BBNI 1H15 profit -51% YoY below estimate

Key takeaways from BBNI analyst meeting: · Loan accelerated to 4% YTD by 1H15 from -3% YTD in 1Q15 from higher lending to SOE (+8% YTD) and the medium segment (+7% YTD). We think the bank is on track to meet our 9% YoY target for FY15. · Deposit grew at the same pace, keeping LDR at 87%. The relatively…

META: Tower business expansion

§ Diversified business segments… : Previously partially held by Jusuf Kalla’s Bosowa Group, Nusantara Infrasatructure (META) is now owned by the Rajawali Group as its infrastructure arm (exhibit 6), operating in: toll roads, water infrastructure, sea ports, renewable energy and telecommunication towers. Through its subsidiary, Inpola Meka Energi (IME), META plans to build a hydro-based power plant in North Sumatera…

Tobacco display ban in minimarkets is not in place yet

No ban in place yet GGRM’s stock price was down 12% from the recent high over the news that government is banning the display of cigarettes in minimarket payment areas. We believe this was an over-sell, as no ban was in place yet. Indeed, this was just a recommendation from Ministry of Health and Indonesia Child Protection Commission (KPAI). Ministry…

ASII: SELL: Uninspiring Outlook

 Maintain SELL, IDR5,500 TP due to uninspiring outlook. Should trade at 20% discount to JCI’s PER.  Revising down our FY15-17F earnings by 10.7%, 12%, and 6.3% on lower UNTR and AALI’s earnings, and low auto sales.  Weak 1H15 earnings at IDR8.05T (49% of FY15F) with auto margin remaining stagnant at 10.1% qoq. 1H15 results ASII’s 2Q15 earnings…

BBCA: 2Q15 results: Solid, as expected

§ 2Q15 net earnings up 7.1% y-y: In the midst of slower loan growth, BBCA reported solid 2Q15 net earnings of IDR4.5tn, up by 7.1% y-y and 10.5% q-q, bringing 1H15 net profit to IDR8.5tn (+8.8% y-y), in line with our and consensus full-year estimates (46%). § Strong NIM and steady provisioning offset increased opex: BBCA’s NIM increased to 6.6%…

Global Bervariasi, IHSG Mix Cenderung Menguat

Jelang akhir pekan ini (31/7) bursa saham Asia dibuka mixed, terpengaruh oleh rilis data inflasi Jepang, penurunan harga komoditas, pergerakan indeks Wall Street yang tidak meyakinkan, serta kekhawatiran akan kembalinya aksi jual saham China. Indeks Nikkei 225 Jepang dibuka dengan mencatatkan penurunan tipis 0,1% dan berlanjut dengan sedikit menguat menjadi -0,02% (-3,60 poin) ke level 20.519,23 pada pukul 8:15 WIB….

BMRI: 2Q misses, confirms beginning of credit cycle in the country

Bank Mandiri (BMRI) reported 2Q net profit of Rp4.8tn, up 3% y/y, but down 7% q/q and 4% below our estimates. 1H15 profits amount to 46% of full year Street estimates. The miss was driven by higher operating costs (+11% q/q) and a significant rise in provisions (+69% q/q). Margins increased 34bps q/q, to 5.75%, primarily due to 250bps q/q…

JSMR: 1H15 earnings declined by 17.4% YoY

We attended Jasa Marga analyst meeting and here are the key takeaways: · 1H15 earnings declined by 17.4% YoY, partially due to higher financing charges and operating expenses (excl. construction exp). · 1H15 Opex (excl. construction exp) increased by 14% YoY due to 1) higher depreciation cost, 2) higher L&B tax as government revised the L&B tax implementation, 3) higher…

UNVR: Rising competition to continue

Rising competition to continue  1H15 results were slightly below expectations on overall economic slowdown and margin pressure.  Revenue grew 7% YoY but its EBIT margin compressed by 80bps, leading to 3% YoY earnings growth.  Maintain SELL on hefty valuation and rising competition that may cap pricing power. Our TP of IDR32,000 implies 36x PER FY16F. 1H15 results…

