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

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<a href="https://www.smartkarma.com/entities/adi-sarana-armada-tbk-pt" target="_blank" data-smartkarma-citation="entities:16947:1" rel="noopener">Adi Sarana Armada (ASSA IJ)</a> is well-known for its car leasing business in Indonesia, as one of the largest players in long-term car leasing through ASSA Rent, with around 13% market share. It is less well appreciated as a major player in logistics and for its technology-based express logistics company Anteraja, which services the booming e-commerce space in Indonesia. 
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The company is also the no.1 used car auction player through JBA, with around 40% market share, providing a service for the majority of Indonesia's auto finance companies.
<a href="https://www.smartkarma.com/entities/adi-sarana-armada-tbk-pt" target="_blank" data-smartkarma-citation="entities:16947:1" rel="noopener">Adi Sarana Armada (ASSA IJ)</a> also has a complementary C2C online marketplace selling vehicles, which is connected to its used car and auction business. 
The company's core car rental business will see growth of +10-15% as the economy recovers but Anteraja will see stronger growth driving the top line to grow +25% in 2021. Management expects Anteraja to account for more than 50% of sales in 1-2 years. 
<a href="https://www.smartkarma.com/entities/adi-sarana-armada-tbk-pt" target="_blank" data-smartkarma-citation="entities:16947:1" rel="noopener">Adi Sarana Armada (ASSA IJ)</a> currently trades on an FY21E PER multiple of 20.1x and F22E PER of 16.9x, which does not look expensive given the potential digital transformation ahead.


Adi Sarana Armada (ASSA IJ) is well-known for its car leasing business in Indonesia, as one of the largest players in long-term car leasing through ASSA Rent, with around 13% market share. It is less well appreciated as a major player in logistics and for its technology-based express logistics company Anteraja, which services the booming e-commerce space in Indonesia. 

The company is also the no.1 used car auction player through JBA, with around 40% market share, providing a service for the majority of Indonesia's auto finance companies.
Adi Sarana Armada (ASSA IJ) also has a complementary C2C online marketplace selling vehicles, which is connected to its used car and auction business. 
The company's core car rental business will see growth of +10-15% as the economy recovers but Anteraja will see stronger growth driving the top line to grow +25% in 2021. Management expects Anteraja to account for more than 50% of sales in 1-2 years. 
Adi Sarana Armada (ASSA IJ) currently trades on an FY21E PER multiple of 20.1x and F22E PER of 16.9x, which does not look expensive given the potential digital transformation ahead. 

Adi Sarana Armada (ASSA IJ) - Auto Leasing, Logistics, and the Last Mile

A call with <a href="https://www.smartkarma.com/entities/bank-central-asia-tbk-pt" target="_blank" data-smartkarma-citation="entities:440:1" rel="noopener">Bank Central Asia (BBCA IJ)</a> management revealed that loan growth continued to remain weak overall in 2020 but with some positive growth from corporate lending. 
Expectations are for some recovery in loan growth in 2021 but a lot depends on the roll-out of the COVID-19 vaccines and on the recovery in GDP growth. This is probably the key risk.
<a href="https://www.smartkarma.com/entities/bank-central-asia-tbk-pt" target="_blank" data-smartkarma-citation="entities:440:1" rel="noopener">Bank Central Asia (BBCA IJ)</a> has been utilizing virtual channels and call centers to some success in order to stimulate mortgage and 4W consumer loans and will look to do a virtual expo for SMEs.
The bank is focusing on existing customers to push for higher utilization of credit lines from its SME and corporate customers. 
<a href="https://www.smartkarma.com/entities/bank-central-asia-tbk-pt" target="_blank" data-smartkarma-citation="entities:440:1" rel="noopener">Bank Central Asia (BBCA IJ)</a> will book some further provisioning in 4Q2020 but the level should come down versus 3Q2020. Loans at risk will also remain stable and credit costs will likely finish the year at the lower end of the bank's guidance. 
<a href="https://www.smartkarma.com/entities/bank-central-asia-tbk-pt" target="_blank" data-smartkarma-citation="entities:440:1" rel="noopener">Bank Central Asia (BBCA IJ)</a> is well-connected to the digital eco-system providing settlement services to all major players and top-ups for digital wallets. 
The bank's own digital initiatives also continue to bear fruit, with increasing numbers of customers taking to mobile banking through increased transactions and account opening.
<a href="https://www.smartkarma.com/entities/bank-central-asia-tbk-pt" target="_blank" data-smartkarma-citation="entities:440:1" rel="noopener">Bank Central Asia (BBCA IJ)</a> continues to demonstrate its ESG credentials, with around 20% of its loan book covering sustainable sectors.
The bank trades on 4.2x FY21E PBV, with a forecast ROE of 15.8% in FY21E and 16.9% in FY22E, and will continue to trade at a premium to peers listed below on its strong management track record and lead in transactional banking.

