INVESTOR DIGEST HIGHLIGHT ECONOMY. Equity Research 16 November 2016

Transcription

1 INVESTOR DIGEST Equity Research 16 November 2016 Economic Data Latest 2016F 7-DRRR (%), eop Inflation (YoY %) US$ 1 = Rp, period avg 13,343 13,164 Stock Market Data (15 Nov 2016) HIGHLIGHT 2017 Government Budget Review: Relying on Reforms Oct16 Trade Surplus: Driven by Correct Reasons Indonesian banking: Sept-16 data - improvement in asset quality Cigarette: Inside the Pack Nov 16 Matahari Department Store: Overhang Removal (LPPF; Rp15,100; Buy; TP: Rp19,200) Market Recap Nov 15 th 2016; JCI: 5, (-0.73%); USD/IDR: 13,343; Total Value: Rp8.8tn JCI Index 5, % Trading T/O ( Rp bn ) 7,531.0 Market Cap ( Rp tn ) 5, ,027.8 Market Data Summary* EBITDA growth (%) EPS growth (%) EV/EBITDA (x) P/E (x) P/BV (x) Div. Yield (%) Earnings Yield (%) Net Gearing (%) ROE (%) * Aggregate of 77 companies in MS research universe, representing 73.3% of JCI s market capitalization ECONOMY 2017 Government Budget Review: Relying on Reforms The 2017 budget has been approved and ready to go. At a glance, the budget figures seem to be more realistic compared to the budget in the last two years. Yet, the task to achieve tax target and spending, especially infrastructure, will remain challenging. We strongly believe that reform will be the key. Without reforms, we estimate that tax revenue would only grow by 7%-10% (vs. government s 13.5%) next year, implying another episode of budget cut and wider deficit. Budget outline. The 2017 budget has been approved and the revenue & expenditure are a tweak higher than the initial draft (RAPBN 2017) with deficit maintained at -2.41% of GDP. Though lower than this year s revised budget s (APBN-P 2016), the 2017 posture is still higher than projected 2016 realization. Tax target: still a challenging one. The government targets 13.5% tax increase in 2017 to Rp1,499tn despite lower economic growth assumption of 5.1% (appendix 1). We believe that achieving the target will remain challenging on the back of two factors. First, lower historical performance. The average tax growth is only 11.5% and it has persistently eased in the last several years; the last time it exceeded 13.5% was in Second, bear in mind that we should exclude amnesty income obtained in 2016 in calculating the increase for 2017 tax revenue as it is a one-off event. Assuming that Rp120tn of Rp1,300tn tax collection this year comes from amnesty, then the basis would be Rp1,180tn. While larger tax base from amnesty would provide additional revenue, the amount will not be enough. Without extra efforts, our baseline scenario suggests that tax revenue will only grow 7%-10% in 2017, implying Rp60tn Rp100tn shortfall (see Eco-Box for details). Tax reform is crucial; without it, tax revenue will likely fall short (again). Therefore, tax reform (the so-called extra efforts contribution) is essential in determining whether or not the government could achieve its target. Addressing why people evade tax in the first place is a must, especially given taxpayers low obedience. According to the Directorate General of Taxation, only Page 1 of 13

2 10mn out of 27mn registered taxpayers submitted their tax papers (SPT) in There are also 44.8mn individuals, including professionals, who are potential to be the sources of revenue (exhibit 3). The potential is even bigger on the corporate side, as only 11% of 5mn registered corporations, excluding SMEs, have paid taxes. GOVERNMENT BUDGET DEVELOPMENT Rp tn Realization 2014 Realization 2015 APBNP 2016 RAPBN 2017 A. Revenue and Grant 1, , , , ,750.2 I. Domestic Revenue 1, , , , , Tax revenue 1, , , , , Non-tax revenue II. Grant B. Expenditure 1, , , , ,080.5 I. Central Government Expenditure 1, , , , , Ministries/Institution Expenditure Non-Ministries/Institution Expenditure II. Transfer to Region and Village Fund Transfer to Region Balanced Fund Regional Incentive Fund Special Autonomy and DIY Special Fund Village Fund C. PRIMARY BALANCE (93.4) (142.4) (105.5) (111.4) (109.1) D. FISCAL SURPLUS/DEFICIT (A-B) (226.8) (298.4) (296.7) (332.8) (330.3) As a percentage of GDP -2.25% -2.58% -2.35% -2.41% -2.41% E. FINANCING I. Debt Financing II. Investment Financing (8.9) (59.7) (94.0) (49.2) (47.5) III. Lending (6.4) (6.4) IV. Guarantee Obligation (1.0) 0.0 (0.7) (0.9) 0.9 V. Other Financing Source: Ministry of Finance APBN 2017 Leo Rinaldy( ) Wisnu Trihatmojo ( ) leo.rinaldy@mandirisek.co.id wisnu.trihatmojo@mandirisek.co.id Oct16 Trade Surplus: Driven by Correct Reasons Trade recorded a surplus by correct reasons. Trade surplus stabilized at US$1.2bn in Oct16, in between our and consensus expectations (exhibit 1). The combined US$2.4bn surplus in Sep16-Oct16 is the biggest since Oct11-Nov11 s US$3.3bn, indicating a more stable path. We believe that trade data spell improving economic condition as exports and imports each grew 4.6% YoY and 3.3% YoY which were also supported by volume growth increases. The cumulative 10M16 trade surplus amounts to US$6.9bn (10M15: US$8.2bn). Exports increase supported by commodities. Advancement was seen in both price and volume. On the former, its contraction eased to -2.7% YoY in Oct16 from previously -6.1% YoY, reflecting commodity price increase. Meanwhile, the latter marginally increased to 7.5% from 7.3% in the corresponding period with non-oil and gas volume growth reaching 10% YoY. Based on goods, exports were propelled by the increase on commodities such as coal and CPO (both contributed 3.1ppt to Oct16 monthly export change). Page 2 of 13

3 Imports increased on the back of higher volume. The volume growth for imports has more than doubled in Oct16, reaching 5.8% YoY (vs. 2.3% in Sept16), indicating improving domestic demand entering 4Q16. Based on groups, import demand for capital goods such as machineries & steel were better whereas consumer goods still grew strongly (see exhibit 1). Current account deficit remains manageable. Trade activity is expected to gain momentum until YE16, with export tipping a little bit higher. Seasonal demand for commodities like coal, also supported by high prices, is expected to sustain until YE16. We maintain our CAD forecast at -2.0% and -2.2% of GDP this year and next, respectively. Benchmark rate to stay. Despite firm fundamental economic picture, we think Bank Indonesia would hold its 7-DRRR policy rate at 4.75% in this week s board of governor meeting on the back of heightened market volatility and capital outflow risk. Moreover, market volatility is propelled by the Fed Fund rate hike issue. While possibility for Fed funds rate hike in Dec16 is not a new story, it is now wrapped with different market environment, namely the unexpected election of President Trump. Hence, the market becomes more vulnerable. For information, the market is pricing in 90% probability of Fed funds rate increase in Dec16. TRADE SUMMARY Sep-16 Oct-16 Previous Revision MS Forecast Market Consensus Actual Exports (% YoY) Imports (% YoY) Trade balance (US$ mn) Sources: Bloomberg, Mandiri Sekuritas estimate Leo Rinaldy( ) Wisnu Trihatmojo ( ) leo.rinaldy@mandirisek.co.id wisnu.trihatmojo@mandirisek.co.id SECTOR Indonesian banking: Sept-16 data - improvement in asset quality Here is some details on the banking data: Loan growth: 1) +6.5% y-y (+3.8% ytd; +1.6% m-m) in September compared to +6.8% y-y (+2.2% ytd; +0.4% m-m) in August. 2) Adjusted for rupiah appreciation, total loan growth was +8.4% y-y, compared to +7.7% y-y in August. Rupiah loans were +10.5% y-y (+10.7% y-y in August) while FX loans in USD term is at -1.7% y-y vs. -6.9% y-y in August. 3) Based on bank classification, strongest loan growth came from BUKU IV banks at +13.5% y-y, followed by BUKU II banks at +3.9% y-y and BUKU III banks at +2.9%y-y. Meanwhile, BUKU I banks recorded a decline in loan growth at -45.1% y-y as a number of banks have been upgraded from BUKU I to BUKU II. 4) In terms of usage, investment loans still has the highest growth rate of 9.1% y-y, down from 9.4% y-y in August, followed by consumption at 8.0% y-y from 8.2%y-y in August and working capital loans at 4.2% y-y vs. 4.7% y-y in August. 5) Of the large sectors with >5% loan exposure: agriculture (6.5% exposure) +14.7% y-y vs % y-y in August, manufacturing (17.7% exposure) at -0.1% y-y vs. +2.9% y-y, wholesale and trade (19.7%) at +7.1% y-y vs. +6.1% y-y, and home ownership (8.1% exposure) at +7.2% y-y, up from 6.8% in August. 6) Regionally, all areas showed declining y-y loan growth except Sumatera at +6.1% y-y in September from +5.5%y-y in August. Page 3 of 13

