INVESTOR DIGEST HIGHLIGHT ECONOMY. Equity Research 29 October 2015

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1 INVESTOR DIGEST Equity Research 29 October 2015 Economic Data Latest 2015F BI Rate (%), eop Inflation (YoY %) US$ 1 = Rp, period avg 13,480 13,333 Stock Market Data (28 Oct 2015) JCI Index 4, % Trading T/O ( Rp bn ) 4,051.0 Market Cap ( Rp tn ) 4, ,677.6 HIGHLIGHT Oct15 Inflation Preview Unilever: Downtrading trend? (UNVR; Rp38,200; Neutral; TP:Rp41,000) XL Axiata: 9M15 EBITDA In-line (EXCL; Rp3,205; Buy; TP:Rp4,000) Telkom: 9M15 Net profit inline (TLKM; Rp2,795; Neutral; TP:Rp2,900) Bank BCA: 9M15 results in line with expected worsening asset quality (BBCA; Rp13,575; Neutral; Tp:Rp12,400) Bank bjb: 9M15 results within expectation (BJBR; Rpunder review) Sido Muncul: 9M15 results within expectation (SIDO; Rp495; Neutral; TP:Rp550) Tempo Scan Pacific: 9M15 results within expectation (TSPC; Rp1,700; Neutral; TP:Rp2,100) Market Data Summary* ECONOMY 2015F 2016F Oct15 Inflation Preview EBITDA growth (%) EPS growth (%) EV/EBITDA (x) P/E (x) P/BV (x) Div. Yield (%) Earnings Yield (%) Net Gearing (%) ROE (%) * Aggregate of 71 companies in MS research universe, representing 55 JCI s market capitalization Announcement date. The Statistics Agency (BPS) will announce Oct15 inflation on Monday, November 2nd. A likely low inflation. Specifically, food price is expected to continue the deflation trend as main staples registered lower prices, based on our observation. Meanwhile, Sept15 electricity tariff, which is paid in Oct15, also went down by 1.5% mom. Although the degree of food deflation may have not been as high as the previous month, we believe it was enough to offset the nonfood inflationary pressure along Oct15 such as clothing and housing. On the other hand, core inflation is expected to remain above 5% threshold. We estimate core inflation to remain relatively unchanged at 5.08% yoy in Oct15. The higher gold price (3.0% mom) followed by the stabilization of domestic economy may have been compensated by the 3.8% mom exchange rate appreciation. Year on year headline inflation continues to tumble. Based on our 0.06% mom inflation estimation, the year on year figure is expected to ease further to 6.40% yoy in Oct15 from 6.83% yoy in the previous month (this is considering Oct14 inflation reached 0.47% mom). Core inflation, on the other hand, would remain flat (5.08% yoy) partly as a consequence of economic stabilization and year-to-date rupiah depreciation. Although annual inflationary pressure continues to tumble, we believe the central bank will hold its benchmark rate at 7.5% in the next board meeting (17/11) as it is too early to conclude that the Rupiah has entered a stable phase. Page 1 of 13

2 Sep-15 Oct-15 MS Forecast Market ensus Headline inflation (% yoy) Headline inflation (% mom) Headline inflation (% ytd) Core inflation (% yoy) Aldian Taloputra ( ) aldian.taloputra@mandirisek.co.id CORPORATE Unilever: Downtrading trend? (UNVR; Rp38,200; Neutral; TP:Rp41,000) Seasonality aside, Unilever (UNVR IJ) s volume contraction in home personal care (HPC) products might suggest downtrading trend in consumer space. Weaker Ebit margin (-30bps QoQ) exacerbated the situation which led to a mere 3% YoY earnings growth in 3Q15. High valuation with lackluster growth. Neutral. 3Q15 result in line with ours, below consensus. Unilever posted revenue of Rp8.7tn (+3% YoY) and earnings of Rp1.3tn (+4% YoY) in 3Q15 representing 74% and 72 our forecast respectively (in line). On quarterly basis, top and bottom line dropped by 7% and 6% respectively due to Lebaran seasonality which moves toward 2Q15. Inventory days consequently also moved up to 50 days in 3Q15 (vs. 42 days in 2Q15) which suggests sluggish demand. This prompted the company to incur new borrowing of Rp1.45tn (US$105mn) as of 9M15. Volume contraction for home personal care product. Unilever s revenue growth decelerated further in 3Q15 