Fortnightly Publication Highlighting Latest Insights From IRF Providers
Company Research
Indonesia: A cautionary tale for EMs
For many emerging markets around the world, Trump’s tariffs on their exports to the US are stressing economies that already were facing formidable challenges, William Pesek reports. The President of Indonesia has been making moves that undermine Bank Indonesia’s independence, shaking investors’ confidence, roiling the country’s financial markets, and risking destabilizing capital flight. Economic mismanagement in Indonesia also has triggered civil unrest. Other vulnerable economies, made more so by the US tariffs, include Brazil, India, South Africa, Turkey, Argentina, South Africa, and Thailand. Each is battling its own set of headwinds, but all seem to be in the same boat in a turbulent sea.
Edition: 220
- 19 September, 2025
Tencent (700 HK) & NetEase (NTES US) US
Technology
While China’s e-commerce sector is mired in subsidy fuelled competition, Arete argues this is outweighed by strength in gaming and online entertainment. Record approvals and blockbuster titles underpin upgrades for Tencent and NetEase, while Alibaba shows early signs of a turnaround in quick commerce and cloud. The report also examines mounting cost pressures at Meituan, the lack of near term catalysts at Xiaomi and SEA, and the structural headwinds still facing JD and Baidu.
Edition: 219
- 05 September, 2025
Financials
Galliano's Financials Research
Victor Galliano upgrades Kyoto Financial to Buy, following what appears to be a sea change in management’s view on equity holdings disposals as well as the president’s opinion regarding Japanese regional bank consolidation. Nobuhiro Doi suggested that the target of JPY100bn disposals by Mar 29 could be increased to JPY200-300bn (up to 30% of total equity holdings; equivalent to 42% of Kyoto’s current m/cap). Such disposals would act as significant catalysts for large share buybacks going forward. In the longer term, Kyoto could be in a strong position to lead a regional bank merger or acquisition, with a look to improving efficiencies. An important factor in determining Kyoto’s “bargaining power” in the consolidation process will be to what extent its shares trade at a premium valuation; it currently trades at a premium in terms of PE multiple, but at a discount in terms of PBV ratio.
Edition: 210
- 02 May, 2025
Crude: Shook up
A bidding frenzy in the Platts North Sea crude assessment window that spurred a Brent rally ended up subsiding last week, but prices continued to crawl higher. Vandana Hari recently noted how the key elements of the market surrounding the prolonged rally were not adding up, making the continued ascent more mysterious. Market sentiment is split, with the bulls calling for $90 and sceptics seeing it as a stretch, but Vandana sees no clear factors on the horizon to sustain a price in the $90s and sees the risk as skewed to the downside. Meanwhile, the market will have to deal with the potential speculative positioning resulting from the unravelling of Biden’s campaign against Donald Trump.
Edition: 190
- 12 July, 2024
China: Devaluation risk
The Chinese Coast Guard is up to its usual shenanigans in the Philippine Sea. Such behaviour is common, not just at sea but with China’s support for Russia and trading arrangements with Iran. Patrick Perret-Green asks claims we shouldn’t expect anything more when it comes to economic policy; China will do whatever it considers best for itself. This seems to be underpriced in global markets. The market has under-reacted to China’s bond yields hitting record lows. Given interest rate differentials (see chart), why shouldn’t China let the currency go? They can argue they are merely allowing markets to function, which will force the world’s central banks to go back to their playbooks of the mid-teens. Against this background, Patrick remains in the camp that rate cuts are coming.
Edition: 181
- 08 March, 2024
Energy
A sea of profits - with expectation of no new ship builds to saturate anytime soon the current day rates should hold over the next 2-3 years. SDRL emerged from bankruptcy protection in early 2022 and listed its shares in Oct. Since then, it has undertaken asset sales to increase its cash balance, which has resulted in the group having more cash than debt - a rare trait for the industry. However, despite the lean balance sheet, the stock continues to trade at a discount to peers. Furthermore, the pending purchase of Aquadrill will substantially increase SDRL's liquidity and earnings power. TP $59 (40% upside).
