Silver Point

Thomas J. Monaco

Silver Point is a boutique research firm that focuses on the broader financial services sector, with a particular focus on troubled institutions globally. 

Asia Ex Japan

Equity Bottom-Up

*Profit Warning: MTR Corp (66.HK) [MTR] warned that it has faced significant operational and valuation challenges, which have led to its first loss since listing two decades ago. Losses of negative HKD 4.8 bn are likely from COVID-19 and a troubled mega project; and*2021 To Remain Very Challenging: The decision by the Hong Kong government to close all but three border checkpoints since the beginning of 2020 is likely to remain in place through much of 2021 as business conditions continue to worsen with the SAR now battling its now fourth wave of COVID-19. At it stands, ridership is down 31.5% YOY in 2020.

*Profit Warning: MTR Corp (66.HK) [MTR] warned that it has faced significant operational and valuation challenges, which have led to its first loss since listing two decades ago. Losses of negative HKD 4.8 bn are likely from COVID-19 and a troubled mega project; and*2021 To Remain Very Challenging: The decision by the Hong Kong government to close all but three border checkpoints since the beginning of 2020 is likely to remain in place through much of 2021 as business conditions continue to worsen with the SAR now battling its now fourth wave of COVID-19. At it stands, ridership is down 31.5% YOY in 2020.

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

The SGD 100 Discover Singapore vouchers that were handed out since 1st December 2020 to its citizens have provided the much-needed sparks in Singapore's hospitality industry that also benefits the Singapore transport sector. <a href="https://www.smartkarma.com/entities/comfortdelgro-corp-ltd" target="_blank" data-smartkarma-citation="entities:497:1" rel="noopener">Comfortdelgro Corp (CD SP)</a>captures this in two angles; higher revenue in public transport as well as in the taxi segment. The taxi segment has a historically higher gross profit margin compared to public transport although of late, the online ride-hailing app has challenged the former's dominance. 
Although Phase 3 is unlikely to happen today after PM Lee's speech, today's speech will highlight more positives rather than negative news on the COVID-19 development for Singapore and will help to increase higher mobility in Singapore that benefits ComfortDelgro. There will be an increase in group size on phase 3 and capacity limits in public places and events including weddings. Borders will also be slowly reopened that invite more tourists to come to Singapore. 
Although Hong Kong is still juggling with more pandemic cases compared to Singapore, <a href="https://www.smartkarma.com/entities/mtr-corp" target="_blank" data-smartkarma-citation="entities:13289:1" rel="noopener">MTR Corp (66 HK)</a> share price has held up far better compared to <a href="https://www.smartkarma.com/entities/comfortdelgro-corp-ltd" target="_blank" data-smartkarma-citation="entities:497:1" rel="noopener">Comfortdelgro Corp (CD SP)</a> . Thus ComfortDelgro's share price should play a catch-up. 
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/178/308/original/image_74960535931607934386271.png?1607934386" class="editor-image img-responsive" data-smartkarma-image-id="178308"></figure>
<div class="content-remarks">
source: Capital IQ
</div>

The SGD 100 Discover Singapore vouchers that were handed out since 1st December 2020 to its citizens have provided the much-needed sparks in Singapore's hospitality industry that also benefits the Singapore transport sector. Comfortdelgro Corp (CD SP)captures this in two angles; higher revenue in public transport as well as in the taxi segment. The taxi segment has a historically higher gross profit margin compared to public transport although of late, the online ride-hailing app has challenged the former's dominance. 
Although Phase 3 is unlikely to happen today after PM Lee's speech, today's speech will highlight more positives rather than negative news on the COVID-19 development for Singapore and will help to increase higher mobility in Singapore that benefits ComfortDelgro. There will be an increase in group size on phase 3 and capacity limits in public places and events including weddings. Borders will also be slowly reopened that invite more tourists to come to Singapore. 
Although Hong Kong is still juggling with more pandemic cases compared to Singapore, MTR Corp (66 HK) share price has held up far better compared to Comfortdelgro Corp (CD SP) . Thus ComfortDelgro's share price should play a catch-up. 