to 3% YoY from 8% and 6% YoY in 1Q15 and 2Q15 respectively. This was driven by sluggish sales growth of their home personal care (HPC) category. HPC posted 0.8% sales growth in 3Q15 which suggests volume contraction on the back of shifting Lebaran seasonality coupled with down trading trend in consumer space. This might apply for Unilever s home care, toothpaste, and face care categories. Weaker Ebit margin due to higher royalty. Blended gross margin improved by 40bps QoQ driven by HPC division while F&B segment posted lower margin (-70bps) on the back of higher coconut sugar price. However, Ebit margin dropped by 30bps QoQ in 3Q15 due to higher royalty expense (+50bps QoQ) and higher ad/sales ratio given poor sales achievement. Ad/promotional spending up by 4% YoY while dropped by 4% QoQ in 3Q15. Tweaked our numbers and maintain Neutral rating. We slightly tweaked our numbers to incorporate 3Q15 result (see table in the report). We derive our TP of Rp41,000/sh based on 48x PE using average EPS UNVR FINANCIAL SUMMARY YE Dec (Rp Bn) 2013A 2014A 2015F 2016F 2017F EBITDA 7,579 8,134 8,132 8,337 9,789 Net Profit 5,353 5,739 5,808 6,051 7,167 Fully-diluted EPS (Rp) Fully-diluted EPS growth (%) P/E Ratio (x) EV/EBITDA (x) P/B Ratio (x) Dividend Yield (%) ROAE (%) Source: Company ( ), Mandiri Sekuritas ( ) Merlissa Paramitha Trisno ( ) merlissa.trisno@mandirisek.co.id Page 2 of 13

3 XL Axiata: 9M15 EBITDA In-line (EXCL; Rp3,205; Buy; TP:Rp4,000) EXCL s 9M15 EBITDA is inline with forecast. Earnings recovery continues in 3Q15 despite high churn rate; RPM is trending up; higher data yield, and higher EBITDA margin. Maintain Buy with Rp Rp4,000/share TP. 9M15 EBITDA inline. XL Axiata (EXCL) reported 3Q15 EBITDA of Rp2.2tr (+10%q-o-q, +7%y-o-y). This brings the 9M15 EBITDA to Rp6.1tr (-4%y-o-y), in-line with our forecast (75%). EXCL s 3Q15 revenue grew by 4%q-o-q (-3%y-o-y) despite losing another 4.5mn subscribers (low quality subscriber) to 41.5mn from its new strategy to focus on value customers. Voice revenue rose 11%q-o-q (+10%y-o-y), driven by 54%q-o-q higher RPM while SMS revenue was flat on q-o-q (-19%y-o-y) due to ongoing substitution to data. Revenue from data rose 4.6%q-o-q (+13%y-o-y), with data yield finally rising by 5.6%q-o-q to Rp36/MB (-14%y-o-y). Smartphone users fell by 4.0%q-o-q (+7.0%y-o-y) to 15.6m, accounting for 38 its total subscribers. We estimate the blended ARPU increased by 13%q-o-q(+33%y-o-y) in 3Q15 after 14%q-o-q increase in 2Q15. EBITDA margin improved. EXCL s 3Q15 operating profit and EBITDA grew by 22%y-o-y and 7%y-o-y respectively as a result of higher revenue and higher margins with operating and EBITDA margins rising to 9.9% (from 7.9% in 3Q14) and to 37.7% (from 35.6% in 2Q15) respectively. Reducing USD loan exposure. As part of the plan to reduce exposure to USD debt, EXCL has refinanced the US$250mn unhedged external USD loan in October. Thus, by the end of October, EXCL has fully repaid and refinanced its entire unhedged external USD loan. The management has indicated that EXCL still has around US$938mn of total loan, of which US$500mn is a loan to Axiata, or 53 total loans that remain unhedged. Strong 3Q15 number gives comfort that more solid recovery is underway. We reiterate our view that the weak earnings could have reached the bottom in 1Q15 given the strong number in the past two quarters. Maintain Buy with TP of Rp4,000/share. EXCL FINANCIAL SUMMARY YE Dec (Rp Bn) 2013A 2014A 2015F 2016F 2017F EBITDA 8,659 8,623 8,267 9,772 10,851 Net Profit 1,033 (891) (516) 1,153 1,754 Fully-diluted EPS (Rp) 121 (104) (60) Fully-diluted EPS growth (%) (62.7) (186.3) n/m n/m 52.1 P/E Ratio (x) 26.5 (30.7) (53.0) EV/EBITDA (x) P/B Ratio (x) Dividend Yield (%) ROAE (%) 6.7 (6.1) (3.8) Source: Company ( ), Mandiri Sekuritas ( ) Ariyanto Kurniawan ( ) ariyanto.kurniawan@mandirisek.co.id Telkom: 9M15 Net profit inline (TLKM; Rp2,795; Neutral; TP:Rp2,900) 9M15 net profit inline. Telkom (TLKM) reported 3Q15 net profit of Rp4.1tr (+13%q-o-q, -1%y-o-y). This brings 9M15 net profit to Rp11.5tr (flat y-o-y) inline with our forecast. Its 9M15 EBTDA of Rp49.9tr accounting for our and consensus forecast. Revenue in 9M15 grew 15%y-o-y mainly driven by 35%y-o-y growth from data and internet services while voice and SMS also grew by 9.5%y-o-y and 8.1%y-o-y respectively despite strong data adoption. Strong revenue growth in 3Q15 (+21%y-o-y) has lead to 14%y-o-y growth in EBITDA despite lower margin operating margin from higher operating expenses. Maintain Neutral, Rp2,900TP. TLKM offers attractive dividend yield of 4%. Its strong cash flow and healthy balance sheet will support 20-25% capex/sales for network expansions as well as high dividend. Page 3 of 13

4 TLKM financial results In Rpbn 3Q15 3Q14 %YoY 2Q15 %QoQ 9M15 9M14 %YoY % ours % to cons. Revenue 26,879 22,299 21% 25,224 7% 75,719 65,841 15% 97,699 78% 79% Operating expenses (18,010) (14,239) 26% (17,549) 3% (51,727) (43,709) 18% (66,596) 78% 81% Operating profit 8,869 8,060 10% 7,675 16% 23,992 22,132 8% 31,103 77% 76% EBITDA 13,580 11,933 14% 11,370 19% 37,496 34,168 10% 49,862 75% 76% Net profit 4, ,160-1% 3,633 13% 11,545 11,446 1% 15,998 72% 70% Operating margin 33.0% 36.1% 30.4% 31.7% 33.6% 31.8% EBITDA margin 50.5% 53.5% 45.1% 49.5% 51.9% 51.0% Net margin 15.2% 18.7% 14.4% 15.2% 17.4% 16.4% Ariyanto Kurniawan ( ) ariyanto.kurniawan@mandirisek.co.id Bank BCA: 9M15 results in line with expected worsening asset quality (BBCA; Rp13,575; Neutral; Tp:Rp12,400) BCA posted Rp13.4tr net profit in 9M15, +10% y-y, in line with the market and our expectations. A better earnings were recorded in 3Q15 with Rp5tr net profit, supported by stronger loan growth and lower operating expenses. The 11% y-y loan growth in September was an improvement from 8% y-y in June. The bank indicated that there has been increasing loan demand from their customers despite most of them are suffering lower profits compared to last year (the bank did a sample of 158 companies in various sectors within their loan portfolio and compared their y-y earnings in 1H15). In addition, BCA also saw customers that converted their USD loans from other banks into rupiah loans in BCA. As such they could record the 11% y-y loan growth, of which the corporate loans increased 12% y-y, commercial & SME loans 9% and consumer loans 10% y-y. Among the consumer loans the auto loans posted the highest growth rate of 11% y-y. LDR continued to reach the new high at 79%. The economic slowdown has been affecting the CASA growth of 7% y-y as well as time deposits, for which BCA has been cutting the maximum rate from 7.5% in the beginning of the year to 5.75% in September. As a result, the LDR/LFR (the bank does not have bonds) has reached the new peak of 79% in September from 77% a year ago. The lower cost of funds thus helped support improvement in NIM, which reached 6.96% in 3Q15, up 10 bps from 6.86% in 2Q15. Non-interest income increased 25% y-y. The 11% y-y increase in net interest income was also supported by the high increase in non-interest income, mainly from the foreign exchange trading as well as from the credit card business. Meanwhile operating expenses declined on q-q basis in 3Q15, given the rising cost for bonus and salary adjustment in 2Q15. NPL inched up 5bps to 0.73%. This is not a surprise given the situation with the new problem loans came from the commercial lending (NPL at 1.2%) while NPL in corporate and consumer segments was at 0.1% and 0.8%, respectively. BCA wrote off around Rp560bn of bad debts in 9M15 (mostly for consumer loans), compared to Rp764bn in 9M14 while the loan-loss coverage ratio is reduced to 283% from 291% in June and in September Furthermore, the special mention loans (SML) increased to 1.9 total loans in September 2015 from 1.4% in September 2014 while the restructured loans rose to 0.6 total loans from 0.3% over the same period. Of the SML almost half of them are from the consumer loans, 73 which is in arrear of <30 days. In addition, there is % these SML which has been showing improvement from the lower asset quality tier. Hence the chance of the SML slip into NPL is likely to be limited to around 1.1% at the worst case, one which a potential corporate client, Trikomsel, in which BCA has Rp500bn loan exposure while the company is likely to default on their bonds. Page 4 of 13

