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/bank-rakyat-indonesia-persero" target="_blank" data-smartkarma-citation="entities:484:1" rel="noopener">Bank Rakyat Indonesia Persero (BBRI IJ)</a> latest numbers were interesting in that there was evidence of declining provisions, which suggests improving credit quality ahead but what was also evident was the renewed momentum behind micro and ultra-micro loans, which now make up more than 40% of total loans but it aims for 45% by 2025.</p>
<p>Microlending and MSMEs are the bank's key differentiating factor and core competency versus its peers. It a skill-set that they have not been able to replicate, despite best efforts by some in recent years.  It is increasingly the champion of financial inclusion in Indonesia.</p>
<p><a href="https://www.smartkarma.com/entities/bank-rakyat-indonesia-persero" target="_blank" data-smartkarma-citation="entities:484:1" rel="noopener">Bank Rakyat Indonesia Persero (BBRI IJ)</a> has re-affirmed its focus on driving continued digitalization as a growth driver, which is enabling the bank to continue to expand with lower costs, even in rural areas. </p>
<p>The bank continues to increase its commitment to implement ESG practices with 63.9% of the total loan portfolio classified as financing for sustainable business activities in 2020. </p>
<p><a href="https://www.smartkarma.com/entities/bank-rakyat-indonesia-persero" target="_blank" data-smartkarma-citation="entities:484:1" rel="noopener">Bank Rakyat Indonesia Persero (BBRI IJ)</a> was also the first bank in Southeast Asia to issue sustainability bonds in 2019. The sustainability bond market has become more attractive and it's projected that the ESG financing instrument will reach USD11tn in 2025. </p>
<p><a href="https://www.smartkarma.com/entities/bank-rakyat-indonesia-persero" target="_blank" data-smartkarma-citation="entities:484:1" rel="noopener">Bank Rakyat Indonesia Persero (BBRI IJ)</a> is also building digital partnerships and collaborations with P2P players, e-commerce platforms, and ride-hailing firms. </p>
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<p><a href="https://www.smartkarma.com/entities/bank-rakyat-indonesia-persero" target="_blank" data-smartkarma-citation="entities:484:1" rel="noopener">Bank Rakyat Indonesia Persero (BBRI IJ)</a> remains one of our top picks amongst the Indonesian banks, with its renewed focus on its core competency in microlending, as well as its meaningful digitalization of existing banking business as well as increasingly using digital channels to expand its reach.</p>
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Bank Rakyat Indonesia Persero (BBRI IJ) latest numbers were interesting in that there was evidence of declining provisions, which suggests improving credit quality ahead but what was also evident was the renewed momentum behind micro and ultra-micro loans, which now make up more than 40% of total loans but it aims for 45% by 2025.
Microlending and MSMEs are the bank's key differentiating factor and core competency versus its peers. It a skill-set that they have not been able to replicate, despite best efforts by some in recent years.  It is increasingly the champion of financial inclusion in Indonesia.
Bank Rakyat Indonesia Persero (BBRI IJ) has re-affirmed its focus on driving continued digitalization as a growth driver, which is enabling the bank to continue to expand with lower costs, even in rural areas. 
The bank continues to increase its commitment to implement ESG practices with 63.9% of the total loan portfolio classified as financing for sustainable business activities in 2020. 
Bank Rakyat Indonesia Persero (BBRI IJ) was also the first bank in Southeast Asia to issue sustainability bonds in 2019. The sustainability bond market has become more attractive and it's projected that the ESG financing instrument will reach USD11tn in 2025. 
Bank Rakyat Indonesia Persero (BBRI IJ) is also building digital partnerships and collaborations with P2P players, e-commerce platforms, and ride-hailing firms. 

Bank Rakyat Indonesia Persero (BBRI IJ) remains one of our top picks amongst the Indonesian banks, with its renewed focus on its core competency in microlending, as well as its meaningful digitalization of existing banking business as well as increasingly using digital channels to expand its reach.


