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Equity Research

Tuesday, December 20, 2016

Danareksa Sekuritas – Equity Research

MARKET NEWS

*Analysts’ comment inside

Single-digit mortgage rate and LTV loosening to boost mortgage lending REI expects improvements in the property sector Net interest margin expected to reach 5-6% in 2017 JSMR plans to divest stakes in two toll roads next year* WSBP booked new contracts of Rp10.7tr, higher than management’s full

year target BSDE and SGU dispute heating up Garudafood targets 15% yoy growth in its FY17 top line

Previous Reports:

AUTO: November 2016: The highest monthly car sales in 2016 Snapshot20161219

WIKA: Ending the year on a high note, Ace Hardware Indonesia: In-line 11M16 revenues Snapshot20161216

MTLA: Taking the middle way, SMGR: Steady performance--Snapshot20161215

Cement sales November: still sluggish (UNDERWEIGHT), ASRI: Solid marketing sales growth due to one-off transaction, Ramayana Lestari Sentosa: In-line 11M16 gross sales -Snapshot20161214

ACES: Continued inventory problems -Snapshot20161213

IDX ANNOUNCEMENT

AGM EGM Announcement

Code Action Date Time (WIB)

IGAR EGM 20-Dec-16 10.00

SQBI EGM 20-Dec-16 9.00

SQBB EGM 20-Dec-16 9.00

MITI EGM 20-Dec-16 15.00

MORNING HIGHLIGHT

Key Index

Close

Chg Ytd Vol

(%) (%) (US$ m)

Asean - 5

Indonesia 5,192 (0.8) 13.0 303

Thailand 1,522 (0.0) 18.2 1,004

Philippines 6,714 (2.0) (3.4) 108

Malaysia 1,634 (0.2) (3.4) 405

Singapore 2,913 (0.8) 1.1 610

Regional

China 3,118 (0.2) (11.9) 35,425

Hong Kong 21,833 (0.9) (0.4) 7,220

Japan 19,364 (0.1) 1.7 648

Korea 2,044 0.3 4.2 2,504

Taiwan 9,239 (0.9) 10.8 1,783

India 26,375 (0.4) 1.0 357

NASDAQ 5,457 0.4 9.0 63,461

Dow Jones 19,883 0.2 14.1 7,650

Currency and Interest Rate

Rate

w-w m-m ytd

(%) (%) (%)

Rupiah Rp/1US$ 13,389 (0.4) 0.1 2.9

SBI rate % 5.90 - - (1.3)

10y Gov Indo bond 7.92 0.2 0.1 (0.8)

Hard Commodities

Unit Price

d-d m-m ytd

(%) (%) (%)

Coal US$/ton 86 (0.3) (18.0) 70.4

Gold US$/toz 1,138 - (5.8) 7.2

Nickel US$/mt.ton 10,826 (2.6) 0.2 23.3

Tin US$/mt.ton 21,300 (0.1) 4.3 46.0

Soft Commodities

Unit Price

d-d m-m ytd

(%) (%) (%)

Cocoa US$/mt.ton 2,279 0.8 (7.3) (30.3)

Corn US$/mt.ton 130 0.6 4.1 (3.1)

Oil (WTI) US$/barrel 52 (0.0) 14.0 40.7

Oil (Brent) US$/barrel 55 (0.5) 17.2 47.3

Palm oil MYR/mt.ton 3,244 (0.1) 11.7 47.4

Rubber USd/kg 193 (1.9) 14.5 64.2

Pulp US$/tonne 809 N/A (0.1) 0.7

Coffee US$/60kgbag 142 0.1 (9.4) 29.5

Sugar US$/MT 490 (0.5) (8.5) 16.1

Wheat US$/ton 110 (1.0) (4.8) (22.0)

