Samsung confirmed to build a cellphone factory in Indonesia

Samsung confirmed to build a cellphone factory in Indonesia. In the localization stage, Samsung will modify its existing factory in Jababeka area, West Java to start producing cellphone; currently the plant produces DVD player, audio video, and top box. The Industry Ministry said Samsung will invest US$20m to buy machinery and equipment in the first stage to build a cellphone factory in West Java, Indonesia. Samsung did not further elaborate other details on investment cost, etc.

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August 21, 2014

WTON BUY call with DCF-derived TP of Rp1,260, offering 25% potential return upside & implying 27.8X PER’15

WTON  BUY call with DCF-derived TP of Rp1,260, offering 25% potential return upside & implying 27.8X PER’15.

Yualdo believes the premium valuation for WTON is justified given the company’s market leader position, strong balance sheet & huge potential upside from infrastructure development.

WTON could achieve 27% CAGR earning growth in FY13-16 on economies of scale, lead by savvy management. BUY.

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August 21, 2014

Panin Sekuritas 21 Agustus 2014

Bursa Amerika ditutup naik setelah The Fed memutuskan akan menaikkan Fed rate jika perekonomian membaik. Dow Jones +0,35%;  S&P 500 +0,25%; Nasdaq -0,02%. Bursa regional juga ditutup mixed ditengah adanya berita konflik geopolitik di Israel. Hari ini akan keluar data HSBC Flash PMI China bulan Agustus, data Juli berada pada level 51,7.

Rasio utang luar negeri triwulan kedua naik menjadi 33,86% dari sebelumnya 32,33%. Pergerakan IHSG hari ini diperkirakan akan dipengaruhi oleh keputusan MK dan data HSBC Flash PMI China. Hari ini MK akan mengeluarkan keputusannya mengenai sengketa hasil Pilpres 2014. Rupiah hari ini Rp11.679.
BOW: MAIN, SMRA, KLBF, BBTN, BBRI, ERAA, MAPI, PWON.
©Panin Sekuritas

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August 21, 2014

3,000 CCTV will be installed throughout Jakarta to supervise security, city’s facilities, and traffic

3,000 CCTV will be installed throughout Jakarta to supervise security, city’s facilities, and traffic. Jakarta deputy governor Basuki “Ahok” Purnama said the CCTV will be installed in all area of Jakarta to supervise and control the city’s problems, such as traffic and flooding. Ahok has ordered Jakarta’s communication agency (Diskominfomas) to install and integrate the CCTV which is targeted to be ready next year.

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August 21, 2014

Markets Able to Battle Back From Fed Tumble

U.S equities were able to recoup most of the lost ground that came following the release of the minutes from the Federal Reserve’s July meeting that roused the possibility that monetary policy stimulus may end sooner than some had expected. The report came on the eve of the Federal Reserve’s multi-day Jackson Hole Symposium, which could draw even more attention for any clues to the timing of the first rate hike given the backdrop of the Fed minutes. On the equity front, Target missed analysts’ forecasts and lowered its full-year earnings outlook, but some upbeat commentary regarding recent sales trends helped the retailer’s stock close higher. Moreover, Lowe’s Companies was able to overcome early losses as its stronger-than-expected results offset its reduced guidance, but shares of Hertz Global Holdings suffered after warning that its 2014 results are expected to fall short of its expectations as a result of operational challenges in the rental car segment. Treasuries drifted lower following the release of the Fed minutes, while a separate report showed mortgage applications rose last week. Gold was lower, whereas crude oil prices and the U.S. dollar were higher.

August 21, 2014

S&P to downgrade BUMI rating to selective default

Lembaga pemeringkat Standard & Poor’s (S&P) akan menurunkan peringkat BUMI menjadi selective default karena tidak mampu melunasi pokok utang obligasi konversi senilai US$375 juta, bahkan hingga masa tenggang hingga 12 Agustus 2014.

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August 21, 2014

U.S. stocks mostly advanced on Wednesday, lifting the S&P 500 to within reach of a record, after minutes from the Federal Reserve’s last meeting showed some Fed officials want a “relatively prompt” rate hike based on the economy’s progress

Good morning, U.S. stocks mostly advanced on Wednesday, lifting the S&P 500 to within reach of a record, after minutes from the Federal Reserve’s last meeting showed some Fed officials want a “relatively prompt” rate hike based on the economy’s progress. Dow………16979 +59.5   +0.35% Nasdaq……4527  -1.03    -0.02% S&P 500…..1987 +4.9     +0.25% FTSE……….6756  -23.8    -0.35% DAX………..9315  -19.7    -0.21% CAC………..4241  -13.7    -0.32% Nikkei……15455  +4.7   +0.03% HSI……….25160  +36.8  +0.15% Shanghai…2240   -5.1     -0.23% ST Times…3324  +7.2    +0.22%  Indo10Yr. 8.3514+0.0014+0.17% US10Yr….2.43% +0.02    +0.87% VIX………..11.78  -0.43     -3.52% USD Index…82.26+0.37   +0.45% Como Indx.288.28+1.24   +0.43% DJUSCL…..131.64 +0.40   +0.30% (Dow Jones US Coal Index) IndoCDS…141.38×5 -0.11  -0.08% (5-yr INOCD5) IDR.. 11705+25.8+0.22% (blmbrg)  Jisdor…… 11707  +25      +0.21% Euro……..1.3258  -0.0061 -0.45%  TLKM..46.71+0.27 +0.58%Rp2734 ARMS Plc….70.00  +0.50  +0.72% EIDO……… 29.26   +0.03  +0.10% EEM………. 45.06    -0.09   -0.20% Oil………….96.07   +1.59  +1.68% Gold ……1290.72   -5.10    -0.39% Timah……22362     -29      -0.13%    Nickel……18465     -56.5   -0.31%       Coal………68.85    +0.35  +0.51% CPO…….2042RM -23 -1.14%$645 Corn……..367.50   -4.75    -1.28% SoybeanOil.33.22 +0.21  +0.64% Wheat……550.00  -8.50    -1.52% (DE/ls- 21-08-14)

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August 21, 2014

TODAY 21 AGUSTUS 2014

TODAY 21 AGUSTUS 2014

• PUBEX :
ANTM, GJTL, ICBP, INDF, LTLS, SILO, SMSM

• RIGHT ISSUE :
BABP-R EndTrading
BCAP-R EndTrading

• DEVIDEN :
DPNS CashDeviden DistDate
ETWA CashDeviden DistDate
GEMA CashDeviden DistDate
PANR CashDeviden DistDate
XCID CashDeviden DistDate

• LISTING/EVENT/CONFERENCE :
-PTBA : resmi memperdagangkan fisik batubara online di Bursa Berjangka Jakarta. Pada tahap awal lelang, perseroan menawarkan 75 ribu ton batubara, masing-masing 60 ribu ton BA-70 HS dengan kalori 7 ribu kcal/kg dan 15 ribu (BA-63) dengan kalori 6,3 ribu kcal/kg. Lelang online tersebut dijadwalkan akan dibuka 21 Agustus 2014.

