Equity SNAPSHOT Tuesday, April 24, 2018

Transcription

1 FROM EQUITY RESEARCH 1Q18 Result Banking BBCA: Soft set of results To see the full version of this report, please click here BBNI: Steady growth in 1Q18 To see the full version of this report, please click here BTPN: Efficiency gains help lift profits To see the full version of this report, please click here Consumer UNVR: Moderate growth To see the full version of this report, please click here Construction WSKT: High margins profile To see the full version of this report, please click here Plantation AALI: Disappointing 1Q18 Results To see the full version of this report, please click here MARKET NEWS Macroeconomy Government: tax allowances provided for investments below IDR500bn Corporate Adaro Energy: To distribute dividends with a payout ratio of 51.8% CPIN: Expecting major improvement in 1Q18 ERAA: Significant better performance in 2018 KEY INDEX Close Chg Ytd Vol (%) (%) (US$ m) Asean - 5 Indonesia 6,308 (0.5) (0.7) 380 Thailand 1,790 (0.6) 2.1 2,027 Philippines 7,719 (0.1) (9.8) 90 Malaysia 1,880 (0.4) Singapore 3, Regional China 3,068 (0.1) (7.2) 41,537 Hong Kong 30,254 (0.5) ,311 Japan 22,088 (0.3) (3.0) 10,353 Korea 2, ,268 Taiwan 10,697 (0.8) 0.5 4,603 India 34, NASDAQ 7,129 (0.2) ,308 Dow Jones 24,449 (0.1) (1.1) 9,940 CURRENCY AND INTEREST RATE Rate w-w m-m ytd (%) (%) (%) Rupiah Rp/1US$ 13,975 (1.4) (1.4) (3.1) SBI rate % y Gov Indo bond (0.0) 0.6 Unit HARD COMMODITY Price d-d m-m ytd (%) (%) (%) Coal US$/ton 93 (0.1) (3.5) (7.4) Gold US$/toz 1,325 (0.0) (1.7) 1.7 Nickel US$/mt.ton 14,208 (3.8) Tin US$/mt.ton 21,340 (3.2) SOFT COMMODITY Unit Price d-d m-m ytd (%) (%) (%) Cocoa US$/mt.ton 2,674 (2.8) Corn US$/mt.ton Oil (WTI) US$/barrel Oil (Brent) US$/barrel Palm oil MYR/mt.ton 2, (1.8) 0.2 Rubber USd/kg (4.5) Pulp US$/tonne 1,130 N/A Coffee US$/60kgbag 91 (0.1) 7.4 (9.0) Sugar US$/MT 329 (3.9) (7.8) (16.6) Wheat US$/ton 129 (0.6) (0.4) 4.7 Soy Oil US$/lb 31 (0.8) (1.2) (6.2) Soy Bean US$/by 1,021 (0.8) (0.7) 7.2 Source: Bloomberg

2 Equity Research Company Update Tuesday,24 April 2018 HOLD Maintain Last price (IDR) 23,000 Target Price (IDR) 22,700 Upside/Downside -1.3% Previous Target Price (IDR) 21,000 Stock Statistics Sector Bloomberg Ticker Banking BBCA IJ No of Shrs (mn) 24,945 Mkt. Cap (IDRbn/USDmn) 573,730/41,054 Avg. daily T/O (IDRbn/USDmn) 338.7/24.2 Major shareholders (%) PT Dwimuria Investama 54.9 Anthony Salim 1.8 Estimated free float 43.0 EPS Consensus (IDR) 2018F 2019F 2020F Danareksa 1, , ,434.2 Consensus 1, , ,347.4 Danareksa/Cons BBCA relative to JCI Index Source : Bloomberg Eka Savitri (62-21) ext 3506 eka.savitri@danareksa.co.id Bank Central Asia(BBCA IJ) Soft set of results We reiterate our HOLD call on BBCA, noting its premium valuation at 3.7x 2018F P/BV following the soft results with IDR5.5n of 1Q18 net profits. Looking forward, we foresee limited room for a lower blended CoF as BBCA just raised its TD rate by 25bps in order to secure the liquidity position amid the potential higher Fed Fund Rate. We also expect mortgages should be the key driver for loans growth this year with 13.9% yoy growth expectation. All in all, we assume the contribution from mortgages should reach 15.9% of total loans portfolio by end of the year (March 2018: 15.3% of loans book). 