May 18, Cement: Surprising volume growth in April

Transcription

1 Mimi Halimin To subscribe to our Daily Focus, please contact us at Market Index Last Trade Chg (%) MoM YoY JCI 5, MSCI Indonesia MSCI EM 1, HANG SENG 25, KOSPI 2, FTSE 7, DJIA 20, NASDAQ 6, Valuation 2017F P/E (x) P/B (x) ROE (%) JCI Key Rates Last Trade Chg (bps) MoM YoY BI 7-Day RR * 3yr yr *since introduced in Aug 2016 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 9, Copper 5, Tin 20, Cement: Surprising volume growth in April Domestic cement consumption in April came in at 5.1mn tonnes (+11.0% YoY). Compared to the January-March figures, the YoY volume growth in April was surprisingly high. April s export volume came in at 224,277 tonnes (+124.7% YoY; +34.7% MoM). Bag cement sales volume showed stronger growth in April (+11.5% YoY) than bulk cement (+9.5% YoY); the stronger growth of bag cement could signal the start of a pickup in the property sector, in our view. Indeed, according to data from Bank Indonesia (BI), house ownership credit (kredit pemilikan rumah/kpr) and apartment ownership credit (kredit pemilikan apartemen/kpa) have shown improvement, albeit slight. Nevertheless, cumulatively as of 4M17, bulk cement s growth (+6.3% YoY) has outpaced that of bag cement (+2.0% YoY). Overall, 4M17 cement consumption showed modest but encouraging growth of 3.0% YoY to 19.8mn tonnes. In our March update on the cement sector ( Java s growth encouraging ), we highlighted the positive demand growth in Java; this strength continued in April, with Java s double-digit increase of 14.7% YoY outpacing industry growth (+11.0% YoY). Cement consumption in Java constituted a majority of overall consumption in April, with April s growth underpinned by sharp increases in Yogyakarta (+46.0% YoY), East Java (+24.9% YoY), and Central Java (+23.0% YoY). In our view, April s cement consumption growth should improve sentiment on the sector, but there are doubts whether the high growth in April can be sustained in May and June, considering that Ramadan starts in late May and Eid al-fitr falls in June. Of note, cement consumption is usually very low during Eid al-fitr due to fewer working days. We are also concerned about the industry s tight competition, which has dragged down cement producers average selling price (ASP). For now, we maintain our Underweight call on the cement sector. Monthly total domestic cement consumption JCI Index VS MSCI Emerging Markets (pt) JCI MSCI EM (pt) 5,500 1, 950 4, , /13 05/14 05/15 05/16 05/17 Source: Company data, ASI, Research

2 5/16 6/16 7/16 8/16 9/16 10/16 11/16 12/16 1/17 2/17 3/17 4/17 5/17 Bank Central Asia (BBCA IJ) Flash note: One step back, two steps forward Financials Company Report (Maintain) Trading Buy Target Price (12M, IDR) 20,300 Share Price (5/17/17, IDR) 16,950 Expected Return 19.8% Consensus OP (17F, IDRtr) 28.4 EPS Growth (17F, %) 11.8 P/E (17F, x) 18.1 Industry P/E (17F, x) 12.5 Benchmark P/E (17F, x) 16.0 Market Cap (IDRbn) 417,2.4 Shares Outstanding (mn) 24,655.0 Free Float (mn) 12,535.5 Institutional Ownership (%) 15.6 Beta (Adjusted, 24M) Week Low (IDR) 12, Week High (IDR) 18,550 BBCA shares fell on MSCI rebalance Bank Central Asia (BBCA) shares fell 7.2% over the past two trading sessions following the reduction (announced May 16 th ) of its weight in the MSCI Asia Pacific ex-japan Index from 0.42% to 0.34%. Foreign investors net sold IDR189bn, which exacerbated the gravitational pull south. All quiet on the fundamental front Given that the macro backdrop remains favorable, we do not expect to see any significant downside risks to BBCA s fundamentals. In particular, we note that: 1) the 10- year government bond yield stands at 7.04% (-94bps YTD); 2) the rupiah has strengthened 1.1% YTD (to IDR13,324) against the greenback; and 3) the dollar index continues to lose steam (98.0p; -4.1% YTD). Oil prices have come down to USD48.7/bbl (-9.3% YTD), pointing to tame inflationary pressures and lowering expectations of significant monetary tightening from the central bank. We also view the 1Q17 GDP growth of 5.0% YoY as broadly stable, with the underlying recovery of trade being a clear indication of a global macro recovery. Given the macro cyclicality of banks, we strongly believe the banking sector will be the key beneficiary during the economic recovery cycle. Within the banking space, we think BBCA is best-positioned to embrace a growth agenda. Price pullback to be short-lived In our view, the recent pullback in BBCA s shares was driven by a non-fundamental issue, and thus we expect the decline to be short-lived. With BBCA trading near the lower rung of the Bollinger band, at a 2017F P/B of 3.2x, we believe the current share price presents an attractive entry point. We reiterate our Trading Buy recommendation on BBCA. (%) 1M 6M 12M Absolute Relative (D-1yr=) JCI BBCA PT. Banks Taye Shim taye.shim@miraeasset.com FY (Dec.) 12/13 12/14 12/15 12/16 12/17F 12/18F Total OP (IDRbn) 34, , , , , ,497.7 PPOP (IDRbn) 19, , , , , ,144.5 Pre-tax profit (IDRbn) 17, , , , , ,237.6 Net Profit (IDRbn) 14, , , , , ,717.1 EPS (IDR) ,043 BPS (IDR) 2,524 3,062 3,625 4,560 5,332 6,187 P/E (x) P/B (x) ROE (%) ROA (%) Note: NP refers to net profit attributable to controlling interests Source: Company data, Research estimates PLEASE SEE ANALYST CERTIFICATIONS AND IMPORTANT DISCLOSURES & DISCLAIMERS IN APPENDIX 1 AT THE END OF REPORT.

