Insight Provider, CrossASEAN Research

Nicolas Van Broekhoven

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

<a href="https://www.smartkarma.com/entities/del-monte-pacific-ltd" target="_blank" data-smartkarma-citation="entities:5051:1" rel="noopener">Del Monte Pacific (DELM SP)</a> is a part of the once sprawling worldwide Del Monte food empire. Over the past couple of decades, that empire was subsequently fragmented into several geographical blocks, creating confusion and investors have lost the forest from the trees.Change is in the air and multiple IPO's could unlock substantial value over the coming 12-18 months. Del Monte's core business has benefited from CFH (Cook-From-Home) as lockdowns and home-office arrangements have people dine-in rather than dine-out. DELM is also a food-inflation play as it will be easier for Del Monte to pass on price increases to their customers in a rising price environment.Below we will explain in detail why DELM has the potential to be radically transformed and how a multi-bagger return could be on the table. DELM currently has no analyst coverage. Just as we saw with <a href="https://www.smartkarma.com/entities/straits-trading-co-ltd" target="_blank" data-smartkarma-citation="entities:15745:1" rel="noopener">Straits Trading (STRTR SP)</a> it only takes one broker (who is interested in IPO fees) to highlight the opportunity to investors to put some spice under DELM's valuation. Another analogy would be <a href="https://www.smartkarma.com/entities/wilmar-international-ltd" target="_blank" data-smartkarma-citation="entities:172:1" rel="noopener">Wilmar International (WIL SP)</a> and the listing of its Chinese subsidiary <a href="https://www.smartkarma.com/entities/yihai-kerry-arawana-holdin-a" target="_blank" data-smartkarma-citation="entities:29184:1" rel="noopener">Yihai Kerry Arawana Holdin-A (YKIVCZ CH)</a>.Risks to the story are a reversal in CFH, continued large debt burden, and execution issues.

Del Monte Pacific (DELM SP) is a part of the once sprawling worldwide Del Monte food empire. Over the past couple of decades, that empire was subsequently fragmented into several geographical blocks, creating confusion and investors have lost the forest from the trees.Change is in the air and multiple IPO's could unlock substantial value over the coming 12-18 months. Del Monte's core business has benefited from CFH (Cook-From-Home) as lockdowns and home-office arrangements have people dine-in rather than dine-out. DELM is also a food-inflation play as it will be easier for Del Monte to pass on price increases to their customers in a rising price environment.Below we will explain in detail why DELM has the potential to be radically transformed and how a multi-bagger return could be on the table. DELM currently has no analyst coverage. Just as we saw with Straits Trading (STRTR SP) it only takes one broker (who is interested in IPO fees) to highlight the opportunity to investors to put some spice under DELM's valuation. Another analogy would be Wilmar International (WIL SP) and the listing of its Chinese subsidiary Yihai Kerry Arawana Holdin-A (YKIVCZ CH).Risks to the story are a reversal in CFH, continued large debt burden, and execution issues.

Del Monte Pacific (DELM SP): Cook-From-Home and Multiple Subsidiary IPO's to Unlock Large Upside?

<a href="https://www.smartkarma.com/entities/straits-trading-co-ltd" target="_blank" data-smartkarma-citation="entities:15745:1" rel="noopener">Straits Trading (STRTR SP)</a> was written up as a privatization candidate almost two months ago. <a href="https://www.smartkarma.com/insights/straits-trading-ripe-for-privatisation" target="_blank" data-smartkarma-citation="insights:44300" rel="noopener">Straits Trading - Ripe For Privatisation</a> by <a href="https://www.smartkarma.com/profiles/david-blennerhassett" target="_blank" data-smartkarma-citation="accounts:840" rel="noopener">David Blennerhassett</a>.We agree with David that Straits Trading is interesting but doubt a privatization is on the table. Straits Trading has been publicly traded since 1979 and the SGX listing is actually useful for the family behind TeCity (controlling shareholder is itself a family office). <div class="content-highlight">The crown jewel of Straits Trading is its 22% stake in <a href="https://www.smartkarma.com/entities/ara-asset-management" target="_blank" data-smartkarma-citation="entities:13301:1" rel="noopener">ARA Asset Management (ARA SP)</a>. ARA was delisted from the SGX by founder John Lim, Warburg Pincus, and Straits Trading in February 2017. We believe ARA gets relisted on the SGX between 2Q21 and 2Q22.</div>Assuming 120-150 billion SGD Assets Under Management at the time of IPO ARA could be valued between 6-7.5 billion SGD. This market cap would lead to entry into the STI Index relatively quickly.Assuming the above Straits Trading's 22% stake in ARA is potentially worth 1.32-1.65 billion SGD. Compare this to the current market cap of Straits Trading at 754 million SGD. Admittedly, there are some "if" and "but" that applies as we don't know the leverage of ARA at the time of IPO, the cost of its debt, and if markets will again apply an EV/AUM ratio of 5% (similar to its delisting in 2017). Still, risk/reward seems heavily skewed to the upside.Conclusion: if investment bank "ABC" approached you to invest in SGX's hottest 2021 IPO at a +/- 50% discount to its likely list price (with additional assets thrown in for free!) would you take the call?  + Free upside comes from its tin, real estate, and hospitality assets. While you wait the stock pays you a 3% dividend yield.

