Indonesia Market Outlook Weekly 2H17 Brief (September 3 7)

Transcription

1 NH Korindo Research NH 해외주식 인도네시아 Indonesia Market Outlook Weekly 2H17 Brief (September 3 7) Summary: Last week JCI was capable of rallying amid the escalating tension of global trade war causing rupiah depreciated further. The figures of credit growth re-accelerated in July gave a positive sentiment investors, mainly foreign investors posting net buy topping IDR1 trillion. This week JCI likely rallies further. Investors will focus on the domestic sentiment, namely August s inflation. Based on the monthly cycle, August s inflation will be controlled at around 3.2%. On the other side, the uptrend of hike in core inflation signals the fact that the trend of improving domestic consumption. Investors will also digest the release of August s forex reserves. The government's stance will cushion pressure on forex reserves. We recommend UNTR and GGRM as top picks. UNTR s stocks will be backed by the government plan to beef up coal production, while GGRM s stocks are another recommendation because its growth in sales accelerates. JCI - one month JCI - one year 1

2 Last Week s Recap Jakarta Composite Index (JCI) : 6, (+0.83%) Foreign Investor : net buy of IDR1.02 trillion (Vs. previous week s net buy of IDR99 billion) USDIDR : 14,710 (+0.42%) 10-year Government Bond Yield : 8.202% (+26.2 bps) July s Positive Credit Growth amid Financial Market Volatility The Financial Service Authority (OJK) posted the growth of 11.34% y-y in July s credit edging up from 10.75% y-y in June. It evidenced the positive performance recorded by the banking sector amid the volatility in the financial market. The growth in July s credit was boosted by the trading and manufacturing sector. The OJK was certain that the target growth of 12% in the end of 2018 s credit likely achieves amid the risks arising from the hike in benchmark rates. Global Trade War Tension Last week, the U.S. succeeded to enter into a new agreement with Mexico and Canada. Such success was a positive step in re-drafting new NAFTA agreement. However, Trump s stance of imposing additional tariffs of USD200 billion on China s goods caused global markets to be loomed with jitters, and left rupiah to weaken further at 14,700 per U.S. dollar. Global Equity Market Sector Index Source: Bloomberg, NH Korindo Research Source: Bloomberg, NH Korindo Research 2

3 This Week s Outlook Release of August s Inflation The Central Statistics Agency (BPS) will release the data of August s inflation on Monday, 09/03/18. July s inflation was at 0.28% m-m lagging than June s inflation of 0.59% m-m. On yearly basis, July s inflation was at 3.18%. June and July s inflation moved stably below 3.2%. Based on the last 2-year monthly cycles, August s inflation is always lower than July s inflation. Thus, August s inflation is estimated to settle at 3.2%. July s core inflation of 2.87% y-y, the highest since 2018 is worth consideration and potential for re-hitting 3% in August. The consistently hiking core inflation indicates the domestic consumption starting to improve. August s Forex Reserves Bank Indonesia (BI) releases August s forex reserves on Friday, 09/07/18. Meanwhile, July s forex reserves were at USD118.3 billion lower than June s forex of USD119.8 billion. The trend of July s declining forex reserves was attributable to the settlement of foreign debt and BI s intervention in forex and sovereign bonds markets. August s forex reserves are crucial in light of varied policies the government implements such as increment in exports and regulation of converting exports income into rupiah. If the pressure on August s forex reserves subdues, the government s policy proves effective. We estimate that during this week JCI likely rallies with the range of The 2-week-consecutive rally and the trend of consistent foreign net buy indicate the backdrop of Indonesia's stocks markets get better. Indonesia Inflation (y-y) Indonesia Foreign Reserves (USD bn) Source: Indonesia Statistics, NH Korindo Research Source: Bloomberg, Bank Indonesia, NH Korindo Research 3