A call with Bank Central Asia (BBCA IJ) management revealed that loan growth continued to remain weak overall in 2020 but with some positive growth from corporate lending. 
Expectations are for some recovery in loan growth in 2021 but a lot depends on the roll-out of the COVID-19 vaccines and on the recovery in GDP growth. This is probably the key risk.
Bank Central Asia (BBCA IJ) has been utilizing virtual channels and call centers to some success in order to stimulate mortgage and 4W consumer loans and will look to do a virtual expo for SMEs.
The bank is focusing on existing customers to push for higher utilization of credit lines from its SME and corporate customers. 
Bank Central Asia (BBCA IJ) will book some further provisioning in 4Q2020 but the level should come down versus 3Q2020. Loans at risk will also remain stable and credit costs will likely finish the year at the lower end of the bank's guidance. 
Bank Central Asia (BBCA IJ) is well-connected to the digital eco-system providing settlement services to all major players and top-ups for digital wallets. 
The bank's own digital initiatives also continue to bear fruit, with increasing numbers of customers taking to mobile banking through increased transactions and account opening.
Bank Central Asia (BBCA IJ) continues to demonstrate its ESG credentials, with around 20% of its loan book covering sustainable sectors.
The bank trades on 4.2x FY21E PBV, with a forecast ROE of 15.8% in FY21E and 16.9% in FY22E, and will continue to trade at a premium to peers listed below on its strong management track record and lead in transactional banking. 

Bank Central Asia (BBCA IJ) - Sustainable Virtual Recovery Ahead

Equity Analyst, LightStream Research

Shifara Samsudeen, FCMA, CGMA

Equity Analyst

Long-Short Analysis on Japan, Asia and the World

LightStream Research

LightStream conducts quantitatively rigorous and data-driven analysis with a focus on Japan and Asia.

We consistently cover the Tech, Consumer and Industrial sectors, and provide ECM and Events coverage more broadly.

We supplement traditional qualitative insights from company relationships with a robust quantitative foundation that examines as much historical data as is available.
We further refine the accuracy of our insights and calls through the use of alternative data to flesh out current trends, and through a valuation framework that emphasises non-superficial peer group selection and a proper attempt to understand the metrics and changes that have driven security valuations in the past.

Private Capital Markets

Throughout 2020, there have been rumours circulating about a merger between <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/grabtaxi-holdings-pte-ltd" target="_blank" data-smartkarma-citation="entities:26950:1" rel="noopener">Grab (0967655D SP)</a> . Towards the latter part of 2020, several news reports had stated that Grab and Gojek have agreed in principal to merge their operations and Grab has offered Gojek a 30% stake in the merged entity. Gojek and its shareholders were however pushing for a larger stake on account of the company’s extensive presence in Indonesia (which is Southeast Asia’s largest market), whereby the deal is yet on hold.On the other hand, on December 17th 2020, several news media outlets reported that <a href="https://www.smartkarma.com/entities/tokopedia-pt" target="_blank" data-smartkarma-citation="entities:24239:1" rel="noopener">Tokopedia PT (1087142D IJ)</a> has appointed US banks Morgan Stanley and Citibank as advisors for its IPO as it seeks to carry out plans to go public. Tokopedia had also been approached by Bridgetown Holdings (a special purpose acquisition company (Spac) backed by the Hong Kong businessman Richard Li and the Silicon Valley investor Peter Thiel). However, on 5th January 2021, Bloomberg reported that Gojek is now in talks with Tokopedia for a merger which would be carried out prior to a planned IPO of the combined entity, which is to list in the US and Indonesia.

Throughout 2020, there have been rumours circulating about a merger between Gojek (1379371D IJ) and Grab (0967655D SP) . Towards the latter part of 2020, several news reports had stated that Grab and Gojek have agreed in principal to merge their operations and Grab has offered Gojek a 30% stake in the merged entity. Gojek and its shareholders were however pushing for a larger stake on account of the company’s extensive presence in Indonesia (which is Southeast Asia’s largest market), whereby the deal is yet on hold.On the other hand, on December 17th 2020, several news media outlets reported that Tokopedia PT (1087142D IJ) has appointed US banks Morgan Stanley and Citibank as advisors for its IPO as it seeks to carry out plans to go public. Tokopedia had also been approached by Bridgetown Holdings (a special purpose acquisition company (Spac) backed by the Hong Kong businessman Richard Li and the Silicon Valley investor Peter Thiel). However, on 5th January 2021, Bloomberg reported that Gojek is now in talks with Tokopedia for a merger which would be carried out prior to a planned IPO of the combined entity, which is to list in the US and Indonesia.

