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Equity Research

Tuesday, April 05, 2016

Danareksa Sekuritas – Equity Research

FROM EQUITY RESEARCH

UNVR: Cautiously optimistic (UNVR IJ. Rp43,500. HOLD. TP Rp46,650) Unilever Indonesia posted revenues of Rp 36.5tn (+5.7% yoy) in FY15, with net profits of Rp5.9tn (-1.3% yoy), the first contraction in the company’s earnings since 2005. More encouragingly, we foresee better performance in FY16F-17F with estimated net profits of Rp6.5 tn (+10.6% yoy) and Rp7.7 tn (+19.1% yoy), respectively. Any rerating in the stock would take place gradually, we believe. We set a higher TP of Rp 46,650, reflecting PE16F of 55x, or at +2SD its 5-year average PE. HOLD.

FROM DANAREKSA RESEARCH INSTITUTE

BSI: Recovery gathers pace

CEO optimism strengthened further in our latest survey. In the reporting period of December 2015 – January 2016, the Business Sentiment Index (BSI) climbed 5.4 percent to 129.5 after rebounding 10.9 percent in the previous survey.

CSI: Consumer Confidence Climbs to an Eighteen-month High

Consumer confidence reached an eighteen-month high in March. After posting a small decline in the previous survey, the Consumer Confidence Index (CCI) resumed its upward trend by rising 2.9% to 101.3 in March.

MARKET NEWS

*Analysts’ comment inside

BBRI targets managed DPLK fund of Rp7tn (ID) Govt, House to discuss State Budget revision in May (TJP) Jakarta Elevated Toll Road: JSMR prepares an investment of Rp 11 tn (BI) JPFA aims revenue increase of 15% (ID) KRAS prepares capital of USD105.6mn to finance HSM (ID) MDLN aims residential sales of Rp3tn (ID) TBIG probes bond emission worth USD500mn (ID)

Previous Reports:

GGRM: Beneficiary of improved purchasing power-Snapshot20160404 FY15 Result on mining, property, retail-Snapshot20160401 FY15 Result on consumer, healthcare, property, and retail-

Snapshot20160331 FY15 Result on consumer and property-Snapshot20160330 Indofood CBP – FY15 Result, Indofood – FY15 Result-

Snapshot20160328

IDX ANNOUNCEMENT Corp Action

Code Action Date Time (WIB) KAEF AGM 6-Apr-16 14

INAF AGM 6-Apr-16 --.--

PPRO AGM-EGM 20-Apr-16

Source: KSEI

MORNING HIGHLIGHT

Key Index

Close

Chg Ytd Vol

(%) (%) (US$ m)

Asean - 5

Indonesia 4,850 0.1 5.6 284

Thailand 1,400 (0.0) 8.7 1,021

Philippines 7,255 0.1 4.4 112

Malaysia 1,725 0.9 1.9 441

Singapore 2,835 0.6 (1.6) 541

Regional

China 3,010 0.2 (15.0) 68,798

Hong Kong 20,499 (1.3) (6.5) 8,497

Japan 16,123 (0.3) (15.3) 11,522

Korea 1,972 (0.3) 0.6 4,465

Taiwan 8,658 (1.0) 3.8 2,235

India 25,400 0.5 (2.7) 311

NASDAQ 4,892 (0.5) (2.3) 64,233

Dow Jones 17,737 (0.3) 1.8 7,080

Currency and Interest Rate

Rate

w-w m-m ytd

(%) (%) (%)

Rupiah Rp/1US$ 13,153 0.9 (0.7) 5.1

SBI rate % 6.60 0.0 (0.1) (0.6)

10y Gov Indo bond 7.62 (0.2) (0.3) (1.1)

Hard Commodities

Unit Price

d-d m-m ytd

(%) (%) (%)

Coal US$/ton 50 (0.9) (1.9) (1.1)

Gold US$/toz 1,215 (0.0) (3.5) 14.5

Nickel US$/mt.ton 8,324 0.5 (10.7) (5.2)

Tin US$/mt.ton 16,705 (0.6) (1.4) 14.4

Soft Commodities

Unit Price

d-d m-m ytd

(%) (%) (%)

Cocoa US$/mt.ton 2,960 (2.1) (0.9) (9.4)

Corn US$/mt.ton 132 (1.6) (2.2) (1.3)

Oil (WTI) US$/barrel 35 (0.8) (1.4) (4.4)

Oil (Brent) US$/barrel 38 (2.5) (2.7) 1.1

Palm oil MYR/mt.ton 2,709 1.2 10.3 23.1

Rubber US$/mt ton 136 2.3 3.2 15.8

Pulp US$/tonne 789 N/A (0.2) (1.7)

Coffee US$/60kgbag 101 0.2 6.0 (0.8)

Sugar US$/MT 423 (3.1) (0.1) 0.2

Wheat US$/ton 129 (0.2) 3.0 (0.4)

Source: Bloomberg

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Equity Research



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

Sales team

[email protected] (62-21) 2955 5831 Auto, Coal, Heavy Equip., Metal, Cement

Stefanus Darmagiri

[email protected] (62-21) 2955 5820 Property, Retail

Anindya Saraswati

[email protected] (62-21) 2955 5824 Consumer

Puti Adani

[email protected] (62-21) 29555 888 ext.3504 Cement

Antonia Febe Hartono

[email protected] (62 21) 29555 888 ext. 3151

Ermawati A. Erman [email protected] (62 21) 29555 888 ext. 3128

Novrita E. Putrianti [email protected] (62 21) 29555 888 ext. 3132

Ehrliech Suhartono


Yunita L. Nababan [email protected] (62 21) 29555 888 ext. 3125

Laksmita Armandani [email protected] (62 21) 29555 888 ext. 3109

Muhammad Hardiansyah


Tuty Sutopo


Upik Yuzarni


Kevin Giarto

[email protected] (62-21) 29555 888 ext.3508 Consumer, Tobacco

Natalia Sutanto

[email protected] (62-21) 29555 888 ext.3512 Technical Analyst

Lucky Bayu Purnomo

Tuesday, 05 April 2016

CONSUMER STAPLES/COMPANY UPDATES

Unilever Indonesia Cautiously optimistic

Unilever Indonesia posted revenues of Rp 36.5tn (+5.7% yoy) in FY15, with net profits

of Rp5.9tn (-1.3% yoy), the first contraction in the company’s earnings since 2005.

More encouragingly, we foresee better performance in FY16F-17F with estimated net

profits of Rp6.5 tn (+10.6% yoy) and Rp7.7 tn (+19.1% yoy), respectively. Any rerating

in the stock would take place gradually, we believe. We set a higher TP of Rp 46,650,

reflecting PE16F of 54x, or near its +2SD of its 5-year average PE. HOLD.

Macro slowdown hurts performance

The FY15 revenues of Rp 36.5tn (+5.7% yoy) and net profits of Rp5.9tn (-1.3% yoy) were

98.5% and 98.0% of our respective forecasts – i.e. inline. At the topline, stronger

domestic performance (+6.6% yoy) was partly offset by weaker exports (-8.5%). Hence,

overall revenues only grew 5.7% yoy compared to the usual double-digit growth in the

last four years. Margins wise, the gross margin remained firm at 51.1%. However, higher

operating expenses (+16.5% yoy) dragged down the operating profits to Rp7.9tn (-0.9%

yoy). This increase in operating expenses owed to implementation of the new PSAK

which affected the accounting treatment of employee benefits in addition to the

increase in UNVR’s royalty fee to 7.0% of total sales in 2015 from 5.6% in 2014.

At the bottom line, the 1.3% yoy decline in net profits was the first contraction in the

company’s earnings since 2005. On a quarterly basis, margins improved across the

board in 4Q15. On a yearly comparison, while revenues still grew 6.1% yoy in 4Q15 the

operating profits were still lower due to the jump in operating expenses (+23.1% yoy),

reflecting the hike in royalty fees. The home and personal care (HPC) segment still

contributed the bulk of sales (69.7%) compared to Food and Refreshments (FNR) at

30.3%. Yet despite FNR’s smaller contribution to total sales, this segment grew more

briskly at 12% yoy compared to 3.2% yoy for HPC.

Better days ahead

We foresee better performance in 2016 from improving macroeconomic conditions and

stronger consumer confidence. In FY16F-17F, we expect revenues to reach Rp40.9 tn

(+12% yoy) and Rp46.4tn (+13% yoy), respectively, supported by yearly average selling

price increases (prices adjusted for inflation) and stronger consumer purchasing power

to boost sales volumes. Operating expenses should stabilize in 2016, translating into

stable profit margins of 21-22%. However, UNVR’s plans to launch/revamp 40 new

products will keep advertising and promotional costs at 8-9% of total sales. The royalty

fee is expected to remain at 7.0% in 2016 although it is likely to be eventually raised to a

maximum 8.0% of total sales. In FY16F-17F, we estimate net profits of Rp6.6 tn (+12.1%

yoy) and Rp7.6 tn (+15.1% yoy), respectively.

