December 20, Automotive 2018 outlook: Pre-election turbocharger. Welcoming strong consumption growth in the coming year

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1 Franky Rivan To subscribe to our Daily Focus, please contact us at Market Index Last Trade Chg (%) MoM YoY JCI 6, MSCI Indonesia MSCI EM 1, HANG SENG 29, KOSPI 2, FTSE 7, DJIA 24, NASDAQ 6, Valuation 2018F P/E (x) P/B (x) ROE (%) JCI Key Rates Last Trade Chg (bps) MoM YoY BI 7-Day RR yr yr FX Last Trade Chg (%) MoM YoY USD/IDR 13, USD/KRW 1, USD/JPY USD/CNY Commodities Last Trade Chg (%) MoM YoY WTI Gold 1, Coal Palm Oil 2, Rubber Nickel 11, Copper 6, Tin 19, JCI Index VS MSCI Emerging Markets (pt) (pt) JCI MSCI EM 608 6,500 1, ,000 5,500 5,000 1, , /16 03/17 06/17 09/17 12/17 Automotive 2018 outlook: Pre-election turbocharger Welcoming strong consumption growth in the coming year For 2018, we revise up our CPI forecast to 4.5% (from 4.3%), subsequently arriving private consumption higher at 5.2% (from 5%), GDP growth of 5.3% (from 5.2%), and benchmark interest rate of 4.75%. In accordance with our favorable growth outlook, we tune our 2018 national 4W sales forecast up from 1.143mn to 1.151mn units. Meanwhile, given our higher benchmark interest rate assumption next year, we revise down our forecast for 2018 national 2W sales from 6.207mn to 6.171mn units. We expect both 4W and 2W would deliver escalated growth of 3.9% YoY and 3.7% YoY, respectively in Furthermore, we compiled 4W & 2W during the pre-election years of 2008 & 2013 to find that the sales always showed strong increase during these years (up by c.35% in 2008, c.10% in 2013). We would like to attribute households higher consumption rate partly to massive populism action by political parties, although we suspect it s also partly contributed by conducive interest rate level during the periods. We argue that campaign funds disbursed by political parties would also have significant positive impact on Indonesian businesses (higher revenue) and households per capita, cumulatively. We believe the trend is returning as per APBN 2018, we evidenced higher allocation for the Social Ministry and energy subsidy budget. Clear skies on the windshield; Maintain Overweight We maintain our Overweight outlook on the automotive industry as: 1) our view of 2018 s stronger GDP as well as private consumption growth backed by strong inflation - should provide boost to national automotive sales, 2) pre-election year historically provides higher purchasing power for households to purchase discretionary goods, and 3) government s direction to ease its fiscal measure on auto industry (e.g. cutting sedan LST rate) should bring optimism. Indonesia s 4W sales performance and forecasts (k units) 1,400 1,200 1, Indonesia 4W sales (L) ,116 1,230 1,208 Source: Gaikindo, Research 1,151 1,108 1,062 1, % YoY growth (R) 4.8%4.3%3.9% 70% 60% 50% 40% 30% 20% 10% 0% -10% -20% -30%

