INVESTOR DIGEST HIGHLIGHT ECONOMY. Equity Research 25 February Equity Research 25 February 2014

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1 INVESTOR DIGEST Equity Research 25 February 2014 Equity Research 25 February 2014 Economic Data Latest 2014F BI Rate (%), eop Inflation (YoY %) US$ 1 = Rp, period avg 11,649 11,825 HIGHLIGHT Mandiri Sekuritas yesterday held an investment forum. Among speakers invited were Mr. Syamsuddin Haris talking about the 2014 political map. Tower Bersama: FY13 EBITDA inline (TBIG, Rp6,075, Not Rated) Infrastructure update Stock Market Data (24 Feb 2014) JCI Index 4, % Trading T/O ( Rp bn ) 4,159.0 Market Cap ( Rp tn ) 4,580.0 Market Data Summary* 2013F 2014F EBITDA growth (%) EPS growth (%) Core EPS growth (%) EV/EBITDA (x) P/E (x) P/BV (x) Div. Yield (%) Earnings Yield (%) Net Gearing (%) ROE (%) * Aggregate of 66 companies in MS research universe, representing 60.8% of JCI s market capitalization ECONOMY Mandiri Sekuritas yesterday held an investment forum. Among speakers invited were Mr. Syamsuddin Haris talking about the 2014 political map. Below are the key takeaways : The likely scenarios for the 2014 presidential race. Jokowi is expected to win the next presidential race if he is proposed as a candidate by PDI-P. Yet, based on Mr. Syamsuddin s information gathered from various sources including the internal of PDI-P, Megawati still wants to run for the president post owing to two reasons i.e.) 1.) Megawati feels that her job is not yet finished 2.) Megawati considers herself not losing the 2004 or 2009 elections. She also receives better support from party elites than Jokowi. Therefore, if Megawati runs as the presidential candidate and Jokowi as the vice presidential candidate, then Prabowo has the biggest chance to win the presidential race. Coalition among religion based parties for the presidential race could happen yet with minor winning chance This is considering that religion based parties have not yet own a strong figure. Furthermore, the previous elections shows that voter segment for religion parties is only 30%. which is also the same case for presidential candidate born from convention mechanism. Among the figures that are competing in the Democrat convention, Dahlan Iskan has the highest electability yet he is not included in the top five on a national scope. On the legislative election, the competition will happen between nationalist parties i.e.) PDIP, Golkar, Gerindra etc. Moreover, not all of the parties could have a representative in the parliament due to the threshold of 3.5% of national parliament vote. Thus, maybe only 6 7 parties will have representatives in the parliament for the next five years. PDIP and Golkar have the upper hand. PDIP could dominate the legislative election should Jokowi is proposed as the presidential candidate. Nevertheless, if Jokowi is not proposed as a president or only proposed as a vice president by PDIP, then Golkar could match PDIP or even win the legislative election. Page 1 of 5

