Macro Update Ground check on malls re-opening: Alive but sort of dead Finally, malls in start to re-open

This week marks a new era for in its fight against COVID-19. Since June 15, 82 malls in Jakarta have started to re-open, after previously witnessing their operations curbed from April to mid-June due to the enactment of large-scale social distancing. Meanwhile, malls in Greater Jakarta areas, such as Bekasi and Macro update Tangerang, began to re-open on June 8. June 19, 2020 Was it a correct call?

In our view, the decision by Governor Anies to push back the re-opening of PT.Mirae Asset Sekuritas Indonesia Jakarta’s economy was a correct call as, looking at May’s data, we found no

conclusive evidence to justify the re-opening of Jakarta’s economy in early June. From the perspective of daily new cases, at a glance, Jakarta, indeed, seems to Anthony Kevin have flattened the curve at that point. However, we found that the lower number Economist [email protected] of daily new cases was side by side with the lower number of people being tested. +62-21-5088-7000 Not a guarantee for a significant jump in GDP figure

Learning from the experiences of other countries which have flattened the curve

and re-opened their economy, it becomes clear that COVID-19 changes the way people live their life not only during the outbreak but also post-outbreak. Take a look at China, which, despite its rather fruitful effort to flatten the curve, has been

struggling for quite some time to regain its footing.

Although we have, indeed, seen some sort of life on the supply side, i.e. industrial

production rise of 3.9% YoY in April (vs. consensus of 1.5% YoY), retail sales fell by 7.5% during the same period, pointing that domestic consumption has yet to pick up to the previous level before COVID-19 hit. In April, China’s imports fell by more than 14% YoY, thus affirming that domestic consumption has yet to pick up to the previous level before COVID-19 hit. Moving on to May, China’s imports fell even further, by 16.7% YoY, while retail sales declined by 2.8% YoY.

What should we be looking for?

In our opinion, the most important thing to look at during the ground check is the purchasing power of low-middle income people as the people from this income segment account for more than 50% of Indonesia’s economy. While we don’t have standalone data detailing the income of Indonesian people, we conclude that most of our economy is shaped by people from that income segment.

Ground check results

Alive but sort of dead. This is what we thought when visiting several malls in Jakarta and Bekasi area as we found that people are still holding back from visiting malls. Meanwhile, those who showed up were only hoarding items at F&B merchants while avoided visiting durable goods stores.

In stark contrast to the minimum-to-no visit to durable goods, besides F&B stores, people are still rushing to supermarkets to buy basic necessities, while staying vigilant to maintain their health by purchasing vitamins at drug stores.

Relatively minimal contribution to GDP growth

After visiting various malls during 3 days of ground check, we conclude that the re- opening of malls and general economic activities won’t bear much of a positive result to Indonesia’s GDP figure as people remain defensive by significantly avoiding durable goods. Combined with the fact that the cure for COVID-19 is unlikely to be ready in the near future (end of 2020 at the earliest, perhaps 1Q21 for Indonesia), then Indonesian people might continue maintaining their defensive stance for the rest of 2020.

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

June 19, 2020 Macro Update

Finally, malls in Jakarta start to re-open

This week marks a new era for Indonesia in its fight against COVID-19. Since June 15, 82 malls in Jakarta have started to re-open, after previously witnessing their operations curbed from April to mid-June due to the enactment of large-scale social distancing (Pembatasan Sosial Berskala Besar/PSBB). Meanwhile, malls in Greater Jakarta areas, such as Bekasi and Tangerang, began to re-open on June 8.

Actually, the re-opening of malls in Jakarta was planned to take place on June 5 by the central government. However, Anies Baswedan, the governor of DKI Jakarta, decided to push back the re-opening date as he remained cautious about the handling of the COVID-19 crisis in Jakarta. Statistically, according to Governor Anies, Jakarta was in a good condition to ease the large-scale social distancing, based on social distancing easing scores; the headline figure consists of three constituents, namely epidemiology, public health, and healthcare facilities.

During a press conference held on June 4, the day when large-scale social distancing was initially set to end in Jakarta, the epidemiology section was attributed a score of 75 out of 100, while public health and healthcare facilities got a score of 70 and 100, respectively, bringing the cumulative score to 76. Of a note, a headline figure within the range of 70-100 means that social distancing measures could be gradually eased, while the administration should remain vigilant about any jump in the number of new cases.

Figure 1. Social distancing easing score Figure 2. Explanation of social distancing easing scores

Headline figure 76

Epidemiology 75

Public health 70

100

Healthcare facilities

0 20 40 60 80 100 (pts)

Source: Jakarta Provincial Government, Mirae Asset Sekuritas Indonesia Research Source: Jakarta Provincial Government, Mirae Asset Sekuritas Indonesia Research

To push back the re-opening of malls, which the central government was so enthusiastic to execute, Governor Anies relies on the so-called “transition phase”, effective from early June to as long as it’s deemed necessary. Throughout the transition phase in June, the regional government of Jakarta will ease social distancing measures very gradually, slower than what the central government has been pushing for. For example, in the first week of June, the regional government only eased restrictions for praying in houses of worship, group prayers, outdoor sports facilities, as well as mobility using own vehicle, mass transportations, and taxis at a maximum capacity of only 50% from the normal condition. If all goes well, Governor Anies stated that the easing of social distancing measures for broader economic activities would follow suit.

