DAILY & TECHNICAL UPDATE Friday, April 06, 2018 CIPTADANA SEKURITAS ASIA http://www.ciptadana.com

GLOBAL  Consumer Confidence Index lower in March 2018 Index Last Change % chg  BI to release regulation on averaging minimum reserve requirement (GWM) Dow 24,505 240.92 0.99  BBCA pays out 27% of 2017 net profit as dividend S&P 500 2,663 18.15 0.69 Eido US 26.9 -0.41 -1.50  Gudang Garam plans on building airport at the end of 2018 H.S.I 29,519 -661.41 -2.19  Vale to focus on cost efficiency amid nickel price volatility Nikkei 21,645 325.87 1.53  Wika Gedung bags Rp2.6 tn new contract, 32.9% of target STI 3,406 65.95 1.97  JPFA plans Rp2.5 tn capex this year KLCI 1,836 20.19 1.11 Kospi 2,438 29.46 1.22 SET Thai 1,740 14.94 0.87 JCI STATISTIC

tn COMMODITIES 7,000 40.0 Index Last Change % chg 35.0 6,500 Brent Crude Oil ($/bbl) 68.3 0.31 0.46 30.0 6,000 WTI Crude Oil ($/bbl) 63.5 0.17 0.27 25.0 CPO (MYR/ton) 2,442 14.00 0.58 5,500 20.0 Gold (US$/tr ounce) 1,327 -6.77 -0.51 15.0 5,000 Nickel (US$/ton) 13,273 173.00 1.32 10.0 4,500 Tin (US$/ton) 21,083 135.00 0.64 5.0 Pulp (US$/ton) weekly 1,097.1 0.00 0.00 4,000 0.0 16 17 16 17 18 16 17 18 16 17 18 16 17 16 17 16 17 16 17 18 16 17 16 17 16 17 Coal (US$/ton) 94.2 0.60 0.64 16 17 ------Jul Jul Oct Oct Apr Apr Apr Jan Jan Jan Jun Jun Feb Feb Feb Dec Dec Sep Sep Nov Nov Aug Aug Mar Mar Mar May May BEI STATISTICS Volume JCI Index JCI 6,183 Change (1 day) 0.42% DAILY TECHNICAL VIEW Change YTD -2.71% We expect JCI to trade between 6,130 (support) – 6,250 (resistance) level today P/E Market (X) 15.8 Volume (mn shr) 6,206.4 ASII: Sell on strength at Rp 7,700-Rp 7,850 Value (Rp bn) 4,590.6 Comment: Testing resistance level ↑ 221 ↓ 139 ↔ 212 GGRM: Sell on strength at Rp 73,500-Rp 74,500 LQ45 854 Comment: Testing resistance level % Change (1 day) 0.28% BBCA: Sell on strength at Rp 23,300-Rp 23,800 Comment: Testing resistance level INTEREST RATE PTBA: Sell on strength at Rp 3,240-Rp 3,400 Current Previous Comment: Testing resistance level BI 7D Reverse Repo (%) 4.25 4.25 Fed fund rate (%) 1.75 1.50 MARKET REVIEW & MARKET OUTLOOK inflation mom (%) 0.20 0.17 Regional Inflation yoy (%) 3.40 3.18 On Thursday, the US stocks extended previous day’s momentum, where Dow Jones posting a second straight 1% gain to 24,505. US trade deficit continues to deepen, totaling USD57.6 EXCHANGE RATE bn in the month of Feb 18 and pointing to strong downward pull from net exports in 1Q17 Last Change % chg GDP report. From labor market, despite the headline rise as initial jobless claims popped 1 USD = IDR 13,767 1.00 0.01 24,000 higher to 242,000, unemployment claims remain solidly consistent with strong 1 USD = SGD 1.32 0.00 0.03 demand for labor. In commodity markets, WTI crude oil price rose by 0.27% to USD63.5/bbl 1 USD = JPY 107.11 -0.28 -0.26 while nickel price was up by 1.32% to USD13,273/ton. 1 USD = AUD 1.30 0.00 0.12 Domestic 1 USD = EUR 0.82 0.00 -0.09 JCI closed higher at 6,183 by 26 points or 0.42% on Thursday trading and recorded Rp430 bn of net foreign sell. The leading sectors were Infrastucture (+1.64%), Basic Industry DUAL LISTING (+1.48%), and Consumer (+0.46%) which mainly driven by TLKM (+2.22% to 3,680), UNVR Stocks Close Chg. % chg In Rp. Vol. (ADR) (+0.96% to 50,025), and BMRI (+0.66% to 7,650) as the key movers. Yesterday economic TLKM 26.8 -0.05 -0.19 3,685 949,165 highlights: consumer confidence index dropped 121.6 in Mar 18 from 122.5 in the ISAT 0.4 0.00 0.00 5,231 2,150 previous month, as current employment is seen lower (96.1% vs 100% in Feb 18). Rupiah BUMI Plc 36.8 0.00 0.00 7,522 - slightly weakened by 1 point to 13,767/USD. Our technical desk suggests for trading within the band of 6,130 – 6,250, with possibility to end at higher level.