-8th Annual Indonesia Conference & Site Tours CIMB institutional salesperson – CIMB Securities @Bali – 21-22 August 2014

-17-Aug 21-Aug Denver, CO 19th Annual Oil & Gas Conference Enercom, Inc. theoilandgasconference.com

-DEUTSCHE BANK ROADSHOW
Cement Ltd: Post Result Update – HK 8/18-20 & SG 8/21

Albert Saputro: Indonesian Property, Constructions & Coal Sector Update – SG 8/18-20 & HK 8/21-22

• AGENDA ECONOMIC :
US : FOMC Minutes, Jobless Claims, PMI Manufacturing Index Flash, Phadelphia FED Survey, Existing Home Sales, Leading Indicators, EIA Natural Gas Report, 3-Month Bill Announcement, 6-Month Bill Announcement, 2-yr FRN Announcement, 2-yr Note Announcement, 5-yr Note Announcement, 7-yr Note Announcement, 5-yr TIPS Auction, FED Balance Sheet, Money Supply, EIA Natural Gas Stocks chg, Philadelphia Fed Manufacturing Index, Existing Home Sales Change MoM, Existing Home Sales, CB Leading Index MoM, Markit Manufacturing PMI Flash, Continuing Jobless Claims, Initial Jobless Claims

EU : Consumer Confidence, Markit Comp PMI Flash, Markit Manufacturing PMI Flash, Markit Services PMI – Flash

JAPAN : Stock Investment by Foreigners, Markit/JMMA Manufacturing PMI Flash

CN : HSBC Manufacturing PMI Flash

MY : Unemployment Rate

HK : Inflation Rate YoY

CH : Balance of Trade

WSKT is targeting to raise fund Rp 3.8tn through the issuance of bond and bank debt

WSKT is targeting to raise fund Rp 3.8tn through the issuance of bond and bank debt. WSKT will reach Rp 1.8tn through bank debt for building highways Pejagan-Pemalang sessions 1 and 2 along 22 km. In addition, WSKT will issue bond Rp 2tn.

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August 21, 2014

BBRI targets satellite launch will take place in 2Q16

BBRI targets satellite launch will take place in 2Q16. Currently, BBRI is still completing construction in Pasar Minggu, Jakarta Selatan. BBRI allocated USD 250mn for the procurement of these satellites. This satellite has 15 years usage period with 54 transponders, where 4 transponder will be used by the Government. With this satellite, BBRI claims will save up to Rp 200bn per year. During this time, BRI spends up to Rp 500bn per year for communication cost.

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August 20, 2014

Deputy Governor Basuki “Ahok” Purnama plans to procure double-decker buses for high-level commuter routes in Jakarta

Deputy Governor Basuki “Ahok” Purnama plans to procure double-decker buses for high-level commuter routes in Jakarta. Ahok plans to eventually pass on operations to PT Transjakarta. The plan will be executed along with e-ticketing, progressive fares (distance determined fares), ERP and improvement of vehicle-testing facilities; all complementary in city’s plan on improving public transport. The buses are planned to be procured through e-catalog, but if this is not possible, Ahok plans to add government-investment participation to PT Transjakarta so they can buy it instead.

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August 20, 2014

SMGR sets target sales growth by 10% -20% from 15.23 mn tons 1H14 to 16.6mn tons in 2H14

SMGR sets target sales growth by 10% -20% from 15.23 mn tons 1H14 to 16.6mn tons in 2H14. Thus, throughout this year, targeted sales volume could reach 29.1mn to 30.5mn tons. In terms of production, SMGR continues to boost the year-end target to reach 31.8mn tons. SMGR production in the country is estimated to reach 29.5mn tons and production in Vietnam reached 2.3mn tons. As of 7M14, sales volume reached 14.42mn tons, grew 0.3% yoy. Growth in sales volume of cement industry itself fell 0.5% to 32.7mn tons. SMGR controls 44.1% market share of the country as of JUL14.

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August 20, 2014

Dahlan want to push banking consolidation

Dahlan want to push banking consolidation. Minister of SOE points out that the consolidation make sense but he won’t have time to carry the changes as his tenor is only 2 months left. Dahlan points out that the end of majority of BBNI directors’ tenor as the prime time for banking consolidation despite potential objections from other directors.

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August 20, 2014

EXCL plans to make the U900 technology to serve surging data service

EXCL plans to make the U900 technology to serve surging data service. Previously, the 3G service only used a frequency 2.1 GHz, and in the future EXCL will also use 900 MHz for 3G service called U900. Frequency of 900 MHz has a wider range, while 2.1 GHz is ideal for capacity. EXCL is already piloting the use of 900 MHz in Karawang and Gresik.

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August 20, 2014

WIKA: 2Q14 results: Earnings miss on below the line charges

2Q14 results: Earnings miss on below the line charges
§ Earnings down 31% q-q and 7% y-y: WIKA recorded 2Q14 net profit of IDR115bn (81% of our 2Q14 estimate), down 31% q-q and 7% y-y. The 1H14 net profit was IDR283bn, up slightly by 1% y-y, mainly due to a net interest expense increase of almost 9x q-q (+72% y-y) to IDR17bn and a minority interest increase to IDR50bn (2Q13: IDR18bn). The 1H14 results, while higher y-y, were lower than our and consensus estimates.

§ Improving revenue on higher industry-business contribution: WIKA booked 2Q14 revenue of IDR3.1tn, up 10% q-q and 15% y-y, in line with our expectation (97%). The 1H14 revenue was up 11% y-y to IDR5.9tn, mainly due to a higher industry-business contribution of 24% y-y to IDR1.9tn (32% of total 1H14 revenue). Infrastructure and building, which is WIKA’s core business, improved slightly by 4% y-y to IDR2tn.