1Q18 highlights. IDR5.5tn of net profits mainly supported by: 1) 15.0% yoy loans growth driven by brisk 17.6% growth in the corporate segment, 2) Lower NIM at 6.1% as loan yields dropped by 80bps yoy to 8.9%, and 3) a 16bps credit costs to 60bps (1Q17: 24bps). The gross NPLs ratio flat at 1.5% as of March 2018 and should be maintained at this level in our view. Limited room for a lower blended CoF. Given BBCA s status as the transactional bank of choice, the bank benefits from substantial CASA deposits in its funding structure. Its current maximum TD rate is currently 4.5%, the lowest within the industry. As a result, we see that there is limited room for further declines in its blended CoF going forward. We therefore project a stable blended CoF of 2.1% this year with a CASA deposits proportion reaching 76.9% of total customer deposits by the end of the year. Mortgages should be the main growth driver. BBCA seeks to grow further its mortgage book as this sub-segment of consumer lending own a lower risk compared to other segments. To support it, BBCA offer one of the lowest rates in the market through its fix and cap program with 5.61% p.a fixed for two years and capped at 6.61% p.a for the next three years. BBCA s management emphasised the rundown in mortgages reach IDR1.6tn per month, making it hard to grow the book. All in, we expect a 13.9% yoy growth in mortgages to IDR83.2tn as of end of the year (March 2018: IDR72tn). HOLD maintained with a TP of IDR22,700. We reiterate our HOLD call on BBCA with an unchanged GGM-derived TP of IDR22,700 assuming 7.8% CoE, 19% sustainable ROAE and 3% long-term growth. Our TP implies 3.6x 2018F P/BV, above its 14-years mean forward P/BV. Key Financials Year to 31 Dec 2016A 2017A 2018F 2019F 2020F PPOP (IDRbn) 30,400 31,791 36,042 40,332 47,438 Net profit (IDRbn) 20,606 23,310 26,257 29,958 35,361 EPS (IDR) , , ,434.2 EPS growth (%) BVPS (IDR) 4, , , , ,540.0 PER (x) PBV (x) Dividend yield (%) ROAE (%) Source : BBCA, Danareksa Estimates See important disclosure at the back of this report 1

3 Equity Research Company Update Tuesday,24 April 2018 BUY Maintain Last price (IDR) 8,725 Target Price (IDR) 10,400 Upside/Downside +19.2% Previous Target Price (IDR) 10,400 Stock Statistics Sector Bloomberg Ticker Banking BBNI IJ No of Shrs (mn) 18,649 Mkt. Cap (IDRbn/USDmn) 162,710/11,643 Avg. daily T/O (IDRbn/USDmn) 173.0/12.4 Major shareholders (%) Government of Indonesia 60.0 Estimated free float 40.9 EPS Consensus (IDR) 2018F 2019F 2020F Danareksa ,148.1 Consensus ,095.0 Danareksa/Cons (1.7) (0.3) 4.8 BBNI relative to JCI Index Bank Negara Indonesia(BBNI IJ) Steady growth in 1Q18 We reiterate our BUY call on BBNI with a GGM-derived TP of IDR10,400 (implying 1.74x 2018F P/BV) following the release of the 1Q18 results that were broadly inline with our forecast. On a cautionary note, however, we expect the recoveries for some of its NPL borrowers, particularly in the corporate segment, to take some time to materialise. As such, the gross NPLs ratio should touch 2.1% by the end of the year in our view. We also assume a NIM of 5.1% on the back of an estimated 37bps fall in the assets yield to 7.8% and a 13bps drop in the blended CoF to 2.9%. 1Q18 highlights. The net profits of IDR3.6tn (+13.3% yoy) in 1Q18 were supported by 10.8% yoy loans growth despite 20bps NIM contraction with credit costs of 173bps. BBNI s loans mix is still dominated by corporate lending which accounted for 49.2% of the total loans book as of March Additionally, BBNI s management also emphasised that the bank would boost its consumer lending further, particularly its payroll loans, given the large prospective potential market of the bank s internal employees. Aside from that, BBNI is one of the main participant banks which channels both the government s social program and Kartu Indonesia Pintar. As such, liquidity was still manageable as reflected in the 89.7% LFR as of March Expectation of a lower NIM. Given the bank s significant exposure to corporate lending, particularly for the development of infrastructure projects, we expect the assets yield to decline further by 37bps to 7.8% this year. The blended CoF, meanwhile, will improve to 2.9% on the back of a higher proportion of CASA deposits at 64.2% of total