Equity SNAPSHOT Wednesday, January 09, 2019

Danareksa Sekuritas – Equity SNAPSHOT

FROM EQUITY RESEARCH

2019 Market Outlook: A Defining Year 2019 is set to be a defining year, as more stable macroeconomic

conditions should help to restore confidence. The accomplishment

of Infra projects will pave the way for stronger macro foundations, in our view. As a political year, both the presidential and legislative

elections will take place concurrently for the first time - a new milestone for Indonesia’s democracy. A greater budget allocation at

the grassroots level will ensure elevated domestic consumption. All in all, we are constructive on the equity market outlook with a year-

end index target of 6,974.

To see the full version of this report (240 pages), please Click here

MARKET NEWS

Corporate

KAEF targets IDR4tn capex in 2019 MYOR targets 20% yoy growth in FY19 export revenue

Summarecon Agung (SMRA) posted FY18 marketing sales of Rp3.4tn

Wijaya Karya: Targets new contracts in 2019 to grow 29%yoy

PREVIOUS REPORT

Property: 4Q18 Mortgage Rate Survey: More SOE Promos

Click here

Banking: Another good year in prospect Click here

Telco: Seeking to restore growth in 2019 Click here

Towers:2019 business volume boost from 4G Click here

Cigarette: Brighter prospects Click here

Consumer: To receive an elections boost Click here Plantation: India Trimmed ASEAN Palm Import Duties

Click here

KEY INDEX

Close

Chg Ytd Vol

(%) (%) (US$ m)

Asean - 5

Indonesia 6,263 (0.4) 1.1 481

Thailand 1,594 0.1 1.9 1,124

Philippines 7,702 (1.1) 3.2 106

Malaysia 1,673 (0.4) (1.1) 467

Singapore 3,123 0.6 1.8 637

Regional

China 2,526 (0.3) 1.3 29,531

Hong Kong 25,875 0.2 0.1 9,535

Japan 20,388 0.9 1.9 1,794

Korea 2,049 1.2 0.4 4,296

Taiwan 9,564 (0.3) (1.7) 2,510

India 35,981 0.4 (0.2) 356

NASDAQ 6,897 1.1 3.9 125,291

Dow Jones 23,787 1.1 2.0 10,860

CURRENCY AND INTEREST RATE

Rate

w-w m-m ytd

(%) (%) (%)

Rupiah Rp/1US$ 14,148 1.7 2.8 1.7

BI7DRRR % 6.00 - - 1.8

10y Gov Indo bond 7.95 (0.1) (0.1) (0.1)

HARD COMMODITY

Unit Price

d-d m-m ytd

(%) (%) (%)

Coal US$/ton 98 (1.3) (4.6) (4.2)

Gold US$/toz 1,285 0.0 3.0 0.2

Nickel US$/mt.ton 11,113 0.3 2.5 4.8

Tin US$/mt.ton 19,945 0.8 4.9 2.2

SOFT COMMODITY

Unit Price

d-d m-m ytd

(%) (%) (%)

Cocoa US$/mt.ton 2,355 1.7 8.1 (0.5)

