Equity SNAPSHOT Monday, February 03, 2020 FROM EQUITY RESEARCH KEY INDEX KEY INDEX Chg Ytd Vol Chg Ytd Vol Q4 2019 GDP Outlook: Slower Growth Close Close (%) (%) (US$ m) (%) (%) (US$ m) The Indonesian economy is likely to expand at a slower pace in the Asean - 5 Asean - 5 last quarter of 2019 since growth in most expenditure components Indonesia 5,940 (1.9) (5.7) 485 Indonesia 6,134 0.1 (1.0) 318 is predicted to ease – both on a quarterly and annual basis. During Thailand 1,514 (0.6) (4.2) 1,795 Thailand 1,568 (0.1) 0.2 1,454 the Oct-Dec 2019 period, Danareksa’s consumer confidence index Philippines 7,201 (2.6) (7.9) 146 Philippines 7,855 (0.3) 5.2 87 touched its highest ever level. Fixed capital formation was slightly Malaysia 1,531 (0.9) (3.6) 564 Malaysia 1,562 (0.5) (7.6) 338 better than in Q4 2019 but still sluggish compared to the previous Singapore 3,154 (0.5) (2.1) 1,140 Singapore 3,173 (0.5) 3.4 908 year. Government expenditure reached 94% of 2019 state budget, Regional Regional and trade tensions and weak global demand continued to put China 2,977 (2.8) (2.4) 62,432 China 2,885 0.3 15.7 28,889 pressure on the foreign trade. Given this backdrop, we project Q4 Hong Kong 26,313 (0.5) (6.7) 13,465 Hong Kong 26,391 (0.2) 2.1 9,093 2019 GDP gworth at around 4.98% yoy and FY 2019 at 5.03%. Japan 22,853 (1.5) (3.4) 1,918 Japan 23,380 (0.6) 16.8 10,278 To see the full version of this report, please click here Korea 2,088 (1.5) (5.0) 6,044 Korea 2,068 (0.8) 1.3 3,790 Taiwan 11,495 0.6 (4.2) 5,818 Taiwan 11,532 0.2 18.5 3,534 India 39,736 (2.4) (3.7) 275 India 40,675 (0.3) 12.8 495 MARKET NEWS Nasdaq 9,151 (1.6) 2.0 193,267 Nasdaq 8,521 (0.6) 28.4 116,797 MACROECONOMY Dow Jones 28,256 (2.1) (1.0) 18,750 Dow Jones 27,503 (1.0) 17.9 11,490 ▪ Japan Credit Rating raised Indonesia’s sovereign bond rating to CURRENCY AND INTEREST RATE CURRENCY AND INTEREST RATE BBB+ w-w m-m ytd w-w m-m ytd Rate Rate SECTOR (%) (%) (%) (%) (%) (%) ▪ Infrastructure: Land clearing for the Jakarta Bandung HSR Rupiah Rp/1US$ 13,655 (0.5) 1.5 1.5 Rupiah Rp/1US$ 14,115 (0.2) (0.7) 1.9 project to be completed soon BI7DRRR % 5.00 - - - BI7DRRR % 5.00 - (0.3) (1.0) ▪ Plantation: 3 Depots to push B-30 10y Gov Indo bond 6.68 0.1 (0.4) (0.4) 10y Gov Indo bond 7.16 0.1 0.2 (0.9) CORPORATE ▪ Indocement Tunggal Prakarsa: Targets sales volume in 2020 to HARD COMMODITY HARD COMMODITY d-d m-m ytd d-d m-m ytd grow by 3-4%yoy Unit Price Unit Price ▪ KINO targets 30% yoy minimum growth in its 2020 bottom line (%) (%) (%) (%) (%) (%) Coal US$/ton 66 (0.1) (2.1) (2.1) Coal US$/ton 67 (0.3) 0.2 (34.0) Gold US$/toz 1,588 (0.1) 2.3 4.6 Gold US$/toz 1,478 (0.0) (2.1) 15.2 PREVIOUS REPORT Nickel US$/mt.ton 12,772 1.8 (8.4) (8.4) Nickel US$/mt.ton 13,315 (2.5) (20.7) 25.6 ▪ Jasa Marga: Year of adjustment Tin US$/mt.ton 16,425 2.4 (4.4) (4.4) Tin US$/mt.ton 16,771 1.5 1.7 (14.1) ▪ Unilever Indonesia: In line FY19 earnings ▪ BPD Jatim: Steady performance SOFT COMMODITY SOFT COMMODITY d-d m-m ytd d-d m-m ytd ▪ Cigarette: A survey on higher prices: What will smokers do? Unit Price Unit Price ▪ Bank Mandiri: Still a keeper (%) (%) (%) (%) (%) (%) ▪ Bank Rakyat Indonesia: Stay micro, stay