Equity SNAPSHOT Tuesday, April 10, 2018

Transcription

1 Equity SNAPSHOT Tuesday, April 10, 2018 FROM EQUITY RESEARCH Alam Sutra Realty: Lifted by land sales (ASRI IJ. IDR 390. HOLD. IDR 390) ASRI recorded marketing sales of IDR1.4tn in 1Q18, up threefold compared to 1Q17 s figure of IDR370bn, thanks to marketing sales recognition from land sales to CFLD of IDR1.2tn. Excluding the oneoff sales, we only expect ASRI to record marketing sales of IDR1.4tn in 1H18, down by 2.3%yoy. Maintain HOLD. To see the full version of this report, please click here Cement: Buoyed by the infrastructure boom (Underweight) Domestic cement sales reached 5.2mn tons in March 2018, +3.5%yoy. While uncertainty regarding the regional elections has hampered the sales of bagged cement (-7.4%yoy), the acceleration of infrastructure projects helped propel bulk cement sales by 39.1%yoy. In the sector, we note that INTP and SMCB managed to improve their market share in March 2018 by 0.9% and 0.7%. To see the full version of this report, please click here Ciputra Development: On a sound footing (CTRA IJ. IDR 1,195. BUY. IDR 1,350) CTRA recorded marketing sales of IDR1.6tn in 1Q18, +31.4%yoy, reaching 20.8% of the management s full year target (IDR7.7tn) and 21.0% of our forecast (IDR7.7tn). With further launches in the pipeline, we expect CTRA to achieve our marketing sales forecast. Maintain BUY. To see the full version of this report, please click here Erajaya Swasembada: Pursuing a volume-driven strategy (ERAA IJ. IDR 1,230. BUY. IDR 1,500) Post the FY17 results, we significantly revise up our FY18-19F revenues estimates as the company pursues a volume-driven strategy. We expect the company to maintain its gross margins with a solid top line. We also increase our FY18-19F pretax and net profit estimates and expect significant growth at the bottom line going forward. To see the full version of this report, please click here Mitra Adiperkasa: Another solid year (MAPI IJ. IDR 7,900. BUY. IDR 9,300) Post the FY17 results, we still expect the specialty stores, such as the Inditex brands and Active wear, as well as the F&B business to be MAPI s main growth engines in FY18-19F. We expect solid revenues supported by the management s brand rationalization strategy which will lead to better EBITDA margins. To see the full version of this report, please click here Semen Indonesia (Persero): Upgrade on higher ASP (SMGR IJ. IDR 10,325. HOLD. IDR 9,400) We upgrade our recommendation on SMGR to HOLD with a higher target price of IDR9,200 as we increase our ASP assumption by 1.6% in 2018 and 2019 to take into account the company s decision to increase its domestic ASP in March 2018 by 3.5% compared to its ASP in December We expect the company to maintain its selling prices at the current level. To see the full version of this report, please click here KEY INDEX Close Chg Ytd Vol (%) (%) (US$ m) Asean - 5 Indonesia 6, (1.7) 347 Thailand 1, (0.1) 1,792 Philippines 7,946 (1.0) (7.2) 107 Malaysia 1, Singapore 3, Regional China 3, (5.1) 44,217 Hong Kong 30, ,724 Japan 21, (4.8) 10,921 Korea 2, (0.9) 6,842 Taiwan 10, ,480 India 33, (0.8) 692 NASDAQ 6, ,776 Dow Jones 23, (3.0) 10,690 CURRENCY AND INTEREST RATE Rate w-w m-m ytd (%) (%) (%) Rupiah Rp/1US$ 13,761 (0.1) 0.3 (1.5) SBI rate % y Gov Indo bond (0.2) 0.3 Unit HARD COMMODITY Price d-d m-m ytd (%) (%) (%) Coal US$/ton (5.2) (6.5) Gold US$/toz 1, Nickel US$/mt.ton 13, (3.1) 5.4 Tin US$/mt.ton 21, (1.2) 5.6 Unit SOFT COMMODITY Price d-d m-m ytd (%) (%) (%) Cocoa US$/mt.ton 2,462 (1.7) Corn US$/mt.ton (1.9) 10.7 Oil (WTI) US$/barrel 63 (0.2) Oil (Brent) US$/barrel Palm oil MYR/mt.ton 2, (0.1) 3.2 Rubber USd/kg (6.4) (6.9) Pulp US$/tonne 1,097 N/A Coffee US$/60kgbag (10.7) Sugar US$/MT 348 (0.3) (2.7) (11.9) Wheat US$/ton Soy Oil US$/lb 32 (0.0) 0.3 (4.7) Soy Bean US$/by 1, Source: Bloomberg Danareksa Sekuritas Equity SNAPSHOT

2 Equity SNAPSHOT Tuesday, April 10, 2018 MARKET NEWS Macroeconomic Foreign reserve declined Corporate Malaysia extends suspension on palm oil export duty to April 30 Danareksa Sekuritas Equity SNAPSHOT

3 Equity Research Company Update Tuesday,10 April 2018 HOLD Maintain Last price (IDR) 390 Target Price (IDR) 390 Upside/Downside 0.0% Previous Target Price (IDR) 400 Stock Statistics Sector Bloomberg Ticker Property ASRI IJ No of Shrs (mn) 19,649 Mkt. Cap (IDRbn/USDmn) 7,663/557 Avg. daily T/O (IDRbn/USDmn) 11.4/0.8 Major shareholders (%) Tangerang Fajar Industrial Estate 25.2 Manunggal Prime Development 18.7 Estimated free float 56.1 EPS Consensus (IDR) 2018F 2019F 2020F Danareksa Consensus Danareksa/Cons ASRI relative to JCI Index Alam Sutra Realty(ASRI IJ) Lifted by land sales ASRI recorded marketing sales of IDR1.4tn in 1Q18, up threefold compared to 1Q17 s figure of IDR370bn, thanks to marketing sales recognition from land sales to CFLD of IDR1.2tn. Should we exclude the bulk sales, then ASRI s marketing sales in 1Q18 would be down by 31.1%yoy. While ASRI plans to conduct two product launches in April 2018, we don t think that this will be sufficient to significantly boost marketing sales in 1H18. Excluding the one-off sales, we only expect ASRI to record marketing sales of IDR1.4tn in 1H18, down by 2.3%yoy. Maintain HOLD. Stellar marketing sales in 1Q18. ASRI recorded marketing sales of IDR1.4tn in 1Q18, more than three-fold achievement in 1Q17 of IDR370bn, accounts for 35.6% of management s marketing sales of IDR4tn and 40.0% of ours of IDR3.6tn. The stellar marketing sales achievement was mainly attributable to recognition of sales to CFLD amounted to IDR1.2tn (this year, ASRI expects the contribution from the land sales to CLFD is expected to IDR2tn). Should we exclude this bulk sales transaction, we note that the marketing sales achievement in 1Q18 was down by 31.1%yoy, mainly owned to no product launching conducted in 1Q18 vs. one product launching in 1Q17 (Victoria Extension in Alam Sutera with 50% take up rate and total proceed of IDR50bn). Two product launchings in April In April 2018, ASRI plans to conduct two product launchings, (i) low rise apartment named the Llyod in Alam Sutera township with price ticket of IDR bn/unit (implies for price of IDR16.4mn/sqm). In the first phase, ASRI offers 7 apartment towers with 140 units available for sale. While the company has not disclosed the final launching s result, the reservation has reached 150 units. We estimate this to result on additional marketing sales of IDR260bn, (ii) landed residential in Pasar Kemis area named Flavio that will be launched in 22 April 2018 with unit available for sale of unit in the first phase and price ticket to range from IDR bn/unit, with building cost of IDR5.8mn/sqm, the implied land price reached IDR5.0mn/sqm, up by 11.9% compared to implied land price during the Chiara launching of IDR4.4mn/sqm. Assuming 70 units sold during the launching, we estimate this to result on additional marketing sales of IDR130bn. Source : Bloomberg Reiterate our HOLD call. We reiterate our HOLD call on ASRI with slightly lower target price of IDR390 as we adjust our balance sheet items (cash and advance from customers) to take into account the 2017 number. While ASRI plans to conduct two products launching in April 2018, we believe that this will not sufficient to support the marketing sales in 1H18. Excluding the one-off sales, we only expect ASRI to record marketing sales of IDR1.4tn, down by 2.3%yoy. Maintain our HOLD call. Key Financials Year to 31 Dec 2016A 2017A 2018F 2019F 2020F x Antonia Febe Hartono, CFA Revenue (IDRbn) 2,716 3,917 4,310 4,138 4,132 EBITDA (IDRbn) 1,177 2,070 2,265 2,215 2,176 (62-21) ext.3504 EBITDA Growth (%) (31.0) (2.2) (1.7) antonia.hartono@danareksa.com Net profit (IDRbn) 509 1,380 1,754 1,583 1,581 EPS (IDR) x Natalia Sutanto EPS growth (%) (14.7) (9.8) (0.1) BVPS (IDR) (62-21) ext.3508 DPS (IDR) 0.0 (1.5) (10.5) (13.4) (12.1) natalia.sutanto@danareksa.com PER (x) PBV (x) Dividend yield (%) 0.0 (0.4) (2.8) (3.5) (3.2) EV/EBITDA (x) Source : ASRI, Danareksa Estimates See important disclosure at the back of this report 1

