Category

Thailand

Brief Thailand: Vietnam’s Big Investment Secret: Foreign Inflows Surge and more

By | Daily Briefs, Thailand

In this briefing:

  1. Vietnam’s Big Investment Secret: Foreign Inflows Surge
  2. BCH: Private Chain Hospital with High Sustainable Growth
  3. Buy Cyclicals? US Fed Hijacked By Big Jump In Global Capital Flows

1. Vietnam’s Big Investment Secret: Foreign Inflows Surge

Smartk2

  • March saw another strong month of cross-border capital inflows into Vietnam financial assets
  • Underlying flow index shows strong momentum hits value 76.9 (range 0-100)
  • Vietnam flows are moving with similar cross-border flow cycle as China and Asian EM

2. BCH: Private Chain Hospital with High Sustainable Growth

Capture2

We initiate coverage on BCH with a BUY rating, based on a target price of Bt21, which is derived from a DCF methodology (WACC 6.8% and terminal growth 0%), implying 43.8xPE’19E, a a 19% premium to the Thai Health Care sector.

The story:

  • Hospital with the most number of Social Security registered against an ageing society theme.
  • Market overreacted to earnings disappointment in 4Q18.
  • New strategies attract foreign patients, boosting flagship hospital
  • IVF Lab to create new growth opportunities
  • Adding three hospitals in areas of large potential demand.

Risks:

 Lack of medical personnel & changes in social security policy

3. Buy Cyclicals? US Fed Hijacked By Big Jump In Global Capital Flows

Cbfgdp

  • World (gross) cross-border flows have rebounded strongly
  • Global Liquidity and World Business cycle are increasing driven by cross-border flows
  • Strong cross-border flows drive outperformance of cyclicals and non-US markets

Get Straight to the Source on Smartkarma

Smartkarma supports the world’s leading investors with high-quality, timely, and actionable Insights. Subscribe now for unlimited access, or request a demo below.



Brief Thailand: GEM Positioning Monthly:  Indonesian Financials, Food & Beverages, Lenovo Sentiment Reversal and more

By | Daily Briefs, Thailand

In this briefing:

  1. GEM Positioning Monthly:  Indonesian Financials, Food & Beverages, Lenovo Sentiment Reversal
  2. JKN: Little Impact from Digital TV Operators Returning Licenses to NBTC
  3. The Global Recovery Narrative Crumbles
  4. Bitcoin, Revisited
  5. SPINOFF: Three Announced but Unconfirmed HK Spinoffs: Legend, Kerry Logistics, Tianneng Power

1. GEM Positioning Monthly:  Indonesian Financials, Food & Beverages, Lenovo Sentiment Reversal

Highlights15

Copley Fund Research analyse the holdings of long-only equity funds.  This analysis is taken from our GEM research product, covering 189 global emerging market funds with a combined AUM of $350bn. 

In this month’s Positioning Monthly, we highlight an increasing exposure towards Indonesian Financial stocks, with Bank Rakyat Indonesia Perser (BBRI IJ) and Bank Central Asia (BBCA IJ) the key overweight positions.  We analyse holdings in the food and beverages industry groups as ownership reaches peak levels in both.  Finally, we explore the sharp reversal in Lenovo (992 HK) sentiment as more and more GEM funds buy into the stock.

2. JKN: Little Impact from Digital TV Operators Returning Licenses to NBTC

Jkn%20update%202.1

We maintain our BUY rating for JKN with a target price of Bt8.80 based on 14.8xPE’19E, average of Asia ex-Japan Consumer Discretionary sector. We foresee insignificant impact from seven of digital TV channel operators (out of 22) who intend to return broadcasting licenses to the NBTC. We expect new clients to cover such a loss from one key account (Bright TV no.20) within 3Q19.

The story:

  • New potential clients could buffer loss from one key client
  • Continuing recovery for domestic digital TV industry
  • Expect 24% CAGR of EPS growth in 2019-21E

Risks: Heavy reliance on a few major customers, probability it will have to set provisions for doubtful debts and potential inability to renew contracts with customers.

