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

Equity Bottom-Up

Aspirasi Hidup Indonesia / Equity Bottom-Up

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<li>
<a href="https://www.smartkarma.com/entities/ace-hardware-indonesia" target="_blank" data-smartkarma-citation="entities:12808:1" rel="noopener">Ace Hardware</a> has been a distinct laggard amongst listed retailers in Indonesia, with its valuations drifting to multi-year lows, given a slow recovery from the pandemic and limited digital strategy. </li>
<li>The company has continued to see lacklustre SSSG finish flat for last year but has recently opined a more optimistic outlook for 2023, planning to open 10-15 new stores.</li>
<li>
<a href="https://www.smartkarma.com/entities/ace-hardware-indonesia" target="_blank" data-smartkarma-citation="entities:12808:1" rel="noopener">Ace Hardware Indonesia (ACES IJ)</a> trades on 13.7x FY2023E PER and 12.7x FY2024E PER when it used to trade on twice that multiple with not dissimilar growth rates.</li>
</ul>



Ace Hardware has been a distinct laggard amongst listed retailers in Indonesia, with its valuations drifting to multi-year lows, given a slow recovery from the pandemic and limited digital strategy. 
The company has continued to see lacklustre SSSG finish flat for last year but has recently opined a more optimistic outlook for 2023, planning to open 10-15 new stores.

Ace Hardware Indonesia (ACES IJ) trades on 13.7x FY2023E PER and 12.7x FY2024E PER when it used to trade on twice that multiple with not dissimilar growth rates.


Ace Hardware Indonesia (ACES IJ) - Will Expansion Mode Be Enough?

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<li>
<a href="https://www.smartkarma.com/entities/arwana-citramulia-tbk-pt" target="_blank" data-smartkarma-citation="entities:17042:1" rel="noopener">Arwana Citramulia</a>'s latest 1H2022 numbers unline its prowess in navigating a difficult operating environment with growing production volumes and better margins as it continues to improve its product mix.</li>
<li>An ongoing shift to its higher-end products through line conversion to Digi Uno plus additional capacity for its ARNA porcelain tiles will underpin growth and pricing this year and next.</li>
<li>
<a href="https://www.smartkarma.com/entities/arwana-citramulia-tbk-pt" target="_blank" data-smartkarma-citation="entities:17042:1" rel="noopener">Arwana Citramulia</a> continues to expand its distribution through <a href="https://www.smartkarma.com/entities/catur-sentosa-adiprana-tbk" target="_blank" data-smartkarma-citation="entities:18671:1" rel="noopener">Catur Sentosa</a> and now through MITRA10, which now sells ARNA tiles. Valuations are attractive and analyst forecasts look shy of the mark.</li>
</ul>



Arwana Citramulia's latest 1H2022 numbers unline its prowess in navigating a difficult operating environment with growing production volumes and better margins as it continues to improve its product mix.
An ongoing shift to its higher-end products through line conversion to Digi Uno plus additional capacity for its ARNA porcelain tiles will underpin growth and pricing this year and next.

Arwana Citramulia continues to expand its distribution through Catur Sentosa and now through MITRA10, which now sells ARNA tiles. Valuations are attractive and analyst forecasts look shy of the mark.


Arwana Citramulia (ARNA IJ) - Polished Porcelain Performance

<ul>
<li>
<a href="https://www.smartkarma.com/entities/arwana-citramulia-tbk-pt" target="_blank" data-smartkarma-citation="entities:17042:1" rel="noopener">Arwana Citramulia (ARNA IJ)</a> released a strong set of 1Q2022 surpassing expectations and paving the way for strong growth in 2022 driven by an improving product mix.</li>
<li>ASPs for <a href="https://www.smartkarma.com/entities/arwana-citramulia-tbk-pt" target="_blank" data-smartkarma-citation="entities:17042:1" rel="noopener">Arwana</a> are increasing through changing product mix, which is improving margins but not suppressing demand with a move to higher-end Digi Uno and ARNA products. </li>
<li>A webinar with management confirmed the positive outlook for 2022, with an estimate of +30% bottom-line growth forecast from increased volumes, greater efficiencies, and higher ASPs through improved product mix.</li>
</ul>



Arwana Citramulia (ARNA IJ) released a strong set of 1Q2022 surpassing expectations and paving the way for strong growth in 2022 driven by an improving product mix.
ASPs for Arwana are increasing through changing product mix, which is improving margins but not suppressing demand with a move to higher-end Digi Uno and ARNA products. 
A webinar with management confirmed the positive outlook for 2022, with an estimate of +30% bottom-line growth forecast from increased volumes, greater efficiencies, and higher ASPs through improved product mix.