4 Exhibit 1. Revenues and Growth Exhibit 2. Net Profits and Growth Exhibit 3. Margins Exhibit 4. Gearing Level Exhibit 5. ASRI s historical discount to NAV 55.0% -2SD 60.0% -1SD 65.0% 70.0% Mean +1SD 75.0% 80.0% +2SD Jun 2016Sep 2016Dec 2016Mar 2017Jun 2017Sep 2017Dec 2017Mar 2018 Source: Bloomberg, Danareksa Sekuritas estimates Exhibit 6. Property sector s historical discount to NAV 45.0% 50.0% 55.0% 60.0% 65.0% 70.0% Source: Bloomberg, Danareksa Sekuritas estimates -2SD -1SD Mean +1SD +2SD 75.0% Jun 2016Sep 2016Dec 2016Mar 2017Jun 2017Sep 2017Dec 2017Mar 2018 Exhibit 7. Forecast changes Previous New Changes in IDR bn F 2019F 2018F 2019F 2018F 2019F Marketing sales 2,213 3,627 4,007 3,559 3, % -7.3% Revenue 3,917 4,011 4,268 4,310 4, % -3.1% Gross profit 2,376 2,240 2,442 2,609 2, % 5.9% Operating Profit 1,986 1,820 2,011 2,183 2, % 6.0% Net profit 1,380 1,435 1,673 1,754 1, % -5.3% See important disclosure at the back of this report 2

5 See important disclosure at the back of this report 3

6 Exhibit 8. Income Statement Year to 31 Dec (IDRbn) 2016A 2017A 2018F 2019F 2020F Revenue 2,716 3,917 4,310 4,138 4,132 COGS (1,251) (1,541) (1,702) (1,551) (1,548) Gross profit 1,465 2,376 2,609 2,587 2,584 EBITDA 1,177 2,070 2,265 2,215 2,176 Oper. profit 1,096 1,986 2,183 2,131 2,090 Interest income Interest expense (226) (314) (304) (318) (345) Forex Gain/(Loss) 157 (32) Income From Assoc. Co s Other Income (Expenses) (358) (107) (113) (129) (98) Pre-tax profit 723 1,575 1,923 1,747 1,746 Income tax (213) (190) (161) (158) (159) Minority interest (1) (5) (7) (6) (6) Net profit 509 1,380 1,754 1,583 1,581 Core Net Profit 351 1,411 1,633 1,583 1,581 Exhibit 9. Balance Sheet Year to 31 Dec (IDRbn) 2016A 2017A 2018F 2019F 2020F Cash & cash equivalent 1, ,259 1,983 2,113 Receivables Inventory 1, Other Curr. Asset Fixed assets - Net 1,149 1,225 1,300 1,346 1,390 Other non-curr.asset 15,955 17,185 18,115 19,160 20,443 Total asset 20,186 20,728 22,105 23,819 25,223 ST Debt Payables Other Curr. Liabilities 2,480 2,145 1,913 1,839 1,837 Long Term Debt 7,511 7,194 7,302 7,504 7,854 Other LT. Liabilities 2,053 1,818 1,870 1,847 1,846 Total Liabilities 12,998 12,156 11,985 12,379 12,439 Shareholder'sFunds 7,083 8,465 10,013 11,333 12,676 Minority interests Total Equity & Liabilities 20,186 20,728 22,105 23,819 25,223 See important disclosure at the back of this report 4

7 Exhibit 10. Cash Flow Year to 31 Dec (IDRbn) 2016A 2017A 2018F 2019F 2020F Net income 509 1,380 1,754 1,583 1,581 Depreciation and Amort Change in Working Capital (411) (23) 113 (39) 50 OtherOper. Cash Flow Operating Cash Flow 1,006 1,739 2,428 1,977 2,045 Capex (787) (1,436) (1,245) (1,291) (1,496) Others Inv. Cash Flow 53 (161) Investing Cash Flow (733) (1,598) (1,209) (1,228) (1,397) Net change in debt 466 (205) (167) New Capital Dividend payment 10 (36) (207) (263) (237) Other Fin. Cash Flow (307) (411) (304) (318) (345) Financing Cash Flow 278 (613) (678) (25) (518) Net Change in Cash 551 (471) Cash - begin of the year 638 1, ,259 1,983 Cash - end of the year 1, ,259 1,983 2,113 Exhibit 11. Key Ratios Year to 31 Dec 2016A 2017A 2018F 2019F 2020F Growth (%) Sales (2.4) (4.0) (0.1) EBITDA (31.0) (2.2) (1.7) Operating profit (32.6) (2.4) (1.9) Net profit (14.7) (9.8) (0.1) Profitability (%) Gross margin EBITDA margin Operating margin Net margin ROAA ROAE Leverage Net Gearing (x) Interest Coverage (x) Source : ASRI, Danareksa Estimates See important disclosure at the back of this report 5

