INVESTOR DIGEST HIGHLIGHT CORPORATE. Equity Research 18 Jul Equity Research 18 Jul 2014

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1 INVESTOR DIGEST Equity Research 18 Jul 2014 Economic Data Latest 2014F BI Rate (%), eop Inflation (YoY %) US$ 1 = Rp, period avg 11,686 11,825 HIGHLIGHT Bank Danamon: 1H14 result: below expectation (BDMN; Rp4,165; Neutral; TP:Rp4,500) Market Recap July 17th 2014; JCI: 5, (-0.84%); USD/IDR: 11,686; Total Value: Rp5.91tn Stock Market Data (17 Jul 2014) JCI Index 5, % Trading T/O ( Rp bn ) 4,801.0 Market Cap ( Rp tn ) 5,027.8 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 66.0% of JCI s market capitalization CORPORATE Bank Danamon: 1H14 result: below expectation (BDMN; Rp4,165; Neutral; TP:Rp4,500) Bank Danamon reported weak 1H14 performance with net profit of Rp1.49tr (-25%yoy, -37%qoq), translated into 38% of our full year estimate and 36% of consensus'. This below expectation result is mainly due to the compressed NIM and declined in fee-based income following the new OJK's regulation regarding ADMF's fee income recognition. Cumulative NIM declined to 8.3% in 1H14 from 9.5% in 1H13 as cost of funds increased faster than the interest yield, considering that 60% of loan portfolio benefited from the fixed rate. Nevertheless the declines in NIM was compensated by lower operating expenses growth due to changes in the management's operation strategy such as resizing and redesigning network distributions, postponing branches expansion and consolidating business as well as reducing head counts. Fee-based income has shrunk significantly due to the Financial Services Authority s (OJK) new regulation in the form of circular letter No SE06/D.05/2013 regarding vehicle insurance, which took effect in March To a certain extent, this regulation benefited Adira insurance as the regulated premium pricing would eliminate unhealthy competition among general insurance. Yet, it has significantly impacted Danamon considering now the income recognition will vary depending on the loan tenor as opposed to immediate upfront recognition previously. Therefore the feebased income would be normalized throughout the years. Gross loan portfolio grew 13%yoy in June 2014 which mainly supported by wholesale loans at 28%yoy (accounted for 14% of total loans portfolio). This was followed by SMEC loans which grew 21%yoy (29% of total). Retail loans grew 20%yoy (7% of total) while mass market grew a mere 6%yoy (51% of total) for the same period. Page 1 of 6

2 Total deposits grew 20%yoy, yet declined -1%qoq in June Hence, consolidated LDR remained high although slightly improved, at 129% in June 2014 from 136% last year. Meanwhile, demand deposits grew strongly at 32%yoy while time deposits grew 20%yoy and savings grew 13%yoy in June CASA improved to 43% in June 2014 from 40% in March Credit quality improved with gross NPL declined to 2.2% in June 2014 from 2.6% in June 2013, however increased from 2.0% in March From the gross NPL portfolio, mass market loans segment contributed to 73%, SME commercial loans 15%, wholesale loans 7% and retails loans 5%. Loan loss coverage, however, declined significantly to 84% in 2Q14 from 121% in 1Q14. We have Neutral call on