2 What will the government look like after the 2014 election? If PDIP wins the legislative election whereas Jokowi wins the presidential race, the political coalition will be simpler. Thus, the likelihood for a skill-based cabinet will be higher. Leo Rinaldy( ) leo.rinaldy@mandirisek.co.id CORPORATE Tower Bersama: FY13 EBITDA inline (TBIG, Rp6,075, Not Rated) Tower Bersama (TBIG) s 4Q13 EBITDA came in at Rp607bn (+9%q-o-q). This brings 12M13 EBITDA to Rp2.2tr (+58%y-o-y) inline with consensus full year forecast of Rp2.2tr. Strong EBITDA number was supported by 57%y-o-y higher revenue to Rp2.7tr. EBITDA margin remains stable at 83%. 4Q13 net profit recovered Rp449bn (+109%q-o-q) due to sharp decline in non-cash forex loss to Rp21bn in 4Q13 from Rp659bn in 3Q13 from translation on its US$1bn loan to reporting currency in Rupiah. As of December 2013, TBIG had 16,577 tenants with total tower tenant of 15,309 and 10,134 telecommunication sites comprised of 8,866 telecommunication towers, 1,040 shelter-only sites and 228 DAS networks. Tenancy ratio in 2013 was We have neither rating nor forecast on this counter. in Rpbn 4Q13 4Q12 %YoY 3Q13 %QoQ 12M13 12M12 %YoY % cons Revenue 735, ,323 27% 683,798 8% 2,690,500 1,715,421 57% 100% COGS 113,824 97,210 17% 101,661 12% 395, ,837 50% 105% Gross profit 621, ,113 29% 582,137 7% 2,294,704 1,451,584 58% 99% Operating profit 561, ,713 32% 520,007 8% 2,052,270 1,280,389 60% 99% Forex loss (20,793) (32,955) -37% (659,554) -97% (799,123) (84,103) 850% Interest expense (105,619) (163,993) -36% (214,743) -51% (726,743) (467,482) 55% EBITDA 607, ,715 27% 556,970 9% 2,205,255 1,398,073 58% 101% Net profit (loss) 449, ,972 33% 214, % 1,274, ,935 51% 116% Gross margin 85% 83% 85% 85% 85% Operating margin 76% 74% 76% 76% 75% EBITDA margin 83% 83% 81% 82% 82% Net margin 61% 58% 31% 47% 49% Ariyanto Kurniawan ( ) ariyanto.kurniawan@mandirisek.co.id SECTOR Infrastructure update 47% planned budget increase by Ministry of Public Works in The ministry is proposing Rp121tn budget in 2015, or 47% from this year budget of Rp82.4tn. Bina Marga Directorate General, responsible for road development, will be allocated ~50% of the budget. This year, the Ministry proposed Rp110tn budget for the year, but the Ministry of Finance approved Rp82.4tn (Investor Daily). Comment: the 2015 proposed budget for the Ministry will normally be approved in 3Q, which by that time will be done by the newly elected government. While this year is an election year, in terms of timing, we believe that the budget increase next year will show the new government commitment to build infrastructure. Trans-Sumatra toll road may not be started this year. Ministry of Public Works, as quoted by Investor Daily, stated that the 2,700km Trans-Sumatra toll network may not be started this year due to the delay in its Presidential Decree and no allocated budget for the project (in 2014). Last year, government has allocated Rp2tn fund for the project (Investor Daily). Handoko Wijoyo ( ) handoko. wijoyo@mandirisek.co.id Page 2 of 5