8 Equity Research Cement Tuesday,10 April 2018 UNDERWEIGHT SMGR relative to JCI Index xxxx INTP relative to JCI Index xxxx Source : Bloomberg x Antonia Febe Hartono, CFA (62-21) ext.3504 antonia.hartono@danareksa.com Cement Report Title Domestic cement sales reached 5.2mn tons in March 2018, +3.5%yoy. While uncertainty regarding the regional elections has hampered the sales of bagged cement (-7.4%yoy), the acceleration of infrastructure projects helped propel bulk cement sales by 39.1%yoy. In the sector, we note that INTP and SMCB managed to improve their market share in March 2018 by 0.9% and 0.7%, respectively, by keeping selling prices relatively flat, whereas SMGR raised its selling prices (leading to 1.6% market share compression). March 2018 sales: supported by bulk cement sales. Domestic cement sales in March 2018 reached 5.2mn tons, +3.5%yoy. While the uncertainty regarding the regional elections has hampered the bag cement sales (-7.4%yoy), acceleration on the multiple infrastructure projects that approaching the completion has resulted on the 39.1%yoy bulk cement sales. Regionally, we note Sumatera and Kalimantan posted the highest sales volume growth of 8.8% and 7.0%, thanks to completion of multiple infrastructure projects to support the upcoming the Asean Games as well as trickling down impact from the higher commodity prices. Cumulative: beating our expectation. Cumulatively, the total domestic sales in 1Q18 reached 15.7mn tons, +6.6%yoy. This pace of sales growth beat our estimate of 4.0%. Nonetheless, we retain our sales volume target for the time being as we believe the high sales growth may not be sustainable towards the year-end considering: (i) several infrastructure projects are approaching completion, (ii) the fact that regional and presidential elections are in the pipeline. We expect the normalizing cement sales growth in March 2018 compared to January and February 2018 that reached 10.1% and 5.9% will be sustainable towards the year end. Mapping of the main players: INTP and SMCB to gain market share at the expense of SMGR. Among the listed cement players, both INTP and SMCB gained market share in March 2018 compared to March 2017 (+0.9% and 0.7%), while SMGR s market share dropped 1.6%. On the bag cement only, we believe decline in the market share of SMGR will be more severe, considering company s decision to increase its bagged cement prices in March 2018 (+ IDR1,000/sack). In April 2018, SMGR stated that it will maintain its March 2018 price to be relatively flat, to further cushion the market share reduction. Nonetheless, the company note that it will only reduce its price once its market share below its threshold level of (+- 2% from its 2017 s market share of 40%). Reiterating our UNDERWEIGHT call. We remain UNDERWEIGHT on the cement sector considering the lofty valuations for the cement players. The cement sector currently trades at 36.3x forward trailing P/E, near to +1.5SD of 38.8x. Company wise, we favor SMGR over other cement players, as we expect the company s strategy to increase prices that comes at the expense of the market share and in turn sales volume will positively impact SMGR s net profit. Thus, we expect SMGR to record highest net profit growth of 23.6% in 2018, outperforming its peers that grow by 14.6%. Target Price Market Cap. P/E (x) P/BV (x) ROE (%) Company Ticker Rec (Rp) (RpBn) 2018F 2019F 2018F 2019F 2019F Semen Indonesia SMGR IJ HOLD 9, , Indocement INTP IJ SELL 15, , Baturaja SMBR IJ SELL , See important disclosure at the back of this report

9 Exhibit 1. Overall cement sales Industry 000 tons Mar-17 Feb-18 Mar-18 yoy chg mom chg 3M17 3M18 yoy chg Java 2,816 2,654 2, % 10.7% 8,279 8, % Sumatra 1,063 1,059 1, % 9.2% 3,073 3, % Kalimantan % -2.7% 923 1, % Sulawesi % 6.8% 1,200 1, % Nusa Tenggara % 0.7% % Maluku & Papua % -12.2% % Total Outside Java 2,212 2,167 2, % 4.6% 6,476 6, % Total Indonesia 5,028 4,821 5, % 8.0% 14,755 15, % Total exports % 0.0% % Total domestic & export 5,194 4,995 5, % 7.7% 15,145 16, % Source: INTP Exhibit 2. Domestic market share (cummulative) 50% 41.4% 39.5% 40% Exhibit 3. Domestic market share (monthly) 50% 41.3% 39.7% 40% 30% 25.6% 26.4% 30% 25.8% 26.7% 20% 15.0% 15.0% 15.5% 16.3% 20% 14.6% 15.3% 15.9% 15.4% 10% 0% 2.4% 2.8% SMGR INTP SMCB SMBR Others 3M17 3M18 10% 0% 2.3% 2.9% SMGR INTP SMCB SMBR Others Mar-17 Feb-18 Mar-18 Source: INTP Source: INTP Exhibit 4. INTP s cement sales INTP Sales volume Market share 000 tons Mar-17 Feb-18 Mar-18 yoy chg mom chg 3M17 3M18 yoy chg 3M17 3M18 Mar-17 Feb-18 Mar-18 Java , % 16.3% 2,760 3, % 33.3% 34.7% 33.5% 34.5% 35.9% West Java % 17.2% 1,070 1, % 51.3% 51.1% 50.9% 52.7% 52.5% Central Java % 32.5% % 33.9% 34.4% 34.8% 33.8% 37.1% Jakarta % 14.2% % 39.9% 41.1% 40.3% 39.5% 42.6% Banten % 6.1% % 44.9% 44.4% 44.5% 44.0% 45.4% Sumatra % 29.5% % 11.2% 11.9% 11.7% 11.3% 13.3% Kalimantan % -29.8% % 23.4% 24.9% 20.9% 25.6% 18.5% Other area % -22.5% % 18.5% 18.1% 19.6% 19.5% 14.9% Total Outside Java % -6.9% 1,017 1, % 15.7% 16.0% 16.0% 16.5% 14.6% Total Indonesia 1,297 1,264 1, % 9.8% 3,777 4, % 25.6% 26.4% 25.8% 26.4% 26.7% Total exports N/A N/A % Total domestic & export 1,297 1,264 1, % 9.8% 3,788 4, % 25.0% 25.5% 25.0% 25.5% 25.8% Source: INTP See important disclosure at the back of this report 2

10 Exhibit 5. SMGR s cement sales SMGR Sales volume Market share 000 tons Mar-17 Feb-18 Mar-18 yoy chg mom chg 3M17 3M18 yoy chg 3M17 3M18 Mar-17 Feb-18 Mar-18 Java 1, , % 14.2% 3,139 3, % 37.9% 36.1% 38.4% 34.7% 35.4% East Java % 12.4% 1,519 1, % 67.9% 66.4% 69.9% 63.7% 67.7% Central Java % 21.7% % 42.9% 42.6% 42.8% 40.5% 40.8% Sulawesi % 19.8% % 67.8% 61.1% 70.2% 56.8% 63.7% South Sulawesi % 30.3% % 60.6% 61.3% 66.6% 57.8% 62.9% North Sulawesi % 21.7% % 56.1% 49.7% 65.3% 47.7% 53.1% Sumatera % 5.9% 1,268 1, % 41.3% 41.4% 40.4% 42.3% 40.7% West Sumatera % 13.8% % 97.3% 94.6% 94.8% 96.6% 94.5% North Sumatera % 6.4% % 35.8% 34.9% 34.4% 36.4% 34.1% Kalimantan % 3.5% % 44.4% 41.0% 41.5% 40.8% 43.4% Other area % 23.8% % 37.8% 34.6% 35.8% 31.9% 41.0% Total Outside Java , % 11.2% 2,976 3, % 46.0% 43.7% 45.1% 42.8% 45.3% Total Indonesia 2,078 1,835 2, % 12.7% 6,115 6, % 41.4% 39.5% 41.3% 38.3% 39.7% Total exports % 7.1% % 69.9% 70.5% 80.1% 59.7% 61.4% Total domestic & export 2,211 1,935 2, % 12.4% 6,388 6, % 42.2% 40.6% 42.6% 39.0% 40.4% Source: INTP Exhibit 6. SMBR s cement sales SMBR Sales volume Market share Market share 000 tons Mar-17 Feb-18 Mar-18 yoy chg mom chg 3M17 3M18 yoy chg 3M17 3M18 Mar-17 Feb-18 Mar-18 Sumatera % 10.3% % 11.4% 13.1% 11.1% 12.9% 13.0% South Sumatera % 10.9% % 51.3% 52.0% 50.8% 51.8% 50.7% Lampung % 10.7% % 23.8% 24.1% 21.9% 24.3% 24.0% Jambi % -22.0% % 6.1% 8.4% 6.1% 8.9% 7.0% Bengkulu % 7.1% % 3.7% 6.0% 3.7% 5.5% 6.6% Total Indonesia % 10.3% % 2.4% 2.8% 2.3% 2.8% 2.9% Source: INTP Exhibit 7. SMCB s cement sales SMCB + ANDALAS Sales volume Market share Market share 000 tons Mar-17 Feb-18 Mar-18 yoy chg mom chg 3M17 3M18 yoy chg 3M17 3M18 Mar-17 Feb-18 Mar-18 Java % 9.5% 1,304 1, % 15.7% 17.0% 15.4% 17.6% 17.3% East Java % 20.7% % 12.1% 13.8% 10.5% 13.4% 15.2% Central Java % 1.4% % 15.7% 17.3% 15.4% 19.5% 16.4% West Java % 8.4% % 12.7% 14.5% 13.2% 15.5% 14.3% Jakarta % 12.9% % 27.4% 25.3% 27.2% 25.1% 26.8% Sumatra % 15.9% % 25.9% 21.2% 24.6% 20.1% 21.2% North Sumatera % 55.7% % 38.3% 30.4% 36.3% 25.9% 35.5% Lampung % 6.8% % 32.1% 19.9% 31.7% 18.4% 17.5% Bangka % -5.4% % 25.7% 25.3% 26.3% 31.3% 20.9% Other area % -6.7% % 3.5% 4.0% 3.2% 4.2% 3.9% Total Outside Java % 11.8% % 14.1% 12.5% 13.5% 12.0% 12.7% Total Indonesia % 10.3% 2,218 2, % 15.0% 15.0% 14.6% 15.1% 15.3% Total exports % 0.0% % 29.5% 19.9% 40.3% 38.6% Total domestic & export % 9.5% 2,325 2, % 15.4% 15.5% 14.8% 15.9% 16.1% Source: INTP See important disclosure at the back of this report 3

