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Asiamoney’s

2013

Best Domestic

Equity House

Spotlight

22 February 2016

Disclosure: Bahana Securities does and seeks to do business with companies covered in its research reports. Investors should consider this report as only a single factor

in making their investment decision.

Please see the important disclaimer information on the back of this report

2014Finance Asia's

Best Equity House

Alpha Southeast Asia

2014 Best Research Call FMCG Sector

Asiamoney's2013

Best DomesticEquity House

2015Institutional

Investors Highest RankedLocal Research

House

2015Global

Banking & FinanceReview

Best ResearchHouse

2016 Indonesia market strategy

Harry Su & team E-mail: [email protected]

Phone: +6221 250 5735

Policy risks & market re-rating

Concerns on interest and NIM interventions; JCI down 0.4% w-w

On Friday, Indonesian banking counters under our coverage lost an average

of 3.9% in terms of share price, wiping out IDR41tn (USD3bn) of market

cap, and dragging down the overall Jakarta Composite Index by 1.7% on the

day or IDR87tn (USD6bn) by market cap. This sell down stemmed from

concerns of banking interventions by the government through Vice President

Jusuf Kalla, who has asked State-Owned Enterprise (SOE) banks to lower

lending rates to single-digit levels in an effort to boost the local economy.

Additionally, according to Rini Soemarno, the SOE Minister, Indonesian

banks’ NIMs should reach the 3-4% levels (current sector NIM: 5.3%; exhibit

4) over the next 3 years. At the same time, the Financial Services Authority

(OJK) head, Muliaman Hadad, has stated preparations of incentives for banks

which could lower their NIMs, citing the need for domestic banks to raise

their competitiveness in the lead up to the Asean Free Trade.

Ambivalence: Government action vs. oligopolistic banking structure

Our view on this issue is one of ambivalence. While based on textbook

theory, the government’s recent move to intervene in both interest rates and

NIMs would lead to financial repression, the existing Indonesian banking

structure is oligopolistic in nature with dominant price leadership. That said,

a failed market mechanism caused by monopoly does require government

intervention to correct. Failure to do so may lead the banking system as well

as the economy to continue performing sub-optimally.

Possible layoffs with property and the middle-up class hurt most

At this stage of the market cycle, the question for the Indonesian banking

sector would be the proper mechanism and the extent of government

intervention that would bring about greater market efficiency. However, we

would like to warn that without proper management and an adjustment

period, massive layoffs and deterioration in property rental prices could occur

as banks shift to IT and M&A/branch closures, in pursuit of efficiencies.

Furthermore, with lower deposit rates, the Indonesian middle-up class (note

that mid-low earners do not have savings) would lose out. However, on the

flip side, the overall middle class should benefit from lower borrowing rates

and higher purchasing power from stronger economic growth, helped by

lower lending rates.

Beneficiaries: Infrastructure, Consumers & SMEs; Bad for banks

With NIMs for prime corporate customers at 2-2.5%, banks will be forced to

lower margins of project, consumer and commercial (SMEs) loans. While this

will generally be negative for banks, the overall economy should benefit from

greater loan volumes from this lower trend in NIM. However, we note that

NPLs may rise without proper risk management. Going forward, in order to

offset the adverse impact from lower NIMs, we expect banks to be forced to

be creative in generating higher fee-based income (sales of mutual funds and

insurance, for examples). Based on our sensitivity analysis, for every 100bp

contraction in NIMs, the sector would see 40% lower average net earnings.

Exhibit 1. Market data

15F 16F 17F

Opr. profit growth (%) (2.3) 11.4 12.7

OP growth (%) – cons. 0.8 12.9 12.0

Net profit growth (%) (5.1) 14.8 14.3

NP growth (%) – cons. (5.6) 14.1 16.1

EPS growth (%) (7.5) 13.6 14.3

EPS growth (%) – cons. (5.8) 12.9 16.1

P/E (x) 19.5 17.0 14.9

P/E* (x) EX-UNVR & HMSP 16.8 14.6 12.8

P/E (x) - consensus 19.1 16.8 0.0

PEG (x) (3.8) 1.1 1.0

EV/EBITDA (x) 13.8 12.7 11.2

P/BV (x) 10.1 8.9 7.9

P/BV (x) exc. UNVR & LPPF 3.4 3.0 2.7

Div.yield (%) 2.1 2.3 2.5

Net gearing (%) 20.8 18.9 16.4

ROAE (%) 32.0 29.4 29.5

ROAA (%) 12.3 12.0 12.5

ROIC (%) 27.1 27.1 27.0 Source: Companies, Bahana estimates

Based on 19 February 2016 closing price

Exhibit 2. Top 10 leaders & laggards 19-Feb-16 18-Feb-15 change

(IDR) (IDR) (%)

