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

<ul>
<li>
<a href="https://www.smartkarma.com/entities/toa-paint-thailand-pcl" target="_blank" data-smartkarma-citation="entities:24235:1" rel="noopener">TOA Paint</a> is Thailand's leading decorative paints player with a 48% market share and a good track record but it has become caught up by association with <a href="https://www.smartkarma.com/entities/stark-corporation-public-company-limited" target="_blank" data-smartkarma-citation="entities:6337:1" rel="noopener">STARK Corporation</a>.</li>
<li>This looks like a guilt by association sell down given there are no visible business connections between <a href="https://www.smartkarma.com/entities/stark-corporation-public-company-limited" target="_blank" data-smartkarma-citation="entities:6337:1" rel="noopener">STARK</a> and <a href="https://www.smartkarma.com/entities/toa-paint-thailand-pcl" target="_blank" data-smartkarma-citation="entities:24235:1" rel="noopener">TOA Paint</a> but the eldest son of the family controls Stark.</li>
<li>The second son of the Patriarch is CEO of <a href="https://www.smartkarma.com/entities/toa-paint-thailand-pcl" target="_blank" data-smartkarma-citation="entities:24235:1" rel="noopener">TOA Paint</a>, which is otherwise enjoying a strong recovery in demand plus lower input costs. Valuations have declined to attractive levels. </li>
</ul>



TOA Paint is Thailand's leading decorative paints player with a 48% market share and a good track record but it has become caught up by association with STARK Corporation.
This looks like a guilt by association sell down given there are no visible business connections between STARK and TOA Paint but the eldest son of the family controls Stark.
The second son of the Patriarch is CEO of TOA Paint, which is otherwise enjoying a strong recovery in demand plus lower input costs. Valuations have declined to attractive levels. 


TOA Paint (Thailand) (TOA TB) - An Unfortunate Turn of Events

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

<ul>
<li>I-Tail Corporation, an original equipment manufacturer (OEM) in the wet pet food category, aims to list in Thailand in 4Q22. ITC is a subsidiary of <a href="https://www.smartkarma.com/entities/thai-union-group-pcl" target="_blank" data-smartkarma-citation="entities:161:1" rel="noopener">Thai Union Group (TU TB)</a>. </li>
<li>As per ITC, it was the number two pet food company in Asia and in the top ten pet food companies globally. ITC expertise lies in fish-based wet pet food.</li>
<li>In this note, we talk about the not-so-positive aspects of the deal.</li>
</ul>


I-Tail Corporation, an original equipment manufacturer (OEM) in the wet pet food category, aims to list in Thailand in 4Q22. ITC is a subsidiary of Thai Union Group (TU TB). 
As per ITC, it was the number two pet food company in Asia and in the top ten pet food companies globally. ITC expertise lies in fish-based wet pet food.
In this note, we talk about the not-so-positive aspects of the deal.