11 Exhibit 8. Cement sector forward trailing P/E band (x ) sd sd Average: sd sd 0.0 Jan 11 Jan 12 Jan 13 Jan 14 Jan 15 Jan 16 Jan 17 Jan 18 Source: Bloomberg, Danareksa Sekuritas Exhibit 10. SMGR forward trailing P/E band (x ) Average: sd -2sd 2sd 1sd 7.0 Jan 11 Jan 12 Jan 13 Jan 14 Jan 15 Jan 16 Jan 17 Jan 18 Source: Bloomberg, Danareksa Sekuritas Exhibit 9. INTP forward trailing P/E band (x ) Average: -1sd -2sd 2sd 1sd Jan 11 Jan 12 Jan 13 Jan 14 Jan 15 Jan 16 Jan 17 Jan 18 Source: Bloomberg, Danareksa Sekuritas Exhibit 11. SMBR forward trailing P/E band (x ) sd sd Average: sd sd Jun 13 Dec 13 Jun 14 Dec 14 Jun 15 Dec 15 Jun 16 Dec 16 Jun 17 Dec 17 Source: Bloomberg, Danareksa Sekuritas See important disclosure at the back of this report 4

12 Equity Research Company Update Tuesday, 10 April 2018 BUY Maintain Last price (IDR) 1,195 Target Price (IDR) 1,350 Upside/Downside +13.0% Previous Target Price (IDR) 1,350 Stock Statistics Sector Bloomberg Ticker Property CTRA IJ No of Shrs (mn) 15,425 Mkt. Cap (IDRbn/USDmn) 18,433/1,340 Avg. daily T/O (IDRbn/USDmn) 18.2/1.3 Major shareholders (%) Founder 30.6 Credit Suisse AG, Singapore 7.9 Estimated free float 49.0 EPS Consensus (IDR) 2018F 2019F 2020F Danareksa Consensus Danareksa/Cons (12.9) (18.3) (11.2) CTRA relative to JCI Index Source : Bloomberg Ciputra Development(CTRA IJ) On a sound footing CTRA recorded marketing sales of IDR1.6tn in 1Q18, +31.4%yoy, reaching 20.8% of the management s full year target (IDR7.7tn) and 21.0% of our forecast (IDR7.7tn). The stellar marketing sales mainly owed to the launch of Citraland Losari Makassar in March 2018 (IDR200bn), shop houses in Citraland Cibubur in March 2018 (IDR61bn), and Vertu Apartment in February 2018 (IDR170bn). With further launches in the pipeline, we expect CTRA to achieve our marketing sales forecast. Maintain BUY. Stellar marketing sales in 1Q18. CTRA recorded marketing sales of IDR1.6tn in 1Q18, +31.4%yoy. This marketing sales accounts for 20.8% of management s marketing sales target (IDR7.7tn) and 21.0% of ours (IDR7.7tn). The stellar performance was mainly attributable to launching event in the Citraland Losari Makassar that conducted in March 2018 (IDR200bn), shophouses in Citraland Cibubur in March 2018 (IDR61bn), Vertu Apartment in February 2018 (IDR170bn). Projects launching under pipeline. To further support its marketing sales, CTRA plans to conduct five projects launching, including (i) landed residential in Citra Maja Raya with more than 1,000 units available for sale in 15 April The company stated that at the moment, the reservation units has reached more than 1,000 units. With price ticket to start from IDR130bn, we expect the launching to result on additional IDR150bn marketing sales, (ii) Newton 2 apartment. After being delayed from its initial launching plan in end 2017 following licensing issue, CTRA plans to launch the apartment in 2H18. Previously, CTRA has started to collect reservation units that reached 200 units (from 624 units available for sale). Assuming all reservation units converted to sales, we estimate the launching to result on additional IDR200bn marketing sales, (iii) new township in Sentul, (iv) apartment in Cawang, (v) new district in Citraraya Tangerang. Reiterate our BUY call on CTRA. We reiterate our BUY call on CTRA with unchanged target price of IDR1,350 (SOTP based valuation with WACC of 12.6%, Terminal Growth of 4.0%, and Target Discount to NAV of 63%). We believe upside for CTRA to remain, considering (i) CTRA will likely to achieve our and management s marketing sales target with encouraging marketing sales in 1Q18 as well as plenty of project launchings under pipeline, (ii) expectation on the encouraging financial performance in 2018 from the normalization of the slow revenue recognition that has hampered financial performance in 2017 as well as profitability margin improvement from the revenue recognition from North Citraland project Key Financials Year to 31 Dec 2016A 2017A 2018F 2019F 2020F Revenue (IDRbn) 6,739 6,443 7,363 7,678 8,805 x Antonia Febe Hartono, CFA EBITDA (IDRbn) 2,048 1,822 2,044 2,202 2,415 (62-21) ext.3504 EBITDA Growth (%) (20.5) (11.1) antonia.hartono@danareksa.com Net profit (IDRbn) 1, ,080 1,117 1,298 EPS (IDR) x Natalia Sutanto EPS growth (%) (38.3) (27.2) (62-21) ext.3508 BVPS (IDR) DPS (IDR) (7.9) (4.7) (4.2) (5.0) (5.2) natalia.sutanto@danareksa.com PER (x) PBV (x) Dividend yield (%) (0.7) (0.4) (0.3) (0.4) (0.4) EV/EBITDA (x) See important disclosure at the back of this report 1 Source : CTRA, Danareksa Estimates

