Indonesia. MERK: 9M16 review of stable growth. 9M16 performance. 3Q16 performance. Strength in revenue composition. ( ID R t r) 1, ,3 0 0.

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1 Indonesia Daily Focus Dang Maulida To subscribe to our Daily Focus, please contact us at Market Index Last Trade Chg (%) MoM YoY JCI 5, MSCI Indonesia MSCI EM HANG SENG 22, KOSPI 1, FTSE 6, DJIA 18, NASDAQ 5, Valuation 2016F 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 Rubber Nickel 11, Copper 5, Tin 20, JCI Index VS MSCI Emerging Markets (pt) JCI MSCI EM (pt) 5,500 4,500 1, , /13 08/14 05/15 02/16 11/16 MERK: 9M16 review of stable growth 9M16 performance MERCK (MERK) published its 9M16 res ults, with revenue of IDR707.3bn (+7% YoY) and IDR125.4bn in net profit (+3.2% YoY). Cost of goods sold (COGS) increased (at a lower rate) at 6.4% YoY and thus enabled MERK to slightly improve gross margin rate to 51.4% in 9M16 vs. 51.1% in 9M15. MERK incurred a 11.9% YoY increase in selling expenses in 9M16; nevertheless total operating expenses were mitigated by miscellaneous income, and thus MERK was able to maintain operating margin of 20.8% in the period (vs. 20.7% in 9M15). 3Q16 performance In 3Q16, MERK posted revenue of IDR229.4bn, slightly higher (+2.1% YoY) compared to 3Q15 s IDR224.6bn. Meanwhile, compared to 2Q16, MERK underwent a 15.7% decrease, which we attribute to the higher base in the previous quarter. MERK s revenue growth in 3Q16 both on an annual and quarterly basis is lower compared to that of companies included in the LQ-45 index. LQ-45 index constituents posted 5.0% YoY growth and -2.4% QoQ growth in 3Q16. Strength in revenue composition MERK is a debt-free company and has been operating in Indonesia for more than four decades, which will be another positive point to be able to grow with the country. Indonesia s is a domestic-driven economy; between , private consumption took up at an average 55% of total gross domestic product. Figure 6 shows that in 3Q16, private consumption gained more momentum growing at c.4% QoQ despite the high base effect from Idul Fitri in 2Q16. Private consumption in Indonesia GDP gained momentum (3Q16) 1, , , , , , , , , , , ( ID R t r) 1, , Source: BPS, Daewoo Securities Indonesia 1, , , , , Q Q Q Q Q Q Q 1 6

2 Local flash ADHI: Adhi Karya won contracts Mampang-Kuningan underpass. PT Adhi Karya (Persero) Tbk obtained a contract worth IDR billion of Mampang-Kuningan underpass construction project in Jakarta. Corporate Secretary of Adhi Karya Ki Syahgolang Permata explained that the owner of the project is Dinas Bina Marga Provinsi DKI Jakarta. The work scope of the project for Adhi Karya is a design and build) with a construction period of 392 days. (Bisnis Indonesia) HMSP: HM Sampoerna allocated a capex of IDR1 trillion next year. PT HM Sampoerna Tbk (HMSP) prepared a capital expenditure next year of about IDR1 trillion. It is relatively the same with the budget has been disbursed this year. "There is no expansion, just to support future business such as the production engine upgrade to increase capacity," said Senior Manager of Philip Morris International Inc. (PMI) Paul Janelle. The allocation is also expected to boost sales volume. (Kontan) KIJA: Jababeka and PP Properti establish a joint ventures to develop land. A subsidiary of PT Kawasan Industri Jababeka Tbk (KIJA), PT Grahabuana Cikarang has set up a joint venture with PT PP Properti Tbk (PPRO). According to Budianto Liman, Director of KIJA, the joint venture company named PT PP Properti Jababeka Residen. The joint venture company has a paid up capital of IDR billion shares with PT PP Properti Tbk has 52.6% of ownership and PT Grahabuana Cikarang 47.5%. (Iqplus) BBYB: Asabri continue to add stake in Bank Yudha Bhakti. PT Asuransi Sosial Angkatan Bersenjata Republik Indonesia (Asabri) increased its interest in Bank Yudha Bhakti. Based on Bank Yudha Bakti information to the Indonesian Stock Exchange, the additional shares recorded at 400 million shares. So that on 16 November 2016, Asabri's shares in Bank Yudha Bhakti increase to 28.05% from 18.11%. (Iqplus) BSIM: Bank Sinarmas to maintain NPL ratio below 2% in PT Bank Sinarmas Tbk (BSIM) plans to restructure the loans in property sector and mining. This was done because of the swelling in the ratio of non performing loans (NPL). The company's gross NPLs increased to 3.45% from 2.27%. Director of BSIM Freenyan Liwang believe that through the restructuring, the credit quality will be better. (Iqplus) LTLS: Lautan Luas aiming for revenue growth of 15%. Distributors and manufacturers of chemicals PT Lautan Luas Tbk (LTLS) predicts that its revenue could grow by at least 15% next year. This is because there are a number of new products that will be launched next year. "In addition to new products, LNK also start operating next year so that it could support our growth," said Managing Director LTLS Joshua Chandraputra Asali. Management predicts that the company will record a revenue of IDR7 trillion. Thus, at least LTLS targets revenue of IDR8 trillion. (Kontan) 2