5 BCA is prepared for the worsening asset quality. The bank expects the industry NPL to reach 4% sometime in 2016 with % in BCA at the worst case scenario. Should this happen, they expect to see declining loan loss provisioning level towards 150%. With <10% loan growth expectation, this means they will not charge significant provisioning charges in 2016 given their current high coverage ratio of 283%. Reducing this level to half while NPL doubles, with everything remains the same, there is no need to add provisioning charges. Maintain Neutral with TP of Rp12,400. The stock is trading at 3.2x P/BV 2016F. The bank is prepared to conduct asset revaluation, which may add around 1% CAR to around 20.5%. Income Statement 9M14 9M15 % YoY 3Q14 2Q15 3Q15 % YoY % QoQ Net interest income 23,580 26, ,153 8,685 9, , Non interest income 6,530 8, ,304 2,981 2, (8) 10, Fees and Commissions 5,303 6, ,814 2,115 2, (0) 8,308 Forex Income (43) Others 754 1, (12) 1,707 Operating income 30,110 34, ,457 11,666 11, , , Provision expense (1,507) (1,537) 2 (721) (480) (963) (1,324) 116 Operating expense (13,302) (16,091) 21 (4,212) (5,695) (4,639) 10 (19) (21,972) 73 Personnel Expenses (6,490) (7,614) 17 (1,650) (2,391) (1,860) 13 (22) (9,915) 77 Other Expenses (6,811) (8,477) 24 (2,562) (3,304) (2,779) 8 (16) (12,057) 70 Operating profit 15,301 16, ,524 5,490 6, , , PPOP 16,808 18, ,246 5,970 7, , Pre-tax profit 15,391 16, ,472 5,490 6, , , Net profit 12,195 13, ,344 4,299 5, , , FY15 Balance Sheet Sep-14 Jun-15 Sep-15 Gross loan 332, , , Demand deposit 106, , , Saving deposit 222, , , Time deposit 104, , ,026 6 (1) Total deposit 433, , , CASA to deposits (%) % YoY % QoQ Ratio (%) 9M14 9M15 3Q14 2Q15 3Q15 CAR Tier 1 CAR LDR NIM ROE NPL, cat Loan loss coverage Cost to Income Tjandra Lienandjaja ( ) tjandra.lienandjaja@mandirisek.co.id Page 5 of 13

6 Bank bjb: 9M15 results within expectation (BJBR; Rpunder review) Bank bjb reported net profit of Rp861bn (+21%yoy) in 9M15 of which in-line with consensus estimation, yet it was below ours at 68%. This strong bottom line growth was due to lower provisioning charges as credit quality improved. Meanwhile net interest income grew by 9%yoy in 9M15. Cumulative NIM declined to 5.8% in 9M15 from 6.3% in 9M14. However on the quarterly basis, NIM improved to 5.6% in 3Q15 from 5.4% in 2Q15as the management reduced time deposit rates gradually since late June Total loans grew by 12%yoy while total deposit grew by 27%yoy in September LDR improved to 73% from 70% in June. Among the deposit, time deposit grew by 35%yoy while savings and demand deposit grew by 24% and 8%, respectively in September. CASA to deposit improved to 50%. Credit quality improved with NPL declined to 3.5% in September from 3.6% in June. Additionally loan loss coverage increased to 82% from 78%. We are currently reviewing our numbers. The counter is currently trading at 0.9x P/BV 2016F. Income Statement 9M14 9M15 % YoY 3Q14 2Q15 3Q15 % YoY % QoQ Net interest income 3,275 3, ,155 1,132 1, , Non interest income Fees and Commisions (14) Forex Income Others (2) Operating income 3,559 3, ,249 1,268 1, , , Provision expense (509) (255) (50) (201) (70) (124) (38) 79 (526) 49 Operating expense (2,098) (2,566) 22 (726) (928) (886) 22 (5) (3,467) 74 Personnel Expenses (931) (1,289) 39 (305) (467) (439) 44 (6) (1,561) 83 Other Expenses (1,167) (1,277) 9 (420) (462) (447) 6 (3) (1,906) 67 Operating profit 952 1, , , PPOP 1,461 1,399 (4) (4) 48 1, Pre-tax profit 925 1, , , Net profit , , FY15 Balance Sheet Sep-14 Jun-15 Sep-15 % YoY % QoQ Gross loan 53,360 57,470 59, Demand deposit 24,007 28,031 29, Saving deposit 10,014 10,339 10, Time deposit 30,566 44,291 41, (6.7) Total deposit 64,587 82,662 81, (0.9) CASA to deposits (%) Ratio (%) 9M14 9M15 3Q14 2Q15 3Q15 CAR Tier 1 CAR LDR NIM ROE NPL, cat Loan loss coverage Cost to Income Vanessa Ariati Tanuwijaya ( ) vanessa.tanuwijaya@mandirisek.co.id Page 6 of 13