Edition: 153
- 03 February, 2023
Sea (SE US) US
Consumer Discretionary
Shares were up over 30% following a relatively small topline beat of 4.8% and a narrower than expected operating loss of $495.6m - Oshadhi Kumarasiri sees this as a great opportunity to make substantial gains on the short side in the near term as e-commerce and fintech remain unprofitable after cutting down necessary expenses such as logistics facilities and senior management cash compensation. Oshadhi estimates fair EV at ~$10bn (Gaming: $2bn, e-commerce: $5bn, Fintech: $3bn) vs. the current EV of $33.1bn, which implies 66% downside to Sea’s post-3Q22 price.
Edition: 149
- 25 November, 2022
Technology
Multiple new agencies have been reporting that Tencent plans to trim its investment portfolio over the remainder of the year. The company has been duly denying these rumours. Although, after it distributed over US$16bn worth of JD.com shares at the end of 2021, and then sold US$3bn worth of SEA stock in early Jan 2022, it clearly showed that the tide for Tencent investments had turned. The company is becoming a seller after having been on a voracious investment spree over the past few years.
Edition: 145
- 30 September, 2022
Shipping: Dry Bulk remains the best bet heading into 2H22
Industrials
Drewry Maritime Financial Research
DMFR are bullish on dry bulk shipping stocks as demand for dry bulk vessel is expected to expand by 3.8% in 2022 and a further 4% in 2023 amid strong construction and infrastructure activities in emerging economies. Whereas the fleet will increase at a modest pace of 2.2% over next two years. Additionally, the disruption in exports from the Black Sea will add tonne-mile demand as importers will source grain from farther countries, boosting rates after 2Q22. Vessel earnings are expected to remain well above break even across vessel class.
Edition: 136
- 27 May, 2022
Communications
The time has come to simplify its confusing sprawl of assets with a series of spin-outs - Tencent Games could replace Activision as the largest global game content stock, worth $150bn, and this excludes its vast portfolio of studios, IP and private stakes. While Tencent will likely be obliged to put Fintech into a standalone Holdco., this creates an opportunity to spin out Cloud & Business Services; potential to be a $10bn business by FY26. Major stakes in Tesla, Meituan, Sea and Kuaishou are not required / should be unwound. Importantly, by taking decisive action, it would make it less threatening to the government and limit the impact of regulation across the group.
Edition: 133
- 14 April, 2022
Technology
Still needs a whole lot of hope to justify valuation - Sumeet Singh runs the rule over India’s biggest IPO which is backed by the likes of Alibaba, Softbank and Berkshire Hathaway. Paytm looks very expensive when compared to some of the superapps (SEA / MercadoLibre), which have all grown much faster. The declining take rate in its payment services segment is also a concern, while a drop in marketing and promotion costs could impact customer acquisition and growth. Paytm will have to keep a very tight lid on expenses to make a profit even in FY24. One to avoid.
Edition: 123
- 12 November, 2021
Nearshoring trend is changing China’s growth model
Many firms are “nearshoring”: bringing production and supply chains closer to home for safety and security. Thus far, China has suffered little since its export sector has turned towards its Silk Road allies. If all goes to Beijing’s plan, this will allow China to undertake a more combative political and military engagement with the G7, opening the door for a reunion with Taiwan and a seize of commerce control in the South China Sea.
Edition: 122
- 29 October, 2021
China’s Deep Sea Research
Chinese researchers recently put their soft-body swimming robot at the bottom of the Mariana Trench, where they moved around easily despite immense pressures. Deep Sea research is not even on the list of critical advancements for China’s five-year plan, yet they are rapidly expanding their technologies which will allow further research for critical minerals and resources in the ocean depths.
Edition: 112
- 11 June, 2021