Corn US$/mt.ton 134 (0.9) (2.6) 0.9

Oil (WTI) US$/barrel 50 0.8 (4.6) 10.5

Oil (Brent) US$/barrel 59 2.4 (4.8) 9.1

Palm oil MYR/mt.ton 2,030 (0.5) 16.5 3.9

Rubber USd/kg 138 (0.2) 12.2 10.9

Pulp US$/tonne 1,205 N/A 2.8 20.5

Coffee US$/60kgbag 79 - (4.8) 0.4

Sugar US$/MT 345 0.2 (0.1) 3.9

Wheat US$/ton 141 0.2 (2.5) 2.9

Soy Oil US$/lb 28 (0.3) (1.1) 2.3

Soy Bean US$/by 906 (0.7) (1.1) 2.7

Source: Bloomberg

5

Equity Research Strategy

Strategy

A Defining Year

2019 is set to be a defining year, as more stable macroeconomic conditions should help to restore confidence. The accomplishment of Infra projects will pave the way for stronger macro foundations, in our view. As a political year, both the presidential and legislative elections will take place concurrently for the first time - a new milestone for Indonesia’s democracy. A greater budget allocation at the grassroots level will ensure elevated domestic consumption. All in all, we are constructive on the equity market outlook with a year-end index target of 6,974. We are constructive on Indonesia’s equity market in 2019 for four main reasons: 1. From a macro perspective, Indonesia is still heading in the right direction. With various coherent policies taken by the government and central bank, concerns on the growing CAD are likely to dissipate and subsequently lead to greater IDR stability, the all-important factor to lure foreign inflows; 2. Populist government policies to promote consumption will ultimately help to support economic growth, especially given the huge amount of household consumption in Indonesia; 3. The elections are likely to create exuberance in the equity market provided they are conducted in a timely and conducive manner. While frictions among the political parties are likely to be unavoidable, we are nonetheless hopeful that political stability will be maintained in 2019. Elections spending will also support consumption, in our view; and 4. We expect more stable corporate performance, with upside in the event of IDR strengthening. We estimate overall earnings growth of 10.8% in 2019. Macro recovery is underway. The macro outlook is expected to be more stable in 2019. With interest rate hikes already taking place in 2018, overall economic growth may slow, albeit gradually. We expect GDP growth of 5.1% in 2019, down from 5.2% in 2018, with domestic consumption and government consumption to drive the growth. Concerns on the CAD are gradually easing and eventually this will pave the way for greater IDR stability. The recent fall in crude oil prices will underpin the outlook for softer inflation, opening up the possibility for easing policy by the central bank. Populist policies in a Political Year. The 2019 elections will set a new milestone for Indonesia’s democracy, whereby for the very first time, direct elections will be done concurrently for both the president and the national and regional parliaments. The continuation of populist policies will ensure robust domestic consumption as the allocation for subsidies, healthcare, education and the social fund budgets increase. Constructive view on equity market with JCI target of 6,974. The various coherent policies implemented by the government and central bank should result in a more stable outlook for 2019, albeit with some moderation in growth. Given the external volatility and the upcoming domestic elections, we believe that stability will be the key consideration for investors. We also believe that the consensus has factored in some moderation in growth, and we see less risk on earnings downgrades in 2019. Indonesia will continue to offer an attractive investment proposition, backed by an improved macro outlook and stronger domestic consumption trend, as well as record low foreign ownership. We expect the JCI to reach 6,974, and we continue to favour domestic consumption plays with reasonable valuations and a clear growth outlook. Our top picks are ASII, EXCL, BBRI, BBNI, GGRM, INDF, ITMG, LSIP, WIKA, and SIDO.

Regional Equity Index (YTD)

x Helmy Kristanto

(62-21) 2955 5888

helmy.kristanto@danareksa.co.id

Equity SNAPSHOT Wednesday, January 09, 2019

Danareksa Sekuritas – Equity SNAPSHOT

CORPORATE KAEF earmarks IDR4tn for capex in 2019

Kimia Farma plans to spend IDR4tn on capex in 2019, funded by internal cash (30%) and external sources (70%).

Most of the capex will be utilized for inorganic acquisitions. In 2018, the management was quoted as saying that due diligence was being carried out on hospitals and a pharmaceutical company. The company also plans to develop

a new factory in Saudi Arabia through collaboration with the Marei Bin Mahfouz (MBM) group. (Investor Daily)

MYOR targets 20% yoy growth in FY19 export revenues Mayora targets 20% yoy growth in its FY19 export revenues. Around 70% of the total exports (mostly of coffee and

biscuit products) were to Asian countries, with a focus on the Philippines, Vietnam, Thailand and Malaysia. The

company is also looking to increase exports to Myanmar, Cambodia and Laos. (Investor Daily)

