MNCS COMPANY UPDATE MNC Sekuritas Research Division July 21, 2017

Transcription

1 MNCS COMPANY UPDATE MNC Sekuritas Research Division July 21, 2017 PT Indocement Tunggal Prakarsa Tbk (INTP) Cement Sector Healthy Inside - Tough Outside BUY Target Price 17,400 Current Price 17,525 52wk Range 14,275-19,400 Share Outstanding 3, mn Free Float (%) 48.99% Mkt Capitalization (IDR bn) 64, Bn Stock Data Major Shareholders Birchwood Omnia, Ltd 51.00% Public 49.00% 1Q17 Performance Sited Below Our Expectations In 1Q17, INTP booked revenue of Rp3.37 trillion YoY, marking 14.06% lower than the Rp3.92 trillion reported in 1Q16. The decline resulted from -4.17% YoY lower sales volume. 1Q17 revenue is still sitting below MNCS yearly estimate of Rp15.63 trillion, representing just 21.59%. In the midst of intense competition, INTP has room for cost efficiencies. In 1Q17, the Company's gross profit margin (GPM) fell to 34.47%, from 43.23% in 1Q16, the victim of increased cost of goods sold. Quarterly net profit fell to Rp billion, down % YoY and still below MNCS yearly estimate of Rp3.25 trillion, representing just 15.12%. Key Growth Catalysts in 2017/2018 We believe that a positive profitability trend in 1Q17 will continue throughout the year, supported by 1) Company strategy that focuses on increasing cost efficiency, with GPM maintained at 40.76% in 2017E and 43.07% in 2018F, maintaining zero leverage with DER of 0.41% in 2017E and 0.38% in 2018F, and launching Rajawali Cement, a new product; 2) Relief from price depression as the price war is over; 3) Demand starting to pick up, at 5% in 2017E and 8% in 2018F, driven by infrastructure projects and an improving property sector. Oversupply Still the Main Concern In our view, INTP will face several challenges in order to deliver higher added value to shareholders, including 1) Inability to optimize production, constrained by unfavorable market conditions; 2) Tighter competition in the home market (West Java); 3) Limited expansion agenda in the next five (5) years. In our view, INTP s market share can be potentially stolen by other cement producers, who are continuing to increase production capacity. Valuation and Recommendation HOLD with TP Rp17,400 We believe demand for INTP cement will increase moderately and the down trend of ASP will be limited, supported by higher infrastructure. However the main concern of oversupply is still intact. Thus we initiate a HOLD recommendation with target price (TP) of Rp17,400 per share for next 12 months, indicating -0.71% potential downside from current share price at Rp17,525 (as of July 18th 2017). Our valuation implies 19.70x/17.49x of PE17E/PE18F. Key Financial Highlight In billion IDR E 2018F 19, , , , , Gross Profit 9, , , , , Operating Profit 6, , , , , Research Analyst Net Profit 5, , , , , Sukisnawati Puspitasari sukisnawati.sari@mncgroup.com Gross Profit Margin (%) Operating Profit Margin (%) Sales (021) ext Net Profit Margin (%) Total Assets , , , , , Yosua Zisokhi yosua.zisokhi@mncgroup.com Net Debt/EBITDA (x) (021) ext Debt/Equity (x) Source Company, MNCS Estimate MNC Sekuritas research@mncsecurities.com Page 1