3. The Global Recovery Narrative Crumbles

3%20 %20copy

The US equity market was running with an optimistic assessment that there is a Trump and Fed put, that a trade deal and Chinese policy stimulus would generate a recovery in the global economy and the US economy was largely immune to a slowdown in activity abroad. However, the tariffs have been increased, trade talks have stalled, and the US has rolled out bans on Chinese tech companies.  The evidence grows that there is a structural rift in US-China trade relations. The rebound in Chinese economic activity in March was not backed up by data in other Asian exporter nations or Europe through April.  Chinese activity data slumped again in April, and the latest PMI data in the Eurozone, Japan and the USA for May are weak. Oil and copper prices have turned lower, suggesting that industrial activity remains weak.  We continue to see downside risk for still elevated US equities.  The strength in the USD to date is contributing to downward pressure on US equities.  The gains in the USD may have become over-extended.  China may pursue a more stable CNY for a period and lower US yields should support safe haven currencies, JPY, CHF and gold.

4. Bitcoin, Revisited

Bitcoin volatility ratio of bitcoin volatility to stocks volatility chartbuilder 3

Bitcoin and the block chain were created just over ten years ago, as a means to create peer to peer transactions without the need to use financial institutions to process the payments. 

However, frequent hacks of Bitcoin exchanges, in addition to the significant past fluctuations of Bitcoin prices, have put mainstream usage off and slowed the adoption of the cryptocurrency.

Is this about to change now?

5. SPINOFF: Three Announced but Unconfirmed HK Spinoffs: Legend, Kerry Logistics, Tianneng Power

Legend Holdings Corp H (3396 HK), Kerry Logistics Network (636 HK) and Tianneng Power Intl (819 HK) have made announcements they intend to spin-off certain divisions.

These spin-offs remain subject to Exchange approvals and market conditions.

While they are not yet “live” as situations, they deserve a look because spin-offs create new parent/subsidiary relationships, leading to Relative Value trade ideas going forward, which will be dependent on the spin-off’s liquidity and the % market cap held by the parent.

Using available information from the prospectus/red herrings and various HKEx announcements, it is also possible to back out a rudimentary implied stub value of the unlisted parent’s operations ahead of these spin-offs.

Get Straight to the Source on Smartkarma

Smartkarma supports the world’s leading investors with high-quality, timely, and actionable Insights. Subscribe now for unlimited access, or request a demo below.



Brief Thailand: Vietnam’s Big Investment Secret: Foreign Inflows Surge and more

By | Daily Briefs, Thailand

In this briefing:

  1. Vietnam’s Big Investment Secret: Foreign Inflows Surge
  2. BCH: Private Chain Hospital with High Sustainable Growth
  3. Buy Cyclicals? US Fed Hijacked By Big Jump In Global Capital Flows
  4. Krungthai Card – Performing in All Line Items

1. Vietnam’s Big Investment Secret: Foreign Inflows Surge

Smartk2

  • March saw another strong month of cross-border capital inflows into Vietnam financial assets
  • Underlying flow index shows strong momentum hits value 76.9 (range 0-100)
  • Vietnam flows are moving with similar cross-border flow cycle as China and Asian EM

2. BCH: Private Chain Hospital with High Sustainable Growth

Capture2

We initiate coverage on BCH with a BUY rating, based on a target price of Bt21, which is derived from a DCF methodology (WACC 6.8% and terminal growth 0%), implying 43.8xPE’19E, a a 19% premium to the Thai Health Care sector.

The story:

  • Hospital with the most number of Social Security registered against an ageing society theme.
  • Market overreacted to earnings disappointment in 4Q18.
  • New strategies attract foreign patients, boosting flagship hospital
  • IVF Lab to create new growth opportunities
  • Adding three hospitals in areas of large potential demand.

Risks:

 Lack of medical personnel & changes in social security policy

3. Buy Cyclicals? US Fed Hijacked By Big Jump In Global Capital Flows

Cbfgdp

  • World (gross) cross-border flows have rebounded strongly
  • Global Liquidity and World Business cycle are increasing driven by cross-border flows
  • Strong cross-border flows drive outperformance of cyclicals and non-US markets

4. Krungthai Card – Performing in All Line Items

1

Thailand’s Krungthai Card (KTC TB) continues to impress. What makes the story so powerful is the multifaceted strength of the credit card and personal lender. In its 1Q19 results the company reports marketing costs down 2.5% YoY where in 2018 these costs rose 5.0%. The company is nimble, able to quickly adapt to changing conditions, and seemingly always with a view to maximizing profit.  Marketing costs are just one example. 

Get Straight to the Source on Smartkarma

Smartkarma supports the world’s leading investors with high-quality, timely, and actionable Insights. Subscribe now for unlimited access, or request a demo below.