TAXI IJ

107 97 10.3 TOWR IJ

4,200 3,980 5.5 HERO IJ

1,050 1,000 5.0 PPRO IJ

193 185 4.3 SGRO IJ

1,860 1,800 3.3 UNVR IJ

42,750 41,675 2.6 ROTI IJ

1,400 1,370 2.2

ECII 715 700 2.1 ANJT IJ

1,620 1,590 1.9 PTBA IJ

4,670 4,585 1.9

CASS IJ

1,250 1,340 (6.7) BBNI IJ

5,100 5,450 (6.4) CPIN IJ

3,445 3,635 (5.2) TBIG IJ

5,950 6,275 (5.2) BJBR IJ

920 970 (5.2) SRIL IJ

260 274 (5.1) CTRA IJ

1,310 1,380 (5.1) BBRI IJ

11,450 12,000 (4.6) BMRI IJ

9,300 9,725 (4.4) DSNG IJ

440 460 (4.3) Source: Bloomberg


22 February 2016

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Mid-term re-rating expected; Portfolio switching with banks trimmed

Over the mid-term, lower lending rates and higher economic growth should

lead to a lower WACC, allowing for an overall market re-rating. However, our

conversations with both foreign and local funds last week point to one

universal conclusion: the trimming of banking stocks on possible faster-than-

expected NIM contractions. Most funds we spoke believe that this process will

be gradual, although NIM pressure would undoubtedly materialize. Some

local fund managers expect that the OJK will “punish” banks without proper

plans to lower future NIMs through approval sanctions (eg, product launches,

branch openings).

Taking out BBNI & ADHI; Adding PTPP, EXCL & JPFA to our top 10 list

Given these recent headwinds for Indonesian banks, we are taking out Bank

Negara Indonesia (BBNI-BUY-IDR5,100) from our top-10 buy list.

Additionally, we have also removed Adhi Karya (ADHI-BUY-IDR2,590) from

our top-10 buy list as the share price has surpassed our target price of

IDR2,550. We are also removing Pura Delta Lestari (DMAS-BUY-IDR214) as

the company’s marketing sales target this year has been cut by 45% y-y to

just 50ha (Bahana: 60ha) from 90.5ha previously. In their places, we have

replaced them with a construction name (PTPP-BUY-IDR3,825-TP:IDR4,300)

and 2 leveraged stocks which should benefit from positive sentiment

stemming from expectations of lower lending interest rates ahead: XL Axiata

(EXCL-BUY-IDR3,900-TP:IDR4,400) and Japfa (JPFA-BUY-IDR770TP:

IDR880). Looking ahead, we expect the consumer, telco and construction

sectors to experience greater weightings in fund managers’ portfolios. Thus,

as their bank holdings are trimmed, we foresee upward re-ratings for

consumer and construction counters, despite their current high valuations.

That said, we believe the JCI should remain relatively well supported, and we

retain our 2016 index target at 5,100.

Exhibit 3. Top 10 BUYs & 5 SELLs EPS

gwt

Mkt cap Price TP gwt. PER Yield

(USDm) (IDR) (IDR) (%) (x) (%)

HMSP IJ Equity

36,363 105,500 115,000 6.5 44.1 2.3 UNVR IJ Equity

24,163 42,750 46,000 12.4 49.3 1.9 TLKM IJ Equity

23,858 3,195 3,750 12.6 18.1 3.6 GGRM IJ Equity

9,140 64,125 65,000 9.3 20.7 2.0 ICBP IJ Equity

6,523 15,100 16,800 15.0 24.8 1.8 EXCL* IJ Equity

2,468 3,900 5,100 na na 0.0 ISAT IJ Equity

2,083 5,175 6,800 18.8 21.1 1.4 WSKT IJ Equity

1,935 1,925 2,250 17.3 23.1 0.9 PTPP* IJ Equity

1,372 3,825 4,300 29.8 20.3 1.5 JPFA* IJ Equity

608 770 880 na 12.6 1.4

ASII 20,693 6,900 5,550 4.9 15.9 2.8

INTP 5,277 19,350 17,600 0.3 16.4 5.5

BIRD 1,061 5,725 4,700 3.6 16.5 2.4

APLN 504 332 220 6.7 10.5 1.9

HERO 325 1,050 650 na 76.5 0.0 Source: Bloomberg, Bahana estimates


*Note: new additions

Exhibit 4. Banking sector sensitivity table comparison, 2016F

2016F 2016F 2016F

NII (IDRbn) 301,631 NII (IDRbn) 38,710 NII (IDRbn) 61,062

Net profit (IDRbn) 103,686 Net profit (IDRbn) 19,883 Net profit (IDRbn) 26,815

Equity (IDRbn) 768,113 Equity (IDRbn) 102,150 Equity (IDRbn) 132,307

NIM (%) 5.3 NIM (%) 6.0 NIM (%) 7.6

ROE (%) 13.5 ROE (%) 19.5 ROE (%) 20.3

NII Net profit Changes ROE NII Net profit Changes ROE NII Net profit Changes ROE

(IDRbn) (IDRbn) (%) (%) (IDRbn) (IDRbn) (%) (%) (IDRbn) (IDRbn) (%) (%)

-100bps 245,224 61,381 (40.8) 8.0 -100bps 32,287 15,066 (24.2) 14.7 -100bps 53,038 20,797 (22.4) 15.7

