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216 Compendium TABLE OF CONTENTS MARKET STRATEGY 5-9 Global economy Domestic economy SWOT analysis GDP data IDR movement 6 16 17 18 23 Monetary policy Government budget Macroeconomics assumption Energy outlook Local politics 24 32 48 49 56 Indonesian markets Indonesia equity and bond perfromance IDR sensitivity Sector performances 4Q15F results 75 76 78 79 86 Various policies Market valuation Top picks and index target 216 technical perspective SECTOR 91-129 Overweight Consumer-Staples 14 Healthcare 16 Neutral Banks Construction & Toll 94 1 Neutral Metal Mining 114 Oil & Gas 116 Underweight Automotive-related Cement 92 96 Shipping 124 Consumer-Discretionary 12 Plantations 118 Coal & Mining 98 Telecommunications 126 Industrial Estates 18 Poultry 12 Land Transportation 11 Tobacco 128 Media 112 Property 122 COMPANY 131-335 Automotive related Astra International 152 Jasa Marga 228 Krakatau Steel 236 Industrial estates Bekasi Fajar Industrial Estate 176 Poultry Charoen Pokphand Indonesia 184 Gajah Tunggal 198 Pembangunan Perumahan 27 Kawasan Industri Jababeka 232 Japfa Comfeed Indonesia 226 Indomobil Sukses Internasional 22 Aviation Total Bangun Persada 314 Waskita Karya 326 Lippo Cikarang Pura Delta Lestari 238 276 Malindo Feedmill 244 Property Cardig Aero Services 182 Wijaya Karya 328 Surya Semesta Internusa 32 Agung Podomoro Land 14 Garuda Indonesia 2 Banks Bank Bukopin 156 Wika Karya Beton 33 Consumer - Discretionary Ace Hardware Indonesia 132 Land Transportation Adi Sarana Armada 138 Blue Bird 178 Alam Sutera Realty 144 Bumi Serpong Damai 18 Ciputra Development 186 Bank Central Asia 158 Electronic City 192 Express Transindo 196 Ciputra Property 188 Bank Danamon 16 Hero Supermarket 28 Media Lippo Karawaci 24 Bank Mandiri 166 Matahari Department Store 246 Media Nusanatara Citra 254 Pakuwon Jati 266 Bank Negara Indonesia 168 Matahari Putra Prima 248 Surya Citra Media 3 PP Properti 274 Bank Pembangunan Daerah Jabar Banten 162 Bank Pembangunan Daerah Jawa Timur 164 Mitra Adiperkasa 258 Multipolar 262 Metal mining Aneka Tambang 148 Summarecon Agung 298 Shipping Bank Rakyat Indonesia 17 Ramayana Lestari Sentosa 278 J Resources Asia Pacific 224 Pelayaran Tempuran Emas 268 Bank Tabungan Negara 172 Sri Rejeki Isman 296 Merdeka Copper Gold 256 Soechi Lines 294 Bank Tabungan Pensiunan Nasional 174 Consumer - Staples Timah 31 Wintermar Offshore Marine 332 Cement Holcim Indonesia 21 Indofood CBP Sukses Makmur Indofood Sukses Makmur 216 218 Vale Indonesia Oil & gas 324 Telecommunications Anabatic Technologies 146 Indocement Tunggal Prakarsa 214 Mayora Indah 25 AKR Corporindo 142 Erajaya Swasembada 194 Semen Baturaja 286 Nippon Indosari Corpindo 264 Medco Energy 252 Indosat 222 Semen Indonesia 288 Coal & mining contracting Unilever Indonesia 32 Healthcare Perusahaan Gas Negara 272 Plantations Sarana Menara Nusantara 284 Telekomunikasi Indonesia 36 Adaro Energy 134 Kalbe Farma 23 Astra Agro Lestari 15 Tiphone Mobile Indonesia 312 Harum Energy 24 Kimia Farma 234 Austindo Nusantara Jaya 154 Tower Bersama Infrastructure 316 Indo Tambangraya Megah 212 United Tractors 322 Mitra Keluarga Karyasehat 26 Sido Muncul 29 Dharma Satya Nusantura 19 London Sumatra Indonesia 242 XL Axiata 334 Tobacco Tambang Batubara Bukit Asam 34 Siloam International Hospitals 292 Salim Ivomas Pratama 28 Gudang Garam 22 Construction & toll roads Tempo Scan Pacific 38 Sampoerna Agro 282 Hanjaya Mandala Sampoerna 26 Adhi Karya 136 Tunas Baru Lampung 318 87 88 89 9 2
216 Compendium Sector coverage by rating Stocks under coverage and as a % of JCI, 211-216 (Stocks) (%) UNDERWEIGHT 24% NEUTRAL 53% OVERWEIGHT 23% 11 1 9 8 7 6 5 4 79.4 71.6 71.1 68.2 69.4 67.2 12 93 83 84 7 51 211 212 213 214 215 216 82 79 76 73 7 67 64 61 58 55 Stocks Bahana / JCI market cap Source: Bahana Stock coverage by rating Source: Bahana Bahana coverage turnover vs. JCI turnover, 211-11M15 (USDmn) (%) REDUCE 21% 35 3 25 2 69.9 72.4 7.9 71.8 72.8 74 73 72 71 7 HOLD 16% BUY 63% 15 1 5 34.3 271.7 321.6 27.6 213.6 69 68 67 66 211 212 213 214 11M15 65 Bahana turnover Bahana turnover / JCI turnover Source: Bahana Source: Bahana 3
216 Compendium This page has been left intentionally blank 4
216 Compendium MARKET STRATEGY 5
216 Compendium Global economy 6
216 Compendium Improving developed markets; stimulus likely in emerging markets IMF indicates that the developed markets should slightly recover in 216 while developing-market growth momentum is quite low on weak commodity prices and expectations of US monetary tightening. A slowdown in emerging markets could be tackled by performing stimulus on both the fiscal and monetary fronts. Some countries are expected to continue monetary easing in 216, with Indonesia seeing a 75bp cut in its policy rate, based on our forecasts. From a trade perspective, sluggish global trade growth may see a slight improvement next year. Interest rate expectations in some Asian countries, 214-16F (%) 9 8 7 7.8 6.8 IMF global economic outlook, 215-16F Real GDP CPI C. A. Balance Countries Old 215F 216F Old 215F 216F Old 215F 216F World Output 3.3 3.1 3.6 - - - - - - United States 2.4 2.6 2.8 1.6.1 1.1 (2.2) (2.6) (2.9) Canada 2.4 1. 1.7 1.9 1. 1.6 (2.1) (2.9) (2.3) Euro Area 1.6 1.9 2. 1.2.7 1.5 1.7 2.2 2. Germany 1.6 1.2 1.5.6.2 1.2 (.9) 8.5 8. Japan (.1).6 1. 2.7.7.4.5 3. 3. France.2 1.2 1.5.6.1 1. (.9) (.2) (.4) Italy (.4).8 1.3.2.2.7 1.9 2. 2.3 UK 3. 2.5 2.2 1.5.1 1.5 (5.9) (4.7) (4.3) Spain 1.4 3.1 2.5 (.2) (.3).9.8.9 1.1 Brazil Mexico.1 2.1 (3.) 2.3 (1.) 2.8 6.3 4. 8.9 2.8 6.3 3. (4.4) (1.9) (4.) (2.4) (3.8) (2.) China 7.3 6.8 6.3 2. 1.5 1.8 2.1 3.1 2.8 India 7.3 7.3 7.5 5.9 5.4 5.5 (1.3) (1.4) (1.6) Indonesia 5. 4.7 5.1 6.4 6.8 5.4 (3.) (2.2) (2.1) Source: Bloomberg Global trade growth, Jan 27-July 215 (%) 25 2 15 22.6 21.4 6 5.6 1 5 4 3 2 3.3 3.3 2. 1.4 4. 4. 1.9 1.8 4.2 2. 1.5 5 Jan-7 Jul-7 Jan-8 Jul-8 Jan-9 Jul-9 Jan-1 Jul-1 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15-5 -1 1-15 -1. Indonesia Malaysia Thailand Philippines Taiwan China South Korea -2-25 -24.6 214 215 215F 216F -3 Source: Bloomberg, as of 2 December 215 Source: IMF, Bloomberg 7
216 Compendium United States: Economy continues to improve The US economy is improving with non-farm payroll jumping to 271k in October 215 and the average change in US hourly wages hitting a twoyear high at 2.5%. The US unemployment rate in October 215 fell to 5.%, close to the Fed s NAIRU projection at 4.9%, a condition which is supportive of a rate hike. US manufacturing PMI data for October also increased to 54.1 with new export sales continuing to rise modestly, while Markit s survey respondents acknowledged that the strong USD remains a headwind to growth. US non-farm payroll and unemployment rate, Sept 214-Oct 215 (') 45 4 35 3 25 2 15 1 (%) 423 2.6 2.5 2.5 329 2.4 2.3 25 266 271 2.3 26 245 221 2.2 223 2.2 21 187 2.1 153 2 119 2 137 2 1.9 5 1.8 9/1/214 11/1/214 1/1/215 3/1/215 5/1/215 7/1/215 9/1/215 1.8 1.7 Change in US non-farm payroll (LHS) US average hourly earnings y-y (RHS) Source: Bloomberg US unemployment rate and jobless claims, Jan 211-Oct 215 US manufacturing PMI, Jan 214-Oct 215 (%) 1 9 8 7 6 5 4 4.9 (') 44 39 34 5 29 276 (pts) 59 58 57 56 55 54 53 52 53.7 57.1 55.555.4 56.4 57.3 55.8 57.9 57.5 55.9 54.8 53.953.9 55.7 55.1 54.1 54 53.6 53.8 53 53.1 54.1 3 24 51 US initial jobless claims (RHS) US unemployment rate (LHS) US NAIRU (LHS) 5 Jan-14 Apr-14 Jul-14 Oct-14 Jan-15 Apr-15 Jul-15 Oct-15 Source: Bloomberg Source: Bloomberg 8
216 Compendium United States: Room for a rate hike Minutes from the Fed s latest meeting revealed downward estimates on economic data. Nevertheless, only less than 25% of the consensus expects no rate hike in December 215, with the majority expecting at least a 75bp rate hike by mid-216. However, we note that most FOMC members are expecting a 25bp rate hike in December 215 with no change in the Fed rate in 216, suggesting a slow and gradual rate normalization. The Fed s economic forecasts, 215-218 215 216 217 218 Longer run Change real GDP (%) 2.1 2.3 2.2 2. 2. June projection 1.9 2.5 2.3 n.a. 2. Unemployement rate (%) 5. 4.8 4.8 4.8 4.9 June projection 5.3 5.1 5. n.a. 5. PCE inflation (%).4 1.7 1.9 2. 2. June projection.7 1.8 2. n.a. 2. Core PCE inflation (%) 1.4 1.7 1.9 2. June projection 1.3 1.8 2. n.a. Fed funds rate (%).4 1.4 2.6 3.4 3.5 June projection.6 1.6 2.9 n.a. 3.8 Source: FOMC meeting Consensus estimates on Fed rate hike timing & magnitude (%) 8 78. FOMC members opinion on Fed-rate hike, 215-216 7 71.3 6 5 4 3 2 1 45.3 4.3 41. 4.7 4.3 38.5 33.1 29.3 26.9 23.4 22. 23.6 19.4 19.9 16.4 13.3 9.4 9.7 8.3 9.3 7.2 4.8 4.1 2.6 2. 1.3. 1. Dec-15 Jan-16 Mar-16 Apr-16 Jun-16 Jul-16 Sep-16 Nov-16 Dec-16 Jan-17 -.25.25-.5.5-.75.75-1 1-1.25 1.25-1.5 1.5-1.75 Source: Bloomberg, as of 8 December 215 Source: Bloomberg 9
216 Compendium Fed rate hike impact: Temporarily stronger USD It is interesting to note that during the last 5 Fed rate-hike cycles from 1972 through 24, most of the hikes resulted in a lower Dollar Index as early as 2-3 months thereafter. Additionally, in the Fed s past up cycles, USD strength was limited to less than 5%. The backdrop of low US inflation, coupled with expectations of an interest-rate hike, is one of the reasons behind the current strong USD. However, some fund managers we spoke to have argued that the current situation is quite different as other major countries are likely to pursue further monetary easing actions (currency war). Dollar Index after Fed rate hike Source: Bloomberg Dollar Index and US inflation, Jan 29-Oct 215 Some scenarios on Dollar movement after rate hikes (%) -3 (pts) 1 Fed rate Hhke US inflation China economy Other major central bank 216 Dollar Index -2-1 95 9 Steep and Scenario 1fast Very low Hard landing Very aggressive easing13-15 (GDP 216: (2% in 216) (.1-.3%) 5.5%) 1 2 3 4 5 US inflation, reversed (LHS) Dollar index (RHS) 85 8 75 7 Scenario 2Fast Low Lower growth Aggressive easing 11-13 (1.5% in 216) (.3-.8%) (GDP 216: 6.%) Scenario 3Modest Moderate Smooth slowdown Quite aggressive easing 95-11 (GDP 216: (1% in 216) (.8%-1.5%) 6.5%) Small rate Moderate Scenario 4hike High inflation adjustments No monetary easing 85-95 (.75% in 216) (>1.5%) (GDP 216: 6.7%) Source: Bloomberg Source: Bahana 1
Jun-3 Sep-3 Dec-3 Mar-4 Jun-4 Sep-4 Dec-4 Mar-5 Jun-5 Sep-5 Dec-5 Mar-6 Jun-6 Sep-6 Dec-6 Mar-7 Jun-7 Sep-7 Dec-7 Mar-8 Jun-8 Sep-8 Dec-8 Mar-9 Jun-9 Sep-9 Dec-9 Mar-1 Jun-1 Sep-1 Dec-1 Mar-11 Jun-11 Sep-11 Dec-11 Mar-12 Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 Sep-13 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 216 Compendium Major central banks: Further balance-sheet expansions Currently, the ECB is purchasing EUR6bn in assets per month until it achieves EUR1.1tn in total easing by September 216, while the BoJ s Kuroda stated that he is willing to do further easing as China s slowdown is threatening Japan s inflation prospects. The velocity of money (GDP/M2) of major economies is still decreasing as the pace of economic recovery is still slow. It should limit the possibility of aggressive monetary tightening. As a consequence, the market is expecting the USD to modestly appreciate against the EUR and JPY as a slower-than-expected US recovery is reducing the magnitude of the likely US Fed rate hike in 216. Major central banks balance sheets, Jan 21-Oct 215 Source: Bloomberg US, Japan & EU velocity of money (indexed), Jun 23-Sept 215 (pts) 11 15 1 95 9 85 8 75 7 65 Source: Bloomberg, Bahana 81.6 78.8 68.3 US M2 velocity of money (indexed) Japan M2 velocity of money (indexed) EU M2 velocity of money (indexed) Consensus forecasts on FX and rates Spot 4Q15F 1Q16F 2Q16F 3Q16F 4Q16F EUR/USD 1.8 1.6 1.5 1.4 1.5 1.5 USD/JPY 123 123 124 125 125 125 The Fed rate (%).25.5.7.85 1.5 1.25 1yr US t-bills yield (%) 2.22 2.26 2.39 2.56 2.68 2.79 3 month LIBOR (%).57.59.71.86 1.3 1.25 ECB main refinancing rate (%).5.5.5.5.5.5 1yr German govt bond yield (%).58.57.65.76.88 1.1 3 month Euribor (%) -.11 -.8 -.9 -.8 -.7 -.6 BoJ Interest rate (%).1.1.1.1.1.1 1yr Japan govt bond yield (%).32.32.36.41.46.53 3 month Japan LIBOR (%).8.11.1.11.11.13 Source: Bloomberg, as of 8 December 215 11
Jan-1 Mar-1 May-1 Jul-1 Sep-1 Nov-1 Jan-11 Mar-11 May-11 Jul-11 Sep-11 Nov-11 Jan-12 Mar-12 May-12 Jul-12 Sep-12 Nov-12 Jan-13 Mar-13 May-13 Jul-13 Sep-13 Nov-13 Jan-14 Mar-14 May-14 Jul-14 Sep-14 Nov-14 Jan-15 Mar-15 May-15 Jul-15 Sep-15 216 Compendium Eurozone: ECB to continue stimulus Eurozone GDP growth improved to 1.6% y-y in 3Q15 while the value of exports to large developing countries dropped. Concerns over a longerthan-expected economic recovery increase the chance of quantitative easing in December. Moreover, on the inflation front, core and headline inflation are still below the ECB s 2% target. The EU s industrial production data also suggests that the decline in China demand is a problem, while a slump in the consumer sentiment index is a concern. German, France, Italy and Spain economic growth, 4Q13-217F Source: Bloomberg Eurozone inflation, Jan 21-Oct 215 Eurozone production & consumer sentiment, Jan 213-Oct 215 (%) 3.5 3. 2.5 2. 1.5 1.1 1..5..1 -.5-1. EU core inflation EU inflation Source: Bloomberg Source: Bloomberg 12
216 Compendium China: Managing the slowdown China GDP only grew 6.9% in 3Q15 (2Q15: 7.%) with the continuing imports decline indicating subdued domestic demand. Hence, while exports dropped, China s annualized trade balance continued to rise. To maintain stabilization amid the global economic slowdown, PBoC cut its benchmark lending interest rate to 4.35% while inflation is very low at 1.6%. Preventing deflation is also a big concern for the government and PBoC now. While the CNY will be a part of the Special Drawing Rights (SDRs) in October 216, most investors believe it will depreciate over the long term. China trade balance, Jan 21-Sept 215 Source: Bloomberg, Bahana PBoC interest rate and inflation, Jan 21-Sept 215 IMF s special drawing rights composition Currency Currency amount Exchange rate USD Old New Equivalent weight weight (Old) (%) (%) USD.66 1..66 41.9 41.73 EUR.42 1.6.45 37.4 3.93 JPY 12.1 122.67.1 9.4 8.33 GBP.11 1.51.17 11.3 8.9 CNY 6.39 1.92 1.37 1. 1. Source: Bloomberg Source: IMF, Zero Hedge 13
216 Compendium Unexciting manufacturing and commodity markets Business activities in Brazil, Australia, South Korea and China have remained unexciting, as shown by the purchasing managers index (PMI). Indonesia s PMI was created in 211, and its level has contracted, suggesting continued weak economic growth in 215 and as we head into 216. China, being the world s main growth engine, continues to stall as shown by the China PMI, which indicates likely continued weak commodity prices ahead. Purchasing Managers Index, Dec 214-Oct 215 Country Dec-14 May-15 Jun-15 Jul-15 Aug-15 Sept-15 Oct-15 America Brazil 5.2 46.5 46.5 47.2 45.8 47. 44.1 Canada 53.9 51.3 51.3 51.3 49.4 48.6 48. United States 53.9 53.6 53.6 53.8 53. 53.1 54.1 Europe Italy 48.4 54.1 54.1 55.3 53.8 52.7 54.1 France 47.5 5.7 5.7 49.6 48.3 5.6 5.6 Germany 51.2 51.9 51.9 51.8 53.3 52.3 52.1 Euro zone 5.6 52.5 52.5 52.4 52.3 52. 52.3 Asia Pacific Australia 46.9 44.2 44.2 5.4 51.7 52.1 5.2 China 5.1 5.2 5.2 5 49.7 49.8 49.8 Japan 52. 5.1 5.1 51.2 51.7 51. 52.4 Indonesia 47.6 47.8 47.8 47.3 48.4 47.4 47.8 Singapore 51.8 5.4 5.4 49.7 49.3 48.6 48.9 South Korea* 75. 82. 76. 67. 7. 71. 7. Source: Bloomberg, Markit *BSI Manufacturing Index Brent oil and metal index price, June 214 Oct 215 China leading index, Jan 211 Sept 215 Source: Bloomberg Source: Bloomberg 14
216 Compendium Emerging market vulnerability: Country comparison Based on our analysis, Indonesia is seeing some weakness due to the poor recovery in its current account deficit, a lower foreign-reserve level and a low manufacturing export base. However, debt indicators suggest Indonesia is safe. The short-term debt-to-foreign-reserve ratio of Indonesian companies is at 52.6%, lower than the 213 taper tantrum period (61.%), but still above that of Asian peers. However, we still need to be mindful with the high level of foreign holding of government bonds which increase the risk on capital outflows. Economic comparisons BIS REER GDP Growth (% 214) Average inflation (%) Manuf export (% of exports) Fiscal deficit (% of GDP) 214 CA balance (% of GDP) 214 External debt (% of GDP) Govt debt (% of GDP) Indonesia 89. 5. 6.2 37.8-2.3-3.1 36.8 23.9 Malaysia 9.4 6. 2.3 61.8-3.5 4.4 7.4 54.2 Thailand 12.3.9 1.5 76.3-2.7 3.3 34.8 48.6 Philippines 117.1 6.1 3.1 79.1 -.6 4.4 26.1 45.4 India 88.1 5.3 6. 64. -5.9-1.4 27.6 51.3 Korea 19. 3.3 1.2 86.2 1.6 6.3 3.9 34.2 Turkey 8.8 2.9 7.9 78.5-1.3-5.8 57.4 36.5 Brazil 7.9.2 6.7 34.8-4. -4.5 38.2 59.3 South Africa 76.8 1.5 5.5 49.5-4.7-5.1 45.1 47.3 Source: Bloomberg, World Bank, Bahana estimates Foreign holding of government bonds outstanding, June 215 Short-term debt-to-foreign reserve ratio, March 29-Sept 215 Source: ADB Asian Bond Online; Indonesia as of Sept 15 & India as of Jul 15 Source: Bloomberg, Bahana 15
216 Compendium Domestic economy 16
216 Compendium 216 SWOT analysis Strengths Improving fiscal policy mix since 213 due to fuel-subsidy removal. Underleveraged economy as external-debt-to-gdp ratio is quite low at 33.4%. Plenty of room for monetary & fiscal easing amid global economic slowdown. Huge productive population base to provide sustained domestic economic growth ahead. Relatively stable political conditions among Southeast Asian nations. Weaknesses Relatively low foreign reserves to support short-term external debt. Weak government spending ability. High dependency on commodity-related sectors and reliance on imports. High and increasing Incremental Capital Output Ratio (low productivity), causing low connectivity to the global production network. Slack in labor markets and labor militancy. Opportunities Further stimulus by BOJ and EU should open possibilities of capital flows. Higher US economic growth. Low oil prices. Favorable GDP per capita level should attract more sophisticated investments from developed markets. Threats Tight global market liquidity with market over-reaction to the Fed rate hike. Too strong Dollar and global currency war. Further unfavorable policies on commodity markets. Hard landing in China adversely impacting Indonesia s economic growth every 1% drop in China s GDP growth would result in a.5% decrease in Indonesia s GDP growth. Source: Bahana 17
216 Compendium Indonesia: still one of the fastest-growing economies In line with the central bank s forecast, we expect 4Q15 GDP growth to come in at 4.78% (3Q15: 4.73%), and is expected to remain flat until 1Q16. For now, our 215 GDP growth forecast is at 4.72%, compared to the consensus projection of 4.8% and the government s estimate of 5.2%. Looking at 216, we expect GDP growth to rise slightly to 5.1%, slightly lower than the government s and central bank s forecasts ranging between 5.2-5.6%. However, even at 4.7%, Indonesia s economic growth would still remain one of the highest next to India s, China s, Philippine and Malaysia. Growth drivers include expected government infrastructure project realizations and solid direct investments. Forecast of regional GDP growth rates Countries 1Q15 2Q15 3Q15 4Q15F 1Q16F 215F 216F 217F (%) (%) (%) (%) (%) (%) (%) (%) India 7.5 7. 7.4 7.5 7.8 7.4 7.6 8. China 7. 7. 6.9 6.8 6.7 6.9 6.5 6.3 Philippines 5.2 6. 7.3 5.9 6.5 6.2 6.3 6.2 Indonesia 4.7 4.7 4.7* 4.8 4.8 4.7 5.1 5.2 Malaysia 5.6 4.6 5. 4.4 3.9 4.8 5.1 4.8 Thailand 3. 3.3 3.3 2.9 2.6 3.4 4. 3.9 Taiwan 3.4.6* 3.2 3.5 1.1 3.5 3.5 3.2 South Korea 2.5 2.2* 2.9 3.5 2.8 2.9 3.4 3.4 Singapore 2.8 1.7* 3. 3.1 2.7 2.7 3.1 3.2 Hong Kong 2.1 2.6 2.3 2.6 2.3 2.5 3. 2.8 215F GDP comparison in BRICS-MINT countries (%) 8 7.4 7 6.9 6.2 6 5 4.8 4.7 4 3.5 3.4 3 2.9 2.7 2.5 2 1 India China Philippines Malaysia Indonesia Taiwan Thailand South Korea Singapore Hong Kong Source: Bloomberg, *Consensus, **Bahana estimates Source: Bloomberg, Bahana estimates, *Actual; for India 215-17F= FY16-18F Real GDP growth, 21-216F (IDRtn) 1,55 9,55 6.22 6.17 8,973 9,432 8,568 8,55 6.3 8,158 7,727 7,55 7,288 6,864 6,55 5.58 5,55 5.11 4,55 5.2 3,55 4.72 2,55 1,55 55 21 211 212 213 214 215F 216F Indonesia GDP (LHS) GDP growth (RHS) Source: Statistics Indonesia, Bahana estimates (%) 6.4 6.2 6. 5.8 5.6 5.4 5.2 5. 4.8 4.6 4.4 4.2 4. 18
216 Compendium Regional GDP: Slower growth in mining dependent areas As a consequence of low commodity prices, provinces which have a high dependency on commodity prices like South Kalimantan, Aceh, Bangka Belitung and Papua experienced GDP growth that was lower than the national average. Interestingly, commodity-related regions like Jambi with 7.76% GDP growth could outperform by exporting rubber-related products and vegetable oils. Industry wise, the information, communication and financial sectors still recorded double-digit GDP growth while the mining and trade sectors (wholesale and retail) booked very low growth. Regional GDP growth, 214 Source: Statistics Indonesia Indonesia GDP by Industry growth, y-y 214 & 3Q15 (%) 12 1.8 1. 1.3 1 8. 8 7.1 6.8 7. Indonesia GDP composition by Industry, 9M15 Financial & Insurance Activity 5% Others 18% Agriculture 18% 6 4 4.9 4.3 4.6 3.2 4.2 4.8 Information & Communication 6% Mining & Quarrying 1% 2 1.5.5-2 -4-6 -8 Information & Com Financial Transportation Const. Manufacturing Agr. Wholesales and Retail 3Q15 4Q14 Mining -5.6 Transportation & Storage 5% Wholesales and Retail Trade 17% Construction 12% Manufacturing Industry 27% Source: Statistics Indonesia Source: Statistics Indonesia 19
216 Compendium Layoffs: The impact of the slowing economy PMI data has shown 13 consecutive months of manufacturing contraction, helping to trigger layoffs at several sectors. In addition to the near 3k layoffs thus far, there is a possibility for an additional quarter of a million severances, mainly coming from the property sector. The weak PMI due to inflation pressure, continued weak IDR and uncertainties regarding government policies, caused the production utilization rate to drop to 75.4% in 3Q15, from 8% in 4Q14. Generally, most industries experienced lower utilization rates in 3Q15, except for electricity, gas and water supply. Indonesia s production capacity utilization, 1Q12 3Q15 Latest news from labor market in Indonesia No Companies Industry Status Number of workers 1 SMEs Manufacture Laid off 155, 2 SMEs Textile Laid off 36, 3 SMEs Logistics Laid off 4, 4 Krakatau Steel Metal Laid off 7 5 HM Sampoerna Cigarettes Laid off 4,9 6 Gudang Garam Cigarettes Laid off 4,288 7 PLTU Paiton Gas Laid off 45 8 Inti Bara Perdana Coal Laid off 125 9 CIMB Niaga Financial Laid off 2, 1 Bank Danamon Financial Laid off 4 11 Other manufactures Laid off 74,9 Total 282,358 12 Maspion Group Manufacture Plan 1,8 13 SMEs Property Plan Total 25, 251,8 Total 534,158 Source: Kontan, Kompas, Tempo, liputan6.com, sindonews.com, Bahana Indonesia s Purchasing Managers Index, Aug 213-Oct 215 Source: CEIC Source: Bloomberg 2
216 Compendium Economic slowdown: Close to reaching the bottom In our view, the slowdown in GDP growth is close to reaching the bottom, with inflation expected to drop to within the BI s target and the 215 current account deficit improving to around 2.% of GDP. This opens the window for the BI to cut its benchmark rate. However, the Indonesian economic recovery is unlikely to be fast this time around since commodity prices should still remain quite depressed when the US decides to begin its tightening cycle. Nevertheless, going forward, we need to be ready for possible economic turbulence as the stability of foreign-capital inflows is correlated to low US interest-rate levels. GDP growth during periods of economic slowdown Source: Bloomberg, Bahana estimates Indonesia business cycle, 1Q13-1Q17 Economic cycle comparison, 24-13 GDP growth prior to slowdown (%) 2-year change in commodity prices (%) Current account balance (% of GDP) Global monetary conditions BI rate change, post 2 years (%) 24 4.53 32.4 1.34 Tightening -5% 26 5.2 34.52 1.99 Tightening -3% 29 6.35 29.5.92 Loosening -2% 213 5.5-29.18-3.1 Tightening % Source: Statistics Indonesia, Bahana estimates Source: Bloomberg, Statistics Indonesia, Bank Indonesia 21
216 Compendium Foreign exchange: Signs of a currency war On a YTD basis, the IDR has depreciated vs. the USD by around 1%. However, it has appreciated against the MYR, EUR and AUD due to the weak Malaysian economy and continued monetary easing in the Eurozone and Australia. Interestingly, the trend changed in the past 6 months, with the IDR appreciating vs. currencies of most of Indonesia s trading partners. Looking at changes in monetary policies across the region, there is a pattern of countries cutting their interest rates faster than Indonesia and seeing their currencies depreciate vs. the IDR. In our view, this signals an ongoing currency war within the region. As a result, we expect BI to continue easing its monetary policy. IDR against currencies of major trading partners YTD Source: Bloomberg, Bahana IDR against trading partners, 6M (May-November 215) Benchmark interest rate change YTD Source: Bloomberg, Bahana Source: Bloomberg, Bahana 22
216 Compendium IDR movements: Macro and micro factors Recently, a combination of lower inflation, a gradual improvement in the CA, tight monetary policy, government initiatives and further Fed delays has brought a positive impact on the IDR/USD rates. However, we are still aware that continued weak GDP growth, a growing fiscal deficit and possible CNY devaluation are downside risks for the IDR. Hence, we maintain our end-215f IDR/1USD exchange rate target at 14k. At this stage of the cycle, we still foresee IDR depreciation continuing into 216, to 14.5k with IDR movements heavily influenced by reactions to the Fed rate hike. Under a second scenario of lower inflation and a subdued US interest rate hike, the IDR could stay at 13.7k by end-216. Current situation of IDR/1USD fundamental factors Indicators Positive Negative Inflation Strong positive Trade balance/cad Mild positive GDP growth Negative Fiscal deficit Mild negative Government policy Positive Oil price Mild positive Interest rate Mild positive China devaluation Strong negative The Fed rate & US t-bills Source: Bahana Positive Change on Real Effective Exchange Rate, June 213 Oct 215 IDR/1USD exchange-rate forecasts and scenario, 1Q15-4Q16F Source: Bloomberg, Bahana Source: Bloomberg, Bahana estimates 23
216 Compendium Monetary policy: Lower RR first, BI rate cuts later BI acknowledges that Indonesia requires monetary easing with the Fed rate hike, China economic slowdown, low commodity prices and administered price hikes being the main problems in the economy. At this stage, given softer inflation ahead, lower interest rates appear possible as real interest rate differentials are expected to improve. However, a recent BI statement indicates that rate cuts ahead will be dependent on the Fed s decision and the severity of capital outflows. As a substitute, BI may further cut the primary RR to help liquidity. With every 5bp cut in the RR, banks loan growth would rise by.4%. Indonesia to US real int. rate difference, Jan 213 Dec 215F Source: Statistics Indonesia, Bahana estimates Recent global interest rate changes Current interest rate Latest change Latest change Number of interest change (%) (bps) (x) India: Repo rate 6.75 (5) 29-Sept-15 4 Cash reserve ratio 4. (25) 29-Sept-15 4 Norwegia.75 (25) 24-Sept-15 1 New Zealand 2.75 (25) 1-Sept-15 7 China: Interest rate 1.75*/4.6** (25) 25-Aug-15 5 Reserve requirement 18. (5) 25-Aug-15 1 Russia 11. (5) 31-Jul-15 1 Brazil 14.25 5 3-Jul-15 6 Canada.5 (25) 15-Jul-15 2 Sweden (.35) (1) 2-Jul-15 1 South Korea 1.5 (25) 11-Jun-15 7 Australia 2. (25) 5-May-15 9 Turkey 7.5 (25) 24-Feb-15 1 Indonesia 7.5 (25) 17-Feb-15 1 Switzerland (.75) (25) 15-Jan-15 1 Euro Zone.1 (5) 4-Sep-14 1 Vietnam 6.5 (5) 17-Mar-14 1 Thailand 2. (25) 12-Mar-14 5 The Philippines 3.5 (25) 25-Oct-12 3 Hong Kong.5 8 19-Jun-12 1 Taiwan 1.88 13 3-Jun-11 5 Source: Bloomberg *Deposit rate **Lending rate Primary reserve requirement and BI rate, Jan 21 Dec 216F Source: Bank Indonesia, Bahana estimates 24
216 Compendium Balance of Payments; Sensitivity analysis on CAD, oil & IDR The Current Account Balance improvement is largely supported by the steep drop in oil prices, while the primary deficit is a big concern during a period of money outflows. Due to continued low oil prices, we forecast next year s current account deficit (CAD) to edge slightly higher, to 2.3% of GDP. Given the likely upcoming US rate-hike cycle, we expect the balance of payments to remain in deficit through 2Q16, with the biggest downside being with negative portfolio investment flows. Our sensitivity analysis on oil prices and the CAD indicate that faster economic growth will increase the CAD and lead to IDR depreciation. We expect the CAD-to-GDP ratio to increase to 2.3% in 216F. Indonesia s current account balance,1q1-4q17f Source: Bloomberg, Bahana estimates Indonesia s financial accounts, 1Q1-3Q15 Current account balance sensitivity to oil prices and IDR Scenario CA Deficit (% of GDP) Oil price (USD/Barrel) IDR/1USD GDP growth (%) Scenario 1 1.9 45 13,5 4.3 Scenario 2 2.1 5 14, 4.9 Scenario 3 2.3 55 14,5 5.1 Scenario 4 2.5 6 15, 5.4 Scenario 5 2.7 7 16, 5.6 Source: Bahana estimates Source: Bloomberg, Bahana estimates 25
216 Compendium Global deflation threat: Low inflation, low growth In 213 14, Indonesia s high inflation rate was due to fuel-price hikes in June 213 and November 214. With the absence of a fuel-price shock in 216, coupled with weaker demand, inflation should be at 3.9% in 216. On the producer-price side, most of Indonesia s Asian counterparts and trading partners have already experienced PPI deflation. It should result in lower pressure from imported inflation ahead, and could be a positive factor as long as Indonesia s domestic demand does not drop with domestic producers maintaining their competitiveness against trading partners. From the domestic side, Indonesia has a number of policy measures at its disposal, including monetary easing and fiscal stimulus. Indonesian inflation,1q12-4q16f (%) 9 8 7 6 5 4 3 2.9 4.5 2 Source: Bloomberg, Bahana estimates PPI comparisons, October 215 Indonesia producer price index, 1Q11-3Q15 Source: Bloomberg Source: Bloomberg 26
216 Compendium International trade: The changing exposure Given China s economic slowdown, Indonesia s trade structure is experiencing a change as the country s exposure to the US is increasing, while its exposure to Japan and China continues to drop. Indonesia s commodity exports dropped with 9M15 exports of coal as a percentage of total exports falling to 12.3% (214: 14.2%) and 11.5% for CPO (214: 11.9%). Meanwhile, the mix of textile and textile-export products rose to 9.3% in 9M15 (214: 8.8%). Imports of electric components and processed foods continued to increase, while imports of metal-based products continued to drop amid lower investment growth in 215. Going forward, we expect this change in trade structure to remain. Growth in oil & gas and non-oil & gas imports, Jan 21-Oct 215 (%) 115 111.9 11 15 1 94.5 95 9 93.8 85 8 76.8 75 China Japan United States EU Singapore Source: Bloomberg, Bahana Growth in export by economic group, Jan 213-Oct 215 Indonesia s import product mix, 214 vs. 9M15 9M15 214 9M15 214 Coal 2.8% 3.3% 31.6% 4.5% 4.5% 5.8% 6.6% 12.3% 7.8% 11.5% 9.3% Coal Palm oils Textile Other manufacture Electrical Base metal product Processed rubber Processed food Footwear Processed woord products Others 1.4% 2.8% 3.1% 4.8% 4.3% 6.2% 6.9% 14.2% 8.6% 11.9% 8.8% Palm oils Textile Other manufacture Electrical Base metal product Processed food Processed rubber footwear Articles of gold Others 37.7% 2.1% 2.4% 2.8% 3.3% 5.4% 6.1% 14.4% 6.2% 12.7% 6.9% Electrical Base metal products Chemical Plastic material Textile Other agriculture Processed food parts of vehicles 36.4% 2.6% 2.6% 2.8% 3.4% 5.5% 5.6% 14.1% 6.2% 13.6% 7.2% Electrical Base metal products Chemical Plastic material Textile Other agriculture Processed food parts of vehicles Cattle fodder Motor vehicle 4 wheels & more Source: Bloomberg, Bahana estimates Source: Bloomberg, Bahana estimates 27
216 Compendium Imports: The drop was driven by price The value of imports dropped by an annualized 18.2% driven by lower oil & gas, which fell by 37.4% y-y, while non-oil & gas dropped in 3Q15 by 11.8% y-y. For the economy, the continued drop y-y in imports of raw materials at 18.8%, capital goods at 16.8% and consumption goods at 14.2% indicate no early recovery for GDP growth prospects. However, the import price index data indicates that the recent steep drop was driven by lower import prices, a consequence of the global deflation trend. The non-oil & gas import price index fell by 19.4% y-y while import volume was still increasing at 1.4% y-y. Growth in oil & gas and non-oil & gas imports, Jan 21-Oct 215 Source: IMF, Statistics Indonesia, Bahana Growth in imports by economic group, Jan 213-Oct 215 Import price index, Jan 213-Oct 215 Source: Bloomberg, Bahana Source: Bank Indonesia, CEIC 28
y-y change in REER 216 Compendium Exports: New trade partners amid lower commodity prices Indonesia s proportion of the global export market has declined from its peak (211), undergoing normalization to.95% of global trade value. Interestingly, Indonesia s major export destination recently changed as US outstripped China on the strengthening US economy and low commodity prices. Textile, rubber, electronics and F&B are the main contributors to US exports. As a consequence of the high reliance on the commodities market, Indonesia s export sensitivity to changes in exchange rate is more limited today. Export share in global market, August 25 September 215 (%) 1.15 1.1 1.5 1..95.9.85 1yr average:.95% The rise of China and economic boom Normalization.8.75.7 Source: IMF, BPS, Bahana Relationship between REER and export growth Export share by country destination, December 21 August 215 (%) (%) (%) 12 1 8 6 4 2-2 Indonesia India Philippine Thailand Korea Singapore China 18. 17. 16. 15. 14. 13. 12. 11. 1. 1.5 1. 9.5 9. 8.5 8. -4 Malaysia 9. 7.5-6 -14-12 -1-8 -6-4 -2 2 y-y change in Annualized exports Source: Bloomberg, Bahana exports (%) Source: Bank Indonesia, Bahana estimates China (LHS) Japan (LHS) EU (LHS) US (RHS) 29
216 Compendium Consumption: Waiting for monetary easing Indonesian private consumption growth dropped from 5.7% in 212 to only 5.%, in line with BI s tight monetary policy. Possible BI policy easing in 216 should boost consumption growth to 5.1% in 217. Apart from F&B and equipment, consumption growth has had a steep drop, especially for apparel goods. Housing loans for flats, apartments, and shop houses experienced the steepest slowdown. Indonesia private consumption growth (%) 5.7 5.5 5.3 5.1 4.9 5. 5. 5.1 4.7 4.5 1Q11 4Q11 3Q12 2Q13 1Q14 4Q14 3Q15 2Q16F 1Q17F 4Q17F Source: Statistics Indonesia, Bahana estimates Consumption growth breakdown Consumption loan growth breakdown (%) 3 25 27.1 25. 2 17. 17.8 15 1 5 14.1 11.8 1.2 12.8 8.1 1.1 4. 3.4 5.9 6.7 9.5 12.6 1.5-5 Consumption Housing Flat & apartment -.8 Shophouse Vehicle Others 213 214 9M15 Source: CEIC Source: Bank Indonesia 3
216 Compendium Investment: Need improvement in business sentiment Investment growth remained sluggish in 3Q15 as it only grew by 4.62% y-y. We forecast it growing by 3.6% y-y in 215, with a pick up to 5.% in 216 as economic sentiment should improve on both the domestic and foreign-investor fronts. However, foreign direct investment (FDI) has been sluggish as it dropped by 15.6% y-y in 3Q15, driven by a lower realization of Japanese investment in the manufacturing sector. Sector wise, we see that due to the IDR depreciation, dollar-based industries such as fishing, agriculture and trade posted the fastest FDI growth in 3Q15. Indonesia s investment y-y growth, 1Q11-4Q17F (%) 1 9 8 7 6.6 6 5 5. 4 3.6 3 1Q11 4Q11 3Q12 2Q13 1Q14 4Q14 3Q15 2Q16F 1Q17F 4Q17F Source: Statistics Indonesia, Bahana estimates FDI y-y growth (USD), 3Q11-3Q15 (%) 6 FDI y-y growth by industry, 3Q15 (%) 15 5 1 9 64 4 3 2 5-5 25 6-3 -16-19 -32-45 1-1 -75-87 3Q11 1Q12 3Q12 1Q13 3Q13 1Q14 3Q14 1Q15 3Q15-15 -1-2 -15.6-2 -25-197 Source: CEIC Source: CEIC 31
216 Compendium Govt expenditures: Trying to pick up in 216 We expect government expenditures to continue growing due to the lowbase effect from early 215 and possible government action on capital spending. On the tax-revenue front, we expect tax-revenue growth to remain subdued at 15.1% y-y in 216F, reflecting weak economy. Moreover, recent government moves to cut tax rates are not favorable to a scenario of a steep increase in tax revenues. Composition wise, weak capital-spending execution is already decreasing the proportion of capital expenditures as a percentage of total government spending. Indonesia s government expenditure, 1Q13-4Q17F (%) 9 8 7 6 5.4 5 4 3 6.7 6.1 2 1 1Q13 3Q13 1Q14 3Q14 1Q15 3Q15 1Q16F 3Q16F 1Q17F 3Q17F Source: IMF, Statistics Indonesia, Bahana estimates Government tax revenue and GDP growth, 24-216F Composition of government expenditure, 214 and 9M15 (%) (%) 6.9 4 6.4 5.9 15.1 35 3 25 2 15 31.5% 9M15 12.3% 11.5% Coal Palm oils Textile and textile products Other manufacture products Electrical apparatus, measuring instruments and optical 3.% 214 14.2% 11.9% Coal Palm oils Textile and textile products Other manufacture products Electrical apparatus, measuring instruments and optical 5.4 4.9 5.1 1 5 2.8% 3.3% 4.5% 7.8% 9.3% Base metal products Processed rubber Processed food Footwear 1.4% 2.8% 4.8% 4.3% 8.6% 8.8% Base metal products Processed food Processed rubber Footwear Articles of gold -5 4.5% 5.8% 6.6% Processed wood products 6.2% 6.9% Others 4.4-1 Others 27 28 29 21 211 212 213 214 215F 216F GDP growth (LHS) Tax revenue growth (RHS) Source: Statistics Indonesia, Bahana estimates Source: Bank Indonesia 32
216 Compendium Fiscal risk: Slower government spending required The 9M15 government deficit rose to IDR259tn, or equal to 2.3% of GDP. The regional transfer-fund realization increased to IDR78tn in September, or IDR511.2tn in 9M15 (76.2% of 215 target), while the government revenues did not show any significant improvement, at IDR122tn in September. Component wise, disappointment came from the oil & gas income tax which dropped 33.2% y-y and only achieved 58.5% of the 215 target. VAT fell 3.3% while property taxes dropped 6.4%. As a consequence, the government is required to either slow down the rate of spending, or increase tax collection to maintain a fiscal deficit below 3%. Government budget realization, January September 215 Source: Ministry of Finance Tax revenue analysis, 9M15 Composition of government expenditure, 214 and 9M15 Source: Ministry of Finance Source: MoF, Bahana estimates 33
GDP growth 216 Compendium 216 state budget: Challenging In its 216 state budget, the government has targeted an optimistic 216 GDP level of 5.3%, down from 215 s target of 5.7%. If we make a comparison to 215, 216 budget should be challenging as it tries to increase tax revenue by 47.4% y-y to nearly IDR1,36tn. At this point, our calculation indicates that the 216 tax revenue could realistically grow 15.1% y-y (excluding custom and duties) to IDR1,62.4tn due to moderate economic growth at 5.1%. Hence, we see the room for government spending to be lower and we expect 216 disbursement should only be at IDR1,843tn or 88% of FY216 target, reflecting 2.7% of GDP fiscal deficit. 216 state budget deficit, various spending targets Achievement of spending target 8% 85% 88% 9% 95% 5.7% -.1 1.6 2.1 2.4 3.3 5.4%.3 2 2.5 2.8 3.7 5.1%.7 2.4 2.7 3.2 4.1 4.8% 1.1 2.8 3.3 3.6 4.5 4.5% 1.5 3.2 3.7 4.1 4.9 Source: Bahana estimates Draft state budget: Macroeconomic assumptions, 216 Assumptions 214 215 215 216 Revised budget State budget Revised state budget Bahana forecast Draft state budget Bahana forecast GDP Growth (% y-y) 5.5 5.8 5.7 4.7 5.3 5.1 Inflation (% y-y) 5.3 4.4 5 2.9 4.7 4.5 IDR/USD 11,6 11,9 12,5 14, 13,9 14,5 Average 3-mo govt T-Bill rate (%) 6 6 6.2-5.5 - Oil price (USD/bbl) 15 15 6 55 5 57 Oil lifting (k bbl/day) 818 9 825-83 - Gas lifting (k boe/day) 1,224 1,248 1,221-1,155 - Source: Ministry of Finance, Bahana estimates State budget summary (IDRtn), 215-16 215 215 216 216 % % Revised Bahana s State Bahana s changes changes Budget estimate Budget estimate Target Bahana Revenues & grants 1,761.6 1,321.2 1,822.5 1,59.6 37.9 14.3 Tax (excluding custom & duties) 1,294.3 923. 136.1 1,62.37 47.4 15.1 Non-tax 467.3 398.2 462.4 447.227 16.1 12.3 Expenditures 1,984.1 1,616.7 2,95.7 1,843. 29.6 14. Central govt 1,319.5 1,54.3 1325.5 1,161.1 25.7 1.1 Infrastructure 29 2 313 275 56.5 37.5 Energy subsidies 137.8 128.8 12.1 89.8-2.7-3.3 Transfer regions 664.6 562.4 77.2 681.9 36.9 21.2 Surplus/deficit (IDRtn) -222.5-295.5-273.2-333.4-7.5 12.8 % of GDP -1.9-2.7-2.2-2.7 - - Source: Ministry of Finance, Bahana estimates 34
216 Compendium Infra progress: Ongoing, but behind schedule In 215, the government has allocated an infrastructure budget of IDR29tn with the following majority (65%) breakdown: Ministry of Public of Works (36%, IDR15.5tn), Transportation Ministry (18%, IDR52.5tn) and several SOEs (11%, IDR3.8tn) through capital injections. Based on the e-procurement system of the Ministry of Public Works, around 86% of the projects have been awarded, including some of the bigger contracts. That said, there are some multi-year and bigger contracts still undergoing the tender process (circa 21%), creating opportunities for listed SOE companies to book additional gov t contracts in 4Q15. IDR29tn infrastructure budget breakdown by recipient, 215F 5% 2% 2% Ministry of Public Works and Public Housing 1% Ministry of Transportation 36% Other Ministries/Institutions State Capital Participation (PMN) 11% Special allocation funds Others Ministry of Energy and Mineral Resources 16% 18% Infrastructure investments Public Works Ministry s project breakdown, Oct 215 Amount Project progress (IDRbn) (IDRbn) Tender invitation Ongoing tender Awarded tender >2bn 1,195 16,357 13,329 5-2bn 849 5,369 16,21 <5bn 181 1,591 56,468 Total 2,225 23,317 86,7 Amount Number of package (unit) (IDRbn) Tender invitation Ongoing tender Awarded tender >2bn 3 46 32 5-2bn 6 4 214 <5bn 25 45 12,19 Total 34 536 12,436 Source: Ministry of Public Works, Bahana Source: Ministry of Public Works, Bahana Public Works Ministry s tender progress, Oct 215 1% 2.9% 2.2% 9.5% 13.6% 9% 19.6% 25.9% 5.3% 23.3% 4.1% 26.3% 8% 9.6% 2.5% 7% 24.% 16.3% 6% 22.7% 5% 3.3% 4% 86.% 7.8% 64.7% 3% 58.2% 48.1% 2% 27.4% 1% % Mar-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Source: Ministry of Public Works, Bahana Not yet tendered Tender invitation Ongoing tender Awarded tender 35
216 Compendium Infra progress: Awarding of bigger projects With the Public Works Ministry almost completed the tender process of its 215 budget, we notice that the projects are evenly awarded to all listed construction companies, with no apparent bias to a particular company. However, there are still a number of large and multi-year projects which currently still under tender process such as the Karangnongko-Wagon road reconstruction (IDR1.55tn), the Manado-Bitung toll road (IDR1.1tn) and the Kendari Bay bridge (IDR749bn). On the back of its effort to evenly distribute the 216 budget, we notice that the Public Works Ministry has begun the tender process for its 216 contracts, although those projects are still relatively small in value. Public Works Ministry s project breakdown, Oct 215 No Projects IDRbn Region 1 Karangnongko-Wangon road reconstruction 1,554.7 Central Java 2 Kendari Bay bridge construction 749. Southeast Sulawesi 3 Bintang Bano main dam construction 686.7 West Nusa Tenggara 4 Manado-Bitung toll road construction (PA1) 549.2 North Sulawesi 5 Manado-Bitung toll road construction (PA1) 524.2 North Sulawesi 6 Simpang Empat-Simpang Air Balam 519.5 West Sumatra 7 Rotiklot dam 497. East Nusa Tenggara 8 Sindang Heula dam construction 459.5 Banten 9 Kambang/Inderapura road widening 457.6 West Sumatra 1 Batas Serawak-Kembayan road widening 45. West Kalimantan 11 Jakarta coastal protection Phase II (Package 2) 416. Jakarta 12 Trisakti port access road construction 48.1 South Kalimantan 13 Jakarta coastal protection Phase II (Package 1) 385.5 Jakarta 14 Manggopoh-Pariaman road construction 377.3 West Sumatra 15 Simpang Tanjung - Aruk II road widening 373.8 West Kalimantan 16 Nipa-Nipa pond construction 369.9 South Sulawesi 17 Rehabilitation of Klambu Kiri channel 357.4 Central Java 18 Construction of Diversion Channel in Putih River 328.6 Jogjakarta 19 Floodway Cisangkuy construction (Package I) 325.8 West Java 2 Floodway Cisangkuy construction (Package II) 316.7 West Java 21 Manado-Bitung toll road construction (PA1) 35.4 North Sulawesi Source: Ministry of Public Works, Bahana Awarded project tenders (above IDR1bn), Oct 215 No Projects IDRbn Region Project winner 1 Pulau Balang II bridge construction 1,391. East Kalimantan Hutama Karya- ADHI-Bangun Cipta (JO) 2 Manado-Bitung toll road 1,133.8 North Sulawesi Hebei Road and Bridge Group - Hutama Karya 3 Tapin dam construction 937.1 South Kalimantan Brantas Abipraya - WSKT (JO) 4 Holtekamp bridge construction 96.8 Papua PTPP - Hutama Karya - Nindya Karya (JO) 5 Balikpapan-Samarinda toll road construction 865.2 East Kalimantan Beijing Urban Construction-WIKA-PTPP 6 Paselloreng Main Dam construction 755.1 South Sulawesi WIKA - Bumi Karsa (JO) 7 Solo-Kertosono toll road (section I) 563.8 Central Java WIKA - WSKT - Nindya Karya (JO) 8 Batuaji-Kuaro road widening 43. East Kalimantan WSKT - Nindya Karya 9 Tanju and Mila dams 377.8 West Nusa Tenggara Nindya Karya - Hutama Karya (JO) 1 Sibolga-Tapsel road widening 364.3 North Sumatra PTPP 11 Gede Bage access road construction 34. West Java WIKA 12 Salubatu-Mambi road and bridge construction 33.5 West Sulawesi Hutama Karya-Passokorang-Tuju Wali Wali 13 Molosipat-Lambunu-Mepanga road widening 318.6 Central Sulawesi Modern Widya Technical 14 Jabung irrigation construction III 298.4 Lampung WSKT - Abdi Mulia Berkah 15 Manggar river bridge 289.6 East Kalimantan WIKA 16 Tomata-Beteleme road widening 285.6 Central Sulawesi JKON-Multigraha Istika Makmur 17 Jabung irrigation construction III 254.8 Lampung ADHI 18 Grindulu Brige construction 253.9 East Java Nindya Karya 19 Ogoamas - Siboang road widening 251.1 Central Sulawesi Perdana Bumi Syariharti 2 Flood control facility in Padang 248.4 West Sumatra PTPP-Ashfri Putralora Source: Ministry of Public Works, Bahana Upcoming project tenders (above IDR1bn), Oct 215 No Projects IDRbn Region 1 Musi IV bridge construction 553.6 South Sumatra 2 Batu Mundom - Natal road reconstruction 326.2 North Sumatra 3 Rianiate - Batu Mundom road reconstruction 315.5 North Sumatra 4 Sp. Jam flyover construction 187.4 Riau 5 Gantung bridge material 182. Jakarta 6 D.I. Lhok Guci irrigation phase I -package I 145.8 Aceh 7 D.I. Lhok Guci irrigation phase I -package II 145.8 Aceh 8 Gaplek flyover construction 13. Jakarta Source: Ministry of Public Works, Bahana 36
216 Compendium Infrastructure spending: Toning down expectations In the government s 216 infrastructure spending breakdown, infrastructure spending is expected to increase to IDR313.5tn (215 revised state budget: IDR29.3tn). Note that as of 11M15, the Ministry of Public Works only managed to disburse 62.1% of their full-year budget while the Ministry of Transportation only spent 41.2% of their full-year target. Government infrastructure spending pattern is different from 215 as the government transfer to the village fund disbursement and government financing while cutting budget allocation on ministerial spending. With expected lower tax revenue next year, we expect infrastructure spending to only reach IDR275tn at most in 216. Ministerial spending realization, 11M15 (%) 1 9 8 7 6 5 4 3 2 1 Ministry of Public Works 73.1 62.1 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec (%) 1 9 8 7 6 5 4 3 2 1 Ministry of Transportation 5.2 41.2 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Infrastructure spending plan Spending category (IDRtn) 215 revised stated budget (IDRtn) 216 state budget Growth (IDRtn) (%) Economic infrastructure 279.9 32.3 8. 1 Ministerial 196.4 167.5-14.7 - Public works & housing 111.1 11.2-8.9 - Transportation 59.1 47.2-2.1 - Agirculture 8.9 6.2-3.3 - Energy and Mineral 8.1 3.6-55.6 - Others 9.2 9.3 1.1 2 Non ministrial Spending 6.8 5.1-25. - Viability Gap Funding (VGF) 1.2 1.1-8.3 - Grants 4.5 4-11.1 - Others 1.1-3 Village fund 41 79.4 93.7 - Specific allocations 29.7 57.2 92.6 - Infrastructure 8.3 18.8 126.5 - Others 3 3.4 13.3 4 Financing 35.7 5.3 4.9 - Gov t infrastructure investment 5.1 9.2 8.4 - Gov t capital allocation 28.8 4.2 39.6 - Others 1.8.9-5. Social infrastructure 6.5 6.5. - Ministy of Education and Culture 4.4 6.1 38.6 - Ministry of Religious Affairs 2.1.5-76.2 Infrastructure support 3.9 4.7 2.5 - BPN 1.3 1.6 23.1 - Ministry of Industry.6.5-16.7 - Others 2 2.6 3. Target Source: Ministry of Finance Realization Target Realization Total 29.3 313.5 8. Source: 216 state budget 37
216 Compendium Government finance: IDR532tn of gross bond issuance To finance 216 s budget deficit, the government plans to issue around IDR532tn of gross bond issuance or IDR372tn of net bond issuance to finance the 216 budget deficit of IDR273.2tn (Bahana: IDR333.4tn), of which 24.4% of total bond (IDR13tn) is non-idr bonds. In December 215, the government had already issued USD3.5bn of non-idr global bonds for 216 budget prefunding. In 216, the government needs to pay USD11.2bn (IDR162tn) for both the principal and interest on the government bonds; 35% of the interest and principal payments are for non-idr bonds. January, March, May and September are the months with large government bond payments. Composition wise, 41% of outstanding government bonds are non-idr bonds. Next year, the government is also willing to issue Panda bonds (CNY denominated) as a source of financing. Indonesia government bond maturity profile, 216 (USDmn) 2,5 2,378 2, 1,5 1,358 1,393 1,361 1, 546 662 52546 5 242 29 192222 254 242 29 192222 254 54 68 54 68 Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Non-IDR bond IDR bond Source: Bloomberg Composition of government bond issuance, 216 Debt positions according to main currencies, 21-215F (IDRtn) 3,5 3, 2,5 2, 1,5 1, 5 1,861 1,697 1,559 281 32 298 482 42 358 93 993 1,98 2,234 278 692 1,264 2,469 232 759 1,478 2,867 247 928 1,692 21 211 212 213 214 215 IDR USD JPY Source: Ministry of Finance Source: Ministry of Finance 38
216 Compendium Government stimulus: Preventing further slowdown To maintain market confidence, the government finally announced 6 economic stimulus packages ranging from deregulation, cuts in energy price, tax incentives and special economic zones. From monetary side, BI continues to maintain IDR stability using the stabilization package and interventions, both in spot and forward markets. At this point, most of the policies are largely structural and will only provide significant impact over the medium term. BI policy to tackle IDR depreciation No. IDR stabilization package 1. Maintaining IDR stability BI will intervene in forward markets by the beginning of October 2. Enhancing IDR liquidity management BI to issue certificates of deposits and reverse repurchase orders of SBNs with 2-week tenors to absorb excess IDR liquidity 3. Advancing forex supply and demand management BI will increase the limit of non-underlying forex/idr forward transactions from USD1mn to USD5mn, issue SBBIs in foreign currencies, lower SBI holding period from 1 month to 1 week, additional incentives for term deposits from exports earnings and enhancing transparency of foreign exchange management Stimulus package summary Focus: Deregulation, bureaucratic reform and law supremacy 1. Advance export-financing activities through national interest account. 2. Determine specific-gas prices for certain industries. 3. Continue development of special industrial zones. 4. Extend role of SMEs in the national economy. 5. Ease regulations in the trade sector. 6. Ease restrictions on foreign visas. 7. Enhance maritime industry by converting fisherman fuel demand from diesel to gas. 8. Cattle-market stabilization. Focus: Cuts in energy prices (avtur, diesel, gas) and business deregulation 1. Energy price cut 9. Advance village fund realization. 2. Business regulation easing 1. Provide 2 additional months of subsidized rice (raskin) to the poor. Package 2 3. 6 OJK initiatives in financial sector Package 4 Source: Bank Indonesia, Bahana Focus: Incentives for asset revaluations and abolishing double taxation for real estate investment trusts (REITs). 1. Lower tax on revaluations 2. Removal of REIT double taxation Package 6 Focus: lower taxes on laborintensive industries, building-permit process, and stimulus measures for real sectors 1. Employee income tax (PPh 21) 2. Industry investment taxes Package 1 Focus: Investment, tax allowances, and lower taxes for strategic sectors. Package 3 Focus: Labor market policies Package 5 Focus: Special economic zones, water resources and FDA policy. Package 7 1. Easing investment regulations: 1. New regulation on wages 1. Special economic zone incentives 2. Lower taxes for strategic sectors and incentives for bonded logistics 2. Subsidized micro loans for overseas and domestic workers 2. Water resources policy 3. More details on tax allowances 4. Lower time-deposit taxes for exporters 3. Export financing for 3 companies 3. Food & Drug administration policy (ebased system) Source: Government 39
216 Compendium Government s moves to strengthen domestic demand The government plans to raise the tax-free threshold of personal income from the current IDR24.3mn to IDR36mn to bolster purchasing power, generating an additional IDR5k for those with a monthly salary of IDR5mn. If the non-taxable income is raised to IDR5mn, consumers could have IDR17k of extra cash in their pocket. Recently, the government also cut the income tax for labor-intensive industries by 5% for employees with income of less than IDR5mn a year. Note that the government has disbursed IDR6k (USD46) per household at the beginning of April 215 to support domestic purchasing power due to higher fuel prices, and IDR45k per year per student in September. Earnings calculation on different taxable income thresholds Salary components Current Rule 36mn nontaxable income 5mn nontaxable income Core salary (Jakarta s minimum wage) 5,, 5,, 5,, Accident insurance premium 15, 15, 15, Death insurance premium 9, 9, 9, Gross salary Deductions 5,24, 5,24, 5,24, Allowance 136,2 136,2 136,2 Pension contribution 5, 5, 5, Old age insurance contribution 6, 6, 6, -246,2-246,2-246,2 Monthly net income 5,27,2 5,27,2 5,27,2 Annualised income (12x) 63,242,4 63,242,4 63,242,4 63,242,4 63,242,4 63,242,4 Status of dependence: TK/ non-taxable income -24,3, -36,, -5,, Taxable income for the year 38,942,4 27,242,4 13,242,4 Tax paid (5% x taxable income) -1,947,12-1,362,12-662,12 Earnings for the year 61,295,28 61,88,28 62,58,28 Monthly savings generated under the proposed rule 48,75 17,83 Savings/monthly income.%.95% 2.5% Source: Taxation General, Bahana Cash transfer scheme due to Jokowi s policy Cash transfer scheme due to fuel price hike (Jokowi regime) In 215, the Government has distributed around IDR12.4tn (USD846mn) to around 2.3mn poor students from disadvantaged families In 214, the Government had distributed around IDR6.2tn (USD54mn) to around 15.15mn poor households In 215, the Government had distributed around IDR9.8tn (USD76mn) to 16.4mn poor households Elementary school = IDR45K/year per student Elementary school = IDR45K/year per student Elementary school = IDR45K/year per student Nov Dec = IDR4k per household Jan Mar = IDR6K per household Source: Source: Ministry of Culture and Elementary and Secondary Education Source: Ministry of Finance, PSKS 4
216 Compendium Spending support ahead: Simultaneous regional elections On 9 December 215, the General Election Commission (KPU) conducted phase 1 of the simultaneous regional elections: 269 elections in total. Recent news indicated that a party with conflicts like Golkar is losing its share in regional elections. Looking at TLKM s top line growth, past election spending provided support with Telkomsel s 1Q-3Q14 growth still up, despite TLKM s decelerating growth. Court settlement of inter-party conflict Stimultaneous election schedule Phase Campaign period Election 1 Aug-Dec 215 9-Dec-15 Up for reelection in 215 - Jun 216 2 Oct-Feb 216* February-17 Jul 216 - Dec 217 TBC 3 Feb-Jun 218* June-18 218-19 TBC 4 Mar-July Result of 1st 22 22* phase election TBC 5 TBC 222 Result of 2nd phase election TBC 6 TBC 223 Result of 3rd phase election TBC 7 TBC 227 Result of 4th phase election TBC Source: Bahana, Election Committee, *Expected TLKM y-y revenue growth, 1Q4-3Q15 (%) 35 24 election Total # of elections 269: 9 provinces (governors), 36 cities (mayors) and 224 regencies (regents) 29 election 214 election 3 25 2 15 1 5 3Q4 3Q5 3Q6 3Q7 3Q8 3Q9 3Q1 3Q11 3Q12 3Q13 3Q14 3Q15-5 Source: Bahana -1 Source: Bloomberg, Bahana 41
216 Compendium Tax amnesty: A game changer? The government has announced some policy actions to help achieve its 216 tax target by providing tax incentives, income tax optimization and some technical related policies. Currently, the government expects IDR1tn of extra tax revenue from this tax amnesty program with 2% in 1Q16, 4% in 2Q16 and 6% in 2H16. Based on our study, the success of past tax amnesty programs depended on three factors: 1. Economic uptrend; 2. Uniqueness perception (the only one or not); 3. Allowance of money to be parked offshore; 4. Certainty on rule of law. Government tax initiatives 1 2 3 4 No. Policy Explanation and implication Change in RUU KUP Income tax optimization, without disturbing business investment environment National economy stability and purchasing power maintenance related policy Competitiveness and national industry valueadded improvement related policy a. Paperless self-assessments (e-registrations, e-tax payments and e-filings) b. Obligation to use IDR for tax payments Excise tax supervision and internal funding quality improvement Higher non-taxable income (PTKP) Increasing consumption goods excise tax policy (PMK 132/ 215) 5 Taxable goods consumption maintenance Excise tax adjustments a. Tax allowances 6 Tax incentives b. Tax holidays c. Government-borne duties (BMDTP) Tax amnesty comparison in some nations a. Taxpaying obedience improvement, for individuals and companies Country Accompanied by enhanced enforcement (Rule of law) Implemented for first time (Uniqueness) Designed to attract flight capital Geared to domestic capital Accompanied by tax rate adjustment Result 7 Tax technical policy b. Tax ratio and tax buoyancy improvement, through extension, intensification, law effectiveness, administration and regulation improvement c. Tax coverage improvement d. Tax data basic improvement, either internal or external Argentina No No Yes No No Unsuccessful Belgium No No Yes Yes No Unsuccessful Colombia Yes Yes No Yes Yes Successful France No No Yes No Yes Unsuccessful India No No Yes Yes No Successful Ireland Yes Yes No Yes No Successful Indonesia No? Yes No Yes??? Source: FRBNY Quarterly review, Bahana 8 Excise tax policy 9 Non-taxable income (PTKP) Source: 216 state budget a. Strengthening legal framework and implementing excise tax regulation b. Developing and perfecting IT system and procedures c. Import supervising optimization d. Excise tax legal framework e. Export supervising optimization f. Organizations, human resources and infrastructure balancing PTKP hike for individual from IDR24.3mn to IDR36mn per annum 42
216 Compendium Minimum wages: Execution risk (compliance issue) Since 29 215, Indonesia s minimum wages have been growing by 13% CAGR. The government already announced new minimum wages policy using GDP and inflation as the formula. However, 15 provinces will reportedly not comply with this rule in 216 and will raise the minimum wages by an average of 11.43%. However, in comparison with other ASEAN nations, Indonesian wages are still one of the lowest. Indonesia minimum wages (IDR') (%) 2,4 25 1,84 1,782 1,64 1,56 2 19 18 1,44 1,297 1,24 1,89 15 989 1,4 99 842 84 746 672 1 63 64 58 8 44 5 24 4 25 26 27 28 29 21 211 212 213 214 215 Monthly minimum wages (LHS) Change in monthly minimum wages, y-y (RHS) Regional wages comparison, Oct 215 (USD/month) 35 32.7 3 286.6 255.5 25 2 216.3 Source: CEIC Regional minimum wages Minimum wages (IDR/Month) Cha nge Minimum wages (IDR/Month) Cha nge No. P rovinc e No. P rovinc e 2 15 2 16 F (%) 2 15 2 16 F (%) 1 Riau Island 1,954, 2,178,71 11.5 16 Central Kalimantan 1,896,367 2,57,558 8.5 2 West Kalimantan 1,56, 1,739,4 11.5 17 North Sulawesi 2,15, 2,4, 11.6 3 West Nusa Tenggara 1,33, 1,482,95 11.5 18 Central Sulawesi 1,5, 1,67, 11.3 4 West Sumatera 1,615, 1,8,725 11.5 19 Maluku 1,65, 1,775, 7.6 5 Jambi 1,71, 1,96,65 11.5 2 West Papua 2,15, 2,237, 11. 6 Nanggroe Aceh Darusalam 1,9, 2,118,5 11.5 21 West Sulawesi 1,655,5 1,864, 12.6 7 South Kalimantan 1,87, 2,85,5 11.5 22 Bengkulu 1,5, 1,65, 7. 15 126.5 117.5 8 Banten 1,6, 1,784, 11.5 23 Riau Island 1,878, 2,95, 11.6 9 Gorontalo 1,6, 1,875, 17.2 24 DKI Jakarta 27 3,1, 14.8 1 1 West Java 1,887, 2,25, 19.2 25 North Kalimantan 2,26,126 2,161,253 6.7 11 Bali 1,621,172 1,87,6 11.5 26 South Sulawesi 2,, 2,25, 12.5 12 North Sumatera 1,625, 1,811,875 11.5 27 North Kalimantan 2,26,126 2,175,34 7.4 5 13 Bangka Belitung 2,1, 2,341,5 11.5 28 Lampung 1,581, 1,763, 11.5 14 Central Kalimantan 1,896,367 2,57,558 8.5 29 South East Sulawesi 1,652, 1,85, 12. Source: World Bank Philippines China Thailand Malaysia Indonesia Vietnam 15 Bangka Belitung 2,1, 2,341,5 11.5 3 North Maluku 1,577,617 1,681,266 6.6 Source: Kontan Ave ra ge 1,8 5,8 7 6 2, 8,8 4 8 11.2 43
216 Compendium 1998 vs 215: Similar condition? The current condition is different from that in 1998. Prior to the 1998 crisis, Indonesia was growing at 8% above its capacity, compared to the current condition of no overheating, particularly since Bank Indonesia has already introduced tight monetary policies since 213. On the external balance front, the Current Account Deficit to GDP is similar to the 1998 level, but has been improving of late helped by the current economic slowdown resulting in lower imports. Balance sheet wise, the 1998 foreign debt to GDP was 15% and corporate net gearing reached 16% while the 214 debt to GDP ratio was at 33.4% with corporate net gearing of just 19.%, likely falling to 18.3% in 215. Output gap, 199-215 (%) 1 5-5 -1 Economic Overheating 7.8 Asian Crisis 5. -13.6-15 4Q1991 2Q1993 4Q1994 2Q1996 4Q1997 2Q1999 4Q2 2Q22 4Q23 2Q25 4Q26 2Q28 4Q29 2Q211 4Q212 2Q214 6.4 4.5 Subprime Mortgage 6.4 4.8 Global Slowdown (%) 1 8 6 4 2-2 -4-6 -8 Output Gap (RHS) Annualized GDP Growth (LHS) Source: Statistics Indonesia, Bahana Estimates Balance Sheet comparison Current Account Deficit to GDP, 199-215 (% of GDP) 6 5 5.3 1998 Debt to GDP: 15% Corporate net gearing: 16% 214 Debt to GDP: 33% Corporate net gearing: 19% 4 3 2 1-1 3. -2-3 -4-3.6-2.5 Source: Bloomberg, Bahana -5 4Q91 4Q92 4Q93 4Q94 4Q95 4Q96 4Q97 4Q98 1Q 1Q1 1Q2 1Q3 1Q4 1Q5 1Q6 1Q7 1Q8 1Q9 1Q1 1Q11 1Q12 1Q13 1Q14 1Q15 Source: Bloomberg 44
216 Compendium Sovereign rating: Possible investment upgrade from S&P Recently, S&P has upgraded the outlook to positive from stable as a result of fuel subsidy removal and lower fiscal deficit in the last 3 years. Fot its fiscal discipline, Indonesia s sovereign rating received investment grade from Fitch & Moody s back in 212. S&P stated that its rating may be raised to investment grade in the next 12 months should the government achieve its objective of improving the quality of expenditures, which was slightly up in 1H15. Compared to its EM peers, generally Indonesia s sovereign ratings are still below those of Mexico, South Africa, Brazil and India. Indonesia s historical sovereign rating, 1995-215 13 AAA 12 AA 11 AA - A1 BBB9 BBB 8- BB+ 7 BB 6 BB 5- B+ 4 Asian monetary crisis hit in 1997-1998 Commodity booming 22-28 13 Aaa 12 Aa 11 A 1 Baa1 9Baa2 8Baa3 7Ba1 6Ba2 5Ba3 4B1 B3 3B2 B- 2 Non-investment grade Investment grade 2B3 CCC+ 1 CCC 1995 1996 1997 1998 1999 2 21 22 23 24 25 26 27 28 29 21 211 212 213 214 215 S&P Moody's Fitch 1Caa1 Caa2 9M14 vs. 9M15 budget realization Source: Bloomberg Latest BRICS-MINT countries sovereign ratings (IDRtn) 1,3 1,25 +1.1% y-y 1,234.8 1248.9 Country Name Moody's S&P Fitch Date Rating Outlook Date Rating Outlook Date Rating Outlook China Apr-13 Aa3 STABLE Dec-1 AA- STABLE Oct-13 A+ STABLE 1,2 1,15 1,1 1,5 1, 95 9 85 1,81.3-8.5% y-y 989.8 Mexico Feb-14 A3 STABLE Dec-13 A STABLE May-13 A- STABLE South Africa Nov-14 Baa2 STABLE Jun-14 BBB+ STABLE Jun-14 BBB+ NEG Brazil Sep-14 Baa2 NEG Mar-14 BBB+ STABLE Apr-15 BBB NEG India Apr-15 Baa3 POS Sep-14 BBB- STABLE Jun-13 BBB- STABLE Indonesia Jan-12 Baa3 STABLE May-15 BB+ POS Dec-11 BBB- STABLE Turkey Apr-14 Baa3 NEG May-15 BBB- NEG Nov-12 BBB STABLE 8 Spending Revenue Russia Feb-15 Ba1 NEG Jan-15 BBB- NEG Jan-15 BBB- NEG 9M14 9M15 Nigeria Nov-12 STABLE Mar-15 B+ STABLE Mar-15 BB NEG Source: Ministry of Finance Source: Bloomberg This report uses credit ratings assigned by Moody s, Standard & Poor s and Fitch, which are not registered with Japan s Financial Services Agency pursuant to Article 66, Paragraph 27 of the Financial Instruments and Exchange Act. Investors should read the related attachment for information on ratings assigned by unregistered rating agencies. 45
216 Compendium Summary of latest macro developments 215 Nov FX reserves of USD1.2bn 1M15 trade balance: USD8.1bn surplus 3Q15 CAD: 1.86% of GDP CPI: Nov: 4.88% y-y; 215F: 2.9% BI rate: 7.5%, expect a 25bps rate cut in 1Q16 3Q15 GDP growth: 4.73% y-y, slightly improved from 4.67 % in 2Q15; we expect 215 GDP growth of 4.72% Indonesia s macroeconomic indicators, 211-15 YTD Indicators Nov-15 Oct-15 Sep-15 Aug-15 214 213 FX reserves (USDbn) 1.2 1.7 11.7 15.3 111.9 99.4 CPI (% y-y) 4.88 6.25 6.83 7.18 8.36 8.8 BI rate (%) 7.5 7.5 7.5 7.5 7.75 7.5 IDR/1USD 13,841 13,45 14,651 14,53 12,35 12,17 Trade balance (USDmn) 1,19 1,29 327.6-1.89-4.8 Source: Bloomberg Govt revenue progress, 1M15 Realization of 215 11M15 1M15 Growth (Unofficial) target, (IDRtn) (%, y-y) (IDRtn) 11M15 (%) Realization of 215 target, 1M15 (%) Realization of 214 target (%) Tax & custom revenue 946 894-1.4 63.5 6. 72.7 Tax 86 767.1-1. 62.3 59.3 72.2 Custom and duties 14 126.9-3.8 71.8 65.1 75.9 Total Govt spending 1,384-2.1 69.7 75.3 Personnel Expenditure 234.2 15.1 78.2 78.7 Goods expenditure 131.5 16.3 5.6 57.9 Capital expenditure 99.1 38.8 39.2 44.4 Land clearing 4.2 na 93 na na Subsidy 151.4-57.3 71.4 88. Regional transfer 553.9 14.8 83.3 8.9 Quarterly GDP growth, 2Q9-3Q15 (%) 6.48 6.5 6.27 6.11 6.21 6.1 5.94 5.94 6. 5.87 5.615.59 5.61 5.5 5.5 5.14 5.19 5.34.92 5.1 4.97 5. 4.71 4.67 4.73 4.79 4.77 4.5 4. Source: Ministry of Finance, Bahana Source: Statistics Indonesia, Bahana 46
216 Compendium Economic indicators 3Q14 4Q14 1Q15 2Q15 3Q15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Car sales (units) 29,558 275,351 282,345 243,113 239,191 82,172 55,615 9,538 93,38 88,325 (% change, y-y) (5.1) (14.4) (14.1) (22.5) (17.7) (25.7) (39.1) (6.3) (9.3) (16.1) Motorcycle sales (units) 1,85,626 1,814,363 1,65,43 1,569,119 1,647,29 574,714 421,838 622,89 63,12 62,882 (% change, y-y) (.9) (7.1) (19.1) (29.3) (11.) (23.5) (21.1) 2.1 (14.7) (1.8) Cement production (' tonnes) 13,693 16,94 13,45 13,357 13,729 4,68 3,543 4,942 5,244 5,646 (% change, y-y). 6.5 (5.5) (9.8).3 (9.3) (17.3) 16. 1.8 (2.9) Cement sales (' tonnes) 14,23 16,933 13,735 14,345 14,96 5,49 3,581 5,53 5,795 6,471 (% change, y-y).9 2.6 (2.5) (3.9) 4.8 (2.8) (6.6) 16.9 2.3 12.2 Regular fuel price (IDR/litre) 6,5 7,833 6,933 7,4 7,4 7,4 7,4 7,4 7,4 7,4 (% change, y-y). 2.5 6.7 13.8 13.8 13.8 13.8 13.8 13.8 13.8 LPG 12kg 8,136 9,397 11,83 11,75 4,25 11,75 11,75 11,75 11,217 11,217 (% change, y-y) 39.1 6.6 47. 55.8 (47.8) 55.8 55.8 55.8 2.3 2.3 Rice price (IDR/litre) 11,381 11,88 12,778 12,41 12,729 12,425 12,59 12,79 12,968 13,67 (% change, y-y) 4.2 7.4 12.2 1.2 11.8 1.4 1.5 11.6 13.4 13.4 Consumer Confidence Index 119.9 119.1 119.1 11.5 16.7 111.3 19.9 112.6 97.5 99.3 Industrial Production Index 121.6 123.7 122.8 125.5 126.8 - - - - - Retail Sales Index 174.3 171. 173.6 182.3 186.8 188.1 24.2 177.5 178.8 178.3 Source: CEIC, Bahana estimates 47
216 Compendium Economic forecasts 1Q15 2Q15 3Q15 4Q15F 1Q16F 2Q16F 3Q16F 4Q16F 214A 215F 216F 217F Real sectors GDP growth (% y-y) 4.7 4.7 4.7 4.8 4.8 5.2 5. 5.5 5. 4.7 5.1 5.2 Private spending (%y-y) 5. 5. 5. 5.1 5.1 5.1 5. 5.3 5.3 5. 5. 5.1 Investment (%y-y) 4.4 3.6 4.6 2. 5.8 4.7 4.4 5.2 4.1 3.6 5. 6.6 Government spending (%y-y) 2.2 2.3 6.6 8.9 6.1 6.3 8.3 6.1 2. 5.4 6.7 6.1 Total exports (%y-y) -.5 -.1 -.7 1.5 3.5 3.5 1.4 1.4 1..3 2.4 1. Total imports (%y-y) -2.2-6.8-6.1-4. 2. 3.6 2.5 1.4 2.2-4.1 2.4 3.3 FX and interest rate BI rate (%) 7.5 7.5 7.5 7.5 7.3 7.3 7. 6.8 7.8 7.5 6.8 6.3 FASBI (%) 5.5 5.5 5.5 5.5 5.3 5.3 5. 4.8 5.8 5.5 4.8 4.5 Lending facility (%) 8. 8. 8. 8. 7.8 7.8 7.5 7.3 8.5 8. 7.3 7. 1yr ID govt bond yield (%) 7.4 8.3 9.6 8.2 8. 8.2 7.9 7.8 7.8 8.2 7.8 7.5 JIBOR 1M 6.6 6.7 8.2 7.5 7.1 6.6 6.4 7. 6.6 7.5 7. 6.5 IDR/1USD (end of period) 13,75 13,333 14,67 14, 14,2 14,3 14,7 14,5 12,385 14, 14,5 14, IDR/1USD (Average) 12,958 13,233 13,948 13,85 14,188 14,424 14,621 14,9 11,917 13,515 14,533 14,115 Prices & commodities Headline inflation (%) 6.4 7.3 6.5 2.9 4.1 3.4 3.9 4.5 8.4 2.9 4.5 5. Core inflation (% y-y) 5. 5. 5.1 4.8 4.8 4.3 4. 4. 4.9 4.8 4. 4.5 Brent oil price (USD/barrel) 64.9 49.6 52.7 55. 52. 55. 6. 57. 99.4 55. 57. 6. Coal price (USD/Mt) 56.9 58.6 52.3 58. 58. 55. 54. 53. 7.9 58. 53. 54. Regular gasoline price, RON 88 (IDR/Liter) 7,4 7,4 7,4 7,4 7,4 7,4 7,4 7,4 8,5 7,4 7,4 7,4 External balance CA balance (% of GDP) -2. -2. -1.9-2. -1.9-2.5-2.3-2.1-3.1-2. -2.3-2.3 Trade balance (USDmn) 232. 282. 2741. 27. 2366.4 2123.6 2329.9 1755. -1942.4 9843. 8574.9 5573.7 Fiscal deficit (% of GDP) - - - - - - - - -2.2-2.7-2.7-2.5 Others GDP per capita (USD) Population (Mn) - - - - - - - - - - - - - - - - 3,523 3,212 3,222 3,47 252 256 259 262 Source: CEIC, IMF, Bahana estimates 48
216 Compendium Energy outlook 49
216 Compendium Oil: Global oil oversupply likely to persist (1) Both EIA and OPEC estimate the global oil oversupply of about 1.5m b/d to persist due to the shale oil boom amid weaker global demand. China and the US account for around 32% of global oil consumption. As US horizontal rig counts jumped over the period of QE1 to QE3, we believe the increase in money supply moved not only to developing countries, but also to fund investments in horizontal rigs. As for the impact, US crude-oil inventory levels have surged 47% since January 212, to November 215 s level of 487mn barrels, well above historical average. However, going forward, we expect lower supplies as O&G companies have 3% capex investment reduction in 215. US rig counts, 25 15 (rigs) QE1 : USD6bn Dec-8 and 1,6 1,4 1,2 1, 8 6 4 2 rose to USD75bn in Mar-1 Horizontal rigs added by 144 rigs in 28 QE2: USD75bn/month Nov-1 to Jun-11 QE3: USD85bn/month Dec-12 to Oct-14 Numbers of horizontal rigs was plunged on declining oil prices as of 13/11/15, horizontal rigs were 587 rigs Source: Baker Hughes, Bloomberg, Bahana US horizontal US vertical US directional Oil production and consumption, 1Q14 4Q15F (mn b/d) 97 96 95 94 93 92 91 9 89 88 87 91.8 92.1 9.3 9.3 92.7 91.9 94.2 92.9 94.4 91.5 94.8 91.4 94.5 93.4 95.5 94. 96. 95.7 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 216 DOE crude oil stocks, 2 November 215 (' barrel) 5, 45, 4, 35, 3, 25, Average: 335,244 World oil supply World oil demand Source: Bloomberg, EIA, Bahana Source: US Department of Energy, Bahana 5
216 Compendium Oil: Global oil oversupply likely to persist (2) The US is the biggest oil consumer with a 21% market share of the global oil market, while China has an 11% market share. It is worth noting that while the US oil consumption per capita has declined, China s consumption per capita has escalated in the past 1 years. Historically, oil prices have the propensity to rise whenever there is a war involving oil-producing nations. However, with the US shale oil production rising, and OPEC s decision to keep pumping above 3mn b/d, a significant jump in oil prices appears unlikely at this stage of the market cycle. Oil consumption market share, 214 Source: Bloomberg Oil prices, 1989 present (USD/barrel) 16 14 12 1 8 6 4 2 Gulf War: 199-1991 France bombing: June 1995 War in Afganistan: 21 Twin tower attacks: 9/11 21 Iraq war: 23-211 Gaza war: 28-29 Boom in shale plays Brent avg. 199-215 ytd price: USD48.4/barrel 215 avg. ytd: USD54.9/barrel Oil consumption per capita, 25-14 (barrels/year) 6 5 4 3 2 1 25.6 2.1 1.9 25.3 4.8 4.7 Oil supply 1 years CAGR: 1% 214 output: 93.4mn b/d 25. 4.8 23.4 2.1 2.2 2.2 2.3 22.3 2. 2. 2. 2.1 4.7 4.6 4.7 4.7 4.7 4.7 2.5 2.6 22.6 2.4 2.2 22.2 2.8 2.9 2.3 21.6 2.4 21.8 4.7 3. 2.4 21.8 26 25 24 23 22 21 25 26 27 28 29 21 211 212 213 214 2 WTI Brent World (LHS) Indonesia (LHS) China (LHS) US (RHS) Source: Bloomberg, Bahana Source: Bloomberg, Bahana 51
216 Compendium Oil: Indonesia s paradigm shift O&G Agency (SKK Migas) expects 215 O&G non-tax revenue (USD12.3bn) to be lower than the recovery cost (USD13.8bn), causing a deficit and a paradigm shift in the oil and gas sector. The government plans to simplify O&G explorations and production permits from 14 to only 4, increasing the chance of achieving the USD26mn O&G investment target (Bahana: only 7% of the target expected) in 216. In 216, we expect oil production to rise on additional 74k b/d from Cepu blocks, while consumption to be higher on increased GDP growth. Refinery operations are expected to reduce 216 oil deficit by 3%. Oil consumption market share, 214 (USDmn) 2, 18, 16, 14, 12, 1, 8, 6, 4, 2, 11,535 4,14 4,793 167 134 3,97 4,626 11,854 6,581 232 6,349 13,986 9,682 344 9,338 16,517 8,692 497 8,195 18,993 13,68 635 12,433 18,718 5,846 5,64 11,8 29 21 211 212 213 214 215E 216F 242 9,17 8,643 18,2 374 Annual transaction commitment ASR funds Investment Source: Upstream Oil and Gas Regulatory Special Task Force (SKK Migas), Bahana State income proportion, 28 216F (IDRtn) 2 18 16 14 12 1 8 6 4 2 979 675 34 662 771 927 1,3 1,126 185 221 278 32 36 35 1,33 1,631 1,73 131 12 28 29 21 211 212 213 214 215E 216F Source: Ministry of Finance Going forward, government expect state income will be more from non-o&g sector 847 992 1,25 O&G income 1,332 1,432 Non O&G income 1,635 1,762 1,823 Oil consumption per capita, 25-14 (' b/d) 2, 1,5 1, 5-5 -1, 1,718 1,698 1,718 1,66 918 875 828 79 785 (8) (823) (89) (87) (792) 1,582 211 212 213 214 215E 216F Production Consumption Deficit Source: Upstream Oil and Gas Regulatory Special Task Force (SKK Migas), Bahana +74k b/d from Cepu's operation 859 1,663 (611) 3% lower deficit due to production escalate of refineries operation 52
216 Compendium Oil: Indonesia s unresolved oil scarcity In 213-2, crude oil demand is expected to increase at a 3.3% CAGR from 297mn barrels (213) to 373mn barrels (22), according to Applied Technology Agency (BPPT). Nevertheless, crude-oil production should continue to decline at a CAGR of 5.8% over the same period. Fortunately, the government has taken actions to resolve the scarcity. Following construction of the Cilacap refinery and the restart of the Tuban refinery in October 215, the country should be able to reduce its gasoline imports by 3% in 216. Oil trade balance, 213 2F Source: BPPT Outlook 215, Bahana Government actions to resolve oil scarcity No. Action Oil exports and imports, 213 3F Developing at least 6 new oil plants to produce 3, barrels/day in 22, 225, 23, 235, 24, and 245 1 To develop new plants, Pertamina has prepared 2 new programs in oil processing, such as: a. Refinery Development Master plan Program (RDMP) to revitalize old plants b. New Grass Root Refinery (NGRR) to develop new plants 2 To maintain national security of oil fuel supply, the government has set a national fuel buffer stock to be increased from 18 days to 3 days Construction of facilities and infrastructure to support the buffer stock will be handed over to the private sector in 5 years Source: BPPT Outlook 215, Bahana Source: BPPT Outlook 215, Bahana 53
216 Compendium Gas: Huge one off jump in supplies While there was a huge jump in gas supplies in 215 due to additional output from Chevron and Total stemming from 214 investments, we expect flat gas production in 216 due to lower gas investments. Several plans are spreading as the government is willing to reduce its gas portion to have lower gas selling prices and support industrial energy cost savings; for examples, PGAS-Pertagas joint operation The Energy and Mineral Resources Ministry (ESDM) reports additional gas reserves of 2.3Tcf, or 1.4% y-y to 151.33Tcf. Indonesia s natural gas infrastructure investment is expected to require at least USD22bn in the western and eastern parts of Indonesia, to be able to lower gas deficit in 219. Satisfaction with social welfare performance, Jan-Oct 215 (bbtupd) 8,5 8, 7,5 7, 6,5 6, 5,877 5,882 5,715 6,349 6,347 6,688 7,4 7,715 7,345 7,181 7,176 7,39 8,52 8,52 5,5 23 24 25 26 27 28 29 21 211 212 213 214 215E 216F Source: Upstream Oil and Gas Regulatory Special Task Force (SKK Migas), Bahana Indonesia s gas balance 215-3 Indonesia s gas consumers, 214 Details (mmscfd) 215 219 223 227 23 Contracted Domestic 4,827 2,83 1,471 769 256 demand Export 2,786 2,41 1,311 786 562 Committed Domestic 1,17 3,477 4,871 5,547 5,582 demand Potential demand Power 35GW 52 92 1,57 1,63 1,63 Industry 15 393 914 1,261 1,616 Supply 6,97 7,78 7,179 6,451 4,616 Import - 1,777 1,92 2,363 3,267 Source: Ministry of Energy and Mineral Resources (ESDM), Bahana Source: Upstream Oil and Gas Regulatory Special Task Force (SKK Migas), Bahana 54
216 Compendium Coal: Diminishing function as fuel energy In order to cut carbon dioxide (CO2) emissions, US and China share similar views on clean energy policy and look to reduce coal-fired power plant utilization. US with the clean power plan and China with the clean coal action plan. This will mean continued pressure on coal demand ahead. China s coal-fired power plants contribute 76% of China s electricity output, while around 35% of the US electricity are generated by coal. Thus, we believe the coal industry is in diminishing phase on global energy market and unlikely to bounce back in the short-term. Satisfaction with social welfare performance, Jan-Oct 215 Source: Energy Information Association (EIA), Bahana Global coal emisssions, 213 China s clean coal action plan, 213 2F Plan Action Impact Coal upgrades Thermal plant & boiler retro-fitting Coal chemical upgrades Residential coal use Further coal washing and processing to improve coal quality Coal-fired industrial boilers should shift to burnt natural gas China plans to upgrade traditional coal chemical industry The sale and burning of high-ash (above 16%) and high-sulphur (above 1%) coal is to be banned In 217, more than 7% of raw coal to be washed in China and over 8% in 22 Existing boilers with low efficiencies or those failed to meet emission standards would be eliminated or upgraded Improve technological level and energy conversion efficiency and reduce negative impact on environment China aims to cut coal consumption by over 8mn mt by 217 and by more than 16mn mt by 22 Source: www.globalcarbonatlas.org, Bahana Waste Source: BPPT Outlook 215, Bahana Increase efforts in utilizing coal gangue, coal slurry, coal mine gas and other resources that have not be used effectively in the past By 22, more than 8% of coal gangue should be utilized comprehensively 55
216 Compendium Local politics 56
216 Compendium Year 1 of Jokowi s administration: Synopsis Compared to September 214, the fuel subsidy in September 215 dropped to IDR148.8tn, from IDR283.3tn in the previous year, allowing Jokowi to divert government spending to capital expenditure, which increased by 28.4% y-y. Generally on the social and political fronts, the sinking of illegal foreign ships, fuel subsidy cut, execution of drug suspects and village fund program are events that stood out, while the conflict between the corruption commission against the police continues to remain a problem. Post the 214 elections, the political power has shifted from the masses back to the political elite, requiring Jokowi to play his cards correctly and to continuously balance his power base. Government budget spending comparison, 9M14-9M15 Stimulus package summary Sinking of foreign ships in Natuna Sea, Riau Island and North Sulawesi Until September 215, 42 foreign ships were sank by Maritime Ministry, navy police, and the navy Fisheries production volumes increased 24.23% from previously Fuel subsidy diversion Corruption Commission named Chief of Police candidate as suspect Police set Bambang Widjajanto and Abraham Samad as suspects President fired Corruption Commission's Speaker and formed Corruption Commission selection committee President inaugurated Badrodin Haiti as Chief of Police and Budi Gunawan as Vice Chief of Police Source: 214 & 215 State Budget Executions of drug suspects Shifting economic development to villages The first phase of village fund was distributed in April 215 Village fund was distributed as much of IDR16.61tn to villages and regions Village fund of IDR7.8tn has been received by villages. Sinking of illegal foreign ships Fuel prices up by IDR2,/ liter in November 214 Fuel price decreased due to fall in world oil prices starting in January 215; However, the government has back tracked on their plan to have a monthly review Fuel subsidy of as much of IDR2tn has been diverted to productive programs, such as sea toll and roadway in Kalimantan and Papua Corruption commission-police conflicts President refused clemency for drug suspects Execution of 9 suspects, excluding Mary Jane from the Philippines Village fund program Source: Government 57
216 Compendium Jokowi: Greater legitimacy A recent survey shows a trend reversal with respondents being more satisfied with the Jokowi government. We believe it is partly related to the poor parliamentary performance. In the past one year, the parliament has become weaker as more House members are impacted by graft cases while Jokowi s cabinet members thus far have remained clean. Currently, all eyes are on the Freeport case with recordings involving the Speaker of the House with Jokowi appearing as the victim, resulting in him gaining public support. People s approval rating on Jokowi, Jan 214 Oct 215 (%) 8 69. 7 62. 6 5 47. 4.7 4 3 2 5.6 1 Source: Kompas January 214* January-15 March-15 June-15 October-15 Cases involving Parliament members No. The House' problems Party 1 House members higher allowances 2 The House s aspiration fund as much as IDR2bn 3 The House's building budget in 216 State Budget 4 Adriansyah's bribery case PDIP 5 Puan, Tjahjo Kumolo and Pramono Anung's double post, both in the House and the cabinet 6 Patrice Rio Capella's corruption on social support fund in North Sumatra PDIP Nasdem 7 Setya's meeting with Donald Trump Golkar 8 Setya's Freeport case Golkar 9 Mustofa Assegaf and Muljadi's fighting in the meeting of PPP & Democratic energy discussion Party 1 Kahar Muzakkir and Ridwan Bae s dual positions in the House Golkar People s satisfaction with Jokowi and his ministries, Jul-Oct 215 Source: Various sources, Bahana Source: Kompas 58
216 Compendium People s satisfaction: Thumbs up for social welfare Satisfaction with social welfare performance in Jokowi s era has been solid, especially on mutual assistance development programs. However, poverty reduction has been ranked the lowest, implying that people still do not have much prosperity, especially in Sumatra and Kalimantan regions. On the other hand, rural citizens are much more satisfied than urban citizens, reflecting urban cities much more critical disposition towards Jokowi s programs. Satisfaction with social welfare performance, Jan-Oct 215 Source: Kompas Satisfaction in rural and urban, Oct 215 Satisfaction levels by region, Oct 215 Rural Urban Source: Kompas Source: Bahana, various sources 59
216 Compendium Changing coalition: House control The political condition has changed as Jokowi has managed to secure a majority in the parliament (256 seats or 51.3% of total), helped by PAN having joined the coalition. As a consequence, we expect Jokowi to share some ministerial positions for PAN s party members in the next cabinet reshuffle. Interestingly, most of the House commission chairman posts are still filled by the opposition coalition. It is also worth noting that during the SBY regime, his coalition controlled 75% of the total House seats. House commissions Commission Function Head of Commission / Party Commission I Defense, inteligence, foreign affairs, communication and Mahfudz Siddiq / PKS information Commission II Domestic affairs, state administrative and bureaucracy Rambe Kamarul Zaman / Golkar Commission III Law, human rights and national security Azis Syamsuddin / Golkar Commission IV Commission V Agriculture, plantation, forestry, maritime, fishery and food security Transportation, public works, housing and disadvantaged areas Edhy Prabowo / Gerindra Fary Djemy Francis / Gerindra Commission VI Trade, industry, investments, and SMEs Hafisz Tohir / PAN Commission VII Energy and mineral resources, research and technology and environment Commission VIII Religion, social and women empowerment Kardaya Warnika / Gerindra Saleh Partaonan Daulay / PAN Commission IX Labors, demography and health Dede Yusuf / Demokrat Commission X Education, culture, tourism, creative economy and sports Teuku Riefky Harsya / Demokrat Commission XI Finance, banking and national development planning Marwan Cik Asan / Demokrat Source: dpr.go.id House seats, by party 214-19 House coalition breakdown, by seat Preceding Current KIH's coalition 41% KMP's coalition with PAN 59% KIH's coalition 51% KMP's coalition without PAN 49% Source: General Election Committee (KPU) Source: General Election Committee (KPU) 6
216 Compendium Jokowi s economic team: Improvement with Darmin Amid the slow government expenditure realization, Jokowi s economic team has seen a positive addition in the form of Darmin Nasution. Going into 216, we believe that both the central bank and the finance ministry would like to move away from the stability over growth strategy to more aggressive stimulus measures to accelerate economic growth, more in line with Jokowi s objective. Additionally, recent economic stimulus packages appear to have helped improve market sentiment. Minister breakdown, by background Source: Kompas The Jokowi s economic team Details of economic team Note: Politically linked Professionals with affiliation No Ministry Minister Background 1 Coordinating Ministry of Economics Darmin Nasution (67) Former Governor of Bank Indonesia 2 Finance Bambang Brodjonegoro (48) Former Deputy Finance Minister, Academician 3 Energy and Mineral Resources Sudirman Said (51) CEO of Pindad (State-owned company) 4 Industry Saleh Husin (51) Lawmaker, Hanura politician 5 Trade Thomas Lembong (42) CEO & managing partner of Quvat Capital 6 National Development Planning Sofyan Djalil (61) 7 State-owned Enterprises Rini M. Soemarno (56) 8 Agriculture Amran Sulaiman (46) Former SOE Minister, Former Minister of Communications and Information, close to Jusuf Kalla Head of Jokowi s Transition Team, former Trade and Industry Minister, close to Megawati PTPN IX staff member, founder of Tiran Group, close to Jusuf Kalla 9 Labor Hanif Dhakiri (42) Lawmaker, PKB politician 1 Public Works and Public Housing Basuki Hadimuljono (49) Director General for Spatial Planning at Public Work Ministry 11 Small Medium Enterprises AA Gede N. Puspayoga (49) Former Deputy Governor of Bali, PDIP politician 12 Transportation Ignasius Jonan (51) Former CEO of PT KAI (state-owned railway company) 13 Agrarian and Spatial Planning Ferry Mursyidan Baldan (53) NasDem politician, lawmaker Source: Bahana Source: Bahana 61
216 Compendium Ministries: Lack of coordination continues Based on more recent comments in social media and major local newspapers, the Working Cabinet (Kabinet Kerja) appears to be working hard. However, we have heard of continued uncoordinated meetings with outcomes or conclusions often remaining undecided. Conflicts amongst ministers and house members appear to be escalating of late, particularly given the possible cabinet reshuffle no. 2. Ministry changes 1 2 3 4 No Old New Ministry of Public Works Ministry of Public Housing Ministry of Forestry Ministry of Environmental Ministry of Education and Culture Ministry of Research and Technology Ministry of Labor and Transmigration Ministry of Development of Disadvantage Areas Ministry of Public Works and Public Housing Ministry of Environmental and Forestry Ministry of Culture, Elementary and Secondary Education Ministry of Research, Technology and Higher Education Ministry of Labor Ministry of Transmigration and Development of Disadvantage Areas 5 Coordinating Ministry of Social Welfare Coordinating Ministry of Human Development and Culture 6 Ministry of Economic Creative and Tourism Ministry of Tourism 7 - Ministry of Agrarian and Spatial Planning Source: Bahana Jokowi s remaining Working Cabinet 14 15 16 17 18 19 2 21 22 23 24 25 26 27 28 29 3 31 32 33 34 Source: Bahana 1 12 13 Cabinet details No Description 14 Coordinating Minister of Maritime Affairs Rizal Ramli (6): Ex MoF 15 Coordinating Minister for Political, Legal and Security Affairs - Luhut Panjaitan (67): Chief of Staff 16 Coordinating Minister of Human Development and Culture Puan Maharani (41): PDI-P politician 17 Secretary of State Pratikno (58): Rector of University of Gajah Mada 18 Minister of Domestic Affairs - Tjahjo Kumolo (58): PDI-P politician, legislator 19 Minister of Foreign Affairs Retno Lestari P Marsudi (44): Indonesian Ambassador for Netherlands 2 Minister of Culture, Elementary and Secondary Education - Anies Baswedan (45): Member of Team 8 in the Corruption Eradication Commission 21 Minister of Defence Ryamizard Ryacudu (64) Former Army Chief of Staff 22 Minister of Social Affairs Khofifah Indar Parawansa (49): Jokowi-JK s team, Former Minister of Women's Empowerment, PKB elite party member 23 Minister of Justice and Human Rights Yasonna H Laoly (51): PDI-P politician, legislator 24 Minister of Religious Affairs Lukman Hakim Saifuddin (51): Former Minister of Religious Affairs 25 Minister of Communication and Information - Rudiantara (55): Former President Director of PLN 26 Minister of Tourism Arief Yahya (49): CEO of Telkom 27 Minister of Environmental and Forestry Siti Nurbaya Bakar (58): NasDem politician 28 Minister of Health Nila Djuwita Anfasa (45): President s special envoy for MDGs, Professor at UI Medical School 29 Minister of Administrative Reforms Yuddy Chrisnandi (44), Hanura politician 3 Minister of Villages, Transmigration and Development of Disadvantage Regions Marwan Jafar (43): PKB politician, lawmaker 31 Minister of Youth and Sports Imam Nahrawi (41): PKB politician, legislator 32 Minister of Research, Technology and Higher Education M. Nasir (54): Rector of Diponegoro University 33 Minister of Maritime Affairs and Fisheries Susi Pudjiastuti (49): CEO and owner of Susi Air 34 Minister of Women s Empowerment and Child Protection Yohana Susana Yembise (54): Cendrawasih University lecturer Source: Bahana 62
216 Compendium Outcome of reshuffle No. 1: No panacea Jokowi announced the cabinet reshuffle on 12 August 215. Six ministers were replaced with no change in the split between politician (47%) and professional (53%) as Andi Widjajanto is a non-pdip member. In the economic team, Darmin Nasution was appointed as the new Economic Affairs Minister, while Rachmat Gobel was replaced by Thomas Trikasih Lembong. It is interesting to see that former MoF Rizal Ramli who is close to Megawati and Luhut has become Coordinating Maritime Minister. New Jokowi ministers Source: Various Sources, Bahana No. Position Predecessor New minister Background 1 Economic Affairs Minister Sofyan Djalil (61) Darmin Nasution (66) Ex BI's Governor, Ex Tax Office Chief 2 Political Affairs Minister Tedjo Edhi Pujiatno (62) Luhut Panjaitan (67) Chief of Staff 3 Coordinating Maritime Minister Indroyono Susilo (6) Rizal Ramli (6) Ex MoF 4 National Planning Minister Andrinof Chaniago (52) Sofyan Djalil (61) Ex Economic Affairs Minister 5 Trade Minister Rachmat Gobel (52) Thomas Trikasih Lembong (44) CEO of Quvat Management 6 Cabinet Secretary Andi Widjayanto (43) Pramono Anung (52) PDIP Politician Source: Bahana 63
216 Compendium Reshuffle No. 2: Possible positions for new joiner Speculation is rife that we will have a 2nd cabinet reshuffle as National Mandate Party (PAN) has joined Jokowi s coalition. Some names like PAN s Wahyu Sakti Trenggono and former constitutional court chairman Hamdan Zoelfa could join the government. Some news also indicate low public acceptance for MoF Bambang Brodjonegoro, Energy and Mineral Minister Sudirman Said, Attorney General M. Prasetyo and SOE s Minister Rini Soemarno. Some changes on the political-party composition in the cabinet favor PAN and GOLKAR while NASDEM and HANURA may be disadvantaged. Potential minister for 2 nd cabinet reshuffle Source: Various Sources, Bahana Position Incumbent Potential candidate Background 1 SOE s Minister Rini Soemarno (57) Wahyu Sakti Trenggono 2 Minister of Finance Bambang Brodjonegoro (58) Sri Adiningsih (54) CEO of Indonesian Tower, PAN s politician UGM s economic prof., Jokowi s close friend 3 Energy and Mineral Minister Sudirman Said (52) R. Sukhyar (6) 4 Attorney General M. Prasetyo (68) Hamdan Zoelfa (53) Former Director General of Mineral and Coal of Energy and Mineral Ministry Former Chairman of Constitutional Court Source: Bahana 64