source: Capital IQ


ComfortDelgro (CD): Re-Discover Singapore

After the amazing Q2 2020 performance, the Q3 result was less stellar compared as the pandemic has seemed to be under control but the recent increase in the outbreak means it is the right time to cover the shorts in <a href="https://www.smartkarma.com/entities/nissin-foods-co-ltd" target="_blank" data-smartkarma-citation="entities:26062:1" rel="noopener">Nissin Foods (1475 HK)</a> and go long with the assumption that the fear factor will kick in again that will create a panic buying and once again - stay at home during the pandemic. 
For long-short investors - the long trade of Nissin Foods can be paired up with either a short in <a href="https://www.smartkarma.com/entities/mtr-corp" target="_blank" data-smartkarma-citation="entities:13289:1" rel="noopener">MTR Corp (66 HK)</a> or <a href="https://www.smartkarma.com/entities/cafe-de-coral-holdings-ltd" target="_blank" data-smartkarma-citation="entities:2568:1" rel="noopener">Cafe De Coral Holdings (341 HK)</a> , both of which trade at ludicrous valuation while maintaining a questionable performance in the next quarter if the lockdown in Hong Kong is going to be reinstated. 
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/172/900/original/image_63144037491605899958762.png?1605899960" class="editor-image img-responsive" data-smartkarma-image-id="172900"></figure>
<div class="content-remarks">
source: Capital IQ
</div>

After the amazing Q2 2020 performance, the Q3 result was less stellar compared as the pandemic has seemed to be under control but the recent increase in the outbreak means it is the right time to cover the shorts in Nissin Foods (1475 HK) and go long with the assumption that the fear factor will kick in again that will create a panic buying and once again - stay at home during the pandemic. 
For long-short investors - the long trade of Nissin Foods can be paired up with either a short in MTR Corp (66 HK) or Cafe De Coral Holdings (341 HK) , both of which trade at ludicrous valuation while maintaining a questionable performance in the next quarter if the lockdown in Hong Kong is going to be reinstated. 


source: Capital IQ


Nissin Food (1475): HK COVID-19 - Reversal of WFH Vs Going Out

This is the first time in months that there are more than one visible positive catalysts for <a href="https://www.smartkarma.com/entities/comfortdelgro-corp-ltd" target="_blank" data-smartkarma-citation="entities:497:1" rel="noopener">Comfortdelgro Corp (CD SP)</a> ; with the more demand for staycation after STB pumped in funds to promote domestic tourism and the come back of Expo and Exhibitions, there will be an increase of mobility in Singapore that increases revenues for public transport and demand for taxi services. 
The end of September 2020 will also mark the end of the rental relief that caused the 1H 2020 taxi operating margin to go on red thus things look much rosier in the 2H 2020 for the taxi business. 
The similar situation between Hong Kong and Singapore in terms of COVID-19 including its work-from-home advice has caused MTR's ridership to drop significantly and reflected in the 1H 2020 income but somehow, its share price is in a much better place compared to <a href="https://www.smartkarma.com/entities/comfortdelgro-corp-ltd" target="_blank" data-smartkarma-citation="entities:497:1" rel="noopener">Comfortdelgro Corp (CD SP)</a> .
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/162/489/original/image_50584886921601366473345.png?1601366473" class="editor-image img-responsive" data-smartkarma-image-id="162489"></figure>

This is the first time in months that there are more than one visible positive catalysts for Comfortdelgro Corp (CD SP) ; with the more demand for staycation after STB pumped in funds to promote domestic tourism and the come back of Expo and Exhibitions, there will be an increase of mobility in Singapore that increases revenues for public transport and demand for taxi services. 
The end of September 2020 will also mark the end of the rental relief that caused the 1H 2020 taxi operating margin to go on red thus things look much rosier in the 2H 2020 for the taxi business. 
The similar situation between Hong Kong and Singapore in terms of COVID-19 including its work-from-home advice has caused MTR's ridership to drop significantly and reflected in the 1H 2020 income but somehow, its share price is in a much better place compared to Comfortdelgro Corp (CD SP) .


