2015 Compendiumasiaresearch.daiwacm.com/.../20141021id_2015Compendium.pdf · 2014-10-29 · 2015...

2015 Compendium

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2015 Compendium

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2015 Compendium

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TABLE OF CONTENTS

MARKET STRATEGY 5-63 Macro environment…………………………………………………………………….………Domestic economy……………………………………………………………………………… 2015 state budget……………………………………………………………………………. Fuel price hike…………………………………………………………………………………… BI rate…………….…………………………………………………………………………………Indonesian markets……………………………………………………………………………Indonesia equity and IDR performance…………………………………………………

6121617192122

Local politics…………………………………………………………………………Stocks & sectors………………………………………………………………… Various policies………..………………………………………………………… Sector performances………………………………………………………… 4Q14F results preview……………………………………………………… IDR sensitivity….………………………………………………………………… Market risk…………………………………………………………………………

24343640444647

Top picks and index target………………………………………………… 2015 technical perspective……………………………………………… IPOs in 2014-2015…………………………………………………………… Long term market view……………………………………………………… Macroeconomics factors…………………………………………………… Macroeconomics assumptions………………………………….………

48 49 51 52 53 63

SECTOR 65-95 Overweight Consumer - staples…………………………………………………………………………… Telecommunications…………………………………………………………………………Neutral Banks………………………………………………………………………………………………… Cement……………………………………………………………………………………………… Construction and toll road…………………………………………………………………

7892

687074

Neutral Consumer - discretionary…………………………………………………… Industrial estates……………………………………………………………… Metal mining……………………………………………………………………… Oil & gas……………………………………………………………………………… Plantations………………………………………………………………………… Poultry…………………………………………………………………………………

768082848688

Neutral Property……………………………………………………………………………… Transportation……………………………………………………………………Underweight Automotive-related……………..………………………………..………… Coal & mining contracting…………………………………………………

90 94

66 72

COMPANY 97-283 Aviation Cardig Aero Services………………………………………………………………………… Garuda Indonesia………………………………………………………………………………Automotive related Astra International……………………………………………………………………….…… Gajah Tunggal…………………………………………………………………………………… Indomobil Sukses Internasional…………………………………………………………Banks Bank Bukopin……………………………………………………………………………………… Bank Central Asia……………………………………………………………………………… Bank Danamon…………………………………………………………………………………… Bank Mandiri……………………………………………………………………………………… Bank Negara Indonesia……………………………………………………………………… Bank Pembangunan Daerah Jabar Banten……………………………………… Bank Pembangunan Daerah Jawa Timur………………………………………… Bank Rakyat Indonesia……………………………………………………………………… Bank Tabungan Negara……………………………………………………………………… Bank Tabungan Pensiunan Nasional…………………………………………………Cement Holcim Indonesia……………………………………………………………………………… Indocement Tunggal Prakarsa…………………………………………………………… Semen Baturaja………………………………………………………………………………… Semen Indonesia………………………………………………………………………………Coal & mining contracting Adaro Energy……………………………………………………………………………………… Bumi Resources………………………………………………………………………………… Harum Energy…………………………………………………………………………………… Indo Tambangraya Megah………………………………………………………………… United Tractors…………………………………………………………………………………… Tambang Batubara Bukit Asam…………………………………………………………Construction & toll roads Adhi Karya………………………………………………………………………………………… Citra Marga Nusaphala Persada………………………………………………………… Jasa Marga………………………………………………………………………………………… Krakatau Steel…………………………………………………………………………………… Pembangunan Perumahan…………………………………………………………………

148164

116162182

120122124130132126128134136138

172176238240

100142168174270254

102156190198226

Total Bangun Persada………………………………………………………… Waskita Karya…………………………………………………………………… Wijaya Karya……………………………………………………………………… Wika Karya Beton ………………………………………………………………Consumer - Discretionary Ace Hardware Indonesia…………………………………………………… Hero Supermarket……………………………………………………………… Matahari Department Store……………………………………………… Matahari Putra Prima………………………………………………………… Mayora Indah……………………………………………………………………… Media Nusantara Citra……………………………………………………… Mitra Adiperkasa………………………………………………………………… Multipolar…………………………………………………………………………… Ramayana Lestari Sentosa………………………………………………… Supra Boga Lestari…………………………………………………………… Surya Citra Media………………………………………………………………Consumer - Staples Gudang Garam…………………………………………………………………… Indofood CBP Sukses Makmur…………………………………………… Indofood Sukses Makmur…………………………………………………… Kalbe Farma……………………………………………………………………… Kimia Farma……………………………………………………………………… Nippon Indosari Corpindo………………………………………………… Sido Muncul………………………………………………………………………… Tempo Scan Pacific…………………………………………………………… Unilever Indonesia………………………………………………………………Industrial estates Bekasi Fajar Industrial Estate…………………………………………… Kawasan Industri Jababeka……………………………………………… Lippo Cikarang…………………………………………………………………… Surya Semesta Internusa…………………………………………………Manufacturing Sri Rejeki Isman…………………………………………………………………Metal mining Aneka Tambang………………………………………………………………… J Resources Asia Pacific……………………………………………………… Timah…………………………………………………………………………………

264274276278

98170208210212216218220230248250

166178180192196222242258268

140194200252

244

112186260

Vale Indonesia……………………………………………………………………Oil & gas AKR Corporindo………………………………………………………………… Medco Energy……………………………………………….…………………… Perusahaan Gas Negara………………………………………………….… Wintermar Offshore Marine………………………………………………Plantations Astra Agro Lestari……………………………………………………….……… Austindo Nusantara Jaya…………………………………………...……. BW Plantation…………………………………………………………….……… London Sumatra Indonesia……………………………………….……… Salim Ivomas Pratama……………………………………………..……… Sampoerna Agro……………………………………………………….……… Tunas Baru Lampung…………………..……………………………………Poultry Charoen Pokphand Indonesia…………………………………………… Japfa Comfeed Indonesia…………………………………………...…… Malindo Feedmill…………………………………………………………………Property Agung Podomoro Land……………………………………………………… Alam Sutera Realty……………………………………………………..…… Bumi Serpong Damai………………………………………………………… Ciputra Development………………………………………………………… Ciputra Property………………………………………………………………… Lippo Karawaci…………………………………………………………………… Pakuwon Jati……………………………………………………………………… Summarecon Agung……………………………………………………………Telecommunications Erajaya Swasembada………………………………………………………… Indosat………………………………………………………………………………… Sarana Menara Nusantara………………………………………………… Telekomunikasi Indonesia………………………………………………… Tiphone Mobile Indonesia………………………………………………… XL Axiata…………………………………………………………………………..Transportation Adi Sarana Armada…………………………………………………………… Express Transindo………………………………………………………………

272

108 214 228 280

114 118 146 204 232 234 266

150 188 206

106 110 144 152 154 202 224 246

160 184 236 256 262 282

104 158

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MARKET STRATEGY

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Macro environment

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Asian economies: Impact on Indonesia From China, we expect little support due to its weak exports and

expected lower GDP growth.

On a more positive note, Bank of Japan’s quantitative easing program has substantially weakened the JPY against the USD, allowing for some export improvements ahead.

Meanwhile, India’s economy is still looking for structural improvement as its widening current account deficit has worsened the INR movements against the USD.

China’s real GDP and export growths, 2005-2015F

7.0

7.1

-20.0

-10.0

0.0

10.0

20.0

30.0

5.0

6.0

7.0

8.0

9.0

10.0

11.0

12.0

13.0

14.0

15.0

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014F 2015F

(%)(%)

Real GDP growth Export growth (RHS)

Source: CEIC

India’s CAD & Indian Rupee

2.0

62.0

35.0

40.0

45.0

50.0

55.0

60.0

65.0

70.00.0

1.0

2.0

3.0

4.0

5.0

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014F 2015F

(Rupee)(%)

Current account as % of GDP Indian rupee (RHS)Source: CEIC, Bloomberg

Quantitative easing & JPY spot currency

102.79

70

75

80

85

90

95

100

105

110

(YEN/USD)

29-May-14 BoJ maintained government

bonds buying at around JPY72tn-96tn p.a. (JPY6tn-8tn

per month)18-Apr-13

BoJ enlarged government bonds purchases significantly to approximately JPY84tn p.a.

(JPY7tn per month)

18-Mar-09BoJ increased Japan’s

government bonds purchases to JPY21.6tn p.a.

from JPY4.8tn p.a.

Source: CEIC, Bloomberg

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European economies: Still weak The European Central Bank (ECB) has further cut its benchmark rate

to a record low of 0.15% to boost domestic demand ahead. However, it will require more time to deliver a sizeable impact to the CPI.

Apart from lowering its interest rate, ECB, similar to the Fed, has also released several packages of bond purchasing programs, helping to improve liquidity in the financial market.

Nonetheless, the impact of such a policy has only provided a limited impact to the Eurozone’s unemployment rates.

CPI & ECB benchmark rate, Oct 2012-August 2014

0.15

0.40.1

0.6

1.1

1.6

2.1

2.6

0.0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

Oct-12 Dec-12 Feb-13 Apr-13 Jun-13 Aug-13 Oct-13 Dec-13 Feb-14 Apr-14 Jun-14 Aug-14

(%)(%)

ECB Rate CPI (%) (RHS)

Source: CEIC

Quantitative easing & EURO STOXX 50 index

1,500.0

1,700.0

1,900.0

2,100.0

2,300.0

2,500.0

2,700.0

2,900.0

3,100.0

3,300.0

3,500.0

7-May-09

ECB started to enchance credit support though Long-

term Refinancing Operations (LTRO)

21-Dec-11ECB released LTRO worth EUR489.2bn to 523 credit

institutions, with an additional maturity of 3-year

07-Mar-12ECB purchased outright

bond totalled EUR217.8bn under Securities Markets

Program (SPM)

29-Feb-12 ECB unveiled another

LTRO program, injecting around

EUR529.5 bn to 800 credit institutions

04-Sept-14ECB will purchase

broad portfolio from non-financial private sector worth around

EUR500bn

Source: Bloomberg, ECB

Unemployment rate in German and PIGS Countries

6.7

13.9

11.5

26.0

24.5

0

5

10

15

20

25

30

1Q05 4Q05 3Q06 2Q07 1Q08 4Q08 3Q09 2Q10 1Q11 4Q11 3Q12 2Q13 1Q14

(%)

German Portugal Ireland Greece Spain


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US economy: Still some “window” for Indonesia Given deflationary pressures from China and European countries, the

Fed rate hike is likely to occur in 3Q15, allowing Indonesia a few months to prepare and improve its CAD.

If we exclude the 1Q14 bottom level, US GDP growth has gradually risen to above the 4% level despite relatively benign inflationary pressure.

Overall, relatively low CPI pressure has restrained the Fed to aggressively shift its monetary bias to be tighter. The 10-year T-notes yield has remained subdued with effective Fed fund rate at below 0.1%.

Unemployment rate & ADP employment, Mar 2010 – Sep 2014

5.9

212.7

4.0

5.0

6.0

7.0

8.0

9.0

10.0

11.0

12.0

20.0

70.0

120.0

170.0

220.0

270.0

Mar-10 Sep-10 Mar-11 Sep-11 Mar-12 Sep-12 Mar-13 Sep-13 Mar-14 Sep-14

('000) (%)

Unemployment rate (RHS) ADP employment index


Fed fund effective rate & 10-year yield, Mar 2011- Sep 2014

0.09

2.45

0.05

0.07

0.09

0.11

0.13

0.15

0.17

1.3

1.8

2.3

2.8

3.3

3.8

May-11 Sep-11 Jan-12 May-12 Sep-12 Jan-13 May-13 Sep-13 Jan-14 May-14 Sep-14

(%)(%)

Fed fund effective rate (RHS) 10-year yield


GDP growth & CPI, 2Q10-2Q14

4.2

2.1

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

-2.0

-1.0

0.0

1.0

2.0

3.0

4.0

5.0

2Q10 4Q10 2Q11 4Q11 2Q12 4Q12 2Q13 4Q13 2Q14

(%)(%)

GDP growth (LHS) CPI (RHS)


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Unexciting manufacturing and commodity markets Business activities in Europe, Australia and China have continued to

weaken as shown by the Purchasing Managers Index. Meanwhile, the real sector in Japan has remained flat.

Slow global demand has further lowered commodity prices including oil and metals.

Weakened commodity prices have also kept the Baltic dry index at below average, compared to the performance

Purchasing Managers Index Country Nov-13 Dec-13 May-14 Jun-14 Jul-14 Aug-14 Sept-14 America

Brazil 49.7 50.5 48.8 48.7 49.1 50.2 49.3 Canada 53.7 46.3 52.2 53.5 54.3 54.8 53.5 United States 57 56.5 56.4 57.3 55.8 57.9 57.5 Europe

Italy 51.4 53.3 53.2 52.6 51.9 49.8 50.7 France 47.1 47.0 49.6 48.2 47.8 48.8 48.8 Germany 54.2 54.3 52.3 52.0 52.4 50.3 49.9 Euro zone 51.6 52.7 52.2 51.8 51.8 50.5 50.3 Asia Pacific

Australia 47.7 47.6 49.2 48.9 50.7 47.3 46.5 China 50.8 50.5 49.4 50.7 51.7 50.5 50.2 Japan 55.1 55.2 49.9 51.5 50.5 51.7 51.7 Indonesia 50.3 50.9 52.4 52.7 52.7 49.5 50.7 Singapore 50.8 49.7 51.1 50.5 51.5 49.7 50.5 South Korea* 83.0 78.0 81.0 78.0 75.0 78.0 78.0 Source: CEIC, Bloomberg

Brent oil and Bloomberg’s metal index price

160

180

200

220

240

260

280

300

70

80

90

100

110

120

130

140

1/9/12 5/9/12 9/9/12 1/9/13 5/9/13 9/9/13 1/9/14 5/9/14 9/9/14

(points)(USD/bbl)

Brent oil price Metal price index (RHS)

Source: Bloomberg

Baltic dry index

0

2000

4000

6000

8000

10000

12000

14000

Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14

Average: 3,192

Oct-14 Source: Bloomberg

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GDP revisions: Worsening 2015 outlook The IMF has cut world output for 2015 on the back of sluggishness in

the Euro zone, Japan and emerging markets.

For China, the World Bank has lowered the country’s economic outlook in 2015 to 6.9%, below the 7% threshold.

Indonesia’s 2014-2015 GDP growths have been lowered by the IMF and ADB, which we believe could still see further downside as they have not factored in the upcoming fuel price hike in their estimates.

International Monetary Fund projections

Countries 2012 2013 2014F 2015F

Old New Change Old New Change

World Output 3.4 3.3 3.4 3.3 -0.1 4.0 3.8 -0.2

United States 2.3 2.2 1.7 2.2 0.5 3.1 3.1 0.0

Canada 1.7 2.0 2.2 2.3 0.1 2.3 2.4 0.1

Brazil 1.0 2.5 0.4 0.3 -0.1 2.0 1.4 -0.6

Mexico 4.0 1.1 2.4 2.4 0.0 3.4 3.5 0.1

Europe -0.3 0.2 1.6 1.4 -0.2 1.9 1.8 -0.1

Euro zone -0.7 -0.4 1.1 0.8 -0.3 1.5 1.3 -0.2

Germany 0.9 0.5 1.9 1.4 -0.5 1.7 1.5 -0.2

France 0.3 0.3 0.8 0.4 -0.4 1.5 1.0 -0.5

Italy -2.4 -1.9 0.3 -0.2 -0.5 1.1 0.8 -0.3

Spain -1.6 -1.2 1.4 1.3 -0.1 1.8 1.7 -0.1

UK 0.3 1.7 3.2 3.2 0.0 2.7 2.7 0.0

China 7.7 7.7 7.4 7.4 0.0 7.1 7.1 0.0

India 4.7 5.0 5.8 5.6 -0.2 6.4 6.4 0.0

Japan 1.5 1.5 1.6 0.9 -0.7 1.0 0.8 -0.2

Indonesia 6.3 5.8 5.5 5.2 -0.3 5.8 5.5 -0.3 Source: International Monetary Fund

Asian Development Bank estimates

Countries 2012 20132014F 2015F


China 7.7 7.7 7.5 7.5 0.0 7.4 7.4 0.0

India 4.7 5.0 5.5 5.5 0.0 6.0 6.3 0.3

Indonesia 6.3 5.8 5.7 5.3 -0.4 6.0 5.8 -0.2

Malaysia 5.6 4.7 5.1 5.7 0.6 5.0 5.3 0.3

Thailand 6.5 2.9 2.9 1.6 -1.3 4.5 4.5 0.0

Philippines 6.8 7.2 6.4 6.2 -0.2 6.7 6.4 -0.3

Vietnam 5.2 5.4 5.6 5.5 -0.1 5.8 5.7 -0.1 Source: Asian Development Bank

World Bank forecasts

Countries 2012 20132014F 2015F


China 7.7 7.7 7.1 6.9 -0.2 7.1 6.9 -0.2

India 4.7 5.0 - - - - - -

Indonesia 6.3 5.8 5.3 5.2 -0.1 5.6 5.6 0.0

Malaysia 5.6 4.7 4.1 4.9 0.8 5.0 4.9 -0.1

Thailand 6.5 2.9 6.6 6.4 -0.2 6.9 6.7 -0.2

Philippines 6.8 7.2 3.0 1.5 -1.5 4.5 3.5 -1.0

Vietnam 5.2 5.4 5.5 5.4 -0.1 5.6 5.5 -0.1

Brazil 1.0 2.5 - - - 2.0 1.4 -0.6 Source: World Bank

2015 Compendium

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Domestic economy

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Indonesia: Still relatively attractive in growth terms With growth becoming a scarce commodity in emerging markets,

Indonesia’s 2015 expected GDP growth of 5.5% (consensus) remains one of the highest.

Even based on our conservative 4.9% GDP growth next year, Indonesia would still remain as the fourth highest next to India’s 5.2%. This is after assuming a 31% hike in the fuel price (IDR2,000/liter) in 1Q15.

Among the BRICS-MINT countries, the Indonesian Rupiah’s depreciation against the USD ytd has been the smallest, apart from the Indian Rupee.

2015 GDP comparison in BRICS-MINT countries

7.0 6.9

5.5 5.24.9

3.8 3.5

2.6

1.3 1.0

0

1

2

3

4

5

6

7

8

China Nigeria Indonesia* India Indonesia Mexico Turkey South Africa Brazil Russia

(%)

Source: Bloomberg Median Survey, Bahana * based on consensus

Ytd currency movements against the USD in BRICS-MINT

(20.5)

(7.6)(6.1)

(3.6)(3.0)

(2.2)(1.4) (0.1)

0.1

(21)

(17)

(13)

(9)

(5)

(1)

3Russia

SouthAfrica Turkey Brazil Mexico Nigeria China Indonesia India

(%)

Source: Statistics Indonesia, CEIC

Real GDP growth, 2008-2016F*

2,0822,179

2,314

2,465

2,619

2,7702,914

3,058

3,219

6.01

4.63

6.22 6.49 6.265.78

5.20 4.94 5.25

0

1

2

3

4

5

6

7

2,000

2,200

2,400

2,600

2,800

3,000

3,200

3,400

3,600

3,800

2008 2009 2010 2011 2012 2013 2014F 2015F 2016F

(%)(IDRt)

Real GDP Growth (RHS)

Source: Bloomberg, *assuming 31% subsidized fuel price hike in 1Q15

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14

Austerity measures required in 2015 Indonesia’s budget deficit is already close to the 2.5% limit of the

central government portion, and given Jokowi’s plan not to alter the fiscal deficit law, government spending would be limited ahead.

Thus, in order for the new government to achieve its ambitious infrastructure-related spending, fuel subsidies must be cut. Note that the energy subsidy is more than IDR300tn or higher than 3% of GDP.

This coupled with the Fed rate hike means inflationary pressure as well as a higher BI rate which would slow down the economy.

Fiscal deficit, 2008-2015F

89

47

84

153

212

242 245

1.6

0.7

1.1

1.9

2.32.4

2.2

0.0

0.5

1.0

1.5

2.0

2.5

40

90

140

190

240

290

2009 2010 2011 2012 2013 2014 2015F

(%) (IDRt)

Budget deficit (RHS) Budget deficit (% of GDP) Source: Ministry of Finance

Energy subsidy amount and fuel consumption

95

140

256

307 310

350344

37

38

40

45

46 46

48

35

37

39

41

43

45

47

49

51

53

50

80

110

140

170

200

230

260

290

320

350

380

2009 2010 2011 2012 2013 2014 2015F

(mn kl) (IDRt)

Energy subsidy (RHS) Subsidized fuel consumption (mn kiloliters)

Source: Ministry of Finance

BI rate, fuel price, and inflation

5.26 6.72

2.83

9.25

5.67

6.50

3.79

5.756.7

4.53

4,500 4,500 4,500

6,500

4,3004,300 4,300

4,500

4,5005,500

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

0

4

8

12

16

20

Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14

(%) (IDR/liter)

BI rate Inflation y-y Gasoline price (RS) Diesel price (RS)

Jul-14


2015 Compendium

15

Lowering growth by design to ease CAD Indonesia’s exports comprise mainly (some 60%) of commodities, and

these have been hurt by the recent ore export ban.

Meanwhile, commodity prices have been declining, exacerbating the export condition.

Given Indonesia’s export problem is rather structural in nature, the central bank has no choice but to lower imports through tight monetary policy to improve the country’s CAD. Note that in spite of the current tight monetary policy, oil imports have remained stubbornly high at USD3.5-4bn/month.

Export breakdown by sector, 8M14 (USD117.4bn)

Manufacturing & others

43%

Petroleum & gas

18%

Coal12%

Palm oil10%

Garments & textiles

7%

Rubber products

5%

Agricultural products

3%

Metal-related2%

Source: Statistics Indonesia

Oil imports and non-oil imports, Jan 2009-Sep 2014

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

4

6

8

10

12

14

16

Jan-09 May-09 Sep-09 Jan-10 May-10 Sep-10 Jan-11 May-11 Sep-11 Jan-12 May-12 Sep-12 Jan-13 May-13 Sep-13 Jan-14 May-14

(USDbn)(USDbn)

Non oil imports Oil imports


Commodity prices %

ytd % in 2013

% since peak

% ytd

% in 2013

% since peak

Coffee (USD/ Mtn) 67.7 (17.0) (27.3) Oil (USD/barrel) (13.8) 7.2 (38.7)

Milk (USD/Mtn) 37.8 (5.7) (0.2) Steel (USD/Mtn) (14.1) (12.4) (49.9)

Nickel (USD/Mtn) 19.5 (18.5) (69.1) CPO (USD/Mtn-CIF) (14.1) 0.6 (43.9)

Aluminum (USD/Mtn) 7.8 (13.2) (37.7) Soybean (USD/ Mtn) (15.0) (20.7) (51.2)

Sugar (USD/Mtn) 2.9 (13.7) (25.7) Wheat (USD/Mtn) (23.0) (23.0) (47.8)

Gold (USD/oz.) 1.6 (27.2) (35.6) Cotton (USD/Mtn) (24.5) 13.4 (70.3)

Rice (IDR/Kg) 1.2 1.2 (1.7) Coal (USD/Mtn) (25.0) (6.7) (66.0)

Copper (USD/Mtn) (8.6) (6.0) (33.6) Corn (USD/Mtn) (25.5) (40.5) (60.7)

Tins (USD/Mtn) (10.3) (3.2) (37.7) Rubber (USD/Mtn) (36.6) (24.4) (74.1)

Silver (USD/oz) (10.8) (35.8) (53.9) Iron ore (USD/Mtn) (39.0) (4.3) (48.5) Source: Bloomberg as of 09 October 2014

2015 Compendium

16

2015 state budget: On the brink of further revision In the 2015 state bugdet, the government has targeted an optimistic

2015 GDP level of 5.8% with CPI only reaching 4.4%.

Due to a relatively sustained high energy subsidy, the government has lowered capital spending to IDR156.5tn (-2.2% from 2014 budget). Additionally, the government has set a lower fiscal deficit, at 2.21% of GDP from the previous target of 2.34%.

As the new administration takes office, the 2015 state budget posture will likely be revised to accomodate the new government’s fiscal strategies.

Central government expenditures breakdown, 2006-2015F

17% 18% 16% 20% 23% 21% 21% 19% 21% 21%12% 13% 10% 12%

14%16% 15% 17% 12% 11%

18% 16% 13% 15%15%

12%12%

10% 11% 11%

21% 23%32%

15%21%

22%20%

27%27%

25%

31%30%

28%38%

27%

29%32%

26%

30%32%

440.0504.6

693.4628.8

697.4

883.7

1,010.6

1,137.2

1,280.4

1,392.4

0.0

200.0

400.0

600.0

800.0

1,000.0

1,200.0

1,400.0

2006 2007 2008 2009 2010 2011 2012 2013 2014F 2015F

(IDRtn)

Personnel exp Capital exp Interest payment Energy subsidy Others Source: Ministry of Finance, Bahana estimates

2015 state budget, macroeconomic assumptions

Assumptions APBN Proposed

APBN Approved Changes 2015*

Bahana 2015

BI

GDP growth (%) 5.6 5.8 0.2 4.9 5.4-5.8

Inflation (%) 4.4 4.4 0 8.4 3.5-5.5

Exchange rate (IDR/1USD) 11,900 11,900 0 11,700 11,900-

12,100

3-month T-bills (%) 6.2 6.0 -0.2 7.0 -

ICP (USD/bbl) 105 105 0 100 -

Oil lifting (thousands bph) 845 900 55 - -

State budget deficit (% of GDP) 2.3 2.2 -0.1 2.5 -

Source: Ministry of Finance, *Assuming 31% subsidized fuel price hike in 1Q15

State budget summary (IDRtn)

2012 2013 2014

Revised& approved

2015 Approved

2015 Changes (%)

Revenues and grants 1,338.1 1,437.0 1,635.4 1,793.6 9.7

Tax revenues 980.5 1,077.3 1,246.1 1,380.0 10.7

Non tax revenues 351.8 354.2 386.9 410.3 6.0

Expenditures 1,491.4 1,639.8 1,876.9 2,039.5 8.7

Central government expenditures 1,010.6 1,126.9 1,280.4 1,392.4 8.7

Material expenditures 140.9 168.5 153.0 - -

Capital expenditures 145.1 172.4 160.0 156.5 -2.2

Energy subsidy 306.5 310.0 350.3 344.7 -1.6

Transfer to regions 480.6 513.3 596.5 647.0 8.5

Surplus/deficit (IDRt) -153.3 -202.8 -241.5 -245.9 1.8

% of GDP -1.9 -2.2 -2.4 -2.2 -


2015 Compendium

17

Fuel price hike: Much needed In order to curb oil imports and to make a positive impact on the

budget, we think a minimum IDR2,000/liter subsidized fuel price is required, for which no parliamentary approval is needed based on the 2015 state budget bill. However, recent political developments spell uncertainty on this issue.

Assuming a IDR2,000/liter fuel price hike, 2015 inflation would reach 8.38%, up 288bps from our current base level of 5.5%.

On economic growth, 2015 GDP may further decelerate to around 4.94% from our base level of 5.1%, but accompanied by CAD improvement.

Sensitivity analysis on the impact of the govt’s fuel subsidy policy

Price hike (IDR/ltr)

Market gasoline price

post policy shock

(IDR/ltr)

CPI (%y-y) GDP (%y-y)

2015F 2016F 2015F 2016F

Bahana’s base case – without fuel price hike

6,500 5.50 5.60 5.10 5.40

1,000 (+15%) 7,500 6.94 5.72 5.05 5.33

2,000 (+31%) 8,500 8.38 5.88 4.94 5.25

3,000 (+46%) 9,500 9.82 5.94 4.80 5.20

4,000 (+62%) 10,500 11.26 6.07 4.73 5.15

5,000 (+77%) 11,500 12.70 6.15 4.66 5.10

6,000 (+92%) 12,500 14.14 6.24 4.59 5.05 Source: Pertamina, BI and Bahana estimate

Fuel consumption and oil lifting, 1999-2015F

1,358 1,4141,343

1,260

1,147

1,0951,061

1,006954

972 949 945 902861

827793

76251

5658 59 60

6564

61 62

6361

67

72

7578

8179

45

50

55

60

65

70

75

80

85

90

700

800

900

1,000

1,100

1,200

1,300

1,400

1,500

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014F 2015F*

(mn kiloliters)(k bpd)

Oil production (LS) Fuel consumption

Source: Pertamina, Statistics Indonesia, Bahana estimate

Impact of higher fuel price on CA deficit, 2004-2016F

0.60

(2.7)*(2.4)*

0.1

2.9

2.4

0.0

2.0

0.7

0.2

(2.8)

(3.3) (3.1) (3.0)(2.8)1,810

4,500 4,500 5,000 4,500 4,500

6,500

8,500*

6,500

1,500

2,500

3,500

4,500

5,500

6,500

7,500

8,500

9,500

-3.5

-2.5

-1.5

-0.5

0.5

1.5

2.5

3.5

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014E 2015E 2016E

(IDR/ltr)(% of GDP)

CA balance Regular gasoline price Source: CEIC, Bahana *CA deficit if subsidized fuel prices are increased by 31%

2015 Compendium

18

Lower ICP allows less fuel price hike During the SBY administration, higher fuel prices were always

accompanied by social safety programs in the form of direct cash transfers (BLT and BLSM), amounting to IDR9.3tn to IDR23tn.

The SBY government has allocated IDR5tn as a social safety net in 2014 state budget, sufficient to only cover IDR1,000/liter fuel price hike in November while some IDR14-15tn is required for 46% hike, freeing up at least IDR173tn from the budget.

Given current ICP of USD95/bbl, Jokowi can actually free up IDR133tn by just raising fuel price IDR2k/liter.

Sensitivity analysis due to changes on ICP (USD/bbl)

Base line ICP = 105 ICP = 100 ICP = 90 ICP = 80

Fuel subsidy (IDRtn) 291.1 277.6 250.7 223.7

Deficit (IDRtn) (245.5) (225.9) (185.9) (145.9)

As % of GDP (%) (2.21) (2.0) (1.7) (1.3)

Budget saving from IDR1,000/liter hike (IDRtn) 57.7 59.9 73.2 97.8

Budget saving from IDR2,000/liter hike (IDRtn) 115.4 119.8 146.3 195.6

Budget saving from IDR3,000/liter hike (IDRtn) 173.1 179.7 219.5 Subsidy free

Source: Ministry of Finance, Bahana estimates

2013 direct cash transfer scheme due to 33.3% fuel price hike


2008 direct cash transfer scheme due to 30.6% fuel price hike


Presidential decree

No 3/2008

instructed Social

Ministry to distribute

around IDR14tn

(USD1.5bn) cash

transfers to 19.1mn

poor households

Jun 08 - Aug 08 period = IDR300k/household

Sep 08 - Dec 08 period = ID400k/household

The government had

distributed around

IDR9.3tn

(USD930mn)

temporary cash aid

transfer (BLSM) to

15.5mn targeted

poor households

Jul 13 - Aug 13 = IDR300k/household

Sep 13 - Oct 13 = ID300k/household

2015 Compendium

19

BI rate should slightly rise 25bps to 7.75% in 1H15 Looking forward, we think there is a need for BI to raise its

benchmark rate, particularly due to possible global financial volatilities on expected changes in the Fed’s monetary policy. Additionally, we also expect inflationary pressure from the planned fuel price hike.

We expect BI to raise its benchmark rate from 7.5% to 7.75% in 2Q15 as we believe CPI would soar to 8.4% on the 31% higher fuel price, dragging down 2015 economic growth to 4.94% (base case: 5.1%).

In 2016, we expect GDP growth of 5.25%, helped by a lower BI rate and normalizing prices.

Indonesia’s inflation vs BI rate, January 2013 – December 2016F

7.50 7.50 7.50 7.507.75 7.75

7.50

7.32

4.53 4.72

5.57

7.199.39

8.39

8.60

8.38

5.925.90

6.04

5.88

4.61 4.644.69

4.554.594.90

5.69 5.826.09

5.77

5.20

4.674.90

4.75

5.50

5.25

5.75

3.5

4.5

5.5

6.5

7.5

8.5

Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-1

(%)

BI rate CPI y-y Core inflation y-y Fasbi rate

Source: Statistics Indonesia, Bahana estimates

Recent global interest rate changes Current

interest rateLatest change

Latest change

Number of interest change

(%) (bps) (x)Euro Zone 0.10 -5 4-Sep-14 1South Korea 2.25 -25 14-Aug-14 4New Zealand 3.50 25 24-Jul-14 4Turkey 8.25 -50 18-Jul-14 3Brazil 11.00 25 2-Apr-14 9Vietnam: Interest rate 6.50 -50 17-Mar-14 1

Reverse repo rate 8.00 100 25-Mar-13 7Thailand 2.00 -25 12-Mar-14 5India: Repo rate 8.00 25 27-Jan-14 3

Cash reserve ratio 4.00 -25 29-Jan-13 3Pakistan 10.00 50 13-Nov-13 2Indonesia 7.50 25 12-Nov-13 5Australia 2.50 -25 6-Aug-13 7The Philippines 3.50 -25 25-Oct-12 3China: Interest rate 3.00*/6.00** -25 5-July-12 2

Reserve requirement 20.00 -50 5-July-12 3Hong Kong 0.50 8 19-Jun-12 1Taiwan 1.88 13 30-Jun-11 5Malaysia 3.00 25 5-May-11 4

Source: Bloomberg *Deposit rate **Lending rate

Spread between Indonesia’s 10-y gov’t bond and Treasury notes

1

3

5

7

9

11

13

15

17

Jul-03 Mar-04 Nov-04 Jul-05 Mar-06 Nov-06 Jul-07 Mar-08 Nov-08 Jul-09 Mar-10 Nov-10 Jul-11 Mar-12 Nov-12 Jul-13 Mar-14

(%)

Indo IDR 10-y (RHS) US 10-y

Long-term gap = 6.29%

Sep-14

Source: Bloomberg

2015 Compendium

20

Summary of latest macro developments 8M14 trade balance: USD1.4bn deficit

2014 September FX reserves of USD111.2bn

CPI: September: 4.53 % y-y; 2014: 5.9%

BI rate: Likely to be held at 7.50% in 4Q14

Deteriorated 2Q14 CA deficit of 4.27% of GDP due to seasonality

effects

2Q14 GDP growth: 5.12% y-y, down from 5.25% in 1Q14, but we expect 2014 GDP growth of 5.20%

Indonesia macroeconomic indicators, 2011 – September 2014

Indicators Sep-14 Aug-14 Jul-14 2013 2012 2011

FX reserves (USDbn) 111.2 111.2 110.5 99.40 112.80 110.12

CPI (% y-y) 4.53 3.99 4.53 8.38 4.30 3.79

BI rate (%) 7.50 7.50 7.50 7.50 5.75 6.50

IDR/1USD 12,183 11,711 11,675 12,170 9,638 9,075

Trade balance (USDbn)* (0.32) 0.12 (0.30) (4.08) (1.66) 26.32

Source: Bank Indonesia, Bloomberg, Bahana *one-month lag

GDP growth details (%), 2012-2015F

Type 2012 2013 2Q14 2014F 2015F*

Household spending 5.28 5.28 5.59 5.27 4.84

Government spending 1.25 4.87 (0.71) 4.55 5.50

Investment 9.81 4.71 4.53 5.70 6.70

Exports 2.01 5.30 (1.04) 0.26 3.30

Imports 6.65 1.21 (5.02) 0.30 2.00

Source: Statistics Indonesia, *assuming 31% subsidized fuel price hike in 1Q15

Quarterly GDP growth, 3Q13-2Q14, 2014 - 2016F

5.635.72

5.22

5.125.20

4.94

5.25

4.5

4.7

4.9

5.1

5.3

5.5

5.7

5.9

3Q13 4Q13 1Q14 2Q14 2014F 2015F 2016F

(%)

Source: Statistics Indonesia, Bahana estimates

2015 Compendium

21

Indonesian markets

2015 Compendium

22

Equity: Outflows starting August; Bonds: outflows With growth in emerging markets slowing, the Indonesian equity

market has benefited from foreign inflows ytd. However, in August and September thus far foreigners have been net sellers.

In 2013, we saw IDR44t in net foreign outflows while in 2014, foreign inflows reached IDR54.5tn in 7M14, although since August, outflows amounted to IDR11.9tn with a ytd total net inflow of IDR42.6tn.

In bonds, October yields are currently at 8.3%, compared to US 10-year treasuries at around 2.4% with foreign outflows for the first time this year.

Foreign equity capital flows in JCI, 2011 - October 2014

25,665

15,881 19,487

(24,741)

2,330

7,817

13,256

7,273 8,089

2,738

13,070

(1,317)

(7,402)(3,209)

(30,000)

(20,000)

(10,000)

0

10,000

20,000

30,000

2011 4M13 Jan-14 Mar-14 May-14 Jul-14 Oct-14

(IDRb)

IDR44tnnet outflow

Source: Bloomberg as of 09 October 2014, Bahana

Government bond yield movements

4.146

5.504

6.511 6.815

7.833

8.640

7.465

8.662 9.320

7.063

8.278

9.09

4

5

6

7

8

9

10

1 Yr 2 Yr 3 Yr 4 Yr 5 Yr 6 Yr 7 Yr 8 Yr 9 Yr 10 Yr 15 Yr 20 Yr 30 Yr

(%)

Time to MaturityApr-13 Jul-13 Aug-13 Oct-14

Source: Bloomberg

Net transactions on government bonds, 2012 - October 2014

(5)(1)

3 0

14

4 6

38

(13)

23

(18)

6

(17)

13 6

23

0

(6)

60.6

(0.9)

7.6

48

3 8

(1)

18

4

(20)

3

(2)

10

24

6

(1)

5

16 10

16 20

5 8.4

0.9

34.4

(4.5)

(25)

(10)

5

20

35

50

65

2012

Jan-1

3

Feb-1

3

Mar-

13

Apr-

13

May-1

3

Jun-1

3

Jul-

13

Aug-1

3

Sep-1

3

Oct

-13

Nov-

13

Dec

-13

Jan-1

4

Feb-1

4

Mar-

14

Apr-

14

May-1

4

Jun-1

4

Jul-

14

Aug-1

4

Sep-1

4

Oct

-14

(IDRt)

Bank Indonesia Foreign


2015 Compendium

23

IDR stability: 50% politics, 50% macro Our end-2014 IDR exchange rate forecast is 11,900/1USD and

IDR11,700 at end-2015, as we expect a slight BI’s rate hike to bolster the local currency as well as Jokowi’s political moves.

This is different from the consensus forecast of a weaker IDR next year, but in line with currency analysis based on REER, which suggests that the IDR is undervalued at current levels.

Nevertheless, the IDR has not done well in the past month, partly due to a stronger dollar and continued unsettling local political developments.

Consensus forecasts on regional currencies

Current 2013 2014F 2014F 2014F 2015F Appreciation

rate per End End End End End Potential (%)

Country Currency 1USD Low Median High Median 2014F 2015F

Korea KRW 1,064 1,050 1,000 1,040 1,100 1,030 2.3 3.2

Indonesia IDR 12,190 12,170 11,500 12,000 12,600 12,030 1.6 1.3

Taiwan TWD 30.4 29.8 29.3 30.2 30.6 30.0 0.6 1.3

Singapore SGD 1.3 1.3 1.2 1.3 1.3 1.3 0.1 (0.7)

Philippines PHP 44.7 44.4 42.8 44.7 45.6 44.8 (0.1) (0.3)

Thailand THB 32.4 32.7 31.8 32.6 34.5 33.0 (0.5) (1.7)

Malaysia MYR 3.2 3.3 3.1 3.3 3.3 3.3 (0.8) (2.0)

India INR 60.5 61.8 57.0 61.5 63.9 62.0 (1.6) (2.5) Source: Bloomberg as of 09 October 2014, Bahana

Real Effective Exchange Rates

102

87

101

119

111

75

85

95

105

115

125

135Points

Thailand Indonesia Malaysia Korea Philippines

Source: CEIC, Bank for International Settlements

USD performance relative to other currencies Asia exc. Japan currencies 1M Ytd Other currencies 1M Ytd CNY (China) 0.1 (1.3) GBP (UK) 0.1 (2.7)

VND (Vietnam) (0.0) (0.6) ARS (Argentina) (0.9) (30.0)

HKD (Hong Kong) (0.1) (0.0) JPY (Japan) (1.6) (2.4)

SGD (Singapore) (0.7) (0.6) MXN (Mexico) (1.7) (3.0)

INR (India) (0.7) 1.2 CAD (Canada) (1.7) (5.2)

THB (Thailand) (1.1) 0.8 EUR (EU) (1.9) (8.3)

TWD (Taiwan) (1.4) (1.9) TRY (Turkey) (3.3) (5.6)

MYR (Malaysia) (1.6) 1.0 AUD (Australia) (4.8) (1.5)

PHP (Philippines) (1.8) (0.6) NZD (New Zealand) (4.8) (4.4)

KRW (Korea) (3.2) (1.4) BRL (Brazil) (4.9) (1.5)

IDR (Indonesia) (3.6) (0.1) RUB (Russia) (8.3) (22.0) Source: Bloomberg as of 09 October 2014, Bahana

2015 Compendium

24

Local politics

2015 Compendium

25

Difficult tasks ahead for the new government

Tax ratio to GDP, 2005-2015F

12.5

12.3

12.4

13.3

11.1

11.3

11.8

11.9 11.911.8 11.7

11.0

11.5

12.0

12.5

13.0

13.5

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014F 2015F

(% of GDP)

Source: Ministry of Finance, Bahana

Oil production and petroleum consumption, 2010-2015F

1,358 1,4141,343

1,260

1,147

1,0951,061

1,006954

972 949 945 902861

827793

76251

5658 59 60

6564

61 62

6361

67

72

7578

8179

45

50

55

60

65

70

75

80

85

90

700

800

900

1,000

1,100

1,200

1,300

1,400

1,500

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014F 2015F

(mn kiloliters)(k bpd)

Oil production (LS) Fuel consumption

Source: Ministry of Energy and Mineral Resources, Bahana

Short-term challenges: • Steps to eliminate fuel subsidies. • Greater coalition within the parliament. • The market’s high expectations of Jokowi’s first 100

days in office. Long-term challenges:

1. Increased upstream manufacturing to lift GDP growth to 6-7% by decreasing dependence of imported raw materials and intermediate products through:

• Industrialization, which in turn creates more jobs;

• Export base diversification away from natural resources.

2. State budget reforms: • Acceleration of capital expenditure absorption; • Funding for village development and food

tenancy: • Greater infrastructure allocation; • Reforms in tax revenues; • Policy to alleviate oil dependence given falling

production.

2015 Compendium

26

Prabowo 5; Jokowi 0 The Jokowi’s coalition has been completely outmaneuvered in the

parliament, resulting in 5 blows, with the latest being the MPR chairman post being secured by the Prabowo coalition.

It is interesting to note that Prabowo’s political party, Gerindra, is not present for important posts in the MPR, reflecting Prabowo’s excellent political and negotiation skills.

Unless Jokowi is willing to be “transactional” going forward, his losing track record in the House is unlikely to improve given “vested interest” of parliament members.

The five Prabowo parliamentary wins:

1. House ended direct elections at the provincial and district levels. 2. Constitutional court denied the MD3 law judicial review, resulting in

PDI-P’s loss of DPR (lower house) leader position. 3. Prabowo's coalition dominates House (DPR) key positions. 4. Prabowo's coalition controls Upper House (MPR) key positions. 5. Changes in the House’s procedures and possible additional

commissions/committees.

Source: Bahana

DPR (Lower House) key positions Position Name Party Chairman Setya Novanto Gokar

Deputy Fadli Zon Gerindra

Deputy Agus Hermanto Demokrat

Deputy Fahri Hamzah PKS

Deputy Taufik Kurniawan PAN Source: Bahana

MPR (Upper House) key positions Position Name Party Chairman Zulkifli Hasan PAN

Deputy EE Mangindaan Demokrat

Deputy Hidayat Nur Wahid PKS

Deputy Mahyudin Golkar

Deputy Oesman Sapta DPD

Source: Bahana

2015 Compendium

27

Lower House (DPR): The current grave conditions Our concerns about a lame duck government are materializing.

With Prabowo’s coalition having control of 63% seats in the House,

the Jokowi coalition was simply outnumbered and outvoted in the first plenary DPR meeting, resulting in the Speaker of the House post being controlled by Golkar.

Prabowo’s coalition, now in control of the legislative agenda, could object to Jokowi’s reform programs

House commisions Commision Function Related institutions

Commision I Defense, inteligence, foreign affairs, communication and information

Ministry of Defense, Ministry of Foreign Affairs, Ministry of Communication and Information, Indonesian Armed Forces, State Intelligence Agency and others

Commision II Domestic affairs, state administrative and bureaucracy

Ministry of Domestic Affairs, General Election Commission (KPU), Cabinet Secretary and others

Commision III Law, human rights, and national security Ministry of Law and Human Rights, Corruption Eradication Commission and Human Rights Commission and others

Commision IV Agriculture, plantation, forestry, maritime, fishery and food security

Agriculture and Forestry Department, Maritime and Fishery Department and others

Commision V Transportation, public works, housing, and disadvantaged areas

Ministry of Transportation, Ministry of Housing, Ministry of Public works and Search and Rescue Agency and others

Commision VI Trade, Industry, Investment and SMEs Ministry of Industry, Ministry of SOEs, Trade and Industry Department, and Investment Coordinating Board and others

Commision VII Energy and mineral resources, research and technology and environment

Energy and Mineral Resources Department, Oil and Gas Task Force, Ministry of Environment and others

Commision VIII Religion, social and women empowerment Religion Affairs, Ministry of Social Welfare, Ministry of Women Empowerment and Child Protection and others

Commision IX Labors, demography and health Ministry of Labor and Transmigration, National Security Agency for Health and Labor and National Agency of Food and Drug Control and others

Commision X Education, culture, tourism, economic creative and sports

Ministry of Education and Culture, Ministry of Tourism and Economic Creative and Ministry of Youth and Sports and others

Commision XI Finance, banking and national development planning Central Bank, OJK and Ministry of Finance and others.

Source: Dpr.go.id

House seats, by party 2014-2019

20%

16%

13%11%

9%

8%

7%

7%

6%3%

PDIP

Golkar

Gerindra

Demokrat

PAN

PKB

PKS

PPP

Nasdem

Hanura

109

91

73 6149

47

40

39

3516

Source: General Election Committee (KPU)

House coalition breakdown, by seat

63%

37%

Prabowo's coalition with PPP Jokowi's coalition

353

207

56%

44%

Prabowo's coalition withhout PPP Jokowi's coalition

314

246

Source: General Election Committee (KPU)

2015 Compendium

28

Political obstacles ahead for Jokowi The house is currently working on presidential impeachment

procedures, with approval cut from a 2/3 MPR vote to just 50%+1, and with criminal charges lowered to merely “unfit”.

Reportedly, the Attorney General’s Office is currently investigating the IDR1.5tn (USD123mn) alleged corruption involving the purchase of Chinese-made buses by the Jakarta government.

The parliament may decide to investigate irregularities in the education budget of the city of Solo while Jokowi was still mayor.

Current presidential impeachment process

The Lower House (DPR), attended by 2/3 of the members and supported by 2/3 of the attendees of the plenary meeting, must first request the Constitutional Court to investigate the wrongdoings (e.g., criminal/treason charges) of the president or vice president.

The Constitutional Court has 30 days to investigate, judge and decide on the DPR’s proposed motion.

If the Constitutional Court decides that such an offence (i.e., treason, corruption, bribery, criminal offence or despicable deeds) has occurred and/or the president and/or vice-president are proven as not eligible, the DPR will hold a plenary session to propose to the MPR the dismissal of the president and/or vice-president.

The MPR must then hold a session no later than 30 days post the receipt of the DPR’s proposal.

The MPR’s decision on the proposed dismissal of the president and/or vice-president must be decided in an MPR plenary session, attended by at least 3/4 of the total MPR members and accepted by at least 2/3 of the attendees, following an explanation from the president and/or vice-president.

Source: Dpr.go.id

MPR composition, by grouping during recent voting 6%

45%

30%

12%

7%

PPP Prabowo's coalition Jokowi's coalition DPD for Jokowi DPD for Prabowo

352352352352306

207

84

48 39

Source: Bahana

2015 Compendium

29

Important and influential political factors ahead So far Jusuf Kalla’s performance has been sub par, with the Golkar

chairman post still in Aburizal Bakrie. Testimony to this is the failure to move forward the Golkar election date to the October-November 2014 period from April 2015.

If SBY’s Perppu is approved by the parliament, only governors and regent heads will run for elections, with vice governors and vice regent heads not automatically moving up to fill the positions of governors and regent heads assuming vacancies.

This could set a precedent at the presidential level

Interesting facts from SBY’s Perppu

An independent governor candidate can only register if he/she is supported by: at least 6.5% of the total population (for population of 2mn), 5% of the total population (2-6mn), 4% of the total population (6-12mn), or 3% of the total population ( >12mn).

A governor-elect has to choose and propose his/her vice governor to be approved by the president and inaugurated by the governor elect.

A governor may have no vice governor or more than one vice governor, depending on the total population of his/her province: no vice governor if population is less than 1mn (i.e., West Papua), 1 vice governor if 1-3mn, 2 vice governors if 3-10mn, or 3 vice governors if more than 10mn (i.e., Jakarta, Banten, West Java, East Java and North Sumatra).

If a governor resigns or is impeached by court decision and has less than 18 months remaining to govern, the president will elect an acting governor based on a ministerial suggestion.

If a governor resigns or is impeached through court decision but still has more than 18 months to govern, there will be an election through the regional legislative council (DPRD).

Source: Bahana

Party’s chairman election

Party Election date Current Chairperson

PDI-P September 2014 Megawati Soekarnoputri*

Gerindra September 2014 Prabowo Subianto

PKB September 2014 Muhaimin Iskandar*

PPP October 2014 Suryadharma Ali

PKS April 2015 Anis Matta

Golkar April 2015 Aburizal Bakrie

Demokrat 2015 Susilo Bambang Yudhoyono

PAN 2015 Muhammad Hatta Rajasa

Hanura 2015 Wiranto

Nasdem 2018 Surya Paloh Source: Bahana, *Re-elected

2015 Compendium

30

Regional Legislative Council elections: All Prabowo In 2015, 7 provinces (Jambi, W. Sumatra, Bengkulu, Riau Islands, C.

Kalimantan, S. Kalimantan and N. Sulawesi) out of 33 will hold People’s Regional Legislative Council (DPRD) elections.

Based on our study, we expect the Prabowo coalition to win all 7 regional elections. Additionally, elections for 240 districts (44%) out of a total of 542 districts will take place in 2015.

Out of the 33 provinces, Jokowi’s coalition is only expected to win in 2 provinces: Bali (#17) and Kalimantan Barat (#20).

Number of People’s Regional Legislative Council (DPRD), by coalition No Province Prabowo's coalition Jokowi's coalition 1 Aceh 38 33 2 Sumatera Utara 63 35 3 Sumatera Barat 49 16 4 Riau 45 20 5 Jambi 36 19 6 Sumatera Selatan 40 30 7 Bengkulu 27 18 8 Lampung 51 34 9 Bangka Belitung 29 16 10 Kepulauan Riau 26 19 11 DKI Jakarta 57 49 12 Jawa Barat 65 35 13 Jawa Tengah 56 44 14 DI Yogyakarta 33 22 15 Jawa Timur 55 41 16 Banten 52 33 17 Bali 27 28 18 Nusa Tenggara Barat 47 18 19 Nusa Tenggara Timur 34 31 20 Kalimantan Barat 37 39 21 Kalimantan Tengah 24 21 22 Kalimantan Selatan 36 19 23 Kalimantan Timur 35 20 24 Kalimantan Utara 22 13 25 Sulawesi Selatan 63 22 26 Sulawesi Tengah 27 18 27 Sulawesi Utara 25 18 28 Sulawesi Tenggara 33 12 29 Gorontalo 33 12 30 Sulawesi Barat 34 11 31 Maluku 25 20 32 Papua 35 21 33 Papua Barat 28 17

Total 1,287 804 Source: Tempo

Prabowo’s dominance in the Regional Legislative Council

94%

6%

Prabowo's coalition Jokowi's coalition

31 provinces

2

Source: Tempo

2015 Compendium

31

Historical cabinet line-up, by affiliation Interestingly, the cabinet line-up in 2001-04 (Gus Dur – Megawati

regime) had the least number of politicians (33%).

Additionally, it also had the most number of ministers with a military background, probably required to help safeguard the civilian regime at the time.

However, during the SBY regime over the past 10 years, there were more politicians as ministers and fewer military-linked ministers.

Cabinet line-up 2001-2004, end of period

Politician33%

Unaffilated33%

Scholar18%

Military15%

PAN, 3.0%

PBB, 3.0%

PKB, 3.0%

Golkar, 6.1%

PPP, 6.1%

PDI-P, 12.1%

Source: Cabinet Secretariat, Bahana

Cabinet line-up in 2004-2009, end of period

Politicians49%

Military8%

Unaffiliated43%

PKB, 2.7%PKPI, 2.7%PAN, 2.7%PBB, 2.7%

Demokrat, 5.4%

PPP, 5.4%

PKS, 8.1%

Golkar, 13.5%


Cabinet line-up 2009-2014, end of period

Politician47%

Military8%

Unaffiliated44%

PPP, 5.6%

PKB, 5.6%

PAN, 5.6%

Golkar, 8.3%

PKS, 8.3%

Demokrat, 13.9%


2015 Compendium

32

Jokowi-JK’s sectoral focus In agriculture & maritime, Jokowi-JK promises revitalization through

agrarian reform and higher fish production.

To solve the energy problem, Jokowi-JK plans to reduce Indonesia’s dependence on oil-based fuel and raise the country’s gas-based fuel usage

Jokowi-JK also plans to boost infrastructure development and provide

business-friendly policies to attract more direct investment.

Agriculture & Maritime

To support 1,000 villages to produce their own seeds by 2019.

To restructure irrigation lines and to build around 25 water reservoirs on 3mn ha of farm fields.

To provide around 9mn ha of lands to farmers.

To increase low-income farmers’ land ownership from 0.3ha to 2ha/ household and to open 1mn ha of dry farm land outside Java.

To establish agriculture banks to support farmers’ businesses and build 5,000 traditional markets.

To develop the maritime economy by way of increasing fish production amounting to around 40-50mn tons per annum by 2019.

Source: Bahana

Infrastructure & business climate

To build 2,000km of new roads, fix current roads across the nation and develop 10 new harbors and 10 new airports.

To construct monorails connecting the airport to the city center, the port to the city center and the inner city ring as well as the outer ring circumference of the city.

To boost share of urban railway transportation usage to 10%, increase the proportion of inter-city railway transport usage to 10%, and reduce private vehicle usage by 30%.

To reinforce infrastructure development through the establishment of infrastructure banks and enhancing the capacity of the state budget towards infrastructure expenditure.

To design a strategy in overcoming electricity scarcity, reducing production costs, eliminating subsidies and increasing the electrification ratio to 100%.

To create one-stop services for investment activities and to reduce the investment proposal process to only 15 days maximum.

Source: Bahana

Energy

To reduce fuel subsidies from fuel-based transportation (high-import) to gas-based. It is expected that around 30% fuel-based transportation could be converted to gas-based with support from government incentives and infrastructure development to meet the needs of domestic gas. This move is also expected to reduce fuel subsidies by IDR60tn and lower overall energy prices by 20%.

In the short term, to establish special agencies like Bulog to strengthen the biofuel industry and ensure efficient biofuel trading.

To commit control of natural resources by increasing the number of mine operators and to renegotiate the management of mineral resources based on equal profit sharing between the government and corporations (domestic and foreign).

Source: Bahana

2015 Compendium

33

Jokowi’s low hanging fruits Raising subsidized fuel prices by 31-46% from current levels would

save the government budget around IDR115-173tn per annum.

To boost non-tax revenues, the new government could increase royalty tariffs for several commodities, including nickel, gold, silver and coal.

The new administration should speed up budget expenditure by cutting unnecessary bureaucracy. The government must finish the budget execution lists (DIPA) prior to January in order to quicken capital expenditure absorption.

Royalty incomes from several commodities

0.90 1.00

2.00

4.00

5.00

3.00

3.753.25

4.00

9.80

0

1

2

3

4

5

6

7

8

9

10

Nickel* Gold Silver Copper Coal (open pit)*

(%)

Old royalti New royalti

Source: Ministry of Energy & Mineral Resources, *planned royalty tariff, *if nickel price is > USD21k per ton

Capital spending absorption (% of target), 2012-2014

18

44

79

6

18

38

93

7

26

50

83

100

25

50

75

100

25

50

0

10

20

30

40

50

60

70

80

90

100

1H12 10M12 2012 3M13 1H13 9M13 2013 3M14 1H14

(%)

Actual level Ideal level

Source: Ministry of Finance, Bahana

The government’s infrastructure spending to GDP, 2005-2015F

0.94

1.62

1.51

1.59

1.36 1.33

1.54

1.77

1.89

1.59

1.41

0.70

0.90

1.10

1.30

1.50

1.70

1.90

2.10

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014F 2015F

(% of GDP)

Source: Ministry of Finance, Bahana estimate

2015 Compendium

34

Stocks & sectors

2015 Compendium

35

Politically linked stocks

The US economy appears to be in a recovery as several leading indicators surveyed by the Federal Reserve display a promising outlook.

The Fed’s leading index has gradually improved post the 2008 crisis

and currently exceeds the level in 2007, while business activity is expected to keep growing as shown by the Fed’s future activity index.

The accelerating positive sentiment has raised the Fed’s business

activity index, which is now much higher compared to even before the 2008 crisis.

Soeharto-linked stocks

Sugih Energy (SUGI IJ)

Source: Bloomberg, Bahana


Bank Bukopin (BBKP IJ) and Nusantara Infrastructure (META IJ)


SUGI IJ (Not Rated) (USD0.9bn market cap; USD2.4mn 3M average daily turnover, as at 10 October 2014), an oil & gas exploration company, has Goldenhill Energy Fund (owned by Edward Soeryadjaya through Ortus Holding limited) as its largest shareholder (15.71%). Currently, SUGI owns 3 blocks, all located in Sumatra: Lemang PSc (49% participating interest), Kalyani PSC (51% participating interest and operating rights) and Selat Panjang PSC (55% participating interest and operating rights). Selat Panjang PSC has produced approximately 5 MMSCFD of gas and 300 BOPD, while the other 2 blocks are still at the exploration stage. Lemang PSC's resources are estimated to contain 511MMBO and 468BCF of gas, and Selat Panjang PSC holds a total of 323MMBO and 1,455BCF of resources (Indonesia has 4BBO and 153TCF).

BBKP IJ (HOLD, IDR700) (USD558mn market cap; USD0.5mn 3M average daily turnover, as at 10 October 2014), a private national bank, divides its business segments into retail and commercial. The bank is 18.57%-owned by Bosowa Corporindo (politically linked to Jusuf Kalla), which plans to raise its ownership in BBKP to 30% (11.43% from Kopelindo) by end-2014. This would suit BBKP's need for business expansions by way of having shareholders with a stronger capital base to allow higher retained earnings or the issuance of new shares (not doable under Kopelindo's investment policy). Bosowa has strong experience and a business network in Eastern Indonesia to utilize in BBKP's strategy in obtaining a captive market and growth sustainability.

META IJ (Not Rated) (USD256mn market cap; USD2.2mn 3M average daily turnover, as at 10 October 2014) is a holding infrastructure company, 6.98%-owned by Bosowa Corporindo. Having a toll road operator as its main business, META has four routes, managed through its 75%-owned subsidiary, Margautama Nusantara. META’s toll road portfolio of 35km in length consists of: 1. Bosowa Marga Nusantara (5.9km) and 2. Jalan Tol Seksi Empat (11.6km), both of which are located in Makassar, South Sulawesi, providing to Soekarno Hatta seaport and Hasanuddin airport; 3. Bintaro Serpong Damai, located in Tangerang, connecting Serpong-Pondok Aren (7.25km); and 4. 10km JORR W1 Jakarta Lingkar Baratsatu, connecting Kebon Jeruk-Penjaringan (10km), in which META owns a 25% stake.

Saratoga-linked stocks

Hary Tanoesoedibjo-linked stocks

Bakrie-linked stocks

2015 Compendium

36

Government & central bank policies: Impact on sectors In 2014-15, we expect government and central bank policies to

continue to affect the performances of our covered sectors, as listed alphabetically here.

Policy risks and impact on various sectors No. Automotive Status Impact 1 Higher fuel price Plan Negative for ASII and IMAS 2 Increased luxury tax to 10% for LCGC Plan Negative for ASII and IMAS 3 Higher taxes on motor vehicles Plan Negative for ASII and IMAS 4 ERP policy (Jakarta) Plan Negative for ASII and IMAS No. Aviation Status Impact 1 Higher ticket price ceiling Plan Positive for GIAA 2 No new airline establishment Signed Positive for GIAA No. Banking Status Impact 1 Foreign ownership capping to 40% Plan Negative for BDMN 2 OJK to set a cap on micro loan rates Plan Negative for Banks that are exposed micro

financing with high NPLs 3 OJK set a cap for special time deposit rates (>IDR2bn) Signed Positive for all banks 4 Implementation of Basel III Plan Requires higher capital 5 Controlling shareholder to own more than one bank by

merger/forming a holding co. - applied retroactively Signed Negative for BDMN

6 Scope of business allowed based on Tier-I capital Signed Positive for BBCA, BMRI, BBRI, BBNI 7 Stricter LTV on property loans (22-70 sq m: 60-70%;

>70 sq m: 50-60%; shophouses: 60-70%) Signed Slower growth of mortgages

8 Ownership limitation (family-owned: 20%; financial: 40%; non-financial: 30%)

Signed Negative for BDMN

9 Minimum CAR based on risk profile Signed Positive for BBCA, BMRI, BBRI, BBNI 10 Higher reserve requirement (current: 10.5%; primary:

8%; secondary: 2.5%) Signed Slower growth of mortgages

No. Cement Status Impact 1 Higher electricity tariffs Signed Most negative for INTP (50% subsidized) No. Coal Status Impact 1 Subsidized fuel prohibition Plan Limited impact for covered stocks 2 Export ban on coal with CV < 5,700kcal/kg adb Draft Negative for low-CV coal producers (ADRO) 3 Increased royalties on coal sales Signed Negative impact on IUP holders 4 Gradual divestment post 5-year production with

maximum ownership of 49% after 10 years Signed As the policy is not retroactive, there is likely no

impact on stocks in our coverage 5 Export tax for coal Plan Negative for covered stocks 6 Limited approved export ports Plan Negative for most coal stocks on higher

transportation costs 7 Requirement as registered exporters Signed Short-term neg. on longer shipment time; Long-

term pos. in cutting illegal mining 8 Allowance of greater production to ensure sufficient

domestic coal supply to cater to electricity demand Plan This means further price pressure on coal

No. Consumer Status Impact 1 Possible ban on sugar imports Plan Negative for MYOR 2 Possible higher-than-expected excise tax hike Plan Negative for GGRM 3 Pictorial health warnings on cigarette packaging Signed Negative for GGRM

Policy risks and impact on various sectors (cont.) No. Infrastructure Status Impact 1 Possible IDR85.9tn additional infrastructure spending

from Jokowi in 2015 to IDR236.6tn Plan Positive for the sector, but we note that in 2014

infrastructure spending was cut No. Media Status Impact

1 Higher interest rates to lower GDP growth and in turn ad spend Ongoing Media companies revenues are very much correlated

to GDP growth No. Metal Status Impact

1 20% ore export tax Signed Negative for ANTM

2 Subsidized fuel prohibition Signed Limited impact for covered stocks

3 Export ban of metal ore products by 2014 Signed Negative for ANTM

4 Gradual foreign ownership divestment: Up to 51% for unintegrated miners; <51% for integrated miners; no divestment for smelters/ refineries

Signed Negative for INCO

5 Local trading and higher tin content for tin exports Signed Lower volumes for TINS, but higher prices

6 Standardized content and packaging for non-ingot tin products

Plan Limited impact on TINS, should reduce illegal mining

7 Limitation on tin production to 40k tons in 2015 Plan Lower volumes for TINS, but higher prices

No. Oil & gas Status Impact

1 2 3

Permit simplification Reduction of oil & gas blocks up for biddings Open access for gas pipelines

Plan Plan Signed

Positive for investment landscape in the sector Less exploration and possible lower production Limited impact for PGAS for now

4 Work contracts from production- to revenue-based Plan Negative for MEDC

No. Plantations Status Impact

1 New permit moratorium extended till 2015 Signed Negative for AALI

2 Foreign ownership limitation of 30% Plan Positive for all planters under coverage

No. Poultry Status Impact

1 Government price capping on DOC Signed Negative for all poultry players covered

No. Property Status Impact

1 Higher LTV regulation: 70% for 1st home buyers; 60% for 2nd home buyers; 50% for 3rd home buyers

Signed Negative for property companies; weaker marketing sales in 2014

2 Mortgage disbursement based on percentage of completion for 2nd homes

Signed Negative for companies with high exposure to apartments like APLN & CTRP

3 Licensing limitation on high-end apartments/ malls Signed Negative for the likes of APLN & LPKR

4 Foreign ownership in luxury apartments (>USD200k) Plan Positive for CTRP, PWON, LPKR, APLN, LPCK & CTRA

No. Retail Status Impact 1 Possibility on limitation (150 outlets max privately)

of business establishment license/zoning Plan Most negative for MDRN

2 Imported goods must be less than 20% of inventory Plan Most negative for RANC

3 Goods sold must comply with store license Plan Most negative for MDRN

4 Cooperation with SME’s in operating areas Plan Negative for all covered retailers

5 Higher electricity tariffs Signed Negative for all covered retailers

No. Telco Status Impact 1 Additional 20% luxury goods tax for mobile phones

and computer tablets

Plan Negative for ERAA and TELE

Source: Bahana

2015 Compendium

37

Pre fuel price hike: Impact on the market and sectors Technically, we estimate that the impending planned fuel price hike

could result in a 6-7% correction in the local market, in line with the index support at around the 4,850-4,900 level.

Interest-rate-sensitive sectors such as banks, property, consumer discretionary and automotive have the tendency to underperform the market in the lead-up to a fuel price hike.

Interestingly, defensive sectors like telco and consumer staples tend to outperform.

Average 3M sector outperformance prior to the past four fuel price hikes, 2005-2013

25.8

18.0

10.4

7.0 6.0 5.5

0.8

0

5

10

15

20

25

30

0

5

10

15

20

25

30

Oil&gas Coal Poultry Consumer Staples Telco Infrastructure Metals

(%)(%)


Average 3M sector performance prior to the past four fuel price hikes

1-Mar-05 1-Oct-05 24-May-08 22-Jun-13 Average (%)Oil&gas 65.3 31.4 10.9 (4.3) 25.8 Coal 31.1 8.9 13.8 18.1 18.0

Poultry 35.6 (13.1) 17.1 1.8 10.4

Consumer Staples 7.7 (1.8) 5.8 16.2 7.0

Telco (17.5) 9.0 1.6 31.0 6.0

Infrastructure 45.6 (16.1) (9.3) 1.7 5.5

Metals 12.3 7.5 (7.7) (8.9) 0.8 Consumer Discretionary (4.3) (4.5) 7.5 0.3 (0.2)

Banks 3.2 (1.0) (7.3) 3.6 (0.4)

Cement 17.9 (7.8) (6.6) (5.4) (0.5)

Plantations (14.9) 31.2 (9.3) (15.6) (2.2)

Property (3.5) (8.6) (1.0) 1.8 (2.8)

Automotive 10.2 (21.7) (16.5) 11.1 (4.2) Source: Bloomberg, Bahana

Average 3M sector underperformance prior the past four fuel price hikes, 2005-2013

(0.2)(0.4) (0.5)

(2.2)

(2.8)

(4.2)

(5)

(4)

(3)

(2)

(1)

0

(5)

(4)

(3)

(2)

(1)

0

ConsumerDiscretionary

Banks Cement Plantations Property Automotive

(%)(%)


2015 Compendium

38

Post fuel price hike: Impact on the market and sectors Following a fuel price hike, defensive sectors like telco and consumer

staples have continued to outperform in the past.

However, we note that interest-rate-sensitive sectors like banks and automotive have rebounded following underperformance leading up to a fuel price hike.

Property and consumer discretionary have continued to underperform.

Average 3M sector outperformance post the past four fuel price hikes, 2005-13

10.0

9.0

4.4 4.1 3.8

2.1

0

2

4

6

8

10

12

0

2

4

6

8

10

12

Oil&gas Telco Automotive Banks Metals Consumer Staples

(%)(%)


Average 3M sector performance post the past four fuel price hikes

1-Mar-05 1-Oct-05 24-May-08 22-Jun-13 Average (%)

Oil&gas 5.2 17.7 10.9 6.2 10.0 Telco 6.4 3.7 17.7 8.1 9.0 Automotive 4.6 1.5 10.6 0.7 4.4 Banks (2.3) (1.8) 13.8 6.8 4.1 Metals (0.2) (12.7) (7.7) 35.6 3.8 Consumer Staples 0.9 (1.8) 5.7 3.7 2.1 Coal 1.2 (10.5) (3.8) 9.4 (0.9) Consumer Discretionary (6.5) (9.2) (2.1) 8.4 (2.3) Cement (7.8) 0.1 5.1 (10.0) (3.2) Property 2.7 (10.1) 6.2 (18.1) (4.8) Plantations 19.9 (13.1) (21.6) (6.4) (5.3) Infrastructure (22.0) 2.5 (6.0) (7.1) (8.2) Poultry (3.7) (10.0) (7.9) (12.9) (8.6) Source: Bloomberg, Bahana

Average 3M sector underperformance post the past four fuel price hikes, 2005-13

(0.9)

(2.3)

(3.2)

(4.8)(5.3)

(8.2)(8.6)

(10)

(9)

(8)

(7)

(6)

(5)

(4)

(3)

(2)

(1)

0

(10)

(9)

(8)

(7)

(6)

(5)

(4)

(3)

(2)

(1)

0

Coal ConsumerDiscretionary

Cement Property Plantations Infrastructure Poultry

(%)(%)


2015 Compendium

39

Fuel price hike: The higher, the better With IDR291tn (USD25bn) in fuel subsidies next year, we think it is

imperative that Jokowi takes the hard step in implementing a subsidy removal.

This would require the formation of a clean and credible cabinet with non-affiliated technocrats having the political will to implement tough reforms.

Based on historical price increases, the higher the fuel price hike (i.e., 96% in October 2005), the faster the market has recovered.

Impact of fuel price hike on JCI

Price hike date

Avg. price

hike (%)JCI level

The bottom

level

Correction (%)

Time to bottom

(Months)

Recovery time

(Months)

1/3/2005 21.9 1,093 1,019 (6.7) 1.8 3.1

1/10/2005 96.1 1,083 1,017 (6.1) 1.5 2.0

24/05/08 30.6 2,419 1,111 (54.1) 5.2 16.3

22/06/13 33.3 4,429 3,967 (10.4) 2.2 2.9

Source: Bank Indonesia

Breakdown of fuel price hike

Price hike date

Regular gasoline price hike Diesel price hike

Initial price

(IDR/ltr)

New price (IDR/ltr)

Growth (%)

Initial price

(IDR/ltr)

New price (IDR/ltr)

Growth (%)

1/3/2005 1,810 2,400 32.6 1,890 2,100 11.1

1/10/2005 2,400 4,500 87.5 2,100 4,300 104.8

24/05/08 4,500 6,000 33.3 4,300 5,500 27.9

22/06/13 4,500 6,500 44.4 4,500 5,500 22.2

Mrkt Price Gasoline price = IDR 11,900/ltr Diesel = IDR12,800/ltr


Subsidy by type

Subsidy amount (IDRtn) Growth Proportion to total spending (%)

2014 2015E (y-y %) 2014 2015E

Fuel subsidy 246.5 291.1 18.1 13.1 14.4

Electricity subsidy 103.8 72.4 (30.3) 5.5 3.6

Energy subsidy 350.3 363.5 3.8 18.7 18.0

Non-energy subsidy 52.7 69.9 - 2.8 3.5

Total 403 433.4 21.5 21.5 Source: Ministry of Finance, Bahana

2015 Compendium

40

Sectors – Ranked by 1M performance: First Telcos: Continued outperformance due to its defensive nature.

Consumer: Performing in line with the market, mainly supported by

ICBP and GGRM.

Poultry: With most bad news related to lower-than-expected earnings and recent IDR volatility likely priced in, the sector has started to outperform.

Telco sector: relative performance

2.1

10.1

17.6

12.9 12.2 13.8 13.5

0

4

8

12

16

20

0

4

8

12

16

20

1M 3M 6M ytd 9M 12M 2013

(%) (%)

Telco sector relative to JCI Source: Bloomberg, Bahana

Consumer sector: relative performances

2.0 1.5 1.2 3.9

20.2

6.0

28.8

0

5

10

15

20

25

30

0

5

10

15

20

25

30

1M 3M 6M ytd 9M 12M 2013

(%) (%)

Consumer sector relative to JCI


Poultry sector: relative performances

0.9 1.3

(12.1)

(6.9)

(13.0)

(11.0)

(2.5)

(14)

(12)

(10)

(8)

(6)

(4)

(2)

0

2

(14)

(12)

(10)

(8)

(6)

(4)

(2)

0

2

1M 3M 6M ytd 9M 12M 2013

(%) (%)

Poultry sector relative to JCI Source: Bloomberg, Bahana

2015 Compendium

41

Sectors – Ranked by 1M performance: Second Banks: Performing in line with the market despite recent concerns of

higher inflation caused by the possible fuel price hike.

Oil-related: Supported mainly by MEDC’s performance.

Infrastructure: Starting to underperform on the government’s recent move to cut infrastructure-related spending.

Banks sector: relative performance

0.4 0.7

3

13.7

11

6.8

1.5

(2)02468101214161820

0

2

4

6

8

10

12

14

16

1M 3M 6M ytd 9M 12M 2013

(%) (%)

Banks sector relative to JCI Source: Bloomberg, Bahana

Oil related: relative performances

(0.0)

3.2

8.7

15.1 14.9

2.0 2.7

(2)

0

2

4

6

8

10

12

14

16

(2)

0

2

4

6

8

10

12

14

16

1M 3M 6M ytd 9M 12M 2013

(%) (%)

Oil-related sector relative to JCI


Infrastructure sector: relative performances

(0.4)

2.3

7.9

36.1

28.5

19.3

5.0

(5)

0

5

10

15

20

25

30

35

40

(5)

0

5

10

15

20

25

30

35

40

1M 3M 6M ytd 9M 12M 2013

(%) (%)

Infrastructure-related sector relative to JCI Source: Bloomberg, Bahana

2015 Compendium

42

Sectors – Ranked by 1M performance: Third Property/industrial estates: Underperforming on slow marketing sales

and rate-hike concerns, despite positive sentiment on possible foreign ownership in luxury apartments.

Plantations: Hit by a weaker-than-expected El Nino, larger-than-expected soy production and higher-than-expected global oil supplies weighing on CPO prices.

Coal: With coal prices well below USD70/ton, the sector has underperformed.

Property sector: relative performance

(1.5)

(6.6)

(3.9)

11.9

6.2

1.5

(1.7)

(10)

(5)

0

5

10

15

(10)

(5)

0

5

10

15

1M 3M 6M ytd 9M 12M 2013

(%) (%)

Property/ industrial estates sector relative to JCI


Plantations related: relative performances

(2.7)

(16.7)(20.7)

(26.2)

(9.7)

(3.2)

6.3

(30)

(25)

(20)

(15)

(10)

(5)

0

5

10

(30)

(25)

(20)

(15)

(10)

(5)

0

5

10

1M 3M 6M ytd 9M 12M 2013

(%) (%)

Plantations sector relative to JCI


Coal sector: relative performances

(3.1)(5.9)

2.8

(14.8)

(7.2)

(11.6)

(20.5)

(25)

(20)

(15)

(10)

(5)

0

5

(25)

(20)

(15)

(10)

(5)

0

5

1M 3M 6M ytd 9M 12M 2013

(%) (%)

Coal sector relative to JCI


2015 Compendium

43

Sectors – Ranked by 1M performance: Last Cement: Concerns about the recent rate hike have eroded

performance, despite the sector being an infrastructure proxy due to its large market capitalization and liquidity.

Automotive: Poor performance due to its interest-rate-sensitive status and weak auto segment results on intense competition, leading to lower margins.

Metals: Suffering from weak sentiment due to possible relaxation on ore ban due to CAD.

Cement sector: relative performance

(3.9)

(9.8) (9.4) (8.8)

(14.0)

(1.8)

21.4

(15)

(10)

(5)

0

5

10

15

20

25

(15)

(10)

(5)

0

5

10

15

20

25

1M 3M 6M ytd 9M 12M 2013

(%) (%)

Cement sector relative to JCI Source: Bloomberg, Bahana

Automotive related: relative performances

(5.2)

(12.0)

(15.8)

(18.6) (18.3)

(13.8)

(9.7)

(20)

(16)

(12)

(8)

(4)

0

(20)

(16)

(12)

(8)

(4)

0

1M 3M 6M ytd 9M 12M 2013

(%) (%)

Automotive sector relative to JCI


Metals sector: relative performances

(7.1)

(2.0)

4.5

10.5

29.5

14.9

7.5

(10)

(5)

0

5

10

15

20

25

30

35

(10)

(5)

0

5

10

15

20

25

30

35

1M 3M 6M ytd 9M 12M 2013

(%) (%)

Metals sector relative to JCI


2015 Compendium

44

4Q14F operating and net profit growth, by company For the market as a whole, we expect 4Q14 earnings to experience

some y-y improvements due to relatively weak levels seen in 4Q13.

This should be supported by sectors booking above-market growth rates in Poultry, Telco-related, Property and Infra-related.

However, we expect weakness in Banks, Consumer with earnings contractions seen in the worst three sectors under our coverage: Automotive, Plantations and Coal.

Market performance* (%) Operating profit y-y growth Net profit y-y growth

4Q13 4Q14F 4Q13 4Q14F

Bahana universe 8.5 11.6 0.8 12.5 Source: Company, Bloomberg, Bahana estimates *excluding metals

The good Operating profit y-y growth Net profit y-y growth

4Q13 4Q14F 4Q13 4Q14F

Poultry 68.0 101.6 (53.6) 719.9

Telco-related (21.0) 48.5 (30.0) 87.7

Property 9.5 65.6 (5.7) 64.6

Infra-related 36.5 14.0 44.9 20.2 Source: Company, Bloomberg, Bahana estimates

The bad

Operating profit y-y growth Net profit y-y growth

4Q13 4Q14F 4Q13 4Q14F

Oil-related 24.8 4.5 0.4 18.6

Metals (19.3) (24.1) (87.9) 14.6

Cement 1.2 13.9 (1.1) 11.6 Source: Company, Bloomberg, Bahana estimates

The ugly Operating profit y-y growth Net profit y-y growth

4Q13 4Q14F 4Q13 4Q14F

Banks 17.5 4.2 12.9 11.2

Consumer 13.6 6.9 11.9 5.6

Automotive 18.4 (14.5) 10.5 (6.2)

Plantations 59.9 (32.0) 39.2 (26.5)

Coal-related (28.1) 9.6 5.1 (112.9) Source: Company, Bloomberg, Bahana estimates

Correlation between earnings and GDP, 1Q11-4Q14F

6.5 6.5 6.5

6.3 6.4

6.2 6.1 6.0

5.8

5.6

5.7

5.5 5.5

5.2 5.2

5.0

5.2

5.4

5.6

5.8

6.0

6.2

6.4

6.6

(5)

0

5

10

15

20

25

30

35

2Q11 4Q11 2Q12 4Q12 2Q13 4Q13F 2Q14 4Q14F

(%)(%)

Opt profit y-y growth Net profit y-y growth GDP y-y growth (RHS) Source: Companies, Bahana estimates, CEIC

2015 Compendium

45

4Q14F operating profit y-y growth gainers Ticker 4Q14F operating

profit y-y growth (%) Ticker 4Q14F operating

profit y-y growth (%)

ISAT IJ 4,493.7 RALS IJ 11.1

RANC IJ 1,289.3 ADHI IJ 9.2

IMAS IJ 600.0 BBCA IJ 8.0

GIAA IJ 498.1 TELE IJ 7.2

LPKR IJ 429.2 ASSA IJ 7.0

JPFA IJ 380.6 ITMG IJ 6.6

MAIN IJ 314.6 SMCB IJ 6.2

MLPL IJ 291.7 INDF IJ 5.9

CPIN IJ 144.8 TOWR IJ 5.0

INCO IJ 111.3 UNVR IJ 4.3

ANTM IJ 111.1 PGAS IJ 3.7

ASRI IJ 99.7 PTPP IJ 2.7

BJBR IJ 97.8 BBTN IJ 2.3

ICBP IJ 76.2 BMRI IJ 1.4

BJTM IJ 69.1 ROTI IJ (0.2)

TLKM IJ 56.8 MEDC IJ (2.4)

CTRA IJ 51.8 BDMN IJ (2.8)

SRIL IJ 48.7 MNCN IJ (3.9)

HRUM IJ 47.8 MAPI IJ (4.8)

BBKP IJ 47.3 GJTL IJ (5.7)

PWON IJ 39.1 ACES IJ (5.7)

TAXI IJ 38.9 BBRI IJ (8.5)

HERO IJ 35.4 WINS IJ (13.0)

BWPT IJ 32.0 SCMA IJ (15.1)

CASS IJ 31.2 UNTR IJ (16.9)

SMRA IJ 30.5 ASII IJ (16.9)

TSPC IJ 29.2 SGRO IJ (18.3)

BSDE IJ 29.0 LPCK IJ (23.7)

WTON IJ 28.4 MYOR IJ (25.8)

GGRM IJ 26.2 KIJA IJ (26.6)

CMNP IJ 25.8 AALI IJ (27.5)

BBNI IJ 24.7 SMBR IJ (27.9)

BTPN IJ 24.2 EXCL IJ (27.9)

APLN IJ 24.0 TOTL IJ (34.2)

SSIA IJ 23.3 ANJT IJ (37.9)

WSKT IJ 22.0 MPPA IJ (41.8)

JSMR IJ 21.8 LSIP IJ (43.9)

AKRA IJ 17.2 SIMP IJ (45.6)

INTP IJ 16.8 PTBA IJ (50.1)

SMGR IJ 16.5 BEST IJ (54.4)

CTRP IJ 15.9 SIDO IJ (54.6)

WIKA IJ 14.3 ADRO IJ (65.7)

KLBF IJ 13.3 TINS IJ (68.5)

Bahana universe 12.6 KRAS IJ (125.0)

ERAA IJ 11.9 BUMI IJ (192.5)Source: Bahana estimates

4Q14F net profit y-y growth gainers Ticker 4Q14F operating

profit y-y growth (%) Ticker 4Q14F operating

profit y-y growth (%)

MAIN IJ 9,231.9 BMRI IJ 6.1 ASRI IJ 4,041.9 BBTN IJ 5.8 IMAS IJ 577.6 ITMG IJ 5.6 KIJA IJ 416.8 APLN IJ 5.5 BUMI IJ 392.9 BDMN IJ 5.4 LPKR IJ 371.7 UNVR IJ 5.1 TOWR IJ 335.4 TAXI IJ 3.7 GJTL IJ 281.7 WIKA IJ 3.6 JPFA IJ 225.5 TELE IJ 1.7 AKRA IJ 203.1 MPPA IJ (1.8) EXCL IJ 195.8 CASS IJ (1.9) CPIN IJ 183.1 ACES IJ (5.6) GIAA IJ 108.7 RALS IJ (9.2) BTPN IJ 105.4 SGRO IJ (9.3) HRUM IJ 71.3 UNTR IJ (9.7) INDF IJ 64.5 ANJT IJ (11.6) BBKP IJ 59.8 ADRO IJ (12.5) JSMR IJ 58.2 SCMA IJ (12.5) BJTM IJ 57.5 AALI IJ (13.0) RANC IJ 51.3 WINS IJ (13.3) WTON IJ 45.1 ASII IJ (13.6) ICBP IJ 43.8 ADHI IJ (14.7) LPPF IJ 38.2 ROTI IJ (15.9) PWON IJ 34.9 MAPI IJ (21.5) BJBR IJ 33.7 LPCK IJ (23.7) SMRA IJ 32.4 LSIP IJ (34.6) CTRA IJ 31.4 MEDC IJ (35.9) PTPP IJ 29.5 ERAA IJ (36.5) TLKM IJ 26.4 TOTL IJ (38.1) GGRM IJ 23.5 SMBR IJ (41.0) CTRP IJ 21.7 PTBA IJ (41.4) CMNP IJ 20.9 SSIA IJ (41.7) BBNI IJ 20.3 MYOR IJ (42.8) WSKT IJ 18.5 ASSA IJ (47.4) PGAS IJ 16.4 SRIL IJ (48.6) TSPC IJ 15.4 BWPT IJ (50.1) INTP IJ 14.3 SIMP IJ (55.7) BSDE IJ 13.6 BEST IJ (56.5) SMCB IJ 13.3 SIDO IJ (66.5) SMGR IJ 12.6 TINS IJ (69.9) Bahana universe 12.5 HERO IJ (77.4) MNCN IJ 11.7 ISAT IJ (97.4) KLBF IJ 10.1 MLPL IJ (126.1) BBCA IJ 8.0 ANTM IJ (386.3) Source: Bahana estimates

2015 Compendium

46

Impact from weaker IDR Each 1% IDR depreciation would lower the EPS of our covered stocks

by 0.8% overall, based on our estimates.

Thus, IDR weakness should benefit dollar earners, although the positive impact could be offset by stronger dollar which would cause lower commodity prices.

Additionally, a stronger dollar should in general spell bad news for corporates with large USD debt.

IDR depreciation: Sensitivity analysis USD 2Q14 Sensitivity USD 2Q14 Sensitivity

Sales Costs Cash DebtNet to net profit

Sales Costs Cash DebtNet to net profit

Ticker gearing on 1% IDR Ticker gearing on 1% IDR

(%) (USDm) (%) Depreciation (%) (%) (USDm) (%) Depreciation (%)

SIMP 100 50 30 149 50.9 5.3 TLKM 0 33 344 0 27.9 (0.4)

BWPT 100 45 0 1 151.2 4.6 ERAA 0 0 2 20 58.9 (0.6)

SGRO 100 60 0 0 41.0 3.9 GGRM 0 10 24 0 36.2 (0.6)

LSIP 100 51 32 0 nc 3.1 INTP 1 51 96 0 nc (0.6)

CASS 45 15 1 1 17.0 2.9 MYOR 42 60 28 0 94.9 (0.7)

UNTR 100 82 344 158 nc 2.6 TAXI 0 12 0 0 101.6 (0.7)

AALI 100 48 1 231 22.8 2.4 ADHI 20 35 15 0 88.0 (0.8)

GJTL 100 85 53 231 82.3 2.4 SMGR 1 41 12 0 5.1 (0.8)

TBLA 100 60 16 120 76.1 2.3 WTON 5 25 0 0 nc (0.8)

MLPL 4 10 94 6 4.4 1.6 PTPP 20 35 23 0 113.0 (0.9)

SSIA 20 15 80 2 nc 1.4 WSKT 20 35 3 0 69.0 (0.9)

AKRA 90 85 27 169 69.0 1.1 JCI 11084 35244 33.1 (1.1)

BEST 93 15 20 37 8.9 0.6 WIKA 25 40 20 29 8.0 (1.2)

CTRP 16 25 202 0 39.2 0.5 SMBR 0 60 0 0 nc (1.4)

APLN 22 30 630 0 36.2 0.4 TSPC 5 75 56 7 nc (1.4)

ASII 40 30 391 2028 52.4 0.4 TELE 0 5 0 0 74.3 (1.5)

BSDE 18 25 807 0 1.6 0.3 IMAS 10 10 31 111 229.3 (1.6)

LPCK 30 10 1 0 nc 0.3 UNVR 5 85 27 0 nc (1.7)

LPKR 14 20 1074 9614 47.5 0.2 INDF 29 53 418 820 67.2 (2.1)

SMRA 24 25 55 36 nc 0.0 KLBF 5 75 47 11 nc (2.1)

WINS* 100 100 3 0 61.7 n/a KIJA 73 8 19 178 45.2 (2.2)

PSAB* 100 60 1.6 0.0 88.1 n/a TOTL 0 40 3 0 nc (2.2)

ADRO* 100 100 786 1178 39.6 n/a RALS 0 30 12 0 nc (2.4)

ANJT* 100 45 26 4 nc n/a TINS 93 76 28 75 28.0 (2.6)

BUMI* 100 100 59 3747 n/a n/a LPPF 0 30 0 0 n/a (2.7)

GIAA* 45 40 368 1192 88.6 n/a EXCL 0 10 47 1078 167.1 (3.0)

HRUM* 100 100 160 0 nc n/a MPPA 0 15 0 0 nc (3.2)

INCO* 95 75 277 165 nc n/a ASRI 5 25 1052 6118 84.9 (4.0)

ITMG* 100 100 267 0 nc n/a ACES 0 65 2 0 nc (4.1)

KRAS* 80 75 194 1045 88.0 n/a ROTI 0 75 1 26 31.7 (4.2)

MEDC* 100 100 247 1,088 93.0 n/a ICBP 9 76 99 63 nc (4.4)

PGAS* 100 100 1,437 2,116 28.0 n/a HERO 0 15 1 0 nc (4.5)

SCMA 0 15 16 0 nc (0.0) CPIN 0 70 42 372 30.8 (4.7)

CMNP 0 12 0 0 nc (0.1) SMCB 0 57 9 294 50.5 (4.8)

JSMR 0 8 1 0 104.0 (0.1) SRIL 67 85 1 96 34.8 (6.6)

PWON 36 25 229 689 nc (0.1) MAIN 0 70 11 73 71.5 (7.2)

MNCN 0 20 6 0 nc (0.2) KAEF 6.3 75 0 1 2.6 (8.7)

SIDO 5 17 1 0 nc (0.2) JPFA 0 60 94 346 127.4 (11.9)

TOWR 100 70 159 425 162.5 (0.2) MAPI 2 80 1 0 120.3 (13.3)

ANTM 78 66 71 201 34.1 (0.3) PTBA 90 98 30 0 nc (17.1)

ASSA 0 7 0 0 146.9 (0.3) RANC 0 70 0 0 11.9 (21.5)

CTRA 5 27 269 0 3.2 (0.4) ISAT 0 22 50 896 118.8 (584.7) Source: IDX, companies, Bahana *USD reporting **Excluding ISAT

Various stock market performances ytd in

USD

Asia (%) (%) (%)

SHENZHEN (China) 1,351 27.7 26.4 20.0

SENSEX (India) 26,297 24.2 25.0 9.0

VNI (Vietnam) 618 22.4 21.8 22.0

PCOMP (Phil.) 7,167 21.7 20.8 1.3

SET (Thailand) 1,553 19.6 20.3 (6.7)

IDX (Indonesia) 4,963 16.1 15.7 (1.0)

SHCOMP (China) 2,375 12.2 11.0 (6.7)

TWSE (Taiwan) 8,966 4.1 12.1 11.8

STI (Singapore) 3,224 1.8 0.7 0.0

Hang Seng (HK) 23,089 (0.9) (1.0) 2.9

KLCI (Mal.) 1,809 (3.1) (2.6) 10.5

KOSPI (Korea) 1,941 (3.5) (5.5) 0.7

Nikkei (Japan) 15,301 (6.1) (8.3) 56.7

2013

Last

ytdStock market

ytd in

USD

Others (%) (%) (%)

IBOV (Brazil) 55,312 7.4 4.5 (15.5)

NZSE (New Zealand) 1,047 4.8 (0.3) 13.2

S&P/TSX (Toronto) 14,227 4.4 (1.0) 9.6

S&P 500 (USA) 1,906 3.1 3.1 29.6

MADX (Madrid) 1,036 2.4 (3.0) 22.7

Nasdaq (USA) 4,276 2.4 (2.4) 38.3

SMI (Swiss) 8,375 2.1 (5.1) 20.2

Dow Jones (USA) 16,544 (0.2) (0.2) 26.5

CAC 40 (France) 4,074 (5.2) (10.6) 18.0

FTSE 100 (UK) 3,821 (6.1) (9.0) 15.1

ASX (Australia) 3,380 (6.4) (9.0) 16.7

DAX (Germany) 8,789 (8.0) (13.4) 25.5

RTSI (Russia) 1,064 (26.2) (49.0) (5.5)

Stock market

Last

ytd 2013

Source: Bloomberg as of 09 October 2014

2015 Compendium

47

Market risk: Valuation not cheap Market valuation is not cheap, at a 2015F PE of 17x, above the regional

average. However, excluding UNVR’s high multiple and market capitalization, our 2015 market PE would decrease to just 14.5x, at par with the region.

We expect 2015F EPS growth to reach 11.6% y-y, slightly below regional average.

On the other hand, we look for a 2015F PEG of 1.5x, above regional average, but excluding UNVR, our market PEG would only be around 1.2x.

Regional PE comparison,2015F

18.6 18.1

17.0 16.4

15.5 14.6

11.5

10.4

9.0

7

10

13

16

19

Philippines India Indonesia Malaysia Thailand Singapore SouthKorea

Hong Kong China

(x)

Average: 14.6x

Source: Bloomberg as of 09 October 2014, Bahana *excluding ISAT and EXCL

Regional EPS growth comparison, 2015F

16.5 16.1 15.6 14.4

11.7 11.6

9.6 8.1

6.6

0

3

6

9

12

15

18

South Korea Philippines India Thailand China Indonesia Malaysia Hong Kong Singapore

(%)

Average: 12.2%


Regional PEG comparison, 2015F

2.2

1.7 1.5 1.5

1.3 1.2 1.2

0.8 0.7

0.0

0.5

1.0

1.5

2.0

2.5

Singapore Malaysia Thailand Indonesia Hong Kong Philippines India China SouthKorea

(x)

Average: 1.3x


2015 Compendium

48

Sector and stocks: Defensives At this stage of the cycle, we retain our 5,300 end-2014 index target,

assuming solid progress during Jokowi’s first 100 days in office, including fuel price hike and greater parliament coalition. For 2015, we expect the index to rise to 5,900, in line with our market EPS growth estimate of 11.6%.

At this stage of cycle, we are heavily weighted in defensives: 3 telcos, 5 consumer stocks, 1 gas play and 1 toll road operator. On the flip side, we remain negative on commodity-related exposure due to the current global deflationary pressure.

Our top five sells are all in consumer discretionary, which we expect to suffer next year due to lower purchasing power. These include media, retail, confectionery and automotive.

Favored stocks (10 Stocks), stocks to avoid (5 stocks), 2015F

Stock Mkt cap. Price TP Upside EPS growth PER PBV Yield ROE ytd

perf.