§ Increasing 2Q14 operating profit: In 2Q14, WIKA booked operating profit of IDR305bn, up 9% q-q and 22% y-y, in line with our projection. In 1H14, WIKA recorded operating profit of IDR584bn, up 12% y-y, in line with our (43% of FY14 estimate) and consensus estimates (43% of FY14 estimate).
Outlook: Growth expected on strong income portfolio
Following its strong earnings growth in 2013, we believe WIKA will continue to see a significant increase of 10% y-y in 2014 on its solid EPC business as well as its improving property and precast concrete businesses. WIKA has a strong reputation in the EPC business, mainly in power plants.
Recommendation: Reaffirm BUY and raise TP to IDR3,000
At this stage, we lower our 2014-15F EPS by 11-12%. However, as we roll over our valuation basis to 2015, we raise our 12-month TP to IDR3,000 from IDR2,700, based on a 2015F PER of 25x, warranted given its strong income portfolio. Besides, WIKA is trading at 25x 2014F PER, and is the largest company of its peers based on market cap. With 13% potential upside to our new TP, we retain BUY. Risks to our call include lower-than-expected revenue and higher-than-expected raw material costs.

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August 20, 2014

State – owned companies, JSMR-WSKT-PTPP, seek debt Rp 4tn to build Kuala Namu – Tebing Tinggi toll road along 60 km

State – owned companies, JSMR-WSKT-PTPP, seek debt Rp 4tn to build Kuala Namu – Tebing Tinggi toll road along 60 km. JSMR will hold majority portion 60% -65%; WSKT by 15%; the remaining 20% -25% will be divided between PTPP and Hutama Karya. JSMR needs a loan Rp 3.6tn – 3.9tn; WSKT Rp 900bn, and PTPP – Hutama Karya around Rp 1.2tn – 1.5tn.

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August 20, 2014

NOBU plans to conduct right issue at price Rp786/share

NOBU plans to conduct right issue at price Rp786/share. NOBU will issue 414.58mn new shares, with a target to raise up Rp 325.86bn. Hence, NOBU will seek shareholder approval at the EGM on Tuesday.

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August 20, 2014

SMGR has already absorbed capex of approximately USD 240mn as of Jul14 from the total budgeted capex worth USD 400mn until the end of the year

SMGR has already absorbed capex of approximately USD 240mn as of Jul14 from the total budgeted capex worth USD 400mn until the end of the year. As for the end of 2014, SMGR is targeting capital spending can be realized up to 90%. Most of the capex is used for factory expansion Indarung VI in Padang, plant in Rembang, Central Java, and also projects Grinding Plant / Cement Mill in Dumai.
Meanwhile, in 4Q14 SMGR targets to finalize the process of expansion plans to Myanmar by forming a joint venture with a local partner. For the formation of this JV, SMGR needs funds USD 100-200mn. USD 50mn comes from equity, while the rest will come from loans. For the expansion of the factory in Vietnam, SMGR states can likely be realized in 2015 with an additional capacity of about 1.5mn tons.

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August 20, 2014

ASRI to launch Menara Indigo apartment

Peluncuran proyek apartemen keempat itu dilakukan melalui anak usaha ASRI yaitu Alfa Goldland Realty. Menurut perseroan, apartemen itu terdiri dari 828 unit dan akan diluncurkan hingga 16 Agustus 2014.

ASP ditetapkan sebesar Rp238 juta per unit dan karena permintaannya tinggi maka harganya sudah naik menjadi Rp265 juta per unit.

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August 20, 2014

MAPI: Downgrade earnings forecast

We lower our MAP (MAPI) earnings forecasts for FY15-16F by 10-14% on worse-than-expected margin pressure. Our revised earnings are 25-30% below Bloomberg consensus. Although we still expect a decent 20% revenue CAGR over 2013-16F, the company’s EBIT margin is projected to contract 180bps over the same period and lead to a 7% earnings CAGR (vs 12% previously expected).

We expect rising operational costs to continue with the potential higher minimum wage increase along with fuel subsidy removal, persistent higher rents, and electricity tariff hike this year. On the other hand, the minimum wage hike is unlikely to lead to stronger growth potential for MAP’s target segment. Also, longer inventory days on the back of continuous expansion outside Jakarta and higher debt level are likely to persist in the medium term, in our view. Maintain Hold and lower TP to IDR5,500.

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August 20, 2014

TOWR: Regains Growth Momentum

TOWR’s 1HFY14 results were within our and consensus expectations, as sequential revenue growth picked up strongly in 2Q on higher tenancy growth following a soft 1Q. The slight deterioration in 2Q EBITDA margin was unsurprising due to efforts to support a sharp recovery in tenancy growth. We like SMN for its strong growth profile and relatively lower gearing. Maintain BUY with a IDR4,800 TP.

¨ Within expectations. Sarana Menara Nusantara (SMN)’s 1HFY14 EBITDA of IDR1,568bn (+26.9% y-o-y) accounted for 50% of both our and consensus full-year estimates. 1HFY14 core earnings were below expectations, primarily due to higher-than-expected taxation. No dividends were declared.
¨ Strong pickup in tower growth. As anticipated, 2QFY14 revenue grew 9.1% q-o-q (1QFY14: +1.3% q-o-q), as sequential tenancy growth accelerated to 1,122 following a soft 1Q (due to timing issue). While EBITDA margin fell 90bps q-o-q to 81.7% on higher selling and marketing expenses, this was unsurprising due to efforts to support the strong tenancy growth. Coupled with flat financing costs and lower taxation, 2QFY14 core earnings roughly doubled to IDR295bn.
¨ On track to meet guidance. Management maintained its 2014 guidance of adding 1,500-2,000 towers, which looks very much achievable having built 1,100 new towers in 1H. We see potential M&A opportunities in the sector from the possible disposal of towers by XL Axiata (EXCL IJ, BUY, TP: IDR6,300) and Indosat (ISAT IJ, BUY, TP: IDR4,800) as catalysts for inorganic growth in the sector. We think SMN stands a healthy chance of maintaining its leadership position via competitive bidding, given its healthy gearing position (annualised gross debt/EBITDA of 2.5x).
¨ Forecasts. We cut our FY14-15F earnings estimates by 20-26% to account for higher taxation.
¨ Investment case. We maintain our BUY rating on SMN, with an unchanged TP of IDR4,800 based on a target EV/EBITDA multiple of 17x (comparable to peers in developed markets trading at 16-19x) to our FY15 EBITDA estimate of IDR3.39trn. We like SMN for its strong growth profile and relatively lower gearing, which we believe provides better opportunities to capture inorganic growth.

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August 20, 2014

Three SOEs will see change of leadership

Three SOEs will see change of leadership. Following the resignation of Karen Agustiawan as Pertamina’s President Director (effective 1Oct2014), Dahlan (SOE Minister) is also looking to change the leadership of PLN (State-owned electricity company), KAI (Indonesian Railway Company) and Garuda (GIAA). Reported in the news that Dahlan wants to appoint Ignasius Jonan (current Head of KAI) as head of PLN, replacing Nur Pamudji – and has submitted Jonan’s name to Coordinating Ministry of Economy. Replacement for KAI is yet to be proposed. Separately, it will be the end of Emirsyah’s term as Head of Garuda.

