INVESTOR DIGEST HIGHLIGHT ECONOMY. Equity Research 17 May 2016

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1 INVESTOR DIGEST Equity Research 17 May 2016 Economic Data Latest 2016F BI Rate (%), eop Inflation (YoY %) US$ 1 = Rp, period avg 13,310 14,150 Stock Market Data (16 May 2016) HIGHLIGHT Apr16 Trade: Dropping Import to Pick Up Ahead of Lebaran Automotive: Apr-16 4W and 2W Volumes Astra International: Anticipate better earnings from Auto unit (ASII; Rp6,200; Buy; TP:Rp7,200) Bank Mandiri 1Q16 results - key take aways from analyst meeting (Rp9,025; Not rated) United Tractors: In the Doldrums (UNTR; Rp13,150; Sell; TP:Rp11,000) JCI Index 4, % Trading T/O ( Rp bn ) 3,921.0 Market Cap ( Rp tn ) 5, ,539.6 Market Data Summary* EBITDA growth (%) EPS growth (%) EV/EBITDA (x) P/E (x) P/BV (x) Div. Yield (%) Earnings Yield (%) Net Gearing (%) ROE (%) * Aggregate of 75 companies in MS research universe, representing 70.5% of JCI s market capitalization ECONOMY Apr16 Trade: Dropping Import to Pick Up Ahead of Lebaran Trade surplus came out bigger than expected. Apr16 trade surplus of US$670mn is roughly triple of our and consensus expectations. Import growth tumbled deeper than we forecast while export did not improve as much as we expected (see exhibit 1). Cumulative 4M16 trade surplus is US$2.3bn, less than 4M15 s: US$2.8bn. Volume continued to weigh on export. Export contracted -12.7% YoY, weaker than -10.9% YoY seen by the consensus and us, respectively. Specifically, non-oil and gas (non-o&g) export recorded a slight deterioration as it contracted -9.3% YoY in Apr16 from -9.2% YoY in the previous month. Weak external demand was the cause. In spite of 3.8% YoY non-o&g commodity price increase, its volume remained weak at -12.6% YoY. We spotted that shipment contribution to India, Taiwan, China, and Malaysia fell the most, in line with deteriorating manufacturing activity in the respective countries. Capital goods not to be solely blamed for import fall. Import, on the other hand, shrank -14.6% YoY (vs. consensus and our forecasts of -8.7% YoY and -9.2% YoY, respectively). It deteriorated further from -10.4% YoY in Mar16. Oil product came first in terms of downward contribution to the annual import growth (-5.1ppt), followed by machinery (-1.3ppt), and vehicle/cereal/fertilizer/oil seed (each by -0.5ppt). Both non-o&g import price (-3.3% YoY) and volume (-5.3% YoY) declined in Apr16. From a broader view, import weakening was not all driven by capital goods; it actually saw its contraction narrowing (-13.4% YoY vs % YoY). Instead, the main drivers were consumer goods and raw material imports, the latter partly due to lower O&G imports. Import may potentially increase in the next several months. Even though trade surplus is structurally positive for the rupiah, both export and import figures indicate economic condition remained sluggish entering 2Q16. The falling monthly import in Apr16 is also uncommon as it tends to pick up two months before Muslim fasting period begins (see exhibit 3). Nevertheless, on this matter, part of demand had possibly already materialized in Mar16, when import increased 11.2% MoM, as producers tried to benefit from strengthening rupiah. Page 1 of 12

2 We still expect import to pick up in most of 2Q due to hefty domestic demand ahead of Lebaran. On the other hand, exports recovery will solely depend on the economic development of Indonesia s main trading partners, especially on China, Japan and ASEAN region. Maintain FY16F CAD forecast. The economy is expected to rebound in 2H16 and reach a FY16F growth of 5.0% and therefore, at this juncture we maintain our FY16F current account deficit estimate at 2.4% of GDP. We also reiterate our exchange rate forecast revision to Rp13,400/USD in YE16 as the risk of portfolio outflow has been lower than anticipated compared to end-2015 (please read our Macroscope report: Revising Rupiah Forecast amid External Dynamic Factors ). Mar-16 Apr-16 Mansek Forecast Market Consensus Actual Exports (% YoY) Imports (% YoY) Trade balance (US$ mn) Leo Rinaldy( ) Wisnu Trihatmojo ( ) leo.rinaldy@mandirisek.co.id wisnu.trihatmojo@mandirisek.co.id SECTOR Automotive: Apr-16 4W and 2W