friday, august 14, 2015

Equity Research

Friday, August 14, 2015

Danareksa Sekuritas – Equity Research

FROM EQUITY RESEARCH

Construction: The initiation of High-speed rail (Overweight)

We attended the opening of China’s high-speed rail (HSR) exhibition hosted by China Railway to gauge how well prepared China is compared to its rival, Japan. Both these countries have put forward proposals to the Government of Indonesia in regard to the future development of the first HSR in Indonesia that will connect the capital city of Jakarta to Bandung in West Java in its first phase. In its ambitious plans, the government eventually hopes to develop a total of 750km of HSR that would cut across four provinces in Java to connect with the country’s second-largest city of Surabaya in East Java.

ITMG: Maintaining its targets despite weak demand from China (ITMG IJ. Rp 9,550. HOLD. TP Rp 10,600)

Following the release of its 1H15 results, we attended the analyst meeting of Indo Tambangraya Megah (ITMG) where the company’s management indicated it would: a) increase its quarterly coal production in 3Q15 to achieve 2015’s coal production target and b) sustain its production plans over the next two years. Nonetheless, given the depressed coal prices coupled with concerns over limited reserves, we maintain our HOLD recommendation with a lower Target Price of Rp10,600.

FROM DANAREKSA RESEARCH INSTITUTE

July Outlook: Stagnant

While June exports and imports both rose on a monthly basis, they were still down on an annual comparison. Exports (+5.9% MoM, -12.8% YoY) reached US$ 13.4 bn, or still higher than imports (+11.6% MoM, -17.4% YoY) which reached US$ 12.9 bn. As a result, the trade balance recorded another surplus. In June the surplus reached US$ 477 mn.

Previous Reports:

RALS: Seasonal boost masks the stuttering performance-Snapshot20150813

MARKET NEWS *Analysts’ comment inside

ACST raise target to IDR 2.5tn (BI) BKPM Now Handles Energy, Mining Permits (TJP) Frequency sharing regulation to be prepared (BI) New Tax Breaks to be Announced Next Week (TJP) WIKA Aims to Obtain Sorong Port Contract (ID) Hutama Karya Gets IDR481bn Loans for Trans-Sumatra Project (TJP) RAPBN is prepared to be semi expansive (BI) Stress test IDR14,000/USD: Banks still indicates solid durability (BI)

IDX ANNOUNCEMENT

Cash Announcement

Code Ex-Date Date Payable Amount (Rp)

IKBI 23-Jul-15 12-Aug-15 26.69

XCID 4-Aug-15 21-Aug-15 1.8479

Source: KSEI

MORNING HIGHLIGHT

Key Index

Close

Chg Ytd Vol

(%) (%) (US$ m)

Asean - 5

Indonesia 4,584 2.3 (12.3) 315

Thailand 1,404 (0.3) (6.2) 1,421

Philippines 7,440 (0.7) 2.9 170

Malaysia 1,622 0.7 (7.9) 572

Singapore 3,092 1.0 (8.1) 984

Regional

China 3,955 1.8 22.3 -

Hong Kong 24,019 0.4 1.8 11,294

Japan 20,596 1.0 18.0 15,148

Korea 1,983 0.4 3.5 5,826

Taiwan 8,312 0.3 (10.7) 2,713

India 27,550 0.1 0.2 474

NASDAQ 5,034 (0.2) 6.3 64,069

Dow Jones 17,408 0.0 (2.3) 7,510

Currency and Interest Rate

Rate

w-w m-m ytd

(%) (%) (%)

Rupiah Rp/1US$ 13,748 (1.7) (3.2) (10.6)

SBI rate % 6.67 (0.3) (0.3) (0.6)

10y Gov Indo bond 8.74 0.3 0.5 0.9

Hard Commodities

Unit Price

d-d m-m ytd

(%) (%) (%)

Coal US$/ton 56 0.4 (3.8) (20.9)

Gold US$/toz 1,115 (0.1) (3.6) (5.9)

Nickel US$/mt.ton 10,426 (1.3) (11.0) (30.8)

Tin US$/mt.ton 15,025 (0.8) 2.8 (22.7)

Soft Commodities

Unit Price

d-d m-m ytd

(%) (%) (%)

Cocoa US$/mt.ton 3,099 (1.6) (7.4) 4.3

Corn US$/mt.ton 134 2.2 (16.0) (6.2)

Crude Oil US$/barrel 49 (0.9) (14.9) (14.1)

Palm oil MYR/mt.ton 1,964 (1.9) (10.1) (14.5)

Rubber USd/kg 135 0.4 (6.3) (11.2)

Pulp US$/tonne 847 N/A (0.5) (9.1)

Coffee US$/60kgbag 91 (0.4) 6.5 21.4

Sugar US$/MT 350 (0.1) (6.5) (10.6)

Wheat US$/ton 139 2.4 (12.5) (17.2)

Source: Bloomberg

http://dmia.danareksaonline.com/Upload/Morning%20pack%2020150813.pdf

Equity Research



PT Danareksa Sekuritas

Jl. Medan Merdeka Selatan No. 14 Jakarta 10110 Indonesia Tel (62 21) 29 555 888 Fax (62 21) 350 1709

