How Low Can Yields Go?

Transcription

1 Strategy IDR Bond IDR Market Bond 28 July 2016 Market Debt Research 28 July 2016 Mandiri Sekuritas Analysts Handy Yunianto How Low Can Yields Go? FIGURE 1. MONTHLY CAPITAL GAIN/(LOSS) OF THE BENCHMARK SERIES AND CUMULATIVE RETURNS (INCLUDING COUPON PAYMENT) YTD Country INDONESIA Country Rating S&P Moody s Fitch BB+/stable Baa3/stable BBB-/stable Outstanding IDR Bond Market As of May-2016 Corporate Bonds: Rp258.5tn Government Bonds: Rp1,590tn Economic Data 31-Dec F BI Rate (%), eop * Inflation ( YoY%) US$1=Rp, eop 13,795 13,400 GDP (YoY%) 4,8 5,0 Yield 10 year (%) * 7-dayRRR Source: Bloomberg and Mandiri Sekuritas Estimate Our recommendation to change to shortening duration since mid of April has delivered good result until May when the 10-yr yield rose to 8% from 7.4% in mid April, but strong rebounds in June have made the shortening duration strategy to underperform the index performances. Overall, our recommendation still outperformed Bloomberg s index by 1.8ppt. In July, the bond rally continued on foreign fund inflows thus made the 10-yr government bond yield 50bps lower than our fair yield forecast that we made at the end of last year and to record the lowest level since Oct The question is whether the rally will continue? We see that there is room for bond prices to rally further. We revise our fair 10-yr yield forecast to 6.54% from 7.5% as we revise down 10-yr UST yield and BI rate outlook to 1.7% and 6.25% from previously 2.5% and 6.75% respectively. We recommend changing to longer duration; seasonally August is the best time to buy government bonds. Please see important disclosure at the back of this report Page 1 of 14

2 July s bond rally is more offshore driven Rupiah government bonds' total returns reported 16.3% ytd (including coupon payment) or 21.3% in USD terms, making Indonesian bonds to record the best local currency bonds on the Asian bond market and number three of all emerging sovereign local currency bond market, according to Bloomberg (Table 1). Almost all emerging bonds reported the lowest yield ytd, meaning that bond rally was also supported by global fund inflows to emerging market. This is in line with IIF portfolio tracking that estimates EMs to have received nonresident portfolio inflows of $16.7bn in June, a big improvement over May, but shy of the average of $22bn. Based on EPFR calculation, Emerging Market Debt's cumulative flows are now at four-year highs, with flows at +13.7bn for 2016 so far, compared to -$14.4bn and +11.1bn in 2015 and 2014 respectively. The fund inflows are helped by the anticipation of Fed rate hikes that will likely be pushed back further following weak US employment report in June and expectation of more stimulus from Euro, China, and Japan after Brexit happened; interestingly, total inflows are still lower than the peak level that happened before US taper tantrum on June 2013, meaning that there s room for more foreign fund inflows to emerging bond market if the Fed does not increase its interest rate this year (Figure 2). TABLE 1. ALMOST ALL EMERGING BOND MARKET BOND YIELD RECORDED THE LOWEST LEVEL YTD YTD Name Ticker Price Yield Duration YTD Low YTD High YTD Avg YTD Chg Return % Local Currency EM Sovereign Indexes Brazil Local Sov BZIL (4.26) Peru Local Sov BPERU (1.51) Indonesia Local Sov BINDO (1.74) S Africa Local Sov BSAFR (0.95) Philippine Local Sov BPHIL (1.15) LATAM Local Sov BLATAM (0.85) Turkey Local Sov BTUR (1.12) Kenya Local Sov BKEN n.a (0.91) Colombia Local Sov BCOLM (0.77) India Local Sov BINDI (0.57) Russia Local Sov BRUSS (0.67) Jamaica Local Sov BJAMA Dominican Local Sov BDOM (0.05) Thailand Local Sov BTHB (0.32) S Korea Local Sov BKRW (0.58) Serbia Local Sov BSERB n.a (0.67) Chile Local Sov BCHIL (0.27) Malaysia Local Sov BMYR (0.49) Mexico Local Sov BMXCO Loc EM Sov BLCSV (0.42) ASIA Local Sov BASIA (0.39) Hungary Local Sov BHUF (0.84) Croatia Local Sov BCROA (0.37) Taiwan Local Sov BTAIW (0.24) Romania Local Sov BROMA (0.27) Israel Local Sov BILGO (0.25) China Local Sov BCGB (0.17) EMEA Local Sov BEMEA (0.31) Lithuania Local Sov BLITH (0.39) Bulgaria Local Sov BBUL (0.12) Egypt Local Sov BEGYP Poland Local Sov BPOL (0.05) Latvia Local Sov BLATV (0.38) Czech Rep Local Sov BCZE Nigeria Local Sov BNGRI (11.82) Source: Bloomberg as of 28-July Please see important disclosure at the back of this report Page 2 of 14

