December 21, [MIRAExplore] Sinar Mas pulp and paper world

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1 Mangesti Diah Sulistiani 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 12, Copper 6, Tin 19, [MIRAExplore] Sinar Mas pulp and paper world Sinar Mas Group s pulp and paper business model Pulp and paper is one of the business lines of Sinar Mas Group. Asia Pulp & Paper (APP) is the brand name of Sinar Mas fully integrated pulp and paper enterprise, which encompasses Pabrik Kertas Tjiwi Kimia (TKIM/Not rated) and Indah Kiat Pulp & Paper (INKP/Not rated), both of which are primarily engaged in manufacturing paper and packaging products. TKIM and INKP have displayed strong performances recently, attracting investor interest and providing the companies with momentum. Pabrik Kertas Tjiwi Kimia (TKIM/Not rated) at a glance TKIM was established in 1972 and has been listed on the Indonesia Stock Exchange (IDX) since Initially producing only soda and other chemicals, the company started to produce paper products in 1978 with an annual production capacity of 12,000 tonnes. Currently, its business lines consist of: 1) the paper division, which produces coated paper, uncoated paper, and specialty paper, among other things; 2) value-added paper products such as stationery, office products, gift wrap & packaging, shopping bags, and printing products; 3) carton boxes, which are customized (e.g., corrugated carton U, corrugated C); 4) the chemicals division, which produces caustic soda liquid (NaOH), liquid chlorine (Cl2), hydrochloric acid (HCl), sodium hypochlorite (NaOCl), and calcium hypochlorite (Ca(OCl)2). The company s plant, which started commercial production in 1977, is located in Sidoarjo, East Java. Indah Kiat Pulp & Paper (INKP/Not rated) at a glance INKP was established as a joint venture with Sinar Mas Group in 1976 and has been listed on the IDX since It has two business segments: 1) paper and pulp, with generic paper and pulp products; and 2) packaging, with a range of products such as linerboard, corrugating medium, corrugated shipping containers, and boxboards, as well as chemical byproducts. TKIM s distribution network JCI Index VS MSCI Emerging Markets (pt) JCI MSCI EM (pt) 6,500 1,250 6,000 1,100 5,500 5, , /16 03/17 06/17 09/17 12/17 Source: Company,

2 Local flash UNTR: United Tractors' heavy equipment sales could rise 60%. PT United Tractors Tbk (UNTR) is optimistic that Komatsu heavy equipment sales in 2017 reached 3,500 units. Target in 2018, heavy equipment sales could reach 3,800 units. UNTR Corporate Secretary Sara K. Loebis said, in 2017, sales of Komatsu heavy equipment by UNTR could reach 3,500 units. Released, throughout the year 2016 and then, UNTR only recorded sales of Komatsu as much as 2118 units. That is, this year active sales of heavy equipment UNTR rose 60.47% YoY. (Kontan) PJAA: Coming to the holiday, Jaya Ancol releases new rides. Toward the Christmas holidays and New Year, PT Pembangunan Jaya Ancol Tbk (PJAA) released four new rides. These four rides include Dream Playground, Galactica, Color of Kingdom, and Time Adventure. Deputy Director of Rekreasi Taman Impian Jaya Ancol, Agus Sudarno said, approximately allocates Rp 35 billion for the development of the rides. (Kontan) TOBA: TOBA production of 5 million-6 million tons of coal in PT Toba Bara Sejahtra Tbk (TOBA) next year will maintain its production level at 5 million-6 million tons of coal. Increased coal prices do not make companies dark eyes to boost production. What is clear with the same level of production potential revenue companies can grow. Iwan Sanyoto, Head of Investors Relations at TOBA stated that it still maintains the production level. In addition, Toba Bara also continues to seek opportunities to acquire new mines as a strategy to increase reserves, in addition to continuing to explore. (Kontan) PNBN: Bank