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August 20, 2014

COWL get a loan from Bank DKI worth Rp 300bn to build apartments Lexington

COWL get a loan from Bank DKI worth Rp 300bn to build apartments Lexington. Lexington apartment building investment fund reached Rp 600bn, where Rp 230bn obtained from Bank Panin and Rp 70bn obtained from internal cash.

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August 20, 2014

MDLN launches Cluster Victoria

MDLN telah meluncurkan klaster Victoria yang secara eksklusif menargetkan eksekutif muda. Hanya 23 unit yang sudah tersedia dan mampu membukukan Rp37 miliar dari penjualan unit tersebut.

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August 20, 2014

AALI record CPO production in Jul14 fell 7.94% to 120,500 tons

AALI record CPO production in Jul14 fell 7.94% to 120,500 tons. So, production in 7M14 rose 16.6% yoy to 973,406 tons. Kernel sales rose 17.9% to 209,250 tons. Sales of FFB increased by 10.4% yoy to 3.14mn tons.

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August 20, 2014

BBRI – Roadshow feedback

Link to note here:
· We hosted BBRI for an NDR to UK/Europe last week, meeting ~50 funds. Interest was strong following the favourable presidential election outcome.
· The number one concern from investors centered on the bank’s LDR, which at 94% is above its peer group. BBRI targets a 92% LDR ratio by year end as its SOE clients have improved liquidity from the state budget (SOE loan repayment and higher current account balances).
· BBRI has plenty of liquidity with Rp86t (US$7.5b) surplus liquid assets and we estimate could theoretically operate as high as 105% LDR. Near term reductions in maximum deposit rates by BBCA and BMRI, however, are good for 2H14 funding cost pressure as BBRI sees itself as more of a follower on deposit rates.
· It’s clear 2013 was ‘as good as it gets’ for credit conditions in Indonesia’s banking system and investors second main concern was the impact of slower growth and higher rates. A normalised NPL ratio of 2-3% is expected vs 1.3% end 2013 and a 2-2.2% target end 2014. The bank’s full year credit cost target is 1.4% (1H14 was 1.35%).
· BBRI has little appetite to grow its SME segments (the cause of NPL growth) and its focus on micro, consumer and SOE corporate should keep quality and margins in check.
· Strategically, Life insurance and/or the Pegadaian pawnshop would be both accretive to group returns and provide new avenues for growth. Most questions centered around BBRI’s appetite to consolidate other state-owned banks, which we gauged as low, and BBRI’s role under the next Gov’t given its status as a top 2 SOE bank.
· The bank shares our view that it should be a key beneficiary of any credit programs focused on the rural sector (farmers, fisherman) under the next Government.
· BBRI is our preferred Indonesian bank and post our upgrade, and we upgrade the stock to BUY. Our 1 year target of Rp12,750/sh, offering 21% total shareholder return, is based on 2.7x P/BV (25% ROE, 9% risk free rate, 5% risk premium) and 11x P/E applied to 15CL and 16CL respectively.
There is upside to the current dividend pay-out of 30% given strong capital growth, even with Basel 3 which would boost the CAR by 1-2% to 19%+ vs the 13.5-17.5% regulatory requirement range.

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August 20, 2014

Fiscal 2014 Profit Bang on the Money, Shareholders to Consider Non-Core Asset Demerger

Following 30 years of decline, the world has again experienced a sustained increase in commodity prices. The last long-cycle uptrend, born at the end of the Great Depression, was driven by the rebuilding of Europe after the wars, and later on the rise of Japan to economic powerhouse status. The oil shocks of the 1970s were an effective death knell. The most recent rise, forged on the industrialisation and urbanisation of the world’s most populous country, began early in the final decade of the 20th century, though the seeds were probably sown considerably earlier.

China’s rise from economic obscurity has sustained commodity price growth into the 21st century. Despite now accounting for the lion’s share of global consumption of many commodity staples, its per capita use remains well below that of industrialised nations–the difference being China’s vast population. India’s near-equivalent numbers portend a lagged reinvigoration of commodity price support. Yet after more than a decade of growth the current resource boom is likely drawing to a close.

Positioned in the centre, BHP Billiton is the world’s largest publicly traded mining conglomerate, with the wherewithal to weather the boom-and-bust cycles of the volatile commodity markets. Geographic and product diversification give BHP more stable cash flow and lower operating risk than most of its mining peers. Most revenue comes from the relative safe havens of Australia/New Zealand, North America, and Europe.

This narrow-moat company has several key advantages. It produces a range of commodities from oil and gas to nickel, and it is a major producer of iron ore, copper, thermal coal, metallurgical coal, and manganese. It also offers a full suite of conventional energy products. The company can benefit from a rally in any of its product lines. Finally, BHP is a major Australian commodity producer in close proximity to the Asian markets.

A geographically diversified customer base allows BHP to benefit from economic growth and development in any part of the world. When all major world economies are growing strongly, BHP’s revenue and profits can benefit materially. With growth in demand for most of its products now softening–because of the maturing Asian economies and worldwide economic malaise–BHP has been recording softer earnings following peak fiscal 2011 levels at USD 21.7 billion. It will likely be mid decade before volume growth again has the company within sight of this earnings peak.

The good times have fortified the balance sheet. Some cash has been returned to shareholders, but the bulk of the windfall financed growth. With commodities peaked and capital costs still high, focus has shifted to fiscal discipline and grinding costs down in order to eke gains. The approach is likely also to yield increased distributions to shareholders.

It is difficult to create and protect competitive advantages while focusing on multiple commodities. With the exception of iron ore, we think BHP lacks real pricing power in its products. There is a risk that expanding at near-peak market conditions will result in lower-than-optimal returns on investment. However, with its impressive portfolio of businesses in terms of size and scale, BHP has a narrow economic moat, in our opinion.

BHP reported a 10% increase in underlying fiscal 2014 earnings of USD 13.5 billion, in line with expectations. The final dividend of AUD 2.60 per share was similarly as expected. This result is very clean, with little in the way of exceptional items, just a USD 530 million profit from the sale of Pinto Valley copper. Improvement was driven primarily via cost cutting and increased volumes, with commodity prices generally lower. Productivity-led volume and cost efficiencies saved USD 2.9 billion and a one-third decline in capital expenditure drove a USD 8.1 billion increase in free cash flow.

We have yet to incorporate the latest result into our valuation model, but don’t expect material changes to earnings or the fair value estimate given the lack of surprises. Net debt to equity is just 30%, net debt is conservative at USD 25.8 billion.