2 Local flash GEMS: Golden Energy distributes an interim dividend of USD 60 million. PT Golden Energy Mines Tbk (GEMS) will distribute interim dividends in fiscal year 2017 of USD 60 million or equivalent to USD per share. The company will use the middle rate of the BI rate of Rp 13,573 so that each share is entitled to a dividend of IDR "Interim dividend will be distributed to shareholders whose names are recorded in the Company's Register of Shareholders on December 29, 2017," said Sudin SH, GEMS Corporate Secretary in the openness of BEI, Tuesday (19/12). (Kontan) INAF: Build factory, Indofarma plans rights issue. PT Indofarma Tbk (INAF) still intends to seek fresh funds through the capital market. The state-owned pharmaceutical company plans to hold a rights issue. "In writing we will submit a letter of application to the ministry next year," said INAF President Director Rusdi Rosman, Tuesday (19/12). He has not been willing to give details of the target of the fund through the action of the corporation. But certainly, the funds will be used to build insulin factory. The investment value is around IDR 200 billion. But, INAF will not build this factory itself. INAF will first establish a joint venture (JV) with a Russian company. (Kontan) INKP: INKP issued MTN amounting to IDR 450 billion. One of the subsidiaries of Sinarmas, PT Indah Kiat Pulp & Paper Tbk (INKP), has signed the issuance and appointment agreement of the monitoring agency, and the dealer of Medium Term Notes Indah Kiat Pulp & Paper II in 2017 on December 15th ago. "MTN Indah Kiat Pulp & Paper II 2017 in the principal amount of IDR 450 billion with a term of two years with a fixed interest rate of 10.25%," said Heri Santoso, Director and Corporate Secretary in the openness at the Indonesia Stock Exchange on Tuesday (19/12). (Kontan) SMDR: SMDR Continue the acquisition of two companies PT Samudera Indonesia Tbk (SMDR) continue acquisition plan next year. The target in January 2018 later, SMDR can complete the acquisition process of 2 companies. Director SMDR Bani Mulia said, in 2018 later his company budgeted capital expenditure or capital expenditure (capex) of about USD 150 million. A total of 35% of this capex will be used to pay for the acquisition of two companies targeted for completion in January Accordingly, the total acquisition value of the two companies is USD 52.5 million. (Kontan) ADRO: Adaro's subsidiary listing, pocket USD 12.1 million. Indirectly owned subsidiary of PT Adaro Energy Tbk (ADRO), Arindo Holdings (Mauritius) Ltd is listed on the Stock Exchange of Mauritius Ltd. (SEM). The recording was made on December 15, 2017 ago. The listing of this stock raises USD 12.1 million. The funds will be used to repay part of the debt and finance working capital needs. (Kontan) CAMP: Campina's 2018 earnings increase by 10%. After the initial public offering (IPO), PT Campina Ice Cream Industry Tbk (CAMP) has prepared a number of expansion plans. One of them, the company will add about 5-10 new products by With the addition of products, CAMP is eyeing a revenue increase of 8% -10% next year. CAMP believes that by the end of 2018, it can book revenues of IDR 960 billion. (Kontan) 2

3 Summary Technical analysis Tasrul Jakarta Composite Index (JCI) Overbought, Prone to Correction Item Data Item Data Close (Dec 19, 2017) 6,168(+0.549%)Trading range 6,152-6,189 Average index performance (%) 5.95 Target Period Daily 6,189 r-squared Weekly 6,200 Volatility (+/-, %) / Monthly 6,264 Volatility (+/-, point) / Stop loss 6,080 Source: Research Figure 1. Daily trend Uptrend ^JKSE [ ^JKSE ] - Daily - 12/19/2017 Open: 6,113 High: 6,176 Low: 6,110 Close: 6,168 Vol. 5,762,018,304 Prev. Av g. Price: 6,151.5 R-Squared: Period: 181 Std.Dev : 1.77 Volatility (+) : Volatility (-) : V-Ratio : 0.96 Chg.: 0.549% 6, , , , , , , , , Optimization Trading System ^JKSE - Volume = 5,762,018,304.00, EMA(Volume,36) = 6,019,552, ,019,552,256 5,762,018,304 Apr May Jun Jul Aug Sep Oct Nov Dec Source: Research 3

4 Figure 2. Daily MFI optimized,rsi optimized, Stochastic %D optimized & Bollinger Band optimized ^JKSE - MFI Smoothed = ^JKSE - RSI Smoothed = ^JKSE - Stochastic %D = 85.24, MA = ^JKSE - Daily 12/19/2017 Open , Hi , Lo , Close (0.5%) BBTop(Av erage,36,1.77) = 6,105.78, BBBot(Av erage,36,1.77) = 5,980.65, SMA 6, ^JKSE [ ^JKSE ] - Daily - 12/19/2017 Open: 6,113 High: 6,176 Low: 6,110 Close: 6,168 Chg. 0.5% Vol. 5,762,018,304 Prev. Av g. Price: 6,151.5 R-Squared: Period: 181 Std.: 1.77 Volatility (+) : Volatility (-) : V-Ratio : 0.96 Optimization Trading System ^JKSE - Volume = 5,762,018,304.00, EMA(Volume,36) = 6,019,552, , , , , ,019,552,256 5,762,018,304 Jul Aug Sep Oct Nov Dec Source: Research 4