Volumes Apr16 4W wholesales: 84.7k units (-9.9%mom/+3.8%yoy), 4M16 wholesales: 351.9k units (-3.3% yoy). Toyota s Apr16 wholesales volume stood at 31.2k units (+3.7%mom/+3.7%yoy) while Daihatsu stood at 14.4k units (-0.7%mom/ -3%yoy), bringing ASII s wholesales volume to 47.3k units (+2.5% mom/+2%yoy). Meanwhile, Honda s wholesales volume totaled 14.4k units (-29.7%mom/+35.9%yoy). Despite decline in the industry s wholesale volumes, it is worth noting that Toyota still managed to post positive mom growth. On a cumulative basis, Toyota s 4M16 wholesales volume totaled to 111.7k units (-3.6% yoy), while Daihatsu totaled to 56.9k units (-5.5% yoy), bringing ASII s 4M16 volumes to 174.6k units, -4.9% yoy. Toyota and Daihatsu s Apr16 market share stood at 36.8% and 17% respectively. Toyota s market share improved to 36.8% in Apr16 vs. 32% in Mar16, bringing Toyota s 4M16 market share to 31.7% (relatively flat vs 4M15). Meanwhile, Daihatsu s market share rose to 17% in Apr16 vs. 15.4% in Mar16, bringing Daihatsu s 4M16 market to 16.2% (relatively flat vs. 4M15). Even though Honda made significant improvements during the first three months of 2016, we would like to highlight that Honda s market share declined substantially to 17% in Apr16 vs. 21.8% in Mar16 due to production hurdles. Apr16 2W wholesales volume totaled 478k units (-15.1%mom/-8.9%yoy); 4M16 2W sales 1,982.5k units (-6.9% yoy). 2W wholesales volume for Astra Honda stood at 348.6k units (-20.8%mom/-6% yoy), bringing ASII s Apr16 2W market share to 72.9% vs. 78.1% in Mar16 and 4M16 market share to 72.6% vs. 4M15 at 68.8%. Even though Honda still dominates the 2W market, we believe decline in Honda s market share was mainly due to brand switching to Yamaha. Signals from 4W retail sales: Astra is making a comeback. Apr16 4W retail sales totaled to 83.3k units (-9.9%mom/ -4.3%yoy) while 4M16 retail sales totaled to 345.4k units, +0.3%yoy. Even though 4W retail sales declined in Apr16, Toyota and Daihatsu managed to increase retail sales to 31.6k units (+6.1% mom/+6.4%yoy) and 15.1k units (+6.1% mom/+6.4% yoy) respectively. Furthermore, Toyota s Apr16 retail market share improved significantly to 38% vs. 32.3% in Mar16 while Daihatsu s retail market share improved to 18.1% in Apr16 vs. 15.4% in Mar16. We believe that Toyota and Daihatsu s positive mom retail sales trend signals recovery for Astra s 4W division. Our channel checks with dealers indicate that discounts for the Toyota Avanza still vary around 7-8% (Rp 16-17mn), while discounts for the Kijang Innova vary around 2-3% (~Rp10mn), and discounts for the new Fortuner vary at <2% (up to ~Rp10mn depending on the model). Page 2 of 12

3 Expect 4W sales to pick up approaching the Lebaran holiday. Similar to Gaikindo and auto producers, we are optimistic 4W wholesales will pick up by +5-10% mom approaching the Lebaran holiday as the need for vehicles increases. We continue to anticipate 4W volumes to pick up in 2H16 on the back of realization of infrastructure spending, rebound in CPO prices, lower interest rates (3x25 bps BI rate cut), lower fuel prices, and recovery of consumer confidence. Maintain BUY with TP of Rp7,200 and trading at FY16 P/E of 18x. APR-16 4W WHOLESALE VOLUME APR-16 2W WHOLESALE VOLUME Source: Gaikindo Source:AISI Apr16 4W Wholesale Data (in '000s) Apr-15 Mar-16 Apr-16 MoM (%) YoY (%) 4M15 4M16 YoY (%) Astra Toyota (3.6) Daihatsu (0.7) (3.0) (5.5) Total for Astra (4.9) Non-Astra Honda (29.7) Others (16.0) (6.7) (16.5) Total 4W Wholesales (9.9) (3.3) 4W Market Share (%) Apr-15 Mar-16 Apr-16 MoM YoY 4M15 4M16 YoY Toyota (0.0) (0.1) Daihatsu (1.2) (0.4) Astra's Market Share (1.0) (0.8) Honda (4.8) Others (2.0) (3.1) (4.7) Non- Astra Market Share (6.8) Apr16 2W Wholesale Data (in '000s) Apr-15 Mar-16 Apr-16 MoM (%) YoY (%) 4M15 4M16 YoY (%) Astra Honda (20.8) (6.0) 1, ,439.2 (1.7) Non-Astra Yamaha (14.2) (16.8) Others (37.3) (32.9) (28.6) Total for Non-Astra (15.8) (18.4) Total 2W Wholesales (15.1) (8.9) 2, ,982.5 (6.9) 2W Market Share (%) Apr-15 Mar-16 Apr-16 MoM YoY (%) 4M15 4M16 YoY Astra Honda (5.2) Yamaha (1.5) (2.9) Others (0.7) (0.7) (1.0) Ariyanto Kurniawan ( ) Priscilla Thany ( ) Page 3 of 12

