Construction, Telecom, ASII, BBCA, BBNI, BBRI, BDMN, BNLI ......x Indofood Sukses Makmur: Weak CBP...

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Latest 2020F

7-DRRR (%), eop 3.75 3.75

Inflation (YoY %) 1.44 2.00

US$ 1 = Rp, period avg 14,179 14,745

JCI Index 5,612.4 -2.96%

Trading T/O ( Rp bn ) 32,025.3

Market Cap ( Rp tn ) 6,526.7

2020F 2021F

P/E (x) 21.7 15.9

P/BV (x) 2.3 2.1

EV/EBITDA (x) 14.6 12.4

Div. Yield (%) 3.0 2.4

Net Gearing (%) 25.0 22.5

ROE (%) 10.4 13.7

EPS Growth (%) -24.8 36.6

EBITDA Growth (%) -11.7 16.9

Earnings Yield (%) 4.6 6.3

* Aggregate of 74 companies in MS research universe,

representing 63.0%of JCI’s market capitalization

Economic Data

Stock Market Data (xx November 2020)

Market Data Summary*

• Construction: The Builders’ Corner – November 2020 • Telecom: Broadband Barometer – November 2020 • Astra International: Analyst Meeting Conference Call Key Takeaways (ASII; Rp5,300;

Buy; TP: Rp6,300) • Bank BCA: 10M20 Results - Profit Ahead of Expectations (BBCA; Rp31,025; Neutral; TP:

Rp35,000) • Bank BNI: Strong Earnings Growth for 2021 (BBNI; Rp6,000; Buy; TP: Rp7,500) • Bank BRI: 10M20 Results - Rising Opex Limited Earnings (BBRI; Rp4,090; Neutral; TP:

Rp4,000) • Bank Danamon: 10M20 Results - In-line with Consensus Estimates (BDMN; Rp3,170;

Buy; TP: Rp4,000) • Bank Permata: 10M20 Results - Net Losses in October (BNLI; Rp2,390; Under Review) • Indika Energy: Cost-Cutting Initiative Still Essential for Survival (INDY; Rp1,710; Under

Review) • Jasa Marga: In a Sweet Spot (JSMR; Rp4,190; Buy; TP: Rp7,040) • Malindo Feedmil 3Q20: Narrowing Earnings Loss (MAIN; Rp650; Buy; TP: Rp700) • Indofood CBP: Weak Domestic Sales and FX Losses Dragged 3Q20 (ICBP; Rp9,900;

Buy; TP: Rp12,050) • Indofood Sukses Makmur: Weak CBP PATMI Offset Strong Flour and Agri (INDF;

Rp7,100; Buy; TP: Rp9,950) • Pakuwon Jati: Acquisition of Central Java Malls Value-Accretive (PWON; Rp500; Buy;

TP: Rp770) • United Tractors: Analyst Meeting Conference Call Key Takeaways (UNTR; Rp23,000;

Buy; TP: Rp31,700) • Market Recap November 30th 2020; JCI 5,612.42 Points -170.92 pts (-2.96%); Valued

$2.26bn; Mkt Cap $455bn; USD/IDR 14,179 • Daily Covid-19 Update: Data as of 30 Nov’20 Construction: The Builders’ Corner – November 2020

Oct-20 new contracts achievement marked the highest new order booking YTD at Rp8.8tn (+22% MoM) and continued to progress well up to week-3 of Nov-20. On the ground, the construction works have almost reached the pre-pandemic level, depending on the projects. Meanwhile, revenue recognition in 4Q20 will be hindered by the delayed land clearing and project payment to balance out operating cash flow.

Oct-20 new-contracts continued to accelerate. The big 4 SOE contractors’ new order book reached Rp8.8tn (+21.6% MoM; -23.8% YoY) in Oct-20, the highest monthly new contracts booking YTD, leading to a 10M20 achievement of Rp45.7tn (-45.2% YoY; 45% of FY20 target). As reported in the news, the new contracts achievement in week-3 of Nov-20 has shown significant progress, with

HIGHLIGHT

Equity Research | 1 December 2020 INVESTOR DIGEST

SECTOR


Equity Research | 1 December 2020


WIKA reaching Rp18.0tn in new contracts (-44% YoY; 84% of FY20 achievement), ADHI at Rp16.8tn (+85% YoY; 61% achievement), and PTPP at Rp17.4tn (-37% YoY; 68% achievement). Energy and toll road sectors dominated the sizable awarded project in Nov-20, with PTPP/WIKA booked Rp3.2tn/Rp5.4tn contract from Kolaka Ferronickel Smelter project, while ADHI booked Rp7.8tn from Solo – Jogjakarta – NYIA – Kulonprogo.

The Ministry of Public Works and Housing (PUPR) tender updates. We highlight a 28.9% MoM increase in awarded new contracts from the Ministry of PUPR in Nov-20 to Rp83.3tn, with WIKA securing new order book of Rp1.5tn, ADHI at Rp820bn, WSKT at Rp354bn, and PTPP at Rp316bn. The biggest project awarded by the Ministry was the Serang–Panimbang Toll Road phase 3, at Rp4.6tn, with Sino Road and Bridge Group as the winners, as the group would provide financing in developing the toll road. Meanwhile, the early tenders for the 2021 projects have reached Rp16.6tn, with 16 tenders worth more than Rp100bn.

Color on the ground. Our discussion with the SOE contractors indicated that the construction works have progressed well in 4Q20 amid the pandemic, reaching an average of 70-90% to pre-COVID levels, depending on the projects. However, the recovery in 4Q20 construction revenues will be hindered by land clearing delays and the construction companies’ aim to balance out their revenue recognition and project payment to manage their OCF and receivables impairment from PSAK 71. In Dec-20, the government plans to finalize the Nusantara Investment Authority (NIA)’s board members, while the NIA is expected to start commercial operation in 1Q21.

NEW-CONTRACTS ACHIEVEMENTS IN 10M20 (IN RP BN)

New contracts (Rp bn) Oct-20 Oct-19 10M20 10M19 y-y FY20 Target

% of FY20 Target

WIKA 3,788 5,500 10,630 31,238 -66% 21,400 50%

PTPP 770 3,200 12,570 26,700 -53% 25,500 49%

WSKT 2,900 2,000 15,000 17,000 -12% 26,500 57%

ADHI 1,300 800 7,500 8,400 -11% 27,500 27%

Total 8,758 11,500 45,700 83,338 -45% 100,900 45%

Source: Company, based on the latest guidance on FY20 target Edbert Surya (+6221 5296 9623) [email protected] Adrian Joezer (+6221 5296 9415) [email protected] Telecom: Broadband Barometer – November 2020

Telkomsel launched ‘Freedom Max’ in 19 cities at Rp3.0-3.6/MB and with low entry price point. Meanwhile, XL Axiata & Hutchison made indirect price cuts to get parity with market averages. These price moves could be tactical and gradual economic recovery should catalyze better mobile revenue trends ahead. Stay OW.

What’s new in November 2020? Telkomsel launched ‘Freedom Max’ in 19 cities (all in Java); packages start as low as Rp10k/month and are offered at effective prices of Rp3.0-3.6/MB. Meanwhile, XL Axiata and Hutchison made indirect price cuts by providing higher data allowances for the same/similar prices. Though, the indirect price cuts appeared more as efforts for customer retention, revenue lock-up ahead of year-end seasonality, and getting Rp/MB parity with latest market average (at Rp2-6/MB now), instead of for new acquisitions. Product updates in Nov-20 are listed below:

− Telkomsel added Rp140k/month option into Combo Sakti Unlimited line-up and launched ‘Freedom Max’ packages. Unlike ‘Unlimited Max’, Freedom Max sets fair-usage policy (FUP) limits for data consumption on selective, but popular apps (details in Fig. 2). Although Freedom Max comes with FUP limits (not unlimited), its low subscription prices would appeal to the more price-sensitive segments aspiring for high quality data network.

− XL Axiata’s Xtra Lite packages now come with 42%-71% more data allowances, effectively lowering their Rp/MB by 30%-42%. But Xtra Lite’s new effective price range of Rp2.8-5.5/MB is comparable with the market’s median/average today – not lower. Similarly, Axis Bronet packages also come with 50%-67% more data allowances, lowering their




Rp/MB by 33%-40%. But Axis Bronet’s new effective price range of Rp6.9-13.3/MB is still above the market’s median/average today.

− Hutch launched new packages ‘Happy’, with effective data price range of Rp3.8-4.2/MB. Hutch also doubled the monthly data allowances of Always On (AON) packages for the same prices. Though, the additional allowances are restricted for usage on streaming apps only. These changes lowered the effective prices by 28%-50% to Rp3.0-5.0/MB, which is within market’s average.

− Meanwhile, Indosat and Smartfren kept product prices unchanged. Both operators continue to offer customers with tactical top-up rewards/cashbacks.

Minor price changes in fixed broadband. MyRepublic reacted to Telkom IndiHome’s product & pricing changes last month by cutting almost all its offerings by 11%-29% this month. Meanwhile, MNC Play raised the prices for entry-level packages by 3%-4% MoM and de-listed internet-only packages from their platform. There are no price changes from all other operators.

Maintain BUY. The latest mobile price cuts, albeit indirect, could be tactical as operators attempt to lock in subscription revenues ahead of the year-end holiday season. The market leader continues to narrow its pricing premium with peers as affordability factor gains importance amidst the current pandemic. But we argue that mobile pricing and revenue trends could potentially improve along with the gradual economic recovery and higher population mobility in the coming months. Meanwhile, fixed broadband price trends remain stable and the segment’s revenue growth will continue to be driven by subscription growth.

MOBILE INTERNET PRICING UPDATE: OCTOBER 2020 VS NOVEMBER 2020

Price Band Affordability Ranking Market Telkomsel Indosat XL Axiata

Less than Rp50,000 per

month

Smartfren's Super 4G and Volume Based EVO ranked as

the most affordable in the market, followed by Indosat's

Yellow and Axis BroNet.

Average headline price decreased from Rp8.9/MB in Oct-20 to

Rp8.2/MB in Nov-20. Telkomsel’s premium increased from 4% in

Oct-20 to 9% in Nov-20.

Launched new package called Freedom Max that

offers Rp3.3-3.6/MB of data yield.

No change from Indosat.

Saw effective price decrease in select Xtra

Lite and Bronet Axis packages by 33-42%

MoM.

Rp50,000 - 75,000 per

month

Hutchison Promo Data, Mix Combo, and Kombo 4G ranked

as the most affordable in the segment, followed by

Smartfren's Super 4G and Volume Based EVO.


Rp7.0/MB in Nov-20. Telkomsel’s premium increased from 79.8% in

Oct-20 to 83.4% in Nov-20.

Launched new package called Freedom Max that offers Rp3.0/MB of data

yield.



Lite and Bronet Axis package by 38-39%

MoM.

Rp75,000 - 100,000 per

month

Smartfren's Super 4G and Volume Based EVO ranked as

the most affordable in the segment, followed by Axis

BroNet.


Rp5.2/MB in Nov-20. Telkomsel’s premium decreased from 137.9%

in Oct-20 to 131.9% in Nov-20.

No change from Telkomsel.


Saw effective price decrease in select

Bronet Axis package by 33.3% MoM.

Rp100,000 - 150,000 per

month

Hutch's Home packages ranked as the most affordable in the

segment, followed by Smartfren Volume Based and Telkomsel's Unlimited Max.


Rp4.9/MB in Nov-20. Telkomsel’s premium increased from 142.2%

in Oct-20 to 148.7% in Nov-20.

Added new option in Combo Sakti Unlimited

package that offers Rp3.5/MB of data yield.



Lite packages by 29-30% MoM.

Rp150,000 - 200,000 per

month

Smartfren's Volume Based EVO ranked as the most affordable

in the segment, followed by Indosat Freedom Combo.

Average headline price flat at Rp7.1/MB in Nov-20. Telkomsel’s

premium flat at 174.6% in Nov-20.

No change from Telkomsel.


No change from XL Axiata.

Source: Company Data, Mandiri Sekuritas Research estimates FIXED BROADBAND PROMOTION UPDATE – OCTOBER 2020

Company Brand Promotion Terms Promotion Period

Telkom IndiHome

Telkom launched Semua Berubah Bisa Maju Promo Package that offers opportunity to get various gifts and add-on for 60 TV channels.

Telkom offers Learning from Home package to support work-from-home activities that give up to 64% discount.