216 Compendium Tax collection: Huge shortfall Due to the tax shortfall issue, tax office chief, Sigit Priadi Pramudito, resigned from his position, citing inability to reach the IDR1,435tn tax revenue target in 215. The MoF replaced him with Former East Java tax office chairman, Ken Dwijugiasteadi, as acting head with immediate effect. The government has already introduced some tax-related policies. Ironically, more tax rate cut adjustments will be introduced in 216 while tax revenue target is at 43% higher. In the past 6 months, the government s economic packages have lowered the corporate income tax and provided some tax incentives, which are counter-intuitive to the government s need to raise tax revenues. Ministry changes Preceding Tax Chief Name Sigit Priadi Pramudito (55) Background Former Large Taxation Office Chairman Name Ken Dwijugiasteadi (58) Current Tax Chief Background Former East Java tax office chairman Institutions linked to tax office No Institution 1 Investment Board (BKPM) 2 Maritime Directorate of General, Ministry of Transportation 3 Ministry of Trade 4 Oil and Gas Directorate of General, Ministry of Energy and Mineral Resources 5 Oil and Gas Agency (SKK Migas) 6 National Aviation and Aerospace Agency (LAPAN) 7 Ministry of Public Works 8 Ministry of Education 9 Immigration Directorate of General, Ministry of Law 1 Law Administration Directorate of General, Ministry of Law 11 Ministry of Industry 12 Air Transportation Directorate of General, Ministry of Transportation 13 Land Transportation Directore of General, Ministry of Transportation 14 Ministry of Health 15 SOEs 16 Ministry of Religion 17 Mineral and Coal Directorate of General, Ministry of Energi and Mineral Resources 18 Data and Information Center (Pusdatin), Ministry of Energy and Mineral Resources 19 Ministry of Agriculture 2 Ministry of Communication and Informatics 21 Ministry of Maritime 22 Ministry of Labor and Transmigration 23 General Election Commission 24 Indonesia Police 25 Ministry of Defense 26 Ministry of Environment and Forestry 27 Ministry of Cooperatives and SMEs 28 Statistics Agency Source: Directorate General of Taxation (Dirjen Pajak), act no. 191/214 Source: Bahana Recent and possible upcoming tax regulations No Description Sector Status Comment 1 PMK91 (Taxes must be paid in the last 5 years but without interests and penalties) - Signed Effective May-December 215 2 Tax revision: Tax allowance and tax holiday for exports oriented production All Signed - 3 22% excise tax hike Consumer Signed - 4 2% ore export tax Metals Signed - 5 Lower thresholds for luxury properties under PPh22 Property Signed Effective 3 May 215 6 E-Invoice Tax for taxable employers (PKP) All Signed Effective in Jawa and Bali since 1 Jul 216, nationwide will be in January 216. 7 Lower corporate income tax to 15-2% All Plan To equal SG/HK 8 Possible property tax (PBB) removal Property Plan For selected group 9 Lower archaic luxury sales tax Various Plan Effective June 215 1 Higher import tax ruling from 7.5% to 1% Various Plan Implemented along with luxury sales tax cuts 11 Government to grant criminals amnesty through govt. bonds - Plan Lead to more than IDR1tn state revenue 12 Criminal law conviction for having no tax id (NPWP) - Plan - 13 Tax ID ownership obligation for land purchase - Plan - 14 1% VAT on 15 toll roads Toll roads Plan For private vehicles only 15 Export tax for coal Coal Plan - 16 Higher sales tax for watches, bag & shoes Retail Plan - 17 Additional 2% luxury goods tax for mobile phones Telcos Plan - 18 Increased luxury tax to 1% for LCGC Auto Plan - 19 Lower thresholds for luxury properties under PPNBM Property Plan - 2 Possible higher tax on revenues (current: 1.2%) Shipping Plan Cancelled 21 Possible higher VAT on tobacco of around 1% Consumer Plan Cancelled Source: Bahana 65
216 Compendium Political friction continues with House members According to PDI-P politicians, Luhut and Rini are individuals with political power and direct access to Jokowi s important policies. With the upcoming cabinet reshuffle, politicians have launched fresh attacks on SOE Minister, Rini Soemarno, whom they claim to have caused losses for the country due to unfavorable SOE-related policies (e.g. China s money in SOE banks). Going forward, it will be interesting to observe whether Jokowi s political inner circle can survive the cabinet reshuffle. Jokowi s political inner circle Luhut Panjaitan Minister of Political Affairs Rini M. Soemarno Minister of SOE Source: Bahana Government capital injection plan State Owned Enterprises Revised State Budget (IDRbn) State Owned Enterprises Revised State Budget (IDRbn) Sarana Multi Indonesia (SMI) 2,357 Pindad 7 Aneka Tambang (ANTM IJ) 3,5 Geo Dipa Energi 67 Perusahaan Listrik Negara 5, Pelayaran Nasional Indonesia (Pelni) 5 Hutama Karya 3,6 Pertani 47 Waskita Karya (WSKT IJ) 3,5 Sang Hyang Seri 4 PTPN III 3,15 Dirgantara Indonesia 4 Indonesia Bureau of Logistics 3, Djakarta Loyd 35 Angkasa Pura II 2, Garam 3 Kereta Api Indonesia 2,75 Perum Perikanan Indonesia 3 Pelindo IV 2, RNI 28 Perusahaan Pengelola Aset (State-run Asset Management) 1, Pengembangan Pariwisata Indonesia 25 Perumnas (State-owned House Developer) 1, BPUI 25 PAL Indonesia 1,5 Perikanan Nusantara 2 The Institution of Engineers Indonesia (PII) 1,5 Dok dan Perkapalan Surabaya 2 Adhi Karya (ADHI IJ) 1,4 Industri Kapal Indonesia 2 Sarana Multigriya Finansial (SMF) 1, PTPN IX 1 Permodalan Nasional Madani (State-owned Financing) 1, PTPN X 98 ASDP Indonesia Ferry 1, PTPN XII 7 Askrindo dan Jamkrindo 1, PTPN XI 65 Dok dan Perkapalan Kodja Bahari (DKB) 9 PTPN VII 18 Source: Ministry of Finance TOTAL 64,8 Appointments by Minister of SOE Name Before After Replacing Alex J. Sinaga Budi Karya Sumadi Dwi Soetjipto Lenny Sugihat Silmy Karim Sofyan Basir Suparni Source: Bahana President director of Telkomsel President director of Jakarta Propertindo President director of SMGR Director of risk management of BBRI Policy committee advisor of defense industry President director of TLKM Arief Yahya President director of Angkasa Pura II President director of Pertamina President director of Indonesia Bureau of Logistics (BULOG) President director of Pindad Tri Sunoko Muhamad Husein Soetarto Alimoeso Sudirman Said President director of BBRI President director of PLN Nur Pamudji Director of Production and R&D of SMGR President director of SMGR Dwi Soetjipto 66
216 Compendium Megawati s political influence on Jokowi Public perception: Megawati continues to exert influence in the appointments of important political posts with the most recent example being Iman Sugema, Economist of Megawati Institute as President Commissioner of PGAS. This continues to remain a political risk, although the appointment of Luhut was against Megawati s wishes. A survey by the Cyrus Network revealed that 83% of respondents believe that Megawati has influence in determining Jokowi s cabinet. Jokowi s appointments Source: Bahana Polling on Megawati s influence on Jokowi s policies Details of recent appointmets No Position Name Background 1 National police chief Badrodin Haiti (56) Acting National Police Chief 2 Chief of Presidential Staff Luhut Panjaitan (67) Former Golkar Politician, Retired Armed Forces Military, Former Trade and Industry Minister 3 Head of Indonesian Presidential Security Forces Andika Perkasa (5) AM Hendropriyono s son in-law, Chief of Military Army Information 4 Constitutional Court Justice I Dewa Gede Palguna (54) 5 Attorney General HM Prasetyo (58) 6 7 8 Chairman of Constitutional Court Chairman of Economy Creative Board Directorate General of Taxes Arief Hidayat (58) Triawan Munaf Sigit Priadi Pramudito (55) Former Senior Member of PDI-P, Former Court Justice NasDem Politician, Lawmaker and Former deputy attorney general for general crimes Academician, from Diponegoro University and lawyer Former member of Giant Step band, former Jokowi s campaign team and a PDI-P politician Large Tax Office Chairman. 9 1 President Academician Iman Sugema (51) Commissioner of PGAS President Staff Refly Harun (45) Commissioner of JSMR from Bogor Agricultural University, former Jokowi s campaign team member of State Secretary, constitutional law expert and former success team of Jokowi. Source: Cyrus Network Source: Various sources, Bahana 67
216 Compendium The new Military & Intelligence Agency Chiefs For an emerging market like Indonesia, military developments remain of paramount importance, particularly with the installation of Gatot as new Military Chief, replacing Moeldoko (58). It is interesting to see that Megawati was not able to assert her choice (#2) for the Military Chief. Additionally, against PDI-P s wishes, Jokowi has inaugurated Sutiyoso as the new National Intelligence Agency Chief and Gatot as the new Military Chief. Chief of National Armed Chief of Intelligence Agency Source: Bahana Military Chief appointments, 26-15 Personal details General Edi Sudradjat 1993 (Army) General Feisal Tanjung 1993-1998 (Army) General Wiranto 1998-1999 (Army) Admiral Widodo Adi Sutjipto 1999-22 (Navy) General Endriartono Sutarto 22-26 (Army) No Position Name/Age Background 1 Military Chief Gatot Nurmantyo/ (55) Former Commander of Army s Strategic Reserves, Former Governor of Military Academy 2 Navy Chief Ade Supandi/ (54) Former Chief of General Staff, Former Governor of Navy Academy Marshal Djoko Suyanto 26-27 (Air Force) General Djoko Santoso 27-21 (Army) Admiral Agus Suhartono 21-213 (Navy) General Moeldoko 213-215 (Army) General Gatot Nurmantyo 215 (Army) 3 Army Chief Mulyono/ (54) 4 Air Force Chief Agus Supriatna/ (56) Former Commander of Army s Strategic Reserves, Former Commander of Jayakarta s Military Command Former Chief of General Staff, Former Commander of Air Force Operations 5 National Intelligence Agency Chief Sutiyoso/ (7) Former Jakarta Governor, Former Deputy Commander of Army s Special Forces Source: Bahana Source: Bahana 68
216 Compendium National Police Chief: An important political determinant Generally, Kompolnas (Police Watchdog) would propose the National Police Chief candidates with remaining tenure of around two years. Note that the National Police Chief Badrodin Haiti will retire in July 216. Thus, despite PDI-P s strong support for Budi Gunawan to become the next National Police Chief, his chances could be undermined by the fact that he needs to retire in December 217, translating to just 18 months of service. Moreover, there are several eligible candidates based on rank and experience including Syafrudin (no.3) Unggung Cahyono (no.7), creating an intrigue in terms of how Luhut and Megawati will play their cards. Who s the next Police Chief Source: Bahana Other possible National Police Chief candidates Possible National Police Chief background Source: Bahana Source: Bahana 69
216 Compendium Corruption Commission Chief: Chaotic On 1 September 215, the KPK selection committees selected 8 candidates for the post of KPK Chief with Johan Budi (# 7) as the front runner for the KPK chairman post. Jimly Asshiddique was earlier stated as the likeliest contender to be the KPK Chief; however, selection committees have selected other candidates who are assessed to have better individual qualifications. The KPK election process is subject to House approval with no certainty on this issue until today. In fact, the law on KPK is currently being reviewed by the House with the possibility of weaker power for the KPK. Finally, we note the continued friction between KPK and the national police, highlighting the importance of the new upcoming National Police Chief. Corruption Commission (KPK) Chief candidates Source: Bahana No. KPK division Candidate name Background 1 Prevention Thony Saut Situmorang Expert Staff, State Intelligence Agency (BIN) & UI law lecturer 2 Prevention Surya Tjandra Trade Union Center Director & Atma Jaya lecturer 3 Action Alexander Marwata Ad Hoc Judge, Graft cases (Tipikor) 4 Action Basaria Panjaitan Indonesian police senior officer 5 Management Agus Rahardjo Chief of national procurement agency (LKPP) 6 Management Sujanarko KPK s Director of internal affair 7 Supervision Johan Budi KPK Chief Tasks Executor 8 Supervision Laode M. Syarif Hasanuddin University law lecturer Source: Bahana 7
216 Compendium Simultaneous regional elections: Unexpected results At 9 December 215, Indonesia conducted its first simultaneous regional elections which brought some interesting and unexpected results with Golkar having lost some of its stronghold in Sulawesi and Papua. PDIP claimed to win 15 elections in North Sumatra and 14 elections in West Java, while Nasdem, led by Surya Paloh, a former Golkar cadre, is expected to win 129 out of the contested 269 regional elections. Our check based on quick count of 52 districts indicates that Golkar is losing its share from 21% in 214 to only 13% after the elections. Regional mayors elections comparison Gerindra 6% PKS 6% Nasdem 9% Demokrat 17% PAN 8% Old PPP 4% PDIP 21% PKB 6% Source: Bahana, as of 1 December 215 Hanura 2% Golkar 21% Demokrat 6% Gerindra 8% PKS 6% Hanura 2% Nasdem 11% PAN 15% New PPP 6% PDIP 23% PKB 1% Golkar 13% Quick count results of regional elections No. Province Incumbent / Party Current / Party 1 West Sumatera Irwan Parayitno / PKS Irwan Parayitno / PKS 2 Bengkulu Junaidi / PDIP Ridwan Mukti / NasDem 3 Jambi Hasan Basri Agus / Demokrat Zumi Zola / PAN 4 Riau Island Muhammad Sani / NasDem Muhammad Sani / Demokrat 5 North Sulawesi Sinyo Sarundajang / Demokrat Olly Dondokambey / PDIP 6 North Kalimantan Irianto Lambrie / PDIP Irianto Lambrie / PDIP 7 South Kalimantan Rudy Ariffin / PPP Sabirin Noor / PDIP 8 Central Sulawesi Longki Djanggola / Gerindra Longki Djanggola / Gerindra No. City / District Incumbent / Party Elected / Party 1 Banyuwangi Dist. Abdullah Anas / PDIP Abdullah Anas / PDIP 2 North Bengkulu Dist. Sultan Bakhtiar Najamudin / PDIP Ridwan Mukti / PAN 3 Bima Dist. Ferry Zulkarnain / Golkar Indah Damayanti / Golkar 4 Gowa Dist. Ichsan Yasin Limpo / Golkar Tenri Yasin Limpo / PPP 5 Gresik Dist. Sambari Radianto / PKB Sambari Radianto / PKB 6 Indramayu Dist. Anna Sophanah / Gerindra Anna Sophanah / Gerindra 7 Kediri Dist. Haryanti Sutrisno / PPP Haryanti Sutrisno / PPP 8 West Kutai Dist. Ismael Thomas / PDIP FX. Yapan / PKB 9 Kutai Kartanegara Dist. Rita Widyasari / Golkar Rita Widyasari / Golkar 1 North Kutai Dist. Ardiansyah Sulaiman / PKS Ardiansyah Sulaiman / PKS 11 Central Lombok Dist. Moh. Suhaili / Gerindra Moh. Suhaili / Gerindra 12 North Lombok Dist. Djohan Sjamsu / Demokrat Najmul Akhyar / PDIP 13 Malang City Rendra Kresna / Golkar Rendra Kresna / Golkar 14 Soppeng Dist. HA Soetomo / Demokrat Kaswadi Razak / Gerindra 15 East Tanjung Jabung Dist. Zumi Zola/ PAN Romi Hariyanto / PAN 16 West Tanjung Jabung Dist. Usman Ermulan / Golkar Anwar Sadat / PAN 17 Trenggalek Dist. Mulyadi WR / PDIP Emil Dardak / PDIP 18 Depok City Nur Mahmudi Ismail / PKS Mohammad Idris / PKS 19 Palu City Rusdi Mastura / Golkar Hidayat / PAN 2 Batam City Ahmad Dahlan / Demokrat Muhammad Rudi / Demokrat 21 Samarinda City Syahari Jaang / Demokrat Syahari Jaang / Demokrat 22 Surabaya City Tri Rismaharini / PDIP Tri Rismaharini / PDIP 23 Medan City Dzulmi Eldin / PDIP Dzulmi Eldin / PDIP 24 Semarang City Hendrar Prihadi / PDIP Hendrar Prihadi / PDIP 25 Denpasar City I Gusti Ngurah Jaya Negara / PDIP Ida Bagus Rai Dharmawijaya / PDIP 26 Gresik Dist. Sambari Radianto / PKB Sambari Radianto / PKB 27 Mataram Dist. Ahyar Abduh / PKS Ahyar Abduh / PKS 28 Pemalang Dist. Junaedi / PDIP Junaedi / PDIP 29 Tanjungbalai City Thamrin Munthe / GOLKAR M. Syahrial / Golkar 3 Serdang Bedagai Dist. Soekirman / PAN Soekirman / PAN 31 South Tapanuli Dist. Syahrul Pasaribu / Golkar Syahrul Pasaribu / Golkar 32 Toba Samosir Dist Pandapotan Tasmin S. / Demokrat Darwin Siagian / NasDem 33 Binjai City Timbas Tarigan/Demokrat Juliadi / PDIP 34 Labuhanbatu Dist. Tigor Siregar / Nasdem Tigor Siregar / Nasdem 35 Sibolga City Syarfi Hutauruk / NasDem Syarfi Hutauruk / NasDem 36 Asahan Dist. Taufan Simatupang / PDIP Taufan Simatupang / PDIP 37 West Pakpak dist. Remigo Berutu / NasDem Remigo Berutu / NasDem 38 Humbang Hasundutan Dist. Maddin Sihombing/Golkar Dosmar Banjarnahor / PKB 39 North Labuhanbatu Dist. Kharuddin Syah / Hanura Kharuddin Syah / Hanura 4 South Labuhanbatu Dist. Wildan Tanjung / NasDem Wildan Tanjung / NasDem 41 Solok City Irza Ilyas / Demokrat Zul Elfian / PPP 42 Dharmasraya Dist. Adi Gunawan / NasDem Sutan Riska Kerajaan / PDIP 43 Bukittinggi City Ismet Amzis / Demokrat Ramlan Nurmatias / PDIP 44 South Solok Dist. Muzni Zakaria / PAN Muzni Zakaria / PAN 45 West Pasaman Dist. Baharuddin R. / PPP Zulkenedi / Golkar 46 Pasaman Dist. Benny Utama / PKB Benny Utama / PKB 47 South Pesisir Dist. Nasrul Abit / Gerindra Hendrajoni / Gerindra 48 West Pesisir Dist. Kherlani / Demokrat Agus Istiqlal / NasDem 49 Sijunjung Dist. Yuswir Arifin / PDIP Muchlis Anwar / Demokrat 5 Tanah Datar Dist. Shadiq Pasadigoe / Golkar Edi Arman / PAN 51 Padang Pariaman Dist. Ali Mukhni / PAN Ali Mukhni / PAN 52 Lima Puluh Kota Dist. Alis Marajo / Golkar Azwar Chesputra / Golkar Source: Quick count, Elections Committee 71
Recent BI and government actions (1) No Regulation/Planning Sector Comment 1 BKPM s new ruling: Tax holiday must be processed within 65 working days All sectors 2 Restrictions on foreigners bank accounts eased Bank & finance This should help to raise USD supplies domestically. 3 Money changers required to collect underlying transactions Banking & finance 4 ADB to lend Indonesia USD4m for financial inclusion Banking & finance 5 6 7 SOE banks signed USD3bn loan agreement with China Development Bank Foreigners to be able to open bank accounts with up to USD5k limit Lower rate on the People Business Credit Program (KUR) from 22-23% to 12% Banking & finance Banking & finance Banking & finance Based on our understanding through our channel checks, the funds to be loaned out to infrastructure companies could be in USD or in IDR post swap. On the RMB borrowings, the funds will be utilized for procurements of Chinese-related products. Positive for commercial banks liquidity and should help to raise USD supplies on the ground. Negative for BBRI's KUR exposure (around a third of its loans portfolio) 8 Advancing forex supply and demand management Banking & finance BI will increase the limit of non-underlying forex/idr forward transaction from USD1mn to USD5mn, issue SBBI in foreign exchange, lower SBI holding period from 1 month to 1 week, provide additional incentive for term deposits from exports earnings and enhance transparency of foreign exchange management. 9 Maintaining IDR stability Banking & finance BI will intervene in forward market by the beginning of October. 1 Enhancing IDR liquidity management Banking & finance BI to issue certificate of deposit and reverse repurchase order of SBN with 2 weeks tenor to absord excess IDR liquidity. 11 Auto and consumer companies to enjoy lower import duties Consumer 12 Deregulation: Possible relaxation on minimarkets to sell < 5% alcohol content Consumer This should be positive for retailers with minimarket formats 13 Cigarette products: Possible higher excise tax in 216 Consumers This should weaken sentiment on the cigarette sector, as excise makes up some 7% of cigarette companies COGS. 14 Govt to ease permits required for exports and imports Consumers This regulation should be positive in limiting inflationary pressure arising from staple foods in the near future. 15 Vice President: Indonesia to import rice preventing Note that in 214, Indonesia imported 844k tons of rice, which was up around Consumers deficit 79% y-y. 16 Cattle market stabilization Consumers On the poultry sector, we continue to have a NEUTRAL stance on the longer dry season, creating supply constraints. 17 Water resources policy Consumers Government will provide water resources following the Constitutional Court s revocation of Act no. 7/24 related to water resources. Constitutional Court set up six principals for water. The government has given permission to some businesses to provide clean water. 18 Food & Drug administration policy Consumers Government will simplify FDA systems for medicines, imports of raw materials for medicines, and also foods. Import permission will be simple and processed online. An online import service will also improve FDA s efficiencies. 19 Enchance maritime industry by converting fishermen fuel demand from solar to gas Fisheries Positive for fishermen's incomes. 216 Compendium 2 Govt plan to limit foreign private debt Government budget We think this would be a positive move in curbing USD demand and help to strengthen the IDR ahead. Source: Government 72
Recent BI and government actions (2) No Regulation/Planning Sector Comment 21 The Govt to issue Bonded Zones regulation Industrial area This could be beneficial to the Industrial Estates players since the government will implement the development through private companies allowing for expansion opportunities 22 Industry Ministry: New industrial estates in Padang Industrial Area 23 Land Industrial area Special economic zones administrators can provide industrial land services. 24 Permits Industrial area Administrators could issue principal licenses and business permits through one-way service in special economic zones, extended permits issued in 3 hours time. 25 Investors required to appoint contractors and operators prior to toll-road tender process Infrastructures 26 President Jokowi signs three Presidential Decrees on LRT With the signing of Perpres on LRT, we expect ADHI to soon commence the Infrastructures development LRT construction using the rights issue proceeds. 27 Govt plans to issue almost USD1bn in Islamic bonds for projects Infrastructures 28 As the government is disallowing the use of the State Budget for the fast-train SOEs to continue fast train project without government Infrastructures project, WIKA plans to use the planned capital injection for other capital injection infrastructure projects. 29 Jokowi inaugurated first TBM for MRT project; Subsidy to Possible ERP implementation has us UNDERWEIGHTING the automotive and Infrastructures come from ERP implementation taxi industries. 3 Labor Labor Wage commission is formed in special economic zones. 31 Immigration Labor To ease VISA extending facility to 5 times every 3 days. 32 Determine some specific gas prices for certain industries Manufacturing Positive for Indonesian manufacturers, but negative for PGAS on possible lower gas prices. 33 Tax cut in employee income tax (PPh21) Manufacturing The Investment Coordinating Board (BKPM) has proposed income tax cuts to support the labor intensive footwear and textile industry by as much as 5% 34 Indonesia to keep ban on nickel ore exports Mining 35 Mineral export relaxation to adversely impact smelters Mining 36 Government plans to cut industrial gas price Oil & gas Although industrial users propose 1-4% gas price cuts, we only price in a 5% gas price discount from Perusahaan Gas Negara as the government is also planning to establish a gas infrastructure board consisting of PGAS and Pertagas. 37 Government sweetens profit sharing for oil and gas blocks Oil & gas 38 Freeport to increase its local content consumption; In discussions with several SOEs Oil & gas 39 Govt opens downstream to private oil companies Oil & gas This news represents a threat for the distribution and logistics business of AKR Corporindo going forward. 216 Compendium 4 Tax allowance for sugar mill construction Plantation Tunas Baru Lampung is the only company under our coverage that is currently constructing a new sugar mill in Lampung with total investment of around IDR1tn for around 1.2mn tons of capacity per annum. Source: Government 73
Recent BI and government actions (3) No Regulation/Planning Sector Comment 41 Ahok scraps land and building taxes for properties under IDR1bn Property 42 Property: IDR2bn luxury tax threshold back on the cards Property 43 Property: MoF revoking IDR2bn luxury tax threshold Property 44 Finance Minister: Property luxury tax threshold at IDR1bn Property While this would increase affordability of homes under IDR1bn, we think it would not be sufficient to offset unfavorable conditions due to policy risks and eroded purchasing power. Such a move would present an additional stumbling block for the sector which is already weakened from eroded purchasing power and existing policy risks, including the continued aggressive taxation drive and the recent implementation of lowered PPh22 (5%) thresholds. A higher luxury property tax threshold would benefit the property stocks under our coverage. This IDR1bn threshold would have minimal adverse impact on home builders under our coverage. We believe that the government s decision is heavily influenced by the current weak economy, which at the same time indicates a challenging operating business condition for the property market 45 Property: Tax top brass reckons no change in PPh22 thresholds Property 46 Easing foreign ownership restriction on apartments Mildly positive for CTRP; Virtually no impact on other listed property stocks Property (>IDR1bn) under our coverage. 47 Increase property sector investment, especially at the low-end market segment Property Positive for construction companies. 48 Foreign Property Ownership Property Foreigners are able to have property in special economic zones. 49 Income tax Taxation Tax Holiday with income tax reduction of 2-1% for 1-25 years with investment above IDR1tn, income tax reduction of 2-1% for 5-15 years with investment above IDR5mn. Tax Allowances: Net income reduction of as much as 3% for 6 years, faster depreciation, income tax on dividend of as much as 1%, loss compensation for 5-1 years. 5 Value-added tax and Sales on luxury goods tax Taxation No VAT for import, no VAT for transportation between custom office areas, no VAT for transactions within special economic zones (KEKs) and in the other KEKs. 51 Customs Taxation Tariffs will depend on certificates of origin. 52 Government to add 47 countries to visa-free list Tourism 53 Tourism Special Activity Tourism Building tax and entertainment tax reduction by 5-1%. 54 Airlines price floor lowered due to weak purchasing power Transportation 55 Jokowi to lower Jet Fuel prices Transportation 56 President urges quick completion of LRT project Transportation 57 Govt revises rule to cut down on dwelling times Transportation 58 The government reportedly plans to cut regular gasoline price and add more tax incentives Transportation Source: Government 216 Compendium 74
216 Compendium INDONESIAN MARKET 75
216 Compendium Equity: Cautiously optimistic; Bonds: Yields likely to drop For the equity market, with growth scarcity (although improving) and continued political dynamics, foreign investors are taking money out of the market. At the April 215 peak, there were around IDR11.3tn in foreign inflows, which have reversed to total net foreign outflows of IDR22.1tn YTD 215. By the end of 213, the taper tantrum caused IDR44tn in net foreign outflows, followed by IDR4tn in net foreign inflows in 214. In bonds, the December yield is currently 8.72%, versus US 1-year notes at 2.18%, with foreign inflows reaching IDR19.8tn in November and IDR87.2tn YTD. Going forward, with the possible BI rate cut, there is room for yields to fall. Foreign equity capital flows in JCI, 213-YTD Dec 215 (IDRb) 6, 5, 4, 3, 2, 1, (1,) (2,) 19,487 8M14 net inflow: 53,256 Sep-Dec 214: net foreign outflows of IDR13.3tn (7,42) (3,232) IDR44tn net outflow 5,281 (7,955) 212 1,68 (5,426) 5,896 (3,46) (4,89) 132 (618) (3,335) (4,71) (9,82) (7,183) (3,) (24,741) 4M13 213 8M14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 Source: Bloomberg as of 3 December 215 Government bond-yield movements BI & foreign ownership in government bonds, 213-Nov 215 (IDRt) 6.6 (%) 6 45 41.3 44. 39.5 32.4 3 14.4 17.6 18.1 2.9 22.2 21.3 23. 19.8 15.6 15.6 42. 13.2 14.7 15.4 8.6 3.9 3.3 2.8 6.4 8.4 12.5 15 6.8 6.24.1 6.3 5.4 4. (15) -2.7 -.9-3.3-3.6-3.1-3.9-2. -2.3-8.2-7.9-7.5-8. -11.5-7.9 38. (3) -2.7-19.9 (45) 36. (6) (75) 34. (9) 32. (15) (12) -11.9 3. Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Bank Indonesia Foreign Foreign ownership Source: Bloomberg Source: Ministry of Finance 76
216 Compendium IDR stability: 5% external, 5% internal The IDR movements continue to be dependent on the Fed rate hike and regional currency wars, most importantly the yuan. Internally, FX reserves, CAD and external private debt should continue to be important determinants of the IDR, with the 215 median estimate at IDR14,68/1USD (Bahana: IDR14,), before worsening to IDR14,7 in 216 (Bahana: 14,5). In 216, the market is looking at continued IDR weakness on a stronger USD in the lead-up to the Fed rate hike. This could complicate the need for the Indonesian central bank to lower rates to support growth. The Indonesian stock market has been the worst performing market in USD terms, down more than 24% YTD. Various stock market performances Stock market YTD YTD in USD 214 Stock market YTD YTD in USD 214 Asia Last (%) (%) (%) Others Last (%) (%) (%) SHENZHEN (China) 2,244 57.8 54.8 36.3 Nasdaq (USA) 5,38 6.4 6.4 8.1 Nikkei (Japan) 19,94 11.8 9.5 2.8 SMI (Swiss) 8,852 (1.5) 2.4 16.8 SHCOMP (China) 3,585 9. 6. 55.4 CAC 4 (France) 4,73 1.7 1.1 7. VNI (Vietnam) 574 4.7 (.2) 9.5 FTSE 1 (UK) 4,125 3.6.8 17.7 KOSPI (Korea) 1,994 3.1 (3.2) (.9) DAX (Germany) 1,789 1..4 7.5 Hang Seng (HK) 22,417 (6.) (5.9) 1.3 S&P 5 (USA) 2,5 (.5) (.5) 16.3 PCOMP (Phil.) 6,994 (4.3) (9.5) 23.5 Dow Jones (USA) 17,478 (1.9) (1.9) 13.1 SENSEX (India) 25,887 (6.6) (12.) 31.9 RTSI (Russia) 827 5.6 (4.5) 13.4 TWSE (Taiwan) 8,456 (9.8) (13.2) 14.3 NZSE (New Zealand) 1,178 4.6 (9.6) 2.9 SET (Thailand) 1,341 (11.) (19.2) 15.9 MADX (Madrid) 1,19 (2.2) STI (Singapore) 2,884 (14.7) (19.6) 11.1 ASX (Australia) 3,456 (2.2) KLCI (Mal.) 1,674 (5.3) (22.5) 1.1 S&P/TSX (Toronto) (11.8) 16.6 (12.3) 39.6 13,325 (8.9) (21.9) 11.4 IDX (Indonesia) 4,537 (13.8) (24.3) 24.1 IBOV (Brazil) 46,393 (7.2) (36.5) 9.6 Source: Bloomberg as of 3 December 215, Bahana Consensus forecasts on regional currencies Current 214 215F 215F 215F 216F Appreciation rate per End End End End End Potential (%) Country Currency 1USD Low Median High Median 215 216 India INR 67 63. 65. 66.6 67.5 67.. (.6) Philippines PHP 47.1 44.7 45. 47.2 48. 48.1 Taiwan TWD 32.8 31.7 32.1 33. 34. 33.8 Thailand THB 35.8 32.9 35. 36.2 37.5 37. (.1) (2.) (.7) (3.1) (1.1) (3.3) Singapore SGD 1.4 1.3 1.4 1.4 1.5 1.5 (1.4) (4.3) Indonesia IDR 13,797 Korea KRW 1,164 12,385 13,15 14,68 14,8 14,7 (2.) (6.5) 1,91 1,11 1,188 1,25 1,216 (2.) (4.4) Malaysia MYR 4.2 3.5 4.1 4.4 4.6 4.4 (2.8) (4.) Source: Bloomberg as of 3 December 215 USD performance relative to other currencies Asia exc. Japan currencies YTD 214 Other currencies YTD 214 HKD (Hong Kong).1 (.) JPY (Japan) (2.3) (13.7) CNY (China) (3.) (2.5) GBP (UK) (2.8) (6.3) TWD (Taiwan) (3.4) (6.2) EUR (EU) (9.6) (13.6) VND (Vietnam) (4.9) (1.4) RUB (Russia) (1.) (84.8) SGD (Singapore) (5.) (4.9) AUD (Australia) (1.2) (9.1) PHP (Philippines) (5.2) (.7) MXN (Mexico) (11.7) (13.2) INR (India) (5.4) (2.) ARS (Argentina) (12.9) (29.8) KRW (Korea) (6.3) (3.9) CAD (Canada) (13.) (9.4) THB (Thailand) (8.2) (.6) NZD (New Zealand) (14.2) (5.4) IDR (Indonesia) (1.5) (1.8) TRY (Turkey) (19.1) (8.7) MYR (Malaysia) (17.2) (6.8) BRL (Brazil) (29.3) (12.5) Source: Bloomberg as of 3 December 215, Bahana 77
216 Compendium Impact from weaker IDR Each 1% IDR depreciation would lower the EPS of our covered stocks by 1.8% overall, based on our estimates. IDR weakness should benefit dollar earners, although the positive impact could be offset by stronger dollar which would cause lower commodity prices. A stronger dollar should in general spell bad news for corporates with large USD debt. JCI index vs. IDR currency (JCI) 5,6 5,4 5,2 5, 4,8 4,6 4,4 4,2 12,3 12,6 12,9 13,2 13,5 13,8 14,1 14,4 14,7 4, 3-Jan 3-Feb 3-Mar 3-Apr 3-May 3-Jun 3-Jul 3-Aug 3-Sep 3-Oct 3-Nov 3-Dec Source: Bloomberg as of 3 December 215, Bahana JCI index Some convergence between IDR/USD and JCI provides comfort USDIDR (IDR) IDR depreciation: Sensitivity analysis Non-IDR 9M15 Sensitivity Non-IDR 9M15 Sensitivity Net to net profit Net to net profit Sales Cost Cash Debt Sales Cost Cash Debt Ticker gearing on 1% IDR Ticker gearing on 1% IDR (%) (USDmn) (%) Depreciation (%) (%) (USDmn) (%) Depreciation (%) HRUM* 1 1 165.2. nc 21.2 TAXI 5 1.1. 183.5 (.4) ANTM 77.7 66 141.7 452.4 5.3 7.3 ASSA 7. 196.4 (.5) MEDC* 98 12 215.1 1,1.7 1.5 6.7 CTRA 4.6 27 8.9. 15. (.6) SGRO 1 6.1. 66.3 4.8 GGRM 1 19.8. 41. (.6) SIMP 1 65 35.9 183.6 46.9 4.2 ASII 35 4 1,9.7 2,81.2 46. (.7) PGAS* 1 1 779.5 2,449.8 51.8 4. HMSP 1 3.5 49. 1.4 (.9) ADRO* 78 8 617.5 1,675.9 26.2 3.9 INTP.9 51.2 36.3. nc (1.) ANJT* 1 6 2.5 18. 16.9 3.9 SMBR 47.7 3.9. nc (1.) LSIP 1 4 25.4. nc 3.6 PWON 36.1 25 86.8 268.5 27.2 (1.1) UNTR 1 82 947.8 147. nc 3.2 GJTL 5 7 17.2 2.3 18.8 (1.1) CASS 45 15 4.5 8.2 28.5 2.9 SMGR 1.3 41 6.2. 3.7 (1.2) PSAB* 1 6 7.7 33.3 15.8 2.8 ATIC 8 9 16.2 43.1 nc (1.3) WINS* 1 1.8. 45.2 2.7 TMAS 3.. 133.1 (1.3) MYOR 42 59.5 72.9. 56.9 2.5 SIDO 5 16.8.7. nc (1.4) SRIL 45 12.9 39.8 149.9 2.5 TINS 96 75.6 8.6 98.6 39.2 (1.6) INCO* 95 75 31.4 145.8 nc 2.3 UNVR 5 85 14.8. nc (1.6) DSNG 1 6 1.6 49.5 16.9 2.2 MNCN 4 2 1.3 25. 36.3 (1.8) AKRA 9 85 737.2 98.6 36.7 1.9 JCI** 7,38 13,594 42.9 (1.8) DMAS 95 1.1. nc 1.8 INDF 29 53 237.5 183.8 34. (1.9) BSDE 17.6 25 35.2 21. 4.8 1.7 TOWR 4 1 157. 467. 151.6 (2.) ITMG* 87 1 334.4. nc 1.7 KLBF 4.7 75 64.1 8.7 nc (2.1) TBLA 1 6 24.7 118.3 15.7 1.3 ROTI 7.1.3 46.5 (2.2) AALI 1 6 8.4 493.6 32.2 1. MPPA 1.. 13.2 (2.2) PTBA 54 63 85.5 84.5 nc 1. RALS. 3. 12.. nc (2.6) APLN 22.4 3 49.1. 36.3.5 TBIG 22. 1. 19.2 1,353. 481.2 (2.7) ADHI 15 15 7.8. 136.5.4 ICBP 8.5 75.5 15.2 18.1 nc (3.2) SOCI 1 15 11.3 98.9 55.6.4 TSPC 5. 7. 51.9 2. nc (3.2) SSIA 2 15 42.6.9 5.9.4 ISAT. 1. 55. 55.6 185.6 (4.8) LPCK 29.5 1.4.4. nc.2 ACES. 8..2. nc (5.) WSKT 5 5 2.9..9.2 KIJA 73. 7.6 29. 264.1 61. (5.1) ERAA 2.9. 32.2.1 BEST 93.4 15. 28.4 18.1 29.8 (5.2) WIKA 15 15 2.4 12.7 58.5.1 KAEF 6.3 75. 3.5 4.2 nc (5.4) TELE.4. 69.4. ASRI 5. 25. 29.8 511.1 113.2 (5.4) SCMA 1 1.7. nc. CPIN. 6. 77.9 225.6 59.7 (5.8) CTRP 15.6 25 5.. 42.2. LPKR 13.9 2. 13.9 83.3 56.8 (6.2) MIKA 4 1.7. nc. PPRO (2Q15). 2... nc (6.8) MDKA 1 9 16.4. nc n/a MAPI 3. 6. 1.1. 111.3 (6.9) TLKM 1 528.6 225.6 1. (.) ECII. 6... nc (7.8) JSMR 5.. 12.4 (.1) MAIN. 6. 9.4 7.4 196.8 (8.2) KRAS* 9 85 1.9. 72.2 (.1) GIAA* 45. 4. 242. 1,362. 11.7 (8.9) PTPP (2Q15) 12 15 22.7. 28.8 (.1) SILO. 7..4. 14.1 (1.) SMRA 24 25 5.8. 73.3 (.1) EXCL. 1. 145.6 1,196.8 191.8 (11.5) TOTL 2 6.8. nc (.1) IMAS 1. 1. 28.4 199.9 29.1 (13.1) WTON 1 15 1.. nc (.2) SMCB 5. 54.3 3.8 73.2 85.4 (15.4) BIRD 1 1.. 38.5 (.3) JPFA. 6. 25.9 339.3 na (26.6) LPPF 25.6. nc (.3) MLPL 4. 1. 47.1 257. na (43.) HERO 15 2.9. 1.6 (174.8) Source: IDX, companies, Bahana *USD reporting **Excluding HERO, JPFA and MLPL due to low-base 78
216 Compendium Sectors Ranked by YTD performance: First Consumer staples: With scarcity of growth on the ground, staples remain as one of the most defensive and resilient sectors. Telcos: Outperformance due to its strong growth caused by higher data usage and also by its defensive nature amid current market volatility. Property: In spite of weak marketing sales, the sector has benefited from positive sentiment on government regulations and possible lower BI rates ahead. Consumer staples sector: relative performance (%) (%) 4 4 35 33.7 35 3 29.8 3 25 25 2.3 19.3 2 2 15 15 1 8.5 9.2 1 5 (5) (2.2) ytd 1M 3M 6M 9M 12M 214 5 (5) Telco sector: relative performance (%) (%) 3 3 Source: Bloomberg Consumer staples sector relative to JCI Property sector: relative performance (%) (%) 3 28.1 3 25 24.1 25 25 25 2 15 1 5 15.6 1.3 11.6 14.6 16.6 8.9 2 15 1 5 2 15 1 5 14.9 6.8 15.8 8.3 7. 7.8 2 15 1 5 ytd 1M 3M 6M 9M 12M 214 ytd 1M 3M 6M 9M 12M 214 Telco sector relative to JCI Property sector relative to JCI Source: Bloomberg Source: Bloomberg 79
216 Compendium Sectors Ranked by YTD performance: Second Consumer retail: Defensive grocery demand has supported the performance of retailers. Banks: Outperforming, helped by sentiment from lower Primary Reserve Requirements and possible lower BI rates, despite current rising NPLs. Infrastructure: Perceived as a market proxy, it has performed relatively in line with the index. Consumer retail sector: relative performance (%) (%) 8 8 6.6 6.7 6 6 5. 5.1 4 3.6 4 2 2.1 (2) (4) (2.2) ytd 1M 3M 6M 9M 12M 214 (2) (4) Source: Bloomberg Consumer retail relative to JCI Banks sector: relative performance (%) (%) 2 18.9 2 18 18 16 16 14 14 12 12 1 1 8 8 6.1 6 5.3 6 4.2 4.7 4 4 2.4 2.8 2 ytd 1M 3M 6M 9M 12M 214 Infrastructure sector: relative performance (%) (%) 118.9 11 11 9 9 7 7 5 5 3 3 13.2 1.7 2.9 1 (1) (.8) (3.1) (1.5) (1) ytd 1M 3M 6M 9M 12M 214 Source: Bloomberg Banks sector relative to JCI Source: Bloomberg Infrastructure-related sector relative to JCI 8
216 Compendium Sectors Ranked by YTD performance: Third Automotive: Weak purchasing power coupled with continued huge discounting environment has resulted in market underperformance. Poultry: Underperforming due to weak IDR as well as low DOC and broiler prices caused by oversupply conditions. Consumer media: Suffered from FMCG companies lower TV ad spend and their shift to cheaper advertising media (e.g. online and direct marketing), though the sector has improved recently on a slightly better economic outlook. Automotive sector: relative performance (%) (%) (.7) (1.7) (1.7) (5) (3.) (3.3) (2.9) (5) (1) (1) (15) (15) (16.1) (2) ytd 1M 3M 6M 9M 12M 214 Automotive sector relative to JCI (2) Source: Bloomberg Poultry sector: relative performance (%) (%) 6 6 5 48.3 5 4 4 3 3 Consumer media sector: relative performance (%) (%) 16 14.2 16 12 11.2 12 8 8 2 1 (1) (4.2) 9.1 6.6 (1.) 2 1 (1) 4 (4).5 1.1 (4.2) 4 (4) (2) (3) (19.3) (2.2) ytd 1M 3M 6M 9M 12M 214 (2) (3) (8) (12) (6.5) (9.5) ytd 1M 3M 6M 9M 12M 214 (8) (12) Poultry sector relative to JCI Consumer media relative to JCI Source: Bloomberg Source: Bloomberg 81
216 Compendium Sectors Ranked by YTD performance: Fourth Industrial estates: Concerns on investment outlook have hurt the performance of the sector. Plantations: Disadvantaged by lower CPO and soybean prices due to global oversupply conditions. Coal: Underperformance on continued weak coal price due to the implementation of China s clean air policy. Industrial estates sector: relative performance (%) (%) 6 52.2 6 5 5 4 4 3 3 2 2 1.4 1 (1) (1) (9.6) (1.3) (2) (18.2) (2) (3) (25.2) (23.7) (3) ytd 1M 3M 6M 9M 12M 214 Industrial estate sector relative to JCI Source: Bloomberg Plantations sector: relative performance (%) (%) (.4) Coal sector: relative performance (%) (%) (5) (5) (5) (5.4) (5) (1) (1) (1) (15) (11.4) (13.5) (1) (15) (15) (2) (25) (12.8) (17.8) (19.3) (24.2) (19.5) (18.6) (15) (2) (25) (2) (16.3) (17.5) (16.8) ytd 1M 3M 6M 9M 12M 214 Plantations sector relative to JCI (2) (3) (35) (32.1) ytd 1M 3M 6M 9M 12M 214 Coal sector relative to JCI (3) (35) Source: Bloomberg Source: Bloomberg 82
216 Compendium Sectors Ranked by YTD performance: Fifth Oil-related: Has been underperforming on depressed oil price outlook on oversupply condition as well as the lifting of Iran sanctions. Transportation: The taxi industry has been hurt by decreased demand on weak purchasing power and lower utilization rates on intensifying competition from online mobile-based transportation applications. Metals: Suffering from weak sentiment due to stronger USD and global economic weakness, negatively affecting prices of base metals. Oil-related sector: relative performance (%) (%) 1 1 7.5 5 5 1.4 (1.7) (5) (5) (1) (7.) (9.5) (9.1) (1) Transportation sector: relative performance (%) (%) 1 5.1 1.7 (15) (12.8) (15) ytd 1M 3M 6M 9M 12M 214 Oil-related sector relative to JCI Source: Bloomberg Metals sector: relative performance (%) (%) 1 5.3 1 (1) (2) (3) (16.9) (7.1) (1) (2) (3) (1) (2) (18.5) (2.3) (1.9) (1) (2) (4) (5) (37.4) (49.) (39.2) (4) (5) (3) (4) (36.6) (39.2) (3) (4) (6) ytd 1M 3M 6M 9M 12M 214 Transportation sector relative to JCI (6) (5) (48.3) ytd 1M 3M 6M 9M 12M 214 Metals sector relative to JCI (5) Source: Bloomberg Source: Bloomberg 83
216 Compendium Sectors Ranked by YTD performance: Last Shipping: Suffering from weak sentiment due to softer-than-expected GDP growth performance. Cement: The sector has been hurt by sentiment on competition, the oversupply situation and weak margins. Aviation: Has been impacted by slower GDP growth and natural disasters, despite lower oil prices. Shipping sector: relative performance (%) (%) 2 2 11.1 1 5.7 1 1.2 (1) (6.7) (1) (13.) (2) (18.6) (2) (3) (3) (4) (39.1) (4) ytd 1M 3M 6M 9M 12M 214 Cement sector: relative performance (%) (%) Shipping sector relative to JCI Source: Bloomberg Aviation sector: relative performance (%) (%) 1 6 2 7.3 1.1 1 6 2 (5) (2.8) (4.8) (5) (2) (6) (1) (.7) (5.2) (6.2) (2) (6) (1) (1) (15) (15.6) (12.6) (1.4) (1) (15) (14) (18) (22) (15.2) (18.9) ytd 1M 3M 6M 9M 12M 214 (14) (18) (22) (2) (25) (2.8) (22.1) ytd 1M 3M 6M 9M 12M 214 (2) (25) Cement sector relative to JCI Aviation sector relative to JCI Source: Bloomberg Source: Bloomberg 84
216 Compendium 3Q15 results review: The good, the bad & the ugly Growth deceleration in overall 3Q15 operating and net profit. At the operating profit level, the market has thus far booked around 6.1% y-y growth in 3Q15, better than our estimate of 3% y-y growth. However, on the bottom line, 3Q15 net profit contracted by nearly 6% y-y, which was worse than our estimate of a 1.4% contraction. The culprits of the earnings slowdown are lower-than-expected GDP growth and IDR depreciation. Market performance (%) Operating profit y-y growth Net profit y-y growth 3Q14 3Q15 3Q14 3Q15 Bahana universe* 8.8 6.1 1.9 (5.9) Source: Company, Bloomberg, Bahana estimates *SRIL, EXCL and ISAT The good Operating profit y-y growth Net profit y-y growth 3Q14 3Q15 3Q14 3Q15 Coal-related 82. 25.6 2.3 44.5 The bad Operating profit y-y growth Net profit y-y growth Infra-related 6.3 2.3 8. 26.5 Banks 3.1 8.9 6.3 7.9 Poultry (62.4) 11.3 (6.8) 7. Telco-related*.6 17.4 17.3 2.9 Source: Company, Bloomberg, Bahana estimates Operating and net profit growth, 3Q11-3Q15 (%) 3Q14 3Q15 3Q14 3Q15 Property 24.4 8. 32. (22.6) Source: Company, Bloomberg, Bahana estimates, The ugly 3 25 2 27.1 25.4 Operating profit y-y growth Net profit y-y growth 15 3Q14 3Q15 3Q14 3Q15 Plantations 63.3 (5.8) 118.4 na Consumer 5.9 3.8 11.6 (9.1) *Discretionary (2.3) (8.8).1 (28.5) Staples 9.1 7.6 17.1 (5.3) Automotive.3 (2.2) (3.2) (22.9) Cement (8.5) (19.9) (.9) (24.2) Oil-related 12.7 (25.8) 27.2 (65.7) 1 5 (5) (1) (15) 1.6 1.9 6.9 6.1 6.9 5.2 6.1 2.9 2.6 2.2.7 -.4 (2.7) -5.9-6.8-12.7 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 Metals na (42.3) na (69.7) Source: Company, Bloomberg, Bahana estimates, *Excluding SRIL Source: Companies, Bahana estimates Opt profit y-y growth Net profit y-y growth 85
216 Compendium 4Q15F results preview: The good, the bad & the ugly For the whole market in 4Q15F, we expect overall growth in operating profit to fall to 4.5% y-y, while net profit should increase by 17.5% y- y, from 3.7% in 4Q14. We expect 4Q15F earnings to experience some y-y improvement due to the relatively weak levels seen in 4Q14. This should be supported by pockets of above-market growth rates, such as in the metals, coal, telco and infrastructure-related sectors. Note that after stripping out the commodity-related sectors, our growth forecast for operating profit would drop to 1.5%, and that for net profit to 3.6%. Market performance* (%) Operating profit y-y growth Net profit y-y growth 4Q14 4Q15F 4Q14 4Q15F Bahana universe 8.7 4.5 3.7 17.5 Bahana universe* (9.3) 1.5.1 3.6 Source: Company, Bloomberg, Bahana estimates *excluding commodity-related companies The good Operating profit y-y growth Net profit y-y growth 4Q14 4Q15F 4Q14 4Q15F Metals 4.5 5.4 (72.5) 378.9 Coal-related 1.7 2.5 (61.4) 352.8 The bad Operating profit y-y growth Net profit y-y growth Telco-related 42.4 19.2 (4.4) 57.5 Infra-related 7.2 21.2 16.1 13.7 Source: Company, Bloomberg, Bahana estimates Operating and net profit growth, 4Q11-4Q15F (%) 4Q14 4Q15F 4Q14 4Q15F Oil-related (14.8) (47.5) (11.6) 34. Poultry (51.1) 15.9 na na Consumer 48.8 11.8 68.6 (3.7) Staples 25. 7.7 19.5 (8.6) Discretionary* (19.8) 25. 69.3 (28.4) Source: Company, Bloomberg, Bahana estimates, *Excluding SRIL The ugly Operating profit y-y growth Net profit y-y growth 4Q14 4Q15F 4Q14 4Q15F Plantations (22.7) (26.9) (28.7) 19. Automotive (7.1) (16.6) (21.4) 4.3 Property 76.1 (1.3) 117.3 2.3 Banks 3.7 (4.5) 6.7 (.9) Cement (6.6) (31.3) (2.8) (21.9) Source: Company, Bloomberg, Bahana estimates 3 27.1 25 25.4 2 17.5 15 1 1.6 1.9 6.9 6.1 6.9 5.2 6.1 5 4.5 2.9 2.6 2.2.7 -.4 (2.7) (5) -6.8-5.9 (1) -12.7 (15) 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15F Opt profit y-y growth Net profit y-y growth Source: Companies, Bahana estimates 86
216 Compendium Government & central bank policies: Impact on sectors No. Automotive Status Impact 1 Higher taxes on motor vehicles Plan Negative for ASII and IMAS 2 ERP policy (Jakarta) Plan Negative for ASII, IMAS, TAXI and BIRD 3 2W cartel allegation Plan Negative for ASII 4 Relaxation of LTV regulations Signed Positive for ASII and IMAS 5 Flexible pricing on regular gasoline Signed Positive/negative for ASII and IMAS 6 Motorcycle ban in several main roads (Jakarta) Signed Negative for ASII and IMAS 7 Progressive tax on cars Signed Negative for auto and consumer sector 8 Limitation on tire imports Signed Positive for GJTL No. Aviation Status Impact 1 Higher ticket price ceiling Plan Positive for GIAA 2 No new airline establishment Signed Positive for GIAA No. Banking Status Impact 1 BI to increase the maximum limit for electronic money Plan Improve Digital Finance Services (LDK) 2 One-year lock-up period for verifying DSIB (Domestic Systematically Important Banks) included in JPSK bill Plan Positive for big banks in terms of size and complexity 3 Regulation on banks taxable income provisions Plan Negative for industry 4 Lower KUR rates to 9% in 216 from 12.% in 215 and 21.% in 214 Plan Pressured banks NIM 5 Stricter regulation on bank deposit tax submission Plan Negative for banks that do not comply on tax submission 6 Lowering RWA for the government prioritized sectors (infrastructure, maritime, and agriculture) Plan Positive for BBRI 7 Setting minimum CAR for banks with large conglomeration Plan More prudent 8 Incentives for bank M&A, including tax reduction, leeway in RR, and easing newbranch establishment Plan Positive for small banks 9 BI cut the reserve requirement ratio (GWM) from 8% to 7.5% Signed Increase liquidity in banking industry 1 The relaxation of a single obligor NPL policy to provide room for banks in doing debt Signed restructuring on a project basis and its related cash flows on those debtors Helping BI to maintain NPL 11 Lowering tax rates for exporters profit TD by around 1% Signed Helping BI to maintain USD/IDR 12 Leeway on regulation regarding account opening for foreigners Signed Helping BI to maintain USD/IDR 13 Simplification for foreigners to open bank account in foreign currency Signed Helping BI to maintain USD/IDR 14 Lower the maximum limit os USD purchase through spot transactions from USD1,/month to USD 25,/month Signed Helping BI to maintain USD/IDR 15 Changing LDR to LFR terms with ceiling limit of 94%, if banks fulfill MSME regulation Signed and NPL below 5% More flexibility 16 Lower KUR rates to 12% in 215 with govt. interest subsidized of 7% Signed Spur loan growth 17 Loosening LTV program 22-7 sq m: 7-8%; >7 sq m: 6-8%; shophouses: 7-8%) Signed Positive for BBCA, BBNI, and BMRI 18 Subsidized mortgage rates will be decreased from 7.25% to 5.% Signed Spur loan growth especially BBTN No. Cement Status Impact 1 Price cut by IDR3, per 5kg bag Signed Negative for all cement players No. Coal Status Impact 1 China lifted 6% import tariffs on Australian coal Plan Positive for prices, negative for Indo coal volumes 2 All transactions must use L/Cs Plan Lower illegal mining; Positive for price 3 Presidential decree to reduce coal license approval for supporting 35GW projects Plan Positive for domestic coal suppliers 4 Europe decarbonisation Plan Negative for Industry 5 Export tax for coal Plan Negative for covered stocks 6 Limited approved export ports Plan Negative on higher transportation costs 7 China s coal ban on high sulfur and ash usage Signed Positive for Indonesia s coal mining 8 Requirement as registered exporters Signed Short-term negative on longer shipment time; Long-term positive in cutting illegal mining 9 Increased royalties on coal sales Delayed Negative impact on IUP holders 1 Gradual divestment post 5-year production with maximum ownership of 49% after 1 years Signed As the policy is not retroactive, there is likely no impact on stocks in our coverage No. Consumer Status Impact 1 Pharmaceutical sector to be opened to foreigners with Jokowi calling for lower px Plan Negative for KLBF, TSPC, SIDO and KAEF 2 Possible ban on sugar imports Plan Negative for MYOR 3 Possible higher VAT on tobacco Plan Negative for GGRM 4 TV and radio cigarette advertisement ban in Indonesia Plan Negative for GGRM 5 Tax on drinks with added sugar Plan Negative for ICBP, KLBF and SIDO 6 Blended 8% excise tax hike Signed Negative for GGRM 7 Pictorial health warnings on cigarette packaging Signed Negative for GGRM 8 Outdoor cigarette advertisement ban in Indonesia Signed Negative for GGRM 9 Tax on drinks with added sugar Plan Negative for ICBP, KLBF and SIDO No. Currency related Status Impact 1 Possible FX settlements to book USD on same day Signed Negative for IDR volatility 2 All local payments/transactions must utilize IDR Signed Negative for property rentals, AKRA, etc 3 25% hedge for net short-term foreign liabilities Signed Negative due to higher hedging costs 4 Lowering FX purchases without underlying limit to USD25, Plan Lowering possibility of currency speculation 5 Lower SBI holiday period to 1 week Signed Trigger capitalization 6 Lower tax rate to -1% for exporters Signed Improve IDR stability No. Health-care Status Impact 1 Private hospitals to accept BPJS patients Plan Negative due to lower expected margins No. Infrastructure Status Impact 1 Putting a time limit on project permit process Plan Positive for construction sector 2 IDR314tn infrastructure spend in 216 State Budget Signed Positive for construction sector No. Land transportation (taxi) Status Impact 1 Possible lower tariffs Plan Negative for BIRD 2 Removal of taxi quota limitation Plan Negative for BIRD and TAXI No. Media Status Impact 1 TV and radio cigarette ads banned in Indonesia Plan Negative for SCMA and MNCN on lower ad spend 2 1 broadcasting right owned by 1 person/entity Signed Negative for media companies No. Metal Status Impact 1 Increased royalty on mineral sales Plan Negative for all miners 2 Standardized tin content & packaging (non-ingots) Plan TINS: limited impact; reducing illegal mining 3 Limitation on tin production to 4k tons in 215 Plan Lower volumes for TINS, but higher prices 4 Export ban of ores in 214/Possible relaxation Signed/plan Negative for ANTM/Positive for ANTM 5 Foreign ownership divestment: Up to 51% for unintegrated miners; <51% for integrated miners; no Signed Negative for INCO divestment for smelters/refineries 6 Local trading and higher tin content for tin exports Signed Lower volumes for TINS, but higher prices 7 2% ore export tax Signed Negative for ANTM 8 Subsidized-fuel prohibition Signed Limited impact for covered stocks No. Oil & Gas Status Impact 1 Possible reduction on gas-selling price Plan Negative on PGAS 2 Permit simplification Plan Positive for ELSA 3 Reduction of oil & gas blocks up for bidding Plan Less exploration and lower production 4 Work contracts from production- to revenue-based Plan Negative for MEDC 5 Gas aggregator establishment Plan Positive impact for PGAS 6 Regulated margin Plan Limited impact for PGAS 7 Lower government take Plan Positive for MEDC 8 Open access for gas pipelines Signed Limited impact for PGAS for now No. Plantations Status Impact 1 Limit peat land plantation Plan Negative for all planters under coverage 2 B2 biodiesel mandatory program Plan Positive for all planters under coverage 3 CPO Supporting Fund: export levies Signed Neutral for all planters under coverage 4 B15 biodiesel mandatory program Signed Positive for all planters under coverage No. Poultry Status Impact 1 GPS (Grand Parent Stock) import quota Plan Positive for all poultry players covered 2 DOC price floor Plan Positive for all poultry players covered 3 Corn import restriction Plan Negative for all poultry players covered No. Property Status Impact 1 Leeway for foreigners to own luxury houses and apartments (including non-resident foreigners) Plan Positive, to benefit CTRP most 2 Revised tax thresholds for luxury properties, Lower PPh22 signed effective 3 May 215/higher PPNBM to >IDR2bn Signed including houses and apartments (non strata) and >IDR1bn (strata) effective 4 Dec 215 3 Relaxation of LTV regulation Signed Positive for all property developers 4 Mortgages based on % of completion for 2 nd homes Signed Negative for companies with high apartment exposure like APLN/CTRP 5 Licensing limitation on high-end apartments Signed Negative for the likes of APLN and LPKR 6 Moratorium on malls in Jakarta Signed Positive for PWON No. Retail Status Impact 1 One zone one minimarket Plan Most negative for MDRN and AMRT 2 Import duty increase for consumer goods Signed Most negative for ACES and MAPI 3 Imported goods must be less than 2% of inventory Signed Most negative for RANC 4 Maximum 15 privately-owned outlets the rest franchised Signed Most negative for MDRN and AMRT 5 Minimarkets not to sell category A alcoholic beverages Signed Most negative for MDRN and AMRT No Shipping Status Impact 1 Possible higher tax on revenues (current: 1.2%) Cancelled Positive for all shipping companies No SOE Status Impact 1 Government to increase ownership in SOEs Plan Negative for BBRI (57%), PGAS (57%), ADHI (51%), PTPP (51%), SMGR (51%) and TLKM (53%) No. Telco Status Impact 1 Additional 2% luxury goods tax for mobile phones Plan Negative for ERAA and TELE 2 Obligation to build local factory for cellular makers Signed Negative for ERAA and TELE No. Toll roads Status Impact 1 1% VAT hike on toll roads for private vehicles Plan Negative for JSMR 2 25-35% toll-road tariff dicounts around Lebaran Signed Negative for JSMR Source: Bahana 87
216 Compendium Market valuation: More reasonable - POSITIVE With the JCI having been the worst performing market in the region in dollar terms, we have raised our rating from neutral to POSITIVE. The JCI s valuation is currently at a 216F P/E of 16.1x, no longer the highest in the region. However, excluding UNVR s & HMSP s high multiples and market capitalization, our 216F market P/E would further fall to 14.x, below the regional average. We expect 216F EPS growth to reach 14.3% y-y, slightly above the regional average, as well as the Bloomberg consensus of 13.8% y-y growth. This is most likely due to consensus not having downgraded 215 earnings. On the other hand, we look for a 216 PEG of 1.x, which is also no longer the highest in the region. Excluding UNVR & HMSP, our 216F PEG would further decrease to.9x. Regional P/E comparison, 216F (x) 22 2 18 16 14 12 1 8 6 4 2 19.5 18.7 16.5 16.3 16.1 India Philippines Malaysia South Korea 14.9 14.8 14. Average**: 15.7x 12.6 12. Indonesia China Thailand Indonesia* Singapore Hong Kong Source: Bloomberg as of 3 December 215, Bahana *excluding UNVR and HMSP **excluding Indonesia* Regional EPS growth comparison, 216F (%) 34.9 35 32.5 3 25 Regional PEG comparison, 216F (x) 1. 5.6 5. 1.7 1.6 1.6 1.4 1..9.5.5. 2 15 1 5 14.3 11.9 9.9 9.2 7.6 Average: 13.7% 3.5 (5.) (1.) (15.) Average**: (1.1x) (.6) (5) South Korea Thailand Indonesia Philippines Malaysia Singapore Hong Kong India China Source: Bloomberg as of 3 December 215, Bahana (2.) (25.) India Malaysia Hong Kong Philippines Singapore Indonesia Indonesia* South Korea Thailand Source: Bloomberg as of 3 December 215, Bahana *excluding UNVR and HMSP **excluding Indonesia* (24.) China 88
216 Compendium Sector and stocks: A mixed bag Looking ahead to 216, our index target is 5,1, in line with our y-y EPS growth of around 14% in 216 (215 index target: 4,5). At this stage, we believe it is too early to move entirely into higher beta stocks given the lack of earnings visibility, particularly in 1H16. Hence, out of our top-1 picks, six are mass-market counters in staples and telcos that can provide stability amid the current market uncertainty. However, as we expect some economic improvements ahead due to possible lower BI rates, we have four stocks that would benefit from this rate cut outlook: BBNI, WSKT, DMAS and ADHI. On the flip side, we dislike auto-based related plays: ASII and BIRD on intense competition. As we are UNDERWEIGHT property on the government s aggressive taxation drive, APLN is one of our top stocks to avoid on a lack of projects, and high reclamation and interest costs. On competition and oversupply, we also dislike the cement sector with INTP as our top sell. Finally, HERO rounds up our top 5 sells. Sectoral rating summary, 216F Rating OW N UW Bahana Operating growth (%) Net profit growth (%) P/E (x) Cons. Bahana Cons. Bahana Cons. Automotive 6.5 1.9 1.9 15.5 14.8 13.4 Banks 1.5 14.9 1.4 13.9 11.1 1.9 Cement 2.8 1. 4.7 7.8 16.3 14.2 Coal mining (8.1) (8.4) (7.4) (9.6) 7.9 8.6 Const. & infra. 27.3 26.5 25. 3.1 2.3 18. Consumer 9.5 11.8 15.5 14. 28.8 28. Industrial estates 13.9 8.8 13.7 3.6 6.3 6.8 Metal mining 56.3 27.3 124.9 46.1 2.6 17.9 Oil and gas 16.6 14.2 22.4 12.2 12.2 11.6 Plantations 37.7 23.5 8.3 37.8 14.6 13.3 Poultry 32.1 34.8 84.5 52.3 18.3 2.8 Property 1.5 11.4 14.6 15.4 12.5 11.4 Shipping 53.9 48.1 38.8 29.4 5.4 4.8 Telcos 14.1 14.3 32. 21.1 19.8 18.7 Transportation 11.2 24.1 6.3 29.3 18.1 13.1 Source: Bloomberg as of 3 December 215, Bahana estimates Favored stocks (1 Stocks), stocks to avoid (5 stocks), 216F Stock Mkt cap. Price TP Upside EPS growth P/E P/BV Yield ROAE (USDm) (IDR) (IDR) (%) (%) (x) (x) (%) (%) (%) YTD perf. HMSP 32,84 97,6 115, 18 6.4 4.8 13.3 2.5 32.6 43.2 TLKM 22,1 3,35 3,75 24 12.6 17.2 3.7 3.8 22.6 6.5 UNVR 2,256 36,75 46, 25 12.4 42.4 49.5 2.2 125.1 13.8 GGRM 7,169 51,575 65, 26 9.3 16.7 2.5 2.5 15.4 (15.) BBNI 6,722 4,99 5,7 14 31.7 8.4 1.3 2.4 16.4 (18.2) ICBP 5,339 12,675 16,8 33 15. 2.9 4.2 2.1 21.2 (3.2) ISAT 2,12 5,4 6,8 26 na 22. 2.1 1.4 1. 33.3 WSKT 1,637 1,67 1,975 18 17.3 2. 2.3 1. 12.1 16.5 DMAS 77 23 29 43 12.2 5.7 1.1 5.2 21.2 1.* ADHI 568 2,21 2,55 15 (17.4) 14.7 1.5 1.4 1.6 (25.2) ASII 18,424 6,3 5,55 (12) 4.9 14.5 2.2 3.1 16.2 (16.8) INTP 5,299 19,925 16,4 (18).3 16.8 3. 5.3 17.9 (2.1) BIRD 1,26 6,675 4,7 (3) 3.6 19.2 3.7 2.1 2.2 (27.6) APLN 449 33 22 (27) 6.7 9.6.8 2.1 9.2 (9.) HERO 332 1,1 65 (41) na 8.1.8. 1. (4.6) Source: Bloomberg as of 3 December 215, Bahana estimates Market data *Since IPO 14A 15F 16F Operating profit growth (%) 6.1 (1.3) 11.8 Operating profit growth (%) - consensus 6.1 1.5 13.8 Net profit growth (%) 4.2 (4.9) 15.5 Net profit growth (%) consensus 4.2 (3.3) 14.9 P/E (x) 17.6 18.5 16.1 P/E (x) - consensus 17.6 17.8 15.5 EPS growth (%) (4.6) (7.5) 14.3 EPS growth (%) - consensus (4.6) (3.7) 13.8 PEG (x) 5.5 (3.8) 1. EV/EBITDA (x) 13.2 12.7 11.7 P/BV (x) 14.4 8.7 7.6 P/BV (x) exc. UNVR & LPPF 3.6 3.2 2.9 Div. yield (%) 2.4 2.2 2.4 Net gearing (%) 21.3 22.8 19.7 ROAE (%) 35. 31.2 28.6 ROAA (%) 14.4 12.1 11.8 ROIC (%) 31.5 23.2 22. Source: Bloomberg as of 3 December 215, Bahana estimates 89
216 Compendium 216 technical perspective: A year of recovery Going into 216, we see the JCI will perform a second correction with 216 support at the 4,345 level and then 4,, before rallying and testing its 216 initial resistance level at 5,1, before finally proceeding to test its second resistance level of 5,6. Note that we see similar patterns as in 213 and 215 with the JCI having started the year with a rally for almost 4 months before it began to crumble, reaching its lowest level in September 215. This fall marked around a 27% drop from the high, similar to that in 213 (down 27% from its highest level). On the currency front, we see the 216 movements will be at around a fibonacci retracement of 5% (IDR13, level) and 76.4% (IDR13,9), before testing its 216 resistance level in a fibonacci retracement of 1% (IDR14,736). JCI historical chart 28: US Crisis 211: EU Quantitative Easing 215: Fed Rate Hike? 213: US Tapering JCI 215 chart Local currency 215 chart Source: Bloomberg, Bahana estimates Source: Bloomberg, Bahana estimates 9
216 Compendium SECTOR 91
216 Compendium AUTOMOTIVE UNDERWEIGHT We expect an unexciting 216 performance by the auto sector with sales volumes of 1.2m units, flat y-y, for 4W and 6.4m units, also flat y-y, for 2W. Despite our expectation of higher commercial vehicle demand on higher government spending, we expect the multiplier effect on passenger-vehicle demand to occur only in 2H16. Our UNDERWEIGHT stance on the sector is backed by margin pressures stemming from intense competition with new product launches and persistently large discounting. Additionally, we expect the proportion of cheaper car sales to increase, translating to lower ASPs. On stocks, we reiterate our REDUCE calls on ASII due to a muted market share and margins, and IMAS as we expect a depressed market share and weak margins on dealer expansion. On the flip side, GJTL is a BUY on its attractive valuation and earnings recovery. Risks: Higher margins (ASII); higher sales (IMAS); and weaker IDR (GJTL). Relative performance YTD to JCI Relative valuations Code Rating CP TP Market cap ------------------------------216F----------------------------- EBIT margin NP growth P/E EV/ EBITDA Yield ROAE Net gearing (IDR) (IDR) (USDmn) (%) (%) (x) (x) (%) (%) (%) ASII REDUCE 6,3 5,55 18,424 9.6 4.9 14.5 11.6 3.1 16.2 44.1 IMAS REDUCE 2,25 2, 449.8 na 49.2 33.3.5 2.3 297.2 GJTL BUY 53 86 134 7.4 na 29.8 4.7.8 1.3 129.3 Sector 19,7 9.4 1.9 14.8 12. 3. 15.7 5.6 Source: Bloomberg, Bahana estimates note: based on 3 December 215 closing price Domestic 2W and 4W ownership per 1, population, 213-17F (%) (%) (per 1, population) (per 1, population) 3 5 (2.) (3.) (1) (1) 275 45 (2) (2) 4 25 (3) (4) (3.6) (3) (4) 225 35 3 (5) (49.6) (5) 2 213A 214A 215F 216F 217F 25 (6) ASII Sector IMAS GJTL (6) Total 2W Total 4W (RHS) Source: Bloomberg Leonardo Henry Gavaza, CFA (leonardo@bahana.co.id) +6221 25581 ext. 368 Source: Gaikindo, AISI, Bahana 92
216 Compendium AUTOMOTIVE 4W sales volumes, 213-17F (' Units) 2W sales volumes, 213-17F (' Units) 1,3 1,2 1,1 1, 1,23 1,28 1,21 1,21 1,72 8,6 7,6 6,6 5,6 7,744 7,867 6,412 6,412 6,572 4,6 9 3,6 8 2,6 7 1,6 6 6 213 214 215F 216F 217F 213 214 215F 216F 217F Source: Gaikindo, Bahana estimates Source: AISI, Bahana estimates Top 1 passengers sales, 212-1M15 Domestic market share (4W and 2W), 1M15 1M15 1 214 1 213 1 212 Type Units Type Units Type Units Type Units Avanza 113,288 Avanza 162,7 Avanza 213,458 Xenia 73,418 Nissan (IMAS) 4W Others (Non-ASII) 8% Others 4% 2W Agya 45,58 Mobilio 79,288 Xenia 64,611 Innova 71,685 3% Toyota (ASII) Mobilio 37,279 Agya 67,74 Innova 64,539 Livina 34,129 Innova 34,755 Innova 56,157 Ertiga 63,317 Ertiga 34,74 Suzuki (IMAS) 12% 32% Yamaha 28% Xenia 31,262 Ertiga 47,15 G. Livina 35,422 Rush 34,33 Ayla 28,783 Xenia 46,71 Rush 35,4 Yaris 27,89 Ertiga 26,6 Ayla 4,775 Jazz 27,83 Terios 23,949 Mitsubishi Brio Satya 24,917 Rush 29,69 Terios 25,764 Jazz 21,244 11% HR-V 24,732 Brio Satya 26,683 Agya 22,376 Freed 19,811 Rush 21,254 Jazz 22,329 CR-V 2,385 Avanza 12,146 Total 387,388 Total 577,71 Total 572,679 Total 352,298 Honda 16% Daihatsu (ASII) 16% Honda (ASII) 68% Grandtotal 853,8 Grandtotal 1,28,19 Grandtotal 1,229,917 Grandtotal 1,116,23 Others (ASII) 2% Percentage 45.4% Percentage 47.8% Percentage 46.6% Percentage 31.6% Source: Gaikindo ggrgrgrgrgrgrgrg Source: Gaikindo, AISI 93
216 Compendium BANKS NEUTRAL With expected gradual improvement in 216F GDP growth, we foresee an enhanced earnings outlook for the Indonesian banking sector with sectoral loan growth picking up to 12.1% (215F: 1.6%; 214: 11.8%) and provisioning coming off on recovering loan quality. Nevertheless, we still expect industry NPLs to only peak in 1Q-2Q16F at around 3.3-3.4% (current: 3.%), before gradually leveling thereafter. On a more negative note, we think a deterioration in employment and consumer spending power requires sound government policies in order to accelerate loan growth ahead. However, looser fiscal and monetary policies should provide banks with flexibility to boost their performance. With possible higher near-term provisions we maintain our NEUTRAL sector call with BBNI, BBRI and BBTN as our top sector picks, followed by BBCA, BMRI and BJBR. Upside risk: higher GDP growth; downside risk: weaker IDR. Relative performance YTD to JCI Relative valuations Code Rating CP TP Mkt Cap Loans ---------------------------- 216F ---------------------- Gross NPL Net Profit ROAE NP Growth P/E P/BV Dv. Yield (IDR) (IDR) (USDmn) (IDRtn) (%) (IDRbn) (%) (%) (x) (x) (%) BBCA BUY 13,3 14,7 23,688 425 1.2 19,883 2.3 9.4 16.5 3.1 1.3 BBRI BUY 11,275 13, 2,93 619 2.7 26,815 21.2 9.8 1.4 2. 1.9 BMRI BUY 8,8 9,7 14,833 652 3.3 2,33 16.3 1.6 1.1 1.5 2. BBNI BUY 4,99 5,7 6,722 358 2.8 11,22 16.4 31.7 8.4 1.3 2.4 BDMN BUY 3,5 3,4 2,81 159 2.7 2,998 8.4 14.8 9.6.8 2.9 BTPN REDUCE 2,5 2,35 1,55 64 1. 1,987 13.7 9. 7.3 1. 2. BBTN BUY 1,285 1,52 982 162 3.5 2,84 14.3 25.3 6.5.9 2.7 BJBR BUY 735 85 515 68 3.5 1,368 17.3 11.5 5.2.9 9.6 BJTM REDUCE 443 42 477 33 3.8 1,23 15.6 8.6 6.5 1. 8.9 BBKP HOLD 695 73 456 72 3.1 1,194 14.8 11.9 5.3.7 3.8 Sector 7,92 2,611 2.7 88,74 18.7 1.4 11.1 2.1 1.9 Source: Bloomberg, Bahana estimates note: based on 3 December 215 closing price Key ratios, 29-9M15 (%) 25 2 15 1 5 (5) (1) (15) (2) (25) (3) 19.8 14.5 13.9 1. 9.5 6.1 5.9 5.9 (5.) (5.1) Source: Bloomberg Teguh Hartanto (teguh.hartanto@bahana.co.id) +6221 25 581 ext. 361 (2.4) (23.5) BBTN BBCA BJBR BBRI BJTM SECTOR BBKP JAKFIN BBNI BMRI BDMN BTPN (%) 25 2 15 1 5 (5) (1) (15) (2) (25) 29 21 211 212 213 214 9M15 Loan growth (% y-y) 8.7 22.1 24.1 22.6 21.5 11.4 11. Productive loan growth (% y-y) 7.2 25.3 23. 2.7 26.5 11.6 11.5 Consumer loan growth (% y-y) 19. 22.9 24.2 19.8 13.7 11.5 1.1 Mortgage growth (% y-y) 14.5 2. 32.9 22.5 16.2 12.6 7.7 Loan to GDP (%) 26.2 28. 3. 33.2 36.6 35.1 35.2 Loan to earnings assets (%) 64.4 65.2 65.9 69.4 72.9 72.1 7. Gross NPL (%) 3.8 2.9 2.6 2.2 1.9 2.4 2.9 NPL coverage (%) 138.7 147.7 111.3 17.9 115.2 93.9 92.6 Deposit growth (% y-y) 12.5 18.5 19.1 15.8 13.6 12.3 11.7 CASA ratio (%) 54.3 54.3 55.7 57.2 56.2 52.8 53.3 LDR (%) 74.5 76.8 8.1 84.7 9.6 89.9 89.2 CAR (%) 17.4 17.2 16.1 17.4 18.1 19.6 2.6 NIM (%) 5.6 5.7 5.9 5.5 4.9 4.2 5.3 ROAA (%) 2.6 2.3 2.4 2.3 2.3 2.1 1.8 ROAE (%) 19.2 19.8 2. 2.6 19.7 17.6 14.9 CIR (%) 121.7 86.2 81.8 77.8 78. 79.9 84.7 Source: Central Bank of Indonesia 94
.7.7.8.8 1.9 2.2 2.2 2.8 2.2 2.8 2.4 3. 3.3 3.1 2.9 3.5 4.1 4.2 4.9 4.5 1.3 1.9 2. 1.9 5.4 4.6 3.6 2.9 1.9 3.6 2.5 2. 5.9 5. 5.2 4.3 6.3 5.9 12.9 13.4 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 9. 9.5 9.9 9.6 91.4 91.4 92.1 91.7 91.1 91.1 93. 91.4 89.8 89.3 89.3 89.9 89.1 88.9 88.2 88.6 89.3 89.1 89.1 89.4 89.2 1.3 1.2 11.4 11.3 12. 11.1 1.2 9.5 12.2 12.4 11.6 12. 12.4 11.6 12.1 1.8 11. 14.7 13.8 13.6 13.6 13.3 13.9 13.8 15.6 13.9 13. 12.5 11.7 11.7 12.3 12.5 12.7 14.2 14.2 13.2 14.3 15.6 15.2 16. 17.8 17.1 2.1 19.4 18.9 22.1 22. 21.5 21.1 23. 216 Compendium BANKS Macroprudential and monetary policies Macroprudential and Fiscal Policy Dec-15 BI to increase the maximum limit for electronic Plan (BI) money (%) Nov-15 BI cut the reserve requirement ratio(gwm) Signed from 8% to 7.5% (BI) 8.5 The relaxation of a single obligor NPL policy to Oct-15 provide room for banks in doing debt Signed 8. restrcturing by project basis and its related (OJK) cash clows on those debtors 7.5 Sep-15 Lowering interet income on TD tax rates up to Signed 1% for 1M USD TD & 7.5% for 1M IDR TD for (Govt.) exporters 7. Sep-15 Sep-15 Aug-15 Aug-15 Jul-15 One year lock period for new lenders considered domestic systemically important banks (DSIB) under the upcoming Financial System Safety Net (JPSK) Simplification for foreigners to open bank account in foreign currency Lower the maximum limit of USD purchase without underlying to reasons USD25,/month from USD1,/month Increasing the limit of non-underlying forex/idr forward transaction from USD1mn to USD5mn Lowering RWA for several type of loans (e.g., mortgage from 45% to 35%) Plan (OJK) Signed (OJK) Signed (BI) Signed (BI) Signed (OJK) Assessing asset quality by focusing on debtor s ability to pay for 2 years while Signed Jul-15 ignoring the industry's and financial outlook for (OJK) the respective debtors Lower KUR lenting rates to 9% in 216 from Plan Jun-15 12.% in 215 (Govt) Changes LDR to LFR terms with ceiling limit Signed Jun-15 of 92%, if banks fulfill MSME regulation and (BI) NPL below 5% Source: Government, Central Bank of Indonesia, OJK Asset quality breakdown, Sep 214 & Sep 215 (%) 12 1 8 6 4 2 6.5 6. 5.5 5. 4.5 4. 3.5 6. 4.9 7.9 7.25 BI rate Monetary Policy 7.75 6.2 Inflation BBCA BBRI BMRI BBNI BDMN BTPN BBTN BJBR BJTM BBKP BBCA BBRI BMRI BBNI BDMN BTPN BBTN BJBR BJTM BBKP Gross NPL, Sep-14 Source: Companies and Bahana Gross NPL, Sep-15 Special mention, Sep-14 (RHS) 7. 7.5 7.5 6.4 (%) 15 1 5 (5) (1) (15) (2) 6.8 Special mention, Sep-15 (RHS) LDR, deposit and loan growth, Sept 213 - Sept 215 (%) 27 24 2 17 14 1 7 3 LDR (RHS) Loan growth (y-y) Deposit growth (y-y) Source: Central Bank of Indonesia, CEIC Deposit breakdown and cost of funding by bank, 9M15 (%) 14 8.4 7.1 7.1 5.8 5.8 3.2 3.7 3.9 4.5 5. 12 2.4 1 24 32 8 38 4 46 49 5 55 53 69 6 86 4 76 68 62 6 54 51 5 45 47 2 31 14 BBCA BBNI BMRI BJTM BBRI Industry BJBR BBTN BDMN BBKP BTPN CASA Time deposit Blended cost of funding (RHS) Source: Companies and Bahana (%) 2 18 16 14 12 1 8 6 4 2 (%) 1 5 (5) (1) (15) (2) 95
216 Compendium CEMENT UNDERWEIGHT Following 215 s expected flat y-y growth in local cement volumes, we expect some recovery in 216 demand, helped by increasing bulk cement used mainly for infrastructure-related projects. Although this development should provide a positive multiplier effect for cement consumption, the property market slowdown may take time to revive. On the cost front, margin pressure appears likely due to ongoing changes in product mix leaning towards lower-margin bulk cement. In addition, we expect cement producers to face difficulties in raising exfactory prices on stiff competition from new players with estimated aggregate capacity of 12.8mt, 12.7% of total domestic capacity. With total capacity (old and new players) likely up 2% in 216F, we retain our UNDERWEIGHT call on the sector, and expect market under-performance to persist. Stock-wise, SMGR and SMBR have a HOLD rating. Risk to our call is stronger-than-expected GDP growth. Relative valuations Code Rating CP TP Mkt Cap EV/ ton ---------------------------- 216F ---------------------- EV/ EBITDA EBITDA margin Net Profit ROAE NP Growth P/E Div. Yield (IDR) (IDR) (USDmn) (USD) (x) (%) (IDRbn) (%) (%) (x) (%) SMGR HOLD 11,75 1,6 4,745 121 9.4 26.6 4,53 16.6 3.5 14.6 2.1 INTP REDUCE 19,925 16,4 5,299 193 11.3 32.8 4,353 17.9.3 16.8 5.3 SMCB REDUCE 1,75 925 595 87 9.7 14.2 89 1.1 na 92.7.8 SMBR HOLD 39 3 22 98 6.1 28.6 3 9.7 (17.5) 1.1 2.5 Sector 1,859 154 1.3 29. 9,245 16.2 4.7 16.3 3.6 Source: Bloomberg, Bahana estimates note: based on 3 December 215 closing price Relative performance to JCI YTD (%) (5) (1) (15) (2) (25) (3) (35) (5.7) (7.1) (18.9) (18.4) (4) (37.6) (4) SMBR INTP SECTOR SMGR SMCB Source: Bloomberg Teguh Hartanto (teguh.hartanto@bahana.co.id) +6221 25 581 ext. 361 Bob Setiadi (bob.setiadi@bahana.co.id) +6221 25581 ext.365 (%) (5) (1) (15) (2) (25) (3) (35) Domestic volume and capacity (212-217F) (mn tons) 12 92. 83.6 82.3 1.2 15.1 1 71.5 83.8 62.1 62. 8 72.8 69.4 59.8 55. 58. 59.9 59.9 6 62.2 65.2 4 2 212 213 214 215F 216F 217F Capacity (include Thang Long) Domestic demand Utilization rate Source: ASI, Bahana estimates (%) 1 9 8 7 6 5 4 3 2 1 96
216 Compendium CEMENT Cement volume breakdown by region, 21-1M15 (%) Domestic market share by company, 21-1M15 1 9 8 8. 7.4 8. 7.7 7.7 8. 7.5 7.3 7.5 7.4 7.6 7.7 7. 7. 7.4 7.6 7.6 6.8 1M15 214 42.8 43.7 28.1 3.4 14.3 2.6 5.2 7.1 14.6 2.1 5.8 3.5 7 6 23.8 23. 21.8 21. 2.9 21.3 213 43.9 3.4 14.5 2.2 5.4 3.7 5 4 212 4.9 32. 15.6 2.2 5.6 3.7 3 2 53.8 55.2 55.3 56.4 56.3 56.2 211 4.8 31.5 15.5 2.6 5.8 3.7 1 21 43.3 3.9 13.6 2.8 5.5 3.9 21 211 212 213 214 1M15 Java Sumatra Kalimantan Sulawesi Others (Nusa Tenggara and East Indonesia) Source: Indonesian Cement Association (%) 1 2 3 4 5 6 7 8 9 1 SMGR INTP SMCB SMBR Bosowa Other Source: Indonesian Cement Association Cement capacity by company, 212-217F Capacity (in k tons) Companies 212 213 214 215F 216F 217F Semen Indonesia (SMGR) 25,3 3,9 31,8 33,3 4,3 41,7 Semen Gresik 12,4 14,7 14,7 14,7 17,7 19,1 Semen Padang 5,9 6,4 7,3 7,3 1,8 1,8 Semen Tonasa 7, 7,5 7,5 9, 9,5 9,5 Others (Thang Long) - 2,3 2,3 2,3 2,3 2,3 Indocement (INTP) 18,6 18,6 2,5 2,5 24,9 24,9 Holcim (SMCB) 8,7 1,4 1,4 12,1 12,1 12,1 Semen Baturaja (SMBR) 1,25 2, 2, 2, 2, 3,85 Others 5,9 7,5 8,1 15,9 2,85 22,55 Semen Andalas 1,6 1,6 1,6 1,6 1,6 1,6 Semen Bosowa 3,8 5,4 6, 6, 6, 6, Semen Kupang 5 5 5 5 5 5 Siam Cement - - - 1,8 1,8 1,8 Merah Putih - - - 2,5 4, 4, Panasia - - - - 1,8 1,8 Anhui - - - 1,7 1,7 3,4 Jui Shin - - - 1,5 1,5 1,5 Ultratech - - - - 1,65 1,65 Puger - - - 3 3 3 Total production capacity 59,75 69,4 72,8 83,8 1,15 15,1 Source: Companies, Bahana Domestic competitive landscape, since 215 Source: Semen Indonesia 97
216 Compendium COAL UNDERWEIGHT At this stage, we reaffirm our negative view on the coal sector due to the shale-gas boom and green-energy policy undermining demand for coal. Additionally, with China s slowdown, its coal imports have dropped 3% y-y to 17.4bn mt as it is now purchasing local coal. Going into 216, we estimate the coal price to average USD55/mt, slightly lower than our 215 assumption of USD58/mt (YTD 215 average: USD58/mt). We expect coal to be driven by local demand, with about 2GW of 35GW projects being coal-fired power plants. Margin support could come from ESDM s policy to raise the coal reference price by 1.8% and to set up to a 25% gross margin for mine-mouth power plant projects. In terms of stocks, we prefer companies with large local coal portions: PTBA (52%) and ADRO (21%). Risks to our call on the sector are faster construction of power plant projects and higher coal prices. Relative valuations -------------------------216F-------------------------- Mkt EV/ EV/ EBIT Div. CP TP Cap reserv. EBITDA margin P/E P/B yield Code Rating (IDR) (IDR) (USDm) (USD) (X) (%) (X) (X) (%) UNTR HOLD 16,1 16, 4,352 na 3.6 16.5 9.4 1.3 4.3 ADRO BUY 535 7 1,237 3.9 2.3 13.6 5.8.4 5.2 PTBA BUY 5,2 7,8 887.4 3.6 17.5 5.5 1.2 1. ITMG REDUCE 6,58 5,2 544.8.8 9.9 7.5.6 1.6 HRUM REDUCE 71 5 139.4 na.8 Na.5 na Sector exc. UNTR 2,87.9 13.5 3.7.3 3.3 Sector 6,615 3.1 15.4 7.9 1.1 5.6 note: based on 3 December 215 closing price Relative performance YTD to JCI (%) UNTR Sector ADRO ITMG PTBA 1 6. (1) (12.8) (2) (3) Indonesia s local coal vol. and electricity vol., 1Q14-4Q15 (mn mt) 4 35 37 3 25 5.8 51.8 51.4 28 5.2 2 49.2 21 46.8 18 18 48. 15 15 1 5 6 (TWh) 56 54.9 54 52 25 5 48 46 44 (4) (5) (35.4) (43.9) (43.6) Source: Bloomberg Arandi Ariantara (arandi@bahana.co.id) +6221 25 581 ext. 3619 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 Domestic coal volumes (LHS) Electricity sales volume (RHS) Source: Ministry of Energy and Mineral Resources (ESDM) 42 98
216 Compendium COAL Indonesia s coal production, 22-16F (mn mt) 45 4 35 3 25 2 15 1 5 13 114 132 153 194 29 39 36 41 49 217 24 256 61 53 56 275 67 353 386 421 435 8 82 72 76 399 4 92 97 22 23 24 25 26 27 28 29 21 211 212 213 214 215E 216F Source: Bloomberg Production volumes Domestic coal volumes Indonesia s energy mix forecast, 215-24F 1% 4.2 4. 4.2 4.2 4.2 5.4 6.2 6.6 6.6 5.7 5.2 9. 4.9 4.7 5. 9% 4.8 4.9 5.6 6. 6.5 8% 7% 53.5 6% 57.1 6.7 59.3 62.9 65.9 67. 67.2 67.1 5% 65.6 4% 3% 24.8 2% 24. 24.5 28.5 25.8 21.8 1% 2.1 18.8 18.6 17.2 11.4 9.3 5.3 % 2.7 1.8 1.6 1.5 1.4 1.4 1.4 215F 216F 217F 218F 219F 22F 221F 222F 223F 224F Oil Gas Coal Hydro Geothermal Others Source: State-owned Electricity Company (PLN) China s coal imports vs electricity output, Jan 214 Oct 215 (mn mt) (bn kwh) 37. 32. 27. 22. 17. 12. 35.9 22.8 25.3 27.1 24. 25.1 23. 18.9 21.2 2.1 21. 27.2 China's thermal power plants shift into domestic coal 16.8 15.3 1M15 coal imports: 17.4mn mt, fell 3% y-y 17. 2. 14.2 16.6 21.3 17.5 17.8 14. 41 39 37 35 33 31 29 China s port inventory level, 211-11M15 (' mt) 27, 25, 23, 21, 19, 17, Avg: 22.8mn mt November 215: 19.7mn mt China coal imports (LHS) China electricity (RHS) Source: Bloomberg, Bahana Source: Bloomberg, Bahana 99
216 Compendium CONSTRUCTION & TOLL ROAD NEUTRAL Entering the second full-year of the Jokowi administration, we expect project acceleration on an improved state budget disbursement rate and high total order books to result in solid growth for construction companies 216F top lines. However, main challenges would stem from cash-flow management and securing suitable financing, particularly due to increased investments and project sizes. On toll roads, we see faster development prospects on improved landclearing process, propelling the government s plan to build 1,km in toll roads by 219. In addition, the government has also offered viability gap funding to attract investment in unfavorable toll sections. On added investment risks in high capital-intensive projects, we retain our NEUTRAL stance. Our top picks are WSKT (solid earnings visibility) and ADHI (most attractive valuation). Upside risk: lower interest rates; downside risk: reduced state spending on tax receipt shortfall. Relative valuations ---------------------------216F--------------------------- CP TP Mkt EV/ EBIT NP P/E P/BV Div. Cap EBITDA margin growth yield Code Rating (IDR) (IDR) (USDm) (x) (%) (%) (x) (x) (%) JSMR BUY 4,79 6,25 2,353 11.1 38.5 13.1 22.5 2.8 1.3 WSKT BUY 1,67 1,975 1,637 13.3 9.3 17.3 2. 2.3 1. PTPP BUY 3,77 4,3 1,319 8.5 11.2 3.3 19.9 4.7 1.5 WIKA BUY 2,85 3,1 1,246 9.7 11.5 4.6 21.9 3.3 1.4 WTON HOLD 895 965 563 14.9 12.1 45. 24.7 3.2 1.2 ADHI BUY 2,21 2,55 568 8.5 7.9 (17.4) 14.7 1.5 1.4 TOTL BUY 64 94 158 5.7 1.2 16.7 9.5 2.2 5.4 Sector 7,845 1.9 18.8 25. 2.3 3. 1.4 Sector (construction only) 4,928 1.3 1.2 2.2 19.2 3.1 1.4 Source: Bloomberg, Bahana estimates note: based on 3 December 215 closing price Relative performance to JCI YTD (%) 4 2 (2) (4) 28.5 17.9.7 (11.8) (12.1) (17.7) (19.7) (29.8) WSKT PTPP SECTOR WIKA ADHI JSMR WTON TOTL Source: Bloomberg Bob Setiadi (bob.setiadi@bahana.co.id) +6221 25581 ext.365 (%) 4 2 (2) (4) Indonesia s infrastructure targets, 215-19 Details End 214 Target 219 Details End 214 Target 219 Connectivity Basic Infrastructure National road-worthiness rate 94% 99% Electrification rate 81.5% 1.% National road length 38,57 km 46,77km Electricity consumption per capita 843 kwh 12 kwh New road construction (in 5-yrs) 1,28km 2,65km Household gas network 12, (SR) 192, (SR) New toll-road construction (in 5-yrs) 26km 1,km Drink water access 7.% 1% Railways length 5,434km 8,692km Home ownership backlog 13.5 mn 6.8 mn Seaports development 278 45 Water supply Dwelling time in ports 6-7 days 3-4 days Basic water capacity 51.4 m3/sec 118.6 m3/sec Number of airports 237 252 Storage per capita 62.3 m3 78.36 m3 Number of crossing docks 21 27 Dam construction (5-yrs) 21 dams 49 dams Logistic costs 23.5% 19.2% Irigation from dam 11% 2% Public transport rate 23% 32% Surface irigation network 7.145 mn ha 7.914 mn ha Source: National Planning Agency 1
216 Compendium CONSTRUCTION, TOLL ROAD & INFRA RELATED Construction sector sales breakdown & gross margin, 21-216F 8, 7, 6, 5, 4, 3, 2, 1, (IDRbn) 11.2 11.2 2,7 2,793 Source: Companies, Bahana 2,589 26,923 11.6 3,631 32,548 12.1 13.2 5,187 7,7 4,127 38,867 13.5 13.4 8,178 47,142 9,57 63,337 21 211 212 213 214 215F 216F Construction Non-construction Gross margin Mid-term infrastructure investment plan (RPJMN), 215-19 Sector State budget Local budget SOE Private Total Electricity 1. - 445. 435. 98. Sea transportation 498. - 238.2 163.8 9. Road 34. 2. 65. 2. 85. Housing 384. 44. 12.5 87. 527.5 Energy (oil & gas) 3.6-151.5 351.5 56.6 Clean water and waste system 227. 198. 44. 3. 499. Water resources 275.5 68. 7. 5. 4.5 Railroad 15. - 11. 122. 283. Information technology 12.5 15.3 27. 223. 277.8 Air transportation 85. 5. 5. 25. 165. City transportation 9. 15. 5. 5. 115. Land transportation 5. - 1. - 6. Total 2,215.6 545.3 1,66.2 1,692.3 5,519.4 Percentage 4.1% 9.9% 19.3% 3.7% 1.% Source: National Planning Agency; Note: 215 state budget infrastructure spending is expected to only reach c. IDR23tn with budgeted amount of just IDR313tn in 216 (%) 14. 12. 1. 8. 6. 4. 2. - New contracts vs construction GDP/total GDP, 21-16F (IDRbn) 14, 12, 1, 8, 6, 4, (%) 1.2 1. 1. 9.9 1. 9.7 3, 9.8 9.6 9.6 3,3 26,51 9.6 13,297 9.4 9.4 3,57 26,23 28,792 9,71 1,956 9.2 2,421 9,455 8,748 2,24 2,195 9. 24,852 9,846 19,583 15,57 3,865 1,578 12,33 17,632 8.8 6,894 17,125 17,7 2, 8,522 13,568 3,589 1,215 22,625 23,791 8.6-6,515 9,769 12,264 13,318 8.4 21 211 212 213 214 215F 216F WSKT WIKA PTPP ADHI TOTL Construction GDP/total GDP Source: Companies, Bahana Current and planned toll road projects, 215-19 Source: The Ministry of Public Works and Public Housing, Bahana 11
216 Compendium CONSUMER DISCRETIONARY - RETAIL NEUTRAL Despite low inflation and a possible rate cut in the near term, we retain our NEUTRAL view on the sector due to lingering external risks threatening a discretionary spending recovery. However, we see mixed preferences on different industry players based on their products and target markets as well as effects of various policy risks. At this stage, more earnings visibility remains with retailers selling defensive products (eg, F&B and tobacco) to mid-up target markets, (ie, LPPF, MAPI, MPPA, ACES). That said, we still see weakness in retailers dealing with big-ticket items/electronics (ECII), low-end target markets (RALS) and inefficient multi-format players (HERO). On stocks, our top sector pick is MPPA based on the biggest upside potential, while our top sell is HERO on the biggest downside. The sector s upside risks are higher purchasing power and employment, while downside risks are IDR depreciation and intense competition. Relative performance YTD to JCI Relative valuations Market --------------------------216F------------------------ CP TP Cap growth P/E PEG P/S P/BV ROA Cod E Rating (IDR) (IDR) (USDm (%) (X) (X) (x) (x) (%) e n) LPPF BUY 15,95 19,8 3,359 19.3 21. 1.1 4.3 15.8 1. 6 ACES BUY 775 875 96 8.9 21.9 2.5 2.6 4. 19.9 MPPA BUY 1,88 2,75 731 3.3 17.2.6.6 2.9 17.8 MAPI BUY 4,195 4,75 53 326.6* 21.2*.1*.5 2.2 1.7* RALS REDUCE 68 64 349 6.8 14.5 2.1.9 1.3 9.3 HERO REDUCE 1,1 65 332 na 8.1 na.3.8 1. ECII REDUCE 8 7 77 245.5 19.9.1.6.6 3. Sector 6,311 29.1 2.9 1.1 2.9 9.6 59.6 Sector exc. LPPF 2,952 42.1 2.8 1.2 1.2 2.5 12.9 Source: Bloomberg, Bahana estimates note: based on 3 December 215 closing price *estimated using core EPS Retail sales index, January 213 November 215 NP (%) (%) 214 4 4 24 2 (2) (4) 19.5 11.9 6.6 (.7) (4.1) (13.4) (25.2) (4.6) 2 (2) (4) 194 184 174 164 154 144 134 124 Average: 16 183 (6) LPPF ACES Sector RALS MAPI ECII MPPA HERO (6) 114 * Jan-13 Mar-13 May-13 Jul-13 Sep-13 Nov-13 Jan-14 Mar-14 May-14 Jul-14 Sep-14 Nov-14 Jan-15 Mar-15 May-15 Jul-15 Sep-15 Nov-15 Source: Bloomberg as of 3 December 215 Bagus Adi Yoga Prawira (yoga.prawira@bahana.co.id) +6221 25581 ext. 364 Michael W. Setjoadi (michael@bahana.co.id) +6221 25581 ext. 3613 Source: CEIC, Bahana *Based on estimated numbers from Bank Indonesia survey 12
216 Compendium CONSUMER RETAIL F&B/Tobacco, HH & Apparel sales index, Jan 13 - Nov 15 Population by income, 213 and 22F Indonesian population, 213 (mn) Indonesian population, 22 (mn) 26 24 2.6 Elite 6.9 22 7.1 Affluent 16.5 2 189 24.5 Upper Middle 49.2 18 16 158 44. Middle 68.2 14 142 46.9 Emerging Middle 5.5 12 64.2 Aspirant 47.9 1 Jan-13 Mar-13 May-13 Jul-13 Sep-13 Nov-13 Jan-14 Mar-14 May-14 Jul-14 Sep-14 Nov-14 Jan-15 Mar-15 May-15 Jul-15 Sep-15 * Nov-15 F&B and Tobacco Household Appliances Apparel 63.3 Poor 28.3 Source:CEIC, Bahana *Based on estimated numbers from Bank Indonesia survey Source: Statistics Indonesia Private consumption vs inflation y-y growth, 1Q13-4Q16F (%) (%) 8.5 5.6 8 7.5 5.4 7 5.2 6.5 6.5 6 5 5.5 5. 5 4.8 4.5 4.6 4 3.5 4.4 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15F 1Q16F 2Q16F 3Q16F 4Q16F Inflation y-y Private consumption y-y Source: CEIC, Bahana estimates Trade Ministry Regulation No. 56/M-DAG/214 Organization of Traditional Markets, Shopping Centers and Modern Stores Modern stores can only sell supplementary goods of no more than 1%. Maximum 15 stores owned and managed per company. Subsequent stores must be in cooperation with micro, small and medium enterprises (MSME). Modern store operators can sell their own brands or labels by prioritizing MSME products, but not exceeding 15% of total goods sold; however, exemptions are allowed if products are not made in Indoensia, high-end and/or high-tech in nature. Local content must reach at least 8% of total products but is exempted if the products are produced not only in Indonesia but also overseas, such as automotive products, premium brands that cannot be produced in Indonesia and products are targeting particular citizens in Indonesia. Source: Ministry of Trade, Bahana Trade Ministry Reg. No. 68/1/212 Franchise for Modern Channel Retailers may only have 15 outlets privately. The subsequent stores are required to have franchised cooperation with another local party. The franchise cooperation may be in a ratio of 6:4, meaning for every 1 stores, four must be franchised out. Retailers shall have up to five years to comply. Source: Ministry of Trade, Bahana 13
216 Compendium CONSUMER STAPLES OVERWEIGHT Indonesia, the biggest consumer market in Southeast Asia and the fourth-largest in Asia ex-japan, should continue to see sustainable and long-term consumption growth due to favorable demographics: a young (average age: 28-29 years old) and high population base (24mn+) as well as rising middle-income earners (nearly USD3,3k per capita expected in 216) and growing urbanization. Looking ahead, rapid growth in modern trades (18,38 minimarkets and 268 hypermarkets and 168 supermarkets) and expansion in FMCG sales should benefit from job creation on the government s acceleration of infrastructure-related projects. For the sector, we expect a gradual improvement in purchasing power to be supportive of both volume and margins in 216. Our bigger-cap stock picks: UNVR and ICBP; for the smaller-caps: ROTI. Risk: Weaker IDR given the sector s high USD-linked raw materials. Relative performance YTD to JCI Relative valuations Market --------------------------216F------------------------ EPS EV/ CP TP Cap growth P/E PEG P/BV EBITDA ROAE Code Rating (IDR) (IDR) (USDmn) (%) (X) (X) (x) (x) (%) UNVR BUY 36,75 46, 19,854 12.4 42.4 3.4 49.5 3.6 125.1 ICBP BUY 12,675 16,8 5,233 15. 2.9 1.4 4.2 14. 21.1 INDF BUY 5,175 6,6 3,217 65.7 13.2.2 1.6 5.9 12.8 MYOR BUY 26,75 31, 1,685 (3.4) 2.8 na 3.9 11.2 2.8 ROTI BUY 1,25 1,45 457 21.6 19.7.9 4.5 1.8 25.2 Sector 3,44 17.7 28.5 2.2 33.5 23.8 88.2 Sector exc. UNVR 1,55 27.9 17.6 (.2) 3.4 1.7 18.7 Source: Bloomberg, Bahana estimates note: based on 3 December 215 closing price FMCG sales in Indonesia groceries, 23-215F (%) 4 38. (%) 4 (IDRtn) 25 232 213 3 27. 3 2 195 2 2.3 2 156 174 1 9.9 3.4 1 15 12 125 14 (1) (2) (1.1) MYOR UNVR Sector ICBP ROTI INDF (1) (2) 1 5 99 86 75 64 56 23 24 25 26 27 28 29 21 211 212 213 214F 215F Source: Bloomberg Harry Su & Michael W. Setjoadi (harry.su@bahana.co.id) +6221 255735 Source: Nielsen, Bahana 14
216 Compendium CONSUMER STAPLES Urban versus rural residents, 196-25F (m people) 18 16 14 12 1 8 6 4 2 196 1965 197 1975 198 1985 199 1995 2 25 21 215F 22F 225F Urban Rural Source: Economist Intelligence Unit Modern trade market share, 2, 21, 212 and 213 (%) 1 9394 94 8 78 67 65 66 54 55 58 6 47 48 49 45 46 44 34 34 36 37 39 41 43 4 2 22 1719 2 1214 15 6 7 8 Singapore China Malaysia Thailand Philippines Indonesia Sri lanka Vietnam India 2 21 212 213 Source: Nielsen, Bahana Consumer confidence index, August 28-August 214 125 12.2 12 115 11 Average: 17.5 15 1 95 9 85 8 75 Aug-8 Aug-9 Aug-1 Aug-11 Aug-12 Aug-13 Aug-14 Consumer confidence index Source: IMF, Bahana Health expenditure to state budget, 25-212 (IDRt) 1,6 3.6 1,418 1,4 3.2 3.3 3. 3. 1,23 3.4 1,2 1,57 2.5 2.5 1, 937 989 8 752 699 6 518 4 2 13 23 25 24 28 32 44 48 25 26 27 28 29 21 211 212 Health budget Government state budget Health expenditure ratio (RHS) Source: Nielsen Media Research, Media Index, Bahana (%) 4. 3.5 3. 2.5 2. 1.5 1..5. 15
216 Compendium HEALTHCARE OVERWEIGHT Indonesia, with the region s lowest healthcare expenditure at 3.8% of 215F GDP, should see continued long-term growth to 5% of GDP by 219, backed by the mandatory National Healthcare Insurance (JKN) scheme. With a 219 GDP forecast of USD4,1 per capita, we estimate that heathcare spending could reach USD25 per person, reflecting a 213-19F CAGR of 11.4%. Rising middle-up income earners suggest rapidly increasing demand for improved healthcare and services, particularly given WHO s data that indicate 67% of Indonesian adult males are smokers. This could lead to lifestyle-related diseases (8% of mortalities), which should result in continued higher spending on medical treatments. Our top hospital pick is SILO, trading at a 65% discount to MIKA on 216F EV/EBTIDA. Our top pharma pick is KAEF on its undemanding valuation. Biggest sector risk: weak IDR due to high USD-linked costs. Relative valuations --------------------------216F----------------------- Market EPS EV/ CP TP Cap growth P/E PEG P/BV EBITDA ROAE Code Rating (IDR) (IDR) (USDmn) (%) (X) (X) (x) (x) (%) KLBF HOLD 1,35 1,48 4,572 11.2 29.2 2.7 5.4 17.6 19.7 MIKA REDUCE 2,295 1,9 2,365 9.3 51.6 5.5 1.3 43.3 2.9 SILO BUY 9,7 14,7 81 51.8 78.9 1.5 6.1 14.9 7.9 SIDO BUY 555 63 62 19.4 14.9.8 2.4 9.8 17.2 TSPC BUY 1,72 2, 559 8.1 12.4 1.5 1.6 7.1 13.4 KAEF BUY 98 1,35 393 17.1 16.6 1. 2.4 12.9 15.4 Sector 9,21 14.8 28.9 3.1 6.2 22.4 18.1 Source: Bloomberg, Bahana estimates note: based on 3 December 215 closing price Relative performance YTD to JCI Healthcare expenditure as % of GDP by region, 213 (latest) (%) (%) (%) 18. 17.1 3 25. 4 16. 2 1 (1) (2) 2.3 (4.) (13.) (16.) (19.9) 3 2 1 (1) (2) 14. 12. 1. 8. 6. 4. 2. - 3.1 3.2 3.7 4. 4. 4.4 4.4 4.6 5.6 6. 9. 1.3 (3) (26.1) (3) MIKA* SIDO Sector KLBF SILO KAEF TSPC Source: Bloomberg *Since IPO Harry Su & Michael W. Setjoadi (harry.su@bahana.co.id) +6221 255735 Source: World Bank 16
216 Compendium HEALTHCARE Indonesia healthcare expenditure as % of GDP, 25-17F (%) 5 4.5 4.5 4. 4 3.8 3.5 3.5 3.1 3.1 3. 2.9 2.9 2.9 3 2.8 2.8 2.8 2.5 2 1.5 1.5 25 26 27 28 29 21 211 212 213 214F 215F 216F 217F Source: World Bank, Bahana No. of hospital beds per 1, people, 212 (latest) (# of beds) 4.5 3.8 3.9 4. 3.6 3.5 2.9 3. 2.5 1.9 2. 2. 2.1 2. 1.5.9 1. 1..6.7.5 - Source: IMF Indonesia pharmaceutical sales and market share, 2Q14 vs. 2Q15 Rank 2Q15 Sales Market share y-y growth Company 2Q14 2Q15 (IDRbn) 2Q15 (%) (%) KLBF IJ 1 1 4,112 6.8 1.7 Sanbe 2 2 3,263 5.4 5.7 Dexa Medica 3 3 2,447 4. 11.8 Pharos Indonesia 5 4 2,8 3.4 8.7 Soho 4 5 1,87 3. -15.1 TSPC IJ 6 6 1,79 2.8 4.1 Fahrenheit 7 7 1,554 2.6 15.8 Novartis 14 8 1,416 2.3 34.5 Konimex 8 9 1,387 2.3 9.5 Hexpharm Jaya 9 1 1,282 2.1 2.9 KAEF IJ 12 11 1,271 2.1 17.2 Dankos 1 12 1,261 2.1 2. Sanofi-Aventis 13 13 1,154 1.9 9. Bayer Indonesia 11 14 1,14 1.9 2.5 Darya Varia 15 15 1,132 1.9 8.7 Novell Pharma 16 16 1,127 1.9 9.2 Lapi 17 17 1,96 1.8 9.1 Pfizer 18 18 1,19 1.7 6.1 MERK IJ 22 19 1,1 1.7 25.8 Interbat 19 2 991 1.6 13.5 Others - - 28,359 46.8 na Total 6,617 1. 9.2 Source: IMS Health, Bahana 17
216 Compendium INDUSTRIAL ESTATES NEUTRAL With the current economic slowdown, our channel checks suggest that investors are currently adopting a wait-and-see attitude, hampering both FDI and sales of industrial estates in 215; however, the government s recent push on infrastructure development and tax incentives should support FDI inflows going forward. Our NEUTRAL sector call is mainly due to soft industrial land demand which has dragged down the performances of some pure industrial players like BEST, while others shift their focus to different segments (eg, power plants, construction, residential/commercial projects). On the flip side, we see the government s infrastructure development benefitting the sector with higher ASPs and margins ahead. Our top sector pick is DMAS (sector s strongest 9M15 marketing sales of 9ha, zero USD debt). Upside risk: Higher presales; Downside risk: Slow infrastructure development. Relative valuations Code Rating CP TP Market cap NAV/ Share -------------------------- 216F ------------------------- Disc. To NAV Land bank NP growth ROAE P/E P/BV (IDR) (IDR) (USDm) (IDR) (%) (Ha) (%) (%) (x) (x) DMAS BUY 23 29 77 732 6 1,87 12.2 21.2 5.7 1.1 LPCK BUY 7,525 8,3 378 2,745 6 675 18.7 27.4 4.5 1.1 KIJA BUY 221 27 33 96 7 3,196 52.6 9.2 1.6.9 BEST REDUCE 343 3 239 1,185 75 97 (29.3) 5.1 2.8 1. SSIA BUY 59 72 21 722 7 136 6.8 18.1 4.5.8 Sector 1,855 67 6,784 13.7 17.9 6.3 1. note: based on 3 December 215 closing price Relative performance YTD to JCI DDI & FDI, 21-215F (%) 2 1 1. (IDRtn) 6 5 463 52 4 399 (1) (2) (3) (4) (5) (9.6) (1.3) (14.5) (31.7) (39.8) DMAS* SECTOR KIJA LPCK SSIA BEST 3 2 1 313 66.2% 66.3% 251 67.8% 29 7.6% 69.8% 71.% 32.2% 33.7% 33.8% 29.% 3.2% 29.4% 21 211 212 213 214 215F Domestic Direct Investment Foreign Direct Investment Source: Bloomberg *Since IPO Sanni Satrio Dwi Utomo (sanni@bahana.co.id) +6221 25581 ext. 3611 Source: BKPM, Bahana 18
378 317 263 423 597 488 573 686 321 831 1,21 1, 1,2 1,128 535 472 411 449 634 1,698 1,53 1,631 1,617 1,44 756 923 914 9 872 845 855 887 851 883 1,891 1,3 937 952 2,1 2,25 1,63 1,95 2,7 2,492 1,375 1,284 2,97 3,267 1,711 1,859 216 Compendium INDUSTRIAL ESTATES Marketing sales, 213-217F (IDRbn) 3,5 3, 2,5 2, 1,5 1, 5 LPCK DMAS KIJA SSIA BEST 213 214 215F 216F 217F Source: Companies, Bahana estimates; Note: Ranked based on 215F Operating profit, 213-217F (IDRbn) 2, 1,8 1,6 1,4 1,2 1, 8 6 4 2 DMAS LPCK SSIA KIJA BEST 213 214 215F 216F 217F Source: Companies, Bahana estimates; Note: Ranked based on 215F Total industrial landbank sold, 1Q1-3Q15 (ha) 35 322 Remaining gross industrial landbank, 9M15 (ha) 3,5 3,196 3 268 3, 25 2 15 1 5 41 1 113 131 189 178 153 186 147 19 86 One-off 4ha sale from DMAS Average: 12 55 39 46 18 142 54 One-off 6ha sale from DMAS 75 81 144 87 2,5 2, 1,5 1, 5 1,87 97 675 136 KIJA DMAS BEST LPCK SSIA Source: Cushman & Wakefield, Bahana Source: Companies 19
216 Compendium LAND TRANSPORTATION UNDERWEIGHT In 216, we think the new online transportation companies could put further pressure on BIRD and TAXI, as they offer drivers higher incomes and greater flexible working time while concurrently providing passengers with cheaper fares as well as greater convenience. Hence, we expect taxi companies to face driver shortages and lower demand, restricting their expansion and revenue growth. On the rental business, ASSA should see continued lower ASPs and margins on its disposal car segment. However, we expect demand for corporate cars (6% of revenues) to remain strong, inline with recent outsourcing trend in various companies to generate cost efficiency. Our UNDERWEIGHT stance is mainly due to intense competition on entry of new players, hence our REDUCE ratings for BIRD/ TAXI. That said, ASSA is the only BUY in the sector as rental car demand remains stable. Upside risk: Higher-than-expected consumer spending on taxis. Relative valuations Code Rating Market cap CP TP -------------------------216F------------------------ NP growth P/E EV/ EBITDA EBITDA margin ROAE (USDmn) (IDR) (IDR) (%) (x) (x) (%) (%) BIRD REDUCE 1,26 6,675 4,5 3.6 19.2 8.9 33.9 2.2 TAXI REDUCE 21 136 12 228.6 15.2 4. 55.3 2.2 ASSA BUY 25 1 13 24. 4.9 3.7 39.8 7.6 Sector 1,252 6.3 18.1 8.8 34.4 19.7 Source: Bloomberg, Bahana estimates note: based on 3 December 215 closing price Relative performance to JCI YTD (%) BIRD SECTOR ASSA TAXI (%) Regional taxi penetration and income per capita, 214 (x) (USDk/person/yr) 12 55.2 6 (1) (1) 1 5 (2) (3) (15.7) (16.9) (21.6) (2) (3) 8 1.2 38.1 4 (4) (4) 6 3 (5) (5) 4 2 (6) (7) (8) (9) (75.2) Source: Bloomberg Agustinus Reza Kirana (agustinus.reza@bahana.co.id) +6221 25581 ext. 3616 (6) (7) (8) (9) 14.3 5.3 2 9.9 2.5 1.4 Bangkok Singapore Hong Kong Greater Jakarta Taxi penetration Income/Capita (RHS) Source: Euromonitor,World Bank, Bahana 1 11
