November 2, 2017

Christine Natasya +62-21-515-1140 [email protected] To subscribe to our Daily Focus, please contact us at [email protected]

LPPF 3Q review: below forecast, but valuation is attractive 3Q17 review: Overall, earnings come in below our estimates Market Index Last Trade Chg (%) MoM YoY For 3Q17, LPPF posted net profit of IDR166.9bn (-84.7% QoQ, -63.2% YoY), JCI 6,038.1 0.5 1.6 11.1 bringing cumulative 9M17 bottom line to IDR1.5tr, running short of our full-year MSCI Indonesia 26.8 0.5 0.0 3.1 estimate (68% run rate to our forecast). We were previously too conservative in MSCI EM 1,128.9 0.9 3.3 25.7 forecasting the company’s operating expenses. Notably, the company has been HANG SENG 28,594.1 1.2 2.5 23.8 striving for efficiencies by using LED lightning and taming labor costs, leading to a KOSPI 2,556.5 -0.1 6.8 29.2 higher operating profit vs. the consensus. Therefore, we lowered our operating FTSE 7,488.0 -0.1 0.7 9.5 profit estimates by 8%/5% for 2017F and 2018F. Regarding top line, LPPF booked DJIA 23,435.0 0.2 3.6 30.2 revenue of IDR1.81tr in 3Q17, dropping 53% QoQ and 22.7% YoY. Cumulatively in 9M17, LPPF booked net revenue of IDR7.5tr, running slightly behind our full-year NASDAQ 6,716.5 -0.2 3.2 31.8 forecast (run rate of 70%) and the full-year consensus (run rate of 73%; 9M Valuation usually hovers at 75-76%). We lowered our top-line forecasts by 7%/5% in 2017F 2017F P/E (x) P/B (x) ROE (%) JCI and 2018F, and reduced our SSSG estimates to -2%/2% for 2017F and 2018F, 17.6 2.6 18.5 respectively. Key Rates Last Trade Chg (bps) MoM YoY Expecting a SSSG rebound in 2018F BI 7-Day RR 4.25 0 0 -100 In 9M17, LPPF’s SSSG came in at -2.7%. Its 3Q17 SSSG stood at -26%, mostly 3yr 6.30 -1 26 -58 weighed by a drop in volume (-24.5%) due to the post-Lebaran effect, although its 10yr 6.77 -3 26 -47 average unit retail sales only dropped by -1.7%. Although SSSG was very weak in 3Q17, management actually sees a recovery in August and September SSSG. FX However, they still keep their 2017F SSSG guidance at flat to negative low single Last Trade Chg (%) MoM YoY digits. Meanwhile, management is optimistic for 2018, given the very low base of USD/IDR 13,580.00 0.1 0.2 4.0 2017 and the fact that purchasing power typically rises in a pre-election year. USD/KRW 1,114.40 -0.5 -2.7 -3.0 Upgrade to Trading buy USD/JPY 114.18 0.5 1.3 10.5 USD/CNY 6.60 -0.2 -0.3 -1.9 Although we cut LPPF’s earnings estimates, we upgrade our recommendation on the company to Trading Buy from Hold, as LPPF’s stock price has dropped sharply, Commodities resulting in strong upside potential to our new target price. In addition, we expect Last Trade Chg (%) MoM YoY a turnaround next year due to a very low base from 2017. Although e-commerce WTI 54.3 -0.1 6.7 8.4 might pose a threat to the company, we believe valuation is currently attractive. Gold 1,274.7 0.3 0.3 -1.7 Our target price is now IDR10,100, which implies 13.6x 2018F P/E. Coal 100.0 0.1 2.8 -12.9 Palm Oil 2,804.0 -0.7 2.5 1.7 Rubber 120.5 0.0 -8.1 -9.5 Nickel 12,295.0 5.3 17.1 18.2 Copper 6,839.0 -0.4 5.5 39.0 Monthly SSSG

Tin 19,400.0 0.1 -6.3 -7.1 50%

JCI Index VS MSCI Emerging Markets 40% (pt) (pt) JCI MSCI EM 30% 6,500 1,250 20% 6,000 1,100 10% 5,500 0% 950 5,000 -10%

4,500 800 -20% 10/16 01/17 04/17 07/17 10/17 -26% -30% 1Q13 3Q13 1Q14 3Q14 1Q15 3Q15 1Q16 3Q16 1Q17 3Q17 JCI MSCI EM (pt) (pt) Source: Company data, Mirae Asset Sekuritas Research Indonesia 1,100 5,500 950 Mirae Asset Sekuritas Indonesia 4,500 800