3 FIGURE 2. INFLOWS TO EMERGING MARKET REBOUNDED AFTER MAY-2016 FIGURE 3. EMERGING MARKET DEBT'S CUMULATIVE FLOWS ARE NOW AT FOUR-YEAR HIGHS Source: IIF JUNE-2016 Source: EPFR GLOBAL FIGURE 4. FOMC MEDIAN VS FED FUNDS FUTURE FOR YEAR- END 2016 FIGURE 5. IMPLIED PROBABILITY OF FED FUND RATE AT YEAR- END 2016 Source: Bloomberg Source: Bloomberg Specific on Indonesia, what happened in July s bond rally was clearly triggered by foreign fund inflows. According to DMO data as of 26-July, excluding sukuk, foreigners reported net buyer of Rp15.5tn while total net issuances increased by Rp23tn mtd (but note that Rp13.1tn was coming from private placement). Banks reported the biggest net seller of Rp1.7tn, followed by insurances and pension funds that also reported net seller of Rp0.6tn in July (Figure 5). We estimate that onshore demands, especially from insurance and pension fund companies, have fulfilled the requirement from the POJK No for their portfolios in government bonds by the end of 2016 (this requirement will increase to 30% in 2017). Based on our initial calculation, the net additional demand from pension funds and insurances to fulfill the OJK requirement is Rp50tn (vs. currently they've already reported net buy of Rp57.5tn as of 26-July). The new draft regulation by OJK (that will allow SOEs' corporate bonds to be included as non-bank financial institutions in the calculation to replace government bonds to fulfill POJK No.1) might also lower demand from both investors. Please see important disclosure at the back of this report Page 3 of 14

4 FIGURE 6. JULY S BOND RALLY WAS CLEARLY TRIGGERED BY FOREIGN FUND INFLOWS Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Total ytd Net inflow/(outflow) - exclude sukuk (Rp tn) Banks (4.1) 10.2 (8.0) (3.9) (1.7) (4.7) Central Bank (0.1) 0.3 (1.0) (0.6) (0.4) (0.1) (0.8) (2.6) Insurance + Pension Fund (0.6) 37.5 Mutual Funds (0.2) (0.1) Others (0.7) (2.2) 1.6 (1.4) Foreigners (4.8) Total Net issuances Foreign net buying to total 109% 36% 68% 59% -122% 93% 68% 64% Source: DMO and Mandiri Sekuritas We believe that foreign fund inflows will remain encouraging to Indonesian bond market, following three reasons: (1) The 10-yr rupiah government bond yield spread against UST yield remains attractive, i.e. 6ppt (vs. long term average of 5ppt); (2) Indonesian government bond yields, both in terms of nominal and real yields (minus expected inflation), are also still attractive compared to other emerging markets'; (3) We still believe that room for lowering Indonesian CDS is still open as we expect Indonesia will get a rerating story from the S&P rating agency early next year assuming tax amnesty success this year. Post Brexit, the market also sees that the probability for Fed Fund Rate hike this year has become very unlikely. The BoE also expects a rate cut this summer and hinted more quantitative easing if necessary to stimulate economic growth. FIGURE 7. THE 10-YR RUPIAH GOVERNMENT BOND YIELD SPREAD AGAINST UST YIELD REMAINS ATTRACTIVE FIGURE 8. IN TERMS OF REAL YIELDS (10-YR NOMINAL YIELD MINUS EXPECTED INFLATION), ARE ALSO STILL ATTRACTIVE Source: Bloomberg Source: Bloomberg Please see important disclosure at the back of this report Page 4 of 14

