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

<p>A recent call with <a href="https://www.smartkarma.com/entities/mitra-adiperkasa-tbk-pt" target="_blank" data-smartkarma-citation="entities:18684:1" rel="noopener">Mitra Adiperkasa (MAPI IJ)</a> management revealed continuing momentum behind the recovery that began in 4Q2020 with growth is back on track and its digital strategy continuing to develop and bear fruit.</p>
<p>The company continues to roll out new stores this year with plans to open a total of 180 new stores. During 1Q2021, the company opened 39 stores and closed 52 underperforming stores. </p>
<p>Store openings are focused on sportswear under <a href="https://www.smartkarma.com/entities/map-aktif-adiperkasa-pt" target="_blank" data-smartkarma-citation="entities:27291:1" rel="noopener">MAP Aktif Adiperkasa PT (MAPA IJ)</a> and fashion, where <a href="https://www.smartkarma.com/entities/mitra-adiperkasa-tbk-pt" target="_blank" data-smartkarma-citation="entities:18684:1" rel="noopener">Mitra Adiperkasa (MAPI IJ)</a> plans to open 65 and 45 new stores respectively but it is also pushing its Apple reseller DigiMap and in addition plans to open a total of 10 Boots stores this year</p>
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<p><a href="https://www.smartkarma.com/entities/mitra-adiperkasa-tbk-pt" target="_blank" data-smartkarma-citation="entities:18684:1" rel="noopener">Mitra Adiperkasa (MAPI IJ)</a> will also open six new Food Hall supermarket outlets this year, which currently has 33 branches.</p>
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<p><a href="https://www.smartkarma.com/entities/mitra-adiperkasa-tbk-pt" target="_blank" data-smartkarma-citation="entities:18684:1" rel="noopener">Mitra Adiperkasa (MAPI IJ)'s</a> digital strategy remains very much intact and continues to grow through the company's MAP Club membership scheme which now has 3.8m active members. It has also moved to collaborate with a fintech on a pay-later installment scheme. </p>
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<p><a href="https://www.smartkarma.com/entities/mitra-adiperkasa-tbk-pt" target="_blank" data-smartkarma-citation="entities:18684:1" rel="noopener">Mitra Adiperkasa (MAPI IJ)</a> trades at a significant discount to its historical valuations and with strong forecast future growth, making it look attractive at these levels, especially in light of the impending recovery and its successful digital strategy. It remains a core proxy for the recovery in consumer spending in Indonesia, which is underway.</p>
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A recent call with Mitra Adiperkasa (MAPI IJ) management revealed continuing momentum behind the recovery that began in 4Q2020 with growth is back on track and its digital strategy continuing to develop and bear fruit.
The company continues to roll out new stores this year with plans to open a total of 180 new stores. During 1Q2021, the company opened 39 stores and closed 52 underperforming stores. 
Store openings are focused on sportswear under MAP Aktif Adiperkasa PT (MAPA IJ) and fashion, where Mitra Adiperkasa (MAPI IJ) plans to open 65 and 45 new stores respectively but it is also pushing its Apple reseller DigiMap and in addition plans to open a total of 10 Boots stores this year

Mitra Adiperkasa (MAPI IJ) will also open six new Food Hall supermarket outlets this year, which currently has 33 branches.



Mitra Adiperkasa (MAPI IJ)'s digital strategy remains very much intact and continues to grow through the company's MAP Club membership scheme which now has 3.8m active members. It has also moved to collaborate with a fintech on a pay-later installment scheme. 

Mitra Adiperkasa (MAPI IJ) trades at a significant discount to its historical valuations and with strong forecast future growth, making it look attractive at these levels, especially in light of the impending recovery and its successful digital strategy. It remains a core proxy for the recovery in consumer spending in Indonesia, which is underway.


