Asian Insight Provider - Actionable ideas, CrossASEAN Research

Henry Soediarko

Asian Insight Provider - Actionable ideas

CrossASEAN Research

At CrossASEAN Research we strive to produce unbiased and differentiated on the ground insights on companies across South East Asia. Our Research is produced for the most part after face to face meetings and conversations with company management to dig deep into the long term vision and strategy of the companies we cover. We seek to deliver investable and actionable themes on sectors and markets across SE Asia, often in collaboration with other Insight Providers across the region, pooling the vast experience of the analysts within the Smartkarma Ecosystem. We also offer bespoke work and tailor made trips for our clients. 

Insights across South East Asia

Equity Bottom-Up

<p>A closer look at each of the Air Travel Pass requirements reveals that the residents from the above countries are not required to do Stay Home Notice/quarantine for 14 days anymore. Historically, tourists from China are the biggest constituents of the total number of tourists in Singapore. The fact that China has already been included in the Travel Bubble is good news for ComfortDelgro as there will be more ridership in Singapore's taxi and public transport. </p>
<p>Launch of lifestyle app (Zig), functionality improvement such as adding more destination in a single journey, increasing its online presence through Lazada is some of the initiatives that ComfortDelgro's management has initiated in a bid to win more market share in the taxi business. This will result in both an increase in revenue and a blended margin. </p>

A closer look at each of the Air Travel Pass requirements reveals that the residents from the above countries are not required to do Stay Home Notice/quarantine for 14 days anymore. Historically, tourists from China are the biggest constituents of the total number of tourists in Singapore. The fact that China has already been included in the Travel Bubble is good news for ComfortDelgro as there will be more ridership in Singapore's taxi and public transport. 
Launch of lifestyle app (Zig), functionality improvement such as adding more destination in a single journey, increasing its online presence through Lazada is some of the initiatives that ComfortDelgro's management has initiated in a bid to win more market share in the taxi business. This will result in both an increase in revenue and a blended margin. 