4 Deposit growth: 1) +3.1% y-y (+4.3% ytd; -0.1% m-m). 2) Adjusted for the currency movement, deposit grew +5.2% y-y in September vs. +6.4%y-y in August. Rupiah deposits grew +7.1% y-y vs. +9.9% in August and foreign currency deposits contracted by 14.5% y-y. In USD terms, FX deposits contracted by 3.6% y-y. 3) Based on bank classification deposits in BUKU IV banks +8.0% y-y, BUKU III +3.8% y-y while in BUKU II -5.6%y-y and BUKU I -48.4%y-y. 4) Based on type, CASA deposits was +5.0% y-y vs. +8.8% y-y in August (CA at -2.7% y-y and savings at +11.5% y-y) while time deposits growth remains weak at +1.1% y-y. Liquidity: the weak deposit growth increased the industry LDR to 91.5% in September from 89.9% in August. Increase in LDR was seen across all bank classifications, with the highest increase coming from BUKU II banks to 92.5% in September (from 89.0% in August) and BUKU III banks to 97.6% in September (from 94.3% in August). Asset quality: 1) NPL declined to 3.10% in September from 3.22% in August while special mention loans (category 2) also declined to 5.44% in September from 5.52% in August. In terms of absolute amount, total NPL increased 21.9% y-y (+29.5% ytd; -2.1% m-m). 2) Improvement in NPL was seen across all banks, with exception of BUKU I banks in which NPL increased to 2.02% in September from 1.98% in August. 3) In terms of segment, NPL in investment loans improved to 3.46% from 3.53% in August, in consumer loans to 1.71% from 1.79% and in working capital to 3.73% from 3.91%. 4) Industry with >4% NPL level: mining at 6.38% (7.22% in August), construction at 4.26% (4.92% in August), wholesale & retail at 4.42%( 4.33%), and transportation at 4.77% (5.61%). Meanwhile, NPL in manufacturing sector declined to 3.88% from 3.92% in August, in household to 1.80% from 1.88%, in apartment 2.32% from 2.44% and in shop houses to 4.16% from 4.18%. 5) Location wise, all areas saw improvement in loan quality with the highest improvement was seen in Sumatera to 3.18% from 3.38% in August and Kalimantan to 4.92% from 5.07%. Profitability: 1) Industry NIM improved to 5.65% from 5.59% in August thanks to continuing reduction in time deposits rates. 2) NIM in state banks increased to 6.40% from 6.24% while NIM of forex commercial banks remains stable at 5.31%. 3) NIM in BUKU IV banks increased to 6.59% (from 6.46% in August) while BUKU III NIM remained relatively stable. Capital: average CAR declined to 22.6% in September from 23.3% in August. Decline in CAR was seen across all bank classifications with the highest decline coming from BUKU IV banks to 20.7% (from 21.8% in August). Sep-15 Oct-15 Nov-15 Dec-15 Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Loan growth (% y-y) Deposits growth (% y-y) LDR (%) NPL (%) Special mention loans (%) NIM (%) CAR (%) Tjandra Lienandjaja ( ) tjandra.lienandjaja@mandirisek.co.id Page 4 of 13

5 Cigarette: Inside the Pack Nov 16 Our cigarette price survey reveals that many stories are at play in the retail price movements this month, including Gudang Garam s new ex-factory prices that are yet to be fully reflected in stores. Bentoel is also slating with lower prices through Lucky Strike Mild 12 and the recent retail price drop on Dunhill Mild 16, which might disrupt the market for mild players. GGRM s new ex-factory prices are yet to be fully translated to retail price. GGRM s ex-factory price increase last week translates to a mere 0.8% MoM retail price increase (versus average ex-factory price increase of c.2%). This is partly caused by some brands ex-factory prices that were not raised, and the retail price responses toward raised ex-factory prices may not be complete yet retailers expect further adjustment in 1-2 weeks. Mirroring the ranks of ex-factory price increases, Pro Mild 16 s retail price leads with +2.6% MoM, followed by Surya 16 (+1.3%), and GG International 12 (+0.5%). For two consecutive months, GGRM ranks last in the monthly retail price movement at +0.5% and +0.8% MoM in Oct 16 and Nov 16, respectively. Bentoel is still in with the cheap. The strategy of lower-price products seems to be maintained until the last breath by RMBA. Their retail price increase has been rather muted this year, up by a mere 6.2% YTD (vs. average of 9.3%), where half of the increase comes from last month