Mitra Adiperkasa (MAPI IJ) - Mercury Rising

Asian Insight Provider - Actionable ideas, CrossASEAN Research

Henry Soediarko

Asian Insight Provider - Actionable ideas

Sarana Menara Nusantara / Equity Bottom-Up

<p>The accelerated digitalization in Indonesia excites many and can be seen with how much money has been thrown to the startups such as <a href="https://www.smartkarma.com/entities/gojek" target="_blank" data-smartkarma-citation="entities:25976:1" rel="noopener">Gojek (1379371D IJ)</a> , and <a href="https://www.smartkarma.com/entities/tokopedia-pt" target="_blank" data-smartkarma-citation="entities:24239:1" rel="noopener">Tokopedia PT (1087142D IJ)</a>, and many would think that smartphone upgrade is the key factor to play this, therefore, buying smartphone retailer such as <a href="https://www.smartkarma.com/entities/erajaya-swasembada-tbk-pt" target="_blank" data-smartkarma-citation="entities:18869:1" rel="noopener">Erajaya Swasembada (ERAA IJ)</a> or <a href="https://www.smartkarma.com/entities/trikomsel-oke-tbk-pt" target="_blank" data-smartkarma-citation="entities:4796:1" rel="noopener">Trikomsel Oke (TRIO IJ)</a> is the way to do it but telco tower such as <a href="https://www.smartkarma.com/entities/sarana-menara-nusantara-pt" target="_blank" data-smartkarma-citation="entities:6848:1" rel="noopener">Sarana Menara Nusantara (TOWR IJ)</a> provides growth with less volatility due to the long term, non-cancelable contract.</p>
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<p>The other fact is that the population per tower in Indonesia is still very high compared to other countries such as China and Japan although it is almost consistent with what they have in India. In order to optimize telco connectivity with the growing internet data demand, telco operators need to build more towers and <a href="https://www.smartkarma.com/entities/sarana-menara-nusantara-pt" target="_blank" data-smartkarma-citation="entities:6848:1" rel="noopener">Sarana Menara Nusantara (TOWR IJ)</a> is just the right player to do that. </p>
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The accelerated digitalization in Indonesia excites many and can be seen with how much money has been thrown to the startups such as Gojek (1379371D IJ) , and Tokopedia PT (1087142D IJ), and many would think that smartphone upgrade is the key factor to play this, therefore, buying smartphone retailer such as Erajaya Swasembada (ERAA IJ) or Trikomsel Oke (TRIO IJ) is the way to do it but telco tower such as Sarana Menara Nusantara (TOWR IJ) provides growth with less volatility due to the long term, non-cancelable contract.

The other fact is that the population per tower in Indonesia is still very high compared to other countries such as China and Japan although it is almost consistent with what they have in India. In order to optimize telco connectivity with the growing internet data demand, telco operators need to build more towers and Sarana Menara Nusantara (TOWR IJ) is just the right player to do that. 


Sarana Menara Nusantara (TOWR): Data Hungry Provider

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<p><a href="https://www.smartkarma.com/entities/link-net-tbk-pt" target="_blank" data-smartkarma-citation="entities:1050:1" rel="noopener">Link Net (LINK IJ)</a> just released a positive set of 1Q2021 results with revenue up +11.4% YoY and net profit up +26% YoY,  despite slower subscriber growth and the ongoing focus on pole migration</p>
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<section class="figure">ARPU remained stable at IDR358,000 per subscriber per month versus IDR364,000 in FY2020 but the number was higher than 4Q2020, as the company ceased giving out ultra-low packages.  </section>
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<p><a href="https://www.smartkarma.com/entities/link-net-tbk-pt" target="_blank" data-smartkarma-citation="entities:1050:1" rel="noopener">Link Net (LINK IJ)</a> is also providing the option for customers to upgrade their packages through the My First Media app, which includes e-wallet payment options.plus conducting various promotional campaigns with major e-commerce players reducing acquisition costs.</p>
<p><a href="https://www.smartkarma.com/entities/link-net-tbk-pt" target="_blank" data-smartkarma-citation="entities:1050:1" rel="noopener">Link Net (LINK IJ)</a> has revised down the total cost of the migration to IDR2.5tn versus IDR3tn previously due to effective cost management and operational cost efficiencies. Enterprise business picking up</p>
<p>Now that investing in fixed broadband has no foreign ownership restrictions versus a 67% limit previously, <a href="https://www.smartkarma.com/entities/link-net-tbk-pt" target="_blank" data-smartkarma-citation="entities:1050:1" rel="noopener">Link Net (LINK IJ)</a> has become a more attractive acquisition target for a potential suitor.</p>
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<p><a href="https://www.smartkarma.com/entities/link-net-tbk-pt" target="_blank" data-smartkarma-citation="entities:1050:1" rel="noopener">Link Net (LINK IJ)</a> remains a key proxy for the low penetration of fixed broadband in Indonesia and currently provided the highest quality in terms of download speeds and programming.</p>
<p><a href="https://www.smartkarma.com/entities/link-net-tbk-pt" target="_blank" data-smartkarma-citation="entities:1050:1" rel="noopener">Link Net (LINK IJ)</a> remains attractive from a valuation standpoint trading on 13.2x FY2021E and FY2022E PER but it looks likely that we could see further earnings upgrades for FY2022E, given that the pole migration is scheduled to complete by May 2022. It is trading above its 5-year average forward PER of 12x but it has traded as high as 17x forward PER. </p>
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Link Net (LINK IJ) just released a positive set of 1Q2021 results with revenue up +11.4% YoY and net profit up +26% YoY,  despite slower subscriber growth and the ongoing focus on pole migration


