A new Luckin Coffee store has just opened downstairs from my apartment in Singapore. The success of Mainland Chinese brands in Southeast Asia is becoming evident. These include electric car maker BYD, toy store Pop Mart, hot pot restaurant Haidilao and bubble tea seller Mixue. I’ll discuss at least one of these companies later this month.
Post of the week
Last week, I had a call with Kimitaka Hashimoto, the Chief Financial Officer of Japanese software developer Kaonavi (4435 JP － US$131 million). The company develops talent management software, helping Japanese small- and medium-sized enterprises manage their staff. My post summarized the key takeaways from the call with Mr Hashimoto, including why their third quarter result disappointed the market and what the future has in store for Kaonavi.
Tweet of the week
Someone asked me which themes I’m paying attention to right now. And I came up with the following answer:
Japan SaaS: Since my industry primer in October, I've become increasingly excited about the sector. Just look at One Capital’s EV/Sales chart for the industry compared to its historical levels.
Defense: The defense industry, with record order books in Singapore, Japan and beyond.
Hong Kong fast-food restaurants: They trade at incredibly low Price/Sales multiples and some operators express long-term optimism.
Malaysian rubber gloves: I think the industry has recovery potential, especially since 50% US tariffs on competing Malaysian gloves will be imposed from January 2025 onwards.
Other themes include Japanese importers (the yen is undervalued), Indian online travel agencies (a large backlog of plane deliveries) and Philippines equities (lower stock transaction tax from 0.60% to 0.15%).
Podcast episode of the week
John Hempton is always worth listening to, and I enjoyed his recent interview on David Clark’s podcast. Hempton is skeptical about Donald Trump’s promises and thinks that few will be fulfilled. However, he does believe tariffs are coming. And Trump will probably weaken SEC oversight, leading to a new, golden age of fraud. He’s particularly cautious about promotional companies in the uranium, gold mining and AI sectors. That said, he expects productivity improvements from AI tools in coding and customer service.
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