the counter, which is trading at 1.2x P/BV 2014 with TP of Rp4,500. Income Statement (Rp bn) 1H13 1H14 % YoY 2Q13 1Q14 2Q14 % YoY % QoQ FY14F % of FY14F Net interest income 6,775 6, ,395 3,482 3,376 (1) (3) 14, Non interest income 2,731 2,481 (9.2) 1,423 1,267 1,214 (15) (4) 6, Fees and Commisions 1,318 1, , Forex income 60 (45) (175.3) 20 (40) (5) (126) (87) 163 (28) Others 1,353 1,170 (13.5) (27) (17) 3, FY14 Cons % of FY14F Cons Operating income 9,506 9,339 (1.8) 4,819 4,749 4,590 (5) (3) 21, , Provision expense (1,695) (1,921) 13.3 (872) (870) (1,051) (4,413) 44 Operating expense (4,932) (5,220) 5.8 (2,571) (2,611) (2,673) Personnel Expenses (2,716) (2,913) 7.2 (1,369) (1,478) (1,435) 5 (3) (6,210) 47 Other Expenses (2,216) (2,307) 4.1 (1,202) (1,133) (1,238) 3 9 Operating profit 2,760 2,071 (25.0) 1,377 1, (37) (28) 5, , PPOP 4,455 3,992 (10.4) 2,248 2,075 1,917 (15) (8) 9, Pre-tax profit 2,715 2,037 (25.0) 1,344 1, (38) (30) 5, , Net profit 1,985 1,489 (25.0) (37) (30) 3, , Balance Sheet (Rp bn) Jun-13 Mar-14 Jun-14 %YoY %QoQ Gross loan 123, , , Demand deposit 13,700 16,578 18, Saving deposit 25,698 27,944 28, Time deposit 51,690 65,729 62, (5) Total deposit 91, , , (1) CASA to deposits (%) Ratio (%) 1H13 1H14 2Q13 1Q14 2Q14 CAR Tier 1 CAR LDR NIM ROE Unconsolidated NPL, cat Loan loss coverage Cost to Income Vanessa Ariati Tanuwijaya ( ) vanessa.tanuwijaya@mandirisek.co.id Page 2 of 6

3 MARKET Market Recap July 17th 2014; JCI: 5, (-0.84%); USD/IDR: 11,686; Total Value: Rp5.91tn Again, smaller caps were more active than big caps. However, since most of them traded near oversold conditions, we saw more volatile trading activities today. The JCI was more stable in morning vs in afternoon where selling pressure showed more aggression from the start; yet the index recoup some of its loses on the closing bell. BBTN (cls -5.4%) was the first after the mgmt reduced its FY14 NPAT target from 22% to 17-20%. After that, other names followed especially property and cement companies. Regular market volume stayed afloat at Rp. 4.8tn ($412MN). Net foreign buy for the day was recorded at Rp bn (USD 45.3mn). Losers beat gainers by 2 to 1. TOP TURNOVER: BBRI BMRI ASII BBCA PGAS SMGR BBTN ASRI TLKM KLBF BBNI GGRM ADHI UNVR ADRO UNTR (40%) ADVANCING SECTOR: auto+0.3% DECLINING SECTOR: cement-2.6%, property-1.6%, mining-1.3%; consumer-1%; plantation-0.7%, telco-0.5%, infra-0.3%. financial-0.2% The yield of 10-year government declined by 0.69% to 8.079% and Rupiah slightly appreciated by 0.1% to 11,686. Sales Team FROM THE PRESS Pakuwon Jati plans to upsize global bond After the successful issuance of the USD168mn bond, PWON is planning to upsize the issuance due to oversubscription. The company has yet to disclose how much the increase would be, but it does expect the bond to have the same coupon rate of 7.125%. (Bisnis Indonesia) 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$/bl) Dow Jones 16, EUR/US$ Nickel spot (US$/mt) 19, Nikkei 15, YEN/US$ Gold spot (US$/oz) 1, SET 1, SGD/US$ Tin 3-month (US$/mt) 22, Hang Seng 23, CPO futures (Ringgit/ton) 2, STI 3, ADR Stocks Soybean oil (US$/100gallons) S&P 500 1, TLK in Rp 12, Rubber forward (US /kg) IIT in Rp 3, Coal (US$/ton)* Ishares