Sector: Cement. Barbarians Inside the Gate. April 6th, Please see important disclaimer and disclosure at the end of the document

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1 Barbarians Inside the Gate Steven Anthony Research Associate (021) ext: 610 Sector: Cement Entry barriers in cement used to be very high due to low value/weight ratio which causes cement companies to normally ship more than 90% of their cement within a 300-mile radius. Thus geographical locations hold an important role in cement industry, especially with relatively poor infrastructure that leads to higher logistic or distribution costs compared to other more developed countries. As new competitors barging in, big players such as INTP and SMGR start to lose market share as market gets overwhelmed by supply, primarily on bag cement with new players offer more attractive prices. Despite pressure from cement price cut at the beginning of the year, oversupply brings price war and forces ASP to be lowered even further along the way. Looking at the bell curve on the side, Indonesia as an emerging market is placed at the lower tail of the curve with only 229 kg per capita, meanwhile, India at 600 kg per capita and China at 1,600 kg per capita. The fact that cement consumption is at moderate level attracts foreign cement players to enter the Indonesian market. Not to mention that margins for cement industry in Indonesia is higher than most countries. Be that as it may, we are still optimistic that there will be growth in 2016, seeing that infrastructure projects have started to be executed. Though not much infrastructure projects done in 2015, and there was a slowdown in property sector, we view 2016 should be a better year as economy starts to rebound. We initiate coverage on the cement industry with a NEUTRAL outlook, preferring SMGR over INTP on valuation. We like SMGR due to its dispersed location that help the company to capture demand across the country. Other than that, SMGR being state-owned will help the company to get infrastructure projects. Please see important disclaimer and disclosure at the end of the document

2 As shown on the chart below, historically, cement demand is highly correlated with GDP growth Source: Indocement Company Presentation 2

3 The consumption growth is still concentrating in outside Java. Meanwhile, in Java, it registers negative growth of 5.5 percent. Last year, Sumatera, Sulawesi, and East Indonesia were the main contributors of incremental demand. All areas in Java except Central Java were worse affected by economic slowdown with Banten which is the hardest hit. Source: Indocement Company Presentation Demand weakness has hit bottom in first half last year, and has started a rapid recovery in 2nd half Source: Indocement Company Presentation 3

4 New entrants especially foreigner companies will dominate the future capacity addition into this industry. Although out side Java capacity growth is gaining traction, the future trend still shows Java will remain popular for new entrants to construct their plants. Source: Indocement Company Presentation Source: Indocement Company Presentation Indonesia as an Emerging Market is Placed at the Lower Tail of the Curve (229 kg per Capita VS India at 600 kg and China at 1,600 kg per Capita) Source: Industry and National Sources, Cembureau, Global Cement Report, IMF, Morgan Stanley Research 4

5 Further evidence of more rapid expansion of foreign players with more rapid capacity expansion than existing local players. Anhui is very notably aggressive with a target of 13 mn tons capacity by Source: SMGR Company Presentation Source: SMGR Company Presentation 5

6 SMGR is still dominating all the major regions in Indonesia Source: SMGR Company Presentation The region consumption breakdown is correlated with population distribution. Source: SMGR Company Presentation 6