(USDm) (IDR) (IDR) (%) (%) (x) (x) (%) (%) (%)

TLKM 23,153 2,800 3,350 20 13.2 16.2 3.8 4.0 25.0 14.6

UNVR 19,216 30,700 37,500 22 22.2 34.8 41.6 2.7 130.8 1.2

PGAS 11,484 5,775 7,000 21 7.8 14.4 3.6 3.5 26.9 12.2

GGRM 8,808 55,800 70,000 25 13.7 17.6 2.9 2.4 17.6 16.0

KLBF 6,364 1,655 1,975 19 15.4 31.7 7.1 1.4 24.1 15.6

ICBP 5,298 11,075 13,300 20 18.7 20.8 4.1 2.1 20.8 (8.3)

JSMR 3,514 6,300 7,200 12 6.3 25.0 3.7 1.6 15.7 16.5

ISAT 1,716 3,850 4,500 17 na na 1.3 - (0.2) (24.1)

TELE 511 885 1,160 31 21.0 15.1 2.4 1.7 17.1 25.9

KAEF 497 1,090 1,400 28 32.2 22.2 3.0 0.9 14.5 67.9

SCMA 4,228 3,525 2,550 (28) 11.4 31.3 11.4 1.4 40.8 17.4

MNCN 3,426 2,945 2,300 (22) 0.4 23.1 4.3 2.0 20.4 (4.6)

MYOR 2,179 29,700 25,500 (14) 52.9 28.0 5.1 0.7 20.2 (2.6)

IMAS 977 4,305 3,000 (30) 5.0 28.9 1.8 0.9 6.5 (29.0)

RALS 483 830 720 (13) (3.7) 15.1 1.6 3.6 11.0 (38.5) Source: Bloomberg as of 09 October 2014, Bahana estimates

Sectoral rating summary, 2015F Rating Operating growth (%) EPS growth (%) PER (x)

OW N UW Bahana Cons. Bahana Cons. Bahana Cons.Aviation √ N/A N/A 2.1 N/A 14.1 N/A

Metal mining √ (15.3) (196.1) (18.8) 131.5 25.2 11.7

Plantations √ 24.8 9.4 18.1 11.4 11.3 9.5

Telcos √ 14.2 10.8 (15.1) 19.3 16.8 17.9Poultry √ 25.3 26.2 26.8 28.2 16.5 15.7

Transportation √ 19.6 21.5 13.8 25.0 13.6 12.0

Property √ 1.3 13.7 (5.8) 8.2 11.4 11.7Coal mining √ 14.9 5.2 (1.2) 5.0 12.1 9.9

Const. & infra. √ 17.7 17.8 24.4 19.3 19.2 18.6

Automotive √ 8.2 13.6 3.9 12.0 13.6 11.4 Banks √ 13.4 14.9 13.3 15.0 11.7 11.8Consumer √ 15.8 15.8 17.9 19.7 27.3 25.3Cement √ 11.6 12.2 11.6 9.6 13.5 14.6Industrial estates √ 2.5 13.0 9.1 34.5 9.2 7.1Oil and gas √ 17.4 10.8 40.3 22.3 15.1 14.4 Source: Bloomberg as of 09 October 2014, Bahana estimates

Market data

11A 12A 13A 14F 15F

Operating profit growth (%) 20.9 14.6 8.7 11.4 11.7

EPS growth (%) 26.4 6.9 3.7 14.3 11.6

P/E (x) 30.3 25.6 23.7 19.1 17.0

PEG (x) 1.1 3.7 6.4 1.3 1.5

EV/EBITDA (x) 13.3 11.5 10.4 10.9 8.8

P/BV (x) 10.0 8.3 6.6 8.5 6.0

P/BV (x) exc. UNVR & LPPF 6.2 4.8 3.8 3.5 3.0

Div. yield (%) 2.0 2.2 2.2 2.5 2.7

Net gearing (%) 10.7 12.8 17.8 23.0 19.5

ROE (%) 32.2 31.4 29.6 28.7 31.1

ROA (%) 12.3 13.0 11.8 11.3 11.5

ROIC (%) 24.0 26.9 13.1 22.3 25.7 Source: Bloomberg as of 09 October 2014, Bahana estimates

2015 Compendium

49

2015 technical perspective: Consolidation year The JCI reached an all-time high of 5,262 on Jokowi’s victory, but

political deterioration has caused the JCI to pull back and test the 5,000 psychological level, testing support levels at 4,822 to 4,685. The JCI accumulation level is seen at 4,822-4,825.

There is strong resistance for the JCI at the 5,300 level and we see resistance targets for 2015 at 5,535 in 1H15, before reaching 5,840 by end-2015.

On currency, we see 2015 movements at 11,770 to 12,800, with stronger tendency. On oil, we expect a trading range of 78–99/bbl, with a downward bias.

JCI – weekly chart

Resistance 2 level at 5,840

Accumulation level at 4,822

Support 1 level at 4,822

Support 2 level at 4,685


Oil – weekly chart

Resistance 2 level at 99.5

Resistance 1 level at 95.2

Support 1 level at 82.9

Support 2 level at 78.6


Local currency – weekly chart

Support level at 11,770

Resistance level at 12,800


2015 Compendium

50

IPO hiccup in 2014 due to elections

In 2014 ytd, we have seen 17 IPOs (IDR5tn fundraising), compared to 24 in the same period last year.

Source: Bloomberg as of 09 October 2014

2013 IPOs

# Ticker Description Listing dateFundsraised(IDRb)

IPOprice(IDR)

2013price(IDR)

Change(%)

Since listing

(%)1 BBRM Shipping 9-Jan-13 138 230 153 (33.5) (43.5)

2 HOTL Hotel management 10-Jan-13 102 185 171 (7.6) (12.4)

3 SAME Hospital 11-Jan-13 72 400 2,500 525.0 542.5

4 MAGP Plantation 16-Jan-13 440 110 100 (9.1) (32.7)

5 TPMA Transportation 20-Feb-13 91 230 285 23.9 30.4

6 ISSP Steel 22-Feb-13 856 295 144 (51.2) (41.7)

7 DYAN Entertainment 25-Mar-13 449 350 235 (32.9) (32.6)

8 ANJT Plantations 8-May-13 400 1,200 1,460 21.7 33.3

9 NOBU Banking 20-May-13 808 375 590 57.3 138.7

10 MPMX Automotive 29-May-13 1,455 1,500 1,280 (14.7) (23.3)

11 DSNG Plantations 14-Jun-13 509 1,850 2,050 10.8 67.6

12 SRIL Textile 17-Jun-13 1,344 240 245 2.1 (20.4)

13 ACST Construction 24-Jun-13 375 2,500 1,990 (20.4) (4.8)

14 SRTG Investment 26-Jun-13 1,492 5,500 4,700 (14.5) (20.0)

15 NRCA Construction 27-Jun-13 260 850 670 (21.2) 15.9

16 SMBR Cement 28-Jun-13 1,309 560 330 (41.1) (16.1)

17 ECII Retail 3-Jul-13 1,350 4,050 2,775 (31.5) (43.2)

18 VICO Finance 8-Jul-13 150 125 119 (4.8) 11.2

19 BBMD Banking 8-Jul-13 593 1,380 1,570 13.8 31.2

20 MLPT Information Tech 8-Jul-13 180 480 1,010 110.4 108.3

21 NAGA Banking 9-Jul-13 80 180 180 0.0 5.6

22 CPGT Transportation 9-Jul-13 69 190 285 50.0 (2.1)

23 BMAS Banking 11-Jul-13 246 320 315 (1.6) (3.1)

24 SILO Hotel management 12-Sep-13 1,405 9,000 9,500 5.6 21.1

25 APII Pipe distributor 29-Oct-13 61 220 225 2.3 9.1

26 KRAH Heavy equipment 8-Nov-13 45 275 290 5.5 18.2

27 IMJS Auto finance 10-Dec-13 225 500 590 18.0 35.0

28 LEAD Marine services 11-Dec-13 357 2,800 2,900 3.6 28.6

29 SSMS Plantations 12-Dec-13 1,005 670 820 22.4 72.4

30 SIDO Manufacture 18-Dec-13 870 580 700 20.7 42.2

Average exc. SAME 16,735 3.1 12.9 Source: Bloomberg

Fundraising activities, 2012-2014 ytd

10 19 41

160

17 31 31

232

5 8 29

265

0

50

100

150

200

250

300

IPO RI Corp bonds Govt bonds

(IDRt)

2012 2013 2014ytd

Source: Bloomberg, IDX, Ministry of Finance

# Ticker Description Listing date Funds raised (IDRb)

IPO price (IDR)

Current price (IDR)

Change (%)

1 PNBS Banking 15-Jan-14 475 100 162 62.0 2 ASMI Insurance 16-Jan-14 109 270 478 77.0 3 CANI Transportation 16-Jan-14 42 200 253 26.5 4 BINA Banking 16-Jan-14 125 240 255 6.3 5 BALI Infrastructure 13-Mar-14 35 400 2,190 447.5 6 WTON Construction 8-Apr-14 1,207 590 1,010 71.2 7 BLTZ Media 10-Apr-14 223 3,000 3,170 5.7 8 MDIA Media 11-Apr-14 541 1,380 1,840 33.3 9 LRNA Transportation 15-Apr-14 135 900 286 (68.2)10 DAJK Manufacture 14-May-14 470 470 489 4.0 11 LINK Media 2-Jun-14 487 1,600 7,200 350.0 12 CINT Manufacture 27-Jun-14 99 330 396 20.0 13 MGNA Finance 7-Jul-14 74 105 91 (13.3)14 BPII Consultant 8-Jul-14 75 500 550 10.0 15 MBAP Coal 10-Jul-14 319 1,300 1,285 (1.2)16 TARA Property 11-Jul-14 424 106 368 247.2 17 DNAR Banking 11-Jul-14 55 110 196 78.2 Average 4,894 79.8

2015 Compendium

51

2014-15 IPOs # Company name Sector # Company name Sector1 Airasia Indonesia Airlines 19 Mitra Keluarga Health care2 Andira Agro Plantations 20 Pacific Agro Sentosa Plantations3 Asia Mangan Group Mining 21 Pegadaian Indonesia Finance4 Bank DKI Banking 22 Pelita Cengkareng Paper Packaging manufacture5 Bank Kesejahteraan Ekonomi Banking 23 Perkebunan Nusantara III, IV and VII Plantations6 Bank Muamalat Banking 24 Pertamina Drilling Services Indonesia Oil-related7 Bank Sumatera Utara Banking 25 Pertamina Hulu Energi Oil-related8 Bank Syariah Mandiri Banking 26 Pertamina Gas Gas distribution9 Blue Bird Group Transportation 27 Pertamina Geothermal Energy Electricity10 Daya Mitra Telekomunikasi Indonesia Telecommunication 28 PLN Batam Electricity11 Daya Mandiri Resources Indonesia Coal mining 29 Pos Indonesia Logistics12 Dutapalma Nusantara Plantations 30 Pos Logistik Logistics13 GMF Aero Asia Target Aero services 31 Puradelta Lestari Property14 Indoprima Gemilang Auto-parts 32 Semen Batam Cement15 Infomedia Nusantara Services 33 Siba Surya Logistics16 Intan Baruprana Finance Multi-finance 34 Soechi Lines Trading17 Kawasan Berikat Nusantara Industrial estates 35 Sriboga Raturaya Restaurant18 Krakatau Wijatama Steel manufacture 36 Toko Buku Kharisma Book store

Source: Bahana

Number of listed companies, 2007-2014 ytd

360

381

396

421

440

459

485

502

350

400

450

500

2007 2008 2009 2010 2011 2012 2013 2014ytd

(companies)


Market capitalization, 2007-2014 ytd

204

91

205

348 366

398

322

380

80

160

240

320

400

2007 2008 2009 2010 2011 2012 2013 2014ytd

(USDb)


2015 Compendium

52

Indonesia market: Positive in the long run Despite weakness in the short term, investors appear to remain

confident about Indonesia’s longer-term outlook as shown by foreign ownership in government bonds, the highest in the region.

Looking ahead, we see rising foreign participation in the stock market, assuming improvement on the macro front.

Potential upside also lies in the number of individual accounts, currently around 439k and translating into just 0.17% of Indonesia’s total population

Foreign ownership of total gov’t bonds in selected countries, 2Q14

35.66

30.76

15.85

10.58.42

0

5

10

15

20

25

30

35

40

Indonesia Malaysia Thailand Korea Japan

(%)

Source: Asian Development Bank

Stock ownership in JCI, 2009-2013, 9M14

30

1826

2226

1826

19 34

1834

19

70

82

74

78

74

82

74

81

66

82

66

81

67

33

63

37

61

39

54

46

57

43

56

44

0

10

20

30

40

50

60

70

Foreign Domestic Foreign Domestic Foreign Domestic Foreign Domestic Foreign Domestic Foreign Domestic

2009 2010 2011 2012 2013 9M14

(%)

Retail Institution

Source: KSEI

Number of accounts as % of Indonesia’s population, 2010-13, 9M14

332

366 363

408

439

0.14 0.15

0.15

0.16

0.17

0.13

0.14

0.15

0.16

0.17

0.18

330

350

370

390

410

430

450

2010 2011 2012 2013 9M14

(%)(thousands)

Number of accounts % of Indonesia's population (RHS) Source: KSEI, Bahana

2015 Compendium

53

FDI: Balance of payment support Indonesia remains as one of the most desirable investment

destinations due to its young and productive population base and rising incomes. Since 2011, we note that around USD231b of investment commitments have been made.

To date, Indonesia business players have signed on 23 investment projects from China amounting to USD28.7b and USD3.7b from South Korea.

We expect these investment commitments to support our balance of

payments over the longer term.

China’s current investment plans

Foreign investment plans, since 2011 Sector Amount Major investors

(USDm)Oil & gas 50,673 BP Plc (London; location: West Papua; type: Tangguh project)Infrastructure 38,970 China Power Investment Corp. (China; location: North Kalimantan; type: hydro power plant)Metal 28,150 Eramet Sa (French; location: Central and East Halmahera; type: Nickle and Cobalt mine & hydrometallurgical processing plant)Conglomerates 23,467 China Hi Tech Group (China; location: Alas Kethu, Central Java; type: cement, textile fact & sea port)Petrochemical 21,047 Honam Petrochemical Corp (South Korea; location: Cilegon; type: Petrochemical factory)& PTT Global Chemical (Thailand; type: new plant)Manufacturing 18,454 Foxconn (Taiwan; location: Cikande; type: manufacturing plant)Steel 13,165 Posco (South Korea; location: Cilegon; type: steel factory)Automotive 7,564 Hankook Tire (South Korea; location: Cikarang; type: tire fact.)Cement 5,193 State Development and Investment Corporation (China; location: West Papua; type: cement fact.)Aviation 4,700 Kuwait Airways (Kuwait; type: purchase 25 aircraft)Mining 4,500 United Co. Rusal (Russia; type: smelter factory)Consumer 4,157 L'OREAL (Paris; location: Jakarta, Bandung, Karawang; type: new fact.)Construction 3,300 China National Machinery Import & Export Corp (China; location: Bandung; type: monorail)Pulp 1,800 OKI Pulp & Paper Mills (China; location: South Sumatera; type: pulp factory)Transportation 1,761 Deutsche Post DHL (Netherlands; type: new logistic warehouse)Property 1,683 Accor group (Germany; type: 57 hotels)Heavy Equipment 1,450 Sany Group Indonesia (China; location: Cengkareng; type: equipments)Coal 626 Cokal (Australia; type: coal fact.)Plantations 555 Mewah International (China; location: East Java; type: CPO cultivation's refinery)Poultry 155 New Hope Group (China; location: Medan; type: poultry breeding)Financial 40 Hanwa Life (South Korea; type: business expanssion)IT 4 Apple Inc (US; type: new online stores)Total 231,414 Source: Various sources

Source: Various sources

South Korea’s current investment plans Source: Various sources

Company Type of investment Sector Amount Location(USDm)

Indika Energy with China Railway Group and Export-Import Bank of China

Construction of mining facilities, roads, bridges, and ports Conglomerate 6,000

Papua and Central Kalimantan

Bintang Delapan Investama with China Development Bank, Shanghai Decent Investment, and China-ASEAN Invesment

Investment agreements and financing infrastructure projects FeNi plant Infrastructure 5,100 -

Bumi Makmur Selaras with Hanking Industrial Group

Development of power plants, smelters nickel, cement, and steel Conglomerate 3,000

North Koonawe, Southeast Sulawesi

OKI Pulp & Paper Mills with China Development Bank Pulp factory Pulp 1,800

Ogan Komering Ilir, South Sumatera

Sarana Infrastruktur Indonesia and Jasa Sarana with China National Machinery Import & Export Corporation

Monorail

Construction 1,800 Bandung, West Java

Garuda Indonesia with ICBC Financial Leasing

Sale and lease back 5 units B777-300ER aircraft and lease six A320-200 aircraft to service flights in eastern Indonesia Aviation 1,700 -

Government of West Kalimantan and Borneo Alumindo Prima with Hangzhou Jinjiang Group

bauxite production by 5 million tons / a, alumina 1.5 million tons / a, power of 30 MW (PLTSa) Conglomerate 1,700 -

Jakarta Monorail with China Communication Construction Group Jakarta Monorail Construction 1,500 -Billy Indonesia and Indonusa Dwitama with China Aluminum Corporation of China Alumina smelter Aluminium 1,400 West KalimantanDaya Bumindo Karunia with China Development Bank and China Harbour Engineering Company

Financing construction of port facilities and transport Infrastructure 1,100 -

Cita Mineral Investindo with China Hongqiao Group and Winning Investment

Joint venture Investment Agreement Aluminium 1,000 -

Yinyi Indonesia Mining Investment Group with Harum Sukses Mining and Bumi Halteng Mining Smelter 900 -PLN, Kawasan Industri Medan with Mabar Elektrindo

Development and supply of electricity Electricity 500 -

DSSP Power South Sumatera with China Development Bank Framework agreement Energy 400 -SDIC Papua Cement Indonesia with Bank of China Cement 345 -Sawah (Indonesia) with Jiangsu Dafeng Harbor Holding Group

Manage Indonesia Dafeng Port Heshun Nickel Industri Metal 250 -

Tianjin Julong Jiahua Investment Group with Rezeki Kencana and Grand Mandiri Utama Oil palm plantation development Plantation 200 West Kalimantan

Balitbang SDM Kemkominfo,Telkom Indonesia, and Telkomsel with Huawei Tech Investment - IT 1 -Total 28,696

Company Type of investment Sector Amount Location(USDm)

Mandala Resources, Coalindo Adhi Nusantara, True North Bridge Capital, Tanah Laut, and Hanwa S&C

Development of railway from Baai Island, Bengkulu to Enim Estuary, South Sumatera Infrastructure 3,000 -

Tebo Agung Int’l and Korea South-East Power

Steam power plant Tebo 2x200MW Infrastructure 600 Jambi

Teluk Bintuni Mina Agro Karya with Korea South-East Power Woodpellet fuel project Oil & gas 55 West Papua

Sugico and Hanjin D&BCoal Bed Methane (CBM) drilling rig Coal 30 -

Sugico Graha and Korea Gas Corporation Wider cooperation Oil & gas 4 -Total 3,689

2015 Compendium

54

Attractive domestic story Indonesia’s huge population base of more than 240m, with a median

age of just 26 years and where 60.0% are productive, should translate into a sustainable domestic growth story.

Strong economic fundamentals can also be seen by the rapidly rising middle class, expected to total 141m in 2020 from 74m in 2012.

GDP per capita is on target to rise above the USD4,000 level in 2016, before surpassing the USD5,000 level in 2018, on our estimates.

Population by age, 2014

11.8

11.3

10.9

10.8

10.6

10.3

10.3

9.8

9.0

7.9

6.7

5.2

3.7

2.8

2.0

2.5

0 2 4 6 8 10 12

0-4 year

5-9 year

10-14 year

15-19 year

20-24 year

25-29 year

30-34 year

35-39 year

40-44 year

45-49 year

50-54 year

55-59 year

60-64 year

65-69 year

70-74 year

75+

(m people)Female

12.3

11.9

11.4

11.2

10.8

10.4

10.2

9.8

9.1

7.9

6.7

5.3

3.8

2.5

1.7

1.8

024681012

Male

12.4%

60.0%

27.6%

Source: Statistics Indonesia, Bahana

GDP per capita, 1998-2018F

487 698 807 771 925 1,094 1,180 1,292

1,623 1,897

2,206 2,292

2,974

3,493 3,573 3,490 3,432 3,862

4,269

4,824

5,466

-

1,500

3,000

4,500

6,000

7,500

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

F

2015

F

2016

F

2017

F

2018

F

(USD)

Source: Statistics Indonesia, Bank Indonesia, Bahana

Population by income, 2013 and 2020F

63.3

46.9

44.0

24.5

7.1

2.6

64.2

28.3

47.9

50.5

68.2

49.2

16.5

6.9Elite

Affluent

Upper Middle

Middle

Emerging Middle

Aspirant

Poor

Indonesian population,2013 (mn)

Indonesian population,2020 (mn)

Source: Statistics Indonesia, Bahana

2015 Compendium

55

Spending support at the micro level Indonesian consumers have increased their consumption of non-food

goods compared to 1999, while that of basic goods (i.e., rice) has dropped significantly.

The change in the consumption structure has been backed by rising incomes, as shown by BPS’s surveys revealing that the proportion of those in the top 20% income bracket increased to 48.5% in 2013.

Support should also come from the relatively resilient 2014 capital expenditures, which we expect to reach IDR175t at the 93 listed companies under our coverage (75%+ of JCI’s total market cap).

Average monthly per capita spending, 1999 vs 2013

17

9

16

11

7

12

19 19

0

5

10

15

20

25

Rice Processed foods House & householdsfacilities

Goods & service

(%)

1999 2013

Foods Non-foods


Bahana’s coverage capex, 2010-2015F

7%5%

7%7% 5%

6%

3%5%

4%

5% 9%10%

12%

10%

12%9%

9%10%

9%

8%

9%10% 10%

9%

23%

21%

20%14% 10%

10%

5%

10%

9% 12%10%

10%

21%

23%

20%21%

23%

23%

89

124

170

180175

162

0

20

40

60

80

100

120

140

160

180

2010 2011 2012 2013F 2014F 2015F

(IDRt)

Poultry Toll road Transportations Plantations Construction Metals Oil & GasCement Automotive Consumer Coal Property Telcos

Source: Company, Bahana

Distribution of income, 2008-2013

21.2 18.1 17.7 16.9 17.3

37.536.5 35.9 34.2 34.3

41.2 45.5 46.5 48.9 48.5

0

10

20

30

40

50

60

70

80

90

100

2009 2010 2011 2012 Sep-13

(%)

40% of lowest income 40% of middle income 20% of highest income Source: Statistics Indonesia

2015 Compendium

56

Spending support from the government Indonesia’s infrastructure spending as a percentage of GDP is

increasing, and we expect it to average 5% in 2011-25.

In 2014, the government plans to build roads, railways and other infrastructure-related projects worth some USD23b.

Over the longer run, the government is committed to spending USD186b to realize MP3EI, Indonesia’s master plan for the acceleration and expansion of economic development.

Indonesia’s planned infrastructure, 2014

Projects Amount

National roadways toll and roadways (km) 4,278 New roadways (km) 559 Railways (km) 380 Electricity installed capacity (megawatt) 32,620 Ports 44 Airports (unit) 24

Total investments (IDRt/USDb) 264/23 Source: Various sources

Indonesia’s infrastructure spending to GDP, 1994-2025F

7.8

3.8 3.94.1

5.0

3

4

5

6

7

8

1994-1997 1998-2002 2003-2006 2007-2009 2011-2025F

(%)

Source: Bappenas, MP3EI

MP3EI infrastructure budget, 2011 – 2025F

681

339

326

242

117

32

31

18

0 100 200 300 400 500 600 700

Power & energy

Road

Train

IT

Port

Airport

Other

Water

(IDRt)

Source: MP3EI

2015 Compendium

57

FDI support Indonesia’s relatively high levels of FDI on the manufacturing front

suggest continued support for job creation at the grass roots level.

Hence, we expect a lower unemployment rate, reaching 5.7% in 2014, down from 7.1% in 2010.

Singapore, Japan, Malaysia and the USA are the major foreign investors for direct investment, accounting for 44.2% of total 1H14 FDI in Indonesia.

FDI breakdown by sector, 1Q11-2Q14

1,705

3,165

670

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14

(USDm)

Agriculture & mining Manufacturing Infrastructure & property Source: Indonesia Investment Coordinating Board (BKPM)

Top 10 FDI by Country (In USD million)

1H14 % 2013 % 2012 %

Singapore 3,394 23.8 4,671 16.3 4,856 17.0

Japan 1,542 10.8 4,713 16.5 2,457 8.6

Malaysia 717 5.0 711 2.5 530 1.9

USA 663 4.6 2,436 8.5 1,238 4.3

South Korea 655 4.6 2,205 7.7 1,950 6.8

UK 646 4.5 1,076 3.8 934 3.3

Netherland 605 4.2 928 3.2 967 3.4

Australia 450 3.1 226 0.8 744 2.6

Mauritus 431 3.0 780 2.7 1,059 3.7

British Virgin Islands 368 2.6 786 2.7 856 3.0 Source: Indonesia Investment Coordinating Board (BKPM)

Unemployment rate, 2006-2015F

10.28

9.11

8.39

7.87

7.14 6.80

6.14 5.74 5.70 5.65

5

6

7

8

9

10

11

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015F

(%)

Source: Statistics Indonesia, Bahana estiamtes

2015 Compendium

58

External debt: Remains manageable Private external debt has exceeded public offshore debt since 2012,

particularly when the government’s debt management office has started to curb foreign public debt exposure.

External debt should remain manageable as most of both private and public debts have long-term maturity profiles.

Additionally, Indonesia’s government debt-to-GDP ratio declined to 26% in 2013 from 33% in 2008, and should remain relatively flat at 25.9% in 2015, as per the government’s estimate.

2007–6M14 external debt, private vs public

80.686.6

99.3

118.6 118.6126.1

123.5132.2 131.7

56.0

68.573.6

83.8

106.7

126.2

141.9

152.1 153.2

40

60

80

100

120

140

160

2007 2008 2009 2010 2011 2012 2013 5M14 6M14

(USDb)

Public Private


Debt-to-GDP ratio, 2008-2015F

4,954

5,613

6,443

7,427

8,242

9,084

10,063

11,100

18.3 17.416.5 16.0 16.5

18.9 18.9 19.2

33.0

28.3

26.1

24.424.0

26.2 25.6 25.9

15

17

19

21

23

25

27

29

31

33

35

4,000

5,000

6,000

7,000

8,000

9,000

10,000

11,000

12,000

2008 2009 2010 2011 2012 2013 2014F 2015F

(%)(IDRt)

Nominal GDP Govt securities to GDP (RHS) Debt to GDP (RHS)

Source: Ministry of Finance, DMO’s estimate

Maturity profile of private and public external debt, 2005-6M14

9.7 7.715.2 14.689

70.578.9

108.0116.967

80.286.6

123.3131.7

0

20

40

60

80

100

120

140

2005 2008 2013 6M14

(USDb)Public

14.221.8

41.2 44.040.146.7

100.3109.2

54.368.5

141.4153.2

0

20

40

60

80

100

120

140

160

180

2005 2008 2013 6M14

(USDb)

Private

Short term debt Long term debt Total debt Source: Bank Indonesia

2015 Compendium

59

Current account to remain relatively weak in 2Q-4Q14 Indonesia’s current account (CA) deficit widened in 2Q14 to 4.3% of

GDP due to seasonality effects coming from the advent of the fasting month.

Additionally, we note that the oil deficit and primary incomes contributed to the deterioration in the 1H14 CA deficit.

On a more positive note, we expect some improvement with the CA deficit slightly easing to below 3% starting in 2H15, helped by higher export demand from advanced economies.

CA deficit contributors, 2010–1H14

31

-10

-21

5

34

-10

-27

49

-11

-27

46

-12

-27

41

-6

-13

23

-5

-14

3

-30

-20

-10

0

10

20

30

40

Trade Services Primary incomes Secondary incomes

(USDb)

2010 2011 2012 2013 1H13 1H14 Source: CEIC

CA deficit as percentage of GDP, 1Q12-4Q15F

-1.1

-1.5

-3.7

-2.4

-3.6

-2.7

-4.5

-3.9

-2.1 -2.0

-4.3

-3.3

-2.8

-2.2

-3-2.7

-2.4

(5.0)

(4.5)

(4.0)

(3.5)

(3.0)

(2.5)

(2.0)

(1.5)

(1.0)

(0.5)

0.0

4Q11 2Q12 4Q12 2Q13 4Q13 2Q14 4Q14F 2Q15F 4Q15F

(% of GDP)

Source: Bank Indonesia, Bahana’s estimate

Breakdown of trade balance, 2010–1H14

31

120

93

-9

12

34

151

119

-18

179

150138

-20

156

147133

-22

131

7368

-11

63

7264

-12

6

-40

-20

0

20

40

60

80

100

120

140

160

180

Trade Non oil & gasexports

Non oil & gasimports

Net oil Net gas

(USDb)

2010 2011 2012 2013 1H13 1H14 Source: Bank Indonesia

2015 Compendium

60

Improved balance of payments in 2Q14 Despite the deterioration of the CA deficit, higher capital inflows into

the domestic financial market as well as resilient direct investment realization helped the 2Q14 balance of payments book a surplus of USD4.3bn.

Looking forward, we expect pressure on Indonesia’s BoP to ease due to resilient foreign direct investment, continuing capital inflows and improving current accounts.

Indonesia’s imports have been in the form of capital goods and raw materials, which contributed 93% of total imports in 8M14, displaying positive support for the country’s domestic economic growth.

Balance of payments, 1Q10-2Q14

(10.1) (9.1)

14.5

4.8 7.0

11.3

7.7

11.9

(4.0)(3.7)

(1.0)(2.8)

0.8

3.2

(6.6)

(2.5)(2.6)

4.4 2.1

4.3

(8)

(4)

0

4

8

12

16

(12)

(8)

(4)

0

4

8

12

16

3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14

(USDb)(USDb)

Current Account Capital and Financial Account FDI Overall Balance


Imports by economic activity, 8M14 8M14 (USD119.0bn) 8M13 (USD125.0bn)

Consumer Goods7%

Raw Materials77%

Capital Goods16%

Consumer Goods7%

Raw Materials76%

Capital Goods17%


Strong FDI contributes to rising import demand, 2007-2016F

72%82%

75%71% 69&

71%70% 69% 69% 69%

28%12%

25%

29%31%

29%

30%31%

31%31%

1417

14

23

28

34

4144

4852

0

5

10

15

20

25

30

35

40

45

50

55

2007 2008 2009 2010 2011 2012 2013 2014F 2015F 2016F

(USDb)

Foreign direct investment Domestic direct investment


2015 Compendium

61

Measures to ease CA deficit over the long term

The government’s medium-term policy packages are aimed at combating Indonesia’s CA deficit.

BI’s measures to reduce IDR volatility: The government and BI have

access to USD20b, USD5.5b in standby loans and USD14.5b in bilateral swap agreements, to mitigate external shocks.

State-owned oil company Pertamina’s moves, as stated below, are

expected to help ease the CA deficit through lower oil imports.

Govt policy packages

Supporting exports:

- Tax break on companies in labor-intensive industries with at least 30% export output- Temporary relaxation on raw-minerals exports such as nickel ore, iron ore, etc assuming

submission of smelter establishment plan

Restraining imports:

- Consumption of biodiesel to be boosted to reduce import reliance on crude based fuel- Hike in luxury tax of imported goods (including completely built-up cars and branded

products) from 75% to 125-150%

Contigency funds (standby loans):

- World Bank = USD2b- Japanese govertment = USD1.5b- Australian government = USD1b- Asian Development Bank = USD1b


Pertamina's measures to reduce USD demand

Source: Kontan, Jakarta Post

BKPM’s initiatives to boost investment


2015 Compendium

62

Fiscal risk: Tax revenue shortfall Compared to other countries in Southeast Asia, Indonesia’s tax

income-to-GDP ratio remains the lowest due to its low tax base.

The weak global economy had slowed exports and earnings; hence the shortfall in income tax collected.

Over the longer term, the Ministry of Finance plans to add around 3,000 tax officials to enhance the collection of taxes.

Income tax-to-GDP ratio in selected countries, 2013

11.9

12.9

14.1

16.1

19.2

20.5

10

12

14

16

18

20

22

Indonesia Phillipines Singapore Malaysia Thailand Vietnam

(%)

Source: CEIC

2014 tax revenue breakdown, by type

Non oil & gas income

tax39%

VAT & luxury goods tax

38%

Excise tax10%

Others13%


Income tax realizations, 2008-2014F

659620

723

874

981

1,077

1,246108

95

97

100

97 96 96

80

85

90

95

100

105

110

500

600

700

800

900

1,000

1,100

1,200

1,300

2008 2009 2010 2011 2012 2013 2014F

(%)(IDRt)

Realization amount Realization from target Source: Ministry of Finance, Bahana estiamate

2015 Compendium

63

Economic assumptions 2013 Latest 2014F 2015F* 2016F

GDP growth (%y-y) 5.8 5.2 (2Q14) 5.2 4.9 5.2

Private spending (%y-y) 5.3 5.59 (2Q14) 5.3 4.8 5.2

Government spending (%y-y) 4.9 -0.71 (2Q14) 4.5 5.5 7.5

Investment (%y-y) 4.7 4.53 (2Q14) 5.7 6.7 6.9

Total exports (%y-y) 5.3 -1.04 (2Q14) 0.3 3.3 7.0

Total imports (%y-y) 1.2 -5.02 (2Q14) 0.3 2.0 5.3

Current account bal (% GDP) -3.3 -3.27 (2Q14) (3.1) (2.8) (2.5)

Forex reserves (USDb) 99.4 111.2 (Sep-14) 107.5 100.0 105.0

Fiscal balance (% GDP) -2.2 -2.2 (2013) (2.5) (2.5) (2.5)

Inflation (%y-y) 8.4 4.57 (Sep-14) 5.2 8.4 5.9

IDR/USD 12,288 12,190 (9-Oct-14) 11,900 11,700 11,500

BI-rate (% end year) 7.50 7.50 (Oct-14) 7.50 7.75 7.50 Source: Statistics Indonesia, *assuming 31% subsidized fuel price hike in 1Q15

GDP breakdown by segment, 1H14

6.8

23.7

25.0

30.8

56.4

0.0 20.0 40.0 60.0

Govtexpenditure

Exports

Imports

Investment

Privateconsumption

% of Nominal GDP Source: Statistic Indonesia

GDP y-y growth, 1Q14-4Q16F

5.2

5.1

5.2 5.2

5.1

4.9

4.6 4.6

5.0

5.2

5.4

5.4

4.5

4.6

4.7

4.8

4.9

5.0

5.1

5.2

5.3

5.4

5.5

1Q14 2Q14 3Q14F 4Q14F 1Q15F 2Q15F 3Q15F 4Q15F 1Q16F 2Q16F 3Q16F 4Q16F

(%)


GDP breakdown by sector, 1H14

Agriculture15%

Mining and Quarrying

11%

Manufacturing Industries

24%Electricity, Gas

and Water Supply

1%

Construction10%

Trade, Hotel and

Restaurant14%

Transportation and

Communication

7%

Financial, Ownership and

Business8%

Services10%


2015 Compendium

64


2015 Compendium

65

SECTOR

2015 Compendium

66

AUTOMOTIVE UNDERWEIGHT Going into 2015, we expect a slight slowdown in the auto sector with

volume growth of 1.2mn units, flat y-y for 4W in 2014F-15F; and 8.3mn units, up 3% y-y for 2W (2014F: +4% y-y). Our UNDERWEIGHT stance is due to continued intense competition and tighter liquidity on the ground.

We expect aggressive marketing strategies with huge discounts and a continued supply of new models to result in lower ASPs and margins. Ahead of the expected fuel price hike, we believe this interest-rate-sensitive sector will remain out of favor and underperform the market.

IMAS is a REDUCE as we expect muted market share growth and lower margins on substantial dealer expansion. Despite our negative view on the stocks, we have HOLD ratings on both ASII and GJTL due to their severe market underperformances. Risks to our call include higher or lower margins (ASII); higher Datsun sales (IMAS); and stronger or weaker IDR (GJTL).

Relative valuations ----------------------------2015F----------------------------

Code Rating CP TP Market

cap EBIT

marginEPS

growth PER EV/EBITDA Yield ROAE Net

gearing (IDR) (IDR) (USDmn) (%) (%) (x) (%) (%) (x) (%)

ASII HOLD 6,725 6,600 22,334 10.2 3.6 13.1 10.8 3.4 20.6 37.4 IMAS REDUCE 4,305 3,000 977 2.1 5.0 28.9 26.4 0.9 6.5 241.1 GJTL HOLD 1,500 1,600 429 7.7 17.2 8.3 5.7 3.0 10.5 80.1

Sector 23,740 9.8 3.9 13.7 11.4 3.3 19.8 46.5 Source: Bloomberg, Bahana estimates note: based on 09 October 2014 closing price

Relative performance ytd to JCI, 2014 ytd

(17.9) (18.6)

(27.6)(29.0)

(35)

(30)

(25)

(20)

(15)

(10)

(5)

0

(35)

(30)

(25)

(20)

(15)

(10)

(5)

0

ASII Sector GJTL IMAS

(%)(%)

Source: Bloomberg Leonardo Henry Gavaza, CFA ([email protected]) +6221 2505081 ext. 3608

Domestic 2W and 4W ownership per 1,000 population, 2012-16F

25

30

35

40

45

50

200

225

250

275

300

2012A 2013A 2014F 2015F 2016F

Total 2W Total 4W (RHS)

(per 1,000 population) (per 1,000 population)

Source: Gaikindo, AISI, Bahana

2015 Compendium

67

AUTOMOTIVE

4W sales volumes, 2012-16F

1,116

1,230 1,230 1,230

1,353

600

700

800

900

1,000

1,100

1,200

1,300

1,400

2012 2013 2014F 2015F 2016F

('000 Units)

Source: Gaikindo, Bahana estimates

2W sales volumes, 2012-16F

7,0647,744 8,054 8,295

8,793

600

1,600

2,600

3,600

4,600

5,600

6,600

7,600

8,600

9,600

2012 2013 2014F 2015F 2016F

('000 Units)

Source: AISI, Bahana estimates

Top 10 passengers sales, 2011-8M14 8M14 2013 2012 2011

Type Units Type Units Type Units Type Units Avanza 112,752 Avanza 213,458 Avanza 192,146 Avanza 162,367 Mobilio 59,377 Xenia 64,611 Xenia 73,418 Xenia 66,835

Agya 46,399 Innova 64,539 Innova 71,685 Innova 54,763 Innova 40,805 Ertiga 63,317 Livina 34,129 APV 30,089 Ertiga 32,916 G. Livina 35,422 Ertiga 34,074 Livina 25,324 Xenia 32,736 Rush 35,004 Rush 34,033 Rush 25,012 Ayla 29,898 Jazz 27,803 Yaris 27,809 Terios 22,416 Brio 25,182 Terios 25,764 Terios 23,949 Jazz 19,440

Livina 24,672 Agya 22,376 Jazz 21,244 Yaris 16,448 Rush 20,400 CR-V 20,385 Freed 19,811 Pajero 13,219

Source: Gakindo

Domestic market share (4W and 2W), 8M14

Toyota31%

Daihatsu15%

Others(Astra)

2%

Honda15%

Mitsubishi11%

Suzuki13%

Nissan 3%

Others(Non-Astra)

8%

ASII64%

Yamaha30%

Others6%

Source: Gaikindo, AISI

2015 Compendium

68

BANKS NEUTRAL Amid the current high interest rate environment, banks are preserving

cash given expensive funding costs. Difficulties in securing quality debtors in select sectors have prevented aggressive loan penetration while banks remain cautious on consumer sector exposure. Hence, we target medium-term loan growth of just 14-16%.

Margin pressure should ease on the back of improving liquidity and manageable NPLs. Despite potential higher inflation from fuel subsidy cut, this price shock may only minimally affect interest rate movement; while banks have priced their TD rates at above the IDIC rate.

Given BI’s continued tight monetary policy, we are NEUTRAL on banks. We continue to prefer big banks with strong deposit franchises and the ability to capitalize their resources and niche markets. Our preference: BBCA (most liquid), BBNI (improving performance), BBRI (beneficiary of rural economy) and BMRI (potential M&A deal).

Relative valuations ---------------------------- 2015F ------------------------

Code Rating CP TP Mkt Cap Loans GrossNPL

Net Profit ROAE EPS

Growth P/E P/BV Dv. Yield

(IDR) (IDR) (USDmn) (IDRtn) (%) (IDRbn) (%) (%) (x) (x) (%)

BBCA BUY 12,750 14,300 25,788 386 0.7 18,457 21.8 13.9 17.0 3.4 1.2

BBRI BUY 10,250 12,500 20,743 592 2.5 27,081 25.8 12.8 9.3 2.2 2.9

BMRI BUY 9,550 11,600 18,280 634 2.7 23,057 21.0 12.4 9.7 1.9 2.8

BBNI BUY 5,400 6,900 8,261 328 2.1 12,112 20.8 13.5 8.3 1.6 3.3

BDMN HOLD 3,900 3,700 3,066 166 2.3 4,005 11.5 16.2 9.3 1.0 3.8

BTPN HOLD 4,470 4,600 2,142 61 1.0 2,588 19.2 14.2 10.1 1.8 1.5

BBTN BUY 1,095 1,300 949 133 3.7 1,669 12.7 13.8 6.9 0.8 4.0

BJBR HOLD 760 830 605 64 3.7 1,317 18.0 15.0 5.6 1.0 11.2

BJTM BUY 436 500 534 30 2.9 1,171 18.3 14.2 5.6 1.0 11.3

BBKP HOLD 700 770 522 63 2.8 1,212 16.2 12.9 5.2 0.8 3.8

Sector (market cap weighted) 80,889 2,457 2.2 92,669 21.9 13.3 11.7 2.4 2.5 Source: Bloomberg, Bahana estimates note: based on 09 October 2014 closing price

Relative performance ytd to JCI

24.5 19.9

16.0 13.7 8.9 8.6

4.8

(0.6)(3.9)

(12.9) (13.5)

(31.4)(40)

(30)

(20)

(10)

0

10

20

30

(40)

(30)

(20)

(10)

0

10

20

30

BBRI BBNI BBCA SECTOR BBTN JAKFIN BMRI BJTM BBKP BTPN BDMN BJBR

(%)(%)

Source: Bloomberg Teguh Hartanto ([email protected]) +6221 250 5081 ext. 3610

Key ratios, 2008-7M14 2008 2009 2010 2011 2012 2013 7M14

Loan growth (% y-y) 29.5 8.7 22.1 24.1 22.6 21.5 15.6

Productive loan growth (% y-y) 30.7 6.4 22.8 24.8 24.5 24.9 17.5

Consumer loan growth (% y-y) 29.9 19 22.9 24.2 19.8 13.7 11.1

Mortgage growth (% y-y) 29.3 14.5 13.3 29.9 21.7 26.5 14.0

Loan to GDP (%) 27.4 26.2 28.0 30.0 33.2 36.6 36.2

Loan to earnings assets (%) 66.8 64.4 65.2 65.9 69.4 72.9 73.8

Gross NPL (%) 3.8 3.8 2.9 2.6 2.2 1.9 2.5

NPL coverage (%) 125.9 138.7 147.7 111.3 107.9 115.2 92.7

Deposit growth (% y-y) 16.0 12.5 18.5 19.1 15.8 13.6 11.6

CASA ratio (%) 53.0 54.3 54.3 55.7 57.2 56.2 52.9

LDR (%) 77.2 74.5 76.8 80.1 84.7 90.6 93.0

CAR (%) 16.8 17.4 17.2 16.1 17.4 18.1 19.4

NIM (%) 5.7 5.6 5.7 5.9 5.5 4.9 4.2

ROAA (%) 2.3 2.6 2.3 2.4 2.3 2.3 2.3

ROAE (%) 15.6 19.2 19.6 20.5 20.6 19.7 19.3

CIR (%) 88.6 86.6 86.1 85.4 74.1 74.1 79.7 Source: Central Bank of Indonesia

2015 Compendium

69

BANKS

Asset yield, funding cost and NIM, March 2013 – July 2014

5.4 5.4 5.4 5.4 5.5 5.5 5.5 5.54.9 4.9

4.2 4.2 4.3 4.3 4.2 4.2 4.2

3.7 3.6 3.7 3.7 3.8 3.9 4.04.2 4.3 4.5

4.7 4.8 4.9 5.0 5.1 5.1 5.25.8

6.0 6.06.5 6.5

7.3 7.5 7.5 7.5 7.5 7.5 7.5 7.5 7.5 7.5 7.5 7.5

11.9 11.9 11.9 11.9 12.0 12.0 12.1 12.2 12.3 12.3 12.4 12.5 12.5 12.5 12.7 12.7 12.8

4

5

6

7

8

9

10

11

12

13

14

2

3

4

5

6

7

8

9

10

Mar-13 May-13 Jul-13 Sep-13 Nov-13 Jan-14 Mar-14 May-14 Jul-14

(%)(%)

NIM Blended cost of funding BI rate Average lending rate (RHS)

Source: Central Bank of Indonesia

LDR, deposit and loan growth, January 2012 – July 2014

79.9

80.7

81.2

82.5

83.0

83.9

84.2

85.0

84.6

85.0

84.8

84.7

84.6

85.5

86.1

86.3

86.9

88.4

89.8

89.9

90.0

90.5

90.9

90.6

91.4

91.4

92.1

91.7

91.1

91.1

93.0

24.6

23.7 24

.4 25.2 25

.8

25.3

24.6

23.1

22.4

22.2

21.8 22

.6

22.6

22.9

21.7

21.5

20.6

20.3

22.2

22.0 23

.0

22.1

22.0

21.5

21.1

20.1

19.4

18.9

17.8

17.1

15.620.4 20.8

20.2 21

.4

21.3

21.2

20.2 21

.3

19.8

18.7

18.4

15.8

15.7 16.0

14.8 16

.1

15.1

14.2 14.6 15

.3

15.6

14.7

13.8

13.6

12.2

12.4

11.6 12

.0

12.4 13

.6

11.6

0

20

40

60

80

100

120

140

160

180

200

0

3

7

10

14

17

20

24

27(%)(%)

LDR (RHS) Loan growth (y-y) Deposit growth (y-y)

Source: Central Bank of Indonesia, CEIC

Asset quality breakdown, June 2013 & June 2014

0.4

1.8

1.8 2.

6

2.4

0.7

4.6

2.3 3.

3

2.5

0.5

1.8 2.0

2.2

2.1

0.9

5.0

4.0

3.5

2.6

0

2

3

5

6

8

9

11

12

14

15

BBCA BMRI BBRI BBNI BDMN BTPN BBTN BJBR BJTM BBKP

Gross NPL, Jun-13 Gross NPL, Jun-14

1.2

3.9 5.

3

3.5 5.

8

1.9

12.2

3.6

1.9 2.6

1.5

4.4 6.

4

3.5 5.

3

2.3

12.4

3.7

1.9 3.

2

(20)

(15)

(10)

(5)

0

5

10

15

BBCA BMRI BBRI BBNI BDMN BTPN BBTN BJBR BJTM BBKP

(%)(%)

Special mention, Jun-13 (RHS) Special mention, Jun-14 (RHS)

Source: Companies

Deposit breakdown and cost of funding by bank, 1H14

77 69

61 59 55 54 50 45 44 40

14

23 31

39 41 45 46 50 55 56 60

86

2.5 2.9 3.5 3.5 4.1 5.1

6.0 6.8 6.8 7.2

9.4

(20)

(15)

(10)

(5)

0

5

10

0

20

40

60

80

100

120

140

BBCA BBNI BMRI BJTM BBRI Industry BJBR BBKP BBTN BDMN BTPN

(%)(%)

CASA Time deposit Blended cost of funding (RHS)

Source: Companies, Bahana estimates

2015 Compendium

70

CEMENT NEUTRAL Following soft 2014 domestic cement volume growth of 3.4% y-y in

9M14 to 43mn tons, we expect a gradual rise in 2015 on infrastructure development, producing a positive multiplier effect for the property-related sector, which could eventually spur domestic consumption.

In contrast, we expect 30.7mn tons of additional cement capacity in 2013-2016F, with 31% of the industry total coming from existing (65%) and new (35%) players. This would translate into a utilization rate dropping from 92.0% in 2012 to 69.0%, creating oversupply and shifting the industry from a high-margin business to a volume game.

At this stage of the cycle, we maintain our NEUTRAL stance on the sector. Downside risks to our call include aggressive penetration by new entrants, while upside risks include delays in capacity expansion to provide time for cement demand to play catch-up with supply. Our preferred stocks within the sector are SMGR and INTP.

Relative valuations ---------------------------- 2015F ------------------------

Code Rating CP TP Mkt Cap EV/ ton

EV/ EBITDA

EBITDAmargin

Net Profit ROAE EPS

Growth P/E Div. Yield

(IDR) (IDR) (USDmn) (USD) (x) (%) (IDRbn) (%) (%) (x) (%)

SMGR BUY 14,825 17,600 7,214 222 9.4 30.8 6,583 26.1 11.8 13.4 3.4 INTP BUY 22,150 25,000 6,689 288 8.6 34.1 6,054 22.6 11.4 13.5 3.7 SMCB REDUCE 2,520 2,150 1,584 187 7.9 25.6 1,272 13.3 12.2 15.2 3.6 SMBR REDUCE 367 320 296 120 7.1 27.1 318 11.3 9.3 11.3 2.2 Sector (market cap weighted) 15,783 246 8.9 31.6 14,228 23.1 11.6 13.5 3.5 Source: Bloomberg, Bahana estimates note: based on 09 October 2014 closing price

Relative performance to JCI ytd

(5.6)(6.1) (6.1)

(8.8)

(12.1)

(2)

0

2

4

6

8

10

12

14

16

(14)

(12)

(10)

(8)

(6)

(4)

(2)

0

SMBR SMCB INTP SECTOR SMGR

(%)(%)

Source: Bloomberg Teguh Hartanto ([email protected]) +6221 250 5081 ext. 3610 Bob Setiadi ([email protected]) +6221 2505081 ext.3605

Domestic volume and capacity (2011-2016F)

54.659.8

68.574.8

83.8

99.2

48.0 55.0

58.0 61.0 64.5 68.5

88.092.0

84.7 81.677.0

69.0

0

10

20

30

40

50

60

70

80

90

100

0

20

40

60

80

100

120

2011 2012 2013 2014F 2015F 2016F

(%)(mn tons)

Capacity (include Thang Long) Domestic demand Utilization (RHS)

Source: ASI, Bahana estimates

2015 Compendium

71

CEMENT

Cement volume breakdown, 2010-9M14

53.8 55.2 55.3 56.4 56.6

23.8 23.0 21.8 21.0 20.8

7.0 7.0 7.4 7.6 7.4

7.5 7.3 7.5 7.4 7.5

8.0 7.4 8.0 7.7 7.8

-

10

20

30

40

50

60

70

80

90

100

2010 2011 2012 2013 9M14

(%)

Java Sumatra Kalimantan Sulawesi Others (Nusa Tenggara and East Indonesia)

Source: Bahana Research

Domestic market share, 2010-9M14

43.3

40.8

40.9

43.9

44.0

30.9

31.5

32.0

30.4

30.2

13.6

15.5

15.6

14.5

14.6

2.8

2.6

2.2

2.2

2.0

5.5

5.8

5.6

5.4

5.8

3.9

3.7

3.7

3.7

3.5

0 10 20 30 40 50 60 70 80 90 100

2010

2011

2012

2013

9M14

(%)

SMGR INTP SMCB SMBR Bosowa Other

Source: Indonesian Cement Association

Geographical spread

Semen Andalas1.6m tpa

Semen Baturaja2.0m tpa

Semen Gresik14.6m tpa Semen Kupang

0.5m tpa

Indocement2.6m tpa

Semen Bosowa3.8m tpa

Semen Tonasa7.6m tpa

Semen Padang7.3m tpa

Holcim10.4m tpa

Semen Bosowa2.2m tpa

Java• Indocement: 17.9mn tpa• Holcim Indonesia: 10.4mn tpa• Semen Gresik: 14.6mn tpa• Semen Bosowa: 2.2mn tpa• Merah Putih: 2.0mn tpa• Siam 1.8mn tpa• Jui Shin 1.5mn tpa

Sumatra• Semen Andalas 1.6mn tpa• Semen Padang 7.3mn tpa• Semen Baturaja 2.0mn tpa

Kalimantan• Indocement: 2.6mn tpa

Sulawesi

Anhui (NEW)1.5m tpa

Indocement17.9m tpa

Panasia (NEW)2.0m tpa

Merah Putih (NEW)2.0m tpa

Siam (NEW)1.8m tpa

Jui Shin (New)1.5 m tpa

Holcim10.4m tpa

Semen Andalas1.6mn tpa

Semen Baturaja2.0mn tpa

Semen Gresik15.0mn tpa

Semen Kupang0.5mn tpa

Indocement2.6mn tpa

Semen Bosowa3.8mn tpa

Semen Tonasa7.6mn tpa

Semen Padang10.3mn tpa

Holcim10.4m tpa


Java 2014-2016F• Indocement: 17.9-22.3mnt• S. Gresik: 14.6-17.6mnt• Holcim: 10.4-12.1mnt• S. Bosowa: 2.2 - 2.2mnt• S. Merah Putih: 0 - 3.0mnt• Pan Asia: 0 - 1.5mnt• Siam 0 - 1.8mnt• Jui Shin 0 - 1.5mnt

Sumatra• S. Padang: 7.3 - 10.3mnt• S. Baturaja: 2.0 - 2.0mnt• Semen Andalas: 1.6 - 1.6mnt

Kalimantan• Indocement: 2.6 - 2.6mnt• Anhui: 0 - 3.0mnt

Sulawesi• Semen Tonasa: 7.6 - 9.1mnt• Semen Bosowa: 3.8 - 3.8mnt

Anhui (2016)3.0mn tpa

Indocement22.3mn tpa

Pan Asia (2016)1.5mn tpa

Merah Putih (2016)3.0mn tpa

Siam (2016)1.8mn tpa

Jui Shin (2016)1.5 mn tpa

Holcim10.4m tpa


Holcim12.1mn tpa

Lafarge3.2mn tpa

Semen Baturaja2.0mn tpa


Semen Kupang0.5mn tpa

Indocement2.6mn tpa


Semen Tonasa9.1mn tpa

Semen Padang10.3mn tpa

Holcim10.4m tpa


Java 2014-2016F• Indocement: 17.9-22.3mnt• S. Gresik: 14.6-17.6mnt• Holcim: 10.4-12.1mnt• S. Bosowa: 2.2 - 2.2mnt• S. Merah Putih: 0 - 2.5mnt• Pan Asia: 0 - 1.65mnt• Siam 0 - 1.7mnt• Jui Shin 1.5 - 1.5mnt• Ultratech 0 - 1.65mnt

Sumatra• S. Padang: 7.3 - 10.3mnt• S. Baturaja: 2.0 - 2.0mnt• Lafarge: 1.6 - 3.2mnt

Kalimantan• Indocement: 2.6 - 2.6mnt• Anhui: 0 - 1.7mnt

Sulawesi• Semen Tonasa: 7.6 - 9.1mnt• Semen Bosowa: 4.3 - 4.3mnt

Other• Semen Kupang: 0.5 - 0.5mnt

Anhui (2016)1.7mn tpa

Indocement22.3mn tpa

Pan Asia (2016)1.65mn tpa

Merah Putih (2016)2.5mn tpa

Siam (2016)1.7mn tpa

Jui Shin (2016)1.5 mn tpa

Holcim10.4m tpa


Holcim12.1mn tpa

Ultratech (2016)1.65mn tpa

Source: Indonesian Cement Association

Cement price geographical comparison, August 2014

45

,00

0

45

,00

0

45

,00

0

45

,00

0

61

,50

0

45

,00

0

45

,00

0

68

,50

0

66

,00

0

67

,50

0

69

,00

0

59

,50

0

45

,00

0

65

,50

0

69

,50

0

67

,00

0

66

,50

0

69

,00

0

59

,50

0

52

,50

0

65

,50

0

69

,00

0

65

,50

0

68

,00

0

71

,00

0

59

,50

0

54

,50

0

66

,50

0

62

,00

0

60

,50

0

45

,00

0

64

,00

0

45

,00

0

53

,00

0

66

,50

0

45,000

50,000

55,000

60,000

65,000

70,000

DKI Jakarta West Java Central Java East Java SouthSumatera

South Sulawesi EastKalimantan

(IDR/50kg)

SMBR SMCB INTP SMGR Bosowa

Source: Companies, Bahana Research

2015 Compendium

72

COAL UNDERWEIGHT While coal price is at around USD65/tonne and some smaller coal

players are likely to run into financial difficulties, we expect continued downward pressure on prices on China slowdown and lower oil prices.

China’s possible implementation of coal import tariff to protect its domestic industry could cause Australia to cut coal prices, which could adversely impact Indonesian coal exports. On a more positive note, Indonesia may curb illegal coal mining activities and increase usage from the energy sector (i.e. more power plants).

At this stage, we expect 2015 coal prices to average USD65/tonne at best. With unexciting coal prices, we reiterate our UNDERWEIGHT sector rating on China’s and India’s successful energy reforms which could result in less coal usage in the international market. While we have all REDUCE ratings, our preferred stock is PTBA due to its large local exposure benefiting from positive coal-related policies.

Relative valuations -------------------------2015F-------------------------- Mkt EV/ EV/ EBIT Div. CP TP Cap reserv. EBITDA margin PE P/B yield

Code Rating (IDR) (IDR) (USDm) (USD) (X) (%) (X) (X) (%) UNTR REDUCE 19,325 18,000 5,913 na 5.6 13.2 12.4 1.8 3.2 ADRO REDUCE 1,140 1,000 2,991 4.6 5.3 14.5 10.4 1.0 3.8 PTBA REDUCE 13,000 11,700 2,457 1.1 13.3 13.4 15.8 2.9 3.8 ITMG REDUCE 25,500 20,000 2,364 7.0 5.5 15.1 12.0 2.3 8.1 BUMI REDUCE 149 120 448 1.1 4.3 12.6 na (0.2) - HRUM REDUCE 1,840 1,500 408 3.9 4.4 9.5 12.3 1.9 5.1 Sector exc. UNTR 8,668 7.5 14.0 11.9 1.9 4.8

Sector 14,581 6.7 13.7 12.1 1.8 4.2 Source: Company, Bahana estimates note: based on 09 October 2014 closing price


10.6

(12.3) (14.8) (15.1)

(27.4)

(49.9)

(67.2)0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1

(80)

(70)

(60)

(50)

(40)

(30)

(20)

(10)

0

10

20PTBA ADRO SECTOR UNTR ITMG HRUM BUMI (%)(%)

Source: Bloomberg Arandi Nugraha ([email protected]) +6221 2505081 ext. 3619

Indonesia’s coal production & domestic consumption, 2002-14F

103114

132153

194217

240256

275

353

386

421 430

29 39 36 41 4961 53 56

6780 82 72 75

0

50

100

150

200

250

300

350

400

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014E

(mn tons)

Production Domestic usage

Source: ESDM

2015 Compendium

73

COAL

China thermal coal production and import, 2002-12

1,717

1,9522,132

2,4782,648

2,8443,022

3,3023,506

3,8453,991

0 1 4 611

16 14

57

93102

195

0

20

40

60

80

100

120

140

160

180

200

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

(m tons)(m tons)

Production Import

Source: Coalportal, EIA

World’s & China’s coal production* & global price, 2001-13

4,915 4,9575,312

5,7256,051

6,361 6,593 6,829 6,9067,262

7,708 7,893 7,896

1,472 1,550 1,835 2,123 2,350 2,529 2,692 2,802 2,973 3,235 3,516 3,645 3,68031 25 26

54

48 49

67

129

72

99

121

9485

-

20

40

60

80

100

120

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

(USD/ton)(m tons)

World China Coal Price

Source: Bloomberg, BP; *Commercial solid fuels only 2013 world production number is based on 36 countries

World’s and China’s coal consumption*, 2001-13

2,355 2,4122,612

2,7992,926

3,0793,204 3,262 3,239

3,4693,630 3,724 3,827

693 728 868 1,020 1,128 1,250 1,320 1,369 1,471 1,610 1,761 1,856 1,925

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

(m tons oil equivalent)

World China

Source: BP; * Commercial solid fuels only

China port inventory level, 2010-9M14

-

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

Feb-

10

Apr-

10

Jun-

10

Aug-

10

Oct

-10

Dec

-10

Feb-

11

Apr-

11

Jun-

11

Aug-

11

Oct

-11

Dec

-11

Feb-

12

Apr-

12

Jun-

12

Aug-

12

Oct

-12

Dec

-12

Feb-

13

Apr-

13

Jun-

13

Aug-

13

Oct

-13

Dec

-13

Feb-

14

Apr-

14

Jun-

14

Aug-

14

(k tons)

Inventory Average

Source: SXCoal

2015 Compendium

74

CONSTRUCTION, TOLL ROAD & INFRA RELATED NEUTRAL The new government, in power until 2019, is expected to fast-track

infrastructure projects, particularly given Indonesia’s low rank in global infrastructure development compared to neighboring countries. This would be done using the framework of the Master Plan for Acceleration and Expansion of Indonesia’s Economic Development (MP3EI) with a particular focus on power, energy and roads.

On toll roads, the government has plans to accelerate land acquisition through blanket purchases per project in order to cut costs. JSMR, the largest toll road operator, will likely continue to develop new toll roads in Indonesia such as Semarang-Solo and the Bogor outer ring road and benefit from higher toll tariff hikes on increased inflation.

Due to its defensive nature, JSMR is our toll-road operator top pick. Our construction top picks are ADHI for its attractive valuation (lowest PE in the sector) and WIKA for its diversified business portfolio.

Relative valuations ---------------------------2015F--------------------------- Mkt EV/ EBIT Div. CP TP Cap EBITDA margin PE P/B yield

Code Rating (IDR) (IDR) (USDm) (X) (%) (X) (X) (%) JSMR BUY 6,300 7,200 3,514 13.8 38.8 25.0 3.7 1.6

WIKA BUY 2,590 3,350 1,307 10.5 9.8 19.4 3.9 1.5

PTPP BUY 2,270 2,800 902 5.5 9.4 16.2 3.8 1.8

WTON HOLD 1,045 1,120 747 13.7 12.5 23.0 3.8 1.3

WSKT BUY 845 1,020 670 9.4 7.3 14.9 2.6 2.0

KRAS REDUCE 468 370 606 62.9 (2.5) Na 0.6 0.0

CMNP HOLD 3,115 3,300 562 8.3 46.0 15.1 1.7 1.5

ADHI BUY 2,525 4,000 374 4.6 9.0 8.4 1.9 2.4

TOTL REDUCE 900 825 252 11.5 9.6 18.0 3.5 2.8

Sector (mkt. cap wght.) 8,934 14.7 22.6 19.2 3.2 1.6 Source: Bloomberg, Bahana estimates Note: based on 09 October 2014 closing price


91.8

78.9

63.2 50.4

47.1

31.8

16.5

(22.3) (23.9)0

20

40

60

80

100

(40)

(20)

0

20

40

60

80

100

WSKT PTPP TOTL ADHI WIKA SECTOR JSMR KRAS CMNP

(%)(%)

Source: Bloomberg

Maxi Liesyaputra ([email protected]) +6221 250 5081 ext. 3615

Infrastructure objectives 2015-2019

Electrification rate of 100% (2014: 81.4%) Access of drinkable water of 100% (2014: 68.5%) Sanitation of 100% (2014: 94%) Feasible housing of 100% Feasible roads of 100% (2014: 94%) Declining logistics cost to 20% of GDP (2014: 27%) Public transportation market share to 32% (2014: 23%) Fixed broadband population of 30% (cities) and 6%

(villages) and mobile broadband population of 100% Irrigation area of 20% (2014: 11%)

Source: National Development Agency (Bappenas)

2015 Compendium

75

CONSTRUCTION, TOLL ROAD & INFRA RELATED

Budget allocation for infrastructure spending, 2011-25F

339

117

681

32

326

18

242

31

1,786

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

Road Port Energy Airport Railway WaterUtility

Telecom Others Total

(IDRtn)

Source: MP3EI

Indonesia’s infrastructure spending to GDP, 1994-2025F

7.8

3.8 3.94.1

5.0

3

4

5

6

7

8

1994-1997 1998-2002 2003-2006 2007-2009 2011-2025F

(%)

Source: Bappenas, MP3EI

Indications of main economic activities, 2011-25F

100 25 9 32 16 183

197 137 92 3 108 58 4

213

463

352 150 2 7 32 1 41 2,225

1,786 4,011

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

Stee

l

Food

beve

rage

s

Text

iles

Tran

spor

atio

nEq

uipm

ent

Ship

ping

Nick

el

Copp

er

Baux

ite

Palm

Oil

Rubb

er

Food

Agric

ultu

re

Tour

ism ICT

Coal

Oil &

gas

Jabo

deta

bek

area

Sund

a st

rait

stra

tegi

c are

aAl

utsis

ta/d

efe

nse

Anim

alHu

sban

dry

Tim

ber

Coco

a

Fish

ery

Inve

stm

ent

indi

catio

n in

Infra

stru

ctur

e

Tota

lIn

vest

men

t

(IDRtn)

Source: MP3EI

Indications of investment in 6 economic corridors, 2011-25F

714

1,289

944 309 133

622 4,011

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

Sumatra Java Kalimantan Sulawesi Bali-NusaTenggara

Papua-Kep.Maluku

Total

(IDRtn)

Source: MP3EI

2015 Compendium

76

CONSUMER DISCRETIONARY NEUTRAL

A fuel price hike accompanied by expected slower economic growth in 2015 would adversely impact Indonesians’ spending behavior in a major way, particularly for the consumer discretionary sector. We expect higher inflation to cap retail companies’ ability to raise prices while increased minimum wages (some 40% of operating expenses) would mean margin pressures ahead.

Due to likely lower GDP growth, media companies’ revenues would suffer from FMCG companies’ lower ad spend (opting to implement direct marketing to consumers) and reduced new product launches.

At this stage of the cycle, for investors wanting to invest in this sector, we would suggest exposure to retailers with a middle-to-high end target market, where purchasing power is more resilient. Thus, we recommend MAPI, MPPA and LPPF. However, we remain bearish on media with REDUCE ratings on both MNCN and SCMA.

Relative valuations ----------------------------2015F-------------------------

Current Target Market EPS EV/

price price Cap growth P/E PEG P/S* PBV EBITDA ROAE

Code Rating (IDR) (IDR) (USDm) (%) (X) (X) (X) (x) (x) (%) SCMA REDUCE 3,525 2,550 4,228 11.4 31.3 2.7 10.9 11.4 21.1 40.8

LPPF BUY 15,800 19,000 3,782 26.0 23.2 0.9 4.8 27.3 15.3 196.4

MNCN REDUCE 2,945 2,300 3,426 0.4 23.1 55.9 5.4 4.3 14.7 20.4

MYOR REDUCE 29,700 25,500 2,179 52.9 28.0 0.5 1.5 5.1 13.6 20.2

MPPA BUY 2,805 3,900 1,238 3.8 33.6 8.8 0.9 3.9 16.1 12.2

ACES HOLD 835 900 1,175 9.2 23.1 2.5 2.7 5.1 16.8 24.0

HERO REDUCE 2,550 1,500 875 7.4 36.7 5.0 0.7 1.8 17.0 5.0

MAPI HOLD 5,275 5,750 718 40.6 24.8 0.6 0.7 3.0 8.7 12.7

MLPL BUY 985 1,400 813 21.0 60.2 2.9 0.5 1.4 9.5 2.3

RALS REDUCE 830 720 483 (3.7) 15.1 (4.1) 0.8 1.6 7.3 11.0

RANC HOLD 422 440 54 1.9 21.2 11.0 0.3 1.6 7.5 7.2

Sector 18,971 30.2 28.3 12.0 2.6 10.2 15.8 57.6

Sector exc. LPPF & MLPL 14,376 33.4 27.8 15.4 1.4 6.2 16.3 24.3 Source: Bloomberg, Bahana estimates note: based on 09 October 2014 closing price *exclude media


156.8

27.7 26.8 24.7 17.4 15.7

(2.6) (4.6) (11.7)(20.9)

(38.5)(52.9)

(80)

(60)

(40)

(20)

0

20

40

(80)

(30)

20

70

120

170

MLPL MPPA LPPF ACES SCMA Sector MYOR MNCN HERO MAPI RALS RANC

(%)(%)

Source: Bloomberg *Since IPO

Harry Su ([email protected]) +6221 2505735 Wendy Chandra ([email protected]) +6221 2505081 ext.3606

Trade Ministry Regulation No. 56/M-DAG/2014 Organization of Traditional Markets, Shopping Centers and Modern Stores Modern stores can only sell supplementary goods of no more than 10%. Maximum 150 stores owned and managed per company. Subsequent stores must be in

cooperation with micro, small and medium enterprises (MSME). Modern store operators can sell their own brands or labels by prioritizing MSME

products, but not exceeding 15% of total goods sold; however, exemptions are allowed if products are not made in Indoensia, high-end and/or high-tech in nature.

Local content must reach at least 80% of totoal products but exempted if the products produced not only in Indonesia but also overseas such as automotive products, premium brands that cannot be produced in Indonesia and products are targeting particular citizen in Indonesia.

Source: Ministry of Trade, Bahana

Trade Ministry Reg. No. 68/10/2012 Franchise for Modern channel Retailers may only have 150 outlets privately. The subsequent stores are required to

have franchised cooperation with another party. The franchise cooperation may be in a ratio of 60:40, meaning for every 10 stores, four

must be franchised out. Retailers shall have up to five years to comply.

Source: Ministry of Trade, Bahana

2015 Compendium

77

CONSUMER DISCRETIONARY

Retail sales index, Jan-11 to Aug-14

90

100

110

120

130

140

150

160

170

180

190

Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14

Average: 130.5

Retail sales index

Source: Bloomberg

Indonesia’s population by income, 2013

63.3

46.9

44.0

24.5

7.1

2.6

64.2

28.3

47.9

50.5

68.2

49.2

16.5

6.9Elite

Affluent

Upper Middle

Middle

Emerging Middle

Aspirant

Poor

Indonesian population,

2013 (mn)Indonesian population,

2020 (mn)

Source: Bahana estimates

Media revenue growth relative to GDP growth, 2002 – 1H14

3

4

5

6

7

(30)

(10)

10

30

50

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 1H14

(%)(%)

SCMA BMTR MNCN Real GDP (RHS)

Source: Various

FMCG ad spend to revenue, 2004 – 2013

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

18.0

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

(%)(%)

UNVR MYOR INDF (RHS) ICBP (RHS)

Source: Companies

2015 Compendium

78

CONSUMER STAPLES OVERWEIGHT Indonesia, the fourth-largest consumer market in Asia ex-Japan,

should see continued long-term growth in its consumer market, backed by a high population base (240mn), rising middle income earners (nearly USD4k per capita expected in 2015), rapid growth in modern trades (18,038 minimarkets and 268 hypermarkets and 168 supermarkets) and expansion in FMCG sales.

Amid the current market volatility, the consumer staple stocks should provide shelter for investors due to their defensive nature. We expect their revenues to remain resilient despite the pressure on purchasing power, given the government’s attempt to jump-start the economy through infrastructure-related projects.

Margins should be protected not only by labor being a small component of COGS (5-7%) but also by lower commodity prices due to the stronger US dollar. Top picks are UNVR, GGRM and KLBF.

Relative valuations

--------------------------2015F------------------------

Market EPS P/E

EV/ CP TP Cap growth PEG PBV EBITDA ROE

Code Rating (IDR) (IDR) (USDmn) (%) (X) (X) (x) (x) (%) UNVR BUY 30,700 37,500 19,216 22.2 34.8 1.6 41.6 25.2 130.8 GGRM BUY 55,800 70,000 8,815 13.7 17.6 1.3 2.9 11.1 17.6 KLBF BUY 1,655 1,975 6,364 15.4 31.7 2.1 7.1 20.9 24.1 ICBP BUY 11,075 13,300 5,302 18.7 20.8 1.1 4.1 13.9 20.8 INDF BUY 6,775 8,300 4,884 13.6 12.3 0.9 2.1 6.1 17.8 TSPC BUY 2,470 2,800 912 11.5 14.5 1.3 2.3 9.3 17.1 SIDO BUY 630 770 775 13.3 19.4 1.5 4.2 13.2 23.8 KAEF BUY 1,090 1,400 495 32.2 22.2 0.7 3.0 17.8 14.5 ROTI BUY 1,060 1,400 440 25.2 20.8 0.8 4.7 14.4 24.9

Sector 47,203 18.2 26.3 1.4 19.3 18.0 65.1

Sector exc. UNVR 27,987 15.5 20.6 1.3 4.0 13.1 19.8 Source: Bloomberg, Bahana estimates


67.9

16.0 15.6

2.6 1.2

(8.3)(12.9) (14.2)

(26.8)

(40.8)

(25)

(20)

(15)

(10)

(5)

0

5

10

(60)

(40)

(20)

0

20

40

60

80

KAEF GGRM KLBF Sector UNVR ICBP ROTI INDF SIDO TSPC

(%)(%)

Source: Bloomberg

Harry Su ([email protected]) +6221 2505735 Michael W. Setjoadi ([email protected]) +6221 2505081 ext. 3613

FMCG sales in Indonesia groceries, 2003-2015F

56 64

75 86

99

120 125 140

156

174

195

213

232

50

100

150

200

250

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014F 2015F

(IDRtn)

Source: Nielsen, Bahana

2015 Compendium

79

CONSUMER STAPLES

Urban versus rural residents, 1960-25F

0

20

40

60

80

100

120

140

160

180

1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015F 2020F 2025F

(m people)

Urban Rural

Source: Economist Intelligence Unit

Modern trade market share, 2000, 2010, 2012 and 2013

78

34 34 36 37

22

93

65

5447 44

39

1712

6

94

66

5548 45

41

1914

7

94

67

58 49 46

43

20 15

8

0

20

40

60

80

100

Singapore China Malaysia Thailand Philippines Indonesia Sri lanka Vietnam India

(%)

2000 2010 2012 2013

Source: Nielsen, Bahana

Consumer confidence index, August 2008-August 2014

120.2

75

80

85

90

95

100

105

110

115

120

125

Aug-08 Aug-09 Aug-10 Aug-11 Aug-12 Aug-13 Aug-14

Consumer confidence index

Average: 107.5

Source: IMF, Bahana

Health expenditure to state budget, 2004-2016F

27 3647

58 61 6486

99 108128

153

182

216

2.4

2.82.9

3.1

2.8 2.82.9 2.9

3.02.9

3.13.0

1.5

2

2.5

3

3.5

0

50

100

150

200

250

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013F 2014F 2015F 2016F

(%)(USD)

Health expenditure per capita (LHS) Health expenditure as % to GDP (RHS)

Source: Nielsen Media Research, Media Index, Bahana estimates

2015 Compendium

80

INDUSTRIAL ESTATE NEUTRAL Following the recent political jitters, we now see risk to our

expectations of improved marketing sales in 2015. Foreign direct investment, which is crucial to the performance of our industrial estate stocks, could be held hostage by continued political uncertainties ahead. Hence, on average, we have only assumed around a 10% increase in 2015 marketing sales.

With our 2015 forecast for a higher BI rate at 7.75%, we expect the industrial estate sector to suffer from a higher cost of funds, leading to higher land acquisition costs. On a more positive note, with the exception of BEST, industrial players within our coverage have been actively developing residential property in an effort to support growth.

At this stage, we believe political uncertainties could remain for longer than expected, hence our NEUTRAL rating. BEST is our sector pick due to its strategic location and sufficient landbank.

Relative valuations

-------------------------- 2015F -------------------------


cap NAV/ Share

Disc. To NAV

Land bank

EPS growth ROAE P/E P/BV

(IDR) (IDR) (USDm) (IDR) (%) (Ha) (%) (%) (x) (x)

KIJA BUY 260 450 432 1,128 77.0 2,973 11.3 12.7 8.5 1.0

BEST BUY 545 690 431 1,158 52.9 932 20.9 14.1 12.3 1.6

LPCK BUY 7,400 9,600 423 15,818 53.2 644 4.1 24.4 7.5 1.6

SSIA BUY 685 820 264 3,893 82.4 171 (5.8) 14.8 7.8 1.1

Sector NEUTRAL 1,550 64.7 4,720 9.1 16.6 9.2 1.4 Source: Company, Bahana estimates note: based on 09 October 2014 closing price


35.0

18.6 17.2

5.6 5.5

0

10

20

30

40

50

60

LPCK KIJA SECTOR BEST SSIA

(%)

Source: Bloomberg Adrian Mahendra Putra ([email protected]) +6221 2505081 ext. 3614

DDI & FDI, 2011-2016F

76 93 128 164 179 193

175 230

270

364 397

431

0

100

200

300

400

500

600

700

2011 2012 2013 2014F 2015F 2016F

(IDRtn)

Domestic Direct Investment Foreign Direct Investment

Source: BKPM, Bahana

2015 Compendium

81

INDUSTRIAL ESTATE

Marketing sales, 2012-2016F

1,47

4

1,06

6

1,48

2

2,06

1

1,12

8

597

1,61

7

1,69

8

812

433

1,20

0 1,40

0

1,07

9

729

1,32

0 1,60

0

1,31

1

886

1,45

2

1,80

0

0

500

1,000

1,500

2,000

2,500

BEST SSIA KIJA LPCK

(IDRbn)

2012 2013 2014F 2015F 2016F


Operating profit, 2012-2016F

527

918

625

437

883

872

855

634

432

692

859

742

514

637

868

774

680 79

2

1,03

6

974

0

200

400

600

800

1,000

1,200

BEST SSIA KIJA LPCK

(IDRbn)

2012 2013 2014F 2015F 2016F


Industrial landbank take-up, 1Q09-2Q14

65

16 25 29 41

100113

131

322

189 178

268

153

186

147

10986

5539 46

18

142

0

50

100

150

200

250

300

350

(ha)

Source:Cushman & Wakefield

Remaining gross industrial landbank, 1H14

2,973

932644

171

0

500

1,000

1,500

2,000

2,500

3,000

3,500

KIJA BEST LPCK SSIA

(ha)

Source: Companies

2015 Compendium

82

METAL MINING NEUTRAL Given the rise in 2014 nickel prices to around USD16,700 ytd (+20% y-y), we

expect further price increases to be minimal, although we see support coming from the recent ore ban, which should result in the building of smelters. We expect nickel prices in 2015 to continue to be heavily influenced by geopolitical tension in Russia and policy changes in the Philippines. We forecast an average nickel price of USD17,500/ton in 2015.

Tin prices have not surged in 2014 due to high inventory levels, which should eventually be depleted assuming Indonesia’s continued stringent export regulations. Thus, as we head into 2015, we expect well-supported tin prices averaging USD25,357/ton, up from a 2014 ytd average of USD22,660/ton.

At this stage, we have a NEUTRAL rating on the sector as we expect limited price increases, particularly given the possible stronger USD on an expected Fed rate hike. Our top pick is INCO due to its cost-cutting initiatives, while we like PSAB for its production-volume growth.

Relative valuations

---------------------------2015F----------------------------- Mkt EV/ EBIT Div.

CP TP Cap EBITDA margin ROAE PE P/BV yield Code Rating (IDR) (IDR) (USDm) (X) (%) (%) (X) (X) (%)

INCO BUY 3,700 4,700 3,020 18.8 16.2 6.0 28.9 1.8 2.6 ANTM REDUCE 1,020 720 799 74.0 (1.9) (1.4) na 0.8 - TINS BUY 1,235 1,550 755 7.3 11.6 9.4 18.8 1.7 2.7 PSAB BUY 760 1,400 336 5.8 36.9 16.0 7.2 1.1 -

Sector (market cap wgt.) 4,910 25.1 14.0 5.9 25.2 1.5 1.9 Source: Bloomberg, Bahana estimates note: based on 09 October 2014 closing price

Relative performance to JCI (2014 ytd)

88.1

22.8

10.5

(2.6)

(23.3)(30)

(10)

10

30

50

70

90

PSAB INCO SECTOR TINS ANTM

(%)


Indonesian nickel and tin production, 2000-6M14

117 134 149170 153

156157

229193 191

216 227

622

811

9552 56

79 69 78120 118 102 96 84 84 78 90 84

33

0

100

200

300

400

500

600

700

800

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 6M14

(k metric tons)

Nickel Tin

Source: Bloomberg

2015 Compendium

83

METAL MINING Nickel price and inventory levels, 2000-8M14

22,36114,058

22,051 24,92414,080 12,916 17,251 17,992

51,737

111,688

137,327

109,037111,816

195,817

286,453

8,636

5,972 6,751

9,678

13,841 14,730

24,366

37,153

20,973

14,724

21,834

22,804 17,522

15,00317,117

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

0

50,000

100,000

150,000

200,000

250,000

300,000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 8M14

(USD/ton)(k metric tons)

Inventory Price (RHS) Source: Bloomberg

Tin price and inventory levels, 2000-8M14

10,968

17,824

33,745

19,556

7,4176,546

13,187

11,910

7,295

17,39318,96018,922

11,93813,381

10,289

5,4344,483 4,062

4,896

8,5137,370

8,763

14,536

18,499

13,593

20,447

26,021

21,09322,304 22,757

0

5,000

10,000

15,000

20,000

25,000

30,000

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 8M14

(USD/ton)(k metric tons)

Inventory Price (RHS)

Source: Bloomberg

Refined nickel production and consumption, 2000-13, 6M13-14

0

300

600

900

1,200

1,500

1,800

2,100

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 6M13 6M14

(k metric tons)

Production Consumption

Source: Bloomberg

Refined tin production and consumption, 2000-13, 6M13-14

0

50

100

150

200

250

300

350

400

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 6M13 6M14

(k metric tons)

Production Consumption

Source: Bloomberg

2015 Compendium

84

OIL & GAS NEUTRAL Despite support from the Banyu Urip field, Cepu block which is

expected to produce 165,000 BOPD in July-August 2015, the Indonesian government’s 2015 national oil production target of 900k BOPD remains ambitious given 2014’s initial target of 870k BOPD was not achieved and was revised down to 818k BOPD in the state budget.

However, this spells opportunities for oil exploration, which bodes well for MEDC and WINS. Going forward, we believe there will be more offshore drilling in deep water concessions which have greater oil potential. This should support WINS’ revenues as they have equipped themselves with more mid-to-high tier vessels.

We believe gas demand will increase in line with the government’s efforts to cut oil consumption, benefiting PGAS, particularly since gas is cheaper compared to other energy sources. AKRA’s volume growth should rise along with Indonesia’s move to remove oil subsidies.

Relative valuations ------------------------2015F------------------------

Code Rating Market

cap Current

Price Target Price

EPS growth P/E EV/

EBITDAEBITDA margin ROE

(USDmn) (IDR) (IDR) (%) (x) (x) (%) (%)

PGAS BUY 11,484 5,775 7,000 7.8 14.4 11.6 33.2 26.9

AKRA HOLD 1,564 4,870 4,775 16.7 21.5 11.7 6.3 16.1

MEDC BUY 1,003 3,670 4,100 460.5 14.1 5.2 43.8 8.1

WINS BUY 417 1,260 1,600 31.5 12.6 7.4 41.2 15.1

Sector 14,468 40.8 15.1 11.0 31.3 24.1 Source: Bloomberg, Bahana estimates note: based on 09 October 2014 closing price


69.7

57.9

15.1 12.2

(5.5) (5)

0

5

10

15

20

(10)

0

10

20

30

40

50

60

70

80

WINS MEDC SECTOR PGAS AKRA

(%)(%)

Source: Bloomberg Maxi Liesyaputra ([email protected]) +6221 250 5081 ext. 3615 Agustinus Reza ([email protected]) +6221 250 5081 ext. 3616

Comparison of non-subsidized fuel prices and gas, 2014

9.2 9.6

15.4 16.6 16.0 17.0

24.7

32.6 34.3 34.8 35.7

0

5

10

15

20

25

30

35

40

Gas LPG - 3Kg LPG -12Kg

LPG -50Kg

LPG Bulk LNG MFO(Fuel Oil)

MDF/IDO(Diesel

Oil)

HSD Kerosene Premium

USD/MMbTU

Source: PGN

2015 Compendium

85

OIL & GAS

Gas lifting (thousand barrels of oil equivalent per day), 2008-13

1,146

1,195

1,224

1,269 1,260

1,360

1,240

1,000

1,050

1,100

1,150

1,200

1,250

1,300

1,350

1,400

2008 2009 2010 2011 2012 2013

Realization State Budget (APBN) 2013 Outlook

Source: SKK Migas

Oil lifting (thousand barrels per day), 2008-13

927

960 965

945930

900

931944

954

898

860

840

760

780

800

820

840

860

880

900

920

940

960

980

2008 2009 2010 2011 2012 2013

State Budget (APBN) Realization

Source: SKK Migas

Indonesia’s new deep-water concession area

Source: SKK Migas

Indonesia oil supply and consumption, 2002 - 2012

200 400 600 800

1,000 1,200 1,400 1,600 1,800

2002 2004 2006 2008 2010 2012

Consumption

Production

Indonesia becomes net importer of oil

Indonesia suspends OPEC membership

thousands barrels per day

Source: U.S Energy Information Administration, International Energy Statistics

2015 Compendium

86

PLANTATIONS NEUTRAL

2008A 2009A

2010F 2011F

Higher soybean production in the American regions, due to supportive

weather conditions, coupled with less probability of El Nino occurrence,

is pressuring CPO prices, which trade at around 5% premium to soybean

prices, versus some 11% discount in the last few years.

On production, we expect improved world CPO production in October

2013 through September 2014 to 58.6mn tons, up 5% y-y. Thus, we

expect 2015 CPO price of USD860/ton (MPOB price: MYR2,558/ton), up

just 2% y-y, capped by CPO’s current premium pricing to soy oil.

Assuming a stronger dollar ahead, we maintain our NEUTRAL stance on

the sector, which currently trades on 2015 PE valuation of 11.3x, 27%

discount to its Malaysian counterparts (average: 15-20%). In the bigger

cap space, our top BUY is AALI given its attractive valuation while within

the smaller cap stocks, we like SGRO on production recovery.

Relative valuations

--------------------------------------2015F-----------------------------------

Code Rating

Market cap

Current Price

Target Price

EPS growth

P/E EV/

EBITDA

EV/ nucleus

EBITDA margin

ROAE

(USDmn) (IDR) (IDR) (%) (x) (x) (USD/ha) (%) (%)

AALI BUY 2,884 22,325 31,400 16.8 10.3 6.8 13,542 24.0 26.1

LSIP HOLD 1,063 1,900 1,975 21.8 12.1 7.9 8,385 29.1 14.2

SIMP HOLD 1,012 780 835 11.9 13.6 5.3 5,331 21.0 6.2

ANJT HOLD 312 1,140 1,200 68.0 11.3 6.9 7,291 31.9 7.7

SGRO BUY 291 1,880 2,500 21.7 9.1 6.1 6,613 28.6 13.3

TBLA BUY 270 665 870 5.5 7.1 4.9 8,565 24.0 18.8

BWPT REDUCE 180 488 370 (20.2) 19.1 11.8 12,207 35.7 6.1

Sector 6,012 18.1 11.3 6.8 10,325 25.4 18.1

Source: Bloomberg, Bahana estimates note: based on 09 October 2014 price


24.7

(16.8) (18.4)(22.8)

(26.2)(27.9)

(40.3)

(80.1)

(90)

(80)

(70)

(60)

(50)

(40)

(30)

(20)

(10)

0

(100)

(80)

(60)

(40)

(20)

0

20

40

TBLA SIMP LSIP SGRO Sector AALI ANJT BWPT

(%)(%)

Source: Bloomberg

Leonardo Henry Gavaza, CFA ([email protected]) +6221 2505081 ext. 3608

Average Rotterdam CPO CIF price, 1Q13-4Q15F

750

800

850

900

950

1,000

(USD/ton)

Avg. CPO price

2Q131Q13 4Q133Q13

864 850 798 887

2Q141Q14 4Q143Q14

904 877 818* 838*

4Q153Q152Q151Q15

888*905*913*875*

Source: Bloomberg, Bahana estimates *forecasted average

2015 Compendium

87

PLANTATIONS

CPO premium to oil prices, Jan’09 – Aug’14

(150)

50

250

450

650

May-09 Dec-09 Jul-10 Feb-11 Sep-11 Apr-12 Nov-12 Jun-13 Jan-14 Aug-14

(USD/ton)

Premium Average premium

Average: 184

Source: Bloomberg

Palm oil production and consumption, 2010-14F 2010-2011 2011-2012 2012-2013 2013-2014F October-September (mn tons)

Opening stocks 7.84 9.28 10.53 9.93

Production 49.42 52.46 55.95 58.61

growth (%) 7.7 6.1 6.7 4.8

Consumption 47.99 51.23 56.51 58.31

growth (%) 6.6 6.7 10.3 3.2

Ending stocks 9.27 10.53 9.93 10.08

Stock/usage (%) 19.32 20.07 17.74 17.20 Source: Oil World, Bahana estimates

CPO discount to soy oil, May’12 – Aug’14

(5)

0

5

10

15

20

25

30

35

May-12 Jul-12 Sep-12 Nov-12 Jan-13 Mar-13 May-13 Jul-13 Sep-13 Nov-13 Jan-14 Mar-14 May-14 Jul-14

(%)

Premium Average premium

Average: 10.73%

Source: USDA

Soy oil futures net buy positions vs palm oil prices, Feb’11–Aug’14

0

50,000

100,000

150,000

200,000

250,000

700

800

900

1,000

1,100

1,200

1,300

Sep-11 Dec-11 Mar-12 Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 Sep-13 Dec-13 Mar-14 Jun-14 Sep-14

(contracts)(USD/ton)

CPO Price Soy oil futures (RHS) Source: Bloomberg

2015 Compendium

88

POULTRY NEUTRAL* Lower corn and soybean prices should continue to help offset the

adverse impact of IDR depreciation on the sector (80% of total COGS are imported). This coupled with cost-plus pricing should allow higher prices to be gradually passed on to customers, leading to 2015 gross margin improvement for the poultry companies under our coverage.

We expect margin support from current low commodity prices due to favorable weather conditions in the US. The government’s adhoc move to cut the DOC supply should also lead to more profitable operating conditions for DOC and broiler chicken companies in 2015.

Further support should come from Japan, with about 10% of global broiler chicken imports, shows more interest in importing poultry products from Indonesia due to China’s poor broiler quality. Our NEUTRAL stance is due to possible negative impact of IDR volatility on Fed rate hike. On stock picks, our preference is market leader CPIN.

Relative valuations ----------------------2015F----------------------------- Mkt EV/ EBIT Div. CP TP Cap EBITDA margin PE P/B yield ROE

Code Rating (IDR) (IDR) (USDm) (X) (%) (X) (X) (%) (%) CPIN BUY 3,815 4,800 5,132 12.3 14.7 17.9 4.3 1.4 26.2 JPFA BUY 1,190 1,400 1,041 7.4 8.1 11.1 2.0 1.3 19.2 MAIN BUY 3,305 3,800 486 8.8 12.0 13.3 4.0 1.5 34.3 Sector (market cap weighted) 6,660 11.3 13.5 16.5 3.9 1.4 25.7

Source: Bloomberg, Bahana estimates note: based on 09 October 2014 closing prices

Share price performance ytd to JCI

(3.8)

(6.9)

(12.7)

(19.3)

(25)

(20)

(15)

(10)

(5)

0

(25)

(20)

(15)

(10)

(5)

0CPIN SECTOR MAIN JPFA

(%)(%)

Source: Bloomberg, based on 09 October 2014 closing prices Michael W. Setjoadi ([email protected]) +6221 2505081 ext. 3613 *New, please refer to appendix II

Regional GDP and chicken consumption (per capita) 2013

47

38

16

9 8 62

38.8

10.65.8

2.5 3.5 1.5 0.8

-20

-10

0

10

20

30

40

50

0

5

10

15

20

25

30

35

40

45

50

Brunei Malaysia Thailand Philippines Indonesia Vietnam Cambodia

Annual Chicken Consumption / Capita (RHS) GDP / Capita (LHS)

(USDk) (kg)

Source: IMF, Bahana

2015 Compendium

89

POULTRY

Corn prices and soybean, 2010-2014 ytd

250

300

350

400

450

500

550

600

Jan-10 Jan-11 Jan-12 Jan-13 Jan-14

Soybean meal price Avg yearly soybean meal price

(USD/ ton)

avg: 429

last: 313

avg: 301

avg: 344

ytd avg: 427

100

150

200

250

300

350

Jan-10 Jan-11 Jan-12 Jan-13 Jan-14

Corn price Avg yearly corn prince

(USD/ ton)

avg: 272

last: 135

avg: 268

ytd avg: 168

avg: 169

Source: Bloomberg Note: ytd through 09 October 2014

DOC prices, 2011-2014 ytd

-

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000


(IDR/DOC)

Last price: 3,500

avg: 3,235 avg : 3,818

avg price: 5,042

Lebaran

Lebaran

Lebaran

avg : 5,566

Lebaran

Source: Pinsar Note: ytd through 09 October 2014

Chicken prices, 2011-2014 ytd

10,000

13,000

16,000

19,000

22,000

25,000


Last price:19,000

(IDR/kg) avg:15,395 avg: 16,805

avg: 19,500

Lebaran

LebaranLebaran

Lebaran

avg: 19,313

Source: Pinsar Note: ytd through 09 October 2014

Poultry market share, 2013

CPIN36%

JPFA19%

MAIN6%

Others39%

Animal feed

CPIN35%

JPFA26%

MAIN7%

Others32%

DOC

Source: Company, Bahana estimates

2015 Compendium

90

PROPERTY NEUTRAL In 2015, the property sector should see upside from improving buyer

sentiment over real estate with the 2014 election and LTV regulation shock out of the way. However, we also see downside from higher interest rates next year that will dampen domestic property demand.

Furthermore, with recent unfavorable political developments against Jokowi’s camp, possible delays could materialize on planned infrastructure projects, which would be required for the longer-term success of the property sector. Hence, we have assumed 2015 conservative marketing sales growth of 0-10% across our coverage.

Overall, we remain NEUTRAL on the sector. We have several BUY ratings, as their valuations, based on NAV discounts, are attractive in our view. Top sector pick: SMRA for its management’s expertise, excellent delivery and moderately high recurring income base of 28%.

Relative valuations -----------------------------2015F------------------------


cap NAV/Share

Disc.to NAV

Landbank

EPSgrowth ROAE P/E P/BV

(IDR) (IDR) (USDmn) (IDR) (%) (Ha) (%) (%) (x) (x) BSDE BUY 1,500 1,900 2,261 3,806 60.6 4,543 (39.3) 16.0 12.2 1.8 LPKR BUY 960 1,200 1,817 2,405 60.1 1,498 (40.6) 9.8 14.7 1.4 PWON BUY 402 470 1,588 859 53.2 385 25.7 32.1 10.0 2.8 SMRA BUY 1,165 1,600 1,379 2,903 59.9 1,549 12.2 22.2 13.3 2.5 CTRA BUY 1,000 1,245 1,244 2,259 55.7 1,902 13.1 18.6 10.3 1.8 ASRI BUY 442 585 712 1,456 69.6 2,334 21.9 22.2 5.7 1.1 APLN HOLD 348 340 585 678 48.7 491 12.6 14.5 7.2 1.0 CTRP HOLD 705 750 356 1,505 53.1 48 23.9 8.7 11.4 1.0 Sector 9,943 2,326 58.3 12,749 (5.8) 18.7 11.4 1.9 Source: Bloomberg, Bahana estimates note:based on 09 October 2014 closing price


45.0

32.5 32.1

16.5 11.0

(0.6)(3.1)

(11.3)(14.0) (20)

(10)

0

10

20

30

40

50

(20)

(10)

0

10

20

30

40

50

APLN SMRA PWON CTRA SECTOR BSDE CTRP LPKR ASRI

(%) (%)

Source: Bloomberg

Robin Sutanto ([email protected]) +6221 2505081 ext. 3620

Mortgage vs BI rate & inflation, 2007-7M14

32.3

26.3

14.5 13.3

29.9

21.7

26.5

14.0

8.00 9.25

6.56.5 6.5

5.75

7.57.5

6.6

11.1

2.8

7.0

3.8 4.3

8.4

3.4

2

3

4

5

6

7

8

9

10

11

12

0

5

10

15

20

25

30

35

2007 2008 2009 2010 2011 2012 2013 7M14

(%)(%)

Mortgage growth (y-y) BI rate (RHS) Inflation (RHS)

Source: Bank Indonesia, Bloomberg

2015 Compendium

91

PROPERTY Portion of revenue from recurring versus development, 2015F

53 5344

2822 19 15

6

47 4756

7278 81 85

94

0

10

20

30

40

50

60

70

80

90

100

LPKR CTRP PWON SMRA APLN BSDE CTRA ASRI

(%)

Recurring Development

Source: Bahana estimates

Marketing sales, 2012-16F

0

2,000

4,000

6,000

8,000

10,000

12,000

CTRA BSDE APLN LPKR ASRI SMRA PWON CTRP

(IDRb)

2012 2013 2014F 2015F 2016F


Operating margins, 2012-2016F

0

10

20

30

40

50

60

ASRI BSDE PWON CTRP SMRA CTRA APLN LPKR

(%)

2012 2013 2014F 2015F 2016F


Operating profit, 2012-16F

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

BSDE ASRI CTRA PWON LPKR APLN SMRA CTRP

(IDRb)

2012 2013 2014F 2015F 2016F


2015 Compendium

92

TELECOMMUNICATION OVERWEIGHT

2008A 2009A

2010F 2011F

The end of the CDMA (Esia, Flexi, Starone) era and more

consolidation in the GSM market should mean more rational pricing

conditions in the sector. Addionally, defensive business models amid

lower GDP growth next year should support our sector investment

thesis. We also like telco derivatives such as the voucher and tower

provider businesses.

The sector’s revenue should be supported mostly by superior growth

in the data segment, helped by pricing power and substantial

investment in infrastructure, such as tower, fiber optics and BTS.