s 3.5% jump. Now available at all convenience stores and street vendors we visited, Lucky Strike Mild 12 emerged as the cheapest cigarette, retailing at Rp10,000 even below HMSP s U Bold in some areas. Lucky Strike Mild s widespread distribution comes at the same time as Dunhill Mild 16 s retail price drop of Rp1,000-3,000/pack to c.rp15,000 at our survey stores, priced within Sampoerna U Mild s level. The price drop could be part of their trade promotion strategy, but would still be disruptive to the market, particularly the mild players. The fewer is the shield. HMSP s overall retail price grew by 1.6% MoM in Nov 16. We notice that A Mild 12 s retail price increase is accelerating to 5% MoM this month, while it also has the highest year-to-date increase among all brands at 24.2% YTD (vs. average of 9.3% YTD). HMSP previously mentioned that double-digit EBIT growth target this year is maintained even if it comes at the expense of premium brands market shares through further price increase. Meanwhile, A Mild 16 s price was flat this month. Trailing behind A Mild 12 is Magnum Blue s retail price increase (4.7% MoM in Nov 16; 13% YTD). A peek at WIIM s We notice that WIIM s retail price starts to grow at a slower pace behind HMSP in Nov 16 (0.9% vs. 1.6%, respectively), potentially signaling the strategy for next year as to maintain pricing points, given ample room for 1 bn more cigarettes. Banderol price increases are seen on three brands: Magnum Filter 12 (+Rp800 to Ro13,450); Sampoerna Kretek (+Rp275 to Rp10,350); and Djarum Coklat 12 (+Rp100 to Rp10,350). AVERAGE RETAIL PRICE GROWTH IN NOVEMBER (MOM) AVERAGE RETAIL PRICE GROWTH (YTD) Source: Mandiri Sekuritas survey Adrian Joezer ( ) Source: Mandiri Sekuritas survey adrian.joezer@mandirisek.co.id Page 5 of 13

6 CORPORATE Matahari Department Store: Overhang Removal (LPPF; Rp15,100; Buy; TP: Rp19,200) The additional stakes in MatahariMall.com is not something exciting, but will become LPPF s final investment. This should remove the overhang on the cash flow risk going forward; though we think investment risk will remain given the competition in the e-commerce industry. Maintain Buy given undemanding valuation and limited downside risk. No more cash flow uncertainties. The company will inject a Rp590bn capital to MatahariMall.com following the news on US$100mn capital injection by Mitsui. This transaction will be done in stages starting from end of 2016 and is expected to be done by 3Q17. The final stakes will be kept below 20% to avoid the consolidation reporting, in our view. On the press release, the management stated that this will be the final investment in MatahariMall.com and does not plan to participate in any further funding activities. With the sizeable total investment of Rp769bn, the company is still exposed to investment risk as future fund raising for MatahariMall will be tougher due to the e-commerce industry now starting to show a consolidation. The upside, however, is the potential monetization of this early-stage investment. Ample cash balance. LPPF has Rp671bn cash balance as of 9M16 and annual free cash flow generation of Rp1tn 1.5tn, which is still enough to finance this transaction. The assurance on the last capital injection will be positive for the company in the long term, as it eliminates the overhang on future cash outflow and hence translates into potential increase in dividend payout ratio. Highest exposure to e-commerce. Among all retail players under our coverage, LPPF is the only one that has an aggressive stance towards the e-commerce investment. It has also launched its MatahariStore.com on 10 Sept 16 to fulfill its mission in becoming the omni-channel retailer. Limited downside risk, maintain Buy. The impact on this transaction will only affect FY17 cash flow, while the remaining years will be intact. We trim our DCF-based TP to Rp19,200, as we used high risk-free rate assumption of 7.1% from 6.5% previously. The stock is now trading at an undemanding valuation of 18.7x FY17 P/E, at 3.1s.d. below its historical average. Date Details 23-Feb-15 Matahari and Global Ecommerce Indonesia (GEI) signed agreement, giving Matahari the right option to buy shares. 