Category

Singapore

Brief Singapore: The Week That Was in [email protected] – Thai Strategy, Astra, Telkom, and Central Retail IPO and more

By | Daily Briefs, Singapore

In this briefing:

  1. The Week That Was in [email protected] – Thai Strategy, Astra, Telkom, and Central Retail IPO
  2. Elite Commercial REIT IPO – Stable Rentals but Small and Old Assets
  3. EV Battery Monthly: No Further Cut in Subsidies for NEVs in China Suggests Better Market Conditions

1. The Week That Was in [email protected] – Thai Strategy, Astra, Telkom, and Central Retail IPO

This past week’s offering of Insights across [email protected] is filled with another eclectic mix of differentiated, substantive and actionable insights from across South East Asia and includes macro, top-down and thematic pieces, as well as actionable equity bottom-up and credit insights. Please find a brief summary below, with a fuller write up in the detailed section. We also include in the detailed section the past week’s relevant Discussions in [email protected]

Macro Insights

In Outlook Factors Turning Positive, Save Governance / UAE Fund Hyped / Step Towards Fuel Reform, CrossASEAN Insight Provider Kevin O’Rourke comments on the most important political and economic developments in Indonesia over the past week.

In Catalyst Calendar for Thai Equities 2020, our Thai Guru Athaporn Arayasantiparb, CFA lays out his thoughts on the potential catalysts for the Thai stock market in the coming 12 months.

In Thai Equities: Five Things That Changes in 2020,Athaporn Arayasantiparb, CFA highlights five different issues that will affect the Thai Equity market in 2020.

Equity Bottom-Up Insights

In Astra International (ASII IJ) – A Dawning Recovery Is Afoot, CrossASEAN Insight Provider Angus Mackintosh revisits the company following a conversation with management on the outlook for 2020. 

In Telkom Indonesia (TLKM IJ) – The Emperor of Data, CrossASEAN Insight Provider Angus Mackintosh zeros in on Indonesia’s leading telco after a meeting with management and returns with a positive view on the outlook.

In Blue Bird (BIRD IJ) And GoJek – An Alliance of Champions,Angus Mackintosh revisits Indonesia’s largest taxi operator in light of the decision to sell a stake to GoJek and find plenty to cheer about.

In Procurri (PROC SP): Failed Park Place Sale = Focus Back on How Undervalued Procurri Remains, CrossASEAN Insight Provider Nicolas Van Broekhoven revisits the company following a failed asset sale. 

In Starhub (STH): Not as Bad as People Thought, CrossASEAN Insight Provider Henry Soediarko takes a close look at the company in the context of its earnings.

In Asia United Bank: Strong Fundamental Momentum, banking specialist Paul Hollingworth takes a look at this smaller cap Philippine bank.

In Central Retail Group IPO Is Set to Become the Biggest IPO in Thailand,Oshadhi Kumarasiri comments on this upcoming Thai retail IPO.

In Central Retail IPO and Potential Changes to the SET50 Index,Brian Freitas zeros in on this upcoming Thai Retail IPO and the consequences for the SET50. 

In Amverton: Game Over For Minorities,David Blennerhassett zeros in on this ill-fated property developer.

In TCB: Subpar Trends and Valuation Leave Us Unconvinced banking specialist Paul Hollingworth zeros in on one of Vietnam’s most popular banks amongst foreign investors but he remains underwhelmed.

Sector and Thematic Insights

In Aequitas 2020 Asia IPO Pipeline – Busy Year Ahead,Sumeet Singh summarises the most important up-and-coming IPOs this year, with a specific section on SE Asia. 

Credit Insights

In Barito Pacific – New Issue Assessment – Lucror Analytics,Trung Nguyen circles back to Indonesia’s biggest chemical and renewable energy player in light of the announcement of a new bond issue.

In Bayan Resources – New Issue Assessment – Lucror Analytics,Trung Nguyen takes a close look at Bayan Resources (BYAN IJ) given an upcoming bond issue. 

in Buana Lintas Lautan – New Issue Assessment – Lucror Analytics,Trung Nguyen takes a look at Buana Lintas Lautan (BULL IJ), an Indonesian shipping company that serves the domestic oil & gas sector, is conducting a roadshow with a view to issuing USD Notes with a tenor of 3-5 years.

At CrossASEAN Research we strive to produce unbiased and differentiated on the ground Insights on companies, economies and stock markets across South East Asia exclusive to Smartkarma. 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 offer bespoke work, company visits and tailor-made trips across South East Asia to our clients through Premium Services on Smartkarma. Please feel free to show your appreciation for any of our insights you find useful using the like button. It makes a difference!

2. Elite Commercial REIT IPO – Stable Rentals but Small and Old Assets

Image?1579501776

Elite Commercial REIT (ELITE SP) (ECR) plans to raise up to US$170m in its Singapore listing. 

The initial portfolio will comprise of 97 commercial buildings located across the UK with a total net internal area of approximately 2.6m sqft and total site area of approximately 47 hectares. The REIT is being sponsored by Elite Partners, Ho Lee Group and Sunway Bhd (SWB MK)

In this insight, I’ll talk about the company’s portfolio and financials. 

3. EV Battery Monthly: No Further Cut in Subsidies for NEVs in China Suggests Better Market Conditions

Image 22892592331579491277918

The highlights for December are as follows:

  • Panasonic:
    • The labour shortage at the Nevada plant is said to be under control. Thus, delays in supply do not seem to be a concern.
    • A partnership with Tropos should strengthen the software side of Panasonic’s business. Motors. Panasonic’s software platform, OneConnect, to be used in Tropos manufactured EVs designed for use in last-mile applications and emergency.
    • Efforts by the company to improve its battery business and adopt CASE related technologies (as highlighted in our previous monthlies) are likely to bring in growth only over the medium term. For the upcoming quarter, consensus and our estimates are for a decline in revenue and OP given the unfavourable market conditions and struggle in battery business through last year.
  • There will be no further cut in subsidy in China for NEVs. With the subsidy staying intact, demand for NEVs is likely to improve (or at least not decline further) suggesting better market conditions for battery players globally (who invested in China despite the country’s slowdown last year).
  • CATL was quiet last month, although there was news about the company being a possible buyer of the US luxury car brand-Aston Martin. This seems more likely to be merely a rumour and we feel that CATL does not seem to have strong synergies to do so.
  • South Korean players had no major battery highlights last month.
  • CATL’s share price continued to rise last month, followed by Panasonic, both outperforming the market. The Korean players and BYD continued to see relatively weak performance during the month.