While the data segment has lower EBITDA margins than voice and

SMS, improved data pricing should cushion any margin erosion ahead.

Our sector OVERWEIGHT is led by TLKM as our top pick in the

operator space, followed by ISAT on low valuation. On telco

derivatives, we also like TELE given its resilient business model and

greater synergies with TLKM.

Relative valuations

----------------------------2015F--------------------------

Code Rating

Market cap

Current Price

Target Price

No. of subs

EV/ EBITDA

EBITDA Margin

P/E P/BV

Dividend yield

(USDmn) (IDR) (IDR) (m) (x) (x) (x) (x) (%)

TLKM BUY 23,153 2,800 3,350 159 5.7 51.4 16.2 3.8 4.0

EXCL BUY 4,253 6,075 7,400 70 5.4 36.1 30.8 2.7 1.0

ISAT BUY 1,716 3,850 4,500 62 3.5 44.9 -

153.8

1.3 -

Sector 29,122

291 5.5 48.8 18.5 3.5 3.5

TOWR BUY 3,515 4,195 5,100 13.5 81.6 29.6 7.1 na

TELE BUY 511 885 1,160 11.8 3.5 15.1 2.4 1.7

ERAA HOLD 238 1,000 1,060 7.7 3.6 9.4 0.9 4.3

Sector 4,264 13.0 67.9 26.7 6.2 0.4

Source: Bloomberg, Bahana estimates note: based on 09 October 2014 closing price


35.7

25.9

14.6 12.9

(0.0)

(16.8)

(24.1)(30)

(20)

(10)

0

10

20

30

40

(30)

(20)

(10)

0

10

20

30

40

TOWR TELE TLKM SECTOR EXCL ERAA ISAT

(%)(%)

Source: Bloomberg

Leonardo Henry Gavaza, CFA ([email protected]) +6221 2505081 ext. 3608

Industry revenue growth, 2Q13-2Q14

-6

-4

-2

0

2

4

6

8

10

12

2Q13 3Q13 4Q13 1Q14 2Q14

TLKM EXCL (RHS) ISAT (RHS) Industry

(%)

Source: Companies

2015 Compendium

93

TELECOMMUNICATION

Subscriber base, 2Q11-2Q14

30,000

35,000

40,000

45,000

50,000

55,000

60,000

65,000

70,000

75,000

90,000

100,000

110,000

120,000

130,000

140,000

150,000

2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14

Telkomsel EXCL (RHS) ISAT (RHS)

('000 subs)

Source: Companies

Average revenue per user, 2Q11-2Q14

22

24

26

28

30

32

34

36

38

40

2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14

EXCL Telkomsel ISAT

(IDRk/mth)

Source: Companies

Operator bts, 2Q11-2Q14

24,971 33,737

41,293 47,814

39,609 47,253

62,225

79,560

18,408 21,039 22,449 33,913

82,988

102,029

125,967

161,287

-

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

2Q11 2Q12 2Q13 2Q14

EXCL Telkomsel ISAT Total

(units)

Source: Companies

Industry capex, 2012-16F

17,272

24,898 24,000 24,000 24,000

9,036

6,932 6,000 6,000 6,000

8,374

9,364 9,000 8,000 8,000

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

2012 2013 2014F 2015F 2016F

TLKM EXCL ISAT

(IDRbn)

Source: Companies

2015 Compendium

94

TRANSPORTATION NEUTRAL Going into 2015, the land transportation sector (in particular the local

taxi business) should remain relatively robust, supported by a lack of public transportation, a higher consumer spending on taxi and the upcoming ERP regulation. However, this could change drastically upon the completion of the MRT project in 2018-19, as about 67% of the taxi fleet currently operates in the greater Jakarta area.

ASPs for used cars have fallen due to the introduction of LCGCs (low-cost green cars), hurting ASSA’s used car margins. This is likely to persist. However, we expect demand for corporate cars to remain strong, in line with the recent outsourcing trend in various companies to create cost efficiency.

Our NEUTRAL stance is due to concerns about intense taxi competition given the Bluebird IPO. However, on a more positive note, we think that both TAXI and ASSA will be minimally affected by higher fuel prices, which are borne by their drivers (TAXI) or customers (ASSA).

Relative valuations -------------------------2015F------------------------

Code Rating Market

cap Current

Price Target Price

EPS growth P/E EV/

EBITDA EBITDA margin ROAE

(USDmn) (IDR) (IDR) (%) (x) (x) (%) (%)

TAXI BUY 200 1,165 1,380 12.7 14.7 5.9 63.4 17.4

ASSA REDUCE 60 191 190 18.0 9.5 3.7 43.0 7.7

Sector 260 13.9 13.5 5.4 58.8 15.5 Source: Bloomberg, Bahana estimates note: based on 09 October 2014 closing price


(37.0)(39.4)

(48.6)

(50)

(40)

(30)

(20)

(10)

0

(60)

(50)

(40)

(30)

(20)

(10)

0TAXI Sector ASSA

(%)(%)

Source: Bloomberg Agustinus Reza Kirana ([email protected]) +6221 2505081 ext. 3616

Regional taxi penetration per 1,000 population, 2013

0.2

1.4

2.5

3.2

5.3

0

2

4

6

Indonesia Greater Jakarta Bangkok Malaysia Singapore

(unit)

Source: Euromonitor, Bahana

2015 Compendium

95

TRANSPORTATION

Consumer spending on taxi services in 2008 – 2016F

2,285 2,545 3,113

3,859 4,115

5,385 6,156

7,001 7,962

61 90

118

255 562

762

904

1,096

1,329

2,346 2,635

3,231

4,114

4,677

6,147

7,060

8,097

9,291

-

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

2008 2009 2010 2011 2012 2013F 2014F 2015F 2016F

(IDRb)

Standard Luxury Source: Euromonitor, Bahana estimates

Taxi fleet in Indonesia, 2009-16F

52

5759

62

71

79

88

96

40

50

60

70

80

90

100

2009 2010 2011 2012 2013F 2014F 2015F 2016F

('000)

Source: Euromonitor, Bahana estimates

Total fleet in operation, breakdown by geography, 2013


Total fleet in operation, by car type, 2013


2015 Compendium

96


2015 Compendium

COMPANY

2015 Compendium

98

ACE HARDWARE INDONESIA HOLD PX: IDR835 - TP: IDR900* While the opening of its 100th store back in April 2014 cemented

ACES’ status as Indonesia’s largest home improvement and lifestyle specialty retailer, aggressive store openings, which would bring end-2014 number of outlets to 110, also meant cannibalization and weak SSSG for the company.

Further SSSG softness is likely to stem from the upcoming potential fuel-price hikes and IKEA competition on its lifestyle department (40% of sales), slowing 2015F revenue growth to 13%. Going forward, we believe government regulation revision on imported products would pave the way for other foreign competitors to enter the fray.

Our IDR900 TP reflects 2015F PE of 25x. Slowing EPS growth on intense competition and more expensive inventory build-up would spell bad news for margins. Risks to our call are weaker/stronger than expected competition.

Financial highlights Year to 31 Dec 2012A 2013A 2014F 2015F 2016F Revenues (IDRbn) 3,223 3,895 4,648 5,250 5,850 EBIT (IDRbn) 515 565 646 707 763 Net profit (IDRbn) 437 509 567 619 674 Bahana/consensus (%) - - 98 90 84

EPS (IDR) 25 30 33 36 39 EPS growth (%) 53.3 16.4 11.4 9.2 8.9 EV/EBITDA (x) 24.1 21.8 18.8 16.8 15.1 P/E (x) 32.8 28.1 25.2 23.1 21.2 FCFPS (IDR) 3 6 14 27 30 FCF yield (%) 0.4 0.7 1.6 3.2 3.6 BVPS (IDR) 94 112 139 164 193 P/BV (x) 8.9 7.5 6.0 5.1 4.3 DPS (IDR) 2 10 6 12 13 Div. yield (%) 0.3 1.2 0.7 1.4 1.5 Source: Company, Bahana estimates note: based on 09 October 2014 closing price

Share price performance

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

100,000

500

550

600

650

700

750

800

850

900

950

1,000

9-Oct-13 9-Dec-13 9-Feb-14 9-Apr-14 9-Jun-14 9-Aug-14 9-Oct-14

('000)(IDR)

Volume (RHS) ACES IJ Px Last

24.7

(9.6)

(4.5)

2.9 5.4

14.5

(15)

(10)

(5)

0

5

10

15

20

25

30

(15)

(10)

(5)

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ACES IJ relative to JCI Source: Bloomberg Wendy Chandra ([email protected]) +6221 2505081 ext.3606 *New, please refer to appendix II

Major assumptions Year to 31 Dec 2012A 2013A 2014F 2015F 2016F Ace Hardware store (unit) 76 95 110 125 140 Toys Kingdom (unit) 16 20 24 27 30 Total store area (k sqm) 232 276 312 348 384 Blended avg. rev. /sqm growth (%) 1.3 (3.7) 2.8 0.6 0.5 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 1,000/580 12M High/low consensus TP (IDR) : 1,200/490 Majority shareholder (%) : Kawan Lama (59.9) Share outstanding (mn)/Free float (%) : 17,150/40 Mkt. cap. (IDRbn/USDmn) : 14,320/1,175 3-m avg.daily t.o.(IDRbn/USDmn) : 10.8/0.9 Bloomberg/Reuters code : ACES IJ/ACES.JK Source: Bloomberg, Reuters based on 09 October 2014 closing price

2015 Compendium

99

ACE HARDWARE INDONESIA

Profit & loss Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016FSales 3,223 3,895 4,648 5,250 5,850Gross profit 1,552 1,934 2,309 2,609 2,916EBITDA 584 651 749 822 892Depreciation 69 86 103 116 129 EBIT 515 565 646 707 763Net interest inc./(expense) (25) (28) (36) (41) (41) Forex gain/(losses) 9 23 - - - Other income/(expense) 39 64 85 95 106 Pre-tax profit 537 623 696 760 828Taxes (108) (120) (134) (146) (159) Minority interest 8 6 6 6 6 Extraordinary gain/(losses) - - - - - Net profit 437 509 567 619 674Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016F Cash and equivalents 270 162 240 495 829 S-T investments - - - - - Trade receivables 55 29 37 42 47 Inventories 445 446 467 490 516 Fixed assets 620 1,113 1,462 1,650 1,834 Other assets 527 730 790 825 854 Total assets 1,917 2,479 2,995 3,501 4,079 Interest bearing liabilities 35 35 - - - Trade payables 63 246 260 293 326 Other liabilities 200 282 349 395 442 Total liabilities 299 563 608 688 768 Minority interest 17 11 17 22 28 Shareholders' equity 1,601 1,904 2,370 2,791 3,283 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016FEBIT 515 565 646 707 763 Depreciation 66 75 99 104 109 Working capital (312) (412) (348) (175) (172) Other operating items (61) (50) (43) (46) (48) Operating cash flow 208 177 354 590 653Net capital expenditure (150) (75) (120) (127) (136) Free cash flow 58 102 234 463 517Equity raised/(bought) (8) (40) - - 35 Net borrowings 35 (0) (35) - - Other financing (26) (169) (121) (209) (217) Net cash flow 60 (108) 78 255 334

Cash flow at beginning 210 270 162 240 495

Ending cash flow 270 162 240 495 829Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2012A 2013A 2014F 2015F 2016F ROAE (%) 31.1 29.0 26.5 24.0 22.2

ROAA (%) 26.0 23.2 20.7 19.1 17.8 EBITDA margin (%) 18.1 16.7 16.1 15.7 15.3 EBIT margin (%) 16.0 14.5 13.9 13.5 13.0 Net margin (%) 13.6 13.1 12.2 11.8 11.5 Payout ratio (%) 15.0 39.1 35.0 35.0 35.0 Current ratio (x) 6.0 4.0 4.8 5.2 5.6 Interest coverage (x) 20.5 20.0 18.1 17.1 18.6 Net gearing (%) nc nc nc nc nc Debts to assets (%) 1.8 1.4 - - - Debtor turnover (days) 7 3 3 3 3 Creditor turnover (days) 16 49 41 41 41 Inventory turnover (days) 152 224 228 228 228 Source: Company, Bahana estimates

2015 Compendium

100

ADARO ENERGY REDUCE PX: IDR1,140 - TP: IDR1,000 ADRO, the second-largest coal company by production volume (6M14

production: 54mn tons), with total reserves of 1.1bn tons and resources of 5.3bn tons, may be hampered by the government’s policy to limit coal production volumes. With ADRO’s “Envirocoal”, known for its low sulfur and ash content, but also low CV, the company may see ASP issues.

As ADRO has low CV coal, we expect low cost maintenance, with a 2015F cash cost average of USD35ton and a stripping ratio (SR) of 5.4x, supported by other operational cost cutting measures.

ADRO is venturing into the energy market by building power plants, although coal mining should remain its backbone. Additionally, ADRO is well-placed as 25% of its sales are local (2nd largest), which should allow for stronger volume growth with more local power plant projects in the pipeline. Our DCF-based TP of IDR1,000 is based on an 11.6% WACC. Risks: higher-than-expected cost and delayed/cancelled power projects.

Financial highlights Year to 31 Dec 2012A 2013A 2014F 2015F 2016F Revenues (USDmn) 3,722 3,285 3,414 3,418 3,576 EBIT (USDmn) 836 566 444 496 539 Net profit (USDmn) 385 231 250 299 332 Bahana/consensus (%) - - 97 103 97

EPS (IDR) 113 87 93 109 119 EPS growth (%) (27.7) (23.2) 7.2 17.7 9.1 EV/EBITDA (x) 4.2 5.4 5.7 5.3 5.3 P/E (x) 10.1 13.1 12.3 10.4 9.5 FCFPS (IDR) 114 116 303 170 174 FCF yield (%) 10.0 10.2 26.5 14.9 15.2 BVPS (IDR) 726 793 1,092 1,158 1,231 P/BV (x) 1.6 1.4 1.0 1.0 0.9 DPS (IDR) 56 34 37 43 48 Div. yield (%) 4.9 3.0 3.2 3.8 4.2 Source: Company, Bahana estimates note: based on 09 October 2014 closing price


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Volume (RHS) ADRO IJ Px Last

(12.3) (10.4)

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16.1

3.9 3.1

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ADRO IJ relative to JCI Source: Bloomberg Arandi Nugraha ([email protected]) +6221 2505081 ext. 3619

Major assumptions Year to 31 Dec 2012A 2013F 2014F 2015F 2016F Average Selling Price (USD/ton) 71 58 59 57 57 growth % (3.1) (18.4) 1.8 (3.5) 1.1 Coal Sales Volume (m tons) 48.6 53.2 54.1 55.9 57.7 growth % (4.3) 9.4 1.7 3.2 3.3 Prod Cash Cost (USD/ton) 40 35 37 35 36 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 1,385/880 12M High/low consensus TP (IDR) : 1,600/980Majority shareholder (%) : PT Adaro Strategic (43.9) Shares outstanding (mn)/Free float (%) : 31,986/41.0 Mkt. cap. (IDRbn/USDmn) : 36,464/2,991 3-m avg.daily t.o.(IDRbn/USDmn) : 63.0/5.2 Bloomberg/Reuters code : ADRO IJ/ADRO.JK Source: Bloomberg, Reuters; based on 09 October 2014 closing price

2015 Compendium

101

ADARO ENERGY

Profit & loss Year to 31 Dec (USDmn) 2012A 2013A 2014F 2015F 2016FSales 3,722 3,285 3,414 3,418 3,576Gross profit 1,043 739 575 674 724EBITDA 1,031 805 753 813 808Depreciation 194 239 308 318 269EBIT 836 566 444 496 539Net interest inc./(expense) (107) (100) (105) (101) (94)Forex gain/(losses) - - - - -Other income/(expense) (15) (46) 120 154 161Pre-tax profit 714 419 459 549 606Taxes (330) (190) (206) (247) (273)Minority interest 2 2 (2) (3) (1)Extraordinary gain/(losses) - - - - -Net profit 385 231 250 299 332Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (USDmn) 2012A 2013A 2014F 2015F 2016F Cash and equivalents 500 681 524 541 574 S-T investments - - - - - Trade receivables 474 310 322 322 337 Inventories 64 103 105 102 106 Fixed assets 3,696 3,893 3,884 3,917 4,047 Other assets 1,957 1,748 1,773 1,782 1,761 Total assets 6,692 6,734 6,608 6,664 6,825 Interest bearing liabilities 2,445 2,221 1,846 1,705 1,565 Trade payables 388 327 365 352 366 Other liabilities 864 991 1,050 1,057 1,092 Total liabilities 3,697 3,539 3,261 3,114 3,024 Minority interest 436 490 437 437 437 Shareholders' equity 2,559 2,705 2,910 3,112 3,364 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (USDmn) 2012A 2013A 2014F 2015F 2016FEBIT 836 566 444 496 539Depreciation 194 239 308 318 269Working capital (217) 211 42 (19) (7)Other operating items 165 48 19 20 21Operating cash flow 979 1,063 814 814 821Net capital expenditure (675) (269) (368) (359) (366)Free cash flow 304 794 447 456 455Equity raised/(bought) (21) - - - -Net borrowings 357 (193) (365) (145) (136)Other financing (699) (420) (239) (294) (287)Net cash flow (59) 181 (157) 17 33Cash flow at beginning 559 500 681 524 541Ending cash flow 500 681 524 541 574Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2012A 2013A 2014F 2015F 2016F ROAE (%) 15.4 8.8 8.9 9.9 10.3 ROAA (%) 6.2 3.4 3.7 4.5 4.9 EBITDA margin (%) 27.7 24.5 22.0 23.8 22.6 EBIT margin (%) 22.5 17.2 13.0 14.5 15.1 Net margin (%) 10.4 7.0 7.3 8.8 9.3 Payout ratio (%) 14.3 39.0 40.0 40.0 40.0 Current ratio (x) 1.6 1.8 1.4 1.6 1.7 Interest coverage (x) 7.6 5.2 4.0 4.8 5.5 Net gearing (%) 76.0 56.9 45.4 37.4 29.5 Debts to assets (%) 36.5 33.0 27.9 25.6 22.9 Debtor turnover (days) 46 34 34 34 34 Creditor turnover (days) 53 47 47 47 47 Inventory turnover (days) 9 15 14 14 14 Source: Company, Bahana estimates

2015 Compendium

102

ADHI KARYA BUY PX: IDR2,525 - TP: IDR4,000 To support its growth, ADHI, the smallest construction company under

our coverage by market cap, is entering the tourism and monorail businesses. Possible major new contracts include the Tanjung Perak port monorail in cooperation with Pelindo III, the airport monorail with Angkasa Pura II, and the monorail feeder for Cibubur–Cawang and Bekasi–Cawang. In tourism, ADHI is developing some hotels under the Grand Dhika brand in Jakarta, Semarang and Medan.

Additionally, ADHI has widened its business through various ongoing property projects, managed by subsidiary PT Adhi Persada Properti, such as Yogyakarta Taman Melati Sardjito and Malang Taman Melati.

Our IDR4,000 TP is based on a 13.2x 2015F PER (20% discount to regional peer average), the most attractive in the sector, in our view. Risks include macro headwinds such as possible higher interest rates and lower-than-expected government spending.

Financial highlights Year to 31 Dec 2012A 2013A 2014F 2015F 2016F Revenues (IDRbn) 7,627 9,800 10,760 13,084 14,237 EBIT (IDRbn) 793 864 941 1,174 1,315 Net profit (IDRbn) 212 406 364 540 675 Bahana/consensus (%) - - 86 101 97

EPS (IDR) 118 226 202 300 375 EPS growth (%) 16.7 91.3 (10.3) 48.3 24.9 EV/EBITDA (x) 5.7 4.9 5.0 4.6 4.6 P/E (x) 21.4 11.2 12.5 8.4 6.7 FCFPS (IDR) 80 125 (408) (307) (370) FCF yield (%) 3.2 5.0 (16.2) (12.2) (14.7) BVPS (IDR) 652 854 1,057 1,357 1,732 P/BV (x) 3.9 3.0 2.4 1.9 1.5 DPS (IDR) 24 45 40 60 75 Div. yield (%) 0.9 1.8 1.6 2.4 3.0 Source: Company, Bahana estimates note: based on 09 October 2014 closing price


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Volume (RHS) ADHI IJ Px Last

50.4

(11.8)(19.0)

(24.7)

45.0

23.7

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ADHI IJ relative to JCI Source: Bloomberg


Major assumptions Year to 31 Dec 2012A 2013A 2014F 2015F 2016F Carried over (IDRbn) 8,036 8,560 8,272 10,255 11,593 New contracts (IDRbn) 9,604 10,860 14,500 17,995 20,794 Total book orders (IDRbn) 17,640 19,420 22,772 28,250 32,387 Source: Company, Bahana estimates Company information 12M high/low (IDR) : 3,380/1,430 12M High/low consensus TP (IDR) : 3,670 /2,670 Majority shareholder (%) : Republic of Indonesia (51) Shares outstanding (mn)/Free float (%) : 1,801/49.0 Mkt. cap. (IDRbn/USDmn) : 4,548/374 3-m avg.daily t.o.(IDRbn/USDmn) : 53.1/4.4 Bloomberg/Reuters code : ADHI IJ/ADHI.JK Source: Bloomberg, Reuters; based on 09 October 2014 closing price

2015 Compendium

103

ADHI KARYA

Profit & loss Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016FSales 7,627 9,800 10,760 13,084 14,237Gross profit 1,043 1,248 1,333 1,649 1,832EBITDA 794 873 1,022 1,258 1,418Depreciation 1 10 81 84 103EBIT 793 864 941 1,174 1,315Net interest inc./(expense) (81) (75) (146) (196) (257)Forex gain/(losses) 18 110 16 7 6Other income/(expense) (306) (184) (100) (50) (30)Pre-tax profit 424 715 711 935 1,034Taxes (210) (306) (344) (393) (356)Minority interest (2) (2) (2) (2) (2)Extraordinary gain/(losses) - - - - -Net profit 212 406 364 540 675Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016F Cash and equivalents 949 1,940 1,284 867 867 S-T investments - - - - - Trade receivables 1,953 2,283 2,535 3,083 3,354 Inventories 117 162 179 217 236 Fixed assets 476 490 860 1,490 2,294 Other assets 4,378 4,846 4,986 5,751 6,556 Total assets 7,872 9,720 9,844 11,408 13,308 Interest bearing liabilities 949 1,709 1,887 2,086 2,850 Trade payables 4,277 4,767 4,492 5,112 5,562 Other liabilities 1,466 1,696 1,552 1,755 1,766 Total liabilities 6,691 8,172 7,931 8,953 10,179 Minority interest 7 9 10 10 11 Shareholders' equity 1,174 1,539 1,903 2,445 3,118 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016FEBIT 793 864 941 1,174 1,315Depreciation 1 10 81 84 103Working capital 258 377 (178) (9) (58)Other operating items (668) (464) (679) (682) (767)Operating cash flow 384 787 165 567 593Net capital expenditure (240) (561) (900) (1,120) (1,260)Free cash flow 144 226 (735) (553) (667)Equity raised/(bought) 38 1 - - -Net borrowings 257 760 180 199 764Other financing (42) 3 (99) (63) (96)Net cash flow 397 991 (655) (417) 0Cash flow at beginning 552 949 1,940 1,284 867Ending cash flow 949 1,940 1,284 867 867Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2012A 2013A 2014F 2015F 2016F ROAE (%) 19.7 30.0 21.2 24.9 24.3 ROAA (%) 3.0 4.6 3.7 5.1 5.5 EBITDA margin (%) 10.4 8.9 9.5 9.6 10.0 EBIT margin (%) 10.4 8.8 8.7 9.0 9.2 Net margin (%) 2.8 4.1 3.4 4.1 4.7 Payout ratio (%) 19.9 20.0 20.0 20.0 20.0 Current ratio (x) 1.2 1.4 1.4 1.3 1.3 Interest coverage (x) 9.8 11.5 6.5 6.0 5.1 Net gearing (%) nc nc 31.7 49.9 63.6 Debts to assets (%) 12.1 17.6 19.2 18.3 21.4 Debtor turnover (days) 89 89 86 86 86 Creditor turnover (days) 172 173 173 173 173 Inventory turnover (days) 4 5 5 5 5 Source: Company, Bahana estimates

2015 Compendium

104

ADI SARANA ARMADA REDUCE PX: IDR191 - TP: IDR190 The second largest car rental corporate with a total market share of

15%, ASSA is currently struggling in disposal car sales. However, corporate clients with long-term contracts account for 99% of ASSA’s business, providing the company with stable car rental revenue.

The new business segment (car auctions) called “Bid Win”, which started in 1H14, should help the company in selling its disposal cars and offset any margin pressure. We expect revenue growth of 22% y-y to IDR1.4tn in 2015 with the net addition of around 2,000 units p.a.

Going forward, ASSA will likely struggle to sell disposal cars (20% of 2013 total revenue) as those sales are down 50% y-y in 1H14. Although ASSA has underperformed the market by 49% ytd, we cut our rating to REDUCE with an unchanged TP of IDR190, based on a PE of 9.5x 2015F, at a 40% discount to regional peers. An upside risk would be higher sales prices for the disposal cars.

Financial highlights Year to 31 Dec 2012A 2013A 2014F 2015F 2016F

Revenues (IDRbn) 794 1,019 1,148 1,396 1,682 EBIT (IDRbn) 167 213 200 254 295 Net profit (IDRbn) 29 92 58 68 75 Bahana/consensus (%) - - - - -

EPS (IDR) 14 27 17 20 22 EPS growth (%) 113.5 97.9 (37.3) 18.0 9.8 EV/EBITDA (x) 4.3 3.9 4.2 3.7 3.5 P/E (x) 13.9 7.0 11.2 9.5 8.6 FCFPS (IDR) (119) (123) (178) (170) (179) FCF yield (%) (63) (65) (94) (90) (94) BVPS (IDR) 216 243 251 267 284 P/BV (x) 0.9 0.8 0.8 0.7 0.7 DPS (IDR) - 8.9 4.2 5.0 5.5 Div. yield (%) - 4.7 2.2 2.6 2.9 Source: Company, Bahana estimates note: based on 10/09/2014 closing price


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Volume (RHS) ASSA IJ Px Last

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Major assumptions Year to 31 Dec 2012A 2013A 2014F 2015F 2016F Unit operation (Unit) 10,969 12,937 15,150 17,250 19,350 Utilization rate (%) 90 92.7 92.0 92.0 92.0 Unit of disposal (Unit) 1,200 1,954 1,600 1,800 2,100 ASP used car (IDRmn) 99.5 102.7 100.0 99.0 99.0 Source: Company, Bahana estimates Company information 12M high/low (IDR) : 325/191 12M High/low consensus TP (IDR) : 360/250 Majority shareholder (%) : Adi Dinamika Investindo (58%) Shares outstanding (mn)/Free float (%) : 3,398/39.4 Mkt. cap. (IDRbn/USDmn) : 649/53 3-m avg.daily t.o.(IDRbn/USDmn) : 0.3/0.02 Bloomberg/Reuters code : ASSA IJ/ASSA.JK Source: Bloomberg, Reuters; based on 9 October 2014 closing price

2015 Compendium

105

ADI SARANA ARMADA

Profit & loss Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016FSales 794 1,019 1,148 1,396 1,682Gross profit 266 346 360 426 480EBITDA 361 458 492 601 709Depreciation 194 246 292 346 414EBIT 167 213 200 254 295Net interest inc./(expense) (132) (112) (134) (176) (208)Forex gain/(losses) (0) (0) 0 0 0Other income/(expense) 9 6 6 6 6Pre-tax profit 43 106 72 85 93Taxes (14) (14) (14) (17) (19)Minority interest - - - - -Extraordinary gain/(losses) - - - - -Net profit 29 92 58 68 75Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016F Cash and equivalents 316 26 15 352 344 S-T investments - - - - - Trade receivables 88 111 133 157 190 Inventories 2 32 39 47 56 Fixed assets 1,644 1,912 2,144 2,393 2,654 Other assets 60 91 153 169 187 Total assets 2,110 2,173 2,484 3,117 3,431 Interest bearing liabilities 1,209 1,161 1,412 1,948 2,154 Trade payables 55 56 64 74 85 Other liabilities 112 130 155 188 228 Total liabilities 1,376 1,347 1,631 2,211 2,467 Minority interest - - - - - Shareholders' equity 733 825 852 906 964 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016FEBIT 167 213 200 254 295Depreciation 194 246 292 346 414Working capital 12 (26) (48) (1) (4)Other operating items (119) (145) (150) (189) (224)Operating cash flow 254 287 294 411 482Net capital expenditure (659) (705) (900) (990) (1090)Free cash flow (405) (418) (606) (579) (608)Equity raised/(bought) 511 0 0 0 0Net borrowings 103 (47) 250 536 205Other financing 95 177 345 379 395Net cash flow 305 (288) (11) 336 (7)Cash flow at beginning 10 316 26 15 352Ending cash flow 316 26 15 352 344Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2012A 2013A 2014F 2015F 2016F ROAE (%) 6.4 11.8 6.9 7.7 8.0 ROAA (%) 1.7 4.3 2.5 2.4 2.3 Gross margin (%) 33.5 33.9 31.4 30.5 28.5 EBITDA margin (%) 45.4 45.0 42.8 43.0 42.2 Net margin (%) 3.7 9.0 5.0 4.9 4.4 Payout ratio (%) - 33.0 25.0 25.0 25.0 Current ratio (x) 1.1 0.5 0.5 1.1 1.0 Interest coverage (x) 1.3 1.9 1.5 1.4 1.4 Net gearing (%) 121.8 137.6 163.8 176.2 187.7 Debts to assets (%) 57.3 53.4 56.8 62.5 62.8 Debtor turnover (days) 34 30 28 26 24 Creditor turnover (days) 37 36 39 38 38 Inventory turnover (days) 1 18 18 18 17 Source: Company, Bahana estimates

2015 Compendium

106

AGUNG PODOMORO LAND HOLD PX: IDR348 - TP: IDR340 APLN, one of Indonesia’s biggest high-rise property developers, is

facing pre-sales underperformance, achieving just 51% of the full-year target in 8M14. Given possible project delays ahead, we maintain our 2014 marketing sales target of IDR5.4tn (-10% y-y), lower than APLN’s internal target of IDR6tn.

Growth support will likely hinge on APLN’s ability to secure licenses to commence reclamation of a 160ha island 300m off the North Jakarta coastline. Post completion, the artificial island could add IDR234 to our estimate of its NAV/share. However, with recent concerns surrounding its Green Bay project, built on partially reclaimed land, we are cautious over its ambitious reclamation plans.

Our IDR340 TP is derived based on a 50% discount to APLN’s 2015F NAV (sector: 50%). HOLD. Upside risk: stronger-than-expected sales; downside risks: greater-than-expected rate hikes and project delays.

Financial highlights Year to 31 Dec 2012A 2013A 2014F 2015F 2016F Revenues (IDRbn) 4,689 4,901 5,310 5,890 6,311 EBIT (IDRbn) 1,260 1,276 1,375 1,519 1,647 Net profit (IDRbn) 812 851 884 995 1,070 Bahana/consensus (%) - - 94 95 106

EPS (IDR) 40 42 43 49 52 EPS growth (%) 39.7 4.9 3.8 12.6 7.5 EV/EBITDA (x) 6.2 6.3 5.9 5.0 4.5 P/E (x) 8.8 8.4 8.1 7.2 6.7 FCFPS (IDR) (43) (9) (19) 26 10 FCF yield (%) (12.4) (2.4) (5.4) 7.3 2.9 BVPS (IDR) 245 281 314 354 396 P/BV (x) 1.4 1.2 1.1 1.0 0.9 DPS (IDR) 6 8 9 10 10 Div. yield (%) 1.7 2.4 2.5 2.8 3.0 Source: Company, Bahana estimates note:based on 09 October 2014 closing price


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Volume (RHS) APLN IJ Px Last

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APLN IJ relative to JCI

Source: Bloomberg Robin Sutanto ([email protected]) +6221 2505081 ext. 3620

NAV Calculation 1H14

Land bank (Ha) 491 Total value (IDRbn) 13,905 NAV/share (IDR) 678 Discount (%) 50 Adjusted NAV/share (IDR) 340 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 390/207 12M High/low consensus TP (IDR) : 500/250 Majority shareholder (%) : Indofica (62.0) Shares outstanding (m)/Free float (%) : 20,501/29.9 Mkt. cap. (IDRbn/USDmn) : 7,134/585 3-m avg.daily t.o.(IDRbn/USDmn) : 25.2/2.1 Bloomberg/Reuters code : APLN IJ/APLN.JK Source: Bloomberg, Reuters; based on 09 October 2014 closing price

2015 Compendium

107

AGUNG PODOMORO LAND

Profit & loss Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016FSales 4,689 4,901 5,310 5,890 6,311Gross profit 2,084 2,355 2,546 2,818 3,030EBITDA 1,523 1,505 1,671 1,866 2,044Depreciation 263 229 296 347 397EBIT 1,260 1,276 1,375 1,519 1,647Net interest inc./(expense) (298) (329) (356) (354) (383)Forex gain/(losses) - - - - -Other income/(expense) 136 231 213 217 221Pre-tax profit 1,098 1,177 1,231 1,382 1,485Taxes (256) (247) (266) (295) (316)Minority interest (30) (79) (82) (92) (99)Extraordinary gain/(losses) - - - - -Net profit 812 851 884 995 1,070Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016F Cash and equivalents 2,225 3,177 3,596 3,989 4,121 S-T investments - - - - - Trade receivables 1,763 1,623 1,379 1,878 1,985 Inventories 1,738 2,978 3,234 3,594 3,839 Fixed assets 6,835 8,289 10,993 13,226 15,329 Other assets 2,634 3,612 3,602 3,832 3,980 Total assets 15,196 19,680 22,804 26,519 29,254 Interest bearing liabilities 4,483 5,457 6,320 6,205 6,154 Trade payables 1,053 2,080 2,168 2,475 2,718 Other liabilities 3,311 4,931 6,279 8,823 10,317 Total liabilities 8,847 12,467 14,767 17,503 19,190 Minority interest 1,323 1,457 1,603 1,763 1,939 Shareholders' equity 5,025 5,756 6,434 7,252 8,125 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016FEBIT 1,260 1,276 1,375 1,519 1,647Depreciation 263 229 296 347 397Working capital 713 2,775 1,659 2,275 1,546Other operating items (458) (483) (282) (513) (567)Operating cash flow 1,778 3,798 3,048 3,627 3,023Net capital expenditure (2,663) (3,972) (3,432) (3,103) (2,819)Free cash flow (885) (175) (385) 524 205Equity raised/(bought) 18 2 - - -Net borrowings 1,056 973 863 (115) (51)Other financing 200 152 (60) (17) (22)Net cash flow 390 952 419 393 132Cash flow at beginning 1,835 2,225 3,177 3,596 3,989Ending cash flow 2,225 3,177 3,596 3,989 4,121Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2012A 2013A 2014F 2015F 2016F ROAE (%) 17.4 15.8 14.5 14.5 13.9 ROAA (%) 6.8 5.4 4.2 4.0 4.2 EBITDA margin (%) 32.5 30.7 31.5 31.7 32.4 EBIT margin (%) 26.9 26.0 25.9 25.8 26.1 Net margin (%) 17.3 17.4 16.6 16.9 17.0 Payout ratio (%) 21.2 15.2 20.0 20.0 20.0 Current ratio (x) 0.8 0.7 0.6 0.6 0.6 Interest coverage (x) 4.2 3.9 3.9 4.3 4.3 Net gearing (%) 44.9 39.6 42.3 30.6 25.0 Debts to assets (%) 29.5 27.7 27.7 23.4 21.0 Debtor turnover (days) 113 126 103 101 101 Creditor turnover (days) 148 298 286 294 302 Inventory turnover (days) na na na na na Source: Company, Bahana estimates

2015 Compendium

108

AKR CORPORINDO HOLD* PX: IDR4,870 – TP: IDR4,775* AKRA, Indonesia’s largest private oil distributor, is developing a JIIPE

(Java Integrated Industrial and Ports Estate) in Gresik, East Java, to support its weak oil distribution business, hurt by low coal prices. Currently, AKRA’s East Java projects are under land upgradation, including over 40 ha of land reclaimed and 6km of access roads.

Going into 2015, AKRA has commenced the marketing of phase 1 of the JIIPE project and expects an additional IDR572bn in revenue from land sales at USD120/sq m. In phase 1, AKRA plans to sell 800 ha of gross area or 560 ha of net saleable area.

Our IDR4,775 TP is comprised of IDR230/share from a 50% discount to NAV valuation of its industrial estate phase 1, plus AKRA’s existing business, which we value at IDR4,545, at par with our targeted 2015-end market PE of 20x. An upside risk is higher oil distribution volume while a downside risk is a delay in the East Java project.

Financial highlights Year to 31 Dec 2012A 2013A 2014F 2015F 2016F Revenues (IDRbn) 21,674 22,338 22,455 25,904 29,723 EBIT (IDRbn) 864 837 1,039 1,148 1,314 Net profit (IDRbn) 649 648 755 881 980 Bahana/consensus (%) - - 93 85 75

EPS (IDR) 167 167 195 227 252 EPS growth (%) (72.3) (0.2) 16.5 16.7 11.2 EV/EBITDA (x) 17.2 19.0 15.7 11.7 11.9 P/E (x) 29.1 29.2 25.0 21.5 19.3 FCFPS (IDR) (41) (334) 445 153 122 FCF yield (%) (0.8) (6.9) 9.1 3.1 2.5 BVPS (IDR) 1,040 1,230 1,347 1,483 1,634 P/BV (x) 4.7 4.0 3.6 3.3 3.0 DPS (IDR) 65 65 78 91 101 Div. yield (%) 1.3 1.3 1.6 1.9 2.1 Source: Company, Bahana estimates note: based on 09 October 2014 closing price


0

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3,500

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('000)(IDR)

Volume (RHS) AKRA IJ Px Last

(5.5) (4.6)

8.5

(2.1)

(9.6) (9.0)(12)(10)(8)(6)(4)(2)0246810

(12)(10)(8)(6)(4)(2)02468

10

ytd 1M 3M 6M 9M 12M

(%) (%)

AKRA IJ relative to JCI Source: Bloomberg

Maxi Liesyaputra ([email protected]) +6221 250 5081 ext. 3615 *New, please refer to appendix II

Major assumptions Year to 31 Dec 2012A 2013A 2014F 2015F 2016F Oil volumes (mn kl) 2.149 2.032 1.829 2.286 2.400 Oil price (IDR/liter) 8,050 8,697 9,800 8,820 9,261 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 5,675/4,125 12M High/low consensus TP (IDR) : 5,380/4,535Majority shareholder (%) : Arthakencana Rayatama (58.4) Shares outstanding (mn)/Free float (%) : 3,903/40.9 Mkt. cap. (IDRbn/USDmn) : 19,059/1,564 3-m avg.daily t.o.(IDRbn/USDmn) : 33.25/2.7 Bloomberg/Reuters code : AKRA IJ/AKRA.JK Source: Bloomberg, Reuters; based on 09 October 2014 closing price

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109

AKR CORPORINDO

Profit & loss Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016FSales 21,674 22,338 22,455 25,904 29,723 Gross profit 1,261 1,368 1,610 1,848 2,488 EBITDA 1,161 1,220 1,399 1,619 1,814 Depreciation 297 383 451 471 500 EBIT 864 837 1,039 1,148 1,314 Net interest inc./(expense) (17) (38) (76) (54) (110)Forex gain/(losses) (22) (55) (49) (25) (12)Other income/(expense) (15) (12) (16) (20) (24)Pre-tax profit 810 733 897 1,050 1,168 Taxes (191) (117) (179) (210) (234)Minority interest 30 33 38 41 45 Extraordinary gain/(losses) - - - - -Net profit 649 648 755 881 980 Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016F Cash and equivalents 1,905 849 1,000 1,144 1,376 S-T investments 136 254 197 207 217 Trade receivables 3,224 4,352 3,691 4,258 4,886 Inventories 1,415 1,823 1,544 1,782 2,017 Fixed assets 3,418 4,541 4,500 4,439 4,350 Other assets 1,689 2,813 2,937 3,066 3,203 Total assets 11,788 14,633 13,869 14,897 16,049 Interest bearing liabilities 3,033 5,146 4,111 4,052 4,052 Trade payables 3,836 3,630 3,427 3,954 4,477 Other liabilities 709 494 456 422 391 Total liabilities 7,578 9,270 7,994 8,428 8,920 Minority interest 173 590 649 714 786 Shareholders' equity 4,037 4,773 5,226 5,755 6,343 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016FEBIT 864 837 1,039 1,148 1,314Depreciation 297 383 451 471 500Working capital (696) (1,741) 737 (277) (341)Other operating items - - - - -Operating cash flow 466 (521) 2,227 1,342 1,473Net capital expenditure (626) (774) (500) (750) (1,000)Free cash flow (160) (1,295) 1,727 592 473Equity raised/(bought) - - - - -Net borrowings 2,034 2,113 (1,034) (59) (0)Other financing (1,342) (375) 1,208 (388) (242)Net cash flow 532 (1,056) 150 145 231Cash flow at beginning 1,373 1,905 849 1,000 1,144Ending cash flow 1,905 849 1,000 1,144 1,376Source: Company, Bahana estimates


2015 Compendium

110

ALAM SUTERA REALTY BUY PX: IDR442 - TP: IDR585 ASRI, the second-largest landbank (2,334ha) owner in our coverage,

is selling land lots in its Alam Sutera township’s commercial area, allowing for improved 2015F earnings. In 4Q14, we expect earnings support from 4Q14 launches of 4 clusters in Pasar Kemis (following the success of 2 previous clusters) and improved demand for the Tower office units as political uncertainties dissipate.

In terms of 2015 marketing sales, we expect ASRI’s performance to grow 10% y-y to IDR5.3tn, helped by commercial land sales (target: 15ha or IDR2.6tn) in Alam Sutera, and further launches (IDR1.4tn) in its Pasar Kemis township and office units in The Tower (IDR1tn).

Due to ASRI’s high net gearing and exposure to USD517mn of foreign debt, we apply a 60% discount to NAV (sector: 50%) to derive our IDR585 TP. Risks to our call include slower-than-expected sales and greater-than-expected interest rate hikes.

Financial highlights Year to 31 Dec 2012A 2013A 2014F 2015F 2016F Revenues (IDRbn) 2,446 3,684 4,112 4,891 5,661 EBIT (IDRbn) 1,254 1,533 1,835 2,092 2,431 Net profit (IDRbn) 1,193 877 1,258 1,534 1,796 Bahana/consensus (%) - - 89 99 110

EPS (IDR) 61 45 64 78 91 EPS growth (%) 98.2 (26.5) 43.5 21.9 17.1 EV/EBITDA (x) 7.3 7.8 7.1 6.5 5.8 P/E (x) 7.3 9.9 6.9 5.7 4.8 FCFPS (IDR) (80) (147) (51) (24) (10) FCF yield (%) (18.2) (33.2) (11.5) (5.4) (2.4) BVPS (IDR) 232 263 320 385 461 P/BV (x) 1.9 1.7 1.4 1.1 1.0 DPS (IDR) 15 7 13 16 19 Div. yield (%) 3.3 1.6 2.9 3.5 4.4 Source: Company, Bahana estimates note:based on 09 October 2014 closing price


0

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650

700


('000)(IDR)

Volume (RHS) ASRI IJ Px Last

(14.0)

(5.7)(11.0)

(30.2)

(20.9)

(38.4)(45)

(40)

(35)

(30)

(25)

(20)

(15)

(10)

(5)

0

(45)

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(35)

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(5)

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ytd 1M 3M 6M 9M 12M

(%) (%)

ASRI IJ relative to JCI



Land bank (Ha) 2,334 Total value (IDRbn) 28,608 NAV/share (IDR) 1,456 Discount (%) 60.0 Adjusted NAV/share (IDR) 585 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 690/425 12M High/low consensus TP (IDR) : 850/540 Majority shareholder (%) : Manunggal Prime Delopment (26.6) Shares outstanding (m)/Free float (%) : 19,649/48.2 Mkt. cap. (IDRbn/USDmn) : 8,685/712 3-m avg.daily t.o.(IDRbn/USDmn) : 35.7/2.9 Bloomberg/Reuters code : ASRI IJ/ASRI.JK Source: Bloomberg, Reuters; based on 09 October 2014 closing price

2015 Compendium

111

ALAM SUTERA REALTY

Profit & loss Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016FSales 2,446 3,684 4,112 4,891 5,661Gross profit 1,467 1,837 2,217 2,525 2,918EBITDA 1,266 1,593 1,900 2,170 2,526Depreciation 12 59 65 78 95EBIT 1,254 1,533 1,835 2,092 2,431Net interest inc./(expense) (84) (88) (183) (203) (240)Forex gain/(losses) (3) (280) 22 31 35Other income/(expense) 177 (83) (182) (109) (110)Pre-tax profit 1,344 1,082 1,492 1,811 2,116Taxes (128) (192) (220) (262) (303)Minority interest (23) (13) (14) (15) (17)Extraordinary gain/(losses) - - - - -Net profit 1,193 877 1,258 1,534 1,796Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016F Cash and equivalents 1,641 890 1,627 1,019 721 S-T investments - - - - - Trade receivables 9 82 113 134 155 Inventories 2,911 3,237 3,677 4,077 4,477 Fixed assets 708 802 1,183 1,277 1,378 Other assets 5,677 9,416 10,769 12,336 13,949 Total assets 10,946 14,428 17,369 18,843 20,681 Interest bearing liabilities 2,180 4,587 6,441 6,536 6,731 Trade payables 35 165 156 194 225 Other liabilities 3,999 4,345 4,303 4,343 4,445 Total liabilities 6,215 9,096 10,900 11,073 11,401 Minority interest 164 174 191 209 230 Shareholders' equity 4,568 5,158 6,278 7,561 9,050 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016FEBIT 1,254 1,533 1,835 2,092 2,431Depreciation 12 59 65 78 95Working capital 1,009 203 (25) 27 30Other operating items (131) (1,316) (644) (632) (716)Operating cash flow 2,145 479 1,231 1,565 1,840Net capital expenditure (3,726) (3,360) (2,228) (2,036) (2,046)Free cash flow (1,582) (2,881) (997) (470) (206)Equity raised/(bought) 758 - - - -Net borrowings 1,626 2,406 1,855 95 195Other financing (6) (277) (120) (233) (286)Net cash flow 797 (751) 737 (609) (297)Cash flow at beginning 845 1,641 890 1,627 1,019Ending cash flow 1,641 890 1,627 1,019 721Source: Company, Bahana estimates


2015 Compendium

112

ANEKA TAMBANG REDUCE PX: IDR1,020 - TP: IDR720 ANTM, the biggest listed state-owned metal mining company, has

virtually lost one of its major revenue contributors due to the government’s recent ore ban. Today, ANTM is heavily dependent on gold sales (48.5%) and ferronickel (44.3%) with silver, coal, bauxite and other precious metals contributing to the rest of the top line.

While the management continues its Pomalaa project (P3FP) in an effort to increase its ferronickel production capacity, we believe difficulties in securing financial backing could see completion delays from the planned 2015 finish to at least 2016. Hence, this could mean stagnant ferronickel production volumes for ANTM ahead.

CGA Tayan should begin offsetting ANTM’s 2014’s net loss due to subsidiaries’ losses. With 29% downside to our DCF-based TP of IDR720 (9.5% WACC), ANTM is a REDUCE while upside risk would be better-than expected developments of subsidiaries and projects.

Financial highlights Year to 31 Dec 2012A 2013A 2014F 2015F 2016F Revenues (IDRbn) 10,450 11,298 7,957 8,764 9,661 EBIT (IDRbn) 896 421 (397) (164) 553 Net profit (IDRbn) 2,993 410 (638) (169) 459 Bahana/consensus (%) - - na na 43 EPS (IDR) 314 43 (67) (18) 48 EPS growth (%) 55.3 (86.3) na na na EV/EBITDA (x) 0.5 3.4 462.0 74.0 18.8 P/E (x) 3.2 23.7 na na 21.3 FCFPS (IDR) (278) (240) (112) (184) (130) FCF yield (%) (24.5) (21.2) (9.8) (16.2) (11.4) BVPS (IDR) 1,345 1,341 1,268 1,250 1,299 P/BV (x) 0.8 0.8 0.8 0.8 1.3 DPS (IDR) 48 6 - - 7 Div. yield (%) 4.2 0.6 - - 0.6 Source: Company, Bahana estimates note: based on 09 October 2014 closing price


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1,700


('000)(IDR)

Volume (RHS) ANTM IJ Px Last

(23.3)

(10.4)(9.9) (10.8)

(13.3)

(42.6) (45)

(40)

(35)

(30)

(25)

(20)

(15)

(10)

(5)

0

(45)

(40)

(35)

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(5)

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ytd 1M 3M 6M 9M 12M

(%) (%)

ANTM IJ relative to JCI


Major assumptions Year to 31 Dec 2012A 2013A 2014F 2015F 2016F Ferronickel sales vol. (tons) 19,530 14,441 15,951 17,430 19,380 growth (%) 0.0 (26.1) 10.5 9.3 11.2 Nickel ore sales vol. (wmt) 4,416 6,461 - - - growth (%) 0.5 0.5 - - - Ferronickel ASP (USD/ton) 17,346 11,957 18,574 18,800 18,800 Source: Company, Bahana estimates

Company information

12M high/low (IDR) : 1,620/950 12M High/low consensus TP (IDR) : 1,600/840Majority shareholder (%) : Government of Indonesia (65.0) Shares outstanding (mn)/Free float (%) : 9,538/35.0 Mkt. cap. (IDRbn/USDmn) : 9,729/799 3-m avg.daily t.o.(IDRbn/USDmn) : 19.2/1.6 Bloomberg/Reuters code : ANTM IJ/ANTM.JK Source: Bloomberg, Reuters; based on 09 October 2014 closing price

2015 Compendium

113

ANEKA TAMBANG

Profit & loss Year to 31 Dec (IDRb) 2012A 2013A 2014F 2015F 2016FSales 10,450 11,298 7,957 8,764 9,661Gross profit 2,023 1,616 488 926 1,710EBITDA 1,581 1,164 33 227 952Depreciation 685 743 430 391 398EBIT 896 421 (397) (164) 553Net interest inc./(expense) (68) 25 (103) (143) (178)Forex gain/(losses) 176 18 (111) (14) 54Other income/(expense) 2,892 (597) (302) 80 226Pre-tax profit 3,895 (133) (912) (241) 655Taxes (902) 543 274 72 (197)Minority interest (0) (0) (0) (0) (0)Extraordinary gain/(losses) - - - - -Net profit 2,993 410 (638) (169) 459Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016F Cash and equivalents 3,869 2,793 2,097 1,983 2,245 S-T investments - - - - - Trade receivables 1,722 1,153 1,224 1,175 1,208 Inventories 1,450 2,446 1,941 1,948 1,819 Fixed assets 6,084 8,269 9,322 10,425 11,578 Other assets 6,583 7,205 6,585 7,238 7,984 Total assets 19,709 21,865 21,169 22,769 24,834 Interest bearing liabilities 4,657 6,785 7,463 9,048 10,387 Trade payables 417 547 278 354 391 Other liabilities 1,803 1,739 1,329 1,440 1,669 Total liabilities 6,876 9,072 9,069 10,841 12,447 Minority interest 0 0 0 0 0 Shareholders' equity 12,832 12,793 12,099 11,928 12,386 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016FEBIT 896 421 (397) (164) 553Depreciation 685 743 430 391 398Working capital 229 (600) 174 125 155Other operating items 2,097 (11) (241) (5) (95)Operating cash flow 3,907 554 (34) 348 1,012Net capital expenditure (6,558) (2,844) (1,031) (2,102) (2,249)Free cash flow (2,650) (2,290) (1,065) (1,754) (1,237)Equity raised/(bought) 6 21 0 0 0Net borrowings 1,657 2,317 678 1,585 1,435Other financing (783) (1,124) (309) 55 64Net cash flow (1,771) (1,076) (696) (114) 262Cash flow at beginning 5,640 3,869 2,793 2,097 1,983Ending cash flow 3,869 2,793 2,097 1,983 2,245Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2012A 2013A 2014F 2015F 2016F ROAE (%) 25.4 3.2 (5.1) (1.4) 3.8 ROAA (%) 17.1 2.0 (3.0) (0.8) 1.9 EBITDA margin (%) 15.1 10.3 0.4 2.6 9.9 EBIT margin (%) 8.6 3.7 (5.0) (1.9) 5.7 Net margin (%) 28.6 3.6 (8.0) (1.9) 4.7 Payout ratio (%) 15.2 15.0 15.0 15.0 15.0 Current ratio (x) 2.5 1.8 2.2 2.0 1.8 Interest coverage (x) 13.1 na na na 3.1 Net gearing (%) 6.1 31.2 44.4 59.2 65.7 Debts to assets (%) 23.6 31.0 35.3 39.7 41.8 Debtor turnover (days) 60 37 56 49 46 Creditor turnover (days) 15 18 13 15 15 Inventory turnover (days) 51 79 89 81 69 Source: Company, Bahana estimates

2015 Compendium

114

ASTRA AGRO LESTARI BUY PX: IDR22,325 - TP: IDR31,400* AALI, the sector’s largest planter by market cap with the second

largest planted area of 279k ha behind SIMP, is moving downstream, doubling its annual refinery business capacity to 1.2m tons in 2016.

On production, we expect AALI’s 2015 FFB production to recover to 4.4mn tons, up 7% y-y. Additional mill capacities will improve CPO production to 1.8mn tons, up 8.5% y-y. We expect 2015 revenue to reach IDR22.5tn, up 17% y-y, supported by its downstream business.

As we expect 2015 earnings to grow 19% y-y to IDR3.4tn on solid production growth, manageable labor cost and additional revenue from the refinery segment, AALI’s valuation is attractive on a 2015 PE of 10.3x. AALI is a BUY with a IDR31,400 TP, based on 2015 PE of 14.5x, a 20% discount to its Malaysian peers. Risks to our call include greater-than expected soybean production and a lower-than-expected global oil price.


Revenues (IDRbn) 11,564 12,675 19,176 22,478 29,938 EBIT (IDRbn) 3,454 3,005 4,006 4,657 5,330 Net profit (IDRbn) 2,410 1,801 2,918 3,407 3,892 Bahana/consensus (%) - - 104 111 130

EPS (IDR) 1,531 1,144 1,853 2,163 2,471 EPS growth (%) 0.2 (25.3) 62.0 16.8 14.2 EV/EBITDA (x) 9.1 10.4 8.0 6.8 5.7 P/E (x) 14.6 19.5 12.0 10.3 9.0 FCFPS (IDR) (78) (237) 265 1,298 2,025 FCF yield (%) (0.3) (1.1) 1.2 5.8 9.1 BVPS (IDR) 5,734 6,283 7,622 8,952 10,450 P/BV (x) 3.9 3.6 2.9 2.5 2.1 DPS (IDR) 615 514 833 973 1,111 Div. yield (%) 2.8 2.3 3.7 4.4 5.0 Source: Company, Bahana estimates note: based on 09 October 2014 closing price


0

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('000)(IDR)

Volume (RHS) AALI IJ Px Last

(27.9)

(8.9)

(15.3)

(19.7)

(8.3)

(0.2)

(30)

(25)

(20)

(15)

(10)

(5)

0

(30)

(25)

(20)

(15)

(10)

(5)

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AALI IJ relative to JCI

Source: Bloomberg Leonardo Henry Gavaza, CFA ([email protected]) +6221 2505081 ext. 3608 *New, please refer to appendix II

Major assumptions Year to 31 Dec 2012A 2013A 2014F 2015F 2016F FFB nucleus production (k tons) 4,003 3,710 4,097 4,393 4,695 CPO production (k tons) 1,476 1,539 1,699 1,844 1,998 Growth (%) 16.4 4.2 10.4 8.5 8.3 ASP CPO (USD/ton) 781 697 676 695 716 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 29,675/18,600 12M High/low consensus TP (IDR) : 35,000/20,000 Majority shareholder (%) : Astra International (79.7) Share outstanding (mn)/Free float (%) : 1,575/20.3 Mkt. cap. (IDRbn/USDmn) : 35,156/2,884 3-m avg.daily t.o.(IDRbn/USDmn) : 42.0/3.4 Bloomberg/Reuters code : AALI IJ/AALI.JK Source: Bloomberg, Reuters; based on 09 October 2014 closing price

2015 Compendium

115

ASTRA AGRO LESTARI

Profit & loss Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016FSales 11,564 12,675 19,176 22,478 29,938Gross profit 4,357 4,082 5,436 6,248 7,256EBITDA 3,956 3,574 4,672 5,397 6,132Depreciation 503 570 667 740 803EBIT 3,454 3,005 4,006 4,657 5,330Net interest inc./(expense) (7) (54) (47) (25) 33Forex gain/(losses) (1) (444) 15 19 (4)Other income/(expense) 79 99 70 70 70Pre-tax profit 3,525 2,605 4,043 4,722 5,428Taxes (1,005) (702) (1,011) (1,181) (1,357)Minority interest (110) (102) (115) (135) (180)Extraordinary gain/(losses) - - - - -Net profit 2,410 1,801 2,918 3,407 3,892Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016F Cash and equivalents 228 709 931 899 886 S-T investments - - - - - Trade receivables 40 4 64 75 100 Inventories 1,249 803 1,249 1,546 2,160 Fixed assets 9,392 11,468 13,720 15,070 15,766 Other assets 1,511 1,980 2,532 2,592 2,721 Total assets 12,420 14,963 18,496 20,182 21,633 Interest bearing liabilities 972 2,723 3,223 2,323 473 Trade payables 565 720 916 1,014 1,194 Other liabilities 1,517 1,253 1,866 2,124 2,707 Total liabilities 3,054 4,695 6,005 5,461 4,373 Minority interest 336 373 488 623 803 Shareholders' equity 9,029 9,895 12,002 14,097 16,457 Source: Company, Bahana estimates

Cashflow Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016FEBIT 3,454 3,005 4,006 4,657 5,330Depreciation 503 570 667 740 803Working capital (411) 612 (183) (58) (111)Other operating items (994) (1,913) (1,154) (1,204) (1,333)Operating cash flow 2,552 2,273 3,336 4,134 4,688Net capital expenditure (2,674) (2,646) (2,919) (2,090) (1,499)Free cash flow (122) (373) 417 2,045 3,189Equity raised/(bought) - - - - -Net borrowings 972 1,751 500 (900) (1,850)Other financing (1,460) (897) (695) (1,177) (1,352)Net cash flow (610) 481 222 (32) (13)Cash flow at beginning 838 228 709 931 899Ending cash flow 228 709 931 899 886Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2012A 2013A 2014F 2015F 2016F ROAE (%) 28.1 19.0 26.6 26.1 25.5 ROAA (%) 21.3 13.2 17.4 17.6 18.6 EBITDA margin (%) 34.2 28.2 24.4 24.0 20.5 EBIT margin (%) 29.9 23.7 20.9 20.7 17.8 Net margin (%) 20.8 14.2 15.2 15.2 13.0 Payout ratio (%) 40.2 45.0 45.0 45.0 45.0 Current ratio (x) 2.7 2.1 2.5 2.5 2.6 Interest coverage (x) 481.0 55.2 84.7 188.8 Na Net gearing (%) 8.2 20.4 19.1 10.1 Nc Debts to assets (%) 7.8 18.2 17.4 11.5 2.2 Debtor turnover (days) 1 1 1 1 1 Creditor turnover (days) 28 27 24 23 19 Inventory turnover (days) 51 44 33 35 35 Source: Company, Bahana estimates

2015 Compendium

116

ASTRA INTERNATIONAL HOLD PX: IDR6,725 - TP: IDR6,600* On the back of unsupportive auto sector conditions following

intensifying competition, with price wars and significant supplies of new models, we expect ASII’s margin contraction in the auto sector to continue in 2015. Hence, we expect ASII’s 4W sales volumes to decrease by 2% y-y (2014F: -4% y-y) in 2015, while for the 2W, we expect volume growth to slow to 3% y-y (2014F:+6% y-y).

For ASII’s financing business, we expect limited growth stemming from unexciting auto growth next year. For its commodity-related segments, we look for an unexciting coal price on an expected higher Fed rate and lower China imports to negatively affect the company’s heavy equipment and mining contracting subsidiaries.

With severe underperformance and IDR6,600 SOTP-based TP (2015 PE of 12.8x), ASII is a HOLD. Risk to our call is higher- or lower- than-expected auto margins and sales.

Financial highlights Year to 31 Dec 2012A 2013A 2014F 2015F 2016F Revenues (IDRbn) 188,053 193,880 200,167 207,953 235,167 EBIT (IDRbn) 19,870 18,603 20,302 21,169 23,527 Net profit (IDRbn) 19,421 19,417 20,104 20,820 22,738 Bahana/consensus(%) - - 98 90 89

EPS (IDR) 480 480 497 514 562 EPS growth (%) 9.2 (0.0) 3.5 3.6 9.2 EV/EBITDA (x) 12.8 12.9 11.3 10.8 9.8 P/E (x) 14.0 14.0 13.5 13.1 12.0 FCFPS (IDR) (225) 242 242 231 288 FCF yield (%) (3.3) 3.6 3.6 3.4 4.3 BVPS (IDR) 1,759 2,073 2,354 2,645 2,975 P/BV (x) 3.8 3.2 2.9 2.5 2.3 DPS (IDR) 214 216 223 231 253 Div. yield (%) 3.2 3.2 3.3 3.4 3.8 Source: Company, Bahana estimates note: based on 09 October 2014 closing price


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Volume (RHS) ASII IJ Px Last

(17.9)

(7.4)

(10.0)

(21.0)

(17.7)

(8.6)

(25)

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(15)

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(5)

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Major assumptions Year to 31 Dec 2012A 2013A 2014F 2015F 2016F 4W sales volume (units) 605,191 654,558 628,481 614,952 676,447 4W market share (%) 54% 53% 51% 50% 50% 2W sales volume (units) 4,089 4,697 4,993 5,143 5,452 2W market share (%) 58% 61% 62% 62% 62% Source: Company, Bahana estimates Company information 12M high/low (IDR) : 8,025/6,100 12M High/low consensus TP (IDR) : 9,500/5,500 Majority shareholder (%) : Jardine Cycle & Carriage L (50.1) Shares outstanding (mn)/Free float (%) : 40,484/49.9 Mkt. cap. (IDRtn/USDbn) : 272.3/22.3 3-m avg.daily t.o.(IDRbn/USDmn) : 116.4/9.5 Bloomberg/Reuters code : ASII IJ/ASII.JK Source: Bloomberg, Reuters; based on 09 October 2014 closing price

2015 Compendium

117

ASTRA INTERNATIONAL

Profit & loss Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016FSales 188,053 193,880 200,167 207,953 235,167Gross profit 36,200 35,311 37,546 39,087 43,545EBITDA 24,800 24,666 27,723 28,952 31,561Depreciation 4,930 6,063 7,421 7,783 8,034EBIT 19,870 18,603 20,302 21,169 23,527Net interest inc./(expense) (330) (166) (214) (173) (242)Forex gain/(losses) (215) (751) 35 65 60Other income/(expense) 8,573 9,837 9,282 9,417 9,938Pre-tax profit 27,898 27,523 29,406 30,478 33,238Taxes (5,156) (5,226) (5,506) (5,700) (6,273)Minority interest (3,321) (2,880) (3,796) (3,957) (4,228)Extraordinary gain/(losses) - - - - -Net profit 19,421 19,417 20,104 20,820 22,738Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016F Cash and equivalents 11,055 18,557 21,078 20,950 21,131 S-T investments 172 262 283 306 330 Trade receivables 18,134 22,831 23,581 24,499 27,705 Inventories 15,285 14,433 15,148 15,730 17,850 Fixed assets 52,811 58,844 63,126 68,216 72,464 Other assets 84,817 99,067 104,657 111,628 121,730 Total assets 182,274 213,994 227,874 241,327 261,210 Interest bearing liabilities 56,757 64,523 63,377 61,034 59,019 Trade payables 12,685 17,275 17,821 18,506 21,262 Other liabilities 23,018 26,008 27,675 29,473 33,606 Total liabilities 92,460 107,806 108,873 109,013 113,887 Minority interest 18,613 22,250 23,696 25,237 26,877 Shareholders' equity 71,201 83,938 95,305 107,077 120,446 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016FEBIT 19,870 18,603 20,302 21,169 23,527Depreciation 4,930 6,063 7,421 7,783 8,034Working capital (8,405) 745 (919) (815) (2,569)Other operating items (5,034) 786 (2,330) (2,675) (1,449)Operating cash flow 11,361 26,197 24,474 25,463 27,542Net capital expenditure (20,473) (16,391) (14,666) (16,131) (15,866)Free cash flow (9,112) 9,806 9,808 9,331 11,676Equity raised/(bought) - - - - -Net borrowings 11,767 7,766 (1,146) (2,343) (2,016)Other financing (4,711) (10,070) (6,141) (7,117) (9,479)Net cash flow (2,056) 7,502 2,521 (128) 182Cash flow at beginning 13,111 11,055 18,557 21,078 20,950Ending cash flow 11,055 18,557 21,078 20,950 21,131Source: Company, Bahana estimates


2015 Compendium

118

AUSTINDO NUSANTARA JAYA HOLD PX: IDR1,140 - TP: IDR1,200* ANJT, with a planted area of 41k ha (the smallest in our coverage),

plans to continue expanding into the sago and biogas-based power plant businesses. However, there is an obstacle in developing the Papua sago business, as the company has just written down a USD10mn investment in its sago starch-processing facilities.

Thus, we expect delayed contribution from the sago business until 2016, as the new team has just been installed. Additionally, we expect its Papua CPO plantation to be delayed. On production, we expect ANJT’s 2015 FFB production to reach 704k tons, up 8% y-y.

In 2015, we forecast accelerated y-y EPS growth of nearly 70%, helped by the absence of the sago-related one-off write-down. Hence, we have a HOLD rating on ANJT with a IDR1,200 TP, reflecting a 2015F PE of 11.9x, about a 35% discount to its Malaysian small-cap peers. Risks to our call include higher or lower CPO price realization.

Financial highlights Year to 31 Dec 2012A 2013A 2014F 2015F 2016F Revenues (USDmn) 166 138 138 159 185 EBIT (USDmn) 40 22 26 32 40 Net profit (USDmn) 42 22 17 29 36 Bahana/consensus (%) - - - - -

EPS (IDR) 164 76 60 100 123 EPS growth (%) (8.3) (53.7) (21.2) 68.0 22.5 EV/EBITDA (x) 5.9 7.5 7.7 6.9 5.8 P/E (x) 7.0 15.1 19.1 11.3 9.1 FCFPS (IDR) 553 (164) (105) (9) 36 FCF yield (%) 48.5 (14.4) (9.2) (0.8) 3.1 BVPS (IDR) 956 1,065 1,084 1,144 1,207 P/BV (x) 1.2 1.1 1.1 1.0 0.9 DPS (IDR) - 38 30 51 63 Div. yield (%) - 3.3 2.6 4.4 5.5 Source: Company, Bahana estimates note: based on 09 October 2014 closing price


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Volume (RHS) ANJT IJ Px Last

(40.3)

2.0

(19.3)

(34.6)

(41.5)

(19.4)

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(35)

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Major assumptions Year to 31 Dec 2012A 2013A 2014F 2015F 2016F FFB nucleus production (k tons) 695 609 650 704 761 CPO production (k tons) 178 159 170 192 207 Growth (%) 13.5 (10.6) 6.7 12.8 8.1 ASP CPO (USD/ton) 781 689 676 695 716 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 1,650/1,070 12M High/low consensus TP (IDR) : 1,300/1,140 Majority shareholder (%) : Austindo (40.3) Shares outstanding (mn)/Free float (%) : 3,333/10 Mkt. cap. (IDRbn/USDmn) : 3,800/312 3-m avg.daily t.o.(IDRbn/USDmn) : 0.1/0.01 Bloomberg/Reuters code : ANJT IJ/ANJT.JK Source: Bloomberg, Reuters; based on 09 October 2014 closing price

2015 Compendium

119

AUSTINDO NUSANTARA JAYA

Profit & loss Year to 31 Dec (USDmn) 2012A 2013A 2014F 2015F 2016FSales 166 138 138 159 185Gross profit 78 48 53 62 74EBITDA 55 37 44 51 61Depreciation 14 15 17 19 21EBIT 40 22 26 32 40Net interest inc./(expense) 2 1 (1.5) (2) (3)Forex gain/(losses) 2 3 - - -Other income/(expense) 15 7 (2) 9 11Pre-tax profit 59 33 23 39 48Taxes (17) (11) (6) (10) (12)Minority interest - (0) (0) (0) (0)Extraordinary gain/(losses) - - - - -Net profit 42 22 17 29 36Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (USDmn) 2012A 2013A 2014F 2015F 2016F Cash and equivalents 77 41 27 22 24 S-T investments 0 0 0 0 0 Trade receivables 1 1 1 1 1 Inventories 16 10 11 12 14 Fixed assets 78 89 105 109 109 Other assets 227 256 290 315 344 Total assets 399 397 434 460 492 Interest bearing liabilities 6 2 30 35 45 Trade payables 5 3 5 5 6 Other liabilities 61 28 28 28 28 Total liabilities 72 33 63 68 79 Minority interest 1 1 1 1 1 Shareholders' equity 327 364 370 391 412 Source: Company, Bahana estimates

Cashflow Year to 31 Dec (USDmn) 2012A 2013A 2014F 2015F 2016FEBIT 40 22 26 32 40Depreciation 14 15 17 19 21Working capital 72 (60) (1) (1) (1)Other operating items 47 (0) (9) (3) (4)Operating cash flow 174 (24) 34 48 55Net capital expenditure (32) (24) (66) (49) (49)Free cash flow 142 (47) (32) (1) 6Equity raised/(bought) 28 49 - - -Net borrowings 2 (3) 29 5 10Other financing (296) (33) (11) (9) (14)Net cash flow (124) (35) (15) (5) 2Cash flow at beginning 91 77 41 27 22Ending cash flow 77 41 27 22 24Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2012A 2013A 2014F 2015F 2016F ROAE (%) 10.7 7.0 4.6 7.7 9.0 ROAA (%) 6.7 6.1 4.1 6.6 7.6 EBITDA margin (%) 33.1 26.6 31.7 31.9 32.7 EBIT margin (%) 24.4 15.9 19.1 19.8 21.5 Net margin (%) 25.3 15.7 12.4 18.2 19.3 Payout ratio (%) - 50.0 50.0 50.0 50.0 Current ratio (x) 20.5 16.1 8.3 6.6 6.3 Interest coverage (x) na na 17.2 15.4 14.3 Net gearing (%) nc nc 1.0 3.5 5.3 Debts to assets (%) 1.5 0.5 7.0 7.7 9.2 Debtor turnover (days) 7.6 7.6 9.1 9.1 9.1 Creditor turnover (days) 16.5 20.3 20.3 20.3 20.3 Inventory turnover (days) 62.7 48.7 46.8 44.5 42.4 Source: Company, Bahana estimates

2015 Compendium

120

BANK BUKOPIN HOLD PX: IDR700 - TP: IDR770* BBKP is facing a change in its controlling shareholder from Bulog, the

state-owned logistics agency, to the Bosowa group, which currently owns 18.6% (purchased at a P/BV of 1.6x), with further plans to increase its ownership to a maximum of 30% via a share divestment from Bulog in the next 12 months.

This has led to shift in focus to expand the loan portfolio towards MSME loans, which is expected to improve margins, as the reliance on low-margin loans to Bulog (6M14: 7.7% of total loans vis-à-vis 6M13: 14.6% of total loans) gradually dissipates.

At this stage of cycle, BBKP, at a 2015F P/BV of 0.8x and a P/E of 5.2x, is trading at the lowest valuation within our banking universe. Given undemanding valuation at our TP, we maintain our HOLD rating. Upside risk includes liquidity picking up over time, while downside risks include the failure to manage its liquidity and asset portfolio.

Financial highlights Year to 31 Dec 2012A 2013A 2014F 2015F 2016F Net interest income (IDRbn) 2,462 2,444 2,560 2,952 3,310 Operating income (IDRbn) 3,246 3,494 3,786 4,341 4,879 Operating profit (IDRbn) 1,066 1,174 1,325 1,496 1,674 Pre-tax profit (IDRbn) 1,059 1,194 1,348 1,521 1,703

Net profit (IDRbn) 830 930 1,073 1,212 1,358 Bahana/consensus (%) - - 106 98 91 EPS (IDR) 104 115 118 133 149 EPS growth (%) 9.2 10.6 2.4 12.9 12.0 P/E (x) 6.7 6.1 5.9 5.2 4.7 Equity (IDRbn) 4,984 6,196 7,019 7,990 9,105 BVPS (IDR) 625 682 772 879 1,002 P/BV (x) 1.1 1.0 0.9 0.8 0.7 DPS (IDR) 31 31 27 27 30 Div. yield (%) 4.5 4.4 3.8 3.8 4.3 Source: Company, Bahana estimates note: based on 09 October 2014 closing price


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Volume (RHS) BBKP IJ Px Last

(3.9)

(1.5)

8.3

3.8

(2.6)

(9.1) (10)

(8)

(6)

(4)

(2)

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6

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Source: Bloomberg Teguh Hartanto ([email protected]) +6221 250 5081 ext. 3610 *New, please refer to appendix II

Major assumptions Year to 31 Dec (%) 2012A 2013A 2014F 2015F 2016F Loan growth 11.7 6.4 13.4 14.2 15.3 Deposit growth 12.6 3.5 14.1 13.4 14.3 Non interest inc./operating inc. 24.2 30.1 32.4 32.0 32.2 Corporate tax rate 21.2 21.7 20.0 20.0 20.0 Payout ratio 30.0 26.9 22.5 20.0 20.0 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 760/560 12M high/low consensus TP (IDR) : 950/600 Majority shareholder (%) : Koperasi Pegawai Bulog (29.5) Shares outstanding (mn)/Free float (%) : 9,087/40.3 Mkt. cap. (IDRbn/USDmn) : 6,361/522 3-m avg.daily t.o.(IDRbn/USDmn) : 6.2/0.5 Bloomberg/Reuters code : BBKP IJ/BBKP.JK Source: Bloomberg, Reuters; based on 09 October 2014 closing price

2015 Compendium

121

BANK BUKOPIN

Profit & loss Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016FInterest income 5,126 5,950 7,225 8,185 9,135Interest expense 2,665 3,506 4,665 5,233 5,825Net interest income 2,462 2,444 2,560 2,952 3,310Non-interest income 785 1,051 1,226 1,389 1,569Total operating income 3,246 3,494 3,786 4,341 4,879Operating expenses 1,906 2,161 2,185 2,515 2,844Loan loss provisions 274 159 275 329 362Operating profit 1,066 1,174 1,325 1,496 1,674Non-operating inc./(exp.) (7) 19 22 26 29Pre-tax profit 1,059 1,194 1,348 1,521 1,703Corporate tax (225) (259) (270) (304) (341)Minorities (4) (5) (5) (5) (5)Net profit 830 930 1,073 1,212 1,358Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016F Loans 45,531 48,461 54,947 62,745 72,373 Cash on hand 909 1,020 1,326 1,724 2,241 Fixed assets 1,078 1,329 1,661 2,076 2,595 Other assets 18,172 18,649 26,787 30,129 34,094 Total assets 65,690 69,458 84,721 96,674 111,303 Customer deposits 53,958 55,822 63,669 72,204 82,555 Deposits from other banks 2,178 1,976 2,268 2,604 2,991 Borrowing and sub-debts 3,418 4,382 4,745 5,056 5,407 Other liabilities 1,139 1,066 7,001 8,803 11,227 Total liabilities 60,693 63,245 77,684 88,667 102,180 Minorities 13 17 17 17 17 Equity 4,984 6,196 7,019 7,990 9,105 Total liabilities and equity 65,690 69,458 84,721 96,674 111,303 Source: Company, Bahana estimates

Breakdown Year to 31 Dec 2012A 2013A 2014F 2015F 2016F% to earnings assets Gross loans 71.1 72.3 67.3 67.7 68.2 Government bonds 1.0 2.6 2.2 9.0 7.8 Other earnings assets 27.9 25.1 30.5 23.3 24.0

% to loan portfolio Loan to bulog 18.3 7.8 7.3 6.9 6.4 MSME 41.8 38.5 39.2 39.8 40.0 Commercial 30.0 39.8 39.5 38.9 38.0 Consumer 9.9 13.8 14.0 14.4 15.6

% to total deposits Core funding 41.0 41.7 39.0 38.4 38.2 Time deposits 59.0 58.3 61.0 61.6 61.8


Key ratios Year to 31 Dec (%) 2012A 2013A 2014F 2015F 2016F ROAA 1.4 1.4 1.4 1.3 1.3 ROAE 17.8 16.6 16.2 16.2 15.9 NIM 4.6 3.8 3.8 3.7 3.7 Loan/deposit ratio 84.4 86.8 86.3 86.9 87.7 Loan/funding ratio 76.5 77.9 77.7 78.6 79.6 Cost efficiency ratio 58.7 61.8 57.7 58.0 58.3 CIR 82.0 83.2 84.3 84.4 84.4 Gross NPL 2.7 2.3 2.8 2.8 2.8 NPL coverage 77.3 72.9 60.2 61.0 61.6 LLR 2.1 1.6 1.7 1.7 1.8 CAR-total 15.7 14.5 17.4 15.5 14.5 CAR-tier I 11.1 10.8 12.9 11.1 10.1 Source: Company, Bahana estimates

2015 Compendium

122

BANK CENTRAL ASIA BUY PX: IDR12,750 - TP: IDR14,300* As the biggest transactional bank, BBCA has benefited from strong

core funding, ensuring ample liquidity with competitive blended funding costs at an average of below 3%, versus an industry average of above 5%. Cautious and prudent strategic business moves have allowed BBCA to secure competitive offshore borrowing rates.

BBCA retains its proactive stance to manage its loan portfolio mix, seeking the best possible margin and asset quality amongst corporate and retail loans. Gradual mortgage penetration by offering a capped lending rate at 11% (industry: 13%) should ensure loan quality, while low mortgage capital charges should prevent CAR deterioration.

On BBCA’s astute management and solid fundamentals, we rate the stock BUY with a IDR14,300 TP based on a 2015F P/BV of 3.8x, a premium valuation which we think is justified by consistent earnings quality. The biggest risk is overly conservative long-term loan growth.


Net profit (IDRbn) 11,722 14,254 16,208 18,457 20,759 Bahana/consensus (%) - - 100 98 95 EPS (IDR) 475 578 657 749 842 EPS growth (%) 8.4 21.6 13.7 13.9 12.5 P/E (x) 26.8 22.1 19.4 17.0 15.1 Equity (IDRbn) 51,827 63,866 77,090 92,256 109,279 BVPS (IDR) 2,102 2,590 3,127 3,742 4,432 P/BV (x) 6.1 4.9 4.1 3.4 2.9 DPS (IDR) 115 120 131 149 167 Div. yield (%) 0.9 0.9 1.0 1.2 1.3 Source: Company, Bahana estimates note: based on 09 October 2014 closing price


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Volume (RHS) BBCA IJ Px Last

16.0

5.7

13.4 15.0

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10.6

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BBCA IJ relative to JCI



Company information 12M high/low (IDR) : 13,075/9,250 12M high/low consensus TP (IDR) : 15,900/11,000 Majority shareholder (%) : Farindo Investments/Djarum Group (47.2) Shares outstanding (mn)/Free float (%) : 24,655/50.8 Mkt. cap. (IDRbn/USDmn) : 314,351/25,788 3-m avg.daily t.o.(IDRbn/USDmn) : 161.9/13.3 Bloomberg/Reuters code : BBCA IJ/BBCA.JK Source: Bloomberg, Reuters; based on 09 October 2014 closing price

2015 Compendium

123

BANK CENTRAL ASIA

Profit & loss Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016FInterest income 28,893 34,291 42,975 47,569 53,542Interest expense 7,647 7,852 11,010 11,995 13,313Net interest income 21,245 26,439 31,965 35,574 40,229Non-interest income 10,073 10,984 13,099 14,451 15,724Total operating income 31,318 37,422 45,064 50,025 55,952Operating expenses 14,345 16,767 20,270 24,283 27,120Loan loss provisions 2,717 3,577 4,837 3,034 3,261Operating profit 14,256 17,079 19,957 22,707 25,571Non-operating inc./(exp.) 430 737 308 369 384Pre-tax profit 14,686 17,816 20,265 23,076 25,954Corporate tax (2,968) (3,559) (4,053) (4,615) (5,191)Minorities 3 (2) (4) (4) (5)Net profit 11,722 14,254 16,208 18,457 20,759Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016F Loans 257,786 313,712 344,072 385,526 437,268 Cash on hand 11,054 16,284 21,984 24,182 26,600 Fixed assets 6,407 7,440 9,176 11,297 13,884 Other assets 167,747 158,868 179,410 211,060 258,561 Total assets 442,994 496,305 554,642 632,064 736,313 Customer deposits 371,536 411,180 457,320 512,499 580,974 Deposits from other banks 2,330 3,301 5,258 9,340 18,018 Borrowing and sub-debts 1,390 2,196 2,536 2,891 3,328 Other liabilities 15,840 15,661 12,334 14,971 24,604 Total liabilities 391,096 432,338 477,448 539,702 626,924 Minorities 71 101 104 107 110 Equity 51,827 63,866 77,090 92,256 109,279 Total liabilities and equity 442,994 496,305 554,642 632,064 736,313 Source: Company, Bahana estimates


% to loan portfolio Corporate 32.9 32.9 32.9 32.8 32.6 Commercial & SME 39.9 39.0 39.1 39.4 39.6 Mortgage 16.3 17.0 16.7 16.4 16.3 Others 10.9 11.2 11.3 11.4 11.5




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BANK DANAMON HOLD* PX: IDR3,900 - TP: IDR3,700* BDMN’s status as having the largest exposure in consumer auto

financing within our banking coverage has led to an unfortunate positioning given intensifying competition for its 95%-owned subsidiary, ADMF. Meanwhile, competition in urban micro financing is deteriorating, with growth dominated by big players like BMRI.

Additionally, BDMN’s growth may be capped as it expands its loan portfolio, given high funding cost. Hence, we expect proactive cost management to occur in an attempt to prevent further NIM declines. To alleviate the situation, BDMN plans to focus on secondary auto financing and upper-tier micro, with IDR500mn-1.5bn loan sizes.

As we roll over to 2015 valuation our TP is now IDR3,700, which implies a P/BV of 1.0x. Given 5% downside to our TP, we upgrade our rating to HOLD. Upside risks to our call include a pick-up in demand for auto and a re-initiation of the bank’s M&A deal while downside risk is higher NPLs.


Net profit (IDRbn) 4,012 4,042 3,448 4,005 4,538 Bahana/consensus (%) - - 101 96 96 EPS (IDR) 419 422 360 418 473 EPS growth (%) 9.7 0.7 (14.7) 16.2 13.3 P/E (x) 9.3 9.2 10.8 9.3 8.2 Equity (IDRbn) 28,494 31,251 33,492 36,290 39,427 BVPS (IDR) 2,973 3,260 3,494 3,786 4,113 P/BV (x) 1.3 1.2 1.1 1.0 0.9 DPS (IDR) 126 126 126 146 166 Div. yield (%) 3.2 3.2 3.2 3.8 4.2 Source: Company, Bahana estimates note: based on 09 October 2014 closing price


0

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3,688

3,875

4,063

4,250

4,438

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5,000


('000)(IDR)

Volume (RHS) BDMN IJ Px Last

(13.5)

6.3

(9.3)

(17.4)

(12.5)(14.5)

(20)

(15)

(10)

(5)

0

5

10

(20)

(15)

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BDMN IJ relative to JCI



Company information 12M high/low (IDR) : 4,640/3,550 12M high/low consensus TP (IDR) : 4,880/2,460 Majority shareholder (%) : Asia Financial (67.4) Shares outstanding (mn)/Free float (%) : 9,585/32.4 Mkt. cap. (IDRbn/USDmn) : 37,380/3,066 3-m avg.daily t.o.(IDRbn/USDmn) : 17.5/1.4 Bloomberg/Reuters code : BDMN IJ/BDMN.JK Source: Bloomberg, Reuters; based on 09 October 2014 closing price

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BANK DANAMON

Profit & loss Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016FInterest income 18,734 19,958 23,105 25,477 28,617Interest expense 5,715 6,358 8,709 9,836 11,160Net interest income 13,019 13,600 14,396 15,642 17,458Non-interest income 5,932 9,555 6,973 8,134 9,208Total operating income 18,951 23,155 21,369 23,775 26,665Operating expenses 10,235 14,203 13,643 15,276 16,837Loan loss provisions 3,145 3,347 3,095 3,121 3,733Operating profit 5,571 5,605 4,631 5,378 6,095Non-operating inc./(exp.) (84) (75) (66) (75) (87)Pre-tax profit 5,487 5,530 4,565 5,303 6,008Corporate tax (1,370) (1,371) (987) (1,149) (1,299)Minorities (105) (118) (129) (149) (171)Net profit 4,012 4,042 3,448 4,005 4,538Source: Company, Bahana estimates



% to loan portfolio Corporate 10.9 14.1 13.8 13.3 12.7 Commercial 26.2 28.1 28.0 27.8 27.8 Mass market 56.7 52.2 52.5 53.1 53.6 Retail 6.2 5.7 5.8 5.8 5.9




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126

BANK PEMBANGUNAN DAERAH JAWA BARAT HOLD PX: IDR760 - TP: IDR830* The largest regional bank by assets, BJBR appears to be struggling in

managing its liquidity in an increasingly competitive environment with its resulting margin pressure. However, BJBR has opted to off-load its excess funding to improve its core earnings outlook.

Despite the current loan growth slowdown, BJBR’s sustainable long-term growth prospects should be helped by a focus on loans to civil servants. We also see support from regional funding and improved asset quality of the loan portfolio mix away from high-risk micro credit.

The upcoming appointment of the new management, allowing for improved strategic business planning, is another positive. Hence, we maintain our HOLD rating with a revised IDR830 TP, based on a 2015F P/BV of 1.1x, at a 60% discount to the sector. A downside risk to our call is higher NPLs, while potential recovery in written-off assets may lead to possible upside for the bank’s earnings.


Net profit (IDRbn) 1,193 1,376 1,146 1,317 1,489 Bahana/consensus (%) - - 99 103 99 EPS (IDR) 123 142 118 136 154 EPS growth (%) 23.9 15.4 (16.7) 15.0 13.1 P/E (x) 6.2 5.4 6.4 5.6 4.9 Equity (IDRbn) 5,975 6,684 7,073 7,588 8,254 BVPS (IDR) 616 689 729 783 851 P/BV (x) 1.2 1.1 1.0 1.0 0.9 DPS (IDR) 68 78 83 85 88 Div. yield (%) 9.0 10.3 10.9 11.2 11.6 Source: Company, Bahana estimates note: based on 09 October 2014 closing price


0

10,000

20,000

30,000

40,000

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60,000

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80,000

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100,000

700

763

825

888

950

1,013

1,075

1,138

1,200


('000)(IDR)

Volume (RHS) BJBR IJ Px Last

(31.4)

(4.5)

(11.0)

(36.2)

(24.7)

(29.4)

(40)

(35)

(30)

(25)

(20)

(15)

(10)

(5)

0

(40)

(35)

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ytd 1M 3M 6M 9M 12M

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BJBR IJ relative to JCI


Major assumptions Year to 31 Dec (%) 2012A 2013A 2014F 2015F 2016F Loan growth 33.3 27.6 14.0 15.0 15.3 Deposit growth 29.6 (1.2) 22.6 16.1 16.1 Non interest inc./operating inc. 8.3 20.0 22.1 22.2 21.4 Corporate tax rate 21.1 21.5 22.5 22.5 22.5 Payout ratio 55.6 55.0 70.0 62.5 57.5 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 1,231/938 12M high/low consensus TP (IDR) : 1,300/700 Majority shareholder (%) : West Java Provincial Govt. (38.3) Shares outstanding (mn)/Free float (%) : 9,696/25.0 Mkt. cap. (IDRbn/USDmn) : 7,369/605 3-m avg.daily t.o.(IDRbn/USDmn) : 15.5/1.3 Bloomberg/Reuters code : BJBR IJ/BJBR.JK Source: Bloomberg, Reuters; based on 09 October 2014 closing price

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BANK PEMBANGUNAN DAERAH JAWA BARAT

Profit & loss Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016FInterest income 6,796 8,133 9,324 10,568 11,926Interest expense 3,141 3,351 4,456 5,262 6,045Net interest income 3,655 4,782 4,868 5,306 5,881Non-interest income 331 1,198 1,379 1,516 1,606Total operating income 3,987 5,980 6,247 6,822 7,487Operating expenses 2,232 2,993 3,406 3,942 4,317Loan loss provisions 405 1,365 1,338 1,155 1,220Operating profit 1,349 1,622 1,502 1,725 1,949Non-operating inc./(exp.) 163 131 (24) (25) (27)Pre-tax profit 1,512 1,753 1,479 1,700 1,922Corporate tax (319) (376) (333) (382) (432)Minorities - - - - -Net profit 1,193 1,376 1,146 1,317 1,489Source: Company, Bahana estimates


Breakdown Year to 31 Dec 2012A 2013A 2014F 2015F 2016F% to earnings assets Gross loans 59.1 77.9 73.0 72.9 73.3 Government bonds - - - - - Other earnings assets 40.9 22.1 27.0 27.1 26.7

% to loan portfolio Consumer 64.2 64.0 65.3 65.9 66.4 Commercial 18.0 15.5 15.3 15.3 15.3 Micro 12.9 11.9 10.9 10.4 10.0 Mortgage 4.9 8.7 8.5 8.4 8.4




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128

BANK PEMBANGUNAN DAERAH JAWA TIMUR BUY PX: IDR436 - TP: IDR500* BJTM, the second-largest regional bank by assets, is well-supported

by regional government funds, accounting for an average of 40% of its total deposits. This should help the bank’s liquidity and allow it to maintain its CASA-to-time deposit ratio at 2:1 respectively.

Its multipurpose loans, mainly nearly risk-free civil servant debtors, remain the main driver for earnings growth. BJTM has also started penetrating micro financing, with tight monitoring of loan-repayment rates to prevent NPLs. In 2014, 55 micro units would be ready (8M14: 40 operational) before adding another 45 units next year.

Despite its high NPLs, BJTM has progressed in line with expectations. Hence, we have a BUY rating and TP of IDR500 based a 2015F P/BV of 1.1x. Other catalysts include BJTM’s high dividend policy, while a risk to our call would be the failure to improve its asset quality, which would adversely affect earnings.

Financial highlights Year to 31 Dec 2012A 2013A 2014F 2015F 2016F Net interest income (IDRbn) 1,958 2,472 2,850 3,189 3,648 Operating income (IDRbn) 2,316 2,839 3,337 3,757 4,295 Operating profit (IDRbn) 986 1,116 1,400 1,600 1,837 Pre-tax profit (IDRbn) 1,001 1,154 1,444 1,650 1,895

Net profit (IDRbn) 725 824 1,025 1,171 1,345 Bahana/consensus (%) - - 98 102 94 EPS (IDR) 54 55 69 79 90 EPS growth (%) (25.1) 2.4 24.4 14.2 14.9 P/E (x) 8.1 7.9 6.3 5.6 4.8 Equity (IDRbn) 5,487 5,719 6,138 6,643 7,250 BVPS (IDR) 368 383 411 445 486 P/BV (x) 1.2 1.1 1.1 1.0 0.9 DPS (IDR) 40 41 45 49 52 Div. yield (%) 9.1 9.3 10.2 11.3 12.0 Source: Company, Bahana estimates note: based on 09 October 2014 closing price


0

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100,000

300

325

350

375

400

425

450

475

500


('000)(IDR)

Volume (RHS) BJTM IJ Px Last

(0.6)

0.8

4.4

(9.7)

0.5

4.2

(12)

(10)

(8)

(6)

(4)

(2)

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4

6

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ytd 1M 3M 6M 9M 12M

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BJTM IJ relative to JCI



Company information 12M high/low (IDR) : 486/355 12M high/low consensus TP (IDR) : 611/432 Majority shareholder (%) : East Java Provincial Govt. (51.5) Shares outstanding (mn)/Free float (%) : 14,918/18.0 Mkt. cap. (IDRbn/USDmn) : 6,504/534 3-m avg.daily t.o.(IDRbn/USDmn) : 2.9/0.2 Bloomberg/Reuters code : BJTM IJ/BJTM.JK Source: Bloomberg, Reuters; based on 09 October 2014 closing price

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129

BANK PEMBANGUNAN DAERAH JAWA TIMUR

Profit & loss Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016FInterest income 2,811 3,386 4,034 4,596 5,305Interest expense 852 913 1,184 1,407 1,657Net interest income 1,958 2,472 2,850 3,189 3,648Non-interest income 358 367 487 569 647Total operating income 2,316 2,839 3,337 3,757 4,295Operating expenses 1,024 1,127 1,494 1,708 1,982Loan loss provisions 307 596 443 450 476Operating profit 986 1,116 1,400 1,600 1,837Non-operating inc./(exp.) 16 38 44 50 58Pre-tax profit 1,001 1,154 1,444 1,650 1,895Corporate tax (277) (329) (419) (478) (549)Minorities - - - - -Net profit 725 824 1,025 1,171 1,345Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016F Loans 18,556 22,084 26,262 30,230 34,838 Cash on hand 1,961 2,320 2,436 2,618 3,011 Fixed assets 430 523 795 839 885 Other assets 8,164 8,119 7,822 8,916 10,321 Total assets 29,112 33,047 37,315 42,604 49,056 Customer deposits 22,210 25,988 29,681 34,452 39,911 Deposits from other banks 392 314 292 298 304 Borrowing and sub-debts 319 316 317 317 309 Other liabilities 704 710 888 893 1,282 Total liabilities 23,625 27,328 31,177 35,961 41,806 Minorities - - - - - Equity 5,487 5,719 6,138 6,643 7,250 Total liabilities and equity 29,112 33,047 37,315 42,604 49,056 Source: Company, Bahana estimates

Breakdown Year to 31 Dec 2012A 2013A 2014F 2015F 2016F% to earnings assets Gross loans 69.6 72.6 75.8 75.8 75.8 Government bonds - - - - - Other earnings assets 30.4 27.4 24.2 24.2 24.2

% to loan portfolio Consumer 64.1 63.5 63.6 64.1 64.6 SME 18.5 17.3 16.5 16.1 15.6 Commercial 17.5 19.1 19.9 19.9 19.8 Others - - - - -




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130

BANK MANDIRI BUY PX: IDR9,550 - TP: IDR11,600* Aiming to be one of ASEAN’s largest banks, BMRI is preparing to

aggressively acquire other banking assets. Ironically, the bank has cut its 2014 loan growth target while maintaining its LDR at 90%. Its subsidiary, Bank Syariah Mandiri, is still performing poorly with rising gross NPLs, reaching 6.8% at the end of June 2014.

The bank will likely continue to increase its high-yielding loans, which accounted for 28.9% of total loans in 1H14. BMRI’s efforts to penetrate this segment include recent JVs with PT POS and Taspen via its subsidiary, Bank Sinar Harapan, to penetrate the pensioner loan segment, which is currently dominated by BBRI and BTPN.

BMRI’s potential M&A deals are likely to drive its share price movements ahead. Hence, we retain our BUY rating and TP of IDR11,600, based on a 2015F P/BV of 2.3x, at 15% discount to with the sector. Risk to our call includes worse-than-expected NPLs.


