Insight Provider, CrossASEAN Research

Nicolas Van Broekhoven

Was on the buyside for 15 years, most recently at a medium-sized boutique asset management firm. I grew up in Europe, went to university in the US and have been living in Singapore for the last 7 years which has given me a broad scope on the world and investing in general.

Consider myself a generalist investor with a preference for small and mid-cap companies and special situations. However, a large cap that has gone temporarily out of favor might also pique my interest. 

My style of investing could be categorized as more of value investor, rather than growth at any cost. Learning from Charlie Munger on the importance of quality of a company has been of tremendous value over the years.I like businesses with real earnings, cash flows, dividends, book value and insider ownership.

Insight Provider

PC Partner: Just the Wrong Price; Raising Fair Value Est to 18 HKD; 1.2x P/E and 40% Div Yield FY21

Preview PC Partner FY21 Earnings: Record Profit + Record Dividend + Strong Outlook for FY22

PC Partner: Record FY21 Results and Strong Dividend. Cash Is 70% of Market Cap. Fair Value 18 HKD.

PC Partner: Great Demand, but Limited Supply of GPU's Created Mixed 2021 Outlook

PC Partner: In the Last Bitcoin Bull Market Stock Was 300% Higher. Repeat?

Preview PC Partner FY20 Earnings + Outlook: Tight GPU Margin Gives FY21 Upside Potential

CrossASEAN Research

At CrossASEAN Research we strive to produce unbiased and differentiated on the ground insights on companies across South East Asia. Our Research is produced for the most part after face to face meetings and conversations with company management to dig deep into the long term vision and strategy of the companies we cover. We seek to deliver investable and actionable themes on sectors and markets across SE Asia, often in collaboration with other Insight Providers across the region, pooling the vast experience of the analysts within the Smartkarma Ecosystem. We also offer bespoke work and tailor made trips for our clients. 

Insights across South East Asia

Equity Bottom-Up

<a href="https://www.smartkarma.com/entities/pc-partner-group-ltd" target="_blank" data-smartkarma-citation="entities:8492:1" rel="noopener">PC Partner (1263 HK)</a> has been a small-cap gem we have written about on numerous occasions. The company is not a buy &amp; hold stock but in September 2020 we called it "very cheap" <a href="https://www.smartkarma.com/insights/pc-partner-poor-man-s-play-on-nvidia-part-2-trades-at-2x-fy20-p-e-and-14-dividend-yield" target="_blank" data-smartkarma-citation="insights:43227" rel="noopener">PC Partner: Poor-Man's Play on Nvidia  (Part 2); Trades at 2x FY20 P/E and 14% Dividend Yield</a> when it was trading at 1.2 HKD/share. Fast forward one year and the company just reported close to 1 billion HKD in net profit and is paying an interim dividend of 0.84 HKD on 1H21. This is a 14% interim dividend yield on a stock that closed at 5.82 HKD recently. While a year ago the company was in a net debt position today the balance sheet is rock solid and approximately 65% of the market cap is cash.So far Mr. Market has met last Friday's results with a big yawn as the stock barely moved. Investors are assuming results will fall off a cliff in 2H21 and into 2022. Now, what if we told you 2H21 results could grow over 1H21? Cash on the balance sheet has ballooned to 65% of market cap and even taking into account the large interim distribution we forecast cash to grow to over 100% of current market cap by late 2021! Pc Partner has a history of doing shareholder friendly things (buybacks, tender offers, special dividends) and we expect this to continue. The wild card with Pc Partner is if the tight supply and fantastic pricing of VGA's will last for just one more quarter or well into 2022.For now there is no indication that 3Q trends have changed meaningfully from 2Q21. This implies that bumper profits will continue at least this quarter. Historically, 4Q is always Pc Partner's strongest quarter and if Covid strikes again in EU/USA winter season we see no reason why demand for PC's/gaming will drop off sharply. As echoed by several car manufacturers and chip suppliers we see no end in sight for chip shortages keeping ASP's elevated. This gets us to a scenario (not guarantee!) that 2H21 profits might actually be higher vs 1H21 profits. It would be an understatement to say that Pc Partner is NOT priced for this scenario at all.Fair Value raised to 10 HKD (2x 5HKD FY2021 EPS estimate). Major risk here is the VGA supply situation improves drastically and ASP's fall. The company is scheduled to hold a conf call with investors next week and we look forward to more guidance at this time.

PC Partner (1263 HK) has been a small-cap gem we have written about on numerous occasions. The company is not a buy &amp; hold stock but in September 2020 we called it "very cheap" PC Partner: Poor-Man's Play on Nvidia  (Part 2); Trades at 2x FY20 P/E and 14% Dividend Yield when it was trading at 1.2 HKD/share. Fast forward one year and the company just reported close to 1 billion HKD in net profit and is paying an interim dividend of 0.84 HKD on 1H21. This is a 14% interim dividend yield on a stock that closed at 5.82 HKD recently. While a year ago the company was in a net debt position today the balance sheet is rock solid and approximately 65% of the market cap is cash.So far Mr. Market has met last Friday's results with a big yawn as the stock barely moved. Investors are assuming results will fall off a cliff in 2H21 and into 2022. Now, what if we told you 2H21 results could grow over 1H21? Cash on the balance sheet has ballooned to 65% of market cap and even taking into account the large interim distribution we forecast cash to grow to over 100% of current market cap by late 2021! Pc Partner has a history of doing shareholder friendly things (buybacks, tender offers, special dividends) and we expect this to continue. The wild card with Pc Partner is if the tight supply and fantastic pricing of VGA's will last for just one more quarter or well into 2022.For now there is no indication that 3Q trends have changed meaningfully from 2Q21. This implies that bumper profits will continue at least this quarter. Historically, 4Q is always Pc Partner's strongest quarter and if Covid strikes again in EU/USA winter season we see no reason why demand for PC's/gaming will drop off sharply. As echoed by several car manufacturers and chip suppliers we see no end in sight for chip shortages keeping ASP's elevated. This gets us to a scenario (not guarantee!) that 2H21 profits might actually be higher vs 1H21 profits. It would be an understatement to say that Pc Partner is NOT priced for this scenario at all.Fair Value raised to 10 HKD (2x 5HKD FY2021 EPS estimate). Major risk here is the VGA supply situation improves drastically and ASP's fall. The company is scheduled to hold a conf call with investors next week and we look forward to more guidance at this time.

PC Partner: 1H21 Off the Chart Results To Be Followed by Large Div Stream; 65% of Mkt Cap Is Cash