BHP has confirmed it will spin out noncore assets via an in-specie distribution of shares in a new company to be listed on both the ASX and Johannesburg exchanges. ADRs are also proposed for the over-the-counter market in the U.S. BHP will spin out its aluminium and manganese businesses, but only components of others. Cerro Matoso nickel in Columbia will go, but Nickel West in Western Australia stays for now. South African energy coal goes but New South Wales energy coal stays. Illawarra coking coal goes but Queensland coal stays. The Cannington silver-lead-nickel mine also goes. The board’s go-ahead is subject to government, taxation, regulatory, and other approvals, including from shareholders.

BHP’s narrow economic moat is intact. Fair value uncertainty is medium, compelling in the generally higher-risk resources segment. On balance, we’re ambivalent about the proposed spin-off. A risk is that shareholders see the new company as noncore, as we would, and any mass exodus upon issue would make it difficult to achieve a reasonable price, especially in the short term.

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August 20, 2014

Apple Inc. soared 1.4% to the record high

Apple Inc. soared 1.4% to the record high on prospect of strong sales of new iPhone.

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August 20, 2014

Panin Sekuritas 20 Agustus 2014

Bursa Amerika ditutup naik ditengah membaiknya data perumahan dan dibarengi inflasi yang rendah. Data konstruksi perumahan AS Juni naik 15,7% mom dan data starts for volatile multi-family homes melonjak +33% mom. Dow Jones +0,48%;  S&P 500 +0,50%; Nasdaq +0,43%. Bursa regional juga ditutup mixed ditengah adanya data defisit neraca dagang Jepang yang lebih besar dari konsensus.

Pemerintah telah menyetujui kenaikan harga gas elpijji non subsidi 12 kg.

Rupiah pagi ini Rp11.708. IHSG hari ini diperkirakan akan dibuka meningkat. Besok MK akan mengeluarkan keputusannya mengenai hasil Pilpres 2014.

BOW: KLBF, INTP, KIJA, PTBA, INCO, PTPP, GGRM, PNLF.

©Panin Sekuritas

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August 20, 2014

D’COINS – DWAC ONLINE TRADING Technical View (www.dcoins.co.id – 20 Agustus 2014)

Indeks Dow Jones Industrial Average naik 80,85 poin, atau 0,48%, menjadi 16.919,59.

Kenaikan disupport oleh data Indeks Harga Konsumen (IHK),  meningkat 0,1% pada Juli dan data housing starts yang naik tajam sebesar 15,7% pada Juli dari bulan sebelumnya. Ini.

Menjadi spekulasi pelaku pasar bahwa The Fed tetap akan menerapka suku bunga longgar. Data Dow Jones Future pagi ini, turun 1 poin.

Kurs Rupiah terhadap US$ menguat Rp. 7,5  ke level Rp. 11.679 (sumber: Bloomberg.com).

Harga minyak mentah turun US$ 1,93 per barrel menjadi US$ 94,48.

Level support harian IHSG berada pada 5.150; 5.130 dan resisten 5.180; 5.200.

Pelaku pasar menanti hasil sidang Pilpres di MK esok. Banyak kalangan menganggap MK akan menolak gugatan, namun tetap membentuk sikap wait and see. Buy on weakness.

Beberapa pilihan saham DWAC Online Trading System – D’COINS, antara lain;

1. WSKT. Trend naik mengarah ke Rp. 1.000an. Level support Rp. 910; 900. Resisten Rp. 930; 950. Buy on weakness.
 
2. BEST. Trend mendatar, kecuali harga melewati Rp. 650. Level Support Rp. 620; 600. Resisten Rp. 650; 700. Buy on weakness

3. TOTL. Trend mendatar, kecuali melewati Rp. 900. Level Support Rp. 815; 800. Resisten Rp. 850; 870. Buy on weakness.

4. KAEF.  Trend naik, harga mengarah ke Rp. 1.400an.  Level Support Rp. 1.300; 1.270. Resisten Rp. 1.350; 1.400. Buy on weakness.

5. SSIA. Trend mendatar, kecuali melewati Rp. 900. Level Support Rp. 800; 790. Resisten Rp. 830; 870. Buy on weakness.

6. WIKA. Trend akan meneruskan kenaikannya menuju Rp. 3.000an. Level Support Rp. 2.850; 2.800. Resisten Rp. 2.950; 3.050. Buy on weakness

7. MLPL. Harga dalam trend mendatar, kecuali harga melewati Rp. 850an. Level Support Rp. 800; 790. Resisten Rp. 830; 850. Buy on weakness

Saham-saham pilihan lainnya, antara lain: NRCA, SMRU, WTON, MDLN, GJTL, KRAS  dan CNKO

(JPs – Disclaimer On)

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August 20, 2014

U.S. stocks climbed on Tuesday, with the Nasdaq Composite furthering gains that have it at a 14-year high

Good morning,

U.S. stocks climbed on Tuesday, with the Nasdaq Composite furthering gains that have it at a 14-year high, as economic reports offered a benign view on inflation and cast a better-than-anticipated light on the housing market.

Dow………16920 +80.9   +0.48% 
Nasdaq……4528 +19.2   +0.43% 
S&P 500…..1982 +9.9     +0.50%

FTSE……….6779 +38.1   +0.56% 
DAX………..9334 +88.95 +0.96% 
CAC………..4255 +23.8   +0.56% 

Nikkei……15450 +127.2 +0.83%
HSI……….25113 +167.5 +0.67% 
Shanghai…2245 +5.9     +0.26% 
ST Times…3316 +3.7     +0.11%  

Indo10Yr. 8.3316+0.0025+0.31%
US10Yr….2.40% +0.02    +0.75% 

VIX………..12.21  -0.11     -0.89% 

USD Index…81.88+0.31   +0.38% 
Como Indx.287.04 -1.16    -0.40%
DJUSCL…..131.24 +1.99   +1.54% 
(Dow Jones US Coal Index) 
IndoCDS…141.495 -3.845  -2.65% 
(5-yr INOCD5) 

IDR.. 11679 -7.5 -0.06% (blmbrg)  
Jisdor…… 11682  +1       +0.008%
Euro……..1.3319  -0.0043-0.32%  

TLKM..46.44 -0.55 -1.17%Rp2713
ARMS Plc….69.50   -2.25    -3.14% 
EIDO……… 29.23   +0.06  +0.21% 
EEM………. 45.15   +0.21  +0.47% 

Oil………….94.48    -1.93   -2.00% 
Gold ……1295.82   -2.19   -0.17% 
Timah……22425     -45      -0.20%    Nickel……18450     -100    -0.54%       
CPO…….2065RM -22 -1.08% $654 
Corn……..372.25   +0.75  +0.20% 
SoybeanOil.33.01   -0.32   -0.96% 
Wheat……558.50  +4.25   +0.77% 

(DE/ls- 20-08-14) 

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August 20, 2014

Event 20 – 25 Aug 2014

20 Agustus

- PublicExpose :

GGRM
HRUM
SMGR
SSMS
TINS,
WSKT

 

•Komisi XI DPR
dijadwalkan membahas RUU Perbankan pada 18 Agustus – 20 Agustus tentang pembatasan kepemilikan asing, baik individu atau badan hukum asing di bank maksimal 40%.
 