Source: Bloomberg

http://dmia.danareksaonline.com/Upload/20161219-Auto.pdf

http://dmia.danareksaonline.com/Upload/Morning%20pack%2020161216.pdf



http://dmia.danareksaonline.com/Upload/20161213-ACES.pdf

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) 29555 888 ext. 3128

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

Ehrliech Suhartono

[email protected] (62-21) 29555 888 ext.3513 Construction

Maria Renata


Yunita L. Nababan

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

Lucky Bayu Purnomo

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

Puti Adani


Laksmita Armandani

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

Antonia Febe Hartono


Muhammad Hardiansyah


Tuty Sutopo


Upik Yuzarni


Kevin Giarto

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

Stefanus Darmagiri

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

Natalia Sutanto

[email protected] (62-21) 29555 888 ext.3500 Strategy, Banking

Agus Pramono, CFA

[email protected] (62-21) 2955 888 ext. 3503 Retail

Adeline Solaiman

[email protected] (62-21) 2955 888 ext. 3506 Research Associate

Melati Laksmindra Isnandari

Equity Research



Single-digit mortgage rate and LTV loosening to boost mortgage lending

Bankers are more optimistic on the outlook for mortgage lending next year given the single-digit mortgage rate and LTV loosening. Bank Central Asia (BBCA) expects to record new mortgage lending of more than Rp2tn per month, higher than the historical average of Rp2tn per month. Meanwhile, Bank Mandiri (BMRI) expects 13-15% growth in mortgage lending next year. (Investor Daily) REI expects improvements in the property sector

The Indonesian Real Estate Association (REI) expects recovery in the property sector in mid-2017 due to: (i) stronger demand for property, (ii) better economic growth. (Investor Daily) Net interest margin expected to reach 5-6% in 2017

The net interest margin in 2017 is not expected to change much from its level this year. The President Director of BMRI, Kartiko Wirjoatmodjo, said that the NIM would narrow by 20-30 bps. BMRI predicts the NIM to be around 5% or below (2016 NIM: 5.8-6%). Meanwhile, the President Director of CIMB Niaga, Tigor Siahaan, predicts that next year’s NIM will be around the same level as this year, reaching 5.54%. According to a director of BBNI, the bank’s NIM amounted to 6.2% as of September 2016. The LPS predicts the NIM in 2017 to be in the range of 5.3 and 5.5% (Kontan)

JSMR plans to divest stakes in two toll roads next year

Jasa Marga (JSMR) plans to sell stakes in two toll roads, JORR W1 and Trans Marga Jateng (TMJ), in 2017. JSMR plans to sell around a 10% - 15% stake in TMJ, reducing its current ownership from 73.9%. In JORR W1, JSMR plans to divest all of its 19.0% stake. JSMR expects to obtain Rp1.0tr in proceeds from the two transactions. Furthermore, JSMR plans to raise Rp4.0tr from the issuance of bonds in 2017, less than the initially expected Rp6.0tr in view of its asset divestments. (Kontan) Comment: We issued a report on JSMR on 30 November 2016 regarding its plans. In JLB (JORR W1), JSMR plans to sell its entire 19% stake at a minimum valuation of 3.0x PBV. And for TMJ, JSMR plans to divest a 13.9% stake reducing its current ownership from 73.9% with a minimum valuation of 1.9x PBV. In 2015, TMJ recorded revenues of Rp129bn or 1.7% of JSMR’s revenues (excl. construction revenues). JSMR expects to book Rp540bn of gains from these two transactions. We have not included the transactions in our forecast. We used sensitivity analysis to evaluate the impact of the transactions. Scenario 1 is based on selling JLB, Scenario 2 is based on the divestment of TMJ, while Scenario 3 is based on both transactions. Hence, based on Scenario 1, JSMR should book 2017 net income 16.1% higher than our current target, while based on Scenario 2 and 3 net income should be 14.5% and 30.6% higher. Our 2017 net income estimate stands at Rp1.75tr (+4.4%yoy; FY16: Rp1.67tr). We have a BUY recommendation on JSMR with a TP of Rp6,300. (Maria Renata)

