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

<p><a href="https://www.smartkarma.com/entities/link-net-tbk-pt" target="_blank" data-smartkarma-citation="entities:1050:1" rel="noopener">Link Net (LINK IJ)</a> released its IH2021 results with revenue growth of +11.7% YoY and with EBITDA growth of +17.1% YoY.  Revenue in 2Q2021 saw an increase of +11.9% YoY, whilst EBITDA  increased +13.3% YoY.</p>
<p>The company's Average Revenue Per User (ARPU) remained stable at IDR351,000 per subscriber per month.</p>
<p>The enterprise business continued its recovery, with +26% YoY growth in 2Q2021, with ongoing success in targeting those customers least affected by the pandemic.</p>
<p>At end of 3Q2021, the company's total network reached 2.8m home passes and <a href="https://www.smartkarma.com/entities/link-net-tbk-pt" target="_blank" data-smartkarma-citation="entities:1050:1" rel="noopener">Link Net (LINK IJ)</a> added a total of 21,000 new net subscribers for 9M2021 but 2Q and 3Q were low, partially due to higher churn.</p>
<p><a href="https://www.smartkarma.com/entities/link-net-tbk-pt" target="_blank" data-smartkarma-citation="entities:1050:1" rel="noopener">Link Net (LINK IJ)</a> had, as of the end of September, completed close to 50% of its pole migration project and is on target to be finished by May 2022.</p>
<p><a href="https://www.smartkarma.com/entities/xl-axiata-tbk-pt" target="_blank" data-smartkarma-citation="entities:15028:1" rel="noopener">XL Axiata (EXCL IJ)</a> continues its discussions to acquire a controlling stake in <a href="https://www.smartkarma.com/entities/link-net-tbk-pt" target="_blank" data-smartkarma-citation="entities:1050:1" rel="noopener">Link Net (LINK IJ),</a> with the potential sellers being CVC and <a href="https://www.smartkarma.com/entities/first-media-tbk-pt" target="_blank" data-smartkarma-citation="entities:11826:1" rel="noopener">First Media (KBLV IJ)</a> (Lippo Group) but the parties have yet to agree on a price.</p>
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<p><a href="https://www.smartkarma.com/entities/link-net-tbk-pt" target="_blank" data-smartkarma-citation="entities:1050:1" rel="noopener">Link Net (LINK IJ)</a> remains attractive as a proxy for the low penetration rates for high-speed fixed broadband and its position as the best quality provider in terms of network quality and its content offering. Valuations look attractive with the company trading at a significant discount to regional peers.</p>
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Link Net (LINK IJ) released its IH2021 results with revenue growth of +11.7% YoY and with EBITDA growth of +17.1% YoY.  Revenue in 2Q2021 saw an increase of +11.9% YoY, whilst EBITDA  increased +13.3% YoY.
The company's Average Revenue Per User (ARPU) remained stable at IDR351,000 per subscriber per month.
The enterprise business continued its recovery, with +26% YoY growth in 2Q2021, with ongoing success in targeting those customers least affected by the pandemic.
At end of 3Q2021, the company's total network reached 2.8m home passes and Link Net (LINK IJ) added a total of 21,000 new net subscribers for 9M2021 but 2Q and 3Q were low, partially due to higher churn.
Link Net (LINK IJ) had, as of the end of September, completed close to 50% of its pole migration project and is on target to be finished by May 2022.
XL Axiata (EXCL IJ) continues its discussions to acquire a controlling stake in Link Net (LINK IJ), with the potential sellers being CVC and First Media (KBLV IJ) (Lippo Group) but the parties have yet to agree on a price.

Link Net (LINK IJ) remains attractive as a proxy for the low penetration rates for high-speed fixed broadband and its position as the best quality provider in terms of network quality and its content offering. Valuations look attractive with the company trading at a significant discount to regional peers.


