finding direction in an uncertainty
TRANSCRIPT
Finding Direction in an
UncertaintyEconomic and Equity Outlook for 2019
3
Table of Contents
Market Outlook 2019
Economic Focus
Modest growth amid external pressure
Trade Balance
Improving trade balance
Currency Outlook
Rupiah in search of equilibrium
Inflation Outlook
Lower price through the controllable volatile food inflation
Indonesia Equity Strategy
Equity Focus
Selective growth strategy amid the intensify risk aversion environment
Company Focus
Banking
Maintaining high coverage ratio as countercyclical strategy
Bank Central Asia
Bank Rakyat Indonesia
Bank Mandiri
Bank Negara Indonesia
Bank Tabungan Negara
Property
Expecting revenue growth recovery
Ciputra Development
Alam Sutera Realty
Summarecon Agung
Consumer
Remain upbeat on selected retail and consumer company
Indofood CBP Sukses Makmur
Campina Ice Cream Industry
Sarimelati Kencana
Telecommunication
Telekomunikasi Indonesia
Media
Surya Citra Media
MNC Studios International
5
5
10
12
14
16
16
18
18
18
21
24
28
31
34
37
39
44
49
54
58
62
66
70
73
77
4
Distributor & Retailer
Ramayana Lestari Sentosa
Ace Hardware Indonesia
Erajaya Swasembada
Surya Pertiwi
Unrated
Indonesia Kendaraan Terminal
81
85
89
93
97
5
Market Outlook 2019
Economic Focus
Modest growth amid external pressure
Indonesia's economic growth faces significant challenges both from
external and internal sides. Increased uncertainty in global economic
growth related to trade wars, normalization of interest rate policies in the US,
weakening of the rupiah and other regional currencies over the USD and a
rise in domestic interest rates related to macro-prudential policies amid
external turmoil.
However, on the other hand, we also see the government's ability to
manage inflation to be quite positive so that it can sustain purchasing
power and maintain a moderate level of consumption, which has an
impact on Indonesia's economy which is slightly better this year. We expect
GDP to reach 5.2% compared to the previous year at the level of 5.1% while
the low and long-lasting inflation rate is below 4% during the year or in the
range of 3.4% this year that would provide the room for consumption growth
in the range of 5%yoy.
Amid the stable consumption growth, the investment in the supply
side had experienced an attractive growth at the level of 7%yoy. The
growth rate was relatively high compared to 4% for the last 4 years.
Improvement of infrastructure in the form of toll and non-toll roads, ports,
bridges is expected to be able to reduce the logistic cost and at the same time
to increase investment productivity when balanced with fast and efficient
licensing services. The consumption level is estimated to be at around 5%
next year on the back of the modest income growth, stable inflation and the
selective fiscal intervention through the social spending.
Improve loan growth. Credit grew by 10.7%yoy vs 7.6%yoy last year.
Even though the 7DRepo rate has increased to 6%, the tightening of liquidity
is offseted by easing loan to value (LTV) as well as easing the calculation of
risk weighted assets for the sector property. This is expected to be a growth
space in the consumption sector and property credit on the other hand. The
growth of property loans for subsidized houses has increased quite high at the
level of 30%yoy this year while non-subsidized houses are at the level of
14%. This shows strong demand, especially for the mid to low class segment.
Thus we estimate that moderate growth will still be a credit projection for the
coming year in the range 11%yoy to 14%yoy.
Fiscal stimulus space is limited considering the government will still
prioritize aspects of stability by keeping the primary balance to GDP
in 2019 near zero or at -0.13% from the previous deficit -0.41% and at
the same time reducing the deficit ratio to GDP to -1.8% compared to the
previous two years in the level -2.1% and -2.5% respectively. However, the
budget allocation for consumption stimulus in 2019 is quite large.
This can be seen in the budget allocation for social assistance. The
budget allocation in the form of cash transfers and near cash
transfers is believed to have a greater multiplier impact than
infrastructure budget.
Helmi Therik
+6221 80869900
6
Considering that propensity to consume for this allocation can reach above
90%. We think that it can be a fiscal driving force even with a more
stringent APBN posture. On the other hand, the lower fiscal deficit posture is
expected to increase credibility of government bonds amid the outflow
turmoil in the bond market along with the default risk sentiment and
contagious effects in Argentina, Turkey and Italy which have an impact on
rupiah volatility. We thus assess that external challenges will continue and
with a leaner fiscal deficit posture. However with the higher budget
allocations to encourage consumption on the other hand, it can offset the
negative effects from the smaller budget deficit. This was done to respond to
the problems of stability as well as the growth on the other side. However,
the allocation for infrastructure is still quite large, IDR420tn but the growth
is not as high as the previous year.
Lower 2019 fiscal deficit to (-1.84%) Significant primary balance improvement to
nearly zero to gain the fiscal credibility
Source: Bloomberg, Shinhan Sekuritas Indonesia Source: Bloomberg, Shinhan Sekuritas Indonesia
Lower infrastructure spending growth while pushed up the consumption stimulus through poverty alleviation
program, health, education budget and village fund
Source: Bloomberg, Shinhan Sekuritas Indonesia
-1.86
-2.33 -2.25
-2.59-2.49 -2.51
-2.12-1.84
-153.3
-211.70-226.7
-298.5-308.3
-341-314.2
-297.2
-3
-2.5
-2
-1.5
-1
-0.5
0
-400
-350
-300
-250
-200
-150
-100
-50
0
Fiscl Deficit to GDP Fiscal Deficit
-0.64
-1.09
-0.92
-1.23
-1.01-0.92
-0.44
-0.13
-52.8
-98.6-93.3
-142.5-125.6
-124.4
-64.8
-21.7
-1.4
-1.2
-1
-0.8
-0.6
-0.4
-0.2
0
-160
-140
-120
-100
-80
-60
-40
-20
0
Primary balance to GDP
Fiscal Primary Balance
9.50%
7%
12.30%
1.10%
16.20%13.60%
5.20% 5.20%
31.90%
4.50% 2.90%
9%
41%
8.20%
2.40%0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
2007 2008E 2019(RAPBN)
Education Budget
Health Budget
Poverty aleviation and protection budget
Transfer & Village fund
Infrastructure
7
Stable consumption growth with attractive investment growth. The
infrastructure development would reduce the sunk cost for investment.
Source: Bloomberg, Shinhan Sekuritas Indonesia
Government has released some economic package and the policy response
to boost the economic growth. The government needs to invite more domestic
and foreign direct investment to push up the growth while at the same time provide
the incentive for the export base company to invest to strengthen the current
account profile. The relaxation of permit, the tax incentive, tax holidays and the
loosening of the negative investment list were the part of the effort to attract the
investment. This would have a positive result in the mid to long term. We highlight
the latest economic package (package 16th) which has a stressing point on the
revision of the country's negative investment list, an expansion of Indonesia's tax
holiday program, the provision of tax incentives for the newly mandated conversion
of export earnings to rupiah to strengthen the foreign reserve as the positive move to
stimulate the economy. Based on various media information, only 15-30% of export
earnings were converted into rupiah.