7 Sido Muncul: 9M15 results within expectation (SIDO; Rp495; Neutral; TP:Rp550) SIDO reported net profit of Rp326bn (+4%yoy) in 9M15, which translated to 74 our 2015F estimates and 77 consensus. On the quarterly basis, net profit declined by 38%qoq to Rp80bn in 3Q15 from Rp128bn in 2Q15 as SIDO saw revenue contracted from across the product segments due to weak sales volume in July-August. The management indicated the volume demand for herbal medicine segment was weak in July-August considering early stock up during Lebaran festive. Nonetheless the demand normalized in September, partly supported by announcement of 6-7% price increase which went effective in October. Meanwhile F&B segment continued to see declining sales volume. SIDO has launched new Kuku Bima RTD to address the declining market interest on the powder energy drink. Cumulative gross margin improved to 39.0% in 9M15 from 35.2% in 9M14 given heightening sales contribution from herbal medicine segment. Conjointly EBIT and Net margin improved to 22.0% and 19.8% in 9M15 from 19.5% and 19.7% in 9M14, respectively. Looking forward, the management aims to boost growth from the herbal medicine segment. SIDO 2015F guidance was as follows: 1) Sales and NPAT growth of 3%yoy, respectively, 2) Gross margin at 39%, 3) EBIT margin >20%, and 4) A&P spending at maximum 11 total sales. We reiterate our Neutral recommendation on SIDO. The counter is trading at 15.2x P/E 2016F. Income Statement 9M14 9M15 % YoY 3Q14 2Q15 3Q15 % YoY % QoQ FY15 Revenue 1,594 1, (19) 2, , COGS (1,032) (1,007) (2) (305) (372) (320) 5 (14) (1,364) 74 Gross profit (27) Opex (250) (281) 12 (101) (119) (106) 5 (11) (452) 62 EBIT (41) NPBT (37) NPAT (38) Ratios 9M14 9M15 3Q14 2Q15 3Q15 Gross margin 35.2% 39.0% 35.8% 41.1% 37.1% EBIT margin 19.5% 22.0% 14.6% 22.3% 16.3% Net margin 19.7% 19.8% 15.8% 20.3% 15.7% Product Segments 9M14 9M15 3Q14 2Q15 3Q15 % YoY % QoQ Sales Herbal Medicine (14) Food & beverages (14.7) (26) Pharma - 60 n/a n/a (2) Gross Margin Herbal Medicine 53.7% 54.9% 55.0% 58.1% 52.1% Food & beverages 18.1% 19.3% 11.3% 21.9% 16.6% Pharma 0.0% 33.7% 0.0% 34.1% 33.1% Vanessa Ariati Tanuwijaya ( ) vanessa.tanuwijaya@mandirisek.co.id Page 7 of 13

8 Tempo Scan Pacific: 9M15 results within expectation (TSPC; Rp1,700; Neutral; TP:Rp2,100) TSPC reported net profit of Rp520bn (-5%yoy) in 9M15. On the quarterly basis, net profit grew by +9%yoy (+4%qoq) to Rp146bn in 3Q15. This was within ours 2015F estimations and consensus considering the lower earnings cyclicality in the 4Q due to higher A&P spending. Top line revenue grew by 10%yoy supported by consumer health +18%yoy, distribution +8%yoy and prescription pharma +5%yoy in 9M15. Given the change in product mix, quarterly gross margin improved to 39.9% in 3Q15 from 38.5% in 2Q15. We reiterate our Neutral recommendation on TSPC. The counter is currently trading at 12.5x P/E 2016F. Income Statement 9M14 9M15 % YoY 3Q14 2Q15 3Q15 % YoY % QoQ Revenue 5,480 6, ,859 2,066 2,005 8 (3) 8, , COGS (3,338) (3,672) 10 (1,120) (1,271) (1,206) 8 (5) (5,075) 72 Gross profit 2,142 2, , Opex (1,578) (1,792) 14 (625) (625) (655) 5 5 (2,399) 75 EBIT NPBT (5) (18) NPAT (5) FY15 Ratios 9M14 9M15 3Q14 2Q15 3Q15 Gross margin 39.1% 38.9% 39.8% 38.5% 39.9% EBIT margin 10.3% 9.1% 6.2% 8.2% 7.2% Net margin 10.0% 8.6% 7.2% 6.8% 7.3% Product Segments 9M14 9M15 3Q14 2Q15 3Q15 % YoY Sales Prescription pharmaceuticals 1,502 1, (8) umer & Cosmetics 1,374 1, Distribution and packaging 2,604 2, (3) % QoQ Gross Margin Prescription pharmaceuticals 