Brief Thailand: BCH: Private Chain Hospital with High Sustainable Growth and more

By | Daily Briefs, Thailand

In this briefing:

  1. BCH: Private Chain Hospital with High Sustainable Growth
  2. Buy Cyclicals? US Fed Hijacked By Big Jump In Global Capital Flows
  3. Krungthai Card – Performing in All Line Items
  4. This Week in Blockchain & Cryptos: MimbleWimble – A Friend or Foe to Bitcoin?

1. BCH: Private Chain Hospital with High Sustainable Growth

Capture2

We initiate coverage on BCH with a BUY rating, based on a target price of Bt21, which is derived from a DCF methodology (WACC 6.8% and terminal growth 0%), implying 43.8xPE’19E, a a 19% premium to the Thai Health Care sector.

The story:

  • Hospital with the most number of Social Security registered against an ageing society theme.
  • Market overreacted to earnings disappointment in 4Q18.
  • New strategies attract foreign patients, boosting flagship hospital
  • IVF Lab to create new growth opportunities
  • Adding three hospitals in areas of large potential demand.

Risks:

 Lack of medical personnel & changes in social security policy

2. Buy Cyclicals? US Fed Hijacked By Big Jump In Global Capital Flows

Cbfgdp

  • World (gross) cross-border flows have rebounded strongly
  • Global Liquidity and World Business cycle are increasing driven by cross-border flows
  • Strong cross-border flows drive outperformance of cyclicals and non-US markets

3. Krungthai Card – Performing in All Line Items

1

Thailand’s Krungthai Card (KTC TB) continues to impress. What makes the story so powerful is the multifaceted strength of the credit card and personal lender. In its 1Q19 results the company reports marketing costs down 2.5% YoY where in 2018 these costs rose 5.0%. The company is nimble, able to quickly adapt to changing conditions, and seemingly always with a view to maximizing profit.  Marketing costs are just one example. 

4. This Week in Blockchain & Cryptos: MimbleWimble – A Friend or Foe to Bitcoin?

  • MimbleWimble is a powerful, positive technological development in the crypto space. There is an increasing possibility that MimbleWimble protocol may become a sidechain to Bitcoin in the future. The launch of Beam and Grin cryptocurrencies in January 2019 is likely to be just the start of many more MimbleWimble protocol based cryptos that may gain greater market acceptance. From a fundamental perspective, as an increasing number of people realize the benefits of using MimbleWimble alongside Bitcoin, this could be one of the reasons helping to drive Bitcoin price higher this year. 
  • MimbleWimble is a privacy-oriented blockchain protocol which attempts to make transactions very anonymous, while still allowing for external verification on a highly scalable basis and maintaining quick verification.  

  • MimbleWimble has its share of weaknesses including potential government crackdown, slow adoption of MimbleWimble based cryptos by major exchanges, and lack of scripting language.
  • However, the clear superiority in anonymity, scalability, and fungibility of MimbleWimble may outweigh its negatives. All in all, MimbleWimble is one the key technological trends that will impact the cryptocurrencies/blockchain sector this year and it is worthwhile paying close attention on this technology. 

Get Straight to the Source on Smartkarma

Smartkarma supports the world’s leading investors with high-quality, timely, and actionable Insights. Subscribe now for unlimited access, or request a demo below.



Brief Thailand: JKN: Little Impact from Digital TV Operators Returning Licenses to NBTC and more

By | Daily Briefs, Thailand

In this briefing:

  1. JKN: Little Impact from Digital TV Operators Returning Licenses to NBTC
  2. The Global Recovery Narrative Crumbles
  3. Bitcoin, Revisited
  4. SPINOFF: Three Announced but Unconfirmed HK Spinoffs: Legend, Kerry Logistics, Tianneng Power
  5. ROBINS: Potential Solid 2Q19 Should Counter De-Rating Trend

1. JKN: Little Impact from Digital TV Operators Returning Licenses to NBTC

Jkn%20update%202.3

We maintain our BUY rating for JKN with a target price of Bt8.80 based on 14.8xPE’19E, average of Asia ex-Japan Consumer Discretionary sector. We foresee insignificant impact from seven of digital TV channel operators (out of 22) who intend to return broadcasting licenses to the NBTC. We expect new clients to cover such a loss from one key account (Bright TV no.20) within 3Q19.