4 CORPORATE Astra International: Anticipate better earnings from Auto unit (ASII; Rp6,200; Buy; TP:Rp7,200) ASII s auto unit remains intact despite weak contribution from UNTR and bank Permata. We cut our FY16-18F net profit by 10-11%. Our TP is also lowered to Rp7,200. Maintain Buy. Sign of recovery in Auto business is seen. While we still see risk of margin pressure on UNTR and higher provisions on Bank Permata, we believe that ASII s auto business is heading toward the right direction. ASII s 1Q16 4W retail sales grew 9%yoy (vs. -7%yoy wholesale) with market share going up to 50% (vs. 48% wholesale). We expect 4W wholesales to pick up over the next few months, indicating recovery in consumer confidence and purchasing power. Meanwhile, better inventory management and less aggressive product discount have led to recovery in auto margin to 2% (vs. 1.3% in 2015) despite the AUTO2000 dealership restructuring. Better macro outlook and aggressive new product launches will support growth for 4W sales in upcoming quarters, which will lead to better earnings outlook for ASII (75% of earnings come from auto related business). Earnings risk from non-auto unit. We still see risk of margin pressure on United Tractors (UNTR, Rp13,150, SELL, Rp11,000TP) and higher NPL on Bank Permata (BNLI, Rp795, Not Rated). UNTR s lower contractor fee, weak spare part sales, and strong IDR will keep UNTR s margin under pressure. Meanwhile, our forecast on BNLI has factored in another Rp1.0tr of provisioning charges to Rp2.5tr. Maintain Buy, cut TP to Rp7,200. ASII s share price has declined by >15% in the past few weeks as a result of weak 1Q16 earnings and slower than expected 1Q16 GDP growth of 4.92% (vs. consensus of 5.0%). Our economist still maintains FY16F GDP of 5.0% and expects >5.0% GDP growth in 2H16, which should be positive for ASII. Nevertheless, we cut our FY16-18F net profit by 10%-11% after imputing lower contribution, mainly from UNTR and finance unit (Incl. bank Permata). Our TP is also lowered to Rp7,200 (From Rp8,000) based on 18x FY16 PE (+1SD 7-year avg.). Key risks: slower GDP growth, weak IDR, aggressive disc in 4W, and continued weak commodity prices. FINANCIAL SUMMARY YE Dec (Rp Bn) 2014A 2015A 2016F 2017F 2018F EBITDA 27,588 28,107 18,637 23,758 25,228 Net Profit 19,181 14,464 16,001 17,245 17,979 Fully-diluted EPS (Rp) Fully-diluted EPS growth (%) (1.2) (24.6) P/E Ratio (x) EV/EBITDA (x) P/B Ratio (x) Dividend Yield (%) ROAE (%) EARNINGS REVISION 2016F In Rpbn New Old %change New Old %change New Old %change Profit & Loss Revenue 187, ,612-5% 200, ,771-6% 210, ,003-6% Gross profit 33,614 35,580-6% 35,391 37,805-6% 37,439 39,521-5% Operating profit 14,978 16,831-11% 15,486 17,500-12% 16,356 17,833-8% Net profit 16,001 17,871-10% 17,245 19,491-11% 17,979 20,170-11% Gross margin 18% 18% 18% 18% 18% 18% Operating margin 8% 9% 8% 8% 8% 8% Net margin 9% 9% 9% 9% 9% 9% Ariyanto Kurniawan ( ) ariyanto.kurniawan@mandirisek.co.id Page 4 of 12

5 Bank Mandiri 1Q16 results - key take aways from analyst meeting (Rp9,025; Not rated) There will be more loan restructuring in coming quarters. A Rp15tr consisting of eight large companies will be restructured in 2Q16 with half of the additional Rp15tr to come from Krakatau Steel, which is in category 2. The management expects to see the bank only provisioning charges increase from Rp4.3tr in 1Q16 to Rp6.9tr in 1H16, adding some Rp tr in 2Q16 while the level for the full year could reach around Rp12tr, including for the subsidiary BSM, similar level that was recorded in Expect NPL to peak at 3.1% in mid 2016 from the current 2.9% (bank only). Current consolidated NPL level is 3.2% as BSM s NPL is still at 6.4%. However, NPL to remain high and expects this to start declining towards end of 2016 or early 2017 with normalized earnings to come on stream next year. On the single digit lending rates, the company has agreed with the OJK to reach <10% average lending rate by the yearend, exempting credit card and micro loans. Without these two sub segments, the average lending rates is already 10.5% currently. Prior to the lending rate cut, the bank will also be aggressive in reducing the deposit rates, as the inflation rate has been