INVESTOR DIGEST HIGHLIGHT SECTOR. Equity Research 27 August Equity Research 27 August 2014

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1 INVESTOR DIGEST Equity Research 27 August 2014 Economic Data Latest 2014F BI Rate (%), eop Inflation (YoY %) US$ 1 = Rp, period avg 11,707 11,740 HIGHLIGHT Property: The calm before the storm? Market Recap Aug 26th 2014; JCI: 5, (-0.74%); USD/IDR: 11,707; Total Value: Rp5.4tn Stock Market Data (26 Aug 2014) JCI Index 5, % Trading T/O ( Rp bn ) 3,475.0 Market Cap ( Rp tn ) 5,150.6 Market Data Summary* 2014F 2015F EBITDA growth (%) EPS growth (%) EV/EBITDA (x) P/E (x) P/BV (x) Div. Yield (%) Earnings Yield (%) Net Gearing (%) ROE (%) * Aggregate of 74 companies in MS research universe, representing 63.0% of JCI s market capitalization SECTOR Property: The calm before the storm? Our channel check to property agents indicate that demand/inquiries have improved post the election. Going forward, in 2H14, we think key risks would be boiled down to regulations and funding appetite on property sector. Hence, we remain Neutral on the sector and prefer to focus on companies with NAV stories. Agents indicate that demand has improved post election. We spoke with several marketing agents to gauge the demand post election. Most agents state that demand is picking up and they have been receiving more inquiries from potential customers. However, customers are still picky on the products, and they tend to select clusters/apartments with potential future developments (new mall and new road access). Branding is also key for the customers. Hence, we still believe it is important to pick companies with good branding and good pipeline of products. Funding cycle started? Balance sheet on property companies remains solid as of 1H14. However, operating cashflow has declined significantly for most property companies. With high LDR on banks, there is a risk that companies would have insufficient funding on new projects which requires some working capital or capex upfront. We fear that if the property companies remain hungry/greedy on acquiring new projects, these companies could be tempted to go into equity funding (such as non preemptive rights), despite of the solid balance sheet. So far, two property companies have received approval for non preemptive rights, PWON and MDLN. Regulation remains a key risk. The policy of balanced housing remains a question mark until the new Ministry of Public Housing is in place. There is risk for stricter enforcement, as this policy is considered as favorable for the public. The property companies currently ask for leniencies on some of the balanced housing regulations. Page 1 of 6