Source: CapIQ

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Brief Singapore: The Guerrilla War Against The PBOC and more

By | Daily Briefs, Singapore

In this briefing:

  1. The Guerrilla War Against The PBOC
  2. The Week That Was in [email protected] – The Omnibus Law, Bank Risk, and Mobile World
  3. The US and Developed Countries: Bump in the Road or Cliff Edge?
  4. Asia’s HY New Issue Market Sense Check: Positive & Negative Implications
  5. Thai Beverages: 1Q20 Results Beats Consensus as Home Demand Outweighed SABECO & GRG Underperformance

1. The Guerrilla War Against The PBOC

In the wake of the news of the coronavirus infection, the Chinese leadership went into overdrive and made it a Draghi-like “whatever it takes” moment to prevent panic and stabilize markets. When the stock markets opened after the Lunar New Year break, the authorities prohibited short sales, directed large shareholders not to sell their holdings and the PBOC turned on their firehose of liquidity to support the stock market. Those steps largely succeeded. China’s stock markets stabilized and recovered, and so too did the markets of China’s Asian trading partners.

However, there were signs that the market is unimpressed by the steps taken by Beijing to control the outbreak and limit its economic impact. Market participants were conducting a guerrilla campaign against the PBOC.

While stock markets have been strong, commodity markets have been weak. Foreign exchange markets are also taking a definite risk-off tone, contrary to the PBOC’s efforts to support risk appetite. Even Chinese market internals are exhibiting skepticism, as financial stocks have lagged the market rally.

This argues for a contrarian position of long EM, commodities, and commodity producers and short U.S. equities. Aggressive traders could enter into a long and short pairs trade, while more risk-controlled accounts could just overweight and underweight.

If the bulls are right, and the coronavirus outbreak recedes and comes under control, U.S. equities should begin to underperform as the demand for safe havens, while cyclically sensitive EM and commodities would rally. On the other hand, if the outbreak were to spiral out of control and global growth collapses, U.S. equities would correct, but there is likely less downside risk in EM and commodity exposure because they have already fallen substantially.

2. The Week That Was in [email protected] – The Omnibus Law, Bank Risk, and Mobile World

This past week’s offering of Insights across [email protected] is filled with another eclectic mix of differentiated, substantive and actionable insights from across South East Asia and includes macro, top-down and thematic pieces, as well as actionable equity bottom-up and credit insights. Please find a brief summary below, with a fuller write up in the detailed section. We also include in the detailed section the past week’s relevant Discussions in [email protected], this week including discussions on Ace Hardware Indonesia (ACES IJ),XL Axiata (EXCL IJ), and Indocement Tunggal Prakarsa (INTP IJ).

Macro

In Vast Omnibus Holds Promise but May Languish / Would Halve Severance / Health Minister Vs Harvard, CrossASEAN Insight Provider Kevin O’Rourke comments on the most important political and economic developments in Indonesia over the past week. 

Equity Bottom-Up

In Lippo Karawaci (LPKR IJ) – Green Shoots Ahead?, CrossASEAN Insight Provider Angus Mackintosh revisits Indonesia’s largest property company and sees the potential for better times ahead. 

In Mobile World Investment (MWG VN) – From Mobile Phones to Groceries, Cross ASEAN Insight Provider Angus Mackintosh finds value in one of Vietnam’s fastest-growing consumer companies. 

In BAT Malaysia: Trading Lower than 1997 Asian Financial Crisis, Cheapest in 27 Years, Div Yield at 11%, Nicolas Van Broekhoven revisits Malaysia’s leading tobacco player and finds deep value. 

In OCBC – Wing Hang Bank and Oil Price Risk, banking specialist Daniel Tabbush revisits Oversea Chinese Banking Corp. (OCBC SP) which has exposure in a number of areas which are likely to impact both growth and credit quality. 

In Thinking About BBL’s Buy of Permata – Buy the Dips, events specialist Travis Lundy circles back to this ongoing M&A situation. 

In Bangkok Bank: Deal or No Deal, Shares Are Too Depressed, Emerging Markets banks specialist Paul Hollingworth takes a closer look at Bangkok Bank Public (BBL TB) in light of the ongoing takeover of Bank Permata (BNLI IJ).

In Tesco to Offload Its Thai & Malaysia Business: Generous Valuation but Value Is in the UK BusinessOshadhi Kumarasiri takes a look at the potential sale of Tesco PLC (TSCO LN)’s Thai and Malaysian Assets. 

In Central Retail Listing and SET50/MSCI Index Inclusion,Brian Freitas looks at the implications from Central Retail (CRC TB) being included in key indices after listing. 

In ThaiBev Beer Brewery Pre-IPO/Spin-Off – Early Take – Aiming to Build an ASEAN Champion?,Zhen Zhou, Toh zeros in on the impending spin-off of Thai Beverage (THBEV SP)’s beer assets.

In a second insight ThaiBev Beer Brewery Pre-IPO/Spin-Off – Valuation Estimates and Implications,Zhen Zhou, Toh zeros in on the potential valuations for this impending spin-off.

In Noble Development Base Support with Volume Concerns, technical analysis specialist Thomas Schroeder looks at Thai property developer Noble Development (NOBLE TB) and works his magic.

In TASCO: Surfing the Spread Uptrend in 2020, our friends at Country Group initiate coverage of Tipco Asphalt (TASCO TB) with a BUY rating and a 2020E target price of Bt27, derived from 12.8xPE’20E, which is in line with valuations of the Asia-ex Japan materials sector. 

In BCPG: Upside from Second Hydro Power Plant Acquisition in Laos,Country Group comment on the recent hydro acquisition by Bcpg Pcl (BCPG TB) and increase their target price as a result. 

In PTTEP: Thai E&P Leader with Promising Growth Outlook, Country Group initiate coverage of PTTEP with a BUY rating, based on a 2020E target price of Bt142, derived from a discounted cash flow valuation (WACC of 10% and TG of 2%). Their valuation implies 11.3x PE’20, which is in line with the Thai Energy Sector.

Sector and Thematic

In Asian Banks – Material Event banking specialist Daniel Tabbush suggests that the impending results may include statements of impending risks related to the Corona Virus.

In Thai Media Spotlight: An Early Quarter of Blockbusters, our Thai guru Athaporn Arayasantiparb, CFA highlights four interesting trends/developments in the Thai media sector.

3. The US and Developed Countries: Bump in the Road or Cliff Edge?

Image 81736776421581584801158

We are in the camp that believes the US economy will hit a recessionary speed-bump in 2020. This isn’t because of the coronavirus fallout but because of signals that emerged through 2019. Over the years we have relied on a series of indicators which have a good track record in forecasting US downturns, regardless of elections or public health.