-200bps 188,817 19,075 (81.6) 2.5 -200bps 25,865 10,249 (48.5) 10.0 -200bps 45,014 14,779 (44.9) 11.2

-300bps 132,409 (23,230) (122.4) -3.0 -300bps 19,442 5,432 (72.7) 5.3 -300bps 36,990 8,761 (67.3) 6.6

Sensitivity, NIM Sensitivity, NIM Sensitivity, NIM

Banking sector BBCA BBRI

2016F 2016F 2016F




NIM (%) 5.5 NIM (%) 6.1 NIM (%) 7.0

ROE (%) 15.9 ROE (%) 16.0 ROE (%) 10.1

NII Net profit Changes ROE NII Net profit Change ROE NII Net profit Changes ROE


-100bps 38,230 14,015 (31.1) 11.0 -100bps 24,212 7,489 (32.1) 10.9 -100bps 12,712 1,399 (53.4) 4.7

-200bps 29,809 7,699 (62.1) 6.0 -200bps 19,502 3,956 (64.1) 5.7 -200bps 10,579 (201) (106.7) -0.7

-300bps 21,389 1,384 (93.2) 1.1 -300bps 14,791 423 (96.2) 0.6 -300bps 8,446 (1,801) (160.1) -6.1

Sensitivity, NIMSensitivity, NIM Sensitivity, NIM

BMRI BBNI BDMN

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2016F 2016F 2016F




NIM (%) 11.4 NIM (%) 4.5 NIM (%) 5.9

ROE (%) 13.3 ROE (%) 14.5 ROE (%) 18.3

NII Net profit Change ROE NII Net profit Change ROE NII Net profit Change ROE


-100bps 7,760 1,425 (28.3) 9.6 -100bps 5,775 835 (60) 5.8 -100bps 4,646 758 (90.6) 9.4

-200bps 7,011 863 (56.6) 5.8 -200bps 4,111 (413) (120) -2.9 -200bps 3,694 44 (99.4) 0.6

-300bps 6,262 301 (84.8) 2.0 -300bps 2,447 (1,661) (180) -11.5 -300bps 2,742 (670) (108.3) -8.3

Sensitivity, NIM Sensitivity, NIM Sensitivity, NIM

BTPN BBTN BJBR

2016F 2016F

NII (IDRbn) 3,494 NII (IDRbn) 3,350

Net profit (IDRbn) 1,023 Net profit (IDRbn) 1,194

Equity (IDRbn) 6,451 Equity (IDRbn) 8,071

NIM (%) 6.2 NIM (%) 4.0

ROE (%) 15.9 ROE (%) 14.8

NII Net profit Change ROE NII Net profit Change ROE

(IDRbn) (IDRbn) (%) (%) (IDRbn) (IDRbn) (%) (%)

-100bps 2,928 599 (41.5) 9.3 -100bps 2,518 570 (52.3) 7.1

-200bps 2,363 175 (82.9) 2.7 -200bps 1,686 (54) (104.5) -0.7

-300bps 1,797 (249) (124.4) -3.9 -300bps 854 (678) (156.8) -8.4

Sensitivity, NIM Sensitivity, NIM

BJTM BBKP

Source: Bahana estimates

Exhibit 5. Regional P/E comparison, 2016F

19.7

17.0 16.7 15.7

15.2

13.6 13.5 11.7 11.7

10.8

0

2

4

6

8

10

12

14

16

18

20

22

India Indonesia Philippines Malaysia South

Korea

Thailand Indonesia* Singapore China Hong Kong

(x)

Average**: 14.7x

Source: Bloomberg, * excluding UNVR & HMSP, **excluding Indonesia*, Bahana estimates

Exhibit 6. Regional EPS growth comparison, 2016F

53.5

24.8

13.6 11.4

8.4 7.2

(0.8) (1.2) (2.5)(5)

5

15

25

35

45

55

65

South Korea Thailand Indonesia Philippines Malaysia Singapore India China Hong Kong

(%)

Average: 12.7%

Source: Bloomberg, Bahana estimates

Following HMSP’s

inclusion in the JCI,

the market is

trading at a 17.0x

2016F PE; however,

excluding UNVR &

HMSP, our 2016F

market P/E would

fall to 13.5x, below

the regional

average

We expect 2016F

EPS growth to hit

13.6% y-y, slightly

above the regional

average, but below

the Bloomberg

consensus of

18.8% y-y (most

likely as the street

has not yet cut

their 2015F

earnings)

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Exhibit 7. Regional PEG comparison, 2016F

1.9 1.6 1.5 1.1 0.9 0.5 0.3

(4.3)

(10.2)

(25.0)

(30.0)

(25.0)

(20.0)

(15.0)

(10.0)

(5.0)

0.0

5.0

Malaysia Singapore Philippines Indonesia Indonesia* Thailand SouthKorea

Hong Kong China India

(x)

Average**: (3.6)x

Source: Bloomberg * excluding UNVR & HMSP, **excluding Indonesia, Bahana estimates

Exhibit 8. Regional index comparison, YTD vs 2015

YTD in USD 2015 YTD in USD 2015

(%) (%) (%) (%)