63.6% 63.1% 64.4% 62.1% 61.9% umer health 58.6% 57.7% 59.4% 54.8% 59.1% Distribution and packaging 14.6% 14.5% 14.5% 14.3% 15.2% Vanessa Ariati Tanuwijaya ( ) vanessa.tanuwijaya@mandirisek.co.id MARKET Market Recap Oct 28 th 2015; JCI: 4, (-1.4%); USD/DR: 13,480; Total Value: Rp5.72tn Asian stocks slipped but losses were capped by caution ahead of a US Federal Reserve policy decision later in the day. The Fed is expected to keep interest rates unchanged this week and may struggle to convince skeptical investors it can tighten monetary policy before the end of the year in the face of US and global economic headwinds. The focus fell on the Fed's stance after the European Central Bank opened the door last week for more easing and China cut rates and banks' reserve requirements. While it can be argued that stimulus abroad is good for U.S. markets and makes it easier for the Fed to raise interest rates in Dec, the reasons why these central banks are easing and the consequences for the dollar could also deter them from tightening. Indo market extended its loss for the 2nd day, and unlike yesterday, the JCI kept sliding lower by the minutes. It finally ended down 1.4% at 4608 level in stable volume of US$297mn (excluding US$11mn LCGP and US$8.9mn SIAP crossing). Page 8 of 13

9 Meanwhile, the IDR moved favorably and strengthened to level. The MSCI s announcement of HMSP inclusion into its MSCI EM Index effective Nov 10th buoyed buying interest in the name (+9.2%). Regular market transaction was recorded at Rp4.1tn (US$304.15mn) and foreign posted a net sell of Rp372.99mn (US$27.67mn). Foreign participants declined to 35% and came up better seller for 6%. Losers beat gainers by 7 to 4. TOP TURNOVER: BBRI ANTM ASII HMSP BBNI BMRI BBCA TLKM LPPF WSKT MIKA SSMS SMRA PGAS AKRA ADHI LSIP (45%) ADVANCING SECTOR: NONE DECLINING SECTOR: financial-1.9%; consumer & auto-1.4%; plantation-1.2%; mining & telco-1.1%; property-0.9%; infra-0.2%; cement flat The yield of 10-year government went down to 8.641% (-0.415%) and Rupiah appreciated to 13,480 (+1.05%). Sales Team FROM THE PRESS Indonesia ranks up in ease of doing business A survey by the World Bank suggests Indonesia s easiness of doing business rank rises from 120 last year to currently 109 out of 189 countries. Coordinating Investment Board s deputy Tamba Hutapea commented that improvements include simpler taxpaying process, easier construction permit acquiring, and easier credit access. Peer ASEAN countries have higher rank: Singapore (1), Malaysia (18), Thailand (49), Brunei (84), Vietnam (90), and Philippines (103) (Investor Daily) BRI takes over Bringin Life BRI is taking over 91% stake in Bringin Life from BRI Pension Fund for an undisclosed amount. The remaining 9% is owned by BRI Workers Foundation. (Kontan). ACES cuts capex target in FY15 ACES cut their capex target in FY15 from Rp300bn to Rp bn, because of reduction in new stores opening target from 15 stores to 8 stores. As of 9M15 the company have built 7 new stores, and another one to be finished by end of FY15. ACES targets FY16 capex to be around Rp300bn to build another 10 new stores. As of 9M15 ACES s sales increased by 3% yoy, from Rp3.3tn to Rp3.4tn. (Kontan) Wijaya Karya Beton (WTON) estimates Rp5-6tn of precast requirement for High-Speed Train Project. Note that this is still a preliminary calculation and is still subject to changes. At the moment, WTON is the only precast company that will supply the High-Speed Train project according to the President Director Wilfred Singkali. (Bisnis Indonesia) The government eases rules for hiring foreigners The Jakarta Post reported that the Ministry of Manpower will ease the regulation regarding foreigners hiring for foreign investment companies. The current rules states that all foreign companies must employ 10 Indonesians for every foreign workers. It will also include the abolishment of expatriate employment permits (MTA) for foreigners working in Indonesia for less than a month. The relaxation is expected to drive more foreign investment and open new jobs (The Jakarta Post) Page 9 of 13