2 Prefer companies with NAV stories. We maintain our Neutral stance on the sector, as we fear regulations risk. We also don t see much catalyst on the sector. We think marketing sales would most likely be in-line, unlike in the past two years where most property companies upgraded its marketing sales numbers. The other risk would be the start of equity funding cycle. At this juncture, we prefer companies with NAV stories or specific catalysts. Our top picks are SMRA, CTRS and LPCK. We remove PWON from our top pick as the stock has outperformed by 14% since our initiation on Feb-14. We think BSDE could perform in the near term, as the stock has been a laggard compared to other big caps. New projects (Rasuna Epicentrum) and additional commercial land sale could be catalysts. Liliana S Bambang ( ) liliana.bambang@mandirisek.co.id MARKET Market Recap Aug 26th 2014; JCI: 5, (-0.74%); USD/IDR: 11,707; Total Value: Rp5.4tn Indo market extended its losses due to lack of fresh positive incentives. Investors just sold everything and nothing was spared from profit taking. All sectors especially Jokowi-favor including cement (-2.1%) and property (-1.9%) lost momentum fast. The JCI finally closed 0.7% lower at 5,146 level in good volume at USD400mn (border line average). Regular market transaction was recorded at Rp4.7tn (USD401.47mn) and foreign recorded a net sell of Rp201.18bn (USD17.27mn). Foreign participants at 35% came up better seller for 5%. Losers beat gainers by 5 to 2. TOP TURNOVER: BBRI TLKM ASII BMRI BBCA EXCL SMGR BBNI LSIP INDF INTP AALI UNTR ASRI PTBA ADRO WIKA KLBF (45%) ADVANCING SECTOR: NONE DECLINING SECTOR: cement-2.1%; property-1.9%; financial-0.9%; consumer-0.5%; auto & telco-0.3%; plantation-inframining-0.1% The yield of 10-year government flat at 8.279% and Rupiah flat at Rp11,707. Sales Team FROM THE PRESS MP3EI realization is only 5% for this year MP3EI realization (as of 1H14) has only reached Rp25tn (17 projects) from FY target of Rp467tn (148 projects). The target was also revised from Rp629tn to Rp467tn this year due to several delayed projects and land acquisition (Bisnis Indonesia). WSKT to divest Depok Antasari toll road The company is planning to divest its 12.5% stake in Depok Antasari toll road this year or next year. CMNP owns 62.5% of the project, PTPP 12.5% and Hutama Karya 12.5%. Project investment will be Rp4.08tn (Kontan). PTPP precast unit eyeing seaport projects The company is targeting 228k ton productin this year, which will be coming from Cilegon and Sadang plants. The Sadang plant has 160k ton per annum capacity. Next year, PTPP will add Bakauheni (exp. 350 ktpa capacity) and Pasuruan (exp. 250 ktpa capacity). The business unit is targeting Rp1.05tn new contract this year, where as of July14, it has reached 50% of the target. Page 2 of 6