Improving loan growth amid the modest GDP growth
Source: Bloomberg, Shinhan Sekuritas Indonesia
5,1% 5,1%5,0% 5,0% 5,0%
4,9%
5,0% 5,1%5,0%
5,0%4,9%
4,9%
4,9% 5,0%
4,9%
5,1%5,0%
4,4%4,1%
4,6%
4,0%
4,9%
6,4%
4,7%
4,2%4,2%
4,8%4,8%
5,3%
7,1%
7,3%
7,9%
5,9%
7,0%
3,0%
4,0%
5,0%
6,0%
7,0%
8,0%
9,0%
Sep 14
Nop 14
Jan 15
Mar 15
Mei 15
Jul 15
Sep 15
Nop 15
Jan 16
Mar 16
Mei 16
Jul 16
Sep 16
Nop 16
Jan 17
Mar 17
Mei 17
Jul 17
Sep 17
Nop 17
Jan 18
Mar 18
Mei 18
Jul 18
Sep 18
Houshold yoy Gross Fixed Capital Formation yoy
6,4
7,6
10,7
5,015,17
0
1
2
3
4
5
6
7
8
0
5
10
15
20
25
30
35
40
Jun-0
8
Oct-
08
Feb-0
9
Jun-0
9
Oct-
09
Feb-1
0
Jun-1
0
Oct-
10
Feb-1
1
Jun-1
1
Oct-
11
Feb-1
2
Jun-1
2
Oct-
12
Feb-1
3
Jun-1
3
Oct-
13
Feb-1
4
Jun-1
4
Oct-
14
Feb-1
5
Jun-1
5
Oct-
15
Feb-1
6
Jun-1
6
Oct-
16
Feb-1
7
Jun-1
7
Oct-
17
Feb-1
8
Jun-1
8
GD
P y
oy
Loan y
oy
loan yoy GDP yoy
8
Package Unveiled Main Points
1st 9 September 2015 • Boost industrial competitiveness through deregulation • Curtail red tape • Enhance law enforcement & business certainty
2nd 30 September 2015 • Interest rate tax cuts for exporters • Speed up investment licensing for investment in industrial estates • Relaxation import taxes on capital goods in industrial estates & aviation
3rd 7 October 2015 • Cut energy tariffs for labor-intensive industries
4th 15 October 2015 • Fixed formula to determine increases in labor wages • Soft micro loans for >30 small & medium, export-oriented, labor-intensive businesses
5th 22 October 2015 • Tax incentive for asset revaluation • Scrap double taxation on real estate investment trusts • Deregulation in Islamic banking
6th 5 November 2015 • Tax incentives for investment in special economic zones
7th 4 December 2015 • Waive income tax for workers in the nation's labor-intensive industries • Free leasehold certificates for street vendors operating in 34 state-owned designated areas
8th 21 December 2015 • Scrap income tax for 21 categories of airplane spare parts • Incentives for the development of oil refineries by the private sector • One-map policy to harmonize the utilization of land
9th 27 January 2016
• Single billing system for port services conducted by SOEs • Integrate National Single Window system with 'inaportnet' system • Mandatory use of Indonesian rupiah for payments related to transportation activities • Remove price difference between private commercial and state postal services
10th 11 February 2016 • Removing foreign ownership cap on 35 businesses • Protecting small & medium enterprises as well as cooperatives
11th 29 March 2016
• Lower tax rate on property acquired by local real estate investment trusts • Harmonization of customs checks at ports (to curtail dwell time) • Government subsidizes loans for export-oriented small & medium enterprises • Roadmap for the pharmaceutical industry
12th 28 April 2016 • Enhancing the ease of doing business in Indonesia by cutting procedures, permits and
costs 13th 24 August 2016 • Deregulation for residential property projects for low-income families
14th 10 November 2016
Creating a roadmap for the nation's e-commerce industry: Easing and widening access to funding, offer tax incentives, harmonize regulations and gradually develop a national payment gateway, promote e-commerce awareness campaigns and improve e-commerce education, accelerate the development of high-speed broadband network, improve the e-commerce logistics system
15th 15 June 2017
• Improving Indonesia's logistics: Enhance the role of transportation insurance, reduce costs for logistic service providers, strengthen the Indonesia National Single Window (INSW) authority, reduce the number of prohibited and restricted goods
16th 16 November 2018
• Improving Indonesia's investment climate: A revision of the country's Negative Investment List, an expansion of Indonesia's tax
holiday program, the provision of tax incentives for the newly mandated conversion of export earnings to rupiah.
Source: www.indonesia-investments.com
Monetary stance. Government has increased its policy rate (7D Repo Rate) for sixth
times during 2018 and would be data dependent for the next year to adjust the rate.
However, we also expect that the BI would maintain its 7D Repo Rate next year
unchanged at 6%. Consecutive hike rate has been ahead the curve to anticipate the
negative impact from the US hawkish tone. The US Fed Fund rate is estimated to be
peak at around 3.5% while the pace for the higher rate is estimated to be slower as
the consecutive rate hiked has gradually near the target. Thus the source of
uncertainty that come from the US Fed Fund trajectory has been reduced while the
volatility of the currency due to the Trade War still remains.
9
Higher rate while at the same time
Source: Bloomberg, Shinhan Sekuritas Indonesia
Outlook. We think that the 2019 GDP growth would be somewhat at 5.2% to 5.3%
for 2019. The modest GDP would give the room for the corporate to continue its
business consolidative stance. The modest consumption and investment growth and
the gradual improvement from the export side would maintain the modest GDP
growth while on the other hand the US monetary normalization policy would be the
challenge for the rupiah. However we think that the market has been partially
anticipate this issue as shown on the rupiah weakening. The possibility of steeper
interest rate was lower for the 2019 due to the down side risk of slower GDP. This
could give the breath for the rupiah to move slightly stronger against the USD for
2019 compared to the last quarter of 2018. We expect the rupiah would be hovered
at around IDR 14,500/USD.
Indicator 2013 2014 2015 2016 2017 2018F 2019F
Economic Activity
Real GDP (YoY%) 5.6 5.0 4.9 5.0 5.1 5.2 5.2
CPI (YoY%) 6.4 6.4 6.4 3.5 3.8 3.3 3.8
Unemployment (%) 6 5.8 6 5.6
5.4 5.3
External Balance
Curr. Acct. (% of GDP) -3.3 -3.1 -2.1 -1.8 -1.7 -2.8 -2.6
Fiscal Balance
Budget (% of GDP) -2.2 -2.1 -2.6 -2.5 -2.9 -2.2 -1.8
Interest Rates
Central Bank Rate (%)
4.75 4.25 6.00 6.00
Exchange Rates
USDIDR 12,171 12,388 13,788 13,473 13,555 15,000 14,500 Source: Shinhan Sekuritas Indonesia estimation
-5
0
5
10
15
20
JIBOR 1W (Proxy for BI 7D Repo rate) BI Rate 7D Repo Rate Inflation (yoy)
10
Improving trade balance
The trade balance was surplus in September at IDR227mn or in line with our previous
thesis regarding the improvement of the trade surplus on the back of the higher export
than the import on the back of the rupiah depreciation. This would reduce the
sentiment regarding the CA deficit that has contributed to the rupiah weakening so far.
However, the volatility in the rupiah due to the US FFR trajectory and the trade
restriction would still overshadow the fluctuation of the rupiah despite it has partially
anticipated and has been priced in to the current level. We still believe that the export
growth this year and 2019 would be at around 10%yoy on the back of the US growth
expansion and the stable commodity price, while on the monetary side the hawkish
monetary tone will remains as the macro prudential reason to stabilize the currency.
The cumulative export (Jan to Sep) grew by 9.4%yoy to USD134.99bn while in
monthly basis the export increased by 1.7%yoy to USD14,83bn.The non-oil export
which contributed as 90% of the total export mounting by 9.29%yoy cumulatively from Jan.
to Sep. to USD122.3bn while the oil export expanded by 10.54%yoy for Jan to Sep period.
The export improvement was mainly driven by the higher volume rather than the higher
price as at the same time the aggregate average price of the export was down by 1.36%yoy
despite there was a higher aggregate average price for the oil export by 38%yoy. The
export growth was driven by the demand from CHN (15.1%), USA (10.79%), Japan
(10.23%). All of those top three represents 36.12% of the total export.
The cumulative import (Jan to Sep) mounted by 23.33% to USD138.7bn. The non-oil
import that represented 84.1% of the total import increased by 22.64%yoy, while the oil
and gas import accelerated by 27.14%. The slightly higher GDP in the 2H this year has
triggered the higher import especially for the capital goods that was up by 27.86%yoy
followed by 22%yoy of raw material goods and 26.4%yoy of consumer import. The capital
goods and raw material represented 90.8% of the total import. To reduce the negative
impact of the unnecessary import goods, the government has announced the new tariffs for
about 1,147 of luxury consumption goods items to hold the acceleration in import with the
new (VAT) of 7.5% from 2.5%. However the total impact on the import is not meaningful as
the consumer goods only 10% of the total import.