Comments: Exports were around 45% of the company’s 9M18 revenues. Improved purchasing power should support demand for consumer products in Indonesia. However, with limited upside, we maintain our HOLD call. (Natalia) Summarecon Agung (SMRA) posted FY18 marketing sales of Rp3.4tn SMRA posted FY18 marketing sales of Rp3.4tn (-4.6% YoY), accounting for 85% of its Rp4.0tn target – below

expectation. By product type, landed residential property accounted for the majority of the presales at Rp2.16tn (63%), followed by apartments at Rp559bn (16%), shoplots at Rp371bn (11%), landplots at Rp302bn (9%) and

office space at Rp8.2bn (0%). In Dec 18 alone, SMRA booked marketing sales of Rp513bn, mostly residential sales at Rp438bn (85%) boosted by Makassar launchings (Jade & Beryl) and Cluster Mozart in Serpong, followed by

apartments at Rp58bn (11%) and shoplots at Rp17bn (3%). (Company release)

Comment: SMRA targets FY19 marketing sales of Rp4.0tn vs. our target of Rp3.65tn. 50% of the FY19 marketing

sales are expected to come from the sale of property in Serpong. The company has indicated that it would focus on launching landed residential property projects to optimize its landbank usage and that it does not plan to launch any new high-rise projects in FY19. (Yudha)

Wijaya Karya: Targets new contracts growth of 29%yoy in 2019

Wijaya Karya (WIKA) targets new contracts growth of 29%yoy in 2019 to IDR66.7tn. WIKA booked IDR51.7tn of new contracts in 2018, up 22%yoy from IDR42.4tn in 2017. 2018’s new contracts achieved is 89% of the full year target of IDR58.1tn. By project owner, around 45.2% of the new contracts booked in 2018 were SOE contracts, 39.8% were contracts from private companies, and 15.0% were government contracts. (Bisnis Indonesia)