Gojek-Tokopedia Merger: A Blockbuster Deal and Potentially Better than a Gojek-Grab Ride

The news that <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> are in talks for a potential merger and future listing came with some excitement, given that it has the potential to create a homegrown Indonesian digital powerhouse in one fell swoop. 
This will present a challenge, not just to <a href="https://www.smartkarma.com/entities/sea-ltd" target="_blank" data-smartkarma-citation="entities:8509:1" rel="noopener">Sea Ltd (SE US)</a> and its Shopee platform but also for <a href="https://www.smartkarma.com/entities/grabtaxi-holdings-pte-ltd" target="_blank" data-smartkarma-citation="entities:26950:1" rel="noopener">Grab (0967655D SP),</a> which will suddenly find itself three steps behind its Indonesian rival having been a potential suitor, although that marriage would have been less than easy.
<a href="https://www.smartkarma.com/entities/gojek" target="_blank" data-smartkarma-citation="entities:25976:1" rel="noopener">Gojek (1379371D IJ)</a> has already stepped up its move into the digital banking space through the recent increase in its stake in <a href="https://www.smartkarma.com/entities/bank-jago-tbk-pt" target="_blank" data-smartkarma-citation="entities:31094:1" rel="noopener">Bank Jago (ARTO IJ)</a> to 22% but it also has strong backers for GoPay in the shape of <a href="https://www.smartkarma.com/entities/facebook-inc-a" target="_blank" data-smartkarma-citation="entities:665:1" rel="noopener">Facebook Inc A (FB US)</a> and <a href="https://www.smartkarma.com/entities/paypal-holdings-inc" target="_blank" data-smartkarma-citation="entities:4747:1" rel="noopener">Paypal Holdings (PYPL US).</a>
One key area of overlap between <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> is on digital payments, where GoPay and OVO compete head-on. Given that Tokopedia holds a 35% stake in OVO, it is possible that it will decide to sell this stake with payments and financial services falling to GoPay. 
The combined entity will be a huge enabler for MSMEs from food providers to small businesses and as a result, will likely get significant support from the Indonesian government. 
Unlike a Gojek/Grab combination, there are few competition issues as <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 <a href="https://www.smartkarma.com/entities/gojek" target="_blank" data-smartkarma-citation="entities:25976:1" rel="noopener">Gojek (1379371D IJ)</a> operate in different verticals. There are also unlikely to be issues with any substantial lay-offs.
There will be significant synergies between the two companies in areas such as payments, with an ever-increasing use-case for GoPay and on making deliveries even more seamless for <a href="https://www.smartkarma.com/entities/tokopedia-pt" target="_blank" data-smartkarma-citation="entities:24239:1" rel="noopener">Tokopedia PT (1087142D IJ)</a>.
<a href="https://www.smartkarma.com/entities/tokopedia-pt" target="_blank" data-smartkarma-citation="entities:24239:1" rel="noopener"></a>The combined size of the two companies would be around US$18bn under the latest valuations but it could quite easily command a higher valuation with a US listing, although it is not yet sure what shape or form that listing will take.
A SPAC listing would be the least favorable option, given question marks over the real winners from such as structure. A straight IPO would be the most straightforward and preferred option, even if it takes a bit longer to execute. The merged entity will likely provide a more formidable adversary for <a href="https://www.smartkarma.com/entities/sea-ltd" target="_blank" data-smartkarma-citation="entities:8509:1" rel="noopener">Sea Ltd (SE US)</a> in Indonesia.

The news that Gojek (1379371D IJ) and Tokopedia PT (1087142D IJ) are in talks for a potential merger and future listing came with some excitement, given that it has the potential to create a homegrown Indonesian digital powerhouse in one fell swoop. 
This will present a challenge, not just to Sea Ltd (SE US) and its Shopee platform but also for Grab (0967655D SP), which will suddenly find itself three steps behind its Indonesian rival having been a potential suitor, although that marriage would have been less than easy.
Gojek (1379371D IJ) has already stepped up its move into the digital banking space through the recent increase in its stake in Bank Jago (ARTO IJ) to 22% but it also has strong backers for GoPay in the shape of Facebook Inc A (FB US) and Paypal Holdings (PYPL US).
One key area of overlap between Gojek (1379371D IJ) and Tokopedia PT (1087142D IJ) is on digital payments, where GoPay and OVO compete head-on. Given that Tokopedia holds a 35% stake in OVO, it is possible that it will decide to sell this stake with payments and financial services falling to GoPay. 
The combined entity will be a huge enabler for MSMEs from food providers to small businesses and as a result, will likely get significant support from the Indonesian government. 
Unlike a Gojek/Grab combination, there are few competition issues as Tokopedia PT (1087142D IJ) and Gojek (1379371D IJ) operate in different verticals. There are also unlikely to be issues with any substantial lay-offs.
There will be significant synergies between the two companies in areas such as payments, with an ever-increasing use-case for GoPay and on making deliveries even more seamless for Tokopedia PT (1087142D IJ).
The combined size of the two companies would be around US$18bn under the latest valuations but it could quite easily command a higher valuation with a US listing, although it is not yet sure what shape or form that listing will take.
A SPAC listing would be the least favorable option, given question marks over the real winners from such as structure. A straight IPO would be the most straightforward and preferred option, even if it takes a bit longer to execute. The merged entity will likely provide a more formidable adversary for Sea Ltd (SE US) in Indonesia.