profitable Cocoa US$/mt.ton 2,728 2.8 13.5 11.0 Cocoa US$/mt.ton 2,476 (1.0) 1.3 4.7 ▪ Semen Indonesia: Year of consolidation Corn US$/mt.ton 142 - (1.6) (1.6) Corn US$/mt.ton 141 1.7 (2.5) 5.6 ▪ Bank Negara Indonesia: Steady Progress Oil (WTI) US$/barrel 51 (1.6) (19.5) (16.9) Oil (WTI) US$/barrel 56 0.6 (0.2) 24.3 ▪ Indocement Tunggal Prakarsa: Solid grounds for optimism Oil (Brent) US$/barrel 56 (1.9) (19.0) (15.8) Oil (Brent) US$/barrel 61 (0.2) (1.4) 13.0 ▪ Telkom Indonesia: Ready to show its teeth Palm oil MYR/mt.ton 2,689 (3.2) (10.3) (11.1) Palm oil MYR/mt.ton 2,632 (1.3) 11.4 34.8 ▪ Astra International: Stable market share in 2019 Rubber USd/kg 131 (2.3) (9.5) (9.7) Rubber USd/kg 142 0.9 6.9 13.6 ▪ Danareksa Research Institute: December Outlook: Soft Trade Pulp US$/tonne 1,205 N/A 2.8 20.5 Pulp US$/tonne 1,205 N/A 2.8 20.5 Activities Coffee US$/60kgbag 70 1.1 3.2 3.2 Coffee US$/60kgbag 72 0.3 7.9 3.5 ▪ Ace Hardware Indonesia: Moderation Transpired in 2019 Sugar US$/MT 406 (0.5) 13.1 13.1 Sugar US$/MT 345 0.7 1.3 3.6 ▪ 2020 Compendium : The Set and Drift Wheat US$/ton 151 (1.2) (0.9) (0.9) Wheat US$/ton 143 (1.9) 0.7 (5.1) ▪ Plantation: Positive market dynamics Soy Oil US$/lb 30 (2.3) (13.2) (13.2) Soy Oil US$/lb 30 0.1 (3.4) 8.9 SoyBean US$/by 873 (0.4) (7.5) (7.5) Soy Bean US$/by 871 0.1 (5.8) (1.3) Source: Bloomberg Source: Bloomberg Danareksa Sekuritas – Equity SNAPSHOT GDP Outlook • • • • • • Equity SNAPSHOT Monday, February 03, 2020 MARKET NEWS MACROECONOMY Japan Credit Rating raised Indonesia’s sovereign bond rating to BBB+ Japan Credit Rating (JCR) have raised Indonesia’s sovereign bond rating to BBB+ with a stable outlook from BBB in April 2019. The Ministry of Finance stated that this rating improvement would be utilized to attract direct investment from Japan in the form of bonds investment. There are three main factors which were behind the rating improvement: continued implementation of the reformation agenda, budget reform to rein in the budget deficit by controlling fuel subsidies, and the omnibus law as a vehicle for deregulation. JCR believes that the Indonesian economy can remain firm thanks to support from domestic consumption, and a manageable budget deficit and debt ratio. (Investor Daily) SECTOR Infrastructure: Land clearing for the Jakarta Bandung HSR project to be completed soon Only 0.05% of the land for the Jakarta Bandung high speed train (HSR) project has not been cleared yet, numbering 60 land plots. The land clearing is targeted to be completed in the near future. The lengthy land clearance process mostly reflects administrative problems such as changes in the ownership of land and issues with land certificates. The construction progress for the railway development has reached 42%. (Kontan) Plantation: 3 Depots to push B-30 Pertamina is planning to develop 3 storage depot locations to support B-30 absorption in Tanjung Uban, Teluk Kabung, Tanjung Gerem. Pertamina has 29 storage facilities for the B-30 mix before distribution to fuel terminals. The company will also develop a green diesel in Plaju Gulping involving a USD600mn investment open to collaboration with private companies. CORPORATE Indocement