3 Kawasan Industri Jababeka reported 1H14 marketing sales Rp450bn KIJA reported 1H14 marketing sales Rp450bn (37.5% of full year target of Rp1.2tr). Sale of industrial land contributes 67% of sales while the remaining 33% came from sale of residential land. In addition, KIJA will prepare capex USD20mn (Rp234bn) for for addition of dry port facility and infrastructure. (Kontan and Investor Daily) Telkom aims to expand in four countries TLKM, through its subsidiary Telin, is planning to expand to Australia, New Zealand and two other countries in Asia Pacific. In Australia, TLKM plans to acquire 75% stake of Business Process Outsourcing (BPO) company. (Kontan) Semen Indonesia to expand internationally SMGR plans to allocate capex USD50mn per year for international expansion in Vietnam, Myanmar and Bangladesh. One of the plans is to expand its factory production capacity in Vietnam from 1.5mt to 2.5mt. (Investor Daily) Page 3 of 6

4 Indices Currencies and ADRs Major Commodities Last (pts) Chg (%) Currency Last (pts) (%) Last (pts) Chg (%) JCI 5, Rp/US$ 11, Oil spot (US$/bl) Dow Jones 17, EUR/US$ Nickel spot (US$/mt) 18, Nikkei 15, YEN/US$ Gold spot (US$/oz) 1, SET 1, SGD/US$ Tin 3-month (US$/mt) 22, Hang Seng 25, CPO futures (Ringgit/ton) 2, STI 3, ADR Stocks Soybean oil (US$/100gallons) S&P 500 2, TLK in Rp 13, Rubber forward (US /kg) IIT in Rp 3, Coal (US$/ton)* Ishares indo Coal (US$/ton) * weekly price 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) P/E 14F P/E 15F ROE 14F ROE 15F BSDE Buy 28, ,630 2,000-59% 4,002 5% 1, % 20.0% PWON Buy 20, % % % 32.2% SMRA Buy 18, ,300 1,550-58% 3,106 91% % 20.7% CTRA Neutral 17, , % 1,647 49% % 19.0% JRPT Buy 13, ,130-66% 2,817 77% % 27.0% ASRI Neutral 8, % 1,538 16% % 23.2% APLN Buy 7, % 458 5% % 16.1% LPCK Buy 5, ,275 9,850-57% 19,300 76% 4, % 27.6% MDLN Neutral 6, % 1,201-4% % 13.4% CTRS Buy 4, ,290 4,000-72% 8,077-17% 2, % 23.4% BKSL Neutral 3, % 1,010-47% % 10.8% Simple average -57% % 20.3% Plantation Valuation Ticker Rec. Market Cap (Rp bn) Share price Target Price planted (US$) EV/ha PER EV/EBITDA ROE Mature (US$) FY14F FY15F FY14F FY15F FY14F FY15F AALI Buy 40,707 25,850 33,200 15,533 18, % 27.3% BWPT Buy 4,457 1,000 1,750 10,260 16, % 22.5% LSIP Buy 12,998 1,905 3,200 8,137 9, % 18.0% SGRO Buy 3,893 2,060 3,000 6,062 8, % 14.4% Weighted average 11,643 14, % 22.5% SIMP* Not Rated 13, ,690 8, % 7.0% SSMS* Not Rated 12,287 1,290 30,764 32, % 33.8% *) Consensus numbers Page 4 of 6

5 Equity Valuation Outstanding Shares Price Mkt Cap Net Profit EPS Growth PER (x) EV / EBITDA (x) P/BV (x) Div.Yield JCI Code Rating (Mn) Price (Rp) Target (Rp Bn) Mandiri Universe 3,194, , , % 17.7% % 2.4% Banking 771,303 59,375 72, % 21.7% N.A. N.A % 2.2% BCA BBCA Neutral 24,655 11,800 11, ,929 15,573 18, % 18.9% N.A. N.A % 1.4% BNI BBNI Neutral 18,649 5,325 5,200 99,304 9,285 10, % 17.9% N.A. N.A % 2.8% BRI BBRI Buy 24,660 11,075 12, ,211 22,266 27, % 25.3% N.A. N.A % 2.4% BTN BBTN Buy 8,836 1,135 1,500 11,755 1,601 1, % 21.2% N.A. N.A % 4.1% Danamon BDMN Neutral 9,585 3,740 4,500 35,846 3,936 4, % 26.7% N.A. N.A % 3.3% Bank BJB BJBR Neutral 9, ,193 1,080 1, % 11.1% N.A. N.A % 5.9% Bank Jatim BJTM Neutral 14, , , % 12.2% N.A. N.A % 9.3% BTPN BTPN Buy 5,840 4,250 5,000 24,821 2,303 2, % 25.5% N.A. N.A % 0.0% Panin PNBN Buy 24, ,000 20,715 2,366 2, % 17.8% N.A. N.A % 2.3% Infrastructure 304,355 