Net profit (IDRbn) 15,504 18,204 20,513 23,057 25,968 Bahana/consensus (%) - - 102 98 96 EPS (IDR) 664 780 879 988 1,113 EPS growth (%) 24.8 17.4 12.7 12.4 12.6 P/E (x) 14.4 12.2 10.9 9.7 8.6 Equity (IDRbn) 74,580 87,419 101,548 118,423 138,027 BVPS (IDR) 3,196 3,747 4,352 5,075 5,916 P/BV (x) 3.0 2.5 2.2 1.9 1.6 DPS (IDR) 199 234 264 272 278 Div. yield (%) 2.1 2.5 2.8 2.8 2.9 Source: Company, Bahana estimates note: based on 09 October 2014 closing price


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('000)(IDR)

Volume (RHS) BMRI IJ Px Last

4.8

(4.9) (5.3)

(8.3)

(1.6)(2.3)

(10)

(8)

(6)

(4)

(2)

0

2

4

6

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BMRI IJ relative to JCI



Company information 12M high/low (IDR) : 11,723/9,529 12M high/low consensus TP (IDR) : 13,200/9,400 Majority shareholder (%) : Republic of Indonesia (60.0) Shares outstanding (mn)/Free float (%) : 23,333/40.0 Mkt. cap. (IDRbn/USDmn) : 222,833/18,280 3-m avg.daily t.o.(IDRbn/USDmn) : 285.5/23.4 Bloomberg/Reuters code : BMRI IJ/BMRI.JK Source: Bloomberg, Reuters; based on 09 October 2014 closing price

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131

BANK MANDIRI

Profit & loss Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016FInterest income 42,550 50,209 62,412 71,513 81,774Interest expense 14,129 16,399 23,368 27,362 32,359Net interest income 28,422 33,809 39,045 44,151 49,415Non-interest income 14,465 17,387 17,959 20,316 23,105Total operating income 42,887 51,197 57,004 64,467 72,520Operating expenses 19,830 22,773 22,995 26,739 30,214Loan loss provisions 3,431 4,871 7,735 8,192 8,981Operating profit 19,625 23,552 26,275 29,536 33,325Non-operating inc./(exp.) 879 510 306 337 370Pre-tax profit 20,504 24,062 26,581 29,873 33,696Corporate tax (4,461) (5,232) (5,316) (5,975) (6,739)Minorities (540) (626) (751) (842) (989)Net profit 15,504 18,204 20,513 23,057 25,968Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016F Loans 388,501 471,815 545,910 634,149 741,523 Cash on hand 15,482 19,052 21,910 25,196 28,976 Fixed assets 11,941 13,258 15,247 17,534 20,164 Other assets 219,695 228,974 255,982 288,483 324,763 Total assets 635,619 733,100 839,049 965,362 1,115,42

7Customer deposits 482,914 556,342 604,879 690,635 808,086 Deposits from other banks 14,321 12,669 14,570 16,755 19,268 Borrowing and sub-debts 27,949 39,268 44,007 49,264 55,237 Other liabilities 34,679 36,030 72,223 87,958 91,888 Total liabilities 559,863 644,309 735,679 844,612 974,479 Minorities 1,175 1,371 1,822 2,327 2,920 Equity 74,580 87,419 101,548 118,423 138,027 Total liabilities and equity 635,619 733,100 839,049 965,362 1,115,42

7Source: Company, Bahana estimates


% to loan portfolio Corporate 38.7 40.7 40.4 40.7 40.8 Commercial 30.3 28.1 28.4 28.1 27.7 Micro and small 16.9 17.6 18.0 18.3 18.5 Consumer 14.0 13.6 13.2 13.0 13.0




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132

BANK NEGARA INDONESIA BUY PX: IDR5,400 - TP: IDR6,900* BBNI, the third-largest state-owned bank in our coverage, has

progressed in line with the industry’s average. Gross NPL has improved substantially, to 2.2% at end-2Q14 from 2.6% a year earlier, on quality new-loan underwriting, debt restructuring and write-offs. We expect NPLs to be hovering at around 2.1% in 2014-16.

Strong liquidity has provided the bank flexibility in recalibrating its loan portfolio, focusing on less-risky assets. Concurrently, management appears to conservatively expand its loans, targeting mid-teens growth in 2014. Efforts to maintain NIM at around 5.8% should be attained by off-loading excess funding from time deposits.

We are positive on BBNI, with a IDR6,900 TP based on a 2015F implied P/BV of 2.0x, as we expect a continued re-rating, supported by solid core interest earnings and fee-based income from a recent JV with Sumitomo Life. Risks to our call include management changes.


Net profit (IDRbn) 7,046 9,054 10,676 12,112 13,693 Bahana/consensus (%) - - 107 106 106 EPS (IDR) 378 486 572 649 734 EPS growth (%) 20.9 28.5 17.9 13.5 13.1 P/E (x) 14.3 11.1 9.4 8.3 7.4 Equity (IDRbn) 43,536 47,663 55,622 64,531 74,894 BVPS (IDR) 2,334 2,556 2,983 3,460 4,016 P/BV (x) 2.3 2.1 1.8 1.6 1.3 DPS (IDR) 113 146 172 179 184 Div. yield (%) 2.1 2.7 3.2 3.3 3.4 Source: Company, Bahana estimates note: based on 09 October 2014 closing price


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4,438

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('000)(IDR)

Volume (RHS) BBNI IJ Px Last

19.9

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2.4

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Company information 12M high/low (IDR) : 5,942/4,752 12M high/low consensus TP (IDR) : 7,200/4,863 Majority shareholder (%) : Republic of Indonesia (60.0) Shares outstanding (mn)/Free float (%) : 18,649/39.8 Mkt. cap. (IDRbn/USDmn) : 100,703/8,261 3-m avg.daily t.o.(IDRbn/USDmn) : 144.4/11.8 Bloomberg/Reuters code : BBNI IJ/BBNI.JK Source: Bloomberg, Reuters; based on 09 October 2014 closing price

2015 Compendium

133

BANK NEGARA INDONESIA

Profit & loss Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016FInterest income 22,705 26,451 33,550 38,118 42,876Interest expense 7,246 7,392 11,848 13,189 14,729Net interest income 15,459 19,058 21,703 24,929 28,146Non-interest income 8,285 9,781 11,200 12,395 14,084Total operating income 23,744 28,839 32,902 37,324 42,231Operating expenses 12,474 14,780 16,074 18,191 20,493Loan loss provisions 2,630 2,840 3,803 4,381 5,049Operating profit 8,641 11,219 13,025 14,752 16,689Non-operating inc./(exp.) 259 59 325 395 435Pre-tax profit 8,900 11,278 13,350 15,146 17,123Corporate tax (1,851) (2,220) (2,670) (3,029) (3,425)Minorities (2) (4) (4) (5) (5)Net profit 7,046 9,054 10,676 12,112 13,693Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016F Loans 200,602 250,450 285,276 327,842 381,167 Cash on hand 7,969 10,090 10,594 11,124 11,680 Fixed assets 9,688 11,181 13,417 15,430 17,745 Other assets 115,044 114,934 129,867 150,082 179,386 Total assets 333,304 386,655 439,156 504,478 589,978 Customer deposits 257,661 291,890 323,783 368,870 425,489 Deposits from other banks 3,540 3,700 4,238 4,855 5,562 Borrowing and sub-debts 18,303 31,852 33,359 34,404 35,505 Other liabilities 10,274 11,528 17,920 27,586 44,296 Total liabilities 289,778 338,971 379,302 435,715 510,852 Minorities (11) 20 4,232 4,232 4,232 Equity 43,536 47,663 55,622 64,531 74,894 Total liabilities and equity 333,304 386,655 439,156 504,478 589,978 Source: Company, Bahana estimates


% to loan portfolio Corporate 36.0 44.8 46.1 46.9 47.8 Commercial & SME 36.6 28.9 27.9 27.2 26.4 Consumer 20.5 19.0 18.7 18.7 18.9 Others 6.9 7.3 7.3 7.3 6.9




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BANK RAKYAT INDONESIA BUY PX: IDR10,250 - TP: IDR12,500* Capitalizing on its extensive network, BBRI, the second-largest bank

by market cap, is enjoying growth through rural economic development as it continues to focus on micro-financing penetration. Its low micro NPLs should indicate its ability to achieve sustained growth, with 2015F loan growth moving at above industry average.

BBRI is likely to use its idle cash to make short-term loans to SOE companies, which should help to maintain its asset quality. However, higher NPLs from SMEs appear likely through early next year, leading to relatively high provisioning charges.

Our IDR12,500 TP is based on an implied 2015F P/BV of 2.7x, at par to the sector. We believe this is warranted by the likely continued growth backed by micro-loan volume growth, in spite of the NIM pressure. Risk to our call includes higher funding costs leading to lower margins given the sticky micro-lending rates.


Net profit (IDRbn) 18,681 21,344 24,003 27,081 30,529 Bahana/consensus (%) - - 100 100 98 EPS (IDR) 757 865 973 1,098 1,238 EPS growth (%) 23.9 14.3 12.5 12.8 12.7 P/E (x) 13.5 11.8 10.5 9.3 8.3 Equity (IDRbn) 64,807 79,164 95,019 114,837 137,873 BVPS (IDR) 2,627 3,209 3,852 4,655 5,589 P/BV (x) 3.9 3.2 2.7 2.2 1.8 DPS (IDR) 225 257 292 302 309 Div. yield (%) 2.2 2.5 2.8 2.9 3.0 Source: Company, Bahana estimates note: based on 09 October 2014 closing price


0

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Company information 12M high/low (IDR) : 11,700/6,800 12M high/low consensus TP (IDR) : 14,300/9,796 Majority shareholder (%) : Republic of Indonesia (56.8) Shares outstanding (mn)/Free float (%) : 24,669/43.2 Mkt. cap. (IDRbn/USDmn) : 252,859/20,743 3-m avg.daily t.o.(IDRbn/USDmn) : 372.2/30.5 Bloomberg/Reuters code : BBRI IJ/BBRI.JK Source: Bloomberg, Reuters; based on 09 October 2014 closing price

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135

BANK RAKYAT INDONESIA

Profit & loss Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016FInterest income 49,598 59,508 75,244 86,576 99,804Interest expense 13,123 15,356 24,735 28,934 33,914Net interest income 36,475 44,153 50,509 57,643 65,890Non-interest income 8,425 8,509 9,073 10,375 11,050Total operating income 44,901 52,661 59,582 68,018 76,939Operating expenses 19,545 22,593 24,997 28,571 32,573Loan loss provisions 2,669 3,948 6,213 7,293 7,970Operating profit 22,687 26,121 28,372 32,154 36,396Non-operating inc./(exp.) 1,173 1,789 2,024 2,139 2,261Pre-tax profit 23,860 27,910 30,397 34,293 38,658Corporate tax (5,172) (6,556) (6,383) (7,202) (8,118)Minorities (6) (10) (10) (10) (10)Net profit 18,681 21,344 24,003 27,081 30,529Source: Company, Bahana estimates



% to loan portfolio Corporate 25.3 25.6 25.2 25.1 24.8 SME 26.4 26.5 25.8 25.1 24.2 Consumer 17.6 17.2 17.3 17.3 17.5 Micro 30.7 30.7 31.6 32.6 33.5




2015 Compendium

136

BANK TABUNGAN NEGARA BUY PX: IDR1,095 - TP: IDR1,300* BBTN, one of the largest mortgage banks, is continuing to capitalize on

its strength in providing mortgages for low-end housing, with a 21.4% market share in both subsidized and non-subsidized mortgages. With an annual shortfall of 300-400K housing units, BBTN expects to maintain its 85:15 split between housing and non-housing loans.

Given the recent write-offs and restructuring of its loan book, BBTN’s NPLs are likely to peak in 3Q-4Q14, but NPL deterioration should be partly curbed by the new fully insured subsidized mortgages. Hence, we expect to see improvement ahead, leading to normalized provisioning, which would provide support for BBTN’s bottom line.

Our positive view on BBTN is backed by its recovery story and undemanding valuation. Our IDR1,300 TP is based on a 2015F P/BV of 1.0x, at a 65% discount to the sector. Risks to our call are a failure to maintain its asset quality and a shortage of low-end housing supply.


Net profit (IDRbn) 1,364 1,562 1,466 1,669 1,885 Bahana/consensus (%) - - 100 96 90 EPS (IDR) 129 148 139 158 178 EPS growth (%) 2.0 14.5 (6.1) 13.8 13.0 P/E (x) 8.5 7.4 7.9 6.9 6.1 Equity (IDRbn) 10,279 11,557 12,554 13,783 15,210 BVPS (IDR) 973 1,094 1,188 1,304 1,439 P/BV (x) 1.1 1.0 0.9 0.8 0.8 DPS (IDR) 39 44 42 43 45 Div. yield (%) 3.5 4.1 3.8 4.0 4.1 Source: Company, Bahana estimates note: based on 09 October 2014 closing price


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Volume (RHS) BBTN IJ Px Last

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Company information 12M high/low (IDR) : 1,405/840 12M high/low consensus TP (IDR) : 1,500 /1,050 Majority shareholder (%) : Republic of Indonesia (60.1) Shares outstanding (mn)/Free float (%) : 10,568/35.0 Mkt. cap. (IDRbn/USDmn) : 11,572/949 3-m avg.daily t.o.(IDRbn/USDmn) : 67.5/5.5 Bloomberg/Reuters code : BBTN IJ/BBTN.JK Source: Bloomberg, Reuters; based on 09 October 2014 closing price

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137

BANK TABUNGAN NEGARA

Profit & loss Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016FInterest income 9,106 11,197 13,308 16,117 18,509Interest expense 4,379 5,558 7,442 9,457 11,052Net interest income 4,726 5,639 5,867 6,660 7,457Non-interest income 577 798 832 945 1,064Total operating income 5,303 6,437 6,699 7,605 8,521Operating expenses 3,225 3,861 4,374 5,015 5,544Loan loss provisions 214 441 319 302 388Operating profit 1,865 2,136 2,006 2,288 2,589Non-operating inc./(exp.) (8) 5 2 (2) (7)Pre-tax profit 1,857 2,141 2,009 2,286 2,583Corporate tax (493) (579) (542) (617) (697)Minorities - - - - -Net profit 1,364 1,562 1,466 1,669 1,885Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016F Loans 81,411 100,467 115,004 133,217 153,940 Cash on hand 695 924 1,156 1,444 1,806 Fixed assets 2,627 2,834 3,684 4,973 6,465 Other assets 27,016 26,944 33,945 39,286 45,640 Total assets 111,749 131,170 153,788 178,921 207,850 Customer deposits 80,688 96,213 112,323 130,020 150,609 Deposits from other banks 741 285 317 364 419 Borrowing and sub-debts 16,206 18,560 26,000 31,201 36,609 Other liabilities 3,834 4,556 2,595 3,553 5,004 Total liabilities 101,470 119,613 141,234 165,138 192,641 Minorities - - - - - Equity 10,279 11,557 12,554 13,783 15,210 Total liabilities and equity 111,749 131,170 153,788 178,921 207,850 Source: Company, Bahana estimates


% to loan portfolio Subsidized mortgage 31.4 28.3 26.7 27.3 27.5 Non-subsidized mortgage 35.8 39.4 41.7 42.1 41.9 Housing related loans 19.1 18.9 18.5 17.9 17.7 Non-housing related loans 13.7 13.4 13.1 12.7 12.9




2015 Compendium

138

BANK TABUNGAN PENSIUNAN NASIONAL HOLD PX: IDR4,470 - TP: IDR4,600* On the back of its high funding cost, BTPN, one of the three pension-

related payment banks for civil servants, is competing in high-yielding loans to pensioners, micro and ‘productive poor’ loans (under its 70%-owned Sharia bank) against existing and new players (BMRI via its JV with PTPOS and Taspen). This could pressure loan growth.

Despite pressure from intensifying competition in both funding and lending, margins should remain at above 10%, with gross NPLs at around 1%. Combined with cost efficiencies and increased fee-based income, a 2013-15F earnings CAGR around 10% should be attainable

Our IDR4,600 TP is based on a 2015F P/BV of 1.8x. An upside risk to our Hold call is the founder’s possible further divestment (Sumitomo is now the controlling shareholder with a 40% stake), creating a 40% free float and gaining a 5% tax saving. A downside risk is accelerated competition, triggering lower loan growth and margin pressure.


Net profit (IDRbn) 1,979 2,131 2,266 2,588 2,897 Bahana/consensus (%) - - 104 96 96 EPS (IDR) 341 365 388 443 496 EPS growth (%) 38.1 6.9 6.3 14.2 12.0 P/E (x) 13.1 12.3 11.5 10.1 9.0 Equity (IDRbn) 7,734 9,908 12,174 14,762 17,271 BVPS (IDR) 1,324 1,696 2,085 2,528 2,957 P/BV (x) 3.4 2.6 2.1 1.8 1.5 DPS (IDR) - - - 66 74 Div. yield (%) - - - 1.5 1.7 Source: Company, Bahana estimates note: based on 09 October 2014 closing price


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Volume (RHS) BTPN IJ Px Last

(12.9)

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BTPN IJ relative to JCI Source: Bloomberg Teguh Hartanto ([email protected]) +6221 250 5081 ext. 3610 *New, please refer to appendix II

Major assumptions Year to 31 Dec 2012A 2013A 2014F 2015F 2016F Loan growth 28.2 18.7 14.8 15.0 15.2 Deposit growth 26.5 15.8 13.8 14.0 14.2 Non interest inc./operating inc. 4.5 5.4 7.5 7.7 8.5 Corporate tax rate 20.4 25.7 20.0 20.0 20.0 Payout ratio - - - 15.0 15.0 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 4,930/3,800 12M high/low consensus TP (IDR) : 5,500/3,800 Majority shareholder (%) : GSI Sumitomo (40.0) Shares outstanding (mn)/Free float (%) : 5,840/72.3 Mkt. cap. (IDRbn/USDmn) : 26,106/2,142 3-m avg.daily t.o.(IDRbn/USDmn) : 0.8/0.1 Bloomberg/Reuters code : BTPN IJ/BTPN.JK Source: Bloomberg, Reuters; based on 09 October 2014 closing price

2015 Compendium

139

BANK TABUNGAN PENSIUNAN NASIONAL

Profit & loss Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016FInterest income 9,293 10,943 12,544 14,086 15,841Interest expense 3,222 3,895 5,238 5,870 6,941Net interest income 6,071 7,048 7,305 8,216 8,900Non-interest income 283 400 589 689 826Total operating income 6,354 7,449 7,894 8,905 9,727Operating expenses 3,411 3,981 4,372 4,974 5,353Loan loss provisions 455 590 680 684 739Operating profit 2,487 2,878 2,843 3,246 3,634Non-operating inc./(exp.) (2) (9) (10) (12) (13)Pre-tax profit 2,485 2,869 2,833 3,234 3,621Corporate tax (506) (738) (567) (647) (724)Minorities - - - - -Net profit 1,979 2,131 2,266 2,588 2,897Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016F Loans 38,844 46,105 52,916 60,875 70,114 Cash on hand 929 1,103 1,654 1,985 2,382 Fixed assets 1,154 1,429 1,786 2,233 2,791 Other assets 18,163 21,028 22,150 26,605 28,370 Total assets 59,090 69,665 78,506 91,698 103,657 Customer deposits 45,073 52,196 59,388 67,697 77,289 Deposits from other banks 6 16 43 115 307 Borrowing and sub-debts 5,157 6,345 6,497 6,299 6,186 Other liabilities 1,121 1,200 404 2,825 2,604 Total liabilities 51,356 59,757 66,332 76,936 86,386 Minorities - - - - - Equity 7,734 9,908 12,174 14,762 17,271 Total liabilities and equity 59,090 69,665 78,506 91,698 103,657 Source: Company, Bahana estimates

Breakdown Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016F% to earnings assets Gross loans 71.7 79.0 73.2 73.4 75.4 Government bonds - - - - - Other earnings assets 28.3 21.0 26.8 26.6 24.6

% to loan portfolio Loans to pensioners 72.2 68.6 65.7 62.6 59.2 Micro loans 23.2 22.3 21.9 21.6 21.2 Others 3.3 6.2 6.7 7.3 7.7 Syariah 1.3 2.9 5.6 8.6 11.9



Key ratios Year to 31 Dec 2012A 2013A 2014F 2015F 2016F ROAA 3.7 3.3 3.1 3.0 3.0 ROAE 29.6 24.2 20.5 19.2 18.1 NIM 13.1 12.7 11.4 11.3 10.7 Loan/deposit ratio 86.2 88.3 89.1 89.9 90.7 Loan/funding ratio 77.3 78.7 80.3 82.1 83.7 Cost efficiency ratio 53.7 53.4 55.4 55.9 55.0 CIR 74.0 74.6 78.4 78.0 78.2 Gross NPL 0.6 0.7 0.9 1.0 1.0 NPL coverage 170.5 157.5 125.1 125.4 126.1 LLR 1.0 1.1 1.2 1.3 1.3 CAR-total 21.5 23.1 21.0 20.3 20.2 CAR-tier I 20.5 22.1 19.1 18.4 18.3 Source: Company, Bahana estimates

2015 Compendium

140

BEKASI FAJAR INDUSTRIAL ESTATE BUY PX: IDR545 - TP: IDR690 BEST, having sufficient 932ha remaining landbank in 1H14, enjoys a

strategic advantage to its competitors, as its industrial area is the closest to Jakarta’s CBD (30km away). This should benefit BEST as we expect the upcoming investment climate to improve on the back of greater political stability ahead.

With most of its earnings coming from industrial estate land sales, BEST, backed by warehouse project (a JV with Daiwa House) and a standard factory building (SFB), plans to diversify its future income stream by raising recurring portion from just 3.5% in 2013 to around 25% over the next 3 years.

In the sector, we believe BEST is the safest given ample landbank and strategic location, allowing for solid recurring income and positive ASP growth ahead. We apply a 40% discount to our 2015F NAV to derive our IDR690 TP. Risk to our call is lower-than-expected FDI.

Financial highlights Year to 31 Dec 2012A 2013A 2014F 2015F 2016F Revenues (IDRbn) 965 1,324 751 893 1,161 EBIT (IDRbn) 527 883 432 514 680 Net profit (IDRbn) 470 744 352 426 577 Bahana/consensus (%) - - 66 64 81

EPS (IDR) 49 77 37 44 60 EPS growth (%) 293.3 58.1 (52.6) 20.9 35.6 EV/EBITDA (x) 9.3 5.9 12.1 10.4 8.0 P/E (x) 11.2 7.1 14.9 12.3 9.1 FCFPS (IDR) 15 (32) (13) (11) (4) FCF yield (%) 2.7 (5.9) (2.4) (2.0) (0.7) BVPS (IDR) 184 257 291 333 391 P/BV (x) 3.0 2.1 1.9 1.6 1.4 DPS (IDR) 10 2 2 2 4 Div. yield (%) 1.7 0.4 0.3 0.4 0.7 Source: Company, Bahana estimates note: based on 09 October 2014 closing price


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Volume (RHS) BEST IJ Px Last

5.6

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21.7

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NAV calculation 1H14 Land bank (Ha) 932 Total value (IDRbn) 11,613 NAV/share (IDR) 1,158 Discount (%) 40 Adjusted NAV/share (IDR) 690 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 705/370 12M High/low consensus TP (IDR) : 1,200/375 Majority shareholder (%) : PT Argo Manunggal Land (51.3) Share outstanding (mn)/Free float (%) : 9,645/38.6 Mkt. cap. (IDRbn/USDmn) : 5,257/431 3-m avg.daily t.o.(IDRbn/USDmn) : 15.4/1.3 Bloomberg/Reuters code : BEST IJ/BEST.JK Source: Bloomberg, Reuters; based on 09 October 2014 closing price

2015 Compendium

141

BEKASI FAJAR INDUSTRIAL ESTATE

Profit & loss Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016FSales 965 1,324 751 893 1,161Gross profit 575 946 510 598 775EBITDA 530 888 447 532 697Depreciation 3 5 15 18 18EBIT 527 883 432 514 680Net interest inc./(expense) (19) (30) (38) (42) (43)Forex gain/(losses) 5 (38) 1 4 4Other income/(expense) 5 (3) (3) (4) (4)Pre-tax profit 518 812 391 472 636Taxes (47) (67) (38) (45) (58)Minority interest - (1) (1) (1) (1)Extraordinary gain/(losses) - - - - -Net profit 470 744 352 426 577Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016F Cash and equivalents 583 548 457 335 277 S-T investments - - - - - Trade receivables 9 80 51 61 80 Inventories 1,545 2,400 2,779 3,239 3,785 Fixed assets 76 77 121 174 226 Other assets 74 256 322 387 453 Total assets 2,286 3,360 3,730 4,197 4,819 Interest bearing liabilities 227 542 600 600 600 Trade payables 5 71 17 20 26 Other liabilities 284 271 308 362 423 Total liabilities 516 883 924 982 1,049 Minority interest - 1 1 2 2 Shareholders' equity 1,770 2,475 2,805 3,213 3,769 Source: Company, Bahana estimates

Cashflow Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016FEBIT 527 883 432 514 680Depreciation 3 5 15 18 18Working capital (11) 13 (20) 1 (5)Other operating items (277) (353) (114) (106) (115)Operating cash flow 241 548 313 427 578Net capital expenditure (100) (860) (439) (531) (615)Free cash flow 141 (312) (126) (104) (37)Equity raised/(bought) 405 53 - - -Net borrowings (24) 314 58 - -Other financing - (90) (23) (18) (21)Net cash flow 523 (35) (91) (122) (58)Cash flow at beginning 60 583 548 457 335Ending cash flow 583 548 457 335 277Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2012A 2013A 2014F 2015F 2016F ROAE (%) 35.3 35.0 13.3 14.1 16.5 ROAA (%) 23.9 26.3 9.9 10.7 12.8 EBITDA margin (%) 54.9 67.0 59.5 59.6 60.1 EBIT margin (%) 54.6 66.7 57.4 57.5 58.5 Net margin (%) 48.7 56.2 46.9 47.7 49.7 Payout ratio (%) 19.5 3.0 5.0 5.0 5.0 Current ratio (x) 10.3 3.4 10.3 10.3 10.3 Interest coverage (x) 27.2 29.3 11.3 12.2 15.7 Net gearing (%) nc nc 5.1 8.2 8.6 Debts to assets (%) 9.9 16.1 16.1 14.3 12.4 Debtor turnover (days) 3 12 25 25 25 Creditor turnover (days) 5 71 17 20 26 Inventory turnover (days) na na na na na Source: Company, Bahana estimates

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142

BUMI RESOURCES REDUCE PX: IDR149 - TP: IDR120* BUMI, the largest coal company in Indonesia by combined production

volumes with the largest amount of resources (10b tons; total reserves of 2.9b tons), continues to book healthy 1H14 sales volumes of 44mn tons, before further increasing to 92mn tons in 2015F.

Going into 2015, we expect BUMI’s margins to remain volatile due to various operational issues, including selling price and cash cost. Below the line, the company continues to be beset by interest charges stemming from its significant USD5.2bn in debts due in 2017.

Although the CIC asset-swap is completed, BUMI will still face increased minority interest, which could continue to erode its financial performance. At this stage, we have a REDUCE rating and DCF-based TP of IDR120, reflecting 19% downside potential. Risks to our call would be greater-than-expected increased earnings contributions from its various subsidiaries and lower interest costs.

Financial highlights Year to 31 Dec 2012A 2013A 2014F 2015F 2016F Revenue (USDmn) 3,776 3,547 3,829 4,207 4,678EBIT (USDmn) 429 230 262 531 418Net profit (USDmn) (666) (609) (392) (199) (183)Bahana/consensus (%) - - 273 278 588EPS (IDR) (309) (313) (202) (102) (94)EPS growth (%) (407.9) 1.4 (35.7) (49.2) (8.2)EV/EBITDA (x) 5.2 5.9 6.6 4.3 5.6PER (x) (0.5) (0.5) (0.7) (1.5) (1.6)FCFPS (IDR) 28 1,013 (468) (135) (324)FCF yield (%) 19.0 679.8 (313.8) (90.4) (217.6)BVPS (IDR) 177 (285) (507) (610) (701)PBV (x) 0.8 (0.5) (0.3) (0.2) (0.2)DPS (IDR) 15 - - - -Dividend Yield (%) - - - - -Source: Company, Bahana estimates note: based on 09 October 2014 closing price


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Volume (RHS) BUMI IJ Px Last

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Source: Bloomberg Arandi Nugraha ([email protected]) +6221 2505081 ext. 3619 *New, please refer to appendix II

Major assumptions Year to 31 Dec 2012A 2013A 2014F 2015F 2016F Avg. coal price (USD/ton) 78.2 63.8 61.5 65.0 68.9growth % (16.6) (18.5) (3.6) 5.7 6.0Coal sales vol. (m tons) 71.6 82.1 88.5 92.0 96.5growth % 13.1 14.7 7.8 4.0 4.9Total cash cost (USD/ton) 45.1 38.6 37.3 36.7 40.8Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 485/131 12M High/low consensus TP (IDR) : 330/180 Majority shareholder (%) : Long Haul Holdings (16.55) Shares outstanding (mn)/Free float (%) : 36,627/83.5 Mkt. cap. (IDRbn/USDmn) : 5,457/448 3-m avg.daily t.o.(IDRbn/USDmn) : 20.7/1.7 Bloomberg/Reuters code : BUMI IJ/BUMI.JK Source: Bloomberg, Reuters; based on 09 October 2014 closing price

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143

BUMI RESOURCES

Profit & loss Year to 31 Dec (USDmn) 2012A 2013A 2014F 2015F 2016FSales 3,776 3,547 3,829 4,207 4,678Gross profit 997 686 778 1,056 1,085EBITDA 709 457 504 790 688Depreciation 281 227 242 259 270EBIT 429 230 262 531 418Net interest inc. / (expense) (566) (604) (417) (432) (493)Forex gain (losses) (48) (137) (35) (38) (23)Other income / (expense) (431) (234) (260) (290) (245)Pre-tax profit (616) (745) (451) (229) (343)Taxes (90) 85 68 34 154Minority interest 39 51 (9) (4) 6Extraordinary gain/(losses) - - - - -Net profit (loss) (666) (609) (392) (199) (183)Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (USDmn) 2012A 2013A 2014F 2015F 2016F Cash 45 46 99 118 217Investment in associates 1,231 1,190 1,214 1,178 1,249Trade Receivables 298 430 364 400 444Inventories 275 188 287 252 416Fixed assets 1,753 1,705 1,815 1,933 1,992Other assets 3,753 3,445 3,135 3,194 3,719Total assets 7,354 7,004 6,915 7,075 8,036Interest bearing liabilities 3,244 2,228 2,959 3,078 3,638Trade payables 319 250 314 345 384Other liabilities 3,158 4,829 4,331 4,534 5,074Total liabilities 6,721 7,307 7,604 7,957 9,095Minority interest 241 190 195 201 207Shareholders' equity 392 (493) (884) (1,084) (1,267)Source: Company, Bahana estimates

Cash flow Year to 31 Dec (USDm) 2012A 2013A 2014F 2015F 2016FEBIT 429 230 262 531 418Depreciation 281 227 242 259 270Working capital (10) 1,297 (1,165) (753) (824)Other operating items - - - - -Operating cash flow 699 1,753 (661) 38 (136)Net capital expenditure (637) 0 (155) (277) (449)Free cash flow 63 1,754 (816) (239) (586)Equity raised/(bought) (879) - - - -Net borrowings (375) (1,016) 731 120 560Other financing 1,168 (737) 139 139 125Net cash flow (24) 0 53 19 99Cash flow at beginning 69 45 46 99 118Ending cash flow 45 46 99 118 217Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2012A 2013A 2014F 2015F 2016F ROAE (%) (84.9) 1,212.0 56.9 20.2 15.6ROAA (%) (9.1) (8.5) (5.6) (2.8) (2.4)EBITDA margin (%) 18.8 12.9 13.2 18.8 14.7EBIT margin (%) 11.4 6.5 6.8 12.6 8.9Net margin (%) (17.6) (17.2) (10.2) (4.7) (3.9)Payout ratio (%) - - - - -Current ratio (x) 0.9 0.4 0.5 0.5 0.6Interest coverage (x) 0.8 0.4 0.6 1.2 0.8Net gearing (%) 815.6 n.a. n.a. n.a. n.a.Debts to assets (%) 44.1 31.8 42.8 43.5 45.3Debtor turnover (days) 29 44 35 35 35Creditor turnover (days) 42 32 38 40 39Inventory turnover (days) 36 24 34 29 42Source: Company, Bahana estimates

2015 Compendium

144

BUMI SERPONG DAMAI BUY PX: IDR1,500 - TP: IDR1,900 BSDE, the largest landbank owner in our coverage, is expanding into

new areas through its townships in Balikpapan, Bekasi and Cibubur. Over the longer term, BSDE plans to build an industrial estate and several commercial properties in Surabaya. Additionally, the company plans to venture into several areas outside of Java such as Manado, Palembang and Ujung Pandang.

The company’s pipeline for its BSD City includes an exhibition hall to be operated by Deutche Messe and a shopping mall to be operated by AEON. We expect both projects to succeed for BSDE, paving the way for an increased recurring income base.

On valuation, we apply a 50% discount to our 2015F NAV (in line with the sector) to derive our IDR1,900 TP. Risks to our call include negative sector sentiment on a possible interest rate hike as well as unsuccessful launches.

Financial highlights Year to 31 Dec 2012A 2013A 2014F 2015F 2016F Revenues (IDRbn) 3,728 5,741 5,602 6,128 7,417 EBIT (IDRbn) 1,412 2,910 2,742 2,909 3,506 Net profit (IDRbn) 1,286 2,691 3,734 2,266 2,719 Bahana/consensus (%) - - 121 92 106

EPS (IDR) 73 154 203 123 148 EPS growth (%) 52.9 109.3 32.2 (39.3) 20.0 EV/EBITDA (x) 15.5 8.6 9.3 8.9 7.1 P/E (x) 20.4 9.8 7.4 12.2 10.1 FCFPS (IDR) (55) (159) 4 (29) (1) FCF yield (%) (3.7) (10.6) 0.3 (1.9) (0.1) BVPS (IDR) 452 584 730 813 936 P/BV (x) 3.3 2.6 2.1 1.8 1.6 DPS (IDR) 15 31 41 25 30 Div. yield (%) 1.0 2.1 2.7 1.6 2.0 Source: Company, Bahana estimates note:based on 09 October 2014 closing price


0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

1,200

1,250

1,300

1,350

1,400

1,450

1,500

1,550

1,600

1,650

1,700


('000)(IDR)

Volume (RHS) BSDE IJ Px Last

(0.6)

(1.7)

(5.0)

(10.6)

(7.9)

(6.4)

(12)

(10)

(8)

(6)

(4)

(2)

0

(12)

(10)

(8)

(6)

(4)

(2)

0

ytd 1M 3M 6M 9M 12M

(%) (%)

BSDE IJ relative to JCI



Land bank (Ha) 4,543 Total value (IDRbn) 69,957 NAV/share (IDR) 3,806 Discount (%) 50.0 Adjusted NAV/share (IDR) 1,900 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 1,710/1,210 12M High/low consensus TP (IDR) : 2,400/1,630 Majority shareholder (%) : Paraga Artamida (24.0) Shares outstanding (mn)/Free float (%) : 18,372/39.9 Mkt. cap. (IDRbn/USDmn) : 27,558/2,261 3-m avg.daily t.o.(IDRbn/USDmn) : 33.1/2.7 Bloomberg/Reuters code : BSDE IJ/BSDE.JK Source: Bloomberg, Reuters; based on 9 October 2014 closing price

2015 Compendium

145

BUMI SERPONG DAMAI

Profit & loss Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016FSales 3,728 5,741 5,602 6,128 7,417 Gross profit 2,381 4,166 4,112 4,351 5,251 EBITDA 1,507 3,036 2,961 3,218 3,904 Depreciation 95 127 220 309 398 EBIT 1,412 2,910 2,742 2,909 3,506 Net interest inc./(expense) 116 7 (77) (81) (126)Forex gain/(losses) 16 166 4 6 7 Other income/(expense) 55 196 1,631 52 55 Pre-tax profit 1,697 3,279 4,300 2,887 3,442 Taxes (218) (373) (331) (362) (438)Minority interest (193) (214) (236) (259) (285)Extraordinary gain/(losses) - - - - -Net profit 1,286 2,691 3,734 2,266 2,719 Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016F Cash and equivalents 3,961 4,332 4,236 3,160 3,289 S-T investments 769 1,907 1,049 525 262 Trade receivables 83 129 162 178 215 Inventories 3,375 3,797 4,468 3,910 4,766 Fixed assets 1,976 3,947 6,947 9,897 12,847 Other assets 6,592 5,509 9,563 10,854 11,477 Total assets 16,757 22,572 26,427 28,523 32,857 Interest bearing liabilities 1,125 4,093 4,307 4,315 4,737 Trade payables 178 96 112 123 148 Other liabilities 4,922 4,968 5,237 5,628 7,072 Total liabilities 6,225 9,157 9,656 10,066 11,958 Minority interest 2,615 3,191 3,351 3,518 3,694 Shareholders' equity 7,917 10,224 13,420 14,939 17,205 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016FEBIT 1,412 2,910 2,742 2,909 3,506 Depreciation 95 127 220 309 398 Working capital 442 (1,884) (870) 360 136 Other operating items (102) (104) 1,026 (639) (725)Operating cash flow 1,847 1,047 3,117 2,939 3,315 Net capital expenditure (2,815) (3,837) (3,048) (3,445) (3,330)Free cash flow (968) (2,790) 70 (506) (15)Equity raised/(bought) (67) (121) - - -Net borrowings 462 2,968 214 8 422 Other financing 1,056 226 (379) (579) (277)Net cash flow 482 283 (95) (1,077) 130 Cash flow at beginning 3,479 3,961 4,332 4,236 3,160 Ending cash flow 3,961 4,332 4,236 3,160 3,289 Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2012A 2013A 2014F 2015F 2016F ROAE (%) 17.4 29.7 31.6 16.0 16.9 ROAA (%) 8.7 13.7 15.2 8.2 8.9 EBITDA margin (%) 40.4 52.9 52.9 52.5 52.6 EBIT margin (%) 37.9 50.7 48.9 47.5 47.3 Net margin (%) 34.5 46.9 66.7 37.0 36.7 Payout ratio (%) 20.8 20.4 20.0 20.0 20.0 Current ratio (x) 1.9 2.7 2.6 2.1 1.8 Interest coverage (x) na na 35.8 35.8 27.8 Net gearing (%) nc nc 0.5 7.7 8.4 Debts to assets (%) 6.7 18.1 16.3 15.1 14.4 Debtor turnover (days) 8 7 9 10 10 Creditor turnover (days) 34 34 25 26 25 Inventory turnover (days) n.a n.a n.a n.a n.a Source: Company, Bahana estimates

2015 Compendium

146

BW PLANTATION REDUCE PX: IDR488 - TP: IDR370* Despite a combined planted area of 138k ha (the fourth biggest in our

coverage) following the acquisition of Green Eagle Plantations (GEP), BWPT will see no synergies nor benefits from economies of scale given the new estates’ scattered locations.

In spite of improving net gearing position to 55% in 2015, we are not positive on the acquisition as GEP is purchased at an expensive valuation of USD15.4k/ha, 20% premium to the sector, considering its huge immature estates.

On valuation, we do not expect the acquisition to be value accretive until 2017, and do not expect EPS to recover to the 2013 level of IDR40 in the next 4 years. BWPT is a REDUCE with TP of IDR370, reflecting EV/ha of USD12.4k, in line with the sector and a 2015F PE of 14.5x, 20% discount to Malaysian peers. Risks to our view include higher-than-expected CPO prices and acquisition synergies.

Financial highlights Year to 31 Dec 2012A 2013A 2014F 2015F 2016F Revenues (IDRbn) 944 1,144 1,742 4,799 5,734 EBIT (IDRbn) 417 326 559 1,468 1,568 Net profit (IDRbn) 262 182 216 804 886 Bahana/consensus (%) - - 61 225 248

EPS (IDR) 61 40 32 26 28 EPS growth (%) (23.4) (33.6) (20.8) (20.2) 10.2 EV/EBITDA (x) 9.5 14.2 12.8 11.8 12.5 P/E (x) 8.0 12.1 15.3 19.1 17.4 FCFPS (IDR) (270) (242) (2,056) (18) (5) FCF yield (%) (55.4) (49.6) (421.3) (3.8) (1.0) BVPS (IDR) 386 485 1,905 433 457 P/BV (x) 1.3 1.0 0.3 1.1 1.1 DPS (IDR) 11 4 1 4 4 Div. yield (%) 2.2 0.8 0.2 0.8 0.9 Source: Company, Bahana estimates note: based on 09 October 2014 closing price


0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

400

600

800

1,000

1,200

1,400


('000)(IDR)

Volume (RHS) BWPT IJ Px Last

(80.1)

(50.8)(57.5)

(67.7)

(80.9)

(57.7)

(90)

(80)

(70)

(60)

(50)

(40)

(30)

(20)

(10)

0

(90)

(80)

(70)

(60)

(50)

(40)

(30)

(20)

(10)

0

ytd 1M 3M 6M 9M 12M

(%) (%)

BWPT IJ relative to JCI


Major assumptions Year to 31 Dec 2012A 2013A 2014F 2015F 2016F FFB nucleus production (k tons) 530 623 789 1,710 2,034 CPO production (k tons) 125 141 195 468 561 Growth (%) 13.0 12.8 38.4 139.7 19.9 ASP CPO (USD/ton) 766 669 676 695 716 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 1,405/460 12M High/low consensus TP (IDR) : 2,050/300 Majority shareholder (%) : PTBW Investindo (34.9) Shares outstanding (mn)/Free float (%) : 4,504 /32.3 Mkt. cap. (IDRbn/USDmn) : 2,198/180 3-m avg.daily t.o.(IDRbn/USDmn) : 26.5/2.2 Bloomberg/Reuters code : BWPT IJ/BWPT.JK Source: Bloomberg, Reuters; based on 09 October 2014 closing price

2015 Compendium

147

BW PLANTATION

Profit & loss Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016FSales 944 1,144 1,742 4,799 5,734Gross profit 571 541 848 2,134 2,516EBITDA 515 478 797 1,716 1,851Depreciation 98 153 237 248 283EBIT 417 326 559 1,468 1,568Net interest inc./(expense) (66) (83) (285) (412) (404)Forex gain/(losses) (1) (2) 1 2 3Other income/(expense) 1 14 14 15 15Pre-tax profit 351 255 288 1,073 1,182Taxes (89) (73) (72) (268) (295)Minority interest - - - - -Extraordinary gain/(losses) - - - - -Net profit 262 182 216 804 886Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016F Cash and equivalents 51 68 90 106 92 S-T investments 25 - - - - Trade receivables 13 25 39 107 127 Inventories 216 159 238 947 1,198 Fixed assets 1,510 2,768 9,105 9,907 10,860 Other assets 3,099 3,179 10,901 11,118 11,032 Total assets 4,913 6,200 20,373 22,184 23,310 Interest bearing liabilities 2,822 3,568 7,006 7,634 7,898 Trade payables 251 216 263 674 771 Other liabilities 174 232 232 232 232 Total liabilities 3,247 4,016 7,501 8,540 8,901 Minority interest - - - - - Shareholders' equity 1,666 2,185 12,872 13,644 14,409 Source: Company, Bahana estimates

Cashflow Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016FEBIT 417 326 559 1,468 1,568Depreciation 98 153 237 248 283Working capital (119) (4) (205) (367) (171)Other operating items (156) (159) (2,893) (717) (736)Operating cash flow 240 316 (2,301) 632 944Net capital expenditure (1,404) (1,406) (11,586) (1,212) (1,101)Free cash flow (1,165) (1,090) (13,887) (580) (157)Equity raised/(bought) 8 194 10,500 - -Net borrowings 1,022 746 3,439 628 264Other financing (30) 143 (29) (32) (121)Net cash flow (165) (7) 22 15 (14)Cash flow at beginning 58 51 68 90 106Ending cash flow 51 68 90 106 92Source: Company, Bahana estimates


2015 Compendium

148

CARDIG AERO SERVICES (RE-INITIATION) HOLD PX: IDR1,190 - TP: IDR1,150 CASS, Indonesia’s second largest aero services firm, has been hurt by

low cargo volumes on lower GDP growth. In 2015, challenges should remain as we expect economic growth to slow further. Over the medium term, however, we expect CASS to experience strong growth in ground handling, catering, food retailing and building management.

Following the 1Q14 acquisition of a 41.6% stake in CASS by SATS, a Singapore-based gateway services and food solution provider, we expect the company to benefit from SATS’s larger client base and gain technological know-how to raise its operating efficiencies.

The IDR1,150 TP is based on a 2015E P/E of 19.8x. HOLD on limited upside. Downside risks include delays in infrastructure progress and slower-than-expected GDP growth causing weak aviation-related businesses while an upside risk is higher-than-expected GDP growth.

Financial highlights Year to 31 Dec 2012A 2013A 2014F 2015F 2016F Revenues (IDRbn) 1,006 1,319 1,491 1,676 1,897

EBIT (IDRbn) 254 326 331 371 419

Net profit (IDRbn) 88 110 108 121 138

Bahana/consensus (%) - - na na na

EPS (IDR) 42 53 52 58 66

EPS growth (%) 23.5 25.3 (1.3) 11.3 14.1

EV/EBITDA (x) 8.1 6.5 6.0 5.2 4.5

P/E (x) 28.4 22.6 22.9 20.6 18.1

FCFPS (IDR) 20 17 61 57 72

FCF yield (%) 1.6 1.4 5.2 4.8 6.0

BVPS (IDR) 115 145 178 216 259

P/BV (x) 10.3 8.2 6.7 5.5 4.6

DPS (IDR) 14.4 20.9 18.2 20.2 23.1

Div. yield (%) 1.2 1.8 1.5 1.7 1.9 Source: Company, Bahana estimates note: based on 09 October 2014 closing price


0

2,000

4,000

6,000

8,000

10,000

12,000

750

831

913

994

1,075

1,156

1,238

1,319

1,400


('000)(IDR)

Volume (RHS) CASS IJ Px Last

28.3

9.7

13.9

22.5

26.0

15.9

0

5

10

15

20

25

30

0

5

10

15

20

25

30

ytd 1M 3M 6M 9M 12M

(%) (%)

CASS IJ relative to JCI


Major assumptions Year to 31 Dec 2012A 2013A 2014F 2015F 2016F Ground handling rev. growth (%) 13.0 26.5 13.0 11.6 12.2

Maintenance rev. growth (%) 30.4 55.3 15.0 15.0 15.0

Catering rev. growth (%) 104.2 30.6 11.9 13.3 15.4 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 1,240/810 12M high/low consensus TP (IDR) : 1,170/1,020 Majority shareholder (%) : SATS LTD (41.7) Shares outstanding (mn)/Free float (%) : 2,087/36.6 Mkt. cap. (IDRbn/USDmn) : 2,483/203 3-m avg.daily t.o.(IDRbn/USDmn) : 0.2/0.0 Bloomberg/Reuters code : CASS IJ/CASS.JK Source: Bloomberg, Reuters based on 09 October 2014

2015 Compendium

149

CARDIG AERO SERVICES

Profit & loss Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016FSales 1,006 1,319 1,491 1,676 1,897Gross profit - - - - -EBITDA 311 392 409 456 512Depreciation 57 66 78 85 92 EBIT 254 326 331 371 419Net interest inc./(expense) 0 (2) (11) (7) 2 Forex gain/(losses) 3 24 2 1 0 Other income/(expense) (4) (5) (8) (15) (23) Pre-tax profit 253 343 314 350 399Taxes (63) (93) (78) (87) (100) Minority interest (102) (140) (127) (142) (161) Extraordinary gain/(losses) - - - - - Net profit 88 110 108 121 138Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016F Cash and equivalents 177 121 196 291 398

S-T investments - - - - -

Trade receivables 150 233 261 295 333

Inventories 13 20 22 25 28

Fixed assets 150 177 172 142 105

Other assets 305 365 357 419 468

Total assets 795 917 1,009 1,172 1,333

Interest bearing liabilities 198 185 172 199 210

Trade payables 63 72 95 107 121

Other liabilities 183 251 260 303 347

Total liabilities 444 508 527 610 679

Minority interest 110 107 109 111 113

Shareholders' equity 241 302 372 452 541 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016FEBIT 254 326 331 371 419

Depreciation 57 66 78 85 92

Working capital (42) (44) (1) (7) (15)

Other operating items (167) (246) (206) (276) (291)

Operating cash flow 102 102 201 173 206

Net capital expenditure (62) (67) (73) (55) (56)

Free cash flow 41 35 128 118 150

Equity raised/(bought) - (183) - - -

Net borrowings (21) (13) (13) 27 11

Other financing (33) 100 (40) (51) (53)

Net cash flow (13) (61) 75 94 107



Key ratios Year to 31 Dec 2012A 2013A 2014F 2015F 2016F ROAE (%) 38.1 40.4 32.1 29.3 27.7

ROAA (%) 11.5 12.8 11.3 11.1 11.0

EBITDA margin (%) 30.9 29.7 27.4 27.2 27.0

EBIT margin (%) 25.3 24.7 22.2 22.1 22.1

Net margin (%) 8.7 8.3 7.3 7.2 7.3

Payout ratio (%) 34.3 39.4 35.0 35.0 35.0

Current ratio (x) 1.7 1.5 1.9 2.0 2.2

Interest coverage (x) na 192.5 31.1 53.7 na

Net gearing (%) 8.7 21.1 nc nc nc

Debts to assets (%) 24.9 20.2 17.0 17.0 15.7

Debtor turnover (days) 46 52 60 60 60

Creditor turnover (days) 29 24 26 28 28

Inventory turnover (days) 16 18 23 23 23 Source: Company, Bahana estimates

2015 Compendium

150

CHAROEN POKPHAND INDONESIA BUY PX: IDR3,815 - TP: IDR4,800 CPIN is Indonesia’s largest poultry-related company, with a 36%

market share in poultry feed (75% of revenues). CPIN should benefit from further capacity expansion, which would lead to even lower feed costs on greater bargaining power for raw-materials purchasing.

Additionally, Japanese consumers are showing renewed interest in buying processed chicken from Indonesia. As Japan represents about 9% of CPIN’s total revenues, this should also help support the company’s growth. CPIN has the largest market share in processed chicken, at 66%, through its “Fiesta” brand.

We believe margins will be supported by a more stable IDR and CPIN’s lack of exposure to the volatile commercial farm business. Our TP of IDR4,800 is based on a 22.4x 2015F PE, an 11% premium to the sector’s target PE, based on CPIN’s status as the market and price leader. Risks include worse-than-expected IDR depreciation.


EPS (IDR) 164 154 173 213 255 EPS growth (%) 14.0 (5.7) 12.3 22.8 19.7 EV/EBITDA (x) 18.0 15.3 15.3 12.3 10.5 P/E (x) 23.3 24.7 22.0 17.9 15.0 FCFPS (IDR) (46) (6) (5) 86 88 FCF yield (%) (1.2) (0.1) (0.1) 2.2 2.3 BVPS (IDR) 497 606 733 894 1,085 P/BV (x) 7.7 6.3 5.2 4.3 3.5 DPS (IDR) 42 46 46 52 64 Div. yield (%) 1.1 1.2 1.2 1.4 1.7 Source: Company, Bahana estimates note: based on 09 October 2014 closing price


0

5,000

10,000

15,000

20,000

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3,200

3,400

3,600

3,800

4,000

4,200

4,400

4,600


('000)(IDR)

Volume (RHS) CPIN IJ Px Last

(3.8)

1.2 0.5

(12.0)

(4.0)

(6.1)

(14)

(12)

(10)

(8)

(6)

(4)

(2)

0

2

(14)

(12)

(10)

(8)

(6)

(4)

(2)

0

2

ytd 1M 3M 6M 9M 12M

(%) (%)

CPIN IJ relative to JCI

Source: Bloomberg Michael W. Setjoadi ([email protected]) +6221 2505081 ext. 3613

Major assumptions Year to 31 Dec 2012A 2013A 2014F 2015F 2016F GDP growth (%) 6.7 5.8 5.2 4.8 5.2 Inflation (%) 5.5 8.4 5.9 10.3 6.3 Indo’s chicken production (k tons) 1,874 2,035 2,150 2,300 2,500 Animal feed ASP (IDR/kg) 5,738 6,097 6,327 6,456 6,715 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 4,600/3,100 12M high/low consensus TP (IDR) : 6,000/3,000 Majority shareholder (%) : Central Agromina (55.5) Shares outstanding (mn)/Free float (%) : 16,398/44.5 Mkt. cap. (IDRbn/USDmn) : 62,558/5,132 3-m avg.daily t.o.(IDRbn/USDmn) : 30.5/2.5

Bloomberg/Reuters code : CPIN IJ/CPIN.JK Source: Bloomberg, Reuters; based on 09 October 2014 closing price

2015 Compendium

151

CHAROEN POKPHAND INDONESIA

Profit & loss Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016FSales 21,311 25,663 29,307 33,374 37,325Gross profit 4,492 5,150 5,450 6,547 7,626EBITDA 3,628 4,203 4,248 5,239 6,232Depreciation 227 299 230 322 431EBIT 3,401 3,904 4,018 4,916 5,802Net interest inc./(expense) (82) (127) (249) (261) (213)Forex gain/(losses) (44) (437) 29 15 10Other income/(expense) 101 112 107 122 136Pre-tax profit 3,376 3,451 3,904 4,792 5,735Taxes (696) (923) (1,042) (1,279) (1,531)Minority interest 3 2 (19) (21) (24)Extraordinary gain/(losses) - - - - -Net profit 2,684 2,531 2,843 3,491 4,180Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016F Cash and equivalents 955 1,147 1,204 1,304 1,244 S-T investments - - - - - Trade receivables 1,793 2,503 2,859 3,255 3,641 Inventories 3,366 4,045 4,704 5,290 5,856 Fixed assets 4,593 6,390 8,059 8,969 10,762 Other assets 1,641 1,638 1,898 2,362 2,641 Total assets 12,349 15,722 18,724 21,180 24,143 Interest bearing liabilities 1,937 2,890 3,794 3,231 2,643 Trade payables 1,014 1,439 1,591 1,789 1,981 Other liabilities 1,222 1,443 1,291 1,471 1,645 Total liabilities 4,172 5,771 6,677 6,490 6,268 Minority interest 20 18 30 34 87 Shareholders' equity 8,157 9,933 12,017 14,655 17,788 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016FEBIT 3,401 3,904 4,018 4,916 5,802Depreciation 173 299 230 322 431Working capital (1,620) (777) (914) (1,042) (840)Other operating items (877) (1,298) (910) (592) (1,536)Operating cash flow 1,077 2,127 2,424 3,605 3,856Net capital expenditure (1,826) (2,221) (2,500) (2,200) (2,420)Free cash flow (749) (94) (76) 1,405 1,436Equity raised/(bought) - - - - -Net borrowings 892 975 904 (564) (588)Other financing (972) (754) (852) (827) (998)Net cash flow (437) 192 57 100 (60)Cash flow at beginning 876 955 1,147 1,204 1,304Ending cash flow 955 1,147 1,204 1,304 1,244Source: Company, Bahana estimates


2015 Compendium

152

CIPUTRA DEVELOPMENT BUY PX: IDR1,000 - TP: IDR1,245* CTRA, the holding company of the Ciputra Group, is adversely

impacted by the current slowdown in the property market on the back of tighter LTV regulation. This, coupled with political uncertainties earlier in the year, meant that its 8M14 pre-sales only reached 48% of its full-year target of IDR10tn (versus our target of IDR7.8tn).

Going into 2015, we expect earnings support for CTRA to come from solid 2013 marketing sales. Meanwhile, August 2014 marketing sales of IDR950bn, up 216% m-m, should bode well for CTRA’s future performance, although we remain cautious in our forecasts given continued tight liquidity conditions.

On valuation, we apply a 45% discount to our 2015F NAV (sector: 50%) to derive our IDR1,245 TP on the back of its solid management and balance sheet (net cash position). Risks to our call are negative sentiment due to possible rate hikes and unsuccessful launches.

Financial highlights Year to 31 Dec 2012A 2013A 2014F 2015F 2016F Revenues (IDRbn) 3,323 5,077 6,929 8,309 8,559 EBIT (IDRbn) 954 1,553 2,229 2,530 2,553 Net profit (IDRbn) 589 977 1,305 1,476 1,467 Bahana/consensus (%) - - 111 102 91

EPS (IDR) 39 64 86 97 97 EPS growth (%) 81.2 65.8 33.6 13.1 (0.6) EV/EBITDA (x) 13.3 8.5 6.0 5.4 5.4 P/E (x) 25.7 15.5 11.6 10.3 10.3 FCFPS (IDR) (19) (55) (35) (47) (54) FCF yield (%) (1.9) (5.5) (3.5) (4.7) (5.4) BVPS (IDR) 369 421 487 559 626 P/BV (x) 2.7 2.4 2.1 1.8 1.6 DPS (IDR) 12 19 26 29 29 Div. yield (%) 1.2 1.9 2.6 2.9 2.9 Source: Company, Bahana estimates note:based on 09 October 2014 closing price


0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

600

700

800

900

1,000

1,100

1,200

1,300


('000)(IDR)

Volume (RHS) CTRA IJ Px Last

16.5

(3.9)

(10.5)

(15.3)

6.1

1.6

(20)

(15)

(10)

(5)

0

5

10

15

20

(20)

(15)

(10)

(5)

0

5

10

15

20

ytd 1M 3M 6M 9M 12M

(%) (%)

CTRA IJ relative to JCI

Source: Bloomberg Robin Sutanto ([email protected]) +6221 2505081 ext. 3620 *New, please refer to appendix II



Company information 12M high/low (IDR) : 1,265/710 12M High/low consensus TP (IDR) : 1,700/1,150 Majority shareholder (%) : Sang Pelopor (30.6) Shares outstanding (m)/Free float (%) : 15,166/61.3 Mkt. cap. (IDRbn/USDmn) : 15,166/1,244 3-m avg.daily t.o.(IDRbn/USDmn) : 25.6/2.1 Bloomberg/Reuters code : CTRA IJ/CTRA.JK Source: Bloomberg, Reuters; based on 09 October 2014 closing price

2015 Compendium

153

CIPUTRA DEVELOPMENT

Profit & loss Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016FSales 3,323 5,077 6,929 8,309 8,559Gross profit 1,667 2,546 3,542 4,253 4,420EBITDA 1,050 1,698 2,427 2,759 2,816Depreciation 96 146 198 228 263EBIT 954 1,553 2,229 2,530 2,553Net interest inc./(expense) 47 53 (51) (57) (88)Forex gain/(losses) 8 48 (2) (4) (4)Other income/(expense) 21 56 37 46 56Pre-tax profit 1,029 1,709 2,214 2,515 2,517Taxes (180) (296) (402) (465) (479)Minority interest (260) (437) (507) (574) (570)Extraordinary gain/(losses) - - - - -Net profit 589 977 1,305 1,476 1,467Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016F Cash and equivalents 2,708 3,464 3,944 4,008 3,996 S-T investments 38 11 12 13 15 Trade receivables 499 541 759 911 938 Inventories 3,310 4,892 5,626 6,469 7,440 Fixed assets 1,240 1,779 2,343 3,162 3,816 Other assets 7,227 9,428 10,539 11,810 13,263 Total assets 15,023 20,115 23,224 26,373 29,467 Interest bearing liabilities 1,471 2,728 3,353 3,715 3,984 Trade payables 524 663 789 944 964 Other liabilities 4,548 6,959 7,627 8,361 9,167 Total liabilities 6,543 10,349 11,769 13,021 14,115 Minority interest 2,891 3,388 4,066 4,879 5,855 Shareholders' equity 5,590 6,377 7,389 8,473 9,497 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016FEBIT 954 1,553 2,229 2,530 2,553Depreciation 96 146 198 228 263Working capital 911 610 (391) (384) (503)Other operating items (981) (925) (1,088) (1,243) (1,303)Operating cash flow 981 1,384 948 1,132 1,009Net capital expenditure (1,270) (2,221) (1,476) (1,851) (1,822)Free cash flow (290) (837) (528) (719) (813)Equity raised/(bought) - - - - -Net borrowings 669 1,257 625 362 269Other financing 220 335 384 421 532Net cash flow 599 756 480 64 (12)Cash flow at beginning 2,109 2,708 3,464 3,944 4,008Ending cash flow 2,708 3,464 3,944 4,008 3,996Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2012A 2013A 2014F 2015F 2016F ROAE (%) 11.0 16.3 19.0 18.6 16.3 ROAA (%) 4.4 5.6 6.0 6.0 5.3 EBITDA margin (%) 31.6 33.5 35.0 33.2 32.9 EBIT margin (%) 28.7 30.6 32.2 30.5 29.8 Net margin (%) 17.7 19.2 18.8 17.8 17.1 Payout ratio (%) 30.9 30.0 30.0 30.0 30.0 Current ratio (x) 1.2 1.0 1.0 1.0 1.0 Interest coverage (x) na na 44.0 44.2 29.0 Net gearing (%) nc nc nc nc nc Debts to assets (%) 9.8 13.6 14.4 14.1 13.5 Debtor turnover (days) 43 37 40 40 40 Creditor turnover (days) 60 86 85 85 85 Inventory turnover (days) na na na na na Source: Company, Bahana estimates

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154

CIPUTRA PROPERTY HOLD PX: IDR705 - TP: IDR750 CTRP, Ciputra Group’s arm tasked with high-rise developments and

investment properties, plans to expand in 2015 with additional offices and condos at its Ciputra International mixed-use development in Puri Indah, West Jakarta. It expects additional support from sales at Raffles Residence and Rosewood Villas Bali, and rental income from Raffles Hotel, Ascott serviced apartments and Rosewood Hotel.

The company’s portfolio will see additional 5ha in Puri, where it plans to build at least 10 additional towers over the next 8-10 years, and 44ha in Bali, where it has plans for another resort which will be managed by Ritz Carlton. Its pipeline also includes the Ciputra World 3 mixed-use development in Kuningan, South Jakarta.

We apply a 50% discount to our 2015F NAV (sector: 50%) to derive our IDR750 TP. Upside risk: stronger-than-expected sales; downside risks: project delays and greater-than-expected rate hikes.

Financial highlights Year to 31 Dec 2012A 2013A 2014F 2015F 2016F Revenues (IDRbn) 826 1,448 1,431 1,704 1,936 EBIT (IDRbn) 334 516 524 643 738 Net profit (IDRbn) 300 422 308 381 432 Bahana/consensus (%) - - 59 59 67

EPS (IDR) 49 69 50 62 70 EPS growth (%) 89.2 40.5 (27.0) 23.9 13.4 EV/EBITDA (x) 11.8 9.3 9.5 8.7 8.0 P/E (x) 14.4 10.3 14.1 11.4 10.0 FCFPS (IDR) (108) (208) (57) (91) (77) FCF yield (%) (15.3) (29.5) (8.1) (12.9) (10.9) BVPS (IDR) 606 659 688 735 786 P/BV (x) 1.2 1.1 1.0 1.0 0.9 DPS (IDR) 16 21 15 19 21 Div. yield (%) 2.3 3.0 2.1 2.6 3.0 Source: Company, Bahana estimates note:based on 09 October 2014 closing price


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Volume (RHS) CTRP IJ Px Last

(3.1)

3.9

(5.4)

(18.5)

(1.8)

(20.5)(25)

(20)

(15)

(10)

(5)

0

5

10

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CTRP IJ relative to JCI



Land bank (Ha) 48 Total value (IDRbn) 9,254 NAV/share (IDR) 1,505 Discount (%) 50 Adjusted NAV/share (IDR) 750 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 895/565 12M High/low consensus TP (IDR) : 1,360/670 Majority shareholder (%) : Ciputra Development (56.3) Shares outstanding (mn)/Free float (%) : 6,150/43.8 Mkt. cap. (IDRbn/USDmn) : 4,336/356 3-m avg.daily t.o.(IDRbn/USDmn) : 5.8/0.5 Bloomberg/Reuters code : CTRP IJ/CTRP.JK Source: Bloomberg, Reuters; based on 09 October 2014 closing price

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155

CIPUTRA PROPERTY

Profit & loss Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016FSales 826 1,448 1,431 1,704 1,936Gross profit 524 771 770 913 1,038EBITDA 362 581 613 740 838Depreciation 29 65 89 97 100EBIT 334 516 524 643 738Net interest inc./(expense) 35 (26) (120) (144) (172)Forex gain/(losses) 3 33 (1) (1) (1)Other income/(expense) 5 11 12 13 15Pre-tax profit 376 534 416 511 579Taxes (57) (92) (93) (111) (126)Minority interest (19) (21) (15) (19) (21)Extraordinary gain/(losses) - - - - -Net profit 300 422 308 381 432Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016F Cash and equivalents 979 977 846 745 717 S-T investments - 1 1 2 2 Trade receivables 180 96 118 140 159 Inventories 488 440 362 433 492 Fixed assets 3,169 4,050 4,242 4,818 5,313 Other assets 1,119 2,090 2,738 3,211 3,773 Total assets 5,934 7,654 8,306 9,349 10,456 Interest bearing liabilities 932 2,061 2,361 2,861 3,361 Trade payables 56 121 91 108 123 Other liabilities 957 900 1,051 1,229 1,440 Total liabilities 1,945 3,081 3,503 4,199 4,925 Minority interest 264 522 574 631 694 Shareholders' equity 3,725 4,051 4,230 4,519 4,837 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016FEBIT 334 516 524 643 738Depreciation 29 65 89 97 100Working capital (163) 17 137 58 99Other operating items (327) 65 (221) (266) (311)Operating cash flow (128) 664 529 532 626Net capital expenditure (537) (1,942) (879) (1,092) (1,097)Free cash flow (665) (1,279) (350) (561) (471)Equity raised/(bought) - - - - -Net borrowings 691 1,129 300 500 500Other financing 85 148 (82) (41) (56)Net cash flow 110 (1) (131) (101) (28)Cash flow at beginning 868 979 977 846 745Ending cash flow 979 977 846 745 717Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2012A 2013A 2014F 2015F 2016F ROAE (%) 8.3 10.8 7.4 8.7 9.2 ROAA (%) 5.9 6.2 3.9 4.3 4.4 EBITDA margin (%) 43.8 40.1 42.8 43.4 43.3 EBIT margin (%) 40.4 35.7 36.6 37.7 38.1 Net margin (%) 36.3 29.1 21.5 22.4 22.3 Payout ratio (%) 32.8 30.6 30.0 30.0 30.0 Current ratio (x) 1.8 1.4 1.6 1.4 1.2 Interest coverage (x) na 19.6 4.4 4.5 4.3 Net gearing (%) nc 26.7 35.8 46.8 54.7 Debts to assets (%) 15.7 26.9 28.4 30.6 32.1 Debtor turnover (days) 44 35 30 30 30 Creditor turnover (days) 73 48 50 50 50 Inventory turnover (days) na na na na na Source: Company, Bahana estimates

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156

CITRA MARGA NUSAPHALA HOLD* PX: IDR3,115 – TP: IDR3,300* To support future growth, CMNP, the second-largest listed toll road

operator with concessions on the Jakarta Intra Urban Toll road (JIUT) and Waru-Juanda Surabaya, plans to develop the IDR4.1tn Depok-Antasari toll road through its 62.5%-owned subsidiary, PT Citra Wassphutowa, in cooperation with WSKT, PTPP and Hutama Karya.

This new toll road development is needed for diversification as CMNP is heavily dependent on JIUT, which accounted for 87% of its 1H14 total revenues. In 2H15, JIUT’s tariff should increase in line with the Indonesian Toll Road Authority’s (BPJT) regulation to raise toll tariffs every two years (latest hike was in December 2013).

Given the lack of growth and higher salary-related costs (69% of 1H14 operating costs), CMNP is a HOLD with an IDR3,300 DCF-based TP (12% WACC). An upside risk would be improved operating cost management while a downside risk would be lower traffic volumes.

Financial highlights Year to 31 Dec 2012A 2013A 2014F 2015F 2016F Revenues (IDRbn) 903 936 1,099 1,221 1,380 EBIT (IDRbn) 526 502 522 562 635 Net profit (IDRbn) 391 402 430 453 512 Bahana/consensus (%) - - 93 93 -

EPS (IDR) 195 183 195 206 233 EPS growth (%) 9.4 (6.3) 6.8 5.5 13.1 EV/EBITDA (x) 10.1 9.2 8.9 8.3 7.1 P/E (x) 16.0 17.0 16.0 15.1 13.4 FCFPS (IDR) 223 129 (34) (41) 116 FCF yield (%) 7.2 4.1 (1.1) (1.3) 3.7 BVPS (IDR) 1,232 1,433 1,608 1,805 2,029 P/BV (x) 2.5 2.2 1.9 1.7 1.5 DPS (IDR) 39 40 43 45 51 Div. yield (%) 1.3 1.3 1.4 1.5 1.6 Source: Company, Bahana estimates note: based on 09 October 2014 closing price


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('000)(IDR)

Volume (RHS) CMNP IJ Px Last

(23.9)

(6.4)(9.6)

(10.4)

(17.7)(15.4)

(30)

(25)

(20)

(15)

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(5)

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Source: Bloomberg


Major assumptions Year to 31 Dec 2012A 2013A 2014F 2015F 2016F Traffic volumes (mn vehicles) 218 229 240 253 264 JIUT 206 215 225 235 245 Waru - Juanda 12 14 16 18 19 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 4,300/2,960 12M High/low consensus TP (IDR) : 3,600/3,600 Majority shareholder (%) : Merah Putih Intl. Ltd. (25.3) Shares outstanding (mn)/Free float (%) : 2,200/62.5 Mkt. cap. (IDRbn/USDmn) : 6,853/562 3-m avg.daily t.o.(IDRbn/USDmn) : 1.2/0.1 Bloomberg/Reuters code : CMNP IJ/CMNP.JK Source: Bloomberg, Reuters; based on 09 October 2014 closing price

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157

CITRA MARGA NUSAPHALA

Profit & loss Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016FSales 903 936 1,099 1,221 1,380Toll revenue 894 929 1,091 1,211 1,370EBITDA 656 650 695 760 849Depreciation 130 148 172 198 214EBIT 526 502 522 562 635Net interest inc./(expense) (13) 25 41 34 38Forex gain/(losses) - - - - -Other income/(expense) (20) (24) (26) (29) (32)Pre-tax profit 493 503 537 566 641Taxes (107) (101) (107) (113) (128)Minority interest 5 - - - -Extraordinary gain/(losses) - - - - -Net profit 391 402 430 453 512Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016F Cash and equivalents 1,103 1,681 1,284 1,225 1,463 S-T investments 20 - - - - Trade receivables 8 18 21 24 27 Inventories - - - - - Fixed assets 2,481 2,831 3,258 3,710 3,895 Other assets 147 253 256 258 261 Total assets 3,759 4,783 4,820 5,216 5,646 Interest bearing liabilities 868 823 594 644 646 Trade payables - - - - - Other liabilities 379 706 584 497 432 Total liabilities 1,248 1,529 1,178 1,141 1,078 Minority interest 47 102 105 105 105 Shareholders' equity 2,464 3,152 3,537 3,970 4,463 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016FEBIT 526 502 522 562 635Depreciation 130 148 172 198 214Working capital 236 312 (123) (90) (69)Other operating items (109) (123) (97) (111) (125)Operating cash flow 782 839 474 560 656Net capital expenditure (336) (556) (550) (650) (400)Free cash flow 446 283 (76) (90) 256Equity raised/(bought) - 257 - - -Net borrowings (25) (45) (229) 50 2Other financing (40) 84 (92) (20) (20)Net cash flow 381 578 (397) (60) 238Cash flow at beginning 722 1,103 1,681 1,284 1,225Ending cash flow 1,103 1,681 1,284 1,225 1,463Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2012A 2013A 2014F 2015F 2016F ROAE (%) 17.1 14.3 12.8 12.1 12.2 ROAA (%) 11.2 9.4 8.9 9.0 9.4 EBITDA margin (%) 72.6 69.4 63.2 62.3 61.5 EBIT margin (%) 58.2 53.6 47.5 46.0 46.0 Net margin (%) 43.2 43.0 39.1 37.1 37.1 Payout ratio (%) 10.0 10.0 10.0 10.0 10.0 Current ratio (x) 9.1 3.8 14.9 13.0 13.6 Interest coverage (x) 40.7 na na na na Net gearing (%) nc nc nc nc nc Debts to assets (%) 23.1 17.2 12.3 12.3 11.4 Debtor turnover (days) 4 5 7 7 7 Creditor turnover (days) - - - - - Inventory turnover (days) - - - - - Source: Company, Bahana estimates

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158

EXPRESS TRANSINDO UTAMA BUY

2008A 2009A

2010F 2011F

PX: IDR1,165 - TP: IDR1,380*

TAXI, the second largest land transportation company in Indonesia,

has cash flow stability and fuel cost control through its partnership

program with drivers. Given its dependency on regular taxis (85% of

top line), it is expanding into other business segments like VATBs.

In 2015, we expect topline growth of 20% y-y, supported by

additional VATBs and regular taxis, although we expect a lower gross

margin mainly on the back of a higher interest expense from its

issuance of the IDR1tn bond in June 2014.

With EPS growth slowing in 2014-15, TAXI has severely under-

performed the market, and is trading on a 2015F PE of 14.7x, on a

par with our forecast for the market. Hence, it is a BUY at current

levels. Downside risk to our call is a further subsidized fuel price while

upside risk lies ERP implementation in 2015, increasing its utilization

rates and lower interest rate, affecting its interest expense.

Financial highlights

Year to 31 Dec 2012A 2013A 2014F 2015F 2016F

Revenues (IDRbn) 521 687 854 1,023 1,218

EBIT (IDRbn) 178 221 320 367 432

Net profit (IDRbn) 79 133 151 170 211

Bahana/consensus.(%) - - 14 13 24

EPS (IDR) 37 62 70 79 98

EPS growth (%) 31.8 67.1 13.9 12.7 24.1

EV/EBITDA (x) 9.9 7.6 6.6 5.9 5.1

P/E (x) 31.5 18.8 16.6 14.7 11.8

FCFPS (IDR) (260) 37 (193) (121) (25)

FCF yield (%) (22.3) 3.2 (16.5) (10.4) (2.2)

BVPS (IDR) 320 372 425 486 563

P/BV (x) 3.6 3.1 2.7 2.4 2.1

DPS (IDR) 10 17 19 21 27

Div. yield (%) 0.9 1.4 1.6 1.8 2.3 Source: Company, Bahana estimates note: based on 09 October closing price


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Volume (RHS) TAXI IJ Px Last

(37.0)

(11.4)

(1.7)

(21.0)

(39.1)(41.1) (45)

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Source: Bloomberg

Agustinus Reza Kirana ([email protected]) +6221 2505081 ext. 3616 *New, please refer to appendix II

Major assumptions

Year to 31 Dec 2012A 2013A 2014F 2015F 2016F

Net daily fixed fee (IDR) 235,000 235,000 240,000 240,000 240,000

Fleet (Unit) 8,035 10,029 11,300 13,100 15,200

Utilization rate (%) 66.4 67.6 70.0 71.0 71.0 Source: Company, Bahana estimates

Company information

12M high/low (IDR) : 1,785/1,130

12M High/low consensus TP (IDR) : 2,050/1,545

Majority shareholder (%) : Rajawali Group (51.0)

Shares outstanding (mn)/Free float (%) : 2,146/49.0

Mkt. cap. (IDRbn/USDmn) : 2,500/200

3-m avg.daily t.o.(IDRbn/USDmn) : 20.0/1.6

Bloomberg/Reuters code : TAXI IJ/TAXI.JK Source: Bloomberg, Reuters; based on 09 October 2014 closing price

2015 Compendium

159

EXPRESS TRASINDO UTAMA

Profit & loss Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016FSales 521 687 854 1,023 1,218Gross profit 165 220 267 291 380EBITDA 323 409 531 648 757Depreciation 145 188 211 281 326EBIT 178 221 320 367 432Net interest inc./(expense) (75) (81) (131) (154) (166)Forex gain/(losses) 4 34 10 11 12Other income/(expense) 107 174 199 224 278Pre-tax profit 28 41 48 54 67Taxes (521) (687) (854) (1,023) (1,218)Minority interest - - - - -Extraordinary gain/(losses) - - - - -Net profit 79 133 151 170 211Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016F Cash and equivalents 150 316 692 277 174 S-T investments 250 - - - - Trade receivables 25 63 62 74 88 Inventories 11 14 15 19 22 Fixed assets 1,162 1,393 1,890 2,316 2,549 Other assets 184 351 385 419 478 Total assets 1,783 2,137 3,044 3,104 3,312 Interest bearing liabilities 849 911 1,712 1,568 1,529 Trade payables 99 240 210 258 305 Other liabilities 148 189 209 236 271 Total liabilities 1,097 1,340 2,132 2,062 2,105 Minority interest - - - - - Shareholders' equity 686 797 912 1,042 1,207 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016FEBIT 178 221 320 367 432Depreciation 145 188 211 281 326Working capital (263) 247 (59) (2) (26)Other operating items (154) (226) (169) (197) (221)Operating cash flow (94) 430 303 449 510Net capital expenditure (464) (351) (717) (709) (565)Free cash flow (558) 79 (414) (260) (54)Equity raised/(bought) 400 - - - -Net borrowings 234 61 802 (144) (39)Other financing 37 26 (12) (11) (9)Net cash flow 113 166 377 (415) (103)Cash flow at beginning 36 150 316 692 277Ending cash flow 150 316 692 277 174Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2012A 2013A 2014F 2015F 2016F ROAE (%) 17.8 17.9 17.7 17.4 18.8 ROAA (%) 5.7 6.8 5.8 5.5 6.6 EBITDA margin (%) 62.1 59.5 62.1 63.4 62.2 Gross margin 31.7 32.1 31.2 28.4 31.2 Net margin (%) 15.2 19.3 17.7 16.6 17.3 Payout ratio (%) 26.8 27.0 27.0 27.0 27.0 Current ratio (x) 1.5 1.0 1.9 1.2 1.1 Interest coverage (x) 2.4 2.7 2.4 2.4 2.6 Net gearing (%) 101.9 74.7 111.9 124.0 112.3 Debts to assets (%) 47.6 42.6 56.2 50.5 46.2 Debtor turnover (days) 91 133 133 133 133 Creditor turnover (days) 45 58 60 60 60 Inventory turnover (days) 10 10 10 10 10 Source: Company, Bahana estimates

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160

ERAJAYA SWASEMBADA HOLD PX: IDR1,000 - TP: IDR1,060* ERAA, the country’s largest mobile phone distributor with licenses to

distribute several famous brands, including BlackBerry (BB), Samsung, Nokia, Apple, HTC and in-house brand Venera, has recently obtained distribution rights for the popular Xiaomi brand.

Risk from possible implementation of handset import taxes continues to put pressure on ERAA’s profit sustainability. Also, ERAA’s aggressive retail store expansion poses margin risk as we expect higher costs stemming from rental rates, electricity, salaries and phone prices on IDR depreciation.

On handset margin pressure, we expect ERAA’s net profit for 2016F to remain below that of 2013. We reiterate HOLD with a TP of IDR1,060 based on a 2015F PE of 9.4x, in line with the sector. Upside risk to our call is lower-than-expected inflation resulting in higher purchasing power, while downside risk is worse-than-expected IDR weakness.


EPS (IDR) 149 120 89 107 114 EPS growth (%) 20.2 (19.5) (26.2) 20.2 7.2 EV/EBITDA (x) 5.4 7.6 8.4 7.7 7.2 P/E (x) 6.7 8.3 11.3 9.4 8.8 FCFPS (IDR) 77 (210) (169) 8 (1) FCF yield (%) 7.7 (21.0) (16.9) 0.8 (0.1) BVPS (IDR) 889 947 1,037 1,108 1,179 P/BV (x) 1.1 1.1 1.0 0.9 0.8 DPS (IDR) 60 - 35 43 57 Div. yield (%) 6.0 - 3.5 4.3 5.7 Source: Company, Bahana estimates note: based on 09 October 2014 closing price


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Volume (RHS) ERAA IJ Px Last

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(19.4)

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Major assumptions Year to 31 Dec 2012A 2013A 2014F 2015F 2016F ASP (IDR’000) 1,183 1,207 1,243 1,280 1,338 Sales volume (mn units) 10,220 10,476 10,476 11,261 12,106 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 1,635/970 12M High/low consensus TP (IDR) : 1,449/1,000 Majority shareholder (%) : PT Eralink International (60.0) Share outstanding (mn)/Free float (%) : 2,900/39.7 Mkt. cap. (IDRbn/USDmn) : 2,900/238 3-m avg.daily t.o.(IDRbn/USDmn) : 21.4/1.8 Bloomberg/Reuters code : ERAA IJ/ERAA.JK Source: Bloomberg, Reuters; based on 09 October 2014 closing price

2015 Compendium

161

ERAJAYA SWASEMBADA

Profit & loss Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016FSales 12,884 12,727 14,485 15,914 17,540Gross profit 1,146 1,169 1,287 1,426 1,576EBITDA 610 522 522 581 632Depreciation 23 32 47 55 63EBIT 587 490 476 526 569Net interest inc./(expense) (45) (89) (162) (167) (175)Forex gain/(losses) 8 4 (0) (1) (1)Other income/(expense) 34 51 30 55 50Pre-tax profit 584 457 343 412 442Taxes (150) (108) (86) (103) (110)Minority interest (1) (0) (0) (0) (0)Extraordinary gain/(losses) - - - - -Net profit 433 349 257 309 331Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016F Cash and equivalents 251 80 256 264 278 S-T investments - - - - - Trade receivables 1,075 901 1,097 1,206 1,329 Inventories 1,242 1,842 2,376 2,535 2,714 Fixed assets 183 216 342 371 389 Other assets 1,135 1,963 1,846 1,910 2,007 Total assets 3,887 5,002 5,917 6,286 6,716 Interest bearing liabilities 630 1,173 1,760 1,810 1,902 Trade payables 445 826 825 906 998 Other liabilities 227 249 319 350 388 Total liabilities 1,302 2,248 2,904 3,066 3,288 Minority interest 6 6 7 7 8 Shareholders' equity 2,579 2,747 3,006 3,213 3,420 Source: Company, Bahana estimates

Cashflow Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016FEBIT 587 490 476 526 569Depreciation 23 32 47 55 63Working capital (481) (48) (729) (185) (206)Other operating items 195 (1,016) (34) (241) (293)Operating cash flow 324 (541) (240) 154 133Net capital expenditure (100) (68) (250) (130) (137)Free cash flow 224 (609) (490) 24 (4)Equity raised/(bought) - - - - -Net borrowings 171 543 595 49 87Other financing (27) (113) 72 (64) (70)Net cash flow 180 (171) 176 8 13Cash flow at beginning 71 251 80 256 264Ending cash flow 251 80 256 264 278Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2012A 2013A 2014F 2015F 2016F ROAE (%) 18.3 13.1 8.9 9.9 10.0 ROAA (%) 12.7 7.8 4.7 5.1 5.1 EBITDA margin (%) 4.7 4.1 3.6 3.6 3.6 EBIT margin (%) 4.6 3.9 3.3 3.3 3.2 Net margin (%) 3.4 2.7 1.8 1.9 1.9 Payout ratio (%) 40.2 - 40.0 40.0 50.0 Current ratio (x) 2.2 1.7 1.6 1.6 1.6 Interest coverage (x) 13.2 5.5 2.9 3.2 3.2 Net gearing (%) 14.7 39.8 50.0 48.1 47.5 Debts to assets (%) 16.2 23.4 29.8 28.8 28.3 Debtor turnover (days) 30 26 28 28 28 Creditor turnover (days) 26 23 23 23 23 Inventory turnover (days) 39 58 66 64 62 Source: Company, Bahana estimates

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162

GAJAH TUNGGAL HOLD PX: IDR1,500 - TP: IDR1,600* GJTL is Indonesia’s leading tire maker, with lower-segment brand GT

Radial. The company is experiencing a margin squeeze on a continued weak IDR, as most of its costs are USD-linked. Additionally, high leverage due to its 435mn USD global bond is likely to hamper the company’s bottom line, due to forex losses.

On the demand side, GJTL should experience more intense competition in the domestic tire market as newcomers such as Hankook and Pirelli enter the fray. However, we conservatively expect 6% y-y volume growth in 2015 on improved exports resulting from a global economic recovery. We expect a growth on 2015 earnings by 17% y-y due to a stronger IDR.

With severe underperformance and IDR1,600 TP, reflecting a 2015F PE of 8.9x, at 10% discount with regional peers, GJTL is a HOLD. Risks include a weaker- or stronger-than-expected IDR.

Financial highlights Year to 31 Dec 2012A 2013A 2014F 2015F 2016F Revenues (IDRbn) 12,579 12,353 13,242 14,160 14,324 EBIT (IDRbn) 1,677 1,365 996 1,093 1,101 Net profit (IDRbn) 1,132 120 536 627 639 Bahana/consensus (%) - - 50 54 54

EPS (IDR) 325 35 154 180 183 EPS growth (%) 65.4 (89.4) 345.1 17.2 1.7 EV/EBITDA (x) 3.9 4.9 6.4 5.7 5.5 P/E (x) 4.6 43.4 9.8 8.3 8.2 FCFPS (IDR) (50) 242 (138) 81 167 FCF yield (%) (3.3) 16.1 (9.2) 5.4 11.2 BVPS (IDR) 1,572 1,643 1,632 1,828 1,951 P/BV (x) 1.0 0.9 0.9 0.8 0.8 DPS (IDR) 27 10 38 45 46 Div. yield (%) 1.8 0.7 2.6 3.0 3.0 Source: Company, Bahana estimates note: based on 09 October 2014 closing price


0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

1,500

1,700

1,900

2,100

2,300

2,500


('000)(IDR)

Volume (RHS) GJTL IJ Px Last

(27.6)

(10.4)

(17.1)

(30.9)

(23.9)

(48.1)

(60)

(50)

(40)

(30)

(20)

(10)

0

(60)

(50)

(40)

(30)

(20)

(10)

0

ytd 1M 3M 6M 9M 12M

(%) (%)

GJTL IJ relative to JCI


Major assumptions Year to 31 Dec 2012A 2013A 2014F 2015F 2016F Tire Volume (mn) 36.8 38.6 39.2 41.7 43.4 Growth (%) 2.2 5.0 1.5 6.4 4.2 Radial blended ASP (IDR '000) 396.0 396.0 396.0 403.9 412.0 Oil Price -WTI ($) 90 91 93 95 96 Source: Company, Bahana estimates

Company information

12M high/low (IDR) : 2,500/1,455 12M High/low consensus TP (IDR) : 3,104/1,875 Majority shareholder (%) : Denham (49.5) Shares outstanding (mn)/Free float (%) : 3,485/40.4 Mkt. cap. (IDRbn/USDmn) : 5,227/429 3-m avg.daily t.o.(IDRbn/USDmn) : 5.1/0.4 Bloomberg/Reuters code : GJTL IJ/GJTL.JK Source: Bloomberg, Reuters; based on 09 October 2014 closing price

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163

GAJAH TUNGGAL

Profit & loss Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016FSales 12,579 12,353 13,242 14,160 14,324Gross profit 2,437 2,273 2,167 2,336 2,363EBITDA 2,114 1,862 1,615 1,791 1,857Depreciation 437 497 618 698 756EBIT 1,677 1,365 996 1,093 1,101Net interest inc./(expense) (332) (520) (537) (559) (557)Forex gain/(losses) (218) (890) 44 89 90Other income/(expense) 330 211 211 213 215Pre-tax profit 1,457 166 714 836 849Taxes (325) (46) (179) (209) (212)Minority interest - - - - -Extraordinary gain/(losses) - - - - -Net profit 1,132 120 536 627 636Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016F Cash and equivalents 905 1,999 933 925 1,049 S-T investments 95 238 238 238 238 Trade receivables 1,961 2,078 2,164 2,314 2,341 Inventories 1,479 1,820 2,124 2,267 2,294 Fixed assets 6,122 6,416 7,254 7,629 7,894 Other assets 2,404 3,038 2,688 2,781 2,794 Total assets 12,870 15,351 15,163 15,917 16,372 Interest bearing liabilities 3,971 5,961 5,961 5,961 5,961 Trade payables 1,082 1,324 1,244 1,328 1,343 Other liabilities 2,339 2,341 2,268 2,346 2,360 Total liabilities 7,391 9,626 9,472 9,635 9,665 Minority interest - - - - - Shareholders' equity 5,478 5,724 5,691 6,283 6,708 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016FEBIT 1,677 1,365 996 1,093 1,101Depreciation 437 497 618 698 756Working capital 10 (174) (462) (226) (40)Other operating items 37 216 56 4 (159)Operating cash flow 2,161 1,904 1,209 1,568 1,658Net capital expenditure (1,236) (1,460) (1,151) (1,034) (979)Free cash flow 924 444 57 534 679Equity raised/(bought) - - - - -Net borrowings 139 1,990 - - -Other financing (746) (1,340) (1,124) (542) (556)Net cash flow 318 1,094 (1,066) (7) 123Cash flow at beginning 587 905 1,999 933 925Ending cash flow 905 1,999 933 925 1,049Source: Company, Bahana estimates


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164

GARUDA INDONESIA (RE-INITIATION) HOLD PX: IDR418 - TP: IDR460 GIAA, Indonesia’s premium carrier with 123 aircraft at end August

2014, is benefiting from higher incomes as well as growing domestic and regional travels. In 2015, Citilink, its low cost carrier with 31 aircraft, will likely start contributing earnings with an increased market share on additional new routes, raising RPK ahead.

An expected hike in the ceiling for domestic ticket pricing and lower oil prices should help improve GIAA’s earnings outlook. Concurrently, fleet rejuvenation and improved flight management through adding high-traffic routes and holding back on less attractive ones as well as flight re-routings should bolster top line growth and margins.

We rate GIAA a HOLD with a IDR460 TP based on an adjusted EV/EBITDAR of 6.8x. Downside risk includes further IDR depreciation, while upside risk is lower-than-expected jet fuel prices given current condition, leading to improved earnings growth ahead.

Financial highlights Year to 31 Dec 2012A 2013A 2014F 2015F 2016F Operating revenues (USDmn) 3,472 3,716 4,099 4,741 5,532

EBITDAR (USDmn) 682 781 836 1,288 1,615

EBIT (USDmn) 178 96 (44) 238 367

Net profit (USDmn) 111 101 (110) 71 146

EPS (IDR) 60 54 (53) 33 68

EPS growth (%) 73.2 (8.9) na na 106.3

Adjusted EV/EBITDAR (x) 5.8 7.7 8.4 6.6 6.0

P/E (x) 7.0 7.7 na 12.6 6.1

FCFPS (IDR) (12) (7) (13) (14) 1

FCF yield (%) (2.9) (1.7) (3.1) (3.3) 0.2

BVPS (IDR) 471 529 463 468 525

P/BV (x) 0.9 0.8 0.9 0.9 0.8

DPS (IDR) - - - - -

Div yield (%) - - - - - Source: Company, Bahana estimates note: based on 09 October 2014 closing price


0

5,000

10,000

15,000

20,000

25,000

30,000

400

425

450

475

500

525

550

575

600


('000)(IDR)

Volume (RHS) GIAA IJ Px Last

(32.6)

0.2

(2.2)

(12.5)

(32.8)

(26.9)

(35)

(30)

(25)

(20)

(15)

(10)

(5)

0

5

(35)

(30)

(25)

(20)

(15)

(10)

(5)

0

5

ytd 1M 3M 6M 9M 12M

(%) (%)

GIAA IJ relative to JCI


Major assumptions Year to 31 Dec 2012A 2013A 2014F 2015F 2016F ASK 36,014 43,133 55,175 60,838 68,964

RPK 27,342 31,962 38,623 43,195 49,654

Total aircraft 106 140 161 196 214 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 506/415 12M high/low consensus TP (IDR) : 615/430 Majority shareholder (%) : Republic of Indonesia (60.5) Shares outstanding (mn)/Free float (%) : 25,869/39.5 Mkt. cap. (IDRbn/USDmn) : 10,813/887 3-m avg.daily t.o.(IDRbn/USDmn) : 1.2/0.1 Bloomberg/Reuters code : GIAA IJ/GIAA.JK Source: Bloomberg, Reuters; based on 09 October 2014 closing price

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165

GARUDA INDONESIA

Profit & loss Year to 31 Dec (USDmn) 2012A 2013A 2014F 2015F 2016FSales 3,472 3,716 4,099 4,741 5,532

EBITDA 308 162 124 432 589

EBITDAR (excl. Wet lease) 682 781 836 1,288 1,615

Depreciation 130 66 167 194 223

EBIT 178 96 (44) 238 367

Net interest inc./(expense) (18) (49) (67) (89) (93)

Forex gain/(losses) - - - - -

Other income/(expense) (8) 52 (38) (54) (76)

Pre-tax profit 152 99 (149) 96 197

Taxes 41 (2) (39) 25 51

Minority interest (0) (0) (0) (0) (0)

Extraordinary gain/(losses) - - - - -

Net profit 111 101 (110) 71 146Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (USDmn) 2012A 2013A 2014F 2015F 2016F Cash and equivalents 326 475 493 384 551

S-T investments - - - - -

Trade receivables 129 140 184 199 243

Inventories 83 90 104 110 126

Fixed assets 798 863 896 1,037 1,009

Other assets 1,181 1,385 1,572 1,892 2,085

Total assets 2,518 2,954 3,249 3,622 4,014

Interest bearing liabilities 613 1,005 1,213 1,449 1,581

Trade payables 173 206 218 237 272

Other liabilities 617 626 686 731 809

Total liabilities 1,403 1,837 2,117 2,417 2,662

Minority interest 2 1 2 2 2

Shareholders' equity 1,113 1,116 1,131 1,203 1,350 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (USDmn) 2012A 2013A 2014F 2015F 2016FEBIT 178 96 (44) 238 367

Depreciation 130 66 167 194 223

Working capital 90 1 3 (15) (38)

Other operating items (167) (181) (117) (290) (239)

Operating cash flow 231 (18) 9 128 312

Net capital expenditure (508) (144) (335) (487) (293)

Free cash flow (277) (161) (326) (359) 19

Equity raised/(bought) 35 (12) 125 - -

Net borrowings 149 409 218 248 147

Other financing 2 (86) 0 2 1

Net cash flow (91) 150 18 (109) 167



Key ratios Year to 31 Dec 2012A 2013A 2014F 2015F 2016F ROAE (%) 10.6 9.0 (9.8) 6.1 11.4

ROAA (%) 4.8 3.7 (3.6) 2.1 3.8

EBITDA margin (%) 8.9 4.4 3.0 9.1 10.6

EBIT margin (%) 5.1 2.6 (1.1) 5.0 6.6

Net margin (%) 3.2 2.7 (2.7) 1.5 2.6

Payout ratio (%) - - - - -

Current ratio (x) 0.8 0.8 1.0 0.8 1.0

Interest coverage (x) 9.6 1.9 na 2.7 3.9

Net gearing (%) 25.8 47.4 63.7 88.5 76.3

Debts to assets (%) 24.3 34.0 37.3 40.0 39.4

Debtor turnover (days) 16 13 14 15 14

Creditor turnover (days) 16 19 18 18 18

Inventory turnover (days) 9 9 8 9 8 Source: Company, Bahana estimates

2015 Compendium

166

GUDANG GARAM BUY PX: IDR55,800 - TP: IDR70,000 On the back of brand developments, GGRM, now the leading local

cigarette player, is bucking the industry trend and gaining market share. In 1H14, the company had overall 1H14 sales of 41.1bn sticks, up 8% y-y, versus industry sales of 121bn sticks, down 9.7% y-y, on demand softness. This has paved the way for a market share increase to 34% in 2014, on our estimates, up from 30% in 2013.

Looking ahead, one of GGRM’s growth strategies is to reverse the fall in demand for its HRCs (1H14: -27% y-y), partly through the April 2014 launch of GG “Gold”, a new premium brand, which, along with stable raw materials prices, should bode well for margins.

Our IDR70,000 TP, based on a 2015F PE of 22x (a 3-year mean), should be supported by solid volume growth, sustainable margins and lower capex to improve free cash flow. Risks include the government’s implementation of an excessive excise tax hike and health policy.


