2015 Alpha 2015 Asiamoney's 2014 Institutional Asiamoney’s Southeast Asia Global 2013 Finance Asia's Investors 2013 2014 Best Banking & Finance Best Domestic Best Highest Ranked Best Domestic Research Call Review Sector flash Equity House Equity House Local Research Equity House FMCG Sector Best Research House House 15 February 2016 Indonesian Telecommunications Overweight (Unchanged) Leonardo Henry Gavaza, CFA E-mail:
[email protected] Phone: +6221 250 5081 Ext. 3608 Pulsating Exhibit 1. Rating & target price summary Code Share price +/- 3M TO Higher smartphone penetration to boost data demand Rating (IDRb/ CP TP (%) USDm) Smartphone usage in Indonesia has been accelerating, boosting data demand. TLKM 3,285 3,750 14.2 BUY 277.3/20.5 We expect this trend to continue and reach the 50% level in 2017 (9M15: EXCL 3,930 4,400 11.9 BUY 18.8/1.4 35.5%; 9M14: 25.0%), backed by the increased availability of cheap 3G ISAT 5,375 6,800 26.5 BUY 1.9/0.1 models, as several leading brands such as Samsung and Nokia continue to ERAA 550 850 54.5 BUY 2.0/0.2 pursue the lower-end 3G-smartphone segment. In our view, this is the only TELE 630 1,180 87.3 BUY 3.0/0.2 TOWR 4,135 5,000 20.9 BUY 0.7/0.1 way to improve the 3G penetration rate, as most Indonesians (around 65%) TBIG 6,100 6,500 6.6 HOLD 11.6/0.9 purchase handsets priced at less than IDR1mn (USD75), while sales at above Source: Bloomberg, Bahana estimates IDR2mn (USD150) per unit represent less than 20% of volume, based on 2015 (Based on closing prices on 12 Feb 2016) data (exhibit 5).