customer deposits by the end of the year. All in all, we expect the NIM to fall by c.30bps to 5.1% in More time needed for recovery. The gross NPLs ratio stood at 2.3% as of March 2018 with IDR1.8tn of write-offs that mostly came from the corporate and medium segments of IDR590bn and IDR482bn, respectively, in 1Q18. This year, BBNI s management expects a sizeable recovery amount from the writeoffs of IDR7tn. We take a more conservative stance on this matter, however, noting that some of the bank s borrowers are still going through the legal process at the courts. With the expectation of 156bps of credit costs and 2.1% gross NPLs ratio, coverage ratio will climb to 146.3% by the end of the year. Maintain BUY with a new TP of IDR10,400. We maintain our BUY call on BBNI with a GGM-derived TP of IDR10,400 assuming 10% CoE, 15.3% sustainable ROAE and 3% long-term growth. Source : Bloomberg Eka Savitri (62-21) ext 3506 eka.savitri@danareksa.co.id Key Financials Year to 31 Dec 2016A 2017A 2018F 2019F 2020F PPOP (IDRbn) 22,082 24,349 27,018 30,751 35,026 Net profit (IDRbn) 11,339 13,616 15,553 18,009 21,411 EPS (IDR) ,148.1 EPS growth (%) BVPS (IDR) 4, , , , ,645.1 PER (x) PBV (x) Dividend yield (%) ROAE (%) Source : BBNI, Danareksa Estimates See important disclosure at the back of this report 1

4 Equity Research Company Update Tuesday,24 April 2018 BUY Upgrade Last price (IDR) 2,900 Target Price (IDR) 3,900 Upside/Downside +34.5% Previous Target Price (IDR) 3,900 Stock Statistics Sector Banking Bloomberg Ticker BTPN IJ No of Shrs (mn) 5,745 Mkt. Cap (IDRbn/USDmn) 16,661/1,192 Avg. daily T/O (IDRbn/USDmn) 3.1/0.2 Major shareholders (%) Sumitomo Mitsui 40.0 Summit Global Capital Management BV 20.0 Estimated free float 50.0 EPS Consensus (IDR) 2018F 2019F 2020F Danareksa Consensus Danareksa/Cons (15.3) (18.2) 5.0 BTPN relative to JCI Index Bank Tabungan Pensiunan Nasional (BTPN IJ) Efficiency gains help lift profits BTPN booked net profits of IDR535bn in 1Q18 despite flat yoy loans growth and 70bps NIM contraction to 11.3%. Concerning the planned IPO of BTPN Syariah, BTPN s 70% ownership in the bank is not expected to be diluted since the productive poor segment will remain its main growth engine. Going forward, loans book would still be dominated by pension followed by SME and sharia as well as micro segment. We upgrade our call to BUY on the stock given the current upside with an unchanged GGM-derived TP of IDR3,900 (implying 1.26x 2018F P/BV). 1Q18 highlights. The bank booked 12% yoy higher net profits of IDR535bn in 1Q18, supported by more manageable operating expenses (-15.6% yoy) as the bank benefitted from the significant IT investment in BTPN Wow! and Jenius business initiatives in 1Q17. Credit costs rose, however, to 224bps due to rebalancing in the loans mix towards the SME and productive poor segments. Going forward, BTPN s management has provided guidance for higher credit costs at % as well as a gross NPLs ratio of % due to higher exposure to the SME, productive poor and consumer finance segments. Maintaining its ownership in BTPN Syariah. In regard to the planned IPO of BTPN Syariah, BTPN s management emphasised that the bank would maintain its ownership at 70% since the productive poor segment will remain its main growth engine. As of March 2018, the productive poor segment accounted for 9.6% of the total loans portfolio. The main targets for this segment are sole financing products and female borrowers, and we expect the segment to grow by 27% yoy this year. As a result, the bank s exposure to this segment should increase to 10.7% of the loans book by the end of the year. Flattish NIM outlook. Given the rebalancing in the bank s loans mix towards the SME segment, we expect the NIM to stabilise at 11.6% this year. This would