Mirae Asset Sekuritas Indonesia Research 2

June 19, 2020 Macro Update

Table 1. Jakarta’s transition to new normal - Phase 1 June 5-7 June 8-14 June 15-21 June 22-28 Activities Fri Sat-Sun Mon-Fri Sat-Sun Mon-Fri Sat-Sun Mon-Fri Sat-Sun Routine worship activities 50% 50% 50% 50% 50% 50% 50% 50% Worship Group activities (< 25 persons) 50% 50% 50% 50% 50% 50% 50% 50% Offices 50% 50% 50% 50% 50% 50% Restaurants (stand-alone) 50% 50% 50% 50% 50% 50% Industries 50% 50% 50% 50% 50% 50% Warehouses 50% 50% 50% 50% 50% 50% Shops/retails/showrooms 50% 50% 50% 50% 50% 50% (stand-alone) Provincial government Workplace and 50% 50% 50% 50% 50% supported SMEs business Markets, shopping centers, 50% 50% 50% 50% malls (non-food) Supporting services (workshop, 50% 50% 50% 50% 50% 50% photocopy centers, etc.) Indoor recreational parks 50% 50% 50% Outdoor recreational parks 50% 50% 50% Zoos 50% 50% 50% Outdoor sport activities 50% 50% 50% 50% 50% 50% 50% 50% Museums, galleries 50% 50% 50% 50% 50% 50% Social and culture Libraries 50% 50% 50% 50% 50% 50% activities Parks, RPTRA 50% 50% 50% 50% 50% Beaches 50% 50% 50% 50% 50% Private vehicle (for family can be 50% 50% 50% 50% 50% 50% 50% 50% 100%) Human mobility Mass public transportation 50% 50% 50% 50% 50% 50% 50% 50% using transportation Taxis (conventional & online) 50% 50% 50% 50% 50% 50% 50% 50% Motorbikes (online & 100% 100% 100% 100% 100% 100% conventional) Source: Jakarta Provincial Government, Mirae Asset Sekuritas Indonesia Research

Table 2. Jakarta’s transition to new normal - Phase 2 Location and activities Schedule Worship activities Worship activities with mass gathering Pre-primary schools Primary schools Secondary schools High schools School and educational institution Universities Courses Day care Etc. Beauty clinics Hairstylists and barbershops Meeting halls (MICE, auditorium, etc.) Unspecified, tentative based on the evaluation Wedding, circumcision on phase-1 transition Business, trade, and industry Movie theaters Recording studios, movie production houses Night life, karaoke, etc. Boutiques Etc. Indoor sport activities (gym, swimming pool, etc.) Human mobility using Festivals transportation Night markets Floating markets Etc. Source: Jakarta Provincial Government, Mirae Asset Sekuritas Indonesia Research

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June 19, 2020 Macro Update

Table 3. Minimum protocol required to be implemented by selected business sectors Sector Protocol Number of visitors/users/employees at max. 50% capacity Food & beverages business Food serving is a la carte (not buffet) Encourage cashless payment method Number of visitors at max. 50% capacity Provide facilities to support prevention of COVID-19 outbreak Market Encourage cashless payment method Operational hours from 8 am to 2 pm Separated entry and exit doors Number of employees at max. 50% capacity Industry Required to have referral clinic or hospital Number of visitors at max. 50% capacity Shopping center, retail, and Tenants are required to do body temperature check before visitors enter the stores store Tenants allowed to operate should be in accordance with the ones in phase I Source: Jakarta Provincial Government, Mirae Asset Sekuritas Indonesia Research

To assess the impact of malls re-opening on Indonesia’s economy, we conducted ground checks at several malls. We divided our visits to two categories of malls: 1) those designated for mid-to-high income people, i.e. Central Park and and, 2) those designated for mid-to-low income people i.e. Plaza Blok M and Summarecon Mall Bekasi. To gain a more comprehensive understanding of the situation, we also visited two malls designated to sell certain durable goods, i.e. ITC Mangga Dua (clothing) and ITC Roxy Mas (smartphones).

Table 4. List of malls in Jakarta which have resumed operation Malls Location 1. Grand Indonesia 2. Central Jakarta 3. FX Sudirman Central Jakarta 4. ITC Cempaka Mas Mega Grosir Central Jakarta 5. Golden Truly Central Jakarta 6. Gajah Mada Plaza Central Jakarta 7. Central Jakarta 8. ITC Roxy Mas Central Jakarta 9. Mal Mangga Dua Central Jakarta 10. Plaza Atrium Central Jakarta 11. Plaza Kenari Mas Central Jakarta 12. Thamrin City Central Jakarta 13. Harco Pasar Baru Central Jakarta 14. Jakarta Design Center Central Jakarta 15. Teras Benhil Central Jakarta 16. Cikini Gold Center Central Jakarta 17. Istana Pasar Baru Central Jakarta 18. ITC Mangga Dua Central Jakarta 19. Mangga Dua Square Central Jakarta 20. Plaza Glodok Central Jakarta 21. Central Jakarta 22. Senayan Park Central Jakarta 23. Grand ITC Permata Hijau 24. Kota Kasablanka South Jakarta 25. South Jakarta 26. Plaza Blok M South Jakarta 27. One Belpark Mall South Jakarta 28. Lippo Mall Kemang South Jakarta 29. South Jakarta 30. Pacific Place South Jakarta 31. South Jakarta 32. ITC Kuningan South Jakarta 33. Transmart Cilandak South Jakarta 34. South Jakarta

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June 19, 2020 Macro Update

35. /Lotte Shopping Avenue South Jakarta 36. South Jakarta 37. Blok M Square South Jakarta 38. ITC Fatmawati South Jakarta 39. Kalibata City Square South Jakarta 40. Mal Ambasador South Jakarta 41. Blok M Square South Jakarta 42. Plaza Mebel South Jakarta 43. De Entrance South Jakarta 44. Epiwalk South Jakarta 45. Plaza Festival South Jakarta 46. Plaza Kalibata South Jakarta 47. Poins Square South Jakarta 48. Town Square Cilandak South Jakarta 49. Mal Taman Anggrek 50. Lippo Mall Puri West Jakarta 51. Mal Taman Palem West Jakarta 52. Puri Indah Mall West Jakarta 53. Mal Ciputra Jakarta West Jakarta 54. Central Park Mall and Neo Soho Mall West Jakarta 55. PX Pavilion West Jakarta 56. Seasons City West Jakarta 57. Green Sedayu Mall West Jakarta 58. Mal Matahari Puri Daan Mogot West Jakarta 59. LTC Glodok West Jakarta 60. Mal Cijantung 61. Lippo Plaza Kramat Jati East Jakarta 62. Cibubur Junction East Jakarta 63. Mall Cipinang Indah East Jakarta 64. Tamini Square East Jakarta 65. AEON MALL Jakarta Garden City East Jakarta 66. Arion Mall East Jakarta 67. Buaran Plaza East Jakarta 68. Mall @Bassura East Jakarta 69. Pulogadung Trade Center East Jakarta 70. Pusat Grosir Cililitan East Jakarta 71. PIK Avenue 72. Summarecon Mall North Jakarta 73. Pluit Vilage North Jakarta 74. Sunter Mall North Jakarta 75. Emporium Pluit North Jakarta 76. Pluit Junction North Jakarta 77. Baywalk Mall North Jakarta 78. WTC Mangga Dua North Jakarta 79. Koja Trade Mall North Jakarta 80 Mahaka Square North Jakarta 81 North Jakarta 82. North Jakarta Source: Various media outlets, Mirae Asset Sekuritas Indonesia Research

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June 19, 2020 Macro Update

Was it a correct call?

