Equity SNAPSHOT Monday, January 15, 2018

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1 FROM EQUITY RESEARCH Buyung Poetra Sembada: A volume play (HOKI IJ. Not Rated) Sales of Topi Koki rice improved in the last two months of 2017, reflecting the limited number of players in the rice business, especially in Modern Trade, following the implementation of Maximum Selling Prices (HET). With the price cap, the key driver for growth going forward is higher sales volume. Thus, coupled with continued cost efficiencies as less promotions are required, the company expects margins to normalize starting in 1Q18. To see the full version of this report, please click here Timah: Brighter outlook (TINS IJ. IDR 810. BUY. TP IDR 1,100) We expect Timah (TINS) to post better earnings in 2018 backed by: a) 6.7% yoy higher refined tin production of 32,000 tonnes, and b) strong tin prices in 2018 supported by supply risks which should outweigh muted refined tin demand. Coupled with the implementation of new technologies to improve productivity and efficiencies in the medium term, we maintain our BUY recommendation on the stock with a target price of Rp1,100 (based on DCF valuation with WACC of 11.3%). To see the full version of this report, please click here MARKET NEWS Macroeconomy Government: Absorption of 2017 village funds reaches 98,7% Sector Construction: Private contractors target new contracts of IDR21.7tn Industrial Estates: industrial land sales slightly better in 2017 than in 2016 Corporate PP Properti to develop Weston View involving a IDR3.9tn investment Telkomsel to build more BTS towers Waskita Beton Precast: Targets revenues to grow 17%yoy to IDR9.0tn in 2018 KEY INDEX Close Chg Ytd Vol (%) (%) (US$ m) Asean - 5 Indonesia 6,370 (0.3) Thailand 1, ,568 Philippines 8, Malaysia 1, Singapore 3, Regional China 3, ,442 Hong Kong 31, ,818 Japan 23,654 (0.2) ,366 Korea 2, ,315 Taiwan 10, ,284 India 34, NASDAQ 7, ,721 Dow Jones 25, ,600 CURRENCY AND INTEREST RATE Rate w-w m-m ytd (%) (%) (%) Rupiah Rp/1US$ 13, SBI rate % (1.3) 10y Gov Indo bond (0.3) (0.1) Unit HARD COMMODITY Price d-d m-m ytd (%) (%) (%) Coal US$/ton 106 (0.2) Gold US$/toz 1,337 (0.1) Nickel US$/mt.ton 12, (0.2) Tin US$/mt.ton 20, Unit SOFT COMMODITY Price d-d m-m ytd (%) (%) (%) Cocoa US$/mt.ton 1,934 (0.6) Corn US$/mt.ton 125 (0.9) 1.3 (0.3) Oil (WTI) US$/barrel 64 (0.0) Oil (Brent) US$/barrel 70 (0.2) Palm oil MYR/mt.ton 2,524 (1.1) Rubber USd/kg Pulp US$/tonne 1,016 N/A Coffee US$/60kgbag 101 (1.7) (7.1) (6.4) Sugar US$/MT 375 (0.5) 3.6 (5.0) Wheat US$/ton 114 (2.9) 2.4 (1.5) Soy Oil US$/lb 33 (0.1) (0.7) 0.2 Soy Bean US$/by (1.6) 0.9 Source: Bloomberg

2 Equity Research HOKI Company Update Monday,15 January 2018 Not Rated Last price (IDR) 336 Stock Statistics Sector CONSUMER Bloomberg Ticker HOKI No of Shrs (mn) 2,350 Mkt. Cap (IDRbn/USDmn) 789.6/58.5 Avg. daily T/O (IDRbn/USDmn) 6.1/0.4 Major shareholders (%) PT Buyung Invest G 66.9% Estimated free float 33.1% Buyung Poetra Sembada (HOKI) A volume play Sales of Topi Koki rice improved in the last two months of 2017, reflecting the limited number of players in the rice business, especially in Modern Trade, following the implementation of Maximum Selling Prices (HET). With the price cap, the key driver for growth going forward is higher sales volume. Thus, coupled with continued cost efficiencies as less promotions are required, the company expects margins to normalize starting in 1Q18. Limited competition in MT positive for HOKI. We recently