4. Asia’s HY New Issue Market Sense Check: Positive & Negative Implications

Week%207%20 %20hy%20corp%20nim%20of%2010%20to%2014%20feb%202020

Things look better than one would expect in Asia’s high yield offshore primary debt markets, given the regional economic contagion from the coronavirus. Issuers last week included an India-based non-bank finance company, two local property developers, a luxury car dealer in China and a telecoms company in India.  The nature and success of the issuance suggest that global liquidity continues to impact the debt capital markets. This has positive and negative implications from our perspective. In some instances, the successful issuance also follows successful financial restructuring. In others, it seems investors may have cash to burn.

In this abridged report, we conduct a sense check regarding recent primary market activity in Asia’s high yield markets to search for clues regarding the market’s perspective on the health of local companies. We believe should be of interest for investors in Asia-headquartered financials, as a healthy high yield market is a coincident indicator on the market’s perception on the health of a financial system’s profit and loss statement, due to capital market revenues and balance sheet lending. Our conclusion is that things may look better than one would expect.

5. Thai Beverages: 1Q20 Results Beats Consensus as Home Demand Outweighed SABECO & GRG Underperformance

Image 26133198731581854492026

Thai Beverage (THBEV SP)‘s strong start to the fiscal year ending September 2020 was confirmed by its 1QFY20 results which they released on 14th February 2020. The company’s revenue grew 4.2% YoY in 1QFY20 driven by growth in its domestic market. Also, Its EBITDA margin improved by 170bps compared to 1QFY20 through improvements across all its segments.

You are currently reading Executive Summaries of Smartkarma Insights.

Want to read on? Explore our tailored Smartkarma Solutions.

Brief Singapore: The Week That Was in [email protected] – Thai Strategy, Astra, Telkom, and Central Retail IPO and more

By | Daily Briefs, Singapore

In this briefing:

  1. The Week That Was in [email protected] – Thai Strategy, Astra, Telkom, and Central Retail IPO
  2. Elite Commercial REIT IPO – Stable Rentals but Small and Old Assets
  3. EV Battery Monthly: No Further Cut in Subsidies for NEVs in China Suggests Better Market Conditions
  4. Asian Bank HY Credit Weekly: New Issuance and Asian Credit Spreads

1. The Week That Was in [email protected] – Thai Strategy, Astra, Telkom, and Central Retail IPO

This past week’s offering of Insights across [email protected] is filled with another eclectic mix of differentiated, substantive and actionable insights from across South East Asia and includes macro, top-down and thematic pieces, as well as actionable equity bottom-up and credit insights. Please find a brief summary below, with a fuller write up in the detailed section. We also include in the detailed section the past week’s relevant Discussions in [email protected]

Macro Insights

In Outlook Factors Turning Positive, Save Governance / UAE Fund Hyped / Step Towards Fuel Reform, CrossASEAN Insight Provider Kevin O’Rourke comments on the most important political and economic developments in Indonesia over the past week.

In Catalyst Calendar for Thai Equities 2020, our Thai Guru Athaporn Arayasantiparb, CFA lays out his thoughts on the potential catalysts for the Thai stock market in the coming 12 months.

In Thai Equities: Five Things That Changes in 2020,Athaporn Arayasantiparb, CFA highlights five different issues that will affect the Thai Equity market in 2020.

Equity Bottom-Up Insights

In Astra International (ASII IJ) – A Dawning Recovery Is Afoot, CrossASEAN Insight Provider Angus Mackintosh revisits the company following a conversation with management on the outlook for 2020. 

In Telkom Indonesia (TLKM IJ) – The Emperor of Data, CrossASEAN Insight Provider Angus Mackintosh zeros in on Indonesia’s leading telco after a meeting with management and returns with a positive view on the outlook.

In Blue Bird (BIRD IJ) And GoJek – An Alliance of Champions,Angus Mackintosh revisits Indonesia’s largest taxi operator in light of the decision to sell a stake to GoJek and find plenty to cheer about.

In Procurri (PROC SP): Failed Park Place Sale = Focus Back on How Undervalued Procurri Remains, CrossASEAN Insight Provider Nicolas Van Broekhoven revisits the company following a failed asset sale. 

In Starhub (STH): Not as Bad as People Thought, CrossASEAN Insight Provider Henry Soediarko takes a close look at the company in the context of its earnings.

In Asia United Bank: Strong Fundamental Momentum, banking specialist Paul Hollingworth takes a look at this smaller cap Philippine bank.

In Central Retail Group IPO Is Set to Become the Biggest IPO in Thailand,Oshadhi Kumarasiri comments on this upcoming Thai retail IPO.

In Central Retail IPO and Potential Changes to the SET50 Index,Brian Freitas zeros in on this upcoming Thai Retail IPO and the consequences for the SET50. 

In Amverton: Game Over For Minorities,David Blennerhassett zeros in on this ill-fated property developer.

In TCB: Subpar Trends and Valuation Leave Us Unconvinced banking specialist Paul Hollingworth zeros in on one of Vietnam’s most popular banks amongst foreign investors but he remains underwhelmed.

Sector and Thematic Insights

In Aequitas 2020 Asia IPO Pipeline – Busy Year Ahead,Sumeet Singh summarises the most important up-and-coming IPOs this year, with a specific section on SE Asia. 

Credit Insights

In Barito Pacific – New Issue Assessment – Lucror Analytics,Trung Nguyen circles back to Indonesia’s biggest chemical and renewable energy player in light of the announcement of a new bond issue.

In Bayan Resources – New Issue Assessment – Lucror Analytics,Trung Nguyen takes a close look at Bayan Resources (BYAN IJ) given an upcoming bond issue. 

in Buana Lintas Lautan – New Issue Assessment – Lucror Analytics,Trung Nguyen takes a look at Buana Lintas Lautan (BULL IJ), an Indonesian shipping company that serves the domestic oil & gas sector, is conducting a roadshow with a view to issuing USD Notes with a tenor of 3-5 years.

At CrossASEAN Research we strive to produce unbiased and differentiated on the ground Insights on companies, economies and stock markets across South East Asia exclusive to Smartkarma. 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 offer bespoke work, company visits and tailor-made trips across South East Asia to our clients through Premium Services on Smartkarma. Please feel free to show your appreciation for any of our insights you find useful using the like button. It makes a difference!

2. Elite Commercial REIT IPO – Stable Rentals but Small and Old Assets

Image?1579501776

Elite Commercial REIT (ELITE SP) (ECR) plans to raise up to US$170m in its Singapore listing. 

The initial portfolio will comprise of 97 commercial buildings located across the UK with a total net internal area of approximately 2.6m sqft and total site area of approximately 47 hectares. The REIT is being sponsored by Elite Partners, Ho Lee Group and Sunway Bhd (SWB MK)

In this insight, I’ll talk about the company’s portfolio and financials. 