Export growth is expected to increase by 10%yoy on the back of higher US GDP
growth. The fiscal stimulus under Trump administration would increase the US economic
growth by 2.9%. This would support our export estimation that would grow by around
10%yoy this year. However we still monitor the impact of the trade war escalation that
would deteriorate the world GDP. This still the negative factor that would overshadow the
trade balance recovery.
Indonesia export (QoQ) & US GDP (QoQ)
Source: BPS, Bloomberg, Shinhan Sekuritas Indonesia
-10
-8
-6
-4
-2
0
2
4
6
-40
-30
-20
-10
0
10
20
30
40
50
US
GD
P (
Qo
Q)
Ind
on
esi
a Ex
po
rt (
Qo
Q)
Indonesia Export (QoQ) US GDP (QoQ)
Trade Balance
Economic Focus
Helmi Therik
+6221 80869900
11
Trade Balance (in USD, mn) Export and Import (in USD,mn)
Source: BPS, Bloomberg, Shinhan Sekuritas Indonesia Source: BPS, Bloomberg, Shinhan Sekuritas Indonesia
Import based on products category (Higher import mainly due
to the raw material and capital goods) Export and the portion of the commodity related goods
that at 50% of the total export.
Source: BPS, Bloomberg, Shinhan Sekuritas Indonesia Source: BPS, Bloomberg, Shinhan Sekuritas Indonesia
Indonesia’s commodity related export Export & Crude oil Price (Higher crude oil price will
benefited the export growth)
Source: BPS, Bloomberg, Shinhan Sekuritas Indonesia Source: BPS, Bloomberg, Shinhan Sekuritas Indonesia
(2,500)
(2,000)
(1,500)
(1,000)
(500)
-
500
1,000
1,500
2,000
in mn USD
13,398
12,616
14,719
13,270
14,334
11,661
13,611
15,188 14,580
15,253 14,865
14,133
15,587
14,537
16,209
12,974
16,243 15,818
11,974 11,359
13,283
11,951
13,773
9,992
13,509 12,788
14,249
15,309
17,663
11,268
18,273
16,840
7,000
9,000
11,000
13,000
15,000
17,000
19,000
Exports (Nominal/Value) (USD, Millions) Imports (Nominal/Value) (USD, Millions)
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
20,000
Total Import Consumer Goods
Capital Goods Raw Materials
-
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
20,000
0%
10%
20%
30%
40%
50%
60%
70%
in m
n U
SD
% o
f co
mm
od
ity
rela
ted
to
to
tal m
erc
he
nd
ise
exp
ort
Composition of commodity, mining and agriculture (USD, mn)
Commodity, mininig and agriculture export
Exports (F.O.B.) (USD, mn)
-
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
Natural gas
Crude oil
Bauxite
Coal
Nickel Ore
Copper Ores
Liquefied petroleum gas
Oil Products
Processed Rubber
Base Metal Products
Palm oil
0
2000
4000
6000
8000
10000
12000
14000
16000
18000
20000
0
20
40
60
80
100
120
140
160
180
200Ex
po
rt (U
SD,
mn
)
WTI
/C
rud
e O
il P
rice
WTI (Crude Oil) Exports (Nominal/Value) (USD, Millions)
12
Rupiah in search of new equilibrium
The rupiah depreciation. The rupiah has been depreciated to above IDR 15,000/USD
before strengthened to around IDR 14,300/USD. This was in line with the dollar index
appreciation that has been strengthening by 1.8%yoy due to the combination of the
anticipation of the US FFR and the risk aversion regarding the trade war tension that has
triggered the capital shifting from emerging market. The CA deficit that currently at 3% of
GDP adds more solicitude regarding the rupiah weakening from the internal side. However,
the impact from the US FFR normalization policy has been partially anticipated as reflected
in the currency depreciation. The Indonesia central Bank has also adjusted the 7D reverse
repo rate for five times to 5.50% and the more interest rate hike is still possible depends
on the volatility ahead. We expect that the less steep of the FFR trajectory on 2019
would provide the room for the rupiah to appreciate against USD.
Long term perspective. We think that the normalization policy will bring the FFR back to
its level before the quantitative easing (QE) in 2008/2009 gradually while the equilibrium
for rupiah will be adjusted accordingly. The path toward the normalization is described
from the FFR trajectory that projected to remain at its hawkish tone for 2-3 times hikes.
This was depicted through the implied fed fund rate that expected at 3.5% as the peak of
the FFR at 2020 or about two years from now. By assuming the peak of the FFR at that
level, we think that the Indonesia official rate (7D Reverse Repo Rate) at somewhat 5.5% -
6% would have been reflected the US FFR trajectory. This can be interpreted as the
further room for the hawkish tone, is narrowing which should suggest the limited
depreciation ahead.
Rupiah and the dollar index. The dollar index as the measure of the demand for the
hedging amid the higher return of the USD recently to match the assets and liability of the
financial institution amid the rising uncertainty in the credit quality regarding the Turkey
and Argentina sovereign bond has triggered the additional pressure for the rupiah. The
improvement of the rupiah will depend on the market confidence or the improvement of
the risk appetite which will takes a time.
The Indonesia 5yr CDS as an indicator of the risk has been rose but still lower
than 2013 and 2008. The CDS was at 136.9 bps or slightly higher than the average at
114bps or paring the emerging market movement. Compared to 2008 at 1,248bps and
281.7bps at 2013 the current CDS is remained lower or points to the better milieu.
The trade war is a lose-lose game that would not last but the signaled for the end
of the trade war has not yet to come. The rising tariff for the export in one side and the
depreciation of the currency in the other side would neutralize the impact of the higher
tariffs for the emerging market. However the uncertainty in the trade war sentiment will
still overshadowed the prospect of the rupiah stability.
Government signaled a new measure to stabilize the rupiah by requiring 50% of
export proceed to be converted in rupiah. This would be a short term policy while the
real source of USD supply is expected to come from the Foreign Direct Investment (FDI)
and portfolio investment besides the trade surplus. If the US-CHN trade war protracted, we
think the relocation of the Industry would drive the higher FDI to Indonesia or South East
Asia on the back of the lower wages, while in the short term, rupiah is waiting for the relief
of the risk appetite in the global market as the sources of the portfolio investment. We
think that the rupiah would still fluctuated at IDR14,500/USD +/-1000 in the next
12month.