talked to the management of Topi Koki and learnt that the company complies with the new regulation implemented on 1 September 2017 which sets Maximum Selling Prices (HET) for rice. Most of the company s products are offered at the HET price for premium grade rice of IDR12,800/kg (previously the price ranged from IDR13,000 to Rp18,000/kg). HOKI started to sell its products through Modern Trade (MT) channels back in 2005 with the revenues contribution from MT reaching as high as 43% in Facing less competition in MT since the implementation of HET, sales volume reportedly improved in Nov-Dec The company also reported a shift in the preference of consumers toward rice sold in 5kg bags due to their greater convenience. HOKI relative price to JCI Index HOKI, Rp/share (LHS) Relative to JCI Index Long track-record in the rice business to ensure supply. Data from BPS shows that the price of rice increased in December 2017 (on average by 3% mom and 6% yoy) given the cyclicality of lower rice production from November to February. As a result, the Ministry of Trade reported higher average prices for medium grade rice of IDR11,083/kg in early January 2018, or higher than the HET of IDR9,450 to IDR10,250/kg. For HOKI, its small share in the rice market (approximately 2-3% only) and long history in the rice business should ensure that the company is able to meet the demand of existing customers. It is also worth noting that post implementation of HET, the company has cut its promotions budget. Given this, margins are expected to normalize starting in 1Q18, supported by higher volume /21/2017 7/19/2017 8/16/2017 Source : Bloomberg 9/13/ /11/ /8/ /6/ Higher volumes on the cards. In 3Q17, the company booked a net operating loss due to lower revenues following retraction of products to comply with HET, which also triggered higher costs. As a result, it will be difficult for the company to deliver on its initial guidance for the FY17 bottom line. Based on our MT channel checks, more products are being offered by Topi Koki in hypermarkets and supermarkets. This will subsequently translate into higher volumes going forward. At the current share price, HOKI trades at FY17 annualized PE of 16.3x. x Natalia Sutanto (62-21) ext.3508 natalia.sutanto@danareksa.com Key Financials M17 Revenue, IDR bn , EBITDA, IDR bn EBITDA Growth (%) na na Net profit, IDR bn EPS, IDR 1,394, EPS growth (%) na na (17.7) 5.6 BVPS (IDR) 2,080, DPS (IDR) PER (x) na Na PBV (x) na Na Dividend yield (%) na na na na Source : HOKI, Bloomberg See important disclosure at the back of this report 1

3 Equity Research Company Update Monday,15 January 2018 BUY Maintain Last price (IDR) 885 Target Price (IDR) 1,100 Upside/Downside +24.3% Previous Target Price (IDR) 1,100 Stock Statistics Sector Bloomberg Ticker Metal Mining TINS IJ No of Shrs (mn) 7,448 Mkt. Cap (IDRbn/USDmn) 6,591/492 Avg. daily T/O (IDRbn/USDmn) 20.3/1.5 Major shareholders (%) Government of Indonesia 65.0 Estimated Free Float 35.0 EPS Consensus (IDR) 2017F 2018F 2019F Danareksa Consensus Danareksa/Cons 0.3 (11.1) (18.3) TINS relative to JCI Index Timah (TINS IJ) Brighter outlook We expect Timah (TINS) to post better earnings in 2018 backed by: a) 6.7% yoy higher refined tin production of 32,000 tonnes, and b) strong tin prices in 2018 supported by supply risks which should outweigh muted refined tin demand. Coupled with the implementation of new technologies to improve productivity and efficiencies in the medium term, we maintain our BUY recommendation