7 April 4th, 2016 Initiating Coverage PT Semen Indonesia (Persero) Tbk (SMGR) Steven Anthony Research Associate The Giant Disturbed UNDERWEIGHT NEUTRAL BUY We initiate coverage on PT Semen Indonesia (Persero) Tbk (SMGR) as a NEUTRAL, with a 52-week target price of IDR 11,050, representing a 8.07% upside. Weak FY2015 results. PT Semen Indonesia (Persero) Tbk is a cement manufacturing company that classifies its business into cement production and non-cement production segments. Cement Manufacturing mainly are located at Indarung, Tuban and Pangkep Indonesia, also at Quang Ninh Vietnam. SMGR s net profit at Rp.4.52 trillion falling by 19% yoy which was in line with consensus., while top line dropped by 2% yoy due to a drop in ASP around 2 percent. However, the COGS and opex increased by 6 percent and 2 percent. As economy recovers, the pie as a whole will grow bigger this year. Incremental demand will largely come from a recovery in construction and infrastructure government spending evidently from more rapid increase in bulk cement sales than bagged (more real estate driven). Bulk contribution to total Indonesia domestic cement sales is at 24 percent from 16 percent five years ago. SMGR IJ Current Price: IDR 10, Week Target Price: IDR 11,050 But challenging outlook due to new competitions. Anecdotal examples on the ground show hat a foreign new player can price their 50 kg cement bag at Rp to Rp lower than existing local names or around 12 to 7.5 percent cheaper. It may be that the foreign competitions still face a tough time in convincing smaller retailers to distribute their products. However, we believe that giving it enough time, with such a wide discount, the new competitions will be able to shake up the market battle field. Cheap relative to historic valuation, but future risks abound. Share Price Performance Price (IDR) 10, Week High (4/17/15) 13, Week Low (8/24/15) 52-Week Beta YTD Change/% 7, (1,075) / (9.43%) Stock Information Market Cap (IDR) Shares Out/Float (M) 61,242.9B 5,931.5 / 2,906.1 Source: Bloomberg, Sinarmas Investment Research In the cement space, we still prefer SMGR rather than INTP or SMCB as it is likely to be the primary beneficiary of incremental demand from massive government infrastructure building. Trading at a valuation of, we recommend our investors to buy on weakness and also to time their trading near dividend s cum date. Financial Highlights Sales Volume Revenue (IDR Bn) 25,778 24,501 26,353 26, % 5, % 7, , ,970 26, % 4, % 6, , % growth Net Profit (IDR Bn) % growth EBITDA P/E Ratio EV/Ton (IDR Thousand) DER 5,354 7, , Source: Company Data, Sinarmas Investment Research Please see important disclaimer and disclosure at the end of the7document 2016F 27,269 28, % 6, % 8, , F 28,359 29, % 6, % 8, ,

8 April 4th, 2016 Company Background Semen Indonesia is the largest cement producer in Indonesia with domestic annual capacity of over 30 million ton. In 2012, the company changed its name from PT Semen Gresik (Persero) Tbk to PT Semen Indonesia (Persero) Tbk. The purpose of migrating to strategic holding platform is to realize the full potential of group companies so the holding company can manage all subsidiaries operations in one umbrella. Furthermore, the name of the holding can be used in introduction of a new product instead of a new brand which may take more time and cost. Company & Shareholder Organization Structure Source: Company Presentation 8

9 April 4th, 2016 Investment Theses Catalysts: Vast distribution network Domestically, SMGR has plants in three distinct geographical areas, Sumatera, Java and Sulawesi. It also operates in Vietnam through its subsidiary called Thang Long Cement. Since logistics is one of the highest cost contributors., being physically present in many economic driven areas is very important. The presence is costly to setup, but in the long run it will save a lot of transportation expenses. THE VAST NETWORK OF SEMEN INDONESIA Source: Company Presentation Cement Consumption Indonesia cement consumption per capital still low comparing to other Country. This indicate that Indonesia cement still have growing potential. Source: Company Presentation 9

10 April 4th, 2016 Funds for Infrastructure Development Source: Indonesia Investment GDP and Cement Sales Trend Source: Indonesia Investment, Trading Economics, Sinarmas Investment Research Source: Company Data, Sinarmas Investment Research Infrastructure Boom Indonesia Government focus in this section to support economic growth. But the impact is not directly and tends to be long-term. This is caused by the need of cement for infrastructure less than the developing of area nearby. Most of the cement consumption are in bag cement (78%) and the rest is bulk cement (22%). As archipelago country, location in cement production hold important role in demand of cement. With price per kilograms relative low comparing other (for example : gold) made logistic hold important role in sales revenue. The Sweet Spot of the government mega infrastructure developments Products from Semen Indonesia will be prioritized compared with other competitors' due to unspoken rule of "esprit de corps" among the State Owned Enterprises contractors as they will have a major role in the government infrastructure projects. Furthermore, even though the cement usage in infrastructure projects such as toll road is not high, the multiplier effects of the infrastructure building will be enormous. For example, residential and commercial developments will blossom along the sides of the new toll roads. Furthermore, good infrastructure backbone will cut into logistics cost, and will boost economic activities as accessibility and lifestyle improve. Cement consumption has been found highly correlated historically with GDP growth in Indonesia. Bottoming GDP Assuming that last year GDP will be the lowest and will growth, make the signal of economical recovery. The growth is expected to be in line with the growth in cement consumption. Strong balance sheet With cash and cash equivalents at near IDR 4 trillion and Debt to Equity ratio at less than 0.15, we can safely conclude that its balance sheet is strong. We forecast the long-term debt will continue to taper down as CapEx expansion will slow down due to overcapacity issues. Source: Company Data, Sinarmas Investment Research 10

