July 30, [Trend Focus] MD Pictures (IPO) Capturing market through the FILM. MD Pictures - A one-stop film company

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1 Angga Rizky C 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 28, KOSPI 2, FTSE 7, DJIA 25, NASDAQ 7, 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 14, USD/KRW 1, USD/JPY USD/CNY Commodities Last Trade Chg (%) MoM YoY WTI Gold 1, Coal Palm Oil 2, Rubber Nickel 13, Copper 6, Tin 19, [Trend Focus] MD Pictures (IPO) Capturing market through the FILM MD Pictures - A one-stop film company MD Pictures, founded by Manoj Punjabi in 2002 under the name MD Media, is an entertainment company in which 80% of revenue comes from film production and various other forms of entertainment such as music production, soap operas, and animation. The company is mainly engaged in the film-making business (producing its own films or cooperating with other production houses) and also conducts marketing and sales activities. The film is marketed through cinema networks, free-to-air (FTA) TV, home videos, and digital platforms. According to data from Film Indonesia, in 2017 the company managed to capture 10mn viewers. It leads Indonesia s film industry, with a market share of 24.1%. Huge room for growth We believe that Indonesian movie companies can improve their performance by utilizing the market situation in the country. There has been an increase in the number of screens from year to year. Looking at the screen ratio, however, Indonesia is still inferior to others. Nevertheless, the uptrend in the number of screens and the potential for screen growth in Indonesia leads us to believe that the company has great opportunities to grow. IPO: 1.98bn shares to be offered at IDR210 MD Pictures plans to be formally listed on the IDX on August 7th, 2018 under the stock code "FILM" with an offering price of IDR210 per share. The price translates to a P/E of 9x. Total proceeds from the IPO are estimated to be IDR416bn, all of which will be allocated for working capital, such as financing film production, exclusive contracts (lock-up) for artists and directors, IPR development, and developing animated films.and 6.4x, respectively. Masterpieces of MD Pictures JCI Index VS MSCI Emerging Markets (pt) 7,000 JCI MSCI EM 6,500 6,000 5,500 5,000 01/17 05/17 09/17 01/18 05/18 (pt) 1,550 1,300 1, Source: Company data, Research