3,500 650 04/13 01/14 10/14 07/15 04/16

Adaro Energy (ADRO IJ) Stronger than expected result

Cumulatively from January to September, Adaro Energy (ADRO) posted stronger-than- Mining expected financial results, with net profit of USD372.5mn, achieving 81.3% of the full- year consensus target. Meanwhile, we leave our earnings estimates unchanged, and hence maintain our target price of IDR2,425 on ADRO, with a Buy rating (as TP implies Company Report 32.9% upside potential). ADRO is currently trading at a P/E of 11.1x and 8.7x in 2017F November 1, 2017 and 2018F, respectively. The short-term downside risk is a drop in global coal prices, which could hit ADRO’s earnings. Solid production numbers for three consecutive quarters (Downgrade) Buy For 3Q17, ADRO posted solid operational numbers, with coal output of 14.2mn tonnes Target Price (12M, IDR) 2,425 (+7.2% QoQ), likely due to conducive weather conditions during 3Q17. Cumulatively in 9M17, ADRO produced 39.4mn tonnes of coal, relatively flat compared to the same Share Price (10/31/17, IDR) 1,825 period last year. For 4Q17, we are optimistic that ADRO will produce 14.6mn tonnes of coal (+2.8% QoQ). Meanwhile, ADRO’s stripping ratio stood at 4.65x in 9M17, while the Expected Return 32.9% company expects full-year stripping ratio of 4.85x. In addition, ADRO’s overburden removal increased to 183.2mn bcm (+4.8% YoY). Growth of both top and bottom lines Consensus OP (17F, IDRbn) 11.5 For 3Q17 top line, ADRO posted single-digit quarterly growth with revenue of EPS Growth (17F, %) 17.0 USD889.6mn (+8.1% QoQ), due to increases in both coal sales volume and ASP. Coal P/E (17F, x) 11.1 sales volume in the quarter reached 14.2mn tonnes (+7.0% QoQ) due to higher coal Industry P/E (17F, x) 9.3 production. Furthermore, ADRO’s coal ASP stood at USD58.8/tonne (+1.3% QoQ). All Benchmark P/E (17F, x) 17.5 in all, ADRO’s 3Q17 net profit expanded to USD150.1mn (+19.8% QoQ). We maintain Market Cap (IDRbn) 59,973.7 our full-year net profit forecasts at USD392mn in 2017 and USD500mn in 2018. Shares Outstanding (mn) 31,986.0 Operating cash flow surged 51.3% YoY Free Float (mn) 14,023.2 Institutional Ownership (%) 53.2 Notably, as of 9M17, ADRO’s operating cash flow surged to USD816.6mn (+51.3% Beta (Adjusted, 24M) 1.3 YoY) due to higher payment from customers, which reached USD2.4mn (+41.1% YoY) 52-Week Low (IDR) 1,395 in 9M17. Meanwhile, ADRO’s interest-bearing debt payment reached USD35.9mn, 52-Week High (IDR) 1,995 relatively flat compared to the same period last year. Going forward, we believe that (%) 1M 6M 12M ADRO is in a better position to manage its operating cash flow over the longer term. Absolute 0.0 2.8 15.1 Maintain TP of IDR2,425; Buy call Relative -1.8 -2.8 4.4 As we leave our earnings estimates unchanged, we maintain our target price for ADRO

(D-1yr=100) JCI ADRO at IDR2,425. We also maintain our Buy call, as our target price now implies 32.9% 130 120 upside potential. ADRO is currently trading at P/Es of 11.1x and 8.7x in 2017F and 110 2018F, respectively. The short-term downside risk is a drop in global coal prices, which 100 90 could hit ADRO’s earnings.

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5/17 8/17 11/16 12/16 1/17 1/17 2/17 3/17 3/17 4/17 5/17 6/17 7/17 8/17 9/17 10/17 10/17 11/16

12/14 12/15 12/16 12/17F 12/18F 12/19F FY (Dec.) PT. Mirae Asset Sekuritas Indonesia Revenue (USDmn) 3,325 2,684 2,524 3,002 3,394 3,609 Gross Profit (USDmn) 720 543 685 959 1,194 1,476 Operating Profit (USDmn) 560 410 534 779 990 1,260 Coal Net Profit (USDmn) 178 152 335 392 500 638

EPS (IDR) 69 66 141 165 211 269 Andy Wibowo Gunawan BPS (IDR) 1,262 1,445 1,595 1,724 1,901 2,125 +62-21-515-1140 (ext: 243) P/E (x) 15.1 7.8 12.0 11.1 8.7 6.8 [email protected] P/B (x) 0.8 0.4 1.1 1.1 1.0 0.9

ROE (%) 5.5 4.5 8.8 9.6 11.1 12.7 ROA (%) 2.8 2.6 5.1 5.2 6.7 7.8 Note: NP refers to net profit attributable to controlling interests Source: Company data, Mirae Asset Sekuritas Indonesia Research estimates

PLEASE SEE ANALYST CERTIFICATIONS AND IMPORTANT DISCLOSURES & DISCLAIMERS IN APPENDIX 1 AT THE END OF REPORT.

Adhi Karya (ADHI IJ) 3Q17 review: Relying on next quarter

Adhi Karya (ADHI) delivered another soft earnings performance in 3Q17, continuing the Construction trend it has exhibited throughout the year. For the quarter, revenue came in at IDR3.5tr (+20.3% QoQ, +37.8% YoY), operating profit at IDR284.5bn (+23.2% QoQ, +69.1% YoY), and net profit at IDR73.8bn (-34.2% QoQ, +23.7% YoY; see Table 1). The 3Q17 results Company Report were below both our expectation and the market consensus, with cumulative 9M17 top November 2, 2017 and bottom lines now meeting just 56.7% and 37%, respectively, of our full-year estimates, and 55.4% and 35.8%, respectively, of the consensus estimates (see Table 2).

(Maintain) Hold Uncertain payment leads to lower burn rate In our view, the main drags on 3Q17 earnings were the huge Jabodebek LRT turnkey Target Price (12M, IDR) 2,170 project and financing expense pressures. Notably, operating cash flow worsened sharply to an outflow of IDR807.3bn in 3Q17 (quadrupling from 3Q16’s outflow of IDR207.9bn; Share Price (11/1/17, IDR) 2,200 see Table 3), weakening ADHI’s ability to recognize its revenue. The cash flow troubles stem from its LRT project, as ADHI must bear most of the construction costs until Expected Return -1.4% December 2017, when the first payment (c.IDR4.5tr) is expected from KAI. This reinforces our view that the key risk to the industry comes from the project owner side (i.e., the government; please refer to our construction report “Escalated systematic risk”