Currency Outlook
Economic Focus
Helmi Therik
+6221 80869900
13
USD IDR USD IDR and Dollar Index (mom%)
Source: BPS, Bloomberg, Shinhan Sekuritas Indonesia Source: BPS, Bloomberg, Shinhan Sekuritas Indonesia
The commodity price contributes to the rupiah
movement Rupiah and Yield Spread (5yr Indonesia-US)
Source: BPS, Bloomberg, Shinhan Sekuritas Indonesia Source: BPS, Bloomberg, Shinhan Sekuritas Indonesia
Foreign ownership in Indonesia Gov. Bond 5Yr CDS remains below the 2008 and 2013
Source: BPS, Bloomberg, Shinhan Sekuritas Indonesia Source: BPS, Bloomberg, Shinhan Sekuritas Indonesia
12,000
12,500
13,000
13,500
14,000
14,500
15,000
-8
-6
-4
-2
0
2
4
6
USDIDR Dollar Index (DXY)
7,000
8,000
9,000
10,000
11,000
12,000
13,000
14,000
15,000
16,000
20
70
120
170
220
270
De
c-0
5
Au
g-0
6
Ap
r-0
7
De
c-0
7
Au
g-0
8
Ap
r-0
9
De
c-0
9
Au
g-1
0
Ap
r-1
1
De
c-1
1
Au
g-1
2
Ap
r-1
3
De
c-1
3
Au
g-1
4
Ap
r-1
5
De
c-1
5
Au
g-1
6
Ap
r-1
7
De
c-1
7
Au
g-1
8
USD
IDR
Blo
om
be
rg C
om
mo
dit
y P
rice
Ind
ex
Bloomberg Commodity Index USDIDR
8,000
9,000
10,000
11,000
12,000
13,000
14,000
15,000
16,000
0
2
4
6
8
10
12
14
16
18
USD
IDR
Yie
ld s
pre
ad (
5yr
In
do
ne
sia-
US)
0
100
200
300
400
500
600
700
800
900
1000
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
Indonesia govt bond foreign ownership (IDR tn)
Foreign ownership (%)
US Tapper Tantrum
Trade War Sentiment
US Subprime
0
200
400
600
800
1000
1200
1400
Indonesia
Turkey
Thailand
Korea
Philiphine
Columbia
Brasil
14
Manageable price through the controllable
volatile food inflation
Indonesia recorded a manageable inflation in November or the two consecutive months
after its peak at July this year during the Eid feast. The inflation was 0.22%mom while
on yearly basis the headline inflation was at 3.23%yoy or 2.5%ytd. The ability to
manage the inflation at a low level was came from the government effort to control the
volatile food prices by maintaining the supply side and through the intervention on food
prices by open up the import to stabilize the prices. The cost pushed inflation remained
sluggish amid the stabiles commodity prices, despite of the rupiah was depreciated. We
didn’t saw a signal of the weaker purchasing power despite of the inflation as the
farmer exchange rate at the same time increased by 0.59% to 103.17 which pointed to
the better purchasing power of farmer. Despite the inflation is estimated to be at below
4% this year, while the inflation in 2019 is expected to move slightly higher due to the
possibility of the adjustment of administered price post-election in April 2019. We
think that the hawkish tone would remain as the part of the macro prudential policy
amid the external pressure with the lower probability of steeper trajectory
Volatile food prices slashed down due to the better food prices stability policy. The volatile food price was down by -1.83%mom to 3.75%yoy or 1.41%ytd. We think it’s due to the stabilization policy through the government intervention by manage the logistic and open the import to intervene the market if there was a slack of supply in the certain area.
Manageable core inflation amid the weaker rupiah currency. The core
inflation was slightly increased by 0.28%mom to 2.38%yoy or 2.82%ytd. We think that the benign core inflation did not pointed to the lower consumer purchasing power, as the farmer exchange rate at the same time expanded to 103.17. This indicated the better welfare in the farmer household which still substantial in Indonesia. However, the impact of the depreciation would be in the gradual path with a mild effect as the producers tend to absorbed the impact of the cost and only partially pass through to the customer.
Maintain hawkish monetary policy tone despite of the manageable inflation. The external factor pressure as reflected in the weaker rupiah would make the policy option for the monetary policy remains at the hawkish tone. The inflation is estimated at below 4%, however we think that the rupiah depreciation have partially reflect the higher US FFR trajectory which suggest the limited room for the further depreciation. The controllable inflation at the other side gave the opportunity for the government bond yield to stabilize on the back of the real yield.
Inflation projection (yoy)
Source: BPS, Shinhan Sekuritas Indonesia estimation
0%
4%
8%
12%
16%
20%
20
01
;4
20
02
;4
20
03
;4
20
04
;4
20
05
;4
20
06
;4
20
07
;4
20
08
;4
20
09
;4
20
10
;4
20
11
;4
20
12
;4
20
13
;4
20
14
;4
20
15
;4
20
16
;4
20
17
;4
20
18
;4
Inflation Outlook
Economic Focus
Helmi Therik
+6221 80869900
15
Headline inflation (yoy) & (mom) Headline inflation, core and administrated
price(qoq)
Source: Bloomberg, Shinhan Sekuritas Indonesia Source: Bloomberg, Shinhan Sekuritas Indonesia
Headline inflation, core and administrated price(yoy) USD IDR and Core Inflation (qoq)
Source: Bloomberg, Shinhan Sekuritas Indonesia Source: Bloomberg, Shinhan Sekuritas Indonesia
Imported inflation accelerate Inflation by category (yoy)
Source: Bloomberg, Shinhan Sekuritas Indonesia Source: Bloomberg, Shinhan Sekuritas Indonesia
-1
-0.5
0
0.5
1
1.5
2
2.5
3
3.5
0
1
2
3
4
5
6
7
8
9
10
Mar
-10
Au
g-1
0
Jan
-11
Jun
-11
No
v-1
1
Ap
r-1
2
Sep
-12
Feb
-13
Jul-
13
De
c-1
3
May
-14
Oct
-14
Mar
-15
Au
g-1
5
Jan
-16
Jun
-16
No
v-1
6
Me
i-1
7
Oct
-17
Mar
-18
Au
g-1
8
Infl
atio
n (
mo
m)
He
adlin
e In
flat
ion
(yo
y)
mom yoy
-6
-4
-2
0
2
4
6
8
10
12
14
Jun
-10
Dec
-10
Jun
-11
De
c-1
1
Jun
-12
Dec
-12
Jun
-13
Dec
-13
Jun
-14
Dec
-14
Jun
-15
Dec
-15
Jun
-16
De
c-1
6
Juli
-17
Jan-
18
Jul-
18
Headline Inflation Core Adm. Price Volatile Good
02468
101214161820
Feb
-10
Jul-
10
De
c-1
0
May
-11
Oct
-11
Mar
-12
Au
g-1
2
Jan
-13
Jun
-13
No
v-1
3
Ap
r-1
4
Sep
-14
Feb
-15
Jul-
15
De
c-1
5
May
-16
Oct
-16
Mar
-17
Sep
-17
Feb
-18
Jul-
18
yoy (%)
Headline Inflation Core Volatile Good
0
0.5
1
1.5
2
2.5
3
-10
-5
0
5
10
15
20
Jun
-10
No
v-1
0
Ap
r-1
1
Sep
-11
Feb
-12
Jul-
12
De
c-1
2
May
-13
Oct
-13
Mar
-14
Au
g-1
4
Jan
-15
Jun
-15
No
v-1
5
Ap
r-1
6
Sep
-16
Feb
-17
Jul-
17
De
c-1
7
May
-18
USD IDR (qoq %) Core infl. (qoq %)
0
2
4
6
8
10
12
De
c-1
3
Mar
-14
Jun
-14
Sep
-14
De
c-1
4
Mar
-15
Jun
-15
Sep
-15
De
c-1
5
Mar
-16
Jun
-16
Sep
-16
De
c-1
6
Mar
-17
Jun
-17
Sep
-17
De
c-1
7
Mar
-18
Jun
-18
Headline Inflation (yoy) Import Price Index -non oil&Gas (yoy)
4.9
4.1
2.12
3.41
2.93
3.76
1.8
0 1 2 3 4 5 6
Unprocessed Food
Food, Beverages and Tobacco
Housing, Water, Electricity, Gas and Other Fuels
Clothing
Health
Education, Recreation and Sport
Transportation, Communication and Financial Services
16
Selective growth strategy amid the intensify
risk aversion environment
We think that the selective growth strategy amid the macro prudential policy
environment would be adopted amid the modest economic growth as a result of
the higher volatility which comes from the combination of external and internal
shock. We prefer the company that still have the room to growth while at the
same time have the strong position in the market or unique value proposition to
offer and have the healthy balance sheet structure to absorb the deterioration or
the shock in the market risk due to the currency volatility. We overweight
banking sector, consumer and retail, property, telecommunication and media for
2019. We also estimated that the 2019 PE at 16x still attractive which implying
the Index at 6,880. On the other side, the political event in April would be the
challenge that would make the market would move at the wait and see mode next
year until the 1Q.
Banking sector loan continues to accelerate. The higher GDP in the 1H18 (5.27% in
1H20118 vs 5.01% in 1H2017) and the improvement in the production index has supported
the loan expansion despite overshadowing with the tightening bias of the interest rate. The
loan expansion is mostly driven by the acceleration of the working capital and consumer
loan or the salary base loan while the investment loan increased with the slower pace. We
overweight the BBCA due to its high assets quality and BBRI due to its highest NIM. We
also overweight the BBNI and BMRI due to its higher exposure on the SOE and corporate
loan. BBTN is also well positioned in the mortgage loan that currently underpenetrated in
Indonesia.