come on the back of a 50bps decline in the blended CoF to 5.5% as we view that the bank s Jenius and BTPN Wow! initiatives will start to have a sizeable impact on funding costs. CASA deposits contribution would slightly elevated to 14.3% of customer deposits by end of the year in our forecast. Upgrade to BUY, TP of IDR3,900. We upgrade our call to BUY on the bank with an unchanged GGM-derived TP of IDR3,900 (implying 1.26x 2018F P/BV) assuming a CoE of 9.2%, a 10.7% sustainable ROAE and 3% long-term growth. Source : Bloomberg Eka Savitri (62-21) ext 3506 eka.savitri@danareksa.co.id Key Financials Year to 31 Dec 2016A 2017A 2018F 2019F 2020F PPOP (IDRbn) 3,479 3,076 3,848 4,254 5,195 Net profit (IDRbn) 1,752 1,221 1,723 2,011 2,605 EPS (IDR) EPS growth (%) 4.7 (30.3) BVPS (IDR) 2, , , , ,694.9 PER (x) PBV (x) Dividend yield (%) ROAE (%) Source : BTPN, Danareksa Estimates See important disclosure at the back of this report 1

5 Equity Research 1Q17 result note Tuesday,24 April 2018 HOLD Maintain Last price (IDR) 50,800 Target Price (IDR) 52,000 Upside/Downside -3.5% Previous Target Price (IDR) 52,000 Stock Statistics Sector Bloomberg Ticker Consumer UNVR IJ No of Shrs (mn) 7,630 Mkt. Cap (IDRbn/USDmn) 387,604/27,736 Avg. daily T/O (IDRbn/USDmn) 107.6/7.7 Major shareholders (%) Unilever Indonesia Holding B.V Estimated free float 15.0 EPS Consensus (IDR) 2018F 2019F 2020F Danareksa 1, , ,252.5 Consensus 1, , ,183.1 Danareksa/Cons (1.3) (0.3) 5.9 UNVR relative to JCI Index Unilever Indonesia (UNVR IJ) Moderate growth UNVR reported 1Q18 earnings of IDR1.8tn, still up 3.6% qoq but down 6.2% yoy on the back of lower gross margin and higher opex. This 1Q18 net profits reach 24% of our full year forecast and consensus, i.e. Inline. We maintain our HOLD recommendation with unchanged TP of IDR52,000. 1Q18 top line +7.6% yoy. UNVR reported 1Q18 revenue of IDR10.7tn, +7.6% yoy but down 0.9% yoy. This 1Q18 top line is accounted for 23.8% and 23.9% of our forecast and consensus estimates, i.e inline. In 1Q18, home and personal care (HPC) reported unexciting growth of 2.9% qoq (down 0.9% yoy), while the Food and Refreshment (FNR) up 18.6%qoq. In term of contribution, HPC still provided the majority contribution of 67.7% to total revenue, while the remaining 32.3% came from FNR. Lower 1Q18 gross margin with higher opex. In 1Q18, HPC reported lower gross margin to 53.3% (4Q17: 54.3%) while FNR booked improved gross margin to 46.2% (4Q17: 45.4%). In line with the company s plan to launch various new products/sku this year, 1Q18 opex increased by 8.1% qoq. We saw that the sales/promotion activities related expenses up by 26% qoq and 17% yoy in 1Q18. As the result, both operating margin for HPC and FNR declined to 32.2% and 19.6%, respectively. Lower gross and operating margins have filter through to the bottom line of IDR1.8tn, down 6.2% but still up 3.6% qoq. This 1Q18 earnings were accounted for 24% of our FY18F and consensus estimates, i.e. in line. By end of March 2018, UNVR reported 0.2x debt to equity ratio, lower than the FY17 of 0.6x Maintain HOLD with lower TP. We estimate more new products offered by the company will provide support for the top line this year. Based on our latest conversation with the company, demand in 1Q18 remain sluggish on persistently high inflation early this year. On a more positive note, however, the upcoming Ramadan season in May to June 2018 should boost sales of FMCG. At current price, UNVR is trading at premium FY18F PE of 48.3x. We maintain our HOLD recommendation with unchanged TP of IDR52,000. Source : Bloomberg x Natalia Sutanto (62-21) ext.3508 natalia.sutanto@danareksa.com Key Financials Year to 31 Dec 2016A 2017A 2018F 2019F 2020F Revenue (IDRbn) 40,054 41,205 45,229 50,126 55,554 EBITDA (IDRbn) 9,238 10,129 11,059 12,244 13,751 EBITDA Growth (%) Net profit (IDRbn) 6,391 7,005 7,673 8,484 9,557 EPS (IDR) , , ,252.5 EPS growth (%) BVPS (IDR) DPS (IDR) , ,174.9 PER (x) PBV (x) Dividend yield (%) EV/EBITDA (x) Source : UNVR, Danareksa Estimates See important disclosure at the back of this report 1