High Conviction Ideas 2021 Update: Travel Bubble, Taxi

ASEAN Insight Provider, CrossASEAN Research

Angus Mackintosh

ASEAN Insight Provider

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<p><a href="https://www.smartkarma.com/entities/mitra-adiperkasa-tbk-pt" target="_blank" data-smartkarma-citation="entities:18684:1" rel="noopener">Mitra Adiperkasa (MAPI IJ)</a> released its results over the weekend for FY2020, which saw sales for the year falling by -31.4% YoY to IDR14.8tn. The company achieved a gross profit margin of 41.6%, an operating loss of IDR56.9bn, an EBITDA of IDR2.3tn, with an FY2020 net loss of IDR585bn.</p>
<p>The fall in sales reflected the impact of COVID-19 and the associated lockdowns. To offset this, the company focused on driving its sales online, which saw digital sales increase to 10.3% of revenues, an increase of +236% YoY.</p>
<p>On a more positive note, <a href="https://www.smartkarma.com/entities/mitra-adiperkasa-tbk-pt" target="_blank" data-smartkarma-citation="entities:18684:1" rel="noopener">Mitra Adiperkasa (MAPI IJ)</a> saw its 4Q2020 sales increase by +35.6% QoQ versus 3Q2020, with its gross margin improvements and an operating profit of IDR357bn in 4Q2020 versus a loss of IDR113bn in 3Q2020. It also achieved a significant increase in EBITDA to IDR844bn versus IDR484bn in 3Q2020 plus a net profit of IDR87.2bn versus a net loss of IDR217bn on 3Q2020.</p>
<p><a href="https://www.smartkarma.com/entities/mitra-adiperkasa-tbk-pt" target="_blank" data-smartkarma-citation="entities:18684:1" rel="noopener">Mitra Adiperkasa (MAPI IJ)</a> sales in 4Q2020 rose considerably in 4Q2020 due to the gradual re-opening of malls together with the impact of the company's Unified Retail Strategy centered around the company's MAP Club loyalty program, which already has 3.7m members.</p>
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<p>The company's sports and leisure subsidiary <a href="https://www.smartkarma.com/entities/map-aktif-adiperkasa-pt" target="_blank" data-smartkarma-citation="entities:27291:1" rel="noopener">MAP Aktif Adiperkasa PT (MAPA IJ)</a> saw an even more impressive performance in 4Q2020, with a +43.9% growth in net revenue in 4Q2020 versus 3Q2020.</p>
<p><a href="https://www.smartkarma.com/entities/mitra-adiperkasa-tbk-pt" target="_blank" data-smartkarma-citation="entities:18684:1" rel="noopener">Mitra Adiperkasa (MAPI IJ)</a> remains one of our top picks to play the gradual recovery in consumer spending and increased mobility, which will help support the recovery in offline channels. At the same time, the company has adjusted through its Unified Retail Strategy to selling more through digital channels, which will continue to underpin future growth given the rapid shift in consumption habits to online channels.</p>
<p><a href="https://www.smartkarma.com/entities/mitra-adiperkasa-tbk-pt" target="_blank" data-smartkarma-citation="entities:18684:1" rel="noopener">Mitra Adiperkasa (MAPI IJ)</a> trades on 22x FY21E per and 13.9x FY22E PER, as the company moved back to profit in FY21E and is forecast to grow EPS by +58% YoY FY22E. <a href="https://www.smartkarma.com/entities/mitra-adiperkasa-tbk-pt" target="_blank" data-smartkarma-citation="entities:18684:1" rel="noopener">Mitra Adiperkasa (MAPI IJ)</a> 5-year average forward PER stands at 21x, making the company look attractive at these levels. </p>
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Mitra Adiperkasa (MAPI IJ) released its results over the weekend for FY2020, which saw sales for the year falling by -31.4% YoY to IDR14.8tn. The company achieved a gross profit margin of 41.6%, an operating loss of IDR56.9bn, an EBITDA of IDR2.3tn, with an FY2020 net loss of IDR585bn.
The fall in sales reflected the impact of COVID-19 and the associated lockdowns. To offset this, the company focused on driving its sales online, which saw digital sales increase to 10.3% of revenues, an increase of +236% YoY.
On a more positive note, Mitra Adiperkasa (MAPI IJ) saw its 4Q2020 sales increase by +35.6% QoQ versus 3Q2020, with its gross margin improvements and an operating profit of IDR357bn in 4Q2020 versus a loss of IDR113bn in 3Q2020. It also achieved a significant increase in EBITDA to IDR844bn versus IDR484bn in 3Q2020 plus a net profit of IDR87.2bn versus a net loss of IDR217bn on 3Q2020.
Mitra Adiperkasa (MAPI IJ) sales in 4Q2020 rose considerably in 4Q2020 due to the gradual re-opening of malls together with the impact of the company's Unified Retail Strategy centered around the company's MAP Club loyalty program, which already has 3.7m members.


The company's sports and leisure subsidiary MAP Aktif Adiperkasa PT (MAPA IJ) saw an even more impressive performance in 4Q2020, with a +43.9% growth in net revenue in 4Q2020 versus 3Q2020.
Mitra Adiperkasa (MAPI IJ) remains one of our top picks to play the gradual recovery in consumer spending and increased mobility, which will help support the recovery in offline channels. At the same time, the company has adjusted through its Unified Retail Strategy to selling more through digital channels, which will continue to underpin future growth given the rapid shift in consumption habits to online channels.
Mitra Adiperkasa (MAPI IJ) trades on 22x FY21E per and 13.9x FY22E PER, as the company moved back to profit in FY21E and is forecast to grow EPS by +58% YoY FY22E. Mitra Adiperkasa (MAPI IJ) 5-year average forward PER stands at 21x, making the company look attractive at these levels. 