3. EV Battery Monthly: No Further Cut in Subsidies for NEVs in China Suggests Better Market Conditions

Image 22892592331579491277918

The highlights for December are as follows:

  • Panasonic:
    • The labour shortage at the Nevada plant is said to be under control. Thus, delays in supply do not seem to be a concern.
    • A partnership with Tropos should strengthen the software side of Panasonic’s business. Motors. Panasonic’s software platform, OneConnect, to be used in Tropos manufactured EVs designed for use in last-mile applications and emergency.
    • Efforts by the company to improve its battery business and adopt CASE related technologies (as highlighted in our previous monthlies) are likely to bring in growth only over the medium term. For the upcoming quarter, consensus and our estimates are for a decline in revenue and OP given the unfavourable market conditions and struggle in battery business through last year.
  • There will be no further cut in subsidy in China for NEVs. With the subsidy staying intact, demand for NEVs is likely to improve (or at least not decline further) suggesting better market conditions for battery players globally (who invested in China despite the country’s slowdown last year).
  • CATL was quiet last month, although there was news about the company being a possible buyer of the US luxury car brand-Aston Martin. This seems more likely to be merely a rumour and we feel that CATL does not seem to have strong synergies to do so.
  • South Korean players had no major battery highlights last month.
  • CATL’s share price continued to rise last month, followed by Panasonic, both outperforming the market. The Korean players and BYD continued to see relatively weak performance during the month.

Source: CapIQ

4. Asian Bank HY Credit Weekly: New Issuance and Asian Credit Spreads

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Spread tightening continued apace as investors put money to work in the global new issue market while questioning the sustainability of recent pricing. Yields on the lowest tier of US$ junk bonds fell below 10% for the first time in 7 months while spreads on single-B rated US$-bonds approached levels last seen in 2007, a disconcerting omen for anyone in the market since then. Asian Subordinated US$-bond spreads and US$ X-over Senior bonds tightened slightly. High Yield Asian bank Senior Unsecured US$-bonds underperformed with Yes Bank (YES IN) dragging the group lower. Moody’s downgraded Yes Banks’ fundamental rating and placed its US$-bond under review. US banks reported strong Q4 results and firm December US retail sales data and a bigger-than-expected increase in the January Philadelphia Fed business outlook resulted in a steeper US Treasury yield curve. A steeper Treasury curve is generally beneficial for banks.  

In Asia’s new issue market, China Evergrande (EVERRE)  Evergrande Real Estate Group (3333 HK) priced a three-year maturity B2-rated US$-bond at a yield of 11.5%. By the end of the week, this bond was trading at a lower yield than the similar maturity and rated YESIN 3.75% ’23 bond. Given negative news flow around Yes, this seem appropriate. Within the bank space, Indonesia’s Bank Tabungan Negara Persero (BBTN IJ) brought a five-year Ba3-rated Tier 2 US$-bond that was over 12x subscribed while debt capital issuance in Europe and the US gathered pace. We highlight debt capital new issue that may have potential implications for Asian bank debt in this weekly report.

In other news, Indusind Bank (IIB IN)reported a 7% decline in sequential profits as higher credit costs offset strong operating revenues. The results are not comparable with the year-ago quarter. As the week ended, Siam Commercial Bank PCL (SCB-R TB) reported Q4 results which seem to have missed expectations on higher operating and credit costs. We consider possible bond pricing implications of these announcements and other news events in this weekly. Looking forward, Axis Bank, Bank of Baroda, Canara Bank and ICICI Bank have confirmed earnings announcements next week while other Thai banks and Vietnam Prosperity Bank may also report.

You are currently reading Executive Summaries of Smartkarma Insights.

Want to read on? Explore our tailored Smartkarma Solutions.

Brief Singapore: The Week That Was in [email protected] – The Omnibus Law, Bank Risk, and Mobile World and more

By | Daily Briefs, Singapore

In this briefing:

  1. The Week That Was in [email protected] – The Omnibus Law, Bank Risk, and Mobile World
  2. The US and Developed Countries: Bump in the Road or Cliff Edge?
  3. Asia’s HY New Issue Market Sense Check: Positive & Negative Implications
  4. Thai Beverages: 1Q20 Results Beats Consensus as Home Demand Outweighed SABECO & GRG Underperformance
  5. Asian Bank HY Credit Weekly: Pockets of Opportunity

1. The Week That Was in [email protected] – The Omnibus Law, Bank Risk, and Mobile World

This past week’s offering of Insights across [email protected] is filled with another eclectic mix of differentiated, substantive and actionable insights from across South East Asia and includes macro, top-down and thematic pieces, as well as actionable equity bottom-up and credit insights. Please find a brief summary below, with a fuller write up in the detailed section. We also include in the detailed section the past week’s relevant Discussions in [email protected], this week including discussions on Ace Hardware Indonesia (ACES IJ),XL Axiata (EXCL IJ), and Indocement Tunggal Prakarsa (INTP IJ).

Macro

In Vast Omnibus Holds Promise but May Languish / Would Halve Severance / Health Minister Vs Harvard, CrossASEAN Insight Provider Kevin O’Rourke comments on the most important political and economic developments in Indonesia over the past week. 

Equity Bottom-Up

In Lippo Karawaci (LPKR IJ) – Green Shoots Ahead?, CrossASEAN Insight Provider Angus Mackintosh revisits Indonesia’s largest property company and sees the potential for better times ahead. 

In Mobile World Investment (MWG VN) – From Mobile Phones to Groceries, Cross ASEAN Insight Provider Angus Mackintosh finds value in one of Vietnam’s fastest-growing consumer companies. 

In BAT Malaysia: Trading Lower than 1997 Asian Financial Crisis, Cheapest in 27 Years, Div Yield at 11%, Nicolas Van Broekhoven revisits Malaysia’s leading tobacco player and finds deep value. 

In OCBC – Wing Hang Bank and Oil Price Risk, banking specialist Daniel Tabbush revisits Oversea Chinese Banking Corp. (OCBC SP) which has exposure in a number of areas which are likely to impact both growth and credit quality. 

In Thinking About BBL’s Buy of Permata – Buy the Dips, events specialist Travis Lundy circles back to this ongoing M&A situation. 

In Bangkok Bank: Deal or No Deal, Shares Are Too Depressed, Emerging Markets banks specialist Paul Hollingworth takes a closer look at Bangkok Bank Public (BBL TB) in light of the ongoing takeover of Bank Permata (BNLI IJ).

In Tesco to Offload Its Thai & Malaysia Business: Generous Valuation but Value Is in the UK BusinessOshadhi Kumarasiri takes a look at the potential sale of Tesco PLC (TSCO LN)’s Thai and Malaysian Assets. 