ARPU remained stable at IDR358,000 per subscriber per month versus IDR364,000 in FY2020 but the number was higher than 4Q2020, as the company ceased giving out ultra-low packages.  


Link Net (LINK IJ) is also providing the option for customers to upgrade their packages through the My First Media app, which includes e-wallet payment options.plus conducting various promotional campaigns with major e-commerce players reducing acquisition costs.
Link Net (LINK IJ) has revised down the total cost of the migration to IDR2.5tn versus IDR3tn previously due to effective cost management and operational cost efficiencies. Enterprise business picking up
Now that investing in fixed broadband has no foreign ownership restrictions versus a 67% limit previously, Link Net (LINK IJ) has become a more attractive acquisition target for a potential suitor.

Link Net (LINK IJ) remains a key proxy for the low penetration of fixed broadband in Indonesia and currently provided the highest quality in terms of download speeds and programming.
Link Net (LINK IJ) remains attractive from a valuation standpoint trading on 13.2x FY2021E and FY2022E PER but it looks likely that we could see further earnings upgrades for FY2022E, given that the pole migration is scheduled to complete by May 2022. It is trading above its 5-year average forward PER of 12x but it has traded as high as 17x forward PER. 


Link Net (LINK IJ) - Multiple Catalysts in Place

<p><a href="https://www.smartkarma.com/entities/kalbe-farma-tbk-pt" target="_blank" data-smartkarma-citation="entities:6303:1" rel="noopener">Kalbe Farma (KLBF IJ)</a> recently reported 1Q2021 results with sales up by +3.8% YoY, with the strongest growth coming from distribution and logistics, which grew +11.7% YoY, followed by consumer health which grew +2.7% YoY and would have been even stronger if not for the sift of the beverages business to the nutritional division.</p>
<p>Its prescription pharmaceuticals saw a slight -0.1% decline in sales for 1Q2021. 2Q2021 should see a boost for the unbranded generics through new tenders won under the BPJS coming through. </p>
<p><a href="https://www.smartkarma.com/entities/kalbe-farma-tbk-pt" target="_blank" data-smartkarma-citation="entities:6303:1" rel="noopener">Kalbe Farma (KLBF IJ)</a> nutritional division saw sales fall -1.0% YoY, boosted by beverages without which sales would have fallen further. The company has launched more affordable powdered milk products to cater for those consumers trading down this year. </p>
<p><a href="https://www.smartkarma.com/entities/kalbe-farma-tbk-pt" target="_blank" data-smartkarma-citation="entities:6303:1" rel="noopener">Kalbe Farma (KLBF IJ)</a> continues to expand into oncology and biologic products, which should help to support margins longer term.</p>
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<p><a href="https://www.smartkarma.com/entities/kalbe-farma-tbk-pt" target="_blank" data-smartkarma-citation="entities:6303:1" rel="noopener">Kalbe Farma (KLBF IJ)</a> has been building its digital capabilities through a number of different initiatives including KalCare, Klikdokter, MOS Health under <a href="https://www.smartkarma.com/entities/enseval-putera-megatrading-tbk-pt" target="_blank" data-smartkarma-citation="entities:12291:1" rel="noopener">Enseval Putera Megatrading (EPMT IJ)</a>, and EMOS , while MosTrans is the company's digital transportation platform that focuses on delivering health products BtoB.</p>
<p><a href="https://www.smartkarma.com/entities/kalbe-farma-tbk-pt" target="_blank" data-smartkarma-citation="entities:6303:1" rel="noopener">Kalbe Farma (KLBF IJ)</a> has a number of strategic initiatives for FY2021, which includes increasing its participation in unbranded generics, and a strengthening its participation in specialty products, as well as growing the pharma business through its digital platform. </p>
<p>We do not expect any near-term spin-off of the company's nutritional business but this may be considered longer term.  There is a possibility of a potential spin-off of its digital businesses but the timing is uncertain on this. </p>
<p>We continue to see <a href="https://www.smartkarma.com/entities/kalbe-farma-tbk-pt" target="_blank" data-smartkarma-citation="entities:6303:1" rel="noopener">Kalbe Farma (KLBF IJ)</a>, as a core holding to play increasing health consciousness in Indonesia, with a strong portfolio of core brands. </p>
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Kalbe Farma (KLBF IJ) recently reported 1Q2021 results with sales up by +3.8% YoY, with the strongest growth coming from distribution and logistics, which grew +11.7% YoY, followed by consumer health which grew +2.7% YoY and would have been even stronger if not for the sift of the beverages business to the nutritional division.
Its prescription pharmaceuticals saw a slight -0.1% decline in sales for 1Q2021. 2Q2021 should see a boost for the unbranded generics through new tenders won under the BPJS coming through. 
Kalbe Farma (KLBF IJ) nutritional division saw sales fall -1.0% YoY, boosted by beverages without which sales would have fallen further. The company has launched more affordable powdered milk products to cater for those consumers trading down this year. 
Kalbe Farma (KLBF IJ) continues to expand into oncology and biologic products, which should help to support margins longer term.