21 Agustus

- PublicExpose : GJTL, ICBP, INDF, LTLS, SILO, SMSM

 

22 Agustus

- CumDate Deviden RDTX Rp.105

- PublicExpose : IKBI

 

25 Agustus

- CumDate Deviden EMTK Rp.79

- RUPS : CPGT, ESSA

 

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August 20, 2014

DILD plans to begin reclamation in North Jakarta in 2Q15 covering an area of ​​63 ha

DILD plans to begin reclamation in North Jakarta in 2Q15 covering an area of ​​63 ha. The project area will be built Giant Sea Wall by the city government. DILD has set aside Rp 7.5tn for the reclamation process.

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August 20, 2014

Regional Plantations – 30% foreign stake rule unlikely

· Reuters recently reported that the Indonesian government could look to cap the foreign ownership of plantation assets to 30%, as the country tries to maximise its land usage, protect indigenous people and tighten environmental controls in the sector. The new draft bill aims to open up the sector to smaller Indonesian players.
· As we understand it, Indonesia’s lawmakers are looking to finalise discussions on the draft bill soon and have plans to approve it before the new administration takes over (on 20 Oct 2014).
· We also understand the new regulation will be retroactive, though recent reports suggest this being rejected by the agriculture ministry and industry officials. Firms could potentially be given five years to comply with the new bill (according to a copy of the draft seen by Reuters), and those that refuse to comply may face fines, temporary suspensions or the revoking of licenses.

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August 20, 2014

EXCL plans to utilize Technology U900

EXCL berebcaba memanfaatkan Technology U900 atau 3G untuk frekwensi 900MHz sebagai solusi kenaikan pengguna layanan data. Rencana itu akan membuat perseroan meluaskan area coverage dan menjangkau lebih banyak konsumen, terutama di kota second tier.

Berdasarkan keterangan perseroan, manajemen optimistis teknologi itu dapat membuatnya berhemat sebesar 30%-40%. Meskipun demikian, komersialisasi U900 belum diumumkan.

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August 20, 2014

Pertamina chief resigns for Harvard job

Pertamina chief resigns for Harvard job. Pertamina’s president director since 2009, Galaila Karen Agustiawan, has submitted her resignation just halfway through her second term; she will officially retire on 1 Oct 2014. Karen, who became Pertamina’s first female CEO, has accepted a position at Harvard University. On Harvard University’s website, Karen is listed as one of the experts at the Belfer Center for Science and International Affairs, a permanent research center within Harvard’s John F. Kennedy school of government. Meanwhile, her resignation has stirred speculation of a possible tension within the government, where President SBY rejected Pertamina’s plan to increase the price of non-subsidized 12KG LPG canisters. But SOE Minister Dahlan Iskan brushed off the speculation, saying Karen has repeatedly asked for his permission to resign to pursue her dream in academia career. The replacement will be chosen by the next administration.

August 20, 2014

Ministry of Energy is confident that there will not be an electricity crisis in 2016

Ministry of Energy is confident that there will not be an electricity crisis in 2016. This is in response made by PLN, the state-owned electric company that the delay of 5 power plants; Sumsel 8, Sumsel 9, Sumsel 10, Batang, Indramayu will cause the problem.

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August 20, 2014

PT Pertamina wants to raise 12kg LPG price; Coordinating Minister of Economy says the plan needs to be discussed

Pertamina berniat menaikkan harga LPG ukuran 12 kg sebesar Rp1.000-Rp1.500 per kg menjadi Rp12.000-Rp18.000 per tabunga pada pertengahan Agustus. Dengan kenaikan itu, harga LPG 12kg akan menjadi Rp117.000-128.000 per tabunga.

Kenaikan itu akan terjadi secara bertahap hingga LPG ukuran tersebut mencapai harga ekonomisnya pada 2016 guna menghindari kerugian Pertamina. Dampak inflasi dari kenaikan harga itu diprediksi akan terasa secara marginal karena berporsi 15% dari total pengguna LPG, berdasarkan keterangan Head of Public Relation Pertamina.

Meskipun demikian, Menko Perekonomian Chairul Tandjung menyatakan rencana itu akan didiskusikan setelah 17 Agustus 2014.

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August 20, 2014

Mining and trading business related non-performing loans increase

Mining and trading business related non-performing loans increase. NPLs for mining increased from Rp1.09t (US$110m) in May 2013 to Rp2.9t (US$250m) in May 2014 from 0.96% (gross) to 2.47% (gross). Trading related NPLs increased from Rp15t to Rp20.6t (2.72% to 3.03%) YoY. Bank Indonesia says it is alert to the increases but no worried as the level is still far from 5% (gross). BCA’s CEO notes neither segment has shown a significant increase for that bank, due to selective lending practices. Bank Permata’s CEO notes it has seen increases but still expects to reach a 1.5% gross NPL ratio by year end, with a current 1.4% ratio.

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August 20, 2014

ITMG: 1H14 core net profit Inline

Core 6M14 net profit inline. ITMG reported 2Q14 net profit of US$52mn
(-23%q-o-q, -46%y-o-y). This brings 6M14 net profit to US$148mn
(+40%y-o-y), accounted for 72%/62% of our/consensus forecast. However,
its core profit of US$115mn (without US$45 derivative gain) accounted for
48-54% forecast. 2Q14 revenue fell to US$462mn (-8%q-o-q) due to 5%
lower sales volume to 6.7mn tons and lower ASP to US$68/ton (-4%q-oq).
We estimate 2Q14 total cost (incl royalty) of US$56.7/ton(-4%q-o-q). As such
gross and operating margin in 2Q14 fell to 20% (from 26% in 1Q14) and 12%
(from 17% in 1Q14). TMG sold 14m tons (flat y-o-y) of coal in 6M14 at
US$70/ton (-11%y-o-y). We will provide more updates post analyst meeting
today.
„
Lack of catalyst. While we like ITMG for its strong earnings delivery and high
dividend yield of 7%, we do not see much upside from this level due to still
weak coal price outlook. We prefer to wait until we see solid recovery in coal
prices. Maintain Neutral, Rp25,750 based on FY14 PE target of 12x (5-year
average)

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August 20, 2014

Political and presidential update

Update on a lawsuit with the Constitutional Court (MK) on presidential election. MK said that Prabowo-Hatta team has not yet provided complete evidences on the election dispute. The Court gives the team until today to complete all necessary evidences. The team claims that irregularities occurred in about 10% of the half a million polling stations and that this affected about 21m votes – well in excess of the 8m votes by which Jokowi won. Yesterday was MK’s eighth meetings to verify witnesses; approve and take notes on the evidences. MK will announce its verdict on 21st – 22nd of August.