I-Tail Corporation Pre-IPO - The Negatives - Non-Uniform Growth

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

There is a BIG trade coming up starting next Monday. If you have exposure in Indonesia, it is worth thinking about. <hr>Back in January 2021, Bloomberg reported that <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> - the country's largest lender by assets - was "exploring a plan to raise at least US$1bn through a rights issue."Almost a year ago in October 2020 BBRI signed a conditional deal to merge their Shariah-compliant unit with those of <a href="https://www.smartkarma.com/entities/bank-mandiri-persero-tbk-pt" target="_blank" data-smartkarma-citation="entities:441:1" rel="noopener">Bank Mandiri Persero (BMRI IJ)</a> and <a href="https://www.smartkarma.com/entities/bank-negara-indonesia-persero" target="_blank" data-smartkarma-citation="entities:8285:1" rel="noopener">Bank Negara Indonesia Persero (BBNI IJ)</a> and there had been talks (since Feb 2020?) with the government for BBRI to take over state-owned pawnshop lender PT Pegadaian and financing firm PT Permodalan Nasional Madani to provide affordable loans to SMEs. A deal for BBRI to take over those two firms was <a href="https://www.reuters.com/article/bank-bri-ma-idUSL4N2KE2J5" target="_blank" rel="noopener">decided</a> in early February, and the need for a rights issue was set, though this required parliamentary approval and BBRI needed shareholder approval for the rights issue - which it announced in June and <a href="https://www.thejakartapost.com/adv/2021/07/23/bri-egms-approves-rights-issue-of-28-billion-shares.html" target="_blank" rel="noopener">received</a> in July - under the mechanism of Capital Increase by Granting Securities Subscription Rights First (PMHMETD). <a href="https://www.smartkarma.com/profiles/angus-mackintosh" target="_blank" data-smartkarma-citation="accounts:937" rel="noopener">Angus Mackintosh</a> discussed the bank's initiatives and aspirations in the micro lending space in <a href="https://www.smartkarma.com/insights/bank-rakyat-indonesia-bbri-ij-both-micro-and-digital" target="_blank" data-smartkarma-citation="insights:48613" rel="noopener">Bank Rakyat Indonesia (BBRI IJ) - Both Micro and Digital</a> in February followed by a discussion of the rights issue itself in early July in <a href="https://www.smartkarma.com/insights/bank-rakyat-indonesia-bbri-ij-ultra-micro-and-digital-aspirations-in-place" target="_blank" data-smartkarma-citation="insights:54111" rel="noopener">Bank Rakyat Indonesia (BBRI IJ) - Ultra-Micro and Digital Aspirations in Place</a>. Angus made a strong case for the bank in both insights and they are worth a read. The shares have basically had an overhang in place since early this year but in June when it became clear the rights issue would be Very Large, that overhang became more pronounced. <section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/228/528/original/Screenshot+2021-09-08+at+2.18.15+PM.png?1631081912" class="editor-image img-responsive" data-smartkarma-image-id="228528"></figure></section>The presentation made to get this past shareholders (never really in doubt as the govt owns 57%) announced the development of an "Ultra-Micro segment" to create an Ultra-Micro Ecosystem as the foundation for further growth, structured under Ultra Micro Holding owned by BRI, in the form of previous precedents of SOE development platforms such as Biofarma/<a href="https://www.smartkarma.com/entities/indofarma-tbk-pt" target="_blank" data-smartkarma-citation="entities:5319:1" rel="noopener">Indofarma (INAF IJ)</a> and Inalum's investment in Indonesian mining companies. <section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/228/527/original/Screenshot+2021-09-08+at+2.02.45+PM.png?1631080980" class="editor-image img-responsive" data-smartkarma-image-id="228527"></figure></section>The way this would be done is a rights offering to offer 230,128,553 rights for every 1,000,000,000 Existing Shares (roughly 0.23013 for 1), with the government contributing its ownership of Pegadaian and PNM in kind to fulfil its rights exercise consideration payment.That means the ~0.23 to 1 Rights Offering would be in effect for the other 43% of holders, which is a vast array of local and international institutions and local retail shareholders, with an Exercise Price of IDR 3400/share, and assuming 100% participation, that would garner IDR 41.15trln in proceeds, which, according to the roadshow <a href="https://www.ir-bri.com/misc/PS/2021/RI-Deal-Roadshow-Presentation-Final.pdf" target="_blank" rel="noopener">presentation</a> released in early September, "will be used for working capital for BRI in order to develop an ultra-micro ecosystem as well as micro and small businesses."The shares traded on the regular market went ex-rights today. Rights will be distributed on 10 September, traded from 13-22 September and exercised in the same period, with the last day for Excess Rights Subscription the 24 September and allotment of Excess Rights on 27 September.There is considerable opportunity here. Some short-term, some longer-term. But it is considerable because there is a fair bit of potential overhang here.I consider the opportunity set below the fold.