11 April 4th, 2016 Risks : Competition Mainly the cement industry competition from two sources, market share and Average Selling price (ASP). Most competitor sell their product at discount to grab market share. This action make PT Semen Indonesia (Persero) Tbk loss its ability to control ASP and tends to depend on volume growth. Other threat from competition also come from outside of Indonesia, MEA triggering fear in domestic cement industry because foreign company can expand its business in Indonesia. Oversupply With production capacity around millon tons, while the cement consumption around 60 million tons, PT Semen Indonesia included as oversupply firm. This year the firm will increase production capacity. But the cement consumption not exceed the increasing in overall production capacity. Not without Hurdle Future expansion like additional in production capacity tend to take quite a long time. Usually from scratch to fully operated takes time more or less six years. Oversupply Source: Company Presentation Material 11

12 April 4th, 2016 Appendix I: Balance Sheet Balance Sheet (in thousand IDR) 2013 Assets F 2017F Cash and Cash equivalent 4,108,092,027 4,939,646,362 3,989,487,892 5,575,784,423 7,985,766,258 Inventories 2,645,892,517 2,811,704,405 2,408,974,072 3,102,437,501 3,226,535,001 Short-Term Investments Receivable Advances Prepaid Expenses and Taxes Total Current Assets Deferred Tax Assets Investments in Associates Investment Properties Fixed Assets Deferred Charges Intangible Assets Advances for Investment Other Assets Total Non-Current Assets TOTAL ASSETS Current Liability Short-term borrowing Trade Payables Other Payables Accrued Expenses Taxes Payable ST Employee Benefits Liabilities Sales Advances Current Maturities of LT Liabilities Total Current Liabilities 104,835,223 2,916,061,904 90,824, ,404,645 91,872,422 3,432,556, ,716, ,048,005 2,263,173 3,628,640,501 88,747, ,591,134 2,263,173 3,577,080, ,387, ,324,877 2,263,173 3,720,163, ,683, ,937,872 9,972,110,370 11,648,544,675 10,538,703,910 12,555,278,052 15,244,349,105 48,654, ,317, ,123, ,879, ,234,603 84,380, ,509,500 39,543, ,980,208 90,267, ,952,239 90,267, ,952,239 90,267, ,952,239 18,862,518,157 20,221,066,650 25,167,682,710 26,426,066,846 27,483,109, ,473, ,935, ,280, ,280, ,280, ,627,005 1,158,474, ,135, ,316,617 1,103,697, ,263, ,693,976 1,134,306, ,108, ,693,976 1,134,306, ,108, ,693,976 1,134,306, ,108,557 20,820,773,722 22,666,121,352 27,614,415,022 28,881,555,321 29,945,953, ,926,026 81,808, ,603, ,645, ,631,767 30,792,884,092 34,314,666,027 38,153,118,932 41,436,833,373 45,190,302,277 2,501,733,910 3,031,507,612 3,783,245,999 3,086,636,307 3,210,101, ,536, ,687, ,833, ,154, ,521, ,383, ,205, ,818,374 23,752, ,274, ,000, ,434, ,536,562 30,224, ,069, ,299, ,616, ,863,477 17,645, ,081, ,047, ,027, ,380,469 38,673, ,028, ,609, ,068, ,475,688 40,220, ,349,473 5,297,630,537 5,273,269,122 6,599,189,622 6,184,594,953 6,431,978,751 Long term liabilities 3,242,382,258 3,315,145,207 3,155,615,541 3,305,449,586 3,121,120,624 Total Liabilities 8,988,908,217 9,312,214,091 10,712,320,531 10,447,559,907 10,510,614,743 1,458,257,900 1,458,257,900 1,458,257,900 1,458,257,900 1,458,257,900 Deferred tax liabilities LT Employee Benefit Liabilities Long term provision Other Non Current Liabilities Equity Share Capital Additional Paid in Capital Other Components of Equity 7,219, ,599, ,622,095 12,453, ,152, ,222,449 58,201, ,577, ,064,953 11,955, ,152, ,470, ,902, ,612, ,526,840 10,473, ,152, ,155, ,902, ,612, ,526,840 10,473, ,152, ,155, ,902, ,612, ,526,840 10,473, ,152, ,155,266 Retained Earning 18,480,910,979 21,630,157,442 23,814,976,624 27,363,451,689 31,053,865,756 TOTAL LIABILITIES AND EQUITY 30,792,884,092 34,314,666,027 38,153,118,932 41,436,833,373 45,190,302,277 Non-Controlling Interest Total Equity 921,432,547 21,803,975,875 Source: Sinarmas Investment Research, Company data 960,414,183 25,002,451, ,021,256,611 27,440,798,401 1,021,256,611 30,989,273,466 1,021,256,611 34,679,687,533