Link Net (LINK IJ) - Profitability Intact but Shy on Subscribers

XLSMART Telecom Sejahtera / Equity Bottom-Up

<section class="figure"><p><a href="https://www.smartkarma.com/entities/xl-axiata-tbk-pt" target="_blank" data-smartkarma-citation="entities:15028:1" rel="noopener">XL Axiata (EXCL IJ)</a> announced a strong set of 1H2021 numbers with especially positive results in 2Q2021, with revenue +8% QoQ, due to a vibrant Lebaran period and an improving pricing environment. EBITDA in 2Q2021 also improved QoQ, with EBITDA margins above 50% in 2Q2021. Net profit saw an even more solid +23% QoQ rise in 2Q2021.</p>
<p>94% of service revenues came from data in 1H2021, with smartphone penetration across its subscriber base of 91%, the highest in the industry in Indonesia. </p>
<p>Data revenue in 2Q2021 grew by high-single digits QoQ reflecting a better pricing environment, continuing work and school from home, and a recovery in the underlying economy.</p>
<section class="figure"><figure class="editor-figure mceNonEditable"></figure></section><p><a href="https://www.smartkarma.com/entities/xl-axiata-tbk-pt" target="_blank" data-smartkarma-citation="entities:15028:1" rel="noopener">XL Axiata (EXCL IJ)</a> sees increasing demand for fixed broadband services and has confirmed that it will look to take a controlling stake in <a href="https://www.smartkarma.com/entities/link-net-tbk-pt" target="_blank" data-smartkarma-citation="entities:1050:1" rel="noopener">Link Net (LINK IJ)</a>, which will provide it with an additional nationwide fiberoptic network to grow its convergence business and for the expansion of its 5G network. </p>
<p>The company has already started to offer a fully-converged service through Satu Fibre, offering mobile and fixed broadband in one package. It already has nearly 600,000 homes passed and is generating strong ARPUs from these customers.</p>
<p><a href="https://www.smartkarma.com/entities/xl-axiata-tbk-pt" target="_blank" data-smartkarma-citation="entities:15028:1" rel="noopener">XL Axiata (EXCL IJ)</a> remains our top pick amongst the Indonesian telcos for its leading and most focused exposure to data. It is also ahead of its peers in offering truly converged services.</p>
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XL Axiata (EXCL IJ) announced a strong set of 1H2021 numbers with especially positive results in 2Q2021, with revenue +8% QoQ, due to a vibrant Lebaran period and an improving pricing environment. EBITDA in 2Q2021 also improved QoQ, with EBITDA margins above 50% in 2Q2021. Net profit saw an even more solid +23% QoQ rise in 2Q2021.
94% of service revenues came from data in 1H2021, with smartphone penetration across its subscriber base of 91%, the highest in the industry in Indonesia. 
Data revenue in 2Q2021 grew by high-single digits QoQ reflecting a better pricing environment, continuing work and school from home, and a recovery in the underlying economy.
XL Axiata (EXCL IJ) sees increasing demand for fixed broadband services and has confirmed that it will look to take a controlling stake in Link Net (LINK IJ), which will provide it with an additional nationwide fiberoptic network to grow its convergence business and for the expansion of its 5G network. 
The company has already started to offer a fully-converged service through Satu Fibre, offering mobile and fixed broadband in one package. It already has nearly 600,000 homes passed and is generating strong ARPUs from these customers.
XL Axiata (EXCL IJ) remains our top pick amongst the Indonesian telcos for its leading and most focused exposure to data. It is also ahead of its peers in offering truly converged services.




Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Index Rebalance

<p>The LQ45 Index is a market cap weighted index of the 45 most liquid stocks listed on the Indonesia Stock Exchange (IDX). The LQ45 Index covers at least 70% of the stock market capitalization and transaction values in the Indonesia Stock Market.</p><p>The IDX has announced the changes to the LQ45 Index as a part of the August review. <a href="https://www.smartkarma.com/entities/barito-pacific-tbk-pt" target="_blank" data-smartkarma-citation="entities:8851:1" rel="noopener">Barito Pacific (BRPT IJ)</a> and <a href="https://www.smartkarma.com/entities/timah-persero-tbk-pt" target="_blank" data-smartkarma-citation="entities:11174:1" rel="noopener">Timah Persero (TINS IJ)</a> have been added to the index while <a href="https://www.smartkarma.com/entities/bank-tabungan-pensiunan-nasi" target="_blank" data-smartkarma-citation="entities:27088:1" rel="noopener">Bank BTPN Syariah (BTPS IJ)</a> and <a href="https://www.smartkarma.com/entities/ciputra-development-tbk-pt" target="_blank" data-smartkarma-citation="entities:5513:1" rel="noopener">Ciputra Development (CTRA IJ)</a> have been deleted from the index.</p><p>We expect the impact of passive funds (and active funds) will be quite high on <a href="https://www.smartkarma.com/entities/barito-pacific-tbk-pt" target="_blank" data-smartkarma-citation="entities:8851:1" rel="noopener">Barito Pacific (BRPT IJ)</a>, <a href="https://www.smartkarma.com/entities/bit-digital-inc" target="_blank" data-smartkarma-citation="entities:31155:1" rel="noopener">Bit Digital (BTBT US)</a> and <a href="https://www.smartkarma.com/entities/ciputra-development-tbk-pt" target="_blank" data-smartkarma-citation="entities:5513:1" rel="noopener">Ciputra Development (CTRA IJ)</a> and significantly lower on <a href="https://www.smartkarma.com/entities/timah-persero-tbk-pt" target="_blank" data-smartkarma-citation="entities:11174:1" rel="noopener">Timah Persero (TINS IJ)</a>.</p><p>The changes are effective after the close of trading on 30 July, so there are only 4 trading days before passive funds have to rebalance their portfolios. Active funds benchmarked to the LQ45 index will also trade over the next few days so as not to deviate too far from their benchmark.</p>