JPFA: 2Q15 results: Below estimates as oversupply dampened Lebaran sales

2Q15 results: Below estimates as oversupply dampened Lebaran sales § Continued DOC EBIT loss on oversupply conditions: Despite high demand for poultry products during the Lebaran period in 2Q15, DOC oversupply conditions in 2Q15 persisted, resulting in a lower-than-expected DOC ASP spike during the pre-Lebaran period (2Q15 highest DOC ASP: IDR5,500; 2Q14: IDR7,000). To reduce DOC overcapacity, JPFA retired parent…

INCO: Tough outlook

Tough outlook; D/G to SELL  Downgrade to SELL and cut TP to IDR1,500 on bleak outlook for nickel prices.  2Q15 earnings down 33% QoQ on lower nickel prices.  We see downside risk to 2015 forecast should nickel and oil prices stay at current levels. 2Q15 earnings: in line INCO posted 2Q15 earnings of USD17m, down 33.3% QoQ…

LPPF: 2Q15 management call: Lebaran aided SSSG in 2Q, FY15 guidance at 7% to 9%

We attended LPPF’s post 2Q15 results conference and detail our key takeaways below. With SSSG of +17.8%, LPPF has continued to deliver ahead of its peers that have seen major SSSG weakness in the recent months. Rising divergence vs peers underscores LPPF’s strong execution and positioning in the middle-income segment. With recurring income growth of +55% y/y and EBITDA growth…

SUPR: New technology utilization

§ Developing microcell towers: SUPR currently owns approximately 6,700 towers (around 93% located in Java and Sumatra), making it the third-largest tower operator amongst Indonesia’s listed tower companies (exhibit 10). A distinguishing feature relative to its peers is SUPR’s transformation from a pure conventional tower into an integrated network infrastructure provider, with a sustained Indoor DAS solution, fiber optic connectivity…

Heavy Equipment – Not As Bright As It Seems

We reinitiate coverage on the heavy equipment sector with a NEUTRAL; we reinitiate coverage on Hexindo Adiperkasa with a NEUTRAL and on United Tractors with a SELL. We believe the demand for heavy equipment from the coal mining sector will further decrease in 2016 while the higher potential demand from the infrastructure sector may not be sufficient to boost the…

Additional import duties: winners and losers

Import duty increases across various consumer product categories The Ministry of Finance has increased import duties for various consumer product categories – clothing, furniture, coffee, tea, wine, chocolate, processed meat & fish, wine, home electronics, jewelries, cars, and motorcycles – with the new tariffs ranging from 5-150% (please find the details in Figure 1). Through this policy (effective from 22…

Indonesia hikes import duties

News The Indonesian government has hiked import duties effective as of yesterday 23 July. The measure affects a wide range of consumer goods, from F&B, clothing, cars, tea/coffee, meat and home appliances among others. Some example statistics: According to media sources (eg Reuters, FT), the levy on Meat was raised from 5% to 30%; Tea and coffee from 5% to…

MEDC: 2Q15 results below expectations; 2015-16F earnings cut significantly

§ Below expectations on discontinued operations loss: In EBIT terms, MEDC’s 2Q15 operating income rose 35% q-q to USD24mn. However, MEDC recorded a net loss of USD16mn on losses from discontinued operations amounting to USD22mn. MEDC shut down operations at 3 gas fields located in the East Cameron block of the Gulf of Mexico as the production rates were below…

Indonesia Retail: Assessing impact of import duty hikes

MAPI sell-off ovedone, we see buying opportunity MAPI has corrected c6% intra-day post reports of Indonesia hiking import tariffs (+5% to 10%, details in table 1 below) on imports from countries with which Indonesia does not have free trade agreement (FTA) treaties. We think the share price reaction is over-done and suggest buying on weakness. Our back-of-envelope calculations indicate MAPI…

BBTN: 2Q15 results: Above expectations

2Q15 results: Above expectations § Earnings jumped 117.0% y-y: In the midst of slow GDP growth, BBTN booked 2Q15 net earnings of IDR429bn (+117.0% y-y, +6.6% q-q), bringing 1H15 earnings to IDR831bn (+54.2% y-y), above expectations and accounting for about 54% of our and consensus full-year estimates. § Support from strong housing loans and lower provisioning: BBTN’s strong housing loan…