The story:

  • New potential clients could buffer loss from one key client
  • Continuing recovery for domestic digital TV industry
  • Expect 24% CAGR of EPS growth in 2019-21E

Risks: Heavy reliance on a few major customers, probability it will have to set provisions for doubtful debts and potential inability to renew contracts with customers.

2. The Global Recovery Narrative Crumbles

4%20 %20copy

The US equity market was running with an optimistic assessment that there is a Trump and Fed put, that a trade deal and Chinese policy stimulus would generate a recovery in the global economy and the US economy was largely immune to a slowdown in activity abroad. However, the tariffs have been increased, trade talks have stalled, and the US has rolled out bans on Chinese tech companies.  The evidence grows that there is a structural rift in US-China trade relations. The rebound in Chinese economic activity in March was not backed up by data in other Asian exporter nations or Europe through April.  Chinese activity data slumped again in April, and the latest PMI data in the Eurozone, Japan and the USA for May are weak. Oil and copper prices have turned lower, suggesting that industrial activity remains weak.  We continue to see downside risk for still elevated US equities.  The strength in the USD to date is contributing to downward pressure on US equities.  The gains in the USD may have become over-extended.  China may pursue a more stable CNY for a period and lower US yields should support safe haven currencies, JPY, CHF and gold.

3. Bitcoin, Revisited

Bitcoin volatility ratio of bitcoin volatility to stocks volatility chartbuilder 3

Bitcoin and the block chain were created just over ten years ago, as a means to create peer to peer transactions without the need to use financial institutions to process the payments. 

However, frequent hacks of Bitcoin exchanges, in addition to the significant past fluctuations of Bitcoin prices, have put mainstream usage off and slowed the adoption of the cryptocurrency.

Is this about to change now?

4. SPINOFF: Three Announced but Unconfirmed HK Spinoffs: Legend, Kerry Logistics, Tianneng Power

Legend Holdings Corp H (3396 HK), Kerry Logistics Network (636 HK) and Tianneng Power Intl (819 HK) have made announcements they intend to spin-off certain divisions.

These spin-offs remain subject to Exchange approvals and market conditions.

While they are not yet “live” as situations, they deserve a look because spin-offs create new parent/subsidiary relationships, leading to Relative Value trade ideas going forward, which will be dependent on the spin-off’s liquidity and the % market cap held by the parent.

Using available information from the prospectus/red herrings and various HKEx announcements, it is also possible to back out a rudimentary implied stub value of the unlisted parent’s operations ahead of these spin-offs.

5. ROBINS: Potential Solid 2Q19 Should Counter De-Rating Trend

Robins%205

We maintain our BUY rating on Robinson Department Store (ROBINS TB) with a new 2019E target price of Bt70.0, from previous Bt78.0, derived from a PER of 24.1x, which is -1 SD of its 5-year trading average. Although ROBINS seems to have a slower growth prospect, we think it has largely priced in the stock price declining to near -2 SD of its trading average. Meanwhile, there should be positive catalysts in 2Q19.

The story:

  • Cut 2019-20E earnings forecast by 7% and 6%, respectively
  • Attractive valuation at -2SD of its 5-year trading average
  • Favourable 2Q19 environment
  • Expected 9.6% EPS growth in 2019-21E

Risks: Domestic consumption slowdown, Fast-changing fashions lead to obsolete stock, Investment and future project development failures

Get Straight to the Source on Smartkarma

Smartkarma supports the world’s leading investors with high-quality, timely, and actionable Insights. Subscribe now for unlimited access, or request a demo below.



Brief Thailand: Buy Cyclicals? US Fed Hijacked By Big Jump In Global Capital Flows and more

By | Daily Briefs, Thailand

In this briefing:

  1. Buy Cyclicals? US Fed Hijacked By Big Jump In Global Capital Flows
  2. Krungthai Card – Performing in All Line Items
  3. This Week in Blockchain & Cryptos: MimbleWimble – A Friend or Foe to Bitcoin?
  4. Using BORUC to Pick Asian Growth Stocks

1. Buy Cyclicals? US Fed Hijacked By Big Jump In Global Capital Flows

Cbfgdp

  • World (gross) cross-border flows have rebounded strongly
  • Global Liquidity and World Business cycle are increasing driven by cross-border flows
  • Strong cross-border flows drive outperformance of cyclicals and non-US markets

2. Krungthai Card – Performing in All Line Items

1

Thailand’s Krungthai Card (KTC TB) continues to impress. What makes the story so powerful is the multifaceted strength of the credit card and personal lender. In its 1Q19 results the company reports marketing costs down 2.5% YoY where in 2018 these costs rose 5.0%. The company is nimble, able to quickly adapt to changing conditions, and seemingly always with a view to maximizing profit.  Marketing costs are just one example. 