benign. Loan growth would be higher as borrowers are still waiting for the right time to invest. Undisbursed loans remained stable at 18% of outstanding loans. The 8% y-y loan growth was supported by micro loans (+19% y-y; 9% of total loans) and consumer loans (+12% y-y; 14% of total loans) and among the consumer loans, auto loans recorded +23% y-y, payroll loans +19% y-y and home equity loans +17% y-y (the bank will concentrate more on this secondary market than primary mortgage). Asset revaluation will be booked in April 2016 to add around Rp25-26tr of fixed assets and Tier 2 capital (2.2% additional CAR). Guideline for 2017 (subject to change post 2Q result): gross loan growth at 12-14%, NIM at %, cost to income ratio at <45%, gross NPL %, cost of credit (provisioning/total loans) %. Tjandra Lienandjaja ( ) tjandra.lienandjaja@mandirisek.co.id United Tractors: In the Doldrums (UNTR; Rp13,150; Sell; TP:Rp11,000) 2016 will be the first year for UNTR to fully feel the impact of weak coal price outlook. Lower contractor fee, weak sparepart sales, and strong IDR will keep margin under pressure. We cut our FY16-18F net profit by 6%-17% and lower our TP to Rp11,000 (from Rp13,250) based on 9x FY16F PE (-1.5SD). Maintain Sell. Weak earnings outlook. Weak 1Q16 earnings should indicate weak earnings outlook for the entire year due to fixed contract on Pama and still weak commodity price outlook. Lower coal production and mining contractor fee at Pama, unexpected weak spare part sales, and stronger IDR have led to sharp drop in 1Q16 gross margin to 18% (from 24% in FY15). We cut our FY16-18F net profit by 6%-17% after imputing lower margin and lower contract fee at Pama and lower contribution from spare part sales. Our TP is also lowered to Rp11,000 (from Rp13,250) based on 9x FY16F PE (-1.5SD 7- year avg). We still see downside risk to our earnings forecast if we do not see margin recovery in forthcoming quarters. Our FY16-18F earnings forecast are 9%-13% below consensus forecast. Pama remains the key risk for UNTR. We forecast Pama s revenue to decline by 20%yoy driven by 10% lower overburden and production and 13% lower contractor fee. However, we still see downside risk on the production if coal prices remain low as around 80% of its customers are large coal producers which have yet to experience a meaningful production cut. Margins will continue to be under pressure as lower coal production also leads to higher cost due to higher fixed cost. Margin recovery might happen if IDR depreciated to >14,000/USD, as around 40% of its costs is in IDR. Page 5 of 12

6 Spare part sales is also slowing down. While weak Komatsu equipment sales is widely anticipated due to still weak coal prices, weak spare part sales in 1Q came as a surprise due to low equipment utilization rate. Spare part sales contribute 13% of revenue now, more than equipment sales of 9%, with higher margin of around 20% (vs. equipment's of <15%). With national coal production is trending down, we still see risk that contribution from spare part sales may decline further. FINANCIAL SUMMARY YE Dec (Rp Bn) 2014A 2015A 2016F 2017F 2018F EBITDA 12,784 12,314 9,655 9,770 10,261 Net Profit 4,840 3,853 4,554 4,635 4,980 Fully-diluted EPS (Rp) 1,298 1,033 1,221 1,242 1,335 Fully-diluted EPS growth (%) 0.9 (20.4) P/E Ratio (x) EV/EBITDA (x) P/B Ratio (x) Dividend Yield (%) ROAE (%) EARNINGS REVISIONS FYE Dec (IDR bn) New Old Change New Old Change New Old Change Revenue 45,923 48,258-5% 46,149 46,950-2% 46,616 46,819 0% Cost of Revenue 37,504 39,099-4% 37,773 38,177-1% 37,893 38,307-1% Gross profit 8,419 9,159-8% 8,376 8,773-5% 8,723 8,511 2% Operating Expenses 2,664 2,751-3% 2,677 2,676 0% 2,704 2,715 0% Operating Profit 5,755 6,409-10% 5,699 6,097-7% 6,020 5,796 4% Earnings before tax 6,071 6,640-9% 6,179 6,479-5% 6,640 6,417 3% Net Profit 4,554 5, % 4,635 5, % 4,980 5,281-6% Gross margin 18.3% 19.0% 18.2% 18.7% 18.7% 18.2% Operating margin 12.5% 13.3% 12.4% 13.0% 12.9% 12.4% Net margin 9.9% 11.4% 10.0% 11.4% 10.7% 11.3% Heavy Equipment (units) 2,000 2,000-2,000 2,000-2,060 2,060 - Coal produced (m tons) Overburden (m bcm) Source: Mandiri Sekuritas estimates Ariyanto Kurniawan ( ) ariyanto.kurniawan@mandirisek.co.id MARKET Market Recap May 16 th 2016; JCI: 4, (-0.63%); USD/IDR: 13,310; Total Value: Rp4.86tn Indo market extended its loss for 2 nd day in a row, weighed down by Friday s decline on Wall Street and soft Chinese economic data released over the weekend. China s investment, factory output and retail sales all grew more slowly than expected in April, adding to doubts about whether the world s second-largest economy is stabilizing. Commodities were hurt as the USD reached a two-week high against a basket of currencies on Friday s upbeat April US retail sales data, which jumped 1.3% for the largest gain since March The JCI fell 0.63% to close 4731 level in low volume of US$295mn (excluding US$9.8mn BBCA; US$8,4mn ASII; US$3.1mn SAME; US$2.9mn MYRX; and US$2.3mn SUGI crossing). Page 6 of 12

7 All poultry players (CPIN -4.4%, JPFA -2.2% and MAIN -0.7%) registered a loss after the government announced its plan to regulate the industry over the weekend in a bid to maintain chicken sales price at an affordable level. The banking sector lost 0.9% after BMRI (close -3%) reporting a worse-than-expected 1Q16 results. Furthermore, all other heavy weight and favorite names were hit by profit taking. Regular market transaction was recorded at Rp3.9tn (US$293mn) and foreign posted a net sell of Rp589.2bn (US$44.27mn). Foreign participants at 45% came up slightly better buyer. Losers beat gainers by 3 to 2. TOP TURNOVER: TLKM ASII BMRI BBCA BBRI WSKT BBNI ANTM INTP SMGR UNVR PGAS KLBF AKRA (45%) ADVANCING SECTOR: telco+1%; construction+0.8%; mining+0.1% DECLINING SECTOR: auto-2%; consumer-1.3%; financial-0.9%; plantation & cement-0.3%; property-0.2% The yield of 10-year government went down to 7.733% (+0.285%) and Rupiah appreciated to Rp13,310 (+0.113%). Sales Team FROM THE PRESS Government to cut spending by Rp50tn President Jokowi has instructed government expenditure cut amounting Rp50tn spread in 87 public agencies. The cut will take place in operational spending (Rp20.9tn) and other spending (Rp29.1tn). The biggest cut takes place in Ministry of Public Works budget, by Rp8.5tn out of 2016 allocation of Rp104.8tn. The Ministry of Transportation comes in the fourth place with a reduction of Rp3.8tn or 7.7% of 2016 budget (Kontan) RI-Korean bank starts operation, CCB (China Construction Banks) delays acquisition Shinhan Bank launched its first-ever operation in Indonesia on Monday, May 16, 2016 following OJK s approval in Bank Metro Express acquisition in November With the acquisition, Shinhan Bank controls 98.12% of Bank Metro Express, while the remaining 1.88% is owned by Metropanca Gemilang. Shinhan Bank injected Rp800bn into Metro Express and changed the bank s name to Bank Shinhan Indonesia. Meanwhile, acquisition of Bank Windu by CCB through a rights issue scheme has been delayed as CCB has yet to gain approval from China Banking Regulatory Commissions. (Jakarta Post) Tax collection growth continues contraction in Apr16 Tax revenue collected by the Directorate General of Tax has amounted to Rp272tn (-8.1% YoY) as of Apr16. In details, the figure consists of Rp171.3tn (-5.7% YoY) non-oil & gas income tax, Rp98.1tn (-12.5% YoY) value added tax and Rp2.5tn (25.0% YoY) other taxes (Bisnis Indonesia) Bumi Serpong Damai (BSDE) to acquire 800ha of land BSDE aims to acquire 800ha of land this year through proceeds from bonds issuance worth Rp3tn. According to Lie Jani Harjanto, BSDE Director, the company plans to obtain additional land banks in Serpong, Bekasi, and Cibubur. As at 31 March 2016, BSDE has land for development totaled 3,954.88ha with bulk of the land located in BSD City (2,307ha). (Bisnis Indonesia) Harum Energy (HRUM) to revise down coal production volume to 3mn tons HRUM is projected to revise down coal production volume to 3mn tons in FY16 (from FY15 realization of 3.6mn tons), in-line with still depressed coal price outlook. Despite reduction in production volume, the company is expected to improve its margins and profitability, according to the management. HRUM will aim to reduce production cost through 1) keeping stripping ratio max 6.0x 2) reduction of fuel-related cost. (Investor Daily) Page 7 of 12

