Equity Research Tuesday, July 14, 2015
MORNING HIGHLIGHT
FROM EQUITY RESEARCH Key Index Chg Ytd Vol Close Weekly report: Lebaran exodus begins (Overweight) (%) (%) (US$ m) As the Lebaran festivities rapidly approach, millions of people (many of Asean - 5 them urban residents) will soon travel to their hometowns, bringing Indonesia 4,894 0.7 (6.4) 210 economic activities in many industries to a halt during this period. This Thailand 1,491 0.4 (0.5) 940 year, the Ministry of Transportation expects a 2% increase in total Philippines 7,496 1.4 3.7 103 passenger numbers, with the number of train passengers expected to Malaysia 1,716 0.0 (2.6) 436 record the largest increase. There will consequently be a huge Singapore 3,311 1.0 (1.6) 680 redistribution of wealth to the country’s smaller cities and towns, especially Regional since incomes have been boosted by payment of the mandatory 13 China 3,970 2.4 22.7 267 month’s salary. This will give a timely boost to demand, noting that its pre- Hong Kong 25,224 1.3 6.9 17,827 Lebaran level this year was below that of previous years. Japan 20,090 1.6 15.1 12,048 Korea 2,062 1.5 7.6 5,921 ADHI: Supportive meeting bodes well for LRT projects Taiwan 9,034 1.3 (2.9) 3,297 (ADHI IJ. Rp 2,500. BUY. TP Rp 3,700) India 27,961 1.1 1.7 401 The President held a cabinet meeting yesterday attended by the NASDAQ 5,072 1.5 7.1 71,770 Coordinating Minister for the Economy, the Minister of Transportation, as Dow Jones 17,978 1.2 0.9 7,490 well as representatives from the Jakarta provincial government and ADHI to specifically discuss the proposed railway project. The government wants Currency and Interest Rate w-w m-m ytd to start the project as soon as possible even with the possibility of taking Rate (%) (%) (%) over the project once it is completed using the state budget. In our view, Rupiah (Rp/1US$) the government’s commitment to get the project off the ground will serve 13,298 0.4 0.2 (7.3) SBI rate (%) as a positive catalyst for the company which will be able to undertake the 6.67 (0.3) (0.3) (0.6) 10y Gov Indo bond 8.25 0.0 (0.4) 0.5 construction works without having any burden placed on its balance sheet going forward. Yet, the main risk could arise from this project relates to the Hard Commodities d-d m-m ytd price settlement between the contractor and the government in the future. Unit Price (%) (%) (%)
Previous Reports: Coal US$/ton 59 n/a 3.4 (17.8) . TINS: Stringent regulation to tackle the problem of muted demand- Gold US$/toz 1,157 (0.1) (2.1) (2.4) Snapshot20150713 Nickel US$/mt.ton 11,713 4.4 (10.5) (22.3) . Cement: Still not much improvement-Snapshot20150710 Tin US$/mt.ton 14,616 2.5 (0.8) (24.8) . Construction: Government tracking – June 2015: Positive surprise!- Soft Commodities Snapshot20150709 d-d m-m ytd Unit Price . MIKA: Sustaining healthy growth-Snapshot20150708 (%) (%) (%)
Cocoa US$/mt.ton 3,347 0.9 5.3 12.7 MARKET NEWS Corn US$/mt.ton 160 1.4 21.0 11.7 *Analysts’ comment inside Crude Oil US$/barrel 58 (1.5) (9.4) 0.9 . Bank Harda to Go Public (TJP) Palm oil MYR/mt.ton 2,185 0.3 (4.4) (4.9) . BBTN wait for interest subsidy (BI) Rubber USd/kg 144 (0.4) (9.1) (5.2) . BJTM prepare IDR 1 trillion fund (BI) Pulp US$/tonne 851 n/a 0.1 (8.7) . BRAU debt restructuring to begin in August (BI) Coffee US$/60kgbag 96 0.4 2.6 14.0 . First Media to sell shares (TJP) Sugar US$/MT 374 0.3 7.7 (4.4) . State Lenders to Submit Pricing Proposals to CDB (TJP) Wheat US$/mt.ton 212 (0.0) 12.8 (4.8) . Soekarno-Hatta connecting train delayed (TJP)
IDX ANNOUNCEMENT
Cash Announcement Code Ex-Date Date Payable Amount (Rp) BBNP 6-Jul-15 30-Jul-15 14 TMAS 6-Jul-15 30-Jul-15 17.81 Source: Bloomberg
Source: KSEI
Danareksa Sekuritas – Equity Research
Equity Research Tuesday, July 14, 2015
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
Agriculture Helmy Kristanto [email protected] (62-21) 2955 824 Automotive Helmy Kristanto [email protected] (62-21) 2955 824 Auto Component Joko Sogie [email protected] (62-21) 2955 5827 Banking Eka Savitri [email protected] (62-21) 2955 5825 Cement Helmy Kristanto [email protected] (62-21) 2955 824 Coal Stefanus Darmagiri [email protected] (62-21) 2955 5831 Construction Joko Sogie [email protected] (62-21) 2955 5827 Consumer Jennifer Frederika Yapply [email protected] (62-21) 2955 5821 Heavy Equipment Stefanus Darmagiri [email protected] (62-21) 2955 5831 Media Lucky Ariesandi, CFA [email protected] (62-21) 2955 5823 Metal Mining Stefanus Darmagiri [email protected] (62-21) 2955 5831 Pharmaceutical Armando Marulitua [email protected] (62-21) 2955 5817 Property Anindya Saraswati [email protected] (62-21) 2955 5820 Retail Anindya Saraswati [email protected] (62-21) 2955 5820 Strategy Helmy Kristanto [email protected] (62-21) 2955 824 Telecommunication Lucky Ariesandi, CFA [email protected] (62-21) 2955 5823 Transportation Joko Sogie [email protected] (62-21) 2955 5827 Utilities Lucky Ariesandi, CFA [email protected] (62-21) 2955 5823 Research Associate Puti Adani [email protected] (62-21) 29555 888 ext.3511
Sales team
