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

<ul>
<li>Sunpower reported 9M23 results which showed the company performing strongly as a 100% GI business.</li>
<li>Revenues +15% and EBITDA +46% YoY. Earlier this month a competitor listed in China at a massive premium to Sunpower's valuation.</li>
<li>The uncertainty over the CB due in April 2025 will be an overhang but management believes there are multiple ways to resolve this in FY2024.</li>
</ul>


Sunpower reported 9M23 results which showed the company performing strongly as a 100% GI business.
Revenues +15% and EBITDA +46% YoY. Earlier this month a competitor listed in China at a massive premium to Sunpower's valuation.
The uncertainty over the CB due in April 2025 will be an overhang but management believes there are multiple ways to resolve this in FY2024.


Sunpower: Resilient Growth Story; Direct Competitor IPO's in China and Highlights Sunpower Value

Thematic (Sector/Industry)

<ul>
<li>The 2023 vintage of "5 High Conviction Ideas" was commodity heavy with 4 of our 5 picks coming from this sector. Three out of five declined between 15-25%. </li>
<li>Our best performer was unloved <a href="https://www.smartkarma.com/entities/mongolian-mining-corp" target="_blank" data-smartkarma-citation="entities:4382:1" rel="noopener">Mongolian Mining (975 HK)</a> which returned 234% even beating <a href="https://www.smartkarma.com/entities/nvidia-corp" target="_blank" data-smartkarma-citation="entities:5891:1" rel="noopener">NVIDIA Corp (NVDA US)</a> YTD performance.  Miracles happen: Coal mining beats AI.</li>
<li>Our 2024 vintage of top ideas for the year will hopefully have a higher hit ratio. See below for more details which are our five high conviction ideas for 2024.</li>
</ul>


The 2023 vintage of "5 High Conviction Ideas" was commodity heavy with 4 of our 5 picks coming from this sector. Three out of five declined between 15-25%. 
Our best performer was unloved Mongolian Mining (975 HK) which returned 234% even beating NVIDIA Corp (NVDA US) YTD performance.  Miracles happen: Coal mining beats AI.
Our 2024 vintage of top ideas for the year will hopefully have a higher hit ratio. See below for more details which are our five high conviction ideas for 2024.


Overview of My Winners and Losers in 2023...and 5 High Conviction Ideas Going Into 2024

<a href="https://www.smartkarma.com/entities/sunpower-group-ltd" target="_blank" data-smartkarma-citation="entities:18395:1" rel="noopener">Sunpower Group (SPWG SP)</a> reported its 1Q21 results which are likely the last in its combined M&amp;S/GI format. 1Q21 were very strong but the YoY comparison is skewed because 1Q20 was heavily impacted by a nationwide lockdown in China. Before the end of June (our estimate) shareholders will receive 0.2359 SGD as a special dividend. After this the focus will be 100% on GI as the M&amp;S divestment completes by end of 1H21. Investors in GI can look forward to:<ul>
<li>lower operating cost </li>
<li>lower labor cost </li>
<li>lower debt</li>
<li>better working capital management</li>
<li>lower receivables</li>
<li>lower interest costs</li>
<li>higher ROE </li>
<li>higher profit margins</li>
<li>more predictable earnings</li>
</ul>Our call is that in 2H21 a substantial re-rating is on the cards as investors "discover" the highly attractive aspects of being a GI pure play. On the call management was the most bullish we have heard them in years. Our Fair Value estimate remains unchanged at 1.38 SGD (including 0.2359 SGD dividend). This leaves another +/- 78% upside from its recent 0.80-0.81 SGD range. Once investor confusion abates, the deal closes we expect a serious re-discovery phase.

Sunpower Group (SPWG SP) reported its 1Q21 results which are likely the last in its combined M&amp;S/GI format. 1Q21 were very strong but the YoY comparison is skewed because 1Q20 was heavily impacted by a nationwide lockdown in China. Before the end of June (our estimate) shareholders will receive 0.2359 SGD as a special dividend. After this the focus will be 100% on GI as the M&amp;S divestment completes by end of 1H21. Investors in GI can look forward to:
lower operating cost 
lower labor cost 
lower debt
better working capital management
lower receivables
lower interest costs
higher ROE 
higher profit margins
more predictable earnings
Our call is that in 2H21 a substantial re-rating is on the cards as investors "discover" the highly attractive aspects of being a GI pure play. On the call management was the most bullish we have heard them in years. Our Fair Value estimate remains unchanged at 1.38 SGD (including 0.2359 SGD dividend). This leaves another +/- 78% upside from its recent 0.80-0.81 SGD range. Once investor confusion abates, the deal closes we expect a serious re-discovery phase.

