Founder of Innovation Research & Advisory firm, Lightbulb Capital

Daniel Liebau

Founder of Innovation Research & Advisory firm

Lightbulb Capital

Thematic (Sector/Industry)

Companies across different industries are building Innovation centers&nbsp; in Singapore, Hong Kong and other cities across Asia and the rest of the world.&nbsp; Some examples include <a target="_blank" href="http://aia-accelerator.com/">AIA</a>, <a target="_blank" href="http://www.3m.com.hk/intl/hk/english/in_hongkong/innovation_center.html">3M</a>, <a target="_blank" href="http://www.mis-asia.com/tech/industries/metlife-announces-futurelab-in-singapore/">MetLife</a> and <a target="_blank" href="https://www.edb.gov.sg/content/edb/en/news-and-events/news/2014-news/p-and-g-opens-250-million-innovation-centre.html">P&amp;G</a> amongst others.&nbsp;While this is a good step in the right direction there are 4 specific points that are worth considering to gauge if the initiative has a chance to create some optionality for future long term growth. Therefore, from an investment perspective it makes sense to evaluate Innovation initiatives in target companies with those points in mind.

Companies across different industries are building Innovation centers&nbsp; in Singapore, Hong Kong and other cities across Asia and the rest of the world.&nbsp;  Some examples include AIA, 3M, MetLife and P&amp;G amongst others.&nbsp;While this is a good step in the right direction there are 4 specific points that are worth considering to gauge if the initiative has a chance to create some optionality for future long term growth. Therefore, from an investment perspective it makes sense to evaluate Innovation initiatives in target companies with those points in mind. 

Can Innovation labs be assessed to pick stocks for your portfolio?

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/rex-international-holding" target="_blank" data-smartkarma-citation="entities:17074:1" rel="noopener">Rex International Holding (REXI SP)</a> has been a forgotten oil stock on the SGX. Last year we tried to highlight the opportunity to investors already <a href="https://www.smartkarma.com/insights/rex-int-from-virtual-drilling-tech-play-to-pumping-oil-in-oman-overlooked-bargain-m-a-candidate" target="_blank" data-smartkarma-citation="insights:41575" rel="noopener">Rex Int: From Virtual Drilling Tech Play to Pumping Oil in Oman; Overlooked Bargain + M&amp;A Candidate</a>.As we learned with our bullish drumbeat on <a href="https://www.smartkarma.com/entities/ug-healthcare-corp-ltd" target="_blank" data-smartkarma-citation="entities:254:1" rel="noopener">UG Healthcare (UGHC SP)</a> a few years ago sometimes Mr. Market can be a bit slow. Recall, we were bullish on UGHC all of 2018/2019 highlighting its massive undervaluation, and then... it went up 1,000%+ last year. Rex reminds us of UGHC in 2019. Rex is not guaranteed to go up 1,000% but it has a pathway there (think oil at 100 USD/bbl) and should AT LEAST double in 2021. This is a high conviction idea.Below the fold, we give the math of how increased production at its Yumna field in Oman should lead to massive cash flows and earnings from 1H21 onwards. Once market participants "get it" and see the cash gush in this has to lead to a re-rating. If Mr.Market remains asleep an industry player will almost certainly come to the table and acquire Rex outright. Given the age of the main shareholders, this is more a question of "when" rather than "if".

Rex International Holding (REXI SP) has been a forgotten oil stock on the SGX. Last year we tried to highlight the opportunity to investors already Rex Int: From Virtual Drilling Tech Play to Pumping Oil in Oman; Overlooked Bargain + M&amp;A Candidate.As we learned with our bullish drumbeat on UG Healthcare (UGHC SP) a few years ago sometimes Mr. Market can be a bit slow. Recall, we were bullish on UGHC all of 2018/2019 highlighting its massive undervaluation, and then... it went up 1,000%+ last year. Rex reminds us of UGHC in 2019. Rex is not guaranteed to go up 1,000% but it has a pathway there (think oil at 100 USD/bbl) and should AT LEAST double in 2021. This is a high conviction idea.Below the fold, we give the math of how increased production at its Yumna field in Oman should lead to massive cash flows and earnings from 1H21 onwards. Once market participants "get it" and see the cash gush in this has to lead to a re-rating. If Mr.Market remains asleep an industry player will almost certainly come to the table and acquire Rex outright. Given the age of the main shareholders, this is more a question of "when" rather than "if".

Rex: Oman Production Gaining Steam; Could It Really Trade at 1x 2021 Pre-Tax Profits?