Before going into details on the results of our survey, we’d like to evaluate whether the move by Governor Anies to push back the reopening of Jakarta’s economy was a correct call.

First thing first, Java Island, which includes Jakarta, is the heart of Indonesia’s economy with a contribution of 59% to Indonesia’s GDP in 2019; in 1Q20, its contribution rose slightly to 59.1%. As for Jakarta itself, its contribution to national GDP figure was as high as 18.1% in 1Q20; during the period, Jakarta’s GDP improved by merely 5.06% YoY.

Unfortunately, Jakarta is among areas which underwent the longest lockdown as it has started doing so since April 10, while West Java started later on May 6; thus, it is understandable that President Joko “Jokowi” Widodo’s administration is pushing forward the re-opening of Jakarta’s and West Java’s economy, along with other provinces in Java Island.

Figure 3. GDP breakdown by island in 2019 Figure 4. GDP breakdown by island in 1Q20

Java Java Sumatera Sumatera Kalimantan Kalimantan 59% 59.1% Sulawesi Sulawesi Bali & Nusa Tenggara Bali & Nusa Tenggara Maluku & Papua Maluku & Papua

Source: Statistics Indonesia, Mirae Asset Sekuritas Indonesia Research Source: Statistics Indonesia, Mirae Asset Sekuritas Indonesia Research

Figure 5. Economically biggest provinces in Indonesia Figure 6. Jakarta’s economic growth

(% YoY) 7.0

18.1% DKI Jakarta 6.5 East Java

40.7% West Java 14.5% 6.0 Central Java North Sumatera Others 5.5 13.1% 5.1% 8.5%

5.0 2011 2012 2013 2014 2015 2016 2017 2018 2019 1Q20

Source: Statistics Indonesia, Mirae Asset Sekuritas Indonesia Research Source: Statistics Indonesia, Mirae Asset Sekuritas Indonesia Research

In our view, the decision by Governor Anies to push back the re-opening of Jakarta’s economy was a correct call as, looking at May’s data, we found no conclusive evidence to justify the re-opening of Jakarta’s economy in early June. From the perspective of daily new cases, at a glance, Jakarta, indeed, seems to have flattened the curve at that point. However, we found that the lower number of daily new cases was side by side with the lower number of people being tested. Had the number of people being tested been kept the same, we might have seen the number of new cases arriving at a significantly higher level.

Mirae Asset Sekuritas Indonesia Research 6

June 19, 2020 Macro Update

Entering June, although we have yet to see the curve flattening when the testing was more aggressive (daily average of 1,696 people vs. 1,367 people in May), which was unfortunate, at the very least, Governor Anies managed to minimize the risk of excessive spreading of the virus by another week.

Figure 7. Numbers of people being tested in Jakarta Figure 8. Daily new COVID-19 cases in Jakarta

(people) (people) 4,000 250

3,500 200 3,000

2,500 150 2,000

1,500 100

1,000 50 500

0 0 3/20 4/20 5/20 6/20 3/20 4/20 5/20 6/20

Source: corona.jakarta.go.id, Mirae Asset Sekuritas Indonesia Research Source: corona.jakarta.go.id, Mirae Asset Sekuritas Indonesia Research

As a matter of fact, the bold move by Governor Anies to defy the will of the central government in fast-forwarding the re-opening of Jakarta’s economy might’ve saved the province from prolonged first wave. In several other countries, the re-opening of their economy, even after they’ve flattened the curve, proved to have an immediate effect of jumps in the number of new cases. Thus, it was highly important that Jakarta applied another round of large-scale social distancing period.

Figure 9. Daily new COVID-19 cases in the US Figure 10. Daily new COVID-19 cases in Malaysia

(people) (people) 50,000 300 45,000 250 40,000 35,000 200 30,000 25,000 150 20,000 100 15,000 10,000 50 5,000 0 0 2/05 2/16 2/27 3/09 3/20 3/31 4/11 4/22 5/03 5/14 5/25 6/05 2/05 2/16 2/27 3/09 3/20 3/31 4/11 4/22 5/03 5/14 5/25 6/05

Source: Bloomberg, Mirae Asset Sekuritas Indonesia Research Source: Bloomberg, Mirae Asset Sekuritas Indonesia Research Data are presented as 5-day moving average Data are presented as 5-day moving average

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June 19, 2020 Macro Update

Not a guarantee for a significant jump in GDP figure

Learning from the experiences of other countries which have flattened the curve and re- opened their economy, it becomes clear that COVID-19 changes the way people live their life not only during the outbreak but also post-outbreak. Take a look at China, which, despite its rather fruitful effort to flatten the curve, has been struggling for quite some time to regain its footing.

Although we have, indeed, seen some sort of life from the supply side, i.e. industrial production rise of 3.9% YoY in April (vs. consensus of 1.5% YoY), retail sales fell by 7.5% during the same period, pointing that domestic consumption has yet to pick up to the previous level before COVID-19 hit. In April, China’s imports fell by more than 14% YoY, thus affirming that domestic consumption has yet to pick up to the previous level before COVID- 19 hit. Moving on to May, China’s imports fell even further, by 16.7% YoY, while retail sales declined by 2.8% YoY.