China Sell-Off Reverberates

The U.S. equity markets followed their foreign counterparts lower amid downtrodden global sentiment in the wake of the largest daily tumble in mainland Chinese markets in over eight years. M&A announcements dominated a light equity front, while the economic calendar offered up a positive durable goods orders report. Treasuries were higher, while gold, crude oil prices and the U.S. dollar…

DOID eyeing on 3-4 new mining contracts

PT Delta Dunia Makmur (DOID), through its subsidiary PT Bukit Makmur Mandiri Utama (BUMA), is eyeing on 3-4 new mining contracts in the near future. Director and Corporate Secretary Errinto Pardede stated that the company still have room for overburden removal projects up to 50-60m bcm or equivalent to ~15% of the company’s total capacity of 350m bcm. The company…

MYRX: Hanson International to allocate IDR 2t

PT Hanson International (MYRX) is allocating around IDR2t to conduct land acquisition. The company plans to add 4,000ha landbank from currently 3,200ha. President Director Benny Tjokrosaputro stated that the company will acquire land in Java and outside of Java island such as Sumatra, Kalimantan, and Sulawesi.

Sector Update: Coal – Indian Imports On An Upward Trend

While thermal coal prices have stabilised at the sub-USD60/tonne level, the worst is not yet over as markets continue to remain oversupplied amidst subdued demand. In 1H15, Chinese coal imports have surprised on the downside, while Indian coal imports surprised on the upside. Although we expect this trend to continue, an overall decline in global coal demand over the next…

BI forecasts Indonesia economic growth at 5% – 5.2% in 2H15

Bank Indonesia Governor Agus Martowardojo has projected Indonesia’s economy will grow by 5% – 5.2% in the second semester of 2015, lower than previous forecast of 5.3% – 5.4%. The economic growth in 2H15 will rely on government spending disbursement including infrastructure spending. Currently, Indonesia Government has spent IDR820trn or 41% of FY15’s spending budget. Moreover, BI foresees that economic…

Ini Penyebab Pasar Saham China Terjun 8,4%

Hari ini, Indeks Komposit Shanghai di bursa saham China terjun 8,5%. Ini menimbulkan pertanyaan soal kebijakan penyelamatan pasar saham yang dilakukan pemerintah China. Tak hanya Indeks Shanghai, Indeks Shenzhen juga turun 7%. Dilansir dari CNN, Senin (27/7/2015), terjunnya bursa saham China terjadi di tengah kekhawatiran soal kesehatan ekonomi China. Laporan kinerja industri yang dirilis Senin mengindikasikan, pabrik-pabrik di negara dengan…

Pasar Saham China Terjun 8,4%, Terburuk Sejak 2007

Pasar saham China mengalami koreksi tajam siang hari ini, terjun bebas hingga 7,7%. Ini merupakan koreksi terburuknya sejak Juni 2007. Pasar saham negeri tirai bambu sudah terpangkas sejak pembukaan perdagangan pagi tadi, tapi penurunannya hanya 2% saja pagi tadi. Siang ini seperti dikutip dari data perdagangan Reuters, Senin (27/7/2015), pasar saham China tiba-tiba anjlok 8,4%. Sampai sekitar sekitar pukul 14.50…

Indonesia Economy: Indonesia June trade update

Improved Performance Exports: -12.8% y-y (Bahana: -13.5% y-y; Consensus:-16.6% y-y), better-than-expected § Oil and gas exports -44% y-y, +6.3% m-m on volume support: On a m-m basis, June’s higher oil and gas exports were supported by crude oil export volumes, which rose 10%, with processed oil up 12.8% and gas up 7.1%. Indonesia’s June crude oil price fell 3.9% m-m…

Indonesian Banking Sector: Slow-going

Although we believe the banking sector remains promising over the long term, short-term hiccups have emerged as banks struggle to grow loan portfolios in the midst of the present economic slowdown. § Continued weak mortgage lending on income tax enforcement: At a meeting last month with a tax consultant regarding the government’s sunset tax policy, we learned that tax officers…

JSMR to bid for 2 toll roads in 2H

JSMR is considering bidding for two toll roads tenders which are Manado-Bitung and Balikpapan-Samarinda in 2H15. Note that Manado-Bitung which is 39km length, is expected to start operating in the next 3 years at an estimated cost of more than IDR4T. Meanwhile, Balikpapan-Samarinda toll road is 990km length and cost up to IDR14.9T.

