Sri Lanka is the top Asian Cub market gainer over the past week
Analysts are most optimistic about Sri Lanka's future earnings growth; Indonesia's market is the cheapest; and Indonesia's Habco Trans Maritima is up 60%.
Asian Cubs
The Asian Cubs are 10 fast growing markets with a combined 846 million population of mostly young (under 30 years of age), educated, urbanized, and gentrified people (third highest in the world); digitized with 1.1 billion mobile phones (third most in the world); and, US$3.8 trillion of GDP (seventh wealthiest in the world).
McKinsey & Company calls these markets “the biggest growth opportunity in the history of capitalism.”
Key takeaways:
July 30 to August 5, 2022
The Sri Lankan stock market is up 9.8% over the past week and is the top Asian Cub market gainer.
Investors are most pessimistic about Indonesia’s future earnings growth rate, and neutral about Thailand, Vietnam, and Bangladesh.
Analysts are most optimistic about Sri Lanka’s future earnings growth rate, and least optimistic about Malaysia.
The Indonesian market is the most undervalued (cheapest); Malaysia is the least undervalued; and, Thailand, Vietnam, and Bangladesh are fairly valued.
Indonesia’s Habco Trans Maritima is up 60% over the past week and is the top Asian Cub business gainer.
Read more below.
Asian Cubs performance and valuation
👉 In the short term, investor sentiment and emotions drive shareholder returns. Over the long term, revenue, earnings, and free cash flow growth drive shareholder returns.
Ranked from highest total market value.
1. 🇲🇨 Indonesian market: +1.6%
The market has climbed 1.6% over the past week, with the Financials and Industrials sectors leading the way. As for the past 12 months, the market is up 12%. As for the next few years, earnings are expected to grow by 11% per annum.
Companies: 716
Total market value: Rp9,093.7 trillion (US$608 billion)
1-year growth: +25%
3-year growth: -85%
Total revenue: Rp4,206.5 trillion (US$281 billion)
1-year growth: +27%
3-year gowth: +18%
Total earnings: Rp558.0 trillion (US$37 billion)
1-year growth: +93%
3-year growth: +63%
Market valuation (PE*): 16.3x
Trading below the 3-year average PE* of 70.5x.
Investors and analysts are pessimistic, indicating they expect that earnings will not grow as fast as they have historically.
The market is undervalued (inexpensive).
2. 🇨🇷 Thai market: +1.7%
The market is up 1.7% over the past week, with the Information Technology sector leading the way, up 9.4%. Over the past year, the market has climbed 7.0%. Earnings are forecast to grow by 19% annually.
Companies: 822
Total market value: ฿19.4 trillion (US$543 billion)
1-year growth: +11%
3-year growth: +18%
Total revenue: ฿14.3 trillion (US$400 billion)
1-year growth: +25%
3-year growth: +19%
Total earnings: ฿995.4 billion (US$27.8 billion)
1-year growth: +13%
3-year growth: +15%
Market valuation (PE*): 19.5x
Trading close to the 3-year average PE* of 21.2x.
Investor sentiment is neutral, indicating they expect that earnings will grow in line with historical growth rates.
Analysts, however, are optimistic that earnings will grow faster than historical growth rates.
The market is fairly valued.
3. 🇸🇬 Singaporean market: +1.8%
The market has climbed 1.8% over the past 7 days, led by the Financials sector with a gain of 3.2%. As for the past year, the market performance has been flat. Earnings are forecast to grow by 13% annually.
Companies: 557
Total market value: S$721.3 billion (US$522 billion)
1-year growth: +3%
3-year growth: +10%
Total revenue: S$531.9 billion (US$385 billion)
1-year growth: +11%
3-year growth: +10%
Total earnings: S$49.8 billion (US$36.1 billion)
1-year growth: +108%
3-year growth: +9%
Market valuation (PE*): 14.5x
Trading below the 3-year average PE* of 26.3x.
Investors are pessimistic, indicating they expect that earnings will not grow as fast as they have historically.
Analysts, however, are optimistic that earnings will grow faster than historical growth rates.
The market is undervalued (inexpensive).
4. 🇲🇾 Malaysian market: +0.5%
Over the past week, the market has been flat. As for the past year, the market is down 3.1%. As for the next few years, earnings are expected to grow by 10% per annum.
Companies: 939
Total market value: RM1.7 trillion (US$382 billion)
1-year growth: -3%
3-year growth: +1%
Total revenue: RM1.1 trillion (US$247 billion)
1-year growth: +10%
3-year growth: +10%
Total earnings: RM99.7 billion (US$22.4 billion)
1-year growth: +5%
3-year growth: +40%
Market valuation (PE*): 16.7x
Trading below the 3-year average PE* of 22.7x.
Investors and analysts are pessimistic, indicating they anticipate that earnings will not grow as fast as they have historically.
The market is undervalued (inexpensive).
5. 🇵🇭 Philippine market: +1.0%
The Consumer Staples sector gained 5.7% while the market remained flat over the past week. As for the longer term, the market has also been flat over the past year. Looking forward, earnings are forecast to grow by 20% annually.
