Buy-back plans for ESOP to mitigate tax risks

Instruction from the top Indonesia’s Minister of SOEs has signaled that 13 SOEs will spend at least Rp10tr on share buybacks. The statement followed the planned relaxation on buyback rule by OJK that would allow publicly listed companies to purchase up to 20% of their total paid-in capital in an event of significant market fluctuation without having to go through…

Q&A Harian (28/8) terkait Perkembangan Nilai Tukar Rupiah

Q: Bagaimana ketahanan ekonomi Indonesia menghadapi gejolak nilai tukar saat ini? A: Indonesia memiliki ketahanan dalam menghadapi perkembangan kondisi perekonomian, khususnya pergerakan nilai tukar Rupiah.   Pertama, Indonesia memiliki cadangan devisa yang cukup untuk menjaga stabilisasi nilai Rupiah. Cadangan devisa Indonesia pada Juli 2015 sebesar USD 107,6miliar, cukup membiayai 7,0 bulan impor atau 6,8 bulan impor dan pembayaran utang luar…

Equities Dipping in Final Session of Wild Week

Domestic stocks are trading modestly lower in the final session of a wild week that has seen an early week sell-off followed by snap-back rallies in the past two sessions. Fed rate hike uncertainty has been one of catalysts for the spike in volatility and traders may be cautious ahead of tomorrow’s speech by Fed Vice Chairman Fischer in Jackson…

SRTG acquired Batu Hitam – SRTG bought as much as 1.79b shares of PT Batu Hitam Perkasa

SRTG acquired Batu Hitam – SRTG bought as much as 1.79b shares of PT Batu Hitam Perkasa. With this transaction, the shareholders of PT Batu Hitam Perkasa will consist of PT Agung Indonesia Mandiri amounting to 83.33% and SRTG amounting to 16.67%. PT Batu Hitam has teamed up with Paiton Energy, International Power Plc, Mitsui and Co. Ltd. and Tokyo…

Indonesian Consumer Sector: A mixed bag

Downward earnings adjustments on changes in macro assumptions: On the back of the recent worse-than-expected economic growth on the ground and weaker IDR, our economist recently revised down his 2015 GDP growth assumption to 4.7% from 4.9% previously and in 2016, from 5.3% to 5.1% (see Tough times ahead, 24 August). On the currency, we move our end-2015 IDR/1USD estimate…

BSDE strong and valuable

With the volatilities in the capital market and the uncertainty on the underlying macroeconomic condition, we note that several companies such as Bumi Serpong Damai (BSDE IJ) is still worth investing in as they still have strong balance sheet and stable business operation. Recently we visited BSD City, BSDE’s main asset and we saw that the traffic in the township…

Financial Services Authority (OJK) has issued a regulation which enables public companies to do buybacks without having to obtain shareholder approval

Given the market volatilities, the Financial Services Authority (OJK) has issued a regulation which enables public companies to do buybacks without having to obtain shareholder approval. Based on balance sheet strength and free floats, we think the following companies have the capacities to do buybacks: ICBP, INTP, ITMG, KLBF, LPCK, PTBA, UNVR and WSKT. BBCA and BBRI also have the…

First Stimulus Package By the Government; More to Follow

-First stimulus package – The government has just unveiled the first stimulus package, which will be followed by another package. Below are details of the package of tax holiday measures announced: – Tax holidays to be offered to pioneer Industries, including those in upstream metals, oil & gas refineries, basic chemicals, machinery, maritime transport, and agriculture, fishery and forestry product…

Equities Posting a Back-to-Back Rally

Domestic stocks are adding to yesterday’s sharp rebound, with crude oil prices jumping to boost the energy sector, following upbeat reads on 2Q GDP and jobless claims, as wells as a late-day rally in China. Treasuries are mixed and the U.S. dollar is higher, though gold is lower. The retail sector is dominating the equity front, with Tiffany & Co,…