2 1Q17 Performance Was Still Below Our Expectation, but... In 1Q17, INTP booked revenue of Rp3.37 trillion YoY, or down % from the Rp3.92 trillion reported for 1Q16. This was caused by lower sales volume, down % YoY to 3.77 million tons in 1Q17, consisting of 2.95 million tons of bagged cement and 819 thousand tons of bulk. Moreover INTP booked a decline in gross profit by % YoY to Rp1.16 trillion in 1Q17, due to the increase in COGS to revenue ratio from 56.76% in 1Q17 to 65.53% in 1Q17. Thus Gross Profit Margin (GPM) fell from 43.24% in 1Q16 to 34.47% in 1Q17. Operating profit of the Company decreased significantly, by % YoY to Rp billion in 1Q17. EBITDA margin fell from 33.90% 1Q16 to 23.00% in 1Q17. As a result, the Company booked net profit of just Rp billion or down % YoY in 1Q17....there is a Little Light in the Tunnel As of May 2017, total domestic cement consumption reached million tons, where INTP had a national market share of 26.69%. Unexpectedly cement sales of the Company have picked up by 7.25% YoY to 1.81 million tons of cement in 5M17, becoming the highest sales volume in West Java Province until 5M17. This was supported by increasing infrastructure development in West Java. It will be potentially a sign of better outlook for the Company if it can be followed by the recovery in the property sector too. Meanwhile INTP held a market share of 18.09% outside Java, and 33.21% on Java. What's more, the Company still dominated 46.32% market share in West Java until 5M17, sitting on the throne in West Java. Exhibit 01. Portion of Cement Sales 1Q16 Exhibit 02. Portion of Cement Sales 1Q17 Bag 78,52% Bag 78,31% Bulk 21,48% Bulk 21,69% Source Company Source Company Exhibit 03. Financial Results RP Bn 1Q16 4Q16 1Q17 QoQ YoY FY17E Consensus FY17E MNCS Estimate %Consensus %MNCS Sales 3, , , % % 16, , % 21.59% COGS -2, , , % -0.78% Gross Profit 1, , , % % 9, , % 18.26% Gross Profit Margin 43.24% 39.97% 34.47% Operating Income 1, % % 3, , % 13.56% Operating Income Margin 27.51% 21.30% 14.80% Net Income % % 3, , % 15.12% Net Income Margin 24.31% 18.00% 14.56% Source Company, Bloomberg, MNCS Estimate Page 2

3 Key Catalysts in 2017 Cost Efficiency Through Plant 14 as an Eco-Friendly Facility GPM will Potentially Increase to 40.76%/43.07% in FY17E/ FY18F In the midst of profitability normalization in 1Q17, we believe that the Company has several strategic action plans to maintain positive profitability throughout the year including 1) Increasing its cost efficiency; 2) Maintaining a zero leverage system; 3) Launching Rajawali Cement, a new product. In the midst of intense competition, INTP has room for cost efficiency. The Company built a new plant, namely Plant 14 located in Citeureup, Bogor. Plant 14 was a merger plant between Plant 1 to Plant 4. The facility has 4.40 million tons of total capacity per year, uses the latest technology and is environmentally-friendly. Therefore INTP benefits from higher productivity and is more efficient in maintaining its costs, as a less negative impact on the surrounding environment. Furthermore the Company also uses alternative fuels besides coal, with recycling of household waste in the vicinity of the plant. It enables the Company to minimize higher volatility risk in coal price so it can manage its fuel costs properly. Although the usage of the alternative fuel is currently still limited, the Company is committed to increase it gradually in coming years. The use of alternative fuels is expected to increase by 3% -5% of total fuel cost in FY17E. We believe the effect of cost efficiency will begin to deliver positively in FY18F, as reflected by higher GPM, from 40.76% in FY17E to 43.07% in FY18F. Exhibit 04. Portion of COGS 1Q16 Exhibit 05. Portion of COGS 1Q17 24,10% Manufacturing Overhead 9,20% Direct Labor 20,50% Manufacturing Overhead 11,30% Direct Labor 24,20% Raw Materials Used 42,60% Fuel and Power 22,80% Raw and Materials Used 45,40% Fuel and Power Source Company Source Company Exhibit 06. Coal Price (US$/barrel) Exhibit 07. Power Price (Rp/KWh Coal Price 124,35 110,2 89,95 81,55 66,75 47,45 90,2 70,11 64,34 62,1 62,4 660,99 695,46 709,91 Power Price 796,35 977, , , FY 2011FY 2012FY 2013FY 2014FY 2015FY 2016FY 2017E 2018F 2019F 2020F 2010FY 2011FY 2012FY 2013FY 2014FY 2015FY 2016FY Source Bloomberg Source Indonesia Power Page 3