8 Property companies still have confidence in luxury segment property sales Intiland (DILD) plans to launch 2 apartment towers (475 available units) in Kebon Melati, Central Jakarta with ASP/sqm amounted to Rp40-45mn/sqm in 2H16, implying Rp310bn of marketing sales. DILD also plans to launch another 2 apartment towers in Dharmo Harapan, Surabaya with marketing sales target amounted to Rp227bn. Meanwhile, Bumi Serpong Damai (BSDE) aims to book marketing sales of at least 50% of the total units available (372 units) with tag price ranges between Rp3.5bn and Rp8bn from luxurious apartment project in Rasuna Said, South Jakarta named The Element by the end of (Bisnis Indonesia) Sarana Multi Infrastruktur (SMI) provides Rp8.7tn loan to three SOEs for land acquisition SMI plans to provide Rp8.7tn loan to three SOEs Waskita Karya (WSKT - Rp3.5tn), Jasa Marga (JSMR - Rp3.4tn), and Hutama Karya (Rp1.8tn) which would be used to fund land acquisitions. SMI plans to charge 1% interest above deposit insurance agency s (LPS) rate (currently: 7%) for the loans. Note that the government is recently stated that it is willing to replace interest charges for the land acquisition equal to BI Rate (6.75%). (Bisnis Indonesia) Comment: We see positively SMI decision to provide cheaper loan facility for land acquisition. This should enable the SOEs to minimize the impact from paying advance payment for land acquisition bailout fund to the government. Tiphone Mobile Indonesia (TELE) seeks external funding TELE is currently seeking external funding amounted to Rp1tn either from bonds issuance or bank loan. The proceeds will be used to refinance company s existing loan. (Bisnis Indonesia) Page 8 of 12

9 Indices Currencies and ADRs Major Commodities Last Chg (%) YTD Chg (%) Currency Last Chg (%) YTD Chg (%) Last Chg (%) YTD Chg (%) JCI 4, Rp/US$ 13, Oil spot (US$/bl) Dow Jones 17, US$/EUR Nickel spot (US$/mt) 8, Nikkei 16, YEN/US$ Gold spot (US$/oz) 1, SET 1, SGD/US$ Tin 3-month (US$/mt) 16, Hang Seng 19, CPO futures (Ringgit/ton) 2, STI 2, ADR Stocks Soybean oil (US$/100gallons) S&P 500 2, TLK in Rp 18, Rubber forward (US /kg) Coal (US$/ton) Ishares indo Baltic Dry Index Property Valuation JCI Code Rec. Market Cap (Rp bn) Share price Target Price Discount to NAV RNAV per share (Rp) Premium (discount) to replacement cost Replacement cost per share (Rp) PE (x) ROE 16F 17F 16F 17F BSDE Buy 31,508 1,715 2,200-62% 4,475 11% 1, % 12.0% PWON Buy 23, % % % 24.8% SMRA Neutral 19,834 1,375 1,600-65% 3, % % 14.1% CTRA Buy 18,882 1,245 1,600-53% 2,628 59% % 14.0% JRPT Buy 11, ,300-75% 3,242 15% % 20.4% ASRI Neutral 6, % 1,161 58% % 6.3% LPCK Buy 4,541 6,525 13,500-74% 24,683 39% 4, % 16.8% MDLN Buy 4, % 1,165 36% % 6.6% CTRS Buy 3,978 2,010 3,600-75% 8,077-27% 2, % 14.7% Simple Average -66% % 14.4% Industrial Estate Valuation JCI Code Rec. Market Cap (Rp bn) Share price Target Price Discount to NAV RNAV per share (Rp) Premium (discount) to replacement cost Replacement cost per share (Rp) PE (x) ROE 16F 17F 16F 17F DMAS Buy 10, % % % 11.5% BEST Neutral 2, % % % 9.8% SSIA Neutral 2, % 1,639-16% % 12.7% LPCK Buy 4,541 6,525 13,500-74% 24,683 39% 4, % 16.8% MDLN Buy 4, % 1,165 36% % 6.6% Simple Average -67% % 11.5% Page 9 of 12

10 Equity Valuation Price Price % of Mkt Cap Net Profit EPS Growth PER (x) EV/EBITDA (x) P/BV (x) Div.Yield Code Rating (Rp) Target PT (Rp Bn) Mandiri Universe 4,732 5,000 3,596, , , % 12.6% % 2.5% Banking 743,116 66,526 76, % 15.3% N.A. N.A % 2.7% BBCA Neutral 13,025 13,000 (0.2) 321,131 18,174 21, % 17.7% N.A. N.A % 1.7% BBNI Buy 4,410 6, ,241 11,032 12, % 13.8% N.A. N.A % 4.0% BBRI Neutral 9,950 12, ,458 25,478 29, % 15.8% N.A. N.A % 3.6% BBTN Buy 1,765 2, ,678 2,379 2, % 19.5% N.A. N.A % 2.5% BDMN Sell 2,830 3, ,124 3,375 3, % 9.5% N.A. N.A % 2.6% BJBR Buy 945 1, ,163 1,378 1, % 7.8% N.A. N.A % 7.5% BJTM Neutral , , % 10.1% N.A. N.A % 9.7% BTPN Sell 2,650 2,200 (17.0) 15,477 1,648 1, % 10.4% N.A. N.A % 0.0% PNBN Buy 705 1, ,982 2,067 2, % 12.7% N.A. N.A % 0.0% Building Materials 122,863 9,279 9, % 5.6% % 4.0% SMCB Sell 1, (11.3) 7, N/M 10.1% % 1.6% INTP Neutral 16,600 20, ,108 4,368 4, % 5.3% % 5.7% SMGR Neutral 9,100 11, ,977 4,501 4, % 5.4% % 2.5% Constructions 