WSBP booked new contracts of Rp10.7tr, higher than management’s full year target

Waskita Beton Precast (WSBP) optimist to book Rp11.0tr of new contracts in 2016. This is based on Rp10.7tr of new contracts booked as of early Dec16, higher than initial full year target of Rp7.9tr. Recently, WSBP booked Rp2.6tr of contracts from Krian – Legundi – Bunder toll road (38.3km), while the remaining Rp300bn new contracts are targeted from Kayu Agung – Palembang – Betung toll road project that the signing is targeted within this month. Compared to previous year, WSBP’s new contracts in 2015 reached only Rp2.65tr. Meanwhile, WSBP targets 2017 new contracts to reach around Rp10.0tr to Rp12.0tr, which most of them are targeted to come from the Trans Sumatra toll road. (Investor Daily)

MARKET NEWS

Equity Research



BSDE and SGU dispute heating up

The dispute between Bumi Serpong Damai (BSDE) and Swiss German University Foundation (YSGU) appears to be heating up. According to BSDE’s attorney, YSGU did not satisfy its obligation to make payment to BSDE for the land and buildings. YSGU claims, however, that it did not make payment to BSDE since BSDE has not completed its obligation to build five buildings at the university. (Kontan) Garudafood targets 15% yoy growth in its FY17 top line

PT Garudafood Putra Putri Jaya will continue its expansion in the food and beverages (F&B) industry. Hardianto Atmadjaja, the CEO of Garudafood, stated that the company’s biscuit and snacks business growth will surpass 15% this year, while for beverages, growth will reach around 8% yoy. In 2016, the F&B business performed well in 1H16, but experienced a slowdown in 3Q16. However, the company foresees stronger demand in 4Q16. This year, the company will spend Rp2tn on capex for its beverages business (Rp1.5tn) and food business (Rp500bn). For 2017, Garudafood has earmarked Rp2tn for capex. The company hopes to record higher revenues growth of 15% yoy in both the food and beverages segments. (Bisnis Indonesia)

Price Mkt Cap

Target Rp Bn 2016 2017 2016 2017 2016 2017 2016 2017 2016 2017 2016 2017 2016 2017 2016 2016

Danareksa Universe 3,019,288 150,667 176,605 243.4 285.3 3% 17% 20.0 17.1 23.0 20.5 2.8 2.5 14.9

Auto 308,687 15,508 18,375 311.9 369.5 7% 18% 19.9 16.8 14.5 12.4 2.2 2.0 11.7

Astra International HOLD 7,625 8,400 308,687 15,508 18,375 383 454 360 435 7% 18% 19.9 16.8 14.5 12.4 2.2 2.0 27.1 11.7

Banks 1,012,117 74,614 91,514 732.3 898.1 0% 23% 13.6 11.1 2.0 1.7 16.2

BCA HOLD 14,725 16,300 363,045 18,931 20,806 768 844 768 844 5% 10% 19.2 17.4 N/A N/A 3.5 3.0 N/A 19.6

BNI HOLD 5,425 6,100 101,169 10,494 13,698 563 735 563 735 16% 31% 9.6 7.4 N/A N/A 1.1 1.0 N/A 12.7

BRI BUY 11,250 14,500 277,528 26,092 31,100 1,058 1,261 1,058 1,261 3% 19% 10.6 8.9 N/A N/A 1.9 1.7 N/A 20.1

Bank Tabungan Negara BUY 1,680 2,300 17,791 2,200 2,572 208 243 208 243 19% 17% 8.1 6.9 N/A N/A 1.0 0.8 N/A 13.6

Bank Mandiri HOLD 10,825 11,250 252,583 16,898 23,339 724 1,000 724 1,000 -17% 38% 14.9 10.8 N/A N/A 1.6 1.5 N/A 12.4

Cement 137,166 7,891 5,869 406 302 -15% -26% 17.4 23.4 11.0 11.7 2.4 2.3 14.4

Indocement SELL 15,650 14,600 57,611 3,863 2,808 1,049 763 1,042 757 -11% -27% 14.9 20.5 10.4 10.8 2.3 2.2 net cash 15.8