Ermawati A. Erman [email protected] (62 21) 29555 888 ext. 3151 Asfarita Andalusia [email protected] (62 21) 29555 888 ext. 3134 Novrita E. Putrianti [email protected] (62 21) 29555 888 ext. 3128 Ehrliech Suhartono [email protected] (62 21) 29555 888 ext. 3132 Yunita L. Nababan [email protected] (62 21) 29555 888 ext. 3145 Bram Taarea [email protected] (62 21) 29555 888 ext. 3127 Martin Joshua [email protected] (62 21) 29555 888 ext. 3126 Laksmita Armandani [email protected] (62 21) 29555 888 ext. 3125 Muhammad Hardiansyah [email protected] (62 21) 29555 888 ext. 3109 Tuty Sutopo [email protected] (62 21) 29555 888 ext. 3121 Upik Yuzarni [email protected] (62 21) 29555 888 ext. 3137
Danareksa Sekuritas – Equity Research
Tuesday, July 14, 2015 Weekly Report OVERWEIGHT Lebaran exodus begins
As the Lebaran festivities rapidly approach, millions of people (many of them urban Foreign fund flow residents) will soon travel to their hometowns, bringing economic activities in many industries to a halt during this period. This year, the Ministry of Transportation expects
Rp, bn
a 2% increase in total passenger numbers, with the number of train passengers
20,000
expected to record the largest increase. There will consequently be a huge
15,000 13,070
10,608 10,608
5,896 5,896 redistribution of wealth to the country’s smaller cities and towns, especially since
10,000 5,281
2,738 2,738 792 792 5,000 212 incomes have been boosted by payment of the mandatory 13 month’s salary. This will
0
give a timely boost to demand, noting that its pre-Lebaran level this year was below
(5,000)
(10,000) that of previous years.
(3,460)
(4,089) (1,317)
(15,000) (5,426) (3,202)
(20,000) (7,954) Indonesia’s annual exodus gets underway (7,402)
The Lebaran exodus has begun and millions of people - many of them urban residents –
Jul-14 Jul-15
Jan-15
Jun-14 Jun-15
Oct-14
Apr-15
Sep-14 Feb-15
Dec-14
Aug-14
Nov-14 Mar-15 May-15 will travel back to their hometowns. During this period, economic activities in many industries will come to a halt as factories are temporarily shut. In the financial sector, 2015 Ytd Regional Performance the Indonesian Stock Exchange will be closed from 16 – 21 July. The Lebaran exodus has
China 19.9 far-reaching ramifications, leading to a redistribution of wealth to smaller cities and Rusia 16.3 towns, mainly in Java. Payment of the mandatory 13 month’s salary will give a vital Japan 13.3 boost to spending, leading to better sales in many industries. In the transportation Korea 6.0 Hongkong 5.5 sector, passenger volumes will rise dramatically, and transportation companies will use Philippines 2.2 this as an opportunity to hike fares - possibly up to double normal prices. The UK 1.6 Transportation Ministry expects the total number of passengers in the Lebaran period S&P 0.9 India 0.6 (H-7 to H+7) to reach 20m people this year, or up 2% from last year, with the number of Dow Jones -0.4 train passengers expected to record the largest increase (+8.5%), while road Thailand -0.9 transportation numbers are expected to fall 6.0% y-y. Given the surge in demand during Malaysia -2.6 Taiwan this period, the government is strictly controlling transportation fare increases, -4.2 % Indonesia -7.0 especially for lower class travel, and tariffs during Lebaran will still need to comply with -10 0 10 20 30 the upper tariff rate of IDR169-187/km (yet still 63% higher than the lower tariff) as regulated earlier this year. Inflation will remain the government’s first priority, as seen in 2015 Ytd Sector Performance its efforts to keep the prices of basic products stable through various market operations China 5.2 at wet markets. Yet inflation is expected to remain elevated, especially in light of the UK 1.3 holiday season and higher transportation fares during this period. In addition, the start Dow Jones 0.2 of the new school year will also add to inflationary pressures in July. S&P 0.0 A welcome improvement this year is better road connectivity, as the Cipali toll road is Thailand -0.3 now fully operational. This new toll road is the missing link which connects the Cikampek Rusia -0.5 Malaysia -1.1 toll road in the eastern part of Jakarta to the Palimantan toll road in West Java. The India -1.5 newly-opened Cipali toll road is reported to be experiencing massive congestion, Singapore -1.9 however, with queues at the exit gate reaching 5km. Aside from its shorter route, Philippines -1.9 travelers are keen to try the toll road since it bypasses many points of congestion along Indonesia -2.5 Japan -3.7 the Northern Route (Pantura). With this new toll road section, traffic on Pantura saw a considerable decline with private vehicle volume was reportedly down 91% last Hongkong -4.5 % Taiwan -4.7 weekend. While better road connectivity is always good, economic activities along the -10 -5 0 5 10 Pantura road which had usually been brisk during heavy traffic are likely to decline in the short-term. The Transportation Ministry expects private 4W usage to increase 5.8% during this year’s Lebaran period to 1.69m vehicles (more details on Exh 08).
Pre-Lebaran demand has lifted sales, although not significantly Helmy Kristanto In the currently weak economy, the Pre-Lebaran demand looks to be on the low side. (62-21) 2955 5824 [email protected] Cement sales only rose 7-8% m-m in May/June this year (in the lower range of 7-14% increases in prior years), 4W sales only edged up 3% m-m in June vs 6-8% in previous years, and the sales performance of retailers (RALS) was only half that of last year’s. Going forward, we don’t yet expect the currently soft demand to show an improvement.