on the stock with a target price of Rp1,100 (based on DCF valuation with WACC of 11.3%). Higher refined tin production in Refined tin production is expected to recover by 26.3% yoy to 30,277 tonnes in 2017 thanks to better tin prices and favorable weather. In 2018, the management is ambitiously targeting refined tin production growth of 15 20% yoy. The higher production will be driven by: a) the opening of two new onshore mining areas in Bangka and Belitung Island, b) more offshore production and c) the operation of the Fuming plant in 2Q18 with daily capacity of 85 tonnes. Nonetheless, we maintain our conservative refined tin production growth estimate of 6.7% yoy to 32,000 tonnes for Better earnings expected in The management has provided guidance for net profits of around IDR bn in 2017 or above our expectation of IDR366bn. The better profitability will be driven by: a) higher refined tin sales volume (+8.7% yoy) and b) better refined tin prices. The average tin price increased by 11.9% yoy to USD20,073/tonne in With production expected to increase and prices improving, we expect earnings to improve further in tin market outlook: supply risks to outweigh muted tin demand. We expect muted refined tin demand with tin demand expected to increase by 1.6% yoy in Nonetheless, on the supply side, we expect the risks to persist as peak production from Myanmar will limit supply growth. Additionally, further stringent regulations in Indonesia and the depletion of reserves will result in lower refined tin exports from Indonesia in We assume an average refined tin price of USD21,000/tonne in 2018 and USD22,000/tonne in Maintain BUY. We maintain our BUY recommendation on the stock with a target price of Rp1,100 (based on DCF valuation with WACC of 11.3%) as we expect the company to continue to post better earnings in Our target price implies 21.2x 2018F PE. Source : Bloomberg x Stefanus Darmagiri (62-21) stefanus.darmagiri@danareksa.com Key Financials Year to 31 Dec 2015A 2016A 2017F 2018F 2019F Revenue (IDRbn) 6,874 6,968 8,617 9,437 9,736 EBITDA (IDRbn) ,197 1,298 1,372 EBITDA Growth (%) (54.3) Net profit (IDRbn) EPS (IDR) EPS growth (%) (84.9) BVPS (IDR) DPS (IDR) PER (x) PBV (x) Dividend yield (%) EV/EBITDA (x) Source : TINS, Danareksa Estimates See important disclosure at the back of this report 1

4 MARKET NEWS MACROECONOMY Government: Absorption of 2017 village funds reaches 98.7% The government has recorded 2017 village funds absorption of 98.7%. This is better than in 2015 (when absorption only reached 82% or IDR20.67tn) or in 2016 (97%). For 2018, the amount of village funds is not significantly different from 2017 (IDR60tn), although the allocation will be different. In 2017, 90% of the funds were distributed equally and 10% were allocated to very undeveloped villages. In 2018, the allocation may be 80:20. Thus, very undeveloped villages may receive IDR2.5bn in 2018 or more than in 2017 (IDR1.5bn). The government aims to distribute these funds to 74,954 villages in Indonesia. Currently, the village funds are distributed through the cash for work program. In this program, 30% of the village funds will be used to pay wages to workers who come from the villages. With this program, the government expects to create 5mn additional job openings. (Investor Daily) SECTOR Construction: Private contractors target new contracts of IDR21.7tn Four private contractors including Acset Indonusa (ACST), Nusa Raya Cipta (NRCA), Total Bangun Persada (TOTL), and Totalindo