4 Maintaining Debt-Free Strategy with DER of 0.41%/0.38% in FY17E/FY18F The Company consistently manages almost a debt-free strategy, in order to grow sustainably in the long run. The Company is the lowest, both in DER and DAR, with only 0.41% and 0.36% among its peers in FY16. On the other hand, its peers are continuously leveraging up their DER at an average of 61.42% in FY16. We continue to like INTP as the most conservative company with only 0.41%/0.38% of DER in FY17E/FY18F. Exhibit 08. DER of INTP and Competitors 2011FY 2012FY 2013FY 2014FY 2015FY 2016FY SMCB 20.07% 20.43% 42.39% 63.18% 72.92% % SMGR 12.81% 21.20% 18.72% 15.65% 14.58% 20.48% INTP 1.12% 0.83% 0.70% 0.51% 0.51% 0.41% Source Company, Bloomberg Exhibit 09. DAR of INTP and Competitors 2011FY 2012FY 2013FY 2014FY 2015FY 2016FY SMCB 13.80% 14.13% 24.97% 31.53% 35.47% 41.74% SMGR 9.52% 14.49% 13.26% 11.40% 10.49% 14.16% INTP 0.97% 0.71% 0.60% 0.43% 0.44% 0.36% Source Company, Bloomberg...INTP Can Still Survive in the Hunger Game Mode In the midst of a "hunger game" within the domestic cement sector, INTP can survive and hopefully still deliver positive values to its shareholders, supported by the implementation of a zero leverage system so the Company will not be burdened by interest costs. In a diminishing trend of revenue in 1Q17, we believe that the Company can still maintain its profitability ratio with slightly lower Operating Profit Margin (OPM), from 23.72% in FY16 to 23.57% in FY17E. Exhibit 10. INTP s Margin of Gross Profit, Operating Profit, and Net Profit Gross Profit Margin Operating Profit Margin Net Profit Margin 45,54% 44,44% 41,22% 40,76% 43,07% 30,01% 26,46% 28,41% 24,48% 25,19% 23,72% 23,57% 20,79% 25,86% 22,52% 2014FY 2015FY 2016FY 2017E 2018 F Source Company, MNCS Estimate Page 4

5 New Rajawali as a Fighting Marque INTP has recently introduced a new product with "Rajawali Cement" Brand to hold its market share against the emergence of new competitors. It is expected to be more competitive than "Tiga Roda", a well-known brand of The Company. It offers a cheaper price than "Tiga Roda" and is aimed against new cement brands which play in the Red Ocean market. Meanwhile "Rajawali cement" is used to attract consumers who previously switched from "Tiga Roda" because of cheaper prices elsewhere. With a good brand image of "Tiga Roda" coupled with the presence of more inexpensive Rajawali Cement, we consider the future market share of the Company as secured and unlikely to shrink. Exhibit 11. INTP s Products Source Company Further Price Decline Will be Potentially Limited... The total supply of cement in Indonesia has increased since 2015, thanks to the emergence of new cement producers. New players in the cement market are focused on gaining market share by selling cement at a bargain price or even below market price, leading to a price war. Thus many new producers put aside their profit margin and focus on their market share. To face the price war roiling the market, INTP inevitably also slashed its selling price of cement to maintain its market share. Currently, we assess the national cement price as already at a very low level, squeezing down income and hitting profit margins as well. We estimate that if the national cement price falls any lower, then cement producers with leverage will gain very little profit and may even incur losses. We assess the national cement price as now at its lowest point, so price competition in the market has the potential to subside, because new players will not be able to sell their cement any cheaper. Now is time for new producers to raise cement prices to increase profits, because they have gained market share. We estimate the ASP will potentially grow by 0%/3% in FY17E/ FY18F. Exhibit 12. ASP of INTP (Rp/ton) INTP's ASP FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17E FY18F FY19F Source Company, MNCS Estimate Page 5

6 ...Then Demand Starts to Pick Up In recent years, growth of the cement supply has been much higher than growth of consumption, which has actually declined in the last five years, revealing a downward trend. In 1Q17, national cement consumption slowed to million tons. However, in April and May 2017, it picked up, especially for bulk cement. The Company's cement sales also increased, especially bulk cement sales, which rose in May 2017 by 17.87% IBU; bagged cement increased by 14.64% IBU, while total sales volume of Company cement was up 15.38% MoM. National cement bulk consumption between January-May 2017 increased by 7.78% YoY, compared to bagged cement, rising by 2.59% YoY. Increased national bulk consumption is supported by growing infrastructure. We expect the increase in national bulk cement consumption will continue until the end of 2017, along with continuing infrastructure projects that are now the government's focus in building Indonesia. Over the long run, we see national cement consumption as potentially increasing, along with the rise of the property sector. Rising national demand will boost the national cement selling price, and this will affect both the Company's cement selling price and its revenue. Although the Company's sales volume shows no increase, if the Company's cement selling price increases, Company revenue will also rise. Exhibit 13. Demand 5% CAGR vs Domestic Supply Demand 5% CAGR Domestic Supply Source Indonesia Cement Association Exhibit 14. Bulk Cement Sales if INTP vs Bulk Domestic Consumption Exhibit 15. Bag Cement Sales of INTP vs Bag Domestic Consumption INTP's Bulk Cement Domestic Consumption INTP's Bag Cement Sales Domestic Consumption % MoM % MoM Jan-17 Feb-17 Mar-17 Apr-17 Mei-17 Jan-17 Feb-17 Mar-17 Apr-17 Mei-17 Source Company, Indonesia Cement Association Source Company, Indonesia Cement Association Page 6