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1 DAILY & TECHNICAL UPDATE Friday, April 06, 2018 CIPTADANA SEKURITAS ASIA http://www.ciptadana.com

CONSUMER CONFIDENCE INDEX LOWER IN MARCH 2018

The Bank Indonesia (BI) Consumer Confidence Index Survey in March 2018 that is 121.6 was lower than the previous month of 122.5. This showed consumer confidence remained at an optimistic level (CCI still above 100), although not as strong as in previous month. The decline in CCI is mainly due to the many expected the job market to weaken in the next six months. Further, survey results also indicate that pressure on price increases in the next three months (June 2018) influenced by increased demand for goods/services during Ramadan. Indonesia's annual inflation accelerated in March from a month earlier but remained within the central bank's target range of 2.5% to 4.5% this year. Comment: We are still optimist with consumer purchasing power this year. We believe the government will maintain electricity tariffs and fuel prices. As government raises the subsidy in APBN-P 2018, we expect there will not be any significant increase for fuel prices and electricity tariffs during this year. However we do agree, there will be higher demand for goods and services that lead inflation and price to pick up in the upcoming second quarter.

BI TO RELEASE REGULATION ON AVERAGING MINIMUM RESERVE REQUIREMENT (GWM)

BI releases regulation on averaging minimum reserve requirement (GWM) through PBI No.20/3/ PBI/2018 effective in Jul-18. BI cuts the fixed GWM ratio to 4.5% (from 5.0%) and increases the averaging ratio to 2.0% (from 1.5%) for conventional banks. More averaging ratio means more flexibility for banks to channel its liquidity and reduced interest rates volatility in money market. BI also expands the GWM averaging rule for sharia banks (3% fixed and 2% average) and foreign currency (6% fixed and 2% average) starting from Oct-18. BI also eliminates the interest rates for the reserve from previously 2.5% to 0%. Comments: The regulation has been previously approved in BI governor meeting in Jan-2018. We believe this regulation to have positive impacts for banks in terms of better liquidity and more room for a lower cost of funding. However, the impact would be not really significant as we still see excess liquidity in banking industry at the moment.

BBCA PAYS OUT 27% OF 2017 NET PROFIT AS DIVIDEND

BBCA decides to pay out a portion of its profit as cash dividend of 2017 book year totaling Rp6.3 tn based on its Annual General Meeting (AGM) of Shareholders yesterday. Dividend payout ratio is recorded at 27% of net profit 2017, slightly higher than last year payout of 24%. In addition to approving the dividend, the AGM also formally approved the appointment Vera Eve Lim as CFO. Vera Eve Lim was previously finance director in BDMN. Comments: The dividend per share is Rp255/share and accounted for 1.1% yield based on current market price, in-line with our expectation. We have a Buy call for the stock with Rp26,100/share target price.

GUDANG GARAM PLANS ON BUILDING KEDIRI AIRPORT AT THE END OF 2018

Gudang Garam would start the construction of Kediri airport in East by the end of 2018. According to Indonesia's Transportation Minister, the airport could be operated by end of 2019. The airport cover an area of 457 hectares, some of them are owned by PT Gudang Garam and planned to have a 3,000-meter long runway. But for its first stage, it would build a 2,400-meter long runway. The total investment would be around Rp5 trillion. The airport construction project has entered its first stage to set the location and design of the airport. The airport expected to serve around 15 million people in more than 10 districts/municipalities.

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Comment: Kediri airport is part of Gudang Garam Corporate Social Responsibility (CSR) program. GGRM also stated that the source of funding for the construction of this airport will be obtained from the operational cash flow generated by GGRM each year. We expect, the construction of this airport will not have a significant impact on the company's financial performance as the funding will be issued gradually every year until the project is completed.

