IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

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Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Event-Driven

<ul>
<li>The MTO in relation to <a href="https://www.smartkarma.com/entities/san-miguel-corporation" target="_blank" data-smartkarma-citation="entities:22728:1" rel="noopener">San Miguel (SMC PM)</a>’s acquisition of 88.50% of <a href="https://www.smartkarma.com/entities/eagle-cement-corp" target="_blank" data-smartkarma-citation="entities:31217:1" rel="noopener">Eagle Cement Corp (EAGLE PM)</a>’s shares is open. The MTO will end on 5 December. </li>
<li>The MTO price is PHP22.02. The net MTO price after deducting the selling charges (0.621% of value) is estimated to be PHP21.8833. </li>
<li>At the current price and for the 14 December payment, the gross and annualised spread to the net MTO price is 1.8% and 19.2%, respectively.</li>
</ul>


The MTO in relation to San Miguel (SMC PM)’s acquisition of 88.50% of Eagle Cement Corp (EAGLE PM)’s shares is open. The MTO will end on 5 December. 
The MTO price is PHP22.02. The net MTO price after deducting the selling charges (0.621% of value) is estimated to be PHP21.8833. 
At the current price and for the 14 December payment, the gross and annualised spread to the net MTO price is 1.8% and 19.2%, respectively.


Eagle Cement (EAGLE PM) MTO Open, Closing on 5 December

<ul>
<li>The regulator will not review <a href="https://www.smartkarma.com/entities/san-miguel-corporation" target="_blank" data-smartkarma-citation="entities:22728:1" rel="noopener">San Miguel (SMC PM)</a>’s SPA with <a href="https://www.smartkarma.com/entities/eagle-cement-corp" target="_blank" data-smartkarma-citation="entities:31217:1" rel="noopener">Eagle Cement Corp (EAGLE PM)</a>’s selling shareholders to acquire their combined 88.50% stake at PHP22.02 per share.</li>
<li>We expected approval as the PCC, the regulator, previously viewed San Miguel and ECC as part of the same group. The next step is the execution of a definitive agreement.</li>
<li>The approval paves the way for an MTO of the remaining 11.50% minority shares at PHP22.02, likely next month. At the last close, the spread to the offer is 6.1%.</li>
</ul>


The regulator will not review San Miguel (SMC PM)’s SPA with Eagle Cement Corp (EAGLE PM)’s selling shareholders to acquire their combined 88.50% stake at PHP22.02 per share.
We expected approval as the PCC, the regulator, previously viewed San Miguel and ECC as part of the same group. The next step is the execution of a definitive agreement.
The approval paves the way for an MTO of the remaining 11.50% minority shares at PHP22.02, likely next month. At the last close, the spread to the offer is 6.1%.


Eagle Cement: Regulatory Approval Paves the Way for San Miguel’s MTO at PHP22.02

<ul>
<li>
<a href="https://www.smartkarma.com/entities/eagle-cement-corp" target="_blank" data-smartkarma-citation="entities:31217:1" rel="noopener">Eagle Cement Corp (EAGLE PM)</a>/ECC’s selling shareholders (88.50% of the outstanding shares) have signed a SPA to sell their stake to <a href="https://www.smartkarma.com/entities/san-miguel-corporation" target="_blank" data-smartkarma-citation="entities:22728:1" rel="noopener">San Miguel (SMC PM)</a> at PHP22.02 per share.</li>
<li>Post-Completion of the SPA, San Miguel will be required to launch a mandatory tender offer to acquire the remaining 11.50% minority shares at PHP22.02 per share. </li>
<li>As the regulator previously viewed San Miguel and ECC as part of the same group, regulatory approval should be forthcoming. At the last close, the gross spread is 14.1%.</li>
</ul>



Eagle Cement Corp (EAGLE PM)/ECC’s selling shareholders (88.50% of the outstanding shares) have signed a SPA to sell their stake to San Miguel (SMC PM) at PHP22.02 per share.
Post-Completion of the SPA, San Miguel will be required to launch a mandatory tender offer to acquire the remaining 11.50% minority shares at PHP22.02 per share. 
As the regulator previously viewed San Miguel and ECC as part of the same group, regulatory approval should be forthcoming. At the last close, the gross spread is 14.1%.