Bank Rakyat Indonesia (BBRI IJ) - Both Micro and Digital

Asset Allocation & Fund Positioning, Copley Fund Research

Steven Holden

Asset Allocation & Fund Positioning

Copley Fund Research

Copley Fund Research provide research and data on asset allocation among Global and Emerging Market equity funds.  The analysis details absolute and relative positioning across countries, sectors and industries together with highly granular data on single stock and single fund allocations.  The data is updated monthly with time series going back to January 2011.

Global Research - Analysis of 165 prominent Global equity funds, combined AUM $335bn
GEM Research - Analysis of 127 prominent global EM equity funds, combined AUM $250bn

Asset Allocation - Global and GEM Equity

<p>Our analysis shows strong conviction towards <a href="https://www.smartkarma.com/entities/sea-ltd" target="_blank" data-smartkarma-citation="entities:8509:1" rel="noopener">Sea Ltd (SE US)</a> among the active GEM and Asia Ex-Japan managers in our analysis.  Ownership levels are increasing and a number of active managers have had the confidence to hold <a href="https://www.smartkarma.com/entities/sea-ltd" target="_blank" data-smartkarma-citation="entities:8509:1" rel="noopener">Sea Ltd (SE US)</a> as a significant out of benchmark position.  Furthermore, <a href="https://www.smartkarma.com/entities/sea-ltd" target="_blank" data-smartkarma-citation="entities:8509:1" rel="noopener">Sea Ltd (SE US)</a> was one of the more profitable positions for the GEM and Asia Ex-Japan funds that held it through 2020. </p><p>With such a rapid rise in fund ownership and a quadrupling of the share price last year, it's not unreasonable to expect a period of consolidation 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>.  For active investors this could be the time to accumulate.  Among GEM managers, 80% do not hold a position and two-thirds of Asia Ex-Japan managers are not exposed.  The risk of lost performance versus active peers and now the added risk of losing out to the benchmark for Asia Ex-Japan investors, means active investors need a good reason <strong><em>not</em></strong> to hold <a href="https://www.smartkarma.com/entities/sea-ltd" target="_blank" data-smartkarma-citation="entities:8509:1" rel="noopener">Sea Ltd (SE US)</a>.  Add in <a href="https://www.smartkarma.com/profiles/angus-mackintosh" target="_blank" data-smartkarma-citation="accounts:937" rel="noopener">Angus Mackintosh</a>'s advice to buy on weakness in his insight <a href="https://www.smartkarma.com/insights/sea-ltd-se-us-extending-the-runway-for-a-bigger-plane" target="_blank" data-smartkarma-citation="insights:48464" rel="noopener">Sea Ltd (SE US) - Extending the Runway for a Bigger Plane?</a><em>and</em> the expected inflows from the MSCI inclusion ((<a href="https://www.smartkarma.com/insights/msci-singapore-sea-change-coming-in-may-2021" target="_blank" data-smartkarma-citation="insights:45172" rel="noopener">MSCI Singapore: SEA Change Coming in May 2021)</a> ), and it's easy to see momentum continuing from here.</p><p><em>Analysis taken from our Global Emerging Market fund research, covering 242 active strategies with combined AUM of $460bn and our Asia Ex-Japan fund research, covering 97 active strategies with combined AUM of $80bn.</em></p>

Our analysis shows strong conviction towards Sea Ltd (SE US) among the active GEM and Asia Ex-Japan managers in our analysis.  Ownership levels are increasing and a number of active managers have had the confidence to hold Sea Ltd (SE US) as a significant out of benchmark position.  Furthermore, Sea Ltd (SE US) was one of the more profitable positions for the GEM and Asia Ex-Japan funds that held it through 2020. With such a rapid rise in fund ownership and a quadrupling of the share price last year, it's not unreasonable to expect a period of consolidation for Sea Ltd (SE US).  For active investors this could be the time to accumulate.  Among GEM managers, 80% do not hold a position and two-thirds of Asia Ex-Japan managers are not exposed.  The risk of lost performance versus active peers and now the added risk of losing out to the benchmark for Asia Ex-Japan investors, means active investors need a good reason not to hold Sea Ltd (SE US).  Add in Angus Mackintosh's advice to buy on weakness in his insight Sea Ltd (SE US) - Extending the Runway for a Bigger Plane?and the expected inflows from the MSCI inclusion ((MSCI Singapore: SEA Change Coming in May 2021) ), and it's easy to see momentum continuing from here.Analysis taken from our Global Emerging Market fund research, covering 242 active strategies with combined AUM of $460bn and our Asia Ex-Japan fund research, covering 97 active strategies with combined AUM of $80bn.