VALE TO FOCUS ON COST EFFICIENCY AMID NICKEL PRICE VOLATILITY

Vale Indonesia (INCO) believes the business outlook for this year will remain challenging as nickel prices continue to be volatile, which it attributes mainly to the government’s restriction of ore exports and external economic conditions. Expecting to deal with another turbulent year, the company is seeking to push for cost-efficiency measures and increase its production target slightly this year. The price of fuel, including coal, a key component in Vale’s production, will also be unpredictable, adding to the pressure on its business throughout the year. Energy costs represented about 30% of company’s total cash cost. Despite the significant energy costs, INCO is optimistic that its business would still have good prospects in 2018 as nickel prices already improved as of the first quarter of this year, reaching USD13,000 per ton on average. In order to save costs, it plans to use coal instead of oil in its reduction kilns at its production facility in Sorowako, South . Considering the company’s bleak financial performance last year, it decided not to pay out dividends this year. Comment: We currently maintain our Hold rating on INCO with TP of Rp3,020 on its pricey valuation.

WIKA GEDUNG BAGS RP2.6 TN NEW CONTRACT, 32.9% OF TARGET

Wika Gedung (WEGE) has obtained Rp2.6 tn in new contract for period of year to 5 April. This achieved 32.9% of its 2018 target of Rp7.82 tn. Among biggest contract booked were Transpark Cibubur of Rp933 bn, Syamsudin Noor Airport of Rp506 bn and Podomoro golf view facilities of Rp182 bn. Comment: We do not cover WEGE . The counter is trading at 2018F PER of 6.14x.

JPFA PLANS RP2.5 TN CAPEX THIS YEAR

In order to create more efficient business operation, this year JPFA is planning to modernize the chicken breeding farms with the capex allocation of Rp1 tn. From feed segment, JPFA is allocated Rp700 bn to procure corn dryer and Rp500 bn to expand feed mill in Medan (North ). Hence, in total, the company sets Rp2.5 tn capex this year, or 63% higher compared to Rp1.53 tn (FY17 allocation). According to Head of Corporate Finance, Putut Djagiri, JPFA will fulfill the capex with internal cash, while standby loan from banks are also ready if it s required. In addition, JPFA expects FY18F net profit to grow by 10% YoY. Comment: We see JPFA is always striving to be more efficient. We believe company’s performance this year will be more favorable compare to last year, with the rationale of (1) relatively higher liverbirds and DOC price (2) more stable corn price, subject to higher domestic supply (3) More stable broiler price due to government intervention in controlling the prices.

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DOC (West Java)

DOC (West Java)

6,000.0 4,000.0 2,000.0 -

Source: JPFA

Livebirds (West Java)

Livebirds (West Java)

20,000.0 18,000.0 16,000.0 14,000.0 12,000.0 10,000.0

Source: JPFA

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4 DAILY & TECHNICAL UPDATE Friday, April 06, 2018 CIPTADANA SEKURITAS ASIA http://www.ciptadana.com

TECHNICAL ANALYSIS

JCI : (6,183 +0.42%)

Comment : TLKM, UNVR and BMRI consecutively became leading movers. Technically, JCI closed below resistance level of 6,275. Support level at 6,085. Next support and resistance level at 5,800-6,350. Candlestick chart likely formed a reversal harami pattern. This pattern still need furhter confirmation. Based on Elliot wave approach, one of alternate wave countings is the index now is doing wave (v) which is the last wave of the uptrend cycle. The lowest level of 5,022 which occurred on December 23, 2016, was the origin level of the short-term uptrend cycle, and the highest level of 5,360 which occurred on January 9, 2017 as the peak of sub wave up (i). The lowest level of 5,228 which occurred on January 23, 2017 as the bottom of sub wave (ii). We revised the wave counting for the peaks of sub wave (iii). The highest level of 6,686 could be the peaks of wave (iii). Based on this assumption, the index is now in the process to form corrective wave abc to find the bottom of sub wave (iv) before forming sub wave (v). Because the index moved below the level of 6,346, the peaks of wave (v) likely already founded and now JCI is doing corrective wave abc.

^JKSE (6,194.10, 6,211.87, 6,176.70, 6,183.23, +26.1309) 6750

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5 DAILY & TECHNICAL UPDATE Friday, April 06, 2018 CIPTADANA SEKURITAS ASIA http://www.ciptadana.com

STOCK OF THE DAY

ASII : Testing resistance level The price closed below resistance level of 7,750-7,850. This level was support level of the previous support level of the neckline of Head and Shoulder pattern and potentially turn into strong resistance level. Support level at 7,450. Next support and resistance level at 7,050-8,050. Sell on strength, sell if the price moves below the level of 7,450.