for more details). Given the company’s slower-than-expected burn rate for its colossal Consensus OP (17F, IDRtr) 1.2 LRT project, we cut our burn rate assumption to 52.3% (from 54.2%). Furthermore, EPS Growth (17F, %) 48.5 ADHI’s financing expenses jumped 124.8% while revenue increased only 37.8% YoY; we P/E (17F, x) 16.8 think this highlights the mismatch between its project financing and project payment. Industry P/E (17F, x) 13.2 Benchmark P/E (17F, x) 17.6 Better new contracts signing; Maintain Hold & revise up TP to IDR2,170 Market Cap (IDRbn) 7,833.9 Previously, we had argued that ADHI would encounter difficulties with new contract Shares Outstanding (mn) 3,560.8 signing, given our expectation that the soft property market would hamper building Free Float (mn) 1,744.8 contractor demand (please refer to our ADHI report “Below expectation, soft Institutional Ownership (%) 61.3 underlying” for more details). However, factoring out the Jabodebek LRT project, ADHI Beta (Adjusted, 24M) 0.8 booked IDR10.3tr worth of new contracts in 9M17 (-6.4% YoY vs. IDR11tr in 9M16; see 52-Week Low (IDR) 1,830 Figure 1), better than we expected. Thus, for 2017F, we revise up our new contracts 52-Week High (IDR) 2,470 projection to IDR33.7tr (including LRT). Factoring in our downward revision to burn rate (%) 1M 6M 12M and upward revision to new contracts book, we revise our 2017F revenue and net profit Absolute 10.0 -0.5 -0.5 estimates to IDR13.37tr and IDR465bn, respectively (see Table 4). Relative 7.7 -6.8 -11.9 All in all, we revise up our TP on ADHI to IDR2,170 (from IDR2,000) and maintain our Hold recommendation. Our DCF-based TP reflects a 5.0% perpetual growth rate, 7.5% (D-1yr=100) JCI ADHI 120 risk-free rate, 5.5% market risk premium, 1.21 beta, and 12.6% WACC. ADHI is currently 110 trading at 2018F P/E of 10.2x, slightly above -2 SD from its 5-year average of 9.2x (see 100 Figure 5). 90

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FY (Dec.) 12/14 12/15 12/16 12/17F 12/18F 12/19F PT. Mirae Asset Sekuritas Indonesia Revenue (IDRbn) 8,653.6 9,389.6 11,063.9 13,376.4 22,395.4 25,727.8

Property Operating profit (IDRbn) 642.0 579.2 659.2 1,006.1 1,625.3 1,786.8 OP Margin (%) 7.4 6.2 6.0 7.5 7.3 6.9 Franky Rivan Net profit (IDRbn) 329.1 463.7 313.5 465.3 764.9 876.3 +62-21-515-1140 (ext. 124) [email protected] EPS (IDR) 92.4 130.2 88.0 130.7 214.8 246.1 BPS (IDR) 460.8 1,449.7 1,528.5 2,050.0 2,216.1 2,404.7

P/E (x) 23.8 16.9 25.0 16.8 10.2 8.9

P/B (x) 4.8 1.5 1.4 1.1 1.0 0.9

ROE (%) 20.1 9.0 5.8 6.4 9.7 10.2 ROA (%) 3.1 2.8 1.6 1.9 2.4 2.4 Note: Net profit refers to net profit attributable to controlling interests Source: Company data, Mirae Asset Sekuritas Indonesia Research

PLEASE SEE ANALYST CERTIFICATIONS AND IMPORTANT DISCLOSURES & DISCLAIMERS IN APPENDIX 1 AT THE END OF REPORT.

Pembangunan Perumahan (PTPP IJ) 3Q17 review: Affirmation continues

Construction Pembangunan Perumahan (PTPP) delivered another strong earnings performance in 3Q17, continuing the trend it has exhibited throughout the year. For the quarter, Company Report revenue came in at IDR5.6tr (+8.2% QoQ, +28.9% YoY), operating profit at IDR662.5bn (+1.3% QoQ, +36.9% YoY), and net profit at IDR417.4bn (-5.6% QoQ, +97.4% YoY; see November 2, 2017 Table 1). The 3Q17 results beat expectations, and brought cumulative 9M17 top and bottom lines to 62.1% and 78.1%, respectively, of our full-year estimates, and 59.7% and 72.2%, respectively, of the full-year consensus estimates (see Table 2). (Maintain) Buy New contracts go-getter coupled with ample cash inflow Target Price (12M, IDR) 3,730 We attribute the earnings beat to the company’s impressive new contracts achievement Share Price (11/1/17, IDR) 2,880 as well as robust project payment. In 3Q17, PTPP signed IDR11.7tr worth of new contracts, up 36% YoY (vs. IDR8.6tr in 3Q16). The third-quarter figure brought Expected Return 29.5% cumulative January-September new contracts to IDR31.9tr, up 40.5% YoY (vs. IDR22.7tr in 9M16; see Figures 1 and 2), the biggest increase among its competitors. Furthermore,