Figure 11. China’s industrial production Figure 12. China’s retail sales Figure 13. China’s imports growth xx xx (US$ terms)

(% YoY) (% YoY) (% YoY) 10 15 50

40 8 10 30 5 6 20 0 4 10 -5 0 2 -10 -10 0 -15 -20

-2 -20 -30

Source: Bloomberg, Mirae Asset Sekuritas Indonesia Source: Bloomberg, Mirae Asset Sekuritas Indonesia Source: Bloomberg, Mirae Asset Sekuritas Indonesia Research Research Research

Figure 14. Breakdown of China’s April retail sales Figure 15. Breakdown of China’s May retail sales

Food 18.2 Beverages 16.7 Communication equipments 12.2 Cosmetics 12.9 Beverages 12.9 Food 11.4 Alcoholic beverages & tobacco 7.1 Communication equipments 11.4 Cosmetics 3.5 Alcoholic beverages & tobacco 10.4

Automobiles 0 Household appliances 4.3 Furniture -5.4 Automobiles 3.5 Household appliances -8.5 Furniture 3 Gold, Silver, & Jewelry -12.1 Garments & Footwear -0.6 Garments & Footwear -18.5 Gold, Silver, & Jewelry -3.9

-25 -20 -15 -10 -5 0 5 10 15 20 25 -5 0 5 10 15 20 (% YoY) (% YoY)

Source: Bloomberg, Mirae Asset Sekuritas Indonesia Research Source: Bloomberg, Mirae Asset Sekuritas Indonesia Research

The deterioration in consumers’ confidence then brought pressures on prices among producers as China’s PPI arrived at -3.7% YoY in May, lower than April’s figure of -3.1% YoY, while CPI came in at 2.4%, lower than April’s figure of 3.3%.

Mirae Asset Sekuritas Indonesia Research 8

June 19, 2020 Macro Update

Figure 16. China’s producer price index Figure 17. China’s consumer price index

(% YoY) (% YoY) 10 6

8 5 6

4 4

2 3 0

-2 2

-4 1 -6

-8 0 2/15 9/15 4/16 11/16 6/17 1/18 8/18 3/19 10/19 5/20 2/15 9/15 4/16 11/16 6/17 1/18 8/18 3/19 10/19 5/20

Source: Bloomberg, Mirae Asset Sekuritas Indonesia Research Source: Bloomberg, Mirae Asset Sekuritas Indonesia Research

Let’s now head over to the US, one of the most generous countries in terms of providing fiscal stimulus to mitigate the economic impact deriving from COVID-19 outbreak. On March 27, the US’ government launched a US$2.2tr stimulus package, labeled as “Coronavirus Aid, Relief, and Economic Security Act”, far exceeding “American Recovery and Reinvestment Act of 2009” which was only worth US$831bn.

Nevertheless, despite the huge amount of money disbursed all over the country, American people act very defensively throughout April. In April, personal spending plunged by 13.6% MoM, despite personal income increase of 10.5% MoM. As a result of that very defensive stance set by American people, personal savings rate soared to a record high of 33% in April.

Figure 18. US personal income and spending Figure 19. US personal saving rate

(% MoM) (% of disposable personal income) 15 Personal income 35 Personal spending 10 30

25 5 20 0 15 -5 10

-10 5

-15 0 2/16 7/16 12/16 5/17 10/17 3/18 8/18 1/19 6/19 11/19 4/20 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020

Source: Bloomberg, Mirae Asset Sekuritas Indonesia Research Source: Bloomberg, Mirae Asset Sekuritas Indonesia Research

Moving on to Indonesia, even before COVID-19 hit, we observed that Indonesian people have been getting more and more defensive; a retail sales survey conducted by BI shows that growth of retail sales has been in a downward trend although consumer confidence remained relatively high. This kind of anomaly shows that even though consumers remain optimistic about the future of Indonesia’s economy, they are being more and more conservative to anticipate sudden shocks to their financials.

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June 19, 2020 Macro Update

Figure 20. Indonesia’s consumer confidence index and retail sales

(pts) (% YoY) 140 Consumer confidence index (L) 35 Retail sales growth (R) 30 130 25 120 20 15 110 10 100 5

90 0 -5 80 -10 70 -15 3/11 1/12 11/12 9/13 7/14 5/15 3/16 1/17 11/17 9/18 7/19 5/20

Source: Bloomberg, Mirae Asset Sekuritas Indonesia Research

In March, the month that marks the arrival of COVID-19 in the country, “Food, Beverages & Tobacco” was the only constituent of retail sales which booked a YoY improvement; in April, figures from Bank Indonesia showed that all constituents noted a contraction, with “Food, Beverages & Tobacco” falling by 7.7% YoY. As for the fifth month of 2020, preliminary figure from the central bank shows that retail sales plunged by more than 20% YoY. As announced earlier this month, weak demand in May was reflected in inflation figure, which arrived at merely 2.19% YoY, relatively in line with our expectation of 2.21% YoY.

Figure 21. Breakdown of Indonesia’s March retail sales Figure 22. Breakdown of Indonesia’s April retail sales

3.7 F&B & tobacco -7.7 F&B & tobacco

-5.5 Other household equipments -17.5 Communication equipments

-7.6 Communication equipments -20.8 Other household equipments

-14.7 Motor vehicle parts -30.8 Motor vehicle parts

-18.7 Automotive fuels -39 Automotive fuels

-20.5 Cultural & recreation goods -48.5 Cultural & recreation goods

-52.2 Other goods -68.5 Other goods

-60 -40 -20 0 20 -80 -60 -40 -20 0 (% YoY) (% YoY)

Source: Bank Indonesia, Mirae Asset Sekuritas Indonesia Research Source: Bank Indonesia, Mirae Asset Sekuritas Indonesia Research

For the month of May, IHS Markit recorded the gauge for manufacturing activities came in at 28.6, indicating three straight months of contraction. Our manufacturing activities were still contracting despite reaching rock bottom back in April; during the period, the gauge for manufacturing activities came in at 27.5, pointing to the worst contraction ever recorded in the nine-year survey history. Of a note, the manufacturing PMI of 28.6 recorded in May marked the second lowest level ever.

The latest reading by IHS Markit showed that a record rate of job losses occurred last month. Recently, Indonesia’s Chamber of Commerce stated that the number of workers being laid off and furloughed due to COVID-19 outbreak has reached as many as 6 million, with 2.1 million coming from the textile industry. As such, there’s a real possibility that Indonesian people will remain defensive even when the economy starts to re-open.

