Weekly Brief (October 22 26)

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1 NH Korindo Research NH 해외주식 인도네시아 Weekly Brief (October 22 26) Summary: JCI continued its last week s rally. The two weeks consecutive rally occurs amid the sluggish global market. Last week, investors positively responded to September s trade surplus of USD230 million. The figures are beyond expectation as investors forecasted a trade deficit in September. JCI s is estimated to continue its rally even though there is pressure from the global market. Investors will keep their wary eyes on BI s Board of Governors Meeting dated Monday and Tuesday, September 22nd and 23rd, The rupiah stable hovering at 15,200 makes investors consider the potency that BI will not raise its benchmark rate again like it did in September. Besides, we recommend ANTM as a top pick stock as it is potential for a hike in ASP and sales volume. Another to ANTM, we also recommend EXCL due to the increment in its subscribers number and data traffic. JCI - one month JCI - one year 1

2 Last Week s Recap Jakarta Composite Index (JCI) : 5, (+1.40%) Foreign Investor : net buy of IDR1.2 trillion (vs. previous week s net sell of IDR4.2 trillion) USDIDR : 15,187 (-0.07%) 10-year Government Bond Yield : 8.664% (-9.8 bps) September s Trade Balance Surplus September s trade balance posted the surplus of USD230 million. The trend in September s trade was improving than August trade balance posting the deficit of USD940 million. On a cumulative basis, from January to September 2018, the trade deficit was USD 3.78 billion. The improving trade balance was backed by the non-oil and gas (non-migas) trade surplus inclining to USD1.30 billion and the oil and gas (migas) trade deficit declining to USD1.70 billion. Meanwhile, the shrinking migas trade deficit was attributable to the decline in migas imports of USD770 million (m-m), stemming from the decrease in crude imports of 30.01% m-m. September s State Budget to Post Deficit of IDR200 Trillion 2018 s state budget (ABPN) posted the deficit of IDR trillion until the end of September The deficit was a lot lower than 2017 s deficit of IDR272 trillion. The decline in 2018 s deficit aligns with the growth of 19% y-y to IDR1,312.3 trillion in government revenue. Meanwhile, the government spending grows only 10% y-y to IDR 1,512.6 trillion. Global Equity Market Sector Index Source: Bloomberg, NH Korindo Research Source: Bloomberg, NH Korindo Research 2

3 This Week s Outlook 2018 s Credit Growth The Financial Services Authority will disclose September s banking credit growth on Monday, 10/22/2018. Of note, August s banking credit growth was at 12.12% y-y, a lot higher than July s growth of 11.34% y-y and much the highest growth since The growth evidences the robust performance of financial service sector amid global economic volatility suppressing domestic financial markets. BI s RDG of October 2018 Investors will keep their wary eyes on BI s Board of Governors Meeting dated Monday, 10/22/18, and Tuesday 10/23/18. The rupiah hovering around its new psychological level of 15,200 per U.S. dollar is BI s hardest hurdle to resolve. In September s RDG, BI held its monetary tightening stance by raising its BI 7-Day Reverse Repo Rate of 25 bps to 5.75%, by far the highest since May It is the fifth interest rate hikes in BI s monetary stance decided in the next-week RDG will direct the stock market movement and the rupiah. We estimate that JCI will rally at the range of within this week. JCI s cycle of posting the hike above 1% in October is potential for a significant rally in the last 2 weeks in October Benchmark Rate Loan Growth (y-y) Source: Indonesia Statistics, NH Korindo Research Source: Bank Indonesia, NH Korindo Research 3

4 Aneka Tambang (ANTM Metal & Mineral) Dec 2019 TP 1,200 Consensus Price 1,218 TP to Consensus Price -1.5% vs. Last Price +56.9% Last Price (IDR) 765 Price date as of Oct 19, wk range (Hi/Lo) 1,015 / 600 Free Float (%) 35.0 Outstanding sh. (mn) 24,031 Market Cap (IDR bn) 18,384 Market Cap (USD mn) 1,211 Avg. Trd Vol 3M (mn) Avg. Trd Val 3M (bn) Foreign Ownership 5.9% Sales Breakdown: Gold 68.1% Nickel 26.9% Other 5.0% USD mn FY2017 FY2018E FY2019E FY2020E Sales 12,654 22,573 24,763 26,281 y-y 39.0% 78.4% 9.7% 6.1% EBITDA 1,434 3,255 3,160 3,453 Net profit ,045 1,125 EPS (IDR) y-y 110.6% 535.7% 20.4% 7.7% NPM 1.1% 3.8% 4.2% 4.3% ROE 0.7% 4.6% 5.3% 5.4% EV/EBITDA 14.8x 8.2x 8.8x 8.9x P/BV 0.8x 0.9x 0.9x 0.9x 3Q18 s Expectancy of Trend in ANTM s Soaring Gold Price We are sanguine that in 3Q18, ANTM remained to post the net profit of IDR301 billion, growing by 82.8% y-y. Meanwhile, its net profit margin climbed by 5.4% (vs. 2Q18 s net profit margin of 1.6%). The growth forecast was underlined by the increment in ANTM s gold price reaching its highest level of IDR677,000. Besides, interest expense and forex gain loss in 2Q18 were cushioned by increment in exports with the U.S. dollar denomination. Diwali Festive Sending Demand for Glod to Soar Diwali festive to be held on November 7th, 2018 inevitably sends the demand for gold to soar and buoys global gold prices. The festive gives a positive sentiment for ANTM s gold ASP. In the festive, Hindi people the largest population dispersed around the world holds the tradition of giving gold bullion or gold jewelry as gifts; accordingly, it entails the soaring demand for gold. ANTM s Cooperation with Ocean Energy Nickel International Ltd (OENI) ANTM cooperates with OENI to build a nickel processing factory worth USD320 million. ANTM has the ownership portion of 30%, while OENI has 70% of the ownership portion. We estimate that this cooperation brings positive impacts for ANTM s revenues such as increment in production volume, added values, and selling prices for nickel products. In 2021, it is likely capable of producing 39,500 TNi of nickels. Share Price Performance Gold Revenue & Gold ASP F 4

