17 January 2018 BCAS Vista IDX: 6,430 (+0.74%) Turnover (IDRbn): Indonesia Morning Digest 6,506 (+41.25%) Vol RESEARCH INDICES Last Chg (%) YTD (%) (US$ mn) RESEARCH REPORT ASIA IDX 6,430 0.74 1.16 488 TPIA: Braces for higher oil price; D/G Fully Valued LQ45 1,093 0.85 1.29 312 Plastic production costs may be burdened by oil price increase Hang Seng 31,905 1.81 6.64 7,416 Adverse impact on earnings KOSPI 2,522 0.72 2.20 6,384 Recommendation: Downgrade to FULLY VALUED with TP of Nikkei 225 23,952 1.00 5.21 12,201 IDR4,800 PCOMP 8,865 0.08 3.58 103 SET 1,822 (0.05) 3.88 2,094 SHCOMP 3,437 0.77 3.91 41,311 HEADLINE NEWS STI 3,550 0.39 4.33 538 TWSE 10,986 0.27 3.23 4,148 MACRO EUROPE & USA Joko Widodo to inaugurate new minister today DAX 13,246 0.35 2.54 377 Dow Jones 25,793 (0.04) 4.34 929 FTSE 100 7,756 (0.17) 0.89 511 INDUSTRY NASDAQ 7,224 (0.51) 4.64 2,119 S&P 500 2,776 (0.35) 3.85 3,417 Dec-17 auto sales: lower on seasonality ETF & ADR Last Chg (%) MoM (%) YTD (%) BI predicts average lending rate to down in 1Q18; loan growth to EIDO US (USD) 29.32 0.31 7.05 3.13 accelerate in 1Q18 TLK US (USD) 31.66 1.02 1.74 (1.74) Feasibility study for Jakarta-Serpong MRT will be implemented this Source: Bloomberg year Government to change KAI’s BOD COMMODITIES Last Chg (%) MoM (%) YTD (%) Excise tax regulation is expected to burden manufacture industry Brent (USD/b) 69 (1.58) 10.38 3.41 Ministry ESDM ensure that PGAS will retain SEI as its subsidiary WTI (USD/bl) 64 (0.89) 11.16 5.48 Coal (USD/ton) 106 0.05 6.45 5.61 COMPANY Copper (USD/mt) 7,078 (1.83) 2.79 (2.33) Gold (USD/toz) 1,338 (0.12) 6.52 2.73 BBNI debtor, Namasindo, has been filed with PKPU Nickel (USD/mt) 12,545 (2.45) 8.33 (1.68) CTRA reported 7.6tn marketing sales in FY17 Tin (USD/mt) 20,470 0.84 6.89 2.22 WIKA to offer USD400mn Komodo Bond Corn (USD/mt) 348 0.58 0.22 (0.71) Palm oil (MYR/mt) 2,504 0.97 6.73 2.45 Soybean (USD/bu) 968 0.78 (1.02) 0.65 Wheat (USD/bsh) 417 (0.95) (0.42) (2.46) Source: Bloomberg CURNCY & RATES Last 1D 1M 2016 IDR/USD 13,338 13,335 13,579 13,568 AUD/USD 1.26 1.26 1.31 1.28 CAD/USD 1.24 1.24 1.29 1.26 CNY/USD 6.44 6.44 6.61 6.51 USD/EUR 1.23 1.23 1.17 1.20 JPY/USD 110.45 110.54 112.60 112.69 SGD/USD 1.32 1.32 1.35 1.34 JIBOR (%) 3.91 3.90 3.90 3.90 7D Repo Rate (%) 4.25 4.25 4.25 4.25 10Y Bond (%) 6.16 6.20 6.49 6.32 CDS - 5Y (bps) 78.95 79.36 91.74 85.25 Source: Bloomberg MARKET 2017F 2018F MACRO 2017F 2018F FUND FLOWS & SECTORAL TREND EPS growth (%) 13.4 12.6 GDP Growth (%) 5.1 5.3 Foreign Flows Last 1W 1M YTD Cons EPS growth (%) 12.6 11.2 Govt Spending (%) 7.0 7.0 In/(Out) (IDRbn) 117 3,304 5,222 4,712 P/E (x) 27.3 25.2 Private Spending (%) 5.1 5.1 Sector Performance Last 1D (%) 1M (%) YTD (%) P/E ex UNVR, HMSP (x) 21.7 20.3 Investment (%) 6.5 6.6 JAKAGRI Index 1,623 0.94 0.47 0.42 JAKBIND Index 696 1.71 3.40 0.92 EV/EBITDA (x) 11.5 10.2 CPI (%) 3.6 3.9 JAKCONS Index 2,860 0.31 5.73 (0.03) P/B (x) 10.7 9.9 BI 7-day RR (%) 4.3 4.3 JAKFIN Index 1,151 0.59 6.49 0.91 P/B ex UNVR, HMSP (x) 3.2 2.9 IDR/USD 13,433 13,576 JAKINFRA Index 387 1.75 7.54 3.93 Yield (%) 2.0 2.3 FX Reserve (USDbn) 126.0 122.0 JAKMIND Index 1,367 0.52 (1.13) (1.03) Gearing ex Bank (%) 11.0 10.8 CAD (%) (2.2) (2.3) JAKMINE Index 1,810 1.11 15.73 13.58 ROE (%) 13.6 14.0 Fiscal Budget (%) (2.5) (2.5) JAKPROP Index 515 0.69 5.92 3.89 ROA (%) 3.9 4.1 10-Y Govt bond 6.7 7.0 JAKTRAD Index 927 0.10 2.30 0.60 Source: BCA Sekuritas Source: Bloomberg Page 1 o10 17 January 2018 BCAS Vista Indonesia Morning Digest HEADLINE NEWS MACRO Joko Widodo to inaugurate new minister today President Joko Widodo to swear in new officials in its cabinet team. The secretary general of Golkar, Idrus Marham will be appointed as social minister, replacing Khofifah Indar