Consumer sector: stable growth expansion. The higher social assistance government
budget and manageable inflation would be the catalyst for the consumer sector. We
overweight ICBP, due to its strong market position in the noodle market couples with its
ability to maintain the margin stability amid the pressure from the rupiah depreciation. We
also overweight small cap PZZA due its leading position as a chained pizza consumer
foodservice in terms of market share in Indonesia and also its outlet expansion. Another
choice is CAMP as the second largest ice cream brand in Indonesia and the low milk
consumption in Indonesia as the opportunity.
Retailers: selective growth. Despite the anemic economic growth we saw several
attractive acceleration growths in selective company. We overweight ACES due to its strong
SSSG growth on the back of the outlet penetration in the high and middle income segment.
We also overweight ERAA as the smart phone wholesaler company that recorded attractive
growth due to the rising of middle income. We overweight RALS, as the company is
transforming the business to target the middle income segment and still recorded a decent
growth. We also overweight SPTO as the company is the market leader in the sanitary
wares under TOTO brand. The company also recorded margin stability amid the rupiah
volatility.
Telecommunication and media. We overweight TLKM as the company is the largest and
the most integrative network in Indonesia. The strong demand in the data would be the
catalyst to grow further. We also overweight the media sector such as SCMA and MSIN due
to the strong free to air audience share and stable profitability.
Property. We overweight CTRA, SMRA and ASRI despite of the higher interest rate and
rupiah volatility. The relaxation of LTV policy and infrastructure development would unlock
the land value ahead.
Indonesia Equity Strategy
Equity Focus
Helmi Therik
+6221 80869900
17
Indonesia VS Regional PE
Source: Bloomberg, Shinhan Sekuritas Indonesia
Indonesia VS Regional Matrix of Valuation – Higher PE is Justified by its higher ROE
Source: Bloomberg, Shinhan Sekuritas Indonesia
Indonesia VS Regional PE
Source: Bloomberg, Shinhan Sekuritas Indonesia
8.61
10.87
12.50
13.22
12.60
16.55
15.91
15.52
5.00 7.00 9.00 11.00 13.00 15.00 17.00 19.00
KOSPI Index
HSI Index
STI Index
Average
TWSE Index
FBMKLCI Index
JCI Index
NKY Index
Regional PE
S Korea ROE: 9.8%
Hongkong ROE
:12.8%
Singapore ROE:9.4%
Average ROE: 12.1%
Taiwan ROE:
14.6%
Malaysia ROE:10.5%
Indonesia ROE: 15.9%
Nikkei ROE: 10.4%
7.00
9.00
11.00
13.00
15.00
17.00
19.00
8.00 9.00 10.00 11.00 12.00 13.00 14.00 15.00 16.00 17.00 18.00
Regional ROE VS PE
10
11
12
13
14
15
16
17
18
19
20
Jul-10 Apr-11 Jan-12 Oct-12 Jul-13 Apr-14 Jan-15 Oct-15 Jul-16 Apr-17 Jan-18 Oct-18
+1 stdev +2 stdev -1 stdev -2 stdev PE (Estimation) Average PE
18
Maintaining high coverage ratio as a
countercyclical strategy
Loan continued to accelerate. The higher GDP in the 1H18 (5.27% in 1H20118
vs 5.01% in 1H2017) and the improvement in the production index has supported
the loan expansion despite overshadowing with the tightening bias of the interest
rate. The loan expansion is mostly driven by the acceleration of the working capital
and consumer loan or the salary base loan while the investment loan increased
with the slower pace. The corporate loan was also increased modestly as the
business consolidation and the selective expansion strategy was applied by the
company. About 76% of the loan approval is a working capital loan, while 16% of
the loan portfolio is for consumer while the rest or 7% is for investment loan. We
highlight the SOE or state owned bank that still dominates the loan growth or
remains the leader due to its position as the state owned that expose to the
infrastructure projects or other government program through a subsidized interest
for mortgage and small commercial loan. Within our coverage, BBTN recorded the
highest pace growth in the 1H this year or picked up by 20%. The growth was
underpinned by the subsidized mortgage.
NIM has been consolidated at low level and seen started to stabilize. We
think that the NIM compression has been stabilize and consolidated at the low
range as the bank would consider to passing through the lower yield assets by
adjusting the deposits rate to the customer while in the other side would start to
adjust the interest rate after the 5th consecutive higher official rate to 5.50%.
Within our coverage, BBRI posted the highest NIM in the industry at (7.4% vs
5.1%) underpinned by its business model that focus on the consumer, micro and
small commercial loan that provided higher yield assets. The trend to allocate
higher exposure to consumer segment or to be more ‘retail-centric’ bank would be
adopted by another bank or become one of the options to mitigate the impact of
the margin compression. BBCA as the largest transaction bank also recorded a
stable NIM on the backed off its ability to manage the low cost fund and the
adjustment to its loan yield. The average margin for the overall industry has been
slightly recover since February this year as the lowest level at 5.0% and gradually
improved to 5.1% in the 1H this year.
NPL increased but remained at satisfactory level. The NPL has been managed
at the low level. However we saw an increasing trend in the NPL level to 2.32% in
1H this year than last year at 2.19%. This was due to the continuing consolidative
business amid the structural adjustment in economic environment. However the
better GDP and economic activity (GDP at 5.3% this year) would maintain the
asset quality at the manageable level. However, we expect the provisioning for the
credit loss expense to be higher in the second half to anticipate the risk caused by
the volatility in the rupiah currency despite the coverage ratio is also sizeable
enough to absorb the deterioration of the asset quality. Within our coverage the
average coverage ratio was at 133%.BBRI remains the highest loan quality
protection with the coverage ratio at 191% followed by BBCA at 187%.
Focus on big 5 banks. We overweight the BBCA due to its high assets quality and
BBRI due to its highest NIM. We also overweight the BBNI and BMRI on the back of
its higher exposure in the SOE and corporate loan. BBTN is also well positioned in
the mortgage loan that currently underpenetrated in Indonesia. Risk:
Deterioration of asset quality, higher interest rate and lower GDP.