Semen Indonesia SELL 9,100 8,100 53,977 3,792 2,958 639 499 633 492 -16% -22% 14.2 18.2 8.4 9.3 1.9 1.8 6.1 13.8

Semen Baturaja SELL 2,600 400 25,578 236 103 24 11 24 11 -33% -56% 108.2 247.2 62.6 49.2 8.2 8.0 net cash 7.8

Cigarettes 578,916 18,145 19,608 153 166 8% 8% 31.9 29.5 21.6 19.9 8.0 7.4 25.4

Gudang Garam HOLD 63,900 70,400 122,949 6,342 6,860 3,296 3,565 3,296 3,565 -1% 8% 19.4 17.9 12.1 11.2 3.1 2.8 46.6 16.4

HM Sampoerna HOLD 3,920 3,850 455,967 11,803 12,749 101 110 101 109 14% 8% 38.6 35.8 28.6 26.1 13.6 13.3 net cash 36.1

Construction 139,736 6,602 8,166 89 110 36% 24% 21.2 17.1 11.6 9.8 2.9 2.5 15.3

Wijaya Karya BUY 2,440 4,300 21,887 758 900 123 146 123 146 21% 19% 19.8 16.7 10.8 8.9 4.4 3.8 24.6 16.2

Pembangunan Perumahan BUY 3,840 5,700 23,387 967 1,295 200 267 211 298 31% 34% 19.2 14.4 11.6 8.8 4.5 3.7 net cash 20.2

Adhi Karya BUY 2,070 3,500 7,371 703 986 208 292 216 303 52% 40% 10.0 7.1 5.4 4.2 1.2 0.9 net cash 12.2

Waskita Karya BUY 2,440 3,700 33,120 1,688 2,344 124 173 124 173 61% 39% 19.6 14.1 14.1 10.1 3.0 2.5 20.2 16.4

Waskita Beton BUY 545 770 14,367 547 788 21 30 21 30 64% 44% 26.3 18.2 15.4 11.8 2.0 1.9 net cash 13.1

Wika Beton BUY 855 1,300 7,452 268 362 31 42 31 42 54% 35% 27.8 20.6 15.1 10.9 3.0 2.7 net cash 11.5

Jasa Marga BUY 4,430 5,700 32,152 1,671 1,492 246 219 249 223 14% -11% 18.0 20.2 11.3 12.2 2.7 2.5 143.1 15.0

Consumer 404,755 10,506 12,110 507 584 15% 15% 38.5 33.4 27.2 23.6 17.0 16.4 45.0

Indofood CBP BUY 8,325 10,850 97,085 3,714 4,293 319 368 319 368 24% 16% 26.1 22.6 18.4 15.9 5.9 5.8 net cash 22.5

Unilever HOLD 39,850 46,650 304,056 6,563 7,555 860 990 860 990 12% 15% 46.3 40.2 32.9 28.5 58.2 52.7 28.9 130.6

Kino Indonesia BUY 2,530 4,500 3,614 229 262 160 183 160 183 -32% 14% 15.8 13.8 9.1 8.4 1.9 1.7 3.9 12.3

Healthcare 84,100 2,490 2,743 97 106 11% 9% 33.8 30.7 21.7 19.4 6.1 5.4 19.0

Kalbe Farma SELL 1,460 1,400 68,438 2,210 2,441 47 52 47 52 10% 10% 31.0 28.0 19.7 17.7 5.8 5.1 net cash 19.9

Kimia Farma SELL 2,820 1,510 15,662 279 302 50 54 48 52 12% 8% 56.1 51.9 37.8 31.5 7.6 6.8 33.7 14.3

Heavy Equipment 78,706 4,481 5,676 1,201 1,522 16% 27% 17.6 13.9 6.2 4.8 2.0 1.9 12.0

