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

Elang Mahkota Teknologi / Equity Bottom-Up

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After the failed attempt to merge with <a href="https://www.smartkarma.com/entities/gojek" target="_blank" data-smartkarma-citation="entities:25976:1" rel="noopener">Gojek</a> and the decision to take the SPAC route to market in the US, <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> has now reportedly taken a 4% stake in local digital and media powerhouse, <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>. It seems unlikely that this is purely a strategic stake and points the way toward future collaboration potentially in a number of areas.
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<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> remains a very interesting locally listed alternative to play digital media, e-commerce, and digital payments under one roof, with aspirations to emulate the success of  <a href="https://www.smartkarma.com/entities/sea-ltd" target="_blank" data-smartkarma-citation="entities:8509:1" rel="noopener">Sea Ltd (SE US)</a>.<a href="https://www.smartkarma.com/entities/elang-mahkota-teknologi-tbk" target="_blank" data-smartkarma-citation="entities:7752:1" rel="noopener"></a>
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In another related and interesting turn, Bukalapak, which is Indonesia's 3rd largest e-commerce firm 35% owned by <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> has raised an undisclosed sum from BRI Ventures, the venture capital arm of <a href="https://www.smartkarma.com/entities/bank-rakyat-indonesia-persero" target="_blank" data-smartkarma-citation="entities:484:1" rel="noopener">Bank Rakyat Indonesia (BBRI IJ)</a>. 
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Bukalapak claims that it now has around 13.5m MSMEs on its platform and over 100m users on its online to offline (O20) platform. 
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> entity to be named "GoTo" will be a formidable competitor for <a href="https://www.smartkarma.com/entities/grabtaxi-holdings-pte-ltd" target="_blank" data-smartkarma-citation="entities:26950:1" rel="noopener">Grab</a>, a risk not highlighted enough in the seeming euphoria around the <a href="https://www.smartkarma.com/entities/grabtaxi-holdings-pte-ltd" target="_blank" data-smartkarma-citation="entities:26950:1" rel="noopener">Grab</a> SPAC listing.
Another significant risk to Grab comes from recently launched ShopeeFood in Indonesia, which will directly impact Grab's (and Gojek's) food delivery business in Indonesia.
From a SotP point of view for <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>, it is difficult to get much beyond a US$4bn valuation but there are those arguing that it should be valued along the same lines as <a href="https://www.smartkarma.com/entities/sea-ltd" target="_blank" data-smartkarma-citation="entities:8509:1" rel="noopener">Sea Ltd (SE US)</a>, which would suggest potential significant upside from here.
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After the failed attempt to merge with Gojek and the decision to take the SPAC route to market in the US, Grab (0967655D SP) has now reportedly taken a 4% stake in local digital and media powerhouse, Emtek (EMTK IJ). It seems unlikely that this is purely a strategic stake and points the way toward future collaboration potentially in a number of areas.

Emtek (EMTK IJ) remains a very interesting locally listed alternative to play digital media, e-commerce, and digital payments under one roof, with aspirations to emulate the success of  Sea Ltd (SE US).

In another related and interesting turn, Bukalapak, which is Indonesia's 3rd largest e-commerce firm 35% owned by Emtek (EMTK IJ) has raised an undisclosed sum from BRI Ventures, the venture capital arm of Bank Rakyat Indonesia (BBRI IJ). 

Bukalapak claims that it now has around 13.5m MSMEs on its platform and over 100m users on its online to offline (O20) platform. 
The merged Gojek (1379371D IJ) and Tokopedia PT (1087142D IJ) entity to be named "GoTo" will be a formidable competitor for Grab, a risk not highlighted enough in the seeming euphoria around the Grab SPAC listing.
Another significant risk to Grab comes from recently launched ShopeeFood in Indonesia, which will directly impact Grab's (and Gojek's) food delivery business in Indonesia.
From a SotP point of view for Emtek (EMTK IJ), it is difficult to get much beyond a US$4bn valuation but there are those arguing that it should be valued along the same lines as Sea Ltd (SE US), which would suggest potential significant upside from here.