13 Exhibit 1. Revenues and Growth Exhibit 2. Net Profits and Growth Exhibit 3. Margins Exhibit 4. Gearing Level Exhibit 5. CTRA s discount to NAV 40.0% 45.0% 50.0% 55.0% 60.0% 65.0% Source: Bloomberg, Danareksa Sekuritas estimates -2SD -1SD Mean +1SD 70.0% 75.0% +2SD Jun 2016 Dec 2016 Jun 2017 Dec 2017 Exhibit 6. Property sector s discount to NAV 45.0% 50.0% 55.0% 60.0% 65.0% 70.0% Source: Bloomberg, Danareksa Sekuritas estimates -2SD -1SD Mean +1SD +2SD 75.0% Jun 2016 Dec 2016 Jun 2017 Dec 2017 Exhibit 7. Forecast changes Previous New Changes in IDR bn Marketing sales 7,640 7,637 8,685 7,637 8, % 0.0% Revenue 6,443 7,952 8,377 7,363 7, % -8.3% Gross profit 3,019 3,798 4,111 3,519 3, % -9.0% Operating profit 1,559 2,210 2,445 1,864 2, % -17.9% Net profit 894 1,493 1,606 1,171 1, % -24.3% See important disclosure at the back of this report 2

14 Exhibit 8. Income Statement Year to 31 Dec (IDRbn) 2016A 2017A 2018F 2019F 2020F Revenue 6,739 6,443 7,363 7,678 8,805 COGS (3,450) (3,423) (3,946) (4,046) (4,680) Gross profit 3,290 3,019 3,416 3,633 4,125 EBITDA 2,048 1,822 2,044 2,202 2,415 Oper. profit 1,806 1,559 1,761 1,900 2,145 Interest income Interest expense (566) (551) (578) (574) (577) Forex Gain/(Loss) Income From Assoc. Co s (2) (19) (19) (19) (19) Other Income (Expenses) Pre-tax profit 1,501 1,343 1,565 1,632 1,876 Income tax (330) (324) (335) (360) (397) Minority interest (149) (124) (150) (155) (180) Net profit 1, ,080 1,117 1,298 Core Net Profit 1, ,080 1,117 1,298 Exhibit 9. Balance Sheet Year to 31 Dec (IDRbn) 2016A 2017A 2018F 2019F 2020F Cash & cash equivalent 3,468 3,229 2,470 2,496 2,819 Receivables 1,702 1,797 1,665 2,073 2,377 Inventory 7,945 9,480 10,861 12,104 13,222 Other Curr. Asset Fixed assets - Net 3,034 3,137 3,221 3,285 3,383 Other non-curr.asset 12,328 13,402 14,307 15,364 16,386 Total asset 29,072 31,706 33,256 36,176 39,140 ST Debt 1,686 1,170 2,462 2,432 4,331 Payables 1,372 1,343 1,256 1,643 1,900 Other Curr. Liabilities 4,253 5,270 5,087 5,949 6,817 Long Term Debt 4,976 6,388 5,127 5,095 3,192 Other LT. Liabilities 2,487 2,085 2,746 3,305 3,790 Total Liabilities 14,774 16,255 16,678 18,424 20,031 Shareholder'sFunds 12,824 13,378 14,381 15,405 16,607 Minority interests 1,474 2,073 2,197 2,347 2,502 Total Equity & Liabilities 29,072 31,706 33,256 36,176 39,140 See important disclosure at the back of this report 3

15 Exhibit 10. Cash Flow Year to 31 Dec (IDRbn) 2016A 2017A 2018F 2019F 2020F Net income 1, ,080 1,117 1,298 Depreciation and Amort Change in Working Capital (1,291) (1,067) (928) (122) (39) OtherOper. Cash Flow Operating Cash Flow ,676 1,909 Capex (701) (390) (385) (385) (385) Others Inv. Cash Flow (287) (844) (642) (716) (714) Investing Cash Flow (988) (1,234) (1,027) (1,101) (1,099) Net change in debt 1, (32) New Capital Dividend payment (123) (88) (77) (93) (96) Other Fin. Cash Flow (181) 472 (426) (614) (358) Financing Cash Flow 1, (474) (550) (487) Net Change in Cash 433 (239) (758) Cash - begin of the year 3,034 3,468 3,229 2,470 2,496 Cash - end of the year 3,468 3,229 2,470 2,496 2,819 Exhibit 11. Key Ratios Year to 31 Dec 2016A 2017A 2018F 2019F 2020F Growth (%) Sales (10.3) (4.4) EBITDA (20.5) (11.1) Operating profit (23.3) (13.7) Net profit (37.9) (12.4) Profitability (%) Gross margin EBITDA margin Operating margin Net margin ROAA ROAE Leverage Net Gearing (x) Interest Coverage (x) Source : CTRA, Danareksa Estimates See important disclosure at the back of this report 4

16 Equity Research Company Update Tuesday, 10 April 2018 BUY Maintain Last price (IDR) 1,230 Target Price (IDR) 1,500 Upside/Downside +24.2% Previous Target Price (IDR) 1,100 Stock Statistics Sector Bloomberg Ticker Retail ERAA IJ No of Shrs (mn) 2,900 Mkt. Cap (IDRbn/USDmn) 3,567/259 Avg. daily T/O (IDRbn/USDmn) 13.2/1.0 Major shareholders (%) PT Eralink International 59.9 Estimated free float 39.7 EPS Consensus (IDR) 2018F 2019F 2020F Danareksa n/a Consensus n/a Danareksa/Cons n/a ERAA relative to JCI Index Erajaya Swasembada(ERAA IJ) Pursuing a volume-driven strategy Post the FY17 results, we significantly revise up our FY18-19F revenues estimates as the company pursues a volume-driven strategy. We expect the company to maintain its gross margins with a solid top line. As ERAA plans to expand its network of retail stores, mainly in the country s second-tier cities, we tone down our FY18-19F operating margins estimate, yet still expect better operating profits ahead. Taking into account Amtrust, we also increase our FY18-19F pretax and net profit estimates and expect significant growth at the bottom line going forward. Volume driven strategy on low-end segment, revise up FY18-19F revenues. Post FY17, we significantly revise up our FY18-19F revenues by 13.1% and 13.6% and expecting a 15% yoy and 10% yoy revenue growth, respectively. We estimate a significant jump on volume growth going forward along with the management s strategy to increase its penetration towards the low-end segments smartphones, worth about IDR3million or below. The strategy, we think, will be different compared to 2017, which after the TKDN issued in FY17, ASP has significantly driven the overall revenue in FY17 (exhibit 5) due to various new products launching coming from various segments. Expanding retail stores in 2 nd -tier cities in Indonesia, tone down operating margin forecast in FY18-19F. On the gross level, we relatively maintained our FY18-19F gross margin at 8.9%, as we still expect cushion from volume and few new launching from mid-up brands, such as Samsung and Apple in the upcoming quarters. However, we tone down our operating margin forecast by FY18-19F to only 2.2%, respectively (exhibit 6) due to expected higher rental and salaries expense along with management s strategy to expand its retail stores towards the second tier cities in Indonesia going forward. Yet, we still revise up operating profits FY18-19F by 3.9% and 4.0%. Source : Bloomberg x x Adeline Solaiman (62-21) ext.3503 adeline.solaiman@danareksa.com Natalia Sutanto (62-21) ext.3508 natalia.sutanto@danareksa.com Taking account Amtrust, revise up FY18-19F net profits. On the bottom line, we revise up our FY18-19F net profits by 17.5% and 13.9%, mainly as we have taken into account share in net income of associated companies, coming from PT Amtrust Mobile Solutions Indonesia, in which ERAA owned 40% ownership interest in Amtrust as of FY17. We think the performance will potentially be better along with ERAA s expected growing volume in the upcoming quarters. Maintain BUY at a higher TP IDR1,500. We reiterate our BUY call on ERAA at a higher TP at IDR1,500, based on 11.1x P/E 2018F which is relatively about its mean level (exhibit 6), reflecting a +15.7% yoy EPSg in 2018F. The stock is currently 9.1x P/E 2018F. Risks to our call include 1) lower than expected GDP growth and 2) higher inflation. Key Financials Year to 31 Dec 2016A 2017A 2018F 2019F 2020F Revenue (IDRbn) 20,547 24,230 27,880 30,669 33,737 EBITDA (IDRbn) EBITDA Growth (%) Net profit (IDRbn) EPS (IDR) EPS growth (%) BVPS (IDR) 1, , , , ,610.7 DPS (IDR) PER (x) PBV (x) Dividend yield (%) EV/EBITDA (x) Source : ERAA, Danareksa Estimates See important disclosure at the back of this report 1

