ASEAN Insight Provider, CrossASEAN Research

Angus Mackintosh

ASEAN Insight Provider

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

Private Capital Markets

<p><a href="https://www.smartkarma.com/entities/gojek" target="_blank" data-smartkarma-citation="entities:25976:1" rel="noopener">Gojek (1379371D IJ)</a> just had a vote of confidence in its digital financial strategy, with GIC (Singapore's Sovereign Wealth Fund) revealing that it will invest in <a href="https://www.smartkarma.com/entities/bank-jago-tbk-pt" target="_blank" data-smartkarma-citation="entities:31094:1" rel="noopener">Bank Jago Tbk PT (ARTO IJ)</a>, where Gojek recently increased its own stake to 22.16%. </p>
<p>GIC will invest around US$225m to acquire circa 9% stake in <a href="https://www.smartkarma.com/entities/bank-jago-tbk-pt" target="_blank" data-smartkarma-citation="entities:31094:1" rel="noopener">Bank Jago Tbk PT (ARTO IJ)</a> through a rights issue to take place in March.</p>
<p>The Indonesian bank is already in the process of transforming itself into a digital bank but bringing in GIC as a shareholder will bring comfort in terms of governance of the bank, as well as obviously bringing new funds.</p>
<p><a href="https://www.smartkarma.com/entities/bank-jago-tbk-pt" target="_blank" data-smartkarma-citation="entities:31094:1" rel="noopener">Bank Jago Tbk PT (ARTO IJ)</a> will secure IDR7tn or US$497.3m through the issuance of new shares, increasing its total capital to IDR8tn or US$564.4m.</p>
<p>The potential customer base for <a href="https://www.smartkarma.com/entities/bank-jago-tbk-pt" target="_blank" data-smartkarma-citation="entities:31094:1" rel="noopener">Bank Jago Tbk PT (ARTO IJ)</a> will be even larger assuming the Gojek-Tokopedia merger goes through, opening up Tokopedia's customers and sellers as potential customers. </p>
<p><a href="https://www.smartkarma.com/entities/sea-ltd" target="_blank" data-smartkarma-citation="entities:8509:1" rel="noopener">Sea Ltd (SE US)</a> is not standing still on digital finance in Indonesia and has recently acquired a local bank Bank BKE, which has been renamed SeaBank, which we also discuss below. <a href="https://www.smartkarma.com/entities/sea-ltd" target="_blank" data-smartkarma-citation="entities:8509:1" rel="noopener">Sea Ltd (SE US)</a> probably represents the most serious potential competitive threat for <a href="https://www.smartkarma.com/entities/bank-jago-tbk-pt" target="_blank" data-smartkarma-citation="entities:31094:1" rel="noopener">Bank Jago Tbk PT (ARTO IJ)</a>.</p>
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<p>Valuations for the merged <a href="https://www.smartkarma.com/entities/gojek" target="_blank" data-smartkarma-citation="entities:25976:1" rel="noopener">Gojek (1379371D IJ)</a> and <a href="https://www.smartkarma.com/entities/tokopedia-pt" target="_blank" data-smartkarma-citation="entities:24239:1" rel="noopener">Tokopedia PT (1087142D IJ)</a> have crept up to US$35bn-US$40bn and no doubt an early success with <a href="https://www.smartkarma.com/entities/bank-jago-tbk-pt" target="_blank" data-smartkarma-citation="entities:31094:1" rel="noopener">Bank Jago Tbk PT (ARTO IJ)</a> will help it command a higher multiple on the listing of the combined entity. </p>
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Gojek (1379371D IJ) just had a vote of confidence in its digital financial strategy, with GIC (Singapore's Sovereign Wealth Fund) revealing that it will invest in Bank Jago Tbk PT (ARTO IJ), where Gojek recently increased its own stake to 22.16%. 
GIC will invest around US$225m to acquire circa 9% stake in Bank Jago Tbk PT (ARTO IJ) through a rights issue to take place in March.
The Indonesian bank is already in the process of transforming itself into a digital bank but bringing in GIC as a shareholder will bring comfort in terms of governance of the bank, as well as obviously bringing new funds.
Bank Jago Tbk PT (ARTO IJ) will secure IDR7tn or US$497.3m through the issuance of new shares, increasing its total capital to IDR8tn or US$564.4m.
The potential customer base for Bank Jago Tbk PT (ARTO IJ) will be even larger assuming the Gojek-Tokopedia merger goes through, opening up Tokopedia's customers and sellers as potential customers. 
Sea Ltd (SE US) is not standing still on digital finance in Indonesia and has recently acquired a local bank Bank BKE, which has been renamed SeaBank, which we also discuss below. Sea Ltd (SE US) probably represents the most serious potential competitive threat for Bank Jago Tbk PT (ARTO IJ).