Parawansa who will be running as a governor candidate in East Java. The president will also appoint ex-general army Moeldoko as Presidential chief of staff, replacing Tenten Masduki. (Detikfinance) Comment: this reshuffle has been somewhat anticipated and will likely become the last reshuffle before President Jokowi end his first term in 2019. There’s also a speculation that Moeldoko may play a larger role, if Jokowi were to get re-elected in 2019. With this re-shuffle, we believe that the impact will not be a significant one, as focus would start to shift to election in 2H18. INDUSTRY Dec-17 auto sales: lower on seasonality • Given shorter working days, domestic car wholesales volume fell 11.5% MoM/-1.7% YoY to 85.1k units. This brought 12M17 wholesales volume to 1.086k units (+2.3% YoY), 101% of our full-year target. It is worth noting, however, that while wholesales domestic figures remained in a positive growth territory in 12M17, Astra ended up with negative growth of 1.7% in 2017, a testimony of stiffer competition toward the end of the year. • On a monthly basis, Astra’s market share further contracted to 46% in December compared to 57% at the beginning of 2017. The recent launched of MPV Mitsubishi Xpander has paved the way for market share expansion to 15% from 9% historical average. • In a 2W segment, domestic wholesales volume fell 24.4% MoM to 415k units, mostly driven by Astra Honda Motor (AHM) lower sales volume of 281k units (-34.5% MoM). We suspect that this was done intentionally to prevent piling up inventory in the retail market. In line with lower sales volume, AHM market share contracted to 68% in December- 17. • With December realization, wholesales volume in 2017 stood at 5.886k units (-0.8% YoY), 99% of our full-year target. • We envisage softer earnings for Astra in 4Q17 as wholesales volume fell 20% YoY in 4W segment and 4.8% in 2W segment. • 2018 outlook may not be so optimistic for the auto segment, driven by continuous impact of tighter competition with the recent launch of Toyota Rush/Daihatsu Terios unlikely sufficient to fend off the contraction in Toyota Avanza/Daihatsu Xenia. At this juncture, we maintain our forecast of flat volume growth in 4W and 2W segment. Rating remains a HOLD. MoM YoY YoY Monthly sales volume Dec-16 Nov-17 Dec-17 FY16 FY17 (%) (%) (%) 4W 4W Astra 50,608 47,088 39,048 (17.1) (22.8) 589,182 579,114 (1.7) 4W non-Astra 35,939 49,060 46,050 (6.1) 28.1 472,713 507,156 7.3 Domestic 86,547 96,148 85,098 (11.5) (1.7) 1,061,895 1,086,270 2.3 2W 2W Astra 309,796 430,487 281,949 (34.5) (9.0) 4,380,888 4,385,888 0.1 2W non-Astra 127,968 119,816 134,047 11.9 4.8 1,550,397 1,500,837 (3.2) Domestic 437,764 550,303 415,996 (24.4) (5.0) 5,931,285 5,886,725 (0.8) Market share (%) Dec-16 Nov-17 Dec-17 Monthly market share 4W 4W Astra 58.5 49.0 45.9 4W non-Astra 41.5 51.0 54.1 2W 2W Astra 70.8 78.2 67.8 2W non-Astra 29.2 21.8 32.2 Accumulated market share 12M16 11M17 12M17 4W 4W Astra 55.5 53.9 53.3 4W non-Astra 44.5 46.1 46.7 2W 2W Astra 73.9 75.0 74.5 2W non-Astra 26.1 25.0 25.5 Source: Gaikindo Page 2 o10 17 January 2018 BCAS Vista Indonesia Morning Digest HEADLINE NEWS BI predicts average lending rate to down in 1Q18; loan growth to accelerate in 1Q18 Based on recent survey, BI indicates average lending rate to down in 1Q18. BI predicts that working capital’s lending rate to down 5bps reaching 12.24% and consumer’s lending rate to down 8bps reaching 15.08% while on investment’s lending rate, BI predicts an increase of 2bps reaching 11.89%. Separately, BI also expects that loan growth would likely to accelerate in 1Q18 compared to a deceleration in the past few years. Additionally, BI predicts overall industry loan growth to reach 11.8% in end of 2018.