Tunggal Prakarsa: Targets sales volume in 2020 to grow by 3-4%yoy Indocement Tunggal Prakarsa (INTP) targets sales volume growth in 2020 of around 3% to 4%yoy. As INTP sold 18.0mn tons of cement in 2019, the volume targeted is 18.54-18.72mn tons in 2020. INTP allocated IDR1.4tn of capex in 2020 which will be focused on continuing the development of refused derived fuel (RDF), a waste used power plant in INTP’s plant in Citeureup, West Java, the development of a split mine in Pamoyanan, Bogor, and bong filter instalments in several plants. (Kontan) Comment: Our sales volume target for 2020 is 18.4mn tons, in-line with the management’s target. Our target is 98.4% to 99.3% of the management’s target. (Maria Renata) KINO targets 30% yoy minimum growth in its 2020 bottom line Kino Indonesia (KINO) is optimistic of booking 15% yoy revenues growth in 2020, with a minimum growth rate of 30% yoy in its FY20 bottom line. Budi Mulyono, the CFO of KINO, stated that the company would be aggressive in pushing the sales of its products in all segments. In 2020, KINO will spend around IDR300bn on capex – a similar allocation compared to 2019. (Investor Daily) Comments: The company’s guidance on its FY20 top line is in line with our FY20 forecast (+17% yoy). However, at the bottom line, we estimate 18% yoy core profits growth. (Natalia Sutanto) Danareksa Sekuritas – Equity SNAPSHOT Equity Rating Price (Rp) Price Mkt Cap Net profit, Rp bn EPS (Rp) Core EPS (Rp) EPS Grow th PER (x) EV / EBITDA (x) PBV (x) ROE Valuation Target Rp Bn 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 Danareksa Universe 4,198,007 258,015 285,979 209 232 8.4% 10.8% 16.3 14.7 12.6 11.7 2.3 2.1 14.9 15.2 Auto 257,071 21,942 23,302 441 469 6.3% 6.2% 11.7 11.0 7.9 7.5 1.6 1.5 14.4 14.2 Astra International BUY 6,350 8,000 257,071 21,942 23,302 542 576 525 546 6.3% 6.2% 11.7 11.0 7.9 7.5 1.6 1.5 14.4 14.2 Banks 1,372,293 86,444 98,704 658 751 8.5% 14.2% 15.9 13.9 2.2 2.0 14.7 15.1 BCA HOLD 32,400 33,000 798,822 32,883 37,215 1,334 1,509 1,334 1,509 12.4% 13.2% 24.3 21.5 N/A N/A 4.1 3.6 17.9 17.8 BNI BUY 7,200 9,000 134,270 16,573 18,085 889 970 889 970 4.2% 9.1% 8.1 7.4 N/A N/A 1.0 0.9 13.0 12.8 Bank Tabungan Negara BUY 1,870 2,700 19,803 2,203 3,423 208 323 208 323 76.8% 55.4% 9.0 5.8 N/A N/A 0.7 0.7 8.6 12.2 Bank Mandiri BUY 7,550 9,000 352,333 28,813 33,046 617 708 617 708 2.9% 14.7% 12.2 10.7 N/A N/A 1.6 1.5 14.0 14.7 BTPN HOLD 2,910 3,500 23,713 2,870 3,298 352 405 352 405 11.2% 14.9% 8.3 7.2 N/A N/A 0.7 0.7 9.3 9.9 BTPS HOLD 4,410 4,200 33,973 1,651 2,067 214 268 214 268 27.4% 25.2% 20.6 16.4 N/A N/A 5.6 4.5 30.1 30.5 BPD Jatim BUY 625 800 9,376 1,451 1,570 97 105 97 105 7.2% 8.2% 6.5 6.0 N/A N/A 1.0 0.9 15.4 15.6 Basic Industries 272,656 2,430 2,783 23 26 64.2% 14.5% 112.2 98.0 19.2 18.7 6.2 6.1 5.6 6.3 Barito Pacific HOLD 1,305 1,200 116,167 821 994 9 11 15 12 115.2% 21.1% 141.5 116.9 12.0 11.9 6.8 6.7 4.8 5.8 Chandra Asri Petrochemical HOLD 8,775 8,800 156,489 1,609 1,789 90 100 94 105 46.4% 11.2% 97.3 87.5 34.5 32.4 5.9 5.7 6.1 6.6 Cement 131,530 4,183 5,367 435 558 23.2% 28.3% 31.4 24.5 11.4 10.2 2.3 2.2 7.4 9.2 Indocement BUY 16,475 21,600 60,648 1,823 2,051 495