Astra Internatio (7,625.00, 7,650.00, 7,475.00, 7,600.00, +25.0000) 9600 9500 9400 9300 9200 9100 9000 8900 8800 8700

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GGRM : Testing resistance level The price closed below minor resistance level of 74,725. Support level at 72,000. Next support and resistance level at 69,700-76,000. The price moved in downtrend in the last two months. Sell on strength, sell if the price moves below the level of 72,000.

Gudang Garam Tbk (73,000.00, 73,500.00, 72,650.00, 73,150.00, +1,150.00) 88500 88000 87500 87000 86500 86000 85500 85000 84500 84000 83500 83000 82500 82000 81500 81000 80500 80000 79500 79000 78500 78000 77500 77000 76500 76000 75500 75000 74500 74000 73500 73000 72500 72000 71500 71000 70500 70000 69500 69000 68500 68000 67500 67000 66500 66000 65500 65000 64500 64000 63500 63000 62500 62000 61500 61000 60500 60000 17 25 2 8 15 22 29 5 12 19 3 10 17 24 31 7 14 21 28 4 11 18 25 2 9 16 23 30 6 13 20 27 4 11 18 27 2 8 15 22 29 5 12 19 26 5 12 19 26 2 9 16 May June July August September October November December 2018 February March April

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BBCA : Testing support level The price closed above strong support level of 22,825-22,425. This is also support level of the mid-term uptrend line. The penetration of this level will cause the short-term trend turn into negative. Resistance level at 23,800. Next support and resistance level at 21,000-24,500. Sell ons trength, sell if the price moves and stable below the level of 22,400.

Bank Central Asi (23,500.00, 23,500.00, 23,050.00, 23,050.00, -250.000) 25500

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PTBA : Testing resistance level The price closed below minor resistance level of 3,240. Support level at 2,990. Next support and resistance level at 2,750-3,450. The mid-term trend is still sideways. Sell on strength

Tambang Batubara Bukit AsamTbk (3,100.00, 3,230.00, 3,100.00, 3,230.00, +180.000) 3600 3550 3500 3450 3400 3350 3300 3250 3200 3150 3100 3050 3000 2950 2900 2850 2800 2750 2700 2650 2600 2550 2500 2450 2400 2350 2300 2250 2200 2150 2100 2050 2000 1950 1900 1850 1800 1750 1700

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7 DAILY & TECHNICAL UPDATE Friday, April 06, 2018 CIPTADANA SEKURITAS ASIA http://www.ciptadana.com

CIPTADANA FIXED INCOME DAILY CURRENCY TRADING RANGE OF TODAY USD/Rp: 13,700 -13,795

INDONESIA GOVERNMENT AVERAGE DEPOSIT RATE SECURITIES YIELD Maturity (yrs) Yield (%) 1M 3M 6M 1YR 2YRS 1 5.24 IDR 5.59 5.66 5.69 5.65 5.26 3 6.06 US$ 0.81 0.83 0.84 0.84 5 5.96 10 6.60 JIBOR (RP) 5.03 5.37 5.72 5.98 15 6.84 JIBOR (USS) #N/A N/A #N/A N/A #N/A N/A #N/A N/A 30 7.37

BASE LENDING RATE EXCHANGE RATE

EXCHANGE RATE % chg. BI RATE 4.25 1 US$ = IDR 13,767 -0.01 FED FUND RATE 1.75 1 US$ = SGD 1.32 -0.03 LPS INSURED RATE 1 US$ = JPY 107.11 0.26 IDR 5.50 1 US$ = AUD 0.77 -0.12 US$ 1.00 1 US$ = EUR 1.23 0.09

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8 DAILY & TECHNICAL UPDATE Friday, April 06, 2018 CIPTADANA SEKURITAS ASIA http://www.ciptadana.com

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The information contained in this report is based on material we believe to be reliable; however, we do not represent that it is accurate, current, complete, or error free. Assumptions, estimates and opinions contained in this report constitute our judgement as of the date of the document and are subject to change without notice. Any projections are based on a number of assumptions as to market conditions and there can be no guarantee that any projected results will be achieved. Past performance is not a guarantee of future results. CIPTADANA SPECIFICALLY DISCLAIMS ALL LIABILITY FOR ANY DIRECT, INDIRECT, CONSEQUENTIAL OR OTHER LOSSES OR DAMAGES INCLUDING LOSS OF PROFITS INCURRED BY YOU OR ANY THIRD PARTY THAT MAY ARISE FROM ANY RELIANCE ON THIS REPORT OR FOR THE RELIABILITY, ACCURACY, COMPLETENESS OR TIMELINESS THEREOF.

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