Eka Persada (TOPS) target new contracts of IDR21.7tn in 2018, up by 21.9% from ACST targets new contracts of IDR10tn in 2018, up by 28.2% from 2017 (IDR7.8tn). TOPS, meanwhile, targets new contracts of IDR4.0tn, up by 33.3% from NRCA targets new contracts of IDR3.7tn, up by 12.12% compared to 2017 and TOTL targets new contracts of IDR4tn, flat compared to 2017 (IDR4.13tn). While ACST is targeting infrastructure projects, TOPS will focus on high rise projects. NRCA will target both infrastructure and high rise projects. (Kontan) Industrial Estates: industrial land sales slightly better in 2017 than in 2016 Colliers stated that industrial land sales were slightly higher in 2017 than in Nonetheless, the consultant stated that this had not resulted in significant price appreciation. Among the industrial land players, only one or two players had increased prices. Going forward, the consultant expects price appreciation to be below 10%. The sales are still dominated by sales to companies in the food and beverages sector (23%) and the automotive sector (21%). Meanwhile, China Fortune Land Development (CFLD) managed to sell 10.2ha of land bank to a Chinese investor. (Bisnis Indonesia) Comment: For companies under our coverage, land sales in 2017 are estimated to reach 104ha (as DMAS has not disclosed its land sales in 2017, we still use our land sales target of 60ha), up by 10.0%yoy. In 2018, we expect the land sales for the companies under our coverage to reach 107ha, up by 2.8%yoy. (Antonia) CORPORATE PP Properti to develop Weston View involving a IDR3.9tn investment PP Properti (PPRO) will develop the first apartment tower of Weston View apartment in Wiyung, Surabaya, named La Chiva. This will be the first tower of four planned apartment towers in the area. The development value for this project is expected to reach IDR3.9tn and take 5-6 years to fully develop. For La Chiva, apartment prices will start at IDR300mn/unit. The company says that inquiries for this apartment tower have already reached 1,500 units, higher than the 900 units available for sale. (Investor Daily) Telkomsel to build more BTS towers Telkomsel (TSEL) will allocate most of its FY18 capex on building BTS towers and developing its fiber optic cable network. In addition, the company is also allocating capex to strengthen its digital business. At the holding level, Telkom (TLKM) is allocating 20-25% of its FY18 revenues for its FY18 capex, with 60% allocated to TSEL. As of 9M17, TSEL owned 152,181 BTS, of which 101,865 are 3G/4G BTS. (Bisnis Indonesia)

5 Waskita Beton Precast: Targets revenues to grow 17%yoy to IDR9.0tn in 2018 Waskita Beton Precast (WSBP) booked IDR11.0tn of new contracts in 2017, lower than the management s target of IDR12.9tn. The new contracts accounted for 90% of the target due to delays in announcing the winners of several tenders for several projects, such as the Probolinggo Banyuwangi toll road and the Penajam bridge. Around 61% of the new contracts booked in 2017 came from affiliated companies, while the remaining 39% came from third parties. The contribution from third parties increased from only 27% in WSBP targets 2018 revenues to reach IDR9.0tn, up 17%yoy higher than the IDR7.7tn targeted in Meanwhile, net income in 2018 is targeted to reach IDR1.4tn, or 16%yoy growth from IDR1.2tn targeted in (Investor Daily) Comment: The new contracts booked in 2017 of IDR11.0tn are in-line with our target of IDR10.5tn. We expect 2017 revenues of IDR7.6tn and net income of IDR1.1tn. For 2018, our revenues target is IDR9.1tn with net income expected to reach IDR1.3tn. Our targets are in-line with the management s. We have a BUY recommendation on WSBP with a TP of IDR520. (Maria Renata)

