Equity Research 7 December Market Recap Dec 6 th 2016; JCI: 5, (+0.09%); USD/IDR: 13,383; Total Value: Rp7.1tn

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1 INVESTOR DIGEST Equity Research 7 December 2016 Economic Data Latest 2016F 7-DRRR (%), eop Inflation (YoY %) US$ 1 = Rp, period avg 13,383 13,164 HIGHLIGHT Market Recap Dec 6 th 2016; JCI: 5, (+0.09%); USD/IDR: 13,383; Total Value: Rp7.1tn Stock Market Data (6 Dec 2016) JCI Index 5, % Trading T/O ( Rp bn ) 4,949.0 Market Cap ( Rp tn ) 5, ,778.5 Market Data Summary* EBITDA growth (%) EPS growth (%) EV/EBITDA (x) P/E (x) P/BV (x) Div. Yield (%) Earnings Yield (%) Net Gearing (%) ROE (%) MARKET Market Recap Dec 6 th 2016; JCI: 5, (+0.09%); USD/IDR: 13,383; Total Value: Rp7.1tn JCI swayed on limited trading range and ended flat with regular market turnover at Rp 4.9tn (USD366mn). BJBR +19%, GJTL +14.7%, KAEF +10.7% and BBTN +6% outshined their peers on high trading volume. Some coal names were corrected as there were no further catalyst at the moment for higher ASP and the stock prices were close to its resistance level: ITMG -2.8%; HRUM -2.5%; PTBA -3.2%; UNTR -1.1%. Foreign investors continued its net sell position by booking net sell of Rp 605bn (USD40mn) today. TOP TURNOVER: TLKM BMRI MYRX BBRI ASII BBCA KAEF GJTL BJBR NIKL BUMI PGAS ADVANCING SECTOR: finance +0.8% agriculture +0.6% trade +0.4% DECLINING SECTOR: mining -0.8% infrastructure -0.6% misc. industry -0.3% The yield of 10-year government went down to 8.013% (-0.62%) and Rupiah appreciated to Rp13,383 (+0.34%). Sales Team * Aggregate of 79 companies in MS research universe, representing 68.8% of JCI s market capitalization Page 1 of 8

2 TAX AMNESTY FROM THE PRESS Consumers were slightly less optimistic in Nov16 Bank Indonesia survey shows consumer confidence index of in Nov16, down from in the previous month. Correction occurred in both present and expectation sub-components, in particular related to income, job availability, and business prospect. According to the same survey, household share of income allocated to consumption increased 1ppt to 72% (Bank Indonesia) Domestic liquidity is sufficient Despite Rp30tn capital outflow in Nov16 (Rp105tn inflow YtD), Bank Indonesia views that domestic liquidity is still sufficient. Three influencing factors are: declining domestic demand for foreign exchange to US$1-1.5bn/month currently from US$8bn/month prior to obligatory rupiah usage rule, repatriation fund, and improving export (Kontan) Indonesian Motorcycle Association (AISI) revises sales target for the third time this year This is the third time AISI cut its sales target in This time, AISI lowered its sales target to 5.9mn units for 2016 from 6.0mn units. The revision was made after AISI reviewed Nov16 sales. Sigit Kumala, Head of AISI s Commercial Division, states that 2W wholesales as of 11M16 totals to approximately 5.5mn units, and k units in Nov16 alone. AISI targets 2W sales to grow by 2-3% in 2017 to mn units. (Kontan) Page 2 of 8