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June 19, 2020 Macro Update

A survey conducted by McKinsey & Company shows that over time, Indonesians are getting less and less pessimistic on the prospect of our economic recovery, affirming our view that the path towards recovery for Indonesia would be more of a U-shape than a V-shape one (for further details on this matter, refer to our report on “Economic Outlook 2020: Recession is coming” [published on April 30]). During its latest survey in May 20-22, McKinsey & Company found that the percentage of respondents feeling optimistic about Indonesia’s economic recovery prospect stood merely at 39%, marking the lowest level since March.

On the other hand, shares of respondents feeling unsure and pessimistic about Indonesia’s economic recovery prospect came in at 52% and 9%, respectively. Still referring to the survey conducted by McKinsey & Company, the company found that 65% of Indonesians are cutting back on spending, while 82% noted that they are being very careful in spending their money. Among activities which will be significantly decreased post-COVID-19 are domestic travel, international travel, and going to the cinema.

Figure 23. Deteriorating optimism on economic recovery Figure 24. Two-thirds of Indonesians cut back on spending

(% of respondents) (% of respondents) Strongly agree / agree Optimistic Unsure Pessimistic Somewhat disagree / agree 100 Strongly disagree / disagree 8 6 6 7 9 1 100 8 6 17 80 41 80 29 41 45 48 33 52 60 60

40 40 82 59 65 51 53 49 45 20 39 20

0 0 Income negatively affected Cutting back on spending Be very careful on how to Mar 28-29 April 3-6 April 10-12 April 25-26 May 20-22 spend money

Source: McKinsey & Company, Mirae Asset Sekuritas Indonesia Research Source: McKinsey & Company, Mirae Asset Sekuritas Indonesia Research

Figure 25. Activities to be reduced post COVID-19

(% of respondents) Decrease Stay the same 100 Increase 13 19 18 80 32 29 38 60

40

52 55 20 44

0 Going to the movies, concerts, etc. Domestic travel International travel

Source: McKinsey & Company, Mirae Asset Sekuritas Indonesia Research

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June 19, 2020 Macro Update

What should we be looking for?

In our opinion, the most important thing to look at during the ground check is the purchasing power of middle-low income people as the people from this income segment account for more than 50% of Indonesia’s economy. While we don’t have standalone data detailing the income of Indonesian people, we conclude that most of our economy is shaped by people from that income segment.

According to Statistics Indonesia, there were as many as 25,763,552 businesses in Indonesia in 2018. Out of that number, 90.5% (23.3 million) are categorized as micro-small businesses (generating annual revenue of IDR2.5bn at most), 60.6% (15.6 million) of which earn annual revenue of less than IDR100mn. Assuming that each micro-small business brings in annual revenue of IDR300mn, then their contribution towards Indonesia’s GDP would be IDR6,992tr or 47%. According to a publication by Ministry of Cooperatives and Small and Medium Enterprises, the contribution of micro-small-medium businesses to total GDP in 2018 was 60.3%. Of a note, most of micro-small businesses are located on Java Island.

Figure 26. Breakdown of businesses in Indonesia Figure 27. Location of micro-small businesses in Indonesia

2,457,843

Java Sumatra Micro-small Bali Total: 25.8 million Medium-large 58.4% Kalimantan Sulawesi Maluku & Papua

23,305,709

Source: Statistics Indonesia, Mirae Asset Sekuritas Indonesia Research Source: Statistics Indonesia, Mirae Asset Sekuritas Indonesia Research

Moving on to the employment side, 97% of Indonesian people work in micro-small-medium businesses, while the remaining 3% work in large-sized businesses. As mentioned above, Indonesia’s Chamber of Commerce stated that the number of workers being laid off and furloughed due to COVID-19 outbreak has reached as many as 6 million. During the COVID- 19 outbreak in Indonesia, Google search trend for the term “PHK”, which means “layoff” in English, topped the search figure for this term in 2008, when a global crisis hit, and notched an all-time high level, signaling that people, primarily those in middle-low income segment, are gearing up to brace significant pressure on their financials.

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June 19, 2020 Macro Update

Figure 28. Indonesia’s workforce by employer type Figure 29. Google search for term “PHK” in Indonesia

(pts) 100 90 80 Business size # of employees (mn) % from total employment 70 Micro 107.4 89 60 Small 5.8 5 50 Medium 3.8 3 40 Total micro & SMEs 117 97 30 Large 3.6 3 20 Total 120.6 100 10 0

Source: Ministry of Cooperatives and SMEs, Mirae Asset Sekuritas Indonesia Source: Google Trends, Mirae Asset Sekuritas Indonesia Research Research Numbers represent search interest relative to the highest point on the chart for the given region and time. A value of 100 is the peak popularity for the term. A value of 50 means that the term is half as popular. A score of 0 means there was not enough data for this term. xx xx

Ground check results

Alive but sort of dead. This is what we thought when visiting several malls in Jakarta and Bekasi area. Before diving into our ground check results, we’d like to note that malls designated for middle-high income people have been superior in shielding its customers from COVID-19.

At Central Park for example, people entering the mall are required to scan a barcode using their smartphones and log their visit by submitting their names and phone numbers; this way, once a visitor is tested positive or becomes a suspect afterwards, the mall’s operator could help the government by providing data to be used to track people who might’ve been in contact with the patient. Touch-less hand sanitizers, tissues, and lifts are also among the facilities provided by the mall’s management.

Figure 30. People queuing to scan a barcode before entering Figure 31. People queuing to scan a barcode before leaving

Central Park Central Park

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

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June 19, 2020 Macro Update

Figure 32. Touch-less hand sanitizer and tissue at Central Park Figure 33. Touch-less lift at Central Park

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

On June 15, we visited malls designated for middle-high income people, i.e. Central Park and Kota Kasablanka. We saw only a very limited number of visitors, roughly at 20-25% from the normal condition (pre-COVID-19 outbreak).

Figure 34. Aerial view of Central Park Figure 35. Aerial view of Central Park

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

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June 19, 2020 Macro Update

Figure 36. Aerial view of Kota Kasablanka Figure 37. Aerial view of Kota Kasablanka

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

We observed that people visiting those malls preferred going to merchants which sell food and beverages, i.e. Starbucks, Chatime, J.CO Donuts & Coffee, KOI Thé, and Kopi Kenangan, while stores selling durable goods, such as clothing, jewelry, and electronics, were struggling even to attract visitors.