Year End 31 Dec 2014 2015 2016F 2017F 2018F

Revenue, Rp bn 34,512 36,484 40,945 46,383 52,845

EBITDA, Rp bn 8,368 8,423 9,297 10,734 12,271

EBITDA growth, % 9.8 0.7 10.4 15.5 14.3

Net profit, Rp bn 5,927 5,852 6,563 7,555 8,658

Core profit, Rp bn 5,927 5,854 6,563 7,555 8,658

Core EPS, Rp 777 767 860 990 1,135

Core EPS growth, % 10.7 (1.3) 12.1 15.1 14.6

Net gearing, x 0.2 0.1 0.2 0.3 0.4

Core PER, x 56.0 56.7 50.6 43.9 38.3

PBV, x 69.9 68.8 63.6 57.5 52.0

EV/EBITDA, x 39.8 39.6 35.9 31.1 27.2

Yield, % 1.7 1.8 2.0 2.3 2.6

HOLD Target Price, Rp 46,650

Upside 7.0%

GGRM IJ/GGMR.JK

Last Price, Rp 43,500

No. of shares (mn) 7,630

Market Cap, Rpbn 331,905 (US$ mn) 25,133

3M T/O, US$mn 7.3

Last Recommendation

03-Feb-16 BUY Rp 42,000

Market Recommendation

UNVR relative to JCI Index

Consensus

Our Cons % Diff

Target Price, IDR 46,650 41,030 13.7

EPS 2016F, IDR 860 850 1.2

PE 2016F, x 50.6 51.2 (1.2)

Puti Adani (62-21) 2955 5777 ext 3511 [email protected] Natalia Sutanto (62-21) 2955 5777 ext 3508 [email protected] Danareksa research reports are also available at Reuters Multex and First Call Direct and Bloomberg.

6

10

8

Buy

Hold

Sell

0

5

10

15

20

25

30

35

40

30,000

32,000

34,000

36,000

38,000

40,000

42,000

44,000

46,000

48,000

50,000

Jun

-15

Jul-

15

Au

g-1

5

Sep

-15

Oct

-15

No

v-1

5

Dec

-15

Jan

-16

Feb

-16

Mar

-16

UNVR (LHS) Relative to JCI (RHS)

(Rp) (%)

5 April 2016 Unilever Indonesia

2

Cautiously optimistic: Hold UNVR We are cautiously optimistic on the stock’s outlook given soft commodity prices, the stabilization of operating expenses – as the largest adjustment to royalty fees was done in 2015 – supported by the company’s deep penetration of the Indonesian market. However, it is worth noting that UNVR shares tend to underperform when the Indonesian equity market is performing strongly, as discussed in our previous report. As such, any rerating of the stock would take place gradually, we believe. We set a higher TP of Rp 46,650, reflecting PE16F of 54x, or near +2SD its 5-year average PE. HOLD.

Exhibit 1. 4Q15 result

FY14* FY15 YoY, % 4Q14 3Q15 4Q15 QoQ, % YoY, % FY15F A/F, %

(in Rp bn)

Net sales 34,512 36,484 5.7 8,422 8,745 8,937 2.2 6.1 37,035 98.5

COGS 17,305 17,835 3.1 3,945 4,311 4,252 (1.4) 7.8 18,048 98.8

Gross profit 17,207 18,649 8.4 4,476 4,435 4,685 5.6 4.7 18,987 98.2

Opex 9,194 10,710 16.5 1,947 2,732 2,397 (12.2) 23.1 10,868 98.5

Operating profit 8,013 7,939 (0.9) 2,529 1,703 2,288 34.3 (9.5) 8,118 97.8

EBITDA 8,368 8,423 0.7 2,884 1,820 2,419 32.9 (16.1) 8,427 99.9

Other income (expenses) (86) (110) 28.4 (22) (25) (57) 125.0 157.5 (44) 249.8

Pretax profit 7,928 7,829 (1.2) 2,507 1,678 2,231 33.0 (11.0) 8,075 97.0

Tax expense (2,001) (1,978) (1.2) (629) (425) (562) 32.2 (10.6) (2,105) 94.0

Net profit 5,927 5,852 (1.3) 1,878 1,253 1,669 33.2 (11.1) 5,970 98.0

(in %)

Gross margin 49.9 51.1

53.2 50.7 52.4

51.3

Operating margin 23.2 21.8

30.0 19.5 25.6

21.9

EBITDA margin 24.2 23.1

34.2 20.8 27.1

22.8

Net margin 17.2 16.0

22.3 14.3 18.7

16.1

Source: Danareksa Sekuritas

Exhibit 2. Earnings revision

New

Old

Changes

2015 2016F 2017F 2015 2016F 2017F 2015 2016F 2017F

Revenue

36,484 40,945 46,383 37,035 41,126 46,009 -1.5% -0.4% 0.8%

Gross profit

18,649 20,293 23,226 18,987 21,012 23,621 -1.8% -3.4% -1.7%

Operating profit

7,940 8,902 10,290 8,118 8,921 10,064 -2.2% -0.2% 2.2%

Net profit

5,852 6,563 7,555 6,036 6,624 7,448 -3.1% -0.9% 1.4%

Gross margin

51% 56% 64% 52% 58% 65%

Operating margin

22% 24% 28% 22% 24% 28%

Ner margin

16% 18% 21% 17% 18% 20%


3

Exhibit 3. Income Statement (Rp bn)

2014 2015 2016F 2017F 2018F

Sales 34,512 36,484 40,945 46,383 52,845

COGS 17,305 17,835 20,652 23,157 26,343

Gross profit 17,207 18,649 20,293 23,226 26,502

Operating Expense 9,193 10,709 11,391 12,936 14,717

Depreciation 354 483 395 443 486

EBITDA 8,368 8,423 9,297 10,734 12,271

Operating income 8,014 7,940 8,902 10,290 11,785

Interest income 10 11 28 23 22

Interest expense (96) (121) (151) (207) (226)

Forex gain (loss) - - - - -

Other income (exp) - - - - -

Pre-tax income 7,928 7,830 8,778 10,106 11,581

Income tax (2,001) (1,978) (2,216) (2,551) (2,923)

Net income 5,927 5,852 6,563 7,555 8,658 Source: Unilever Indonesia, Danareksa Sekuritas

Exhibit 4. Balance Sheet (Rp bn)

2014 2015 2016F 2017F 2018F

Cash and cash equivalent 859 628 1,181 951 1,046

Account receivables 3,052 3,602 3,734 4,230 4,819

Inventories

2,326 2,298 2,677 3,002 3,415

Other current assets 100 95 107 121 138

Total current assets 6,337 6,623 7,699 8,304 9,418

PPE

7,348 8,321 9,430 10,689 12,144

Others

595 786 822 865 917

Total assets

14,281 15,730 17,950 19,859 22,479

Account payable

4,632 4,842 5,213 5,666 6,590

Bank Loan

1,250 1,700 2,692 3,050 3,475

Other current liabilities 2,983 3,585 4,025 4,457 4,990

Total current liabilities 8,864 10,128 11,930 13,173 15,054

Benefit obligation

295 372 348 392 445

Other non current liabilities 375 403 452 522 598

Total non-current liabilities 670 775 799 914 1,043

Total liabilities

9,534 10,903 12,729 14,088 16,097

Minority Interest

- - - - -

Capital stock

76 76 76 76 76

Additional paid in

96 96 96 96 96

Retained earnings

4,574 4,655 5,049 5,599 6,210

Total liabilities and equity 14,281 15,730 17,950 19,859 22,479 Source: Unilever Indonesia, Danareksa Sekuritas


4

Exhibit 5. Statement of Cash Flow (Rp bn)

2014 2015 2016F 2017F 2018F

Net Income

5,927 5,852 6,563 7,555 8,658

Depreciation and amortisation 354 483 395 443 486

Change in working capital 293 296 287 51 437

Operating cash flow 6,575 6,632 7,245 8,049 9,581

Capex

(828) (1,456) (1,504) (1,703) (1,941)

Others

16 (190) (36) (44) (52)

Investing cash flow

(813) (1,647) (1,540) (1,747) (1,993)

Dividends

(5,066) (5,738) (5,852) (6,563) (7,555)