Mitra Adiperkasa (MAPI IJ) - Shape-Shifting to Back in Black

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<p><a href="https://www.smartkarma.com/entities/adi-sarana-armada-tbk-pt" target="_blank" data-smartkarma-citation="entities:16947:1" rel="noopener">Adi Sarana Armada (ASSA IJ)</a> continues to see improvements not just for its core car rental business but also for rapid momentum behind its move into the last mile through Anteraja, which looks set to account for more than 50% of revenues over the next 1-2 years and it has already broken even, earlier than expected.</p>
<p>A Webinar we hosted on Smartkarma with senior management revealed a positive outlook for the business on a number of fronts.</p>
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<p>Despite the impact of the pandemic, the company's car rental business under ASSA Rent saw very little fall out from the COVID-19 pandemic, with the overall fleet increasing by +1% last year and the company has also increased its team of drivers.</p>
<p><a href="https://www.smartkarma.com/entities/adi-sarana-armada-tbk-pt" target="_blank" data-smartkarma-citation="entities:16947:1" rel="noopener">Adi Sarana Armada (ASSA IJ)</a> has also developed a car-sharing App to help to better utilize the fleet, where cars are booked by individuals from its corporate clients.</p>
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<p>ASSA rent will increase the fleet further in 2021 by around +10% to cater for higher demand from government departments, as well as the economic recovery in the coming year. </p>
<p>The company's B2B used car auction business under JBA BidWin Auction had a very strong year in 2020, with volume growth of +30%.</p>
<p><a href="https://www.smartkarma.com/entities/adi-sarana-armada-tbk-pt" target="_blank" data-smartkarma-citation="entities:16947:1" rel="noopener">Adi Sarana Armada (ASSA IJ)</a> also has a C2C car marketplace called Caroline, which deals with individuals for new and used cars, with financing as an option. </p>
<p>The backbone of the company's third pillar of business is ASSA logistics, which provides fleet management services, trip management, and delivery systems for its corporate customers. </p>
<p><a href="https://www.smartkarma.com/entities/adi-sarana-armada-tbk-pt" target="_blank" data-smartkarma-citation="entities:16947:1" rel="noopener">Adi Sarana Armada (ASSA IJ)</a>'s last-mile subsidiary is called Anteraja is the real future growth driver for the company with 300 service points in 34 provinces.  Anteraja partners with all the major e-commerce players but is also seeking to enlarge other segments such as B2B, C2C, and Social Commerce. </p>
<p>In 2020, Anteraja delivered 50m packages recording positive growth in its second year of operation by booking 300,000 packages per day on average by the end of 2020, allowing Anteraja to breakeven by the end of the year. </p>
<p>Anteraja has also launched a number of new initiatives including Bisnisaja, Travylite, and Titipaja, a self-developed e-fulfillment service</p>
<section class="figure"><a href="https://www.smartkarma.com/entities/adi-sarana-armada-tbk-pt" target="_blank" data-smartkarma-citation="entities:16947:1" rel="noopener">Adi Sarana Armada (ASSA IJ)</a> takes a positive view on the outlook for this year with positive expectations for revenue growth overall but with the real growth momentum coming from Anteraja.  It trades on 42.2x and 24.4x FY21E and FY22E PER respectively but should be viewed as a transformational growth story crossing into the digital ecosystem, with even higher growth potential in FY2022 according to management. </section>
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Adi Sarana Armada (ASSA IJ) continues to see improvements not just for its core car rental business but also for rapid momentum behind its move into the last mile through Anteraja, which looks set to account for more than 50% of revenues over the next 1-2 years and it has already broken even, earlier than expected.
A Webinar we hosted on Smartkarma with senior management revealed a positive outlook for the business on a number of fronts.

Despite the impact of the pandemic, the company's car rental business under ASSA Rent saw very little fall out from the COVID-19 pandemic, with the overall fleet increasing by +1% last year and the company has also increased its team of drivers.
Adi Sarana Armada (ASSA IJ) has also developed a car-sharing App to help to better utilize the fleet, where cars are booked by individuals from its corporate clients.