Kalbe Farma (KLBF IJ) has been building its digital capabilities through a number of different initiatives including KalCare, Klikdokter, MOS Health under Enseval Putera Megatrading (EPMT IJ), and EMOS , while MosTrans is the company's digital transportation platform that focuses on delivering health products BtoB.
Kalbe Farma (KLBF IJ) has a number of strategic initiatives for FY2021, which includes increasing its participation in unbranded generics, and a strengthening its participation in specialty products, as well as growing the pharma business through its digital platform. 
We do not expect any near-term spin-off of the company's nutritional business but this may be considered longer term.  There is a possibility of a potential spin-off of its digital businesses but the timing is uncertain on this. 
We continue to see Kalbe Farma (KLBF IJ), as a core holding to play increasing health consciousness in Indonesia, with a strong portfolio of core brands. 


Kalbe Farma (KLBF IJ) - An Increasingly Healthy Blend

<p>Indonesia's leading mobile phone retailer <a href="https://www.smartkarma.com/entities/erajaya-swasembada-tbk-pt" target="_blank" rel="noopener">Erajaya Swasembada (ERAA IJ)</a> recently released a strong set of 1Q2021 results, with sales growth of +39% YoY to IDR10.85tn and net profit growth of +170.9% YoY to IDR278.2bn, with sales driven by cellular phones and tablets, the backbone of <a href="https://www.smartkarma.com/entities/erajaya-swasembada-tbk-pt" target="_blank" rel="noopener">Erajaya Swasembada (ERAA IJ)</a>'s business.</p>
<p>The only area seeing a decrease was the voucher segment, which decreased -28.3% YoY to IDR869.7bn.  This is not surprising given that most of the e-commerce players are now selling mobile phone credit as virtual products, making this space highly competitive.</p>
<p>The new iPhone 12 released at the end of 2020 had a positive impact on the company's 1Q2021 results. In addition, the positive performance was also driven by the new IMEI regulations, which blocks illegal cell phones, strengthening <a href="https://www.smartkarma.com/entities/erajaya-swasembada-tbk-pt" target="_blank" rel="noopener">Erajaya Swasembada (ERAA IJ)</a>'s top line.</p>
<p><a href="https://www.smartkarma.com/entities/erajaya-swasembada-tbk-pt" target="_blank" data-smartkarma-citation="entities:18869:1" rel="noopener">Erajaya Swasembada (ERAA IJ)</a> also reported strong sales results during this year's Lebaran holiday period, without any impact from the mudik ban (going back to hometowns).</p>
<p>The company continues to open new sales outlets, opening 36 new outlets in 1Q2021. Apart from opening conventional outlets, <a href="https://www.smartkarma.com/entities/erajaya-swasembada-tbk-pt" target="_blank" data-smartkarma-citation="entities:18869:1" rel="noopener">Erajaya Swasembada (ERAA IJ)</a> has started to open outlets called Erafone Cloud Retail Partner based on the concept of a partnership with local investors but are still managed and operated by the Erafone team.</p>
<p><a href="https://www.smartkarma.com/entities/erajaya-swasembada-tbk-pt" target="_blank" data-smartkarma-citation="entities:18869:1" rel="noopener">Erajaya Swasembada (ERAA IJ)</a> remains a very interesting proxy and enabler for the digital economy, as the provider of equipment to fuel the growth and increased activity. The company trades on 11x FY21E PER and 9.4x FY22E PER, versus its 5-year average forward PER of 9.8x but we expect continuing positive growth, which could fuel a re-rating.</p>