MARKET NEWS

Equity SNAPSHOT Wednesday, January 09, 2019

Danareksa Sekuritas – Equity SNAPSHOT

LEADERS Price as on Code 08-Jan-19 07-Jan-19 Chg, % w-w, % m-m, % YTD, % Rating

Mitra Adi Perkasa MAPI 880 815 8.0 9.3 6.0 9.3 BUY

Indo Tambangraya Megah ITMG 22,075 20,850 5.9 9.0 8.1 9.0 BUY

Pembangunan Perumahan PTPP 2,200 2,100 4.8 21.9 13.7 21.9 BUY

Timah TINS 785 750 4.7 4.0 7.5 4.0 BUY

Ramayana RALS 1,510 1,460 3.4 6.3 11.4 6.3 HOLD

Bank Tabungan Negara BBTN 2,730 2,640 3.4 7.5 (0.4) 7.5 BUY

Sampoerna Agro SGRO 2,430 2,350 3.4 2.5 3.8 2.5 BUY

Waskita Karya WSKT 1,995 1,940 2.8 18.8 8.1 18.8 BUY

BTPN BTPN 3,630 3,530 2.8 5.5 4.3 5.5 HOLD

Wika Beton WTON 410 400 2.5 9.0 6.8 9.0 BUY

Sources: Bloomberg

LAGGARDS Price as on Code 08-Jan-19 07-Jan-19 Chg, % w-w, % m-m, % YTD, % Rating

Ciputra Development CTRA 1,040 1,085 (4.1) 3.0 (4.1) 3.0 BUY

Indocement INTP 17,400 18,025 (3.5) (5.7) (15.9) (5.7) SELL

Malindo Feedmill MAIN 1,465 1,515 (3.3) 5.0 11.4 5.0 HOLD

PP London Sumatra LSIP 1,330 1,375 (3.3) 6.4 11.8 6.4 BUY

Mayora Indah MYOR 2,630 2,710 (3.0) 0.4 4.8 0.4 HOLD

Summarecon Agung SMRA 860 885 (2.8) 6.8 - 6.8 BUY

Unilever UNVR 47,350 48,600 (2.6) 4.3 7.6 4.3 SELL

Surya Citra Media SCMA 1,835 1,880 (2.4) (1.9) (3.4) (1.9) BUY

Japfa Comfeed JPFA 2,200 2,250 (2.2) 2.3 (2.2) 2.3 BUY

Erajaya Swasembada ERAA 2,450 2,500 (2.0) 11.4 11.4 11.4 BUY

Sources: Bloomberg

COVERAGE PERFORMANCE

Equity SNAPSHOT Wednesday, January 09, 2019

Danareksa Sekuritas – Equity SNAPSHOT

PREVIOUS REPORTS

Property : 4Q18 Mortgage Rate Survey: More SOE Promos SnapShot20190107

Banking : Another good year in prospect SnapShot20190107 Telco: Seeking to restore growth in 2019, Towers:2019 business volume boost from 4G SnapShot20190104

Cigarette: Brighter prospects, Consumer: To receive an elections boost, Plantation: India Trimmed ASEAN Palm Import Duties SnapShot20190103

Coal Mining: Higher production to offset price consolidation SnapShot20190102 Bank Rakyat Indonesia: Still micro-driven SnapShot20181226

Construction: Construction continues apace SnapShot20181221

Property: Positive Sentiment Play, Surya Citra Media: Increasing its digital footprint SnapShot20181220 Telco price tracker: Striking a balance among heterogeneous players SnapShot20181219

Strategy: Not Out of the Woods Yet SnapShot20181218 Automotive: Solid car sales in 11M18 SnapShot20181217

Equity SNAPSHOT Wednesday, January 09, 2019

Danareksa Sekuritas – Equity SNAPSHOT

PT Danareksa Sekuritas

Jl. Medan Merdeka Selatan No. 14 Jakarta 10110 Indonesia Tel (62 21) 29 555 888 Fax (62 21) 350 1709

Equity Research Team S

Sales team

Maria Renata

maria.renata@danareksa.co.id (62-21) 29555 888 ext.3513 Construction

Stefanus Darmagiri

stefanus.darmagiri@danareksa.co.id (62-21) 2955 888 ext. 3530 Auto, Coal, Heavy Equip, Metal

Natalia Sutanto

natalia.sutanto@danareksa.com (62-21) 29555 888 ext.3508 Consumer, Tobacco, Property

Niko Margaronis

niko.margaronis@danareksa.co.id (62-21) 29555 888 ext.3512 Telco, Tower

Helmy Kristanto

helmy.kristanto@danareksa.co.id (62-21) 2955 888 ext. 3500

Head of Research, Strategy

Eka Savitri

Eka.savitri@danareksa.co.id (62-21) 29555 888 ext.3506 Banking

Yudha Gautama

yudha.gautama@danareksa.co.id (62-21) 29555 888 ext.3509

Plantation, Property

Novrita E. Putrianti

novrita@danareksa.co.id (62-21) 29555 888 ext. 3128

Ehrliech Suhartono

ehrliech@danareksa.co.id (62-21) 29555 888 ext. 3132

Vera Ongyono

vera.ongyono@danareksa.co.id (62-21) 29555 888 ext. 3120

Laksmita Armandani

laksmitaa@danareksa.co.id (62-21) 29555 888 ext. 3125

Upik Yuzarni

upik_y@danareksa.co.id

(62-21) 29555 888 ext. 3137

Tuty Sutopo

tuty@danareksa.co.id (62-21) 29555 888 ext. 3121

Giovan Sitepu

giovanp@danareksa.co.id

(62-21) 29555 888 ext. 3130

Adeline Solaiman

adeline.solaiman@danareksa.co.id (62-21) 29555 888 ext. 3503

Rendy Ben Philips

rendy.philips@danareksa.co.id

(62-21) 29555 888 ext. 3148

Thalia Kadharusman

thalia.kadharusman@danareksa.co.id

(62-21) 29555 888 ext. 3124

Ignatius Teguh Prayoga

ignatius.prayoga@danareksa.co.id (62-21) 29555 888 ext.3511 Research Associate

Equity SNAPSHOT Wednesday, January 09, 2019

Danareksa Sekuritas – Equity SNAPSHOT

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