The LQ45 Index is a market cap weighted index of the 45 most liquid stocks listed on the Indonesia Stock Exchange (IDX). The LQ45 Index covers at least 70% of the stock market capitalization and transaction values in the Indonesia Stock Market.The IDX has announced the changes to the LQ45 Index as a part of the August review. Barito Pacific (BRPT IJ) and Timah Persero (TINS IJ) have been added to the index while Bank BTPN Syariah (BTPS IJ) and Ciputra Development (CTRA IJ) have been deleted from the index.We expect the impact of passive funds (and active funds) will be quite high on Barito Pacific (BRPT IJ), Bit Digital (BTBT US) and Ciputra Development (CTRA IJ) and significantly lower on Timah Persero (TINS IJ).The changes are effective after the close of trading on 30 July, so there are only 4 trading days before passive funds have to rebalance their portfolios. Active funds benchmarked to the LQ45 index will also trade over the next few days so as not to deviate too far from their benchmark.

LQ45 Index Rebalance: BRPT, TINS In; BTPS, CTRA Out

Asian Insight Provider - Actionable ideas, CrossASEAN Research

Henry Soediarko

Asian Insight Provider - Actionable ideas

<p>If the US equity markets have <strong>stay-home</strong> names such as <a href="https://www.smartkarma.com/entities/peloton-interactive-inc" target="_blank" data-smartkarma-citation="entities:28014:1" rel="noopener">Peloton Interactive (PTON US)</a> and <a href="https://www.smartkarma.com/entities/zoom-technologies-inc" target="_blank" data-smartkarma-citation="entities:28002:1" rel="noopener">Zoom Technologies Inc (ZOOM US)</a> , Indonesia has <a href="https://www.smartkarma.com/entities/erajaya-swasembada-tbk-pt" target="_blank" data-smartkarma-citation="entities:18869:1" rel="noopener">Erajaya Swasembada (ERAA IJ)</a> as one of the stay home names besides the private internet behemoth 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> and <a href="https://www.smartkarma.com/entities/gojek" target="_blank" data-smartkarma-citation="entities:25976:1" rel="noopener">Gojek (1379371D IJ)</a> . </p>
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/216/533/original/image_71646866821625224195978.png?1625224195" class="editor-image img-responsive" data-smartkarma-image-id="216533"></figure>
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<p>source: Reuters</p>
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<p>The outperformance was apparent although, during this time, 300 stores were closed during the earlier lockdown (PSBB).  Erajaya has established various methods during the previous lockdown that will bring the in-store experience to the customers' homes, keeping the potential for upselling of higher-margin accessories products. </p>

If the US equity markets have stay-home names such as Peloton Interactive (PTON US) and Zoom Technologies Inc (ZOOM US) , Indonesia has Erajaya Swasembada (ERAA IJ) as one of the stay home names besides the private internet behemoth such as Tokopedia PT (1087142D IJ) and Gojek (1379371D IJ) . 


source: Reuters

The outperformance was apparent although, during this time, 300 stores were closed during the earlier lockdown (PSBB).  Erajaya has established various methods during the previous lockdown that will bring the in-store experience to the customers' homes, keeping the potential for upselling of higher-margin accessories products. 