Equity Research Team

Sales team

[email protected] (62-21) 2955 5827 Auto Comp, Construction, Transportation

Joko Sogie

[email protected] (62-21) 2955 5825 Banking

Eka Savitri

[email protected] (62-21) 2955 5825 Coal, Heavy Equipment, Metal Mining

Stefanus Darmagiri

[email protected] (62-21) 2955 5821 Consumer

Jennifer Frederika Yapply

[email protected] (62-21) 2955 5817 Pharmaceutical

Armando Marulitua [email protected] (62-21) 2955 5820 Property, Retail

Anindya Saraswati

[email protected] (62-21) 29555 888 ext.3511 Research Associate

Puti Adani

[email protected] (62-21) 29555 888 ext.3504 Research Associate

Antonia Febe Hartono

[email protected] (62 21) 29555 888 ext. 3151

Ermawati A. Erman


Novrita E. Putrianti


Ehrliech Suhartono


Yunita L. Nababan


Bram Taarea [email protected] (62 21) 29555 888 ext. 3126

Martin Joshua


Laksmita Armandani


Muhammad Hardiansyah


Tuty Sutopo


Upik Yuzarni


Kevin Giarto

Construction Sector The initiation of High-speed rail We attended the opening of China’s high-speed rail (HSR) exhibition hosted by China Railway to gauge how well prepared China is compared to its rival, Japan. Both these countries have put forward proposals to the Government of Indonesia in regard to the future development of the first HSR in Indonesia that will connect the capital city of Jakarta to Bandung in West Java in its first phase. In its ambitious plans, the government eventually hopes to develop a total of 750km of HSR that would cut across four provinces in Java to connect with the country’s second-largest city of Surabaya in East Java. What is Indonesia’s HSR? Indonesia’s high-speed rail is one of the major infrastructure projects that the government hopes can be built without using funds from the state budget. In the first phase, the capital city of Jakarta will be connected to Bandung in West Java, a distance of over 150km, with the ultimate goal of connecting the four provinces in the country’s main island of Java – Jakarta, Bandung, Semarang, and Surabaya – spanning 750km from West Java to East Java. As the high-speed trains would be capable of speeds of 300-350km/h, the travel time from Jakarta to Bandung would be cut to around 30 minutes only. Regarding the timeline of the project, China claims it can run at full operation by 2019F if it is permitted to start groundbreaking in September. Japan, meanwhile, says it will be ready to kick off the project early next year with a test run in 2019F and with full operation starting in 2021F. Japan and China to face off in beauty contest The government has received two proposals with feasibility studies from Japan and China. Japan through JICA offered a 40-year loan at a 0.1% interest rate with a 10-year grace period – the same terms as seen for the now being built Jakarta MRT. By comparison, China is also offering a 40-year loan with a 2.0% interest rate and 10-year grace period. Both countries have substantial expertise in developing high-speed railways. Japan, which rolled out its first HSR (Shinkansen) in 1964, has a longer track record than China, which launched its first HSR in 2007. Since then, however, China claims to have developed more than half of the world’s HSR. Nevertheless, the main consideration for the Indonesian government concerns the project’s investment. In this regard, the government has indicated that it would favor proposals which do not involve funding from the state budget. At this juncture, China has provided reassurances that the project would be fully funded by China, while Japan is only offering a soft loan to cover up to 75% of the funding. A decision by the Indonesian government on the matter is expected by the end of this month, which in our view China has the upper hand considering its full-cover loan facility. WIKA plans to lead the consortium The HSR project will be 60% owned by a local consortium and 40% owned by a foreign consortium. In the local consortium, WIKA plans to have majority 55% ownership, thus translating into 33% ownership of the project overall – confirming that the company would be the largest single owner of the project. Given such an ownership structure, WIKA would be the company to consolidate the project’s assets and financials. Nevertheless, the ownership structure will put more risks for WIKA as this investment would significantly limit the company’s balance sheet in the future whilst the company would also book negative earnings from the project in the early years of its operation. Risks on proposed tariff and traffic While this project is still at the planning stage, the IRR calculation has not been provided. In our view, there are still big questions over both fares and traffic aside from the investment costs. In Asia, the average fare/km is around US$0.07-0.15 with the cheapest fare is in China. This would translate into Rp145k-310k using the HSR from Jakarta to Bandung, meaning the government may potentially need to subsidize the fares to achieve optimum traffic to make the project commercially viable.

Wednesday, 14 August 2015

OVERWEIGHT

Stocks Price Target Rec.

IDR price IDR

WIKA 2,665 4,000 BUY

PTPP 3,840 4,600 BUY

WSKT 1,780 2,000 BUY

ADHI 2,180 3,700 BUY

JAKPROP relative to JCI Index

-10

-5

0

5

10

15

20

400

420

440

460

480

500

520

540

560

580

600

Jul-

14

Au

g-1

4

Sep

-14

Oct

-14

No

v-1

4

Dec

-14

Jan

-15

Feb

-15

Mar

-15

Ap

r-1

5

May

-15

Jun

-15

Jul-

15

JAKPROP (LHS) Relative to JCI (RHS)

(Rp) (%)

Danareksa research reports are also available at Reuters Multex and First Call Direct and Bloomberg.

Joko Sogie (62-21) 2955 5827 [email protected]

2

Construction Sector 14 August 2015

Exhibit 1. China railway exhibition

Source: Danareksa Sekuritas

Exhibit 2. Japan and China proposal for Jakarta-Bandung HSR

Japan China Total Investment costs, USD bn 5.0 5.5 Interest rate, % 0.1 2.2 Loan tenor, years 40 40 Grace period, years 10 10 Train set Shinkansen E5 Series CRH 380A Maximum velocity, km/h 320 350 Proposed tariff, Rp ‘000 200-220 200

Source: Various publications

Exhibit 3. HSR ticket price in Asia ranges between USD0.07-0.15/km

Country From To Fare, USD Distance, km Fare/km, USD Fare/km, Rp

CHINA Shanghai Beijing 88.0 1,318 0.07 966 Wuhan Guangzhou 74.0 1,069 0.07 966 Shanghai Nanjing 22.0 301 0.07 966

JAPAN Tokyo Kyoto 65.7 514 0.13 1,794 Tokyo Hakata 110.6 1,175 0.09 1,242

KOREA Seoul Busan 48.3 387 0.12 1,656 Seoul Daejeon 19.1 166 0.12 1,656 Yongsan Mokpo 42.7 404 0.11 1,518

TAIWAN Taipei Zuoying 50.5 345 0.15 2,070 Taipei Chiayi 36.6 252 0.15 2,070 Taipei Taichung 23.7 166 0.14 1,932

Notes: USDIDR = 13,800

Source: Various publications

Friday, 14 August 2015

MINING/COMPANY UPDATE

Indo Tambangraya Megah Maintaining its targets despite weak demand from China

Following the release of its 1H15 results, we attended the analyst meeting of Indo Tambangraya Megah (ITMG) where the company’s management indicated it would: a) increase its quarterly coal production in 3Q15 to achieve 2015’s coal production target and b) sustain its production plans over the next two years. With the weak coal demand from China, the company plans to shift its target markets toward India and other Asian markets ex China. Looking at the valuation, the stock now offers an attractive dividend yield of about 11% following the sharp correction in the share price. Nonetheless, given the depressed coal prices coupled with concerns over limited reserves, we maintain our HOLD recommendation with a lower Target Price of Rp10,600 (based on DCF valuation with a WACC of 12.9%) since we also cut our coal price assumption.

2Q15 result: weak ASP led to further margins erosion ITMG reported weak net profits of US$58mn (-61% yoy) in 1H15. This reflects: a) lower ASP, b) derivative losses of US$8mn in 1H15 vs. gains of US$45mn in 1H14 and c) a higher tax rate of 37% in 1H15 vs. 25% in 1H14. The net profit was below our previous forecast due to: a) the lower-than-expected coal prices and b) the higher tax rate vs. our assumption of 27% for 2015. While the coal sales volume inched up 1% yoy, the revenues dropped 15% yoy due to 15% yoy lower coal ASP. Although the company managed to lower its cash cost of production by 22% thanks to a decline in the stripping ratio and lower fuel prices, the gross margin remained thin as a result of weak ASP. In 2Q15, net profits sank 46% qoq to US$20mn on the back of: a) weak ASP and b) derivatives losses of US$10mn in 2Q15 vs. gains of US$2mn in 1Q15.

Expecting better coal production in 2H15 to achieve the full year target With 1H15 coal production reaching 48.8% of the full year target, we expect the company to increase its coal production in 2H15. In 3Q15 alone, we expect coal production to reach 7.7mn tons (+4.1% qoq). Looking further ahead, the management aims to deliver consistent annual production of up to 31 – 32mn tons over the next two years following completion of Bunyut port expansion in 4Q15, which will increase coal production at Trubaindo – Bharinto from 10mn tons in 2015 to 13mn tons in 2017.

About 92% of 2015’s coal sales have been contracted Despite indications of abundant supply of low-rank coal in Indonesia- as reflected in the weak coal sales reported by several coal mining companies - ITMG is nonetheless expected to maintain its coal sales target of 30.0mn tons and coal production target of 29.5mn tons for 2015. As about 92% of the company’s coal sales volume for 2015 has been contracted, and with only 8% unsold by the end of 1H15, we believe the coal sales volume for 2015 looks achievable.

Attractive dividend yield after sharp share price correction While the weak coal price led to a reduction in the company’s dividend payout ratio to 80% from 2014’s net profit vs. 85% from 2011 – 2013’s net profits, we still expect the company to maintain a high payout ratio. Looking at the valuation, the stock now offers an attractive 2016F dividend yield of about 11% partly due to the sharp correction in the share price due to China’s stock market crash and the adverse impact of Chinese Yuan devaluation relative to the US Dollar.