13 April 4th, 2016 Appendix II: Income Statement Income Statement (in IDR Thousand) Revenue Cost of Revenue Gross Profit Selling Expenses General and Administration Expenses Other Operating Income Finance Income Finance Cost Share in Net Profit of Associates Profit Before Income Tax Income Tax Expenses Net Profit For the Year ,501,240,780 26,987,035, ,948,004, F 28,690,475, F 29,838,094,840 (13,557,146,834) (15,388,431,050) (16,302,008,098) (16,049,245,178) (16,691,214,985) (1,688,256,993) (1,951,961,379) (2,087,885,344) (2,120,585,831) (2,205,409,264) 10,944,093,946 (2,283,452,142) 90,608, ,033,492 (340,168,567) 34,541,962 6,920,399,734 (1,566,101,213) 5,354,298,521 11,598,604,085 (2,692,902,707) 201,928, ,070,140 (382,919,122) 31,946,912 7,090,765,967 (1,517,188,688) 5,573,577,279 10,645,996,373 (2,658,736,792) 46,157, ,075,757 (370,004,717) 34,320,727 5,850,923,497 12,641,230,630 (2,669,598,601) 114,299, ,545,487 (280,221,468) 35,655,331 7,998,325,353 13,146,879,855 (2,776,382,545) 118,871, ,647,306 (291,430,327) 37,081,545 8,318,258,367 (1,325,482,459) (1,839,614,831) (1,913,199,424) % 16.49% 2016F 14.86% 19.87% 2017F 14.17% 18.47% 4,525,441,038 6,158,710,522 6,405,058,943 Appendix III: DCF Assumption Assumption Risk Free Risk Premium Beta Tax Rate Bunga Bank 6.75% 5.16% % 10.5% Cost of Equity 13.0% Cost of Debt 8.4% DER 15.0% we 87.0% wd 13.0% WACC 12.4% Inflation (Growth) 4.5% Appendix IV: Financial Ratio Financial Ratio ROA ROE % 24.56% % 22.29% Source: Sinarmas Investment Research 13