3 5/16 6/16 7/16 8/16 9/16 10/16 11/16 12/16 1/17 2/17 3/17 4/17 5/17 Indo Tambangraya Megah (ITMG IJ) Driven up by P Mining Company Report May 17, 2017 For 1Q17, net profit of Indo Tambangraya Megah (ITMG) achieved 32.4% and 29.0% of our and consensus full-year 2017F targets, respectively.this strong financial result was mainly driven by the quarter s higher average selling price (ASP) of USD67.5/tonne (+41.5% YoY; +12.9% QoQ). Meanwhile, coal production figure was lower due to seasonal factors, which we have already predicted. Overall, we keep our earnings estimates unchanged and maintain our 12-month forward TP of IDR22,. Buy call. ASP soars; sales volume drops (Upgrade) Buy Target Price (12M, IDR) 22, Share Price (5/16/17, IDR) 15,000 Expected Return 47.3% Consensus OP (17F, USDmn) EPS Growth (17F, %) 34.9 P/E (17F, x) 7.1 Industry P/E (17F, x) 9.1 Benchmark P/E (17F, x) 16.2 Market Cap (IDRbn) 16,948.5 Shares Outstanding (mn) 1,129.9 Free Float (mn) Institutional Ownership (%) 14.1 Beta (Adjusted, 24M) Week Low (IDR) 8, Week High (IDR) 22,300 (%) 1M 6M 12M Absolute Relative (D-1yr=) JCI ITMG ITMG posted a strong 1Q17 net profit result of USD57.2mn (+148.3% YoY) on the back of USD370.9mn revenue (+10.7% YoY). The increase in 1Q17 revenue was mainly underpinned by the first quarter s almost-doubled ASP of USD67.5/tonne (+41.5% YoY). On a quarterly basis, ITMG s ASP in 1Q17 also stood above that in 4Q16 (USD59.8/tonne; +12.9% QoQ) despite global coal prices being lower in 1Q17 than in 4Q16 (see Figure 1 and 2). The rise in 1Q17 ASP was attributable to the use of September-November 2016 benchmark global coal price for some amount of coal sales volume delivered during 1Q17 (please see previous report Still enjoying last year s effect ). On the other hand, ITMG s 1Q17 sales volume went down to 5.4mn tonnes (- 21.7% YoY). However, given the depressed sales volume, the company s freight and loading costs came in lower, too. A drop in production only due to seasonal factors Similar to its sales volume, ITMG s 1Q17 coal production was also down to 5.4mn tonnes (-12.9% YoY), in line with our estimate. This figure was also low compared to that in 4Q16 (6.6mn tonnes; -18.2% QoQ); however, we suspect it was only due to seasonal factors. On the other hand, ITMG s 1Q17 stripping ratio went up to 9.6x (from 8.6x in 1Q16). For full-year 2017F, ITMG s management projects its stripping ratio at 10.0x 11.0x. Our 2017F and 2018F earnings estimates unchanged We maintain our revenue estimates for ITMG at USD1.8bn (2017F) and USD2.2bn (2018F). Our net profit targets stand at USD176.4mn (2017F) and USD236.6mn (2018F). Given this, we predict ITMG s 2017F and 2018F net profit margins will expand to 9.7% and 10.7%, respectively. We maintain TP at IDR22, Due to our unchanged earnings estimates, we maintain our 12-month forward TP for ITMG at IDR22,. We upgrade our investment rating for the company to Buy from Trading Buy as its share price offers upside potential of more than 20.0%. ITMG is currently trading at 2017F and 2018F P/Es of 7.1x and 5.3x, respectively. PT. Coal Andy Wibowo Gunawan ext 243 andy.wibowo@miraeasset.co.id FY (Dec.) 12/14 12/15 12/16 12/17F 12/18F 12/19F Revenue (USDmn) 1, , , , , ,584.0 Gross Profit (USDmn) Operating Profit (USDmn) Net Profit (USDmn) EPS (IDR) 2, , , , ,867.4 BPS (IDR) 9, , , , , ,065.9 P/E (x) P/B (x) ROE (%) ROA (%) Note: Net profit refers to net profit attributable to controlling interests Source: Company data, Research PLEASE SEE ANALYST CERTIFICATIONS AND IMPORTANT DISCLOSURES & DISCLAIMERS IN APPENDIX 1 AT THE END OF REPORT.

