Regal Asian Investments Limited · ASX:RG8
Regal Asian Investments — Investor Presentation (June 2024)
44 slides from Regal Asian Investments's investor presentation, Jun 20, 2024
Slide 1: RG8 Investor Update and Q&A Webinar Presentation
Regal Asian Investments Limited ABN 58 635 219 484 Level 47 Gateway, 1 Macquarie Place Sydney NSW 2000 Australia T. +61 2 8197 4333 www.regalfm.com/RG8 20 June 2024 ASX Market Announcements Office ASX Limited Exchange Centre 20 Bridge Street Sydney NSW 2000 For personal use only RG8 Investor Update
Slide 2: Investor Update & Q&A: Regal Asian Investments
For personal use only Investor Update & Q&A Regal Asian Investments June 2024
Slide 3: Introduction
For personal use only Introduction Charlie Aitken, Regal Partners
Slide 4: Disclaimer
Disclaimer This document (Information) is provided by Regal Partners Marketing Services Pty Ltd (ACN 637 448 072) (Regal Partners Marketing), a corporate authorised representative of Attunga Capital Pty Ltd (ABN 96 117 683 093) (AFSL 297385) (Attunga). Regal Partners Marketing and Attunga are busine
Slide 5: Speakers
Speakers For personal use only PHILIP KING SHANNON MCCONAGHY GLEN BARNES HENRY RENSHAW Co-Founder & Senior Analyst, Asia Head of Asia Portfolio Manager CIO Long/Short Equities Regal Funds Fundamental Research Metals & Mining Regal Funds Regal Funds Regal Funds 4
Slide 6: Regal Asian Investments Limited (ASX:RG8)
Regal Asian Investments Limited (ASX:RG8) RG8 provides investors with access to an actively- For personal use only managed, concentrated portfolio, comprising long investments and short positions in securities with $436m $2.13 $2.52 exposure to the Asian region. • Initially listing in November 2019,
Slide 7: Strong performance across all listed investment vehicles
Strong performance across all listed investment vehicles 1 yr Portfolio return since TOTAL SHARE PRICE RETURN INDEX3 Fund Launch Description portfolio inception/ return1 merger p.a.1,2 150 PGF RF1 VG1 RG8 For personal use only Global L/S PGF 2013 Equities 35.9% 15.0% 140 137 130 129 Multi-strategy 1
Slide 8: Strong performance across all listed investment vehicles
Strong performance across all listed investment vehicles LISTED INVESTMENT VEHICLES >$300M MARKET CAP 40% TOTAL SHARE PRICE RETURN SINCE REGAL/VGI MERGER (PER ANNUM)1 For personal use only 35% 33.5% 30% 24.9% 25% 20% 17.3% 15% 12.7% 10% 5% 0% Regal Investment Fund Peer 10 Peer 11 Peer 12 Peer 13 Pee
Slide 9: Asia leads in population & GDP but not market capitalisation
Asia leads in population & GDP but not market capitalisation POPULATION1 GDP2 MARKET CAPITALISATION3 For personal use only m USD tn USD tn 6,000 45 70 40 60 5,000 35 50 4,000 30 40 25 3,000 20 30 2,000 15 20 10 1,000 10 5 0 0 0 North America Europe Asia North America Europe Asia North America Europe
Slide 10: Market Outlook
For personal use only Market Outlook Philip King, CIO Long/Short Equities, Regal Funds
Slide 11: Market update: Key takeaways
Market update Key takeaways 11 For personal use only Higher earnings yields and lower bond yields make Asian equities particularly attractive 23 Asian companies unlocking hidden value 3 Asia provides great exposure to AI through semiconductor manufacturing 4 Green transition driving demand for commo
Slide 12: Asian equities continue to lag
Asian equities continue to lag TOTAL RETURN1 PRICE TO EARNINGS (12 MONTHS FORWARD) 800 MSCI US Index MSCI Asia Pacific Index 30x MSCI US Index MSCI Asia Pacific Index For personal use only 25x 700 20x 600 15x 10x 500 5x 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 400 EQUITY RISK PREMIA BY MARK
Slide 13: Attractive equity risk premia in Asia
Attractive equity risk premia in Asia EQUITY RISK PREMIA 8.2% For personal use only 6.7% 5.3% 1.8% 0.5% US Australia Japan Hong Kong South Korea P/E 21.3x 17.0x 16.0x 8.5x 10.0x Corporate earnings yield 4.7% 5.9% 6.3% 11.7% 10.0% 10 year government yield 4.2% 4.1% 0.9% 3.5% 3.3% Equity risk premium
Slide 14: Increasing focus on shareholders
Increasing focus on shareholders – Tokyo Stock Exchange naming and shaming those not optimising earnings for shareholders For personal use only Japan – Rising shareholder returns as activists pressure companies to unlock hidden value – Large increase in dividends and buybacks – Trying to improve sha
Slide 15: Japanese corporates are unlocking hidden value