2013 2014 2015F 2016F 2017F

Revenue, USD mn 2,179 1,943 1,657 1,704 1,781

EBITDA, USD mn 375 299 256 261 267

EBITDA Growth, % -41.0 -20.1 -14.5 1.8 2.4

Net profit, USD mn 205 200 123 136 142

EPS, USD 0.181 0.177 0.109 0.121 0.125

EPS growth, % -52.6 -2.3 -38.4 10.6 3.9

BVPS, USD 0.795 0.795 0.800 0.839 0.877

DPS, USD 0.238 0.177 0.104 0.082 0.087

Net Gearing, % -32 -23 -27 -30 -36

PER, x 5.1 5.1 6.7 6.0 5.9

PBV, x 1.2 1.1 0.9 0.9 0.8

EV/EBITDA, x 2.0 2.7 2.2 2.0 1.7

Yield, % 25.6 19.5 14.3 11.4 11.8

HOLD Target Price, Rp 10,600

Upside 10.9%

ITMG IJ/ITMG.JK

Last Price, Rp 9,550

No. of shares (mn) 1,130

Market Cap, Rpbn 10,791 (US$ mn) 784

3M T/O, US$mn 1.9

Last Recommendation

15-May-15 HOLD Rp16,000

12-May-15 HOLD Rp18,500

25-Feb-15 HOLD Rp18,500

ITMG relative to JCI Index

Market Recommendation

Consensus

Our Cons % Diff

Target Price, IDR 10,600 15,027 (29.5)

EPS 2015F, IDR 1,500 550.7 172.5

PE 2015F, x 6.7 17.3 (61.4)

Stefanus Darmagiri (62-21) 2955 5777 ext3530 [email protected] Danareksa research reports are also available at Reuters Multex and First Call Direct and Bloomberg.

-70

-60

-50

-40

-30

-20

-10

0

10

8,000

13,000

18,000

23,000

28,000

33,000

Jul-

14

Au

g-1

4

Sep

-14

Oct

-14

No

v-1

4

Dec

-14

Jan

-15

Feb

-15

Mar

-15

Ap

r-1

5

May

-15

Jun

-15

Jul-

15

ITMG (LHS) Relative to JCI (RHS)

(Rp) (%)

11

12

6

Buy

Hold

Sell

14 August 2015 Indo Tambangraya Megah

2

Exhibit 1. Weak ASP depressed net profit

Operational performance 1Q15 2Q15 QoQ,% 1H14 1H15 YoY, % 2015F A/F, %

Sales volume, mn tons 7.1 6.9 (3) 13.8 14.0 1 29.5 47

Production volume, mn tons 6.9 7.4 6 14.0 14.3 2 29.5 48

ASP, USD/ton 60.5 57.2 (5) 69.7 58.9 (15) 60.5 97

Strip ratio, bcm/ton 8.7 8.6 (1) 9.7 8.6 (11) 9.6 90

Cash production cost, USD/ton 33.5 33.6 0 43.2 33.6 (22) 38.6 87

Total cost, USD/ton 47.0 46.3 (1) 58.0 46.7 (19) 51.7 90

Financial performance 1Q15 2Q15 QoQ,% 1H14 1H15 YoY, % 2015F A/F, %

Net sales, USD mn 428 397 (7) 965 825 (15) 1,784 46

COGS, USD mn (329) (322) (2) (742) (650) (12) (1,416) 46

Gross profit, USD mn 99 75 (24) 223 174 (22) 369 47

Opex, USD mn (40) (37) (6) (79) (77) (2) (166) 47

Operating profit, USD mn 59 38 (36) 145 97 (33) 203 48

Net profit, USD mn 38 20 (46) 148 58 (61) 152 38

Gross margin, % 23.1 19.0 (4.2) 23.1 21.1 (2.0) 20.7 Operating margin, % 13.9 9.5 (4.4) 15.0 11.8 (3.2) 11.4 Net margin, % 8.8 5.1 (3.7) 15.3 7.0 (8.3) 8.5

Source: ITMG, Danareksa Sekuritas

Shifting its target markets to India and Asian countries ex China The management is shifting its target markets from China to India and Asian countries ex China since: a) China’s coal market is still oversupplied (as reflected in China’s weak demand for coal), b) economic headwinds in China haveled to falling power demand and c) the recent move by the People’s Bank of China to devalue the Chinese Yuan will translate into higher import costs of raw materials such as coal. In 2Q15, exports of ITMG’s coal to China declined by 25% qoq to 1.2mn tons. This was offset, however, by higher exports to India, up 27.3% qoq.

3Q15: Expecting normalization in the tax rate Although the company’s quarterly tax rate declined to 34% in 2Q15 from 38% in 1Q15 - mainly attributable to adjustments from numbers in previous years – the tax rate was relatively higher at about 37% in 1H15. In the remaining quarters of 2015 we are expecting normalization in the tax rate, however, and for 2015 we assume a tax rate of about 30%.

Source: ITMG Source: ITMG

Exhibit 2. Expect better coal production in next quarters Exhibit 3. A decline in stripping ratio helped to lower cost

40

50

60

70

80

90

100

110

5.0

5.5

6.0

6.5

7.0

7.5

8.0

8.5

1Q12 3Q12 1Q13 3Q13 1Q14 3Q14 1Q15

US$/ton mn tons

Production Volume (LHS) ASP (RHS)

8

9

9

10

10

11

11

12

12

13

13

5.0

15.0

25.0

35.0

45.0

55.0

65.0

75.0

3Q12 1Q13 3Q13 1Q14 3Q14 1Q15

x US$/ton

Cash Cost (LHS) Stripping Ratio (RHS)


3

Source: ITMG Source: ITMG

Further reducing our coal price assumption Despite the company’s generous dividends and high payout ratio giving rise to an attractive dividend yield of 11%, we maintain our HOLD recommendation on the company given the depressed coal prices coupled with concerns over limited reserves. Our Target Price is cut to Rp10,600 (based on DCF valuation with WACC of 12.9%) as we further reduce our coal price assumption.

Exhibit 6. Changes in our forecast

New

Previous

Change (%)

2015F 2016F 2017F 2015F 2016F 2017F 2015F 2016F 2016F

Coal sales volume, mn tons 29.5 30.2 31.0 29.5 30.2 31.0 0.0 0.0 0.0

Coal production volume, mn tons 29.5 30.2 31.0 29.5 30.2 31.0 0.0 0.0 0.0

Coal Price, USD/ton

58 59 60 65 68 70 (10.8) (13.2) (14.3)

Blended Coal ASP, USD/ton 56 56 57 60 62 64 (7.2) (9.0) (10.8)

Cash Cost, USD/ton

49 49 51 53 53 55 (6.9) (7.4) (8.7)

Revenue (USD mn)

1,657 1,704 1,781 1,784 1,873 1,995 (7.2) (9.0) (10.8)

EBITDA (USD mn)

256 261 267 275 308 330 (7.0) (15.5) (19.2)

Net Profit (USD mn)

123 136 142 152 172 190 (18.6) (20.9) (25.4)

Source: Danareksa Sekuritas

Exhibit 4. Lower ASP depressed margin Exhibit 5. China was still the largest customers (1H15)

0%

5%

10%

15%

20%

25%

30%

35%

40%

1Q12 3Q12 1Q13 3Q13 1Q14 3Q14 1Q15

Gross Margin EBITDA Margin Net Margin

China 20%

India 18%

Japan 17%

Indonesia 13%

Thailand 10%

Philippines 7%

Italy 4%

Korea 3%

Taiwan 3%

Malaysia 1%

Others 4%


4

Exhibit 7.Profit and Loss, USDmn

2013A 2014A 2015F 2016F 2017F

Turnover 2,179 1,943 1,657 1,704 1,781

COGS (1,695) (1,535) (1,316) (1,353) (1,421)