Valuations for the merged Gojek (1379371D IJ) and Tokopedia PT (1087142D IJ) have crept up to US$35bn-US$40bn and no doubt an early success with Bank Jago Tbk PT (ARTO IJ) will help it command a higher multiple on the listing of the combined entity. 


Gojek (1379371D IJ) - A Leg Up for Digital Finance?

Global TMT analyst with Asia ex-Japan focus.

Mitchell Kim

Equity Bottom-Up

<p>In this report, we summarize the potential impact of the Internet consumer lending guidelines announced by CBIRC on Ant Group and why its value remains intact, which bodes well for the underperformed Alibaba shares.  We provide a more in-depth look at the following: </p><ul>
<li>Ant’s revised valuation and sensitivity analyses focusing on consumer loan growth assumption and various valuation multiples.</li>
<li>The argument for why <a href="https://www.smartkarma.com/entities/alibaba-group-holding-ltd" target="_blank" data-smartkarma-citation="entities:787:1" rel="noopener">Alibaba Group (BABA US)</a> shares were excessively penalized when <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent Holdings (700 HK)</a> remains unscathed.</li>
<li>Our own Ant Group’s financial forecasts.</li>
<li>A closer look at each of Ant's business segments and their monetization rates.</li>
<li>Ant’s market share by segment. </li>
</ul>

In this report, we summarize the potential impact of the Internet consumer lending guidelines announced by CBIRC on Ant Group and why its value remains intact, which bodes well for the underperformed Alibaba shares.  We provide a more in-depth look at the following: 
Ant’s revised valuation and sensitivity analyses focusing on consumer loan growth assumption and various valuation multiples.
The argument for why Alibaba Group (BABA US) shares were excessively penalized when Tencent Holdings (700 HK) remains unscathed.
Our own Ant Group’s financial forecasts.
A closer look at each of Ant's business segments and their monetization rates.
Ant’s market share by segment. 


Alibaba (BABA US): Ant Group Woes Overly Priced-In

Global equities research in innovation & tech

Vishal Hargovan

An innovation focussed investment company

Granite Bay Capital

Granite Bay Capital is an innovation focussed investment company with a deep focus on the companies at the leading edge of innovation across major themes such as AI, ubiquitous computing, sustainability, automation and longevity.

<ul>
<li>Affirm is a leading North American based BNPL provider that is well placed to grow aggressively over the next decade</li>
<li>Their advantages are threefold:</li>
</ul><ol>
<li>Excellence at technology and data which enables Affirm to win enterprise scale platforms</li>
<li>The ability to address transactions across the average order value scale hence address a larger proportion of credit card displacement TAM</li>
<li>Transparency and fairness with a commitment to never charge late fees appeals to merchants who share this value set / brand ethos</li>
</ol><ul><li>There will be multiple winners in the BNPL space and while Afterpay is our preferred pick, we believe Affirm’s strengths cannot be ignored and warrants strong consideration in a long portfolio</li></ul>


Affirm is a leading North American based BNPL provider that is well placed to grow aggressively over the next decade
Their advantages are threefold:

Excellence at technology and data which enables Affirm to win enterprise scale platforms
The ability to address transactions across the average order value scale hence address a larger proportion of credit card displacement TAM
Transparency and fairness with a commitment to never charge late fees appeals to merchants who share this value set / brand ethos
There will be multiple winners in the BNPL space and while Afterpay is our preferred pick, we believe Affirm’s strengths cannot be ignored and warrants strong consideration in a long portfolio