31 December 2020

31 December 2020

Link Net First New subscribers: Up to 30% discount on subscription prices (excluding modem and STB rental costs) for credit card Ongoing




Company Brand Promotion Terms Promotion

Period Media holders only; 25% discount for 12 months for speed upgrade; 50% discount for Wi-Fi X-Tender for 12 months, free

speed upgrade and all channels for 3 months, Free YouTube Premium for 12 months. Cyberindo

Aditama CBN New subscribers of Fiber can get up to 30% discount and free speed boost for 6-12 months Ongoing

MNC Group Play

Media New subscriber: Free 1 month with minimal 10 Mbps Ongoing

Source: Company Data, Mandiri Sekuritas Research estimates

FIXED BROADBAND PRICE CHANGES

Oct-20 Nov-20 Changes

Price (Rp/month) Package Price (Rp/month) Package Price (Rp/month) Package

MyRepublic

515,000 Download up to 20Mbps

+ 162 channels 375,000

Download up to 20Mbps + 109 channels

-27.2% n.a.

825,000 Download up to 50Mbps

+ 172 channels 590,000

Download up to 50Mbps + 109 channels

-28.5% n.a.

1,250,000 Download up to 100Mbps + 181

channels 945,000

Download up to 100Mbps + 109

channels -24.4% n.a.


channels 1,665,000




channels 2,655,000



MNC Play

269,000 Download up to 15Mbps 279,500 Download up to 15Mbps 3.9% n.a.

319,000 Download up to 20Mbps 329,500 Download up to 20Mbps 3.3% n.a.

Source: Company Data, Mandiri Sekuritas Research estimates

Kresna Hutabarat (+6221 5296 9542) [email protected] Henry Tedja (+6221 5296 9434) [email protected]

Astra International: Analyst Meeting Conference Call Key Takeaways (ASII; Rp5,300; Buy; TP: Rp6,300)

ASII’s forecast on the 4W and 2W markets next year suggests a gradual recovery—rather than V-shaped—amid the uncertain economic recovery. Interestingly, commercial vehicle recovered faster than passenger car, indicating recovery in economic activities. Maintain Buy on ASII with Rp6,300 TP.

Outlook for 2021:

1. 4W recovery is gradual rather than V-shaped. While retail sales have gradually recovered, targeting 560k units this year, ASII only sees 750k units of car sales in FY21F, still 25% below the 2019 level, with the export market expected to recover faster than the domestic. Interestingly, commercial vehicle sales have recovered faster than passenger car sales, indicating recovery in economic activities, with the Sep–Oct-20 number reaching the Mar-20 level, while passenger car sales were still 35% below Mar-20. We also see growing interest in SUV and a pick-up relative to other segments, given the strong product line-up, including those with lower prices, which we think will continue to next year.

2. Slower recovery for 2W. ASII targets 4.0mn-4.3mn units of 2W sales in FY21F, still up to 38% lower than in 2019, making our forecast of 4.9mn units look too aggressive. The recovery in the 2W market will depend on GDP growth and credit availability, as 65-75% of sales are using financing. Though people prefer to use private vehicles to avoid

CORPORATE




crowds, weak purchasing power and priority shift in spending hinder growth in 2W sales. ASII is undisputed in the 2W market with an 80% market share.

3. Financing business echoes auto sales. ASII’s financing business is negatively affected by weak auto sales and higher non-performing financing (NPF). Despite the stronger outlook next year, the management highlights that the credit evaluation process remains unchanged; more stringent policies, such as higher down payment, are applied by segment and sector basis to mitigate default risk.

4. A long way to go for EV in Indonesia. The management sees that the new carbon-emission-based luxury tax will increase the tax paid to buy internal combustion engines (ICE). The new sales tax on luxury goods (PPnBM) scheme will be based on fuel efficiency, with 0% tax for electric vehicles (EV), a minimum of 15% for non-LCGC, and 3% for LCGC. ASII has complete exposure to EV from hybrid (Corolla Cross, CHR, Camry, Alphard) to full electric (Lexus EV), and Toyota plans to spend USD 2bn to develop EVs in Indonesia. Despite that, the management sees EV’s contribution to overall 4W sales will remain small until we see a more affordable EV car and better EV infrastructure.

PE ASII PBV ASII

Source: Detik Oto Source: Tempo

Ariyanto Kurniawan (+6221 5296 9682) [email protected] Wesley Louis Alianto (+6221 5296 9510) [email protected] Bank BCA: 10M20 Results - Profit Ahead of Expectations (BBCA; Rp31,025; Neutral; TP: Rp35,000)

BBCA reported Rp22.8tn net profit in 10M20, flat YoY, accounting for 93%/85% of consensus/Mansek’s estimates. PPOP growth stayed solid at +16% YoY as the bank secured 8% YoY net interest income growth and cut opex by 8% YoY. On monthly basis, the bank’s monthly net profit more than doubled MoM to Rp3.1tn in Oct-20. The strong et profit growth in the month was boosted by 42% MoM growth in non-interest income and 89% MoM drop in provision expenses. Indeed, operating expenses picked up 9% MoM in Oct-20, but are still 26% lower versus in Oct-19.

Muted loan trends in Oct-20; deposit growth +16% YoY/+2% MoM. Loan declined 1% MoM, but deposit grew 2% MoM. As a result, LDR further lowered to 71.4% in Oct-20, vs. 73.3% in Sep-20 and 83.4% in Oct-19. Though, CASA level improved by 10bps MoM to 76.8% in Oct-20, vs. 76.7% in Sep-20.

NIM declined to 5.8% in 10M20 from 6.2% in 10M19, in-line with the lower benchmark rate, lower LDR and higher restructured loan balance. Despite the NIM decline, BBCA managed to deliver 8% net interest income growth in 10M20 with support from ~20% larger earning asset base and lower average cost of fund.

Cost to income ratio declined to 36.7% in 10M20 from 42.1% in 10M19, helped by 8% lower opex YoY in 10M20.




Provision expenses picked up 161% YoY to Rp8.7tn in 10M20. Cost of credit increased from 0.7% in 10M19 to 1.8% in 10M20, albeit lowest among the listed BUKU-IV banks. Provisioning level is at 4.7% in 10M20, vs. 2.7% in 10M19. O monthly basis, cost of credit fell to 0.5% in Oct-20, vs. 4.2% in Sep-20. We estimate BBCA to have written off Rp3.8tn in 10M20, vs. Rp1.4tn in 10M19.

Maintain Neutral with TP of Rp35,000. The stock is trading at 4.2x/3.8x PBV for 2020F/2021F.

Income Statement (Rp bn)

Oct-19 Sep-20 Oct-20 % MoM % YoY 10M19 10M20 % YoY FY20F % of

FY20F FY20 Cons

% of FY20F

Cons

Net interest income 4,156 4,241 4,274 1 3 39,167 42,477 8 55,624 76

Non-interest income 1,584 1,000 1,417 42 (11) 15,580 15,573 (0) 19,815 79

Operating income 5,739 5,241 5,691 9 (1) 54,748 58,050 6 75,439 77 74,149 78

Provision expenses (210) (1,979) (221) (89) 5 (3,336) (8,693) 161 (10,196) 85

Operating expenses (2,267) (1,540) (1,678) 9 (26) (23,042) (21,282) (8) (32,078) 66

Operating profit 3,261 1,722 3,792 120 16 28,370 28,074 (1) 33,165 85 32,752 86

PPOP 3,472 3,701 4,013 8 16 31,706 36,768 16 43,361 85

Pre-tax profit 3,261 1,560 3,789 143 16 28,370 27,948 (1) 33,165 84 30,373 92

Net profit 2,607 1,237 3,067 148 18 22,756 22,828 0 26

,722 85 24,429 93

Balance Sheet (Rp bn) Oct-19 Sep-20 Oct-20 % MoM % YoY Gross loans 566,386 569,164 565,246 (1) (0) Demand deposits 177,594 204,853 211,186 3 19

Saving deposits 337,299 391,153 396,388 1 18

Time deposits 164,496 180,677 183,664 2 12

Total deposits 679,389 776,683 791,238 2 16

CASA to deposits (%) 75.8 76.7 76.8

Ratio (%) Oct-19 Sep-20 Oct-20 10M19 10M20 LDR 83.4 73.3 71.4

83.4 71.4

NIM 6.2 5.4 5.3

6.2 5.8

ROE 19.2 8.7 21.2

17.8 16.4

Cost to income 39.5 29.4 29.5

42.1 36.7

Cost of credit - net (0.4) (4.2) (0.5)

(0.7) (1.8)

Provisioning level 2.7 4.7 4.7

2.7 4.7

Tjandra Lienandjaja (+6221 5296 9617) [email protected] Silvony Gathrie (+6221 5296 9544) [email protected] Bank BNI: Strong Earnings Growth for 2021 (BBNI; Rp6,000; Buy; TP: Rp7,500)

We remain positive on BBNI despite the 40% and 10% reductions in 2020 and 2021 earnings. The strong inflows and earnings rebound in 2021 should still be positive for the counter, which is set at Rp7,500 based on 1.2x P/BV 2021. We keep our Buy call on the counter, which is trading at 0.9x P/BV 2021.

Loan growth of 4% and 6% for 2020 and 2021. BNI recorded +4.2% YoY/+5.6% YTD consolidated loan growth in 9M20. The bank took a breather in October, with a -0.6% MoM bank-only loan growth, in-line with some reduction in deposits. Going forward, we project a 4% loan growth for 2020 and 6% for 2021, with corporate lending (particularly from the private side) to stay as the main driver. With more than 53% of total loans, BNI plans to bring in more blue-chip customers, which should provide additional fee-based income and improve loan quality.




NPL to increase to 3.9% with a coverage ratio of above 200%. We project the NPL level to rise to 3.9% by the year-end from 3.6% in Sep-20, but heavy write-offs (Rp6.6tn this year and Rp9.0tn next year) should bring this down to 3.4% by the end of 2021. BNI wants to ensure it has sufficient coverage ratio for the expected rising NPL, and we expect 3.7% and 2.1% cost of credit with coverage ratios of 200% and 230% for 2020 and 2021, respectively.

Restructured loans close to 20%. COVID-19-related restructured loans stood at 18.5% in Sep-20, with up to 10% anticipated to be downgraded to problem loans, adding around 2% NPL.

Earnings revisions of -40% for 2020 and -10% for 2021. After factoring lower loan growth (4% and 6% for 2020 and 2021) and margins (4.50% and 4.67%), as well as higher cost of credit (3.7% and 2.1%), from the previous forecast, we lower our earnings projections by 40% to Rp4.25tn for 2020 and by 10% to Rp13.75tn for 2021.

Maintain Buy with Rp7,500 TP. We revise our TP to Rp7,500 (from Rp5,900), based on 1.2x P/BV 2021. The counter has outperformed the market by 10%/39% over the past 3/6 months and is trading at 0.9x P/BV 2021. The expected strong earnings growth of 224% for 2021 (from the low base of 2020) should be an attractive catalyst for the counter, aside from new management’s initiatives in ensuring new business in the future.