indo Coal (US$/ton) * weekly price Baltic Dry Index 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, ,620 2,000-60% 4,002 5% 1, % 20.0% PWON Buy 19, % % % 35.3% SMRA Buy 18, ,285 1,550-59% 3,106 89% % 20.7% CTRA Neutral 18, , % 1,647 52% % 19.0% JRPT Buy 12, ,130-66% 2,817 76% % 27.0% ASRI Neutral 9, % 1,538 24% % 23.2% APLN Buy 6, % 458-2% % 15.4% LPCK Buy 5, ,200 9,850-58% 19,300 74% 4, % 28.6% MDLN Neutral 5, % 1,201-18% % 13.4% CTRS Buy 4, ,350 4,000-71% 8,077-15% 2, % 23.4% BKSL Neutral 4, % 1,010-41% % 10.8% Simple average -57% % 20.5% 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 40,786 25,900 33,200 15,563 18, % 27.3% BWPT Buy 5,036 1,130 1,750 11,040 17, % 22.5% LSIP Buy 14,226 2,085 3,200 9,092 11, % 18.0% SGRO Buy 3,969 2,100 3,000 6,151 8, % 14.4% Weighted average 11,998 15, % 22.5% SIMP* Not Rated 14, ,912 9, % 7.0% SSMS* Not Rated 10,954 1,150 27,487 28, % 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 3,157, , , % 18.9% % 2.5% Banking 775,549 59,375 72, % 21.7% N.A. N.A % 2.1% BCA BBCA Neutral 24,655 11,650 11, ,231 15,573 18, % 18.9% N.A. N.A % 1.4% BNI BBNI Neutral 18,649 5,075 5,200 94,642 9,285 10, % 17.9% N.A. N.A % 2.9% BRI BBRI Buy 24,660 11,425 12, ,845 22,266 27, % 25.3% N.A. N.A % 2.3% BTN BBTN Buy 8,836 1,150 1,500 11,910 1,601 1, % 21.2% N.A. N.A % 4.0% Danamon BDMN Neutral 9,585 4,165 4,500 39,920 3,936 4, % 26.7% N.A. N.A % 3.0% Bank BJB BJBR Neutral 9, ,436 1,080 1, % 11.1% N.A. N.A % 5.8% Bank Jatim BJTM Neutral 14, , , % 12.2% N.A. N.A % 9.7% BTPN BTPN Buy 5,840 4,125 5,000 24,091 2,303 2, % 25.5% N.A. N.A % 0.0% Panin PNBN Buy 24, ,000 21,197 2,366 2, % 17.8% N.A. N.A % 2.2% Infrastructure 306,020 16,581 18, % 14.1% % 2.1% Holcim SMCB Neutral 7,663 2,980 2,700 22,838 1,288 1, % 12.9% % 1.7% Indocement INTP Buy 3,681 25,650 24,000 94,424 5,582 6, % 11.7% % 1.9% Semen Indonesia SMGR Buy 5,932 16,550 16,600 98,167 5,900 6, % 12.9% % 3.0% Adhi Karya ADHI Buy 1,801 3,190 2,500 5, % 40.9% % 2.0% Pembangunan Perumahan PTPP Buy 4,842 2,265 2,100 10, % 20.2% % 1.4% Wijaya Karya WIKA Buy 6,106 2,595 2,300 15, % 18.2% % 1.3% Waskita Karya WSKT Neutral 9, , % 34.8% % 1.5% Wijaya Karya Beton WTON Buy 8, , % 25.5% % 1.4% Jasa Marga JSMR Neutral 6,800 6,350 6,200 43,180 1,566 1, % 10.5% % 1.5% Consumer 496,972 19,255 22, % 18.3% % 2.3% Tiga Pilar AISA Buy 3,000 2,390 3,000 7, % 31.5% % 0.0% Gudang Garam GGRM Buy 1,924 53,550 68, ,035 5,571 6, % 15.0% % 2.1% Indofood CBP ICBP Neutral 5,831 10,500 10,700 61,226 2,292 2, % 11.4% % 1.9% Indofood INDF Buy 8,780 6,975 8,200 61,240 4,048 5, % 29.1% % 3.3% Mayora MYOR Neutral ,575 27,200 26, % 16.4% % 0.9% Unilever UNVR Buy 7,630 30,900 34, ,767 5,907 6, % 16.9% % 2.5% Wismilak WIIM Neutral 2, , % -30.6% % 2.2% Dyandra DYAN Buy 4, % 41.8% % 0.0% Healthcare 92,953 2,748 3, % 22.9% % 1.2% Kalbe Farma KLBF Buy 46,875 1,735 1,880 81,328 2,287 2, % 24.3% % 1.1% Sido Muncul SIDO Neutral 15, , % 15.7% % 1.6% Transportation 2, % 26.2% % 1.8% Express Transindo TAXI Buy 2,146 1,195 1,600 2, % 26.2% % 1.8% Retail 83,366 3,829 4, % 23.8% % 1.8% Ace Hardware Indonesia *) ACES U/R 17, U/R 15, % 18.2% % 0.8% Erajaya *) ERAA U/R 2,900 1,300 U/R 3, % 12.5% % 3.7% Matahari Department Store *) LPPF U/R 2,918 