8-Apr-15 Matahari signed commercial agreement on products sales and purchases through MatahariMall.com 11-Aug-15 Matahari executed its options by acquiring 2,631,580 shares in GEI (2.5% stakes). 12-Aug-15 GEI issued new shares, fully subscribed by Investama Digital Ventura (IDV). Matahari's stakes were diluted to 2.26% 13-Aug-15 GEI shareholders agreed that Matahari and MPPA's stakes will each become 5% in GEI at Rp12,065/share The agreement also stipulates the additional options for Matahari and MPPA to acquire up to 10% stakes in GEI 16-Dec-15 GEI issued new shares, fully subscribed by Investama Digital Ventura (IDV). Matahari's stakes were diluted to 1.99% 1-Dec-15 Matahari increased its ownership in GEI to 5.16%, total investment stood at Rp84.9bn 1-Jun-16 Matahari increased its ownership in GEI to 9.47%, total investment stood at Rp179.8bn Laura Taslim ( ) laura.taslim@mandirisek.co.id Page 6 of 13

7 TAX AMNESTY MARKET Market Recap Nov 15 th 2016; JCI: 5, (-0.73%); USD/IDR: 13,343; Total Value: Rp8.8tn Asian stocks were on back foot today as USD and Treasury yields extended their rise. However, the situation was not as dire as the previous two sessions. At least it was for Indo equities. Robust trade data for the month of Oct (at $1.21bn) came just in time and helped to spark buying interest. Investors actively chased battered blue chips: ASII (flat), TLKM (+1.3%), BMRI (+2.2%), BBCA (+1.2%) and ICBP (+1.2%). The JCI opened at positive territory and reached as high as 5169 (+1%). Then, when mining sector succumbed to profit taking after several weeks of winning streak and ended as the worst performer for the day, the JCI started going downhill. We saw selling across the sub sectors, namely coal miners with most names hit the lowest price for the day: ADRO (-8.7%), HRUM (-9.9%), ITMG (-10%), PTBA (-10.5%) and metal plays: TINS (-10%), INCO (-6.4%), ANTM (flat). For TINS, the tin price fell for the longest streak since Aug and the tin futures dropped 1.7% in London. Meanwhile, names included into MSCI index received strong adjustment toward the closing: PWON (+1.5%), KREN (+5.4%), PPRO (+5%) and SMBR (+10.3%). In the end, the JCI lost 0.7% at 5078 level in steady turnover of US$561mn (excluding US$10mn SMMA; US$7.5mn SMBR; US$7.2mn MYRX crossing). Regular market transaction was recorded at Rp7.5tn (US$562.1mn) and foreign posted a net sell of Rp551.8bn (US$41.36mn). Foreign participants at 35% came up better seller for 13%. Losers beat gainers by 5 to 2. The immediate driving force is the anticipated policy mix in the US. Most economists are focusing on either the higher US interest rates and a likelihood of a somewhat more aggressive Fed tightening cycle, or the possibility of a dramatically more stimulative fiscal stance. According to Investing.com's Fed Rate Monitor Tool, odds for a rate hike at the Fed's December meeting rose to 90.6%, up from 81.1% on Friday and compared to 71.5% in the days leading up to the election last week. TOP TURNOVER: TLKM BBRI BUMI BBCA ASII BBNI PWON BMRI WSKT UNVR LPPF UNTR ADRO KLBF INDF ANTM ICBP (50%) Page 7 of 13

8 ADVANCING SECTOR: cement +0.6%; construction +0.3%; financial & telco +0.1%; auto flat DECLINING SECTOR: mining -5.5%; plantation -1.7%; property -1.2%; consumer -0.7% The yield of 10-year government went down to 7.895% (-0.34%) and Rupiah appreciated to Rp13,343 (+1.0%) Sales Team FROM THE PRESS Rp40tn prefunding plan to be reviewed The government will reassess the amount of fund needed for prefunding from the previously-stated Rp40tn. Global economic uncertainty post-trump being elected is the reason for the doubt, and the government is waiting for a conducive market condition to conduct prefunding. Furthermore, Robert Pakpahan (DJPPR), mentioned that the fund needed in early next year can still be covered by the remaining budget (SAL) in 2016 and the debt issuance in early (Kontan, Investor Daily) Ministry of Finance issued a regulation to guarantee Hutama Karya s bond issuance To support the development of Trans Sumatra toll road projects which currently being developed by Hutama Karya, the government has released Ministry of Finance s Regulation No.168/PMK.08/2016, This regulation would provide a guarantee for financing of Medan-Binjai and Palembang-Indralaya toll road. It is worth noting that Hutama Karya has been assigned to develop 8 toll road