FINANCIAL SUMMARY YE Dec (Rp Bn) 2018A 2019A 2020F 2021F 2022F Pre-Provision Profit 26,576 27,679 26,706 29,346 31,653 Net Profit 15,015 15,384 4,249 13,755 15,861 EPS 805 825 228 738 851 EPS Growth (%) 10.3 2.5 (72.4) 223.7 15.3 P/E Ratio (x) 7.5 7.3 26.3 8.1 7.1 BVPS 5,674 6,449 5,760 6,440 7,069 P/BV Ratio (x) 1.1 0.9 1.0 0.9 0.8 Dividend Yield (%) 4.3 5.4 3.4 0.9 3.7 ROAE (%) 14.9 13.6 3.7 12.1 12.6 CAR (%) 18.6 19.8 16.9 18.3 19.0

Source: Company (2018-2019), Mandiri Sekuritas (2020-2022)

BBNI EARNINGS REVISIONS Year-end Dec 31 OLD NEW Change (Rpbn) 2020E 2021E 2022E 2020E 2021E 2022E 2020E 2021E 2022E Net interest income 38,065 41,125 46,066 35,987 40,560 43,998 (5.5) (1.4) (4.5) Net interest margin (%) 4.88 4.87 4.92 4.50 4.67 4.72 — — — Total income 52,585 57,148 64,066 49,793 54,129 58,747 (5.3) (5.3) (8.3) Pre-provision operating profit 26,503 28,575 32,504 26,706 29,346 31,653 0.8 2.7 (2.6) Operating profit 8,821 19,081 20,400 5,592 16,861 19,019 (36.6) (11.6) (6.8) Reported net profit 7,073 15,323 16,787 4,249 13,755 15,861 (39.9) (10.2) (5.5)

Growth/ratios (%):

Loan growth 5.1 10.9 12.4 4.1 6.2 9.9

Deposit growth 4.7 10.9 11.9 12.1 7.5 7.5

LDR 90.9 90.9 91.4 84.0 83.0 84.8

NPL 3.5 3.2 3.1 3.9 3.4 3.9

Coverage ratio 209.8 217.8 218.8 200.0 230.0 190.0

Cost of Credit 3.1 1.5 1.8 3.7 2.1 2.0

Write off to total loans 1.8 1.6 1.6 0.9 2.0 2.2

NIM 4.9 4.9 4.9 4.5 4.7 4.7

Cost to income 49.6 50.0 49.3 46.4 45.8 46.1

ROA 0.8 1.7 1.7 0.5 1.5 1.6

ROE 8.5 13.3 13.1 3.9 12.1 12.7

CAR 18.7 19.5 23.3 16.9 18.3 19.0

Source: Mandiri Sekuritas estimates Tjandra Lienandjaja (+6221 5296 9617) [email protected] Silvony Gathrie (+6221 5296 9544) [email protected]




Bank BRI: 10M20 Results - Rising Opex Limited Earnings (BBRI; Rp4,090; Neutral; TP: Rp4,000)

BBRI’s unconsolidated net income stood at Rp14.77tn in 10M20, -46% yoy, accounting for 75% of FY20 consensus and 77% of Mansek’s expectations. We estimate consolidated net income at Rp14.84tn which accounted for the same numbers. PPOP declined14% yoy, attributed to declining top-line growth and opex. Meanwhile, operating profit posted a deeper contraction of -38% yoy due to +36% yoy increase in provision expenses. The bank booked Rp721bn net income in Oct-20, +14% mom/ -72% yoy on lower opex and improved non-interest income growth.

Loan growth +3% yoy/flat mom, deposit growth +16% yoy/-1% mom. Though demand deposit posted the highest growth rate of +32% yoy, it went down 10% mom, while savings and time deposits increased +13% yoy each. As a result, CASA ratio increased to 59% in Oct-20 from 58% last year while LDR declined to 83.3% in Oct-20 from 94.3% in the same period but increased from 82.6% in Sep-20.

NIM declined to 5.8% in 10M20 from 7.0% in 10M19 mainly due to lower asset yield, as restructured loans has been rising, despite the declining CoF. On the monthly basis, Oct-20’s NIM also declined again to 6.0% from 6.3% in Sep-20. BRI records interest income from the restructured loans on cash basis and doesn’t accrue it.

Cost to income ratio increased to 49% from 41% in 10M19, partly due to the cost of share allocation for the staffs, which will continue to 2021.

Provision expenses increased +36% yoy to Rp21.6tn in 10M20 with annualized cost of credit stood at 3.0% in 10M20 vs. 2.2% in 10M19. BBRI guides FY20 cost of credit to be at around 3.2%. Our estimated write off is Rp13.8tn in 10M20 vs. Rp9.6tn in 10M19. Provisioning to total loans increased to 6.8% in Oct-20 from 6.5% in Sep-20.

Maintain Neutral with TP of Rp4,000. BBRI currently trades at 2.6/2.3x of 2020/2021F P/BV.

Income Statement (Rp bn)


FY20F FY20 Cons

% of FY20F

Cons Net interest income 5,958 6,893 6,704 (3) 13 64,284 59,912 (7) 75,122 80

Non-interest income 2,465 2,335 2,585 11 5 20,943 23,637 13 30,386 78

Operating income 8,423 9,228 9,289 1 10 85,227 83,549 (2) 105,508 79 103,742 81 Provision expenses (1,368) (4,144) (4,232) 2 209 (15,848) (21,589) 36 (30,261) 71

Operating expenses (3,850) (4,944) (3,915) (21) 2 (35,131) (40,669) 16 (51,007) 80

Operating profit 3,205 141 1,142 711 (64) 34,248 21,291 (38) 24,240 88 26,185 81 PPOP 4,573 4,285 5,374 25 18 50,096 42,880 (14) 54,501 79 Pre-tax profit 3,193 136 1,154 747 (64) 34,212 21,304 (38) 24,224 88 25,635 83 Net profit 2,539 629 721 14 (72) 27,313 14,767 (46) 19,246 77 19,699 75

Balance Sheet (Rp bn)

Oct-19 Sep-20 Oct-20 % MoM % YoY

Gross loans 850,862 877,561 874,043 (0) 3

Demand deposits 146,923 215,173 193,465 (10) 32

Saving deposits 377,154 424,325 427,625 1 13

Time deposits 378,446 423,527 428,387 1 13

Total deposits 902,524 1,063,025 1,049,476 (1) 16



94.3 83.3

NIM 6.3 6.3 6.0

7.0 5.8

ROE 15.5 4.0 4.5

17.4 9.6


41.2 48.7

Cost of credit - net 1.9 5.7 5.8

2.2 3.0


4.8 6.8

Tjandra Lienandjaja (+6221 5296 9617) [email protected] Silvony Gathrie (+6221 5296 9544) [email protected]




Bank Danamon: 10M20 Results - In-line with Consensus Estimates (BDMN; Rp3,170; Buy; TP: Rp4,000)

BDMN posted Rp1.8tn net profit in 10M20, -37% yoy, accounting for 86% of consensus and 67% of our expectations. PPOP increased +7% yoy mainly driven by declining opex and moderate net interest income growth. A significant increase in provision expenses has caused operating profit to decline by -24% yoy. Oct-20 net profit was Rp323bn, -10% mom/+26% yoy due to a significant increase in provisioning charges in the month.

Loan growth +1% yoy/-2% mom, deposit growth +7% yoy/flat mom. The synergy with MUFG has successfully brought in some new loans, but this was offset by the high run-off from the automotive loans through Adira Finance. On the liability side, the bank managed to see conversion from TD to DD, which showed +46% yoy growth, coming from corporate and commercial clients, while savings deposits increased +7% yoy and TD at -3% yoy. CASA deposits account for 52% of total deposits in Oct-20 vs. 47% in Oct-19 while LDR declined to 90% in Oct-20 from 96% in Oct-19.

NIM declined to 5.1% in 10M20 from 5.4% in 10M19 due to higher pressure in asset yield that came from rising restructured loans. On the monthly basis, NIM declined to 5.1% from 5.2% in Sep-20 due to loan contraction in the month.

Cost to income ratio declined to 47% from 50% in 10M19.

Provision expenses increased +66%yoy to Rp2.9tn in 10M20. Cost of credit increased to 3.2% in 10M20 from 1.9% in 10M19, with the guidance of 3.0-3.5% for the year. Provisioning to total loans increased to 3.9% from 2.7% in Sep-20 after the estimated Rp3.2tr write offs in 10M20.

We have a Buy rating with TP of Rp4,000. The stock is trading at 0.7/0.6x P/BV 2020/2021F. Income Statement (Rp bn)

Oct-19 Sep-20 Oct-20 % MoM % YoY 10M19 10M20 % YoY FY20F % of FY20F

FY20 Cons

% of FY20F

Cons Net interest income 639 695 676 (3) 6 6,215 6,554 5 15,578 42

Non-interest income 382 328 377 15 (1) 3,694 3,607 (2) 3,801 95

Operating income 1,021 1,022 1,052 3 3 9,909 10,160 3 19,379 52 18,664 54

Provision expenses (251) (74) (161) 117 (36) (1,730) (2,877) 66 (5,695) 51

Operating expenses (488) (465) (456) (2) (6) (4,904) (4,807) (2) (10,242) 47

Operating profit 282 483 435 (10) 54 3,274 2,476 (24) 3,442 72 2,935 84

PPOP 533 557 596 7 12 5,004 5,353 7 9,137 59

Pre-tax profit 281 482 423 (12) 51 3,229 2,366 (27) 3,549 67 2,811 84

Net profit 256 360 323 (10) 26 2,852 1,800 (37) 2,703 67 2,087 86

Balance Sheet (Rp bn) Oct-19 Sep-20 Oct-20 % MoM % YoY

Gross loans 108,207 111,074 109,104 (2) 1

Demand deposits 15,263 23,494 22,230 (5) 46

Saving deposits 37,422 39,767 40,135 1 7

Time deposits 59,961 57,226 58,402 2 (3)

Total deposits 112,647 120,486 120,767 0 7


Ratio (%) Oct-19 Sep-20 Oct-20

10M19 10M20

LDR 96.1 92.2 90.3

96.1 90.3

NIM 5.3 5.2 5.1

5.4 5.1

ROE 7.1 10.0 8.9

8.2 5.0


49.5 47.3


1.9 3.2


2.7 3.9

Silvony Gathrie (+6221 5296 9544) [email protected] Tjandra Lienandjaja (+6221 5296 9617) [email protected]




Bank Permata: 10M20 Results - Net Losses in October (BNLI; Rp2,390; Under Review)

BNLI reported earnings of Rp360bn in 10M20, -71%yoy, fell short of expectations at 51% FY20 consensus estimates and 40% of Mansek’s. PPOP was strong at +21% yoy, driven by moderate operating income growth and managed opex. Meanwhile, provision expenses increased +169% yoy, dragging operating profit to -54% yoy. The bank reported a net loss of Rp72bn in Oct-20, mostly attributed to rising provisioning expenses and opex.

Loan growth -4%yoy/+1% mom, deposit growth +14% yoy/ -1% mom. Saving deposits grew the highest at +52% yoy, followed by demand deposits at +30% yoy, while time deposits declined -4% yoy, leading to CASA ratio of 50% in Oct-20 vs. 41% in Oct-19, while LDR declined to 78% in Oct-20 from 93% over the same period.

NIM was stable at 4.1% in 10M20 and 10M19 as a result of higher CASA ratio that compensated the pressure on asset yield. On the monthly basis, NIM improved to 3.7% from 3.6% in Sep-20 mainly over reduction in cost of funds.

Cost to income ratio declined to 59% from 63% in 10M19.

Provision expenses increased +169% yoy to Rp2.2tn. Cost of credit increased significantly to 2.5% from 0.9% in 10M19 while provisioning to total loans increased to 4.5% in Oct-20 from 4.3% in Sep-20. We estimate the bank wrote-off Rp2.1tn of bad debt in 10M20 vs. Rp3.5tn in 10M19.

Numbers under review. BNLI is trading at 2.8x 2020F P/BV. Income Statement (Rp bn)


FY20F FY20 Cons

% of FY20F

Cons

Net interest income 521 474 492 4 (6) 4,780 5,118 7 5,900 87

Non-interest income 209 164 147 (10) (30) 1,746 1,885 8 2,264 83

Operating income 731 638 639 0 (12) 6,526 7,004 7 8,164 86 8,255 85

Provision expenses (140) (223) (297) 33 113 (810) (2,176) 169 (1,938) 112

Operating expenses (402) (403) (432) 7 8 (4,125) (4,102) (1) (5,148) 80

Operating profit 189 11 (90) (912) (147) 1,591 726 (54) 1,078 67 1,078 67

PPOP 329 234 208 (11) (37) 2,402 2,902 21 3,016 96

Pre-tax profit 200 10 (92) (1,024) (146) 1,676 744 (56) 1,182 63 935 80

Net profit 149 7 (72) (1,118) (148) 1,251 360 (71) 909 40 711 51

Balance Sheet (Rp bn)

Oct-19 Sep-20 Oct-20 % MoM % YoY

Gross loan 107,903 102,686 103,419 1 (4) Demand deposits 26,678 36,379 34,648 (5) 30

Saving deposits 20,423 31,439 31,113 (1) 52

Time deposits 68,813 65,658 66,335 1 (4)

Total deposits 115,914 133,475 132,095 (1) 14



93.1 78.3

NIM 4.5 3.6 3.7

4.1 4.1

ROE 7.6 0.4 (3.6)

6.6 1.8


63.2 58.6


0.9 2.5


5.0 4.5

Silvony Gathrie (+6221 5296 9544) [email protected] Tjandra Lienandjaja (+6221 5296 9617) [email protected]




Indika Energy: Cost-Cutting Initiative Still Essential for Survival (INDY; Rp1,710; Under Review)

INDY’s 9M20 net loss of USD 53mn was below forecast but largely in-line with consensus. Despite recent upticks in coal prices, apparent cost-cutting initiatives will still be the key focus next year, as the coal price outlook remains uncertain. Our recommendation and target price are under review.