5 We update our Ordered Logit Model that previously predicted Indonesia should be on investment grade this year. There are five independent variables, i.e. Nominal GDP, GDP per capita, Inflation, Gross Domestic Saving to GDP, and Government Debt per Government revenue. Using historical and forecast data for each variable, our model showed that Indonesia's probability to be upgraded is still relatively high (46.7 and 50.1%) compared to the probability of a downgrade, i.e. only 16.5% and 14.7% in 2016 and 2017 (Table 6). We think that the market has priced in this probability, as reflected by the low 5-yr CDS, which as of end of July is traded at 165 or theoretically slightly lower than those of countries rated BB+ by S&P, i.e. 207 (Hungary has the lowest 5-yr CDS with BB+ rated at 142). TABLE 2. OUR LOGIT MODEL STILL SHOWED HIGH PROBABILITY OF INDONESIA TO BE UPGRADED BY S&P RATING AGENCY new forecast Variables F 2017F Nominal GDP (US$ bn) ,024 Real GDP (%) GDP/capita (US$) 3,532 3,362 3,620 3,906 Inflation (%) Gross National Savings to GDP (%) Govt Gross Debt per Govt Revenue (%) FIGURE 9. MARKET HAS PRICED IN INDONESIA S PROBABILITY TO BE UPGRADED INVESTMENT GRADE BY S&P RATING AGENCY Probability based on Ordinal logit model Upgraded upper BB+ 54% 53% 47% 50% Stay at BB+ 18% 22% 23% 22% Downgraded below BB+ 28% 13% 17% 15% Source: IMF, Bloomberg and Mandiri Sekuritas Esimate Source: Bloomberg and Mandiri Sekuritas Estimate What is the fair value for 10-yr rupiah government bond? As we believe that foreign fund inflows triggered the bond rally, measuring the fair value yields will be important to show how much the rally needs to move from their fundamental to give us confidence the rally will continue further. There will be three approaches: (1) a simple historical time series pattern of the 10-yr nominal yield and the spread over BI rate; (2) Real yield valuation; and (3) Simulation using multiple regressions. 1. From the historical pattern, currently the 10-yr government bond yield of 7.02% is already trading below their long term average of 7.52% since Jan-2010, but still higher than -1-standard deviation (6.34%). In terms of spread over BI rate, it s also slightly lower than their long term average by -27bps, meaning that the market has already priced in that BI rate will be cut to 6.25% this year. The rebound in yields, historically, happened when the 10-yr bond yield broke BI rate level (Figure 8). As our economist expects that BI rate still has room to be cut by another 25bps this year, thus we believe that the current level (7%) is still trading at fair value. Although, the lowest level for the 10-yr rupiah bond yield has reached 5.08% before (on 8-Jan-2013), but note that BI rate was 5.75% at that moment. Thus from historical pattern, we only expect that the lowest 10-yr fair value will be 6.25% this year, and if it happens then we strongly suggest investors to take profit. Please see important disclosure at the back of this report Page 5 of 14

6 FIGURE 10. NOMINAL 10-YR RUPIAH BOND YIELD AND SPREAD OVER BI RATE AGAINST HISTORICAL AVERAGE AND STANDARD DEVIATION Source: Bloomberg and Mandiri Sekuritas 2. From historical real yield perspective, our historical calculation shows the 10-yr real yield (which measures 10-yr nominal yield minus core inflation) now is traded below the average real yield minus 1 standard deviation using moving average of 12 months' historical data, i.e. 3.5ppt vs. 4.2ppt. Meaning that, at the current level, the market expects inflation will be only 3.5% this year. Ytd inflation reported only 1.1% (until June-2016), thus using historical pattern of inflation in the last three years (excluding fuel price hike impact), then inflation will probably be below 4% this year. Low inflation this year is also supported by delayed electricity tariff for 900VA and no increase on fuel price subsidy with relatively stable oil price at USD 40.3pbrl and rupiah at 13,373 this year. Thus from real yield perspective, the 10-yr bond yield still has room to lower by 25bps to 6.75%, assuming inflation will be only 3.3%. FIGURE 11. FROM REAL YIELD PERSPECTIVE, THE 10-YR BOND YIELD AT 7% IS ALSO FAIR LEVEL FOR THIS YEAR FIGURE 12. INFLATION MOST LIKELY TO FALL BELOW 4% THIS YEAR Source: Bloomberg Source: CEIC and Mandiri Sekuritas Estimate Please see important disclosure at the back of this report Page 6 of 14