Arwana Citramulia (ARNA IJ) A Finely Glazed Future

<a href="https://www.smartkarma.com/entities/arwana-citramulia-tbk-pt" target="_blank" data-smartkarma-citation="entities:17042:1" rel="noopener">Arwana Citramulia (ARNA IJ),</a> Indonesia's largest and most efficient ceramic tile manufacturer, continues to go from strength to strength in FY2020, after a short lull in 2Q2020, benefiting from the lowering on the gas price in April 2020, together with continuing improvements in its product mix and cost structure. A conversation with management further unpinned our positive view on the company.
The next significant move by the company will be its move into the higher-end glazed porcelain tile market versus its current lower end ceramic red-bodied tiles. Here it will compete head-on with Chinese imports but management is confident that <a href="https://www.smartkarma.com/entities/arwana-citramulia-tbk-pt" target="_blank" data-smartkarma-citation="entities:17042:1" rel="noopener">Arwana Citramulia (ARNA IJ)</a> produces a better quality product, with a significant advantage on lead times, and providing much more attractive working capital terms to its customers. 
<a href="https://www.smartkarma.com/entities/arwana-citramulia-tbk-pt" target="_blank" data-smartkarma-citation="entities:17042:1" rel="noopener">Arwana Citramulia (ARNA IJ)</a> operated at 103% capacity utilization last year and plans to grow volumes by +10% in 2021, as well as improving its product mix further towards its Uno Digi brands, as well as its newer high-end offering, which should mean higher ASPs. 
Management sees further potential improvements in efficiencies in 2021, with even lower rejection rates in the production process and lower gas usage, which should help to drive better margins, along with the full-year impact on a lower gas price. 
<div class="content-highlight">
<a href="https://www.smartkarma.com/entities/arwana-citramulia-tbk-pt" target="_blank" data-smartkarma-citation="entities:17042:1" rel="noopener">Arwana Citramulia (ARNA IJ)</a> trades on 12.3x FY21E PER and 10.6x FY21E PER, compared to its 3-year average forward PER of 15.4x. We see the company as one of the best-managed industrials in Indonesia and this move into the higher-end tile market has the potential to drive the next leg of growth. 
</div>

Arwana Citramulia (ARNA IJ), Indonesia's largest and most efficient ceramic tile manufacturer, continues to go from strength to strength in FY2020, after a short lull in 2Q2020, benefiting from the lowering on the gas price in April 2020, together with continuing improvements in its product mix and cost structure. A conversation with management further unpinned our positive view on the company.
The next significant move by the company will be its move into the higher-end glazed porcelain tile market versus its current lower end ceramic red-bodied tiles. Here it will compete head-on with Chinese imports but management is confident that Arwana Citramulia (ARNA IJ) produces a better quality product, with a significant advantage on lead times, and providing much more attractive working capital terms to its customers. 
Arwana Citramulia (ARNA IJ) operated at 103% capacity utilization last year and plans to grow volumes by +10% in 2021, as well as improving its product mix further towards its Uno Digi brands, as well as its newer high-end offering, which should mean higher ASPs. 
Management sees further potential improvements in efficiencies in 2021, with even lower rejection rates in the production process and lower gas usage, which should help to drive better margins, along with the full-year impact on a lower gas price. 

Arwana Citramulia (ARNA IJ) trades on 12.3x FY21E PER and 10.6x FY21E PER, compared to its 3-year average forward PER of 15.4x. We see the company as one of the best-managed industrials in Indonesia and this move into the higher-end tile market has the potential to drive the next leg of growth. 