3 MARKET Market Recap February 24th 2014; JCI: 4, (-0.49%); USD/IDR: 11,649; Total Value: Rp4.6tn Indo market is at odd with other Asian markets today. While, other Asian markets were under pressure on renewed concern over the health of China s economy, the JCI traded in narrow range. Market volume was low at USD396mn as foreign participants were sidelines (at 30% came up better buyer for 15%). Regular market transaction was recorded at Rp4.2tn (USD360.5mn) and foreign investors continued to post a strong net buy of Rp543.3bn (USD46.6mn). Foreign investors were mostly waiting for Yellen s final testimony due this Thursday night. Furthermore, our top pick, plantation sector, continued to outperform alongside defensive names. Meanwhile, investors locked in profit on rate plays which have been the backbone of recent rally. Finally, the JCI closed 0.5% lower at 4,623 level and Rupiah stayed strong at 11,649 level (+0.8%), the best performer in Asia Pacific region. Losers beat gainers by 3 to 2. TOP TURNOVER: BBRI, BMRI, TLKM, ASII, BBNI, BBCA, SMGR, ASRI, WIKA, SSMS, ADHI, ICBP, CPIN, KLBF, WSKT, AALI (40%) ADVANCING SECTOR: plantation (+0.5%), consumer (+0.2%) DECLINING SECTOR: auto (-1.2%), infra (-1.1%), cement (-0.9%), mining (-0.7%), telco (-0.6%), financial (-0.3%), property (-0.1%) The yield of 10-year government bond increased to 8.517% (+1.49%). Sales Team FROM THE PRESS Ciputra Residence to issue bond 11-13% coupon rate CTRA s subsidiary, PT Ciputra Residence, is issuing Rp500bn bond in 3 series: A (3 years at %), B (5 years at %), and C (7 years at %). The proceeds will be used to finance project constructions and developments. The company s major projects include CitraGarden Jakarta, CitraRaya Tangerang, CitraGrand City Palembang, CitraGrand Jambi, CitraLake Sawangan, and CitraGarden BMW Cilegon. The company has 4,027ha of operational landbank and 931ha of preoperational landbank. There are 3 projects under the company that are yet to be under CTRA s FY14 target marketing sales: CitraGrand City Pekanbaru (JO), Citra Palm Garden Sentul (JO), and SOHO Rawa Buaya. BRI seeks Rp3tr acquisition target Bank Rakyat Indonesia (BBRI IJ, TP Rp10,000) plans on Rp3tr acquisition to boost inorganic growth. Possibilities range either on small cap bank, insurance or securities company, with highlights on the last two. The management revealed that there has no formal approach to acquire BTN. (Kontan) Page 3 of 5

4 Equity Valuation Outstanding Shares Price Mkt Cap Net Profit EPS Growth PER (x) EV / EBITDA (x) P/BV (x) Yield JCI Code Rating (Mn) Price (Rp) Target (Rp Bn) Mandiri Universe 2,786, , , % 12.7% % 2.6% Banking 695,901 53,491 60, % 12.6% N.A. N.A % 2.1% BCA BBCA Neutral 24,655 10,400 10, ,412 12,671 15, % 20.8% N.A. N.A % 1.5% BNI BBNI Neutral 18,649 4,655 4,400 86,809 7,763 8, % 11.4% N.A. N.A % 2.2% BRI BBRI Buy 24,660 9,650 10, ,057 21,344 22, % 7.1% N.A. N.A % 2.2% BTN BBTN Buy 8,836 1,130 1,200 11,703 1,562 1, % 12.0% N.A. N.A % 3.3% Danamon BDMN Neutral 9,585 4,300 4,400 41,214 4,042 4, % 8.5% N.A. N.A % 2.9% Bank BJB BJBR Buy 9,696 1,030 1,300 9,987 1,252 1, % 14.8% N.A. N.A % 6.5% Bank Jatim BJTM Buy 