Net change in debt

84 555 1,017 473 553

Other

(182) (33) (317) (443) (492)

Financing cash flow

(5,164) (5,216) (5,152) (6,533) (7,494)

Net change in cash

598 (231) 553 (230) 95

Net cash (debt) at beg. 261 859 628 1,181 951

Net cash (debt) at end. 859 628 1,181 951 1,046 Source: Unilever Indonesia, Danareksa Sekuritas

Exhibit 6. Ratios (Rp bn)

2014 2015 2016F 2017F 2018F

Profitability, %

Gross margin

50 51 50 50 50

Operating margin

23 22 22 22 22

Pretax margin

23 21 21 22 22

Net margin

17 16 16 16 16

ROA

42 37 37 38 39

ROE

125 121 126 131 136

Leverage, x

Net debt/equity

0.1 0.2 0.3 0.4 0.4

Per share data (Rp)

EPS

777 767 860 990 1,135

BVPS

622 633 684 756 836

DPS

752 767 860 990 1,135

Multiples (x)

P/E, current

56 57 51 44 38

P/BV

70 69 64 58 52

EV/EBITDA, current

40 40 36 31 27 Source: Unilever Indonesia, Danareksa Sekuritas

April 2016B U S I N E S S S E N T I M E N T

Recovery gathers pace

www.danareksa-research.com

∂Ri/1238/bs/2016

∂Ri D A N A R E K S A R E S E A R C H I N S T I T U T EB I - M O N T H L Y R E P O R T

CEO optimism strengthened further in our latest survey. In the reporting period ofDecember 2015 – January 2016, the Business Sentiment Index (BSI) climbed 5.4percent to 129.5 after rebounding 10.9 percent in the previous survey.

Most notably, sentiment was much stronger in the agricultural and constructionsectors, helped by higher commodity prices and government infrastructure spending,respectively.

Along with the bright outlook for the economy, CEOs also foresee stronger businessconditions over the next six months. Indeed, of the CEOs polled, a clear majority (60.5percent) expect business conditions to be “good” over the next six months.

Corporate health is also expected to improve as economic conditions recover. At thetop line, sales are expected to grow at a faster pace (this index added 3.5 percent to145.1). And profits are also expected to grow at a brisker pace: this index climbedanother 2.0 percent to 140.8 – its highest reading since the April-May 2015 survey.

A key finding of our latest survey is that CEOs expect further cuts in interest rates - thisindex has now fallen in five straight surveys to stand at 107.3. This assessment looksincreasingly realistic given the government’s desire to see bank lending rates reducedin a bid to promote economic growth.

Business confidence toward the government continued to improve as economicconditions picked up. In our survey, the Business Confidence in the Government Index(BCGI) rose another 5.6 percent to 136.2 after climbing 4.1 percent in the previoussurvey.

MARTIN JENKINSEconomist(62-21) 29555777/ 88 ext [email protected]

DAMHURI NASUTIONHead of Economic Research(62-21) 29555777/ 88 ext [email protected]

2∂Ri DANAREKSA RESEARCH INSTITUTE

B U S I N E S S S E N T I M E N T

Business sentiment rose further in the latest survey

THE DECEMBER 2015 - JANUARY 2016 RESULTS:

CEO optimism strengthened further in our latest survey. In the reporting period of December 2015 – January 2016, the Business

Sentiment Index (BSI) climbed 5.4 percent to 129.5 after rebounding 10.9 percent in the previous survey. While it is too early to

say that the economy is performing strongly, our latest survey findings do encouragingly suggest that a broad-based recovery

is nonetheless taking place across many sectors of the Indonesian economy.

Most notably, sentiment was much stronger in the agricultural sector, a significant finding given that this sector remains a mainstay

of the Indonesian economy, accounting for 14 percent of national economic output and nearly 50 percent of the workforce. CPO

prices are showing nascent signs of recovery this year (+14 percent ytd) – a boon to the nation’s CPO producers. In our survey,

sentiment also showed a marked improvement in the construction sector, perhaps unsurprisingly, given that this sector has the

most to gain from the government’s ambitious infrastructure development plans for which Rp313.5 trillion was allocated from

the state budget in 2016, or up from Rp290.3 trillion in 2015.

While concerns over the strength of global economic recovery do remain, the rising prices of some commodities this year – such

as CPO – are good news for Indonesia, especially since the national economy is also gaining traction from improving fundamentals

which include well-controlled inflation, interest rate cuts and increasing momentum from the government’s drive to upgrade the

nation’s infrastructure.

Against this backdrop, the two main components which make up the BSI both improved. Most impressively, the Present Situations

Index (or PSI) rose another 9.2 percent after surging 13.7 percent in the previous survey, an indication that economic recovery is

taking hold. The other main component of the BSI, the Expectations Index (or EI), posted a smaller gain: up 2.5 percent to 143.1,

as improving economic indicators point toward a brighter future.

Table 1. Appraisal of Present Situations

Sep-15 Nov-15 Jan-16 %Change

Business Sentiment Index 110.8 122.9 129.5 5.4Present Situation 93.5 106.3 116.0 9.2Expectations 128.2 139.6 143.1 2.5

Source: Danareksa Research Institute


129,5

116,0

143,1

90

105

120

135

150

165

180

Jan-

11Fe

b-11

Mar

-11

Apr

-11

Mei

-11

Jun-

11Ju

l-11

Agu

st-1

1Se

p-11

Okt

-11

Nop

-11

Des

-11

Jan-

12Fe

b-12

Mar

-12

Apr

-12

Mei

-12

Jun-

12Ju

l-12

Agu

st-1

2Se

p-12

Okt

-12

Nop

-12

Des

-12

Jan-

13Fe

b-13

Mar

-13

Apr

-13

Mei

-13

Jun-

13Ju

l-13

Agu

st-1

3Se

p-13

Okt

-13

Nop

-13

Des

-13

Jan-

14Fe

b-14

Mar

-14

Apr

-14

Mei

-14

Jun-

14Ju

l-14

Agu

st-1

4Se

p-14

Okt

-14

Nop

-14

Des

-14

Jan-

15Fe

b-15

Mar

-15

Apr

-15

Mei

-15

Jun-

15Ju

l-15

Agu

st-1

5Se

p-15

Okt

-15

Nop

-15

Des

-15

Jan-

16

129,5 Present Situation Expectations



Table 2. Appraisal of Present Situations


Economic Conditions 35.3 65.1 85.1 30.8 Business Conditions 124.4 130.0 133.0 2.3 Company’s Conditions 120.7 123.8 130.0 5.0


CEO ASSESSMENTS OF CURRENT BUSINESS CONDITIONS

Like in the previous survey, CEOs gave less negative assessments on the health of the economy (this index rose a further 30.7 percent

to 85.1). This compares to a low of just 35.3 two surveys previously, providing compelling evidence to believe that the performance

of the Indonesian economy has picked up dramatically. Overall, some 34.3 percent of CEOs gave negative assessments on the

state of the economy. While this may seem a high figure, it is nonetheless significantly down from the previous survey’s figure

of 46.2 percent. Furthermore, nearly half of CEOs now believe that the economy is performing normally and another 19.5 percent

say it is performing well.

With economic recovery taking hold, CEOs also claimed better business conditions (this index added another 2.3 percent to 133.0).

Companies continued to benefit from the more supportive business environment and, as a result, CEOs claimed not only higher

sales growth (the index climbed a solid 9.1 percent) but also easing cost pressures - most notably from lower forex losses as the

rupiah recovered its composure. Hence, corporate profitability also improved. According to the CEOs surveyed, corporate profits

are now expected to start growing again – this index rose 7.7 percent to 101.4 from 94.1 in the previous survey.


Table 3. Current Company Financial and Utilization Performance

All Sectors Sep-15 Nov-15 Jan-16 %Change

Capital Expenditure 100.8 101.5 108.1 6.5Sales 76.2 94.3 103.0 9.1Profits 75.6 94.1 101.4 7.7Liquidity 86.6 99.3 100.5 1.3Capacity/Equipment Utilization 97.2 99.3 101.1 1.8Employment 95.5 106.6 110.5 3.7

Cost of Goods Sold 107.8 105.2 104.1 (1.1)Operating cost 149.3 150.6 150.5 (0.0)Interest expenses/cost 101.2 101.1 100.7 (0.4)Foreign Exchange Loss 127.7 116.5 113.0 (3.0)Average Price of Product/Service 118.2 124.6 122.2 (1.9)

CEO APPRAISALS OF NEAR-TERM BUSINESS CONDITIONS

CEOs remain hopeful of a brighter future. External risks have eased and the rupiah has recovered accordingly, rebounding around

7 percent off its low of circa 14,700/USD at end-September 2015. Meanwhile, positive improvements on the domestic economic

front pave the way for further progress, especially if lending rates can be trimmed more aggressively to levels which stimulate more

borrowing – a goal the government recently said it was keen to achieve. Against this backdrop, some 46.5 percent of CEOs expect

a brighter economic future (a figure which is little changed from the previous survey’s 47.2 percent).