In Central Retail Listing and SET50/MSCI Index Inclusion,Brian Freitas looks at the implications from Central Retail (CRC TB) being included in key indices after listing. 

In ThaiBev Beer Brewery Pre-IPO/Spin-Off – Early Take – Aiming to Build an ASEAN Champion?,Zhen Zhou, Toh zeros in on the impending spin-off of Thai Beverage (THBEV SP)’s beer assets.

In a second insight ThaiBev Beer Brewery Pre-IPO/Spin-Off – Valuation Estimates and Implications,Zhen Zhou, Toh zeros in on the potential valuations for this impending spin-off.

In Noble Development Base Support with Volume Concerns, technical analysis specialist Thomas Schroeder looks at Thai property developer Noble Development (NOBLE TB) and works his magic.

In TASCO: Surfing the Spread Uptrend in 2020, our friends at Country Group initiate coverage of Tipco Asphalt (TASCO TB) with a BUY rating and a 2020E target price of Bt27, derived from 12.8xPE’20E, which is in line with valuations of the Asia-ex Japan materials sector. 

In BCPG: Upside from Second Hydro Power Plant Acquisition in Laos,Country Group comment on the recent hydro acquisition by Bcpg Pcl (BCPG TB) and increase their target price as a result. 

In PTTEP: Thai E&P Leader with Promising Growth Outlook, Country Group initiate coverage of PTTEP with a BUY rating, based on a 2020E target price of Bt142, derived from a discounted cash flow valuation (WACC of 10% and TG of 2%). Their valuation implies 11.3x PE’20, which is in line with the Thai Energy Sector.

Sector and Thematic

In Asian Banks – Material Event banking specialist Daniel Tabbush suggests that the impending results may include statements of impending risks related to the Corona Virus.

In Thai Media Spotlight: An Early Quarter of Blockbusters, our Thai guru Athaporn Arayasantiparb, CFA highlights four interesting trends/developments in the Thai media sector.

2. The US and Developed Countries: Bump in the Road or Cliff Edge?

Image 81736776421581584801158

We are in the camp that believes the US economy will hit a recessionary speed-bump in 2020. This isn’t because of the coronavirus fallout but because of signals that emerged through 2019. Over the years we have relied on a series of indicators which have a good track record in forecasting US downturns, regardless of elections or public health.

3. Asia’s HY New Issue Market Sense Check: Positive & Negative Implications

Week%207%20 %20hy%20corp%20nim%20of%2010%20to%2014%20feb%202020

Things look better than one would expect in Asia’s high yield offshore primary debt markets, given the regional economic contagion from the coronavirus. Issuers last week included an India-based non-bank finance company, two local property developers, a luxury car dealer in China and a telecoms company in India.  The nature and success of the issuance suggest that global liquidity continues to impact the debt capital markets. This has positive and negative implications from our perspective. In some instances, the successful issuance also follows successful financial restructuring. In others, it seems investors may have cash to burn.

In this abridged report, we conduct a sense check regarding recent primary market activity in Asia’s high yield markets to search for clues regarding the market’s perspective on the health of local companies. We believe should be of interest for investors in Asia-headquartered financials, as a healthy high yield market is a coincident indicator on the market’s perception on the health of a financial system’s profit and loss statement, due to capital market revenues and balance sheet lending. Our conclusion is that things may look better than one would expect.

4. Thai Beverages: 1Q20 Results Beats Consensus as Home Demand Outweighed SABECO & GRG Underperformance

Image 26133198731581854492026

Thai Beverage (THBEV SP)‘s strong start to the fiscal year ending September 2020 was confirmed by its 1QFY20 results which they released on 14th February 2020. The company’s revenue grew 4.2% YoY in 1QFY20 driven by growth in its domestic market. Also, Its EBITDA margin improved by 170bps compared to 1QFY20 through improvements across all its segments.

5. Asian Bank HY Credit Weekly: Pockets of Opportunity

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Roses are red, liquidity rings true. Although we agree with Guggenheim Partners chief investment officer Scott Minerd’s perspective that “yields are low, spreads are tight and risk assets remain priced to perfection”, we believe that liquidity rules. As such, despite increasing evidence of regional economic decline from the coronavirus, credit markets remained broadly positive. Weak Greek banks continue to access the primary market at attractive terms while previously defaulted institutions such as Iceland’s Kaupthing, now Arion Bank, get ready to issue Additional Tier 1 debt. Even the Royal Bank of Scotland will be no more as it rebrands itself as NatWest. Although the market is less attractive, we believe that pockets of opportunity remain.

Amongst Asia-headquartered banks, Yes Bank’s US$-bond outperformed all others by tightening 161bps during the week. We see further upside potential in this credit. Meanwhile, investors rotated out of higher-beta Additional Tier 1 (AT1) bonds of mainland China banks and ventured into callable and bullet maturity Tier 2 instruments of the same institutions. This suggests increasing risk-aversion, but it does not suggest risk-avoidance, and this is a theme that may remain until coronavirus uncertainty fades.

We are splitting the credit weekly in half to hopefully give a more insightful perspective into market movements concerning the banks that we follow. This will also allow for a deeper analysis of new issue market conditions and their implications for secondary market trading.  We note that there may not be new issuance activity in some weeks and, as such, that note will become more of an occasional report, although it may appear almost weekly.

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Brief Singapore: Elite Commercial REIT IPO – Stable Rentals but Small and Old Assets and more

By | Daily Briefs, Singapore

In this briefing:

  1. Elite Commercial REIT IPO – Stable Rentals but Small and Old Assets
  2. EV Battery Monthly: No Further Cut in Subsidies for NEVs in China Suggests Better Market Conditions
  3. Asian Bank HY Credit Weekly: New Issuance and Asian Credit Spreads

1. Elite Commercial REIT IPO – Stable Rentals but Small and Old Assets

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Elite Commercial REIT (ELITE SP) (ECR) plans to raise up to US$170m in its Singapore listing. 

The initial portfolio will comprise of 97 commercial buildings located across the UK with a total net internal area of approximately 2.6m sqft and total site area of approximately 47 hectares. The REIT is being sponsored by Elite Partners, Ho Lee Group and Sunway Bhd (SWB MK)

In this insight, I’ll talk about the company’s portfolio and financials. 