Japanese corporates are unlocking hidden value DIVIDENDS AND BUYBACKS1 ACTIVISM EVENTS IN JAPAN2 JPY tn Dividends Share buybacks 180 For personal use only 35 160 30 140 25 120 100 20 80 15 60 10 40 5 20 0 0 CY24E CY13 CY14 CY15 CY16 CY17 CY18 CY19 CY20 CY21 CY22 CY23 FY10 FY12 FY13 FY14 FY15 FY16 FY
Slide 16: Japan's return on equity rising
Japan’s return on equity rising RETURN ON EQUITY – TRAILING 5YR AVERAGE 20% MSCI World MSCI Japan For personal use only 15% 10% 5% 0% 1979 1983 1987 1991 1995 1999 2003 2007 2011 2015 2019 2023 Source: Morgan Stanley (solid lines). Dotted lines represent Regal internal views and estimates only. Past
Slide 17: Japan: Activism Unlocking Value Is Real
For personal use only Japan: Activism Unlocking Value Is Real Shannon McConaghy – Senior Analyst
Slide 18: Nihon Kohden
Nihon Kohden JPY Share price (JPY) 4,671 5,500 Market cap (JPY) 412bn For personal use only P/E (NTM) 23x • Leading supplier of medical devices in Japan – #1 in patient monitors, EEG, Automatic External 5,000 Defibrillators and polygraphs • High exposure to recurring consumables and services (~47% o
Slide 19: Nihon Kohden: Leveraging data strengths for AI solutions
Nihon Kohden: Leveraging data strengths for AI solutions Seamlessly managing patient data throughout treatment process: For personal use only 1. Pre-hospital 2. Intensive care and operating theatre 3. Recovery Leveraging data management strengths and R&D to provide leading AI solutions that allow ho
Slide 20: Nihon Kohden: Unlocking value following activist engagement
Nihon Kohden: Unlocking value following activist engagement Profit structure reform announced following activist engagement Management have a war-chest to fund further growth For personal use only OPERATING PROFIT JPY bn JPY bn 45 70 Net Cash Treasury Stock 40 60 35 50 30 40 25 Overhaul of: - Produc
Slide 21: Asian Semiconductors and AI
For personal use only Asian Semiconductors and AI Philip King, CIO Long/Short Equities, Regal Funds
Slide 22: AI demand will drive Asia semiconductor market
AI demand will drive Asia semiconductor market GLOBAL SEMICONDUCTER INDUSTRY REVENUE1 MARKET SHARE OF GLOBAL SEMICONDUCTOR SUPPLY2 US$b Asia Rest of World For personal use only 1,200 1,000 Foundry 800 ERA 4: 600 AI Materials 400 ERA 3: Mobility 200 Equipment ERA 2: PC + ERA 1: Mainframe Internet - 1
Slide 23: Focusing in on leading edge technology
Focusing in on leading edge technology Taiwan dominates leading edge while China is investing significantly in 2023-26 annual growth rates for semiconductor revenue by end market2 older techologies1 For personal use only Taiwan China USA Europe Korea Japan South East Asia SEA 30% 100% 90% 25% 80% 20
Slide 24: Taiwan & Korean Semiconductor Manufacturers
For personal use only Taiwan & Korean Semiconductor Manufacturers Glen Barnes, Head of Asia Fundamental Research
Slide 25: Taiwan Semiconductor Manufacturing Company (TSMC)
Taiwan Semiconductor Manufacturing Company (TSMC) TWD Share price (TWD) 922 1,000 Market cap (TWD) 23,912bn For personal use only P/E (NTM) 21x 900 800 • Global leader in contract semiconductor chip manufacturing 700 • Clear leader in cutting edge technologies for chip manufacturing 600 • Crucial pl
Slide 26: TSMC: AI chip manufacturing a key growth driver
TSMC: AI chip manufacturing a key growth driver Server and AI server growth is a major driver of High Performance TSMC is the global leader in leading edge chip manufacturing and a critical Computing (HPC) and is now the largest division for TSMC partner in producing AI chips For personal use only T
Slide 27: AI-related memory increasing
AI-related memory increasing DRAM WAFER CAPACITY For personal use only 300mm k wpm Traditional memory capacity falling due to existing capacity being converted to AI-related memory. 2,000 Most new capacity being focused on AI-related memory 1,800 1,600 1,400 1,200 1,000 800 600 400 200 0 2022 2023 2
Slide 28: SK Hynix
SK Hynix KRW Share price (KRW) 211,000 240,000 Market cap (KRW) 160,889bn For personal use only P/E (NTM) 9x 220,000 200,000 180,000 • 2nd Largest memory maker globally, being just behind Samsung 160,000 • Clear leader in providing AI-related memory and a key partner of NVIDIA 140,000 • Largest pure
Slide 29: SK Hynix: In the early stages of a cyclical recovery