10 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$/mt) 10, Nikkei 19, YEN/US$ Gold spot (US$/oz) 1, SET 1, SGD/US$ Tin 3-month (US$/mt) 15, Hang Seng 22, CPO futures (Ringgit/ton) 2, STI 3, ADR Stocks Soybean oil (US$/100gallons) S&P 500 2, TLK in Rp 13, Rubber forward (US /kg) Coal (US$/ton) Ishares indo Baltic Dry Index Property Valuation JCI Code Rec. Market Cap Share price Target Price Discount to NAV RNAV per share (Rp) Premium (discount) to replacement cost Replacement cost per share (Rp) P/E 15F P/E 16F ROE 15F ROE 16F BSDE Buy 30,773 1,675 2,400-65% 4,725 8% 1, % 15.5% PWON Buy 21, % 1,033 25% % 27.5% SMRA Buy 21,998 1,525 2,000-61% 3, % % 19.2% CTRA Neutral 17,744 1,170 1,350-48% 2,234 50% % 17.0% JRPT Buy 11, ,350-75% 3,380 6% % 25.9% ASRI Buy 7, % 1,538-5% % 23.3% APLN Buy 5, % % % 15.9% LPCK Buy 5,620 8,075 13,500-67% 24,683 72% 4, % 19.9% MDLN Buy 6, % 1,712-15% % 15.5% CTRS Buy 4,532 2,290 3,600-72% 8,077-17% 2, % 14.8% Simple Average -65% % 19.4% Industrial Valuation JCI Code Rec. Market Cap Share price Target Price Discount to NAV RNAV per share (Rp) Premium (discount) to replacement cost Replacement cost per share (Rp) P/E 15F P/E 16F ROE 15F ROE 16F DMAS Buy 10, % % % 14.1% BEST Neutral 3, % 1,047-26% % 6.6% SSIA Buy 3, ,100-74% 2,750-47% 1, % 14.9% LPCK Buy 5,620 8,075 13,500-67% 24,683 72% 4, % 19.9% MDLN Buy 6, % 1,712-15% % 15.5% Simple Average -67% % 14.2% Plantation Valuation Ticker Rec. Market Cap Share price Target Price planted (US$) EV/ha PER EV/EBITDA ROE Mature (US$) FY16F FY16F FY16F AALI Buy 30,865 19,600 30,800 1,031 1, % 25.1% LSIP Buy 10,575 1,550 2,700 3,783 4, % 17.5% SGRO Buy 2,060 1,090 3,050 1,461 2, % 16.7% Weighted average 1,849 2, % 22.8% Page 10 of 13

11 Equity Valuation Price Price Mkt Cap Net Profit EPS Growth PER (x) EV/EBITDA (x) P/BV (x) Div.Yield Code Rating (Rp) Target (Rp Bn) Mandiri Universe 4,609 5,450 2,976, , , % 16.2% % 2.5% Banking 797,905 59,809 71, % 19.5% N.A. N.A % 2.0% BBCA Neutral 13,575 12, ,692 17,796 20, % 12.6% N.A. N.A % 1.4% BBNI Buy 5,025 5,100 93,709 7,728 12, % 56.0% N.A. N.A % 2.5% BBRI Buy 11,100 11, ,828 24,023 26, % 11.6% N.A. N.A % 2.2% BBTN Buy 1,215 1,500 12,840 1,891 2, % 29.6% N.A. N.A % 2.9% BDMN Neutral 3,075 3,150 29,473 2,589 3, % 36.2% N.A. N.A % 2.7% BJBR Buy 775 1,100 7,515 1,257 1, % 20.9% N.A. N.A % 10.0% BJTM Neutral ,631 1,015 1, % 13.6% N.A. N.A % 9.2% BTPN Neutral 2,900 3,000 16,937 1,755 1, % 10.8% N.A. N.A % 0.0% PNBN Neutral 925 1,000 22,281 1,755 1, % 13.0% N.A. N.A % 0.0% Building Materials 143,627 10,435 11, % 5.5% % 3.9% SMCB Sell 1,095 1,350 8, % 35.4% % 2.1% INTP Neutral 20,100 21,600 73,993 4,972 5, % 3.2% % 5.4% SMGR Neutral 10,325 12,100 61,243 4,880 5, % 4.2% % 2.4% tructions 73,374 2,816 3, % 22.6% % 0.2% ADHI Buy 2,330 2,590 8, % -30.7% % 1.6% PTPP Buy 3,795 4,200 18, , % 45.3% % 0.0% WIKA Buy 3,080 4,000 18, , % 38.8% % 0.0% WSKT Buy 1,705 1,900 19, % 8.3% % 0.0% WTON Neutral , % 51.2% % 0.7% Toll road 35,700 1,569 2, % 30.2% % 1.8% JSMR Buy 5,250 8,650 35,700 1,569 2, % 30.2% % 1.8% Rice Mill 5, % 29.3% % 0.0% AISA Neutral 1,620 2,500 5, % 29.3% % 0.0% umer 542,051 18,712 20, % 7.6% % 2.0% ICBP Neutral 13,350 14,000 77,843 2,903 3, % 7.7% % 1.9% INDF Neutral 6,075 6,000 53,344 3,454 4, % 20.7% % 3.2% MYOR Sell 27,450 22,500 21,043 1, % -30.1% % 1.0% ULTJ Buy 3,810 5,100 11, % 27.0% % 0.5% UNVR Neutral 38,200 41, ,466 5,801 6, % 4.2% % 2.0% GGRM Buy 45,000 56,000 86,584 4,999 5, % 7.6% % 2.1% WIIM Buy % 31.5% % 7.7% Healthcare 83,747 3,190 3, % 11.2% % 1.6% KLBF Neutral 1,465 1,750 68,672 2,166 2, % 11.9% % 1.3% SIDO Neutral , % 11.4% % 3.0% TSPC Neutral 1,700 2,100 7, % 8.6% % 3.1% Retail 91,420 4,156 4, % 18.3% % 2.0% ACES Buy , % 18.6% % 1.8% ERAA Buy , % -2.0% % 3.6% LPPF Neutral 17,000 17,600 49,589 1,808 2, % 12.6% % 2.1% MAPI Buy 3,565 7,750 5, % 77.0% % 1.0% MPPA Neutral 2,395 4,170 12, % 22.8% % 1.5% RALS Sell , % -15.2% % 2.3% TELE Neutral , % 24.5% % 3.2% Automotive 253,680 18,146 20, % 11.9% % 3.5% ASII U/R 6,075 U/R 245,938 17,717 20, % 11.0% % 3.6% IMAS U/R 2,800 U/R 7, N/M 47.0% % 1.5% Heavy Equipment 75,470 4,882 5, % 7.3% % 2.4% HEXA* Buy 1,810 4,250 1, % 61.1% % 8.7% UNTR Sell 19,825 13,950 73,950 4,329 4, % 6.0% % 2.2% Plantation 43,501 5,063 5, % 12.5% % 5.6% AALI Buy 19,600 30,800 30,865 3,181 3, % 12.4% % 5.5% LSIP Buy 1,550 2,700 10,575 1,378 1, % 10.8% % 5.2% Page 11 of 13