Overweight
Jakarta Finance Index Performance
Source: Bloomberg, Shinhan Sekuritas Indonesia
Helmi Therik
+6221 80869900
0
50
100
150
200
250
JAKFIN JCI Index
Banking Sector
Sector Focus
19
The loan is expected to increase by 10% State bank (SOE) leads the loan growth performance
Source: Bloomberg, Company, Shinhan Sekuritas Indonesia Source: Company, Shinhan Sekuritas Indonesia
NPL is slightly increased while the stabilize GDP would translated to
the manageable assets quality in the second round Consumer, commercial and SME dominates the loan
portfolio
Source: Company, Shinhan Sekuritas Indonesia Source: Company, Shinhan Sekuritas Indonesia
BBRI recorded the highest NIM Banking Valuation matrix
Source: Company, Shinhan Sekuritas Indonesia Estimates Source: Company, Shinhan Sekuritas Indonesia Estimates
0
1
2
3
4
5
6
7
8
0
5
10
15
20
25
30
35
40
Jun-0
8
Jun-0
9
Jun-1
0
Jun-1
1
Jun-1
2
Jun-1
3
Jun-1
4
Jun-1
5
Jun-1
6
Jun-1
7
Jun-1
8
GD
P y
oy
Loan y
oy
loan yoy GDP yoy
0
5
10
15
20
25
30
35
40
45
State Banks Regional Government Banks Commercial Banks and Islamic Banks
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
3.5
4.0
4.5
5.0
5.5
6.0
6.5
7.0
Jun-0
8
Jun-0
9
Jun-1
0
Jun-1
1
Jun-1
2
Jun-1
3
Jun-1
4
Jun-1
5
Jun-1
6
Jun-1
7
Jun-1
8
GD
P y
oy
Loan y
oy
GDP yoy Gross NPL
37%
25%
49%58%
23%
35% 58%
29%
31%
28%
16%22%
11%
77%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
BBCA BBRI BBNI BMRI BBTN
Consumer
Commercial & SME
Corporate
7%
8%
6% 6%
4%
6%
8%
6% 6%
4%
6%
7%
5% 5%
4%
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
BBCA BBRI BBNI BMRI BBTN
NIM
2016 2017 2018F
BBCABBRI
BBNI
BMRI
BBTN
Average
12%
13%
14%
15%
16%
17%
18%
19%
0.3 0.8 1.3 1.8 2.3 2.8 3.3 3.8 4.3
RO
AE
PBV
20
Banking NPL within our coverage Assets yield (%)
Source: Company, Shinhan Sekuritas Indonesia Estimates Source: Company, Shinhan Sekuritas Indonesia Estimates
CASA ratio (low cost funding composition) Loan to deposits ratio (LDR)
Source: Company, Shinhan Sekuritas Indonesia Estimates Source: Company, Shinhan Sekuritas Indonesia Estimates
Well Capitalized as seen in the CAR ROAE
Source: Company, Shinhan Sekuritas Indonesia Estimates Source: Company, Shinhan Sekuritas Indonesia Estimates
1% 1%
3%3%
3%
1%
2%
3%
4%
3%
1%
2%2%
3%
3%
0%
1%
1%
2%
2%
3%
3%
4%
4%
5%
BBCA BBRI BBNI BMRI BBTN
NPL
2016 2017 2018F
7%
8%
6% 6%
4%
6%
8%
6% 6%
4%
6%
7%
5% 5%
4%
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
BBCA BBRI BBNI BMRI BBTN
Assets Yield
2016 2017 2018F
65%
49%
61%
66%
75%
67%
51%
65% 64%
71%72%
53%
63%66%
72%
0%
10%
20%
30%
40%
50%
60%
70%
80%
BBCA BBRI BBNI BMRI BBTN
CASA
2016 2017 2018F
80%
87%
90%
89%
102%
0% 20% 40% 60% 80% 100% 120%
BBCA
BBRI
BBNI
BMRI
BBTN
LDR
26%
17% 17% 17%18%
28%
18% 19% 19%
17%
28%
25%
22%22%
20%
0%
5%
10%
15%
20%
25%
30%
BBCA BBRI BBNI BMRI BBTN
CAR
2016 2017 2018F
13%
13%
15%
16%
18%
0% 5% 10% 15% 20%
BBNI
BMRI
BBTN
BBCA
BBRI
ROAE
21
Maintains sound asset quality
Back ground. Bank BCA is the prominent and positioning as the largest
transaction bank in Indonesia. The positioning is buoyed by it nearly 18mn
interconnected customer accounts which benefited by the multichannel
platform. The company is continuing to enhance the digital services platform to
complete the widespread of its ATM and branch network which will support its
ability to raise the low cost third party fund. The company has 12% share of
the total national deposit and 10% of the total national loan.
Stable and decent earning power. We overweight the company amid the
modest loan growth and slightly hawkish tone in the monetary policy. The loan
growth is moderate but slightly above the national average growth (10%yoy)
which will provide the decent ppop and earnings growth. Lower credit cost and
the improvement in the asset quality is expected would reduce the impact of
the margin compression.
Solid asset quality. The company recorded a sizeable provisioning for the risk
of the down grade assets quality as reflected in the loan loss reserve ratio at
187.8%. The company is also able to manage its loan risk at the low level as
reflected in its NPL at 1,4% or 10bps lower than last year at 1,5%. The NPL is
the lowest compares to its peers. Despite the higher policy rate, on the other
side the central bank also has relaxed the loan to value (LTV) to give a room
for the higher property loan. This could be a little bit a positive catalyst for the
property and consumer loan. The solid CAR (>22%) and low LFR (<80%)
would provide the capacity to increase the loan growth according to its risk
appetite framework despite have an ample room to absorb the deterioration of
the asset quality.
Expecting 14%yoy of loan expansion. The company recorded 14.2%yoy
growth of its loan in 1H to IDR433.2tn while we expect the loan could be
expanded by 14%yoy this year. The loan mix is balance as about 28% of the
loan came from consumer loan, 35% from commercial and small medium
enterprise while 37% is made up from corporate loan. The NIM is expected to
be contained at 6% for this year while in the 1H, the company posted the NIM
at 6.2%. The net profit has improved to IDR11.4tn or up by 8.4%yoy in the 1H
or represent 43% of our full year estimation at IDR26.3tn.
Risk. The higher interest rate, slower GDP and loan growth couples with the
unanticipated deterioration in the loan quality that could slash down the
earning estimation.
Valuation. We drive our TP at IDR26,500 based on GGM which implying the
PBV at 4.3 and 3.6 for 2018F and 2019F respectively.
Year to Dec. NII OP Pre-tax NP EPS Growth BVPS PER PBR ROAE CAR
(bn IDR) (bn IDR) (bn IDR) (bn IDR) (IDR) (%) (IDR) (x) (x) (%) (%)
2015 35,869 22,657 22,657 18,036 740 9% 3,678.4 19.4 3.6 22% 19%
2016 40,079 25,594 25,839 20,632 847 14% 4,626.1 18.0 3.4 20% 22%
2017 41,826 29,403 29,159 23,321 957 13% 5,393.0 18.3 3.5 19% 24%
2018F 46,218 33,054 32,906 26,319 1,080 13% 6,399.7 19.6 3.7 18% 24%
2019F 50,445 36,452 36,423 29,131 1,196 11% 7,372.8 22.1 3.2 17% 25%
Source: Company, Shinhan Sekuritas Indonesia
Overweight
Current Price (IDR) (31/7) 24.000
Target price (IDR) 26.500
Upside/Downside (%) 10,4%
52 Week High (IDR) 25.475
52 Week Low (IDR) 18.675
Major Shareholders:
PT Dwimuria Investama Andalan 54,94%
Stock Price Movement
Source: Bloomberg, Shinhan Sekuritas Indonesia
Helmi Therik
+6221 80869900
0
50
100
150
200
250
BBCA JCI Index
Bank Central Asia Tbk
(BBCA)((BBCA(BBCA)
Company Focus
22
Loan expansion with satisfactory risk Well diversify of loan portfolio
Source: Company, Shinhan Sekuritas Indonesia Estimates Source: Company, Shinhan Sekuritas Indonesia Estimates
Strong liquidity position Dominated by low cost of fund (CASA ratio at 72%)
Source: Company, Shinhan Sekuritas Indonesia Estimates Source: Company, Shinhan Sekuritas Indonesia Estimates
Manageable NIM Well capitalized with the strong CAR