Smartkarma Research Team, Smartkarma

Smartkarma Research

Smartkarma Research Team

Smartkarma

Smartkarma unites the fragmented investment industry, connecting institutional investors, independent research providers, and corporates within a single network.

Research Reinvented

In this Smartkarma Corporate Webinar, we welcome Jun Yih Lee, Executive Director and Director of Finance at <a href="https://www.smartkarma.com/entities/ug-healthcare-corp-ltd" target="_blank" data-smartkarma-citation="entities:254:1" rel="noopener">UG Healthcare (UGHC SP)</a>. He will share a <a href="https://www.smartkarma.com/entities/ug-healthcare-corp-ltd/presentations?item=7342" target="_blank" rel="noopener">company presentation</a> along with some key aspects about the firm, and then engage in a fireside chat with Smartkarma Insight Provider, <a href="https://www.smartkarma.com/profiles/nicolas-van-broekhoven-24a66c2d-bca4-4f5b-adda-c4e2bcc509f4" target="_blank" rel="noopener">Nicolas Van Broekhoven</a>, including a live Q&amp;A session.
<h3>This Corporate Webinar will be hosted on Tuesday, 19 January 2021, 17:00 SGT/HKT.</h3>
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<h2><a href="https://share.hsforms.com/1H9pFZOB-RF2J00kbvMmxcw2c5gj?zoom_webinar_id=81776503326" target="_blank" rel="noopener">Register for the Webinar here</a></h2>
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Every week, Corporate Webinars by <a href="https://www.smartkarma.com/home/corporate-solutions/" target="_blank" rel="noopener">Smartkarma Corporate Solutions</a> feature discussions with Corporate IROs and Executives, discussing their companies, the challenges they face, and the opportunities in their sectors and markets.

In this Smartkarma Corporate Webinar, we welcome Jun Yih Lee, Executive Director and Director of Finance at UG Healthcare (UGHC SP). He will share a company presentation along with some key aspects about the firm, and then engage in a fireside chat with Smartkarma Insight Provider, Nicolas Van Broekhoven, including a live Q&amp;A session.
This Corporate Webinar will be hosted on Tuesday, 19 January 2021, 17:00 SGT/HKT.

Register for the Webinar here

Every week, Corporate Webinars by Smartkarma Corporate Solutions feature discussions with Corporate IROs and Executives, discussing their companies, the challenges they face, and the opportunities in their sectors and markets.

Smartkarma Corporate Webinar | UG Healthcare: Demand Visibility & Pricing Trends

<a href="https://www.smartkarma.com/entities/254" target="_blank" data-smartkarma-citation="entities:254:1" rel="noopener">UG Healthcare (UGHC SP)</a> showed good topline growth to almost 92M SGD (+17.5%), and a 400bps improvement in its GPM (from 16.4% to 20.4%) during its last financial year. However, UG also reported very weak bottom-line performance (-43% to 2.5M SGD) in FY19 (financial year ending June). Weak bottom-line results were caused by a 56% increase in marketing &amp; distribution expenses and a 38.6% rise in admin expenses. Consequently, net profit margin was only 2.7% vs Malaysian industry peers at 11-12%. Management believes it needs to spend on the build out of its distribution network before it can ramp-up its sales effort and improve its factory utilization from 70% in FY19 to 80% in FY20. Key growth areas remain Europe, Africa and Brazil.While the latest results are not very inspiring I remain a believer in the UG Healthcare story. The eventual goal of reaching 100M SGD in revenues and getting a 10% NPM remains unchanged by the end of FY2020. Should the target be achieved the company trades at 4x 2020 P/E. Competitors in Malaysia trade at mid-teens multiples (or higher) so UG should deserve a significant re-rating the coming twelve months. Fundamentally, nothing has changed to alter my bear case  (0.24 SGD), base case (0.39 SGD) or blue-sky scenario (0.62 SGD) analysis. Liquidity remains an issue at less than 25K SGD/day.

