Bottom-Up EquitiesDaily Briefs

Equity Bottom-Up: Honda Motor, Prodia, AKR Corporindo, Bank Negara Indonesia Persero, Intel Corp and more

In today’s briefing:

  • Honda – Potential for a 1QFY22 Blowout
  • Smartkarma Webinar | Overweight and Underweight in Indonesia Amidst the Covid Crisis
  • AKR Corporindo (AKRA IJ) – Freeport Smelter a Boon for JIIPE
  • Bank Negara Indonesia (BBNI IJ) – Digitally Remastered in Style
  • Why Would Intel Buy Global Foundries?

Honda – Potential for a 1QFY22 Blowout

By Mio Kato

Consensus estimates for Honda suggest 1QFY22 OP could be roughly ¥112bn. We believe sell side analysts are not accounting for seasonality sufficiently and believe results could be materially higher than that figure driven by strength in North America.


Smartkarma Webinar | Overweight and Underweight in Indonesia Amidst the Covid Crisis

By Smartkarma Research

For our next Webinar, we have the pleasure of welcoming Insight Provider Henry Soediarko to explore overweight and underweight in Indonesia. The country’s healthcare system has been overwhelmed due to COVID-19, raising questions about hospital operators such as Mitra Keluarga Karyasehat Tbk (MIKA IJ) and Siloam International Hospital (SILO IJ), while tighter testing and vaccination regulations could bode well for Prodia (PRDA IJ) as the only listed entity in Indonesia with expertise on testing.

The webinar will be hosted on Wednesday, 21 July 2021, 17:00 SGT/HKT.

Henry Soediarko is a Long & Short Investment Ideas generator for Asian Equities with 10 years of experience in a Hedge fund focused on bottom-up ideas, searching out mispriced ideas and misunderstood investment theses. He provides on-the-ground insights in various Asian markets with a sway towards ASEAN. 


AKR Corporindo (AKRA IJ) – Freeport Smelter a Boon for JIIPE

By Angus Mackintosh

American mining giant Freeport Mcmoran (FCX US) will not proceed with plans to build a new copper smelter with China’s Tsingshan Holding Group in Indonesia, according to PT Freeport Indonesia.

The fact that this deal will not go ahead is a positive for AKR Corporindo (AKRA IJ) as Freeport Mcmoran (FCX US) is scheduled to build a smelter at its JIIPE (Java Integrated Industrial and Port Estate) Industrial estate, and this news cements that deal.

Freeport Mcmoran (FCX US) has confirmed it will go ahead with plans to build a new smelter near its existing copper refining operations at the JIIPE Industrial estate in Gresik and has signed an EPC contract with Japanese engineering company Chiyoda Corp (6366 JP) to build the plant.

This is a significant development for AKR Corporindo (AKRA IJ) to have this confirmation of Freeport Mcmoran (FCX US) as an anchor tenant for JIIPE as it will draw many more investors in industries related to copper like electric vehicle (EV) batteries to the JIIPE Estate.

JIIPE should also see more focus given its recently granted special economic zone status (KEK) status, with healthy land enquiries which should enable the company to increase marketing sales for this year, currently forecast at 35 ha. 
AKR Corporindo (AKRA IJ) is due to announce 1H2021 results toward the end of July, with the expectation of a strong set of numbers similar to Q12021 with profit growth of more than +25%.

The company is trading on 11.1x FY21E PER and 11.0x FY22E PER versus its 5-year average forward PER of 17.2x, which makes it look attractive from a valuation perspective.


Bank Negara Indonesia (BBNI IJ) – Digitally Remastered in Style

By Angus Mackintosh

Bank Negara Indonesia (BBNI IJ) held an analyst call late last week to outline the bank’s already well-developed digital strategy both wholesale and retail plus what really makes it stand out from competitors and what the future holds.

The bank has just launched the newest version of its BNI App which also commemorates the bank’s 75th Anniversary and gets a high rating. Bank Negara Indonesia (BBNI IJ)‘s strategy on its ongoing digital transformation has been to embrace the new wave of digital disruption through collaboration with third parties rather than going it alone.

Bank Negara Indonesia Persero (BBNI IJ) works with leading P2P lenders such as Kredivo, Amartha, and Investree, as well as the major digital payments actors such as GoPay, OVO, and Dana. 

BBNI bases its service on its good use case for its customers rather than burning money to acquire new customers. 

The bank is also leveraging its open API providing services for digital players and as a result, now offers 260 different services through its app with more than 3,000 partners, the most compared to any of its peers in Indonesia. 

Bank Negara Indonesia  (BBNI IJ) is linked with many different e-commerce and Fintech companies helping to facilitate payments, collections, providing liquidity, and providing audits, as examples of some services. 

The app is also very popular with younger customers with Gen x at 21% of users, Millennials 43%, and Gen C at 33% making up a large portion of tye 8.9m users.

Bank Negara Indonesia (BBNI IJ)‘s increasing integration with Indonesia’s digital economy also stands it in good stead to benefit from the vibrant growth from the space. The bank’s progression in building its digital capabilities and its integration with the Indonesian digital economy is not yet fully appreciated, with the bank trading on 0.7x FY21E PBV.


Why Would Intel Buy Global Foundries?

By Aaron Gabin

We think its a bonkers idea for Intel to acquire Global Foundries. Unless it wants to accelerate its margin demise. 

Obex’s fundamental research process is focused on secular change in the TMT and Consumer sectors. We seek to differentiate between fundamental business analysis and security analysis. Before deciding if a security’s pricing and positioning merit a long or short position, we analyze the four pillars of business fundamentals (Secular Factors, TAM, Competitive Advantage, Business Model) in order to determine if this is a “good” or “not so good” opportunity.  


Related tickers: Honda Motor (7267.T), Prodia (PRDA.JK), AKR Corporindo (AKRA.JK), Bank Negara Indonesia Persero (BBNI.JK), Intel Corp (INTC.O)

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