Table 4. Expectations for the Six Months Ahead


Economic Prospects 100.0 125.3 124.9 (0.3) Business Prospects 143.7 149.4 151.4 1.3 Company’s Prospects 140.9 144.0 153.0 6.3


Table 5. Prospects for Company Financial and Utilization Performance

All Sectors Sep-15 Nov-15 Jan-16 %Change

Capital Expenditure 128.6 130.7 137.6 5.2Sales 130.8 140.3 145.1 3.5Profits 128.9 138.1 140.8 2.0Liquidity 127.2 129.2 128.9 (0.2)Capacity/Equipment Utilization 103.6 102.2 104.1 1.8Employment 111.5 114.0 121.4 6.4

Cost of Goods Sold 103.6 103.7 105.9 2.2Operating cost 137.0 150.4 149.5 (0.6)Interest expenses/cost 112.0 114.3 106.8 (6.6)Foreign Exchange Loss 111.8 106.4 103.5 (2.7)Average Price of Product/Service 138.1 136.4 134.6 (1.3)


Along with the bright outlook for the economy, CEOs also foresee stronger business conditions over the next six months. Indeed,

of the CEOs polled, a clear majority (60.5 percent) expect business conditions to be “good” over the next six months – up from

56.3 percent in the previous survey.

Corporate health is also expected to improve as economic conditions recover. At the top line, sales are expected to grow at a faster

pace (this index added 3.5 percent to 145.1). Costs wise, the picture is mixed but while COGS are expected to grow at a faster

pace (+2.2 percent), operating costs (-0.6 percent) as well as forex losses (-2.7 percent) and, most notably interest expenses (-6.6

percent) are expected to ease. Hence, with a growing domestic marketplace and relatively subdued cost pressures, profits are

expected to grow at a brisker pace over the next six months: this index climbed another 2.0 percent to 140.8 – its highest reading

since the April-May 2015 survey.



Table 6. Expectation Index on Key Economic Indicators

Indicators Sep-15 Nov-15 Jan-16 %Change

General Prices Expectation 128.9 110.3 111.1 0.7Loan Rate Expectation 117.9 110.6 107.3 (3.0)Exchange Rate Expectation 84.6 110.3 106.5 (3.5)Stock Price Expectation 101.7 113.8 110.8 (2.6)


EXPECTATIONS ON KEY ECONOMIC INDICATORS

A key finding of our latest survey is that CEOs expect further cuts in interest rates - this index has now fallen in five straight surveys

to stand at 107.3, thus mirroring the central bank’s easing monetary policy. The government itself has specifically stated that it

would like to see lower lending rates in the country to boost the economy. At the present time, there is growing belief that banks’

profitability margins are excessive and the government - along with the financial services oversight body (OJK) and the central bank

– have signaled their intent to address this issue in an effort to promote growth.

In regard to prices, CEOs still believe that inflationary pressures will be relatively well contained even though the index measuring

sentiment toward prices edged up 0.7 percent to 111.1 in the latest survey. Note that while inflationary pressures have eased

considerably (headline yoy inflation was subdued at 3.35 percent yoy in December 2015), prices do tend to head higher at the

end of the year due to seasonal factors. Nonetheless, the impact is not long-lasting. Similarly, CEOs also remained upbeat toward

the outlook for the rupiah over the next six months. Despite posting a small 3.5 percent decline in the latest survey, this index

remains comfortably above the 100 level, depicting general optimism toward the local currency as Indonesia’s economic

fundamentals continue to improve.

Lastly, CEOs were slightly less upbeat on the outlook for stock prices – this index corrected 2.6 percent after rebounding a healthy

11.9 percent in the previous survey. Yet at a level of 110.8, this index is still well ensconced in positive territory, suggesting a bright

outlook for stock prices going forward, especially amid improving corporate fundamentals. Stock price movements this year appear

to support this view with the Indonesian stock market one of the best performing markets globally, up more than 5 percent ytd.

Table 7. Business Confidence in the Government Index

Indicators Sep-15 Nov-15 Jan-16 %Change

Expand the Market Size 123.5 140.1 150.5 7.5Create a Safe Environment 152.9 148.9 151.4 1.7Stabilize prices 98.3 110.8 114.3 3.2Provide Public Utilities 155.5 156.8 165.9 5.9Enforce Law of Contracts 89.6 88.7 98.9 11.5BCGI 123.9 129.0 136.2 5.6




SENTIMENT TOWARD THE GOVERNMENT

Business confidence toward the government continued to improve as economic conditions picked up. In our survey, the Business

Confidence in the Government Index (BCGI) rose another 5.6 percent to 136.2 after climbing 4.1 percent in the previous survey.

On the economic front, CEOs are much more confident in the government’s ability to expand the domestic marketplace (this index

jumped another 7.5 percent to 150.5). With regard to inflation, more CEOs believe that the government is doing a good job at

stabilizing prices: this index rose 3.2 percent. Optimism toward the ability of the government to improve public infrastructure also

strengthened: this index climbed 5.9 percent to a very high level of 166.0 – an endorsement of the government’s commitment

to improve the nation’s creaky infrastructure.

Finally, CEOs were more confident in the government’s ability to enforce the law of contracts (this index jumped 11.5 percent to

98.9) while the component measuring sentiment toward the government’s ability to create a safe and orderly environment rose

1.7 percent to 151.4.

April 2016 Consumer Confidence Climbs to an Eighteen-month High

∂Ri/1239/cc/2016 C O N S U M E R C O N F I D E N C E

Consumer confidence reached an eighteen-month high in March.After posting a small decline in the previous survey, theConsumer Confidence Index (CCI) resumed its upward trend byrising 2.9% to 101.3 in March. Most notably, consumer concernsover expensive fuel eased significantly - only 3.0% of theconsumers polled cited this issue as a major concern (downfrom 5.7% in February – reflecting subdued global prices ofcrude oil. At the same time, consumer concerns over droughtalso eased in our latest survey (down from 6.4% to 3.4%).Consumer concerns toward the sensitive issue of high foodstuffprices remained high at 73.4% yet still stable.

Both components that make up the CCI increased. Thecomponent measuring consumer sentiment toward currentconditions, the Present Situations Index (PSI), rose 2.6 percentto 82.6, as sentiment toward both the current state of theeconomy and the current state of the job market improved. Theother main component of the CCI - the one measuring consumersentiment toward the future (the Expectations Index or EI) –climbed 3.0 percent to 115.3 in March. The increase in the EIreflects stronger consumer optimism toward the prospects forthe national economy over the next six months.

Although consumers are more upbeat on the country’s overalleconomic outlook, buying intentions for durable goods actuallydeclined in March. In our latest survey, 28.3 percent of consumersexpressed plans to purchase a durable good over the next sixmonths, down from 30.9 percent in the previous month.Furthermore, on a yearly comparison, buying intentions fordurable goods are also lower, since 32.7 percent of consumersexpressed plans to purchase a durable good back in March2015.

Consumer confidence in the government’s ability to carry outits duties strengthened in the March survey. After increasing6.4 percent in the previous survey, the Consumer Confidence inthe Government Index (CCGI) climbed 0.2 percent to 99.0.Furthermore, this index is also higher than its level one yearago (93.6 in March 2015). Two components that make up theCCGI increased, while three components declined.

∂Ri D A N A R E K S A R E S E A R C H I N S T I T U T EM O N T H L Y R E P O R T

ASTI SUWARNI

Analyst

(62-21) 29555777/ 888 ext 3608

[email protected]

MARTIN JENKINS

Analyst

(62-21) 29555777/ 888 ext 3609

[email protected]

www.danareksa-research.com

2

C O N S U M E R C O N F I D E N C E

∂Ri DANAREKSA RESEARCH INSTITUTE

THE MARCH 2015 RESULTS

Consumer confidence reached an eighteen-month high in March. After posting a small decline in the previous survey,

the Consumer Confidence Index (CCI) resumed its upward trend by rising 2.9% to 101.3 in March. Most notably,

consumer concerns over expensive fuel eased significantly - only 3.0% of the consumers polled cited this issue as a major

concern (down from 5.7% in February – reflecting subdued global prices of crude oil. At the same time, consumer

concerns over drought also eased in our latest survey (down from 6.4% to 3.4%). Consumer concerns toward the

sensitive issue of high foodstuff prices remained high at 73.4% yet still stable.