Nonetheless, there are some encouraging signs that government infrastructure spending
is starting to accelerate. This is vital, as increased government spending in 2H will improve overall system liquidity, which ultimately will lead to demand recovery. Following the long holidays, the market will then focus on the release of the 2Q15 Danareksa research reports are also corporate results, which, we believe, will depict further deterioration in the overall available at Reuters Multex and First economy. Despite this, we believe that the market is already anticipating soft figures, Call Direct and Bloomberg. even below those in 1Q15. On a more positive note, since expectations are now running low, disappointing 2Q15 results should not lead to a severe market correction as seen after the announcement of the 1Q15 corporate results and GDP figures.
14 July 2015 Weekly Report
Exhibit 1. Estimated number of homecomer Exhibit 2. Comparison on number million in million 2014 2015 Growth 25 Land transportation 19.6 20.0 Road transportation 5.2 4.9 -5.97% 20 17.3 18.0 Lake, river, crossings transportation 3.6 3.7 3.58% 14.9 15.4 Train 5.1 5.5 8.54% 15 Sea transportation 1.6 1.7 3.00% Air transportation 4.0 4.1 2.56% 10 Total 19.6 20.0 2.06% 5
0 2010 2011 2012 2013 2014 2015*
Air transportation Sea transportation Train Lake, river, crossings transportation Road transportation
Source: Ministry of Transportation Source: Ministry of Transportation
Exhibit 3. Homecomer destination Homecomer origin Homecomer destination Jabodetabek Bandung Surabaya Yogyakarta Jabodetabek 3.47% 2.38% 6.40% West Java 25.82% 56.07% 3.57% 4.80% Central Java 27.27% 14.45% 12.50% 36.80% East Java 13.45% 8.09% 73.21% 9.60% Yogyakarta 6.91% 5.78% 2.38% 25.60% Sumatera 14.18% 5.78% 1.79% 7.20% Kalimantan 2.31% 4.00% Others 12.37% 4.05% 4.17% 5.60% Source: Jakpat, Indonesian Behavior of Homecoming in 2015
Exhibit 4. Number of public transportation provided during Lebaran 2011 2012 2013 2014 2015 Land transportation Road transportation AKAP Bus 21,014 21,395 21,782 22,340 22,544 AKDP Bus 13,676 13,875 14,075 16,415 16,825 Tourism Bus 2,270 2,350 2,432 4,260 5,502 Lake, river, crossings transportation Ro-ro boat 119 137 154 174 187 Fast boat 2 Train Ready for operation locomotive 151 235 320 416 410 Ready for operation coach 1,384 1,594 1,558 1,543 1,637 Number of train 215 262 303 293 340 Sea transportation Total boat 747 784 1,248 1,256 1,264 PELNI boat 27 25 25 25 25 Private ro-ro boat 47 79 26 25 28 Private fast boat 13 13 67 72 74 Private boat melee 600 600 1,049 1,049 1,049 Pioneer boat 60 67 80 84 86 Navi boat 1 1 2 Air transportation Number of planes 299 339 382 430 450 Seat capacity (per day) N/A 43,795 50,747 58,585 69,665
Source: Ministry of Transportation
2
14 July 2015 Weekly Report
Exhibit 5. Estimated peak of homecomers’ flow Peak of homecoming Peak of reverse flow Road transportation 15-Jul-15 20-Jul-15 Lake, river, crossings transportation 15-Jul-15 20-Jul-15 Train 15-Jul-15 21-Jul-15 Sea transportation 14-Jul-15 21-Jul-15 Air transportation 16-Jul-15 21-Jul-15 Source: Ministry of Transportation
Exhibit 6. Estimated number of newcomer to Jakarta Exhibit 7. Bank Indonesia cash supply
person IDR trillion 80,000 40% 140.0 125.2 50% 68,537 70,593 46.5% 118.5 120.0 59,215 30% 103.2 40% 54,757 60,000 51,875 25% 100.0 89.4 47,832 20% 80.3 30% 14% 80.0 40,000 10% 54.8 60.0 3% 20% 0% 40.0 15.4% 14.8% 20,000 11.3% 10% -8% -10% -12% 20.0 5.7% - -20% 0.0 0% 2010 2011 2012 2013 2014 2015 2010 2011 2012 2013 2014 2015
Additional newcommer to Jakarta Cash supply during lebaran Growth Growth in additional newcomer
Source: Ministry of Transportation Source: Various publications
Exhibit 8. Number of private vehicles used (4W) Exhibit 9. Number of private vehicles used (2W)
in million 1.69 in million 1.70 3.00
1.65 2.50 18.0% 2.02 1.60 2.00 7.8% 2.9% 1.55 9.0% 1.50 5.3% 5.8% -8.2% 1.50 0.6% 1.00 -8.6% 1.45 0.50 -27.0%
1.40 - 2010 2011 2012 2013 2014 2015 2010 2011 2012 2013 2014 2015
4W volume Growth in 4W volume 2W volume Growth in 2W volume
Source: Ministry of Transportation Source: Ministry of Transportation
3
14 July 2015 Weekly Report
Exhibit 10. Regional weekly performance Exhibit 11. Regional Ytd 2015 performance
Source: Bloomberg, as of Jul 10, 2015 Source: Bloomberg, as of Jul 10, 2015
Exhibit 12. Average daily transactions Exhibit 13. Foreign fund flows
Source: IDX, as of Jul 10, 2015 Source: IDX, as of Jul 10, 2015
Exhibit 14. Sector weekly performance Exhibit 15. Sector Ytd 2015 performance
Source: Bloomberg, as of Jul 10, 2015 Source: Bloomberg, as of Jul 10, 2015
4
14 July 2015 Weekly Report
Exhibit 16. Regional market valuations Exhibit 17. JCI Valuation 2015F 2016F Philippines 19.4 17.1 Malaysia 16.0 14.7 NKY 18.7 16.9 Singapore 13.6 12.5 JCI 14.7 12.6 Dow Jones 15.8 14.5 Sensex 16.2 13.8 Thailand 15.3 13.4 FTSE 16.0 14.3 Hongkong 12.0 10.9 China 16.3 14.4 Taiwan 12.6 11.7 Average 15.2 13.6
Source: Bloomberg, as of Jul 10, 2015 Source: Danareksa Sekuritas, as of Jul 10, 2015
Exhibit 18. USD/IDR performance Exhibit 19. CDS - 5 years
Source: Bloomberg, as of Jul 10, 2015 Source: Bloomberg, as of Jul 10, 2015
Exhibit 20. Danareksa bonds yield index Exhibit 21. Country risk premium