Affirm (AFRM) – The Rise of the Financial Super App

<p>The news that <a href="https://www.smartkarma.com/entities/gojek" target="_blank" data-smartkarma-citation="entities:25976:1" rel="noopener">Gojek (1379371D IJ)</a> and <a href="https://www.smartkarma.com/entities/tokopedia-pt" target="_blank" data-smartkarma-citation="entities:24239:1" rel="noopener">Tokopedia PT (1087142D IJ)</a> are in talks for a potential merger and future listing came with some excitement, given that it has the potential to create a homegrown Indonesian digital powerhouse in one fell swoop. </p>
<p>This will present a challenge, not just to <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 its Shopee platform but also for <a href="https://www.smartkarma.com/entities/grabtaxi-holdings-pte-ltd" target="_blank" data-smartkarma-citation="entities:26950:1" rel="noopener">Grab (0967655D SP),</a> which will suddenly find itself three steps behind its Indonesian rival having been a potential suitor, although that marriage would have been less than easy.</p>
<p><a href="https://www.smartkarma.com/entities/gojek" target="_blank" data-smartkarma-citation="entities:25976:1" rel="noopener">Gojek (1379371D IJ)</a> has already stepped up its move into the digital banking space through the recent increase in its stake in <a href="https://www.smartkarma.com/entities/bank-jago-tbk-pt" target="_blank" data-smartkarma-citation="entities:31094:1" rel="noopener">Bank Jago (ARTO IJ)</a> to 22% but it also has strong backers for GoPay in the shape of <a href="https://www.smartkarma.com/entities/facebook-inc-a" target="_blank" data-smartkarma-citation="entities:665:1" rel="noopener">Facebook Inc A (FB US)</a> and <a href="https://www.smartkarma.com/entities/paypal-holdings-inc" target="_blank" data-smartkarma-citation="entities:4747:1" rel="noopener">Paypal Holdings (PYPL US).</a></p>
<p>One key area of overlap between <a href="https://www.smartkarma.com/entities/gojek" target="_blank" data-smartkarma-citation="entities:25976:1" rel="noopener">Gojek (1379371D IJ)</a> and <a href="https://www.smartkarma.com/entities/tokopedia-pt" target="_blank" data-smartkarma-citation="entities:24239:1" rel="noopener">Tokopedia PT (1087142D IJ)</a> is on digital payments, where GoPay and OVO compete head-on. Given that Tokopedia holds a 35% stake in OVO, it is possible that it will decide to sell this stake with payments and financial services falling to GoPay. </p>
<p>The combined entity will be a huge enabler for MSMEs from food providers to small businesses and as a result, will likely get significant support from the Indonesian government. </p>
<p>Unlike a Gojek/Grab combination, there are few competition issues 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> and <a href="https://www.smartkarma.com/entities/gojek" target="_blank" data-smartkarma-citation="entities:25976:1" rel="noopener">Gojek (1379371D IJ)</a> operate in different verticals. There are also unlikely to be issues with any substantial lay-offs.</p>
<p>There will be significant synergies between the two companies in areas such as payments, with an ever-increasing use-case for GoPay and on making deliveries even more seamless for <a href="https://www.smartkarma.com/entities/tokopedia-pt" target="_blank" data-smartkarma-citation="entities:24239:1" rel="noopener">Tokopedia PT (1087142D IJ)</a>.</p>
<p><a href="https://www.smartkarma.com/entities/tokopedia-pt" target="_blank" data-smartkarma-citation="entities:24239:1" rel="noopener"></a>The combined size of the two companies would be around US$18bn under the latest valuations but it could quite easily command a higher valuation with a US listing, although it is not yet sure what shape or form that listing will take.</p>
<p>A SPAC listing would be the least favorable option, given question marks over the real winners from such as structure. A straight IPO would be the most straightforward and preferred option, even if it takes a bit longer to execute. The merged entity will likely provide a more formidable adversary for <a href="https://www.smartkarma.com/entities/sea-ltd" target="_blank" data-smartkarma-citation="entities:8509:1" rel="noopener">Sea Ltd (SE US)</a> in Indonesia.</p>