Eagle Cement’s Potential MTO of PHP22.02 from San Miguel

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

Indocement Tunggal Prakarsa / Equity Bottom-Up

<div class="content-highlight">
<p><span data-preserver-spaces="true">Given we are now coming out of Indonesia's latest wave of COVID-19 and mobility and economic activity is resuming , we see <a href="https://www.smartkarma.com/entities/indocement-tunggal-prakarsa" target="_blank" data-smartkarma-citation="entities:4040:1" rel="noopener">Indocement Tunggal Prakarsa (INTP IJ)</a> as an interesting proxy for the recovery, given its exposure to West Java, infrastructure spending, and the recovering residential property market </span></p>
</div>
<p><a href="https://www.smartkarma.com/entities/indocement-tunggal-prakarsa" target="_blank" rel="noopener"><span data-preserver-spaces="true">Indocement Tunggal Prakarsa (INTP IJ)</span></a><span data-preserver-spaces="true"> released a solid set of 1H2021 results, with an increase in revenue of +8.0% YoY on the back of an increase in cement volume.  </span><span data-preserver-spaces="true">EBITDA margins improved from 15.5% to 19.2% due to savings in operating expenses and gains in other operating income, leading to an EBITDA increase of +33.6% YoY to IDR1,280.6bn. <a href="https://www.smartkarma.com/entities/indocement-tunggal-prakarsa" target="_blank" rel="noopener"></a></span><span data-preserver-spaces="true"> </span></p>
<section class="figure">One major cost pressure comes from rising coal prices, which have increased significantly over the past year and the company has been continually both increasing its usage of low calorific coal and alternative fuels over the past 5-years to offset this.</section>
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<p><a href="https://www.smartkarma.com/entities/indocement-tunggal-prakarsa" target="_blank" data-smartkarma-citation="entities:4040:1" rel="noopener">Indocement Tunggal Prakarsa (INTP IJ)</a> has a strong focus on improving its emissions, with assistance from the Heidelberg Cement Technology Centre, with a road map in place for energy efficiency and CO2 reductions.</p>
<p>The fact that around 78% of cement sales at <a href="https://www.smartkarma.com/entities/indocement-tunggal-prakarsa" target="_blank" data-smartkarma-citation="entities:4040:1" rel="noopener">Indocement Tunggal Prakarsa (INTP IJ)</a> is in bags makes branding all the more important and as a result the company is quite focused on promoting the brand through TV and social media channels.</p>
<section class="figure">The company continues with its digitalisation and has developed a fully digitalised ordering system with real time data which helps the company's sales to achieve better results both on ordering as well as on pricing.</section>
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<p><a href="https://www.smartkarma.com/entities/indocement-tunggal-prakarsa" target="_blank" data-smartkarma-citation="entities:4040:1" rel="noopener">Indocement Tunggal Prakarsa (INTP IJ)</a> estimates that national cement domestic growth will increase by +5% for FY2021 with the resumption of more infrastructure projects and private projects in 2H2021 plus more activity in residential property.</p>
<p>The company's expansion will be focused on expanding its distribution channels through possible new terminals and barge or vessel ownership, as well as potentially exploring M&amp;A opportunities. </p>
<p><span data-preserver-spaces="true"><a href="https://www.smartkarma.com/entities/indocement-tunggal-prakarsa" target="_blank" data-smartkarma-citation="entities:4040:1" rel="noopener">Indocement Tunggal Prakarsa (INTP IJ)</a> trades on 11.1x FY21E EV/EBITDA and 9.9x FY22E EV/EBITDA versus its 5-year average forward EV/EBITDA of 15x, making the company look attractive from a valuation perspective. </span></p>


Given we are now coming out of Indonesia's latest wave of COVID-19 and mobility and economic activity is resuming , we see Indocement Tunggal Prakarsa (INTP IJ) as an interesting proxy for the recovery, given its exposure to West Java, infrastructure spending, and the recovering residential property market 

Indocement Tunggal Prakarsa (INTP IJ) released a solid set of 1H2021 results, with an increase in revenue of +8.0% YoY on the back of an increase in cement volume.  EBITDA margins improved from 15.5% to 19.2% due to savings in operating expenses and gains in other operating income, leading to an EBITDA increase of +33.6% YoY to IDR1,280.6bn.  
One major cost pressure comes from rising coal prices, which have increased significantly over the past year and the company has been continually both increasing its usage of low calorific coal and alternative fuels over the past 5-years to offset this.



Indocement Tunggal Prakarsa (INTP IJ) has a strong focus on improving its emissions, with assistance from the Heidelberg Cement Technology Centre, with a road map in place for energy efficiency and CO2 reductions.
The fact that around 78% of cement sales at Indocement Tunggal Prakarsa (INTP IJ) is in bags makes branding all the more important and as a result the company is quite focused on promoting the brand through TV and social media channels.
The company continues with its digitalisation and has developed a fully digitalised ordering system with real time data which helps the company's sales to achieve better results both on ordering as well as on pricing.





Indocement Tunggal Prakarsa (INTP IJ) estimates that national cement domestic growth will increase by +5% for FY2021 with the resumption of more infrastructure projects and private projects in 2H2021 plus more activity in residential property.
The company's expansion will be focused on expanding its distribution channels through possible new terminals and barge or vessel ownership, as well as potentially exploring M&amp;A opportunities. 
Indocement Tunggal Prakarsa (INTP IJ) trades on 11.1x FY21E EV/EBITDA and 9.9x FY22E EV/EBITDA versus its 5-year average forward EV/EBITDA of 15x, making the company look attractive from a valuation perspective. 