14,600 U/R 42,602 1,611 2, % 28.7% % 1.9% Mitra Adiperkasa *) MAPI U/R 1,660 5,050 U/R 8, % 36.1% % 0.8% Ramayana *) RALS U/R 7,096 1,110 U/R 7, % 14.0% % 3.3% Supra Boga *) RANC U/R 1, U/R % 19.4% % 1.4% Tiphone Mobile Indonesia *) TELE U/R 5, U/R 4, % 22.3% n/a n/a 2.5% 2.9% Automotive 320,395 21,719 24, % 14.1% % 3.3% Astra International *) ASII U/R 40,484 7,600 U/R 307,675 20,862 23, % 13.6% % 3.4% IMAS *) IMAS U/R 2,765 4,600 U/R 12, , % 26.5% % 1.4% Heavy Equipment 88,431 6,505 6, % 4.3% % 2.8% Hexindo Adiperkasa HEXA Buy 840 3,585 4,250 3, % 26.4% % 2.8% United Tractors UNTR Neutral 3,730 22,900 23,000 85,420 6,214 6, % 2.2% % 2.7% Plantation 64,017 4,608 5, % 29.2% % 3.4% Astra Agro Lestari AALI Buy 1,575 25,900 33,200 40,786 2,848 3, % 22.4% % 3.8% BW Plantation BWPT Buy 4,457 1,130 1,750 5, % 77.6% % 1.4% London Sumatera Plantations LSIP Buy 6,823 2,085 3,200 14,226 1,101 1, % 28.6% % 3.1% Sampoerna Agro SGRO Buy 1,890 2,100 3,000 3, % 40.4% % 2.9% Property 133,956 12,507 14, % 14.5% % 1.5% Agung Podomoro Land APLN Buy 20, , , % 16.6% % 2.7% Alam Sutera Realty ASRI Neutral 17, ,467 1,354 1, % 17.8% % 4.9% Sentul City BKSL Neutral 31, , % 35.7% % 0.0% Bumi Serpong Damai BSDE Buy 17,497 1,620 2,000 28,345 2,155 2, % 17.7% % 1.9% Ciputra Development CTRA Neutral 15,166 1, ,048 1,209 1, % 25.7% % 1.3% Ciputra Surya CTRS Buy 1,979 2,350 4,000 4, % 30.3% % 2.6% Jaya Real Property JRPT Buy 13, ,130 12, % 30.4% % 0.9% Lippo Cikarang LPCK Buy 696 8,200 9,850 5, % 8.7% % 0.0% Modernland MDLN Neutral 12, ,477 1, % -46.3% % 0.0% Pakuwon Jati PWON Buy 48, ,794 1,495 2, % 41.4% % 1.7% Summarecon Agung SMRA Buy 14,425 1,285 1,550 18,536 1,134 1, % 24.2% % 0.0% Poultry 83,658 3,127 3, % 26.9% % 1.1% Charoen Pokphand CPIN Neutral 16,423 3,980 4,100 65,363 2,429 3, % 26.6% % 1.0% Japfa Comfeed JPFA Sell 10,499 1,255 1,000 13, % 25.2% % 1.1% Malindo Feedmill MAIN Neutral 1,695 3,020 3,000 5, % 33.0% % 0.9% Energy 255,443 15,211 18, % 23.8% % 3.8% Adaro ADRO Buy 31,986 1,110 1,450 35,504 3,253 3, % 5.3% % 3.7% Bumi *) BUMI U/R 20, U/R 3,220 (1,879) (91) 70.0% N/M -1.5 n/a % 7.1% Harum Energy HRUM Neutral 2,699 2,125 2,400 5, % 8.6% % 5.1% Indo Tambangraya Megah ITMG Neutral 1,130 25,100 25,750 28,361 2,057 2, % 7.9% % 6.3% Bukit Asam PTBA Neutral 2,304 10,500 9,700 24,197 1,717 2, % 25.8% % 4.5% Energi Mega Persada *) ENRG U/R 44, U/R 4, % 0.0% n/a n/a 0.0% 0.0% Medco *) MEDC U/R 3,332 3,570 U/R 11, % 300.0% % 0.3% PGN PGAS Buy 24,240 5,875 6, ,419 9,319 9, % 8.6% % 3.4% Metal 54,487 1,584 2,680 N/M 60.8% % 2.0% Antam *) ANTM U/R 9,538 1,125 U/R 10, % 200.6% % 1.1% Bumi Resources Minerals *) BRMS U/R 25, U/R 6, % 0.0% n/a n/a 0.0% 0.0% PT Inco *) INCO U/R 9,936 3,750 U/R 37,261 1,747 2, % 40.0% % 2.6% Telecommunication 399,878 19,244 22, % 15.8% % 2.9% EXCEL *) EXCL U/R 8,534 5,350 U/R 45, , % 99.0% % 1.4% Indosat *) ISAT U/R 5,434 3,800 U/R 20, ,092 N/M 90.4% % 2.2% Tower Bersama TBIG Buy 4,657 7,900 7,200 37,893 1,474 1, % 32.0% % 0.0% Sarana Menara TOWR Neutral 10,203 4,000 3,750 40,812 1,110 1, % 22.1% % 0.0% Telkom TLKM Buy 96,010 2,645 2, ,865 15,343 16, % 7.1% % 4.2% 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 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.