6 DANAREKSA VALUATION GUIDE Equity Valuation Rating Price (Rp) Price Mkt Cap Net profit, Rp bn EPS (Rp) Core EPS (Rp) EPS Growth PER (x) EV / EBITDA (x) PBV (x) ROE Target Rp Bn Danareksa Universe 4,262, , , % 11.5% Auto 330,953 18,895 20, % 11.0% Astra International BUY 8,175 9, ,953 18,895 20, % 11.0% Banks 1,605,423 86, , % 16.1% BCA HOLD 22,425 21, ,889 23,620 27, , , % 14.6% N/A N/A BNI HOLD 9,275 8, ,966 13,089 14, % 14.6% N/A N/A BRI BUY 3,540 3, ,644 27,521 31, % 14.7% N/A N/A Bank Tabungan Negara BUY 3,630 4,000 38,442 3,135 3, % 16.7% N/A N/A Bank Mandiri HOLD 8,100 7, ,000 19,555 23, % 20.6% N/A N/A BTPN BUY 2,650 2,800 15,477 1,273 1, % 27.8% N/A N/A BPD Jatim BUY ,006 1,282 1, % 3.0% N/A N/A Cement 177,354 4,206 4, % 4.0% Indocement SELL 22,700 14,700 83,564 1,887 1, % 2.7% Semen Indonesia HOLD 10,575 9,100 62,726 2,150 2, % 6.4% Semen Baturaja SELL 3, , % -11.0% Cigarettes 732,081 20,595 22, % 10.7% Gudang Garam BUY 83,050 83, ,796 7,498 8,487 3,897 4,411 3,897 4, % 13.2% HM Sampoerna BUY 4,920 4, ,285 13,097 14, % 9.2% Construction 137,412 8,554 10, % 21.0% Wijaya Karya BUY 1,780 2,800 15,967 1,225 1, % 45.5% Pembangunan Perumahan BUY 2,960 3,900 18,352 1,295 1, % 21.2% Adhi Karya BUY 2,030 2,800 7, % 37.3% Waskita Karya BUY 2,560 2,700 34,749 2,383 3, % 27.4% Waskita Beton BUY ,230 1,104 1, % 19.5% Wika Beton BUY , % 20.2% Jasa Marga BUY 6,225 7,800 45,180 1,747 1, % -8.1% Consumer 639,283 16,992 19, % 12.0% Indofood CBP BUY 8,850 9, ,208 3,894 4, % 10.3% Indofood BUY 7,850 9,100 68,926 4,381 4, % 10.6% Unilever HOLD 54,250 52, ,928 7,324 8, , , % 13.7% Kino Indonesia HOLD 2,040 2,100 2, % 25.8% Mayora Indah HOLD 2,250 1,960 50,307 1,277 1, % 10.4% Healthcare 93,172 2,700 2, % 11.5% Kalbe Farma HOLD 1,695 1,700 79,453 2,411 2, % 10.3% Kimia Farma SELL 2,470 1,940 13, % 12.7% Heavy Equipment 138,108 7,463 8,439 2,001 2, % 13.1% United Tractors BUY 37,025 38, ,108 7,463 8,439 2,001 2,262 2,001 2, % 13.1% Industrial Estate 12,943 2,415 1, % -46.5% Puradelta Lestari BUY , % 6.7% Bekasi Fajar BUY , % 11.3% Surya Semesta HOLD ,376 1,130 (101) 241 (11) 240 (22) % % 2.1 (47.1) (2.9) Media 53,926 2,965 3, % 13.5% Media Nusantara Citra BUY 2,370 2,800 34,653 1,491 1, % 7.6% Surya Citra Media BUY 1,350 1,750 19,273 1,474 1, % 19.5% Mining 192,009 13,615 13, % -3.8% Adaro Energy BUY 2,230 2,200 71,329 6,489 5, % -8.6% Timah BUY 885 1,100 6, % 3.0% Vale Indonesia HOLD 3,180 3,100 31,598 (74) 233 (7) 23 (7) % % (426.6) (0.3) 1.0 Aneka Tambang HOLD ,980 (264) (68) (11) (3) (11) (3) % -74.4% (60.6) (236.4) (1.4) (0.4) Bukit Asam BUY 2,890 2,900 33,295 3,332 3, % -0.5% Indo Tambangraya Megah HOLD 23,750 17,000 26,836 3,183 2,717 2,817 2,404 2,936 2, % -14.6% Harum Energy HOLD 2,360 2,200 6, % 2.1% Plantation 39,931 3,010 2, % -0.8% Astra Agro Lestari HOLD 13,325 15,000 25,646 1,908 1, % -3.0% Sampoerna Agro HOLD 2,540 2,320 4, % 6.4% PP London Sumatra BUY 1,390 1,830 9, % 1.7% Poultry 69,712 4,078 5, % 29.8% Charoen Pokphand HOLD 3,210 3,100 52,638 2,576 3, % 32.2% Japfa Comfeed BUY 1,360 1,650 15,518 1,463 1, % 23.8% Malindo Feedmill HOLD , % 91.5% Property 110,334 8,495 8, % -4.7% Alam Sutera HOLD ,427 1,436 1, % -26.4% Bumi Serpong Damai BUY 1,685 2,000 32,431 3,923 2, % -29.0% Ciputra Development BUY 1,175 1,350 21, , % 60.6% Pakuw on Jati BUY ,953 1,913 2, % 24.0% Summarecon BUY 1,020 1,100 14, % 31.6% Retail 77,103 3,402 3, % 12.4% Mitra Adi Perkasa BUY 6,625 8,100 10, % 46.8% Ramayana BUY 1,215 1,130 8, % 4.9% Matahari Department Store BUY 10,625 10,500 31,003 1,928 2, % 5.3% Matahari Putra Prima SELL , % 2.7% Ace Hardw are BUY 1,290 1,300 22, % 9.3% Erajaya Sw asembada BUY 705 1,100 2, % 11.8%