14 Initiating Coverage PT Indocement Tunggal Prakarsa Tbk (INTP) Steven Anthony Research Associate Defending the Fortress UNDERWEIGHT NEUTRAL BUY We initiate coverage on PT Indocement Tunggal Prakarsa Tbk (INTP) as a NEUTRAL, with a 52-week target price of IDR 20,243, representing a 0.71% upside. PT Indocement Tunggal Prakarsa Tbk is an Indonesia-based company primarily engaged in manufacturing cement. Its business is classified into three segments: cement, ready-mix concrete as well as aggregates and trass quarries. INTP IJ Current Price: 20, Week Target Price: 20,243 Very healthy operations will enable the company to self fund future expansions. We like INTP for its net cash position and higher profit margins compared to its peers Going forward, we believe that its near zero debt will enable INTP to self fund its expansion plans for the future, should it decide to grab more market share. In our view, this reduces related risks that go along with most companies aggressive expansion plans. The best alternative way to play Indonesia s property recovery story. INTP has always been a higher margin cement supplier, primarily focusing on middle-upper property projects. In our view, recent developments point to the tax amnesty scheme being closer to approval. Furthermore, benign inflation and Indonesia s relatively high real interest rates opens up more opportunity for further rate cuts. These two catalysts will set the tone for a recovery in property sales, in our view INTP is one of the few alternative (other than buying the property names outright), ways to play out these catalysts. Rife competition may limit potential significant upside. Indonesia s high margin cement industry has made it a popular destination for many regional players. Going forward, we believe price wars will still persist, as margins (21% FY15 NPM average of SMGR & INTP v.s % NPM across regional players) recorded in FY15 still remain 20-30% above the regional average. In our view, price wars will continue to occur in this oversupplied industry where major losers will be previously higher margin reaping companies such as listed SMGR & INTP. Share Price Performance Price (IDR) 20, Week Low (09/29/15) 16, Week High (04/24/15) 52-Week Beta YTD Change/% 23, ,275 /-10.19% Stock Information Market Cap (IDR) Shares Out/Float (M) 73,808.7B 3,681.2 / 1,324 Source: Bloomberg, Sinarmas Investment Research Central Java looks to be overwhelmed with competition. INTP currently produces over 70% of its product in West Java, which is currently the most oversupplied region for cement. Given that many competitors are located in the area (i.e. Semen Merah Putih and Juishin), in our view price wars will be even more rampant in West Java than in any other region across the nation. Financial Highlights F Sales Volume ('000) Revenue (IDR Bn) % growth Net Profit (IDR Bn) % growth EBITDA P/E Ratio EV/Ton (IDR Thousand) DER 16,916 19,996 17,882 17, % 4, % 5, , ,154 6, , F 18,776 18, % 4, % 5, , Source: Company Data, Sinarmas Investment Research Please see important disclaimer and disclosure at the end of the 14document 2017F 19,527 19, % 5, % 6, , F 20,113 20, % 5, % 6, ,

15 Company Background PT Indocement Tunggal Tbk operate its first factory officially in August Within 39 years, Indocement has become one of the largest cement producers in Indonesia. The company established on January 16, 1985 through the merger of six cement companies, which at the time had eight factories, Currently, the Company and Subsidiaries are involved in several businesses consisting of the manufa cture and sale of cement, produces ready-mix concrete, aggregates and trass. Most of Indocement factory located in Java, 10 of which are located in Citeureup, Bogor, West Java, which makes it one of the largest integrated cement plant complex in the world. While two other factories in Palimanan, Cirebon, West Java, and another in Tarjun, Kotabaru, South Kalimantan. Indocement listed its shares on the Indonesia Stock Exchange (IDX) on December 5, 1989 with stock code "INTP". With the trademark "Tiga Roda" Indocement sold about 18.7 million tons of cement in 2014, which makes the company the largest single entity in the Indonesian cement sellers. The Company is a Portland cement products Composite Cement, Ordinary Portland Cement, Oil Well Cement, White Cement, and TR-30 Acian White. In conducting its business, Indocement continues to focus on sustainable development with a commitment to reduce carbon dioxide emissions from the cement production process. Indocement is the first company in Southeast Asia to receive Certified Emission Reductions (CER) in the framework of the Clean Development Mechanism (CDM). Indocement is the first company in Indonesia that use blast furnace slag sand, pulp fused steel products, a few years after the launch of the project cement mixture (blended cement). The cementitious materials used in cement production to reduce the clinker content and lower CO2 emissions. Company & Shareholder Organization Structure Source: Company Data 15

