INVESTOR DIGEST HIGHLIGHT CORPORATE. Equity Research 1 Februay 2017

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1 INVESTOR DIGEST Equity Research 1 Februay 2017 Economic Data Latest 2017F 7-DRRR (%), eop Inflation (YoY %) US$ 1 = Rp, period avg 13,352 13,450 Stock Market Data (31 Jan 2017) JCI Index 5, % Trading T/O ( Rp bn ) 5,696.8 Market Cap ( Rp tn ) 5,759.0 HIGHLIGHT Bank bjb: 12M16 Results Below Expectations (BJBR; Rp2,300; Sell; TP;Rp1,600) Bank Central Asia: 12M16 Unconsolidated Results- In Line (BBCA; Rp15,300; Neutral; TP:Rp15,150) Bank Panin: 12M16 Unconsolidated Results- Above Expectations (PNBN; Rp825; Buy; TP:Rp1,190) Bank Rakyat Indonesia: 12M16 olidated Results In Line (BBRI; Rp11,725; Buy; TP:Rp13,800) Bank Tabungan Pensiunan Nasional: 12M16 Unconsolidated Results - Slightly Below ensus Expectations (BTPN; Rp2,580; Neutral; TP:Rp2,635) XL Axiata: FY16 EBITDA inline but outlook remains challenging (EXCL; Rp2,910; Neutral; TP:Rp2,400) Wijaya Karya: Analyst Meeting Key Takeaways (WIKA; BUY; Rp2,570; TP: Rp3,000) 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 80 companies in MS research universe, representing of JCI s market capitalization CORPORATE Bank bjb: 12M16 Results Below Expectations (BJBR; Rp2,300; Sell; TP;Rp1,600) BJBR reported 12M16 unconsolidated net income of Rp1.6tn, +19% yoy, accounting for 101 FY16 consensus and 108 Mansek s expectations. Strong net income growth was driven by operating income growth of +23%yoy. Management indicates that the bank s syariah unit booked a net loss of approximately Rp400bn in 12M16, dragging down consolidated net income to Rp1.2tn, accounting for 77 consensus and 82 Mansek s expectations. The bank s syariah unit was able to recover Rp160bn of its NPL, reducing its net loss from Rp589bn in 11M16 to approximately Rp400bn in 12M16. Meanwhile, net income in the month of Dec totaled to Rp79bn, -20%mom/-70%yoy, mainly due to increase in provision expenses of +27%mom. Loan growth +14%yoy, deposit growth +16%yoy. BJBR indicates that strong loan growth was driven by commercial and consumer loans. On the other hand, deposit growth was mainly driven by time deposits at +30%yoy and savings deposits at +18%yoy. Meanwhile, demand deposit declined by -8%yoy due to drawdown of the government s budget. This brings CASA to 47% in Dec16 vs. 52% in Dec15. LDR stood at 87% in Dec16 vs 88% in Dec15. NIM increased to 7.4% in 12M16 from 6.2% in 12M15 as cost of funds declined by 91bps while asset yield increased by 30bps, mainly due to strong loan growth. On a monthly basis, NIM declined to 9.5% in Dec from 11.9% in Nov. Cost to income ratio remains flat at 66% in 12M16. However in the month of Dec, cost to income ratio deteriorated to 76% from 72% in Nov. Page 1 of 14

2 Provisioning expenses increased by +257%yoy to Rp157bn. We estimate Bjb to have written off about Rp786bn in 12M16 and Rp96bn in the month of Dec alone. Provisioning level declined to 0.9% in Dec16 from 1.0% in Nov16 while cumulative cost of credit increased to 2.7% in Dec from 2.3% in Nov. Maintain Sell with TP of Rp1,600. The counter is trading at 2.0x P/BV 2017F. We remain cautious on the bank s syariah unit which has been dragging down consolidated net income. Income Statement Dec-15 Nov-16 Dec-16 % MoM % YoY 12M15 12M16 % YoY Net interest income (3) 10 4,747 5, , Non interest income Operating income ,308 6, , , Provision expenses 161 (35) (44) 27 (127) (44) (157) 257 (518) 30 Operating expenses (356) (410) (454) (3,522) (4,304) 22 (4,037) 107 Operating profit (23) (72) 1,742 2, , , PPOP (12) (22) 1,786 2, , Pre-tax profit (20) (70) 1,767 2, , , Net profit (20) (70) 1,385 1, , , FY16 Balance Sheet Dec-15 Nov-16 Dec-16 % MoM % YoY Gross loans 55,311 63,728 63,144 (1) 14 Demand deposits 18,633 18,179 17,130 (6) (8) Saving deposits 14,279 14,186 16, Time deposits 29,838 34,510 38, Total deposits 62,749 66,876 72, CASA to deposits (%) Ratio (%) Dec-15 Nov-16 Dec-16 12M15 12M16 LDR NIM ROE Cost to income Priscilla Thany ( ) priscilla.thany@mandirisek.co.id Bank Central Asia: 12M16 Unconsolidated Results- In Line (BBCA; Rp15,300; Neutral; TP:Rp15,150) BBCA reported unconsolidated 12M16 net income of Rp19.8tn, +13% yoy, accounting for 100 FY16 consensus and 103 Mansek s expectations. The bank booked strong PPOP growth of +16% yoy supported by operating income growth of +12% yoy and managed operating expenses at +7% yoy. In Dec, net income was Rp1.3tn, -31%mom/+43%yoy. BCA s subsidiaries only account for 3 its consolidated earnings in 9M16, using this ratio, Mansek estimates consolidated net income to total to