Weak 3Q20 earnings amid low coal prices. INDY reported a USD 30.6mn net loss in 3Q20 (vs. net loss of USD 21.3mn in 3Q19), bringing the 9M20 net loss to USD 53mn, below our forecast of net profit of USD 2mn but in-line with consensus. Revenue declined to USD 1.5bn (-26% YoY) due to weak revenue from the energy resources segment (Kideco and Mutu) at USD 1.1bn (-26% YoY), which we believe was largely attributable to lower coal sales volume and ASP. Note that the benchmark ICI4 stood at USD 28/ton (-20% YoY) in 9M20. Revenue from the energy services unit (Tripatra and Petrosea) also declined to USD 519mn (-24% YoY), with Petrosea booking lower overburden removal/coal production at -29%/-22% YoY; hence, the operating margin lowered to 7.1% from 10.9% in the same period last year, despite cost-efficiency initiatives at Kideco. We believe cost reduction will remain the key focus for Kideco despite the recent uptick in coal prices, as the coal outlook remains uncertain.

Key points to highlight in 3Q20: 1) Revenue (before elimination) from energy resource units (Kideco and Mutu) fell by -40% YoY/-17% QoQ, while gross profit fell by -62% YoY/-51% QoQ, as the overall coal market reached the trough in 3Q20. Note that the ICI4 coal price index declined to an average of USD 24/ton (-26% YoY/-10% QoQ) in 3Q20. 2) Revenue from energy service units (Tripatra and Petrosea) declined by -42% YoY/-9% QoQ, with gross profit at -40% YoY/+35% QoQ. Gross profit margin significantly improved to 15.9% in 3Q20 (vs. 10.8% in 2Q20, flat YoY) due to apparent direct cost reduction within Petrosea.

Earnings recovery ahead. With coal prices recovering to USD 65/ton (vs. USD 50/ton in Aug-20), we expect a better earnings outlook next year. Despite that, cutting initiatives remain the key to survive during low coal prices. Our recommendation and target price are under review.

INDY QUARTERLY RESULTS in US$mn 3Q20 3Q19 %YoY 2Q20 %QoQ 9M20 9M19 %YoY FY20F % ours % to cons.

Revenue 409.7 699.4 -41% 487.4 -16% 1,539 2,080 -26% 2,368 65% 74%

COGS (369.7) (607.0) -39% (418.1) -12% (1,324) (1,752) -24% (2,009) 66% 74%

Gross profit 40.0 92.5 -57% 69.4 -42% 214 328 -35% 359 60% 71%

Operating expenses (28.8) (28.8) 0% (40.5) -29% (105) (100) 5% (152) 70% 100%

Operating profit 11.2 63.7 -82% 28.8 -61% 109 227 -52% 208 52% 55%

Earnings before tax (38.5) (6.5) 491% 6.0 na. (49) 53 na. 3 -1793% 99%

Net profit (30.6) (21.3) 44% (0.9) 3331% (53) (9) na. 2 na. 89%

Gross margin 9.8% 13.2%

14.2%

13.9% 15.8%

Operating margin 2.7% 9.1%

5.9%

7.1% 10.9%

Net margin -7.5% -3.0%

-0.2%

-3.4% -0.4%

Effective tax rate 20.5% -227.2%

114.9%

116.1%

Source: Company, Mandiri Sekuritas Estimates

Ariyanto Kurniawan (+6221 5296 9682) [email protected] Wesley Louis Alianto (+6221 5296 9510) [email protected]




Jasa Marga: In a Sweet Spot (JSMR; Rp4,190; Buy; TP: Rp7,040)

We upgrade JSMR’s PT from Rp5,690 to Rp7,040. Valuation re-rating is justified, in our view, considering solid traffic recovery with a potential incremental increase in 2021 as mass public transportation may not immediately normalize, while the declining 10Y government bond yield and cost of funds bolstered JSMR’s DCF valuation on the back of lowered WACC. Reiterate Buy.

Raising 2020-22 EPS by 12-117%. We raised 2020/21 traffic assumptions by 7.1%/2.8% to 1.2mn/1.6mn vehicles, following the stronger-than-expected traffic recovery run-rate, reaching 95% of pre-pandemic in the first two weeks of Nov-20, while expecting 2021 traffic to exceed pre-pandemic level as the passenger recovery in mass public transportation should take longer. JSMR currently trades on 11.8x 2021 EV/EBITDA, slightly below 7Y historical mean, while potential re-rating is justified, in our view, considering 23.1% CAGR in 2019-24F EBITDA and improvement in ROIC spread over WACC from the bottom of 0.8% in 2017 to 2.6% in 2021 as CAPEX cycle should have peaked (2017-20F: Rp68.2tn; 2021F-24F: Rp51.8tn) and ramping up traffic in new operating toll roads have largely contributed to JSMR’s revenues.

Favorable macro environment amplified JSMR’s valuation re-rating. JMSR benefits from the current macro backdrop, with Indonesia’s easing monetary and lower 10Y INDOGB. We adjusted our risk-free assumption from 8.0% to 6.0% by using MANSEK’s fixed income 10Y INDOGB forecast in 2021 and lowered JSMR’s WACD to 8.5%, following the 125 bps BI rate cut YTD, to derive a WACC of 7.4%.

Upgrade PT from Rp5,690 to Rp7,040. Reassurance of commercially-driven mindset from the Ministry of SOE (MSOE) and the initiation of Nusantara Investment Authority (NIA) are backing our investment thesis that aggressive CAPEX cycle is behind. The positive vaccine development and foreign inflow in Nov-20 (USD 0.5bn vs. USD 6.2bn outflow in 2015-19) are worth highlighting, considering JSMR’s foreign ownership reached the lowest in Oct-20 (figure 12). Our PT of Rp7,040 is based on DCF-valuation until the concession ends, translating to 12.7x EV/EBITDA 2022, +1.5stdev above 7Y historical mean. Key risks: another round of strict social distancing and delays in tariff adjustment.

FINANCIAL SUMMARY YE Dec (Rp Bn) 2018A 2019A 2020F 2021F 2022F EBITDA 5,590 6,239 4,920 9,418 11,766

Net Profit 2,203 2,207 557 1,957 2,882

Fully-diluted EPS 303 304 77 270 397

Fully-diluted EPS growth (%) 0.1 0.2 (74.7) 251.0 47.3

P/E Ratio (x) 13.8 13.8 54.5 15.5 10.6

EV/EBITDA (x) 10.8 11.7 21.5 11.8 11.0

P/B Ratio (x) 1.8 1.6 1.6 1.5 1.3

Dividend Yield (%) 1.4 1.4 1.5 0.4 1.3

ROAE (%) 13.8 12.4 3.0 10.0 13.3


JSMR - CHANGES IN EARNINGS FORECAST

In Rpbn OLD NEW Changes Consensus versus Cons

2020F 2021F 2022F 2020F 2021F 2022F 2020F 2021F 2022F 2020F 2021F 2022F 2020F 2021F 2022F

Revenue 9,349 14,790 17,990 9,968 15,103 18,320 6.6 2.1 1.8 9,814 15,478 15,919 1.6% -2.4% 15.1%

Operating profit 3,174 7,596 9,681 3,712 7,785 9,836 17.0 2.5 1.6 4,278 6,068 7,327 -13.2% 28.3% 34.2%

Net profit 256 1,707 2,578 557 1,957 2,882 117.5 14.6 11.8 768 1,542 2,087 -27.5% 26.9% 38.1%

Source: Mandiri Sekuritas estimates, Bloomberg




DCF VALUATION

2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031

EBIT 7,785 9,836 13,545 15,496 16,926 18,747 20,259 21,956 23,403 25,395 27,064 Add:Depreciation 1,633 1,930 2,072 2,162 2,247 2,325 2,406 2,482 2,555 2,628 2,705 Less: Tax (2,725) (3,443) (4,741) (5,424) (5,924) (6,561) (7,091) (7,684) (8,191) (8,888) (9,472) Less: Capital expenditure (10,360) (19,863) (11,599) (10,263) (8,430) (8,601) (8,775) (8,953) (9,135) (9,320) (9,509) Add: Change in WC 1,116 (2,902) 10,653 602 611 650 631 656 661 692 708

Free Cash Flow (2,551) (14,441) 9,931 2,573 5,429 6,560 7,431 8,456 9,294 10,507 11,495

Discount factor 0.93 0.87 0.81 0.75 0.70 0.65 0.61 0.56 0.52 0.49 0.45

PV of FCFF (2,374) (12,510) 8,007 1,931 3,792 4,265 4,497 4,763 4,872 5,126 5,220

Firm Value 132,923 Add: Cash 8,422 Less: Debt (84,470) Less: Minority interest (5,768)

Total Equity Value 51,108

No of outstanding shares (mn) 7,258

DCF Value 7,042

Target Price (Rp/share) 7,040

Source: Mandiri Sekuritas estimates

Edbert Surya (+6221 5296 9623) [email protected] Adrian Joezer (+6221 5296 9415) [email protected] Malindo Feedmil 3Q20: Narrowing Earnings Loss (MAIN; Rp650; Buy; TP: Rp700)

MAIN’s 3Q20 earnings beat our estimates, largely due to the improved feed margins and gradual volume recovery across DOC and commercial farming segments. Favorable corn prices lifted feed margins but were unable to offset weak DOC and broiler prices. Toward the year-end, we remain positive on the sector, given the higher demand due to end-of-year festivity and more transparent approach on culling regulations.

3Q20 earnings: above ours; below consensus. MAIN recorded a 3Q20 PATMI loss of Rp28bn, which resulted in a 9M20 PATMI loss of Rp73bn, at 55%/-244% of our/consensus’ forecasts. The earnings beat our expectation, as strong feed margins helped the feeble broiler and DOC selling prices. The SG&A-to-sales ratio was maintained at 7.1%, similar to the 2Q20 level, despite the sales increase on a QoQ basis. On the top-line, the Company booked 3Q20 revenues of Rp1.8tn (+1% YoY; +21% QoQ), translating to a 9M20 revenue of Rp5.0tn (-12% YoY) or achieving 82%/74% of our/consensus estimates.

Key highlights by division:

− Feed: beat. The 3Q20 revenue/EBIT recorded Rp1.1tn/Rp141bn or grew by 21%/49% QoQ and -2%/-22% YoY, translating to 9M20 revenue/EBIT of Rp3.1tn/Rp349bn and achieving 83%/86% of our forecasts. EBIT margin improved by 2.4 ppt QoQ but dropped by 3.3 ppt YoY to 12.6%. Similar to competitors, the successful corn harvest in 1Q20-3Q20 and the gradual recovery of independent farmers’ business activities helped the strong earnings achievement. With a low-single-digit YoY ASP decline, MAIN booked 4% YoY/25% QoQ sales volume growth in 3Q20.

− DOC: beat. The 3Q20 revenue was at Rp316bn or went up by 2% YoY/19% QoQ despite the 15% YoY/2% QoQ ASP decline, suggesting 19% YoY/21% QoQ volume growth. Strong volume growth was partially driven by growing farmers’ confidence amid the reopening of dine-in activities. Regardless, EBIT loss widened to Rp94bn from Rp79bn in 2Q20 due to the severe oversupply condition in 3Q20. On a 9-month basis, revenue/EBIT loss stood at Rp881bn/Rp244bn, achieving 86%/64% of our FY20 forecasts.




− Commercial farming: below. The 3Q20 revenue was at Rp337bn or went up by 10% YoY/31% QoQ despite 8% YoY and QoQ ASP decline, thus implying 19% YoY/41% QoQ volume growth. EBIT stood at Rp26bn loss due to a steep decline of prices due to the seasonality of Suro month. On a 9-month basis, revenue/EBIT loss of Rp897bn/Rp29bn achieved 78%/-170% of our numbers.

− Processed food: below. The 3Q20 revenue declined by 10% QoQ as a result of the relaxation of social mobility restriction. On the EBIT level, processed food recorded a higher EBIT loss than in 2Q20, which is quite surprising given the favorable broiler prices. We suspect the weak EBIT margin could be attributed to the mandatory absorption program by the Ministry of Agriculture to support prices. On a 9-month basis, the revenue/EBIT loss of Rp144tn/Rp25bn achieved 68%/114% of our FY20 estimates.

Valuation and recommendation. We retain a Buy recommendation on MAIN with a 3-stage DCF-derived PT of Rp700, implying 10.4x 2021 PE.