12 Price Price Mkt Cap Net Profit EPS Growth PER (x) EV/EBITDA (x) P/BV (x) Div.Yield Code Rating (Rp) Target (Rp Bn) Mandiri Universe 4,609 5,450 2,976, , , % 16.2% % 2.5% SGRO Buy 1,090 3,050 2, % 17.2% % 7.4% Property 132,588 12,245 14, % 20.7% % 1.7% APLN Buy ,925 1,031 1, % 19.8% % 3.5% ASRI Buy ,252 1,240 1, % 46.0% % 7.3% BSDE Buy 1,675 2,400 30,773 2,499 3, % 23.0% % 2.0% CTRA Neutral 1,170 1,350 17,744 1,436 1, % 8.4% % 1.6% CTRS Buy 2,290 3,600 4, % -23.8% % 3.3% JRPT Buy 830 1,350 11, , % 27.3% % 1.0% LPCK Buy 8,075 13,500 5, % -10.0% % 0.0% MDLN Buy , % 63.3% % 0.0% PWON Buy ,190 1,714 2, % 32.2% % 1.9% SMRA Buy 1,525 2,000 21,998 1,332 1, % 9.1% % -0.2% Industrial 17,970 1,782 1, % 7.1% % 2.6% DMAS Buy ,700 1,016 1, % 20.2% % 3.4% BEST Neutral , % -27.3% % 0.4% SSIA Buy 725 1,100 3, % 0.3% % 2.8% Poultry 47,607 4,336 5, % 34.8% % 2.6% CPIN Buy 2,530 6,000 41,550 3,548 4, % 24.7% % 2.4% JPFA Buy 388 1,600 4, , % 77.0% % 5.0% MAIN Sell 1,170 2,100 1, % 89.8% % 2.0% Coal 50,118 6,107 6, % 13.1% % 7.4% ADRO* Neutral 650 1,000 20, % 12.5% % 5.5% HRUM* Neutral 885 1,700 2, % 37.0% % 2.5% ITMG* Neutral 8,850 17,650 10, % 11.8% % 14.4% PTBA Buy 7,350 10,000 16,938 1,938 2, % 10.5% % 6.3% Oil & Gas 73,815 7,021 7, % 2.6% % 5.0% PGAS* Sell 3,045 3,400 73, % 1.1% % 5.0% Shipping 3, % 12.2% % 3.9% SOCI* Buy , % 10.5% % 3.9% Metal 27, , % 97.4% % 4.0% ANTM Neutral , % 67.8% % 0.0% INCO* U/R 2,345 U/R 23, % 30.8% % 4.7% Telco 322,141 16,435 19, % 21.4% % 3.7% EXCL Buy 3,205 4,000 27, , % N/M % 0.8% ISAT U/R 4,000 U/R 21, ,147 N/M 237.1% % 2.0% TLKM Neutral 2,795 2, ,060 16,510 17, % 6.1% % 4.2% Tower 76,816 2,535 2, % 14.9% % 0.0% TBIG Neutral 7,400 8,000 35,494 1,101 1, % 5.9% % 0.0% TOWR Buy 4,050 5,000 41,322 1,434 1, % 21.9% % 0.0% Media 71,989 3,234 3, % 20.1% % 2.4% SCMA Neutral 3,030 3,000 44,303 1,534 1, % 15.3% % 2.4% MNCN Buy 1,880 2,300 27,685 1,700 2, % 24.3% % 2.5% Textile 7, % 17.7% % 0.0% SRIL* Buy , % 16.0% % 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 12 of 13

13 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 Research), (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 Mining ariyanto.kurniawan@mandirisek.co.id Merlissa Paramitha Trisno umer, Poultry merlissa.trisno@mandirisek.co.id Matthew Wibowo Retail, Textile matthew.wibowo@mandirisek.co.id Rizky Hidayat Property, Industrial, Media rizky.hidayat@mandirisek.co.id Vanessa Ariati Tanuwijaya Banking, Health Care vanessa.tanuwijaya@mandirisek.co.id Aditya Sastrawinata Shipping, truction aditya.sastrawinata@mandirisek.co.id Aldian Taloputra Economist aldian.taloputra@mandirisek.co.id Leo Putra Rinaldy Economist leo.rinaldy@mandirisek.co.id Wisnu Trihatmojo Research Assistant wisnu.trihatmojo@mandirisek.co.id Yudha Gautama Research Assistant yudha.gautama@mandirisek.co.id Kevin Halim Research Assistant kevin.halim@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 Andrew Handaya Institutional Sales andrew.handaya@mandirisek.co.id Cindy Amelia P. Kalangie Institutional Sales cindy.amelia@mandirisek.co.id Jane Theodoven Sukardi Institutional Sales jane.sukardi@mandirisek.co.id Janefer Amanda Soelaiman Institutional Sales janefer.soelaiman@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 Yohan Setio, CFA Institutional Sales yohan.setio@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 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.