ASSA rent will increase the fleet further in 2021 by around +10% to cater for higher demand from government departments, as well as the economic recovery in the coming year. 
The company's B2B used car auction business under JBA BidWin Auction had a very strong year in 2020, with volume growth of +30%.
Adi Sarana Armada (ASSA IJ) also has a C2C car marketplace called Caroline, which deals with individuals for new and used cars, with financing as an option. 
The backbone of the company's third pillar of business is ASSA logistics, which provides fleet management services, trip management, and delivery systems for its corporate customers. 
Adi Sarana Armada (ASSA IJ)'s last-mile subsidiary is called Anteraja is the real future growth driver for the company with 300 service points in 34 provinces.  Anteraja partners with all the major e-commerce players but is also seeking to enlarge other segments such as B2B, C2C, and Social Commerce. 
In 2020, Anteraja delivered 50m packages recording positive growth in its second year of operation by booking 300,000 packages per day on average by the end of 2020, allowing Anteraja to breakeven by the end of the year. 
Anteraja has also launched a number of new initiatives including Bisnisaja, Travylite, and Titipaja, a self-developed e-fulfillment service
Adi Sarana Armada (ASSA IJ) takes a positive view on the outlook for this year with positive expectations for revenue growth overall but with the real growth momentum coming from Anteraja.  It trades on 42.2x and 24.4x FY21E and FY22E PER respectively but should be viewed as a transformational growth story crossing into the digital ecosystem, with even higher growth potential in FY2022 according to management. 












Adi Sarana Armada (ASSA IJ) - To the Last Mile and Beyond

<p>A conversation with <a href="https://www.smartkarma.com/entities/berli-jucker-public-co-ltd" target="_blank" data-smartkarma-citation="entities:3685:1" rel="noopener">Berli Jucker (BJC TB)</a> management post its recent results revealed a company primed for a rebound as the Thai economy recovers and eventually tourism recovers.</p>
<p>4Q2020 saw some recovery QoQ with the glass and aluminium can businesses only down slightly versus 4Q2019. The was despite major repair (scheduled) to one of the company's glass furnaces in 4Q2020 with a 60-day shutdown.</p>
<p>Demand for aluminium cans was impacted by the lack of tourists and less cross-border trade but boosted by new RTD customers plus the introduction of new can variants, which will continue into 2021. </p>
<p><a href="https://www.smartkarma.com/entities/berli-jucker-public-co-ltd" target="_blank" data-smartkarma-citation="entities:3685:1" rel="noopener">Berli Jucker (BJC TB)</a> has already added new aluminium can capacity to take advantage of increased demand in Vietnam from Sabeco. </p>
<p>Big C continues to suffer from a high-base effect from last year and will also suffer from this in 2Q2021 before YoY comparisons start to improve in 2Q2021. </p>
<p><a href="https://www.smartkarma.com/entities/berli-jucker-public-co-ltd" target="_blank" data-smartkarma-citation="entities:3685:1" rel="noopener">Berli Jucker (BJC TB)</a> will resume its store expansion and widespread renovation in 2021, which will support future growth and returns. </p>
<p>The company is taking a more digital approach to marketing using Nielsen data plus collaborating with platforms such as Food Panda, Happy Fresh, Shopee (<a href="https://www.smartkarma.com/entities/sea-ltd" target="_blank" data-smartkarma-citation="entities:8509:1" rel="noopener">Sea Ltd (SE US)</a>), and Lazada to sell more online. </p>
<p>Competitive pressures remain as always although probably lessening from Tesco as it is slowly rebranded under Lotus, with the main pressure for Big C now coming from government copayment schemes, which have just been extended. </p>
<p><a href="https://www.smartkarma.com/entities/berli-jucker-public-co-ltd" target="_blank" data-smartkarma-citation="entities:3685:1" rel="noopener">Berli Jucker (BJC TB)</a> will start to see much better numbers from 2Q2021 but 1Q2021 should see sequential improvements QoQ, underlining the momentum behind the recovery.  </p>
<p><a href="https://www.smartkarma.com/entities/berli-jucker-public-co-ltd" target="_blank" data-smartkarma-citation="entities:3685:1" rel="noopener">Berli Jucker (BJC TB)</a>trades on 25.5x FY21E PER and 21.6x FY22E PER versus its 5-year aveRage forward PER of 29.4x. The company is also expected to see EPS growth of +44% and +18% for FY21E and FY22E respectively, making it look like an attractive recovery prospect and looks like good value versus peers.</p>