4 Local flash TBIG: Tower Bersama set aside IDR2.5 trillion to add 2,500 new towers. PT Tower Bersama Infrastructure Tbk (TBIG) plans to add 2,500 new towers. It was delivered by Tower Bersama Infrastructure Director, Helmy Yasman, in Jakarta, Wednesday. He said, the company will continue to strengthen its business in telecommunication tower business. Therefore, the company is optimistic this year could add as many as 2,500 new towers. The funds will come from internal cash as well as syndicated loans. (Iqplus) AGRO: Rights issue, BRI Agro targeting funds of up to IDR1.15 trillion. PT Bank BRI Agro Tbk plans to conduct a rights issue in this year. From the rights issue, AGRO is targeting IDR999.9 billion to IDR1.15 trillion. In the disclosure information to the Indonesian stock exchange, the rights issue price set at IDR130 to IDR150 per share. The proceeds will be used to strengthen capital structure and support credit growth. (Kontan) WICO: Wicaksana Overseas expands the distribution area. The distribution company, PT Wicaksana Overseas International Tbk (WICO) targeting to expand the distribution of product. This year, the company is exploring three new prospective principals. Unfortunately, management has not been able to describe from any company that principal. The sector comes from the food and beverage industry. "We expect in the fourth quarter the transaction has been running," said Eddy Suwandi, WICO's Managing Director. The new business partnership is company's strategy to increase revenue. (Kontan) MAYA: Bank Mayapada distributes dividend of IDR40 per share. The Annual General Meeting (AGM) PT Bank Mayapada International Tbk agreed a dividend payment of 24% of the 2016 net profit or IDR billion. The dividend value is equivalent to IDR40 per share. (Kontan) GDYR: Goodyear will boost production. PT Goodyear Indonesia Tbk will increase the utility of the factory to expand the domestic market. GDYR President Director Allan Loi said so far the development of domestic auto market is quite positive for the tire industry. Moreover, in the past year, the improvement of global and national macroeconomic indicators, has strengthened the demand for automotive consumption. (Bisnis Indonesia) ADMF: Adira Finance will distribute dividend of IDR505 billion. PT Adira Dinamika Multi Finance to distribute dividend to shareholders reached IDR505 billion or IDR505 per share. Director of Adira Finance, I Dewa Made Susila, said that the dividend distribution this year is equivalent to 50% of Adira's net profit in the last year. (Kontan) KINO: Kino Indonesia will pay a dividend of IDR35.7 billion. PT Kino Indonesia Tbk will distribute a dividends worth IDR35.7 billion or 20% of 2016 net profit. Finance Director of Kino Indonesia Peter Chayson said profit in 2016 reached IDR181 billion. He revealed that the company's profit decreased due to weakening purchasing power last year. (Bisnis Indonesia) 4

5 Chart 1. JCI Vs. USD/IDR Chart 2. JCI performance (absolute vs. relative) (pt) JCI (L) USD/IDR (R) 5,800 (IDR) (%, %p) 20 Absolute Relative ,600 13, ,400 5,200 5,000 4,800 13,500 13,300 13, D 1W 1M 1Y Source: Bloomberg, Note: Relative to MSCI EM Index Source: Bloomberg, Chart 3. Foreigner s net purchase (EM) Chart 4. Energy price (USDmn) 1,000 1 Day 5 Days (D-3M=) 115 CPO WTI Coal Korea Taiwan Indonesia Thailand Philippines India Note: The latest figure for India are May 16 th, 2017 Source: Bloomberg, Source: Bloomberg, Chart 5. Non-ferrous metal price Chart 6. Precious metal price (D-3M=) Copper Nickel Tin (D-3M=) Silver Gold Platinum 80 Source: Bloomberg, 80 Source: Bloomberg, 5

