Equity SNAPSHOT Thursday, July 13, 2017

Transcription

1 FROM EQUITY RESEARCH FLASH NOTES Retail Sector: Stay defensive, better outlook for mid-up retailers Bank Negara Indonesia: Maintaining momentum (BBNI IJ. IDR7,025. HOLD. TP IDR6,700) MARKET NEWS Macroeconomy MoF to increase ratio taxes to GDP target from 10.3% currently to 16% in 2019 Sector Automotive: AISI revised motorcycle sales volume target following weak sales in 1H17. Retail: Expected slower growth in retail sales post Lebaran season Corporate KINO: Estimates flat FY17 revenue on weak purchasing power Puradelta Lestari: to launch residential and commercial project Waskita Karya: New contracts in 1H17 reaches IDR32.0tn Asean - 5 Indonesia Thailand Philippines Malaysia Singapore Regional China Hong Kong Japan Korea Taiwan India NASDAQ Dow Jones KEY INDEX Close Chg Ytd Vol (%) (%) (US$ m) 5, , ,472 7, , ,209 (0.3) ,198 (0.2) ,218 26, ,090 20,098 (0.5) 5.1 9,689 2, ,337 10, ,621 31, , ,418 21, ,500 CURRENCY AND INTEREST RATE Rate w-w m-m ytd (%) (%) (%) Rupiah Rp/1US$ 13,370 (0.0) (0.5) 0.8 SBI rate % (1.3) 10y Gov Indo bond (0.9) HARD COMMODITY Unit Price d-d m-m ytd (%) (%) (%) Coal US$/ton 83 (0.2) 4.7 (5.9) Gold US$/toz 1,219 (0.2) (3.8) 5.8 Nickel US$/mt.ton 9, (8.1) Tin US$/mt.ton 20, (5.6) SOFT COMMODITY Unit Price d-d m-m ytd (%) (%) (%) Cocoa US$/mt.ton 1,876 (1.1) (8.7) (12.6) Corn US$/mt.ton 135 (5.0) (1.1) 4.9 Oil (WTI) US$/barrel 45 (0.3) (2.4) (15.6) Oil (Brent) US$/barrel 48 (0.3) (2.3) (16.2) Palm oil MYR/mt.ton 2,636 (1.1) (2.1) (17.6) Rubber USd/kg (23.3) Pulp US$/tonne 890 N/A Coffee US$/60kgbag (3.5) (16.7) Sugar US$/MT (0.9) (22.5) Wheat US$/ton 145 (0.7)

2 FLASH NOTES Retail Sector: Stay defensive, better outlook for mid-up retailers The CCI in June 2017 is down slightly. The latest Bank Indonesia (BI) survey reveals that June s CCI fell to (-3.5 pt) from in May albeit still higher than its level one year ago (June 2016: 113.7). The survey findings are in line with those of Danareksa Research Institute (DRI) whose CCI weakened to 98.2 in June from 99.2 in May, a reflection of soft purchasing power (the index stood at 96.6 in June 2016). (Exhibit 1 and 2). The CCI for low income consumers was down sharply. In DRI s survey, the CCI for low income consumers with incomes below IDR1,000,000 sank by 14.1% yoy to 81.1 in June 2017 from 94.5 in June On a mom comparison, it was up by 3.3% mom due to seasonality (May 2017: 78.5). Nonetheless, consumers with higher incomes were more upbeat. For consumers with incomes between IDR1,500,001-2,000,000 and IDR 2,000,001-and above, the CCI was up by 2.8% yoy and 1.0% yoy, respectively, albeit down by 0.4% mom and 0.8% mom due to seasonality. (Exhibit 3) Aprindo reveals weak Lebaran sales, as reflected in RALS s SSSG in June. The Indonesian Retail Association (Aprindo) has stated that sales were weak during this year s Lebaran period compared to the previous year, an indication of weak purchasing power. RALS as a low-end retailer recorded significantly lower SSSG YTD in June 2017 of 14.4% compared to almost 27.5% in June After Ramadhan and the start of the new school year, we think there will be a lack of positive catalysts for low-end retailers in 2H17. By contrast, ACES as a mid-up retailer is performing better. Its SSSG YTD in June 2017 reached 10.5% compared to only 3.7% in June This surpassed our expectation and indicates resiliency in the mid-up markets amidst the currently weak consumption. (Exhibit 4) Mid-up retailers to fare better in 3Q17. Given soft purchasing power, we are currently more favourable on the mid-up retailers which we believe are more resilient in a challenging business environment. Our top pick is Mitra Adipkerasa (MAPI) with a TP of IDR7,000. The stock is currently trading at 29.6x P/E 2017F. Exhibit 1. BI CCI, June 2017 Exhibit 2. DRI CCI, June 2017 Source: Bank Indonesia (BI) Source: Danareksa Research Institute (DRI)