A conversation with Berli Jucker (BJC TB) management post its recent results revealed a company primed for a rebound as the Thai economy recovers and eventually tourism recovers.
4Q2020 saw some recovery QoQ with the glass and aluminium can businesses only down slightly versus 4Q2019. The was despite major repair (scheduled) to one of the company's glass furnaces in 4Q2020 with a 60-day shutdown.
Demand for aluminium cans was impacted by the lack of tourists and less cross-border trade but boosted by new RTD customers plus the introduction of new can variants, which will continue into 2021. 
Berli Jucker (BJC TB) has already added new aluminium can capacity to take advantage of increased demand in Vietnam from Sabeco. 
Big C continues to suffer from a high-base effect from last year and will also suffer from this in 2Q2021 before YoY comparisons start to improve in 2Q2021. 
Berli Jucker (BJC TB) will resume its store expansion and widespread renovation in 2021, which will support future growth and returns. 
The company is taking a more digital approach to marketing using Nielsen data plus collaborating with platforms such as Food Panda, Happy Fresh, Shopee (Sea Ltd (SE US)), and Lazada to sell more online. 
Competitive pressures remain as always although probably lessening from Tesco as it is slowly rebranded under Lotus, with the main pressure for Big C now coming from government copayment schemes, which have just been extended. 
Berli Jucker (BJC TB) will start to see much better numbers from 2Q2021 but 1Q2021 should see sequential improvements QoQ, underlining the momentum behind the recovery.  
Berli Jucker (BJC TB)trades on 25.5x FY21E PER and 21.6x FY22E PER versus its 5-year aveRage forward PER of 29.4x. The company is also expected to see EPS growth of +44% and +18% for FY21E and FY22E respectively, making it look like an attractive recovery prospect and looks like good value versus peers.

Berli Jucker (BJC TB) - Primed for Rebound

Elang Mahkota Teknologi / Equity Bottom-Up

<p>Indonesia e-commerce player Bukalapak, which counts <a href="https://www.smartkarma.com/entities/elang-mahkota-teknologi-tbk" target="_blank" data-smartkarma-citation="entities:7752:1" rel="noopener">Emtek (EMTK IJ)</a> as its largest local backer but also has <a href="https://www.smartkarma.com/entities/microsoft-corp" target="_blank" data-smartkarma-citation="entities:15273:1" rel="noopener">Microsoft Corp (MSFT US)</a>, <a href="https://www.smartkarma.com/entities/standard-chartered-plc" target="_blank" data-smartkarma-citation="entities:193:1" rel="noopener">Standard Chartered (STAN LN)</a>, GIC, and Naver Corp is investors in reportedly in talks to list through a SPAC with a valuation of US$4bn-US$5bn, with a local listing of part of the business in Jakarta first. The timing suggests a target transaction date in 3Q2021.</p>
<p>Bukalapak is the No.4 e-commerce player in Indonesia with 13.5m online sellers and 100m monthly active users, competing with players such as <a href="https://www.smartkarma.com/entities/tokopedia-pt" target="_blank" data-smartkarma-citation="entities:24239:1" rel="noopener">Tokopedia PT (1087142D IJ)</a>, Shopee (<a href="https://www.smartkarma.com/entities/sea-ltd" target="_blank" data-smartkarma-citation="entities:8509:1" rel="noopener">Sea Ltd (SE US))</a>, and <a href="https://www.smartkarma.com/entities/lazada-group" target="_blank" data-smartkarma-citation="entities:26148:1" rel="noopener">Lazada Group (LAZADA SP)</a> but with an edge providing fulfillment and logistics for around 5.4m warungs (mom&amp;pop stores) in Indonesia.</p>
<p>The company recently saw <a href="https://www.smartkarma.com/entities/standard-chartered-plc" target="_blank" data-smartkarma-citation="entities:193:1" rel="noopener">Standard Chartered (STAN LN)</a> come in as part of a US$200m funding round, with a view of helping to build financial services through the platform and offer to its sellers and customers financial services.</p>
<p><a href="https://www.smartkarma.com/entities/elang-mahkota-teknologi-tbk" target="_blank" data-smartkarma-citation="entities:7752:1" rel="noopener">Emtek (EMTK IJ)</a> is the most direct beneficiary of a listing for Bukalapak, even through a SPAC, given that it will crystallize a market value for the company. <a href="https://www.smartkarma.com/entities/elang-mahkota-teknologi-tbk" target="_blank" data-smartkarma-citation="entities:7752:1" rel="noopener">Emtek (EMTK IJ)</a>approved a stock split in December and the company has become more liquid and it may look at a further restructuring at a later stage to bring all its digital and media assets under one roof.</p>
<p>The IDX (Indonesia Stock Exchange) is already talking about both allowing SPACs to list in Indonesia but also more importantly to allow main-board listings for high-growth companies that may not be profitable, as well as allowing dual-class shares. </p>