Companies: 253
Total market value: ₱12.7 trillion (US$229 billion)
1-year growth: +1%
3-year growth: -10%
Total revenue: ₱9.7 trillion (US$175 billion)
1-year growth: +21%
3-year growth: +5%
Total earnings: ₱866.9 billion (US$16 billion)
1-year growth: +41%
3-year Growth: +9%
Market valuation (PE*): 14.7x
Trading below the 3-year average PE* of 20.4x.
Investors are pessimistic, indicating they expect that earnings will not grow as fast as they have historically.
Analysts, however, are optimistic that earnings will grow faster than historical growth rates.
The market is undervalued (inexpensive).
6. 🇻🇳 Vietnamese market: +3.7%
The market is up 3.7% over the past 7 days, led by the Financials and all sectors gaining ground. In contrast, the market has seen a decline of 7.0% over the past 12 months. As for the next few years, earnings are expected to grow by 19% per annum.
Companies: 752
Total market value: ₫5,265.8 trillion (US$225 billion)
1-year growth: -4%
3-year growth: +52%
Total revenue: ₫2,535.7 trillion (US$108 billion)
1-year growth: +5%
3-year growth: +17%
Total earnings: ₫351.5 trillion (US$15 billion)
1-year growth: +12%
3-year growth: +71%
Market valuation (PE*): 15x
Trading close to the 3-year average PE* of 16.5x.
Investor sentiment and analysts are neutral, indicating they expect that earnings will grow in line with historical growth rates.
The market is fairly valued.
7. 🇧🇩 Bangladeshi market: +5.0%
The market has climbed by 5.0% over the past week, with every sector up and the Financials sector leading the way. In contrast, the market has seen a decline of 8.9% over the past 12 months. Earnings are forecast to grow by 12% annually.
Companies: 336
Total market value: ৳4.4 trillion (US$46 billion)
1-year growth: -8%
3-year growth: +39%
Total revenue: ৳2.4 trillion (US$25 billion)
1-year growth: +19%
3-year growth: +33%
Total earnings: ৳273.2 billion (US$2.87 billion)
1-year growth: +22%
3-year growth: +23%
Market valuation (PE*): 16.2x
Trading close to the 3-year average PE* of 17.7x.
Investor sentiment is neutral, indicating they expect that earnings will grow in line with historical growth rates.
Analysts, however, are optimistic that earnings will grow faster than historical growth rates.
The market is fairly valued.
8. 🇱🇰 Sri Lankan market: +9.8%
The market has climbed by 9.8% over the past week, with every sector up and the Financials sector leading the way. Over the past year, the market is down 3.6%. Earnings are forecast to grow by 27% annually.
Companies: 268
Total market value: LKRs3.6 trillion (US$9.9 billion)
1-year growth: +1%
3-year growth: +43%
Total revenue: LKRs5.5 trillion (US$15 billion)
1-year growth: +43%
3-year growth: +66%
Total earnings: LKRs661.9 billion (US$1.83 billion)
1-year growth: +88%
3-year growth: +164%
Market valuation (PE*): 5.4x
Trading below the 3-year average PE* of 11.1x.
Investors and analysts are pessimistic, indicating they expect that earnings will not grow as fast as they have historically.
The market is undervalued (inexpensive).
Asian Frontier Cubs
9. 🇰🇭 Cambodian market: -1.3%
Founded: 2011
Companies: 9
Total market value: KHR7,218.1 billion (US$1.75 billion)
1-year growth: -11%
3-year growth: +211%
10. 🇲🇲 Myanmar market: -0.3%
Founded: 2015
Companies: 7
Total market value: MMK581.3 billion (US$312 million)
1-year growth: -17%
3-year growth: -5%
* The PE, or Price to Earnings ratio, determines investor sentiment and perceived value for a market. It measures and compares values among mature and profitable companies, across markets, and across time. A higher than average PE indicates increased investor optimism, resulting in an overvalued (expensive) market. A lower than average PE indicates increased investor pessimism, resulting in an undervalued (inexpensive) market.
👉 Long term investors who focus on value investing (buying high quality businesses at below average prices) will find more opportunities in undervalued (inexpensive) markets.
Top Asian Cub business gainer
🇲🇨 Habco Trans Maritima: +60.4%
PT Habco Trans Maritima Tbk (IDX:HATM) owns and operates bulk carriers. It provides barging, transshipment, and bulk carrier services. The company transports goods using ships primarily to transport certain types of goods, such as transportation of dangerous goods, hazardous and toxic waste, fuel oil, petroleum, processed products, LPG, LNG and CNG, and fish, including marine transportation rental businesses and their operators. The company was founded in 2019 and is headquartered in Pekanbaru, Indonesia. PT Habco Trans Maritima Tbk is a subsidiary of PT Habco Primatama.
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This post is excerpted, edited, and sourced from analyst notes and S&P Global Market Intelligence. The content is for general informational and entertainment purposes only and should not be construed as investment advice.