17 Exhibit 1. Revenues and Growth Exhibit 2. Net Profits and Growth Exhibit 3. Margins Exhibit 4. Gearing Level Exhibit 5. Volume and ASP, F See important disclosure at the back of this report 2

18 Exhibit 6. Forecast Changes (In IDRbn, unless Before After Changes otherwise stated) 2018F 2019F 2018F 2019F 2018F 2019F Revenues 24,644 26,989 27,880 30, % 13.6% Gross profits 2,159 2,370 2,484 2, % 15.3% Operating profits % 4.0% Pretax profits % 14.6% Net profits % 13.9% Gross margin, % 8.8% 8.8% 8.9% 8.9% Operating margin, % 2.4% 2.4% 2.2% 2.2% Pretax margin, % 1.9% 2.0% 2.0% 2.0% Net margin, % 1.4% 1.4% 1.4% 1.4% Exhibit 7. P/E Band Source: Company, Danareksa Sekuritas estimate See important disclosure at the back of this report 3

19 Exhibit 8. Income Statement Year to 31 Dec (IDRbn) 2016A 2017A 2018F 2019F 2020F Revenue 20,547 24,230 27,880 30,669 33,737 COGS (18,755) (22,071) (25,396) (27,937) (30,731) Gross profit 1,792 2,159 2,484 2,733 3,006 EBITDA Oper. profit Interest income Interest expense (154) (143) (143) (152) (154) Forex Gain/(Loss) Income From Assoc. Co s Other Income (Expenses) Pre-tax profit Income tax (122) (133) (153) (168) (185) Minority interest 2 (8) (9) (10) (11) Net profit Core Net Profit Exhibit 9. Balance Sheet Year to 31 Dec (IDRbn) 2016A 2017A 2018F 2019F 2020F Cash & cash equivalent Receivables 1,876 1,903 2,069 2,300 2,507 Inventory 2,203 3,388 3,430 4,070 4,181 Other Curr. Asset 475 1,028 1,130 1,243 1,368 Fixed assets - Net Other non-curr.asset 1,799 1,703 1,811 1,928 2,056 Total asset 7,425 8,874 9,298 10,432 11,120 ST Debt 902 1,748 1,748 2,148 2,148 Payables 2,921 3,149 3,252 3,637 3,941 Other Curr. Liabilities Long Term Debt Other LT. Liabilities Total Liabilities 4,015 5,167 5,271 6,059 6,366 Shareholder'sFunds 3,349 3,627 3,947 4,292 4,671 Minority interests Total Equity & Liabilities 7,425 8,874 9,298 10,432 11,119 See important disclosure at the back of this report 4

20 Exhibit 10. Cash Flow Year to 31 Dec (IDRbn) 2016A 2017A 2018F 2019F 2020F Net income Depreciation and Amort Change in Working Capital 909 (983) (107) (485) (13) OtherOper. Cash Flow 74 (413) Operating Cash Flow 1,307 (984) Capex (81) (100) (140) (153) (169) Others Inv. Cash Flow (105) (114) (125) Investing Cash Flow 22 (2) (245) (267) (293) Net change in debt (694) New Capital Dividend payment (58) (58) (75) (86) (95) Other Fin. Cash Flow (96) (52) (138) (148) (154) Financing Cash Flow (849) 738 (213) 166 (248) Net Change in Cash 481 (248) (54) (25) 56 Cash - begin of the year Cash - end of the year Exhibit 11. Key Ratios Year to 31 Dec 2016A 2017A 2018F 2019F 2020F Growth (%) Sales EBITDA Operating profit Net profit Profitability (%) Gross margin EBITDA margin Operating margin Net margin ROAA ROAE Leverage Net Gearing (x) Interest Coverage (x) Source : ERAA, Danareksa Estimates See important disclosure at the back of this report 5

21 Equity Research Company Update Tuesday, 10 April 2018 BUY Maintain Last price (IDR) 7,900 Target Price (IDR) 9,300 Upside/Downside +15.1% Previous Target Price (IDR) 8,100 Stock Statistics Sector Bloomberg Ticker Retail MAPI IJ No of Shrs (mn) 1,654 Mkt. Cap (IDRbn/USDmn) 12,320/894 Avg. daily T/O (IDRbn/USDmn) 13.0/0.9 Major shareholders (%) PT Satya Mulia Gema Gemilang 56.0 Estimated free float 44.0 EPS Consensus (IDR) 2018F 2019F 2020F Danareksa n/a Consensus n/a Danareksa/Cons n/a MAPI relative to JCI Index Source : Bloomberg Mitra Adiperkasa(MAPI IJ) Another solid year Post the FY17 results, we still expect the specialty stores, such as the Inditex brands and Active wear, as well as the F&B business to be MAPI s main growth engines in FY18-19F. We expect solid revenues supported by the management s brand rationalization strategy which will lead to better EBITDA margins. In addition, we also expect net gearing to remain relatively stable with inventory days to potentially trend down. BUY maintained. Specialty stores and F&B business remain to be the key growth engines. Post FY17 results, we are still expecting a solid revenue growth for MAPI going forward at +15% yoy in FY18-19F, respectively, and relatively maintain our FY18-19F revenue forecast. We believe this will be mainly driven by 1) specialty stores, which will be coming from Inditex brands, such as Zara, Massimo Dutti, and Stradivarius, cushion as well by expected robust specialty store growth in Vietnam, as well as Active wear and 2) F&B going forward, on the back of Starbucks. On the flip side, we believe mid-up segment will be remain resilient. Brand rationalization cushions EBITDA margin improvement in FY18-19F. We believe management s recent strategy on brand rationalization, reflected on department store downsizing in FY17, will continue to help boost EBITDA margin to improve in FY18-19F, although we believe the trend will start to normalize going forward. On the gross level, we slightly tone down our FY18-19F gross margin forecast yet still estimate a stable trend compared to FY17. On the operating level, we continue to estimate operating margin improvement and slightly revise up our FY18-19F operating profits by 2.7% and 1.5%. Healthy balance sheet on the cards, expecting better FY18-19F net margins. On the balance sheet side, we remain positive to see a healthy side with potential continue trending down inventory days due to solid revenues and net gearing to be relatively stable going forward. We relatively maintain our FY18F net profits and expect a net margin improvement in FY18-19F. We revise up our FY19 net profits by 8.3% as we adjust our FY19F pretax profits, especially as we lower down our interest expense estimate. Maintain BUY at a higher TP IDR9,300. We reiterate our BUY call on MAPI at a higher TP at IDR9,300, reflected on 26.3x P/E 2018F, +0.5 sd based on historical (exhibit 6) as we slightly rerate our valuation from previously at about mean level. The stock is currently trading at 22.2x P/E 2018F, which is slightly below its mean. Risks to our call include 1) lower than expected GDP growth and 2) higher than expected inflation. x x Adeline Solaiman (62-21) ext.3503 adeline.solaiman@danareksa.com Natalia Sutanto (62-21) ext.3508 natalia.sutanto@danareksa.com Key Financials Year to 31 Dec 2016A 2017A 2018F 2019F 2020F Revenue (IDRbn) 14,150 16,306 18,750 21,566 24,803 EBITDA (IDRbn) 1,516 1,807 2,106 2,439 2,823 EBITDA Growth (%) Net profit (IDRbn) EPS (IDR) EPS growth (%) BVPS (IDR) 1, , , , ,173.8 DPS (IDR) PER (x) PBV (x) Dividend yield (%) EV/EBITDA (x) Source : MAPI, Danareksa Estimates See important disclosure at the back of this report 1