Emtek (EMTK IJ) - The Indonesian Digital Game of Thrones

<a href="https://www.smartkarma.com/entities/surya-citra-media-pt-tbk" target="_blank" data-smartkarma-citation="entities:14739:1" rel="noopener">PT Surya Citra Media Tbk (SCMA IJ)</a> released results last week, which were striking in how well the company coped with months of not being able to produce new content due to COVID-19 restrictions. This year should see a recovery in its FTA TV advertising revenues but an increasingly positive impact from its digital business.
The company managed to maintain its number 1 &amp; 2  position in terms of audience share in 2020, despite playing re-runs, demonstrating the strength of its drama content.
Competitor <a href="https://www.smartkarma.com/entities/media-nusantara-citra-tbk-pt" target="_blank" data-smartkarma-citation="entities:6881:1" rel="noopener">Media Nusantara Citra (MNCN IJ)</a> surged ahead with the success of its drama series Iketan Cinta, which dented <a href="https://www.smartkarma.com/entities/surya-citra-media-pt-tbk" target="_blank" data-smartkarma-citation="entities:14739:1" rel="noopener">PT Surya Citra Media Tbk (SCMA IJ)</a> year-end rankings but it has started to regain share in 1Q2021. 
<a href="https://www.smartkarma.com/entities/surya-citra-media-pt-tbk" target="_blank" data-smartkarma-citation="entities:14739:1" rel="noopener">PT Surya Citra Media Tbk (SCMA IJ</a> plans to produce 300 hours of high-quality drama content in 2021 versus 110 hours in 2020, which should help to secure audience share along with more sponsored events such as concerts. 
Vidio.com continues to gain ground in terms of paying subscribers and already ranks as the number three player in terms of paying subs in Indonesia. 
The company is ahead of the curve in terms of progress in the move from analog to digital, with parallel broadcasts already being trialed.
<a href="https://www.smartkarma.com/entities/surya-citra-media-pt-tbk" target="_blank" data-smartkarma-citation="entities:14739:1" rel="noopener">PT Surya Citra Media Tbk (SCMA IJ)</a> trades on 19.0x FY21E and 15.7x FY22E PER, versus its 5-year average of 18.6x forward PER, making it look relatively attractive.

PT Surya Citra Media Tbk (SCMA IJ) released results last week, which were striking in how well the company coped with months of not being able to produce new content due to COVID-19 restrictions. This year should see a recovery in its FTA TV advertising revenues but an increasingly positive impact from its digital business.
The company managed to maintain its number 1 &amp; 2  position in terms of audience share in 2020, despite playing re-runs, demonstrating the strength of its drama content.
Competitor Media Nusantara Citra (MNCN IJ) surged ahead with the success of its drama series Iketan Cinta, which dented PT Surya Citra Media Tbk (SCMA IJ) year-end rankings but it has started to regain share in 1Q2021. 
PT Surya Citra Media Tbk (SCMA IJ plans to produce 300 hours of high-quality drama content in 2021 versus 110 hours in 2020, which should help to secure audience share along with more sponsored events such as concerts. 
Vidio.com continues to gain ground in terms of paying subscribers and already ranks as the number three player in terms of paying subs in Indonesia. 
The company is ahead of the curve in terms of progress in the move from analog to digital, with parallel broadcasts already being trialed.
PT Surya Citra Media Tbk (SCMA IJ) trades on 19.0x FY21E and 15.7x FY22E PER, versus its 5-year average of 18.6x forward PER, making it look relatively attractive.