16,590 18, % 14.0% % 2.1% Holcim SMCB Neutral 7,663 2,925 2,700 22,417 1,288 1, % 12.9% % 1.7% Indocement INTP Buy 3,681 24,400 24,000 89,822 5,582 6, % 11.7% % 2.0% Semen Indonesia SMGR Buy 5,932 16,450 18,300 97,574 5,901 6, % 12.9% % 3.0% Adhi Karya ADHI Buy 1,801 3,025 2,500 5, % 40.9% % 2.1% Pembangunan Perumahan PTPP Buy 4,842 2,425 2,100 11, % 20.2% % 1.3% Wijaya Karya WIKA Buy 6,106 2,800 2,300 17, % 18.2% % 1.2% Waskita Karya WSKT Neutral 9, , % 34.8% % 1.4% Wijaya Karya Beton WTON Neutral 8,715 1, , % 18.5% % 1.2% Jasa Marga JSMR Neutral 6,800 6,300 6,200 42,840 1,566 1, % 10.5% % 1.5% Consumer 502,634 19,255 22, % 18.3% % 1.9% Tiga Pilar AISA Buy 3,000 2,500 3,000 7, % 31.5% % 0.0% Gudang Garam GGRM Buy 1,924 53,700 68, ,324 5,571 6, % 15.0% % 2.1% Indofood CBP ICBP Neutral 5,831 10,275 10,700 59,914 2,292 2, % 11.4% % 1.9% Indofood INDF Buy 8,780 7,000 8,200 61,460 4,048 5, % 29.1% % 0.0% Mayora MYOR Neutral ,000 27,200 26, % 16.4% % 0.9% Unilever UNVR Buy 7,630 31,675 34, ,680 5,907 6, % 16.9% % 2.4% Wismilak WIIM Neutral 2, , % -30.6% % 2.4% Dyandra DYAN Buy 4, % 41.8% % 0.0% Healthcare 89,747 2,625 3, % 25.4% % 1.2% Kalbe Farma KLBF Buy 46,875 1,665 1,820 78,047 2,156 2, % 27.5% % 1.1% Sido Muncul SIDO IJ Buy 15, , % 16.0% % 1.6% Transportation 2, % 26.2% % 1.6% Express Transindo TAXI Buy 2,146 1,345 1,600 2, % 26.2% % 1.6% Retail 89,958 3,783 4, % 23.8% % 1.7% Ace Hardware Indonesia *) ACES U/R 17, U/R 16, % 18.1% % 0.8% Erajaya *) ERAA U/R 2,900 1,110 U/R 3, % 10.1% % 4.2% Matahari Department Store *) LPPF U/R 2,918 16,200 U/R 47,270 1,610 2, % 28.8% % 1.7% Mitra Adiperkasa *) MAPI U/R 1,660 6,025 U/R 10, % 38.9% % 0.6% Ramayana *) RALS U/R 7,096 1,030 U/R 7, % 14.7% % 3.5% Supra Boga *) RANC U/R 1, U/R % 16.2% % 0.9% Tiphone Mobile Indonesia *) TELE U/R 6, U/R 5, % 22.3% n/a n/a 2.5% 2.8% Automotive 319,815 21,517 24, % 13.6% % 3.3% Astra International *) ASII U/R 40,484 7,600 U/R 307,675 20,671 23, % 13.1% % 3.3% IMAS *) IMAS U/R 2,765 4,390 U/R 12, , % 26.6% % 1.5% Heavy Equipment 87,647 6,505 6, % 4.3% % 2.8% Hexindo Adiperkasa HEXA Buy 840 3,650 4,250 3, % 26.4% % 2.8% United Tractors UNTR Neutral 3,730 22,675 23,000 84,581 6,214 6, % 2.2% % 2.8% Plantation 62,055 4,608 5, % 29.2% % 3.5% Astra Agro Lestari AALI Buy 1,575 25,850 33,200 40,707 2,848 3, % 22.4% % 3.8% BW Plantation BWPT Buy 4,457 1,000 1,750 4, % 77.6% % 1.6% London Sumatera Plantations LSIP Buy 6,823 1,905 3,200 12,998 1,101 1, % 28.6% % 3.4% Sampoerna Agro SGRO Buy 1,890 2,060 3,000 3, % 40.4% % 2.9% Property 134,883 12,526 14, % 12.9% % 1.5% Agung Podomoro Land APLN Buy 20, , , % 22.6% % 2.5% Alam Sutera Realty ASRI Neutral 17, ,896 1,354 1, % 17.8% % 5.2% Sentul City BKSL Neutral 31, , % 35.7% % 0.0% Bumi Serpong Damai BSDE Buy 17,497 1,630 2,000 28,520 2,155 2, % 17.7% % 1.9% Ciputra Development CTRA Neutral 15,166 1, ,593 1,209 1, % 25.7% % 1.4% Ciputra Surya CTRS Buy 1,979 2,290 4,000 4, % 30.3% % 2.7% Jaya Real Property