Rp20.4tn, accounting for 103 consensus and 106 Mansek s expectations. Loan growth +7% yoy, deposit growth +12% yoy. Deposit growth was mainly driven by demand deposits at +19% yoy, followed by savings deposits at +11% yoy, and time deposits at +8% yoy. CASA stood at 77% in Dec16 from 76% in Dec15, meanwhile LDR declined to 79% in Dec16 vs. 82% in Dec15. NIM improved to 6.7% in 12M16 vs. 6.5% in 12M15 due to decline in time deposit rates and stronger CASA growth. On the monthly basis NIM also improved to 6.5% in Dec16 from 6.3% in Nov16. Provisioning expenses increased by +34% yoy to Rp4.2tn in 12M16, meanwhile in Nov alone provision expense increased by +137%mom to Rp728bn. We estimate total write offs around Rp635bn in 12M16 and Rp51bn in Dec alone. Provisioning to total loans and cost of credit (gross) remains stable at 3.0% and 1.5% in Dec16. Page 2 of 14

3 Cost to income ratio improved to 42% in 12M16 from 44% in 12M15 as operating expenses only grew +7% yoy while operating income increased +12% yoy. On a monthly basis, cost to income ratio deteriorated to 46% in Dec16 from 40% in Nov16. Maintain Neutral with TP Rp15,150. The counter is trading at 3.1x FY17 P/BV. BBCA s loan growth has been quite slow so far given the weak demand and wait and see situation by most of their clients. Meanwhile, the management has also been careful in extending new loans, in conjunction with rising lending risk. Income Statement Dec-15 Nov-16 Dec-16 % MoM % YoY 12M15 12M16 % YoY Net interest income 3,105 3,109 3, ,118 37, , Non interest income 998 1,162 1,044 (10) 5 11,387 12, , Operating income 4,103 4,271 4,271 (0) 4 44,505 49, , , Provision expenses (1,139) (308) (728) 137 (36) (3,177) (4,247) 34 (4,281) 99 Operating expenses (1,896) (1,708) (1,958) 15 3 (19,620) (21,020) 7 (23,333) 90 Operating profit 1,068 2,255 1,584 (30) 48 21,708 24, , , PPOP 2,207 2,563 2,312 (10) 5 24,885 28, , Pre-tax profit 1,068 2,255 1,584 (30) 48 21,708 24, , , Net profit 887 1,834 1,265 (31) 43 17,522 19, , , FY16 Balance Sheet Dec-15 Nov-16 Dec-16 % MoM % YoY Gross loans 388, , , Demand deposits 115, , ,880 (2) 19 Saving deposits 244, , , Time deposits 113, , , Total deposits 473, , , CASA to deposits (%) Ratio (%) Dec-15 Nov-16 Dec-16 12M15 12M16 LDR NIM ROE Cost to income Tjandra Lienandjaja ( ) tjandra.lienandjaja@mandirisek.co.id Bank Panin: 12M16 Unconsolidated Results- Above Expectations (PNBN; Rp825; Buy; TP:Rp1,190) PNBN reported unconsolidated net income of Rp2.2tn in 12M16, +71% yoy, accounting for 103 FY16 consensus and 99 Mansek s expectations. The bank s subsidiaries accounts for 8 consolidated earnings in 9M16, using this ratio, we estimate consolidated earnings to total to Rp2.4tn, accounting for 112 consensus and 107 Mansek s expectations. Strong PPOP growth of +57%yoy was driven by operating income growth of +19%yoy and decline in operating expenses of -4%yoy. In the month of Dec alone, PNBN recorded net income of Rp193bn, -22%mom/+250%yoy. Loan growth +6% yoy, deposit growth +11% yoy. Deposit growth was mainly driven by time deposits at +15%yoy, followed by demand deposits at +13%yoy, and savings deposits of +5%yoy bringing CASA to 39% in Dec16 vs. 41% in Dec15. LDR stood at 90% in Dec16 vs. 94% in Dec15. NIM improved to 4.8% in 12M16 from 4.2% in 12M15 as cost of funds declined by 82bps, outweighing decline in asset yield of 18bps. On a monthly basis, NIM improved to 4.8% in Dec from 4.7% in Nov. Provision expenses increased by +47%yoy to Rp1.5tn in 12M16, meanwhile provision expense in the month of Dec totaled to Rp71bn, -27% mom/+548%yoy. Provisioning to total loans declined to 2.4% in Dec16 from 2.5% in Nov16 while Page 3 of 14

4 cost of credit (gross) also declined to 1.3% in Dec16 from 1.4% in Nov16, this indicates improving asset quality (NPL as per Sept-16 was 2.6%). Cost to income ratio improved to 49% in 12M16 vs. 61% in 12M15 as operating expenses declined by -4%yoy while operating income increased by +19%yoy. On a monthly basis, cost to income ratio increased to 55% in Dec16 from 52% in Nov16. Maintain BUY with TP of Rp1,190, the counter is trading at 0.6x FY17E P/BV. We believe that the stock is a laggard to the sector. While NPL of peers under our coverage was on an increasing trend, PNBN was able to reduce NPL to 2.6% in Sept16 from 2.8% in Jun16. Income Statement Dec-15 Nov-16 Dec-16 % MoM % YoY 12M15 12M16 % YoY Net interest income ,221 7, , Non interest income ,020 1, , Operating income ,241 8, , , Provision expenses (11) (97) (71) (27) 548 (1,049) (1,539) 47 (1,940) 79 Operating expenses (547) (362) (409) 13 (25) (4,431) (4,252) (4) (4,673) 