There is a BIG trade coming up starting next Monday. If you have exposure in Indonesia, it is worth thinking about. Back in January 2021, Bloomberg reported that Bank Rakyat Indonesia Persero (BBRI IJ) - the country's largest lender by assets - was "exploring a plan to raise at least US$1bn through a rights issue."Almost a year ago in October 2020 BBRI signed a conditional deal to merge their Shariah-compliant unit with those of Bank Mandiri Persero (BMRI IJ) and Bank Negara Indonesia Persero (BBNI IJ) and there had been talks (since Feb 2020?) with the government for BBRI to take over state-owned pawnshop lender PT Pegadaian and financing firm PT Permodalan Nasional Madani to provide affordable loans to SMEs. A deal for BBRI to take over those two firms was decided in early February, and the need for a rights issue was set, though this required parliamentary approval and BBRI needed shareholder approval for the rights issue - which it announced in June and received in July - under the mechanism of Capital Increase by Granting Securities Subscription Rights First (PMHMETD). Angus Mackintosh discussed the bank's initiatives and aspirations in the micro lending space in Bank Rakyat Indonesia (BBRI IJ) - Both Micro and Digital in February followed by a discussion of the rights issue itself in early July in Bank Rakyat Indonesia (BBRI IJ) - Ultra-Micro and Digital Aspirations in Place. Angus made a strong case for the bank in both insights and they are worth a read. The shares have basically had an overhang in place since early this year but in June when it became clear the rights issue would be Very Large, that overhang became more pronounced. The presentation made to get this past shareholders (never really in doubt as the govt owns 57%) announced the development of an "Ultra-Micro segment" to create an Ultra-Micro Ecosystem as the foundation for further growth, structured under Ultra Micro Holding owned by BRI, in the form of previous precedents of SOE development platforms such as Biofarma/Indofarma (INAF IJ) and Inalum's investment in Indonesian mining companies. The way this would be done is a rights offering to offer 230,128,553 rights for every 1,000,000,000 Existing Shares (roughly 0.23013 for 1), with the government contributing its ownership of Pegadaian and PNM in kind to fulfil its rights exercise consideration payment.That means the ~0.23 to 1 Rights Offering would be in effect for the other 43% of holders, which is a vast array of local and international institutions and local retail shareholders, with an Exercise Price of IDR 3400/share, and assuming 100% participation, that would garner IDR 41.15trln in proceeds, which, according to the roadshow presentation released in early September, "will be used for working capital for BRI in order to develop an ultra-micro ecosystem as well as micro and small businesses."The shares traded on the regular market went ex-rights today. Rights will be distributed on 10 September, traded from 13-22 September and exercised in the same period, with the last day for Excess Rights Subscription the 24 September and allotment of Excess Rights on 27 September.There is considerable opportunity here. Some short-term, some longer-term. But it is considerable because there is a fair bit of potential overhang here.I consider the opportunity set below the fold. 

Bank Rakyat Indonesia (BBRI)'s Mega Rights Issue - Plenty of Opportunity Short-Term and Long-Term

Product Marketing Manager, Criat

Raghav Chandra Mathur

Product Marketing Manager

Next-Generation Credit Analytics Provider

Criat

Criat specializes in new-generation data-driven credit analytics. Leveraging our industry-leading DeepCredit analytical technologies, we produce daily-updated forward-looking credit assessment and valuation to help financial institutions stay ahead of risks. Coupled with use-case-driven applications, we extract insights, answer questions and enable smarter credit decisions.