6 Equity Research Results Note Tuesday,24 April 2018 BUY Maintain Last price (IDR) 2,440 Target Price (IDR) 3,000 Upside/Downside +23.0% Previous Target Price (IDR) 3,000 Stock Statistics Sector Bloomberg Ticker Construction WSKT IJ No of Shrs (mn) 13,574 Mkt. Cap (IDRbn/USDmn) 33,120/2,370 Avg. daily T/O (IDRbn/USDmn) 71.4/5.1 Major shareholders (%) Govt. Indonesia 66.0 Public 34.0 Estimated free float 34.0 EPS Consensus (IDR) 2018F 2019F 2020F Danareksa Consensus Danareksa/Cons WSKT relative to JCI Index Source : Bloomberg x Maria Renata (62-21) ext.3513 maria.renata@danareksa.com Waskita Karya(WSKT IJ) Much better margins WSKT s 1Q18 earnings soared 313.4% to IDR1.5tn on the back of: 1) 68.6%yoy revenues growth, 2) margins expansion, and 3) higher net profits of the construction JV. The 1Q18 earnings figure is 34.8% of our full year target and 36.7% of consensus estimates, above the past two-year s rate of 9.2%. Nonetheless, soft new contracts booked in 3M18 took the shine off the solid financial results. We maintain our forecast and BUY recommendation on WSKT. Revenues in 1Q18 reached IDR12.4tn, up 68.6%yoy (1Q17: IDR7.4tn). The 1Q18 revenues are 24% of our full year target and the consensus, surpassing the past two-year s figure of 15%. The contribution from construction services reached 96.4%. This division booked a better gross profit margin (GPM) of 21.9% compared to 14.4% in 1Q17 and 20.2% in FY17. Consequently, WSKT s GPM in 1Q18 stood at 22.5% (1Q17: 15.2%). The order book in 3M18 reached IDR94.0tn. The order book reached IDR94.0tn including IDR90.4tn of carry over contracts. However, new contracts booked in 3M18 reached only IDR3.6tn, down by 69%yoy from IDR11.7tn booked in 3M17. The new contracts are 5.1% of the management s full year target of IDR70.0tn (+25.4%yoy; FY17: IDR55.8tn). However, the realization rate of 5.1% is also lower than the previous year s realization rate of 20.9%. Furthermore, around 58% of the new contracts booked were recorded by WSBP. Higher leverage, negative operating cash flow. Total interest bearing debts as of Mar 18 reached IDR49.4tn, higher than IDR43.9tn as of Dec 17. Hence, the DER rose to 2.02x as of Mar 18, up from 1.93x as of Dec 17. Interest expenses in 3M18 reached IDR506bn (+8.5%yoy) with interest coverage of 5.3x (1Q17: 2.1x). Since Dec 15, WSKT has booked negative operating cash flow (OCF). OCF as of Mar 18 was negative at IDR1.8tn (1Q17: -IDR591bn). Issued IDR5.0tn of RDPT. In early Apr 18, WSKT through its subsidiary, Waskita Toll Road (WTR), managed to raise IDR5.0tn of fresh funds by issuing a mutual fund (RDPT). Based on our calculations, the transaction should result in a potential gain of around IDR1.7tn which should be booked in 2Q18. The gain comes from the divestment of a 70% stake in WTTR at 1.9x PBV (see our report released on 11 Apr 18). Maintain BUY. We maintain our forecast since we are awaiting the realization of new contracts in 2Q. However, our current estimate for profits after tax (PAT) of IDR4.9tn is around 8% lower than the management s target of IDR5.3tn. Key Financials Year to 31 Dec 2016A 2017A 2018F 2019F 2020F Revenue (IDRbn) 23,788 45,213 51,046 58,471 64,309 EBITDA (IDRbn) 2,974 7,034 8,324 9,541 10,431 EBITDA Growth (%) Net profit (IDRbn) 1,713 3,882 4,369 5,038 5,934 EPS (IDR) EPS growth (%) (3.7) BVPS (IDR) , , , ,972.1 DPS (IDR) PER (x) PBV (x) Dividend yield (%) EV/EBITDA (x) Source : WSKT, Danareksa Estimates See important disclosure at the back of this report 1