3 Exhibit 3. DRI CCI per segment, June 2017 Exhibit 4. SSSG RALS vs. ACES, June 2017 YTD Source: Danareksa Research Institute (DRI) Source: RALS and ACES Exhibit 5. Valuations Company Ticker Rec. EPS Target P/E (x), growth Price, IDR 2017 (%), 2017 Mitra Adiperkasa MAPI BUY 7, Ramayana Lestari Sentosa RALS HOLD 1, Erajaya Swasembada ERAA BUY 1, Ace Hardware Indonesia ACES HOLD 1, Matahari Department Stores LPPF SELL 12, Matahari Putra Prima MPPA SELL Source: Company, Danareksa Sekuritas Adeline Solaiman Natalia Sutanto (62-21) ext 3503 (62-21) ext 3508

4 FLASH NOTES Bank Negara Indonesia: Maintaining momentum (BBNI IJ. IDR7,025. HOLD. TP IDR6,700) Bank Negara Indonesia reported 2Q17 net earnings of IDR3.2tn (-1.3% qoq; % yoy), or reaching 45.6% of our FY17F estimate. With Indonesia s macroeconomic conditions still fairly sluggish, the bank s loans growth moderated, mainly driven by lending to SOEs. The highlights of the 2Q17 results are as follows: The loans yield declined further to 10.0% in 1H17 from 10.1% in 1Q17 with declines in all segments except SME. The corporate loans yield dropped to 10.3% in 1H17 from 10.7% due to the large portion of loans extended to SOE. Non-interest income, which according to the management offset the decline in the loans yield, grew by 10.1% qoq in 2Q17, mainly driven by higher revenues from the trade finance business. Other segments, such as account maintenance and credit cards, also showed sustainable growth. BBNI s SML improved to 3.9% in 1H17 from 4.3% in 1Q17 as the bank had to follow the EY recommendation on SML recognition. Furthermore, NPLs improved to 2.8% in 1H17 as BBNI made IDR3.5tn of write-offs in 2Q17 (assuming no additional write-offs in 2Q17, BBNI s NPLs will stand at 3.3%). Nonetheless, the bank still managed to achieve around 55% of its NPLs recovery target. Going forward, the loan yield may decline further - especially if BBNI increases its exposure to infrastructure loans. The loans extended to finance the LRT project are still under negotiation between SOE banks as the lenders and PT KAI. These loans may carry a yield below 9%. We maintain our HOLD call on the stock with a target price of IDR6,700 (ROE: 14.3%, ke: 13.5% and growth: 9.5%). 2Q16 2Q17 YoY (%) 1Q17 QoQ (%) 6M17 FY17F A/F in Rp bn 10,392 11, , ,153 48, Interest Income -3,389-3, , ,749-16, Interest Expense 7,003 7, ,758 (1.4) 15,404 31, Net Interest Income 2,575 3, , ,290 17, Non-Interest Income 9,578 10, , ,694 49, Total Operating Income -4,575-4, , ,775-25, Operating Expenses 5,003 6, , ,919 23, Operating Profit Pre- Provisions -3,254-2,024 (37.8) -1, ,824-6, Provisions and allowances 1,749 4, ,068 (1.0) 8,095 17, Operating Profit 1,752 4, ,052 (1.1) 8,060 17, Pre-Tax Profit (EBIT) 1,398 3, ,227 (1.3) 6,413 14, Reported Net Profit 357, , , , , Loan 391, , , , , Third Party Funds In % NIM NPL-Gross NPL Coverage LDR ROE Agus Pramono, CFA Agus.pramono@danareksa.com (62-21) ext.3500