16 Production Capacity Investment Theses Catalysts: Source: Company Presentation, Sinarmas Investment Researchj Source: Company Presentation Market Share Strong Brand and Corporate Image Indocement Tunggal Prakasa has been operating since 1985, and it has built an extensive distributorship network. Their brand, cement Tiga Roda is already a trusted household name familiar for its high quality, availability and excellent customer service. Size does matter in the cement industry Indocement, being the second largest cement player in Indonesia with production capacity of 20.5 MT and 27.5 percent domestic market share, will benefit from better economic outlook and government massive infrastructure buildings. Strong balance sheet with high-profit margin Indocement is running at net cash position with minimal long-term debt. Its balance sheet can withstand a slowdown and diminishing margin for a considerable time. Even though there is no clear guidance from management on venturing outside core business, INTP is in a good shape to commit on new opportunities which require high capital expenditures Initiation of cost reduction projects can help to offset weakness in ASP Due to higher competitive landscape, INTP's fat margin is forecast to decline considerable. However, the management is working to improve efficiency by adding or upgrading plants with more advanced technology. For example, the new kiln P14 scheduled to be in operations first half this year can potentially improve manufacturing cost. Furthermore, the company plans to install an aero-derivative gas turbine (ADGT) to supply 73 MW from Steam Turbine to Citeureup factor. This new power turbine unit can generate electricity cost which is cheaper than current PLN cost. Capacity expansion to continue The company will be working on one brownfield project with a capacity of 4.4 million ton with an investment cost of Rp trillion scheduled to commence operations by the end of Q1/2016. Furthermore, there are two greenfield or brownfield projects with a capacity of 2.5 million ton each in Central Java and the other one in outside Java. Source: ASI, Sinarmas Investment Research 16

17 Ready to leverage its position to be a beneficiary of government infrastructure spending By positioning itself as a reliable producer of quality bulk cement and concrete coupled with timely delivery, it will stand to benefit from government massive ambition in infrastructure buildings. The contribution from bulk sales in term of total output is at 24 percent increase from 19% in The company noted a high bulk demand in Jakarta, and it has benefited from proximity to Jakarta. Risks: Source: Company Presentation Market Penetration Limitation of Loacation Having most of the plants in West Java has limited Indocement s penetration in East Indonesia, which currently happens to have higher growth. With Jokowi s focus on outside Java growth, INTP is less likely to be a beneficiary from outsized national budget towards rural and village infrastructure funds. Threat on Market Share Further expansion from Semen Merah Putih and Juishin could threaten Indocement s market share in West Java. Starting this year the management will focus more on defending market share rather than margins. Slowing consumption growth The consumption growth is still concentrating in outside Java. Meanwhile, in Java, it registers negative growth of 5.5 percent. Last year, Sumatera, Sulawesi, and East Indonesia were the main contributors of incremental demand. All areas in Java except Central Java were worse affected by economic slowdown with Banten which is the hardest hit. Source: Company Presentation, Sinarmas Investment Research Source: ASI, Sinarmas Investment Research 17