Sunpower: Ex-Dividend Date Coming Soon; 100% GI Should Lead to Re-Rating; Fair Value Remains $1.38

Alpha-Centric ESG Research

Kyle Rudden

<ul>
<li>The Monetary Authority of Singapore (MAS) recently launched a public consultation regarding a Code of Conduct for ESG ratings providers and ESG data product providers in Singapore.</li>
<li>It is the right approach for Singapore – a voluntary best-practices framework furthering one of the world's most credible "green" economies, not a regulatory force-fix of something broken.</li>
<li>No surprise ratings methodology changes. No en masse upgrades/downgrades. No acute shocks to the system. Just slow and steady progress for ESG investing and finance in Singapore.</li>
</ul>


The Monetary Authority of Singapore (MAS) recently launched a public consultation regarding a Code of Conduct for ESG ratings providers and ESG data product providers in Singapore.
It is the right approach for Singapore – a voluntary best-practices framework furthering one of the world's most credible "green" economies, not a regulatory force-fix of something broken.
No surprise ratings methodology changes. No en masse upgrades/downgrades. No acute shocks to the system. Just slow and steady progress for ESG investing and finance in Singapore.


Singapore Code of Conduct for ESG Ratings Is Less Risk and More Reward

<ul>
<li>2021's vintage of my 5 High Convictions Ideas did extremely well</li>
<li>
<a href="https://www.smartkarma.com/entities/pc-partner-group-ltd" target="_blank" data-smartkarma-citation="entities:8492:1" rel="noopener">PC Partner (1263 HK)</a> was up 543%, <a href="https://www.smartkarma.com/entities/rex-international-holding" target="_blank" data-smartkarma-citation="entities:17074:1" rel="noopener">Rex International Holding (REXI SP)</a> was up 80%, <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 up almost 74% and Shougang Fushan just under 40%.</li>
<li>The underperformer award goes to HK restaurant operator <a href="https://www.smartkarma.com/entities/taste-gourmet-group-ltd" target="_blank" data-smartkarma-citation="entities:27339:1" rel="noopener">Taste Gourmet Group Ltd (8371 HK)</a> as it declined 25%. Below the fold we'll give our 5 High Conviction Ideas for 2022.</li>
</ul>


2021's vintage of my 5 High Convictions Ideas did extremely well

PC Partner (1263 HK) was up 543%, Rex International Holding (REXI SP) was up 80%, Straits Trading (STRTR SP) was up almost 74% and Shougang Fushan just under 40%.
The underperformer award goes to HK restaurant operator Taste Gourmet Group Ltd (8371 HK) as it declined 25%. Below the fold we'll give our 5 High Conviction Ideas for 2022.


Overview of My Winners and Losers in 2021... And 5 High Conviction Ideas Going Into 2022

China

Founded in 1997 and listed in 2005, Sunpower Group Limited (5GD.SI / SPWG SP) is an environmental protection company specialising in fighting air pollution using proprietary energy-saving and clean power technologies. Since 2017, Sunpower has expanded heavily into “Green Investments” (GI), its sizeable and valuable portfolio of anti-smog investment projects that generate long-term, recurring and high-quality cashflows and now account for more than half of recurring profits and cashflow. The “Manufacturing & Service” (M&S) business provides a variety of high-end customised environmental protection products and solutions to approximately 1,500 customers across 15 industries in over 30 countries, such as Wanhua Chemical, Hengli Petrochemical, CNOOC, CNPC, SINOPEC, ExxonMobil, BASF, BP, Shell, and many others. 70% of them are repeat customers.

Sunpower Group (SPWG SP)

Sunpower: Resilient Growth Story; Direct Competitor IPO's in China and Highlights Sunpower Value

Sunpower's is back on a growth trajectory post Covid. Interestingly, a direct peer listed in Shenzhen recently. Sunpower is much bigger and more...

Nicolas Van Broekhoven

Overview of My Winners and Losers in 2023...and 5 High Conviction Ideas Going Into 2024

Our stand-out performer in FY23 was little loved Mongolia Mining. For FY24 we provide five new names which we think can perform strongly.

Nicolas Van Broekhoven

Sunpower: Ex-Dividend Date Coming Soon; 100% GI Should Lead to Re-Rating; Fair Value Remains $1.38

Sunpower reported solid 1Q21 results as the company's GI/M&S split is now almost complete. We expect a serious re-rating in 2H21 as the...

Nicolas Van Broekhoven

Singapore Code of Conduct for ESG Ratings Is Less Risk and More Reward

Singapore's Code of Conduct for ESG ratings is more light-handed than other regulation-based approaches, but therein lies the "less risk and more...

Kyle Rudden

Overview of My Winners and Losers in 2021... And 5 High Conviction Ideas Going Into 2022

2021's vintage of 5 High Conviction Ideas did extremely well led by star performer Pc Partner. Our new selection for 2022 will hopefully have some...

Nicolas Van Broekhoven