Indocement Tunggal Prakasa (INTP IJ) - Bulky Recovery in Place

<p><a href="https://www.smartkarma.com/entities/indocement-tunggal-prakarsa" target="_blank" rel="noopener"><span data-preserver-spaces="true">Indocement Tunggal Prakarsa (INTP IJ)</span></a><span data-preserver-spaces="true"> released results last week with an -11%  decrease in sales to IDR 14,184.3bn but only a -1.6% decrease in net profit to IDR1,803.3bn, with a number of cost reduction initiatives baring fruit in 2020 and we see these initiative continuing into 2021 on top of higher sales.</span></p><p><span data-preserver-spaces="true">The company saw resilient performance last year from its bag cement sales but bulk cement demand suffered as infrastructure projects stalled but we expect this situation to reverse this year.</span></p><p><span data-preserver-spaces="true">The cost of revenues decreased last year due to lower volumes and continuous savings on fuel and power with lower coal prices but with greater use of LCV coal, alternative fuels, and other operational cost savings, plus the ongoing digitalization at the company. </span></p><p><a href="https://www.smartkarma.com/entities/indocement-tunggal-prakarsa" target="_blank" data-smartkarma-citation="entities:4040:1" rel="noopener">Indocement Tunggal Prakarsa (INTP IJ)</a> will continue to push these cost initiatives in 2021, with the potential to further increase the use of LCV coal and alternative fuels.</p><p>The company has seen a slow start to the year due to heavy rains but we should expect a strong rebound from April onwards as projects get underway.</p><p><a href="https://www.smartkarma.com/entities/indocement-tunggal-prakarsa" target="_blank" data-smartkarma-citation="entities:4040:1" rel="noopener">Indocement Tunggal Prakarsa (INTP IJ)</a> continues to improve its sustainability credentials with lower emissions and new environmentally friendly products. </p><p><a href="https://www.smartkarma.com/entities/indocement-tunggal-prakarsa" target="_blank" data-smartkarma-citation="entities:4040:1" rel="noopener">Indocement Tunggal Prakarsa (INTP IJ)</a> trades on 13.2x FY21E EV/EBITDA and 12.0x FY22E EV/EBITDA versus its 5-year average of 14.4x forward EV/EBITDA, making the company look relatively attractive from a valuation standpoint.</p>

Indocement Tunggal Prakarsa (INTP IJ) released results last week with an -11%  decrease in sales to IDR 14,184.3bn but only a -1.6% decrease in net profit to IDR1,803.3bn, with a number of cost reduction initiatives baring fruit in 2020 and we see these initiative continuing into 2021 on top of higher sales.The company saw resilient performance last year from its bag cement sales but bulk cement demand suffered as infrastructure projects stalled but we expect this situation to reverse this year.The cost of revenues decreased last year due to lower volumes and continuous savings on fuel and power with lower coal prices but with greater use of LCV coal, alternative fuels, and other operational cost savings, plus the ongoing digitalization at the company. Indocement Tunggal Prakarsa (INTP IJ) will continue to push these cost initiatives in 2021, with the potential to further increase the use of LCV coal and alternative fuels.The company has seen a slow start to the year due to heavy rains but we should expect a strong rebound from April onwards as projects get underway.Indocement Tunggal Prakarsa (INTP IJ) continues to improve its sustainability credentials with lower emissions and new environmentally friendly products. Indocement Tunggal Prakarsa (INTP IJ) trades on 13.2x FY21E EV/EBITDA and 12.0x FY22E EV/EBITDA versus its 5-year average of 14.4x forward EV/EBITDA, making the company look relatively attractive from a valuation standpoint.

Indocement Tunggal Prakarsa (INTP IJ) - Bunkering Down for a Better Year

Thailand

Siam City Cement Public Company Limited produces and distributes cement under branded names with various type of cement for different applications.  The Company also also produces and distributes ready-mix concrete and aggregates under branded names, as well as branded wood-replacement products.

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Siam City Cement (SCCC TB)

Eagle Cement (EAGLE PM) MTO Open, Closing on 5 December

The net MTO price after deducting charges is PHP21.8833. At the current price and for the 14 December payment, the gross and annualised spread to...

Arun George

Eagle Cement: Regulatory Approval Paves the Way for San Miguel’s MTO at PHP22.02

The approval paves the way for an MTO of the remaining 11.50% minority shares at PHP22.02, likely next month. At the last close, the spread to the...

Arun George

Eagle Cement’s Potential MTO of PHP22.02 from San Miguel

The regulator should approve as it previously considered San Miguel and ECC as part of the same group. Timing is the key risk. At the last close,...

Arun George

Indocement Tunggal Prakasa (INTP IJ) - Bulky Recovery in Place

We see Indocement as an interesting and high-quality proxy to the recovery in the Indonesian economy, given its exposure to infrastructure through...

Angus Mackintosh

Indocement Tunggal Prakarsa (INTP IJ) - Bunkering Down for a Better Year

Indocement is a high-quality core holding for exposure to the recovery in cement demand this year and next, with lower costs and digitalization...

Angus Mackintosh

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