7 Equity Research Company Update Monday,23 April 2018 HOLD MAINTAIN Last price (IDR) 13,025 Target Price (IDR) 14,800 Upside/Downside +13.6% Previous Target Price (IDR) 14,300 Stock Statistics Sector Bloomberg Ticker Plantation AALI IJ No of Shrs (mn) 1,925 Mkt. Cap (IDRbn/USDmn) 25,069/1,794 Avg. daily T/O (IDRbn/USDmn) 18.4/1.3 Major shareholders (%) Astra International 79.7 Public 20.3 Estimated free float 20.3 EPS Consensus (IDR) 2018F 2019F 2020F Danareksa Consensus 1, , Danareksa/Cons (7.4) (14.4) (6.5) AALI relative to JCI Index Astra Agro Lestari(AALI IJ) Disappointing 1Q18 Results AALI booked lower-than-expected 1Q18 net profits of Rp355bn (-56% YoY, - 41% QoQ), reaching 19% of our full year forecast and 17% of consensus estimates, mainly due to higher-than-expected COGS. Nevertheless, the 1Q18 revenues were in-line at Rp4.4tn (-1% YoY, -8% QoQ) thanks to higher sales volume, we suspect. The gross margin declined significantly in 1Q18 mainly as a result of lower CPO ASP in 1Q18, we believe. Maintain HOLD. Lower-than-expected 1Q18 results. AALI booked 1Q18 net profits of Rp355bn (-56% YoY, -41% QoQ), reaching 19% of our full year forecast and 17% of consensus estimates. The 1Q18 net profits were below our forecast mainly due to higher-than-expected COGS arising from higher-than-expected infrastructure maintenance costs and inventory drawdown. Nonetheless, the 1Q18 revenues were in-line at Rp4.4tn (-1% YoY, -8% QoQ), reaching 27% of our forecast and 28% of consensus estimates. We suspect the 1Q18 revenues were boosted by higher sales volume, amid lower CPO ASP in the period. The gross and operating margins stood at 16.8% and 10.5%, respectively. Significantly lower margins in 1Q18. On both a YoY and QoQ basis, the 1Q18 gross margin fell to 17% (vs. 31% in 1Q17 and 26% in 4Q17). We suspect that this reflects lower CPO ASP in 1Q18. High CPO ASP in 1Q17 were due to the effect of supply disruptions caused by El Nino. In addition, AALI also booked higher harvesting & maintenance costs (+17% YoY), infrastructure maintenance costs (+14% YoY) and depreciation expenses (+11% YoY). Net gearing remains under control. As of Mar 18, AALI posted net gearing of 18.5%, lower than Dec 17 s 20.3%. The company booked operating cash flow of Rp681bn (-16% YoY) and spent Rp304bn on capex (-36% YoY). Maintain hold. At this juncture, we maintain our HOLD recommendation on AALI with a TP of Rp14,800. We will provide more information upon disclosure of AALI s operational data. The counter is currently trading at 13.2x FY18 P/E. Source : Bloomberg x Yudha Gautama (62-21) ext 3509 yudha.gautama@danareksa.com Key Financials Year to 31 Dec 2016A 2017A 2018F 2019F 2020F Revenue (IDRbn) 14,121 17,306 16,508 16,842 17,075 EBITDA (IDRbn) 3,662 4,178 4,154 4,164 3,995 EBITDA Growth (%) (0.6) 0.2 (4.1) Net profit (IDRbn) 2,007 2,010 1,906 1,900 1,782 EPS (IDR) 1, , EPS growth (%) (5.2) (0.3) (6.2) BVPS (IDR) 8, , , , ,383.5 DPS (IDR) PER (x) PBV (x) Dividend yield (%) EV/EBITDA (x) Source : AALI, Danareksa Estimates See important disclosure at the back of this report 1

8 MARKET NEWS MACROECONOMY Government: tax allowance for investment below IDR500bn Government is planning to provide special policy regarding tax incentive for small medium enterprise investment with fund less than IDR500bn. The tax incentive scheme is still under consideration, be it tax holiday, tax allowance or tax deduction. Currently government has already given tax holiday to investors who invest more than IDR500bn. (Investor Daily) CORPORATE Adaro Energy: Distributes dividend with payout ratio of 51.8% Adaro Energy (ADRO) plans to distribute dividend of USD250mn, represented 51.8% from 2017 net profit of USD483mn. The final dividend includes the interim cash dividend of USD100mn