Asia"s Best Analyst: Singapore

Backing Asia’s producers of consumer staples was a preferred play last year, and profitable for the most part. But picking a loser against the grain, defying a chorus of optimism, was what set RHB’s Tan Han Meng apart and earned him the Singapore crown in the Asia’s Best Analysts survey.

Mr. Tan had mostly good things to say last year about the firms he reviewed, recommending clients put their money into some of Southeast Asia’s more promising names. Thailand’s Charoen Pokphand Foods PCL


wasn’t one of them.

Courtesy of the analyst

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The industrial agriculture conglomerate, owned by Thai tycoon Dhanin Chearavanont, won favor from some 20 analysts with buy calls on the stock. But Mr. Tan suspected that his rivals’ high hopes for the Thai food producer were misplaced.

“We worked on our financial model and thought the consensus expectations were too optimistic in view of soft meat prices and high input raw material costs, which would likely result in dismal margins,” said Mr. Tan, adding that his 2012 profit estimate for Charoen Pokphand was among the lowest projections.

In May 2012, he recommended clients sell the stock with a price target of 32 baht ($1.08). From then until the end of the year, Charoen Pokphand’s share price dropped 15%.

Mr. Tan’s only other sell call in 2012—placed on Mr. Dhanin’s CP All PCL


from May to August last year—also helped clients take profits. The convenience-store chain’s share price fell 14% during that period.

The analyst also backed some winning horses. Sensing that falling raw material prices would help instant-coffee maker Super Group Ltd.,


Mr. Tan put a buy call on the Singapore-based firm from February to June, during which time the stock gained 44%.

Looking ahead, Mr. Tan said he believes investing in Asia’s consumption story remains a sound strategy, but warned that “much of the optimism—in particular for Southeast Asia consumer counters—has been priced in.”

With valuations for some stocks reaching all-time highs, investors may turn “their attention toward the risks,” which include rising wage pressures and potential earnings disappointments, he said.

—Chun Han Wong

Asia"s Best Analyst: Singapore