PT Surya Citra Media Tbk (SCMA IJ) - From Analog to Digital

<a href="https://www.smartkarma.com/entities/mnc-vision-networks-tbk-pt" target="_blank" data-smartkarma-citation="entities:28658:1" rel="noopener">MNC Vision Networks (IPTV IJ)</a>'s subsidiary, PT Asia Vision Network (AVN), just announced that it will merge with Malacca Straits Acquisition Company Limited (NASDAQ: MLAC), a NASDAQ listed SPAC. This would be the first Indonesian company to undertake a SPAC listing in the U.S.
With the merger, the company's valuation is estimated to reach USD573m, with the transaction expected to be completed by the end of 2Q2021 or early  3Q2021. The transaction is also expected to bring around USD135m in fresh funds to the company, assuming there's no adjustment to the purchase price. 
PT Asia Vision Network (AVN) is Indonesia’s fastest-growing Over-The-Top (OTT) media business and is the holding company of Vision+, the 3rd largest broadband, and IPTV operator in Indonesia.
<a href="https://www.smartkarma.com/entities/malacca-straits-acquisition-company-limited" target="_blank" data-smartkarma-citation="entities:32226:1" rel="noopener">Malacca Straits Acquisition Company (MLAC US)</a> is a publicly-traded special-purpose acquisition company, owned by Kenneth Ng, who has a fund management background. 
President Director of <a href="https://www.smartkarma.com/entities/global-mediacom-tbk-pt" target="_blank" data-smartkarma-citation="entities:14005:1" rel="noopener">Global Mediacom (BMTR IJ)</a>, Hary Tanoesoedibjo, the major shareholder of <a href="https://www.smartkarma.com/entities/mnc-vision-networks-tbk-pt" target="_blank" data-smartkarma-citation="entities:28658:1" rel="noopener">MNC Vision Networks (IPTV IJ)</a> stated that the merger would not only help increase the company's cash flow but also strengthen the company's position as one of the leaders in the Indonesian OTT market. 
A successful SPAC listing for Asia Vision Networks (AVN) has the potential to crystalize some of the hidden value from its underlying businesses through a NASDAQ listing and hence provide a reference valuation for <a href="https://www.smartkarma.com/entities/mnc-vision-networks-tbk-pt" target="_blank" data-smartkarma-citation="entities:28658:1" rel="noopener">MNC Vision Networks (IPTV IJ),</a> as it remains the major shareholder even after the proposed SPAC listing is complete.
The belief is that AVN's growth potential will be more appreciated by US investors, especially since that market has a more developed IPTV and broadband ecosystem. Penetration rates for both Pay-TV and high-speed broadband are still very low in Indonesia relative to other ASEAN countries, underpinning future growth prospects.

MNC Vision Networks (IPTV IJ)'s subsidiary, PT Asia Vision Network (AVN), just announced that it will merge with Malacca Straits Acquisition Company Limited (NASDAQ: MLAC), a NASDAQ listed SPAC. This would be the first Indonesian company to undertake a SPAC listing in the U.S.
With the merger, the company's valuation is estimated to reach USD573m, with the transaction expected to be completed by the end of 2Q2021 or early  3Q2021. The transaction is also expected to bring around USD135m in fresh funds to the company, assuming there's no adjustment to the purchase price. 
PT Asia Vision Network (AVN) is Indonesia’s fastest-growing Over-The-Top (OTT) media business and is the holding company of Vision+, the 3rd largest broadband, and IPTV operator in Indonesia.
Malacca Straits Acquisition Company (MLAC US) is a publicly-traded special-purpose acquisition company, owned by Kenneth Ng, who has a fund management background. 
President Director of Global Mediacom (BMTR IJ), Hary Tanoesoedibjo, the major shareholder of MNC Vision Networks (IPTV IJ) stated that the merger would not only help increase the company's cash flow but also strengthen the company's position as one of the leaders in the Indonesian OTT market. 
A successful SPAC listing for Asia Vision Networks (AVN) has the potential to crystalize some of the hidden value from its underlying businesses through a NASDAQ listing and hence provide a reference valuation for MNC Vision Networks (IPTV IJ), as it remains the major shareholder even after the proposed SPAC listing is complete.
The belief is that AVN's growth potential will be more appreciated by US investors, especially since that market has a more developed IPTV and broadband ecosystem. Penetration rates for both Pay-TV and high-speed broadband are still very low in Indonesia relative to other ASEAN countries, underpinning future growth prospects. 

