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

Cross Asset Strategy

<ul>
<li>The Week That Was in ASEAN@Smartkarma is filled with an eclectic mix of differentiated, substantive, and actionable insights, macro and equity bottom-up, from across South East Asia.</li>
<li>The past week has seen Insights on <a href="https://www.smartkarma.com/entities/grab-holdings-inc" target="_blank" data-smartkarma-citation="entities:26950:1" rel="noopener">Grab (GRAB US)</a>, <a href="https://www.smartkarma.com/entities/sumber-alfaria-trijaya-tbk-pt" target="_blank" data-smartkarma-citation="entities:15659:1" rel="noopener">Sumber Alfaria Trijaya (AMRT IJ)</a>, <a href="https://www.smartkarma.com/entities/semen-indonesia-persero-tbk" target="_blank" data-smartkarma-citation="entities:11161:1" rel="noopener">Semen Indonesia (Gresik) (SMGR IJ)</a>, and the <a href="https://www.smartkarma.com/entities/mapletree-commercial-trust" target="_blank" data-smartkarma-citation="entities:106:1" rel="noopener">Mapletree Commercial Trust (MCT SP)</a> deal.</li>
<li>We also explored online groceries in South-East Asia as we see increasing interest in the space plus <a href="https://www.smartkarma.com/profiles/nicolas-van-broekhoven-24a66c2d-bca4-4f5b-adda-c4e2bcc509f4" target="_blank" data-smartkarma-citation="accounts:1208" rel="noopener">Nicolas Van Broekhoven</a> also lays out his top picks for 2022 performance.</li>
</ul>


The Week That Was in ASEAN@Smartkarma is filled with an eclectic mix of differentiated, substantive, and actionable insights, macro and equity bottom-up, from across South East Asia.
The past week has seen Insights on Grab (GRAB US), Sumber Alfaria Trijaya (AMRT IJ), Semen Indonesia (Gresik) (SMGR IJ), and the Mapletree Commercial Trust (MCT SP) deal.
We also explored online groceries in South-East Asia as we see increasing interest in the space plus Nicolas Van Broekhoven also lays out his top picks for 2022 performance.


The Week That Was in ASEAN@Smartkarma - Grab Expands, Alfamart, and Mapletree Mega-Merger

Insight Provider, CrossASEAN Research

Nicolas Van Broekhoven

Insight Provider

Thematic (Sector/Industry)

<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

Equity, Bottom-up Analyst, Investics Research

Sameer Taneja

Equity, Bottom-up Analyst

Investics Research

It is important to note that the information provided by Investics Research is based on publicly available data and own knowledge, which has been gathered and analyzed from a variety of sources. While every effort has been made to ensure the accuracy and completeness of the information provided, it is not guaranteed to be free from errors or omissions. All forecasts and estimates are based on information that has been obtained from public sources that are considered to be reliable. The sources include but are not limited to, company announcements, exchange filings, presentations, etc. Investics does not guarantee the accuracy and completeness of the forecasts, estimates, and/or other information.

Equity Bottom-up Research

Equity Bottom-Up

<ul>
<li>
<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> represents a great opportunity to capture growth and value.  With 8% net margins, the company outperformed its peers in a depressed environment.</li>
<li>Trading at a 5.8x FY22 PE with 29% of the market capitalization in cash, the company has a significant margin of safety. Reopening could easily result in the stock doubling.</li>
<li>The company paid 0.04 HKD/share of dividend for H1 2022, representing a 9% dividend yield annualized. With seasonally higher earnings, we believe dividends can be higher.</li>
</ul>



Taste Gourmet Group Ltd (8371 HK) represents a great opportunity to capture growth and value.  With 8% net margins, the company outperformed its peers in a depressed environment.
Trading at a 5.8x FY22 PE with 29% of the market capitalization in cash, the company has a significant margin of safety. Reopening could easily result in the stock doubling.
The company paid 0.04 HKD/share of dividend for H1 2022, representing a 9% dividend yield annualized. With seasonally higher earnings, we believe dividends can be higher.


We received a positive profit alert for H1 2022 for <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 expected in our last insight, <a href="https://www.smartkarma.com/insights/taste-gourmet-conviction-growing-as-execution-remains-solid" target="_blank" data-smartkarma-citation="insights:57186" rel="noopener">Taste Gourmet: Conviction Growing As Execution Remains Solid</a>,  the numbers based on the profit alert though are below our expectations which we largely believe is due to higher employee and food costs (we will get more clarity on this when the results are fully published on the 12th of November 2021). We calculate the H1 FY22 profits based on the alert released at 24 mn HKD (vs. our expectation of around 27 mn HKD).
We believe that the company is still on track to hit a 60 mn HKD profit number for FY22, putting it at 6.5x FY22 PE. We also believe that the management will adhere to a 50% payout ratio, resulting in a dividend yield of 7.9%. With close to 90 mn HKD of net cash on the balance sheet, the stock trades an even cheaper ex-cash at 4.5x FY22 PE. 
<h3></h3>
The only major near-term risk we see is the resurfacing of Covid restrictions on dine-ins.