Straits Trading (STRTR SP) was written up as a privatization candidate almost two months ago. Straits Trading - Ripe For Privatisation by David Blennerhassett.We agree with David that Straits Trading is interesting but doubt a privatization is on the table. Straits Trading has been publicly traded since 1979 and the SGX listing is actually useful for the family behind TeCity (controlling shareholder is itself a family office). The crown jewel of Straits Trading is its 22% stake in ARA Asset Management (ARA SP). ARA was delisted from the SGX by founder John Lim, Warburg Pincus, and Straits Trading in February 2017. We believe ARA gets relisted on the SGX between 2Q21 and 2Q22.Assuming 120-150 billion SGD Assets Under Management at the time of IPO ARA could be valued between 6-7.5 billion SGD. This market cap would lead to entry into the STI Index relatively quickly.Assuming the above Straits Trading's 22% stake in ARA is potentially worth 1.32-1.65 billion SGD. Compare this to the current market cap of Straits Trading at 754 million SGD. Admittedly, there are some "if" and "but" that applies as we don't know the leverage of ARA at the time of IPO, the cost of its debt, and if markets will again apply an EV/AUM ratio of 5% (similar to its delisting in 2017). Still, risk/reward seems heavily skewed to the upside.Conclusion: if investment bank "ABC" approached you to invest in SGX's hottest 2021 IPO at a +/- 50% discount to its likely list price (with additional assets thrown in for free!) would you take the call?  + Free upside comes from its tin, real estate, and hospitality assets. While you wait the stock pays you a 3% dividend yield.

Straits Trading: Discounted Way into 2021 SGX's Hottest IPO

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

Back on the 14 August 2020, <a href="https://www.smartkarma.com/entities/straits-trading-co-ltd" target="_blank" data-smartkarma-citation="entities:15745:1" rel="noopener">Straits Trading (STRTR SP)</a> announced its <a href="https://straitstrading.listedcompany.com/newsroom/20200814_171924_S20_ETSA0B9VKYMLZIBA.2.pdf" target="_blank" rel="noopener">1H20 result</a>s, which showed a 62.9/87.5% decline yoy in EBITDA and EPS, due in part to lower average tin prices and lower sales quantity of refined tin; and the knock on-effects from COVID-19 to its hospitality operations.
Tin prices are up 38% since the March low and 10% since  30 June. There are signs of life in the hospitality front, with talk of bubble travel between countries, which may indicate operational losses have troughed.
But of more interest is STR's 22.06% stake in ARA Asset Management. STR added 1.1% in <a href="https://links.sgx.com/FileOpen/R706A%20Announcement.ashx?App=Announcement&amp;FileID=627835" target="_blank" rel="noopener">May</a> of this year at for S$30.2mn. There is talk of IPO'ing ARA, some four years after it was taken private.
STR's stake in ARA, based on its recent stake increase, is worth around the same as its current market cap - indicating the market is assigning almost zero value for the remaining real estate, hospitality segment, and the 54.8% stake in <a href="https://www.smartkarma.com/entities/malaysia-smelting-corp-bhd" target="_blank" data-smartkarma-citation="entities:14425:1" rel="noopener">Malaysia Smelting Corp (SMELT MK)</a>, and stake in <a href="https://www.smartkarma.com/entities/suntec-reit" target="_blank" data-smartkarma-citation="entities:151:1" rel="noopener">Suntec REIT (SUN SP)</a>.
Illiquid, depressed pricing, with a potential major catalyst in the pipeline, this appears ripe for Tecity to take the company private.
As always, more below the fold.

Back on the 14 August 2020, Straits Trading (STRTR SP) announced its 1H20 results, which showed a 62.9/87.5% decline yoy in EBITDA and EPS, due in part to lower average tin prices and lower sales quantity of refined tin; and the knock on-effects from COVID-19 to its hospitality operations.
Tin prices are up 38% since the March low and 10% since  30 June. There are signs of life in the hospitality front, with talk of bubble travel between countries, which may indicate operational losses have troughed.
But of more interest is STR's 22.06% stake in ARA Asset Management. STR added 1.1% in May of this year at for S$30.2mn. There is talk of IPO'ing ARA, some four years after it was taken private.
STR's stake in ARA, based on its recent stake increase, is worth around the same as its current market cap - indicating the market is assigning almost zero value for the remaining real estate, hospitality segment, and the 54.8% stake in Malaysia Smelting Corp (SMELT MK), and stake in Suntec REIT (SUN SP).
Illiquid, depressed pricing, with a potential major catalyst in the pipeline, this appears ripe for Tecity to take the company private.
As always, more below the fold.

Singapore

The Straits Trading Company Limited is a Singapore-based conglomerate-investment company with operations and financial interests in resources, property, and hospitality. Its activities include tin smelting, property investment, development, and management, as well as hotel ownership and management. The company was founded in Singapore in 1887.

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Straits Trading (STRTR SP)

Del Monte Pacific (DELM SP): Cook-From-Home and Multiple Subsidiary IPO's to Unlock Large Upside?

Del Monte Pacific, dual-listed in Singapore and the Philippines, is valued at a mere 350M USD but potentially sits on a treasure trove of...

Nicolas Van Broekhoven

Straits Trading: Discounted Way into 2021 SGX's Hottest IPO

Straits Trading offers a discounted way to invest in what is likely going to be the hottest IPO on the SGX in 2021. If our thesis is right Straits...

Nicolas Van Broekhoven

Straits Trading - Ripe For Privatisation

Stratis Trading is a buy ahead of a potential re-rating from an ARA IPO, and the recovery in underlying real estate and tin ops.

David Blennerhassett

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