3 OJK evaluates capping of deposit rates OJK is reviewing plans to change the current deposit rate cap for big banks. They plan to announce the new policy before the end of the year. One of the considerations is that the banking system s liquidity received positive effects from the tax amnesty s repatriated funds. Based on OJK s calculation the amount that will enter the banking system totals to Rp143tn. OJK hopes that liquidity in the banking system will ease and banks will move away from deposit rate wars. (Kontan) Comment: this is based on the assumption that liquidity in the banking system will ease with the expected Rp143tr of repatriated funds by end of the year (we expect <Rp100tr instead of Rp143tr). Currently the industry LDR is 91% but banks have been issuing bonds, which are not calculated in LDR. The loan to funding ratio (LFR), which include bond outstanding, is around 90%. With low loan growth demand, the relaxation of the deposit rates should not trigger deposit rate price war like in 2014, which affected the banks margin. OJK encourages consolidation of banks OJK continues to encourage banks to consolidate, one of the ways is by asking banks to have a capital of more than Rp1tn. However, OJK is still reviewing plans to make this a requirement for banks in BUKU I. (Kontan) President Joko Widodo aims for investment acceleration The Investment Coordinating Board will be assigned to collect direct investment of Rp670tn in FY17 (12.6% YoY) and Rp840tn (25.4% YoY) in FY18. Investment is expected to be channeled to import substitution, petrochemical, steel, oil & gas, and power plant industries. Direct investment realization in 9M16 was Rp453.4tn (76.2% of FY16 target of Rp595tn, 13.4% YoY) (Bisnis Indonesia) CIMB Niaga (BNGA) leads syndicate loans for Sintesa Group BNGA along with Indonesia Infrastructure Finance and Sanara Multi Infrastruktur will distribute syndicate loans to Meppogen, Sintesa Group, totaling to USD145mn or equivalent to Rp1.9tn. The loans will be used to expand the company s gas and steam power plant capacity from 110 MW to become 150MW. (Bisnis Indonesia) Lion Superindo will aggressively open Lion Express Lion Express, a compact supermarket type with 500sqm area, is a concept that company offers to franchisee. The initial capital needed to be a franchisee is Rp2,5bn. This is a smaller concept compare to Super indo that have 1,200sqm area. Lion Express will offers 6,500SKU, 1,000 of which are fresh products and targeted for people in Jabodetabek area. Super Indo is a JV between Salim Group and Ahold Delhaize, Dutch based food retail company. The first Lion Express store opened in Jul 16 in Rempoa South Jakarta. Super Indo has 137 stores YTD and will have 141 stores by the end of the year. The company expected to open 15 new stores next year. Kontan Pembangunan Perumahan (PTPP) aims to raise Rp13tn from 3 subsidiaries IPO in 2017 The construction SOE plans to raise Rp3.5tn from PP Precast IPO, Rp3.8tn from PP Equipment IPO, and Rp5.7tn from PP Energy IPO which is expected would have total market cap of Rp55tn. PTPP hopes to release 10-15% ownership in the first round of PP Energy IPO and another 20% shares in the second round, bringing PP Energy s floating shares to 35%. Meanwhile, PP Equipment would acquire three private companies with focus in foundation, offshore drilling and underground construction business. In separate news, PTPP s subsidiary, PP Properti (PPRO) plans to conduct stock split to increase liquidity. (Bisnis Indonesia, Kontan) Sido Muncul (SIDO) increased Tolak Angin price, will add more production SIDO has increased Tolak Angin price by 8% in Oct 16 now retails at Rp2,700 per sachet. The company is also preparing for additional capacity from 80mn sachet/month to 150mn sachet/month, to be effective by mid SIDO sees more potential in untapped areas, i.e. East Indonesia. KLBF s Bintang Toedjoe (Antangin), however, prefers to maintain price to boost sales. According to Nielsen, Tolak Angin still eats up 70% market share by 2015, while Antangin follows at 6%. (Kontan) Page 3 of 8

4 Surya Semesta (SSIA) has acquired 486ha of land in Subang Up to 9M16, SSIA has acquired 486ha of land in Subang. In 3Q alone, the company acquired 38ha of land. Previously, SSIA has obtained a location permit to acquire 2,000ha of land in Subang. Meanwhile, SSIA aims to add more land bank in its Karawang estate through a JV, targeting 400ha of land bank in total. (Bisnis Indonesia) Waskita (WSKT) aims for Cibitung Cilincing toll road section The company is currently reviewing plan to take ownership in Cimanggis Cibitung Tollways, the owner of Cibitung Cilincing toll road project. Note that the Cibitung Cilincing toll road section (34km) is currently owned by MTD capital Bhd (50%), Akses Pelabuhan Indonesia (45%), and Nusacipta Eka Pratama (5%) with Rp4.2tn investment cost and Rp2.5tn construction cost. This section would be connected with Cimanggis Cibitung toll road section which is owned by WTR (90%), Bakrie & Brothers (BNBR; 5%), and Bakrie Toll (5%). (Bisnis Indonesia) Page 4 of 8