paid in January During the AGM, the management is also revised down its EBITDA guidance for 2018 to USD bn from previously USD bn due to the new domestic pricing regulation issued by the Ministry of Energy and Mineral Resources. (Investor Daily, Company) Comment: Based on exchange rate of USD/IDR of 13,900, the final dividend (including interim dividend) per share will be around IDR108/share. Hence, based on yesterday closing price of IDR2,260, the final dividend yield will be 4.8%. The revised guidance of EBITDA represented 73 87% of our current EBITDA assumption of USD1.5bn. CPIN: Expecting a significant improvement in 1Q18 Charoen Pokphand Indonesia (CPIN) is expecting a significant revenue improvement in 1Q18, mainly driven by 1) animal feed and 2) processed chicken division. The company foresees a robust growth potential in processed chicken division going forward, both in domestic and foreign market. The company plans to continue exporting their products to Japan, Timor Leste, and Papua Nugini. (Kontan)

9 DANAREKSA VALUATION GUIDE Equity Valuation Rating Price (Rp) Price Mkt Cap Net profit, Rp bn EPS (Rp) Core EPS (Rp) EPS Growth PER (x) EV / EBITDA (x) PBV (x) ROE Target Rp Bn Danareksa Universe 4,105, , , % 11.9% Auto 302,615 18,881 20, % 8.4% Astra International BUY 7,475 9, ,615 18,881 20, % 8.4% Banks 1,611,575 90, , % 14.0% BCA HOLD 23,000 21, ,065 23,620 27, , , % 14.6% N/A N/A BNI HOLD 8,725 10, ,710 13,616 15, % 15.6% N/A N/A BRI BUY 3,580 4, ,578 29,044 31, % 8.9% N/A N/A Bank Tabungan Negara BUY 3,720 4,000 39,395 3,135 3, % 16.7% N/A N/A Bank Mandiri HOLD 8,000 8, ,333 20,640 24, % 18.7% N/A N/A BTPN HOLD 2,900 3,900 16,937 1,273 1, % 27.8% N/A N/A BPD Jatim BUY ,558 1,282 1, % 3.0% N/A N/A Cement 164,293 4,000 4, % 4.9% Indocement SELL 18,650 14,700 68,655 1,887 1, % 2.7% Semen Indonesia SELL 10,100 8,600 59,908 1,945 2, % 8.4% Semen Baturaja SELL 3, , % -11.0% Cigarettes 608,962 20,595 22, % 10.7% Gudang Garam BUY 74,075 83, ,527 7,498 8,487 3,897 4,411 3,897 4, % 13.2% HM Sampoerna HOLD 4,010 4, ,436 13,097 14, % 9.2% Construction 121,190 8,554 10, % 21.0% Wijaya Karya BUY 1,690 2,100 15,159 1,225 1, % 45.5% Pembangunan Perumahan BUY 2,800 4,000 17,360 1,295 1, % 21.2% Adhi Karya BUY 2,120 2,800 7, % 37.3% Waskita Karya BUY 2,440 3,000 33,120 2,383 3, % 27.4% Waskita Beton BUY ,230 1,104 1, % 19.5% Wika Beton BUY , % 20.2% Jasa Marga BUY 4,460 7,800 32,370 1,747 1, % -8.1% Consumer 614,690 16,992 19, % 12.0% Indofood CBP BUY 8,375 9,700 97,668 3,894 4, % 10.3% Indofood BUY 7,000 9,100 61,463 4,381 4, % 10.6% Unilever HOLD 50,800 52, ,604 7,324 8, , , % 13.7% Kino Indonesia HOLD 2,180 2,100 3, % 25.8% Mayora Indah HOLD 2,900 1,960 64,840 1,277 1, % 10.4% Healthcare 84,314 2,700 2, % 11.5% Kalbe Farma HOLD 1,525 1,700 71,485 2,411 2, % 10.3% Kimia Farma SELL 2,310 1,910 12, % 12.7% Heavy Equipment 140,253 7,463 8,439 2,001 2, % 13.1% United Tractors BUY 37,600 38, ,253 7,463 8,439 2,001 2,262 2,001 2, % 13.1% Industrial Estate 14,009 2,352 1, % -49.5% Puradelta Lestari BUY , % 1.8% Bekasi Fajar BUY , % 11.3% Surya Semesta HOLD ,564 1,131 (103) 240 (22) (119) (32) % % 2.3 (25.0) (2.8) Media 59,315 2,965 3, % 13.5% Media Nusantara Citra BUY 2,680 2,800 39,186 1,491 1, % 7.6% Surya Citra Media BUY 1,410 1,750 20,129 1,474 1, % 19.5% Mining 215,013 14,754 17, % 15.5% Adaro Energy BUY 2,260 2,800 72,288 6,283 7, % 17.4% Timah BUY 1,100 1,100 8, % 3.0% Vale Indonesia HOLD 3,550 3,100 35,274 (74) 233 (7) 23 (7) % % (476.3) (0.3) 1.0 Aneka Tambang HOLD ,508 (264) (68) (11) (3) (11) (3) % -74.4% (81.5) (318.2) (1.4) (0.4) Bukit Asam BUY 3,350 3,600 38,594 4,476 4, % 3.3% Indo Tambangraya Megah HOLD 27,500 33,200 31,073 3,384 3,903 2,995 3,455 3,232 3, % 15.3% Harum Energy HOLD 2,990 2,200 8, % 2.1% Plantation 38,740 3,010 