we note that the company’s operating cash flow improved sharply to IDR652.5bn in 3Q17 (up 36.7% from 3Q16’s operating cash inflow of IDR477.5bn; see Table 3), which Consensus OP (17F, IDRtr) 2.6 has strengthened PTPP’s ability to recognize its revenue. Given its sizable current order EPS Growth (17F, %) 45.8 book coupled with sound revenue recognition ability, we are upbeat on PTPP’s earnings P/E (17F, x) 12.0 performance going forward. Industry P/E (17F, x) 13.2 Margin expansion followed by low debt burden Benchmark P/E (17F, x) 17.6 Market Cap (IDRbn) 17,855.7 On the back of robust revenue growth, PTPP’s margins have also expanded. In 9M17, Shares Outstanding (mn) 6,199.9 NPM stood at 7.2%, way above the FY16 level of 6.2%. We believe this is likely due to Free Float (mn) 3,032.8 the company’s new high-margin projects such as Kulon Progo airport (IDR6.5tr). We also Institutional Ownership (%) 66.2 highlight the company’s low debt level (see Figures 5 and 6), which has helped margins Beta (Adjusted, 24M) 0.9 through a lower interest burden. For 2017F and 2018F, we revise up our NPM 52-Week Low (IDR) 2,250 assumptions for PTPP to 6.7% (from 5.7%) and 6.3% (from 5.4%), and hence lift our net 52-Week High (IDR) 4,049 profit forecasts to IDR1.49tr (from IDR1.27tr) and IDR1.71tr (from (IDR1.45tr) for 2017F and 2018F, respectively (see Table 4). However, we lower our terminal year (%) 1M 6M 12M margin, as we think normalization should occur over a longer horizon. Absolute 24.7 -3.0 -26.8 Relative 22.3 -9.4 -38.3 Maintain Buy & revise up TP to IDR3,730

(D-1yr=100) JCI PTPP All in all, we revise up our TP to IDR3,730 (from IDR3,610) and maintain our Buy

110 recommendation on PTPP. Our DCF-based TP reflects a 5.0% perpetual growth rate,

90 7.5% risk-free rate, 5.5% market risk premium, 1.2 beta, and 13.1% WACC. PTPP is

70 currently trading at 2018F P/E of 10.5x, slightly above -1.5 SD from its five-year average

50 of 10x (see Figure 7).

5/17 8/17 11/16 11/16 12/16 1/17 1/17 2/17 3/17 3/17 4/17 5/17 6/17 7/17 8/17 9/17 10/17 10/17

PT. Mirae Asset Sekuritas Indonesia FY (Dec.) 12/14 12/15 12/16 12/17F 12/18F 12/19F Property Revenue (IDRbn) 12,427.4 14,217.4 16,458.9 22,142.9 26,925.1 34,230.2

Franky Rivan Operating profit (IDRbn) 1,268.4 1,597.0 1,968.2 2,733.6 3,392.6 4,166.3 +62-21-515-1140 (ext. 124) OP Margin (%) 10.2 11.2 12.0 12.3 12.6 12.2 [email protected] Net profit (IDRbn) 533.4 740.2 1,023.4 1,492.1 1,706.8 2,011.3

EPS (IDR) 86.0 119.4 165.1 240.7 275.3 324.4 BPS (IDR) 376.3 830.2 1,741.3 2,306.2 2,566.5 2,889.6 P/E (x) 33.5 24.1 17.4 12.0 10.5 8.9 P/B (x) 7.7 3.5 1.7 1.2 1.1 1.0 ROE (%) 22.9 14.4 9.5 10.4 10.7 11.2 ROA (%) 3.7 3.9 3.3 3.7 3.7 3.7 Note: Net profit refers to net profit attributable to controlling interests Source: Company data, Mirae Asset Sekuritas Indonesia Research

PLEASE SEE ANALYST CERTIFICATIONS AND IMPORTANT DISCLOSURES & DISCLAIMERS IN APPENDIX 1 AT THE END OF REPORT.

Indonesia Daily Focus Adaro Energy

Local flash

SRIL: Sritex private placement IDR 658 billion. PT Sri Rejeki Isman (Sritex) will conduct a general meeting of shareholders alias GMS in Solo, Central Java. One of the agenda is the implementation of additional capital without preemptive rights (non HMETD) aka private placement. The non-performing exercise price is IDR 354 per share. President Director of PT Sri Rejeki Isman Tbk, Iwan S. Lukminto, in a meeting with media editor, last night (1/11) said that Sritex will issue as many as 1.859 billion new shares. This figure represents 10% of the total issued and paid up capital. With an average share price of IDR 354 per share, SRIL has the potential to raise IDR 658 billion from the corporate action. (Kontan)

HOKI: Buyung Poetra recorded sales of IDR 900 M in Q3. PT Buyung Poetra Sembada Tbk (HOKI) successfully booked sales of IDR 900 billion in Q3 of 2017. This sales increased by 10% compared to the same period the previous year, where in the third quarter of 2016 HOKI achieved sales of IDR 816 billion. According to HOKI Investor Relations, Dion Surijata, the increase in sales is due to the fact that demand is increasing compared to last year. He said, for the third quarter of this year, sales in traditional markets are larger than the modern retail market. (Kontan)

POLY: POLY targets 10% revenue target by year end. PT Asia Pacific Fibers Tbk (POLY) is optimistic that its business target will be achieved until the end of the year. The producer of yarn and polymer fiber will work hard to achieve it. "The revenue growth target is 10 percent compared to last year," said Prama Yudha Amdan, Corporate Communication of PT Asia Pacific Fibers Tbk. Sales of yarn in the third quarter of 2017 dominated the local market POLY by 48% or worth USD 115 million. The number grew 16% over the same period last year, USD 99 million. While fiber sales at the local level fell 8%, from USD 103 million to USD 94 million. (Kontan)

TLKM: Default causes Telkom broke up with CSM. PT Telekomunikasi Indonesia Tbk (Telkom) has suspended its cooperation with PT Citra Sari Makmur (PT CSM) because PT CSM has defaulted on alias breach. PT CSM also experienced some internal problems, one of which arrears of taxes are settled so that PT Telkom avoids the burden of larger accounts. "Telkom does not extend the cooperation with PT CSM not because of tax arrears from PT CSM, but due to the absence of payment settlement of transponder leases from PT CSM to PT Telkom," said Arief Prabowo, Vice President of Corporate Communication Telkom, Wednesday ). (Kontan)