Gross profit 484 408 340 351 359

Operating expenses (172) (172) (156) (167) (174)

Operating profit 312 236 184 184 185

Other income/expenses (17) 26 (8) 3 4

Pre-tax profit 295 262 176 187 189

Taxes (90) (62) (53) (50) (47)

Minority interest 0 0 0 0 0

Net profit 205 200 123 136 142


Exhibit 8.Balance Sheet, USDmn

2013A 2014A 2015F 2016F 2017F

Cash 289 226 260 302 372

Account Receivables 169 170 155 159 166

Inventories 118 150 105 108 113

Other current assets 30 23 23 23 23

Total current assets 607 570 543 591 674

Fixed assets 338 305 317 324 301

Other noncurrent assets 383 433 425 417 408

Total assets 1,327 1,307 1,285 1,332 1,383

Account payable 183 179 151 155 162

Short term debt 0 0 0 0 0

Other current liabilities 192 185 185 185 185

Total current liabilities 375 364 336 340 347

Long term debt 0 0 0 0 0

Other noncurrent liabilities 54 45 45 45 45

Total noncurrent liabilites 54 45 45 45 45

Share capital 64 64 64 64 64

Excess paid in 329 329 329 329 329

Retained earnings & others 506 506 511 555 598

Total equity 898 899 904 948 991

Total equity & liabilities 1,327 1,307 1,285 1,332 1,383



5

Exhibit 9.Cash Flow, USDmn

2013F 2014A 2015F 2016F 2017F

Net income 205 200 123 136 142

Depreciation and amortisation 74 70 72 77 82

Change in working capital 44 (53) 32 (3) (5)

Others (180) (21) 0 0 0

Operating cash flow 143 195 228 210 219

Capex (44) (36) (76) (76) (50)

Others (2) (22) 0 0 0

Investing cash flow (47) (58) (76) (76) (50)

Dividends (269) (200) (118) (93) (98)

Net change in debt 0 0 0 0 0

Others 0 0 0 0 0

Financing cash flow (269) (200) (118) (93) (98)

Net change in cash (173) (63) 34 41 70

Net cash (debt) at beg. 461 289 226 260 302

Net cash (debt) at end. 289 226 260 302 372


Exhibit 10.Key Ratios

2013A 2014A 2015F 2016F 2017F

Gross margin, % 22.2 21.0 20.5 20.6 20.2

Operating margin, % 14.3 12.1 11.1 10.8 10.4

EBITDA margin, % 17.2 15.4 15.5 15.3 15.0

Net margin, % 9.4 10.3 7.4 8.0 8.0

ROA, % 14.8 15.2 9.5 10.4 10.4

ROE, % 22.0 22.3 13.7 14.7 14.6

Net gearing, % (31.8) (23.0) (26.6) (29.8) (35.6)


TRADE OUTLOOK

MONTHLY REPORT

∂Ri/1212/to/2015

August 2015

∂Ri D A N A R E K S A R E S E A R C H I N S T I T U T E

While June exports and imports both rose on a monthly basis, they were still downon an annual comparison. Exports (+5.9% MoM, -12.8% YoY) reached US$ 13.4bn, or still higher than imports (+11.6% MoM, -17.4% YoY) which reached US$12.9 bn. As a result, the trade balance recorded another surplus. In June the surplusreached US$ 477 mn. This was below the median estimate of US$ 496 mn but higherthan our projection of US$ 359.5 mn. Year-to-date, the cumulative trade surplushas reached US$ 4.3 bn, or a big improvement over the deficit of US$ 1.1 bnrecorded in the same period last year.

The sales of Indonesia’s major non oil and gas export products were mixed.Compared to the previous month, exports of animal and vegetable fats (HS 15) andelectrical machinery and equipment (HS 85) posted an increase, while exports ofmineral fuels (HS 27) declined. In the first semester of 2015, the exports value ofthe top three commodities continued to contract. By destination, exports to the U.S.topped the list of major destination countries (accounting for 11.5 percent ofIndonesia’s non oil and gas exports), ahead of China (9.7 percent) and Japan (9.8percent).

On a monthly basis, the major types of Indonesia’s non oil and gas imports postedincreases. Imports of mechanical machinery and equipment (HS 84) and electricalmachinery and equipment (HS 85) were up 26.3 percent and 12.9 percent MoM,respectively. In the first half of 2015, however, imports of these goods were loweron a yearly comparison. Looked at by the classification of use, the imports of alltypes of goods were also higher on a monthly basis. Imports of raw materials, capitalgoods and consumption goods rose by 12.1 percent, 10.9 percent, and 8.9 percentMoM, respectively.

Imports of non oil and gas products from China (which have a 24.2 percent shareof Indonesia’s non oil and gas imports) and from Japan (with a 11.8 percent share)jumped by 17.3 percent and 22 percent MoM, respectively. However, imports fromSingapore (with a 6.9 percent share) fell by 26.3 percent.

In recent release, the performance of Indonesia’s major trading partners was mixed.The economies of China and Japan look steady while the U.S. economy is continuingto make further progress. The Chinese economy, by comparison, continues to slowwith flattish GDP growth of +7.0 percent YoY in Q2 2015. Other current indicatorsin China also indicate weakness: easing inflation and retail sales, as well as slowingmanufacturing activity. For Japan, despite the soft inflation and weak retail sales,industrial expansion did provide an encouraging signal of a pick-up in activity whilebusiness capital spending has remained strong. In the U.S., strong consumerspending fueled economic recovery.

The Indonesian economy grew at a slower pace in the second quarter of 2015 (+4.6percent YoY). Slower growth in domestic consumption and investment - coupledwith falling exports - have put the brakes on the economy. The benchmark rate hasbeen kept unchanged and the rupiah has continued to falter.

In view of the latest developments, Indonesia’s exports are predicted to remainsluggish over the near term. Indeed, better export figures look unlikely given themixed economic prospects for Indonesia’s major trading partners in addition to thecurrently depressed prices of Indonesia’s major commodity exports. Slowingdomestic demand, meanwhile, is putting pressure on imports. All in all, we expectIndonesia’s exports to reach US$ 13.0 bn in July 2015, with imports reaching US$12.5 bn. This would give a trade surplus of US$ 532.6 mn in July 2015.

July Outlook: Stagnant

Forecast for July 2015

Exports US$ 13.0 bn

Imports US$ 12.5 bn

Trade Surplus US$ 532.6 mn

Forecast for 2015

Exports US$ 182.8 bn

Imports US$ 180.3 bn

Trade balance US$ 2.5 bn

DAMHURI NASUTION

Head of Economic Research

(62-21) 29555777/ 888 ext 3602

[email protected]

HANDRI THIONO

Economist

(62-21) 29555777/ 888 ext 3606

[email protected]

www.danareksa-research.com

TRADE OUTLOOK

2∂Ri DANAREKSA RESEARCH INSTITUTE

Indonesia’s Exports and Imports

Source: BPS

2015 Full Year Exports

Source: BPS, Danareksa Research Institute

2015 Full Year Imports

Source: BPS, Danareksa Research Institute

0

2

4

6

8

10

12

14

16

18

20

Jan-

13

Feb-

13

Mar

-13

Apr

-13

May

-13

Jun-

13

Jul-1

3

Aug

-13

Sep-

13

Oct

-13

Nov

-13

Dec

-13

Jan-

14

Feb-

14

Mar

-14

Apr

-14

May

-14

Jun-

14

Jul-1

4

Aug

-14

Sep-

14

Oct

-14

Nov

-14

Dec

-14

Jan-

15

Feb-

15

Mar

-15

Apr

-15

May

-15

Jun-

15

US$ Bn

(3.000)