EPS (IDR) 2,086 2,250 2,785 3,168 3,618 EPS growth (%) (18.0) 7.8 23.8 13.7 14.2 EV/EBITDA (x) 16.2 15.3 12.5 11.1 9.7 P/E (x) 26.7 24.8 20.0 17.6 15.4 FCFPS (IDR) 1,077 (2,076) (478) 596 1,184 FCF yield (%) 1.9 (3.7) (0.9) 1.1 2.1 BVPS (IDR) 13,766 15,216 17,045 19,029 21,301 P/BV (x) 4.1 3.7 3.3 2.9 2.6 DPS (IDR) 803 956 1,184 1,346 1,538 Div. yield (%) 1.4 1.7 2.1 2.4 2.8 Source: Company, Bahana estimates note: based on 09 October 2014 closing price


0

1,000

2,000

3,000

4,000

5,000

6,000

30,000

35,000

40,000

45,000

50,000

55,000

60,000


('000)(IDR)

Volume (RHS) GGRM IJ Px Last

16.0

7.0 5.5

8.5 13.9

49.9

0

10

20

30

40

50

60

0

10

20

30

40

50

60

ytd 1M 3M 6M 9M 12M

(%) (%)

GGRM IJ relative to JCI

Source: Bloomberg Harry Su ([email protected]) +6221 2505735

Major assumptions Year to 31 Dec 2012A 2013A 2014F 2015F 2016F Sales growth (%) 17.1 13.1 11.6 13.2 13.5 Gross profit margin (%) 18.7 19.6 20.4 20.7 20.6 EBIT margin (%) 12.3 12.0 13.6 13.6 13.6 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 57,800/33,250 12M High/low consensus TP (IDR) : 70,000/34,800 Majority shareholder (%) : Suryaduta Investama (69.3) Shares outstanding (mn)/Free float (%) : 1,924/23.5 Mkt. cap. (IDRbn/USDmn) : 107,364/8,815 3-m avg.daily t.o.(IDRbn/USDmn) : 40.8/3.4 Bloomberg/Reuters code : GGRM IJ/GGRM.JK Source: Bloomberg, Reuters; based on 09 October 2014 closing price

2015 Compendium

167

GUDANG GARAM

Profit & loss Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016FSales 49,029 55,437 61,842 70,014 79,453 Gross profit 9,185 10,874 12,627 14,486 16,336 EBITDA 7,031 7,758 9,751 11,145 12,697 Depreciation 1,024 1,108 1,330 1,596 1,915 EBIT 6,007 6,650 8,421 9,550 10,783 Net interest inc./(expense) (422) (693) (1,084) (1,221) (1,286)Forex gain/(losses) (18) (13) (18) (17) (16)Other income/(expense) (37) (7) (8) (8) (9)Pre-tax profit 5,531 5,936 7,312 8,304 9,472 Taxes (1,462) (1,552) (1,901) (2,159) (2,463)Minority interest (55) (55) (52) (50) (47)Extraordinary gain/(losses) - - - - -Net profit 4,014 4,329 5,358 6,095 6,962 Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016F Cash and equivalents 1,286 1,404 1,244 1,317 1,781 S-T investments - - - - - Trade receivables 1,383 2,196 2,450 2,774 3,147 Inventories 26,650 30,241 33,942 37,519 40,985 Fixed assets 10,389 14,789 18,332 20,329 21,541 Other assets 1,802 2,140 2,430 2,552 2,823 Total assets 41,509 50,770 58,398 64,490 70,277 Interest bearing liabilities 8,164 12,979 16,029 17,231 18,006 Trade payables 458 798 1,084 1,384 2,099 Other liabilities 5,400 6,554 7,153 7,724 7,420 Total liabilities 14,022 20,331 24,266 26,340 27,525 Minority interest 999 1,162 1,336 1,537 1,767 Shareholders' equity 26,488 29,277 32,796 36,613 40,985 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016FEBIT 6,007 6,650 8,421 9,550 10,783Depreciation 1,024 1,108 1,330 1,596 1,915Working capital (147) (4,064) (3,668) (3,601) (4,155)Other operating items (1,901) (2,259) (3,002) (3,397) (3,764)Operating cash flow 4,983 1,435 3,080 4,148 4,779Net capital expenditure (2,911) (5,429) (4,000) (3,000) (2,500)Free cash flow 2,071 (3,994) (920) 1,148 2,279Equity raised/(bought) - - - - -Net borrowings 2,000 4,814 3,050 1,202 775Other financing (3,881) (702) (2,290) (2,277) (2,590)Net cash flow 191 118 (160) 73 464Cash flow at beginning 1,095 1,286 1,404 1,244 1,317Ending cash flow 1,286 1,404 1,244 1,317 1,781Source: Company, Bahana estimates


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168

HARUM ENERGY REDUCE PX: IDR1,840 – TP: IDR1,500* HRUM’s combined coal reserves of around 86m tons, the lowest in our

coverage, translate into about 10 years of mine life, assuming 8mn tons of annual production. In the interim, while HRUM may want to acquire a new concession to add to its reserves, difficulties in finding suitable concessions at the right price may hinder this process.

Therefore, until management is able to secure greater concessions, we do not expect to see increased sales volumes for HRUM. In 2015, we expect HRUM’s sales to reach 9.8mn tons, down 2% y-y, helped by third-party coal purchases.

Thus, while HRUM’s cost-saving initiatives may salvage 2014 net profit, concerns over low coal prices are likely to undermine 2015 earnings. On the valuation front, our DCF-based TP of IDR1,500 (18% WACC), reflects more than 18% potential downside. REDUCE. Risks to our call include higher volumes or prices and lower stripping ratios.

Financial highlights Year to 31 Dec 2012A 2013A 2014F 2015F 2016F Revenues (USDmn) 1,043 837 581 588 590 EBIT (USDmn) 211 69 45 56 81 Net profit (USDmn) 132 42 36 43 61 Bahana/consensus (%) 83 25 90 49 95 EPS (IDR) 456 145 126 150 212 EPS growth (%) (21.1) (68.2) (13.3) 19.1 41.5 EV/EBITDA (x) 2.3 24.6 5.5 4.4 2.8 P/E (x) 4.0 12.7 14.7 12.3 8.7 FCFPS (IDR) 1,342 45 (465) 232 336 FCF yield (%) 72.9 2.4 (25.3) 12.6 18.3 BVPS (IDR) 1,214 1,222 868 976 1,144 P/BV (x) 1.5 1.5 2.1 1.9 1.6 DPS (IDR) 252 81 81 94 131 Div. yield (%) 13.7 4.4 4.4 5.1 7.1 Source: Company, Bahana estimates note: based on 09 October 2014 closing price


0

10,000

20,000

30,000

40,000

50,000

60,000

1,500

2,000

2,500

3,000

3,500


('000)(IDR)

Volume (RHS) HRUM IJ Px Last

(49.9)

(11.3)(17.6) (15.7)

(39.4)

(50.2)

(60)

(50)

(40)

(30)

(20)

(10)

0

(60)

(50)

(40)

(30)

(20)

(10)

0

ytd 1M 3M 6M 9M 12M

(%) (%)

HRUM IJ relative to JCI Source: Bloomberg Arandi Nugraha ([email protected]) +6221 2505081 ext. 3619 *New, please refer to appendix II

Major assumptions Year to 31 Dec 2012A 2013A 2014F 2015F 2016F Avg. coal price (USD/ton) 78.9 68.3 58.0 59.8 61.8 growth (%) (15.7) (13.4) (15.2) 3.2 3.4 Total sales vol. (m tons) 12.9 11.9 10.0 9.8 9.5 growth % 48.3 (7.8) (16.0) (2.0) (3.1) Total cash cost (USD/ton) 78.3 52.1 51.0 51.1 52.5 Source: Company, Bahana estimates

Company information

12M high/low (IDR) : 3,675/1,840 12M High/low consensus TP (IDR) : 3,100/1,850 Majority shareholder (%) : Karunia Bara Perkasa (70.6) Shares outstanding (mn)/Free float (%) : 2,704/29.3 Mkt. cap. (IDRbn/USDmn) : 4,975/408 3-m avg.daily t.o.(IDRbn/USDmn) : 14.2/1.2 Bloomberg/Reuters code : HRUM IJ/HRUM.JK Source: Bloomberg, Reuters; based on 09 October 2014 closing price

2015 Compendium

169

HARUM ENERGY

Profit & loss Year to 31 Dec (USDmn) 2012A 2013A 2014F 2015F 2016FSales 1,043 837 581 588 590Gross profit 319 176 125 142 168EBITDA 223 81 57 67 93Depreciation 12 12 12 11 12EBIT 211 69 45 56 81Net interest inc./(expense) 1 1 1 (0) 0Forex gain/(losses) - - - - -Other income/(expense) - (7) 6 6 7Pre-tax profit 213 63 52 62 88Taxes (51) (13) (10) (12) (18)Minority interest (30) (8) (5) (6) (9)Extraordinary gain/(losses) - - - - -Net profit 132 42 36 43 61Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (USDmn) 2012A 2013A 2014F 2015F 2016F Cash and equivalents 162 181 98 125 166 Trade receivables 68 52 47 47 47 Inventories 102 28 33 32 30 Investment in associates 22 16 19 20 22 Fixed assets 123 116 120 122 123 Other assets 61 86 40 41 43 Total assets 539 481 355 388 431 Interest bearing liabilities - - - - - Trade payables 85 68 61 59 56 Other liabilities 25 18 31 31 31 Total liabilities 110 86 91 90 87 Minority interest 79 79 69 74 77 Shareholders' equity 350 316 195 223 266 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (USDmn) 2012A 2013A 2014F 2015F 2016FEBIT 211 69 45 56 81Depreciation 12 12 12 11 12Working capital 7 65 11 (1) (2)Other operating items - (20) 1 - -Operating cash flow 231 126 69 66 91Net capital expenditure 157 (11) (14) (12) (13)Free cash flow 388 137 54 53 78Equity raised/(bought) (118) - - - -Net borrowings - - - - -Other financing (296) (119) (138) (28) (40)Net cash flow (27) 19 (84) 26 38Cash flow at beginning 189 162 181 100 127Ending cash flow 162 181 98 125 166Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2012A 2013A 2014F 2015F 2016F ROAE (%) 37.8 12.6 14.2 20.7 25.0 ROAA (%) 24.6 8.2 8.6 11.6 14.9 EBITDA margin (%) 21.4 9.7 9.9 11.3 15.7 EBIT margin (%) 20.3 8.2 7.8 9.5 13.7 Net margin (%) 12.6 5.0 6.2 7.3 10.4 Payout ratio (%) 70.1 55.3 50.0 50.0 50.0 Current ratio (x) 3.1 3.5 2.0 2.3 2.8 Interest coverage (x) na na na na na Net gearing (%) nc nc nc nc nc Debts to assets (%) - - - - - Debtor turnover (days) 24 23 29 29 29 Creditor turnover (days) 30 30 38 37 35 Inventory turnover (days) 36 12 20 20 19 Source: Company, Bahana estimates

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170

HERO SUPERMARKET REDUCE PX: IDR2,550 - TP: IDR1,500* We retain our view that HERO, considered to be one of the largest

supermarket operators, with its multi-format stores (Giant – 54 outlets, Hero Supermarket - 37, Guardian - 316, Starmart – 157), has too much on its plate, resulting in a 2Q14 operating loss of IDR46bn. Additionally, IKEA’s delayed opening has been costly for the company, instead of generating revenue.

With the expansions of competitors such as Hypermart and Carrefour, the growth of Giant hypermarket (some 50% of total top line) should remain challenging, particularly since it has only managed to grow its market share from 21.7% in 2007 to 25.9% in 2013.

Given the weak 2015 macro outlook, we lower our TP from IDR1,590 to IDR1,500, based on a 2015F PE of 21x, at a 25% discount to its peers. We believe this is warranted on lower margins and ROE. Risks include higher-than-expected SSSG.

Financial highlights Year to 31 Dec 2012A 2013A 2014F 2015F 2016F Revenues (IDRbn) 10,510 11,900 14,259 15,745 17,107 EBIT (IDRbn) 441 782 333 380 493 Net profit (IDRbn) 302 671 271 291 373 Bahana/consensus (%) - - - - -

EPS (IDR) 89 171 65 70 89 EPS growth (%) 10.7 93.1 (62.2) 7.4 28.0 EV/EBITDA (x) 16.3 14.6 19.2 17.0 11.0 P/E (x) 28.7 14.9 39.4 36.7 28.6 FCFPS (IDR) (157) (201) (142) (96) 22 FCF yield (%) (6.1) (7.9) (5.6) (3.8) 0.9 BVPS (IDR) 486 1,367 1,345 1,414 1,504 P/BV (x) 5.2 1.9 1.9 1.8 1.7 DPS (IDR) - - - - - Div. yield (%) - - - - - Source: Company, Bahana estimates note: based on 09 October 2014 closing price


0

500

1,000

1,500

2,000

2,500

2,000

2,200

2,400

2,600

2,800

3,000

3,200

3,400

3,600

3,800

4,000


('000)(IDR)

Volume (RHS) HERO IJ Px Last

(11.7)

6.7

(8.3)(10.4)

(13.3)

(38.1)(45)(40)(35)(30)(25)(20)(15)(10)(5)0510

(45)(40)(35)(30)(25)(20)(15)(10)(5)05

10

ytd 1M 3M 6M 9M 12M

(%) (%)

HERO IJ relative to JCI

Source: Bloomberg Wendy Chandra ([email protected]) +6221 2505081 ext.3606 *New, please refer to appendix II

Major assumptions Year to 31 Dec 2012A 2013A 2014F 2015F 2016F Hypermarket stores 46 52 56 59 61 Supermarket stores 142 165 187 204 221 Speciality stores 417 467 517 567 597 IKEA - - 1 2 3 Selling exp. as % of Rev. (%) 2.4 2.4 2.5 2.5 2.5 Source: Company, Bahana estimates

Company information

12M high/low (IDR) : 3,900/2,400 12M High/low consensus TP (IDR) : 1,590/1,590 Majority shareholder (%) : Jardine Matheson Holdings (80.8) Shares outstanding (m)/Free float (%) : 4,184/16.5 Mkt. cap. (IDRbn/USDmn) : 10,668/875 3-m avg.daily t.o.(IDRbn/USDmn) : 0.3/0.0 Bloomberg/Reuters code : HERO IJ/HERO.JK Source: Bloomberg, Reuters based on 09 October 2014 closing price

2015 Compendium

171

HERO SUPERMARKET

Profit & loss Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016FSales 10,510 11,900 14,259 15,745 17,107Gross profit 2,437 2,847 3,291 3,740 4,209EBITDA 705 997 678 790 951Depreciation 264 215 345 410 458 EBIT 441 782 333 380 493Net interest inc./(expense) (40) 8 29 8 4 Forex gain/(losses) - - - - - Other income/ (expense) - - - - - Pre-tax profit 402 790 361 388 497Taxes (99) (119) (90) (97) (124) Minority interest - - - - - Extraordinary gain/(losses) - - - - - Net profit 303 671 271 291 373Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016F Cash and equivalents 248 1,327 764 720 468 S-T investments - - - - - Trade receivables 258 293 370 380 435 Inventories 1,550 1,829 2,221 1,991 2,535 Fixed assets 2,592 3,726 4,395 4,950 5,119 Other assets 630 583 604 627 649 Total assets 5,277 7,758 8,354 8,668 9,206 Interest bearing liabilities 1,104 - - 350 - Trade payables 1,877 1,928 2,240 1,899 2,400 Other liabilities 639 475 487 501 515 Total liabilities 3,619 2,403 2,728 2,750 2,916 Minority interest - - - - - Shareholders' equity 1,658 5,356 5,627 5,918 6,290 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016FEBIT 441 782 171 194 288 Depreciation 264 304 345 410 458 Working capital 211 (351) (173) (138) (116) Other operating items (120) (396) 382 89 80 Operating cash flow 796 340 725 556 711Net capital expenditure (1,330) (1,126) (1,317) (957) (617) Free cash flow (534) (786) (592) (402) 94Equity raised/(bought) - 2,961 - - - Net borrowings 720 (1,104) - 350 (350) Other financing (41) 8 29 8 4 Net cash flow 145 1,079 (564) (43) (252)Cash flow at beginning 103 248 1,327 764 720 Ending cash flow 248 1,327 764 720 468Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2012A 2013A 2014F 2015F 2016F ROAE (%) 19.7 19.2 4.9 5.0 6.1 ROAA (%) 6.7 10.3 3.4 3.4 4.2 EBITDA margin (%) 6.7 9.1 3.6 3.8 4.4 EBIT margin (%) 4.2 3.6 1.2 1.2 1.7 Net margin (%) 2.9 5.6 1.9 1.8 2.2 Payout ratio (%) - - - - - Current ratio (x) 0.7 1.6 1.4 1.3 1.3 Interest coverage (x) 11.1 na na na na Net gearing (%) 51.6 nc nc nc nc Debts to assets (%) 20.9 - - 4.0 - Debtor turnover (days) 8 9 9 9 9 Creditor turnover (days) 73 66 61 63 61 Inventory turnover (days) 62 64 64 64 64 Source: Company, Bahana estimates

2015 Compendium

172

HOLCIM INDONESIA REDUCE* PX: IDR2,520 - TP: IDR2,150* In 2015, SMCB, the third biggest cement maker (14% market share)

with its main operations in Java (71%) and Sumatra (21%), will likely benefit from the completion of its 1.7mn ton Tuban II plant (+16% in capacity terms) and distribution points to fit its inter-island strategy.

Going forward, SMCB plans to increase its presence in Southern Sumatra following the construction of a new cement terminal in Lampung. On the proposed merger between Holcim Ltd. and Lafarge S.A., we see minimal synergies for SMCB due not only to restrictive geographical distance but also different regional target markets.

Despite expecting improved 2015 margins and volumes (to 9.7mn tons, +7% y-y), we still expect lower EP growth, partly due to the debt level of IDR5.6tn (62% foreign-denominated). Our IDR2,150 TP is based on a 2015F PE of 12.9x, at a justified 15% discount to the sector. The main risk to our call is higher-than-expected volumes.

Financial highlights Year to 31 Dec 2012A 2013A 2014F 2015F 2016F Revenues (IDRbn) 9,011 9,686 10,878 12,170 12,891 EBIT (IDRb) 2,079 2,033 2,030 2,240 2,453 Net profit (IDRbn) 1,350 952 1,135 1,272 1,416 Bahana/consensus (%) - - 99 98 97

EPS (IDR) 176 124 148 166 185 EPS growth (%) 27.0 (29.5) 19.2 12.2 11.3 EV/EBITDA (x) 8.0 8.5 8.7 7.9 7.2 P/E (x) 14.3 20.3 17.0 15.2 13.6 FCFPS (IDR) (41) (206) (123) 15 119 FCF yield (%) (1.6) (8.2) (4.9) 0.6 4.7 BVPS (IDR) 1,098 1,144 1,205 1,287 1,376 P/BV (x) 2.3 2.2 2.1 2.0 1.8 DPS (IDR) 80 90 81 91 102 Div. yield (%) 3.2 3.6 3.2 3.6 4.0 Source: Company, Bahana estimates note: based on 09 October 2014 closing price


0

5,000

10,000

15,000

20,000

25,000

1,800

2,000

2,200

2,400

2,600

2,800

3,000

3,200


('000)(IDR)

Volume (RHS) SMCB IJ Px Last

(6.1) (6.1)(7.8)

(12.9)

(9.0)

(3.6)

(14)

(12)

(10)

(8)

(6)

(4)

(2)

0

(14)

(12)

(10)

(8)

(6)

(4)

(2)

0

ytd 1M 3M 6M 9M 12M

(%) (%)

SMCB IJ relative to JCI

Source: Bloomberg Bob Setiadi ([email protected]) +6221 2505081 ext.3605 *New, please refer to appendix II

Major assumptions Year to 31 Dec 2012A 2013A 2014F 2015F 2016F Volume capacity ('000 tons) 8,700 10,400 10,400 12,100 12,100 Export volume ('000 tons) - - - - - Domestic volume ('000 tons) 8,553 8,431 9,021 9,653 9,942 Total sales volume ('000 tons) 8,585 8,431 9,021 9,653 9,942 Utilization rate (%) 98.7 81.1 86.7 79.8 82.2 Source: Company, Bahana estimates

Com.pany information 12M high/low (IDR) : 3,100/2,025 12M High/low consensus TP (IDR) : 2,900/2,500 Majority shareholder (%) : Holderfin BV (80.6) Shares outstanding (m)/Free float (%) : 7,663/19.4 Mkt. cap. (IDRbn/USDmn) : 19,311/1,584 3-m avg.daily t.o.(IDRbn/USDmn) : 5.6/0.4 Bloomberg/Reuters code : SMCB IJ/SMCB.JK Source: Bloomberg, Reuters based on 09 October 2014 closing price

2015 Compendium

173

HOLCIM INDONESIA

Profit & loss Year to 31 Dec (IDRb) 2012A 2013A 2014F 2015F 2016FSales 9,011 9,686 10,878 12,170 12,891 Gross profit 3,286 3,355 3,552 3,931 4,247 EBITDA 2,558 2,668 2,790 3,113 3,408 Depreciation 479 636 760 874 956 EBIT 2,079 2,033 2,030 2,240 2,453 Net interest inc./(expense) (103) (173) (360) (483) (488)Forex gain/(losses) (67) (323) (65) 42 38 Other income/(expense) (36) (200) (30) (32) (35)Pre-tax profit 1,873 1,337 1,576 1,768 1,968 Taxes (522) (384) (441) (495) (551)Minority interest (1) (0) (0) (0) (0)Extraordinary gain/(losses) - - - - -Net profit 1,350 952 1,135 1,272 1,416 Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRb) 2012A 2013A 2014F 2015F 2016F Cash and equivalents 556 376 819 683 577 S-T investments 0 0 0 0 0 Trade receivables 810 958 983 1,100 1,162 Inventories 687 591 702 790 827 Fixed assets 9,589 12,367 14,458 15,634 16,229 Other assets 527 603 637 718 811 Total assets 12,169 14,895 17,600 18,925 19,606 Interest bearing liabilities 1,654 3,626 5,663 6,046 5,737 Trade payables 707 886 895 1,001 1,057 Other liabilities 1,390 1,610 1,801 2,016 2,260 Total liabilities 3,750 6,122 8,359 9,062 9,054 Minority interest 3 4 4 4 5 Shareholders' equity 8,415 8,769 9,237 9,859 10,547 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (IDRb) 2012A 2013A 2014F 2015F 2016FEBIT 2,079 2,033 2,030 2,240 2,453 Depreciation 479 636 760 874 956 Working capital (114) 363 (58) (20) 44 Other operating items (930) (1,199) (824) (929) (990)Operating cash flow 1,514 1,832 1,909 2,165 2,462 Net capital expenditure (1,830) (3,414) (2,850) (2,050) (1,550)Free cash flow (315) (1,582) (941) 115 912 Equity raised/(bought) - - - - -Net borrowings 147 1,972 2,038 382 (309)Other financing (403) (569) (653) (634) (709)Net cash flow (572) (180) 444 (137) (106)Cash flow at beginning 1,127 556 376 819 683 Ending cash flow 556 376 819 683 577 Source: Company, Bahana estimates


2015 Compendium

174

INDO TAMBANGRAYA MEGAH REDUCE PX: IDR25,500 - TP: IDR20,000 Aside from our continued negative view on the coal industry, one of

our main concerns about ITMG is its limited reserves (376 mn tons), the second-lowest in our coverage after HRUM. With current production of around 28mn tons/year, its reserves would be depleted in the next 11 years.

With limited reserves, coupled with the government’s plan to limit coal production volumes, we believe ITMG will not be too aggressive in its volume production growth, with our estimate of just 30mn tons in 2015, flat compared to its 2013-14 production.

As we expect coal prices to remain weak, ITMG’s performance should continue to suffer. Additionally, we see limited ability for ITMG to cut cost due to high stripping ratios for its mines. Our DCF-based TP of IDR20,000 is based on a 13.3% WACC. Risks to our call include lower-than-expected costs and possible concession acquisitions.

Financial highlights Year to 31 Dec 2012A 2013A 2014F 2015F 2016F Revenue (USDmn) 2,439 2,179 2,032 1,971 1,981 EBIT (USDmn) 558 337 318 299 276 Net profit (USDmn) 432 230 249 205 186 Bahana/consensus (%) - - 101 81 67 EPS (IDR) 3,584 2,180 2,619 2,122 1,894 EPS growth (%) (18.3) (39.2) 20.1 (19.0) (10.8) EV/EBITDA (x) 3.5 5.9 5.1 5.5 6.5 PER (x) 7.1 11.7 9.7 12.0 13.5 FCFPS (IDR) 5,187 2,176 3,442 2,583 2,574 FCF yield (%) 20.3 8.5 13.5 10.1 10.1 BVPS (IDR) 10,814 10,398 10,988 11,052 11,291 PBV (x) 2.4 2.5 2.3 2.3 2.3 DPS (IDR) 3,130 3,130 1,989 2,060 1,669 Dividend Yield (%) 12.3 12.3 7.8 8.1 6.5 Source: Company, Bahana estimates note: based on 09 October 2014 closing price


0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

20,000

22,000

24,000

26,000

28,000

30,000

32,000

34,000


('000)(IDR)

Volume (RHS) ITMG IJ Px Last

(27.4)

(3.9) (4.1)

3.4

(18.1)

(25.0)(30)

(25)

(20)

(15)

(10)

(5)

0

5

(30)

(25)

(20)

(15)

(10)

(5)

0

5

ytd 1M 3M 6M 9M 12M

(%) (%)

ITMG IJ relative to JCI


Major assumptions Year to 31 Dec 2012A 2013A 2014F 2015F 2016F Avg. coal price (USD/ton) 88.7 74.9 68.9 66.4 65.4 growth % (8.7) (15.6) (8.0) (3.6) (1.4) Coal sales vol. (m tons) 27.5 29.1 29.5 29.7 30.3 growth % 11.3 5.8 1.4 0.6 1.9 Total cash cost (USD/ton) 65.6 60.8 55.4 53.2 52.9 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 33,950/22,525 12M High/low consensus TP (IDR) : 31,000/20,000 Majority shareholder (%) : Banpu Minerals (65.0) Shares outstanding (mn)/Free float (%) : 1,130/35.0 Mkt. cap. (IDRbn/USDmn) : 28,813/2,364 3-m avg.daily t.o.(IDRbn/USDmn) : 25.4/2.1 Bloomberg/Reuters code : ITMG IJ/ITMG.JK Source: Bloomberg, Reuters; based on 09 October 2014 closing price

2015 Compendium

175

INDO TAMBANGRAYA MEGAH

Profit & loss Year to 31 Dec (USDmn) 2012A 2013A 2014F 2015F 2016FSales 2,439 2,179 2,032 1,971 1,981Gross profit 741 509 496 474 460EBITDA 634 410 399 392 379Depreciation 75 72 82 93 103EBIT 558 337 318 299 276Net interest inc./(expense) 14 9 6 5 4Forex gain/(losses) - - - - -Other income/(expense) 19 (25) 22 (19) (22)Pre-tax profit 591 321 346 284 258Taxes (159) (90) (98) (79) (72)Minority interest - - - - -Extraordinary gain/(losses) - - - - -Net profit 432 230 249 205 186Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (USDmn) 2012A 2013A 2014F 2015F 2016F Cash and equivalents 461 289 332 277 263 S-T investments - - - - - Trade receivables 249 193 185 171 172 Inventories 151 121 102 100 101 Fixed assets 336 317 449 522 560 Other assets 294 473 373 366 367 Total assets 1,491 1,392 1,441 1,436 1,464 Interest bearing liabilities - - - - - Trade payables 375 330 341 333 338 Other liabilities 114 98 81 79 79 Total liabilities 489 428 423 411 417 Minority interest - - - - - Shareholders' equity 1,002 964 1,018 1,024 1,047 Source: Company, Bahana estimates

Cashflow Year to 31 Dec (USDmn) 2012A 2013A 2014F 2015F 2016FEBIT 558 337 318 299 276Depreciation 75 72 82 93 103Working capital (77) 24 34 6 3Other operating items 10 (36) 63 2 (0)Operating cash flow 566 398 496 400 382Net capital expenditure (86) (196) (177) (161) (143)Free cash flow 481 202 319 239 239Equity raised/(bought) - - - - -Net borrowings - - - - -Other financing (632) (374) (276) (294) (253)Net cash flow (151) (173) 43 (54) (15)Cash flow at beginning 612 461 289 332 277Ending cash flow 461 289 332 277 263Source: Company, Bahana estimates


2015 Compendium

176

INDOCEMENT TUNGGAL PRAKASA BUY* PX: IDR22,150 - TP: IDR25,000* As the second-largest domestic cement producer concentrated in Java,

INTP continues to benefit from the island’s growing consumption. INTP’s commencement of 1.9mn tons of new capacity should bode well for volume growth, allowing some market share regain. Note that INTP enjoyed 38.4% Java market share (vs. Outer Java of 19.4%) in 9M14.

However, the other 4.4mn tons of new capacity in INTP’s existing plants should not come on-stream until late 2016, capping volumes, while competition in Java is set to intensify upon the completion of the plants of the five new players, which are all aiming at the Java market.

INTP’s net cash position should allow flexibility for further expansion at its facilities in Pati-Java and Kalimantan, adding a total 5.0mn tons of capacity. On valuation, our IDR25,000 TP, implying a 15.2x 2015F PE (at par to the sector), reflects 12.9% upside potential. Risk includes the success of new entrants in taking INTP’s market share in Java.


EPS (IDR) 1,295 1,363 1,477 1,645 1,800 EPS growth (%) 32.6 5.2 8.3 11.4 9.5 EV/EBITDA (x) 10.8 10.2 9.8 8.6 7.7 P/E (x) 17.1 16.2 15.0 13.5 12.3 FCFPS (IDR) 1,281 927 129 475 1,135 FCF yield (%) 5.8 4.2 0.6 2.1 5.1 BVPS (IDR) 5,267 6,234 6,811 7,718 8,697 P/BV (x) 4.2 3.6 3.3 2.9 2.5 DPS (IDR) 450 900 738 822 900 Div. yield (%) 2.0 4.1 3.3 3.7 4.1 Source: Company, Bahana estimates note: based on 09 October 2014 closing price


0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

20,000

15,000

16,563

18,125

19,688

21,250

22,813

24,375

25,938

27,500


('000)(IDR)

Volume (RHS) INTP IJ Px Last

(6.1)

(3.8)

(10.8)

(12.7)(11.3)

2.4

(14)

(12)

(10)

(8)

(6)

(4)

(2)

0

2

4

(14)

(12)

(10)

(8)

(6)

(4)

(2)

0

2

4

ytd 1M 3M 6M 9M 12M

(%) (%)

INTP IJ relative to JCI


Major assumptions Year to 31 Dec 2012A 2013A 2014F 2015F 2016F Volume capacity ('000 tons) 18,600 18,600 20,500 20,500 24,900 Export volumes ('000 tons) 71 152 87 92 97 Domestic volumes ('000 tons) 17,612 17,642 18,595 19,729 20,913 Total volumes ('000 tons) 17,683 17,794 18,682 19,821 21,010 Utilization rate (%) 95 96 91 97 84 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 26,450/18,000 12M high/low consensus TP (IDR) : 26,020/23,257 Majority shareholder (%) : Birchwood Omnia Limited (51.0) Shares outstanding (mn)/Free float (%) : 3,681/36.0 Mkt. cap. (IDRbn/USDmn) : 81,539/6,689 3-m avg.daily t.o.(IDRbn/USDmn) : 93.1/7.4 Bloomberg/Reuters code : INTP IJ/INTP.JK Source: Bloomberg, Reuters based on 09 October 2014 closing price

2015 Compendium

177

INDOCEMENT TUNGGAL PRAKASA

Profit & loss Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016FSales 17,290 18,691 22,170 24,783 26,962Gross profit 8,270 8,655 9,648 10,763 11,688EBITDA 6,600 6,746 7,373 8,454 9,369Depreciation 755 771 843 1,031 1,210 EBIT 5,845 5,975 6,530 7,423 8,160Net interest inc./(expense) 354 513 603 519 534 Forex gain/(losses) - - (10) (18) (21) Other income/(expense) 49 115 128 151 167 Pre-tax profit 6,248 6,603 7,251 8,076 8,841Taxes (1,476) (1,583) (1,813) (2,019) (2,210) Minority interest (3) (2) (2) (3) (3) Extraordinary gain/(losses) - - - - - Net profit 4,769 5,019 5,436 6,054 6,627Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016F Cash and equivalents 10,474 12,595 9,666 8,625 9,701 S-T investments - - - - - Trade receivables 2,452 2,504 2,735 3,024 3,308 Inventories 1,470 1,474 1,942 2,174 2,369 Fixed assets 7,935 9,305 13,765 18,605 22,498 Other assets 423 730 1,252 1,389 1,169 Total assets 22,755 26,607 29,359 33,816 39,044 Interest bearing liabilities 108 93 59 42 34 Trade payables 975 1,008 1,012 1,096 1,214 Other liabilities 2,253 2,529 3,183 4,231 5,745 Total liabilities 3,336 3,630 4,254 5,370 6,993 Minority interest 31 30 32 34 36 Shareholders' equity 19,388 22,947 25,073 28,412 32,015 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016FEBIT 5,845 5,975 6,530 7,423 8,160Depreciation 755 771 843 1,031 1,210Working capital (288) (22) (696) (437) (361)Other operating items (637) (1,304) (1,268) (1,560) (1,743)Operating cash flow 5,675 5,419 5,409 6,457 7,266Net capital expenditure (959) (2,005) (4,933) (4,709) (3,089)Free cash flow 4,716 3,414 477 1,748 4,177Equity raised/(bought) - - - - -Net borrowings (23) (16) (34) (17) (8)Other financing (1,083) (1,277) (3,372) (2,773) (3,092)Net cash flow 3,610 2,121 (2,929) (1,041) 1,076Cash flow at beginning 6,864 10,474 12,595 9,666 8,625Ending cash flow 10,474 12,595 9,666 8,625 9,701Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2012A 2013A 2014F 2015F 2016F ROAE (%) 27.2 23.7 22.6 22.6 21.9 ROAA (%) 23.3 20.3 19.4 19.2 18.2 EBITDA margin (%) 38.2 36.1 33.3 34.1 34.8 EBIT margin (%) 33.8 32.0 29.5 30.0 30.3 Net margin (%) 27.6 26.8 24.5 24.4 24.6 Payout ratio (%) 34.7 66.0 50.0 50.0 50.0 Current ratio (x) 6.0 6.1 4.3 3.4 3.0 Interest coverage (x) na na na na na Net gearing (%) nc nc nc nc nc Debts to assets (%) 0.7 0.6 0.3 0.2 0.1 Debtor turnover (days) 46 44 45 45 45 Creditor turnover (days) 31 28 29 29 29 Inventory turnover (days) 57 57 57 57 57 Source: Company, Bahana estimates

2015 Compendium

178

INDOFOOD CONSUMER BRANDED PRODUCTS BUY* PX: 11,075 - TP: IDR13,300* With rising competition in FMCG, ICBP, Indonesia’s largest consumer

packaged food company with 70+% market share in noodles, continues to roll out new and higher-margin products (e.g. Soto Lamongan) while tapping into beverages through its Asahi JV to provide additional growth support. Note that ICBP has a 19% share (No. 3) in the liquid segment behind Ultra and Frisian.

Entering 2015, we like ICBP’s defensive nature as its noodles continue to remain affordable, priced at less than USD0.20/pack. On the cost side, we expect July’s 5% average price hike on noodles coupled with benign commodity prices to be supportive of margins.

On valuation, our IDR13,300 TP is based on a 2015 PE of 25x, at around a 20% discount to the sector. BUY. Downside risks include continued losses of its beverages business on higher A&P to gain market share.

Financial highlights Year to 31 Dec 2012A 2013A 2014F 2015F 2016F Revenues (IDRbn) 21,717 25,095 30,616 34,517 38,204EBIT (IDRbn) 2,846 2,734 3,415 4,091 4,903Net profit (IDRbn) 2,180 2,225 2,621 3,110 3,710Bahana/consensus (%) - - 100 100 97EPS (IDR) 374 382 449 533 636EPS growth (%) 10.3 2.1 17.8 18.7 19.3EV/EBITDA (x) 19.5 20.1 16.4 13.9 11.8P/E (x) 29.6 29.0 24.6 20.8 17.4FCFPS (IDR) 15 (6) (10) (1) 4FCF yield (%) 0.1 (0.1) (0.1) (0.0) 0.0BVPS (IDR) 1,957 2,158 2,413 2,712 3,068P/BV (x) 5.7 5.1 4.6 4.1 3.6DPS (IDR) 169 186 198 235 280Div. yield (%) 1.5 1.7 1.8 2.1 2.5Source: Company, Bahana estimates note: based on 09 October 2014 closing price


0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

20,000

9,000

9,500

10,000

10,500

11,000

11,500

12,000


('000)(IDR)

Volume (RHS) ICBP IJ Px Last

(8.3)

6.0 8.9 9.3

(6.6)

(11.8)(15)

(10)

(5)

0

5

10

15

(15)

(10)

(5)

0

5

10

15

ytd 1M 3M 6M 9M 12M

(%) (%)

ICBP IJ relative to JCI

Source: Bloomberg Harry Su ([email protected]) +6221 2505735 *New, please refer to appendix II

Major assumptions Year to 31 Dec 2012A 2013A 2014F 2015F 2016F Noodles sales volume (bn packs) 11.8 12.3 13.0 13.7 14.5 Avg. price per pack (IDR) 1,300 1,408 1,506 1,612 1,724 Dairy solid prod. sales vol. ('000tons) 191 201 201 209 218Dairy sales price (IDR/kg) 16,608 18,269 21,009 21,849 22,723Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 11,600/9,70012M high/low consensus TP (IDR) : 13,500/8,300Majority shareholder (%) : Indofood Sukses Makmur (80.5)Shares outstanding (mn)/Free float (%) : 5,831/19.5Mkt. cap. (IDRbn/USDmn) : 64,578/5,3023-m avg.daily t.o.(IDRbn/USDmn) : 33.6/2.8Bloomberg/Reuters code : ICBP IJ/ICBP.JKSource: Bloomberg, Reuters; based on 09 October 2014 closing price

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179

INDOFOOD CONSUMER BRANDED PRODUCTS

Profit & loss Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016FSales 21,717 25,095 30,616 34,517 38,204 Gross profit 5,804 6,426 7,930 9,181 10,460 EBITDA 3,096 3,057 3,840 4,598 5,491 Depreciation 250 323 425 507 589 EBIT 2,846 2,734 3,415 4,091 4,903 Net interest inc./(expense) 177 117 93 41 17 Forex gain/(losses) 6 101 (30) (5) 4 Other income/(expense) 6 15 18 20 22 Pre-tax profit 3,034 2,967 3,495 4,147 4,946 Taxes (745) (734) (864) (1,025) (1,223)Minority interest (103) (10) (12) (13) (14)Extraordinary gain/(losses) (7) 2 2 2 2Net profit 2,180 2,225 2,621 3,110 3,710 Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016F Cash and equivalents 5,487 5,526 4,139 3,591 3,288 S-T investments 21 72 72 72 72 Trade receivables 2,384 2,549 3,110 3,507 3,881 Inventories 1,816 2,869 3,486 3,893 4,263 Fixed assets 3,869 4,844 6,919 8,413 9,824 Other assets 4,242 5,407 6,052 6,847 8,231 Total assets 17,820 21,267 23,780 26,323 29,560 Interest bearing liabilities 1,263 2,521 2,673 2,832 3,376 Trade payables 1,996 2,531 3,075 3,434 3,761 Other liabilities 2,480 2,832 3,071 3,250 3,424 Total liabilities 5,836 8,003 8,963 9,689 10,767 Minority interest 572 679 747 822 904 Shareholders' equity 11,412 12,586 14,070 15,811 17,889 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016FEBIT 2,846 2,734 3,415 4,091 4,903Depreciation 250 323 425 507 589Working capital 373 (730) (651) (365) (282)Other operating items (324) (1,694) (1,751) (2,321) (2,784)Operating cash flow 3,145 632 1,438 1,912 2,425Net capital expenditure (1,509) (1,298) (2,500) (2,000) (2,000)Free cash flow 1,636 (665) (1,062) (88) 425Equity raised/(bought) - - - - -Net borrowings 483 1,258 152 159 544Other financing (576) 704 (325) (461) (722)Net cash flow 1,060 39 (1,387) (549) (297)Cash flow at beginning 4,427 5,487 5,526 4,139 3,591Ending cash flow 5,487 5,526 4,139 3,591 3,288Source: Company, Bahana estimates


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180

INDOFOOD SUKSES MAKMUR BUY PX: IDR6,775 - TP: IDR8,300* In 2015, we expect the earnings of INDF, the Salim Group’s holding

company of IFAR SP (60%-owned), ICBP IJ (81%) and MINZ SP (83%), to find support from 100%-owned Bogasari, Indonesia’s largest flour miller, which is benefiting from declining wheat prices and the government’s anti-dumping move to curb flour imports.

A growth catalyst for INDF would be a successful integration with synergy extraction from MINZ SP, an integrated vegetable processor. This has begun with the increased procurement of raw materials and replication of farming technology in Indonesia. Note that MINZ SP accounted for 14% of INDF’s 1H14 consolidated EBIT.

Our IDR8,300 TP is based on a 2015 PE of 15x, at a 15% discount to market’s current PE. A downside risk is continued intense competition in the flour market, currently a 24-player industry with Bogasari needing to cut flour prices by 2% in 3Q14 despite lower wheat prices.

Financial highlights Year to 31 Dec 2012A 2013A 2014F 2015F 2016F Revenues (IDRbn) 50,202 57,732 68,383 75,163 82,274 EBIT (IDRbn) 6,753 6,089 8,169 9,203 10,629 Net profit (IDRbn) 3,261 2,504 4,246 4,825 5,524 Bahana/consensus (%) - - 101 99 100 EPS (IDR) 371 285 484 550 629 EPS growth (%) 5.9 (23.2) 69.6 13.6 14.5 EV/EBITDA (x) 7.7 9.2 7.6 6.1 5.8 P/E (x) 18.2 23.8 14.0 12.3 10.8 FCFPS (IDR) 36 (33) (24) 10 12 FCF yield (%) 0.5 (0.5) (0.4) 0.1 0.2 BVPS (IDR) 2,415 2,693 2,939 3,246 3,601 P/BV (x) 2.8 2.5 2.3 2.1 1.9 DPS (IDR) 190 147 249 283 324 Div. yield (%) 2.8 2.2 3.7 4.2 4.8 Source: Company, Bahana estimates note: based on 09 October 2014 closing price


0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

6,000

6,400

6,800

7,200

7,600

8,000


('000)(IDR)

Volume (RHS) INDF IJ Px Last

(14.2)

0.9

(1.9)

(7.6)

(15.9)

(11.7)

(18)

(16)

(14)

(12)

(10)

(8)

(6)

(4)

(2)

0

2

(18)

(16)

(14)

(12)

(10)

(8)

(6)

(4)

(2)

0

2

ytd 1M 3M 6M 9M 12M

(%) (%)

INDF IJ relative to JCI

Source: Bloomberg Harry Su ([email protected]) +6221 250 5735 *New, please refer to appendix II

Major assumptions Year to 31 Dec 2012A 2013A 2014F 2015F 2016F Flour sales volume ('000 tons) 2,580 2,815 2,951 3,157 3,267 Average flour price per kg (IDR) 6,176 6,636 7,233 7,595 7,975 Wheat price (USD/tons) 263 269 225 220 225 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 7,750/6,250 12M high/low consensus TP (IDR) : 8,600/6,700 Majority shareholder (%) : CAB Holding Ltd (50.1) Shares outstanding (mn)/Free float (%) : 8,780/49.9 Mkt. cap. (IDRbn/USDmn) : 59,487/4,884 3-m avg.daily t.o.(IDRbn/USDmn) : 60.4/5.0 Bloomberg/Reuters code : INDF IJ/INDF.JK Source: Bloomberg, Reuters; based on 09 October 2014 closing price

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181

INDOFOOD SUKSES MAKMUR

Profit & loss Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016FSales 50,202 57,732 68,383 75,163 82,274 Gross profit 13,591 14,330 17,775 20,070 22,398 EBITDA 7,990 7,950 10,999 12,751 13,325 Depreciation 1,237 1,860 2,830 3,547 2,695 EBIT 6,753 6,089 8,169 9,203 10,629 Net interest inc./(expense) (390) (656) (812) (692) (659)Forex gain/(losses) (33) (1,109) 84 18 (5)Other income/(expense) (14) 343 479 540 420 Pre-tax profit 6,317 4,667 7,919 9,070 10,385 Taxes (1,531) (1,252) (2,125) (2,485) (2,846)Minority interest (1,518) (913) (1,549) (1,760) (2,015)Extraordinary gain/(losses) (7) 2 - - -Net profit 3,261 2,504 4,246 4,825 5,524 Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016F Cash and equivalents 13,346 13,666 13,304 15,022 16,652 S-T investments 553 693 634 697 767 Trade receivables 3,641 4,959 6,506 7,152 7,828 Inventories 7,786 8,161 9,428 10,264 11,155 Fixed assets 22,727 30,887 42,719 50,719 58,719 Other assets 11,336 16,328 19,875 15,526 12,492 Total assets 59,389 78,093 95,865 99,380 107,614 Interest bearing liabilities 15,286 27,320 37,727 33,097 31,816 Trade payables 3,643 4,851 6,212 6,763 7,350 Other liabilities 5,699 6,779 9,926 11,580 13,509 Total liabilities 24,628 38,949 53,865 51,440 52,675 Minority interest 12,934 14,725 16,197 19,436 23,324 Shareholders' equity 21,206 23,649 25,802 28,504 31,615 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016FEBIT 6,753 6,089 8,169 9,203 10,629Depreciation 1,237 1,860 2,830 3,547 2,695Working capital 1,408 (667) (172) (733) (779)Other operating items (1,921) (1,908) (2,937) (3,177) (3,504)Operating cash flow 7,478 5,374 7,890 8,841 9,042Net capital expenditure (4,352) (8,256) (10,000) (8,000) (8,000)Free cash flow 3,126 (2,882) (2,110) 841 1,042Equity raised/(bought) - - - - -Net borrowings 1,633 12,034 10,407 (4,630) (1,281)Other financing (4,519) (10,260) (8,659) 5,507 1,868Net cash flow 240 (1,108) (362) 1,718 1,630Cash flow at beginning 13,055 13,346 13,666 13,304 15,022Ending cash flow 13,346 13,666 13,304 15,022 16,652Source: Company, Bahana estimates


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182

INDOMOBIL SUKSES INTERNATIONAL REDUCE PX: IDR4,305 - TP: IDR3,000* Due to tight competition, Nissan, the main brand of IMAS, the second-

largest listed auto distributor, is likely to experience disappointing sales volumes of its two most popular models, Livina (low MPV) and March (city car). Additionally, despite the launch of Datsun (LCGC) and the new X-Trail (SUV), Nissan’s market share should remain weak on competition with new-model launches and aggressive promotions.

On the margin side, we expect IMAS to experience continued pressure from low utilization rates in several of its new distribution outlets, on discount offers and increased promotional activities in the sector.

At this stage of the cycle, we are negative on IMAS, as we expect its market underperformance to persist on muted market share and lower margins. Our TP of IDR3,000 reflects a 2015F PE of 20x, 20% premium with its regional peers. REDUCE. Risks to our call include higher-than-expected Datsun sales and margins.


EPS (IDR) 214 174 142 149 188 EPS growth (%) 13.6 (18.7) (18.5) 5.0 26.5 EV/EBITDA (x) 26.8 28.3 28.3 26.4 24.0 P/E (x) 20.1 24.7 30.4 28.9 22.9 FCFPS (IDR) (957) (289) (176) (16) 49 FCF yield (%) (22.2) (6.7) (4.1) (0.4) 1.1 BVPS (IDR) 1,876 2,122 2,245 2,358 2,509 P/BV (x) 2.3 2.0 1.9 1.8 1.7 DPS (IDR) 29 19 35 37 47 Div. yield (%) 0.7 0.4 0.8 0.9 1.1 Source: Company, Bahana estimates note: based on 09 October 2014 closing price


0

500

1,000

1,500

2,000

2,500

3,000

4,000

4,200

4,400

4,600

4,800

5,000

5,200

5,400


('000)(IDR)

Volume (RHS) IMAS IJ Px Last

(29.0)

0.7

(10.1)

(20.0)

(31.7) (30.8)(35)

(30)

(25)

(20)

(15)

(10)

(5)

0

5

(35)

(30)

(25)

(20)

(15)

(10)

(5)

0

5

ytd 1M 3M 6M 9M 12M

(%) (%)

IMAS IJ relative to JCI


Major assumptions Year to 31 Dec 2012A 2013A 2014F 2015F 2016F Automotive Market Sales (‘000) 1,116 1,230 1,230 1,230 1,353 Nissan Market Share (%) 6.0 5.0 4.7 5.3 5.3 IMAS retail Sales unit 67,143 61,119 57,960 65,248 71,096 EBIT Margin (%) 2.3 1.8 1.9 2.1 2.4 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 5,350/4,280 12M High/low consensus TP (IDR) : 6,050/3,900 Majority shareholder (%) : Gallant Venture (71.5) Shares outstanding (mn)/Free float (%) : 2,765/10.5 Mkt. cap. (IDRbn/USDmn) : 11,905/977 3-m avg.daily t.o.(IDRbn/USDmn) : 1.1/0.1 Bloomberg/Reuters code : IMAS IJ/IMAS.JK Source: Bloomberg, Reuters; note: based on 09 October 2014 closing price

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183

INDOMOBIL SUKSES INTERNATIONAL

Profit & loss Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016FSales 19,572 20,095 19,719 21,998 25,047Gross profit 2,242 2,490 2,468 2,805 3,209EBITDA 723 826 903 1,047 1,238Depreciation 271 457 533 579 642EBIT 452 369 370 469 596Net interest inc./(expense) (247) (479) (641) (795) (906)Forex gain/(losses) (60) 6 5 11 11Other income/(expense) 718 700 740 815 927Pre-tax profit 864 596 474 500 628Taxes (174) (26) (47) (50) (63)Minority interest (97) (89) (35) (38) (44)Extraordinary gain/(losses) - - - - -Net profit 592 481 392 412 521Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016F Cash and equivalents 1,135 1,122 1,489 957 1,416 S-T investments Trade receivables 2,267 2,457 3,056 3,080 3,131 Inventories 3,888 4,499 4,305 4,790 5,450 Fixed assets 2,951 3,774 4,846 5,873 6,836 Other assets 7,336 10,464 11,443 12,710 14,030 Total assets 17,578 22,315 25,140 27,409 30,862 Interest bearing liabilities 8,644 12,552 15,100 16,675 19,200 Trade payables 2,352 2,379 2,300 2,559 2,912 Other liabilities 872 723 762 845 959 Total liabilities 11,869 15,654 18,163 20,079 23,071 Minority interest 522 794 770 809 853 Shareholders' equity 5,186 5,867 6,207 6,520 6,938 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016FEBIT 452 369 370 469 596Depreciation 271 457 533 579 642Working capital (2,389) (1,137) (535) (257) (366)Other operating items 544 674 693 765 864Operating cash flow (1,121) 363 1,060 1,556 1,736Net capital expenditure (1,526) (1,161) (1,546) (1,600) (1,600)Free cash flow (2,647) (798) (485) (44) 136Equity raised/(bought) (122) 229 - - -Net borrowings 3,932 3,907 2,548 1,575 2,525Other financing (1,637) (3,352) (1,695) (2,063) (2,202)Net cash flow (474) (13) 367 (532) 459Cash flow at beginning 1,609 1,135 1,122 1,489 957Ending cash flow 1,135 1,122 1,489 957 1,416Source: Company, Bahana estimates


2015 Compendium

184

INDOSAT BUY PX: IDR3,850 - TP: IDR4,500* ISAT, currently the third-largest cellular operator in terms of number

of subscribers, will incur a capex of IDR9tn in 2014 on network modernization program, in an effort to better compete with the other two incumbents. Hence, we expect lower capex in the next two years.

Following the finalization of the first phase of network modernization, we expect higher revenue growth of 4% y-y to IDR25.3tn for 2015, before improving further in 2016 at a 5% y-y growth to IDR26.6tn. Thus, increasing top line, coupled with easing competition and solid infrastructure support, should allow for an earnings reversal from net loss to a net profit of IDR431bn by 2016.

ISAT’s severe ytd market underperformance has priced in most of bad news, limiting further share price weakness in our view. Our IDR4,500 TP is conservatively based on a 2015F EV/EBITDA of 4.1x, a 40% discount to its regional peers. Risk is stronger dollar causing FX losses.

Financial highlights Year to 31 Dec 2012A 2013A 2014F 2015F 2016F Revenues (IDRbn) 22,419 23,855 24,273 25,254 26,598 EBIT (IDRbn) 2,267 1,418 2,072 2,121 2,332 Net profit (IDRbn) 375 (2,782) 18 (30) 431 Bahana/consensus (%) - - 4 (3) 32

EPS (IDR) 69 (512) 3 (6) 79 EPS growth (%) (61.3) na na na na EV/EBITDA (x) 3.8 4.1 3.7 3.5 3.0 P/E (x) 55.8 na na na 48.6 FCFPS (IDR) 261 (683) 376 162 331 FCF yield (%) 6.8 (17.7) 9.8 4.2 8.6 BVPS (IDR) 3,471 2,929 2,932 2,926 3,020 P/BV (x) 1.1 1.3 1.3 1.3 1.3 DPS (IDR) 77 35 - - 14 Div. yield (%) 2.0 0.9 - - 0.4 Source: Company, Bahana estimates note: based on 09 October 2014 closing price


0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

3,400

3,600

3,800

4,000

4,200

4,400

4,600

4,800


('000)(IDR)

Volume (RHS) ISAT IJ Px Last

(24.1)

(2.3)

5.1

(7.9)

(22.0) (21.2)

(30)

(25)

(20)

(15)

(10)

(5)

0

5

10

(30)

(25)

(20)

(15)

(10)

(5)

0

5

10

ytd 1M 3M 6M 9M 12M

(%) (%)

ISAT IJ relative to JCI


Major assumptions Year to 31 Dec 2012A 2013A 2014F 2015F 2016F Subscribers (‘000) 58,574 59,712 60,792 62,008 63,248 Net additional (‘000) 6,700 1,200 1,192 1,216 1,240 ARPU (IDR’000/month) 27 28 28 28 29 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 4,625/3,500 12M High/low consensus TP (IDR) : 6,850/3,600 Majority shareholder (%) : Ooredoo Asia Pte Ltd (38.8) Share outstanding (mn)/Free float (%) : 5,434/20.7 Mkt. cap. (IDRbn/USDmn) : 20,921/1,716 3-m avg.daily t.o.(IDRbn/USDmn) : 3.1/0.3 Bloomberg/Reuters code : ISAT IJ/ISAT.JK Source: Bloomberg, Reuters; based on 09 October 2014 closing price

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185

INDOSAT

Profit & loss Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016FSales 22,419 23,855 24,273 25,254 26,598Gross profit - - - - -EBITDA 10,376 10,340 10,758 11,331 12,580Depreciation 8,273 8,958 8,268 8,637 8,999EBIT 2,267 1,418 2,072 2,121 2,332Net interest inc./(expense) (1,944) (2,105) (2,274) (2,276) (2,012)Forex gain/(losses) (789) (3,011) 252 199 178Other income/(expense) 928 365 120 72 202Pre-tax profit 462 (3,334) 170 116 701Taxes 26 667 (34) (23) (140)Minority interest (112) (116) (118) (123) (130)Extraordinary gain/(losses) - - - - -Net profit 375 (2,782) 18 (30) 431Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016F Cash and equivalents 3,917 2,234 2,287 2,440 2,717 S-T investments - - - - - Trade receivables 2,061 2,285 2,312 2,405 2,533 Inventories 53 36 44 46 48 Fixed assets 41,965 42,190 42,480 41,452 40,062 Other assets 7,229 7,777 5,749 5,982 6,300 Total assets 55,225 54,521 52,872 52,325 51,660 Interest bearing liabilities 7,400 9,894 7,587 7,813 6,879 Trade payables 232 339 584 609 639 Other liabilities 28,198 27,770 28,094 27,253 26,907 Total liabilities 35,830 38,003 36,266 35,674 34,425 Minority interest 534 603 675 749 827 Shareholders' equity 18,861 15,914 15,932 15,902 16,408 Source: Company, Bahana estimates

Cashflow Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016FEBIT 2,267 1,418 2,072 2,121 2,332Depreciation 8,273 8,958 8,268 8,637 8,999Working capital 2,345 2,660 2,940 3,060 3,220Other operating items (3,094) (7,382) (2,240) (4,939) (4,751)Operating cash flow 9,791 5,654 11,041 8,879 9,800Net capital expenditure (8,374) (9,364) (9,000) (8,000) (8,000)Free cash flow 1,418 (3,710) 2,041 879 1,800Equity raised/(bought) - - - - -Net borrowings (3,266) 2,643 (2,000) (1,192) (2,068)Other financing 3,541 (616) 13 465 545Net cash flow 1,693 (1,684) 54 153 277Cash flow at beginning 2,224 3,917 2,234 2,287 2,440Ending cash flow 3,917 2,234 2,287 2,440 2,717Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2012A 2013A 2014F 2015F 2016F ROAE (%) 2.0 (16.0) 0.1 (0.2) 2.7 ROAA (%) 0.7 (5.1) 0.0 (0.3) 0.6 EBITDA margin (%) 46.3 43.3 44.3 44.9 47.3 EBIT margin (%) 10.1 5.9 8.5 8.4 8.8 Net margin (%) 1.7 (11.7) 0.1 (0.5) 1.2 Payout ratio (%) 111.3 (6.7) - - 25.8 Current ratio (x) 0.8 0.5 0.5 0.5 0.6 Interest coverage (x) 1.2 0.7 0.9 0.9 1.2 Net gearing (%) 95.8 136.3 120.2 120.1 101.3 Debts to assets (%) 12.9 15.4 13.4 13.9 12.7 Debtor turnover (days) 29 33 35 35 35 Creditor turnover (days) 5 5 10 10 10 Inventory turnover (days) 1 1 1 1 1 Source: Company, Bahana estimates

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186

J RESOURCES ASIA PACIFIC (INITIAL COVERAGE) BUY PX: IDR760 - TP: IDR1,400 PSAB, Indonesia’s largest listed pure gold producer, should continue

to see strong production growth, helped by 4 producing assets and 4 pre-production and development assets in Indonesia and Malaysia. Additionally, PSAB has fast-tracked its exploration efforts, which should result in significantly higher reserves of 1.5mn oz and resources of 4.9mn oz, more than 20x its current annual production.

Due to the commencement of production in the past 8 months on 2 new assets, Bakan and Seruyung, we expect PSAB’s 2015 production to increase by 10% y-y to 230k oz, before rising by 22% y-y to 280k oz in 2016, supported by its experienced operational team.

At our DCF-based TP of IDR1,400, PSAB looks attractive at a 2015F PE of 13x, a 30% discount to the sector and a 2014-16F earnings CAGR of 30% y-y. It is also trading at an EV/resource of USD136/oz, a 60% sector discount. BUY. Risks include lower gold prices.


Revenues (USDmn) 173 78 263 288 350 EBIT (USDmn) 38 (29) 96 106 144 Net profit (USDmn) 18 (24) 40 46 73 Bahana/consensus (%) na na 15 59

EPS (IDR) 41 (56) 92 105 168 EPS growth (%) na na na 14.5 59.4 EV/EBITDA (x) 15.1 (38.1) 6.3 5.8 4.5 P/E (x) 18.3 (13.6) 8.3 7.2 4.5 FCFPS (IDR) (832) (536) 32 148 208 FCF yield (%) (59.4) (38.3) 2.3 10.6 14.8 BVPS (IDR) 572 516 608 713 882 P/BV (x) 1.3 1.5 1.3 1.1 0.9 DPS (IDR) - - - - - Div. yield (%) - - - - - Source: Company, Bahana estimates note: based on 09 October 2014 closing price


0

5,000

10,000

15,000

20,000

25,000

250

350

450

550

650

750

850

950


('000)(IDR)

Volume (RHS) PSAB IJ Px Last

88.1

(1.8)

9.3

77.3

106.5

87.4

(20)

0

20

40

60

80

100

120

(20)

0

20

40

60

80

100

120

ytd 1M 3M 6M 9M 12M

(%) (%)

PSAB IJ relative to JCI


Major assumptions Year to 31 Dec 2012A 2013A 2014F 2015F 2016F Gold production volume (oz) 101,314 66,957 210,000 230,000 280,000 Volume growth (%) 6.6 (33.9) 213.6 9.5 21.7 ASP (USD/oz) 1,676 1,417 1,250 1,250 1,250 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 925/300 12M High/low consensus TP (IDR) : na Majority shareholder (%) : J&Partners Asia Limited (94.6) Shares outstanding (mn)/Free float (%) : 5,292/5.4 Mkt. cap. (IDRbn/USDmn) : 4,022/336 3-m avg.daily t.o.(IDRbn/USDmn) : 2/0.2 Bloomberg/Reuters code : PSAB IJ/PSAB.JK Source: Bloomberg, Reuterd; based on 09 October 2014 closing price

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J RESOURCES ASIA PACIFIC

Profit & loss Year to 31 Dec (USDmn) 2012A 2013A 2014F 2015F 2016FSales 173 78 263 288 350Gross profit 67 3 119 131 173EBITDA 49 (19) 116 126 165Depreciation 37 25 35 35 35EBIT 38 (29) 96 106 144Net interest inc./(expense) (11) (25) (24) (26) (25)Forex gain/(losses) - - - - -Other income/(expense) 69 14 (15) (14) (14)Pre-tax profit 96 (39) 57 66 105Taxes (8) 13 (14) (16) (26)Minority interest (1) 2 (3) (4) (6)Extraordinary gain/(losses) - - - 4 5Net profit 87 (24) 40 46 73Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (USDmn) 2012A 2013A 2014F 2015F 2016F Cash and equivalents 9 27 44 78 102 S-T investments - - - - - Trade receivables 6 2 6 7 8 Inventories 29 40 48 52 59 Fixed assets 397 580 596 576 556 Other assets 134 156 156 156 156 Total assets 574 805 849 868 881 Interest bearing liabilities 155 405 408 378 318 Trade payables 30 65 50 15 15 Other liabilities 104 76 91 130 131 Total liabilities 289 546 550 523 463 Minority interest 38 36 36 36 36 Shareholders' equity 248 224 264 309 382 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (USDmn) 2012A 2013A 2014F 2015F 2016FEBIT 38 (29) 96 106 144Depreciation 37 25 35 35 35Working capital (4) 9 (7) (1) (3)Other operating items 3 (25) (60) (60) (71)Operating cash flow 74 (20) 64 79 105Net capital expenditure (434) (212) (50) (15) (15)Free cash flow (361) (232) 14 64 90Equity raised/(bought) 161 (0) - - -Net borrowings 154 251 3 (30) (66)Other financing 54 0 - - 0Net cash flow 8 18 17 34 24Cash flow at beginning 1 9 27 44 78Ending cash flow 9 27 44 78 102Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2012A 2013A 2014F 2015F 2016F ROAE (%) 1.4 (10.3) 16.4 16.0 21.1 ROAA (%) 3.3 (3.5) 4.8 5.3 8.3 EBITDA margin (%) 28.1 (24.7) 44.2 44.0 47.1 EBIT margin (%) 21.8 (36.7) 36.6 36.9 41.1 Net margin (%) 10.4 (31.1) 15.2 15.9 20.8 Payout ratio (%) - - - - - Current ratio (x) 0.9 0.9 1.3 2.7 3.0 Interest coverage (x) 3.5 na 4.0 4.1 5.8 Net gearing (%) 59.0 169.2 138.3 97.1 56.4 Debts to assets (%) 27.0 50.3 48.1 43.6 36.0 Debtor turnover (days) 13 9 9 9 9 Creditor turnover (days) 104 316 128 36 32 Inventory turnover (days) 99 198 122 122 122 Source: Company, Bahana estimates

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188

JAPFA COMFEED INDONESIA BUY PX: IDR1,190 - TP: IDR1,400* JPFA is the largest fully integrated poultry play in our coverage, with

100% domestic businesses including animal feed (42% of 6M14 total sales), commercial farms (33%), aquaculture (9%), DOC (6%), cattle breeding (5%), consumer products (3%), and trading and others (2%). JPFA is benefiting from higher chicken broiler prices (currently IDR18,500/kg) due to the government’s recent supply cut.

While the animal feed business model is based on cost-plus with the ASP adjusted according to raw materials price fluctuations, recent margin pressure has stemmed from currency volatility and greater discounts due to oversupply conditions and tighter competition.

On valuation, JPFA is one of the sector’s cheapest at an 11.1x 2015F PE. At our IDR1,400 TP, JPFA would trade at 13.1x 2015F PE (35% discount to sector target PE), likely sufficient to account for the company’s high leverage. Risks include higher-than-expected raw materials prices.

Financial highlights Year to 31 Dec 2012A 2013A 2014F 2015F 2016F Revenues (IDRbn) 17,833 21,412 25,329 28,238 32,303 EBIT (IDRbn) 1,668 1,803 1,779 2,274 2,721 Net profit (IDRbn) 992 595 827 1,142 1,432 Bahana/consensus (%) - - 99 100 104

EPS (IDR) 93 56 78 107 134 EPS growth (%) 56.2 (40.0) 38.9 38.1 25.4 EV/EBITDA (x) 8.7 8.6 8.9 7.4 6.4 P/E (x) 12.8 21.3 15.3 11.1 8.9 FCFPS (IDR) (106) (130) (186) (73) (43) FCF yield (%) (8.9) (10.9) (15.7) (6.1) (3.6) BVPS (IDR) 408 446 512 604 717 P/BV (x) 2.9 2.7 2.3 2.0 1.7 DPS (IDR) 15 20 11 16 21 Div. yield (%) 1.3 1.7 0.9 1.3 1.8 Source: Company, Bahana estimates note: based on 09 October 2014 closing price


0

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('000)(IDR)

Volume (RHS) JPFA IJ Px Last

(19.3)

(1.9) (2.0)

(18.2)

(23.6)

(31.4) (35)

(30)

(25)

(20)

(15)

(10)

(5)

0

(35)

(30)

(25)

(20)

(15)

(10)

(5)

0

ytd 1M 3M 6M 9M 12M

(%) (%)

JPFA IJ relative to JCI

Source: Bloomberg Michael W. Setjoadi ([email protected]) +6221 2505081 ext. 3613 *New, please refer to appendix II


Company information 12M high/low (IDR) : 1,705/1,130 12M high/low consensus TP (IDR) : 1,860/1,285 Majority shareholder (%) : Japfa Holding (57.5) Shares outstanding (mn)/Free float (%) : 10,661/42.5 Mkt. cap. (IDRbn/USDmn) : 12,686/1,041 3-m avg.daily t.o.(IDRbn/USDmn) : 8.5/0.7 Bloomberg/Reuters code : JPFA IJ/JPFA.JK Source: Bloomberg, Reuters; based on 09 October 2014 closing price

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189

JAPFA COMFEED INDONESIA

Profit & loss Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016FSales 17,833 21,412 25,329 28,238 32,303Gross profit 3,184 3,618 4,058 4,843 5,563EBITDA 1,911 2,151 2,306 2,902 3,418Depreciation 243 349 527 628 697EBIT 1,668 1,803 1,779 2,274 2,721Net interest inc./(expense) (393) (494) (581) (645) (670)Forex gain/(losses) 25 (317) 10 10 10Other income/(expense) 65 (96) (11) 15 13Pre-tax profit 1,365 896 1,198 1,654 2,074Taxes (290) (255) (336) (464) (582)Minority interest (83) (45) (35) (48) (60)Extraordinary gain/(losses) - - - - -Net profit 992 595 827 1,142 1,432Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016F Cash and equivalents 872 1,746 1,097 1,159 1,251 S-T investments - - - - - Trade receivables 905 1,197 1,416 1,579 1,645 Inventories 3,634 4,727 5,438 5,982 6,837 Fixed assets 4,065 5,272 6,145 7,317 8,121 Other assets 1,485 1,975 3,298 3,597 4,087 Total assets 10,961 14,918 17,395 19,635 21,940 Interest bearing liabilities 4,733 7,613 8,923 9,833 10,468 Trade payables 557 995 1,177 1,312 1,501 Other liabilities 907 1,065 1,260 1,404 1,607 Total liabilities 6,198 9,672 11,360 12,549 13,575 Minority interest 415 493 575 649 725 Shareholders' equity 4,349 4,752 5,460 6,436 7,640 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016FEBIT 1,668 1,803 1,779 2,274 2,721Depreciation 243 349 527 628 697Working capital (1,071) (795) (1,351) (700) (913)Other operating items (541) (1,181) (1,543) (1,178) (1,464)Operating cash flow 299 176 (587) 1,023 1,040Net capital expenditure (1,425) (1,564) (1,400) (1,800) (1,500)Free cash flow (1,125) (1,388) (1,987) (777) (460)Equity raised/(bought) 214 316 - - -Net borrowings 1,229 2,333 1,311 910 635Other financing (272) (387) 28 (71) (83)Net cash flow 45 874 (649) 62 92Cash flow at beginning 827 872 1,746 1,097 1,159Ending cash flow 872 1,746 1,097 1,159 1,251Source: Company, Bahana estimates


2015 Compendium

190

JASA MARGA BUY PX: IDR6,300 - TP: IDR7,200* JSMR is Indonesia’s state-owned and largest toll road operator, with a

76% domestic market share and roads totaling 576km. To support long-term growth, JSMR is developing new toll roads, including the Bogor Outer Ring Road, and the Semarang-Solo and Surabaya-Mojokerto roads. JSMR currently has 18 toll road concessions in Java and Sumatra, which are due to expire in 2044-58.

In 2H15, JSMR is planning tariff hikes for almost all of its toll roads (not Jakarta-Cikampek and Sedyatmo), pending Indonesian Toll Road Authority approval. We assume a 5% average tariff hike in 2015.

Going into 2015, we like JSMR’s inflation-hedge status and proven ability to generate stable revenues under unfavorable economic conditions. We value JSMR using DCF with a WACC of 12%, translating into a IDR7,200 TP. Risks include lower traffic volumes from toll road completion delays and higher-than-expected opex.


EPS (IDR) 236 197 237 252 291 EPS growth (%) 33.9 (16.6) 20.8 6.3 15.2 EV/EBITDA (x) 15.1 16.4 14.6 13.8 12.6 P/E (x) 26.7 32.1 26.5 25.0 21.7 FCFPS (IDR) (102) (431) (429) (428) (350) FCF yield (%) (1.6) (6.8) (6.8) (6.8) (5.6) BVPS (IDR) 1,266 1,368 1,527 1,685 1,874 P/BV (x) 5.0 4.6 4.1 3.7 3.4 DPS (IDR) 94 79 95 101 116 Div. yield (%) 1.5 1.2 1.5 1.6 1.8 Source: Company, Bahana estimates note: based on 09 October 2014 closing price


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Volume (RHS) JSMR IJ Px Last

16.5

3.1 3.5 1.8

14.0

(1.5)(4)(2)024681012141618

(4)(2)02468

1012141618

ytd 1M 3M 6M 9M 12M

(%) (%)

JSMR IJ relative to JCI Source: Bloomberg


Major assumptions Year to 31 Dec 2012A 2013A 2014F 2015F 2016F Traffic volumes ('000,000) 1,198 1,259 1,402 1,519 1,632 Volumes growth (%) 9.8 5.1 11.4 8.3 7.4 Avg. tariff (IDR) 4,658 4,627 4,996 5,252 5,670 Source: Company, Bahana estimates

Company information

12M high/low (IDR) : 6,450/4,450 12M High/low consensus TP (IDR) : 7,200 /6,300Majority shareholder (%) : Republic of Indonesia (70) Shares outstanding (mn)/Free float (%) : 6,800/30 Mkt. cap. (IDRbn/USDmn) : 42,840/3,514 3-m avg.daily t.o.(IDRbn/USDmn) : 40.0/3.3 Bloomberg/Reuters code : JSMR IJ/JSMR.JK Source: Bloomberg, Reuters; based on 09 October 2014 closing price

2015 Compendium

191

JASA MARGA

Profit & loss Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016FSales 5,759 6,380 7,589 8,590 9,896Gross profit - - - - -EBITDA 3,237 3,128 3,763 4,218 4,865Depreciation 602 642 765 885 1,005EBIT 2,635 2,487 2,997 3,333 3,859Net interest inc./(expense) (718) (715) (890) (1,106) (1,301)Forex gain/(losses) - - - - -Other income/(expense) 138 (57) (57) (58) (59)Pre-tax profit 2,056 1,715 2,050 2,169 2,499Taxes (519) (477) (554) (586) (675)Minority interest 66 98 117 133 153Extraordinary gain/(losses) - - - - -Net profit 1,602 1,336 1,614 1,716 1,977Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016F Cash and equivalents 4,302 3,514 4,210 3,097 3,599 S-T investments 8 7 7 8 9 Trade receivables 64 197 208 235 271 Inventories - - - - - Fixed assets 18,970 22,893 28,128 33,243 38,238 Other assets 1,409 1,755 1,801 1,811 1,831 Total assets 24,754 28,366 34,354 38,395 43,948 Interest bearing liabilities 10,214 12,116 16,130 18,430 21,830 Trade payables 1,453 1,300 1,742 1,972 2,299 Other liabilities 3,298 4,083 4,418 4,726 5,108 Total liabilities 14,966 17,499 22,291 25,128 29,238 Minority interest 1,177 1,562 1,679 1,811 1,964 Shareholders' equity 8,611 9,305 10,384 11,456 12,746 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016FEBIT 2,635 2,487 2,997 3,333 3,859Depreciation 602 642 765 885 1,005Working capital 793 (267) 515 292 437Other operating items (1,121) (1,230) (1,195) (1,423) (1,684)Operating cash flow 2,908 1,630 3,082 3,087 3,618Net capital expenditure (3,604) (4,565) (6,000) (6,000) (6,000)Free cash flow (695) (2,934) (2,918) (2,913) (2,382)Equity raised/(bought) 131 - - - -Net borrowings 1,509 1,908 4,015 2,300 3,400Other financing (407) 238 (401) (500) (516)Net cash flow 538 (788) 696 (1,113) 502Cash flow at beginning 3,764 4,302 3,514 4,210 3,097Ending cash flow 4,302 3,514 4,210 3,097 3,599Source: Company, Bahana estimates


2015 Compendium

192

KALBE FARMA BUY PX: IDR 1,655 - TP: IDR1,975 KLBF is one of Indonesia’s leading consumer companies, with

segments in pharmaceutical (25% of total sales), nutrition (26%), OTC/energy drinks (17%) and distribution/logistics (32%). In 2015, we expect it to enjoy margin protection due to its cost efficiency and margin enhancement programs, with its oncology division coming on stream, as well as lower commodity and key raw materials prices.

Additionally, we expect strong brands, a widening distribution network, continued innovations and premium niche products to support pricing power. Growth should be backed by low health care spending, rising incomes and expansion into non-branded generics, which benefit from National Healthcare Insurance (BPJS-SJSN).

With market volatility expected, KLBF’s defensive status should support its premium valuation, with our IDR1,975 TP reflecting a 2015F PE of 38x. Risks include a weaker-than-expected IDR.

Financial highlights Year to 31 Dec 2012A 2013A 2014F 2015F 2016F Revenues (IDRbn) 13,636 16,002 18,035 20,555 23,702 EBIT (IDRbn) 2,218 2,549 2,841 3,279 3,845 Net profit (IDRbn) 1,734 1,920 2,122 2,449 2,872 Bahana/cons. (%) - - 97 93 92 EPS (IDR) 37 41 45 52 61 EPS growth (%) 17.0 10.7 10.6 15.4 17.3 EV/EBITDA (x) 31.0 27.2 24.2 20.9 17.8 P/E (x) 44.7 40.4 36.6 31.7 27.0 FCFPS (IDR) 7 (1) 23 25 28 FCF yield (%) 0.4 (0.0) 1.4 1.5 1.7 BVPS (IDR) 150 173 201 233 271 P/BV (x) 11.0 9.6 8.2 7.1 6.1 DPS (IDR) 19 17 20 24 31 Div. yield (%) 1.1 1.0 1.2 1.4 1.9 Source: Company, Bahana estimates note: based on 09 October 2014 closing price


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('000)(IDR)

Volume (RHS) KLBF IJ Px Last

15.6

2.7

(2.9)

8.1

3.4

11.5

(5)

0

5

10

15

20

(5)

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5

10

15

20

ytd 1M 3M 6M 9M 12M

(%) (%)

KLBF IJ relative to JCI

Source: Bloomberg

Harry Su ([email protected]) +6221 2505735

Major assumptions Year to 31 Dec 2012A 2013A 2014F 2015F 2016F Sales growth (%) 25.0 17.3 12.7 14.0 15.3 Gross margin (%) 47.9 48.0 47.8 48.1 48.5 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 1,790/1,180 12M high/low consensus TP (IDR) : 2,020/1,090 Majority shareholder (%) : The Kalbe Family (56.7) Shares outstanding (mn)/Free float (%) : 46,875/43.3 Mkt. cap. (IDRbn/USDmn) : 77,578/6,364 3-m avg.daily t.o.(IDRbn/USDmn) : 98.1/8.0 Bloomberg/Reuters code : KLBF IJ/KLBF.JK Source: Bloomberg, Reuters; based on 09 October 2014 closing price

2015 Compendium

193

KALBE FARMA

Profit & loss Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016FSales 13,636 16,002 18,035 20,555 23,702 Gross profit 6,533 7,679 8,626 9,882 11,498 EBITDA 2,449 2,824 3,160 3,637 4,245 Depreciation 231 275 319 358 400 EBIT 2,218 2,549 2,841 3,279 3,845 Net interest inc./(expense) 57 22 11 21 31 Forex gain/(losses) 20 1 8 (2) 0Other income/(expense) 13 1 (12) 1 (3)Pre-tax profit 2,308 2,573 2,848 3,299 3,873 Taxes (533) (602) (669) (782) (918)Minority interest (41) (51) (57) (68) (83)Extraordinary gain/(losses) - - - - -Net profit 1,734 1,920 2,122 2,449 2,872 Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016F Cash and equivalents 1,860 1,426 1,808 2,181 2,592 S-T investments 239 188 180 206 237 Trade receivables 1,805 2,145 2,421 2,759 3,182 Inventories 2,115 3,053 3,351 3,743 4,246 Fixed assets 2,255 2,926 3,698 4,536 5,193 Other assets 1,144 1,577 1,557 1,625 1,776 Total assets 9,418 11,315 13,016 15,050 17,227 Interest bearing liabilities 205 584 668 701 780 Trade payables 809 1,152 1,320 1,518 1,597 Other liabilities 1,033 1,080 1,203 1,425 1,595 Total liabilities 2,046 2,815 3,190 3,644 3,971 Minority interest 318 392 405 491 571 Shareholders' equity 7,054 8,108 9,421 10,915 12,685 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016FEBIT 2,218 2,549 2,841 3,279 3,845Depreciation 231 275 319 358 400Working capital (666) (842) (376) (504) (894)Other operating items (573) (972) (679) (789) (974)Operating cash flow 1,210 1,009 2,105 2,345 2,377Net capital expenditure (515) (855) (1,000) (1,100) (950)Free cash flow 346 (36) 1,062 1,175 1,328Equity raised/(bought) - - - - -Net borrowings 73 374 84 34 78Other financing (851) (771) (764) (836) (994)Net cash flow (432) (433) 382 373 411Cash flow at beginning 2,291 1,860 1,426 1,808 2,181Ending cash flow 1,860 1,426 1,808 2,181 2,592Source: Company, Bahana estimates


2015 Compendium

194

KAWASAN INDUSTRI JABABEKA BUY PX: IDR260 - TP: IDR450 The largest industrial estate player in our coverage with remaining

gross landbank of 2,973 ha in Cikarang, Kendal and Tanjung Lesung, KIJA, is experiencing rising recurring income, which bodes well amid current volatile operating environment. In its ongoing first-phase project in Kendal, KIJA targets to acquire an 860 ha landbank, of which 349 ha were secured in 1H14.

Recurring income, backed by its 135MW power plant, accounted for 55% of its 1H14 revenue. We expect this to rise to 57% of the total top line by end-2014, providing greater income stability for KIJA and at the same time allowing for less dependence on FDI.

Our IDR450 TP is based on a 60% 2015F NAV discount (sector: 40%), which looks warranted given KIJA’s high currency-volatility exposure, having issued USD190mn in global bonds. Risks include worse-than expected IDR depreciation and lower-than-expected marketing sales.

Financial highlights Year to 31 Dec 2012A 2013A 2014F 2015F 2016F Revenues (IDRbn) 1,401 2,740 2,896 2,995 3,327 EBIT (IDRbn) 625 855 859 868 1,036 Net profit (IDRbn) 380 101 554 616 799 Bahana/consensus (%) - - 80 89 122

EPS (IDR) 19 5 28 31 40 EPS growth (%) 16.5 (73.5) 442.0 11.3 29.6 EV/EBITDA (x) 10.4 7.6 7.3 7.0 5.6 P/E (x) 13.6 51.2 9.4 8.5 6.6 FCFPS (IDR) (2) (7) 14 20 32 FCF yield (%) (0.8) (2.6) 5.5 7.5 12.4 BVPS (IDR) 201 208 230 253 284 P/BV (x) 1.3 1.2 1.1 1.0 0.9 DPS (IDR) 1 - 8 9 12 Div. yield (%) 0.5 - 3.2 3.5 4.6 Source: Company, Bahana estimates note: based on 09 October 2014 closing price


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Volume (RHS) KIJA IJ Px Last

18.6

(1.2)

13.7

(11.9)

17.3

(7.4)

(15)

(10)

(5)

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15

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25

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NAV calculation NAV Table 1H14 Land bank (Ha) 2,973 Total value (IDRbn) 24,872 NAV/share (IDR) 1,128 Discount (%) 60 Adjusted NAV/share (IDR) 450 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 294/189 12M High/low consensus TP (IDR) : 455/249Majority shareholder (%) : Meadowood Capital (12.6) Shares outstanding (mn)/Free float (%) : 20,235/80.1 Mkt. cap. (IDRbn/USDmn) : 5,261/432 3-m avg.daily t.o.(IDRbn/USDmn) : 15.5/1.3 Bloomberg/Reuters code : KIJA IJ/KIJA.JK Source: Bloomberg, Reuters; based on 09 October 2014 closing price

2015 Compendium

195

KAWASAN INDUSTRI JABABEKA

Profit & loss Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016FSales 1,401 2,740 2,896 2,995 3,327Gross profit 860 1,171 1,198 1,223 1,419EBITDA 682 951 979 1,004 1,180Depreciation 57 96 120 136 144EBIT 625 855 859 868 1,036Net interest inc./(expense) (135) (261) (252) (186) (161)Forex gain/(losses) (62) (420) 36 27 30Other income/(expense) 30 30 30 30 30Pre-tax profit 458 204 673 740 935Taxes (78) (100) (116) (120) (133)Minority interest - (4) (4) (4) (4)Extraordinary gain/(losses) - - - - -Net profit 380 101 554 616 799Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016F Cash and equivalents 242 595 820 850 895 S-T investments - - - - - Trade receivables 119 231 185 191 212 Inventories 624 703 773 851 936 Fixed assets 2,138 2,168 2,181 2,185 2,190 Other assets 3,955 4,558 5,451 6,319 7,218 Total assets 7,078 8,255 9,410 10,396 11,450 Interest bearing liabilities 2,046 2,572 2,708 2,590 2,252 Trade payables 166 187 109 114 123 Other liabilities 889 1,310 1,969 2,607 3,362 Total liabilities 3,102 4,069 4,786 5,311 5,737 Minority interest - - - - - Shareholders' equity 3,975 4,186 4,624 5,085 5,713 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016FEBIT 625 855 859 868 1,036Depreciation 57 96 120 136 144Working capital (30) (56) (78) (54) (70)Other operating items (79) (392) 268 282 389Operating cash flow 572 503 1,169 1,233 1,500Net capital expenditure (613) (637) (882) (840) (849)Free cash flow (41) (133) 287 392 651Equity raised/(bought) - 107 - - -Net borrowings 550 526 135 (118) (338)Other financing (395) (145) (197) (245) (268)Net cash flow 114 354 225 30 45Cash flow at beginning 128 242 595 820 850Ending cash flow 242 595 820 850 895Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2012A 2013A 2014F 2015F 2016F ROAE (%) 10.2 2.5 12.6 12.7 14.8 ROAA (%) 6.0 1.3 6.3 6.2 7.3 EBITDA margin (%) 48.7 34.7 33.8 33.5 35.5 EBIT margin (%) 44.6 31.2 29.7 29.0 31.1 Net margin (%) 27.1 3.7 19.1 20.6 24.0 Payout ratio (%) 7.0 - 30.0 30.0 30.0 Current ratio (x) 3.8 4.9 7.1 7.1 7.0 Interest coverage (x) 4.6 3.3 3.4 4.7 6.4 Net gearing (%) 45.4 47.2 40.8 34.2 23.7 Debts to assets (%) 28.9 31.2 28.8 24.9 19.7 Debtor turnover (days) 27 23 23 23 23 Creditor turnover (days) 33 24 24 24 24 Inventory turnover (days) na na na na na Source: Company, Bahana estimates

2015 Compendium

196

KIMIA FARMA (INITIAL COVERAGE) BUY PX: IDR1,090- TP: IDR1,400 State-owned KAEF, the only pharmaceutical company with the license

to produce narcotics and anti-retroviral medicine by the Government, plans to strengthen its retail business by adding 100 pharmacies p.a. to its existing 512 outlets, in an effort to better serve more health-conscious Indonesians. Additionally, KAEF plans to aggressively open 100 clinics p.a. (current: 200) to tap into the higher demand for medicine under the new national health care program (BPJS).

In 2H15, KAEF will be the first medicinal iodine maker in Indonesia with a capacity of 3,000 tpa, sufficient to cater to 50% of the domestic demand for pharmaceutical iodine.

Given the excellent growth potential, we believe KAEF deserves to trade on 29x 2015 PE, 10% sector premium on much higher EPS growth in 2015, for a TP of IDR1,400. A downside risk would be higher raw materials prices on a strengthening US dollar.


EPS (IDR) 37 39 37 49 59 EPS growth (%) 19.4 4.6 (3.9) 32.2 20.3 EV/EBITDA (x) 20.4 21.4 24.1 17.8 15.2 P/E (x) 29.5 28.2 29.3 22.2 18.4 FCFPS (IDR) 29 25 (138) (20) (22) FCF yield (%) 0.0 0.0 (0.1) (0.0) (0.0) BVPS (IDR) 260 292 322 362 410 P/BV (x) 4.2 3.7 3.4 3.0 2.7 DPS (IDR) 6 6 7 10 12 Div. yield (%) 0.6 0.5 0.7 0.9 1.1 Source: Company, Bahana estimates note: based on 09 October 2014 closing price


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1,400


('000)(IDR)

Volume (RHS) KAEF IJ Px Last

67.9

(5.9)

3.4

21.2

62.1

90.5

(20)

0

20

40

60

80

100

(20)

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KAEF IJ relative to JCI


Major assumptions Year to 31 Dec 2012A 2013A 2014F 2015F 2016F No. of KAEF clinic 64 200 300 400 500 Indo pharma. sales (USDbn) 4.6 4.9 5.9 6.6 7.4 Gross margin (%) 31.5 29.7 27.7 28.7 29.2 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 1,370/480 12M high/low consensus TP (IDR) : 1,550/995Majority shareholder (%) : Republic of Indonesia (90.0) Shares outstanding (mn)/Free float (%) : 5,554/10.0 Mkt. cap. (IDRbn/USDmn) : 6,054/495 3-m avg.daily t.o.(IDRbn/USDmn) : 3.4/0.3 Bloomberg/Reuters code : KAEF IJ/KAEF.JK Source: Bloomberg, Reuters; based on 09 October 2014 closing price

2015 Compendium

197

KIMIA FARMA

Profit & loss Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016FSales 3,734 4,348 5,093 6,024 6,801Gross profit 1,175 1,292 1,412 1,730 1,987EBITDA 282 267 269 378 461Depreciation 20 18 24 28 32EBIT 263 250 245 350 429Net interest inc./(expense) (4) (9) (17) (43) (55)Forex gain/(losses) (2) 1 (0) (0) (0)Other income/(expense) 22 42 50 59 66Pre-tax profit 278 284 277 366 440Taxes (73) (68) (69) (92) (110)Minority interest (1) (1) (1) (1) (1)Extraordinary gain/(losses) - - - - -Net profit 205 215 206 273 328Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016F Cash and equivalents 316 394 124 121 136 S-T investments - - - - - Trade receivables 464 554 666 788 890 Inventories 530 641 716 835 936 Fixed assets 449 499 1,309 1,579 1,939 Other assets 316 384 389 481 560 Total assets 2,076 2,472 3,203 3,804 4,460 Interest bearing liabilities 24 49 552 803 1,103 Trade payables 341 478 514 599 645 Other liabilities 270 320 348 395 441 Total liabilities 635 848 1,414 1,796 2,190 Minority interest 15 16 18 20 21 Shareholders' equity 1,426 1,608 1,773 1,991 2,254 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016FEBIT 263 250 245 350 429Depreciation 20 18 24 28 32Working capital (66) (84) (150) (200) (195)Other operating items 22 26 12 13 15Operating cash flow 238 209 131 191 280Net capital expenditure (76) (72) (900) (300) (400)Free cash flow 161 137 (769) (109) (120)Equity raised/(bought) 10 - - - -Net borrowings 3 23 503 251 301Other financing (58) (83) (5) (145) (166)Net cash flow 117 78 (271) (3) 15Cash flow at beginning 199 316 394 124 121Ending cash flow 316 394 124 121 136Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2012A 2013A 2014F 2015F 2016F ROAE (%) 15.3 14.1 12.2 14.5 15.5 ROAA (%) 10.6 9.4 7.3 7.8 7.9 EBITDA margin (%) 7.6 6.1 5.3 6.3 6.8 EBIT margin (%) 7.0 5.7 4.8 5.8 6.3 Net margin (%) 5.5 4.9 4.1 4.5 4.8 Payout ratio (%) 20.0 20.0 15.0 20.0 20.0 Current ratio (x) 2.7 2.8 2.4 1.6 1.5 Interest coverage (x) 58.7 28.9 14.2 8.2 7.8 Net gearing (%) nc nc 24.2 34.2 42.9 Debts to assets (%) 1.1 2.0 17.2 21.1 24.7 Debtor turnover (days) 40 42 43 48 48 Creditor turnover (days) 44 45 49 51 51 Inventory turnover (days) 63 70 70 71 71 Source: Company, Bahana estimates

2015 Compendium

198

KRAKATAU STEEL REDUCE PX: IDR468 – TP: IDR370* KRAS, Indonesia’s largest steel producer with a 41% hot rolled coil

(HRC) domestic market share, should continue to be adversely affected by lower steel prices in 2015 given global oversupply conditions. Although the government expects 8.3% y-y growth in 2015 in domestic steel demand to 13mn tons, we believe competition from steel imports will persist and cap KRAS’s growth prospects.

To improve efficiency, KRAS is developing a blast furnace with production capacity of 1.2mn tons per annum, with completion planned for 2015, although this could be subject to delays. In an attempt to support earnings, KRAS is planning to divest some of its assets such as non-core subsidiaries and land.

Our DCF-based TP of IDR370, with a 10.8% WACC, translates into a 2016F PE of 9.0x. Risks include higher-than-expected revenue on less fierce competition and higher-than-expected operating efficiency.

Financial highlights Year to 31 Dec 2012A 2013A 2014F 2015F 2016F Revenues (USDmn) 2,287 2,084 2,067 2,202 2,397 EBIT (USDmn) (25) (40) (33) (55) 74 Net profit (USDmn) (20) (14) (33) (33) 55 Bahana/consensus (%) - - - - -

EPS (IDR) (12) (10) (25) (24) 41 EPS growth (%) n.a. n.a. n.a. n.a. n.a. EV/EBITDA (x) 58.4 64.7 40.6 62.9 20.5 P/E (x) n.a. n.a. n.a. n.a. 11.3 FCFPS (IDR) (164) (43) (196) (166) (46) FCF yield (%) (34.9) (9.2) (41.8) (35.6) (9.8) BVPS (IDR) 651 772 747 723 771 P/BV (x) 0.7 0.6 0.6 0.6 0.6 DPS (IDR) - - - - - Div. yield (%) - - - - - Source: Company, Bahana estimates note: based on 09 October 2014 closing price


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Volume (RHS) KRAS IJ Px Last

(22.3)

1.8 4.4

(9.7)

(18.2)(20.3)

(25)

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(5)

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KRAS IJ relative to JCI Source: Bloomberg


Major assumptions Year to 31 Dec 2012A 2013A 2014F 2015F 2016F HRC price (USD per ton) 772 666 633 633 633 CRC price (USD per ton) 878 799 783 783 807 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 580/440 12M High/low consensus TP (IDR) : 500/380Majority shareholder (%) : Republic of Indonesia (80.0) Shares outstanding (mn)/Free float (%) : 15,775/20.0 Mkt. cap. (IDRbn/USDmn) : 7,383/606 3-m avg.daily t.o.(IDRbn/USDmn) : 1.5/0.1 Bloomberg/Reuters code : KRAS IJ/KRAS.JK Source: Bloomberg, Reuters; based on 09 October 2014 closing price

2015 Compendium

199

KRAKATAU STEEL

Profit & loss Year to 31 Dec (USDmn) 2012A 2013A 2014F 2015F 2016FSales 2,287 2,084 2,067 2,202 2,397Gross profit 122 96 105 92 242EBITDA 23 22 42 30 96Depreciation 48 62 75 86 96EBIT (25) (40) (33) (55) 74Net interest inc./(expense) (31) (39) (40) (47) (59)Forex gain/(losses) 5 37 (12) 2 3Other income/(expense) 36 27 42 56 56Pre-tax profit (15) (15) (43) (43) 74Taxes (4) 1 11 11 (18)Minority interest (1) (0) (0) (0) (0)Extraordinary gain/(losses) - - - - -Net profit (20) (14) (33) (33) 55Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (USDmn) 2012A 2013A 2014F 2015F 2016F Cash and equivalents 270 190 230 209 149 S-T investments 8 8 9 9 10 Trade receivables 392 276 283 302 328 Inventories 652 519 538 578 590 Fixed assets 749 858 1,133 1,297 1,401 Other assets 491 528 545 564 583 Total assets 2,562 2,380 2,737 2,958 3,062 Interest bearing liabilities 983 1,006 1,306 1,506 1,506 Trade payables 264 180 242 260 266 Other liabilities 198 141 167 200 242 Total liabilities 1,446 1,327 1,715 1,967 2,014 Minority interest 20 20 22 24 27 Shareholders' equity 1,096 1,032 999 967 1,022 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (USDmn) 2012A 2013A 2014F 2015F 2016FEBIT (25) (40) (33) (55) 74Depreciation 48 62 75 86 96Working capital 17 82 50 (22) (8)Other operating items (133) 9 (3) 19 (22)Operating cash flow (94) 113 88 28 139Net capital expenditure (181) (171) (350) (250) (200)Free cash flow (275) (58) (262) (222) (61)Equity raised/(bought) 1 0 - - -Net borrowings 177 23 300 200 -Other financing (29) (46) 2 1 1Net cash flow (126) (80) 40 (21) (59)Cash flow at beginning 396 270 190 230 209Ending cash flow 270 190 230 209 149Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2012A 2013A 2014F 2015F 2016F ROAE (%) (1.8) (1.3) (3.2) (3.3) 5.5 ROAA (%) (0.8) (0.6) (1.3) (1.1) 1.8 EBITDA margin (%) 1.0 1.1 2.0 1.4 4.0 EBIT margin (%) (1.1) (1.9) (1.6) (2.5) 3.1 Net margin (%) (0.9) (0.7) (1.6) (1.5) 2.3 Payout ratio (%) - - - - - Current ratio (x) 1.5 1.1 1.0 0.9 0.8 Interest coverage (x) na na na na 1.2 Net gearing (%) 65.1 79.1 107.8 134.3 132.9 Debts to assets (%) 38.4 42.3 47.7 50.9 49.2 Debtor turnover (days) 51 58 50 50 50 Creditor turnover (days) 41 41 45 45 50 Inventory turnover (days) 121 107 100 100 100 Source: Company, Bahana estimates

2015 Compendium

200

LIPPO CIKARANG BUY PX: IDR7,400 - TP: IDR9,600 LPCK, the third-largest industrial landbank (350 ha) in our coverage,

is shifting its marketing focus away from industrial to residential sales (294 ha landbank). This has paved the way for a solid revenue stream from residential, amounting to IDR222bn in 1H14 (+118% y-y).

In 2H14, LPCK plans to launch Orange County City Center (OCCC), a non-industrial CBD mega project. This project should benefit from the new Cibatu toll gate, located at point 34.7 km on the Jakarta-Cikampek toll road. This convenient toll-road access should allow OCCC to book a higher ASP, allowing for improved margins and providing solid contributions for LPCK.

Going into 2015-16, we expect higher contributions from industrial land sales, backed by increased political stability. Our IDR9,600 TP is based on a 40% discount to NAV, at par with the sector. Risks include lower-than-expected marketing sales due to disappointing FDI.