216 Compendium LAND TRANSPORTATION New mobile-based transportation companies Taxi fleet in Indonesia, 214 Company C 1,35 Company B 2, Company A 3,2 TAXI* 11,1 BIRD* 28,545 Source: Euromonitor, Bahana estimates (Units) - 5, 1, 15, 2, 25, 3, Source: Euromonitor, Bahana estimates, *based on Bahana 216 forecast Total fleet in operation, breakdown by geography, 214 Fleet and growth comparison BIRD and TAXI, 21 217F (X) 2.7 2.6 2.7 (% growth) 6 2.6 5 2.5 2.5 2.4 4 3 2.3 2 2.3 2.2 1 2.2 2.1 21 211 212 213 214 215F 216F 217F BIRD vs TAXI fleet (LHS) TAXI's growth BIRD's growth -1 Source: Euromonitor, Bahana Source: Euromonitor, Bahana 111
216 Compendium CONSUMER DISCRETIONARY - MEDIA NEUTRAL Indonesia s FTA TV industry, dominated by MNCN (36.% audience share) and SCMA (3.4% audience share), is facing soft ad spend on a GDP slowdown, leading FMCG companies to cut their TV-ad budgets. In 216, a gradual economic recovery should help ad-spend recovery, particularly since we still expect TVs to be the most effective ad platform for goods targeted to mass demographics. Additionally, we are seeing increasing ad contribution from ecommerce players. Looking ahead, benefiting the industry would be a possible limitation of discount rates from MNCN, as the price leader is experiencing higher prime-time shares. On stocks, we favor MNCN as most of the bad news looks priced in, and we remain cautious on SCMA s valuation despite our more positive view on the stock of late. Upside risk: Digitalization with current FTA TV players as multiplexers. Downside risks: Softer GDP and stricter interpretation of ruling No. 5/25. Relative valuations Market --------------------------216F------------------------ EPS EV/ CP TP Cap growth P/E PEG P/BV EBITDA ROAE Code Rating (IDR) (IDR) (USDmn) (%) (X) (X) (x) (x) (%) SCMA HOLD 3,7 3,25 3,243 1.2 26.8 2.6 9.9 19.5 39.7 MNCN BUY 1,69 2, 1,743 28.7 14.6.5 2.2 9.1 16.8 Sector 4,986 16. 2.8 1.9 7.2 15.9 31.7 Source: Bloomberg, Bahana estimates 22.5 note: based on 3 December 215 closing price Relative performance YTD to JCI (%) 4 (%) 4 Media revenue vs real GDP, 26 3Q15 (%) 6 (%) 7 5 7 2 2 4 6.9 3 2 6 (2) (6.5) (2.3) (2) 1 26 27 28 29 21 211 212 213 214 1Q15 2Q15 3Q15 5 5 (4) SCMA Sector MNCN (4) -1 SCMA MNCN Real GDP (RHS) 4 Source: Bloomberg Bagus Adi Yoga Prawira (yoga.prawira@bahana.co.id) +6221 25581 ext. 364 Source: Company, Bahana 112
216 Compendium CONSUMER DISCRETIONARY - MEDIA FMCG ad spend, 24 215F All-time audience share, January 214 November 215 (IDRbn) 6,5 6, 5,5 5, 4,5 4, (%) 19. 17. 15. 13. 15.7 15.3 16.3 14.7 16.4 14.8 14.4 15.6 14.9 14.5 17.4 17. 14.1 14.1 13.7 18.3 15.5 18.7 18.5 15.6 14.8 12.9 17.4 16.3 18.2 15.9 17.9 15.6 16.1 16.4 15.2 14.6 14.4 15.9 16. 14.2 15.9 15.4 14.1 15.6 15.5 14.3 17.6 17.2 18. 16.7 17.3 17.3 15.7 15.2 16.3 16. 14.1 18.5 15.7 14.7 3,5 3, 2,5 2, 1,5 1, 11. 9. 7. 5. 1.7 8.9 6.6 12. 9.6 9.3 6.4 6.3 9.7 9.4 6.5 6.6 11.5 9. 5.9 1.3 8.2 5.6 12.1 9. 8.5 6. 6.1 1.3 9.3 6.3 12. 11.8 1.8 1.5 9.9 9.7 6.5 6.5 6. 12. 12.2 6.1 6.4 11.4 7.5 11.2 8.2 11.3 11.3 1.71.9 11. 1.3 7.8 7.3 7.2 11.9 1.7 1.7 6.7 6.7 11.3 6.2 5 24 25 26 27 28 29 21 211 212 213 214 9M15 215F UNVR INDF TSPC ICBP MYOR Total RCTI SCTV IVM MNCTV GTV Source: Companies, Bahana estimates Law No.32/22 Article Clause Main content 1 Within one broadcasting region or multiple regions, ownership or control over non-government broadcasting institutions by either an individual or an entity must be limited 18 Directly or indirectly owned non-government broadcasting companies or 2 entities in cross ownerships within different media type must be limited 4 The terms and conditions of clauses 1 and 2 above shall be arranged by the Indonesian Broadcasting Commission (KPI) and the government 34 4 Broadcasting licenses are non-transferable Source: Indonesian Broadcasting Comission, Bahana Government Regulation No.5/25 Article Clause Main content 32 1 33 Source: Ministry of Information and Communication, Bahana One entity may only have two TV broadcasting licenses in different provinces 49% maximum share ownership in a second entity 2% maximum share ownership in a third entity two 5% maximum share ownership in a fourth entity Cross-ownership limitations with a single entity only allowed to own one media company type Source: Nielsen, Bahana Media revenue vs govt. exp & investment y-y growth, 1Q13 4Q16F (%) (%) 3 8 25 7 6 2 4.6 5 15 4 3 1 2 5 4.3 1 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15F 1Q16F 2Q16F 3Q16F 4Q16F -1-5 -2-1 -3 Media Revenue growth Investment growth (RHS) Source: CEIC, Companies, Bahana estimates 113
216 Compendium METAL MINING NEUTRAL In 216, we expect gold prices to be range-bound averaging USD1,2/toz with support from the People s Bank of China (PboC) on gold purchases, offset by likely Fed rate hikes. In 3Q15, (PBoC) confirmed gold reserves of 1,79mt, up >5% since 29, although still representing just 2% of China s foreign reserves, far below those of the US (73%) and Germany (67%). While November 215 tin stocks diminished 57% to 5,25mt from early 215, we retain our bearish view on the soft global cellphone demand and continued prevalent domestic illegal mining. On nickel, we expect a price bounce to USD12,5/mt in 216 as high-cost producers are eliminated on 215 s 3% price drop to USD12,89/mt on China s weak stainless steel production. A downside risk to our NEUTRAL sector rating is a stronger USD due to Fed rate hikes, while an upside risk would be faster global economic recovery. By stock, PSAB is our top pick in the sector on sizeable production growth (through Pani mine +45k toz, up 2%) amid a stable gold-price environment. Relative valuations ---------------------------216F----------------------------- Mkt EV/ EBIT Div. CP TP Cap EBITDA margin ROAE P/E P/BV yield Code Rating (IDR) (IDR) (USDm) (X) (%) (%) (X) (X) (%) INCO BUY 1,555 2,5 1,116 3.2 19.2 6.2 1..6 6. ANTM BUY 323 764 799 13.2 2.1 (1.) na.5 - TINS REDUCE 52 411 277 11.8.5.3 285.9.7.2 MDKA BUY 2,3 2,2 524 na na (1.2) na 4.5 - PSAB BUY 1,355 2, 497 4.7 37.5 13.8 1.1 1.2 - Sector 3,213 6.8 14.3 5.4 2.6.7 2.7 Source: Bloomberg, Bahana estimates note: based on 3 December 215 closing price Relative performance YTD to JCI (%) 2 15 1 5 (5) (1) 144.8 (4.9) (18.5) (62.8) (64.3) (7.2) PSAB MDKA SECTOR INCO TINS ANTM Source: Bloomberg Arandi Ariantara (arandi@bahana.co.id) +6221 25581 ext. 3619 (%) 2 15 1 5 (5) (1) Gold reserves by country, 2Q15-3Q15 (mt) 9, 8, 7, 6, 5, 4, 3, 2, 1, 8,134 United States Source: Bloomberg 8,134 3,381 3,381 2,814 2,814 2,452 2,436 2,452 2,435 1,79 1,658 1,352 1,275 1,4 1,4 Germany IMF Italy France China Russia Switzerland 2Q15 3Q15 +654mt from 1Q15 level +114mt from 1Q15 level 114
216 Compendium METAL MINING Gold prices, supply & demand, 3Q13-216F (mt) 1,2 1,15 1,1 1,5 1, 95 9 1,113 1,113 1,9 1,88 1,86 1,92 1,56 1,11 1,36 1,42 1,144 1,51 1,84 1,7 1,48 95 1,121 1,1 (USD/toz) 1,35 1,3 1,2 1,25 1,2 1,15 1,1 1,67 1,5 1, Gold demand by segment, 3Q13-3Q15 1,56 mt 1,11 mt 1,9 mt 1,36 mt 13.1% 14.8% 19.1% 16.% 24.8% 8.2% 8.3% 59.5% 6.9% 11.% 17.3% 17.2% 19.2% 17.3% 7.5% 8.3% 8.3% 56.6% 57.3% 57.% 1,42 mt 1,51 mt 1,84 mt 95 mt 1,121 mt 12.7% 11.3% 14.1% 15.6% 16.1% 8.6% 62.5% 25.4% 19.7% 2.5% 7.5% 9.2% 7.5% 55.7% 56.9% 56.4% 85 95 8 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 216 9 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 Gold demand (LHS) Gold supply (LHS) Gold price (RHS) Jewellery Technology Investment Central bank net purchases Source: World Gold Council, Bloomberg Source: World Gold Council Nickel producers cash cost, 214 (USD/lbs) Tin stocks & prices, July 214 November 215 (mt) (USD/mt) 1 9 8 7 6 5 4 3 4.1 6.7 5.3 6.4 4.6 8.9 Avg. cash cost USD6.3 6. 5.5 6.5 6.2 7.6 8.3 5.6 14, 13, 12, 11, 1, 9, 8, 7, 6, 5, 4, 25, 23, 21, 19, 17, 15, 13, LME Tin stock LME tin price Source: Bloomberg Source: Bloomberg 115
216 Compendium OIL & GAS NEUTRAL* The shale boom, China slowdown and global oversupply conditions should continue to weigh on oil prices, which we expect to average USD55/bbl in 216 for Brent, flat y-y. These conditions may force the government to alter its view on other commodities, including gas. That said, the government plans to implement lower gas-selling prices through lower portions on upstream and regulated margins for gas distributors. Permit simplifications are expected to attract upstream exploration, while on the downstream side, we expect refinery renovations, foreign investment and biodiesel policy implementation. While we have a NEUTRAL rating on the sector, we see upside risks in the form of higher gas-selling prices and distribution volumes for PGAS. Downside risks are lower oil prices for MEDC and AKRA, possible foreign entry into their distribution and logistics businesses. Relative valuations Code Rating Market cap Current Price Target Price ------------------------216F------------------------ NP growth P/E EV/ EBITDA ROAE Dividend yield (USDmn) (IDR) (IDR) (%) (x) (x) (%) (%) PGAS REDUCE 4,924 2,875 2,5 4. 12.3 6.5 12.5 4.5 AKRA BUY 1,768 6,2 7, 42.8 16.3 11.4 22.3 1.7 MEDC BUY* 234 96 1,3 na 17.5 4.4 2. 2. Sector 6,926 22.4 12.2 7.7 14.8 3.7 Source: Bloomberg, Bahana estimates note: based on 3 December 215 closing price Relative performance YTD to JCI (%) (%) Oil & gas policy risks in 216 Risks Status Impact 8 6 4 67.3 8 6 4 Reduction of gas-selling prices Plan (-) PGAS Gas aggregator establishment Permit simplification from 14 licenses to 4 Plan (+) PGAS Open access for gas pipelines Signed (-) PGAS 2 2 Work contracts based on PSC to royalty Plan (-) MEDC Permit simplification from 14 licenses to 4 Plan (+) MEDC s O&G inv. (2) (12.8) (2) Reduction of O&G block bids Plan (-) MEDC s E&P (4) (6) (8) (39.4) (6.7) AKRA SECTOR PGAS MEDC Source: Bloomberg Arandi Ariantara (arandi@bahana.co.id) +6221 25 581 ext. 3619 *New, please refer to appendix II (4) (6) (8) Profit-sharing scheme: Oil: 3-35% from 15% Gas: 35-4% from 3% Plan (+) MEDC Downstream permit access Plan (-) AKRA Penalty if below standard of B15 biodiesel Plan (-) AKRA Source: Bahana, various sources 116
216 Compendium OIL & GAS Utilization rates vs PGAS s power-plant gas volumes, 2Q12-4Q15F (%) (mmscfd) 84. 82. 8. 78. 76. 74. 72. 7. 7.4 322 71.4 75. 312 36 77.1 31 375 81.7 351 353 77.7 77.7345 76.8 76.5 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 216F Utilization rates: Electricity, Gas & Water Supply (LHS) Source: Central Statistics Agency (BPS), PGAS 298 78.8 293 81.6 39 82. 318 83. 335 PGAS' power plants gas volumes (RHS) 39. 37. 35. 33. 31. 29. 27. MEDC oil & gas production, 28-216F (mboepd) 5 45 44 45 4 37 37 35 36 36 35 33 31 3 32 3 3 26 26 25 22 2 2 18 18 15 28 29 21 211 212 213 214 215F 216F Oil sales Gas sales Source: MEDC, Bahana Indonesia s refinery facilities AKRA s petroleum distribution and ASP, 21 216F (' kl) IDR/liter Arun LNG plant capacity: 12.5mn mt/annum Pk Brandan capacity: 5mbsd Dumai capacity: 17mbsd Balikpapan capacity: 26mbsd Unit: H- Bunyu methanol capacity: 33mt/annum Bontang LNG plant capacity: 18.5mn mt/annum Kasim capacity: 1mbsd 3, 2,5 2, 1,5 1, 1,356 2,39 2,149 2,318,699 8,48 7,315 9,681 1,83 2,19 2,461 7,715 1, 9,5 9, 8,5 8, 7,5 7, 6,5 Musi capacity: 133.7mbsd BALONGAN capacity: 125mbsd Cilacap capacity: 348mbsd Cepu capacity: 3.8mbsd 5 6,356 5,512 21 211 212 213 214 215F 216F 6, 5,5 5, Ren Pertami Joint Petroleum sales volumes (LHS) Average selling price (RHS) Source: Downstream Oil and Gas Regulatory Agency (BPH Migas) Source: U.S Energy Information Administration, International Energy Statistics 117
216 Compendium PLANTATIONS NEUTRAL Having recently upgraded our sector weighting to NEUTRAL, we are more positive on plantations, due to the El Nino phenomenon cutting 216F production and the planned implementation of the biodiesel program (B15, B2) creating higher demand with an estimated annual volume of 4-6m tons, or 12-18% of total Indonesian CPO production. On production, we expect 216 domestic CPO volume to remain flat y- y at 33m tons, although we expect the average 216 CPO price to reach USD7/ton, based on CIF Rotterdam (MPOB FOB price: MYR2,52/ton), +6% y-y, capped by continued low Brent oil prices. On valuation, the sector, on a 216F PE of 14.6x, a 4% discount to Malaysian peers (average: 15-2%) looks fairly attractive. Our top pick is LSIP on its zero debt position, while for the smaller-cap stocks, we like SGRO and DSNG on their still-growing mature areas. Upside risk: Higher B2 demand; Downside risk: Low soybean prices. Relative valuations Code Rating Market cap Current Price Target Price --------------------------------------216F---------------------------------- NP growth P/E EV/ EBITDA EV/ nucleus EBITDA margin ROAE (USDmn) (IDR) (IDR) (%) (x) (x) (USD/ha) (%) (%) AALI BUY 2,14 17,65 22,5 11.8 16.9 9.2 1,15 23.6 13.8 LSIP BUY 636 1,285 1,87 31.3 1.6 6.2 6,387 25.8 1.6 SIMP BUY 427 372 6 125.3 9.6 3.7 5,259 22. 4.2 DSNG BUY 467 61 74 17. 15.8 1.7 9,871 17.8 15.9 ANJT REDUCE 395 1,61 1, na 129.9 9.5 8,753 29.9.8 SGRO BUY 23 1,475 1,97 17.9 1.7 6.5 4,461 22.7 8.2 TBLA BUY 218 565 63 41.4 9.3 6.4 1,113 19.4 11.9 Sector 4,36 8.3 14.6* 8.2 8,694 22.8 11.1 Source: Bloomberg, Bahana estimates *P/E is market-cap weighted note: based on 3 December 215 closing price Relative performance YTD to JCI (%) 34.7 35 25 (%) 35 25 Average Rotterdam CPO CIF price, 1Q13 4Q16F (USD/ton) 1, 896 877 785 743 672 677 625 61* 67* 71* 72* 71* 95 15 15 9 5 (5) (15) (25) (35) (45) (55) (7.6) (1.) (11.4) (13.8) (17.) (19.1) (33.5) ANJT DSNG TBLA Sector AALI SGRO LSIP SIMP 5 (5) (15) (25) (35) (45) (55) 85 8 75 7 65 6 55 5 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 Avg. CPO price 1Q16 2Q16 3Q16 4Q16 Source: Bloomberg Agustinus Reza Kirana (agustinus.reza@bahana.co.id) +6221 25581 ext. 3616 Source: Bloomberg, Bahana estimates *forecasted average 118
216 Compendium PLANTATIONS CPO premium to oil prices, August 21 November 215 (USD/ton) 6 4 Average: 176 2 Palm oil production and consumption, 212 16F 212-213 213-214 214-215 215-216F October-September (mn tons) Opening stocks 1.67 1.34 1.99 12.8 Production 56.17 59.72 62.1 62.96 growth (%) 7.1 6.3 3.8 1.5 Consumption 56.68 59.12 6.55 63.67 growth (%) 1.6 4.3 2.4 5.2 Ending stocks 1.34 1.99 12.8 11.42 Stock/usage (%) 18.2 18.6 2. 17.9 Source: Oil World (2) Aug-1 Mar-11 Oct-11 May-12 Dec-12 Jul-13 Feb-14 Sep-14 Apr-15 Nov-15 Premium Source: Bloomberg CPO discount to soy oil, February 212 November 215 (%) 3 25 2 15 Average: 9.2% 1 5 (5) (1) (15) Feb-12 Jul-12 Dec-12 May-13 Oct-13 Mar-14 Aug-14 Jan-15 Jun-15 Nov-15 El-Nino forecast, August 215 August 216 Premium/Discount Average soybean premium to CPO Source: Bloomberg Source: Australian Government Bureau of Meteorology 119
216 Compendium POULTRY NEUTRAL Catalysts for the poultry sector include margin support coming from low corn and soybean prices, which should result in soft increases in poultry-feed ASPs for the next few quarters. Additionally, an economic recovery in 216 could mean higher consumption of chicken broilers as the most affordable protein-content product. The recent 6m PS culling, despite its short-term cost surge, has eradicated DOC oversupply conditions and allowed for a doubling of 4Q15 ASPs on a q-q basis, which should provide a margin cushion. Downside risk to our NEUTRAL stance is possible negative impact from Indonesia s plan to join the Trans-Pacific Partnership, as the US could dump its dark-meat broilers at lower prices. Upside risk: A stronger IDR (6% imported COGS), particularly if the companies under our coverage are able to lower their USD debt exposure. MAIN is our top pick due to its cheapest valuation with a good corporate governance. Relative valuations -----------------------216F----------------------------- Mkt EV/ EBIT Div. CP TP Cap EBITDA margin P/E P/BV yield ROAE Code Rating (IDR) (IDR) (USDm) (X) (%) (X) (X) (%) (%) CPIN HOLD 3,28 3,5 3,886 12.4 11.1 19.1 3.7 1. 2.9 JPFA BUY 458 55 353 6.3 5. 13. 1. 1.4 7.6 MAIN BUY 1,34 1,85 217 9.4 6.9 13. 2.4 1.5 15.2 Sector 4,456 11.8 1.4 18.3 3.4 1.1 19.6 Source: Bloomberg note: based on 3 December 215 closing price Share price performance YTD to JCI (%) CPIN SECTOR MAIN JPFA (.) (4.2) (1) (%) (1) Regional GDP and chicken consumption per capita, 215 47. 38.8 38. (2) (2) (3) (4) (23.9) (38.) (3) (4) 1.6 16. 5.8 9. 8. 2.5 3.7 6. 1.5 2..8 Brunei Malaysia Thailand Philippines Indonesia Vietnam Cambodia (5) (5) Chicken consumption per capita (kg/annum) Income per capita (USD1k) Source: Bloomberg, based on 3 December 215 closing prices Michael W. Setjoadi (michael@bahana.co.id) +6221 25581 ext. 3613 Source: Company, Bahana 12
216 Compendium POULTRY Corn and soybean prices, 21-215 YTD DOC prices, 211-215 YTD Source: Bloomberg Note: YTD through December 3 215 Chicken prices, 211-215 YTD Source: Pinsar Note: YTD through 3 November 215 Poultry market share, 215 Source: Pinsar Note: YTD through 3 November 215 Feed DOC 121
216 Compendium PROPERTY¹ UNDERWEIGHT The property sector has been hard hit on weak domestic purchasing power and the government s aggressive taxation drive, causing most developers to cut their full-year 215 marketing sales targets. IDR depreciation has raised FX losses, causing severe earnings erosion. Our UNDERWEIGHT stance on the property sector is attributable to weak 215 marketing sales, which should result in low 216 earnings. With secondary property prices coming off, it is possible that property developers may experience margin pressure on greater discounting in order to stimulate demand. Hence, we remain conservative and expect average marketing sales growth of 9% y-y in 216. Our top sector pick is SMRA on its Bandung success, no USD debt and 28% recurring base. Risk to our sector call: A proposed plan to not only allow below IDR1bn property purchase prices by foreigners but also to grant apartment and landed housing (right-to-use) ownership. Relative valuations Code Rating CP TP Market cap NAV/ Share -----------------------------216F------------------------ Disc. to NAV Land bank NP growth ROAE P/E P/BV (IDR) (IDR) (USDmn) (IDR) (%) (Ha) (%) (%) (x) (x) BSDE BUY 1,77 2,2 2,461 5,55 6 5,17 13. 15.2 11.8 1.7 LPKR REDUCE 1,32 1,13 2,2 2,826 6 1,274 5.7 11. 16.1 1.7 SMRA BUY 1,57 1,82 1,636 4,558 6 2,76 9.7 19.7 16.4 2.6 PWON HOLD 468 49 1,628 1,23 6 457 14.9 22.9 11.6 2.4 CTRA BUY 1,23 1,4 1,362 3,492 6 1,553 8.2 15.2 13.6 1.9 ASRI REDUCE 363 3 515 989 7 2,388 11.8 13.8 7.1.9 APLN REDUCE 33 22 449 871 75 651 6.7 9.2 9.6.8 PPRO HOLD 185 18 188 62 7 58 5.5 13.4 8.4 1.1 CTRP REDUCE 47 365 184 1,218 7 92 (27.) 6.3 8.5.5 Sector 1,623 65. 13,719 14.6 15.7 12.5 1.9 Source: Bloomberg, Bahana estimates note: based on 3 December 215 closing price Relative performance YTD to JCI Mortgage vs BI rate & inflation, 28-9M15 (%) (%) 5 42.6 5 4 4 3 3 2 16.5 14.9 13.4 12.7 11.3 2 1 4.1 3.6 1 (1) (1) (2) (2) (3) (22.) (3) (%) 35 3 25 2 15 1 5 11.6 29.3 9.25 6.5 14.5 2.77 2. 6.5 6.96 32.9 22.5 6. 5.75 3.78 3.65 8.8 8.36 7.75 7.5 16.2 12.6 7.5 6.83 7.7 (%) 12 1 8 6 4 2 (4) (5) (37.8) LPKR SMRA SECTOR PPRO* CTRA BSDE PWON APLN ASRI CTRP (4) (5) 28 29 21 211 212 213 214 9M15 Mortgage growth (y-y) BI rate (RHS) Inflation (RHS) Source: Bloomberg *Since IPO Sanni Satrio Dwi Utomo (sanni@bahana.co.id) +6221 25581 ext. 3611 ¹This marks a transfer of analyst coverage Source: Bank Indonesia, Bloomberg 122
216 Compendium PROPERTY Portion of revenue from recurring versus development, 216F (%) 1 Marketing sales, 213-17F (IDRb) 12, 9 8 44 47 47 1, 7 6 5 69 73 79 8 9 93 8, 6, 4 3 56 53 53 4, 2 1 31 27 21 2 1 7 PWON LPKR CTRP SMRA BSDE APLN CTRA ASRI PPRO Recurring Development 2, CTRA BSDE SMRA ASRI LPKR APLN PWON CTRP PPRO 213 214 215F 216F 217F Source: Bahana estimates Operating margins, 213-217F (%) 6 5 4 3 2 1 Source: Companies, Bahana estimates; Note: Ranked based on 215F Operating profit, 213-17F (IDRb) 4,5 4, 3,5 3, 2,5 2, 1,5 1, 5 ASRI PWON BSDE SMRA CTRA CTRP PPRO LPKR APLN BSDE PWON LPKR CTRA SMRA ASRI APLN CTRP PPRO 213 214 215F 216F 217F 213 214 215F 216F 217F Source: Companies, Bahana estimates; Note: Ranked based on 215F Source: Companies, Bahana estimates; Note: Ranked based on 215F 123
216 Compendium SHIPPING OVERWEIGHT* Following President Jokowi s maritime-toll program, the Indonesian shipping sector has seen a lower average dwelling time of 4.1 days/trip, from 6 days in 214, allowing for reduced logistics costs to the benefit of shipping companies like TMAS. With the government s dwelling-time target of just 2 days, we expect sector margin support. To support the maritime program, we expect huge demand for shipyards to build new vessels and provide repair and maintenance services. This should benefit SOCI s newly launched shipyard business, one of the few that can receive large vessels of up to 5k DWT. On low oil prices (c.3-4% of COGS) coupled with the government s successful maritime program rollout, we are OVERWEIGHT on the shipping sector. Our top sector pick is TMAS on its fleet and route expansion, which should result in a nearly doubling of revenues and earnings by 217. Risks: Slower GDP growth and intense competition. Relative performance YTD to JCI (%) (1) (2) (3) (4) (5) (6) (7) TMAS SECTOR SOCI WINS (1.) (18.6) (2.4) (65.4) (7) Source: Bloomberg Agustinus Reza Kirana (agustinus.reza@bahana.co.id) +6221 25581 ext. 3616 *New, please refer to appendix II (%) (1) (2) (3) (4) (5) (6) Relative valuations Code Rating Market cap CP TP -------------------------216F------------------------ NP growth P/E EV/ EBITDA EBITDA margin ROAE (USDmn) (IDR) (IDR) (%) (x) (x) (%) (%) SOCI BUY 223 459 63 21.6 5. 5.7 43.9 13.6 TMAS BUY 16 1,945 3, 28.2 5.2 4.1 39.6 45.4 WINS HOLD 52 178 19 na 15.1 3.5 42. 1.7 Sector 435 38.8 5.4 4.8 42.1 23.9 Source: Bloomberg, Bahana estimates note: based on 3 December 215 closing price Dwelling time in Tanjung Priok port, Jakarta, 215 (days/trip) 7 6 5 4 3 2 1 6.3 4.5 1. 5.9 3.7 3.7 3.5 1.5 5.6 5.6 1.3 1.4 6.1 4.1 1.1.8.8.7.7.8 5.6 3.3.7 5.2 5.3 3.1 3.2 4.1 4.2 4.1 2.1 2.3 2.2 1.6 1.6 1.5 1.6 1.5 1.4.8.6.5.4.5 Jan Feb Mar April May June July Aug Sept Oct Nov Target Pre-Clearance Custom Clearance Post Clearance Total Source: Investor Daily, Bisnis Indonesia, Bahana 3. 124
216 Compendium SHIPPING Logistics market share by company, 214 Indonesia oil suppy and consumption, 22-214 (mn brl/day) Others 22% Meratus 23% 1.8 1.6 1.4 1.2 Spil 16% Tanto 22% 1..8 Indonesia becomes net importer of oil Indonesia suspends OPEC membership TMAS 17%.6 22 24 26 28 21 212 214 Source: Company, Bahana Source: International Energy Statistics, Bahana Indonesian flag vessels and SOCI vessels, 213 (' DWT) 7, EBITDA margin comparison by company, 212-217F (%) 5 6, 5, 5,86 45 4 4, 3, 2, 1, - Source: Company, Bahana 992 753 178 618 59 144 4 Oil tankers Chemical tankers FSO Liquid gas Indonesia SOCI 35 3 25 2 212 213 214 215F 216F 217F SOCI TMAS WINS Source: Companies, Bahana 125
216 Compendium TELECOMMUNICATION OVERWEIGHT In the next few years, we expect continued improvement in Indonesia s smartphone proportion, from 37% currently to 5% by 217. This should have a positive impact on data usage as well as ARPU. Furthermore, we expect rational competition to persist due to limited credible competitors outside the three incumbents. Thus, we expect strong revenue growth on solid data usage and improved pricing. Telco derivatives such as voucher distributors and handset resellers should benefit from continued conducive operating conditions, and expansion into 4G technology should lift BTS demand. Our sector OVERWEIGHT is led by TLKM as our top operator, followed by ISAT on an earnings recovery. On telco derivatives, we like TELE on solid TLKM revenue growth and higher market share, and we like ERAA on improved dominance in handset distribution. On towers, we prefer TOWR on cheaper valuation. Risk: Reoccurrence of price wars. Relative valuations Code Rating Market cap CP TP No. of subs ---------------------------216F----------------------- EV/ EBITDA EBITDAmargin P/E P/BV Div. yield ROAE (USDmn) (IDR) (IDR) (mn) (x) (%) (x) (x) (%) (%) TLKM BUY 22,1 3,35 3,75 15.5 7.7 49.4 17.2 3.7 3.8 22.6 EXCL BUY 2,314 3,75 3,9 42.9 6.1 37.8 na 2.3 - (.9) ISAT BUY 2,124 5,4 6,8 7.2 3.4 43.5 22. 2.1 1.4 1. Operator 26,538 264 7.2 47.9 16.1 3.4 3.3 19.6 TELE BUY 373 725 1,18 8.5 3. 11. 1.6 2.3 15.4 ERAA BUY 116 555 85 5.7 2.3 6.4.5 6.3 7.9 Retailer 489 7.8 2.8 9.9 1.3 3.2 13.6 TOWR BUY 3,96 4,2 5, 11.7 83.8 26.9 6. - 25. TBIG HOLD 2,131 6,15 6,5 15.2 84.6 22.9 7.3.9 37.3 Tower 5,227 13.1 84.1 25.3 6.5.4 3. Sector 32,254 8.2 53.1 19.8 3.9 2.8 21.2 Source: Bloomberg, Bahana estimates based on 3 December 215 closing price Relative performance to JCI YTD (%) 6 5 4 3 2 1 (1) (2) (3) (4) 46.5 19.7 15.6 14.4 (8.9) (9.7) (23.4) (1) (2) (3) (35.9) (4) ISAT TLKM SECTOR TOWR TELE EXCL TBIG ERAA Source: Bloomberg Leonardo Henry Gavaza, CFA (leonardo@bahana.co.id) +6221 25581 ext. 368 (%) 6 5 4 3 2 1 Industry revenue growth, 3Q14-3Q15 8 6 4 2 (2) (4) (6) (8) (1) (%) Source: Companies 3Q14 4Q14 1Q15 2Q15 3Q15 EXCL TLKM ISAT Industry 6.7 6.6 6.2 3.9 126
216 Compendium TELECOMMUNICATION Subscriber base, 3Q12-3Q15 Average revenue per subscriber, 3Q12-3Q15 (mn subs) 7 68.9 (mn subs) 15 (IDRk/mth) 32 (IDRk/mth) 32. 43 65 6 55 148.6 145 14 31 3 29 28 42. 28.3 42 41 4 5 135 27 39 45 4 35 41.5 13 125 26 25 24 23 38 37 36 3 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 EXCL ISAT TLKM (RHS) Source: Companies 12 22 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 EXCL ISAT TLKM (RHS) Source: Companies 35 BTS units by operator, 3Q12-3Q15 (units) 22, 22,878 2, 18, 17,41 16, 14, 124,961 12, 18,748 1,382 1, 83,346 8, 65,653 56,3 6, 51,5 49,682 46,196 36,11 36,11 37,382 4, 21,642 23,27 2, 3Q12 3Q13 3Q14 3Q15 EXCL TLKM (RHS) ISAT Total Source: Companies Industry capex, 213-17F (IDRbn) 45, 41,195 39,892 4, 38,691 36,75 36,75 9,364 7,33 35, 6,96 6,5 6,5 3, 6,932 8,192 6,587 6,25 6,25 25, 2, 15, 24,898 24,667 24, 24, 25,198 1, 5, 213 214 215F 216F 217F TLKM EXCL ISAT Source: Companies 127
216 Compendium TOBACCO OVERWEIGHT The severity of Indonesia s 215 economic downturn can be seen by lower cigarette sales which dropped 1.3% y-y in 9M15 to 232bn sticks. However, the 21-14 CAGR of 4.5% in cigarette stick sales is testimony to the tobacco industry s overall resilience, despite an average annual excise-tax hike of around 7.5% over the same period. Full-flavor machine-rolled cigarettes are the fastest growing segment with 75% market share at the expense of both hand-rolled (19%) and white (6%) cigarettes. On the excise front, the government plans to implement a more level playing field, although today, hand-rolled cigarettes continue to be taxed less for fear of rising unemployment. Although HMSP s huge market capitalization (ie, the single biggest at 9% of the JCI) is a must for investors benchmarked either against the MSCI or the local indices, GGRM s much lower valuations are certainly more attractive for absolute-return investors. Relative valuations CP TP Market Cap --------------------------216F------------------------ NP growth P/E PEG P/BV EV/ EBITDA ROAE Code Rating (IDR) (IDR) (USDmn) (%) (X) (X) (x) (x) (%) HMSP BUY 97,6 115, 32,688 6.4 4.8 6.4 13.3 3.6 32.6 GGRM BUY 51,575 65, 7,134 9.3 16.7 1.8 2.5 9.8 15.4 Sector 39,823 7. 35.5 5.4 1.9 21.2 28.9 Source: Bloomberg, Bahana estimates note: based on 3 December 215 closing price Relative performance YTD to JCI (%) 6 5 4 3 2 1 (1) (2) (3) 56.1 45.4 14.7 (2.) (23.1) HMSP Sector RMBA GGRM WIIM Source: Bloomberg Harry Su (harry.su@bahana.co.id) +6221 255735 (%) 6 5 4 3 2 1 (1) (2) (3) Cigarette industry volumes and excise tax hikes, 21-9M15 (bn sticks) 35 12.% 32 38 314 3 28 1.% 253 8.7% 1.% 25 235 9.2% 232 8.% 8.5% 2 6.% 15 1 4.9% 5.% 4.% 5 2.%.% 21 211 212 213 214 9M14 9M15 Cigarette industry volume Average excise rate Source: Nielsen,Companies, Bahana 128
216 Compendium TOBACCO Cigarette product by category, 25-9M15 Market share of cigarette players, 25-9M15 35% 8% 8% 6% 31% Sampoerna 37% 29% 19% 27% 26% 23% 23% Gudang Garam 21% 19% 19% Djarum 75% 55% 63% 25 21 9M15 Machine-rolled Hand-rolled White Source: Nielsen, Companies, Bahana 16% 12% 12% 9% 7% 6% 4% 6% 4% 25 21 9M15 Source: Nielsen, Companies, Bahana Others BAT Nojorono Excise tax, 216 Cigarette type SKM SPM SKT Tax tier Share of market (%) 9M15 Excise + Regional tax (IDR/stick) 215 216 Increase (%) V1 P1 64.3% 456.5 528. 15.7% V2 P1 3.2% 335.5 374. 11.5% V2 P2 6.4% 291.5 33. 13.2% V1 P1 5.5% 467.5 544.5 16.5% V2 P1.3% 297. 335.5 13.% V2 P2.8% 242. 28.5 15.9% V1 P1 4.7% 319. 352. 1.3% V1 P2 11.7% 242. 269.5 11.4% V2 P1 1.% 154. 17.5 1.7% V2 P2.% 137.5 154. 12.% V3 A 1.6% 93.5 99. 5.9% V3 B.5% 88. 88..% Source: Nielsen retail audit results share of market YTD September 215, Companies, Bahana Regulatory changes on cigarette industry no. 1 2 3 4 Source: Company Regulatory changes Health warnings on packs: must be 4% of the surface area - effective 24th June 214 No misleading descriptions allowed and specific words e.g. 'ultra-light', etc. not permitted Corporate sponsorship will be more restricted (sports and education-related ads are no longer permitted) Smoking prohibition inside buildings with smoking rooms inside buildings no longer available 129
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216 Compendium COMPANY 131
216 Compendium ACE HARDWARE INDONESIA BUY* PX: IDR775 - TP: IDR875* ACES, the market leader in home and lifestyle products with 116 stores nationwide, is seeing a slight rise in 1M15 SSSG to -.4%, given less store cannibalization on resilient purchasing power of midup segment. In 216-17, we expect GDP improvements to support ACES top line, despite little uptick overall discretionary spending. On the cost front, ACES solid brand loyalty should allow for volume maintenance and higher ASP on possible weaker IDR prospects. Additionally, ACES cost pressure should be minimized by recent CNY devaluation as 5% of COGS are imported from China. We have a higher TP of IDR875, based on a 216F PE of 25x, 2% premium to the sector justified by rising earnings growth on resilient target market. With 13% upside potential, we upgrade ACES to BUY, from Reduce. Risks: Inventory hike (9M15: +21%) without a proportional retail space rise (+5%) could pressure margins ahead. Share price performance (IDR) 95 85 75 65 55 45 3-Dec-14 3-Feb-15 3-Apr-15 3-Jun-15 3-Aug-15 3-Oct-15 3-Dec-15 Volume (RHS) ACES IJ Px Last (') 12, 1, 8, 6, 4, 2, (%) (%) 35 3 25 2 15 1 5 11.9 6.8 32.4 ytd 1M 3M 6M 9M 12M ACES IJ relative to JCI Source: Bloomberg Bagus Adi Yoga Prawira (yoga.prawira@bahana.co.id) +6221 25581 ext.364 *New, please refer to appendix II 25.5 11.7 9. 35 3 25 2 15 1 5 Financial highlights* Year to 31 Dec 213A 214A 215F 216F 217F Revenues (IDRbn) 3,895 4,541 4,698 5,86 5,647 EBIT (IDRbn) 565 647 648 74 787 Net profit (IDRbn) 59 551 559 68 674 Bahana/consensus (%) - - 98 97 94 EPS (IDR) 3 32 33 35 39 EPS growth (%) 16.4 8.3 1.4 8.9 1.9 EV/EBITDA (x) 2.6 17.8 17.4 15.5 13.4 P/E (x) 26.1 24.1 23.8 21.9 19.7 FCFPS (IDR) 5.9 2.9 24. 32.4 32. FCF yield (%).8 2.7 3.1 4.2 4.1 BVPS (IDR) 112 138 164 193 226 P/BV (x) 6.9 5.6 4.7 4. 3.4 DPS (IDR) 6 6 7 7 8 Div. yield (%).8.8.8.9 1. note: based on 3 December 215 closing price Major assumptions Year to 31 Dec 213A 214A 215F 216F 217F Ace Hardware store (unit) 95 11 118 127 137 Toys Kingdom (unit) 2 24 27 3 35 Total store area (k sqm) 276 39 332 357 387 Blended avg. rev. /sqm growth (%) (4.) 1.2 (5.6).7 2.9 Company information 12M high/low (IDR) : 845/5 12M High/low consensus TP (IDR) : 98/67 Majority shareholder (%) : Kawan Lama (6.) Share outstanding (mn)/free float (%) : 17,15/4. Mkt. cap. (IDRbn/USDmn) : 13,291/96 3-m avg.daily t.o.(idrbn/usdmn) : 7.3/.5 Bloomberg/Reuters code : ACES IJ/ACES.JK Source: Bloomberg, Reuters based on 3 December 215 closing price 132
216 Compendium ACE HARDWARE INDONESIA Profit & loss Year to 31 Dec 213A 214A 215F 216F 217F Sales 3,895 4,541 4,698 5,86 5,647 Gross profit 1,934 2,19 2,243 2,426 2,76 EBITDA 64 725 726 785 873 Depreciation 75 78 79 81 86 EBIT 565 647 648 74 787 Net interest inc./(expense)* (28) (34) (34) (27) (23) Forex gain/(losses) 23 4 9 6 (6) Other income/(expense) 64 61 62 62 69 Pre-tax profit 623 678 684 745 827 Taxes 12 133 132 143 159 Minority interest (6) (6) (6) (7) (7) Extraordinary gain/(losses) - - - - - Net profit 59 551 559 68 674 *including bank admin. charges Balance sheet Year to 31 Dec 213A 214A 215F 216F 217F Cash and equivalents 162 391 71 1,168 1,69 S-T investments - - - - - Trade receivables 29 26 3 32 36 Inventories 446 463 475 494 526 Fixed assets 1,113 1,296 1,485 1,546 1,681 Other assets 73 771 765 779 83 Total assets 2,479 2,947 3,465 4,2 4,655 Interest bearing liabilities 35 27 23 24 26 Trade payables 246 131 186 21 222 Other liabilities 282 427 44 476 529 Total liabilities 563 584 649 72 778 Minority interest 11 5 11 18 24 Shareholders' equity 1,94 2,357 2,85 3,3 3,853 Cash flow Year to 31 Dec 213A 214A 215F 216F 217F EBIT 565 647 648 74 787 Depreciation 75 78 79 81 86 Working capital (412) (25) (151) (55) (122) Other operating items (5) (66) (73) (75) (84) Operating cash flow 177 454 53 656 667 Net capital expenditure (75) (95) (91) (11) (118) Free cash flow 12 359 412 555 549 Equity raised/(bought) (4) (6) - - - Net borrowings () (9) (3) 1 2 Other financing (169) (114) (9) (98) (11) Net cash flow (18) 23 319 458 441 Cash balances, beginning 27 162 391 71 1,168 Ending cash 162 391 71 1,168 1,69 Key ratios Year to 31 Dec 213A 214A 215F 216F 217F ROAE (%) 29. 25.9 21.6 19.9 18.9 ROAA (%) 23.2 2.3 17.4 16.2 15.5 Gross margin (%) 49.6 48.2 47.7 47.7 47.9 EBITDA margin (%) 16.4 16. 15.5 15.4 15.5 EBIT margin (%) 14.5 14.2 13.8 13.8 13.9 Net margin (%) 13.1 12.1 11.9 12. 11.9 Payout ratio (%) 2.1 2.1 2.1 2.1 2.1 Current ratio (x) 4. 5.2 5.6 6.2 6.7 Interest coverage (x) 15.7 16.2 15.3 15.4 15.5 Net gearing (%) nc nc nc nc nc Debtor turnover (days) 33 28 28 28 28 Creditor turnover (days) 3 2 2 2 2 Inventory turnover (days) 161 187 221 212 29 133
216 Compendium ADARO ENERGY BUY PX: IDR535 - TP: IDR7 To help offset sluggish global coal demand, ADRO, Indonesia s biggest coal producer (55.3m mt production, based on 214 data from the energy ministry), is entering the energy market by building power plants. Also, ADRO s low calorific-value (CV) coal is well-placed as 25% of its sales are domestic-based (2 nd largest after PTBA), which should allow for stronger volume growth ahead as local power-plant projects come on stream. On the back of 1.1bn mt coal reserves and 12.8bn mt coal resources, located in South, East and Central Kalimantan, ADRO positions its products as the most environmentally friendly under the brand Envirocoal. On the cost side, we expect margin support to come from continued low 216F cash costs of USD33/ton and a strip ratio of 5.4x, supported also by other operational cost-cutting measures like OPCC project. Reaffirm BUY and DCF-based 12-month TP of IDR7 (WACC: 16%). Risks: Higher-than-expected costs and delayed/cancelled power-plant projects. Share price performance (IDR) (') 1,25 25, 1,15 1,5 2, 95 15, 85 75 1, 65 55 5, 45 3-Dec-14 3-Feb-15 3-Apr-15 3-Jun-15 3-Aug-15 3-Oct-15 3-Dec-15 Volume (RHS) adro IJ Px Last (%) (%) (5) (1) (15) (2) (25) (3) (35) (4) (5) (1) (1.5) (15) (16.7) (2) (25) (3) (28.9) (3.) (35) (35.4) (37.6) (4) ytd 1M 3M 6M 9M 12M adro IJ relative to JCI Source: Bloomberg Arandi Ariantara (arandi@bahana.co.id) +6221 25581 ext. 3619 Financial highlights Year to 31 Dec 213A 214A 215F 216F 217F Revenues (USDmn) 3,285 3,325 2,791 2,774 2,759 EBIT (USDmn) 534 494 48 376 255 Net profit (USDmn) 231 178 213 24 14 Bahana/consensus (%) - - 124 142 91 EPS (IDR) 87 66 93 92 61 EPS growth (%) (22.9) (24.9) 4.7 (1.3) (33.7) EV/EBITDA (x) 3. 2.9 2.7 2.3 2.6 P/E (x) 6.1 8.1 5.8 5.8 8.8 FCFPS (IDR) 119 192 185 188 183 FCF yield (%) 22.2 36. 34.5 35.1 34.1 BVPS (IDR) 1,27 1,29 1,291 1,42 1,389 P/BV (x).5.5.4.4.4 DPS (IDR) 31 26 28 28 18 Div. yield (%) 5.8 4.9 4.3 5.4 5. note: based on 3 December 215 closing price Major assumptions Year to 31 Dec 213A 214A 215F 216F 217F Average Selling Price (USD/ton) 57 54 44 43 43 growth % (25.) (5.2) (18.7) (1.7) (1.8) Coal Sales Volume (m tons) 53.5 57. 53.8 53.8 53.8 growth % 1. 6.7 (5.6).. Prod Cash Cost (USD/ton) 35 33 35 33 33 Company information 12M high/low (IDR) : 1,135/474 12M High/low consensus TP (IDR) : 1,1/56 Majority shareholder (%) : PT Adaro Strategic (43.9) Shares outstanding (mn)/free float (%) : 31,986/41. Mkt. cap. (IDRbn/USDmn) : 17,112/1,237 3-m avg.daily t.o.(idrbn/usdmn) : 25.8/1.9 Bloomberg/Reuters code : ADRO IJ/ADRO.JK Source: Bloomberg, Reuters; based on 3 December 215 closing prices 134
216 Compendium ADARO ENERGY Profit & loss Year to 31 Dec (USDmn) 213A 214A 215F 216F 217F Sales 3,285 3,325 2,791 2,774 2,759 Gross profit 739 72 55 523 4 EBITDA 83 811 729 691 614 Depreciation 269 317 32 315 359 EBIT 534 494 48 376 255 Net interest inc./(expense) (1) (164) (38) (33) (19) Forex gain/(losses) - - - - - Other income/(expense) (15) (4) (12) (2) (2) Pre-tax profit 419 326 357 341 234 Taxes (19) (142) (143) (136) (94) Minority interest 2 (5) (1) (1) (1) Extraordinary gain/(losses) - - - - - Net profit 231 178 213 24 14 Balance sheet Year to 31 Dec (USDmn) 213A 214A 215F 216F 217F Cash and equivalents 681 745 853 1,8 1,131 S-T investments - - - - - Trade receivables 31 286 24 238 237 Inventories 13 97 83 84 88 Fixed assets 3,893 3,715 3,477 3,263 3,4 Other assets 1,71 1,571 1,557 1,557 1,557 Total assets 6,696 6,414 6,211 6,15 6,16 Interest bearing liabilities 2,221 1,896 1,619 1,416 1,186 Trade payables 327 351 32 33 318 Other liabilities 971 97 851 851 851 Total liabilities 3,518 3,154 2,772 2,57 2,354 Minority interest 49 492 489 489 489 Shareholders' equity 2,687 2,766 2,95 3,92 3,173 Cash flow Year to 31 Dec (USDmn) 213A 214A 215F 216F 217F EBIT 534 494 48 376 255 Depreciation 269 317 32 315 359 Working capital 1 55 1 2 12 Other operating items (181) (273) (235) (172) (115) Operating cash flow 722 592 54 521 511 Net capital expenditure (375) (82) (5) (1) (1) Free cash flow 347 51 454 421 41 Equity raised/(bought) - - - - - Net borrowings (225) (325) (277) (24) (23) Other financing 59 (121) (69) (62) (58) Net cash flow 181 64 18 155 123 Cash balances, beginning 5 681 745 853 1,8 Ending cash 681 745 853 1,8 1,131 Key ratios pls update Year to 31 Dec 213A 214A 215F 216F 217F ROAE (%) 8.8 6.5 7.5 6.7 4.5 ROAA (%) 3.5 2.7 3.4 3.3 2.3 Gross margin (%) 22.5 21.7 19.7 18.9 14.5 EBITDA margin (%) 24.4 24.4 26.1 24.9 22.3 EBIT margin (%) 16.3 14.9 14.6 13.6 9.2 Net margin (%) 7. 5.4 7.6 7.3 5.1 Payout ratio (%) 21 3 3 3 3 Current ratio (x) 1.8 1.6 2.2 2.2 2.3 Interest coverage (x) 4.6 2.5 8.1 6. 4.7 Debts to assets (%) 33.2 29.6 26.1 23. 19.7 Debtor turnover (days) 34 31 31 31 31 Creditor turnover (days) 46 49 49 49 49 Inventory turnover (days) 15 13 13 13 13 135
216 Compendium ADHI KARYA BUY PX: IDR2,21- TP: IDR2,55 Following a successful IDR2.7tn rights issue, ADHI, the fourth-largest construction play by market cap in our coverage, is set to develop the long-awaited IDR24tn Jakarta light rail transit (LRT) project. Solid project implementation would positively affect not only ADHI s construction sales but also its property and precast businesses. Going into 216, its property business (9M15: 67% of net income) should contribute less due to the current downturn in the property market. However, ADHI s merged property division into Adhi Persada Properti has 19 projects in its pipeline, including Grand Dhika City Bekasi and Grand Dhika Jatiwarna, creating ample growth potential. Backed by rising infrastructure projects, ADHI s recent positive share price momentum should persist despite EPS dilution post-rights. Our IDR2,55 TP is based on a 17x 216F PER, a 15% discount to the sector. BUY. Risks are lower LRT margins and project delays. Share price performance (IDR) (') 3,5 16, 14, 3, 12, 2,5 1, 8, 2, 6, 1,5 4, 2, 1, 3-Dec-14 3-Feb-15 3-Apr-15 3-Jun-15 3-Aug-15 3-Oct-15 3-Dec-15 Volume (RHS) ADHI IJ Px Last (%) (%) 25 22.9 25 19.4 2 2 15 15 1 1 4.2 5 5 (5) (5) (4.4) (4.1) (1) (1) (15) (12.1) (15) ytd 1M 3M 6M 9M 12M ADHI IJ relative to JCI Source: Bloomberg Bob Setiadi (bob.setiadi@bahana.co.id) +6221 25581 ext.365 *New, please refer to appendix II Financial highlights Year to 31 Dec 213A 214A 215F 216F 217F Revenues (IDRbn) 9,8 8,654 9,817 14,68 19,59 EBIT (IDRbn) 919 655 784 1,155 1,483 Net profit (IDRbn) 46 324 395 534 69 Bahana/cons.(%) - - 97 97 94 EPS (IDR) 225 18 182 15 194 EPS growth (%) 91.1 (2.2).9 (17.4) 29.2 EV/EBITDA (x) 8.2 14.8 8.8 8.5 6.1 P/E (x) 9.8 12.3 12.2 14.7 11.4 FCFPS (IDR) 15 (87) (145) (793) 228 FCF yield (%) 6.7 (39.) (6.5) (35.6) 1.2 BVPS (IDR) 854 969 1,354 1,481 1,645 P/BV (x) 2.6 2.3 1.6 1.5 1.3 DPS (IDR) 45 54 36 3 39 Div. yield (%) 2. 2.4 1.6 1.4 1.8 note: based on 3 December 215 closing price Major assumptions Year to 31 Dec 213A 214A 215F 216F 217F Carried over (IDRbn) 9,218 8,745 9,9 27,236 25,795 New contracts (IDRbn) 1,854 9,218 26,51 13,297 25,928 Total order books (IDRbn) 2,72 17,963 36,41 4,533 51,724 Company information 12M high/low (IDR) : 3,224/1,464 12M high/low consensus TP (IDR) : 3,5/1,67 Majority shareholder (%) : Republic of Indonesia (51.) Shares outstanding (mn)/free float (%) : 3,561/49. Mkt. cap. (IDRbn/USDmn) : 7,865/568 3-m avg.daily t.o.(idrbn/usdmn) : 74.6/5.4 Bloomberg/Reuters code : ADHI IJ/ADHI.JK Source: Bloomberg, Reuters based on 3 December 215 closing price 136
216 Compendium ADHI KARYA Profit & loss Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Sales 9,8 8,654 9,817 14,68 19,59 Gross profit 1,248 1,17 1,191 1,747 2,242 EBITDA 929 632 812 1,189 1,523 Depreciation 1 (24) 28 34 4 EBIT 919 655 784 1,155 1,483 Net interest inc./(expense) (75) (13) (86) (91) (118) Forex gain/(losses) 11 1 82 11 (6) Other income/(expense) (239) (58) (78) (83) (75) Pre-tax profit 714 595 72 992 1,284 Taxes (36) (268) (34) (456) (591) Minority interest (2) (3) (3) (3) (3) Extraordinary gain/(losses) - - - - - Net profit 46 324 395 534 69 Balance sheet Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Cash and equivalents 1,94 811 3,379 1,576 1,783 S-T investments - - - - - Trade receivables 2,283 2,896 3,163 3,72 4,39 Inventories 162 132 149 179 21 Fixed assets 49 857 995 1,126 1,251 Other assets 4,846 5,762 6,895 11,111 11,637 Total assets 9,721 1,459 14,581 17,694 19,271 Interest bearing liabilities 1,79 2,269 2,672 3,772 3,272 Trade payables 4,767 4,923 5,445 6,48 7,43 Other liabilities 1,696 1,515 1,636 2,231 2,73 Total liabilities 8,172 8,77 9,753 12,411 13,45 Minority interest 9 7 7 8 8 Shareholders' equity 1,539 1,745 4,82 5,275 5,858 Cash flow Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F EBIT 919 655 784 1,155 1,483 Depreciation 1 (24) 28 34 4 Working capital 343 (67) (36) (2,43) 913 Other operating items (5) (1,) (588) (892) (968) Operating cash flow 771 (1,38) 188 (2,17) 1,468 Net capital expenditure (52) (53) (74) (718) (655) Free cash flow 27 (1,568) (515) (2,825) 814 Equity raised/(bought) 1 3 2,745 - - Net borrowings 635 56 43 1,1 (375) Other financing 85 (124) (64) (79) (231) Net cash flow 991 (1,129) 2,568 (1,84) 27 Cash balances, beginning 949 1,94 811 3,379 1,576 Ending cash 1,94 811 3,379 1,576 1,783 Key ratios Year to 31 Dec 213A 214A 215F 216F 217F ROAE (%) 29.9 19.7 12. 1.6 12.4 ROAA (%) 4.6 3.2 3.2 3.3 3.7 Gross margin (%) 12.7 11.7 12.1 11.9 11.8 EBITDA margin (%) 9.5 7.3 8.3 8.1 8. EBIT margin (%) 9.4 7.6 8. 7.9 7.8 Net margin (%) 4.1 3.7 4. 3.6 3.6 Payout ratio (%) 19.9 3. 2. 2. 2. Current ratio (x) 1.4 1.3 1.7 1.5 1.5 Interest coverage (x) 12.2 6.4 9.2 12.6 12.5 Net gearing (%) nc 83.6 nc 41.6 25.4 Debtor turnover (days) 58 78 85 8 8 Creditor turnover (days) 216 218 23 18 16 Inventory turnover (days) 6 7 6 5 4 137
216 Compendium ADI SARANA ARMADA BUY PX: IDR1 - TP: IDR13 Despite higher sales volumes in its car-disposal division, ASSA, Indonesia s second-largest corporate car rental company with a 15% market share, has been hurt by lower second-hand car prices, following weak auto sector demand since 214. That said, revenue growth has been supported by its logistics and rental businesses. The new business segment (car auctions) called Bid Win, which started in 1H14, has helped the company to sell used cars, which could result in 216 revenue growth of 15% y-y to IDR1.6tn, despite flattish margins in 216-17F due to still-weak disposal-car pricing. At this stage, we expect ASSA s share price performance to reverse on continued above-market 216-17F EPS growth. Thus, we maintain our BUY rating and 12-month TP of IDR13, based on a 216F PE of 7x, still at a 3% discount to regional peers. Risks would be fewer expansion fleets and lower-than-expected second-hand car ASPs. Share price performance (IDR) 23 21 19 17 15 13 11 9 3-Dec-14 3-Feb-15 3-Apr-15 3-Jun-15 3-Aug-15 3-Oct-15 3-Dec-15 Volume (RHS) ASSA IJ Px Last (%) (%) (5) (1) (15) (2) (25) (3) (35) (21.6) (9.9) (13.8) (2.2) (') 7, (3) (29.2) (31.3) (35) ytd 1M 3M 6M 9M 12M ASSA IJ relative to JCI Source: Bloomberg Agustinus Reza Kirana (agustinus.reza@bahana.co.id) +6221 255735 ext. 3616 6, 5, 4, 3, 2, 1, (5) (1) (15) (2) (25) Financial highlights Year to 31 Dec 213A 214A 215F 216F 217F Revenues (IDRbn) 1,19 1,14 1,34 1,552 1,779 EBIT (IDRbn) 213 184 224 266 38 Net profit (IDRbn) 92 43 55 69 83 Bahana/consensus (%) - - - - - EPS (IDR) 27 13 16 2 24 EPS growth (%) 97.8 (53.3) 29. 24. 2.5 EV/EBITDA (x) 3.2 3.8 3.7 3.7 3.5 P/E (x) 3.7 7.9 6.1 4.9 4.1 FCFPS (IDR) (123) (116) (123) (112) (96) FCF yield (%) (122.8) (115.6) (122.5) (112.4) (96.) BVPS (IDR) 243 246 26 275 293 P/BV (x).4.4.4.4.3 DPS (IDR) 9 3 5 6 7 Div. yield (%) 8.9 3.2 4.9 6.1 7.3 note: based on 3 December 215 closing price Major assumptions Year to 31 Dec 213A 214A 215F 216F 217F Unit operation (Unit) 12,937 14,873 17,273 19,273 21,273 Utilization rate (%) 92.6 92.1 92.5 93. 93. Unit of disposal (Unit) 1,954 1,748 2,2 2,2 2,2 ASP used car (IDRmn) 12.7 99.4 97. 97. 97. Company information 12M high/low (IDR) : 214/95 12M High/low consensus TP (IDR) : 13/14 Majority shareholder (%) : Adi Dinamika Investindo (58%) Shares outstanding (mn)/free float (%) : 3,398/37.4 Mkt. cap. (IDRbn/USDmn) : 343/25 3-m avg.daily t.o.(idrbn/usdmn) :.3/.2 Bloomberg/Reuters code : ASSA IJ/ASSA.JK Source: Bloomberg, Reuters; based on 3 December 215 closing price 138
216 Compendium ADI SARANA ARMADA Profit & loss Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Sales 1,19 1,14 1,34 1,552 1,779 Gross profit 346 349 41 488 564 EBITDA 458 471 535 618 7 Depreciation 246 287 311 352 392 EBIT 213 184 224 266 38 Net interest inc./(expense) (112) (139) (161) (186) (211) Forex gain/(losses) () - - - Other income/(expense) 6 11 9 1 12 Pre-tax profit 16 56 73 9 19 Taxes (14) (13) (17) (22) (26) Minority interest - - - - - Extraordinary gain/(losses) - - - - - Net profit 92 43 55 69 83 Balance sheet Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Cash and equivalents 26 22 25 25 23 S-T investments - - - - - Trade receivables 111 136 134 155 178 Inventories 32 26 3 34 39 Fixed assets 1,912 2,193 2,385 2,714 2,981 Other assets 91 132 138 144 151 Total assets 2,172 2,57 2,713 3,72 3,372 Interest bearing liabilities 1,161 1,456 1,673 1,953 2,158 Trade payables 56 85 83 82 81 Other liabilities 13 129 157 185 218 Total liabilities 1,347 1,67 1,913 2,22 2,458 Minority interest - - - - - Shareholders' equity 825 837 882 934 996 Cash flow Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F EBIT 213 184 224 266 38 Depreciation 246 287 311 352 392 Working capital (26) (16) 7 (19) (2) Other operating items (145) (131) (158) (181) (26) Operating cash flow 288 324 384 418 474 Net capital expenditure (75) (717) (8) (8) (8) Free cash flow (417) (393) (416) (382) (326) Equity raised/(bought) - - - - - Net borrowings (47) 294 217 28 25 Other financing 177 94 23 11 119 Net cash flow (288) (4) 4 () (2) Cash balances, beginning 316 26 22 25 25 Ending cash 26 22 25 25 23 Key ratios Year to 31 Dec 213A 214A 215F 216F 217F ROAE (%) 11.8 5.2 6.4 7.6 8.6 ROAA (%) 4.3 1.8 2.1 2.4 2.6 Gross margin (%) 33.9 3.6 29.9 31.4 31.7 EBITDA margin (%) 45. 41.3 39.9 39.8 39.3 EBIT margin (%) 2.9 16.2 16.7 17.1 17.3 Net margin (%) 9. 3.8 4.1 4.4 4.7 Payout ratio (%) 33. 25. 3. 3. 3. Current ratio (x).5.4.4.3.3 Interest coverage (x) 1.9 1.3 1.4 1.4 1.5 Net gearing (%) 137.6 171.3 186.8 26.4 214.4 Debtor turnover (days) 36 39 37 37 37 Creditor turnover (days) 3 32 32 28 24 Inventory turnover (days) 18 12 12 12 12 139
216 Compendium AGUNG PODOMORO LAND REDUCE PX: IDR33 - TP: IDR22 APLN, with the largest high-rise and mixed-use portfolio among the property companies in our coverage, is under pressure from slow marketing sales of IDR1.7tn in 9M15, translating to just 28% of its IDR6tn full-year 215 target (Bahana: IDR2.2tn). Going into 216, we expect a slight revenue improvement with 3% growth, although the 215 top line would also likely increase on sales recognition (9M15 revenue: IDR3.9tn). We believe minority interests will continue to be a drag on earnings, capping 215-16F net profit margin at 1.9-11.3%. Our negative view on APLN stems from not only weak growth prospects but also its high ongoing reclamation project costs. We maintain our 12M TP of IDR22, based on a 75% discount to our 216F NAV, higher than the sector average of 65%. REDUCE. Upside risks include stronger-than-expected sales on successful projects. Share price performance (IDR) 5 45 4 35 3 25 2 3-Dec-14 3-Feb-15 3-Apr-15 3-Jun-15 3-Aug-15 3-Oct-15 3-Dec-15 Volume (RHS) APLN IJ Px Last (') 6, (%) (%) 15 12.1 15 1 5 (5) (1) (15) (2) 3.6 (9.1) (8.1) (14.2) ytd 1M 3M 6M 9M 12M APLN IJ relative to JCI Source: Bloomberg Sanni Satrio Dwi Utomo (sanni@bahana.co.id) +6221 25581 ext. 3611 *New, please refer to appendix II (2.2) 5, 4, 3, 2, 1, 1 5 (5) (1) (15) (2) Financial highlights* Year to 31 Dec 213A 214A 215F 216F 217F Revenues (IDRbn) 4,91 5,297 5,594 5,769 6,132 EBIT (IDRbn) 1,276 1,43 1,349 1,351 1,469 Net profit (IDRbn) 851 855 69 649 683 Bahana/cons.(%) - - 72 65 72 EPS (IDR) 42 42 3 32 33 EPS growth (%) 4.9.4 (28.8) 6.7 5.2 EV/EBITDA (x) 5.6 4.9 5.6 6.3 5.8 P/E (x) 7.3 7.3 1.2 9.6 9.1 FCFPS (IDR) (9) (22) (5) (8) (13) FCF yield (%) (2.8) (7.4) (16.4) (26.3) (4.2) BVPS (IDR) 281 314 333 359 386 P/BV (x) 1.1 1..9.8.8 DPS (IDR) 6 8 6 6 7 Div. yield (%) 2. 2.8 2. 2.1 2.2 note: based on 3 December 215 closing price NAV-derived target price calculation 9M15 Land bank (Ha) 651 Total value (IDRbn) 17,861 NAV/share (IDR) 871 Discount (%) 75 Adjusted NAV/share (IDR) 218 Company information 12M high/low (IDR) : 473/25 12M high/low consensus TP (IDR) : 52/22 Majority shareholder (%) : Indofica (65%) Share outstanding (m)/free float (%) : 2,51/27.1 Mkt. cap. (IDRbn/USDmn) : 6,212/449 3-m avg.daily t.o.(idrbn/usdmn) : 3.3/.2 Bloomberg/Reuters code : APLN IJ/APLN.JK Source: Bloomberg, Reuters; based on 3 December 215 closing price 14
216 Compendium AGUNG PODOMORO LAND Profit & loss Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Sales 4,91 5,297 5,594 5,769 6,132 Gross profit 2,355 2,655 2,851 2,913 3,127 EBITDA 1,55 1,699 1,679 1,742 1,922 Depreciation 229 269 33 391 454 EBIT 1,276 1,43 1,349 1,351 1,469 Net interest inc./(expense) (329) (393) (413) (395) (426) Forex gain/(losses) - - - - - Other income/(expense) 231 193 198 28 218 Pre-tax profit 1,177 1,23 1,133 1,164 1,261 Taxes (247) (246) (28) (288) (37) Minority interest (79) (129) (245) (226) (271) Extraordinary gain/(losses) - - - - - Net profit 851 855 69 649 683 Balance sheet Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Cash and equivalents 3,177 4,337 3,156 3,32 3,276 S-T investments - - - - - Trade receivables 1,623 1,524 1,887 1,955 2,51 Inventories 2,978 4,15 4,263 4,438 4,669 Fixed assets 8,289 8,83 12,722 16,7 19,83 Other assets 3,612 4,891 4,62 4,689 4,81 Total assets 19,68 23,687 26,648 3,41 35,51 Interest bearing liabilities 5,457 6,485 6,342 8,41 8,143 Trade payables 2,8 1,92 2,39 2,193 2,386 Other liabilities 4,931 6,837 9,216 1,374 13,923 Total liabilities 12,467 15,223 17,597 2,68 24,451 Minority interest 1,457 2,2 2,222 2,444 2,689 Shareholders' equity 5,756 6,444 6,829 7,357 7,912 Cash flow Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F EBIT 1,276 1,43 1,349 1,351 1,469 Depreciation 229 269 33 391 454 Working capital 2,775 1,821 2,97 1,181 3,126 Other operating items (483) (681) (45) (693) (776) Operating cash flow 3,798 2,839 3,371 2,23 4,272 Net capital expenditure (3,972) (3,297) (4,387) (3,866) (4,534) Free cash flow (175) (458) (1,16) (1,636) (262) Equity raised/(bought) 2 - - - - Net borrowings 973 1,28 (143) 1,699 12 Other financing 152 589 (21) 11 116 Net cash flow 952 1,159 (1,181) 164 (44) Cash balances, beginning 2,225 3,177 4,337 3,156 3,32 Ending cash 3,177 4,337 3,156 3,32 3,276 Key ratios Year to 31 Dec 213A 214A 215F 216F 217F ROAE (%) 15.8 14. 9.2 9.2 8.9 ROAA (%) 5.4 3.9 2.4 2.3 2.1 Gross margin (%) 48. 5.1 51. 5.5 51. EBITDA margin (%) 3.7 32.1 3. 3.2 31.4 EBIT margin (%) 26. 27. 24.1 23.4 23.9 Net margin (%) 17.4 16.1 1.9 11.3 11.1 Payout ratio (%) 14.4 2. 2. 2. 2. Current ratio (x).7.7.6.5.5 Interest coverage (x) 3.9 3.6 3.3 3.4 3.4 Net gearing (%) 39.6 33.3 46.6 64.2 61.5 Debtor turnover (days) 126 18 111 11 79 Creditor turnover (days) 298 263 271 28 29 Inventory turnover (days) - - - - - 141
216 Compendium AKR CORPORINDO BUY PX: IDR6,2 TP: IDR7,* AKRA, Indonesia s largest private petroleum distributor, is developing the Java Integrated Industrial and Ports Estate (JIIPE) in Gresik, East Java to diversify from its low-margin core chemical/oil distribution business. Equipped with power plants, coal distribution facility and LNG receiving terminals, JIIPE requires total investment of IDR2.7tn. BP Migas plans to reappoint AKRA to distribute 3k kl of subsidized gasoline in 216, and allow for a 13% y-y volume hike with the petroleum segment still the biggest revenue contributor. This, coupled with our average oil-price assumption of USD55/bbl and USD/IDR at 14,5, should leave AKRA with a stable 216F gross margin of 1%. We have a new DCF-based 12-month TP of IDR7, (WACC: 11%). BUY. Risks to our call would be a biodiesel policy adversely affecting AKRA s distribution volumes and a sooner-than-expected entrance by Saudi Aramco into the downstream oil market. Share price performance (IDR) 6,5 6, 5,5 5, 4,5 4, 3-Dec-14 3-Feb-15 3-Apr-15 3-Jun-15 3-Aug-15 3-Oct-15 3-Dec-15 63.7 Volume (RHS) 5. 9.5 22.7 akra IJ Px Last (%) (%) 7 6 5 4 3 2 1 ytd 1M 3M 6M 9M 12M akra IJ relative to JCI Source: Bloomberg Arandi Ariantara (arandi@bahana.co.id) +6221 25 581 ext. 3619 *New, please refer to appendix III 38.9 46.8 (') 14, 12, 1, 8, 6, 4, 2, 7 6 5 4 3 2 1 Financial highlights* Year to 31 Dec 213A 214A 215F 216F 217F Revenues (IDRbn) 22,338 22,468 19,344 23,231 27,77 EBIT (IDRbn) 768 1,63 1,345 2,43 2,14 Net profit (IDRbn) 648 81 1,47 1,495 1,535 Bahana/consensus (%) - - 93 117 98 EPS (IDR) 167 28 266 38 39 EPS growth (%) (.2) 25. 28.1 42.8 2.6 EV/EBITDA (x) 24.8 18.1 16.2 11.4 11.3 P/E (x) 37.1 29.8 23.3 16.3 15.9 FCFPS (IDR) (819) 395 26 (136) 288 FCF yield (%) (13.7) 6.6 3.3 (2.2) 4.7 BVPS (IDR) 1,226 1,383 1,556 1,853 2,132 P/BV (x) 5.1 4.5 4. 3.3 2.9 DPS (IDR) 18 14 16 152 156 Div. yield (%) 1.8 1.7 1.7 2.5 2.5 note: based on 3 December 215 closing price Major assumptions Year to 31 Dec 213A 214A 215F 216F 217F Petroleum volumes ( kl) 2,32 1,83 2,19 2,479 2,841 Growth (%) (5.5) (9.9) 19.7 12.1 13.2 ASP (IDR/liter) 8,699 9,681 6,7 7,566 8,543 Growth (%) 8.1 11.3 (34.6) 15.6 1.1 Company information 12M high/low (IDR) : 6,325/4,8 12M High/low consensus TP (IDR) : 7,/6,2 Majority shareholder (%) : Arthakencana Rayatama (58.4) Shares outstanding (mn)/free float (%) : 3,93/4.9 Mkt. cap. (IDRbn/USDmn) : 24,484/1,768 3-m avg.daily t.o.(idrbn/usdmn) : 62.8/4.5 Bloomberg/Reuters code : AKRA IJ/AKRA.JK Source: Bloomberg, Reuters; based on 3 December 215 closing price 142
216 Compendium AKR CORPORINDO Profit & loss Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Sales 22,338 22,468 19,344 23,231 27,77 Gross profit 1,368 1,732 2,54 2,78 2,83 EBITDA 1,2 1,396 1,666 2,49 2,41 Depreciation 252 333 321 366 396 EBIT 768 1,63 1,345 2,43 2,14 Net interest inc./(expense) (38) (77) (9) (141) (51) Forex gain/(losses) - - - - - Other income/(expense) 3 8 4 17 28 Pre-tax profit 733 993 1,34 1,919 1,991 Taxes (117) (23) (272) (451) (468) Minority interest 33 2 (21) 27 12 Extraordinary gain/(losses) - - - - - Net profit 648 81 1,47 1,495 1,535 Balance sheet Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Cash and equivalents 849 897 1,485 1,688 2,29 S-T investments - - - - - Trade receivables 4,352 4,39 4,15 4,873 5,566 Inventories 1,823 935 911 1,213 1,398 Fixed assets 4,227 4,39 4,85 6,724 6,823 Other assets 3,411 4,261 3,496 3,395 3,273 Total assets 14,633 14,792 14,83 17,894 19,27 Interest bearing liabilities 5,146 4,126 3,988 4,675 4,234 Trade payables 3,735 4,67 2,997 4,6 4,621 Other liabilities 378 629 648 763 818 Total liabilities 9,259 8,823 7,633 9,444 9,672 Minority interest 59 571 1,45 1,154 1,2 Shareholders' equity 4,784 5,398 6,125 7,296 8,398 Cash flow Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F EBIT 768 1,63 1,345 2,43 2,14 Depreciation 252 333 321 366 396 Working capital (1,828) 1,657 (713) (114) (31) Other operating items (56) (245) (298) (547) (479) Operating cash flow (863) 2,88 655 1,748 1,63 Net capital expenditure (2,335) (1,245) 116 (2,285) (495) Free cash flow (3,198) 1,564 771 (537) 1,135 Equity raised/(bought) - - 112 - - Net borrowings 2,113 (1,19) (138) 687 (441) Other financing 2 (468) (156) 53 (172) Net cash flow (1,65) 76 589 23 521 Cash balances, beginning 1,885 82 896 1,485 1,688 Ending cash 82 896 1,485 1,688 2,29 Key ratios Year to 31 Dec 213A 214A 215F 216F 217F ROAE (%) 13.5 14.3 18.2 22.3 19.6 ROAA (%) 4.9 5.5 7.1 9.1 8.3 Gross margin (%) 6.1 7.7 1.6 12. 1.4 EBITDA margin (%) 4.6 6.2 8.6 1.4 8.9 EBIT margin (%) 3.4 4.7 7. 8.8 7.4 Net margin (%) 2.9 3.6 5.4 6.4 5.7 Payout ratio (%) 65 5 4 4 4 Current ratio (x) 1.2 1.1 1.5 1.5 1.5 Interest coverage (x) 6.9 7.7 11.5 8. 11.8 Net gearing (%) 9.4 59.8 4.9 4.9 24.1 Debtor turnover (days) 7 69 76 76 74 Creditor turnover (days) 64 71 62 71 69 Inventory turnover (days) 31 16 19 21 21 143
216 Compendium ALAM SUTERA REALTY REDUCE* PX: IDR363 - TP: IDR3* With the second-largest landbank in our coverage (2,388ha), ASRI may have difficulty booking 16ha in land sales estimated at IDR2.9tn in 215, as its 9M15 pre-sales reached only IDR1.4tn, only 3% of its IDR4.5tn full-year target. Assuming this can be executed, ASRI should be able to book IDR4.3tn in 215 marketing sales. In terms of earnings, we expect ASRI s net margins to erode in 215-16F to 25.7-27.4% on large FX losses (9M15 FX loss: IDR791bn) due to large USD bonds. However, ASRI targets to increase its recurring income to 1% in 217, backed by expansion in its Alam Sutera mall and its Garuda Wisnu Kencana tourism project. As ASRI is adversely affected by a weak IDR and has suffered from a lack of project launches, we use a 7% NAV discount (sector: 65%) to derive our new 12-month TP of IDR3; downgrade to REDUCE. Risks would be higher-than-expected marketing sales and a stronger IDR. Share price performance (IDR) 8 7 6 5 4 3 2 3-Dec-14 3-Feb-15 3-Apr-15 3-Jun-15 3-Aug-15 3-Oct-15 3-Dec-15 Volume (RHS) ASRI IJ Px Last (') 5, (%) (%) 5 3.2 5 (5) (1) (15) (2) (25) (3) (6.5) 4, 3, 2, 1, (22.) (22.8) (25) (26.4) (26.3) (3) ytd 1M 3M 6M 9M 12M ASRI IJ relative to JCI Source: Bloomberg Sanni Satrio Dwi Utomo (sanni@bahana.co.id) +6221 25581 ext. 3611 *New, please refer to appendix II (5) (1) (15) (2) Financial highlights* Year to 31 Dec 213A 214A 215F 216F 217F Revenues (IDRbn) 3,684 3,631 3,491 3,667 3,952 EBIT (IDRbn) 1,533 1,98 1,782 1,79 1,938 Net profit (IDRbn) 877 1,97 899 1,4 1,26 Bahana/cons.(%) - - 75 74 82 EPS (IDR) 45 56 46 51 61 EPS growth (%) (26.5) 25.2 (18.1) 11.8 2. EV/EBITDA (x) 6.8 6.5 7.1 7.1 6.6 P/E (x) 8.1 6.5 7.9 7.1 5.9 FCFPS (IDR) (147) (1) (13) (5) 6 FCF yield (%) (4.4) (27.6) (3.6) (1.3) 1.6 BVPS (IDR) 263 311 35 392 443 P/BV (x) 1.4 1.2 1..9.8 DPS (IDR) 7 7 9 11 14 Div. yield (%) 1.9 1.9 2.5 3.1 3.9 note: based on 3 December 215 closing price NAV-derived target price calculation 9M15 Land bank (Ha) 2,388 Total value (IDRbn) 19,43 NAV/share (IDR) 989 Discount (%) 7 Adjusted NAV/share (IDR) 297 Company information 12M high/low (IDR) : 69/316 12M High/low consensus TP (IDR) : 77/33 Majority shareholder (%) : Manunggal Prime Development (26.3) Share outstanding (m)/free float (%) : 19,649/48.5 Mkt. cap. (IDRbn/USDmn) : 7,133/515 3-m avg.daily t.o.(idrbn/usdmn) : 38.8/2.8 Bloomberg/Reuters code : ASRI IJ/ASRI.JK Source: Bloomberg, Reuters; based on 3 December 215 closing price 144
216 Compendium ALAM SUTERA REALTY Profit & loss Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Sales 3,684 3,631 3,491 3,667 3,952 Gross profit 1,837 2,37 2,241 2,315 2,541 EBITDA 1,593 1,978 1,864 1,889 2,52 Depreciation 59 7 82 99 114 EBIT 1,533 1,98 1,782 1,79 1,938 Net interest inc./(expense) (88) (147) (15) (185) (228) Forex gain/(losses) (28) (138) (327) (164) 22 Other income/(expense) (83) (237) (115) (126) (189) Pre-tax profit 1,82 1,386 1,19 1,315 1,543 Taxes (192) (29) (192) (22) (217) Minority interest (13) (8) (99) (19) (12) Extraordinary gain/(losses) - - - - - Net profit 877 1,97 899 1,4 1,26 Balance sheet Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Cash and equivalents 89 881 1,42 1,27 1,39 S-T investments - - - - - Trade receivables 82 13 96 1 119 Inventories 3,237 3,751 4,11 4,271 4,531 Fixed assets 82 958 1,6 1,65 1,139 Other assets 9,415 11,24 12,443 13,665 14,889 Total assets 14,427 16,924 18,598 2,129 21,718 Interest bearing liabilities 4,587 6,66 7,14 7,37 7,44 Trade payables 165 161 13 111 119 Other liabilities 4,345 3,786 4,198 4,639 5,113 Total liabilities 9,96 1,553 11,441 12,12 12,673 Minority interest 174 253 278 36 336 Shareholders' equity 5,158 6,118 6,879 7,74 8,79 Cash flow Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F EBIT 1,533 1,98 1,782 1,79 1,938 Depreciation 59 7 82 99 114 Working capital (123) (869) (4) 27 36 Other operating items (1,316) (1,341) (1,1) (926) (886) Operating cash flow 154 (233) 813 99 1,23 Net capital expenditure (3,34) (1,739) (1,73) (1,83) (1,9) Free cash flow (2,88) (1,972) (26) (93) 113 Equity raised/(bought) - - - - - Net borrowings 2,46 2,2 534 23 7 Other financing (278) (57) (113) (152) (17) Net cash flow (751) (9) 161 (15) 13 Cash balances, beginning 1,641 89 881 1,42 1,27 Ending cash 89 881 1,42 1,27 1,39 Key ratios Year to 31 Dec 213A 214A 215F 216F 217F ROAE (%) 18. 19.5 13.8 13.8 14.7 ROAA (%) 6.9 7. 5.1 5.2 5.8 Gross margin (%) 49.9 63.5 64.2 63.1 64.3 EBITDA margin (%) 43.2 54.5 53.4 51.5 51.9 EBIT margin (%) 41.6 52.5 51. 48.8 49. Net margin (%) 23.8 3.2 25.7 27.4 3.5 Payout ratio (%) 15.7 12.5 2. 2. 2. Current ratio (x) 4.9 4.7 5.1 5. 4.8 Interest coverage (x) 17.3 13. 11.9 9.7 8.5 Net gearing (%) 71.7 93.6 88.6 82.3 73.5 Debtor turnover (days) 5 1 1 1 11 Creditor turnover (days) 165 19 13 111 119 Inventory turnover (days) - - - - - 145
ATIC IJ relative to JCI 216 Compendium ANABATIC TECHNOLOGIES BUY PX: IDR695 - TP: IDR8 With expected GDP improvement, ATIC, a leading fully-integrated IT company, should enjoy higher revenue growth as some large banks would be more willing to upgrade their core banking systems. Given Indonesia s low bank-account penetration rate (2%), ATIC should benefit from the new branchless banking regulations, specifically aimed at serving customers in remote areas. The government s proactive move in extending formal financial access to the unbanked sections of the country is likely to benefit from the banks additional IT-related capex. As ATIC s 3-year outlook looks attractive, we have a BUY call with a TP of IDR8, based on a simple average 1-year DCF valuation with WACC of 11.1%, and implying a 216F PER of 16.3x, about a 2% discount to regional peers. Risks: banks delaying their core system upgrades and IDR depreciation. Share price performance (IDR) (') 8 25, 75 7 2, 65 15, 6 55 1, 5 45 5, 4 8-Jul-15 29-Jul-15 19-Aug-15 9-Sep-15 3-Sep-15 21-Oct-15 11-Nov-15 2-Dec-15 Volume (RHS) ATIC IJ Px Last (%) (%) 8 6 4 2 (2) (4) (6) (8) (6.2) 7.1 6.1 1M 3M Since IPO Source: Bloomberg Michael W. Setjoadi (michael@bahana.co.id) +6221 25581 ext. 3613 8 6 4 2 (2) (4) (6) (8) Financial highlights Year to 31 Dec 213A 214A 215F 216F 217F Revenues (IDRbn) 2,482 2,57 2,626 2,964 3,375 EBIT (IDRbn) 168 129 178 217 263 Net profit (IDRbn) 38 61 6 11 146 Bahana/consensus (%) - - - - - EPS (IDR) 25 41 33 51 68 EPS growth (%) (97.3) 6.4 (19.2) 55.7 32.1 EV/EBITDA (x) 1.8 13.9 7.5 6.4 6. P/E (x) 27.3 17. 21.1 13.5 1.2 FCFPS (IDR) (22) (11) (93) (1) 9 FCF yield (%) (31.7) (1.6) (13.3) (.1) 1.3 BVPS (IDR) 138 179 384 369 424 P/BV (x) 5. 3.9 1.8 1.9 1.6 DPS (IDR) 45-1 8 13 Div. yield (%) 6.5-1.5 1.2 1.8 note: based on 3 December 215 closing price Major assumptions Year to 31 Dec 213A 214A 215F 216F 217F IT industry growth (%) 16.5 17.3 13.8 12.8 13. IT spending/gdp (%) 1.3 1.4 1.5 1.7 2. Smartphone users (mn people) 41.6 61.2 74.8 89.8 13.6 Internet penetration rate (%) 72.7 83.6 93.4 12.8 112.6 Company information 12M high/low (IDR) : 75/51 12M high/low consensus TP (IDR) : na/na Majority shareholder (%) : Artha Investama Jaya (4.2) Shares outstanding (mn)/free float (%) : 1,875/21.7 Mkt. cap. (IDRbn/USDmn) : 1,33/94 3-m avg.daily t.o.(idrbn/usdmn) :./. Bloomberg/Reuters code : ATIC IJ/ATIC.JK Source: Bloomberg, Reuters; based on 3 December 215 closing price 146
216 Compendium ANABATIC TECHNOLOGIES Profit & loss Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Sales 2,482 2,57 2,626 2,964 3,375 Gross profit 4 396 452 528 626 EBITDA 188 147 224 268 32 Depreciation 2 19 46 51 57 EBIT 168 129 178 217 263 Net interest inc./(expense) (25) (33) (29) (28) (32) Forex gain/(losses) (37) 16 (32) (3) 3 Other income/(expense) (4) Pre-tax profit 12 112 117 186 235 Taxes (27) (31) (29) (46) (59) Minority interest (37) (21) (28) (29) (31) Extraordinary gain/(losses) - 1 - - - Net profit 38 61 6 11 146 Balance sheet Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Cash and equivalents 27 281 366 414 479 S-T investments - - - - - Trade receivables 556 56 573 658 762 Inventories 349 439 435 497 572 Fixed assets 139 251 45 424 437 Other assets 559 51 565 649 741 Total assets 1,874 1,978 2,344 2,642 2,991 Interest bearing liabilities 83 833 734 819 912 Trade payables 44 286 35 394 447 Other liabilities 357 454 48 47 539 Total liabilities 1,563 1,572 1,492 1,683 1,897 Minority interest 13 138 152 167 184 Shareholders' equity 28 268 7 792 91 Cash flow Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F EBIT 168 129 178 217 263 Depreciation 2 19 46 51 57 Working capital (33) 1 (74) (14) (13) Other operating items (15) (35) (89) (78) (86) Operating cash flow (246) 123 61 86 14 Net capital expenditure (84) (139) (23) (87) (85) Free cash flow (331) (16) (169) (1) 19 Equity raised/(bought) 133-39 - - Net borrowings 398 3 (99) 85 93 Other financing (11) (2) (38) (35) (47) Net cash flow 9 11 84 49 65 Cash balances, beginning 18 27 281 366 414 Ending cash 27 282 366 414 479 Key ratios Year to 31 Dec 213A 214A 215F 216F 217F ROAE (%) 24.5 25.8 12.4 14.8 17.1 ROAA (%) 2.5 3.2 2.8 4.4 5.2 Gross margin (%) 16.1 15.4 17.2 17.8 18.5 EBITDA margin (%) 7.6 5.7 8.5 9.1 9.5 EBIT margin (%) 6.8 5. 6.8 7.3 7.8 Net margin (%) 1.5 2.4 2.3 3.7 4.3 Payout ratio (%) 4.7. 25. 25. 25. Current ratio (x) 1.1 1.1 1.2 1.2 1.3 Interest coverage (x) 6.8 3.9 6.1 7.6 8.3 Net gearing (%) 256.4 25.8 52.6 51. 47.5 Debtor turnover (days) 5 51 51 51 51 Creditor turnover (days) 7 68 71 72 73 Inventory turnover (days) 53 58 63 64 65 147
216 Compendium ANEKA TAMBANG BUY PX: IDR323 - TP:IDR764 On the back of the government s mineral-ore ban, ANTM, one of the largest listed diversified metals and mining companies in the region with 67m mt nickel reserves (6 th largest) and 8m mt gold reserves (9 th largest), is going more industrial by expanding its ferronickel plants and building bauxite value-added plants. ANTM s successful IDR5.3tn rights issue will be used to finance its 1 st phase (USD45m) of the East Halmahera s ferronickel plant with 15k TNi/annum capacity. In terms of its ferronickel volumes, we conservatively expect 216 production to reach 22k tonnes, despite the completion of Pomalaa s expansion (+5%). We have a BUY rating and DCF-based 12-month TP of IDR764 (12.5% WACC). Downside risks would be a longer-than expected nickel-price recovery (currently hovering at USD1k/mt on weak demand) and maintenance shutdown for its ferronickel plants. Share price performance (IDR) (') 1, 8, 9 7, 8 6, 5, 7 4, 6 3, 5 2, 4 1, 3 3-Dec-14 3-Feb-15 3-Apr-15 3-Jun-15 3-Aug-15 3-Oct-15 3-Dec-15 Volume (RHS) antm IJ Px Last (%) (%) (1) (2) (3) (4) (5) (6) (5.7) (7.6) (23.3) (38.1) (45.) (48.6) ytd 1M 3M 6M 9M 12M antm IJ relative to JCI Source: Bloomberg Arandi Ariantara (arandi@bahana.co.id) +6221 25581 ext. 3619 (1) (2) (3) (4) (5) (6) Financial highlights Year to 31 Dec 213A 214A 215F 216F 217F Revenues (IDRbn) 11,298 9,421 11,89 13,29 14,812 EBIT (IDRbn) 585 (137) (8) 281 826 Net profit (IDRbn) 533 (744) (449) (172) 228 Bahana/consensus (%) - - na na 22 EPS (IDR) 23 (31) (19) (7) 1 EPS growth (%) (82.3) na na na 232.4 EV/EBITDA (x) 14.7 28.1 19.5 13.2 8.2 P/E (x) 14.3 (1.3) na na 33.5 FCFPS (IDR) (112) (67) (287) (69) (39) FCF yield (%) (34.6) (2.7) (88.9) (21.4) (12.2) BVPS (IDR) 52 51 718 711 721 P/BV (x).6.6.4.5.4 DPS (IDR) 19 4 - - 2 Div. yield (%) 5.9 1.2 - -.5 note: based on 3 December 215 closing price Major assumptions Year to 31 Dec 213A 214A 215F 216F 217F Ferronickel sales vol. (tons) 14,441 19,748 2, 22, 27, Ferronickel ASP (USD/mt) 6.2 7.7 5.7 5.7 6.4 Gold sales volume. (wmt) 31.9 32.8 5. 5. 5. Gold ASP (USD/toz) 1,49 1,286 1,125 1,2 1,25 Company information 12M high/low (IDR) : 937/313 12M High/low consensus TP (IDR) : 516/336 Majority shareholder (%) : Government of Indonesia (65.) Shares outstanding (mn)/free float (%) : 24,31/65. Mkt. cap. (IDRbn/USDmn) : 9,729/799 3-m avg.daily t.o.(idrbn/usdmn) : 52.6/3.8 Bloomberg/Reuters code : ANTM IJ/ANTM.JK Source: Bloomberg, Reuters; based on 3 December 215 closing price 148
216 Compendium ANEKA TAMBANG Profit & loss Year to 31 Dec (IDRb) 213A 214A 215F 216F 217F Sales 11,298 9,421 11,89 13,29 14,812 Gross profit 1,686 793 924 1,24 1,842 EBITDA 1,158 66 737 1,18 2,81 Depreciation 573 743 745 899 1,255 EBIT 585 (137) (8) 281 826 Net interest inc./(expense) 25 (58) (113) (118) (147) Forex gain/(losses) - - - - - Other income/(expense) (579) (596) (374) (382) (374) Pre-tax profit 31 (791) (495) (219) 34 Taxes 52 47 46 46 (76) Minority interest () () () () () Extraordinary gain/(losses) - - - - - Net profit 533 (744) (449) (172) 228 Cash flow Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F EBIT 585 (137) (8) 281 826 Depreciation 573 743 745 899 1,255 Working capital (6) 387 (639) (289) (278) Other operating items (41) (61) (39) (454) (598) Operating cash flow 157 392 (291) 438 1,25 Net capital expenditure (2,83) (1,975) (6,499) (2,76) (2,139) Free cash flow (2,645) (1,584) (6,791) (1,638) (934) Equity raised/(bought) 21 5,39 - - Net borrowings 2,129 1,23 1,596 847 64 Other financing (58) 18 216 365 354 Net cash flow (1,76) (174) 412 (426) (516) Cash balances, beginning 3,869 2,793 2,619 3,31 2,65 Ending cash 2,793 2,619 3,31 2,65 2,89 Balance sheet Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Cash and equivalents 2,793 2,619 3,31 2,65 2,89 S-T investments - - - - - Trade receivables 1,19 1,99 1,387 1,55 1,728 Inventories 2,446 1,762 2,193 2,41 2,594 Fixed assets 6,7 8,7 14,273 15,146 15,736 Other assets 8,94 7,825 8,66 8,5 7,945 Total assets 22,32 22,4 28,95 29,716 3,91 Interest bearing liabilities 6,785 8,15 9,612 1,459 1,523 Trade payables 547 687 874 96 1,34 Other liabilities 2,47 1,252 1,478 1,483 1,492 Total liabilities 9,74 9,954 11,963 12,92 13,49 Minority interest Shareholders' equity 12,292 12,5 16,987 16,815 17,43 Key ratios Year to 31 Dec 213A 214A 215F 216F 217F ROAE (%) 4.3 (6.1) (3.1) (1.) 1.3 ROAA (%) 2.6 (3.4) (1.8) (.6).8 Gross margin (%) 14.9 8.4 7.8 9.3 12.4 EBITDA margin (%) 1.3 6.4 6.2 8.9 14. EBIT margin (%) 5.2 (1.5) (.1) 2.1 5.6 Net margin (%) 4.7 (7.9) (3.8) (1.3) 1.5 Payout ratio (%) 15 na na na 15 Current ratio (x) 1.8 1.6 1.8 1.8 1.6 Interest coverage (x) 9.6 na na 1.7 4.4 Net gearing (%) 32.5 44.8 38.7 46.7 49.5 Debtor turnover (days) 38 42 42 42 42 Creditor turnover (days) 2 29 29 29 29 Inventory turnover (days) 92 74 72 72 72 149
216 Compendium ASTRA AGRO LESTARI BUY PX: IDR17,65 - TP: IDR22,5 AALI, the sector s largest planter by market cap with the second largest planted area of 29k ha behind SIMP, is likely to undergo an operating performance turnaround in 216 on the back of rising CPO prices and higher utilization rates on its refinery mills, offsetting the company s weak FFB production. On the cost front, we expect margin expansion across the board in 216 given expected higher CPO prices, and lower harvesting and maintenance costs on the back of reduced labor costs, which account for around 4% of total COGS. We estimate 216 sales to reach IDR16.5tn (+12% y-y), supported by rising CPO prices. As we expect 216 earnings to strongly rebound by 111% y-y to IDR1.6tn, mainly on a stronger USD and lower FX losses, we maintain our BUY call and IDR22,5 TP, based on a 216F PE of 21.5x, a 1% discount to Malaysian peers. Risk: Lower-than-expected CPO prices. Share price performance (IDR) (') 28, 8, 26, 7, 24, 6, 5, 22, 4, 2, 3, 18, 2, 16, 1, 14, 3-Dec-14 3-Feb-15 3-Apr-15 3-Jun-15 3-Aug-15 3-Oct-15 3-Dec-15 Volume (RHS) AALI IJ Px Last (%) (%) 1 5 (5) (1) (15) (2) (25) (13.8) (1.9) 6.4 (19.4) (16.1) (14.6) ytd 1M 3M 6M 9M 12M AALI IJ relative to JCI Source: Bloomberg Agustinus Reza Kirana (agustinus.reza@bahana.co.id) +6221 25581 ext. 3616 1 5 (5) (1) (15) (2) (25) Financial highlights Year to 31 Dec 213A 214A 215F 216F 217F Revenues (IDRbn) 12,675 16,36 14,739 16,467 18,486 EBIT (IDRbn) 3,5 3,722 1,969 2,773 3,233 Net profit (IDRbn) 1,81 2,54 781 1,647 2,495 Bahana/consensus (%) - - 64 88 118 EPS (IDR) 1,144 1,59 496 1,46 1,585 EPS growth (%) (25.3) 39. (68.8) 11.8 51.5 EV/EBITDA (x) 8.3 7.1 12. 9.2 8. P/E (x) 15.4 11.1 35.6 16.9 11.1 FCFPS (IDR) (237) (668) (1,419) (47) 252 FCF yield (%) (1.3) (3.8) (8.) (2.3) 1.4 BVPS (IDR) 6,283 7,252 7,14 7,963 9,77 P/BV (x) 2.8 2.4 2.5 2.2 1.9 DPS (IDR) 514 715 223 47 713 Div. yield (%) 2.9 4.1 1.3 2.7 4. note: based on 3 December 215 closing price Major assumptions Year to 31 Dec 213A 214A 215F 216F 217F FFB nucleus production (k tons) 3,71 5,551 5,496 5,267 5,673 CPO production (k tons) 1,539 1,744 1,71 1,649 1,788 Growth (%) 4.2 13.3 (2.4) (3.1) 8.4 ASP CPO (USD/ton) 673 673 56 6 62 Average IDR/USD 1,925 12,393 13,455 14,533 14,115 Company information 12M high/low (IDR) : 27,4/14,8 12M High/low consensus TP (IDR) : 28,5/15,8 Majority shareholder (%) : Astra International (79.7) Share outstanding (mn)/free float (%) : 1,575/2.3 Mkt. cap. (IDRbn/USDmn) : 27,873/2,14 3-m avg.daily t.o.(idrbn/usdmn) : 32.1/2.3 Bloomberg/Reuters code : AALI IJ/AALI.JK Source: Bloomberg, Reuters; based on 3 December 215 closing price 15
216 Compendium ASTRA AGRO LESTARI Profit & loss Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Sales 12,675 16,36 14,739 16,467 18,486 Gross profit 4,82 4,952 3,252 4,167 4,79 EBITDA 3,574 4,45 2,915 3,882 4,48 Depreciation 57 728 946 1,19 1,247 EBIT 3,5 3,722 1,969 2,773 3,233 Net interest inc./(expense) (54) (73) (141) (159) (17) Forex gain/(losses) (444) (127) (696) (317) 378 Other income/(expense) 99 147 66 74 83 Pre-tax profit 2,65 3,69 1,199 2,371 3,524 Taxes (72) (1,69) (3) (593) (881) Minority interest (12) (118) (118) (132) (148) Extraordinary gain/(losses) - - - - - Net profit 1,81 2,54 781 1,647 2,495 Balance sheet Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Cash and equivalents 79 611 618 658 662 S-T investments - - - - - Trade receivables 4 33 49 55 62 Inventories 83 1,278 1,574 1,685 1,887 Fixed assets 11,468 14,342 17,155 19,447 21,526 Other assets 1,98 2,294 2,349 2,395 2,445 Total assets 14,963 18,558 21,744 24,24 26,583 Interest bearing liabilities 2,723 4,427 7,677 8,577 8,777 Trade payables 72 923 945 1,12 1,134 Other liabilities 1,253 1,371 1,342 1,444 1,562 Total liabilities 4,695 6,721 9,965 11,33 11,473 Minority interest 373 418 536 668 816 Shareholders' equity 9,895 11,419 11,244 12,539 14,294 Cash flow Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F EBIT 3,5 3,722 1,969 2,773 3,233 Depreciation 57 728 946 1,19 1,247 Working capital 612 (746) (237) (22) (52) Other operating items (1,913) (1,154) (1,154) (1,98) (76) Operating cash flow 2,273 2,55 1,524 2,762 3,723 Net capital expenditure (2,646) (3,62) (3,759) (3,42) (3,326) Free cash flow (373) (1,52) (2,235) (64) 397 Equity raised/(bought) - - - - - Net borrowings 1,751 1,74 3,25 9 2 Other financing (897) (75) (1,8) (219) (593) Net cash flow 481 (98) 7 4 4 Cash balances, beginning 228 79 611 618 658 Ending cash 79 611 618 658 662 Key ratios Year to 31 Dec 213A 214A 215F 216F 217F ROAE (%) 19. 23.5 6.9 13.8 18.6 ROAA (%) 13.2 14.9 3.9 7.2 9.8 Gross margin (%) 32.2 3.4 22.1 25.3 25.5 EBITDA margin (%) 28.2 27.3 19.8 23.6 24.2 EBIT margin (%) 23.7 22.8 13.4 16.8 17.5 Net margin (%) 14.2 15.4 5.3 1. 13.5 Payout ratio (%) 45. 45. 45. 45. 45. Current ratio (x).5.6.5.3.3 Interest coverage (x) 55.2 5.9 14. 17.5 19. Net gearing (%) 2.4 33.4 62.8 63.2 56.8 Debtor turnover (days) 1 1 1 1 1 Creditor turnover (days) 27 26 3 3 3 Inventory turnover (days) 44 33 5 5 5 151
216 Compendium ASTRA INTERNATIONAL REDUCE PX: IDR6,3 - TP: IDR5,55 In 216, ASII, Indonesia s biggest auto player, will likely continue to experience tough business conditions on the back of unsupportive industry fundamentals on weak purchasing power and intensifying competition. We expect ASII s weak auto margins to persist given flat 216F 4W (51k) and 2W (4.3m) volumes. At this stage, we expect ASII s financing business to experience limited growth, hurt by unexciting 215-16F auto-sales growth. For its commodity-related segments, we look for continued soft coal prices to be a drag on ASII s heavy-equipment and mining-contracting subsidiaries. As we foresee a limited economic recovery in 216, we expect ASII s recent market outperformance to reverse. We maintain our REDUCE rating on ASII with a SOTP-based 12-month TP of IDR5,55, reflecting a 216F PE of 12.8x. Risks to our call are higher-than-expected auto sales from greater purchasing power and less intense competition. Share price performance (IDR) (') 9, 12, 8,5 1, 8, 7,5 8, 7, 6, 6,5 4, 6, 5,5 2, 5, 3-Dec-14 3-Feb-15 3-Apr-15 3-Jun-15 3-Aug-15 3-Oct-15 3-Dec-15 Volume (RHS) ASII IJ Px Last (%) (%) 4 3 2 1 (1) (2) (3) (4) (2.) (2.).1 Source: Bloomberg Leonardo Henry Gavaza, CFA (leonardo@bahana.co.id) +6221 25581 ext. 368 2.8 (3.1) ytd 1M 3M 6M 9M 12M ASII IJ relative to JCI 3.5 4 3 2 1 (1) (2) (3) (4) Financial highlights Year to 31 Dec 213A 214A 215F 216F 217F Revenues (IDRbn) 193,88 21,71 184,851 193,52 211,196 EBIT (IDRbn) 18,63 2,163 17,427 18,498 2,496 Net profit (IDRbn) 19,417 19,181 16,764 17,591 19,543 Bahana/consensus(%) - - 73 69 77 EPS (IDR) 48 474 414 435 483 EPS growth (%) (.) (1.2) (12.6) 4.9 11.1 EV/EBITDA (x) 12.2 11. 12.1 11.6 1.6 P/E (x) 13.1 13.3 15.2 14.5 13.1 FCFPS (IDR) 242 154 116 8 164 FCF yield (%) 3.8 2.4 1.8 1.3 2.6 BVPS (IDR) 2,73 2,362 2,563 2,811 3,98 P/BV (x) 3. 2.7 2.5 2.2 2. DPS (IDR) 216 213 186 196 217 Div. yield (%) 3.4 3.4 3. 3.1 3.4 note: based on 3 December 215 closing price Major assumptions Year to 31 Dec 213A 214A 215F 216F 217F 4W sales volume (units) 654,573 614,169 51,388 51,388 546,626 4W market share (%) 53% 51% 5% 5% 51% 2W sales volume (k units) 4,697 5,51 4,296 4,296 4,43 2W market share (%) 61% 64% 67% 67% 67% Company information 12M high/low (IDR) : 8,575/5,125 12M High/low consensus TP (IDR) : 8,5/5,28 Majority shareholder (%) : Jardine Cycle & Carriage L (5.1) Shares outstanding (mn)/free float (%) : 4,484/49.9 Mkt. cap. (IDRtn/USDbn) : 255./18.4 3-m avg.daily t.o.(idrbn/usdmn) : 195.6/14.1 Bloomberg/Reuters code : ASII IJ/ASII.JK Source: Bloomberg, Reuters; based on 3 December 215 closing price 152
216 Compendium ASTRA INTERNATIONAL Profit & loss Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Sales 193,88 21,71 184,851 193,52 211,196 Gross profit 35,311 38,89 36,56 38,514 42,4 EBITDA 24,666 27,588 24,913 26,349 28,91 Depreciation 6,63 7,425 7,487 7,851 8,45 EBIT 18,63 2,163 17,427 18,498 2,496 Net interest inc./(expense) (166) 151 16 59 (29) Forex gain/(losses) (751) (126) (244) (77) 8 Other income/(expense) 9,837 7,164 7,841 7,791 8,569 Pre-tax profit 27,523 27,352 25,129 26,272 29,115 Taxes (5,226) (5,227) (4,849) (5,76) (5,684) Minority interest (2,88) (2,944) (3,517) (3,66) (3,888) Extraordinary gain/(losses) - - - - - Net profit 19,417 19,181 16,764 17,591 19,543 Balance sheet Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Cash and equivalents 18,557 2,92 19,817 19,842 18,34 S-T investments 262 277 299 323 349 Trade receivables 22,831 24,462 22,537 23,593 25,749 Inventories 14,433 16,986 15,444 16,138 17,611 Fixed assets 58,844 61,336 67,218 71,942 73,3 Other assets 99,67 112,66 117,889 129,341 143,66 Total assets 213,994 236,29 243,24 261,179 278,72 Interest bearing liabilities 64,523 7,72 67,433 69,981 68,98 Trade payables 17,275 18,839 17,7 17,836 19,464 Other liabilities 26,8 26,794 27,772 29,669 31,948 Total liabilities 17,86 115,75 112,276 117,486 12,392 Minority interest 22,25 24,713 27,184 29,93 32,893 Shareholders' equity 83,938 95,611 13,744 113,79 125,417 Cash flow Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F EBIT 18,63 2,163 17,427 18,498 2,496 Depreciation 6,63 7,425 7,487 7,851 8,45 Working capital 745 (2,62) 1,698 (984) (2,) Other operating items 786 (2,928) (3,251) (3,452) (3,736) Operating cash flow 26,197 22,4 23,361 21,914 23,165 Net capital expenditure (16,391) (15,86) (18,676) (18,678) (16,51) Free cash flow 9,86 6,234 4,684 3,236 6,655 Equity raised/(bought) - - - - - Net borrowings 7,766 5,549 (2,639) 2,548 (1,2) Other financing (1,7) (9,438) (3,13) (5,759) (7,192) Net cash flow 7,52 2,345 (1,85) 25 (1,538) Cash balances, beginning 11,55 18,557 2,92 19,817 19,842 Ending cash 18,557 2,92 19,817 19,842 18,34 Key ratios Year to 31 Dec 213A 214A 215F 216F 217F ROAE (%) 25. 21.4 16.8 16.2 16.3 ROAA (%) 9.8 8.5 7. 7. 7.2 Gross margin (%) 18.2 19.2 19.7 19.9 19.9 EBITDA margin (%) 12.7 13.7 13.5 13.6 13.7 EBIT margin (%) 9.6 1. 9.4 9.6 9.7 Net margin (%) 1. 9.5 9.1 9.1 9.3 Payout ratio (%) 45. 45. 45. 45. 45. Current ratio (x) 1.2 1.3 1.4 1.2 1.3 Interest coverage (x) 112.1 na na na 698.9 Net gearing (%) 54.8 51.4 45.9 44.1 4.4 Debtor turnover (days) 43 44 45 45 45 Creditor turnover (days) 4 42 42 42 42 Inventory turnover (days) 33 38 38 38 38 153
216 Compendium AUSTINDO NUSANTARA JAYA REDUCE PX: IDR1,61 - TP: IDR1,* ANJT, with a planted area of 48k ha (the smallest under our coverage), is currently experiencing a big loss of USD8mn below the line on the delayed development of its Papua sago plantation business due to social issues, resulting in the early termination of deals with some contractors. In 216, we expect ANJT s revenue to improve to USD153m (+16% y- y) on higher CPO prices, resulting in net profit of USD3m, on lower forex losses, a reversal when compared to 215 s net loss of around USD3m due to low CPO prices, forex losses and higher costs related to immature area transition. Nevertheless, we remain cautious on ANJT due to its cost burden on the continued delayed development of its Papua sago plantation. We have a REDUCE rating with a new 12-month TP of IDR1,, reflecting an EV/ha of USD5,5, compared to SIMP s current valuation of USD5,3/ha. Risk: Higher cost efficiencies. Share price performance (IDR) (') 1,7 5, 1,6 1,5 4, 1,4 3, 1,3 1,2 2, 1,1 1, 1, 9 3-Dec-14 3-Feb-15 3-Apr-15 3-Jun-15 3-Aug-15 3-Oct-15 3-Dec-15 Volume (RHS) ANJT IJ Px Last (%) (%) 6 5 4 3 2 1 (1) 34.7 (.1) (1.1) ytd 1M 3M 6M 9M 12M ANJT IJ relative to JCI Source: Bloomberg Agustinus Reza Kirana (agustinus.reza@bahana.co.id) +6221 25581 ext. 3616 *New, please refer to appendix II 45.7 54.4 35.7 6 5 4 3 2 1 (1) Financial highlights Year to 31 Dec 213A 214A 215F 216F 217F Revenues (USDmn) 138 158 132 153 17 EBIT (USDmn) 22 36 4 15 19 Net profit (USDmn) 22 18 (3) 3 7 Bahana/consensus (%) - - - - - EPS (IDR) 91 77 (13) 12 27 EPS growth (%) (53.7) (15.5) na na 12.2 EV/EBITDA (x) 11.1 7.7 16.1 11.8 8.8 P/E (x) 17.8 21. (125.6) 129.9 59. FCFPS (IDR) (164) (14) (187) (31) (28) FCF yield (%) (1.2) (6.4) (11.6) (1.9) (1.7) BVPS (IDR) 1,65 1,97 1,61 1,74 1,89 P/BV (x) 1.5 1.5 1.5 1.5 1.5 DPS (IDR) 4 38 (6) 6 14 Div. yield (%) 2.5 2.4 (.4).4.8 note: based on 3 December 215 closing price Major assumptions Year to 31 Dec 213A 214A 215F 216F 217F FFB nucleus production (k tons) 69 726 751 766 81 CPO production (k tons) 159 188 194 193 197 Growth (%) (1.6) 17.8 3.3 (.7) 2.4 ASP CPO (USD/ton) 689 697 56 6 62 Company information 12M high/low (IDR) : 1,62/98 12M High/low consensus TP (IDR) : na Majority shareholder (%) : Austindo (4.3) Shares outstanding (mn)/free float (%) : 3,335/1 Mkt. cap. (IDRbn/USDmn) : 3,8/312 3-m avg.daily t.o.(idrbn/usdmn) :.1/.1 Bloomberg/Reuters code : ANJT IJ/ANJT.JK Source: Bloomberg, Reuters; based on 3 December 215 closing price 154
216 Compendium AUSTINDO NUSANTARA JAYA Profit & loss Year to 31 Dec (USDmn) 213A 214A 215F 216F 217F Sales 138 158 132 153 17 Gross profit 48 64 3 43 49 EBITDA 37 61 33 46 52 Depreciation 15 26 29 31 34 EBIT 22 36 4 15 19 Net interest inc./(expense) 1 (1) (1) (2) Forex gain/(losses) 3 (2) (4) (1) 1 Other income/(expense) 7 (5) (7) (6) Pre-tax profit 33 34 (6) 5 12 Taxes (11) (16) 3 (2) (5) Minority interest () () () () Extraordinary gain/(losses) - - - - - Net profit 22 18 (3) 3 7 Balance sheet Year to 31 Dec (USDmn) 213A 214A 215F 216F 217F Cash and equivalents 41 3 27 28 26 S-T investments - - Trade receivables 1 1 1 2 2 Inventories 1 13 12 14 8 Fixed assets 89 125 18 198 219 Other assets 256 275 276 277 276 Total assets 397 444 497 518 532 Interest bearing liabilities 2 28 88 96 14 Trade payables 3 6 6 6 7 Other liabilities 28 34 41 48 48 Total liabilities 33 69 134 15 159 Minority interest 1 Shareholders' equity 364 375 363 367 372 Cash flow Year to 31 Dec (USDmn) 213A 214A 215F 216F 217F EBIT 22 36 4 15 19 Depreciation 15 26 29 31 34 Working capital (6) 9 6 6 6 Other operating items () (26) (8) (12) (12) Operating cash flow (24) 44 32 4 46 Net capital expenditure (24) (74) (86) (49) (54) Free cash flow (47) (3) (54) (9) (8) Equity raised/(bought) 49 - - - Net borrowings (3) 26 6 8 8 Other financing (33) (8) (9) 2 (1) Net cash flow (35) (11) (3) 1 (1) Cash balances, beginning 77 41 3 27 28 Ending cash 41 3 27 28 26 Key ratios Year to 31 Dec 213A 214A 215F 216F 217F ROAE (%) 7. 4.8 (.8).8 1.8 ROAA (%) 6.1 4.3 (.7).6 1.3 Gross margin (%) 34.8 4.6 22.9 28.2 29.1 EBITDA margin (%) 26.6 38.6 25.3 3.1 3.8 EBIT margin (%) 15.9 22.4 3.4 9.8 1.9 Net margin (%) 15.7 11.6 (2.3) 2. 3.9 Payout ratio (%) 44.1 5. 5. 5. 5. Current ratio (x) 3.7 1.2.7.6.5 Interest coverage (x) na na 3.8 11. 12.3 Net gearing (%) nc nc 16.8 18.6 2.9 Debtor turnover (days) 8 9 9 9 9 Creditor turnover (days) 19 13 2 2 2 Inventory turnover (days) 54 45 45 43 34 155
216 Compendium BANK BUKOPIN HOLD PX: IDR695 - TP: IDR73* BBKP, under a new controlling shareholder, is continuing to reduce its reliance on Bulog, the state-owned logistics agency, by focusing on MSMEs to not only raise its loan portfolio but also to sustain long-term earnings growth and prevent further margin erosion. This aggressive penetration into the SME segment should also improve the bank s funding structure, boosting margins. However, the bank s limited track record of accomplishment in this segment remains the main challenge for BBKP, in our opinion. At this stage, we retain our HOLD rating on the stock with a fine-tuned 12-month target price of IDR73, based on a 216F P/BV of.8x, a 7% discount to the sector. Despite its undemanding valuation, we see downside risks to our call, including the failure to manage its loan quality within the SME segment. Upside risk would lie in its ability to improve margins in a potentially lower interest rate environment. Share price performance (IDR) 85 8 75 7 65 6 55 3-Dec-14 3-Feb-15 3-Apr-15 3-Jun-15 3-Aug-15 3-Oct-15 3-Dec-15 Volume (RHS) BBKP IJ Px Last (%) (%) 8 7.5 7. 8 5.9 6 3.8 6 4 2.4 4 2 2 (2) (4) (2.) ytd 1M 3M 6M 9M 12M BBKP IJ relative to JCI Source: Bloomberg Teguh Hartanto (teguh.hartanto@bahana.co.id) +6221 25 581 ext. 361 *New, please refer to appendix II (') 25, 2, 15, 1, 5, (2) (4) Financial highlights Year to 31 Dec 213A 214A 215F 216F 217F Net interest income (IDRbn) 2,444 2,473 2,864 3,35 3,892 Operating income (IDRbn) 3,494 3,56 4,247 4,832 5,423 Operating profit (IDRbn) 1,174 944 1,366 1,528 1,687 Pre-tax profit (IDRbn) 1,194 971 1,398 1,564 1,729 Net profit (IDRbn) 93 724 1,67 1,194 1,32 Bahana/consensus (%) - - 119 115 115 EPS (IDR) 115 8 117 131 145 EPS growth (%) 1.6 (3.8) 47.3 11.9 1.6 P/E (x) 6. 8.7 5.9 5.3 4.8 Equity (IDRbn) 6,196 6,82 7,59 8,57 9,652 BVPS (IDR) 682 749 835 943 1,62 P/BV (x) 1..9.8.7.7 DPS (IDR) 31 31 23 26 29 Div. yield (%) 4.5 4.4 3.4 3.8 4.2 note: based on 3 December 215 closing price Major assumptions Year to 31 Dec (%) 213A 214A 215F 216F 217F Loan growth 6.4 14. 14.1 13.6 13.3 Deposit growth 3.5 17.1 12.7 7.5 11.2 Non interest inc./operating inc. 3.1 3.5 32.6 3.7 28.2 Corporate tax rate 21.7 25.2 23.5 23.5 23.5 Payout ratio 26.9 38.5 2. 2. 2. Company information 12M high/low (IDR) : 8/56 12M high/low consensus TP (IDR) : 1,5/66 Majority shareholder (%) : Bosowa Corp (3.) Shares outstanding (mn)/free float (%) : 9,87/4.5 Mkt. cap. (IDRbn/USDmn) : 6,315/456 3-m avg.daily t.o.(idrbn/usdmn) : 1.8/.1 Bloomberg/Reuters code : BBKP IJ/BBKP.JK Source: Bloomberg, Reuters; based on 3 December 215 closing price 156
216 Compendium BANK BUKOPIN Profit & loss Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Interest income 5,95 7,93 8,136 8,941 9,85 Interest expense 3,56 4,62 5,272 5,591 5,914 Net interest income 2,444 2,473 2,864 3,35 3,892 Non-interest income 1,51 1,86 1,383 1,482 1,531 Total operating income 3,494 3,56 4,247 4,832 5,423 Operating expenses 2,161 2,325 2,486 2,929 3,411 Loan loss provisions 159 291 394 376 325 Operating profit 1,174 944 1,366 1,528 1,687 Non-operating inc./(exp.) 19 27 31 36 42 Pre-tax profit 1,194 971 1,398 1,564 1,729 Corporate tax (259) (244) (328) (367) (46) Minorities (5) (2) (2) (2) (2) Net profit 93 724 1,67 1,194 1,32 Balance sheet Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Loans 48,461 55,263 63,71 71,655 81,174 Cash on hand 1,2 1,23 1,33 1,729 2,248 Fixed assets 1,329 1,519 1,898 2,373 2,966 Other assets 18,648 21,247 24,351 27,39 27,367 Total assets 69,458 79,51 9,651 12,797 113,756 Customer deposits 55,822 65,391 73,686 79,23 88,6 Deposits from other banks 1,976 2,7 2,38 2,654 3,52 Borrowing and sub-debts 4,382 3,777 3,924 4,217 4,551 Other liabilities 1,65 1,55 3,124 8,133 8,421 Total liabilities 63,244 72,23 83,41 94,27 14,84 Minorities 17 2 2 2 2 Equity 6,196 6,82 7,59 8,57 9,652 Total liabilities and equity 69,458 79,51 9,651 12,797 113,756 Breakdown Year to 31 Dec 213A 214A 215F 216F 217F % to earnings assets Gross loans 72.3 72.2 72. 72.5 72.9 Government bonds 2.6 3. 7.3 6.5 5.7 Other earnings assets 25.1 24.8 2.6 21. 21.4 % to loan portfolio Loan to bulog 7.8 2.2 2. 1.8 1.7 Commercial 38.5 45.5 46.7 47.6 48.4 MSME 39.8 38.8 37.9 37.4 37. Consumer 13.8 13.6 13.3 13.2 13. % to total deposits Core funding 41.7 37.1 35.9 37.4 38.2 Time deposits 58.3 62.9 64.1 62.6 61.8 Key ratios Year to 31 Dec (%) 213A 214A 215F 216F 217F ROAA 1.4 1. 1.3 1.2 1.2 ROAE 16.6 11.1 14.8 14.8 14.5 NIM 3.8 3.7 3.9 4. 4.1 Loan/deposit ratio 86.8 84.5 85.6 9.5 92.2 Loan/funding ratio 77.9 77.6 78.9 83.2 84.9 Cost efficiency ratio 61.8 65.3 58.5 6.6 62.9 CIR 83.2 88.5 85.6 85.3 85.1 Gross NPL 2.3 2.8 3.2 3.1 3. NPL coverage 72.9 59.8 59.4 65.4 67.6 LLR 1.6 1.6 1.9 2. 2. CAR-total 14.5 14.5 15.1 14.3 13.3 CAR-tier I 1.8 11.4 12. 11.1 1. 157
216 Compendium BANK CENTRAL ASIA BUY PX: IDR13,3 - TP: IDR14,7* As Indonesia s biggest transactional and private bank, BBCA is backed by Chinese entrepreneurs, allowing it to enjoy strong core funding, which in turn provides flexibility in maneuvering its loan portfolio mix. Note that the bank has the lowest funding cost in our coverage at around 2.6%, helped by a CASA ratio of over 75%. Cautious and prudent strategic business moves have allowed BBCA to manage its loan quality, well below the industry s average, although the potential increase in gross NPLs seems inevitable in the next few quarters. However, the bank s over-provisioning should have a limited adverse impact on its earnings outlook. BBCA should continue trading at a premium valuation to the industry, justified by its very strong management. BUY with a 12-month TP of IDR14,7, based on a 216F P/BV of 3.4x, a 45% premium to peers. Risk: Overly conservative approach triggering market share loss. Share price performance (IDR) (') 16, 8, 7, 15, 6, 14, 5, 4, 13, 3, 12, 2, 1, 11, 3-Dec-14 3-Feb-15 3-Apr-15 3-Jun-15 3-Aug-15 3-Oct-15 3-Dec-15 Volume (RHS) BBCA IJ Px Last (%) (%) 16 14 12 1 8 6 4 2 14.5 1. 5.8 9.4 9. ytd 1M 3M 6M 9M 12M BBCA IJ relative to JCI Source: Bloomberg Teguh Hartanto (teguh.hartanto@bahana.co.id) +6221 25 581 ext. 361 *New, please refer to appendix II 11.8 16 14 12 1 8 6 4 2 Financial highlights* Year to 31 Dec 213A 214A 215F 216F 217F Net interest income (IDRbn) 26,439 32,49 35,69 38,71 41,549 Operating income (IDRbn) 37,422 44,47 48,667 52,85 58,14 Operating profit (IDRbn) 17,79 2,59 22,474 24,585 26,964 Pre-tax profit (IDRbn) 17,816 2,746 22,758 24,897 27,37 Net profit (IDRbn) 14,254 16,49 18,176 19,883 21,86 Bahana/consensus (%) - - 11 98 95 EPS (IDR) 578 669 737 86 884 EPS growth (%) 21.6 15.7 1.3 9.4 9.7 P/E (x) 23. 19.9 18. 16.5 15. Equity (IDRbn) 63,866 75,488 9,16 16,3 123,668 BVPS (IDR) 2,59 3,62 3,651 4,299 5,16 P/BV (x) 5.1 4.3 3.6 3.1 2.7 DPS (IDR) 12 148 158 168 178 Div. yield (%).9 1.1 1.2 1.3 1.3 note: based on 3 December 215 closing price Major assumptions Year to 31 Dec (%) 213A 214A 215F 216F 217F Loan growth 21.7 11.2 1. 1.7 11.8 Deposit growth 1.7 9.5 1.4 1.3 11.6 Non interest inc./operating inc. 29.4 27.2 26.8 26.8 28.4 Corporate tax rate 2. 2.4 2. 2. 2. Payout ratio 2.8 22.1 21.4 2.8 2.1 Company information 12M high/low (IDR) : 15,3/11,3 12M high/low consensus TP (IDR) : 16,7/1,3 Majority shareholder (%) : Republic of Indonesia (47.2) Shares outstanding (mn)/free float (%) : 24,655/5.8 Mkt. cap. (IDRbn/USDmn) : 327,912/23,688 3-m avg.daily t.o.(idrbn/usdmn) : 185.4/13.4 Bloomberg/Reuters code : BBCA IJ/BBCA.JK Source: Bloomberg, Reuters; based on 3 December 215 closing price 158