Erajaya (ERAA): In-Store Experience to Your Home

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<p><a href="https://www.smartkarma.com/entities/telekomunikasi-indonesia" target="_blank" data-smartkarma-citation="entities:1051:1" rel="noopener">Telekomunikasi Indonesia (TLKM IJ)</a> announced its results this week, which on the face of it do not look exciting, with revenues declining -0.7% YoY, EBITDA up by +0.5%, and net income up by +2.6%.</p>
<p>Beneath these headline numbers, there is a more compelling story, with Indihome seeing +25% YoY revenue growth driven by increasing subscribers and higher ARPU. Data traffic seeing +59.7% YoY growth 1Q2021, with the digital business now accounting for 76.9% of revenues in 1Q2021. </p>
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<p>The legacy SMS, fixed, and cellular voice declined by -25.4% to IDR5.3tn due to the cannibalisation from OTT applications such as Whatsapp. </p>
<p>The mobile segment in Indonesia remains competitive with the major players continuing to offer unlimited plans and other promotional plans but Telkom still realised data revenue growth of +0.4% YoY whilst digital services grew by +22.6% YoY, as the company added new services.</p>
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<section class="figure">After <a href="https://www.smartkarma.com/entities/telekomunikasi-indonesia" target="_blank" data-smartkarma-citation="entities:1051:1" rel="noopener">Telekomunikasi Indonesia (TLKM IJ)</a>'s investment in <a href="https://www.smartkarma.com/entities/gojek" target="_blank" data-smartkarma-citation="entities:25976:1" rel="noopener">Gojek</a>, the two companies have been integrating various aspects of their services to provide users with new benefits, as well as helping MSMEs to digitalise their businesses.</section>
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<section class="figure"><a href="https://www.smartkarma.com/entities/telekomunikasi-indonesia" target="_blank" data-smartkarma-citation="entities:1051:1" rel="noopener">Telekomunikasi Indonesia (TLKM IJ)</a> continues to augment the network reach and quality by increasing the number of BTS towers.</section>
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<section class="figure"> The wholesale and international business is supported by the tower and data centre business, with the potential for further growth from the rollout of 5G technology.</section>
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<p><a href="https://www.smartkarma.com/entities/telekomunikasi-indonesia" target="_blank" data-smartkarma-citation="entities:1051:1" rel="noopener">Telekomunikasi Indonesia (TLKM IJ)</a> remains a core proxy to Indonesia's digital economy and its growing appetite for data and broadband services. The company trades on 5.6x FY2021E EV/EBITDA and 4.8x FY22E EV/EBITDA versus the 5-year average of 6.2x forward EV/EBITDA, which makes it attractive even without any digital re-rating.</p>
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Telekomunikasi Indonesia (TLKM IJ) announced its results this week, which on the face of it do not look exciting, with revenues declining -0.7% YoY, EBITDA up by +0.5%, and net income up by +2.6%.
Beneath these headline numbers, there is a more compelling story, with Indihome seeing +25% YoY revenue growth driven by increasing subscribers and higher ARPU. Data traffic seeing +59.7% YoY growth 1Q2021, with the digital business now accounting for 76.9% of revenues in 1Q2021. 

The legacy SMS, fixed, and cellular voice declined by -25.4% to IDR5.3tn due to the cannibalisation from OTT applications such as Whatsapp. 
The mobile segment in Indonesia remains competitive with the major players continuing to offer unlimited plans and other promotional plans but Telkom still realised data revenue growth of +0.4% YoY whilst digital services grew by +22.6% YoY, as the company added new services.


After Telekomunikasi Indonesia (TLKM IJ)'s investment in Gojek, the two companies have been integrating various aspects of their services to provide users with new benefits, as well as helping MSMEs to digitalise their businesses.




Telekomunikasi Indonesia (TLKM IJ) continues to augment the network reach and quality by increasing the number of BTS towers.




 The wholesale and international business is supported by the tower and data centre business, with the potential for further growth from the rollout of 5G technology.





Telekomunikasi Indonesia (TLKM IJ) remains a core proxy to Indonesia's digital economy and its growing appetite for data and broadband services. The company trades on 5.6x FY2021E EV/EBITDA and 4.8x FY22E EV/EBITDA versus the 5-year average of 6.2x forward EV/EBITDA, which makes it attractive even without any digital re-rating.













Telekomunikasi Indonesia (TLKM IJ) - The Trend Is Digital

Indonesia

Indosat Ooredoo Hutchison provides digital telecommunication services, including cellular, fixed telecommunications, and multimedia, data communication, and internet (MIDI) services across Indonesia. The company offers prepaid and post-paid mobile services, international and roaming services, data communication, IT services, and electronic payment and remittance services. It was founded in 1967 and is headquartered in Jakarta, Indonesia.

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Indosat Ooredoo Hutchison (ISAT IJ)

Link Net (LINK IJ) - Profitability Intact but Shy on Subscribers

Link Net (LINK IJ) remains attractive as a proxy for the low penetration rates for high-speed fixed broadband in Indonesia as the best quality...

Angus Mackintosh

XL Axiata (EXCL IJ) - The Convergent

XL Axiata remains our top pick amongst the Indonesian telcos for its leading and most focused exposure to data. It is also ahead of its peers in...

Angus Mackintosh

LQ45 Index Rebalance: BRPT, TINS In; BTPS, CTRA Out

The LQ45 rebalance will be implemented at the close on 30 July. BRPT & TINS have been included, replacing BTPS & CTRA. There is a large impact on...

Brian Freitas

Erajaya (ERAA): In-Store Experience to Your Home

If US markets have stay-home names such as Peloton and Zoom, Indonesia has Erajaya Swasembada as one of the stay-home names besides the internet...

Henry Soediarko

Telekomunikasi Indonesia (TLKM IJ) - The Trend Is Digital

Telkom Indonesia's recent 1Q2021 results reflect a competitive environment but also its growing strength in its digital business, which continues...

Angus Mackintosh

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