daily & technical update -...

Wednesday, October 31, 2018DAILY & TECHNICAL UPDATE

http://www.ciptadana.com

CIPTADANA SEKURITAS ASIA

Please see analyst certification and other important disclosures at the back of this report

1

Investment realization down -1.4% YoY, FDI was down 20.5% YoY

BPS to deliver October inflation data tomorrow

Wijaya Karya 9M18 earnings within expectations

Wika Beton 9M18 earnings up by 27% YoY, slightly better than expectations

ISAT released its indicative revenue and EBITDA numbers

KLBF: Relatively in line 9M18 result

INDF: 9M18 earnings below our expectation

MYOR 9M18 bottom line below expectation due to high opex

INDF: 9M18 Results show margin improvement

BNGA earnings grew by 18% YoY to Rp2.6 tn in 9M18; in-line

SPTO 9M18 earnings: flat growth due to forex loss and relatively below ourprojection

JPFA 9M18 net profit achievement within expectation

Salim Ivomas net profit drops 78% YoY in 9M18

London Sumatra books net profit of Rp345 bn in 9M18

DAILY TECHNICAL VIEW

We expect JCI to trade between 5,730 (support) – 5,870 (resistance) level todayHMSP: Speculative buy at Rp 3,850-Rp 3,800Comment: The short-term trend is still positive

ASII: Speculative buy at Rp 7,650-Rp 7,600Comment: Closed above resistance level

PTBA : Sell on strength at Rp 4,400-Rp 4,500Comment: The trend turn into sideways

PTPP : Buy on weakness at Rp 1,300-Rp 1,250Comment: Testing support level of the down trend channel

MARKET REVIEW & MARKET OUTLOOK

RegionalU.S stock market ended solidly higher on Tuesday whereas major index jumped more than1% on strong gains for transport stocks and investors taking a break from the sellingaction. S&P 500 gained by 1.67%, DJIA rose by 1.8% and Nasdaq advanced by 1.6%. Bigwinners in the Dow included Caterpillar, up 3 per cent, Intel, up 5.2 per cent, and Boeing,which surged 4.3 per cent. Meanwhile, General Electric plunged 8.8 per cent after cuttingmost of its dividend as it reported a US$22.8 billion loss in the third-quarter. Actually,during the session yesterday, market experienced a couple of waves of weakness, but onthe back of report from the conference board regarding with US consumer confidenceindex that hit a new 18-year high, it triggered the wall street to finish firmly higher. Oncommodity markets, Brent and WTI slipped by 1.85% and 1.28% to USD75.9/bbl andUSD66.2/bbl.DomesticJCI went up by 34.49 points or 0.6% to close at Rp5,789 on Tuesday and recorded Rp599 bnnet foreign buy. Misc. Industry (+1.97%), Finance (+1.55%), Basic Industry (+1.38%),Infrastructure (+1.28%) and Trade (+0.16%) were the sector leaders with TLKM (+3.83% to3,800), BBRI (+2.71% to 3,030) and BBCA (+1.62% to 23,500) become the leading movers.Rupiah currency unchanged at Rp15,223/USD. Our technical desk suggests for tradingwithin the band of 5,750 – 5,870, with possibility to end at mix level.

Last Change % chg

24,875 431.72 1.77

2,683 41.38 1.57

Eido US 22.0 0.72 3.39

24,586 -226.51 -0.91

Nikkei 21,635 177.97 0.83

2,966 -15.09 -0.51

KLCI 1,686 2.21 0.13

2,011 -3.99 -0.20

SET Thai 1,639 1.63 0.10

Last Change % chg

75.9 -1.43 -1.85

66.2 -0.86 -1.28

2,057 -18.00 -0.87

1,222 -0.84 -0.07

11,690 4.00 0.03

19,113 -59.00 -0.31

1,205.0 0.00 0.00

107.5 -0.50 -0.46

↑ 164 ↓ 217 ↔ 230

Previous

5.50

2.00

-0.05

3.20

Change % chg

0.00 0.00

0.00 0.05

0.01 0.01

0.00 0.24

0.00 0.00

Stocks Close Chg. % chg In Rp. Vol. (ADR)

TLKM 25.3 1.69 7.15 3,858 237,896

ISAT 0.2 0.00 0.00 3,045 2,150

BUMI Plc 36.8 0.00 0.00 7,522 -

0.60%

Current

Pulp (US$/ton) weekly

Change (1 day)

Change YTD

JCI

Coal (US$/ton)

GLOBAL

COMMODITIES

BEI STATISTICS

914

5,128.8

P/E Market (X)

Nickel (US$/ton)

Index

Dow

-8.91%

LQ45

5,983.4

S&P 500

H.S.I

CPO (MYR/ton)

DUAL LISTING

5.75

2.25

-0.18

Last

15,223

1 USD = AUD

EXCHANGE RATE

1.41

1.39

1 USD = JPY

1 USD = IDR

BI 7D Reverse Repo (%)

1 USD = SGD

Fed fund rate (%)

1 USD = EUR 0.88

113.14

2.88Inflation yoy (%)

inflation mom (%)

STI

Kospi

Volume (mn shr)

INTEREST RATE

15.1

Value (Rp bn)

Brent Crude Oil ($/bbl)

-15.35%% Change (1 day)

Tin (US$/ton)

Index

Gold (US$/tr ounce)

WTI Crude Oil ($/bbl)

5,789





2

INVESTMENT REALIZATION DOWN -1.4% YOY, FDI WAS DOWN 20.5% YOY

Negative news came from investment realization in 3Q18 which was down -1.4% YoY. Domesticdirect investment still scored significant growth with 30.5% YoY while FDI growth was havingsignificant downtrend of 20.5% YoY. Although many parties will say that the declining trend wasbecause of global volatility, investment board chief (Thomas Lembong) choose to see domesticfactors as the main laggard of investment growth. The investment in 3Q18 was concentrated attransportation, warehouse and telecommunication sector with Rp 30.4 tn (17.5% proportion);electricity gas and water supply sector with Rp 28.6 tn (16.56% proportion) and mining sector withRp 16.1 tn (9.3% proportion). The source of foreign investment mainly came from Singapore withUSD 6.7 bn (30.6% proportion), Japan with USD 3.8 bn (17.4% proportion) and China with USD 1.8 bn(8.2% proportion). Lower growth of investment realization brought labor absorption at 213k, thelowest level for 3rd quarter period since 2013.