5 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$/bl) Dow Jones 19, US$/EUR Nickel spot (US$/mt) 11, Nikkei 18, YEN/US$ Gold spot (US$/oz) 1, SET 1, SGD/US$ Tin 3-month (US$/mt) 21, Hang Seng 22, CPO futures (Ringgit/ton) 3, STI 2, ADR Stocks Soybean oil (US$/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 35,895 1,865 2,570-60% 4,673 21% 1, % 12.3% PWON Buy 32, % 1,207 60% % 24.7% SMRA Neutral 21,132 1,465 1,575-63% 3, % % 7.9% CTRA Buy 20,777 1,370 1,600-55% 3,073 75% % 14.0% JRPT Buy 11, ,300-73% 3,242 24% % 20.4% ASRI Neutral 7, % 1,161 67% % 10.3% LPCK Buy 3,689 5,300 10,000-79% 24,683 13% 4, % 14.6% MDLN Buy 4, % 1,165 25% % 6.6% CTRS Buy 5,204 2,630 4,000-80% 13,390-35% 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 11, % % % 12.5% BEST Buy 2, % % % 9.0% SSIA Neutral 2, % 1,701-42% % 8.1% LPCK Buy 3,689 5,300 10,000-79% 24,683 13% 4, % 14.6% MDLN Buy 4, % 1,165 25% % 6.6% Simple Average -71% % 10.2% Page 5 of 8

6 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 5,273 5,550 3,997, , , % 16.5% % 1.9% Banking 890,055 68,568 83, % 22.4% N.A. N.A % 1.9% BBCA Neutral 14,675 15, ,812 19,326 21, % 12.4% N.A. N.A % 1.4% BBNI Buy 5,375 6, ,237 10,783 12, % 20.5% N.A. N.A % 3.2% BBRI Buy 11,325 14, ,378 25,817 30, % 19.1% N.A. N.A % 2.3% BBTN Buy 1,760 2, ,638 2,439 2, % 21.0% N.A. N.A % 2.6% BDMN Neutral 3,370 3, ,300 3,097 4, % 31.1% N.A. N.A % 2.2% BJBR Neutral 2,250 1,600 (28.9) 21,817 1,522 1, % 16.9% N.A. N.A % 2.8% BJTM Neutral (2.7) 8,428 1,032 1, % 7.2% N.A. N.A % 8.2% BNGA Buy 825 1, ,734 1,670 3, % 97.0% N.A. N.A % 0.0% BNLI Buy ,175-1, N/M N/M N.A. N.A % 0.0% BTPN Neutral 2,820 2,635 (6.6) 16,470 1,756 1, % -1.5% N.A. N.A % 0.0% PNBN Buy 750 1, ,066 2,260 2, % 13.5% N.A. N.A % 0.0% Building Materials 124,275 8,261 6, % -23.1% % 2.2% INTP Neutral 15,925 14,400 (9.6) 58,624 4,234 3, % -23.2% % 2.5% SMCB Sell (10.6) 6, % % % 0.0% SMGR Neutral 9,225 8,600 (6.8) 54,718 4,044 3, % -20.7% % 2.2% ARNA Buy , % 147.5% % 1.7% Constructions 102,996 4,491 5, % 23.6% % 1.0% ADHI Neutral 1,880 2, , % 77.0% % 0.9% PTPP Buy 3,960 5, , , % 19.2% % 1.0% WIKA Buy 2,400 3, , , % 17.4% % 0.7% WSKT Buy 2,490 3, ,319 1,634 1, % 12.7% % 1.1% WTON Buy , % 33.8% % 1.0% WSBP Buy , % 41.1% % 1.2% Toll road 31,209 1,730 1, % -1.7% % 1.1% JSMR Buy 4,300 5, ,209 1,730 1, % -1.7% % 1.1% Rice Mill 6, % 22.9% % 0.5% AISA U/R 1,915 U/R U/R 6, % 22.9% % 0.5% Consumer 1,121,525 34,261 37, % 11.1% % 1.0% ICBP Neutral 8,700 9, ,459 3,662 3, % 6.6% % 1.6% INDF Buy 7,500 11, ,857 3,999 4, % 5.5% % 3.2% MYOR Neutral 1,575 1,550 (1.6) 35,215 1,346 1, % 7.2% % 1.5% ULTJ U/R 4,640 U/R U/R 13, % 19.8% % 0.5% UNVR Neutral 41,800 41, ,934 6,414 7, % 13.4% % -2.0% GGRM Buy 67,450 75, ,780 6,018 7, % 20.8% % 1.5% HMSP Neutral 3,920 3,850 (1.8) 455,967 12,021 12, % 8.1% % 2.6% WIIM U/R 434 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 90,844 3,281 3, % 11.7% % 1.5% KLBF Neutral 1,570 1,500 (4.5) 73,594 2,156 2, % 11.2% % 1.2% SIDO Neutral , % 12.9% % 3.0% TSPC Neutral 2,000 2, , % 12.1% % 2.8% Hospital 49, % 12.2% % 0.6% MIKA Buy 2,560 3, , % 11.1% % 0.8% SILO Neutral 10,825 10,820 (0.0) 12, % 17.7% % 0.0% Retail 91,138 4,054 4, % 19.2% % 2.6% ACES Neutral , % 10.4% % 1.9% ERAA Neutral (7.7) 1, % 49.7% % 4.2% LPPF Buy 14,700 19, ,893 2,082 2, % 13.1% % 3.4% MAPI Buy 5,175 6, , % 84.0% % 0.0% MPPA Neutral 1,700 1, , % 49.9% % 0.6% RALS Neutral 1,170 1, , % 6.5% % 3.1% TELE Buy 770 1, , % 18.6% % 3.7% Automotive 321,667 16,738 18, % 10.1% % 2.3% ASII Neutral 7,850 8, ,796 16,492 18, % 9.5% % 2.3% Page 6 of 8