EPS (IDR) 585 849 952 990 1,253 EPS growth (%) 58.4 45.1 12.1 4.1 26.6 EV/EBITDA (x) 11.0 7.6 6.7 6.2 4.8 P/E (x) 12.7 8.7 7.8 7.5 5.9 FCFPS (IDR) (241) (844) (836) (282) (330) FCF yield (%) (3.3) (11.4) (11.3) (3.8) (4.5) BVPS (IDR) 1,765 2,613 3,565 4,557 5,811 P/BV (x) 4.2 2.8 2.1 1.6 1.3 DPS (IDR) - - - - - Div. yield (%) na na na na na Source: Company, Bahana estimates note: based on 09 October 2014 closing price


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('000)(IDR)

Volume (RHS) LPCK IJ Px Last

35.0

(5.8)

(0.4)

(14.2)

23.6

36.0

(20)

(10)

0

10

20

30

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(20)

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NAV calculation NAV Table 1H14 Land bank (Ha) 644 Total value (IDRbn) 12,946 NAV/share (IDR) 15,819 Discount (%) 40 Adjusted NAV/share (IDR) 9,600 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 8,600/4,525 12M High/low consensus TP (IDR) : 13,400/6,000 Majority shareholder (%) : Kemuning Satiatama (42.2) Shares outstanding (mn)/Free float (%) : 696/57.8 Mkt. cap. (IDRbn/USDmn) : 5,150/423 3-m avg.daily t.o.(IDRbn/USDmn) : 8.1/0.7 Bloomberg/Reuters code : LPCK IJ/LPCK.JK Source: Bloomberg, Reuters; based on 09 October 2014 closing price

2015 Compendium

201

LIPPO CIKARANG

Profit & loss Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016FSales 1,013 1,328 1,598 1,662 2,083Gross profit 520 743 872 910 1,142EBITDA 441 641 750 782 983Depreciation 4 7 8 8 9EBIT 437 634 742 774 974Net interest inc./(expense) 4 22 14 13 23Forex gain/(losses) 2 6 (1) (1) (1)Other income/(expense) 15 4 3 2 2Pre-tax profit 458 666 758 789 997Taxes (51) (75) (96) (100) (125)Minority interest - - - - -Extraordinary gain/(losses) - - - - -Net profit 407 591 662 689 872Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016F Cash and equivalents 310 308 103 282 476 S-T investments - - - - - Trade receivables 54 60 88 91 114 Inventories 1,940 2,510 2,886 3,261 3,685 Fixed assets 48 53 65 72 77 Other assets 480 923 1,668 1,887 2,129 Total assets 2,832 3,854 4,809 5,593 6,481 Interest bearing liabilities - - - - - Trade payables - - - - - Other liabilities 1,604 2,035 2,328 2,421 2,437 Total liabilities 1,604 2,035 2,328 2,421 2,437 Minority interest - - - - - Shareholders' equity 1,228 1,819 2,481 3,172 4,045 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016FEBIT 437 634 742 774 974Depreciation 4 7 8 8 9Working capital (772) (556) (397) (371) (439)Other operating items 632 98 119 (68) (186)Operating cash flow 301 183 472 343 358Net capital expenditure (469) (770) (1,054) (540) (588)Free cash flow (167) (587) (582) (196) (230)Equity raised/(bought) - - - - -Net borrowings (140) - - - -Other financing 580 585 376 375 424Net cash flow 273 (2) (205) 179 194Cash flow at beginning 37 310 308 103 282Ending cash flow 310 308 103 282 476Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2012A 2013A 2014F 2015F 2016F ROAE (%) 39.7 38.8 30.8 24.4 24.2 ROAA (%) 16.7 17.7 15.3 13.3 14.5 EBITDA margin (%) 43.6 48.3 46.9 47.1 47.2 EBIT margin (%) 43.1 47.7 46.4 46.6 46.7 Net margin (%) 40.2 44.5 41.4 41.5 41.9 Payout ratio (%) - - - - - Current ratio (x) 39.1 36.0 35.4 38.5 41.6 Interest coverage (x) na na na na na Net gearing (%) nc nc nc nc nc Debts to assets (%) - - - - - Debtor turnover (days) 23 16 20 20 20 Creditor turnover (days) - - - - - Inventory turnover (days) - - - - - Source: Company, Bahana estimates

2015 Compendium

202

LIPPO KARAWACI BUY PX: IDR960 - TP: IDR1,200 LPKR, having the largest recurring income base in our coverage, has

continued to see strong demand for its recent apartment launches with oversubscriptions of 150-200%. Hence, we expect the company’s subsequent apartment launches in 4Q14-2015 to be successful, helped by continued solid buyers’ confidence.

Following LPKR’s sale of its Kemang mall to an affiliated Singapore-based REIT, the company plans to recycle more assets annually worth IDR5.5-7.5tn. While this is positive, in our view, there could be delays of these planned sales as delays have occurred in the past.

Growth support should stem from LPKR’s projects in Lippo Village and its Kemang apartments as well as LPCK’s Orange County. On valuation, we apply a 50% discount to our 2015F NAV (sector: 50%) to derive our IDR1,200 TP. Risks to our call include project delays and greater-than-expected interest rate hikes.


EPS (IDR) 46 53 110 65 81 EPS growth (%) 31.1 15.8 106.9 (40.6) 23.9 EV/EBITDA (x) 14.8 15.6 7.4 11.2 9.2 P/E (x) 20.9 18.0 8.7 14.7 11.8 FCFPS (IDR) (7) (107) (65) 34 19 FCF yield (%) (0.7) (11.1) (6.8) 3.5 1.9 BVPS (IDR) 462 555 651 689 754 P/BV (x) 2.1 1.7 1.5 1.4 1.3 DPS (IDR) 12 14 28 16 20 Div. yield (%) 1.2 1.4 2.9 1.7 2.1 Source: Company, Bahana estimates note:based on 09 October 2014 closing price


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Volume (RHS) LPKR IJ Px Last

(11.3)

(1.5)

(11.3)

(21.5)

(10.1)

(18.8)

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LPKR IJ relative to JCI




Company information 12M high/low (IDR) : 1,250/870 12M High/low consensus TP (IDR) : 1,515/920 Majority shareholder (%) : Pacific Asia Holding (17.9) Shares outstanding (mn)/Free float (%) : 23,078/82.1 Mkt. cap. (IDRbn/USDmn) : 22,155/1,817 3-m avg.daily t.o.(IDRbn/USDmn) : 98.2/8.1 Bloomberg/Reuters code : LPKR IJ/LPKR.JK Source: Bloomberg, Reuters; based on 09 October 2014 closing price

2015 Compendium

203

LIPPO KARAWACI

Profit & loss Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016FSales 6,160 6,666 11,847 9,365 11,287Gross profit 2,821 3,047 5,448 4,251 5,080EBITDA 1,678 1,807 4,049 2,684 3,269

Depreciation 201 295 341 405 444EBIT 1,477 1,512 3,708 2,280 2,825Net interest inc./(expense) 2 (27) (87) (72) (76)Forex gain/(losses) 108 (33) (7) 1 (7)Other income/(expense) (10) 472 89 86 89Pre-tax profit 1,577 1,925 3,703 2,295 2,831Taxes (254) (332) (486) (384) (463)Minority interest (263) (364) (676) (401) (497)Extraordinary gain/(losses) - - - - -Net profit 1,060 1,228 2,542 1,510 1,871Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016F Cash and equivalents 3,337 1,855 1,785 1,697 1,569 S-T investments 4,603 6,778 6,982 7,191 7,407 Trade receivables 594 772 1,558 1,232 1,480 Inventories 10,505 13,894 16,019 17,819 19,619 Fixed assets 2,222 2,811 4,822 6,044 6,553 Other assets 3,607 5,190 7,210 7,729 9,767 Total assets 24,869 31,300 38,375 41,711 46,395 Interest bearing liabilities 6,014 7,808 9,660 9,550 9,439 Trade payables 576 398 974 770 925 Other liabilities 6,809 8,918 11,233 13,923 16,921 Total liabilities 13,399 17,123 21,867 24,242 27,285 Minority interest 814 1,377 1,486 1,572 1,720 Shareholders' equity 10,656 12,801 15,023 15,897 17,390 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016FEBIT 1,477 1,512 3,708 2,280 2,825Depreciation 201 295 341 405 444Working capital 278 (390) (200) 216 (55)Other operating items (1,537) (2,309) (2,432) 526 (309)Operating cash flow 419 (893) 1,417 3,427 2,905Net capital expenditure (582) (1,570) (2,925) (2,645) (2,476)Free cash flow (163) (2,462) (1,508) 782 429Equity raised/(bought) - - - - -Net borrowings 2,261 1,793 1,853 (111) (111)Other financing (935) (813) (415) (760) (447)Net cash flow 1,163 (1,482) (71) (88) (128)Cash flow at beginning 2,175 3,337 1,855 1,785 1,697Ending cash flow 3,337 1,855 1,785 1,697 1,569Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2012A 2013A 2014F 2015F 2016F ROAE (%) 10.9 10.5 18.3 9.8 11.2 ROAA (%) 4.9 4.4 7.3 3.8 4.2 EBITDA margin (%) 27.2 27.1 34.2 28.7 29.0 EBIT margin (%) 24.0 22.7 31.3 24.3 25.0 Net margin (%) 17.2 18.4 21.5 16.1 16.6 Payout ratio (%) 25.5 26.1 25.0 25.0 25.0 Current ratio (x) 5.9 5.3 5.2 5.1 5.3 Interest coverage (x) na 56.6 42.6 31.8 37.2 Net gearing (%) 25.1 46.5 52.4 49.4 45.3 Debts to assets (%) 24.2 24.9 25.2 22.9 20.3 Debtor turnover (days) 34 48 48 48 48 Creditor turnover (days) 29 30 30 30 30 Inventory turnover (days) na na na na na Source: Company, Bahana estimates

2015 Compendium

204

LONDON SUMATRA INDONESIA HOLD PX: IDR1,900 - TP: IDR1,975* As the third-largest CPO company with 143k ha in planted area, LSIP

plans to continue new plantings of 5k ha per annum in the next few years, with 2014-16F capex reaching IDR1tn, supported by a strong cash position of IDR1.3tn. Other than CPO, LSIP revenues also come from its rubber and seed businesses.

In 2015, we expect continued recovery in LSIP’s CPO production to 495k tons, reflecting 6% y-y growth. However, we expect the rubber and seeds contributions to remain weak on soft demand and flat ASP. We forecast overall 2015 revenue of IDR5.1tn, up 9% y-y.

Our IDR1,975 TP translates into a 2015F PE of 12.6x, a 30% discount to its Malaysian peers. Limited upside of 4% to our TP results in our HOLD rating on the stock. Risks to our call include higher- or lower-than-expected CPO prices and production costs.

Financial highlights Year to 31 Dec 2012A 2013A 2014F 2015F 2016F Revenues (IDRb) 4,212 4,134 4,640 5,080 5,461 EBIT (IDRb) 1,276 818 1,112 1,235 1,354 Net profit (IDRb) 1,116 769 878 1,069 1,167 Bahana/consensus (%) - - 73 83 91

EPS (IDR) 164 113 129 157 171 EPS growth (%) (34.4) (31.1) 14.2 21.8 9.2 EV/EBITDA (x) 7.8 11.6 8.8 7.9 7.1 P/E (x) 11.6 16.9 14.8 12.1 11.1 FCFPS (IDR) 48 (6) 25 44 59 FCF yield (%) 2.5 (0.3) 1.3 2.3 3.1 BVPS (IDR) 920 969 1,049 1,154 1,262 P/BV (x) 2.1 2.0 1.8 1.6 1.5 DPS (IDR) 66 46 51 63 68 Div. yield (%) 3.5 2.4 2.7 3.3 3.6 Source: Company, Bahana estimates note: based on 09 October 2014 closing price


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Volume (RHS) LSIP IJ Px Last

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5.3

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Major assumptions Year to 31 Dec 2012A 2013A 2014F 2015F 2016F FFB nucleus production (k tons) 1,315 1,250 1,434 1,522 1,622 Growth (%) 1.8 (4.9) 14.7 6.1 6.6 CPO production (k tons) 448 396 467 495 528 Growth (%) 1.2 (11.5) 17.7 6.1 6.6 ASP CPO (USD/ton) 787 686 676 695 716 Source: Company, Bahana estimates Company information

12M high/low (IDR) : 2,450/1,430 12M High/low consensus TP (IDR) : 3,200/1,720 Majority shareholder (%) : Salim Ivomas Pratama (59.5) Shares outstanding (m)/Free float (%) : 6,823/40.5 Mkt. cap. (IDRb/USDm) : 12,963/1,063 3-m avg.daily t.o.(IDRb/USDm) : 56.6/4.6 Bloomberg/Reuters code : LSIP IJ/LSIP.JK Source: Bloomberg, Reuters; based on 09 October 2014 closing price

2015 Compendium

205

LONDON SUMATRA INDONESIA

Profit & loss Year to 31 Dec (IDRb) 2012A 2013A 2014F 2015F 2016FSales 4,212 4,134 4,640 5,080 5,461Gross profit 1,681 1,253 1,556 1,729 1,892EBITDA 1,426 993 1,321 1,481 1,629Depreciation 150 175 210 246 276EBIT 1,276 818 1,112 1,235 1,354Net interest inc./(expense) 85 44 45 57 58Forex gain/(losses) - - - - -Other income/(expense) 11 135 (60) 44 47Pre-tax profit 1,372 997 1,097 1,336 1,459Taxes (257) (228) (219) (267) (292)Minority interest - - - - -Extraordinary gain/(losses) - - - - -Net profit 1,116 769 878 1,069 1,167Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRb) 2012A 2013A 2014F 2015F 2016F Cash and equivalents 1,799 1,401 1,306 1,316 1,344 S-T investments - - - - - Trade receivables 37 92 55 60 64 Inventories 646 374 411 447 476 Fixed assets 4,474 5,270 6,003 6,698 7,400 Other assets 595 837 916 1,005 1,083 Total assets 7,552 7,975 8,691 9,525 10,367 Interest bearing liabilities - - - - - Trade payables 299 311 309 339 364 Other liabilities 973 1,050 1,225 1,312 1,389 Total liabilities 1,272 1,361 1,535 1,651 1,753 Minority interest - - - - - Shareholders' equity 6,280 6,614 7,156 7,874 8,613 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (IDRb) 2012A 2013A 2014F 2015F 2016FEBIT 1,276 818 1,112 1,235 1,354Depreciation 150 175 210 246 276Working capital (45) 214 107 (3) (1)Other operating items (182) (50) (233) (165) (186)Operating cash flow 1,199 1,157 1,195 1,312 1,442Net capital expenditure (869) (1,198) (1,022) (1,009) (1,037)Free cash flow 330 (41) 173 303 405Equity raised/(bought) - - - - -Net borrowings - - - - -Other financing (594) (358) (268) (293) (377)Net cash flow (264) (399) (95) 10 28Cash flow at beginning 2,064 1,799 1,401 1,306 1,316Ending cash flow 1,799 1,401 1,306 1,316 1,344Source: Company, Bahana estimates


2015 Compendium

206

MALINDO FEEDMILL BUY PX: IDR3,305 - TP: IDR3,800 MAIN, the smallest company in the sector by market cap, but with the

highest DOC utilization rate of 85%, is increasing its capacity. Out of its 4 segments, including poultry feed (6M14: 71% of revenues) and day-old chicks (DOC) (17%), the fastest-growing divisions are broiler chickens (8%) and processed chicken and duck/aquaculture (4%).

In 2015, capex of IDR465bn should fund 2015 annual capacity increases: feed mill +240k tons to 1.5mn tons, DOC +26mn to 230mn, broiler chickens +6k tons to 34k and food processing +15k tons to 24k. On the cost front, management expects a margin recovery in 4Q14 on lower raw materials prices and additional government DOC supply cuts, supporting DOC and broiler price.

We like MAIN’s fully consolidated and integrated businesses. Our IDR3,800 TP reflects a 2015F PE of 15.3x, a 16% discount to the sector target PE. Risks to our call are IDR volatility and government policy.


EPS (IDR) 169 135 171 248 295 EPS growth (%) 47.9 (20.2) 26.5 45.1 19.1 EV/EBITDA (x) 13.1 11.9 12.0 8.8 7.4 P/E (x) 19.6 24.5 19.4 13.3 11.2 FCFPS (IDR) (108) (60) (85) 3 (54) FCF yield (%) (3.3) (1.8) (2.6) 0.1 (1.6) BVPS (IDR) 382 623 821 821 1,057 P/BV (x) 8.6 5.3 4.0 4.0 3.1 DPS (IDR) 34 20 34 50 59 Div. yield (%) 1.0 0.6 1.0 1.5 1.8 Source: Company, Bahana estimates note: based on 09 October 2014 closing price


0

5,000

10,000

15,000

20,000

25,000

2,600

2,800

3,000

3,200

3,400

3,600

3,800


('000)(IDR)

Volume (RHS) MAIN IJ Px Last

(12.7)

3.2

17.4

(0.7)

(17.6) (18.9)(25)

(20)

(15)

(10)

(5)

0

5

10

15

20

(25)

(20)

(15)

(10)

(5)

0

5

10

15

20

ytd 1M 3M 6M 9M 12M

(%) (%)

MAIN IJ relative to JCI



Company information 12M high/low (IDR) : 3,715/2,605 12M high/low consensus TP (IDR) : 4,500/3,150 Majority shareholder (%) : Dragon Amity Ltd. (55.9) Shares outstanding (mn)/Free float (%) : 1,791/44.1 Mkt. cap. (IDRbn/USDmn) : 5,919/486 3-m avg.daily t.o.(IDRbn/USDmn) : 7.5/0.6 Bloomberg/Reuters code : MAIN IJ/MAIN.JK Source: Bloomberg, Reuters based on 09 October 2014 closing price

2015 Compendium

207

MALINDO FEEDMILL

Profit & loss Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016FSales 3,350 4,193 4,620 5,507 6,744Gross profit 638 718 726 964 1,178EBITDA 519 573 584 806 972Depreciation 64 90 118 145 174EBIT 456 483 466 660 798Net interest inc./(expense) (65) (66) (95) (103) (107)Forex gain/(losses) (11) (109) 15 12 13Other income/(expense) 3 3 6 6 1Pre-tax profit 383 311 392 576 704Taxes (81) (69) (86) (132) (176)Minority interest (0) (0) (0) (0) (0)Extraordinary gain/(losses) - - - - -Net profit 303 242 306 443 528Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016F Cash and equivalents 91 83 99 117 154 S-T investments - - - - - Trade receivables 222 302 332 396 485 Inventories 263 392 389 413 557 Fixed assets 855 1,128 1,525 1,844 2,229 Other assets 370 309 371 434 519 Total assets 1,800 2,214 2,716 3,205 3,943 Interest bearing liabilities 822 974 1,190 1,285 1,516 Trade payables 175 241 260 284 348 Other liabilities 121 136 154 168 189 Total liabilities 1,118 1,352 1,603 1,737 2,053 Minority interest (2) (3) (2) (3) (3) Shareholders' equity 685 865 1,116 1,470 1,893 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016FEBIT 456 483 466 660 798Depreciation 64 90 118 145 174Working capital (123) (175) (42) (94) (211)Other operating items (232) (143) (179) (242) (299)Operating cash flow 164 255 363 470 462Net capital expenditure (357) (363) (515) (465) (558)Free cash flow (193) (108) (152) 5 (96)Equity raised/(bought) - - - - -Net borrowings 228 153 216 95 231Other financing (32) (52) (48) (82) (98)Net cash flow 3 (8) 16 18 37Cash flow at beginning 87 91 83 99 117Ending cash flow 91 83 99 117 154Source: Company, Bahana estimates


2015 Compendium

208

MATAHARI DEPARTMENT STORE BUY PX: IDR15,800 - TP: IDR19,000* Market-share gains to 34.4% in 2013 (+5ppt y-y) affirm LPPF’s

position as Indonesia’s largest and most successful retail operator in the past 56 years. Targeting the country’s burgeoning middle-income earners through its 127 stores in 62 cities, LPPF has the most extensive network across the archipelago.

LPPF has consistently opened 8 to 12 stores annually while focusing on the underpenetrated and vast areas ex Java, allowing the company to avoid store cannibalization with stable SSSG at above 10% over the past four years. On the cost front, LPPF stores are all leased to help maintain profit margins, while low capex benefits its cash flow.

Minimal competition and the purchasing power resilience of the middle income segment would allow sustained growth. Hence, we have a positive view on LPPF with IDR19,000 TP, reflecting 2015F PER of 28x, at par with the sector. Risks would include reduced store openings.

Financial highlights Year to 31 Dec 2012A 2013A 2014F 2015F 2016F Revenues (IDRbn) 5,617 6,754 8,079 9,622 11,577EBIT (IDRbn) 1,574 1,781 2,140 2,584 3,158Net profit (IDRbn) 771 1,150 1,574 1,984 2,463Bahana/consensus (%) - - 98 96 97

EPS (IDR) 264 394 540 680 844EPS growth (%) 65.6 49.2 36.9 26.0 24.2EV/EBITDA (x) 27.5 23.6 19.1 15.3 12.0P/E (x) 59.8 40.1 29.3 23.2 18.7P/Sales 8.2 6.8 5.7 4.8 4.0FCFPS (IDR) 301 373 546 722 908FCF yield (%) 1.9 2.4 3.5 4.6 5.7BVPS (IDR) - - 114.1 578.1 1,150.4P/BV (x) - - 138.4 27.3 13.7DPS (IDR) - 460.1 215.8 271.9 337.7Div. yield (%) - 2.9 1.4 1.7 2.1Source: Company, Bahana estimates note: based on 09 October 2014 closing price


0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

9,000

10,000

11,000

12,000

13,000

14,000

15,000

16,000

17,000

18,000


('000)(IDR)

Volume (RHS) LPPF IJ Px Last

26.8

1.1

8.8 5.3

23.4

31.0

0

5

10

15

20

25

30

35

0

5

10

15

20

25

30

35

ytd 1M 3M 6M 9M 12M

(%) (%)

LPPF IJ relative to JCI


Major assumptions Year to 31 Dec 2012A 2013A 2014F 2015F 2016F

Net revenue growth (%) 19.5 20.2 19.6 19.1 20.3Same-store sales growth (%) 11.1 12.1 12.3 10.2 10.1Number of outlets (stores) 116 125 133 145 158Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 17,025/10,400 12M High/low consensus TP (IDR) : 20,000/12,000 Majority shareholder (%) : Multipolar Tbk (20.5) Shares outstanding (mn)/Free float (%) : 2,918/65.4 Mkt. cap. (IDRbn/USDmn) : 46,103/3,782 3-m avg.daily t.o.(IDRbn/USDmn) : 71.8/5.9 Bloomberg/Reuters code : LPPF IJ/LPPF.JK Source: Bloomberg, Reuters; based on 09 October 2014 closing price

2015 Compendium

209

MATAHARI DEPARTMENT STORE

Profit & loss Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016F

Sales 5,617 6,754 8,079 9,622 11,577Gross profit 3,706 4,363 5,234 6,286 7,575EBITDA 1,750 1,988 2,387 2,881 3,516Depreciation 176 207 247 297 358 EBIT 1,574 1,781 2,140 2,584 3,158Net interest inc./(expense) (425) (291) (103) (8) 49 Forex gain/(losses) - - - - - Other income/(expense) 10 34 34 34 34 Pre-tax profit 1,159 1,524 2,072 2,610 3,241Taxes (388) (373) (497) (626) (778) Minority interest - - - - - Extraordinary gain/(losses) - - - - - Net profit 771 1,150 1,574 1,984 2,463Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016F

Cash and equivalents 1,000 772 960 1,956 3,922 S-T investments 39 26 31 36 44 Trade receivables 58 33 38 45 54 Inventories 520 724 862 1,011 1,206 Fixed assets 694 727 737 793 846 Other assets 619 655 707 759 821 Total assets 2,930 2,937 3,335 4,601 6,892 Interest bearing liabilities 2,959 1,596 565 - - Trade payables 1,055 1,266 1,507 1,766 2,118 Other liabilities 847 857 930 1,148 1,417 Total liabilities 4,861 3,718 3,002 2,914 3,535 Minority interest - - - - - Shareholders' equity (1,931) (781) 333 1,687 3,357 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016F

EBIT 1,574 1,781 2,140 2,584 3,158 Depreciation 176 207 247 297 358 Working capital 126 25 109 116 165 Other operating items (750) (681) (628) (538) (620) Operating cash flow 1,127 1,332 1,869 2,459 3,060Net capital expenditure (248) (244) (276) (353) (410) Free cash flow 878 1,089 1,593 2,106 2,650Equity raised/(bought) - - - - - Net borrowings (478) (1,363) (1,031) (565) - Other financing (319) 47 (374) (545) (684) Net cash flow 81 (228) 188 996 1,966Cash flow at beginning 919 1,000 772 960 1,956 Ending cash flow 1,000 772 960 1,956 3,922Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2012A 2013A 2014F 2015F 2016F

ROAE (%) - - - 196.4 97.7 ROAA (%) 28.8 39.2 50.2 50.0 42.9 EBITDA margin (%) 31.2 29.4 29.5 29.9 30.4 EBIT margin (%) 28.0 26.4 26.5 26.9 27.3 Net margin (%) 13.7 17.0 19.5 20.6 21.3 Payout ratio (%) 0.0 29.2 40.0 40.0 40.0 Current ratio (x) 0.8 0.9 0.8 1.3 1.8 Interest coverage (x) 3.7 6.1 20.9 336.2 na Net gearing (%) nc nc nc nc nc Debts to assets (%) 101.0 54.3 16.9 - - Debtor turnover (days) 5 4 3 3 3 Creditor turnover (days) 200 191 191 192 190 Inventory turnover (days) 93.8 94.9 102 102 101 Source: Company, Bahana estimates

2015 Compendium

210

MATAHARI PUTRA PRIMA BUY PX: IDR2,805 - TP: IDR3,900* MPPA, Indonesia’s second largest hypermarket player, is in the midst

of overtaking Carrefour’s leading position. Testimony to this is MPPA’s growing market share from 24% in 2007 to 36% in 2013; it operates 99 stores versus Carrefour’s 57 outlets. Future expansion would likely be funded by internal cash and working capital.

To avoid intense competition, MPPA is expanding in outlying areas, opening 15-20 stores a year, of which 60% would be located outside of Java. This should allow for SSSG of 5-6% in 2015-16 and higher gross margins, although we expect relatively flat EBIT margins given cost pressures from wages and rent.

We derive our TP of IDR3,900 from a 2015F price/sales of 1.2x, given our view that core 2015 y-y EPS growth will likely remain strong at 20%. Risks to our call would be greater-than-expected economic slowdown, inflation and minimum wages eroding earnings.

Financial highlights Year to 31 Dec 2012A 2013A 2014F 2015F 2016F Revenues (IDRbn) 10,868 11,913 14,371 17,276 21,388 EBIT (IDRbn) 120 389 431 539 756 Net profit (IDRbn) 221 445 433 449 606 Bahana/consensus(%) - - 109 85 87

EPS (IDR) 41 83 80 84 113 EPS growth (%) 110.0 101.7 (2.7) 3.8 35.0 EV/EBITDA (x) 38.9 23.7 20.0 16.1 12.1 P/E (x) 68.4 33.9 34.9 33.6 24.9 FCFPS (IDR) (66) 426 44 (17) 23 FCF yield (%) (2.4) 15.2 1.6 (0.6) 0.8 BVPS (IDR) 715 613 661 711 779 P/BV (x) 3.9 4.6 4.2 3.9 3.6 DPS (IDR) 6 186 32 33 45 Div. yield (%) 0.2 6.6 1.1 1.2 1.6 Source: Company, Bahana estimates note: based on 09 October 2014 closing price


0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

1,500

1,700

1,900

2,100

2,300

2,500

2,700

2,900

3,100

3,300

3,500


('000)(IDR)

Volume (RHS) MPPA IJ Px Last

27.7

(8.3)(5.3) (5.6)

42.9

7.3

(20)

(10)

0

10

20

30

40

50

(20)

(10)

0

10

20

30

40

50

ytd 1M 3M 6M 9M 12M

(%) (%)

MPPA IJ relative to JCI


Major assumptions Year to 31 Dec 2012A 2013A 2014F 2015F 2016F Total store opening 33 36 24 38 38 Average selling area 505,495 599,278 673,807 761,782 877,832 Ave. Hypermart area / store 6,434 6,107 5,500 5,600 5,600 Sales (in mn) / sqm 18.6 18.4 19.8 20.5 22.3 Rent expense / ave. selling area 0.53 0.57 0.60 0.66 0.70 Marketing exp. (income) (IDRbn) (150) (299) (316) (380) (471) Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 3,360/1,730 12M High/low consensus TP (IDR) : 3,900/2,700 Majority shareholder (%) : Multipolar Tbk (50.2) Shares outstanding (mn)/Free float (%) : 5,378/18.1 Mkt. cap. (IDRbn/USDmn) : 15,085/1,238 3-m avg.daily t.o.(IDRbn/USDmn) : 134/11 Bloomberg/Reuters code : MPPA IJ/MPPA.JK Source: Bloomberg, Reuters based on 09 October 2014 closing price

2015 Compendium

211

MATAHARI PUTRA PRIMA

Profit & loss Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016FSales 10,868 11,913 14,371 17,276 21,388Gross profit 1,898 1,889 2,376 2,884 3,610EBITDA 405 589 695 882 1,183Depreciation 285 200 264 343 427 EBIT 120 389 431 539 756Net interest inc./(expense) (46) (3) 52 52 41 Forex gain/(losses) - - - - - Other income/(expense) 223 200 86 0 0 Pre-tax profit 298 585 569 591 797Taxes (59) (140) (136) (141) (191) Minority interest (19) - - - -Extraordinary gain/(losses) - - - - -Net profit 221 445 433 449 606Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016F Cash and equivalents 1,362 1,303 1,169 899 759 S-T investments 1,554 63 100 100 100 Trade receivables 43 34 47 56 69 Inventories 1,671 2,299 2,366 2,760 3,312 Fixed assets 775 1,087 1,523 1,930 2,302 Other assets 2,820 1,794 1,674 1,985 2,355 Total assets 8,225 6,580 6,878 7,729 8,898 Interest bearing liabilities 2,002 188 - - - Trade payables 1,422 1,989 2,041 2,449 3,025 Other liabilities 955 1,108 1,282 1,456 1,684 Total liabilities 4,379 3,285 3,323 3,905 4,710 Minority interest - - - - - Shareholders' equity 3,846 3,295 3,555 3,824 4,188 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016FEBIT 120 389 431 539 756 Depreciation 285 200 264 343 427 Working capital (1,333) 1,338 (72) (68) (68) Other operating items (1,085) 841 315 (154) (192) Operating cash flow (2,013) 2,768 939 660 924Net capital expenditure 1,656 (476) (700) (750) (800) Free cash flow (357) 2,292 239 (90) 124Equity raised/(bought) (2,509) 440 - - - Net borrowings (271) (1,815) (188) - - Other financing 3,096 (977) (185) (180) (263) Net cash flow (41) (59) (134) (270) (140)Cash flow at beginning 1,403 1,362 1,303 1,169 899 Ending cash flow 1,362 1,303 1,169 899 759Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2012A 2013A 2014F 2015F 2016F ROAE (%) 4.7 12.5 12.6 12.2 15.1 ROAA (%) 2.4 6.0 6.4 6.2 7.3 EBITDA margin (%) 3.7 4.9 4.8 5.1 5.5 EBIT margin (%) 1.1 3.3 3.0 3.1 3.5 Net margin (%) 2.0 3.7 3.0 2.6 2.8 Payout ratio (%) 14.6 224.8 40.0 40.0 40.0 Current ratio (x) 1.1 1.1 1.1 1.1 1.1 Interest coverage (x) 2.6 112.5 na na na Net gearing (%) 16.7 nc nc nc nc Debts to assets (%) 26.6 2.9 nc nc nc Creditor turnover (days) 55 62 62 62 62 Debtor turnover (days) 1 1 1 1 1 Inventory turnover (days) 60 72 72 70 68 Source: Company, Bahana estimates

2015 Compendium

212

MAYORA INDAH REDUCE PX: IDR29,700 - TP: IDR25,500* MYOR is Indonesia’s largest confectionery manufacturer, with several

household brands targeting low- to middle-income earners. The company is facing a margin squeeze in its coffee division. Coffee prices have risen 68% ytd due to the drought in Brazil, resulting in poor 1H14 performance with the GP margin contracted by 670bps y-y.

We believe a margin recovery is at least be 3 quarters away. In the interim, MYOR’s working capital requirement has increased as a result of high coffee prices, forcing the company to obtain an IDR1tn short-term loan (higher interest expense) and cut its A&P spending to 6.4% of sales in 2Q14 from 11.5% in 2Q13.

Our IDR25,500 TP is based on a 24x 2015F PE, 15% discount to the sector, due to protracted margin pressure. Risks to our call include higher-than-expected margins stemming from lower-than-expected coffee prices, easing competition and IDR appreciation.

Financial highlights Year to 31 Dec 2012A 2013A 2014F 2015F 2016F Revenues (IDRbn) 10,511 12,018 15,343 17,742 20,382

EBIT (IDRbn) 1,157 1,305 1,153 1,635 2,022

Net profit (IDRbn) 730 997 620 948 1,238

Bahana/consensus (%) - - 79 91 93

EPS (IDR) 952 1,115 693 1,060 1,384

EPS growth (%) 54.9 36.6 (37.9) 52.9 30.6

EV/EBITDA (x) 17.4 17.0 18.5 13.6 11.1

P/E (x) 31.2 26.6 42.9 28.0 21.5

FCFPS (IDR) 642 734 (226) 1,119 1,215

FCF yield (%) 2.2 2.5 (0.8) 3.8 4.1

BVPS (IDR) 3,430 4,353 4,940 5,806 6,938

P/BV (x) 8.6 6.8 6.0 5.1 4.3

DPS (IDR) 130 197 125 212 277

Div. yield (%) 0.4 0.7 0.4 0.7 0.9 Source: Company, Bahana estimates note: based on 09 October 2014 closing price


0

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100

150

200

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22,000

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26,000

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28,000

29,000

30,000

31,000

32,000


('000)(IDR)

Volume (RHS) MYOR IJ Px Last

(2.6)

1.2

2.5

(4.4)

(0.8)

0.5

(5)

(4)

(3)

(2)

(1)

0

1

2

3

(5)

(4)

(3)

(2)

(1)

0

1

2

3

ytd 1M 3M 6M 9M 12M

(%) (%)

MYOR IJ relative to JCI


Major assumptions Year to 31 Dec 2012A 2013A 2014F 2015F 2016F Confectionaries price growth (%) 4.0 10.0 7.0 3.0 5.0 Coffee price growth (%) 2.0 10.0 5.0 5.0 5.0 A&P to sales (%) 6.7 8.6 7.5 8.5 8.8 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 31,100/22,500 12M High/low consensus TP (IDR) : 45,000/25,900 Majority shareholder (%) : Unita Branindo (32.9) Shares outstanding (mn)/Free float (%) : 894.3/66.9 Mkt. cap. (IDRb/USDmn) : 26,562/2,179 3-m avg.daily t.o.(IDRbn/USDmn) : 5.0/0.4 Bloomberg/Reuters code : MYOR IJ/MYOR.JK Source: Bloomberg, Reuters; based on 09 October 2014 closing price

2015 Compendium

213

MAYORA INDAH

Profit & loss Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016FSales 10,511 12,018 15,343 17,742 20,382Gross profit 2,346 2,922 2,942 3,875 4,651EBITDA 1,422 1,663 1,571 2,122 2,587Depreciation 265 358 419 487 566EBIT 1,157 1,305 1,153 1,635 2,022Net interest inc./(expense) (205) (232) (270) (301) (296)Forex gain/(losses) 32 308 (20) (15) (12)Other income/(expense) (24) (25) (20) (30) (30)Pre-tax profit 960 1,356 843 1,289 1,684Taxes (215) (343) (213) (326) (425)Minority interest (15) (17) (10) (16) (21)Extraordinary gain/(losses) - - - - -Net profit 730 997 620 948 1,238Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016F Cash and equivalents 1,340 1,860 1,994 2,201 2,344 S-T investments - - - - - Trade receivables 2,051 2,813 3,196 3,450 3,963 Inventories 1,499 1,456 2,548 2,659 2,801 Fixed assets 2,858 3,114 3,545 4,009 4,543 Other assets 555 465 569 658 755 Total assets 8,303 9,710 11,853 12,976 14,406 Interest bearing liabilities 3,337 3,623 4,568 4,550 4,552 Trade payables 853 1,179 1,722 1,926 2,185 Other liabilities 1,045 1,015 1,145 1,308 1,464 Total liabilities 5,235 5,816 7,435 7,784 8,201 Minority interest 76 86 96 112 132 Shareholders' equity 2,992 3,808 4,322 5,080 6,072 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016FEBIT 1,157 1,305 1,153 1,635 2,022Depreciation 265 358 419 487 566Working capital 160 (449) (931) (179) (409)Other operating items 78 57 8 8 9Operating cash flow 1,659 1,271 648 1,951 2,186Net capital expenditure (1,085) (614) (850) (950) (1,100)Free cash flow 574 657 (202) 1,001 1,086Equity raised/(bought) 0 64 - - -Net borrowings 529 286 945 (18) 2Other financing (91) (487) (610) (776) (945)Net cash flow 1,012 519 133 207 143Cash flow at beginning 325 1,340 1,860 1,994 2,201Ending cash flow 1,340 1,860 1,994 2,201 2,344Source: Company, Bahana estimates


2015 Compendium

214

MEDCO ENERGI INTERNASIONAL BUY* PX: IDR3,670 – TP: IDR4,100* With overseas oil blocks in Libya, Tunisia and Papua New Guinea,

MEDC, the largest listed oil and gas play in terms of market capitalization, should benefit from the commercial production of its 30%-interest Senoro upstream project (310mmscfd in annual production capacity) which could contribute 45mmscfd in gas volume, 12% of MEDC’s 2015F production, before rising to 19% in 2016F.

Other projects include: Block A in Aceh to develop a 60mmscfd gas plant facility; a 3x110MW Sarulla geothermal plant in North Sumatra; and Kalimantan exploration programs in the Bengara, Tarakan and Nunukan blocks. MEDC should also benefit from overseas assets in Libya’s Area 47, Tunisia’s 8 working areas, and Papua.

In aggregate, MEDC estimates 78mmboe in net risked resources in 2013-18. On valuation, our DCF-based IDR4,100 TP translates into a 2015F PE of 15.7x. Risks include continued low global oil prices.

Financial highlights Year to 31 Dec 2012A 2013A 2014F 2015F 2016F Revenues (USDmn) 904 889 887 1,068 1,146 EBIT (USDmn) 260 246 228 370 364 Net profit (USDmn) 13 13 13 73 77 Bahana/consensus (%) - - 58 98 97

EPS (IDR) 40 41 46 261 275 EPS growth (%) (85.6) 1.8 13.8 460.5 5.7 EV/EBITDA (x) 5.2 4.4 6.6 5.2 2.2 P/E (x) 91.5 89.8 78.9 14.1 13.3 FCFPS (IDR) (32) 336 220 237 673 FCF yield (%) (0.9) 9.1 6.0 6.5 18.3 BVPS (IDR) 2,661 2,874 3,122 3,298 3,497 P/BV (x) 1.4 1.3 1.2 1.1 1.0 DPS (IDR) 10 16 19 104 110 Div. yield (%) 0.3 0.4 0.5 2.8 3.0 Source: Company, Bahana estimates note: based on 09 October 2014 closing price


0

2,000

4,000

6,000

8,000

10,000

12,000

1,500

2,000

2,500

3,000

3,500

4,000


('000)(IDR)

Volume (RHS) MEDC IJ Px Last

57.9

6.7

1.7

35.5

47.2

27.8

0

10

20

30

40

50

60

70

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70

ytd 1M 3M 6M 9M 12M

(%) (%)

MEDC IJ relative to JCI Source: Bloomberg


Major assumptions Year to 31 Dec 2012A 2013A 2014F 2015F 2016F ASP oil (USD/barrel) 111 110 110 99 94 ASP gas (USD/mmbtu) 3.8 5.2 5.6 6.5 7.2 Production per day (MBOED) 56 56 53 63 84 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 3,785/1,940 12M High/low consensus TP (IDR) : 3,900/2,530Majority shareholder (%) : Encore Energy Pte Ltd. (50.7) Shares outstanding (mn)/Free float (%) : 3,332/49.0 Mkt. cap. (IDRbn/USDmn) : 12,230/1,003 3-m avg.daily t.o.(IDRbn/USDmn) : 5.5/0.5 Bloomberg/Reuters code : MEDC IJ/MEDC.JK Source: Bloomberg, Reuters; based on 09 October 2014 closing price

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215

MEDCO ENERGI INTERNASIONAL

Profit & loss Year to 31 Dec (USDmn) 2012A 2013A 2014F 2015F 2016FSales 904 889 887 1,068 1,146Gross profit 402 367 359 502 498EBITDA 346 335 321 468 467Depreciation 85 89 93 98 103EBIT 260 246 228 370 364Net interest inc./(expense) (95) (77) (85) (109) (123)Forex gain/(losses) - - - - -Other income/(expense) 32 25 4 10 45Pre-tax profit 197 194 147 271 286Taxes (156) (154) (129) (190) (200)Minority interest (6) (3) (5) (9) (9)Extraordinary gain/(losses) (22) (24) - - -Net profit 13 13 13 73 77Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (USDmn) 2012A 2013A 2014F 2015F 2016F Cash and equivalents 525 270 306 408 318 S-T investments 312 253 274 200 271 Trade receivables 147 144 114 137 147 Inventories 37 37 41 44 50 Fixed assets 120 86 100 94 88 Other assets 1,515 1,742 1,916 2,429 2,436 Total assets 2,656 2,532 2,750 3,312 3,311 Interest bearing liabilities 1,350 1,032 1,388 1,794 1,815 Trade payables 95 95 100 99 114 Other liabilities 367 509 375 473 373 Total liabilities 1,813 1,635 1,864 2,366 2,302 Minority interest 8 12 15 24 34 Shareholders' equity 835 885 871 922 975 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (USDmn) 2012A 2013A 2014F 2015F 2016FEBIT 260 246 228 370 364Depreciation 85 89 93 98 103Working capital (9) (30) 190 (8) (28)Other operating items (25) (6) 45 22 (31)Operating cash flow 312 298 557 482 409Net capital expenditure (322) (195) (495) (416) (221)Free cash flow (10) 103 61 66 188Equity raised/(bought) - - - - -Net borrowings 69 (302) 342 406 22Other financing (263) (57) (367) (369) (300)Net cash flow (204) (255) 36 102 (90)Cash flow at beginning 729 525 270 306 408Ending cash flow 525 270 306 408 318Source: Company, Bahana estimates


2015 Compendium

216

MEDIA NUSANTARA CITRA REDUCE PX: IDR2,945 - TP: IDR2,300 Based on our channel checks, MNCN, Indonesia’s largest multimedia

player, is experiencing slower industry-wide ad spend on the back of an economic slowdown, despite a 40% market share in three free-to-air channels, MNC TV, RCTI and Global TV. Hence, in 2015, we expect it to book just 8% y-y top line growth vs. 9% in 2014 (1H14: 7.6%).

Our study shows that FMCG companies such as UNVR, INDF, KLBF, MYOR and TSPC have been reducing adspend as a percentage of sales, particularly during the economic downturn, in order to save costs. In the interim, some FMCG companies such as KLBF prefer to do direct marketing to customers, perceived to be more effective.

With an unexciting 2015 macro outlook, we expect MNCN’s advertising growth rate to remain sluggish (as evidenced in 2013 at 4%). Our IDR2,300 TP, based on a 2015F PE of 18x, which is 20% below its regional peers. An upside risk would be higher-than-expected economic growth.


EPS (IDR) 118 120 127 128 149 EPS growth (%) 54.8 2.1 6.0 0.4 17.0 EV/EBITDA (x) 17.7 15.7 14.9 14.7 12.7 P/E (x) 25.1 24.6 23.2 23.1 19.7 FCFPS (IDR) 71 105 37 40 45 FCF yield (%) 2.4 3.6 1.3 1.4 1.5 BVPS (IDR) 518 549 614 690 789 P/BV (x) 5.7 5.4 4.8 4.3 3.7 DPS (IDR) 35 71 58 58 68 Div. yield (%) 1.2 2.4 2.0 2.0 2.3 Source: Company, Bahana estimates note: based on 09 October 2014 closing price


0

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3,400


('000)(IDR)

Volume (RHS) MNCN IJ Px Last

(4.6)

13.6

8.5

4.5

(0.0)

(10.5)

(15)

(10)

(5)

0

5

10

15

(15)

(10)

(5)

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5

10

15

ytd 1M 3M 6M 9M 12M

(%) (%)

MNCN IJ relative to JCI


Major assumptions Year to 31 Dec 2012A 2013A 2014F 2015F 2016F Advertising rate growth (%) 16.2 4.1 9.1 7.7 13.1 Programming cost rate growth (%) 17.9 7.0 9.0 11.7 11.7 G&A costs to revenue (%) 19.1 17.0 17.5 18.4 18.2 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 3,220/2,220 12M High/low consensus TP (IDR) : 3,800/2,400 Majority shareholder (%) : Global Mediacom (66.04) Shares outstanding (mn)/Free float (%) : 14,180/33.8 Mkt. cap. (IDRbn/USDmn) : 41,761/3,426 3-m avg.daily t.o.(IDRbn/USDmn) : 19.7/1.6 Bloomberg/Reuters code : MNCN IJ/MNCN.JK Source: Bloomberg, Reuters based on 09 October 2014 closing price

2015 Compendium

217

MEDIA NUSANTARA CITRA

Profit & loss Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016FSales 6,265 6,522 7,114 7,665 8,667Gross profit 3,409 3,672 3,983 4,186 4,800EBITDA 2,275 2,648 2,830 2,876 3,326Depreciation 60 87 92 96 101 EBIT 2,215 2,560 2,738 2,780 3,225Net interest inc./(expense) (15) (10) (35) (54) (43) Forex gain/(losses) (52) (134) (146) (157) (178) Other income/(expense) 113 (23) (20) (22) (25) Pre-tax profit 2,261 2,394 2,536 2,547 2,979Taxes (498) (584) (619) (621) (727) Minority interest (106) (119) (114) (115) (134) Extraordinary gain/(losses) - - - - - Net profit 1,657 1,691 1,804 1,811 2,119Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016F Cash and equivalents 528 575 1,674 838 165 S-T investments - - - - - Trade receivables 2,615 3,062 3,272 3,526 3,987 Inventories 1,139 1,333 1,409 1,565 1,740 Fixed assets 986 1,543 2,206 2,890 3,644 Other assets 3,692 3,104 3,340 3,582 3,840 Total assets 8,961 9,615 11,902 12,401 13,376 Interest bearing liabilities 727 535 1,951 1,264 679 Trade payables 447 631 698 776 863 Other liabilities 489 705 550 570 649 Total liabilities 1,664 1,871 3,200 2,610 2,190 Minority interest 238 358 358 358 358 Shareholders' equity 7,059 7,386 8,344 9,434 10,828 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016FEBIT 2,215 2,560 2,738 2,780 3,225 Depreciation 60 87 92 96 101 Working capital (321) (501) (411) (354) (529) Other operating items (546) (807) (836) (829) (921) Operating cash flow 1,408 1,339 1,582 1,692 1,876Net capital expenditure (87) (705) (854) (920) (1,040) Free cash flow 1,322 634 729 773 836Equity raised/(bought) (219) (129) - - - Net borrowings (117) (193) 1,416 (687) (585) Other financing (1,295) (266) (1,046) (921) (924) Net cash flow (309) 46 1,100 (836) (673)Cash flow at beginning 837 528 575 1,674 838 Ending cash flow 528 575 1,674 838 165Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2012A 2013A 2014F 2015F 2016F ROAE (%) 23.9 23.4 22.9 20.4 20.9 ROAA (%) 18.7 18.2 16.8 14.9 16.4 EBITDA margin (%) 36.3 40.6 39.8 37.5 38.4 EBIT margin (%) 35.4 39.3 38.5 36.3 37.2 Net margin (%) 26.4 25.9 25.4 23.6 24.4 Payout ratio (%) 45.6 60.8 50.0 40.0 40.0 Current ratio (x) 5.4 4.2 6.3 6.2 5.7 Interest coverage (x) 148.2 247.3 77.3 51.7 75.1 Net gearing (%) 2.8 nc 3.3 4.5 4.7 Debts to assets (%) 8.1 5.6 16.4 10.2 5.1 Debtor turnover (days) 151 159 159 159 159 Creditor turnover (days) 63 81 81 81 81 Inventory turnover (days) 130 158 158 158 158 Source: Company, Bahana estimates

2015 Compendium

218

MITRA ADIPERKASA HOLD PX: IDR5,275 - TP: IDR5,750 MAPI, the largest modern lifestyle retailer by number of brands, is in

the midst of consolidating and rationalizing its existing brands. In the interim, 2014 store openings is capped at 300 (2013: 396), while inventory levels appear to have stabilized at 210 days in 2Q14, flat q-q, but unwinding to targeted 170-180 days likely to take up to 1H16.

Going into 2015, the main challenge for MAPI will be possible higher-than-expected minimum wages (salaries and wages: 35% of operating cost), particularly as it embarks on an 18-month project (starting March 2014) to raise efficiencies through various measures such as reductions in the number of workers and travel costs.

Thus, MAPI is a HOLD, despite a 40% average EPS growth in 2015-16, which is mostly due to a low base effect. Our IDR5,750 TP is based on 2015F PER of 27x, at par with the sector. Downside risk is competition while upside is IDR400-500bn capital gain from land sale.

Financial highlights Year to 31 Dec 2012A 2013A 2014F 2015F 2016F Revenues (IDRbn) 7,585 9,734 11,937 13,993 16,510 EBIT (IDRbn) 761 751 695 839 1,022 Net profit (IDRbn) 433 328 251 353 492 Bahana/consensus (%) - - 78 76 84

EPS (IDR) 261 197 151 213 297 EPS growth (%) 20.1 (24.3) (23.3) 40.6 39.3 EV/EBITDA (x) 9.5 9.7 10.1 8.7 7.4 P/E (x) 20.2 26.7 34.8 24.8 17.8 FCFPS (IDR) (289) (291) (66) 273 403 FCF yield (%) (5.5) (5.5) (1.2) 5.2 7.6 BVPS (IDR) 1,309 1,463 1,590 1,774 2,028 P/BV (x) 4.0 3.6 3.3 3.0 2.6 DPS (IDR) 35 43 43 33 46 Div. yield (%) 0.7 0.8 0.8 0.6 0.9 Source: Company, Bahana estimates note: based on 09 October 2014 closing price


0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

4,500

5,000

5,500

6,000

6,500

7,000

7,500


('000)(IDR)

Volume (RHS) MAPI IJ Px Last

(20.9)

(5.9)

7.2

(16.7)

(22.3)(25.6)

(30)

(25)

(20)

(15)

(10)

(5)

0

5

10

(30)

(25)

(20)

(15)

(10)

(5)

0

5

10

ytd 1M 3M 6M 9M 12M

(%) (%)

MAPI IJ relative to JCI

Source: Bloomberg Harry Su ([email protected]) +6221 2505735

Major assumptions Year to 31 Dec 2012A 2013A 2014F 2015F 2016F Sales growth (%) 28.8 28.3 22.6 17.2 18.0 Gross profit margin (%) 50.9 49.8 47.5 47.7 47.9 EBIT margin (%) 10.0 7.7 5.8 6.0 6.2 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 7,000/4,655 12M High/low consensus TP (IDR) : 8,000/4,100 Majority shareholder (%) : Satya Mulia Gema/ Gajah Tunggal (56.0) Share outstanding (mn)/Free float (%) : 1,660/44.0 Mkt. cap. (IDRbn/USDmn) : 8,757/718 3-m avg.daily t.o.(IDRbn/USDmn) : 12.3/1.0 Bloomberg/Reuters code : MAPI IJ/MAPI.JK Source: Bloomberg, Reuters; based on 09 October 2014 closing price

2015 Compendium

219

MITRA ADIPERKASA

Profit & loss Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016FSales 7,585 9,734 11,937 13,993 16,510Gross profit 3,859 4,849 5,673 6,674 7,907EBITDA 1,078 1,150 1,163 1,363 1,602Depreciation 317 399 468 524 580EBIT 761 751 695 839 1,022Net interest inc./(expense) (156) (218) (354) (346) (332)Forex gain/(losses) (26) (60) 7 0 0Other income/(expense) 18 12 11 12 13Pre-tax profit 598 485 359 505 703Taxes (165) (157) (108) (151) (211)Minority interest - - - - -Extraordinary gain/(losses) - - - - -Net profit 433 328 251 353 492Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016F Cash and equivalents 526 369 414 245 270 S-T investments 1 - - - - Trade receivables 283 415 442 518 611 Inventories 1,918 2,942 3,432 3,810 4,243 Fixed assets 2,011 2,509 2,606 2,729 2,696 Other assets 1,250 1,552 1,923 2,103 2,393 Total assets 5,991 7,808 8,840 9,426 10,235 Interest bearing liabilities 1,975 2,775 3,463 3,393 3,370 Trade payables 800 1,205 1,201 1,404 1,650 Other liabilities 1,042 1,401 1,536 1,685 1,849 Total liabilities 3,818 5,380 6,201 6,482 6,869 Minority interest - - - - - Shareholders' equity 2,173 2,428 2,639 2,944 3,366 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016FEBIT 761 751 695 839 1,022Depreciation 317 399 468 524 580Working capital (431) (751) (521) (251) (280)Other operating items (252) 86 (151) 40 46Operating cash flow 395 486 491 1,152 1,368Net capital expenditure (874) (969) (600) (700) (700)Free cash flow (479) (483) (109) 452 668Equity raised/(bought) (4) (5) - - -Net borrowings 1,153 799 688 (70) (23)Other financing (431) (469) (533) (552) (620)Net cash flow 238 (158) 46 (169) 25Cash flow at beginning 289 526 369 414 245Ending cash flow 526 369 414 245 270Source: Company, Bahana estimates


2015 Compendium

220

MULTIPOLAR BUY PX: IDR985 - TP: IDR1,400* MLPL, the holding company of Lippo Group, which has businesses in

retail, multimedia, telecommunication, technology and banking, should benefit from strong growth backed by its 50.2% ownership in MPPA, which contributes about 80% to MLPL’s revenue.

Going into 2015, we expect MPPA (the main revenue contributor) to remain resilient in any economic downturn considering its products are mainly groceries/staples (72.5%) while its aggressive expansion outside Java should be supportive of margins.

At this stage, we believe MLPL is undervalued, particularly given the escalating EPS growth we expect in 2015-16. We derive our SOTP-based target price of IDR1,400 by applying a 55% holding company discount and using our target prices of IDR3,900 for MPPA and IDR19,000 for LPPF. Downside risks include a worse-than-expected economic downturn and lower-than-expected store openings by MPPA.

Financial highlights Year to 31 Dec 2012A 2013A 2014F 2015F 2016F Revenues (IDRbn) 12,643 14,672 17,456 20,730 25,250 EBIT (IDRbn) (94) 85 24 85 107 Net profit (IDRbn) 29 1,415 136 165 205 Bahana/consensus (%) - - 115 78 57

EPS (IDR) 4 150 14 16 20 EPS growth (%) 40.9 3,957.4 (91.0) 21.0 24.3 EV/EBITDA (x) 37.4 11.6 10.8 9.5 8.1 P/E (x) 265.8 6.6 72.8 60.2 48.4 FCFPS (IDR) 2 (178) (2) (25) 5 FCF yield (%) 0.0 (1.9) (0.0) (0.2) 0.1 BVPS (IDR) 644 749 693 707 725 P/BV (x) 1.5 1.3 1.4 1.4 1.4 DPS (IDR) 1 1 21 2 2 Div. yield (%) 0.1 0.1 2.2 0.2 0.3 Source: Company, Bahana estimates note: based on on 09 October 2014 closing price


0

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('000)(IDR)

Volume (RHS) MLPL IJ Px Last

156.8

30.2 33.7

61.3

156.2 150.6

0

20

40

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140

160

180

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100

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180

ytd 1M 3M 6M 9M 12M

(%) (%)

MLPL IJ relative to JCI Source: Bloomberg Wendy Chandra ([email protected]) +6221 2505081 ext.3606 *New, please refer to appendix II

Major assumptions Year to 31 Dec 2012A 2013A 2014F 2015F 2016F MPPA’s revenue 10,868 11,913 14,371 17,276 21,388 Big TV subscribers (‘000) - - 500 1,000 1,500 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 1,080/355 12M High/low consensus TP (IDR) : 1,500/900Majority shareholder (%) : Cyport Limited (27) Shares outstanding (mn)/Free float (%) : 10,065/68 Mkt. cap. (IDRbn/USDmn) : 9,914/813 3-m avg.daily t.o.(IDRbn/USDmn) : 17.9/1.5 Bloomberg/Reuters code : MLPL IJ/MLPL.JK Source: Bloomberg, Reuters based on 09 October 2014 closing price

2015 Compendium

221

MULTIPOLAR

Profit & loss Year to 31 Dec (IDRb) 2012A 2013A 2014F 2015F 2016FSales 12,643 14,672 17,456 20,730 25,250Gross profit 2,249 2,651 3,102 3,741 4,561EBITDA 202 673 817 985 1,183Depreciation 296 588 793 901 1,076 EBIT (94) 85 24 85 107Net interest inc./(expense) (34) (188) (206) (219) (228) Forex gain/(losses) 63 143 (10) (5) (5) Other income/(expense) 250 1,725 471 476 543 Pre-tax profit 185 1,765 278 336 418Taxes (19) (119) (83) (101) (125) Minority interest (138) (231) (58) (71) (88) Extraordinary gain/(losses) - - - - - Net profit 29 1,415 136 165 205Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRb) 2012A 2013A 2014F 2015F 2016F Cash and equivalents 2,875 4,301 3,763 3,247 2,905 S-T investments - - - - - Trade receivables 231 349 345 410 500 Inventories 2,064 2,925 3,018 3,572 4,350 Fixed assets 2,593 3,019 3,099 3,131 3,191 Other assets 6,324 9,661 10,631 11,680 12,603 Total assets 14,088 20,255 20,856 22,041 23,549 Interest bearing liabilities 2,811 2,838 2,685 2,740 2,572 Trade payables 1,908 2,677 2,738 3,240 3,946 Other liabilities 2,316 5,763 6,475 6,887 7,590 Total liabilities 7,035 11,278 11,898 12,868 14,108 Minority interest 2,077 1,924 1,982 2,053 2,141 Shareholders' equity 4,976 7,053 6,976 7,121 7,300 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (IDRb) 2012A 2013A 2014F 2015F 2016FEBIT (94) 85 24 85 107 Depreciation 296 588 793 901 1,076 Working capital 253 (2,915) (254) (586) (375) Other operating items 190 1,584 292 283 382 Operating cash flow 645 (658) 855 683 1,190Net capital expenditure (626) (1,014) (873) (933) (1,136) Free cash flow 19 (1,673) (18) (250) 54Equity raised/(bought) (247) 672 - - - Net borrowings 114 28 (153) 55 (168) Other financing 949 2,399 (368) (320) (228) Net cash flow 836 1,426 (538) (516) (343)Cash flow at beginning 2,040 2,875 4,301 3,763 3,247 Ending cash flow 2,875 4,301 3,763 3,247 2,905Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2012A 2013A 2014F 2015F 2016F ROAE (%) 0.6 23.5 1.9 2.3 2.8 ROAA (%) 0.2 8.2 0.7 0.8 0.9 EBITDA margin (%) 1.6 4.6 4.7 4.8 4.7 EBIT margin (%) (0.7) 0.6 0.1 0.4 0.4 Net margin (%) 1.3 11.2 1.1 1.1 1.2 Payout ratio (%) 38.0 35.1 15.1 15.1 15.1 Current ratio (x) 1.5 1.5 1.4 1.4 1.3 Interest coverage (x) na 0.5 0.1 0.4 0.5 Net gearing (%) nc nc nc nc nc Debts to assets (%) 49.9 55.7 57.0 58.4 59.9 Debtor turnover (days) 6 7 7 7 7 Creditor turnover (days) 61 70 70 70 70 Inventory turnover (days) 61 76 77 77 77 Source: Company, Bahana estimates

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222

NIPPON INDOSARI CORPINDO BUY PX: IDR1,060 - TP: IDR1,400 With a 92% domestic market share, ROTI, the largest packaged

bread manufacturer in Indonesia, should see margin improvement on lower flour prices (Bogasari cut its flour ASP by 2% in September 2014), which have dropped about 13% ytd.

Apart from an estimated increase of 15% in capacity from ROTI’s new factories in Cikande (capacity: 110mn pieces pa) and Purwakarta (111mn pieces pa), growth support in 2015 should come from rapid nationwide expansion of minimarkets like Indomart (DNET) and Alfarmart (AMRT).

Our IDR1,400 TP implies a 2015F PE of 27.5x, about a 10% discount to the sector target, justified due to the possibility of intensifying competition. Risk is AMRT’s (47% ROTI’s total distributors) collaboration with Yamazaki Baking, Japan’s largest bread manufacturer to start production of its own brand in 1H15.


EPS (IDR) 29 31 41 51 59 EPS growth (%) 28.7 5.9 30.6 25.2 14.9 EV/EBITDA (x) 24.8 19.9 17.4 14.4 12.3 P/E (x) 36.0 33.9 26.0 20.8 18.1 FCFPS (IDR) (36) (7) 19 19 9 FCF yield (%) (3.4) (0.7) 1.8 1.8 0.9 BVPS (IDR) 132 156 186 224 268 P/BV (x) 8.0 6.8 5.7 4.7 3.9 DPS (IDR) 0.5 0.7 1.0 1.2 1.4 Div. yield (%) 0.5 0.2 0.3 0.3 0.3 Source: Company, Bahana estimates note: based on 09 October 2014 closing price


0

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('000)(IDR)

Volume (RHS) ROTI IJ Px Last

(12.9)

(5.7)

(20.6)

(8.9)

(12.5)

(27.2) (30)

(25)

(20)

(15)

(10)

(5)

0

(30)

(25)

(20)

(15)

(10)

(5)

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ytd 1M 3M 6M 9M 12M

(%) (%)

ROTI IJ relative to JCI


Major assumptions Year to 31 Dec 2012A 2013A 2014F 2015F 2016F Net volume (packs mn) 304 367 420 476 512 Sales return to net revenue (%) 12.8 13.5 16.3 14.9 14.9 Blended ASP (IDR’000) 3.9 4.3 4.5 4.6 4.9 HRW wheat price (USD/ton) 260 247 210 231 226 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 1,480/920 12M high/low consensus TP (IDR) : 1,600/1,350Majority shareholder (%) : Indoritel Makmur Intl. (31.5) Shares outstanding (mn)/Free float (%) : 5,062/29.3 Mkt. cap. (IDRbn/USDmn) : 5,366/440 3-m avg.daily t.o.(IDRbn/USDmn) : 5.0/0.4 Bloomberg/Reuters code : ROTI IJ/ROTI.JK Source: Bloomberg, Reuters; based on 09 October 2014 closing price

2015 Compendium

223

NIPPON INDOSARI CORPINDO

Profit & loss Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016FSales 1,191 1,506 1,901 2,283 2,626Gross profit 556 699 890 1,077 1,240EBITDA 227 273 338 407 470Depreciation 41 63 84 98 117EBIT 186 210 254 309 353Net interest inc./(expense) 0 (22) (5) (0) 1Forex gain/(losses) 0 (1) 0 0 1Other income/(expense) 13 24 26 36 41Pre-tax profit 200 211 275 344 396Taxes (51) (53) (69) (86) (99)Minority interest - - - - -Extraordinary gain/(losses) - - - - -Net profit 149 158 206 258 297Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016F Cash and equivalents 38 101 106 110 135 S-T investments - - - - - Trade receivables 136 183 201 242 278 Inventories 23 37 34 41 47 Fixed assets 894 1,175 1,316 1,532 1,841 Other assets 114 327 332 343 233 Total assets 1,205 1,823 1,990 2,267 2,534 Interest bearing liabilities 303 657 630 610 550 Trade payables 79 159 139 165 190 Other liabilities 156 219 280 356 436 Total liabilities 538 1,035 1,048 1,131 1,176 Minority interest - - - - - Shareholders' equity 667 787 942 1,136 1,359 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016FEBIT 186 210 254 309 353Depreciation 41 63 84 98 117Working capital 4 57 4 30 42Other operating items (26) (22) (23) (29) (40)Operating cash flow 206 308 319 407 472Net capital expenditure (389) (344) (224) (312) (425)Free cash flow (183) (35) 95 95 47Equity raised/(bought) - - - - -Net borrowings 270 354 (27) (20) (60)Other financing (98) (254) (62) (70) 39Net cash flow (10) 64 6 5 26Cash flow at beginning 48 37 100 105 109Ending cash flow 38 101 106 110 135Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2012A 2013A 2014F 2015F 2016F ROAE (%) 24.6 21.7 23.9 24.9 23.8 ROAA (%) 15.2 10.4 10.8 12.1 12.4 EBITDA margin (%) 19.1 18.1 17.8 17.8 17.9 EBIT margin (%) 15.6 13.9 13.4 13.5 13.5 Net margin (%) 12.5 10.5 10.9 11.3 11.3 Payout ratio (%) 19.4 23.6 25.0 25.0 25.0 Current ratio (x) 1.1 1.1 1.0 1.0 1.1 Interest coverage (x) na 9.7 49.0 700.2 na Net gearing (%) 39.8 70.6 55.6 44.0 30.5 Debts to assets (%) 25.2 8.8 6.5 4.9 2.0 Debtor turnover (days) 42 54 50 50 50 Creditor turnover (days) 37 39 39 39 39 Inventory turnover (days) 11 13 12 12 12 Source: Company, Bahana estimates

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224

PAKUWON JATI BUY PX: IDR402 - TP: IDR470* Within our property coverage, PWON has the largest recurring base

(ex. hospitals) comprising 43% of total revenues, supported by healthy retail activity and high occupancy rates in its malls. The current mall moratorium should provide barrier to entry for new entrants while helping PWON to retain high mall occupancy rates and allow the company to raise rent rates due to retail space scarcity.

However, PWON will not be able to build a mall at its planned TB Simatupang mixed-use project, creating uncertainty on the success of this development (past projects have had high-mall dependency). In addition, 2015 rate hikes should also affect its development portfolio.

We now apply a 45% discount (sector: 50%) to our 2015F NAV to derive our new IDR470 TP, supported by solid growth prospects on strong recurring income and successful launches. Risk would be greater-than-expected interest-rate hikes.

Financial highlights Year to 31 Dec 2012A 2013A 2014F 2015F 2016F Revenues (IDRbn) 2,165 3,030 3,763 4,801 5,712 EBIT (IDRbn) 1,062 1,512 1,941 2,417 2,835 Net profit (IDRbn) 748 1,133 1,534 1,928 2,304 Bahana/consensus (%) - - 101 102 98

EPS (IDR) 16 24 32 40 48 EPS growth (%) 115.6 51.4 35.4 25.7 19.5 EV/EBITDA (x) 17.9 11.6 8.8 7.1 6.0 P/E (x) 25.9 17.1 12.6 10.0 8.4 FCFPS (IDR) 7 20 17 9 15 FCF yield (%) 1.7 5.1 4.2 2.3 3.7 BVPS (IDR) 60 80 108 142 181 P/BV (x) 6.7 5.0 3.7 2.8 2.2 DPS (IDR) 4 5 6 8 11 Div. yield (%) 0.9 1.1 1.6 2.0 2.6 Source: Company, Bahana estimates note:based on 09 October 2014 closing price


0

50,000

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350,000

400,000

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200

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('000)(IDR)

Volume (RHS) PWON IJ Px Last

32.1

(3.5)

5.6 2.4

29.9

36.9

(10)

(5)

0

5

10

15

20

25

30

35

40

(10)

(5)

0

5

10

15

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35

40

ytd 1M 3M 6M 9M 12M

(%) (%)

PWON IJ relative to JCI


Major assumptions 1H14

Land bank (Ha) 385 Total value (IDRbn) 41,355 NAV/share (IDR) 859 Discount (%) 45.0 Adjusted NAV/share (IDR) 470 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 475/250 12M High/low consensus TP (IDR) : 478/235 Majority shareholder (%) : Burgami Investments Ltd (20.9) Share outstanding (mn)/Free float (%) : 48,160/43.5 Mkt. cap. (IDRbn/USDmn) : 19,360/1,588 3-m avg.daily t.o.(IDRb/USDmn) : 39.3/3.2 Bloomberg/Reuters code : PWON IJ/PWON.JK Source: Bloomberg, Reuters; based on 09 October 2014 closing price

2015 Compendium

225

PAKUWON JATI

Profit & loss Year to 31 Dec (IDRb) 2012A 2013A 2014F 2015F 2016FSales 2,165 3,030 3,763 4,801 5,712Gross profit 1,234 1,765 2,205 2,819 3,360EBITDA 1,142 1,700 2,158 2,649 3,082Depreciation 80 188 217 232 247EBIT 1,062 1,512 1,941 2,417 2,835Net interest inc./(expense) (131) (73) (145) (151) (118)Forex gain/(losses) (35) (102) 12 9 (1)Other income/(expense) 5 (6) (6) (7) (8)Pre-tax profit 901 1,331 1,801 2,268 2,708Taxes (135) (195) (263) (336) (400)Minority interest (19) (4) (4) (4) (4)Extraordinary gain/(losses) - - - - -Net profit 748 1,133 1,534 1,928 2,304Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRb) 2012A 2013A 2014F 2015F 2016F Cash and equivalents 1,315 2,126 5,025 4,693 3,857 S-T investments - - - - - Trade receivables 128 149 247 316 375 Inventories 1,262 1,490 1,261 1,514 1,816 Fixed assets 4,210 4,376 5,919 7,834 9,895 Other assets 651 1,157 1,279 1,421 1,587 Total assets 7,566 9,298 13,732 15,778 17,530 Interest bearing liabilities 2,426 2,415 4,701 4,203 3,005 Trade payables 34 55 68 87 103 Other liabilities 1,973 2,726 3,521 4,400 5,388 Total liabilities 4,432 5,196 8,290 8,689 8,496 Minority interest 222 226 249 274 301 Shareholders' equity 2,911 3,876 5,194 6,815 8,734 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (IDRb) 2012A 2013A 2014F 2015F 2016FEBIT 1,062 1,512 1,941 2,417 2,835Depreciation 80 188 217 232 247Working capital 366 459 859 484 532Other operating items (590) (550) (450) (537) (586)Operating cash flow 918 1,608 2,567 2,595 3,028Net capital expenditure (596) (622) (1,760) (2,147) (2,308)Free cash flow 322 986 807 448 719Equity raised/(bought) - - - - -Net borrowings 359 (11) 2,286 (498) (1,197)Other financing 13 (164) (194) (282) (358)Net cash flow 694 811 2,899 (332) (836)Cash flow at beginning 621 1,315 2,126 5,025 4,693Ending cash flow 1,315 2,126 5,025 4,693 3,857Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2012A 2013A 2014F 2015F 2016F ROAE (%) 29.1 33.4 33.8 32.1 29.6 ROAA (%) 11.2 13.4 13.3 13.1 13.8 EBITDA margin (%) 52.7 56.1 57.3 55.2 54.0 EBIT margin (%) 49.1 49.9 51.6 50.3 49.6 Net margin (%) 34.5 37.4 40.8 40.2 40.3 Payout ratio (%) 22.5 19.1 20.0 20.0 20.0 Current ratio (x) 1.3 1.3 1.3 1.0 2.0 Interest coverage (x) 8.1 20.7 13.4 16.0 24.0 Net gearing (%) 38.1 7.4 nc nc nc Debts to assets (%) 32.1 26.0 34.2 26.6 17.1 Debtor turnover (days) 20 17 24 24 24 Creditor turnover (days) 15 9 16 16 16 Inventory turnover (days) na na na na na Source: Company, Bahana estimates

2015 Compendium

226

PEMBANGUNAN PERUMAHAN BUY PX: IDR2,270 - TP: IDR2,800 PTPP, the only construction play in our coverage with a heavy

equipment-related subsidiary, is also going into the property business, following the trend in the sector. In 2015, to further develop its property business, PTPP plans to IPO PT PP Properti, its subsidiary, which has projects such as the Bekasi Grand Kamala Lagoon and the Surabaya Grand Sungkono Lagoon.

In the mid-term, PTPP should benefit from the IDR9tn Kalibaru project from Pelindo II and its expansion in EPC due to increasing demand for energy. The company is planning to develop a 2x7 MW Gunung Sugih coal-fired power plant in Lampung.

Our IDR2,800 TP is based on a 2015 target multiple of 20x, at par with our sector’s 2015 target PE. Risks to our recommendation include macro headwinds such as possible higher interest rates, which could in turn lead to lower-than-expected revenues.

Financial highlights Year to 31 Dec 2012A 2013A 2014F 2015F 2016F Revenues (IDRbn) 8,004 11,656 12,914 16,652 20,010 EBIT (IDRbn) 853 1,168 1,227 1,560 1,832 Net profit (IDRbn) 309 421 499 678 875 Bahana/consensus (%) - - 93 99 103

EPS (IDR) 64 87 103 140 181 EPS growth (%) 28.5 36.3 18.5 35.9 29.2 EV/EBITDA (x) 10.5 6.9 6.9 5.5 4.8 P/E (x) 35.6 26.1 22.0 16.2 12.6 FCFPS (IDR) (67) (40) (140) (8) 28 FCF yield (%) (3.0) (1.8) (6.1) (0.4) 1.2 BVPS (IDR) 342 410 487 596 734 P/BV (x) 6.6 5.5 4.7 3.8 3.1 DPS (IDR) 19 26 31 42 54 Div. yield (%) 0.8 1.1 1.4 1.8 2.4 Source: Company, Bahana estimates note: based on 09 October 2014 closing price


0

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1,000

1,200

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1,600

1,800

2,000

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2,400


('000)(IDR)

Volume (RHS) PTPP IJ Px Last

78.9

(2.3)

12.7 17.7

67.9

94.3

(20)

0

20

40

60

80

100

(20)

0

20

40

60

80

100

ytd 1M 3M 6M 9M 12M

(%) (%)

PTPP IJ relative to JCI Source: Bloomberg


Major assumptions Year to 31 Dec 2012A 2013A 2014F 2015F 2016F Carried over (IDRbn) 8,200 17,691 25,016 30,874 34,496 New contracts (IDRbn) 19,474 20,001 21,107 22,843 26,141 Total book orders (IDRbn) 27,670 37,692 46,123 53,716 60,636 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 2,510/1,070 12M High/low consensus TP (IDR) : 2,700/1,570Majority shareholder (%) : Republic of Indonesia (51) Shares outstanding (mn)/Free float (%) : 4,842/42.8 Mkt. cap. (IDRbn/USDmn) : 10,992/902 3-m avg.daily t.o.(IDRbn/USDmn) : 35.3/2.9 Bloomberg/Reuters code : PTPP IJ/JPTPP.JK Source: Bloomberg, Reuters; based on 09 October 2014 closing price

2015 Compendium

227

PEMBANGUNAN PERUMAHAN

Profit & loss Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016FSales 8,004 11,656 12,914 16,652 20,010Gross profit 996 1,367 1,522 1,948 2,373EBITDA 1,093 1,438 1,562 1,960 2,232Depreciation 240 270 335 400 400EBIT 853 1,168 1,227 1,560 1,832Net interest inc./(expense) (199) (205) (217) (221) (288)Forex gain/(losses) 8 (6) (0) 2 (3)Other income/(expense) (118) (191) (124) (164) (66)Pre-tax profit 545 767 886 1,177 1,476Taxes (236) (346) (387) (500) (600)Minority interest - - - - -Extraordinary gain/(losses) - - - - -Net profit 309 421 499 678 875Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016F Cash and equivalents 1,303 2,396 2,710 2,888 3,142 S-T investments 141 176 194 213 234 Trade receivables 1,339 1,710 1,884 2,429 2,919 Inventories 1,566 1,777 1,885 2,307 2,848 Fixed assets 273 377 860 1,319 1,777 Other assets 3,929 5,978 6,336 7,697 8,810 Total assets 8,551 12,414 13,869 16,854 19,730 Interest bearing liabilities 1,796 1,367 2,563 2,663 2,763 Trade payables 4,244 6,300 6,166 7,956 9,541 Other liabilities 856 2,764 2,784 3,351 3,866 Total liabilities 6,895 10,431 11,513 13,969 16,170 Minority interest - - - - - Shareholders' equity 1,656 1,984 2,356 2,884 3,560 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016FEBIT 853 1,168 1,227 1,560 1,832 Depreciation 240 270 335 400 400 Working capital (410) (187) (431) 67 85 Other operating items (901) (1,245) (1,326) (1,536) (1,652)Operating cash flow (218) 5 (195) 491 665 Net capital expenditure (105) (198) (481) (530) (530)Free cash flow (323) (192) (676) (39) 135 Equity raised/(bought) - - - - -Net borrowings 402 (314) 1,130 100 100 Other financing (80) 1,599 (139) 117 19 Net cash flow (1) 1,092 314 178 254 Cash flow at beginning 1,306 1,303 2,396 2,710 2,888 Ending cash flow 1,305 2,396 2,710 2,888 3,142 Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2012A 2013A 2014F 2015F 2016F ROAE (%) 20.0 23.1 23.0 25.9 27.2 ROAA (%) 4.0 4.0 3.8 4.4 4.8 EBITDA margin (%) 13.7 12.3 12.1 11.8 11.2 EBIT margin (%) 10.7 10.0 9.5 9.4 9.2 Net margin (%) 3.9 3.6 3.9 4.1 4.4 Payout ratio (%) 29.8 29.7 30.0 30.0 30.0 Current ratio (x) 1.4 1.4 1.3 1.3 1.3 Interest coverage (x) 4.3 5.7 5.7 7.0 6.4 Net gearing (%) 29.7 nc nc nc nc Debts to assets (%) 21.0 11.0 18.5 15.8 14.0 Debtor turnover (days) 53 53 53 53 53 Creditor turnover (days) 197 197 197 197 197 Inventory turnover (days) 80 59 58 52 53 Source: Company, Bahana estimates

2015 Compendium

228

PERUSAHAAN GAS NEGARA BUY PX: IDR5,775 – TP: IDR7,000* In 2015, PGAS, Indonesia’s only state-owned gas distribution and

transmission company, should see rising gas volumes due to the planned operation of its Lampung FSRU (floating storage regasification unit). Note that the offshore installation and connection with the Tower Yoke Mooring system in Lampung has been completed.

In the next few years, we expect PGAS’s growth to be derived from improving distribution volumes (more than 80% of total revenue), reaching 869mmscfd in 2015, up around 4% y-y (2014: +2% y-y).

We expect the energy policy introduced by the new government to further improve PGAS’s volume supply. We value PGAS using DCF with a WACC of 8%, translating into a IDR7,000 TP. BUY. Risks to our call include lower-than-expected volume growth, a lower-than expected tariff increase and unfavorable changes in government rulings.

Financial highlights Year to 31 Dec 2012A 2013A 2014F 2015F 2016F Revenues (USDmn) 2,576 3,002 3,423 3,924 4,448 EBIT (USDmn) 1,018 934 985 1,062 1,079 Net profit (USDmn) 891 861 785 846 914 Bahana/consensus (%) - - 99 102 105

EPS (IDR) 423 408 372 401 433 EPS growth (%) 30.9 (3.4) (8.8) 7.8 8.0 EV/EBITDA (x) 10.7 8.5 11.8 11.6 10.1 P/E (x) 13.7 14.1 15.5 14.4 13.3 FCFPS (IDR) 566 180 104 183 164 FCF yield (%) 9.8 3.1 1.8 3.2 2.8 BVPS (IDR) 1,042 1,207 1,394 1,594 1,811 P/BV (x) 5.5 4.8 4.1 3.6 3.2 DPS (IDR) 203 210 186 201 217 Div. yield (%) 3.5 3.6 3.2 3.5 3.8 Source: Company, Bahana estimates note: based on 09 October 2014 closing price


0

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('000)(IDR)

Volume (RHS) PGAS IJ Px Last

12.2

1.4

5.1

8.0

12.8

(2.0)(4)

(2)

0

2

4

6

8

10

12

14

(4)

(2)

0

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4

6

8

10

12

14

ytd 1M 3M 6M 9M 12M

(%) (%)

PGAS IJ relative to JCI Source: Bloomberg


Major assumptions Year to 31 Dec 2012A 2013A 2014F 2015F 2016F Distribution Vol. (mmscfd) 815 824 839 869 899 Tariff (USD/mmbtu) 7.8 9.6 10.2 10.6 10.7 Transmission Vol. (mmscfd) 863 854 865 865 865 Source: Company, Bahana estimates

Company information

12M high/low (IDR) : 6,100/4,250 12M High/low consensus TP (IDR) : 6,300/5,450Majority shareholder (%) : Republic of Indonesia (57) Shares outstanding (mn)/Free float (%) : 24,242/43.0 Mkt. cap. (IDRbn/USDmn) : 139,995/11,484 3-m avg.daily t.o.(IDRbn/USDmn) : 99.3/8.1 Bloomberg/Reuters code : PGAS IJ/PGAS.JK Source: Bloomberg, Reuters; based on 09 October 2014 closing price

2015 Compendium

229

PERUSAHAAN GAS NEGARA

Profit & loss Year to 31 Dec (USDmn) 2012A 2013A 2014F 2015F 2016FSales 2,576 3,002 3,423 3,924 4,448Gross profit 1,472 1,418 1,496 1,711 1,862EBITDA 1,208 1,124 1,199 1,303 1,361Depreciation 189 190 214 241 283EBIT 1,018 934 985 1,062 1,079Net interest inc./(expense) 6 5 18 8 28Forex gain/(losses) 50 84 (22) (20) 16Other income/(expense) 74 102 42 47 52Pre-tax profit 1,148 1,125 1,023 1,097 1,174Taxes (233) (231) (212) (223) (232)Minority interest (24) (33) (26) (28) (29)Extraordinary gain/(losses) - - - - -Net profit 891 861 785 846 914Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (USDmn) 2012A 2013A 2014F 2015F 2016F Cash and equivalents 1,576 1,319 2,376 1,968 2,950 S-T investments 108 85 92 92 92 Trade receivables 259 280 319 366 414 Inventories 2 15 4 4 5 Fixed assets 1,694 1,837 2,684 3,195 3,789 Other assets 269 827 526 647 762 Total assets 3,908 4,363 6,001 6,272 8,012 Interest bearing liabilities 939 1,026 2,263 1,706 2,497 Trade payables 189 158 185 212 248 Other liabilities 426 452 424 775 1,210 Total liabilities 1,553 1,636 2,872 2,693 3,955 Minority interest 158 182 191 218 239 Shareholders' equity 2,197 2,545 2,938 3,361 3,818 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (USDmn) 2012A 2013A 2014F 2015F 2016FEBIT 1,018 934 985 1,062 1,079Depreciation 189 190 214 241 283Working capital 224 23 (226) (37) (21)Other operating items (22) (192) (197) (212) (216)Operating cash flow 1,410 955 776 1,053 1,124Net capital expenditure (217) (576) (847) (511) (594)Free cash flow 1,192 379 (71) 542 530Equity raised/(bought) - - - - -Net borrowings (59) (491) 1,276 (557) 791Other financing (705) (145) (149) (394) (339)Net cash flow 429 (257) 1,057 (408) 982Cash flow at beginning 1,147 1,576 1,319 2,376 1,968Ending cash flow 1,576 1,319 2,376 1,968 2,950Source: Company, Bahana estimates


2015 Compendium

230

RAMAYANA LESTARI SENTOSA REDUCE PX: IDR830 - TP: IDR720* Going into 2015, RALS, Indonesia’s largest low-end department store

chain with 118 outlets, should experience the brunt of the government’s planned fuel-price hike as its target market, which is most sensitive to inflation, should suffer purchasing power erosion.

Apart from weaker sales expectations, we believe RALS will be hurt by cost pressure stemming from higher salaries in 2015 on increased inflation. In 1H14, RALS’ operating margin dropped to 2.8% from 3.8% in 1H13 as growth in rental (+14% y-y) and electricity (+10%) charges outstripped top-line growth of just 7%.

We have a negative view on RALS, particularly as its supermarket sale to a strategic partner is no longer likely given the recent tie-up with SPAR. Our IDR720 TP reflects a 2015F PE of 13x, a 25% market discount, which we think is justified on negative EPS growth. Risks include better-than-expected SSSG on a milder economic slowdown.

Financial highlights Year to 31 Dec 2012A 2013A 2014F 2015F 2016F Revenues (IDRbn) 7,454 7,968 8,471 8,870 9,454 EBIT (IDRbn) 418 399 388 371 413 Net profit (IDRbn) 424 434 405 390 416 Bahana/consensus (%) - - 94 82 79 EPS (IDR) 60 61 57 55 59 EPS growth (%) 12.2 2.4 (6.7) (3.7) 6.7 EV/EBITDA (x) 7.8 8.1 7.5 7.3 6.7 P/E (x) 13.9 13.6 14.5 15.1 14.2 FCFPS (IDR) 42 23 15 30 18 FCF yield (%) 5.0 2.7 1.8 3.6 2.2 BVPS (IDR) 430 455 490 513 542 P/BV (x) 1.9 1.8 1.7 1.6 1.5 DPS (IDR) 30 31 31 30 30 Div. yield (%) 3.6 3.7 3.8 3.6 3.6 Source: Company, Bahana estimates note: based on 09 October 2014 closing price


0

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700

800

900

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1,500


('000)(IDR)

Volume (RHS) RALS IJ Px Last

(38.5)

(8.7)

(27.8)

(39.5)

(48.2)(51.5)

(60)

(50)

(40)

(30)

(20)

(10)

0

(60)

(50)

(40)

(30)

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(%) (%)

RALS IJ relative to JCI

Source: Bloomberg Harry Su ([email protected]) +6221 250 5735 *New, please refer to appendix II

Major assumptions Year to 31 Dec 2012A 2013A 2014F 2015F 2016F Number of stores 113 118 122 126 130 Same store growth (%) 8.8 2.2 1.0 2.0 4.0 Sales growth (%) 13.0 6.9 6.3 4.7 6.6 Gross margin (%) 34.7 35.7 35.5 35.0 35.1 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 1,430/800 12M high/low consensus TP (IDR) : 1,800/720 Majority shareholder (%) : Ramayana Makmur Sentosa (55.9) Shares outstanding (mn)/Free float (%) : 7,096/40.5 Mkt. cap. (IDRbn/USDmn) : 5,890/483 3-m avg.daily t.o.(IDRbn/USDmn) : 9.8/0.8 Bloomberg/Reuters code : RALS IJ/RALS.JK Source: Bloomberg, Reuters; based on 09 October 2014 closing price

2015 Compendium

231

RAMAYANA LESTARI SENTOSA

Profit & loss Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016FSales 7,454 7,968 8,471 8,870 9,454Gross profit 1,975 2,140 2,299 2,404 2,610EBITDA 586 572 625 644 718Depreciation 172 177 238 274 306EBIT 418 399 388 371 413Net interest inc./(expense) 48 55 67 66 58Forex gain/(losses) 13 37 0 0 0Other income/(expense) 16 11 5 7 8Pre-tax profit 495 501 460 443 478Taxes (71) (67) (55) (53) (62)Minority interest - - - - -Extraordinary gain/(losses) - - - - -Net profit 424 434 405 390 416Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016F Cash and equivalents 1,323 1,273 1,215 1,173 1,045 S-T investments - - - - - Trade receivables 2 2 2 2 3 Inventories 763 872 886 944 1,020 Fixed assets 1,202 1,445 1,658 1,784 1,979 Other assets 783 785 894 1,036 1,168 Total assets 4,073 4,379 4,656 4,940 5,215 Interest bearing liabilities - - - - - Trade payables 723 874 866 922 996 Other liabilities 308 287 328 389 387 Total liabilities 1,031 1,161 1,193 1,311 1,383 Minority interest - - - - - Shareholders' equity 3,042 3,217 3,462 3,630 3,831 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016FEBIT 418 399 388 371 413Depreciation 172 177 238 274 306Working capital (67) 16 (32) 5 (54)Other operating items 1 (10) (38) (37) (38)Operating cash flow 525 582 555 612 627Net capital expenditure (228) (422) (450) (400) (500)Free cash flow 297 160 105 212 127Equity raised/(bought) - - - - -Net borrowings - - - - -Other financing (250) (210) (163) (254) (255)Net cash flow 47 (50) (58) (42) (128)Cash flow at beginning 1,277 1,323 1,273 1,215 1,173Ending cash flow 1,323 1,273 1,215 1,173 1,045Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2012A 2013A 2014F 2015F 2016F ROAE (%) 14.4 13.9 12.1 11.0 11.2 ROAA (%) 10.8 10.3 9.0 8.1 8.2 EBITDA margin (%) 7.9 7.2 7.4 7.3 7.6 EBIT margin (%) 5.6 5.0 4.6 4.2 4.4 Net margin (%) 5.7 5.4 4.8 4.4 4.4 Payout ratio (%) 50.2 50.2 55.0 55.0 55.0 Current ratio (x) 1.8 1.6 1.5 1.4 1.2 Interest coverage (x) na na na na na Net gearing (%) nc nc nc nc nc Debts to assets (%) - - - - - Debtor turnover (days) - - - - - Creditor turnover (days) 69 76 76 73 73 Inventory turnover (days) 72 77 77 75 74 Source: Company, Bahana estimates

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232

SALIM IVOMAS PRATAMA HOLD PX: IDR780 - TP: IDR835* Backed by the biggest planted area of 353k ha in the sector, we

expect SIMP to continue its production recovery, growing 2015F nucleus FFB production to 3.5mn tons, up 6% y-y, resulting in 2015F revenue of IDR17.1tn, up 10% y-y. We expect a higher proportion of its external FFB on completion of several CPO mills in 2014-15F. Other than the CPO business, SIMP has rubber and sugarcane plantations.

Helped by its integrated palm oil business model from upstream to downstream, including the seed business, we expect solid growth with 2015F bottom-line growth to IDR908bn, up 12% y-y. On a more negative note, we only expect 7% y-y volume growth in SIMP’s refinery business, due to weak margins.

Our TP of IDR835 reflects a 2015F PE of 14.5x, a 20% discount to its Malaysian peers. While we like its low EV/ha of USD6,916 (50% discount to the sector), we see risks from lower refinery margins.


Revenues (IDRbn) 13,845 13,280 15,547 17,092 18,397 EBIT (IDRbn) 2,603 1,586 2,137 2,405 2,790 Net profit (IDRbn) 1,157 524 812 908 1,011 Bahana/consensus (%) - - 74 75 78

EPS (IDR) 73 33 51 57 64 EPS growth (%) (36.4) (54.7) 54.9 11.9 11.4 EV/EBITDA (x) 4.6 7.2 5.8 5.3 4.7 P/E (x) 10.7 23.5 15.2 13.6 12.2 FCFPS (IDR) (59) (134) (18) (40) (19) FCF yield (%) (7.6) (17.2) (2.3) (5.1) (2.4) BVPS (IDR) 858 864 906 948 994 P/BV (x) 0.9 0.9 0.9 0.8 0.8 DPS (IDR) 22 10 15 17 19 Div. yield (%) 2.8 1.3 2.0 2.2 2.5 Source: Company, Bahana estimates note: based on 09 October 2014 closing price


0

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('000)(IDR)

Volume (RHS) SIMP IJ Px Last

(16.8)

(2.6)

(14.5)

(18.6) (19.3)

(12.6)

(25)

(20)

(15)

(10)

(5)

0

(25)

(20)

(15)

(10)

(5)

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ytd 1M 3M 6M 9M 12M

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SIMP IJ relative to JCI


Major assumptions Year to 31 Dec 2012A 2013A 2014F 2015F 2016F FFB nucleus production (k tons) 2,973 2,895 3,315 3,519 5,088 Growth (%) 6.3 (2.6) 14.5 6.1 7.0 CPO production (k tons) 880 810 956 1,024 1,096 Growth (%) 5.0 (8.0) 18.1 7.1 7.0 ASP CPO (USD/ton) 791 685 676 695 716 Source: Company, Bahana estimates

Company information

12M high/low (IDR) : 1,050/670 12M High/low consensus TP (IDR) : 1,200/858 Majority shareholder (%) : First Pacific Company Limited (78.4) Shares outstanding (mn)/Free float (%) : 15,816/21.6 Mkt. cap. (IDRbn/USDmn) : 12,337/1,012 3-m avg.daily t.o.(IDRbn/USDmn) : 6.5/0.5 Bloomberg/Reuters code : SIMP IJ/SIMP.JK Source: Bloomberg, Reuters; based on 09 October 2014 closing price

2015 Compendium

233

SALIM IVOMAS PRATAMA

Profit & loss Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016FSales 13,845 13,280 15,547 17,092 18,397Gross profit 3,894 2,947 3,717 4,051 4,498EBITDA 3,408 2,504 3,161 3,593 4,155Depreciation 806 918 1,023 1,188 1,365EBIT 2,603 1,586 2,137 2,405 2,790Net interest inc./(expense) (309) (401) (594) (636) (688)Forex gain/(losses) (47) (176) 90 45 49Other income/(expense) (235) (75) (75) (112) (112)Pre-tax profit 2,012 934 1,558 1,703 2,039Taxes (496) (299) (390) (426) (510)Minority interest (359) (111) (357) (369) (518)Extraordinary gain/(losses) - - - - -Net profit 1,157 524 812 908 1,011Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016F Cash and equivalents 3,449 2,113 1,883 1,933 2,047 S-T investments - - - - - Trade receivables 1,034 1,130 1,244 1,367 1,472 Inventories 1,889 1,568 1,943 2,136 2,300 Fixed assets 7,743 9,074 10,400 11,626 12,752 Other assets 19,560 23,075 21,886 21,584 20,806 Total assets 26,574 28,065 29,445 31,338 33,000 Interest bearing liabilities 6,780 7,886 7,976 8,776 9,276 Trade payables 661 664 789 869 927 Other liabilities 3,041 3,407 3,792 4,010 4,195 Total liabilities 10,482 11,957 12,556 13,655 14,397 Minority interest 2,515 2,440 2,565 2,694 2,875 Shareholders' equity 13,577 13,668 14,324 14,989 15,727 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016FEBIT 2,603 1,586 2,137 2,405 2,790Depreciation 806 918 1,023 1,188 1,365Working capital 172 152 (251) (133) (130)Other operating items (1,764) (1,859) (407) (1,433) (1,724)Operating cash flow 1,817 797 2,503 2,027 2,301Net capital expenditure (2,753) (2,917) (2,792) (2,662) (2,597)Free cash flow (937) (2,120) (289) (635) (295)Equity raised/(bought) 4 (85) - - -Net borrowings (480) 1,106 90 800 500Other financing (185) (237) (31) (114) (91)Net cash flow (1,597) (1,336) (230) 51 113Cash flow at beginning 5,046 3,449 2,113 1,883 1,933Ending cash flow 3,449 2,113 1,883 1,933 2,047Source: Company, Bahana estimates


2015 Compendium

234

SAMPOERNA AGRO BUY PX: IDR1,880 - TP: IDR2,500 SGRO has a planted area of 118k ha and the highest proportion of

plasma estates among the planters within our coverage. The company plans to increase its new CPO plantings to 10k ha per annum to increase its nucleus proportion going forward.

Helped by strong growth from the Kalimantan estates and several productivity improvement initiatives, SGRO’s 2015 FFB production should recover to 1.7mn tons, up 7% y-y, and support 2015 revenue growth of 11% y-y and net earnings growth of 22% y-y.

On valuation, SGRO now trades at an attractive 2015 PE of 9.1x, at a 45% discount to its Malaysian peers. We maintain our BUY recommendation on SGRO and reiterate our IDR2,500 TP, based on a 2015F PE of 12.1x, at about a 30% discount to Malaysian peers due to its small-cap discount. Risks to our call are volatile production on substantial plasma proportion and lower-than-expected CPO prices.