IDX (Indonesia) 4.6 (2.0) S&P/TSX (Toronto) (1.0) 4.9

SET (Thailand) 3.3 (5.3) IBOV (Brazil) (5.7) 19.6

KLCI (Mal.) 0.9 14.7 NZSE (New Zealand)

(5.9) 20.9

TWSE (Taiwan) (0.7) (6.7) Dow Jones (USA) (5.9) (2.2)

VNI (Vietnam) (3.8) 11.0 S&P 500 (USA) (6.2) (0.7)

PCOMP (Phil.) (3.9) 0.8 CAC 40 (France) (6.6) 18.8

KOSPI (Korea) (6.8) 9.5 ASX (Australia) (7.0) 8.3

STI (Singapore) (6.9) (7.8) SMI (Swiss) (7.6) (1.1)

Nikkei (Japan) (9.1) 8.7 RTSI (Russia) (10.0) 12.0

Hang Seng (HK) (11.8) (7.2) Nasdaq (USA) (10.0) 5.7

SENSEX (India) (12.6) (0.3) DAX (Germany) (10.3) 19.8

SHCOMP (China) (19.6) 13.9 MADX (Madrid) (12.0) 2.8

SHENZHEN (China) (20.3) 67.6 FTSE 100 (UK) (13.6) 6.5 Source: Bloomberg

Based on 19 February 2016 and 30 December 2015 closing prices

Exhibit 9. Currency comparison, YTD vs 2015

YTD 2015 YTD 2015

(%) (%) (%) (%)

IDR (Indonesia) 2.3 (10.2) JPY (Japan) 6.3 (0.4)

MYR (Malaysia) 2.1 (18.6) EUR (EU) 2.3 (10.2)

SGD (Singapore) 0.9 (6.6) CAD (Canada) 0.5 (16.0)

THB (Thailand) 0.8 (8.7) TRY (Turkey) (1.2) (20.0)

VND (Vietnam) 0.5 (4.9) BRL (Brazil) (1.5) (32.9)

HKD (Hong Kong) (0.2) 0.1 AUD (Australia) (1.8) (10.8)

CNY (China) (0.4) (4.4) NZD (New Zealand) (2.9) (12.4)

TWD (Taiwan) (1.1) (3.7) GBP (UK) (3.0) (5.4)

PHP (Philippines) (1.6) (4.7) MXN (Mexico) (5.5) (14.3)

INR (India) (3.4) (4.7) RUB (Russia) (5.9) (16.3)

KRW (Korea) (4.7) (7.2) ARS (Argentina) (14.2) (34.5) Source: Bloomberg Based on 19 February 2016 and 30 December 2015 closing prices

Note: When a report covers six or more subject companies please access important disclosures for Daiwa Capital Markets Hong Kong Limited at

http://www.daiwacm.com/hk/research_disclaimer.html or contact your investment representative or Daiwa Capital Markets Hong Kong Limited at Level 26, One Pacific

Place, 88 Queensway, Hong Kong.

On the other hand,

we look for a 2016F

PEG of 1.1x, but

excluding UNVR &

HMSP, our 2016F

PEG would further

decrease to 0.9x

Indonesia is the

best performing

market in the

region YTD

IDR has been the

best performing

currency in the

region YTD

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Exhibit 10. Aviation sector relative performance

29.6

19.6

27.5

8.4

(4.1)(2.6)

(32.2)(40)

(30)

(20)

(10)

0

10

20

30

(40)

(30)

(20)

(10)

0

10

20

30

ytd 1M 3M 6M 9M 12M 2015

(%) (%)

Aviation sector relative to JCI

Source: Bloomberg, Bahana

Exhibit 11. Poultry sector relative performance

26.9

16.7 24.2

74.6

16.0

2.6

(19.2)

(40)

(20)

0

20

40

60

80

(40)

(20)

0

20

40

60

80

ytd 1M 3M 6M 9M 12M 2015

(%) (%)

Poultry sector relative to JCI


Exhibit 12. Automotive sector relative performance

12.0 11.4

5.7 5.9

2.1

(1.3)

(7.0)(10)

(5)

0

5

10

15

(10)

(5)

0

5

10

15

ytd 1M 3M 6M 9M 12M 2015

(%) (%)

Automotive sector relative to JCI


Some positive

sentiment from

additional aircraft,

new internal routes,

lower oil prices and

a stronger IDR

From one of the

worst in 2015, the

sector has

rebounded YTD due

to a stronger IDR

and falling raw

materials prices,

easing oversupply

conditions which

allow for DOC and

broiler prices to rise

Helped by positive

sentiment from

lower interest rates,

despite continued

intense competition

and discounting

22 February 2016


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Exhibit 13. Consumer staples sector relative performance

10.4 8.4

10.9

19.0

31.8

43.3

28.9

0

5

10

15

20

25

30

35

40

45

0

5

10

15

20

25

30

35

40

45

ytd 1M 3M 6M 9M 12M 2015

(%) (%)