22 Exhibit 1. Revenues and Growth Exhibit 2. Net Profits and Growth Exhibit 3. Margins Exhibit 4. Gearing Level Exhibit 5. Forecast Changes (In IDRbn, unless Before After Changes otherwise stated) 2018F 2019F 2018F 2019F 2018F 2019F Revenues 18,560 21,342 18,750 21, % 1.1% Gross profits 9,094 10,458 9,034 10, % -0.6% Operating profits 1,265 1,474 1,299 1, % 1.5% Pretax profits % 8.1% Net profits % 8.3% Gross margin, % 49.0% 49.0% 48.2% 48.2% Operating margin, % 6.8% 6.8% 6.9% 6.9% Pretax margin, % 4.3% 4.2% 4.3% 4.5% Net margin, % 3.2% 3.0% 3.1% 3.2% See important disclosure at the back of this report 2

23 Exhibit 6. P/E Band See important disclosure at the back of this report 3

24 Exhibit 7. Income Statement Year to 31 Dec (IDRbn) 2016A 2017A 2018F 2019F 2020F Revenue 14,150 16,306 18,750 21,566 24,803 COGS (7,277) (8,450) (9,716) (11,176) (12,853) Gross profit 6,873 7,856 9,034 10,391 11,950 EBITDA 1,516 1,807 2,106 2,439 2,823 Oper. profit 888 1,121 1,299 1,495 1,721 Interest income Interest expense (421) (404) (386) (392) (415) Forex Gain/(Loss) Income From Assoc. Co s Other Income (Expenses) (109) (166) (136) (158) (200) Pre-tax profit ,123 Income tax (193) (247) (203) (240) (281) Minority interest 0 (15) (21) (25) (29) Net profit Core Net Profit Exhibit 8. Balance Sheet Year to 31 Dec (IDRbn) 2016A 2017A 2018F 2019F 2020F Cash & cash equivalent 1,526 1, Receivables Inventory 3,007 3,066 3,323 3,413 3,629 Other Curr. Asset 1,290 1,449 1,464 1,479 1,493 Fixed assets - Net 2,637 3,103 3,503 3,946 4,438 Other non-curr.asset 1,430 1,524 1,641 1,775 1,927 Total asset 10,684 11,425 11,556 12,474 13,632 ST Debt 1,889 1,699 1,685 1,835 2,035 Payables 1,638 1,990 2,163 2,614 2,880 Other Curr. Liabilities Long Term Debt 2,611 1,853 1,853 1,573 1,573 Other LT. Liabilities Total Liabilities 7,480 7,183 7,358 7,696 8,179 Shareholder'sFunds 3,203 4,038 3,993 4,573 5,248 Minority interests Total Equity & Liabilities 10,683 11,425 11,556 12,474 13,632 See important disclosure at the back of this report 4

25 Exhibit 9. Cash Flow Year to 31 Dec (IDRbn) 2016A 2017A 2018F 2019F 2020F Net income Depreciation and Amort ,102 Change in Working Capital (105) 165 (4) OtherOper. Cash Flow Operating Cash Flow 1,478 1,621 1,640 2,181 2,309 Capex (823) (1,245) (1,312) (1,508) (1,734) Others Inv. Cash Flow (76) Investing Cash Flow (899) (1,213) (1,290) (1,504) (1,730) Net change in debt 844 (948) (14) (130) 200 New Capital Dividend payment 0 (41) (66) (117) (138) Other Fin. Cash Flow (401) 342 (1,005) (392) (415) Financing Cash Flow 443 (647) (1,031) (638) (353) Net Change in Cash 1,022 (239) (682) Cash - begin of the year 504 1,526 1, Cash - end of the year 1,526 1, Exhibit 10. Key Ratios Year to 31 Dec 2016A 2017A 2018F 2019F 2020F Growth (%) Sales EBITDA Operating profit Net profit Profitability (%) Gross margin EBITDA margin Operating margin Net margin ROAA ROAE Leverage Net Gearing (x) Interest Coverage (x) Source : MAPI, Danareksa Estimates See important disclosure at the back of this report 5

26 Equity Research Company Update Monday,09 April 2018 HOLD Upgrade Last price (IDR) 10,325 Target Price (IDR) 9,400 Upside/Downside -9.0% Previous Target Price (IDR) 8,600 Stock Statistics Sector Bloomberg Ticker Cement SMGR IJ No of Shrs (mn) 5,932 Mkt. Cap (IDRbn/USDmn) 61,243/4,450 Avg. daily T/O (IDRbn/USDmn) 49.1/3.6 Major shareholders (%) Republic of Indonesia 51.0 Lazard LTD 2.4 Estimated free float 49.0 EPS Consensus (IDR) 2018F 2019F 2020F Danareksa Consensus Danareksa/Cons (4.8) (9.9) (11.0) SMGR relative to JCI Index Source : Bloomberg x x Antonia Febe Hartono, CFA (62-21) ext.3504 antonia.hartono@danareksa.com Stefanus Darmagiri (62-21) stefanus.darmagiri@danareksa.com Semen Indonesia (Persero)(SMGR IJ) Upgrade on higher ASP We upgrade our recommendation on SMGR to HOLD with a higher target price of IDR9,200 as we increase our ASP assumption by 1.6% in 2018 and 2019 to take into account the company s decision to increase its domestic ASP in March 2018 by 3.5% compared to its ASP in December While the higher ASP led to 2.0% lower market share, the company stated that it would maintain its current selling prices as its market share remained above the threshold of 38%. As such, we expect the company to maintain its selling prices at the current level. 1Q18 price to grow by 2.5% compared to its ASP in December The company stated that its domestic ASP in March 2018 has reached IDR757,000/ton, grow by 3.5% compared to its ASP in December 2017, following company s decision to conduct selective price appreciation in certain areas. This is inline with our finding on channel check on the distributor level in the Greater Jakarta area that state Gresik has increased its factory price by IDR2,500/sack in the area. comes at the expense of market share. Nonetheless, the higher price comes at the expense of the market share. We note that the domestic market share of SMGR in 1Q18 reached 39.5%, down by 2.0%yoy. We believe that the on the bag cement segment, the decline in the market share was more severe, considering SMGR s sales volume remains supported by its bulk cement sales, owed to its participation in multiple infrastructure projects. This also inline with our finding in our channel check, which state that the higher prices have considerably hamper bag cement market. We expect company to maintain its price. Although the lower market share, we remain expect company to maintain its price at the current level, considering the company implies that the current market share remains above its threshold minimum market share. Realizing on the trade-off of prices and the market share, SMGR aims to maintain its market share within the range of 38-42% (plus minus 2% from the market share in 2017). Upgrade our recommendation to HOLD. We upgrade our recommendation fro SMGR to HOLD with higher target price of IDR9,400 (from IDR8,600) previously as we adjust our price by 1.6% in 2018 and 2019, respectively (implies for %yoy price appreciation). Although we adjust down our sales volume by %, the higher impact from the ASP has positively impact our net profit by %yoy. Key Financials Year to 31 Dec 2016A 2017A 2018F 2019F 2020F Revenue (IDRbn) 26,134 27,814 29,690 31,920 34,377 EBITDA (IDRbn) 6,611 4,901 5,707 6,581 7,375 EBITDA Growth (%) (9.8) (25.9) Net profit (IDRbn) 4,522 2,014 2,489 2,959 3,126 EPS (IDR) EPS growth (%) 0.0 (55.5) BVPS (IDR) 4, , , , ,817.2 DPS (IDR) PER (x) PBV (x) Dividend yield (%) EV/EBITDA (x) Source : SMGR, Danareksa Estimates See important disclosure at the back of this report 1