3 Summary Technical analysis Tasrul Jakarta Composite Index (JCI) Consolidation Item Data Item Data Close (Nov 18, 2016) 5,170(-0.4%)Trading range 5,140-5,232 Average index performance (%) 3.66Target Period Daily 5,229 r-squared Weekly 5,257 Volatility (+/-, %) Monthly 5,283 Volatility (+/-, point) 26.95Stop loss 5,094 Source: Figure 1. Daily trend - Uptrend ^JKSE-Daily11/18/2016Open , Hi , Lo , Close (-0.4%)UpperBand=5,644.41, Channel_prd=5,448.22, Lower Band=5,252.03, UpperBand=5,756.18, Channel_prd= 5, , , , ,232 5,140 5, , , , , ^JKSE-Volume =7,211,876,352.00, Avg.Volume =8,653,112, Aug Sep Oct Nov Dec 2016 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Created with AmiBroker - advanced charting and technical analysis software. 8,653,112,320 7,211,876,352 Source: 3

4 Figure 2. Daily MFI optimized & W%R optimized ^JKSE-MFI Smoothed= ^JKSE-Will%RSmoothed= ^JKSE-Daily11/18/2016Open , Hi , Lo , Close (-0.4%)VWAP=5,094.56, VWAP=5, ,232 5,140 5, , , ^JKSE-Volume =7,211,876,352.00, Avg.Volume =8,809,157, Dec 2016 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Created with AmiBroker - advanced charting and technical analysis software. 8,809,157,632 7,211,876,352 Source: Figure 3. Daily, target : 5,229 Figure 4. Weekly, target : 5,257 Figure 5. Monthly,target : 5,283 ^ J K S E - D a i l y 1 1 / 1 8 / O p e n , H i , L o , ^ JK S E - W e e kly 11/18/2016 O p e n , H i , L o ^ J K S E - M o n th ly 1 1 /1 8 / O p e n , H i , L o x 5, , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ^ J K S E - V o l u m e = 7, 2 1 1, 8 7 6, , A v g. V o l u m e = 8, 8 0 9, 1 5 7, ^ JK S E - V o lu m e = 39,675,772,928.00, A vg.v o lu m e = 39,761,899, ^ JK S E - V o lu m e = 118,857,269,248.00, A vg.v o lu m e = 116,215,324, , 8 0 9, 1 5 7, , 2 1 1, 8 7 6, O p ti m i z a ti o n T ra d i n g S y ste m O c t N o v Cr e a te d w ith A mib r o ke r - a d v a n c e d c h a r tin g a n d te c h n ic a l a n a ly s is s o f tw a r e. h ttp ://w w w.a mib r o ke r.c o m 3 9, 7 6 1, 8 9 9, , 6 7 5, 7 7 2, O p tim iz a tio n T ra d in g S y ste m A p r J u l O c t Cr e a te d w ith A mib r o ke r - a d v a n c e d c h a r tin g a n d te c h n ic a l a n a ly s is s o f tw a r e. h ttp ://w w w.a mib r o ke r.c o m 1 1 8,8 5 7,2 6 9, ,2 1 5,3 2 4,6 7 2 O p tim iz a tio n T ra d in g S y ste m Cr e a te d w ith A mib r o ke r - a d v a n c e d c h a r tin g a n d te c h n ic a l a n a ly s is s o f tw a r e. h ttp ://w w w.a mib r o ke r.c o m Source: Source: Source: 4