Source: Danareksa Sekuritas, as of Jul 10, 2015 Source: Danareksa Sekuritas, as of Jul 10, 2015
5
14 July 2015 Weekly Report
Exhibit 22. Winners within our coverage Exhibit 23. Losers within our coverage
Source: Bloomberg and Danareksa Sekuritas, as of Jul 10, 2015 Source: Bloomberg and Danareksa Sekuritas, as of Jul 10, 2015
Exhibit 24. Winners within our coverage (Weekly) Exhibit 25. Losers within our coverage (Weekly)
Source: Bloomberg and Danareksa Sekuritas, as of Jul 10, 2015 Source: Bloomberg and Danareksa Sekuritas, as of Jul 10, 2015
6
14 July 2015 Weekly Report
Exhibit 26. One-week report wrap Date Company Title Key Point
13-Jul-15 TCID Under Fire A fire engulfed TCID’s new factory in Bekasi last Friday, which, in our assessment, looks to be quite severe. Since production at the factory will likely be hampered, we cut our 2015 revenues growth projection to 7.5% from 11.5%. As such, even though the company has insurance we don’t account for insurance payments in our numbers and consequently slash our 2015 net profits projection by 21.85%. With this development, our PE based valuation now looks expensive, prompting us to cut our recommendation to HOLD with a TP of Rp17,350 based on 18.9x 2015PE. 13-Jul-15 TINS Stringent regulation to tackle The government’s move to more tightly regulate the Indonesian tin industry the problem of muted should help tackle the problem of muted tin demand, we believe. This policy demand will involve: a) more revisions to the regulation governing tin trading (to be implemented in August 2015) and, b) President Joko Widodo’s new approach to combat illegal tin mining activities. As a result, the tin price should see upside from its current low of US$14,325/ton. BUY recommendation maintained but with a lower Target Price of Rp850 10-Jul-15 TOWR Speedy Conclusion of iForte Sarana Menara has concluded the acquisition of iForte, a microcell and fiber Acquisition optic operator, from Saratoga early this month for a total value of IDR1tn with cash portion of IDR864bn. However, impact to our valuation is minuscule in the short-term given the small size of iForte compared to SMN. Maintain BUY with slightly lower TP of IDR4,600 10-Jul-15 Cement Still not much improvement Demand was flat m-m in June, with overall 1H15 domestic sales still decline Sector 4.2% y-y. We continue to believe that cement will become one of the main beneficiaries of government infra projects and we started to see the influx of government infra projects in construction companies’ new order book in June. 9-Jul-15 Construction Government tracking – June Monthly new contracts in June 2015 show a positive surprise: the preliminary Sector 2015: Positive numbers from the four state contractors reveal total new contracts of Rp15tn surprise! in this month. Each company booked between Rp2-5tn of monthly new contracts, partly thanks to the influx of long-awaited government projects. In addition to that, there is also more encouraging data from the Ministry of Public Works with budget realization and the government projects signing process speeding up. We reiterate our OVERWEIGHT call on the sector with PTPP and WSKT remaining as our Top Picks. 8-Jul-15 MIKA Initiating Coverage: Sustaining We initiate coverage on Mitra Keluarga with a BUY recommendation and a healthy growth Target Price of IDR27,400 based on DCF valuation. Our Target Price implies 67.7x/59x FY15F/16F P/E and 49.7x/42.1x FY15F/16F EV/EBITDA, putting the stock at a premium to its regional peers. However, we believe this premium is justified given: 1) the stock’s superior EBITDA margin of 34-35% and ROIC compared to its peers, 2) the robust EBITDA and earnings growth of 16.2% and 14.7% CAGR in FY14-17F, and 3) the strong FCF generation. On top of this, the company’s leading position in Indonesia’s healthcare industry combined with its strong hospital brand name and large scale of operations should allow the company to benefit from growing healthcare demand over the longer term. 7-Jul-15 Weekly Evaluating the 1H15 In 1H15, while the overall budget absorption at 26% was not far from that in report government progress previous years, low spending by the Public Works and Transportation ministries has arguably heightened concerns over execution of Indonesia’s infrastructure development. Encouragingly, the government has taken the necessary steps to address the problems, and we expect a better spending profile in 2H15. For the full year, the government expects absorption to reach 91.8%. Meanwhile, the government has also trimmed its growth estimate and revised its currency forecast - although we still see risk on the former.
Source: Danareksa Sekuritas
7 Danareksa Quant Model
14 July 2015 Weekly Report
DQM model commentary: Last week the JCI tumbled, down 2.5% w-w, underpinned by a weakening in most sectors other than trade and services. Nevertheless, our DQM model forecasts a rebound on the market this week as most stocks in our model is forecasted to record positive w-w return. Some of the big caps name such as ASII, UNVR, BBCA, TLKM, BMRI, BBRI, PGAS, SMGR and KLBF are predicted to move into green territory this week. Despite this, our model also forecast some stocks such as GGRM, BSDE, ACES, and MPPA to record a negative w-w return (Please see the details in the table above).