91 Operating profit ,761 2, , , PPOP ,810 4, , Pre-tax profit (17) 199 1,763 2, , , Net profit (22) 250 1,305 2, , , FY16 Balance Sheet Dec-15 Nov-16 Dec-16 % MoM % YoY Gross loans 115, , , Demand deposits 9,385 10,715 10,567 (1) 13 Saving deposits 41,016 42,092 43, Time deposits 72,004 79,880 82, Total deposits 122, , , CASA to deposits (%) Ratio (%) Dec-15 Nov-16 Dec-16 12M15 12M16 LDR NIM ROE Cost to income Priscilla Thany ( ) priscilla.thany@mandirisek.co.id Bank Rakyat Indonesia: 12M16 olidated Results In Line (BBRI; Rp11,725; Buy; TP:Rp13,800) BBRI reported consolidated net income of Rp26.2tn, +3% y-y, in FY16, accounting for 102 consensus and 103% of our FY expectations. PPOP came in at Rp47.7tn, +21% y-y, supported by strong non-interest income at +37% y-y. Substantial increase in provisioning charges resulted in low single digit earnings growth while 4Q16 saw net income of Rp7.2tn, +4% y-y/+7% q-q. Loan growth +14% y-y/+5% q-q and deposit growth +13% y-y/+9% q-q. Above industry average loan growth was driven by non-soe corporate (+22% y-y), micro loans (+18% y-y, KUR at +184% y-y) and consumer loans (+14% y-y). Deposit growth was supported by demand deposit at +25% y-y, followed by savings at +11% y-y, and time deposit at +10% y-y, thus bringing CASA portion to 58 total deposits in Dec-16 vs. 57% in Dec-15 while consolidated LDR increased to 88% from 87% over the same period. Page 4 of 14

5 NIM improved to 8.10% from 7.77% in 2015 due to decline in cost of funds, in particular TD rates. NIM in 4Q16 however, declined to 7.95% from 8.23% in 3Q16 due to adjustment in KUR interest subsidy of ca. Rp800bn in November. Nevertheless, without this adjustment, NIM would decline to 8.1% in 4Q16 as more loan growth was recorded for corporate segment. Bank only NPL improved to 2.0% in Dec-16 from 2.2% in Sept-16 (consolidated NPL at 2.1% in Dec-16 vs. 2.3% in Sept-16). Among the segments, micro, consumer and small commercial loans posted asset quality improvement while medium loans and non-soe corporate loans still recorded rising NPL. Provisioning expenses increased 54% Rp13.7tn in FY16 while 4Q16 saw lower provisioning expenses of 41% q-q/+27% y-y to Rp2.3tr. Special mention loans also improved to 4.3% from 5.7% in Sep-16 while restructured loans increased to 5.8% from 5.4% in Sept-16. We estimate BRI wrote off Rp8.7tn in 2016, of which Rp2.6tn in 4Q16. Post the write off coverage ratio has been increased to 165% in De16 from 161% in Sep-16. The management indicated that 1Q17 will see improvement in non-soe corporate loans NPL, which stood at 5.6% (Rp4.7tr) in Dec-16. Of these NPL, they had already settled Rp1.4tr (1.7 non-soe corporate loans or 0.3% of total loans) through the sales of assets. Of the remaining NPL of Rp3.3tr, they have set aside Rp1.2tr as provisioning while another Rp1.4tr NPL (1.7 non-soe corporate loans or 0.3 total loans) will be settled through asset sales as well. This should bring down NPL in this segment, provided there is no more NPL creation, to 2.3% from 5.6%. Cost to income ratio further declined to 43.7% in FY16 vs. 44.3% in FY15. CIR declined to 40.1% in 4Q16 from 44.6% in 3Q targets: loan growth 12-14%, LDR 90+/-2%, NPL %, credit cost %, coverage ratio %, NIM %, opex %, net profit +3-5%. There seems to be some inconsistency in earnings growth expectation given the loan growth and similar credit cost to We believe the bank should be able to record higher earnings growth in 2017 and currently we expect some Rp28.3tr net profit for the year. Maintain BUY with TP of Rp13,800. The counter is trading at 1.7x FY17 P/BV. Income Statement 12M15 12M16 % YoY 4Q15 3Q16 4Q16 % YoY % QoQ Net interest income 58,279 67, ,415 17,074 17, , Non-interest income 12,409 17, ,900 3,380 5, , Fees and commissions 7,364 9, ,118 2,401 2, , Others 5,045 7, , , , Operating income 70,688 84, ,316 20,454 23, , , Provisioning expenses (8,891) (13,700) 54 (1,798) (3,892) (2,278) 27 (41) (14,014) 98 Operating expenses (31,285) (36,922) 18 (8,399) (9,113) (9,384) 12 3 (37,325) 99 Personnel Expenses (15,970) (17,953) 12 (4,600) (4,575) (3,350) (27) (27) (19,607) 92 Other Expenses (15,315) (18,970) 24 (3,799) (4,538) (6,034) (17,718) 107 Operating profit 30,511 33, ,119 7,449 11, , , PPOP 39,403 47, ,916 11,341 14, , Pre-tax profit 32,494 33, ,873 7,739 10, , , Net profit 25,398 26, ,981 6,775 7, , , FY16 Balance Sheet Dec-15 Sep-16 Dec-16 % YoY % QoQ Gross loan 580, , , Demand deposit 113, , , Saving deposit 268, , , Time deposit 287, , , Total deposit 668, , , CASA to deposits (%) Page 5 of 14