7 COVERAGE PERFORMANCE LEADERS Price as on Code 12-Jan Jan-18 Chg, % w-w, % m-m, % YTD, % Rating Timah TINS BUY Mitra Adi Perkasa MAPI 6,625 6, BUY Bukit Asam PTBA 2,890 2, BUY Aneka Tambang ANTM HOLD Adaro Energy ADRO 2,230 2, BUY Summarecon Agung SMRA 1,020 1, BUY Indofood CBP ICBP 8,850 8, (4.6) 1.4 (0.6) BUY Surya Semesta SSIA (1.9) HOLD HM Sampoerna HMSP 4,920 4, BUY Bumi Serpong Damai BSDE 1,685 1, (0.6) 0.3 (0.9) BUY Sources: Bloomberg LAGGARDS Price as on Code 12-Jan Jan-18 Chg, % w-w, % m-m, % YTD, % Rating Matahari Department Store LPPF 10,625 11,375 (6.6) (7.6) (3.0) 6.3 BUY Kalbe Farma KLBF 1,695 1,750 (3.1) (3.7) HOLD Semen Indonesia SMGR 10,575 10,850 (2.5) (3.0) HOLD Pembangunan Perumahan PTPP 2,960 3,010 (1.7) BUY Astra Agro Lestari AALI 13,325 13,525 (1.5) HOLD PP London Sumatra LSIP 1,390 1,410 (1.4) (2.1) BUY Matahari Putra Prima MPPA (1.4) (2.3) (1.4) (4.9) SELL Indocement INTP 22,700 23,000 (1.3) (2.3) SELL Bank Central Asia BBCA 22,425 22,700 (1.2) HOLD Puradelta Lestari DMAS (1.2) (2.4) (5.7) (4.1) BUY Sources: Bloomberg

8 PREVIOUS REPORTS Ace Hardware Indonesia: Excellent Dec 17 SSSG, Semen Indonesia: Running ahead of its fundamentals, Surya Semesta Internusa: Muted expectations SnapShot Poultry: Slight pick-up in December 2017 ASP, Plantation: Dec 17 Stockpile Closes At More Than A 2-Year High WIKA: Waiting for the loans disbursement SnapShot Automotive: Motorcycle sales set to recover in 2018, Cement: Ending 2017 on a high note SnapShot Banking: Rise and Shine, Mitra Adiperkasa: Stellar performance will continue SnapShot Plantation: Temporary Suspension of Malaysia CPO Export Duty, Summarecon Agung: Looking forward to a better year SnapShot Danareksa Compendium is now available. Click here to see the report.

9 PT Danareksa Sekuritas Jl. Medan Merdeka Selatan No. 14 Jakarta Indonesia Tel (62 21) Fax (62 21) Equity Research Team Helmy Kristanto Stefanus Darmagiri Natalia Sutanto S helmy.kristanto@danareksa.com (62-21) ext Head of Research, Strategy stefanus.darmagiri@danareksa.com (62-21) ext Auto, Coal, Heavy Equip, Metal, Cement natalia.sutanto@danareksa.com (62-21) ext.3508 Consumer, Tobacco, Property Maria Renata maria.renata@danareksa.com (62-21) ext.3513 Construction Eka Savitri Eka.savitri@danareksa.com (62-21) ext.3506 Banking Yudha Gautama Yudha.gautama@danareksa.com (62-21) ext.3509 Plantation Adeline Solaiman adeline.solaiman@danareksa.com (62-21) ext Retail, Poultry Antonia Febe Hartono, CFA antonia.hartono@danareksa.com (62-21) ext.3504 Cement, Property, Industrial Estate Ignatius Teguh Prayoga ignatius.prayoga@danareksa.com (62-21) ext.3511 Research Associate Lucky Bayu Purnomo lucky.purnomo@danareksa.com (62-21) ext.3512 Technical Analyst Sales team Novrita E. Putrianti novrita@danareksa.com (62-21) ext Tuty Sutopo tuty@danareksa.com (62-21) ext Ehrliech Suhartono ehrliech@danareksa.com (62-21) ext Upik Yuzarni upik_y@danareksa.com (62-21) ext Laksmita Armandani laksmitaa@danareksa.com (62-21) ext Kevin Giarto kevin.giarto@danareksa.com (62-21) ext Rendy Ben Philips rendy.philips@danareksa.com (62-21) ext. 3148

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