EPS (IDR) 174 63 169 206 233 EPS growth (%) (39.1) (63.8) 168.6 21.7 13.2 EV/EBITDA (x) 6.2 11.3 7.1 6.1 5.6 P/E (x) 10.8 29.8 11.1 9.1 8.1 FCFPS (IDR) (197) (177) (354) (62) 10 FCF yield (%) (10.5) (9.4) (18.8) (3.3) 0.6 BVPS (IDR) 1,393 1,410 1,495 1,598 1,715 P/BV (x) 1.3 1.3 1.3 1.2 1.1 DPS (IDR) 87 45 85 103 117 Div. yield (%) 4.6 2.4 4.5 5.5 6.2 Source: Company, Bahana estimates note: based on 09 October 2014 closing price


0

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1,700

1,800

1,900

2,000

2,100

2,200

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2,500


('000)(IDR)

Volume (RHS) SGRO IJ Px Last

(22.8)

(10.9) (10.5)

(15.9)

(20.5)

(6.3)

(25)

(20)

(15)

(10)

(5)

0

(25)

(20)

(15)

(10)

(5)

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ytd 1M 3M 6M 9M 12M

(%) (%)

SGRO IJ relative to JCI


Major assumptions Year to 31 Dec 2012A 2013A 2014F 2015F 2016F FFB nucleus production (k tons) 1,723 1,356 1,613 1,721 1,852 Growth (%) 6.8 (21.3) 18.9 6.7 7.6 CPO production (k tons) 351 271 321 347 372 Growth (%) 1.9 (22.8) 18.4 8.0 7.3 ASP CPO (USD/ton) 776 685 676 695 716 Source: Company, Bahana estimates Company information

12M high/low (IDR) : 2,445/1,780 12M High/low consensus TP (IDR) : 3,280/1,960 Majority shareholder (%) : Sampoerna Agri Resources (79.7) Share outstanding (mn)/Free float (%) : 1,890/33.0 Mkt. cap. (IDRbn/USDmn) : 3,553/291 3-m avg.daily t.o.(IDRbn/USDmn) : 1.6/0.1 Bloomberg/Reuters code : SGRO IJ/SGRO.JK Source: Bloomberg, Reuter; based on 10 October 2014 closing price

2015 Compendium

235

SAMPOERNA AGRO

Profit & loss Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016FSales 2,986 2,561 3,018 3,343 3,631Gross profit 793 498 838 981 1,081EBITDA 663 405 774 955 1,089Depreciation 191 204 259 324 374EBIT 472 201 515 632 715Net interest inc./(expense) (29) (62) (104) (124) (136)Forex gain/(losses) - - - - -Other income/(expense) 14 36 36 36 36Pre-tax profit 457 174 446 543 615Taxes (121) (53) (125) (152) (172)Minority interest (7) (1) (1) (2) (2)Extraordinary gain/(losses) - - - - -Net profit 329 119 320 389 441Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016F Cash and equivalents 228 163 100 107 125 S-T investments - - - - - Trade receivables 112 139 151 167 182 Inventories 364 272 321 347 375 Fixed assets 2,746 2,997 4,026 4,478 4,852 Other assets 475 612 641 683 720 Total assets 4,138 4,513 5,489 6,051 6,536 Interest bearing liabilities 942 1,297 2,081 2,411 2,639 Trade payables 253 257 270 292 316 Other liabilities 276 259 278 291 302 Total liabilities 1,471 1,814 2,629 2,994 3,257 Minority interest 34 33 35 36 38 Shareholders' equity 2,633 2,666 2,826 3,020 3,241 Source: Company, Bahana estimates

Cashflow Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016FEBIT 472 201 515 632 715Depreciation 191 204 259 324 374Working capital (120) (3) 47 (49) (43)Other operating items (146) (117) (203) (248) (279)Operating cash flow 398 286 619 659 767Net capital expenditure (771) (620) (1,288) (776) (747)Free cash flow (373) (335) (669) (117) 20Equity raised/(bought) - - - - -Net borrowings 510 356 784 330 228Other financing (257) (86) (177) (206) (230)Net cash flow (121) (65) (62) 7 18Cash flow at beginning 349 228 163 100 107Ending cash flow 228 163 100 107 125Source: Company, Bahana estimates


2015 Compendium

236

SARANA MENARA NUSANTARA BUY PX: IDR4,195 - TP: IDR5,100* TOWR, Indonesia’s largest independent tower provider with 10,799

towers and 19,991 tower tenants (as of 1H14), looks set to have its number of tenants increase to 23,000 (+10% y-y) as the company’s number of towers reach 12,217 (+9% y-y) in 2015F.

As telcos move to outer Java and the implementation of asset-light strategies through tower leasing from tower providers, we expect TOWR to continue its strong growth in the next few years. On the balance sheet side, we expect lower net gearing ahead to below 60% by 2016 due to strong operating cash flow.

Backed by continued growth in towers and collocation, TOWR should be able to retain its market outperformance. Our TP of IDR5,100 translates to 2015F EV/EBITDA of 16.0x, in line with the sector. BUY. Risks to our call include greater-than-expected competition and higher-than-expected operating costs (e.g. electricity and rentals).

Financial highlights Year to 31 Dec 2012A 2013A 2014F 2015F 2016F Revenues (IDRbn) 2,265 3,197 3,861 4,418 4,975 EBIT (IDRbn) 1,307 1,724 2,091 2,501 2,965 Net profit (IDRbn) 346 169 1,079 1,444 1,876 Bahana/consensus (%) - - 98 108 140 EPS (IDR) 34 17 106 142 184 EPS growth (%) 21.8 (51.3) 540.1 33.9 29.9 EV/EBITDA (x) 26.3 19.1 15.7 13.5 11.7 P/E (x) 123.8 254.0 39.7 29.6 22.8 FCFPS (IDR) (35) (83) 101 99 147 FCF yield (%) (0.8) (2.0) 2.4 2.4 3.5 BVPS (IDR) 335 358 457 593 771 P/BV (x) 12.5 11.7 9.2 7.1 5.4 DPS (IDR) na na na na na Div. yield (%) na na na na na Source: Company, Bahana estimates note: based on 09 October 2014 closing price


0

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2,000

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4,000

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2,700

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3,100

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4,100

4,300

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('000)(IDR)

Volume (RHS) TOWR IJ Px Last

35.7

7.5 9.6

4.2

33.9

38.5

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TOWR IJ relative to JCI


Major assumptions Year to 31 Dec 2012A 2013A 2014F 2015F 2016F ASP (IDR mn) 153 174 183 192 202 Tower sites 8,460 9,746 11,208 12,217 13,072 Collocation 6,389 8,576 9,862 10,750 11,556 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 4,200/2,575 12M High/low consensus TP (IDR) : 5,600/3,700 Majority shareholder (%) : Tricipta Mandhala Gumilang (32.7) Share outstanding (mn)/Free float (%) : 10,203/61.0 Mkt. cap. (IDRbn/USDmn) : 42,852/3,515 3-m avg.daily t.o.(IDRbn/USDmn) : 0.3/0.0 Bloomberg/Reuters code : TOWR IJ/TOWR.JK Source: Bloomberg, Reuters; based on 09 October 2014 closing price

2015 Compendium

237

SARANA MENARA NUSANTARA

Profit & loss Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016FSales 2,265 3,197 3,861 4,418 4,975Gross profit 1,546 2,062 2,518 2,995 3,528EBITDA 1,889 2,651 3,167 3,605 4,042Depreciation 582 928 1,075 1,104 1,077EBIT 1,307 1,724 2,091 2,501 2,965Net interest inc./(expense) (522) (547) (660) (568) (481)Forex gain/(losses) (283) (888) 71 87 64Other income/(expense) (42) (60) (10) (20) (19)Pre-tax profit 460 228 1,493 2,000 2,529Taxes (114) (63) (418) (560) (657)Minority interest (1) (4) (4) (4) (4)Extraordinary gain/(losses) - - - - -Net profit 346 169 1,079 1,444 1,876Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016F Cash and equivalents 1,130 1,506 1,599 1,422 1,050 S-T investments - - - - - Trade receivables 262 674 1,029 1,281 1,531 Inventories 1 1 1 1 1 Fixed assets 10,379 11,152 11,926 12,306 12,589 Other assets 1,821 2,202 2,405 2,420 2,479 Total assets 13,591 15,534 16,960 17,430 17,650 Interest bearing liabilities 8,047 9,308 8,377 7,246 5,434 Trade payables 387 485 535 639 740 Other liabilities 1,739 2,098 3,384 3,497 3,611 Total liabilities 10,173 11,891 12,295 11,381 9,785 Minority interest 2 (5) 2 2 2 Shareholders' equity 3,417 3,648 4,663 6,046 7,863 Source: Company, Bahana estimates

Cashflow Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016FEBIT 1,307 1,724 2,091 2,501 2,965Depreciation 582 927 1,075 1,104 1,077Working capital 249 (334) (283) (124) (131)Other operating items (1,444) (1,799) (318) (1,301) (1,325)Operating cash flow 694 517 2,565 2,180 2,586Net capital expenditure (1,054) (1,365) (1,535) (1,165) (1,086)Free cash flow (360) (848) 1,030 1,015 1,499Equity raised/(bought) - - - - -Net borrowings 2,149 1,261 (931) (1,131) (1,811)Other financing (1,308) (36) (6) (61) (59)Net cash flow 480 376 93 (177) (372)Cash flow at beginning 649 1,130 1,506 1,599 1,422Ending cash flow 1,130 1,506 1,599 1,422 1,050Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2012A 2013A 2014F 2015F 2016F ROAE (%) 14.0 4.8 26.0 27.0 27.0 ROAA (%) 3.1 1.2 6.6 8.4 10.7 EBITDA margin (%) 83.4 82.9 82.0 81.6 81.3 EBIT margin (%) 57.7 53.9 54.2 56.6 59.6 Net margin (%) 15.3 5.3 27.9 32.7 37.7 Payout ratio (%) - - - - - Current ratio (x) 1.2 0.9 0.8 0.8 0.8 Interest coverage (x) 2.5 3.1 3.2 4.4 6.2 Net gearing (%) 202.5 213.8 145.4 96.3 55.8 Debts to assets (%) 59 60 49 42 31 Debtor turnover (days) 42 77 43 43 43 Creditor turnover (days) 1,027 854 730 730 730 Inventory turnover (days) 271 408 410 410 410 Source: Company, Bahana estimates

2015 Compendium

238

SEMEN BATURAJA REDUCE PX: IDR367- TP: IDR320* SMBR, the smallest cement producer in our coverage with 1.9%

market share (2013 sales volumes: 1.3mn tons) and main markets in South Sumatra and Lampung, should continue to see margin pressures on intensifying competition and continued clinker imports.

In 2015-16, we expect SMBR to face intense competition due to its premium pricing and particularly given SMCB’s decision to go into the Sumatra markets. Additionally, we look for a potential capacity glut in 2016, well before the 2017 completion of its 1.85mn tpa Baturaja II plant (IDR2.9tn), which has experienced construction delays.

With 2Q14’s maintenance issue out of the way, we see 2015 volumes of 1.5mn tons, +15% y-y, although margins are likely to be pressured by increased costs from higher electricity, fuel and imported clinker prices. Our IDR320 TP reflects a 2015F PE of 10x, a 35% sector discount. Risks include higher-than-expected volumes and ASP.

Financial highlights Year to 31 Dec 2012A 2013A 2014F 2015F 2016F Revenues (IDRbn) 1,098 1,169 1,217 1,455 1,596 EBIT (IDRbn) 366 327 238 313 325 Net profit (IDRbn) 299 312 291 318 297 Bahana/consensus (%) - - na na na

EPS (IDR) 40 35 30 32 30 EPS growth (%) 18.6 (11.5) (16.0) 9.3 (6.8) EV/EBITDA (x) 7.4 4.4 5.9 7.1 9.7 P/E (x) 9.2 10.4 12.4 11.3 12.2 FCFPS (IDR) 10 15 (7) (87) (127) FCF yield (%) 2.6 3.6 (1.8) (21.5) (31.6) BVPS (IDR) 127 251 273 297 320 P/BV (x) 2.9 1.5 1.3 1.2 1.1 DPS (IDR) 8 8 7 8 8 Div. yield (%) 2.2 2.2 2.0 2.2 2.1 Source: Company, Bahana estimates note: based on 09 October 2014 closing price


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350

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450

500

550


('000)(IDR)

Volume (RHS) SMBR IJ Px Last

(5.6) (4.3) (4.6)

(26.1)

(9.4)

(12.8)

(30)

(25)

(20)

(15)

(10)

(5)

0

(30)

(25)

(20)

(15)

(10)

(5)

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ytd 1M 3M 6M 9M 12M

(%) (%)

SMBR IJ relative to JCI

Source: Bloomberg Bob Setiadi ([email protected]) +6221 2505081 ext.3605 *New, please refer to appendix II

Major assumptions Year to 31 Dec 2012A 2013A 2014F 2015F 2016F Volume capacity ('000 tons) 1,250 2,000 2,000 2,000 2,000 Export volume ('000 tons) - - - - - Domestic volume ('000 tons) 1,234 1,266 1,285 1,478 1,589 Total sales volume ('000 tons) 98.7 63.3 64.3 73.9 79.5 Utilization rate (%) 98.7 63.3 64.3 73.9 79.5 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 500/325 12M High/low consensus TP (IDR) : 485/350 Majority shareholder (%) : Republic of Indonesia (76.2) Shares outstanding (mn)/Free float (%) : 9,838/23.8 Mkt. cap. (IDRbn/USDmn) : 3,610/296 3-m avg.daily t.o.(IDRbn/USDmn) : 5.0/0.4 Bloomberg/Reuters code : SMBR IJ/SMBR.JK Source: Bloomberg, Reuters based on 09 October 2014 closing price

2015 Compendium

239

SEMEN BATURAJA

Profit & loss Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016FSales 1,098 1,169 1,217 1,455 1,596 Gross profit 490 462 388 491 536 EBITDA 416 394 320 395 426 Depreciation 51 67 81 81 101 EBIT 366 327 238 313 325 Net interest inc./(expense) 28 71 137 97 52 Forex gain/(losses) - - - - -Other income/(expense) 1 2 2 3 5 Pre-tax profit 395 400 378 413 383 Taxes (97) (88) (87) (95) (86)Minority interest - - - - -Extraordinary gain/(losses) - - - - -Net profit 299 312 291 318 297 Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016F Cash and equivalents 543 1,883 1,736 799 471 S-T investments - - - - - Trade receivables 0 36 7 8 9 Inventories 117 132 193 225 247 Fixed assets 518 590 976 2,145 3,697 Other assets 21 71 79 90 97 Total assets 1,199 2,711 2,991 3,267 4,522 Interest bearing liabilities 3 - - - 1,000 Trade payables 64 68 114 132 145 Other liabilities 178 176 193 211 230 Total liabilities 244 244 306 343 1,375 Minority interest - - - - - Shareholders' equity 954 2,467 2,685 2,924 3,146 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016FEBIT 366 327 238 313 325 Depreciation 51 67 81 81 101 Working capital (24) (55) 13 (16) (12)Other operating items (99) (56) 64 17 (15)Operating cash flow 293 283 397 396 399 Net capital expenditure (215) (139) (468) (1,250) (1,653)Free cash flow 78 144 (71) (854) (1,254)Equity raised/(bought) - 1,378 - - -Net borrowings - - - - 1,000 Other financing (53) (182) (76) (83) (74)Net cash flow 25 1,340 (147) (937) (328)Cash flow at beginning 518 543 1,883 1,736 799 Ending cash flow 543 1,883 1,736 799 471 Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2012A 2013A 2014F 2015F 2016F ROAE (%) 35.7 18.3 11.3 11.3 9.8 ROAA (%) 27.4 16.0 10.2 10.2 7.6 EBITDA margin (%) 37.9 33.7 26.3 27.1 26.7 EBIT margin (%) 33.3 28.0 19.6 21.5 20.4 Net margin (%) 27.2 26.7 23.9 21.9 18.6 Payout ratio (%) 20.0 25.0 25.0 25.0 25.0 Current ratio (x) 3.9 10.9 8.0 3.9 2.6 Interest coverage (x) na na na na na Net gearing (%) nc nc nc nc 16.8 Debts to assets (%) 0.2 0.0 0.0 0.0 22.1 Debtor turnover (days) - 2 2 2 2 Creditor turnover (days) 39 50 50 50 50 Inventory turnover (days) 62 85 85 85 85 Source: Company, Bahana estimates

2015 Compendium

240

SEMEN INDONESIA BUY PX: IDR14,825 - TP: IDR17,600* SMGR, Indonesia’s largest cement player, benefits from ample

capacity at its three strategic plant locations in Tuban-Java (14.6mn tons capacity), Padang-Sumatra (7.3mn tons) and Tonasa-Sulawesi (7.6mn tons). In 2013-16, 9.3mn tons (23.6% of enlarged capacity) are expected to come on stream, for aggregate capacity to 39.3mn tons in 2016. Its marketing is fully supported by exclusive distributors.

Over the long run, SMGR plans to diversify its cement business, including expansion outside Indonesia and vertical integration. However, its core earnings should remain domestic-based, backed by its 44.0% local market share. Strong brand recognition in several areas has enabled SMGR to pass on cost increments to consumers.

Our positive view on SMGR stems from its diversified cement player status, while our DCF-based IDR17,600 TP (14.5% WACC) translates into a 2015F P/E of 15.9x (sector: 15.2x). Risks include rising net gearing, which may trigger a greater-than expected financial burden.


EPS (IDR) 817 902 993 1,110 1,216 EPS growth (%) 23.5 10.4 10.0 11.8 9.6 EV/EBITDA (x) 12.5 11.0 10.0 9.4 8.6 P/E (x) 18.1 16.4 14.9 13.4 12.2 FCFPS (IDR) 138 568 477 265 279 FCF yield (%) 0.9 3.8 3.2 1.8 1.9 BVPS (IDR) 2,925 3,521 3,947 4,560 5,268 P/BV (x) 5.1 4.2 3.8 3.3 2.8 DPS (IDR) 368 407 496 499 547 Div. yield (%) 2.5 2.7 3.3 3.4 3.7 Source: Company, Bahana estimates note: based on 09 October 2014 closing price


0

10,000

20,000

30,000

40,000

50,000

60,000

12,000

12,625

13,250

13,875

14,500

15,125

15,750

16,375

17,000


('000)(IDR)

Volume (RHS) SMGR IJ Px Last

(12.1)

(3.0)

(7.9)

(13.2)

(17.9)

(3.0)

(20)

(18)

(16)

(14)

(12)

(10)

(8)

(6)

(4)

(2)

0

(20)

(18)

(16)

(14)

(12)

(10)

(8)

(6)

(4)

(2)

0

ytd 1M 3M 6M 9M 12M

(%) (%)

SMGR IJ relative to JCI


Major assumptions Year to 31 Dec 2012A 2013A 2014F 2015F 2016F Volume capacity ('000 tons) 25,300 30,000 31,800 33,300 39,300 Export volumes ('000 tons) 77 329 363 411 474 Domestic volumes ('000 tons) 22,477 25,450 27,023 28,743 30,694 Total volumes ('000 tons) 22,554 25,778 27,387 29,154 31,168 Utilization rate (%) 89.1 85.9 86.1 87.5 79.3 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 17,050/12,600 12M high/low consensus TP (IDR) : 20,100/11,800 Majority shareholder (%) : Republic of Indonesia (51.0) Shares outstanding (mn)/Free float (%) : 5,932/49.0 Mkt. cap. (IDRbn/USDmn) : 87,935/7,214 3-m avg.daily t.o.(IDRbn/USDmn) : 122.9/9.6 Bloomberg/Reuters code : SMGR IJ/SMGR.JK Source: Bloomberg, Reuters; based on 09 October 2014 closing price

2015 Compendium

241

SEMEN INDONESIA

Profit & loss Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016FSales 19,598 24,501 28,385 31,334 34,293Gross profit 9,298 10,924 11,946 13,117 14,262EBITDA 7,136 8,028 8,867 9,656 10,691Depreciation 1,027 1,076 1,194 1,204 1,462EBIT 6,109 6,952 7,673 8,451 9,229Net interest inc./(expense) 78 (177) (111) (141) (334)Forex gain/(losses) (18) 45 7 15 14Other income/(expense) 118 80 88 108 138Pre-tax profit 6,287 6,900 7,657 8,432 9,047Taxes (1,361) (1,566) (1,786) (1,869) (1,853)Minority interest (79) 16 18 19 21Extraordinary gain/(losses) - - - - -Net profit 4,847 5,350 5,888 6,583 7,215Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016F Cash and equivalents 3,022 4,070 4,822 5,136 4,118 S-T investments 295 142 63 76 88 Trade receivables 2,001 2,238 2,480 2,725 2,989 Inventories 2,285 2,646 2,985 3,308 3,791 Fixed assets 16,794 18,863 21,644 26,546 30,987 Other assets 2,181 2,833 3,397 4,045 4,819 Total assets 26,579 30,793 35,392 41,836 46,792 Interest bearing liabilities 3,944 4,253 5,515 7,635 8,500 Trade payables 2,173 2,502 2,830 3,136 3,449 Other liabilities 2,297 2,235 2,814 3,313 3,022 Total liabilities 8,414 8,989 11,160 14,084 14,970 Minority interest 818 921 817 702 576 Shareholders' equity 17,347 20,883 23,415 27,050 31,246 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016FEBIT 6,109 6,952 7,673 8,451 9,229Depreciation 1,027 1,076 1,194 1,204 1,462Working capital 168 (269) (252) (261) (435)Other operating items (1,712) (1,712) (2,037) (2,184) (2,297)Operating cash flow 5,592 6,047 6,578 7,211 7,958Net capital expenditure (4,774) (2,675) (3,748) (5,638) (6,305)Free cash flow 818 3,372 2,830 1,573 1,653Equity raised/(bought) - - - - -Net borrowings 1,980 521 1,259 2,120 865Other financing (3,151) (2,844) (3,337) (3,379) (3,536)Net cash flow (354) 1,048 752 314 (1,018)Cash flow at beginning 3,376 3,022 4,070 4,822 5,136Ending cash flow 3,022 4,070 4,822 5,136 4,118Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2012A 2013A 2014F 2015F 2016F ROAE (%) 30.5 28.0 26.6 26.1 24.8 ROAA (%) 21.0 18.7 17.8 17.0 16.3 EBITDA margin (%) 36.4 32.8 31.2 30.8 31.2 EBIT margin (%) 31.2 28.4 27.0 27.0 26.9 Net margin (%) 24.7 21.8 20.7 21.0 21.0 Payout ratio (%) 45.0 45.2 50.0 45.0 45.0 Current ratio (x) 1.7 1.9 1.9 1.8 1.8 Interest coverage (x) na 39.2 69.2 59.8 27.6 Net gearing (%) 5.3 0.9 3.0 9.2 14.0 Debts to assets (%) 14.8 13.8 15.6 18.2 18.2 Debtor turnover (days) 32 32 32 32 32 Creditor turnover (days) 59 63 63 63 63 Inventory turnover (days) 76 66 66 66 66 Source: Company, Bahana estimates

2015 Compendium

242

SIDO MUNCUL BUY PX: IDR630 - TP: IDR770* Following the acquisition of Berlico, a small OTC player, SIDO, a

leading traditional herbal medicine maker, plans to enter the pharmaceutical market, capitalizing on its strong traditional trade channel in Java. Growth could also come from SIDO’s plan to expand to the eastern part of Indonesia, backed by its Kuku Bima energy drink (60% share) and Tolak Angin herbal medicine (75% share).

SIDO has set aside its remaining A&P budget for new energy drink product launches later this year to offset KLBF’s aggressive promotions of its energy drink Extra Joss. SIDO also has rebranded and modernized its products through celebrity endorsements.

Our IDR770 TP is based on a 24x 2015F PE (9% discount to the sector), sufficient to account for intensifying competition in the energy drink segment. Risks to our call include an unsuccessful entry into new markets and continued fierce competition.


EPS (IDR) 29 30 29 32 40 EPS growth (%) 14.0 4.3 (4.4) 13.3 24.2 EV/EBITDA (x) 15.5 12.7 17.4 13.2 10.4 P/E (x) 21.9 21.0 22.0 19.4 15.7 FCFPS (IDR) 13 (4) 49 26 27 FCF yield (%) 2.1 (0.7) 7.7 4.2 4.3 BVPS (IDR) 97 194 123 149 183 P/BV (x) 6.5 3.3 5.1 4.2 3.4 DPS (IDR) 48 11 35 6 6 Div. yield (%) 7.7 1.8 5.5 0.9 1.0 Source: Company, Bahana estimates note: based on 09 October 2014 closing price


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Major assumptions Year to 31 Dec 2012A 2013A 2014F 2015F 2016F Herbal vol. growth (%) 20.0 15.0 10.0 18.0 18.0 Herbal price growth (%) 13.8 6.0 5.0 7.0 7.0 Energy drinks vol. growth (%) (7.8) (7.0) (7.0) 0.0 3.0 Energy drinks price growth (%) 2.3 - 5.0 5.0 5.0 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 955/580 12M high/low consensus TP (IDR) : 900/790Majority shareholder (%) : Sulistio Desi (40.5) Shares outstanding (mn)/Free float (%) : 15,000/19.0 Mkt. cap. (IDRbn/USDmn) : 9,450/775 3-m avg.daily t.o.(IDRbn/USDmn) : 3.6/0.3 Bloomberg/Reuters code : SIDO IJ/SIDO.JK Source: Bloomberg, Reuters; based on 09 October 2014 closing price

2015 Compendium

243

SIDO MUNCUL

Profit & loss Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016FSales 2,392 2,372 2,535 2,937 3,351Gross profit 921 1,011 944 1,163 1,415EBITDA 542 565 512 649 794Depreciation 38 49 48 73 82EBIT 504 516 463 577 713Net interest inc./(expense) 5 (5) 91 71 102Forex gain/(losses) 0 126 (12) (10) (10)Other income/(expense) 4 (55) 30 10 -Pre-tax profit 514 583 572 648 805Taxes (126) (177) (143) (162) (201)Minority interest - - - - -Extraordinary gain/(losses) - - - - -Net profit 388 406 429 486 604Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016F Cash and equivalents 411 1,349 560 868 1,179 S-T investments - - - - - Trade receivables 927 462 462 535 629 Inventories 236 288 262 292 345 Fixed assets 442 556 558 888 957 Other assets 136 296 351 31 31 Total assets 2,151 2,951 2,193 2,615 3,141 Interest bearing liabilities 299 - - - - Trade payables 280 190 218 243 266 Other liabilities 267 136 133 130 127 Total liabilities 846 326 351 373 392 Minority interest - - - - - Shareholders' equity 1,305 2,625 1,842 2,242 2,748 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016FEBIT 504 516 463 577 713Depreciation 38 49 48 73 82Working capital (16) (120) 44 (93) (132)Other operating items (175) (349) 223 (88) (104)Operating cash flow 351 96 779 469 557Net capital expenditure (170) (161) (50) (75) (150)Free cash flow 180 (65) 729 394 407Equity raised/(bought) 1,094 1,062 (692) - -Net borrowings (266) (7) - - -Other financing (719) (51) (826) (86) (97)Net cash flow 289 938 (789) 308 310Cash flow at beginning 122 411 1,349 560 868Ending cash flow 411 1,349 560 868 1,179Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2012A 2013A 2014F 2015F 2016F ROAE (%) 42.1 20.7 19.2 23.8 24.2 ROAA (%) 23.3 15.9 16.7 20.2 21.0 EBITDA margin (%) 22.7 23.8 20.2 22.1 23.7 EBIT margin (%) 21.1 21.8 18.3 19.6 21.3 Net margin (%) 16.2 17.1 16.9 16.6 18.0 Payout ratio (%) 168.0 37.0 121.1 20.0 20.0 Current ratio (x) 1.9 7.3 3.7 4.6 5.6 Interest coverage (x) na 104.9 na na na Net gearing (%) nc nc nc nc nc Debts to assets (%) 39.3 11.0 16.0 14.3 12.5 Debtor turnover (days) 54 63 47 47 48 Creditor turnover (days) 100 107 67 62 63 Inventory turnover (days) 58 77 60 60 65 Source: Company, Bahana estimates

2015 Compendium

244

SRI REJEKI ISMAN BUY PX: IDR123 - TP: IDR220* Despite being the largest fully integrated textile player in Southeast

Asia, SRIL’s capacity constraints have led to rapid expansion across all of its business segments, with USD200mn in total capex through 2016F. This should allow SRIL to be able to lower its current high minimum orders with more than 50% in unmet potential sales.

Going forward, we expect bottom-line improvement due to SRIL’s lower borrowing costs, with its new USD120mn syndicated loan at 5.25%, and an additional USD30mn MTN at 6%. Furthermore, SRIL’s plan to move to USD accounting should help to offset FX volatility. On the operating front, SRIL should continue to benefit as orders move away from China due to labor shortages there.

At our new TP of IDR220, or 7x 2015F PE, SRIL would still trade 30% lower than the current PBRX valuation, enough to account for its high gearing, in our view. Risks include a weaker IDR.

Financial highlights Year to 31 Dec 2012A 2013A 2014F 2015F 2016F Revenues (IDRbn) 3,339 4,715 6,427 7,747 9,158EBIT (IDRbn) 513 763 982 1,124 1,345Net profit (IDRbn) 229 310 403 585 699Bahana/cons.(%) - - 97 115 114

EPS (IDR) 18 19 22 31 38EPS growth (%) 42.1 7.9 13.9 45.2 19.5EV/EBITDA (x) 7.2 7.4 4.5 4.3 3.8P/E (x) 7.0 6.5 5.7 3.9 3.3FCFPS (IDR) (30) (39) (12) (15) 8FCF yield (%) (24.4) (31.4) (9.6) (11.8) 6.7BVPS (IDR) 110 143 142 167 197P/BV (x) 1.1 0.9 0.9 0.7 0.6DPS (IDR) - 30 4 6 8Div. yield (%) - 24.1 3.5 5.1 6.1Source: Company, Bahana estimates note: based on 09 October 2014 closing price


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Volume (RHS) SRIL IJ Px Last

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(8.0)

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Major assumptions Year to 31 Dec 2012A 2013A 2014F 2015F 2016F Spinning volume (bale of yarn) 253 427 504 550 589 Garment volume (pieces) 7.0 9.1 15.6 20.4 25.9 Total debt (IDRbn) 2,054 2,441 3,286 4,065 4,459 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 303/123 12M high/low consensus TP (IDR) : 333/200Majority shareholder (%) : Huddleston Indonesia (56.1) Shares outstanding (mn)/Free float (%) : 18,593/43.9 Mkt. cap. (IDRbn/USDmn) : 2,287/188 3-m avg.daily t.o.(IDRbn/USDmn) : 6.7/0.5 Bloomberg/Reuters code : SRIL IJ/SRIL.JK Source: Bloomberg, Reuters; based on 09 October 2014 closing price

2015 Compendium

245

SRI REJEKI ISMAN

Profit & loss Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016FSales 3,339 4,715 6,427 7,747 9,158Gross profit 685 1,018 1,271 1,532 1,841EBITDA 631 943 1,187 1,407 1,690Depreciation 118 180 205 284 346EBIT 513 763 982 1,124 1,345Net interest inc./(expense) (172) (205) (331) (363) (417)Forex gain/(losses) (19) (122) (94) 60 60Other income/(expense) 2 27 (20) (40) (55)Pre-tax profit 324 463 538 780 932Taxes (83) (134) (134) (195) (233)Minority interest - - - - -Extraordinary gain/(losses) (12) (20) - - -Net profit 229 310 403 585 699Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016F Cash and equivalents 77 74 95 94 80S-T investments - - - - -Trade receivables 317 741 1,229 1,465 1,706Inventories 1,080 1,459 1,522 1,711 1,910Fixed assets 2,157 3,048 3,704 4,670 5,335Other assets 644 255 255 256 256Total assets 4,275 5,577 6,805 8,195 9,288Interest bearing liabilities 2,054 2,441 3,186 3,875 4,204Trade payables 538 509 650 773 895Other liabilities 261 321 333 442 524Total liabilities 2,853 3,271 4,168 5,090 5,624Minority interest - - - - -Shareholders' equity 1,426 2,320 2,637 3,105 3,664Source: Company, Bahana estimates

Cash flow Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016FEBIT 513 763 982 1,124 1,345Depreciation 118 180 205 284 346Working capital (189) (705) (416) (235) (275)Other operating items 48 297 38 18 23Operating cash flow 490 535 810 1,191 1,438Net capital expenditure (828) (1,071) (866) (1,250) (1,012)Free cash flow (338) (536) (56) (59) 427Equity raised/(bought) - 1,169 - - -Net borrowings 586 387 745 689 330Other financing (244) (1,023) (668) (631) (771)Net cash flow 4 (3) 21 (2) (14)Cash flow at beginning 73 77 74 95 94Ending cash flow 77 74 95 94 80Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2012A 2013A 2014F 2015F 2016F ROAE (%) 17.6 16.5 16.3 20.4 20.7ROAA (%) 6.3 6.3 6.5 7.8 8.0EBITDA margin (%) 13.7 16.5 16.0 15.9 16.3EBIT margin (%) 11.1 13.3 13.2 12.7 13.0Net margin (%) 5.0 5.4 5.4 6.6 6.8Payout ratio (%) - 155.9 20.0 20.0 20.0Current ratio (x) 0.9 1.0 2.9 2.6 2.9Interest coverage (x) 0.3 0.3 0.3 0.3 0.3Net gearing (%) 135.6 101.9 117.2 121.8 112.6Debts to assets (%) 48.0 43.8 46.8 47.3 45.3Debtor turnover (days) 20 47 60 60 60Creditor turnover (days) 38 38 38 38 38Inventory turnover (days) 90 95 90 85 82Source: Company, Bahana estimates

2015 Compendium

246

SUMMARECON AGUNG BUY PX: IDR1,165 - TP: IDR1,600* SMRA, amongst the first Indonesian township developers, should have

robust growth in 2015-16 following a successful 2014 with 1H pre-sales exceeding expectations. Within our coverage, SMRA is the only developer to raise its 2014 pre-sales target by 12.5% to IDR4.5tn.

Its development pipeline includes a Bandung township, a Balinese resort as well as several apartment blocks in Jakarta and Serpong. The geographic diversification should bode well for SMRA providing a hedge against area-specific risks. SMRA’s strong recurring base (around 30% historically, the second highest in our property universe) also provides a stable revenue stream in times of uncertainty.

We apply a 45% discount to our 2015F NAV (sector: 50%) to derive our IDR1,600 TP on the back of its solid growth prospects and net cash position. Risks to our call include negative sentiment on the sector from possible interest rate hikes and unsuccessful launches.

Financial highlights Year to 31 Dec 2012A 2013A 2014F 2015F 2016F Revenues (IDRbn) 3,463 4,094 4,436 5,165 6,278 EBIT (IDRbn) 984 1,342 1,490 1,663 2,057 Net profit (IDRbn) 798 1,102 1,122 1,259 1,601 Bahana/consensus (%) - - 98 97 103 EPS (IDR) 111 76 78 87 111 EPS growth (%) 107.0 (30.9) 1.8 12.2 27.1 EV/EBITDA (x) 6.4 11.2 9.9 8.8 7.1 P/E (x) 10.5 15.2 15.0 13.3 10.5 FCFPS (IDR) 89 (88) 10 27 48 FCF yield (%) 7.7 (7.5) 0.8 2.3 4.1 BVPS (IDR) 529 323 393 460 549 P/BV (x) 2.2 3.6 3.0 2.5 2.1 DPS (IDR) 23 43 23 23 26 Div. yield (%) 2.0 3.7 2.0 2.0 2.2 Source: Company, Bahana estimates note:based on 09 October 2014 closing price


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Volume (RHS) SMRA IJ Px Last

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Company information 12M high/low (IDR) : 1,395/760 12M High/low consensus TP (IDR) : 2,000/1,080 Majority shareholder (%) : Semarop Agung (25.4) Shares outstanding (mn)/Free float (%) : 14,427/67.8 Mkt. cap. (IDRbn/USDmn) : 16,807/1,379 3-m avg.daily t.o.(IDRbn/USDmn) : 38.1/3.1 Bloomberg/Reuters code : SMRA IJ/SMRA.JK Source: Bloomberg, Reuters; based on 09 October 2014 closing price

2015 Compendium

247

SUMMARECON AGUNG

Profit & loss Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016FSales 3,463 4,094 4,436 5,165 6,278Gross profit 1,592 2,150 2,299 2,511 3,050EBITDA 1,114 1,492 1,689 1,891 2,314Depreciation 130 151 199 227 257EBIT 984 1,342 1,490 1,663 2,057Net interest inc./(expense) (25) (27) (138) (135) (125)Forex gain/(losses) - - - - -Other income/(expense) 27 5 7 7 7Pre-tax profit 986 1,319 1,359 1,536 1,940Taxes (194) (224) (243) (283) (345)Minority interest 6 6 6 6 6Extraordinary gain/(losses) - - - - -Net profit 798 1,102 1,122 1,259 1,601Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016F Cash and equivalents 2,428 2,545 3,616 3,537 3,631 S-T investments - - - - - Trade receivables 106 179 158 184 224 Inventories 2,820 3,058 3,670 4,404 5,285 Fixed assets 2,832 3,501 5,404 6,590 7,829 Other assets 2,690 4,376 4,479 5,220 5,908 Total assets 10,876 13,659 17,327 19,935 22,876 Interest bearing liabilities 1,122 2,501 3,543 3,421 3,173 Trade payables 184 63 129 160 195 Other liabilities 5,755 6,437 7,982 9,713 11,594 Total liabilities 7,061 9,001 11,654 13,294 14,962 Minority interest 177 227 452 497 547 Shareholders' equity 3,639 4,431 5,221 6,144 7,367 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016FEBIT 984 1,342 1,490 1,663 2,057Depreciation 130 151 199 227 257Working capital 1,416 (477) 633 592 475Other operating items (406) 65 (81) (57) (37)Operating cash flow 2,123 1,080 2,241 2,426 2,752Net capital expenditure (1,490) (2,357) (2,104) (2,042) (2,061)Free cash flow 633 (1,276) 138 384 691Equity raised/(bought) 499 - - - -Net borrowings (253) 1,641 1,040 (172) (269)Other financing 52 (247) (107) (291) (328)Net cash flow 932 117 1,072 (79) 94Cash flow at beginning 1,496 2,428 2,545 3,616 3,537Ending cash flow 2,428 2,545 3,616 3,537 3,631Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2012A 2013A 2014F 2015F 2016F ROAE (%) 25.0 25.7 23.3 22.2 22.0 ROAA (%) 8.3 8.9 7.2 6.8 7.5 EBITDA margin (%) 32.2 36.5 38.1 36.6 36.9 EBIT margin (%) 28.4 32.8 33.6 32.2 32.8 Net margin (%) 22.7 26.6 25.3 24.4 25.5 Payout ratio (%) 37.8 30.5 30.0 30.0 30.0 Current ratio (x) 0.9 1.4 1.5 1.4 1.4 Interest coverage (x) 40.2 49.3 10.8 12.4 16.5 Net gearing (%) nc nc nc nc nc Debts to assets (%) 10.3 18.3 20.4 17.2 13.9 Debtor turnover (days) 7 13 13 13 13 Creditor turnover (days) 42 23 22 22 22 Inventory turnover (days) na na na na na Source: Company, Bahana estimates

2015 Compendium

248

SUPRA BOGA LESTARI HOLD PX: IDR422 - TP: IDR440* RANC’s 22 supermarkets, which cater to the highest income segment

of the population, should see stable revenue growth of 20% next year despite likely higher inflation from rising fuel prices. However, margins have been hurt by higher minimum wages and the continued weak IDR as 70% of their products are imported. This is likely to persist resulting in 2015F EPS growth of just 1.9%.

In 2015, we expect fewer openings of 4 outlets due to macro issues. Only 5 Ministop minimarkets have been opened ytd, compared to RANC’s plan of 30 store openings per annum (to contribute less than 10% of total revenues in the next 2 years).

Our TP of IDR440, based on 2015F PE of 22x (20% below sector), reflects minimal upside of just 4%. HOLD. Downside risk to our call is a higher-than-expected minimum wage hike, while upside risks are better-than-expected SSG and more-than-expected store openings.

Financial highlights Year to 31 Dec 2012A 2013A 2014F 2015F 2016F Revenues (IDRbn) 1,077 1,303 1,659 1,993 2,434 EBIT (IDRbn) 37 28 39 44 72 Net profit (IDRbn) 36 35 31 31 52 Bahana/consensus(%) - - 152 123 158

EPS (IDR) 23 22 20 20 33 EPS growth (%) 33.0 (3.8) (12.8) 1.9 67.7 EV/EBITDA (x) 10.0 11.4 8.6 7.5 5.6 P/E (x) 18.1 18.8 21.6 21.2 12.6 FCFPS (IDR) (8) (54) (11) (9) (3) FCF yield (%) (1.6) (11.2) (2.3) (1.8) (0.7) BVPS (IDR) 111 230 254 268 288 P/BV (x) 3.8 1.8 1.7 1.6 1.5 DPS (IDR) - 3 - - 3 Div. yield (%) - 0.7 - - 0.6 Source: Company, Bahana estimates note: based on 09 October 2014 closing price


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Major assumptions Year to 31 Dec 2012A 2013A 2014F 2015F 2016F Ranch Market stores 10 11 13 14 16 Farmers Market stores 7 11 14 17 20 Selling exp. as % of Revenue (%) 13.1 13.8 13.8 13.5 13.0 G&A expenses growth 31.0 27.5 25.0 27.0 20.0 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 710/422 12M High/low consensus TP (IDR) : 500/380 Majority shareholder (%) : Wijaya Sumber Sejahtera (26.9) Shares outstanding (mn)/Free float (%) : 1,564/26.8 Mkt. cap. (IDRbn/USDmn) : 660/54 3-m avg.daily t.o.(IDRbn/USDmn) : 0.1/0.0 Bloomberg/Reuters code : RANC IJ/RANC.JK Source: Bloomberg, Reuters based on 09 October 2014 closing price

2015 Compendium

249

SUPRA BOGA LESTARI

Profit & loss Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016FSales 1,077 1,303 1,659 1,993 2,434Gross profit 281 341 433 522 638EBITDA 60 58 81 95 130Depreciation 23 30 41 51 58 EBIT 37 28 39 44 72Net interest inc./(expense) (5) (3) (6) (6) (6) Forex gain/(losses) - - - - - Other income/(expense) 15 17 7 3 2 Pre-tax profit 46 43 40 41 68Taxes (10) (10) (9) (9) (15) Minority interest - - - - - Extraordinary gain/(losses) - - - - - Net profit 36 35 31 31 52Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016F Cash and equivalents 117 67 49 24 21 S-T investments - - - - - Trade receivables 31 37 50 60 73 Inventories 163 229 218 262 320 Fixed assets 130 174 235 269 305 Other assets 129 205 139 134 131 Total assets 570 712 692 749 851 Interest bearing liabilities 50 70 85 79 92 Trade payables 129 209 151 181 221 Other liabilities 32 36 37 37 38 Total liabilities 211 315 272 298 351 Minority interest - - - - - Shareholders' equity 359 397 420 452 500 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016FEBIT 37 28 39 44 72 Depreciation 23 30 41 51 58 Working capital (22) 27 (59) (22) (31) Other operating items (12) (95) 63 (2) (10) Operating cash flow 26 (10) 85 71 89Net capital expenditure (38) (74) (102) (84) (94) Free cash flow (12) (84) (17) (13) (5)Equity raised/(bought) 150 (0) - - - Net borrowings (31) 20 15 (5) 12 Other financing (5) 15 (15) (6) (10) Net cash flow 102 (49) (17) (25) (3)Cash flow at beginning 15 117 67 49 24 Ending cash flow 117 67 49 24 21Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2012A 2013A 2014F 2015F 2016F ROAE (%) 13.7 9.3 7.5 7.2 11.0 ROAA (%) 7.5 5.5 4.4 4.3 6.5 EBITDA margin (%) 5.5 4.5 4.9 4.8 5.3 EBIT margin (%) 3.4 2.2 2.4 2.2 2.9 Net margin (%) 3.4 2.7 1.8 1.6 2.1 Payout ratio (%) - 15.0 - - 15.0 Current ratio (x) 2.2 1.6 1.7 1.6 1.6 Interest coverage (x) 7.2 9.8 6.2 6.9 12.6 Net gearing (%) nc 0.8 8.4 12.2 14.1 Debts to assets (%) 8.8 9.8 12.2 10.6 10.8 Debtor turnover (days) 12 12 12 12 12 Creditor turnover (days) 45 45 45 45 45 Inventory turnover (days) 64 65 65 65 65 Source: Company, Bahana estimates

2015 Compendium

250

SURYA CITRA MEDIA REDUCE PX: IDR3,525 - TP: IDR2,550* Operating two FTA TV stations, SCTV and Indosiar, SCMA, the third-

largest TV operator by market share (23%) behind MNCN (40%) and Trans Corp (24%), will face operating challenges, in our view. In an effort to lower its broadcasting costs, SCMA, back in June 2013, acquired a 51% stake in the Screenplay production house, allowing for increased usage of higher-margin in-house content to reach 70%.

Going into 2015, our expectations of lower GDP growth mean that advertising revenue growth should be under pressure. This is also supported by declining trends (see exhibit in the sector part – consumer discretionary) in FMCG companies’ ad spends.

As we expect SCMA’s EPS growth to slow in 2015, we rate the stock a REDUCE with IDR2,550 TP, reflecting a lofty 2015F PE of 22.5x, which is on par with its peers. The key risk to our call is higher-than-expected GDP growth, which would raise ad spending.

Financial highlights Year to 31 Dec 2012A 2013A 2014F 2015F 2016F Revenues (IDRbn) 3,277 3,695 4,199 4,739 5,521 EBIT (IDRbn) 1,642 1,759 1,991 2,224 2,619 Net profit (IDRbn) 1,170 1,280 1,476 1,645 1,931 Bahana/consensus (%) - - 85 77 75 EPS (IDR) 80 88 101 113 132 EPS growth (%) 43.4 9.4 15.4 11.4 17.4 EV/EBITDA (x) 29.3 27.4 23.9 21.1 17.7 P/E (x) 44.0 40.3 34.9 31.3 26.7 FCFPS (IDR) 58 75 90 105 116 FCF yield (%) 1.7 2.1 2.6 3.0 3.3 BVPS (IDR) 181 191 248 310 386 P/BV (x) 19.5 18.5 14.2 11.4 9.1 DPS (IDR) 17 63 44 50 56 Div. yield (%) 0.5 1.8 1.2 1.4 1.6 Source: Company, Bahana estimates note: based on 09 October 2014 closing price


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Volume (RHS) SCMA IJ Px Last

17.4

(5.1)

(1.3)

7.8

16.9

34.8

(10)

(5)

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15

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SCMA IJ relative to JCI


Major assumptions Year to 31 Dec 2012A 2013A 2014F 2015F 2016F Advertising rate growth (%) 3.6 12.7 13.6 12.9 16.5 Prog. cost rate growth (%) (22.9) 25.2 12.1 12.6 16.1 Operating exp. to revenue (%) 19.3 19.1 18.3 18.9 18.5 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 4,130/2,225 12M High/low consensus TP (IDR) : 4,700/2,550 Majority shareholder (%) : Elang Mahkota Teknologi Tbk (74.5) Shares outstanding (mn)/Free float (%) : 14,622/25.5 Mkt. cap. (IDRbn/USDmn) : 51,541/4,228 3-m avg.daily t.o.(IDRbn/USDmn) : 32/2.6 Bloomberg/Reuters code : SCMA IJ/SCMA.JK Source: Bloomberg, Reuters based on 09 October 2014 closing price

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251

SURYA CITRA MEDIA

Profit & loss Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016FSales 3,277 3,695 4,199 4,739 5,521Gross profit 2,251 2,410 2,758 3,117 3,637EBITDA 1,721 1,846 2,083 2,321 2,721Depreciation 80 87 92 97 103 EBIT 1,642 1,759 1,991 2,224 2,619Net interest inc./(expense) (34) 5 (3) (8) (17) Forex gain/(losses) - - - - - Other income/(expense) - - - - - Pre-tax profit 1,608 1,764 1,989 2,216 2,602Taxes (391) (448) (505) (563) (661) Minority interest - (6) (7) (8) (9) Extraordinary gain/(losses) (47) (30) - - - Net profit 1,170 1,280 1,476 1,645 1,931Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016F Cash and equivalents 1,066 1,043 1,723 2,533 3,428 S-T investments - - - - - Trade receivables 1,020 1,015 1,152 1,300 1,514 Inventories 267 375 360 405 470 Fixed assets 710 725 745 772 805 Other assets 774 853 872 895 927 Total assets 3,837 4,010 4,852 5,905 7,144 Interest bearing liabilities 1 51 59 66 77 Trade payables 997 989 998 1,127 1,238 Other liabilities 191 180 169 179 188 Total liabilities 1,189 1,221 1,226 1,372 1,502 Minority interest 11 52 52 52 52 Shareholders' equity 2,637 2,738 3,574 4,481 5,590 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016FEBIT 1,642 1,759 1,991 2,224 2,619 Depreciation 80 87 92 97 103 Working capital (336) (92) (108) (164) (238) Other operating items (462) (541) (537) (498) (646) Operating cash flow 923 1,213 1,438 1,658 1,838Net capital expenditure (104) (102) (112) (123) (136) Free cash flow 819 1,111 1,326 1,535 1,702Equity raised/(bought) 47 (218) - - - Net borrowings (997) 51 8 7 10 Other financing 298 (967) (654) (732) (817) Net cash flow 168 (22) 680 810 895Cash flow at beginning 898 1,066 1,043 1,723 2,533 Ending cash flow 1,066 1,043 1,723 2,533 3,428Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2012A 2013A 2014F 2015F 2016F ROAE (%) 54.4 47.6 46.8 40.8 38.4 ROAA (%) 32.1 32.6 33.3 30.6 29.6 EBITDA margin (%) 52.5 50.0 49.6 49.0 49.3 EBIT margin (%) 50.1 47.6 47.4 46.9 47.4 Net margin (%) 35.7 34.6 35.2 34.7 35.0 Payout ratio (%) 29.9 78.7 50.0 50.0 50.0 Current ratio (x) 3.8 3.6 4.7 5.1 5.7 Interest coverage (x) 48.4 na 725.2 295.6 156.5 Net gearing (%) nc nc nc nc nc Debts to assets (%) 0.02 1.3 1.2 1.1 1.1 Debtor turnover (days) 105 99 99 99 99 Creditor turnover (days) 91 54 54 54 54 Inventory turnover (days) 82 91 91 91 91 Source: Company, Bahana estimates

2015 Compendium

252

SURYA SEMESTA INTERNUSA BUY* PX: IDR685 - TP: IDR820* With just 171ha of landbank and the low-margin construction

business as its biggest contributor (62% of 2013 revenue), SSIA is the least preferred industrial estate player within our coverage. SSIA’s plan to acquire 1,000ha from Perhutani remains unclear due to permit issues and incoming new government officials.

We expect IDR3.4tn in new contracts in 2014, contributing 69% to revenue, and a further IDR3.7tn (73% of top line contribution) in 2015. In 1H14, SSIA booked IDR1.8tn of new contracts, in line with the management’s 2014 target of IDR3.5tn.

In 2015-16, we expect sales to improve, in line with greater political stability and higher investments into Indonesia. We apply a 40% discount to our NAV/share to obtain the TP of IDR820. An upside risk is the potential 1,000ha land acquisition from Perhutani while a downside risk is a lower-than-expected construction contract value.


EPS (IDR) 150 147 93 87 113 EPS growth (%) 174.8 (2.3) (36.9) (5.8) 29.5 EV/EBITDA (x) 2.6 2.8 3.3 3.4 2.6 P/E (x) 4.6 4.7 7.4 7.8 6.1 FCFPS (IDR) 183 (124) 66 28 32 FCF yield (%) 26.7 (18.1) 9.6 4.1 4.6 BVPS (IDR) 340 493 556 625 721 P/BV (x) 2.0 1.4 1.2 1.1 1.0 DPS (IDR) 30 29 19 17 23 Div. yield (%) 4.4 4.3 2.7 2.5 3.3 Source: Company, Bahana estimates note: based on 09 October 2014 closing price


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Volume (RHS) SSIA IJ Px Last

5.5

(14.1)(13.8)

(33.7)

(0.3)

(14.2)

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(35)

(30)

(25)

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(15)

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Source: Bloomberg Adrian Mahendra Putra ([email protected]) +6221 2505081 ext. 3614 *New, please refer to appendix II

NAV calculation NAV Table 1H14 Land value (IDRbn) 1,037 (Based on 40% discount to NAV) Property value (IDRbn) 948 (Based on DCF) Construction business (IDRbn) 1,612 (Based on 5.8x 2015 P/E) Total Value (IDRbn) 3,597 Value/share (IDR) 820 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 1,060/545 12M High/low consensus TP (IDR) : 2,000/720 Majority shareholder (%) : Union Sampoerna (8.9) Shares outstanding (mn)/Free float (%) : 4,705/68.5 Mkt. cap. (IDRbn/USDmn) : 3,223/264 3-m avg.daily t.o.(IDRbn/USDmn) : 11.1/1.0 Bloomberg/Reuters code : SSIA IJ/SSIA.JK Source: Bloomberg, Reuters; based on 09 October 2014 closing price

2015 Compendium

253

SURYA SEMESTA INTERNUSA

Profit & loss Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016FSales 3,565 4,583 4,730 4,787 5,339Gross profit 1,296 1,320 1,233 1,185 1,403EBITDA 1,010 988 794 760 937Depreciation 92 116 102 124 145EBIT 918 872 692 637 792Net interest inc./(expense) (47) (61) (55) (47) (33)Forex gain/(losses) 5 26 (3) (2) (2)Other income/(expense) 2 3 - - -Pre-tax profit 878 907 717 674 843Taxes (139) (160) (166) (168) (187)Minority interest 31 55 116 96 125Extraordinary gain/(losses) - - - - -Net profit 707 691 436 411 532Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016F Cash and equivalents 1,890 1,692 1,876 1,945 1,867 S-T investments - - - - - Trade receivables 277 699 511 420 356 Inventories 164 459 551 661 727 Fixed assets 1,137 1,483 1,631 1,807 2,012 Other assets 1,387 1,482 1,852 2,181 2,547 Total assets 4,855 5,814 6,421 7,013 7,509 Interest bearing liabilities 1,316 1,279 1,301 1,293 1,113 Trade payables 156 346 385 521 555 Other liabilities 1,714 1,578 1,797 1,905 2,062 Total liabilities 3,185 3,203 3,482 3,719 3,730 Minority interest 71 291 321 353 388 Shareholders' equity 1,599 2,320 2,618 2,942 3,391 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016FEBIT 918 872 692 637 792Depreciation 92 116 102 124 145Working capital 475 (801) 319 187 138Other operating items (279) (541) (260) (223) (285)Operating cash flow 1,206 (353) 852 723 790Net capital expenditure (343) (231) (541) (590) (640)Free cash flow 862 (583) 311 133 150Equity raised/(bought) (178) 172 - - -Net borrowings 157 (39) 22 (8) (180)Other financing 464 254 (149) (56) (48)Net cash flow 1,305 (197) 183 69 (78)Cash flow at beginning 584 1,890 1,692 1,876 1,945Ending cash flow 1,890 1,692 1,876 1,945 1,867Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2012A 2013A 2014F 2015F 2016F ROAE (%) 52.4 35.3 17.7 14.8 16.8 ROAA (%) 18.2 13.0 7.1 6.1 7.3 EBITDA margin (%) 28.3 21.6 16.8 15.9 17.5 EBIT margin (%) 25.8 19.0 14.6 13.3 14.8 Net margin (%) 19.8 15.1 9.2 8.6 10.0 Payout ratio (%) 11.9 20.0 20.0 20.0 20.0 Current ratio (x) 1.5 1.8 1.7 1.6 1.7 Interest coverage (x) 19.6 14.3 12.6 13.5 23.8 Net gearing (%) nc nc nc nc nc Debts to assets (%) 27.1 22.0 20.3 18.4 14.8 Debtor turnover (days) 29 39 25 25 20 Creditor turnover (days) 30 28 40 40 40 Inventory turnover (days) na na na na na Source: Company, Bahana estimates

2015 Compendium

254

TAMBANG BATUBARA BUKIT ASAM REDUCE* PX: IDR13,000- TP: IDR11,700 PTBA, the only listed state-owned coal company with 1.99bn tons in

total reserves, the second highest in our coverage, is our top pick in the sector due to its dominant position in the domestic market. To become more fully integrated in the energy sector, PTBA has ventured into power plants with its first commercial operation in 4Q14-1Q15.

On a more negative note, transportation bottlenecks have persistently plagued PTBA, although we expect greater efficiencies in coal transport to allow for higher sales volumes. In 2015, we expect 23mn tons of coal, of which some 50% would be sold in the local market.

Possible support for the share price could stem from a stronger US dollar, translating into improved earnings for PTBA. Our DCF-based TP of IDR11,700 is based on a 13.3% WACC. Upside risks to our call include better-than-expected coal prices, while downside risks would be prolonged power plant delays and transportation bottlenecks.

Financial highlights Year to 31 Dec 2012A 2013A 2014F 2015F 2016F Revenues (IDRbn) 11,594 11,209 12,449 13,821 14,650 EBIT (IDRbn) 3,399 1,857 1,981 1,849 1,850 Net profit (IDRbn) 2,900 1,826 1,934 1,901 1,941 Bahana/consensus (%) - - 97 88 73 EPS (IDR) 1,259 793 839 825 842 EPS growth (%) (6.0) (37.0) 5.9 (1.7) 2.1 EV/EBITDA (x) 6.9 13.6 12.7 13.3 13.0 P/E (x) 10.3 16.4 15.5 15.8 15.4 FCFPS (IDR) 512 359 517 554 577 FCF yield (%) 3.9 2.8 4.0 4.3 4.4 BVPS (IDR) 3,691 4,026 4,165 4,486 4,834 P/BV (x) 3.5 3.2 3.1 2.9 2.7 DPS (IDR) 804 476 504 495 505 Div. yield (%) 6.2 3.7 3.9 3.8 3.9 Source: Company, Bahana estimates note: based on 09 October 2014 closing price


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Volume (RHS) PTBA IJ Px Last

10.6

0.2

17.5

36.8

24.3

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Major assumptions Year to 31 Dec 2012A 2013A 2014F 2015F 2016F Avg. coal price (USD/ton) 81.1 66.4 53.4 50.9 48.4 growth % (9.4) (18.2) (19.5) (4.8) (4.8) Coal sales vol. (m tons) 14.9 17.8 19.5 23.0 25.9 growth % 10.8 19.3 9.6 17.9 12.9 Total cash cost (USD/ton) 56.0 58.4 52.6 62.5 55.8 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 14,000/9,12512M High/low consensus TP (IDR) : 17,000/9,700Majority shareholder (%) : Republic of Indonesia (65.0)Shares outstanding (mn)/Free float (%) : 2,304/29.3Mkt. cap. (IDRbn/USDmn) : 29,954/2,4573-m avg.daily t.o.(IDRbn/USDmn) : 37.1/3.0Bloomberg/Reuters code : PTBA IJ/PTBA.JKSource: Bloomberg, Reuters; based on 09 October 2014 closing price

2015 Compendium

255

TAMBANG BATUBARA BUKIT ASAM

Profit & loss Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016FSales 11,594 11,209 12,449 13,821 14,650Gross profit 5,088 3,464 4,011 4,063 4,049EBITDA 3,474 1,950 2,079 1,951 1,957Depreciation 75 93 98 102 107EBIT 3,399 1,857 1,981 1,849 1,850Net interest inc./(expense) 324 234 146 161 181Forex gain/(losses) - - - - -Other income/(expense) 188 370 495 567 601Pre-tax profit 3,912 2,461 2,622 2,577 2,632Taxes (1,002) (607) (656) (644) (658)Minority interest (9) (28) (33) (32) (33)Extraordinary gain/(losses) - - - - -Net profit 2,900 1,826 1,934 1,901 1,941Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016F Cash and equivalents 5,917 3,344 3,616 4,071 4,527 S-T investments - - - - - Trade receivables 1,546 1,428 1,659 1,842 1,953 Inventories 766 902 993 1,149 1,248 Fixed assets 1,853 2,803 2,927 2,999 3,116 Other assets 2,647 3,200 3,216 3,602 3,930 Total assets 12,729 11,677 12,412 13,663 14,775 Interest bearing liabilities 10 - 10 10 10 Trade payables 150 472 194 225 244 Other liabilities 4,064 3,654 4,364 4,845 5,136 Total liabilities 4,224 4,126 4,568 5,079 5,390 Minority interest - 114 86 86 86 Shareholders' equity 8,505 7,437 7,758 8,498 9,299 Source: Company, Bahana estimates

Cashflow Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016FEBIT 3,399 1,857 1,981 1,849 1,850Depreciation 75 93 98 102 107Working capital (757) 56 (369) (281) (175)Other operating items (260) 132 (180) 30 19Operating cash flow 2,457 2,139 1,529 1,700 1,801Net capital expenditure (1,277) (1,312) (338) (425) (471)Free cash flow 1,179 826 1,191 1,275 1,330Equity raised/(bought) - - - - -Net borrowings (8) (10) 10 - -Other financing (2,045) (3,390) (929) (820) (875)Net cash flow (874) (2,573) 272 456 455Cash flow at beginning 6,791 5,917 3,344 3,616 4,071Ending cash flow 5,917 3,344 3,616 4,071 4,527Source: Company, Bahana estimates


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256

TELEKOMUNIKASI INDONESIA BUY PX: IDR2,800 - TP: IDR3,350* Given TLKM’s 50% domestic cellular market share through 65%-

owned Telkomsel (35%-owned by Singtel), we expect it to not only retain its dominance in the local telco industry but to also benefit from improved pricing in the cellular segment on rational competition, which should bode well for margins.

Going forward, we expect data to remain the company’s revenue growth driver. Additionally, we expect higher smartphone penetration rates (currently 23%), additional frequency from Telkom Flexi and proactive management to boost data segment revenue growth ahead.

TLKM is a BUY on what we see as easing competition, and strong data growth and stable EBITDA margins. Our TP of IDR 3,350 is based on 2015E EV/EBITDA of 6.7x, broadly at par with its regional peers. Risks to our call include a lower-than-expected EBITDA margin on tougher-than-expected competition.


EPS (IDR) 127 141 152 173 192 EPS growth (%) 17.2 10.5 7.5 13.2 11.5 EV/EBITDA (x) 7.3 6.9 6.3 5.7 5.2 P/E (x) 22.0 19.9 18.4 16.2 14.5 FCFPS (IDR) (61) (107) 60 90 120 FCF yield (%) (2.2) (3.8) 2.1 3.2 4.3 BVPS (IDR) 511 601 655 728 809 P/BV (x) 5.5 4.7 4.3 3.8 3.5 DPS (IDR) 83 98 99 112 125 Div. yield (%) 3.0 3.5 3.5 4.0 4.5 Source: Company, Bahana estimates note: based on 09 October 2014 closing price


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Volume (RHS) TLKM IJ Px Last

14.6

2.2

9.1

16.5 17.6

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Major assumptions Year to 31 Dec 2012A 2013A 2014F 2015F 2016F Subscribers (‘000) 125,146 131,512 144,663 159,130 175,042 Net additional (‘000) 18,129 6,366 13,151 14,466 15,913 ARPU (IDR’000/month) 37 37 39 39 38 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 2,945/1,981 12M High/low consensus TP (IDR) : 3,350/2,000 Majority shareholder (%) : Republic of Indonesia (51.2) Shares outstanding (mn)/Free float (%) : 100,800/48.8 Mkt. cap. (IDRbn/USDmn) : 282,240/23,153 3-m avg.daily t.o.(IDRbn/USDmn) : 232.9/19.1 Bloomberg/Reuters code : TLKM IJ/TLKM.JK Source: Bloomberg, Reuters; based on 09 October 2014 closing price

2015 Compendium

257

TELEKOMUNINKASI INDONESIA

Profit & loss Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016FSales 77,143 82,967 90,444 98,555 107,448Gross profit - - - - -EBITDA 39,757 41,776 46,073 50,648 55,386Depreciation 14,456 15,780 16,882 18,044 19,206EBIT 25,301 25,996 29,191 32,603 36,179Net interest inc./(expense) (1,459) (668) (866) (808) (596)Forex gain/(losses) (189) (249) (300) 61 57Other income/(expense) 575 2,070 971 971 971Pre-tax profit 24,228 27,149 28,996 32,827 36,611Taxes (5,866) (6,859) (7,249) (8,207) (9,153)Minority interest (5,512) (6,085) (6,379) (7,222) (8,054)Extraordinary gain/(losses) - - - - -Net profit 12,850 14,205 15,368 17,398 19,404Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016F Cash and equivalents 13,118 14,696 15,917 16,802 17,601 S-T investments 4,338 6,872 7,236 7,884 8,596 Trade receivables 5,223 6,026 7,537 8,570 9,768 Inventories 579 509 1,021 1,099 1,188 Fixed assets 77,047 86,761 95,147 102,371 108,432 Other assets 11,064 13,087 13,922 15,170 16,539 Total assets 111,369 127,951 140,779 151,896 162,124 Interest bearing liabilities 19,275 20,256 23,756 23,756 21,756 Trade payables 7,280 11,600 13,316 14,032 14,848 Other liabilities 17,836 18,671 19,220 20,407 21,711 Total liabilities 44,391 50,527 56,292 58,195 58,315 Minority interest 15,437 16,882 18,477 20,282 22,296 Shareholders' equity 51,541 60,542 66,010 73,419 81,514 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016FEBIT 25,301 25,996 29,191 32,603 36,179Depreciation 14,456 15,780 16,882 18,044 19,206Working capital (1,166) 3,587 (307) (395) (471)Other operating items (27,468) (31,264) (15,713) (17,154) (18,787)Operating cash flow 11,123 14,099 30,053 33,099 36,127Net capital expenditure (17,272) (24,898) (24,000) (24,000) (24,000)Free cash flow (6,149) (10,799) 6,053 9,099 12,127Equity raised/(bought) - 1,250 - - -

Net borrowings 1,404 981 3,500 - (2,000)

Other financing 8,229 10,146 (8,333) (8,213) (9,328)Net cash flow 3,484 1,578 1,221 885 799Cash flow at beginning 9,634 13,118 14,696 15,917 16,802Ending cash flow 13,118 14,696 15,917 16,802 17,601Source: Company, Bahana estimates


2015 Compendium

258

TEMPO SCAN PACIFIC BUY PX: IDR2,470- TP: IDR2,800* Given the slowdown in sales of its well-known consumer health brands

of Bodrex, Oskadon and Hemaviton, TSPC is in the midst of growing its ethical/prescription drug segment (currently some 10% of total pharmaceutical sales) through Tempo RX Farma, to partake in the government’s National Universal Coverage Insurance (BPJS) program.

With approval from the Food & Drug administration (BPOM), production on its 2 additional unbranded generic drugs should start in 2015. In the nutritional division, top-line support should come from new launches baby milk products (stages 1-4) under “Vidoran brand.”

On the cost side, TSPC plans to cap third-party distribution sales (13% GPM) to allow for higher-margin products under its own brands (50-65% GPM). Our IDR2,800 TP is based on 16.4x 2015 PE, at 40% discount to the sector. A downside risk would be lower-than-expected personal care sales due to the lower purchasing power.

Financial highlights Year to 31 Dec 2012A 2013A 2014F 2015F 2016F Revenues (IDRbn) 6,631 6,855 7,431 8,243 9,137EBIT (IDRbn) 702 648 726 842 958Net profit (IDRbn) 628 635 690 769 857Bahana/consensus (%) - - 99 92 88

EPS (IDR) 140 141 153 171 190EPS growth (%) 10.9 1.1 8.7 11.5 11.4EV/EBITDA (x) 11.9 12.8 10.9 9.3 8.1P/E (x) 17.7 17.5 16.1 14.5 13.0FCFPS (IDR) 103 64 89 119 139FCF yield (%) 4.2 2.6 3.6 4.8 5.6BVPS (IDR) 738 849 945 1,053 1,243P/BV (x) 3.3 2.9 2.6 2.3 2.0DPS (IDR) 58 58 63 70 78Div. yield (%) 2.3 2.3 2.5 2.8 3.2Source: Company, Bahana estimates note: based on 09 October 2014 closing price


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Volume (RHS) TSPC IJ Px Last

(40.8)

(6.0)

(13.8)

(20.3)

(36.0)

(44.1)(50)

(45)

(40)

(35)

(30)

(25)

(20)

(15)

(10)

(5)

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Major assumptions Year to 31 Dec 2012A 2013A 2014F 2015F 2016F Indo pharma. sales (USDbn) 4.6 4.9 5.9 6.6 7.4 Sales growth (%) 14.7 3.4 8.4 10.9 10.9 Gross margin (%) 37.5 39.7 39.2 39.7 40.0 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 3,900/2,470 12M high/low consensus TP (IDR) : 3,878/2,800Majority shareholder (%) : Bogamulia Nagadi (77.3) Shares outstanding (mn)/Free float (%) : 4,500/22.7 Mkt. cap. (IDRbn/USDmn) : 11,115/912 3-m avg.daily t.o.(IDRbn/USDmn) : 2.0/0.2 Bloomberg/Reuters code : TSPC IJ/TSPC.JK Source: Bloomberg, Reuters; based on 09 October 2014 closing price

2015 Compendium

259

TEMPO SCAN PACIFIC

Profit & loss Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016FSales 6,631 6,855 7,431 8,243 9,137Gross profit 2,488 2,720 2,911 3,273 3,654EBITDA 806 743 852 985 1,120Depreciation 105 95 125 143 161EBIT 702 648 726 842 958Net interest inc./(expense) 68 73 88 90 95Forex gain/(losses) - - - - -Other income/(expense) 42 109 87 74 67Pre-tax profit 812 830 901 1,006 1,120Taxes (177) (191) (207) (231) (258)Minority interest (7) (4) (4) (5) (6)Extraordinary gain/(losses) - - - - -Net profit 628 635 690 769 857Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016F Cash and equivalents 1,651 1,792 2,046 2,242 2,456 S-T investments - - - - - Trade receivables 746 809 874 999 1,142 Inventories 765 1,001 1,004 1,169 1,337 Fixed assets 1,001 1,204 1,378 1,535 1,674 Other assets 470 602 638 695 1,109 Total assets 4,633 5,408 5,941 6,640 7,718 Interest bearing liabilities 95 186 242 327 392 Trade payables 629 745 786 904 1,044 Other liabilities 556 613 617 624 634 Total liabilities 1,280 1,545 1,645 1,854 2,070 Minority interest 31 41 45 49 54 Shareholders' equity 3,322 3,822 4,251 4,737 5,593 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016FEBIT 702 648 726 842 958Depreciation 105 95 125 143 161Working capital (113) (86) (150) (149) (192)Other operating items - - - - -Operating cash flow 694 657 701 836 928Net capital expenditure (228) (370) (300) (300) (300)Free cash flow 465 287 401 536 628Equity raised/(bought) - - - - -Net borrowings 94 184 240 324 389Other financing (517) (331) (387) (664) (802)Net cash flow 43 141 254 196 214Cash flow at beginning 1,609 1,651 1,792 2,046 2,242Ending cash flow 1,651 1,792 2,046 2,242 2,456Source: Company, Bahana estimates


2015 Compendium

260

TIMAH BUY PX: IDR1,235 - TP: IDR1,550* In spite of TINS’ status as the world’s third largest tin producer in

terms of production volumes, we believe the company’s sales volumes may be weaker than expected as a result of its internal policy to curb sales if the tin price were to remain below USD23k.

On the margin front, we think cost-cutting initiatives are limited as most of TINS’ production is offshore. In the interim, adding additional capacity offshore would be even more expensive than opening new onshore pits. However, due to continued illegal mining problems, opening new pits onshore is not a viable option for TINS.

Given higher tin prices coupled with the stronger USD, the performance of TINS should improve ahead. Our DCF-based TP of IDR1,550 (11.5% WACC) translates to 25.5% upside potential. Retain BUY. Risks to our call would be lower tin prices/ sales volumes and unfavorable government-related policy changes.

Financial highlights Year to 31 Dec 2012A 2013A 2014F 2015F 2016F Revenue (IDRbn) 7,363 5,852 5,758 6,891 7,260 EBIT (IDRbn) 651 829 737 801 879 Net profit (IDRbn) 432 515 418 489 556 Bahana/consensus (%) - - 63 64 69 EPS (IDR) 86 102 65 66 75 EPS growth (%) (28.8) 19.3 (36.6) 1.2 13.8 EV/EBITDA (x) 9.0 7.9 7.8 7.3 6.7 PER (x) 14.4 12.1 19.0 18.8 16.5 FCFPS (IDR) 10 (6) 9 0 2 FCF yield (%) 0.1 (0.1) 0.1 0.0 0.0 BVPS (IDR) 612 657 680 718 760 PBV (x) 2.0 1.9 1.8 1.7 1.6 DPS (IDR) 43 38 28 33 37 Yield (%) 3.5 3.1 2.3 2.7 3.0 Source: Company, Bahana estimates note: based on 10/09/2014 closing price


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Volume (RHS) TINS IJ Px Last

(2.6)

(5.9)

(12.1)(8.5)

18.5

0.8

(15)

(10)

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25

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TINS IJ relative to JCI


Major assumptions Year to 31 Dec 2012A 2013A 2014F 2015F 2016F Tins sales vol. (tons) 34,934 23,237 17,798 20,655 21,687 growth (%) 2.8 (33.5) (23.4) 16.1 5.0 Avg. tin price (USD/ton) 21,335 22,751 24,150 25,358 26,625 growth (%) (17.6) 6.6 6.1 5.0 5.0 Production cost per ton (USD) 16,867 21,685 21,194 22,798 23,004 Source: Company, Bahana estimates Company information 12M high/low (IDR) : 1,595/848 12M High/low consensus TP (IDR) : 1,800/1,075Majority shareholder (%) : Government of Indonesia (65.0) Share outstanding (mn)/Free float (%) : 7,448/35.0 Mkt. cap. (IDRbn/USDmn) : 9,198/755 3-m avg.daily t.o.(IDRbn/USDmn) : 18.9/1.5 Bloomberg/Reuters code : TINS IJ/TINS.JK Source: Bloomberg, Reuters based on 09 October 2014 closing price

2015 Compendium

261

TIMAH

Profit & loss Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016FSales 7,363 5,852 5,758 6,891 7,260 Gross profit 1,275 1,444 1,414 1,586 1,695 EBITDA 1,072 1,220 1,214 1,322 1,443 Depreciation 421 391 477 521 564 EBIT 651 829 737 801 879 Net interest income/(expense) (14) (19) (44) (53) (54)Forex gain/(losses) - 102 (52) 2 25 Other income/(expense) (29) (111) (44) (52) (55)Pre-tax profit 608 801 597 698 795 Taxes (205) (257) (179) (209) (238) Minority interest (0) (0) (0) (0) (0)Extraordinary gain/(losses) 28 (29) - - -Net profit 432 515 418 489 556 Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016F Cash and equivalents 670 614 852 693 695 S-T investments 12 1 1 2 2 Trade receivables 498 1,077 886 861 908 Inventories 1,617 2,461 2,350 2,600 2,740 Fixed assets 1,794 1,960 2,143 2,179 2,169 Other assets 1,550 1,771 1,313 1,557 1,749 Total assets 6,130 7,883 7,544 7,891 8,261 Interest bearing liabilities 264 1,355 1,111 1,111 1,179 Trade payables 308 406 384 363 382 Other liabilities 971 1,231 985 1,070 1,039 Total liabilities 1,543 2,991 2,480 2,544 2,600 Minority interest 0 0 0 0 0 Shareholders' equity 4,588 4,892 5,064 5,347 5,660 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016FEBIT 651 829 737 801 879 Depreciation 421 391 477 521 564 Working capital 1,278 (139) 1,138 1,010 1,052 Other operating items (875) (1,023) (982) (1,636) (1,644)Operating cash flow 1,448 (156) 1,311 680 787 Net capital expenditure (675) (284) (612) (650) (629)Free cash flow 773 (440) 698 30 157 Equity raised/(bought) 4 - - - -Net borrowings (380) 1,091 (244) (0) 68 Other financing (386) (708) (216) (189) (223)Net cash flow 11 (57) 239 (159) 2 Cash flow at beginning 660 670 614 852 693 Ending cash flow 670 614 852 693 695 Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2012A 2013A 2014F 2015F 2016F ROAE (%) 9.4 10.9 8.4 9.4 10.1 ROAA (%) 6.8 7.4 5.4 6.3 6.9 EBITDA margin (%) 14.6 20.8 21.1 19.2 19.9 EBIT margin (%) 8.8 14.2 12.8 11.6 12.1 Net margin (%) 5.9 8.8 7.3 7.1 7.7 Payout ratio (%) 74.0 55.0 50.0 50.0 50.0 Current ratio (x) 4.1 2.2 2.6 2.7 2.8 Interest coverage (x) 46.2 43.2 16.6 15.2 16.1 Net gearing (%) nc 15.1 5.1 7.8 8.6 Debts to assets (%) 4.3 17.2 14.7 14.1 14.3 Debtor turnover (days) 25 67 56 46 46 Creditor turnover (days) 15 25 24 19 19 Inventory turnover (days) 80 154 149 138 138 Source: Company, Bahana estimates

2015 Compendium

262

TIPHONE MOBILE INDONESIA BUY PX: IDR885 - TP: IDR1,160* TELE is the largest Telkomsel (TSEL) pre-paid card and voucher

distributor, with a 12% market share. Following the acquisition of TELE’s 25% stake by TLKM subsidiary PINS, TELE should experience synergies (e.g., handset bundling and faster growth). TELE’s 2015 market share of TSEL voucher distribution should rise to 22% on TELE’s 4Q14F acquisition of TSEL distributor Simpatindo (8% share).

With continued Samsung dominance in smartphones, TELE, with a 20% market share in Samsung distribution, is poised to benefit from increased Samsung handset business, currently accounting for 80% of TELE’s total handset sales. Additional growth could stem from TSEL’s handset bundling programs.

On valuation, our IDR1,160 TP translates into a 2015F PE of 20x, supported by TELE’s now telco-consumer hybrid profile. BUY. Risks include tough competition and a high purchase price for Simpatindo.


EPS (IDR) 28.9 41.9 48.3 58.5 67.4 EPS growth (%) (24.3) 44.9 15.3 21.0 15.2 EV/EBITDA (x) 20.3 12.9 13.5 11.8 10.7 P/E (x) 30.6 21.1 18.3 15.1 13.1 FCFPS (IDR) 13 (169) (121) 11 41 FCF yield (%) 1.4 (19.1) (13.7) 1.2 4.6 BVPS (IDR) 166 253 336 366 418 P/BV (x) 5.3 3.5 2.6 2.4 2.1 DPS (IDR) 7 - 12 15 17 Div. yield (%) 0.8 - 1.4 1.7 1.9 Source: Company, Bahana estimates note: based on 09 October 2014 closing price


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Volume (RHS) TELE IJ Px Last

25.9

(1.9)

13.4

2.5

23.8

65.7

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70

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TELE IJ relative to JCI


Major assumptions Year to 31 Dec 2012A 2013A 2014F 2015F 2016F Vouchers and starter kit (IDRbn) 7,629 8,116 8,748 11,734 12,888 Cellphones (IDRbn) 478 2,171 5,599 6,378 7,047 Telkomsel market share (%) 13 13 13 22 23 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 975/495 12M High/low consensus TP (IDR) : 1,160/900 Majority shareholder (%) : Upaya Cipta Sejahtera (38.8) Shares outstanding (mn)/Free float (%) : 7,033/39.1 Mkt. cap. (IDRbn/USDmn) : 6,227/511 3-m avg.daily t.o.(IDRbn/USDmn) : 7.3/0.6 Bloomberg/Reuters code : TELE IJ/TELE.JK Source: Bloomberg, Reuters; based on 09 October closing price

2015 Compendium

263

TIPHONE MOBILE INDONESIA

Profit & loss Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016FSales 8,194 10,485 14,348 18,113 19,936Gross profit 452 628 814 1,035 1,140EBITDA 280 452 559 640 690Depreciation 11 15 29 29 43EBIT 269 437 531 668 733Net interest inc./(expense) (26) (55) (94) (140) (125)Forex gain/(losses) - - - - -Other income/(expense) 29 11 17 20 24Pre-tax profit 272 393 454 549 632Taxes (68) (99) (113) (137) (158)Minority interest (0) (0) (0) (0) (0)Extraordinary gain/(losses) - - - - -Net profit 204 295 340 411 474Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016F Cash and equivalents 395 493 225 417 504 S-T investments - - - - - Trade receivables 420 1,301 1,435 1,647 1,734 Inventories 277 661 1,353 1,553 1,634 Fixed assets 105 156 238 218 197 Other assets 161 844 1,443 1,548 1,660 Total assets 1,359 3,455 4,694 5,383 5,728 Interest bearing liabilities 177 1,476 1,540 1,738 1,638 Trade payables 0 533 846 1,005 1,074 Other liabilities 74 59 64 69 74 Total liabilities 251 2,069 2,449 2,812 2,786 Minority interest 0 0 0 1 1 Shareholders' equity 1,108 1,387 2,245 2,571 2,942 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016FEBIT 269 437 531 668 733Depreciation 11 15 29 29 43Working capital (18) (731) (512) (251) (99)Other operating items (134) (848) (289) (347) (366)Operating cash flow 128 (1,128) (241) 99 311Net capital expenditure (40) (59) (610) (23) (24)Free cash flow 88 (1,187) (851) 76 286Equity raised/(bought) 412 33 518 - -Net borrowings (376) 1,299 63 198 (100)Other financing 7 (47) 2 (82) (100)Net cash flow 132 98 (268) 192 87Cash flow at beginning 263 395 493 225 417Ending cash flow 395 493 225 417 504Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2012A 2013A 2014F 2015F 2016F ROAE (%) 25.5 23.6 18.7 17.1 17.2 ROAA (%) 16.0 12.3 8.3 8.2 8.5 EBITDA margin (%) 3.4 4.3 3.9 3.5 3.5 EBIT margin (%) 3.3 4.2 3.7 3.7 3.7 Net margin (%) 2.5 2.8 2.4 2.3 2.4 Payout ratio (%) 23.9 - 25.0 25.0 25.0 Current ratio (x) 5.6 1.4 1.4 1.5 1.6 Interest coverage (x) 10.3 7.9 5.6 4.8 5.9 Net gearing (%) nc 70.9 58.6 51.4 38.5 Debts to assets (%) 13.0 42.7 32.8 32.3 28.6 Debtor turnover (days) 19 45 37 33 32 Creditor turnover (days) 0 20 23 21 21 Inventory turnover (days) 28 15 10 11 12 Source: Company, Bahana estimates

2015 Compendium

264

TOTAL BANGUN PERSADA REDUCE PX: IDR900 - TP: IDR825 TOTL, the only non-state-owned listed construction company in our

coverage, focuses on high-rise buildings for residential, commercial and office projects. Prestigious development projects include: Menara Astra and MNC Media Tower (both JO projects with Shimizu).

Going into 2015, TOTL’s performance should be supported by tourism-related projects: the Holiday Inn, Tanjung Benoa, Bali and the education-related development of Binus campus in Alam Sutera, Tangerang. Although we expect a rebound in 2015 net profit, earnings should still remain below 2013’s achievement.

On valuation, we think our IDR825 TP, based on a 16.5x 2015F PER, the regional peer average, demands a REDUCE rating given its unattractive valuation. With the recent share-price appreciation, TOTL offers about 8% downside potential from current levels. Risks to our call include better-than-expected delivery on new projects.


EPS (IDR) 52 57 42 50 55 EPS growth (%) 40.7 10.6 (26.2) 19.1 9.2 EV/EBITDA (x) 11.9 9.3 14.2 11.5 10.2 P/E (x) 17.5 15.8 21.4 18.0 16.5 FCFPS (IDR) 29 (34) (0) 21 28 FCF yield (%) 3.2 (3.7) (0.0) 2.4 3.2 BVPS (IDR) 193 221 229 254 289 P/BV (x) 4.7 4.1 3.9 3.5 3.1 DPS (IDR) 29 35 21 25 27 Div. yield (%) 3.3 3.9 2.3 2.8 3.0 Source: Company, Bahana estimates note: based on 09 October 2014 closing price


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Volume (RHS) TOTL IJ Px Last

63.2

3.4

13.8

(2.6)

43.3

9.6

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TOTL IJ relative to JCI Source: Bloomberg



Company information 12M high/low (IDR) : 1,020/495 12M High/low consensus TP (IDR) : 1,260/710Majority shareholder (%) : Total Inti Persada (56.5) Shares outstanding (mn)/Free float (%) : 3,410/34.8 Mkt. cap. (IDRbn/USDmn) : 3,069/252 3-m avg.daily t.o.(IDRbn/USDmn) : 10.0/0.8 Bloomberg/Reuters code : TOTL IJ/TOTL.JK Source: Bloomberg, Reuters; based on 09 October 2014 closing price

2015 Compendium

265

TOTAL BANGUN PERSADA

Profit & loss Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016FSales 1,834 2,287 1,935 2,230 2,503Gross profit 349 441 368 420 470EBITDA 199 272 186 231 256Depreciation 11 16 18 17 17EBIT 188 256 167 214 239Net interest inc./(expense) 30 50 32 31 32Forex gain/(losses) 9 10 (4) 3 2Other income/(expense) 14 (26) 12 10 10Pre-tax profit 241 290 207 258 284Taxes (59) (77) (58) (83) (93)Minority interest (6) (19) (6) (4) (4)Extraordinary gain/(losses) - - - - -Net profit 176 194 143 171 186Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016F Cash and equivalents 698 548 432 419 451 S-T investments 99 100 103 106 109 Trade receivables 228 280 243 279 304 Inventories 134 185 241 313 407 Fixed assets 100 93 129 145 160 Other assets 806 1,020 940 1,078 1,183 Total assets 2,064 2,226 2,088 2,340 2,615 Interest bearing liabilities 22 93 57 57 58 Trade payables 66 94 80 92 103 Other liabilities 1,271 1,220 1,100 1,252 1,391 Total liabilities 1,358 1,407 1,237 1,401 1,553 Minority interest 47 66 69 73 76 Shareholders' equity 659 753 782 867 987 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016FEBIT 188 256 167 214 239Depreciation 11 16 18 17 17Working capital 72 (199) 49 (47) (36)Other operating items (144) (157) (205) (82) (93)Operating cash flow 127 (84) 29 102 127Net capital expenditure (29) (30) (30) (30) (30)Free cash flow 98 (114) (1) 72 97Equity raised/(bought) - - - - -Net borrowings - 71 (36) - 1Other financing (62) (87) (80) (85) (66)Net cash flow 37 (131) (117) (12) 32Cash flow at beginning 661 698 548 432 419Ending cash flow 698 567 432 419 451Source: Company, Bahana estimates


2015 Compendium

266

TUNAS BARU LAMPUNG (INITIAL COVERAGE) BUY PX: IDR665 - TP: IDR870 With the smallest CPO plantation area under our coverage of 63k ha,

TBLA is currently in the midst of aggressively growing its sugar business in Lampung, Sumatra, which should pave way for 2014F EPS growth to jump fourfold. In 2014, TBLA has imported 108k tons of raw sugar to be processed through its USD50mn sugar refinery mill with capacity of 216k tpa, which became operational in 2013.

To support growth, TBLA is raising its sugar plantation to 12k ha from 1H14’s level of 3k ha and is building a USD100mn sugar mill with 1.2mn tpa capacity to be operational in 4Q16. On CPO, a higher mature area in 2015 should mean FFB production recovering to 1.1m tons, up 13% y-y.

On valuation, our IDR870 TP is based on 2015 P/E of 9.2x, a 50% discount to its Malaysian peers. Risks to our call include lower-than-expected CPO and sugar prices also possible delays in government approvals for the import of raw sugar for its refinery business.

Financial highlights Year to 31 Dec 2012A 2013A 2014F 2015F 2016FRevenues (IDRbn) 3,806 3,705 4,495 4,922 5,263EBIT (IDRbn) 498 494 757 820 804Net profit (IDRbn) 242 84 439 463 451Bahana/cons.(%) - - - - -

EPS (IDR) 49 17 89 94 91EPS growth (%) (42.3) (65.1) 420.1 5.5 (2.5)EV/EBITDA (x) 7.1 8.1 6.1 4.9 4.9P/E (x) 13.6 38.9 7.5 7.1 7.3FCFPS (IDR) (82) (148) 84 62 57FCF yield (%) (12.4) (22.2) 12.6 9.4 8.6BVPS (IDR) 354 361 461 537 610P/BV (x) 1.9 1.8 1.4 1.2 1.1DPS (IDR) 18 10 3 18 19Div. yield (%) 2.8 1.5 0.5 2.7 2.8Source: Company, Bahana estimates note: based on 09 october 2014 closing price


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Volume (RHS) TBLA IJ Px Last

24.7

1.4 2.0

36.7

26.6 24.4

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Major assumptions Year to 31 Dec 2012A 2013A 2014F 2015F 2016FFFB processed (k tons) 1,287 1,035 956 1,080 1,080CPO production (k tons) 229 213 197 222 222ASP CPO (USD/ton 8,823 8,237 9,032 9,378 9,659Sugar plantation (ha) 1,305 1,736 4,812 9,000 12,000Source: Company, Bahana estimates

Company information

12M high/low (IDR) : 710/47012M High/low consensus TP (IDR) : naMajority shareholder (%) : Budi Delta Swakarya & Sungai Budi (58.7)Shares outstanding (mn)/Free float (%) : 4,942/41.2Mkt. cap. (IDRbn/USDmn) : 3,286/2703-m avg.daily t.o.(IDRbn/USDmn) : 1.6/0.1Bloomberg/Reuters code : TBLA IJ/TBLA.JKSource: Bloomberg, Reuters; based on 09 October 2014 closing price

2015 Compendium

267

TUNAS BARU LAMPUNG

Profit & loss Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016FSales 3,806 3,705 4,495 4,922 5,263Gross profit 1,028 950 1,226 1,334 1,354EBITDA 686 706 917 1,181 1,254Depreciation 143 148 160 361 450EBIT 498 494 757 820 804Net interest inc./(expense) (120) (171) (193) (207) (212)Forex gain/(losses) (91) (250) (21) (4) 5Other income/(expense) 25 45 34 - -Pre-tax profit 311 119 577 609 597Taxes 67 33 136 144 144Minority interest (2) (2) (2) (2) (2)Extraordinary gain/(losses) - - - - -Net profit 242 84 439 463 451Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016FCash and equivalents 548 648 885 851 946S-T investments 11 10 10 10 10Trade receivables 385 416 48 51 50Inventories 649 795 934 1,025 1,117Fixed assets 3,612 4,455 5,249 5,939 6,750Other assets 3 (102) (104) (136) (313)Total assets 5,198 6,212 7,013 7,730 8,549Interest bearing liabilities 2,109 3,089 3,220 3,400 3,750Trade payables 250 183 195 252 271Other liabilities 1,079 1,143 1,304 1,409 1,501Total liabilities 3,438 4,414 4,719 5,061 5,521Minority interest 10 15 15 15 15Shareholders' equity 1,749 1,783 2,279 2,655 3,014Source: Company, Bahana estimates

Cashflow Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016FEBIT 498 494 757 820 804Depreciation 143 148 160 361 450Working capital (361) (189) 400 (19) (59)Other operating items (20) (249) 100 90 104Operating cash flow 261 204 1,417 1,252 1,300Net capital expenditure (668) (935) (1,002) (943) (1,016)Free cash flow (407) (731) 415 308 284Equity raised/(bought) - 0 72 - -Net borrowings 706 981 131 180 350Other financing (704) (373) 732 8 (258)Net cash flow (405) (123) 1,350 496 376Cash flow at beginning 544 548 648 885 851Ending cash flow 548 648 885 851 946Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2012A 2013A 2014F 2015F 2016FROAE (%) 14.4 4.8 21.6 18.8 15.9ROAA (%) 5.1 1.5 6.6 6.3 5.5EBITDA margin (%) 18.0 19.0 20.4 24.0 23.8EBIT margin (%) 13.1 13.3 16.8 16.7 15.3Net margin (%) 6.3 2.3 9.8 9.4 8.6Payout ratio (%) 21.8 20.4 20.0 20.0 20.0Current ratio (x) 6.3 10.2 9.6 7.6 7.8Interest coverage (x) 4.1 2.9 3.9 4.0 3.8Net gearing (%) 89.2 136.9 102.4 96.0 93.0Debts to assets (%) 40.6 49.7 45.9 44.0 43.9Debtor turnover (days) 30 40 40 40 40Creditor turnover (days) 21 21 16 19 19Inventory turnover (days) 75 96 104 104 104Source: Company, Bahana estimates

2015 Compendium

268

UNILEVER INDONESIA BUY PX: IDR30,700 - TP: IDR37,500 Due to strong global backing, UNVR, Indonesia’s leading FMCG

company, continues to retain its stranglehold in 13 out of 14 product categories, with a 40-60% market share, helped by aggressive launchings and re-launchings of its household brands.

Growth support comes from its F&B division (the smallest at 27% of top line), which grew 26% y-y in 2Q14, compared to the 8% y-y growth of the household & personal care (HPC). On the cost front, margin protection should stem from UNVR’s recent 5% average price increase in September 2014, coupled with the recent correction in the company’s key raw materials prices.

On valuation, quality does come at a price. Our target price of IDR37,500 is based on 42.5x FY15F P/E, which we think is justified by UNVR’s defensive nature and excellent management team. Risks include intensified competition.

Financial highlights Year to 31 Dec 2012A 2013A 2014F 2015F 2016F Revenues (IDRbn) 27,303 30,757 35,313 40,577 46,687 EBIT (IDRbn) 6,455 7,122 7,408 9,068 10,075 Net profit (IDRbn) 4,839 5,353 5,517 6,739 7,517 Bahana/consensus (%) - - 95 104 100 EPS (IDR) 634 702 723 883 985 EPS growth (%) 16.2 10.6 3.1 22.2 11.5 EV/EBITDA (x) 34.9 31.1 30.9 25.2 22.6 P/E (x) 48.4 43.8 42.5 34.8 31.2 FCFPS (IDR) 687 786 800 1,089 1,219 FCF yield (%) 2.2 2.6 2.6 3.5 4.0 BVPS (IDR) 520 558 613 737 837 P/BV (x) 59.0 55.1 50.1 41.6 36.7 DPS (IDR) 634 663 687 839 936 Div. yield (%) 2.1 2.2 2.2 2.7 3.0 Source: Company, Bahana estimates note: based on on 09 October 2014 closing price


0

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('000)(IDR)

Volume (RHS) UNVR IJ Px Last

1.2 2.0

(1.1)

2.0 1.2

(10.5) (12)

(10)

(8)

(6)

(4)

(2)

0

2

4

(12)

(10)

(8)

(6)

(4)

(2)

0

2

4

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(%) (%)

UNVR IJ relative to JCI

Source: Bloomberg Harry Su ([email protected]) +6221 250 5735

Major assumptions Year to 31 Dec 2012A 2013A 2014F 2015F 2016F Sales growth (%) 16.3 12.7 14.8 14.9 15.1 Gross margin (%) 50.9 51.3 50.8 51.0 51.4 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 32,150/25,500 12M high/low consensus TP (IDR) : 37,500/18,745 Majority shareholder (%) : Unilever Indonesia (85.0) Shares outstanding (mn)/Free float (%) : 7,630/15.0 Mkt. cap. (IDRbn/USDmn) : 234,241/19,216 3-m avg.daily t.o.(IDRbn/USDmn) : 40.7/3.3 Bloomberg/Reuters code : UNVR IJ/UNVR.JK Source: Bloomberg, Reuter; based on 09 October 2014 closing price

2015 Compendium

269

UNILEVER INDONESIA

Profit & loss Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016FSales 27,303 30,757 35,313 40,577 46,687Gross profit 13,889 15,778 17,931 20,713 23,987EBITDA 6,704 7,562 7,670 9,372 10,409Depreciation 249 441 262 304 334EBIT 6,455 7,122 7,408 9,068 10,075Net interest inc./(expense) (31) (6) (70) (93) (64)Forex gain/(losses) - - - - -Other income/(expense) 43 43 41 39 42Pre-tax profit 6,467 7,159 7,378 9,014 10,053Taxes (1,628) (1,806) (1,862) (2,274) (2,536)Minority interest - - - - -Extraordinary gain/(losses) - - - - -Net profit 4,839 5,353 5,517 6,739 7,517Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016F Cash and equivalents 230 261 284 278 371 S-T investments - - - - - Trade receivables 2,426 3,270 3,435 3,947 4,541 Inventories 2,062 2,084 2,286 2,612 3,016 Fixed assets 6,283 6,874 8,012 8,708 9,374 Other assets 984 859 1,730 947 696 Total assets 11,985 13,348 15,746 16,492 17,998 Interest bearing liabilities 1,040 977 3,000 2,100 1,700 Trade payables 2,764 3,765 3,810 4,354 4,975 Other liabilities 4,213 4,352 4,259 4,413 4,933 Total liabilities 8,017 9,094 11,069 10,866 11,608 Minority interest - - - - - Shareholders' equity 3,968 4,255 4,677 5,626 6,390 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016FEBIT 6,455 7,122 7,408 9,068 10,075Depreciation 249 441 262 304 334Working capital (313) (267) (163) (63) (109)Other operating items - - - - -Operating cash flow 6,390 7,295 7,507 9,309 10,300Net capital expenditure (1,145) (1,300) (1,400) (1,000) (1,000)Free cash flow 5,245 5,995 6,107 8,309 9,300Equity raised/(bought) - - - - -Net borrowings 341 (63) 2,023 (900) (400)Other financing (5,693) (5,901) (8,108) (7,414) (8,807)Net cash flow (106) 32 22 (6) 93Cash flow at beginning 336 230 261 284 278Ending cash flow 230 261 284 278 371Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2012A 2013A 2014F 2015F 2016F ROAE (%) 126.5 130.2 123.5 130.8 125.1 ROAA (%) 43.1 42.3 37.9 41.8 43.6 EBITDA margin (%) 24.6 24.6 21.7 23.1 22.3 EBIT margin (%) 23.6 23.2 21.0 22.3 21.6 Net margin (%) 17.7 17.4 15.6 16.6 16.1 Payout ratio (%) 93.8 94.5 95.0 95.0 95.0 Current ratio (x) 0.7 0.7 0.6 0.8 0.9 Interest coverage (x) 205.9 1,263.4 105.9 97.9 157.1 Net gearing (%) 20.4 16.8 58.1 32.4 20.8 Debts to assets (%) 8.7 7.3 19.1 12.7 9.4 Debtor turnover (days) 30 34 35 33 33 Creditor turnover (days) 72 82 81 76 76 Inventory turnover (days) 54 52 47 46 46 Source: Company, Bahana estimates

2015 Compendium

270

UNITED TRACTORS REDUCE PX: IDR19,325 - TP: IDR18,000 UNTR, Indonesia’s largest equipment and mining contracting

company, should continue to see unexciting earnings growth as 85% of its businesses are exposed to the coal and mining sectors. However, we expect 2015 heavy equipment sales to experience a slight recovery to 4,318 units, up 7% y-y, on improved construction and plantation contributions, with mining sales remaining flat.