The news that Gojek (1379371D IJ) and Tokopedia PT (1087142D IJ) are in talks for a potential merger and future listing came with some excitement, given that it has the potential to create a homegrown Indonesian digital powerhouse in one fell swoop. 
This will present a challenge, not just to Sea Ltd (SE US) and its Shopee platform but also for Grab (0967655D SP), which will suddenly find itself three steps behind its Indonesian rival having been a potential suitor, although that marriage would have been less than easy.
Gojek (1379371D IJ) has already stepped up its move into the digital banking space through the recent increase in its stake in Bank Jago (ARTO IJ) to 22% but it also has strong backers for GoPay in the shape of Facebook Inc A (FB US) and Paypal Holdings (PYPL US).
One key area of overlap between Gojek (1379371D IJ) and Tokopedia PT (1087142D IJ) is on digital payments, where GoPay and OVO compete head-on. Given that Tokopedia holds a 35% stake in OVO, it is possible that it will decide to sell this stake with payments and financial services falling to GoPay. 
The combined entity will be a huge enabler for MSMEs from food providers to small businesses and as a result, will likely get significant support from the Indonesian government. 
Unlike a Gojek/Grab combination, there are few competition issues as Tokopedia PT (1087142D IJ) and Gojek (1379371D IJ) operate in different verticals. There are also unlikely to be issues with any substantial lay-offs.
There will be significant synergies between the two companies in areas such as payments, with an ever-increasing use-case for GoPay and on making deliveries even more seamless for Tokopedia PT (1087142D IJ).
The combined size of the two companies would be around US$18bn under the latest valuations but it could quite easily command a higher valuation with a US listing, although it is not yet sure what shape or form that listing will take.
A SPAC listing would be the least favorable option, given question marks over the real winners from such as structure. A straight IPO would be the most straightforward and preferred option, even if it takes a bit longer to execute. The merged entity will likely provide a more formidable adversary for Sea Ltd (SE US) in Indonesia.

Gojek and Tokopedia - Digital Game of Thrones

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<p><a href="https://www.smartkarma.com/entities/gojek" target="_blank" data-smartkarma-citation="entities:25976:1" rel="noopener">Gojek (1379371D IJ)</a> has bought a further 18% stake in Indonesia's <a href="https://www.smartkarma.com/entities/bank-jago-tbk-pt" target="_blank" data-smartkarma-citation="entities:31094:1" rel="noopener">Bank Jago (ARTO IJ)</a> bringing its total state to 22.16%. The transaction was executed at 1.14x PBV and a significant discount to the last traded price.</p>
<p><a href="https://www.smartkarma.com/entities/bank-jago-tbk-pt" target="_blank" data-smartkarma-citation="entities:31094:1" rel="noopener">Bank Jago (ARTO IJ)</a> has a market capitalization of IDR42.3tn (US$2.9bn), which values Gojek's stake in the bank at IDR9.3tn (US$641m).</p>
<p>Gojek's Indonesia users will in the future be able to open a bank account with <a href="https://www.smartkarma.com/entities/bank-jago-tbk-pt" target="_blank" data-smartkarma-citation="entities:31094:1" rel="noopener">Bank Jago (ARTO IJ)</a> and manage their finances through the <a href="https://www.smartkarma.com/entities/gojek" target="_blank" data-smartkarma-citation="entities:25976:1" rel="noopener">Gojek (1379371D IJ)</a> App. </p>
<p>The <a href="https://www.smartkarma.com/entities/bank-jago-tbk-pt" target="_blank" data-smartkarma-citation="entities:31094:1" rel="noopener">Bank Jago (ARTO IJ)</a> deal marks an opportunity for <a href="https://www.smartkarma.com/entities/gojek" target="_blank" data-smartkarma-citation="entities:25976:1" rel="noopener">Gojek (1379371D IJ)</a> to capitalize on its vast user base, especially through GoPay, to offer customers digital banking products and other financial services.</p>
<p><a href="https://www.smartkarma.com/entities/bank-jago-tbk-pt" target="_blank" data-smartkarma-citation="entities:31094:1" rel="noopener">Bank Jago (ARTO IJ)</a> has already moved its focus to digital banking, targeting SMEs and retail customers. GoPay also recently received investment from <a href="https://www.smartkarma.com/entities/facebook-inc-a" target="_blank" data-smartkarma-citation="entities:665:1" rel="noopener">Facebook Inc A (FB US)</a> and <a href="https://www.smartkarma.com/entities/paypal-holdings-inc" target="_blank" data-smartkarma-citation="entities:4747:1" rel="noopener">Paypal Holdings (PYPL US)</a>, which also provides a strong backing and the potential for collaboration from two heavyweight foreign investors</p>
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<div>For <a href="https://www.smartkarma.com/entities/gojek" target="_blank" data-smartkarma-citation="entities:25976:1" rel="noopener">Gojek (1379371D IJ</a>, this will help it develop a process through which it can work with other banks, as well as providing customers with an increasing array of digital financial solutions.</div>
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<div>The deal also demonstrates that management is focused on building its competitive advantage in Indonesia rather than being sidelined any merger considerations with <a href="https://www.smartkarma.com/entities/grabtaxi-holdings-pte-ltd" target="_blank" data-smartkarma-citation="entities:26950:1" rel="noopener">Grab (0967655D SP),</a> which seems increasingly unlikely. </div>
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<p>Gojek is also seen to be on the path to profitability, with all its services generating positive margins on a product basis. <a href="https://www.smartkarma.com/entities/gojek" target="_blank" data-smartkarma-citation="entities:25976:1" rel="noopener">Gojek (1379371D IJ)</a> also recently received US$150m in new money from <a href="https://www.smartkarma.com/entities/telekomunikasi-indonesia" target="_blank" data-smartkarma-citation="entities:1051:1" rel="noopener">Telekomunikasi Indonesia (TLKM IJ),</a> which represented another heavyweight local shareholder on top of <a href="https://www.smartkarma.com/entities/astra-international-tbk-pt" target="_blank" data-smartkarma-citation="entities:46:1" rel="noopener">Astra International (ASII IJ)</a> and Djarum Group. </p>
<p>We look at the background of the <a href="https://www.smartkarma.com/entities/bank-jago-tbk-pt" target="_blank" data-smartkarma-citation="entities:31094:1" rel="noopener">Bank Jago (ARTO IJ)</a> management team below the fold, which seems well-suited to building this future collaboration.</p>
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Gojek (1379371D IJ) has bought a further 18% stake in Indonesia's Bank Jago (ARTO IJ) bringing its total state to 22.16%. The transaction was executed at 1.14x PBV and a significant discount to the last traded price.
Bank Jago (ARTO IJ) has a market capitalization of IDR42.3tn (US$2.9bn), which values Gojek's stake in the bank at IDR9.3tn (US$641m).
Gojek's Indonesia users will in the future be able to open a bank account with Bank Jago (ARTO IJ) and manage their finances through the Gojek (1379371D IJ) App. 
The Bank Jago (ARTO IJ) deal marks an opportunity for Gojek (1379371D IJ) to capitalize on its vast user base, especially through GoPay, to offer customers digital banking products and other financial services.
Bank Jago (ARTO IJ) has already moved its focus to digital banking, targeting SMEs and retail customers. GoPay also recently received investment from Facebook Inc A (FB US) and Paypal Holdings (PYPL US), which also provides a strong backing and the potential for collaboration from two heavyweight foreign investors