216 Compendium BANK CENTRAL ASIA Profit & loss Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Interest income 34,291 43,793 48,452 52,391 56,372 Interest expense 7,852 11,745 12,843 13,68 14,823 Net interest income 26,439 32,49 35,69 38,71 41,549 Non-interest income 1,984 11,998 13,58 14,139 16,464 Total operating income 37,422 44,47 48,667 52,85 58,14 Operating expenses 16,767 18,336 21,253 25,187 28,492 Loan loss provisions 3,577 5,21 4,939 3,77 2,557 Operating profit 17,79 2,59 22,474 24,585 26,964 Non-operating inc./(exp.) 737 236 283 311 342 Pre-tax profit 17,816 2,746 22,758 24,897 27,37 Corporate tax (3,559) (4,229) (4,552) (4,979) (5,461) Minorities (2) (26) (3) (34) (39) Net profit 14,254 16,49 18,176 19,883 21,86 Balance sheet Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Loans 313,712 348,694 383,734 424,783 474,791 Cash on hand 16,284 19,578 21,535 22,612 23,743 Fixed assets 7,44 8,845 1,98 13,428 16,52 Other assets 158,868 176,39 193,937 222,56 254,89 Total assets 496,35 553,156 61,114 683,328 769,925 Customer deposits 411,18 45,155 496,841 548,239 611,723 Deposits from other banks 3,31 3,754 4,712 6,345 8,925 Borrowing and sub-debts 52 3,81 3,235 3,397 3,566 Other liabilities 17,355 2,44 15,52 19,62 21,734 Total liabilities 432,338 477,43 519,84 577,42 645,948 Minorities 11 238 258 282 31 Equity 63,866 75,488 9,16 16,3 123,668 Total liabilities and equity 496,35 553,156 61,114 683,328 769,925 Breakdown Year to 31 Dec 213A 214A 215F 216F 217F % to earnings assets Gross loans 67.4 67.6 68.5 68.2 68.4 Government bonds 7.4 5.6 4. 2.8 1.6 Other earnings assets 25.2 26.8 27.5 29. 3. % to loan portfolio Corporate 32.9 34.6 33.9 32.9 32.4 Commercial & SME 39. 38.5 39.2 4.3 41.1 Consumer 11.2 11.2 11.3 11.4 11.4 Mortgage 17. 15.8 15.6 15.4 15. % to total deposits Core funding 78.5 74.7 74.9 75.6 77. Time deposits 21.5 25.3 25.1 24.4 23. Key ratios Year to 31 Dec (%) 213A 214A 215F 216F 217F ROAA 3. 3.1 3.1 3.1 3. ROAE 24.6 23.7 22. 2.3 19. NIM 6.2 6.5 6.3 6. 5.8 Loan/deposit ratio 76.3 77.5 77.2 77.5 77.6 Loan/funding ratio 75.6 76.3 76. 76.1 76.1 Cost efficiency ratio 44.8 41.6 43.7 47.7 49.1 CIR 62.3 63.2 63.5 63. 63. Gross NPL.4.6.9 1.2 1. NPL coverage 46.5 32.4 256. 181.9 19.4 LLR 1.8 1.9 2.4 2.3 2. CAR-total 16. 17.2 17.3 17.7 18. CAR-tier I 15. 16.2 16.2 16.6 16.8 159
216 Compendium BANK DANAMON BUY* PX: IDR3,5 - TP: IDR3,4* Due to BDMN s large exposure in the 4W and 2W markets, the bank continues to try to remix its loan portfolio towards the SME segment due to intensifying competition in the micro-loan segment and slowing demand for auto leasing from its subsidiary ADMF. Its penetration into SMEs would enhance BDMN s funding profile, supporting its CASA ratio, which stood at 44.5% at end-3q15. This would subsequently improve its blended funding cost. Additionally, the management aims to improve operating efficiencies by reducing headcount, closing down and/or combining some overlapping outlets. While we expect BDMN earnings to be helped by overall cost-structure improvement, implementation and effectiveness will likely take time to materialize. We upgrade to BUY (from HOLD) on valuation, with a new 12-month TP of IDR3,4, based on 216F PBV of.9x (65% discount to the sector). Downside risk: failure to improve funding costs. Share price performance (IDR) (') 4, 5, 35, 4,5 3, 25, 4, 2, 3,5 15, 1, 3, 5, 2,5 3-Dec-14 3-Feb-15 3-Apr-15 3-Jun-15 3-Aug-15 3-Oct-15 3-Dec-15 Volume (RHS) BDMN IJ Px Last (%) (%) (5) (1) (15) (2) (25) (2.4) (3.) (19.8) (17.5) (2.2) (16.3) ytd 1M 3M 6M 9M 12M BDMN IJ relative to JCI Source: Bloomberg Teguh Hartanto (teguh.hartanto@bahana.co.id) +6221 25 581 ext. 361 *New, please refer to appendix II (5) (1) (15) (2) (25) Financial highlights Year to 31 Dec 213A 214A 215F 216F 217F Net interest income (IDRbn) 13,6 13,774 14,235 14,845 16,187 Operating income (IDRbn) 23,155 19,452 2,353 21,26 23,16 Operating profit (IDRbn) 5,65 4,63 3,623 4,17 4,681 Pre-tax profit (IDRbn) 5,53 3,554 3,63 3,514 4,77 Net profit (IDRbn) 4,42 2,64 2,613 2,998 3,475 Bahana/consensus (%) - - 92 85 77 EPS (IDR) 422 272 273 313 363 EPS growth (%).7 (35.6).3 14.8 15.9 P/E (x) 7.1 11.1 11. 9.6 8.3 Equity (IDRbn) 31,251 32,78 34,611 36,825 39,476 BVPS (IDR) 3,26 3,42 3,611 3,842 4,119 P/BV (x).9.9.8.8.7 DPS (IDR) 126 82 82 86 91 Div. yield (%) 4.2 2.7 2.7 2.9 3. note: based on 3 Decemberr 215 closing price Major assumptions Year to 31 Dec (%) 213A 214A 215F 216F 217F Loan growth 15.1 2.6 3.9 11.1 11.7 Deposit growth 21.4 6.7 12. 11.1 11.2 Non interest inc./operating inc. 41.3 29.2 3.1 29.4 29.9 Corporate tax rate 24.8 24.5 11.7 11.7 11.8 Payout ratio 29.9 3. 3. 27.5 25. Company information 12M high/low (IDR) : 5,15/2,695 12M high/low consensus TP (IDR) : 4,65/3,343 Majority shareholder (%) : Asia Financial (67.4) Shares outstanding (mn)/free float (%) : 9,585/32.5 Mkt. cap. (IDRbn/USDmn) : 28,82/2,81 3-m avg.daily t.o.(idrbn/usdmn) : 9.1/.7 Bloomberg/Reuters code : BDMN IJ/BDMN.JK Source: Bloomberg, Reuters; based on 3 December 215 closing price 16
216 Compendium BANK DANAMON Profit & loss Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Interest income 19,958 22,75 23,179 24,579 26,816 Interest expense 6,358 8,976 8,944 9,735 1,628 Net interest income 13,6 13,774 14,235 14,845 16,187 Non-interest income 9,555 5,678 6,118 6,182 6,919 Total operating income 23,155 19,452 2,353 21,26 23,16 Operating expenses 14,23 11,42 11,443 12,3 13,311 Loan loss provisions 3,347 3,986 5,287 4,98 5,114 Operating profit 5,65 4,63 3,623 4,17 4,681 Non-operating inc./(exp.) (75) (51) (561) (53) (64) Pre-tax profit 5,53 3,554 3,63 3,514 4,77 Corporate tax (1,371) (871) (36) (411) (482) Minorities (118) (79) (9) (14) (12) Net profit 4,42 2,64 2,613 2,998 3,475 Balance sheet Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Loans 133,991 137,478 142,872 158,769 177,41 Cash on hand 2,944 2,856 3,285 3,777 4,344 Fixed assets 4,587 5,137 5,98 6,794 7,813 Other assets 42,716 5,237 61,275 88,244 143,27 Total assets 184,237 195,79 213,34 257,584 332,765 Customer deposits 19,161 116,495 13,527 145,16 161,193 Deposits from other banks 1,699 2,429 2,849 3,347 3,931 Borrowing and sub-debts 33,512 34,824 37,82 43,14 49,184 Other liabilities 8,312 8,944 7,969 29,8 78,523 Total liabilities 152,684 162,691 178,427 22,385 292,831 Minorities 32 238 31 374 458 Equity 31,251 32,78 34,611 36,825 39,476 Total liabilities and equity 184,237 195,79 213,34 257,584 332,765 Breakdown Year to 31 Dec 213A 214A 215F 216F 217F % to earnings assets Gross loans 77.8 73.6 7.5 64.7 55.7 Government bonds 3.3 3.5 1.8 1.5 1.1 Other earnings assets 18.9 22.9 27.7 33.8 43.2 % to loan portfolio Corporate 14.1 12.8 12.5 12.2 11.9 Commercial 28.1 27. 27.3 27.5 28.1 Retail 5.7 9.3 9.1 9.5 9.7 Mass market 52.2 5.9 51. 5.8 5.3 % to total deposits Core funding 45.2 48.7 47.8 47.4 47. Time deposits 54.8 51.3 52.2 52.6 53. Key ratios Year to 31 Dec (%) 213A 214A 215F 216F 217F ROAA 2.3 1.3 1.3 1.3 1.2 ROAE 13.5 8.1 7.8 8.4 9.1 NIM 9.6 8.4 7.8 7. 6.1 Loan/deposit ratio 122.7 118. 19.5 19.5 11.1 Loan/funding ratio 92.8 89.4 83.8 83. 82.8 Cost efficiency ratio 61.3 58.6 56.2 57.2 57.6 CIR 81. 85.7 87.6 86.9 86.1 Gross NPL 1.9 2.4 2.8 2.7 2.6 NPL coverage 91.3 86.7 17.5 113.7 111.6 LLR 1.7 2. 3. 3.1 2.9 CAR-total 17.9 17.9 19. 17.6 15.5 CAR-tier I 17.3 17.3 18. 16.6 14.4 161
216 Compendium BANK PEMB. DAERAH JAWA BARAT DAN BANTEN BUY PX: IDR735 - TP: IDR85 The largest regional bank by assets, BJBR is back on track to focus on expanding its loans to civil servants and pensioners, which accounted for 68.3% of end-september 215 total loans. Its ability to secure this market segment through the regional payroll system with a high credit ceiling should provide sustained and increased customer loyalty. Additionally, we like BJBR s less-risky participation in syndicated loans for infrastructure-related project financing and linkage credit lines with other banks. This, combined with loans to civil servants, should ensure future loan quality, following the unfavorable experience of having massive NPLs in its micro financing in the past few years. As we like BJBR s ability to benefit from growing regional funding to allow for some flexibility in off-loading expensive time deposits, we retain our BUY rating and IDR85 TP based on a 216F PBV of 1.x, a 6% discount to the sector. Risk: plan to come back into micro loans. Share price performance 1,5 (IDR) 95 85 75 65 55 3-Dec-14 3-Feb-15 3-Apr-15 3-Jun-15 3-Aug-15 3-Oct-15 3-Dec-15 Volume (RHS) BJBR IJ Px Last (') 2, (%) (%) 15 13.9 15 1 5 (5) (1) 5.3 (4.7) (6.5) (7.5) ytd 1M 3M 6M 9M 12M BJBR IJ relative to JCI Source: Bloomberg Teguh Hartanto (teguh.hartanto@bahana.co.id) +6221 25 581 ext. 361 3.4 15, 1, 5, 1 5 (5) (1) Financial highlights Year to 31 Dec 213A 214A 215F 216F 217F Net interest income (IDRbn) 4,782 4,462 5,39 5,484 5,977 Operating income (IDRbn) 5,98 5,969 6,392 6,898 7,494 Operating profit (IDRbn) 1,622 1,291 1,432 1,599 1,79 Pre-tax profit (IDRbn) 1,753 1,438 1,586 1,769 1,977 Net profit (IDRbn) 1,376 1,12 1,227 1,368 1,529 Bahana/consensus (%) - - 11 112 18 EPS (IDR) 142 116 127 141 158 EPS growth (%) 15.4 (18.6) 9.5 11.5 11.7 P/E (x) 5.2 6.4 5.8 5.2 4.7 Equity (IDRbn) 6,684 7,43 7,575 8,269 9,114 BVPS (IDR) 689 726 781 853 94 P/BV (x) 1.1 1..9.9.8 DPS (IDR) 78 72 7 71 71 Div. yield (%) 1.6 9.7 9.5 9.6 9.7 note: based on 3 December 215 closing price Major assumptions Year to 31 Dec (%) 213A 214A 215F 216F 217F Loan growth 27.6 1.5 11.8 13.1 13.3 Deposit growth (1.2) 15.5 16. 15.3 15.4 Non interest inc./operating inc. 2. 25.3 21.2 2.5 2.3 Corporate tax rate 21.5 22.1 22.7 22.7 22.7 Payout ratio 55. 62. 55. 5. 45. Company information 12M high/low (IDR) : 1,1/585 12M high/low consensus TP (IDR) : 1,1/888 Majority shareholder (%) : West Java Provincial Govt. (38.3) Shares outstanding (mn)/free float (%) : 9,696/25. Mkt. cap. (IDRbn/USDmn) : 7,127/515 3-m avg.daily t.o.(idrbn/usdmn) : 9.6/.7 Bloomberg/Reuters code : BJBR IJ/BJBR.JK Source: Bloomberg, Reuters; based on 3 December 215 closing price 162
216 Compendium BANK PEMB. DAERAH JAWA BARAT DAN BANTEN Profit & loss Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Interest income 8,133 8,792 9,993 1,986 12,181 Interest expense 3,351 4,33 4,954 5,51 6,25 Net interest income 4,782 4,462 5,39 5,484 5,977 Non-interest income 1,198 1,58 1,353 1,414 1,518 Total operating income 5,98 5,969 6,392 6,898 7,494 Operating expenses 2,993 3,131 3,752 4,138 4,544 Loan loss provisions 1,365 1,547 1,28 1,161 1,161 Operating profit 1,622 1,291 1,432 1,599 1,79 Non-operating inc./(exp.) 131 147 155 17 188 Pre-tax profit 1,753 1,438 1,586 1,769 1,977 Corporate tax (376) (318) (36) (41) (448) Minorities - - - - - Net profit 1,376 1,12 1,227 1,368 1,529 Balance sheet Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Loans 48,92 54,17 6,47 68,32 77,383 Cash on hand 2,595 2,768 3,183 3,66 4,29 Fixed assets 1,355 1,799 2,68 2,379 2,735 Other assets 18,16 17,253 19,71 22,726 27,391 Total assets 7,958 75,837 85,368 97,84 111,719 Customer deposits 49,997 57,741 66,994 77,262 89,134 Deposits from other banks 5,514 3,924 3,76 4,15 4,648 Borrowing and sub-debts 5,732 4,26 4,595 4,377 4,815 Other liabilities 2,997 2,828 2,458 2,986 3,968 Total liabilities 64,24 68,753 77,752 88,774 12,564 Minorities 34 41 41 41 41 Equity 6,684 7,43 7,575 8,269 9,114 Total liabilities and equity 7,958 75,837 85,368 97,84 111,719 Breakdown Year to 31 Dec 213A 214A 215F 216F 217F % to earnings assets Gross loans 73.6 75.2 74.7 74.4 73.3 Government bonds - - - - - Other earnings assets 26.4 24.8 25.3 25.6 26.7 % to loan portfolio Consumer 64. 68. 68.7 69.2 69.6 Commercial 15.5 13.9 13.8 13.6 13.5 Micro 11.9 9.1 8.6 8.4 8.3 Mortgage 8.7 9. 8.9 8.8 8.7 % to total deposits Core funding 57.9 6.4 59.7 58.9 58.2 Time deposits 42.1 39.6 4.3 41.1 41.8 Key ratios Year to 31 Dec (%) 213A 214A 215F 216F 217F ROAA 1.9 1.5 1.5 1.5 1.5 ROAE 21.7 16.3 16.8 17.3 17.6 NIM 8. 6.8 6.9 6.7 6.4 Loan/deposit ratio 97.8 93.6 9.2 88.4 86.8 Loan/funding ratio 79.8 81.9 8.2 79.6 78.5 Cost efficiency ratio 5. 52.4 58.7 6. 6.6 CIR 82.6 87.5 87.4 87.1 86.9 Gross NPL 2.8 4.2 3.6 3.5 3.4 NPL coverage 78.2 75.3 97.8 14.2 15.6 LLR 2.2 3.1 3.5 3.7 3.6 CAR-total 16.4 16.1 17. 15.5 14.5 CAR-tier I 15.5 15.1 16.1 14.6 13.6 163
216 Compendium BANK PEMBANGUNAN DAERAH JAWA TIMUR REDUCE* PX: IDR443 - TP: IDR42* BJTM, the second-largest regional bank by assets, has been struggling to improve its loan quality since its IPO back in July 212. At end-sep 215, BJBR, mainly caused by commercial and mortgage loans, booked gross NPL of 4.2%, up from 3.3% a year earlier. On a more positive note, BJTM is now more vigilant, implementing tight credit-risk monitoring and shifting its focus to less-risky civilservant loans (54% of total loans). Additionally, with continued regional funding support, BJTM should see higher margins. Following BJTM s substantial 12M market outperformance, we downgrade our rating to REDUCE (from HOLD) with a TP of IDR42 on a 216F P/BV of.9x, a 6% discount to the sector. A high dividend-payout ratio is likely to lend some support to valuation. Upside risk: BJTM s ability to accelerate loan growth to civil servants. Share price performance (IDR) 6 55 5 45 4 35 3 3-Dec-14 3-Feb-15 3-Apr-15 3-Jun-15 3-Aug-15 3-Oct-15 3-Dec-15 Volume (RHS) BJTM IJ Px Last (%) (%) 15 1 5 (5) 9.5 (1.6) 13.5 (1.3) (1.2) ytd 1M 3M 6M 9M 12M BJTM IJ relative to JCI Source: Bloomberg Teguh Hartanto (teguh.hartanto@bahana.co.id) +6221 25 581 ext. 361 *New, please refer to appendix II 8.7 (') 7, 6, 5, 4, 3, 2, 1, 15 1 5 (5) Financial highlights* Year to 31 Dec 213A 214A 215F 216F 217F Net interest income (IDRbn) 2,472 2,881 3,129 3,494 3,895 Operating income (IDRbn) 2,839 3,254 3,633 4,52 4,518 Operating profit (IDRbn) 1,116 1,351 1,29 1,398 1,575 Pre-tax profit (IDRbn) 1,154 1,376 1,327 1,441 1,624 Net profit (IDRbn) 824 939 942 1,23 1,153 Bahana/consensus (%) - - 1 93 88 EPS (IDR) 55 63 63 69 77 EPS growth (%) 2.4 13.9.3 8.6 12.7 P/E (x) 8. 7. 7. 6.5 5.7 Equity (IDRbn) 5,719 6,44 6,361 6,791 7,355 BVPS (IDR) 383 45 426 455 493 P/BV (x) 1.2 1.1 1. 1..9 DPS (IDR) 41 42 4 39 41 Div. yield (%) 9.2 9.4 9. 8.9 9.2 note: based on 3 December 215 closing price Major assumptions Year to 31 Dec (%) 213A 214A 215F 216F 217F Loan growth 19. 18.6 12.2 12.6 12.6 Deposit growth 17. 16.5 17.4 14.8 14.8 Non interest inc./operating inc. 12.9 11.5 13.9 13.8 13.8 Corporate tax rate 28.5 31.7 29. 29. 29. Payout ratio 73.5 66.5 63. 57.5 52.5 Company information 12M high/low (IDR) : 57/354 12M high/low consensus TP (IDR) : 6/45 Majority shareholder (%) : East Java Provincial Govt. (51.5) Shares outstanding (mn)/free float (%) : 14,918/2. Mkt. cap. (IDRbn/USDmn) : 6,69/477 3-m avg.daily t.o.(idrbn/usdmn) : 1.6/.1 Bloomberg/Reuters code : BJTM IJ/BJTM.JK Source: Bloomberg, Reuters; based on 3 December 215 closing price 164
216 Compendium BANK PEMBANGUNAN DAERAH JAWA TIMUR Profit & loss Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Interest income 3,386 4,84 4,678 5,22 5,794 Interest expense 913 1,23 1,548 1,79 1,899 Net interest income 2,472 2,881 3,129 3,494 3,895 Non-interest income 367 373 54 558 622 Total operating income 2,839 3,254 3,633 4,52 4,518 Operating expenses 1,127 1,395 1,59 1,96 2,194 Loan loss provisions 596 57 753 748 749 Operating profit 1,116 1,351 1,29 1,398 1,575 Non-operating inc./(exp.) 38 24 37 43 49 Pre-tax profit 1,154 1,376 1,327 1,441 1,624 Corporate tax (329) (437) (385) (418) (471) Minorities - - - - - Net profit 824 939 942 1,23 1,153 Balance sheet Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Loans 22,84 26,195 29,381 33,74 37,233 Cash on hand 2,32 1,889 2,3 2,335 2,685 Fixed assets 523 622 839 885 885 Other assets 8,119 9,293 11,339 13,278 15,484 Total assets 33,47 37,998 43,589 49,572 56,287 Customer deposits 25,988 3,27 35,529 4,775 46,822 Deposits from other banks 314 612 624 637 65 Borrowing and sub-debts 316 317 318 39 39 Other liabilities 71 755 756 1,61 1,15 Total liabilities 27,328 31,954 37,227 42,782 48,931 Minorities - - - - - Equity 5,719 6,44 6,361 6,791 7,355 Total liabilities and equity 33,47 37,998 43,589 49,572 56,287 Breakdown Year to 31 Dec 213A 214A 215F 216F 217F % to earnings assets Gross loans 72.6 73.2 71.6 7.9 7.1 Government bonds 1. 2. 3. 4. 4. Other earnings assets 26.4 24.8 25.4 25.1 25.9 % to loan portfolio Consumer 63.5 63.8 64. 64.2 64.4 SME 17.3 16.4 16.3 16.2 16.1 Commercial 19.1 19.8 19.7 19.6 19.5 Others - - - - - % to total deposits Core funding 76.7 74.8 75.1 75.1 75.1 Time deposits 23.3 25.2 24.9 24.9 24.9 Key ratios Year to 31 Dec (%) 213A 214A 215F 216F 217F ROAA 2.7 2.6 2.3 2.2 2.2 ROAE 14.7 16. 15.2 15.6 16.3 NIM 7.1 6.9 6.5 6.2 6.1 Loan/deposit ratio 85. 86.5 82.7 81.1 79.5 Loan/funding ratio 83. 84. 8.6 79.3 77.9 Cost efficiency ratio 39.7 42.9 43.8 47. 48.6 CIR 7.3 69.7 75.1 75.7 75.5 Gross NPL 3.4 3.3 3.8 3.8 3.7 NPL coverage 69.2 75. 83.9 88.7 89.8 LLR 2.4 2.5 3.2 3.3 3.3 CAR-total 23.7 22.2 22. 19.7 18.2 CAR-tier I 22.7 21.4 21. 18.7 17.2 165
216 Compendium BANK MANDIRI BUY* PX: IDR8,8- TP: IDR9,7* Aiming to be one of ASEAN s largest banks, BMRI is preparing to enhance its capital base by revaluing its assets, allowing for continued aggressive expansion across all segments. However, in 3Q15, the bank conservatively expanded its loans while focusing on improving loan quality through debt restructuring. Hurt mainly by its commodity-based lending and subsidiary company, Bank Syariah Mandiri, BMRI faced greater gross NPLs of 2.8% at end- September 215, vis-à-vis 2.2% a year earlier. This has resulted in market underperformance throughout 215 for the bank. At this stage, we fine tune our 12-month TP to IDR9,7 based on a 216F implied P/BV of 1.7x, at around 3% discount to the sector. We upgrade BMRI to BUY on valuation. Key risks: worse-than-expected NPLs and increased low-margin infra-related project financing. Share price performance (IDR) 13, 12, 11, 1, 9, 8, 7, 3-Dec-14 3-Feb-15 3-Apr-15 3-Jun-15 3-Aug-15 3-Oct-15 3-Dec-15 Volume (RHS) BMRI IJ Px Last (%) (%) (2) (4) (6) (8) (1) (5.1) (1.7) (3.) (5.4) (8.8) ytd 1M 3M 6M 9M 12M BMRI IJ relative to JCI Source: Bloomberg Teguh Hartanto (teguh.hartanto@bahana.co.id) +6221 25 581 ext. 361 *New, please refer to appendix II (4.5) (') 1, 8, 6, 4, 2, (2) (4) (6) (8) (1) Financial highlights Year to 31 Dec 213A 214A 215F 216F 217F Net interest income (IDRbn) 33,89 39,132 42,39 46,651 52,45 Operating income (IDRbn) 51,197 56,941 62,897 69,286 77,12 Operating profit (IDRbn) 23,552 25,978 26,68 26,665 3,171 Pre-tax profit (IDRbn) 24,62 26,8 26,11 26,71 3,21 Net profit (IDRbn) 18,24 19,872 2,4 2,33 22,958 Bahana/consensus (%) - - 97 87 82 EPS (IDR) 78 852 857 871 984 EPS growth (%) 17.4 9.2.7 1.6 12.9 P/E (x) 11.3 1.3 1.3 1.1 8.9 Equity (IDRbn) 87,419 12,658 117,19 132,914 151,812 BVPS (IDR) 3,747 4,4 5,15 5,696 6,56 P/BV (x) 2.3 2. 1.8 1.5 1.4 DPS (IDR) 234 213 193 174 172 Div. yield (%) 2.7 2.4 2.2 2. 2. note: based on 3 December 215 closing price Major assumptions Year to 31 Dec (%) 213A 214A 215F 216F 217F Loan growth 21.4 12.2 1.3 11.6 12.1 Deposit growth 15.2 14.4 7.1 8.9 9.3 Non interest inc./operating inc. 34. 31.3 32.6 32.7 32.5 Corporate tax rate 21.7 2.6 2. 2. 2. Payout ratio 3. 25. 22.5 2. 17.5 Company information 12M high/low (IDR) : 12,475/7,525 12M high/low consensus TP (IDR) : 13,2/9,674 Majority shareholder (%) : Republic of Indonesia (6.) Shares outstanding (mn)/free float (%) : 23,333/4. Mkt. cap. (IDRbn/USDmn) : 25,333/14,833 3-m avg.daily t.o.(idrbn/usdmn) : 187.4/13.5 Bloomberg/Reuters code : BMRI IJ/BMRI.JK Source: Bloomberg, Reuters; based on 3 December 215 closing price 166
216 Compendium BANK MANDIRI Profit & loss Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Interest income 5,29 62,638 68,8 74,294 81,22 Interest expense 16,399 23,56 26,49 27,643 28,977 Net interest income 33,89 39,132 42,39 46,651 52,45 Non-interest income 17,387 17,89 2,57 22,635 25,75 Total operating income 51,197 56,941 62,897 69,286 77,12 Operating expenses 22,773 25,233 27,919 31,58 36,384 Loan loss provisions 4,871 5,73 8,91 11,113 1,566 Operating profit 23,552 25,978 26,68 26,665 3,171 Non-operating inc./(exp.) 51 3 33 36 4 Pre-tax profit 24,62 26,8 26,11 26,71 3,21 Corporate tax (5,232) (5,353) (5,22) (5,34) (6,42) Minorities (626) (783) (877) (1,3) (1,211) Net profit 18,24 19,872 2,4 2,33 22,958 Balance sheet Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Loans 471,815 529,19 583,887 651,8 73,711 Cash on hand 19,52 2,75 23,81 27,382 31,489 Fixed assets 13,258 15,487 17,81 2,482 23,554 Other assets 228,974 289,658 37,675 323,963 345,577 Total assets 733,1 855,4 933,183 1,23,627 1,131,331 Customer deposits 556,342 636,382 681,48 741,735 81,495 Deposits from other banks 12,669 17,772 2,438 23,54 27,29 Borrowing and sub-debts 39,268 51,136 52,59 58,188 64,63 Other liabilities 36,3 44,95 59,96 63,956 73,334 Total liabilities 644,39 75,195 813,451 887,382 975,462 Minorities 1,371 2,187 2,713 3,331 4,57 Equity 87,419 12,658 117,19 132,914 151,812 Total liabilities and equity 733,1 855,4 933,183 1,23,627 1,131,331 Breakdown Year to 31 Dec 213A 214A 215F 216F 217F % to earnings assets Gross loans 68.1 66.7 66.6 68.1 69.6 Government bonds 12.5 1.7 8.3 6.3 4.5 Other earnings assets 19.4 22.6 25.1 25.6 25.9 % to loan portfolio Corporate 39.9 36.9 36.1 35.6 34.9 Commercial 28.5 29.5 29.7 29.6 29.5 Micro and small 17.9 19.8 2.5 21.1 21.7 Consumer 13.8 13.8 13.7 13.7 13.8 % to total deposits Core funding 61. 56.5 56.8 57.8 58.9 Time deposits 39. 43.5 43.2 42.2 41.1 Key ratios Year to 31 Dec (%) 213A 214A 215F 216F 217F ROAA 2.7 2.5 2.2 2.1 2.1 ROAE 22.5 2.9 18.2 16.3 16.1 NIM 5.7 5.9 5.5 5.5 5.7 Loan/deposit ratio 84.8 83.2 85.7 87.9 9.2 Loan/funding ratio 77.6 75. 77.4 79.2 81. Cost efficiency ratio 44.5 44.3 44.4 45.5 47.2 CIR 65.2 67.7 7.8 72.5 71.6 Gross NPL 1.9 2.2 3. 3.3 3.2 NPL coverage 184.5 155.6 129.5 13.7 135.9 LLR 3.5 3.3 3.8 4.2 4.3 CAR-total 14.8 16.1 16.9 15.5 15. CAR-tier I 13.1 14.8 15.4 13.9 13.3 167
216 Compendium BANK NEGARA INDONESIA BUY PX: IDR4,99 - TP: IDR5,7* Following higher gross NPLs, BBNI, the third-largest state-owned bank in our coverage, has progressed well to improve its loan quality ahead. Under the current new management, the bank plans to focus on infrastructure-related projects and their derivatives while minimizing its exposure to risky commodity-based industries. Efforts to maintain its NIM should be attained by off-loading excess funding from time deposits and raising the CASA ratio from 6.9% at end-september 215 to 65.% at end-september 216. This would lower the cost of funding to <3.%, the second lowest after BBCA. On the back of both fee-based and interest incomes (eg, BNI Life), BBNI s earnings outlook should remain attractive. Hence, we reiterate our BUY rating with a new 12-month TP of IDR5,7, based on a 216F implied P/BV of 1.5x, still a 4% discount to the industry. Risks to our call include higher provisioning on an increased coverage ratio. Share price performance (IDR) (') 14, 7, 12, 6,5 1, 6, 8, 5,5 5, 6, 4,5 4, 4, 2, 3,5 3-Dec-14 3-Feb-15 3-Apr-15 3-Jun-15 3-Aug-15 3-Oct-15 3-Dec-15 Volume (RHS) BBNI IJ Px Last (%) (%) 8 6 4 2 (2) (4) (6) (8) (1) 5.7 8 6 1.4 4 2 (2) (4) (5.) (6) (8) (8.6) (8.5) (7.7) (1) ytd 1M 3M 6M 9M 12M BBNI IJ relative to JCI Source: Bloomberg Teguh Hartanto (teguh.hartanto@bahana.co.id) +6221 25 581 ext. 361 *New, please refer to appendix II Financial highlights* Year to 31 Dec 213A 214A 215F 216F 217F Net interest income (IDRbn) 19,58 22,376 25,998 28,923 31,54 Operating income (IDRbn) 28,839 35,246 37,239 4,951 45,725 Operating profit (IDRbn) 11,219 12,967 9,966 13,232 14,595 Pre-tax profit (IDRbn) 11,278 13,524 1,532 13,855 15,28 Net profit (IDRbn) 9,54 1,783 8,372 11,22 12,153 Bahana/consensus (%) - - 91 95 88 EPS (IDR) 486 578 449 591 652 EPS growth (%) 28.5 19.1 (22.4) 31.7 1.3 P/E (x) 1.3 8.6 11.1 8.4 7.7 Equity (IDRbn) 47,663 56,889 62,565 71,74 81,652 BVPS (IDR) 2,556 3,51 3,355 3,845 4,378 P/BV (x) 2. 1.6 1.5 1.3 1.1 DPS (IDR) 146 145 11 118 114 Div. yield (%) 2.9 2.9 2. 2.4 2.3 note: based on 3 December 215 closing price Major assumptions Year to 31 Dec (%) 213A 214A 215F 216F 217F Loan growth 24.8 1.7 13. 14. 14. Deposit growth 13.3 7.5 1.2 14.4 14. Non interest inc./operating inc. 33.9 36.5 3.2 29.4 31. Corporate tax rate 19.7 19.9 2. 2. 2. Payout ratio 3. 25. 22.5 2. 17.5 Company information 12M high/low (IDR) : 7,275/3,94 12M high/low consensus TP (IDR) : 6,5/5,533 Majority shareholder (%) : Republic of Indonesia (6.) Shares outstanding (mn)/free float (%) : 18,649/4. Mkt. cap. (IDRbn/USDmn) : 93,57/6,722 3-m avg.daily t.o.(idrbn/usdmn) : 137.6/9.9 Bloomberg/Reuters code : BBNI IJ/BBNI.JK Source: Bloomberg, Reuters; based on 3 December 215 closing price 168
216 Compendium BANK NEGARA INDONESIA Profit & loss Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Interest income 26,451 33,365 37,592 41,865 45,524 Interest expense 7,392 1,989 11,594 12,942 13,984 Net interest income 19,58 22,376 25,998 28,923 31,54 Non-interest income 9,781 12,87 11,241 12,28 14,186 Total operating income 28,839 35,246 37,239 4,951 45,725 Operating expenses 14,78 18,578 17,372 21,361 23,963 Loan loss provisions 2,84 3,72 9,91 6,358 7,168 Operating profit 11,219 12,967 9,966 13,232 14,595 Non-operating inc./(exp.) 59 557 566 623 685 Pre-tax profit 11,278 13,524 1,532 13,855 15,28 Corporate tax (2,22) (2,695) (2,16) (2,771) (3,56) Minorities (4) (47) (54) (62) (71) Net profit 9,54 1,783 8,372 11,22 12,153 Balance sheet Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Loans 25,45 277,36 313,485 357,516 47,475 Cash on hand 1,9 11,436 12,7 12,68 13,238 Fixed assets 11,181 12,51 14,386 16,544 19,26 Other assets 114,934 115,268 132,759 155,389 134,137 Total assets 386,655 416,574 472,637 542,57 573,876 Customer deposits 291,89 313,893 345,758 395,681 45,959 Deposits from other banks 3,7 4,15 3,79 4,247 4,864 Borrowing and sub-debts 31,852 26,154 25,275 26,88 26,942 Other liabilities 11,528 11,415 31,123 4,131 5,252 Total liabilities 338,971 355,478 45,866 466,147 488,17 Minorities 2 4,27 4,27 4,27 4,27 Equity 47,663 56,889 62,565 71,74 81,652 Total liabilities and equity 386,655 416,574 472,637 542,57 573,876 Breakdown Year to 31 Dec 213A 214A 215F 216F 217F % to earnings assets Gross loans 67.4 69.9 66.8 66.4 71.4 Government bonds 11.1 11. 8.9 7.4 6.7 Other earnings assets 21.5 19.1 24.3 26.2 21.9 % to loan portfolio Corporate 44.8 43.2 43.6 43.9 44.2 Commercial & SME 28.9 29.1 29.2 29.1 29.1 Consumer 19. 18.8 18.3 18.2 18.2 Others 7.3 9. 8.9 8.7 8.6 % to total deposits Core funding 69.2 65.8 66.1 66.9 68.7 Time deposits 3.8 34.2 33.9 33.1 31.3 Key ratios Year to 31 Dec (%) 213A 214A 215F 216F 217F ROAA 2.5 2.7 1.9 2.2 2.2 ROAE 19.9 2.6 14. 16.4 15.8 NIM 6.1 6.2 6.4 6.1 6.1 Loan/deposit ratio 85.8 88.4 9.7 9.4 9.4 Loan/funding ratio 76.5 8.6 83.7 83.9 84.4 Cost efficiency ratio 51.2 52.7 46.6 52.2 52.4 CIR 69. 72. 79.6 75.4 75.6 Gross NPL 2.2 2. 3. 2.8 2.7 NPL coverage 123.4 123.4 139.5 14.8 14.4 LLR 2.7 2.4 4.1 3.9 3.7 CAR-total 14.9 16.3 17.6 16.5 16.2 CAR-tier I 13.8 15.2 14.6 13.7 13.5 169
216 Compendium BANK RAKYAT INDONESIA BUY PX: IDR11,275 - TP: IDR13,* Capitalizing on its extensive network, BBRI, the second-largest bank by market cap, continues to enjoy its strength in micro lending despite the recently lowered KUR lending rate to 12%, which should minimally affect margins given the government s 7% interest rate subsidy and 7% loan loss coverage with a lower RWA. BBRI s sustainable growth should be backed by superior micro loans quality (company payroll support) of 1.4% at end-september 215 (industry average: >5.%). Possible setbacks: SME commercial loan quality, where BBRI has been reluctant to aggressively expand. As we remain in favor of the bank s business concept, we reaffirm our BUY call on BBRI. We also fine tune our TP to IDR13,, based on a 216F implied PBV of 2.3x, at par with the sector. Key risks to our call: concerns on government interventions on micro lending rates through KUR, which could cannibalize BBRI s Kupedes micro lending. Share price performance (IDR) 14, 13, 12, 11, 1, 9, 8, 3-Dec-14 3-Feb-15 3-Apr-15 3-Jun-15 3-Aug-15 3-Oct-15 3-Dec-15 Volume (RHS) BBRI IJ Px Last (%) (%) 14 12 1 8 6 4 2 1. 3.7 9.1 ytd 1M 3M 6M 9M 12M BBRI IJ relative to JCI Source: Bloomberg Teguh Hartanto (teguh.hartanto@bahana.co.id) +6221 25 581 ext. 361 *New, please refer to appendix II 12.3 4.5 9.1 (') 12, 1, 8, 6, 4, 2, 14 12 1 8 6 4 2 Financial highlights* Year to 31 Dec 213A 214A 215F 216F 217F Net interest income (IDRbn) 44,153 51,49 56,76 61,62 66,99 Operating income (IDRbn) 52,661 6,789 66,953 73,44 81,52 Operating profit (IDRbn) 26,121 28,364 28,314 31,25 34,621 Pre-tax profit (IDRbn) 27,91 3,859 3,935 33,958 37,514 Net profit (IDRbn) 21,344 24,242 24,426 26,815 29,624 Bahana/consensus (%) - - 99 99 96 EPS (IDR) 865 983 99 1,87 1,21 EPS growth (%) 14.3 13.6.8 9.8 1.5 P/E (x) 13. 11.5 11.4 1.4 9.4 Equity (IDRbn) 79,164 97,56 115,311 137,121 161,427 BVPS (IDR) 3,29 3,955 4,674 5,558 6,544 P/BV (x) 3.5 2.9 2.4 2. 1.7 DPS (IDR) 257 295 198 217 21 Div. yield (%) 2.3 2.6 1.8 1.9 1.9 note: based on 3 December 215 closing price Major assumptions Year to 31 Dec (%) 213A 214A 215F 216F 217F Loan growth 23.9 13.9 9.2 11.1 11.4 Deposit growth 12. 23.4 12.8 12.2 12.3 Non interest inc./operating inc. 16.2 15.3 16.2 16.9 17.3 Corporate tax rate 23.5 21.4 21. 21. 21. Payout ratio 29.7 3. 2. 2. 17.5 Company information 12M high/low (IDR) : 13,275/8,3 12M high/low consensus TP (IDR) : 14,15/12,19 Majority shareholder (%) : Republic of Indonesia (56.8) Shares outstanding (mn)/free float (%) : 24,669/43.2 Mkt. cap. (IDRbn/USDmn) : 278,145/2,93 3-m avg.daily t.o.(idrbn/usdmn) : 288./2.8 Bloomberg/Reuters code : BBRI IJ/BBRI.JK Source: Bloomberg, Reuters; based on 3 December 215 closing price 17
216 Compendium BANK RAKYAT INDONESIA Profit & loss Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Interest income 59,58 75,17 85,429 93,579 12,722 Interest expense 15,356 23,681 29,353 32,517 35,732 Net interest income 44,153 51,49 56,76 61,62 66,99 Non-interest income 8,59 9,299 1,877 12,378 14,62 Total operating income 52,661 6,789 66,953 73,44 81,52 Operating expenses 22,593 26,75 28,434 32,484 36,693 Loan loss provisions 3,948 5,719 1,25 9,752 9,739 Operating profit 26,121 28,364 28,314 31,25 34,621 Non-operating inc./(exp.) 1,789 2,495 2,621 2,753 2,893 Pre-tax profit 27,91 3,859 3,935 33,958 37,514 Corporate tax (6,556) (6,65) (6,496) (7,131) (7,878) Minorities (1) (12) (12) (12) (12) Net profit 21,344 24,242 24,426 26,815 29,624 Balance sheet Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Loans 448,12 51,428 557,299 618,923 689,483 Cash on hand 19,172 22,469 2,222 21,233 22,295 Fixed assets 8,818 11,583 15,637 21,111 28,499 Other assets 15,91 257,475 277,111 317,755 368,529 Total assets 626,183 81,955 87,27 979,22 1,18,86 Customer deposits 54,281 622,322 72,249 788,228 885,421 Deposits from other banks 3,691 8,655 1,44 11,659 13,539 Borrowing and sub-debts 11,318 25,64 26,337 27,676 29,86 Other liabilities 27,565 48,176 16,144 14,143 19,132 Total liabilities 546,856 74,218 754,773 841,76 947,177 Minorities 164 177 186 194 23 Equity 79,164 97,56 115,311 137,121 161,427 Total liabilities and equity 626,183 81,955 87,27 979,22 1,18,86 Breakdown Year to 31 Dec 213A 214A 215F 216F 217F % to earnings assets Gross loans 73.6 67.3 65.9 65. 64.1 Government bonds.7.6.5.5.4 Other earnings assets 25.6 32.2 33.6 34.5 35.5 % to loan portfolio Corporate 25.6 25.6 25.8 25.7 25.6 SME 26.5 26.5 25.7 25.5 25.4 Consumer 17.2 17.2 16.5 16.4 16.5 Micro 3.7 3.7 32. 32.4 32.6 % to total deposits Core funding 58.9 53.2 53.4 54.3 55.1 Time deposits 41.1 46.8 46.6 45.7 44.9 Key ratios Year to 31 Dec (%) 213A 214A 215F 216F 217F ROAA 3.6 3.4 2.9 2.9 2.8 ROAE 29.7 27.4 22.9 21.2 19.8 NIM 8.6 8.5 8. 7.6 7.4 Loan/deposit ratio 88.9 82. 79.4 78.5 77.9 Loan/funding ratio 86.3 77.8 75.5 74.8 74.3 Cost efficiency ratio 42.9 43.9 42.5 44.2 45.3 CIR 61.6 66.4 7.6 7.5 7.4 Gross NPL 1.6 1.7 2.6 2.7 2.6 NPL coverage 218.4 184.2 14.3 145.2 15.9 LLR 3.4 3.1 3.7 4. 4. CAR-total 17. 18.1 19.4 18.2 17. CAR-tier I 15.8 17.1 15.7 14.8 13.8 171
216 Compendium BANK TABUNGAN NEGARA BUY PX: IDR1,285 - TP: IDR1,52* As one of the largest mortgage providers focusing on the low-end segment, BBTN should be the main beneficiary of the government s One Million Houses Program, with budgeted 216 liquidity and interest subsidies amounting to IDR12.4tn, up from just IDR5.1tn in 215. This, coupled with the government s proposed Tapera funding to support low-end housing availability, should enable sustainable loan growth for BBTN as the main lender for subsidized mortgages. Additionally, while enjoying lower RWA for mortgages, BBTN can enhance capital through FLPP liquidity conversion to sub-debt and lower dividend payouts to support loan growth. Given the current huge backlog of low-end housing, we remain positive on BBTN s outlook, and raise our TP to IDR1,52, on a 216F PBV of 1.x, a 55% sector discount. BUY. Risks: special-mention loan downgrades and delays of government funding disbursements. Share price performance (IDR) 1,3 1,25 1,2 1,15 1,1 1,5 1, 95 9 3-Dec-14 3-Feb-15 3-Apr-15 3-Jun-15 3-Aug-15 3-Oct-15 3-Dec-15 Volume (RHS) BBTN IJ Px Last (') 4, 35, 3, 25, 2, 15, 1, 5, (%) (%) 3 28. 25.2 24.9 3 25 19.8 22. 25 2 2 15 1 5 8.7 ytd 1M 3M 6M 9M 12M BBTN IJ relative to JCI Source: Bloomberg Teguh Hartanto (teguh.hartanto@bahana.co.id) +6221 25 581 ext. 361 *New, please refer to appendix II 15 1 5 Financial highlights Year to 31 Dec 213A 214A 215F 216F 217F Net interest income (IDRbn) 5,639 5,48 6,382 7,44 8,683 Operating income (IDRbn) 6,437 6,46 7,439 8,816 1,234 Operating profit (IDRbn) 2,136 1,546 2,215 2,686 3,39 Pre-tax profit (IDRbn) 2,141 1,548 2,217 2,689 3,42 Net profit (IDRbn) 1,562 1,116 1,663 2,84 2,419 Bahana/consensus (%) - - 16 19 17 EPS (IDR) 148 15 157 197 229 EPS growth (%) 14.5 (28.6) 49.1 25.3 16.1 P/E (x) 8.7 12.2 8.2 6.5 5.6 Equity (IDRbn) 11,557 12,26 13,646 15,397 17,451 BVPS (IDR) 1,92 1,153 1,289 1,455 1,649 P/BV (x) 1.2 1.1 1..9.8 DPS (IDR) 44 21 31 34 34 Div. yield (%) 3.5 1.6 2.4 2.7 2.7 note: based on 3 December 215 closing price Major assumptions Year to 31 Dec (%) 213A 214A 215F 216F 217F Loan growth 23.4 15.4 18.2 17.9 16.2 Deposit growth 19.2 1.7 16.2 16.3 15. Non interest inc./operating inc. 12.4 14.5 14.2 15.6 15.2 Corporate tax rate 27. 27.9 25. 22.5 2.5 Payout ratio 3. 2. 2. 17.5 15. Company information 12M high/low (IDR) : 1,285/945 12M high/low consensus TP (IDR) : 1,55 /1,185 Majority shareholder (%) : Republic of Indonesia (6.) Shares outstanding (mn)/free float (%) : 1,582/39.9 Mkt. cap. (IDRbn/USDmn) : 13,598/982 3-m avg.daily t.o.(idrbn/usdmn) : 22./1.6 Bloomberg/Reuters code : BBTN IJ/BBTN.JK Source: Bloomberg, Reuters; based on 3 December 215 closing price 172
216 Compendium BANK TABUNGAN NEGARA Profit & loss Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Interest income 11,197 13,373 15,4 17,653 2,282 Interest expense 5,558 7,893 9,18 1,214 11,599 Net interest income 5,639 5,48 6,382 7,44 8,683 Non-interest income 798 926 1,56 1,376 1,551 Total operating income 6,437 6,46 7,439 8,816 1,234 Operating expenses 3,861 4,83 4,56 5,276 6,117 Loan loss provisions 441 777 663 854 1,78 Operating profit 2,136 1,546 2,215 2,686 3,39 Non-operating inc./(exp.) 5 2 2 3 3 Pre-tax profit 2,141 1,548 2,217 2,689 3,42 Corporate tax (579) (433) (554) (65) (624) Minorities - - - - - Net profit 1,562 1,116 1,663 2,84 2,419 Balance sheet Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Loans 1,467 115,916 137,34 161,51 187,646 Cash on hand 924 92 1,151 1,438 1,798 Fixed assets 2,834 3,1 4,51 5,267 6,847 Other assets 26,944 24,739 34,857 45,559 68,626 Total assets 131,17 144,576 177,92 213,774 264,916 Customer deposits 96,213 16,479 123,69 143,897 165,538 Deposits from other banks 285 1,188 1,356 1,56 1,794 Borrowing and sub-debts 18,56 19,334 25,743 3,375 35,386 Other liabilities 4,556 5,369 12,657 22,545 44,747 Total liabilities 119,613 132,37 163,446 198,377 247,465 Minorities - - - - - Equity 11,557 12,26 13,646 15,397 17,451 Total liabilities and equity 131,17 144,576 177,92 213,774 264,916 Breakdown Year to 31 Dec 213A 214A 215F 216F 217F % to earnings assets Gross loans 88.5 88.7 89. 87.8 82.9 Government bonds 7.4 6.3 5.1 4. 3.1 Other earnings assets 4.1 5. 5.9 8.2 14. % to loan portfolio Subsidized mortgage 28.3 29.6 3.4 32.8 34.7 Non-subsidized mortgage 39.4 39.3 4.6 39.4 38. Housing related loans 18.9 19.6 18.4 17.8 17.4 Non-housing related loans 13.4 11.5 1.5 1. 9.8 % to total deposits Core funding 45.1 46.6 46. 46.6 47.8 Time deposits 54.9 53.4 54. 53.4 52.2 Key ratios Year to 31 Dec (%) 213A 214A 215F 216F 217F ROAA 1.3.8 1. 1.1 1. ROAE 14.3 9.4 12.9 14.3 14.7 NIM 5.4 4.5 4.6 4.5 4.4 Loan/deposit ratio 14.4 18.9 11.8 112.2 113.4 Loan/funding ratio 87.3 91.3 9.9 91.9 92.6 Cost efficiency ratio 6. 63.7 61.3 59.8 59.8 CIR 82.2 89.2 86.5 85.9 86.1 Gross NPL 4.1 4. 3.8 3.5 3.4 NPL coverage 27.9 33.9 35.7 37.8 4.7 LLR 1.1 1.4 1.2 1.2 1.3 CAR-total 15.6 14.6 15.6 15.4 13.6 CAR-tier I 14.9 14.1 14.8 14.1 12.4 173
216 Compendium BANK TABUNGAN PENSIUNAN NASIONAL REDUCE* PX: IDR2,5 - TP: IDR2,35* Given its reliance on time deposits, BTPN, a mid-cap bank, looks well placed to benefit from the central bank s possible looser monetary policy. Meanwhile, in an effort to lower its blended funding cost, BTPN is committed to raising its CASA ratio (3Q15: 14.4%) via its Wow phone banking and branchless-network expansion. However, BTPN faces tight competition as a lender since growth in this segment is dominated by big banks utilizing their competitive funding costs and joint ventures with related institutions like Taspen to gain advantage. Competition also stems from regional banks. Given this scenario and share illiquidity, BTPN looks less attractive, leading us to downgrade to REDUCE with a new TP of IDR2,35, based on a 216F P/BV of.9x, a 6% sector discount. Upside risk: founder s further divestment, allowing for a 5% tax saving on 4% free float. Share price performance (IDR) 4,3 3,8 3,3 2,8 2,3 3-Dec-14 3-Feb-15 3-Apr-15 3-Jun-15 3-Aug-15 3-Oct-15 3-Dec-15 Volume (RHS) BTPN IJ Px Last (%) (%) (5) (1) (15) (2) (25) (3) (23.5) (1.7) (18.) (24.2) (24.) ytd 1M 3M 6M 9M 12M BTPN IJ relative to JCI Source: Bloomberg Teguh Hartanto (teguh.hartanto@bahana.co.id) +6221 25 581 ext. 361 *New, please refer to appendix II (') 1,2 1, 8 6 4 2 (5) (1) (15) (2) (25) (26.1) (3) Financial highlights Year to 31 Dec 213A 214A 215F 216F 217F Net interest income (IDRbn) 7,48 7,41 7,6 8,59 9,582 Operating income (IDRbn) 7,449 7,84 8,452 9,489 1,678 Operating profit (IDRbn) 2,878 2,535 2,444 2,665 2,817 Pre-tax profit (IDRbn) 2,869 2,523 2,43 2,649 2,799 Net profit (IDRbn) 2,131 1,853 1,822 1,987 2,99 Bahana/consensus (%) - - 9 85 78 EPS (IDR) 365 317 312 34 359 EPS growth (%) 6.9 (13.) (1.7) 9. 5.7 P/E (x) 6.9 7.9 8. 7.3 7. Equity (IDRbn) 9,98 11,811 13,634 15,347 17,148 BVPS (IDR) 1,696 2,22 2,334 2,628 2,936 P/BV (x) 1.5 1.2 1.1 1..9 DPS (IDR) - - 47 51 54 Div. yield (%) - - 1.9 2. 2.2 note: based on 3 December 215 closing price Major assumptions Year to 31 Dec 213A 214A 215F 216F 217F Loan growth 18.7 12.8 1.9 11.6 11.7 Deposit growth 15.8 2.2 1.1 12.1 12.4 Non interest inc./operating inc. 5.4 9.8 1.1 1.3 1.3 Corporate tax rate 25.7 25.9 25. 25. 25. Payout ratio.. 15. 15. 15. Company information 12M high/low (IDR) : 4,315/2,5 12M high/low consensus TP (IDR) : 4,/3,236 Majority shareholder (%) : GSI Sumitomo (4.) Shares outstanding (mn)/free float (%) : 5,84/5.8 Mkt. cap. (IDRbn/USDmn) : 14,61/1,55 3-m avg.daily t.o.(idrbn/usdmn) :./. Bloomberg/Reuters code : BTPN IJ/BTPN.JK Source: Bloomberg, Reuters; based on 3 December 215 closing price 174
216 Compendium BANK TABUNGAN PENSIUNAN NASIONAL Profit & loss Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Interest income 1,943 12,293 12,866 14,134 15,521 Interest expense 3,895 5,252 5,267 5,625 5,939 Net interest income 7,48 7,41 7,6 8,59 9,582 Non-interest income 4 764 852 98 1,96 Total operating income 7,449 7,84 8,452 9,489 1,678 Operating expenses 3,981 4,51 5,21 6,116 7,81 Loan loss provisions 59 768 797 77 78 Operating profit 2,878 2,535 2,444 2,665 2,817 Non-operating inc./(exp.) (9) (13) (15) (17) (19) Pre-tax profit 2,869 2,523 2,43 2,649 2,799 Corporate tax (738) (653) (67) (662) (7) Minorities - (16) - - - Net profit 2,131 1,853 1,822 1,987 2,99 Balance sheet Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Loans 46,15 51,994 57,676 64,37 71,934 Cash on hand 1,13 1,13 1,356 1,627 1,952 Fixed assets 1,429 1,57 1,884 2,355 2,944 Other assets 21,28 2,384 23,31 26,852 3,934 Total assets 69,665 75,15 84,226 95,24 17,763 Customer deposits 52,196 53,335 58,718 65,836 74,31 Deposits from other banks 16-4 2 1 Borrowing and sub-debts 6,345 8,214 1,237 12,285 14,742 Other liabilities 1,2 1,45 1,384 1,486 1,592 Total liabilities 59,757 62,954 7,343 79,68 9,366 Minorities - 249 249 249 249 Equity 9,98 11,811 13,634 15,347 17,148 Total liabilities and equity 69,665 75,15 84,226 95,24 17,763 Breakdown Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F % to earnings assets Gross loans 7.1 73.7 71.9 71.4 7.8 Government bonds - - - - - Other earnings assets 29.9 26.3 28.1 28.6 29.2 % to loan portfolio Loans to pensioners 68.6 66.8 65.7 64.1 62.5 Micro loans 22.3 24.5 24.3 24.1 24. Others 6.2 3.9 4. 4.1 4.3 Syariah 2.9 4.8 6.1 7.6 9.2 % to total deposits Core funding 13.6 14.8 14.9 15. 15.3 Time deposits 86.4 85.2 85.1 85. 84.7 Key ratios Year to 31 Dec 213A 214A 215F 216F 217F ROAA 3.3 2.6 2.3 2.2 2.1 ROAE 24.2 17.1 14.3 13.7 12.9 NIM 12.7 11.4 11.3 11.4 11.4 Loan/deposit ratio 88.3 97.5 98.2 97.8 97.2 Loan/funding ratio 78.7 84.5 83.6 82.4 81. Cost efficiency ratio 53.4 57.7 61.6 64.5 66.3 CIR 74.6 8.6 82.2 82.4 83. Gross NPL.7.7 1. 1..9 NPL coverage 157.5 14.3 125.9 129.1 131.9 LLR 1.1 1. 1.3 1.2 1.2 CAR-total 23.1 23.4 18.7 16.9 15.7 CAR-tier I 22.1 22.5 16.9 15.1 14. 175
216 Compendium BEKASI FAJAR INDUSTRIAL ESTATE REDUCE PX: IDR343 - TP: IDR3 As a pure industrial estate player (ie, other than DMAS), BEST may struggle to sell its 97ha landbank due to soft demand, despite its estate location, which is closest to Jakarta, allowing for the highest ASP. Nevertheless, BEST, having booked the sector s worst 9M15 marketing sales of just 7.9ha, has cut its 215 target from 4ha to 15ha. We assume 216 marketing sales of 2ha. On the 215-16F top line, we expect revenue declines due to weak marketing sales and continued slow marketing-sales recognition. On the bottom line, we expect 216 net earnings to be eroded by interest charges and FX losses due to high USD-denominated debt levels. Weak growth, coupled with a low portion of recurring income, has us deriving our 12M TP of IDR3, based on a 75% discount to 216F NAV (sector average discount to NAV: 67%). REDUCE on expensive 216F PE of 2.8x. Risks: higher-than-expected marketing sales and FDI. Share price performance (IDR) 8 7 6 5 4 3 2 3-Dec-14 3-Feb-15 3-Apr-15 3-Jun-15 3-Aug-15 3-Oct-15 3-Dec-15 Volume (RHS) BEST IJ Px Last (%) (%) 3 2 1 (1) (2) (3) (4) (5) (') 2, 15, 1, 5, 3 2.6 2 1 (1) (13.3) (2) (16.2) (3) (32.6) (4) (39.8) (41.2) (5) ytd 1M 3M 6M 9M 12M BEST IJ relative to JCI Source: Bloomberg Sanni Satrio Dwi Utomo (sanni@bahana.co.id) +6221 25581 ext. 3611 *New, please refer to appendix II Financial highlights* Year to 31 Dec 213A 214A 215F 216F 217F Revenues (IDRbn) 1,324 84 681 563 743 EBIT (IDRbn) 883 472 411 321 444 Net profit (IDRbn) 744 391 225 159 326 Bahana/consensus (%) - - 74 47 78 EPS (IDR) 77 41 23 16 34 EPS growth (%) 58.1 (47.4) (42.5) (29.3) 14.9 EV/EBITDA (x) 3.7 7.2 9.6 13.8 1.3 P/E (x) 4.4 8.5 14.7 2.8 1.2 FCFPS (IDR) (32) (14) (58) (53) (25) FCF yield (%) (9.4) (4.1) (16.9) (15.4) (7.3) BVPS (IDR) 257 295 316 331 363 P/BV (x) 1.3 1.2 1.1 1..9 DPS (IDR) 2 2 3 2 4 Div. yield (%).7.7.9.7 1.2 note: based on 3 December 215 closing price NAV-derived target price calculation 9M15 Land bank (Ha) 97 Total value (IDRbn) 11,434 NAV/share (IDR) 1,185 Discount (%) 75 Adjusted NAV/share (IDR) 296 Company information 12M High/low (IDR) : 765/274 12M High/low consensus TP (IDR) : 96/26 Majority shareholder (%) : PT Argo Manunggal Land (48.1) Share outstanding (mn)/free float (%) : 9,647/41.8 Mkt. cap. (IDRbn/USDmn) : 3,39/239 3-m avg.daily t.o.(idrbn/usdmn) : 1.5/.8 Bloomberg/Reuters code : BEST IJ/BEST.JK Source: Bloomberg, Reuters; based on 3 December 215 closing price 176
216 Compendium BEKASI FAJAR INDUSTRIAL ESTATE Profit & loss Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Sales 1,324 84 681 563 743 Gross profit 946 58 494 49 542 EBITDA 888 478 419 331 47 Depreciation 5 6 8 11 25 EBIT 883 472 411 321 444 Net interest inc./(expense) (3) (33) (56) (99) (122) Forex gain/(losses) (38) (6) (96) (35) 4 Other income/(expense) (3) 1 Pre-tax profit 812 433 259 187 363 Taxes (67) (42) (34) (28) (37) Minority interest (1) () () () () Extraordinary gain/(losses) - - - - - Net profit 744 391 225 159 326 Balance sheet Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Cash and equivalents 548 318 594 464 433 S-T investments - - - - - Trade receivables 8 36 47 39 51 Inventories 2,4 2,493 3,8 3,637 4,39 Fixed assets 77 77 95 12 18 Other assets 256 729 821 932 1,57 Total assets 3,36 3,653 4,638 5,192 5,76 Interest bearing liabilities 542 466 1,323 1,723 1,948 Trade payables 71 47 13 11 14 Other liabilities 271 29 249 268 296 Total liabilities 883 83 1,585 2,1 2,258 Minority interest 1 2 2 2 2 Shareholders' equity 2,475 2,848 3,51 3,189 3,51 Cash flow Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F EBIT 883 472 411 321 444 Depreciation 5 6 8 11 25 Working capital 13 (2) (42) 1 (4) Other operating items (353) (31) (312) (248) (29) Operating cash flow 548 166 65 93 257 Net capital expenditure (86) (32) (624) (63) (499) Free cash flow (312) (136) (559) (51) (242) Equity raised/(bought) 53 3 - - - Net borrowings 314 (75) 857 4 225 Other financing (91) (22) (22) (2) (14) Net cash flow (35) (23) 276 (131) (31) Cash balances, beginning 583 548 318 594 464 Ending cash 548 318 594 464 433 Key ratios Year to 31 Dec 213A 214A 215F 216F 217F ROAE (%) 35. 14.7 7.6 5.1 9.7 ROAA (%) 26.3 11.1 5.4 3.2 5.9 Gross margin (%) 71.4 69.1 72.5 72.7 73. EBITDA margin (%) 67. 56.9 61.5 58.8 63.3 EBIT margin (%) 66.7 56.2 6.3 57. 59.8 Net margin (%) 56.2 46.6 33. 28.2 43.9 Payout ratio (%) 3. 5.6 9. 9. 9. Current ratio (x) 3.4 2.7 5.3 4. 3.6 Interest coverage (x) 29.3 14.3 7.3 3.2 3.6 Net gearing (%) nc 5.2 23.9 39.5 43.3 Debtor turnover (days) 12 25 25 25 25 Creditor turnover (days) 71 47 13 11 14 Inventory turnover (days) - - - - - 177
216 Compendium BLUE BIRD REDUCE PX: IDR6,675 - TP: IDR4,7* Despite its strong brand, BIRD, the largest land transportation company with around a 4% market share in Indonesia, is facing extremely tough competition on the ground due to new entrants such as Uber, GrabCar, Go-Jek and GrabBike, resulting in a lower 3Q15 EBITDA margin of 29%, down from 3% in 2Q15 and 31% in 1Q15. In 216, we expect continued margin pressure causing a flat utilization rate at best as drivers migrate to higher-income jobs with mobile-based-application competitors. We thus see risk due to limitations on BIRD s expansion plan, leading to low top-line growth. Given intense competition, a lack of drivers and a negative earnings impact from potentially higher fuel prices, we expect BIRD s market underperformance to persist. Reiterate REDUCE. Our 12-month TP of IDR4,7 reflects a 216F PE of 13.6x, a 2% discount to regional peers. Risk: higher-than-expected consumer purchasing power. Share price performance (IDR) 13, 11, 9, 7, 5, 3-Dec-14 3-Feb-15 3-Apr-15 3-Jun-15 3-Aug-15 3-Oct-15 3-Dec-15 Volume (RHS) BIRD IJ Px Last (%) (%) 2 1 (1) (2) (3) (15.7) 11.2 (3.5) (6.5) (19.7) ytd 1M 3M 6M 9M 12M BIRD IJ relative to JCI Source: Bloomberg Agustinus Reza Kirana (agustinus.reza@bahana.co.id) +6221 255735 ext. 3616 *New, please refer to appendix II.9 (') 3,5 3, 2,5 2, 1,5 1, 5 2 1 (1) (2) (3) Financial highlights Year to 31 Dec 213A 214A 215F 216F 217F Revenues (IDRbn) 3,921 4,759 5,552 6,25 6,988 EBIT (IDRbn) 99 1,53 1,197 1,298 1,354 Net profit (IDRbn) 78 735 84 87 877 Bahana/consensus.(%) - - 95 75 62 EPS (IDR) 666 336 336 348 35 EPS growth (%) 278.6 (49.5) (.) 3.6.7 EV/EBITDA (x) 12.6 1.5 9.7 8.9 8.5 P/E (x) 1. 19.9 19.9 19.2 19. FCFPS (IDR) (97) (365.7) (264) (8) (118) FCF yield (%) (13.6) (5.5) (4.) (1.2) (1.8) BVPS (IDR) 1,71 1,615.5 1,615 1,823 2,34 P/BV (x) 6.2 4.1 4.1 3.7 3.3 DPS (IDR) 237 295. 134 139 14 Div. yield (%) 3.5 4.4 2. 2.1 2.1 note: based on 3 December 215 closing price Major assumptions Year to 31 Dec 213A 214A 215F 216F 217F Total regular taxi (units) 21,756 25,545 27,45 28,545 31,45 Utilization rates (%) 79. 75. 75. 75. 75. Average daily income (kidr/unit) 558 594 638 69 731 Average fuel price (IDR/lt) 5,7 6,8 7,48 8, 8,4 Company information 12M high/low (IDR) : 12,1/5,2 12M High/low consensus TP (IDR) : 14,/5,8 Majority shareholder (%) : Pusaka Citra Djokosoetono (37) Shares outstanding (mn)/free float (%) : 2,52/15 Mkt. cap. (IDRbn/USDmn) : 16,72/1,26 3-m avg.daily t.o.(idrbn/usdmn) :.7/.1 Bloomberg/Reuters code : BIRD IJ/BIRD.JK Source: Bloomberg, Reuters; based on 3 December 215 closing price 178
216 Compendium BLUE BIRD Profit & loss Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Sales 3,921 4,759 5,552 6,25 6,988 Gross profit 1,332 1,453 1,678 1,854 1,988 EBITDA 1,492 1,699 1,99 2,118 2,29 Depreciation 52 646 712 819 936 EBIT 99 1,53 1,197 1,298 1,354 Net interest inc./(expense) (174) (263) (217) (295) (38) Forex gain/(losses) (66) (5) (15) (5) 5 Other income/(expense) 27 22 163 17 2 Pre-tax profit 956 987 1,128 1,168 1,177 Taxes (243) (247) (282) (292) (294) Minority interest (6) (5) (5) (6) (6) Extraordinary gain/(losses) - - - - - Net profit 78 735 84 87 877 Balance sheet Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Cash and equivalents 267 951 316 347 52 S-T investments - - - - - Trade receivables 257 227 38 428 479 Inventories 7 12 11 12 14 Fixed assets 4,342 5,563 6,293 7,352 8,58 Other assets 139 418 154 167 181 Total assets 5,12 7,172 7,155 8,35 9,71 Interest bearing liabilities 2,413 2,5 2,51 2,576 3,338 Trade payables 178 258 16 12 137 Other liabilities 1,216 1,261 886 971 1,58 Total liabilities 3,87 3,568 3,44 3,667 4,533 Minority interest 67 68 72 76 8 Shareholders' equity 1,138 3,535 4,4 4,562 5,88 Cash flow Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F EBIT 99 1,53 1,197 1,298 1,354 Depreciation 52 646 712 819 936 Working capital (16) (55) (64) (69) Other operating items (58) (359) (1,146) (723) (845) Operating cash flow 877 1,285 764 1,331 1,376 Net capital expenditure (1,841) (2,86) (1,424) (1,53) (1,671) Free cash flow (964) (8) (661) (2) (294) Equity raised/(bought) 242 2,38 - - - Net borrowings 78 (588) () 577 817 Other financing (382) (236) 26 (347) (35) Net cash flow (323) 684 (635) 3 173 Cash balances, beginning 59 267 951 316 347 Ending cash 267 951 316 347 52 Key ratios Year to 31 Dec 213A 214A 215F 216F 217F ROAE (%) 62.2 2.8 2.8 19.1 17.2 ROAA (%) 14.1 1.3 11.7 1.5 9. Gross margin (%) 34. 3.5 3.2 29.7 28.5 EBITDA margin (%) 38. 35.7 34.4 33.9 32.8 EBIT margin (%) 25.2 22.1 21.6 2.8 19.4 Net margin (%) 18. 15.4 15.1 13.9 12.5 Payout ratio (%) 35.6 87.8 4. 4. 4. Current ratio (x).8.8.7.8.9 Interest coverage (x) 5.7 4. 5.5 4.4 3.6 Net gearing (%) 188.6 31.1 43. 48.9 55.4 Debtor turnover (days) 24 17 25 25 25 Creditor turnover (days) 25 28 1 1 1 Inventory turnover (days) 1 1 1 1 1 179
216 Compendium BUMI SERPONG DAMAI BUY* PX: IDR1,77 - TP: IDR2,2 One of the largest landbank owners and also the largest property developer by market cap in our coverage, BSDE is currently developing the second phase of its township mega project, BSD City, with a 7% marketing sales contribution in 9M15. This 2,ha project should continue as BSDE s earnings growth driver until 22. In 216, we expect marketing sales to be flat y-y, compared to management s 215 target of IDR6.7tn (9M15: IDR4.6tn), backed by residential projects. Furthermore, we expect BSDE s commercial developments at Rasuna Said and BSD City Green Office Park to boost its recurring income to around 2% (9M15: 18%). BSDE s highest net margin in the sector and secured projects have us applying a 6% discount to our 216F NAV to derive our IDR2,2 TP. We upgrade to BUY on valuation. Risks: lower-than-expected marketing sales and slower-than-expected project developments. Share price performance (IDR) 2,4 2,2 2, 1,8 1,6 1,4 1,2 3-Dec-14 3-Feb-15 3-Apr-15 3-Jun-15 3-Aug-15 3-Oct-15 3-Dec-15 Volume (RHS) BSDE IJ Px Last (') 14, (%) (%) 12 11.3 12 1 9.3 9.4 1 8 6 4 2 4. ytd 1M 3M 6M 9M 12M BSDE IJ relative to JCI Source: Bloomberg Sanni Satrio Dwi Utomo (sanni@bahana.co.id) +6221 25581 ext. 3611 *New, please refer to appendix II 5.5 2.4 12, 1, 8, 6, 4, 2, 8 6 4 2 Financial highlights* Year to 31 Dec 213A 214A 215F 216F 217F Revenues (IDRbn) 5,741 5,572 6,69 7,856 8,978 EBIT (IDRbn) 2,91 2,632 3,226 3,71 4,248 Net profit (IDRbn) 2,691 3,821 2,545 2,876 3,386 Bahana/cons.(%) - - 99 1 16 EPS (IDR) 154 28 132 149 176 EPS growth (%) 19.3 35.2 (36.4) 13. 17.7 EV/EBITDA (x) 11.1 12.8 1.9 9.7 8.4 P/E (x) 11.5 8.5 13.4 11.8 1.1 FCFPS (IDR) (159) (153) (139) (58) 1 FCF yield (%) (9.) (8.7) (7.8) (3.3).6 BVPS (IDR) 584 837 916 1,53 1,214 P/BV (x) 3. 2.1 1.9 1.7 1.5 DPS (IDR) 16 16 13 15 18 Div. yield (%).9.9.7.8 1. note: based on 3 December 215 closing price NAV-derived target price calculation 9M15 Land bank (Ha) 5,17 Total value (IDRbn) 97,289 NAV/share (IDR) 5,55 Discount (%) 6 Adjusted NAV/share (IDR) 2,22 Company information 12M high/low (IDR) : 1,315/2,22 12M High/low consensus TP (IDR) : 2,6/1,29 Majority shareholder (%) : Paraga Artamida (26.7) Share outstanding (mn)/free float (%) : 19,247/35.4 Mkt. cap. (IDRbn/USDmn) : 34,67/2,461 3-m avg.daily t.o.(idrbn/usdmn) : 26.7/1.9 Bloomberg/Reuters code : BSDE IJ/BSDE.JK Source: Bloomberg, Reuters; based on 3 December 215 closing price 18
216 Compendium BUMI SERPONG DAMAI Profit & loss Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Sales 5,741 5,572 6,69 7,856 8,978 Gross profit 4,166 4,132 4,985 5,753 6,593 EBITDA 3,36 2,763 3,48 4,34 4,652 Depreciation 127 132 254 333 43 EBIT 2,91 2,632 3,226 3,71 4,248 Net interest inc./(expense) 7 (99) (38) (31) (35) Forex gain/(losses) 166 3 (9) (19) 18 Other income/(expense) 196 1,745 37 165 17 Pre-tax profit 3,279 4,36 3,135 3,537 4,132 Taxes (373) (31) (397) (448) (512) Minority interest (214) (176) (194) (213) (234) Extraordinary gain/(losses) - - - - - Net profit 2,691 3,821 2,545 2,876 3,386 Balance sheet Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Cash and equivalents 4,332 2,967 3,615 2,623 2,565 S-T investments 1,97 5,499 5,499 5,499 5,499 Trade receivables 129 139 192 228 26 Inventories 3,797 5,239 6,497 8,412 9,538 Fixed assets 3,947 4,461 7,761 1,261 12,361 Other assets 5,59 9,831 11,91 12,22 12,987 Total assets 22,572 28,135 34,655 39,44 43,29 Interest bearing liabilities 4,93 4,172 7,38 7,5 7,387 Trade payables 96 158 187 223 255 Other liabilities 4,968 5,332 6,24 7,654 8,631 Total liabilities 9,157 9,662 13,771 15,376 16,273 Minority interest 3,191 3,92 3,246 3,49 3,579 Shareholders' equity 1,224 15,382 17,638 2,26 23,358 Cash flow Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F EBIT 2,91 2,632 3,226 3,71 4,248 Depreciation 127 132 254 333 43 Working capital (1,884) (1,589) (84) (891) (569) Other operating items (14) 1,378 (76) (759) (816) Operating cash flow 1,47 2,552 1,879 2,384 3,266 Net capital expenditure (3,837) (5,233) (4,35) (3,44) (3,95) Free cash flow (2,79) (2,681) (2,426) (1,2) 172 Equity raised/(bought) (121) 1,613 - - - Net borrowings 2,968 79 3,28 12 (113) Other financing 313 (375) (134) (92) (117) Net cash flow 37 (1,364) 649 (993) (58) Cash balances, beginning 3,961 4,332 2,967 3,615 2,623 Ending cash 4,332 2,967 3,615 2,623 2,565 Key ratios Year to 31 Dec 213A 214A 215F 216F 217F ROAE (%) 29.7 29.8 15.4 15.2 15.5 ROAA (%) 13.7 15.1 8.1 7.8 8.2 Gross margin (%) 72.6 74.1 75.4 73.2 73.4 EBITDA margin (%) 52.9 49.6 52.6 51.3 51.8 EBIT margin (%) 5.7 47.2 48.8 47.1 47.3 Net margin (%) 46.9 68.6 38.5 36.6 37.7 Payout ratio (%) 1.2 7.6 1. 1. 1. Current ratio (x) 2.7 3.4 3.3 2.8 2.7 Interest coverage (x) na 26.5 1.5 12. 13.9 Net gearing (%) nc 7.8 21.3 24.1 2.6 Debtor turnover (days) 7 9 9 1 1 Creditor turnover (days) 34 31 41 4 39 Inventory turnover (days) - - - - - 181
216 Compendium CARDIG AERO SERVICES HOLD PX: IDR1,2 - TP: IDR1,25* To support growth, CASS, one of the leaders in airport services, providing integrated solutions for ground & cargo handling (72% of 9M15 revenues), from cleaning and catering to aviation support, plans to expand into other business lines, including aircraft simulators. On the cost side, CASS plans to improve operating efficiency by maximizing resources (ie, cleaning services and laundry) to improve earnings growth. Additional margin support could come from plans to shift its catering market segmentation from lower-margin remote areas to urban areas. On valuation, CASS, having substantially outperformed the market, is currently fairly valued. At our fine-tuned TP of IDR1,25, CASS would trade at nearly a 3% peer discount, which we believe would be sufficient to take into account its small-cap status. Downside risk: a weaker-than-expected IDR, as around 4% of earnings are in USD. Share price performance (IDR) 1,4 1,35 1,3 1,25 1,2 1,15 1,1 1,5 3-Dec-14 3-Feb-15 3-Apr-15 3-Jun-15 3-Aug-15 3-Oct-15 3-Dec-15 Volume (RHS) CASS IJ Px Last (%) (%) 2 15 1 5 (5) 9.2 (.1) (2.4) ytd 1M 3M 6M 9M 12M CASS IJ relative to JCI Source: Bloomberg Teguh Hartanto (teguh.hartanto@bahana.co.id) +6221 25 581 ext. 361 *New, please refer to appendix II 11.6 16.8 12.2 (') 5, 4, 3, 2, 1, 2 15 1 5 (5) Financial highlights* Year to 31 Dec 213A 214A 215F 216F 217F Revenues (IDRbn) 1,319 1,52 1,68 1,95 2,146 EBIT (IDRbn) 326 345 418 496 571 Net profit (IDRbn) 11 11 124 142 16 Bahana/consensus (%) - - na na na EPS (IDR) 53 53 59 68 76 EPS growth (%) 25.3.6 12.2 14.6 12.5 EV/EBITDA (x) 7. 6.7 5.4 4.6 4.1 P/E (x) 22.8 22.7 2.2 17.7 15.7 FCFPS (IDR) 2 (2) 54 8 (3) FCF yield (%).2 (.2) 4.5.7 (.3) BVPS (IDR) 145 177 222 273 33 P/BV (x) 8.3 6.8 5.4 4.4 3.6 DPS (IDR) 14 21 15 17 19 Div. yield (%) 1.2 1.7 1.2 1.4 1.6 note: based on 3 December 215 closing price Major assumptions Year to 31 Dec 213A 214A 215F 216F 217F Ground handling rev. growth (%) 27 12 16 15 13 Maintenance rev. growth (%) 55 13 5 7 9 Catering rev. growth (%) 31 21 (9) 8 1 Company information 12M high/low (IDR) : 1,35/1,1 12M high/low consensus TP (IDR) : 1,25/1,25 Majority shareholder (%) : SATS LTD (41.7) Shares outstanding (mn)/free float (%) : 2,87/56.6 Mkt. cap. (IDRbn/USDmn) : 2,54/181 3-m avg.daily t.o.(idrbn/usdmn) :./. Bloomberg/Reuters code : CASS IJ/CASS.JK Source: Bloomberg, Reuters based on 3 December 215 182
216 Compendium CARDIG AERO SERVICES Profit & loss Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Sales 1,319 1,52 1,68 1,95 2,146 Gross profit - - - - - EBITDA 365 39 464 548 63 Depreciation 4 45 47 52 59 EBIT 326 345 418 496 571 Net interest inc./(expense) (2) (3) (1) (12) (15) Forex gain/(losses) 24 (2) 33 18 - Other income/(expense) (5) 34 (6) (6) 5 Pre-tax profit 343 375 435 496 561 Taxes 93 15 13 148 168 Minority interest 14 159 181 26 234 Extraordinary gain/(losses) - - - - - Net profit 11 11 124 142 16 Balance sheet Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Cash and equivalents 121 152 218 212 169 S-T investments - - - - - Trade receivables 233 273 312 351 395 Inventories 2 17 23 21 24 Fixed assets 177 236 244 248 247 Other assets 365 47 428 543 639 Total assets 917 1,85 1,224 1,376 1,474 Interest bearing liabilities 182 25 232 243 245 Trade payables 72 68 82 75 62 Other liabilities 254 279 326 367 353 Total liabilities 58 597 641 684 66 Minority interest 17 118 121 123 126 Shareholders' equity 32 37 463 569 688 Cash flow Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F EBIT 326 345 418 496 571 Depreciation 4 45 47 52 59 Working capital (56) (54) (8) (56) (138) Other operating items 9 () 42 (2) 25 Operating cash flow 13 11 25 118 14 Net capital expenditure (99) (16) (92) (11) (111) Free cash flow 4 (5) 113 17 (7) Equity raised/(bought) (48) (42) (31) (36) (4) Net borrowings (2) 35 36 2 1 Other financing 9 43 (52) 11 3 Net cash flow (56) 31 66 (6) (43) Cash balances, beginning 177 121 152 218 212 Ending cash 121 152 218 212 169 Key ratios Year to 31 Dec 213A 214A 215F 216F 217F ROAE (%) 4.4 32.8 29.7 27.5 25.4 ROAA (%) 12.8 11. 1.7 1.9 11.2 EBITDA margin (%) 27.7 25.7 27.6 28.8 29.4 EBIT margin (%) 24.7 22.7 24.9 26. 26.6 Net margin (%) 8.3 7.3 7.4 7.4 7.4 Payout ratio (%) 27.3 39.5 25.2 25.2 25.2 Current ratio (x) 1.5 1.7 1.9 2. 2.4 Interest coverage (x) 17.3 15.4 15.3 17.5 2.3 Net gearing (%) 21.1 27.1 3.6 5.9 11.3 Debts to assets (%) 2.2 23.3 19.1 17.8 16.7 Debtor turnover (days) 53 61 63 63 63 Creditor turnover (days) 25 22 22 22 22 Inventory turnover (days) 6 6 6 6 6 183
216 Compendium CHAROEN POKPHAND INDONESIA HOLD* PX: IDR3,28- TP: IDR3,5* CPIN, Indonesia s largest poultry-related company with a 36% market share in poultry feed (75% of revenues), has culled 3m parent stocks (PS) to help eliminate the nation s DOC oversupply condition, resulting in a DOC price in 4Q15 of IDR6,/chick from a low 3Q15 level of IDR3,. On the balance sheet side, we are concerned over CPIN s FX exposure despite plans to lower its USD-denominated net debt to USD1m. Another concern that we have would be 216 margins as prices of soybean meal and corn have bottomed out. Our new 12-month TP of IDR3,5 is based on a 216F PE of 2.4x, a 1% premium to the sector s market-cap weighted PE. Given limited upside potential to our TP and recent market outperformance, we downgrade our rating on CPIN to HOLD from Buy. Downside risk: IDR depreciation. Upside risk: Higher-than-expected DOC prices. Share price performance (IDR) 4,4 3,9 3,4 2,9 2,4 1,9 1,4 3-Dec-14 3-Feb-15 3-Apr-15 3-Jun-15 3-Aug-15 3-Oct-15 3-Dec-15 Volume (RHS) CPIN IJ Px Last (%) (%) 8 6 4 2 (2) (.) 22.1 65.9 ytd 1M 3M 6M 9M 12M CPIN IJ relative to JCI Source: Bloomberg Michael W. Setjoadi (michael@bahana.co.id) +6221 25581 ext. 3613 *New, please refer to appendix II 18.9 3.2 (') 35, 3, 25, 2, 15, 1, 5, 8 6 4 2 (8.3) (2) Financial highlights* Year to 31 Dec 213A 214A 215F 216F 217F Revenues (IDRbn) 25,663 29,15 32,99 38,526 44,678 EBIT (IDRbn) 3,94 2,628 3,416 4,268 5,341 Net profit (IDRbn) 2,531 1,747 1,885 2,81 3,746 Bahana/consensus (%) - - 7 85 13 EPS (IDR) 154 17 115 171 228 EPS growth (%) (5.7) (31.) 7.9 49.1 33.3 EV/EBITDA (x) 13.2 19.4 15.4 12.4 1.1 P/E (x) 21.3 3.8 28.5 19.1 14.4 FCFPS (IDR) (34) (14) 6 7 64 FCF yield (%) (1.) (.4) 1.8.2 2. BVPS (IDR) 66 666 751 891 1,71 P/BV (x) 5.4 4.9 4.4 3.7 3.1 DPS (IDR) 46 43 3 32 48 Div. yield (%) 1.4 1.3.9 1. 1.5 note: based on 3 December 215 closing price Major assumptions Year to 31 Dec 213A 214A 215F 216F 217F Indo s chicken production (k tons) 1,874 2,35 2,15 2,3 2,5 Animal feed ASP (IDR/kg) 5,738 6,97 6,327 6,456 6,715 Company information 12M high/low (IDR) : 4,195/1,4 12M high/low consensus TP (IDR) : 6,/1,75 Majority shareholder (%) : Central Agromina (55.5) Shares outstanding (mn)/free float (%) : 16,398/44.5 Mkt. cap. (IDRbn/USDmn) : 53,785/3,886 3-m avg.daily t.o.(idrbn/usdmn) : 17./1.3 Bloomberg/Reuters code : CPIN IJ/CPIN.JK Source: Bloomberg, Reuters; based on 3 December 215 closing price 184
216 Compendium CHAROEN POKPHAND INDONESIA Profit & loss Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Sales 25,663 29,15 32,99 38,526 44,678 Gross profit 5,15 4,134 5,216 6,336 7,739 EBITDA 4,23 3,64 3,869 4,739 5,883 Depreciation 299 437 453 47 543 EBIT 3,94 2,628 3,416 4,268 5,341 Net interest inc./(expense) (127) (261) (332) (475) (466) Forex gain/(losses) (437) (271) (6) (8) 8 Other income/(expense) 112 11 29 34 4 Pre-tax profit 3,451 2,17 2,514 3,747 4,994 Taxes (923) (36) (628) (937) (1,249) Minority interest (2) () () () () Extraordinary gain/(losses) - - - - - Net profit 2,531 1,747 1,885 2,81 3,746 Balance sheet Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Cash and equivalents 1,147 885 1,86 1,172 1,154 S-T investments - - - - - Trade receivables 2,53 3,159 3,42 4,6 4,78 Inventories 4,45 4,333 4,797 5,64 6,472 Fixed assets 6,39 9,58 9,49 1,85 12,265 Other assets 1,638 3,427 3,375 3,246 3,467 Total assets 15,722 2,862 22,69 24,968 28,67 Interest bearing liabilities 2,89 6,597 5,9 6,2 5,7 Trade payables 1,439 1,591 2,38 2,47 2,349 Other liabilities 1,443 1,731 1,79 2,95 2,43 Total liabilities 5,771 9,919 9,728 1,343 1,479 Minority interest 18 18 19 21 24 Shareholders' equity 9,933 1,926 12,322 14,65 17,563 Cash flow Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F EBIT 3,94 2,628 3,416 4,268 5,341 Depreciation 299 437 453 47 543 Working capital (1,292) (1,54) 441 (1,68) (738) Other operating items (1,373) (881) (1,531) (1,458) (1,595) Operating cash flow 1,537 1,13 2,779 2,213 3,551 Net capital expenditure (2,95) (3,15) (1,8) (2,1) (2,5) Free cash flow (558) (1,976) 979 113 1,51 Equity raised/(bought) - - - - - Net borrowings 1,469 3,77 (697) 3 (5) Other financing 1,437 1,644 1,643 1,749 1,96 Net cash flow 192 (211) 151 86 (18) Cash balances, beginning 955 1,147 935 1,86 1,172 Ending cash 1,147 935 1,86 1,172 1,154 Key ratios Year to 31 Dec 213A 214A 215F 216F 217F ROAE (%) 28. 16.7 16.2 2.9 23.3 ROAA (%) 18. 9.5 8.8 11.9 14.1 Gross margin (%) 2.1 14.2 15.8 16.4 17.3 EBITDA margin (%) 16.4 1.5 11.8 12.3 13.2 EBIT margin (%) 15.2 9. 1.4 11.1 12. Net margin (%) 9.9 6. 5.7 7.3 8.4 Payout ratio (%) 28.1 28. 28. 28. 28. Current ratio (x) 3.8 2.2 2.6 2.6 3. Interest coverage (x) 3.7 1.1 1.3 9. 11.5 Net gearing (%) 17.5 52.3 39.1 34.4 25.9 Debtor turnover (days) 38 41 43 42 43 Creditor turnover (days) 17 19 2 19 18 Inventory turnover (days) 66 61 6 59 6 185
216 Compendium CIPUTRA DEVELOPMENT BUY PX: IDR1,23 - TP: IDR1,4* Despite being the most geographically and demographically diverse developer in our coverage, with projects spanning from high-end condos to low-end landed houses, CTRA, parent company of the Ciputra Group, has also been hit by the property slowdown causing it to lower its 215 pre-sales target to IDR9.5tn, from IDR11tn. Despite this, we expect CTRA s backlog to support decent 12.6% y-y revenue growth in 216, although net profit should see slower at 8.2% y-y growth on lower-grossing projects coming into the revenue mix, which is backed by its diversified portfolio. On valuation, we maintain our 12-month TP of IDR1,4, based on a 6% discount to our 216F NAV (sector: 65%). Our positive view on CTRA is based on its favorable rank relative to other developers in our coverage in terms of net gearing and interest coverage. Reaffirm BUY. The risk to our call is a slower-than-expected project take-up. Share price performance (IDR) (') 1,7 8, 1,5 7, 6, 1,3 5, 1,1 4, 9 3, 2, 7 1, 5 3-Dec-14 3-Feb-15 3-Apr-15 3-Jun-15 3-Aug-15 3-Oct-15 3-Dec-15 Volume (RHS) CTRA IJ Px Last (%) (%) 6 5 4 3 2 1 (1) 12.7 4.1 49.3 (1.5) ytd 1M 3M 6M 9M 12M CTRA IJ relative to JCI Source: Bloomberg Sanni Satrio Dwi Utomo (sanni@bahana.co.id) +6221 25581 ext. 3611 *New, please refer to appendix II 7.2 4. 6 5 4 3 2 1 (1) Financial highlights* Year to 31 Dec 213A 214A 215F 216F 217F Revenue (IDRbn) 5,77 6,344 7,232 8,141 9,43 EBIT (IDRbn) 1,553 2,24 2,119 2,31 2,523 Net profit (IDRbn) 977 1,325 1,285 1,39 1,523 Bahana/cons.(%) - - 97 93 93 EPS (IDR) 64 86 84 91 99 EPS growth (%) 65.8 34.2 (3.) 8.2 9.6 EV/EBITDA (x) 1.5 8.3 8.7 8.1 7.6 P/E (x) 19.1 14.2 14.7 13.6 12.4 FCFPS (IDR) (55) (144) (73) (8) (111) FCF yield (%) (4.5) (11.7) (5.9) (6.5) (9.1) BVPS (IDR) 421 484 559 637 722 P/BV (x) 2.9 2.5 2.2 1.9 1.7 DPS (IDR) 19 8 13 15 16 Div. yield (%) 1.5.7 1.1 1.2 1.3 note: based on 3 December 215 closing price NAV-derived target price calculation 9M15 Land bank (Ha) 1,553 Total value (IDRbn) 53,536 NAV/share (IDR) 3,492 Discount (%) 6 Adjusted NAV/share (IDR) 1,397 Company information 12M high/low (IDR) : 1,543/772 12M High/low consensus TP (IDR) : 1,566/91 Majority shareholder (%) : Sang Pelopor (3.3) Share outstanding (m)/free float (%) : 15,331/69.5 Mkt. cap. (IDRbn/USDmn) : 18,857/1,362 3-m avg.daily t.o.(idrbn/usdmn) : 15.8/1.1 Bloomberg/Reuters code : CTRA IJ/CTRA.JK Source: Bloomberg, Reuters; based on 3 December 215 closing price 186
216 Compendium CIPUTRA DEVELOPMENT Profit & loss Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Sales 5,77 6,344 7,232 8,141 9,43 Gross profit 2,546 3,334 3,57 3,99 4,6 EBITDA 1,698 2,43 2,357 2,583 2,857 Depreciation 146 199 238 282 333 EBIT 1,553 2,24 2,119 2,31 2,523 Net interest inc./(expense) 53 (14) (15) (14) (95) Forex gain/(losses) 48 (37) 22 6 (6) Other income/(expense) 56 85 15 131 163 Pre-tax profit 1,79 2,147 2,142 2,335 2,585 Taxes (296) (353) (45) (456) (527) Minority interest (437) (469) (452) (488) (535) Extraordinary gain/(losses) - - - - - Net profit 977 1,325 1,285 1,39 1,523 Balance sheet Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Cash and equivalents 3,464 2,888 2,918 2,655 1,822 S-T investments 11 1 5 6 6 Trade receivables 541 765 793 892 1,3 Inventories 4,879 6,429 7,715 9,258 11,572 Fixed assets 1,84 2,352 2,617 2,468 1,97 Other assets 9,415 1,849 12,439 14,41 16,78 Total assets 2,115 23,283 26,487 29,68 33,46 Interest bearing liabilities 2,728 4,21 4,489 4,693 4,637 Trade payables 663 773 868 967 1,118 Other liabilities 6,958 7,68 7,745 8,488 9,34 Total liabilities 1,349 11,862 13,11 14,148 15,59 Minority interest 3,388 4,7 4,89 5,77 6,924 Shareholders' equity 6,377 7,414 8,577 9,761 11,62 Cash flow Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F EBIT 1,553 2,24 2,119 2,31 2,523 Depreciation 146 199 238 282 333 Working capital 1,144 (2,158) (779) (1,81) (1,817) Other operating items (1,447) (86) (1,66) (1,178) (1,38) Operating cash flow 1,396 (561) 513 324 (268) Net capital expenditure (2,234) (1,648) (1,625) (1,547) (1,439) Free cash flow (838) (2,29) (1,112) (1,223) (1,77) Equity raised/(bought) - - - - - Net borrowings 1,257 84 468 25 (57) Other financing 336 829 674 756 931 Net cash flow 756 (576) 3 (263) (833) Cash balances, beginning 2,78 3,464 2,888 2,918 2,655 Ending cash 3,464 2,888 2,918 2,655 1,822 Key ratios Year to 31 Dec 213A 214A 215F 216F 217F ROAE (%) 16.3 19.2 16.1 15.2 14.6 ROAA (%) 5.6 6.1 5.2 5. 4.9 Gross margin (%) 5.2 52.5 48.5 49. 48.9 EBITDA margin (%) 33.5 37.9 32.6 31.7 3.4 EBIT margin (%) 3.6 34.7 29.3 28.3 26.8 Net margin (%) 19.2 2.9 17.8 17.1 16.2 Payout ratio (%) 29.5 9.3 16. 16. 16. Current ratio (x).9 1. 1.1 1.2 1.3 Interest coverage (x) na 21.2 2.3 22.2 26.7 Net gearing (%) nc 15.3 18.3 2.9 25.4 Debtor turnover (days) 37 4 4 4 4 Creditor turnover (days) 86 85 85 85 85 Inventory turnover (days) - - - - - 187
216 Compendium CIPUTRA PROPERTY REDUCE* PX: IDR47 - TP: IDR365* Focusing on premium high-rise and mixed-use developments, CTRP, owned by the Ciputra Group through CTRA, currently is facing difficulties selling high-end office buildings due to oversupply conditions. In 215, CTRP has relied heavily on Ciputra World 1 and 2 office sales, causing lower-than-expected 9M15 marketing sales of IDR1tn, just 5% of management s initial full-year target of IDR2tn. CTRP s strategy to remain targeted on the premium-class segment could continue to be a drag on earnings. In 216, we expect an 18% y-y top-line decline, following a 9M15 revenue increase of 67% y-y to IDR1.8tn on a one-off Ascott Residence project. CTRP s high-end concentration and small landbank (92ha) are likely to result in continued market underperformance. On valuation, we derive our new TP of IDR365 using a 7% discount to 216F NAV. Downgrade to REDUCE. Risk: tax reform raising premium-class property demand. Share price performance (IDR) 9 8 7 6 5 4 3 2 3-Dec-14 3-Feb-15 3-Apr-15 3-Jun-15 3-Aug-15 3-Oct-15 3-Dec-15 Volume (RHS) CTRP IJ Px Last (%) (%) 2 1 (1) (2) (3) (4) (5) (37.8) (14.) 9.3 (24.7) (24.) (39.4) ytd 1M 3M 6M 9M 12M CTRP IJ relative to JCI Source: Bloomberg Sanni Satrio Dwi Utomo (sanni@bahana.co.id) +6221 25581 ext. 3611 *New, please refer to appendix II (') 5, 4, 3, 2, 1, 2 1 (1) (2) (3) (4) (5) Financial highlights* Year to 31 Dec 213A 214A 215F 216F 217F Revenues (IDRbn) 1,448 1,662 2,36 1,934 2,25 EBIT (IDRbn) 516 667 643 519 592 Net profit (IDRbn) 422 394 412 31 353 Bahana/cons.(%) - - 149 64 76 EPS (IDR) 69 64 66 48 56 EPS growth (%) 4.5 (6.6) 2.8 (27.) 17.4 EV/EBITDA (x) 6.2 5.9 7.6 9.9 9.2 P/E (x) 5.9 6.4 6.2 8.5 7.2 FCFPS (IDR) (28) (143) (196) (89) (39) FCF yield (%) (51.1) (35.1) (48.2) (21.8) (9.7) BVPS (IDR) 659 72 747 775 817 P/BV (x).6.6.5.5.5 DPS (IDR) 21 1 2 14 17 Div. yield (%) 5.2 2.5 4.9 3.5 4.2 note: based on 3 December 215 closing price NAV-derived target price calculation 9M15 Land bank (Ha) 92 Total value (IDRbn) 7,618 NAV/share (IDR) 1,218 Discount (%) 7 Adjusted NAV/share (IDR) 365 Company information 12M high/low (IDR) : 865/331 12M High/low consensus TP (IDR) : 825/41 Majority shareholder (%) : Ciputra Development (55%) Share outstanding (m)/free float (%) : 6,256/44.7 Mkt. cap. (IDRbn/USDmn) : 2,546/184 3-m avg.daily t.o.(idrbn/usdmn) : 1.8/.1 Bloomberg/Reuters code : CTRP IJ/CTRP.JK Source: Bloomberg, Reuters; based on 3 December 215 closing price 188
216 Compendium CIPUTRA PROPERTY Profit & loss Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Sales 1,448 1,662 2,36 1,934 2,25 Gross profit 771 957 1,38 97 1,74 EBITDA 581 766 77 65 73 Depreciation 65 99 127 132 138 EBIT 516 667 643 519 592 Net interest inc./(expense) (26) (177) (228) (23) (268) Forex gain/(losses) 33 (3) (2) (8) 8 Other income/(expense) 11 21 23 24 26 Pre-tax profit 534 58 418 35 358 Taxes (92) (19) (1) (1) (1) Minority interest (21) (5) (5) (4) (4) Extraordinary gain/(losses) - - - - - Net profit 422 394 412 31 353 Balance sheet Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Cash and equivalents 977 568 566 59 54 S-T investments 1 1 1 1 1 Trade receivables 96 288 226 185 211 Inventories 44 1,67 1,61 1,358 1,217 Fixed assets 4,5 4,98 6,31 7,147 7,958 Other assets 2,9 2,3 2,223 2,435 2,667 Total assets 7,654 8,861 1,647 11,716 12,594 Interest bearing liabilities 2,61 2,611 3,844 4,489 4,712 Trade payables 121 23 16 123 135 Other liabilities 9 1,16 1,348 1,569 1,881 Total liabilities 3,81 3,974 5,353 6,182 6,728 Minority interest 522 568 625 687 756 Shareholders' equity 4,51 4,32 4,67 4,847 5,11 Cash flow Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F EBIT 516 667 643 519 592 Depreciation 65 99 127 132 138 Working capital 17 (499) (37) 421 387 Other operating items 65 (398) (248) (237) (26) Operating cash flow 664 (13) 152 835 857 Net capital expenditure (1,942) (748) (1,378) (1,39) (1,13) Free cash flow (1,279) (878) (1,226) (555) (246) Equity raised/(bought) - - - - - Net borrowings 1,129 55 1,234 645 223 Other financing 148 (81) (9) (66) (27) Net cash flow (1) (49) (2) 24 (5) Cash balances, beginning 979 977 568 566 59 Ending cash 977 568 566 59 54 Key ratios Year to 31 Dec 213A 214A 215F 216F 217F ROAE (%) 1.8 9.4 9.2 6.3 7.1 ROAA (%) 6.2 4.8 4.2 2.7 2.9 Gross margin (%) 53.2 57.5 44. 46.9 48.7 EBITDA margin (%) 4.1 46.1 32.6 33.6 33.1 EBIT margin (%) 35.7 4.1 27.3 26.8 26.9 Net margin (%) 29.1 23.7 17.5 15.6 16. Payout ratio (%) 3.6 15.6 3. 3. 3. Current ratio (x) 1.4 1.4 2. 1.6 1.3 Interest coverage (x) 19.6 3.8 2.8 2.3 2.2 Net gearing (%) 26.7 47.3 7.2 8.4 81.7 Debtor turnover (days) 35 42 35 35 35 Creditor turnover (days) 48 84 5 5 5 Inventory turnover (days) - - - - - 189
216 Compendium DHARMA SATYA NUSANTARA BUY PX: IDR61 - TP: IDR74* DSNG, having the highest production yield under our coverage with a total planted area of 87k ha (78% mature area) and an average age of only 6.9 years, should experience improved performance on a more positive CPO-price outlook in 216 despite lower FFB nucleus output. In 216, despite lower FFB production of 1.3m tons (-4% y-y), we expect revenue to rebound to IDR5.1tn (+16% y-y), on stronger USD/CPO prices. Looking ahead, we also expect increased operating efficiencies from some additional mills in East Kalimantan (12ton/ha, 3% of total capacity), which are due to start operations in 216. Following share dilution from its IPO in 214, DSNG looks set to book strong earnings growth in 216-17F, driven by a growing plantation with young average age. We reaffirm our BUY call with a new 12- month TP of IDR74, based on a 216F PE of 19.1x, a 25% discount to its Malaysian peers. Risk: Lower-than-expected CPO prices. Share price performance (IDR) 1, 85 7 55 4 3-Dec-14 3-Feb-15 3-Apr-15 3-Jun-15 3-Aug-15 3-Oct-15 3-Dec-15 Volume (RHS) DSNG IJ Px Last (%) (%) 2 18.2 2 1 (1) (2) (7.6) (1.7) (14.) (14.3) ytd 1M 3M 6M 9M 12M DSNG IJ relative to JCI Source: Bloomberg Agustinus Reza Kirana (agustinus.reza@bahana.co.id) +6221 25581 ext. 3616 *New, please refer to appendix II (9.8) (') 4, 3, 2, 1, 1 (1) (2) Financial highlights* Year to 31 Dec 213A 214A 215F 216F 217F Revenues (IDRbn) 3,842 4,898 4,49 5,121 5,998 EBIT (IDRbn) 695 1,135 53 785 1,155 Net profit (IDRbn) 23 65 197 49 687 Bahana/consensus (%) - - 46 75 9 EPS (IDR) 96 61 19 39 65 EPS growth (%) (91.7) (36.1) (69.6) 17. 68.1 EV/EBITDA (x) 9.8 6.7 14.6 1.7 7.6 P/E (x) 6.4 1. 32.8 15.8 9.4 FCFPS (IDR) (422) 8 (56) (2) 1 FCF yield (%) (69.2) 1.2 (9.1) (3.3).2 BVPS (IDR) 1,541 213 225 259 314 P/BV (x).4 2.9 2.7 2.4 1.9 DPS (IDR) 4 15 5 1 16 Div. yield (%).7 2.5.8 1.6 2.7 note: based on 3 December 215 closing price Major assumptions Year to 31 Dec 213A 214A 215F 216F 217F FFB nucleus production (k tons) 1,153 1,258 1,321 1,271 1,544 CPO production (k tons) 336 391 46 433 532 Growth (%) 3.6 16.4 3.8 6.6 22.9 ASP CPO (USD/ton) 652 672 56 6 62 Company information 12M high/low (IDR) : 96/431 12M High/low consensus TP (IDR) : 75/435 Majority shareholder (%) : Triputra Investindo Arya (25.1) Shares outstanding (mn)/free float (%) : 1,599/34.1 Mkt. cap. (IDRbn/USDmn) : 6,465/467 3-m avg.daily t.o.(idrbn/usdmn) : 1.6/.1 Bloomberg/Reuters code : DSNG IJ/DSNG.JK Source: Bloomberg, Reuters; based on 3 December 215 closing price 19
216 Compendium DHARMA SATYA NUSANTARA Profit & loss Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Sales 3,842 4,898 4,49 5,121 5,998 Gross profit 1,19 1,79 1,76 1,421 1,884 EBITDA 91 1,329 654 912 1,296 Depreciation 215 193 15 127 142 EBIT 695 1,135 53 785 1,155 Net interest inc./(expense) (351) (23) (239) (258) (268) Forex gain/(losses) (54) (5) (8) (29) 3 Other income/(expense) 15 (55) 94 59 14 Pre-tax profit 36 873 279 558 931 Taxes (91) (223) (72) (14) (233) Minority interest (13) () (9) (1) (12) Extraordinary gain/(losses) - - - - - Net profit 23 65 197 49 687 Balance sheet Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Cash and equivalents 487 1,124 1,61 1,96 1,28 S-T investments - - - - - Trade receivables 334 328 423 491 575 Inventories 677 713 822 912 1,14 Fixed assets 3,467 3,964 4,598 5,16 5,597 Other assets 957 1,47 1,61 1,59 1,157 Total assets 5,921 7,174 7,964 8,664 9,551 Interest bearing liabilities 2,961 3,532 4,132 4,432 4,632 Trade payables 494 421 482 535 595 Other liabilities 788 928 932 923 966 Total liabilities 4,243 4,881 5,545 5,889 6,192 Minority interest 41 41 32 29 29 Shareholders' equity 1,638 2,252 2,387 2,746 3,33 Cash flow Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F EBIT 695 1,135 53 785 1,155 Depreciation 215 193 15 127 142 Working capital (27) (61) (149) (86) (15) Other operating items (526) (492) (296) (389) (482) Operating cash flow 177 776 29 438 664 Net capital expenditure (626) (696) (8) (65) (65) Free cash flow (449) 8 (591) (212) 14 Equity raised/(bought) 468 - - - - Net borrowings 228 571 6 3 2 Other financing (298) (15) (72) (53) (12) Net cash flow (51) 637 (63) 35 111 Cash balances, beginning 538 487 1,124 1,61 1,96 Ending cash 487 1,124 1,61 1,96 1,28 Key ratios Year to 31 Dec 213A 214A 215F 216F 217F ROAE (%) 12.4 28.8 8.3 14.9 2.6 ROAA (%) 3.4 9.1 2.5 4.7 7.2 Gross margin (%) 31. 34.9 24.4 27.8 31.4 EBITDA margin (%) 23.7 27.1 14.8 17.8 21.6 EBIT margin (%) 18.1 23.2 11.4 15.3 19.2 Net margin (%) 5.3 13.3 4.5 8. 11.4 Payout ratio (%) 38.8 2.9 25. 25. 25. Current ratio (x) 1.4 1.5 1.4 1.5 1.5 Interest coverage (x) 2. 5.6 2.1 3. 4.3 Net gearing (%) 151. 16.9 128.7 121.5 12.8 Debtor turnover (days) 32 24 35 35 35 Creditor turnover (days) 7 5 55 55 55 Inventory turnover (days) 93 82 9 9 9 191
216 Compendium ELECTRONIC CITY REDUCE PX: IDR8 - TP: IDR7* ECII, Indonesia s largest electronic retailer by market share (c. 44.6%) and 69 stores across 24 cities, is seeing declining sales on low customer loyalty and weak purchasing power adversely affecting discretionary spending for big-ticket items like electronics. In 216, we expect a slow revival for ECII s products on a soft consumer appetite and management s cautious expansion plans. At this stage, ECII plans to focus on productivity, store refurbishments, product mix enhancement, e-commerce utilization and operating efficiencies through SAP migration and an integrated distribution channel to reverse its negative EBIT margin. On valuation, however, ECII is still expensive, in our view. Hence, we maintain our REDUCE rating with IDR7 TP, reflecting a 17.5x 216F PE, a 15% discount to the sector, given its small-cap status and illiquidity. Risks: Better industry outlook and cost efficiencies. Share price performance (IDR) 1,75 1,5 1,25 1, 75 5 3-Dec-14 3-Feb-15 3-Apr-15 3-Jun-15 3-Aug-15 3-Oct-15 3-Dec-15 Volume (RHS) ECII IJ Px Last (%) (%) (5) (1) (15) (2) (25) (3) (35) (13.4) (21.7) (15.4) (19.5) (29.1) (21.2) ytd 1M 3M 6M 9M 12M ECII IJ relative to JCI Source: Bloomberg Bagus Adi Yoga Prawira (yoga.prawira@bahana.co.id) +6221 25581 ext.364 *New, please refer to appendix II (') 14, 12, 1, 8, 6, 4, 2, (5) (1) (15) (2) (25) (3) (35) Financial highlights* Year to 31 Dec 213A 214A 215F 216F 217F Revenues (IDRbn) 2,13 2,227 1,776 1,917 2,121 EBIT (IDRbn) 184 99 (17) 31 67 Net profit (IDRbn) 27 129 15 54 82 Bahana/consensus (%) - - 9 22 26 EPS (IDR) 155 97 12 4 61 EPS growth (%) 24. (37.4) (88.) 245.5 52.6 EV/EBITDA (x) 1.8 4.7 na 15.5 7.9 P/E (x) 5.2 8.2 68.9 19.9 13.1 FCFPS (IDR) (63) (29) 2 (1) 5.3 FCF yield (%) (7.9) (3.6) 2.5 (.1).7 BVPS (IDR) 1,263 1,332 1,334 1,373 1,43 P/BV (x).6.6.6.6.6 DPS (IDR) 28 1 1 4 6 Div. yield (%). 1.2.1.5.8 note: based on 3 December closing price Major assumptions Year to 31 Dec 213A 214A 215F 216F 217F Total store opening (unit) 33 11 2 4 5 Selling area (sqm) 56,648 69,539 71,939 75,339 79,939 Sales (mn)/avg. sqm 45.3 34.3 24.5 25.5 27. Company information 12M high/low (IDR) : 1,665/685 12M High/low consensus TP (IDR) : 8/8 Majority shareholder (%) : Graha Surya Kirana (25.6) Share outstanding (mn)/free float (%) : 1,334/25. Mkt. cap. (IDRbn/USDmn) : 1,67/77 3-m avg.daily t.o.(idrbn/usdmn) :.3/. Bloomberg/Reuters code : ECII IJ/ECII.JK Source: Bloomberg, Reuters based on 3 December closing price 192
216 Compendium ELECTRONIC CITY Profit & loss Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Sales 2,13 2,227 1,776 1,917 2,121 Gross profit 46 429 325 355 397 EBITDA 24 141 (7) 41 8 Depreciation 2 42 11 9 13 EBIT 184 99 (17) 31 67 Net interest inc./(expense) 11 2 16 18 17 Forex gain/(losses) - - - - - Other income/(expense) 44 38 25 33 41 Pre-tax profit 239 156 24 82 126 Taxes (32) (27) (8) (29) (44) Minority interest Extraordinary gain/(losses) - - - - - Net profit 27 129 15 54 82 Balance sheet Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Cash and equivalents 742 444 514 478 471 S-T investments 215 277 277 277 277 Trade receivables 8 18 14 16 17 Inventories 445 489 374 415 431 Fixed assets 448 542 591 632 693 Other assets 164 234 21 214 235 Total assets 2,23 2,4 1,97 2,31 2,123 Interest bearing liabilities 43 35 41 41 37 Trade payables 227 13 116 125 138 Other liabilities 67 61 34 33 4 Total liabilities 337 226 19 199 215 Minority interest Shareholders' equity 1,685 1,777 1,78 1,832 1,98 Cash flow Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F EBIT 184 99 (17) 31 67 Depreciation 2 42 11 9 13 Working capital (191) (137) 12 (33) (3) Other operating items (263) (126) 72 9 (4) Operating cash flow (249) (122) 168 17 73 Net capital expenditure (351) (137) (59) (51) (74) Free cash flow (6) (259) 19 (34) (1) Equity raised/(bought) 1,253 () - - - Net borrowings (12) (9) 6 (4) Other financing 15 (31) (45) (3) (2) Net cash flow 656 (299) 7 (36) (7) Cash balances, beginning 86 742 444 514 478 Ending cash 742 444 514 478 471 Key ratios Year to 31 Dec 213A 214A 215F 216F 217F ROAE (%) 21.6 7.5.9 3. 4.4 ROAA (%) 16.6 6.4.8 2.7 3.9 Gross margin (%) 2.2 19.2 18.3 18.5 18.7 EBITDA margin (%) 1.2 6.3 (.4) 2.1 3.8 EBIT margin (%) 9.1 4.4 (1.) 1.6 3.1 Net margin (%) 1.3 5.8.9 2.8 3.9 Payout ratio (%) 18. 1. 1. 1. 1. Current ratio (x) 5.6 8.6 9.9 9.3 8.6 Interest coverage (x) 21.6 21.5 na 22.8 45.8 Net gearing (%) nc nc nc nc nc Debtor turnover (days) 1 1 1 1 1 Creditor turnover (days) 41 36 29 29 29 Inventory turnover (days) 69 95 19 92 9 193
216 Compendium ERAJAYA SWASEMBADA BUY PX: IDR555 - TP: IDR85* ERAA, the country s largest mobile-phone distributor having 519 retail outlets, with licenses to distribute well-known brands including Samsung and Nokia, should continue to dominate in the current consolidating handset distribution business. We expect margin improvement for ERAA on business expansion and working capital efficiencies. ERAA plans to continue to increase its retail presence (519 owned retail outlets), targetting a 45% retail revenue proportion (37% currently). ERAA is also continuing its Malaysia retail expansion and e-commerce penetration. On continued higher smartphone penetration, we expect ERAA s net profit to continue to recover. We reiterate our BUY call with a new DCF-based 12-month TP of IDR85, reflecting a 216F PE of 9.8x, in line with the sector. Risks to our call are slower purchasing power and weak operating margins on high working capital requirements. Share price performance (IDR) 1,35 1,15 95 75 55 35 3-Dec-14 3-Feb-15 3-Apr-15 3-Jun-15 3-Aug-15 3-Oct-15 3-Dec-15 3 2 1 (1) (2) (3) (4) (5) Volume (RHS) (%) (%) 3 19.6 2 1 (1) (12.) (2) (21.9) (3) (35.9) (4) (39.1) (43.8) (5) ytd 1M 3M 6M 9M 12M ERAA IJ relative to JCI ERAA IJ Px Last Source: Bloomberg Leonardo Henry Gavaza, CFA (leonardo@bahana.co.id) +6221 25581 ext. 368 *New, please refer to appendix II (') 14, 12, 1, 8, 6, 4, 2, Financial highlights Year to 31 Dec 213A 214A 215F 216F 217F Revenues (IDRbn) 12,727 14,451 18,569 19,777 21,43 EBIT (IDRbn) 49 49 375 412 466 Net profit (IDRbn) 349 212 21 252 299 Bahana/consensus (%) - - 94 14 19 EPS (IDR) 12 73 72 87 13 EPS growth (%) (19.5) (39.3) (.6) 19.8 18.7 EV/EBITDA (x) 5.2 6.4 6.3 5.7 4.8 P/E (x) 4.6 7.6 7.7 6.4 5.4 FCFPS (IDR) (193) (125) 146 29 6 FCF yield (%) (34.8) (22.5) 26.2 5.1 1.7 BVPS (IDR) 947 1,21 1,64 1,122 1,19 P/BV (x).6.5.5.5.5 DPS (IDR) - 29 29 35 41 Div. yield (%) - 5.3 5.2 6.3 7.4 note: based on 3 December 215 closing price Major assumptions Year to 31 Dec 213A 214A 215F 216F 217F ASP (IDR ) 1,168 1,25 1,287 1,339 1,392 Sales volume (mn units) 1,38 1,528 12,528 12,94 13,42 Company information 12M high/low (IDR) : 1,26/396 12M High/low consensus TP (IDR) : 825/727 Majority shareholder (%) : PT Eralink International (6.) Share outstanding (mn)/free float (%) : 2,9/39.7 Mkt. cap. (IDRbn/USDmn) : 1,61/116 3-m avg.daily t.o.(idrbn/usdmn) : 4.7/.3 Bloomberg/Reuters code : ERAA IJ/ERAA.JK Source: Bloomberg, Reuters; based on 3 December 215 closing price 194
216 Compendium ERAJAYA SWASEMBADA Profit & loss Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Sales 12,727 14,451 18,569 19,777 21,43 Gross profit 1,169 1,289 1,448 1,582 1,734 EBITDA 522 449 422 464 524 Depreciation 32 4 46 52 57 EBIT 49 49 375 412 466 Net interest inc./(expense) (89) (181) (162) (147) (142) Forex gain/(losses) 4 (1) (5) (1) 2 Other income/(expense) 51 69 76 76 76 Pre-tax profit 457 296 284 339 42 Taxes (18) (82) (71) (85) (11) Minority interest () (3) (3) (3) (3) Extraordinary gain/(losses) - - - - - Net profit 349 212 21 252 299 Balance sheet Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Cash and equivalents 8 17 69 84 99 S-T investments - - - - - Trade receivables 91 1,255 1,613 1,681 1,782 Inventories 1,842 2, 1,883 1,956 2,65 Fixed assets 216 42 456 59 56 Other assets 1,963 2,293 2,424 2,533 2,581 Total assets 5,2 6,12 6,446 6,763 7,87 Interest bearing liabilities 1,173 1,563 1,1 1,1 1,25 Trade payables 826 1,183 1,82 1,915 2,7 Other liabilities 249 361 393 424 462 Total liabilities 2,248 3,17 3,296 3,439 3,558 Minority interest 6 53 64 7 77 Shareholders' equity 2,747 2,961 3,86 3,254 3,452 Cash flow Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F EBIT 49 49 375 412 466 Depreciation 32 4 46 52 57 Working capital (48) (147) 381 (26) (52) Other operating items (967) (496) (281) (25) (192) Operating cash flow (492) (194) 522 188 28 Net capital expenditure (68) (168) (1) (15) (18) Free cash flow (56) (362) 422 83 173 Equity raised/(bought) - - - - - Net borrowings 543 39 (463) - (75) Other financing (162) 76 (6) (68) (83) Net cash flow (171) 89 (11) 15 15 Cash balances, beginning 251 8 17 69 84 Ending cash 8 17 69 84 99 Key ratios Year to 31 Dec 213A 214A 215F 216F 217F ROAE (%) 13.1 7.4 7. 7.9 8.9 ROAA (%) 7.8 3.8 3.3 3.8 4.3 Gross margin (%) 9.2 8.9 7.8 8. 8.1 EBITDA margin (%) 4.1 3.1 2.3 2.3 2.4 EBIT margin (%) 3.9 2.8 2. 2.1 2.2 Net margin (%) 2.7 1.5 1.1 1.3 1.4 Payout ratio (%) - 4. 4. 4. 4. Current ratio (x) 1.7 1.5 1.4 1.4 1.4 Interest coverage (x) 5.5 2.3 2.3 2.8 3.3 Net gearing (%) 39.8 41.9 33.4 31.2 26.8 Debtor turnover (days) 26 32 32 31 3 Creditor turnover (days) 33 38 38 38 38 Inventory turnover (days) 58 55 4 39 38 195
216 Compendium EXPRESS TRANSINDO UTAMA REDUCE PX: IDR136 - TP: IDR12 TAXI, the second-largest land transportation company with around a 15% market share in Indonesia, is suffering as a result of its aggressive expansion in the past few years. Currently, the company is confronting severe earnings pressure due to two factors: (1) a lack of drivers and (2) large interest payments on its IDR1tn bond. Over 215-17F, we expect debt levels to remain high for TAXI, leaving net earnings of just IDR6-22bn, translating into depressed net margins of around 1-2%. On the top line, we expect soft growth as utilization rates remain weak due to massive driver resignations, leaving TAXI to deal with high accounts receivable. Due to its expensive valuation, we expect TAXI to continue its market underperformance. Our 12M TP of IDR12 is based on a 216F PE of 13x, a 3% discount to the region. The risk remains with possible third-party acquisition given TAXI s cheap 216F P/BV of.3x. Financial highlights Year to 31 Dec 213A 214A 215F 216F 217F Revenues (IDRbn) 687 89 953 1,9 1,74 EBIT (IDRbn) 221 283 2 238 255 Net profit (IDRbn) 132 118 6 19 22 Bahana/consensus.(%) - - 9 2 24 EPS (IDR) 62 55 3 9 1 EPS growth (%) 65.1 (1.8) (95.) 228.6 14.9 EV/EBITDA (x) 2.2 3.5 4.3 4. 3.9 P/E (x) 2.2 2.5 49.9 15.2 13.2 FCFPS (IDR) 37 (444) (97) (12) (147) FCF yield (%) 27.1 (326.7) (71.) (74.8) (18.3) BVPS (IDR) 372 416 49 417 426 P/BV (x).4.3.3.3.3 DPS (IDR) 1. 1..5 1.6 1.9 Div. yield (%) 7.4 7.4.4 1.2 1.4 note: based on 3 December 215 closing price Share price performance (IDR) 1,5 1,2 9 6 3 (') 25, 2, 15, 1, 5, Major assumptions Year to 31 Dec 213A 214A 215F 216F 217F Fleet (Unit) 1,255 11,452 11,452 11,382 11,882 Net daily fixed fee (IDR) 19 218 24 252 276 Utilization rate (%) 92.6 88.3 8. 82. 84. 3-Dec-14 3-Feb-15 3-Apr-15 3-Jun-15 3-Aug-15 3-Oct-15 3-Dec-15 (3) (6) (9) (39.1) Volume (RHS) TAXI IJ Px Last (%) (%) (67.) (75.2) (75.) (75.3) (84.9) ytd 1M 3M 6M 9M 12M TAXI IJ relative to JCI Source: Bloomberg *based on 12 November 215 closing price before suspension Agustinus Reza Kirana (agustinus.reza@bahana.co.id) +6221 255735 ext. 3616 (1) (2) (3) (4) (5) (6) (7) (8) (9) Company information 12M high/low (IDR) : 1,28/136 12M High/low consensus TP (IDR) : 85/12 Majority shareholder (%) : Rajawali Group (51) Shares outstanding (mn)/free float (%) : 2,146/49 Mkt. cap. (IDRbn/USDmn) : 292/21 3-m avg.daily t.o.(idrbn/usdmn) : 13.9/1. Bloomberg/Reuters code : TAXI IJ/TAXI.JK Source: Bloomberg, Reuters; based on 3 December 215 closing price 196
216 Compendium EXPRESS TRANSINDO UTAMA Profit & loss Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Sales 687 89 953 1,9 1,74 Gross profit 31 398 32 329 354 EBITDA 49 521 474 558 633 Depreciation 188 239 274 32 378 EBIT 221 283 2 238 255 Net interest inc./(expense) (81) (133) (192) (213) (227) Forex gain/(losses) - - - - - Other income/(expense) 34 3 Pre-tax profit 174 153 8 25 29 Taxes (41) (34) (2) (6) (7) Minority interest () () () () () Extraordinary gain/(losses) - - - - - Net profit 132 118 6 19 22 Balance sheet Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Cash and equivalents 316 216 29 31 34 S-T investments - - - - - Trade receivables 144 281 318 36 325 Inventories 14 14 18 19 2 Fixed assets 1,393 2,124 2,291 2,515 2,82 Other assets 271 376 333 359 392 Total assets 2,137 3,11 2,988 3,23 3,572 Interest bearing liabilities 911 1,747 1,76 1,945 2,222 Trade payables 24 127 83 9 95 Other liabilities 189 245 269 3 342 Total liabilities 1,34 2,119 2,111 2,335 2,659 Minority interest 1 1 1 1 1 Shareholders' equity 796 892 876 894 913 Cash flow Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F EBIT 221 283 2 238 255 Depreciation 188 239 274 32 378 Working capital 247 (273) (11) (13) (5) Other operating items (226) (31) (28) (363) (399) Operating cash flow 43 (53) 93 182 184 Net capital expenditure (351) (9) (3) (4) (5) Free cash flow 79 (953) (27) (218) (316) Equity raised/(bought) 5 (1) Net borrowings 61 836 13 185 277 Other financing 2 19 8 35 42 Net cash flow 166 (1) (186) 2 2 Cash balances, beginning 15 316 216 29 31 Ending cash 316 216 29 31 34 Key ratios Year to 31 Dec 213A 214A 215F 216F 217F ROAE (%) 17.9 14..7 2.2 2.4 ROAA (%) 6.8 4.6.2.6.6 Gross margin (%) 45.1 44.7 31.7 32.6 32.9 EBITDA margin (%) 59.5 58.6 49.7 55.3 59. EBIT margin (%) 32.2 31.8 21. 23.5 23.8 Net margin (%) 19.3 13.3.6 1.9 2.1 Payout ratio (%) 16.2 18.2 18. 18. 18. Current ratio (x) 1. 1.3 1.1 1..9 Interest coverage (x) 2.7 2.1 1. 1.1 1.1 Net gearing (%) 74.7 171.7 197.5 214. 239.7 Debtor turnover (days) 58 87 122 111 111 Creditor turnover (days) 164 178 48 48 48 Inventory turnover (days) 12 1 1 1 1 197