Hexindo Adiperkasa

United Tractors HOLD 21,100 23,500 78,706 4,481 5,676 1,201 1,522 1,231 1,556 16% 27% 17.6 13.9 6.2 4.8 2.0 1.9 net cash 12.0

Mining 167,932 4,311 5,355 54 67 1% 24% 39.0 31.4 10.2 9.2 1.5 1.5 3.9

Adaro Energy HOLD 1,695 800 54,216 1,781 1,980 56 62 56 62 -13% 11% 30.4 27.4 7.5 6.9 1.4 1.4 18.9 4.6

Timah HOLD 1,155 590 8,602 180 196 24 26 24 26 78% 9% 47.8 43.8 11.6 10.6 1.6 1.5 26.0 3.3

Vale Indonesia HOLD 3,060 2,800 30,405 222 480 22 48 22 48 -67% 116% 136.8 63.3 12.7 10.9 1.3 1.3 net cash 0.9

Aneka Tambang HOLD 870 650 20,907 (307) (147) (13) (6) (13) (6) -79% -52% (68.2) (141.9) 27.3 24.0 1.2 1.2 18.0 (1.7)

Bukit Asam BUY 12,300 8,800 28,341 1,610 1,834 741 844 741 844 -21% 14% 16.6 14.6 11.9 10.1 2.8 2.5 net cash 16.7

Indo Tambangraya Megah HOLD 17,150 8,400 19,378 947 1,106 838 979 838 979 14% 17% 20.5 17.5 6.5 5.8 1.7 1.7 net cash 8.4

Harum Energy HOLD 2,250 790 6,083 (123) (95) (45) (35) (45) (35) -540% -22% (49.6) (63.9) 50.6- 62.2- 1.6 1.7 net cash (3.2)

Property 108,428 5,172 6,045 44 52 -16% 17% 21.0 17.9 12.5 12.1 1.7 1.5 8.4

Alam Sutera HOLD 356 380 6,995 820 924 42 47 53 52 38% 13% 8.5 7.6 9.5 9.8 0.3 0.3 33.2 4.2

Bumi Serpong Damai BUY 1,725 2,500 33,201 1,859 2,009 97 104 139 146 -13% 8% 17.9 16.5 11.7 11.5 1.6 1.5 11.5 9.5

Ciputra Development BUY 1,350 1,850 20,824 661 998 43 54 38 45 -38% 26% 31.5 25.1 12.9 12.5 2.4 1.6 42.2 7.7

Pakuwon Jati HOLD 565 700 27,210 1,757 2,019 36 42 34 39 39% 15% 15.5 13.5 11.5 10.5 3.1 2.5 29.6 21.8

Summarecon BUY 1,400 1,600 20,197 75 95 5 7 14 19 -91% 27% 268.4 212.2 19.2 18.3 3.4 3.4 92.8 1.3

Retail 82,846 3,435 3,888 100 114 17% 13% 24.1 21.3 14.0 12.5 5.7 5.3 25.2

Mitra Adi Perkasa HOLD 5,050 5,000 8,383 174 267 108 166 107 165 370% 54% 46.8 30.4 9.8 8.9 2.7 2.6 99.8 5.8

Ramayana BUY 1,145 1,350 8,125 396 468 56 66 54 64 18% 18% 20.4 17.3 15.0 13.3 2.3 2.2 net cash 11.6

Matahari Department Store SELL 14,950 12,000 43,623 2,080 2,370 707 805 704 803 16% 14% 21.2 18.6 14.7 12.8 21.3 17.9 net cash 131.7

Matahari Putra Prima HOLD 1,545 1,700 8,309 129 185 24 34 29 40 -30% 44% 64.7 44.9 14.6 12.5 2.9 2.7 net cash 4.5

Ace Hardware SELL 840 750 14,406 656 598 37 35 38 34 7% -5% 22.7 23.9 16.8 16.9 4.9 4.5 net cash 23.7