Transition team to help Jokowi deliver campaign promises. The core tasks of the team will be given to 13 working units that will compile data and information through a serious of meetings with officials of the current administration. Apart from the working units, the transition team also features four task forces charged with analysing with four specific issues namely state budget, implementation of Jokowi’s mental revolution, political communication and impromptu visits locally known as blusukan. The working units will come up with recommendations on what Jokowi should do in the first three months, six months and one year according to scaled priorities. The chief of the team is Mrs. Rini Mariani Soemarno, a former president director at Astra (ASII IJ) and a close aide to Megawati. She is helped by four deputies including Anies Baswedan and Andi Widjajanto.

Transition team identifies the first hurdle is the budget discussion with current administration. Given the massive spending proposal for the fuel subsidy, debt payment and bureaucracy that Susilo Bambang Yudhoyono’s government has set, the next administration will have less than 15% of central government’s budget for development programs. The 2015 budget is slated to be passed before the current term of the House of Representatives expires on Sept 30. For fuel subsidies, they will rise by 18% to Rp291.1tn (US$24.6bn) in 2015 or 21% of government’s expenditure.

August 19, 2014

MRT constructions received mixed reactions from businesses on and near Jl. Sudirman due to traffic

MRT constructions received mixed reactions from businesses on and near Jl. Sudirman due to traffic. With less car lanes to accommodate the 2 year construction, restaurants and businesses in Ratu Plaza, FX Senayan and Pacific Place are experiencing both a decrease and increase of customer levels. However, all agree on hopes that construction will finish on time and the opening of the MRT will bring in more customers.

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August 19, 2014

Banking – three state banks launched EDC Link

Three state banks, BMRI, BBRI and BBNI, launched the shared electronic data capture (EDC) Link, which will ease the noncash
transactions for merchants through this electronic banking. Altogether the three banks have around 50m customers and they
control around 48% share in EDC market or around 310,000 units

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August 19, 2014

Plantation – Indonesia May Cap Foreign Ownership At 30%

A Reuters report on Friday said that Indonesia is drafting a new bill to limit foreign ownership in plantations to no more than 30%. We view this as a negative for Indonesia’s long-term sector growth prospects. We believe there are many grey areas and potentially many loopholes. The move is also surprising, coming from a pro-business new President, in our view.

¨ The new bill. Indonesia’s Parliament is looking to wrap up discussions with the Government on the draft bill soon, which if passed, will limit foreign ownership of plantations to no more than 30%. Herman Khaeron, vice chairman of the parliamentary committee for agriculture, said if the bill becomes law, it would take effect retrospectively. However, this interpretation was rejected by the Agriculture Ministry and industry officials. Companies will be given five years to comply.
¨ Lacking details at the moment. We believe such a harsh law may not become a reality, noting that the country has just had a change of Government, although the previous Government had also introduced measures with a nationalistic slant. It would also be difficult to implement retrospectively, given the large number of companies that may be affected and the need to find buyers to take up those assets. Nevertheless, if implemented, we believe it would be negative for the sector’s long-term growth and could weaken the IDR further.
¨ Malaysian plantations likely the biggest losers. Malaysian companies which own plantations in Indonesia are most likely the biggest losers, especially those already getting significant earnings contributions from their Indonesian operations, such as Sime Darby (SIME MK, NEUTRAL, FV: MYR10.40), Kuala Lumpur Kepong (KLK MK, NEUTRAL, FV: MYR26.00) and TSH Resources (TSH MK, BUY, FV: MYR3.91).
¨ Least-impacted Malaysian companies. Sarawak Oil Palms (SOP MK, BUY, FV: MYR9.08) and Felda Global Ventures (FGV MK, BUY, FV: MYR5.07) have no Indonesian plantations; IOI Corp (IOIC MK, NEUTRAL, FV: MYR5.50), TH Plantations (THP MK, NEUTRAL, FV: MYR2.03) and TDM (TDM MK, NEUTRAL, FV: MYR1.07) have very small planted areas there. Although half of their planted areas are in Indonesia, both Genting Plantations (GENP MK, BUY, FV: MYR13.25) and IJM Plantations’ (IJMP MK, BUY, MYR4.34) earnings contributions from their Indonesian operations are minimal currently. Nevertheless, there could be writedowns on these companies’ Indonesian investments in the event they are to pare down their stakes at a loss.

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August 19, 2014

Samsung is planning to open handset factory in Indonesia

Samsung is planning to open handset factory in Indonesia. Berdasarkan pertemuan antara Jokowi dan Korea Selatan, Samsung ingin berinvestasi pada pabrik handset pada Desember 2014. Beberapa alternatif lokasi adalah Jabodetabek, dan Jawa Tengah dengan total investasi US$2,5 miliar.

Meskipun demikian, untuk menarik minat investasi Samsung, pemerintah perlu memberikan beberapa insentif seperti tax holiday.

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August 19, 2014

The government remains firm on ore export ban

There is a good chance that the government will remain firm on ore export ban policy because there have many interests from investors, especially from China, to build smelters in Indonesia. According to R. Sukhyar – director general of mineral and coal – as quoted by Bloomberg, investors are planning ot build at least 64 facilities to process nickel, bauxite and other metals, and investment values reached USD4.9b so far this year. Because of the strong interests, he mentioned that it’s important to maintain the ore export ban policy because investors do not want any change in the policy which could damage all their investments.

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August 19, 2014

PWON: 2Q14 performance: Above our and consensus’ estimates

2Q14 performance: Above our and consensus’ estimates
§ 2Q14 bottom line +32.6% q-q and +46.7% y-y: PWON recorded 2Q14 bottom line of IDR516bn (38%% above our 2Q14 estimate), +32.6% q-q and +46.7 y-y, translating to 1H14 bottom line of IDR906bn (+36.1% y-y). The 1H14 result was above our (60%) and consensus’ (60%) estimates.

§ Top line recognition supported by land sales: PWON booked 2Q14 revenue of IDR1.1tn (+27.9% q-q; +16.4% y-y), bringing 1H14 top line to IDR1.9tn (+15.7% y-y). Revenue was strongly supported by 2Q14 building land sales of IDR263bn (+158% q-q), allowing 2Q14 gross margin expansion to 64.7% (1Q14: 57.9%). Meanwhile, 2Q14 condominium and office sales grew by 16.3% q-q.