3. This Week in Blockchain & Cryptos: MimbleWimble – A Friend or Foe to Bitcoin?

  • MimbleWimble is a powerful, positive technological development in the crypto space. There is an increasing possibility that MimbleWimble protocol may become a sidechain to Bitcoin in the future. The launch of Beam and Grin cryptocurrencies in January 2019 is likely to be just the start of many more MimbleWimble protocol based cryptos that may gain greater market acceptance. From a fundamental perspective, as an increasing number of people realize the benefits of using MimbleWimble alongside Bitcoin, this could be one of the reasons helping to drive Bitcoin price higher this year. 
  • MimbleWimble is a privacy-oriented blockchain protocol which attempts to make transactions very anonymous, while still allowing for external verification on a highly scalable basis and maintaining quick verification.  

  • MimbleWimble has its share of weaknesses including potential government crackdown, slow adoption of MimbleWimble based cryptos by major exchanges, and lack of scripting language.
  • However, the clear superiority in anonymity, scalability, and fungibility of MimbleWimble may outweigh its negatives. All in all, MimbleWimble is one the key technological trends that will impact the cryptocurrencies/blockchain sector this year and it is worthwhile paying close attention on this technology. 

4. Using BORUC to Pick Asian Growth Stocks

Introducing the Bucephalus Operating Return on Utilised Capital

We created BORUC, to reveal the true operating performance of businesses because ‘traditional’ measures (ROE, ROCE etc.) are easy to manipulate. Struggling companies often resort to creative accounting to obscure their problems and hide their decline. This alters the numerator in ROE, ROCE etc. and disguises their investment and capex cycles.

Get Straight to the Source on Smartkarma

Smartkarma supports the world’s leading investors with high-quality, timely, and actionable Insights. Subscribe now for unlimited access, or request a demo below.



Brief Thailand: The Global Recovery Narrative Crumbles and more

By | Daily Briefs, Thailand

In this briefing:

  1. The Global Recovery Narrative Crumbles
  2. Bitcoin, Revisited
  3. SPINOFF: Three Announced but Unconfirmed HK Spinoffs: Legend, Kerry Logistics, Tianneng Power
  4. ROBINS: Potential Solid 2Q19 Should Counter De-Rating Trend
  5. A Second Look at Thai REITs

1. The Global Recovery Narrative Crumbles

4%20 %20copy

The US equity market was running with an optimistic assessment that there is a Trump and Fed put, that a trade deal and Chinese policy stimulus would generate a recovery in the global economy and the US economy was largely immune to a slowdown in activity abroad. However, the tariffs have been increased, trade talks have stalled, and the US has rolled out bans on Chinese tech companies.  The evidence grows that there is a structural rift in US-China trade relations. The rebound in Chinese economic activity in March was not backed up by data in other Asian exporter nations or Europe through April.  Chinese activity data slumped again in April, and the latest PMI data in the Eurozone, Japan and the USA for May are weak. Oil and copper prices have turned lower, suggesting that industrial activity remains weak.  We continue to see downside risk for still elevated US equities.  The strength in the USD to date is contributing to downward pressure on US equities.  The gains in the USD may have become over-extended.  China may pursue a more stable CNY for a period and lower US yields should support safe haven currencies, JPY, CHF and gold.

2. Bitcoin, Revisited

Bitcoin volatility ratio of bitcoin volatility to stocks volatility chartbuilder 3

Bitcoin and the block chain were created just over ten years ago, as a means to create peer to peer transactions without the need to use financial institutions to process the payments. 

However, frequent hacks of Bitcoin exchanges, in addition to the significant past fluctuations of Bitcoin prices, have put mainstream usage off and slowed the adoption of the cryptocurrency.

Is this about to change now?

3. SPINOFF: Three Announced but Unconfirmed HK Spinoffs: Legend, Kerry Logistics, Tianneng Power

Legend Holdings Corp H (3396 HK), Kerry Logistics Network (636 HK) and Tianneng Power Intl (819 HK) have made announcements they intend to spin-off certain divisions.

These spin-offs remain subject to Exchange approvals and market conditions.

While they are not yet “live” as situations, they deserve a look because spin-offs create new parent/subsidiary relationships, leading to Relative Value trade ideas going forward, which will be dependent on the spin-off’s liquidity and the % market cap held by the parent.