2 PP London Sumatra (LSIP IJ) Still below consensus target Plantation Company Report (Upgrade) Trading Buy Target Price (12M, IDR) 1,150 Share Price (7/27/18, IDR) 1,000 Expected Return 15.0% Consensus OP (18F, IDRbn) EPS Growth (18F, %) P/E (18F, x) 12.2 Industry P/E (18F, x) 10.9 Benchmark P/E (18F, x) 15.4 Market Cap (IDRbn) 6,822.9 Shares Outstanding (mn) 6,822.9 Free Float (mn) 2,756.9 Institutional Ownership (%) 7.5 Beta (Adjusted, 24M) Week Low (IDR) Week High (IDR) 1,570 (%) 1M 6M 12M Absolute Relative (D-1yr=100) PT. Agriculture Andy Wibowo Gunawan (ext: 243) JCI LSIP 50 7/17 8/17 9/17 10/17 11/1712/17 1/18 2/18 3/18 4/18 5/18 6/18 7/18 For 1H18, PP London Sumatra Indonesia (LSIP) posted below-consensus results, with net profit of IDR225bn representing just 40.3% of our 2018 forecast and 29.6% of the full-year consensus. The weakness has stemmed from a lower ASP for CPO and declines in both ASP and sales volume for palm kernel. Nevertheless, we leave our assumptions unchanged and hence maintain our target price of IDR1,150. We upgrade our call to Trading Buy (from Hold), as the target price now implies 15.0% upside potential. LSIP is currently trading a F P/B of 0.8x. One short-term downside risk would be a decline in global CPO prices. Improving operational numbers In 2Q18, LSIP s FFB nucleus production improved to 328,700 tonnes (+6.8% QoQ) due to the lower average number rainy days in Sumatra and Kalimantan (14.4 days and 15.0 days, respectively; -11.0% and -8.0% QoQ, respectively). As a result, 2Q18 CPO production increased to 98,000 tonnes (+10.4% QoQ). Cumulatively, LSIP s 1H18 FFB nucleus and CPO production reached 636,500 tonnes and 186,800 tonnes, respectively (+8.7% and +3.5% YoY). Disappointing 2Q18 financial results LSIP s 2Q18 CPO sales volume also improved to 90,200 tonnes (+13.3% QoQ) on the back of better CPO production. Meanwhile, palm kernel sales volume dropped to 19,200 tonnes (-18.2% QoQ) due to lower global palm kernel demand. Of note, Malaysia s palm kernel oil and cake exports declined to 268,803 tonnes (-2.1% QoQ) in 2Q18. Furthermore, the ASPs of both CPO and palm kernel declined, to IDR7,808/kg and IDR5,808kg, respectively (-1.1% and -18.1% QoQ). As a result, LSIP s 2Q18 revenue fell to IDR600bn (-48.4% QoQ), while its net profit decreased more moderately (-18.5% QoQ to IDR101bn) thanks to the absence of interest-bearing debt. Leaving our earnings estimates unchanged We leave our assumptions unchanged, and hence keep our revenue forecasts at IDR4.9tr in 2018 and IDR5.6tr in 2019 and our gross profit forecasts at IDR1.1tr in 2018 (-16.4% YoY) and IDR1.5tr in 2019 (+36.4% YoY). We also keep our full-year net profit forecasts at IDR558bn in 2018 (-27.0% YoY) and IDR822bn in 2019 (+47.5% YoY). Upgrade rating to Trading Buy, and maintain TP of IDR1,150 As we leave our assumptions unchanged, we maintain our target price of IDR1,150. We upgrade our call to Trading Buy (from Hold), as the target price now implies 15.0% upside potential. In our view, LSIP s strongest competitive edge is its estimated zero debt. LSIP is currently trading a F P/B of 0.8x. One short-term downside risk would be a decline in global CPO prices. 12/15 12/16 12/17 12/18F 12/19F 12/20F Revenue (IDRbn) 4,190 3,848 4,738 4,892 5,615 6,164 Op. Profit (IDRbn) ,056 1,291 Net Profit (IDRbn) EPS (IDR) BPS (IDR) 1,075 1,121 1,190 1,228 1,326 1,426 P/E (x) P/B (x) EV/EBITDA (x) ROE (%) ROA (%) Dividend Yield (%) Net Gearing (x) Net Cash Net Cash Net Cash Net Cash Net Cash Net Cash 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 Coal The icing on the cake Neutral Industry Report PT. Mining Andy Wibowo Gunawan (ext.: 243) We appreciate Indonesian government s plan to amend the domestic market obligation (DMO) regulation. Two scenarios are proposed: To revoke DMO quota (25% of total production) or to change the fixed pricing scheme of USD70/tonne (with CV 6,322kcal/kg). The decision will be out on Tuesday this week. For the time being, we reiterate our overweight stance on coal sector, although this government s plan has not been included in our financial numbers. First scenario: To revoke DMO quota regulation Accoding to Maritime Coordinating Minister, Mr. Luhut Binsar Panjaitan, Indonesian government will revoke DMO quota regulation (25% of total production) for Indonesian coal players. Furthermore, they plan to establish an institution which collects coal export levies of USD2 3/tonne from coal players. Some of the collected levies will be allocated for subsidizing Indonesian Electricity Company (PLN). We also notice the government s plan to increase coal export quota up to 100mn tonnes, which, in our view, would benefit coal players with high calorific value (CV) contents, such Indo Tambangraya Megah (ITMG). Moreover, we believe that coal players who have achieved 25% of total production in the DMO quota would get additional payment from PLN. Second scenario: To change fixed pricing scheme of USD70.0/tonne Differently, Energy and Mineral Resources (ESDM) vice minister, Mr. Archandra, said that ESDM minister would change the formula in the DMO fixed pricing. This strategy is to increase government s revenue going forward. Indeed, a change in the DMO fixed pricing would benefit all Indonesian coal miners. Although the detail of the new formula has yet to be revealed, we see a possibility of Indonesian government s implementing a cost-plus-margin scheme, and we think this would be fairer for Indonesian coal players than the fixed pricing scheme. The main motive is not only to secure CAD, but.. We suspect that Indonesian government s plan to change DMO regulation is not only to narrow the widening current account deficit (CAD), but also to deliver better financial performance of Inalum (PTBA s parent company). As a note, Indonesian government needs USD3.5bn to acquire PT Freeport Indonesia and become a major shareholder. Reiterate our overweight call Given Indonesian government s plan to change DMO regulation, our optimistic view on Indonesia s coal sector is unwavered. Thus, we reiterate our overweight stance on the coal sector, although we have yet to factor the planned regulation in our financial assumption numbers for the coal companies that we cover. Table 1. Key investment metrics Target price P/E (x) P/B (x) ROE (%) Company Ticker Rating (IDR) 2018F 2019F 2018F 2019F 2018F 2019F Adaro Energy ADRO Buy 2, Indo Tambangraya Megah ITMG Buy 44, Tambang Batubara Bukit Asam PTBA Hold 5, Source: Mirae Asset Sekuritas Research Indonesia PLEASE SEE ANALYST CERTIFICATIONS AND IMPORTANT DISCLOSURES & DISCLAIMERS IN APPENDIX 1 AT THE END OF REPORT.