UG Healthcare (UGHC SP) showed good topline growth to almost 92M SGD (+17.5%), and a 400bps improvement in its GPM (from 16.4% to 20.4%) during its last financial year. However, UG also reported very weak bottom-line performance (-43% to 2.5M SGD) in FY19 (financial year ending June). Weak bottom-line results were caused by a 56% increase in marketing &amp; distribution expenses and a 38.6% rise in admin expenses. Consequently, net profit margin was only 2.7% vs Malaysian industry peers at 11-12%. Management believes it needs to spend on the build out of its distribution network before it can ramp-up its sales effort and improve its factory utilization from 70% in FY19 to 80% in FY20. Key growth areas remain Europe, Africa and Brazil.While the latest results are not very inspiring I remain a believer in the UG Healthcare story. The eventual goal of reaching 100M SGD in revenues and getting a 10% NPM remains unchanged by the end of FY2020. Should the target be achieved the company trades at 4x 2020 P/E. Competitors in Malaysia trade at mid-teens multiples (or higher) so UG should deserve a significant re-rating the coming twelve months. Fundamentally, nothing has changed to alter my bear case  (0.24 SGD), base case (0.39 SGD) or blue-sky scenario (0.62 SGD) analysis. Liquidity remains an issue at less than 25K SGD/day. 

UG Healthcare: FY19 Results Show Revenue and Gross Margin Strength; Cost Control Now Needed

<a href="https://www.smartkarma.com/entities/254" target="_blank" data-smartkarma-citation="entities:254:1">UG Healthcare (UGHC SP)</a> showed good topline growth (+15%) but very weak bottom-line performance (-73%) in the second quarter of FY19 (financial year ending June). Weak bottom-line results were caused by delays and cost overruns in opening its latest factory expansion.While the latest results are a setback I remain a believer in the UG Healthcare story. The eventual goal of reaching 100M SGD in revenues and getting a 10% NPM remains unchanged by the end of FY2020. Should the target be achieved the company trades at 4x 2020 P/E. Competitors in Malaysia trade at mid-teens multiples (or higher) so UG should deserve a significant re-rating the coming two years. Fundamentally, nothing has changed to alter my bear case  (0.24 SGD), base case (0.39 SGD) or blue-sky scenario (0.62 SGD) analysis. Liquidity remains an issue at less than 25K SGD/day.

UG Healthcare (UGHC SP) showed good topline growth (+15%) but very weak bottom-line performance (-73%) in the second quarter of FY19 (financial year ending June). Weak bottom-line results were caused by delays and cost overruns in opening its latest factory expansion.While the latest results are a setback I remain a believer in the UG Healthcare story. The eventual goal of reaching 100M SGD in revenues and getting a 10% NPM remains unchanged by the end of FY2020. Should the target be achieved the company trades at 4x 2020 P/E. Competitors in Malaysia trade at mid-teens multiples (or higher) so UG should deserve a significant re-rating the coming two years. Fundamentally, nothing has changed to alter my bear case  (0.24 SGD), base case (0.39 SGD) or blue-sky scenario (0.62 SGD) analysis. Liquidity remains an issue at less than 25K SGD/day. 

UG Healthcare: Weak 2Q19 Driven by One-Off Issue, If 10% NPM Achieved in FY20 Trades at 4x FY20 P/E

Singapore

UG Healthcare is an own brand manufacturer specializing in the marketing and sale of proprietary UNIGLOVES® branded hand protection solutions, primarily disposable natural latex and nitrile gloves. The company also distributes non-glove hygiene and healthcare ancillary products such as surgical, vinyl, and cleanroom gloves, face masks, and other medical disposables. UG Healthcare was founded in 1989 and is headquartered in Singapore, Singapore.

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UG Healthcare (UGHC SP)

Can Innovation labs be assessed to pick stocks for your portfolio?

Companies across different industries are building Innovation centers in Singapore, Hong Kong and other cities across Asia and the rest of the...

Daniel Liebau

Rex: Oman Production Gaining Steam; Could It Really Trade at 1x 2021 Pre-Tax Profits?

Rex is a misunderstood oil company trading on SGX. Our calculations show the stock could be trading at +/- 1x 2021 pre-tax profits. There is wild...

Nicolas Van Broekhoven

Smartkarma Corporate Webinar | UG Healthcare: Demand Visibility & Pricing Trends

On 19 January, at 5PM SGT, join us for a presentation by Jun Yih Lee, Executive Director and Director of Finance at UG Healthcare, and a fireside...

Smartkarma Research

UG Healthcare: FY19 Results Show Revenue and Gross Margin Strength; Cost Control Now Needed

UG Healthcare (UGHC SP) showed good topline growth to almost 92M SGD (+17.5%), and a 400bps improvement in its GPM (from 16.4% to 20.4%) during its...

Nicolas Van Broekhoven

UG Healthcare: Weak 2Q19 Driven by One-Off Issue, If 10% NPM Achieved in FY20 Trades at 4x FY20 P/E

UG Healthcare (UGHC SP) showed good topline growth (+15%) but very weak bottom-line performance (-73%) in the second quarter of FY19 (financial...

Nicolas Van Broekhoven

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