Consumer staples sector relative to JCI Source: Bloomberg, Bahana

Exhibit 14. Plantations sector relative performance

7.0

2.5

(1.9) (0.5)

(18.3)(17.4)

(21.7)

(25)

(20)

(15)

(10)

(5)

0

5

10

(25)

(20)

(15)

(10)

(5)

0

5

10

ytd 1M 3M 6M 9M 12M 2015

(%) (%)

Plantations sector relative to JCI


Exhibit 15. Infrastructure sector relative performance

4.2

(4.7)

2.1 1.9

5.3

1.1 1.4

(6)

(4)

(2)

0

2

4

6

(6)

(4)

(2)

0

2

4

6

ytd 1M 3M 6M 9M 12M 2015

(%) (%)

Infrastructure-related sector relative to JCI


With scarcity of

growth on the

ground, staples

remain as one of the

most defensive and

resilient sectors

El Nino effect (lower

Malaysia’s and

Indonesia’s

inventories) in

January is helping to

support the sector’s

recent performance

Perceived as a market proxy in 2015, it has outperformed on expectations of

project acceleration

22 February 2016


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Exhibit 16. Metals sector relative performance

0.8

5.2

(13.4)(15.8)

(38.2)

(42.3)

(46.5) (50)

(40)

(30)

(20)

(10)

0

10

(50)

(40)

(30)

(20)

(10)

0

10

ytd 1M 3M 6M 9M 12M 2015

(%) (%)

Metals sector relative to JCI


Exhibit 17. Telco sector relative performance

(1.3)(2.9)

5.6 6.3

25.5

19.6 21.7

0

5

10

15

20

25

30

(5)

0

5

10

15

20

25

30

ytd 1M 3M 6M 9M 12M 2015

(%) (%)

Telco sector relative to JCI


Exhibit 18. Banks sector relative performance

(1.3)

(3.7)

0.3

5.1

(0.4)

0.3

5.7

(4)

(3)

(2)

(1)

0

1

2

3

4

5

6

(4)

(3)

(2)

(1)

0

1

2

3

4

5

6

ytd 1M 3M 6M 9M 12M 2015

(%) (%)

Banks sector relative to JCI


Starting to

outperform due to

oil-price sentiment

Starting to

underperform on

profit taking due to

its strong 2015

outperformance

Starting to

underperform due to

news on NIM

capping

22 February 2016


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Exhibit 19. Coal sector relative performance

(3.6)

1.0

(13.6) (14.0)

(24.5)

(18.0)

(11.4)

(30)

(25)

(20)

(15)

(10)

(5)

0

5

(30)

(25)

(20)

(15)

(10)

(5)

0

5

ytd 1M 3M 6M 9M 12M 2015

(%) (%)

Coal sector relative to JCI


Exhibit 20. Oil-related sector relative performance

(3.8)

0.4

(6.6)

(9.0)

(3.9)

(4.9)

(2.4)

(10)

(8)

(6)

(4)

(2)

0

2

(10)

(8)

(6)

(4)

(2)

0

2

ytd 1M 3M 6M 9M 12M 2015

(%) (%)

Oil-related sector relative to JCI Source: Bloomberg, Bahana

Exhibit 21. Consumer retail sector relative performance

(4.8)

(3.0)

(0.7)

(3.2)

1.2 0.6

10.3

(6)

(4)

(2)

0

2

4

6

8

10

12

(6)

(4)

(2)

0

2

4

6

8

10

12

ytd 1M 3M 6M 9M 12M 2015

(%) (%)

Consumer retail relative to JCI Source: Bloomberg, Bahana

Underperformance

on continued weak

coal prices due to

implementation of

China’s clean air

policy

Has been

underperforming on

a depressed oil price

outlook from

oversupply condition

and the lifting of

Iran sanctions

With farmer incomes

down due to low

commodity prices,

retailers have

underperformed YTD

22 February 2016


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Exhibit 22. Property sector relative performance

(6.5)

(4.7)

(2.0)

4.6

(3.5) (3.9)

12.9

(10)

(5)

0

5

10

15

(10)

(5)

0

5

10

15

ytd 1M 3M 6M 9M 12M 2015

(%) (%)

Property sector relative to JCI


Exhibit 23. Shipping sector relative performance

(7.1)

(9.4)

2.7

7.7

(2.8)

(6.1)

(11.4)

(15)

(10)

(5)

0

5

10

(15)

(10)

(5)

0

5

10

ytd 1M 3M 6M 9M 12M 2015

(%) (%)

Shipping sector relative to JCI Source: Bloomberg, Bahana

Exhibit 24. Industrial estate sector relative performance

(11.9)

(8.0)(10.1)

(13.4)

(24.6)

(29.9)

(18.4)

(35)

(30)

(25)

(20)

(15)

(10)

(5)

0

(35)

(30)

(25)

(20)

(15)

(10)

(5)

0

ytd 1M 3M 6M 9M 12M 2015

(%) (%)