5 Figure 3. Weekly Trend Uptrend, MFI optimized,w%r optimized, Stochastic %D & Bollinger Band optimized ^JKSE - MFI Smoothed = ^JKSE - Will%R Smoothed = ^JKSE - Stochastic %D = 70.89, MA = ^JKSE - Weekly 12/19/2017 Open , Hi , Lo , Close (0.8%) BBTop(Av erage,18,1.86) = 6,125.31, BBBot(Av erage,18,1.86) = 5, , ^JKSE [ ^JKSE ] - Weekly - 12/19/2017 Open: 6,112 High: 6,176 Low: 6,080 Close: 6,168 Chg. 0.8% Vol. 10,946,528,256 Prev. Av g. Price: 6,141.4 R-Squared: Period: 51 Std.: 1.86 Volatility (+) : Volatility Optimization (-) : Trading System V-Ratio ^JKSE -: Volume 1.34 = 10,946,528,256.00, EMA(Volume,19) = 27,695,697, , , , , , Oct Nov Dec 2017 Feb Mar Apr May Jun 22 Jul Aug 31 Sep Oct Nov 30 Dec 27,695,697,920 10,946,528,256 Source: Research Figure 4. Daily : 6,146 6,189 Figure 5. Weekly : 6,097-6,200 Figure 6. Monthly : 5,956 6,264 ^JKSE [ ^JKSE ] - Daily - 12/19/2017 Open: Prev. Av g. Price: 6,151.5 x ^JKSE [ ^JKSE ] - Weekly - 12/19/2017 Open: Prev. Av g. Price: 6,141.4 ^JKSE [ ^JKSE ] - Monthly - 12/19/2017 Open: Prev. Av g. Price: 6,107.9 x R-Squared: R-Squared: R-Squared: Period: 181 Period: 51 Period: 30 Std.Dev : 1.77 Volatility (+) : Volatility (-) : V-Ratio : ,189.3 Std.Dev : 1.86 Volatility (+) : Volatility (-) : V-Ratio : ,200.9 Std.Dev : 1.84 Volatility (+) : Volatility (-) : V-Ratio : ,263.7 Chg.: 0.549% 6,173.3 Chg.: 0.788% Chg.: 3.621% , , , , , ,956.1 ^JKSE - Volume = 5,762,018, ^JKSE - Volume = 10,946,528, ^JKSE - Volume = 69,133,312, ,762,018, ,946,528,256 Nov 30 Dec 69,133,312,000 Jul Oct Source: Research Source: Research Source: Research 5

6 Chart 7. JCI Vs. USD/IDR (pt) JCI (L) USD/IDR (R) 6,200 6,100 6,000 5,900 5,800 5,700 5,600 9/19 10/17 11/14 12/12 Source: Bloomberg, (IDR) 13,800 13,700 13,600 13,500 13,400 13,300 13,200 13,100 Chart 8. JCI performance (absolute vs. relative) (%, %p) Note: Relative to MSCI EM Index Source: Bloomberg, Absolute Relative D 1W 1M 1Y Chart 9. Foreigner s net purchase (EM) Chart 10. Energy price (USDmn) Note: The latest figure for India are December 18 th, 2017 Source: Bloomberg, Day 5 Days -4-8 Korea Taiwan Indonesia Thailand Philippines India (D-3M=100) 120 CPO WTI Coal /19 10/17 11/14 12/12 Source: Bloomberg, Chart 11. Non-ferrous metal price Chart 12. Precious metal price (D-3M=100) Copper Nickel Tin (D-3M=100) Silver Gold Platinum /17 10/17 11/17 12/17 Source: Bloomberg, /19 10/17 11/14 12/12 Source: Bloomberg, 6