7 3. From multiple regression method, Our 10-year fair yield model currently stands around 6.62%. Using the estimated relationship between bond yield and four fundamental variables (UST 10-yr, BI rate, 5-yr CDS, and IDR against USD), we can calculate the theoretical level of bond yield at any point in time. With UST yield inflation projected to be 1.7%, BI rate 6.25%, 5-yr CDS 175 and the rupiah Rp13,400 vs. the US dollar, therefore our fair yield for the 10-year bond is 6.54% with a range of 6.28%-6.80%. TABLE 3. THE 10-YR RUPIAH GOVERNMENT BOND YIELD MODEL Model Inputs Coeff P-value Current 28-July YE2016 Scenario Delta FIGURE 13. PREDICTED VS ACTUAL 10-YR RUPIAH GOVERNEMNT BOND YIELD Intercept (2.62) BIRate (%) (0.25) yoy% Change IDR (13,095) -3.3 (13,400) CDS-5yr US 10Y Adj R-Square 0.80 Actual 6.97 Observations 78 Prediction model Source: Bloomberg, Mandiri Sekuritas Source: Bloomberg, Mandiri Sekuritas Please see important disclosure at the back of this report Page 7 of 14

8 Government bond supply outlook 2H 2016 Relatively high tax amnesty target: risk of bond supply increasing, but still manageable The Indonesian parliament passed the Tax Amnesty bill and approved the budget deficit 2016 revision on 28-June. With the approval of the tax amnesty bill, the fiscal risk might be lessened, as our economist calculated that without the additional tax revenue from tax amnesty, the budget deficit for 2016 would rise well above the budget deficit rule of 3.0% of GDP assuming no cut on spending. How long this tax amnesty is and how much revenue will be generated from it will be the most important factors to be watched by investors, as they will impact the economy, budget deficit, and the government bond supply this year. The repatriation of capital overseas should also lower liquidity risks and support the rupiah and foreign reserves. We revise our 10-yr fair yield forecast to 7% from 7.5% by YE2016. The government expects around Rp165tn of additional tax revenue from the tax amnesty. It is coming from Rp3,800 trillion of declared funds and Rp1,000 trillion of repatriation funds. The amnesty has taken effect as of 1 July and will last until 31 March 2017, and it comes with reasonable penalty rates. Taxpayers who announce their undeclared onshore assets or undeclared offshore assets & repatriate them to Indonesia must pay a penalty of 2% in the first three months window, 3% in the fourth month to Dec16, and 5% in Jan17 to Mar17. Taxpayers who only announce undeclared offshore assets, without repatriation, must pay a higher penalty of 4%, 6%, and 10% in the respective periods. Meanwhile, the law also specifies lower penalty rates for small medium enterprises (SMEs), - SMEs being defined as having annual revenue of up to Rp4.8bn. However, our economist still expects that further adjustment is still needed for the 2016 budget. According to his estimation, the base scenario for revenue from tax amnesty is Rp80-90tn, in the middle of BI s estimation of Rp53tn and the government s of Rp165tn. He also mentions that tax revenue collection by the government (excluding tax amnesty) this year is also still high (17.4% compared to 2015 realization vs. natural tax growth of 8.2%yoy in the last three years). Thus the base scenario is: the optimum tax revenue projected to increase by 8% in 2016 (vs. government s assumed growth of 24.1%), or suggesting a tax revenue shortfall of Rp200tn from Rp1,786.2tn target in APBN-P With this calculation, the government needs to cut expenditure by another Rp80-90tn to maintain budget deficit to stay at 2.6% of GDP. The source of the cut will come from Rp18tn of automatic spending cut, Rp40tn likely coming from material & operational spending, and the rest will be from a combination of cuts on transfers to regions and capital spending. We made four scenarios - from the best and to the worst - to calculate how much government financing is needed in 2H to fulfill the budget deficit this year: 1. There s no shortfall in revenue, budget deficit stays at 2.35% of GDP, and all additional financing comes from excess budget. 2. There s no shortfall in revenue, budget deficit stays at 2.35% of GDP, and all additional financing comes from bond issuances. 3. There s shortfall from tax amnesty by Rp111tn, the government should cut expenditure by Rp79.4tn to maintain budget deficit below 3% of GDP (i.e. 2.6% of GDP). 4. There s shortfall from tax amnesty by Rp111tn and tax collection by Rp89tn, the government should cut expenditure higher by Rp130.6tn to maintain budget deficit below 3% of GDP (2.9% of GDP). Please see important disclosure at the back of this report Page 8 of 14