7 Oversupply Issue Leads into Normalization in Utilization Rate with Average of 68% in the Next Two Years In 2012 and 2013, the Company's utilization rate reached its highest level of 95.70% %. However, following that, the utilization rate gradually weakened, until in 2016 it only recorded 65.86%. Until now, INTP has not been able to produce cement at maximum volume, with constrained market conditions. For the next several years, we expect that it will be difficult to adjust the Company's utilization rate back to an optimum level, for as long as the oversupply continues. This is the result of old cement producers increasing production capacity, coupled with the emergence of producers, scattered throughout the Indonesian archipelago, one of them in the home market of the Company. Exhibit 16. INTP s Sales Volume and Utilization Sales Volume Utilization 24,00 22,00 20,00 18,00 16,00 14,00 12,00 10,00 69,35% 82,80% 96,24% 95,70% 90,24%84,39% 65,86% 68,70% 69% 120,00% 100,00% 80,00% 60,00% 40,00% 20,00% 0,00% Source Company, MNCS Estimate Exhibit 17. Domestic Demand and Utilization Demand Growth Utilization Domestic Demand 100,00% 90,00% 80,00% 70,00% 60,00% 50,00% 40,00% 30,00% 20,00% 10,00% 0,00% 17,65% 14,58% 6,25% 7,99% 5,45% 3,28% 3,51% 5,00% 0,00% 2010FY 2011FY 2012FY 2013FY 2014FY 2015FY 2016FY 2017E 2018F Source Indonesia Cement Association Page 7

8 Tighter Competition Still Remains the Main Concern... There are currently 15 cement producers, with a total of 19 brands of cement sold in the marketplace. The emergence of new cement producers, especially in West Java, has caused intense competition in the Company's home market (West Java). Tighter competition in the home market has also tended to undermine the Company's market share, which originally stood at 46.98%, slipping from Jan-May 2016 to 46.32% in Jan-May 2017 in West Java. In DKI Jakarta, the Company's market share fell 11.72% and decreased 2.13% in Banten. Exhibit 18. INTP s Market Share (YoY) Jan-Mei 2015 Jan-Mei 2016 Jan-Mei ,78% 50,12% 45,29% 45,57% 44,43% 44,38% 47,72% 47,93% 46,39% 46,32% 41,92% 40,54% Source Company Jakarta Banten West Java WESTERN JAVA The Company's market share is further undermined by the slowing growth of cement demand, especially in home market areas. The Company's sales volume growth in West Java (DKI Jakarta, Banten, and West Java) is no higher than sales volume growth in other regions. For the period of Jan-May 2017, sales volume in West Java slowed to 3.14 million tons, while in DKI Jakarta its sales volume decreased 13.24% to 791,677 tons. Demand is limited, in the midst of intense competition in the home market of the Company, resulting in difficulty in any more price hikes for cement. Exhibit 19. INTP s Cement Sales by Region Jan-Mar2016 Jan-Mar2017 Growth Jakarta 538, , % Banten 335, , % West Java 1,011,367 1,069, % Central Java 575, , % Yogyakarta 43,482 42, % East Java 262, , % TOTAL JAVA 2,766,821 2,760, % WESTERN JAVA 1,885,683 1,850, % Sumatera 403, , % Borneo 257, , % Celebes 188,331 89, % Nusa Tenggara 256, , % East Indonesia 69,191 65, % Outer Java Islands 1,175,055 1,017, % TOTAL INDONESIA 3,941,876 3,777, % Source Company Page 8