(2.500)

(2.000)

(1.500)

(1.000)

(500)

0

500

1.000

1.500

2.000

Trade Balance (RHS)-US$ Mn

Total Export-LHS

Total Import-LHS

40,746,9

53,9

70,4

50,1

72,5

98,6 97,0 91,1 88,878,3

85,7100,8

114,1

137,0

116,5

157,8

203,5190,0

182,6 176,3 182,8

0,0

50,0

100,0

150,0

200,0

250,0

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

US$ Bn

Jan-June (US$ Bn) Jan-Dec

28,5 28,9 33,7

65,1

41,4

62,9

83,696,4 94,4 90,0

73,9

57,7 61,174,5

129,2

96,8

135,7

177,4191,7 186,6

178,2 180,3

0,0

50,0

100,0

150,0

200,0

250,0

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

US$ Bn

Jan-June (US$ Bn) Jan-Dec

YoY Change in Imports

Source: BPS

(50)

(40)

(30)

(20)

(10)

0

10

20

30

40

Jan-13 Mar-13 Mei-13 Jul-13 Sep-13 Nop-13 Jan-14 Mar-14 Mei-14 Jul-14 Sep-14 Nop-14 Jan-15 Mar-15 Mei-15

(%YoY)

Consumer Goods

Raw Materials

Capital Goods

TRADE OUTLOOK

3∂Ri DANAREKSA RESEARCH INSTITUTE

TABLE 1. SELECTED ECONOMIC INDICATORS

No Country Selected Economic Indicators Period Actual Previous Description

1 China Coincident economic index (CEI) June 276,30 275,20 Both indicators indicate moderating growth in China’s economy over the near termLeading economic index (LEI) June 329,60 326,20Retail sales MoM June 0,96 0,81 Aggregate sales of retail goods and services started to rebound in April 2015Retail sales YoY June 10,60 10,10Inflation rate- MoM June 0,00 (0,20) Heightened pressures from accelerating prices of food components and slowing non

food componentsInflation rate- YoY June 1,40 1,20Benchmark lending rate (%) July 4,85 4,85 The policy was unchanged in July. PBOC’s action in June was the fourth reduction

since Nov 2014 to lift the Chinese economy out of its current slowdown. The PBOCalso reduced the one-year benchmark deposit rate by 25 basis points to 2.0 percent.

Official purchasing managers’ index (PMI) July 50,00 50,20 Easing domestic and exports demand has created aslowdown in China’s manufacturing sector

Gross Domestic Product-YoY Q2 2015 7,00 7,00 Stronger-than-expected numbers indicate a stable Chinese economy over the nearterm

2 Japan Coincident economic index (CEI) May 97,70 97,90 Both indicators indicate moderate growth in Japan’seconomy over the near term

Leading economic index (LEI) May 102,70 102,80Consumer confidence index (CCI) June 41,70 41,40 Improved sentiment toward income growth and employment conditions lifted the

willingness of consumers to buy durable goods in the futureRetail sales MoM June (0,80) 1,67 After rebounding strongly in April, the sales of goods slowed. Consumer buying

tended to ease in the last 2 monthsRetail sales YoY June 0,90 3,00Inflation rate- MoM June (0,20) 0,30 The cost of housing, fuel and transport and communications declined; while the

prices of foods, clothing, education, and medical care rose.Inflation rate- YoY June 0,40 0,50Benchmark rate (%) July 0,10 0,10 The BOJ kept its easing monetary policy unchanged. The BOJ will increase the

monetary base at an annual pace of about 80 trillion yen through the purchase ofJapanese government bonds and other assets (exchange-traded funds, Japanese realestate investment trusts, and corporate bonds).trusts, and corporate bonds).

Markit Purchasing Managers’ Index (PMI) July 51,20 50,10 The operating conditions at Japanese manufactur ers improved driven by expansionin both production and new orders

Core machinery orders-MoM May 0,60 3,80 Corporate capital spending over the next 6-9 months should stay strong

3 U.S. Coincident economic index (CEI) June 112,50 112,30 Solid U.S. economic recovery and strong momentum of expansion remain on trackLeading economic index (LEI) June 123,60 122,90Consumer confidence index (CCI) July 90,90 99,80 Consumer assessments toward the short-term outlook and labor market are less

upbeatRetail sales MoM June (0,30) 1,00 Easing retail sales growth owed to weak sales of auto products and several other

goods (furniture,clothing, building materials)Retail sales YoY June 1,40 2,30Inflation rate- MoM June 0,30 0,40 The YoY inflationary pressure was driven by rising prices of food, housing,

transportation and medical care. Meanwhile, energy costs remained subdued.Inflation rate- YoY June 0,10 0,00Benchmark rate-FFR (%) July 0 - 0.25 0 - 0.25 Remained steady. Rates will be raised when the indicators show further

improvements in the labor market and inflation moves back to around 2 percentISM Manufacturing (PMI)-index July 52,70 53,50 Economic activity in the manufacturing sector expanded in July. Amidst weak

exports, new orders, production, and employment continued to growGross Domestic Product-YoY Q2 2015 2,30 2,90 Strong growth was contributed by a pick-up in consumer spending and exports,

while business investment declined

4 Indonesia Danareksa’s coincident econ. index (CEI) June 123,62 123,09 The Indonesian economy will grow at a moderate pace going forwardDanareksa’s leading econ. index (LEI) June 132,51 132,42Danareksa’s cons confidence index (CCI) July 92,30 92,70 Household assessments towards economic prospects and employment conditions

deteriorated. Consumer buying intentions for durable goods declined in July 2015.

Inflation rate- MoM July 0,93 0,54 Rising prices due to seasonality (Ramadan, Idul Fitri, the start of the new schoolyear). The foodstuffs component (+2.02% MoM) and transportationcomponent (+1.74% MoM) posted the biggest increases.

Inflation rate- YoY July 7,26 7,26Benchmark rate-BI rate (%) July 7,50 7,50 Heightened inflationary pressures over the near term and BI’s goal of improving the

current account mean that BI has little room to cut ratesForex (average USD/IDR) July 13.379,90 13.305,77 The rupiah remained under pressure (depreciating by 0.55% MoM in July), after

falling 1.35% MoM in the previous monthIndonesia commodity price index-MoM July (6,59) (1,63) Global prices of Indonesia’s major export commodities fell significantlyAverage global oil price-MoM July (18,90) (3,28) Continued to declineGross Domestic Product-YoY Q2 2015 4,67 4,72 The Indonesian economy is slowing. From the expenditure side, private consumption

(+4.9% YoY), government consumption (+2.3% YoY) and investment (+3.6% YoY)grew at a slower pace. Exports remained weak (-10.2% YoY). The top three sectorswere manufacturing (+4.4% YoY), agriculture (+6.6% YoY), and wholesale and retailtrade (+1.7% YoY).

Danareksa Research InstituteDanareksa Building

Jl. Medan Merdeka Selatan 14Jakarta, 10110

INDONESIATel : (62-21) 29555 777 / 888 (hunting)

Fax : (62 21) 3501709

All rights reserved. No part of this publication may be reproduced, stored in retrieval systems, or transmitted,in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior

written permission of Danareksa Research Institute.