7 Table. Key valuation metrics Company Name Ticker Price Market Cap Price Performance (%) P/E(X)* P/B(X)* ROE(%)* (IDR) (IDRbn) 1D 1W 1M 1Y FY17 FY18 FY17 FY18 FY17 FY18 Jakarta Composite Index JCI 6,168 6,845, FINANCIALS Bank Central Asia BBCA 21, , Bank Mandiri Persero BMRI 7, , Bank Rakyat Indonesia Persero BBRI 3, , Bank Negara Indonesia Persero BBNI 9, , Bank Tabungan Negara Persero BBTN 3,480 36, CONSUMER HM Sampoerna HMSP 4, , Gudang Garam GGRM 81, , Indofood CBP Sukses Makmur ICBP 8, , Indofood Sukses Makmur INDF 7,650 67, Kalbe Farma KLBF 1,685 78, Unilever Indonesia UNVR 54, , AGRICULTURAL Astra Agro Lestari AALI 13,475 25, PP London Sumatera Indonesia LSIP 1,300 8, Sawit Sumbermas Sarana SSMS 1,475 14, INFRASTRUCTURE XL Axiata EXCL 2,950 31, Jasa Marga JSMR 6,225 45, Perusahaan Gas Negara PGAS 1,765 42, Tower Bersama Infrastructure TBIG 6,225 28, Telekomunikasi Indonesia TLKM 4, , Soechi Lines SOCI 236 1, N/A N/A Garuda Indonesia GIAA 308 7, BASIC-INDUSTRIES Semen Indonesia SMGR 9,850 58, Charoen Pokphand Indonesia CPIN 3,270 53, Indocement Tunggal Prakarsa INTP 20,025 73, Japfa Comfeed Indonesia JPFA 1,335 15, MINING Indo Tambangraya Megah ITMG 20,500 23, Adaro Energy ADRO 1,835 58, Aneka Tambang ANTM , Vale Indonesia INCO 2,920 29, N/A Tambang Batubara Bukit Asam PTBA 2,460 28, TRADE United Tractors UNTR 33, , AKR Corporindo AKRA 6,050 24, Global Mediacom BMTR 610 8, N/A N/A N/A N/A N/A N/A Matahari Department Store LPPF 10,975 32, Media Nusantara Citra MNCN 1,255 17, Matahari Putra Prima MPPA 434 2, N/A Surya Citra Media SCMA 2,470 36, Siloam International Hospital SILO 9,600 15, PROPERTY Bumi Serpong Damai BSDE 1,720 33, Adhi Karya ADHI 1,885 6, Alam Sutera Realty ASRI 368 7, Ciputra Development CTRA 1,185 21, Lippo Karawaci LPKR , Pembangunan Perumahan PTPP 2,650 16, Pakuwon Jati PWON , Summarecon Agung SMRA , Wijaya Karya WIKA 1,605 14, Waskita Karya WSKT 2,250 30, MISCELLANEOUS Astra International ASII 8, , Source: Bloomberg, *Note: Valuation metrics based on Bloomberg consensus estimates 7

8 Sector performance Top 10 market cap performance Name Index Chg (%) Ticker Price Market Cap (IDRbn) Chg (%) Agricultural 1, BSIM IJ , Mining 1, INAF IJ , Basic-Industry PTBA IJ , Miscellaneous Industry 1, DOID IJ 780 6, Consumer Goods 2, BMTR IJ 610 8, Property & Construction SMBR IJ , Infrastructure 1, RALS IJ , Finance 1, GEMS IJ , Trade HRUM IJ , Composite 6, SCMA IJ , Source: Bloomberg Top 5 leading movers Top 5 lagging movers Name Chg (%) Close Name Chg (%) Close UNVR IJ ,100 TLKM IJ ,190 BBRI IJ 1.5 3,440 TPIA IJ ,625 HMSP IJ 1.1 4,550 INTP IJ ,025 MABA IJ ,380 MAYA IJ ,180 BBNI IJ 2.4 9,525 BMRI IJ ,475 Source: Bloomberg Economic Calendar Time Currency Detail Forecast Previous 1:00am USD FOMC Member Kashkari Speaks 4:45am NZD Current Account -4.22B -0.51B 4:45am NZD Trade Balance -495M -843M 4:45am NZD Visitor Arrivals m/m 2.1% 6:30am AUD MI Leading Index m/m 0.1% 9:00am NZD Credit Card Spending y/y 2.9% 11:30am JPY All Industries Activity m/m 0.4% -0.5% 2:00pm EUR German PPI m/m 0.2% 0.3% 4:00pm EUR Current Account 33.4B 37.8B 6:00pm GBP CBI Realized Sales :00pm EUR German Buba President Weidmann Speaks 8:15pm GBP BOE Gov Carney Speaks 8:30pm CAD Wholesale Sales m/m 0.5% -1.2% 9:00pm CHF SNB Quarterly Bulletin 9:00pm CNY CB Leading Index m/m 1.3% 9:00pm EUR Belgian NBB Business Climate :00pm USD Existing Home Sales 5.53M 5.48M 10:30pm USD Crude Oil Inventories -3.6M -5.1M Note: Time is based on Indonesian local time Source: Forex Factory Disclaimers This report is prepared strictly for private circulation only to clients of PT. It is purposed only to person having professional experience in matters relating to investments. The information contained in this report has been taken from sources which we deem reliable. No warranty (express or implied) is made to the accuracy or completeness of the information. All opinions and estimates included in this report constitute our judgments as of this date, without regards to its fairness, and are subject to change without notice. However, none of 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, 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 Mirae Asset Sekuritas Indonesia, 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 liability in respect of the report or any inaccuracy therein or omission there from which might otherwise arise is hereby expresses disclaimed. This document is not an offer to sell or a solicitation to buy any securities. This firms and its affiliates and their officers and employees may have a position, make markets, act as principal or engage in transaction in securities or related investments of any company mentioned herein, may perform services for or solicit business from any company mentioned herein, and may have acted upon or used any of the recommendations herein before they have been provided to you. PT