9
Tuesday, 14 July 2015
CONSTRUCTION/ALERT BUY Adhi Karya Target Price, Rp 3,700 Supportive meeting bodes well for LRT projects Upside 48.0% ADHI IJ/ADHI.JK The President held a cabinet meeting yesterday attended by the Coordinating Minister for the Economy, the Minister of Transportation, as well as representatives from the Last Price, Rp 2,500 Jakarta provincial government and ADHI to specifically discuss the proposed railway No. of shares (bn) 1.8 project. The government wants to start the project as soon as possible even with the Market Cap, Rp bn 4,503 possibility of taking over the project once it is completed using the state budget. In (US$ mn) 338 our view, the government’s commitment to get the project off the ground will serve 3M T/O, US$mn 3.07 as a positive catalyst for the company which will be able to undertake the
construction works without having any burden placed on its balance sheet going Last Recommendation forward. Yet, the main risk could arise from this project relates to the price settlement
8-May-15 BUY Rp3,700 between the contractor and the government in the future. 4-May-15 BUY Rp3,700 8-Apr-15 BUY Rp3,700 Possibility of a new scheme In recent weeks rumors have spread related to the possibility of disintegration between ADHI’s proposed LRT routes and the Jakarta provincial government’s proposed LRT JSMR relative to JCI Index routes. This would potentially delay the long-anticipated railway project. As such, in ADHI (LHS) Relative to JCI (RHS) (Rp) (%) yesterday’s meeting, the government indicated its willingness to take over the whole 4000 20 3500 10 LRT project once it is completed using the state budget in order to get the project 3000 0 started as soon as possible. Another reason why the government does not want ADHI to 2500 -10 2000 -20 build the LRT independently relates to the tariffs. If the project is owned by the 1500 -30 government, the government will be able to provide subsidies for LRT tickets – as it has
1000 -40 done for the KRL Commuter Line and Transjakarta. Both the ADHI LRT and the Jakarta
Jul-14
Jan-15
Jun-14 Jun-15
Oct-14
Apr-15
Sep-14 Feb-15
Dec-14
Aug-14
Nov-14 Mar-15 May-15 provincial government’s LRT would be integrated with the KRL Commuter Line,
Transjakarta, and the Jakarta MRT.
Market Recommendation Presidential decrees to be issued soon The government will draft two presidential decrees appointing the Jakarta Buy 12 administration (Jakpro and Pembangunan Jaya) and ADHI to start construction of two Hold 2 different LRT projects in the greater Jakarta area. Thus, Jakpro, Pembangunan Jaya and ADHI will only serve as contractors for the project, in which the railway operator will be Sell 2 determined through an open tender once the project is completed. In our view, the
contractors stand to benefit from such an arrangement as no burden will be placed on Danareksa vs. Consensus their balance sheets post-completion.
Our Cons % Diff Government to use open bidding for the Jakarta-Bandung Express Train Target Price, IDR 3,700 3,658 1.1 Aside from the LRT, the government has also decided to continue the Jakarta-Bandung EPS 2015F, IDR 244 209 16.8 express train. In the near future, the government will hold an open tender to select a PE 2015F, x 11.3 12.0 (-5.6) company that will operate a high-speed train service. The government will appoint an independent party which will determine the criteria for selection of the winning bidder to prevent a conflict of interests. So far, express train operators from both China and Japan have expressed an interest in operating the train service. Through operation of
the Jakarta-Bandung bullet train, travel time on the 150-km route would be slashed to only about 45 minutes compared to the three hours at present. At the current juncture, WIKA is expected to lead the local consortium which would take a 30% share in the US$5bn project.
2013 2014 2015F 2016F 2017F Revenues, Rp bn 9,800 8,654 10,610 12,691 14,526 EBITDA, Rp bn 934 681 982 1,234 1,462 EBITDA Growth, % 16.8 (27.1) 44.2 25.7 18.5 Joko Sogie Net Profit, Rp bn 406 324 399 531 638 (62-21) 2955 5827 Core Profit, Rp bn 480 301 440 580 692 [email protected] Core EPS, Rp 266 167 244 322 384 Core EPS Growth, % 34.4 (37.3) 46.1 31.9 19.4 Net Gearing, % Net cash 83.2 66.6 73.3 72.3 PER, x 11.1 13.9 11.3 8.5 7.1 Core PER, x 9.4 15.0 10.2 7.8 6.5 Danareksa research reports are also PBV, x 2.9 2.6 2.2 1.8 1.5 available at Reuters Multex and First EV/EBITDA, x 4.6 8.8 6.0 5.2 4.6 Call Direct and Bloomberg. Yield, % 0.9 2.7 1.4 1.8 2.4
14 July 2015 Adhi Karya
Exhibit 1. ADHI LRT routes
Source: Company
Exhibit 2. Jakarta provincial government LRT routes
Source: Company
2
Equity Research Tuesday, July 14, 2015
MARKET NEWS
Bank Harda to Go Public (TJP) Private lender Bank Harda Internasional expects to raise IDR109.25-142.5bn (USD8.21-10.7mn) by selling a maximum of 950mn shares, of 25% of its enlarged shares through IPO. Bank Harda's President Director, Antonius Prabowo, mentioned that the proceeds from IPO would be used to strengthen its capital, so that the banks can be a BUKU II lender in 2-3 years. Harda's share price will range from IDR115-150, and the bookbuilding will run until July 23, with the share offering taking place in August 4-6. Listing date will be conducted on August 12. At present the bank is 93.05% owned by PT Hakimputra Perkasa and 6.95% owned by Kwee Sinto.
BBTN wait for interest subsidy (BI) Bank Tabungan Negara (BBTN) is waiting for the interest differential subsidies for housing financing liquidity facility (FLPP). In FLPP scheme, 90% of the value of credit is financed by the government, while the remaining 10% will be financed by bank loan with 5% interest charged. The difference between the lending market rate and FLPP loan interest will be financed by the government. The interest margin scheme is expected to be launched this year. Currently, total of FLPP distribution up to 1H 2015 reached IDR3.9 trillion, or equivalent to 52,000 housing units, growing by 30% yoy. This growth is higher than the growth in individual loans of 18%. Director BBTN predicts the FLPP growth will beat the overall industry growth, considering high demand for housing.
