INVESTOR DIGEST HIGHLIGHT SECTOR. Equity Research 30 January Equity Research 30 January 2014

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1 INVESTOR DIGEST Equity Research 30 January 2014 Economic Data Latest 2014F BI Rate (%), eop Inflation (YoY %) US$ 1 = Rp, period avg 12,166 11,825 Stock Market Data (29 Jan 2014) JCI Index 4, % Trading T/O ( Rp bn ) 4,817.0 Market Cap ( Rp tn ) 4,376.3 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 HIGHLIGHT Banking: FY13 results indication (Overweight) Property sector: FY13F marketing sales tally (Neutral) SECTOR Banking: FY13 results indication (Overweight) Following the good result recorded by BRI, we believe most of our 2013 earnings forecasts were on the more conservative side. The final results are to be out mostly in February with initial data from Bank Indonesia indicating good numbers up to November Maintain Overweight on the sector with BRI as our top pick. Expect good results for While BRI and Bank Jatim had reported the 2013 audited and unaudited results, most banks have yet to announce the 2013 final results. While there is limited insight about the results, we anticipate the numbers will look good despite the liquidity tightening after the central bank started raising the benchmark rate in June Data from Bank Indonesia shows that up to November 2013, the banking industry was still resilient. Loan growth remained strong, deposit growth slowed down, asset quality improved but net interest margin weakened. The survey conducted by the central bank suggests that loan demand in 4Q13 slowed down from 3Q13.. Loan growth at 22% in November total loan growth was recorded at 22.2% y-y in November 2013 with rupiah loans advanced 20.0% and foreign currency loans 33.8% y-y. Adjusted for the 22% rupiah depreciation, total loan growth only grew 18.4% y-y. Based on the usage, investment loans were still dominant, growing at 33.3% y-y followed by working capital loans at 21.3% y-y while the consumption loans have slowed down to 15.3% y-y, the lowest since March This slow down was due to the LTV regulation on housing loans (lower LTV on second and the next mortgage), the requirement for the construction completion before disbursement of the second and the next mortgage. This slowdown continued in December 2013, according to BI s survey on bank as well as our confirmation to the banks. Maintain Overweight on banks with BRI as top pick. While 2013 results are likely to provide some upside banks are still cautious on interest rates and asset quality deterioration this year. We believe the industry will still be able to perform well this year although at slower rate. We maintain our positive outlook on the banks which are trading at 2.0x P/B and 10.7x P/E for 2014E. Our top pick in the sector is BRI (BBRI IJ; TP Rp10,600). Page 1 of 6