216 Compendium GAJAH TUNGGAL BUY PX: IDR53 - TP: IDR86 The operating performance of GJTL, Indonesia s leading tire maker with lower-segment brand GT Radial, should have bottomed and we expect margin protection from its efforts to expand into the highermargin retail business (216F: 135 outlets, +1% y-y). We look for minimal pressure from a strong USD and high commodity prices. On the demand side, we expect GJTL s 216F revenue to grow 9% y-y on stronger demand from overseas markets (42% of revenues) like the US. Closer to home, economic recovery and a stronger retail presence would also benefit its local performance. Thus, we expect GJTL to book a 216 earnings reversal, from a net loss, to a net profit of IDR62bn, before strongly rising to IDR436bn, up 7x y-y, in 217. On valuation, we view as attractive GJTL s 216F P/B of.4x, a 65% discount to its regional peers. We reaffirm our BUY call and DCF-based 12-month TP of IDR86. Risk: a weaker-than-expected IDR. Share price performance (IDR) (') 1,6 4, 1,4 35, 3, 1,2 25, 1, 2, 8 15, 1, 6 5, 4 3-Dec-14 3-Feb-15 3-Apr-15 3-Jun-15 3-Aug-15 3-Oct-15 3-Dec-15 Volume (RHS) GJTL IJ Px Last (%) (%) 2 1 (1) (2) (3) (4) (5) (6) (49.6) (13.9) 1.4 (38.) (43.7) (47.5) ytd 1M 3M 6M 9M 12M GJTL IJ relative to JCI Source: Bloomberg Leonardo Henry Gavaza, CFA (leonardo@bahana.co.id) +6221 25581 ext. 368 2 1 (1) (2) (3) (4) (5) (6) Financial highlights Year to 31 Dec 213A 214A 215F 216F 217F Revenues (IDRbn) 12,353 13,71 12,833 13,932 15,91 EBIT (IDRbn) 1,365 1,154 95 1,31 1,117 Net profit (IDRbn) 12 27 (422) 62 436 Bahana/consensus (%) - - (84) 7 51 EPS (IDR) 35 77 (121) 18 125 EPS growth (%) (89.4) 124.2 na na 63.6 EV/EBITDA (x) 4.4 4.8 5.1 4.7 5.3 P/E (x) 15.3 6.8 na 29.8 4.2 FCFPS (IDR) 242.1 (224.5) 153.2 1.2 24.9 FCF yield (%) 45.7 (42.4) 28.9 18.9 38.7 BVPS (IDR) 1,643 1,717 1,41 1,433 1,56 P/BV (x).3.3.4.4.3 DPS (IDR) 1 19-4 31 Div. yield (%) 1.9 3.7 -.8 5.9 note: based on 3 December 215 closing price Major assumptions Year to 31 Dec 213A 214A 215F 216F 217F Domestic 4W Volume (mn) 6.4 6.3 5.4 5.5 6. Growth (%) 17.9 (1.6) (15.) 2.6 1. Domestic 2W Volume (mn) 8.4 1. 1.8 11.9 13. Growth (%) (14.3) 19. 8.4 9.3 9.4 Export volumes (mn) 23.8 24.1 23. 23.7 24.4 Growth (%) 11.7 1.3 (4.6) 3. 3. Company information 12M high/low (IDR) : 1,53/445 12M High/low consensus TP (IDR) : 1,/93 Majority shareholder (%) : Denham (49.5) Shares outstanding (mn)/free float (%) : 3,485/39.8 Mkt. cap. (IDRbn/USDmn) : 1,847/134 3-m avg.daily t.o.(idrbn/usdmn) : 2./.1 Bloomberg/Reuters code : GJTL IJ/GJTL.JK Source: Bloomberg, Reuters; based on 3 December 215 closing price 198
216 Compendium GAJAH TUNGGAL Profit & loss Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Sales 12,353 13,71 12,833 13,932 15,91 Gross profit 2,488 2,445 2,438 2,647 2,867 EBITDA 1,862 1,722 1,614 1,782 1,936 Depreciation 497 569 664 75 819 EBIT 1,365 1,154 95 1,31 1,117 Net interest inc./(expense) (52) (571) (665) (732) (739) Forex gain/(losses) (89) (179) (848) (215) 28 Other income/(expense) 211 (9) 1 (2) (4) Pre-tax profit 166 394 (563) 83 582 Taxes (46) (124) 141 (21) (145) Minority interest - - - - - Extraordinary gain/(losses) - - - - - Net profit 12 27 (422) 62 436 Balance sheet Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Cash and equivalents 1,999 957 863 817 63 S-T investments 238 93 93 93 93 Trade receivables 2,78 2,69 2,32 2,519 2,729 Inventories 1,82 2,247 2,65 2,242 2,428 Fixed assets 6,416 7,611 8,663 9,266 9,445 Other assets 2,81 3,66 3,27 3,62 3,218 Total assets 15,351 16,43 17,31 17,998 18,516 Interest bearing liabilities 5,961 6,37 7,77 8,27 7,87 Trade payables 1,324 1,25 1,31 1,422 1,541 Other liabilities 2,341 2,484 3,38 3,313 3,67 Total liabilities 9,626 1,6 12,118 13,6 13,81 Minority interest - - - - - Shareholders' equity 5,724 5,983 4,913 4,993 5,435 Cash flow Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F EBIT 1,365 1,154 95 1,31 1,117 Depreciation 497 569 664 75 819 Working capital (174) (68) 495 (58) (79) Other operating items 216 (9) 244 78 (54) Operating cash flow 1,94 1,15 2,352 1,82 1,83 Net capital expenditure (1,465) (1,671) (1,58) (1,318) (996) Free cash flow 439 (566) 772 484 87 Equity raised/(bought) - - - - - Net borrowings 1,99 41 1,4 5 (4) Other financing (1,335) (886) (2,266) (1,3) (62) Net cash flow 1,94 (1,41) (94) (46) (214) Cash balances, beginning 95 1,999 957 863 817 Ending cash 1,999 957 863 817 63 Key ratios Year to 31 Dec 213A 214A 215F 216F 217F ROAE (%) 2.1 4.6 (7.7) 1.3 8.4 ROAA (%).9 1.7 (2.6).4 2.4 Gross margin (%) 2.1 18.7 19. 19. 19. EBITDA margin (%) 15.1 13.2 12.6 12.8 12.8 EBIT margin (%) 11.1 8.8 7.4 7.4 7.4 Net margin (%) 1. 2.1 (3.3).4 2.9 Payout ratio (%) 29. 25. - 25. 25. Current ratio (x) 2.3 2. 1.9 1.7 1.8 Interest coverage (x) 2.6 2. 1.4 1.4 1.5 Net gearing (%) 69.2 86.3 13.5 129.3 122.7 Debtor turnover (days) 45 43 46 46 46 Creditor turnover (days) 6 58 66 66 66 Inventory turnover (days) 61 7 73 73 73 199
216 Compendium GARUDA INDONESIA BUY PX: IDR3 - TP: IDR4* With 19 aircraft, GIAA s seat-load factor increased to 77.3% in 9M15 vis-à-vis 7.7% a year earlier, as it surpassed Lion Air s 41% market share with market share gains for both Garuda (9M15: 29%, 214: 26%) and its low-cost carrier Citilink (9M15: 15%, 214: 11%), making it Indonesia s largest domestic carrier. On a more negative note, the volatilility in jet-fuel prices and foreignexchange rates has caused severe earnings fluctuations for GIAA. IDR depreciation disadvantaged GIAA due to mismatches in costs and revenues, while Pertamina s premium jet-fuel pricing resulted in less competitive operating costs relative to other foreign carriers. However, GIAA s recent lower valuation reinforces our BUY rating and TP of IDR4, based on 216E EV/EBITDAR of 5.9x, at par with the regional average on Indonesia s improving GDP growth. Risk: Slower GDP growth since most GIAA passengers are business travellers. Share price performance (IDR) (') 64 16, 59 14, 12, 54 1, 49 8, 44 6, 39 4, 34 2, 29 3-Dec-14 3-Feb-15 3-Apr-15 3-Jun-15 3-Aug-15 3-Oct-15 3-Dec-15 Volume (RHS) GIAA IJ Px Last (%) (%) (5) (1) (15) (2) (25) (3) (35) (4.8) (7.4) (32.2) (33.3) ytd 1M 3M 6M 9M 12M GIAA IJ relative to JCI (24.5) (26.6) Source: Bloomberg Teguh Hartanto (teguh.hartanto@bahana.co.id) +6221 25 581 ext. 361 *New, please refer to appendix II (5) (1) (15) (2) (25) (3) (35) Financial highlights Year to 31 Dec 213A 214A 215F 216F 217F Operating revenues (USDmn) 3,759 3,934 4,98 4,622 5,292 EBITDAR (USDmn) 781 584 1,189 1,38 1,556 EBIT (USDmn) 13 (361) 75 15 124 Net profit (USDmn) 11 (373) 69 113 143 EPS (IDR) 7 (22) 37 61 77 EPS growth (%) na na na 63.8 26.7 Adjusted EV/EBITDAR (x) 6. 1.2 6.1 5.8 5.7 P/E (x) 45. na 8.1 4.9 3.9 FCFPS (IDR) (11) (16) (11) (8) (12) FCF yield (%) (3.7) (5.4) (3.5) (2.6) (3.8) BVPS (IDR) 686 489 488 69 763 P/BV (x).4.6.6.5.4 DPS (IDR) - - - - - Div yield (%) - - - - - note: based on 3 December 215 closing price Major assumptions Year to 31 Dec 213A 214A 215F 216F 217F ASK (mn) 43,133 5,155 63,178 69,529 76,158 RPK (mn) 31,95 35,997 46,555 52,446 59,582 Total aircraft (Unit) 14 169 19 24 218 Company information 12M high/low (IDR) : 635/297 12M high/low consensus TP (IDR) : 74/37 Majority shareholder (%) : Republic of Indonesia (6.5) Shares outstanding (mn)/free float (%) : 25,869/14.9 Mkt. cap. (IDRbn/USDmn) : 7,761/56 3-m avg.daily t.o.(idrbn/usdmn) : 7.9/.5 Bloomberg/Reuters code : GIAA IJ/GIAA.JK Source: Bloomberg, Reuters; based on 3 December 215 closing price 2
216 Compendium GARUDA INDONESIA Profit & loss Year to 31 Dec (USDmn) 213A 214A 215F 216F 217F Sales 3,759 3,934 4,98 4,622 5,292 EBITDA 168 (182) 258 34 47 EBITDAR (excl. Wet lease) 781 584 1,189 1,38 1,556 Depreciation 769 945 1,114 1,275 1,432 EBIT 13 (361) 75 15 124 Net interest inc./(expense) (49) (61) (79) (85) (95) Forex gain/(losses) - - - - - Other income/(expense) 5 88 96 13 162 Pre-tax profit 14 (461) 92 151 191 Taxes () 89 (23) (38) (48) Minority interest (3) (1) - - - Extraordinary gain/(losses) - - - - - Net profit 11 (373) 69 113 143 Balance sheet Year to 31 Dec (USDmn) 213A 214A 215F 216F 217F Cash and equivalents 48 434 389 332 447 S-T investments - - - - - Trade receivables 146 121 139 156 179 Inventories 91 85 83 93 16 Fixed assets 895 135 1,27 1,125 1,27 Other assets 1,38 2,326 1,667 1,921 2,342 Total assets 2,993 3,11 3,35 3,627 4,281 Interest bearing liabilities 1,9 1,23 1,526 1,558 1,829 Trade payables 27 216 198 222 254 Other liabilities 651 738 658 696 759 Total liabilities 1,867 2,184 2,382 2,476 2,843 Minority interest 17 13 14 15 17 Shareholders' equity 1,19 94 99 1,135 1,421 Cash flow Year to 31 Dec (USDmn) 213A 214A 215F 216F 217F EBIT 13 (361) 75 15 124 Depreciation 74 13 112 129 156 Working capital 8 54 (29) (11) (4) Other operating items (194) (187) (11) (155) (179) Operating cash flow (1) (365) 48 68 6 Net capital expenditure (15) (51) (326) (271) (361) Free cash flow (25) (415) (277) (23) (31) Equity raised/(bought) (12) 43 (64) 113 143 Net borrowings 49 25 295 32 272 Other financing 121 1 1 2 Net cash flow 146 (46) (46) (57) 115 Cash balances, beginning 334 48 434 389 332 Ending cash 48 434 389 332 447 Key ratios Year to 31 Dec 213A 214A 215F 216F 216F ROAE (%) 1. (37.1) 7.6 11.1 11.2 ROAA (%).4 (12.2) 2.2 3.3 3.6 EBITDA margin (%) 4.5 (4.6) 6.3 7.4 7.7 EBIT margin (%).3 (9.2) 1.8 2.3 2.3 Net margin (%).3 (9.5) 1.7 2.4 2.7 Payout ratio (%) - - - - - Current ratio (x).8.7.7.8.9 Interest coverage (x).3 na.9 1.2 1.3 Net gearing (%) 47.6 88. 125.2 18. 97.2 Debts to assets (%) 33.7 39.6 46.1 42.9 42.7 Debtor turnover (days) 14 12 12 12 12 Creditor turnover (days) 18 18 18 18 18 Inventory turnover (days) 9 8 8 8 8 21
216 Compendium GUDANG GARAM BUY PX: IDR51,575 - TP: IDR65, Due to lower farmer incomes in general, GGRM, Indonesia s secondlargest cigarette player, experienced a 3.5% y-y volume decline to 58.1bn sticks in 9M15, but has retained a relatively stable market share of around 23% since 21. Looking ahead, with gradually improving GDP growth, we expect GGRM s EBIT margin to remain relatively stable in 216, as the company should be able to pass on the government s 15% excise tax hike, equivalent to around a 7-8% price hike, to customers in order to maintain its gross margin. Our 12-month TP of IDR65,, based on a 216F PE of 21x (5-year mean), should be supported by the improving purchasing power of smokers, sustainable margins and lower capex to improve free cash flow. Risks include weaker-than-expected purchasing power and the government s negative health campaign causing lower stick sales. Financial highlights Year to 31 Dec 213A 214A 215F 216F 217F Revenues (IDRbn) 55,437 65,186 69,29 73,916 81,379 EBIT (IDRbn) 6,65 8,525 8,963 9,718 1,751 Net profit (IDRbn) 4,329 5,369 5,445 5,95 6,674 Bahana/consensus (%) - - 91 86 98 EPS (IDR) 2,25 2,79 2,83 3,92 3,469 EPS growth (%) 7.8 24. 1.4 9.3 12.2 EV/EBITDA (x) 14.3 11.6 1.6 9.8 9. P/E (x) 22.9 18.5 18.2 16.7 14.9 FCFPS (IDR) (2,76) (2,273) 43 175 (7) FCF yield (%) (4.) (4.4).1.3 (.) BVPS (IDR) 15,216 17,26 19,187 2,965 22,96 P/BV (x) 3.4 3. 2.7 2.5 2.2 DPS (IDR) 8 8 849 1,314 1,474 Div. yield (%) 1.6 1.6 1.6 2.5 2.9 note: based on 3 December 215 closing price Share price performance (IDR) 65, 6, 55, 5, 45, (') 5, 4, 3, 2, 1, Major assumptions Year to 31 Dec 213A 214A 215F 216F 217F Sales growth (%) 13.1 17.6 5.9 7.1 1.1 Gross profit margin (%) 19.6 2.5 21. 21.2 21.4 EBIT margin (%) 12. 13.1 13. 13.1 13.2 4, 3-Dec-14 3-Feb-15 3-Apr-15 3-Jun-15 3-Aug-15 3-Oct-15 3-Dec-15 8.6 Volume (RHS) 18.3 GGRM IJ Px Last (%) (%) 3 25 2 15 1 5 (5) (2.) (2.9) (5) ytd 1M 3M 6M 9M 12M GGRM IJ relative to JCI Source: Bloomberg Harry Su (harry.su@bahana.co.id) +6221 255735 25.5 11.8 3 25 2 15 1 5 Company information 12M high/low (IDR) : 64,/39,5 12M High/low consensus TP (IDR) : 65,/46,9 Majority shareholder (%) : Suryaduta Investama (69.3) Shares outstanding (mn)/free float (%) : 1,924/23.5 Mkt. cap. (IDRbn/USDmn) : 98,75/7,136 3-m avg.daily t.o.(idrbn/usdmn) : 49.3/3.6 Bloomberg/Reuters code : GGRM IJ/GGRM.JK Source: Bloomberg, Reuters; based on 23 November 215 closing price 22
216 Compendium GUDANG GARAM Profit & loss Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Sales 55,437 65,186 69,29 73,916 81,379 Gross profit 1,874 13,38 14,485 15,669 17,424 EBITDA 7,758 1,18 1,94 11,854 13,1 Depreciation 1,18 1,493 1,941 2,135 2,349 EBIT 6,65 8,525 8,963 9,718 1,751 Net interest inc./(expense) (693) (1,34) (1,637) (1,74) (1,759) Forex gain/(losses) (13) 17 6 3 8 Other income/(expense) (7) (32) (38) (42) (46) Pre-tax profit 5,936 7,26 7,294 7,976 8,954 Taxes (1,552) (1,811) (1,823) (2,2) (2,256) Minority interest (55) (27) (25) (24) (23) Extraordinary gain/(losses) - - - - - Net profit 4,329 5,369 5,445 5,95 6,674 Balance sheet Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Cash and equivalents 1,44 1,588 2,351 2,322 2,8 S-T investments - - - - - Trade receivables 2,196 1,532 1,534 2,738 3,14 Inventories 3,241 34,739 38,91 42,836 48,994 Fixed assets 14,789 18,973 2,633 21,627 21,778 Other assets 2,14 1,388 1,457 1,636 1,846 Total assets 5,77 58,221 64,885 71,159 77,712 Interest bearing liabilities 12,979 18,147 19,55 19,531 2,117 Trade payables 798 989 795 611 435 Other liabilities 6,554 4,969 6,957 9,344 11,449 Total liabilities 2,331 24,16 26,87 29,486 32,1 Minority interest 1,162 1,9 1,16 1,334 1,534 Shareholders' equity 29,277 33,16 36,918 4,339 44,177 Cash flow Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F EBIT 6,65 8,525 8,963 9,718 1,751 Depreciation 1,18 1,493 1,941 2,135 2,349 Working capital (4,64) (5,669) (4,366) (5,315) (6,68) Other operating items (2,259) (3,98) (3,454) (3,72) (4,5) Operating cash flow 1,435 1,252 3,84 2,837 2,486 Net capital expenditure (5,429) (5,625) (3,) (2,5) (2,5) Free cash flow (3,994) (4,373) 84 337 (14) Equity raised/(bought) - - - - - Net borrowings 4,814 5,169 97 476 586 Other financing (72) (642) (198) (842) (814) Net cash flow 118 154 793 (29) (242) Cash balances, beginning 1,286 1,44 1,558 2,351 2,322 Ending cash 1,44 1,558 2,351 2,322 2,8 Key ratios Year to 31 Dec 213A 214A 215F 216F 217F ROAE (%) 15.5 17.2 15.6 15.4 15.8 ROAA (%) 9.4 9.9 8.8 8.7 9. Gross margin (%) 19.6 2.5 21. 21.2 21.4 EBITDA margin (%) 14. 15.4 15.8 16. 16.1 EBIT margin (%) 12. 13.1 13. 13.1 13.2 Net margin (%) 7.8 8.2 7.9 8. 8.2 Payout ratio (%) 35.6 28.7 3. 42.5 42.5 Current ratio (x) 1.7 1.6 1.6 1.7 1.7 Interest coverage (x) 9.6 6.5 5.5 5.7 6.1 Net gearing (%) 39.5 5. 45.2 42.7 4.8 Debtor turnover (days) 14 9 8 14 14 Creditor turnover (days) 43 27 27 27 27 Inventory turnover (days) 248 245 26 268 28 23
216 Compendium HARUM ENERGY REDUCE PX: IDR71 TP: IDR5* HRUM, with combined coal reserves of around 86m tons, the lowest in our coverage, has been adversely affected by the global economic slowdown as 99% of its coal revenues are exported to South Korea (49%), Malaysia (18%), Taiwan (17%), China (8%) and others (8%). As a result, its 9M15 earnings plunged 95% y-y, and it is attempting to reverse this poor performance by reducing its coal production and implementing cost efficiencies (215E stripping ratio: 8x). Cost efficiencies through the operation of a single mine is HRUM s strategy going into 216 on weak coal prices. We expect HRUM to book 5.5m tons in sales, flat y-y, helped by third-party coal purchases. With the market s preference for low coal calorific value, HRUM is likely to face another tough year in 216. We lower our DCF-based TP to IDR5 (16% WACC), which reflects 3% potential downside. REDUCE. Risks to our call are higher coal prices and lower stripping ratios. Share price performance (IDR) 2, 1,8 1,6 1,4 1,2 1, 8 6 3-Dec-14 3-Feb-15 3-Apr-15 3-Jun-15 3-Aug-15 3-Oct-15 3-Dec-15 Volume (RHS) hrum IJ Px Last (%) (%) (1) (2) (3) (4) (5) (15.8) (') 12, (25.2) (3) (29.9) (4) (39.4) (44.) (45.6) (5) ytd 1M 3M 6M 9M 12M hrum IJ relative to JCI Source: Bloomberg Arandi Ariantara (arandi@bahana.co.id) +6221 25 581 ext. 3619 *New, please refer to appendix II 1, 8, 6, 4, 2, (1) (2) Financial highlights* Year to 31 Dec 213A 214A 215F 216F 217F Revenues (USDmn) 837 478 265 251 251 EBIT (USDmn) 66 21 3 2 (3) Net profit (USDmn) 4 (2) (7) Bahana/consensus (%) - - 8 na na EPS (IDR) 15 2 1 (9) (35) EPS growth (%) na (85.6) (51.4) na na EV/EBITDA (x) na na na na na P/E (x) 48.2 333.8 687.5 na na FCFPS (IDR) 46 352 45 62 1 FCF yield (%) 6.5 49.6 6.4 8.7 1.5 BVPS (IDR) 1,5 1,385 1,384 1,375 1,348 P/BV (x).5.5.5.5.5 DPS (IDR) 285 131 1 Div. yield (%) 4.1 18.4.2 Major assumptions note: based on 3 December 215 closing price Year to 31 Dec 213A 214A 215F 216F 217F Avg. coal price (USD/ton) 68.3 61.2 48.2 45.7 45.7 growth (%) (13.4) (1.4) (21.3) (5.2) - Total sales vol. (m tons) 11.9 7.6 5.5 5.5 5.5 growth % (7.8) (36.1) (27.6) - - Company information 12M high/low (IDR) : 1,76/69 12M High/low consensus TP (IDR) : 915/62 Majority shareholder (%) : Karunia Bara Perkasa (7.6) Shares outstanding (mn)/free float (%) : 2,74/29.3 Mkt. cap. (IDRbn/USDmn) : 1,92/139 3-m avg.daily t.o.(idrbn/usdmn) :.6/. Bloomberg/Reuters code : HRUM IJ/HRUM.JK Source: Bloomberg, Reuters; based on 3 December 215 closing price 24
216 Compendium HARUM ENERGY Profit & loss Year to 31 Dec (USDmn) 213A 214A 215F 216F 217F Sales 837 478 265 251 251 Gross profit 173 87 48 45 39 EBITDA 96 51 1 9 5 Depreciation 3 3 7 7 8 EBIT 66 21 3 2 (3) Net interest inc./(expense) 1 3 6 7 7 Forex gain/(losses) (1) - - - - Other income/(expense) (7) (17) (9) (11) (13) Pre-tax profit 6 7 (2) (1) Taxes (13) (5) () 2 Minority interest (7) (2) () 1 Extraordinary gain/(losses) - - - - - Net profit 4 (2) (7) Balance sheet Year to 31 Dec (USDmn) 213A 214A 215F 216F 217F Cash and equivalents 181 21 24 213 214 Trade receivables 52 32 13 13 13 Inventories 28 17 7 7 7 Investment in associates 16 13 1 7 6 Fixed assets 116 17 13 11 98 Other assets 81 75 4 36 35 Total assets 475 444 377 376 373 Interest bearing liabilities - - - - - Trade payables 68 72 11 1 11 Other liabilities 18 11 7 6 6 Total liabilities 86 82 17 17 17 Minority interest 79 74 72 74 76 Shareholders' equity 311 288 288 286 28 Cash flow Year to 31 Dec (USDmn) 213A 214A 215F 216F 217F EBIT 66 21 3 2 (3) Depreciation 3 3 7 7 8 Working capital 65 28 (35) Other operating items (2) (8) 24 - Operating cash flow 142 71 (1) 1 5 Net capital expenditure (17) (3) 1 1 (3) Free cash flow 125 68 9 11 2 Equity raised/(bought) - - - - Net borrowings - - - - - Other financing (246) (49) (6) (2) (1) Net cash flow (121) 19 2 9 1 Cash balances, beginning 162 181 21 24 213 Ending cash 41 2 24 213 214 Key ratios Year to 31 Dec 213A 214A 215F 216F 217F ROAE (%) 12.8.1.1 (.6) (2.4) ROAA (%) 14.5.1. (.5) (1.8) Gross margin (%) 2.7 18.2 18. 17.7 15.6 EBITDA margin (%) 11.5 1.7 3.8 3.8 2. EBIT margin (%) 7.9 4.4 1.2.8 (1.2) Net margin (%) 4.8.1.1 (.7) (2.7) Payout ratio (%) 34 63 63 - - Current ratio (x) 3.5 3.6 15.6 17. 16.8 Interest coverage (x) na na na na na Net gearing (%) nc nc nc nc nc Debtor turnover (days) 23 25 18 18 18 Creditor turnover (days) 3 55 15 15 15 Inventory turnover (days) 12 13 1 1 1 25
216 Compendium HM SAMPOERNA BUY PX: ID97,6 - TP: IDR115,* Armed with its strong brand equity and extensive distribution network, Indonesia s largest market cap company and cigarette maker with an estimated 35% market share, HMSP, must deal with the current tough operating environment, beset by weak purchasing power and declining margins (although still the highest in the sector). Nevertheless, we expect the stock to remain on investors radar screens on the back of 3 factors: (1) index-inclusion play in the JCI, LQ-45 and MSCI EM; (2) much higher liquidity post rights issue; and (3) 1% dividend payout ratio given strong cash flows. On valuation, our IDR115, TP, based on a 216F PE of 48x, c.1% discount to our target PER for UNVR, is warranted in our view, due to the following: intense competition amid the current weak purchasing power environment, government policy risk on health awareness and higher excise tax to curb both stick sales and margins. Share price performance (IDR) 11, 1, 9, 8, 7, 6, 3-Dec-14 3-Feb-15 3-Apr-15 3-Jun-15 3-Aug-15 3-Oct-15 3-Dec-15 Volume (RHS) HMSP IJ Px Last (%) (%) 7 66.4 7 6 56.1 53.1 6 5 46.5 5 4 3 2 1 4.1 27.8 ytd 1M 3M 6M 9M 12M HMSP IJ relative to JCI Source: Bloomberg Harry Su (harry.su@bahana.co.id) +6221 255735 *New, please refer to appendix II (') 25, 2, 15, 1, 5, 4 3 2 1 Financial highlights Year to 31 Dec 213A 214A 215F 216F 217F Revenues (IDRbn) 75,25 8,69 88,712 97,119 17,376 EBIT (IDRbn) 14,6 13,85 14,4 14,253 16,717 Net profit (IDRbn) 1,818 1,181 1,393 11,156 12,86 Bahana/consensus (%) - - 98 91 95 EPS* (IDR) 2,445 2,31 2,25 2,393 2,741 EPS growth (%) 8.8 (5.9) (2.2) 6.4 14.5 EV/EBITDA (x) 28.5 29.9 29.6 29.4 25.2 P/E (x) 39.9 42.4 43.4 4.8 35.6 FCFPS (IDR) 2,249 2,259 2,97 1,926 2,285 FCF yield (%) 2.3 2.3 2.1 2. 2.3 BVPS (IDR) 3,23 3,8 7,43 7,349 7,349 P/BV (x) 3.2 31.7 13.2 13.3 13.3 DPS (IDR) 2,271 2,468 2,25 2,393 2,741 Div. yield (%) 2.3 2.5 2.3 2.5 2.8 note: based on 3 December 215 closing price *effect of rights issue Major assumptions Year to 31 Dec 213A 214A 215F 216F 217F Sales growth (%) 12.6 7.6 9.9 9.5 1.6 Gross profit margin (%) 26.8 25.4 24.3 23. 23.5 EBIT margin (%) 19.5 17.1 15.8 14.7 15.6 Company information 12M high/low (IDR) : 98,1/64,529 12M High/low consensus TP (IDR) : 115,/89,9 Majority shareholder (%) : Philip Morris Indonesia (92.5) Shares outstanding (mn)/free float (%) : 4,652/7.5 Mkt. cap. (IDRbn/USDmn) : 452,244/32,695 3-m avg.daily t.o.(idrbn/usdmn) : 89.9/6.5 Bloomberg/Reuters code : HMSP IJ/HMSP.JK Source: Bloomberg, Reuters; based on 3 December 215 closing price 26
216 Compendium HM SAMPOERNA Profit & loss Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Sales 75,25 8,69 88,712 97,119 17,376 Gross profit 2,71 2,5 21,521 22,374 25,182 EBITDA 15,95 14,384 14,629 14,937 17,481 Depreciation 495 578 625 684 764 EBIT 14,6 13,85 14,4 14,253 16,717 Net interest inc./(expense) (2) 1 117 862 579 Share of net results of associates 9 14 1 6 11 Other income/(expense) (8) (111) (129) (115) (12) Pre-tax profit 14,51 13,718 14,2 15,6 17,187 Taxes (3,691) (3,537) (3,69) (3,85) (4,381) Minority interest - - - - - Extraordinary gain/(losses) - - - - - Net profit 1,818 1,181 1,393 11,156 12,86 Balance sheet Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Cash and equivalents 657 65 19,484 16,259 13,489 S-T investments 4. 5. 5. 5. 5. Trade receivables 1,393 1,1 1,258 1,344 1,449 Inventories 17,333 17,432 18,48 2,763 22,832 Fixed assets 4,79 5,92 6,251 6,775 7,476 Other assets 3,163 3,955 4,14 4,492 4,9 Total assets 27,45 28,381 49,541 49,632 5,146 Interest bearing liabilities 2,442 2,835 2,268 1,248 624 Trade payables 2,194 2,761 2,8 2,875 2,834 Other liabilities 7,163 7,547 8,57 9,32 1,316 Total liabilities 13,25 14,883 15,346 15,438 15,951 Minority interest - - - - - Shareholders' equity 14,155 13,498 34,194 34,194 34,194 Cash flow Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F EBIT 14,6 13,85 14,4 14,253 16,717 Depreciation 27 43 522 578 65 Working capital (237) 833 (693) (1,817) (1,53) Other operating items (3,915) (3,526) (3,295) (2,948) (3,853) Operating cash flow 1,656 11,543 1,538 1,66 11,984 Net capital expenditure (8) (1,641) (853) (1,13) (1,351) Free cash flow 9,855 9,92 9,685 8,963 1,633 Equity raised/(bought) (16) (21) 2,696 - - Net borrowings 136 393 (567) (1,21) (624) Other financing (1,11) (1,866) (1,396) (11,167) (12,779) Net cash flow (126) (592) 19,418 (3,224) (2,77) Cash balances, beginning 784 657 65 19,484 16,259 Ending cash 657 65 19,484 16,259 13,489 Key ratios Year to 31 Dec 213A 214A 215F 216F 217F ROAE (%) 78.8 73.6 43.6 32.6 37.4 ROAA (%) 4.3 36.5 26.7 22.5 25.7 Gross margin (%) 26.8 25.4 24.3 23. 23.5 EBITDA margin (%) 2.1 17.8 16.5 15.4 16.3 EBIT margin (%) 19.5 17.1 15.8 14.7 15.6 Net margin (%) 14.4 12.6 11.7 11.5 11.9 Payout ratio (%) 92. 16.2 1. 1. 1. Current ratio (x) 1.8 1.5 3. 3. 2.9 Interest coverage (x) na na na na na Net gearing (%).1.2 nc nc nc Debtor turnover (days) 6 5 5 5 5 Creditor turnover (days) 15 15 15 14 13 Inventory turnover (days) 11 15 1 11 11 27
216 Compendium HERO SUPERMARKET REDUCE PX: IDR1,1 - TP: IDR65* HERO, Indonesia s largest supermarket operator, continues to struggle with its multi-format stores [53 Hypermarkets, 155 Supermarkets, 337 Health & Beauty (Guardian), 95 Convenience Stores (Starmart) and 1 IKEA] and is currently undergoing store rationalization and cost efficiencies to improve its operating earnings. Looking ahead, HERO plans to establish a price-leader image in its expanded fresh products and also to enhance SKU layouts across product lines. However, these strategies are not a game changer for HERO, in our view, as other competitors like Carrefour and Hypermart have already implemented similar moves. On valuation, as we still expect soft top-line and weak earnings, we lower our 12-month TP from IDR7 to IDR65, based on unchanged 216F P/S of nearly.2x, justified by HERO s lack of transparency. Retain REDUCE. Risk: faster implementation of new store formats. Share price performance (IDR) 2,75 2,5 2,25 2, 1,75 1,5 1,25 1, 3-Dec-14 3-Feb-15 3-Apr-15 3-Jun-15 3-Aug-15 3-Oct-15 3-Dec-15 Volume (RHS) HERO IJ Px Last (%) (%) (1) (2) (3) (4) (5) (4.6) (24.2) (29.) (33.4) (22.8) ytd 1M 3M 6M 9M 12M HERO IJ relative to JCI Source: Bloomberg Bagus Adi Yoga Prawira (yoga.prawira@bahana.co.id) +6221 25581 ext.364 *New, please refer to appendix II (') 2,5 2, 1,5 1, 5 (1) (2) (3) (4) (43.7) (5) Financial highlights* Year to 31 Dec 213A 214A 215F 216F 217F Revenues (IDRbn) 11,9 13,564 15,118 16,96 19,439 EBIT (IDRbn) 246 (196) (215) (113) 72 Net profit (IDRbn) 671 44 (29) 57 191 Bahana/consensus (%) - - - - - EPS (IDR) 171 1 (7) 14 46 EPS growth (%) 93.1 (93.9) na na 231.7 EV/EBITDA (x) 7.5 29.1 61.4 26.9 14.3 P/E (x) 6.4 15.2 na 8.1 24.2 FCFPS (IDR) (322) (323) (57) (9) (8) FCF yield (%) (29.3) (29.4) (5.2) (.8) (7.3) BVPS (IDR) 1,367 1,34 1,314 1,346 1,49 P/BV (x).8.8.8.8.8 DPS (IDR) - - - - - Div. yield (%) - - - - - note: based on 3 December 215 closing price Major assumptions Year to 31 Dec 213A 214A 215F 216F 217F Hypermarket stores (unit) 51 55 59 63 68 Supermarket stores (unit) 158 165 155 157 167 Speciality stores (unit) 473 483 433 433 453 IKEA (unit) - 1 1 1 1 Selling exp. as % of Rev (%) 2.6 2.8 3. 2.9 2.9 Company information 12M high/low (IDR) : 2,5/1,1 12M High/low consensus TP (IDR) : 7/57 Majority shareholder (%) : Jardine Matheson Holdings (83.9) Shares outstanding (m)/free float (%) : 4,184/13.4 Mkt. cap. (IDRbn/USDmn) : 4,62/332 3-m avg.daily t.o.(idrbn/usdmn) :.1/. Bloomberg/Reuters code : HERO IJ/HERO.JK Source: Bloomberg, Reuters based on 3 December 215 closing price 28
216 Compendium HERO SUPERMARKET Profit & loss Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Sales 11,9 13,564 15,118 16,96 19,439 Gross profit 2,847 3,116 3,415 3,839 4,46 EBITDA 55 192 95 219 434 Depreciation 34 388 31 331 362 EBIT 246 (196) (215) (113) 72 Net interest inc./(expense) 8 3 (23) (3) (46) Forex gain/(losses) (1) 2 2 1 (1) Other income/ (expense) 538 26 198 218 227 Pre-tax profit 79 42 (39) 76 252 Taxes (119) 2 9 (19) (62) Minority interest - - - - - Extraordinary gain/(losses) - - - - - Net profit 671 44 (29) 57 191 Balance sheet Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Cash and equivalents 1,327 197 426 54 312 S-T investments - - - - - Trade receivables 293 399 372 491 51 Inventories 1,829 2,271 2,41 2,714 3,47 Fixed assets 3,726 4,61 4,64 4,884 5,253 Other assets 583 818 852 88 911 Total assets 7,758 8,296 8,699 9,474 1,23 Interest bearing liabilities - 34 816 939 1,92 Trade payables 1,928 2,46 1,921 2,434 2,558 Other liabilities 475 456 462 469 476 Total liabilities 2,43 2,842 3,2 3,843 4,126 Minority interest - - - - - Shareholders' equity 5,356 5,454 5,499 5,631 5,896 Cash flow Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F EBIT 246 (196) (215) (113) 72 Depreciation 211 275 31 331 362 Working capital (263) (431) (236) 9 (244) Other operating items (19) 157 242 232 25 Operating cash flow 84 (195) 11 54 395 Net capital expenditure (1,345) (1,159) (339) (576) (73) Free cash flow (1,261) (1,353) (238) (36) (336) Equity raised/(bought) 2,961 (1) - - - Net borrowings (53) 34 477 123 153 Other financing (91) (116) (9) (9) (1) Net cash flow 1,8 (1,131) 229 78 (192) Cash balances, beginning 248 1,327 197 426 54 Ending cash 1,327 197 426 54 312 Key ratios Year to 31 Dec 213A 214A 215F 216F 217F ROAE (%) 19.1.8 (.5) 1. 3.3 ROAA (%) 1.3.5 (.3).6 2. Gross margin (%) 23.9 23. 22.6 22.7 22.9 EBITDA margin (%) 4.6 1.4.6 1.3 2.2 EBIT margin (%) 2.1 (1.4) (1.4) (.7).4 Net margin (%) 5.6.3 (.2).3 1. Payout ratio (%) - - - - - Current ratio (x) 1.6 1.2 1.3 1.2 1.2 Interest coverage (x) 5.3 na na na 1.1 Net gearing (%) nc 2.6 7.1 7.7 13.2 Debtor turnover (days) 8 9 9 9 9 Creditor turnover (days) 77 69 62 61 61 Inventory turnover (days) 68 72 73 72 7 29
216 Compendium HOLCIM INDONESIA REDUCE PX: IDR1,75 - TP: IDR925 Hit by lower-than-expected demand in 215 coupled with its looming merger with Lafarge Indonesia, SMCB, the third largest cement producer, has decided to cut production at its older plants and reduce the number of its workforce. Furthermore, SMCB plans to offload its Malaysian plant as part of its parent company s global restructuring. Going forward, we expect SMCB to try to maintain its 14% market share through aggressive marketing to ensure ample volumes for its three plants during current capacity glut. This strategy, combined with high debt level (6M15: IDR6.9tn) needed for the 1.7m ton Tuban plant completion, would be a drag on margins. At this stage, we still see unattractive growth prospect for SMCB on weak property market and potential shareholders dilution to purchase Lafarge Indonesia s assets. Retain REDUCE with IDR925 DCF-based TP (WACC: 12.%). Risk: Lower interest costs from debt restructuring. Share price performance (IDR) (') 16, 2,3 14, 2,1 12, 1,9 1, 1,7 8, 1,5 6, 1,3 4, 1,1 2, 9 3-Dec-14 3-Feb-15 3-Apr-15 3-Jun-15 3-Aug-15 3-Oct-15 3-Dec-15 Volume (RHS) SMCB IJ Px Last (%) (%) 1 (1) (2) (3) (4) (5) (37.6) 1.3 (.9) (19.1) (25.6) (4.4) ytd 1M 3M 6M 9M 12M SMCB IJ relative to JCI Source: Bloomberg Bob Setiadi (bob.setiadi@bahana.co.id) +6221 25 581 ext. 365 *New, please refer to appendix II 1 (1) (2) (3) (4) (5) Financial highlights* Year to 31 Dec 213A 214A 215F 216F 217F Revenues (IDRbn) 9,686 1,529 9,352 9,619 9,94 EBIT (IDRbn) 2,33 1,316 287 566 538 Net profit (IDRbn) 952 668 (225) 89 129 Bahana/consensus (%) - - (12) 25 25 EPS (IDR) 124 87 (29) 12 17 EPS growth (%) (29.5) (29.8) (133.6) (139.5) 45. EV/EBITDA (x) 4.3 6.7 13.3 9.7 9.1 P/E (x) 8.7 12.3 na 92.7 64. FCFPS (IDR) (26) (131) 6 53 119 FCF yield (%) (19.2) (12.2).6 5. 11.1 BVPS (IDR) 1,144 1,119 1,54 1,6 1,63 P/BV (x).9 1. 1. 1. 1. DPS (IDR) 9 65-9 13 Div. yield (%) 8.4 6.1 -.8 1.2 note: based on 3 December 215 closing price Major assumptions Year to 31 Dec 213A 214A 215F 216F 217F Volume capacity (' tons) 8,7 1,4 12,1 12,1 12,1 Export volumes (' tons) - - 45 45 45 Domestic volumes (' tons) 8,431 8,756 8,799 9,195 9,655 Total volumes (' tons) 8,431 8,756 9,249 9,645 1,15 Utilization rate (%) 96.9 84.2 76.4 79.7 83.5 Company information 12M high/low (IDR) : 2,35/945 12M high/low consensus TP (IDR) : 2,5/65 Majority shareholder (%) : Holderfin BV (8.6) Shares outstanding (mn)/free float (%) : 7,663/19.4 Mkt. cap. (IDRbn/USDmn) : 8,238/595 3-m avg.daily t.o.(idrbn/usdmn) :.5/. Bloomberg/Reuters code : SMCB IJ/SMCB.JK Source: Bloomberg, Reuters based on 3 December 215 closing price 21
216 Compendium HOLCIM INDONESIA Profit & loss Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Sales 9,686 1,529 9,352 9,619 9,94 Gross profit 3,355 3,26 1,986 2,196 2,221 EBITDA 2,668 2, 1,25 1,362 1,363 Depreciation 636 684 738 796 825 EBIT 2,33 1,316 287 566 538 Net interest inc./(expense) (173) (318) (41) (373) (341) Forex gain/(losses) (323) 45 (284) (27) 28 Other income/(expense) (2) (37) 77 (4) (41) Pre-tax profit 1,337 1,7 (321) 127 184 Taxes (384) (339) 96 (38) (55) Minority interest () (1) () () Extraordinary gain/(losses) - - - - - Net profit 952 668 (225) 89 129 Balance sheet Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Cash and equivalents 376 215 1,72 227 337 S-T investments - - - - - Trade receivables 958 1,35 1,12 1,51 1,82 Inventories 591 629 76 71 737 Fixed assets 12,367 14,498 14,495 14,489 13,956 Other assets 63 822 748 81 858 Total assets 14,895 17,199 18,124 17,279 16,97 Interest bearing liabilities 3,626 5,374 6,452 5,239 4,53 Trade payables 886 1,67 1,153 1,183 1,221 Other liabilities 1,61 2,176 2,436 2,732 3,66 Total liabilities 6,122 8,617 1,41 9,154 8,817 Minority interest 4 4 4 4 4 Shareholders' equity 8,769 8,578 8,79 8,121 8,149 Cash flow Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F EBIT 2,33 1,316 287 566 538 Depreciation 636 684 738 796 825 Working capital 363 366 5 196 112 Other operating items (1,199) (557) (291) (36) (271) Operating cash flow 1,832 1,81 784 1,199 1,24 Net capital expenditure (3,414) (2,815) (735) (79) (291) Free cash flow (1,582) (1,5) 49 49 913 Equity raised/(bought) - - - - - Net borrowings 1,972 1,749 1,78 (1,213) (79) Other financing (57) (95) (269) (41) (94) Net cash flow (18) (161) 858 (845) 11 Cash balances, beginning 556 376 215 1,72 227 Ending cash 376 215 1,72 227 337 Key ratios Year to 31 Dec 213A 214A 215F 216F 217F ROAE (%) 11.1 7.7 (2.7) 1.1 1.6 ROAA (%) 7. 4.2 (1.3).5.8 Gross margin (%) 34.6 28.7 21.2 22.8 22.4 EBITDA margin (%) 27.5 19. 11. 14.2 13.8 EBIT margin (%) 21. 12.5 3.1 5.9 5.4 Net margin (%) 9.8 6.3 (2.4).9 1.3 Payout ratio (%) 72.4 75. - 75. 75. Current ratio (x).6.6 1..7.7 Interest coverage (x) 11.7 4.1.7 1.5 1.6 Net gearing (%) 37.1 6.2 66.6 61.7 51.5 Debtor turnover (days) 33 35 43 4 4 Creditor turnover (days) 3 34 45 45 45 Inventory turnover (days) 37 3 35 35 35 211
216 Compendium INDO TAMBANGRAYA MEGAH REDUCE PX: IDR6,58 - TP: IDR5,2* Slower global economic growth especially in China is hurting highquality coal producers in Indonesia like ITMG (CV 5,5kcal-6,9kcal GAR). While ITMG s mine sites are close to each other (except Jorong), we expect its current SR of 9.x to rise in 216 as the company s selective mining method can no longer be applied. With lower overseas coal demand from steel manufacturers and power plants, ITMG has lowered its 215 production target to 27m mt (214: 29m mt), down 6% from its previous estimate. Note that ITMG s major sales destinations are China (17%) and India (2%). As China gradually shifts towards renewable energy, we revise down our DCF-based TP to IDR5,2 (from IDR8,) based on an 18.6% WACC. Thus, despite its debt-free status allowing it to have a 6-8% dividend payout ratio with 6-1% yields in 216-17, we retain our REDUCE call. Risk: Delay in China s renewable energy projects. Share price performance (IDR) (') 2, 4, 18, 35, 16, 3, 25, 14, 2, 12, 15, 1, 1, 8, 5, 6, 3-Dec-14 3-Feb-15 3-Apr-15 3-Jun-15 3-Aug-15 3-Oct-15 3-Dec-15 Volume (RHS) itmg IJ Px Last (%) (%) (1) (2) (3) (4) (5) (6) (43.9) (23.4) (26.2) (37.6) (44.2) (52.) ytd 1M 3M 6M 9M 12M itmg IJ relative to JCI Source: Bloomberg Arandi Ariantara (arandi@bahana.co.id) +6221 25 581 ext. 3619 *New, please refer to appendix II (1) (2) (3) (4) (5) (6) Financial highlights* Year to 31 Dec 213A 214A 215F 216F 217F Revenue (USDmn) 2,179 1,943 1,65 1,38 1,559 EBIT (USDmn) 312 236 189 97 45 Net profit (USDmn) 25 2 11 71 39 Bahana/consensus (%) - - 9 69 39 EPS (IDR) 2,54 2,481 1,368 878 483 EPS growth (%) (52.6) (2.3) (44.8) (35.9) (44.9) EV/EBITDA (x).7.8 1. 1.1 1.5 PER (x) 2.6 2.7 4.8 7.5 13.7 FCFPS (IDR) 94 1,388 1,962 1,164 972 FCF yield (%) 13.7 21. 29.7 17.6 14.7 BVPS (IDR) 8,77 9,446 1,762 1,545 1,371 PBV (x).8.7.6.6.6 DPS (IDR) 2,67 2,136 1,94 678 386 Dividend Yield (%) 27.3 22.4 16.6 1.6 5.9 Major assumptions note: based on 3 December 215 closing price Year to 31 Dec 213A 214A 215F 216F 217F Avg. coal price (USD/ton) 74.9 67.1 57.5 5.6 51.3 growth % (16.8) (1.4) (14.3) (12.1) 1.5 Coal sales vol. (m tons) 29.1 29.1 28.7 27.3 3.4 growth % 7.4 (.) (1.4) (4.9) 11.4 Company information 12M high/low (IDR) : 18,425/6,475 12M High/low consensus TP (IDR) : 13,7/7, Majority shareholder (%) : Banpu Minerals (65.) Shares outstanding (mn)/free float (%) : 1,13/35. Mkt. cap. (IDRbn/USDmn) : 7,435/544 3-m avg.daily t.o.(idrbn/usdmn) : 12.3/.9 Bloomberg/Reuters code : ITMG IJ/ITMG.JK Source: Bloomberg, Reuters; based on 3 December 215 closing price 212
216 Compendium INDO TAMBANGRAYA MEGAH Profit & loss Year to 31 Dec (USDmn) 213A 214A 215F 216F 217F Sales 2,179 1,943 1,65 1,38 1,559 Gross profit 484 48 373 265 29 EBITDA 373 297 238 175 129 Depreciation 61 61 49 79 84 EBIT 312 236 189 97 45 Net interest inc./(expense) 8 5 4 6 6 Forex gain/(losses) (22) (1) - - - Other income/(expense) (2) 21 (21) 8 1 Pre-tax profit 295 262 172 11 61 Taxes (9) (62) (61) (39) (22) Minority interest - - - - - Extraordinary gain/(losses) - - - - - Net profit 25 2 11 71 39 Balance sheet Year to 31 Dec (USDmn) 213A 214A 215F 216F 217F Cash and equivalents 289 226 34 31 335 S-T investments - - - - - Trade receivables 193 186 135 113 128 Inventories 118 15 16 139 169 Fixed assets 317 286 262 242 22 Other assets 41 463 417 416 413 Total assets 1,327 1,31 1,279 1,221 1,264 Interest bearing liabilities - - - - - Trade payables 166 165 17 149 18 Other liabilities 263 261 24 222 248 Total liabilities 428 426 41 371 428 Minority interest - - - - - Shareholders' equity 898 885 869 851 837 Cash flow Year to 31 Dec (USDmn) 213A 214A 215F 216F 217F EBIT 312 236 189 97 45 Depreciation 61 61 49 79 84 Working capital 45 (39) 44 3 13 Other operating items (26) (67) (99) (26) (6) Operating cash flow 159 191 183 152 137 Net capital expenditure (66) (61) (25) (58) (58) Free cash flow 93 13 158 94 78 Equity raised/(bought) - - - - - Net borrowings - - - - - Other financing (266) (193) (8) (88) (53) Net cash flow (173) (63) 78 6 25 Cash balances, beginning 461 289 226 34 31 Ending cash 289 226 34 31 335 Key ratios Year to 31 Dec 213A 214A 215F 216F 217F ROAE (%) 22. 22.5 12.6 8.2 4.6 ROAA (%) 14.8 15.2 8.5 5.7 3.1 Gross margin (%) 22.2 21. 22.6 19.2 13.4 EBITDA margin (%) 17.1 15.3 14.4 12.7 8.3 EBIT margin (%) 14.3 12.1 11.4 7. 2.9 Net margin (%) 9.4 1.3 6.7 5.1 2.5 Payout ratio (%) 62 98 8 8 8 Current ratio (x) 1.6 1.6 1.7 1.8 1.7 Interest coverage (x) na na na na na Net gearing (%) nc nc nc nc nc Debtor turnover (days) 26 29 22 22 22 Creditor turnover (days) 35 39 48 48 48 Inventory turnover (days) 25 35 45 45 45 213
216 Compendium INDOCEMENT TUNGGAL PRAKASA REDUCE PX: IDR19,925 - TP: IDR16,4 Unlike SMGR, INTP, Indonesia s second-largest cement player by volume, is focused on maintaining its strong market presence in West Java and Jakarta, to prevent margin deterioration. Ironically, INTP s relatively high margins have led to competition from new companies, which could lead to continued margin pressure in the medium term. In 4Q16, we expect additional capacity of 4.4mt (+21%) for INTP, resulting in additional overhead costs. Additionally, we look for total capacity in Java (56% of total domestic volumes) to rise 9% during the period; Java cement demand grew flat in 1M15. Although INTP has a strong balance sheet with a net cash position, the company is likely to continue facing not only market-share contraction but also margin pressure on intense competition. Thus, INTP remains a REDUCE with an IDR16,4 TP based on a 216F P/E of 13.9x. Risks include a major turnaround in Java property demand. Share price performance (IDR) 26, 24, 22, 2, 18, 16, 3-Dec-14 3-Feb-15 3-Apr-15 3-Jun-15 3-Aug-15 3-Oct-15 3-Dec-15 Volume (RHS) INTP IJ Px Last (%) (%) 1 5 (5) (1) 3.7 5.9 (') 2, 15, 1, 5, (7.1) (8.8) (1) ytd 1M 3M 6M 9M 12M INTP IJ relative to JCI Source: Bloomberg Teguh Hartanto (teguh.hartanto@bahana.co.id) +6221 25 581 ext. 361 *New, please refer to appendix II 3.2.1 1 5 (5) Financial highlights* Year to 31 Dec 213A 214A 215F 216F 217F Revenues (IDRbn) 18,691 19,996 17,473 18,73 18,951 EBIT (IDRbn) 5,975 5,854 4,768 4,834 5,84 Net profit (IDRbn) 5,19 5,271 4,34 4,353 4,558 Bahana/consensus (%) - - 92 89 83 EPS (IDR) 1,363 1,432 1,179 1,183 1,238 EPS growth (%) 5.2 5. (17.7).3 4.7 EV/EBITDA (x) 9. 9.4 11.7 11.3 1.9 P/E (x) 14.6 13.9 16.9 16.8 16.1 FCFPS (IDR) 927 529 251 79 899 FCF yield (%) 4.7 2.7 1.3 4. 4.5 BVPS (IDR) 6,234 6,733 6,563 6,685 6,861 P/BV (x) 3.2 3. 3. 3. 2.9 DPS (IDR) 9 1,35 1,61 1,64 1,114 Div. yield (%) 4.5 6.8 5.3 5.3 5.6 note: based on 3 December 215 closing price Major assumptions Year to 31 Dec 213A 214A 215F 216F 217F Volume capacity (' tons) 18,6 2,5 2,5 24,9 24,9 Export volumes (' tons) 152 68 12 114 154 Domestic volumes (' tons) 17,642 18,189 17,461 18,73 19,67 Total volumes (' tons) 17,794 18,257 17,563 18,187 19,221 Utilization rate (%) 96 89 86 73 77 Company information 12M high/low (IDR) : 25,2/16,3 12M high/low consensus TP (IDR) : 28,6/14,2 Majority shareholder (%) : Birchwood Omnia Limited (51.) Shares outstanding (mn)/free float (%) : 3,681/36. Mkt. cap. (IDRbn/USDmn) : 73,349/5,299 3-m avg.daily t.o.(idrbn/usdmn) : 46.9/3.4 Bloomberg/Reuters code : INTP IJ/INTP.JK Source: Bloomberg, Reuters based on 3 December 215 closing price 214
216 Compendium INDOCEMENT TUNGGAL PRAKASA Profit & loss Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Sales 18,691 19,996 17,473 18,73 18,951 Gross profit 8,655 9,87 7,691 7,777 8,133 EBITDA 6,746 6,614 5,682 5,93 6,259 Depreciation 771 76 913 1,96 1,175 EBIT 5,975 5,854 4,768 4,834 5,84 Net interest inc./(expense) 513 79 686 514 488 Forex gain/(losses) - - - - - Other income/(expense) 115 146 114 145 166 Pre-tax profit 6,63 6,79 5,569 5,494 5,738 Taxes (1,583) (1,516) (1,225) (1,136) (1,175) Minority interest (2) (3) (4) (4) (5) Extraordinary gain/(losses) - - - - - Net profit 5,19 5,271 4,34 4,353 4,558 Balance sheet Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Cash and equivalents 12,595 11,256 7,138 6,85 5,417 S-T investments - - - - - Trade receivables 2,54 2,64 2,282 2,342 2,77 Inventories 1,474 1,666 1,47 1,481 1,63 Fixed assets 9,35 12,144 16,41 18,464 19,448 Other assets 699 1,18 1,925 2,251 4,519 Total assets 26,577 28,885 28,794 3,623 33,91 Interest bearing liabilities 93 76 51 39 33 Trade payables 1,8 1,175 972 1,27 741 Other liabilities 2,529 2,849 3,611 4,947 7,61 Total liabilities 3,63 4,1 4,635 6,13 7,835 Minority interest - - - - - Shareholders' equity 22,947 24,785 24,159 24,61 25,255 Cash flow Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F EBIT 5,975 5,854 4,768 4,834 5,84 Depreciation 771 76 913 1,96 1,175 Working capital (22) (16) 413 (8) (169) Other operating items (1,34) (1,19) (1,7) (1,1) (1,98) Operating cash flow 5,419 5,345 5,88 4,849 4,992 Net capital expenditure (2,5) (3,396) (4,166) (1,939) (1,681) Free cash flow 3,414 1,949 922 2,99 3,311 Equity raised/(bought) - - - - - Net borrowings (16) (17) (25) (12) (6) Other financing (1,277) (3,271) (5,15) (3,95) (3,972) Net cash flow 2,121 (1,339) (4,118) (1,53) (668) Cash balances, beginning 1,474 12,595 11,256 7,138 6,85 Ending cash 12,595 11,256 7,138 6,85 5,417 Key ratios Year to 31 Dec 213A 214A 215F 216F 217F ROAE (%) 23.7 22.1 17.7 17.9 18.3 ROAA (%) 2.3 19. 15. 14.7 14.3 Gross margin (%) 46.3 45.4 44. 43. 42.9 EBITDA margin (%) 36.1 33.1 32.5 32.8 33. EBIT margin (%) 32. 29.3 27.3 26.7 26.8 Net margin (%) 26.8 26.4 24.8 24.1 24.1 Payout ratio (%) 66. 94.3 9. 9. 9. Current ratio (x) 6.1 4.9 3.1 2.2 1.7 Interest coverage (x) na na na na na Net gearing (%) nc nc nc nc nc Debtor turnover (days) 48 47 48 47 4 Creditor turnover (days) 36 37 36 36 25 Inventory turnover (days) 54 53 53 53 55 215
216 Compendium INDOFOOD CONSUMER BRANDED PRODUCTS BUY PX: 12,675 - TP: IDR16,8 With rising competition in FMCG and soft purchasing power in 215, ICBP, Indonesia s largest consumer-packaged food company (7%+ market share in instant noodles), is still able to maintain its margins. We attribute this to its strong brand equity in the market, enabling for price increases with minimal damage on sales volumes. Going into 216, we continue to like ICBP s defensive nature as its noodles continue to remain as one of the most affordable staples in the market, priced at below USD.2/pack. On the cost side, we expect input costs like flour prices to remain under pressure due to intense local competition, given a 33-player market. On valuation, our 12-month TP of IDR16,8 is based on a 216F PE of 28x. Reaffirm BUY. Downside risks include continued losses at its beverages division on rising A&P to gain market share, severe IDR weakness and higher raw material prices. Share price performance (IDR) (') 16, 16, 15, 14, 12, 14, 1, 13, 8, 12, 6, 4, 11, 2, 1, 3-Dec-14 3-Feb-15 3-Apr-15 3-Jun-15 3-Aug-15 3-Oct-15 3-Dec-15 Volume (RHS) ICBP IJ Px Last (%) (%) 25 23.3 25 2 15 1 5 (5) 1.2 1.9 (2.5) ytd 1M 3M 6M 9M 12M ICBP IJ relative to JCI Source: Bloomberg Harry Su (harry.su@bahana.co.id) +6221 255735 4. 4.9 2 15 1 5 (5) Financial highlights Year to 31 Dec 213A 214A 215F 216F 217F Revenues (IDRbn) 25,95 3,22 32,115 35,481 39,775 EBIT (IDRbn) 2,734 3,63 3,936 4,57 5,71 Net profit (IDRbn) 2,225 2,64 3,82 3,543 4,39 Bahana/consensus (%) - - 99 1 14 EPS (IDR) 382 447 529 68 693 EPS growth (%) 2.1 17. 18.4 15. 14. EV/EBITDA (x) 23.2 2.6 15.9 14. 12.3 P/E (x) 33.2 28.4 24. 2.9 18.3 FCFPS (IDR) (5) 7 3 (6) () FCF yield (%) (.).1. (.) (.) BVPS (IDR) 2,158 2,414 2,77 3,48 3,435 P/BV (x) 5.9 5.2 4.7 4.2 3.7 DPS (IDR) 186 197 233 267 35 Div. yield (%) 1.5 1.6 1.8 2.1 2.4 note: based on 3 December 215 closing price Major assumptions Year to 31 Dec 213A 214A 215F 216F 217F Noodles sales volume (bn packs) 12.7 12.6 12.7 13.1 13.8 Avg. price per pack (IDR) 1,369 1,582 1,661 1,761 1,884 Dairy solid prod. sales vol. ('tons) 21 21 29 224 24 Dairy sales price (IDR/kg) 18,269 21,9 21,9 22,164 23,494 Company information 12M high/low (IDR) : 16,5/1,9 12M high/low consensus TP (IDR) : 17,4/1,9 Majority shareholder (%) : Indofood Sukses Makmur (8.5) Shares outstanding (mn)/free float (%) : 5,831/19.5 Mkt. cap. (IDRbn/USDmn) : 73,97/5,233 3-m avg.daily t.o.(idrbn/usdmn) : 25.4/1.8 Bloomberg/Reuters code : ICBP IJ/ICBP.JK Source: Bloomberg, Reuters; based on 3 December 215 closing price 216
216 Compendium INDOFOOD CONSUMER BRANDED PRODUCTS Profit & loss Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Sales 25,95 3,22 32,115 35,481 39,775 Gross profit 6,426 8,6 9,656 11,12 12,351 EBITDA 3,57 3,4 4,376 5,4 5,678 Depreciation 323 337 388 498 67 EBIT 2,734 3,63 3,936 4,57 5,71 Net interest inc./(expense) 117 175 229 98 62 Forex gain/(losses) 11 115 (21) (46) 69 Other income/(expense) 15 36 38 42 47 Pre-tax profit 2,967 3,389 3,993 4,61 5,249 Taxes (734) (857) (988) (1,138) (1,298) Minority interest (1) 73 76 8 88 Extraordinary gain/(losses) 2 - - - - Net profit 2,225 2,64 3,82 3,543 4,39 Balance sheet Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Cash and equivalents 5,526 7,343 8,237 8,126 8,674 S-T investments 72 6 54 49 45 Trade receivables 2,549 2,92 3,381 3,735 4,187 Inventories 2,869 2,822 3,28 3,496 3,562 Fixed assets 4,844 5,839 6,851 9,353 11,746 Other assets 5,47 5,945 5,951 6,78 6,286 Total assets 21,267 24,91 27,682 3,837 34,5 Interest bearing liabilities 2,52 3,46 3,835 4,358 4,887 Trade payables 2,531 2,813 3,28 3,496 3,918 Other liabilities 2,832 3,493 3,64 3,821 4,18 Total liabilities 8,2 9,87 1,837 11,93 13,186 Minority interest 679 962 1,58 1,164 1,281 Shareholders' equity 12,586 14,78 15,786 17,77 2,32 Cash flow Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F EBIT 2,734 3,63 3,936 4,57 5,71 Depreciation 323 337 388 498 67 Working capital (731) 461 (355) (268) 42 Other operating items (1,692) (1,644) (2,184) (2,472) (2,754) Operating cash flow 633 2,217 1,786 2,264 2,967 Net capital expenditure (1,298) (1,331) (1,4) (3,) (3,) Free cash flow (664) 886 386 (736) (33) Equity raised/(bought) - - - - - Net borrowings 1,257 886 429 523 53 Other financing 73 931 57 626 58 Net cash flow 39 1,817 894 (11) 547 Cash balances, beginning 5,487 5,526 7,343 8,237 8,126 Ending cash 5,526 7,343 8,237 8,126 8,674 Key ratios Year to 31 Dec 213A 214A 215F 216F 217F ROAE (%) 18.5 19.5 2.6 21.1 21.4 ROAA (%) 11.4 11.3 11.7 12.1 12.4 EBITDA margin (%) 25.6 26.8 3.1 31. 31.1 EBIT margin (%) 12.2 11.3 13.6 14.1 14.3 Net margin (%) 1.9 1.2 12.3 12.7 12.7 Payout ratio (%) 8.9 8.7 9.6 1. 1.2 Current ratio (x) 43.7 44. 44. 44. 44. Interest coverage (x) 2.4 2.2 2.3 2.1 1.9 Net gearing (%) na na na na na Gross margin (%) nc nc nc nc nc Debtor turnover (days) 37 35 38 38 38 Creditor turnover (days) 49 47 52 52 52 Inventory turnover (days) 56 47 52 52 47 217
216 Compendium INDOFOOD SUKSES MAKMUR BUY PX: IDR5,175- TP: IDR6,6 Amid intense flour (24% of 9M15 revenues) competition and weak commodity prices adversely impacting its agribusiness division (18%), earnings of INDF, the holding company of the Salim Group, have been largely supported by success of its subsidiary ICBP (5% of revenues) with the remaining 8% coming from its distribution business. On the cost side, we expect to see margin support in 216, helped by continued strong pricing power at ICBP, and rising CPO prices as well as cost efficiencies, which are likely to positively impact SIMP, INDF s agribusiness. Our 12-month TP of IDR6,6 is based on a 216F PE of 17x, and set at a 4% discount to our target PE for ICBP (28x), as we take into account INDF s holding-company status and higher portion of volatile, commodity-based earnings. Reaffirm BUY. Downside risks include intensifying flour competition and lower-than-expected CPO prices. Share price performance (IDR) 8, 7,5 7, 6,5 6, 5,5 5, 4,5 3-Dec-14 3-Feb-15 3-Apr-15 3-Jun-15 3-Aug-15 3-Oct-15 3-Dec-15 Volume (RHS) INDF IJ Px Last (%) (%) 5 (5) (1) (15) (2) (1.1) (11.3).2 (16.3) (13.8) (11.2) ytd 1M 3M 6M 9M 12M INDF IJ relative to JCI Source: Bloomberg Harry Su (harry.su@bahana.co.id) +6221 25 5735 (') 6, 5, 4, 3, 2, 1, 5 (5) (1) (15) (2) Financial highlights Year to 31 Dec 213A 214A 215F 216F 217F Revenues (IDRbn) 55,624 63,594 64,352 7,849 78,78 EBIT (IDRbn) 5,557 6,874 6,81 7,61 8,547 Net profit (IDRbn) 2,54 3,885 2,84 3,454 4,196 Bahana/consensus (%) - - 64 84 89 EPS (IDR) 285 443 237 393 478 EPS growth (%) (23.2) 55.2 (46.4) 65.7 21.5 EV/EBITDA (x) 8. 6.3 6.5 5.9 4.9 P/E (x) 18.1 11.7 21.8 13.2 1.8 FCFPS (IDR) (41) 36 44 57 47 FCF yield (%) (.8).7.9 1.1.9 BVPS (IDR) 2,668 2,927 2,92 3,24 3,499 P/BV (x) 1.9 1.8 1.8 1.6 1.5 DPS (IDR) 147 22 115 19 231 Div. yield (%) 2.8 4.2 2.2 3.7 4.5 note: based on 3 December 215 closing price Major assumptions Year to 31 Dec 213A 214A 215F 216F 217F Flour sales volume (' tons) 2,815 2,88 2,99 3,85 3,266 Average flour price per kg (IDR) 6,636 6,918 6,352 6,491 6,59 Wheat price (USD/tons) 312 285 273 279 286 Company information 12M high/low (IDR) : 7,725/4,56 12M high/low consensus TP (IDR) : 1,6/5,4 Majority shareholder (%) : CAB Holding Ltd (5.1) Shares outstanding (mn)/free float (%) : 8,78/49.9 Mkt. cap. (IDRbn/USDmn) : 45,439/3,217 3-m avg.daily t.o.(idrbn/usdmn) : 41.2/3.2 Bloomberg/Reuters code : INDF IJ/INDF.JK Source: Bloomberg, Reuters; based on 3 December 215 closing price 218
216 Compendium INDOFOOD SUKSES MAKMUR Profit & loss Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Sales 55,624 63,594 64,352 7,849 78,78 Gross profit 13,66 17,5 17,459 19,418 21,45 EBITDA 7,418 9,232 9,336 1,35 11,389 Depreciation 1,86 2,358 2,535 2,695 2,842 EBIT 5,557 6,874 6,81 7,61 8,547 Net interest inc./(expense) (584) (882) (688) (674) (85) Forex gain/(losses) (976) 29 (2,181) (591) 136 Other income/(expense) 3 27 121 15 64 Pre-tax profit 4,1 6,229 4,53 6,45 7,943 Taxes (1,176) (1,828) (1,11) (1,548) (1,986) Minority interest (913) (1,261) (1,765) (2,118) (2,33) Income from discontinued op. 591 745 97 67 57 Net profit 2,54 3,885 2,84 3,454 4,196 Balance sheet Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Cash and equivalents 13,666 14,158 15,12 17,3 18,338 S-T investments 693 665 748 823 96 Trade receivables 5,267 4,34 4,948 5,62 6,74 Inventories 8,161 8,455 8,351 8,454 9,39 Fixed assets 3,97 3,64 35,77 37,324 38,95 Other assets 16,329 27,718 23,3 23,415 25,186 Total assets 77,611 85,94 87,859 92,81 97,98 Interest bearing liabilities 27,32 31,84 29,916 27,885 26,693 Trade payables 4,851 5,151 5,682 6,232 6,861 Other liabilities 7,549 8,476 1,526 12,73 14,869 Total liabilities 39,72 44,711 46,124 46,82 48,424 Minority interest 14,462 15,528 18,634 22,36 26,832 Shareholders' equity 23,429 25,71 25,637 28,132 3,724 Cash flow Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F EBIT 5,557 6,874 6,81 7,61 8,547 Depreciation 1,86 2,358 2,535 2,695 2,842 Working capital (975) 1,56 1,358 1,167 (835) Other operating items (1,76) (2,71) (1,799) (2,222) (2,79) Operating cash flow 4,683 8,29 8,895 9,25 7,763 Net capital expenditure (8,256) (4,872) (5,) (4,25) (3,613) Free cash flow (3,573) 3,157 3,895 5, 4,151 Equity raised/(bought) - - - - - Net borrowings 12,34 3,764 (1,168) (2,31) (1,192) Other financing (8,141) (6,429) (1,873) (979) (1,623) Net cash flow 32 491 855 1,99 1,335 Cash balances, beginning 13,346 13,666 14,158 15,12 17,3 Ending cash 13,666 14,158 15,12 17,3 18,338 Key ratios Year to 31 Dec 213A 214A 215F 216F 217F ROAE (%) 11.2 15.8 8.1 12.8 14.3 ROAA (%) 3.7 4.8 2.4 3.8 4.4 EBITDA margin (%) 13.3 14.5 14.5 14.5 14.6 EBIT margin (%) 1. 1.8 1.6 1.7 1.9 Net margin (%) 4.5 6.1 3.2 4.9 5.4 Payout ratio (%) 49.8 49.9 48.2 47. 47. Current ratio (x) 1.7 1.8 2.1 2.1 1.6 Interest coverage (x) 9.5 7.8 9.9 11.3 1.6 Net gearing (%) 58.3 49.6 58.1 38.7 27.2 Gross margin (%) 35.2 31.3 34.1 3.3 27.3 Debtor turnover (days) 29 28 26 26 26 Creditor turnover (days) 37 39 42 42 42 Inventory turnover (days) 69 65 65 6 57 219
216 Compendium INDOMOBIL SUKSES INTERNATIONAL REDUCE PX: IDR2,25 - TP: IDR2, Going into 216, IMAS, the second-largest listed auto player, will likely continue to experience weak performance despite introduction of the company s new Datsun brand and new Nissan X-trail (SUV) model, as we expect lower sales volumes for Nissan s two most popular models, Livina (low MPV) and March (city car), on intense competition. On the margin side, we expect IMAS to experience continued pressure from low utilization rates in several of its new distribution outlets, discount offers, increased promotional activities in the sector and weak contribution from its production subsidiaries. Despite improved rental and financing performance, we expect its severe market underperformance to persist, and maintain our REDUCE rating on IMAS on weak auto segment and low operating margins. Our DCF-based 12-month TP of IDR2, reflects a 216F PE of 44x (14% premium to the region). Risks: Higher auto sales and margins. Share price performance (IDR) 4,5 4, 3,5 3, 2,5 2, 1,5 3-Dec-14 3-Feb-15 3-Apr-15 3-Jun-15 3-Aug-15 3-Oct-15 3-Dec-15 (5) (1) (15) (2) (25) (3) (35) Volume (RHS) (%) (%) (17.4) (22.1) (22.3) (26.9) (3.6) (31.8) ytd 1M 3M 6M 9M 12M IMAS IJ relative to JCI IMAS IJ Px Last Source: Bloomberg Leonardo Henry Gavaza, CFA (leonardo@bahana.co.id) +6221 255735 ext. 368 *New, please refer to appendix II (') 2, 1,5 1, 5 (5) (1) (15) (2) (25) (3) (35) Financial highlights* Year to 31 Dec 213A 214A 215F 216F 217F Revenues (IDRbn) 2,95 19,458 18,176 19,77 21,414 EBIT (IDRbn) 369 224 96 149 229 Net profit (IDRbn) 532 (147) (312) 126 292 Bahana/consensus (%) - - na 19 45 EPS (IDR) 193 (53) (113) 46 15 EPS growth (%) (33.5) na na na 13.7 EV/EBITDA (x) 21.5 26.7 33.9 33.3 31.5 P/E (x) 11.7 na na 49.2 21.3 FCFPS (IDR) (265) 25 (12) 78 152 FCF yield (%) (11.8) 11.1 (5.3) 3.5 6.8 BVPS (IDR) 2,117 2,65 1,952 1,998 2,92 P/BV (x) 1.1 1.1 1.2 1.1 1.1 DPS (IDR) 19 - - 11 26 Div. yield (%).8 - -.5 1.2 note: based on 3 December 215 closing price Major assumptions Year to 31 Dec 213A 214A 215F 216F 217F Automotive Market Sales ( ) 1,23 1,28 1,21 1,21 1,72 Nissan Market Share (%) 5. 4.4 5.4 5.5 5.5 IMAS retail sales (unit) 61,119 52,736 55,5 56,3 58,847 EBIT Margin (%) 1.8 1.2.5.8 1.1 Company information 12M high/low (IDR) : 4,2/2,25 12M High/low consensus TP (IDR) : 2,8/2,5 Majority shareholder (%) : Gallant Venture (71.5) Shares outstanding (mn)/free float (%) : 2,765/1.5 Mkt. cap. (IDRbn/USDmn) : 6,222/449 3-m avg.daily t.o.(idrbn/usdmn) : 189.2/13.7 Bloomberg/Reuters code : IMAS IJ/IMAS.JK Source: Bloomberg, Reuters; note: based on 3 December 215 closing price 22
216 Compendium INDOMOBIL SUKSES INTERNATIONAL Profit & loss Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Sales 2,95 19,458 18,176 19,77 21,414 Gross profit 2,49 2,636 2,673 2,916 3,195 EBITDA 821 695 612 68 779 Depreciation 452 471 517 531 55 EBIT 369 224 96 149 229 Net interest inc./(expense) (479) (74) (692) (829) (894) Forex gain/(losses) 2 53 2 (18) 21 Other income/(expense) 73 445 472 924 1,83 Pre-tax profit 596 19 (15) 226 438 Taxes 26 (15) (157) (45) (88) Minority interest (89) (61) (5) (54) (59) Extraordinary gain/(losses) - - - - - Net profit 532 (147) (312) 126 292 Balance sheet Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Cash and equivalents 1,122 1,134 1,823 793 521 S-T investments - - - - - Trade receivables 2,457 3,12 2,726 2,965 3,212 Inventories 4,499 3,366 3,564 3,874 4,188 Fixed assets 3,774 4,629 5,113 5,581 6,31 Other assets 1,464 11,311 12,461 13,742 15,165 Total assets 22,315 23,452 25,686 26,956 29,117 Interest bearing liabilities 12,539 13,496 16,366 17,216 18,816 Trade payables 2,392 2,32 2,385 2,593 2,83 Other liabilities 724 928 436 468 5 Total liabilities 15,655 16,744 19,187 2,277 22,119 Minority interest 86 997 1,1 1,154 1,213 Shareholders' equity 5,854 5,71 5,399 5,525 5,785 Cash flow Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F EBIT 369 224 96 149 229 Depreciation 452 471 517 531 55 Working capital (1,122) 796 (138) (344) (353) Other operating items 729 34 315 879 995 Operating cash flow 427 1,831 789 1,215 1,421 Net capital expenditure (1,161) (1,141) (1,121) (1,) (1,) Free cash flow (734) 69 (332) 215 421 Equity raised/(bought) 215 56 - - - Net borrowings 3,894 957 2,87 85 1,6 Other financing (3,39) (1,691) (1,85) (2,95) (2,294) Net cash flow (13) 13 688 (1,29) (272) Cash balances, beginning 1,135 1,122 1,134 1,823 793 Ending cash 1,122 1,134 1,823 793 521 Key ratios Year to 31 Dec 213A 214A 215F 216F 217F ROAE (%) 9.6 (2.6) (5.6) 2.3 5.2 ROAA (%) 2.7 (.6) (1.3).5 1. Gross margin (%) 12.4 13.5 14.7 14.8 14.9 EBITDA margin (%) 4.1 3.6 3.4 3.4 3.6 EBIT margin (%) 1.8 1.2.5.8 1.1 Net margin (%) 2.6 (.8) (1.7).6 1.4 Payout ratio (%) 9.9 - - 25. 25. Current ratio (x) 1.1 1..9.9.9 Interest coverage (x).8.3.1.2.3 Net gearing (%) 195. 216.5 269.4 297.2 316.2 Debtor turnover (days) 41 41 41 41 41 Creditor turnover (days) 23 23 23 23 23 Inventory turnover (days) 43 43 43 43 43 221
216 Compendium INDOSAT BUY PX: IDR5,4 - TP: IDR6,8 On the back of its successful network modernization program, ISAT has managed to surpass EXCL as Indonesia s second-largest cellular operator in terms of number of subscribers in 215. Going into 216, we expect ISAT to continue its strong momentum, booking solid y-y revenue growth of 8% supported by solid ARPU growth, higher data usage and improved pricing policy. Thus, increasing top lines, coupled with well-maintained operating costs, should allow for EBITDA margin expansion and an earnings reversal from a net loss to a net profit of IDR1.3tn in 216, and a further 91% y-y jump to IDR2.6tn in 217. With data migration and rational competition positively impacting ISAT s performance ahead, we reaffirm our BUY call with a DCF-based TP of IDR6,8, reflecting 216F EV/EBITDA of 4.x, still an attractive 54% discount to its regional peers. Main risk: Weak IDR on USD debt. Share price performance (IDR) (') 6, 4, 5,5 35, 3, 5, 25, 4,5 2, 4, 15, 1, 3,5 5, 3, 3-Dec-14 3-Feb-15 3-Apr-15 3-Jun-15 3-Aug-15 3-Oct-15 3-Dec-15 (%) (%) 7 61.1 66.6 7 6 6 5 46.5 48.5 5 4 3. 38.6 4 3 3 2 1 Volume (RHS) ytd 1M 3M 6M 9M 12M ISAT IJ relative to JCI ISAT IJ Px Last Source: Bloomberg Leonardo Henry Gavaza, CFA (leonardo@bahana.co.id) +6221 25581 ext. 368 2 1 Financial highlights Year to 31 Dec 213A 214A 215F 216F 217F Revenues (IDRbn) 23,855 24,85 26,249 28,395 3,758 EBIT (IDRbn) 1,373 1,833 2,953 3,879 4,839 Net profit (IDRbn) (2,826) (1,987) (1,187) 1,334 2,545 Bahana/consensus (%) - - na 114 145 EPS (IDR) (52) (366) (218) 245 468 EPS growth (%) na na na na 9.8 EV/EBITDA (x) 4.9 4.9 4.1 3.4 2.8 P/E (x) na na na 22. 11.5 FCFPS (IDR) (738) 424 388 75 78 FCF yield (%) (13.7) 7.8 7.2 13.1 14.4 BVPS (IDR) 2,976 2,56 2,288 2,67 3,214 P/BV (x) 1.8 2.2 2.4 2.1 1.7 DPS (IDR) 35 - - 74 139 Div. yield (%).6 - - 1.4 2.6 note: based on 3 December 215 closing price Major assumptions Year to 31 Dec 213A 214A 215F 216F 217F Subscribers ( ) 59,712 63,2 69,52 7,215 7,917 Net additional ( ) 1,2 3,6 6,32 695 72 ARPU (IDR /month) 28 27 25 27 3 Company information 12M high/low (IDR) : 5,6/3,5 12M High/low consensus TP (IDR) : 6,8/4,394 Majority shareholder (%) : Ooredoo Asia Pte Ltd (65.) Share outstanding (mn)/free float (%) : 5,434/2.7 Mkt. cap. (IDRbn/USDmn) : 29,343/2,124 3-m avg.daily t.o.(idrbn/usdmn) : 3.6/.3 Bloomberg/Reuters code : ISAT IJ/ISAT.JK Source: Bloomberg, Reuters; based on 3 December 215 closing price 222
216 Compendium INDOSAT Profit & loss Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Sales 23,855 24,85 26,249 28,395 3,758 Gross profit - - - - - EBITDA 1,332 1,59 11,34 12,352 13,472 Depreciation 8,958 8,226 8,386 8,473 8,633 EBIT 1,373 1,833 2,953 3,879 4,839 Net interest inc./(expense) (2,15) (2,264) (2,672) (2,18) (1,433) Forex gain/(losses) (3,11) (243) (1,989) (74) 34 Other income/(expense) 365 (1,262) 4 7 (52) Pre-tax profit (3,378) (1,936) (1,37) 1,857 3,387 Taxes 667 78 261 (371) (677) Minority interest (116) (129) (141) (152) (165) Extraordinary gain/(losses) - - - - - Net profit (2,826) (1,987) (1,187) 1,334 2,545 Balance sheet Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Cash and equivalents 2,234 3,486 4,875 6,888 7,166 S-T investments - - - - - Trade receivables 2,285 2,11 2,838 3,7 3,325 Inventories 36 49 42 45 47 Fixed assets 42,19 4,776 38,687 36,512 34,582 Other assets 7,822 6,858 5,936 6,391 6,893 Total assets 54,566 53,27 52,378 52,95 52,14 Interest bearing liabilities 23,931 23,146 22,146 19,646 14,646 Trade payables 339 691 863 98 96 Other liabilities 13,525 15,134 16,18 17,344 18,12 Total liabilities 37,795 38,971 39,189 37,898 33,618 Minority interest 598 681 758 842 933 Shareholders' equity 16,174 13,618 12,431 14,165 17,463 Cashflow Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F EBIT 1,373 1,833 2,953 3,879 4,839 Depreciation 8,958 8,226 8,386 8,473 8,633 Working capital (99) 521 (557) (189) (26) Other operating items (4,877) (1,246) (2,173) (1,836) (2,128) Operating cash flow 5,355 9,335 8,61 1,326 11,138 Net capital expenditure (9,364) (7,33) (6,5) (6,5) (6,96) Free cash flow (4,9) 2,32 2,11 3,826 4,232 Equity raised/(bought) - - - - - Net borrowings 2,644 4,878 (2,378) (1,5) (4,) Other financing (319) (5,928) 1,657 (314) 46 Net cash flow (1,684) 1,252 1,389 2,13 278 Cash balances, beginning 3,917 2,234 3,486 4,875 6,888 Ending cash 2,234 3,486 4,875 6,888 7,166 Key ratios Year to 31 Dec 213A 214A 215F 216F 217F ROAE (%) (16.1) (13.3) (9.1) 1. 16.1 ROAA (%) (5.1) (3.7) (2.2) 2.5 4.9 EBITDA margin (%) 43.3 41.8 43.2 43.5 43.8 EBIT margin (%) 5.8 7.6 11.3 13.7 15.7 Net margin (%) (11.8) (8.3) (4.5) 4.7 8.3 Payout ratio (%) 11.3 - - 3. 3. Current ratio (x).5.4.7.8 1. Interest coverage (x).7.8 1.1 1.9 3.4 Net gearing (%) 134.2 144.4 138.9 9.1 42.8 Debts to assets (%) 43.9 43.5 42.3 37.1 28.2 Debtor turnover (days) 33 33 39 39 39 Creditor turnover (days) 5 8 14 14 14 Inventory turnover (days) 1 1 1 1 1 223
216 Compendium J RESOURCES ASIA PASIFIK BUY PX: IDR1,355 - TP: IDR2, PSAB, Indonesia s largest listed pure gold producer, is benefiting from not only relatively stable gold prices in 215 (USD1,5/toz USD1,3/toz) but also 6.6% y-y production growth helped by 4 producing assets in Penjom, Seruyung, North Lanut and Bakan. In 9M15, net profit rose 139% y-y to USD29mn on low oil prices, which helped to raise PSAB s gross margin to 55.6% (9M14: 44.3%). Going into 216, we expect 2% y-y production growth to 285k toz due to the commencement of 45k toz of production at the Pani mine site in North Sulawesi, before escalating to 335k toz in 217. Furthermore, PSAB has allocated 216 capex of USD5mn to build 2 smelters with 5mn toz/annum capacity at the Doup and Pani mines. At our DCF-based TP of IDR2,, PSAB still looks attractive at a 216F PE of 15x, still below the sector average of 36.5x. BUY on 48% potential upside. Risks include project delays and higher oil prices. Share price performance (IDR) 1,7 1,5 1,3 1,1 9 7 5 3-Dec-14 3-Feb-15 3-Apr-15 3-Jun-15 3-Aug-15 3-Oct-15 3-Dec-15 Volume (RHS) psab IJ Px Last (%) (%) 2 15 1 5 (5) 164.7 (8.9) 114.7 11.8 152.4 122.2 ytd 1M 3M 6M 9M 12M psab IJ relative to JCI Source: Bloomberg Arandi Ariantara (arandi@bahana.co.id) +6221 25581 ext. 3619 (') 3, 25, 2, 15, 1, 5, 2 15 1 5 (5) Financial highlights Year to 31 Dec 213A 214A 215F 216F 217F Revenues (USDmn) 78 28 278 342 42 EBIT (USDmn) (29) 69 91 128 194 Net profit (USDmn) (24) 23 32 58 114 Bahana/consensus (%) - - - - - EPS (IDR) (56) 53 73 134 263 EPS growth (%) na na 38. 83. 95.8 EV/EBITDA (x) (314.) 9.7 6.5 4.7 4.3 P/E (x) (25.4) 26.6 18.6 1.1 5.2 FCFPS (IDR) (536) (47) 157 89 22 FCF yield (%) (37.9) (3.4) 11.6 6.5 16.2 BVPS (IDR) 516 569 87 1,93 1,11 P/BV (x) 2.7 2.5 1.6 1.2 1.2 DPS (IDR) - - - - - Div. yield (%) - - - - - note: based on 3 December 215 closing price Major assumptions Year to 31 Dec 213A 214A 215F 216F 217F Gold production volume (oz) 66,957 223,31 24, 285, 335, Volume growth (%) (33.9) 233.5 7.5 18.8 17.5 ASP (USD/oz) 1,417 1,255 1,16 1,2 1,2 Company information 12M high/low (IDR) : 1,6/525 12M High/low consensus TP (IDR) : na Majority shareholder (%) : J&Partners Asia Limited (94.6) Shares outstanding (mn)/free float (%) : 5,292/5.4 Mkt. cap. (IDRbn/USDmn) : 6,879/497 3-m avg.daily t.o.(idrbn/usdmn) : 7.6/.5 Bloomberg/Reuters code : PSAB IJ/PSAB.JK Source: Bloomberg, Reuters; based on3 December 215 closing price 224
216 Compendium J RESOURCES ASIA PASIFIK Profit & loss Year to 31 Dec (USDmn) 213A 214A 215F 216F 217F Sales 78 28 278 342 42 Gross profit 3 129 13 174 212 EBITDA (3) 15 126 163 23 Depreciation 25 36 36 35 36 EBIT (29) 69 91 128 194 Net interest inc./(expense) (25) (28) (26) (25) (15) Forex gain/(losses) - - - - - Other income/(expense) 14 4 (14) (14) (15) Pre-tax profit (39) 46 51 89 164 Taxes 13 (2) (16) (26) (41) Minority interest 2 (3) (3) (5) (9) Extraordinary gain/(losses) - - - - - Net profit (24) 23 32 58 114 Balance sheet Year to 31 Dec (USDmn) 213A 214A 215F 216F 217F Cash and equivalents 27 11 9 9 1 S-T investments - - - - - Trade receivables 2 2 9 11 13 Inventories 4 46 49 56 63 Fixed assets 58 641 662 697 635 Other assets 156 156 181 199 167 Total assets 85 857 911 972 89 Interest bearing liabilities 45 398 32 281 187 Trade payables 65 44 3 34 38 Other liabilities 76 13 14 14 14 Total liabilities 546 571 49 455 365 Minority interest 36 38 43 43 43 Shareholders' equity 224 247 377 474 481 Cash flow Year to 31 Dec (USDmn) 213A 214A 215F 216F 217F EBIT (29) 69 91 128 194 Depreciation 25 36 36 35 36 Working capital 9 8 (25) (5) (5) Other operating items (25) (43) 7 (7) (8) Operating cash flow (2) 7 18 88 145 Net capital expenditure (212) (91) (4) (5) (5) Free cash flow (232) (21) 68 38 95 Equity raised/(bought) () () - - - Net borrowings 251 (8) (78) (39) (95) Other financing 13 8 - - Net cash flow 18 (15) (2) (1) 1 Cash balances, beginning 9 27 11 9 9 Ending cash 27 11 9 9 1 Key ratios Year to 31 Dec 213A 214A 215F 216F 217F ROAE (%) (1.3) 9.8 1.2 13.7 23.9 ROAA (%) (3.5) 2.8 3.6 6.2 12.3 Gross margin (%) 4.2 46.2 46.7 5.8 52.7 EBITDA margin (%) (4.2) 37.6 45.3 47.7 57.3 EBIT margin (%) (36.7) 24.7 32.5 37.5 48.3 Net margin (%) (31.1) 8.2 11.4 17. 28.4 Payout ratio (%) - - - - - Current ratio (x).9.4.5.6.7 Interest coverage (x) na 2.5 3.5 5.1 12.9 Net gearing (%) 169.2 156.7 82.3 57.4 36.7 Debtor turnover (days) 9 3 12 12 12 Creditor turnover (days) 316 17 73 73 73 Inventory turnover (days) 198 112 122 122 122 225
216 Compendium JAPFA COMFEED INDONESIA BUY PX: IDR458- TP: IDR55* JPFA, Indonesia s second largest and most integrated poultry player with exposure in aquaculture (7% of sales) and cattle (5%), is likely to enjoy the recovery in purchasing power going forward, which should translate into higher broiler chicken demand. The current DOC oversupply condition has also started to ease due to the aggressive culling of Parent Stock, which should boost margins in 216. Furthermore, JPFA is in the process of lowering its USD net debt exposure by lowering capex and holding more USD cash ahead. We believe that JPFA s 38% YTD market underperformance should reverse, following its outstanding 3Q15 results. On valuation, JPFA is currently trading at 13.x 216F PE and well below its replacement cost of IDR78/share. Thus, we retain our positive view with a higher TP of IDR55, based on 16x 216F PE (2% disc. to CPIN s target PER, to account for JPFA s high leverage). Risk: IDR depreciation. Share price performance (IDR) 1,5 85 65 45 25 3-Dec-14 3-Feb-15 3-Apr-15 3-Jun-15 3-Aug-15 3-Oct-15 3-Dec-15 Volume (RHS) JPFA IJ Px Last (%) (%) 3 2 1 (1) (2) (3) (4) (5) (6) (38.) (4.1) 22.1 (19.) (3.6) (48.1) ytd 1M 3M 6M 9M 12M JPFA IJ relative to JCI Source: Bloomberg Michael W. Setjoadi (michael@bahana.co.id) +6221 25581 ext. 3613 *New, please refer to appendix II (') 3, 25, 2, 15, 1, 5, 3 2 1 (1) (2) (3) (4) (5) (6) Financial highlights* Year to 31 Dec 213A 214A 215F 216F 217F Revenues (IDRbn) 21,412 24,459 25,3 27,52 3,21 EBIT (IDRbn) 1,83 1,276 925 1,368 1,546 Net profit (IDRbn) 595 332 (68) 376 588 Bahana/consensus (%) - - 77 182 168 EPS (IDR) 56 31 (6) 35 55 EPS growth (%) (4.) (44.2) na na 56.4 EV/EBITDA (x) 5. 6.5 8.1 6.3 5.9 P/E (x) 8.2 14.7 na 13. 8.3 FCFPS (IDR) (132) (5) (5) (38) (24) FCF yield (%) (28.8) (11.) (11.) (8.4) (5.3) BVPS (IDR) 446 456 45 479 524 P/BV (x) 1. 1. 1. 1..9 DPS (IDR) 1 6-6 1 Div. yield (%) 2.2 1.2-1.4 2.2 note: based on 3 December 215 closing price Major assumptions Year to 31 Dec 213A 214A 215F 216F 217F Indo s chicken production (k tons) 1,874 2,35 2,15 2,3 2,5 Animal feed ASP (IDR/kg) 5,738 6,97 6,327 6,556 6,715 Company information 12M high/low (IDR) : 1,11/297 12M high/low consensus TP (IDR) : 48/37 Majority shareholder (%) : Japfa Holding (57.5) Shares outstanding (mn)/free float (%) : 1,661/42.5 Mkt. cap. (IDRbn/USDmn) : 4,882/353 3-m avg.daily t.o.(idrbn/usdmn) : 1.8/.1 Bloomberg/Reuters code : JPFA IJ/JPFA.JK Source: Bloomberg, Reuters; based on 3 December 215 closing price 226
216 Compendium JAPFA COMFEED INDONESIA Profit & loss Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Sales 21,412 24,459 25,3 27,52 3,21 Gross profit 3,618 3,426 3,149 3,785 4,232 EBITDA 2,151 1,715 1,46 1,923 2,136 Depreciation 349 439 535 555 59 EBIT 1,83 1,276 925 1,368 1,546 Net interest inc./(expense) (494) (678) (67) (722) (75) Forex gain/(losses) (317) (78) (3) (8) 8 Other income/(expense) (96) 22 (7) 25 28 Pre-tax profit 896 543 (52) 591 94 Taxes (255) (158) (5) (166) (254) Minority interest (45) (52) (11) (49) (63) Extraordinary gain/(losses) - - - - - Net profit 595 332 (68) 376 588 Balance sheet Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Cash and equivalents 1,746 768 21 291 217 S-T investments - - - - - Trade receivables 1,197 1,243 1,159 1,26 1,384 Inventories 4,727 5,134 5,47 5,789 6,185 Fixed assets 5,272 6,362 6,427 6,671 7,81 Other assets 1,975 2,224 2,22 2,381 2,647 Total assets 14,918 15,73 15,422 16,391 17,514 Interest bearing liabilities 7,613 6,958 7,88 7,588 7,877 Trade payables 995 2,4 1,82 1,841 2,22 Other liabilities 1,65 1,478 1,31 1,414 1,553 Total liabilities 9,672 1,44 1,29 1,843 11,453 Minority interest 493 426 417 444 474 Shareholders' equity 4,752 4,864 4,796 5,15 5,587 Cash flow Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F EBIT 1,83 1,276 925 1,368 1,546 Depreciation 349 439 535 555 59 Working capital (795) 219 (43) (54) (435) Other operating items (1,27) (943) (993) (992) (958) Operating cash flow 149 99 64 391 743 Net capital expenditure (1,556) (1,528) (6) (8) (1,) Free cash flow (1,47) (538) (536) (49) (257) Equity raised/(bought) 316 - - - - Net borrowings 2,879 (654) 13 5 289 Other financing 632 1,83 554 797 943 Net cash flow 873 (978) (559) 81 (74) Cash balances, beginning 872 1,746 768 21 291 Ending cash 1,746 768 21 291 217 Key ratios Year to 31 Dec 213A 214A 215F 216F 217F ROAE (%) 13.1 6.9 (1.4) 7.6 11. ROAA (%) 4.6 2.2 (.4) 2.4 3.5 Gross margin (%) 16.9 14. 12.4 13.8 14. EBITDA margin (%) 1. 7. 5.8 7. 7.1 EBIT margin (%) 8.4 5.2 3.7 5. 5.1 Net margin (%) 2.8 1.4 (.3) 1.4 1.9 Payout ratio (%) 17.9 17.9-17.9 17.9 Current ratio (x) 2.1 1.8 1.7 1.6 1.6 Interest coverage (x) 3.6 1.9 1.4 1.9 2.1 Net gearing (%) 123.5 127.3 143.4 142.9 137.1 Debtor turnover (days) 18 18 17 16 16 Creditor turnover (days) 16 26 32 28 27 Inventory turnover (days) 86 86 87 86 84 227
216 Compendium JASA MARGA BUY PX: IDR4,79 - TP: IDR6,25 JSMR, the leading toll road operator, with 68km of roads and around 8% of total traffic volume in Indonesia, is set to benefit from the government s decision to raise tariffs by 9-15% in November 215. With 3 newly acquired toll roads in 215, JSMR currently owns 26 concessions, which are due to expire in 244-58. Future growth would be backed by the government s infrastructure push, allowing JSMR to embark on a major expansion phase with 38km of new toll roads expected to be built in 215-18. This includes the operation of two new toll-road sections (Gempol-Pasuruan and Surabaya-Mojokerto) expected in 216. Despite rising capex, JSMR s performance should improve in 216 on tariff hikes and a continued poor public transportation network. Retain BUY and DCF-based TP of IDR6,25 (9.1% WACC). Main risk: higherthan-expected construction costs on project delays. Share price performance (IDR) 7,5 7, 6,5 6, 5,5 5, 4,5 4, 3-Dec-14 3-Feb-15 3-Apr-15 3-Jun-15 3-Aug-15 3-Oct-15 3-Dec-15 Volume (RHS) JSMR IJ Px Last (%) (%) (5) (1) (15) (2) (17.7) (5.2) (6.3) (12.2) (15.3) ytd 1M 3M 6M 9M 12M JSMR IJ relative to JCI Source: Bloomberg Bob Setiadi (bob.setiadi@bahana.co.id) +6221 25581 ext.365 (') 5, 4, 3, 2, 1, (5) (1) (15) (17.4) (2) Financial highlights Year to 31 Dec 213A 214A 215F 216F 217F Revenues (IDRbn) 6,357 7,254 7,592 8,73 9,63 EBIT (IDRbn) 2,39 2,777 2,87 3,351 3,669 Net profit (IDRbn) 1,29 1,43 1,278 1,445 1,481 Bahana/cons.(%) - - 83 79 75 EPS (IDR) 151 26 188 213 218 EPS growth (%) (35.9) 36.7 (9.) 13.1 2.5 EV/EBITDA (x) 17.1 11.8 11.9 11.1 1.7 P/E (x) 31.7 23.2 25.5 22.5 22. FCFPS (IDR) (433) (299) (435) (68) (553) FCF yield (%) (8.9) (6.2) (9.) (14.) (11.4) BVPS (IDR) 1,323 1,451 1,556 1,712 1,866 P/BV (x) 3.6 3.3 3.1 2.8 2.6 DPS (IDR) 6 83 56 64 65 Div. yield (%) 1.3 1.7 1.2 1.3 1.4 note: based on 3 December 215 closing price Major assumptions Year to 31 Dec 213A 214A 215F 216F 217F Traffic volumes (',) 1,259 1,314 1,378 1,452 1,546 Volumes growth (%) 5.1% 4.3% 4.9% 5.3% 6.5% Avg. tariff (%) (1.1%) 9.8% 1.3% 9.2% 3.6% Company information 12M high/low (IDR) : 7,2/4,75 12M high/low consensus TP (IDR) : 8,8/4,2 Majority shareholder (%) : Republic of Indonesia (7.) Shares outstanding (mn)/free float (%) : 6,8/3. Mkt. cap. (IDRbn/USDmn) : 32,572/2,353 3-m avg.daily t.o.(idrbn/usdmn) : 34.9/2.5 Bloomberg/Reuters code : JSMR IJ/JSMR.JK Source: Bloomberg, Reuters based on 3 December 215 closing price 228
216 Compendium JASA MARGA Profit & loss Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Sales 6,357 7,254 7,592 8,73 9,63 Gross profit - - - - - EBITDA 2,49 3,594 3,812 4,476 4,972 Depreciation 371 817 942 1,125 1,32 EBIT 2,39 2,777 2,87 3,351 3,669 Net interest inc./(expense) (715) (95) (1,28) (1,558) (1,859) Forex gain/(losses) - - - - - Other income/(expense) (12) (5) (5) (5) (5) Pre-tax profit 1,311 1,822 1,585 1,787 1,85 Taxes (382) (67) (57) (572) (578) Minority interest 99 188 2 23 254 Extraordinary gain/(losses) - - - - - Net profit 1,29 1,43 1,278 1,445 1,481 Balance sheet Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Cash and equivalents 3,514 3,291 3,431 3,131 2,71 S-T investments 7 7 8 9 1 Trade receivables 177 149 146 167 185 Inventories - - - - - Fixed assets 22,553 24,637 28,12 33,66 38,76 Other assets 1,87 3,774 4,818 5,721 6,324 Total assets 28,59 31,858 36,414 42,688 47,925 Interest bearing liabilities 12,116 13,283 16,176 2,258 23,518 Trade payables 1,31 1,256 1,34 1,495 1,654 Other liabilities 4,75 5,894 6,746 7,64 8,29 Total liabilities 17,51 2,433 24,226 29,357 33,463 Minority interest 1,561 1,559 1,66 1,686 1,77 Shareholders' equity 8,997 9,866 1,583 11,644 12,692 Cash flow Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F EBIT 2,39 2,777 2,87 3,351 3,669 Depreciation 371 817 942 1,125 1,32 Working capital (351) (24) 96 252 28 Other operating items (746) (1,162) (1,676) (1,966) (2,224) Operating cash flow 1,312 2,47 2,233 2,762 2,956 Net capital expenditure (4,256) (4,443) (5,19) (7,385) (6,716) Free cash flow (2,944) (2,35) (2,958) (4,623) (3,76) Equity raised/(bought) - - - - - Net borrowings 1,98 1,167 2,893 4,81 3,261 Other financing 248 645 24 242 69 Net cash flow (788) (223) 14 (299) (43) Cash balances, beginning 4,32 3,514 3,291 3,431 3,131 Ending cash 3,514 3,291 3,431 3,131 2,71 Key ratios Year to 31 Dec 213A 214A 215F 216F 217F ROAE (%) 11.7 14.9 12.5 13. 12.2 ROAA (%) 3.9 4.7 3.7 3.7 3.3 EBITDA margin (%) 37.9 49.5 5.2 51.4 51.6 EBIT margin (%) 32.1 38.3 37.8 38.5 38.1 Net margin (%) 16.2 19.3 16.8 16.6 15.4 Payout ratio (%) 4. 4. 3. 3. 3. Current ratio (x).8.8.9.7.6 Interest coverage (x) 2.9 2.9 2.2 2.2 2. Net gearing (%) 95.6 11.3 12.4 147.1 164. Debts to assets (%) 43.2 41.7 44.4 47.5 49.1 Debtor turnover (days) 1 7 7 7 7 Creditor turnover (days) 6 1 9 9 9 Inventory turnover (days) na na na na na 229
216 Compendium KALBE FARMA HOLD PX: IDR 1,35 - TP: IDR1,48 Despite relatively defensive business segments in nutritionals (28% of total sales), pharmaceuticals (24%), consumer health (18%) and distribution (3%), KLBF, one of Indonesia s leading consumer companies, has had to revise down its earnings guidance three times in 215 on economic softness and troubled branded generic products due to the National Health Insurance program. Going into 216, we see margin support stemming from greater IDR stability, coupled with planned price increases in its nutritionals and consumer health divisions. Another positive catalyst could come from BPOM s (FDA) allowance to restart its injection products (liquid) line. At this stage, we have a HOLD rating with an IDR1,48 TP, reflecting a 216F PE of 32x, around a 2% discount to UNVR s target valuation. Upside risk: faster-than-expected purchasing power recovery; downside risks: IDR weakness and intensifying competition. Financial highlights Year to 31 Dec 213A 214A 215F 216F 217F Revenues (IDRbn) 16,2 17,369 17,786 19,3 2,943 EBIT (IDRbn) 2,549 2,761 2,549 2,812 3,8 Net profit (IDRbn) 1,92 2,65 1,949 2,167 2,4 Bahana/cons. (%) - - 91 89 86 EPS (IDR) 41 44 42 46 51 EPS growth (%) 1.7 7.6 (5.6) 11.2 1.7 EV/EBITDA (x) 22.1 19.9 2.2 17.6 16. P/E (x) 33. 3.6 32.5 29.2 26.4 FCFPS (IDR) (1) 32 26 28 32 FCF yield (%) (.1) 2.4 2. 2.1 2.4 BVPS (IDR) 173 2 222 248 276 P/BV (x) 7.8 6.7 6.1 5.4 4.9 DPS (IDR) 17 19 21 23 26 Div. yield (%) 1.3 1.4 1.5 1.7 1.9 note: based on 3 December 215 closing price Share price performance (IDR) 2, 1,8 1,6 1,4 1,2 (') 2, 15, 1, 5, Major assumptions Year to 31 Dec 213A 214A 215F 216F 217F Sales growth (%) 17.3 8.5 2.4 8.5 8.5 Gross margin (%) 48. 48.8 48.5 49. 49.2 1, 3-Dec-14 3-Feb-15 3-Apr-15 3-Jun-15 3-Aug-15 3-Oct-15 3-Dec-15 (13.) (4.4) Volume (RHS) (22.5) (15.8) KLBF IJ Px Last (%) (%) (5) (1) (15) (2) (25) (8.4) (14.1) ytd 1M 3M 6M 9M 12M KLBF IJ relative to JCI Source: Bloomberg Harry Su (harry.su@bahana.co.id) +6221 255735 (5) (1) (15) (2) (25) Company information 12M high/low (IDR) : 1,915/1,25 12M high/low consensus TP (IDR) : 2,75/1,2 Majority shareholder (%) : The Kalbe Family (56.7) Shares outstanding (mn)/free float (%) : 46,875/43.3 Mkt. cap. (IDRbn/USDmn) : 63,281 /4,572 3-m avg.daily t.o.(idrbn/usdmn) : 67.2/4.9 Bloomberg/Reuters code : KLBF IJ/KLBF.JK Source: Bloomberg, Reuters; based on 3 December 215 closing price 23
216 Compendium KALBE FARMA Profit & loss Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Sales 16,2 17,369 17,786 19,3 2,943 Gross profit 7,679 8,476 8,626 9,457 1,297 EBITDA 2,824 3,12 3,3 3,46 3,764 Depreciation 275 341 481 648 684 EBIT 2,549 2,761 2,549 2,812 3,8 Net interest inc./(expense) 22 11 49 81 15 Forex gain/(losses) 1 14 2 1 17 Other income/(expense) 1 (22) 3 9 14 Pre-tax profit 2,573 2,764 2,64 2,92 3,215 Taxes (62) (643) (61) (676) (749) Minority interest (51) (56) (53) (59) (67) Extraordinary gain/(losses) - - - - - Net profit 1,92 2,65 1,949 2,167 2,4 Balance sheet Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Cash and equivalents 1,426 1,895 2,299 2,738 3,272 S-T investments 188 199 178 193 29 Trade receivables 2,145 2,347 2,436 2,665 2,926 Inventories 3,53 3,91 3,262 3,438 3,755 Fixed assets 2,926 3,44 4,19 4,569 5,16 Other assets 1,577 1,489 1,412 1,456 1,493 Total assets 11,315 12,425 13,67 15,6 16,672 Interest bearing liabilities 584 296 311 33 357 Trade payables 1,152 1,133 1,147 1,222 1,327 Other liabilities 1,8 1,178 1,26 1,373 1,48 Total liabilities 2,815 2,68 2,718 2,925 3,164 Minority interest 392 435 469 523 588 Shareholders' equity 8,18 9,382 1,421 11,613 12,921 Cash flow Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F EBIT 2,549 2,761 2,549 2,812 3,8 Depreciation 275 341 481 648 684 Working capital (842) (24) (235) (37) (421) Other operating items (1,162) (684) (598) (798) (687) Operating cash flow 819 2,214 2,197 2,355 2,656 Net capital expenditure (855) (724) (96) (1,23) (1,152) Free cash flow (36) 1,49 1,237 1,332 1,54 Equity raised/(bought) - - - - - Net borrowings 374 (288) 15 19 31 Other financing (771) (734) (847) (912) (1,1) Net cash flow (433) 468 45 439 534 Cash balances, beginning 1,86 1,426 1,895 2,299 2,738 Ending cash 1,426 1,895 2,299 2,738 3,272 Key ratios Year to 31 Dec 213A 214A 215F 216F 217F ROAE (%) 25.3 23.6 19.7 19.7 19.6 ROAA (%) 18.5 17.4 15. 15.1 15.1 EBITDA margin (%) 17.6 17.9 17. 17.9 18. EBIT margin (%) 15.9 15.9 14.3 14.6 14.7 Net margin (%) 12. 11.9 11. 11.2 11.5 Payout ratio (%) 44.3 51.4 46. 38. 45.5 Current ratio (x) 2.8 3.4 3.5 3.6 3.7 Interest coverage (x) na na na na na Net gearing (%) nc nc nc nc nc Debts to assets (%) 5.2 2.4 2.3 2.2 2.1 Debtor turnover (days) 49 49 5 5 51 Creditor turnover (days) 49 45 44 44 44 Inventory turnover (days) 134 127 13 128 129 231
216 Compendium KAWASAN INDUSTRI JABABEKA BUY PX: IDR221 - TP: IDR27 28A Being the largest industrial estate player by total landbank and having the most diversified businesses (power plant, infrastructure, dryport) among its peers, KIJA is enjoying greater income stability with less FDI dependence ahead due to its 13MW power plant, allowing for the highest recurring income in the sector (9M15: 5% of revenue). In 216, KIJA, attempting to enhance its margins, plans to start the first phase of its JV project in Kendal, Central Java, on 86ha industrial land with Singapore-based land-management company, SembCorp Development. Valuation wise, we maintain our 12-month target price of IDR27 based on a 7% discount to 216F NAV, slightly above the sector s average of 67% given KIJA s large 9M15 USD-debt amounting to USD252mn, which could result in further high FX losses. Risks: Worse-than-expected IDR depreciation and lower-than-expected marketing sales. Share price performance (IDR) 4 35 3 25 2 15 1 3-Dec-14 3-Feb-15 3-Apr-15 3-Jun-15 3-Aug-15 3-Oct-15 3-Dec-15 Volume (RHS) KIJA IJ Px Last (%) (%) 15 1 5 (5) (1) (15) (2) 2.7 11. (5.2) (1.3) (14.9) (17.7) ytd 1M 3M 6M 9M 12M KIJA IJ relative to JCI Source: Bloomberg Sanni Satrio Dwi Utomo (sanni@bahana.co.id) +6221 25581 ext. 3611 *New, please refer to appendix II (') 35, 3, 25, 2, 15, 1, 5, 15 1 5 (5) (1) (15) (2) Financial highlights* Year to 31 Dec 213A 214A 215F 216F 217F Revenues (IDRbn) 2,74 2,799 2,81 3,31 3,291 EBIT (IDRbn) 855 887 756 851 952 Net profit (IDRbn) 11 41 283 431 6 Bahana/consensus (%) - - 37 6 64 EPS (IDR) 5 2 14 21 29 EPS growth (%) (73.5) 29.7 (31.1) 52.6 39.1 EV/EBITDA (x) 6.9 6.7 8.2 7.3 6.4 P/E (x) 43.5 11.1 16.2 1.6 7.6 FCFPS (IDR) (7) (14) (16) 11 18 FCF yield (%) (3.) (6.4) (7.2) 4.8 8.2 BVPS (IDR) 197 211 219 236 259 P/BV (x) 1.1 1. 1..9.9 DPS (IDR) 6 4 6 9 Div. yield (%).2 2.6 1.9 2.8 3.9 note: based on 3 December 215 closing price NAV-derived target price calculation NAV Table 9M15 Land bank (Ha) 3,196 Total value (IDRbn) 18,718 NAV/share (IDR) 96 Discount (%) 7 Adjusted NAV/share (IDR) 272 Company information 12M high/low (IDR) : 355/16 12M High/low consensus TP (IDR) : 419/246 Majority shareholder (%) : Meadowood Capital (12.6) Shares outstanding (mn)/free float (%) : 2,662/68.9 Mkt. cap. (IDRbn/USDmn) : 4,566/33 3-m avg.daily t.o.(idrbn/usdmn) : 11.8/.8 Bloomberg/Reuters code : KIJA IJ/KIJA.JK Source: Bloomberg, Reuters; based on 3 December 215 closing price 232
216 Compendium KAWASAN INDUSTRI JABABEKA Profit & loss Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Sales 2,74 2,799 2,81 3,31 3,291 Gross profit 1,171 1,252 1,118 1,229 1,353 EBITDA 951 1,1 895 1, 1,11 Depreciation 96 113 14 148 158 EBIT 855 887 756 851 952 Net interest inc./(expense) (261) (316) (263) (269) (257) Forex gain/(losses) (42) (58) (352) (12) 88 Other income/(expense) 3 46 249 84 (22) Pre-tax profit 24 56 39 564 762 Taxes (1) (166) (114) (14) (169) Minority interest (4) 7 7 7 7 Extraordinary gain/(losses) - - - - - Net profit 11 41 283 431 6 Balance sheet Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Cash and equivalents 595 595 914 1,91 1,141 S-T investments - - - - - Trade receivables 231 292 262 283 37 Inventories 73 66 726 799 879 Fixed assets 2,168 2,228 2,236 2,244 2,252 Other assets 1,149 967 1,8 1,23 1,345 Total assets 8,255 8,55 9,6 1,652 11,636 Interest bearing liabilities 2,572 2,75 3,732 3,846 3,726 Trade payables 187 164 16 113 121 Other liabilities 1,31 975 1,124 1,699 2,313 Total liabilities 4,69 3,843 4,962 5,658 6,161 Minority interest 224 294 19 117 128 Shareholders' equity 3,962 4,367 4,53 4,876 5,347 Cash flow Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F EBIT 855 887 756 851 952 Depreciation 96 113 14 148 158 Working capital (56) (35) (71) (6) (67) Other operating items (392) (725) (387) 86 179 Operating cash flow 53 241 438 1,25 1,222 Net capital expenditure (637) (527) (767) (86) (846) Free cash flow (133) (286) (329) 219 376 Equity raised/(bought) 17 28 - - - Net borrowings 526 132 1,27 115 (12) Other financing (145) 125 (379) (156) (26) Net cash flow 354 (1) 319 177 5 Cash balances, beginning 242 595 595 914 1,91 Ending cash 595 595 914 1,91 1,141 Key ratios Year to 31 Dec 213A 214A 215F 216F 217F ROAE (%) 2.6 9.6 6.4 9.2 11.7 ROAA (%) 1.3 4.8 3.1 4.3 5.4 Gross margin (%) 42.8 44.7 39.8 4.5 41.1 EBITDA margin (%) 34.7 35.7 31.9 33. 33.7 EBIT margin (%) 31.2 31.7 26.9 28.1 28.9 Net margin (%) 3.7 14.3 1.1 14.2 18.2 Payout ratio (%) - 3. 3. 3. 3. Current ratio (x) 4.9 5.1 7.3 7.7 7.6 Interest coverage (x) 3.3 2.8 2.9 3.2 3.7 Net gearing (%) 49.9 48.3 62.2 56.5 48.4 Debtor turnover (days) 23 34 34 34 34 Creditor turnover (days) 24 23 23 23 23 Inventory turnover (days) - - - - - 233
216 Compendium KIMIA FARMA BUY PX: IDR98- TP: IDR1,35* The largest state-owned pharmaceutical company, KAEF, should have several growth catalysts through adding 1 pharmacies p.a. (current: 67), 5 clinics p.a. (current: 215) and several hospitals and hotels under the BOT agreement. KAEF is also benefitting from higher demand for drugs under the National Health Insurance (JKN). The company plans to build a IDR11bn factory in Bekasi to produce six pharmaceutical raw materials and eight high functional chemicals. Furthermore, KAEF plans to start building a second pharmaceutical salt factory in 216 with a capacity of 4,tons p.a.; construction is expected to be completed in 18-24 months. In order to fund expansion, KAEF plans to have a rights issue or an MTN issuance in 216. On valuation, we lower our TP to IDR1,35 on 23x 216F PER (from 18x), justified by its solid 9M15 operating performance. BUY. Risk: continued JKN deficit that curbs growth. Share price performance (IDR) 1,5 1,3 1,1 9 7 5 3-Dec-14 3-Feb-15 3-Apr-15 3-Jun-15 3-Aug-15 3-Oct-15 3-Dec-15 Volume (RHS) KAEF IJ Px Last (%) (%) 4 3 2 1 (1) (2) (3) (19.9) 13.2 3.7 3.9 (12.) ytd 1M 3M 6M 9M 12M KAEF IJ relative to JCI Source: Bloomberg Michael W. Setjoadi (michael@bahana.co.id) +6221 25581 ext. 3613 *New, please refer to appendix II (') 3, 25, 2, 15, 1, 5, 4 3 2 1 (1) (2) (21.) (3) Financial highlights Year to 31 Dec 213A 214A 215F 216F 217F Revenues (IDRbn) 4,348 4,521 5,7 5,754 6,599 EBIT (IDRbn) 25 286 342 422 524 Net profit (IDRbn) 215 235 279 327 396 Bahana/consensus (%) - - 97 92 112 EPS (IDR) 39 42 5 59 71 EPS growth (%) 4.6 9.4 19.1 17.1 21. EV/EBITDA (x) 19.1 17. 15.3 12.9 1.5 P/E (x) 25.4 23.2 19.5 16.6 13.7 FCFPS (IDR) 25 37 (63) (12) 21 FCF yield (%).. (.1) (.). BVPS (IDR) 29 322 36 44 458 P/BV (x) 3.4 3. 2.7 2.4 2.1 DPS (IDR) 1 11 13 15 18 Div. yield (%) 1. 1.1 1.3 1.5 1.8 note: based on 3 December 215 closing price Major assumptions Year to 31 Dec 213A 214A 215F 216F 217F Generic to sales proportion (%) 12.6 15.5 17.1 18.3 18.6 BPJS members (mn) 116 135 15 17 195 Company information 12M high/low (IDR) : 1,465/615 12M high/low consensus TP (IDR) : 1,37/1,2 Majority shareholder (%) : Republic of Indonesia (9.) Shares outstanding (mn)/free float (%) : 5,554/1. Mkt. cap. (IDRbn/USDmn) : 5,443/393 3-m avg.daily t.o.(idrbn/usdmn) : 3.8/.3 Bloomberg/Reuters code : KAEF IJ/KAEF.JK Source: Bloomberg, Reuters; based on 3 December 215 closing price 234
216 Compendium KIMIA FARMA Profit & loss Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Sales 4,348 4,521 5,7 5,754 6,599 Gross profit 1,292 1,385 1,546 1,784 2,79 EBITDA 267 36 365 449 554 Depreciation 18 21 23 26 3 EBIT 25 286 342 422 524 Net interest inc./(expense) (9) (22) (28) (36) (44) Forex gain/(losses) 1 9 15 3 (3) Other income/(expense) 42 43 47 51 55 Pre-tax profit 284 316 376 44 532 Taxes (68) (79) (94) (11) (133) Minority interest (1) (2) (2) (2) (3) Extraordinary gain/(losses) - - - - - Net profit 215 235 279 327 396 Balance sheet Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Cash and equivalents 394 573 15 18 6 S-T investments - - - - - Trade receivables 554 525 65 687 788 Inventories 641 687 753 87 991 Fixed assets 499 558 1,93 1,373 1,539 Other assets 384 624 631 71 795 Total assets 2,472 2,968 3,232 3,74 4,172 Interest bearing liabilities 49 335 34 454 454 Trade payables 478 55 552 622 79 Other liabilities 32 317 353 393 44 Total liabilities 848 1,157 1,21 1,469 1,62 Minority interest 16 22 24 27 29 Shareholders' equity 1,68 1,789 1,999 2,244 2,541 Cash flow Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F EBIT 25 286 342 422 524 Depreciation 18 21 23 26 3 Working capital (84) (27) (133) (166) (187) Other operating items 26 18 6 2 2 Operating cash flow 29 298 238 285 369 Net capital expenditure (72) (93) (59) (35) (25) Free cash flow 137 24 (352) (65) 119 Equity raised/(bought) - - - - - Net borrowings 23 285 (31) 15 Other financing (83) (31) (41) (127) (167) Net cash flow 78 179 (424) (42) (48) Cash balances, beginning 316 394 573 15 18 Ending cash 394 573 15 18 6 Key ratios Year to 31 Dec 213A 214A 215F 216F 217F ROAE (%) 14.1 13.8 14.8 15.4 16.5 ROAA (%) 9.4 8.6 9. 9.4 1. Gross margin (%) 29.7 3.6 3.5 31. 31.5 EBITDA margin (%) 6.1 6.8 7.2 7.8 8.4 EBIT margin (%) 5.7 6.3 6.7 7.3 7.9 Net margin (%) 4.9 5.2 5.5 5.7 6. Payout ratio (%) 25. 25. 25. 25. 25. Current ratio (x) 2.8 2.4 2.4 2. 2. Interest coverage (x) 28.9 13. 12.2 11.7 11.9 Net gearing (%) nc nc 7.7 15.4 15.5 Debtor turnover (days) 42 43 44 44 44 Creditor turnover (days) 45 49 57 57 57 Inventory turnover (days) 7 7 77 78 8 235
216 Compendium KRAKATAU STEEL REDUCE PX: IDR34 - TP: IDR275 Despite rising steel demand for infra-related projects, KRAS, the largest steel maker in Indonesia, should remain negatively affected by the weak steel price amid China s economic slowdown. These conditions likely warrant continued sub-par performance of KRAS s main affiliated company, Krakatau Posco (9M15 net loss: USD85mn). Delays in the planned IDR1.5tn state capital injection might force KRAS to further raise its debt level (9M15: USD1.4bn) to complete a blast furnace construction and develop a new 1.5mnt hot strip mill plant. Greater government support through a tighter set of rules is also required to curb steel imports, which have flooded the local market and cut KRAS s HRC market share to 34% (214: 45%). We retain our DCF-based TP of IDR275 (WACC 1.2%) and REDUCE rating on sluggish earnings prospects despite an improved gearing level post its USD1.1bn land revaluation. Risk: Gas price cuts. Share price performance (IDR) 55 5 45 4 35 3 25 3-Dec-14 3-Feb-15 3-Apr-15 3-Jun-15 3-Aug-15 3-Oct-15 3-Dec-15 Volume (RHS) KRAS IJ Px Last (%) (%) (5) (1) (15) (2) (25) (3) (24.3) (1.7) (6.) (1.2) (17.9) (21.2) ytd 1M 3M 6M 9M 12M KRAS IJ relative to JCI Source: Bloomberg Bob Setiadi (bob.setiadi@bahana.co.id) +6221 25581 ext.365 (') 12, 1, 8, 6, 4, 2, (5) (1) (15) (2) (25) (3) Financial highlights Year to 31 Dec 213A 214A 215F 216F 217F Revenues (USDmn) 2,84 1,869 1,382 1,496 1,659 EBIT (USDmn) (4) (18) (183) (117) (14) Net profit (USDmn) (14) (15) (218) (188) (179) Bahana/cons.(%) - - na na na EPS (IDR) (9) (113) (186) (173) (161) EPS growth (%) na na na na na EV/EBITDA (x) 52.5 na na na na P/E (x) na na na na na FCFPS (IDR) (36) (215) (268) (262) (26) FCF yield (%) (11.4) (68.2) (85.1) (83.2) (82.5) BVPS (IDR) 694 664 1,446 1,388 1,188 P/BV (x).4.5.2.2.3 DPS (IDR) - - - - - Div. yield (%) - - - - - note: based on 3 December 215 closing price Major assumptions Year to 31 Dec 213A 214A 215F 216F 217F HRC price (USD per ton) 666 645 484 435 457 CRC price (USD per ton) 799 756 65 556 584 Company information 12M high/low (IDR) : 55/32 12M high/low consensus TP (IDR) : na / na Majority shareholder (%) : Republic of Indonesia (8.) Shares outstanding (mn)/free float (%) : 15,775/2. Mkt. cap. (IDRbn/USDmn) : 4,796/346 3-m avg.daily t.o.(idrbn/usdmn) : 2./.1 Bloomberg/Reuters code : KRAS IJ/KRAS.JK Source: Bloomberg, Reuters based on 3 December 215 closing price 236
216 Compendium KRAKATAU STEEL Profit & loss Year to 31 Dec (USDmn) 213A 214A 215F 216F 217F Sales 2,84 1,869 1,382 1,496 1,659 Gross profit 96 41 (37) 32 51 EBITDA 22 (39) (113) (47) (32) Depreciation 62 69 69 7 72 EBIT (4) (18) (183) (117) (14) Net interest inc./(expense) (39) (46) (75) (86) (98) Forex gain/(losses) 37 4 8 29 (4) Other income/(expense) 27 (33) (88) (56) (14) Pre-tax profit (15) (183) (265) (23) (22) Taxes 1 26 4 35 33 Minority interest () 7 7 8 8 Extraordinary gain/(losses) - - - - - Net profit (14) (15) (218) (188) (179) Balance sheet Year to 31 Dec (USDmn) 213A 214A 215F 216F 217F Cash and equivalents 19 237 124 141 152 S-T investments 8 - - - - Trade receivables 276 249 197 213 236 Inventories 519 481 389 41 44 Fixed assets 858 1,97 2,362 2,443 2,521 Other assets 528 535 541 563 585 Total assets 2,38 2,598 3,613 3,761 3,935 Interest bearing liabilities 1,6 1,34 1,54 1,84 2,14 Trade payables 18 23 175 181 198 Other liabilities 141 163 187 217 251 Total liabilities 1,327 1,77 1,93 2,238 2,59 Minority interest 2 13 14 16 17 Shareholders' equity 1,32 879 1,695 1,57 1,327 Cash flow Year to 31 Dec (USDmn) 213A 214A 215F 216F 217F EBIT (4) (18) (183) (117) (14) Depreciation 62 69 69 7 72 Working capital 82 139 131 (4) (21) Other operating items 13 (75) (32) (83) (87) Operating cash flow 117 24 (14) (134) (141) Net capital expenditure (171) (38) (3) (15) (15) Free cash flow (53) (284) (314) (284) (291) Equity raised/(bought) (1) - - - Net borrowings 23 334 2 3 3 Other financing (5) (2) 1 1 2 Net cash flow (8) 47 (113) 17 11 Cash balances, beginning 27 19 237 124 141 Ending cash 19 237 124 141 152 Key ratios Year to 31 Dec 213A 214A 215F 216F 217F ROAE (%) (1.3) (15.7) (16.9) (11.8) (12.7) ROAA (%) (.6) (6.) (7.) (5.1) (4.7) Gross margin (%) 4.6 2.2 (2.7) 2.1 3.1 EBITDA margin (%) 1.1 (2.1) (8.2) (3.1) (2.) EBIT margin (%) (1.9) (5.8) (13.2) (7.8) (6.3) Net margin (%) (.7) (8.) (15.8) (12.6) (1.8) Payout ratio (%) - - - - - Current ratio (x) 1.1 1..7.6.5 Interest coverage (x) na na na na na Net gearing (%) 79.1 125.6 83.6 112.8 149.8 Debtor turnover (days) 58 51 52 52 52 Creditor turnover (days) 41 38 45 45 45 Inventory turnover (days) 17 1 1 1 1 237