projects in Sumatra with total length of 645km. (Investor Daily) Auto W sales total to 144k units, +24%yoy Auto W sales totaled to 144k units in 10M16, +24%yoy. Avanza still remains the highest contributor with 50k units (+21%yoy) equivalent to 34% of total sales, followed the Innova contributing 16% of total sales, Agya 13%, and LCGCs at 8% of total sales. Meanwhile, Daihatsu s 4W retail sales totaled to 153k units in 10M16, +9%yoy. (Bisnis Indonesia) Bank BCA (BBCA) shares transferred to domestic entity The major shareholders of BBCA, Farindo Investment (Mauritius) Ltd, has transferred their ownership to PT Dwimuria Investama Andalan last Friday. Both entities, which are owned by the Hartono family (Djarum Group), controls 47.15% stake in the largest private bank in Indonesia. The transfer is part of the repatriation of offshore wealth under the tax amnesty program. (CNN Indonesia). Bank Rakyat Indonesia (BBRI) maintains loan growth target of 15-17% for 2017 Even though no final decision has been made, BBRI targets loan growth of 15-17% in 2017, similar to 2016 s target. President Director of BBRI Asmawi Syam states that they are still processing the bank s business plan. Going forward, BBRI will still focus on distributing loans to MSMEs and will participate in infrastructure projects, including ports, airports, telecommunications, and toll roads. Asmawi states that MSME loan growth would likely be >20%yoy in 2017, in line with 2016 s achievement, however the bank will be more selective in distributing corporate loans as their main focus will be on their micro segment. In the corporate segment, Asmawi states that BBRI will distribute loans to Krakatau Steel and a number of SOE companies next year. (Bisnis Indonesia) Bank Mandiri (BMRI) to bring uncooperative debtors to the court To reduce the amount of problematic loans, BMRI will bring uncooperative debtors to court. Uncooperative debtors that has been or will be brought to court includes PT Rockit Aldeway and PT Central Steel Indonesia. (Bisnis Indonesia) Page 8 of 13

9 Intiland Development (DILD) plans for South Quarter s second phase DILD aims to start development of second phase in South Quarter next year by working together with Reco Kris Private Ltd. For the second phase, the company will develop 2.2ha of land, notably an apartment project with estimated marketing sales of Rp tn and ASP/sqm of Rp35-40mn/sqm. DILD has signed a joint venture agreement with Reco Kris Pte Ltd. on Nov 10 th, 2016 and sold 40% stake in PSR, company s subsidiary that develops South Quarter for Rp1.03tn. (Bisnis Indonesia) Semen Indonesia (SMGR) to allocate capex up to Rp7tn The company is allocating Rp6-7tn of capex next year for acquisitions as well as packing plant and power plant constructions. The company has previously signed MoU to acquire a grinding plant in Bangladesh. Currently, it is in due diligence process. Meanwhile, SMGR aims to build waste energy based power plant by utilizing carbon from packing plant. (Investor Daily) Wijaya Karya (WIKA) to engage in Transit Oriented Development (TOD) The construction SOE aims to construct and manage several TODs located along their toll road projects to offset the toll roads financial infeasibility. The CFO, Steve Kosasih, hinted that the company set eyes to construct TOD along Serang Panimbang toll road. In addition, WIKA also prepared 1,900ha land banks along Jakarta Bandung High Speed Railway (HSR) for TOD purposes. (Bisnis Indonesia) Page 9 of 13

10 Indices Currencies and ADRs Major Commodities Last Chg (%) YTD Chg (%) Currency Last Chg (%) YTD Chg (%) Last Chg (%) YTD Chg (%) JCI 5, Rp/US$ 13, Oil spot (US$/bl) Dow Jones 18, US$/EUR Nickel spot (US$/mt) 11, Nikkei 17, YEN/US$ Gold spot (US$/oz) 1, SET 1, SGD/US$ Tin 3-month (US$/mt) 20, Hang Seng 22, CPO futures (Ringgit/ton) 2, STI 2, ADR Stocks Soybean oil (US$/100gallons) S&P 500 2, TLK in Rp 9, Rubber forward (US /kg) Coal (US$/ton) Ishares indo Baltic Dry Index 1, Property Valuation JCI Code Rec. Market Cap (Rp bn) Share price Target Price Discount to NAV RNAV per share (Rp) Premium (discount) to replacement cost Replacement cost per share (Rp) PE (x) ROE 16F 17F 16F 17F BSDE Buy 33,970 1,765 2,570-62% 4,673 14% 1, % 12.3% PWON Buy 32, % 1,207 60% % 24.7% SMRA Neutral 17,815 