DISCLAIMER

The information contained in this report has been taken from sources which we deem reliable. However, none of Danareksa Research Institute and/or its affiliated companies and/or their respectiveemployees and/or agents makes any representation or warranty (express or implied) or accepts any responsibility or liability as to, or in relation to, the accuracy or completeness of the informationand opinions contained in this report or as to any information contained in this report or any other such information or opinions remaining unchanged after the issue hereof.We have no responsibility toupdate this report in respect of events and circumstances occurring after the date of this report.We expressly disclaim any responsibility or liability (express or implied) of Danareksa ResearchInstitute and/or its affiliated companies and/or their respective employees and/or agents whatsoever and howsoever arising (including, without limitation for any claims, proceedings, actions, suits,losses, expenses, damages or costs) which may be brought against or suffered by any person as a result of acting in reliance upon the whole or any part of the contents of this report and neitherDanareksa Research Institute and/or its affiliated companies and/or their respective employees and/or agents accepts liability for any errors, omissions or mis-statements, negligent or otherwise, inthis report and any liability in respect of this report or any inaccuracy herein or omission herefrom which might otherwise arise is hereby expressly disclaimed.Accordingly, none of Danareksa ResearchInstitute and/or its affiliated companies and/or their respective employees and/or agents shall be liable for any direct, indirect or consequential loss or damage suffered by any person as a result ofrelying on any statement or omission in any information contained in this report. This report is prepared for general circulation. It does not have regard to the specific person who may receive this

RESEARCH TEAM

Damhuri Nasution Kahlil Rowter Head of Economic Research Chief Economist [email protected] [email protected]

Asti Suwarni Pramayanti MeitisariAnalyst [email protected] [email protected]

Darwin Sitorus Handri ThionoEconomist / Database Officer Junior [email protected] [email protected]

Natalia Daisyana Martin JenkinsResearch Assistant [email protected] [email protected]

Rika PantjawatiExecutive [email protected]

Equity Research



ACST raise target to IDR 2.5tn (BI)

Acset Indonusa (ACST) revising the new contract target to be 25% higher at IDR 2.5tn compared to the initial target of IDR 2tn.

Currently ACST has obtained IDR 1.9tn new contracts, entirely come from private sector, is Thamrin 9 and Indonesia 1. 2015,

ACST targeting revenue and net profit growth of 20% respectively.

BKPM Now Handles Energy, Mining Permits (TJP)

Investors in oil, gas, mineral and coal mining sectors will have some of its permits processed under Investment Coordinating

Board (BKPM)'s one stop policy, which would streamline the business permits. Energy and Mineral Resources Minster, Sudirman

Said, mentioned that he had officially handed over 10 out of 42 permits in oil and gas sector, which include licenses for oil & gas

processing, export recommendations and LNG storing licenses; and 11 others in mineral and coal mining fields, including mining

production and exploration licenses and renewals for production and services licenses to BKPM, which will be effective

immediately.

Frequency sharing regulation to be prepared (BI)

Government opens possibility of operator for sharing frequencies as part of industry efficiency. Currently, the sharing

infrastructure is applied for towers, base stations, and fiber optic cable. However, implementation of sharing frequencies still

face complexities in calculation of usage fees (BHP) of radio frequency. Currently, government is discussing to what extent to

infrastructure sharing is allowed, therefore polemic problems can be avoided.

New Tax Breaks to be Announced Next Week (TJP)

Finance Minister Bambang Brojonegoro has announced that his ministry will introduce a new tax policy on tax holidays next

week, which was designed to lure foreign investors. Previously, Bambang said a revision of prevailing tax holiday would extend

the tax breaks to 20 years from 10 years, and would include more business segments included on the tax holiday plan, which will

include firms in agriculture-processing industry, marine transportation, primary companies and infrastructure.

WIKA Aims to Obtain Sorong Port Contract (ID)

Wijaya Karya (WIKA) is aiming to obtain contract for Sorong Port in West Papua, under PT Pelindo II. WIKA has expressed its

intention to become contractors and investors for the aforementioned project, which is estimated to cost IDR3tn. Previously, on

the port front, WIKA has contracts with Pelindo I on constructing and managing container terminals in Batu Ampar Port in Batam

and Pelintung Dumai. Sorong Port will be built during 2016-2019, and has estimated capacity of 15mn tons.

Hutama Karya Gets IDR481bn Loans for Trans-Sumatra Project (TJP)

Sarana Multi Infrastructure (SMI) has agreed to disburse IDR481bn (USD34.9mn) of loans to Hutama Karya, to help finance part

of the ongoing Trans-Sumatra toll road project. The loans, which will mature in 25 years, will be used mostly to finance the

speeding up construction of Medan-Binjai segment, which has the length of 16.6km and has initial cost of IDR1.6tn. Hutama

Karya's President Director, I Gusti Ngurah Putra, mentioned that Medan-Binjai segment is targeted to be completed by 2017,

having begun in late 2014.

RAPBN is prepared to be semi expansive (BI)

Government prepares a draft budget (RAPBN) for 2016 to be semi expansionary in order to boost the economy and come out of

economic slowdown. State financial posture in the draft budget 2016 is designed to accommodate the region by improving the

allocation of central transfers to the region by 17.66% yoy. State expenditure targeted to reach IDR2,030 trillion, up by 2.3% yoy,

while the budget ministry in 2016 dropped to IDR51 trillion, equivalent to 94.61% budget in 2015. BI projects GDP growth to be

5.4-5.8% with exchange rate of IDR against the USD amounted to IDR13,400 to 13,800 in 2016.

Stress test IDR14,000/USD: Banks still indicates solid durability (BI)

Financial Services Authority (OJK) together with the banking industry players have done stress test under Rupiah assumption of

IDR14,000/USD. Stress test indicates that bank durability still perceived to be solid. Stress test of Bank Mandiri (BMRI) indicates

a CAR of 17.7%.

MARKET NEWS

Price Mkt Cap

Target Rp Bn 2015 2016 2015 2016 2015 2016 2015 2016 2015 2016 2015 2016 2015 2016 2015 2015

Danareksa Universe 2,644,490 196,740 221,699 309.9 349.2 9% 13% 13.4 11.9 11.7 10.6 2.3 2.1 18.7

Auto 270,601 24,706 29,222 452.6 535.3 15% 18% 11.0 9.3 9.0 7.8 1.9 1.7 18.6

Astra International HOLD 6,400 8,300 259,095 23,976 28,096 592 694 497 567 16% 17% 10.8 9.2 9.2 7.9 1.9 1.7 33.5 19.1

Gajah Tunggal BUY 600 1,500 2,091 266 633 76 182 140 127 -1% 138% 7.9 3.3 4.3 4.2 0.3 0.3 95.0 4.4

Selamat Sempurna BUY 4,850 5,300 6,982 465 493 323 342 332 352 19% 6% 15.0 14.2 9.1 8.4 4.9 4.0 net cash 36.0

Banks 902,618 82,338 92,048 764.4 854.6 11% 12% 11.0 9.8 2.1 1.8 21.0

BCA HOLD 13,200 14,050 325,446 19,127 21,921 767 879 767 879 15% 15% 17.2 15.0 NA NA 3.5 2.9 NA 22.4

BNI BUY 4,630 6,600 86,343 11,522 12,657 618 679 618 679 7% 10% 7.5 6.8 NA NA 1.3 1.1 NA 18.2

BRI BUY 10,025 13,400 247,308 26,451 29,202 1,072 1,184 1,072 1,184 9% 10% 9.3 8.5 NA NA 2.1 1.8 NA 24.8

Bank Tabungan Negara BUY 1,155 1,400 12,206 1,357 1,609 129 153 129 153 22% 19% 8.9 7.5 NA NA 0.9 0.8 NA 10.6

Bank Mandiri BUY 9,100 13,600 212,333 21,856 24,422 937 1,047 937 1,047 10% 12% 9.7 8.7 NA NA 1.8 1.5 NA 19.6