MNC Vision Networks (IPTV IJ) - SPAC Listing to Realize Value

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.
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.
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.
<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.
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.

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?

A call for an update with <a href="https://www.smartkarma.com/entities/surya-citra-media-pt-tbk" target="_blank" data-smartkarma-citation="entities:14739:1" rel="noopener">PT Surya Citra Media Tbk (SCMA IJ)</a> revealed a positive outlook for 2021, with a keen focus on regaining some audience share from <a href="https://www.smartkarma.com/entities/media-nusantara-citra-tbk-pt" target="_blank" data-smartkarma-citation="entities:6881:1" rel="noopener">Media Nusantara Citra (MNCN IJ)</a>.
<a href="https://www.smartkarma.com/entities/media-nusantara-citra-tbk-pt" target="_blank" data-smartkarma-citation="entities:6881:1" rel="noopener">Media Nusantara Citra (MNCN IJ)</a> has had massive success with its drama series Iketan Cinta and talent shows such as Indonesian Idol, sometimes controlling over 50% audience share.
<a href="https://www.smartkarma.com/entities/surya-citra-media-pt-tbk" target="_blank" data-smartkarma-citation="entities:14739:1" rel="noopener">PT Surya Citra Media Tbk (SCMA IJ</a> launched two new drama shows in January, which have helped to push up SCTV's ratings points into the mid-teens in Janaury.
Demand for TV advertising remains impacted by COVID-19 with e-commerce, consumer health, and obviously FMCG driving demand in an overall soft environment. 
One positive take on <a href="https://www.smartkarma.com/entities/media-nusantara-citra-tbk-pt" target="_blank" data-smartkarma-citation="entities:6881:1" rel="noopener">Media Nusantara Citra (MNCN IJ)</a> very strong audience share is that pricing remains firm. Given its strong position, it is unlikely to be cutting prices. 
Vidio.com continues to see strong performance, with MAUs between 50m-60m and paying subscribers of 970,000. There is strong potential to convert MAUs to paying subs.

A call for an update with PT Surya Citra Media Tbk (SCMA IJ) revealed a positive outlook for 2021, with a keen focus on regaining some audience share from Media Nusantara Citra (MNCN IJ).
Media Nusantara Citra (MNCN IJ) has had massive success with its drama series Iketan Cinta and talent shows such as Indonesian Idol, sometimes controlling over 50% audience share.
PT Surya Citra Media Tbk (SCMA IJ launched two new drama shows in January, which have helped to push up SCTV's ratings points into the mid-teens in Janaury.
Demand for TV advertising remains impacted by COVID-19 with e-commerce, consumer health, and obviously FMCG driving demand in an overall soft environment. 
One positive take on Media Nusantara Citra (MNCN IJ) very strong audience share is that pricing remains firm. Given its strong position, it is unlikely to be cutting prices. 
Vidio.com continues to see strong performance, with MAUs between 50m-60m and paying subscribers of 970,000. There is strong potential to convert MAUs to paying subs.

PT Surya Citra Media Tbk (SCMA IJ) - Playing Catch Up WIth a Digital Twist

Indonesia

PT Surya Citra Media Tbk is an Indonesian media and entertainment company engaged in free-to-air television broadcasting, digital advertising, and content production. It operates national TV channels like SCTV and Indosiar, the Vidio streaming service, and other multimedia platforms, creating and distributing entertainment, news, and sports programming. The company is headquartered in Jakarta, Indonesia, and was founded on January 29, 1999.

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Surya Citra Media (SCMA IJ)

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

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PT Surya Citra Media Tbk (SCMA IJ) - Playing Catch Up WIth a Digital Twist

SCMA is one of Indonesia's two leading free-to-air TV players and also the leading OTT player in Indonesia through Vidio.com, which is becoming...

Angus Mackintosh

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