6 Ratio (%) 12M15 12M16 4Q15 3Q16 4Q16 CAR Tier 1 CAR LDR NIM ROE NPL, cat Loan loss coverage Cost to Income Restructured Loans Tjandra Lienandjaja ( ) tjandra.lienandjaja@mandirisek.co.id Bank Tabungan Pensiunan Nasional: 12M16 Unconsolidated Results - Slightly Below ensus Expectations (BTPN; Rp2,580; Neutral; TP:Rp2,635) BTPN reported 12M16 unconsolidated net income of Rp1.5tn, -8% yoy, accounting for 80 FY16 consensus and 84 Mansek s expectations. As per 9M16 BTPN s unconsolidated net income accounts for 86 its consolidated net income, using this same ratio, Mansek estimates 12M16 consolidated results to total to Rp1.7tn, accounting for 93 consensus and 97 Mansek s expectations. Decline in net income was mainly due to increase in operating expenses of +14%yoy. In Dec alone, net income stood at Rp1bn, -99%mom/-95%yoy, mainly due to increase in provision expenses of +122%mom. Loan growth +6% yoy, deposit growth +8% yoy. Of deposits, time deposits and demand deposits grew by +10% yoy while savings deposits declined by -6%yoy bringing CASA to 11% in Dec16 vs. 12% Dec15. LDR stood at 96% in Dec16 vs. 97% in Dec15. NIM improved to 9.9% in 12M16 from 9.6% in 12M15 as decline in cost of funds of 114 bps outweighed decline in asset yield of 82bps. On a monthly basis, NIM declined to 9.8% in Dec from 10.3% in Nov. Provisioning expenses increased by +4% yoy to Rp733bn in 12M16. We estimate total write-offs of Rp661bn in 12M16 and Rp76bn in Dec alone. Provisioning to total loans and cost of credit increased to 1.0% in Dec (from 0.9% in Nov) and 1.3% in Dec (from 1.2% in Nov), indicating worsening asset quality (NPL at 0.7% in Sept16). Cost to income ratio increased to 63% in 12M16 vs 58% in 12M15 due to ongoing investments in BTPN s digital banking platform, BTPN WoW and Jenius. On a monthly basis, cost to income ratio increased to 71% in Dec from 65% in Nov. Maintain Neutral with TP of Rp2,635, the counter is trading at 0.9x FY17E P/BV. We expect BTPN to continue posting a high cost to income ratio over the next couple of years due to ongoing investments in its digital banking platform. Income Statement Dec-15 Nov-16 Dec-16 % MoM % YoY 12M15 12M16 % YoY Net interest income (2) 11 6,379 6, , Non interest income (6) (14) Operating income (1) 10 7,083 7, , , Provision expenses (59) (52) (116) (707) (733) 4 (793) 92 Operating expenses (417) (434) (465) 7 12 (4,143) (4,738) 14 (5,924) 80 Operating profit (57) (38) 2,233 2,061 (8) 2, , PPOP (17) 5 2,940 2,794 (5) 3, Pre-tax profit (56) 34 2,168 2,055 (5) 2, , Net profit (99) (95) 1,587 1,466 (8) 1, , FY16 Page 6 of 14

7 Balance Sheet Dec-15 Nov-16 Dec-16 % MoM % YoY Gross loans 54,909 57,879 58, Demand deposits (26) 10 Saving deposits 6,712 6,684 6,316 (6) (6) Time deposits 49,425 51,503 54, Total deposits 56,463 58,672 60, CASA to deposits (%) Ratio (%) Dec-15 Nov-16 Dec-16 12M15 12M16 LDR NIM ROE Cost to income Priscilla Thany ( ) priscilla.thany@mandirisek.co.id XL Axiata: FY16 EBITDA inline but outlook remains challenging (EXCL; Rp2,910; Neutral; TP:Rp2,400) FY16 EBITDA inline. EXCL s 4Q16 EBITDA declined by-21%yoy/-8%qoq to Rp1.8tr due to higher operating cost. This brings FY16 EBITDA to Rp8.1tr (-4%yoy), accounting for 98%/96 our and consensus' forecast. Its FY16 net profit of Rp376bn was above our and consensus forecast due to Rp1.7tr gain from tower sales Poor top line growth. EXCL s 4Q16 revenue declined by-12%yoy/flat qoq to Rp5.3tr with FY16 revenue declined by 7%yoy to Rp21.3tr. We suspect weak top line growth was due to sharp decline in the traditional voice and sms business while growth from data remains strong due to strong data traffic. EXCL is the only operators under our coverage with poor top line growth in 2016 despite double digit growth of peers (in 9M16). EBITDA margin declined to 34.7% in 4Q16 (vs 37.8% in 9M16) due to higher operating expenses (higher leasing cost and higher promotion expenses). Its EBITDA margin of 37.8% in FY16 is largely inline with guidance. However, EXCL booked Rp414bn operating loss in 4Q16 (-7.9% operating loss). Earnings outlook remains challenging. We reiterate our Neutral call on EXCL with Rp2,400TP (3%LTG, 11%WACC) due to still challenging growth outlook. The company s effort to improve its traditional distribution channel, if successful, may lead to better revenue outlook. EXCL quarterly results In Rpbn 4Q16 4Q15 %YoY 3Q16 %QoQ 12M16 12M15 %YoY % ours % to cons. Revenue 5,258 5,954-12% 5,229 1% 21,341 22,876-7% 21,759 98% 98% Operating expenses (5,673) (5,445) 4% (5,002) 13% (21,111) (21,373) -1% (20,657) 102% 102% Operating profit (414) % 228 na 230 1,504-85% 1,102 21% 20% EBITDA 1,822 2,320-21% 1,979-8% 8,058 8,393-4% 8,225 98% 96% Net profit % (65) na 376 (25) na % -80% Operating margin -7.9% 8.6% 4.4% 1.1% 6.6% 5.1% EBITDA margin 34.7% 39.0% 37.8% 37.8% 36.7% 37.8% Net margin 4.1% 8.1% -1.2% 1.8% -0.1% 1.2% Ariyanto Kurniawan ( ) ariyanto.kurniawan@mandirisek.co.id Page 7 of 14