6 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 FY16 FY17 FY16 FY17 FY16 FY17 Jakarta Composite Index JCI 5,615 6,172, FINANCIALS Bank Central Asia BBCA 16, , Bank Mandiri Persero BMRI 12, , Bank Rakyat Indonesia Persero BBRI 14, 347, Bank Negara Indonesia Persero BBNI 6, , Bank Tabungan Negara Persero BBTN 2,430 25, CONSUMER HM Sampoerna HMSP 3, , Gudang Garam GGRM 70, 134, Indofood CBP Sukses Makmur ICBP 8, , Indofood Sukses Makmur INDF 8,475 74, Kalbe Farma KLBF 1,500 70, Unilever Indonesia UNVR 47, , AGRICULTURAL Astra Agro Lestari AALI 14,425 27, PP London Sumatera Indonesia LSIP 1,4 10, Sawit Sumbermas Sarana SSMS 1,735 16, INFRASTRUCTURE XL Axiata EXCL 3,080 32, Jasa Marga JSMR 4,800 34, Perusahaan Gas Negara PGAS 2,2 55, Tower Bersama Infrastructure TBIG 5,575 25, Telekomunikasi Indonesia TLKM 4, , Soechi Lines SOCI 316 2, N/A Garuda Indonesia GIAA 344 8, BASIC-INDUSTRIES Semen Indonesia SMGR 9, 53, Charoen Pokphand Indonesia CPIN 3,000 49, Indocement Tunggal Prakarsa INTP 18,325 67, Japfa Comfeed Indonesia JPFA 1,260 14, MINING Indo Tambangraya Megah ITMG 14,850 16, Adaro Energy ADRO 1,410 45, Aneka Tambang ANTM , Vale Indonesia INCO 1,910 18, N/A Tambang Batubara Bukit Asam PTBA 10,575 24, TRADE United Tractors UNTR 23, 86, AKR Corporindo AKRA 6,275 25, Global Mediacom BMTR 640 9, N/A 0.9 N/A 2.0 N/A Matahari Department Store LPPF 14,800 43, Media Nusantara Citra MNCN 1,915 27, Matahari Putra Prima MPPA 815 4, Surya Citra Media SCMA 2,870 41, Siloam International Hospital SILO 12,000 15, PROPERTY Bumi Serpong Damai BSDE 1,700 32, Adhi Karya ADHI 2,210 7, Alam Sutera Realty ASRI 320 6, Ciputra Development CTRA 1,125 20, Lippo Karawaci LPKR , Pembangunan Perumahan PTPP 2,950 18, Pakuwon Jati PWON , Summarecon Agung SMRA 1,250 18, Wijaya Karya WIKA 2,250 20, Waskita Karya WSKT 2,300 31, MISCELLANEOUS Astra International ASII 8, , Source: Bloomberg, *Note: Valuation metrics based on Bloomberg consensus estimates 6

7 Sector performance Top 10 market cap performance Name Index Chg (%) Ticker Price Market Cap (IDRbn) Chg (%) Agricultural 1, INAF IJ 33 10, Mining 1, JPFA IJ , Basic-Industry PTPP IJ , Miscellaneous Industry 1, BBTN IJ , Consumer Goods 2, NIKL IJ , Property & Construction RMBA IJ , Infrastructure 1, SMSM IJ , Finance TOWR IJ , Trade TELE IJ , Composite 5, SMBR IJ , Source: Bloomberg Top 5 leading movers Top 5 lagging movers Name Chg (%) Close Name Chg (%) Close BBRI IJ , BBCA IJ ,950 ICBP IJ 1.5 8,700 ASII IJ ,350 TPIA IJ ,800 UNTR IJ , TOWR IJ 3.0 3,750 HMSP IJ ,840 BBTN IJ 3.9 2,430 BSDE IJ ,700 Source: Bloomberg Economic Calendar Time Currency Detail Forecast Previous 6:50am JPY Prelim GDP q/q 0.4% 0.3% 6:50am JPY Prelim GDP Price Index y/y -0.7% -0.1% 8:00am AUD MI Inflation Expectations 4.1% 8:30am AUD Employment Change 4.5K 60.9K 8:30am AUD Unemployment Rate 5.9% 5.9% 18th-19th CNY Foreign Direct Investment ytd/y 1.0% 3:30pm GBP Retail Sales m/m 1.2% -1.8% Tentative EUR Spanish 10-y Bond Auction Tentative EUR French 10-y Bond Auction 7:30pm CAD Foreign Securities Purchases 38.84B 7:30pm USD Unemployment Claims 240K 236K 7:30pm USD Philly Fed Manufacturing Index :00pm USD CB Leading Index m/m 0.4% 0.4% 9:30pm USD Natural Gas Storage 61B 45B 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