Comments: Investment realization data indicates that investment growth in 3Q18 should still weaklike 2Q18.

BPS TO DELIVER OCTOBER INFLATION DATA TOMORROW

Statistics office (BPS) is expected to release October inflation data by tomorrow. As of October 30,Bloomberg consensus predicted annual inflation at 3.05% YoY with monthlty inflation at 0.15% MoM.We agree with consensus that the price index will be back to inflation territory after it had deflationin last two months. Food price is predicted to have slight inflation at around 0.11% MoM. Althoughsome of food price still experience downtrend like egg, garlic and onion; other food componentalready had inflation like chili and rice. October inflation also will be pushed by the rise of fuel price,especially the non-sbsidized price. As the fuel price hike was quite significant in October, we predictit will affect around 0.1% to overall inflation in this month. All in all we predict Ocotber inflation at0.24% MoM or 3.12% YoY.

ISAT RELEASED ITS INDICATIVE REVENUE AND EBITDA NUMBERS

ISAT released its indicative 9M18 results which are actually intended for Ooreddoo’s reportingpurpose. Note that ISAT is currently undergoing a limited review and the 9M18 audited financialstatement is slated to release on 23rd of November 2018. Another word of warning is that theseindicative results do not fully converge to Indonesian GAAP so any discrepancies with the auditedstatement may occur.

The indicative released only revealed revenue and EBITDA numbers along with some operationalfigures. 3Q18 revenue and EBITDA both grew by +6.0% QoQ to Rp5.7 tn and Rp 1.7tn, respectively,implying a flat EBITDA margin of 29.0%. On a cumulative 9M18 numbers, revenue and EBITDA stilldeclined by -25.7% YoY and -47.9% YoY to Rp16.7 tn and Rp5.2 tn, respectively, while EBITDA marginalso deteriorated by -13.1pts YoY. The revenue and EBITDA formed 68% and 53% of our FYforecasts, respectively.

Comments: We estimate ISAT to still book a net loss in 3Q18, given depreciation expenses should beabove c.Rp2 tn in 3Q18. We currently have a HOLD rating on ISAT with TP of Rp2,940.

Rp bn 9M18 9M17 Δ YoY 3Q18 2Q18 Δ QoQ 2018F Realized

Operating revenue 16,761 22,566 -25.7% 5,695 5,373 6.0% 24,623 68%

EBITDA 5,156 9,906 -48.0% 1,653 1,560 6.0% 9,668 53%

EBITDA margin (%) 30.8 43.9 -13.1 29.0 29.0 0.0 43.9





3

WIJAYA KARYA 9M18 EARNINGS WITHIN EXPECTATIONS

Wijaya Karya reported flat QoQ earnings in 3Q18 at Rp343 bn as costs of revenue (+22% QoQ)outgrew revenue (+19% QoQ). However, 9M18 net income still rose robustly by 26% YoY to Rp860 bn, which came at both 55% of our and consensus FY18 estimates or within historical range of 40-57%in the last two years. 9M18 revenue rose by 32% YoY to Rp21 tn while operating income increasedby 28% YoY to Rp2 tn. Segment wise, infra/building segment remained the largest contributor (67%)to total revenue by Rp14.1 tn (+31% YoY), followed by energy & industrial plant (18%) by Rp3.7 tn(+75% YoY) , industry (11%) by Rp2.5 tn (+13% YoY) and property (3%) by Rp659 bn (-8% YoY). On thebalance sheet, net gearing rose to still a comfortable level 0.4x at end of 9M18 from 0.3x at end of6M18 on higher bonds/loans.

Comment: Following in-line 9M18 results we maintain our earnings forecast on WIKA as well as ourBuy rating with TP of Rp2,100. WIKA is currently trading at only 5.3x 2019F PER.

WIKA BETON 9M18 EARNINGS UP BY 27% YOY, SLIGHTLY BETTER THAN EXPECTATIONS

Wika Beton reported 9M18 net income of Rp280 bn (+27% YoY ) and formed 67% of our FY18F orslightly higher than historical achievement of 60-65% over the last two years. Strong net incomegrowth was mainly driven by higher revenue (+20% YoY) and solid margins expansion across theboard. On quarterly basis, the company saw a 16% QoQ increase in net income to Rp119 bn on theback of higher revenue (+8% QoQ) and better margins which led to operating profit increasing by11% QoQ to Rp169 bn. Below the operating line, the company book lower other expenses (-41% QoQ)

Comment: We maintain our earnings forecasts for WTON following relatively in-line 9M18 results.WTON is trading at only 5.1x 2019F PER vs historical average of 28x. We have Buy rating on thecounter with TP of Rp570.