Source: Company, Shinhan Sekuritas Indonesia Estimates Source: Company, Shinhan Sekuritas Indonesia Estimates
263,396
320,419 359,266
401,031 428,029
487,382 541,068
602,261
0.4%0.4%
0.6%
0.7%
1.3%1.5% 1.5%
1.5%
0.0%
0.2%
0.4%
0.6%
0.8%
1.0%
1.2%
1.4%
1.6%
100,000
200,000
300,000
400,000
500,000
600,000
700,000
2012 2013 2014 2015 2016 FY2017 2018F 2019F
Gross Loan (IDR bn) NPL
Corporate, 37%
Commercial &
SME, 35%
Consumer, 28%
371,536 411,180
450,155 476,820
533,965
585,572 644,129
708,542
71%
78% 80%
84% 80%
83%
84%
78%
60%
65%
70%
75%
80%
85%
90%
150,000
250,000
350,000
450,000
550,000
650,000
750,000
2012 2013 2014 2015 2016 FY2017 2018F 2019F
Customer Deposits (IDR bn) LDR
105,802
138,666 156,562
179,778
209,543
249,009
297,258
322,894
56%
66% 64% 65% 65% 67%72%
72%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90,000
140,000
190,000
240,000
290,000
340,000
2012 2013 2014 2015 2016 FY2017 2018F 2019F
CASA (IDR bn) CASA Ratio
5%6%
6% 7% 7%6% 6%
6%
7% 7%8%
9% 9%8% 8%
8%
2% 2% 2%3%
2% 2%2%
2%
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
10%
2012 2013 2014 2015 2016 FY2017 2018F 2019F
NIM Assets yield CoF
51,898 63,967
75,726
89,625 112,715
131,402
155,930
179,640
15%
16%17%
19%
22%24%
24%
25%
0%
5%
10%
15%
20%
25%
30%
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
180,000
200,000
2012 2013 2014 2015 2016 FY2017 2018F 2019F
Equity (IDR bn) CAR
23
Balance Sheet
Key Ratio
Year-end 31 Dec (IDRbn) 2016 2017 2018F 2019F
Year-end 31 Dec (%) 2016 2017 2018F 2019F
Cash 60,367 60,227 73,522 84,843
Growth
Inter-banking Assets 50,377 37,322 51,289 50,962
Assets 14% 11% 12% 11%
Short-Term Investments 86,882 113,321 115,587 132,658
Loans 9% 17% 14% 14%
Loan gross 428,029 487,382 541,068 602,261
Customer Deposits 12% 10% 10% 10%
Allowance for Losses (12,850) (13,688) (14,029) (16,110)
Net Interest Income 12% 4% 10% 9%
Net Loans 415,179 473,694 527,040 586,150
PPOP 12% 6% 11% 9%
Net Fixed Assets 16,991 16,869 20,370 21,848
Net Income 14% 13% 13% 11%
Other Assets 46,943 48,887 50,913 55,295
Profitability
Total Assets 676,739 750,320 838,721 931,756
Asset Yield 8% 8% 8% 8%
Customer Deposits 533,965 585,572 644,129 708,542
Cost of Fund 2% 2% 2% 2%
ST Borrowings & Repos 9,215 8,967 10,760 12,912
Net Interest Margin 7% 6% 6% 6%
Long-Term Borrowings 1,064 593 1,563 1,499
ROAA 3% 3% 3% 3%
Other Liabilities 19,780 23,787 26,338 29,164
ROAE 20% 19% 18% 17%
Total Liabilities 564,024 618,918 682,791 752,117
Cost Efficiency Ratio 43% 44% 44% 44%
Minority Interest 282 98 3,571 3,975
Liquidity
Shareholders' Equity 112,715 131,402 155,930 179,640
LDR 80% 83% 84% 78%
Total Liabilities & Equity 676,739 750,320 838,721 931,756
CASA Ratio 65% 67% 72% 72%
Source: Company, Shinhan Sekuritas Indonesia Estimates
Capital
CAR - without market risk 26% 28% 28% 29%
Income Statement
CAR - considering market
risk 22% 24% 24% 25%
Year-end 31 Dec (IDRbn) 2016 2017 2018F 2019F
Assets Quality
Interest Income 50,426 53,768 59,366 64,926
NPL 1.3% 1.5% 1.5% 1.5%
Interest Expense (10,347) (11,941) (13,149) (14,481)
Coverage Ratio 229% 191% 175% 180%
Net Interest Income 40,079 41,826 46,218 50,445
Source: Company, Shinhan Sekuritas Indonesia Estimates
Other Operating Income 13,704 14,960 16,629 18,221
Net Revenue 53,783 56,787 62,847 68,667
Dupont 2016 2017 2018F 2019F
Provision for loan loses (4,807) (2,191) (2,081) (1,731)
Net Interest Income 8% 8% 7% 7%
Net Revenue after provision 48,976 54,596 60,766 66,935
Net Revenue 8% 8% 8% 8%
Non-interest expense (23,383) (25,192) (27,712) (30,483)
Net Revenue after provision 8% 8% 8% 8%
Operating Income 25,594 29,403 33,054 36,452
Operating Income 4% 4% 4% 4%
Net Non-Operating Losses (Gains) (246) 244 (148) (30)
Net Income 3% 3% 3% 3%
Income before tax 25,839 29,159 32,906 36,423
ROAA 3% 3% 3% 3%
Tax (5,207) (5,838) (6,588) (7,292)
Multiplier 6 6 6 5
Net Income 20,632 23,321 26,319 29,131
ROAE 20% 19% 18% 17%
Source: Company, Shinhan Sekuritas Indonesia Estimates
Source: Company, Shinhan Sekuritas Indonesia Estimates
24
Strengthen the micro loan
Satisfactory result in 9M performance. BBRI posted the net profit in 9M
this year at IDR23.5tn which was in line with our full year estimation that set at
IDR30.8tn. The net profit increased by 14.6%yoy or reflecting 76% of our
estimation. This was due to the improvement in the net interest income and
noninterest income that grew by 6.5%yoy and 18.4%yoy respectively which
resulted in the PPOP that was up by8.4%yoy to IDR43.7tn. The lower
provisioning by11%yoy has contributed to the higher net profit and we
maintained our estimation unchanged that will grow by 14%yoy this year.
Loan grew across the segment except the medium segments. The total loan grew by 16.5%yoy to IDR808tn, while the fastest growth was posted in the consumer segment that accelerated by 17.6%yoy to IDR127tn, followed by 17% yoy of small commercial to IDR266.6tn, 16.3%yoy of micro loan to IDR266.6tn. The medium commercial loan was the slowest pace growth that up by only 1.9%yoy to IDR19.7tn due to the BBRI policy to reduce its exposure in this segment given its highest NPL so far. It was part of the strategy to manage the risk at the acceptable level. Micro loan would dominate the loan portfolio. The company guided its loan portfolio structure for the next 2 years that would push up the contribution from the micro loan segment above 35% of the portfolio from the current level at 34%, while at the same time would reduce the corporate and medium segment to below 20% from current level at 22% from total loan. This would maintain its NIM at the highest level in Indonesia as the micro loan provides the highest yield compare to the other segment.
Strengthening the digital platform to enhance the customer experience. The company has jus launched the lending platform through ‘BRISpot’ as one stop service for loan disbursement and ‘myBRI’ as mobile application for new customer borrower especially for mortgage loan. These add to the current BBRI’s digital platform such as ‘Kiosk’ for transaction payment and ‘MoCash’ as a transaction platform. This would be a positive contribution to the higher third party fund as well as to the CASA ahead. The third party fund has increased by 13.3%yoy to IDR872.7tn in 9M this year while the CASA composition improved to 56.4% from 55.4% last year.
Well maintained asset quality. The NPL gross was slightly up to 2.54% in
9M from 2.33% last year due to the deterioration of the loan at oil&gas sector,
water treatment and Agriculture Company. However the ability to absorbed the
quality downgrade remained strong as reflected in the coverage ratio at
181,9% in the 9M this year. The company also recorded a positive recovery to
write-off ratio at 52.9% from 39.8% last year.
Valuation. We reiterate our overweight call with the TP at IDR3,900 based on
GGM which implying the PBV at 2.6 and 2.5 for 2018F and 2019F respectively.