MAIN 9M20 RESULT SUMMARY

MAIN 3Q20 2Q20 %QoQ 3Q19 %yoy 9M20 9M19 %yoy % of

Mansek % of

Cons Net sales 1.817 1.500 21,1% 1.797 1,1% 5.009 5.670 -11,6% 82% 74%

Gross profit 148 88 68,5% 212 -30,5% 380 661 -42,5% 96% 60%

Operating profit 19 (19) -198,5% 91 -79,4% 24 315 -92,4% -76% 17%

Pretax profit (27) (53) -48,0% 62 -144,4% (62) 248 -125,0% 37% -151%

Net profit (28) (58) -51,5% 49 -157,2% (73) 195 -137,1% 55% -244%

Margins Gross margin 8,1% 5,8% 2,3% 11,8% -3,7% 7,6% 11,7% -4,1% Operating margin 1,0% -1,3% 2,3% 5,0% -4,0% 0,5% 5,5% -5,1% Pretax margin -1,5% -3,5% 2,0% 3,4% -4,9% -1,2% 4,4% -5,6% Net margin -1,6% -3,9% 2,3% 2,8% -4,3% -1,4% 3,4% -4,9%

Segmental performance 3Q20 2Q20 %QoQ 3Q19 %yoy 9M20 9M19 %yoy % of

Mansek Net revenue breakdown

Feed 1.117 924 20,8% 1.139 -2,0% 3.087 3.561 -13,3% 82,5% DOC 316 267 18,6% 311 1,8% 881 1.091 -19,2% 86,4% Processed food 46 51 -9,7% 41 13,4% 144 113 27,0% 67,7% Broiler 337 258 30,6% 306 10,0% 897 905 -0,9% 78,1%

Operating profit breakdown

Feed 141 94 49,4% 182 -22,4% 349 418 -16,4% 86,4% DOC (94) (79) 18,5% (48) 94,7% (244) 46 -632,9% 63,9% Processed food (10) (7) 41,1% (10) -6,6% (25) (29) -13,4% 113,5% Broiler (26) 6 -517,1% (17) 59,2% (29) (55) -48,0% -170,3%

Operating profit margin

Feed 12,6% 10,2% 2,4% 16,0% -3,3% 11,3% 11,7% -0,4% DOC -29,8% -29,8% 0,0% -15,6% -14,2% -27,6% 4,2% -31,8% Processed food -21,0% -13,4% -7,6% -25,5% 4,5% -17,4% -25,4% 8,1% Broiler -7,9% 2,5% -10,3% -5,4% -2,4% -3,2% -6,1% 2,9%

Source: Company, Mandiri Sekuritas, Bloomberg

Riyanto Hartanto (+6221 5296 9488) [email protected] Adrian Joezer (+6221 5296 9415) [email protected]




Indofood CBP: Weak Domestic Sales and FX Losses Dragged 3Q20 (ICBP; Rp9,900; Buy; TP: Rp12,050)

3Q20 PATMI missed estimates, predominantly dragged by FX losses and weak 3Q20 domestic sales. ICBP’s market shares are relatively stable, citing the overall weakness in the FMCG industry amid subdued purchasing power recovery. Rebound in soft commodities and A&P resurgence started to normalize EBIT margin.

3Q20 PATMI missed estimates. 3Q20 PATMI came out weak at Rp585bn, down -55.4%/-58.1% YoY/QoQ, with 9M20’s Rp3,963bn (+2.0% YoY) forming 66%/67% of MANSEK/consensus FY20. Material FX loss of Rp860bn (2Q20: Rp241bn), attributable to Pinehill acquisition financing, and weak sequential trend in noodles’ revenue/EBIT largely contributed to the overall weakness. Excluding non-recurring FX items, adjusted PATMI was Rp1,275bn in 3Q20 (-0.5/-18.6% YoY/QoQ) and Rp4,425bn in 9M20 (+15.3% YoY). Syndicated loans for Pinehill acquisition totaled USD 1.75bn and JPY 31.72bn, unsecured with August 2025 maturity and interest rates of 2.10-2.25% for the USD loan and <2% for the JPY loan. Goodwill rose to Rp54.0trn from Rp1.8trn related post-Pinehill acquisition.

Weak purchasing power started showing impact. Consolidated revenues, which included a one-month contribution from Pinehill, were only at +1.8% YoY compared to +1.5% YoY in 2Q20. Domestic revenues declined by -7.4% QoQ in 3Q20, with YoY decline weakening to -10.3% from -6.7% in 2Q20. Profitability margins retraced further as some raw material costs increased while certain SG&A (i.e., A&P) started normalizing post-reopening.

3Q20 segmental analysis:

− Instant noodles. 3Q20 volume improved to ~6% YoY from ~3% YoY in 2Q20, given Pinehill’s one-month consolidation. While 3Q20 revenue +4.8% YoY, EBIT down -7.3% YoY, as higher COGS (i.e., cooking oil) and normalizing A&P likely contributed to the decline in EBIT margin to 20.9% in 3Q20 from the unusually high 24.8% margin in 2Q20.

− Dairy. Revenue growth stayed weak at -0.9% YoY in 3Q20 (2Q20: -0.5% YoY), while volume down ~-3% YoY (2Q20: flat) due to weak sweetened condensed milk amid consumption shifts post-reopening, and liquid milk trend was unchanged, as schools are still closed. Dairy’s EBIT margin rose to 10.8% in 3Q20 from 7.5% in 2Q20; in addition to the selective price increases in 2Q20, favorable skimmed milk powder prices helped too.

− Snacks. 3Q20 revenue was at +3.1% YoY, while volume growth picked up to around +4% YoY from a -1% YoY decline in 2Q20. EBIT margin improved to 11.4% from 5.8% in 2Q20, benefitting from the volume recovery in both chips and extruded categories.

− Food seasonings. 3Q20 revenues down -6.8% QoQ, partly on Pinehill consolidation, though YoY trends remained strong in revenues (+21.2% YoY) and volume (~26% YoY).

− Nutrition & special foods. 3Q20 revenues fell -10.8% YoY with YoY volume decline staying at high-teens, likely as out-of-home activities have not fully normalized.

− Beverages. Beverages remained weak, with revenue down -43.7% YoY (2Q20: -52.3% YoY) as YoY volume decline stayed >20%. The ratio of operating loss to sales improved to -4.8% in 3Q20 from -19.0% on favorable raw material costs and limited A&P spending.

Valuation and recommendation. We have a Buy rating with an SOTP-derived PT of Rp12,050, implying a 2021 PE of 22.2x. ICBP now trades on an undemanding 2021 PE of 18.3x.

ICBP 3Q20 RESULT SUMMARY

P&L (Rp bn) 9M20 9M19 YoY 3Q20 3Q19 YoY 2Q20 QoQ % of Mansek

% of Consensus

Revenue 33.897 32.790 3,4% 10.849 10.660 1,8% 11.041 -1,7% 76% 72% Gross profit 12.329 11.259 9,5% 3.999 3.747 6,7% 4.148 -3,6% 79% 75% Selling expense 4.169 3.952 5,5% 1.444 1.360 6,2% 1.336 8,1% 80%

G&A expense 1.907 1.634 16,7% 641 495 29,7% 667 -3,9% 87%

EBIT 6.253 5.672 10,2% 1.913 1.893 1,1% 2.145 -10,8% 76% 72% Interest income 291 132 119,4% 102 35 192,0% 101 0,5% 96%




P&L (Rp bn) 9M20 9M19 YoY 3Q20 3Q19 YoY 2Q20 QoQ % of

Mansek % of

Consensus Interest expense (188) (119) 58,0% (102) (45) 128,5% (37) 176,8% 121%

Forex gain/loss (559) (47) 1087,1% (860) 9 -9428,0% (241) 256,8% 4044%

PBT 5.743 5.752 -0,2% 999 1.925 -48,1% 1.989 -49,8% 69% 67% Tax (1.406) (1.632) -13,9% (247) (534) -53,8% (508) -51,4% 67%

PATMI 3.963 3.886 2,0% 585 1.311 -55,4% 1.396 -58,1% 66% 67% Adjusted PATMI 4.425 3.838 15,3% 1.275 1.280 -0,5% 1.566 -18,6% 74%

Margins

Gross 36,4% 34,3% 2,0% 36,9% 35,1% 1,7% 37,6% -0,7%

EBIT 18,4% 17,3% 1,1% 17,6% 17,8% -0,1% 19,4% -1,8%

Net profit 11,7% 11,8% -0,2% 5,4% 12,3% -6,9% 12,6% -7,3%

Net revenue breakdown Noodles 22.267 21.146 5,3% 7.237 6.905 4,8% 7.308 -1,0% 77%

Dairy 6.107 5.994 1,9% 1.904 1.922 -0,9% 2.008 -5,2% 73%

Food Seasonings 1.813 1.462 24,0% 547 452 21,2% 587 -6,8% 83%

Snack Foods 2.067 2.026 2,0% 663 643 3,1% 661 0,3% 77%

Nutrition and Special Foods 709 699 1,4% 224 251 -10,8% 228 -1,9% 80%

Beverage 935 1.463 -36,1% 274 487 -43,7% 249 10,2% 64%

EBIT breakdown

Noodles 5.042 4.790 5,3% 1.546 1.668 -7,3% 1.871 -17,3% 75%

Dairy 744 880 -15,4% 210 230 -8,7% 154 36,7% 71%

Food Seasonings 260 208 25,0% 81 57 41,0% 116 -30,3% 88%

Snack Foods 214 (65) -431,8% 78 (2) -4239,1% 40 96,8% 90%

Nutrition and Special Foods 37 27 36,9% 9 8 17,5% 14 -38,9% 74%

Beverage (43) (167) -74,0% (13) (67) -80,4% (47) -72,2% 30%

EBIT margin (gross sales) Noodles 22,0% 22,1% -0,1% 20,9% 23,5% -2,6% 24,8% -3,9%

Dairy 12,0% 14,7% -2,7% 10,8% 12,0% -1,2% 7,5% 3,2%

Food Seasonings 11,4% 11,1% 0,3% 12,2% 9,5% 2,7% 15,2% -2,9%

Snack Foods 10,0% -3,1% 13,1% 11,4% -0,3% 11,7% 5,8% 5,7%

Nutrition and Special Foods 5,2% 3,9% 1,4% 3,9% 3,0% 0,9% 6,3% -2,4%

Beverage -4,6% -11,4% 6,8% -4,8% -13,8% 9,0% -19,0% 14,2%

Source: Company, Bloomberg, Mandiri Sekuritas

Adrian Joezer (+6221 5296 9415) [email protected] Riyanto Hartanto (+6221 5296 9488) [email protected] Indofood Sukses Makmur: Weak CBP PATMI Offset Strong Flour and Agri (INDF; Rp7,100; Buy; TP: Rp9,950)

3Q20 PATMI came out weaker than expected, with the strong profit margin recovery in Bogasari and agribusiness offset by ICBP’s weak PATMI on account of weak domestic revenue and material FX losses related to the FX-denominated debt for the acquisition of Pinehill.

3Q20 PATMI missed estimates. INDF delivered PATMI of Rp1,485bn in 3Q20, a decline of -36.8% QoQ and -7.7% YoY, translating into 9M20 PATMI of Rp3,753bn (+6.3% YoY), which only formed 63%/66% of MANSEK/consensus FY20 estimates. While the 9M20 revenues/EBIT were relatively aligned at 74%/77% of MANSEK’s estimate and 72%/73% of consensus, the large deviations came from the material translational FX losses of Rp938bn in 3Q20 related to the USD and JPY debts taken by ICBP to acquire Pinehill. Strong performance of Bogasari and Agribusiness helped offset the subdued trend in consumer branded products. Excluding non-recurring FX items, adjusted PATMI was in-line at Rp1,485bn in 3Q20 (+10.2%/+30.7% QoQ/YoY) and Rp4,374bn in 9M20 (+22.8% YoY).

Key highlights by division:




− Consumer branded products (CBP). The CBP division’s net revenues declined by -3.9% QoQ, with YoY growth unchanged at +2.8%. As explained in a separate report on Indofood CBP (report here: https://www.mandirisekuritas.co.id/r/iNwh?c=rsch), the domestic revenue trend is generally weak, in-line with the FMCG industry weakness as weak consumer purchasing power limits consumption preferences to essential categories. Weakness is seen in instant noodles (probably due to less snacking), sweetened condensed milk, and beverages. Meanwhile, the CBP’s 3Q20 EBIT margin declined by 1.1 ppt QoQ to 18.2% as soft commodity prices started recovering while A&P activities started normalizing. Pinehill’s contribution to instant noodles is still immaterial, as it has only been consolidated for a month.