For Gojek (1379371D IJ, this will help it develop a process through which it can work with other banks, as well as providing customers with an increasing array of digital financial solutions.

The deal also demonstrates that management is focused on building its competitive advantage in Indonesia rather than being sidelined any merger considerations with Grab (0967655D SP), which seems increasingly unlikely. 



Gojek is also seen to be on the path to profitability, with all its services generating positive margins on a product basis. Gojek (1379371D IJ) also recently received US$150m in new money from Telekomunikasi Indonesia (TLKM IJ), which represented another heavyweight local shareholder on top of Astra International (ASII IJ) and Djarum Group. 
We look at the background of the Bank Jago (ARTO IJ) management team below the fold, which seems well-suited to building this future collaboration.











































Gojek (1379371D IJ) - Upping the Ante on Financial Services

United States

PayPal Holdings, Inc. operates as a technology platform company that enables digital and mobile payments on behalf of consumers and merchants. The Company offers online payment solutions. PayPal Holdings serves customers worldwide.

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Paypal Holdings (PYPL US)

Gojek (1379371D IJ) - A Leg Up for Digital Finance?

The move by GIC to invest in Bank Jago represents a vote of confidence in Gojek's digital financial strategy and places it ahead of its competitors...

Angus Mackintosh

Alibaba (BABA US): Ant Group Woes Overly Priced-In

In this report, we summarize the potential impact of the recently announced regulation by CBIRC on Ant Group and why its value remains intact,...

Mitchell Kim

Affirm (AFRM) – The Rise of the Financial Super App

Affirm has a strong technology focus and a mission driven CEO who believes in bringing fairness to financial products. Investors should not...

Vishal Hargovan

Gojek and Tokopedia - Digital Game of Thrones

The potential merger of Gojek and Tokopedia with a listing of the combined entity planned at a future date will provide investors with an exciting...

Angus Mackintosh

Gojek (1379371D IJ) - Upping the Ante on Financial Services

Gojek's recent move to increase its stake in Bank Jago to 22% signals it intends to move into providing a broader range of financial services.

Angus Mackintosh

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