Stocks Continue to Rebound

U.S. stocks are extending yesterday’s sharp rebound in early action on the heels of a favorable upward revision to 2Q GDP growth and a larger-than-expected decline in jobless claims, while global sentiment is being soothed by a sharp late-day rally in China. Treasuries are mostly lower and the U.S. dollar is higher, along with crude oil prices, while gold is…

Domestic Equities Remain Nicely Higher

U.S. stocks remain solid higher, aided by a second-straight month of growth in domestic durable goods orders, though global volatility continues with Chinese equity markets extending their tumble. Stocks are trying to finish higher after a string of steep drops, culminating with yesterday’s dramatic late-day downside reversal. Treasuries, gold and crude oil are lower, while the U.S. dollar is higher….

The USDIDR traded at 14032 IDR on Wednesday August 26, according to interbank foreign exchange market quotes

The USDIDR traded at 14032 IDR on Wednesday August 26, according to interbank foreign exchange market quotes. The Indonesian Rupiah averaged 8231.37 from 1991 until 2015, reaching an all time high of 16650 in June of 1998 and a record low of 888.11 in November of 2010.

PTPP: 6M15 results below expectations

 Slightly weaker than expected 2nd quarter. PTPP’s 6M15 NPAT came in at Rp161bn (+9% YoY) comprising of 23% of ours and consensus estimate. We deem this to be a lower than expected earnings since historically PTPP has managed to realize 28% of their full year target in the first half of the year.  Large margin improvements due to…

Raung Volcano eruption may affect region’s tobacco production

Raung Volcano eruption may affect region’s tobacco production. The tobacco field was planned to be harvested by August 2015. Yet, the harvesting may be failed as most tobacco plants are covered by volcano ash. There are 20,000ha tobacco field at Raung which normally can contribute up to 20,000tons tobacco (8% of total FY15 target production).

Minister of Industries to inaugurate Holcim’s USD800m Tuban factory

The Minister of Inudstries today attended the ceremony of PT Holcim Indonesia’s factory in Tuban. The factory took USD800m to built and with a capacity of 3.4m tons / annum, is expected to supply East Java, and East Indonesia regions’ demand for cement. The factory has increased the company’s production capacity by 40% to 12.5m tons/annum.

BJTM: Caution on Asset Quality

 We downgrade BTJM‘s earnings forecast by 8-15% for 2015-2016F due to lower loan growth outlook and higher provision expense as gross NPL reached its peak of 4.6% in April 2015. The share price has also fallen to its lowest since January 2014, and now is trading at 0.9x P/BV 2015F. We downgrade BJTM to Neutral with the revised TP…

AKRA together with Pelabuhan Indonesia (Pelindo) has prepared Rp1tn (US$71mn) to develop Java Integrated Industrial and Port Estate (JIIPE) in Gresik, East Java

AKR Corporindo together with Pelabuhan Indonesia (Pelindo) has prepared Rp1tn (US$71mn) to develop Java Integrated Industrial and Port Estate (JIIPE) in Gresik, East Java. The funding came from the banks consortium of BMRI, BJTM, and Indonesia Eximbank. The project construction is expected to be completed by 2018. Currently, it has reached 30% completion. Mining company Freeport, South Korean company Cheil…

UNTR: July operational data – Equipment stays subdued, but contracting rebounds

United Tractors (UNTR) reported July operational data after market close. July’s coal production / overburden removal volumes increased 14% / 16% yoy and 7% / 7% mom, as UT accelerated production to offset the shortfall caused by heavy rainfalls in early 1H15. YTD coal production / overburden removal volume declined 4% / 4% yoy vs. our FY15 forecasts of +2%…

PTBA to continue acquisition process for Australian company Ignite Energy Resources Ltd

Bukit Asam to continue acquisition process for Australian company Ignite Energy Resources Ltd. According to PTBA’s corporate secretary, the acquisition process is still awaiting administration regulation in Australia. Ignite PTBA also plans to do regional expansion to build power plants in Myanmar and Vietnam.