Arwana Citramulia (ARNA IJ) - Garuda Versus Dragon

Indonesia's most efficient tile manufacturer, <a href="https://www.smartkarma.com/entities/arwana-citramulia-tbk-pt" target="_blank" data-smartkarma-citation="entities:17042:1" rel="noopener">Arwana Citramulia (ARNA IJ)</a> has a habit of showing its true quality in times of trouble and this time is no different.  A conversation with management revealed that the company continues to improve its product mix and operate at high utilisation levels, with 2Q2020 likely to remain above 85%, despite COVID-19. 
The company published strong 1Q2020 numbers, with sales up 18% and net margins significantly above last year on better product mix, with its higher-end Digi UNO tiles now around 60% of production. 
The company has adjusted its expectations for sales this year and expects a decline but remains confident it can achieve profits at the same level. 
The real game-changer for the company is the reduction in the gas price to US$6/mmbtu which came into force at the start of April. This will reduce costs and boost margins significantly and is not yet reflected in the share price. 
There will be some negative drag from the weaker currency on costs of imported materials but this should not be overly burdensome given the reduced gas price. 
<div class="content-highlight">
<a href="https://www.smartkarma.com/entities/arwana-citramulia-tbk-pt" target="_blank" data-smartkarma-citation="entities:17042:1" rel="noopener">Arwana Citramulia (ARNA IJ)</a> continues to demonstrate its resilience in the face of a renewed challenge from COVID-19 and should come out all the stronger, given the potential fallout for some of the competition. Management expects flat earnings this year but we expect a sharp rebound in FY21E and FY22E. This is a high-quality small-cap industrial with positive catalysts ahead, most notably the cut in the gas price, which happened 1st April but will drive higher margins going forward. 
</div>

Indonesia's most efficient tile manufacturer, Arwana Citramulia (ARNA IJ) has a habit of showing its true quality in times of trouble and this time is no different.  A conversation with management revealed that the company continues to improve its product mix and operate at high utilisation levels, with 2Q2020 likely to remain above 85%, despite COVID-19. 
The company published strong 1Q2020 numbers, with sales up 18% and net margins significantly above last year on better product mix, with its higher-end Digi UNO tiles now around 60% of production. 
The company has adjusted its expectations for sales this year and expects a decline but remains confident it can achieve profits at the same level. 
The real game-changer for the company is the reduction in the gas price to US$6/mmbtu which came into force at the start of April. This will reduce costs and boost margins significantly and is not yet reflected in the share price. 
There will be some negative drag from the weaker currency on costs of imported materials but this should not be overly burdensome given the reduced gas price. 

Arwana Citramulia (ARNA IJ) continues to demonstrate its resilience in the face of a renewed challenge from COVID-19 and should come out all the stronger, given the potential fallout for some of the competition. Management expects flat earnings this year but we expect a sharp rebound in FY21E and FY22E. This is a high-quality small-cap industrial with positive catalysts ahead, most notably the cut in the gas price, which happened 1st April but will drive higher margins going forward. 


Arwana Citramulia (ARNA IJ) - Jumping Jack Flash

Indonesia

PT Catur Sentosa Adiprana Tbk is an Indonesia-based holding company that engages in the distribution and retail of industrial goods, specializing in building materials, chemicals, and consumer goods. The company operates retail stores under the Mitra10 and Atria brands. It was founded in 1966 and is headquartered in Jakarta, Indonesia.

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Catur Sentosa Adiprana (CSAP IJ)

Ace Hardware Indonesia (ACES IJ) - Will Expansion Mode Be Enough?

Ace Hardware Indonesia trades on 13.7x FY23E PER and 12.7x FY24E PER when it used to trade on twice that multiple with not dissimilar growth rates,...

Angus Mackintosh

Arwana Citramulia (ARNA IJ) - Polished Porcelain Performance

Arwana's latest 1H2022 numbers underline its skill in navigating a difficult operating environment with growing production volumes and better...

Angus Mackintosh

Arwana Citramulia (ARNA IJ) A Finely Glazed Future

Arwana has confirmed a positive outlook for 2022, with an estimate of +30% bottom-line growth from increased volumes, greater efficiencies, and...

Angus Mackintosh

Arwana Citramulia (ARNA IJ) - Garuda Versus Dragon

Arwana Citramulia, Indonesia's largest and most efficient ceramic tile manufacturer, continued to go from strength to strength in FY2020 and looks...

Angus Mackintosh

Arwana Citramulia (ARNA IJ) - Jumping Jack Flash

Indonesia's most efficient tile manufacturer, Arwana Citramulia (ARNA IJ) has a habit of showing its true quality in times of trouble and this time...

Angus Mackintosh

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