82,957 4,006 4, % 21.8% % 0.2% ADHI Neutral 2,500 2, , % 32.0% % 1.2% PTPP Buy 3,570 4, , , % 13.5% % -1.1% WIKA Buy 2,380 3, , % 23.9% % -1.5% WSKT Buy 2,580 2, ,523 1,516 1, % 15.5% % 1.0% WTON Buy 885 1, , % 54.2% % 1.2% Toll road 36,890 1,620 1, % 7.4% % 1.8% JSMR U/R 5,425 U/R U/R 36,890 1,620 1, % 7.4% % 1.8% Rice Mill 4, % 10.0% % 0.8% AISA U/R 1,370 U/R U/R 4, % 10.0% % 0.8% Consumer 1,114,747 32,423 36, % 12.4% % 2.1% ICBP Neutral 15,475 14,000 (9.5) 90,234 3,298 3, % 10.7% % 1.8% INDF Neutral 7,025 6,000 (14.6) 61,686 4,160 4, % 13.5% % 3.4% MYOR Sell 39,100 24,500 (37.3) 29, % 19.8% % 0.5% ULTJ U/R 3,960 U/R U/R 11, % 12.4% % 0.0% UNVR Neutral 43,050 41,000 (4.8) 328,472 6,051 7, % 18.4% % 1.8% GGRM Buy 71,200 56,000 (21.3) 136,995 5,665 6, % 11.7% % 1.5% HMSP Neutral 97, , ,150 11,712 12, % 9.3% % 2.5% WIIM U/R 380 U/R U/R n/a 0.0% 0.0% n/a n/a n/a n/a n/a n/a 0.0% 0.0% Healthcare 77,505 3,281 3, % 11.7% % 1.8% KLBF Neutral 1,300 1, ,938 2,156 2, % 11.2% % 1.4% SIDO Neutral , % 12.9% % 3.2% TSPC Neutral 1,965 2, , % 12.1% % 2.9% Hospital 47, , % 25.8% % 0.8% MIKA Buy 2,550 3, , % 17.0% % 1.0% SILO Buy 8,750 11, , % 73.2% % 0.1% Retail 95,409 4,300 5, % 18.8% % 2.4% ACES Neutral (15.8) 14, % 14.4% % 1.4% ERAA Neutral (7.7) 1, % 49.7% % 4.2% LPPF Buy 19,150 21, ,861 2,154 2, % 15.1% % 2.7% MAPI Sell 4,030 2,700 (33.0) 6, % 56.1% % 0.5% MPPA Neutral 1,320 2, , % 24.2% % 1.5% RALS Neutral , % 8.3% % 3.9% TELE Buy 625 1, , % 18.6% % 4.6% Automotive 255,533 16,430 17, % 7.9% % 2.8% ASII Buy 6,200 7, ,998 16,001 17, % 7.8% % 2.9% IMAS U/R 1,640 U/R U/R 4, % 13.5% % 1.1% Heavy Equipment 50,437 4,694 4, % 2.8% % 2.8% HEXA* U/R 1,650 U/R U/R 1, % 33.3% n/a n/a 0.0% 0.0% Page 10 of 12

11 Price Price % of Mkt Cap Net Profit EPS Growth PER (x) EV/EBITDA (x) P/BV (x) Div.Yield Code Rating (Rp) Target PT (Rp Bn) UNTR Sell 13,150 11,000 (16.3) 49,051 4,554 4, % 1.8% % 2.8% Plantation 37,357 2,844 3, % 20.7% % 2.7% AALI Buy 14,650 18, ,070 1,807 2, % 15.5% % 2.7% LSIP Buy 1,560 1, , % 28.3% % 2.8% SGRO U/R 1,930 U/R U/R 3, % 31.3% % 1.8% Property 129,312 12,010 12, % 0.7% % 0.8% APLN U/R 236 U/R U/R 4, % 10.8% % 3.5% ASRI Neutral (3.3) 6,466 1, % -59.0% % 2.0% BSDE Buy 1,715 2, ,508 2,594 2, % 3.0% % 1.1% CTRA Buy 1,245 1, ,882 1,474 1, % -3.1% % -1.6% CTRS Buy 2,010 3, , % 8.5% % 2.9% JRPT Buy 800 1, , , % 11.6% % 1.0% LPCK Buy 6,525 13, , % -5.6% % 0.0% MDLN Buy , % -2.2% % 0.0% PWON Buy ,502 1,965 2, % 24.9% % 1.9% SMRA Neutral 1,375 1, ,834 1,137 1, % 4.5% % 0.0% Industrial 15,712 1,396 1, % 19.9% % 2.7% DMAS Buy , % 1.6% % 3.5% BEST Neutral , % 43.2% % 0.5% SSIA Neutral , % 62.3% % 1.8% Poultry 62,227 3,045 3, % 26.5% % 1.4% CPIN U/R 3,010 U/R U/R 49,358 2,557 3, % 22.5% % 1.6% JPFA U/R 910 U/R U/R 9, N/M 51.7% % 1.0% MAIN U/R 1,415 U/R U/R 3, N/M 39.8% % 0.9% Coal 48,164 4,732 5, % 8.8% % 5.7% ADRO* Neutral , % 13.4% % 4.2% HRUM* Neutral , % N/M % 0.9% ITMG* Neutral 8,250 7,600 (7.9) 9, % 8.0% % 9.6% PTBA Buy 6,375 8, ,691 1,714 1, % 5.3% % 6.1% Oil & Gas 56,968 7,517 7, % 5.9% % 6.6% PGAS* Sell 2,350 3, , % 10.5% % 6.6% Shipping 2, % 6.3% % 5.0% SOCI* Buy , % 11.0% % 5.0% Metal 22, , % 17.4% % 2.5% ANTM Neutral (26.5) 6, % N/M % 0.1% INCO* U/R 1,580 U/R U/R 15, % 0.0% % 3.5% Telco 430,631 21,436 24, % 14.2% % 3.4% EXCL Buy 3,400 4, ,010 1,153 1,754 N/M 52.1% % 1.2% ISAT U/R 6,700 U/R U/R 36,407 1,199 1, % 52.9% % 2.2% TLKM Buy 3,720 3, ,214 19,083 20, % 9.5% % 3.7% Tower 73,272 3,540 4, % 26.3% % 0.0% TBIG Neutral 6,725 6,000 (10.8) 32,257 1,120 1, % 39.1% % 0.0% TOWR Buy 4,020 5, ,016 2,420 2, % 20.4% % 0.0% Media 81,683 3,353 3, % 15.9% % 2.3% SCMA Neutral 3,270 3,000 (8.3) 47,813 1,674 1, % 13.9% % 2.5% MNCN Neutral 2,300 2,200 (4.3) 33,870 1,680 1, % 17.9% % 2.0% Textile 4, % 16.8% % 0.0% SRIL* Buy , % 22.0% % 0.0% Note: - *) net profit in USD mn - U/R means Under Review - n/a means Not Available - N/M means Not Meaningful - N.A means Not Applicable Page 11 of 12