2 Banks Net Earnings Expectations for BBCA BBNI BBRI BDMN PNBN BBTN BTPN BJBR BJTM Avg. % y-y Net interest income 21,245 15,459 36,475 13,103 5,554 4,726 6,071 3,655 1, Total income 27,616 23,552 44,901 18,237 7,663 5,303 6,354 3,919 2, Pre-provisioning profit 14,754 11,271 25,356 8,710 3,961 2,079 2,942 1,754 1, Pre-tax profit 14,686 8,900 23,860 5,487 3,043 1,857 2,485 1,513 1, Net profit 11,718 7,046 18,681 4,012 2,108 1,364 1,979 1, F BBCA BBNI BBRI* BDMN PNBN BBTN BTPN BJBR BJTM Avg. % y-y Net interest income 25,328 17,848 44,153 13,748 6,030 5,370 7,128 4,624 2, Total income 32,735 27,183 52,512 19,467 8,083 6,033 7,468 4,939 2, Pre-provisioning profit 18,087 12,965 30,069 8,797 4,176 2,204 3,493 2,138 1, Pre-tax profit 15,880 8,323 27,910 4,752 2,558 1,880 2,724 1,579 1,240 6 Expected net profit 12,671 6,672 21,344 3,456 1,853 1,425 2,074 1, Expected gr. % YoY 8 (5) 14 (14) (12) * Audited Source: Banks, Mandiri Sekuritas estimates Bank Valuation and Recommendation Company Code Recom. Price TP Mkt. Cap. P/E (x) P/BV (x) ROE (%) Yld (%) (Rp) (Rp) (Rp bn) 2013F 2014F 2013F 2014F 2013F 2014F 2013F 2014F BCA BBCA IJ NEUTRAL 10,000 10, , BRI BBRI IJ BUY 8,300 10, , BNI BBNI IJ NEUTRAL 4,370 4,300 81, Danamon BDMN IJ NEUTRAL 4,375 4,100 41, BTPN BTPN IJ BUY 4,600 5,200 26, Panin PNBN IJ BUY , BTN BBTN IJ BUY 910 1,150 9, BJB BBJB IJ BUY 900 1,300 8, Jatim BJTM IJ BUY , Average O/W Source: Banks, Mandiri Sekuritas estimates Tjandra Lienandjaja ( ) tjandra.lienandjaja@mandirisek.co.id Property sector: FY13F marketing sales tally (Neutral) In-line for FY13. Despite of the weak 4Q13, most property companies meet its marketing sales target for FY13F. BSDE, BKSL, and APLN slightly beat its FY13 marketing sales target by 5-8%. ASRI disappoints, as it only meet 89% of its FY13 target. Marketing sales in 4Q13 dipped by 50-60% QoQ due to the LTV rule which was implemented in October-13. Most banks only signed the new agreement with developers at Dec-13 to Jan-14, hence mortgage usage dipped in 4Q13. APLN booked 166% QoQ growth in 4Q13 due to the success of Deli Podomoro City Medan. MDLN also bookedjgc and AEON sales in 4Q13. Target for FY14F? Most property companies have not given any formal guidance for FY14F. Those that provide guidance usually expects flat or slight increase of marketing sales for FY14F. However, if we strip out the new projects, the companies already priced in a decline on their existing projects. SMRA, for example, aims for Rp4tr (+10% YoY growth), which includes Bandung project. BSDE aims for flat marketing sales, while ASRI estimates 4% growth (from Rp4.8tr in FY13 to Rp5tr in FY14F). Market not as soft as developers expected? Some developers believe that the real property market in FY14F is not as weak as in and , in which marketing sales dipped by 30% YoY. The market is still firm for unit priced at Rp2bn and below. However, we noted that in the market of middle-up and above, there is a significant slowdown in demand. Page 2 of 6

3 Pipeline is thin in 1Q14F. Our channel check to marketing agents indicates that pipeline for the listed companies are thin in 1Q14F. Hence, there is room for disappointment post 1Q14F marketing sales announcement. We suspect that the thin pipeline is due to recent chaotic flood in Jakarta and Greater Jakarta, which delayed the launches. Only few will launch clusters in Jan-Feb14. CTRA launched shophouse in Citra Raya Tangerang (50 units), while APLN soft launched its trade center in Glodok (Chinatown Jakarta). BKSL launched 60 units of its Sentul CBD shophouses at Rp2.5bn/unit. ASRI is launching its new apartment projects in