216 Compendium LIPPO CIKARANG BUY PX: IDR7,525 - TP: IDR8,3* With the largest residential and commercial portfolio (9M15: 57% of total revenue) among its peers, LPCK continues to shift its focus from industrial estates to residential and commercial sales, allowing for the generation of IDR1.8tn (+11.4% y-y) in 9M15 revenue. On industrial land, LPCK only expects 215 marketing sales of IDR3bn, 12% of the management s initial full-year target of IDR2.5tn. Despite strong 9M15 marketing sales of IDR2tn, up 36% y-y and in line with the company s full-year 215 target, LPCK has raised its target from the Orange County (OC) mega project by 5% to IDR1.5tn resulting in a IDR3tn pre-sales target. In 216, we expect LPCK s revenue to jump 19% y-y on solid 215 OC marketing sales. We apply a 6% discount to our 216F NAV to derive our higher IDR8,3 TP backed by its sustainable projects. BUY. Risk: Lowerthan-expected marketing sales on unsuccessful projects. Share price performance (IDR) (') 14, 6, 13, 5, 12, 11, 4, 1, 3, 9, 2, 8, 7, 1, 6, 3-Dec-14 3-Feb-15 3-Apr-15 3-Jun-15 3-Aug-15 3-Oct-15 3-Dec-15 Volume (RHS) LPCK IJ Px Last (%) (%) 1 9.5 1 5 (5) (1) (15) (2) (25) (14.5) (7.8) (18.3) (19.7) (15.1) ytd 1M 3M 6M 9M 12M LPCK IJ relative to JCI Source: Bloomberg Sanni Satrio Dwi Utomo (sanni@bahana.co.id) +6221 25581 ext. 3611 *New, please refer to appendix II 5 (5) (1) (15) (2) (25) Financial highlights* Year to 31 Dec 213A 214A 215F 216F 217F Revenues (IDRbn) 1,328 1,792 1,828 2,183 2,589 EBIT (IDRbn) 634 914 9 1,63 1,284 Net profit (IDRbn) 591 844 97 1,152 1,334 Bahana/consensus (%) - - 12 119 115 EPS (IDR) 849 1,212 1,394 1,655 1,917 EPS growth (%) 45.1 42.9 15. 18.7 15.8 EV/EBITDA (x) 7.7 5.4 5.4 4.6 3.7 P/E (x) 8.9 6.2 5.4 4.5 3.9 FCFPS (IDR) (844) (616) (396) (638) (372) FCF yield (%) (11.2) (8.2) (5.3) (8.5) (4.9) BVPS (IDR) 2,613 3,838 5,221 6,878 8,796 P/BV (x) 2.9 2. 1.4 1.1.9 DPS (IDR) - - - - - Div. yield (%) - - - - - note: based on 3 December 215 closing price NAV-derived target price calculation NAV Table 9M15 Land bank (Ha) 675 Total value (IDRbn) 14,439 NAV/share (IDR) 2,745 Discount (%) 6 Adjusted NAV/share (IDR) 8,298 Company information 12M high/low (IDR) : 12,25/6,25 12M High/low consensus TP (IDR) : 14,3/7,9 Majority shareholder (%) : Kemuning Satiatama (42.2) Shares outstanding (mn)/free float (%) : 696/57.8 Mkt. cap. (IDRbn/USDmn) : 5,237/378 3-m avg.daily t.o.(idrbn/usdmn) : 6.1/.4 Bloomberg/Reuters code : LPCK IJ/LPCK.JK Source: Bloomberg, Reuters; based on 3 December 215 closing price 238
216 Compendium LIPPO CIKARANG Profit & loss Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Sales 1,328 1,792 1,828 2,183 2,589 Gross profit 743 1,57 1,44 1,233 1,483 EBITDA 641 925 98 1,72 1,294 Depreciation 7 11 8 9 1 EBIT 634 914 9 1,63 1,284 Net interest inc./(expense) 22 12 2 2 3 Forex gain/(losses) 6 (2) 12 4 (4) Other income/(expense) 4 19 148 196 167 Pre-tax profit 666 942 1,8 1,283 1,477 Taxes (75) (98) (11) (131) (142) Minority interest - - - - - Extraordinary gain/(losses) - - - - - Net profit 591 844 97 1,152 1,334 Balance sheet Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Cash and equivalents 38 246 337 316 425 S-T investments - - - - - Trade receivables 6 66 1 12 142 Inventories 2,51 2,882 3,257 3,68 4,48 Fixed assets 53 54 61 67 73 Other assets 923 1,62 2,32 3,489 4,664 Total assets 3,854 4,31 6,57 7,672 9,352 Interest bearing liabilities - - - - - Trade payables - 4 - - - Other liabilities 2,35 1,598 2,423 2,885 3,23 Total liabilities 2,35 1,638 2,423 2,885 3,23 Minority interest - - - - - Shareholders' equity 1,819 2,671 3,634 4,787 6,122 Cash flow Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F EBIT 634 914 9 1,63 1,284 Depreciation 7 11 8 9 1 Working capital (556) (377) (447) (44) (387) Other operating items 98 (663) 839 479 32 Operating cash flow 183 (115) 1,3 1,111 1,29 Net capital expenditure (77) (314) (1,575) (1,555) (1,468) Free cash flow (587) (429) (276) (444) (259) Equity raised/(bought) - 8 (8) - - Net borrowings - - - - - Other financing 585 358 375 423 368 Net cash flow (2) (63) 91 (21) 19 Cash balances, beginning 31 38 246 337 316 Ending cash 38 246 337 316 425 Key ratios Year to 31 Dec 213A 214A 215F 216F 217F ROAE (%) 38.8 37.6 3.8 27.4 24.5 ROAA (%) 17.7 2.7 18.7 16.8 15.7 Gross margin (%) 55.9 59. 57.1 56.5 57.3 EBITDA margin (%) 48.3 51.6 49.7 49.1 5. EBIT margin (%) 47.7 51. 49.2 48.7 49.6 Net margin (%) 44.5 47.1 53.1 52.8 51.5 Payout ratio (%) - - - - - Current ratio (x) 36. 25. 38.5 39.4 4.6 Interest coverage (x) na na na na na Net gearing (%) nc nc nc nc nc Debtor turnover (days) 16 2 2 2 2 Creditor turnover (days) - - - - - Inventory turnover (days) - - - - - 239
216 Compendium LIPPO KARAWACI REDUCE PX: IDR1,32 - TP: IDR1,13 LPKR, the largest property developer by total assets in our coverage, is facing soft demand causing a recent severe 33% cut in its 215 marketing-sales target to IDR4tn (Bahana: IDR3.6tn). However, we see some operating support for LPKR on the back of its REIT asset-sales target, which was recently raised by 15% to IDR1.5tn. Going into 216, LPKR s REITs, in the form of Lippo Mall Jogja, on top of the originally-planned Lippo Mall Kuta, should boost revenue growth by 21% y-y to over IDR11tn. However, we note that REITs are a lower-margin business for LPKR. On valuation, our TP at IDR1,13 is based on 6% discount to our 216F NAV. 14% downside to our TP and 43% YTD market outperformance have us retaining our REDUCE call as most good news related to SILO and LPCK are priced in. Risks: Stronger IDR due to large USD83mn debt and sentiment from government policies. Share price performance (IDR) (') 1,6 35, 1,5 3, 1,4 25, 1,3 2, 1,2 15, 1,1 1, 1, 9 5, 8 3-Dec-14 3-Feb-15 3-Apr-15 3-Jun-15 3-Aug-15 3-Oct-15 3-Dec-15 Volume (RHS) LPKR IJ Px Last (%) (%) 5 4 3 2 1 42.6 5.1 22.8 ytd 1M 3M 6M 9M 12M LPKR IJ relative to JCI Source: Bloomberg Sanni Satrio Dwi Utomo (sanni@bahana.co.id) +6221 25581 ext. 3611 *New, please refer to appendix II 18.9 31.5 27.5 5 4 3 2 1 Financial highlights* Year to 31 Dec 213A 214A 215F 216F 217F Revenues (IDRbn) 6,666 11,655 9,156 11,116 1,785 EBIT (IDRbn) 1,512 3,277 2,237 2,841 2,9 Net profit (IDRbn) 1,228 2,547 1,257 1,894 2,81 Bahana/cons.(%) - - 78 113 11 EPS (IDR) 53 11 54 82 9 EPS growth (%) 15.8 17.4 (5.7) 5.7 9.9 EV/EBITDA (x) 2.2 1.1 14.6 12.1 11.7 P/E (x) 24.8 12. 24.2 16.1 14.6 FCFPS (IDR) (17) 4 (39) (27) 37 FCF yield (%) (8.1).3 (3.) (2.) 2.8 BVPS (IDR) 555 676 714 783 852 P/BV (x) 2.4 2. 1.8 1.7 1.5 DPS (IDR) 14 16 14 21 23 Div. yield (%) 1.1 1.2 1. 1.6 1.7 note: based on on 3 December 215 closing price NAV-derived target price calculation 9M15 Land bank (Ha) 1,274 Total value (IDRbn) 65,226 NAV/share (IDR) 2,826 Discount (%) 6 Adjusted NAV/share (IDR) 1,13 Company information 12M high/low (IDR) : 1,46/975 12M High/low consensus TP (IDR) : 1,52/842 Majority shareholder (%) : Pacific Asia Holding (17.9) 9) Share outstanding (m)/free float (%) : 23,78/94.7 Mkt. cap. (IDRbn/USDmn) : 3,463/2,2 3-m avg.daily t.o.(idrbn/usdmn) : 88.9/2.4 Bloomberg/Reuters code : LPKR IJ/LPKR.JK Source: Bloomberg, Reuters; based on 3 December 215 closing price 24
216 Compendium LIPPO KARAWACI Profit & loss Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Sales 6,666 11,655 9,156 11,116 1,785 Gross profit 3,47 5,397 4,197 5,26 4,979 EBITDA 1,87 3,666 2,645 3,284 3,38 Depreciation 295 389 49 442 48 EBIT 1,512 3,277 2,237 2,841 2,9 Net interest inc./(expense) (27) (122) (21) (55) (62) Forex gain/(losses) (33) 182 (412) (115) 111 Other income/(expense) 472 358 162 181 194 Pre-tax profit 1,925 3,695 1,966 2,853 3,143 Taxes (332) (56) (375) (456) (448) Minority interest (364) (588) (334) (53) (615) Extraordinary gain/(losses) - - - - - Net profit 1,228 2,547 1,257 1,894 2,81 Balance sheet Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Cash and equivalents 1,855 3,529 3,79 2,68 2,342 S-T investments 6,778 8,111 8,354 8,65 8,863 Trade receivables 772 951 1,24 1,458 1,414 Inventories 13,894 16,553 18,313 2,563 22,814 Fixed assets 2,811 3,29 4,79 5,735 5,953 Other assets 5,19 5,48 6,183 7,588 8,943 Total assets 31,3 37,761 41,923 46,557 5,329 Interest bearing liabilities 7,88 9,997 11,297 11,848 11,297 Trade payables 398 395 753 911 884 Other liabilities 8,918 9,723 11,762 13,95 16,534 Total liabilities 17,123 2,115 23,811 26,79 28,715 Minority interest 1,377 2,41 1,63 1,786 1,945 Shareholders' equity 12,81 15,65 16,482 18,61 19,669 Cash flow Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F EBIT 1,512 3,277 2,237 2,841 2,9 Depreciation 295 389 49 442 48 Working capital (39) 788 294 (5) 112 Other operating items (2,39) (4,52) (1,358) (1,628) (586) Operating cash flow (893) 42 1,581 1,651 2,96 Net capital expenditure (1,57) (315) (2,485) (2,263) (2,46) Free cash flow (2,462) 86 (94) (612) 859 Equity raised/(bought) - - - - - Net borrowings 1,793 2,19 1,299 552 (552) Other financing (813) (62) (846) (41) (574) Net cash flow (1,482) 1,674 (45) (471) (266) Cash balances, beginning 3,337 1,855 3,529 3,79 2,68 Ending cash 1,855 3,529 3,79 2,68 2,342 Key ratios Year to 31 Dec 213A 214A 215F 216F 217F ROAE (%) 1.5 17.9 7.8 11. 11. ROAA (%) 4.4 7.4 3.2 4.3 4.3 Gross margin (%) 45.7 46.3 45.8 45.2 46.2 EBITDA margin (%) 27.1 31.5 28.9 29.5 31.3 EBIT margin (%) 22.7 28.1 24.4 25.6 26.9 Net margin (%) 18.4 21.9 13.7 17. 19.3 Payout ratio (%) 26.1 14.9 25. 25. 25. Current ratio (x) 5.3 5.4 4.8 4.9 5.2 Interest coverage (x) 56.6 26.8 17.5 51.7 46.6 Net gearing (%) 46.5 41.4 49.9 51.2 45.5 Debtor turnover (days) 48 48 48 48 48 Creditor turnover (days) 3 3 3 3 3 Inventory turnover (days) - - - - - 241
216 Compendium LONDON SUMATRA INDONESIA BUY* PX: IDR1,285 - TP: IDR1,87 LSIP, the sector s third-largest CPO player in terms of planted areas with 115k ha (82% palm oil, 15% rubber, 3% others ), plans to slow down new planting to 2k ha/ annum (from 5k ha) in the years ahead due to current unattractive CPO prices. This will allow for lower 215-16F capex of around IDR1tn, a strong cash position and zero debt. Note that LSIP s strong balance sheet allows for the greatest leverage in the sector from higher CPO prices and a stronger USD providing immunity from forex losses. We forecast a 216 revenue of IDR4.7tn, +12% y-y, on a stronger USD and rising CPO prices. As we expect 216 earnings to recover to IDR822bn, +31% y-y, LSIP is our second most preferred stock in the sector with around 46% upside potential to our TP of IDR1,87, based on a 216F PE of 15.5x, at a 35% discount to its Malaysian peers. We upgrade our rating to BUY from Hold. Risks: Lower-than-expected prices and production. Share price performance (IDR) (') 2,1 16, 1,9 14, 12, 1,7 1, 1,5 8, 1,3 6, 4, 1,1 2, 9 3-Dec-14 3-Feb-15 3-Apr-15 3-Jun-15 3-Aug-15 3-Oct-15 3-Dec-15 Volume (RHS) LSIP IJ Px Last (%) (%) 3 2 1 (1) (2) (3) 18.2 (1) (9.6) (15.1) (16.) (2) (19.1) (23.4) (3) ytd 1M 3M 6M 9M 12M LSIP IJ relative to JCI Source: Bloomberg Agustinus Reza Kirana (agustinus.reza@bahana.co.id) +6221 25581 ext. 3616 *New, please refer to appendix II 3 2 1 Financial highlights Year to 31 Dec 213A 214A 215F 216F 217F Revenues (IDRb) 4,134 4,727 4,223 4,748 5,121 EBIT (IDRb) 818 1,192 723 974 1,81 Net profit (IDRb) 769 917 628 825 94 Bahana/consensus (%) - - 96 113 17 EPS (IDR) 113 134 92 121 133 EPS growth (%) (31.1) 19.3 (31.5) 31.3 9.7 EV/EBITDA (x) 7.4 5.4 8.1 6.2 5.5 P/E (x) 11.4 9.6 14. 1.6 9.7 FCFPS (IDR) (6) 2 (6) 37 5 FCF yield (%) (.5) 1.6 (.4) 2.9 3.9 BVPS (IDR) 969 1,58 1,94 1,178 1,262 P/BV (x) 1.3 1.2 1.2 1.1 1. DPS (IDR) 46 54 37 48 53 Div. yield (%) 3.6 4.2 2.9 3.8 4.1 note: based on 3 December 215 closing price Major assumptions Year to 31 Dec 213A 214A 215F 216F 217F FFB nucleus production (k tons) 1,25 1,341 1,38 1,267 1,371 CPO production (k tons) 396 443 453 439 474 Growth (%) (11.5) 11.8 2.1 (3.1) 8.2 ASP CPO (USD/ton) 686 696 56 6 62 Average IDR/USD 1,431 11,875 13,455 14,533 14,115 Company information 12M high/low (IDR) : 2,25/935 12M High/low consensus TP (IDR) : 2,22/1,448 Majority shareholder (%) : Salim Ivomas Pratama (59.5) Shares outstanding (m)/free float (%) : 6,823/4.5 Mkt. cap. (IDRb/USDm) : 8,81/636 3-m avg.daily t.o.(idrb/usdm) : 32.2/2.3 Bloomberg/Reuters code : LSIP IJ/LSIP.JK Source: Bloomberg, Reuters; based on 3 December 215 closing price 242
216 Compendium LONDON SUMATRA INDONESIA Profit & loss Year to 31 Dec (IDRb) 213A 214A 215F 216F 217F Sales 4,134 4,727 4,223 4,748 5,121 Gross profit 1,253 1,636 1,215 1,53 1,647 EBITDA 993 1,372 946 1,224 1,348 Depreciation 175 181 223 251 267 EBIT 818 1,192 723 974 1,81 Net interest inc./(expense) 44 64 53 5 46 Forex gain/(losses) - - - - - Other income/(expense) 135 (67) 38 46 46 Pre-tax profit 997 1,189 815 1,7 1,173 Taxes (228) (272) (187) (245) (269) Minority interest - - - - - Extraordinary gain/(losses) - - - - - Net profit 769 917 628 825 94 Balance sheet Year to 31 Dec (IDRb) 213A 214A 215F 216F 217F Cash and equivalents 1,41 1,357 1,13 1,212 1,295 S-T investments - - - - - Trade receivables 92 85 7 53 57 Inventories 374 38 463 541 579 Fixed assets 5,27 6,18 6,732 7,224 7,732 Other assets 837 815 77 795 86 Total assets 7,975 8,655 9,75 9,824 1,523 Interest bearing liabilities - - - - - Trade payables 311 283 422 475 512 Other liabilities 1,5 1,153 1,191 1,313 1,41 Total liabilities 1,361 1,436 1,613 1,788 1,913 Minority interest - - - - - Shareholders' equity 6,614 7,219 7,462 8,36 8,61 Cash flow Year to 31 Dec (IDRb) 213A 214A 215F 216F 217F EBIT 818 1,192 723 974 1,81 Depreciation 175 181 223 251 267 Working capital 214 (25) (2) (7) (7) Other operating items (5) (271) (96) (147) (175) Operating cash flow 1,157 1,76 829 1,7 1,166 Net capital expenditure (1,198) (937) (867) (815) (826) Free cash flow (41) 14 (38) 255 339 Equity raised/(bought) - - - - - Net borrowings - - - - - Other financing (358) (184) (216) (146) (256) Net cash flow (399) (45) (254) 19 84 Cash balances, beginning 1,799 1,41 1,357 1,13 1,212 Ending cash 1,41 1,357 1,13 1,212 1,295 Key ratios Year to 31 Dec 213A 214A 215F 216F 217F ROAE (%) 11.9 13.3 8.6 1.6 1.9 ROAA (%) 9.9 11. 7.1 8.7 8.9 Gross margin (%) 3.3 34.6 28.8 31.7 32.2 EBITDA margin (%) 24. 29. 22.4 25.8 26.3 EBIT margin (%) 19.8 25.2 17.1 2.5 21.1 Net margin (%) 18.6 19.4 14.9 17.4 17.7 Payout ratio (%) 4.8 4. 4. 4. 4. Current ratio (x) 2.5 2.6 2.2 2.3 2.3 Interest coverage (x) na na na na na Net gearing (%) nc nc nc nc nc Debtor turnover (days) 6 4 6 4 4 Creditor turnover (days) 27 23 37 37 37 Inventory turnover (days) 65 45 56 61 61 243
216 Compendium MALINDO FEED-MILL BUY PX: IDR1,34 - TP: IDR1,85* MAIN, the third-largest listed poultry player, is set to enjoy a DOC price recovery amid the current 6mn parent stock (PS) culling. Out of its 4 segments, including poultry feed (9M15: 69% of revenues) and day-old chicks (DOC) (19%), the fastest-growing segments are broiler chickens (11%) and processed foods (1%). MAIN guides for 15-2% y-y revenue growth in 215-18, with 216F capex of IDR635bn for the following expansion: 19% rise in feed-mill production capacity to 1.5mn tons; DOC: 6% to 26mn chicks; broilers: 13% to 45k tons; and processed foods: 167% to 24k tons. MAIN expects margins to improve in 216 on poultry price support backed by higher purchasing power. Our new IDR1,85 TP (from IDR1,5) reflects a 216F PE of 18x, a 1% discount to CPIN's target PE, sufficient to account for MAIN s much smaller market cap despite good corporate governance execution. Risk: IDR volatility. Share price performance (IDR) (') 2,6 7, 2,4 6, 2,2 5, 2, 4, 1,8 3, 1,6 1,4 2, 1,2 1, 1, 3-Dec-14 3-Feb-15 3-Apr-15 3-Jun-15 3-Aug-15 3-Oct-15 3-Dec-15 Volume (RHS) MAIN IJ Px Last (%) (%) 3 2 1 (1) (2) (3) (4) (23.9) 17.6 14.3 (16.6) (18.3) (34.4) (4) ytd 1M 3M 6M 9M 12M MAIN IJ relative to JCI Source: Bloomberg Michael W. Setjoadi (michael@bahana.co.id) +6221 25581 ext. 3613 *New, please refer to appendix II 3 2 1 (1) (2) (3) Financial highlights Year to 31 Dec 213A 214A 215F 216F 217F Revenues (IDRbn) 4,193 4,52 4,878 5,143 5,765 EBIT (IDRbn) 483 15 195 354 453 Net profit (IDRbn) 242 (85) 9 182 287 Bahana/consensus (%) - - 93 121 168 EPS (IDR) 143 (48) 5 13 163 EPS growth (%) (2.2) (133.7) (11.7) 1,916.1 57.6 EV/EBITDA (x) 27.6 13.5 9.1 9.4 7.9 P/E (x) 9.4 (27.9) 261.1 13. 8.2 FCFPS (IDR) (64) (566) (128) (82) (7) FCF yield (%) (4.8) (42.2) (9.5) (6.1) (5.2) BVPS (IDR) 483 55 55 57 673 P/BV (x) 2.8 2.7 2.7 2.4 2. DPS (IDR) 21-1 21 33 Div. yield (%) 1.6 -.1 1.5 2.4 note: based on 3 December 215 closing price Major assumptions Year to 31 Dec 213A 214A 215F 216F 217F GDP growth (%) 6.7 5.8 5.2 4.8 5.2 Inflation (%) 5.5 8.4 5.9 1.3 6.3 Indo s chicken production (k tons) 1,874 2,35 2,15 2,3 2,5 Animal feed ASP (IDR/kg) 5,738 6,97 6,327 6,456 6,715 Company information 12M high/low (IDR) : 2,475/1,1 12M high/low consensus TP (IDR) : 3,1/1,7 Majority shareholder (%) : Dragon Amity Ltd. (55.9) Shares outstanding (mn)/free float (%) : 2,239/58.7 Mkt. cap. (IDRbn/USDmn) : 3,/217 3-m avg.daily t.o.(idrbn/usdmn) : 1.2/.1 Bloomberg/Reuters code : MAIN IJ/MAIN.JK Source: Bloomberg, Reuters based on 3 December 215 closing price 244
216 Compendium MALINDO FEED-MILL Profit & loss Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Sales 4,193 4,52 4,878 5,143 5,765 Gross profit 718 322 514 7 841 EBITDA 572 141 34 522 642 Depreciation 9 126 146 168 189 EBIT 483 15 195 354 453 Net interest inc./(expense) (66) (91) (11) (116) (12) Forex gain/(losses) (19) (38) (79) (12) 1 Other income/(expense) 3 5 6 7 8 Pre-tax profit 311 (18) 12 233 369 Taxes (69) 24 (3) (51) (81) Minority interest () () () () Extraordinary gain/(losses) - - - - - Net profit 242 (85) 9 182 287 Balance sheet Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Cash and equivalents 83 31 14 251 179 S-T investments - - - - - Trade receivables 32 464 53 53 594 Inventories 392 61 493 52 557 Fixed assets 1,128 1,577 1,831 2,13 2,376 Other assets 39 57 581 611 678 Total assets 2,214 3,531 3,511 3,997 4,384 Interest bearing liabilities 974 1,888 1,861 2,181 2,28 Trade payables 241 418 336 342 379 Other liabilities 136 147 188 22 223 Total liabilities 1,352 2,453 2,385 2,724 2,882 Minority interest (3) (2) (3) (3) (3) Shareholders' equity 865 1,81 1,13 1,276 1,56 Cash flow Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F EBIT 483 15 195 354 453 Depreciation 9 126 146 168 189 Working capital (175) (258) (17) (41) (16) Other operating items (143) (37) (149) (186) (197) Operating cash flow 254 (424) 174 295 339 Net capital expenditure (363) (574) (4) (44) (462) Free cash flow (19) (998) (226) (145) (123) Equity raised/(bought) - 336 - - - Net borrowings 153 914 (28) 32 99 Other financing (51) 311 48 (28) (48) Net cash flow (8) 227 (26) 147 (72) Cash balances, beginning 91 83 31 14 251 Ending cash 83 31 14 251 179 Key ratios Year to 31 Dec 213A 214A 215F 216F 217F ROAE (%) 31.2 (8.7).8 15.2 2.7 ROAA (%) 12. (3.).3 4.9 6.9 Gross margin (%) 17.1 7.2 1.5 13.6 14.6 EBITDA margin (%) 13.7 3.1 7. 1.1 11.1 EBIT margin (%) 11.5.3 4. 6.9 7.9 Net margin (%) 5.8 (1.9).2 3.5 5. Payout ratio (%) 14.8-2. 2. 2. Current ratio (x) 1. 1.1 1..9.9 Interest coverage (x) 7.4.2 1.8 3.1 4.4 Net gearing (%) 13.1 146.1 155.5 151.3 139.5 Debtor turnover (days) 26 38 38 43 43 Creditor turnover (days) 25 37 28 28 28 Inventory turnover (days) 9 7 9 9 9 245
216 Compendium MATAHARI DEPARTMENT STORE BUY PX: IDR15,95 - TP: IDR19,8* LPPF, the sole listed retail player focusing on the mid-income segment, has opened 11 stores in 215 despite economic slowdown, while retaining the sector s highest 9M15 SSSG of 6.6%. In 216, on a gradual improvement in the economy, SSSG should return to doubledigit levels, backed by the most extensive network of 141 outlets. Going forward, we look for top-line growth to be supported by expansion in underpenetrated and vast areas ex-java, while on the cost front, LPPF s leased stores, low capex and planned IDR7bn debt repayment should help maintain 216 profit margins. Purchasing-power resilience of the mid-income segment would allow sustained growth for LPPF. Hence, we retain our positive view with a IDR19,8 TP (from IDR18,2), reflecting a 216F PER of 26x, 25% premium to the sector, justified on its large cap and low competition. Risk: More competition in outlying areas with above-average growth. Share price performance (IDR) 2, 19, 18, 17, 16, 15, 14, 3-Dec-14 3-Feb-15 3-Apr-15 3-Jun-15 3-Aug-15 3-Oct-15 3-Dec-15 Volume (RHS) LPPF IJ Px Last (%) (%) 25 2 15 1 5 (5) (1) 19.5 (.2) (6.1) ytd 1M 3M 6M 9M 12M LPPF IJ relative to JCI Source: Bloomberg Michael W. Setjoadi (michael@bahana.co.id) +6221 25581 ext.3613 *New, please refer to appendix II 2.9 5.6 17.1 (') 2, 25 2 15 1 5 (5) 15, 1, 5, (1) Financial highlights* Year to 31 Dec 213A 214A 215F 216F 217F Revenues (IDRbn) 6,754 7,926 9,34 1,872 12,699 EBIT (IDRbn) 1,781 2,111 2,474 2,868 3,346 Net profit (IDRbn) 1,15 1,419 1,859 2,219 2,62 Bahana/consensus (%) - - 99 96 94 EPS (IDR) 394 486 637 76 898 EPS growth (%) 49.2 23.4 31. 19.3 18.1 EV/EBITDA (x) 23.8 19.9 16.5 13.7 11.2 P/E (x) 4.5 32.8 25. 21. 17.8 P/Sales 6.9 5.9 5. 4.3 3.7 FCFPS (IDR) 373 477 627 755 962 FCF yield (%) 2.3 3. 3.9 4.7 6. BVPS (IDR) (268) 61 54 1,9 1,63 P/BV (x) - 262.1 31.7 15.8 1. DPS (IDR) 46 195 255 34 359 Div. yield (%) 2.9 1.2 1.6 1.9 2.3 note: based on 3 December 215 closing price Major assumptions Year to 31 Dec 213A 214A 215F 216F 217F Net revenue growth (%) 2.2 17.3 17.9 16.4 16.8 Same-store sales growth (%) 12.1 1.1 5.4 6.8 7.7 Number of outlets (stores) 125 131 142 152 162 Company information 12M high/low (IDR) : 19,95/14,2 12M High/low consensus TP (IDR) : 21,3/14, Majority shareholder (%) : Multipolar Tbk (2.5) Shares outstanding (mn)/free float (%) : 2,918/79.5 Mkt. cap. (IDRbn/USDmn) : 46,541/3,359 3-m avg.daily t.o.(idrbn/usdmn) : 58.5/4.2 Bloomberg/Reuters code : LPPF IJ/LPPF.JK Source: Bloomberg, Reuters; based on 3 December 215 closing price 246
216 Compendium MATAHARI DEPARTMENT STORE Profit & loss Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Sales 6,754 7,926 9,34 1,872 12,699 Gross profit 4,363 5,48 5,933 6,869 7,981 EBITDA 1,988 2,339 2,743 3,19 3,727 Depreciation 27 228 269 322 381 EBIT 1,781 2,111 2,474 2,868 3,346 Net interest inc./(expense) (291) (233) (5) 25 7 Forex gain/(losses) - - - - - Other income/(expense) 34 (27) - - - Pre-tax profit 1,524 1,851 2,425 2,893 3,416 Taxes (373) (431) (565) (675) (796) Minority interest - - - - - Extraordinary gain/(losses) - - - - - Net profit 1,15 1,419 1,859 2,219 2,62 Balance sheet Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Cash and equivalents 772 786 1,642 2,899 4,872 S-T investments 26 - - - - Trade receivables 33 45 54 74 73 Inventories 724 955 1,131 1,43 1,627 Fixed assets 727 726 796 842 874 Other assets 655 896 935 998 1,75 Total assets 2,937 3,48 4,558 6,243 8,521 Interest bearing liabilities 1,596 689 25 - - Trade payables 1,266 1,411 1,671 1,962 2,313 Other liabilities 857 1,131 1,168 1,337 1,532 Total liabilities 3,718 3,231 3,89 3,299 3,845 Minority interest - - - - - Shareholders' equity (781) 178 1,469 2,944 4,676 Cash flow Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F EBIT 1,781 2,111 2,474 2,868 3,346 Depreciation 27 228 269 322 381 Working capital 25 (77) 91 (9) 177 Other operating items (681) (637) (667) (611) (685) Operating cash flow 1,332 1,625 2,167 2,57 3,219 Net capital expenditure (244) (232) (339) (368) (413) Free cash flow 1,89 1,392 1,828 2,22 2,86 Equity raised/(bought) - - - - - Net borrowings (1,363) (97) (439) (25) - Other financing 47 (472) (533) (696) (832) Net cash flow (228) 14 856 1,256 1,974 Cash balances, beginning 1, 772 786 1,642 2,899 Ending cash 772 786 1,642 2,899 4,872 Key ratios Year to 31 Dec 213A 214A 215F 216F 217F ROAE (%) - - 225.8 1.6 56. ROAA (%) 39.2 44.7 46.7 41.1 35.5 Gross margin (%) 34.2 34.8 35.7 36.1 36.4 EBITDA margin (%) 15.6 16.1 16.3 16.6 16.8 EBIT margin (%) 13.9 14.6 14.7 14.9 15.1 Net margin (%) 9. 9.8 11.1 11.5 11.8 Payout ratio (%) 4. 4. 4. 4. 4. Current ratio (x).9.8 1.3 1.7 2.1 Interest coverage (x) 6.1 9. 5. na na Net gearing (%) na nc nc nc nc Debtor turnover (days) 4 4 5 5 5 Creditor turnover (days) 191 185 182 183 183 Inventory turnover (days) 94.9 16 112 117 118 247
216 Compendium MATAHARI PUTRA PRIMA BUY PX: IDR1,88 - TP: IDR2,75 We believe that MPPA, Indonesia s second largest hypermarket player, has the edge over Transmart (prev: Carrefour) on its poor inventory system and HERO (Giant) on its labor issue, given MPPA has recently improved its organizational structure by separating the management of its divisions (i.e. Wholesale, Hypermarket, Supermarket/ Minimarket, Health & Beauty). Going forward, 6% of MPPA s expansions would be ex-java to leverage on its logistics infrastructure and distribution network. Aside from SSSG of 5-6% in 216 onwards, we also expect higher margins on minimal wage and rent increases. On valuation, we derive our TP of IDR2,75 from an unchanged 25x 216F PER. BUY on 46% upside to our TP and Temasek s possible divestment. Risk: Intensifying competition as two large overseas retailers, Lulu and Aeon Group, enter the market. Share price performance (IDR) 5, 4,5 4, 3,5 3, 2,5 2, 1,5 3-Dec-14 3-Feb-15 3-Apr-15 3-Jun-15 3-Aug-15 3-Oct-15 3-Dec-15 Volume (RHS) MPPA IJ Px Last (%) (%) (5) (1) (15) (2) (25) (3) (35) (4) (25.2) (9.1) (22.) (37.1) (37.) ytd 1M 3M 6M 9M 12M MPPA IJ relative to JCI Source: Bloomberg Michael W. Setjoadi (michael@bahana.co.id) +6221 25581 ext.3613 (3.5) (') 14, 12, 1, 8, 6, 4, 2, (5) (1) (15) (2) (25) (3) (35) (4) Financial highlights Year to 31 Dec 213A 214A 215F 216F 217F Revenues (IDRbn) 11,913 13,59 14,286 16,331 18,267 EBIT (IDRbn) 389 647 567 738 839 Net profit (IDRbn) 445 554 451 587 666 Bahana/consensus(%) - - 91 12 11 EPS (IDR) 83 13 84 19 124 EPS growth (%) 11.7 24.5 (18.6) 3.3 13.4 EV/EBITDA (x) 15.3 1.3 1.7 8.4 7. P/E (x) 22.7 18.2 22.4 17.2 15.2 FCFPS (IDR) 426.2 126.5 53.8 58.8 76.4 FCF yield (%) 22.7 6.7 2.9 3.1 4.1 BVPS (IDR) 613 53 58 646 72 P/BV (x) 3.1 3.5 3.2 2.9 2.6 DPS (IDR) 186 36 34 44 5 Div. yield (%) 9.9 1.9 1.8 2.3 2.6 note: based on 3 December 215 closing price Major assumptions Year to 31 Dec 213A 214A 215F 216F 217F Total store opening (unit) 35 45 42 33 33 Average selling area (sqm) 599,278 67,877 732,89 8,34 864,259 Ave. Hypermart area / store (sqm) 6,17 6,8 5, 5,5 5,5 Sales (in mn) / sqm 18.4 19.6 17.8 18.8 19.5 Marketing income (IDRbn) 299 525 587 72 842 Company information 12M high/low (IDR) : 4,47/1,875 12M High/low consensus TP (IDR) : 3,97/1,85 Majority shareholder (%) : Multipolar Tbk (5.2) Shares outstanding (mn)/free float (%) : 5,378/18.1 Mkt. cap. (IDRbn/USDmn) : 1,111/731 3-m avg.daily t.o.(idrbn/usdmn) : 16.5/1.2 Bloomberg/Reuters code : MPPA IJ/MPPA.JK Source: Bloomberg, Reuters based on 3 December 215 closing price 248
216 Compendium MATAHARI PUTRA PRIMA Profit & loss Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Sales 11,913 13,59 14,286 16,331 18,267 Gross profit 1,889 2,354 2,52 2,893 3,275 EBITDA 589 99 865 1,93 1,33 Depreciation 2 262 298 355 42 EBIT 389 647 567 738 839 Net interest inc./(expense) (3) 19 26 35 37 Forex gain/(losses) - - - - - Other income/(expense) 2 65 - - - Pre-tax profit 585 731 593 772 876 Taxes (14) (177) (142) (185) (21) Minority interest - - - - - Extraordinary gain/(losses) - - - - - Net profit 445 554 451 587 666 Balance sheet Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Cash and equivalents 1,33 748 1,44 1,141 1,252 S-T investments 63 - - - - Trade receivables 34 31 34 39 44 Inventories 2,274 2,655 2,648 3,19 3,368 Fixed assets 1,87 1,273 1,475 1,68 1,9 Other assets 1,82 1,121 1,36 1,4 1,472 Total assets 6,58 5,827 6,57 7,279 8,36 Interest bearing liabilities 188-2 2 2 Trade payables 1,989 1,893 2,2 2,283 2,546 Other liabilities 1,18 1,85 1,186 1,324 1,418 Total liabilities 3,285 2,979 3,388 3,87 4,164 Minority interest Shareholders' equity 3,295 2,849 3,119 3,472 3,871 Cash flow Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F EBIT 389 647 567 738 839 Depreciation 2 262 298 355 42 Working capital 1,338 (283) (25) (129) (128) Other operating items 841 57 (51) (87) (8) Operating cash flow 2,768 1,133 789 876 1,51 Net capital expenditure (476) (452) (5) (56) (64) Free cash flow 2,292 68 289 316 411 Equity raised/(bought) 44 - - - - Net borrowings (1,815) (188) 2 - - Other financing (977) (1,47) (192) (22) (3) Net cash flow (59) (555) 297 96 111 Cash balances, beginning 1,362 1,33 748 1,44 1,141 Ending cash 1,33 748 1,44 1,141 1,252 Key ratios Year to 31 Dec 213A 214A 215F 216F 217F ROAE (%) 12.5 18. 15.1 17.8 18.1 ROAA (%) 6. 8.9 7.3 8.5 8.7 Gross margin (%) 15.9 17.3 17.5 17.7 17.9 EBITDA margin (%) 4.9 6.7 6.1 6.7 7.1 EBIT margin (%) 3.3 4.8 4. 4.5 4.6 Net margin (%) 3.7 4.1 3.2 3.6 3.6 Payout ratio (%) 224.8 4. 4. 4. 4. Current ratio (x) 1.1 1.1 1.1 1.1 1.1 Interest coverage (x) 112.5 nc nc nc nc Net gearing (%) nc nc nc nc nc Creditor turnover (days) 62 63 62 62 62 Debtor turnover (days) 1 1 1 1 1 Inventory turnover (days) 72 8 82 82 82 249
216 Compendium MAYORA INDAH BUY PX: IDR26,75 - TP: IDR31,* With several household brands targeting low- to middle-income earners, MYOR, Indonesia s largest confectionery manufacturer, should face normalized margins, as benefits from low commodity prices have likely run their course. Robusta s coffee price (in IDR) seems to have bottomed out (+4%) from its lowest 3Q15 level, similar to sugar (+34%) and flour (+7%), while we think MYOR will only raise ASPs when its GPM has reached the 23% level (3Q15 GPM: 29%). A possible catalyst would be the possibility for Indonesia to join the TPP, allowing for the growth of MYOR s exports (46% of 9M15 top line) to other Asian countries (9M15 overseas sales: +29% y-y). Going into 216, we like MYOR s discretionary status, which should benefit from higher GDP growth. Our IDR31, TP (from IDR28,8), based on an unchanged 25x 216F PER, reflects 19% upside potential. Risks: higher raw materials prices and a stronger IDR on the USD. Share price performance (IDR) 32, 3, 28, 26, 24, 22, 2, 18, 3-Dec-14 3-Feb-15 3-Apr-15 3-Jun-15 3-Aug-15 3-Oct-15 3-Dec-15 Volume (RHS) MYOR IJ Px Last (%) (%) 5 4 3 2 1 (1) 38. (4.6) (5.1) ytd 1M 3M 6M 9M 12M MYOR IJ relative to JCI Source: Bloomberg Michael W. Setjoadi (michael@bahana.co.id) +6221 25581 ext. 3613 *New, please refer to appendix II 11.8 23.1 15.4 (') 7 6 5 4 3 2 1 5 4 3 2 1 (1) Financial highlights Year to 31 Dec 213A 214A 215F 216F 217F Revenues (IDRbn) 12,18 14,169 14,886 16,395 18,557 EBIT (IDRbn) 1,35 891 1,697 1,773 1,917 Net profit (IDRbn) 997 44 1,161 1,122 1,218 Bahana/consensus (%) - - 118 16 1 EPS (IDR) 1,115 451 1,298 1,254 1,362 EPS growth (%) 36.6 (59.5) 187.6 (3.4) 8.6 EV/EBITDA (x) 15.1 2.9 11.9 11.2 9.8 P/E (x) 23.4 57.8 2.1 2.8 19.1 FCFPS (IDR) 734 (1,37) 1,941 1,361 1,352 FCF yield (%) 2.6 (4.8) 6.9 4.8 4.8 BVPS (IDR) 4,353 4,585 5,646 6,672 7,784 P/BV (x) 6.5 6.2 4.6 3.9 3.6 DPS (IDR) 197 23 26 251 272 Div. yield (%).8.9 1. 1. 1. note: based on 3 December 215 closing price Major assumptions Year to 31 Dec 213A 214A 215F 216F 217F Confectionaries price growth (%) 1. 7. 5. - 3. Coffee price growth (%) 1.. 1. - 4. A&P to sales (%) 8.6 6.8 11.6 8.5 8. Company information 12M high/low (IDR) : 31,/2,55 12M High/low consensus TP (IDR) : 35,2/24, Majority shareholder (%) : Unita Branindo (32.9) Shares outstanding (mn)/free float (%) : 894.3/66.9 Mkt. cap. (IDRb/USDmn) : 23,32/1,685 3-m avg.daily t.o.(idrbn/usdmn) : 5./.4 Bloomberg/Reuters code : MYOR IJ/MYOR.JK Source: Bloomberg, Reuters; based on 3 December 215 closing price 25
216 Compendium MAYORA INDAH Profit & loss Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Sales 12,18 14,169 14,886 16,395 18,557 Gross profit 2,922 2,535 4,193 4,68 4,46 EBITDA 1,663 1,291 2,16 2,279 2,467 Depreciation 358 399 463 56 549 EBIT 1,35 891 1,697 1,773 1,917 Net interest inc./(expense) (232) (326) (314) (281) (249) Forex gain/(losses) 38 (19) 18 3 (2) Other income/(expense) (25) (17) (4) (5) (5) Pre-tax profit 1,356 53 1,523 1,472 1,598 Taxes (343) (12) (345) (333) (362) Minority interest (17) (6) (18) (17) (19) Extraordinary gain/(losses) - - - - - Net profit 997 44 1,161 1,122 1,218 Balance sheet Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Cash and equivalents 1,86 713 1,441 1,75 1,174 S-T investments - - - - - Trade receivables 2,813 3,81 3,391 3,735 4,227 Inventories 1,456 1,967 1,758 2,26 2,317 Fixed assets 3,114 3,585 3,722 3,816 3,867 Other assets 465 946 1,38 1,137 1,288 Total assets 9,71 1,291 11,35 11,789 12,873 Interest bearing liabilities 3,623 4,353 3,848 3,249 3,49 Trade payables 1,179 955 1,277 1,472 1,684 Other liabilities 1,15 883 1,175 1,1 1,179 Total liabilities 5,816 6,191 6,31 5,821 5,912 Minority interest 86 92 19 127 145 Shareholders' equity 3,88 4,8 4,94 5,84 6,815 Cash flow Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F EBIT 1,35 891 1,697 1,773 1,917 Depreciation 358 399 463 56 549 Working capital (449) (1,531) 175 (464) (658) Other operating items 57 (115) 1 1 1 Operating cash flow 1,271 (355) 2,336 1,817 1,89 Net capital expenditure (614) (87) (6) (6) (6) Free cash flow 657 (1,225) 1,736 1,217 1,29 Equity raised/(bought) 64 - - - - Net borrowings 286 73 (55) (599) (2) Other financing (485) (653) (53) (984) (91) Net cash flow 521 (1,148) 729 (367) 99 Cash balances, beginning 1,34 1,86 713 1,441 1,75 Ending cash 1,86 713 1,441 1,75 1,174 Key ratios Year to 31 Dec 213A 214A 215F 216F 217F ROAE (%) 29.3 1.3 25.9 2.8 19.2 ROAA (%) 11.1 4. 1.7 9.7 9.9 Gross margin (%) 24.3 17.9 28.2 24.8 24. EBITDA margin (%) 13.8 9.1 14.5 13.9 13.3 EBIT margin (%) 1.9 6.3 11.4 1.8 1.3 Net margin (%) 8.3 2.8 7.8 6.8 6.6 Payout ratio (%) 17.7 51. 2. 2. 2. Current ratio (x) 2.4 2.1 2.5 3. 3.3 Interest coverage (x) 5.6 2.7 5.4 6.3 7.7 Net gearing (%) 46.3 9.8 48.7 37.2 27.5 Debtor turnover (days) 47 43 43 43 43 Creditor turnover (days) 84 82 82 82 82 Inventory turnover (days) 58 6 6 6 6 251
216 Compendium MEDCO ENERGI INTERNASIONAL BUY* PX: IDR96 TP: IDR1,3* On the back of the 5% y-y oil price slump, MEDC, Indonesia s largest listed upstream oil company, has seen depressed earnings, eroded in part by impairment costs on each one of MEDC s O&G fields. However, given the severe price underperformance, we are now more positive on MEDC, particularly as its growth helped by its LNG processing plant in Donggi-Senoro, Sulawesi; it had shipped its first cargo to Pertamina Arun s LNG receiving terminal in August 215. Hence, in 216, we expect MEDC s gas business to contribute 36mn boe, around 68% of our revenue forecast. Other gas projects include Aceh s Block A to distribute up to 6mmscfd of gas in 218. At this stage, we believe the low oil price has been reflected in MEDC s share price, and our DCF-based IDR1,3 TP (from IDR2,3) translates to 35% potential upside. Upgrade to BUY from Reduce. Risk: Recurring shale oil boom. Share price performance (IDR) 4,3 3,8 3,3 2,8 2,3 1,8 1,3 8 3-Dec-14 3-Feb-15 3-Apr-15 3-Jun-15 3-Aug-15 3-Oct-15 3-Dec-15 Volume (RHS) medc IJ Px Last (%) (%) (1) (2) (3) (4) (5) (6) (7) (6.7) (11.5) (3.) (53.2) (49.7) ytd 1M 3M 6M 9M 12M medc IJ relative to JCI Source: Bloomberg Arandi Ariantara (arandi@bahana.co.id) +6221 25 581 ext. 3619 *New, please refer to appendix II (') 3, 25, 2, 15, 1, 5, (1) (2) (3) (4) (5) (6) (61.9) (7) Financial highlights* Year to 31 Dec 213A 214A 215F 216F 217F Revenues (USDmn) 887 751 468 666 811 EBIT (USDmn) 248 161 18 163 234 Net profit (USDmn) 13 1 (26) 13 21 Bahana/consensus (%) - - na 81 87 EPS (IDR) 41 37 (18) 55 88 EPS growth (%) 1.7 (1.3) na na 61.2 EV/EBITDA (x) 4.2 4.8 5. 4.4 4. P/E (x) 23.5 26.2 na 17.5 1.8 FCFPS (IDR) 342 (299) (79) (34) (448) FCF yield (%) 35.6 (31.2) (8.2) (3.6) (46.7) BVPS (IDR) 2,874 3,297 3,884 4,61 3,988 P/BV (x).4.3.2.2.2 DPS (IDR) 16 15 na 22 21 Div. yield (%) 1.7 1.5 na 2.3 2.2 note: based on 3 December 215 closing price Major assumptions Year to 31 Dec 213A 214A 215F 216F 217F ASP oil (USD/barrel) 18 97.8 54.1 54.5 57.4 ASP gas (USD/mmbtu) 5.1 5.6 5.6 5.7 5.8 Production per day (MBOED) 54 46 43 61 73 Company information 12M high/low (IDR) : 3,8/96 12M High/low consensus TP (IDR) : 1,3/1,13 Majority shareholder (%) : Encore Energy Pte Ltd. (5.7) Shares outstanding (mn)/free float (%) : 3,332/49. Mkt. cap. (IDRbn/USDmn) : 3,199/234 3-m avg.daily t.o.(idrbn/usdmn) : 2./.2 Bloomberg/Reuters code : MEDC IJ/MEDC.JK Source: Bloomberg, Reuters; based on 3 December 215 closing price 252
216 Compendium MEDCO ENERGI INTERNASIONAL Profit & loss Year to 31 Dec (USDmn) 213A 214A 215F 216F 217F Sales 887 751 468 666 811 Gross profit 365 271 117 272 351 EBITDA 346 254 137 312 411 Depreciation 98 93 12 148 177 EBIT 248 161 18 163 234 Net interest inc./(expense) (65) (61) (55) (63) (78) Forex gain/(losses) - - - - - Other income/(expense) 1 11 15 7 23 Pre-tax profit 192 111 (23) 17 179 Taxes (154) (98) 18 (91) (152) Minority interest (3) (4) 1 (3) (6) Extraordinary gain/(losses) (22) 1 (22) - - Net profit 13 1 (26) 13 21 Balance sheet Year to 31 Dec (USDmn) 213A 214A 215F 216F 217F Cash and equivalents 27 27 22 223 214 S-T investments 253 269 267 266 265 Trade receivables 144 12 6 85 14 Inventories 37 39 27 3 35 Fixed assets 86 89 89 91 92 Other assets 1,742 1,998 2,52 2,23 2,531 Total assets 2,532 2,72 2,716 2,898 3,241 Interest bearing liabilities 1,32 1,186 1,223 1,385 1,695 Trade payables 95 92 62 69 81 Other liabilities 59 54 498 498 498 Total liabilities 1,635 1,782 1,782 1,952 2,274 Minority interest 12 1 9 12 18 Shareholders' equity 885 911 924 933 949 Cash flow Year to 31 Dec (USDmn) 213A 214A 215F 216F 217F EBIT 248 161 18 163 234 Depreciation 98 93 12 148 177 Working capital (3) 35 17 (21) (12) Other operating items (6) (37) 92 (8) (6) Operating cash flow 39 252 247 282 393 Net capital expenditure (24) (334) (266) (29) (5) Free cash flow 15 (83) (19) (8) (17) Equity raised/(bought) - - - - - Net borrowings (32) 194 37 162 31 Other financing (59) (174) (5) (151) (213) Net cash flow (255) (63) 13 3 (9) Cash balances, beginning 525 27 27 22 223 Ending cash 27 27 219 223 214 Key ratios Year to 31 Dec 213A 214A 215F 216F 217F ROAE (%) 1.5 1.1 (2.8) 1.4 2.2 ROAA (%).5.4 (1.).4.7 Gross margin (%) 41.1 36.1 25. 4.9 43.3 EBITDA margin (%) 39. 33.8 29.3 46.8 5.7 EBIT margin (%) 27.9 21.4 3.8 24.6 28.9 Net margin (%) 1.4 1.3 (5.5) 1.9 2.6 Payout ratio (%) 4 4 4 4 4 Current ratio (x) 2. 1.6 1.1 1.4 1.4 Interest coverage (x) 3.8 2.6.3 2.6 3. Net gearing (%) 86.1 17.5 18.5 124.5 156. Debtor turnover (days) 59 49 47 47 47 Creditor turnover (days) 66 7 64 64 64 Inventory turnover (days) 26 3 28 28 28 253
216 Compendium MEDIA NUSANTARA CITRA BUY PX: IDR1,69 - TP: IDR2,* MNCN, Indonesia s biggest media firm by audience share (c. 36%), is facing weak industry-wide TV ad spend this year due to some FMCG companies opting for direct marketing amid the economic slowdown. To raise its market share, MNCN is offering rate card discounts, which should reduce accounts receivable days ahead. As we expect a gradual economic recovery in 216, we look for MNCN s top line to grow 5.% y-y (215F: +.1% y-y), with earnings support from lower programming costs due to completed TV studio integration and a focus on talent search content commanding higher power ratios (particularly RCTI shows). Following its massive share price de-rating, we currently have a BUY on MNCN and a 12M TP of IDR2,, based on a 216F PE of 17.4x, around a 3% sector discount, we think sufficient to account for ongoing litigation risk. Risks: Lower GDP growth and USD25mn debt. Share price performance (IDR) (') 3,25 6, 3, 5, 2,75 2,5 4, 2,25 3, 2, 2, 1,75 1,5 1, 1,25 3-Dec-14 3-Feb-15 3-Apr-15 3-Jun-15 3-Aug-15 3-Oct-15 3-Dec-15 Volume (RHS) MNCN IJ Px Last (%) (%) (5) (1) (15) (2) (25) (3) (2.3) (3.) (6.6) (5.) (27.) ytd 1M 3M 6M 9M 12M MNCN IJ relative to JCI Source: Bloomberg Bagus Adi Yoga Prawira (yoga.prawira@bahana.co.id) +6221 25581 ext.364 *New, please refer to appendix II (17.7) (5) (1) (15) (2) (25) (3) Financial highlights* Year to 31 Dec 213A 214A 215F 216F 217F Revenues (IDRbn) 6,522 6,666 6,675 7,6 7,519 EBIT (IDRbn) 2,56 2,64 2,58 2,724 2,936 Net profit (IDRbn) 1,691 1,762 1,28 1,648 1,99 Bahana/consensus (%) - - 76 84 88 EPS (IDR) 12 123 9 115 139 EPS growth (%) 2.1 2.9 (27.3) 28.7 2.7 EV/EBITDA (x) 8.7 9.4 9.8 9.1 7.1 P/E (x) 14.1 13.7 18.8 14.6 12.1 FCFPS (IDR) 15 (14) 3 62 99 FCF yield (%) 6.2 (8.3).2 3.7 5.8 BVPS (IDR) 549 658 689 764 849 P/BV (x) 3.1 2.6 2.5 2.2 2. DPS (IDR) 35 62 45 58 7 Div. yield (%) 2.1 3.7 2.7 3.4 4.1 note: based on 3 December 215 closing price Major assumptions Year to 31 Dec 213A 214A 215F 216F 217F Advertising rate growth (%) 6.8 3.6.1 4.7 6.7 Programming cost rate growth (%) 7. 9. 1.6 4.5 7.1 G&A costs to revenue (%) 17. 18.7 18.9 18.8 18.6 Company information 12M high/low (IDR) : 3,15/1,5 12M High/low consensus TP (IDR) : 2,8/2,117 Majority shareholder (%) : Global Mediacom (63.5) Shares outstanding (mn)/free float (%) : 14,276/36.4 Mkt. cap. (IDRbn/USDmn) : 24,127/1,743 3-m avg.daily t.o.(idrbn/usdmn) : 12.1/.9 Bloomberg/Reuters code : MNCN IJ/MNCN.JK Source: Bloomberg, Reuters based on 3 December 215 closing price 254
216 Compendium MEDIA NUSANTARA CITRA Profit & loss Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Sales 6,522 6,666 6,675 7,6 7,519 Gross profit 3,672 3,853 3,838 4,39 4,336 EBITDA 2,721 2,779 2,759 2,92 3,153 Depreciation 161 176 179 196 217 EBIT 2,56 2,64 2,58 2,724 2,936 Net interest inc./(expense) (1) 28 (123) (12) (16) Forex gain/(losses) (134) (77) (42) (21) 75 Other income/(expense) (23) (11) (73) (12) (14) Pre-tax profit 2,394 2,544 1,963 2,381 2,892 Taxes (584) (66) (589) (619) (763) Minority interest (119) (121) (94) (114) (138) Extraordinary gain/(losses) - - - - - Net profit 1,691 1,762 1,28 1,648 1,99 Balance sheet Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Cash and equivalents 575 1,132 1,112 1,348 1,879 S-T investments - - - - - Trade receivables 3,62 3,215 3,283 3,46 3,421 Inventories 1,333 1,635 1,576 1,64 1,675 Fixed assets 1,543 2,659 3,766 4,195 4,643 Other assets 3,14 4,968 5,154 5,389 5,56 Total assets 9,615 13,69 14,89 15,941 17,178 Interest bearing liabilities 535 3,199 3,971 3,911 3,798 Trade payables 631 43 567 593 636 Other liabilities 76 613 512 536 617 Total liabilities 1,872 4,216 5,51 5,4 5,51 Minority interest 358 486 535 589 647 Shareholders' equity 7,386 8,97 9,34 1,313 11,479 Cash flow Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F EBIT 2,56 2,64 2,58 2,724 2,936 Depreciation 161 176 179 196 217 Working capital (286) (812) 156 (125) (43) Other operating items (1,96) (1,693) (1,338) (1,11) (85) Operating cash flow 1,339 275 1,577 1,784 2,261 Net capital expenditure (76) (1,287) (1,335) (71) (752) Free cash flow 633 (1,12) 242 1,84 1,59 Equity raised/(bought) (249) 256 - - - Net borrowings (193) 2,665 772 (61) (112) Other financing (145) (1,351) (1,34) (787) (865) Net cash flow 46 557 (2) 236 531 Cash balances, beginning 528 575 1,132 1,112 1,348 Ending cash 575 1,132 1,112 1,348 1,879 Key ratios Year to 31 Dec 213A 214A 215F 216F 217F ROAE (%) 23.4 21.6 14.1 16.8 18.3 ROAA (%) 18.2 15.2 9. 1.7 12. Gross margin (%) 56.3 57.8 57.5 57.6 57.7 EBITDA margin (%) 41.7 41.7 41.3 41.7 41.9 EBIT margin (%) 39.3 39.1 38.6 38.9 39.1 Net margin (%) 25.9 26.4 19.2 23.5 26.5 Payout ratio (%) 29.4 5.1 5. 5. 5. Current ratio (x) 4.2 9.7 8.4 8.2 7.5 Interest coverage (x) 62.4 44.7 14.4 16.1 19. Net gearing (%) nc 23.2 3.7 24.8 16.7 Debtor turnover (days) 159 172 167 166 155 Creditor turnover (days) 81 82 73 73 73 Inventory turnover (days) 158 193 23 197 192 255
216 Compendium MERDEKA COPPER GOLD BUY PX: IDR2,3 TP: IDR2,2 With the second biggest copper resources in Indonesia of 19.3bn lbs and 898k toz in gold proven reserves, MDKA became the 1 st mining company to take advantage of the new IDX regulation allowing greenfield mines to list on the stock exchange. Using the heap leach method for efficient cash costs, MDKA projects start-up production by 217, with a gold production capacity of 9k oz/annum and an estimated production cost of USD451/oz. Having allocated 215 capex of USD51mn, MDKA s 1M15 engineering design had reached 75% and 7% on road construction. In 216, with capex likely to rise to USD76mn, we expect MDKA to generate a net profit of USD16.7mn in 217 and USD46.5mn in 218. Our TP of IDR2,2 is 35% DCF-based (1% WACC) and 65% based on our valuation of its copper resources. BUY. Risk: Mining infrastructure construction delays. Share price performance (IDR) 2,36 2,26 2,16 2,6 1,96 1,86 19-Jun-15 19-Jul-15 19-Aug-15 19-Sep-15 19-Oct-15 19-Nov-15 Volume (RHS) mdka IJ Px Last (') 12, (%) (%) 6 5 4 3 2 1 (1) (2) 4.8 (.8) 1M 3M Since IPO MDKA IJ relative to JCI Source: Bloomberg Arandi Ariantara (arandi@bahana.co.id) +6221 25 581 ext. 3619 1. 1, 8, 6, 4, 2, 6 5 4 3 2 1 (1) (2) Financial highlights Year to 31 Dec 213A 214A 215F 216F 217F Revenues (USDmn) - - - - 62 EBIT (USDmn) (3) (5) (6) (1) 33 Net profit (USDmn) (3) (5) (7) (15) 17 Bahana/consensus (%) - - na na na EPS (IDR) (3) (16) (21) (48) 53 EPS growth (%) na na na na na EV/EBITDA (x) na na na na 4.1 P/E (x) na na na na 35.8 FCFPS (IDR) (48) (69) (183) (295) 65 FCF yield (%) (4.9) (7.1) (18.7) (3.2) 6.7 BVPS (IDR) 61 64 495 447 5 P/BV (x) 16.1 15.2 2. 2.2 2. DPS (IDR) - - - - - Div. yield (%) - - - - - Major assumptions note: based on 3 December 215 closing price Year to 31 Dec 213A 214A 215F 216F 217F Avg. gold price (USD/oz) - - - - 1,2. growth (%) na na na na na Total sales vol. (oz) - - - - 43,569 growth % na na na na na Company information 12M high/low (IDR) : 2,27/1,9 12M High/low consensus TP (IDR) : na/na Majority shareholder (%) : Trimitra Karya Jaya (25.6) Shares outstanding (mn)/free float (%) : 2,74/29.3 Mkt. cap. (IDRbn/USDmn) : 7,246/524 3-m avg.daily t.o.(idrbn/usdmn) :./. Bloomberg/Reuters code : MDKA IJ/MDKA.JK Source: Bloomberg, Reuters; based on 3 December 215 closing price 256
216 Compendium MERDEKA COPPER GOLD Profit & loss Year to 31 Dec (USDmn) 213A 214A 215F 216F 217F Sales - - - - 62 Gross profit - - - - 4 EBITDA (3) (5) (5) (5) 45 Depreciation 2 6 13 EBIT (3) (5) (6) (1) 33 Net interest inc./(expense) (1) (2) (1) (12) Forex gain/(losses) 2 - - - Other income/(expense) () () - - - Pre-tax profit (1) (6) (9) (2) 21 Taxes 1 2 5 (5) Minority interest - - - - - Extraordinary gain/(losses) - - - - - Net profit (1) (5) (7) (15) 17 Balance sheet Year to 31 Dec (USDmn) 213A 214A 215F 216F 217F Cash and equivalents 1 4 5 4 14 Trade receivables - - - - 2 Inventories - - - - 6 Exploration and evaluation 16 89 89 89 89 Fixed assets 1 54 133 123 Other assets 5 4 2 2 3 Total assets 22 127 179 257 263 Interest bearing liabilities - 8 17 19 98 Trade payables 1 2 4 4 Other liabilities 3 25 5 5 5 Total liabilities 3 17 24 117 16 Minority interest Shareholders' equity 18 2 155 14 157 Cash flow Year to 31 Dec (USDmn) 213A 214A 215F 216F 217F EBIT (3) (5) (6) (1) 33 Depreciation 2 6 13 Working capital 1 (1) 3 1 (8) Other operating items 1 () () (5) (16) Operating cash flow (1) (7) (2) (8) 21 Net capital expenditure (14) (15) (55) (85) (1) Free cash flow (15) (22) (57) (93) 21 Equity raised/(bought) 14 7 142 - - Net borrowings - 8 (84) 92 (11) Other financing 3 (62) 1 () - Net cash flow 1 3 1 (1) 1 Cash balances, beginning 1 4 5 4 Ending cash 1 4 5 4 14 Key ratios Year to 31 Dec 213A 214A 215F 216F 217F ROAE (%) (5.3) (26.2) (7.6) (1.2) 11.2 ROAA (%) (4.5) (6.8) (4.3) (6.9) 6.4 Gross margin (%) na na na na 64.6 EBITDA margin (%) na na na na 73. EBIT margin (%) na na na na 52.9 Net margin (%) na na na na 26.8 Payout ratio (%) - - - - - Current ratio (x) na na na na na Interest coverage (x) na na na na.3 Net gearing (%) nc 379.6 7.4 74.5 53.4 Debtor turnover (days) na na na na 37 Creditor turnover (days) na na na na 1 Inventory turnover (days) na na na na 44 257
216 Compendium MITRA ADIPERKASA BUY PX: IDR4,195 - TP: IDR4,75* Indonesia s largest lifestyle retailer, with more than 15 brands and 1,87 stores, MAPI has guided for higher margins in 216-17 through improved inventory management and productivity. Margin support could also stem from specialty and F&B expansion, particularly post the restructuring of its Active Division, Burger King and DOM. In 216, we think the main challenges for MAPI will be a soft top line on competition from H&M and Uniqlo as well as mid-upper segment shoppers downtrading to mid-low retailers like LPPF and RALS. After taking out the effect of non-tax deductible zero-interest coupon bond amort. expense, we set our TP at IDR4,75 based on a 216F P/E of 24x (using core EPS), 15% premium to the sector on its sustained long-term growth coming from its well-known brands like Inditex and Starbucks catering to the growing mid-up segment. Risks: weaker IDR and softer demand causing inventory issues to resurface. Share price performance (IDR) (') 6,5 25, 6, 5,5 2, 5, 15, 4,5 4, 1, 3,5 3, 5, 2,5 3-Dec-14 3-Feb-15 3-Apr-15 3-Jun-15 3-Aug-15 3-Oct-15 3-Dec-15 Volume (RHS) MAPI IJ Px Last (%) 19.6 (%) 2 2 15 14.2 15 1 1 5 5 (5) (5) (4.1) (3.9) (1) (1) (15) (15) (12.9) (2) (14.6) (2) ytd 1M 3M 6M 9M 12M MAPI IJ relative to JCI Source: Bloomberg Bagus Adi Yoga Prawira (yoga.prawira@bahana.co.id) +6221 25581 ext. 364 *New, please refer to appendix II Financial highlights* Year to 31 Dec 213A 214A 215F 216F 217F Revenues (IDRbn) 9,734 11,822 12,76 14,54 16,27 EBIT (IDRbn) 751 525 399 68 778 Net profit (IDRbn) 328 74 34 242 38 Bahana/consensus (%) - - 23 73 76 EPS (IDR) 197 45 21 146 229 EPS growth (%) (24.3) (77.4) (53.7) 65.4 57.4 EV/EBITDA (x) 8. 1.2 1.6 8.1 6.7 P/E** (x) 21.2 94. 9.5 21.2 14.9 FCFPS (IDR) (46) (327) 161 177 123 FCF yield (%) (9.7) (7.8) 3.8 4.2 2.9 BVPS (IDR) 1,463 1,47 1,777 1,94 2,11 P/BV (x) 2.9 2.9 2.4 2.2 2. DPS (IDR) 2 - - 22 34 Div. yield (%).5 - -.5.8 note: based on 3 December 215 closing price **estimated using core EPS Major assumptions Year to 31 Dec 213A 214A 215F 216F 217F Sales growth (%) 28.3 21.4 7.9 1.1 14. Gross profit margin (%) 49.8 46.3 44.8 45.5 46.2 Core net profit* (IDR) 328 74 77 328 467 Core EPS** (IDR) 197 45 46 198 281 Core EPS** growth (%) (24.3) (77.4) 3.9 326.6 42.2 ROAE** (%) 14.3 3. 2.9 1.7 14.1 **excluding the effect from zero-interest bond amortization expense Company information 12M high/low (IDR) : 6,1/2,75 12M High/low consensus TP (IDR) : 7,8/2,5 Majority shareholder (%) : Satya Mulia Gema/ Gajah Tunggal (56.) Share outstanding (mn)/free float (%) : 1,66/44. Mkt. cap. (IDRbn/USDmn) : 6,964/53 3-m avg.daily t.o.(idrbn/usdmn) : 7.5/.5 Bloomberg/Reuters code : MAPI IJ/MAPI.JK Source: Bloomberg, Reuters; based on 3 December closing price 258
216 Compendium MITRA ADIPERKASA Profit & loss Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Sales 9,734 11,822 12,76 14,54 16,27 Gross profit 4,849 5,47 5,716 6,388 7,397 EBITDA 1,168 972 88 1,124 1,344 Depreciation 417 447 481 516 566 EBIT 751 525 399 68 778 Net interest inc./(expense) (233) (376) (36) (291) (292) Forex gain/(losses) (6) 15 (4) (15) 1 Other income/(expense) 27 28 72 79 87 Pre-tax profit 485 192 72 381 574 Taxes (157) (119) (38) (14) (194) Minority interest 1 1 1 1 Extraordinary gain/(losses) - - - - - Net profit 328 74 34 242 38 Balance sheet Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Cash and equivalents 369 513 888 1,282 1,688 S-T investments - - - - Trade receivables 415 496 454 462 527 Inventories 2,942 3,23 3,339 3,465 3,87 Fixed assets 2,59 2,548 2,372 2,346 2,37 Other assets 1,574 1,926 2,146 2,327 2,525 Total assets 7,88 8,686 9,198 9,882 1,917 Interest bearing liabilities 2,775 3,425 3,268 3,45 3,757 Trade payables 1,25 1,154 1,158 1,323 1,49 Other liabilities 1,41 1,599 1,754 1,925 2,113 Total liabilities 5,38 6,178 6,18 6,654 7,36 Minority interest - 69 69 69 69 Shareholders' equity 2,428 2,44 2,949 3,16 3,488 Cash flow Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F EBIT 751 525 399 68 778 Depreciation 417 447 481 516 566 Working capital (751) (394) (89) 31 (24) Other operating items (176) (634) (22) (371) (39) Operating cash flow 242 (57) 571 784 794 Net capital expenditure (915) (486) (34) (49) (59) Free cash flow (674) (542) 266 294 24 Equity raised/(bought) (54) 136 474 - - Net borrowings 639 681 (263) 187 315 Other financing (7) (13) (13) (87) (113) Net cash flow (158) 144 375 395 46 Cash balances, beginning 526 369 513 888 1,282 Ending cash 369 513 888 1,282 1,688 Key ratios Year to 31 Dec 213A 214A 215F 216F 217F ROAE (%) 14.3 3. 1.3 7.9 11.4 ROAA (%) 4.8.9.4 2.5 3.7 Gross margin (%) 49.8 46.3 44.8 45.5 46.2 EBITDA margin (%) 12. 8.2 6.9 8. 8.4 EBIT margin (%) 7.7 4.4 3.1 4.3 4.9 Net margin (%) 3.4.6.3 1.7 2.4 Payout ratio (%) 1.1 - - 15. 15. Current ratio (x) 1.1 1.3 1.9 1.7 1.7 Interest coverage (x) 3.1 1.4 1. 1.9 2.3 Net gearing (%) 99.1 119.4 8.7 67.2 59.3 Debtor turnover (days) 13 14 13 12 12 Creditor turnover (days) 75 68 6 63 63 Inventory turnover (days) 182 177 173 165 161 259
216 Compendium MITRA KELUARGA KARYASEHAT REDUCE PX: IDR2,295 - TP: IDR1,9 As one of Indonesia's leading community hospitals, MIKA is currently undergoing a decelerating growth phase, especially in terms of its inpatient volumes due to the National Health Insurance (JKN) program. In 214, inpatient volumes barely grew.4% y-y, while management expects flat growth in 215F (Bahana: -1.6%). Going forward, MIKA plans to open 6 new greenfield hospitals with 2-bed capacity each in major cities, reflecting a conservative expansion strategy, vs. SILO s 4 new hospitals p.a. Also, MIKA does not see itself participating in the JKN scheme over the long run which is likely to lead to higher migrating patient flows to JKN providers. On valuation, MIKA s 216F EV/EBITDA of 43x (a 19% premium to SILO), bakes in positive earnings surprises, in our view. We have a DCF-based 12-month TP of IDR1,9. REDUCE. Upside risk: Higher demand for better-quality services from private insurance companies. Share price performance (IDR) 3, 2,8 2,6 2,4 2,2 2, 24-Mar-15 24-Apr-15 24-May-15 24-Jun-15 24-Jul-15 24-Aug-15 24-Sep-15 24-Oct-15 Volume (RHS) MIKA IJ Px Last (') 5, 4, 3, 2, 1, (%) (%) 3 2 1 (1) (2) (8.9) (16.7) 1M 3M 6M Since IPO MIKA IJ relative to JCI Source: Bloomberg Renaldy Effendy (renaldy@bahana.co.id) +6221 25581 ext. 366 4.9 25. 3 2 1 (1) (2) Financial highlights Year to 31 Dec 213A 214A 215F 216F 217F Revenues (IDRbn) 1,742 1,946 2,114 2,387 2,743 EBIT (IDRbn) 47 545 58 645 73 Net profit (IDRbn) 44 524 576 657 725 Bahana/consensus (%) - - 98 94 89 EPS (IDR) 29 37 41 44 49 EPS growth (%) 38.3 29.7 8.8 9.3 1.2 EV/EBITDA (x) 56.5 5. 45.7 43.3 38.2 P/E (x) 79.6 61.4 56.4 51.6 46.9 FCFPS (IDR) 24 32 3 32 32 FCF yield (%) 1. 1.4 1.3 1.4 1.4 BVPS (IDR) 122 126 219 223 241 P/BV (x) 18.8 18.2 1.5 1.3 9.5 DPS (IDR) 1 34 34 32 32 Div. yield (%). 1.5 1.5 1.4 1.4 note: based on 3 December 215 closing price Major assumptions Year to 31 Dec 213A 214A 215F 216F 217F Beds occupancy rate (%) 72 64 62 61 6 Ave. IPD length of stay (days) 3.7 3.6 3.6 3.7 3.7 No. of beds in operation 1,484 1,647 1,732 1,895 2,88 No. of hospitals 1 11 12 13 14 Company information 12M high/low (IDR) : 3,23/1,7 12M high/low consensus TP (IDR) : 3,4/1,9 Majority shareholder (%) : Lion Investments Partners BV (49.7) Shares outstanding (mn)/free float (%) : 14,55/18. Mkt. cap. (IDRbn/USDmn) : 33,394 /2,365 3-m avg.daily t.o.(idrbn/usdmn) : 46.3/3.4 Bloomberg/Reuters code : MIKA IJ/MIKA.JK Source: Bloomberg, Reuters; based on 3 December 215 closing price 26
216 Compendium MITRA KELUARGA KARYASEHAT Profit & loss Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Sales 1,742 1,946 2,114 2,387 2,743 Gross profit 737 865 924 1,32 1,175 EBITDA 543 615 654 722 818 Depreciation 73 7 73 77 89 EBIT 47 545 58 645 73 Net interest inc./(expense) 48 8 18 148 147 Forex gain/(losses) - - - - - Other income/(expense) 12 41 41 41 41 Pre-tax profit 53 667 73 834 918 Taxes (118) (133) (145) (166) (182) Minority interest (13) (17) (17) (21) (23) Extraordinary gain/(losses) 5 7 9 11 13 Net profit 44 524 576 657 725 Source: Company, Bahana forecasts Balance sheet Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Cash and equivalents 1,18 97 2,118 2,16 2,1 S-T investments - - - - - Trade receivables 115 132 13 149 171 Inventories 4 39 42 48 56 Fixed assets 598 771 954 1,161 1,429 Other assets 273 245 299 323 351 Total assets 2,134 2,157 3,543 3,787 4,17 Interest bearing liabilities 5 - - - - Trade payables 75 65 89 91 95 Other liabilities 274 286 33 379 433 Total liabilities 399 35 419 469 528 Minority interest 45 63 66 7 73 Shareholders' equity 1,689 1,743 3,58 3,248 3,56 Source: Company, Bahana forecasts Cash flow Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F EBIT 47 545 58 645 73 Depreciation 73 7 73 77 89 Working capital (17) 58 (2) (13) (17) Other operating items (39) 6 17 38 24 Operating cash flow 487 679 669 747 826 Net capital expenditure (16) (243) (256) (284) (357) Free cash flow 327 436 413 463 469 Equity raised/(bought) (4) (3) 1,28 - - Net borrowings (5) (5) - - - Other financing (11) (52) (473) (476) (475) Net cash flow 36 (138) 1,148 (13) (6) Cash balances, beginning 82 1,18 97 2,118 2,16 Ending cash 1,18 97 2,118 2,16 2,1 Source: Company, Bahana forecasts Key ratios Year to 31 Dec 213A 214A 215F 216F 217F ROAE (%) 27. 3.5 24. 2.9 21.5 ROAA (%) 21.2 24.4 2.2 17.9 18.4 Gross margin (%) 42.3 44.4 43.7 43.2 42.8 EBITDA margin (%) 31.2 31.6 3.9 3.2 29.8 EBIT margin (%) 27. 28. 27.5 27. 26.6 Net margin (%) 23.2 26.9 27.2 27.5 26.4 Payout ratio (%) 3.7 89.7 81.5 71.2 64.4 Current ratio (x) 5. 5.8 9.5 8.7 8. Interest coverage (x) na na na na na Net gearing (%) nc nc nc nc nc Debtor turnover (days) 27 24 24 24 22 Creditor turnover (days) 24 23 23 21 21 Inventory turnover (days) 15 13 12 12 12 Source: Company, Bahana forecasts 261
216 Compendium MULTIPOLAR BUY PX: IDR28 - TP: IDR55 Going into 216, MLPL, the holding company of the Lippo Group in retail, multimedia, telecommunication, technology and banking, should benefit from growth recovery backed by its 5.2% ownership in MPPA (Hypermart), which contributes about 8% to MLPL s revenue. Looking ahead, we expect MPPA s performance to be backed by soft increases in minimum wages and rentals. Furthermore, future store expansions will focus on outer islands (6%), which have higher profitability and less competition. We believe MLPL is undervalued, particularly given LINK s subsidiary s IPO plan. By applying a 7% holding company discount factor to the market caps of uncovered listed companies and using the same discount to our TPs of IDR2,75 for MPPA and IDR19,8 for LPPF, we arrive at MLPL s SOTP-based TP of IDR55. Risks: Higher FX losses on huge USD debt and continued poor performance of its Chinese retail subsidiary. Share price performance (IDR) 95 85 75 65 55 45 35 25 3-Dec-14 3-Feb-15 3-Apr-15 3-Jun-15 3-Aug-15 3-Oct-15 3-Dec-15 Volume (RHS) MLPL IJ Px Last (%) (%) (1) (2) (3) (4) (5) (6) (7) (53.2) (14.7) (33.5) (49.9) (53.6) (57.7) ytd 1M 3M 6M 9M 12M MLPL IJ relative to JCI Source: Bloomberg Michael W. Setjoadi (michael@bahana.co.id) +6221 25581 ext.3613 (') 12, 1, 8, 6, 4, 2, (1) (2) (3) (4) (5) (6) (7) Financial highlights Year to 31 Dec 213A 214A 215F 216F 217F Revenues (IDRbn) 14,675 17,74 19,134 22,97 25,298 EBIT (IDRbn) 67 (268) (28) (324) (373) Net profit (IDRbn) 1,415 1,895 (75) (43) (7) Bahana/consensus (%) - - - - - EPS (IDR) 15 188 (7) (4) (1) EPS growth (%) 3,957.4 25.2 na na na EV/EBITDA (x) 1.8 31.1 8.3 1.2 1.5 P/E (x) 1.9 1.5 na na na FCFPS (IDR) (178) 97 (72) (59) (53) FCF yield (%) (1.9) 1. (.7) (.6) (.5) BVPS (IDR) 749 84 84 8 799 P/BV (x).4.3.3.4.4 DPS (IDR) 1 21 28 - - Div. yield (%).4 7.6 1.1 - - note: based on on 3 December 215 closing price Major assumptions Year to 31 Dec 213A 214A 215F 216F 217F MPPA s revenue (IDR bn) 11,913 13,59 14,286 16,331 18,267 Big TV subscribers ( ) - - 5 1, 1,5 Company information 12M high/low (IDR) : 1,/274 12M High/low consensus TP (IDR) : na/na Majority shareholder (%) : Cyport Limited (26.9) Shares outstanding (mn)/free float (%) : 1,65/68 Mkt. cap. (IDRbn/USDmn) : 2,818/24 3-m avg.daily t.o.(idrbn/usdmn) : 2.8/.2 Bloomberg/Reuters code : MLPL IJ/MLPL.JK Source: Bloomberg, Reuters based on 3 December 215 closing price 262
216 Compendium MULTIPOLAR Profit & loss Year to 31 Dec (IDRb) 213A 214A 215F 216F 217F Sales 14,675 17,74 19,134 22,97 25,298 Gross profit 2,64 3,31 3,417 3,946 4,516 EBITDA 655 11 259 284 316 Depreciation 588 379 539 68 688 EBIT 67 (268) (28) (324) (373) Net interest inc./(expense) (188) (266) (313) (31) (315) Forex gain/(losses) 143 - (25) (5) 5 Other income/(expense) 1,778 2,783 498 57 671 Pre-tax profit 1,8 2,248 (12) (69) (11) Taxes (154) (139) 36 21 3 Minority interest (231) (214) 8 5 1 Extraordinary gain/(losses) - - - - - Net profit 1,415 1,895 (75) (43) (7) Balance sheet Year to 31 Dec (IDRb) 213A 214A 215F 216F 217F Cash and equivalents 4,31 2,77 4,249 3,35 2,87 S-T investments - - - - - Trade receivables 349 564 512 591 677 Inventories 2,925 3,47 3,66 4,227 4,84 Fixed assets 3,19 3,451 3,773 4,159 4,61 Other assets 9,661 12,669 11,145 11,828 12,214 Total assets 2,255 22,798 23,339 24,155 25,147 Interest bearing liabilities 2,838 3,319 3,581 3,435 3,294 Trade payables 2,677 2,679 2,997 3,462 3,964 Other liabilities 5,763 6,55 6,834 7,38 8,2 Total liabilities 11,278 12,53 13,413 14,278 15,278 Minority interest 1,924 1,84 1,831 1,826 1,825 Shareholders' equity 7,53 8,456 8,95 8,52 8,44 Cash flow Year to 31 Dec (IDRb) 213A 214A 215F 216F 217F EBIT 67 (268) (28) (324) (373) Depreciation 588 379 539 68 688 Working capital (2,915) (7) (462) (359) (286) Other operating items 1,62 2,378 34 478 579 Operating cash flow (658) 1,787 137 43 68 Net capital expenditure (1,14) (81) (861) (994) (1,138) Free cash flow (1,673) 977 (724) (591) (53) Equity raised/(bought) 672 (279) - - - Net borrowings 28 481 262 (146) (141) Other financing 2,399 (2,773) 2,3 (161) 128 Net cash flow 1,426 (1,594) 1,541 (898) (543) Cash balances, beginning 2,875 4,31 2,77 4,249 3,35 Ending cash 4,31 2,77 4,249 3,35 2,87 Key ratios Year to 31 Dec 213A 214A 215F 216F 217F ROAE (%) 23.5 24.4 (.9) (.5) (.1) ROAA (%) 8.2 8.8 (.3) (.2) (.) Gross margin (%) 17.7 17.8 17.9 17.9 17.9 EBITDA margin (%) 4.5.6 1.4 1.3 1.2 EBIT margin (%).5 (1.6) (1.5) (1.5) (1.5) Net margin (%) 11.2 12.3 (.4) (.2) (.) Payout ratio (%) 35.1 15.1 15. 15. 15. Current ratio (x) 1.5 1.3 1.5 1.4 1.3 Interest coverage (x).4 na na na na Net gearing (%) nc 7.2 nc 1.1 6.1 Debtor turnover (days) 7 1 1 1 1 Creditor turnover (days) 69 7 7 7 7 Inventory turnover (days) 75 82 85 85 85 263
216 Compendium NIPPON INDOSARI CORPINDO BUY PX: IDR1,25 - TP: IDR1,45 Indonesia s largest packaged bread producer (9% market share), ROTI s supply chain improvements have resulted in a much lower sales-return rate of 9.5% in 3Q15 from 13.7% in 2Q15, providing margin support (3Q15 GPM: 52%). We expect the return rate to stabilize at the 11% level, with a normalized margin of 51%. On expansion, ROTI is adding capacity only to existing plants, such as its Bekasi factory, shut down in 215 to undertake 1% increased capacity, with operations expected to resume in early 216. With much lower expected 215-16 capex, ROTI should book positive free cash flow for debt repayment, allowing for higher net margins. On valuation, our IDR1,45 TP implies a 216F PE of 23x, a 3% discount to the consumer staples sector. BUY on 16% upside potential. Risk: intensifying competition from other bread producers, although Yamazaki s 215 return rate was more than 5%. Share price performance (IDR) 1,5 1,4 1,3 1,2 1,1 1, 3-Dec-14 3-Feb-15 3-Apr-15 3-Jun-15 3-Aug-15 3-Oct-15 3-Dec-15 Volume (RHS) ROTI IJ Px Last (%) (%) 2 15 1 5 3.4.7 12.4 ytd 1M 3M 6M 9M 12M ROTI IJ relative to JCI Source: Bloomberg Michael W. Setjoadi (michael@bahana.co.id) +6221 25581 ext. 3613 1. 17.2 15.2 (') 5, 4, 3, 2, 1, 2 15 1 5 Financial highlights Year to 31 Dec 213A 214A 215F 216F 217F Revenues (IDRbn) 1,56 1,88 2,189 2,693 3,343 EBIT (IDRbn) 21 263 389 458 575 Net profit (IDRbn) 158 189 265 322 416 Bahana/consensus (%) - - 113 17 115 EPS (IDR) 31 37 52 64 82 EPS growth (%) 5.9 19.3 4.3 21.6 29.2 EV/EBITDA (x) 25.1 19.4 12.9 1.8 8.9 P/E (x) 39.9 33.4 23.9 19.7 15.2 FCFPS (IDR) (7) (58) 73 75 26 FCF yield (%) (.7) (5.5) 6.9 7.1 2.5 BVPS (IDR) 156 19 229 277 338 P/BV (x) 6.8 5.6 5.5 4.5 3.1 DPS (IDR) 7 3 13 16 21 Div. yield (%).7.3 1. 1.3 1.9 note: based on 3 December 215 closing price Major assumptions Year to 31 Dec 213A 214A 215F 216F 217F Net volume (packs mn) 367 381 486 584 697 Sales return to net revenue (%) 13.5 13. 12.4 11.1 11.1 Blended ASP (IDR ) 4.3 5. 4.5 4.6 4.8 HRW wheat price (USD/ton) 247 222 189 217 222 Company information 12M high/low (IDR) : 1,48/92 12M high/low consensus TP (IDR) : 1,8/1,2 Majority shareholder (%) : Indoritel Makmur Intl. (31.5) Shares outstanding (mn)/free float (%) : 5,62/29.3 Mkt. cap. (IDRbn/USDmn) : 6,327/457 3-m avg.daily t.o.(idrbn/usdmn) : 5./.4 Bloomberg/Reuters code : ROTI IJ/ROTI.JK Source: Bloomberg, Reuters; based on 3 December 215 closing price 264
216 Compendium NIPPON INDOSARI CORPINDO Profit & loss Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Sales 1,56 1,88 2,189 2,693 3,343 Gross profit 699 91 1,134 1,377 1,77 EBITDA 273 359 527 68 742 Depreciation 63 96 138 15 167 EBIT 21 263 389 458 575 Net interest inc./(expense) (22) (46) (65) (57) (54) Forex gain/(losses) (1) 4 1 1 () Other income/(expense) 24 32 28 28 34 Pre-tax profit 211 253 353 429 555 Taxes (53) (64) (88) (17) (139) Minority interest - - - - - Extraordinary gain/(losses) - - - - - Net profit 158 189 265 322 416 Balance sheet Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Cash and equivalents 11 163 546 753 688 S-T investments - - - - - Trade receivables 183 213 231 284 352 Inventories 37 41 42 52 65 Fixed assets 1,175 1,68 1,722 1,823 2,287 Other assets 327 46 12 114 133 Total assets 1,823 2,143 2,642 3,26 3,524 Interest bearing liabilities 657 836 1, 1, 1, Trade payables 159 126 154 192 238 Other liabilities 219 221 329 435 575 Total liabilities 1,35 1,183 1,483 1,626 1,813 Minority interest - - - - - Shareholders' equity 787 96 1,159 1,4 1,712 Cash flow Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F EBIT 21 263 389 458 575 Depreciation 63 96 138 15 167 Working capital 57 (54) 61 51 62 Other operating items (22) 1 (4) (3) (45) Operating cash flow 38 35 548 629 759 Net capital expenditure (344) (598) (177) (248) (628) Free cash flow (35) (293) 371 381 131 Equity raised/(bought) - - - - - Net borrowings 354 179 164 - - Other financing (254) 178 (149) (17) (194) Net cash flow 64 65 386 211 (62) Cash balances, beginning 37 98 159 543 75 Ending cash 11 163 546 753 688 Key ratios Year to 31 Dec 213A 214A 215F 216F 217F ROAE (%) 21.7 21.6 25. 25.2 26.7 ROAA (%) 1.4 9.5 11.1 11.4 12.7 Gross margin (%) 46.4 47.9 51.8 51.1 51.1 EBITDA margin (%) 18.1 19.1 24.1 22.6 22.2 EBIT margin (%) 13.9 14. 17.8 17. 17.2 Net margin (%) 1.5 1. 12.1 11.9 12.4 Payout ratio (%) 23.6 8.4 25. 25. 25. Current ratio (x) 1.1 1.4 2.4 2.5 2.1 Interest coverage (x) 9.7 5.7 6. 8. 1.7 Net gearing (%) 7.6 7.1 39.2 17.6 18.2 Debtor turnover (days) 54 53 53 53 53 Creditor turnover (days) 39 38 38 38 38 Inventory turnover (days) 13 14 14 14 14 265
216 Compendium PAKUWON JATI HOLD PX: IDR468 - TP: IDR49* Within our property coverage (ex those with hospitals), PWON has the largest recurring base (48% of total top line) supported by continued high occupancy rates in its malls, allowing for solid earnings. The current mall moratorium, coupled with the strategically-located, highfoot-traffic nature of its malls, should lead to tenant stickiness. With plenty of uncertainties for the property sector as we head into 216, PWON s earnings should remain relatively stable versus its peers. At this stage, we expect its strong 215 marketing sales to allow PWON to book double-digit EPS growth of 14.9% y-y in 216. On valuation, we raise our 12M TP to IDR49 (from IDR45) on a 6% discount (vs. 65% sector avg.) to 216F NAV, driven by strong recurring income and successful Tunjungan and Gandaria launches. HOLD. Downside risks: Worse-than-expected macro slowdown and weak IDR; Upside risk: Positive sentiment from government policies. Share price performance (IDR) 6 55 5 45 4 35 3 3-Dec-14 3-Feb-15 3-Apr-15 3-Jun-15 3-Aug-15 3-Oct-15 3-Dec-15 Volume (RHS) PWON IJ Px Last (%) (%) 3 25 2 15 1 5 4.1 3.7 25.9 ytd 1M 3M 6M 9M 12M PWON IJ relative to JCI Source: Bloomberg Sanni Satrio Dwi Utomo (sanni@bahana.co.id) +6221 25581 ext. 3611 *New, please refer to appendix II 23. 9.5 3. (') 6, 5, 4, 3, 2, 1, 3 25 2 15 1 5 Financial highlights* Year to 31 Dec 213A 214A 215F 216F 217F Revenues (IDRbn) 3,3 3,872 4,99 5,535 6,483 EBIT (IDRbn) 1,512 1,89 2,499 2,82 3,283 Net profit (IDRbn) 1,133 2,516 1,693 1,946 2,36 Bahana/cons.(%) - - 9 82 85 EPS (IDR) 24 52 35 4 49 EPS growth (%) 51.4 122.1 (32.7) 14.9 21.3 EV/EBITDA (x) 13.4 9.8 8.8 7.9 6.8 P/E (x) 19.9 9. 13.3 11.6 9.5 FCFPS (IDR) 2 (66) (15) (8) 3 FCF yield (%) 4.4 (14.) (3.3) (1.7).7 BVPS (IDR) 8 128 159 194 237 P/BV (x) 5.8 3.7 2.9 2.4 2. DPS (IDR) 4 4 4 5 6 Div. yield (%).7 1. 1. 1.1 1.3 note: based on 3 December 215 closing price NAV-derived target price calculation 9M15 Land bank (Ha) 457 Total value (IDRbn) 59,215 NAV/share (IDR) 1,23 Discount (%) 6 Adjusted NAV/share (IDR) 492 Company information 12M high/low (IDR) : 555/331 12M High/low consensus TP (IDR) : 65/41 Majority shareholder (%) : Burgami Investments (21%) Share outstanding (m)/free float (%) : 48,16/47.8 Mkt. cap. (IDRbn/USDmn) : 22,539/1,628 3-m avg.daily t.o.(idrbn/usdmn) : 27.6/2. Bloomberg/Reuters code : PWON IJ/PWON.JK Source: Bloomberg, Reuters; based on 3 December 215 closing price 266
216 Compendium PAKUWON JATI Profit & loss Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Sales 3,3 3,872 4,99 5,535 6,483 Gross profit 1,765 2,158 2,82 3,177 3,748 EBITDA 1,7 2,471 2,837 3,27 3,77 Depreciation 188 581 338 387 423 EBIT 1,512 1,89 2,499 2,82 3,283 Net interest inc./(expense) (73) (87) (173) (281) (275) Forex gain/(losses) (12) (4) (136) (17) 17 Other income/(expense) (6) 1,97 (1) (25) (12) Pre-tax profit 1,331 2,859 2,179 2,497 3,13 Taxes (195) (26) (319) (36) (421) Minority interest (4) (84) (167) (192) (231) Extraordinary gain/(losses) - - - - - Net profit 1,133 2,516 1,693 1,946 2,36 Balance sheet Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Cash and equivalents 2,126 2,89 2,22 2,257 2,239 S-T investments - - - - - Trade receivables 149 263 323 363 442 Inventories 1,49 3,133 3,76 4,511 5,414 Fixed assets 4,376 9,12 11,495 13,761 15,84 Other assets 1,157 1,445 1,649 1,886 2,162 Total assets 9,298 16,771 19,447 22,778 26,62 Interest bearing liabilities 2,415 4,596 4,746 5,178 5,5 Trade payables 55 134 92 13 127 Other liabilities 2,726 3,758 4,635 5,594 6,666 Total liabilities 5,196 8,488 9,473 1,875 11,843 Minority interest 226 2,11 2,321 2,553 2,88 Shareholders' equity 3,876 6,173 7,652 9,35 11,41 Cash flow Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F EBIT 1,512 1,89 2,499 2,82 3,283 Depreciation 188 581 338 387 423 Working capital 459 (914) 28 32 (56) Other operating items (55) 357 (887) (967) (1,28) Operating cash flow 1,68 1,914 1,977 2,273 2,623 Net capital expenditure (622) (5,78) (2,713) (2,653) (2,467) Free cash flow 986 (3,164) (735) (38) 156 Equity raised/(bought) - - - - - Net borrowings (11) 2,182 149 432 (128) Other financing (164) 1,665 (3) (16) (45) Net cash flow 811 683 (589) 36 (17) Cash balances, beginning 1,315 2,126 2,89 2,22 2,257 Ending cash 2,126 2,89 2,22 2,257 2,239 Key ratios Year to 31 Dec 213A 214A 215F 216F 217F ROAE (%) 33.4 5.1 24.5 22.9 22.7 ROAA (%) 13.4 19.3 9.3 9.2 9.7 Gross margin (%) 58.3 55.7 57.1 57.4 57.8 EBITDA margin (%) 56.1 63.8 57.8 57.9 57.2 EBIT margin (%) 49.9 48.8 5.9 51. 5.6 Net margin (%) 37.4 65. 34.5 35.2 36.4 Payout ratio (%) 14.9 8.6 12.8 12.8 12.8 Current ratio (x) 1.3.9.8.8.8 Interest coverage (x) 2.7 21.8 14.4 1. 11.9 Net gearing (%) 7.4 29. 33. 31.2 24.6 Debtor turnover (days) 17 24 24 24 25 Creditor turnover (days) 9 16 16 16 17 Inventory turnover (days) - - - - - 267
216 Compendium PELAYARAN TEMPURAN EMAS BUY PX: IDR1,945 - TP: IDR3, As the largest listed cargo shipper, TMAS, with little exposure to commodities, is enjoying the benefit of government policy on logistics in the form of lower dwelling times at ports. Hence, we expect TMAS to experience continued margin expansions in the next two years. With new larger ships being built, the management believes that its earnings could more than double by 218. In 216, we forecast higher revenue growth of 6.5% (215F: 1% y-y) on improving economy and six additional new vessels for new routes to Papua. On the bottom line, we expect 216 earnings of IDR425bn, +28% y-y, on continued lower stevedoring and fuel costs (6% of total COGS). Given robust bottom line growth ahead, we expect continued market outperformance, and retain our BUY call with IDR3, TP, reflecting an undemanding 216F PE of 8.1x, some 55% discount its regional peers. Risks: Slower GDP growth and increased competition. Share price performance (IDR) (') 8, 2,2 7, 6, 1,9 5, 4, 1,6 3, 1,3 2, 1, 1, 3-Dec-14 3-Feb-15 3-Apr-15 3-Jun-15 3-Aug-15 3-Oct-15 3-Dec-15 Volume (RHS) TMAS IJ Px Last (%) (%) 4 3 2 1 (1) (1.) 9.2 33.7 ytd 1M 3M 6M 9M 12M TMAS IJ relative to JCI Source: Bloomberg Agustinus Reza Kirana (agustinus@bahana.co.id) +6221 255735 ext. 3616 *New, please refer to appendix II 22.4 19.1 6.4 4 3 2 1 (1) Financial highlights* Year to 31 Dec 213A 214A 215F 216F 217F Revenues (IDRbn) 1,384 1,687 1,7 1,81 2,56 EBIT (IDRbn) 126 316 378 52 659 Net profit (IDRbn) 7 23 332 425 571 Bahana/consensus.(%) - - na na na EPS (IDR) 62 178 291 372 498 EPS growth (%) (41.2) 187.7 63.7 28.2 34. EV/EBITDA (x) 1.8 6.4 5.5 4.1 3.1 P/E (x) 31.5 1.9 6.7 5.2 3.9 FCFPS (IDR) (1) 83.7 47 146 26 FCF yield (%) (.5) 4.3 2.4 7.5 13.3 BVPS (IDR) 316 27.5 681 961 1,332 P/BV (x) 6.2 7.2 2.9 2. 1.5 DPS (IDR) 11-73 93 124 Div. yield (%).5-3.7 4.8 6.4 note: based on 3 December 215 closing price Major assumptions Year to 31 Dec 213A 214A 215F 216F 217F Total vessels (units) 22 22 25 29 33 Total capacity (k DWT) 181 22 233 27 37 Total TEUs Delivery (k unit) 237 27 278 31 348 Total calls 1,229 1,481 1,777 2,133 2,559 Company information 12M high/low (IDR) : 2,225/1,3 12M High/low consensus TP (IDR) : 3,25/3, Majority shareholder (%) : Temas Lestari (8) Shares outstanding (mn)/free float (%) : 1.141/2 Mkt. cap. (IDRbn/USDmn) : 2,219/16 3-m avg.daily t.o.(idrbn/usdmn) :.4/. Bloomberg/Reuters code : TMAS IJ/TMAS.JK Source: Bloomberg, Reuters; based on 3 December 215 closing price 268
216 Compendium PELAYARAN TEMPURAN EMAS Profit & loss Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Sales 1,384 1,687 1,7 1,81 2,56 Gross profit 2 388 477 629 785 EBITDA 291 462 548 716 883 Depreciation 165 146 17 196 224 EBIT 126 316 378 52 659 Net interest inc./(expense) (89) (89) (72) (66) (51) Forex gain/(losses) 32 2 6 2 (2) Other income/(expense) 24 7 53 6 6 Pre-tax profit 92 236 366 462 613 Taxes (21) (33) (33) (35) (4) Minority interest () (1) (1) (1) (1) Extraordinary gain/(losses) - - - - - Net profit 7 23 332 425 571 Balance sheet Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Cash and equivalents 53 43 49 53 51 S-T investments - - - - - Trade receivables 176 198 27 219 249 Inventories 28 27 27 23 24 Fixed assets 1,353 1,295 1,57 1,812 2,64 Other assets 6 64 47 5 57 Total assets 1,671 1,627 1,899 2,158 2,445 Interest bearing liabilities 967 792 822 762 592 Trade payables 299 19 21 194 29 Other liabilities 68 113 98 15 119 Total liabilities 1,334 1,95 1,121 1,6 92 Minority interest 1 1 1 1 1 Shareholders' equity 336 531 777 1,96 1,524 Cash flow Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F EBIT 126 316 378 52 659 Depreciation 165 146 17 196 224 Working capital (8) 3 (78) (11) (25) Other operating items (217) (268) (43) (177) (181) Operating cash flow (5) 196 427 528 677 Net capital expenditure (6) (32) (373) (361) (376) Free cash flow (11) 164 54 167 31 Equity raised/(bought) - - - - - Net borrowings 98 (171) 26 (6) (17) Other financing (77) (3) (74) (12) (133) Net cash flow 1 (1) 6 5 (2) Cash balances, beginning 43 53 43 49 53 Ending cash 53 43 49 53 51 Key ratios Year to 31 Dec 213A 214A 215F 216F 217F ROAE (%) 2.6 46.8 5.7 45.4 43.6 ROAA (%) 4.4 12.3 18.8 21. 24.8 Gross margin (%) 14.5 23. 28.1 34.8 38.2 EBITDA margin (%) 21. 27.4 32.3 39.6 42.9 EBIT margin (%) 9.1 18.7 22.3 28.7 32. Net margin (%) 5.1 12. 19.5 23.5 27.8 Payout ratio (%) 17. - 25. 25. 25. Current ratio (x).5.5.5.6.8 Interest coverage (x) 1.4 3.5 5.3 7.9 13. Net gearing (%) 272.4 141.1 99.5 64.6 35.5 Debtor turnover (days) 46 5 45 45 45 Creditor turnover (days) 92 95 6 6 6 Inventory turnover (days) 9 12 8 7 7 269
216 Compendium PEMBANGUNAN PERUMAHAN BUY* PX: IDR3,77 - TP: IDR4,3* PTPP, the second largest construction play by market cap, is gearing up for infra-related projects, supported by IPO proceeds of subsidiary PP Properti (PPRO) in May 215. Potential IDR2.25tn state capital injection should assist plan to raise investment portfolio, creating added construction projects while providing sound recurring income. Capitalizing on the government s sea-toll program, we expect PTPP to realize increased port-related construction contracts given its standing as one of the best domestic port contractor with notable experience in both the Kalibaru and Kuala Tanjung projects. Solid execution in gaspowered (PLTMG) Gorontalo project should also bode well for its ability to secure future contracts in power plant construction. Our SOTP-based TP of IDR4,3 reflects 23x of 216E PE, slightly less than WSKT and WIKA given PTPP s high earnings contribution from its property business. BUY. Risk: Payment delays from private projects. Financial highlights* Year to 31 Dec 213A 214A 215F 216F 217F Revenues (IDRbn) 11,656 12,427 15,842 2,154 23,95 EBIT (IDRbn) 1,168 1,328 1,794 2,253 2,66 Net profit (IDRbn) 421 532 76 92 1,63 Bahana/cons.(%) - - 1 96 86 EPS (IDR) 87 11 146 19 22 EPS growth (%) 15.7 13.1 32.7 3.3 15.6 EV/EBITDA (x) 15.4 12.8 1.3 8.5 7.4 P/E (x) 43.4 34.3 25.9 19.9 17.2 FCFPS (IDR) (29) (153) (32) (239) (188) FCF yield (%) (.8) (4.) (7.8) (6.2) (4.9) BVPS (IDR) 42 485 649 794 956 P/BV (x) 9.4 7.8 5.8 4.7 3.9 DPS (IDR) 26 33 44 57 66 Div. yield (%).7.9 1.2 1.5 1.7 note: based on 3 December 215 closing price Share price performance (IDR) 4,5 4, 3,5 3, (') 5, 4, 3, 2, 1, Major assumptions Year to 31 Dec 213A 214A 215F 216F 217F Carried over (IDRbn) 15,914 22,278 29,867 39,45 46,412 New contracts (IDRbn) 19,583 2,24 26,23 28,792 27,479 Total order books (IDRbn) 35,497 42,518 56,96 67,837 73,892 2,5 3-Dec-14 3-Feb-15 3-Apr-15 3-Jun-15 3-Aug-15 3-Oct-15 3-Dec-15 17.9 Volume (RHS) 1.7 4.1 5.8 PTPP IJ Px Last (%) (%) 35 3 25 2 15 1 5 ytd 1M 3M 6M 9M 12M PTPP IJ relative to JCI Source: Bloomberg Bob Setiadi (bob.setiadi@bahana.co.id) +6221 25581 ext.365 *New, please refer to appendix II 11.5 28.7 35 3 25 2 15 1 5 Company information 12M high/low (IDR) : 4,175/3,95 12M high/low consensus TP (IDR) : 5,1/3,1 Majority shareholder (%) : Republic of Indonesia (51.) Shares outstanding (mn)/free float (%) : 4,842/49. Mkt. cap. (IDRbn/USDmn) : 18,256/1,319 3-m avg.daily t.o.(idrbn/usdmn) : 21.4/1.5 Bloomberg/Reuters code : PTPP IJ/PTPP.JK Source: Bloomberg, Reuters based on 3 December 215 closing price 27
216 Compendium PEMBANGUNAN PERUMAHAN Profit & loss Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Sales 11,656 12,427 15,842 2,154 23,95 Gross profit 1,367 1,64 2,15 2,692 3,171 EBITDA 1,18 1,473 1,856 2,339 2,77 Depreciation 12 146 63 87 111 EBIT 1,168 1,328 1,794 2,253 2,66 Net interest inc./(expense) (259) (32) (39) (453) (55) Forex gain/(losses) (6) 2 1 4 (1) Other income/(expense) (136) (9) (95) (114) (128) Pre-tax profit 767 919 1,318 1,69 1,98 Taxes (346) (387) (57) (645) (765) Minority interest - - (15) (125) (152) Extraordinary gain/(losses) - - - - - Net profit 421 532 76 92 1,63 Balance sheet Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Cash and equivalents 2,397 2,48 2,92 2,66 3,154 S-T investments 176 23 23 23 23 Trade receivables 1,71 2,3 2,821 3,589 4,257 Inventories 1,65 2,52 2,91 3,414 3,914 Fixed assets 377 713 1,51 2,234 2,933 Other assets 6,128 6,453 7,869 9,371 1,78 Total assets 12,393 14,579 18,214 21,471 25,241 Interest bearing liabilities 2,287 3,32 3,87 4,362 5,527 Trade payables 6,3 7,22 7,912 9,142 1,276 Other liabilities 1,857 2,176 2,649 3,348 3,96 Total liabilities 1,444 12,229 14,368 16,852 19,764 Minority interest 1 1 71 771 848 Shareholders' equity 1,948 2,348 3,144 3,847 4,629 Cash flow Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F EBIT 1,168 1,328 1,794 2,253 2,66 Depreciation 12 146 63 87 111 Working capital (15) (1,5) (67) (939) (864) Other operating items (952) (6) (1,239) (1,439) (1,682) Operating cash flow 213 (132) (53) (38) 224 Net capital expenditure (355) (61) (1,47) (1,121) (1,135) Free cash flow (143) (742) (1,461) (1,159) (911) Equity raised/(bought) () 26 - - Net borrowings 871 792 931 771 1,353 Other financing 365 (39) 763 147 52 Net cash flow 1,94 11 493 (241) 494 Cash balances, beginning 1,33 2,397 2,48 2,92 2,66 Ending cash 2,397 2,48 2,92 2,66 3,154 Key ratios Year to 31 Dec 213A 214A 215F 216F 217F ROAE (%) 23.4 24.8 25.7 26.3 25.1 ROAA (%) 4. 3.9 4.3 4.6 4.6 Gross margin (%) 11.7 12.9 13.6 13.4 13.3 EBITDA margin (%) 1.1 11.9 11.7 11.6 11.6 EBIT margin (%) 1. 1.7 11.3 11.2 11.1 Net margin (%) 3.6 4.3 4.5 4.6 4.4 Payout ratio (%) 29.7 3. 3. 3. 3. Current ratio (x) 1.3 1.4 1.4 1.3 1.3 Interest coverage (x) 4.5 4.1 4.6 5. 4.8 Net gearing (%) nc 26.6 28.8 44.2 51.3 Debtor turnover (days) 48 59 65 65 65 Creditor turnover (days) 185 223 21 19 18 Inventory turnover (days) 56 69 72 66 64 271
216 Compendium PERUSAHAAN GAS NEGARA REDUCE PX: IDR2,875 TP: IDR2,5 PGAS, the biggest gas distributor with 81% market share by volume and owner of 95% of Indonesian pipelines, is suffering from low distribution volumes on weak GDP growth and also impairment costs from both its local and overseas investments due to weak oil prices. Through the 3 rd economic stimulus package, the government, starting 1 January 216, plans to cut gas-selling prices, especially in laborintensive industries (i.e. petrochemicals, fertilizers) to allow manufacturers to have improved cost efficiencies. At this stage, we assume the 216 gas ASP to fall 5% to USD8.8/mmbtu while we expect distribution volumes to rise 5% on higher GDP growth. On valuation, we derive our 12M DCF-based TP of IDR2,5 using a 13% WACC. Thus, we retain our REDUCE rating, particularly given PGAS industrial support function, which could lead to continued government policy risks ahead. Risk: Faster local economic recovery. Share price performance (IDR) (') 6,3 35, 5,8 3, 5,3 25, 4,8 2, 4,3 15, 3,8 3,3 1, 2,8 5, 2,3 3-Dec-14 3-Feb-15 3-Apr-15 3-Jun-15 3-Aug-15 3-Oct-15 3-Dec-15 Volume (RHS) pgas IJ Px Last (%) (%) (1) (2) (3) (4) (5) (39.4) (4.1) (1.7) (22.4) (28.7) (39.5) ytd 1M 3M 6M 9M 12M pgas IJ relative to JCI Source: Bloomberg Arandi Ariantara (arandi@bahana.co.id) +6221 25 581 ext. 3619 (1) (2) (3) (4) (5) Financial highlights Year to 31 Dec 213A 214A 215F 216F 217F Revenues (USDmn) 3,2 3,49 2,869 2,967 3,313 EBIT (USDmn) 934 982 593 581 686 Net profit (USDmn) 85 723 416 433 53 Bahana/consensus (%) - - 88 83 97 EPS (IDR) 433 389 224 233 285 EPS growth (%) 21.9 (1.2) (42.5) 4.1 22.4 EV/EBITDA (x) 4.1 4.5 5.8 5.3 4.6 P/E (x) 6.6 7.4 12.8 12.3 1.1 FCFPS (IDR) 458 (493) (179) 59 32 FCF yield (%) 15.9 (17.1) (6.2) 1.9 1. BVPS (IDR) 1,44 1,547 1,88 1,916 2,72 P/BV (x) 2. 1.9 1.6 1.5 1.4 DPS (IDR) 219 214 123 128 157 Div. yield (%) 7.6 7.4 4.3 4.5 5.5 note: based on 3 December 215 closing price Major assumptions Year to 31 Dec 213A 214A 215F 216F 217F Distribution Vol. (mmscfd) 824 865 787 828 884 Tariff (USD/mmbtu) 9.2 9.2 9. 8.8 8.8 Company information 12M high/low (IDR) : 6,/2,455 12M High/low consensus TP (IDR) : 4,775/2,5 Majority shareholder (%) : Republic of Indonesia (57) Shares outstanding (mn)/free float (%) : 24,242/43. Mkt. cap. (IDRbn/USDmn) : 69,694/4,924 3-m avg.daily t.o.(idrbn/usdmn) : 19.5/6.7 Bloomberg/Reuters code : PGAS IJ/PGAS.JK Source: Bloomberg, Reuters; based on 3 December 215 closing price 272
216 Compendium PERUSAHAAN GAS NEGARA Profit & loss Year to 31 Dec (USDmn) 213A 214A 215F 216F 217F Sales 3,2 3,49 2,869 2,967 3,313 Gross profit 1,418 1,465 943 921 1,97 EBITDA 1,29 1,12 871 942 1,93 Depreciation 275 12 278 36 47 EBIT 934 982 593 581 686 Net interest inc./(expense) 5 (5) (59) (57) (58) Forex gain/(losses) 84 47 (15) (15) (15) Other income/(expense) 43 (1) 11 67 93 Pre-tax profit 1,66 979 53 577 76 Taxes (228) (231) (114) (144) (177) Minority interest (33) (25) Extraordinary gain/(losses) - - - - - Net profit 85 723 416 433 53 Balance sheet Year to 31 Dec (USDmn) 213A 214A 215F 216F 217F Cash and equivalents 1,234 1,131 1,191 1,15 1,284 S-T investments 86 93 64 64 64 Trade receivables 25 295 269 279 311 Inventories 15 63 63 67 73 Fixed assets 1,92 3,621 3,872 4,237 4,183 Other assets 636 866 1,168 1,163 1,157 Total assets 4,14 6,68 6,626 6,824 7,72 Interest bearing liabilities 934 1,853 2,422 2,369 2,316 Trade payables 158 138 158 168 182 Other liabilities 438 1,22 686 726 722 Total liabilities 1,531 3,193 3,266 3,263 3,22 Minority interest 1 1 1 1 Shareholders' equity 2,69 2,874 3,359 3,56 3,85 Cash flow Year to 31 Dec (USDmn) 213A 214A 215F 216F 217F EBIT 934 982 593 581 686 Depreciation 275 12 278 36 47 Working capital 36 45 (426) 37 (28) Other operating items (416) (61) (253) (148) (156) Operating cash flow 829 897 191 83 99 Net capital expenditure 22 (1,813) (524) (721) (348) Free cash flow 851 (916) (332) 19 562 Equity raised/(bought) 127 - - - - Net borrowings (4) 919 569 (53) (53) Other financing (1,37) (16) (177) (232) (24) Net cash flow (333) (13) 6 (176) 269 Cash balances, beginning 1,567 1,234 1,131 1,191 1,15 Ending cash 1,234 1,131 1,191 1,15 1,284 Key ratios Year to 31 Dec 213A 214A 215F 216F 217F ROAE (%) 33.5 26.4 13.8 12.5 14.3 ROAA (%) 2. 14.2 6.8 6.4 7.6 Gross margin (%) 47.2 43. 32.9 31. 33.1 EBITDA margin (%) 42.1 37.2 3.3 31.7 33. EBIT margin (%) 31.1 28.8 2.7 19.6 2.7 Net margin (%) 26.8 21.2 14.5 14.6 16. Payout ratio (%) 57 55 55 55 55 Current ratio (x) 2.1 1.7 2.8 2.5 3. Interest coverage (x) 42.7 13. 7.1 7.1 8.6 Net gearing (%) nc 25.1 36.7 38. 26.8 Debtor turnover (days) 3 34 34 34 34 Creditor turnover (days) 36 4 3 3 3 Inventory turnover (days) 3 4 12 12 12 273
216 Compendium PP PROPERTI HOLD* PX: IDR185 - TP: IDR18* Following a successful IDR99bn IPO in May 215, PPRO, a subsidiary of SOE construction player (PTPP), has ample cash to fund its highrise developments projects (some 96% of its portfolio) to maximize its limited 58ha landbank. We note the company has added a small land acquisition of 4ha in 9M15 with another 4ha to be added by end-215. Going into 216, we expect PPRO s revenue to rise 1% y-y backed by our 215 marketing-sales target of IDR1.8tn (1M15: IDR1.4tn), up 51% y-y, which is more conservative than management guidance of IDR2tn. Further earnings-growth catalysts should come from plans to build 3 malls, 2 hotels and 1 office in the next 3 years. On valuation, we apply a 7% discount to our 216F NAV to derive our IDR18 TP (from IDR152) due to limited landbank and low recurring income portion. Hold. Upside risk: Faster project realization; Downside risk: Lower-than-expected presales. Share price performance (IDR) 22 2 18 16 14 12 19-May-15 19-Jun-15 19-Jul-15 19-Aug-15 19-Sep-15 19-Oct-15 19-Nov-15 3-Dec-15 Volume (RHS) PPRO IJ Px Last 2,, 1,5, 1,, 5, (%) (%) 25 2 15 1 5 13.4 2.2 1.5 13.4 1M 3M 6M Since IPO PPRO IJ relative to JCI Source: Bloomberg Sanni Satrio Dwi Utomo (sanni@bahana.co.id) +6221 25581 ext. 3611 *New, please refer to appendix II (') 25 2 15 1 5 Financial highlights* Year to 31 Dec 213A 214A 215F 216F 217F Revenues (IDRbn) 192 555 1,545 1,77 1,913 EBIT (IDRbn) 46 128 419 46 532 Net profit (IDRbn) 49 16 293 39 383 Bahana/cons.(%) - - 111 112 17 EPS (IDR) 5 12 21 22 27 EPS growth (%) 45 115.4 79.7 5.5 23.8 EV/EBITDA (x) 27.4 13.1 7.3 7.4 6.1 P/E (x) 34.3 15.9 8.9 8.4 6.8 FCFPS (IDR) 23 (19) (51) (39) 24 FCF yield (%).2 (.2) (.4) (.3).2 BVPS (IDR) 11 113 157 173 193 P/BV (x) 1.8 1.6 1.2 1.1 1. DPS (IDR) - 2 6 7 8 Div. yield (%) - 1.2 3.4 3.6 4.4 note: based on 3 December 215 closing price NAV-derived target price calculation 9M15 Land bank (Ha) 58 Total value (IDRbn) 8,457 NAV/share (IDR) 62 Discount (%) 7 Adjusted NAV/share (IDR) 181 Company information 12M high/low (IDR) : 28/127 12M High/low consensus TP (IDR) : 242/18 Majority shareholder (%) : PP Persero (65.) Share outstanding (m)/free float (%) : 14,44/35. Mkt. cap. (IDRbn/USDmn) : 2,598/188 3-m avg.daily t.o.(idrbn/usdmn) : 17.4/1.3 Bloomberg/Reuters code : PPRO IJ/PPRO.JK Source: Bloomberg, Reuters; based on 3 December 215 closing price 274
216 Compendium PP PROPERTI Profit & loss Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Sales 192 555 1,545 1,77 1,913 Gross profit 49 143 459 54 582 EBITDA 6 135 448 492 572 Depreciation 14 7 29 33 4 EBIT 46 128 419 46 532 Net interest inc./(expense) 1 (51) (67) (55) Forex gain/(losses) - - - - - Other income/(expense) 4 2 2 2 2 Pre-tax profit 51 131 37 395 479 Taxes (2) (25) (77) (85) (96) Minority interest () () () () Extraordinary gain/(losses) - - - - - Net profit 49 16 293 39 383 Balance sheet Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Cash and equivalents 32 228 492 44 43 S-T investments - - - - - Trade receivables 199 439 1,27 1,43 1,572 Inventories 817 1,529 1,772 2,68 2,43 Fixed assets 27 218 45 757 1,12 Other assets 181 315 648 1,22 1,376 Total assets 1,437 2,73 4,632 5,69 6,793 Interest bearing liabilities 37 1,158 1,478 1,278 Trade payables 21 752 892 989 912 Other liabilities 491 64 38 8 1,891 Total liabilities 512 1,699 2,431 3,267 4,81 Minority interest () () () () Shareholders' equity 925 1,31 2,21 2,423 2,713 Cash flow Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F EBIT 46 128 419 46 532 Depreciation 14 7 29 33 4 Working capital 481 (176) (469) (191) 545 Other operating items (8) (22) (126) (15) (149) Operating cash flow 533 (62) (147) 151 968 Net capital expenditure (326) (19) (583) (75) (632) Free cash flow 27 (172) (73) (553) 337 Equity raised/(bought) 913-99 - - Net borrowings 296 268 59 (28) Other financing (1,14) 72 (183) (88) (94) Net cash flow 16 196 263 (51) (37) Cash balances, beginning 16 32 228 492 44 Ending cash 32 228 492 44 43 Key ratios Year to 31 Dec 213A 214A 215F 216F 217F ROAE (%) 5.3 1.8 18.1 13.4 14.9 ROAA (%) 3.2 5.1 8. 6. 6.1 Gross margin (%) 25.3 25.7 29.7 29.5 3.4 EBITDA margin (%) 31.4 24.3 29. 28.8 29.9 EBIT margin (%) 24.1 23.1 27.1 26.9 27.8 Net margin (%) 25.6 19.1 19. 18.1 2. Payout ratio (%) - 3. 3. 3. 3. Current ratio (x) 8. 2.1 2.3 2.2 1.6 Interest coverage (x) na na 8.2 6.9 9.7 Net gearing (%) nc 7.6 3.3 42.8 32.2 Debtor turnover (days) 335 21 3 3 3 Creditor turnover (days) 38 343 3 3 25 Inventory turnover (days) - - - - - 275
216 Compendium PURADELTA LESTARI BUY PX: IDR23 - TP: IDR29 Following a successful IDR1tn IPO in May 215, DMAS, the purest industrial estate player and the largest by market cap in our coverage, has booked by far the sector s strongest 9M15 marketing sales amounting to 9ha, of which 6ha was from SAIC-GM-Wuling, its new auto-related anchor tenant. DMAS s competitive advantage is its well-located 1,87ha gross landbank, which has managed to attract many auto manufacturers, and we expect future support from entries by GM-Wuling s suppliers. Hence, for sustained growth, DMAS plans to expand its industrial landbank by adding 14ha with potential expansion of up to 6ha. Due to its zero USD debt level, DMAS is our top sector pick of the industrial estate players, particularly given its strong client base and strategic location, allowing for positive ASP growth ahead. Our 12M IDR29 TP is based on a 6% discount to 216F NAV. Risk: Slow FDI. Share price performance (IDR) (') 26 8, 24 7, 22 6, 5, 2 4, 18 3, 16 2, 14 1, 12 29-May-15 29-Jun-15 29-Jul-15 29-Aug-15 29-Sep-15 29-Oct-15 29-Nov-15 3-Dec-15 Volume (RHS) DMAS IJ Px Last (%) (%) 15 1 5 (5) (1) (15) 1.4 (13.7) 1M 3M 6M Since IPO DMAS IJ relative to JCI Source: Bloomberg Sanni Satrio Dwi Utomo (sanni@bahana.co.id) +6221 25581 ext. 3611 *New, please refer to appendix II 2.6 1. 15 1 5 (5) (1) (15) Financial highlights* Year to 31 Dec 213A 214A 215F 216F 217F Revenues (IDRbn) 1,826 1,538 2,175 2,698 2,929 EBIT (IDRbn) 923 1,3 1,375 1,711 1,859 Net profit (IDRbn) 941 964 1,52 1,75 1,799 Bahana/consensus (%) - - 132 133 118 EPS (IDR) 2 2 32 35 37 EPS growth (%) 161.8 2.4 57.7 12.2 5.5 EV/EBITDA (x) 1.6 8.9 6.1 4.9 4.3 P/E (x) 1.4 1.1 6.4 5.7 5.4 FCFPS (IDR) 25 17 21 12 2 FCF yield (%) 12.1 8.2 1.4 6. 9.9 BVPS (IDR) 113 133 155 179 26 P/BV (x) 1.8 1.5 1.3 1.1 1. DPS (IDR) - - 9 11 11 Div. yield (%) - - 4.7 5.2 5.5 note: based on 3 December 215 closing price NAV-derived target price calculation 9M15 Land bank (Ha) 1,87 Total value (IDRbn) 35,268 NAV/share (IDR) 732 Discount (%) 6 Adjusted NAV/share (IDR) 293 Company information 12M High/low (IDR) : 235/146 12M High/low consensus TP (IDR) : 31/245 Majority shareholder (%) : AFP International Cap. (41.4) Share outstanding (mn)/free float (%) : 48,198/1. Mkt. cap. (IDRbn/USDmn) : 9,784/77 3-m avg.daily t.o.(idrbn/usdmn) : 2.1/.1 Bloomberg/Reuters code : DMAS IJ/DMAS.JK Source: Bloomberg, Reuters; based on 3 December 215 closing price 276
216 Compendium PURADELTA LESTARI Profit & loss Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Sales 1,826 1,538 2,175 2,698 2,929 Gross profit 998 1,76 1,515 1,885 2,48 EBITDA 924 1,6 1,377 1,714 1,862 Depreciation 2 3 3 3 3 EBIT 923 1,3 1,375 1,711 1,859 Net interest inc./(expense) 32 22 41 45 49 Forex gain/(losses) 66 (4) 175 38 (13) Other income/(expense) 16 26 47 56 62 Pre-tax profit 1,37 1,47 1,638 1,851 1,958 Taxes (95) (83) (117) (145) (158) Minority interest () () () () () Extraordinary gain/(losses) - - - - - Net profit 941 964 1,52 1,75 1,799 Balance sheet Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Cash and equivalents 1,285 1,381 1,618 1,563 1,858 S-T investments - - - - - Trade receivables - - - - - Inventories 6,224 6,29 6,629 7,279 7,979 Fixed assets 52 134 188 271 395 Other assets 112 6 66 73 81 Total assets 7,673 7,63 8,51 9,185 1,312 Interest bearing liabilities 1,299 593 267 134 - Trade payables - - - - - Other liabilities 943 614 774 397 398 Total liabilities 2,242 1,28 1,41 531 398 Minority interest 2 3 4 4 5 Shareholders' equity 5,428 6,393 7,457 8,65 9,91 Cash flow Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F EBIT 923 1,3 1,375 1,711 1,859 Depreciation 2 3 3 3 3 Working capital (11) (13) (1) (1) (1) Other operating items (163) (293) 3 (388) (65) Operating cash flow 75 7 1,677 1,325 1,796 Net capital expenditure 432 11 (659) (737) (828) Free cash flow 1,183 81 1,18 589 968 Equity raised/(bought) - - - - - Net borrowings (1,13) (76) (326) (134) (134) Other financing (455) (511) (539) Net cash flow 53 96 237 (55) 295 Cash balances, beginning 1,232 1,285 1,381 1,618 1,563 Ending cash 1,285 1,381 1,618 1,563 1,858 Key ratios Year to 31 Dec 213A 214A 215F 216F 217F ROAE (%) 19. 16.3 22. 21.2 19.4 ROAA (%) 11.9 12.6 18.9 19.3 18.5 Gross margin (%) 54.6 7. 69.7 69.9 69.9 EBITDA margin (%) 5.6 65.4 63.3 63.5 63.6 EBIT margin (%) 5.5 65.2 63.2 63.4 63.5 Net margin (%) 51.5 62.7 69.9 63.2 61.4 Payout ratio (%) - - 3. 3. 3. Current ratio (x) 2.5 4. 4.2 8.8 11.6 Interest coverage (x) na na na na na Net gearing (%).3 nc nc nc nc Debtor turnover (days) - - - - - Creditor turnover (days) - - - - - Inventory turnover (days) - - - - - 277