12 Mandiri Sekuritas A subsidiary of PT Bank Mandiri (Persero) Tbk Plaza Mandiri 28 th Floor, Jl. Jend. Gatot Subroto Kav , Jakarta 12190, Indonesia General: , Fax : (Equity Sales) RESEARCH John Rachmat Head of Equity Research, Strategy john.rachmat@mandirisek.co.id Tjandra Lienandjaja Banking tjandra.lienandjaja@mandirisek.co.id Liliana S Bambang Property, Building Material liliana.bambang@mandirisek.co.id Ariyanto Kurniawan Telecom, Coal, Metal, Automotive ariyanto.kurniawan@mandirisek.co.id Rizky Hidayat Property, Industrial, Media rizky.hidayat@mandirisek.co.id Bob Setiadi Construction, Toll Road bob.setiadi@mandirisek.co.id Francis Lim Health Care, Hospital francis.lim@mandirisek.co.id Yudha Gautama Mining, Plantation yudha.gautama@mandirisek.co.id Kevin Halim Media kevin.halim@mandirisek.co.id Leo Putera Rinaldy Economist leo.rinaldy@mandirisek.co.id Wisnu Trihatmojo Research Assistant wisnu.trihatmojo@mandirisek.co.id Priscilla Thany Research Assistant priscilla.thany@mandirisek.co.id Ferdy Wan Research Assistant ferdy.wan@mandirisek.co.id Giovanni Dustin Research Assistant giovanni.dustin@mandirisek.co.id INSTITUTIONAL SALES Lokman Lie Co-Head Institutional Equities lokman.lie@mandirisek.co.id Silva Halim Co-Head Institutional Equities silva.halim@mandirisek.co.id Aditya Sastrawinata Institutional Sales aditya.sastrawinata@mandirisek.co.id Andrew Handaya Institutional Sales andrew.handaya@mandirisek.co.id Cindy Amelia P. Kalangie Institutional Sales cindy.amelia@mandirisek.co.id Feliciana Ramonda Institutional Sales feliciana.ramonda@mandirisek.co.id Karmia Tandjung-Nasution Institutional Sales karmia.tandjung@mandirisek.co.id Mirna Santikara Salim Institutional Sales santikara.salim@mandirisek.co.id Oos Rosadi Institutional Sales oos.rosadi@mandirisek.co.id Vera Ongyono Institutional Sales vera.ongyono@mandirisek.co.id Zahra Aldila Niode Institutional Sales zahra.niode@mandirisek.co.id Kusnadi Widjaja Equity Dealing kusnadi.widjaja@mandirisek.co.id Edwin Pradana Setiadi Equity Dealing edwin.setiadi@mandirisek.co.id Jane Theodoven Sukardi Equity Dealing jane.sukardi@mandirisek.co.id Michael Taarea Equity Dealing michael.taarea@mandirisek.co.id RETAIL SALES Andreas M. Gunawidjaja Head Retail Equities andreas@mandirisek.co.id Boy Triyono Plaza Mandiri boy.triyono@mandirisek.co.id A. A. Damargumilang Pondok Indah Office Tower damar.gumilang@mandirisek.co.id Herianto Pondok Indah Prioritas herianto@mandirisek.co.id Yohanes Triyanto Kelapa Gading yohanes.triyanto@mandirisek.co.id Hendra Riady Mangga Dua hendra.riady@mandirisek.co.id Indra Mas'ari Bandung indra.mas ari@mandirisek.co.id Yogiswara P. Yogyakarta yogiswara.perdana@mandirisek.co.id Widodo Solo widodo@mandirisek.co.id Linawati Surabaya Linawati@mandirisek.co.id Bambang Suwanto Malang bambang.suwanto@mandirisek.co.id Ruwie Medan ruwie@mandirisek.co.id Aidil Idham Palembang aidil.idham@mandirisek.co.id Yuri Ariadi Pontianak yuri.ariadi@mandirisek.co.id INVESTMENT RATINGS: Indicators of expected total return (price appreciation plus dividend yield) within the 12-month period from the date of the last published report, are: Buy (10% or higher), Neutral (-10% to10%) and Sell (-10% or lower). DISCLAIMER: This report is issued by PT. Mandiri Sekuritas, a member of the Indonesia Stock Exchanges (IDX) and Mandiri Sekuritas is registered and supervised by the Financial Services Authority (OJK). Although the contents of this document may represent the opinion of PT. Mandiri Sekuritas, deriving its judgement from materials and sources believed to be reliable, PT. Mandiri Sekuritas or any other company in the Mandiri Group cannot guarantee its accuracy and completeness. PT. Mandiri Sekuritas or any other company in the Mandiri Group may be involved in transactions contrary to any opinion herein to make markets, or have positions in the securities recommended herein. PT. Mandiri Sekuritas or any other company in the Mandiri Group may seek or will seek investment banking or other business relationships with the companies in this report. For further information please contact our number or fax ANALYSTS CERTIFICATION: Each contributor to this report hereby certifies that all the views expressed accurately reflect his or her views about the companies, securities and all pertinent variables. It is also certified that the views and recommendations contained in this report are not and will not be influenced by any part or all of his or her compensation.