5 MARKET NEWS MACROECONOMY MoF to increase taxes to GDP ratio target from 10.3% currently to 16% in 2019 The Minister of Finance (MoF) said that Indonesia would increase the taxes to GDP ratio target from 10.3% currently to 16% by 2019 as part of the government s plans to reform the tax system. The Directorate General of Taxes has started the reform process internally by simplifying its IT systems and business processes. The MoF also said that the government would increase tax revenues by working with foreign authorities to prevent tax evasion. SECTOR Automotive: AISI revised down its motorcycle sales target following weak sales in 1H17 Given the 7.1% yoy decline in motorcycle sales to 2.7mn units in 1H17, AISI revised down its motorcycle sales target to 5.75mn units in 2017 from 5.90mn units previously. In June 2017, motorcycle sales declined sharply by 28.6% mom to 379,467 units owing to fewer working days because of Lebaran at the end of June Honda Motorcycle still has the largest market share (74%), followed by Yamaha (27%). (Kontan) Retail: Slower growth in retail sales expected post Lebaran Bank Indonesia (BI) expects the retail sales index to increase to in June 2017, but face pressure post Lebaran due to weak consumption. According to Aprindo, retail sales post Lebaran will be sluggish. (Kontan) CORPORATE KINO: Estimates flat FY17 revenues on weak purchasing power The management of KINO has provided guidance of flat revenues this year given weak purchasing power. To sustain revenues, the company will launch several new products including Cap Kaki Tiga Anak with a new character from Frozen, a kids personal care product with Transformer and Little Pony characters, and Ellips dry shampoo etc. For 2017, KINO has budgeted Rp80bn on capex. The ytd realization is Rp30bn. (Kontan) Comments: The management s FY17 guidance is lower than our forecast of 5.9% yoy growth. We maintain our SELL recommendation on KINO. (Natalia) Puradelta Lestari: to launch residential and commercial projects Puradelta Lestari (DMAS) plans to launch residential and commercial projects. Its present tenants include SAIC GM Wuling and Mitsubishi. This year, the company expects to increase marketing sales from residential and commercial projects from a 16% share last year. In addition, the company also plans to increase the contribution from recurring income from 5-6% last year to 10% in the next five years. Waskita Karya: New contracts reach IDR32.0tn in 1H17 Waskita Karya (WSKT) has booked new contracts of IDR32.0tn in June 17. This figure is 40% of the management s full year target of IDR80.0tn. Most of the projects are infrastructure projects with toll road projects being the main contributor. (Kontan)