2, % -0.8% Astra Agro Lestari HOLD 13,025 14,800 25,069 1,908 1, % -3.0% Sampoerna Agro SELL 2,450 2,240 4, % 6.4% PP London Sumatra BUY 1,325 1,700 9, % 1.7% Poultry 80,466 4,078 5, % 29.8% Charoen Pokphand HOLD 3,690 3,100 60,509 2,576 3, % 32.2% Japfa Comfeed BUY 1,595 1,650 18,200 1,463 1, % 23.8% Malindo Feedmill HOLD , % 91.5% Property 109,814 8,450 8, % -0.2% Alam Sutera HOLD ,467 1,379 1, % 4.1% Bumi Serpong Damai BUY 1,825 2,000 35,125 3,909 2, % -29.5% Ciputra Development BUY 1,215 1,350 22, , % 58.8% Pakuw on Jati HOLD ,100 1,937 2, % 24.0% Summarecon BUY 1,010 1,100 14, % 28.3% Retail 83,680 3,402 3, % 12.4% Mitra Adi Perkasa BUY 8,200 8,100 13, % 46.8% Ramayana HOLD 1,450 1,400 10, % 4.9% Matahari Department Store BUY 10,900 12,500 31,805 1,928 2, % 5.3% Matahari Putra Prima SELL , % 2.7% Ace Hardw are BUY 1,290 1,450 22, % 9.3% Erajaya Sw asembada BUY 1,320 1,100 3, % 11.8%

10 COVERAGE PERFORMANCE LEADERS Price as on Code 23-Apr Apr-18 Chg, % w-w, % m-m, % YTD, % Rating Erajaya Swasembada ERAA 1,320 1, BUY Ramayana RALS 1,450 1, HOLD United Tractors UNTR 37,600 36, BUY Waskita Beton WSBP BUY Adaro Energy ADRO 2,260 2, BUY Japfa Comfeed JPFA 1,595 1, BUY Indocement INTP 18,650 18, (15.0) SELL Bank Tabungan Negara BBTN 3,720 3, (0.8) 4.2 BUY BPD Jatim BJTM (0.7) BUY Waskita Karya WSKT 2,440 2, (3.2) 10.4 BUY Sources: Bloomberg LAGGARDS Price as on Code 23-Apr Apr-18 Chg, % w-w, % m-m, % YTD, % Rating Kalbe Farma KLBF 1,525 1,595 (4.4) (1.0) 6.6 (9.8) HOLD Timah TINS 1,100 1,145 (3.9) BUY Charoen Pokphand CPIN 3,690 3,800 (2.9) (3.9) HOLD Summarecon Agung SMRA 1,010 1,040 (2.9) BUY Bekasi Fajar BEST (2.8) (4.1) BUY Semen Baturaja SMBR 3,600 3,700 (2.7) (1.1) 4.0 (5.3) SELL Media Nusantara Citra MNCN 1,410 1,445 (2.4) (2.8) BUY Gudang Garam GGRM 74,075 75,800 (2.3) (0.6) 4.3 (11.6) BUY Ace Hardware ACES 1,290 1,320 (2.3) (6.2) (3.0) 11.7 BUY Bank Rakyat Indonesia BBRI 3,580 3,660 (2.2) 0.6 (0.6) (1.6) BUY Sources: Bloomberg

11 PREVIOUS REPORTS Bank Tabungan Negara: Still going strong SnapShot Astra International: Better monthly 4W market share, Bukit Asam: Higher coal prices sustained earnings SnapShot Ace Hardware Indonesia: Solid Mar-18 revenues SnapShot United Tractors: Strong Komatsu Sales in March 2018 SnapShot Adhi Karya: Two new faces on the BOD SnapShot Strategy: Welcoming the festive season, Ramayana Lestari Sentosa: Pick-up in gross sales and SSSG in Mar-18, Danareksa Research Institute: Business Sentiment Entering a stormy period? SnapShot

12 PT Danareksa Sekuritas Jl. Medan Merdeka Selatan No. 14 Jakarta Indonesia Tel (62 21) Fax (62 21) Equity Research Team Helmy Kristanto Stefanus Darmagiri Natalia Sutanto S helmy.kristanto@danareksa.com (62-21) ext Head of Research, Strategy stefanus.darmagiri@danareksa.com (62-21) ext Auto, Coal, Heavy Equip, Metal, Cement natalia.sutanto@danareksa.com (62-21) ext.3508 Consumer, Tobacco, Property Maria Renata maria.renata@danareksa.com (62-21) ext.3513 Construction Eka Savitri Eka.savitri@danareksa.com (62-21) ext.3506 Banking Yudha Gautama Yudha.gautama@danareksa.com (62-21) ext.3509 Plantation Adeline Solaiman adeline.solaiman@danareksa.com (62-21) ext Media, Retail, Poultry Ignatius Teguh Prayoga ignatius.prayoga@danareksa.com (62-21) ext.3511 Research Associate Lucky Bayu Purnomo lucky.purnomo@danareksa.com (62-21) ext.3512 Technical Analyst Sales team Novrita E. Putrianti novrita@danareksa.com (62-21) ext Tuty Sutopo tuty@danareksa.com (62-21) ext Ehrliech Suhartono ehrliech@danareksa.com (62-21) ext Upik Yuzarni upik_y@danareksa.com (62-21) ext Laksmita Armandani laksmitaa@danareksa.com (62-21) ext Giovan Sitepu giovanp@danareksa.com (62-21) ext Rendy Ben Philips rendy.philips@danareksa.com (62-21) ext. 3148

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