Indonesia market survey: Fasting month discounts

Retail walkabout § Grocery prices -4.2% in the fasting season = weak demand: Due to disappointing GDP growth of only 4.7% y-y in 1Q15 and our expected growth of just 4.7% y-y in 2Q15 (1Q14: 5.2%; 2Q14: 5.1%), we believe revenue growth in the retail sector will suffer, even for the more defensive grocery players. Higher fuel prices at the…

Higher import duties on consumer goods

News · The government has increased import duties on consumer goods (1,150 items), such as coffee, tea, alcohol, clohtes, etc. · The import duty increase varies from 10% to 150% · The objective of the import duty increase is to improve domestic industries’ competitiveness. The government is confident that the regulation will not be againts to the WTO. · Link…

BBTN: Expect strong profit growth in 2Q15

We expect BBTN to post flat QoQ profit of ~IDR405b in 2Q15 (+100% YoY) on the back of healthy mortgage growth and manageable funding cost. With declining portion of the old subsidized mortgage (IOBP & IO) we think NPL will not tick up further from 1Q15 level of 4.8%. Should BBTN manage to maintain the good performance in 2H15, then…

Indonesia’s Financial Regulator Loosens Risk-Weighted Asset Rule

Financial Services Authority, or OJK, announces 12 stimulus policies to boost banking industry, Chairman Muliaman Hadad tells reporters in Jakarta. * Govt-guaranteed credit given zero weight in risk measurement, automotive loans get 75%: Hadad * OJK temporarily allows loans secured with residence to get only 35% weight in risk measurement, micro loans backed by national credit guarantee agency get 50%,…

Property foreign ownership policy targeted to be effective by October

The Ministry of Coordination for Economics has targeted that the the property foreign ownership policy will be effective in the next three months to boost the property sector. The Minister of Coordination for Economics also stated that the slowing down of Indonesia’s economy is the main basis and argument for the policy.

PTBA: Delaying the inevitable

Event § According to Investor Daily, Indonesia’s Directorate General of Mineral and Coal has indefinitely put on hold the coal royalty hike for IUP (Mining Business License) holders, in view of the current low coal prices. We discuss the potential impact of this measure on PTBA and the seaborne coal market. The stock has fallen by more than 20% in…

Indonesian Banking Sector: SOE banks: Worse-than-expected NPLs

§ Asset-quality assessment based on three areas: Based on Banking Regulation number 14/15/PBI/2012, there are three main factors utilized to evaluate loan quality: (1) Business prospects, which cover sector performance, including corporate governance and competitive industrial-related rivalries; (2) Financial standing, consisting of earnings quality, capital adequacy, cash flow and market-sensitivity risks; and (3) Ability to service debt, including interest and…

DNET officially expanded to fiber optic business

PT Indoritel Makmur (DNET) has officially expanded its line of business to fiber optic through acquiring 71.89% shares in PT Mega Akses Persada, a cable optic company. Corporate secretary Kiki Yanto stated that the company is also obliged to purchase PT Mega Akses Persada’s mandatory convertible bonds worth as much as IDR1t which will be issued by the company periodically.

Markets End Week Lower

Despite a blow-out earnings report from internet kingpin Amazon.com and mostly better-than-expected results from some consumer stalwarts, as well as a massive merger in the healthcare space, an unexpected decline in U.S. new home sales and a disappointing read on Chinese manufacturing output sapped sentiment, sending U.S. equities into the red. Adding to the negative mood, uncertainty surrounding commodities lingered….