5 XL Axiata (EXCL Telco) Dec 2019 TP 3,930 Consensus Price 3,715 TP to Consensus Price +5.8% vs. Last Price +41.4% Last Price (IDR) 2,780 Price date as of Oct 18, wk range (Hi/Lo) 3,600 / 1,710 Free Float (%) 33.6 Outstanding sh. (mn) 10,688 Market Cap (IDR bn) 29,713 Market Cap (USD mn) 1,957 Avg. Trd Vol 3M (mn) Avg. Trd Val 3M (bn) Foreign Ownership 99.9% Revenue Breakdown: Data 63.4% Non-Data 23.6% Others 13.0% IDR bn FY2017 FY2018E FY2019E FY2020E Revenue 22,876 23,026 24,587 26,167 y-y 7.2% 0.7% 6.8% 6.4% EBITDA 8,177 8,741 9,072 9,833 Net profit EPS (IDR) y-y -0.1% -59.4% 67.3% 80.5% NPM 1.6% 0.7% 1.0% 1.8% ROE 1.8% 0.7% 1.2% 2.1% EV/EBITDA 5.9x 5.4x 5.2x 4.8x P/BV 1.5x 1.4x 1.3x 1.3x Focus on Data Segment We forecast that in 3Q18, EXCL remains to post positive performance. It is underlined by the growth of 1% q-q in 2Q18 and the growth of 1% y-y in 1H18. It outperformed its peers. The Data segment buoyed 20% y-y was the potent driver for 1H18 s growth; indeed, it gave the contribution 63% (vs. 1H17 s contribution of 53%) to EXCL s overall revenue. Until 1H18, EXCL succeeded in posting the growth of 5% y-y to 53 million subscribers whose 41 million are smartphone users. Meanwhile, in 1H18, its data traffic edged up significantly petabytes (vs petabytes in 1H17). Acknowledging the fact, it focuses on the partnership with Evercoss and Youtube in launching a smartphone, Xtream and exclusive bundling of Samsung Galaxy Tab 4. To support its strategy, EXCL keeps building new 4G base transceiver stations (BTS) to reach 24,685 units or growing by 82% y-y; therefore, at the end of June 2018, it has 111,786 units BTS. High Debt for Expansion EXCL s funding focuses more on a long-term debt. Its debt ratio to equities (DER) reached 90% in FY17, estimated to remain at the same figures in FY18. In 3Q18, EXCL increased its debts by issuing bonds and Islamic bonds worth IDR1 trillion, respectively. Both the bonds are offered in shelf registration with the targeted proceeds of IDR5 trillion, respectively. The proceeds of bonds right issue will be spent on the capex financing network expansions in Java and outside Java and improving Java-based network s capacity and quality. Share Price Performance EXCL s BTS Quantity 2Q16 2Q18 5

6 PT NH Korindo Sekuritas Indonesia Member of Indonesia Stock Exchange Head Office : Wisma Korindo 7 th Floor Jl. M.T. Haryono Kav. 62 Pancoran, Jakarta Indonesia Telp : Fax : Branch Office BSD: ITC BSD Blok R No.48 Jl. Pahlawan Seribu Serpong Tangerang Selatan Indonesia Telp : Fax : Branch Office Solo : Jl. Ronggowarsito No. 8 Kota Surakarta Jawa Tengah Indonesia Telp : Fax : DISCLAIMER This report and any electronic access hereto are restricted and intended only for the clients and related entities of PT NH Korindo Sekuritas Indonesia. This report is only for information and recipient use. It is not reproduced, copied, or made available for others. Under no circumstances is it considered as a selling offer or solicitation of securities buying. Any recommendation contained herein may not suitable for all investors. Although the information hereof is obtained from reliable sources, its accuracy and completeness cannot be guaranteed. PT NH Korindo Sekuritas Indonesia, its affiliated companies, employees, and agents are held harmless form any responsibility and liability for claims, proceedings, action, losses, expenses, damages, or costs filed against or suffered by any person as a result of acting pursuant to the contents hereof. Neither is PT NH Korindo Sekuritas Indonesia, its affiliated companies, employees, nor agents are liable for errors, omissions, misstatements, negligence, inaccuracy contained herein. All rights reserved by PT NH Korindo Sekuritas Indonesia