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Indonesia's leading mobile phone retailer Erajaya Swasembada (ERAA IJ) recently released a strong set of 1Q2021 results, with sales growth of +39% YoY to IDR10.85tn and net profit growth of +170.9% YoY to IDR278.2bn, with sales driven by cellular phones and tablets, the backbone of Erajaya Swasembada (ERAA IJ)'s business.
The only area seeing a decrease was the voucher segment, which decreased -28.3% YoY to IDR869.7bn.  This is not surprising given that most of the e-commerce players are now selling mobile phone credit as virtual products, making this space highly competitive.
The new iPhone 12 released at the end of 2020 had a positive impact on the company's 1Q2021 results. In addition, the positive performance was also driven by the new IMEI regulations, which blocks illegal cell phones, strengthening Erajaya Swasembada (ERAA IJ)'s top line.
Erajaya Swasembada (ERAA IJ) also reported strong sales results during this year's Lebaran holiday period, without any impact from the mudik ban (going back to hometowns).
The company continues to open new sales outlets, opening 36 new outlets in 1Q2021. Apart from opening conventional outlets, Erajaya Swasembada (ERAA IJ) has started to open outlets called Erafone Cloud Retail Partner based on the concept of a partnership with local investors but are still managed and operated by the Erafone team.
Erajaya Swasembada (ERAA IJ) remains a very interesting proxy and enabler for the digital economy, as the provider of equipment to fuel the growth and increased activity. The company trades on 11x FY21E PER and 9.4x FY22E PER, versus its 5-year average forward PER of 9.8x but we expect continuing positive growth, which could fuel a re-rating.
  

Erajaya Swasembada (ERAA IJ) - The Empire Strikes Back

Indonesia

Tokopedia PT provides e-commerce services. The Company owns and operates an online e-commerce platform that allows individuals and small-to-mid-sized business owners to start their online stores.

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Tokopedia PT (1087142D IJ)

Mitra Adiperkasa (MAPI IJ) - Mercury Rising

MAPI remains a core proxy for the recovery in consumer spending in Indonesia, which is well-underway, with an increasingly digital edge.

Angus Mackintosh

Sarana Menara Nusantara (TOWR): Data Hungry Provider

In order to optimize telco connectivity with the growing internet data demand, telco operators need to build more towers and Sarana Menara...

Henry Soediarko

Link Net (LINK IJ) - Multiple Catalysts in Place

Link Net (LINK IJ) is a high-quality proxy for the low penetration of fixed broadband in Indonesia, with its pole migration program a positive,...

Angus Mackintosh

Kalbe Farma (KLBF IJ) - An Increasingly Healthy Blend

Kalbe Farma is a core holding to play increasing health consciousness in Indonesia, with a strong portfolio of core brands, with valuations below...

Angus Mackintosh

Erajaya Swasembada (ERAA IJ) - The Empire Strikes Back

Erajaya recently released an impressive set of 1Q2021, driven by strong handsets sales, with a positive tailwind from the new rules on compulsory...

Angus Mackintosh

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