BJTM prepare IDR 1 trillion fund (BI) Bank Pembangunan Daerah Jawa Timur (BJTM) has set aside IDR 1 billion to be channeled to SMEs through linkage scheme with Bank Pengkreditan Rakyat Jawa Timur (BPR Jatim). SME loans is expected to improve the economy of East Java community. Within the linkage scheme, BJTM will earn interest at 2%, while the BPR Jatim will earn 6% per year.
BRAU debt restructuring to begin in August (BI) Berau Coal Energy (BRAU) will start the debt restructuring after obtaining the approval from shareholders for inclusion of the new directors from Sinarmas Group due to be held on August 19, 2015. Currently, BRAU have default for failing to pay USD450 million worth bonds matured on 8 July 2015. Sinarmas Group will enter into BRAU through its subsidiary, Asia Coal Energy Limited (ACE) which will acquire Asia Minerals Resources Plc (ARMS). Subsidiary of ARMS’, Vallar Investment UK Ltd is the largest shareholder with 85% ownership.
First Media to sell shares (TJP) First Media, the media arm of Lippo Group is planning to sell 15% stakes in its broadband wireless business, Internux through Initial Public Offering (IPO) in the third quarter of this year. First Media owns 72% stakes of Internux through Mitra Mandiri Mantap. However, it does not disclose how much it aims to raise from the IPO. Furthermore, First Media is selling stake in internet service provider, Link Net, and it hoped to decide who the buyer is in August.
State Lenders to Submit Pricing Proposals to CDB (TJP) Major state lenders such as Bank Rakyat Indonesia (BBRI), Bank Negara Indonesia (BBNI) and Bank Mandiri (BMRI) are finalizing pricing proposals to secure loans from China Development Bank (CDB), by end of July as part of requirements to access the USD1bn loan for each state lenders, to finance various infrastructure projects. From the discussions so dar, the loan will be in USD as well as in RMB, with interest rates referring to LIBOR and SHIBOR respectively. Maturity periods will vary from 3 to 10 years.
Soekarno-Hatta connecting train delayed (TJP) Ministry of Transportation is postponing the tender process for the Jakarta airport express train as the project’s redesigning stage has not yet been completed. Previously, the train will connect Soekarno-Hatta airport and Halim Perdanakusuma airport. Under the new design, the first phase of construction will connect Soekarno-Hatta airport and either Manggarai or Gambir train station. As the first phase of construction is completed, they will examine the public demand and later they will decide whether we should continue track to Halim or not.
Danareksa Sekuritas – Equity Research Equity Price Mkt Cap Net profit, Rp bn EPS (Rp) Core EPS (Rp) EPS Growth PER (x) EV / EBITDA (x) PBV (x) Net Gearing ROE Rating Price (Rp) Valuation Target Rp Bn 2015 2016 2015 2016 2015 2016 2015 2016 2015 2016 2015 2016 2015 2016 2015 2015
Danareksa Universe 2,864,806 199,274 227,889 313.9 359.0 11% 14% 14.4 12.6 12.5 11.4 2.5 2.2 18.9 Auto 287,183 24,660 29,165 451.7 534.3 15% 18% 11.6 9.8 9.4 8.2 2.0 1.8 18.6 Astra International HOLD 6,800 8,300 275,288 23,976 28,096 592 694 497 567 16% 17% 11.5 9.8 9.7 8.3 2.1 1.8 33.5 19.1 Gajah Tunggal BUY 775 1,500 2,701 266 633 76 182 140 127 -1% 139% 10.2 4.3 4.2 4.0 0.4 0.4 80.8 4.4 Selamat Sempurna BUY 4,600 5,300 6,622 419 437 291 303 291 303 14% 4% 15.8 15.2 9.1 8.6 4.6 4.0 net cash 32.3 Banks 959,624 84,101 95,896 780.8 890.3 13% 14% 11.4 10.0 2.2 1.9 21.3 BCA HOLD 13,500 14,050 332,843 19,127 21,921 767 879 767 879 15% 15% 17.6 15.4 NA NA 3.6 3.0 NA 22.4 BNI BUY 5,475 7,450 102,101 12,142 13,914 651 746 651 746 13% 15% 8.4 7.3 NA NA 1.5 1.3 NA 19.1 BRI BUY 10,475 13,800 258,409 27,391 31,497 1,110 1,277 1,110 1,277 13% 15% 9.4 8.2 NA NA 2.2 1.8 NA 25.2 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 10,050 13,600 234,500 21,856 24,422 937 1,047 937 1,047 10% 12% 10.7 