5 Chart 6. JCI Vs. USD/IDR (pt) JCI (L) USD/IDR (R) 5,700 5,500 5,300 5,100 4,900 4,700 4,500 4,300 8/22 9/5 9/19 10/3 10/17 10/31 11/14 Source: Bloomberg, (IDR) 14,000 13,800 13,600 13,400 13,200 13,000 12,800 Chart 7. JCI performance (absolute vs. relative) (%, %p) Note: Relative to MSCI EM Index Source: Bloomberg, -4.4 Absolute D 1W 1M 1Y Relative Chart 8. Foreigner s net purchase (EM) Chart 9. Energy price (USDmn) Day 5 Days ((D-3M=100) CPO WTI Coal ,000-1,200-1,400-1, ,600-1,501 Korea Taiwan Indonesia ThailandPhilippines India 70 8/16 9/16 9/16 10/16 10/16 10/16 11/16 Note: The latest figure for India are Nov, 17 th Source: Bloomberg, Source: Bloomberg, Chart 10. Non-ferrous metal price Chart 11. Precious metal price ((D-3M=100) Copper Nickel Tin Silver Gold Platinum 80 8/16 9/16 9/16 10/16 10/16 10/16 11/16 Source: Bloomberg, 70 8/16 9/16 9/16 10/16 10/16 10/16 11/16 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 5,170 5,613, FINANCIALS Bank Central Asia BBCA 14, , Bank Mandiri Persero BMRI 10, , Bank Rakyat Indonesia Persero BBRI 11, , Bank Negara Indonesia Persero BBNI 5,225 97, Bank Tabungan Negara Persero BBTN 1,660 17, CONSUMER HM Sampoerna HMSP 3, , Gudang Garam GGRM 63, , Indofood CBP Sukses Makmur ICBP 9, , Indofood Sukses Makmur INDF 7,775 68, Kalbe Farma KLBF 1,465 68, Unilever Indonesia UNVR 40, , AGRICULTURAL Astra Agro Lestari AALI 15,200 29, PP London Sumatera Indonesia LSIP 1,600 10, Sawit Sumbermas Sarana SSMS 1,390 13, INFRASTRUCTURE XL Axiata EXCL 2,340 25, Jasa Marga JSMR 4,270 29, Perusahaan Gas Negara PGAS 2,390 57, Tower Bersama Infrastructure TBIG 5,675 27, Telekomunikasi Indonesia TLKM 3, , Soechi Lines SOCI 394 2, N/A N/A N/A N/A N/A N/A Garuda Indonesia GIAA 332 8, BASIC-INDUSTRIES Semen Indonesia SMGR 8,425 49, Charoen Pokphand Indonesia CPIN 3,340 54, IndocementTunggal Prakarsa INTP 14,900 54, Japfa Comfeed Indonesia JPFA 1,750 19, MINING Indo Tambangraya Megah ITMG 14,725 16, Adaro Energy ADRO 1,500 47, Aneka Tambang ANTM , N/A Vale Indonesia INCO 3,110 30, Tambang Batubara Bukit Asam PTBA 11,125 25, TRADE United Tractors UNTR 21,300 79, AKR Corporindo AKRA 6,975 27, Global Mediacom BMTR 645 9, N/A N/A N/A N/A N/A N/A Matahari Department Store LPPF 15,200 44, Media Nusantara Citra MNCN 1,785 25, Matahari Putra Prima MPPA 1,660 8, Surya Citra Media SCMA 2,260 33, Siloam International Hospital SILO 10,100 11, PROPERTY Bumi Serpong Damai BSDE 1,825 35, Adhi Karya ADHI 1,990 7, Alam Sutera Realty ASRI 386 7, Ciputra Development CTRA 1,425 21, Lippo Karawaci LPKR , Pembangunan Perumahan PTPP 4,060 19, Pakuwon Jati PWON , Summarecon Agung SMRA 1,350 19, Wijaya Karya WIKA 2,360 14, Waskita Karya WSKT 2,320 31, MISCELLANEOUS Astra International ASII 7, , 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, KRAS IJ , Mining 1, SMBR IJ , Basic-Industry BISI IJ , Miscellaneous Industry 1, BBKP IJ 630 5, Consumer Goods 2, INKP IJ , Property & Construction JRPT IJ , Infrastructure 1, TBIG IJ , Finance BDMN IJ , Trade SMCB IJ 900 6, Composite 5, MYRX IJ , Source: Bloomberg Top 5 leading movers Top 5 lagging movers Name Chg (%) Close Name Chg (%) Close HMSP IJ 0.5 3,800 TLKM IJ ,970 SMBR IJ 3.0 2,400 UNTR IJ ,300 BRAM IJ ,000 UNVR IJ ,250 KRAS IJ PTBA IJ ,125 BMRI IJ ,925 AMRT IJ Source: Bloomberg Economic Calendar Time Currency Detail Forecast Previous 6:50am JPY Trade Balance 0.35T 9:00am NZD Credit Card Spending y/y 8.2% 11:30am JPY All Industries Activity m/m 0.2% Tentative EUR German Buba Monthly Report 8:30pm CAD Wholesale Sales m/m 0.8% 9:00pm CNY CB Leading Index m/m 1.1% 10:30pm AUD CB Leading Index m/m 0.0% 11:00pm EUR ECB President Draghi Speaks 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 Daewoo Securities Indonesia (DWS). It is purpo sed 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 DWS 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 DWS, 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 DWS, 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 Daewoo Securities Indonesia