2. EV Battery Monthly: No Further Cut in Subsidies for NEVs in China Suggests Better Market Conditions

Image 22892592331579491277918

The highlights for December are as follows:

  • Panasonic:
    • The labour shortage at the Nevada plant is said to be under control. Thus, delays in supply do not seem to be a concern.
    • A partnership with Tropos should strengthen the software side of Panasonic’s business. Motors. Panasonic’s software platform, OneConnect, to be used in Tropos manufactured EVs designed for use in last-mile applications and emergency.
    • Efforts by the company to improve its battery business and adopt CASE related technologies (as highlighted in our previous monthlies) are likely to bring in growth only over the medium term. For the upcoming quarter, consensus and our estimates are for a decline in revenue and OP given the unfavourable market conditions and struggle in battery business through last year.
  • There will be no further cut in subsidy in China for NEVs. With the subsidy staying intact, demand for NEVs is likely to improve (or at least not decline further) suggesting better market conditions for battery players globally (who invested in China despite the country’s slowdown last year).
  • CATL was quiet last month, although there was news about the company being a possible buyer of the US luxury car brand-Aston Martin. This seems more likely to be merely a rumour and we feel that CATL does not seem to have strong synergies to do so.
  • South Korean players had no major battery highlights last month.
  • CATL’s share price continued to rise last month, followed by Panasonic, both outperforming the market. The Korean players and BYD continued to see relatively weak performance during the month.

Source: CapIQ

3. Asian Bank HY Credit Weekly: New Issuance and Asian Credit Spreads

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Spread tightening continued apace as investors put money to work in the global new issue market while questioning the sustainability of recent pricing. Yields on the lowest tier of US$ junk bonds fell below 10% for the first time in 7 months while spreads on single-B rated US$-bonds approached levels last seen in 2007, a disconcerting omen for anyone in the market since then. Asian Subordinated US$-bond spreads and US$ X-over Senior bonds tightened slightly. High Yield Asian bank Senior Unsecured US$-bonds underperformed with Yes Bank (YES IN) dragging the group lower. Moody’s downgraded Yes Banks’ fundamental rating and placed its US$-bond under review. US banks reported strong Q4 results and firm December US retail sales data and a bigger-than-expected increase in the January Philadelphia Fed business outlook resulted in a steeper US Treasury yield curve. A steeper Treasury curve is generally beneficial for banks.  

In Asia’s new issue market, China Evergrande (EVERRE)  Evergrande Real Estate Group (3333 HK) priced a three-year maturity B2-rated US$-bond at a yield of 11.5%. By the end of the week, this bond was trading at a lower yield than the similar maturity and rated YESIN 3.75% ’23 bond. Given negative news flow around Yes, this seem appropriate. Within the bank space, Indonesia’s Bank Tabungan Negara Persero (BBTN IJ) brought a five-year Ba3-rated Tier 2 US$-bond that was over 12x subscribed while debt capital issuance in Europe and the US gathered pace. We highlight debt capital new issue that may have potential implications for Asian bank debt in this weekly report.

In other news, Indusind Bank (IIB IN)reported a 7% decline in sequential profits as higher credit costs offset strong operating revenues. The results are not comparable with the year-ago quarter. As the week ended, Siam Commercial Bank PCL (SCB-R TB) reported Q4 results which seem to have missed expectations on higher operating and credit costs. We consider possible bond pricing implications of these announcements and other news events in this weekly. Looking forward, Axis Bank, Bank of Baroda, Canara Bank and ICICI Bank have confirmed earnings announcements next week while other Thai banks and Vietnam Prosperity Bank may also report.

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Brief Singapore: EV Battery Monthly: No Further Cut in Subsidies for NEVs in China Suggests Better Market Conditions and more

By | Daily Briefs, Singapore

In this briefing:

  1. EV Battery Monthly: No Further Cut in Subsidies for NEVs in China Suggests Better Market Conditions
  2. Asian Bank HY Credit Weekly: New Issuance and Asian Credit Spreads

1. EV Battery Monthly: No Further Cut in Subsidies for NEVs in China Suggests Better Market Conditions

Image 22892592331579491277918

The highlights for December are as follows:

  • Panasonic:
    • The labour shortage at the Nevada plant is said to be under control. Thus, delays in supply do not seem to be a concern.
    • A partnership with Tropos should strengthen the software side of Panasonic’s business. Motors. Panasonic’s software platform, OneConnect, to be used in Tropos manufactured EVs designed for use in last-mile applications and emergency.
    • Efforts by the company to improve its battery business and adopt CASE related technologies (as highlighted in our previous monthlies) are likely to bring in growth only over the medium term. For the upcoming quarter, consensus and our estimates are for a decline in revenue and OP given the unfavourable market conditions and struggle in battery business through last year.
  • There will be no further cut in subsidy in China for NEVs. With the subsidy staying intact, demand for NEVs is likely to improve (or at least not decline further) suggesting better market conditions for battery players globally (who invested in China despite the country’s slowdown last year).
  • CATL was quiet last month, although there was news about the company being a possible buyer of the US luxury car brand-Aston Martin. This seems more likely to be merely a rumour and we feel that CATL does not seem to have strong synergies to do so.
  • South Korean players had no major battery highlights last month.
  • CATL’s share price continued to rise last month, followed by Panasonic, both outperforming the market. The Korean players and BYD continued to see relatively weak performance during the month.

Source: CapIQ

2. Asian Bank HY Credit Weekly: New Issuance and Asian Credit Spreads

Week%203%20 %20nim%20highlights%20of%2013%20to%2017%20jan%202020

Spread tightening continued apace as investors put money to work in the global new issue market while questioning the sustainability of recent pricing. Yields on the lowest tier of US$ junk bonds fell below 10% for the first time in 7 months while spreads on single-B rated US$-bonds approached levels last seen in 2007, a disconcerting omen for anyone in the market since then. Asian Subordinated US$-bond spreads and US$ X-over Senior bonds tightened slightly. High Yield Asian bank Senior Unsecured US$-bonds underperformed with Yes Bank (YES IN) dragging the group lower. Moody’s downgraded Yes Banks’ fundamental rating and placed its US$-bond under review. US banks reported strong Q4 results and firm December US retail sales data and a bigger-than-expected increase in the January Philadelphia Fed business outlook resulted in a steeper US Treasury yield curve. A steeper Treasury curve is generally beneficial for banks.  

In Asia’s new issue market, China Evergrande (EVERRE)  Evergrande Real Estate Group (3333 HK) priced a three-year maturity B2-rated US$-bond at a yield of 11.5%. By the end of the week, this bond was trading at a lower yield than the similar maturity and rated YESIN 3.75% ’23 bond. Given negative news flow around Yes, this seem appropriate. Within the bank space, Indonesia’s Bank Tabungan Negara Persero (BBTN IJ) brought a five-year Ba3-rated Tier 2 US$-bond that was over 12x subscribed while debt capital issuance in Europe and the US gathered pace. We highlight debt capital new issue that may have potential implications for Asian bank debt in this weekly report.