9.6 NA NA 2.0 1.7 NA 19.6 Bank Tabungan Pensiunan BUY 3,350 5,450 19,565 2,228 2,533 381 434 381 434 19% 14% 8.8 7.7 NA NA 1.4 1.2 NA 17.2 Cement 155,918 12,525 15,375 725 890 7% 23% 12.4 10.1 7.5 6.6 2.4 2.1 20.0 Holcim HOLD 1,500 2,300 11,494 923 1,213 120 158 118 152 12% 31% 12.4 9.5 6.6 5.1 1.1 1.0 30.0 9.1 Indocement BUY 21,025 28,300 77,398 5,741 6,595 1,559 1,792 1,555 1,788 8% 15% 13.5 11.7 7.8 6.6 2.7 2.4 net cash 21.2 Semen Indonesia BUY 11,300 18,800 67,026 5,861 7,567 988 1,276 988 1,276 5% 29% 11.4 8.9 7.5 7.0 2.5 2.1 12.3 23.2 Construction 118,786 4,693 5,888 111 139 28% 25% 25.3 20.2 12.4 10.5 3.4 3.0 15.5 Jasa Marga BUY 5,775 8,200 39,270 1,600 1,877 422 547 451 585 25% 30% 13.7 10.6 13.6 12.3 3.1 2.8 116.4 13.4 Wijaya Karya BUY 3,150 4,000 19,370 843 1,004 137 164 152 179 37% 19% 22.9 19.2 9.5 7.9 3.3 2.8 8.9 15.4 Pembangunan Perumahan BUY 4,050 4,600 19,612 694 856 143 177 150 185 30% 23% 28.3 22.9 11.0 9.1 6.6 5.3 18.0 25.8 Adhi Karya BUY 2,500 3,700 4,503 399 531 221 295 244 322 23% 33% 11.3 8.5 6.0 5.2 2.2 1.8 66.5 20.8 Waskita Karya BUY 1,865 2,150 26,095 762 1,129 56 83 56 83 8% 48% 33.3 22.5 19.0 14.8 3.0 2.7 14.9 13.1 Wika Beton HOLD 1,140 1,350 9,936 396 491 45 56 46 57 32% 24% 25.1 20.2 13.5 10.9 4.0 3.4 net cash 17.1 Consumer 447,843 13,660 15,575 497 566 8% 14% 32.8 28.8 19.5 17.6 8.6 7.8 27.8 Indofood CBP HOLD 12,500 13,800 72,887 3,033 3,308 520 567 520 567 16% 9% 24.0 22.0 16.5 15.6 4.6 4.1 net cash 20.3 Indofood BUY 6,525 8,050 57,292 3,811 4,287 434 488 580 650 -2% 12% 15.0 13.4 7.1 6.5 2.0 1.9 19.2 14.1 Unilever SELL 40,350 30,000 307,871 6,365 7,332 834 961 834 961 11% 15% 48.4 42.0 33.8 29.6 57.1 51.2 net cash 129.7 Nippon Indosari Corpindo HOLD 1,180 1,200 5,973 266 377 53 75 53 75 41% 42% 22.4 15.8 12.9 9.1 5.1 4.0 63.0 25.0 Mandom BUY 19,000 17,350 3,820 184 271 916 1,346 915 1,345 6% 47% 20.7 14.1 8.9 7.5 2.8 2.5 9.4 14.1 Healthcare 135,334 3,183 3,593 588 688 19% 17% 42.5 37.7 26.8 22.8 7.6 6.8 19.7 Kalbe Farma HOLD 1,665 1,800 78,047 2,233 2,472 48 53 47 54 9% 10% 34.7 31.4 23.1 20.3 7.4 6.5 net cash 22.4 Kimia Farma BUY 1,020 1,500 5,665 258 313 47 56 41 50 12% 19% 21.7 18.2 14.8 11.9 2.8 2.5 2.2 13.5 Siloam Hospital BUY 14,225 15,750 16,446 102 133 89 115 92 119 64% 30% 160.6 123.8 28.1 20.9 9.4 8.7 64.2 6.0 Mitra Keluarga BUY 24,175 27,400 35,176 589 676 405 464 397 454 14% 15% 59.7 52.1 53.7 45.6 10.6 9.5 net cash 22.9 Heavy Equipment 73,836 5,764 6,341 1,261 1,387 4% 10% 12.8 11.6 5.5 4.7 1.7 1.6 14.1 Hexindo Adiperkasa HOLD 2,640 3,650 2,218 220 260 262 309 238 273 13% 18% 10.1 8.5 4.7 3.7 0.8 0.8 net cash 8.0 United Tractors HOLD 19,200 22,200 71,619 5,544 6,081 1,486 1,630 1,486 1,630 3% 10% 12.9 11.8 5.6 4.7 1.8 1.6 net cash 14.5 Mining 87,112 7,974 9,280 123 143 -8% 16% 10.9 9.4 4.7 4.2 0.9 0.9 8.3 Adaro Energy BUY 620 1,150 19,831 2,095 2,202 66 69 66 69 2% 5% 9.5 9.0 3.7 3.2 0.6 0.6 33.0 6.2 Timah BUY 625 850 4,655 651 765 87 103 92 105 40% 18% 7.2 6.1 3.6 3.2 0.9 0.8 10.2 12.4 Vale Indonesia BUY 2,490 3,700 24,741 1,386 1,790 140 180 140 180 -36% 29% 17.8 13.8 6.0 5.1 1.1 1.1 net cash 6.2 Aneka Tambang HOLD 615 1,100 5,866 194 400 20 42 20 42 -148% 106% 30.2 14.7 12.8 9.6 0.5 0.5 62.8 1.6 Bukit Asam BUY 7,050 13,500 16,244 1,746 1,939 803 892 803 892 -13% 11% 8.8 7.9 6.2 5.4 1.8 1.6 net cash 19.7 Indo Tambangraya Megah HOLD 11,400 16,000 12,881 1,782 1,982 1,577 1,755 1,577 1,755 -15% 11% 7.2 6.5 3.1 2.8 1.2 1.2 net cash 18.0 Harum Energy HOLD 1,070 1,750 2,893 119 202 44 75 44 75 -53% 69% 24.3 14.4 1.3 0.9 0.8 0.8 net cash 3.1 Plantation 64,200 5,510 5,938 211 227 11% 8% 11.7 10.8 6.3 5.7 1.7 1.5 14.9 Astra Agro Lestari BUY 25,900 27,100 40,786 2,770 2,832 1,759 1,798 1,759 1,798 4% 2% 14.7 14.4 8.8 8.3 3.5 3.2 net cash 24.5 Sampoerna Agro BUY 1,670 2,600 3,156 464 550 245 291 253 299 18% 19% 6.8 5.7 4.5 3.9 0.9 0.8 31.8 14.5 PP London Sumatra HOLD 1,555 2,090 10,610 1,055 