Cikokol, Tangerang which targets mid-low market. The unit is priced at Rp mn with sizes of 23-65sqm. Property Marketing FY13E % of FY13 from 1Q13 2Q13 3Q13 4Q13 y/y q/q sales (Rp bn) guidance FY13E guidance APLN 1,719 1, ,307 48% 166% 6, % CTRA 2,852 2,638 1,992 1,459-37% -27% 9,070 99% ASRI 1,200 1,931 1, % -57% 5,400 89% SMRA 900 1,100 1, % -79% 4,000 93% BSDE 2,599 1,596 2, % -62% 7, % BKSL % -41% 2, % MDLN , % 349% 2, % Liliana S Bambang ( ) liliana.bambang@mandirisek.co.id MARKET Market Recap January 29th 2014; JCI: 4, (+1.74%); USD/IDR: 12,166; Total Value: Rp5.47tn Indo market rebounded strongly in line with strong US and other Asian markets as Turkey rate hike provided optimism. The JCI closed 1.7% higher at 4417 level in better volume at regular market for $394MN (+17% d/d). All sectors traded strong with the laggard remain with auto sector. BMRI, TLKM, UNVR, PGAS, and ICBP lead the index rally. Foreign participants slowed to 35% and came up slightly better buyer of Rp. 245bn (USD 20mn). Gainers beat losers by 7 to 2. JCI POINTS pts (+1.74%), VALUED $452MN, MKT CAP $328BN, IDR TOP TURNOVER: BBRI BMRI ASII BBCA TLKM PGAS KLBF SMGR BBNI INTP CPIN GGRM UNVR INDF (45% of total T/O) ADVANCING SECTOR: infra+2.5%, consumer+2.1%, property+2%, telco+1.9%, financial+1.7%, cement+1.3%, plantation & mining +1.1%, auto+0.6% DECLINING SECTOR: NONE The yield of 10-year government bond continued to decreas to 8.819% (-1.81%) and Rupiah slightly appreciated to Rp12,166 (+0.20%). Sales Team FROM THE PRESS Subsidized fuel consumption declined in 2013; mandatory bio-diesel usage below target The realization last year was 46.83mn kl, below 48mn kl targeted under the 2013 APBN-P, and was caused by price hike in Jun13. On this background, the government is optimistic that 2014 quota, still at 48mn kl, will be manageable as well. Though improving in terms of quota, rupiah depreciation caused the nominal disbursement for fuel subsidy to be above budget (Rp210tn vs. Rp200tn). With regards to the 10% mandatory bio-diesel usage, 2013 realization was 1.03mn kl versus 1.5mn kl target and saved US$779mn. In 2014, the government targets 4.01mn kl bio-diesel usage which is expected to save US$3.11bn (Kompas) Page 3 of 6

4 Federal Reserve decided to continue to reduce its bond purchasing. In last night FOMC meeting, the Federal Reserve decided reduce its pace of asset purchases to US$65bn from US$75bn. Starting this February, it will reduce its purchase for mortgage-backed and long-term Treasury securities to US$30bn per month and US$35bn per month, respectively from US$35bn per month and US$40bn per month. Despite the reduction pace on bond purchases, the Federal Reserve reaffirmed several important messages i.e.) i.) The Fed remains in a highly accommodative stance and it will remain appropriate for a considerable time after the asset purchase program ends and the economic recovery strengthens. Overall, the Fed set a forward guidance that the Fed Fund rate of 0% % will not increase anytime soon ii.) The Fed stated the asset purchases are not on a fix course and its decision about the pace of bond purchase reduction will depend on the development on the labor market and inflation. iii.) The Fed could hold