4 Local flash INCO: October 2019, Vale will be divested 20% of its shares to the public. PT Vale Indonesia Tbk (INCO) will divest 20% of its shares to the public in October The move is in line with the amendment contracts already signed by the issuer and the Indonesian government. "So, in October 2019 Vale Indonesia must divest another 20% stake in order to comply with the agreement we have reached in the contract of amendment work," said INCO President Director Nico Kanter, Saturday (28/7). (Kontan) CLEO: Second half of demand will rise significantly. Manufacturer of Drinking Water in Cleo brand packaging. PT Sariguna Primatirta Tbk recorded profit growth during the first half of 2018 by 60%. Sariguna collected a profit of IDR billion while the same period last year the company recorded a profit of IDR billion. "For the first semester, this is in line with the expected target, and if the second semester of the dry season, demand will increase significantly," said Belinda Natalia, President Director of Sariguna Primatirta. (Kontan) PGAS: State Gas Company denies rising gas prices for industry. The establishment of a state-owned oil and gas holding company with the acquisition of a subsidiary of PT Pertamina, Pertamina Gas (Pertagas) by PT Perusahaan Gas Negara Tbk (PGN), raises concerns from industry players. PGN is considered to be monopolizing the market. Understandably, by joining Pertagas into a subsidiary of PGN, the two gas companies' business in the field of transmission, storage, trading, and others will be united. Total managed gas becomes 3 billion cfd. The concern of PGN's monopoly in the gas business is emerging especially since PGN is said to have raised the price of gas. But PGN Commercial Director Danny Praditya denied PGN raised gas prices for the industry. (Kontan) AISA: Despite the chaos, AISA CEO opimistis can restore the company's performance. Post-ganjing in the body of PT Three Pilar Sejahtera Food Tbk (AISA), President Director of AISA Joko Mogoginta sure can still save this troubled company. In a press statement received by Kontan.co.id, Sunday (29/7), Joko Mogoginta, President Director and founder of the company said it will be as much as possible in order to restore the company's wealth. (Kontan) PPRO: PP Property prints a 15% increase in net profit during the first half of PT PP Properties Tbk (PPRO) recorded a net profit of IDR 188 billion in the first half of The net profit is 15% compared to the same period last year of IDR 163 billion. The property company also posted a 32 percent increase in total assets to IDR trillion in the first half of 2018 from IDR trillion in the first half of (Kontan) PBID: Thanks to efficiency, Panca Budi's net profit grew 43.88% in the first half of PT Panca Budi Idaman Tbk (PBID) posted a net profit of IDR 141 billion in the first half of This net profit grew 43.88% over the same period last year. Based on the information received by Kontan.co.id, Saturday (28/7), the increase in net profit is due to the increase in sales and cost efficiency which is seen from the increase of gross profit margin. (Kontan) 4

5 Summary Technical analysis Tasrul Jakarta Composite Index (JCI) Limited Upside Item Data Item Data Close (July 27, 2018) (+0.723%)Trading range 5,936-6,007 Average index performance (%) (3.99) Target Period Daily 6,007 r-squared Weekly 6,033 Volatility (+/-, %) +0.52/ Monthly 6,075 Volatility (+/-, point) / Stop loss 5,914 Source: Research Figure 1. Daily, Short term trend Downtrend ^JKSE [ ^JKSE ] - Daily - 7/27/2018 Open: 5,947 High: 5,992 Low: 5,947 Close: 5,989 Vol. 6,585,758,720 Prev. Av g. Price: 5,976.1 R-Squared: Period: 120 Std.Dev : 1.34 Volatility (+) : Volatility (-) : V-Ratio : 0.76 Chg.: 0.723% Optimization Trading System ^JKSE - Volume = 6,585,758,720.00, EMA(Volume,11) = 6,553,891, , , , , , , , , , , ,340.4 Feb Mar Apr May Jun Jul Source: Research 6,585,758,720 6,553,891,840 5

6 Figure 2. Daily, Short term trend, MFI optimized & W%R optimized ^JKSE - MFI Smoothed = ^JKSE - Will%R Smoothed = ^JKSE [ ^JKSE ] - Daily - 7/27/2018 Open: 5,947 High: 5,992 Low: 5,947 Close: 5,989 Chg. 0.7% Vol. 6,585,758,720 Prev. Av g. Price: 5,976.1 R-Squared: Period: 715 Std.Dev : 1.59 Volatility (+) : Volatility (-) : V-Ratio : 0.75 Optimization Trading System Powered by AMTA ^JKSE - Volume = 6,585,758,720.00, Exponential Mov ing Av erage(volume,11) = 6,553,891, , , , , , Feb Mar Apr May Jun Jul Source: Research 6,585,758,720 6,553,891,840 6