KOBX: Kobexindo Tractors out of the losses. The financial performance of PT Kobexindo Tractors Tbk (KOBX) follows the conducive trend of the coal industry. The exclusive distributor of heavy equipment brands Doosan recorded USD 44.7 million in the first nine months of this year, up 41% over the same period the previous year, USD 31.7 million. "This growth can not be separated from the increasing demand for heavy equipment for the mining industry," said Public Relations Saputro, President Director of KOBX, Wednesday (1/11). The heavy equipment sales segment is still a major contributor to KOBX's revenue. (Kontan)

UNVR: It's Unilever's strategy to increase sales. PT Unilever Indonesia Tbk (UNVR) set a strategy to increase revenue. The reason, this issuer became one of the consumer good issuers that also affected the weak sales. Macroeconomic conditions provide a direct impact on sectoral performance. Hemant Bakshi, President Director of UNVR said to strengthen sales, it added a new product portfolio. This is done along with the interests and market trends. For example, such as Hijab Fresh products launched on 27 September 2017. (Kontan)

Mirae Asset Sekuritas Indonesia 5

Indonesia Daily Focus Adaro Energy

Technical analysis Tasrul +62-21-515-1140 [email protected]

Jakarta Composite Index (JCI) – Test Resistance at 6,050

Summary Item Data Item Data Close (Nov 1, 2017) 6,038.2 (+0.5%) Trading range 6,007 - 6,050 Average index performance (%) 4.60 Target Period 148 - Daily 6,050 r-squared 0.8841 - Weekly 6,076

Volatility (+/-, %) +0.35 / -0.36 - Monthly 6,102 Volatility (+/-, point) +21.13 / -21.74 Stop loss 5,980 Source: Mirae Asset Sekuritas Indonesia Research

Figure 1. Daily trend – Uptrend

^JKSE [ ^JKSE ] - Daily - 11/1/2017 Open: 6,017 High: 6,039 Low: 6,008 Close: 6,038 Vol. 5,673,360,896 Prev. Avg. Price: 6,028.5 6,111.55 R-Squared: 0.8841 Period: 148 _____ 6,049.6 Std.Dev: 1.58 6,044.71 6,038.15 Volatility (+) : 0.0035 _____ 6,006.5 Volatility (-) : -0.0037 5,979.57 V-Ratio : 0.96 5,979.57 Chg.: 0.5% 5,977.56 5,914.42

5,847.59

Optimization Trading System - ©2010

^JKSE - Volume = 5,673,360,896.00, EMA(Volume,10) = 6,122,348,032.00

6,122,348,032 5,673,360,896

Mar Apr May Jun Jul Aug Sep Oct Nov Created w ith AmiBroker - advanced charting and technical analysis softw are. http://w w w .amibroker.com

Source: Mirae Asset Sekuritas Indonesia Research

6

Mirae Asset Sekuritas Indonesia

Indonesia Daily Focus Adaro Energy

Figure 2. Daily MFI optimized,RSI optimized , Stochastic %D optimized & Bollinger Band optimized

^JKSE - MFI Smoothed = 79.92 79.9195

^JKSE - RSI Smoothed = 82.92 82.9189

^JKSE - Stochastic %D = 39.96, MA = 35.00

39.9647 34.9976

^JKSE - Daily 11/1/2017 Open 6017.04, Hi 6038.99, Lo 6008.37, Close 6038.15 (0.5%) BBTop(Average,10,1.58) = 6,033.97, BBBot(Average,10,1.58) = 5,924.26, SMA Typical Price(Average,10) = 5,979.12 6,038.15 5,979.12

^JKSE [ ^JKSE ] - Daily - 11/1/2017 Open: 6,017 High: 6,039 Low: 6,008 Close: 6,038 Chg. 0.5% Vol. 5,673,360,896 Prev. Avg. Price: 6,028.5 R-Squared: 0.8841 _____ 6,049.5 6,038.15 Period: 148 _____ 6,006.7 Std.: 1.58 5,977.56 Volatility (+) : 0.0035 Volatility (-) : -0.0036 5,893.5 V-Ratio : 0.96

Optimization Trading System - ©2010

^JKSE - Volume = 5,673,360,896.00, EMA(Volume,10) = 6,122,348,032.00

6,122,348,032 5,673,360,896

22 29 Jun 12 19 Jul 10 17 24 31Aug 7 14 21 28 Sep 11 18 25 Oct 9 16 23 30 Nov Created w ith AmiBroker - advanced charting and technical analysis softw are. http://w w w .amibroker.com

Source: Mirae Asset Sekuritas Indonesia Research

Mirae Asset Sekuritas Indonesia 7

Indonesia Daily Focus Adaro Energy

Figure 3. Weekly Trend – Uptrend, MFI optimized,W%R optimized , Stochastic %D & Bollinger Band optimized

^JKSE - MFI Smoothed = 94.81 94.8109

^JKSE - Will%R Smoothed = -15.37 -15.3715

^JKSE - Stochastic %D = 69.45, MA = 61.17 69.4504 61.1738

^JKSE - Weekly 11/1/2017 Open 5990.19, Hi 6038.99, Lo 5969.21, Close 6038.15 (1.1%) BBTop(Average,13,1.82) = 6,003.46, BBBot(Average,13,1.82) = 5,790.76, SMA Typical Price(Average,13) = 6,038.15 5,897.11

^JKSE [ ^JKSE ] - Weekly - 11/1/2017 Open: 5,990 High: 6,039 Low: 5,969 Close: 6,038 Chg. 1.1% Vol. 17,407,623,168 6,044.6 _____ 6,076.2 Prev. Avg. Price: 6,015.5 _____ 5,963.5 6,038.15 R-Squared: 0.9308 5,914.32 Period: 51 Std.: 1.82 Volatility (+) : 0.0101 Volatility (-) : -0.0086 V-Ratio : 1.17 Optimization Trading System - ©2010 ^JKSE - Volume = 17,407,623,168.00, EMA(Volume,13) = 27,739,936,768.00