its Fed Fund rate of 0% % even will past the time that the unemployment rate declines below 6.5%, especially if projected inflation continues to run below 2%. Our comment: Despite the Fed continues to reduce its bond purchasing, the impact of QE taper to the financial market and the currency will likely be minor going forward. If we look at the time the Fed starts to taper this January, actually the stock market recorded a net inflow of Rp2.5tn or US$0.3bn whereas the foreign ownership in the bond market increased to Rp329tn in January 28, 2014 (33% of total holding) from Rp324tn in Dec13 (32 of total holding). Instead, we think the announcement of Jan14 inflation and Dec13 trade number next Monday by the Statistics Indonesia (BPS) will be more important affecting the Indonesia s financial market mood, which we think the data flow will be positive. Japan and South Korea are interested to develop Cilamaya Seaport Directorate General of Sea Transportation from Ministry of Transportation stated that tender for Cilamaya seaport development will be held next year. Japan and South Korea investor are interested to develop this Rp23.9tn (US$2bn) seaport project in West Java. The newspaper reported that environmental analysis document (AMDAL) has been completed in 2013 and feasibility study in The actual construction is expected by 2016 and completion by 2021 (Bisnis Indonesia). Page 4 of 6

5 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 2,629, , , % 13.3% % 2.7% Banking 641,922 52,768 60, % 14.2% N.A. N.A % 2.3% BCA BBCA Neutral 24,655 10,000 10, ,550 12,671 15, % 20.8% N.A. N.A % 1.6% BNI BBNI Neutral 18,649 4,370 4,400 81,495 7,763 8, % 11.4% N.A. N.A % 2.4% BRI BBRI Buy 24,660 8,300 10, ,754 21,344 22, % 7.1% N.A. N.A % 2.6% BTN BBTN Buy 8, ,150 9,424 1,425 1, % 12.6% N.A. N.A % 3.8% Danamon BDMN Neutral 9,585 4,375 4,100 41,933 3,456 4, % 31.9% N.A. N.A % 2.5% Bank BJB BJBR Buy 9, ,300 8,727 1,252 1, % 14.8% N.A. N.A % 7.5% Bank Jatim BJTM Buy 14, , % 4.1% N.A. N.A % 9.6% BTPN BTPN Buy 5,840 4,600 5,200 26,865 2,073 2, % 23.6% N.A. N.A % 1.9% Panin PNBN Buy 24, ,898 1,853 2, % 25.3% N.A. N.A % 2.3% Infrastructure 243,706 15,095 17, % 14.3% % 2.4% Holcim SMCB Neutral 7,663 2,160 2,700 16,554 1,207 1, % 11.3% % 2.2% Indocement INTP Buy 3,681 21,775 24,000 80,159 5,237 5, % 11.9% % 2.1% Semen Indonesia SMGR Buy 5,932 14,400 17,000 85,414 5,703 6, % 14.2% % 3.3% Adhi Karya ADHI Buy 1,801 1,780 2,500 3, % 8.8% % 3.2% Pembangunan Perumahan PTPP Buy 4,842 1,315 1,600 6, % 24.8% % 1.8% Wijaya Karya WIKA Buy 6,106 1,930 2,300 11, % 19.7% % 1.5% Waskita Karya WSKT IJ Neutral 9, , % 21.2% % 1.8% Jasa Marga JSMR Buy 6,800 5,150 6,700 35,020 1,335 1, % 21.1% % 1.5% Consumer 518,084 18,150 21, % 17.8% % 2.3% Gudang Garam GGRM Neutral 1,924 42,175 39,200 81,148 4,385 4, % 7.5% % 2.7% Indofood CBP ICBP Neutral 5,831 11,200 10,700 65,307 2,474 2, % 10.3% % 1.9% Indofood INDF Buy 8,780 6,925 7,500 60,801 2,607 4, % 69.2% % 2.1% Mayora MYOR Sell ,250 22,000 24, % -5.0% % 1.1% Unilever UNVR Neutral 7,630 28,500 30, ,455 5,559 6, % 11.8% % 2.6% Wismilak WIIM Buy 2, , % 17.3% % 3.2% Kalbe Farma KLBF Neutral 46,875 1,420 1,275 66,563 1,987 2, % 7.6% % 1.8% Dyandra DYAN Buy 4, % 59.1% % 0.0% Retail 