ASEAN markets are often framed as long-term growth stories.
Favorable demographics, rising consumption, and supply-chain realignment all support that narrative.
Yet for many investors, analysts, and CFOs, ASEAN exposure remains surprisingly difficult to explain — even when performance looks reasonable.
This is not because ASEAN assets inherently underperform.
And it is not because portfolio construction is flawed.
The problem starts much earlier.
1. When “Comparable” Numbers Are Not Really Comparable
At first glance, ASEAN financial data looks familiar.
EBITDA, EBIT, operating margins, valuation multiples — the labels are the same as those used globally.
But the ground rules behind those numbers are not.
Across ASEAN countries — and sometimes across companies within the same market —
financial statements are prepared under different accounting practices, classifications, and structural assumptions.
As a result, metrics that appear comparable on the surface often reflect different underlying economics.
This is why ASEAN investing is frequently explained through narratives rather than through clearly articulated fundamentals.
2. When EBITDA Stops Being a Common Language
EBITDA is widely treated as a universal proxy for operating performance and cash generation.
In ASEAN, that assumption breaks down.
Lease accounting differs
Expense capitalization varies
One-off items are inconsistently treated
And, critically, what is included “above” and “below” EBITDA is not standardized
EBITDA remains a useful starting point.
But without consistent definitions and refinement, it cannot serve as a reliable basis for cross-country comparison.
The issue is not misuse.
The issue is meaning.
3. When Operating Profit Is Not Really “Operating”
The problem becomes more pronounced at the EBIT level.
In several ASEAN markets, including Thailand and Vietnam,
profits from joint ventures are often included in Operating Profit (EBIT).
This raises fundamental questions:
Are these profits truly “operating” if management has limited control over the underlying business?
Are they economically equivalent to profits generated by assets directly owned and managed by the company?
Joint venture profits may be recurring and strategically important.
But they are not the same as profits generated within the core operating perimeter.
When such differences are embedded in EBIT,
cross-border comparison becomes fragile by design.
The Deeper Issue: Risk and Valuation Built on Unstable Foundations
These are not technical footnotes.
They directly affect risk analysis and valuation.
When EBITDA and EBIT are defined differently across countries and companies:
Valuation multiples lose meaning
Risk attribution becomes blurred —
because without consistent EBITDA definitions,
it is impossible to isolate true business risk from accounting noisePortfolio diversification turns into an illusion
Valuation may appear possible on the surface.
Models can still be built, and numbers can still be discounted.
However, those valuations can be fundamentally distorted
when they rest on inconsistent definitions of EBITDA and operating profit.
Growth narratives alone are not sufficient
to persuade asset managers to commit risk capital
to ASEAN assets without comparable fundamentals.
Why This Matters
The challenge in ASEAN investing is not a lack of data.
It is the absence of shared financial foundations.
Before debating valuation techniques,
before adjusting discount rates,
before optimizing portfolio weights,
a more basic question must be addressed:
What do these numbers actually represent?
What Comes Next
The next part of this series shifts the focus from earnings to cash.
In Indonesia, cash flow statements are often presented using the Direct Method,
making depreciation and amortization difficult to observe.
When depreciation disappears from cash flow,
what exactly are we valuing?
Closing Note
The objective is not to criticize accounting standards or markets,
but to highlight where cross-border financial analysis quietly breaks down —
and why valuation requires more than the mechanical application of familiar metrics.
If you have any thoughts or feedback, I’d welcome hearing from you — feel free to reply to this email.
Dai Kadomae, CFA, CPA
Email : [email protected]
URL : GARYO FINANCE | ASEAN Financial Insights & Capital Markets
LinkedIn:Dai Kadomae, CFA, CPA | LinkedIn