9 TABLE 4. RISK SCENARIO FOR THE BOND SUPPLY OUTLOOK 2016 Simulation Source of revenue shortfall Gov t Target Scen. 1 Scen. 2 Scen. 3 Scen. 4 Shortfall from tax amnesty Shortfall from other collection - 89 Budget deficit/(% of GDP) (2.35%) (2.35%) (2.35%) (3.23%) (3.93%) Cut spending to stay below than -3% of GDP - (79.4) (130.6) Additional bond supply Remaining gross supply Total gross issuances FY Financing plan in 2H Retail bonds Sukuk auction size, 10x per auction Conventional auction size, 10x per auction Global bond issuances Source: Mandiri Sekuritas Estimate The latest information, the government plans Rp37.6tn of additional bond issuances in It also targeted to issue a Rp88tn target in 3Q (excluding global bond and retail bond issuances). This is in the middle of our scenarios three and four, meaning that we believe the government has already prepared for higher budget deficit of more than 2.35% of GDP this year. If we use the worst scenario (scenario 4), the government can still maintain its issuance target per auction the same with 1H this year, i.e. Rp4tn and Rp12tn for sukuk and conventional bonds respectively; thanks to the success of the front loading policy that the government did this year. However, the government should issue retail bonds higher, i.e. Rp25tn. Thus issuance targets in 3Q and 4Q will be Rp91.6tn and Rp67.7tn respectively. With there being Rp31.7tn and Rp35.8tn of bonds that will mature in 3Q and 4Q, thus net issuances will be Rp59.9tn and Rp31.9tn in 3Q and 4Q respectively (compared to Rp40.2tn and Rp51.2tn in 1Q and 2Q 2016). FIGURE 14. OPTIMIZING FRONT LOADING POLICY BY THE GOVERNMENT THIS YEAR Source: DMO and Mandiri Sekuritas as of 26-July TABLE 5. THE GOVERNMENT HAS ISSUED RP493.5TN-GROSS OR 83.2% OF GOVERNMENT TARGET THIS YEAR Rp trillion Target 2016 Budget deficit (% of GDP) 2.2 YTD 2016 % of target Issuanc es Need Net Issuances % 20.5 Redemption & buybacks (228.5) (149.8) 65.6% (78.7) Gross Issuances % 99.2 Domestic bonds % 70.7 Conventional FR/VR T-bills/ZC bonds 36.1 Retail bonds (ORI & Sukuk) 35.4 Domestic sukuk 67.8 Private placement 52.8 Global bonds % (8.5) Yankee bonds 51.7 Global sukuks 32.8 Samurai bonds 12.5 Euro denominated bond 45.0 Source: DMO and Mandiri Sekuritas as of 26-July Please see important disclosure at the back of this report Page 9 of 14