SK Hynix: In the early stages of a cyclical recovery SK Hynix’s profit has only just started recovering after a large downcycle, DRAM memory market expected to stay in supply deficit until at least the with AI-related demand a key driver end of 2025 For personal use only KRW bn QUARTERLY PROFIT m gi
Slide 30: SK Square
SK Square LRW Share price (KRW) 91,400 100,000 Market cap (KRW) 12,316bn For personal use only P/E (NTM) 10x 90,000 80,000 70,000 • Another way to invest in SK Hynix while also having a value unlock element 60,000 • SK Square is an investment holding company in Korea, with c.90% of its net assets re
Slide 31: SK Square: Continues to trade at large discount
SK Square: Continues to trade at large discount SK SQUARE DISCOUNT TO NAV For personal use only Discount to NAV Average discount -50% -55% -60% -65% -70% -75% -80% Dec 21 Dec 22 Dec 23 Sep 22 Sep 23 Mar 22 Mar 23 Mar 24 Jun 22 Jun 23 Jun 24 Source: Bloomberg, CLSA estimates. Past performance is not
Slide 32: Japan Semiconductor Materials & Equipment
For personal use only Japan Semiconductor Materials & Equipment Shannon McConaghy – Senior Analyst
Slide 33: Ulvac
Ulvac JPY Share price (JPY) 10,910 14,000 Market cap (JPY) 538bn For personal use only P/E (NTM) 22x • Semiconductor and Electronics division is driving 12,000 growth: – Supplier of “sputtering” deposition equipment 10,000 – Benefiting from investment in High-Bandwidth Memory (HBM) – “De facto stand
Slide 34: Ulvac: Growth in semiconductor and battery equipment
Ulvac: Growth in semiconductor and battery equipment Leveraged to growth in leading edge HBM and EUV processes Winning orders in next gen battery production using vacuum technology For personal use only USD bn SPUTTER DEPOSITION MARKET FORECAST Traditional battery Next Gen battery 3.5 (no vacuum pro
Slide 35: Australia
For personal use only Australia Philip King, CIO Long/Short Equities, Regal Funds
Slide 36: Positive setup for Copper
Positive setup for Copper Lack of new supply Demand accelerating A$b AUSTRLIAN MINING INVESTMENT1 MINERALS USED IN CLEAN ENERGY VS OTHER POWER GENERATION SOURCES3 For personal use only 50 Australian Mining Investment (LHS) 120 Offshore wind 13.2x vs Nat Gas, 6.2x vs Coal Commodity Price Index (RHS)
Slide 37: Uranium: Increasingly undersupplied
Uranium: Increasingly undersupplied PLANNED REACTOR BUILD OUT – ASIA & PACIFIC LEADING THE WORLD NUCLEAR ASSOCIATION: SUPPLY VS DEMAND (UPPER CHARGE (51% OF GLOBAL PLANNED CONSTRUCTION1 SCENARIO)2 For personal use only tU +28% +13% +68% Asia & Pacific account for 66% of reactors under construction a
Slide 38: Australia Resources
For personal use only Australia Resources Henry Renshaw, Portfolio Manager, Regal Funds
Slide 39: Capstone Copper
Capstone Copper CAD Share price (CAD) 8.93 12.00 Market cap (CAD) 6,729m For personal use only 11.00 10.00 • Copper producer operating assets in USA, Mexico and 9.00 Peru • The company have expansion potential in Peru, 8.00 expanding its producing mine and a large scale greenfield development 7.00 –
Slide 40: Capstone Copper: Cheap, growth and declining cost profile
Capstone Copper: Cheap, growth and declining cost profile PRICE/TARGET PRICE PRODUCTION 0.90 Kt CuEq CSC SFR MAC For personal use only 400 0.85 350 +75% 300 0.80 250 0.75 200 150 +20% 0.70 100 50 +20% 0.65 0 CSC SFR MAC E FY24e E FY25e E FY26e FY27eE E FY28e FY29eE EV/EBITDA ALL-IN SUSTAINING COSTS
Slide 41: NexGen Energy
NexGen Energy CAD Share price (CAD) 9.68 13.00 Market cap (CAD) 5,430 For personal use only 12.00 11.00 • Uranium developer whose flagship asset is the Rook 1 10.00 Project in Saskatchewan, Canada 9.00 • The Project hosts the Tier 1 Arrow Deposit – 2021 feasibility study demonstrated Arrow as a tier
Slide 42: NexGen Energy: A world class development asset
NexGen Energy: A world class development asset DEVELOPMENT PROJECTS: PLANNED PRODUCTION URANIUM COST CURVE: 2023 PRODUCTION & NEXGEN VS RESOURCE SIZE VS RESOURCE GRADE (BUBBLE)1 35 PLANNED PRODUCTION (2028)2 For personal use only 35 30 Cost of Production (US$/lb U308) 30 Planned production rate (mlb
Slide 43: Investor Q&A
Investor Q&A For personal use only Please submit your questions via the side menu on the webcast player PHILIP KING SHANNON MCCONAGHY GLEN BARNES HENRY RENSHAW Co-Founder & Senior Analyst, Asia Head of Asia Portfolio Manager CIO Long/Short Equities Regal Funds Fundamental Research Metals & Mining Re
Slide 44: For personal use only
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