14, , % 4.1% N.A. N.A % 8.8% BTPN BTPN Buy 5,840 4,295 5,200 25,084 2,073 2, % 23.6% N.A. N.A % 2.1% Panin PNBN Buy 24, ,752 1,853 2, % 25.3% N.A. N.A % 1.9% Infrastructure 255,556 14,763 16, % 12.4% % 2.2% Holcim SMCB Neutral 7,663 2,425 2,700 18,585 1,207 1, % 11.3% % 1.9% Indocement INTP Buy 3,681 22,250 24,000 81,907 5,237 5, % 11.9% % 2.0% Semen Indonesia SMGR Buy 5,932 14,900 16,600 88,380 5,370 5, % 9.9% % 3.0% Adhi Karya ADHI Buy 1,801 2,290 2,500 4, % 8.8% % 2.5% Pembangunan Perumahan PTPP Buy 4,842 1,405 1,600 6, % 24.8% % 1.6% Wijaya Karya WIKA Buy 6,106 2,005 2,300 12, % 19.7% % 1.4% Waskita Karya WSKT IJ Neutral 9, , % 21.2% % 1.5% Jasa Marga JSMR Buy 6,800 5,450 6,200 37,060 1,336 1, % 18.1% % 1.4% Consumer 533,527 18,150 21, % 17.8% % 2.2% Gudang Garam GGRM Neutral 1,924 47,850 39,200 92,068 4,385 4, % 7.5% % 2.4% Indofood CBP ICBP Neutral 5,831 11,200 10,700 65,307 2,474 2, % 10.3% % 1.9% Indofood INDF Buy 8,780 6,975 7,500 61,240 2,607 4, % 69.2% % 2.1% Mayora MYOR Sell ,600 22,000 27, % -5.0% % 1.0% Unilever UNVR Neutral 7,630 28,375 30, ,501 5,559 6, % 11.8% % 2.6% Wismilak WIIM Buy 2, , % 17.3% % 2.8% Kalbe Farma KLBF Neutral 46,875 1,460 1,275 68,438 1,987 2, % 7.6% % 1.7% Dyandra DYAN Buy 4, % 59.1% % 0.0% Retail 85,502 3,273 4, % 27.4% % 1.2% Ace Hardware Indonesia ACES Neutral 1, , % 21.7% % 0.5% ERAA ERAA Buy 2,025 1,495 1,730 4, % 18.2% % 1.6% Matahari Department Store LPPF Buy 2,918 13,700 15,600 39,975 1,129 1, % 41.4% % 1.1% Mitra Adiperkasa MAPI Neutral 1,660 6,825 5,700 11, % 18.0% % 0.6% Ramayana RALS Buy 7,096 1,390 1,850 9, % 15.3% % 2.5% Supra Boga RANC Buy 1, , % 37.2% % 0.9% Tiphone Mobile Indonesia TELE Buy 5, , % 7.8% % 1.7% Automotive 288,656 19,556 20, % 7.0% % 2.7% Astra International ASII Sell 40,484 6,775 5, ,276 18,787 19, % 5.0% % 2.8% IMAS IMAS Buy 2,765 5,200 6,550 14, , % 57.0% % 1.1% Heavy Equipment 72,268 5,529 5, % 4.7% % 3.1% Hexindo Adiperkasa HEXA Sell 840 3,770 3,050 3, % -40.8% % 6.8% United Tractors UNTR Sell 3,730 18,525 17,000 69,101 4,912 5, % 10.5% % 3.0% Plantation 60,385 2,276 4, % 78.6% % 1.5% Astra Agro Lestari AALI Buy 1,575 23,800 25,000 37,479 1,378 2, % 84.2% % 1.5% BW Plantation BWPT Buy 4,457 1,340 1,750 5, % 89.6% % 0.6% London Sumatera Plantations LSIP Buy 6,823 1,975 2,200 13, % 45.8% % 1.9% Sampoerna Agro SGRO Neutral 1,890 1,830 1,650 3, % 211.3% % 1.7% Property 105,321 10,940 10, % -0.3% % 1.9% Agung Podomoro Land APLN Buy 20, , , % 12.8% % 3.7% Alam Sutera Realty ASRI Neutral 17, ,629 1,803 1, % -13.4% % 4.3% Sentul City BKSL Neutral 31, , % -39.3% % 0.0% Bumi Serpong Damai BSDE Buy 17,497 1,560 2,000 27,295 2,519 2, % -12.3% % 2.3% Ciputra Development CTRA Neutral 15,166 1, , , % 33.1% % 1.2% Lippo Cikarang LPCK Buy 696 7,300 7,700 5, % 40.2% % 0.0% Modernland MDLN Neutral 12, ,251 1, % -18.7% % 5.6% Pakuwon Jati PWON Buy 48, ,230 1,168 1, % 23.7% % 1.7% Summarecon Agung SMRA Buy 14,425 1,060 1,280 15,290 1,060 1, % 14.0% % 0.0% Poultry 91,770 4,126 5, % 26.3% % 1.4% Charoen Pokphand CPIN Buy 16,423 4,170 4,300 68,483 2,836 3, % 23.1% % 1.2% Japfa Comfeed