1,133 155 166 155 166 8% 7% 10.1 9.4 5.1 4.3 1.3 1.2 net cash 13.9 Salim Ivomas Pratama BUY 610 850 9,648 1,221 1,423 77 90 87 98 33% 17% 7.9 6.8 4.2 3.7 0.6 0.6 37.6 8.2 Property 110,154 8,896 10,205 87 99 -10% 15% 12.4 10.8 10.8 9.4 2.2 1.9 18.8 Alam Sutera BUY 560 700 11,004 1,254 1,516 64 77 73 85 15% 21% 8.8 7.3 8.5 7.2 1.5 1.3 75.3 18.9 Bumi Serpong Damai BUY 1,865 2,100 35,895 2,369 2,617 135 150 140 156 -36% 10% 13.8 12.5 12.1 10.6 2.4 2.1 net cash 16.6 Metropolitan Land BUY 360 620 2,729 290 322 38 43 38 43 14% 11% 9.4 8.5 6.5 6.1 1.3 1.1 27.7 14.2 Surya Semesta Internusa HOLD 950 1,040 4,470 464 415 99 88 103 93 32% -11% 9.6 10.8 4.3 4.4 1.5 1.4 net cash 16.9 Lippo Karawaci BUY 1,190 1,200 27,462 1,565 1,763 72 82 58 64 -38% 13% 16.4 14.6 12.4 10.6 1.7 1.6 27.3 10.1 PP Properti BUY 187 242 2,626 1,626 1,963 21 26 22 28 172% 27% 9.1 7.2 6.3 5.9 1.2 1.0 8.8 100.6 Summarecon BUY 1,800 2,045 25,968 1,327 1,609 92 111 92 111 -5% 21% 19.6 16.1 14.2 11.7 5.3 4.2 57.1 29.6 Telco & Infrastructure 436,136 19,313 22,528 141 165 28% 17% 22.6 19.4 6.5 5.9 3.6 3.3 17.0 XL Axiata BUY 3,270 4,710 27,930 356 680 42 80 42 80 -140% 91% 78.3 41.0 5.5 5.0 2.0 1.9 120.7 2.5 Indosat BUY 4,300 4,200 23,366 312 588 57 108 38 89 -152% 89% 74.9 39.7 3.9 3.6 1.5 1.4 132.4 2.0 Telkom HOLD 2,890 3,050 291,312 15,554 16,458 158 168 158 168 6% 6% 18.2 17.2 5.9 5.4 4.0 3.7 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 8,950 8,725 42,929 1,528 2,387 300 429 300 429 9% 43% 29.8 20.8 16.2 12.9 3.7 3.0 129.0 19.3 MNC Sky Vision HOLD 1,400 1,230 9,889 (22) 375 (3) 53 (2) 1 -86% -1776% (442.5) 26.4 9.9 8.6 6.1 5.0 162.0 -1.4 Tranportation 19,516 1,253 1,554 501 621 62% 24% 15.6 12.6 8.8 7.2 4.4 3.5 32.3 Blue Bird BUY 7,800 12,200 19,516 1,253 1,554 501 621 488 608 62% 24% 15.6 12.6 8.8 7.2 4.4 3.5 47.8 32.3 Utility 99,027 11,088 10,313 457 425 3% -7% 8.9 9.6 6.0 6.5 2.4 2.2 28.7 PGN BUY 4,085 6,650 99,027 11,088 10,313 457 425 5,775 5,313 3% -7% 8.9 9.6 6.0 6.5 2.4 2.2 net cash 28.7 Retail 24,987 1,091 1,385 42 53 11% 27% 22.9 18.0 10.6 8.8 2.8 2.5 12.6 Mitra Adi Perkasa BUY 5,400 6,525 8,964 287 492 173 296 183 306 284% 72% 31.3 18.2 9.4 7.4 3.2 2.7 111.8 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 655 780 11,233 561 638 33 37 32 37 2% 12% 19.8 17.7 13.3 11.3 4.0 3.4 net cash 21.7
Equity Research Tuesday, July 14, 2015
COVERAGE PERFORMANCE
LEADERS
Price as on Code 13-Jul-2015 10-Jul-2015 Chg, % w-w, % m-m, % YTD, % Rating Blue Bird BIRD 7,800 6,500 20.0 (1.9) (2.5) (17.2) BUY Surya Semesta Internusa SSIA 950 895 6.1 (0.5) (13.6) (11.2) HOLD Tower Bersama TBIG 8,950 8,500 5.3 - - (7.7) HOLD Adhi Karya ADHI 2,500 2,380 5.0 14.9 22.5 (28.2) BUY Bumi Serpong Damai BSDE 1,865 1,785 4.5 9.1 8.7 3.3 BUY Indosat ISAT 4,300 4,150 3.6 7.5 10.5 6.2 BUY Indofood CBP ICBP 12,500 12,125 3.1 1.8 (6.4) (4.6) HOLD Waskita Karya WSKT 1,865 1,810 3.0 15.1 17.0 30.2 BUY Gajah Tunggal GJTL 775 755 2.6 (9.9) (21.3) (45.6) BUY Perusahaan Gas Negara PGAS 4,085 3,980 2.6 (3.9) (2.7) (31.9) BUY
Sources: Bloomberg
LAGGARDS
Price as on Code 13-Jul-2015 10-Jul-2015 Chg, % w-w, % m-m, % YTD, % Rating Ace Hardware ACES 655 685 (4.4) 4.0 1.6 (16.6) BUY Bukit Asam PTBA 7,050 7,250 (2.8) (14.0) (23.0) (43.6) BUY Adaro Energy ADRO 620 635 (2.4) (16.2) (25.3) (40.4) BUY PP London Sumatra LSIP 1,555 1,590 (2.2) (6.0) (6.0) (17.7) HOLD Bank Tabungan Negara BBTN 1,155 1,180 (2.1) (1.3) 2.7 (4.1) BUY Siloam Hospital SILO 14,225 14,500 (1.9) 0.2 7.8 3.8 BUY Vale Indonesia INCO 2,490 2,530 (1.6) (6.7) (15.4) (31.3) BUY Harum Energy HRUM 1,070 1,080 (0.9) (3.2) (7.8) (35.5) HOLD Alam Sutera ASRI 560 565 (0.9) 1.8 5.7 - BUY Indo Tambangraya Megah ITMG 11,400 11,500 (0.9) (11.6) (13.0) (25.9) HOLD
Sources: Bloomberg
Danareksa Sekuritas – Equity Research
Equity Research Tuesday, July 14, 2015
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Danareksa Sekuritas – Equity Research