ISAT considers to restructure USD debt

Indosat (ISAT)’s president director stated that the weakening of the IDR against the USD will not affect ISAT’s long term loans but will instead have an impact on its short term loans. He added that ISAT has two options for its short-term USD debt: first, to convert the debt to IDR, and second, to postpone its tenor.

Aug15 Inflation figure could be similar to last year

The Deputy for Distribution and Service Statistic, Sasmito Hadi Wibowo, mentioned that Aug15 inflation could hit lower than 0.5% mom assuming insignificant price movements on main goods until end this month. This estimation is relatively in line with last year’s inflation at 0.47% mom

UNTR: Output from Pama is surprisingly strong in July

 Komatsu sales in July drop to 137 units. United tractors (UNTR)’s Komatsu sales in July declined by 32%m-o-m to only 137 units(-55%y-o-y) due to shorter working days on Lebaran holiday, below y-t-d average of 216 units. The biggest sales came from the construction sector (29%) followed by Agro (28%), and forestry (25%) while mining sector was the lowest at…

BBRI increases subsidized-micro loans to spur growth

Bank Rakyat Indonesia (BBRI) expects to increase the supply of subsidized-micro loans (KUR) in order to stimulate activity at the grassroots level, which it believes is less affected the global crisis. BRI vice president said he is optimistic that micro lending was one of the best ways for the government to stimulate growth.

Strategy Report – It’s going to get worse before it gets better

STRATEGY REPORT It’s going to get worse before it gets better Market nervous on surprising Yuan devaluation Indonesian stock market has plummeted by more than 20% YTD after unexpected devaluation of Yuan by China’s central bank jolted global market, hitting stocks and commodities. The sentiment was hurt amid rising concerns of a possible currency war on China’s devaluation of Yuan…

Indonesia economic outlook: Tough times ahead

Moderate domestic demand and investment to continue: Private consumption growth of below 5% y-y in 2Q15 and declining imports in July (-28% y-y) affirm our view of continued weak domestic demand and investment and leads us to make changes to our macro indicators (exhibit 2). The tight monetary policy of the past two years should continue to result in economic…

Gaikindo Indonesia Int’l Auto Show 2015: A Fresh New Look

 We visited GAIKINDO Indonesia International Auto Show (GIIAS) 2015, the largest auto show in SEA region. Among the top brands, Honda once again stole the spotlight with its well-designed B-RV model in hope to repeat its success with HRV last year. Astra also followed with the dynamic duo Toyota Avanza and Daihatsu Xenia facelift.  This time is different….

BBNI: Close to the Trough

 Despite the steep earnings downgrade (38% for 2015, 14% for 2016) and the lower TP of Rp5,100 (from Rp7,200), we upgrade the counter to BUY given its share price performance in the past two months. More provisioning is required in 2H15 but trading at 1.1x P/BV 2016 we see limited downside amid the volatile market.  Loan growth cut…

TAXI is still waiting for the completion of ownership sales to SRTG, before it finalizes its capex plan

Express Transindo Utama is still waiting for the completion of ownership sales to Saratoga, before it finalizes its capex plan. TAXI plans to add 500 regular taxi in 2H15. Meanwhile, Management expects the transaction will be completed in 4Q15. Separately, management stated that the newly transportation applications have caused declining drivers’ revenue by 10-20% in weekdays.