In mining contracting, we expect Pama Persada to book a low 2015 stripping ratio of 6.9x (2014F:6.9x), due to coal-company efficiency improvements. In 2015F, mining contracting revenue growth should remain low as most coal players renegotiate Pama’s mining fees.

With the coal price likely to remain flat at USD65/ton, we arrive at our DCF-based (WACC: 13%) TP of IDR18,000, reflecting 7% potential downside from current levels. REDUCE. Risks to our call include a higher-than-expected coal price and a weaker-than-expected IDR.

Financial highlights Year to 31 Dec 2012A 2013A 2014F 2015F 2016F Revenues (IDRbn) 55,954 51,012 53,767 56,127 57,086 EBIT (IDRbn) 7,566 6,741 7,676 7,426 7,210 Net profit (IDRbn) 5,780 4,833 5,905 5,827 5,686 Bahana/consensus(%) - - 111 97 95

EPS (IDR) 1,549 1,296 1,583 1,562 1,524 EPS growth (%) (8.2) (16.4) 22.2 (1.3) (2.4) EV/EBITDA (x) 6.8 6.6 5.7 5.6 5.3 P/E (x) 12.5 14.9 12.2 12.4 12.7 FCFPS (IDR) (505) 2,068 1,076 1,187 1,319 FCF yield (%) (2.6) 10.7 5.6 6.1 6.8 BVPS (IDR) 7,945 8,906 9,638 10,567 11,466 P/BV (x) 2.4 2.2 2.0 1.8 1.7 DPS (IDR) 585 515 633 625 610 Div. yield (%) 3.0 2.7 3.3 3.2 3.2 Source: Company, Bahana estimates note: based on 09 October 2014 closing price


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('000)(IDR)

Volume (RHS) UNTR IJ Px Last

(15.1)

(2.4)

(19.4)

(10.5)(12.0)

(5.1)

(25)

(20)

(15)

(10)

(5)

0

(25)

(20)

(15)

(10)

(5)

0

ytd 1M 3M 6M 9M 12M

(%) (%)

UNTR IJ relative to JCI


Major assumptions Year to 31 Dec 2012A 2013A 2014F 2015F 2016F Komatsu 6,202 4,203 4,050 4,318 4,643 Coal extraction (mn tons) 94 105 110 110 110 Ovr. Removal (mn bcm) 856 845 760 760 760 Coal mines (mn tons) 5.6 4.2 6.0 7.0 7.0 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 24,600/17,500 12M High/low consensus TP (IDR) : 29,000/18,200 Majority shareholder (%) : Astra International (59.5) Shares outstanding (mn)/Free float (%) : 3,730/40.4 Mkt. cap. (IDRbn/USDmn) : 72,085/5,913 3-m avg.daily t.o.(IDRbn/USDmn) : 73.7/6.1 Bloomberg/Reuters code : UNTR IJ/UNTR.JK Source: Bloomberg, Reuters; based on 09 October 2014 closing price

2015 Compendium

271

UNITED TRACTORS

Profit & loss Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016FSales 55,954 51,012 53,767 56,127 57,086Gross profit 10,521 9,517 10,622 10,444 10,223EBITDA 10,936 10,446 11,907 11,897 12,105Depreciation 3,369 3,705 4,230 4,471 4,895EBIT 7,566 6,741 7,676 7,426 7,210Net interest inc./(expense) (59) (17) 10 86 40Forex gain/(losses) (247) (319) (61) (18) 22Other income/(expense) 186 183 199 225 255Pre-tax profit 7,447 6,587 7,824 7,718 7,527Taxes (1,693) (1,789) (1,956) (1,930) (1,882)Minority interest 26 35 37 39 40Extraordinary gain/(losses) - - - - -Net profit 5,780 4,833 5,905 5,827 5,686Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016F Cash and equivalents 3,995 7,936 8,935 9,589 11,566 S-T investments 1,211 1,242 1,242 1,242 1,242 Trade receivables 9,895 12,141 14,731 15,992 17,204 Inventories 7,174 6,176 6,501 7,197 7,704 Fixed assets 25,820 26,602 25,554 25,265 24,554 Other assets 2,207 3,265 3,153 3,236 3,273 Total assets 50,301 57,362 60,117 62,521 65,543 Interest bearing liabilities 5,913 4,939 5,099 3,687 3,076 Trade payables 6,934 10,887 11,230 11,577 11,876 Other liabilities 5,153 5,887 5,446 5,487 5,507 Total liabilities 18,000 21,713 21,774 20,752 20,459 Minority interest 2,665 2,429 2,392 2,354 2,313 Shareholders' equity 29,636 33,220 35,951 39,416 42,771 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016FEBIT 7,566 6,741 7,676 7,426 7,210Depreciation 3,369 3,705 4,230 4,471 4,895Working capital (3,535) 3,135 (2,996) (1,568) (1,400)Other operating items 1,044 (2,899) (1,714) (1,720) (1,602)Operating cash flow 8,446 10,682 7,197 8,610 9,102Net capital expenditure (10,331) (2,969) (3,183) (4,183) (4,183)Free cash flow (1,885) 7,713 4,014 4,427 4,919Equity raised/(bought) - - - - -Net borrowings 1,209 (974) 160 (1,412) (612)Other financing (2,464) (2,799) (3,174) (2,362) (2,331)Net cash flow (3,140) 3,941 1,000 654 1,977Cash flow at beginning 7,135 3,995 7,936 8,935 9,589Ending cash flow 3,995 7,936 8,935 9,589 11,566Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2012A 2013A 2014F 2015F 2016F ROAE (%) 20.7 15.4 17.1 15.5 13.8 ROAA (%) 11.9 9.0 10.1 9.5 8.9 EBITDA margin (%) 19.5 20.5 22.1 21.2 21.2 EBIT margin (%) 13.5 13.2 14.3 13.2 12.6 Net margin (%) 10.3 9.5 11.0 10.4 10.0 Payout ratio (%) 37.8 39.7 40.0 40.0 40.0 Current ratio (x) 1.9 1.9 2.2 2.5 2.7 Interest coverage (x) 128 396 na na na Net gearing (%) nc 6.5 nc nc nc Debts to assets (%) 11.8 8.6 8.5 5.9 4.7 Debtor turnover (days) 65 87 100 104 110 Creditor turnover (days) 56 96 95 93 93 Inventory turnover (days) 54 55 58 60 47 Source: Company, Bahana estimates

2015 Compendium

272

VALE INDONESIA BUY PX: IDR3,700 - TP: IDR4,700 On the back of the ore export ban, INCO, a subsidiary of Vale Canada,

has now become Indonesia’s largest nickel producer, with 94mn tons of reserves in 2013. Going into 2015, despite its status as one of the world’s lowest-cost nickel producers, INCO’s margin could come under pressure as it expects to close one of its furnaces for maintenance.

On a more positive note, we expect INCO’s 2016 performance to be much improved due to its furnace upgrade and low-cost nickel production. In terms of 2015 production, we estimate 67k tons (-15% y-y) of nickel in matte, before rising to 77k tons (+15%) in 2016.

Our DCF-based TP of IDR4,700 is based on 13% WACC. Policy-related risks to our call include a potential divestment by Vale Canada to reduce its stake to below 50% to comply with government ruling on foreign ownership, a higher royalty from currently 4.0% of sales, a contract extension and reduced concession from 100k ha to as low as 20k ha.

Financial highlights Year to 31 Dec 2012A 2013A 2014F 2015F 2016F Revenues (USDmn) 967 922 1,146 981 1,160 EBIT (USDmn) 107 70 214 159 234 Net profit (USDmn) 67 39 147 109 166 Bahana/consensus (%) - - 84 42 56 EPS (IDR) 65 42 176 128 192 EPS growth (%) (78.5) (36.5) 324.1 (27.4) 50.2 EV/EBITDA (x) 15.0 17.3 9.3 18.8 8.2 P/E (x) 56.5 89.0 21.0 28.9 19.2 FCFPS (IDR) (47) 164 66 258 206 FCF yield (%) (0.5) 1.6 0.7 2.6 2.1 BVPS (IDR) 1,670 1,844 2,117 2,114 2,126 P/BV (x) 2.2 2.0 1.7 1.8 1.7 DPS (IDR) 49 31 132 96 144 Div. yield (%) 1.3 0.8 3.6 2.6 3.9 Source: Company, Bahana estimates note: based on 10/09/2014 closing price


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Volume (RHS) INCO IJ Px Last

22.8

(13.3)

1.4

16.9

43.5

36.0

(20)

(10)

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10

20

30

40

50

(20)

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ytd 1M 3M 6M 9M 12M

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INCO IJ relative to JCI


Major assumptions Year to 31 Dec 2012A 2013A 2014F 2015F 2016F Sales vol. (tons) 70,129 77,198 79,591 70,040 80,546 growth (%) 5.0 10.1 3.1 (12.0) 15.0 ASP (USD/m ton) 13,794 11,939 14,400 14,000 14,400 growth (%) (25.8) (13.4) 20.6 (2.8) 2.9 Production cost per ton (USD) 11.43 10.35 11.20 11.22 11.36 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 4,575/2,115 12M High/low consensus TP (IDR) : 4,500/2,300Majority shareholder (%) : Vale Canada Limited (58.7) Shares outstanding (mn)/Free float (%) : 9,936/20.5 Mkt. cap. (IDRbn/USDmn) : 36,764/3,020 3-m avg.daily t.o.(IDRbn/USDmn) : 52.9/4.3 Bloomberg/Reuters code : INCO IJ/INCO.JK Source: Bloomberg, Reuters based on 09 October 2014 closing price

2015 Compendium

273

VALE INDONESIA

Profit & loss Year to 31 Dec (USDmn) 2012A 2013A 2014F 2015F 2016FSales 967 922 1,146 981 1,160 Gross profit 167 140 273 218 294 EBITDA 209 178 332 287 373 Depreciation 102 108 117 128 139 EBIT 107 70 214 159 234 Net interest inc./(expense) (15) (15) (15) (12) (9)Forex gain/(losses) - - - - -Other income/(expense) - - - - -Pre-tax profit 91 55 199 147 224 Taxes (24) (17) (52) (38) (59)Minority interest - - - - -Extraordinary gain/(losses) - - - - -Net profit 67 39 147 109 166 Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (USDmn) 2012A 2013A 2014F 2015F 2016F Cash and equivalents 190 217 123 137 126 S-T investments - - - - - Trade receivables 113 66 115 98 116 Inventories 153 151 179 156 184 Fixed assets 1,625 1,652 1,685 1,687 1,680 Other assets 253 196 250 208 244 Total assets 2,333 2,281 2,351 2,286 2,349 Interest bearing liabilities 256 219 184 148 111 Trade payables 79 76 79 69 79 Other liabilities 277 272 320 274 324 Total liabilities 612 567 584 491 513 Minority interest - - - - - Shareholders' equity 1,721 1,714 1,767 1,795 1,836 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (USDmn) 2012A 2013A 2014F 2015F 2016FEBIT 107 70 214 159 234 Depreciation 102 108 117 128 139 Working capital (25) 35 (76) 43 (47)Other operating items (3) 2 (2) (0) 0 Operating cash flow 181 215 253 330 326 Net capital expenditure (230) (63) (198) (110) (149)Free cash flow (49) 152 55 219 178 Equity raised/(bought) - - - - -Net borrowings (37) (37) (35) (36) (37)Other financing (142) (88) (113) (170) (152)Net cash flow (227) 27 (93) 13 (11)Cash flow at beginning 417 190 217 123 137 Ending cash flow 190 217 123 137 126 Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2012A 2013A 2014F 2015F 2016F ROAE (%) 3.9 2.3 8.5 6.0 9.2 ROAA (%) 2.8 1.7 6.4 4.7 7.2 EBITDA margin (%) 21.6 19.3 28.9 29.3 32.2 EBIT margin (%) 11.1 7.6 18.7 16.2 20.2 Net margin (%) 7.0 4.2 12.8 11.1 14.3 Payout ratio (%) 74.2 75.0 75.0 75.0 75.0 Current ratio (x) 3.4 3.3 3.1 3.2 3.2 Interest coverage (x) 6.9 4.8 14.5 13.4 26.2 Net gearing (%) 3.8 0.1 3.4 0.6 nc Debts to assets (%) 11.0 9.6 7.8 6.5 4.7 Debtor turnover (days) 43 26 37 37 37 Creditor turnover (days) 30 30 25 26 25 Inventory turnover (days) 58 60 57 58 58 Source: Company, Bahana estimates

2015 Compendium

274

WASKITA KARYA BUY PX: IDR845 – TP: IDR1,020* To support growth, WSKT, a mid-cap SOE construction company, is

entering the toll road business through its subsidiary, PT Waskita Toll Road (WTR). Currently, WTR is developing the Pejagan-Pemalang toll road (Central Java) with expected completion in 2016 and is participating in the Legundi-Blunder (East Java) toll-road tender. WTR also has a 15% participation in the Medan-Kualanamu-Tebing Tinggi toll road, which is expected to be completed in 2017.

To diversify its business, WSKT is developing some realty projects: Cawang (offices and hotel), Alam Sutera (SOHO suites and offices) and a Surabaya super block (10 phases).

Our IDR1,020 TP is based on a 2015F PE of 18x, a 10% discount to our sector targeted 2015F PE. Risks to our recommendation include macro headwinds such as possible higher interest rates, which could in turn lead to lower-than-expected revenues.

Financial highlights Year to 31 Dec 2012A 2013A 2014F 2015F 2016F Revenues (IDRbn) 8,808 9,687 11,311 13,820 16,696 EBIT (IDRbn) 540 672 786 1,006 1,247 Net profit (IDRbn) 254 368 430 545 613 Bahana/consensus (%) - - 100 99 91

EPS (IDR) 38 38 45 57 64 EPS growth (%) 45.2 0.2 16.9 26.7 12.6 EV/EBITDA (x) 13.8 12.2 10.7 9.4 8.3 P/E (x) 22.2 22.1 18.9 14.9 13.3 FCFPS (IDR) (37) (53) (48) (83) (79) FCF yield (%) (4.4) (6.2) (5.7) (9.9) (9.4) BVPS (IDR) 295 247 280 319 364 P/BV (x) 2.9 3.4 3.0 2.6 2.3 DPS (IDR) 2 11 13 17 19 Div. yield (%) 0.2 1.4 1.6 2.0 2.3 Source: Company, Bahana estimates note: based on 09 October 2014 closing price


0

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('000)(IDR)

Volume (RHS) WSKT IJ Px Last

91.8

(0.1)

12.5 6.9

75.6

38.9

(20)

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20

40

60

80

100

(20)

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40

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80

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ytd 1M 3M 6M 9M 12M

(%) (%)

WSKT IJ relative to JCI Source: Bloomberg



Company information 12M high/low (IDR) : 935/405 12M High/low consensus TP (IDR) : 970 /630Majority shareholder (%) : Republic of Indonesia (68) Shares outstanding (mn)/Free float (%) : 9,666/26.4 Mkt. cap. (IDRbn/USDmn) : 8,168/670 3-m avg.daily t.o.(IDRbn/USDmn) : 60.5/5.0 Bloomberg/Reuters code : WSKT IJ/JWSKT.JK Source: Bloomberg, Reuters; based on 09 October 2014 closing price

2015 Compendium

275

WASKITA KARYA

Profit & loss Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016FSales 8,808 9,687 11,311 13,820 16,696Gross profit 732 911 1,062 1,340 1,636EBITDA 570 711 829 1,056 1,304Depreciation 29 38 43 51 57EBIT 540 672 786 1,006 1,247Net interest inc./(expense) (138) (70) (110) (191) (320)Forex gain/(losses) 2 21 (10) 2 (2)Other income/(expense) 54 (13) 47 60 72Pre-tax profit 460 611 713 877 997Taxes (206) (243) (283) (332) (384)Minority interest - - - - -Extraordinary gain/(losses) - - - - -Net profit 254 368 430 545 613Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016F Cash and equivalents 2,184 1,120 1,232 1,175 930 S-T investments 24 24 24 27 29 Trade receivables 1,464 1,710 1,827 2,233 2,698 Inventories 413 292 430 576 765 Fixed assets 240 415 1,115 1,958 2,794 Other assets 4,041 5,226 5,666 6,853 8,188 Total assets 8,366 8,788 10,296 12,820 15,403 Interest bearing liabilities 1,919 1,623 1,998 2,923 3,623 Trade payables 2,003 2,291 2,676 3,258 3,932 Other liabilities 2,437 2,491 2,928 3,564 4,339 Total liabilities 6,359 6,405 7,602 9,745 11,894 Minority interest - - - - - Shareholders' equity 2,007 2,383 2,694 3,075 3,509 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016FEBIT 540 672 786 1,006 1,247 Depreciation 29 38 43 51 57 Working capital (436) (714) (203) (506) (541)Other operating items (286) (421) (239) (461) (634)Operating cash flow (153) (424) 387 89 129 Net capital expenditure (101) (82) (850) (893) (893)Free cash flow (253) (506) (463) (803) (763)Equity raised/(bought) 1,139 - - - -Net borrowings 714 (296) 375 925 700 Other financing 0 (262) 201 (180) (182)Net cash flow 1,601 (1,064) 113 (58) (245)Cash flow at beginning 583 2,184 1,120 1,232 1,175 Ending cash flow 2,184 1,120 1,232 1,175 930 Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2012A 2013A 2014F 2015F 2016F ROAE (%) 34.5 16.8 16.9 18.9 18.6 ROAA (%) 4.7 4.3 4.5 4.7 4.3 EBITDA margin (%) 6.5 7.3 7.3 7.6 7.8 EBIT margin (%) 6.1 6.9 6.9 7.3 7.5 Net margin (%) 2.9 3.8 3.8 3.9 3.7 Payout ratio (%) 5.2 30.0 30.0 30.0 30.0 Current ratio (x) 1.5 1.4 1.5 1.5 1.4 Interest coverage (x) 3.9 9.6 7.1 5.3 3.9 Net gearing (%) nc 21.1 28.4 56.9 76.8 Debts to assets (%) 22.9 18.5 19.4 22.8 23.5 Debtor turnover (days) 82 88 87 86 86 Creditor turnover (days) 50 59 56 53 53 Inventory turnover (days) 17 14 13 15 16 Source: Company, Bahana estimates

2015 Compendium

276

WIJAYA KARYA BUY PX: IDR2,590 - TP: IDR3,350 Following the successful listing of Wika Beton (WTON) on 8 April

2014, WIKA, the most diversified construction play in our universe, plans to spin off its other subsidiaries like Wika Realty (WR) in 2015-16. With various projects in Java, Sumatra, Kalimantan and Sulawesi from commercial, high-rise and landed housing, WR is seeing growing revenue contributions (7% of the total 2015F top line) to WIKA.

In line with growth in increased domestic electricity demand, WIKA’s EPC (engineering, procurement and construction) segment is growing and should account for 14% of total 2015F revenues.

With expected greater political stability, construction revenue remains WIKA’s backbone and should account for some 33% of total 2015F revenues. Our IDR3,350 TP reflects a 2015F PER of 25x, a 20% premium to the sector, which we think is justified given its excellent management team. Risks include a lower-than-expected state budget.

Financial highlights Year to 31 Dec 2012A 2013A 2014F 2015F 2016F Revenues (IDRbn) 9,905 11,885 14,393 16,135 18,638 EBIT (IDRbn) 870 1,216 1,369 1,577 1,864 Net profit (IDRbn) 476 570 629 818 974 Bahana/cons.(%) - - 91 95 90

EPS (IDR) 76 93 102 133 159 EPS growth (%) 25.4 22.2 10.3 30.0 19.0 EV/EBITDA (x) 17.0 12.3 11.6 10.5 9.1 P/E (x) 34.1 27.9 25.3 19.4 16.3 FCFPS (IDR) 3 (8) (191) (155) (80) FCF yield (%) 0.1 (0.3) (7.4) (6.0) (3.1) BVPS (IDR) 423 480 555 657 776 P/BV (x) 6.1 5.4 4.7 3.9 3.3 DPS (IDR) 22 28 31 40 48 Div. yield (%) 0.9 1.1 1.2 1.5 1.8 Source: Company, Bahana estimates note: based on 09 October 2014 closing price


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Volume (RHS) WIKA IJ Px Last

47.1

(4.9)

7.0 4.7

28.1 28.7

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WIKA IJ relative to JCI

Source: Bloomberg


Major assumptions Year to 31 Dec 2012A 2013A 2014F 2015F 2016F New order books (IDRbn) 16,337 17,700 24,199 29,039 31,562 Total order books (IDRbn) 29,723 34,834 41,897 50,343 58,299 Carried-over (IDRbn) 17,134 17,698 21,304 26,738 31,662 Source: Company, Bahana estimates

Company information

12M high/low (IDR) : 2,940/1,550 12M High/low consensus TP (IDR) : 3,000/2,175 Majority shareholder (%) : Republic of Indonesia (65.1) Shares outstanding (mn)/Free float (%) : 6,149/34.7 Mkt. cap. (IDRbn/USDmn) : 15,926/1,307 3-m avg.daily t.o.(IDRbn/USDmn) : 64.1/5.3 Bloomberg/Reuters code : WIKA IJ/WIKA.JK Source: Bloomberg, Reuters; based on 09 October 2014 closing price

2015 Compendium

277

WIJAYA KARYA

Profit & loss Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016FSales 9,905 11,885 14,393 16,135 18,638Gross profit 1,155 1,584 1,798 2,092 2,460EBITDA 922 1,280 1,475 1,732 2,070Depreciation 52 64 106 156 205EBIT 870 1,216 1,369 1,577 1,864Net interest inc./(expense) - (40) (84) (101) (128)Forex gain/(losses) 3 (31) (10) 12 15Other income/(expense) (40) (128) (87) (95) (103)Pre-tax profit 833 1,017 1,187 1,393 1,648Taxes (309) (392) (475) (484) (559)Minority interest (47) (54) (83) (91) (115)Extraordinary gain/(losses) (0) - - - -Net profit 476 570 629 818 974Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016F Cash and equivalents 1,532 1,386 905 1,059 714 S-T investments - - - - - Trade receivables 1,959 2,132 2,597 2,907 3,359 Inventories 1,144 1,118 1,354 1,518 1,754 Fixed assets 1,184 1,640 2,934 4,428 5,873 Other assets 5,202 6,317 7,334 8,173 8,969 Total assets 11,021 12,594 15,125 18,084 20,669 Interest bearing liabilities 1,255 1,206 2,157 3,414 3,725 Trade payables 2,586 3,116 3,786 4,220 4,850 Other liabilities 4,345 5,045 5,490 6,124 7,032 Total liabilities 8,186 9,368 11,434 13,758 15,607 Minority interest 241 277 284 290 297 Shareholders' equity 2,594 2,949 3,407 4,036 4,765 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016FEBIT 870 1,216 1,369 1,577 1,864Depreciation 52 64 106 156 205Working capital 30 35 (339) (255) (367)Other operating items (333) (937) (345) (481) (495)Operating cash flow 618 378 791 996 1,207Net capital expenditure (600) (429) (1,965) (1,950) (1,700)Free cash flow 18 (51) (1,174) (954) (493)Equity raised/(bought) 173 357 - - -Net borrowings 798 (49) 951 1,257 311Other financing (702) (403) (258) (149) (163)Net cash flow 288 (146) (481) 154 (344)Cash flow at beginning 1,244 1,532 1,386 905 1,059Ending cash flow 1,532 1,386 905 1,059 714Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2012A 2013A 2014F 2015F 2016F ROAE (%) 20.4 20.6 19.8 22.0 22.1 ROAA (%) 4.9 4.8 4.5 4.9 5.0 EBITDA margin (%) 9.3 10.8 10.2 10.7 11.1 EBIT margin (%) 8.8 10.2 9.5 9.8 10.0 Net margin (%) 4.8 4.8 4.4 5.1 5.2 Payout ratio (%) 29.5 30.0 30.0 30.0 30.0 Current ratio (x) 1.1 1.1 1.0 1.0 1.0 Interest coverage (x) na 30.5 16.2 15.6 14.6 Net gearing (%) nc nc 36.8 58.4 63.2 Debts to assets (%) 11.4 9.6 14.3 18.9 18.0 Debtor turnover (days) 79 69 66 66 66 Creditor turnover (days) 109 107 108 108 108 Inventory turnover (days) 53 42 39 39 39 Source: Company, Bahana estimates

2015 Compendium

278

WIJAYA KARYA BETON HOLD PX: IDR1,045 - TP: IDR1,120 WTON, Southeast Asia’s largest concrete maker, has a first-mover

advantage, creating a barrier to entry for other players within the sector and allowing the company to continue to undertake new projects such as the Dompak bridge in Riau, an oil terminal in Tanjung Muncang (Batam) and the Cilacap power plant.

In 2014, we expect new contracts to reach IDR3.1tn, backed by WTON’s quality products and widespread production locations, with 11 plants in Java, Sumatra and Sulawesi. On margins, we expect support to come from its premium products marketed in six selling areas and integrated plants to enhance operating efficiencies.

WTON’s share-price hike post the IPO has us retaining our HOLD rating and IDR1,120 TP, based on an expensive 2015F PER of 24.7x (around an 15% premium to the sector’s target PE). Upside risk: higher-than-expected revenue; downside risk: infrastructure project delays.


EPS (IDR) 27 36 39 45 60 EPS growth (%) 24.2 35.4 7.4 16.0 31.5 EV/EBITDA (x) 31.9 24.8 17.0 13.7 10.8 P/E (x) 38.9 28.7 26.7 23.0 17.5 FCFPS (IDR) 33 (70) (48) (15) 41 FCF yield (%) 3.2 (6.7) (4.6) (1.4) 3.9 BVPS (IDR) 84 102 241 273 314 P/BV (x) 12.5 10.2 4.3 3.8 3.3 DPS (IDR) - - 11 14 18 Div. yield (%) - - 1.0 1.3 1.7 Source: Company, Bahana estimates note: based on 09 October 2014 closing price


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Volume (RHS) WTON IJ Px Last

0.0

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31.2

36.0

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Major assumptions Year to 31 Dec 2012A 2013A 2014F 2015F 2016F Sales volumes (mn tons) 1.4 1.5 1.7 2.0 2.2 Prod. capacity (mn tons/annum) 1.9 2.0 2.2 2.3 2.6 Price/ton (IDRmn) 1.4 1.8 2.0 2.1 2.4 Source: Company, Bahana estimates Company information

Since IPO high/low (IDR) : 1,205/590 Since IPO High/low consensus TP (IDR) : 1,240 /835 Majority shareholder (%) : Wijaya Karya (60) Share outstanding (mn)/Free float (%) : 8,715/35.7 Mkt. cap. (IDRbn/USDmn) : 9,108/747 3-m avg.daily t.o.(IDRbn/USDmn) : 29.8/2.4 Bloomberg/Reuters code : WTON IJ/WTON.JK Source: Bloomberg, Reuters; based on 09 October 2014 closing price

2015 Compendium

279

WIJAYA KARYA BETON

Profit & loss Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016FSales 2,031 2,644 3,403 4,310 5,307Gross profit 265 388 471 615 776EBITDA 276 372 499 644 804Depreciation 44 51 90 105 124EBIT 231 321 410 539 680Net interest inc./(expense) 2 (4) 12 (5) 20Forex gain/(losses) (6) (5) 5 1 1Other income/(expense) 7 2 1 1 1Pre-tax profit 234 329 425 534 700Taxes (54) (87) (106) (133) (175)Minority interest - - (5) (5) (5)Extraordinary gain/(losses) - - - - -Net profit 179 243 314 395 520Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016F Cash and equivalents 340 413 967 254 438 S-T investments - - - - 1 Trade receivables 309 200 535 739 834 Inventories 881 846 1,056 1,330 1,450 Fixed assets 585 1,012 1,780 2,143 2,419 Other assets 23 9 9 15 27 Total assets 2,401 2,917 4,551 4,730 5,483 Interest bearing liabilities 19 539 366 - - Trade payables 421 325 591 667 789 Other liabilities 18 26 34 45 58 Total liabilities 1,797 2,187 2,391 2,293 2,682 Minority interest 46 50 60 60 61 Shareholders' equity 558 680 2,100 2,377 2,740 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016FEBIT 231 321 410 539 680 Depreciation 44 51 90 105 124 Working capital 205 (257) 35 (226) 151 Other operating items - - - - -Operating cash flow 481 115 534 418 955 Net capital expenditure (260) (580) (950) (550) (600)Free cash flow 221 (465) (416) (132) 356 Equity raised/(bought) - - 1,200 - -Net borrowings 4 366 (173) (366) -Other financing (110) 234 37 (97) (15)Net cash flow 115 73 554 (713) 184 Cash flow at beginning 226 340 413 967 254 Ending cash flow 340 413 967 254 438 Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2012A 2013A 2014F 2015F 2016F ROAE (%) 34.7 36.4 38.6 17.7 20.3 ROAA (%) 8.5 9.1 8.4 8.5 10.2 EBITDA margin (%) 13.6 14.1 14.7 14.9 15.1 EBIT margin (%) 11.4 12.1 12.0 12.5 12.8 Net margin (%) 8.8 9.2 9.2 9.2 9.8 Payout ratio (%) - - 30 30 30 Current ratio (x) 1.0 1.1 1.4 1.1 1.1 Interest coverage (x) na 88.7 na 107.1 na Net gearing (%) nc nc nc nc nc Debts to assets (%) 0.8 18.5 8.0 na na Debtor turnover (days) 61 57 58 60 60 Creditor turnover (days) 86 70 59 69 65 Inventory turnover (days) 181 161 122 131 123 Source: Company, Bahana estimates

2015 Compendium

280

WINTERMAR OFFSHORE MARINE BUY PX: IDR1,260 - TP: IDR1,600 As one of the largest domestic providers of offshore marine services,

owning a fleet of 70 OSVs, WINS will likely experience a 7% y-y EPS decline in 2014 due to project approval delays at SKK Migas, partly held back by the legislative and presidential elections.

With the new government in place, WINS should benefit from the USD25bn in total projects including BP Tangguh’s USD12bn LNG production, Chevron’s USD7bn deepwater development and ENI Djangkrik’s USD4bn field. To cater to these projects, WINS has continued with its vessel expansion program, replacing 20 low-tier vessels with 50 higher-margin mid-to-high tier vessels.

Given strong demand, faster project approvals and an improved margin outlook, WINS is a BUY at our DCF-based IDR1,600 TP, despite its substantial market outperformance ytd. The key risk to our call is continued project delays that dampen revenue performance.

Financial highlights Year to 31 Dec 2012A 2013A 2014F 2015F 2016F Revenues (USDmn) 124 187 180 195 216 EBIT (USDmn) 27 47 49 55 63 Net profit (USDmn) 20 27 26 34 40 Bahana/consensus (%) - - 85 92 100

EPS (IDR) 47 82 76 100 118 EPS growth (%) 26.8 73.7 (6.6) 31.5 17.2 EV/EBITDA (x) 16.4 8.7 8.3 7.4 6.4 P/E (x) 26.8 15.4 16.5 12.6 10.7 FCFPS (IDR) (75) (243) 16 50 74 FCF yield (%) (6.0) (19.2) 1.3 4.0 5.8 BVPS (IDR) 359 546 620 709 812 P/BV (x) 3.5 2.3 2.0 1.8 1.6 DPS (IDR) 2 8 11 15 18 Div. yield (%) 0.2 0.6 0.9 1.2 1.4 Source: Company, Bahana estimates note: based on 9 october 2014 closing price


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Volume (RHS) WINS IJ Px Last

69.7

2.1 2.0

41.0

86.5

119.3

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Major assumptions Year to 31 Dec 2012A 2013A 2014F 2015F 2016F Number of vessels (low tier) 32 28 20 16 13 Number of vessels (mid-high tier) 32 43 50 55 62 Total (units) 64 71 70 71 75 Vessels additional (units) (3) 7 (1) 1 4 Source: Company, Bahana estimates Company information

12M high/low (IDR) : 1,410/526 12M High/low consensus TP (IDR) : 1,556/626 Majority shareholder (%) : Wintermarjaya Lestari (48.8) Shares outstanding (mn)/Free float (%) : 4,031/35.4 Mkt. cap. (IDRbn/USDmn) : 5,079/417 3-m avg.daily t.o.(IDRbn/USDmn) : 2.7/0.2 Bloomberg/Reuters code : WINS IJ/WINS.JK Source: Bloomberg, Reuters; based on 9 October 2014 closing price

2015 Compendium

281

WINTERMAR OFFSHORE MARINE

Profit & loss Year to 31 Dec (USDmn) 2012A 2013A 2014F 2015F 2016FSales 124 187 180 195 216Gross profit 35 58 63 69 78EBITDA 40 65 71 80 91Depreciation 14 19 22 25 28EBIT 27 47 49 55 63Net interest inc./(expense) (6) (8) (13) (11) (13)Forex gain/(losses) - - - - -Other income/(expense) 5 1 2 3 3Pre-tax profit 26 40 39 47 52Taxes (2) (3) (3) (3) (4)Minority interest (4) (10) (10) (10) (9)Extraordinary gain/(losses) - - - - -Net profit 20 27 26 34 40Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (USDmn) 2012A 2013A 2014F 2015F 2016F Cash and equivalents 17 25 25 35 29 S-T investments - - - - - Trade receivables 36 57 45 49 62 Inventories - - - - - Fixed assets 248 301 344 377 408 Other assets 38 38 42 47 47 Total assets 339 422 456 508 546 Interest bearing liabilities 98 133 144 152 141 Trade payables 21 30 22 24 26 Other liabilities 43 41 33 35 38 Total liabilities 162 204 198 210 205 Minority interest 23 38 48 57 66 Shareholders' equity 154 181 210 240 275 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (USDmn) 2012A 2013A 2014F 2015F 2016FEBIT 27 47 49 55 63Depreciation 14 19 22 25 28Working capital 7 (10) (5) (4) (6)Other operating items - - (2) (1) (0)Operating cash flow 47 56 65 76 85Net capital expenditure (80) (136) (59) (59) (60)Free cash flow (32) (80) 5 17 25Equity raised/(bought) 5 55 - - -Net borrowings 26 57 8 8 (11)Other financing 9 (24) (14) (16) (19)Net cash flow 8 8 (0) 10 (6)Cash flow at beginning 10 17 25 25 35Ending cash flow 17 25 25 35 29Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2012A 2013A 2014F 2015F 2016F ROAE (%) 13.9 16.1 13.2 15.1 15.5 ROAA (%) 7.0 7.9 5.8 7.0 7.6 EBITDA margin (%) 32.6 35.0 39.6 41.2 42.0 EBIT margin (%) 21.5 25.0 27.3 28.3 29.0 Net margin (%) 16.3 14.5 14.4 17.4 18.4 Payout ratio (%) 3.9 2.6 15.0 15.0 15.0 Current ratio (x) 1.2 1.3 1.5 1.5 1.9 Interest coverage (x) 4.7 5.6 3.9 5.0 4.8 Net gearing (%) 52.3 59.3 56.5 48.8 40.6 Debts to assets (%) 28.9 31.5 31.5 29.9 25.8 Debtor turnover (days) 106 111 91 91 104 Creditor turnover (days) 84 86 69 69 69 Inventory turnover (days) - - - - - Source: Company, Bahana estimates

2015 Compendium

282

XL AXIATA BUY* PX: IDR6,075 - TP: IDR7,400* EXCL, a pure GSM mobile telecommunication operator (2nd largest in

terms of subscribers), will compete in the data segment following the consolidation of Axis Telekom’s infrastructure, which could result in capex savings related to 2G, 3G and LTE/4G.

Earnings growth support will likely come from expansion in the data segment while continued rational competition within the sector should improve margins on favorable data pricing schemes ahead. Furthermore, we expect EBITDA margin support going forward on the back of an increased utilization rate of Axis’ infrastructure in the form of BTSs, frequencies and backbone.

We expect its net gearing to improve on the IDR5.6tn cash from the sale of its 3,500 towers. Hence, we expect a re-rating to the regional sector’s 2015F EV/EBITDA of 6.6x, the basis for our IDR7,400 TP. A downside risk would be higher-than-expected infrastructure costs.


EPS (IDR) 324 121 408 197 310 EPS growth (%) (2.3) (62.6) 237.0 (51.6) 57.3 EV/EBITDA (x) 6.7 6.1 6.2 5.4 4.6 P/E (x) 18.8 50.2 14.9 30.8 19.6 FCFPS (IDR) (224) (313) (807) 209 398 FCF yield (%) (3.7) (5.2) (13.3) 3.4 6.6 BVPS (IDR) 1,801 1,793 2,149 2,287 2,504 P/BV (x) 3.4 3.4 2.8 2.7 2.4 DPS (IDR) 135 63 122 59 93 Div. yield (%) 2.2 1.0 2.0 1.0 1.5 Source: Company, Bahana estimates note: based on 09 October 2014 closing price


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Major assumptions Year to 31 Dec 2012A 2013A 2014F 2015F 2016F Subscribers ('000) 45,755 60,577 66,635 69,966 73,465 Net adds ('000) (651) 14,822 6,058 3,332 3,498 ARPU ('000) 31 27 28 30 32 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 6,925/4,000 12M High/low consensus TP (IDR) : 9,500/5,000 Majority shareholder (%) : Axiata Group (66.5) Shares outstanding (mn)/Free float (%) : 8,534/33.5 Mkt. cap. (IDRbn/USDmn) : 51,847/4,253 3-m avg.daily t.o.(IDRbn/USDmn) : 49.1/4.0 Bloomberg/Reuters code : EXCL IJ/EXCL.JK Source: Bloomberg, Reuters; based on 9 October closing price

2015 Compendium

283

XL AXIATA

Profit & loss Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016FSales 20,970 21,265 23,815 26,761 30,084Gross profit - - - - -EBITDA 9,673 8,544 8,368 9,662 11,304Depreciation 5,066 5,759 6,675 6,834 7,338EBIT 4,679 2,901 2,210 3,347 4,485Net interest inc./(expense) (601) (293) (1,550) (1,209) (1,048)Forex gain/(losses) (299) (1,037) (492) 235 222Other income/(expense) (27) (181) 4,473 (127) (127)Pre-tax profit 3,751 1,390 4,641 2,245 3,531Taxes (987) (357) (1,160) (561) (883)Minority interest Extraordinary gain/(losses) - - - - -Net profit 2,765 1,033 3,481 1,684 2,648Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016F Cash and equivalents 792 1,318 1,488 1,769 2,071 S-T investments Trade receivables 528 1,332 1,721 1,934 2,175 Inventories 50 49 58 63 69 Fixed assets 29,643 30,928 33,771 33,455 32,636 Other assets 2,153 3,505 17,453 18,275 19,040 Total assets 35,456 40,278 58,762 60,295 61,385 Interest bearing liabilities 13,520 17,822 25,322 24,322 22,022 Trade payables 2,654 3,226 6,173 6,690 7,314 Other liabilities 3,912 3,930 8,927 9,764 10,676 Total liabilities 20,086 24,977 40,421 40,775 40,011 Minority interest - - - - - Shareholders' equity 15,370 15,300 18,340 19,519 21,373 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (IDRbn) 2012A 2013A 2014F 2015F 2016FEBIT 4,679 2,901 2,210 3,347 4,485Depreciation 5,066 5,759 6,675 6,834 7,338Working capital 3,209 4,589 7,932 8,665 9,532Other operating items (5,831) (8,989) (17,707) (11,059) (11,958)Operating cash flow 7,123 4,260 (890) 7,786 9,397Net capital expenditure (9,036) (6,932) (6,000) (6,000) (6,000)Free cash flow (1,913) (2,673) (6,890) 1,786 3,397Equity raised/(bought) - - - - -Net borrowings 2,794 4,302 7,500 (1,000) (2,300)Other financing (1,087) (1,103) (441) (505) (795)Net cash flow (206) 526 170 281 302Cash flow at beginning 998 792 1,318 1,488 1,769Ending cash flow 792 1,318 1,488 1,769 2,071Source: Company, Bahana estimates


2015 Compendium

APPENDIX

2015 Compendium

285

APPENDIX I: STOCK HIGHLIGHTS Ticker Rating Price TP Shares Free float Mkt cap 3M avg to

(IDR) (IDR) (m) (%) (IDRb) (IDRb) 2014F 2015F 2014F 2015F 2014F 2015F 2014F 2015F 2014F 2015F 2014F 2015F 2014F 2015F 2014F 2015F 2014F 2015F 2014F 2015F 2014F 2015F 2014F 2015FAVIATION N 13,297 1 50,263 58,090 (188) 3,209 (1,202) 962 (0.2) 2.1 4.3 14.1 12.2 2.9 2.0 1.8 0.3 0.3 51.8 72.0 (2.0) 10.4 (0.8) 3.7 14.2 (1.7)GIAA IJ* HOLD 418 460 25,869 39.5 10,813 1 48,773 56,414 (519) 2,838 (1,310) 842 na na na 12.6 13.6 2.3 0.9 0.9 0.0 0.0 63.7 88.5 (9.8) 6.1 (3.6) 2.1 9.4 (9.1)CASS IJ HOLD 1,190 1,150 2,087 36.6 2,483 0 1,491 1,676 331 371 108 121 (1.3) 11.3 22.9 20.6 6.0 5.2 6.7 5.5 1.5 1.7 nc nc 32.1 29.3 11.3 11.1 34.9 30.3

AUTOMOTIVE UW 289,384 122 233,127 244,111 21,669 22,730 21,032 21,859 8.8 3.9 14.2 13.6 12.0 11.3 2.8 2.5 3.2 3.3 52.4 46.6 21.5 19.8 8.7 8.5 15.0 14.3ASII IJ HOLD 6,725 6,600 40,484 49.9 272,252 116 200,167 207,953 20,302 21,169 20,104 20,820 3.5 3.6 13.5 13.1 11.3 10.8 2.9 2.5 3.3 3.4 44.4 37.4 22.4 20.6 9.1 8.9 15.7 15.0IMAS IJ REDUCE 4,305 3,000 2,765 10.5 11,905 1 19,719 21,998 370 469 392 412 (18.5) 5.0 30.4 28.9 28.3 26.4 1.9 1.8 0.8 0.9 219.3 241.1 6.5 6.5 1.7 1.6 3.2 2.1GJTL IJ HOLD 1,500 1,600 3,485 40.4 5,227 5 13,242 14,160 996 1,093 536 627 345.1 17.2 9.8 8.3 6.4 5.7 0.9 0.8 2.6 3.0 88.4 80.1 9.4 10.5 3.5 4.0 1.3 5.3

BANKS N 986,038 1,074 243,883 275,039 101,336 114,882 81,826 92,669 11.9 13.3 13.2 11.7 na na 2.8 2.4 2.3 2.5 na na 22.9 21.9 3.0 3.0 na na BBCA IJ BUY 12,750 14,300 24,655 50.8 314,351 162 45,064 50,025 19,957 22,707 16,208 18,457 13.7 13.9 19.4 17.0 na na 4.1 3.4 1.0 1.2 na na 23.0 21.8 3.1 3.1 na na BBRI IJ BUY 10,250 12,500 24,669 43.2 252,859 372 59,582 68,018 28,372 32,154 24,003 27,081 12.5 12.8 10.5 9.3 na na 2.7 2.2 2.8 2.9 na na 27.6 25.8 3.6 3.6 na na BMRI IJ BUY 9,550 11,600 23,333 40.0 222,833 286 57,004 64,467 26,275 29,536 20,513 23,057 12.7 12.4 10.9 9.7 na na 2.2 1.9 2.8 2.8 na na 21.7 21.0 2.6 2.6 na na BBNI IJ BUY 5,400 6,900 18,649 39.8 100,703 144 32,902 37,324 13,025 14,752 10,676 12,112 17.9 13.5 9.4 8.3 na na 1.8 1.6 3.2 3.3 na na 21.2 20.8 2.6 2.6 na na BDMN IJ HOLD 3,900 3,700 9,585 32.4 37,380 18 21,369 23,775 4,631 5,378 3,448 4,005 (14.7) 16.2 10.8 9.3 na na 1.1 1.0 3.2 3.8 na na 10.7 11.5 1.8 1.9 na na BTPN IJ HOLD 4,470 4,600 5,840 72.3 26,106 1 7,894 8,905 2,843 3,246 2,266 2,588 6.3 14.2 11.5 10.1 na na 2.1 1.8 0.0 1.5 na na 20.5 19.2 3.1 3.0 na na BBTN IJ BUY 1,095 1,300 10,568 35.0 11,572 68 6,699 7,605 2,006 2,288 1,466 1,669 (6.1) 13.8 7.9 6.9 na na 0.9 0.8 3.8 4.0 na na 12.2 12.7 1.0 1.0 na na BJBR IJ HOLD 760 830 9,696 25.0 7,369 16 6,247 6,822 1,502 1,725 1,146 1,317 (16.7) 15.0 6.4 5.6 na na 1.0 1.0 10.9 11.2 na na 16.7 18.0 1.5 1.5 na na BJTM IJ BUY 436 500 14,918 18.0 6,504 3 3,337 3,757 1,400 1,600 1,025 1,171 24.4 14.2 6.3 5.6 na na 1.1 1.0 10.2 11.3 na na 17.3 18.3 2.9 2.9 na na BBKP IJ** HOLD 700 770 9,087 40.3 6,361 6 3,786 4,341 1,325 1,496 1,073 1,212 2.4 12.9 5.9 5.2 na na 0.9 0.8 3.8 3.8 na na 16.2 16.2 1.4 1.3 na na

CEMENT N 192,395 227 62,649 69,742 16,472 18,428 12,750 14,228 9.7 11.6 15.1 13.5 9.7 8.9 3.3 2.9 3.3 3.5 6.6 9.7 23.2 23.1 17.3 16.8 36.3 137.8SMGR IJ BUY 14,825 17,600 5,932 49.0 87,935 123 28,385 31,334 7,673 8,451 5,888 6,583 10.0 11.8 14.9 13.4 10.0 9.4 3.8 3.3 3.3 3.4 3.0 9.2 26.6 26.1 17.8 17.0 27.2 26.1INTP IJ BUY 22,150 25,000 3,681 36.0 81,539 93 22,170 24,783 6,530 7,423 5,436 6,054 8.3 11.4 15.0 13.5 9.8 8.6 3.3 2.9 3.3 3.7 nc nc 22.6 22.6 19.4 19.2 51.6 293.4SMCB IJ REDUCE 2,520 2,150 7,663 19.4 19,311 6 10,878 12,170 2,030 2,240 1,135 1,272 19.2 12.2 17.0 15.2 8.7 7.9 2.1 2.0 3.2 3.6 52.4 54.4 12.6 13.3 7.0 7.0 8.8 8.7SMBR IJ REDUCE 367 320 9,838 23.8 3,610 5 1,217 1,455 238 313 291 318 (16.0) 9.3 12.4 11.3 5.9 7.1 1.3 1.2 2.0 2.2 nc nc 11.3 11.3 10.2 10.2 62.6 38.0

COAL & MINING CONTRACTING UW 177,748 234 183,512 191,137 22,375 25,709 9,543 11,872 13.3 (1.2) 12.1 12.1 6.8 6.7 2.0 1.9 4.0 4.2 9.3 7.7 19.3 16.7 10.5 9.8 23.5 22.9UNTR IJ REDUCE 19,325 18,000 3,730 40.4 72,085 74 53,767 56,127 7,676 7,426 5,905 5,827 22.2 (1.3) 12.2 12.4 5.7 5.6 2.0 1.8 3.3 3.2 nc nc 17.1 15.5 10.1 9.5 15.6 18.9ADRO IJ* REDUCE 1,140 1,000 31,986 41.0 36,464 63 40,632 40,675 5,288 5,902 2,976 3,561 7.2 17.7 12.3 10.4 5.7 5.3 1.0 1.0 3.2 3.8 45.4 37.4 8.9 9.9 3.7 4.5 5.9 5.8ITMG IJ* REDUCE 25,500 20,000 1,130 35.0 28,813 25 24,183 23,456 3,780 3,553 2,959 2,439 20.1 (19.0) 9.7 12.0 5.1 5.5 2.3 2.3 7.8 8.1 nc nc 25.1 20.1 17.6 14.2 41.8 36.1PTBA IJ REDUCE 13,000 11,700 2,304 29.3 29,954 37 12,449 13,821 1,981 1,849 1,934 1,901 5.9 (1.7) 15.5 15.8 12.7 13.3 3.1 2.9 3.9 3.8 nc nc 25.5 23.4 16.1 14.6 54.6 46.9HRUM IJ* REDUCE 1,840 1,500 2,704 29.3 4,975 14 6,920 6,999 537 663 432 514 (13.3) 19.1 14.7 12.3 5.5 4.4 2.1 1.9 4.4 5.1 nc nc 14.2 20.7 8.6 11.6 29.5 30.9BUMI IJ* REDUCE 149 120 36,627 83.5 5,457 21 45,562 50,060 3,113 6,315 (4,662) (2,370) (35.7) (49.2) na na 6.6 4.3 (0.3) (0.2) na na na na 56.9 20.2 (5.6) (2.8) (26.9) (21.2)

CONS. & TOLL ROADS N 108,888 295 88,002 102,246 8,026 9,311 4,031 4,923 12.7 24.4 22.2 19.2 14.3 14.7 3.7 3.3 1.3 1.6 61.3 76.6 18.2 17.1 4.9 5.0 23.4 15.3JSMR IJ BUY 6,300 7,200 6,800 30.0 42,840 40 7,589 8,590 2,997 3,333 1,614 1,716 20.8 26.5 26.6 25.0 14.6 13.8 4.1 3.7 1.5 1.6 114.8 133.8 16.4 15.7 5.1 4.7 8.2 8.0WIKA IJ BUY 2,590 3,350 6,149 34.7 15,926 64 14,393 16,135 1,369 1,577 629 818 10.3 30.0 25.3 19.4 11.6 10.5 4.7 3.9 1.2 1.5 36.8 58.4 19.8 22.0 4.5 4.9 22.4 16.9CMNP IJ HOLD 3,115 3,300 2,200 62.5 6,853 1 1,099 1,221 522 562 430 453 6.8 5.5 16.0 15.1 8.9 8.3 1.9 1.7 1.4 1.5 nc nc 12.8 12.1 8.9 9.0 17.8 16.7PTPP IJ BUY 2,270 2,800 4,842 42.8 10,992 35 12,914 16,652 1,227 1,560 499 678 18.5 35.9 22.0 16.2 6.9 5.5 4.7 3.8 1.4 1.8 nc nc 23.0 25.9 3.8 4.4 27.1 31.5WSKT IJ BUY 845 1,020 9,666 26.4 8,168 60 11,311 13,820 786 1,006 430 545 16.9 26.7 18.9 14.9 10.7 9.4 3.0 2.6 1.6 2.0 28.4 56.9 16.9 18.9 4.5 4.7 15.9 13.6WTON IJ HOLD 1,045 1,120 8,715 35.7 9,108 30 3,403 4,310 410 539 314 395 7.4 16.0 26.7 23.0 17.0 13.7 4.3 3.8 1.0 1.3 nc nc 38.6 17.7 8.4 8.5 46.6 27.3ADHI IJ BUY 2,525 4,000 1,801 49.0 4,548 53 10,760 13,084 941 1,174 364 540 (10.3) 48.3 12.5 8.4 5.0 4.6 2.4 1.9 1.6 2.4 31.7 49.9 21.2 24.9 3.7 5.1 32.7 19.1KRAS IJ* REDUCE 468 370 15,775 20.0 7,383 2 24,597 26,204 (393) (655) (393) (393) na (4.0) na na 40.6 62.9 0.6 0.6 0.0 0.0 107.8 134.3 (3.2) (3.3) (1.3) (1.1) (0.9) (1.7)TOTL IJ REDUCE 900 825 3,410 34.8 3,069 10 1,935 2,230 167 214 143 171 (26.2) 19.1 21.4 18.0 14.2 11.5 3.9 3.5 2.3 2.8 nc nc 18.7 20.7 6.6 7.7 234.1 51.7

CONSUMER - DISCRETIONARY N 231,261 313 107,536 123,624 10,578 12,187 7,568 8,686 0.2 17.4 33.2 28.3 18.4 15.8 33.3 10.2 1.3 1.4 11.8 10.2 19.8 57.6 23.4 22.5 25.4 30.5SCMA IJ REDUCE 3,525 2,550 14,622 25.5 51,541 32 4,199 4,739 1,991 2,224 1,476 1,645 15.4 11.4 34.9 31.3 23.9 21.1 14.2 11.4 1.2 1.4 nc nc 46.8 40.8 33.3 30.6 58.9 80.8LPPF IJ BUY 15,800 19,000 2,918 65.4 46,103 72 8,079 9,622 2,140 2,584 1,574 1,984 36.9 26.0 29.3 23.2 19.1 15.3 138.4 27.3 1.4 1.7 nc nc na 196.4 50.2 50.0 na na MNCN IJ REDUCE 2,945 2,300 14,180 33.8 41,761 20 7,114 7,665 2,738 2,780 1,804 1,811 6.0 0.4 23.2 23.1 14.9 14.7 4.8 4.3 2.0 2.0 3.3 4.5 22.9 20.4 16.8 14.9 23.2 22.5MPPA IJ BUY 2,805 3,900 5,378 18.1 15,085 134 14,371 17,276 431 539 433 449 (2.7) 3.8 34.9 33.6 20.0 16.1 4.2 3.9 1.1 1.2 nc nc 12.6 12.2 6.4 6.2 13.3 69.0ACES IJ HOLD 835 900 17,150 40.0 14,320 11 4,648 5,250 646 707 567 619 11.4 9.2 25.2 23.1 18.8 16.8 6.0 5.1 0.7 1.4 nc nc 26.5 24.0 20.7 19.1 32.4 29.0HERO IJ REDUCE 2,550 1,500 4,184 16.5 10,668 0 14,259 15,745 333 380 271 291 (62.2) 7.4 39.4 36.7 19.2 17.0 1.9 1.8 na na nc nc 4.9 5.0 3.4 3.4 20.5 6.1RALS IJ REDUCE 830 720 7,096 40.5 5,890 10 8,471 8,870 388 371 405 390 (6.7) (3.7) 14.5 15.1 7.5 7.3 1.7 1.6 3.8 3.6 nc nc 12.1 11.0 9.0 8.1 23.7 19.3MAPI IJ HOLD 5,275 5,750 1,660 44.0 8,757 10 11,937 13,993 695 839 251 353 (23.3) 40.6 34.8 24.8 10.1 8.7 3.3 3.0 0.8 0.6 115.5 106.9 9.9 12.7 3.0 3.9 7.8 4.8MLPL IJ BUY 985 1,400 10,065 68.0 9,914 18 17,456 20,730 24 85 136 165 (91.0) 21.0 72.8 60.2 10.8 9.5 1.4 1.4 2.2 0.2 nc nc 1.9 2.3 0.7 0.8 27.0 0.5MYOR IJ REDUCE 29,700 25,500 894 66.9 26,562 5 15,343 17,742 1,153 1,635 620 948 (37.9) 52.9 42.9 28.0 18.5 13.6 6.0 5.1 0.4 0.7 59.6 46.2 15.2 20.2 5.7 7.6 18.9 9.9RANC IJ HOLD 422 440 1,564 26.8 660 0 1,659 1,993 39 44 31 31 (12.8) 1.9 21.6 21.2 8.6 7.5 1.7 1.6 na na 8.4 12.2 7.5 7.2 4.4 4.3 10.1 2.4

ROAE (%) ROAA (%) ROIC (%)EV/EBITDA (x) P/BV (x) Yield (%) Net gearing (%)Revenue (IDRb) Opt. profit (IDRb) Net profit (IDRb) EPS growth (%) PER (x)

Source: Bloomberg, Bahana estimates; note: based on 09 October 2014 closing price

2015 Compendium

286

APPENDIX I: STOCK HIGHLIGHTS (CONT’D) Ticker Rating Price TP Shares Free float Mkt cap 3M avg to

(IDR) (IDR) (m) (%) (IDRb) (IDRb) 2014F 2015F 2014F 2015F 2014F 2015F 2014F 2015F 2014F 2015F 2014F 2015F 2014F 2015F 2014F 2015F 2014F 2015F 2014F 2015F 2014F 2015F 2014F 2015FCONSUMER - STAPLES OW 575,233 288 231,149 260,313 31,942 37,268 21,395 25,005 16.6 18.2 31.4 26.3 21.7 18.0 23.1 19.3 2.2 2.5 42.6 28.6 61.8 65.1 22.1 23.9 56.3 47.3UNVR IJ BUY 30,700 37,500 7,630 15.0 234,241 41 35,313 40,577 7,408 9,068 5,517 6,739 3.1 22.2 42.5 34.8 30.9 25.2 50.1 41.6 2.2 2.7 58.1 32.4 123.5 130.8 37.9 41.8 109.8 89.2GGRM IJ BUY 55,800 70,000 1,924 23.5 107,364 41 61,842 70,014 8,421 9,550 5,358 6,095 23.8 13.7 20.0 17.6 12.5 11.1 3.3 2.9 2.1 2.4 45.1 43.5 17.3 17.6 9.8 9.9 11.7 12.1KLBF IJ BUY 1,655 1,975 46,875 43.3 77,578 98 18,035 20,555 2,841 3,279 2,122 2,449 10.6 15.4 36.6 31.7 24.2 20.9 8.2 7.1 1.2 1.4 nc nc 24.2 24.1 17.4 17.5 30.3 27.3INDF IJ BUY 6,775 8,300 8,780 49.9 59,487 60 68,383 75,163 8,169 9,203 4,246 4,825 69.6 13.6 14.0 12.3 7.6 6.1 2.3 2.1 3.7 4.2 94.7 63.4 17.2 17.8 4.9 4.9 8.3 9.7ICBP IJ BUY 11,075 13,300 5,831 19.5 64,578 34 30,616 34,517 3,415 4,091 2,621 3,110 17.8 18.7 24.6 20.8 16.4 13.9 4.6 4.1 1.8 2.1 nc nc 19.7 20.8 11.6 12.4 26.5 23.6TSPC IJ BUY 2,470 2,800 4,500 22.7 11,115 2 7,431 8,243 726 842 690 769 8.7 11.5 16.1 14.5 10.9 9.3 2.6 2.3 2.5 2.8 nc nc 17.1 17.1 12.2 12.2 31.9 29.6SIDO IJ BUY 630 770 15,000 19.0 9,450 4 2,535 2,937 463 577 429 486 (4.4) 13.3 22.0 19.4 17.4 13.2 5.1 4.2 5.5 0.9 nc nc 19.2 23.8 16.7 20.2 32.9 29.6ROTI IJ BUY 1,060 1,400 5,062 29.3 5,366 5 1,901 2,283 254 309 206 258 30.6 25.2 26.0 20.8 17.4 14.4 5.7 4.7 1.0 1.2 55.6 44.0 23.9 24.9 10.8 12.1 13.9 14.7KAEF IJ BUY 1,090 1,400 5,554 10.0 6,054 3 5,093 6,024 245 350 206 273 (3.9) 32.2 29.3 22.2 24.1 17.8 3.4 3.0 0.7 0.9 24.2 34.2 12.2 14.5 7.3 7.8 17.9 11.9

INDUSTRIAL ESTATES N 18,891 50 9,975 10,337 2,724 2,792 2,004 2,142 105.5 9.1 10.2 9.2 7.8 7.1 1.6 1.4 1.4 1.5 12.8 11.8 18.6 16.6 9.9 9.4 32.4 19.1KIJA IJ BUY 260 450 20,235 80.1 5,261 16 2,896 2,995 859 868 554 616 442.0 11.3 9.4 8.5 7.3 7.0 1.1 1.0 3.2 3.5 40.8 34.2 12.6 12.7 6.3 6.2 1.7 8.7BEST IJ BUY 545 690 9,645 38.6 5,257 15 751 893 432 514 352 426 (52.6) 20.9 14.9 12.3 12.1 10.4 1.9 1.6 0.3 0.4 5.1 8.2 13.3 14.1 9.9 10.7 38.3 13.0SSIA IJ BUY 685 820 4,705 68.5 3,223 11 4,730 4,787 692 637 436 411 (36.9) (5.8) 7.4 7.8 3.3 3.4 1.2 1.1 2.7 2.5 nc nc 17.7 14.8 7.1 6.1 47.2 22.1LPCK IJ BUY 7,400 9,600 696 57.8 5,150 8 1,598 1,662 742 774 662 689 12.1 4.1 7.8 7.5 6.7 6.2 2.1 1.6 na na nc nc 30.8 24.4 15.3 13.3 48.6 34.1

METALS N 59,714 93 30,477 30,744 4,019 3,603 2,018 2,068 259.5 (18.8) 16.3 25.2 82.5 25.1 1.5 1.5 2.5 1.9 19.3 17.7 6.7 5.9 4.5 4.0 3.1 6.4INCO IJ* BUY 3,700 4,700 9,936 20.5 36,764 53 13,639 11,669 2,612 1,862 1,795 1,272 324.1 (27.4) 21.0 28.9 9.3 18.8 1.7 1.8 3.6 2.6 3.4 0.6 8.5 6.0 6.4 4.7 2.3 8.9ANTM IJ REDUCE 1,020 720 9,538 35.0 9,729 19 7,957 8,764 (397) (164) (638) (169) na na na na 462.0 74.0 0.8 0.8 na na 44.4 59.2 (5.1) (1.4) (3.0) (0.8) 2.7 (3.7)TINS IJ BUY 1,235 1,550 7,448 35.0 9,198 19 5,758 6,891 737 801 418 489 (36.6) 1.2 19.0 18.8 7.8 7.3 1.8 1.7 2.3 2.7 5.1 7.8 8.4 9.4 5.4 6.3 10.5 7.6PSAB IJ* BUY 760 1,400 5,292 5.4 4,022 2 3,124 3,421 1,067 1,103 444 476 na 14.5 8.3 7.2 6.3 5.8 1.3 1.1 na na 138.3 97.1 16.4 16.0 4.8 5.2 (5.1) 6.7

OIL & GAS N 176,312 140 75,888 87,634 16,058 18,847 10,557 12,221 (3.7) 40.3 21.0 15.1 11.8 11.0 3.8 3.4 2.8 3.2 16.7 17.3 24.8 24.1 12.8 12.0 40.3 25.7PGAS IJ* BUY 5,775 7,000 24,242 43 139,995 99 40,734 46,696 11,722 12,638 9,342 10,067 (8.8) 7.8 15.5 14.4 11.8 11.6 4.1 3.6 3.2 3.5 nc nc 28.6 26.9 15.1 13.8 49.3 30.6AKRA IJ HOLD 4,870 4,775 3,903 41 19,008 33 22,455 25,904 1,039 1,148 755 881 16.5 16.7 25.0 21.5 15.7 11.7 3.6 3.3 1.6 1.9 59.5 50.5 15.1 16.1 5.3 6.1 9.4 11.7MEDC IJ* BUY 3,670 4,100 3,332 49 12,230 6 10,559 12,709 2,714 4,403 154 869 13.8 460.5 78.9 14.1 6.6 5.2 1.2 1.1 0.5 2.8 124.3 150.3 1.5 8.1 0.5 2.4 0.8 0.7WINS IJ* BUY 1,260 1,600 4,031 35 5,079 2 2,140 2,326 584 658 307 404 18.3 14.2 16.5 12.6 8.3 7.4 2.0 1.8 0.9 1.2 56.5 48.8 13.2 15.1 5.8 7.0 2.0 1.4

PLANTATIONS N 73,294 135 49,871 59,198 9,326 11,542 5,740 7,338 66.8 18.1 13.3 11.3 7.8 6.8 2.1 1.8 3.0 3.7 26.0 22.4 17.9 18.1 11.6 12.1 12.0 15.3AALI IJ BUY 22,325 31,400 1,575 20.3 35,156 42 19,176 22,478 4,006 4,657 2,918 3,407 62.0 16.8 12.0 10.3 8.0 6.8 2.9 2.5 3.7 4.4 19.1 10.1 26.6 26.1 17.4 17.6 16.6 22.3SIMP IJ HOLD 780 835 15,816 21.6 12,337 6 15,547 17,092 2,137 2,405 812 908 54.9 11.9 15.2 13.6 5.8 5.3 0.9 0.8 2.0 2.2 42.5 45.7 5.8 6.2 2.8 3.0 2.9 4.1LSIP IJ HOLD 1,900 1,975 6,823 40.5 12,963 57 4,640 5,080 1,112 1,235 878 1,069 14.2 21.8 14.8 12.1 8.8 7.9 1.8 1.6 2.7 3.3 nc nc 12.7 14.2 10.5 11.7 15.9 15.9BWPT IJ REDUCE 488 370 4,504 32.3 2,198 27 1,742 4,799 559 1,468 216 804 (20.8) (20.2) 15.3 19.1 12.8 11.8 0.3 1.1 0.2 0.8 53.7 55.2 2.9 6.1 1.6 3.8 3.6 1.7ANJT IJ* HOLD 1,140 1,200 3,333 10.0 3,800 0 1,254 1,446 239 286 158 267 (21.2) 68.0 19.1 11.3 7.7 6.9 1.1 1.0 2.6 4.4 1.0 3.5 4.6 7.7 4.1 6.6 7.5 5.0SGRO IJ BUY 1,880 2,500 1,890 33.0 3,553 2 3,018 3,343 515 632 320 389 168.6 21.7 11.1 9.1 7.1 6.1 1.3 1.2 4.5 5.5 70.1 76.3 11.7 13.3 6.4 6.8 3.3 7.4TBLA IJ BUY 665 870 4,942 41.2 3,286 2 4,495 4,922 757 820 439 463 420.1 5.5 7.5 7.1 6.1 4.9 1.4 1.2 0.5 2.7 102.4 96.0 21.6 18.8 6.6 6.3 2.2 10.0

POULTRY N 81,164 47 59,256 67,118 6,263 7,851 3,976 5,076 17.5 26.8 20.8 16.5 14.1 11.3 4.7 3.9 1.2 1.4 46.2 37.0 24.7 25.7 14.4 15.5 20.8 18.9CPIN IJ BUY 3,815 4,800 16,398 44.5 62,558 31 29,307 33,374 4,018 4,916 2,843 3,491 12.3 22.8 22.0 17.9 15.3 12.3 5.2 4.3 1.2 1.4 21.6 13.1 25.9 26.2 16.5 17.5 24.3 21.6JPFA IJ BUY 1,190 1,400 10,661 42.5 12,686 9 25,329 28,238 1,779 2,274 827 1,142 38.9 38.1 15.3 11.1 8.9 7.4 2.3 2.0 0.9 1.3 143.4 134.8 16.2 19.2 5.1 6.2 6.3 6.9MAIN IJ BUY 3,305 3,800 1,791 44.1 5,919 8 4,620 5,507 466 660 306 443 26.5 45.1 19.4 13.3 12.0 8.8 4.0 4.0 1.0 1.5 97.8 79.4 30.9 34.3 12.4 15.0 15.2 15.4

PROPERTY N 121,201 301 43,429 46,253 15,843 16,052 12,686 11,350 39.3 (5.8) 10.3 11.4 8.2 8.2 2.2 1.9 2.4 2.2 19.0 19.5 24.2 18.7 9.6 7.3 22.8 22.5BSDE IJ BUY 1,500 1,900 18,372 39.9 27,558 33 5,602 6,128 2,742 2,909 3,734 2,266 32.2 (39.3) 7.4 12.2 9.3 8.9 2.1 1.8 2.7 1.6 0.5 7.7 31.6 16.0 15.2 8.2 35.7 31.8LPKR IJ BUY 960 1,200 23,078 82.1 22,155 98 11,847 9,365 3,708 2,280 2,542 1,510 106.9 (40.6) 8.7 14.7 7.4 11.2 1.5 1.4 2.9 1.7 52.4 49.4 18.3 9.8 7.3 3.8 7.7 12.2PWON IJ BUY 402 470 48,160 43.5 19,360 39 3,763 4,801 1,941 2,417 1,534 1,928 35.4 25.7 12.6 10.0 8.8 7.1 3.7 2.8 1.6 2.0 nc nc 33.8 32.1 13.3 13.1 27.7 34.0SMRA IJ BUY 1,165 1,600 14,427 67.8 16,807 38 4,436 5,165 1,490 1,663 1,122 1,259 1.8 12.2 15.0 13.3 9.9 8.8 3.0 2.5 2.0 2.0 nc nc 23.3 22.2 7.2 6.8 32.8 23.5CTRA IJ BUY 1,000 1,245 15,166 61.3 15,166 26 6,929 8,309 2,229 2,530 1,305 1,476 33.6 13.1 11.6 10.3 6.0 5.4 2.1 1.8 2.6 2.9 nc nc 19.0 18.6 6.0 6.0 19.5 21.0ASRI IJ BUY 442 585 19,649 48.2 8,685 36 4,112 4,891 1,835 2,092 1,258 1,534 43.5 21.9 6.9 5.7 7.1 6.5 1.4 1.1 2.9 3.5 76.7 73.0 22.0 22.2 7.9 8.5 12.6 12.6APLN IJ HOLD 348 340 20,501 29.9 7,134 25 5,310 5,890 1,375 1,519 884 995 3.8 12.6 8.1 7.2 5.9 5.0 1.1 1.0 2.5 2.8 42.3 30.6 14.5 14.5 4.2 4.0 11.1 10.3CTRP IJ HOLD 705 750 6,150 43.8 4,336 6 1,431 1,704 524 643 308 381 (27.0) 23.9 14.1 11.4 9.5 8.7 1.0 1.0 2.1 2.6 35.8 46.8 7.4 8.7 3.9 4.3 9.6 5.7

TEXTILE N 2,287 7 6,427 7,747 982 1,124 403 585 13.9 45.2 5.7 3.9 4.5 4.3 0.9 0.7 3.5 5.1 nc nc 16.3 20.4 6.5 7.8 7.7 7.7SRIL IJ BUY 123 220 18,593 43.9 2287 7 6,427 7,747 982 1,124 403 585 13.9 45.2 5.7 3.9 4.5 4.3 0.9 0.7 3.5 5.1 117.2 121.8 16.3 20.4 6.5 7.8 7.7 7.7

TELCOS OW 355,140 313 171,225 189,016 36,571 41,766 20,543 21,217 71.2 15.1 19.8 16.8 7.4 6.6 4.6 4.0 2.9 3.2 35.5 27.5 22.8 23.5 10.1 10.6 18.4 18.8TLKM IJ BUY 2,800 3,350 100,800 48.8 282,240 233 90,444 98,555 29,191 32,603 15,368 17,398 7.5 13.2 18.4 16.2 6.3 5.7 4.3 3.8 3.5 4.0 11.9 9.5 24.3 25.0 11.4 11.9 22.9 22.0EXCL IJ BUY 6,075 7,400 8,534 33.5 51,847. 49 23,815 26,761 2,210 3,347 3,481 1,684 237.0 (51.6) 14.9 30.8 9.0 7.7 2.8 2.7 2.0 1.0 130.0 115.5 20.7 8.9 7.0 2.8 3.4 9.4TOWR IJ BUY 4,195 5,100 10,203 61.0 42,852 0 3,861 4,418 2,091 2,501 1,079 1,444 540.1 33.9 39.7 29.6 15.7 13.5 9.2 7.1 na na 145.4 96.3 26.0 27.0 6.6 8.4 1.5 9.4ISAT IJ BUY 3,850 4,500 5,434 20.7 20,921 3 24,273 25,254 2,072 2,121 18 (30) na na na na 3.7 3.5 1.3 1.3 0.0 0.0 120.2 120.1 0.1 (0.2) 0.0 (0.3) (7.5) 0.0TELE IJ BUY 885 1,160 7,033 39.1 6,227 7 14,348 18,113 531 668 340 411 15.3 21.0 18.3 15.1 13.5 11.8 2.6 2.4 1.4 1.7 58.6 51.4 18.7 17.1 8.3 8.2 18.1 11.5ERAA IJ HOLD 1,000 1,060 2,900 39.7 2,900 21 14,485 15,914 476 526 257 309 (26.2) 20.2 11.3 9.4 8.4 7.7 1.0 0.9 3.5 4.3 50.0 48.1 8.9 9.9 4.7 5.1 10.3 6.2

TRANSPORTATION N 3,149 20 2,002 2,419 519 621 209 239 3.3 13.8 15.5 13.6 6.1 5.4 2.3 2.1 1.8 2.0 122.6 134.8 15.5 15.5 5.1 4.9 8.6 7.8TAXI IJ BUY 1,165 1,380 2,146 49.0 2,500 19 854 1,023 320 367 151 170 13.9 12.7 16.6 14.7 6.6 5.9 2.7 2.4 1.6 1.8 111.9 124.0 17.7 17.4 5.8 5.5 9.5 9.1ASSA IJ REDUCE 191 190 3,398 39.4 649 0 1,148 1,396 200 254 58 69 (37.3) 18.0 11.2 9.5 4.2 3.7 0.8 0.7 2.2 2.6 163.8 176.2 6.9 7.8 2.5 2.5 5.1 2.7Market N 3,465,393 3,660 1,648,673 1,824,769 304,515 347,921 215,079 242,411 14.3 11.6 19.1 17.0 10.9 8.8 8.5 6.0 2.5 2.7 23.0 19.5 28.7 31.1 11.3 11.5 22.3 25.7

ROAE (%) ROAA (%) ROIC (%)EV/EBITDA (x) P/BV (x) Yield (%) Net gearing (%)Revenue (IDRb) Opt. profit (IDRb) Net profit (IDRb) EPS growth (%) PER (x)

Source: Bloomberg, Bahana estimates; note: based on 09 October 2014 closing price

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APPENDIX II: EARNINGS REVISIONS TABLE Ticker Valuation basis Ticker Valuation basis

New Old 2014F 2015F 2016F 2014F 2015F 2016F New Old New Old 2014F 2015F 2016F 2014F 2015F 2016F New OldAVIATION INDUSTRIAL ESTATESGIAA* 460 - (110) 71 146 - - - HOLD - Adjusted EV/EBITDAR BEST 690 690 352 426 577 355 425 586 BUY BUY 40% discount to NAVCASS 1,150 - 108 121 138 - - - HOLD - 19.8x 2015F P/E KIJA 450 450 554 616 799 554 613 780 BUY BUY 60% discount to NAV

LPCK 9,600 9,600 662 689 872 663 690 874 BUY BUY 40% discount to NAVAUTOMOTIVE SSIA 820 780 436 411 532 431 416 544 BUY HOLD 40% discount to NAVASII 6,600 6,675 20,104 20,820 22,738 20,235 20,945 22,888 HOLD HOLD SOTP valuationIMAS 3,000 3,000 392 424 540 392 412 521 REDUCE REDUCE 20.5x 2015F PE METALSGJTL 1,600 1,550 536 627 639 536 627 639 HOLD HOLD 8.9x 2015F PE INCO* 4,700 4,000 147 109 166 129 101 - BUY BUY DCF valuation

ANTM 720 720 (638) (169) 459 (103) 67 54 REDUCE REDUCE DCF valuationBANKS TINS 1,550 1,800 418 489 556 468 502 539 BUY BUY DCF valuationBBCA 14,300 12,700 16,208 18,457 20,759 16,090 18,415 21,076 BUY BUY Gordon growth model PSAB* 1,400 - 40 46 73 - - - BUY - 12x 2015F PEBBRI 12,500 13,100 24,003 27,081 30,529 24,123 27,755 32,050 BUY BUY Gordon growth modelBMRI 11,600 12,000 20,513 23,057 25,968 20,283 23,291 27,236 BUY BUY Gordon growth model OIL & GASBBNI 6,900 6,650 10,676 12,112 13,693 10,224 11,614 13,353 BUY BUY Gordon growth model PGAS* 7,000 5,400 785 846 914 690 734 790 BUY BUY DCF valuationBDMN 3,700 3,400 3,448 4,005 4,538 4,133 4,583 4,730 HOLD REDUCE Gordon growth model AKRA 4,775 4,150 755 881 980 752 818 912 HOLD REDUCE DCF valuationBTPN 4,600 4,300 2,266 2,588 2,897 2,267 2,502 2,798 HOLD HOLD Gordon growth model MEDC* 4,100 2,400 13 73 77 13 27 53 BUY REDUCE DCF valuationBBTN 1,300 1,320 1,466 1,669 1,885 1,653 1,855 2,109 BUY BUY Gordon growth model WINS* 1,600 1,600 315 414 485 402 500 536 BUY BUY DCF valuationBJBR 830 900 1,146 1,317 1,489 1,304 1,466 1,673 HOLD HOLD Gordon growth modelBJTM 500 520 1,025 1,171 1,345 1,025 1,171 1,346 BUY BUY Gordon growth model PLANTATIONSBBKP 770 600 1,073 1,212 1,358 1,053 1,207 1,255 HOLD HOLD Gordon growth model AALI 31,400 32,000 2,918 3,407 3,892 2,918 3,473 4,073 BUY BUY 14.5x 2015F PE

SIMP 835 900 812 908 1,011 812 912 1,114 HOLD HOLD 14.5x 2015F PECEMENT LSIP 1,975 2,100 878 1,069 1,167 879 995 1,151 HOLD HOLD 12.6x 2015F PESMGR 17,600 18,400 5,888 6,583 7,215 5,854 6,518 7,008 BUY BUY DCF valuation BWPT 370 360 216 804 886 215 809 948 REDUCE REDUCE 14.5x 2015F PEINTP 25,000 26,000 5,436 6,054 6,627 5,489 6,088 6,525 BUY HOLD DCF valuation ANJT* 1,200 1,300 17 29 36 17 29 37 HOLD HOLD 11.9x 2015F PESMCB 2,150 2,500 1,135 1,272 1,416 1,138 1,258 1,414 REDUCE HOLD 12.9x 2015F PE SGRO 2,500 2,650 320 389 441 320 391 475 BUY BUY 12.6x 2015F PESMBR 320 300 291 318 297 250 260 228 REDUCE REDUCE 10.0x 2015F PE TBLA 870 - 439 463 451 - - - BUY - 9.2x 2015F PE

COAL POULTRYUNTR 18,000 18,000 5,905 5,827 5,686 5,896 5,831 5,700 REDUCE REDUCE DCF Valuation CPIN 4,800 4,800 2,843 3,491 4,180 2,843 3,493 4,185 BUY BUY 22.4x 2015F PEADRO* 1,000 1,000 250 299 332 250 260 271 REDUCE REDUCE DCF valuation JPFA 1,400 1,500 827 1,142 1,432 827 1,093 1,386 BUY BUY 13.1x 2015F PEITMG* 20,000 20,000 249 205 186 249 205 186 REDUCE REDUCE DCF valuation MAIN 3,800 3,800 306 443 528 303 483 542 BUY BUY 15.3x 2015F PEPTBA 11,700 11,700 1,934 1,901 1,941 1,934 1,901 1,941 REDUCE HOLD DCF valuationHRUM* 1,500 1,900 36 43 61 32 22 18 REDUCE REDUCE DCF valuation PROPERTY BUMI* 120 180 (392) (199) (183) (311) (346) - REDUCE REDUCE DCF valuation BSDE 1,900 1,900 3,734 2,266 2,719 3,738 2,253 2,715 BUY BUY 50% discount to NAV

LPKR 1,200 1,200 2,542 1,510 1,879 2,542 1,511 1,885 BUY BUY 50% discount to NAVCONS.,TOLL ROADS & INFRASTRUCTURE RELATED PWON 470 600 1,534 1,928 2,304 1,534 1,915 2,305 BUY BUY 45% discount to NAVJSMR 7,200 7,050 1,614 1,716 1,977 1,614 1,716 1,977 BUY BUY DCF valuation SMRA 1,600 1,580 1,122 1,259 1,601 1,141 1,281 1,614 BUY BUY 45% discount to NAVCMNP 3,300 3,600 430 453 512 472 489 - HOLD BUY DCF valuation CTRA 1,245 1,350 1,305 1,476 1,467 1,322 1,537 1,621 BUY BUY 45% discount to NAVADHI 4,000 4,000 364 540 675 364 540 675 BUY BUY 13.2x 2015F PE ASRI 585 585 1,258 1,534 1,796 1,258 1,496 1,773 BUY BUY 60% discount to NAVWTON 1,120 1,070 314 395 520 314 395 520 HOLD HOLD 24.7x 2015F PE APLN 340 340 884 995 1,070 884 995 1,070 HOLD HOLD 50% discount to NAV

CTRP 750 750 308 381 432 308 381 432 HOLD HOLD 50% discount to NAVCONSUMER - DISCRETIONARYSCMA 2,550 3,000 1,476 1,645 1,931 1,483 1,653 1,941 REDUCE REDUCE PE 22.5 2015F STEELMLPL 1,400 900 136 165 205 123 173 191 BUY BUY SOTP Disc 55% KRAS* 370 400 (33) (33) 55 17 34 83 REDUCE REDUCE DCF valuationRALS 720 800 405 390 416 405 390 416 REDUCE REDUCE 13x 2015F PESRIL 220 200 403 585 699 400 515 637 BUY BUY 8x 2015F PE TELCOSRANC 440 500 31 31 52 30 36 - HOLD REDUCE PE 22x 2015F TLKM 3,350 3,350 15,368 17,398 19,404 15,368 17,361 19,394 BUY BUY 6.7x 2015F EV/EBITDAMYOR 25,500 25,900 620 948 1,238 620 966 1,229 REDUCE REDUCE 24x 2015F PE EXCL 7,400 5,500 3,481 1,684 2,648 474 1,039 1,925 BUY BUY 6.6x 2015F EV/EBITDA

TOWR 5,100 4,400 1,079 1,444 1,876 1,258 1,348 - BUY BUY 16x 2015F EV/EBITDACONSUMER - STAPLES ISAT 4,500 4,800 18 (30) 431 486 901 1,018 BUY BUY 4.1x 2015F EV/EBITDAUNVR 37,500 37,500 5,517 6,739 7,517 5,517 6,739 7,517 BUY BUY 42.5x 2015F PE ERAA 1,060 1,325 257 309 231 403 460 - HOLD HOLD 9.4x 2015F PEGGRM 70,000 70,000 5,358 6,095 6,962 5,358 6,095 6,962 BUY BUY 22x 2015F PE TELE 1,160 1,160 340 411 468 327 408 461 BUY BUY 20x 2015F PEKLBF 1,975 1,975 2,122 2,449 2,872 2,122 2,449 2,872 BUY BUY 38x 2015F PEKAEF 1400 - 206 273 328 - - - BUY - 29x 2015F PE TRANSPORTATIONICBP 13,300 8,300 2,621 3,110 3,710 2,420 2,770 - BUY REDUCE 25x 2015F PE TAXI 1,380 1540 151 170 211 151 170 211 BUY BUY PE 17x 2015F INDF 8,300 7,950 4,246 4,825 5,524 3,953 4,911 - BUY BUY 15x 2015 PE ASSA 190 190 58 68 75 58 69 73 REDUCE REDUCE PE 9.5x 2015F TSPC 2,800 3,800 690 769 857 683 762 849 BUY BUY 16.4x 2015F PEROTI 1,400 1,400 206 258 297 206 258 297 BUY BUY 27.5x 2015F PESIDO 770 875 429 486 604 435 502 605 BUY BUY 24x 2015F PE

RATINGRATING Old earningsTarget price New earnings Old earnings Target price New earnings

Source: Bahana estimates * Reporting currency in USD; earnings figures are in USDm

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United Kingdom This research report is produced by Daiwa Capital Markets Europe Limited and/or its affiliates and is distributed in the European Union, Iceland, Liechtenstein, Norway and Switzerland. Daiwa Capital Markets Europe Limited is authorised and regulated by The Financial Conduct Authority (“FCA”) and is a member of the London Stock Exchange, Eurex and NYSE Liffe. Daiwa Capital Markets Europe Limited and/or its affiliates may, from time to time, to the extent permitted by law, participate or invest in other financing transactions with the issuers of the securities referred to herein (the “Securities”), perform services for or solicit business from such issuers, and/or have a position or effect transactions in the Securities or options thereof and/or may have acted as an underwriter during the past twelve months for the issuer of such securities. In addition, employees of Daiwa Capital Markets Europe Limited and/or its affiliates may have positions and effect transactions in such securities or options and may serve as Directors of such issuers. Daiwa Capital Markets Europe Limited may, to the extent permitted by applicable UK law and other applicable law or regulation, effect transactions in the Securities before this material is published to recipients. This publication is intended for investors who are not Retail Clients in the United Kingdom within the meaning of the Rules of the FCA and should not therefore be distributed to such Retail Clients in the United Kingdom. Should you enter into investment business with Daiwa Capital Markets Europe’s affiliates outside the United Kingdom, we are obliged to advise that the protection afforded by the United Kingdom regulatory system may not apply; in particular, the benefits of the Financial Services Compensation Scheme may not be available.

Daiwa Capital Markets Europe Limited has in place organisational arrangements for the prevention and avoidance of conflicts of interest. Our conflict management policy is available at http://www.uk.daiwacm.com/about-us/corporate-governance-regulatory. Regulatory disclosures of investment banking relationships are available at https://daiwa3.bluematrix.com/sellside/Disclosures.action.

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Germany This document is distributed in Germany by Daiwa Capital Markets Europe Limited, Niederlassung Frankfurt which is regulated by BaFin (Bundesanstalt fuer Finanzdienstleistungsaufsicht) for the conduct of business in Germany.

Bahrain This research material is distributed by Daiwa Capital Markets Europe Limited, Bahrain Branch, regulated by The Central Bank of Bahrain and holds Investment Business Firm – Category 2 license and having its official place of business at the Bahrain World Trade Centre, South Tower, 7th floor, P.O. Box 30069, Manama, Kingdom of Bahrain. Tel No. +973 17534452 Fax No. +973 535113

This material is provided as a reference for making investment decisions and is not intended to be a solicitation for investment. Investment decisions should be made at your own discretion and risk. Accordingly, no representation or warranty, express or implied, is made as to and no reliance should be placed on the fairness, accuracy, completeness or correctness of the information and opinions contained in this document, Content herein is based on information available at the time the research material was prepared and may be amended or otherwise changed in the future without notice. All information is intended for the private use of the person to whom it is provided without any liability whatsoever on the part of Daiwa Capital Markets Europe Limited, Bahrain Branch, any associated company or the employees thereof. If you are in doubt about the suitability of the product or the research material itself, please consult your own financial adviser. Daiwa Capital Markets Europe Limited, Bahrain Branch retains all rights related to the content of this material, which may not be redistributed or otherwise transmitted without prior consent. United States This report is distributed in the U.S. by Daiwa Capital Markets America Inc. (DCMA). It may not be accurate or complete and should not be relied upon as such. It reflects the preparer’s views at the time of its preparation, but may not reflect events occurring after its preparation; nor does it reflect PT.Bahana Securities’ or DCMA’s views at any time. Neither PT.Bahana Securities, DCMA nor the preparer has any obligation to update this report or to continue to prepare research on this subject. This report is not an offer to sell or the solicitation of any offer to buy securities. Unless this report says otherwise, any recommendation it makes is risky and appropriate only for sophisticated speculative investors able to incur significant losses. Readers should consult their financial advisors to determine whether any such recommendation is consistent with their own investment objectives, financial situation and needs. This report does not recommend to U.S. recipients the use of any of PT.Bahana Securities’ or DCMA’s non-U.S. affiliates to effect trades in any security and is not supplied with any understanding that U.S. recipients of this report will direct commission business to such non-U.S. entities. Unless applicable law permits otherwise, non-U.S. customers wishing to effect a transaction in any securities referenced in this material should contact a Daiwa entity in their local jurisdiction. Most countries throughout the world have their own laws regulating the types of securities and other investment products which may be offered to their residents, as well as a process for doing so. As a result, the securities discussed in this report may not be eligible for sales in some jurisdictions. Customers wishing to obtain further information about this report should contact DCMA: Daiwa Capital Markets America Inc., Financial Square, 32 Old Slip, New York, New York 10005 (telephone 212-612-7000). Ownership of Securities For “Ownership of Securities” information please visit BlueMatrix disclosure Link at https://daiwa3.bluematrix.com/sellside/Disclosures.action . Investment Banking Relationships For “Investment Banking Relationships” please visit BlueMatrix disclosure link at https://daiwa3.bluematrix.com/sellside/Disclosures.action . DCMA Market Making For “DCMA Market Making” please visit BlueMatrix disclosure link at https://daiwa3.bluematrix.com/sellside/Disclosures.action . Research Analyst Conflicts For updates on “Research Analyst Conflicts” please visit BlueMatrix disclosure link at https://daiwa3.bluematrix.com/sellside/Disclosures.action. The principal research analysts who prepared this report have no financial interest in securities of the issuers covered in the report, are not (nor are any members of their household) an officer, director or advisory board member of the issuer(s) covered in the report, and are not aware of any material relevant conflict of interest involving the analyst or DCMA, and did not receive any compensation from the issuer during the past 12 months except as noted: no exceptions. Research Analyst Certification For updates on “Research Analyst Conflicts” please visit BlueMatrix disclosure link at https://daiwa3.bluematrix.com/sellside/Disclosures.action. The principal research analysts who prepared this report have no financial interest in securities of the issuers covered in the report, are not (nor are any members of their household) an officer, director or advisory board member of the issuer(s) covered in the report, and are not aware of any material relevant conflict of interest involving the analyst or DCMA, and did not receive any compensation from the issuer during the past 12 months except as noted: no exceptions.

For stocks and sectors in Indonesia covered by Bahana Securities, the following rating system is in effect:

Stock ratings are based on absolute upside or downside, which is the difference between the target price and the current market price. Unless otherwise specified, these ratings are set with a 12-month horizon. It is possible that future price volatility may cause a temporary mismatch between upside/downside for a stock based on the market price and the formal rating. "Buy": the price of the security is expected to increase by 10% or more. "Hold": the price of the security is expected to range from an increase of less than 10% to a decline of less than 5%. "Reduce": the price of the security is expected to decline by 5% or more.

Sector ratings are based on fundamentals for the sector as a whole. Hence, a sector may be rated “Overweight” even though its constituent stocks are all rated “Reduce”; and a sector may be rated “Underweight” even though its constituent stocks are all rated “Buy”. “Overweight”: positive fundamentals for the sector. “Neutral”: neither positive nor negative fundamentals for the sector. “Underweight”: negative fundamentals for the sector.

Ownership of Securities For “Ownership of Securities” information, please visit BlueMatrix disclosure Link at https://daiwa3.bluematrix.com/sellside/Disclosures.action .

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Investment Banking Relationships For “Investment Banking Relationship”, please visit BlueMatrix disclosure Link at https://daiwa3.bluematrix.com/sellside/Disclosures.action . Relevant Relationships (Bahana Securities) Bahana Securities may from time to time have an individual employed by or associated with it serves as an officer of any of the companies under its research coverage.

Bahana Securities market making Bahana Securities may from time to time make a market in securities covered by this research.

Additional information may be available upon request. Japan - additional notification items pursuant to Article 37 of the Financial Instruments and Exchange Law (This Notification is only applicable where report is distributed by Daiwa Securities Co. Ltd.)

If you decide to enter into a business arrangement with us based on the information described in materials presented along with this document, we ask you to pay close attention to the following items. • In addition to the purchase price of a financial instrument, we will collect a trading commission* for each transaction as agreed beforehand with you. Since commissions may be included in the purchase price or

may not be charged for certain transactions, we recommend that you confirm the commission for each transaction. • In some cases, we may also charge a maximum of ¥ 2 million (including tax) per year as a standing proxy fee for our deposit of your securities, if you are a non-resident of Japan. • For derivative and margin transactions etc., we may require collateral or margin requirements in accordance with an agreement made beforehand with you. Ordinarily in such cases, the amount of the transaction

will be in excess of the required collateral or margin requirements. • There is a risk that you will incur losses on your transactions due to changes in the market price of financial instruments based on fluctuations in interest rates, exchange rates, stock prices, real estate prices,

commodity prices, and others. In addition, depending on the content of the transaction, the loss could exceed the amount of the collateral or margin requirements. • There may be a difference between bid price etc. and ask price etc. of OTC derivatives handled by us. • Before engaging in any trading, please thoroughly confirm accounting and tax treatments regarding your trading in financial instruments with such experts as certified public accountants.

*The amount of the trading commission cannot be stated here in advance because it will be determined between our company and you based on current market conditions and the content of each transaction etc.

When making an actual transaction, please be sure to carefully read the materials presented to you prior to the execution of agreement, and to take responsibility for your own decisions regarding the signing of the agreement with us.

Corporate Name: Daiwa Securities Co. Ltd. Financial instruments firm: chief of Kanto Local Finance Bureau (Kin-sho) No.108 Memberships: Japan Securities Dealers Association, Financial Futures Association of Japan Japan Securities Investment Advisers Association Type II Financial Instruments Firms Association

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Andre Natala [email protected] Associate

ext 3601

Chandra [email protected]

Technical Analystext 1252

Andre Natala [email protected] Associate

ext 3601

Harry [email protected]

Senior Associate DirectorHead of Research

Strategy, Consumerext 3600

direct: +62 21 250 5735

Dealing Room: +62 21 527 0808 (Foreign Institutional)

Teguh [email protected]

Associate DirectorDeputy Head of ResearchBanks, Cement, Aviation

ext 3610

Leonardo Henry Gavaza, [email protected]

Senior Research ManagerAuto, Plantations, Heavy equipment,

Telcoext 3608

Arga [email protected]

Economistext 3602

Chandra [email protected]

Technical Analystext 1252

+62 21 250 5508 (Domestic Institutional)

Ashish [email protected]

Vice PresidentInstitutional Equity Sales

ext 2550 / 2553

Reynard [email protected]

Institutional Equity Salesext 2528

John M. [email protected]

Equity Salesext 2549

Yohanes Adhi [email protected]

Manager, Surabaya Branchext 7250

Suwardi Widjaja [email protected]


Ricardo Silaen, [email protected]


ext 2524

Amelia [email protected]


ext 2552

Michael W Setjoadi [email protected]

Research AnalystConsumer, Poultry

ext 3613

Nurul [email protected]


Research: +62 21 250 5081

Adrian Mahendra [email protected]

Research AnalystIndustrial Estate

ext 3614

Hanna [email protected]

Sales Traderext 2525

Adriana [email protected]

Sales Executiveext 2541

Ari [email protected]

Sales Traderext 2554

Adi [email protected]

Research Associateext 3693

William [email protected] Associate

ext 3604

Robin [email protected] Analyst

Propertyext 3620

Agustinus Reza [email protected]

Research AnalystTransportation

ext 3616

Maxi [email protected] Analyst

Construction, Toll Roads, Steel, Oil and Gas

ext 3615

Wendy [email protected]

Research AnalystConsumer, Media

ext 3606

Bob [email protected]

Research AnalystCementext 3605

Muhammad [email protected] Analyst

ext 3609

+62 31 535 2788 (Surabaya Branch)

Arandi [email protected]

Research AnalystCoal, Metals

ext 3619

Edy [email protected]

Head of Equity Sales & TradingInstitutional Equity Sales

ext 2545

Nuriah [email protected] Executive

ext 3001

Made Ayu [email protected]

Research Executiveext 3607

Sanni Satrio Dwi [email protected] Associate

ext 3605

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