7 Figure 3. Weekly Trend Uptrend, MFI optimized,rsi optimized & Stochastic %D optimized ^JKSE - MFI Smoothed = ^JKSE - RSI Smoothed = ^JKSE - Stochastic %D = 56.96, MA = ^JKSE [ ^JKSE ] - Weekly - 7/27/2018 Open: 5,887 High: 5,992 Low: 5,885 Close: 5,989 Vol. 34,526,760,960 Prev. Av g. Price: 5,955.4 R-Squared: Period: 152 Std.Dev : 1.58 Volatility (+) : Volatility (-) : V-Ratio : 1.03 Chg.: 1.98% 7, , , , , , , Optimization Trading System ^JKSE - Volume = 34,526,760,960.00, EMA(Volume,16) = 30,505,541, Jul Oct 2016 Apr Jul Oct 2017 Apr Jul Oct 2018 Apr Jul 34,526,760,960 30,505,541,632 Source: Research Figure 4. Daily : 5,936 6,007 Figure 5. Weekly : 5,880 6,033 Figure 6. Monthly : 5,846 6,075 ^JKSE [ ^JKSE ] - Daily - 7/27/2018 Open: 5,947 Prev. Av g. Price: 5,976.1 R-Squared: Period: 120 Std.Dev : 1.34 Volatility (+) : Volatility (-) : V-Ratio : 0.76 Chg.: 0.72% ^JKSE [ ^JKSE ] - Weekly - 7/27/2018 Open: Prev. Av g. Price: 5,955.4 R-Squared: Period: 152 Std.Dev : 1.58 Volatility (+) : Volatility (-) : V-Ratio : 1.03 Chg.: 1.98% x ^JKSE [ ^JKSE ] - Monthly - 7/27/2018 Open: Prev. Av g. Price: 5,846.2 R-Squared: Period: 125 Std.Dev : 1.58 Volatility (+) : Volatility (-) : V-Ratio : 0.97 Chg.: 3.27% x 6, , , , , , , , ,611.1 ^JKSE - Volume = 34,526,760, ^JKSE - Volume = 6,585,758, ,526,760,960 ^JKSE - Volume = 118,937,026, ,585,758, ,937,026, Apr Jul Apr Oct 2018 Source: Research Source: Research Source: Research 7

8 Chart 7. JCI Vs. USD/IDR Chart 8. JCI performance (absolute vs. relative) (pt) JCI (L) USD/IDR (R) 6,600 (IDR) 14,600 (%, %p) Absolute 2.7 Relative 6,200 14, ,800 13, ,400 4/30 5/28 6/25 7/23 13, D 1W 1M 1Y Source: Bloomberg, Note: Relative to MSCI EM Index Source: Bloomberg, Chart 9. Foreigner s net purchase (EM) (USDmn) V Note: The latest figure for India are July 26 th, 2018 Source: Bloomberg, Day 5 Days Korea Taiwan Indonesia Thailand Philippines India Chart 10. Energy price (D-3M=100) 130 CPO WTI Coal /30 5/28 6/25 7/23 Source: Bloomberg, Chart 11. Non-ferrous metal price (D-3M=100) Copper Nickel Tin 125 Chart 12. Precious metal price (D-3M=100) Silver Gold Platinum /18 05/18 06/18 07/18 Source: Bloomberg, 85 04/18 05/18 06/18 07/18 Source: Bloomberg, Table. Key valuation metrics 8