Bank Tabungan Pensiunan BUY 3,250 4,500 18,981 2,026 2,237 347 383 347 383 8% 10% 9.4 8.5 NA NA 1.4 1.2 NA 15.8

Cement 131,143 12,525 15,375 725 890 7% 23% 10.5 8.5 6.3 5.4 2.0 1.8 20.0

Holcim HOLD 1,100 2,300 8,429 923 1,213 120 158 118 152 12% 31% 9.1 7.0 5.2 4.0 0.8 0.7 30.0 9.1

Indocement BUY 19,075 28,300 70,220 5,741 6,595 1,559 1,792 1,555 1,788 8% 15% 12.2 10.6 6.9 5.8 2.5 2.2 net cash 21.2

Semen Indonesia BUY 8,850 14,500 52,494 5,861 7,567 988 1,276 988 1,276 5% 29% 9.0 6.9 5.9 5.5 2.0 1.7 12.3 23.2

Construction 109,687 4,586 5,716 108 135 25% 25% 23.9 19.2 11.3 9.6 3.2 2.8 15.2

Jasa Marga BUY 5,400 8,000 36,720 1,531 1,779 480 614 513 657 19% 28% 11.2 8.8 12.6 11.2 2.9 2.7 95.8 12.8

Wijaya Karya BUY 2,665 4,000 16,388 843 1,004 137 164 152 179 37% 19% 19.4 16.3 8.0 6.7 2.8 2.4 8.9 15.4

Pembangunan Perumahan BUY 3,840 4,600 18,595 694 856 143 177 150 185 30% 23% 26.8 21.7 10.8 9.1 6.2 5.0 39.2 25.8

Adhi Karya BUY 2,180 3,700 3,927 399 531 221 295 244 322 23% 33% 9.9 7.4 5.4 4.7 1.9 1.5 66.6 20.8

Waskita Karya BUY 1,780 2,000 24,906 725 1,054 53 78 53 78 4% 46% 33.3 22.9 16.6 13.8 2.8 2.6 net cash 12.5

Wika Beton HOLD 1,050 1,350 9,151 396 491 45 56 46 57 32% 24% 23.1 18.6 12.3 9.9 3.7 3.1 net cash 17.1

Consumer 418,212 13,419 14,186 488 516 7% 6% 31.2 29.5 18.4 17.4 7.3 6.2 25.9

Indofood CBP BUY 12,250 13,800 71,429 3,033 3,308 520 567 520 567 16% 9% 23.5 21.6 16.2 15.3 4.5 4.1 net cash 20.3

Indofood BUY 6,175 7,100 54,219 3,704 4,059 422 462 563 610 -5% 10% 14.6 13.4 6.7 6.4 1.9 1.8 19.5 13.8

Unilever SELL 37,100 30,475 283,073 5,889 6,234 772 817 772 817 3% 6% 48.1 45.4 33.1 31.4 27.7 17.3 net cash 80.4

Nippon Indosari Corpindo BUY 1,160 1,680 5,872 266 309 53 61 53 61 41% 16% 22.0 19.0 12.7 10.2 4.9 4.1 59.5 24.7

Mandom BUY 18,000 21,170 3,619 526 276 2,618 1,375 279 1,373 202% -47% 6.9 13.1 7.7 6.7 2.1 2.0 net cash 35.7

Healthcare 133,623 3,219 3,609 595 703 20% 18% 41.5 37.0 26.3 22.6 7.6 6.8 19.9

Kalbe Farma BUY 1,545 1,925 72,422 2,219 2,375 47 51 47 52 8% 7% 32.6 30.5 21.3 18.7 6.9 6.1 net cash 22.2

Kimia Farma BUY 845 1,500 4,693 258 313 47 56 41 50 12% 19% 18.0 15.1 12.2 9.8 2.3 2.0 2.2 13.5

Siloam Hospital HOLD 15,525 16,900 17,948 153 245 96 132 99 137 77% 38% 162.0 117.4 29.5 23.4 10.2 9.4 35.5 8.9

Mitra Keluarga BUY 26,500 27,400 38,559 589 676 405 464 397 454 14% 15% 65.5 57.1 59.2 50.3 11.6 10.4 net cash 22.9

Heavy Equipment 73,093 5,973 6,297 1,307 1,378 7% 5% 12.2 11.6 5.5 4.6 1.7 1.6 14.6

Hexindo Adiperkasa HOLD 1,755 3,650 1,474 220 260 262 309 238 273 13% 18% 6.7 5.7 3.0 2.1 0.5 0.5 net cash 8.0

United Tractors HOLD 19,200 19,800 71,619 5,753 6,037 1,542 1,619 1,542 1,619 7% 5% 12.4 11.9 5.6 4.7 1.8 1.6 net cash 15.1

Mining 69,404 7,295 8,487 112 130 -17% 16% 9.5 8.2 4.1 3.6 0.7 0.7 7.5

Adaro Energy BUY 498 1,150 15,929 2,095 2,202 66 69 66 69 2% 5% 7.6 7.2 3.2 2.8 0.4 0.5 33.0 6.2

Timah BUY 595 850 4,431 157 237 21 32 21 32 -75% 51% 28.2 18.7 6.8 6.3 0.8 0.8 24.9 2.9

Vale Indonesia BUY 1,835 3,700 18,233 1,386 1,790 140 180 140 180 -36% 29% 13.2 10.2 4.3 3.7 0.8 0.8 net cash 6.2

Aneka Tambang HOLD 545 1,100 5,198 194 400 20 42 20 42 -148% 106% 26.8 13.0 12.2 9.2 0.4 0.4 62.8 1.6

Bukit Asam BUY 5,300 8,400 12,212 1,560 1,674 718 770 718 770 -23% 7% 7.4 6.9 5.2 4.8 1.3 1.2 net cash 17.4

Indo Tambangraya Megah HOLD 9,550 10,600 10,791 1,782 1,982 1,577 1,755 1,577 1,755 -15% 11% 6.1 5.4 2.5 2.3 1.0 1.0 net cash 18.0

Harum Energy HOLD 965 1,750 2,609 119 202 44 75 44 75 -53% 69% 21.9 12.9 0.4 0.3 0.7 0.7 net cash 3.1

Plantation 49,445 5,510 5,938 211 227 11% 8% 9.0 8.3 5.0 4.4 1.3 1.2 14.9

Astra Agro Lestari BUY 19,650 27,100 30,944 2,770 2,832 1,759 1,798 1,759 1,798 4% 2% 11.2 10.9 6.7 6.2 2.6 2.4 net cash 24.5

Sampoerna Agro BUY 1,660 2,600 3,137 464 550 245 291 253 299 18% 19% 6.8 5.7 4.5 3.8 0.9 0.8 31.8 14.5

PP London Sumatra HOLD 1,160 2,090 7,915 1,055 1,133 155 166 155 166 8% 7% 7.5 7.0 3.5 2.8 1.0 0.9 net cash 13.9

Salim Ivomas Pratama BUY 471 850 7,449 1,221 1,423 77 90 87 98 33% 17% 6.1 5.2 3.6 3.2 0.5 0.5 37.6 8.2

Property 98,115 8,896 10,205 87 99 -10% 15% 11.0 9.6 9.8 8.5 1.9 1.7 18.8

Alam Sutera BUY 452 700 8,882 1,254 1,516 64 77 73 85 15% 21% 7.1 5.9 7.4 6.2 1.2 1.1 75.3 18.9

Bumi Serpong Damai BUY 1,670 2,100 32,142 2,369 2,617 135 150 140 156 -36% 10% 12.3 11.2 10.8 9.5 2.1 1.9 net cash 16.6