27,739,936,768 17,407,623,168 Mar 24Apr May Jun Jul Aug Sep Oct Nov Dec 2017 Feb Mar Apr May Jun 22Jul Aug 31Sep Oct Nov Created w ith AmiBroker - advanced charting and technical analysis softw are. http://w w w .amibroker.com

Source: Mirae Asset Sekuritas Indonesia Research

Figure 4. Daily : 6,007 – 6,050 Figure 5. Weekly : 5,964 – 6,076 Figure 6. Monthly : 5,948 – 6,102

^JKSE [ ^JKSE ] - Daily - 11/1/2017 Open: 6,017 High: 6,039 ^JKSE [ ^JKSE ] - Weekly - 11/1/2017 Open: 5,990 High: ^JKSE [ ^JKSE ] - Monthly - 11/30/2017 Open: 6,017 High: Prev. Avg. Price: 6,028.5 Prev. Avg. Price: 6,015.5 x Prev. Avg. Price: 6,028.5 x R-Squared: 0.8841 R-Squared: 0.9308 R-Squared: 0.8889 Period: 148 Period: 51 Period: 30 Std.Dev: 1.58 Std.Dev: 1.82 Std.Dev: 1.60 Volatility (+) : 0.0035 Volatility (+) : 0.0101 Volatility (+) : 0.0243 _____ 6,175.0 Volatility (-) : -0.0036 Volatility (-) : -0.0086 _____ 6,076.2 Volatility (-) : -0.0268 V-Ratio : 0.98 V-Ratio : 1.17 V-Ratio : 0.91 6,101.8 Chg.: 0.5% Chg.: 1.1% Chg.: 0.5% _____ 6,049.9 6,038.15 6,038.15 6,028.5 6,038.15 5,947.7

6,015.5 _____ 5,866.9 6,028.5

_____ 6,006.6 _____ 5,963.5

^JKSE - Volume = 17,407,623,168.00 ^JKSE - Volume = 5,673,360,896.00 ^JKSE - Volume = 5,673,360,896.00

5,673,360,896 17,407,623,168 5,673,360,896 23 30 Nov 31 Sep Oct Nov 2017 Apr Jul Oct Created w ith AmiBroker - advanced charting and technical analysis softw are. http://w w w .amibroker.com Created w ith AmiBroker - advanced charting and technical analysis softw are. http://w w w .amibroker.com Created w ith AmiBroker - advanced charting and technical analysis softw are. http://w w w .amibroker.com

Source: Mirae Asset Sekuritas Indonesia Research Source: Mirae Asset Sekuritas Indonesia Research Source: Mirae Asset Sekuritas Indonesia Research

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Chart 7. JCI Vs. USD/IDR Chart 8. JCI performance (absolute vs. relative)

(pt) JCI (L) USD/IDR (R) (IDR) (%, %p) Absolute Relative 6,100 13,800 16 11.7 12 13,700 6,000 8 13,600 4 2.1 0.5 5,900 0.2 13,500 0 -0.3 -4 -1.7 5,800 13,400 -2.1 -8 13,300 5,700 -12 13,200 -16 -15.1 5,600 13,100 -20 8/2 8/30 9/27 10/25 1D 1W 1M 1Y

Note: Relative to MSCI EM Index Source: Bloomberg, Mirae Asset Sekuritas Indonesia Source: Bloomberg, Mirae Asset Sekuritas Indonesia

Chart 9. Foreigner’s net purchase (EM) Chart 10. Energy price

(USDmn) 1 Day 5 Days (D-3M=100) 1,200 1,114 115 CPO WTI Coal

1,000 889 110 800

600 105 400 100 200 129 0 9 0 -13 -32 -3 95 -200 -47 -83 -65 -258 -400 90 Korea Taiwan Indonesia Thailand Philippines India 8/2 8/30 9/27 10/25

Note: The latest figure for India are Oct 30th, 2017 Source: Bloomberg, Mirae Asset Sekuritas Indonesia Source: Bloomberg, Mirae Asset Sekuritas Indonesia

Chart 11. Non-ferrous metal price Chart 12. Precious metal price

(D-3M=100) Copper Nickel Tin (D-3M=100) Silver Gold Platinum 130 120 125 115 120 110 115

110 105

105 100 100 95 95

90 90 8/2 8/30 9/27 10/25 8/2 8/30 9/27 10/25 Source: Bloomberg, Mirae Asset Sekuritas Indonesia Source: Bloomberg, Mirae Asset Sekuritas Indonesia