Both components that make up the CCI increased. The component measuring consumer sentiment toward current

conditions, the Present Situations Index (PSI), rose 2.6 percent to 82.6, as sentiment toward both the current state of

the economy and the current state of the job market improved. The other main component of the CCI - the one measuring

consumer sentiment toward the future (the Expectations Index or EI) – climbed 3.0 percent to 115.3 in March. The

increase in the EI reflects stronger consumer optimism toward the prospects for the national economy over the next

six months.

By region, consumer confidence strengthened in four of the six regions covered by the survey. Sentiment improved the

most in West Java (where the index jumped 14.6 percent to 100.6 in March), followed by East Java (where the index added

5.6 percent to 101.1), South Sulawesi (where the index edged up 3.5 percent to 99.8), and Jakarta (where the index

climbed 2.5 percent to 118.3). By contrast, confidence still deteriorated in Central Java (where the index slumped 4.1%

to 102.6 in March), and North Sumatra (where the index retreated 3.1 percent to 90.9).

Overall, consumers with income levels above Rp2,000,000 per month were more upbeat than consumers with low

incomes (incomes below Rp1,000,000/month). The survey shows that the CCI for high income consumers rose 2.5

percent to 106.2 in March, while the CCI for low income consumers actually decreased 1.8 percent to 81.9. Changes

in confidence were also varied between rural and urban areas. While the CCI for urban consumers rose 5.1 percent to

105.6 in March, the CCI for rural consumers fell 2.8 percent to 91.0.

Chart 1. Consumer Confidence Strengthened in March

60

70

80

90

100

110

J-05 J-06 J-07 J-08 J-09 J-10 J-11 J-12 J-13 J-14 J-15 J-16

Consumer Confidence Index

Fuel Prices Hike

Fuel Prices Hike

Basic Food Price Hike Fuel Prices Hike

Fuel Prices Hike

Fuel Prices Hike

Basic Food Price Hike

3



Chart 2. Urban Consumers were More Upbeat in March

Table 1. The Consumer Confidence Index

Nov-15 Dec-15 Jan-16 Feb-16 Mar-16 MoM % Change

Consumer Confidence 91.4 95.8 98.5 98.4 101.3 2.9Present Situation 69.3 76.9 78.6 80.5 82.6 2.6Expectation 108.0 110.0 113.5 111.9 115.3 3.0

Appraisal of Current Situations: More Positive on the Economy

Consumers were more positive on the current state of the national economy in our latest survey (this index added 0.2

percent to 76.2). In our survey, the proportion of consumers who claimed that national economic conditions were “bad”

decreased from 39.1 percent to 38.0 percent, while the proportion of consumers claiming that national economic

conditions were “good” stayed around 14.2 percent. Nevertheless, a significant proportion of consumers (47.9 percent)

still said that national economic conditions were “normal”.

In regard to the current state of the local economy, consumers also gave more positive assessments (this index jumped

4.2 percent from 99.4 to 103.6 in March). However, several issues continued to worry consumers in March. Most notably,

73.4 percent of them still cited high foodstuff prices as a major factor weighing on the local economy in the last three

months (down from 73.8 percent in February). Besides this, 32.9 percent of consumers mentioned job scarcity as a main

concern (up from 25.3 percent in February), while 3.4 percent are worried by drought (down from 6.4 percent in February).

In the March survey, consumers gave more upbeat assessments on the job market (the index measuring sentiment toward

job market conditions rose 3.1 percent to 68.0). Furthermore, our survey also reveals that more consumers claimed that

jobs were easy to get (23.3% in March vs. 21.2 percent in February), while 21.3% of consumers still claimed that the

job market was unchanged. Nevertheless, it should be noted that the index measuring sentiment toward job market

conditions is still way below 100, an indication that the job market remains tough and that greater efforts are still needed

to tackle the perennial problem of unemployment.

60

70

80

90

100

110

Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16

Urban Areas Rural Areas

4



Table 2. Appraisal of Current Situations

Nov-15 Dec-15 Jan-16 Feb-16 Mar-16 MoM%Change

Economic Conditions 60.0 68.6 70.0 76.0 76.2 0.2Local Area Economic Conditions 89.6 97.0 98.8 99.4 103.6 4.2Employment Conditions 58.3 65.0 66.9 66.0 68.0 3.1

Chart 3. Key Concerns

Assessments on Near-Term Conditions: More Upbeat on the Economy

Looking ahead over the next six months, consumers are more optimistic on the country’s economic outlook: the

Expectations Index (EI) rose 3.0 percent to 115.3 in March. This is its highest level since March 2005. Moreover, all

components of the EI posted increases and they are above the 100 level. This suggests that consumers are more upbeat

on the outlook for the economy and the job market.

In the March survey, consumers are more optimistic on the national economic outlook. This component of the EI added

1.7 percent to 119.0. Indeed, our survey reveals that 28.4 percent of consumers were upbeat on the national economic

outlook in March compared to 25.3 percent in February. Only 9.3 percent of consumers were downbeat. Nevertheless,

62.2 percent of consumers still foresee no change in national economic conditions over the next six months. As for the

local economy, consumers are also more upbeat on its prospects: this index added 2.4 percent to 118.6 in March.

In regard to the job market outlook, consumers are also more upbeat. This index added 5.5% to 112.6 in March. Indeed,

our survey shows that more consumers expect jobs to be easier to get (18.0% in March vs. 14.7% in February), while

fewer consumers expect jobs to be hard to get (5.3% in March vs. 7.9% in February). With greater confidence in the

job market outlook, more consumers foresee better prospects for family incomes (24.1% in March vs. 21.3% in February)

and fewer consumers foresee lower family incomes in the future (13.2% in March vs. 13.4% in February). As such, overall,

the index measuring sentiment toward future family incomes edged up 2.7% to 110.8.

73.8%

25.3%

5.7%

1.9%6.4%

February 2016Important factors that worsen local economic conditions in the

past three months

Increase in basic foodstuff prices Job scarcity

Expensive of fuel Scarcity of fuel

Drought

73.4%

32.9%

3.0%2.0% 3.4%

March 2016Important factors that worsen local economic conditions in

the past three months

Increase in basic foodstuff prices Job scarcityExpensive of fuel Scarcity of fuelDrought

5



Table 3. Expectations in the Six Months Ahead

Nov-15 Dec-15 Jan-16 Feb-16 Mar-16 MoM% Change

Economic Prospects 111.4 112.1 119.7 117.1 119.0 1.7Local Area Economic Prospects 110.6 112.0 115.4 115.9 118.6 2.4Employment Prospects 105.3 108.8 108.8 106.8 112.6 5.5Family Income Prospects 104.6 107.3 110.0 107.9 110.8 2.7

Purchasing Intentions for Durable Goods: Declined

Although consumers are more upbeat on the country’s overall economic outlook, buying intentions for durable goods

actually declined in March. In our latest survey, 28.3 percent of consumers expressed plans to purchase a durable good

over the next six months, down from 30.9 percent in the previous month. Furthermore, on a yearly comparison, buying

intentions for durable goods are also lower, since 32.7 percent of consumers expressed plans to purchase a durable

good back in March 2015.

Of the ten categories tracked by our survey, buying intentions declined in six of them. Most notably, buying intentions

for home aplliances, land, audio-visual equipment and houses dropped significantly in March. At the same time, the

proportion of consumers who expressed an interest in wanting to renovate their homes also declined (down from 3.02

percent to 2.96 percent in March). Meanwhile, the proportion of consumers who want to buy livestock sank from 0.75

percent to 0.23 percent in March.

By contrast, buying intentions for some items still increased. For example, buying intentions for bicycles rose fourfold

from 0.06 percent to 0.23 percent in March. Meanwhile, buying intentions for automobiles doubled from 0.23 percent

to 0.46 percent in March. Finally, the proportion of consumers who expressed an interest in buying either a motorcycle

or gold & jewelry rose moderately in March.