WIKA 9M18 results

(Rp bn) 9M18 9M17 YoY 3Q18 2Q18 QoQ FY18 9M/18F

Revenue 21,004 15,876 32% 8,026 6,720 19% 30,255 69%

Cost of sales -18,628 -14,227 31% -7,137 -5,859 22%

Gross profit 2,376 1,649 44% 890 861 3% 4,099 58%

Gross margin 11.3% 10.4% 0.9% 11.1% 12.8% -1.7% 13.5%

Operating profit 2,020 1,572 28% 783 962 -19% 3,429 59%

Operating margin 9.6% 9.9% -0.3% 9.8% 10.6% -0.8% 11.3%

Net profit 860 683 26% 343 346 -1% 1,565 55%

Net margin 4.1% 4.3% -0.2% 4.3% 5.1% -0.9% 5.2%

WTON 9M18 results

Rp bn 9M18 9M17 YoY 3Q18 2Q18 QoQ 2018F 9M/18F

Revenues 4,105.5 3,425.4 20% 1,509.8 1,402.4 8% 6,273.8 65%

Gross profit 544.1 433.3 26% 210.0 197.2 6% 803.1 68%

Gross margin (%) 13.3 12.7 0.6 13.9 12.7 1.3 14.7

Operating profit 429.0 346.0 24% 169.1 152.3 11% 650.6 66%

Operating margin (%) 10.4 10.1 0.3 11.2 10.1 1.1 12.5

Net profit 279.8 220.5 27% 119.3 102.9 16% 417.6 67%

Net profit margin (%) 6.8 6.4 0.4 7.9 6.4 1.5 8.8





4

KLBF: RELATIVELY IN LINE 9M18 RESULT

Kalbe reported topline Rp15.6tn (+3.9% YoY), albeit -1.3% QoQ, this representing 75% of our full-year 2018 forecast, with Pharmaceuticals Rp3.67 tn (+2.8% YoY) Consumer health Rp2.71 bn (+2%YoY), Nutritionals Rp4.62 tn (+3.7% YoY) and Distribution & Logistics Rp4.67 tn (+6% YoY). Grossprofit increased on a yearly basis by 1.6% to Rp7.4tn but decreased on a quarter basis by 2.9%.Gross margin slightly decreased by 110 bps to 47.7% and Operarting income of Rp2.4 tn (+2% YoY /-5.2% QoQ). Net Profit was improved by 1.4% YoY amounting to Rp 1.8tn which represents 75% ofour estimates. However, net profit declined by 6.1% QoQ.

Comment: We see the results was quite disappointing in terms of quarter basis, however the yearlyimprovements on each segments may help KLBF to meet our expectations. We have a HOLD ratingwith TP of Rp1,500 following the weak 3Q18 results. At the moment the stocks trades at 26.2x2018F PER

INDF: 9M18 EARNINGS BELOW OUR EXPECTATION

Indofood Sukses Makmur (INDF) reported 9M18 Rp54.7 tn revenue or up by 3.1%YoY, still in line withour and consensus estimate, achieving 75% and 73% respectively. As COGS upped by 3.6% , grossprofit inched up slightly by 1.6% to Rp15.4 tn. However, GPM was down by 40bps at 28.3%. Opexincreased by (8%YoY) also drove operating profit to down by 7.3% YoY at Rp 5.86t. On the otherhand, other income jumped by 52.4%YoY, INDF recorded Rp 1.2 tn. Finance cost also increasedsignificantly by 68%. These together resulted to weaker net profit at Rp 2.8tn (-13.6%YoY) whichaccounted for only 68% of our FY18F. Meanwhile on quarterly basis, top line and bottom line bookedpositive growth of 2% and 12.6%, respectively.

Comment: The weakening of Rupiah and weak CPO prices add pressures for INDF profitability.However given the company's current stock price, INDF is trading at 2019F PER of just 13x, webelieve this is an attractive price to pay for INDF, as it’s PER fell below 5 year historical PER of 15.0x.We maintain BUY with 2019F TP of Rp 7,000/share.

Rp (bn) 9M18 9M17 YoY 3Q18 2Q18 QoQ FY18F 1H/FY18F

Revenue 15,678 15,090 3.9% 5,297 5,366 -1.3% 20,929 75%

COGS (8,194) (7,726) 6.1% (2,807) (2,800) 0.3%

Gross profit 7,484 7,364 1.6% 2,490 2,566 -2.9%

Gross profit margin (%) 47.7 48.8 -1.1 47.0 48 -0.8

Selling expenses (4,008) (4,004) 0.1% (1,331) (1,366) -2.6%

G&A expenses (892) (833) 7.0% (312) (302) 3.5%

Research & development (183) (173) 5.3% (60) (67) -10.9%

Operating expense (5,082) (5,010) 1.4% (1,703) (1,735) -1.9%

Operating income 2,402 2,354 2.0% 787 830 -5.2% 3,207 75%

Operating income margin (%) 15.3 15.6 -0.3 15 15 -0.6

Interest income, net 94 104 25 33

Interest expenses & charges (22) (27) (6) (8)

Net earning (loss) in assoc. (2) (11) (2) (6)

Other operating income 71 33 29 20

Other operating expenses (128) (68) (89) (39)

Other gains (losses) - net 13 31 (2) 15

Profit before tax 2,415 2,385 1.3% 785 845 -7.1%

Income tax expense (582) (572) 1.6% (185) (210) -11.7%

Profit before MI 1,833 1,812 1.2% 600 636 -5.6%

Minority interest (29) (33) -11.3% (12) (9) 27.5%

Net profit 1,804 1,779 1.4% 588 626 -6.1% 2,407 75%

Net profit margin (%) 11.5 11.8 -0.3 11 12 -0.6





5

In addition, general shareholders meeting that held on last Monday, October 29th 2018 approved aninterim cash dividend of Rp 570.7bn or Rp65 per share will be paid in November 8th 2018.

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9M/2018FRevenue 54,742 53,120 3.1% 18,743 18,368 2.0% 72,964 75.0%

Gross Profit 15,470 15,222 1.6% 5,300 4,908 8.0% 21,087 73.4%

Gross Profit Margin 28.3% 28.7% -0.4% 29.8% 29.8% 0.0%

Opex 9,602 8,892 8.0% 3,975 2,668 49.0%

Operating Profit 5,867 6,330 -7.3% 1,325 2,060 -35.7% 9,412 62.3%

Operating margin 10.7% 11.9% -1.2% 14.1% 14.1% 0.0%

Finance Cost -1,833 -1,092 67.9% -709 -1,605 -55.8%

Others-net 1,257 825 52.4% 1,064 -55.78 n.a

Pre-tax profit 5,296 6,024 -12.1% 1,685 1,541 9.4% 7,905 67.0%

Pre-tax margin 9.7% 11.3% -1.7% 11.7% 11.7% 0.0%

Net Profit 2,820 3,263 -13.6% 864 767 12.6% 4,161 67.8%

Net Margin 5.2% 6.1% -1.0% 6.7% 6.7% 0.0%

9M18 9M17 YoY 3Q18 2Q18 QoQ

Revenue breakdown:

CBP 29,211 26,973 8.3% 9,761 9,903 -1.4%

Bogasari 15,390 14,093 9.2% 5,406 5,096 6.1%

Agriculture 10,245 12,139 -15.6% 3,723 3,341 11.4%

Distribution 4,378 4,218 3.8% 1,389 1,507 -7.9%

3Q18(in Rp Bn) 9M18 9M17 YoY 2Q18 QoQ 2018F





6

MYOR 9M18- BOTTOM LINE BELOW EXPECTATION DUE TO HIGH OPEX

Mayora Indah (MYOR) reported Rp1.1 tn net profit in 9M18 or up by 18.6%YoY this accounted only65% of our FY18F. While, MYOR 9M18 revenue was at Rp 17.3tn(+21.3%YoY) which came around75% of our and consensus revenue forecast. MYOR 9M18 COGS grew by16.2% YoY, causing grossprofit inched up by 39.1%YoY at Rp4.5 tn. This enables MYOR to record higher GPM of 25.9% (+330bps). Meanwhile, opex grew significantly by 70.1% YoY to Rp 3tn, which drove operating profitslightly increase by 1.7% YoY at Rp1.5 tn. Further, in 9M18 MYOR also booked Rp 294bn(+383%YoY)gain on forex. Thereby, this helps MYOR reported double digit bottom line growth. Onquarterly basis, MYOR recorded both double digit growth for it’s sales and net profit by 20.9%QoQand 36.3%QoQ, respectively. Package foods revenue rose 35.6% while beverage booked 8.4%salesgrowthin 3Q18.

Comment: Overall, 9M18 results were below our expectations. We currently have Hold rating onMYOR with Tp of Rp3,900. Despite the double digit bottom line growths as we believe all the positiveresults have appropriately reflected in current stock price. Currently MYOR is trading at 32.4x 2019FPER.

Rp bn 9M18 9M17 YoY 3Q18 2Q18 QoQ 2018F 9M/2018F

Revenue 17,349.9 14,298.8 21.3% 6,533 5,402 20.9% 23,188.1 74.8%

COGS 12,851.8 11,064.2 16.2% 4,816 4,007 20.2%

Gross profit 4,498.1 3,234.6 39.1% 1,717 1,394 23.2% 5,582.0 80.6%

Gross margin (%) 25.9% 22.6% 3.3% 26.3% 25.8% 0.5%

Selling expenses 2,523.0 1,353.0 86.5% 1,076 818 31.6%

G&A expenses 482.1 413.7 16.5% 155 175 -11.5%

Operating expenses 3,005.1 1,766.7 70.1% 1,231 993 24.0%

Operating profit 1,493.1 1,468.0 1.7% 486 402 21.1% 2,581.1 57.8%

Operating margin (%) 8.6% 10.3% -1.7% 7.4% 7.4%

Interest expense (348.1) (292.9) 18.9% (139) (117) 18.9%

Interest income 33.4 28.2 18.3% 11 12 -1.6%Sukuk Mudharabah incomesharing - (7.4) n.a - - -

Gain (loss) on forex - net 294.0 60.9 383.1% 138 58 137.3%

Gain on sale of PPE 2.7 2.3 19.0% 0 0 14.0%

Others - net 32.7 7.8 321.6% (1) 15 -106.3%

Other income (expenses) 14.7 -201.2 n.a 10 (32) -130.2%

Pre-tax profit 1,507.7 1,266.8 19.0% 496 370 34.3%

Tax 379.2 316.1 20.0% 123 92 33.1%

Profit before MI 1,128.5 950.6 18.7% 373 277 34.6%

Minority interest 28.4 22.8 24.6% 9 10 -10.6%

Net profit 1,100.1 927.9 18.6% 364 267 36.3% 1,696.5 64.8%

Net margin (%) 6.3% 6.5% -0.1% 5.6% 4.9% 0.6%

9M18 9M17 YoY 3Q18 2Q18 QoQ

Package foods 8,802.1 7,472.5 17.8% 3,388.9 2,500.0 35.6%

Package beverages 8,547.8 6,826.4 25.2% 3,144.1 2,901.8 8.4%





7

ICBP: 9M18 RESULTS SHOW MARGIN IMPROVEMENT

Indofood Consumer Branded Products (ICBP) 9M18 revenue rose by 7.5% to Rp29.48tn, forming82.8% of our and 76% consensus's estimates. As COGS grew only around 5.7%YoY, gross profitmanaged to grow by 11.1%YoY. Coupled with Opex (+9.8% YoY), operating profit soared by 12.6% YoYto Rp4.5 tn. Below operating line, ICBP booked finance cost of Rp187 bn(+59.3%YoY) and otheroperating income of Rp783bn(+57.7%). These together led to net profit increasing up by 14.6% toRp3.48 tn, accounting for 82.8% of our FY18 and 83% of consensus estimates. On margins, GPM,OPM and NPM expanded nicely by 110 bps to 32.5% , 70bps to 15.3% and 70bps to 11.8%,respectively. On quarterly basis 3Q18 performance experienced positive growth with revenue wasrecorded at Rp 10 tn(+4.6%QoQ) and net profit booked at Rp 1.1 tn (+10.7%QoQ).

Comment: We view that even though noodle industry is fairly saturated, however demand seemedstable and inelastic. We opt to maintain our recommendation for ICBP with Buy ratings with TP ofRp10,200/share. ICBP is currently trading at 2019F PER of 21.8x. In addition, general shareholdersmeeting that held on last Monday, October 29th 2018 approved an interim cash dividend of Rp676.4bn or Rp 58 per share. This will be paid in November 8th 2018.