Industrial estate sector relative to JCI


Despite lower

interest rates, the

sector has been

underperforming

this year due to

weak marketing

sales and the

government’s

aggressive taxation

drive

Has done well in the

past 6 months,

helped by lower oil

prices

Concerns on

investment outlook

have hurt the

performance of the

sector

22 February 2016


2014Finance Asia's

Best Equity House



Asiamoney's2013


2015Institutional


House

2015Global


Best ResearchHouse

Exhibit 25. Cement sector relative performance

(13.6)

(6.1)

(13.1)

9.0

(7.8)

(12.5)

(9.1)

(15)

(10)

(5)

0

5

10

(15)

(10)

(5)

0

5

10

ytd 1M 3M 6M 9M 12M 2015

(%) (%)

Cement sector relative to JCI Source: Bloomberg, Bahana

Exhibit 26. Consumer media sector relative performance

(13.9)

(2.7)

(15.8)

(8.3)

(2.8)

(19.6)

(4.6)

(25)

(20)

(15)

(10)

(5)

0

(25)

(20)

(15)

(10)

(5)

0

ytd 1M 3M 6M 9M 12M 2015

(%) (%)

Consumer media relative to JCI Source: Bloomberg, Bahana

Exhibit 27. Transportation sector relative performance

(21.1)

(14.9)(17.2)

(28.8)

(39.3)

(54.3)

(39.2)

(60)

(50)

(40)

(30)

(20)

(10)

0

(60)

(50)

(40)

(30)

(20)

(10)

0

ytd 1M 3M 6M 9M 12M 2015

(%) (%)

Transportation sector relative to JCI Source: Bloomberg, Bahana

The sector has been

hurt by sentiment on

competition, the

oversupply situation

and weak margins

Suffered from FMCG

companies’ lower TV

ad spend and their

shift to cheaper

advertising media

(ie, online and direct

marketing)

The taxi industry has

been hurt by

decreased demand

on weak purchasing

power and lower

utilization rates on

intensifying online

mobile-based

competition

22 February 2016


2014Finance Asia's

Best Equity House



Asiamoney's2013


2015Institutional


House

2015Global


Best ResearchHouse

Exhibit 28. Bahana equity coverage, leaders & laggards COMPANY STOCK CODE RATING TARGET PRICE Up/(Downside)(%) 2/19/2016 2/18/2015 CHANGE (%)

Express Transindo Utama TAXI IJ REDUCE 120 12.1 107 97 10.3

Sarana Menara Nusantara TOWR IJ BUY 5,000 19.0 4,200 3,980 5.5 Hero Supermarket HERO IJ REDUCE 650 (38.1) 1,050 1,000 5.0

PP Property PPRO IJ HOLD 180 (6.7) 193 185 4.3

Sampoerna Agro SGRO IJ HOLD 1,800 (3.2) 1,860 1,800 3.3

Unilever Indonesia UNVR IJ BUY 46,000 7.6 42,750 41,675 2.6 Nippon Indosari Corpindo ROTI IJ BUY 1,450 3.6 1,400 1,370 2.2

Electronic City ECII IJ REDUCE 700 (2.1) 715 700 2.1

Austindo Nusantara Jaya ANJT IJ REDUCE 1,000 (38.3) 1,620 1,590 1.9 Bukit Asam PTBA IJ BUY 7,800 67.0 4,670 4,585 1.9

Medco Energi Internasional MEDC IJ BUY 1,300 55.7 835 820 1.8

Erajaya Swasembada ERAA IJ BUY 850 47.8 575 565 1.8 Ace Hardware Indonesia ACES IJ HOLD 875 (3.8) 910 900 1.1

Mayora Indah MYOR IJ BUY 31,000 16.0 26,725 26,450 1.0

Gudang Garam GGRM IJ BUY 65,000 1.4 64,125 63,500 1.0

Blue Bird BIRD IJ REDUCE 4,700 (17.9) 5,725 5,675 0.9 Aneka Tambang ANTM IJ BUY 764 107.0 369 366 0.8

Tiphone Mobile Indonesia TELE IJ BUY 1,180 69.8 695 690 0.7

Multipolar MLPL IJ BUY 550 140.2 229 228 0.4 Astra Agro Lestari AALI IJ REDUCE 14,300 (19.4) 17,750 17,725 0.1

Bank Jawa Timur BJTM IJ REDUCE 420 (0.2) 421 421 0.0

Holcim Indonesia SMCB IJ REDUCE 925 (2.6) 950 950 0.0

Indo Tambangraya Megah ITMG IJ REDUCE 5,200 (1.0) 5,250 5,250 0.0 Harum Energy HRUM IJ REDUCE 500 (21.3) 635 635 0.0

Tempo Scan Pacific TSPC IJ BUY 2,000 14.3 1,750 1,750 0.0

J Resources PSAB IJ BUY 2,000 88.7 1,060 1,060 0.0 Merdeka Copper Gold MDKA IJ BUY 2,200 15.8 1,900 1,900 0.0

Agung Podomoro Land APLN IJ REDUCE 220 (33.7) 332 332 0.0

Soechi Lines SOCI IJ BUY 630 33.5 472 472 0.0 Pelayaran Tempuran Emas TMAS IJ BUY 3,000 62.2 1,850 1,850 0.0