8 Wijaya Karya: Analyst Meeting Key Takeaways (WIKA; BUY; Rp2,570; TP: Rp3,000) Financial Closing for Jakarta-Bandung High Speed Railways (HSR) project to be signed in mid/end February Currently, Kereta Cepat Indonesia China (KCIC), the project owner of HSR project, is in negotiation with China Development Bank (CDB) on the scope of works as well as completing necessary documents. It is worth noting that WIKA has obtained Rp15.8tn contracts for the HSR project but there is a potential that WIKA s precast subsidiary, Wijaya Karya Beton (WTON), could obtain additional Rp3-5tn contracts for the project net profit is expected to grow by 50% y-y. WIKA expects that unaudited 2016 net earnings to reach Rp940bn (+50% y-y), or 117%/118 Mansek/consensus estimate. This solid result in 2016 was partly caused by one-off gain from sales of property, amounting to around Rp200bn. On the other hand, WIKA expects 2016 sales of Rp19.4tn (+42% y- y) which translate to 118%/109 Mansek and consensus estimate. For 2017, WIKA targets net profit of Rp1,218bn (Mansek: Rp1,239bn, consensus: Rp1,182bn) and sales of Rp25.7tn (Mansek: Rp25.7tn, consensus: Rp24.1tn). Ytd new contracts reached Rp5.1tn. Less than one month into 2017, WIKA was able to book 12 its 2017FY new contracts target of Rp43.2tn. Major signed new contracts are Serang-Panimbang toll road (Rp3.6tn), Integrated Logistic Storage Terminal & Jetty (Rp875bn) and PLTU Sulsel 1x100MW (Rp253bn). For 2017, WIKA expects 40 its new contract to derive from private projects, followed by SOE (30%) and government (30%). The company also expects 2017 total order books to break Rp100tn mark. Developing Wika Realty into prominent property player. To accelerate development process, Wika Realty would seek partnership with foreign players in developing property site. Currently, Wika Realty has 35% stake in Makassar Coastal City (81ha land bank), 30% stake in Jakarta River City (10ha) and 35% stake in Tegalluar City Development (Transit Oriented Development for HSR project). WIKA also plans to IPO Wika realty in 3Q17, pending approval from SOE Ministry. Maintain BUY. We reiterate our positive outlook for WIKA, especially after completion of Rp6.1tn rights issue. WIKA should have better equity balance to bid new projects as well as execute existing contracts. Retain BUY with TP of Rp3,000. Bob Setiadi ( ) bob.setiadi@mandirisek.co.id TAX AMNESTY Page 8 of 14

9 MARKET Market Recap Jan 31 st 2016; JCI: 5, (-0.16%); USD/IDR: 13,352; Total Value: Rp6.8tn Indo shares were on the defensive on Tuesday as stringent curbs on travel to the US ordered by President Donald Trump brought home to investors that he is serious about putting his radical campaign pledges into action. Global stocks posted their biggest loss in six weeks after Trump signed an executive order on Friday to bar Syrian refugees indefinitely and suspend travel to the US from seven Muslim-majority countries, sparking widespread protests. Elevated uncertainty on Trump's policies, including his plans for tax cuts and fiscal spending, offset optimism on the US economy. Data on Monday showed US consumer spending accelerated in Dec while inflation showed some signs of picking up last month. The core PCE price index, the Federal Reserve's preferred inflation measure, rose 1.7% on a year-on-year basis after a similar gain in Nov. The share price of ASII registered its biggest intraday advance since Jan 13 th by 0.63% to close at 7950 after its subsidiary Astratel Nusantara acquires additional stake in toll road operators for Rp2.57tn from SSIA (close flat) and NRCA (+8.8%). Then, WIKA (+4.5%) jumped into wagon after reporting 20% increase in unaudited FY16 net profit at Rp940bn (vs management expectation of Rp750bn). Other SOE contractors followed suit: ADHI (-0.5%), PTPP (+2%), WSKT (flat) and TOTL (+0.7%). The JCI stayed in tight range of throughout the day and last minute selling into heavyweight consumer including: HMSP (from -1% to close -1.3%); UNVR (from -0.24% to close -0.3%); and GGRM (from -1.2% to close -1.7%) pushed the JCI to close 0.15% lower at Turnover was good at US$428mn (excluding US$8.3mn CTRA; US$7.7mn MYRX; US$6.7mn INPC; US$3.7mn JGLE crossing). Foreign posted a net sell of Rp405.8bn (US$30.4mn) and foreign participants