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

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

  • This report is intended exclusively for Information.center@mandirisek.co.id. Unauthorized distribution is prohibited.

    Page 1 of 29 Please see important disclosure at the back of this report

    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

  • This report is intended exclusively for Information.center@mandirisek.co.id. Unauthorized distribution is prohibited.

    Equity Research | 1 December 2020

    Page 2 of 29 Please see important disclosure at the back of this report

    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) edbert.surya@mandirisek.co.id Adrian Joezer (+6221 5296 9415) adrian.joezer@mandirisek.co.id 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

  • This report is intended exclusively for Information.center@mandirisek.co.id. Unauthorized distribution is prohibited.

    Equity Research | 1 December 2020

    Page 3 of 29 Please see important disclosure at the back of this report

    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