Indomobil Sukses Internasional IMAS IJ HOLD 2,000 (3.8) 2,080 2,085 (0.2)

AKR Corporindo AKRA IJ BUY 7,000 (9.1) 7,700 7,750 (0.6)

Japfa Comfeed Indonesia JPFA IJ BUY 550 (28.6) 770 775 (0.6) Bank Tabungan Pensiunan Nasional BTPN IJ REDUCE 2,350 13.3 2,075 2,090 (0.7)

Krakatau Steel KRAS IJ REDUCE 275 (24.2) 363 366 (0.8)

Xl Axiata EXCL IJ BUY 4,400 12.8 3,900 3,935 (0.9) Sido Muncul SIDO IJ HOLD 480 (5.0) 505 510 (1.0)

Indofood CBP Sukses Makmur ICBP IJ BUY 16,800 11.3 15,100 15,250 (1.0)

Tunas Baru Lampung TBLA IJ BUY 570 14.0 500 505 (1.0) Adi Sarana Armada ASSA IJ BUY 130 31.3 99 100 (1.0)

Wijaya Karya WIKA IJ BUY 3,100 15.5 2,685 2,715 (1.1)

Malindo Feedmill MAIN IJ BUY 1,700 27.3 1,335 1,350 (1.1)

HM Sampoerna HMSP IJ BUY 115,000 9.0 105,500 106,700 (1.1) United Tractors UNTR IJ HOLD 16,000 0.5 15,925 16,125 (1.2)

Waskita Karya WSKT IJ BUY 1,975 2.6 1,925 1,950 (1.3)

Indofood Sukses Makmur INDF IJ BUY 6,600 (1.9) 6,725 6,825 (1.5) Gajah Tunggal GJTL IJ BUY 860 76.2 488 496 (1.6)

Bank Tabungan Negara BBTN IJ BUY 1,520 1.0 1,505 1,530 (1.6)

Kawasan Industri Jababeka KIJA IJ BUY 270 13.9 237 241 (1.7) Indonesian Stock Exchange JCI 4,698 4,779 (1.7)

Kimia Farma KAEF IJ BUY 1,350 20.0 1,125 1,145 (1.7)

Bank Bukopin BBKP IJ HOLD 730 30.4 560 570 (1.8)

Semen Baturaja SMBR IJ HOLD 300 (5.4) 317 323 (1.9) Lippo Karawaci LPKR IJ REDUCE 1,130 9.7 1,030 1,050 (1.9)

Kalbe Farma KLBF IJ HOLD 1,480 17.0 1,265 1,290 (1.9)

Vale Indonesia INCO IJ BUY 2,500 66.1 1,505 1,535 (2.0) Lippo Cikarang LPCK IJ BUY 8,300 35.5 6,125 6,250 (2.0)

Ciputra Property CTRP IJ REDUCE 365 (6.2) 389 397 (2.0)

Siloam International Hospitals SILO IJ BUY 14,700 72.9 8,500 8,675 (2.0)

London Sumatra Indonesia LSIP IJ BUY 1,500 3.1 1,455 1,485 (2.0) Ramayana Lestari Sentosa RALS IJ REDUCE 640 (7.9) 695 710 (2.1)

Astra International ASII IJ REDUCE 5,550 (19.6) 6,900 7,050 (2.1)

Mitra Keluarga Karyasehat MIKA IJ SELL 1,900 (7.5) 2,055 2,100 (2.1) Pembangunan Perumahan PTPP IJ BUY 4,300 12.4 3,825 3,910 (2.2)

Summarecon Agung SMRA IJ BUY 1,820 16.3 1,565 1,600 (2.2)

Bumi Serpong Damai BSDE IJ BUY 2,020 16.8 1,730 1,770 (2.3) Puradelta Lestari DMAS IJ BUY 290 35.5 214 219 (2.3)

Garuda Indonesia GIAA IJ BUY 400 (5.4) 423 433 (2.3)

Matahari Putra Prima MPPA IJ BUY 2,750 54.1 1,785 1,830 (2.5)

Total Bangun Persada TOTL IJ BUY 940 64.9 570 585 (2.6) Mitra Adiperkasa MAPI IJ BUY 4,750 13.8 4,175 4,285 (2.6)

Timah TINS IJ REDUCE 411 (27.3) 565 580 (2.6)

Bank Central Asia BBCA IJ BUY 14,700 12.6 13,050 13,400 (2.6) Wintermar Offshore Marine WINS IJ HOLD 190 75.9 108 111 (2.7)

Pakuwon Jati PWON IJ HOLD 490 5.4 465 478 (2.7)

Anabatic Technologies ATIC IJ BUY 800 49.5 535 550 (2.7) Semen Indonesia SMGR IJ HOLD 10,600 4.2 10,175 10,475 (2.9)

Surya Semesta Internusa SSIA IJ BUY 720 8.3 665 685 (2.9)

Wijaya Karya Beton WTON IJ BUY 1,100 12.2 980 1,010 (3.0)