6 DANAREKSA VALUATION GUIDE Equity Valuation Rating Price (Rp) Price Mkt Cap Net profit, Rp bn EPS (Rp) Core EPS (Rp) EPS Growth PER (x) EV / EBITDA (x) PBV (x) ROE Target Rp Bn Danareksa Universe 3,554, , , % 14.6% Auto 353,219 18,975 22, % 16.0% Astra International HOLD 8,725 8, ,219 18,975 22, % 16.0% Banks 1,285,482 88, , , % 17.3% BCA BUY 18,425 18, ,269 22,682 25, , , % 10.3% N/A N/A BNI HOLD 7,000 6, ,541 14,049 16, % 19.8% N/A N/A BRI BUY 14,825 15, ,720 30,046 33,756 1,218 1,368 1,218 1, % 12.3% N/A N/A Bank Tabungan Negara BUY 2,490 2,400 26,369 2,941 3, % 6.1% N/A N/A Bank Mandiri HOLD 13,225 11, ,583 18,340 24, , , % 34.1% N/A N/A Cement 157,796 5,871 5, % 0.6% Indocement SELL 17,675 13,000 65,066 2,514 2, % -1.2% Semen Indonesia HOLD 10,025 8,600 59,463 3,169 3, % 2.2% Semen Baturaja SELL 3, , % -3.3% Cigarettes 593,636 20,433 21, % 7.5% Gudang Garam HOLD 78,200 72, ,464 7,303 7,787 3,796 4,047 3,796 4, % 6.6% HM Sampoerna HOLD 3,810 3, ,172 13,130 14, % 8.0% Construction 132,670 8,734 11, % 27.4% Wijaya Karya BUY 2,170 2,800 19,465 1,225 1, % 45.5% Pembangunan Perumahan BUY 3,150 5,700 19,530 1,295 1, % 21.2% Adhi Karya BUY 2,210 3,500 7, , % 31.1% Waskita Karya BUY 2,190 3,700 29,727 2,344 3, % 49.3% Waskita Beton BUY , % 21.1% Wika Beton BUY 600 1,100 5, % 20.2% Jasa Marga BUY 5,350 6,300 38,830 1,747 1, % -8.1% Consumer 592,197 17,349 19, % 13.9% Indofood CBP BUY 8,525 9,800 99,418 4,002 4, % 12.5% Indofood HOLD 8,700 8,650 76,390 4,506 5, % 12.2% Unilever HOLD 48,300 47, ,529 7,278 8, , , % 15.3% Kino Indonesia SELL 2,200 2,800 3, % 11.2% Mayora Indah SELL 2,000 1,790 44,717 1,372 1, % 13.9% Healthcare 91,107 2,796 3, % 12.4% Kalbe Farma BUY 1,600 1,750 75,000 2,507 2, % 12.1% Kimia Farma SELL 2,900 1,510 16, % 12.7% Heavy Equipment 104,164 6,468 7,242 1,734 1, % 12.0% United Tractors BUY 27,925 30, ,164 6,468 7,242 1,734 1,941 1,734 1, % 12.0% Mining 150,562 9,374 11, % 18.3% Adaro Energy BUY 1,665 1,900 53,257 4,282 4, % 7.2% Timah BUY 715 1,000 5, % 6.7% Vale Indonesia HOLD 1,910 2,800 18, % 42.0% Aneka Tambang HOLD ,822 (147) 207 (6) 9 (6) % % (114.2) (0.8) 1.2 Bukit Asam BUY 12,500 14,500 28,802 2,498 3,004 1,149 1,382 1,149 1, % 20.3% Indo Tambangraya Megah HOLD 19,325 15,800 21,836 1,661 1,913 1,470 1,693 1,470 1, % 15.2% Harum Energy SELL 2,050 2,000 5, % 29.1% Property 110,808 7,238 6, % -4.6% Alam Sutera HOLD ,288 1,129 1, % -9.2% Bumi Serpong Damai BUY 1,790 2,200 34,452 3,115 1, % -37.5% Ciputra Development BUY 1,235 1,530 22, , % 43.5% Pakuw on Jati BUY ,618 1,707 2, % 25.7% Summarecon HOLD 1,215 1,300 17, % 26.0% Retail 74,227 3,741 4, % 11.5% Mitra Adi Perkasa BUY 6,250 7,000 10, % 46.8% Ramayana BUY 1,045 1,580 7, % 4.9% Matahari Department Store SELL 11,950 12,000 34,869 2,098 2, % 7.9% Matahari Putra Prima SELL , % 2.7% Ace Hardw are HOLD 1,060 1,050 18, % 9.3% Erajaya Sw asembada BUY 575 1,100 1, % 11.8%