JPFA Buy 10,499 1,640 1,840 17, , % 31.0% % 1.8% Malindo Feedmill MAIN Buy 1,695 3,580 4,500 6, % 39.8% % 1.2% Energy 229,004 12,467 15, % 10.6% % 4.4% Adaro ADRO Neutral 31, ,050 31,026 2,700 2, % 5.8% % 3.6% Bumi BUMI Neutral 20, ,719 (4,578) (2,376) 39.2% 44.7% % 0.0% Harum Energy HRUM Neutral 2,699 2,400 3,200 6, % 53.9% % 7.0% Indo Tambangraya Megah ITMG Neutral 1,130 25,950 29,150 29,322 2,382 2, % 10.6% % 7.2% Bukit Asam PTBA Neutral 2,304 9,225 12,100 21,259 1,784 2, % 19.9% % 5.0% Energi Mega Persada *) ENRG U/R 44, U/R 4, % -60.0% n/a n/a 0.0% 0.0% Medco *) MEDC U/R 3,332 2,545 U/R 8, % -13.3% % 1.7% PGN *) PGAS U/R 24,242 5,000 U/R 121,208 9,269 9, % 8.8% % 4.2% Metal 40,390 1,874 2, % 7.7% % 1.9% Antam *) ANTM U/R 9,538 1,050 U/R 10, % 14.3% % 2.5% Bumi Resources Minerals *) BRMS U/R 25, U/R 5, N/M 0.0% n/a n/a n/a n/a n/a n/a 0.0% 0.0% PT Inco *) INCO U/R 9,936 2,465 U/R 24, , % 10.0% % 2.2% Telecommunication 328,265 18,262 19, % 12.6% % 4.0% EXCEL *) EXCL U/R 8,534 4,445 U/R 37,936 1,859 1, % 6.6% % 2.3% Indosat *) ISAT U/R 5,434 4,010 U/R 21, % 365.5% % 2.0% TBI *) TBIG U/R 4,797 6,075 U/R 29,139 1,116 1, % 33.4% % 1.7% Telkom *) TLKM U/R 100,800 2,375 U/R 239,400 14,638 15, % 7.8% % 4.7% Note : - *) means Company Data is using Bloomberg Data - U/R means Under Review - n/a means Not Available - N/M means Not Meaningful - N.A. means Not Applicable Page 4 of 5

5 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 Handoko Wijoyo Construction, Toll Road handoko.wijoyo@mandirisek.co.id Hariyanto Wijaya, CFA, CFP, CA, CPA Plantation, Heavy eq., Energy hariyanto.wijaya@mandirisek.co.id Herman Koeswanto, CFA Consumer, Poultry herman.koeswanto@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 Aldian Taloputra Economist aldian.taloputra@mandirisek.co.id Leo Putra Rinaldy Economist leo.rinaldy@mandirisek.co.id Janefer Amanda Soelaiman Research Assistant janefer.soelaiman@mandirisek.co.id Rizky Hidayat Research Assistant rizky.hidayat@mandirisek.co.id Vanessa Ariati Tanuwijaya Research Assistant vanessa.tanuwijaya@mandirisek.co.id Wisnu Trihatmojo Research Assistant wisnu.trihatmojo@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 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 Mirna Santikara Salim Institutional Sales santikara.salim@mandirisek.co.id Jane Sukardi Institutional Sales jane.sukardi@mandirisek.co.id Kusnadi Widjaja Equity Dealing kusnadi.widjaja@mandirisek.co.id Edwin Setiadi Equity Dealing edwin.setiadi@mandirisek.co.id RETAIL SALES Ridwan Pranata Head Retail Equities ridwan.pranata@mandirisek.co.id Boy Triyono Jakarta Branch boy.triyono@mandirisek.co.id Yohanes Triyanto Kelapa Gading Branch Yohanes.triyanto@mandirisek.co.id Hendra Riady Mangga Dua Branch hendra.riady@mandirisek.co.id Umar Abdullah Pondok Indah Branch umar.abdullah@mandirisek.co.id Indra Mas ari Bandung Branch indra.mas ari@mandirisek.co.id Yuri Ariadi Pontianak Branch yuri.ariadi@mandirisek.co.id Ruwie Medan Branch ruwie@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). 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.