In other news, Indusind Bank (IIB IN)reported a 7% decline in sequential profits as higher credit costs offset strong operating revenues. The results are not comparable with the year-ago quarter. As the week ended, Siam Commercial Bank PCL (SCB-R TB) reported Q4 results which seem to have missed expectations on higher operating and credit costs. We consider possible bond pricing implications of these announcements and other news events in this weekly. Looking forward, Axis Bank, Bank of Baroda, Canara Bank and ICICI Bank have confirmed earnings announcements next week while other Thai banks and Vietnam Prosperity Bank may also report.

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Brief Singapore: The US and Developed Countries: Bump in the Road or Cliff Edge? and more

By | Daily Briefs, Singapore

In this briefing:

  1. The US and Developed Countries: Bump in the Road or Cliff Edge?
  2. Asia’s HY New Issue Market Sense Check: Positive & Negative Implications
  3. Thai Beverages: 1Q20 Results Beats Consensus as Home Demand Outweighed SABECO & GRG Underperformance
  4. Asian Bank HY Credit Weekly: Pockets of Opportunity
  5. Semiconductor WFE Strong 2019 Finish And Double Digit 2020 Outlook, Albeit With A Coronavirus Caveat

1. The US and Developed Countries: Bump in the Road or Cliff Edge?

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We are in the camp that believes the US economy will hit a recessionary speed-bump in 2020. This isn’t because of the coronavirus fallout but because of signals that emerged through 2019. Over the years we have relied on a series of indicators which have a good track record in forecasting US downturns, regardless of elections or public health.

2. Asia’s HY New Issue Market Sense Check: Positive & Negative Implications

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Things look better than one would expect in Asia’s high yield offshore primary debt markets, given the regional economic contagion from the coronavirus. Issuers last week included an India-based non-bank finance company, two local property developers, a luxury car dealer in China and a telecoms company in India.  The nature and success of the issuance suggest that global liquidity continues to impact the debt capital markets. This has positive and negative implications from our perspective. In some instances, the successful issuance also follows successful financial restructuring. In others, it seems investors may have cash to burn.

In this abridged report, we conduct a sense check regarding recent primary market activity in Asia’s high yield markets to search for clues regarding the market’s perspective on the health of local companies. We believe should be of interest for investors in Asia-headquartered financials, as a healthy high yield market is a coincident indicator on the market’s perception on the health of a financial system’s profit and loss statement, due to capital market revenues and balance sheet lending. Our conclusion is that things may look better than one would expect.

3. Thai Beverages: 1Q20 Results Beats Consensus as Home Demand Outweighed SABECO & GRG Underperformance

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Thai Beverage (THBEV SP)‘s strong start to the fiscal year ending September 2020 was confirmed by its 1QFY20 results which they released on 14th February 2020. The company’s revenue grew 4.2% YoY in 1QFY20 driven by growth in its domestic market. Also, Its EBITDA margin improved by 170bps compared to 1QFY20 through improvements across all its segments.

4. Asian Bank HY Credit Weekly: Pockets of Opportunity

Week%207%20 %20yes%20bank,%20yes%20performs

Roses are red, liquidity rings true. Although we agree with Guggenheim Partners chief investment officer Scott Minerd’s perspective that “yields are low, spreads are tight and risk assets remain priced to perfection”, we believe that liquidity rules. As such, despite increasing evidence of regional economic decline from the coronavirus, credit markets remained broadly positive. Weak Greek banks continue to access the primary market at attractive terms while previously defaulted institutions such as Iceland’s Kaupthing, now Arion Bank, get ready to issue Additional Tier 1 debt. Even the Royal Bank of Scotland will be no more as it rebrands itself as NatWest. Although the market is less attractive, we believe that pockets of opportunity remain.

Amongst Asia-headquartered banks, Yes Bank’s US$-bond outperformed all others by tightening 161bps during the week. We see further upside potential in this credit. Meanwhile, investors rotated out of higher-beta Additional Tier 1 (AT1) bonds of mainland China banks and ventured into callable and bullet maturity Tier 2 instruments of the same institutions. This suggests increasing risk-aversion, but it does not suggest risk-avoidance, and this is a theme that may remain until coronavirus uncertainty fades.

We are splitting the credit weekly in half to hopefully give a more insightful perspective into market movements concerning the banks that we follow. This will also allow for a deeper analysis of new issue market conditions and their implications for secondary market trading.  We note that there may not be new issuance activity in some weeks and, as such, that note will become more of an occasional report, although it may appear almost weekly.

5. Semiconductor WFE Strong 2019 Finish And Double Digit 2020 Outlook, Albeit With A Coronavirus Caveat

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On the back of robust billings in the fourth quarter, the semiconductor Wafer Fab Equipment (WFE) segment closed out 2019 on a  comparatively high note with annual billings for the North American players down 12% YoY, far less than had been originally anticipated. Now, with  Applied Materials bringing to a close the latest reporting season earlier this week, the consensus is for strong double digit growth in 2020.  However, that growth number comes with health warning as AMAT lowers its first quarter guidance by $300 million, some 7% of revenues, as a result of the disruption to their business in China caused by the spread of the so-called Novel Coronavirus in Hubei province. 

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Brief Singapore: Asian Bank HY Credit Weekly: New Issuance and Asian Credit Spreads and more

By | Daily Briefs, Singapore

In this briefing:

  1. Asian Bank HY Credit Weekly: New Issuance and Asian Credit Spreads

1. Asian Bank HY Credit Weekly: New Issuance and Asian Credit Spreads

Week%203%20 %20nim%20highlights%20of%2013%20to%2017%20jan%202020

Spread tightening continued apace as investors put money to work in the global new issue market while questioning the sustainability of recent pricing. Yields on the lowest tier of US$ junk bonds fell below 10% for the first time in 7 months while spreads on single-B rated US$-bonds approached levels last seen in 2007, a disconcerting omen for anyone in the market since then. Asian Subordinated US$-bond spreads and US$ X-over Senior bonds tightened slightly. High Yield Asian bank Senior Unsecured US$-bonds underperformed with Yes Bank (YES IN) dragging the group lower. Moody’s downgraded Yes Banks’ fundamental rating and placed its US$-bond under review. US banks reported strong Q4 results and firm December US retail sales data and a bigger-than-expected increase in the January Philadelphia Fed business outlook resulted in a steeper US Treasury yield curve. A steeper Treasury curve is generally beneficial for banks.  