Figure 38. People visiting F&B store at malls designated for Figure 39. People visiting F&B store at malls designated for middle-high income people middle-high income people

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

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June 19, 2020 Macro Update

Figure 40. People visiting F&B store at malls designated for Figure 41. People visiting F&B store at malls designated for middle-high income people middle-high income people

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

Figure 42. People visiting F&B store at malls designated for Figure 43. People visiting F&B store at malls designated for middle-high income people middle-high income people

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

Figure 44. People visiting F&B store at malls designated for Figure 45. People visiting F&B store at malls designated for middle-high income people middle-high income people

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

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Figure 46. People avoid visiting durable goods store at malls Figure 47. People avoid visiting durable goods store at malls designated for middle-high income people designated for middle-high income people

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

Figure 48. People avoid visiting durable goods store at malls Figure 49. People avoid visiting durable goods store at malls designated for middle-high income people designated for middle-high income people

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

Figure 50. People avoid visiting durable goods store at malls Figure 51. People avoid visiting durable goods store at malls designated for middle-high income people designated for middle-high income people

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

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Figure 52. People avoid visiting durable goods store at malls Figure 53. People avoid visiting durable goods store at malls designated for middle-high income people designated for middle-high income people

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

On June 16, we visited Blok M Plaza, a mall well-known amongst middle-low income earners due to its strategic location. During our visit, we noticed that the number of visitors roughly stood at 20-25% compared to the normal condition. It turns out that the preference of middle-low income earners is similar to middle-high income earners in that they prefer visiting F&B merchants rather than durable goods stores.

Figure 54. Aerial view of Blok M Plaza Figure 55. Aerial view of Blok M Plaza

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

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Figure 56. People visiting F&B store at Blok M Plaza Figure 57. People visiting F&B store at Blok M Plaza

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

Figure 58. People visiting F&B store at Blok M Plaza Figure 59. People visiting F&B store at Blok M Plaza

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

Figure 60. People avoid visiting durable goods store at Blok M Figure 61. People avoid visiting durable goods store at Blok M

Plaza Plaza

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

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Figure 62. People avoid visiting durable goods store at Blok M Figure 63. People avoid visiting durable goods store at Blok M

Plaza Plaza

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

While visiting Matahari Department Store located at Blok M Plaza, we found that the total traffic was merely at 10%-15% of normal condition, despite the slew of sales offered by the store. Out of three cashier checks we encountered, two were totally empty (no single buyer conducting transaction), while the other one was closed, possibly due to very low traffic in the store. This is in line with the projection of our retail analyst, Christine Natasya, who previously expected the recovery in sales to be gradual and remained Neutral on the sector for the rest of 2020 (please refer to “Retail - Gradual recovery after relaxed PSBB”, published on June 3).

Figure 64. Very low traffic at Matahari Department Store (Blok Figure 65. Very low traffic at Matahari Department Store (Blok

M Plaza) M Plaza)

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

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Figure 66. Very low traffic at Matahari Department Store (Blok Figure 67. Very low traffic at Matahari Department Store (Blok

M Plaza) M Plaza)

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

Figure 68. Very low traffic at Matahari Department Store (Blok Figure 69. Very low traffic at Matahari Department Store (Blok

M Plaza) M Plaza)

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

Figure 70. Very low traffic at Matahari Department Store (Blok Figure 71. Very low traffic at Matahari Department Store (Blok

M Plaza) M Plaza)

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

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On June 17, we visited Summarecon Mall Bekasi, another mall designated for middle-low income earners, which is also one of the most popular in Bekasi, perhaps West Java. During our visit, we noticed that the number of visitors roughly stood at 30-35% compared to the normal condition. Again, we found that people were hoarding items at F&B merchants while avoided visiting durable goods stores.

Figure 72. Aerial view of Summarecon Mall Bekasi Figure 73. Aerial view of Summarecon Mall Bekasi

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

Figure 74. People visiting F&B store at Summarecon Mall Figure 75. People visiting F&B store at Summarecon Mall

Bekasi Bekasi

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

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Figure 76. People visiting F&B store at Summarecon Mall Figure 77. People visiting F&B store at Summarecon Mall

Bekasi Bekasi

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

Figure 78. People avoid visiting durable goods store at Figure 79. People avoid visiting durable goods store at

Summarecon Mall Bekasi Summarecon Mall Bekasi

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

Figure 80. People avoid visiting durable goods store at Figure 81. People avoid visiting durable goods store at

Summarecon Mall Bekasi Summarecon Mall Bekasi

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

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In stark contrast to the minimum-to-no visit to durable goods, besides food and beverages stores, people are still rushing to supermarkets to buy basic necessities, while staying vigilant to maintain their health by purchasing vitamins at drug stores.

Figure 83. People queuing at a grocery store at Kota Figure 82. People queuing at a grocery store at Central Park Kasablanka

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

Figure 84. People queuing at a drug store at Central Park Figure 85. People looking at products at a drug store at Blok xx M Plaza

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

Still on June 17, we visited two shopping areas designated for selling durable goods, namely ITC Mangga Dua (clothing) and ITC Roxy Mas (smartphones). From our visit, we found that the total traffic was merely at 15% of the normal condition at ITC Mangga Dua, while the traffic at ITC Roxy Mas reached as much as 45% of the normal condition. Although the latter managed to attract relatively more people compared to other malls, people coming to ITC Roxy Mas mainly came to have their smartphones repaired, instead of purchasing the new ones.

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Figure 86. Aerial view of ITC Mangga Dua Figure 87. Aerial view of ITC Mangga Dua

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

Figure 88. Very low traffic at ITC Mangga Dua Figure 89. Very low traffic at ITC Mangga Dua

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

Figure 90. Very low traffic at ITC Mangga Dua Figure 91. Very low traffic at ITC Mangga Dua

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

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Figure 92. People queuing to enter ITC Roxy Mas Figure 93. People queuing to enter ITC Roxy Mas

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

Figure 94. People queuing to have their smartphones Figure 95. People queuing to have their smartphones repaired at ITC Roxy Mas repaired at ITC Roxy Mas

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

Figure 96. Smartphones sellers at ITC Roxy Mas struggle to Figure 97. Smartphones sellers at ITC Roxy Mas struggle to attract customers attract customers

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

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During our ground checks to several malls, we also asked a total of 20 people (10 middle- low income earners and 10 middle-high income earners) as to whether they will keep visiting malls should there be no vaccine available throughout the rest of 2020. It turns out that there is a profound difference between those two groups of people. While most of the middle-high income earners said that they will keep visiting malls, or at least consider doing it, most of the middle-low income earners don’t feel comfortable doing so, noting that it possess the risk of them getting infected, which could very well lead them to lose their current job.