Sea Ltd:  Rising Momentum Among Active Investors Ahead of Index Inclusion

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Equity Capital Markets

<div><p><a href="https://www.smartkarma.com/entities/coupang" target="_blank" data-smartkarma-citation="entities:28425:1" rel="noopener">Coupang (CPNG US)</a> , the largest product e-commerce player in Korea, aims to raise around US$3bn in its US listing via a mix of selling primary and secondary shares. As per media reports, the company has earlier obtained investments from Sequoia, Softbank, Blackrock and Fidelity.</p></div><div><p>Coupang offers its 14.8m customers a wide range of owned-inventory selection. In addition, on its marketplace it also offers millions of SKUs sourced from over 200,000 merchants. Apart from normal e-commerce operation, it also provides its customers with: grocery offering, Rocket Fresh; logistics food delivery offering, Coupang Eats; and digital financial services, Coupang Pay.</p></div><div><p>I've covered various aspects of the deal in my earlier insights: </p></div><div><ul style="list-style-type: disc;">
<li>
<a href="https://www.smartkarma.com/insights/coupang-pre-ipo-the-positives-fast-growth-sticky-customers" target="_blank" rel="noopener">Coupang Pre-IPO - The Positives - Fast Growth, Sticky Customers</a>, </li>
<li><a href="https://www.smartkarma.com/insights/coupang-pre-ipo-the-negatives-horrendous-data-disclosures-including-no-mention-of-ott-launch" target="_blank" rel="noopener">Coupang Pre-IPO - The Negatives - Horrendous Data Disclosures, Including No Mention of OTT Launch</a></li>
<li><a href="https://www.smartkarma.com/insights/coupang-pre-ipo-fair-bit-of-competition-but-it-s-doing-better-than-most-local-peers" target="_blank" rel="noopener">Coupang Pre-IPO - Fair Bit of Competition but It’s Doing Better than Most Local Peers</a></li>
</ul></div><div><p>In this insight, I'll talk about our earnings forecast and thoughts on valuations.</p></div>

Coupang (CPNG US) , the largest product e-commerce player in Korea, aims to raise around US$3bn in its US listing via a mix of selling primary and secondary shares. As per media reports, the company has earlier obtained investments from Sequoia, Softbank, Blackrock and Fidelity.Coupang offers its 14.8m customers a wide range of owned-inventory selection. In addition, on its marketplace it also offers millions of SKUs sourced from over 200,000 merchants. Apart from normal e-commerce operation, it also provides its customers with: grocery offering, Rocket Fresh; logistics food delivery offering, Coupang Eats; and digital financial services, Coupang Pay.I've covered various aspects of the deal in my earlier insights: 

Coupang Pre-IPO - The Positives - Fast Growth, Sticky Customers, 
Coupang Pre-IPO - The Negatives - Horrendous Data Disclosures, Including No Mention of OTT Launch
Coupang Pre-IPO - Fair Bit of Competition but It’s Doing Better than Most Local Peers
In this insight, I'll talk about our earnings forecast and thoughts on valuations.