Indonesia e-commerce player Bukalapak, which counts Emtek (EMTK IJ) as its largest local backer but also has Microsoft Corp (MSFT US), Standard Chartered (STAN LN), GIC, and Naver Corp is investors in reportedly in talks to list through a SPAC with a valuation of US$4bn-US$5bn, with a local listing of part of the business in Jakarta first. The timing suggests a target transaction date in 3Q2021.
Bukalapak is the No.4 e-commerce player in Indonesia with 13.5m online sellers and 100m monthly active users, competing with players such as Tokopedia PT (1087142D IJ), Shopee (Sea Ltd (SE US)), and Lazada Group (LAZADA SP) but with an edge providing fulfillment and logistics for around 5.4m warungs (mom&amp;pop stores) in Indonesia.
The company recently saw Standard Chartered (STAN LN) come in as part of a US$200m funding round, with a view of helping to build financial services through the platform and offer to its sellers and customers financial services.
Emtek (EMTK IJ) is the most direct beneficiary of a listing for Bukalapak, even through a SPAC, given that it will crystallize a market value for the company. Emtek (EMTK IJ)approved a stock split in December and the company has become more liquid and it may look at a further restructuring at a later stage to bring all its digital and media assets under one roof.
The IDX (Indonesia Stock Exchange) is already talking about both allowing SPACs to list in Indonesia but also more importantly to allow main-board listings for high-growth companies that may not be profitable, as well as allowing dual-class shares. 

Emtek (EMTK IJ) - Bukalapak Eyeing a SPAC Listing But Jakarta May Be First?

Singapore

Lazada Group SA provides online shopping services. The Company offers consumer electronics, household, toys, fashion, and sports equipment. Lazada Group serves customers worldwide.   

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Lazada Group (LAZADA SP)

High Conviction Ideas 2021 Update: Travel Bubble, Taxi

Zig, adding more destinations in a single journey, cooperation with Lazada are some initiatives that ComfortDelgro's management has initiated in a...

Henry Soediarko

Mitra Adiperkasa (MAPI IJ) - Shape-Shifting to Back in Black

MAPI remains one of our top picks for the gradual recovery in consumption in Indonesia. It has successfully shifted a large portion of sales to...

Angus Mackintosh

Adi Sarana Armada (ASSA IJ) - To the Last Mile and Beyond

ASSA saw growth in its car rental business despite the pandemic but its last-mile delivery business Anteraja is what will drive the long-term...

Angus Mackintosh

Berli Jucker (BJC TB) - Primed for Rebound

Berli Jucker is an interesting proxy for the consumer rebound in Thailand and Vietnam through its consumer packaging, retail, and other consumer...

Angus Mackintosh

Emtek (EMTK IJ) - Bukalapak Eyeing a SPAC Listing But Jakarta May Be First?

Emtek is an interesting way to play the burgeoning digital economy in Indonesia and would be a key beneficiary should subsidiary Bukalapak choose...

Angus Mackintosh

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