Gojek and Tokopedia - Digital Game of Thrones

<a href="https://www.smartkarma.com/entities/tokopedia-pt" target="_blank" data-smartkarma-citation="entities:24239:1" rel="noopener">Tokopedia PT (1087142D IJ)</a> has confirmed that it has hired Morgan Stanley and Citigroup as advisers to help accelerate its plan to go public. The company has not yet decided which route to take to come to market, whether through a straightforward IPO or a SPAC listing, potentially through Richard Li and Peter Thiel's Bridgetown Holdings Ltd.
The company had previously stated that it would definitely seek a listing in its home market of Indonesia, with a potential dual listing in the US, although these statements were made pre-pandemic. 
Valuations for <a href="https://www.smartkarma.com/entities/tokopedia-pt" target="_blank" data-smartkarma-citation="entities:24239:1" rel="noopener">Tokopedia PT (1087142D IJ)</a> range from US$8-10bn, although after the last round of funding it was valued at US$7.5bn, making it Indonesia's second most valuation start-up after <a href="https://www.smartkarma.com/entities/gojek" target="_blank" data-smartkarma-citation="entities:25976:1" rel="noopener">Gojek (1379371D IJ)</a>, which was last valued at US$10bn.
An IPO would help the company realize a higher valuation, providing a currency to drive future growth, given it would be an alternative to <a href="https://www.smartkarma.com/entities/sea-ltd" target="_blank" data-smartkarma-citation="entities:8509:1" rel="noopener">Sea Ltd (SE US), </a>as the number 2 e-commerce player in Indonesia. <a href="https://www.smartkarma.com/entities/sea-ltd" target="_blank" data-smartkarma-citation="entities:8509:1" rel="noopener">Sea Ltd (SE US)</a> trades at 13x FY21E EV/Sales currently and just raised more than US$2bn through a placement of new ADS's. We look at <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 its positioning in more detail below the fold.

Tokopedia PT (1087142D IJ) has confirmed that it has hired Morgan Stanley and Citigroup as advisers to help accelerate its plan to go public. The company has not yet decided which route to take to come to market, whether through a straightforward IPO or a SPAC listing, potentially through Richard Li and Peter Thiel's Bridgetown Holdings Ltd.
The company had previously stated that it would definitely seek a listing in its home market of Indonesia, with a potential dual listing in the US, although these statements were made pre-pandemic. 
Valuations for Tokopedia PT (1087142D IJ) range from US$8-10bn, although after the last round of funding it was valued at US$7.5bn, making it Indonesia's second most valuation start-up after Gojek (1379371D IJ), which was last valued at US$10bn.
An IPO would help the company realize a higher valuation, providing a currency to drive future growth, given it would be an alternative to Sea Ltd (SE US), as the number 2 e-commerce player in Indonesia. Sea Ltd (SE US) trades at 13x FY21E EV/Sales currently and just raised more than US$2bn through a placement of new ADS's. We look at Tokopedia PT (1087142D IJ) and its positioning in more detail below the fold. 

Tokopedia PT (1087142D IJ) - From Private to Public by Hook or by Crook

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)

Adi Sarana Armada (ASSA IJ) - Auto Leasing, Logistics, and the Last Mile

ASSA is Indonesia's leading B2B car leasing company moving aggressively into related businesses of auto auctions, logistics, and the last mile...

Angus Mackintosh

Bank Central Asia (BBCA IJ) - Sustainable Virtual Recovery Ahead

Bank Central Asia (BBCA IJ) continues to demonstrate its resilience and initiative during the pandemic period and remains a core holding for its...

Angus Mackintosh

Gojek-Tokopedia Merger: A Blockbuster Deal and Potentially Better than a Gojek-Grab Ride

Gojek is now in talks with Tokopedia for a merger which would be carried out prior to a planned IPO of the combined entity, which is to list in the...

Shifara Samsudeen, FCMA, CGMA

Gojek and Tokopedia - Digital Game of Thrones

The potential merger of Gojek and Tokopedia with a listing of the combined entity planned at a future date will provide investors with an exciting...

Angus Mackintosh

Tokopedia PT (1087142D IJ) - From Private to Public by Hook or by Crook

Tokopedia has confirmed that it is looking to go public and has enlisted Investment Banks to speed the process. This will give investors an...

Angus Mackintosh

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