We received a positive profit alert for H1 2022 for Taste Gourmet Group Ltd (8371 HK), as expected in our last insight, Taste Gourmet: Conviction Growing As Execution Remains Solid,  the numbers based on the profit alert though are below our expectations which we largely believe is due to higher employee and food costs (we will get more clarity on this when the results are fully published on the 12th of November 2021). We calculate the H1 FY22 profits based on the alert released at 24 mn HKD (vs. our expectation of around 27 mn HKD).
We believe that the company is still on track to hit a 60 mn HKD profit number for FY22, putting it at 6.5x FY22 PE. We also believe that the management will adhere to a 50% payout ratio, resulting in a dividend yield of 7.9%. With close to 90 mn HKD of net cash on the balance sheet, the stock trades an even cheaper ex-cash at 4.5x FY22 PE. 

The only major near-term risk we see is the resurfacing of Covid restrictions on dine-ins. 

Taste Gourmet: Positive Profit Alert for H1 2022

We believe that <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> can deliver a stellar Q2 FY22/H1 FY22  if operations remain uninterrupted in Hong Kong. 
<ul>
<li>In Q1 FY22, the company delivered its highest quarterly revenue of 145 mn HKD ( Vs. its last highest of 103 mn in Q3 FY21), despite operation being interrupted for over 1.5 weeks in April. We believe that revenue can average over 160 mn HKD in Q2 FY22.</li>
<li>Profit margins for Q1 FY22 averaged 7.6% due to COVID interrupting operations in April, and the company also took the opportunity to refurbish 2 of its existing restaurants and rebrand its Vietnamese La'Taste brand. With its operations uninterrupted in Q2 FY22 net margins can trend up to 10% on the revenue of 160 mn HKD. </li>
</ul>
We expect the company to deliver a profit alert for H1 FY2022. We believe that <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>  can deliver revenue above 300 mn HKD ( FY21 revenue 379 mn HKD ) and a profit of 28 mn HKD ( equivalent to FY21 profit) for H1 FY22.
The stock trades at an appealing multiple of 6.9x FY22 and 5.7x FY23. With increasing cash flows, we believe the company can increase its dividend payout ratio to 50%. We believe at this payout ratio, the dividend yield for FY22/FY23 equates to 7.2%/9.1%.

We believe that Taste Gourmet Group Ltd (8371 HK) can deliver a stellar Q2 FY22/H1 FY22  if operations remain uninterrupted in Hong Kong. 

In Q1 FY22, the company delivered its highest quarterly revenue of 145 mn HKD ( Vs. its last highest of 103 mn in Q3 FY21), despite operation being interrupted for over 1.5 weeks in April. We believe that revenue can average over 160 mn HKD in Q2 FY22.
Profit margins for Q1 FY22 averaged 7.6% due to COVID interrupting operations in April, and the company also took the opportunity to refurbish 2 of its existing restaurants and rebrand its Vietnamese La'Taste brand. With its operations uninterrupted in Q2 FY22 net margins can trend up to 10% on the revenue of 160 mn HKD. 

We expect the company to deliver a profit alert for H1 FY2022. We believe that Taste Gourmet Group Ltd (8371 HK)  can deliver revenue above 300 mn HKD ( FY21 revenue 379 mn HKD ) and a profit of 28 mn HKD ( equivalent to FY21 profit) for H1 FY22.
The stock trades at an appealing multiple of 6.9x FY22 and 5.7x FY23. With increasing cash flows, we believe the company can increase its dividend payout ratio to 50%. We believe at this payout ratio, the dividend yield for FY22/FY23 equates to 7.2%/9.1%.

Taste Gourmet: Conviction Growing As Execution Remains Solid

Hong Kong

Taste Gourmet Group Limited operates as a holding company. The Company, through its subsidiaries, manages a chain of restaurants. Taste Gourmet Group serves clients worldwide.

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Taste Gourmet (8371 HK)

The Week That Was in ASEAN@Smartkarma - Grab Expands, Alfamart, and Mapletree Mega-Merger

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Nicolas Van Broekhoven

Taste Gourmet: Great Reopening Play

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Taste Gourmet: Positive Profit Alert for H1 2022

Taste Gourmet is a small restaurant operator in Hong Kong trading at 6.5x FY22 PE with a 7.9% dividend yield and around 24% of its market...

Sameer Taneja

Taste Gourmet: Conviction Growing As Execution Remains Solid

Taste Gourmet trades at a multiple of 6.9x FY22 and 5.7x FY23. The company can increase its dividend payout ratio to 50%, implying a dividend yield...

Sameer Taneja

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