Matahari Department Store LPPF IJ BUY 19,800 23.0 16,100 16,600 (3.0) Alam Sutera Realty ASRI IJ REDUCE 300 (15.3) 354 365 (3.0)

Adaro Energy ADRO IJ BUY 700 19.7 585 605 (3.3)

Surya Citra Media SCMA IJ HOLD 3,250 14.4 2,840 2,940 (3.4) Bekasi Fajar Industrial Estates BEST IJ REDUCE 300 18.6 253 262 (3.4)

Media Nusantara Citra MNCN IJ BUY 2,000 31.1 1,525 1,580 (3.5)

Adhi Karya ADHI IJ BUY 2,550 (1.5) 2,590 2,685 (3.5) Jasa Marga JSMR IJ BUY 6,250 15.7 5,400 5,600 (3.6)

Telekomunikasi Indonesia TLKM IJ BUY 3,750 17.4 3,195 3,315 (3.6)

Bank Danamon Indonesia BDMN IJ BUY 3,400 (15.9) 4,045 4,200 (3.7)

Indocement Tunggal Prakarsa INTP IJ REDUCE 16,400 (15.2) 19,350 20,150 (4.0) Indosat ISAT IJ BUY 6,800 31.4 5,175 5,400 (4.2)

Perusahaan Gas Negara PGAS IJ REDUCE 2,500 (3.3) 2,585 2,700 (4.3)

Salim Ivomas Pratama SIMP IJ HOLD 290 (28.2) 404 422 (4.3) Dharma Satya Nusantara DSNG IJ BUY 535 21.6 440 460 (4.3)

Bank Mandiri BMRI IJ BUY 9,700 4.3 9,300 9,725 (4.4)

Bank Rakyat Indonesia BBRI IJ BUY 13,000 13.5 11,450 12,000 (4.6)

Ciputra Development CTRA IJ BUY 1,400 6.9 1,310 1,380 (5.1) Sri Rejeki Isman SRIL IJ BUY 500 92.3 260 274 (5.1)

Bank Jawa Barat dan Banten BJBR IJ BUY 1,020 10.9 920 970 (5.2)

Tower Bersama Infrastructure TBIG IJ HOLD 6,500 9.2 5,950 6,275 (5.2) Charoen Pokphand Indonesia CPIN IJ BUY 3,500 1.6 3,445 3,635 (5.2)

Bank Negara Indonesia BBNI IJ BUY 5,700 11.8 5,100 5,450 (6.4)

Source: Bloomberg, Bahana estimates

Head Office Surabaya Branch

Graha Niaga, 19th Floor Wisma BII, Ground Floor

Jl. Jend. Sudirman Kav. 58 Jl. Pemuda 60-70

Jakarta 12190 Surabaya 60271

Indonesia Indonesia

Tel. 62 21 250 5081 Tel. 62 31 535 2788

Fax. 62 21 522 6049 http://www.bahana.co.id Fax. 62 31 546 1157

Dealing Room: +62 21 527 0808 (Foreign Institutional)

Research: +62 21 250 5081

+62 21 250 5508 (Domestic Institutional)

Harry [email protected]

Senior Associate DirectorHead of Corporate Strategy & Research

Consumer, Strategy

ext 3600direct: +62 21 250 5735

Teguh Hartanto

[email protected] Director

Deputy Head of Research

Banks, Cement, Aviationext 3610

Leonardo Henry Gavaza, [email protected]

Senior Research ManagerAuto, Heavy equipment, Telco

ext 3608

Bob [email protected]

Research AnalystCement, Infratructure,Toll roads

ext 3605

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[email protected] Analyst

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Research AnalystCoal, Metals, Oil & Gas

ext 3619

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[email protected] Executive

ext 3607

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[email protected] AnalystConsumer, Media

ext 3604

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[email protected] Manager

ext 3612

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[email protected]

ext 3618

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[email protected] President

Institutional Equity Salesext 2550 / 2553

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[email protected] Equity Sales

ext 2528

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ext 2549

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[email protected], Surabaya Branch

ext 7250

Suwardi Widjaja


ext 2548

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[email protected] President

Institutional Equity Salesext 2552

Nurul Farida


ext 2547

+62 31 535 2788 (Surabaya Branch)

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Economistext 3602

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[email protected] Associate

ext 3621

Sanni Satrio Dwi Utomo


Industrial Estate, Propertyext 3611

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Client Relationship Management ext 2500

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ext 3693

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ext 3623

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Consumer, Healthcareext 3606

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ext 3601

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[email protected] Executive

ext 2541

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[email protected] Trader

ext 2525

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[email protected] Trader

ext 2554

Bram Taarea


ext 2524

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Poultryext 3620

Muhammad Wafi


ext 3609

Inca [email protected]

Senior Equity Institutional Salesext 2545

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http://www.uk.daiwacm.com/about-us/corporate-governance-regulatory






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 10% or more. "Hold": the price of the security is expected to range from an increase of less than 10% 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 a ll 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.

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. 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.108

Memberships: Japan Securities Dealers Association, Financial Futures Association of Japan

Japan Securities Investment Advisers Association

Type II Financial Instruments Firms Association



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