Table 4. Buying intensions

Nov-15 Dec-15 Jan-16 Feb-16 Mar-16

Automobile 0.46 0.81 0.46 0.23 0.46Motorcycle 1.97 2.09 2.38 2.73 2.90Bicycle 0.17 0.64 0.23 0.06 0.23House 0.58 0.58 1.28 1.04 0.70House Renovation 2.20 2.90 2.44 3.02 2.96Land 0.23 0.35 0.29 0.29 0.23Audio-visual 2.90 2.49 3.31 3.42 2.73Home appliance 5.57 6.90 6.26 7.02 6.15Gold & jewelry 0.58 1.16 0.87 0.99 1.10Livestock 0.29 0.58 0.29 0.75 0.23

6



Expectations on Key Economic Variables: Inflationary Pressure is Expected to Decrease

In our latest survey, consumers said they expected inflationary pressures to decrease over the next six months. Overall,

the index measuring consumer sentiment toward general prices retreated 1.7 percent to 182.5 in March. Furthermore,

this index is also lower than its level one year ago, when the index reached 186.0 in March 2015. In part, at least, the

decline in this index might be attributable to expectations that foodstuff prices will fall due to greater supply of

foodstuffs in relation to the harvesting season in March.

In regard to interest rates, more consumers foresee higher interest rates over the next six months (34.4 percent in March

vs. 30.0 percent in February), while fewer consumers foresee lower interest rates (8.9 percent in March vs. 10.1 percent

in February). At the same time, a significant portion of consumers (21.0 percent) still expect interest rates to remain

unchanged. As such, overall, the index measuring sentiment toward interest rates added 4.6 percent to 125.5.

As for the rupiah, consumers in the main cities are more pessimistic on the outlook for the local currency. In our survey,

the index measuring sentiment toward the rupiah retreated 9.3 percent to a nine-month low of 67.6 in March. In regard

to the outlook for stock prices, however, consumers are more confident that Indonesian stocks will record gains over

the next six months (this index added 8.8 percent to 121.3).

Table 5. Expectations on Prices

Nov-15 Dec-15 Jan-16 Feb-16 Mar-16 MoM% Change

General Prices Expectation 186.1 185.3 178.0 185.6 182.5 -1.7Interest Rates Expectation 123.7 132.9 123.9 120.0 125.5 4.6Exchange Rates Expectation 75.8 67.7 78.0 74.5 67.6 -9.3Stock Prices Expectation 115.4 121.9 118.3 111.5 121.3 8.8

7



Confidence in the Government: Strengthened

Consumer confidence in the government’s ability to carry out its duties strengthened in the March survey. After

increasing 6.4 percent in the previous survey, the Consumer Confidence in the Government Index (CCGI) climbed 0.2

percent to 99.0. Furthermore, this index is also higher than its level one year ago (93.6 in March 2015). Two components

that make up the CCGI increased, while three components declined.

The component of the CCGI to increase the most was the one measuring sentiment toward the government’s ability

to enforce the rule of law (it climbed 6.6 percent to 98.3 in March). This component is now at its highest level in the

last 14 months. This is very encouraging since perceptions of weak law enforcement have been the main drag on

consumer sentiment toward the government since the end of 2009. At the same time, the component of the CCGI

measuring sentiment toward the government’s ability to ensure a safe and orderly environment was also higher: it added

4.0 percent to 109.8 in March.

By contrast, the component of the CCGI measuring sentiment toward the government’s ability to stabilize prices

declined in March. The relevant index retreated 4.6 percent to 74.9. Indeed, in our survey, most consumers still said that

this particular issue was a major factor affecting local economic conditions over the last three months. The component

of the CCGI measuring sentiment toward the government’s ability to provide and maintain public infrastructure was

also down: it dipped 2.9 percent to 112.7 in March. Finally, the component of the CCGI measuring sentiment toward

the government’s ability to spur economic growth edged down 2.5 percent from its eleven-month high of 101.7 to 99.2

in March.

Table 6. Confidence Toward The Current Government

Nov-15 Dec-15 Jan-16 Feb-16 Mar-16 MoM%Change

Recovery National Economy 91.6 95.2 97.2 101.7 99.2 -2.5Stabilize the Price of Goods 74.1 74.1 72.6 78.5 74.9 -4.6Maintain Public Infrastructure 109.3 109.0 107.2 116.1 112.7 -2.9Provide A Sense of Safety 102.4 103.6 100.8 105.6 109.8 4.0Provide A Sense of Certainty 89.5 87.7 86.4 92.2 98.3 6.6CCGI 93.3 93.9 92.8 98.8 99.0 0.2

* Note: Starting in April 2007, the Consumer Confidence in the Government Index (CCGI) has been adjusted to the year of 2003 = 100

8



* An index reading above 100 indicates that positives responses outnumber negative responses

CCI by Regions Feb-16 Mar-16 MoM %Change

NationalConsumer Confidence Index 98.4 101.3 2.9Present Situation 80.5 82.6 2.6Expectations 111.9 115.3 3.0JakartaConsumer Confidence Index 115.3 118.3 2.5Present Situation 97.6 99.3 1.8Expectations 128.7 132.4 2.9West JavaConsumer Confidence Index 87.7 100.6 14.6Present Situation 60.3 74.5 23.5Expectations 108.4 120.1 10.9Central JavaConsumer Confidence Index 107.0 102.6 -4.1Present Situation 90.0 85.0 -5.6Expectations 119.8 115.9 -3.3East JavaConsumer Confidence Index 95.8 101.1 5.6Present Situation 85.9 86.8 1.0Expectations 103.1 111.8 8.4North SumateraConsumer Confidence Index 93.8 90.9 -3.1Present Situation 69.7 66.7 -4.4Expectations 111.8 109.0 -2.5South SulawesiConsumer Confidence Index 96.4 99.8 3.5Present Situation 84.9 89.0 4.9Expectations 105.1 107.9 2.7

CCI by Classification Respondent Feb-16 Mar-16 MoM Profile (%) %Change

Age of Respondents20-29 15.4 106.9 107.1 0.330-39 28.5 101.1 100.8 -0.340-49 28.8 96.0 101.8 6.050-59 18.7 92.9 98.9 6.560 and over 8.6 93.1 96.1 3.2Educational LevelPrimary School or less 33.1 90.0 94.5 5.0High School 59.0 102.4 103.0 0.7Academy/University 7.9 105.4 116.6 10.6Households Incomeunder RP 1.000.000,- 4.2 83.4 81.9 -1.8Rp. 1.000.001 - 1.500.000,- 10.1 87.7 93.1 6.2Rp 1.500.001 - 2.000.000,- 23.1 93.4 95.1 1.9Rp 2.000.001,- and over 62.6 103.6 106.2 2.5Type AreaUrban 70.4 100.5 105.6 5.1Rural 29.6 93.6 91.0 -2.8GenderMale 50.1 97.8 101.2 3.5Female 49.9 99.1 101.3 2.3OccupationWorker 27.3 98.6 103.6 5.1Self employed 36.9 98.3 100.5 2.3Unemployed 35.7 98.5 100.2 1.8

TABLE 8: NATIONAL FIGURES TABLE 7. CCI - COMPOSITE SERIES

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RESEARCH TEAM

Damhuri Nasution Kahlil Rowter

Head of Economic Research Chief Economist [email protected] [email protected]

Asti Suwarni Pramayanti MeitisariAnalyst [email protected] [email protected]

Darwin Sitorus Handri ThionoEconomist / Database Officer Junior [email protected] [email protected]

Natalia Daisyana Martin JenkinsResearch Assistant [email protected] [email protected]

Rika PantjawatiExecutive [email protected]

Equity Research



BBRI targets managed DPLK fund of Rp7tn (ID)

Bank Rakyat Indonesia (BBRI) targets a managed Financial Institutions Pension Fund (DPLK) to reach Rp7tn. DPLK is one of the

BBRI investment products that provide pension benefit payments periodically. Generally, more than 50% of assets under

management of the DPLK is placed in money market instruments with returns above the average benchmark.

Govt, House to discuss State Budget revision in May (TJP)

As State Revenue is expected to fall well below expectations, the government said that it would submit revision in early May and

expected to secure latters approval within the same month. Finance Minister and Coordinating Economic Minister said

President Jokowi would gather its ministers on Thursday to discuss several key economic issues and review their budget revision

proposal. Finance Minister said that government expected to see house begin deliberation of the tax amnesty bill in April and

State budget revision on the following month.

Jakarta Elevated Toll Road: JSMR prepares an investment of Rp 11 tn (BI)

Jasa Marga (JSMR) set aside up to funds up to Rp11tn for the development of 37km’s Jakarta elevated toll road. JMSR also plans

to work with other investors but still can’t ensure which business entities to work together, as it depends on the strategy of SOE

ministry. The cost of construction is estimated to reach Rp300 bn per km, excluding the cost to widen the road that must be

done to develop the elevated toll road. This toll road will stretch from West Karawang to Cikunir and will be built above the

existing Jakarta-Cikampek toll road. JSMR targeting the addition of 400km new sections in 2016.