7 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 1,400 U/R U/R 3, N/M % % 0.0% Heavy Equipment 89,640 4,652 5, % 25.3% % 3.5% HEXA* U/R 3,470 U/R U/R 2, % 100.0% % 49.1% UNTR Neutral 23,250 21,000 (9.7) 86,726 4,554 5, % 23.5% % 1.9% Plantation 47,533 2,248 3, % 37.3% % 1.6% AALI Buy 17,800 16,500 (7.3) 31,043 1,519 2, % 19.8% % 1.6% LSIP Buy 1,890 1, , % 62.5% % 1.5% SGRO U/R 1,905 U/R U/R 3, % 18.8% % 1.9% Property 147,562 10,223 11, % 12.2% % 0.8% APLN U/R 238 U/R U/R 4, % 5.5% % 3.6% ASRI Neutral ,506 1, % -33.4% % 3.0% BSDE Buy 1,865 2, ,895 1,721 2, % 53.8% % 1.0% CTRA Buy 1,370 1, ,777 1,474 1, % -3.1% % -1.4% CTRS Buy 2,630 4, , % 1.8% % 2.2% JRPT Buy 860 1, , , % 11.6% % 0.9% LPCK Buy 5,300 10, , % -15.9% % 0.0% MDLN Buy , % -2.2% % 0.0% PWON Buy ,267 1,934 2, % 25.9% % 1.4% SMRA Neutral 1,465 1, , % 78.2% % 0.0% Industrial Estate 15,989 1,394 1, % 11.5% % 2.1% DMAS Buy , % 8.4% % 2.5% BEST Buy , % 18.8% % 0.5% SSIA Neutral , % 15.5% % 1.9% Poultry 72,921 4,795 5, % 14.9% % 2.0% CPIN U/R 3,170 U/R U/R 51,982 2,961 3, % 17.9% % 1.8% JPFA U/R 1,580 U/R U/R 18,029 1,553 1, % 10.3% % 2.7% MAIN U/R 1,300 U/R U/R 2, N/M 12.2% % 2.2% Coal 110,762 6,403 8, % 31.0% % 3.7% ADRO* Sell 1,730 1,200 (30.6) 55, % 19.6% % 2.5% HRUM* Sell 2,380 1,600 (32.8) 6, N/M 153.7% % 4.0% ITMG* Sell 16,750 12,250 (26.9) 18, % 23.3% % 7.3% PTBA Sell 13,050 9,500 (27.2) 30,074 1,541 2, % 46.4% % 3.8% Oil & Gas 68,603 6,887 7, % 10.5% % 5.2% PGAS* Sell 2,830 3, , % 10.5% % 5.2% Shipping 2, % 11.0% % 5.1% SOCI* Buy , % 11.0% % 5.1% Metal 42, % N/M % 0.6% ANTM Neutral (47.9) 9, % N/M % 0.1% INCO* U/R 3,370 U/R U/R 33, N/M N/M % 0.8% Telco 440,951 20,483 23, % 16.4% % 3.4% EXCL Neutral 2,280 2, , N/M 81.6% % 0.4% ISAT U/R 6,300 U/R U/R 34, ,896 N/M 95.6% % 2.3% TLKM Buy 3,910 4, ,011 19,278 21, % 11.2% % 3.6% Tower 61,912 3,540 4, % 26.3% % 0.0% TBIG Neutral 5,250 6, ,182 1,120 1, % 39.1% % 0.0% TOWR Buy 3,600 5, ,731 2,420 2, % 20.4% % 0.0% Media 62,322 3,175 3, % 16.0% % 2.8% SCMA Buy 2,500 3, ,554 1,599 1, % 16.9% % 3.1% MNCN Buy 1,805 2, ,768 1,576 1, % 15.0% % 2.4% 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 7 of 8

8 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.