− Bogasari. Net revenues inched up +2.9% QoQ in 3Q20 with the YoY trend improving to +0.2% from -6.8% in 2Q20, though flat YoY volume trend continues. There were no price increases in 3Q20, yet favorable wheat flour costs, as the global prices dipped by 5.8% QoQ in 2Q20 translated into a notable 4.8 ppt QoQ increase in 3Q20 EBIT margin to 8.5%. However, given the recent increase in global wheat prices, we do not rule the possibility of a margin normalization within the next 1-2 quarters.

− Agribusiness. Strengthening CPO prices, which recovered by 21.0% QoQ and 35.6% YoY to MYR 2,784/ton in 3Q20, helped INDF’s agribusiness performance, with 106.2%/505.9% YoY/QoQ jump in 3Q20 EBIT. This, nonetheless, is within our expectation. IndoAgri reported a 25% decline in its 3Q20 CPO sales volume, with 13.5% and 20.6% YoY declines in nucleus FFB and CPO production volumes. The decline in external FFB purchases was more material.

Valuation and recommendation. We have a Buy rating and an SOTP-derived PT of Rp9,950, implying a 2021F PE of 13.8x. INDF now trades on 2021 PE of 9.9x.

INDF 9M20 RESULT SUMMARY


Mansek % of

Consensus Revenue 58.776 57.845 1,6% 19.391 19.236 0,8% 20.080 -3,4% 74% 72%

Gross profit 18.830 16.999 10,8% 6.350 5.638 12,6% 6.197 2,5% 78% 75%

Selling expense 6.786 6.509 4,2% 2.332 2.221 5,0% 2.219 5,1% 77%

G&A expense 3.861 3.610 7,0% 1.146 1.099 4,3% 1.502 -23,7% 79%

EBIT 8.183 6.880 18,9% 2.872 2.318 23,9% 2.476 16,0% 77% 73%

Interest income 405 453 -10,5% 115 220 -47,6% 159 -27,6% 97%

Interest expense (1.156) (1.306) -11,5% (411) (424) -3,0% (375) 9,6% 93%

Forex gain/loss (664) 148 -550,0% (938) (8) 12402,6% 236 -497,0% -1088%

PBT 6.749 6.195 8,9% 1.789 1.960 -8,7% 2.501 -28,5% 65% 68%

Tax 2.020 2.000 1,0% 525 700 -25,1% 842 -37,7% 64%

Net profit 3.753 3.531 6,3% 910 986 -7,7% 1.439 -36,8% 63% 66%

Core profit 4.374 3.563 22,8% 1.485 1.136 30,7% 1.348 10,2% 74%

Margins Gross 32,0% 29,4% 2,6% 32,7% 29,3% 3,4% 30,9% 1,9%

EBIT 13,9% 11,9% 2,0% 14,8% 12,1% 2,8% 12,3% 2,5%

Net profit 6,4% 6,1% 0,3% 4,7% 5,1% -0,4% 7,2% -2,5%

Net revenues

CBP 33.493 32.251 3,9% 10.834 10.535 2,8% 11.279 -3,9% 75%

Flour 13.239 13.818 -4,2% 4.525 4.516 0,2% 4.397 2,9% 70%

Agribusiness 8.625 8.642 -0,2% 2.921 3.130 -6,7% 3.221 -9,3% 75%

Distribution 3.419 3.135 9,1% 1.112 1.055 5,3% 1.183 -6,1% 79%

EBIT

CBP 6.191 5.477 13,0% 1.982 1.809 9,6% 2.185 -9,3% 75%

Flour 1.241 1.140 8,9% 477 294 62,2% 211 126,4% 88%





Mansek % of

Consensus Agribusiness 572 128 346,9% 348 169 106,2% 57 505,9% 76%

Distribution 135 148 -9,1% 50 46 6,5% 9 447,7% 60%

EBIT margin (gross sales)

CBP 18,4% 16,9% 1,5% 18,2% 17,1% 1,1% 19,3% -1,1%

Flour 7,5% 6,6% 0,8% 8,5% 5,2% 3,4% 3,7% 4,8%

Agribusiness 5,5% 1,3% 4,3% 10,1% 4,7% 5,4% 1,6% 8,5%

Distribution 3,9% 4,7% -0,8% 4,5% 4,4% 0,1% 0,8% 3,7%

Source: Company, Mandiri Sekuritas, Bloomberg

Adrian Joezer (+6221 5296 9415) [email protected] Riyanto Hartanto (+6221 5296 9488) [email protected] Pakuwon Jati: Acquisition of Central Java Malls Value-Accretive (PWON; Rp500; Buy; TP: Rp770)

PWON acquired two investment properties located in Jogjakarta and Solo. The purchase cost of IDR 1,359bn was paid in cash. We see this as a value-accretive purchase by the company, at valuation which is discounted. The acquisition raises NAV estimate by 5% and annual recurring revenues by 9%. Maintain Buy on PWON at higher PT.

Acquisition of Hartono brand malls. PWON acquired the properties – a mall-and-hotel mixed use in Jogjakarta, and a mall in Solo, from the Duniatex group, which defaulted on a bond last year. In aggregate, the malls have NLA of 110k sqm while the Marriott-run hotel contains 347 rooms, adding 17 and 18% to PWON’s mall NLA and hotel rooms portfolio.

Well-occupied assets. The Jogjakarta mall is the more prominent of the two, targeted at the higher-income crowd and is superior in NLA and location compared to the Solo mall. Occupancy on a blended basis stands at 90%. Nonetheless, PWON provides that ARR for both malls are currently below potential at IDR 140k psm at Hartono Jogjakarta and IDR 100k psm at Hartono Solo Baru. Following this acquisition it aims to gradually better unlock the potential of the two malls. We estimate an annual increase of 9% to total recurring income from the acquisition.

Value-accretive to PWON. The acquisition was done by 67%-owned subsidiary Pakuwon Permai, at IDR 1,359bn in cash payment. Based on the 2019 operations, cap rate on the purchase would be 13% based on the pre-tax acquisition cost (10.8% post-tax), while our DCF estimate values them at IDR 2tn. Hence, at the acquisition cost of IDR 1.4tn, the purchase is value-accretive in our view. The structure with Permai holding the assets was due to Permai having had the strongest cash position in the group. We are less concerned by potential GCG issues which might arise due to the structure, as the assets’ value was fair and were acquired from non-related parties.

Upgrade PT to IDR 770. We upgrade our PT from IDR 700 on the back of this acquisition, as well as reduction in WACC following lowering of our house risk-free rate assumption to 5.8% (from 6.3%). Our new PT of IDR 770 is based on SOTP DCF assuming WACC at 9.9%.




FINANCIAL SUMMARY YE Dec (Rp Bn) 2018A 2019A 2020F 2021F 2022F EBITDA 3,903 3,922 2,101 3,113 3,680

Net Profit 2,543 2,720 985 1,879 2,361

Fully-diluted EPS 53 56 20 39 49

Fully-diluted EPS growth (%) 35.9 6.9 (63.8) 90.7 25.6

P/E Ratio (x) 9.5 8.9 24.4 12.8 10.2

EV/EBITDA (x) 7.2 7.1 14.1 9.4 7.7

P/B Ratio (x) 1.9 1.6 1.5 1.4 1.2

Dividend Yield (%) 1.2 1.4 1.2 1.2 1.2

ROAE (%) 22.2 19.7 6.4 11.4 12.9


NAV BREAKDOWN

Landbank ASP Attributable

Gross Net Value

(ha) (IDRm/sqm) (IDRb)

Landbank

Pakuwon City Township 241.1 14.3 21,850

Grand Pakuwon Township 167.7 11.2 11,850

Others - East Surabaya 21.5 10.7 977

Superblock fringe land 38.5 4,597

Landbank value 39,274

Less: discount 60;4%

Discounted Land bank NAV 15,541

Investment Properties 21,503

Malls 17,351

Hotels 1,971

Office lease 2,181

Mixed use & Apartments 1,867

Total value 38,911

Net Debt (1,377)

Advance from customers (561)

Adj. NAV 36,972

Outstanding shares (mn) 48,160

Adj. NAV/share 770

Source: Company, Mandiri Sekuritas estimates Robin Sutanto (+6221 5296 9572) [email protected] United Tractors: Analyst Meeting Conference Call Key Takeaways (UNTR; Rp23,000; Buy; TP: Rp31,700)

UNTR’s guidance for FY21F is generally very conservative in our view: expecting a slow recovery in equipment and lower output at Pama amid the uncertainty in coal price outlook. We reiterate our Buy call on UNTR with Rp31,700TP for its strong exposure to gold and attractive valuation at 7.9x FY21F PE, close to the tough coal cycle in 2016.

Intensifying competition in the small machine. UNTR targets 10-15% growth in Komatsu sales to 1,700 units in FY21F, lower than our forecast of 2,000 units. Sales of big machine are estimated at around 8% of total sales, similar to 2020, but lower than 21% of total volume in 2019. Thus, blended ASP will be largely unchanged, with more upside if coal price recovers. Meanwhile, competition is heating up in the price-sensitive small equipment market (agriculture and forestry), particularly from Hitachi. Komatsu decided not to join the price competition but prefers to provide better products, increase coverage, and expand distribution channels to get more customers. Komatsu also plans to introduce a new




model (20-ton hydraulic excavator) suitable for the economical segment with a lower price in April next year. UNTR expects higher sales to the construction sector, as demand from the mining sector is estimated to remain weak, in-line with low coal prices of avg. USD 60/ton in FY21F, based on internal forecast. Demand for nickel will remain strong next year, but the needed equipment size is not the same as in the coal mining sector, as the nickel sector uses mid-size equipment.

Up to 5% lower output at Pama, limiting the possibility of margin expansions. UNTR internally sees up to 5% lower coal production and overburden in FY21F, depending on coal prices. This is more conservative than our forecast of 3% growth. Contractors’ fee discount will be largely similar to the 2020 level at around USD 175mn amid still-weak coal price outlook, which UNTR internally forecast at avg. USD 60/ton. Thus, our expectation of possible margin expansions next year amid a recovery in coal prices could be too aggressive, as we still see possible margin pressure from discount fees and lower equipment utilization. However, we believe Pama’s margin is already low, with limited downside risk but higher coal prices necessary to support higher margins.

Recovery in gold production – only 20% of gold output is hedged. UNTR targets 350k toz of gold production at Martabe in FY21F from 320k toz this year but still lower than 400k toz in 2019 due to lower grade and lower gold recovery. UNTR has increased its amount of ore processed from 5.4mn tons in 2017 to 6.0mn tons in 2019 to compensate for lower gold grade, but as its ore processing facility has reached an optimum level (6mn tons), the annual gold production declined to 350k toz from 400k toz in 2019. In terms of gold hedging, the company targets 20% of its gold output will be hedged, with 80% exposure to the spot market.

UNTR plans to spend USD 290mn capex this year: USD 140mn for Pama, USD 120mn for Martabe, and the remaining USD 30mn for others.

PE BAND PBV BAND

Source: Bloomberg Source: Bloomberg

Ariyanto Kurniawan (+6221 5296 9682) [email protected] Wesley Louis Alianto (+6221 5296 9510) [email protected]




Market Recap November 30th 2020; JCI 5,612.42 Points -170.92 pts (-2.96%); Valued $2.26bn; Mkt Cap $455bn; USD/IDR 14,179

TOP TURNOVER: TOWR BBCA MDKA TLKM BBRI ASII HMSP BMRI BBNI EXCL ICBP ADRO BRIS PGAS UNTR ANTM PTBA AKRA ITMG DOID (67%)

ADVANCING SECTOR: plantation+2.2%;

DECLINING SECTOR: telco-5.9%; construction-5.0%; auto-4.6%; financial-3.3%; cement-3.1%; consumer-2.6%; property-1.6%; mining-0.2%

Indo stocks dropped the most in Asia after record COVID-19 infections. The national daily infection rate jumped to 20% on Sunday, versus 3DMA +17% versus 7DMA +14%. Driver of higher infection rate mainly from outside Jakarta. Head of West Java Task Force Daud Achmad said movement restriction in cities bordering Jakarta, including Bogor, Depok and Bekasi, is extended until Dec 23rd. Helping sentiment in Asia was a survey showing factory activity in China handily beat forecasts in Nov. China’s factory activity expanded at the fastest pace in more than three years, and growth in the services sector also hit a multi-year high. The JCI dropped 3% to close at 5612 level, the most since Nov 12th. CPO plays all rallied: BWPT+8.7% AALI+5.8% LSIP+1.7%. PWON lost 3.9% after acquiring Delta Merlin’s assets worth IDR1.36TN, consisting of Hartono Mall Yogyakarta, Hotel Marriott Yogyakarta and Hartono Solo Baru. The acquisition aimed at helping PWON expand business outside Surabaya and Jakarta. Market turnover (excluding $9.5MN FREN; $7.7MN CARE; $4.8MN NATO crossing) stayed strong at $2.26BN. Foreign participants doubled to 43% and came up better seller for 20%. Losers beat gainers by 7 to 2. The IDR together with Thai baht were the region’s top performing currencies of the month. The IDR maintained presence at 14179 level. The govt bonds have also outperformed most of global peers in Nov as overseas demand continued to recover. The bonds have gained 2.7% this month, the third best performer among the 46 sovereign markets. The 10-year govt bond yield fell 2 bps to 6.18% on Monday. Global funds bought a net $945.6MN in Indo bonds in Nov, following purchases of $1.45BN in Oct, which was the most in a year.