rose to 22% and came up better seller for 16%. Gainers and losers almost even out. The Bank of Japan ends a monetary meeting later on Tuesday and is widely expected to keep policy on hold. Worries about a political shift to populist leaders in Europe are rising. French bond yields rose to the highest level since Sept 2015, on rising uncertainty over the Presidential election later this year. ervative leader Francois Fillon, seen as the frontrunner, is now battling to contain a scandal over allegedly unlawful payments to his wife while the Socialists on Sunday picked a hard-left candidate, possibly helping popular far-right leader Marine Le Pen. Italian debt yields climbed to 1 1/2- year high partly as early elections could be called following a ruling from the country's constitutional court last week. By contrast, the yield on German debt fell on Monday even as data showed inflation in Germany hit a 3 1/2-year high in January. News of Germany posting a national inflation rate of 1.9% stoked talk of an unwinding of monetary stimulus by the European Central Bank, even though the inflation outcome was below expectations. TOP TURNOVER: BUMI ENRG ELTY TLKM BRMS WIKA ASII BBRI BBCA BBNI BMRI DEWA ANTM PTPP LPPF WSBP (40%) ADVANCING SECTOR: plantation +2.1%; auto & telco +1.1%; mining +0.6%; property & construction +0.4%; DECLINING SECTOR: consumer -0.8%; cement -0.5%; financial -0.3% The yield of 10-year government went up to 7.64% (+0.25%) and Rupiah was flat at Rp13,352. Sales Team Page 9 of 14

10 FROM THE PRESS Bank Indonesia changes its Open Market Operation scheme BI changes its open market operation scheme from previously fixed-rate tenders to variable-rate tenders. With variable-rate tenders (VRT) scheme, the quantity of open market operation will be determined by BI, but the interest rate will be determined by the market. On the previous fixed-rate tenders scheme, the interest rate is set by BI. Note that the instruments offered in VRT exclude the ones with 7-days tenors. This scheme is expected to give more effect on bank s liquidity management and interest rates, thus affecting long-run interbank money market (e.g. 3 months and 6 months repo). (Kontan) Government to impose higher tax for land speculators Government plans to restrict movement of land speculators by changing taxation scheme of land transactions from taxable value taxation (NJOP) to capital gain taxation and imposing progressive tax on unutilized land. (Kontan) Adaro Energy (ADRO) reported coal production at 52.64mn tons in FY16 ADRO reported 4Q16 coal production at 13.31mn tons (+14% YoY, -1% QoQ), putting total coal production at 52.64mn tons in FY16 (+2% YoY), in-line with our target of 53mn tons. 4Q16 coal sales were at 13.64mn tons (+15% YoY, +2% QoQ), bringing total coal sales volume at 54.09mn tons (+2% YoY), also in-line with our target of 54.4mn tons. Meanwhile, 4Q16 strip ratio was realized at 4.46x, putting FY16 strip ratio at 4.45x (vs. planned SR of 4.71x). Lower than expected strip ratio was caused by prolonged rainfall in South Kalimantan operations. In FY17, ADRO guided flat production at 52-54mn tons (vs. our target at 54mn tons). Meanwhile the company aimed for higher strip ratio in FY17 at 4.85x (+9% YoY), vs. ours at 5.1x. Both EBITDA and capital expenditure are estimated between USD900mn-USD1.1bn and USD200mn-USD250mn respectively. (Company Release) Adhi Karya (ADHI) booked 12M16 new contracts of Rp16.5tn The 2016FY new contracts achievement of Rp16.5tn (+18% y-y) is below the company s revised 2016 target of Rp17.9tn but slightly higher than Mansek forecast of Rp16tn. Major contracts signed in Dec-16 include package I of 6 Inner City Toll Road (Rp785bn), Pasar Minggu flat (Rp481bn) and Entikong border facility (Rp211bn). In 2016, 37 ADHI s new projects are coming from government, followed by SOE (36%) and private (28%). For 2017, ADHI forecast sales of Rp14tn (Mansek: Rp15.6tn), net profit of Rp505bn (Mansek: Rp513bn) and new contracts (ex-lrt) of Rp21.6tn (Mansek: Rp18tn). (Company, Bisnis Indonesia) Rumah.com property survey: 52 participants are positive on the sector Property Affordability Sentiment Index 2016 survey conducted by Rumah.com states 52 Indonesians are interested to buy properties in 1H17. In addition, 76 participants are optimist on long-term upside in property pricing in the country. According to Country Manager Rumah.com, Wasudewan, landed housing price has increased with a median of Rp10mn/sqm. (Bisnis Indonesia) PP Properti (PPRO) to launch 2 malls in Bekasi and Balikpapan PPRO will launch Lagoon Avenue mall in Grand