Using available information from the prospectus/red herrings and various HKEx announcements, it is also possible to back out a rudimentary implied stub value of the unlisted parent’s operations ahead of these spin-offs.

4. ROBINS: Potential Solid 2Q19 Should Counter De-Rating Trend

Robins%204

We maintain our BUY rating on Robinson Department Store (ROBINS TB) with a new 2019E target price of Bt70.0, from previous Bt78.0, derived from a PER of 24.1x, which is -1 SD of its 5-year trading average. Although ROBINS seems to have a slower growth prospect, we think it has largely priced in the stock price declining to near -2 SD of its trading average. Meanwhile, there should be positive catalysts in 2Q19.

The story:

  • Cut 2019-20E earnings forecast by 7% and 6%, respectively
  • Attractive valuation at -2SD of its 5-year trading average
  • Favourable 2Q19 environment
  • Expected 9.6% EPS growth in 2019-21E

Risks: Domestic consumption slowdown, Fast-changing fashions lead to obsolete stock, Investment and future project development failures

5. A Second Look at Thai REITs

REITs are fairly new asset class in Thailand. Today, we met with CPN, a sponsor of some of Central Group’s most important commercial REITs, and FTREIT (Fraser), an industrial REIT from the TCC Group. Here’s the key takeaways:

  • Very stable business but not much growth for both firms. Earnings grew 10% for FTREIT and only 3% for CPN. However, it should be noted that both firms eked out some top line growth, and CPN’s earnings were somewhat depressed by the additional debt it incurred to buy out GLAND from BAY Group.
  • Geography mattered a lot for FTREIT. It was able to raise rental fees by 3% at the Bangplee estate in Bangkok that served e-commerce firms like Lazada, but for the northern estate (Ayuthya/Pathumthani), they largely kept existing rates in order to retain tenants.
  • Low gearing of 0.35x for CPN and 0.23x for FTREIT is a competitive advantage for both. Their high credit ratings (A for FTREIT and AA for CPN) gives them a super low cost of funding only slightly higher than 3%.
  • Opportunities and customers. FTREIT still sees its future primarily in Japanese rather than Chinese customers. Its three locations are respectively dominated by electronics (North), e-commerce (Bangplee), and autos (EEC).

Get Straight to the Source on Smartkarma

Smartkarma supports the world’s leading investors with high-quality, timely, and actionable Insights. Subscribe now for unlimited access, or request a demo below.



Brief Thailand: Krungthai Card – Performing in All Line Items and more

By | Daily Briefs, Thailand

In this briefing:

  1. Krungthai Card – Performing in All Line Items
  2. This Week in Blockchain & Cryptos: MimbleWimble – A Friend or Foe to Bitcoin?
  3. Using BORUC to Pick Asian Growth Stocks
  4. Semiconductor Revenues Collapsing, As Anticipated

1. Krungthai Card – Performing in All Line Items

1

Thailand’s Krungthai Card (KTC TB) continues to impress. What makes the story so powerful is the multifaceted strength of the credit card and personal lender. In its 1Q19 results the company reports marketing costs down 2.5% YoY where in 2018 these costs rose 5.0%. The company is nimble, able to quickly adapt to changing conditions, and seemingly always with a view to maximizing profit.  Marketing costs are just one example. 

2. This Week in Blockchain & Cryptos: MimbleWimble – A Friend or Foe to Bitcoin?

  • MimbleWimble is a powerful, positive technological development in the crypto space. There is an increasing possibility that MimbleWimble protocol may become a sidechain to Bitcoin in the future. The launch of Beam and Grin cryptocurrencies in January 2019 is likely to be just the start of many more MimbleWimble protocol based cryptos that may gain greater market acceptance. From a fundamental perspective, as an increasing number of people realize the benefits of using MimbleWimble alongside Bitcoin, this could be one of the reasons helping to drive Bitcoin price higher this year. 
  • MimbleWimble is a privacy-oriented blockchain protocol which attempts to make transactions very anonymous, while still allowing for external verification on a highly scalable basis and maintaining quick verification.  

  • MimbleWimble has its share of weaknesses including potential government crackdown, slow adoption of MimbleWimble based cryptos by major exchanges, and lack of scripting language.
  • However, the clear superiority in anonymity, scalability, and fungibility of MimbleWimble may outweigh its negatives. All in all, MimbleWimble is one the key technological trends that will impact the cryptocurrencies/blockchain sector this year and it is worthwhile paying close attention on this technology. 