27 Exhibit 1. Revenues and Growth Exhibit 2. Net Profits and Growth Exhibit 3. Margins Exhibit 4. Gearing Level Exhibit 5. SMGR s forward trailing P/E (x ) sd 1sd 22.0 Average: sd sd 7.0 Jan 11 Jan 12 Jan 13 Jan 14 Jan 15 Jan 16 Jan 17 Jan 18 Source: Bloomberg, Danareksa Sekuritas estimates Exhibit 6. Cement sector s forward trailing P/E (x ) sd sd Average: sd sd 0.0 Jan 11 Jan 12 Jan 13 Jan 14 Jan 15 Jan 16 Jan 17 Jan 18 Source: Bloomberg, Danareksa Sekuritas estimates Exhibit 7. Forecast changes Previous New Changes (%) F 2019F 2018F 2019F 2018F 2019F ASP (Rp/ton) 864, , , , , Sales volume (mn ton) (2.7) (4.9) Coal price (USD/ton) Electricity cost (Rp/kWh) Revenue 27,814 29,084 31,890 29,690 31, EBITDA 4,901 5,345 6,420 5,707 6, Net profit 2,014 2,109 2,678 2,489 2, See important disclosure at the back of this report 2

28 Source: Bloomberg, Danareksa Sekuritas estimates SMGR to start to mine from its mining site in Rembang plant. SMGR stated that in April 2018, it has started to mine the limestone from the mining site in the Rembang plant on top of purchasing the limestone from the local miners. With more supply of the raw material, the company expects the utilization rate of the plant to be above 50% this year, considerably higher than the utilization rate in 2017 that only reached 20-30%. Sensitivity analysis. We also conducted sensitivity analysis to our forecast in 2018 based on the sales volume, ASP, and coal prices. Exhibit 8. Sensitivity analysis to sales volume -5% -2.5% Base case +2.5% +5% Utilization rate (%) 81.6% 83.8% 85.9% 88.1% 90.2% Revenue (IDRbn) 27,554 28,155 28,755 29,355 29,955 EBITDA (IDRbn) 5,253 5,399 5,545 5,691 5,837 Net income (IDRbn) 2,064 2,176 2,289 2,401 2,514 EPS (IDR) Impact to EPS -9.8% -4.9% 4.9% 9.8% Exhibit 9. Sensitivity analysis to ASP -5% -2.5% Base case +2.5% +5% 745, , , , ,736 Revenue (IDRbn) 27,554 28,155 28,755 29,355 29,955 EBITDA (IDRbn) 4,357 4,951 5,545 6,139 6,733 Net income (IDRbn) 1,373 1,831 2,289 2,747 3,205 EPS (IDR) Impact to EPS -40.0% -20.0% 20.0% 40.0% Exhibit 10. Sensitivity analysis of 2018 s net profit to coal price -5% -2.5% Base case +2.5% +5% Revenue (IDRbn) 28,755 28,755 28,755 28,755 28,755 EBITDA (IDRbn) 5,758 5,652 5,545 5,439 5,332 Net income (IDRbn) 2,453 2,371 2,289 2,207 2,124 EPS (IDR) Impact to EPS 7.2% 3.6% -3.6% -7.2% See important disclosure at the back of this report 3

29 Exhibit 11. Income Statement Year to 31 Dec (IDRbn) 2016A 2017A 2018F 2019F 2020F Revenue 26,134 27,814 29,690 31,920 34,377 COGS (16,278) (19,854) (21,013) (22,335) (24,032) Gross profit 9,856 7,960 8,677 9,585 10,345 EBITDA 6,611 4,901 5,707 6,581 7,375 Oper. profit 4,973 3,126 3,638 4,246 4,677 Interest income Interest expense (363) (756) (876) (947) (1,155) Forex Gain/(Loss) Income From Assoc. Co s 37 (10) Other Income (Expenses) Pre-tax profit 5,085 2,747 3,227 3,838 4,054 Income tax (550) (704) (731) (869) (918) Minority interest (13) (29) (7) (9) (9) Net profit 4,522 2,014 2,489 2,959 3,126 Core Net Profit 4,522 2,014 2,489 2,959 3,126 Exhibit 12. Balance Sheet Year to 31 Dec (IDRbn) 2016A 2017A 2018F 2019F 2020F Cash & cash equivalent 2,834 3,638 4,934 4,609 5,376 Receivables 4,018 4,995 5,332 5,645 6,080 Inventory 2,671 3,686 3,902 4,147 4,462 Other Curr. Asset 835 1,454 1,548 1,658 1,779 Fixed assets - Net 30,847 32,523 32,536 36,159 39,526 Other non-curr.asset 3,007 2,638 2,655 2,677 2,700 Total asset 44,227 48,964 50,936 54,924 59,951 ST Debt 1,686 1,795 1,776 1,341 1,716 Payables 4,383 5,250 5,556 5,905 6,354 Other Curr. Liabilities 2,083 1,759 1,813 1,839 1,883 Long Term Debt 4,450 8,099 7,982 9,999 12,145 Other LT. Liabilities 1,051 1,622 1,686 1,753 1,824 Total Liabilities 13,653 18,524 18,813 20,838 23,923 Shareholder'sFunds 29,035 28,915 30,598 32,562 34,505 Minority interests 1,539 1,524 1,524 1,524 1,524 Total Equity & Liabilities 44,227 48,964 50,936 54,924 59,951 See important disclosure at the back of this report 4

30 Exhibit 13. Cash Flow Year to 31 Dec (IDRbn) 2016A 2017A 2018F 2019F 2020F Net income 4,522 2,014 2,489 2,959 3,126 Depreciation and Amort. 2,126 1,791 2,084 2,350 2,713 Change in Working Capital (388) (2,069) (301) (275) (365) OtherOper. Cash Flow Operating Cash Flow 6,439 2,324 4,965 5,734 6,398 Capex (7,661) (3,443) (2,082) (5,962) (6,070) Others Inv. Cash Flow (521) Investing Cash Flow (8,182) (2,930) (1,931) (5,748) (5,873) Net change in debt 2,259 3,759 (120) 1,564 2,509 New Capital Dividend payment 1,819 1, ,184 Other Fin. Cash Flow 172 (541) (812) (880) (1,084) Financing Cash Flow 4,250 5,027 (126) 1,679 2,609 Net Change in Cash 2,507 4,421 2,908 1,666 3,134 Cash - begin of the year 3,964 2,834 3,638 4,934 4,609 Cash - end of the year 2,834 3,638 4,934 4,609 5,376 Exhibit 14. Key Ratios Year to 31 Dec 2016A 2017A 2018F 2019F 2020F Growth (%) Sales (3.0) EBITDA (9.8) (25.9) Operating profit (15.7) (37.1) Net profit 0.0 (55.5) Profitability (%) Gross margin EBITDA margin Operating margin Net margin ROAA ROAE Leverage Net Gearing (x) Interest Coverage (x) Source : SMGR, Danareksa Estimates See important disclosure at the back of this report 5