10 Conclusion: Lowering our fair yield forecast to 6.54% from 7.5% by YE2016 With all those factors that we mention above, we still maintain a positive view on the rupiah bond market. As we always mention in our report, there are only two factors that can make te rupiah government bond yield increase significantly: (1) increasing inflation followed by increasing BI rate; and (2) Foreign fund outflows if UST yield rose significantly or if the rupiah weakened to more than Rp14,100 against USD. As we believe that inflation will lower to 4% this year (vs. 4.5% our previous estimation) and the 10-yr UST yield also will be lower than our previous estimation (2.5% vs. now market consensus expected only 1.7% YE2016) and rupiah also might not depreciate significantly to more than 14,000 this year as the probability for FFR rate hike this year is still low, thus we suspect that the rupiah bond prices potentially might rally further in 2H. We are lowering our 10-yr yield forecast to 6.54% from previously 7.5% by YE2016. The main risks that might increase bond yields higher than our estimation are mostly coming from global factors, such as sharp deterioration in risk sentiment that might be triggered by China s hard landing and CNY, significant devaluation, and Fed Fund Rate hike more than market expectation. TABLE 6. LOWERING OUR FAIR YIELD FORECAST TO 6.7% FROM 7.5% BY YE2016 Dec- Summary Dec-11 Dec-12 Dec-13 Dec-14 Sep-15 Dec F Dec- 16FRev BI rate Headline inflation CDS 5-yr UST 10yr IDR 9,075 9,638 12,170 12,435 14,653 13,856 13,400 13,400 10YR Source: Bloomberg and Mandiri Sekuritas Estimate Please see important disclosure at the back of this report Page 10 of 14

11 APPENDIX 1. SEASONALITY IN RUPIAH GOVERNMENT BOND MARKET JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC (0.12) (0.82) (1.87) (1.89) (0.06) (5.15) (1.71) (0.01) 1.49 (0.31) (0.61) (3.63) (1.55) 0.51 (1.26) (2.54) (13.40) (2.20) (0.00) (0.49) (0.00) (1.73) (0.46) (1.43) (2.55) 1.75 (0.24) (4.45) (1.59) (5.98) (6.04) (0.09) (4.05) 7.32 (1.18) (4.53) (16.25) (0.58) (8.28) (2.46) 4.52 (2.82) 2.64 (0.46) (0.11) (0.09) (0.06) (3.20) (1.27) (1.27) 2011 (5.89) (0.30) (2.93) (1.63) (2.99) 0.05 (3.70) (3.15) (1.39) 0.23 (1.91) (0.01) (3.35) (8.32) (4.33) (4.31) (7.66) (2.77) (0.08) (0.40) (1.12) 1.02 (0.66) (1.65) (1.32) (3.22) (2.03) (2.44) (0.75) (1.87) (2.42) (4.26) (0.80) Avg price return mom (%) 0.70 (0.34) (1.01) (0.81) 1.05 (2.06) (0.20) 1.88 Probability bond price to increase 54% 54% 62% 54% 33% 17% 69% 31% 69% 62% 46% 62% Source: Mandiri Sekuritas Estimate Please see important disclosure at the back of this report Page 11 of 14

12 APPENDIX 2. GLOBAL BOND YIELD: RACE TO NEGATIVE Source: Bloomberg Please see important disclosure at the back of this report Page 12 of 14

13 APPENDIX 3. PENSION AND INSURANCE PORTFOLIO DATA Source: OJK and Mandiri Sekuritas Please see important disclosure at the back of this report Page 13 of 14

14 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 : (Debt Capital Market) DEBT RESEARCH TEAM Handy Yunianto Leo Putra Rinaldi Head of Fixed Income Research Economist handy.yunianto@mandirisek.co.id leo.rinaldy@mandirisek.co.id Ali Hasanudin Wisnu Trihatmojo Credit Analyst Research Assistant ali.hasanudin@mandirisek.co.id wisnu.trihatmojo@mandirisek.co.id Yulia Ansari Credit Analyst yulia.ansari@mandirisek.co.id Yudistira Yudadisastra Credit Analyst yudistira@mandirisek.co.id DEBT CAPITAL MARKET TEAM Abdul Hadie Head of Institutional Sales abdul.hadie@mandirisek.co.id Sita Arvianti Fonny Supargo Institutional Sales Institutional Sales sita.arvianti@mandirisek.co.id fonny.supargo@mandirisek.co.id Teguh Suwarno Deswita Nia Nur Mohammad Haikal Institutional Sales Institutional Sales Institutional Sales teguh.suwarno@mandirisek.co.id mohammad.haikal@mandirisek.co.id Mandiri Sekuritas A subsidiary of PT Bank Mandiri (Persero) Tbk Plaza Mandiri, 28 th Floor Jl. Jend. Gatot Subroto Kav Jakarta Indonesia General: Fax: (Debt Capital Market) 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 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.