JPFA aims revenue increase of 15% (ID)

Japfa Comfeed Indonesia (JPFA) aiming for revenue growth of 10-15% this year. The growth target is in line with average growth

in corporate earnings since 2007. Financial Director JPFA declare this income projections can be achieved if the exchange rate

remained stable this year. To minimize the impact of exchange rate fluctuations, JPFA will hedge 70% of the needs of US dollars

for the purchase of raw materials this year. This number increased compared hedging last year by 50%.

KRAS prepares capital of USD105.6mn to finance HSM (ID)

Krakatau Steel (KRAS) prepared a capital expenditure for construction USD105.6mn Hot Strip Mill (HSM) II factory up to 2019.

The portion of this equity loan will complement loan provided by Commerzebank AG worth USD260.05 million in funding the

construction of the plant with a capacity of 1.5 million tons per year. HSM will be constructed on an area of 48ha in Krakatau

Industrial Estate Cilegon. The development will increase the production capacity hot strip mill into 3.9 million tonnes at the

beginning of 2019. For the sale of steel, KRAS optimistic for an improving on the volume growth this year following Chinese

government's decision to cut its steel production capacity ranging between 150-200 million tonnes in the next 5 years.

MDLN aims residential sales of Rp3tn (ID)

Modernland Realty (MDLN) targeting residential sales worth Rp3tn this year which will be supported by the launch of the new

four clusters site houses on 2Q16. Corporate Secretary MDLN declare this new project located in Jakarta Garden City. With

regard to the price of the unit, MDLN can not release it. To attract customers in Jakarta Garden City, MDLN plans to build

facilities food and beverage and AEON Mall. MDLN targets pre-sales of Rp4.2tn in 2016, up 32.5% from 2015 realization.

TBIG probes bond emission worth USD500mn (ID)

Tower Bersama Infrastructure (TBIG) through TBG Global Pte Ltd back exploring the issuance of up to USD500 million bonds or

equivalent Rp6.6tn this year. Previously, TBIG had canceled plans following not conducive market conditions. Finance Director

TBIG said the company will ask for approval on bond issuance on Annual General Meeting (AGM) on May 11, 2016. Bonds with

total worth of USD500 million will due on 2025 with maximum interest rate charged of 8% pa.

MARKET NEWS

Price Mkt Cap

Target Rp Bn 2015 2016 2015 2016 2015 2016 2015 2016 2015 2016 2015 2016 2015 2016 2015 2016 2015 2016 2015

Danareksa Universe 2,301,117 140,352 150,317 301.4 322.7 -4% 7% 16.4 15.3 19.4 18.6 2.5 2.3 66,785 62,798 16.4

Auto 311,019 16,781 19,189 307.4 351.5 -15% 14% 18.5 16.2 12.9 11.8 2.3 2.1 49,969 45,539 12.7

Astra International HOLD 7,400 6,700 299,578 16,050 18,063 396 446 370 412 -16% 13% 18.7 16.6 13.6 12.4 2.3 2.1 44,068 39,931 34.1 28.0 12.9

Gajah Tunggal BUY 770 1,500 2,683 266 633 76 182 140 127 -1% 138% 10.1 4.2 4.6 4.5 0.4 0.4 5,910 5,846 95.0 85.6 4.4

Selamat Sempurna BUY 4,820 5,300 6,939 465 493 323 342 332 352 19% 6% 14.9 14.1 9.0 8.4 4.8 4.0 (9) (238) net cash net cash 36.0

Banks 969,803 73,678 79,865 683.9 741.3 -1% 8% 13.2 12.1 2.3 2.0 - - 19.0

BCA BUY 13,325 15,425 328,528 18,062 19,792 724 794 724 794 8% 10% 18.4 16.8 NA NA 3.6 3.1 0 0 NA NA 21.4

BNI BUY 5,125 5,850 95,574 7,506 8,596 402 461 402 461 -30% 15% 12.7 11.1 NA NA 1.5 1.3 0 0 NA NA 12.1

BRI BUY 11,100 13,400 273,828 24,352 25,863 987 1,048 987 1,048 0% 6% 11.2 10.6 NA NA 2.4 2.0 0 0 NA NA 23.0

Bank Tabungan Negara BUY 1,715 1,450 18,162 1,588 1,964 151 187 151 187 42% 24% 11.3 9.2 NA NA 1.3 1.2 0 0 NA NA 12.4

Bank Mandiri BUY 10,175 11,450 237,417 20,144 21,413 863 918 863 918 1% 6% 11.8 11.1 NA NA 2.0 1.7 0 0 NA NA 18.2

Bank Tabungan Pensiunan BUY 2,790 4,500 16,294 2,026 2,237 347 383 347 383 8% 10% 8.0 7.3 NA NA 1.2 1.0 0 0 NA NA 15.8

Cement 138,689 9,876 9,918 508 510 -13% 0% 14.0 14.0 8.7 8.6 2.4 2.2 10,662- 8,862- 17.4

Indocement HOLD 20,125 21,000 74,085 4,915 4,919 1,335 1,336 1,305 1,306 -9% 0% 15.1 15.1 9.4 9.1 2.5 2.4 (10,361) (10,866) net cash net cash 16.9

Semen Indonesia BUY 10,225 12,300 60,650 4,608 4,648 777 784 761 767 -17% 1% 13.2 13.0 8.4 8.1 2.3 2.1 1,330 1,550 5.1 5.5 18.4

Semen Baturaja HOLD 402 350 3,955 354 352 36 36 36 36 8% -1% 11.2 11.2 5.5 9.0 1.3 1.2 (1,632) 455 net cash 14.0 12.5

Cigarettes 578,112 15,841 17,080 2,409 2,597 2% 8% 36.5 33.8 23.7 22.1 8.4 7.8 16,599 19,508 27.4

Gudang Garam BUY 65,900 68,800 126,797 5,478 5,760 2,847 2,993 2,847 2,993 2% 5% 23.1 22.0 13.9 12.9 3.4 3.1 18,297 17,703 49.4 42.9 15.6

HM Sampoerna HOLD 97,000 105,000 451,314 10,363 11,320 2,338 2,433 2,356 2,447 -1% 4% 41.5 39.9 30.6 28.5 14.1 13.7 (1,698) 1,805 net cash 5.5 45.5

Construction 119,368 4,375 5,514 100 126 19% 26% 27.3 21.6 12.8 10.7 3.1 2.8 11,562 19,620 13.8

Jasa Marga BUY 5,500 8,000 37,400 1,531 1,779 480 614 513 657 19% 28% 11.5 9.0 12.8 11.3 3.0 2.7 11,949 14,205 95.8 103.4 12.8

Wijaya Karya HOLD 2,675 2,900 16,449 584 741 95 120 100 126 -5% 27% 28.1 22.2 11.6 9.3 3.0 2.6 1,595 2,217 28.8 35.4 11.1

Pembangunan Perumahan BUY 3,850 4,700 18,643 635 857 131 177 138 185 19% 35% 29.4 21.7 11.3 9.2 5.1 3.5 945 1,429 25.6 27.1 20.9

Adhi Karya BUY 2,700 2,750 9,614 397 556 111 156 123 169 22% 40% 24.2 17.3 9.3 8.5 2.0 1.8 (1,281) 941 net cash 17.7 12.1

Waskita Karya BUY 2,100 2,150 28,502 833 1,089 61 80 61 80 19% 31% 34.2 26.2 18.4 13.6 3.2 2.9 (352) 2,439 net cash 24.9 14.2

Wika Beton HOLD 1,005 1,350 8,759 396 491 45 56 46 57 32% 24% 22.1 17.8 11.6 9.4 3.5 3.0 (1,293) (1,610) net cash net cash 17.1

Consumer 495,244 13,566 14,577 493 530 8% 7% 36.5 34.0 22.0 20.7 9.5 8.7 2,950 2,353 27.5

Indofood CBP BUY 15,450 13,800 90,088 3,033 3,308 520 567 520 567 16% 9% 29.7 27.2 20.7 19.5 5.7 5.1 (3,798) (3,861) net cash net cash 20.3

Indofood BUY 7,225 7,100 63,439 3,704 4,059 422 462 563 610 -5% 10% 17.1 15.6 7.7 7.4 2.3 2.1 5,492 4,475 19.5 14.7 13.8

Unilever BUY 43,500 42,000 331,905 6,036 6,624 791 868 791 868 5% 10% 55.0 50.1 39.1 35.6 65.6 61.6 745 1,162 14.7 21.6 123.2

Nippon Indosari Corpindo BUY 1,280 1,680 6,479 266 309 53 61 53 61 41% 16% 24.3 20.9 13.8 11.2 5.4 4.5 713 718 59.5 49.6 24.7