Comfort Delgro (CD): Staycation, Expo and No More Rental Relief

<a href="https://www.smartkarma.com/entities/comfortdelgro-corp-ltd" target="_blank" data-smartkarma-citation="entities:497:1" rel="noopener">Comfortdelgro Corp (CD SP)</a> share price was battered around 40% due to the COVID-19 induced (domestically) Circuit Breaker and (internationally) border shut down in the region, therefore, the tourists' arrival in Singapore has dropped significantly, causing a low ridership in the taxi division. 
Recovery seems on the way as the Singapore government has slowly but surely eased off border restrictions, allowing safe countries such as Brunei Darussalam and New Zealand tourists to visit without stay-at-home notice while also allowing other Asian countries such as China, Thailand, Vietnam, Taiwan, Malaysia, Macao and Australia (excluding Victoria) will be required to undergo a stay-home-notice at their own residence for 7 instead of previously 14 days. There is a talk with the Indonesian government to open an essential "green lane" that could mean medical tourism. 
For the past 10 years, the number of tourists from Indonesia and China competed for the top two spots thanks to the warm bilateral relationship between Singapore and the two countries, superior healthcare facilities in Singapore and cultural closeness.
<div>Currently, the company is valued at 28 times historical earnings so with increasing profitability in the next half of the year, the valuation ranges around 18-21x PER. Compared to other transport-related peers such as <a href="https://www.smartkarma.com/entities/japan-airport-terminal-co" target="_blank" data-smartkarma-citation="entities:18034:1" rel="noopener">Japan Airport Terminal Co (9706 JP)</a> , Comfort Delgro trades at a 86% discount in EV/EBITDA while to <a href="https://www.smartkarma.com/entities/mtr-corp" target="_blank" data-smartkarma-citation="entities:13289:1" rel="noopener">MTR Corp (66 HK)</a> , it trades at a 30% discount in PER. BUY.</div>

Comfortdelgro Corp (CD SP) share price was battered around 40% due to the COVID-19 induced (domestically) Circuit Breaker and (internationally) border shut down in the region, therefore, the tourists' arrival in Singapore has dropped significantly, causing a low ridership in the taxi division. 
Recovery seems on the way as the Singapore government has slowly but surely eased off border restrictions, allowing safe countries such as Brunei Darussalam and New Zealand tourists to visit without stay-at-home notice while also allowing other Asian countries such as China, Thailand, Vietnam, Taiwan, Malaysia, Macao and Australia (excluding Victoria) will be required to undergo a stay-home-notice at their own residence for 7 instead of previously 14 days. There is a talk with the Indonesian government to open an essential "green lane" that could mean medical tourism. 
For the past 10 years, the number of tourists from Indonesia and China competed for the top two spots thanks to the warm bilateral relationship between Singapore and the two countries, superior healthcare facilities in Singapore and cultural closeness.
Currently, the company is valued at 28 times historical earnings so with increasing profitability in the next half of the year, the valuation ranges around 18-21x PER. Compared to other transport-related peers such as Japan Airport Terminal Co (9706 JP) , Comfort Delgro trades at a 86% discount in EV/EBITDA while to MTR Corp (66 HK) , it trades at a 30% discount in PER. BUY.

Comfort Delgro (CD): Undervalued and Recovery in Ridership

Hong Kong

MTR Corporation is a public transport operator and property developer, primarily operating the Mass Transit Railway (MTR) system in Hong Kong. Its core activities include passenger railway services, property development, leasing, and management, alongside international railway operations and consultancy services. The company is headquartered in Kowloon Bay, Hong Kong, and was founded in 1972.

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MTR Corporation (66 HK)

MTR Corp – Trainwreck

MTR CORP: MTR warned that it has faced significant operational and valuation challenges, which have led to a major loss. The border closure is...

Thomas J. Monaco

ComfortDelgro (CD): Re-Discover Singapore

Phase 3 is to happen soon and the speech highlighted more positives than negative news on COVID-19 development in SG and help to raise higher...

Henry Soediarko

Nissin Food (1475): HK COVID-19 - Reversal of WFH Vs Going Out

How severe it will get in Hong Kong and will the government re-instate the lockdown. It is time to go long Nissin food and start shorting MTR and...

Henry Soediarko

Comfort Delgro (CD): Staycation, Expo and No More Rental Relief

Recovery Stories are in the right track

Henry Soediarko

Comfort Delgro (CD): Undervalued and Recovery in Ridership

Comfortdelgro Corp (CD SP) share price was battered around 40% due to the COVID-19 induced (domestically) Circuit Breaker and (internationally)...

Henry Soediarko

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