18 Appendix I: Balance Sheet Balance Sheet (in IDR Million) 2014 Current Assets Cash and cash equivalent 11,256,129 Trade receivables 2,670,993 Inventories - net 1,665,546 Advances and deposits 313,966 Prepaid taxex 7,837 Prepaid expenses 42,218 Other current financial assets 130,681 Total Current Assets 16,087,370 Deferred tax assets - net 29,919 Investments in share of stock 108,639 Fixed Asset-net 12,143,632 Investment property 3,700 Intangible assets 15,037 Other non-current financial assets 74,853 Other non-current assets 421,823 Total non-current assets 12,797,603 TOTAL ASSETS 28,884,973 Current Liabilities Trade payables - third parties 1,174,919 Other payables 520,268 Customers deposits 66,836 Accrued expenses 1,055,928 Taxes payable 270,602 Short-term employee benefit liability 122,880 Current maturities of obligation under financial 49,126 lease Total Current Liabilities 3,260,559 Obligations under financial lease - net of current maturities 76,053 Deferred tax liabilities - net 386,772 Long term employee benefit liability 309,048 Long term provisions 67,545 Deferred gain on sale and leaseback transaction 195- net Total Non-Current Liabilities 839,613 Total Liabilities 4,100,172 Capital Stock 1,840,616 Additional paid in capital 2,698,863 Other comprehensive income 85,426 Retained earnings 20,159,896 Total Equity 24,784,801 TOTAL LIABILITIES AND EQUITY 28,884,973 Source: Sinarmas Investment Research, Company data F 2017F 2018F 8,655,562 2,534,690 1,521, ,214 5,816 33,061 82,314 13,133,854 39, ,650 13,813,892 3,700 71,073 75, ,265 14,504,506 27,638,360 9,876,342 2,586,949 1,600, ,864 8,341 31,335 80,513 14,384,942 39, ,650 14,504,587 3,700 71,073 75, ,265 15,195,201 29,580,143 11,248,473 2,690,427 1,664, ,899 8,675 32,588 83,734 15,937,416 39, ,650 15,084,770 3,700 71,073 75, ,265 15,775,384 31,712,800 12,825,050 2,771,140 1,714, ,166 8,935 33,566 86,246 17,654,662 39, ,650 15,537,313 3,700 71,073 75, ,265 16,227,927 33,882,589 1,103, ,626 19, , , ,768 60,122 2,687,743 1,024, ,308 69, , ,955 90,106 58,629 2,642,038 1,065, ,161 71, , ,833 93,710 60,974 2,747,719 1,097, ,306 73, , ,658 96,521 62,803 2,830,151 61, , ,933 59,150 1,084,667 3,772,410 1,840,616 2,698,863 (214,380) 19,540,851 23,865,950 27,638, , , ,933 59,150 1,127,943 3,769,981 1,840,616 2,698,863 (214,380) 21,485,063 25,810,162 29,580, , , ,933 59,150 1,132,118 3,879,838 1,840,616 2,698,863 (214,380) 23,507,864 27,832,963 31,712, , , ,933 59,150 1,135,375 3,965,526 1,840,616 2,698,863 (214,380) 25,591,964 29,917,063 33,882,589 18

19 Appendix II: Income Statement Income Statement(in IDR Millions) Net Revenue Cost of Revenue Gross profit Operating expenses Other operating income Other operating expenses Operating Income Finance income Finance cost Equity in net earnings Income before final tax & income tax Final tax Income before income tax expense Income tax expense-net Income for the year Net movement on cash flow hedge Remeasurement lossess Related income tax Total Comprehensive Income ,996,264 10,909,595 9,086,669 (3,232,770) 196,043 (74,949) 5,974, ,649 (21,527) 24,487 6,789,602 6,789,602 (1,515,593) 5,274,009 (160,310) 40,077 5,153, ,798,055 9,888,919 7,909,136 (2,879,720) 121,295 (93,781) 5,056, ,399 (26,543) 25,325 5,645,111 (535) 5,644,576 (1,287,915) 4,356,661 (79,901) (50,847) 32,687 4,258, F 18,687,958 10,078,377 8,609,580 (2,809,486) 127,255 (76,618) 5,850, ,119 (33,217) 17,580 6,389,213 (535) 6,388,678 (1,486,037) 4,902,641 8,089 (50,847) 647 4,860,530 Appendix III: DCF Assumption Assumptions Risk Free Risk Premium Be ta Tax Rate Bunga Bank Cost of Equity Cost of Debt DER we wd WACC Inflation (Growth) 6.75% 5.16% % 10.50% 12.48% 8.40% 0.26% 99.74% 0.26% 12.47% 4.45% Appendix IV : Financial Ratio Financial Ratio ROA ROE % 20.79% % 17.84% 2016F 16.43% 18.83% Source: Sinarmas Investment Research F 15.95% 18.17% 2018F 15.38% 17.42% 2017F 19,435,476 10,481,512 8,953,964 (2,921,866) 132,345 (79,682) 6,084, ,284 (34,546) 18,283 6,644,781 (535) 6,644,246 (1,545,483) 5,098,763 8,413 (50,847) 673 5,057, F 20,018,540 10,795,958 9,222,583 (3,009,522) 136,315 (82,073) 6,267, ,572 (35,582) 18,831 6,844,125 (535) 6,843,590 (1,591,851) 5,251,738 8,665 (50,847) 693 5,210,250

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