§ Recurring accounts for 43% of 1H14 revenue: Rental and service charges supported PWON’s 2Q14 recurring income of IDR268bn (+0.8% q-q; +18.4% y-y), bringing 1H14 recurring to IDR805bn (+18.3% y-y). This resulted in recurring income accounting for 43% of 1H14 top line.

Outlook: A slower 2H14 on interest charges due to bond issuance
On 2 July 2014, PWON issued USD168mn global bond with 7.125% coupon pa and maturing in 2019. The fund raising will be to finance its working capital, future acquisitions, and to pay for its USD58mn mandatory convertible bond maturing in July 2016. With the bond issuance, we expect weaker 2H14 earnings on greater interest costs. Separately, PWON is still keeping its option open whether to conduct its 10% non-preemptive rights issue of up to IDR1.7tn, which could be implemented in the next two years.

Rating & valuation: Maintaining BUY with raised TP of IDR500
Based on PWON’s strong set of 1H14 results, we upgrade our 2014-15 earnings by 2% and 5% respectively. This coupled with our rolled-over valuations to 2015, we upgrade our TP to IDR500 (From: IDR445) based on 40% discount to our NAV calculation. BUY. The risk to our call is weak apartment sales, new tighter regulations and interest rate hikes.

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August 19, 2014

Poultry Sector: 3Q14 margin may still under pressure

Last week, we met with poultry industry experts and mid-size feed supplier. We found some interesting update in the industry, please find below the key highlights:
„
Based on our discussion we found that currently the big players are dumping their feed stock to market at 5-10% lower prices to grab more market share from the small-mid players and to shorten their pipeline inventory amid declining raw material costs. They enter futures contract to hedge and lock cheaper raw material prices (which on average dropped about 20-25%YTD). Given these situation, we view that 3Q14 margin especially for feed margin remain under pressure.
„
To anticipate this, some mid-size players plan to launch cheaper new feed product at lower spec to meet the demand and sustain the margin. Small-mid size players that still hold some of high inventory costs will suffer and desperate looking for volume growth, which would create trading opportunity and benefit the big group’s trading arms divisions. However, our industry sources said that October-November could be the turning point which the big players start monetizing their higher market share and margin likely to expand along with cheaper raw material costs they have bought during 3Q14.
„
We also found some interesting discussion about CPIN’s aggressive expansion plan acquiring more land bank to expand its breeding farms. CPIN plans to expand its DOC layers business in order to control the layer market which currently is still considered as a free market (yet it is not confirmed by the company yet). Please note that layer market currently only accountabout 10-15% of the overall chicken market, where the remaining 85-90% of the market is still dominated by broiler market.
„
Latest update: DOC prices remain weak at Rp2,500/bird and chicken broiler around Rp18,000 – 18,500/kg. Based on our discussion, some chicken farmers still recorded some losses, yet the trend has shown some recovery vs beginning of the year but still not firmed yet.
„
Overall it is still in-line with our view that the negatives should come off by 3Q14. Currently we’re still waiting and seeking any strong positive catalysts for the sector. Given these situation, we may see that 3Q14 results still weak. We may start seeing strong earnings and margin recovery in 4Q14. At this juncture, our top pick remains CPIN.

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August 19, 2014

AMRT: 2Q14 net profit -1% yoy, still dragged down by interest cost

2Q14 net profit -1% yoy, still dragged
down by interest cost

n AMRT reported 2Q14 sales of Rp10.1tr (+19% yoy, +11% qoq) on SSSG of
7.2%, and net profit of Rp110bn (-1% yoy, +995% qoq). The SSSG was
slower than 9.6% in 1Q14. This brought the 1H14 sales to Rp19.3tr (+21%
yoy) on SSSG of 7.5% and net profit of Rp120bn (-16% yoy). The 1H14
sales were in-line but profits were below DBe and consensus.

n AMRT has opened 630 new Alfamart outlets ytd, with 30% of them are
franchised stores, to have 9,187 outlets as of 6M14.

n The weak profit was mainly due to rising interest cost (+75% yoy), with the
net gearing ratio now stands at 1.6x (higher compared to 1.4x in 1Q14). At
the same time, inventory also went up to 42 days (vs. 39 days in 1Q14).

n Blended gross margin was stable yoy, but down qoq by -60bps to 17.4%.
Opex as a percentage of net sales was also stable yoy at 15.6%. Hence,
operating margin was flat at 1.75%.

n In terms of product division: non-food sales (28% of total sales, 36% of GP)
grew by +25% yoy, faster than food sales (72% of total sales, 64% of GP)
which grew by +17% yoy in 2Q14.

n In terms of geographical presence: Greater Jakarta (47% of sales) grew by
+25% yoy, Java excluding Jakarta (38% of sales) grew by +11% yoy, while
the Outer Islands (14% of sales) grew by +25% yoy in 2Q14.

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August 19, 2014

ANJT: 2Q14 results: Disappointing on one-off below the line

§ Net loss of USD177k: Due to one-off below the line item, ANJT reported a disappointing 2Q14 net loss of USD177k, resulting in 1H14 earnings of USD4mn, down 59% y-y. The results account for 11.7% of our full-year forecast.

§ Higher-than-expected operating profit on strong production: On the operating front, ANJT booked higher-than-expected 2Q14 operating revenue of USD46mn (124% of our estimate), up 45% q-q and 32% y-y on the back of stronger production and ASP. The 2Q14 operating margin improved to 27% (1Q14: 14.4%; 2Q13: 8.0%).

§ One-off below the line turns net profit negative: ANJT booked a one-off below the line cost of USD10mn on the back of the write-down of the company’s sago starch processing machinery, resulting in a net loss in 2Q14.

Outlook: Improving production outlook to support earnings
We expect ANJT production to continue to improve, with FFB production of 646k tons in 2014, up 6% y-y, and 718k tons in 2015, up 11%. At the same time, we expect the sago investment to supplement CPO revenue starting in 2015. We expect ANJT’s 2015 revenue to reach USD180mn, up 23% y-y, resulting in 2015 net earnings of USD36mn, up 16% y-y.

Rating & valuation: Reaffirm BUY and TP of IDR1,650
At this stage of the cycle, we maintain our positive view of the sector on tight supply conditions in 2H14. With strong development expected in production and ASP, we reaffirm our BUY rating on ANJT and 12-month target price of IDR1,650, representing a 2015F PE of 9.9x, a 54% discount to Malaysian peers due to a small-cap discount. Risks to our view include worse-than-expected CPO production and ASP.

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August 19, 2014
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