3. Using BORUC to Pick Asian Growth Stocks

Introducing the Bucephalus Operating Return on Utilised Capital

We created BORUC, to reveal the true operating performance of businesses because ‘traditional’ measures (ROE, ROCE etc.) are easy to manipulate. Struggling companies often resort to creative accounting to obscure their problems and hide their decline. This alters the numerator in ROE, ROCE etc. and disguises their investment and capex cycles.

4. Semiconductor Revenues Collapsing, As Anticipated

2019 04 01%20wsts%20monthly%20revenues

On April 1 the World Semiconductor Trade Statistics were released illustrating, as we anticipated, that a full-blown collapse is underway.  This Insight shows how consistently the current situation follows past trends.

Get Straight to the Source on Smartkarma

Smartkarma supports the world’s leading investors with high-quality, timely, and actionable Insights. Subscribe now for unlimited access, or request a demo below.



Brief Thailand: Bitcoin, Revisited and more

By | Daily Briefs, Thailand

In this briefing:

  1. Bitcoin, Revisited
  2. SPINOFF: Three Announced but Unconfirmed HK Spinoffs: Legend, Kerry Logistics, Tianneng Power
  3. ROBINS: Potential Solid 2Q19 Should Counter De-Rating Trend
  4. A Second Look at Thai REITs
  5. High Stakes Huawei Gamble a Weight on US and Global Equities

1. Bitcoin, Revisited

Screenshot%202019 05 23%20at%2020.26.51

Bitcoin and the block chain were created just over ten years ago, as a means to create peer to peer transactions without the need to use financial institutions to process the payments. 

However, frequent hacks of Bitcoin exchanges, in addition to the significant past fluctuations of Bitcoin prices, have put mainstream usage off and slowed the adoption of the cryptocurrency.

Is this about to change now?

2. SPINOFF: Three Announced but Unconfirmed HK Spinoffs: Legend, Kerry Logistics, Tianneng Power

Legend Holdings Corp H (3396 HK), Kerry Logistics Network (636 HK) and Tianneng Power Intl (819 HK) have made announcements they intend to spin-off certain divisions.

These spin-offs remain subject to Exchange approvals and market conditions.

While they are not yet “live” as situations, they deserve a look because spin-offs create new parent/subsidiary relationships, leading to Relative Value trade ideas going forward, which will be dependent on the spin-off’s liquidity and the % market cap held by the parent.

Using available information from the prospectus/red herrings and various HKEx announcements, it is also possible to back out a rudimentary implied stub value of the unlisted parent’s operations ahead of these spin-offs.

3. ROBINS: Potential Solid 2Q19 Should Counter De-Rating Trend

Robins%204

We maintain our BUY rating on Robinson Department Store (ROBINS TB) with a new 2019E target price of Bt70.0, from previous Bt78.0, derived from a PER of 24.1x, which is -1 SD of its 5-year trading average. Although ROBINS seems to have a slower growth prospect, we think it has largely priced in the stock price declining to near -2 SD of its trading average. Meanwhile, there should be positive catalysts in 2Q19.

The story:

  • Cut 2019-20E earnings forecast by 7% and 6%, respectively
  • Attractive valuation at -2SD of its 5-year trading average
  • Favourable 2Q19 environment
  • Expected 9.6% EPS growth in 2019-21E

Risks: Domestic consumption slowdown, Fast-changing fashions lead to obsolete stock, Investment and future project development failures

4. A Second Look at Thai REITs

REITs are fairly new asset class in Thailand. Today, we met with CPN, a sponsor of some of Central Group’s most important commercial REITs, and FTREIT (Fraser), an industrial REIT from the TCC Group. Here’s the key takeaways:

  • Very stable business but not much growth for both firms. Earnings grew 10% for FTREIT and only 3% for CPN. However, it should be noted that both firms eked out some top line growth, and CPN’s earnings were somewhat depressed by the additional debt it incurred to buy out GLAND from BAY Group.
  • Geography mattered a lot for FTREIT. It was able to raise rental fees by 3% at the Bangplee estate in Bangkok that served e-commerce firms like Lazada, but for the northern estate (Ayuthya/Pathumthani), they largely kept existing rates in order to retain tenants.
  • Low gearing of 0.35x for CPN and 0.23x for FTREIT is a competitive advantage for both. Their high credit ratings (A for FTREIT and AA for CPN) gives them a super low cost of funding only slightly higher than 3%.
  • Opportunities and customers. FTREIT still sees its future primarily in Japanese rather than Chinese customers. Its three locations are respectively dominated by electronics (North), e-commerce (Bangplee), and autos (EEC).