Kamala lagoon Bekasi, amounting to Rp130bn and a shopping mall in Balikpapan Ocean Square. PPRO Director of Commercial and Hospitality, Sinurlinda Gustina, stated that the company hopes to boost recurring revenues from the opening of two shopping malls. Current recurring income of 5% to total revenue comes from Park Hotel Jakarta and Bandung and one shopping mall in Surabaya. PPRO sets to increase recurring income to 18% in (Bisnis Indonesia) Waskita Beton Precast (WSBP) booked ytd new contracts of Rp1.4tn; add new director WSBP targets to book Rp12.3tn new contracts in 2017, of which Rp3tn projects was expected to be signed in 1Q17. Recently, the company signed Mesuji and Kayu Agung-Betung toll road worth Rp1.4tn. WSBP also plans to increase precast plant to 12 (current: 10) and batching plants to 83 units (current: 42 units). Meanwhile, during the Extraordinary Shareholder Meeting (RUPSLB), WSBP appoint Didit Oemar Prihadi as its new director. (Bisnis Indonesia) Page 10 of 14

11 Indices Currencies and ADRs Major Commodities Last Chg (%) YTD Chg (%) Currency Last Chg (%) YTD Chg (%) Last Chg (%) YTD Chg (%) JCI 5, Rp/US$ 13, Oil spot (US$/bl) Dow Jones 19, US$/EUR Nickel spot (US$/mt) 9, Nikkei 19, YEN/US$ Gold spot (US$/oz) 1, SET 1, SGD/US$ Tin 3-month (US$/mt) 19, Hang Seng 23, CPO futures (Ringgit/ton) 3, STI 3, ADR Stocks Soybean oil (US$/100gallons) S&P 500 2, TLK in Rp 9, Rubber forward (US /kg) Coal (US$/ton) Ishares indo Baltic Dry Index Property Valuation JCI Code Rec. Market Cap Share price Target Price Discount to NAV RNAV per share (Rp) Premium (discount) to replacement cost Replacement cost per share (Rp) PE (x) ROE 17F 18F 17F 18F BSDE Buy 35,221 1,830 2,570-61% 4,673 18% 1, % 10.5% PWON Buy 26, % 1,207 33% % 25.5% SMRA Neutral 18,896 1,310 1,575-67% 3,933 92% % 17.2% CTRA Buy 20,019 1,320 1,600-57% 3,073 69% % 14.0% JRPT Buy 12, ,300-73% 3,242 26% % 18.7% ASRI Neutral 7, % 1,161 67% % 5.3% LPCK Buy 3,466 4,980 10,000-80% 24,683 6% 4, % 11.9% MDLN Buy 4, % 1,165 19% % 7.9% CTRS Buy 5,363 2,710 4,000-80% 13,390-33% 4, % 12.2% Simple Average -68% % 13.7% Industrial Estate Valuation JCI Code Rec. Market Cap Share price Target Price Discount to NAV RNAV per share (Rp) Premium (discount) to replacement cost Replacement cost per share (Rp) PE (x) ROE 17F 18F 17F 18F DMAS Buy 11, % % % 11.8% BEST Buy 3, % % % 9.9% SSIA Buy 2, % 1,701-27% % 5.6% LPCK Buy 3,466 4,980 10,000-80% 24,683 6% 4, % 11.9% MDLN Buy 4, % 1,165 19% % 7.9% Simple Average -68% % 9.4% Page 11 of 14

12 Equity Valuation Price Price Mkt Cap Net Profit EPS Growth PER (x) EV/EBITDA (x) P/BV (x) Div.Yield Code Rating (Rp) Target PT (Rp Bn) MANSEK universe 5,294 5,550 3,997, , , % 13.1% % 2.0% Banking 938,935 81,172 95, % 17.5% N.A. N.A % 2.0% BBCA Neutral 15,300 15,150 (1.0) 377,222 21,729 24, % 11.2% N.A. N.A % 1.3% BBNI Buy 5,700 6, ,297 12,995 15, % 17.9% N.A. N.A % 3.7% BBRI Buy 11,725 13, ,246 28,258 34, % 22.2% N.A. N.A % 2.4% BBTN Buy 1,905 2, ,174 2,843 3, % 18.6% N.A. N.A % 2.8% BDMN Neutral 4,160 3,575 (14.1) 39,872 4,060 4, % 13.2% N.A. N.A % 1.8% BJBR Sell 2,300 1,600 (30.4) 22,301 1,780 1, % 10.5% N.A. N.A % 3.2% BJTM Neutral (10.6) 9,174 1,107 1, % 12.2% N.A. N.A % 7.5% BNGA Buy 980 1, ,629 3,290 3, % 21.2% N.A. N.A % 0.0% BNLI Buy , ,434 N/M 75.7% N.A. N.A % 0.5% BTPN Neutral 2,580 2, ,068 1,730 1, % 10.5% N.A. N.A % 0.0% PNBN Buy 825 1, ,872 2,565 2, % 11.8% N.A. N.A % 0.0% Building Materials 119,190 6,308 7, % 11.9% % 1.8% INTP Neutral 15,025 14,400 (4.2) 55,311 3,252 3, % 10.4% % 1.9% SMCB Sell (11.1) 6, % 14.2% % 0.0% SMGR Neutral 9,025 8,600 (4.7) 53,532 3,207 3, % 8.4% % 1.8% ARNA Buy , % 51.9% % 2.4% tructions 112,256 6,339 7, % 15.2% % 1.3% ADHI Neutral 2,100 2,020 (3.8) 7, % 35.2% % 1.4% PTPP Buy 3,590 4, ,258 1,323 1, % 22.7% % 1.2% WIKA Buy 2,570 3, ,028 1,239 1, % 11.9% % 1.1% WSKT Buy 2,560 3, ,255 1,842 2, % 10.2% % 1.2% WTON Buy 825 1, , % 13.8% % 1.4% WSBP Buy , % 7.8% % 1.6% TOTL Buy 770 1, , % 14.1% % 5.4% Toll road 30,628 1,805 1, % 4.6% % 1.8% JSMR Buy 4,220 5, ,628 1,805 1, % 4.6% % 1.8% Rice Mill 5, % 27.9% % 0.9% AISA U/R 1,575 U/R U/R 5, % 27.9% % 0.9% umer 1,101,734 37,839 41, % 10.8% % 1.1% ICBP Neutral 8,400 9, ,960 3,904 4, % 14.0% % 1.8% INDF Buy 7,925 11, ,597 4,221 4, % 11.5% % 3.2% MYOR Neutral 1,770 1,550 (12.4) 39,575 1,443 1, % 19.7% % 1.5% ULTJ U/R 4,390 U/R U/R 12, % 10.2% n/a 0.5% 0.6% UNVR Neutral 41,200 41, ,356 7,274 8, % 11.1% % -2.3% GGRM Buy 61,750 75, ,812 7,272 7, % 8.9% % 1.6% HMSP Neutral 3,850 3, ,825 12,996 14, % 9.7% % 2.8% WIIM U/R 442 U/R U/R 928 n/a n/a 0.0% 0.0% n/a n/a n/a n/a n/a n/a 0.0% 0.0% Healthcare 84,739 3,779 4, % 11.9% % 2.5% KLBF U/R 1,450 U/R U/R 67,969 2,569 2, % 11.2% % 2.1% SIDO Buy , % 15.0% % 5.1% TSPC U/R 1,860 U/R U/R 8, % 12.4% % 3.8% Hospital 50, , % 21.7% % 0.7% MIKA Buy 2,500 3, , % 16.1% % 0.9% SILO Neutral 11,800 10,820 (8.3) 13, % 49.4% % 0.0% Retail 89,197 4,637 5, % 17.9% % 3.4% ACES Neutral , % 15.3% % 2.4% ERAA U/R 610 U/R U/R 1, % 25.2% n/a n/a 5.7% 6.9% LPPF Buy 14,775 19, ,112 2,355 2, % 17.0% % 4.9% MAPI Buy 5,525 6, , % 35.5% % 0.5% MPPA Sell 1, (26.5) 6, % 55.4% % 0.3% RALS Neutral 1,340 1,180 (11.9) 9, % 6.5% % 2.8% TELE U/R 880 U/R U/R 6, % 14.2% % 2.1% Automotive 325,439 18,303 19, % 6.0% % 2.5% Page 12 of 14