7 COVERAGE PERFORMANCE LEADERS Price as on Code 12-Jul Jul-17 Chg, % w-w, % m-m, % YTD, % Rating Bank Tabungan Negara BBTN 2,490 2, (4.2) (7.1) 43.1 BUY Bukit Asam PTBA 12,500 12, BUY Indo Tambangraya Megah ITMG 19,325 18, HOLD Kimia Farma KAEF 2,900 2, (2.0) 5.5 SELL Vale Indonesia INCO 1,910 1, (2.8) (32.3) HOLD Wika Beton WTON (0.8) (8.4) (27.3) BUY Gudang Garam GGRM 78,200 75, HOLD Adaro Energy ADRO 1,665 1, (1.8) BUY Ciputra Development CTRA 1,235 1, (7.5) BUY Jasa Marga JSMR 5,350 5, (0.9) BUY Sources: Bloomberg LAGGARDS Price as on Code 12-Jul Jul-17 Chg, % w-w, % m-m, % YTD, % Rating Ramayana RALS 1,045 1,075 (2.8) (5.0) (19.6) (12.6) BUY Pakuwon Jati PWON (1.6) (2.4) BUY Matahari Department Store LPPF 11,950 12,075 (1.0) (10.2) (18.6) (21.0) SELL Pembangunan Perumahan PTPP 3,150 3,180 (0.9) (5.4) 1.6 (17.3) BUY Ace Hardware ACES 1,060 1,070 (0.9) HOLD Waskita Karya WSKT 2,190 2,210 (0.9) (3.5) (1.8) (14.1) BUY Mitra Adi Perkasa MAPI 6,250 6,300 (0.8) BUY United Tractors UNTR 27,925 27,975 (0.2) BUY Astra International ASII 8,725 8,725 - (0.9) (0.9) 5.4 HOLD Semen Baturaja SMBR 3,360 3, SELL Sources: Bloomberg

8 PREVIOUS REPORTS Strategy: Stay vigilant, BSDE: Set to book solid 2Q17 results Snapshot Property: Lacking catalysts, RALS: No positive catalysts expected in 2H17 Snapshot Semen Baturaja: Seasonally weak Snapshot Property: Stable mortgage rates expected in July 2017 Snapshot Timah: Higher production to support earnings in 2017, United Tractors: Stronger Komatsu sales to the mining sector Snapshot Automotive: Strong monthly automotive sales volume toward Lebaran Snapshot Wijaya Karya: Still on track Snapshot

9 PT Danareksa Sekuritas Jl. Medan Merdeka Selatan No. 14 Jakarta Indonesia Tel (62 21) Fax (62 21) Equity Research Team Agus Pramono, CFA (62-21) ext.3500 Head of Research, Strategy, Banking Stefanus Darmagiri (62-21) ext Auto, Coal, Heavy Equip., Metal, Cement Natalia Sutanto (62-21) ext.3508 Consumer, Tobacco, Property Maria Renata (62-21) ext.3513 Construction Adeline Solaiman (62-21) ext Retail Antonia Febe Hartono (62-21) ext.3504 Cement, Property Lucky Bayu Purnomo (62-21) ext.3512 Technical Analyst Sales team Novrita E. Putrianti (62-21) ext Laksmita Armandani (62-21) ext Upik Yuzarni (62-21) ext Ehrliech Suhartono (62-21) ext Muhammad Hardiansyah (62-21) ext Kevin Giarto (62-21) ext Yunita L. Nababan (62-21) ext Tuty Sutopo (62-21) ext Disclaimer The information contained in this report has been taken from sources which we deem reliable. However, none of P.T. Danareksa Sekuritas and/or its affiliated companies and/or their respective employees and/or agents makes any representation or warranty (express or implied) or accepts any responsibility or liability as to, or in relation to, the accuracy or completeness of the information and opinions contained in this report or as to any information contained in this report or any other such information or opinions remaining unchanged after the issue thereof. We expressly disclaim any responsibility or liability (express or implied) of P.T. Danareksa Sekuritas, its affiliated companies and their respective employees and agents whatsoever and howsoever arising (including, without limitation for any claims, proceedings, action, suits, losses, expenses, damages or costs) which may be brought against or suffered by any person as a results of acting in reliance upon the whole or any part of the contents of this report and neither P.T. Danareksa Sekuritas, its affiliated companies or their respective employees or agents accepts liability for any errors, omissions or misstatements, negligent or otherwise, in the report and any liability in respect of the report or any inaccuracy therein or omission there from which might otherwise arise is hereby expresses disclaimed. The information contained in this report is not be taken as any recommendation made by P.T. Danareksa Sekuritas or any other person to enter into any agreement with regard to any investment mentioned in this document. This report is prepared for general circulation. It does not have regards to the specific person who may receive this report. In considering any investments you should make your own independent assessment and seek your own professional financial and legal advice.

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