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Table. Key valuation metrics Price Market Cap Price Performance (%) P/E(X)* P/B(X)* ROE(%)* Company Name Ticker (IDR) (IDRbn) 1D 1W 1M 1Y FY16 FY17 FY16 FY17 FY16 FY17 Jakarta Composite Index JCI 6,038 6,669,996 0.5 0.2 2.3 11.5 17.6 15.5 2.6 2.3 18.5 13.0 FINANCIALS Bank Central Asia BBCA 21,325 525,768 2.0 1.3 5.0 38.0 20.4 18.1 3.5 3.1 18.3 18.0 Bank Mandiri Persero BMRI 7,100 331,333 0.7 1.4 5.6 24.3 12.4 10.5 1.7 1.6 14.2 15.3 Bank Rakyat Indonesia Persero BBRI 15,700 387,306 0.6 0.6 2.8 28.4 12.1 10.8 2.1 1.9 18.2 18.2 Bank Negara Indonesia Persero BBNI 7,925 147,791 4.3 4.3 7.1 43.4 9.7 8.7 1.4 1.2 15.0 15.1 Bank Tabungan Negara Persero BBTN 2,820 29,864 2.2 -6.0 -10.5 47.6 11.1 9.7 1.2 1.1 11.3 12.1 CONSUMER HM Sampoerna HMSP 4,000 465,272 0.5 -0.5 3.6 0.3 33.1 30.6 12.2 11.6 39.0 40.1 Gudang Garam GGRM 71,750 138,053 2.5 13.9 9.0 5.5 16.9 15.3 2.9 2.6 17.8 17.7 Indofood CBP Sukses Makmur ICBP 8,850 103,208 0.6 -0.3 1.4 -3.8 24.2 22.0 4.8 4.3 20.5 20.5 Indofood Sukses Makmur INDF 8,200 71,999 0.0 -3.2 -2.7 -3.5 15.0 13.8 2.1 1.9 13.9 14.3 Kalbe Farma KLBF 1,600 75,000 0.0 -3.6 -3.9 -7.8 27.0 24.1 5.0 4.5 18.6 18.2 Unilever Indonesia UNVR 49,600 378,448 0.0 0.2 1.3 11.6 46.0 40.9 61.7 54.1 145.5 147.2 AGRICULTURAL Astra Agro Lestari AALI 14,575 28,052 0.0 -1.5 -2.0 -2.8 13.9 12.7 1.4 1.3 10.6 10.7 PP London Sumatera Indonesia LSIP 1,500 10,234 -0.7 1.4 6.4 1.7 12.4 11.3 1.2 1.1 9.8 10.0 Sawit Sumbermas Sarana SSMS 1,500 14,288 0.3 0.7 -1.3 -1.3 14.3 11.1 3.1 2.5 21.5 22.8 INFRASTRUCTURE XL Axiata EXCL 3,500 37,408 3.6 2.9 -6.4 59.8 35.1 20.3 1.6 1.5 4.0 6.7 Jasa Marga JSMR 6,425 46,632 -1.2 1.2 14.7 40.9 20.4 19.0 2.7 2.4 13.7 13.4 Perusahaan Gas Negara PGAS 1,845 44,726 0.3 6.3 17.1 -26.8 13.6 13.6 1.1 1.0 8.6 8.1 Tower Bersama Infrastructure TBIG 6,750 30,587 -0.7 3.8 2.7 13.0 20.3 17.0 9.9 8.1 58.1 55.6 Telekomunikasi Indonesia TLKM 3,950 398,160 -2.0 -3.4 -15.6 -5.5 15.4 13.9 3.7 3.4 24.6 25.0 Soechi Lines SOCI 274 1,934 -0.7 -0.7 -3.5 -34.4 2.5 3.4 N/A N/A 9.8 10.2 Garuda Indonesia GIAA 360 9,319 -1.6 5.9 7.8 -3.2 13.3 10.6 2.0 1.8 14.7 16.6 BASIC-INDUSTRIES Semen Indonesia SMGR 10,500 62,281 -3.7 -3.4 3.7 10.5 16.7 14.5 1.9 1.8 11.4 12.5 Charoen Pokphand Indonesia CPIN 3,330 54,605 0.9 4.1 21.5 -10.2 17.4 15.5 3.0 2.6 16.9 18.1 Indocement Tunggal Prakarsa INTP 22,175 81,631 -1.2 1.5 17.3 35.0 26.5 23.2 2.9 2.8 10.8 12.1 Japfa Comfeed Indonesia JPFA 1,340 15,290 -2.5 -5.0 5.5 -31.6 8.4 7.9 1.4 1.3 17.7 17.0 MINING Indo Tambangraya Megah ITMG 22,800 25,762 2.7 0.4 12.6 53.3 8.8 9.0 1.8 1.7 20.2 19.5 Adaro Energy ADRO 1,910 61,093 4.7 0.5 4.7 16.5 10.0 9.4 1.2 1.1 12.5 11.4 Aneka Tambang ANTM 710 17,062 10.1 10.1 10.9 -21.1 87.8 29.5 1.0 1.0 1.1 3.3 Vale Indonesia INCO 3,020 30,008 2.7 1.7 16.6 12.7 44.5 24.7 1.4 1.4 2.4 4.4 Tambang Batubara Bukit Asam PTBA 11,675 26,901 1.7 8.9 11.7 -7.9 7.9 8.1 1.7 1.5 23.4 21.0 TRADE United Tractors UNTR 36,250 135,217 4.5 3.7 13.3 62.7 16.7 15.2 2.9 2.4 16.8 16.8 AKR Corporindo AKRA 7,275 29,146 -2.3 -7.9 2.5 5.8 22.2 18.7 3.4 3.1 16.0 16.8 Global Mediacom BMTR 600 8,519 2.6 -4.8 6.2 -30.2 N/A N/A N/A N/A N/A N/A Matahari Department Store LPPF 9,600 28,012 11.6 5.5 3.5 -43.0 12.6 11.6 8.8 7.0 74.9 65.6 Media Nusantara Citra MNCN 1,540 21,985 -1.3 0.7 16.7 -25.6 12.3 11.5 2.0 1.9 16.6 16.8 Matahari Putra Prima MPPA 595 3,200 2.6 2.6 -9.2 -66.9 94.1 35.2 1.3 1.3 0.7 1.2 Surya Citra Media SCMA 2,190 32,021 1.9 1.9 0.0 -15.4 16.9 15.0 7.1 6.6 43.9 45.5 Siloam International Hospital SILO 9,750 15,851 0.0 3.2 -1.9 -3.2 88.8 73.4 3.2 3.0 3.6 3.8 PROPERTY Bumi Serpong Damai BSDE 1,725 33,201 0.3 -2.0 -2.5 -19.0 12.0 11.3 1.2 1.1 11.0 10.4 Adhi Karya ADHI 2,200 7,834 0.5 -2.2 10.0 -0.5 9.5 7.9 1.2 1.1 12.4 12.8 Alam Sutera Realty ASRI 402 7,899 -1.0 0.5 6.3 -8.2 8.0 7.1 0.9 0.8 11.1 10.9 Ciputra Development CTRA 1,215 22,551 0.4 0.0 1.7 -20.1 17.0 14.7 1.6 1.5 9.5 9.8 Lippo Karawaci LPKR 675 15,577 -2.2 -4.3 -6.9 -25.0 13.4 12.9 0.7 0.8 5.7 6.0 Pembangunan Perumahan PTPP 2,880 17,856 1.1 0.3 24.7 -26.8 10.5 8.4 1.4 1.3 13.9 14.9 Pakuwon Jati PWON 640 30,822 1.6 -3.0 4.9 -9.9 13.9 12.6 2.4 2.1 18.4 17.4 Summarecon Agung SMRA 1,020 14,715 -1.4 0.5 -4.2 -32.7 29.2 25.2 2.0 1.8 7.1 7.5 Wijaya Karya WIKA 1,950 17,491 -1.0 -4.9 8.9 -17.1 11.5 10.0 1.2 1.2 11.2 11.8 Waskita Karya WSKT 2,100 28,505 -0.9 -5.4 18.3 -19.2 8.3 7.7 1.5 1.3 18.3 17.1 MISCELLANEOUS Astra International ASII 8,075 326,905 0.9 -0.9 2.2 -3.0 15.0 13.6 2.4 2.2 16.0 16.6 Source: Bloomberg, Mirae Asset Sekuritas Indonesia