Figure 98. Most of middle-high income earners will keep Figure 99. Most of middle-low income earners reluctant to visiting malls, or at least consider doing it, even without keep visiting malls without vaccine available vaccine xx

(% of total respondents) (% of total respondents) 45 80 40 70 40 70 35 60 30 30 30 50 25 40 20 30 15 20 20 10 10 5 10

0 0 Yes No Maybe Yes No Maybe

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

Finally, we ended our ground checks by interviewing 10 online motorbike drivers, whom we think are good proxies to represent middle-low income earners. We found that even after regional governments started to ease social distancing measures, their income are still nowhere near the pre-COVID-19 level.

On average, those drivers managed to earn as much as IDR165,500/day pre-COVID-19, which then fell to as much as IDR23,000/day throughout PSBB period. Post the easing of PSBB, on average, their income stands at IDR42,500/day, which translates into 26% of the normal rate (pre-COVID-19). All of the 10 drivers that we interviewed agree that the ride- sharing business is the one taking the biggest hit.

Table 5. Survey on 10 online motorbike drivers on their daily income Pre-COVID-19 Throughout PSBB Post PSBB Easing 1. 150,000 20,000 35,000 2. 200,000 20,000 40,000 3. 150,000 25,000 30,000 4. 250,000 15,000 40,000 5. 280,000 30,000 50,000 6. 125,000 30,000 50,000 7. 100,000 25,000 40,000 8. 100,000 15,000 50,000 9. 150,000 25,000 40,000 10. 150,000 25,000 50,000 Source: Mirae Asset Sekuritas Indonesia Research Data are presented in IDR

Throughout PSBB period, 6 drivers said that they significantly reduced their spending on durable goods, such as clothing, shoes, and electronics (including smartphone), while the other 4 drivers’ reduced spending was split into food (by reverting to instant noodles) and cigarette (one driver shifted to a cheaper brand, while the other was forced to completely quit smoking).

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After PSBB was eased, food becomes the one they increasingly spend on (80% of respondents), while spending on durable goods remains in check the most (90% of respondents).

Figure 100. Most reduced spending Figure 101. Most increased spending Figure 102. Most maintained spending components of motorbike drivers components of motorbike drivers after components of motorbike drivers after during PSBB period (before it was PSBB was eased x PSBB was eased eased) xxx xx

(% of total respondents) (% of total respondents) (% of total respondents) 70 90 100 80 90 60 80 90 60 70 80 50 70 60 60 40 50 50 30 40 40 20 20 30 20 30 20 20 10 10 10 10 10 10 0 0 0 0 Food Cigarette Durables Food Cigarette Durables Food Cigarette Durables

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

Relatively minimal contribution to GDP growth

After visiting various malls during 3 days of ground check, we conclude that the re-opening of malls and general economic activities won’t bear much of a positive result to Indonesia’s GDP figure as people remain defensive by significantly avoiding durable goods.

During our ground check, we found that throughout COVID-19, both middle-high income and middle-low income earners save more money than usual, driven by fear of losing jobs or at least taking a pay cut; middle-high income earners mostly save 31%-60% more money, while 80% of middle-low income earners save 10%-30% more money.

Combined with the fact that the cure for COVID-19 is unlikely to be ready in the near future (end of 2020 at the earliest, perhaps 1Q21 for Indonesia), then Indonesian people might continue maintaining their defensive stance for the rest of 2020.

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Table 6. 2020-2021 macroeconomic projection 2019 2020E 2021F GDP Growth (%) 5.02 2.20 3.50 Household Consumption (%) 5.04 1.87 Investment (%) 4.45 0.05 Government Spending (%) 3.25 4.40 Exports (%) -0.87 -3.01 Imports (%) -7.69 -5.01 Inflation (%) 2.72 2.80 USD/IDR (average) 14,142 15,500 USD/IDR (year-end) 13,866 15,400 BI 7-Day Reverse Repo Rate (%) 5.00 4.00 Source: Statistics Indonesia, Bloomberg, Mirae Asset Sekuritas Indonesia Research

Table 7. 2020 GDP growth projection 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20E 3Q20E 4Q20E GDP Growth (% YoY) 5.07 5.05 5.02 4.97 2.97 -1.50 1.50 4.50 Household Consumption (%) 5.02 5.18 5.01 4.97 2.84 -1.50 1.00 3.50 Investment (%) 5.03 4.55 4.21 4.06 1.70 -4.00 -1.50 3.00 Government Spending (%) 5.22 8.23 0.98 0.48 3.74 4.50 4.50 5.00 Exports (%) -1.58 -1.73 0.10 -0.39 0.24 -8.00 -2.00 1.50 Imports (%) -7.47 -6.84 -8.30 -8.05 -2.19 -10.00 -8.00 1.50 Source: Statistics Indonesia, Mirae Asset Sekuritas Indonesia Research

Table 8. 2020 GDP growth projection GDP growth (% QoQ) 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 1Q 0.64 0.80 0.49 0.04 -0.16 -0.36 -0.30 -0.41 -0.52 -2.41 2Q 3.86 3.96 4.00 3.83 3.74 4.01 4.01 4.21 4.20 -1.69 3Q 3.61 3.35 3.28 3.27 3.31 3.13 3.19 3.09 3.06 6.20 4Q -2.18 -2.25 -2.18 -2.07 -1.73 -1.81 -1.70 -1.69 -1.74 1.16 Full-year GDP (%) 6.17 6.03 5.56 5.01 4.88 5.03 5.07 5.17 5.02 2.20 Source: Statistics Indonesia, Mirae Asset Sekuritas Indonesia Research Data for 2Q20-4Q20 are our own estimate