74,749 3,273 4, % 27.4% % 1.3% Ace Hardware Indonesia ACES Neutral 1, , % 21.7% % 0.6% ERAA ERAA Buy 2,025 1,170 1,730 3, % 18.2% % 2.1% Matahari Department Store LPPF Buy 2,918 11,800 15,600 34,431 1,129 1, % 41.4% % 1.3% Mitra Adiperkasa MAPI Neutral 1,660 5,525 5,700 9, % 18.0% % 0.7% Ramayana RALS Buy 7,096 1,265 1,850 8, % 15.3% % 2.8% Supra Boga RANC Buy 1, % 37.2% % 1.0% Tiphone Mobile Indonesia TELE Buy 5, , % 7.8% % 1.8% Automotive 274,486 19,556 20, % 7.0% % 2.8% Astra International ASII Sell 40,484 6,425 5, ,107 18,787 19, % 5.0% % 2.9% IMAS IMAS Buy 2,765 5,200 6,550 14, , % 57.0% % 1.1% Heavy Equipment 75,292 5,529 5, % 4.7% % 3.0% Hexindo Adiperkasa HEXA Sell 840 3,485 3,050 2, % -40.8% % 7.3% United Tractors UNTR Sell 3,730 19,400 17,000 72,365 4,912 5, % 10.5% % 2.8% Plantation 54,463 2,276 4, % 78.6% % 1.7% Astra Agro Lestari AALI Buy 1,575 21,575 25,000 33,975 1,378 2, % 84.2% % 1.7% BW Plantation BWPT Buy 4,457 1,275 1,750 5, % 89.6% % 0.7% London Sumatera Plantations LSIP Buy 6,823 1,670 2,200 11, % 45.8% % 2.3% Sampoerna Agro SGRO Neutral 1,890 1,805 1,650 3, % 211.3% % 1.7% Property 79,351 9,772 9, % -3.1% % 2.2% Agung Podomoro Land APLN Buy 20, , , % 12.8% % 3.8% Alam Sutera Realty ASRI Neutral 17, ,289 1,803 1, % -13.4% % 4.9% Sentul City BKSL Neutral 31, , % -39.3% % 0.0% Bumi Serpong Damai BSDE Buy 17,497 1,460 2,000 25,546 2,519 2, % -12.3% % 2.5% Ciputra Development CTRA Neutral 15, , , % 33.1% % 1.4% Lippo Cikarang LPCK Buy 696 5,675 7,700 3, % 40.2% % 0.0% Modernland MDLN Neutral 12, ,925 1, % -18.7% % 6.0% Summarecon Agung SMRA Buy 14, ,260 13,271 1,060 1, % 14.0% % 0.0% Poultry 87,321 4,126 5, % 26.3% % 1.4% Charoen Pokphand CPIN Buy 16,423 4,075 4,300 66,923 2,836 3, % 23.1% % 1.3% Japfa Comfeed JPFA Buy 10,499 1,410 1,900 14, , % 31.0% % 2.1% Malindo Feedmill MAIN Buy 1,695 3,300 4,500 5, % 39.8% % 1.3% Energy 221,887 12,467 15, % 10.6% % 4.5% Adaro ADRO Neutral 31, ,050 30,547 2,700 2, % 5.8% % 3.6% Bumi BUMI Neutral 20, ,516 (4,578) (2,376) 39.2% 44.7% % 0.0% Harum Energy HRUM Neutral 2,699 2,455 3,200 6, % 53.9% % 6.9% Indo Tambangraya Megah ITMG Neutral 1,130 26,250 29,150 29,661 2,382 2, % 10.6% % 7.2% Bukit Asam PTBA Neutral 2,304 9,450 12,100 21,778 1,784 2, % 19.9% % 4.9% Energi Mega Persada *) ENRG U/R 44, U/R 3, % -60.0% n/a n/a 0.0% 0.0% Medco *) MEDC U/R 3,332 2,460 U/R 8, % -13.3% % 1.7% PGN *) PGAS U/R 24,242 4,760 U/R 115,390 9,269 9, % 8.8% % 4.5% Metal 39,213 1,874 2, % 7.7% % 2.0% Antam *) ANTM U/R 9,538 1,010 U/R 9, % 14.3% % 2.6% 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 2,385 U/R 23, , % 10.0% % 2.2% Telecommunication 319,421 18,232 19, % 12.8% % 4.0% EXCEL *) EXCL U/R 8,534 4,990 U/R 42,587 1,859 1, % 6.6% % 2.0% Indosat *) ISAT U/R 5,434 4,150 U/R 22, % 365.5% % 1.9% TBI *) TBIG U/R 4,797 6,150 U/R 29,499 1,116 1, % 33.4% % 1.7% Telkom *) TLKM U/R 100,800 2,230 U/R 224,784 14,608 15, % 8.0% % 4.9% 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 5 of 6

6 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 Satriawan Technical Analyst satriawan@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 Sylvia Tirtanata Research Assistant sylvia.tirtanata@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.