9M/2018FRevenue 29,478 27,430 7.5% 10,019 9,579 4.6% 35,607 82.8%

Gross Profit 9,591 8,632 11.1% 3,302 3,084 7.1% 11,846 81.0%

Gross Profit Margin 32.5% 31.5% 1.1% 33.0% 32.2% 0.8%

Opex -5,085 -4,630 9.8% -2,066 -1,425 44.9%

Operating Profit 4,507 4,002 12.6% 1,237 1,555 -20.5% 5,394 83.6%

Operating margin 15.3% 14.6% 0.7% 12.3% 16.2% -3.9%

Finance Cost -187 -118 59.3% -42.9 -235 -81.8%

Others-net 783.7 497.0 57.7% 687.33 -47.72 n.a

Pre-tax profit 4,948 4,242 16.6% 1,726 1,558 10.8%

Pre-tax margin 16.8% 15.5% 1.3% 17.2% 16.3% 1.0%

Net Profit 3,485 3,042 14.6% 1,194 1,078 10.7% 4,208 82.8%

Net Margin 11.8% 11.1% 0.7% 11.9% 11.3% 0.7%

9M18 9M17 YoY 3Q18 2Q18 QoQ

Revenue breakdown:

Instant Noodles 19,300 17,692 9.1% 6,610 6,136 7.7%

Dairy 5,834 5,361 8.8% 2,042 1,909 7.0%

Snacks 2,027 2,083 -2.7% 602 698 -13.8%

Food seasonings 1,022 1,176 -13.1% 308 387 -20.5%

Nutrition&Special foods 609 510 19.4% 214 186 15.2%

Beverages 1,468 1,359 8.0% 522 528 -1.2%

3Q18(in Rp Bn) 9M18 9M17 YoY 2Q18 QoQ 2018F





8

BNGA EARNINGS GREW BY 18% YOY TO RP2.6 TN IN 9M18; IN-LINE

Bank CIMB Niaga (BNGA) earnings grew by 18% YoY to Rp2.6 tn in 9M18, in-line with our estimatesat 76% of our 2018F, but above consensus as it already met 79% of 2018F consensus (vs. 9M17 at74% of full year). On quarterly basis the net income declined by 7.5% QoQ to Rp0.82 tn, mainly due tohigher effective tax rate (32% in 3Q18 vs. 26% in 2Q18) and higher provision expenses (+24% QoQ).For 9M18, net-interest income (-4% YoY to Rp9.0 tn in 9M18) remains weak given the challenge frombenign loan growth (4% YoY) and lower YoY NIM (-60 bps YoY to 5.3%). However on quarterly basis,the figures was slightly improved with net-interest income grew by 2.4% QoQ and NIM expands by10 bps to 5.4% in 3Q18, underpinned by increase in asset yield during the quarter. The significantboost to bottom line came from decrease in provision expenses (-23% YoY to Rp2.4 tn in 9M18),which drives down cost of credit by 60 bps to 1.4% of earnings asset in 9M18 from 2.0% in 9M17.Non-performing loan was relatively stable with NPL stands at 3.4%, unchanged from previousquarter.

Comments: We maintain our Buy call on BNGA with Rp1,285/share target price which implies 0.73x2019F PBV. BNGA currently trades at 0.50x 2019F PBV.

(in Rp bn) 9M18 9M17 YoY 3Q18 2Q18 QoQ 2018F 9M18/18F

Interest income 15,064 15,301 -1.5% 5,109 4,946 3.3%

Interest expense (6,052) (5,932) 2.0% (2,084) (1,991) 4.7%

Net interest income 9,013 9,369 -3.8% 3,024 2,955 2.4% 11,767 76.6%

Non-interest operating income 2,973 2,318 28.2% 1,110 872 27.3% 4,023 73.9%

Non-interest operating expense (5,995) (5,625) 6.6% (2,093) (1,933) 8.3% (7,900) 75.9%

PPOP 5,991 6,062 -1.2% 2,041 1,894 7.8% 7,890 75.9%

Provision expense (2,422) (3,157) -23.3% (871) (702) 24.0% (3,221) 75.2%

Operating profit 3,568 2,905 22.8% 1,170 1,192 -1.8% 4,669 76.4%

Net income 2,592 2,197 18.0% 824 891 -7.5% 3,421 75.8%

Ratios (%)

Asset yield 8.8 9.6 -0.8 9.1 8.8 0.3

Cost of fund 3.8 3.9 -0.2 4.0 3.8 0.2

NIM 5.3 5.9 -0.6 5.4 5.3 0.1

LDR 93.0 93.1 -0.1 93.0 96.2 -3.2

Cost to income 50.0 48.1 1.9 50.6 50.5 0.1

Tax rate 28.5 25.3 3.2 31.6 25.8 5.8

NPL gross 3.4 3.9 -0.5 3.4 3.4 0.1

Credit cost 1.4 2.0 -0.6 1.6 1.3 0.3

Loan loss coverage 100.7 110.4 -9.7 100.7 104.6 -3.9

CAR 19.0 18.6 0.4 19.0 18.1 0.8

ROA 1.3 1.2 0.1 1.3 1.4 -0.1

ROE 9.2 8.3 0.9 8.7 9.5 -0.8

Total loan 180,697 174,394 3.6% 180,697 183,112 -1.3%

NPL 6,162 6,875 -10.4% 6,162 6,141 0.3%

Total deposit 194,325 187,247 3.8% 194,325 190,285 2.1%

Shareholders equity 38,478 36,586 5.2% 38,478 37,626 2.3%





9

SPTO 9M18 EARNINGS: FLAT GROWTH DUE TO FOREX LOSS AND RELATIVELY BELOW OURPROJECTION

Surya Pertiwi (SPTO) 9M18 net profit was flat at Rp148.2 bn (+0.9% YoY), fell short of ourexpectation by fulfilling only 62.6% of our estimate. We believe this is mainly due to substantial losson forex which soared by 664.6% YoY. If we take out the forex loss, core net profit can improve byapproximately 12% YoY. 9M18 net revenue grew 5.7% YoY to Rp1.64 tn, or relatively in line with ourprojection. Gross profit and operating profit grew to Rp399.6 bn (+6.3% YoY) and Rp201.3 bn (+3.1%YoY). Margins wise, 9M18 gross margin slightly increased to 24.4% (vs. 24.2% in 9M18), yetoperating margins a bit declined to 12.7% (vs. 13.0% in 9M17)

Comment: We see the manufacturing segment of SPTO apparently has not given significantcontribution to company’s margins. Moreover, we expect no more substantial forex loss to appear infollowing quarter as the company has retired most of debt denominated in USD. We will review ourFY18F earnings, but downward revision is necessary.