216 Compendium RAMAYANA LESTARI SENTOSA REDUCE PX: IDR68 - TP: IDR64* RALS, Indonesia s largest low-end department store chain with 116 outlets, is combatting low SSSG and intense competition, by raising its consignment sales proportion to 38-4% (214: 35.4%; 3Q14: 39.8%; 3Q15: 44.9%), carrying lower operating costs. This strategy is employed to offset weak sales at the low end by capturing mid-end shopper tendencies to down-trade during soft economic conditions. At this stage, RALS s performance would be adversely affected by cheap Chinese imports and low inflation (weak purchasing power), given job security issues on rising unemployment rates due to sluggish commodities and other exporting sectors. On valuation, our IDR64 TP reflects a 216F PE of 13.6x, a 35% discount to the sector, warranted by the stock s low EPS growth. Risks include higher job creation on faster-than-expected realizations of infrastructure projects and price support from its share buyback plan. Share price performance (IDR) (') 95 8, 7, 85 6, 75 5, 4, 65 3, 55 2, 1, 45 3-Dec-14 3-Feb-15 3-Apr-15 3-Jun-15 3-Aug-15 3-Oct-15 3-Dec-15 Volume (RHS) RALS IJ Px Last (%) (%) 15 1 5 (5) (.7) 7. 12.9 ytd 1M 3M 6M 9M 12M RALS IJ relative to JCI Source: Bloomberg Bagus Adi Yoga Prawira (yoga.prawira@bahana.co.id) +6221 25 581 ext. 364 *New, please refer to appendix III 4.7 7.8 (2.3) 15 1 5 (5) Financial highlights Year to 31 Dec 213A 214A 215F 216F 217F Revenues (IDRbn) 6,1 5,861 5,56 5,675 6,12 EBIT (IDRbn) 399 294 218 246 282 Net profit (IDRbn) 391 355 311 333 369 Bahana/consensus (%) - - 99 12 17 EPS (IDR) 55 5 44 47 52 EPS growth (%) (7.8) (9.1) (12.3) 6.8 11.1 EV/EBITDA (x) 6.2 6.5 6.3 5.6 4.9 P/E (x) 12.4 13.6 15.5 14.5 13.1 FCFPS (IDR) 18 79 57 33 3 FCF yield (%) 2.6 11.7 8.4 4.9 4.4 BVPS (IDR) 453 473 49 515 544 P/BV (x) 1.5 1.4 1.4 1.3 1.3 DPS (IDR) 3 27 22 23 26 Div. yield (%) 4.4 4. 3.2 3.4 3.8 note: based on 3 December 215 closing price Major assumptions Year to 31 Dec 213A 214A 215F 216F 217F Number of stores (unit) 118 116 116 119 124 Same store growth (%) 2.2.6 (4.) (.5) 3. Net sales growth (%) 5.3 (2.3) (5.1) 2.1 5.9 Opt. Margin to gross sales (%) 5. 3.7 2.8 3.1 3.3 Gross sales 7,968 7,942 7,774 8,38 8,534 Company information 12M high/low (IDR) : 865/51 12M high/low consensus TP (IDR) : 85/663 Majority shareholder (%) : Ramayana Makmur Sentosa (55.9) Shares outstanding (mn)/free float (%) : 7,96/4.5 Mkt. cap. (IDRbn/USDmn) : 4,825/349 3-m avg.daily t.o.(idrbn/usdmn) : 1.8/.1 Bloomberg/Reuters code : RALS IJ/RALS.JK Source: Bloomberg, Reuters; based on 3 December 215 closing price 278
216 Compendium RAMAYANA LESTARI SENTOSA Profit & loss Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Sales 6,1 5,861 5,56 5,675 6,12 Gross profit 2,14 2,48 1,977 2,22 2,148 EBITDA 572 49 465 55 566 Depreciation 173 197 248 26 284 EBIT 399 294 218 246 282 Net interest inc./(expense) 55 9 115 17 111 Forex gain/(losses) 37 1 1 1 (1) Other income/(expense) (32) 4 32 16 18 Pre-tax profit 458 388 366 369 41 Taxes (67) (33) (55) (37) (41) Minority interest - - - - - Extraordinary gain/(losses) - - - - - Net profit 391 355 311 333 369 Balance sheet Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Cash and equivalents 1,272 1,651 1,889 1,993 2,66 S-T investments 1 36 36 36 36 Trade receivables 2 23 2 21 22 Inventories 872 89 766 761 868 Fixed assets 1,445 1,375 1,278 1,318 1,384 Other assets 768 66 693 724 762 Total assets 4,379 4,555 4,682 4,853 5,139 Interest bearing liabilities - - - - - Trade payables 895 889 87 856 95 Other liabilities 267 36 332 342 375 Total liabilities 1,161 1,195 1,23 1,197 1,28 Minority interest - - - - - Shareholders' equity 3,217 3,359 3,479 3,656 3,859 Cash flow Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F EBIT 399 294 218 246 282 Depreciation 173 197 248 26 284 Working capital 2 55 28 (1) (59) Other operating items (29) 144 63 4 55 Operating cash flow 544 689 556 535 561 Net capital expenditure (417) (127) (15) (3) (35) Free cash flow 128 563 46 235 211 Equity raised/(bought) (2) - - - Net borrowings - - - - - Other financing (175) (183) (169) (131) (139) Net cash flow (5) 379 237 15 73 Cash balances, beginning 1,322 1,272 1,651 1,889 1,993 Ending cash 1,272 1,651 1,889 1,993 2,66 Key ratios Year to 31 Dec 213A 214A 215F 216F 217F ROAE (%) 12.5 1.8 9.1 9.3 9.8 ROAA (%) 9.2 7.9 6.7 7. 7.4 Gross margin (%) 35.7 34.9 35.6 35.6 35.7 EBITDA margin (%) 9.5 8.4 8.4 8.9 9.4 EBIT margin (%) 6.6 5. 3.9 4.3 4.7 Net margin (%) 6.5 6.1 5.6 5.9 6.1 Payout ratio (%) 54.5 54. 5. 5. 5. Current ratio (x) 1.6 1.9 2.2 2.4 2.4 Interest coverage (x) na na na na na Net gearing (%) nc nc nc nc nc Debtor turnover (days) 1 1 1 1 1 Creditor turnover (days) 79 85 9 86 83 Inventory turnover (days) 77 8 8 76 77 279
216 Compendium SALIM IVOMAS PRATAMA BUY PX: IDR372 - TP: IDR6 Owning the largest planted area of 3k ha in the sector and an integrated palm oil business model from upstream to downstream, SIMP is currently suffering from its inefficient refinery business, but a stronger CPO price outlook should help improve the company s performance as we head into 216. We expect solid growth with a 216F net profit of IDR612bn, +125% y-y, mainly helped by some new mills which should increase its efficiency rates. On a more negative note, we expect a 7% y-y volume decline in the FFB output, due to El Nino effect hurting SIMP s production yield. On the back of a low EV/ha of USD5,278 (5% discount to AALI) and 216F earnings recovery expectation, SIMP is still a BUY with our TP at IDR6, based on a 216F PE of 15.5x, at a 35% discount to Malaysian peers. Risks to our call include lower refinery margins. Share price performance (IDR) (') 85 4, 35, 75 3, 65 25, 2, 55 15, 45 1, 5, 35 3-Dec-14 3-Feb-15 3-Apr-15 3-Jun-15 3-Aug-15 3-Oct-15 3-Dec-15 Volume (RHS) SIMP IJ Px Last (%) (%) (1) (2) (3) (4) (5) (33.5) (18.8) (21.9) (31.3) (32.6) (38.5) ytd 1M 3M 6M 9M 12M SIMP IJ relative to JCI Source: Bloomberg Agustinus Reza Kirana (agustinus.reza@bahana.co.id) +6221 25581 ext. 3616 (1) (2) (3) (4) (5) Financial highlights Year to 31 Dec 213A 214A 215F 216F 217F Revenues (IDRbn) 13,28 14,963 14,7 15,699 16,53 EBIT (IDRbn) 1,586 2,563 1,582 2,145 2,468 Net profit (IDRbn) 524 842 272 612 1,45 Bahana/consensus (%) - - 64 18 133 EPS (IDR) 33 53 17 39 66 EPS growth (%) (54.7) 6.8 (67.7) 125.3 7.7 EV/EBITDA (x) 4.7 3.4 4.5 3.7 3.3 P/E (x) 11.2 7. 21.6 9.6 5.6 FCFPS (IDR) (134) (69) 5 (34) 4 FCF yield (%) (18.) (9.2).7 (4.5).6 BVPS (IDR) 864 897 898 931 986 P/BV (x).4.4.4.4.4 DPS (IDR) 1 16 5 12 2 Div. yield (%) 2.6 4.3 1.4 3.1 5.3 note: based on 3 December215 closing price Major assumptions Year to 31 Dec 213A 214A 215F 216F 217F FFB nucleus production (k tons) 2,895 3,259 3,254 3,12 4,479 CPO production (k tons) 81 957 1,2 938 976 Growth (%) (8.) 18.1 4.7 (6.3) 4.1 ASP CPO (USD/ton) 659 664 56 6 62 Average IDR/USD 1,925 12,393 13,455 14,533 14,115 Company information 12M high/low (IDR) : 76/372 12M High/low consensus TP (IDR) : 76/531 Majority shareholder (%) : First Pacific Company Limited (78.4) Shares outstanding (mn)/free float (%) : 15,816/21.6 Mkt. cap. (IDRbn/USDmn) : 5,915/427 3-m avg.daily t.o.(idrbn/usdmn) : 1.2/.1 Bloomberg/Reuters code : SIMP IJ/SIMP.JK Source: Bloomberg, Reuters; based on 3 December215 closing price 28
216 Compendium SALIM IVOMAS PRATAMA Profit & loss Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Sales 13,28 14,963 14,7 15,699 16,53 Gross profit 2,947 4,97 3,175 3,772 4,348 EBITDA 2,54 3,536 2,719 3,447 3,913 Depreciation 918 973 1,137 1,32 1,445 EBIT 1,586 2,563 1,582 2,145 2,468 Net interest inc./(expense) (41) (65) (661) (745) (762) Forex gain/(losses) (176) (78) (242) (174) 173 Other income/(expense) (75) (233) (19) (131) (131) Pre-tax profit 934 1,647 57 1,96 1,748 Taxes (299) (537) (186) (357) (57) Minority interest (111) (267) (112) (126) (132) Extraordinary gain/(losses) - - - - - Net profit 524 842 272 612 1,45 Balance sheet Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Cash and equivalents 2,113 2,696 2,861 2,589 2,82 S-T investments - - - - - Trade receivables 1,13 989 875 951 972 Inventories 1,568 1,773 1,556 1,744 1,837 Fixed assets 16,664 18,644 2,128 21,269 22,224 Other assets 6,59 6,894 6,5 6,6 6,13 Total assets 28,65 3,996 31,427 32,614 33,956 Interest bearing liabilities 7,886 8,888 9,188 9,488 9,788 Trade payables 664 862 722 795 812 Other liabilities 3,47 4,439 4,652 4,891 5,9 Total liabilities 11,957 14,189 14,561 15,174 15,68 Minority interest 2,44 2,626 2,665 2,79 2,755 Shareholders' equity 13,668 14,181 14,21 14,731 15,593 Cash flow Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F EBIT 1,586 2,563 1,582 2,145 2,468 Depreciation 918 973 1,137 1,32 1,445 Working capital 152 56 241 (77) (56) Other operating items (1,859) (1,724) (26) (1,462) (1,388) Operating cash flow 797 1,868 2,7 1,99 2,468 Net capital expenditure (2,917) (2,953) (2,621) (2,443) (2,4) Free cash flow (2,12) (1,86) 79 (534) 68 Equity raised/(bought) (85) (174) - - - Net borrowings 1,16 1,2 3 3 3 Other financing (237) 842 (213) (38) (137) Net cash flow (1,336) 583 165 (272) 231 Cash balances, beginning 3,449 2,113 2,696 2,861 2,589 Ending cash 2,113 2,696 2,861 2,589 2,82 Key ratios Year to 31 Dec 213A 214A 215F 216F 217F ROAE (%) 3.8 6. 1.9 4.2 6.9 ROAA (%) 1.9 2.9.9 1.9 3.1 Gross margin (%) 22.2 27.4 22.7 24. 26.3 EBITDA margin (%) 18.9 23.6 19.4 22. 23.7 EBIT margin (%) 11.9 17.1 11.3 13.7 14.9 Net margin (%) 3.9 5.6 1.9 3.9 6.3 Payout ratio (%) 29.6 3. 3. 3. 3. Current ratio (x).8.9.8.8 6.9 Interest coverage (x) 4. 4.2 2.4 2.9 3.2 Net gearing (%) 42.2 43.7 44.5 46.8 44.7 Debtor turnover (days) 3 26 23 22 21 Creditor turnover (days) 23 26 24 24 24 Inventory turnover (days) 61 56 41 41 41 281
216 Compendium SAMPOERNA AGRO BUY PX: IDR1,475 - TP: IDR1,97 With a planted area of 118k ha and the highest proportion of plasma estates (4%) among the planters within our coverage, SGRO has initiated a share buy-back program from Nov 215 to early 216; this has so far resulted in a boost to its share price performance. Despite strong growth from its Kalimantan estates and several productivity improvement initiatives, SGRO s 216 FFB production should fall to 893k tons, -2% y-y, due to a lower production yield on the El Nino effect. We expect a 216F revenue of IDR3.5tn, +13% y- y, mainly stemming from rising CPO prices and a stronger USD. As we expect 216F earnings to reach IDR26bn, +18% y-y, with slight margin expansions, we reiterate our BUY rating on SGRO with a TP of IDR1,97, based on a 216F PE of 14.3x, at a 4% discount to Malaysian peers due to its small-cap status. Risks: Volatile production on plasma proportion and lower-than-expected CPO prices. Share price performance (IDR) 2,4 2,2 2, 1,8 1,6 1,4 1,2 1, 3-Dec-14 3-Feb-15 3-Apr-15 3-Jun-15 3-Aug-15 3-Oct-15 3-Dec-15 Volume (RHS) SGRO IJ Px Last (%) (%) 3 2 1 (1) (2) (3) 24.2 1.1 (') 25, 2, 15, 1, 5, (5.9) (1) (11.5) (2) (17.) (23.3) (3) ytd 1M 3M 6M 9M 12M SGRO IJ relative to JCI Source: Bloomberg Agustinus Reza Kirana (agustinus.reza@bahana.co.id) +6221 25581 ext. 3616 3 2 1 Financial highlights Year to 31 Dec 213A 214A 215F 216F 217F Revenues (IDRbn) 2,561 3,242 3,118 3,512 3,758 EBIT (IDRbn) 21 542 411 487 64 Net profit (IDRbn) 119 34 22 26 328 Bahana/consensus (%) - - 86 86 1 EPS (IDR) 63 18 117 137 174 EPS growth (%) (63.8) 185.7 (35.3) 17.9 26.3 EV/EBITDA (x) 9.7 5.6 7.1 6.5 5.8 P/E (x) 23.4 8.2 12.7 1.7 8.5 FCFPS (IDR) (177) (181) (242) (123) (57) FCF yield (%) (12.) (12.3) (16.4) (8.4) (3.9) BVPS (IDR) 1,41 1,575 1,634 1,72 1,789 P/BV (x) 1..9.9.9.8 DPS (IDR) 45 15 58 69 87 Div. yield (%) 3.1 1. 3.9 4.7 5.9 note: based on 3 December 215 closing price Major assumptions Year to 31 Dec 213A 214A 215F 216F 217F FFB nucleus production (k tons) 646 786 915 893 997 CPO production (k tons) 271 321 352 342 372 Growth (%) (22.8) 18.5 9.5 (2.8) 8.9 ASP CPO (USD/ton) 685 77 56 6 62 Average IDR/USD 1,436 11,799 13,455 14,533 14,115 Company information 12M high/low (IDR) : 2,245/1,5 12M High/low consensus TP (IDR) : 2,25/1,629 Majority shareholder (%) : Sampoerna Agri Resources (79.7) Share outstanding (mn)/free float (%) : 1,89/33. Mkt. cap. (IDRbn/USDmn) : 2,87/23 3-m avg.daily t.o.(idrbn/usdmn) : 3.2/.2 Bloomberg/Reuters code : SGRO IJ/SGRO.JK Source: Bloomberg, Reuter; based on 3 December 215 closing price 282
216 Compendium SAMPOERNA AGRO Profit & loss Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Sales 2,561 3,242 3,118 3,512 3,758 Gross profit 498 869 787 917 1,69 EBITDA 45 765 678 798 951 Depreciation 24 223 267 311 348 EBIT 21 542 411 487 64 Net interest inc./(expense) (62) (62) (95) (115) (127) Forex gain/(losses) - - - - - Other income/(expense) 36 31 26 22 19 Pre-tax profit 174 51 343 395 495 Taxes (53) (16) (113) (124) (156) Minority interest (1) (1) (9) (11) (11) Extraordinary gain/(losses) - - - - - Net profit 119 34 22 26 328 Balance sheet Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Cash and equivalents 163 195 147 183 179 S-T investments - - - - - Trade receivables 139 9 27 233 249 Inventories 272 298 28 311 322 Fixed assets 2,997 3,675 4,36 4,393 4,712 Other assets 942 1,21 1,265 1,44 1,522 Total assets 4,513 5,467 5,934 6,525 6,985 Interest bearing liabilities 1,297 1,69 2,198 2,599 2,863 Trade payables 257 332 289 322 334 Other liabilities 259 427 311 326 336 Total liabilities 1,814 2,45 2,797 3,247 3,533 Minority interest 33 4 49 6 71 Shareholders' equity 2,666 2,978 3,88 3,218 3,381 Cash flow Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F EBIT 21 542 411 487 64 Depreciation 24 223 267 311 348 Working capital (3) 239 (255) (44) (28) Other operating items (117) (227) (179) (235) (28) Operating cash flow 286 777 245 519 644 Net capital expenditure (62) (1,119) (73) (753) (751) Free cash flow (335) (342) (458) (233) (18) Equity raised/(bought) - - - - - Net borrowings 356 393 57 41 264 Other financing (86) (19) (97) (131) (16) Net cash flow (65) 32 (48) 37 (4) Cash balances, beginning 228 163 195 147 183 Ending cash 163 195 147 183 179 Key ratios Year to 31 Dec 213A 214A 215F 216F 217F ROAE (%) 4.5 12.1 7.3 8.2 9.9 ROAA (%) 2.8 6.8 3.9 4.2 4.9 Gross margin (%) 19.5 26.8 25.2 26.1 28.5 EBITDA margin (%) 15.8 23.6 21.8 22.7 25.3 EBIT margin (%) 7.8 16.7 13.2 13.9 16.1 Net margin (%) 4.7 1.5 7.1 7.4 8.7 Payout ratio (%) 71.4 8.3 5. 5. 5. Current ratio (x) 2.2 1.8 2.2 2.3 2.3 Interest coverage (x) 3.2 8.7 4.3 4.2 4.7 Net gearing (%) 42.6 5.2 66.4 75.1 79.4 Debtor turnover (days) 29 24 24 24 24 Creditor turnover (days) 45 45 45 45 45 Inventory turnover (days) 56 44 44 44 44 283
216 Compendium SARANA MENARA NUSANTARA BUY PX: IDR4,2 - TP: IDR5,* TOWR, Indonesia s largest independent tower provider with 12,211 towers and 2,956 tower tenants (as of 9M15), looks set to have its 216F number of tenants increase to 22,234 (+6% y-y) as the company s number of towers reach 12,96 (+6% y-y), reflecting collocation rate of 1.7x. The re-arrangement of 18MHz frequency will support operators to expand their 4G network, building more 4G infrastructure, including BTSs and towers, allowing sustainable strong growth for TOWR in the next few years. On the balance sheet side, TOWR also has solid cash position to support both organic and inorganic future expansions. Our TP of IDR5, (from IDR 5,1) translates to 216F EV/EBITDA of 13.7x, 13% discount to its local peer s TP. BUY. Risks to our call include greater-than-expected competition and lower-than-expected Hutch expansion. Share price performance (IDR) 4,4 4,3 4,2 4,1 4, 3,9 3,8 3,7 3-Dec-14 3-Feb-15 3-Apr-15 3-Jun-15 3-Aug-15 3-Oct-15 3-Dec-15 Volume (RHS) TOWR IJ Px Last (%) (%) 25 2 15 1 5 (5) 14.4 (.1) 1.4 ytd 1M 3M 6M 9M 12M TOWR IJ relative to JCI Source: Bloomberg Leonardo Henry Gavaza, CFA (leonardo@bahana.co.id) +6221 25581 ext. 368 *New, please refer to appendix II 16.8 22. 13. (') 1, 8, 6, 4, 2, 25 2 15 1 5 (5) Financial highlights Year to 31 Dec 213A 214A 215F 216F 217F Revenues (IDRbn) 3,197 4,16 4,415 4,845 5,315 EBIT (IDRbn) 1,724 2,335 2,493 2,866 3,274 Net profit (IDRbn) 169 841 986 1,591 2,133 Bahana/consensus (%) - - 73 119 159 EPS (IDR) 17 82 97 156 29 EPS growth (%) (51.3) 398.9 17.3 61.3 34.1 EV/EBITDA (x) 19.1 14.6 13.3 11.7 1.1 P/E (x) 254.3 51. 43.5 26.9 2.1 FCFPS (IDR) (83) 45 152 177 226 FCF yield (%) (2.) 1.1 3.6 4.2 5.4 BVPS (IDR) 358 458 548 698 9 P/BV (x) 11.7 9.2 7.7 6. 4.7 DPS (IDR) - - - - - Div. yield (%) - - - - - note: based on 3 December 215 closing price Major assumptions Year to 31 Dec 213A 214A 215F 216F 217F ASP (IDR mn) 174 24 21 218 227 Tower sites (units) 9,746 11,595 12,233 12,96 13,615 Collocation (x) 8,576 8,543 8,842 9,328 9,841 Company information 12M high/low (IDR) : 4,4/3,72 12M High/low consensus TP (IDR) : 5,8/4,431 Majority shareholder (%) : Sapta Adhikari Investama (32.7) Share outstanding (mn)/free float (%) : 1,23/67.3 Mkt. cap. (IDRbn/USDmn) : 42,852/3,96 3-m avg.daily t.o.(idrbn/usdmn) : 1.9/.1 Bloomberg/Reuters code : TOWR IJ/TOWR.JK Source: Bloomberg, Reuters; based on 3 December 215 closing price 284
216 Compendium SARANA MENARA NUSANTARA Profit & loss Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Sales 3,197 4,16 4,415 4,845 5,315 Gross profit 2,62 2,784 3,2 3,444 3,98 EBITDA 2,651 3,418 3,71 4,61 4,455 Depreciation 928 1,84 1,28 1,194 1,181 EBIT 1,724 2,335 2,493 2,866 3,274 Net interest inc./(expense) (547) (849) (522) (455) (36) Forex gain/(losses) (888) (5) (497) (94) 4 Other income/(expense) (6) (27) (1) (1) (1) Pre-tax profit 228 1,211 1,374 2,217 2,854 Taxes (63) (371) (385) (621) (713) Minority interest 4 1 (4) (6) (7) Extraordinary gain/(losses) - - - - - Net profit 169 841 986 1,591 2,133 Balance sheet Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Cash and equivalents 1,56 2,1 3,35 3,16 3,854 S-T investments - - - - - Trade receivables 674 572 535 587 644 Inventories 1-1 1 Fixed assets 11,152 12,392 12,467 12,292 12,164 Other assets 2,22 2,262 2,63 2,653 2,679 Total assets 15,534 17,235 18,982 18,692 19,342 Interest bearing liabilities 9,38 9,354 9,669 7,735 6,188 Trade payables 485 472 268 28 293 Other liabilities 2,98 2,74 3,458 3,566 3,681 Total liabilities 11,891 12,566 13,395 11,581 1,162 Minority interest (5) (8) (8) (8) (8) Shareholders' equity 3,648 4,677 5,595 7,119 9,187 Cashflow Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F EBIT 1,724 2,335 2,493 2,866 3,274 Depreciation 927 1,84 1,28 1,194 1,181 Working capital (334) 147 (143) (25) (28) Other operating items (1,799) (1,372) (1,492) (1,553) (1,411) Operating cash flow 517 2,193 2,66 2,483 3,16 Net capital expenditure (1,365) (1,73) (51) (673) (71) Free cash flow (848) 464 1,556 1,81 2,36 Equity raised/(bought) - - - - - Net borrowings 1,261 46 315 (1,934) (1,547) Other financing (36) (6) (531) (67) (65) Net cash flow 376 54 1,34 (19) 694 Cash balances, beginning 1,13 1,56 2,1 3,35 3,16 Ending cash 1,56 2,1 3,35 3,16 3,854 Key ratios Year to 31 Dec 213A 214A 215F 216F 217F ROAE (%) 4.8 2.2 19.2 25. 26.2 ROAA (%) 1.2 5.1 5.4 8.4 11.2 EBITDA margin (%) 82.9 83.3 83.8 83.8 83.8 EBIT margin (%) 53.9 56.9 56.5 59.2 61.6 Net margin (%) 5.3 2.5 22.3 32.8 4.1 Payout ratio (%) - - - - - Current ratio (x).9 1.3 1.5 1.5 1.8 Interest coverage (x) 3.1 2.8 4.8 6.3 9.1 Net gearing (%) 213.8 152.1 112.9 64.3 25.4 Debts to assets (%) 6 54 51 41 32 Debtor turnover (days) 77 51 44 44 44 Creditor turnover (days) 854 723 521 497 473 Inventory turnover (days) 48-41 41 41 285
216 Compendium SEMEN BATURAJA HOLD* PX: IDR39 - TP: IDR3 SMBR, the smallest cement player under our coverage with 2mnt capacity and 2.8% market share, would be adversely impacted by high capex on its 1.8mn ton Baturaja II plant construction partly finishing in 217. Added margin pressure could stem from higher contribution of low-margin bulk cement (1M15: 31% of total sales) and competition. On the demand side, construction of Trans Sumatra toll road would only benefit SMBR in the long run, as multiplier effects from the property sector would only occur once toll-roads are operational. That said, demand support for SMBR would be derived from infra-related projects, especially in South Sumatra prior to the 218 Asian Games. On valuation, our IDR3 TP reflects 216E PE of 1x, a 4% discount to the sector on smaller capacity and 216-17F earnings contractions. However, recent price fall has us raising to a HOLD. Upside risk: Accelerated Trans Sumatra toll-road built; Downside risk: Lower ASP. Share price performance (IDR) 43 38 33 28 23 3-Dec-14 3-Feb-15 3-Apr-15 3-Jun-15 3-Aug-15 3-Oct-15 3-Dec-15 Volume (RHS) SMBR IJ Px Last (%) (%) 2 15 1 5 (5) (1) (15) (5.7) 1.9 14.3 ytd 1M 3M 6M 9M 12M SMBR IJ relative to JCI Source: Bloomberg Bob Setiadi (bob.setiadi@bahana.co.id) +6221 25 581 ext. 365 *New, please refer to appendix II 5.5 1. (') 7, 6, 5, 4, 3, 2, 1, 2 15 1 5 (5) (1) (1.6) (15) Financial highlights Year to 31 Dec 213A 214A 215F 216F 217F Revenues (IDRbn) 1,169 1,215 1,479 1,528 1,633 EBIT (IDRbn) 327 236 339 325 344 Net profit (IDRbn) 312 328 364 3 252 Bahana/consensus (%) - - 98 9 57 EPS (IDR) 35 33 37 3 26 EPS growth (%) (11.5) (5.2) 1.8 (17.5) (16.1) EV/EBITDA (x) 2.9 3.2 3.7 6.1 8.3 P/E (x) 8.8 9.3 8.4 1.1 12.1 FCFPS (IDR) 15 27 (51) (13) (12) FCF yield (%) 4.8 8.8 (16.6) (33.3) (38.7) BVPS (IDR) 251 276 34 327 346 P/BV (x) 1.2 1.1 1..9.9 DPS (IDR) 8 8 9 8 6 Div. yield (%) 2.6 2.7 3. 2.5 2.1 note: based on 3 December 215 closing price Major assumptions Year to 31 Dec 213A 214A 215F 216F 217F Volume capacity (' tons) 2, 2, 2, 2, 3,85 Export volumes (' tons) - - - - - Domestic volumes (' tons) 1,266 1,261 1,55 1,651 1,783 Total volumes (' tons) 1,266 1,261 1,55 1,651 1,783 Utilization rate (%) 63.3 63. 77.5 82.5 46.3 Company information 12M high/low (IDR) : 44/25 12M high/low consensus TP (IDR) : 375/3 Majority shareholder (%) : Republic of Indonesia (76.2) Shares outstanding (mn)/free float (%) : 9,838/23.8 Mkt. cap. (IDRbn/USDmn) : 3,4/22 3-m avg.daily t.o.(idrbn/usdmn) : 2.4/.2 Bloomberg/Reuters code : SMBR IJ/SMBR.JK Source: Bloomberg, Reuters based on 3 December 215 closing price 286
216 Compendium SEMEN BATURAJA Profit & loss Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Sales 1,169 1,215 1,479 1,528 1,633 Gross profit 462 372 492 489 521 EBITDA 394 311 429 438 47 Depreciation 67 75 9 113 126 EBIT 327 236 339 325 344 Net interest inc./(expense) 71 152 123 54 (33) Forex gain/(losses) - - - - - Other income/(expense) 2 7 1 16 2 Pre-tax profit 4 395 472 395 331 Taxes (88) (66) (19) (95) (8) Minority interest - - - - - Extraordinary gain/(losses) - - - - - Net profit 312 328 364 3 252 Balance sheet Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Cash and equivalents 1,883 2,54 1,45 363 272 S-T investments - - - - - Trade receivables 36 81 81 84 9 Inventories 132 187 189 199 213 Fixed assets 59 558 1,435 2,747 4,171 Other assets 71 47 56 59 63 Total assets 2,711 2,926 3,212 3,452 4,89 Interest bearing liabilities - - - - 1,15 Trade payables 68 91 95 1 17 Other liabilities 176 118 127 137 148 Total liabilities 244 29 222 237 1,45 Minority interest - - - - - Shareholders' equity 2,467 2,717 2,99 3,215 3,44 Cash flow Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F EBIT 327 236 339 325 344 Depreciation 67 75 9 113 126 Working capital (55) (73) 1 (8) (13) Other operating items (56) 72 31 (18) (85) Operating cash flow 283 31 462 412 372 Net capital expenditure (139) (43) (968) (1,425) (1,55) Free cash flow 144 267 (56) (1,13) (1,178) Equity raised/(bought) 1,378 - - - - Net borrowings - - - - 1,15 Other financing (182) (96) (97) (75) (63) Net cash flow 1,34 171 (64) (1,88) (91) Cash balances, beginning 543 1,883 2,54 1,45 363 Ending cash 1,883 2,54 1,45 363 272 Key ratios Year to 31 Dec 213A 214A 215F 216F 217F ROAE (%) 18.3 12.7 12.7 9.7 7.6 ROAA (%) 16. 11.6 11.9 9. 6.1 Gross margin (%) 39.6 3.7 33.3 32. 31.9 EBITDA margin (%) 33.7 25.6 29. 28.6 28.8 EBIT margin (%) 28. 19.4 22.9 21.3 21.1 Net margin (%) 26.7 27. 24.6 19.6 15.4 Payout ratio (%) 25. 25. 25. 25. 25. Current ratio (x) 1.9 13. 9.1 3.3 2.7 Interest coverage (x) na na na na 1.5 Net gearing (%) nc nc nc nc 25.8 Debtor turnover (days) 6 17 2 2 2 Creditor turnover (days) 34 34 35 35 35 Inventory turnover (days) 64 69 7 7 7 287
216 Compendium SEMEN INDONESIA HOLD PX: IDR11,75 - TP: IDR1,6* With total installed capacity of 17.5mn tons on three strategic islands (Java, Sumatra and Sulawesi), SMGR, Indonesia s largest cement player by volume, should have the competitive advantage to defend market share through its new focus on volume rather than margins. In 216, cement demand should be driven by increasing bulk cement volume growth, supported by government infra-related projects, which must use cement from SOE cement producers, including SMGR. However, bulk cement has lower margins. This shift in cement product mix to bulk and intensifying competition is likely to pressure margins, dampening SMGR s earnings outlook. Thus, we retain a HOLD on SMGR with IDR 1,6 TP (from IDR 9,8) on a 216F P/E of 14.x. Upside risks: Cost efficiencies and higher domestic demand; Downside risks: Worsening competition from new cement players and lower regional cement prices on higher China exports. Share price performance (IDR) 17, 15, 13, 11, 9, 7, 3-Dec-14 3-Feb-15 3-Apr-15 3-Jun-15 3-Aug-15 3-Oct-15 3-Dec-15 Volume (RHS) SMGR IJ Px Last (%) (%) 2 1 (1) (2) (3) (18.4) 8.5 17.7 (5.2) (8.9) (21.) ytd 1M 3M 6M 9M 12M SMGR IJ relative to JCI Source: Bloomberg Teguh Hartanto (teguh.hartanto@bahana.co.id) +6221 25 581 ext. 361 *New, please refer to appendix II (') 5, 4, 3, 2, 1, 2 1 (1) (2) (3) Financial highlights* Year to 31 Dec 213A 214A 215F 216F 217F Revenues (IDRbn) 24,51 26,987 26,545 27,486 28,611 EBIT (IDRbn) 6,972 6,954 5,612 5,594 5,873 Net profit (IDRbn) 5,37 5,566 4,352 4,53 4,727 Bahana/consensus (%) - - 79 72 67 EPS (IDR) 95 938 734 759 797 EPS growth (%) 1.8 3.6 (21.8) 3.5 5. EV/EBITDA (x) 8.2 7.9 9.5 9.4 8.5 P/E (x) 12.2 11.8 15.1 14.6 13.9 FCFPS (IDR) 568 647 (4) (15) 799 FCF yield (%) 5.1 5.8 (.) (1.4) 7.2 BVPS (IDR) 3,521 4,53 4,37 4,844 5,411 P/BV (x) 3.1 2.7 2.6 2.3 2. DPS (IDR) 47 375 22 228 239 Div. yield (%) 3.7 3.4 2. 2.1 2.2 note: based on 3 December 215 closing price Major assumptions Year to 31 Dec 213A 214A 215F 216F 217F Volume capacity (' tons) 3,9 31,8 33,3 4,3 41,7 Export volumes (' tons) 329 197 857 959 1,75 Domestic volumes (' tons) 25,45 26,156 26,261 27,418 28,977 Total volumes (' tons) 25,778 26,353 27,119 28,378 3,52 Utilization rate (%) 83.4 82.9 81.4 7.4 72.1 Company information 12M high/low (IDR) : 16,625/7,2 12M high/low consensus TP (IDR) : 18,/7,8 Majority shareholder (%) : Republic of Indonesia (51.) Shares outstanding (mn)/free float (%) : 5,932/49. Mkt. cap. (IDRbn/USDmn) : 65,692/4,745 3-m avg.daily t.o.(idrbn/usdmn) : 59.6/4.3 Bloomberg/Reuters code : SMGR IJ/SMGR.JK Source: Bloomberg, Reuters; based on 3 December 215 closing price 288
216 Compendium SEMEN INDONESIA Profit & loss Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Sales 24,51 26,987 26,545 27,486 28,611 Gross profit 1,944 11,599 1,254 1,286 1,466 EBITDA 8,48 8,19 7,16 7,33 7,941 Depreciation 1,76 1,237 1,44 1,79 2,68 EBIT 6,972 6,954 5,612 5,594 5,873 Net interest inc./(expense) (177) (97) (15) (42) (1) Forex gain/(losses) 45 75 (27) (1) 1 Other income/(expense) 8 159 118 139 183 Pre-tax profit 6,92 7,91 5,688 5,69 5,957 Taxes (1,566) (1,517) (1,328) (1,178) (1,22) Minority interest 16 (8) (8) (9) (1) Extraordinary gain/(losses) - - - - - Net profit 5,37 5,566 4,352 4,53 4,727 Balance sheet Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Cash and equivalents 4,7 4,926 6,638 5,53 6,284 S-T investments 142 16 38 45 53 Trade receivables 2,238 2,554 2,327 2,425 2,516 Inventories 2,646 2,812 2,889 3,218 3,218 Fixed assets 18,863 2,221 23,66 28,174 29,265 Other assets 2,833 3,697 4,481 5,596 7,789 Total assets 3,793 34,315 39,438 44,988 49,125 Interest bearing liabilities 4,253 4,1 7,39 8,289 8,315 Trade payables 2,52 3,32 2,929 3,92 3,262 Other liabilities 2,235 2,181 2,72 3,93 4,518 Total liabilities 8,989 9,312 12,94 15,311 16,96 Minority interest 921 96 952 942 932 Shareholders' equity 2,883 24,42 25,546 28,735 32,97 Cash flow Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F EBIT 6,972 6,954 5,612 5,594 5,873 Depreciation 1,76 1,237 1,44 1,79 2,68 Working capital (269) 49 47 (263) 79 Other operating items (1,732) (1,518) (1,446) (1,259) (1,331) Operating cash flow 6,47 6,721 5,618 5,781 6,689 Net capital expenditure (2,675) (2,881) (5,639) (6,671) (1,948) Free cash flow 3,372 3,84 (21) (89) 4,741 Equity raised/(bought) - - - - - Net borrowings 38 (153) 3,29 98 26 Other financing (2,632) (2,832) (1,476) (1,198) (4,13) Net cash flow 1,48 855 1,712 (1,17) 754 Cash balances, beginning 3,22 4,7 4,926 6,638 5,53 Ending cash 4,7 4,926 6,638 5,53 6,284 Key ratios Year to 31 Dec 213A 214A 215F 216F 217F ROAE (%) 28.1 24.8 17.6 16.6 15.5 ROAA (%) 18.7 17.1 11.8 1.7 1. Gross margin (%) 44.7 43. 38.6 37.4 36.6 EBITDA margin (%) 32.8 3.3 26.4 26.6 27.8 EBIT margin (%) 28.5 25.8 21.1 2.4 2.5 Net margin (%) 21.9 2.6 16.4 16.4 16.5 Payout ratio (%) 45. 4. 3. 3. 3. Current ratio (x) 1.9 2.2 2.5 1.9 1.3 Interest coverage (x) 39.4 71.8 37.9 134.1 58.5 Net gearing (%).9 nc 2.6 9.6 6.3 Debtor turnover (days) 32 32 32 32 32 Creditor turnover (days) 63 66 66 66 66 Inventory turnover (days) 66 65 65 65 65 289
216 Compendium SIDO MUNCUL BUY PX: IDR555 - TP: IDR63* Beset by competition from Kalbe Farma (KLBF) through its Extra Joss energy drink, SIDO, a leading traditional herbal medicine producer, has recently entered higher-margin businesses in pharmaceuticals (via its acquisition of Berlico Farma) and RTD by launching Ener-G to provide top-line support. Its GPM rose to 39% in 9M15 (214: 35%) following improved sales mix and Tolak Angin's 7-8% ASP hike. Given its already strong traditional trade channels in Java, SIDO plans to seek growth by expanding into the eastern part of Indonesia, by promoting four products launched in mid-215: Tolak Angin-Sugar Free, Ener-G, Tolak Linu and Tolak Angin Care. Our IDR63 TP (from IDR585) on a 216F PE of 17x (5% discount to sector) is sufficient to account for its small cap and the competitive energy drink market. Thus, SIDO s recent under-performance should reverse. BUY. Risk: Unsuccessful tries into new markets. Share price performance (IDR) 7 65 6 55 5 45 3-Dec-14 3-Feb-15 3-Apr-15 3-Jun-15 3-Aug-15 3-Oct-15 3-Dec-15 Volume (RHS) SIDO IJ Px Last (%) (%) 15 1 5 (5) 2.3 12.6 2.9 ytd 1M 3M 6M 9M 12M SIDO IJ relative to JCI Source: Bloomberg Michael W. Setjoadi (michael@bahana.co.id) +6221 25581 ext. 3613 *New, please refer to appendix II 6.4 11.6 (') 7, 6, 5, 4, 3, 2, 1, 15 1 5 (2.5) (5) Financial highlights Year to 31 Dec 213A 214A 215F 216F 217F Revenues (IDRbn) 2,372 2,198 2,31 2,579 2,96 EBIT (IDRbn) 516 438 499 56 625 Net profit (IDRbn) 46 415 469 56 638 Bahana/consensus (%) - - 86 87 99 EPS (IDR) 3 28 31 37 42 EPS growth (%) 4.5 (8.) 13.1 19.4 13.8 EV/EBITDA (x) 1.9 15. 11.5 9.8 8.2 P/E (x) 18.5 2.1 17.8 14.9 13.1 FCFPS (IDR) (4) 4 64 28 36 FCF yield (%) (.8).7 11.6 5.1 6.5 BVPS (IDR) 194 176 21 232 267 P/BV (x) 2.9 3.2 2.8 2.4 2.1 DPS (IDR) 11 27 6 6 7 Div. yield (%) 2. 4.9 1. 1.1 1.3 note: based on 3 December 215 closing price Major assumptions Year to 31 Dec 213A 214A 215F 216F 217F Herbal vol. growth (%) 15. 1. 8. 8. 8. Herbal price growth (%) 6. 2. 3. 3. 5. Energy drinks vol. growth (%) (7.) (29.) (12.) (12.) 3. Energy drinks price growth (%) (2.) (19.8) (12.) 8. 9. Company information 12M high/low (IDR) : 655/44 12M high/low consensus TP (IDR) : 75/54 Majority shareholder (%) : Sulistio Desi (4.5) Shares outstanding (mn)/free float (%) : 15,/19. Mkt. cap. (IDRbn/USDmn) : 8,325/62 3-m avg.daily t.o.(idrbn/usdmn) : 2.5/.3 Bloomberg/Reuters code : SIDO IJ/SIDO.JK Source: Bloomberg, Reuters; based on 3 December 215 closing price 29
216 Compendium SIDO MUNCUL Profit & loss Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Sales 2,372 2,198 2,31 2,579 2,96 Gross profit 1,11 84 893 1,6 1,142 EBITDA 565 496 568 636 79 Depreciation 49 58 68 76 84 EBIT 516 438 499 56 625 Net interest inc./(expense) (5) 14 16 165 196 Forex gain/(losses) 126 (1) (5) (2) 2 Other income/(expense) (55) 4 5 - - Pre-tax profit 583 546 66 723 823 Taxes (177) (13) (136) (163) (185) Minority interest - - - - - Extraordinary gain/(losses) - - - - - Net profit 46 415 469 56 638 Balance sheet Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Cash and equivalents 1,349 865 1,789 2,92 2,52 S-T investments - - - - - Trade receivables 33 323 189 226 255 Inventories 288 231 231 28 314 Fixed assets 556 791 913 987 1,53 Other assets 296 61 149 179 179 Total assets 2,951 2,821 3,295 3,79 4,35 Interest bearing liabilities - - - - - Trade payables 175 137 162 181 23 Other liabilities 136 37 36 37 4 Total liabilities 326 187 275 35 34 Minority interest - - - - - Shareholders' equity 2,625 2,635 3,2 3,485 4,1 Cash flow Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F EBIT 516 438 499 56 625 Depreciation 49 58 68 76 84 Working capital (12) 31 228 (62) (35) Other operating items (349) (159) 297 1 14 Operating cash flow 96 368 1,93 576 689 Net capital expenditure (161) (39) (13) (15) (15) Free cash flow (65) 59 963 426 539 Equity raised/(bought) 1,62 - - - - Net borrowings (7) - - - - Other financing (51) (544) (39) (123) (111) Net cash flow 938 (484) 924 33 428 Cash balances, beginning 411 1,349 865 1,789 2,92 Ending cash 1,349 865 1,789 2,92 2,52 Key ratios Year to 31 Dec 213A 214A 215F 216F 217F ROAE (%) 2.7 15.8 16.6 17.2 17. ROAA (%) 15.9 14.4 15.3 15.8 15.7 Gross margin (%) 42.6 38.2 38.8 39. 39.3 EBITDA margin (%) 23.8 22.6 24.7 24.7 24.4 EBIT margin (%) 21.8 19.9 21.7 21.7 21.5 Net margin (%) 17.1 18.9 2.4 21.7 21.9 Payout ratio (%) 36.9 97.8 2. 2. 2. Current ratio (x) 7.3 1.3 8.4 8.9 9.4 Interest coverage (x) 14.9 na na na na Net gearing (%) nc nc nc nc nc Debtor turnover (days) 45 54 41 29 3 Creditor turnover (days) 49 42 39 4 4 Inventory turnover (days) 7 7 6 59 61 291
216 Compendium SILOAM INTERNATIONAL HOSPITALS BUY PX: IDR9,7 - TP: IDR14,7* SILO, Indonesia s largest private hospital chain, with 13 of its 2 hospitals accepting National Health Insurance (JKN), has seen delays in its expansion plans due to construction issues and slower demand on non-urgent treatment due to the slowing economy. SILO plans to open 2 private and 2 hybrid hospitals (for private and JKN patients) p.a. in the next 5 years. We expect additional growth from the conversion of 6 other private hospitals into hybrid hospitals. As these hospitals mature, we expect higher utilization rates and greater efficiencies, resulting in improved EBITDA margins. Following SILO s market underperformance, valuation looks attractive. Our IDR14,7 TP (from IDR17,2) is based on a 24x 216F EV/EBITDA, a 5% discount to MIKA IJ s valuation and 1- year DCF valuation, sufficient to account for JKN s continued fund deficit on poor cost control. Risk: a weak IDR. Share price performance (IDR) 17, 15, 13, 11, 9, 7, 3-Dec-14 3-Feb-15 3-Apr-15 3-Jun-15 3-Aug-15 3-Oct-15 3-Dec-15 Volume (RHS) SILO IJ Px Last (%) (%) (1) (2) (3) (4) (5) (16.) (.6) (4.9) (19.) (5.6) (16.9) ytd 1M 3M 6M 9M 12M SILO IJ relative to JCI Source: Bloomberg Michael W. Setjoadi (michael@bahana.co.id) +6221 25581 ext. 3613 *New, please refer to appendix II (') 5, 4, 3, 2, 1, (1) (2) (3) (4) (5) Financial highlights Year to 31 Dec 213A 214A 215F 216F 217F Revenues (IDRbn) 2,54 3,341 4,116 5,242 6,675 EBIT (IDRbn) 76 168 215 276 351 Net profit (IDRbn) 5 63 94 142 21 Bahana/consensus (%) - - 1 15 9 EPS (IDR) 5 54 81 123 174 EPS growth (%) (1.2) 8.5 49.7 51.8 41.4 EV/EBITDA (x) 31.8 23.5 19. 14.9 11.4 P/E (x) 194.6 179.2 119.8 78.9 55.8 FCFPS (IDR) (563) (96) (111) (172) 31 FCF yield (%) (5.8) (1.) (1.1) (1.8).3 BVPS (IDR) 1,611 1,426 1,496 1,63 1,752 P/BV (x) 6. 6.8 6.5 6.1 5.5 DPS (IDR) - - 11 16 25 Div. yield (%) - -.1.2.3 note: based on 3 December 215 closing price Major assumptions Year to 31 Dec 213A 214A 215F 216F 217F Beds occupancy rate (%) 51.3 56.2 54.4 55.5 57.1 Ave. IPD length of stay (days) 4.3 4.1 3.9 3.8 3.8 IPD/OPD admissions (%) 7.1 7.7 8.1 8.3 8.6 No. of beds in operation (unit) 1,985 2,277 2,79 3,365 4,3 Company information 12M high/low (IDR) : 16,9/9,625 12M high/low consensus TP (IDR) : 19,/1, Majority shareholder (%) : LPKR IJ (7.8) Shares outstanding (mn)/free float (%) : 1,156/18. Mkt. cap. (IDRbn/USDmn) : 11,214/81 3-m avg.daily t.o.(idrbn/usdmn) : 39.9/3.4 Bloomberg/Reuters code : SILO IJ/SILO.JK Source: Bloomberg, Reuters; based on 3 December 215 closing price 292
216 Compendium SILOAM INTERNATIONAL HOSPITALS Profit & loss Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Sales 2,54 3,341 4,116 5,242 6,675 Gross profit 659 952 1,194 1,544 1,982 EBITDA 33 487 61 795 1,43 Depreciation 227 319 395 518 692 EBIT 76 168 215 276 351 Net interest inc./(expense) (7) (4) (43) (56) (77) Forex gain/(losses) - - - - - Other income/(expense) 3 (34) (4) (2) 1 Pre-tax profit 72 94 131 2 284 Taxes (22) (34) (39) (6) (85) Minority interest () 3 2 2 2 Extraordinary gain/(losses) - - - - - Net profit 5 63 94 142 21 Balance sheet Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Cash and equivalents 515 28 94 57 162 S-T investments - - - - - Trade receivables 272 399 439 558 79 Inventories 95 16 123 156 198 Fixed assets 1,42 1,589 1,739 2,5 2,123 Other assets 317 47 523 591 671 Total assets 2,61 2,844 2,918 3,367 3,863 Interest bearing liabilities 447 514 45 674 867 Trade payables 164 193 236 298 379 Other liabilities 351 483 498 536 586 Total liabilities 962 1,19 1,184 1,58 1,832 Minority interest 28 5 5 5 5 Shareholders' equity 1,611 1,648 1,729 1,853 2,25 Cash flow Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F EBIT 76 168 215 276 351 Depreciation 227 319 395 518 692 Working capital (76) 13 (72) (75) (48) Other operating items (26) (16) (121) (134) (15) Operating cash flow 21 395 416 585 846 Net capital expenditure (764) (56) (544) (784) (81) Free cash flow (563) (111) (128) (199) 35 Equity raised/(bought) 1,328 (26) - - - Net borrowings (48) 46 1 241 17 Other financing (11) (145) (58) (79) (1) Net cash flow 347 (235) (186) (37) 15 Cash balances, beginning 169 515 28 94 57 Ending cash 515 28 94 57 162 Key ratios Year to 31 Dec 213A 214A 215F 216F 217F ROAE (%) 5.4 3.8 5.5 7.9 1.4 ROAA (%) 2.4 2.3 3.2 4.5 5.6 Gross margin (%) 26.3 28.5 29. 29.5 29.7 EBITDA margin (%) 12.1 14.6 14.8 15.2 15.6 EBIT margin (%) 3. 5. 5.2 5.3 5.3 Net margin (%) 2. 1.9 2.3 2.7 3. Payout ratio (%) - - 2. 2. 2. Current ratio (x) 3.1 1.8 1.5 1.5 1.6 Interest coverage (x) 11. 4.2 5. 4.9 4.6 Net gearing (%) nc 14.2 2.6 33.3 34.8 Debtor turnover (days) 32 29 29 29 29 Creditor turnover (days) 39 43 39 39 39 Inventory turnover (days) 19 16 15 15 15 293
216 Compendium SOECHI LINES BUY PX: IDR459 - TP: IDR63 Despite stable business from oil companies like Pertamina (5% of total revenue) and Conoco Phillips, SOCI, a leading oil tanker logistic company with some 2% market share in Indonesia, has seen lower 215 margins due to an increased portion of lower-margin ship building business (GPM: 15%) and higher docking vessels. Going into 216, we expect new vessels and increased utilization rates to pave the way for 216 revenue to reach USD163mn, up 22% y-y. On the cost front, we expect 216 margin support to come from its new ship-maintenance business (GPM: 3%). We expect SOCI to book 216 EBIT growth of 32%, helped by stable incomes from long-term contracts. On valuation, our 12M TP of IDR63, based on 216F PE of 7x, reflects a 25% discount to regional peers. BUY on 37% potential upside to our TP. Risk: Lower-thanexpected utilization rates. Share price performance (IDR) 75 65 55 45 35 3-Dec-14 3-Feb-15 3-Apr-15 3-Jun-15 3-Aug-15 3-Oct-15 3-Dec-15 Volume (RHS) SOCI IJ Px Last (%) (%) (1) (2) (3) (2.4) (5.9) (9.2) (17.2) Source: Bloomberg Agustinus Reza Kirana (agustinus.reza@bahana.co.id) +6221 255735 ext. 3616 *New, please refer to appendix II (7.4) (13.8) ytd 1M 3M 6M 9M 12M SOCI IJ relative to JCI (') 35, 3, 25, 2, 15, 1, 5, (1) (2) (3) Financial highlights* Year to 31 Dec 213A 214A 215F 216F 217F Revenues (USDmn) 16 127 134 163 17 EBIT (USDmn) 29 45 42 56 59 Net profit (USDmn) 3 33 38 45 45 Bahana/consensus.(%) - - 87 91 82 EPS (IDR) 119 95 76 89 9 EPS growth (%) (2.5) (19.7) (2.4) 21.6.4 EV/EBITDA (x) 1.1 6.9 7. 5.7 5.5 P/E (x) 3.9 4.8 6. 5. 5.1 FCFPS (IDR) (184) (32) (27) 1 3 FCF yield (%) (4) (7) (6) 1 BVPS (IDR) 542 683 533 64 681 P/BV (x).8.7.9.8.7 DPS (IDR) - - 2 23 27 Div. yield (%) - - 4.3 5. 5.8 note: based on 3 December 215 closing price Major assumptions Year to 31 Dec 213A 214A 215F 216F 217F General purpose vessels (units) 22 24 26 26 26 Medium range vessels (units) 4 3 3 5 7 Aframax tanker & VLCC (units) 6 8 8 9 1 Utilization rates (%) 91. 89.1 85. 88. 87.3 IDR/USD 12,157 12,385 14, 14,5 14, Company information 12M high/low (IDR) : 735/393 12M High/low consensus TP (IDR) : 83/741 Majority shareholder (%) : Soechi Group (8) Shares outstanding (mn)/free float (%) : 7,59/15 Mkt. cap. (IDRbn/USDmn) : 3,92/223 3-m avg.daily t.o.(idrbn/usdmn) : 3.7/.3 Bloomberg/Reuters code : SOCI IJ/SOCI.JK Source: Bloomberg, Reuters; based on 3 December 215 closing price 294
216 Compendium SOECHI LINES Profit & loss Year to 31 Dec (USDmn) 213A 214A 215F 216F 217F Sales 16 127 134 163 17 Gross profit 36 51 5 64 67 EBITDA 41 56 56 71 76 Depreciation 11 11 14 16 17 EBIT 29 45 42 56 59 Net interest inc./(expense) (1) (1) (9) (1) (1) Forex gain/(losses) 15 1 8 2 (1) Other income/(expense) (4) (1) - - - Pre-tax profit 3 35 4 48 48 Taxes () (2) (2) (3) (3) Minority interest () () () () Extraordinary gain/(losses) - - - - - Net profit 3 33 38 45 45 Balance sheet Year to 31 Dec (USDmn) 213A 214A 215F 216F 217F Cash and equivalents 3 21 5 (2) (6) S-T investments - - - - - Trade receivables 18 7 2 25 26 Inventories 4 5 3 4 4 Fixed assets 327 383 426 474 52 Other assets 23 24 2 23 24 Total assets 375 44 475 524 568 Interest bearing liabilities 181 171 181 19 194 Trade payables 12 13 14 16 17 Other liabilities 43 17 12 13 13 Total liabilities 236 22 26 219 224 Minority interest Shareholders' equity 138 238 269 34 344 Cash flow Year to 31 Dec (USDmn) 213A 214A 215F 216F 217F EBIT 29 45 42 56 59 Depreciation 11 11 14 16 17 Working capital (2) 18 (12) (3) (1) Other operating items 1 (23) (8) (2) (23) Operating cash flow 22 5 36 48 52 Net capital expenditure (69) (61) (5) (55) (55) Free cash flow (47) (11) (14) (7) (3) Equity raised/(bought) 25 66 - - - Net borrowings 18 (1) 1 9 4 Other financing 2 (27) (12) (9) (6) Net cash flow (1) 18 (16) (7) (5) Cash balances, beginning 4 3 21 5 (2) Ending cash 3 21 5 (2) (6) Key ratios Year to 31 Dec 213A 214A 215F 216F 217F ROAE (%) 27.4 17.7 1.3 13.6 13.8 ROAA (%) 9. 8.2 3.6 6.2 8.1 Gross margin (%) 33.7 4.3 37.1 39.2 39.5 EBITDA margin (%) 38.1 43.7 42.1 43.9 44.7 EBIT margin (%) 27.4 35. 31.6 34.4 34.7 Net margin (%) 28.5 26. 28.6 27.7 26.6 Payout ratio (%) - - 3. 3. 3. Current ratio (x).4.6.6.5.5 Interest coverage (x) 3. 4.6 4.5 5.7 5.8 Net gearing (%) 128.8 63.2 65.5 62.9 58.4 Debtor turnover (days) 61 3 5 5 5 Creditor turnover (days) 62 75 6 6 6 Inventory turnover (days) 1 5 15 15 15 295
216 Compendium SRI REJEKI ISMAN BUY PX: IDR324 - TP: IDR5* Given the recent weak IDR, SRIL, Southeast Asia s largest fully integrated textile player, has enjoyed higher margins due to its high USD-linked sales (7% of top line) while most opex is in IDR. Looking ahead, we expect SRIL to benefit not only from cheap labor but also from orders shifting away from China on labor shortages. With SRIL s rapid expansion across all of its business segments, the company has decided to embark on constructing its own USD1mn 6MW power plant by end-216. This would be partly funded by a USD4mn bond issuance (8-9% indicative coupon rate), of which USD3mn would be used for debt refinancing. With the power plant s IRR expected at 15% (equivalent to 3% higher margin) using current coal price, we retain our positive view on SRIL. At our new TP of IDR5 (from IDR35), or a 9.6x 216F PE, SRIL still trades at a 3% discount to PBRX s valuation. Risk: Stronger IDR. Share price performance (IDR) (') 5 1,4, 45 1,2, 4 1,, 35 8, 3 6, 25 2 4, 15 2, 1 3-Dec-14 3-Feb-15 3-Apr-15 3-Jun-15 3-Aug-15 3-Oct-15 3-Dec-15 Volume (RHS) SRIL IJ Px Last (%) (%) 16 14 12 1 8 6 4 2 (2) 138.3 1.1 (5.9) ytd 1M 3M 6M 9M 12M SRIL IJ relative to JCI 2.7 13.5 Source: Bloomberg Michael W. Setjoadi (michael@bahana.co.id) +6221 25581 ext. 3613 *New, please refer to appendix II 12.6 16 14 12 1 8 6 4 2 (2) Financial highlights* Year to 31 Dec 213A 214A 215F 216F 217F Revenues (USDmn) 451 555 599 68 791 EBIT (USDmn) 73 95 114 129 154 Net profit (USDmn) 3 45 52 67 84 Bahana/cons.(%) - - 113 124 - EPS (IDR) 25 34 39 52 66 EPS growth (%) (2.9) 32.2 25.3 32.3 25.7 EV/EBITDA (x) 34.6 8. 6.6 5.6 5. P/E (x) 14.1 1.7 9.1 6.9 5.5 FCFPS (IDR) 2 (5) (1) 3 4 FCF yield (%).4 (1.5) (.3).8 1.1 BVPS (IDR) 164 175 218 276 32 P/BV (x) 2.2 2. 1.6 1.3 1.1 DPS (IDR) 3 3 4 5 7 Div. yield (%).7 1. 1.1 1.5 1.8 note: based on 3 December 215 closing price Major assumptions Year to 31 Dec 213A 214A 215F 216F 217F Spinning volume (bale of yarn) 427 59 543 554 622 Garment volume (shirt) 9.1 12.6 17.2 2.7 24.5 Total debt (IDRbn) 2 416 454 48 45 Company information 12M high/low (IDR) : 474/15 12M high/low consensus TP (IDR) : 432/19 Majority shareholder (%) : Huddleston Indonesia (56.1) Shares outstanding (mn)/free float (%) : 18,593/43.9 Mkt. cap. (IDRbn/USDmn) : 6,675/482 3-m avg.daily t.o.(idrbn/usdmn) : 2.3/3.1 Bloomberg/Reuters code : SRIL IJ/SRIL.JK Source: Bloomberg, Reuters; based on 3 December 215 closing price 296
216 Compendium SRI REJEKI ISMAN Profit & loss Year to 31 Dec (USDmn) 213A 214A 215F 216F 217F Sales 451 555 599 68 791 Gross profit 97 122 141 161 191 EBITDA 88 19 132 152 179 Depreciation 15 14 18 22 25 EBIT 73 95 114 129 154 Net interest inc./(expense) (2) (28) (39) (41) (45) Forex gain/(losses) (12) (2) (5) (1) 1 Other income/(expense) 3 1 - - - Pre-tax profit 44 66 7 88 19 Taxes (13) (15) (15) (18) (22) Minority interest () () () () Extraordinary gain/(losses) (2) (6) (3) (3) (3) Net profit 3 45 52 67 84 Balance sheet Year to 31 Dec (USDmn) 213A 214A 215F 216F 217F Cash and equivalents 6 82 53 56 8 S-T investments - - - - - Trade receivables 61 129 18 116 129 Inventories 12 11 134 152 176 Fixed assets 25 323 459 516 551 Other assets 21 55 61 51 51 Total assets 459 699 814 892 977 Interest bearing liabilities 2 416 45 45 45 Trade payables 42 19 38 46 53 Other liabilities 26 31 35 41 49 Total liabilities 268 466 524 538 552 Minority interest Shareholders' equity 19 233 29 354 425 Cash flow Year to 31 Dec (USDmn) 213A 214A 215F 216F 217F EBIT 73 95 114 129 154 Depreciation (8) 17 18 22 25 Working capital (9) (11) 15 (3) (21) Other operating items (1) (14) (15) (18) (22) Operating cash flow 46 (12) 132 131 136 Net capital expenditure (19) (9) (153) (8) (6) Free cash flow 27 (12) (22) 51 76 Equity raised/(bought) 96 (18) - - - Net borrowings (8) 216 34 - - Other financing (117) (21) (41) (47) (52) Net cash flow (2) 75 (29) 4 24 Cash balances, beginning 8 6 82 53 56 Ending cash 6 82 53 56 8 Key ratios Year to 31 Dec 213A 214A 215F 216F 217F ROAE (%) 17.5 21.1 21.1 21.1 21.6 ROAA (%) 6.6 7.7 7.3 8. 9. Gross margin (%) 21.6 22.1 23.5 23.7 24.2 EBITDA margin (%) 19.5 19.6 22. 22.3 22.6 EBIT margin (%) 16.2 17.1 19. 19. 19.5 Net margin (%) 6.6 8.1 8.7 9.8 1.6 Payout ratio (%) 1.3 1.3 1.3 1.3 1.3 Current ratio (x) 1. 5.3 5. 4.6 4.6 Interest coverage (x).3.3.3.3.3 Net gearing (%) 11.9 143.4 137.2 111.4 87. Debtor turnover (days) 38 63 66 63 6 Creditor turnover (days) 5 26 31 33 33 Inventory turnover (days) 12 97 17 17 17 297
216 Compendium SUMMARECON AGUNG BUY PX: IDR1,57 - TP: IDR1,82 Known as a specialist and the first Indonesian township developer, SMRA, is trying to diversify its portfolio by developing hotels in Bali and offices in Serpong (to be opened in 1H16) in order to provide greater income stability with 216F recurring income of around 3% (9M15: 28%) and higher y-y revenue growth of 9% (9M15: 14%). In 216, we forecast SMRA s marketing sales to rise 15% y-y to IDR4.9tn, backed by its new 33ha township mega project in Bandung, West Java (launch by end-215). This project should benefit from the Bandung government s plan to move its administrative centre near the area and also build a toll-road access nearby. With a rising recurring-income, solid project launches ahead and no USD debt, we raise our NAV-based TP to IDR1,82 (6% NAV discount). BUY. Risk: lower-than-expected demand causing poor marketing sales. Share price performance (IDR) 2, 1,8 1,6 1,4 1,2 1, 3-Dec-14 3-Feb-15 3-Apr-15 3-Jun-15 3-Aug-15 3-Oct-15 3-Dec-15 Volume (RHS) SMRA IJ Px Last (%) (%) 2 15 1 5 (5) 16.5 8.2.6 (.2) 12. 11.5 ytd 1M 3M 6M 9M 12M SMRA IJ relative to JCI Source: Bloomberg Sanni Satrio Dwi Utomo (sanni@bahana.co.id) +6221 25581 ext. 3611 (') 7, 6, 5, 4, 3, 2, 1, 2 15 1 5 (5) Financial highlights Year to 31 Dec 213A 214A 215F 216F 217F Revenues (IDRbn) 4,549 5,757 6,15 6,724 7,485 EBIT (IDRbn) 1,624 2,77 1,948 2,146 2,384 Net profit (IDRbn) 1,14 1,386 1,259 1,382 1,54 Bahana/cons.(%) - - 99 98 92 EPS (IDR) 79 96 87 96 17 EPS growth (%) (29.2) 21.6 (9.1) 9.7 11.4 EV/EBITDA (x) 12.6 11.1 12.1 11.2 1.1 P/E (x) 19.9 16.3 18. 16.4 14.7 FCFPS (IDR) (97) (24) (79) (26) (3) FCF yield (%) (6.2) (13.) (5.1) (1.7) (.2) BVPS (IDR) 346 445 523 68 73 P/BV (x) 4.5 3.5 3. 2.6 2.2 DPS (IDR) 2 2 18 2 22 Div. yield (%) 1.3 1.3 1.2 1.3 1.4 note: based on 3 December 215 closing price NAV-derived target price calculation 9M15 Land bank (Ha) 2,76 Total value (IDRbn) 65,758 NAV/share (IDR) 4,558 Discount (%) 6 Adjusted NAV/share (IDR) 1,823 Company information 12M high/low (IDR) : 1,995/1,35 12M High/low consensus TP (IDR) : 2,15/1,18 Majority shareholder (%) : Semarop Agung (25.4) Share outstanding (m)/free float (%) : 14,427/67.7 Mkt. cap. (IDRbn/USDmn) : 22,65/1,636 3-m avg.daily t.o.(idrbn/usdmn) : 5.1/3.6 Bloomberg/Reuters code : SMRA IJ/SMRA.JK Source: Bloomberg, Reuters; based on 3 December 215 closing price 298
216 Compendium SUMMARECON AGUNG Profit & loss Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Sales 4,549 5,757 6,15 6,724 7,485 Gross profit 2,441 3,57 3,122 3,428 3,83 EBITDA 1,774 2,282 2,18 2,47 2,679 Depreciation 151 24 233 262 295 EBIT 1,624 2,77 1,948 2,146 2,384 Net interest inc./(expense) (15) (159) (274) (31) (338) Forex gain/(losses) - - - - - Other income/(expense) 6 19 6 7 7 Pre-tax profit 1,615 1,937 1,679 1,843 2,53 Taxes (247) (319) (252) (276) (38) Minority interest (228) (232) (168) (184) (25) Extraordinary gain/(losses) - - - - - Net profit 1,14 1,386 1,259 1,382 1,54 Balance sheet Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Cash and equivalents 2,819 1,771 1,488 1,366 1,447 S-T investments - - - - - Trade receivables 182 77 219 239 267 Inventories 3,264 3,341 4,343 5,211 6,253 Fixed assets 3,486 4,387 5,5 5,734 6,476 Other assets 4,54 6,297 7,647 8,941 9,938 Total assets 14,255 15,872 18,747 21,493 24,38 Interest bearing liabilities 2,51 4,382 5,161 5,578 5,878 Trade payables 7 71 183 199 22 Other liabilities 6,686 5,3 5,855 6,942 8,138 Total liabilities 9,257 9,456 11,199 12,719 14,237 Minority interest 66 993 1,92 1,21 1,322 Shareholders' equity 4,392 5,424 6,455 7,573 8,822 Cash flow Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F EBIT 1,624 2,77 1,948 2,146 2,384 Depreciation 151 24 233 262 295 Working capital (1,136) (1,554) (863) (366) (49) Other operating items (26) (1,387) (275) (355) (394) Operating cash flow 612 (659) 1,43 1,687 1,795 Net capital expenditure (2,7) (2,285) (2,188) (2,67) (1,843) Free cash flow (1,394) (2,945) (1,146) (38) (48) Equity raised/(bought) - - - - - Net borrowings 1,572 1,864 996 417 3 Other financing (21) 33 (132) (158) (172) Net cash flow 156 (1,48) (283) (122) 8 Cash balances, beginning 2,663 2,819 1,771 1,488 1,366 Ending cash 2,819 1,771 1,488 1,366 1,447 Key ratios Year to 31 Dec 213A 214A 215F 216F 217F ROAE (%) 25.7 28.2 21.2 19.7 18.8 ROAA (%) 8.9 9.2 7.3 6.9 6.7 Gross margin (%) 53.7 53.1 5.8 51. 51.2 EBITDA margin (%) 39. 39.6 35.5 35.8 35.8 EBIT margin (%) 35.7 36.1 31.7 31.9 31.9 Net margin (%) 25.1 24.1 2.5 2.6 2.6 Payout ratio (%) 29.2 2.8 21. 21. 21. Current ratio (x) 1.4 2.7 3.2 3.2 3.1 Interest coverage (x) 111.5 13.1 7.1 6.9 7. Net gearing (%) nc 48.2 56.9 55.6 5.2 Debtor turnover (days) 12 13 13 13 13 Creditor turnover (days) 23 22 22 22 22 Inventory turnover (days) - - - - - 299
216 Compendium SURYA CITRA MEDIA HOLD PX: IDR3,7 - TP: IDR3,25* To secure sustained growth, SCMA, the leading media player after MNCN with two FTA TV stations (SCTV and Indosiar) and in-house production houses (IEG and Screenplay), is in the process of reorganizing its content business to target and monetize new revenue sources (e.g., pay TV providers and online marketers). In 216, soft GDP growth and slow ad spend recovery should remain challenges, although SCMA s top line should see support from new e- commerce players (already 5% of revenues) and programming mix to maintain rate cards. We expect earnings benefits from lower programming costs on terminating pricey European sports in 1H16. On valuation, our 12M TP of IDR3,25, based on a 216F PE of 28.5x (c. 1% sector premium), provides limited upside potential from current levels. Upside risks: TV digitalization and faster GDP growth; Downside risks: Stricter implementation of cigarette ad ban. Share price performance (IDR) (') 4, 5, 3,75 3,5 4, 3,25 3, 3, 2,75 2, 2,5 2,25 1, 2, 3-Dec-14 3-Feb-15 3-Apr-15 3-Jun-15 3-Aug-15 3-Oct-15 3-Dec-15 Volume (RHS) SCMA IJ Px Last (%) (%) 2 19.7 2 15 1 5.9 1.1 ytd 1M 3M 6M 9M 12M SCMA IJ relative to JCI Source: Bloomberg Bagus Adi Yoga Prawira (yoga.prawira@bahana.co.id) +6221 25581 ext. 364 *New, please refer to appendix II 13.7 1.4 2.7 15 1 5 Financial highlights* Year to 31 Dec 213A 214A 215F 216F 217F Revenues (IDRbn) 3,695 4,56 4,253 4,573 4,983 EBIT (IDRbn) 1,759 1,917 1,997 2,192 2,48 Net profit (IDRbn) 1,28 1,454 1,519 1,674 1,848 Bahana/consensus (%) - - 1 97 91 EPS (IDR) 88 99 14 114 126 EPS growth (%) 9.4 13.6 4.4 1.2 1.4 EV/EBITDA (x) 23.8 22.2 21.5 19.5 17.6 P/E (x) 35.1 3.9 29.6 26.8 24.3 FCFPS (IDR) 75 69 98 16 115 FCF yield (%) 2.4 2.2 3.2 3.4 3.8 BVPS (IDR) 191 238 272 39 349 P/BV (x) 16.1 12.9 11.3 9.9 8.8 DPS (IDR) 51 7 78 86 95 Div. yield (%) 1.7 2.3 2.5 2.8 3.1 note: based on 3 December 215 closing price Major assumptions Year to 31 Dec 213A 214A 215F 216F 217F Advertising rate growth (%) 12.7 9.8 4.9 7.5 9. Prog. cost rate growth (%) 35.7 34.6 35.1 34.6 34.1 Operating exp. to revenue (%) 16.4 16.4 16.1 15.9 15.9 Company information 12M high/low (IDR) : 3,9/2,445 12M High/low consensus TP (IDR) : 3,91/3,297 Majority shareholder (%) : Elang Mahkota Teknologi Tbk (61.8) Shares outstanding (mn)/free float (%) : 14,622/38.2 Mkt. cap. (IDRbn/USDmn) : 44,888/3,243 3-m avg.daily t.o.(idrbn/usdmn) : 19.1/1.4 Bloomberg/Reuters code : SCMA IJ/SCMA.JK Source: Bloomberg, Reuters based on 3 December 215 closing price 3
216 Compendium SURYA CITRA MEDIA Profit & loss Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Sales 3,695 4,56 4,253 4,573 4,983 Gross profit 2,313 2,576 2,673 2,91 3,19 EBITDA 1,846 1,968 2,5 2,247 2,466 Depreciation 87 51 53 56 58 EBIT 1,759 1,917 1,997 2,192 2,48 Net interest inc./(expense) 5 23 35 5 Forex gain/(losses) - - - - - Other income/(expense) - - - - - Pre-tax profit 1,764 1,917 2,2 2,226 2,457 Taxes (448) (469) (494) (544) (61) Minority interest (6) 6 (7) (8) (8) Extraordinary gain/(losses) (3) - - - - Net profit 1,28 1,454 1,519 1,674 1,848 Balance sheet Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Cash and equivalents 1,43 1,246 837 1,151 1,478 S-T investments - - - - - Trade receivables 1,15 1,291 1,36 1,462 1,593 Inventories 375 462 459 478 511 Fixed assets 725 762 89 853 895 Other assets 853 967 982 993 1,11 Total assets 4,1 4,728 4,446 4,937 5,487 Interest bearing liabilities 51 12 112 88 71 Trade payables 989 931 973 1,23 1,83 Other liabilities 18 218 189 193 198 Total liabilities 1,221 1,25 1,273 1,34 1,353 Minority interest 52 32 32 32 32 Shareholders' equity 2,738 3,446 3,944 4,479 5,72 Cash flow Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F EBIT 1,759 1,917 1,997 2,192 2,48 Depreciation 87 51 53 56 58 Working capital (92) (329) (79) (19) (144) Other operating items (541) (498) (428) (49) (536) Operating cash flow 1,213 1,141 1,542 1,648 1,786 Net capital expenditure (12) (88) (1) (1) (1) Free cash flow 1,111 1,53 1,442 1,548 1,686 Equity raised/(bought) (218) (19) - - - Net borrowings 51 5 1 (23) (17) Other financing (967) (881) (1,862) (1,211) (1,342) Net cash flow (22) 23 (41) 314 327 Cash balances, beginning 1,66 1,43 1,246 837 1,151 Ending cash 1,43 1,246 837 1,151 1,478 Key ratios Year to 31 Dec 213A 214A 215F 216F 217F ROAE (%) 47.6 47. 41.1 39.7 38.7 ROAA (%) 32.6 33.3 33.1 35.7 35.5 Gross margin (%) 62.6 63.5 62.8 63.6 64. EBITDA margin (%) 5. 48.5 48.2 49.1 49.5 EBIT margin (%) 47.6 47.3 46.9 47.9 48.3 Net margin (%) 34.6 35.8 35.7 36.6 37.1 Payout ratio (%) 58.3 7.2 75. 75. 75. Current ratio (x) 3.6 3.9 3.3 3.7 4. Interest coverage (x) 37.6 28.3 46.8 19.6 151.2 Net gearing (%) nc nc nc nc nc Debtor turnover (days) 99 12 115 115 115 Creditor turnover (days) 51 51 51 51 51 Inventory turnover (days) 85 13 16 15 14 31
216 Compendium SURYA SEMESTA INTERNUSA BUY PX: IDR59 - TP: IDR72* With the biggest exposure to construction of its peers, SSIA, through its subsidiary NRCA, is attempting to diversify from its core industrial land sales, which have been weak (9M15 marketing sales: 1ha, 5% of full-year target). That said, NRCA booked 9M15 new contracts of IDR2.7tn, 15% higher than the 214 full-year figure, mainly from SSIA s residential and commercial projects. In 216, NRCA targets IDR4.5tn in new contracts, up 9.75% from the 215 target of IDR4.1tn, backed by SSIA s plan to obtain government toll-road and infrastructure projects. We see this as a positive catalyst and look for top-line growth of 15% y-y in 216. On valuation, we apply a 7% discount to our 216F NAV to derive our IDR72 TP, above the sector s 67% average given SSIA s lowmargin construction business. BUY. Risks are higher-than-expected project write-offs and a weak IDR. Share price performance (IDR) 1,4 1,2 1, 8 6 4 3-Dec-14 3-Feb-15 3-Apr-15 3-Jun-15 3-Aug-15 3-Oct-15 3-Dec-15 Volume (RHS) SSIA IJ Px Last (%) (%) (5) (1) (15) (2) (25) (3) (35) (4) (8.6) (23.2) (31.7) (3.) (36.5) (34.7) ytd 1M 3M 6M 9M 12M SSIA IJ relative to JCI Source: Bloomberg Sanni Satrio Dwi Utomo (sanni@bahana.co.id) +6221 25581 ext. 3611 *New, please refer to appendix II (') 1, 8, 6, 4, 2, (5) (1) (15) (2) (25) (3) (35) (4) Financial highlights* Year to 31 Dec 213A 214A 215F 216F 217F Revenues (IDRbn) 4,583 4,464 5,282 6,65 6,939 EBIT (IDRbn) 872 535 845 937 1,95 Net profit (IDRbn) 691 415 579 618 716 Bahana/consensus (%) - - 117 127 126 EPS (IDR) 147 88 123 131 152 EPS growth (%) (2.3) (39.9) 39.4 6.8 15.9 EV/EBITDA (x) 2.4 4.3 3.2 2.9 2.6 P/E (x) 4. 6.7 4.8 4.5 3.9 FCFPS (IDR) (124) (48) (93) 7 8 FCF yield (%) (21) (8) (16) 1 1 BVPS (IDR) 493 563 673 78 96 P/BV (x) 1.2 1..9.8.7 DPS (IDR) 25 18 25 26 3 Div. yield (%) 4.2 3. 4.2 4.5 5.2 note: based on 3 December 215 closing price NAV-derived target price calculation NAV Table 9M15 Land value (IDRbn) 614 (Based on 7% discount to NAV) Property value (IDRbn) 1,31 (Based on DCF) Construction business (IDRbn) 2,282 (Based on 12x 216F P/E) Total Value (IDRbn) 3,399 Value/share (IDR) 722 Company information 12M high/low (IDR) : 1,345/565 12M High/low consensus TP (IDR) : 1,42/692 Majority shareholder (%) : Arman Investment Utama (9.5) Shares outstanding (mn)/free float (%) : 4,75/68.6 Mkt. cap. (IDRbn/USDmn) : 2,776/21 3-m avg.daily t.o.(idrbn/usdmn) : 14.2/1. Bloomberg/Reuters code : SSIA IJ/SSIA.JK Source: Bloomberg, Reuters; based on 3 December 215 closing price 32
216 Compendium SURYA SEMESTA INTERNUSA Profit & loss Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Sales 4,583 4,464 5,282 6,65 6,939 Gross profit 1,32 1,54 1,45 1,632 1,89 EBITDA 988 668 983 1,79 1,241 Depreciation 116 133 138 142 146 EBIT 872 535 845 937 1,95 Net interest inc./(expense) (61) (64) (79) (86) (1) Forex gain/(losses) 26 6 29 5 (2) Other income/(expense) 3 (34) - - - Pre-tax profit 97 671 88 942 1,78 Taxes (16) (158) (174) (188) (215) Minority interest (55) (98) (127) (136) (147) Extraordinary gain/(losses) - - - - - Net profit 691 415 579 618 716 Balance sheet Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Cash and equivalents 1,692 1,173 1,18 1,58 1,12 S-T investments - - - - - Trade receivables 699 47 416 374 377 Inventories 459 351 421 463 59 Fixed assets 1,483 1,688 1,85 2,8 2,163 Other assets 1,482 2,312 3,282 4,42 4,88 Total assets 5,814 5,993 7,149 7,946 8,977 Interest bearing liabilities 1,279 1,279 1,54 1,424 1,525 Trade payables 346 356 465 622 713 Other liabilities 1,578 1,319 1,67 1,782 1,982 Total liabilities 3,23 2,954 3,577 3,828 4,219 Minority interest 291 39 429 472 519 Shareholders' equity 2,32 2,649 3,167 3,669 4,262 Cash flow Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F EBIT 872 535 845 937 1,95 Depreciation 116 133 138 142 146 Working capital (81) 279 338 273 169 Other operating items (541) (864) (316) (39) (452) Operating cash flow (353) 83 1,4 962 959 Net capital expenditure (231) (311) (1,44) (93) (92) Free cash flow (584) (228) (436) 32 39 Equity raised/(bought) 172 53 - - - Net borrowings (39) 1 225 (8) 1 Other financing 254 (323) 218 (74) (77) Net cash flow (198) (497) 8 (122) 62 Cash balances, beginning 1,89 1,692 1,173 1,18 1,58 Ending cash 1,692 1,173 1,18 1,58 1,12 Key ratios Year to 31 Dec 213A 214A 215F 216F 217F ROAE (%) 35.3 16.7 19.9 18.1 18.1 ROAA (%) 13. 7. 8.8 8.2 8.5 Gross margin (%) 28.8 23.6 27.5 26.9 27.2 EBITDA margin (%) 21.6 15. 18.6 17.8 17.9 EBIT margin (%) 19. 12. 16. 15.5 15.8 Net margin (%) 15.1 9.3 11. 1.2 1.3 Payout ratio (%) 16.9 2.2 2. 2. 2. Current ratio (x) 1.8 1.5 1.3 1.3 1.4 Interest coverage (x) 14.3 8.4 1.8 1.9 11. Net gearing (%) nc 4. 1.2 1. 9.5 Debtor turnover (days) 39 48 25 2 2 Creditor turnover (days) 28 38 4 4 4 Inventory turnover (days) - - - - - 33
216 Compendium TAMBANG BATUBARA BUKIT ASAM BUY PX: IDR5,2- TP: IDR7,8 Around 52% of PTBA s coal sales volumes are domestically distributed with PLN as the biggest off taker (38% of 9M15 revenues), allowing PTBA, the only coal company to use railway for coal transport and its 1.99bn mt of total reserves (second highest), to support Indonesia s rising electricity requirements. With South Sumatra projects of Tarahan port expansion to 24mn ton and construction of the Banjarsari power plant, PTBA will increasingly supply to the domestic market, protecting it from weak global coal demand. Thus, in 216, we expect PTBA s sales volumes to rise 9% y- y, resulting in a slight 1.3% y-y EPS growth on our 216 conservative SR assumption of 5.x (9M15:4.6x). On valuation, we set our DCF-based TP at IDR7,8 using 19.9% WACC, translating to 8.2x 216F PE. Downside risks to our call include lower-than-expected coal prices and weak electricity sales. Share price performance (IDR) (') 14,5 8, 7, 12,5 6, 1,5 5, 4, 8,5 3, 6,5 2, 1, 4,5 3-Dec-14 3-Feb-15 3-Apr-15 3-Jun-15 3-Aug-15 3-Oct-15 3-Dec-15 Volume (RHS) ptba IJ Px Last (%) (%) (1) (2) (3) (4) (5) (6) (43.6) (29.2) (13.3) (33.1) (35.2) (48.2) ytd 1M 3M 6M 9M 12M ptba IJ relative to JCI Source: Bloomberg Arandi Ariantara (arandi@bahana.co.id) +6221 25581 ext. 3619 (1) (2) (3) (4) (5) (6) Financial highlights Year to 31 Dec 213A 214A 215F 216F 217F Revenues (IDRbn) 11,29 13,78 14,428 15,832 15,981 EBIT (IDRbn) 2,153 2,31 2,661 2,774 2,547 Net profit (IDRbn) 1,826 2,16 2,17 2,198 1,99 Bahana/consensus (%) - - 139 139 114 EPS (IDR) 793 875 942 954 864 EPS growth (%) (37.) 1.4 7.6 1.3 (9.5) EV/EBITDA (x) 5.6 5.8 3.6 3.6 5.6 P/E (x) 6.6 5.9 5.5 5.5 6. FCFPS (IDR) 157 12 328 426 228 FCF yield (%) 3. 2. 6.3 8.2 4.4 BVPS (IDR) 3,228 3,712 4,5 4,441 4,78 P/BV (x) 1.6 1.4 1.3 1.6 1.5 DPS (IDR) 476 436 518 525 475 Div. yield (%) 9.1 8.4 9.3 1. 1.1 Major assumptions note: based on 3 December 215 closing price Year to 31 Dec 213A 214A 215F 216F 217F Avg. coal price (IDR /ton) 629.7 723.6 7 76 694 growth % (16.5) 14.9 (3.3).9 (1.8) Coal sales vol. (m tons) 17.8 18. 2.6 22.4 23. growth % 15.8 1.2 14.7 8.7 2.8 Company information 12M high/low (IDR) : 13,5/5,175 12M High/low consensus TP (IDR) : 1,5/6, Majority shareholder (%) : Republic of Indonesia (65.) Shares outstanding (mn)/free float (%) : 2,34/29.3 Mkt. cap. (IDRbn/USDmn) : 12,27/887 3-m avg.daily t.o.(idrbn/usdmn) : 47.3/3.4 Bloomberg/Reuters code : PTBA IJ/PTBA.JK Source: Bloomberg, Reuters; based on 3 December 215 closing price 34
216 Compendium TAMBANG BATUBARA BUKIT ASAM Profit & loss Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Sales 11,29 13,78 14,428 15,832 15,981 Gross profit 3,464 4,22 4,388 4,435 4,264 EBITDA 2,281 2,459 2,932 3,32 2,853 Depreciation 128 149 271 258 37 EBIT 2,153 2,31 2,661 2,774 2,547 Net interest inc./(expense) 234 219 144 68 19 Forex gain/(losses) - - - - - Other income/(expense) 75 146 8 8 8 Pre-tax profit 2,461 2,675 2,884 2,922 2,645 Taxes (67) (656) (711) (721) (652) Minority interest (28) (3) (3) (3) (3) Extraordinary gain/(losses) - - - - - Net profit 1,826 2,16 2,17 2,198 1,99 Balance sheet Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Cash and equivalents 3,344 4,39 4,295 4,744 4,175 S-T investments - - - - - Trade receivables 1,428 1,439 2,343 2,571 2,595 Inventories 92 1,33 837 95 975 Fixed assets 3,796 5,57 5,848 7,91 8,784 Other assets 2,28 2,793 2,793 2,793 2,793 Total assets 11,677 14,812 16,116 18,148 19,325 Interest bearing liabilities 78 2,255 2,962 3,763 4,15 Trade payables 1,554 1,749 1,673 1,9 1,953 Other liabilities 2,494 2,136 2,136 2,136 2,136 Total liabilities 4,126 6,141 6,772 7,799 8,194 Minority interest 114 117 117 117 117 Shareholders' equity 7,437 8,554 9,227 1,232 11,13 Cash flow Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F EBIT 2,153 2,31 2,661 2,774 2,547 Depreciation 128 149 271 258 37 Working capital 48 52 (783) (115) 2 Other operating items (638) (535) (491) (576) (557) Operating cash flow 2,51 1,976 1,658 2,341 2,299 Net capital expenditure (1,67) (1,67) (1,) (1,5) (2,) Free cash flow 445 37 658 841 299 Equity raised/(bought) - - - - - Net borrowings (1) 962 76 81 342 Other financing (3,8) (636) (1,19) (1,193) (1,29) Net cash flow (2,573) 695 256 449 (569) Cash balances, beginning 5,917 3,344 4,39 4,295 4,744 Ending cash 3,344 4,39 4,295 4,744 4,175 Key ratios Year to 31 Dec 213A 214A 215F 216F 217F ROAE (%) 23. 25.2 24.4 22.6 18.7 ROAA (%) 15. 15.2 14. 12.8 1.6 Gross margin (%) 3.9 3.8 3.4 28. 26.7 EBITDA margin (%) 2.4 18.8 2.3 19.1 17.9 EBIT margin (%) 19.2 17.7 18.4 17.5 15.9 Net margin (%) 16.3 15.4 15. 13.9 12.5 Payout ratio (%) 55. 55. 55. 55. 55. Current ratio (x) 2.9 2.1 2.1 2. 1.8 Interest coverage (x) na na na na na Net gearing (%) nc nc nc nc nc Debtor turnover (days) 46 4 58 58 58 Creditor turnover (days) 72 7 6 6 6 Inventory turnover (days) 42 41 3 3 3 35
216 Compendium TELEKOMUNIKASI INDONESIA BUY PX: IDR3,35 - TP: IDR3,75 Given its 5% domestic cellular share through 65%-owned Telkomsel (35%-owned by Singtel), TLKM should benefit from higher ARPUs and a data migration trend, as we expect the Indonesian smartphone subscriber proportion to rise from 37% in 9M15 to 5% in 217. On the cost front, improved pricing in the cellular segment on rational competition would mean margin protection for TLKM. Furthermore, the company targets its IndiHome triple-play business (cable, internet and fixed line) to have 3mn subscribers in 216, allowing for additional revenue of IDR1tn (1% of TLKM s top line). At this stage, we expect continued outperformance for TLKM on easing competition, strong data growth and stable EBITDA margins. Our DCFbased TP of IDR3,75 reflects a 216F EV/EBITDA of 9.5x, an 8% premium to its regional peers. Risks: Lower-than-expected EBITDA margins on tougher-than-expected competition. Share price performance (IDR) 3,1 3, 2,9 2,8 2,7 2,6 2,5 3-Dec-14 3-Feb-15 3-Apr-15 3-Jun-15 3-Aug-15 3-Oct-15 3-Dec-15 3 25 2 15 1 5 19.7 1.7 Volume (RHS) (%) (%) 6. ytd 1M 3M 6M 9M 12M TLKM IJ relative to JCI Source: Bloomberg Leonardo Henry Gavaza, CFA (leonardo@bahana.co.id) +6221 25581 ext. 368 *New, please refer to appendix II 26.9 TLKM IJ Px Last 22.3 19.2 (') 3, 25, 2, 15, 1, 5, 3 25 2 15 1 5 Financial highlights* Year to 31 Dec 213A 214A 215F 216F 217F Revenues (IDRbn) 82,967 89,696 12,143 113,31 124,788 EBIT (IDRbn) 25,996 28,713 32,141 36,256 41,388 Net profit (IDRbn) 14,25 14,638 15,778 17,773 2,468 Bahana/consensus (%) - - 96 98 12 EPS (IDR) 141 145 157 176 23 EPS growth (%) 1.5 2.4 7.8 12.6 15.2 EV/EBITDA (x) 1.4 9.5 8.6 7.7 6.8 P/E (x) 21.5 2.9 19.4 17.2 14.9 FCFPS (IDR) (11) 65 91 12 145 FCF yield (%) (3.3) 2.1 3. 4. 4.8 BVPS (IDR) 594 673 742 817 95 P/BV (x) 5.1 4.5 4.1 3.7 3.4 DPS (IDR) 99 87 12 115 132 Div. yield (%) 3.3 2.9 3.4 3.8 4.3 note: based on 3 December 215 closing price Major assumptions Year to 31 Dec 213A 214A 215F 216F 217F Subscribers ( ) 131,512 14,585 149,2 15,51 152,15 Net additional ( ) 6,366 9,73 8,435 1,49 1,55 ARPU (IDR /month) 37 39 42 45 49 Company information 12M high/low (IDR) : 3,35/2,6 12M High/low consensus TP (IDR) : 3,75/2,924 Majority shareholder (%) : Republic of Indonesia (51.2) Shares outstanding (mn)/free float (%) : 1,8/48.8 Mkt. cap. (IDRbn/USDmn) : 35,928/22,1 3-m avg.daily t.o.(idrbn/usdmn) : 189.7/13.7 Bloomberg/Reuters code : TLKM IJ/TLKM.JK Source: Bloomberg, Reuters; based on 3 December 215 closing price 36
216 Compendium TELEKOMUNIKASI INDONESIA Profit & loss Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Sales 82,967 89,696 12,143 113,31 124,788 Gross profit - - - - - EBITDA 41,776 45,844 5,442 55,794 62,51 Depreciation 15,78 17,131 18,32 19,537 2,663 EBIT 25,996 28,713 32,141 36,256 41,388 Net interest inc./(expense) (668) (576) (983) (1,84) (8) Forex gain/(losses) (249) (14) 37 12 (13) Other income/(expense) 2,7 661 361 361 361 Pre-tax profit 27,149 28,784 31,556 35,545 4,936 Taxes (6,859) (7,338) (7,889) (8,886) (1,234) Minority interest (6,85) (6,88) (7,889) (8,886) (1,234) Extraordinary gain/(losses) - - - - - Net profit 14,25 14,638 15,778 17,773 2,468 Balance sheet Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Cash and equivalents 14,696 17,672 27,169 28,642 32,728 S-T investments 6,872 2,797 3,27 3,549 3,918 Trade receivables 6,623 6,997 8,512 9,419 1,399 Inventories 59 474 583 64 695 Fixed assets 86,761 94,89 11,57 16,97 112,55 Other assets 13,94 19,73 19,962 22,9 24,388 Total assets 128,555 141,822 16,941 171,31 184,633 Interest bearing liabilities 2,256 23,452 33,452 31,452 3,452 Trade payables 12,197 12,362 13,593 14,35 15,27 Other liabilities 19,286 19,873 21,659 23,968 26,461 Total liabilities 51,739 55,687 68,74 69,771 71,94 Minority interest 16,932 18,323 17,429 19,215 21,452 Shareholders' equity 59,884 67,812 74,88 82,325 91,241 Cash flow Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F EBIT 25,996 28,713 32,141 36,256 41,388 Depreciation 15,78 17,131 18,32 19,537 2,663 Working capital 3,587 (174) (394) (26) (358) Other operating items (3,656) (14,441) (16,97) (19,46) (21,894) Operating cash flow 14,77 31,229 33,142 36,128 39,799 Net capital expenditure (24,898) (24,667) (24,) (24,) (25,198) Free cash flow (1,191) 6,562 9,142 12,128 14,61 Equity raised/(bought) 1,25 576 - - - Net borrowings 981 3,196 1, (2,) (1,) Other financing 9,538 (7,358) (9,646) (8,654) (9,516) Net cash flow 1,578 2,976 9,497 1,474 4,85 Cash balances, beginning 13,118 14,696 17,672 27,169 28,642 Ending cash 14,696 17,672 27,169 28,642 32,728 Key ratios Year to 31 Dec 213A 214A 215F 216F 217F ROAE (%) 25.5 22.9 22.1 22.6 23.6 ROAA (%) 11.8 1.8 1.4 1.7 11.5 EBITDA margin (%) 5.4 51.1 49.4 49.4 49.7 EBIT margin (%) 31.3 32. 31.5 32.1 33.2 Net margin (%) 17.1 16.3 15.4 15.7 16.4 Payout ratio (%) 7. 6. 65. 65. 65. Current ratio (x) 1.2 1.1 1.4 1.3 1.4 Interest coverage (x) 38.9 49.8 32.7 33.4 51.7 Net gearing (%) 9.3 8.5 8.4 3.4 nc Debts to assets (%) 15.8 16.5 2.8 18.4 16.5 Debtor turnover (days) 27 29 29 31 31 Creditor turnover (days) 64 75 68 67 65 Inventory turnover (days) 3 3 3 3 3 37
216 Compendium TEMPO SCAN PACIFIC BUY PX: IDR1,72 - TP: IDR2, Given the slowdown in sales of its well-known consumer health brands, Bodrex, Oskadon and Hemaviton, TSPC, the second-largest listed pharmaceutical company, is growing its prescription drug segment (c. 1% of total pharmaceutical sales) via Tempo RX Farma, which is participating in the National Health Insurance (JKN) program. With approval from the Food & Drug Administration (BPOM), production on 2 unbranded generic drugs should start in 216. In the nutritional division, top-line support should come from new baby milk product launches (stages 1-4) under the Vidoran brand. On the cost side, TSPC plans to cap third-party distribution sales (13% GPM) to allow for higher-margin products under its own brands (5-65% GPM). On valuation, our IDR2, TP is based on a 14.5x 216F PE, at a 35% discount to the sector. Risks: slower-than-expected RX Farma s growth and IDR depreciation to pressure margins. Share price performance (IDR) 3,5 3, 2,5 2, 1,5 3-Dec-14 3-Feb-15 3-Apr-15 3-Jun-15 3-Aug-15 3-Oct-15 3-Dec-15 Volume (RHS) TSPC IJ Px Last (%) (%) 1 5 (5) (1) (15) (2) (25) (3) (35) (26.1) (.4) 3.5 (3.3) (14.4) (32.6) ytd 1M 3M 6M 9M 12M TSPC IJ relative to JCI Source: Bloomberg Michael W. Setjoadi (michael@bahana.co.id) +6221 25581 ext. 3613 (') 14, 12, 1, 8, 6, 4, 2, 1 5 (5) (1) (15) (2) (25) (3) (35) Financial highlights Year to 31 Dec 213A 214A 215F 216F 217F Revenues (IDRbn) 6,855 7,512 8,22 9,16 1,88 EBIT (IDRbn) 648 636 64 713 785 Net profit (IDRbn) 635 579 575 622 672 Bahana/consensus (%) - - 93.2 87.6 94.6 EPS (IDR) 141 129 128 138 149 EPS growth (%) 1.1 (8.7) (.7) 8.1 8.1 EV/EBITDA (x) 8.3 8. 7.8 7.1 6.3 P/E (x) 12.2 13.4 13.5 12.4 11.5 FCFPS (IDR) 64 46 51 6 93 FCF yield (%) 3.7 2.6 3. 3.5 5.4 BVPS (IDR) 849 92 99 1,66 1,215 P/BV (x) 2. 1.9 1.7 1.6 1.4 DPS (IDR) 58 58 58 62 67 Div. yield (%) 3.4 3.4 3.3 3.6 3.9 note: based on 3 December 215 closing price Major assumptions Year to 31 Dec 213A 214A 215F 216F 217F Indo pharma. sales (IDRtn) 4.6 4.9 5.9 6.6 7.4 Sales growth (%) 14.7 3.4 8.4 1.9 1.9 Gross margin (%) 37.5 39.7 39.2 39.7 4. Company information 12M high/low (IDR) : 3,7/1,53 12M high/low consensus TP (IDR) : 2,2/2, Majority shareholder (%) : Bogamulia Nagadi (77.3) Shares outstanding (mn)/free float (%) : 4,5/21.9 Mkt. cap. (IDRbn/USDmn) : 7,74/559 3-m avg.daily t.o.(idrbn/usdmn) : 2./.2 Bloomberg/Reuters code : TSPC IJ/TSPC.JK Source: Bloomberg, Reuters; based on 3 December 215 closing price 38
216 Compendium TEMPO SCAN PACIFIC Profit & loss Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Sales 6,855 7,512 8,22 9,16 1,88 Gross profit 2,72 2,94 3,147 3,498 3,861 EBITDA 743 765 793 892 989 Depreciation 95 128 153 179 24 EBIT 648 636 64 713 785 Net interest inc./(expense) 73 78 77 73 73 Forex gain/(losses) - - - - - Other income/(expense) 19 28 25 16 1 Pre-tax profit 83 743 742 82 868 Taxes (191) (158) (161) (174) (188) Minority interest (4) (5) (6) (6) (7) Extraordinary gain/(losses) - - - - - Net profit 635 579 575 622 672 Balance sheet Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Cash and equivalents 1,792 1,741 1,69 1,55 1,518 S-T investments - - - - - Trade receivables 89 884 996 1,145 1,261 Inventories 1,1 1,16 1,194 1,381 1,519 Fixed assets 1,24 1,475 1,747 1,994 2,214 Other assets 62 576 581 61 91 Total assets 5,48 5,692 6,127 6,626 7,413 Interest bearing liabilities 186 94 77 62 51 Trade payables 745 795 922 1,78 1,186 Other liabilities 613 617 624 634 648 Total liabilities 1,545 1,57 1,623 1,775 1,885 Minority interest 41 45 49 54 6 Shareholders' equity 3,822 4,141 4,455 4,797 5,469 Cash flow Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F EBIT 648 636 64 713 785 Depreciation 95 128 153 179 24 Working capital (84) (158) (138) (199) (147) Other operating items (2) (1) 3 3 Operating cash flow 657 65 656 696 845 Net capital expenditure (37) (4) (425) (425) (425) Free cash flow 287 25 231 271 42 Equity raised/(bought) - - - - - Net borrowings 91 (92) (18) (15) (12) Other financing (237) (164) (344) (36) (395) Net cash flow 141 (51) (132) (14) 13 Cash balances, beginning 1,651 1,792 1,741 1,69 1,55 Ending cash 1,792 1,741 1,69 1,55 1,518 Key ratios Year to 31 Dec 213A 214A 215F 216F 217F ROAE (%) 17.8 14.6 13.4 13.4 13.1 ROAA (%) 12.6 1.4 9.7 9.8 9.6 Gross margin (%) 39.7 39.1 38.3 38.2 38.3 EBITDA margin (%) 1.8 1.2 9.6 9.7 9.8 EBIT margin (%) 9.5 8.5 7.8 7.8 7.8 Net margin (%) 9.3 7.7 7. 6.8 6.7 Payout ratio (%) 41.1 4. 4. 4. 4. Current ratio (x) 3. 3. 2.8 2.7 2.6 Interest coverage (x) na na na na na Net gearing (%) nc nc nc nc nc Debtor turnover (days) 41 43 44 46 46 Creditor turnover (days) 61 63 66 7 7 Inventory turnover (days) 78 81 86 89 89 39
216 Compendium TIMAH REDUCE PX: IDR52 - TP: IDR411* While new government policies to reduce illegal mining activities were expected to aid TINS, the world s second-largest tin producer and biggest tin exporter, the company still struggles in dealing with tin oversupply conditions. This hurt TINS s 9M15 ASP, which fell 27% y-y to USD16,516/mt, depressing 9M15 earnings to just IDR1bn, down 98% y-y, and diminishing its gross margin to 1% (9M14: 24%). With Indonesian illegal tin production reaching 24% of global tin ore production, TINS is diversifying its business to rare earth metals to mitigate tin s unexciting outlook. However, we believe 216 will be another tough year for TINS, due to its still-unfinished rare-earth smelter and soft global cellphone demand. Our DCF-based new TP is IDR411 (from IDR5), using a 16.5% WACC, and we retain our REDUCE rating. Risk: a faster-thanexpected eradication of illegal tin mining. Share price performance (IDR) (') 1,45 8, 7, 1,25 6, 1,5 5, 4, 85 3, 65 2, 1, 45 3-Dec-14 3-Feb-15 3-Apr-15 3-Jun-15 3-Aug-15 3-Oct-15 3-Dec-15 Volume (RHS) tins IJ Px Last (%) (%) (1) (2) (3) (4) (5) (14.7) (13.3) (26.8) (33.5) (44.4) (44.5) (5) ytd 1M 3M 6M 9M 12M tins IJ relative to JCI Source: Bloomberg Arandi Ariantara (arandi@bahana.co.id) +6221 25581 ext. 3619 *New, please refer to appendix II (1) (2) (3) (4) Financial highlights* Year to 31 Dec 213A 214A 215F 216F 217F Revenue (IDRbn) 5,852 7,371 5,632 5,615 5,725 EBIT (IDRbn) 829 925 6 28 29 Net profit (IDRbn) 581 638 16 14 (31) Bahana/consensus (%) - - 2 2 (6) EPS (IDR) 115 99 2 2 (4) EPS growth (%) 34.5 (14.1) (97.9) (13.2) na EV/EBITDA (x) 4.9 4.5 13.2 11.8 1.7 PER (x) 4.5 5.3 248.2 285.9 na FCFPS (IDR) (259) (163) 146 (3) (2) FCF yield (%) (3.5) (2.2) 2. (.) (.3) BVPS (IDR) 592 64 76 79 74 PBV (x).9.9.7.7.7 DPS (IDR) 38 26 1 1 na Yield (%) 6.9 4.6.2.1 na Major assumptions note: based on 3 December 215 closing price Year to 31 Dec 213A 214A 215F 216F 217F Tins sales vol. (tons) 23,237 26,97 26, 26,78 26,78 growth (%) (33.5) 15.8 (3.4) 3.. Avg. tin price (USD/ton) 22,751 21,686 15, 14, 16, growth (%) 6.6 (4.7) (3.8) (6.7) 14.3 Company information 12M high/low (IDR) : 1,235/515 12M High/low consensus TP (IDR) : 85/5 Majority shareholder (%) : Government of Indonesia (65.) Share outstanding (mn)/free float (%) : 7,448/16.2 Mkt. cap. (IDRbn/USDmn) : 3,873/277 3-m avg.daily t.o.(idrbn/usdmn) : 3.9/.2 Bloomberg/Reuters code : TINS IJ/TINS.JK Source: Bloomberg, Reuters based on 3 December 215 closing price 31
216 Compendium TIMAH Profit & loss Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Sales 5,852 7,371 5,632 5,615 5,725 Gross profit 1,444 1,598 562 482 485 EBITDA 1,22 1,315 451 54 554 Depreciation 391 39 391 476 525 EBIT 829 925 6 28 29 Net interest income/(expense) (19) (96) (19) (46) (17) Forex gain/(losses) (13) (56) Other income/(expense) 16 25 9 56 57 Pre-tax profit 867 1,23 41 38 (21) Taxes (257) (346) (1) (1) 5 Minority interest () () () () () Extraordinary gain/(losses) (29) (39) (15) (15) (15) Net profit 581 638 16 14 (31) Balance sheet Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Cash and equivalents 614 346 264 264 289 S-T investments 1 1 2 2 2 Trade receivables 1,82 1,484 74 72 716 Inventories 2,345 3,384 2,816 2,88 2,862 Fixed assets 2,438 2,656 3,373 3,482 3,57 Other assets 1,955 1,973 2,75 2,18 2,69 Total assets 8,433 9,844 9,232 9,274 9,443 Interest bearing liabilities 1,355 2,334 2,336 2,34 2,49 Trade payables 46 851 563 562 572 Other liabilities 2,26 2,159 1,74 1,93 1,128 Total liabilities 4,21 5,344 3,972 3,994 4,19 Minority interest Shareholders' equity 4,412 4,5 5,261 5,281 5,253 Cash flow Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F EBIT 829 925 6 28 29 Depreciation 391 39 391 476 525 Working capital (74) 94 42 5 359 Other operating items (1,82) (1,81) 433 (49) (471) Operating cash flow 64 (392) 1,34 595 442 Net capital expenditure (1,994) (82) (219) (621) (593) Free cash flow (1,93) (1,212) 1,86 (26) (151) Equity raised/(bought) - - - - - Net borrowings 1,91 979 1 4 15 Other financing 782 (35) (1,17) 23 25 Net cash flow (57) (267) (83) 1 24 Cash balances, beginning 67 614 346 264 264 Ending cash 614 346 264 264 289 Key ratios Year to 31 Dec 213A 214A 215F 216F 217F ROAE (%) 12.9 14.3.3.3 (.6) ROAA (%) 8. 7..2.1 (.3) Gross margin (%) 24.7 21.7 1. 8.6 8.5 EBITDA margin (%) 2.8 17.8 8. 9. 9.7 EBIT margin (%) 14.2 12.6 1.1.5.5 Net margin (%) 9.9 8.7.3.2 (.5) Payout ratio (%) 48.8 3. 3. 3. 3. Current ratio (x) 2.1 1.8 1.6 1.6 1.6 Interest coverage (x) 43.2 9.7.5.6.3 Net gearing (%) 16.8 44.2 39.4 39.3 41.9 Debtor turnover (days) 67 73 46 46 46 Creditor turnover (days) 25 42 37 37 37 Inventory turnover (days) 146 168 183 183 183 311
216 Compendium TIPHONE MOBILE INDONESIA BUY PX: IDR725 - TP: IDR1,18 TELE, the largest Telkomsel (TSEL) pre-paid card and voucher distributor, should increase its dominance in the conventional market segment following a recent cluster re-arrangement. We expect this, coupled with new deals from private banks in the banking segment, to increase TELE s market share from 2% currently to 3% in 216. The increasing smartphone penetration rate should also benefit TELE s handset distribution business (3% of revenues) as TELE distributes most of the popular brands, including Samsung and Apple. Additional growth could stem from TSEL s handset bundling programs. Looking ahead, TELE should continue to book strong earnings growth, supported by rising voucher contributions due to higher market share and solid Telkomsel growth. We maintain our BUY on TELE and DCFbased TP of IDR1,18, reflecting a 216F PE of 18x, due to its strong growth prospects. Risk: lower margins and higher interest rates. Share price performance (IDR) (') 1,5 5, 1, 95 4, 9 3, 85 8 2, 75 7 1, 65 3-Dec-14 3-Feb-15 3-Apr-15 3-Jun-15 3-Aug-15 3-Oct-15 3-Dec-15 5 (5) (1) (15) (2) (8.9) 1.3 Volume (RHS) (%) (%) (12.3) (13.7) (15.4) ytd 1M 3M 6M 9M 12M TELE IJ relative to JCI TELE IJ Px Last Source: Bloomberg Leonardo Henry Gavaza, CFA (leonardo@bahana.co.id) +6221 25581 ext. 368 *New, please refer to appendix II (8.6) 5 (5) (1) (15) (2) Financial highlights* Year to 31 Dec 213A 214A 215F 216F 217F Revenues (IDRbn) 1,485 14,59 2,524 29,578 34,851 EBIT (IDRbn) 437 57 758 95 1,74 Net profit (IDRbn) 295 35 382 462 592 Bahana/consensus (%) - - 1 11 129 EPS (IDR) 42 43 54 66 84 EPS growth (%) 44.9 3.4 25.2 21. 28.3 EV/EBITDA (x) 11. 11.8 9.4 8.5 7.1 P/E (x) 17.3 16.7 13.4 11. 8.6 FCFPS (IDR) (17) (136) (89) (67) 21 FCF yield (%) (23.4) (18.7) (12.2) (9.3) 2.9 BVPS (IDR) 253 355 4 452 519 P/BV (x) 2.9 2. 1.8 1.6 1.4 DPS (IDR) - 1 14 16 21 Div. yield (%) - 1.4 1.9 2.3 2.9 note: based on 3 December 215 closing price Major assumptions Year to 31 Dec 213A 214A 215F 216F 217F Vouchers and starter kit (IDRbn) 8,116 8,799 12,947 21,153 25,469 Cellphones (IDRbn) 2,171 5,426 7,67 7,788 8,585 Telkomsel market share (%) 13 13 21 3 33 Company information 12M high/low (IDR) : 1,45/69 12M High/low consensus TP (IDR) : 1,25/1,53 Majority shareholder (%) : Upaya Cipta Sejahtera (38.8) Shares outstanding (mn)/free float (%) : 7,121/23. Mkt. cap. (IDRbn/USDmn) : 5,163/373 3-m avg.daily t.o.(idrbn/usdmn) : 9./.7 Bloomberg/Reuters code : TELE IJ/TELE.JK Source: Bloomberg, Reuters; based on 3 December 215 closing price 312
216 Compendium TIPHONE MOBILE INDONESIA Profit & loss Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Sales 1,485 14,59 2,524 29,578 34,851 Gross profit 628 819 1,215 1,565 1,852 EBITDA 452 528 738 88 1,42 Depreciation 15 2 2 25 32 EBIT 437 57 758 95 1,74 Net interest inc./(expense) (55) (121) (292) (341) (345) Forex gain/(losses) - - - - - Other income/(expense) 11 25 43 51 62 Pre-tax profit 393 412 51 616 791 Taxes (99) (17) (127) (154) (198) Minority interest () (1) (1) (1) Extraordinary gain/(losses) - - - - - Net profit 295 35 382 462 592 Balance sheet Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Cash and equivalents 493 638 1,148 585 622 S-T investments - - - - - Trade receivables 1,31 1,642 2,16 2,958 3,319 Inventories 661 949 1,485 1,868 1,941 Fixed assets 156 145 187 227 263 Other assets 844 1,644 1,724 1,845 1,892 Total assets 3,455 5,18 6,75 7,482 8,38 Interest bearing liabilities 1,476 1,753 2,953 2,953 2,953 Trade payables 533 673 772 1,167 1,32 Other liabilities 59 93 169 186 111 Total liabilities 2,69 2,518 3,895 4,36 4,384 Minority interest 1 1 1 1 Shareholders' equity 1,387 2,498 2,89 3,175 3,652 Cash flow Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F EBIT 437 57 758 95 1,74 Depreciation 15 2 2 25 32 Working capital (731) (489) (943) (778) (268) Other operating items (856) (977) (392) (554) (615) Operating cash flow (1,135) (938) (556) (41) 222 Net capital expenditure (59) (17) (68) (71) (75) Free cash flow (1,194) (955) (624) (472) 148 Equity raised/(bought) 33 87 - - - Net borrowings 1,299 277 1,2 - - Other financing (4) 16 (66) (91) (11) Net cash flow 98 145 51 (563) 38 Cash balances, beginning 395 493 638 1,148 585 Ending cash 493 638 1,148 585 622 Key ratios Year to 31 Dec 213A 214A 215F 216F 217F ROAE (%) 23.6 15.7 14.4 15.4 17.3 ROAA (%) 12.3 7.2 6.5 6.5 7.6 EBITDA margin (%) 4.3 3.6 3.6 3. 3. EBIT margin (%) 4.2 3.5 3.7 3.1 3.1 Net margin (%) 2.8 2.1 1.9 1.6 1.7 Payout ratio (%) - 23.4 25. 25. 25. Current ratio (x) 1.4 1.8 6.4 4.6 4.3 Interest coverage (x) 7.9 4.2 2.6 2.7 3.1 Net gearing (%) 69.9 44.4 64.1 74.4 63.6 Debts to assets (%) 42.7 34.9 44. 39.5 36.7 Debtor turnover (days) 45 41 38 37 35 Creditor turnover (days) 2 18 15 15 15 Inventory turnover (days) 15 15 13 15 17 313
216 Compendium TOTAL BANGUN PERSADA BUY PX: IDR64 - TP: IDR94* TOTL, the smallest construction player under our coverage, and one of the most well-respected private contractors for high-end high-rise buildings, has underperformed the market despite relatively strong contracts (215F: IDR9.2tn, +18% y-y) and solid project execution. In 216, TOTL plans to focus on office and commercial projects, where it has abundant experience, such as in the current development of Sequis Tower and Menara Kompas in Jakarta. Other growth potential would stem from residential demand (around 47% of TOTL s 3Q15 revenue) on an economic turnaround in 2H16. This could lead to higher land prices, justifying TOTL s.8ha Serpong land purchase. On valuation, our 12M TP of IDR94 is based on a 216F PE of 14x, a 3% sector discount due to TOTL s smaller market cap. Retain BUY on TOTL s proven track record and management team. Risk is further IDR weakness causing high costs and project slowdowns. Share price performance (IDR) 1,2 1,1 1, 9 8 7 6 5 3-Dec-14 3-Feb-15 3-Apr-15 3-Jun-15 3-Aug-15 3-Oct-15 3-Dec-15 Volume (RHS) TOTL IJ Px Last (%) (%) (5) (1) (15) (2) (25) (3) (35) (29.8) (11.2) (4.1) (2.3) (22.) (27.5) ytd 1M 3M 6M 9M 12M TOTL IJ relative to JCI Source: Bloomberg Bob Setiadi (bob.setiadi@bahana.co.id) +6221 25581 ext.365 *New, please refer to appendix II (') 3, 25, 2, 15, 1, 5, (5) (1) (15) (2) (25) (3) (35) Financial highlights* Year to 31 Dec 213A 214A 215F 216F 217F Revenues (IDRbn) 2,287 2,16 2,338 2,618 3,4 EBIT (IDRbn) 256 177 218 266 317 Net profit (IDRbn) 194 164 197 23 255 Bahana/cons.(%) - - 14 99 84 EPS (IDR) 57 48 58 67 75 EPS growth (%) 1.6 (15.7) 2.4 16.7 1.9 EV/EBITDA (x) 6. 8.7 6.9 5.7 4.8 P/E (x) 11.2 13.3 11.1 9.5 8.6 FCFPS (IDR) (41) 13 36 29 34 FCF yield (%) (5.7) 18.3 5.1 4. 4.7 BVPS (IDR) 221 234 262 294 329 P/BV (x) 2.9 2.7 2.4 2.2 1.9 DPS (IDR) 29 35 3 35 4 Div. yield (%) 4.6 5.5 4.7 5.4 6.3 note: based on 3 December 215 closing price Major assumptions Year to 31 Dec 213A 214A 215F 216F 217F Carried over (IDRbn) 4,573 4,242 5,76 6,713 7,112 New contracts (IDRbn) 1,956 3,57 3, 3, 3,3 Total order books (IDRbn) 6,529 7,812 8,75 9,712 1,413 Company information 12M high/low (IDR) : 1,18/585 12M high/low consensus TP (IDR) : 1,2/725 Majority shareholder (%) : Total Inti Persada (56.5) Shares outstanding (mn)/free float (%) : 3,41/34.8 Mkt. cap. (IDRbn/USDmn) : 2,182/158 3-m avg.daily t.o.(idrbn/usdmn) : 3.5/.2 Bloomberg/Reuters code : TOTL IJ/TOTL.JK Source: Bloomberg, Reuters based on 3 December 215 closing price 314
216 Compendium TOTAL BANGUN PERSADA Profit & loss Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Sales 2,287 2,16 2,338 2,618 3,4 Gross profit 441 33 392 462 557 EBITDA 275 184 232 281 332 Depreciation 18 7 13 14 15 EBIT 256 177 218 266 317 Net interest inc./(expense) 32 37 4 38 39 Forex gain/(losses) 1 (3) 7 1 (1) Other income/(expense) (8) 3 9 11 12 Pre-tax profit 29 241 274 317 368 Taxes (77) (77) (77) (86) (112) Minority interest (19) () () () () Extraordinary gain/(losses) - - - - - Net profit 194 164 197 23 255 Balance sheet Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Cash and equivalents 548 579 577 584 588 S-T investments 1 67 89 92 95 Trade receivables 28 418 416 52 66 Inventories 185 - - - - Fixed assets 93 71 15 158 166 Other assets 1,2 1,348 1,438 1,529 1,734 Total assets 2,226 2,484 2,671 2,865 3,188 Interest bearing liabilities 93 - - - - Trade payables 94 7 93 18 135 Other liabilities 1,22 1,615 1,683 1,751 1,929 Total liabilities 1,47 1,685 1,777 1,859 2,65 Minority interest 66 2 2 2 2 Shareholders' equity 753 797 892 1,4 1,121 Cash flow Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F EBIT 256 177 218 266 317 Depreciation 18 7 13 14 15 Working capital (199) 191 (48) (153) (252) Other operating items (188) 35 29 (11) 55 Operating cash flow (113) 411 213 117 135 Net capital expenditure (26) 32 (9) (2) (2) Free cash flow (139) 443 123 97 115 Equity raised/(bought) - - - - - Net borrowings 72 (93) - - - Other financing (82) (319) (124) (91) (111) Net cash flow (15) 31 (2) 7 5 Cash balances, beginning 698 548 579 577 584 Ending cash 548 579 577 584 588 Key ratios Year to 31 Dec 213A 214A 215F 216F 217F ROAE (%) 27.5 21.1 23.3 24.3 24. ROAA (%) 9.1 7. 7.6 8.3 8.4 Gross margin (%) 18.9 14.6 14.2 14.2 14.6 EBITDA margin (%) 12. 8.7 9.9 1.7 9.8 EBIT margin (%) 11.2 8.4 9.3 1.2 9.3 Net margin (%) 8.5 7.8 8.4 8.8 7.5 Payout ratio (%) 51.5 72.9 51.9 51.4 54.1 Current ratio (x) 1.6 1.3 1.3 1.3 1.4 Interest coverage (x) na na na na na Net gearing (%) nc nc nc nc nc Debtor turnover (days) 45 58 65 7 65 Creditor turnover (days) 17 16 17 18 17 Inventory turnover (days) 28 15 - - - 315
216 Compendium TOWER BERSAMA INFRASTRUCTURE* HOLD PX: IDR6,15 - TP: IDR6,5 As one of Indonesia s largest independent tower providers, with 11,291 towers and 18,642 tenants (as of 9M15) and a tenancy ratio of 1.65x, TBIG, may see limited growth capability due to its higher-thanpeers 216F net gearing of 481%. TBIG s total telecommunication sites (including shelter only and DAS networks) extend to 12,292 with total tenants of 19,643. Despite having solid tenant support (83% incumbents), we are concerned with TBIG s policy of not depreciating its tower portfolio annually, which could result in overstated net profit. We iniatiate coverage on TBIG with a DCF-based 12M TP of IDR6,5, reflecting a 216F EV/EBITDA of 15.7x, already a 15% premium to TOWR s valuation at its TP. With limited upside potential, TBIG is a HOLD. Risks include the rearrangement of the TLKM deal, higher or lower revenue growth and stronger or weaker competition. Share price performance (IDR) 1, 9, 8, 7, 6, 5, 3-Dec-14 3-Feb-15 3-Apr-15 3-Jun-15 3-Aug-15 3-Oct-15 3-Dec-15 (5) (1) (15) (2) (25) (3) (23.4) (14.7) Volume (RHS) (%) (%) (11.9) (16.6) (2.7) (24.4) ytd 1M 3M 6M 9M 12M TBIG IJ relative to JCI TBIG IJ Px Last Source: Bloomberg Leonardo Henry Gavaza, CFA (leonardo@bahana.co.id) +6221 25581 ext. 368 *New, please refer to appendix II (') 35, 3, 25, 2, 15, 1, 5, (5) (1) (15) (2) (25) (3) Financial highlights Year to 31 Dec 213A 214A 215F 216F 217F Revenues (IDRbn) 2,691 3,37 3,437 3,81 4,229 EBIT (IDRbn) 2,52 2,55 2,637 2,915 3,243 Net profit (IDRbn) 1,248 1,31 1,56 1,289 1,593 Bahana/consensus (%) - - 79 84 88 EPS (IDR) 26 271 22 269 332 EPS growth (%) 45.7 1.5 (18.) 22. 23.2 EV/EBITDA (x) 19. 16.4 16.6 15.2 13.8 P/E (x) 23.6 22.7 27.9 22.9 18.5 FCFPS (IDR) (44) (223) (53) (33) (37) FCF yield (%) (6.6) (3.6) (8.2) (4.9) (5.) BVPS (IDR) 831 83 65 837 1,123 P/BV (x) 7.4 7.4 1.2 7.3 5.5 DPS (IDR) 6 6 44 54 66 Div. yield (%) 1. 1..7.9 1.1 note: based on 3 December 215 closing price Major assumptions Year to 31 Dec 213A 214A 215F 216F 217F ASP (IDR mn) 162 173 173 184 195 Tower sites (unit) 1,134 11,82 12,399 13,143 13,932 Collocation (x) 6,443 7,256 7,43 7,541 7,778 Company information 12M high/low (IDR) : 9,8/6,75 12M High/low consensus TP (IDR) : 9,/6,717 Majority shareholder (%) : Wahana Anugerah Sejahtera (27.5) Share outstanding (mn)/free float (%) : 4,797/47.8 Mkt. cap. (IDRbn/USDmn) : 29,499/2,131 3-m avg.daily t.o.(idrbn/usdmn) : 9./.7 Bloomberg/Reuters code : TBIG IJ/TBIG.JK Source: Bloomberg, Reuters; based on 3 December 215 closing price 316