Coupang Pre-IPO - Earnings Forecast and Valuation

<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> has launched the Shopee App for Mexico to offer online sales in what would be its second foray in the Americas after a pilot initiative in 2019 in Brazil, which has been scaling up operations.</p>
<p>The expansion to Mexico, Latin America's second-largest economy, could mark a major new growth opportunity in cross-border sales but it will also mean more cash burn and a longer runway to profitability.</p>
<div>
<div id="sda-INARTICLE">Shopee will offer free shipping throughout Mexico, offering items including electronics, clothes, toys, and home goods, which would suggest immediate cash burn. The features will be similar to its South East Asia Shopee App, which has been a huge success. </div>
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<div>The company has already had huge success with its gaming business in Latin America through Garena but its e-commerce business has more moving parts and has yet to be tested in a big way in Latin America, which does introduce an element of uncertainty to this latest move. </div>
<div></div>
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<a href="https://www.smartkarma.com/entities/sea-ltd" target="_blank" data-smartkarma-citation="entities:8509:1" rel="noopener">Sea Ltd (SE US)</a> faces the challenge of facing off against <a href="https://www.smartkarma.com/entities/mercadolibre-inc" target="_blank" data-smartkarma-citation="entities:27954:1" rel="noopener">MercadoLibre Inc (MELI US)</a>, which is a formidable adversary that has seen off <a href="https://www.smartkarma.com/entities/amazon-com-inc" target="_blank" data-smartkarma-citation="entities:409:1" rel="noopener">Amazon.com Inc (AMZN US)</a> on its doorstep already. </div>
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<a href="https://www.smartkarma.com/entities/sea-ltd" target="_blank" data-smartkarma-citation="entities:8509:1" rel="noopener">Sea Ltd (SE US)</a> does have a track record of winning share quickly seemingly "against all odds" in unseating <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/lazada-group" target="_blank" data-smartkarma-citation="entities:26148:1" rel="noopener">Lazada Group (LAZADA SP)</a> in Indonesia. </div>
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<a href="https://www.smartkarma.com/entities/sea-ltd" target="_blank" data-smartkarma-citation="entities:8509:1" rel="noopener">Sea Ltd (SE US)</a> trades on a lofty 15.5x FY21E EV/sales and 11.1x FY22E EV/Sales with forecast sales growth of +56% and +30.3% for FY21E and FY22E respectively but is not expected to breakeven until 2023 under current estimates. We continue to like <a href="https://www.smartkarma.com/entities/sea-ltd" target="_blank" data-smartkarma-citation="entities:8509:1" rel="noopener">Sea Ltd (SE US)</a> over the long-term for its leading position and rapid growth in gaming and e-commerce in South East Asia but this recent move may provide further leg to its long term growth. We would look to buy on any further weakness.</div>

Sea Ltd (SE US) has launched the Shopee App for Mexico to offer online sales in what would be its second foray in the Americas after a pilot initiative in 2019 in Brazil, which has been scaling up operations.
The expansion to Mexico, Latin America's second-largest economy, could mark a major new growth opportunity in cross-border sales but it will also mean more cash burn and a longer runway to profitability.

Shopee will offer free shipping throughout Mexico, offering items including electronics, clothes, toys, and home goods, which would suggest immediate cash burn. The features will be similar to its South East Asia Shopee App, which has been a huge success. 


The company has already had huge success with its gaming business in Latin America through Garena but its e-commerce business has more moving parts and has yet to be tested in a big way in Latin America, which does introduce an element of uncertainty to this latest move. 


Sea Ltd (SE US) faces the challenge of facing off against MercadoLibre Inc (MELI US), which is a formidable adversary that has seen off Amazon.com Inc (AMZN US) on its doorstep already. 


Sea Ltd (SE US) does have a track record of winning share quickly seemingly "against all odds" in unseating Tokopedia PT (1087142D IJ) and Lazada Group (LAZADA SP) in Indonesia. 


Sea Ltd (SE US) trades on a lofty 15.5x FY21E EV/sales and 11.1x FY22E EV/Sales with forecast sales growth of +56% and +30.3% for FY21E and FY22E respectively but is not expected to breakeven until 2023 under current estimates. We continue to like Sea Ltd (SE US) over the long-term for its leading position and rapid growth in gaming and e-commerce in South East Asia but this recent move may provide further leg to its long term growth. We would look to buy on any further weakness.