5. High Stakes Huawei Gamble a Weight on US and Global Equities

1%20 %20copy

The Huawei Entity Listing appears to be a high stakes gamble by the US administration to counter the rise in Chinese economic power in an industry that is critical to the global economy.  It is evidence that the broader economic and trade dispute will be hard to resolve, and makes it harder for China and the US to resume trade negotiations.  This suggests that punitive tariffs may remain in place for much longer than expected and indeed may be expanded further.  Global trade and manufacturing activity appears to have been undermined by the trade dispute, and hopes of a recovery later in the year may continue to fade.  China is likely to retaliate; weakening the outlook for US companies.  It may also weaponise its exchange rate, allowing it to weaken further, adding to strength in the USD, dampening US equities. The market might assume that the Fed will cut rates to support the equity market, but this is unlikely until US financial conditions deteriorate further.  As such, we see a high risk of a weaker global equity market, and under-performance in EM and commodity currencies against safe havens, gold and JPY.

Get Straight to the Source on Smartkarma

Smartkarma supports the world’s leading investors with high-quality, timely, and actionable Insights. Subscribe now for unlimited access, or request a demo below.



Brief Thailand: This Week in Blockchain & Cryptos: MimbleWimble – A Friend or Foe to Bitcoin? and more

By | Daily Briefs, Thailand

In this briefing:

  1. This Week in Blockchain & Cryptos: MimbleWimble – A Friend or Foe to Bitcoin?
  2. Using BORUC to Pick Asian Growth Stocks
  3. Semiconductor Revenues Collapsing, As Anticipated
  4. Bitcoin Is Back on Its Feet

1. This Week in Blockchain & Cryptos: MimbleWimble – A Friend or Foe to Bitcoin?

  • MimbleWimble is a powerful, positive technological development in the crypto space. There is an increasing possibility that MimbleWimble protocol may become a sidechain to Bitcoin in the future. The launch of Beam and Grin cryptocurrencies in January 2019 is likely to be just the start of many more MimbleWimble protocol based cryptos that may gain greater market acceptance. From a fundamental perspective, as an increasing number of people realize the benefits of using MimbleWimble alongside Bitcoin, this could be one of the reasons helping to drive Bitcoin price higher this year. 
  • MimbleWimble is a privacy-oriented blockchain protocol which attempts to make transactions very anonymous, while still allowing for external verification on a highly scalable basis and maintaining quick verification.  

  • MimbleWimble has its share of weaknesses including potential government crackdown, slow adoption of MimbleWimble based cryptos by major exchanges, and lack of scripting language.
  • However, the clear superiority in anonymity, scalability, and fungibility of MimbleWimble may outweigh its negatives. All in all, MimbleWimble is one the key technological trends that will impact the cryptocurrencies/blockchain sector this year and it is worthwhile paying close attention on this technology. 

2. Using BORUC to Pick Asian Growth Stocks

Introducing the Bucephalus Operating Return on Utilised Capital

We created BORUC, to reveal the true operating performance of businesses because ‘traditional’ measures (ROE, ROCE etc.) are easy to manipulate. Struggling companies often resort to creative accounting to obscure their problems and hide their decline. This alters the numerator in ROE, ROCE etc. and disguises their investment and capex cycles.

3. Semiconductor Revenues Collapsing, As Anticipated

2019 04 01%20wsts%20monthly%20revenues

On April 1 the World Semiconductor Trade Statistics were released illustrating, as we anticipated, that a full-blown collapse is underway.  This Insight shows how consistently the current situation follows past trends.

4. Bitcoin Is Back on Its Feet

Picture%201

Bitcoin has been getting back on its feet since March, after a year-long bear market that saw the currency going from an almost $20,000 peak in December 2017 to a bottom of $3,200 in December of 2018.

Yet since March, the Fed has performed a complete U-turn in monetary policy, going from signalling three more rate hikes this year back in December, to none expected now.

Is this just a coincidence?

Get Straight to the Source on Smartkarma

Smartkarma supports the world’s leading investors with high-quality, timely, and actionable Insights. Subscribe now for unlimited access, or request a demo below.