Equities Turn Lower on Housing and Commodity Uneasiness

U.S. stocks are lower on the heels of an unexpected drop in domestic new home sales and as festering global growth concerns are being exacerbated by a softer-than-expected Chinese manufacturing report. Commodity uneasiness remains with resource-related stocks seeing some pressure as gold and crude oil prices are lower. Amazon.com’s rally after its much better-than-expected earnings report is being overshadowed, along…

Indonesia’s largest FMCG company; initiating with a Buy

Return of the cigarette king; initiating with Buy HM Sampoerna (HMSP) is Indonesia’s largest fast-moving consumer goods (FMCG) and cigarette company by sales and profitability. We believe it is well positioned to benefit from rising consumer spending, especially given 1) its market leadership (both in volume and profitability terms) in one of the world’s most attractive cigarette markets with 35%…

PROPERTY SECTOR: Exploring potential catalysts

Indonesia’s property market update Recently, the central bank loosened macro prudential policy by raising loan-to-value (LTV) ratio for property loans in order to boost economic growth. Thereby, it reduces the minimum DP requirement for first home buyers. However, we think that It needs a more time to feel the impact of lower DP requirement given the recent slowdown on economic…

MDKA: Promising

Proven mining track record with support from the local community Owned by the Saratoga Group, which has a strong reputation and proven track record in the mining business, Merdeka Copper Gold (“MDKA”) launched an initial public offering (IPO) and was listed on 19 June 2015. MDKA was the first to utilize the Stock Exchange’s new regulation to list as a…

MIKA: Profit growth meets safety

Profit growth meets safety An affiliate of Kalbe Farma, Mitra Keluarga (MIKA) is a leading hospital operator with more than 25 years of experience. It operates 11 community hospitals, mostly in Greater Jakarta and Surabaya, where the demand level is matched by the supply of doctors. It boasts one of the highest operating margins among regional operators and has a…

SRAJ berpotensi memperoleh dana sebesar Rp1,07 triliun melalui mekanisme right issue

PT Sejahteraraya Anugrahjaya Tbk (SRAJ) berpotensi memperoleh dana sebesar Rp1,07 triliun melalui mekanisme right issue. Jumlah saham baru yang diterbitkan sebanyak-banyaknya 5,35 miliar saham dengan harga penawaran sebesar Rp200 per saham. Adapun PT Surya Cipta Inti Cemerlang (SCIC) menjadi pembeli siaga.

Natural Gas Overtakes Coal as Top U.S. Electricity Source

Call it a one-two punch against coal. As global demand for U.S. coal exports continues to sag, domestic demand at power plants has been sliding as well. For the first time ever, natural gas trumped coal as the top source of electric power generation in the U.S. In April, roughly 31 percent of electric power generation came from natural gas,…

ARTI akan mengakusisi 75% saham PT Odira Energi Persada di Blok Karang Agung, Sumatera Selatan

PT Ratu Prabu Energy Tbk (ARTI) akan mengakusisi 75% saham PT Odira Energi Persada di Blok Karang Agung, Sumatera Selatan. Kontrak panjangnya mencapai 32 tahun. Adapun nilai investasi akuisisi tersebut mencapai US$61 juta. Kapasitas produksinya bisa sekitar 1.800 barel per hari, dengan cadangan 150 juta barel.

Indonesia telecoms: Value with price tailwind

Overweight sector with PT Telkom our top pick We initiate coverage of the Indonesian telecoms sector with an overweight and PT Telkom as our top pick. For those with a riskier appetite, Indosat offers the greatest potential upside over the next 12months. We see structural price reforms in the sector providing 19% 2014-17E earnings CAGR, while at 6.1x FY16E EV/EBITDA…

Indonesia Oil & Gas: Downstream preference

§ Upstream – Unexciting on oil oversupply & weaker gas demand: In line with our 2015 average oil price assumption of USD60/barrel, Brent oil price has averaged USD59.4/barrel ytd, down 45% y-y, on oversupply (exhibit 3) on weak global conditions/ US inventory levels jumped 22% y-y to 465k barrels (exhibit 6), and as Iraq increased its 2Q15 production to 3.9m…

TELE to build cell phones factory in Indonesia

Usaha pemerintah untuk menurunkan impor ponsel dengan meningkatkan nilai minimum konten lokal menjadi 30% untuk ponsel 4G LTE telah ditanggapi secara antusias oleh industri. TELE telah menandatangani perjanjian dengan perusahaan Taiwan- Arima Communication, untuk membangun pabrik baru dan memenuhi ketentuan 30% konten lokal. Arima Communication sudah bekerja sama dengan NEC dan Acer.