13 Price Price Mkt Cap Net Profit EPS Growth PER (x) EV/EBITDA (x) P/BV (x) Div.Yield Code Rating (Rp) Target PT (Rp Bn) ASII Neutral 7,950 8, ,844 18,054 18, % 4.5% % 2.5% IMAS U/R 1,300 U/R U/R 3, % 267.7% % 0.2% Heavy Equipment 84,275 5,799 5, % -0.3% % 2.1% HEXA* U/R 3,300 U/R U/R 2, % 0.0% % 4.0% UNTR Neutral 21,850 21,000 (3.9) 81,503 5,623 5, % -0.4% % 2.1% Plantation 44,703 3,099 3, % 14.0% % 2.4% AALI Buy 15,775 16, ,362 2,008 2, % 14.0% % 2.3% LSIP Buy 1,550 1, , % 7.5% % 3.0% SGRO U/R 1,995 U/R U/R 3, % 31.4% % 2.0% Property 138,169 11,535 12, % 9.3% % 0.8% APLN U/R 220 U/R U/R 4, % -12.6% % 2.9% ASRI Neutral , % -46.1% % 1.5% BSDE Buy 1,830 2, ,221 2,648 2, % -6.4% % 1.0% CTRA Buy 1,320 1, ,019 1,429 1, % 11.4% % -1.4% CTRS Buy 2,710 4, , % -3.1% % 2.2% JRPT Buy 875 1, ,031 1,074 1, % 9.4% % 0.9% LPCK Buy 4,980 10, , % -7.1% % 0.0% MDLN Buy , % 14.7% % 0.0% PWON Buy ,969 2,435 3, % 27.1% % 2.1% SMRA Neutral 1,310 1, , , % 148.5% % 0.0% Industrial Estate 17,681 2,814 1, % -41.9% % 3.5% DMAS Buy , , % 2.8% % 2.6% BEST Buy , % 20.4% % 0.5% SSIA Buy ,988 1, % -83.7% % 10.2% Poultry 73,479 5,544 6, % 18.8% % 2.4% CPIN U/R 3,100 U/R U/R 50,834 3,525 4, % 17.6% % 2.4% JPFA U/R 1,755 U/R U/R 20,025 1,688 2, % 22.2% % 2.2% MAIN U/R 1,170 U/R U/R 2, % 12.8% % 2.8% Coal 103,837 8,370 8, % 3.4% % 4.1% ADRO* Sell 1,695 1,200 (29.2) 54, % 2.9% % 2.6% HRUM* Sell 2,200 1,600 (27.3) 5, % 7.3% % 4.7% ITMG* Sell 15,000 12,250 (18.3) 16, % -9.3% % 7.4% PTBA Sell 11,600 9,500 (18.1) 26,732 2,256 2, % 12.4% % 4.7% Oil & Gas 69,816 5,529 5, % 5.9% % 4.1% PGAS* U/R 2,880 U/R U/R 69, % 5.9% % 4.1% Shipping 2, % N/A % 0.0% SOCI* U/R 300 U/R U/R 2, n/a 0.0% % 4.6 n/a 6.7 n/a n/a n/a 0.0% 0.0% Metal 31, % N/M ### % 1.1% ANTM Neutral (37.5) 7, % -13.3% % -3.9% INCO* U/R 2,370 U/R U/R 23, % 125.0% % 2.8% Telco 446,187 23,840 27, % 17.6% % 3.9% EXCL Neutral 2,910 2,400 (17.5) 31, % 37.7% % 0.5% ISAT U/R 6,450 U/R U/R 35,049 1,871 2, % 43.5% % 3.3% TLKM Buy 3,870 4, ,082 21,439 24, % 14.9% % 4.2% Tower 59,453 4,471 5, % 16.1% % 0.0% TBIG Neutral 4,950 6, ,743 1,558 1, % 25.6% % 0.0% TOWR Buy 3,500 5, ,710 2,913 3, % 11.0% % 0.0% Media 65,431 3,681 4, % 14.8% % 3.1% SCMA Buy 2,820 3, ,233 1,870 2, % 13.6% % 3.2% MNCN Buy 1,695 2, ,198 1,812 2, % 16.0% % 3.0% Textile 4, % N/A % 0.0% SRIL* U/R 232 U/R U/R 4, n/a 33.3% % 4.4 n/a 5.6 n/a 0.8 n/a 5.6% 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 13 of 14

14 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 Tjandra Lienandjaja Deputy Head of Equity Research, Banking tjandra.lienandjaja@mandirisek.co.id Liliana S Bambang Property, Building Material liliana.bambang@mandirisek.co.id Adrian Joezer umer, Strategy adrian.joezer@mandirisek.co.id Ariyanto Kurniawan Telecom, Coal, Metal, Automotive ariyanto.kurniawan@mandirisek.co.id Bob Setiadi truction, Toll Road bob.setiadi@mandirisek.co.id Francis Lim Quant, Health Care, Hospital francis.lim@mandirisek.co.id Yudha Gautama Mining, Plantation yudha.gautama@mandirisek.co.id Laura Taslim Retail laura.taslim@mandirisek.co.id Priscilla Thany Banking priscilla.thany@mandirisek.co.id Ferdy Wan Building Material, Industrial Est., Media ferdy.wan@mandirisek.co.id Lakshmi Rowter Research Assistant lakshmi.rowter@mandirisek.co.id Gerry Harlan Research Assistant gerry.harlan@mandirisek.co.id Leo Putera Rinaldy Chief Economist leo.rinaldy@mandirisek.co.id Wisnu Trihatmojo Economist wisnu.trihatmojo@mandirisek.co.id Aziza Nabila Amani Research Assistant aziza.amani@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 Kevin Halim Institutional Sales kevin.halim@mandirisek.co.id Mirna Santikara Salim Institutional Sales santikara.salim@mandirisek.co.id Oos Rosadi Institutional Sales oos.rosadi@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 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 (15% or higher), Neutral (-15% to15%) and Sell (-15% 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.