1,235 1,575-69% 3,933 81% % 7.9% CTRA Buy 21,915 1,445 1,600-53% 3,073 85% % 14.0% JRPT Buy 11, ,300-75% 3,242 17% % 20.4% ASRI Neutral 7, % 1,161 66% % 10.3% LPCK Buy 3,584 5,150 10,000-79% 24,683 10% 4, % 14.6% MDLN Buy 4, % 1,165 24% % 6.6% CTRS Buy 5,897 2,980 4,000-78% 13,390-26% 4, % 13.9% Simple Average -66% % 13.9% Industrial Estate Valuation JCI Code Rec. Market Cap (Rp bn) Share price Target Price Discount to NAV RNAV per share (Rp) Premium (discount) to replacement cost Replacement cost per share (Rp) PE (x) ROE 16F 17F 16F 17F DMAS Buy 10, % % % 12.5% BEST Buy 2, % % % 9.0% SSIA Neutral 2, % 1,701-38% % 8.1% LPCK Buy 3,584 5,150 10,000-79% 24,683 10% 4, % 14.6% MDLN Buy 4, % 1,165 24% % 6.6% Simple Average -71% % 10.2% Page 10 of 13

11 Equity Valuation Price Price % of Mkt Cap Net Profit EPS Growth PER (x) EV/EBITDA (x) P/BV (x) Div.Yield Code Rating (Rp) Target PT (Rp Bn) Mandiri Universe 5,079 5,550 3,834, , , % 16.8% % 2.0% Banking 862,597 68,847 83, % 21.4% N.A. N.A % 2.0% BBCA Neutral 14,550 15, ,730 19,326 21, % 12.4% N.A. N.A % 1.4% BBNI Buy 5,000 6, ,243 10,783 12, % 20.5% N.A. N.A % 3.5% BBRI Buy 11,025 14, ,978 25,817 30, % 19.1% N.A. N.A % 2.3% BBTN Buy 1,625 2, ,209 2,439 2, % 21.0% N.A. N.A % 2.8% BDMN Sell 3,310 3, ,725 3,375 3, % 9.5% N.A. N.A % 2.3% BJBR Neutral 1,390 1, ,478 1,522 1, % 16.9% N.A. N.A % 4.5% BJTM Neutral ,160 1,032 1, % 7.2% N.A. N.A % 9.7% BNGA Buy 825 1, ,734 1,670 3, % 97.0% N.A. N.A % 0.0% BNLI Buy ,064-1, N/M N/M N.A. N.A % 0.0% BTPN Neutral 2,850 2,635 (7.5) 16,645 1,756 1, % -1.5% N.A. N.A % 0.0% PNBN Buy 815 1, ,631 2,260 2, % 13.5% N.A. N.A % 0.0% Building Materials 112,315 9,374 10, % 7.0% % 4.5% INTP Neutral 14,500 20, ,378 4,368 4, % 5.3% % 6.5% SMCB Sell , N/M 10.1% % 1.9% SMGR Neutral 8,200 11, ,638 4,501 4, % 5.4% % 2.8% ARNA Buy , % 147.5% % 1.9% Constructions 92,092 4,670 5, % 22.7% % 1.2% ADHI Buy 1,980 3, , % 32.0% % 1.5% PTPP Buy 4,000 5, , , % 19.2% % 0.9% WIKA Buy 2,390 3, , % 23.9% % 1.5% WSKT Buy 2,180 3, ,171 1,634 1, % 12.7% % 1.3% WTON Buy , % 33.8% % 1.1% WSBP Buy , % 41.1% % 1.2% Toll road 28,696 1,612 1, % -6.2% % 1.1% JSMR Neutral 4,220 5, ,696 1,612 1, % -6.2% % 1.1% Rice Mill 6, % 22.9% % 0.5% AISA U/R 1,865 U/R U/R 6, % 22.9% % 0.5% Consumer 1,087,394 34,261 37, % 11.1% % 1.1% ICBP Neutral 8,650 9, ,876 3,662 3, % 6.6% % 1.6% INDF Buy 7,600 11, ,735 3,999 4, % 5.5% % 3.1% MYOR Neutral 1,490 1, ,315 1,346 1, % 7.2% % 1.6% ULTJ U/R 4,600 U/R U/R 13, % 19.8% % 0.5% UNVR Neutral 40,975 41, ,639 6,414 7, % 13.4% % -2.1% GGRM Buy 61,125 75, ,610 6,018 7, % 20.8% % 1.6% HMSP Neutral 3,800 3, ,009 12,021 12, % 8.1% % 2.7% WIIM U/R 440 U/R U/R n/a % 0.0% n/a n/a n/a n/a n/a n/a 0.0% 0.0% Healthcare 85,866 3,281 3, % 11.7% % 1.6% KLBF Neutral 1,475 1, ,141 2,156 2, % 11.2% % 1.2% SIDO Neutral , % 12.9% % 3.2% TSPC Neutral 2,000 2, , % 12.1% % 2.8% Hospital 51, % 12.2% % 0.6% MIKA Buy 2,750 3, , % 11.1% % 0.7% SILO Neutral 9,525 10, , % 17.7% % 0.0% Retail 89,080 3,980 4, % 21.0% % 3.1% ACES Neutral , % 10.4% % 2.1% ERAA Neutral , % 49.7% % 4.8% LPPF Buy 15,100 21, ,061 2,082 2, % 13.1% % 4.3% MAPI Buy 4,850 5, , % 194.2% % 0.0% MPPA Neutral 1,660 1, , % 49.9% % 0.6% RALS Neutral 1,190 1,180 (0.8) 8, % 6.5% % 3.0% TELE Buy 665 1, , % 18.6% % 4.3% Automotive 312,310 16,738 18, % 10.1% % 2.4% ASII Neutral 7,625 8, ,687 16,492 18, % 9.5% % 2.4% Page 11 of 13

12 Price Price % of Mkt Cap Net Profit EPS Growth PER (x) EV/EBITDA (x) P/BV (x) Div.Yield Code Rating (Rp) Target PT (Rp Bn) IMAS U/R 1,310 U/R U/R 3, N/M % % 0.0% Heavy Equipment 79,994 4,652 5, % 25.3% % 3.9% HEXA* U/R 3,310 U/R U/R 2, % 100.0% % 51.5% UNTR Neutral 20,700 21, ,214 4,554 5, % 23.5% % 2.2% Plantation 40,905 2,248 3, % 37.3% % 1.8% AALI Buy 15,200 16, ,508 1,519 2, % 19.8% % 1.8% LSIP Buy 1,565 1, , % 62.5% % 1.8% SGRO U/R 1,970 U/R U/R 3, % 18.8% % 1.8% Property 143,539 10,223 11, % 12.2% % 0.8% APLN U/R 250 U/R U/R 5, % 5.5% % 3.4% ASRI Neutral ,467 1, % -33.4% % 3.0% BSDE Buy 1,765 2, ,970 1,721 2, % 53.8% % 1.1% CTRA Buy 1,445 1, ,915 1,474 1, % -3.1% % -1.3% CTRS Buy 2,980 4, , % 1.8% % 2.0% JRPT Buy 810 1, , , % 11.6% % 1.0% LPCK Buy 5,150 10, , % -15.9% % 0.0% MDLN Buy , % -2.2% % 0.0% PWON Buy ,267 1,934 2, % 25.9% % 1.4% SMRA Neutral 1,235 1, , % 78.2% % 0.0% Industrial Estate 