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APPENDIX 1

Important Disclosures & Disclaimers Stock Ratings Industry Ratings Buy Relative performance of 20% or greater Overweight Fundamentals are favorable or improving Trading Buy Relative performance of 10% or greater, but with volatility Neutral Fundamentals are steady without any material changes Hold Relative performance of -10% and 10% Underweight Fundamentals are unfavorable or worsening Sell Relative performance of -10% * Ratings and Target Price History (Share price (----), Target price (----), Not covered ( ), Buy ( ), Trading Buy ( ), Hold ( ), Sell (◆)) * Our investment rating is a guide to the relative return of the stock versus the market over the next 12 months. * Although it is not part of the official ratings at PT Mirae Asset Sekuritas Indonesia, we may call a trading opportunity in case there is a technical or short- term material development. * The target price was determined by the research analyst through valuation methods discussed in this report, in part based on the analyst’s estimate of future earnings. The achievement of the target price may be impeded by risks related to the subject securities and companies, as well as general market and economic conditions.

Equity Ratings Distribution Buy Trading Buy Hold Sell Equity Ratings Distribution 57% 17% 19% 7% *Based on recommendations in the last 12-months (as of March 31, 2020)

Disclosures As of the publication date, PT Mirae Asset Sekuritas Indonesia, and/or its affiliates do not have any special interest with the subject company and do not own 1% or more of the subject company's shares outstanding.

Analyst Certification Opinions expressed in this publication about the subject securities and companies accurately reflect the personal views of the Analysts primarily responsible for this report. Except as otherwise specified herein, the Analysts have not received any compensation or any other benefits from the subject companies in the past 12 months and have not been promised the same in connection with this report. No part of the compensation of the Analysts was, is, or will be directly or indirectly related to the specific recommendations or views contained in this report but, like all employees of PT Mirae Asset Sekuritas Indonesia, the Analysts receive compensation that is impacted by overall firm profitability, which includes revenues from, among other business units, the institutional equities, investment banking, proprietary trading and private client division. At the time of publication of this report, the Analysts do not know or have reason to know of any actual, material conflict of interest of the Analyst or PT Mirae Asset Sekuritas Indonesia except as otherwise stated herein.

Disclaimers This report is published by PT Mirae Asset Sekuritas Indonesia (“Mirae Asset”), a broker-dealer registered in the Republic of Indonesia and a member of the Indonesia Exchange. Information and opinions contained herein have been compiled from sources believed to be reliable and in good faith, but such information has not been independently verified and Mirae Asset makes no guarantee, representation or warranty, express or implied, as to the fairness, accuracy, completeness or correctness of the information and opinions contained herein or of any translation into English from the Bahasa Indonesia. If this report is an English translation of a report prepared in the Indonesian language, the original Indonesian language report may have been made available to investors in advance of this report. Mirae Asset, its affiliates and their directors, officers, employees and agents do not accept any liability for any loss arising from the use hereof. This report is for general information purposes only and it is not and should not be construed as an offer or a solicitation of an offer to effect transactions in any securities or other financial instruments. The intended recipients of this report are sophisticated institutional investors who have substantial knowledge of the local business environment, its common practices, laws and accounting principles and no person whose receipt or use of this report would violate any laws and regulations or subject Mirae Asset and its affiliates to registration or licensing requirements in any jurisdiction should receive or make any use hereof. Information and opinions contained herein are subject to change without notice and no part of this document may be copied or reproduced in any manner or form or redistributed or published, in whole or in part, without the prior written consent of Mirae Asset. Mirae Asset, its affiliates and their directors, officers, employees and agents may have long or short positions in any of the subject securities at any time and may make a purchase or sale, or offer to make a purchase or sale, of any such securities or other financial instruments from time to time in the open market or otherwise, in each case either as principals or agents. Mirae Asset and its affiliates may have had, or may be expecting to enter into, business relationships with the subject companies to provide investment banking, market-making or other financial services as are permitted under applicable laws and regulations. The price and value of the investments referred to in this report and the income from them may go down as well as up, and investors may realize losses on any investments. Past performance is not a guide to future performance. Future returns are not guaranteed, and a loss of original capital may occur.

Distribution United Kingdom: This report is being distributed by Mirae Asset Securities (Europe) Ltd. in the United Kingdom only to (i) investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the “Order”), and (ii) high net worth companies and other persons to whom it may lawfully be communicated, falling within Article 49(2)(A) to (E) of the Order (all such persons together being referred to as “Relevant Persons”). This report is directed only at Relevant Persons. Any person who is not a Relevant Person should not act or rely on this report or any of its contents. United States: This report is distributed in the U.S. by Mirae Asset Securities (America) Inc., a member of FINRA/SIPC, and is only intended for major institutional investors as defined in Rule 15a-6(b)(4) under the U.S. Securities Exchange Act of 1934. All U.S. persons that receive this document by their acceptance thereof represent and warrant that they are a major institutional investor and have not received this report under any express or implied understanding that they will direct commission income to Mirae Asset or its affiliates. Any U.S. recipient of this document wishing to effect a transaction in any securities discussed herein should contact and place orders with Mirae Asset Securities (America) Inc., which accepts responsibility for the contents of this report in the U.S. The securities described in this report may not have been registered under the U.S.

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Securities Act of 1933, as amended, and, in such case, may not be offered or sold in the U.S. or to U.S. persons absent registration or an applicable exemption from the registration requirements. Hong Kong: This document has been approved for distribution in Hong Kong by Mirae Asset Securities (Hong Kong) Ltd., which is regulated by the Hong Kong Securities and Futures Commission. The contents of this report have not been reviewed by any regulatory authority in Hong Kong. This report is for distribution only to professional investors within the meaning of Part I of Schedule 1 to the Securities and Futures Ordinance of Hong Kong (Cap. 571, Laws of Hong Kong) and any rules made thereunder and may not be redistributed in whole or in part in Hong Kong to any person. All Other Jurisdictions: Customers in all other countries who wish to effect a transaction in any securities referenced in this report should contact Mirae Asset or its affiliates only if distribution to or use by such customer of this report would not violate applicable laws and regulations and not subject Mirae Asset and its affiliates to any registration or licensing requirement within such jurisdiction.

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Mirae Asset Daewoo International Network

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