4 United Tractors (UNTR Heavy Equipment) Dec 2018 TP 44,750 Consensus Price 45,383 TP to Consensus Price +5.6% vs. Last Price +30.1% Last Price (IDR) 34,400 Price date as of Aug 31, wk range (Hi/Lo) 40,500 / 29,500 Free Float (%) 40.5 Outstanding sh. (mn) 3,730 Market Cap (IDR bn) 128,317 Market Cap (USD mn) 8,634 Avg. Trd Vol 3M (mn) 4.04 Avg. Trd Val 3M (bn) Foreign Ownership 18.9% Revenue Breakdown: Mining Contracting 47.3% Construction Machinery 35.7% Others 17.0% IDR bn FY2016 FY2017 FY2018E FY2019E Sales 45,539 64,559 78, ,945 y-y -7.7% 41.8% 21.9% 30.8% EBITDA 10,173 14,596 18,931 22,851 Net profit 5,002 7,403 10,821 12,019 EPS (IDR) 1,384 1,984 2,900 3,222 y-y 29.8% 47.9% 46.2% 11.1% NPM 11.0% 11.5% 13.7% 11.7% ROE 12.2% 16.4% 21.0% 20.6% P/E 15.8x 17.8x 11.9x 10.7x P/BV 1.9x 2.8x 2.3x 2.1x 1H18 s Net Income: Positive Impacts of Recovery in Coal Prices UNTR posted the net profit of IDR5.74 trillion growing by 60% y-y and 20% q-q. The growth was the positive impacts of the recovery in the global coal prices. Meanwhile, the demand for heavy machinery and mining contractor grew by 24% y-y and 32% y-y, respectively. Furthermore, the sales volume surged 37% y-y inclining from 1,751 units to 2,400 units. Of note, while Komatsu dominates the total sales of heavy machinery in Indonesia by 36%, PAMA dominates market shares by 35%. Demand: Making Best Use of Momentum We oversee that in ahead years the prospect of mining contractor and demand for heavy machinery is still promising because of a number of positive catalysts, such as 1) the increment of 100 million tons in coal production by government, 2) the high demand for coal by China and India, 3) a way more conducive weather, 4) trend of dollar appreciation against rupiah, and 5) the trend of rallying coal prices (the average of USD90-USD95 per ton FY18E-FY19E: our estimate). Martabe: Best Exploration The acquisition of Martabe mine was potential for beefing up UNTR s total assets by 33.1% y-y from IDR93.5 trillion in the FY18E to IDR124.3 trillion in the FY19E. We estimate that in FY19E Martabe will contribute 7.5% to UNTR s revenue. In the end of 2017, Martabe s gold reserves grew by 46.8% y-y inclining from 3.2 million ounces to 4.8 million ounces, while its silver reserves grew by 36.1% y-y hiking from 27.2 million ounces to 36 million ounces. Share Price Performance Revenue Composition E 4

5 Gudang Garam (GGRM Cigarettes) Dec 2018 TP 88,650 Consensus Price 83,300 TP to Consensus Price +6.4% vs. Last Price +21.4% Last Price (IDR) 73,000 Price date as of Aug 30, wk range (Hi/Lo) 85,275 / 62,025 Free Float (%) 23.8 Outstanding sh. (mn) 1,924 Market Cap (IDR bn) 139,160 Market Cap (USD mn) 9,445 Avg. Trd Vol 3M (mn) 0.92 Avg. Trd Val 3M (bn) Foreign Ownership 8.0% Sales Breakdown: Machine Made Cigarettes 90.7% Hand Rolled Cigarettes 7.7% Others 1.6% IDR bn FY2016 FY2017 FY2018E FY2019E Sales 76,274 83,306 91,075 99,626 y-y 8.4% 9.2% 9.3% 9.4% EBITDA 12,113 13,122 14,780 16,464 Net profit 6,677 7,754 8,923 9,929 EPS (IDR) 3,470 4,030 4,637 5,160 y-y 3.8% 16.1% 15.1% 11.3% NPM 8.8% 9.3% 9.8% 10.0% ROE 17.2% 19.0% 20.2% 20.4% P/E 18.4x 20.8x 15.7x 14.1x P/BV 3.1x 3.8x 3.0x 2.8x 2Q18 s Acceleration in Sales Growth GGRM succeeded to post the highest sales of 15% topping the last-3 year sales, from IDR20.2 trillion in th e 2Q17 to IDR23.2 trillion in the 2Q18. The sales growth were mainly underpinned by the machine-made clove cigarette (SKM) contributing 90% to the total sales dan capable of growing by 16.6% from IDR18.1 trillion in the 2Q17 to IDR21.1 in the 2Q18. The sales of hand-rolled clove cigarette (SKT) contributing 9% to the sales edged down by 2% from IDR1.83 trillion in the 2Q17 to IDR1.79 trillion in the 2Q18. The decline was attributable to the uptrend of SKM instead of SKT among youth smokers. 2Q18 s Net Profit Hiking by 35% GGRM succeeded to lower the transportation, ads., and promotion expenses to sales from 4.2% in the 2Q17 to 3.7% in the 2Q18 thanks to the efficiency it carried on. Thus, its net profit succeeded to grow by 35% from IDR1.23 trillion in the 2Q17 to IDR1.66 trillion in the 2Q18. GGRM to Construct Airport in Kediri GGRM allocated the funds of IDR5 trillion to construct airport in Kediri. The long-term project estimated to run more than two years is at the phase of determining location and design evaluation. The airport construction covers an area of 450 hectares. Its 3,000 meter in length runway is under construction. As an information, GGRM is domiciled in Kediri, East Java and has factory located in Kediri. Share Price Performance GGRM Sales Growth y-y

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