15,556 1,394 1, % 11.5% % 2.1% DMAS Buy , % 8.4% % 2.6% BEST Buy , % 18.8% % 0.5% SSIA Neutral , % 15.5% % 1.8% Poultry 74,391 4,795 5, % 14.9% % 2.0% CPIN U/R 3,140 U/R U/R 51,490 2,961 3, % 17.9% % 1.8% JPFA U/R 1,750 U/R U/R 19,968 1,553 1, % 10.3% % 2.5% MAIN U/R 1,310 U/R U/R 2, N/M 12.2% % 2.2% Coal 97,511 5,176 5, % 13.2% % 3.0% ADRO* Neutral 1,465 1,100 (24.9) 46, % 14.2% % 2.5% HRUM* Neutral 2,270 1,100 (51.6) 6, N/M 43.3% % 1.5% ITMG* Neutral 16,000 7,600 (52.5) 18, % 8.0% % 4.7% PTBA Neutral 11,475 9,200 (19.8) 26,444 1,542 1, % 12.7% % 3.3% Oil & Gas 54,059 6,887 7, % 10.5% % 6.6% PGAS* Sell 2,230 3, , % 10.5% % 6.6% Shipping 2, % 11.0% % 5.0% SOCI* Buy , % 11.0% % 5.0% Metal 39, ##### N/M % 0.7% ANTM Neutral (43.5) 8, % N/M % 0.1% INCO* U/R 3,090 U/R U/R 30, N/M N/M % 0.8% Telco 432,935 20,483 23, % 16.4% % 3.4% EXCL Neutral 2,220 2, , N/M 81.6% % 0.4% ISAT U/R 6,200 U/R U/R 33, ,896 N/M 95.6% % 2.3% TLKM Buy 3,840 4, ,136 19,278 21, % 11.2% % 3.7% Tower 64,642 3,540 4, % 26.3% % 0.0% TBIG Neutral 5,500 6, ,381 1,120 1, % 39.1% % 0.0% TOWR Buy 3,750 5, ,261 2,420 2, % 20.4% % 0.0% Media 56,876 3,175 3, % 16.0% % 3.1% SCMA Buy 2,230 3, ,606 1,599 1, % 16.9% % 3.4% MNCN Buy 1,700 2, ,269 1,576 1, % 15.0% % 2.6% Textile 4, % 22.0% % 0.0% SRIL* Buy , % 22.0% % 0.0% Note: - *) net profit in USD mn - U/R means Under Review - n/a means Not Available - N/M means Not Meaningful - N.A means Not Applicable Page 12 of 13

13 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 Sales) RESEARCH Tjandra Lienandjaja Deputy Head of Equity Research, Banking tjandra.lienandjaja@mandirisek.co.id Liliana S Bambang Property, Building Material liliana.bambang@mandirisek.co.id Adrian Joezer Consumer, Strategy adrian.joezer@mandirisek.co.id Ariyanto Kurniawan Telecom, Coal, Metal, Automotive ariyanto.kurniawan@mandirisek.co.id Bob Setiadi Construction, Toll Road bob.setiadi@mandirisek.co.id Francis Lim Quant, Health Care, Hospital francis.lim@mandirisek.co.id Yudha Gautama Mining, Plantation yudha.gautama@mandirisek.co.id Laura Taslim Retail laura.taslim@mandirisek.co.id Priscilla Thany Banking priscilla.thany@mandirisek.co.id Ferdy Wan Building Material, Industrial Est., Media ferdy.wan@mandirisek.co.id Lakshmi Rowter Research Assistant lakshmi.rowter@mandirisek.co.id Gerry Harlan Research Assistant gerry.harlan@mandirisek.co.id Leo Putera Rinaldy Chief Economist leo.rinaldy@mandirisek.co.id Wisnu Trihatmojo Economist wisnu.trihatmojo@mandirisek.co.id Aziza Nabila Amani Research Assistant aziza.amani@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 Aditya Sastrawinata Institutional Sales aditya.sastrawinata@mandirisek.co.id Andrew Handaya Institutional Sales andrew.handaya@mandirisek.co.id Cindy Amelia P. Kalangie Institutional Sales cindy.amelia@mandirisek.co.id Feliciana Ramonda Institutional Sales feliciana.ramonda@mandirisek.co.id Kevin Halim Institutional Sales kevin.halim@mandirisek.co.id Mirna Santikara Salim Institutional Sales santikara.salim@mandirisek.co.id Oos Rosadi Institutional Sales oos.rosadi@mandirisek.co.id Zahra Aldila Niode Institutional Sales zahra.niode@mandirisek.co.id Kusnadi Widjaja Equity Dealing kusnadi.widjaja@mandirisek.co.id Edwin Pradana Setiadi Equity Dealing edwin.setiadi@mandirisek.co.id Jane Theodoven Sukardi Equity Dealing jane.sukardi@mandirisek.co.id Michael Taarea Equity Dealing michael.taarea@mandirisek.co.id RETAIL SALES Andreas M. Gunawidjaja Head Retail Equities andreas@mandirisek.co.id Boy Triyono Plaza Mandiri boy.triyono@mandirisek.co.id A. A. Damargumilang Pondok Indah Office Tower damar.gumilang@mandirisek.co.id Herianto Pondok Indah Prioritas herianto@mandirisek.co.id Hendra Riady Mangga Dua hendra.riady@mandirisek.co.id Indra Mas'ari Bandung indra.mas ari@mandirisek.co.id Yogiswara P. Yogyakarta yogiswara.perdana@mandirisek.co.id Widodo Solo widodo@mandirisek.co.id Linawati Surabaya Linawati@mandirisek.co.id Bambang Suwanto Malang bambang.suwanto@mandirisek.co.id Ruwie Medan ruwie@mandirisek.co.id Aidil Idham Palembang aidil.idham@mandirisek.co.id Yuri Ariadi Pontianak yuri.ariadi@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) and Mandiri Sekuritas is registered and supervised by the Financial Services Authority (OJK). 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.