(in Rp bn) 9M18 9M17 YoY 2018F KI. %18F KI.

Net Revenue 1,640.8 1,552.3 5.7%2,267.40

72.4%

COGS -1,241.2 -1,176.3 5.5%

Gross profit 399.6 376.0 6.3% 551.77 72.4%

Gross margin 24.4 24.2 0.13

Selling expenses -64.1 -63.4 1.0%

G&A expenses -127.9 -111.3 14.9%

Total operating expenses -192.0 -174.7 9.9%

Total operating profit 207.6 201.3 3.1% 315.96 65.7%

Operating margin 12.7 13.0 (0.31)

EBITDA 218.08 203.63 7.1%

Net interest income (loss) -9.2 -3.0 203.8%

gain/loss on forex -20.0 -2.6 664.6%

Others 0.2 0.8 -69.7%

Earnings before tax 178.6 196.4 -9.1% 305.1 58.6%

Tax expenses -42.6 -58.0 -26.5%

Minority interest 12.1 8.5 43.4%

Net profit 148.2 146.9 0.9% 236.8 62.6%





10

JPFA 9M18 NET PROFIT ACHIEVEMENT WITHIN EXPECTATION

3Q18 net profit came in at Rp563.8 bn (-16.5% QoQ and +55.5% YoY), bringing 9M18 bottom line toRp1.67 tn (+108.4% YoY) or relatively in line with ours and consensus projection at 72.9% and 76.5%.3Q18 revenue was stood at Rp8.63 tn (-2.4% QoQ and +14.16% YoY), or representing 75.1% and74.2% of ours and streets estimates. We view the slight negative growth on 3Q18 top line wasattributable to significant decrease in broiler price during September’18 coupled with lower revenueof trading and others segment. However, 9M18 revenue still amplified by 16.8% YoY to Rp25.3 tn.Gross profit and EBIT in 9M18 still strongly heightened by 47.7% and 80.4% to Rp5.6 tn and 2.98 tn,respectively. Moreover, we also captured reversal on net others in 3Q18 from -37.4 bn to Rp118.2bn, underpinned by remarkable increased in other income, whilst led JPFA to book Rp165.5 bn ofnet other income in 9M18.

JPFA

In Rp bn 9M18 9M17 YoY 3Q18 2Q18 QoQ FY18 KI FY18 Cons

Revenue 25,337.6 21,694.2 16.8% 8,633.1 8,843.63 -2.4% 75.1% 74.2%

COGS -19,701.3 -17,878.6 10.2% -6,803.9 -6,760.43 0.6%

Gross profit 5,636.2 3,815.7 47.7% 1,829.2 2,083.20 -12.2% 80.7% 82.6%

Gross margin (%) 22.2 17.6 4.66 21.2 23.6 -2.37

Selling expenses -679.4 -535.3 26.9% -228.4 -204.64 11.6%

GA expenses -1,970.8 -1,625.0 21.3% -664.9 -612.64 8.5%

Operating income 2,986.0 1,655.4 80.4% 935.9 1,265.92 -26.1% 77.0% 82.1%

Operating margin (%) 11.8 7.6 4.15 10.8 14.3 -3.47

Interest income 36.2 40.8 -11.4% 8.4 9.90 -15.4%

Interest expense -785.3 -356.0 120.6% -266.5 -263.09 1.3%

net others 165.5 -55.7 N/A 118.2 -37.40 N/A

Profit before tax 2,402.4 1,284.5 87.0% 796.0 975.34 -18.4%

Tax expense -640.3 -366.7 74.6% -207.0 -265.42 -22.0%

Net income 1,672.0 802.4 108.4% 563.8 674.84 -16.5% 72.9% 76.5%

Net margin (%) 6.6 3.7 2.90 6.5 7.6 -1.10





11

SALIM IVOMAS NET PROFIT DROPS 78% YOY IN 9M18

Salim Ivomas Pratama (SIMP) revenues came in -15% YoY to Rp10.41 tn while cost of revenuedescent slower at -13% YoY hence gross profit contracted 20% to Rp2.04 tn. Marketing expenseswere 14% YoY higher and squeezed operating profit to Rp880 bn (-34% YoY). Increased in otherexpenses and higher tax realization within 9M18 pushed SIMP’s bottom line 78% YoY lower to Rp84bn. On quarterly basis, revenues increased 11% to Rp3.77 bn while net profit came in at Rp27 bn, aturnaround from net loss o Rp54 bn in 2Q18.

Exhibit : SIMP 9M18 results

Rp bn 9M18 9M17 YoY 3Q18 2Q18 QoQ FY18F 9M/18F

Revenues 10,406 12,233 -15% 3,772 3,406 11% 16,664 62%

Cost of revenue (8,364) (9,669) -13% (3,046) (2,819) 8%

Gross profit 2,042 2,564 -20% 726 587 24% 2,980 69%

Gross margin (%) 20 21 -1 19 17 2 18

G&A expenses (684) (699) -2% (241) (231) 4%

Marketing expenses (534) (469) 14% (216) (163) 33%

Other op. income (exp) 57 (59) -196% 39 36 8%

Operating expenses (1,162) (1,227) -5% (418) (357) 17%

Operating profit 880 1,337 -34% 308 230 34% 1,292 68%

Operating margin (%) 8 11 -2 8 7 1 8

Forex gain (loss) 170 13 1247% 56 99 -43%

Interest income 62 54 14% 20 20 -1%

Interest expense (642) (527) 22% (228) (234) -3%

Other income (exp) (169) (13) 1238% (55) (97) -43%

Total other inc (exp) (579) (473) 23% (207) (212) -3%

Pre-tax profit 301 864 -65% 102 18 467%

Tax (231) (371) -38% (86) (69) 24%

PBMI 71 493 -86% 16 (51) n.a

MI 14 (115) -112% 11 (3) n.a

Net profit 84 378 -78% 27 (54) n.a 145 58%

Net margin (%) 1 3 - 2 1 (2) 2 1

Revenue breakdown

Plantations 2,327 4,453 -48% 917 708 30%

EOF 8,079 7,780 4% 2,855 2,699 6%

Production Volume

FFB nucleus ('000 ton) 2,446 2,317 6% 997 754 32%

Yield (ton/ha) 11.6 11.1 0.5FFB external ('000/ton) 742 708 5% 342 217 58%

CPO ('000 ton) 663 626 6% 278 201 38%

Extraction rate (%) 22.0 21.8 0.2 20.8 20.7 0.1Yield (ton/ha) 2.6 2.4 0.2PK ('000 ton) 160 151 6% 67 49 37%