JRPT Buy 13, ,130 13, % 30.4% % 0.8% Lippo Cikarang LPCK Buy 696 8,275 9,850 5, % 5.2% % 0.0% Modernland MDLN Neutral 12, ,392 1, % -46.3% % 0.0% Pakuwon Jati PWON Buy 48, ,323 1,523 1, % 26.0% % 1.7% Summarecon Agung SMRA Buy 14,425 1,300 1,550 18,752 1,134 1, % 24.2% % 0.0% Poultry 85,006 3,127 3, % 26.9% % 1.0% Charoen Pokphand CPIN Neutral 16,423 4,035 4,100 66,266 2,429 3, % 26.6% % 1.0% Japfa Comfeed JPFA Sell 10,499 1,265 1,000 13, % 25.2% % 1.1% Malindo Feedmill MAIN Neutral 1,695 3,220 3,000 5, % 33.0% % 0.9% Energy 278,713 15,869 18,523 N/M 4.1% % 3.7% Adaro ADRO Buy 31,986 1,270 1,450 40,622 3,253 3, % 5.3% % 3.2% Bumi *) BUMI U/R 52, U/R 10,330 (1,662) (663) 86.7% -50.0% % 5.6% Harum Energy HRUM Neutral 2,699 2,195 2,400 5, % 8.6% % 4.9% Indo Tambangraya Megah ITMG Neutral 1,130 27,900 25,750 31,525 2,423 2, % 7.9% % 6.4% Bukit Asam PTBA Neutral 2,304 13,275 9,700 30,592 1,717 2, % 25.8% % 3.5% Energi Mega Persada *) ENRG U/R 44, U/R 3, % 0.0% n/a n/a n/a n/a n/a n/a 0.0% 0.0% Medco *) MEDC U/R 3,332 3,480 U/R 11, % 242.9% % 1.3% PGN PGAS Buy 24,240 5,950 6, ,237 9,319 9, % 8.6% % 3.4% Metal 58,967 1,405 3,043 N/M 154.2% % 1.9% Antam *) ANTM U/R 9,538 1,190 U/R 11, % 95.3% ###### % 1.0% Bumi Resources Minerals *) BRMS U/R 25, U/R 6, % 75.0% n/a n/a 0.0% 0.0% PT Inco *) INCO U/R 9,936 4,105 U/R 40,789 1,802 2, % 29.4% % 2.4% Telecommunication 406,876 19,012 22, % 16.7% % 2.9% EXCEL *) EXCL U/R 8,534 5,575 U/R 47, , % 171.0% % 1.3% Indosat *) ISAT U/R 5,434 3,810 U/R 20, ,115 N/M 92.8% % 2.3% Tower Bersama TBIG Buy 4,657 7,625 7,200 36,574 1,474 1, % 32.0% % 0.0% Sarana Menara TOWR Neutral 10,203 4,055 3,750 41,373 1,110 1, % 22.1% % 0.0% Telkom TLKM Buy 96,010 2,705 2, ,647 15,343 16, % 7.1% % 4.1% 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, 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 Matthew Wibowo Retail matthew.wibowo@mandirisek.co.id Rizky Hidayat Property, Media rizky.hidayat@mandirisek.co.id Vanessa Ariati Tanuwijaya Banking, Health Care vanessa.tanuwijaya@mandirisek.co.id Aldian Taloputra Economist aldian.taloputra@mandirisek.co.id Leo Putra Rinaldy Economist leo.rinaldy@mandirisek.co.id Aditya Sastrawinata Research Assistant aditya.sastrawinata@mandirisek.co.id Wisnu Trihatmojo Research Assistant wisnu.trihatmojo@mandirisek.co.id Yudha Gautama Research Assistant yudha.gautama@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 Cindy Amelia P. Kalangie Institutional Sales cindy.amelia@mandirisek.co.id Jane Theodoven Sukardi Institutional Sales jane.sukardi@mandirisek.co.id Janefer Amanda Soelaiman Institutional Sales janefer.soelaiman@mandirisek.co.id Karmia Tandjung-Nasution Institutional Sales karmia.tandjung@mandirisek.co.id Mirna Santikara Salim Institutional Sales santikara.salim@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 Kusnadi Widjaja Equity Dealing kusnadi.widjaja@mandirisek.co.id Edwin Pradana 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.