Equity

Valuation Rating Price (Rp) Net profit, Rp bn EPS (Rp) EPS Growth PER (x)Core EPS (Rp) EV / EBITDA (x) PBV (x) ROENet Gearing

Equity Research



LEADERS Price as on

Code 19-Dec-2016 16-Dec-2016 Chg, % w-w, % m-m, % YTD, % Rating

Matahari Department Store LPPF 14,950 14,500 3.1 (2.9) (1.6) (15.1) SELL

Adaro Energy ADRO 1,695 1,660 2.1 0.9 13.0 229.1 BUY

Kimia Farma KAEF 2,820 2,780 1.4 1.8 29.4 224.1 SELL

Bank Negara Indonesia BBNI 5,425 5,350 1.4 (0.9) 3.8 8.7 HOLD

Bank Mandiri BMRI 10,825 10,750 0.7 (1.4) (0.9) 17.0 HOLD

Astra International ASII 7,625 7,575 0.7 (2.6) (2.9) 27.1 HOLD

Summarecon Agung SMRA 1,400 1,395 0.4 (5.4) 3.7 (15.2) BUY

Mitra Adi Perkasa MAPI 5,050 5,050 - (1.9) 5.2 33.1 HOLD

Bank Rakyat Indonesia BBRI 11,250 11,275 (0.2) (2.0) (2.2) (1.5) BUY

Unilever UNVR 39,850 39,975 (0.3) (3.9) (1.0) 7.7 HOLD

Sources: Bloomberg

LAGGARDS Price as on

Code 19-Dec-2016 16-Dec-2016 Chg, % w-w, % m-m, % YTD, % Rating

Vale Indonesia INCO 3,060 3,240 (5.6) (7.6) (1.6) 87.2 HOLD

Kalbe Farma KLBF 1,460 1,530 (4.6) (7.3) (0.3) 10.6 SELL

Indocement INTP 15,650 16,375 (4.4) (3.7) 5.0 (29.9) SELL

Pakuwon Jati PWON 565 590 (4.2) (12.4) (17.5) 13.9 HOLD

United Tractors UNTR 21,100 21,975 (4.0) (7.5) (0.9) 24.5 HOLD

Indofood CBP ICBP 8,325 8,625 (3.5) (5.9) (8.5) 23.6 BUY

Ace Hardware ACES 840 870 (3.4) (0.6) (1.2) 1.8 SELL

Harum Energy HRUM 2,250 2,320 (3.0) (3.4) (2.2) 233.3 HOLD

Alam Sutera ASRI 356 366 (2.7) (8.7) (7.8) 3.8 HOLD

Gudang Garam GGRM 63,900 65,550 (2.5) (4.6) 1.3 16.2 HOLD

Sources: Bloomberg

COVERAGE PERFORMANCE

Equity Research



Disclaimer

The information contained in this report has been taken from sources which we deem reliable. However, none of P.T. Danareksa Sekuritas and/or its affiliated

companies and/or their respective employees and/or agents makes any representation or warranty (express or implied) or accepts any responsibility or liability as to, or in relation to, the accuracy or completeness of the information and opinions contained in this report or as to any information contained in this report or any other such information or opinions remaining unchanged after the issue thereof.

We expressly disclaim any responsibility or liability (express or implied) of P.T. Danareksa Sekuritas, its affiliated companies and their respective employees and agents whatsoever and howsoever arising (including, without limitation for any claims, proceedings, action , suits, losses, expenses, damages or costs) which may be brought

against or suffered by any person as a results of acting in reliance upon the whole or any part of the contents of this report and neither P.T. Danareksa Sekuritas, its affiliated companies or their respective employees or agents accepts liability for any errors, omissions or misstatements, negligent or otherwise, in the report and any

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The information contained in this report is not be taken as any recommendation made by P.T. Danareksa Sekuritas or any other person to enter into any agreement

with regard to any investment mentioned in this document. This report is prepared for general circulation. It does not have regards to the specific person who may receive this report. In considering any investments you should make your own independent assessment and seek your own professional financial and legal advice.

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