Metropolitan Land BUY 348 620 2,664 290 322 38 43 38 43 14% 11% 9.1 8.2 6.4 6.0 1.2 1.1 27.7 14.2

Surya Semesta Internusa HOLD 725 1,040 3,411 464 415 99 88 103 93 32% -11% 7.3 8.2 3.1 3.1 1.2 1.0 net cash 16.9

Lippo Karawaci BUY 1,075 1,200 24,809 1,565 1,763 72 82 58 64 -38% 13% 14.9 13.2 11.3 9.7 1.6 1.4 27.3 10.1

PP Properti BUY 166 242 2,331 1,626 1,963 21 26 22 28 172% 27% 8.1 6.4 5.6 5.4 1.1 0.9 8.8 100.6

Summarecon BUY 1,655 2,045 23,876 1,327 1,609 92 111 92 111 -5% 21% 18.0 14.8 13.1 10.9 4.8 3.9 57.1 29.6

Telco & Infrastructure 416,802 19,313 22,528 141 165 28% 17% 21.6 18.5 6.2 5.7 3.4 3.2 17.0

XL Axiata BUY 2,555 4,710 21,823 356 680 42 80 42 80 -140% 91% 61.2 32.1 4.8 4.3 1.5 1.5 120.7 2.5

Indosat BUY 4,255 4,200 23,121 312 588 57 108 38 89 -152% 89% 74.1 39.3 3.9 3.6 1.4 1.4 132.4 2.0

Telkom HOLD 2,825 3,050 284,760 15,554 16,458 158 168 158 168 6% 6% 17.8 16.9 5.7 5.3 3.9 3.6 net cash 22.1

Sarana Menara Nusantara BUY 3,990 4,600 40,710 1,585 2,040 155 200 158 202 89% 29% 25.7 20.0 12.4 10.4 6.6 5.2 108.8 29.2

Tower Bersama HOLD 7,300 8,600 35,015 1,528 2,387 300 429 300 429 9% 43% 24.3 17.0 13.9 11.1 3.0 2.5 129.0 19.3

MNC Sky Vision HOLD 1,610 1,230 11,373 (22) 375 (3) 53 (2) 1 -86% -1776% (508.9) 30.4 11.1 9.7 7.0 5.7 162.0 -1.4

Tranportation 19,391 1,253 1,554 501 621 62% 24% 15.5 12.5 8.6 7.0 4.4 3.5 32.4

Blue Bird BUY 7,750 12,200 19,391 1,253 1,554 501 621 488 608 62% 24% 15.5 12.5 8.6 7.0 4.4 3.5 43.9 32.4

Utility 82,664 11,088 10,313 457 425 3% -7% 7.5 8.0 5.0 5.4 2.0 1.8 28.7

PGN BUY 3,410 6,650 82,664 11,088 10,313 457 425 5,775 5,313 3% -7% 7.5 8.0 5.0 5.4 2.0 1.8 net cash 28.7

Retail 22,708 1,091 1,385 42 53 11% 27% 20.8 16.4 9.7 8.0 2.5 2.3 12.6

Mitra Adi Perkasa BUY 4,595 6,525 7,628 287 492 173 296 183 306 284% 72% 26.6 15.5 8.3 6.5 2.7 2.3 111.8 10.7

Ramayana SELL 675 660 4,790 243 255 34 36 34 36 -31% 5% 19.7 18.8 9.5 8.7 1.4 1.4 net cash 7.2

Ace Hardware BUY 600 780 10,290 561 638 33 37 32 37 2% 12% 18.2 16.2 12.1 10.2 3.7 3.1 net cash 21.7

Core EPS (Rp)Equity

Valuation Rating Price (Rp)

Net profit, Rp bn EPS (Rp) Net Gearing ROE EPS Growth PER (x) EV / EBITDA (x) PBV (x)

Equity Research



LEADERS Price as on

Code 13-Aug-2015 12-Aug-2015 Chg, % w-w, % m-m, % YTD, % Rating

Adhi Karya ADHI 2,180 2,005 8.7 (3.8) (12.8) (37.4) BUY

Bank Tabungan Pensiunan

Nasional BTPN 3,250 3,000 8.3 (0.8) (3.0) (17.7) BUY

XL Axiata EXCL 2,555 2,360 8.3 (10.7) (21.9) (47.5) BUY

Wijaya Karya WIKA 2,665 2,465 8.1 (0.6) (15.4) (27.6) BUY

Kimia Farma KAEF 845 785 7.6 (12.0) (17.2) (42.3) BUY

Aneka Tambang ANTM 545 510 6.9 (11.4) (11.4) (48.8) HOLD

Blue Bird BIRD 7,750 7,275 6.5 (2.2) (0.6) (17.8) BUY

Indofood INDF 6,175 5,800 6.5 2.9 (5.4) (8.5) BUY

Timah TINS 595 560 6.3 (7.8) (4.8) (51.6) BUY

Astra Agro Lestari AALI 19,650 18,500 6.2 (1.8) (24.1) (19.0) BUY

Sources: Bloomberg

LAGGARDS Price as on

Code 13-Aug-2015 12-Aug-2015 Chg, % w-w, % m-m, % YTD, % Rating

Sampoerna Agro SGRO 1,660 1,680 (1.2) - (0.6) (21.0) BUY

United Tractors UNTR 19,200 19,300 (0.5) (0.5) - 10.7 HOLD

Lippo Karawaci LPKR 1,075 1,080 (0.5) (5.7) (9.7) 5.4 BUY

Indofood CBP ICBP 12,250 12,300 (0.4) (3.7) (2.0) (6.5) BUY

Tower Bersama TBIG 7,300 7,325 (0.3) (7.6) (18.4) (24.7) HOLD

Indosat ISAT 4,255 4,260 (0.1) (3.2) (1.0) 5.1 BUY

Mandom TCID 18,000 18,000 - (5.3) (5.3) 2.7 BUY

Mitra Keluarga MIKA 26,500 26,500 - (0.2) 9.6 55.9 BUY

Vale Indonesia INCO 1,835 1,835 - (8.0) (26.3) (49.4) BUY

Summarecon SMRA 1,655 1,655 - (7.0) (8.1) 8.9 BUY

Sources: Bloomberg

COVERAGE PERFORMANCE

Equity Research



Disclaimer

The information contained in this report has been taken from sources which we deem reliable. However, none of P.T. Danareksa Sekuritas and/or its affiliated

companies and/or their respective employees and/or agents makes any representation or warranty (express or implied) or accepts any responsibility or liability as to, or in relation to, the accuracy or completeness of the information and opinions contained in this report or as to any information contained in this report or any other such information or opinions remaining unchanged after the issue thereof.

We expressly disclaim any responsibility or liability (express or implied) of P.T. Danareksa Sekuritas, its affiliated companies and their respective employees and agents whatsoever and howsoever arising (including, without limitation for any claims, proceedings, action , suits, losses, expenses, damages or costs) which may be brought

against or suffered by any person as a results of acting in reliance upon the whole or any part of the contents of this report and neither P.T. Danareksa Sekuritas, its affiliated companies or their respective employees or agents accepts liability for any errors, omissions or misstatements, negligent or otherwise, in the report and any

liability in respect of the report or any inaccuracy therein or omission there from which might otherwise arise is hereby expresses disclaimed.

The information contained in this report is not be taken as any recommendation made by P.T. Danareksa Sekuritas or any other person to enter into any agreement

with regard to any investment mentioned in this document. This report is prepared for general circulation. It does not have regards to the specific person who may receive this report. In considering any investments you should make your own independent assessment and seek your own professional financial and legal advice.

friday, august 14, 2015

Documents