Extraction rate (%) 5.3 5.0 0.3 5.0 5.0 (0.0)

Source : SIMP, Ciptadana Estimates

Comment: SIMP 9M18 top and bottom line came in below our and consensus expectation. We putSIMP under review with potential to downgrade. Currently we have HOLD rating with Rp440/shimplying 2019F PE of 22.4x.





12

LONDON SUMATRA BOOKS NET PROFIT OF RP345 BN IN 9M18

PP London Sumatra Indonesia (LSIP) booked Rp2.87 tn of revenues (-20% YoY) in 9M18 as ASPs waslower compared to 9M17. Cost of revenue only decreased by 10% YoY hence gross prodit squeezedto Rp591 bn (-43% YoY) while operating profit fell 58% YoY to Rp332 bn with operating margin dropto 12% (vs. 22% in 9M17). LSIP bottom line decereased 46% tp Rp345 bn in 9M18. On quarterlybasis, revenue increased 24% to Rp1.11 tn while net profit grew 10% QoQ to Rp 120 bn in 3Q18.

Exhibit : LSIP 9M18 results

Rp bn 9M18 9M17 YoY 3Q18 2Q18 QoQ FY18F 9M/18F

Revenues 2,874 3,575 -20% 1,111 895 24% 4,175 69%

Cost of revenue (2,283) (2,530) -10% (916) (701) 31%

Gross profit 591 1,045 -43% 195 194 1% 974 61%

Gross margin (%) 21 29 -9 18 22 -4 27

G&A expenses (209) (200) 5% (78) (70) 13%

Marketing expenses (49) (61) -19% (21) (15) 33%

Operating expenses (259) (260) -1% (99) (85) 17%

Operating profit 332 785 -58% 96 109 -12% 596 56%

Operating margin (%) 12 22 -10 9 12 -3 18

Forex gain (loss) 0 0 n.a. 0 0 n.a.

Interest income 51 42 23% 15 17 -14%

Interest expense (0) (0) -33% (0) (0) -20%

Other income (exp) 60 2 3802% 42 23 82%

Total other inc (exp) 111 43 159% 57 40 41%

Pre-tax profit 443 828 -46% 153 149 3%

Tax (100) (188) -47% (33) (41) -18%

PBMI 343 640 -46% 119 108 10%

MI 1 (0) -959% 0 1 -37%

Net profit 345 640 -46% 120 109 10% 495 70%

Net margin (%) 12 18 -6 11 12 -1 12

Production volume ('000 tons)

FFB nucleus 1,085 946 15% 448 329 36%

FFB external 320 315 1% 596 428 39%

CPO 323 288 12% 136 98 39%

Palm Kernel 87 79 10% 37 26 39%

Rubber - 8 n.a. - - n.a.

Comment: LSIP top line came in 6% below our and 7% lower than consensus expectation. However,the 9M18 net profit met our estimation and 5% below consensus. Currently we have HOLD rating onLSIP with TP of Rp1,060 incorporating 2019F PE of 16.3x.





13

TECHNICAL ANALYSIS

JCI : ( 5,789 +0.6%)

Comment : TLKM, BBRI and BBCA consecutively became leading movers. Technically, JCI closed below minor resistance level of5,814. Support level at 5,733. Next support and resistance level at 5,620-5,874. Based on Elliot wave approach, as we discussedbefore, JCI is forming corrective wave ABC. Because the index moved below the mid-term uptrend line, we consider that the index isforming a mid-term corrective wave. Meanwhile, we revise our short-term wave counting because the index moved above resistancelevel of the short-term downtrend line 5,850. We noted that the lowest level of 5,557 as the bottom of wave A. The rising movementthat occured in the last months noted as sub wave X of wave up B. The peaks of wave X likely at the level of 6,117 which occured onAugust 8, 2018. According to this wave counting, now JCI is in the process to find the bottom of sub wave Y of wave up B. The bottomof wave Y should above the bottom of wave A (above 5,557). Because the index moved below the lowest level of 5,689 which isoccured on August 15 then level of 5,621 ilkely the bottom of wave Y. If the level of 5,621 is the bottom of wave Y then JCI begin toform sub wave up Z of B which is the last wave of wave B. We predict the peaks of wave Z around the level of 6,120-6,250. This wavecounting is automatically false if the index moves below the level of 5,557.

2April

9 16 23 30May

7 14 21 28 4June

20 25 2July

9 16 23 30 6August

13 20 27 3 10September

17 24 1October

8 15 22 29 5November

12 19 26

5500

5550

5600

5650

5700

5750

5800

5850

5900

5950

6000

6050

6100

6150

6200

6250

6300

6350

6400

6450

1

2

3

4

5

A

Assumption : C=4

Bullish cycle likely has completed

^JKSE (5,755.02, 5,789.10, 5,733.24, 5,789.10, +34.4932)





14

STOCK OF THE DAY

HMSP : Testing resistance levelThe price failed to break minor resistance level of 3,980. Support level at 3,800. Next support and resistance level at3,620-4,220. The short-term trend is still positive. Specu;lative buy, cut if the price moves and stable below the level of3,470.