9 ...Followed by Slower Expansion of The Company Tight competition in West Java has become an obstacle for the Company to maintain its revenue; thus it is forced to expand its plants in other areas to defend market share in those regions. However, over the next five years, the Company will not build any new factories, and capital expenditure for 2018 will be unchanged from this year's capex of Rp1.70 trillion. That means the Company does not have any definite plan to expand through new plant construction outside its home market. The appearance of new competitors in the community has proved a barrier to any expansion of the Company's cement distribution. However, if it fails to expand it will be difficult to increase its market share. Going forward, as demand for cement improves and cement demand rises to exceed maximum production limits, the Company may lose market share, if it is unable to meet existing demand; then other cement producers who continue to increase their production capacity will move in to take over the Company's historical market share. Exhibit 20. INTP s Capacity Production (Ton/Year) INTP's Capacity Production (Ton/Year) 30,00 25,00 20,00 18,60 20,50 24,90 15,00 10,00 5,00 - Source Company, MNCS Estimate Valuation and Recommendation HOLD with TP Rp17,400 We believe demand for INTP cement will increase moderately and the down trend of ASP will be limited, supported by higher infrastructure. However the main concern of oversupply is still intact. Thus we initiate a HOLD recommendation with target price (TP) of RP17,400 per share for next 12 months, indicating -0.71% potential downside from current share price at Rp17,525 (as of July 18th 2017). The calculation of TP is based on a DCF model, using 12.97% of WACC, 1.40 of Beta and 4.37% of risk premium. Our valuation implies 19.70x/17.49x of PE17E/PE18F. Page 9

10 Exhibit 21. INTP s PE Ratio Band PE_RATIO MEAN STD-1 STD-2 STD+1 STD Jul-14 Sep-14 Nov-14 Jan-15 Mar-15 May-15 Jul-15 Sep-15 Nov-15 Jan-16 Mar-16 May-16 Jul-16 Sep-16 Nov-16 Jan-17 Mar-17 May-17 Jul-17 Page 10

11 Company Update MNC Sekuritas Research Division Exhibit 21. Financial Projection Income Statement IDR Billion 2014FY 2015FY 2016FY 2017E 2018F Revenues 19, , , , , COGS (10, (9,888.92) (9,030.43) (9,263.52) (9,262.39) Gross Profit 9, , , , , Operating Expenses (3,226.45) (2,879.72) (2,713.87) (2,728.94) (2,843.23) Others - net Operating Profit 6, , , , , Other Income (Expenses) Finance Income 1, Final Tax on Interest Income (202.88) (147.31) (123.29) (123.70) (125.58) Finance Cost (21.53) (26.54) (11.82) (10.72) (10.72) Others Profit Before Tax 6, , , , , Final Tax Expense (0.84) (0.54) (0.75) (0.75) (0.85) Tax Expense (1,521.22) (1,287.92) (275.31) (934.47) (1,052.99) Income Before X/O 5, , , , , Non-controlling Interest Net Income 5, , , , , EPS (full amount) 1, , , Balance Sheet IDR Billion 2014FY 2015FY 2016FY 2017E 2018F Current Assets 16, , , , , Cash and Cash Equivalents 11, , , , , Trade Receivable 2, , , , , Inventories 1, , , , , Others current Assets Non-Current Assets 12, , , , , Fix Asset - net 12, , , , , Other Non-Current Assets , , , TOTAL ASSETS 28, , , , , Current Liabilities 3, , , , , Short-term Bank Loans Trade payable 1, , , , , Other current liabilities 2, , , , , Current maturities of longterm liabilities Non-Current Liabilities 1, , Long-term Liabilities - Net Other Non-Current Liabilities , TOTAL EQUITY 24, , , , , Cash Flow IDR Billion 2014FY 2015FY 2016FY 2017E 2018F CFO Total 5, , , , , Net Income 5, , , , , Depreciation , , Change in Working Capital (25.81) Change in others (679.75) (365.13) (1,386.47) - - CFI Total (3,395.83) (2,696.66) (973.96) (1,700.00) (1,615.00) Change in ST Investment Change in LT Investment (51.39) 5.99 (5.92) - - Capex (3,598.53) (2,528.02) (1,757.22) (1,700.00) (1,615.00) Change in Others (174.63) CFF Total (3,365.10) (4,993.31) (1,547.21) (3,137.13) (1,625.85) Change in ST debt (18.15) Change in LT debt (16.74) (14.94) (23.97) - - Equity financing Dividend payment (3,313.11) (4,969.66) (1,527.71) (3,421.36) (1,625.85) Others (17.10) (19.71) (5.45) Net Cash Increase (1,416.33) (2,640.86) 1, , Closing Balance 11, , , , , Ratios IDR Billion 2014FY 2015FY 2016FY 2017E 2018F Growth Sales 6.98% % % 1.80% 4.05% Gross Profit 5.22% % % 0.68% 9.94% Operating Profit -1.04% % % 1.14% 14.14% Profit Before Tax 3.34% % % 0.98% 12.68% Net Profit 5.59% % % % 12.68% Gross Profit Margin 45.54% 44.44% 41.22% 40.76% 43.07% Operating Profit Margin 30.01% 28.41% 23.72% 23.57% 25.86% Profit Before Tax Margin 34.08% 31.72% 26.99% 26.77% 29.00% Net Profit Margin 26.46% 24.48% 25.19% 20.79% 22.52% ROE 21.53% 18.25% 14.81% 12.39% 12.95% Liquidity & Solvency Net Debt/EBITDA Debt/Equity Turnover Receiveable (Days) Inventory (Days) Payable (Days) Source Company, MNCS Estimate Page 11