Mandom BUY 16,575 21,170 3,333 526 276 2,618 1,375 279 1,373 202% -47% 6.3 12.1 7.0 6.1 2.0 1.9 (202) (141) net cash net cash 35.7

Healthcare 119,459 2,964 3,341 210 260 19% 24% 40.3 35.8 24.7 21.1 6.9 6.2 3,721- 3,613- 18.6

Kalbe Farma HOLD 1,430 1,355 67,031 2,040 2,274 44 49 43 49 -1% 12% 32.9 29.5 21.5 18.7 6.5 5.8 (1,785) (2,100) net cash net cash 20.6

Kimia Farma HOLD 1,290 1,130 7,165 258 287 46 52 42 47 10% 11% 27.8 25.0 18.6 16.3 3.7 3.3 121 426 6.3 19.9 14.2

Siloam Hospital HOLD 7,875 10,500 9,104 93 134 80 116 84 127 49% 44% 97.9 68.1 17.8 13.8 5.2 4.8 281 534 16.1 28.4 5.5

Mitra Keluarga BUY 2,485 2,580 36,159 574 646 39 44 39 43 11% 13% 63.0 56.0 46.0 39.7 10.9 9.9 (2,337) (2,474) net cash net cash 22.4

Heavy Equipment 58,365 6,331 6,015 1,385 1,316 14% -5% 9.2 9.7 3.8 3.5 1.4 1.3 8,513- 13,469- 15.9

Hexindo Adiperkasa HOLD 1,540 3,650 1,294 220 260 262 309 238 273 13% 18% 5.9 5.0 2.6 1.8 0.5 0.4 (194) (447) net cash net cash 8.0

United Tractors HOLD 15,300 18,500 57,071 6,111 5,756 1,638 1,543 1,638 1,543 14% -6% 9.3 9.9 3.8 3.5 1.5 1.3 (8,318) (13,022) net cash net cash 16.5

Mining 82,179 5,809 3,823 73 48 -28% -34% 14.1 21.5 4.5 5.3 0.7 0.7 8,432 5,651 5.8

Adaro Energy BUY 680 750 21,750 2,249 1,577 70 49 70 49 9% -30% 9.7 13.8 3.7 3.8 0.6 0.6 12,330 9,655 32.0 25.0 6.4

Timah HOLD 755 570 5,623 101 180 14 24 14 24 -84% 78% 55.7 31.2 9.6 7.9 1.1 1.0 1,851 1,221 34.7 22.3 1.8

Vale Indonesia BUY 1,815 2,000 18,034 664 222 67 22 67 22 -67% -67% 27.2 81.2 5.8 7.1 0.7 0.8 (640) (2,381) net cash net cash 3.0

Aneka Tambang BUY 500 472 12,015 (706) (293) (74) (31) (74) (31) -5% -59% (6.8) (16.3) 18.6 16.2 0.7 0.7 2,223 3,734 13.3 22.7 -4.9

Bukit Asam BUY 6,450 7,800 14,862 1,970 1,445 906 665 906 665 -2% -27% 7.1 9.7 5.0 6.7 1.5 1.4 (1,374) (370) net cash net cash 21.4

Indo Tambangraya Megah HOLD 6,675 7,300 7,542 1,504 814 1,331 720 1,331 720 -28% -46% 5.0 9.3 1.2 1.8 0.6 0.6 (3,400) (3,739) net cash net cash 14.1

Harum Energy HOLD 870 790 2,352 28 (123) 10 (45) 10 (45) 471% -540% 84.4 (19.2) 1.2- 1.6 0.6 0.6 (2,559) (2,469) net cash net cash 0.8

Property 98,283 8,896 10,205 87 99 -10% 15% 11.0 9.6 9.8 8.5 1.9 1.7 11,956 11,229 18.8

Alam Sutera BUY 380 700 7,467 1,254 1,516 64 77 73 85 15% 21% 6.0 4.9 6.7 5.6 1.0 0.9 5,388 4,831 75.3 57.4 18.9

Bumi Serpong Damai BUY 1,815 2,100 34,933 2,369 2,617 135 150 140 156 -36% 10% 13.4 12.1 11.7 10.3 2.3 2.0 (631) (1,015) net cash net cash 16.6

Metropolitan Land BUY 281 620 2,151 290 322 38 43 38 43 14% 11% 7.3 6.6 5.4 5.0 1.0 0.9 602 668 27.7 27.2 14.2

Surya Semesta Internusa HOLD 705 1,040 3,317 464 415 99 88 103 93 32% -11% 7.1 8.0 3.0 3.0 1.1 1.0 (785) (908) net cash net cash 16.9

Lippo Karawaci BUY 1,045 1,200 24,116 1,565 1,763 72 82 58 64 -38% 13% 14.4 12.8 11.1 9.5 1.5 1.4 4,370 4,769 27.3 27.4 10.1

PP Properti BUY 229 242 3,216 1,626 1,963 21 26 22 28 172% 27% 11.1 8.8 7.6 6.9 1.5 1.3 194 760 8.8 30.1 100.6

Summarecon BUY 1,600 2,045 23,083 1,327 1,609 92 111 92 111 -5% 21% 17.4 14.3 12.8 10.5 4.7 3.8 2,818 2,125 57.1 34.6 29.6

Retail 28,167 1,039 1,211 40 47 6% 17% 27.1 23.3 12.3 10.8 3.0 2.8 1,090 737 11.8

Mitra Adi Perkasa BUY 4,920 4,650 8,167 161 275 97 166 107 175 117% 71% 50.7 29.7 9.0 7.8 2.6 2.4 2,317 2,250 72.4 67.4 5.6

Ramayana HOLD 740 775 5,251 321 331 45 47 45 47 -9% 3% 16.3 15.8 10.0 9.0 1.5 1.5 (757) (809) net cash net cash 9.4

Ace Hardware HOLD 860 745 14,749 557 604 32 35 31 34 0% 9% 26.5 24.4 18.6 16.8 5.6 5.0 (470) (704) net cash net cash 22.4

Net Gearing ROE EPS Growth PER (x) EV / EBITDA (x) PBV (x) Net DebtCore EPS (Rp)Equity

Valuation Rating Price (Rp)

Net profit, Rp bn EPS (Rp)

Equity Research



LEADERS Price as on

Code 4-Apr-2016 1-Apr-2016 Chg, % w-w, % m-m, % YTD, % Rating

Aneka Tambang ANTM 500 461 8.5 8.9 24.1 59.2 BUY

Siloam Hospital SILO 7,875 7,450 5.7 3.6 (0.9) (19.6) HOLD

Perusahaan Gas Negara PGAS 2,790 2,660 4.9 7.5 5.3 1.6 BUY

Vale Indonesia INCO 1,815 1,735 4.6 2.5 2.0 11.0 BUY

Bukit Asam PTBA 6,450 6,200 4.0 (1.5) 11.2 42.5 BUY

Ramayana RALS 740 715 3.5 5.7 (9.2) 14.7 HOLD

Timah TINS 755 730 3.4 2.7 23.8 49.5 HOLD

Waskita Karya WSKT 2,100 2,035 3.2 5.8 10.5 25.7 BUY

PP Properti PPRO 229 223 2.7 7.0 9.0 28.7 BUY

Adaro Energy ADRO 680 665 2.3 1.5 - 32.0 BUY

Sources: Bloomberg

LAGGARDS Price as on

Code 4-Apr-2016 1-Apr-2016 Chg, % w-w, % m-m, % YTD, % Rating

Metropolitan Land MTLA 281 295 (4.7) (3.1) 41.2 30.7 BUY

Hexindo Adiperkasa HEXA 1,540 1,600 (3.8) (1.3) 19.4 24.7 HOLD

Astra Agro Lestari AALI 17,500 18,150 (3.6) 2.3 15.9 10.4 BUY

Gajah Tunggal GJTL 770 795 (3.1) 9.2 36.3 45.3 BUY

Ace Hardware ACES 860 885 (2.8) 7.5 (9.0) 4.2 BUY

Surya Semesta Internusa SSIA 705 725 (2.8) - 2.9 (1.4) HOLD

Blue Bird BIRD 5,800 5,950 (2.5) (7.9) (9.0) (18.3) BUY

PP London Sumatra LSIP 1,760 1,800 (2.2) 1.1 18.5 33.3 HOLD

HM Sampoerna HMSP 97,000 99,000 (2.0) (0.7) (11.0) 3.2 HOLD

Salim Ivomas Pratama SIMP 455 463 (1.7) 9.6 16.4 37.0 BUY

Sources: Bloomberg

COVERAGE PERFORMANCE

Equity Research



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