Share buy backs may rise

 Companies with strong balance sheet are strong candidates to do share buy backs. They include ICBP, INTP, ITMG, KLBF, LPCK, PTBA, UNVR and WSKT.  BBCA and BBRI also have the potential for buy backs due to high CAR’s. The buyback program The Indonesia Financial Services Authority (OJK) has issued a regulation that enables public companies to buy back…

PTPP: 2Q15 results: Below on hefty minority interest

§ Depressed bottom line due to 2Q15 minority interest on PPRO IPO: Although PTPP booked in-line 2Q15 sales and operating profit, the PPRO IPO caused PTPP to record 1H15 minority interest of IDR50bn (Bahana 2015E: IDR106bn), which brought PTPP’s 2Q15 net profit to IDR67bn (-28.1% q-q, -21.1% y-y). In 1H15, PTPP’s net profit reached IDR161bn (+9.6% y-y), accounting for 21.6%…

SSIA 1H15 result highlights

We attended analyst meeting of Surya Semesta Internusa (SSIA), one of leading listed developer in Indonesia. Through its subsidiary Lintas Marga Sedata (LMS), Surya holds the concession of Cikopo – Palimanan Toll Road, opened since last June. The company also have potential to acquire Nusantara Infrastructure (META IJ, NR) which they believe is inline with their plan to expand their…

Informasi Perubahan Batasan Auto Rejection

Sehubungan dengan adanya surat keputusan direksi PT. Bursa Efek Indonesia (BEI) nomor Kep-00096/BEI/08-2015 tentang perubahan batasan auto rejection, dengan ini kami sampaikan Informasi terkait Pemberlakuan Perubahan batasan Auto rejection serta Lampiran SK tersebut. Batas Auto Rejection as of Aug 25, 2015 Kelompok Harga Batas Atas Batas Bawah 50 – 200 35% 10% 201 – 5000 25% 10% > 5000 20%…

SSIA: A fall too far

§Bleak development with 1H15 marketing sales of 6.9ha, -56% y-y: The adverse macro environment has resulted in weak marketing sales for SSIA, with 1H15 marketing sales of 6.9ha, down 56% y-y and accounting for less than 12% of its previous target of 60ha on USD157.7/m² ASP. At this stage, management has revised down 2015 marketing sales target to 20ha, which…

Taxi operator BIRD to operate 300 units of Honda Mobilio by year-end

Taxi operator Blue Bird to operate 300 units of Honda Mobilio by year-end. The company is currently operating 100 units of Honda Mobilio (7 seaters) but due to high demand the company decided to add additional 200 units by year-end. The strategy of using mobilio is to defend itself from taxi hailing-app Uber, which using MPVs as its fleets.

A much needed rally after days of bloodshed this morning

A much needed rally after days of bloodshed this morning. Region wide price action obviously helps but domestic headlines can also be attributed to the buying sentiment today: BUYBACK: SOE Minister said that Rp10trn will be allocated for SOE listed Cos to do a share buyback starting today. We also have Workers Social Security Agency (BPJS Ketenagakerjaan) and pension funds…

Coal is perhaps the most hated commodity given the market’s oversupplies, declining demand growth and global cleaner energy policy

Coal is perhaps the most hated commodity given the market’s oversupplies, declining demand growth and global cleaner energy policy. We wouldn’t argue on the such variables, but we wanted to say is that despite declining growth, coal would remain the second largest world’s energy by 2035 (according to IEA), meaning the demand is still there. With a lot of shut…

Government issued tax holiday revision

 Under ministry of finance regulation No.159/PMK.010/2015, the government revised the tax holiday regulation, which includes new industries, extending the time period of the tax holiday implementation, and more flexible tax term.  We view the revision positively as it eases the term to obtain tax holiday and includes a wider range of sectors. The tax incentive is expected to…

IHSG masih dihantui dengan kekhawatiran perlambatan perkeonomian China berdampak negatif pada pertumbuhan ekonomi global serta peristiwa devaluasi yuan minggu lalu membuat pasar re-pricing global assets

IHSG terkoreksi -5,44% wow atau -16.88% ytd ditutup pada 4.335,95. IHSG masih dihantui dengan kekhawatiran perlambatan perkeonomian China berdampak negatif pada pertumbuhan ekonomi global serta peristiwa devaluasi yuan minggu lalu membuat pasar re-pricing global assets. Caixin China PMI Manufaktur Agustus 47,1 dibawah konsensus 48,2 dan menunjukkan kelanjutan kontraksi serta dibawah level bulan Juli 47,8. Data manufkatur PMI AS Agustus juga…

BI to use 7.5% interest rate in 2016

In the meeting with Commission XI with the parliament, BI Governor stated that BI will still use interest rate of 7.5% in 2016. This interest rate was the assumption basis used to calculate the 2016 budget.