Thematic (Sector/Industry)

<ul><li>The strong showing of economic data from the US for the first three months of 2024 has spurred bets that the Federal Reserve’s is going to delay cutting rates towards the latter half of this year.</li><li>The narrative surrounding ‘imminent’ rate cuts that dominated market perception near the end of last year has been thwarted by the Fed’s chair Jerome Powell suggesting that rates are likely to remain elevated, without the market completely discounting the possibility of further rate hikes.</li><li>The immediate fallout from the higher-than-expected March inflation figures led to a systematic drop in Asian currencies, especially for some ASEAN based currencies, such as the Malaysian Ringgit, that have already been embattled by weakening currency against the dollar since the start of this year.</li></ul>

The strong showing of economic data from the US for the first three months of 2024 has spurred bets that the Federal Reserve’s is going to delay cutting rates towards the latter half of this year.The narrative surrounding ‘imminent’ rate cuts that dominated market perception near the end of last year has been thwarted by the Fed’s chair Jerome Powell suggesting that rates are likely to remain elevated, without the market completely discounting the possibility of further rate hikes.The immediate fallout from the higher-than-expected March inflation figures led to a systematic drop in Asian currencies, especially for some ASEAN based currencies, such as the Malaysian Ringgit, that have already been embattled by weakening currency against the dollar since the start of this year.

Strong ASEAN Banks Poised Well to Face Uncertain Rate Outlook

Asian bank research and consultancy, Tabbush Report

Daniel Tabbush

Asian bank research and consultancy

Tabbush Report

We provide research and consultancy on Asian banks. Our focus is on what we call “Asian bank research, without the noise.” We are interested in the most critical swing-factors for banks, the NPL and credit cycle, and where we believe there is a gap between perception and reality. We often focus on the less studied components of bank financial statements.  Our research is highly thematic, sometimes examining unlisted banks and companies as a window on mainstream banks. 

Being independent allows us to look at smaller banks, often overlooked by others. Analysis of BIS bank guidelines in the context of Asia, is also a focal point, while we also analyze global banks operating in the region. We use what we believe is the most comprehensive, reliable financials database, SNL Financial. S&P Capital IQ augments our database, with corporate data and CEIC, with economics. 

Asian bank research, without the noise.

<ul>
<li>It's the largest bank by assets in Indonesia, but its loan growth is about 2x the country aggregate growth rate. </li>
<li>NPL decline is stronger than most all banks in the country over the past few years, implications for credit costs are positive. </li>
<li>Boring old costs should not be ignored, especially where they are driving radical expansion of ROA. </li>
</ul>


It's the largest bank by assets in Indonesia, but its loan growth is about 2x the country aggregate growth rate. 
NPL decline is stronger than most all banks in the country over the past few years, implications for credit costs are positive. 
Boring old costs should not be ignored, especially where they are driving radical expansion of ROA. 


Bank Mandiri - All Cylinders Firing Strong

Thailand

SCB X Public Company Limited provides banking services. The Bank offers accounts, loans, cards, deposits, insurance, investment, payment, digital banking, and other related services. SCB X serves customers worldwide.

Siam Commercial Bank (SCB TB)

TOA Paint (Thailand) (TOA TB) - An Unfortunate Turn of Events

TOA Paint is Thailand's leading decorative paints player, with a good track record but has been sold off due to its association with beleaguered...

Angus Mackintosh

I-Tail Corporation Pre-IPO - The Negatives - Non-Uniform Growth

I-Tail Corporation, an original equipment manufacturer (OEM) in the wet pet food category, aims to list in Thailand in 4Q22. ITC is a subsidiary of...

Sumeet Singh

Bank Rakyat Indonesia (BBRI)'s Mega Rights Issue - Plenty of Opportunity Short-Term and Long-Term

Bank Rakyat (BBRI) Indonesia's largest bank by assets, has a rights issue (stock went ex-rights today). The bank hopes to raise $2.8bn from its...

Travis Lundy

Strong ASEAN Banks Poised Well to Face Uncertain Rate Outlook

The strong showing of economic data from the US for the first three months of 2024 has spurred bets that the Federal Reserve’s is going to delay...

Criat

Bank Mandiri - All Cylinders Firing Strong

BMRI reveals cyclical and structural strength to such as a degree that its ROA is highest in its history. Loan growth, NPL decline, lower operating...

Daniel Tabbush