9 Company Name Ticker Price Market Cap Price Performance (%) P/E(X)* P/B(X)* ROE(%)* (IDR) (IDRbn) 1D 1W 1M 1Y FY18 FY19 FY18 FY19 FY18 FY19 Jakarta Composite Index JCI 5,989 6,771, FINANCIALS Bank Central Asia BBCA 23, , Bank Mandiri Persero BMRI 6, , Bank Rakyat Indonesia Persero BBRI 3, , Bank Negara Indonesia Persero BBNI 7, , Bank Tabungan Negara Persero BBTN 2,410 25, CONSUMER HM Sampoerna HMSP 3, , Gudang Garam GGRM 72, , Indofood CBP Sukses Makmur ICBP 8, , Indofood Sukses Makmur INDF 6,275 55, Kalbe Farma KLBF 1,290 60, Unilever Indonesia UNVR 44, , AGRICULTURAL Astra Agro Lestari AALI 11,000 21, PP London Sumatera Indonesia LSIP 1,000 6, Sawit Sumbermas Sarana SSMS 1,240 11, INFRASTRUCTURE XL Axiata EXCL 2,880 30, Jasa Marga JSMR 4,950 35, Perusahaan Gas Negara PGAS 1,695 41, Tower Bersama Infrastructure TBIG 5,000 22, Telekomunikasi Indonesia TLKM 3, , Soechi Lines SOCI 175 1, N/A Garuda Indonesia GIAA 236 6, BASIC-INDUSTRIES Semen Indonesia SMGR 7,725 45, Charoen Pokphand Indonesia CPIN 4,550 74, Indocement Tunggal Prakarsa INTP 14,600 53, Japfa Comfeed Indonesia JPFA 2,290 26, MINING Indo Tambangraya Megah ITMG 29,000 32, Adaro Energy ADRO 1,965 62, Aneka Tambang ANTM , N/A Vale Indonesia INCO 4,530 45, N/A N/A Tambang Batubara Bukit Asam PTBA 4,600 52, TRADE United Tractors UNTR 35, , AKR Corporindo AKRA 4,420 17, Global Mediacom BMTR 460 6, N/A 0.9 N/A 5.3 N/A Matahari Department Store LPPF 9,450 27, Media Nusantara Citra MNCN , Matahari Putra Prima MPPA 258 1, N/A N/A Surya Citra Media SCMA 2,040 29, Siloam International Hospital SILO 3,330 5, PROPERTY Bumi Serpong Damai BSDE 1,490 28, Adhi Karya ADHI 1,585 5, Alam Sutera Realty ASRI 330 6, Ciputra Development CTRA 1,060 19, Lippo Karawaci LPKR 388 8, Pembangunan Perumahan PTPP 2,160 13, Pakuwon Jati PWON , Summarecon Agung SMRA , Wijaya Karya WIKA 1,470 13, Waskita Karya WSKT 2,000 27, MISCELLANEOUS Astra International ASII 6, , Source: Bloomberg, *Note: Valuation metrics based on Bloomberg consensus estimates 9

10 Sector performance Top 10 market cap performance Name Index Chg (%) Ticker Price Market Cap (IDRbn) Chg (%) Agricultural 1, FREN IJ , Mining 2, ADRO IJ , Basic-Industry TKIM IJ , Miscellaneous Industry 1, BUMI IJ , Consumer Goods 2, JPFA IJ , Property & Construction AGRO IJ 368 6, Infrastructure 1, RMBA IJ , Finance 1, ASII IJ , Trade ERAA IJ , Composite 5, INCO IJ , Source: Bloomberg Top 5 leading movers Top 5 lagging movers Name Chg (%) Close Name Chg (%) Close ASII IJ 4.5 6,975 BBCA IJ ,225 BBRI IJ 1.6 3,090 BBNI IJ ,450 HMSP IJ 1.3 3,920 JSMR IJ ,950 GGRM IJ ,550 TPIA IJ ,980 ADRO IJ 6.2 1,965 BDMN IJ ,250 Source: Bloomberg Economic Calendar Time Currency Detail Forecast Previous All Day EUR German Prelim CPI m/m 0.4% 0.1% 3:00am CHF KOF Economic Barometer :00am EUR Spanish Flash CPI y/y 2.3% 2.3% 4:30am GBP Net Lending to Individuals m/m 5.3B 5.3B 4:30am GBP M4 Money Supply m/m 0.6% 0.4% 4:30am GBP Mortgage Approvals 66K 65K Tentative EUR Italian 10-y Bond Auction :00am USD Pending Home Sales m/m 0.4% -0.5% Tentative USD Loan Officer Survey 6:45pm NZD Building Consents m/m 7.1% 7:01pm GBP GfK Consumer Confidence :30pm JPY Unemployment Rate 2.3% 2.2% 7:50pm JPY Prelim Industrial Production m/m -0.3% -0.2% 9:00pm CNY Manufacturing PMI :00pm CNY Non-Manufacturing PMI :00pm NZD ANZ Business Confidence Tentative AUD HIA New Home Sales m/m -4.4% 9:30pm AUD Building Approvals m/m 1.1% -3.2% 9:30pm AUD Private Sector Credit m/m 0.3% 0.2% Tentative JPY BOJ Outlook Report Tentative JPY BOJ Policy Rate -0.10% -0.10% Tentative JPY Monetary Policy Statement Note: Time is based on Indonesian local time Source: Forex Factory 10

11 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