ASII : Testing resistance levelThe price closed above minor resistance level of 7,600. If the breakout confirm, level of 7,600 will turn into support leveland the short-term trend turn into positive. Historically, resistance level at 8,000. Next support and resistance level at7,100-8,500

2 82018

15 22 29 5February

12 19 26 5March

12 19 26 2April

9 16 23 30 7May

14 21 28 4June

20 25 2July

9 16 23 30 6August


17 24 1 8October

15 22 29 5 12November

3050310031503200325033003350340034503500355036003650370037503800385039003950400040504100415042004250430043504400445045004550460046504700475048004850490049505000505051005150520052505300535054005450550055505600565057005750H M Sampoerna Tb (3,940.00, 3,940.00, 3,830.00, 3,870.00, -80.0000)

2 82018

15 22 29 5February

12 19 26 5March

12 19 26 2April

9 16 23 30 7May

14 21 28 4June

20 25 2July

9 16 23 30 6August


17 24 1 8October

15 22 29 5 12November

59005950600060506100615062006250630063506400645065006550660066506700675068006850690069507000705071007150720072507300735074007450750075507600765077007750780078507900795080008050810081508200825083008350840084508500855086008650870087508800885089008950Astra Internatio (7,500.00, 7,750.00, 7,450.00, 7,700.00, +200.000)





15

PTPP : Testing support levelThe price closed above minor support level of the short-term downtrend channel 1,250. Resistance level of the channelaround the level of 1,470. The price likely will form a reversal falling wedges pattern. Indicator of RSI likely will form apositive divergence. Speculative buy/Buy on weakness

PTBA : Testing support levelThe price closed above minor support level of 4,140 Resistance level at 4,500. Next support and resistance level at3,700-4,800. The trend turn into sideways. Sell on strength

13November

20 27 4 11December

18 27 2 82018

15 22 29 5 12February

19 26 5March

12 19 26 2April

9 16 23 30 7May

14 21 28 4June

20 25 2July

9 16 23 30 6August

13 20 27 3 10 17September

24 1 8October

15 22 29 5 12November

120012501300135014001450150015501600165017001750180018501900195020002050210021502200225023002350240024502500255026002650270027502800285029002950300030503100315032003250330033503400

PTPP.JK (1,370.00, 1,395.00, 1,340.00, 1,340.00, -30.0000)

203040506070Relative Strength Index (27.0728)

12 19 26 5March

12 19 26 2April

9 16 23 30May

7 14 21 28 4June

20 25 2July

9 16 23 30 6August


17 24 1October

8 15 22 29 5November

12

25002550260026502700275028002850290029503000305031003150320032503300335034003450350035503600365037003750380038503900395040004050410041504200425043004350440044504500455046004650470047504800485049004950500050505100

1

2

3

4

5?

Tambang Batubara Bukit AsamTbk (4,190.00, 4,250.00, 4,140.00, 4,190.00, +0.0)





16

CIPTADANA FIXED INCOME DAILY

USD/Rp: 15,150 – 15,260

Maturity (yrs) 1M 3M 6M 1YR 2YRS1 IDR 6.00 6.22 6.11 6.02 5.503 US$ 1.16 1.21 1.06 1.125

10 JIBOR (RP) 7.08 7.52 7.63 7.7215 JIBOR (USS) #N/A N/A #N/A N/A #N/A N/A #N/A N/A30

EXCHANGE RATE % chg.5.75 1 US$ = IDR 15,223 0.002.25 1 US$ = SGD 1.39 -0.05

1 US$ = JPY 113.14 -0.015.50 1 US$ = AUD 0.71 -0.241.00 1 US$ = EUR 1.13 0.00US$

BASE LENDING RATE

BI RATEFED FUND RATE

AVERAGE DEPOSIT RATE

EXCHANGE RATE

LPS INSURED RATEIDR

8.448.638.849.36

INDONESIA GOVERNMENTSECURITIES YIELD

Yield (%)6.978.17

CURRENCY TRADING RANGE OF TODAY





17

Plaza ASIA Office Park Unit 2Jl. Jend. Sudirman Kav. 59Jakarta 12190, Indonesia

T +62 21 2557 4800F +62 21 2557 4900E [email protected]

Analyst CertificationEach contributor to this report hereby certifies that all the views expressed accurately reflect his or her personal views about the companies, securities and all pertinentvariables. It is also certified that the views and recommendations contained in this report are not and will not be influenced by any part or all of his or her compensation.

DisclaimerThis report does not constitute an offer to buy or sell any security/instrument, invitation to offer or recommendation to enter into any transaction. Nor are we acting in any othercapacity as a fiduciary to you. By accepting this report, subject to applicable law or regulation. When making and investment decision, you should determine, without reliance uponus or our affiliates, the economic risks and merits (and independently determine that you are able to assume these risks) as well as the legal, tax and accountingcharacterizations and consequences of any such transaction. In this regard, by accepting this presentation, you acknowledge that (a) we are not in the business of providing (andyou are not relying on us for) legal, tax or accounting advice, (b) there may be legal, tax or accounting risks associated with any transaction, (c) you should receive (and rely on)separate and qualified legal, tax and accounting advice and (d) you should apprise senior management in your organization as to such legal, tax and accounting advice (and anyrisks associated with any transaction and our disclaimer as to these matters.

The information contained in this report is based on material we believe to be reliable; however, we do not represent that it is accurate, current, complete, or error free.Assumptions, estimates and opinions contained in this report constitute our judgement as of the date of the document and are subject to change without notice. Any projectionsare based on a number of assumptions as to market conditions and there can be no guarantee that any projected results will be achieved. Past performance is not a guarantee offuture results. CIPTADANA SPECIFICALLY DISCLAIMS ALL LIABILITY FOR ANY DIRECT, INDIRECT, CONSEQUENTIAL OR OTHER LOSSES OR DAMAGES INCLUDING LOSS OF PROFITSINCURRED BY YOU OR ANY THIRD PARTY THAT MAY ARISE FROM ANY RELIANCE ON THIS REPORT OR FOR THE RELIABILITY, ACCURACY, COMPLETENESS OR TIMELINESSTHEREOF.

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