Sales Team +6221 527 5375

The one million housing program reached 760k unit As of 30 Nov-20. Of the total, about 75% is for low-income community houses. (Investor Daily)

MARKET

FROM THE PRESS




Daily Covid-19 Update: Data as of 30 Nov’20

Testing: Daily specimens tested was 40k yesterday. Daily case tested was 30k yesterday.

New cases: Indo recorded 4,617 new cases yesterday.

Infection rate: Daily national infection returned to 15% yesterday (vs. 3DMA 17%/7DMA 15%). Jakarta daily infection rate was 19% (vs. 3DMA 10%/7DMA 9%).

Epicenters: Jakarta (+1,099); Central Java (+899); West Java (+741).

From the news:

− Wisma Atlet converted one of its isolation tower (Tower 4) for emergency hospital starting 30 Nov. Currently, Wisma Atlet has 3 towers for emergency hospital (Tower 4,6,7) with 52% BOR. Isolation (Tower 5) currently at 73% BOR. Govt will allocate more hotels for isolation. (see chart)

− PSBB Proporsional in Bogor, Depok, Bekasi is extended until 23 Dec-20.

− Moderna announced final result of phase 3 trial with 94% efficacy, proven to prevent severe Covid-19 symptoms. Co expects to receive approval in next few weeks.

COVID-19 INDONESIA




Inggrid Gondoprastowo (+6221 5296 9450) [email protected] Adrian Joezer (+6221 5296 9415) [email protected]




Indices and Fund Flows Currencies and Bonds Major Commodities

Indices Last Chg (%) YTD Chg

(%) Currency Last Chg (%)

YTD Chg (%)

Last Chg (%) YTD

Chg (%)

JCI 5,612.4 -3.0 -10.9 Rp/US$ 14,120 +0.21 -1.9 Crude Oil, WTI (US$/bl) 45.34 -0.4 -25.7

Dow Jones 29,638.6 -0.9 +3.9 US$/EUR 1.193 -0.30 -6.0 Copper (US$/mt) 7,569 +1.1 +23.1

Nikkei 26,433.6 -0.8 +11.7 YEN/US$ 104.31 +0.21 +4.1 Nickel (US$/mt) 15,985 -2.6 +14.6

Hang Seng 26,341.5 -2.1 -6.6 SGD/US$ 1.342 +0.25 +0.3 Gold (US$/oz) 1,777 -0.6 +17.1

STI 2,806.0 -1.8 -12.9 Tin 3-month (US$/mt) 18,621 -1.5 +8.4

Ishares indo 21.8 -4.1 -15.2 CPO futures (Ringgit/ton) 3,305 -1.0 +9.0

Coal (US$/ton) 70.3 +10.0 +3.8

Foreign Fund Flows (US$mn)

Last Chg YTD Chg

Gov. Bond Yield

Last Chg

(bps)

YTD Chg

(bps) Rubber forward (US¢/kg) 249.5 -0.0 +50.0

Equity Flow -231.5 -2,941 5Yr 5.08 -2 -136 Soybean oil (US$/100gallons)

37.88 -2.1 +9.8

Bonds Flow -14.8 -5,111 10Yr 6.18 -1 -88 Baltic Dry Index 1,230.0 +1.0 +12.8




Equity Valuation Price Price % of Mkt Cap Net Profit PER (x) P/BV (x) EV/EBITDA (x) EPS Growth Div.Yield

Code Rating (Rp) Target PT (Rp Bn) 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021

MANSEK universe 5,612 5,540 -1.3 4,111,491 186,842 257,577 22.0 16.0 2.3 2.1 14.6 12.4 -25.9% 37.9% 3.0% 2.4%

Banking 1,603,487 64,115 101,348 25.0 15.8 2.3 2.1 N.A. N.A. -33.4% 58.1% 2.5% 1.5%

BBCA Neutral 31,025 35,000 12.8 764,922 26,722 32,541 28.6 23.5 4.2 3.8 N.A. N.A. -6.5% 21.8% 1.8% 1.6%

BBNI Buy 6,000 7,500 25.0 111,892 4,249 13,755 26.3 8.1 1.0 0.9 N.A. N.A. -72.4% 223.7% 3.4% 0.9%

BBRI Neutral 4,090 4,000 (2.2) 504,291 19,246 33,603 26.2 15.0 2.6 2.3 N.A. N.A. -44.0% 74.6% 3.4% 1.1%

BBTN Buy 1,645 1,900 15.5 17,421 1,510 2,120 11.5 8.2 1.0 0.9 N.A. N.A. 621.6% 40.4% 3.2% 1.7%

BDMN Buy 3,170 4,000 26.2 30,383 2,703 4,752 11.2 6.4 0.7 0.6 N.A. N.A. -33.6% 75.8% 4.7% 3.1%

BJBR Buy 1,325 860 (35.1) 13,036 1,260 1,438 10.3 9.1 1.2 1.1 N.A. N.A. -19.2% 14.1% 7.1% 7.1%

BJTM Buy 635 590 (7.1) 9,527 1,146 1,434 8.3 6.6 1.0 0.9 N.A. N.A. -16.8% 25.2% 7.6% 7.6%

BNGA Buy 830 840 1.2 20,859 2,340 4,211 8.9 5.0 0.5 0.5 N.A. N.A. -35.8% 80.0% 7.0% 4.5%

BNLI Sell 2,390 430 (82.0) 67,022 909 1,494 73.7 44.9 2.8 2.6 N.A. N.A. -39.4% 64.4% 0.0% 0.0%

PNBN Buy 990 1,100 11.1 23,847 1,976 3,508 12.1 6.8 0.6 0.5 N.A. N.A. -40.4% 77.5% 0.0% 0.0%

BTPS Buy 4,130 3,200 (22.5) 31,816 1,189 1,547 26.8 20.6 5.0 4.2 N.A. N.A. -15.1% 30.1% 0.9% 0.7%

BFIN Buy 382 475 24.3 5,716 781 841 7.3 6.8 0.9 0.8 N.A. N.A. 9.7% 7.7% 3.1% 4.1%

AMOR Buy 2,610 2,500 (4.2) 2,755 80 88 34.6 32.8 9.6 10.0 25.8 27.5 -12.9% 5.6% 3.2% 2.9%

Construction & materials 201,835 3,664 8,077 55.1 25.0 1.6 1.5 16.0 11.8 -70.9% 120.5% 1.5% 0.9%

INTP Buy 14,300 14,500 1.4 52,642 1,673 2,003 31.5 26.3 2.2 2.1 14.6 12.8 -8.9% 19.8% 1.2% 1.1%

SMGR Buy 11,700 11,020 (5.8) 69,399 2,520 2,825 27.5 24.6 2.1 1.9 10.7 10.1 5.4% 12.1% 1.8% 1.4%

ADHI Buy 1,090 810 (25.7) 3,881 105 361 36.9 10.8 0.7 0.6 9.9 7.6 -84.2% 243.0% 3.4% 0.5%

PTPP Buy 1,360 1,370 0.7 8,432 219 754 38.5 11.2 0.7 0.7 11.3 7.4 -76.5% 244.3% 3.3% 0.8%

WIKA Buy 1,620 1,680 3.7 14,516 561 1,159 25.9 12.5 1.0 0.9 9.5 7.3 -75.4% 106.5% 0.8% 1.6%

WSKT Buy 1,040 1,230 18.3 13,916 -2,141 -1,501 -6.5 -9.3 1.4 1.6 37.3 23.1 N/M 29.9% -3.1% -2.2%

WTON Buy 350 500 42.9 3,050 285 438 10.7 7.0 0.8 0.8 4.7 3.3 -44.4% 53.7% 5.0% 2.8%

WSBP Buy 212 195 (8.0) 5,589 -115 83 -48.5 67.4 0.8 0.8 21.1 14.9 N/M N/M 7.2% 0.0%

JSMR Buy 4,190 7,040 68.0 30,410 557 1,957 54.5 15.5 1.6 1.5 21.5 11.8 -74.7% 251.0% 1.5% 0.4%

Consumer staples 898,176 41,277 51,577 21.8 17.4 4.7 4.2 14.0 11.5 -14.8% 25.0% 3.9% 3.3%

ICBP Buy 9,900 12,050 21.7 115,453 5,977 6,319 19.3 18.3 4.0 3.6 11.4 11.0 18.6% 5.7% 2.2% 2.6%

INDF Buy 7,100 9,950 40.1 62,338 5,919 6,307 10.5 9.9 1.5 1.4 6.5 6.2 20.6% 6.5% 3.9% 4.7%

MYOR Buy 2,380 2,600 9.2 53,214 2,413 2,190 22.1 24.3 4.7 4.2 15.1 13.9 21.4% -9.2% 1.4% 1.7%

UNVR Buy 7,725 9,700 25.6 294,709 7,420 8,138 39.7 36.2 58.9 54.7 27.9 25.6 0.3% 9.7% 2.5% 2.5%

GGRM Buy 42,250 63,450 50.2 81,293 7,422 10,321 11.0 7.9 1.5 1.4 7.2 5.7 -31.8% 39.1% 6.2% 6.2%

HMSP Buy 1,525 2,400 57.4 177,385 8,342 13,384 21.3 13.3 5.8 5.0 16.3 9.7 -39.2% 60.4% 7.6% 4.6%

KLBF Buy 1,505 1,900 26.2 70,547 2,731 2,842 25.8 24.8 4.1 3.7 17.5 16.6 9.0% 4.1% 1.9% 2.0%

SIDO Buy 760 980 28.9 22,800 912 1,011 25.0 22.5 7.1 6.8 18.7 16.8 12.9% 10.9% 3.3% 3.9%

MLBI Buy 9,700 13,250 36.6 20,438 141 1,063 145.5 19.2 53.5 15.7 35.5 12.3 -88.3% 656.9% 4.4% 0.7%

Healthcare 59,007 842 1,080 70.1 54.6 4.6 4.3 24.6 19.9 30.2% 28.3% 0.1% 0.1%

MIKA Buy 2,700 2,750 1.9 39,287 547 659 71.9 59.7 8.7 7.9 47.4 38.2 -25.1% 20.5% 0.0% 0.0%

SILO Buy 5,000 5,950 19.0 8,125 -44 22 -184.7 365.8 1.4 1.4 11.1 8.7 87.0% N/M 0.0% 0.0%

HEAL Buy 3,900 4,000 2.6 11,595 339 400 34.2 29.0 4.7 4.1 14.5 12.0 32.9% 17.8% 0.3% 0.4%

Consumer discretionary 315,830 21,000 25,795 15.0 12.2 1.6 1.5 10.6 8.4 -29.8% 22.8% 4.0% 3.2%

ACES Neutral 1,585 1,500 (5.4) 27,183 711 1,055 38.2 25.8 5.5 4.8 29.4 20.9 -31.0% 48.5% 1.9% 1.3%

LPPF Buy 1,265 1,800 42.3 3,691 50 497 73.2 7.4 2.1 1.6 6.0 2.4 -96.3% 884.6% 0.0% 0.4%

MAPA Buy 2,570 3,850 49.8 7,326 54 606 134.5 12.1 2.4 2.0 18.8 6.4 -92.1% 1013.2% 0.0% 0.2%