Panin paid IDR 1 trillion in bonds. PT Bank Pan Indonesia Tbk announced that it has settled the issuance of Bank Panin Phase I Bank BCA's first sustainable bond issuance. The bonds were first issued on December 21, 2012 with fixed interest rate. "I Bank Panin Phase I sustainable bond I of 2012 with the principal amount of Rp 1 trillion has matured December 20, 2017," wrote Herwidayatmo in a statement to BEI, Wednesday (20/12). (Kontan) BMRI: 2018, Bank Mandiri only added branches. PT Bank Mandiri Tbk said next year it will only add as many as 10 to 20 branches. The addition of branches next year is projected to be highly selective. Ahmad Siddik Badruddin, Director of Risk Management and Compliance Bank Mandiri said that next year banks will be more selective in adding branches. (Kontan) ADHI: Adhi Karya targets property sales of IDR 6.7 T. PT Adhi Karya Tbk (ADHI) will intensify its property business development through the Transit Oriented Development (TOD) & Hotel, as well as its subsidiary PT Adhi Persada Properti (APP). Through both, ADHI targets marketing sales or pre sales of IDR 6.7 trillion. Around IDR 3.3 trillion is targeted to be obtained from TOD & Hotel departments, and IDR 3.4 trillion is expected to be obtained through APP. (Kontan) 2

3 Summary Technical analysis Tasrul Jakarta Composite Index (JCI) Consolidation Item Data Item Data Close (Dec 20, 2017) 6,109(-0.943%)Trading range 6,088-6,141 Average index performance (%) 4.92 Target Period Daily 6,141 r-squared Weekly 6,173 Volatility (+/-, %) / Monthly 6,243 Volatility (+/-, point) / Stop loss 6,083 Source: Research Figure 1. Daily trend Uptrend ^JKSE [ ^JKSE ] - Daily - 12/20/2017 Open: 6,166 High: 6,167 Low: 6,089 Close: 6,109 Vol. 6,008,821,760 Prev. Av g. Price: 6,121.8 R-Squared: Period: 182 Std.Dev : 1.78 Volatility (+) : Volatility (-) : V-Ratio : 0.96 Chg.: % 6, , , , , , , , , Optimization Trading System ^JKSE - Volume = 6,008,821,760.00, EMA(Volume,37) = 6,020,768, ,020,768,768 6,008,821,760 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 = 75.80, MA = ^JKSE - Daily 12/20/2017 Open , Hi , Lo , Close (-0.9%) BBTop(Av erage,37,1.78) = 6,111.42, BBBot(Av erage,37,1.78) = 5,979.26, SMA 6, ^JKSE [ ^JKSE ] - Daily - 12/20/2017 Open: 6,166 High: 6,167 Low: 6,089 Close: 6,109 Chg. -0.9% Vol. 6,008,821,760 Prev. Av g. Price: 6,121.8 R-Squared: Period: 182 Std.: 1.78 Volatility (+) : Volatility (-) : V-Ratio : 0.95 Optimization Trading System ^JKSE - Volume = 6,008,821,760.00, EMA(Volume,37) = 6,020,768, , , , , ,020,768,768 6,008,821,760 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 = 68.29, MA = ^JKSE - Weekly 12/20/2017 Open , Hi , Lo , Close (-0.2%) BBTop(Av erage,18,1.86) = 6,120.29, BBBot(Av erage,18,1.86) = 5, , ^JKSE [ ^JKSE ] - Weekly - 12/20/2017 Open: 6,112 High: 6,176 Low: 6,080 Close: 6,109 Chg. -0.2% Vol. 16,955,350,016 Prev. Av g. Price: 6,122.0 R-Squared: Period: 51 Std.: 1.86 Volatility (+) : Volatility Optimization (-) : Trading System V-Ratio ^JKSE -: Volume 1.34 = 16,955,350,016.00, EMA(Volume,20) = 28,412,381, , , , , Oct Nov Dec 2017 Feb Mar Apr May Jun 22 Jul Aug 31 Sep Oct Nov 30 Dec 28,412,381,184 16,955,350,016 Source: Research Figure 4. Daily : 6,088 6,141 Figure 5. Weekly : 6,078-6,173 Figure 6. Monthly : 6,012 6,243 ^JKSE [ ^JKSE ] - Daily - 12/20/2017 Open: Prev. Av g. Price: 6,121.8 x ^JKSE [ ^JKSE ] - Weekly - 12/20/2017 Open: Prev. Av g. Price: 6,122.0 ^JKSE [ ^JKSE ] - Monthly - 12/20/2017 Open: Prev. Av g. Price: 6,088.5 x R-Squared: Period: 182 R-Squared: Period: 51 R-Squared: Period: 30 6,243.8 Std.Dev : 1.78 Volatility (+) : Volatility (-) : Std.Dev : 1.86 Volatility (+) : Volatility (-) : ,173.1 Std.Dev : 1.84 Volatility (+) : Volatility (-) : ,166.2 V-Ratio : 0.96 V-Ratio : 1.16 V-Ratio : 1.03 Chg.: % Chg.: % Chg.: 2.643% 6, , , , , , , , ,087.5 ^JKSE - Volume = 6,008,821, ^JKSE - Volume = 16,955,350, ^JKSE - Volume = 75,142,135, ,008,821, ,955,350,016 Nov 30 Dec 75,142,135,808 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 9/20 10/18 11/15 12/13 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 2.9 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 19 th, 2017 Source: Bloomberg, 1 Day 5 Days Korea Taiwan Indonesia Thailand Philippines India (D-3M=100) 120 CPO WTI Coal /20 10/18 11/15 12/13 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, /20 10/18 11/15 12/13 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 6,109 6,780, FINANCIALS Bank Central Asia BBCA 20, , Bank Mandiri Persero BMRI 7, , Bank Rakyat Indonesia Persero BBRI 3, , Bank Negara Indonesia Persero BBNI 9, , Bank Tabungan Negara Persero BBTN 3,470 36, CONSUMER HM Sampoerna HMSP 4, , Gudang Garam GGRM 79, , Indofood CBP Sukses Makmur ICBP 8, , Indofood Sukses Makmur INDF 7,550 66, Kalbe Farma KLBF 1,675 78, Unilever Indonesia UNVR 53, , AGRICULTURAL Astra Agro Lestari AALI 13,050 25, PP London Sumatera Indonesia LSIP 1,265 8, Sawit Sumbermas Sarana SSMS 1,455 13, INFRASTRUCTURE XL Axiata EXCL 2,840 30, Jasa Marga JSMR 6,200 44, Perusahaan Gas Negara PGAS 1,755 42, Tower Bersama Infrastructure TBIG 6,150 27, Telekomunikasi Indonesia TLKM 4, , Soechi Lines SOCI 234 1, N/A N/A Garuda Indonesia GIAA 306 7, BASIC-INDUSTRIES Semen Indonesia SMGR 9,550 56, Charoen Pokphand Indonesia CPIN 3,110 50, Indocement Tunggal Prakarsa INTP 19,400 71, Japfa Comfeed Indonesia JPFA 1,295 14, MINING Indo Tambangraya Megah ITMG 20,000 22, Adaro Energy ADRO 1,800 57, Aneka Tambang ANTM , Vale Indonesia INCO 2,850 28, N/A Tambang Batubara Bukit Asam PTBA 2,460 28, TRADE United Tractors UNTR 32, , AKR Corporindo AKRA 6,050 24, Global Mediacom BMTR 580 8, N/A N/A N/A N/A N/A N/A Matahari Department Store LPPF 10,600 30, Media Nusantara Citra MNCN 1,255 17, Matahari Putra Prima MPPA 426 2, #N/A Surya Citra Media SCMA 2,450 35, N/A Siloam International Hospital SILO 10,100 16, PROPERTY Bumi Serpong Damai BSDE 1,660 31, Adhi Karya ADHI 1,900 6, Alam Sutera Realty ASRI 358 7, Ciputra Development CTRA 1,165 21, Lippo Karawaci LPKR , Pembangunan Perumahan PTPP 2,590 16, Pakuwon Jati PWON , Summarecon Agung SMRA , Wijaya Karya WIKA 1,580 14, Waskita Karya WSKT 2,210 29, 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, INAF IJ , Mining 1, GEMS IJ , Basic-Industry BDMN IJ , Miscellaneous Industry 1, SILO IJ , Consumer Goods 2, IIKP IJ , Property & Construction EMTK IJ , Infrastructure 1, NIKL IJ , Finance 1, BISI IJ , Trade RMBA IJ , Composite 6, SMRA IJ , Source: Bloomberg Top 5 leading movers Top 5 lagging movers Name Chg (%) Close Name Chg (%) Close MABA IJ ,660 HMSP IJ ,450 BDMN IJ 5.2 6,050 UNVR IJ ,000 EMTK IJ 3.3 9,400 ASII IJ ,000 TAMU IJ ,370 BBRI IJ ,400 INAF IJ 8.7 5,100 BBCA IJ ,925 Source: Bloomberg Economic Calendar Time Currency Detail Forecast Previous 3:00am USD President Trump Speaks 4:45am NZD GDP q/q 0.6% 1.0% 6:05am GBP GfK Consumer Confidence Tentative JPY Monetary Policy Statement Tentative JPY BOJ Policy Rate -0.10% -0.10% 1:30pm JPY BOJ Press Conference 2:00pm CHF Trade Balance 2.84B 2.33B 4:30pm GBP Public Sector Net Borrowing 8.3B 7.5B 8:30pm CAD CPI m/m 0.2% 0.1% 8:30pm CAD Core Retail Sales m/m 0.4% 0.3% 8:30pm CAD Common CPI y/y 1.7% 1.6% 8:30pm CAD Median CPI y/y 1.7% 1.7% 8:30pm CAD Retail Sales m/m 0.3% 0.1% 8:30pm CAD Trimmed CPI y/y 1.5% 1.5% 8:30pm CAD ADP Non-Farm Employment Change -5.7K 8:30pm CAD Core CPI m/m 0.3% 8:30pm USD Final GDP q/q 3.3% 3.3% 8:30pm USD Philly Fed Manufacturing Index :30pm USD Unemployment Claims 232K 225K 8:30pm USD Final GDP Price Index q/q 2.1% 2.1% 9:00pm USD HPI m/m 0.4% 0.3% 10:00pm EUR Consumer Confidence :00pm USD CB Leading Index m/m 0.4% 1.2% 10:30pm USD Natural Gas Storage -160B -69B Note: Time is based on Indonesian local time Source: Forex Factory 8

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