12 Company Update MNC Sekuritas Research Division MNC SEKURITAS RESEARCH TEAM Thendra Crisnanda Head of Institutional Research, Strategy (021) ext Victoria Venny Telco, Infrastructure, Logistics (021) ext Rr. Nurulita Harwaningrum Banking (021) ext Edwin J. Sebayang Head of Retail Research, Technical, Auto, Mining (021) ext Yosua Zisokhi Plantation, Cement, Poultry, Cigarette (021) ext Krestanti Nugrahane Research Associate (021) ext I Made Adesaputra Head of Fixed Income Research imade.saputra@mncgroup.com (021) ext Rheza Dewangga Nugraha Junior Analyst of Fixed Income rheza.nugraha@mncgroup.com (021) ext Sukisnawati Puspitasari Research Associate sukisnawati.sari@mncgroup.com (021) ext Gilang Anindito Property, Construction gilang.dhirobroto@mncgroup.com (021) ext MNC SEKURITAS EQUITY SALES TEAM Benny Narendro Head of Institutional Client benny.narendro@mncgroup.com (021) ext Sri Laksamanawati Head Marketing of Institutional Client sri.laksamanawati@mncgroup.com (021) ext Nesya Kharismawati Equity Sales Manager nesya.kharismawati@mncgroup.com (021) ext Harun Nurrosyid Manager Equity Trader harun.nurrosyid@mncgroup.com (021) ext Okhy Ibrahim Manager Equity Trader okhy.ibrahim@mncgroup.com (021) ext Anastasia Pratiwi Manager Equity Institution anastasia.pratiwi@mncgroup.com (021) ext Agus Eko Santoso Manager Equity Trader agus.santoso@mncgroup.com (021) ext Gilang Ramadhan Manager Equity Trader gilang.ramadhan@mncgroup.com (021) ext Iman Hadimulya, ST Manager Equity Institution iman.hadimulya@mncgroup.com (021) ext MNC Research Investment Ratings Guidance BUY Share price may exceed 10% over the next 12 months HOLD Share price may fall within the range of +/- 10% of the next 12 months SELL Share price may fall by more than 10% over the next 12 months Not Rated Stock is not within regular research coverage PT MNC SEKURITAS MNC Financial Center Lt Jl. Kebon Sirih No , Jakarta Pusat Telp (021) Fax (021) Call Center Disclaimer This research report has been issued by PT MNC Sekuritas, It may not be reproduced or further distributed or published, in whole or in part, for any purpose. PT MNC Sekuritas has based this document on information obtained from sources it believes to be reliable but which it has not independently verified; PT MNC Sekuritas makes no guarantee, representation or warranty and accepts no responsibility to liability as to its accuracy or completeness. Expression of opinion herein are those of the research department only and are subject to change without notice. This document is not and should not be construed as an offer or the solicitation of an offer to purchase or subscribe or sell any investment. PT MNC Sekuritas and its affiliates and/or their offices, director and employees may own or have positions in any investment mentioned herein or any investment related thereto and may from time to time add to or dispose of any such investment. PT MNC Sekuritas and its affiliates may act as market maker or have assumed an underwriting position in the securities of companies discusses herein (or investment related thereto) and may sell them to or buy them from customers on a principal basis and may also perform or seek to perform investment banking or underwriting services for or relating to those companies. Page 12