MAPI Buy 805 1,000 24.2 13,363 -1,704 543 -7.8 24.6 3.2 2.8 -126.9 8.0 N/M N/M 1.6% 0.0%

RALS Buy 730 700 (4.1) 5,180 -132 143 -39.3 36.3 1.5 1.4 -69.4 15.1 N/M N/M 7.4% -1.7%

ERAA Buy 1,720 2,000 16.3 5,487 268 436 20.5 12.6 1.1 1.0 10.2 8.7 -9.3% 63.0% 1.0% 1.6%

ASII Buy 5,300 6,300 18.9 214,563 17,763 18,098 12.1 11.9 1.4 1.3 10.2 8.7 -18.2% 1.9% 4.6% 3.7%

SCMA Buy 1,645 1,800 9.4 24,227 1,566 1,693 15.5 14.3 4.1 3.7 10.8 10.3 35.7% 8.1% 4.5% 4.9%

MNCN Buy 1,015 2,200 116.7 12,590 2,427 2,593 5.2 4.9 0.9 0.8 3.8 3.3 24.1% 6.8% 2.9% 3.1%

PZZA Buy 735 750 2.0 2,221 -2 130 -1,076.5 17.1 1.8 1.6 12.2 6.5 N/M N/M 4.5% 0.0%

Commodities 311,628 21,057 25,415 14.8 12.3 1.3 1.3 5.5 4.7 -13.3% 20.7% 2.7% 3.0%

UNTR Buy 23,000 31,700 37.8 85,793 7,172 10,603 12.0 8.1 1.4 1.2 4.8 3.5 -36.6% 47.8% 2.5% 3.7%

ADRO* Neutral 1,390 1,350 (2.9) 44,460 372 353 8.4 8.9 0.8 0.8 3.4 3.3 -7.9% -5.2% 4.2% 3.9%

HRUM* Neutral 2,780 1,300 (53.3) 7,135 17 14 28.6 36.9 1.6 1.5 8.7 9.8 -5.9% -21.7% 1.9% 1.5%

INDY* Neutral 1,710 910 (46.8) 8,909 2 6 377.9 98.5 0.7 0.7 2.3 1.9 N/M 286.9% 0.1% 0.3%




Price Price % of Mkt Cap Net Profit PER (x) P/BV (x) EV/EBITDA (x) EPS Growth Div.Yield

Code Rating (Rp) Target PT (Rp Bn) 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021

ITMG* Neutral 13,100 10,450 (20.2) 14,365 100 101 10.0 10.0 1.1 1.1 3.8 3.7 -20.8% 0.9% 8.5% 8.5%

PTBA Neutral 2,360 2,350 (0.4) 27,193 3,482 3,496 7.8 7.7 1.5 1.4 4.9 4.8 -18.3% 0.4% 9.6% 9.6%

ANTM Buy 1,145 1,300 13.5 27,515 1,107 1,320 24.9 20.8 1.2 1.2 10.2 9.6 470.9% 19.3% 1.4% 1.7%

INCO* Neutral 4,610 4,000 (13.2) 45,807 103 106 31.2 30.4 1.6 1.5 9.9 9.5 78.6% 3.7% 0.0% 0.0%

TINS Neutral 1,070 800 (25.3) 7,969 -111 357 -71.7 22.3 1.5 1.4 19.3 10.6 81.8% N/M -0.5% 1.6%

MDKA* Buy 1,940 2,100 8.2 42,481 64 99 46.4 30.1 5.3 4.6 14.7 11.3 -11.8% 55.2% 0.0% 0.0%

Property & Industrial Estate 117,970 5,740 8,875 20.6 13.3 0.9 0.9 12.0 10.4 -29.2% 54.6% 2.1% 1.5%

ASRI Buy 236 210 (11.0) 4,637 42 683 111.0 6.8 0.4 0.4 11.3 8.2 -95.9% 1534.2% 0.8% 0.8%

BSDE Buy 1,050 1,160 10.5 22,230 1,399 2,050 15.9 10.8 0.7 0.7 11.9 11.0 -54.4% 46.5% 0.0% 0.4%

CTRA Buy 925 1,120 21.1 17,168 832 1,094 20.6 15.7 1.1 1.0 12.3 10.6 -28.2% 31.5% 0.8% 0.8%

JRPT Buy 525 670 27.6 7,219 997 1,065 7.2 6.8 0.9 0.8 6.4 5.8 -1.9% 6.7% 3.7% 0.1%

PWON Buy 500 770 54.0 24,080 985 1,879 24.4 12.8 1.5 1.4 14.1 9.4 -63.8% 90.7% 1.2% 1.2%

SMRA Buy 820 960 17.1 11,830 420 604 28.2 19.6 1.5 1.4 11.8 10.6 -18.5% 43.8% 0.6% 0.6%

LPKR Neutral 234 200 (14.5) 16,519 74 391 223.7 42.2 0.6 0.6 13.0 13.1 N/M 429.7% 0.4% 0.4%

DMAS Buy 260 300 15.4 12,532 885 988 14.2 12.7 2.1 2.2 13.7 12.3 -33.7% 11.7% 12.3% 8.1%

BEST Neutral 182 130 (28.6) 1,756 107 122 16.5 14.4 0.4 0.4 7.4 10.7 -72.0% 14.2% 1.9% 0.5%

Telecom 450,257 24,823 26,452 18.1 17.0 2.9 2.7 6.1 5.8 -0.7% 6.6% 4.0% 4.3%

EXCL Buy 2,410 3,600 49.4 25,665 2,186 1,340 11.7 19.1 1.2 1.2 4.6 4.3 207.9% -38.7% 0.8% 0.7%

TLKM Buy 3,230 3,900 20.7 319,971 19,403 21,026 16.5 15.2 3.1 3.0 5.8 5.5 4.0% 8.4% 4.9% 5.3%

ISAT Buy 2,200 3,200 45.5 11,955 -1,046 -648 -11.4 -18.5 1.0 1.1 4.3 3.8 N/M 38.1% 0.0% 0.0%

LINK Buy 2,420 3,300 36.4 6,867 736 744 9.3 9.2 1.4 1.3 4.0 4.0 -17.8% 1.1% 6.4% 5.4%

TBIG Buy 1,425 1,400 (1.8) 30,824 1,068 1,264 28.9 24.4 5.6 5.0 12.6 11.7 30.4% 18.3% 1.9% 1.9%

TOWR Buy 1,095 1,300 18.7 54,975 2,476 2,725 22.2 20.2 5.5 4.8 12.1 11.3 5.7% 10.1% 2.2% 2.2%

Transportation 2,877 -175 251 -16.4 11.5 0.6 0.5 12.2 4.8 -155.7% N/M -1.5% 2.2%

BIRD Buy 1,150 1,700 47.8 2,877 -175 251 -16.4 11.5 0.6 0.5 12.2 4.8 N/M N/M -1.5% 2.2%

Poultry 116,728 2,988 5,574 39.1 20.9 3.3 2.9 17.5 11.8 -46.2% 86.5% 1.3% 1.1%

CPIN Buy 6,075 6,950 14.4 99,618 2,775 3,728 35.9 26.7 4.4 4.0 20.6 16.7 -23.6% 34.3% 1.3% 1.2%

JPFA 1,700

15,655 344 1,696 45.5 9.2 1.4 1.2 11.2 5.8 -80.5% 392.5% 1.5% 0.7%

MAIN Buy 650 700 7.7 1,455 -131 150 -11.1 9.7 0.7 0.7 13.2 4.8 N/M N/M 0.0% 0.0%

Oil and Gas 33,696 1,511 3,133 22.3 10.8 0.9 0.9 7.3 5.8 61.2% 107.4% 1.8% 3.7%

PGAS* Buy 1,390 1,700 22.3 33,696 106 221 22.3 10.8 0.9 0.9 7.3 5.8 56.4% 109.1% 1.8% 3.7%

Note: - *) net profit in USD mn - U/R means Under Review - n/a means Not Available - N/M means Not Meaningful - N.A means Not Applicable


Mandiri Sekuritas A subsidiary of PT Bank Mandiri (Persero) Tbk Menara Mandiri Tower I, 25th floor, Jl. Jend. Sudirman Kav. 54 – 55, Jakarta 12190, Indonesia

General: +62 21 526 3445, Fax : +62 21 527 5374 (Equity Sales)

Adrian Joezer Head of Equity Research, Strategy, Consumer [email protected] +6221 5296 9415 Tjandra Lienandjaja Deputy Head of Equity Research, Banking [email protected] +6221 5296 9617 Ariyanto Kurniawan Automotive, Coal, Metal Mining, Chemical [email protected] +6221 5296 9682 Kresna Hutabarat Telecom, Media [email protected] +6221 5296 9542 Lakshmi Rowter Healthcare, Consumer, Retail [email protected] +6221 5296 9549 Robin Sutanto Property, Building Material [email protected] +6221 5296 9572 Edbert Surya Construction, Transportation [email protected] +6221 5296 9623 Silvony Gathrie Banking [email protected] +6221 5296 9544 Inggrid Gondoprastowo Healthcare, Consumer, Retail [email protected] +6221 5296 9450 Riyanto Hartanto Poultry, Research Assistant [email protected] +6221 5296 9488 Henry Tedja Research Assistant [email protected] +6221 5296 9434 Wesley Louis Alianto Research Assistant [email protected] +6221 5296 9510 Leo Putera Rinaldy Chief Economist [email protected] +6221 5296 9406 Imanuel Reinaldo Economist [email protected] +6221 5296 9651 Silva Halim Managing Director [email protected] +6221 527 5375 Lokman Lie Head of Equity Capital Market [email protected] +6221 527 5375 Andrew Handaya Institutional Sales [email protected] +6221 527 5375 Feliciana Ramonda Institutional Sales [email protected] +6221 527 5375 Henry Pranoto Institutional Sales [email protected] +6221 527 5375 Kevin Giarto Institutional Sales [email protected] +6221 527 5375 Sharon Anastasia Tjahjadi Institutional Sales [email protected] +6221 527 5375 Talitha Medha Anindya Institutional Sales [email protected] +6221 527 5375 Angga Aditya Assaf Institutional Sales [email protected] +6221 527 5375 Ilona Carissa Institutional Sales [email protected] +6221 527 5375 Kusnadi Widjaja Equity Dealing [email protected] +6221 527 5375 Edwin Pradana Setiadi Equity Dealing [email protected] +6221 527 5375 Jane Theodoven Sukardi Equity Dealing [email protected] +6221 527 5375 Michael Taarea Equity Dealing [email protected] +6221 527 5375 Andreas M. Gunawidjaja Head Retail Equities [email protected] 6221 5296 9693 Boy Triyono Jakarta [email protected] 6221 5296 5678 Care Center Online Jakarta [email protected] 14032 Ruwie Medan [email protected] 6261 8050 1825 Linawati Surabaya [email protected] 6231 535 7218 Maulidia Osviana Lampung [email protected] 62721 476 135 Aidil Idham Palembang [email protected] 62711 319 900 Yudhistira Putra Pradana Bandung [email protected] 6222 426 5088 Yuri Ariadi Pontianak [email protected] 62561 582 293 Yogiswara Perdana Yogyakarta [email protected] 62274 560 596 Achmad Rasyid Bali [email protected] 62361 475 3066 www.most.co.id [email protected] 14032

INVESTMENT RATINGS: Indicators of expected total return (price appreciation plus dividend yield) within the 12-month period from the date of the last published report, are: Buy (15% or higher), Neutral (-15% to15%) and Sell (-15% or lower). DISCLAIMER: This report is issued by PT. Mandiri Sekuritas, a member of the Indonesia Stock Exchanges (IDX) and Mandiri Sekuritas is registered and supervised by the Financial Services Authority (OJK). Although the contents of this document may represent the opinion of PT. Mandiri Sekuritas, deriving its judgement from materials and sources believed to be reliable, PT. Mandiri Sekuritas or any other company in the Mandiri Group cannot guarantee its accuracy and completeness. PT. Mandiri Sekuritas or any other company in the Mandiri Group may be involved in transactions contrary to any opinion herein to make markets, or have positions in the securities recommended herein. PT. Mandiri Sekuritas or any other company in the Mandiri Group may seek or will seek investment banking or other business relationships with the companies in this report. For further information please contact our number 62-21-5263445 or fax 62-21-5275374. ANALYSTS CERTIFICATION: Each contributor to this report hereby certifies that all the views expressed accurately reflect his or her views about the companies, securities and all pertinent variables. It is also certified that the views and recommendations contained in this report are not and will not be influenced by any part or all of his or her compensation.

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