Sea Ltd (SE US) - Extending the Runway for a Bigger Plane?

Equity Analyst, LightStream Research

Oshadhi Kumarasiri

Equity Analyst

Long-Short Analysis on Japan, Asia and the World

LightStream Research

LightStream conducts quantitatively rigorous and data-driven analysis with a focus on Japan and Asia.

We consistently cover the Tech, Consumer and Industrial sectors, and provide ECM and Events coverage more broadly.

We supplement traditional qualitative insights from company relationships with a robust quantitative foundation that examines as much historical data as is available.
We further refine the accuracy of our insights and calls through the use of alternative data to flesh out current trends, and through a valuation framework that emphasises non-superficial peer group selection and a proper attempt to understand the metrics and changes that have driven security valuations in the past.

<p><a href="https://www.smartkarma.com/entities/coupang" target="_blank" data-smartkarma-citation="entities:28425:1" rel="noopener">Coupang (CPNG US)</a>, the largest e-commerce company in South Korea with US$ 12.0bn in annual revenue, filed for an NYSE IPO under the ticker “CPNG” with a placeholder value of US$ 1.0bn.</p><p>According to various new reports, the Softbank Group- backed company Coupang is expected to command a valuation of nearly US$50.0bn, which is 456% more than its last private market valuation in 2018. Other investors of Coupang include BlackRock, Sequoia Capital, Altos Ventures, Maverick Ventures, and billionaire investor Bill Ackman.</p><p>The IPO is underwritten by Goldman Sachs, Allen &amp; Company LLC, J.P. Morgan, BofA, Citigroup, HSBC, Deutsche Bank, UBS, Mizuho Securities, and CLSA Limited.</p>

Coupang (CPNG US), the largest e-commerce company in South Korea with US$ 12.0bn in annual revenue, filed for an NYSE IPO under the ticker “CPNG” with a placeholder value of US$ 1.0bn.According to various new reports, the Softbank Group- backed company Coupang is expected to command a valuation of nearly US$50.0bn, which is 456% more than its last private market valuation in 2018. Other investors of Coupang include BlackRock, Sequoia Capital, Altos Ventures, Maverick Ventures, and billionaire investor Bill Ackman.The IPO is underwritten by Goldman Sachs, Allen &amp; Company LLC, J.P. Morgan, BofA, Citigroup, HSBC, Deutsche Bank, UBS, Mizuho Securities, and CLSA Limited.

Coupang IPO: Not Worth Subscribing at Rumoured 50.0bn Valuation

Singapore

Sea Limited offers information technology services. The Company provides online personal computer and mobile digital content, e-commerce, and payment platforms. Sea serves customers worldwide.

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Sea Ltd (SE US)

Bank Rakyat Indonesia (BBRI IJ) - Both Micro and Digital

Bank Rakyat Indonesia remains one of our top picks amongst the Indonesian banks, with its renewed focus on its core competency in microlending and...

Angus Mackintosh

Sea Ltd: Rising Momentum Among Active Investors Ahead of Index Inclusion

Our analysis shows strong conviction towards Sea Ltd (SE US) among the active GEM and Asia Ex-Japan managers in our analysis.

Steven Holden

Coupang Pre-IPO - Earnings Forecast and Valuation

Coupang, the largest product e-commerce player in Korea, aims to raise around US$3bn in its US listing. The company has earlier obtained...

Sumeet Singh

Sea Ltd (SE US) - Extending the Runway for a Bigger Plane?

Sea Ltd (SE US) remains the listed key proxy for the explosive growth in e-commerce in South East Asia, fuelled by growing revenues from its gaming...

Angus Mackintosh

Coupang IPO: Not Worth Subscribing at Rumoured 50.0bn Valuation

Coupang’s active user count is just 7.5%, 3.4%, 2.0% and 2.0% of Shopee’s JD.com’s, Pinduoduo’s, and Alibaba’s respectively. However, Coupang’s...

Oshadhi Kumarasiri

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