216 Compendium TOWER BERSAMA INFRASTRUCTURE Profit & loss Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Sales 2,691 3,37 3,437 3,81 4,229 Gross profit 2,295 2,797 2,956 3,269 3,637 EBITDA 2,25 2,717 2,97 3,214 3,576 Depreciation 153 212 27 299 332 EBIT 2,52 2,55 2,637 2,915 3,243 Net interest inc./(expense) (73) (972) (1,417) (1,472) (1,499) Forex gain/(losses) (799) (192) (52) (16) 17 Other income/(expense) 628 89 1 1 1 Pre-tax profit 1,177 1,431 1,178 1,438 1,771 Taxes 174 (58) (53) (65) (8) Minority interest (14) (71) (69) (84) (98) Extraordinary gain/(losses) - - - - - Net profit 1,248 1,31 1,56 1,289 1,593 Balance sheet Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Cash and equivalents 647 91 792 538 564 S-T investments 1 2 2 2 2 Trade receivables 63 491 687 76 846 Inventories 328 44 426 471 524 Fixed assets 13,184 15,515 16,613 17,793 18,976 Other assets 3,955 4,722 6,185 6,772 7,464 Total assets 18,719 22,34 24,75 26,336 28,376 Interest bearing liabilities 12,437 16,62 19,562 19,862 2,262 Trade payables 126 178 278 37 342 Other liabilities 2,43 1,663 1,843 2,38 2,268 Total liabilities 14,65 17,93 21,684 22,28 22,872 Minority interest 126 15 121 112 116 Shareholders' equity 3,988 3,981 2,9 4,16 5,388 Cash flow Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F EBIT 2,52 2,55 2,637 2,915 3,243 Depreciation 153 212 27 299 332 Working capital (695) 69 (13) (93) (11) Other operating items (1,469) (2,142) (4,178) (3,56) (3,918) Operating cash flow 42 644 (1,42) (438) (452) Net capital expenditure (1,978) (1,714) (1,1) (1,16) (1,22) Free cash flow (1,936) (1,7) (2,412) (1,455) (1,475) Equity raised/(bought) (577) (555) (122) - - Net borrowings 4,252 3,81 3,5 3 4 Other financing (1,598) (1,22) (1,75) 91 1,11 Net cash flow 14 253 (19) (254) 27 Cash balances, beginning 57 647 91 792 538 Ending cash 647 91 792 538 564 Key ratios Year to 31 Dec 213A 214A 215F 216F 217F ROAE (%) 31.3 32.7 3.7 37.3 33.9 ROAA (%) 7.6 6.4 4.5 5.1 5.8 Gross margin (%) 85.3 84.6 86. 86. 86. EBITDA margin (%) 82. 82.2 84.6 84.6 84.6 EBIT margin (%) 76.3 75.8 76.7 76.7 76.7 Net margin (%) 46.4 39.4 3.7 33.9 37.7 Payout ratio (%) 23.1 22.1 2. 2. 2. Current ratio (x).7.3.6.5.6 Interest coverage (x) 2.9 2.6 1.9 2. 2.2 Net gearing (%) 39.3 38.9 647.2 481.2 365.6 Debtor turnover (days) 55 66 71 79 79 Creditor turnover (days) 86 62 85 99 98 Inventory turnover (days) 494 56 487 487 487 317
216 Compendium TUNAS BARU LAMPUNG BUY PX: IDR565 - TP: IDR63 With the smallest CPO plantation area under our coverage of 6k ha (88% palm oil, 12% sugar), TBLA is currently in the midst of building a new sugar mill (1.2mn ton pa) to start operation in 4Q16, which would support its lower-than-expected sugar sales volumes, following the government s policy to limit sugar import quota. TBLA targets its total sugar plantation to reach 12k ha in 216 from 9M15 s level of 7k ha, and we expect the company s sugar business to contribute around 35% of 217F revenues. On CPO, 216 FFB nucleus production should reach 63k tons, -6% y-y due to El Nino occurrence. As we have a long-term positive view on the company s sugar business development, we reiterate our BUY rating with IDR63 TP, reflecting a 216 P/E of 1.3x, still a substantial 55% discount to the Malaysian sector. Risk: Possible further import restrictions by the government on raw sugar required to support TBLA s refinery mill. Financial highlights Year to 31 Dec 213A 214A 215F 216F 217F Revenues (IDRbn) 3,75 6,338 5,45 5,668 7,41 EBIT (IDRbn) 493 795 611 689 941 Net profit (IDRbn) 84 433 23 325 584 Bahana/cons.(%) - - - - - EPS (IDR) 16 88 43 61 19 EPS growth (%) (65.1) 456.5 (51.) 41.4 79.5 EV/EBITDA (x) 7.7 5.5 7. 6.4 5.1 P/E (x) 35.8 6.4 13.1 9.3 5.2 FCFPS (IDR) (156) (126) (145) (42) (11) FCF yield (%) (27.7) (22.2) (25.6) (7.4) (2.) BVPS (IDR) 334 458 485 538 635 P/BV (x) 1.7 1.2 1.2 1.1.9 DPS (IDR) 11 16 9 12 22 Div. yield (%) 2. 2.9 1.5 2.2 3.9 note: based on 3 December 215 closing price Share price performance (IDR) (') 8 8, 7, 7 6, 5, 6 4, 3, 5 2, 1, 4 3-Dec-14 3-Feb-15 3-Apr-15 3-Jun-15 3-Aug-15 3-Oct-15 3-Dec-15 Volume (RHS) TBLA IJ Px Last (%) (%) 25 15 5 (5) (15) (25) (1.) 15.7 18.6 13.4 (4.2) (16.8) ytd 1M 3M 6M 9M 12M TBLA IJ relative to JCI Source: Bloomberg Agustinus Reza Kirana (agustinus.reza@bahana.co.id) +6221 25581 ext. 3616 25 15 5 (5) (15) (25) Major assumptions Year to 31 Dec 213A 214A 215F 216F 217F FFB nucleus production (k tons) 738 749 641 63 7 CPO production (k tons) 213 31 286 258 283 Growth (%) (7.1) 41.4 (4.9) (9.9) 9.9 ASP CPO (USD/ton) 754 736 56 6 62 Sugar plantation (ha) 1,736 4,516 9, 12, 12, Company information 12M high/low (IDR) : 8/425 12M High/low consensus TP (IDR) : na Majority shareholder (%) : Budi Delta Swakarya & Sungai Budi (58.7) Shares outstanding (mn)/free float (%) : 4,942/41.2 Mkt. cap. (IDRbn/USDmn) : 3,18/218 3-m avg.daily t.o.(idrbn/usdmn) :.3/. Bloomberg/Reuters code : TBLA IJ/TBLA.JK Source: Bloomberg, Reuters; based on 3 December 215 closing price 318
216 Compendium TUNAS BARU LAMPUNG Profit & loss Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Sales 3,75 6,338 5,45 5,668 7,41 Gross profit 95 1,293 1,83 1,26 1,68 EBITDA 75 1,65 959 1,12 1,46 Depreciation 211 27 348 413 466 EBIT 493 795 611 689 941 Net interest inc./(expense) (171) (21) (25) (254) (26) Forex gain/(losses) (25) (15) (145) (49) 49 Other income/(expense) 46 73 48 48 48 Pre-tax profit 119 562 39 435 778 Taxes (33) (126) (76) (17) (191) Minority interest (2) (3) (3) (3) (3) Extraordinary gain (losses) - - - - - Net profit 84 433 23 325 584 Balance sheet Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Cash and equivalents 648 52 512 492 465 S-T investments 1 1 3 3 3 Trade receivables 416 711 61 78 88 Inventories 787 956 1,125 1,147 1,395 Fixed assets 3,516 4,245 5,14 5,591 5,926 Other assets 835 886 715 712 833 Total assets 6,212 7,328 8,59 8,652 9,52 Interest bearing liabilities 3,89 3,399 4,25 4,5 4,6 Trade payables 183 292 36 378 44 Other liabilities 1,143 1,173 839 885 1,54 Total liabilities 4,414 4,864 5,449 5,762 6,93 Minority interest 15 18 18 18 18 Shareholders' equity 1,783 2,447 2,593 2,872 3,391 Cash flow Year to 31 Dec (IDRbn) 213A 214A 215F 215F 216F EBIT 493 795 611 689 941 Depreciation 211 27 348 413 466 Working capital (189) (48) (199) (71) (35) Other operating items (416) (329) (335) (356) (317) Operating cash flow 1 328 426 675 739 Net capital expenditure (935) (999) (1,2) (9) (8) Free cash flow (835) (671) (774) (225) (61) Equity raised/(bought) (1) 29 - - - Net borrowings 981 39 851 25 1 Other financing (46) (57) (84) (46) (65) Net cash flow 99 (128) (7) (21) (26) Cash balances, beginning 549 648 52 512 492 Ending cash 648 52 512 492 465 Key ratios Year to 31 Dec 213A 214A 215F 216F 217F ROAE (%) 4.8 2.5 9.1 11.9 18.7 ROAA (%) 1.5 6.4 3. 3.9 6.4 Gross margin (%) 25.6 2.4 2. 22.2 23.9 EBITDA margin (%) 19. 16.8 17.8 19.4 2. EBIT margin (%) 13.3 12.5 11.3 12.2 13.4 Net margin (%) 2.3 6.8 4.3 5.7 8.3 Payout ratio (%) 2.4 7.3 2. 2. 2. Current ratio (x) 1.1 1.1 1.1 1.1 1.1 Interest coverage (x) 2.9 4. 3. 2.7 3.6 Net gearing (%) 136.9 117.7 144.1 139.6 121.9 Debtor turnover (days) 4 33 41 46 46 Creditor turnover (days) 21 37 24 24 23 Inventory turnover (days) 95 63 95 95 95 319
216 Compendium UNILEVER INDONESIA BUY PX: IDR36,75 - TP: IDR46, Despite retaining its dominance with a 4-6% market share in 13 of 14 product categories, UNVR, Indonesia s largest non-tobacco FMCG company, only experienced low-single-digit volume growth in 215, highlighting the severity of the current economic downturn. Going forward, we expect growth support to come from its F&B division and from launchings and re-launchings of powerful household brands. On the cost front, margin protection should stem from UNVR s three price increases: March-15 (1%), August-15 (1%) and October- 15 (1.8%), coupled with corrections in key raw materials prices, helped by the parent company s global procurement program. On valuation, UNVR has never been cheap due to strong management, as reflected in a high ROAE of more than 12%. Our IDR46, TP is based on a 216F PE of 53x (3-year average), on UNVR s excellent portfolio of brands. Risk: More intense competition. Share price performance (IDR) 5, 45, 4, 35, 3, 3-Dec-14 3-Feb-15 3-Apr-15 3-Jun-15 3-Aug-15 3-Oct-15 3-Dec-15 Volume (RHS) UNVR IJ Px Last (%) (%) 4 3 2 1 (1) (2) 25.4. (9.2) (3.6) ytd 1M 3M 6M 9M 12M UNVR IJ relative to JCI Source: Bloomberg Harry Su (harry.su@bahana.co.id) +6221 25 5735 18.1 29.3 (') 6, 5, 4, 3, 2, 1, 4 3 2 1 (1) (2) Financial highlights Year to 31 Dec 213A 214A 215F 216F 217F Revenues (IDRbn) 3,757 34,512 36,115 4,257 45,54 EBIT (IDRbn) 7,122 7,779 7,976 8,943 1,18 Net profit (IDRbn) 5,353 5,739 5,885 6,612 7,489 Bahana/consensus (%) - - 1 11 12 EPS (IDR) 72 752 771 867 982 EPS growth (%) 1.6 7.2 2.5 12.4 13.3 EV/EBITDA (x) 37.2 35.4 34.1 3.7 27.1 P/E (x) 52.4 48.9 47.6 42.4 37.4 FCFPS (IDR) 821 932 921 1,43 1,26 FCF yield (%) 2.2 2.5 2.5 2.8 3.3 BVPS (IDR) 558 63 643 742 858 P/BV (x) 65.9 61. 57.1 49.5 42.8 DPS (IDR) 71 752 725 815 923 Div. yield (%) 1.9 2. 2. 2.2 2.5 note: based on 3 December 215 closing price Major assumptions Year to 31 Dec 213A 214A 215F 216F 217F Sales growth (%) 12.7 12.2 4.6 11.5 13.1 Gross margin (%) 51.3 49.5 51.2 51.4 51.7 Company information 12M high/low (IDR) : 46,/3,525 12M high/low consensus TP (IDR) : 46,/23,17 Majority shareholder (%) : Unilever Indonesia (85.) Shares outstanding (mn)/free float (%) : 7,63/15. Mkt. cap. (IDRbn/USDmn) : 276,15/19,954 3-m avg.daily t.o.(idrbn/usdmn) : 55.6/4. Bloomberg/Reuters code : UNVR IJ/UNVR.JK Source: Bloomberg, Reuter; based on 3 December 215 closing price 32
216 Compendium UNILEVER INDONESIA Profit & loss Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Sales 3,757 34,512 36,115 4,257 45,54 Gross profit 15,778 17,99 18,54 2,683 23,542 EBITDA 7,562 7,923 8,239 9,143 1,332 Depreciation 441 144 263 199 224 EBIT 7,122 7,779 7,976 8,943 1,18 Net interest inc./(expense) (6) (86) (85) (72) (6) Forex gain/(losses) - - - - - Other income/(expense) 43 (17) (19) (21) (23) Pre-tax profit 7,159 7,677 7,872 8,851 1,25 Taxes (1,86) (1,938) (1,988) (2,239) (2,536) Minority interest Extraordinary gain/(losses) - - - - - Net profit 5,353 5,739 5,885 6,612 7,489 Balance sheet Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Cash and equivalents 261 859 74 827 1,113 S-T investments - - - - - Trade receivables 2,625 2,896 2,888 3,22 3,642 Inventories 2,84 2,326 2,268 2,521 2,772 Fixed assets 6,874 6,763 7,7 8,751 9,777 Other assets 859 1,437 1,574 1,77 2,229 Total assets 12,73 14,281 15,134 17,88 19,534 Interest bearing liabilities 977 1,25 1,125 1,13 962 Trade payables 3,765 4,632 4,342 4,827 5,424 Other liabilities 3,77 3,8 4,758 5,585 6,6 Total liabilities 8,449 9,682 1,225 11,424 12,986 Minority interest Shareholders' equity 4,255 4,599 4,99 5,665 6,548 Cash flow Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F EBIT 7,122 7,779 7,976 8,943 1,18 Depreciation 441 144 263 199 224 Working capital (267) 314 (12) 68 122 Other operating items - - - - - Operating cash flow 7,295 8,237 8,227 9,211 1,454 Net capital expenditure (1,31) (1,126) (1,2) (1,25) (1,25) Free cash flow 6,264 7,111 7,27 7,961 9,24 Equity raised/(bought) - - - - - Net borrowings (63) 273 (125) (113) (51) Other financing (6,169) (6,786) (7,58) (7,725) (8,867) Net cash flow 32 598 (155) 123 286 Cash balances, beginning 23 261 859 74 827 Ending cash 261 859 74 827 1,113 Key ratios Year to 31 Dec 213A 214A 215F 216F 217F ROAE (%) 13.2 129.6 123.8 125.1 122.6 ROAA (%) 43.4 42.5 4. 41. 4.9 Gross margin (%) 51.3 49.5 51.2 51.4 51.7 EBITDA margin (%) 24.6 23. 22.8 22.7 22.7 EBIT margin (%) 23.2 22.5 22.1 22.2 22.2 Net margin (%) 17.4 16.6 16.3 16.4 16.4 Payout ratio (%) 94.5 94. 94. 94. 94. Current ratio (x).7.8.7.8.8 Interest coverage (x) 1,263.4 9.9 93.5 124.7 169.4 Net gearing (%) 16.8 8.5 8.6 3.3 nc Debtor turnover (days) 3 29 29 29 29 Creditor turnover (days) 8 88 9 9 9 Inventory turnover (days) 51 46 47 47 46 321
216 Compendium UNITED TRACTORS HOLD* PX: IDR16,1 - TP: IDR16, UNTR, Indonesia s largest heavy equipment (HE) and mining contracting play, should continue to see flat earnings growth ahead as 87% of its businesses are exposed to the coal/mining sectors. In HE (27% of revenues), we expect soft 216 sales of 2k units, -3% y-y. In mining contracting (62% of total revenues), we expect Pama to improve its efficiency in order to limit declining margin as most coal players will continue to implement various cost-cutting measures to maintain profitability against a backdrop of declining coal prices, which we expect to average USD55/ton (-5% y-y) in 216. UNTR s severe 3M market underperformance of 21.5% on weak coal price has run its course, in our view. Thus, we upgrade UNTR to HOLD from REDUCE with our DCF-based (WACC: 13%) TP unchanged at IDR16,, representing 216F PE of 9.4x. Risks to our call include higher/lower coal prices and IDR. Share price performance (IDR) 25, 23, 21, 19, 17, 15, 3-Dec-14 3-Feb-15 3-Apr-15 3-Jun-15 3-Aug-15 3-Oct-15 3-Dec-15 Volume (RHS) UNTR IJ Px Last (%) (%) 1 5 (5) (1) (15) (2) (25) 6. (12.2) (21.5) (13.7) Source: Bloomberg Leonardo Henry Gavaza, CFA (leonardo@bahana.co.id) +6221 25581 ext. 368 *New, please refer to appendix II (9.3) ytd 1M 3M 6M 9M 12M UNTR IJ relative to JCI (.2) (') 12, 1, 8, 6, 4, 2, 1 5 (5) (1) (15) (2) (25) Financial highlights Year to 31 Dec 213A 214A 215F 216F 217F Revenues (IDRbn) 51,12 53,142 49,968 49,619 51,535 EBIT (IDRbn) 6,741 8,866 8,357 8,192 8,437 Net profit (IDRbn) 4,833 5,369 6,847 6,383 6,395 Bahana/consensus(%) - - 16 98 93 EPS (IDR) 1,296 1,439 1,836 1,711 1,715 EPS growth (%) (16.4) 11.1 27.5 (6.8).2 EV/EBITDA (x) 5.5 4.1 3.8 3.6 3.2 P/E (x) 12.4 11.2 8.8 9.4 9.4 FCFPS (IDR) 2,68 1,81 2,233 1,65 1,738 FCF yield (%) 12.8 6.7 13.9 1. 1.8 BVPS (IDR) 8,96 9,828 11,119 12,96 13,126 P/BV (x) 1.8 1.6 1.4 1.3 1.2 DPS (IDR) 515 545 734 684 686 Div. yield (%) 3.2 3.4 4.6 4.3 4.3 note: based on 3 December 215 closing price Major assumptions Year to 31 Dec 213A 214A 215F 216F 217F Komatsu sales (units) 4,23 3,513 2,21 1,97 2,45 Coal extraction (mn tons) 15 12 114 12 12 Ovr. Removal (mn bcm) 845 85 765 688 688 Coal mines (mn tons) 4.2 5.8 4.6 6. 6. Company information 12M high/low (IDR) : 23,925/16,1 12M High/low consensus TP (IDR) : 25,/13,25 Majority shareholder (%) : Astra International (59.5) Shares outstanding (mn)/free float (%) : 3,73/4.5 Mkt. cap. (IDRbn/USDmn) : 6,55/4,352 3-m avg.daily t.o.(idrbn/usdmn) : 63.8/4.6 Bloomberg/Reuters code : UNTR IJ/UNTR.JK Source: Bloomberg, Reuters; based on 3 December 215 closing price 322
216 Compendium UNITED TRACTORS Profit & loss Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Sales 51,12 53,142 49,968 49,619 51,535 Gross profit 9,517 12,7 11,356 11,17 11,529 EBITDA 1,446 14,562 12,62 12,25 12,444 Depreciation 3,75 5,697 4,263 4,58 4,8 EBIT 6,741 8,866 8,357 8,192 8,437 Net interest inc./(expense) (17) 154 64 77 155 Forex gain/(losses) (319) 5 67 133 (182) Other income/(expense) 183 (2,44) 5 55 61 Pre-tax profit 6,587 6,622 9,78 8,457 8,471 Taxes (1,789) (1,782) (2,27) (2,114) (2,118) Minority interest 35 53 39 4 42 Extraordinary gain/(losses) - - - - - Net profit 4,833 5,369 6,847 6,383 6,395 Balance sheet Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Cash and equivalents 7,936 1,6 16,758 2,135 24,183 S-T investments 1,242 1,856 2,413 2,413 2,413 Trade receivables 12,141 13,587 13,69 13,934 14,825 Inventories 6,176 7,77 7,511 7,69 8,22 Fixed assets 26,62 22,774 23,511 22,73 21,945 Other assets 3,265 4,245 6,283 6,269 6,396 Total assets 57,362 6,292 7,166 73,144 77,984 Interest bearing liabilities 4,939 3,432 4,242 4,371 4,491 Trade payables 1,887 12,624 14,81 15,11 15,893 Other liabilities 5,887 5,659 7,762 6,86 6,844 Total liabilities 21,713 21,715 26,813 26,188 27,228 Minority interest 2,429 1,917 1,878 1,838 1,795 Shareholders' equity 33,22 36,66 41,474 45,119 48,961 Cash flow Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F EBIT 6,741 8,866 8,357 8,192 8,437 Depreciation 3,75 5,697 4,263 4,58 4,8 Working capital 3,135 (1,427) 3,238 (1,179) (51) Other operating items (2,899) (6,621) (2,53) (1,836) (2,211) Operating cash flow 1,682 6,515 13,329 9,236 9,732 Net capital expenditure (2,969) (2,483) (5,) (3,25) (3,25) Free cash flow 7,713 4,32 8,329 5,986 6,482 Equity raised/(bought) - - - - - Net borrowings (974) (1,57) 81 13 12 Other financing (2,799) (41) (2,44) (2,739) (2,553) Net cash flow 3,941 2,124 6,699 3,377 4,48 Cash balances, beginning 3,995 7,936 1,6 16,758 2,135 Ending cash 7,936 1,6 16,758 2,135 24,183 Key ratios Year to 31 Dec 213A 214A 215F 216F 217F ROAE (%) 15.4 15.4 17.5 14.7 13.6 ROAA (%) 9. 9.1 1.5 8.9 8.5 Gross margin (%) 18.7 22.7 22.7 22.5 22.4 EBITDA margin (%) 2.5 24.5 25. 24.7 24.1 EBIT margin (%) 13.2 16.7 16.7 16.5 16.4 Net margin (%) 9.5 1.1 13.7 12.9 12.4 Payout ratio (%) 39.7 37.9 4. 4. 4. Current ratio (x) 1.9 2.1 2. 2.3 2.4 Interest coverage (x) 23.4 na na na na Net gearing (%) 6.5 nc nc nc nc Debtor turnover (days) 87 93 1 13 15 Creditor turnover (days) 96 112 14 143 145 Inventory turnover (days) 54 69 71 73 77 323
216 Compendium VALE INDONESIA BUY PX: IDR1,555 - TP: IDR2,5 INCO, the biggest listed nickel-in-matte producer and an essential subsidiary for Vale SA (accounting for 41% of reserves), is troubled by low nickel prices due to sluggish global economic conditions, particularly in China, although we continue to like its low 3Q15 cash cost at USD7,261/mt (the lowest level in the past 5 years), helped by its hydropowerplant and coal-conversion project (CCP). On the 216 production front, we assume 8k mt nickel-in-matte to be fully absorbed by INCO s buyers at a USD12.5k/mt nickel price, translating into 4% YoY revenue growth and 53% YoY net profit expansion on a gross margin of 23% (215F: 17%; 214: 3%). Given the unexciting nickel price of below USD1k/mt, we conservatively set our DCF-based TP at IDR2,5 (15% WACC), on a 216F PE of 16x. BUY on 6% upside potential. Risks: Hydro power plants being hurt by El Nino, CCP failures and a longer-than-expected nickel price recovery. Share price performance (IDR) (') 4,6 4, 4,1 35, 3,6 3, 25, 3,1 2, 2,6 15, 2,1 1, 1,6 5, 1,1 3-Dec-14 3-Feb-15 3-Apr-15 3-Jun-15 3-Aug-15 3-Oct-15 3-Dec-15 2 1 (1) (2) (3) (4) (5) (6) (43.9) (29.1) Volume (RHS) 11.2 inco IJ Px Last (%) (%) (38.6) (37.7) (47.1) ytd 1M 3M 6M 9M 12M inco IJ relative to JCI Source: Bloomberg Arandi Ariantara (arandi@bahana.co.id) +6221 25581 ext. 3619 2 1 (1) (2) (3) (4) (5) (6) Financial highlights Year to 31 Dec 213A 214A 215F 216F 217F Revenues (USDmn) 922 1,38 749 78 874 EBIT (USDmn) 7 249 13 15 26 Net profit (USDmn) 39 172 7 17 151 Bahana/consensus (%) - - 69 82 15 EPS (IDR) 41 211 98 156 213 EPS growth (%) (38.) 417.3 (53.4) 58.8 36.5 EV/EBITDA (x) 11.4 5.5 4.3 3.2 2.3 P/E (x) 38.2 7.4 15.8 1. 7.3 FCFPS (IDR) 137 32 12 126 127 FCF yield (%) 8.8 19.4 7.7 8.1 8.2 BVPS (IDR) 1,86 2,183 2,468 2,651 2,682 P/BV (x).9.7.6.6.6 DPS (IDR) 53 122 59 94 128 Div. yield (%) 3.4 7.9 3.8 6. 8.2 note: based on 3 December 215 closing price Major assumptions Year to 31 Dec 213A 214A 215F 216F 217F Sales vol. (tons) 77,198 79,477 8, 8, 8, growth (%) 8.2 3..7.. ASP (USD/m ton) 11,939 13,61 9,36 9,75 1,92 growth (%) (11.9) 9.4 (28.3) 4.2 12. Company information 12M high/low (IDR) : 4,135/1,25 12M High/low consensus TP (IDR) : 3,/9 Majority shareholder (%) : Vale Canada Limited (58.7) Shares outstanding (mn)/free float (%) : 9,936/2.5 Mkt. cap. (IDRbn/USDmn) : 15,451/1,116 3-m avg.daily t.o.(idrbn/usdmn) : 29.3/2.2 Bloomberg/Reuters code : INCO IJ/INCO.JK Source: Bloomberg, Reuters based on 3 December 215 closing price 324
216 Compendium VALE INDONESIA Profit & loss Year to 31 Dec (USDmn) 213A 214A 215F 216F 217F Sales 922 1,38 749 78 874 Gross profit 14 37 128 176 233 EBITDA 181 372 232 287 353 Depreciation 111 122 13 137 147 EBIT 7 249 13 15 26 Net interest inc./(expense) (15) (13) (1) (7) (5) Forex gain/(losses) - - - - - Other income/(expense) (15) (13) (1) (7) (5) Pre-tax profit 55 237 93 143 22 Taxes (17) (65) (23) (36) (5) Minority interest - - - - - Extraordinary gain/(losses) - - - - - Net profit 39 172 7 17 151 Balance sheet Year to 31 Dec (USDmn) 213A 214A 215F 216F 217F Cash and equivalents 2 32 252 259 244 S-T investments 17 16 16 16 16 Trade receivables 66 93 67 7 78 Inventories 151 139 115 119 127 Fixed assets 1,652 1,69 1,629 1,642 1,695 Other assets 212 191 19 19 191 Total assets 2,281 2,334 2,252 2,28 2,336 Interest bearing liabilities 219 183 15 113 75 Trade payables 76 74 63 61 65 Other liabilities 272 292 288 289 292 Total liabilities 567 549 5 463 432 Minority interest - - - - - Shareholders' equity 1,714 1,785 1,752 1,817 1,94 Cash flow Year to 31 Dec (USDmn) 213A 214A 215F 216F 217F EBIT 7 249 13 15 26 Depreciation 111 122 13 137 147 Working capital 52 (12) 36 (7) (11) Other operating items 33 (36) (33) (43) (55) Operating cash flow 266 323 235 237 287 Net capital expenditure (136) (76) (15) (15) (2) Free cash flow 13 247 85 87 87 Equity raised/(bought) - - - - - Net borrowings (37) (37) (33) (38) (38) Other financing (65) (18) (13) (42) (64) Net cash flow 28 12 (51) 7 (14) Cash balances, beginning 172 2 32 252 259 Ending cash 2 32 252 259 244 Key ratios Year to 31 Dec 213A 214A 215F 216F 217F ROAE (%) 2.3 9.8 3.9 6.2 8.1 ROAA (%) 1.7 7.5 3. 4.7 6.6 Gross margin (%) 15.2 29.5 17.1 22.5 26.7 EBITDA margin (%) 19.6 35.8 31. 36.8 4.4 EBIT margin (%) 7.6 24. 13.7 19.2 23.6 Net margin (%) 4.2 16.6 9.3 13.7 17.3 Payout ratio (%) 258.9 6. 6. 6. 6. Current ratio (x) 3.3 3. 2.7 2.7 2.7 Interest coverage (x) 4.8 19.9 1.5 2.5 42.4 Net gearing (%) 1.1 nc nc nc nc Debtor turnover (days) 9.6 7.8 6.7 4.9 3.2 Creditor turnover (days) 26 32 32 32 32 Inventory turnover (days) 3 34 34 34 34 325
216 Compendium WASKITA KARYA BUY PX: IDR1,67 - TP: IDR1,975 WSKT, the largest market cap construction player in Indonesia post its IDR5.3tn rights issue, is poised to expand its investment portfolio, particularly in toll-road projects where the company now owns stakes in 1 sections, totaling 38km. An enlarged balance sheet would also enable WSKT to raise 216F total order book to IDR57tn (+12% y-y). In 216, we expect WSKT to extend its solid sales growth (211-16F CAGR: 23%) by partaking in several high-profile projects such as the Palembang light-rail-transit and 395km Sumatra transmission lines. This should also translate to increased demand for its subsidiary, Waskita Beton Precast, which has total plant capacity of 1.8mn tons. Our SOTP-based TP of IDR1,975 reflects a 216F PE of 24x, a 2% premium to the sector, justified by solid earnings visibility as most projects stem from the government and SOEs. Risks: Land clearing delays and higher-than-expected project write-offs. Share price performance (IDR) 2, 1,8 1,6 1,4 1,2 1, 8 3-Dec-14 3-Feb-15 3-Apr-15 3-Jun-15 3-Aug-15 3-Oct-15 3-Dec-15 Volume (RHS) WSKT IJ Px Last (%) (%) 8 7 6 5 4 3 2 1 (1) 28.5 (1.4) (1.) ytd 1M 3M 6M 9M 12M WSKT IJ relative to JCI 11.8 12.2 Source: Bloomberg Bob Setiadi (bob.setiadi@bahana.co.id) +6221 25581 ext.365 67.9 (') 2, 15, 1, 5, 8 7 6 5 4 3 2 1 (1) Financial highlights Year to 31 Dec 213A 214A 215F 216F 217F Revenues (IDRbn) 9,687 1,287 15,174 2,58 24,65 EBIT (IDRbn) 672 875 1,434 1,918 2,148 Net profit (IDRbn) 368 52 818 1,116 1,174 Bahana/cons.(%) - - 111 11 95 EPS (IDR) 38 52 71 83 88 EPS growth (%) 2.4 35. 37.9 17.3 5.2 EV/EBITDA (x) 31.6 26.1 13.4 13.3 12.8 P/E (x) 43.7 32.4 23.5 2. 19. FCFPS (IDR) (81) (98) (456) (269) (214) FCF yield (%) (4.8) (5.8) (27.1) (16.) (12.7) BVPS (IDR) 247 292 657 724 794 P/BV (x) 6.8 5.7 2.5 2.3 2.1 DPS (IDR) 11 1 12 17 18 Div. yield (%).7.6.7 1. 1.1 note: based on 3 December 215 closing price Major assumptions Year to 31 Dec 213A 214A 215F 216F 217F Carried over (IDRbn) 8,814 1,516 2,277 32,938 33,469 New contracts (IDRbn) 13,318 22,625 3,589 23,791 24,619 Total order books (IDRbn) 22,132 33,141 5,866 56,73 58,87 Company information 12M high/low (IDR) : 1,87/926 12M high/low consensus TP (IDR) : 2,5/1,67 Majority shareholder (%) : Republic of Indonesia (66.) Shares outstanding (mn)/free float (%) : 13,572/34. Mkt. cap. (IDRbn/USDmn) : 22,666/1,637 3-m avg.daily t.o.(idrbn/usdmn) : 48./3.5 Bloomberg/Reuters code : WSKT IJ/WSKT.JK Source: Bloomberg, Reuters based on 3 December 215 closing price 326
216 Compendium WASKITA KARYA Profit & loss Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Sales 9,687 1,287 15,174 2,58 24,65 Gross profit 911 1,19 1,767 2,326 2,711 EBITDA 724 913 1,815 2,53 2,336 Depreciation 52 37 381 134 188 EBIT 672 875 1,434 1,918 2,148 Net interest inc./(expense) (7) (14) (333) (494) (731) Forex gain/(losses) 21 (3) 15 11 (3) Other income/(expense) (12) 24 11 6 5 Pre-tax profit 611 756 1,127 1,441 1,419 Taxes (243) (254) (379) (515) (615) Minority interest 7 189 371 Extraordinary gain/(losses) - - - - - Net profit 368 52 818 1,116 1,174 Balance sheet Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Cash and equivalents 1,12 1,675 4,48 2,559 1,619 S-T investments 24 24 24 24 24 Trade receivables 1,71 2,37 3,35 4,116 4,921 Inventories 292 64 839 879 922 Fixed assets 415 622 776 921 1,58 Other assets 5,226 7,31 15,822 21,21 25,88 Total assets 8,788 12,542 24,544 29,79 34,425 Interest bearing liabilities 1,623 3,163 5,725 7,163 9,228 Trade payables 2,291 2,572 3,673 5,1 5,998 Other liabilities 2,491 3,959 5,569 6,179 6,794 Total liabilities 6,45 9,693 14,967 18,343 22,2 Minority interest 1 6 78 1,676 1,775 Shareholders' equity 2,382 2,843 8,797 9,69 1,63 Cash flow Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F EBIT 672 875 1,434 1,918 2,148 Depreciation 52 37 381 134 188 Working capital (483) (183) (1,78) (1,434) (2,165) Other operating items (538) (47) (82) (1,78) (1,28) Operating cash flow (298) 26 (713) (46) (1,36) Net capital expenditure (48) (1,211) (5,387) (3,14) (1,832) Free cash flow (777) (952) (6,1) (3,6) (2,868) Equity raised/(bought) - 59 5,3 - - Net borrowings (296) 1,544 2,562 1,438 2,65 Other financing 1 (95) 61 673 (136) Net cash flow (1,64) 556 2,373 (1,489) (939) Cash balances, beginning 2,184 1,12 1,675 4,48 2,559 Ending cash 1,12 1,675 4,48 2,559 1,619 Key ratios Year to 31 Dec 213A 214A 215F 216F 217F ROAE (%) 16.8 19.2 14.1 12.1 11.6 ROAA (%) 4.3 4.7 4.4 4.1 3.7 Gross margin (%) 9.4 1.8 11.6 11.3 11. EBITDA margin (%) 7.5 8.9 12. 1. 9.5 EBIT margin (%) 6.9 8.5 9.4 9.3 8.7 Net margin (%) 3.8 4.9 5.4 5.4 4.8 Payout ratio (%) 3. 2. 2. 2. 2. Current ratio (x) 1.5 1.4 1.4 1.8 1.7 Interest coverage (x) 9.6 6.2 4.3 3.9 2.9 Net gearing (%) 21.1 52.3 19.1 47.5 71.6 Debtor turnover (days) 89 97 1 1 1 Creditor turnover (days) 6 71 73 73 73 Inventory turnover (days) 15 18 15 15 15 327
216 Compendium WIJAYA KARYA BUY PX: IDR2,85 - TP: IDR3,1* Through rising private infrastructure investments, especially in power plants and ports, WIKA is looking to turn around its likely weak 215 performance on enhanced project implementation and improvement in its embattled precast subsidiary, Wika Beton (WTON), offsetting slower property sales from Wika Realty. Balance sheet augmentation through the planned rights issue and IDR4tn state capital injection (PMN) would be required for future investments, including the USD5.5bn Jakarta-Bandung fast train project. Other positive catalysts could be derived from possible bigticket projects (i.e. Java V power plant and Antam s processing plant). Our TP of IDR3,1 is based on a 216F PE of 24x, a 2% premium to the sector, given our expectation of a 216 net earnings rebound to IDR785bn (+4.6% y-y) and high precast valuation. BUY on expected higher new construction projects. Risk: Jump in financing charges. Share price performance (IDR) (') 4, 8, 7, 3,5 6, 5, 3, 4, 3, 2,5 2, 1, 2, 3-Dec-14 3-Feb-15 3-Apr-15 3-Jun-15 3-Aug-15 3-Oct-15 3-Dec-15 Volume (RHS) WIKA IJ Px Last (%) (%) 4 2 (2) (4) (6) (8) (1) (12) (14) (11.8) (1.5) (.4) 1.7 (3.4) ytd 1M 3M 6M 9M 12M WIKA IJ relative to JCI Source: Bloomberg Bob Setiadi (bob.setiadi@bahana.co.id) +6221 25581 ext.365 *New, please refer to appendix II 2. 4 2 (2) (4) (6) (8) (1) (12) (14) Financial highlights Year to 31 Dec 213A 214A 215F 216F 217F Revenues (IDRbn) 11,885 12,463 12,15 14,875 17,597 EBIT (IDRbn) 1,216 1,41 1,297 1,718 2,5 Net profit (IDRbn) 57 615 559 785 957 Bahana/cons.(%) - - 9 94 91 EPS (IDR) 93 1 91 128 156 EPS growth (%) 19.2 7.9 (9.2) 4.6 21.8 EV/EBITDA (x) 13.1 11.3 12.5 9.7 8.1 P/E (x) 3.2 28. 3.8 21.9 18. FCFPS (IDR) (78) (312) (251) (85) (51) FCF yield (%) (2.8) (11.1) (8.9) (3.) (1.8) BVPS (IDR) 481 65 73 852 992 P/BV (x) 5.8 4.3 3.8 3.3 2.8 DPS (IDR) 28 3 27 38 47 Div. yield (%) 1. 1.1 1. 1.4 1.7 note: based on 3 December 215 closing price Major assumptions Year to 31 Dec 213A 214A 215F 216F 217F Carried over (IDRbn) 2,536 24,141 22,751 3,794 4,158 New contracts (IDRbn) 17,743 17,632 24,852 3,865 32,48 Total order books (IDRbn) 38,279 41,773 47,63 61,659 72,566 Company information 12M high/low (IDR) : 3,815/2,46 12M high/low consensus TP (IDR) : 4,/2,5 Majority shareholder (%) : Republic of Indonesia (65.1) Shares outstanding (mn)/free float (%) : 6,149/34.9 Mkt. cap. (IDRbn/USDmn) : 17,249/1,246 3-m avg.daily t.o.(idrbn/usdmn) : 26.7/1.9 Bloomberg/Reuters code : WIKA IJ/WIKA.JK Source: Bloomberg, Reuters based on 3 December 215 closing price 328
216 Compendium WIJAYA KARYA Profit & loss Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Sales 11,885 12,463 12,15 14,875 17,597 Gross profit 1,584 1,794 1,697 2,21 2,622 EBITDA 1,336 1,589 1,562 2,5 2,449 Depreciation 12 188 266 332 399 EBIT 1,216 1,41 1,297 1,718 2,5 Net interest inc./(expense) (4) (124) (185) (239) (273) Forex gain/(losses) (31) (2) 25 1 (2) Other income/(expense) (128) (129) (17) (116) (121) Pre-tax profit 1,17 1,146 1,3 1,372 1,654 Taxes (392) (395) (385) (472) (558) Minority interest (54) (136) (87) (115) (139) Extraordinary gain/(losses) - - - - - Net profit 57 615 559 785 957 Balance sheet Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Cash and equivalents 1,387 2,31 1,475 1,496 1,369 S-T investments - - - - - Trade receivables 1,479 1,963 1,964 2,44 2,845 Inventories 1,118 817 891 1,87 1,286 Fixed assets 1,64 2,676 3,81 4,678 5,479 Other assets 6,97 8,158 8,917 1,157 11,442 Total assets 12,595 15,915 17,58 19,822 22,421 Interest bearing liabilities 1,672 3,32 3,791 4,91 4,91 Trade payables 3,117 3,974 3,94 4,76 5,633 Other liabilities 4,579 3,931 3,846 4,658 5,468 Total liabilities 9,368 1,936 11,541 13,58 15,192 Minority interest 278 989 1,39 1,91 1,145 Shareholders' equity 2,949 3,99 4,479 5,223 6,84 Cash flow Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F EBIT 1,216 1,41 1,297 1,718 2,5 Depreciation 12 188 266 332 399 Working capital 18 (166) (425) (422) (338) Other operating items (932) (1,577) (965) (691) (894) Operating cash flow 422 (154) 173 937 1,217 Net capital expenditure (897) (1,763) (1,711) (1,457) (1,531) Free cash flow (476) (1,917) (1,538) (52) (314) Equity raised/(bought) 357 724 115 127 139 Net borrowings 417 1,359 759 3 - Other financing (443) 747 (161) 114 48 Net cash flow (145) 914 (826) 21 (127) Cash balances, beginning 1,532 1,387 2,31 1,475 1,496 Ending cash 1,387 2,31 1,475 1,496 1,369 Key ratios Year to 31 Dec 213A 214A 215F 216F 217F ROAE (%) 2.6 17.7 13.2 16.2 16.9 ROAA (%) 4.8 4.3 3.4 4.3 4.5 Gross margin (%) 13.3 14.4 14. 14.8 14.9 EBITDA margin (%) 11.2 12.7 12.9 13.8 13.9 EBIT margin (%) 1.2 11.2 1.7 11.5 11.6 Net margin (%) 4.8 4.9 4.6 5.3 5.4 Payout ratio (%) 3. 3. 3. 3. 3. Current ratio (x) 1.1 1.1 1.1 1.1 1. Interest coverage (x) 3.5 11.3 7. 7.2 7.5 Net gearing (%) 9.7 18.3 51.7 49.7 44.7 Debtor turnover (days) 47 52 59 59 59 Creditor turnover (days) 17 12 131 131 131 Inventory turnover (days) 39 32 3 3 3 329
216 Compendium WIJAYA KARYA BETON HOLD* PX: IDR895 - TP: IDR965 Facing shrinking orders on heavy plant expansions by other construction SOEs, WTON, the largest concrete maker in Indonesia, is likely to raise its project reliance on parent Wijaya Karya (WIKA) ahead. To partly offset potential loss orders, WTON has put further focus in its engineering services and come up with, among others, a product innovation for fully constructed precast-based buildings. Going forward, improved utilization rates and a more evenly disbursed government s budget would mean recovery in 216F GPM to 14.5% (215: 14.1%) and sales to IDR3.3tn (+32% y-y), helped by WTON s widely covered areas with 12 production plants in three major islands. On 216F EPS growth of 46% y-y and an experienced management team, we retain our TP of IDR965 on 27x 216F PER, at par with regional peers. But, given share price drop, we upgrade to HOLD from Reduce. Upside risk: Huge fast train contract; Downside risk: ASP fall. Financial highlights Year to 31 Dec 213A 214A 215F 216F 217F Revenues (IDRbn) 2,644 3,277 2,527 3,347 4,147 EBIT (IDRbn) 337 49 292 43 5 Net profit (IDRbn) 243 329 218 316 47 Bahana/cons.(%) - - 84 9 95 EPS (IDR) 36 41 25 36 47 EPS growth (%) 35.4 12.2 (38.9) 45. 28.8 EV/EBITDA (x) 19.9 14.8 19.9 14.9 12.1 P/E (x) 24.5 21.9 35.8 24.7 19.2 FCFPS (IDR) (28) 21 (58) 26 2 FCF yield (%) (3.1) 2.3 (6.3) 2.9 2.2 BVPS (IDR) 12 249 257 282 315 P/BV (x) 8.8 3.6 3.5 3.2 2.8 DPS (IDR) 7 11 7 11 14 Div. yield (%).8 1.3.8 1.2 1.6 note: based on 3 December 215 closing price Share price performance (IDR) 1,4 1,2 1, 8 (') 2, 15, 1, 5, Major assumptions Year to 31 Dec 213A 214A 215F 216F 217F Sales volumes (mn tons) 1.5 1.7 1.4 1.8 2. Prod. capacity (mn tons/annum) 2. 2.2 2.3 2.5 2.5 Price/ton (IDRmn) 1.8 2. 1.9 1.9 2. 6 3-Dec-14 3-Feb-15 3-Apr-15 3-Jun-15 3-Aug-15 3-Oct-15 3-Dec-15 (19.7) (6.4) Volume (RHS) (13.1) (7.4) WTON IJ Px Last (%) (%) (5) (1) (15) (2) (25) (18.1) (16.) ytd 1M 3M 6M 9M 12M WTON IJ relative to JCI Source: Bloomberg Bob Setiadi (bob.setiadi@bahana.co.id) +6221 25581 ext.365 *New, please refer to appendix II (5) (1) (15) (2) (25) Company information 12M high/low (IDR) : 1,425/78 12M high/low consensus TP (IDR) : 1,27/68 Majority shareholder (%) : Wijaya Karya (6.) Shares outstanding (mn)/free float (%) : 6,149/24.5 Mkt. cap. (IDRbn/USDmn) : 7,8/563 3-m avg.daily t.o.(idrbn/usdmn) : 18./1.3 Bloomberg/Reuters code : WTON IJ/WTON.JK Source: Bloomberg, Reuters based on 3 December 215 closing price 33
216 Compendium WIJAYA KARYA BETON Profit & loss Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Sales 2,644 3,277 2,527 3,347 4,147 Gross profit 388 487 356 485 61 EBITDA 397 494 398 517 622 Depreciation 61 85 16 114 123 EBIT 337 49 292 43 5 Net interest inc./(expense) (4) 6 (17) (5) 11 Forex gain/(losses) (5) (5) (7) (2) 2 Other income/(expense) 2 4 3 4 4 Pre-tax profit 329 412 27 399 516 Taxes (87) (89) (59) (92) (119) Minority interest 2 6 7 8 1 Extraordinary gain/(losses) - - - - - Net profit 243 329 218 316 47 Balance sheet Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Cash and equivalents 413 1,38 279 274 254 S-T investments - - - - - Trade receivables 422 476 554 642 87 Inventories 846 458 832 862 1,78 Fixed assets 1,12 1,671 2,66 2,151 2,229 Other assets 224 159 127 166 26 Total assets 2,917 3,82 3,858 4,96 4,573 Interest bearing liabilities 539 565 4 2 - Trade payables 325 42 446 47 593 Other liabilities 1,324 591 76 892 1,156 Total liabilities 2,187 1,577 1,552 1,563 1,748 Minority interest 5 59 65 72 79 Shareholders' equity 68 2,166 2,24 2,461 2,746 Cash flow Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F EBIT 337 49 292 43 5 Depreciation 61 85 16 114 123 Working capital (97) 432 (45) (88) (25) Other operating items (144) (749) 51 54 122 Operating cash flow 156 177 44 483 494 Net capital expenditure (488) (744) (5) (2) (2) Free cash flow (333) (567) (456) 284 296 Equity raised/(bought) 494 1,178 - - - Net borrowings 519 26 (165) (2) (2) Other financing (552) 78 (78) () Net cash flow 73 625 (759) (5) (21) Cash balances, beginning 34 413 1,38 279 274 Ending cash 413 1,38 279 274 254 Key ratios Year to 31 Dec 213A 214A 215F 216F 217F ROAE (%) 36.4 39.3 9.9 13.4 15.6 ROAA (%) 9.1 9.8 5.7 7.9 9.4 Gross margin (%) 14.7 14.9 14.1 14.5 14.5 EBITDA margin (%) 15. 15.1 15.7 15.5 15. EBIT margin (%) 12.7 12.5 11.6 12.1 12.1 Net margin (%) 9.2 1. 8.6 9.4 9.8 Payout ratio (%) 25.8 3. 3. 3. 3. Current ratio (x) 1.1 1.4 1.2 1.3 1.4 Interest coverage (x). na.1. na Net gearing (%) 18.5 nc 5.4 nc nc Debtor turnover (days) 55 5 5 8 7 Creditor turnover (days) 6 49 75 6 61 Inventory turnover (days) 14 85 14 11 111 331
216 Compendium WINTERMAR OFFSHORE MARINE HOLD PX: IDR178 - TP: IDR19* As one of the largest domestic providers of offshore marine services with 7 OSVs, WINS s earnings have been hurt by discontinued domestic projects on low oil prices and regulatory changes. Going forward, WINS is attempting to raise its vessel utilization rates, which dropped to 59% in 9M15 (214: 7%), by seeking other offshore drilling projects in Brunei and Vietnam. However, against a backdrop of persistently weak oil prices, we believe WINS will continue to face operating challenges in the next two years. Due to poor earnings and the low oil price outlook, WINS has already underperformed the market by 63% YTD. This provides limited downside, in our view. Hence, WINS is a HOLD with a DCF-based 12M target price of IDR19 (from IDR7). The downside risks to our call on the stock are continued project delays, while an upside risk is a rebound in oil prices causing a demand recovery. Share price performance (IDR) (') 1,2 4, 1, 35, 3, 8 25, 6 2, 4 15, 1, 2 5, 3-Dec-14 3-Feb-15 3-Apr-15 3-Jun-15 3-Aug-15 3-Oct-15 3-Dec-15 Volume (RHS) WINS IJ Px Last (%) (%) 2 (2) (4) (6) (8) (9.8) 1.8 (44.) (6) (55.9) (65.4) (71.3) (8) ytd 1M 3M 6M 9M 12M WINS IJ relative to JCI Source: Bloomberg Agustinus Reza Kirana (agustinus.reza@bahana.co.id) +6221 25581 ext. 3616 *New, please refer to appendix II 2 (2) (4) Financial highlights* Year to 31 Dec 213A 214A 215F 216F 217F Revenues (USDmn) 195 177 97 111 12 EBIT (USDmn) 51 45 2 17 2 Net profit (USDmn) 27 22 (4) 3 7 Bahana/consensus (%) - - na 82 75 EPS (IDR) 95 75 (14) 11 23 EPS growth (%) 252.9 (2.6) na na 13.4 EV/EBITDA (x) 6.1 5.9 12.2 7.7 7.3 P/E (x) 1.9 2.4 (12.5) 15.1 7.7 FCFPS (IDR) (52) (54) 37 9 17 FCF yield (%) (29.3) (3.1) 2.6 5.4 6.4 BVPS (IDR) 546 667 657 695 692 P/BV (x).3.3.3.3.3 DPS (IDR) 5 11 (2) 2 3 Div. yield (%) 3. 6.4 (1.2) 1. 1.9 note: based on 3 December 215 closing price Major assumptions Year to 31 Dec 213A 214A 215F 216F 217F Low-tier vessels (unit) 28 28 28 28 28 Mid-high-tier vessels (unit) 43 43 43 43 43 Utilization rates (%) 76 73 58 61 65 Vessels additional (units) 7 - - - - Company information 12M high/low (IDR) : 1,15/159 12M High/low consensus TP (IDR) : 35/19 Majority shareholder (%) : Wintermarjaya Lestari (48.8) Shares outstanding (mn)/free float (%) : 4,31/42.3 Mkt. cap. (IDRbn/USDmn) : 715/52 3-m avg.daily t.o.(idrbn/usdmn) :.1/. Bloomberg/Reuters code : WINS IJ/WINS.JK Source: Bloomberg, Reuters; based on 3 December 215 closing price 332
216 Compendium WINTERMAR OFFSHORE MARINE Profit & loss Year to 31 Dec (USDmn) 213A 214A 215F 216F 217F Sales 195 177 97 111 12 Gross profit 62 58 13 28 31 EBITDA 7 71 3 47 51 Depreciation 19 25 28 29 31 EBIT 51 45 2 17 2 Net interest inc./(expense) (11) (12) (1) (9) (8) Forex gain/(losses) - - - - Other income/(expense) 1 () (1) (1) (1) Pre-tax profit 41 33 (8) 7 11 Taxes (3) (3) - (2) (2) Minority interest (1) (9) 4 (2) (2) Extraordinary gain/(losses) - - - - - Net profit 27 22 (4) 3 7 Balance sheet Year to 31 Dec (USDmn) 213A 214A 215F 216F 217F Cash and equivalents 25 3 2 2 17 S-T investments - - - - - Trade receivables 58 52 3 33 31 Inventories Fixed assets 31 38 38 376 369 Other assets 37 4 36 36 38 Total assets 422 51 467 465 455 Interest bearing liabilities 133 155 155 135 15 Trade payables 3 2 12 11 11 Other liabilities 4 63 54 61 65 Total liabilities 24 238 221 27 182 Minority interest 38 46 56 65 74 Shareholders' equity 181 217 189 193 199 Cash flow Year to 31 Dec (USDmn) 213A 214A 215F 216F 217F EBIT 51 45 2 17 2 Depreciation 19 25 28 29 31 Working capital (13) 16 11 4 6 Other operating items 1 (1) () () Operating cash flow 57 87 4 51 56 Net capital expenditure (74) (15) (3) (26) (25) Free cash flow (17) (17) 11 25 31 Equity raised/(bought) 39 2 (2) - - Net borrowings 35 22 - (2) (3) Other financing (49) (2) () (5) (4) Net cash flow 8 4 (1) (3) Cash balances, beginning 17 25 3 2 2 Ending cash 25 3 2 2 17 Key ratios Year to 31 Dec 213A 214A 215F 216F 217F ROAE (%) 13.8 9. (2.) 1.7 2.5 ROAA (%) 7.2 4.7 (.8).7 1.4 Gross margin (%) 31.9 32.8 13.4 25.4 25.9 EBITDA margin (%) 35.6 4. 31.3 42. 42.1 EBIT margin (%) 26. 25.5 2.5 15.4 16.5 Net margin (%) 14. 12.3 (4.2) 3. 5.5 Payout ratio (%) 22.6 13.3 15. 15. 15. Current ratio (x) 1.3 1.2 1.4 1.5 1.5 Interest coverage (x) 4.6 3.9.3 1.9 2.5 Net gearing (%) 59.4 57.8 71.5 59.6 44.3 Debtor turnover (days) 87 112 151 11 94 Creditor turnover (days) 69 77 69 51 45 Inventory turnover (days) 333
216 Compendium XL AXIATA BUY PX: IDR3,75 - TP: IDR3,9 EXCL, a pure GSM mobile telecommunications operator and the third largest in terms of subscribers, plans to continue to focus on its value strategy, monetizing its strong network following the consolidation of Axis Telekom s infrastructure. Supported by strong improvements in ARPU and higher data usage, we expect EXCL to start to enjoy revenue growth of around 5% y-y in 216. Furthermore, we look for EBITDA margins to be supportive on its continued enhanced pricing strategy against a market landscape marked by persistent rational pricing. Following the repayment of its unhedged external debt, we expect limited volatility from forex. Thus, EXCL is a BUY with a DCF-based TP of IDR3,9, reflecting a 216F EV/EBITDA of 6.2x, a 3% discount to regional peers. Risks include tough competition and high infrastructure costs. Share price performance (IDR) 5,5 5, 4,5 4, 3,5 3, 2,5 2, 3-Dec-14 3-Feb-15 3-Apr-15 3-Jun-15 3-Aug-15 3-Oct-15 3-Dec-15 Volume (RHS) EXCL IJ Px Last (%) (%) 4 3 2 1 (1) (2) (9.7) 13.5 28.8 Source: Bloomberg Leonardo Henry Gavaza, CFA (leonardo@bahana.co.id) +6221 25581 ext. 368 *New, please refer to appendix II 3.7 (5.2) (11.8) ytd 1M 3M 6M 9M 12M EXCL IJ relative to JCI (') 25, 2, 15, 1, 5, 4 3 2 1 (1) (2) Financial highlights* Year to 31 Dec 213A 214A 215F 216F 217F Revenues (IDRbn) 21,265 23,46 22,754 23,798 25,57 EBIT (IDRbn) 2,91 1,782 1,186 1,48 1,72 Net profit (IDRbn) 1,33 (775) (128) (125) 3 Bahana/consensus (%) - - na na 28 EPS (IDR) 121 (91) (15) (15) 35 EPS growth (%) (62.6) na na na na EV/EBITDA (x) 5.6 6.3 6.7 6.1 5.4 P/E (x) 31. na na na 16.6 FCFPS (IDR) (313) (667) (94) 92 195 FCF yield (%) (8.4) (17.8) (2.5) 2.4 5.2 BVPS (IDR) 1,793 1,646 1,631 1,616 1,641 P/BV (x) 2.1 2.3 2.3 2.3 2.3 DPS (IDR) 63 - - - 11 Div. yield (%) 1.7 - - -.3 note: based on 3 December 215 closing price Major assumptions Year to 31 Dec 213A 214A 215F 216F 217F Subscribers (') 6,577 59,623 41,736 42,988 44,278 Net adds (') 14,822 (954) (17,887) 1,252 1,29 ARPU (') 27 26 32 41 43 Company information 12M high/low (IDR) : 5,2/2,325 12M High/low consensus TP (IDR) : 6,9/4,19 Majority shareholder (%) : Axiata Group (66.4) Shares outstanding (mn)/free float (%) : 8,541/33.6 Mkt. cap. (IDRbn/USDmn) : 32,3/2,314 3-m avg.daily t.o.(idrbn/usdmn) : 8.9/.6 Bloomberg/Reuters code : EXCL IJ/EXCL.JK Source: Bloomberg, Reuters; based on 3 December 215 closing price 334
216 Compendium XL AXIATA Profit & loss Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Sales 21,265 23,46 22,754 23,798 25,57 Gross profit - - - - - EBITDA 8,659 8,623 8,271 8,988 9,782 Depreciation 5,759 6,841 7,86 7,58 8,63 EBIT 2,91 1,782 1,186 1,48 1,72 Net interest inc./(expense) (293) (1,397) (96) (1,565) (1,454) Forex gain/(losses) (1,37) (1,295) (3,8) (276) (131) Other income/(expense) (181) (44) 2, 266 266 Pre-tax profit 1,39 (953) (728) (167) 4 Taxes (357) 179 6 42 (1) Minority interest - - - - - Extraordinary gain/(losses) - - - - - Net profit 1,33 (775) (128) (125) 3 Balance sheet Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F Cash and equivalents 1,318 6,951 3,146 2,428 2,52 S-T investments - - - - - Trade receivables 1,332 1,188 1,284 1,343 1,439 Inventories 49 77 78 81 86 Fixed assets 3,928 35,27 34,619 33,537 32,39 Other assets 3,55 15,114 14,4 14,585 15,123 Total assets 4,278 63,631 58,518 57,431 57,155 Interest bearing liabilities 17,822 29,628 26,628 25,128 23,628 Trade payables 3,226 4,444 6,162 6,397 6,796 Other liabilities 3,93 15,51 11,87 12,111 12,725 Total liabilities 24,977 49,583 44,598 43,636 43,15 Minority interest - - - - - Shareholders' equity 15,3 14,48 13,92 13,795 14,5 Cash flow Year to 31 Dec (IDRbn) 213A 214A 215F 216F 217F EBIT 2,91 1,782 1,186 1,48 1,72 Depreciation 5,759 6,841 7,86 7,58 8,63 Working capital 4,589 5,652 7,55 7,81 8,3 Other operating items (8,989) (11,78) (1,332) (9,757) (9,831) Operating cash flow 4,26 2,496 5,445 7,32 8,251 Net capital expenditure (6,932) (8,192) (6,25) (6,25) (6,587) Free cash flow (2,673) (5,696) (85) 782 1,665 Equity raised/(bought) - - - - - Net borrowings 4,32 11,87 (3,) (1,5) (1,5) Other financing (1,13) (478) - - (9) Net cash flow 526 5,633 (3,85) (718) 75 Cash balances, beginning 792 1,318 6,951 3,146 2,428 Ending cash 1,318 6,951 3,146 2,428 2,52 Key ratios Year to 31 Dec 213A 214A 215F 216F 217F ROAE (%) 6.7 (5.3) (.9) (.9) 2.2 ROAA (%) 2.7 (1.5) (.2) (.2).5 EBITDA margin (%) 4.7 36.8 36.4 37.8 38.4 EBIT margin (%) 13.6 7.6 5.2 5.9 6.7 Net margin (%) 4.9 (3.3) (.6) (.5) 1.2 Payout ratio (%) 52.3 - - - 3. Current ratio (x).7.9.6.6.6 Interest coverage (x) 9.9 1.3 1.3.9 1.2 Net gearing (%) 17.9 161.4 168.7 164.6 15.8 Debts to assets (%) 44.2 46.6 45.5 43.8 41.3 Debtor turnover (days) 16 19 2 2 2 Creditor turnover (days) 58 65 14 14 14 Inventory turnover (days) 1 1 1 1 1 335
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216 Compendium APPENDIX 337
APPENDIX I: STOCK HIGHLIGHTS Stock JCI code Ticker Rating Price TP Shares Free float Mkt cap 3M avg to 216 Compendium Revenue (IDRb) Opt. profit (IDRb) Net profit (IDRb) EPS growth (%) PER (x) EV/EBITDA (x) P/BV (x) Yield (%) Net gearing (%) ROAE (%) ROAA (%) ROIC (%) (IDR) (IDR) (m) (%) (IDRb) (IDRb) 215F 216F 215F 216F 215F 216F 215F 216F 215F 216F 215F 216F 215F 216F 215F 216F 215F 216F 215F 216F 215F 216F 215F 216F AVIATION N 1,265 8.1 59,49 68,925 1,468 2,22 1,9 1,781 na 33.5 9.4 5.8 5.9 5.5 1.8 1.5.3.3 95.5 83.1 13. 15.1 4.2 5.1 9.3 1.4 Garuda Indonesia GIAA IJ Equity GIAA IJ* BUY 3 4 25,869 14.9 7,761 8.1 57,368 67,19 1,5 1,526 966 1,639 na 63.8 8.1 4.9 6.1 5.8.6.5.. 125.2 18. 7.6 11.1 2.2 3.3 3.9 5.2 Cardig Aero Service CASS IJ Equity CASS IJ HOLD 1,2 1,25 2,87 56.6 2,54. 1,68 1,95 418 496 124 142 12.2 14.6 2.2 17.7 5.4 4.6 5.4 4.4 1.2 1.4 3.6 5.9 29.7 27.5 1.7 1.9 26.2 26.3 AUTOMOTIVE UW 263,115 386.8 215,86 227,222 18,472 19,678 16,3 17,779 (17.) 1.9 16.4 14.8 12.6 12. 2.4 2.2 2.9 3. 51.8 5.6 16.1 15.7 6.7 6.8 1.9 1.8 Astra International ASII IJ Equity ASII IJ REDUCE 6,3 5,55 4,484 49.8 255,46 196 184,851 193,52 17,427 18,498 16,764 17,591 (12.6) 4.9 15.2 14.5 12.1 11.6 2.5 2.2 3. 3.1 45.9 44.1 16.8 16.2 7. 7. 11.3 11.2 Indomobil Sukses InternationIMAS IJ Equity IMAS IJ REDUCE 2,25 2, 2,765 1.5 6,222 189 18,176 19,77 96 149 (312) 126 na na na 49.2 33.9 33.3 1.2 1.1..5 269.4 297.2 (5.6) 2.3 (1.3).5 (1.6).6 Gajah Tunggal GJTL IJ Equity GJTL IJ BUY 53 86 3,485 39.8 1,847 2 12,833 13,932 95 1,31 (422) 62 na na na 29.8 5.1 4.7.4.4..8 13.5 129.3 (7.7) 1.3 (2.6).4 (3.6).5 BANKS N 981,498 842.5 266,27 291,64 99,194 19,58 8,313 88,74 1.9 1.4 12.2 11.1 na na 2.5 2.1 1.8 1.9 na na 19.9 18.7 2.6 2.6 na na Bank Central Asia BBCA IJ Equity BBCA IJ BUY 13,3 14,7 24,655 5.8 327,912 185.4 48,667 52,85 22,474 24,585 18,176 19,883 1.3 9.4 18. 16.5 na na 3.6 3.1 1.2 1.3 na na 22. 2.3 3.1 3.1 na na Bank Rakyat Indonesia BBRI IJ Equity BBRI IJ BUY 11,275 13, 24,669 43.2 278,145 288. 66,953 73,44 28,314 31,25 24,426 26,815.8 9.8 11.4 1.4 na na 2.4 2. 1.8 1.9 na na 22.9 21.2 2.9 2.9 na na Bank Mandiri BMRI IJ Equity BMRI IJ BUY 8,8 9,7 23,333 4. 25,333 187.4 62,897 69,286 26,68 26,665 2,4 2,33.7 1.6 1.3 1.1 na na 1.8 1.5 2.2 2. na na 18.2 16.3 2.2 2.1 na na Bank Negara Indonesia BBNI IJ Equity BBNI IJ BUY 4,99 5,7 18,649 4. 93,57 137.6 37,239 4,951 9,966 13,232 8,372 11,22 (22.4) 31.7 11.1 8.4 na na 1.5 1.3 2. 2.4 na na 14. 16.4 1.9 2.2 na na Bank Danamon BDMN IJ Equity BDMN IJ BUY 3,5 3,4 9,585 32.5 28,82 9.1 2,353 21,26 3,623 4,17 2,613 2,998.3 14.8 11. 9.6 na na.8.8 2.7 2.9 na na 7.8 8.4 1.3 1.3 na na Bank Tabungan Pensiunan NaBTPN IJ EQUITY BTPN IJ REDUCE 2,5 2,35 5,84 5.8 14,61. 8,452 9,489 2,444 2,665 1,822 1,987 (1.7) 9. 8. 7.3 na na 1.1 1. 1.9 2. na na 14.3 13.7 2.3 2.2 na na Bank Tabungan Negara BBTN IJ Equity BBTN IJ BUY 1,285 1,52 1,582 39.9 13,598 22. 7,439 8,816 2,215 2,686 1,663 2,84 49.1 25.3 8.2 6.5 na na 1..9 2.4 2.7 na na 12.9 14.3 1. 1.1 na na Bank Jabar Banten BJBR IJ Equity BJBR IJ BUY 735 85 9,696 25. 7,127 9.6 6,392 6,898 1,432 1,599 1,227 1,368 9.5 11.5 5.8 5.2 na na.9.9 9.5 9.6 na na 16.8 17.3 1.5 1.5 na na Bank Jatim BJTM IJ Equity BJTM IJ REDUCE 443 42 14,918 2. 6,69 1.6 3,633 4,52 1,29 1,398 942 1,23.3 8.6 7. 6.5 na na 1. 1. 9. 8.9 na na 15.2 15.6 2.3 2.2 na na Bank Bukopin BBKP IJ Equity BBKP IJ HOLD 695 73 9,87 4.5 6,315 1.8 4,247 4,832 1,366 1,528 1,67 1,194 47.3 11.9 5.9 5.3 na na.8.7 3.4 3.8 na na 14.8 14.8 1.3 1.2 na na CEMENT UW 15,318 19.5 54,849 56,76 11,6 11,319 8,831 9,245 (25.4) 4.7 17. 16.3 1.6 1.3 2.7 2.5 3.5 3.6 4.8 7.6 16.4 16.2 12.7 12. 22.1 19.1 Semen Indonesia SMGR IJ Equity SMGR IJ HOLD 11,75 1,6 5,932 49. 65,692 59.6 26,545 27,486 5,612 5,594 4,352 4,53 (21.8) 3.5 15.1 14.6 9.5 9.4 2.6 2.3 2. 2.1 2.6 9.6 17.6 16.6 11.8 1.7 17.6 15.6 Indocement INTP IJ Equity INTP IJ REDUCE 19,925 16,4 3,681 36. 73,349 46.9 17,473 18,73 4,768 4,834 4,34 4,353 (17.7).3 16.9 16.8 11.7 11.3 3. 3. 5.3 5.3 nc nc 17.7 17.9 15. 14.7 28.3 24.4 Holcim Indonesia SMCB IJ Equity SMCB IJ REDUCE 1,75 925 7,663 19.4 8,238.5 9,352 9,619 287 566 (225) 89 na na na 92.7 13.3 9.7 1. 1...8 66.6 61.7 (2.7) 1.1 (1.3).5 (1.6).7 Semen Baturaja SMBR IJ Equity SMBR IJ HOLD 39 3 9,838 23.8 3,4 2.4 1,479 1,528 339 325 364 3 1.8 (17.5) 8.4 1.1 3.7 6.1 1..9 3. 2.5 nc nc 12.7 9.7 11.9 9. 33. 13.7 COAL UW 98,526 138.9 13,282 129,331 19,415 17,847 13,545 12,537 12.1 (7.4) 7.3 7.9 3.2 3. 1.2 1.1 6.2 5.6 4.5 2.3 16. 13.5 9.4 8. 19.2 17.6 United Tractors UNTR IJ Equity UNTR IJ HOLD 16,1 17,5 3,73 4.5 6,55 63.8 49,968 49,619 8,357 8,192 6,847 6,383 27.5 (6.8) 8.8 9.4 3.8 3.6 1.4 1.3 4.6 4.3 nc nc 17.5 14.7 1.5 8.9 21.5 2.6 Adaro Energy ADRO IJ Equity ADRO IJ* BUY 535 7 31,986 43. 17,112 25.7 39,74 4,223 5,712 5,452 2,982 2,958 4.9 (1.1) 5.8 5.8 2.7 2.3.4.4 5.2 5.2 26. 13.2 7.9 6.9 3.6 3.4 5.9 5.8 Indo Tambangraya Megah ITMG IJ Equity ITMG IJ* REDUCE 6,6 5,2 1,13 34.8 7,458 11.1 23,12 2,13 2,643 1,4 1,546 1,27 (44.9) (35.9) 4.8 7.5 1. 1.2.6.6 16.6 1.6 nc nc 13.4 8.4 8.8 5.5 19.2 13. Tambang Batubara Bukit Asa PTBA IJ Equity PTBA IJ BUY 5,2 7,8 2,34 28.7 11,981 37.7 14,428 15,832 2,661 2,774 2,17 2,198 7.7 1.3 5.5 5.5 3.6 3.6 1.3 1.2 1. 1.1 nc nc 24.4 22.6 14. 12.8 29.6 25.6 Harum Energy HRUM IJ Equity HRUM IJ* REDUCE 71 5 2,74 28.8 1,92.6 3,71 3,644 42 29 (29) (5) (1,) 71. (78.9) (6.7) (9.).5.5.1. nc nc. (.7). (.5). (2.6) CONS. & TOLL ROADS N 18,59 226.7 65,439 84,958 8,688 11,64 4,17 5,346 6.1 25. 26. 2.3 12.3 1.9 3.5 3. 1.1 1.4 53.5 72.4 15.1 15.6 4.1 4.4 12. 11.4 Jasa Marga JSMR IJ Equity JSMR IJ BUY 4,79 6,25 6,8 3. 32,572 34.5 7,592 8,73 2,87 3,351 1,278 1,445 (9.) 13.1 25.5 22.5 11.9 11.1 3.1 2.8 1.2 1.3 12.4 147.1 12.5 13. 3.7 3.7 5.9 5.5 Wijaya Karya WIKA IJ Equity WIKA IJ BUY 2,85 3,1 6,149 34.9 17,249 26.7 12,15 14,875 1,297 1,718 559 785 (9.2) 4.6 3.8 21.9 12.5 9.7 3.8 3.3 1. 1.4 51.7 49.7 13.2 16.2 3.4 4.3 9.7 1.8 Pembangunan Perumahan PTPP IJ Equity PTPP IJ BUY 3,77 4,3 4,842 49. 18,256 21.4 15,842 2,154 1,794 2,253 76 92 32.7 3.3 25.9 19.9 1.3 8.5 5.8 4.7 1.2 1.5 28.8 44.2 25.7 26.3 4.3 4.6 2.1 19.2 Waskita Karya WSKT IJ Equity WSKT IJ BUY 1,67 1,975 13,572 33.8 22,666 48. 15,174 2,58 1,434 1,918 818 1,116 37.9 17.3 23.5 2. 13.4 13.3 2.5 2.3.7 1. 19.1 47.5 14.1 12.1 4.4 4.1 11. 9. Wijaya Karya Beton WTON IJ Equity WTON IJ HOLD 895 965 8,715 28.1 7,8 18. 2,527 3,347 292 43 218 316 (38.9) 45. 35.8 24.7 19.9 14.9 3.5 3.2.8 1.2 5.4 nc 9.9 13.4 5.7 7.9 1.7 13.3 Adhi Karya ADHI IJ Equity ADHI IJ BUY 2,21 2,55 3,559 74.2 7,865 74.6 9,817 14,68 784 1,155 395 534.9 (17.4) 12.2 14.7 8.8 8.5 1.6 1.5 1.6 1.4 nc 41.6 12. 1.6 3.2 3.3 1.8 9.2 Total Bangun Persada TOTL IJ Equity TOTL IJ BUY 64 94 3,41 33.7 2,182 3.5 2,338 2,618 218 266 197 23 2.4 16.7 11.1 9.5 6.9 5.7 2.4 2.2 4.7 5.4 nc nc 23.3 24.3 7.6 8.3 73.8 62.6 CONSUMER - DISCRE. N 156,416 122.1 76,68 84,783 8,65 9,998 6, 7,422 (6.7) 25. 26.1 21.1 17. 14.3 13.8 8.6 1.9 2.3 8.5 7.1 84.3 47.5 26.9 26.4 21.7 21.4 Surya Citra Media SCMA IJ Equity SCMA IJ HOLD 3,7 3,25 14,622 38.2 44,888 19.1 4,253 4,573 1,997 2,192 1,519 1,674 4.4 1.2 29.6 26.8 21.5 19.5 11.3 9.9 2.5 2.8 nc nc 41.1 39.7 33.1 35.7 55. 5.4 Matahari Department Store LPPF IJ Equity LPPF IJ BUY 15,95 19,8 2,918 79.5 46,541 57.7 9,34 1,872 2,474 2,868 1,859 2,219 31. 19.3 25. 21. 16.5 13.7 31.7 15.8 1.6 1.9 nc nc 225.8 1.6 46.7 41.1 na na Media Nusantara Citra MNCN IJ Equity MNCN IJ BUY 1,69 2, 14,276 36.4 24,127 12.1 6,675 7,6 2,58 2,724 1,28 1,648 (27.3) 28.7 18.8 14.6 9.8 9.1 2.5 2.2 2.7 3.4 3.7 24.8 14.1 16.8 9. 1.7 11.1 13.2 Matahari Putra Prima MPPA IJ Equity MPPA IJ BUY 1,88 2,75 5,378 23.7 1,111 16.6 14,286 16,331 567 738 451 587 (18.6) 3.3 22.4 17.2 1.7 8.4 3.2 2.9 1.8 2.3 nc nc 15.1 17.8 7.3 8.5 2.6 24.4 ACE Hardware ACES IJ Equity ACES IJ BUY 775 875 17,15 4. 13,291 7.3 4,698 5,86 648 74 559 68 1.4 8.9 23.8 21.9 17.4 15.5 4.7 4..8.9 nc nc 21.6 19.9 17.4 16.2 27.2 28.5 HERO Supermarket HERO IJ Equity HERO IJ REDUCE 1,1 65 4,184 13.4 4,62.1 15,118 16,96 (215) (113) (29) 57 na na na 8.1 52.6 23..8.8.. 7.1 7.7 (.5) 1. (.3).6 (.5) 1. Ramayana Lestari Sentosa RALS IJ Equity RALS IJ REDUCE 68 64 7,96 4.5 4,825 1.7 7,774 8,38 218 246 311 333 (12.3) 6.8 15.5 14.5 6.3 5.6 1.4 1.3 3.2 3.4 nc nc 9.1 9.3 6.7 7. 18.9 2.4 Mitra Adiperkasa MAPI IJ Equity MAPI IJ BUY 4,195 4,75 1,66 44. 6,964 7.2 12,76 14,54 399 68 34 242 (53.7) 64.6 22.9 28.8 1.6 8.1 2.4 2.2..5 8.7 67.2 1.3 7.9.4 2.5.6 4.6 Electronic City ECII IJ Equity ECII IJ REDUCE 8 7 1,334 25. 1,67.3 1,776 1,917 (17) 31 15 54 (88.) 245.5 68.9 19.9 na 15.5.6.6.1.5 nc nc.9 3..8 2.7 1.2 4. Source: Bloomberg, Bahana estimates; note: based on 3 December 215 closing price 338
APPENDIX I: STOCK HIGHLIGHTS (CONT D) 216 Compendium Stock JCI code Ticker Rating Price TP Shares Free float Mkt cap 3M avg to Revenue (IDRb) Opt. profit (IDRb) Net profit (IDRb) EPS growth (%) PER (x) EV/EBITDA (x) P/BV (x) Yield (%) Net gearing (%) ROAE (%) ROAA (%) ROIC (%) (IDR) (IDR) (m) (%) (IDRb) (IDRb) 215F 216F 215F 216F 215F 216F 215F 216F 215F 216F 215F 216F 215F 216F 215F 216F 215F 216F 215F 216F 215F 216F 215F 216F CONSUMER - STAPLES OW 1,111,862 386.5 347,5 381,132 48,59 52,691 32,252 36,639 3.9 12. 34.5 3.3 26.9 25.2 21.3 19.3 2. 2.3 9.6 6.7 55. 5.9 24.7 23.2 57.2 53.1 HM Sampoerna HMSP IJ Equity HMSP IJ BUY 97,58 115, 4,653 7.5 454,13 93.7 88,712 97,119 14,4 14,253 1,389 11,161 (2.3) 6.5 43.4 4.8 31.3 3.6 13.2 13.3 2.3 2.5 9.5 nc 43.6 32.6 26.7 22.5 38.4 29.8 Unilever Indonesia UNVR IJ Equity UNVR IJ BUY 36,75 46, 7,63 15. 28,43 56.6 36,115 4,257 7,976 8,943 5,885 6,612 2.5 12.4 47.6 42.4 34. 3.6 57.1 49.5 2. 2.2 (8.6) nc 123.8 125.1 4. 41. 135.4 132.7 Gudang Garam GGRM IJ Equity GGRM IJ BUY 51,575 65, 1,924 23.5 99,235 53.6 69,29 73,916 8,963 9,718 5,445 5,95 1.4 9.3 18.2 16.7 1.6 9.8 2.7 2.5 1.6 2.5 45.2 42.7 15.6 15.4 8.8 8.7 1.5 1.7 Kalbe Farma KLBF IJ Equity KLBF IJ HOLD 1,35 1,48 46,875 43.3 63,281 66.9 17,786 19,3 2,549 2,812 1,949 2,167 (5.6) 11.2 32.5 29.2 2.2 17.6 6.1 5.4 1.5 1.7 nc nc 19.7 19.7 15. 15.1 24. 24.6 Indofood Sukses Makmur INDF IJ Equity INDF IJ BUY 5,175 6,6 8,78 49.9 45,439 4.8 64,352 7,849 6,81 7,61 2,84 3,454 (46.4) 65.7 21.8 13.2 6.5 5.5 1.8 1.6 2.2 3.7 58.1 38.7 8.1 12.8 2.4 3.8 5. 8.7 Indofood CBP Sukses MakmuICBP IJ Equity ICBP IJ BUY 12,675 16,8 5,831 19.5 73,97 25.2 32,115 35,481 3,936 4,57 3,82 3,543 18.4 15. 24. 2.9 15.9 14. 4.7 4.2 1.8 2.1 nc nc 2.6 21.1 11.7 12.1 28.6 27.9 Mayora Indah MYOR IJ Equity MYOR IJ BUY 25,875 31, 894 66.9 23,141.6 14,886 16,395 1,697 1,773 1,161 1,122 187.6 (3.4) 19.9 2.6 11.8 11.1 4.6 3.9 1. 1. 48.7 37.2 25.9 2.8 1.7 9.7 15.5 14.6 Tempo Scan Pacific TSPC IJ Equity TSPC IJ BUY 1,72 2, 4,5 21.9 7,74.8 8,22 9,16 64 713 575 622 (.7) 8.1 13.5 12.4 7.8 7.1 1.7 1.6 3.3 3.6 nc nc 13.4 13.4 9.7 9.8 21.2 19.8 Sido Muncul SIDO IJ Equity SIDO IJ BUY 555 63 15, 19. 8,325 2.6 2,31 2,579 499 56 469 56 13.1 19.4 17.8 14.9 11.5 9.8 2.8 2.4 1. 1.1 nc nc 16.6 17.2 15.3 15.8 31.3 42.7 Nippon Indosari Corpindo ROTI IJ Equity ROTI IJ BUY 1,25 1,45 5,62 29.3 6,327 2.1 2,189 2,693 389 458 265 322 4.3 21.6 23.9 19.7 12.9 1.8 5.5 4.5 1. 1.3 39.2 17.6 25. 25.2 11.1 11.4 16.3 19.7 Kimia Farma KAEF IJ Equity KAEF IJ BUY 98 1,35 5,554 1. 5,443 3.8 5,7 5,754 342 422 279 327 19.1 17.1 19.5 16.6 15.3 12.9 2.7 2.4 1.3 1.5 7.7 15.4 14.8 15.4 9. 9.4 15.1 13.8 Mitra Keluarga Karyasehat MIKA IJ Equity MIKA IJ REDUCE 2,295 1,9 14,551 18. 33,394. 2,114 2,387 58 645 576 657 8.8 9.3 56.4 51.6 45.7 43.3 1.5 1.3 1.5 1.4 nc nc 24. 2.9 2.2 17.9 67.2 63.2 Siloam International Hospital SILO IJ Equity SILO IJ BUY 9,7 14,7 1,156 29.2 11,214 39.7 4,116 5,242 215 276 94 142 49.7 51.8 119.8 78.9 19. 14.9 6.5 6.1.1.2 2.6 33.3 5.5 7.9 3.2 4.5 4.7 6.2 INDUSTRIAL ESTATES N 25,673 44.7 12,775 11,841 4,286 4,883 3,576 4,65 18.6 13.7 7.2 6.3 6.5 6.2 1.2 1. 2.7 3.1 15.3 16.2 18.9 17.9 13.2 12.8 2.4 19.1 Puradelta Lestari DMAS IJ Equity DMAS IJ BUY 23 29 48,198 1. 9,784 2.1 2,175 1,375 1,711 1,52 1,75 57.7 12.2 6.4 5.7 6.1 4.9 1.3 1.1 4.7 5.2 nc nc 22. 21.2 18.9 19.3 26. 25.6 Kawasan Industri Jababeka KIJA IJ Equity KIJA IJ BUY 221 27 2,662 68.9 4,566 11.8 2,81 3,31 756 851 283 431 (31.1) 52.6 16.2 1.6 8.2 7.3 1..9 1.9 2.8 62.2 56.5 6.4 9.2 3.1 4.3 4.1 5.8 Bekasi Fajar Industrial EstateBEST IJ Equity BEST IJ REDUCE 343 3 9,647 41.8 3,39 1.5 681 563 411 321 225 159 (42.5) (29.3) 14.7 2.8 9.6 13.8 1.1 1..9.7 23.9 39.5 7.6 5.1 5.4 3.2 6.6 3.9 Surya Semesta Internusa SSIA IJ Equity SSIA IJ BUY 59 72 4,75 68.6 2,776 14.2 5,282 6,65 845 937 579 618 39.4 6.8 4.8 4.5 3.2 2.9.9.8 4.2 4.5 1.2 1. 19.9 18.1 8.8 8.2 18.5 16.4 Lippo Cikarang LPCK IJ Equity LPCK IJ BUY 7,525 8,3 696 57.8 5,237 6.1 1,828 2,183 9 1,63 97 1,152 15. 18.7 5.4 4.5 5.4 4.6 1.4 1.1.. nc nc 3.8 27.4 18.7 16.8 33.9 29.7 INDUSTRY - Various 15,592 24.7 49,489 57,962 (1,61) 77 (2,329) (1,693) na na na na 5. 4.8 1..8 2.4.7 88.8 86.8 4.7 6.6 1.2 2.2 1.4 2.9 Krakatau Steel KRAS IJ Equity KRAS IJ* REDUCE 34 275 15,775 2. 4,796 2. 19,341 21,695 (2,555) (1,693) (3,47) (2,73) na na na na na na.2.2.. 83.6 112.8 (16.9) (11.8) (7.) (5.1) (8.9) (6.1) Anabatic Technologies ATIC IJ Equity ATIC IJ BUY 695 8 1,875 1.5 1,33. 2,626 2,964 178 217 6 11 (19.2) 55.7 21.1 13.5 7.5 6.4 1.8 1.9 1.5 1.2 52.6 51. 12.4 14.8 2.8 4.4 6.4 9.7 Sri Rejeki isman SRIL IJ Equity SRIL IJ BUY 359 5 18,593 43.9 6,675 19.9 8,388 9,86 1,596 1,877 734 97 25.6 32.3 9.1 6.9 6.6 5.6 1.6 1.3 1.1 1.5 137.2 111.4 21.1 21.1 7.3 8. 8.8 9.5 Multipolar MLPL IJ Equity MLPL IJ BUY 28 55 1,65 68. 2,818 2.8 19,134 22,97 (28) (324) (75) (43) na na na na 8.3 1.2.3.4 1.1. nc 1.1 (.9) (.5) (.3) (.2) (.9) (.6) LAND TRANSPORTATION UW 17,333 15.5 7,845 13,58 1,621 1,82 92 958.6 6.3 19.2 18.1 9.4 8.8 4. 3.5 2. 2.1 48.4 54.7 21.5 19.7 11.3 1.9 15.9 13.6 Blue Bird BIRD IJ Equity BIRD IJ REDUCE 6,675 4,7 2,52 15. 16,72.7 5,552 6,25 1,197 1,298 84 87 (.) 3.6 19.9 19.2 9.7 8.9 4.1 3.7 2. 2.1 43. 48.9 22.2 2.2 11.7 11.3 16.1 13.9 Express Transindo Utama TAXI IJ Equity TAXI IJ REDUCE 136 12 2,146 49. 292 14.7 953 1,9 2 238 6 19 (95.) 228.6 49.9 15.2 4.3 4..3.3.4 1.2 197.5 214..7 2.2.2.6.2.7 Adi Sarana Armada ASSA IJ Equity ASSA IJ BUY 1 13 3,398 37.4 34. 1,34 1,552 224 266 55 69 29. 24. 6.1 4.9 3.7 3.7.4.4 4.9 6.1 186.8 26.4 6.4 7.6 2.1 2.4 2.3 2.5 METALS N 41,53 118.5 31,9 3,216 2,684 4,195 897 2,17 (6.1) 124.9 46.3 2.6 9.2 6.8.7.7 1.7 2.7 3.5 27. 3.5 5.4 1.8 3.3 2. 3.6 Vale Indonesia INCO IJ Equity INCO IJ* BUY 1,555 2,5 9,936 2.5 15,451 26.4 1,486 11,31 1,442 2,175 98 1,552 (53.6) 59.2 15.9 1. 4.3 3.2.6.6 3.8 6. nc nc 4.2 6.1 3.1 4.7 4.5 6.6 Aneka Tambang ANTM IJ Equity ANTM IJ BUY 323 764 24,31 74.2 7,762 53.1 11,89 13,29 (8) 281 (449) (172) (76.5) (63.2) na na 19.5 13.2.4.5.. 38.7 46.7 (3.1) (1.) (1.8) (.6) (2.2) (.7) Timah TINS IJ Equity TINS IJ REDUCE 52 411 7,448 34.7 3,873 3.9 5,632 5,616 6 28 16 14 (97.9) (13.2) 248.2 285.9 13.2 11.8.7.7.2.2 39.4 39.3.3.3.2.2.2.2 J Resources Asia Pasifik PSAB IJ Equity PSAB IJ* BUY 1,355 2, 5,292 7.4 7,171 7.3 3,892 4,959 1,274 1,856 448 841 59.8 83.6 18.6 1.1 6.5 4.7 1.2 1.2.. 82.5 57.4 1.8 13.8 3.6 6.2 5.1 8.2 Merdeka Copper Gold MDKA IJ Equity MDKA IJ* BUY 2,3 2,2 3,57 35.8 7,246 27.8 (84) (145) (98) (218) 58.3 na na na na na 4.1 4.5.. 7.7 75. (9.) (1.4) (4.6) (6.9) OIL & GAS N 97,377 168.8 69,66 78,897 11,859 13,832 6,57 7,962 (34.2) 22.4 15. 12.2 9.3 7.7 2.2 1.9 3.5 3.7 13.8 14.4 14.6 14.8 6.4 6.9 1.7 1.6 Perusahaan Gas Negara PGAS IJ Equity PGAS IJ* REDUCE 2,875 2,5 24,242 43. 69,694 14.7 4,166 43,22 8,32 8,425 5,824 6,279 (42.4) 4. 12.8 12.3 7.1 6.5 1.6 1.5 4.3 4.5 nc nc 14.1 12.7 6.6 6.4 1.7 9.3 AKR Corporindo AKRA IJ Equity AKRA IJ BUY 6,2 7, 3,949 4.1 24,484 62.2 19,344 23,231 1,345 2,43 1,47 1,495 28.1 42.8 23.3 16.3 16.2 11.4 4. 3.3 1.7 1.7 4.9 4.9 18.2 22.3 7.1 9.1 12.1 15.8 Medco Energy MEDC IJ Equity MEDC IJ* BUY 96 1,3 3,332 49. 3,199 2. 1,15 12,644 2,212 3,364 (364) 189 (391.9) (15.9) NA 17.5 5. 4.4.4.4 1.4 2.3 18.5 124.5 (3.) 1.4 (.9).4 (1.4).7 PLANTATIONS N 6,86 72.4 42,345 47,759 5,862 8,69 2,285 4,121 (61.4) 8.3 26.3 14.6 1.8 8.2 1.9 1.7 1.6 2.8 54.6 54.8 6.1 11.1 3.5 5.8 4.6 7.5 Astra Agro Lestari AALI IJ Equity AALI IJ BUY 17,65 22,5 1,575 2.3 27,794 32.3 14,739 16,467 1,969 2,773 781 1,647 (68.8) 11.8 35.6 16.9 12. 9.2 2.5 2.2 1.3 2.7 62.8 63.2 6.9 13.8 3.9 7.2 4.7 8.5 Salim Ivomas Pratama SIMP IJ Equity SIMP IJ BUY 372 6 15,816 21.6 5,884 1.2 14,7 15,699 1,582 2,145 272 612 (67.7) 125.3 21.6 9.6 4.5 3.7.4.4 1.4 3.1 44.5 46.8 1.9 4.2.9 1.9 1.3 2.9 London Sumatra Indonesia LSIP IJ Equity LSIP IJ BUY 1,285 1,87 6,823 4.4 8,767 33.6 4,223 4,748 723 974 628 825 (31.5) 31.3 14. 1.6 8.1 6.2 1.2 1.1 2.9 3.8 nc nc 8.6 1.6 7.1 8.7 1.3 12.5 Dharma Satya Nusantara DSNG IJ Equity DSNG IJ BUY 61 74 1,599 34.1 6,465 1.5 4,49 5,121 53 785 197 49 (69.6) 17. 32.8 15.8 14.6 1.7 2.7 2.4.8 1.6 128.7 121.5 8.5 15.9 2.6 4.9 3.9 7.1 Austindo Nusantara Jaya ANJT IJ Equity ANJT IJ* REDUCE 1,61 1, 3,335 1. 5,369.2 1,849 2,212 62 216 (43) 43 na na na 129.9 13.3 9.5 1.5 1.5 1.2 1.6 16.8 18.6 (.9).8 (.7).6 (.8).7 Sampoerna Agro SGRO IJ Equity SGRO IJ BUY 1,475 1,97 1,89 33. 2,788 3.3 3,118 3,512 411 487 22 26 (35.3) 17.9 12.7 1.7 7.1 6.5.9.9 3.9 4.7 66.4 75.1 7.3 8.2 3.9 4.2 4.6 4.8 Tunas Baru Lampung TBLA IJ Equity TBLA IJ BUY 565 63 5,342 45.6 3,18.2 5,45 5,668 611 689 23 325 (51.) 41.4 13.1 9.3 7. 6.4 1.2 1.1 1.5 2.2 144.1 139.6 9.1 11.9 3. 3.9 3.9 4.9 POULTRY N 61,667 2.3 63,87 71,171 4,536 5,99 1,826 3,369 (8.4) 84.5 33.8 18.3 14.5 11.8 4. 3.4.8 1. 53. 48.7 14.1 19.5 7.6 1.8 9.7 13.9 Charoen Pokphand IndonesiaCPIN IJ Equity CPIN IJ HOLD 3,28 3,5 16,398 44.5 53,785 17.2 32,99 38,526 3,416 4,268 1,885 2,81 7.9 49.1 28.5 19.1 15.1 12.4 4.4 3.7.9 1. 39.1 34.4 16.2 2.9 8.8 11.9 11.2 15.3 Japfa Comfeed Indonesia JPFA IJ Equity JPFA IJ BUY 458 55 1,659 42.5 4,882 1.8 25,3 27,52 925 1,368 (68) 376 na na na 13. 8.1 6.3 1. 1.. 1.4 143.4 142.9 (1.4) 7.6 (.4) 2.4 (.6) 3.1 Malindo Feedmill MAIN IJ Equity MAIN IJ BUY 1,34 1,85 2,239 58.7 3, 1.2 4,878 5,143 195 354 9 182 na 1,916.1 261.1 13. 14. 9.4 2.7 2.4.1 1.5 155.5 151.3.8 15.2.3 4.9.3 6. PROPERTY UW 147,64 27.4 47,48 52,448 16,222 17,929 1,251 11,752 (27.) 14.6 14.3 12.5 1.7 9.7 2.1 1.9 1.2 1.4 39.5 41.1 15.8 15.7 6.3 6.3 11.9 11.5 Bumi Serpong Damai BSDE IJ Equity BSDE IJ BUY 1,77 2,2 19,247 35.4 34,67 26.7 6,69 7,856 3,226 3,71 2,545 2,876 (36.4) 13. 13.4 11.8 1.9 9.7 1.9 1.7.7.8 21.3 24.1 15.4 15.2 8.1 7.8 13.4 12.4 Lippo Karawaci LPKR IJ Equity LPKR IJ REDUCE 1,32 1,13 23,78 94.7 3,463 88.9 9,156 11,116 2,237 2,841 1,257 1,894 (5.7) 5.7 24.2 16.1 14.6 12.1 1.8 1.7 1. 1.6 49.9 51.2 7.8 11. 3.2 4.3 5.4 7.3 Pakuwon Jati PWON IJ Equity PWON IJ HOLD 468 49 48,16 47.8 22,539 27.6 4,99 5,535 2,499 2,82 1,693 1,946 (32.7) 14.9 13.3 11.6 8.8 7.9 2.9 2.4 1. 1.1 33. 31.2 24.5 22.9 9.3 9.2 18.7 17.3 Summarecon Agung SMRA IJ Equity SMRA IJ BUY 1,57 1,82 14,427 67.7 22,65 5.1 6,15 6,724 1,948 2,146 1,259 1,382 (9.1) 9.7 18. 16.4 12.1 11.2 3. 2.6 1.2 1.3 56.9 55.6 21.2 19.7 7.3 6.9 13.9 12.6 Ciputra Development CTRA IJ Equity CTRA IJ BUY 1,23 1,4 15,331 69.5 18,857 15.8 7,232 8,141 2,119 2,31 1,285 1,39 (3.) 8.2 14.7 13.6 8.7 8.1 2.2 1.9 1.1 1.2 18.3 2.9 16.1 15.2 5.2 5. 13.8 12.7 Alam Sutera ASRI IJ Equity ASRI IJ REDUCE 363 3 19,649 48.5 7,133 38.8 3,491 3,667 1,782 1,79 899 1,4 (18.1) 11.8 7.9 7.1 7.1 7.1 1..9 2.5 3.1 88.6 82.3 13.8 13.8 5.1 5.2 7.2 7.4 Agung Podomoro Land APLN IJ Equity APLN IJ REDUCE 33 22 2,51 27.1 6,212 3.3 5,594 5,769 1,349 1,351 69 649 (28.8) 6.7 1.2 9.6 5.6 6.3.9.8 2. 2.1 46.6 64.2 9.2 9.2 2.4 2.3 6.5 5.9 Ciputra Property CTRP IJ Equity CTRP IJ REDUCE 47 365 6,256 44.7 2,546 1.8 2,36 1,934 643 519 412 31 2.8 (27.) 6.2 8.5 7.6 9.9.5.5 4.9 3.5 7.2 8.4 9.2 6.3 4.2 2.7 5.8 3.6 PP Property PPRO IJ Equity PPRO IJ HOLD 185 18 14,44 35. 2,598 17.4 1,545 1,77 419 46 293 39 79.7 5.5 8.9 8.4 7.3 7.4 1.2 1.1 3.4 3.6 3.3 42.8 18.1 13.4 8. 6. 14.7 9.8 SHIPPING N 6,3 4.8 4,937 5,775 1,5 1,546 81 1,124 (8.2) 38.8 7.4 5.4 6.4 4.8 1.5 1.2 3.4 4.4 78.7 63.2 23.7 23.9 8.7 11. 14.9 1. Soechi Lines SOCI IJ Equity SOCI IJ BUY 459 63 7,59 15. 3,92 4.3 1,873 2,358 592 778 536 651 (2.4) 21.6 6. 5. 7. 5.7.9.8 4.3 5. 65.5 62.9 1.3 13.6 3.6 6.2 14.7 9.8 Pelayaran Tempuran Emas TMAS IJ Equity TMAS IJ BUY 1,945 3, 1,141 13.5 2,219.4 1,7 1,81 378 52 332 425 63.7 28.2 6.7 5.2 5.5 4.1 2.9 2. 3.7 4.8 99.5 64.6 5.7 45.4 18.8 21. 23.4 25.3 Wintermar Offshore Marine WINS IJ Equity WINS IJ HOLD 178 7 4,38 42.3 719.1 1,364 1,66 34 248 (58) 47 (118.9) (182.5) (12.5) 15.1 6.1 3.5.3.3 (1.2) 1. 71.5 59.6 (2.) 1.7 (.8).7 (1.3) 1.1 TELCOS OW 446,424 226.8 198,93 223,225 42,543 48,563 17,97 22,574 17.6 32. 26.1 19.8 9.2 8.2 4.6 3.9 2.4 2.8 81.5 59. 18.6 21.2 7.9 8.7 14.9 16.7 Telekomunikasi Indonesia TLKM IJ Equity TLKM IJ BUY 3,35 3,75 1,8 48.8 35,928 189.7 12,143 113,31 32,141 36,256 15,778 17,773 7.8 12.6 19.4 17.2 8.6 7.7 4.1 3.7 3.4 3.8 8.4 3.4 22.1 22.6 1.4 1.7 2.4 21.4 XL Axiata EXCL IJ Equity EXCL IJ BUY 3,75 3,9 8,541 33.6 32,3 8.9 22,754 23,798 1,186 1,48 (128) (125) na na na na 6.7 6.1 2.3 2.3.. 168.7 164.6 (.9) (.9) (.2) (.2) (.3) (.3) Tower Bersama InfrastructureTBIG IJ Equity TBIG IJ HOLD 6,15 6,5 4,797 47.8 29,499 9. 3,437 3,81 2,637 2,915 1,56 1,289 (18.8) 22. 27.9 22.9 16.6 15.2 1.2 7.3.7.9 647.2 481.2 3.7 37.3 4.5 5.1 4.9 5.5 Sarana Menara Nusantara TOWR IJ Equity TOWR IJ BUY 4,2 5, 1,23 67.3 42,852 1.9 4,415 4,845 2,493 2,866 986 1,591 17.3 61.3 43.5 26.9 13.3 11.7 7.7 6... 112.9 64.3 19.2 25. 5.4 8.4 8.3 13.6 Indosat ISAT IJ Equity ISAT IJ BUY 5,4 6,8 5,434 2.7 29,343 3.6 26,249 28,395 2,953 3,799 (1,187) 1,334 4.3 19.6 NA 22. 4.1 3.4 2.4 2.1. 1.4 138.9 9.1 (9.1) 1. (2.2) 2.5 (3.8) 4.7 Tiphone Mobile Indonesia TELE IJ Equity TELE IJ BUY 725 1,18 7,121 23. 5,163 9. 2,524 29,578 758 95 382 462 25.2 21. 13.4 11. 9.4 8.5 1.8 1.6 1.9 2.3 64.1 74.4 14.4 15.4 6.5 6.5 6.1 7. Erajaya Swasembada ERAA IJ Equity ERAA IJ BUY 555 85 2,9 39.7 1,61 4.7 18,569 19,777 375 412 21 252 (.6) 19.8 7.7 6.4 6.3 5.7.5.5 5.2 6.3 33.4 31.2 7. 7.9 3.3 3.8 5.1 5.9 Market Market N 3,783,747 3,163 1,693,122 1,859,87 35,41 341,86 24,55 235,73 (7.5) 14.3 18.5 16.1 12.7 11.7 8.7 7.6 2.2 2.4 22.7 19.6 31.2 28.6 12.1 11.8 23.2 22. Source: Bloomberg, Bahana estimates; note: based on 3 December 215 closing price 339
APPENDIX II: EARNINGS REVISIONS TABLE 216 Compendium Ticker Target price New earnings Old earnings RATING Valuation basis Target price New earnings Old earnings RATING Valuation basis New Old 215F 216F 217F 215F 216F 217F New Old New Old 215F 216F 217F 215F 216F 217F New Old AVIATION INDUSTRIAL ESTATES GIAA* 4 46 69 113 143 69 113 143 BUY BUY Adjusted EV/EBITDAR BEST 3 3 225 159 326 225 159 289 REDUCE REDUCE 75% discount to NAV CASS 1,25 1,25 124 142 16 124 142 16 HOLD REDUCE 2.6x 215F P/E KIJA 27 27 283 431 6 335 385 525 BUY BUY 7% discount to NAV, DCF LPCK 8,3 8,2 97 1,152 1,334 933 971 1,112 BUY BUY 6% discount to NAV AUTOMOTIVE SSIA 72 795 579 618 716 476 57 67 BUY BUY 7% discount to NAV, DCF ASII 5,55 5,55 16,764 17,591 19,543 16,764 17,591 19,543 REDUCE REDUCE SOTP valuation DMAS 29 29 1,52 1,75 1,799 1,34 1,391 1,49 BUY BUY 6% discount to NAV IMAS 2, 2, (312) 126 292 (122) (37) 34 REDUCE REDUCE 44.x 216F PE GJTL 86 86 (422) 62 436 (431) 18 139 BUY BUY.4x 216F P/BV INDUSTRY - Various SRIL* 5 35 52 67 84 5 63 77 BUY BUY PE 1x 216F BANKS RALS 64 61 311 333 369 311 333 369 REDUCE REDUCE 13.6x 216F PE BBCA 14,7 15,1 18,176 19,883 21,86 17,445 19,146 21,13 BUY BUY Gordon growth model MLPL 55 55 (75) (43) (7) (63) (43) (13) BUY BUY SOTP Disc 7% BBRI 13, 12,8 24,426 26,815 29,624 24,426 26,815 29,624 BUY BUY Gordon growth model ATIC 8 8 6 11 146 14 151 189 BUY BUY PE 16.3x 216F, DCF BMRI 9,7 1, 2,4 2,33 22,958 2,4 2,33 22,958 BUY HOLD Gordon growth model BBNI 5,7 6,1 8,372 11,22 12,153 8,493 1,239 11,515 BUY BUY Gordon growth model METALS BDMN 3,4 3,6 2,613 2,998 3,475 2,613 2,998 3,475 BUY HOLD Gordon growth model INCO* 2,5 2,5 7 17 151 7 17 151 BUY BUY DCF valuation BTPN 2,35 2,4 1,822 1,987 2,99 1,822 1,987 2,99 REDUCE REDUCE Gordon growth model ANTM 764 764 (449) (172) 228 (449) (172) 228 BUY BUY DCF valuation BBTN 1,52 1,5 1,663 2,84 2,419 1,663 2,84 2,419 BUY BUY Gordon growth model TINS 411 5 16 14 (31) 33 11 3 REDUCE REDUCE DCF valuation BJBR 85 85 1,227 1,368 1,529 1,227 1,368 1,529 BUY BUY Gordon growth model PSAB* 2, 1,3 32 58 114 32 58 114 BUY BUY 15x 216F PE BJTM 42 42 942 1,23 1,153 1,5 1,16 1,22 REDUCE HOLD Gordon growth model MDKA 2,2 2,2 (7) (15) 17 (7) (15) 17 BUY BUY DCF valuation BBKP 73 74 1,67 1,194 1,32 1,67 1,194 1,32 HOLD HOLD Gordon growth model OIL & GAS CEMENT PGAS* 2,5 2,5 416 433 53 416 433 53 BUY BUY DCF valuation SMGR 1,6 9,8 4,352 4,53 4,727 5,216 5,44 5,94 HOLD HOLD PE 14x 216F AKRA 7, 6,2 1,53 1,495 1,535 1,57 1,218 1,294 BUY BUY DCF valuation INTP 16,4 16,4 4,34 4,353 4,558 4,477 4,357 4,437 REDUCE REDUCE PE 13.9x 216F MEDC* 1,3 2,3 (26) 13 21 (12) 8 13 BUY REDUCE DCF valuation SMBR 3 3 364 3 252 364 3 252 HOLD REDUCE PE 1x 216F SMCB 925 925 (225) 89 129 253 118 144 REDUCE REDUCE DCF valuation PLANTATIONS AALI 22,5 22,5 781 1,647 2,495 781 1,647 2,495 BUY BUY 2x 216F PE COAL SIMP 6 6 272 612 1,45 272 612 1,45 BUY BUY 15.5x 216F PE UNTR 16, 16, 6,847 6,383 6,395 6,847 6,383 6,395 HOLD REDUCE DCF Valuation LSIP 1,87 1,87 628 825 94 628 825 94 BUY BUY 15.5x 216F PE ADRO* 7 7 213 24 14 213 24 14 BUY BUY DCF valuation DSNG 74 6 197 49 687 356 435 534 BUY BUY 19.1x 216F PE ITMG* 5,9 8, 11 71 39 129 17 76 REDUCE REDUCE DCF valuation ANJT* 1, 54 16 2 - (3) 3 7 REDUCE REDUCE USD5,5 216F EV/ha PTBA 7,8 7,8 2,17 2,198 1,99 2,17 2,198 1,99 BUY BUY DCF valuation SGRO 1,97 1,97 22 26 328 22 26 328 BUY BUY 14.3x 216F PE HRUM* 5 8 (2) (7) 4 2 (7) REDUCE REDUCE DCF valuation TBLA 63 63 23 325 584 23 325 584 BUY BUY 1.3x 216F PE CONS. & TOLL ROADS POULTRY JSMR 6,25 6,25 1,278 1,445 1,481 1,278 1,445 1,481 BUY BUY DCF valuation CPIN 3,5 2,55 1,885 2,81 3,746 1,987 2,767 3,65 BUY HOLD PE 2x 216F WSKT 1,975 1,975 818 1,116 1,174 818 1,116 1,174 BUY BUY SOTP valuation JPFA 55 48 (68) 376 588 (88) 571 868 BUY BUY PE 16x 216F WIKA 3,1 3,2 559 785 957 559 785 957 BUY BUY PE 24x 216F MAIN 1,85 1,5 9 182 287 211 324 373 BUY BUY PE 18x 216F PTPP 4,3 3,71 76 92 1,63 677 85 934 BUY HOLD SOTP valuation WTON 965 965 218 316 47 218 316 47 HOLD REDUCE PE 27x 216F PROPERTY ADHI 2,55 2,55 395 534 69 395 534 69 BUY BUY PE 17x 216F BSDE 2,2 2,2 2,545 2,876 3,386 2,54 2,873 3,377 BUY HOLD 6% discount to NAV TOTL 94 1,1 197 23 255 194 229 242 BUY BUY 14x 216F PE LPKR 1,13 1,13 1,257 1,894 2,81 1,589 1,964 2,128 REDUCE REDUCE 6% discount to NAV, DCF PWON 49 45 1,693 1,946 2,36 1,693 1,937 2,346 HOLD HOLD 6% discount to NAV CONSUMER - DISCRE. CTRA 1,4 1,385 1,285 1,39 1,523 1,276 1,369 1,484 BUY BUY 6% discount to NAV SCMA 3,25 2,95 1,519 1,674 1,848 1,518 1,631 1,754 HOLD HOLD PE 28.5x 216F SMRA 1,82 1,82 1,259 1,382 1,54 1,259 1,382 1,54 BUY BUY 6% discount to NAV MNCN 2, 1,95 1,28 1,648 1,99 1,456 1,732 2,18 BUY BUY PE 17.4x 216F ASRI 3 72 899 1,4 1,26 1,135 1,248 1,734 REDUCE BUY 7% discount to NAV LPPF 19,8 18,2 1,859 2,219 2,62 1,859 2,214 2,67 BUY BUY PE 26x 216F APLN 22 22 69 649 683 469 539 623 REDUCE REDUCE 75% discount to NAV MPPA 2,75 2,75 451 587 666 451 587 666 BUY BUY PE 25x 216F CTRP 365 776 412 31 353 327 393 393 REDUCE BUY 7% discount to NAV HERO 65 7 (29) 57 191 16 92 194 REDUCE REDUCE PS.2x 216F PPRO 18 152 293 39 383 293 39 371 HOLD HOLD 7% discount to NAV ACES 875 5 559 68 674 516 562 641 BUY REDUCE PE 25x 216F MAPI 4,75 4, 34 242 38 51 277 399 BUY BUY 24x 216F PE** SHIPPING ECII 7 8 15 54 82 65 98 121 REDUCE REDUCE PE 17.5x 216F SOCI 63 63 38 45 45 41 45 51 BUY BUY 7x 216F PE TMAS 3, 3, 332 425 571 332 358 468 BUY BUY 8.1x 216F PE CONSUMER - STAPLES WINS* 19 7 22 (4) 3 24 31 - HOLD HOLD DCF valuation HMSP 115, 18, 1,393 11,156 12,86 1,393 11,156 12,86 BUY BUY PE 48x 216F MYOR 31, 28,8 1,161 1,122 1,218 933 1,4 1,225 BUY BUY PE 25x 216F STEEL UNVR 46, 46, 5,885 6,612 7,489 5,885 6,612 7,489 BUY BUY PE 53x 216F KRAS* 275 275 (218) (188) (179) (218) (188) (179) REDUCE REDUCE DCF valuation GGRM 65, 65, 5,445 5,95 6,674 5,445 5,95 6,674 BUY BUY PE 21x 216F ICBP 16,8 8,3 3,82 3,543 4,39 3,82 3,543 4,39 BUY BUY 28x 215F PE TELCOS INDF 6,6 6, 2,84 3,454 4,196 2,84 3,454 4,196 BUY BUY 17x 215 PE TLKM 3,75 3,75 15,778 17,773 2,468 16,382 19,15 21,615 BUY BUY 9.5x 216F EV/EBITDA TSPC 2, 2, 575 622 672 575 615 672 BUY BUY PE 14.5x 216F EXCL 3,9 3,9 (128) (125) 3 (1,42) 18 48 BUY BUY 6.2x 216F EV/EBITDA ROTI 1,45 1,45 265 322 416 245 317 416 BUY BUY PE 23x 216F TOWR 5, 5,1 986 1,591 2,133 1,52 1,934 2,724 BUY BUY 13.7x 216F EV/EBITDA SIDO 63 585 469 56 638 441 49 542 BUY BUY PE 18x 216F ISAT 6,8 6,8 (1,187) 1,334 2,545 (1,187) 1,334 2,545 BUY BUY 4.x 216F EV/EBITDA KAEF 1,35 1,6 279 327 396 286 329 394 BUY BUY PE 23x 216F ERAA 85 94 21 252 299 26 289 31 BUY HOLD 9.8x 216F PE MIKA 1,9 1,9 576 657 725 576 657 725 REDUCE REDUCE DCF valuation TELE 1,18 1,18 382 462 592 382 48 632 BUY BUY DCF valuation SILO 14,7 17,2 94 142 21 14 174 233 BUY BUY 24x EV/EBITDA, DCF KLBF 1,48 1,48 1,949 2,167 2,4 1,949 2,167 2,4 HOLD BUY PE 32x 216F TRANSPORTATION ASSA 13 13 55 69 83 55 69 83 BUY BUY 7x 216F PE BIRD 4,7 5,8 84 87 877 84 87 877 REDUCE REDUCE 13.6x 216F PE TAXI 12 12 6 19 22 6 19 22 REDUCE REDUCE 13x 216F PE Source: Bahana estimates * Reporting currency in USD; earnings figures are in USDm 34
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216 Compendium Readers should consult their financial advisors to determine whether any such recommendation is consistent with their own investment objectives, financial situation and needs. This report does not recommend to U.S. recipients the use of any of PT.Bahana Securities or DCMA s non-u.s. affiliates to effect trades in any security and is not supplied with any understanding that U.S. recipients of this report will direct commission business to such non-u.s. entities. Unless applicable law permits otherwise, non-u.s. customers wishing to effect a transaction in any securities referenced in this material should contact a Daiwa entity in their local jurisdiction. Most countries throughout the world have their own laws regulating the types of securities and other investment products which may be offered to their residents, as well as a process for doing so. As a result, the securities discussed in this report may not be eligible for sales in some jurisdictions. Customers wishing to obtain further information about this report should contact DCMA: Daiwa Capital Markets America Inc., Financial Square, 32 Old Slip, New York, New York 15 (Tel no. 212-612-7). Ownership of Securities For Ownership of Securities information please visit BlueMatrix disclosure Link at https://daiwa3.bluematrix.com/sellside/disclosures.action. Investment Banking Relationships For Investment Banking Relationships please visit BlueMatrix disclosure link at https://daiwa3.bluematrix.com/sellside/disclosures.action. DCMA Market Making For DCMA Market Making please visit BlueMatrix disclosure link at https://daiwa3.bluematrix.com/sellside/disclosures.action. Research Analyst Conflicts For updates on Research Analyst Conflicts please visit BlueMatrix disclosure link at https://daiwa3.bluematrix.com/sellside/disclosures.action. The principal research analysts who prepared this report have no financial interest in securities of the issuers covered in the report, are not (nor are any members of their household) an officer, director or advisory board member of the issuer(s) covered in the report, and are not aware of any material relevant conflict of interest involving the analyst or DCMA, and did not receive any compensation from the issuer during the past 12 months except as noted: no exceptions. Research Analyst Certification For updates on Research Analyst Certification and Rating System please visit BlueMatrix disclosure link at https://daiwa3.bluematrix.com/sellside/disclosures.action. The views about any and all of the subject securities and issuers expressed in this Research Report accurately reflect the personal views of the research analyst(s) primarily responsible for this report (or the views of the firm producing the report if no individual analysts[s] is named on the report); and no part of the compensation of such analyst(s) (or no part of the compensation of the firm if no individual analyst[s)] is named on the report) was, is, or will be directly or indirectly related to the specific recommendations or views contained in this Research Report. For stocks and sectors in Indonesia covered by Bahana Securities, the following rating system is in effect: Stock ratings are based on absolute upside or downside, which is the difference between the target price and the current market price. Unless otherwise specified, these ratings are set with a 12-month horizon. It is possible that future price volatility may cause a temporary mismatch between upside/downside for a stock based on the market price and the formal rating. "Buy": the price of the security is expected to increase by 1% or more. "Hold": the price of the security is expected to range from an increase of less than 1% to a decline of less than 5%. "Reduce": the price of the security is expected to decline by 5% or more. Sector ratings are based on fundamentals for the sector as a whole. Hence, a sector may be rated Overweight even though its constituent stocks are all rated Reduce ; and a sector may be rated Underweight even though its constituent stocks are all rated Buy. Overweight : positive fundamentals for the sector. Neutral : neither positive nor negative fundamentals for the sector. Underweight : negative fundamentals for the sector. Ownership of Securities For Ownership of Securities information, please visit BlueMatrix disclosure Link at https://daiwa3.bluematrix.com/sellside/disclosures.action. Investment Banking Relationships For Investment Banking Relationship, please visit BlueMatrix disclosure Link at https://daiwa3.bluematrix.com/sellside/disclosures.action. Relevant Relationships (Bahana Securities) Bahana Securities may from time to time have an individual employed by or associated with it serves as an officer of any of the companies under its research coverage. Bahana Securities market making Bahana Securities may from time to time make a market in securities covered by this research. Explanatory Document of Unregistered Credit Ratings (Moody s Investors Service, Inc.) In order to ensure the fairness and transparency in the markets, Credit Rating Agencies became subject to the Credit Rating Agencies registration system based on the Financial Instruments and Exchange Act. In accordance with this Act, in soliciting customers, Financial Instruments Business Operators, etc. shall not use the credit ratings provided by unregistered Credit Rating Agencies without informing customers of the fact that those Credit Rating Agencies are not registered, and shall also inform customers of the significance and limitations of credit ratings, etc. 344
216 Compendium The Significance of Registration Registered Credit Rating Agencies are subject to the following regulations: 1) Duty of good faith. 2) Establishment of control systems (fairness of the rating process, and prevention of conflict of interest, etc.). 3) Prohibition of the ratings in cases where Credit Rating Agencies have a close relationship with the issuers of the financial instruments to be rated, etc. 4) Duty to disclose information (preparation and publication of rating policies, etc. and public disclosure of explanatory documents). In addition to the above, Registered Credit Rating Agencies are subject to the supervision of the Financial Services Agency ( FSA ), and as such may be ordered to produce reports, be subject to on-site inspection, and be ordered to improve business operations, whereas unregistered Credit Rating Agencies are free from such regulations and supervision. The Name of the Credit Rating Agency Group, etc The name of the Credit Rating Agency group: Moody s Investors Service, Inc. ("MIS") The name and registration number of the Registered Credit Rating Agency in the group: Moody s Japan K.K. (FSA commissioner (Rating) No.2) How to acquire information related to an outline of the rating policies and methods adopted by the person who determines Credit Ratings The information is posted under Unregistered Rating explanation in the section on The use of Ratings of Unregistered Agencies on the website of Moody s Japan K.K. (The website can be viewed after clicking on Credit Rating Business on the Japanese version of Moody s website (http://www.moodys.co.jp) Assumptions, Significance and Limitations of Credit Ratings Credit ratings are Moody s Investors Service, Inc. s ("MIS") current opinions of the relative future credit risk of entities, credit commitments, or debt or debt-like securities. MIS defines credit risk as the risk that an entity may not meet its contractual, financial obligations as they come due and any estimated financial loss in the event of default. Credit ratings do not address any other risk, including but not limited to: liquidity risk, market value risk, or price volatility. Credit ratings do not constitute investment or financial advice, and credit ratings are not recommendations to purchase, sell, or hold particular securities. No warranty, express or implied, as to the accuracy, timeliness, completeness, merchantability or fitness for any particular purpose of any such rating or other opinion or information is given or made by MIS in any form or manner whatsoever. Based on the information received from issuers or from public sources, the credit risks of the issuers or obligations are assessed. MIS adopts all necessary measures so that the information it uses in assigning a credit rating is of sufficient quality and from sources MIS considers to be reliable. However, MIS is not an auditor and cannot in every instance independently verify or validate information received in the rating process. Explanatory Document of Unregistered Credit Ratings (Standard & Poor s Ratings Services) In order to ensure the fairness and transparency in the markets, Credit Rating Agencies became subject to the Credit Rating Agencies registration system based on the Financial Instruments and Exchange Act. In accordance with this Act, in soliciting customers, Financial Instruments Business Operators, etc. shall not use the credit ratings provided by unregistered Credit Rating Agencies without informing customers of the fact that those Credit Rating Agencies are not registered, and shall also inform customers of the significance and limitations of credit ratings, etc. The Significance of Registration Registered Credit Rating Agencies are subject to the following regulations: 1) Duty of good faith. 2) Establishment of control systems (fairness of the rating process, and prevention of conflict of interest, etc.). 3) Prohibition of the ratings in cases where Credit Rating Agencies have a close relationship with the issuers of the financial instruments to be rated, etc. 4) Duty to disclose information (preparation and publication of rating policies, etc. and public disclosure of explanatory documents). In addition to the above, Registered Credit Rating Agencies are subject to the supervision of the Financial Services Agency ( FSA ), and as such may be ordered to produce reports, be subject to on-site inspection, and be ordered to improve business operations, whereas unregistered Credit Rating Agencies are free from such regulations and supervision. The Name of the Credit Rating Agency group, etc The name of the Credit Rating Agency group: Standard & Poor s Ratings Services The name and registration number of the Registered Credit Rating Agency in the group: Standard & Poor s Ratings Japan K.K. (FSA commissioner (Rating) No.5) How to acquire information related to an outline of the rating policies and methods adopted by the person who determines Credit Ratings The information is posted under Unregistered Rating Information (http://www.standardandpoors.co.jp/unregistered) in the Library and Regulations section on the website of Standard & Poor s Ratings Japan K.K. (http://www.standardandpoors.co.jp) 345
216 Compendium Assumptions, Significance and Limitations of Credit Ratings Credit ratings assigned by Standard & Poor's are statements of opinion on the future credit quality of specific issuers or issues as of the date they are expressed and do not guarantee timely payments of interest or principal. Credit ratings are not a recommendation to purchase, sell or hold any securities, or a statement of market liquidity or prices in the secondary market of any issues. Credit ratings may change depending on various factors, including issuers' performance, changes in external environment, performance of underlying assets, creditworthiness of counterparties and others. Standard & Poor's conducts rating analysis based on information it believes to be reliable in terms of quality and quantity. However, Standard & Poor's does not perform an audit, due diligence or independent verification of any information it receives, or guarantees its accuracy, completeness or timeliness. Explanatory Document of Unregistered Credit Ratings (Fitch Ratings) In order to ensure the fairness and transparency in the markets, Credit Rating Agencies became subject to the Credit Rating Agencies registration system based on the Financial Instruments and Exchange Act. In accordance with this Act, in soliciting customers, Financial Instruments Business Operators, etc. shall not use the credit ratings provided by unregistered Credit Rating Agencies without informing customers of the fact that those Credit Rating Agencies are not registered, and shall also inform customers of the significance and limitations of credit ratings, etc. The Significance of Registration Registered Credit Rating Agencies are subject to the following regulations: 1) Duty of good faith. 2) Establishment of control systems (fairness of the rating process, and prevention of conflict of interest, etc.). 3) Prohibition of the ratings in cases where Credit Rating Agencies have a close relationship with the issuers of the financial instruments to be rated, etc. 4) Duty to disclose information (preparation and publication of rating policies, etc. and public disclosure of explanatory documents). In addition to the above, Registered Credit Rating Agencies are subject to the supervision of the Financial Services Agency ( FSA ), and as such may be ordered to produce reports, be subject to on-site inspection, and be ordered to improve business operations, whereas unregistered Credit Rating Agencies are free from such regulations and supervision. The Name of the Credit Rating Agency group, etc The name of the Credit Rating Agency group: Fitch Ratings ("Fitch") The name and registration number of the Registered Credit Rating Agency in the group: Fitch Ratings Japan Limited (FSA commissioner (Rating) No.7) How to acquire information related to an outline of the rating policies and methods adopted by the person who determines Credit Ratings The information is posted under Outline of Rating Policies in the section of Regulatory Affairs on the website of Fitch Ratings Japan Limited (http://www.fitchratings.co.jp) Assumptions, Significance and Limitations of Credit Ratings Ratings assigned by Fitch are opinions based on established criteria and methodologies. Ratings are not facts, and therefore cannot be described as being "accurate" or "inaccurate". Credit ratings do not directly address any risk other than credit risk. Credit ratings do not comment on the adequacy of market price or market liquidity for rated instruments. Ratings are relative measures of risk; as a result, the assignment of ratings in the same category to entities and obligations may not fully reflect small differences in the degrees of risk. Credit ratings, as opinions on relative ranking of vulnerability to default, do not imply or convey a specific statistical probability of default. In issuing and maintaining its ratings, Fitch relies on factual information it receives from issuers and underwriters and from other sources Fitch believes to be credible. Fitch conducts a reasonable investigation of the factual information relied upon by it in accordance with its ratings methodology, and obtains reasonable verification of that information from independent sources, to the extent such sources are available for a given security or in a given jurisdiction. The assignment of a rating to any issuer or any security should not be viewed as a guarantee of the accuracy, completeness, or timeliness of the information relied on in connection with the rating or the results obtained from the use of such information. If any such information should turn out to contain misrepresentations or to be otherwise misleading, the rating associated with that information may not be appropriate. Despite any verification of current facts, ratings can be affected by future events or conditions that were not anticipated at the time a rating was issued or affirmed. Additional information may be available upon request. Japan - additional notification items pursuant to Article 37 of the Financial Instruments and Exchange Law (This Notification is only applicable where report is distributed by Daiwa Securities Co. Ltd.) If you decide to enter into a business arrangement with us based on the information described in materials presented along with this document, we ask you to pay close attention to the following items. In addition to the purchase price of a financial instrument, we will collect a trading commission* for each transaction as agreed beforehand with you. Since commissions may be included in the purchase price or may not be charged for certain transactions, we recommend that you confirm the commission for each transaction. In some cases, we may also charge a maximum of 2 million (including tax) per year as a standing proxy fee for our deposit of your securities, if you are a non-resident of Japan. For derivative and margin transactions etc., we may require collateral or margin requirements in accordance with an agreement made beforehand with you. Ordinarily in such cases, the amount of the transaction will be in excess of the required collateral or margin requirements. There is a risk that you will incur losses on your transactions due to changes in the market price of financial instruments based on fluctuations in interest rates, exchange rates, stock prices, real estate prices, commodity prices, and others. In addition, depending on the content of the transaction, the loss could exceed the amount of the collateral or margin requirements. 346
216 Compendium There may be a difference between bid price etc. and ask price etc. of OTC derivatives handled by us. Before engaging in any trading, please thoroughly confirm accounting and tax treatments regarding your trading in financial instruments with such experts as certified public accountants. *The amount of the trading commission cannot be stated here in advance because it will be determined between our company and you based on current market conditions and the content of each transaction etc. When making an actual transaction, please be sure to carefully read the materials presented to you prior to the execution of agreement, and to take responsibility for your own decisions regarding the signing of the agreement with us. Corporate Name: Daiwa Securities Co. Ltd. Financial instruments firm: chief of Kanto Local Finance Bureau (Kin-sho) No.18 Memberships: Japan Securities Dealers Association, Financial Futures Association of Japan Japan Securities Investment Advisers Association Type II Financial Instruments Firms Association 347
216 Compendium Research: +62 21 25 581 Harry Su harry.su@bahana.co.id Senior Associate Director Head of Corporate Strategy & Research Consumer, Strategy ext 36 direct: +62 21 25 5735 Teguh Hartanto teguh.hartanto@bahana.co.id Associate Director Deputy Head of Research Banks, Cement, Aviation ext 361 Leonardo Henry Gavaza, CFA leonardo@bahana.co.id Senior Research Manager Auto, Heavy equipment, Telco ext 368 Arandi Ariantara arandi@bahana.co.id Research Analyst Coal, Metals, Oil & Gas ext 3619 Fakhrul Fulvian fakhrul.fulvian@bahana.co.id Economist ext 362 Bob Setiadi bob.setiadi@bahana.co.id Research Analyst Cement, Infratructure,Toll roads ext 365 Agustinus Reza Kirana agustinus.reza@bahana.co.id Research Analyst Plantations, Shipping, Transportation ext 3616 Bagus Adi Yoga Prawira yoga.prawira@bahana.co.id Research Analyst Consumer, Media ext 364 Sanni Satrio Dwi Utomo sanni@bahana.co.id Research Analyst Industrial Estate, Property ext 3611 Renaldy Effendy renaldy@bahana.co.id Research Analyst Consumer, Healthcare ext 366 Jozabad Jonathan jozabad@bahana.co.id Research Analyst Poultry ext 362 Michael W Setjoadi michael@bahana.co.id Research Analyst Consumer, Healthcare, Poultry ext 3613 Muhammad Wafi wafi@bahana.co.id Technical Analyst ext 369 Nyoman Widita Prabawa nyoman@bahana.co.id Research Associate ext 3623 Melvin Mikha Reminov melvin@bahana.co.id Research Associate ext 3621 Sarah Jessica Hutapea sarah.jessica@bahana.co.id Research Associate ext 3693 Gilang Purnama gilang.purnama@bahana.co.id Research Associate ext 361 Made Ayu Wijayati made.ayu@bahana.co.id Research Executive ext 367 Zefanya Halim zefanya@bahana.co.id CA Manager ext 3612 Novianty Permata Sari novianty@bahana.co.id CA ext 3618 Dealing Room: +62 21 527 88 (Foreign Institutional) +62 21 25 558 (Domestic Institutional) +62 31 535 2788 (Surabaya Branch) Natalia Surjadiputra natalia@bahana.co.id Director of Sales & Client Relationship Management ext 25 Inca Aditya inca@bahana.co.id Senior Equity Institutional Sales ext 2545 Ashish Agrawal ashish@bahana.co.id Vice President Institutional Equity Sales ext 255 / 2553 Yohanes Adhi Handoko yohanes@bahana.co.id Manager, Surabaya Branch ext 725 Amelia Husada amelia@bahana.co.id Vice President Institutional Equity Sales ext 2552 John M. Dasaad dasaad@bahana.co.id Institutional Equity Sales ext 2549 Reynard Poernawan reynard@bahana.co.id Institutional Equity Sales ext 2528 Suwardi Widjaja Suwardi@bahana.co.id Institutional Equity Sales ext 2548 Bram Taarea bram@bahana.co.id Institutional Equity Sales ext 2524 Nurul Farida nurul@bahana.co.id Institutional Equity Sales ext 2547 Ari Santosa ari.santosa@bahana.co.id Sales Trader ext 2554 Hanna Marionda hanna@bahana.co.id Sales Trader ext 2525 Adriana Kosasih adri@bahana.co.id Sales Executive ext 2541 348