Government proposes 2016 budget pre-funding scheme

The government has proposed to issue securities by the end of 2015 to secure its cashflow for 2016 budget financing. Financing and Risk Management Director of the Ministry of Finance Robert Pakpahan stated the pre-funding strategy takes into account seasonal factors as approaching year end, yields tend to drop and hence would be a good timing for the government to…

UNTR: Mixed July operational results

Very weak heavy equipment sales, but improved Pama volumes in July: · Heavy equipment sales of 137 units in July (-32% MoM and -55% YoY) due to Ramadhan holiday and celebrations, translating to 50% of our 2015F of 3000 units. · UNTR’s contract mining unit, Pama, achieved coal extraction and overburden volumes of 9.8m tonnes (+7.7% MoM and +15% YoY…

U.S. stock rally unravels as Dow, S&P 500 end sharply lower

In a dramatic reversal to a morning rally, U.S. stocks relinquished all of their opening gains, and then some, to finish with sharp losses. The main indexes began trimming gains in afternoon trade, falling into negative territory ahead of the closing bell as selling accelerated in the final hour. “We would have preferred stocks open flat and rally into the…

ITMG: 2Q15 results: Below expectation on lower ASP and sales volume

§ Net profit slumped 46% q-q on low ASP: Due to the weak coal price, 2Q15 net profit plunged by 46% q-q and 61% y-y to USD20mn with an ASP decline of 5% q-q and 16% y-y to USD57.2/mt. 1H15 earnings were down 61% y-y to USD58mn, as ITMG also booked a USD7mn loss on a coal swap. 1H15 earnings…

HRUM: 2Q15 results: Below consensus on higher stripping ratio

§ Net profit fell 35% q-q on higher cash cost: HRUM booked 2Q15 net profit of USD1.1mn, down 35% q-q and 85% y-y as the company suffered from a lower ASP, down by 2% q-q to USD53.6/mt, and a higher cash cost which was up by 1% q-q to USD36.2/mt. In 1H15, revenue was down 43% y-y to USD151mn following…

Indonesia Market Strategy: Ok, so what to do now

● The default position for most of us during high volatility and red all over the screen is to wait before making any decision. However, history has shown that high volatility tends to last longer than anticipated. Hence, a decision on either to cut the losses or to average down is a better choice than to just-ride-it-out. ● We analysed…

Indonesian Plantations Update: 2016: Hit by volumes and low oil price

Adjusting 2015-16F assumptions; Dropping BWPT from coverage: As we head into 2H15, we have made some adjustments to our plantation sector’s assumptions as follows: (1) Cutting our CPO price in 2015F to USD650/ton (from USD690/ton) due to low demand, higher Malaysian inventory (exhibit 20) caused by increased production post 1H15 rainy season; (2) Lowering 2016F CPO price to USD690/ton (from…

Indonesia economy: July foreign trade

Exports: -19.2% y-y (Bahana: -5.6% y-y, Consensus: -8.8% y-y), lower-than-expected § Oil & gas exports dropped 43.0% y-y and 1.3% m-m to USD1,421mn: Oil & Gas exports dropped 44.3% y-y and 1.3% m-m due to a continued low Indonesian oil price benchmark (USD47.4/barrel). § Non-oil & gas exports dropped 14.1% y-y and 17.2% m-m to USD9.9bn: The steepest decline came…