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*Note: Valuation metrics based on Bloomberg consensus estimates

Sector performance Top 10 market cap performance Name Index Chg (%) Ticker Price Market Cap (IDRbn) Chg (%) Agricultural 1,761.8 0.0 LPPF IJ 9600 28,012 11.63 Mining 1,643.8 2.2 ANTM IJ 710 17,062 10.08 Basic-Industry 671.4 -1.1 TINS IJ 895 6,666 9.1

Miscellaneous Industry 1,364.1 0.8 TKIM IJ 3050 9,495 5.17 Consumer Goods 2,559.3 0.5 MEGA IJ 3100 21,588 5.08 Property & Construction 507.1 -0.5 INPP IJ 650 7,268 4.8 Infrastructure 1,129.8 -0.9 ADRO IJ 1910 61,093 4.66

Finance 1,047.3 1.2 BUMI IJ 272 17,782 4.62 Trade 940.5 1.2 UNTR IJ 36250 135,217 4.54 Composite 6,038.1 0.5 MYOR IJ 2140 47,848 4.4 Source: Bloomberg

Top 5 leading movers Top 5 lagging movers Name Chg (%) Close Name Chg (%) Close BBCA IJ 2.0 21,325 TLKM IJ -2.0 3,950 BBNI IJ 4.3 7,925 TPIA IJ -3.9 27,300 UNTR IJ 4.5 36,250 SMGR IJ -3.7 10,500 GGRM IJ 2.5 71,750 RIMO IJ -4.8 600

ASII IJ 0.9 8,075 INTP IJ -1.2 22,175 Source: Bloomberg

Economic Calendar Time Currency Detail Forecast Previous 12:15am CHF Gov Board Member Zurbrugg Speaks

1:00am USD FOMC Statement

1:00am USD Federal Funds Rate <1.25% <1.25% 3:15am CAD BOC Gov Poloz Speaks

6:50am JPY Monetary Base y/y 15.7% 15.6% 7:30am AUD Trade Balance 1.42B 0.99B 7:30am AUD Building Approvals m/m -0.9% 0.4% 12:00pm JPY Consumer Confidence 43.6 43.9 1:45pm CHF SECO Consumer Climate 0 -3 3:15pm CHF Retail Sales y/y 0.3% -0.2% 3:15pm EUR Spanish Manufacturing PMI 54.8 54.3 3:45pm EUR Italian Manufacturing PMI 56.6 56.3 3:50pm EUR French Final Manufacturing PMI 56.7 56.7 3:55pm EUR German Final Manufacturing PMI 60.5 60.5 3:55pm EUR German Unemployment Change -10K -23K 4:00pm EUR Final Manufacturing PMI 58.6 58.6 4:30pm GBP Construction PMI 48.3 48.1 Tentative EUR Spanish 10-y Bond Auction 1.63|1.8

Tentative EUR French 10-y Bond Auction 0.88|1.9

6:30pm USD Challenger Job Cuts y/y -27.0%

7:00pm GBP BOE Inflation Report

7:00pm GBP MPC Official Bank Rate Votes 6-0-3 2-0-7 7:00pm GBP Monetary Policy Summary 7:00pm GBP Official Bank Rate 0.50% 0.25% 7:00pm GBP Asset Purchase Facility 435B 435B 7:00pm GBP MPC Asset Purchase Facility Votes 0-0-9 0-0-9 7:30pm GBP BOE Gov Carney Speaks 7:30pm USD Unemployment Claims 235K 233K 7:30pm USD FOMC Member Powell Speaks 7:30pm USD Prelim Nonfarm Productivity q/q 2.5% 1.5% 7:30pm USD Prelim Unit Labor Costs q/q 0.5% 0.2%

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9:30pm USD Natural Gas Storage 63B 64B 11:20pm USD FOMC Member Dudley Speaks Note: Time is based on Indonesian local time Source: Forex Factory

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