In Asia’s new issue market, China Evergrande (EVERRE)  Evergrande Real Estate Group (3333 HK) priced a three-year maturity B2-rated US$-bond at a yield of 11.5%. By the end of the week, this bond was trading at a lower yield than the similar maturity and rated YESIN 3.75% ’23 bond. Given negative news flow around Yes, this seem appropriate. Within the bank space, Indonesia’s Bank Tabungan Negara Persero (BBTN IJ) brought a five-year Ba3-rated Tier 2 US$-bond that was over 12x subscribed while debt capital issuance in Europe and the US gathered pace. We highlight debt capital new issue that may have potential implications for Asian bank debt in this weekly report.

In other news, Indusind Bank (IIB IN)reported a 7% decline in sequential profits as higher credit costs offset strong operating revenues. The results are not comparable with the year-ago quarter. As the week ended, Siam Commercial Bank PCL (SCB-R TB) reported Q4 results which seem to have missed expectations on higher operating and credit costs. We consider possible bond pricing implications of these announcements and other news events in this weekly. Looking forward, Axis Bank, Bank of Baroda, Canara Bank and ICICI Bank have confirmed earnings announcements next week while other Thai banks and Vietnam Prosperity Bank may also report.

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Brief Singapore: Asia’s HY New Issue Market Sense Check: Positive & Negative Implications and more

By | Daily Briefs, Singapore

In this briefing:

  1. Asia’s HY New Issue Market Sense Check: Positive & Negative Implications
  2. Thai Beverages: 1Q20 Results Beats Consensus as Home Demand Outweighed SABECO & GRG Underperformance
  3. Asian Bank HY Credit Weekly: Pockets of Opportunity
  4. Semiconductor WFE Strong 2019 Finish And Double Digit 2020 Outlook, Albeit With A Coronavirus Caveat
  5. Circles.Life: Singapore Just Created A Stealth Unicorn – Regional Incumbent Telcos Should Worry

1. Asia’s HY New Issue Market Sense Check: Positive & Negative Implications

Week%207%20 %20hy%20corp%20nim%20of%2010%20to%2014%20feb%202020

Things look better than one would expect in Asia’s high yield offshore primary debt markets, given the regional economic contagion from the coronavirus. Issuers last week included an India-based non-bank finance company, two local property developers, a luxury car dealer in China and a telecoms company in India.  The nature and success of the issuance suggest that global liquidity continues to impact the debt capital markets. This has positive and negative implications from our perspective. In some instances, the successful issuance also follows successful financial restructuring. In others, it seems investors may have cash to burn.

In this abridged report, we conduct a sense check regarding recent primary market activity in Asia’s high yield markets to search for clues regarding the market’s perspective on the health of local companies. We believe should be of interest for investors in Asia-headquartered financials, as a healthy high yield market is a coincident indicator on the market’s perception on the health of a financial system’s profit and loss statement, due to capital market revenues and balance sheet lending. Our conclusion is that things may look better than one would expect.

2. Thai Beverages: 1Q20 Results Beats Consensus as Home Demand Outweighed SABECO & GRG Underperformance

Image 40343167041581854783919

Thai Beverage (THBEV SP)‘s strong start to the fiscal year ending September 2020 was confirmed by its 1QFY20 results which they released on 14th February 2020. The company’s revenue grew 4.2% YoY in 1QFY20 driven by growth in its domestic market. Also, Its EBITDA margin improved by 170bps compared to 1QFY20 through improvements across all its segments.

3. Asian Bank HY Credit Weekly: Pockets of Opportunity

Week%207%20 %20pockets%20of%20opportunity%20remain

Roses are red, liquidity rings true. Although we agree with Guggenheim Partners chief investment officer Scott Minerd’s perspective that “yields are low, spreads are tight and risk assets remain priced to perfection”, we believe that liquidity rules. As such, despite increasing evidence of regional economic decline from the coronavirus, credit markets remained broadly positive. Weak Greek banks continue to access the primary market at attractive terms while previously defaulted institutions such as Iceland’s Kaupthing, now Arion Bank, get ready to issue Additional Tier 1 debt. Even the Royal Bank of Scotland will be no more as it rebrands itself as NatWest. Although the market is less attractive, we believe that pockets of opportunity remain.

Amongst Asia-headquartered banks, Yes Bank’s US$-bond outperformed all others by tightening 161bps during the week. We see further upside potential in this credit. Meanwhile, investors rotated out of higher-beta Additional Tier 1 (AT1) bonds of mainland China banks and ventured into callable and bullet maturity Tier 2 instruments of the same institutions. This suggests increasing risk-aversion, but it does not suggest risk-avoidance, and this is a theme that may remain until coronavirus uncertainty fades.

We are splitting the credit weekly in half to hopefully give a more insightful perspective into market movements concerning the banks that we follow. This will also allow for a deeper analysis of new issue market conditions and their implications for secondary market trading.  We note that there may not be new issuance activity in some weeks and, as such, that note will become more of an occasional report, although it may appear almost weekly.

4. Semiconductor WFE Strong 2019 Finish And Double Digit 2020 Outlook, Albeit With A Coronavirus Caveat

Image 69212212341581646136035

On the back of robust billings in the fourth quarter, the semiconductor Wafer Fab Equipment (WFE) segment closed out 2019 on a  comparatively high note with annual billings for the North American players down 12% YoY, far less than had been originally anticipated. Now, with  Applied Materials bringing to a close the latest reporting season earlier this week, the consensus is for strong double digit growth in 2020.  However, that growth number comes with health warning as AMAT lowers its first quarter guidance by $300 million, some 7% of revenues, as a result of the disruption to their business in China caused by the spread of the so-called Novel Coronavirus in Hubei province. 

5. Circles.Life: Singapore Just Created A Stealth Unicorn – Regional Incumbent Telcos Should Worry

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We believe Circles.Life is likely Singapore’s newest unicorn thanks to its recent investment from global PE firm Warburg Pincus. We believe the digital telco has already captured over 5% market share in Singapore, is rapidly expanding its presence in Taiwan & Australia, and the company has said that they are now eyeing two new markets to enter by end-2020.

We believe that Circles.Life’s success indicates a broader shift in the telco industry to competing more on customer service & digital experiences – away from the price competition and commoditized offerings, the old business model that traditional incumbents are used to. 

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Brief Singapore: The Race To The Top? Beijing Chases The Wall Street Bubble and more

By | Daily Briefs, Singapore

In this briefing:

  1. The Race To The Top? Beijing Chases The Wall Street Bubble

1. The Race To The Top? Beijing Chases The Wall Street Bubble

Image 12467037221579281300716

  • Central Banks continue to fuel markets
  • China’s PBoC starting to add liquidity
  • Is this a Shanghai Accord 2 matching previous monetary deals like 1985 Plaza Accord?
  • Emerging Markets potentially key beneficiaries in 2020

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