Year to Dec. NII OP Pre-tax NP EPS Growth BVPS PER PBR ROAE CAR
(bn IDR) (bn IDR) (bn IDR) (bn IDR) (IDR) (%) (IDR) (x) (x) (%) (%)
2015 58,280 30,491 32,494 25,411 206 5% 918 11.09 2.49 24% 17%
2016 67,576 33,964 33,974 26,228 214 3% 1,201 10.90 1.94 20% 18%
2017 73,005 36,802 37,022 29,044 237 11% 1,369 12.50 2.17 18% 21%
2018F 82,930 39,378 39,272 30,810 252 6% 1,475 12.48 2.13 18% 23%
2019F 92,974 41,808 42,814 33,588 274 9% 1,565 11.45 2.01 18% 23%
Source: Company, Shinhan Sekuritas Indonesia
Overweight
Current Price (IDR) (31/10) 3.150
Target price (IDR) 3.900
Upside/Downside (%) 23,8%
52 Week High (IDR) 3.920
52 Week Low (IDR) 2.720
Major Shareholders:
Indonesian Government 60.00%
Stock Price Movement
Source: Bloomberg, Shinhan Sekuritas Indonesia
Helmi Therik
+6221 80869900
0
50
100
150
200
250
BBRI JCI Index
Bank Rakyat Indonesia Tbk (BBRI)
(BBCA)
Company Focus
25
Rising digital services that contributed to the Fee Base Income growth by 160%yoy in BRILink
Source: Company, Shinhan Sekuritas Indonesia
108.3
281.9
0
50
100
150
200
250
300
9M17 9M18Fee Base Income
160% YoY
IDR Billion 9M17 9M18 YoY 2Q18 3Q18 QoQ Interest Income 73,093 78,580 8% 26,142 27,422 5% Interest Expense (20,644) (22,680) 10% (7,186) (8,459) 18% Fee & Other Opr.Income 52,449 55,900 7% 4,953 5,813 17% Gross Operating Income 65,717 71,505 9% 23,908 24,776 4% Operating Expense (26,236) (29,144) 11% (9,819) (10,645) 8% Pre Provisioning Operating Profit (PPOP) 39,481 42,361 7% 14,089 14,131 0% Provision (15,361) (13,265) -14% (4,938) (3,008) -39% Non Operating Income (Net) 149 40 -73% 8 23 188% Profit before Tax 24,269 29,136 20% 9,159 11,146 22% Net Profit 20,119 22,914 14% 7,403 8,358 13%
IDR Billion 1H17 1H18 YoY 9M17 9M18 YoY Total Assets 983,176 1,097,368 12% 993,101 1,125,401 13% Gross loan 658,864 758,952 15% 664,510 772,725 16% Government Bond (Recap) 3,318 3,093 -7% 3,319 1,505 -55% Other Earning Assets 211,017 225,590 7% 233,966 249,256 7% Total Earning Assets 873,199 987,635 13% 901,796 1,023,487 13% Earning Assets Provision (28,860) (33,900) 17% (31,199) (34,550) 11% Total Earning Assets (net) 844,339 953,735 13% 870,597 988,937 14% Total Non Earning Assets 139,179 143,633 3% 122,504 136,464 11% Total Liability & S.E 983,518 1,097,368 12% 993,101 1,125,401 13% Total Customer Deposit 734,071 796,639 9% 735,147 829,539 13% Demand Deposits 128,716 137,832 7% 115,588 138,482 20% Savings 294,242 336,244 14% 303,328 343,882 13% Time Deposits 311,113 322,563 4% 316,231 347,175 10% Other Interest Bearing Liabilities 70,489 105,394 50% 71,046 85,957 21% Non Interest Bearing Liabilities 30,063 32,316 7% 30,393 38,495 27% Tier I Capital 139,489 149,672 7% 145,552 156,941 8% Total Shareholder's Equity 148,896 163,020 9% 156,515 171,410 10%
Source: Company, Shinhan Sekuritas Indonesia
26
Loan expansion with acceptable risk Small commercial, consumer and micro dominates the loan portfolio
Source: Company, Shinhan Sekuritas Indonesia Estimates Source: Company, Shinhan Sekuritas Indonesia Estimates
Improving customer deposit growth CASA was stable at 54%
Source: Company, Shinhan Sekuritas Indonesia Estimates Source: Company, Shinhan Sekuritas Indonesia Estimates
Managed the NIM at above 7% Maintain CAR at 22%
Source: Company, Shinhan Sekuritas Indonesia Estimates Source: Company, Shinhan Sekuritas Indonesia Estimates
356,693 434,316
495,097 564,481
645,541 727,095
833,240
916,564 1.8%
1.6%
1.7%
1.3%
2.1% 2.1% 2.2%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
200,000
300,000
400,000
500,000
600,000
700,000
800,000
900,000
1,000,000
1,100,000
1,200,000
2012 2013 2014 2015 2016 2017 2018F 2019F
Gross Loan (IDR bn) NPL
Micro, 34%
Consumer, 16%
Small Commercial, 20
%
Medium, 3%
Corporate & Non-SOE, 13%
SOE, 13%
450,166 504,281
622,322 668,995
754,526 841,656 925,822
1,018,404
79%
86%
80%
84%86%
86%
90% 90%
72%
74%
76%
78%
80%
82%
84%
86%
88%
90%
92%
300,000
500,000
700,000
900,000
1,100,000
1,300,000
1,500,000
2012 2013 2014 2015 2016 2017 2018F 2019F
Customer Deposits (IDR bn) LDR
230,912 264,440
292,334 326,447
386,838
445,817
496,876
546,564 51%
52%
47%
49%
51%
53%54% 54%
42%
44%
46%
48%
50%
52%
54%
56%
100,000
200,000
300,000
400,000
500,000
600,000
700,000
800,000
2012 2013 2014 2015 2016 2017 2018F 2019F
CASA (IDR bn) CASA Ratio
7% 8%8% 8% 8% 7% 7%
8%
11%12% 12% 12% 12%
11% 11%11%
3% 3%4% 4% 3% 3% 3%
3%
0%
2%
4%
6%
8%
10%
12%
14%
2012 2013 2014 2015 2016 2017 2018F 2019F
NIM Assets yield CoF
64,882 79,327
97,706 113,127
146,813
167,347 180,317
191,275 17% 17%
18%
21%23% 23% 23%
22%
0%
5%
10%
15%
20%
25%
50,000
100,000
150,000
200,000
250,000
300,000
2012 2013 2014 2015 2016 2017 2018F 2019F
Equity (IDR bn) CAR
27
Balance Sheet
Key Ratio
Year-end 31 Dec (IDRbn) 2016 2017 2018F 2019F
Year-end 31 Dec (%) 2016 2017 2018F 2019F
Cash 90,193 82,953 89,699 82,002
Growth
Inter-banking Assets 90,723 79,042 86,947 95,641
Assets 14% 12% 10% 9%
Short-Term Investments 70,167 133,407 146,748 161,423
Loans 14% 12% 14% 10%
Loan gross 645,541 727,095 833,240 916,564
Customer Deposits 13% 12% 10% 10%
Allowance for Losses 22,184 29,527 35,342 38,876
Net Interest Income 16% 8% 14% 12%
Net Loans 623,357 697,568 797,898 877,688
PPOP 13% 9% 19% 12%
Net Fixed Assets 24,515 24,746 26,517 28,465
Net Income 3% 11% 6% 9%
Other Assets 104,689 108,531 93,572 102,929
Profitability
Total Assets 1,003,644 1,126,248 1,241,380 1,348,148
Asset Yield 12% 11% 11% 11%
Customer Deposits 754,526 841,656 925,822 1,018,404
Cost of Fund 3% 3% 3% 3%
ST Borrowings & Repos 34,488 36,398 37,649 35,644
Net Interest Margin 8% 7% 7% 8%
Long-Term Borrowings 41,272 42,341 42,341 42,341
ROAA 3% 3% 3% 3%
Other Liabilities 26,546 38,505 55,251 60,483
ROAE 20% 18% 18% 18%
Total Liabilities 856,832 958,901 1,061,063 1,156,873
Cost Efficiency Ratio 46% 44% 45% 48%
Minority Interest 391 599 4,416 4,858
Liquidity
Shareholders' Equity 146,813 167,347 180,317 191,275
LDR 86% 86% 90% 90%
Total Liabilities & Equity 1,003,644 1,126,248 1,241,380 1,348,148
CASA Ratio 51% 53% 54% 54%
Source: Company, Shinhan Sekuritas Indonesia Estimates
Capital
CAR - without market risk 18% 25% 28% 29%
Income Statement
CAR - considering market risk 18% 21% 23% 23%
Year-end 31 Dec (IDRbn) 2016 2017 2018F 2019F
Assets Quality
Interest Income 94,788 102,899 116,764 130,124
NPL 2.1% 2.1% 2.2% 2.0%
Interest Expense 27,212 29,894 33,834 37,150
Coverage Ratio 162.9% 192.5% 184.2%
202.4
%
Net Interest Income 67,576 73,005 82,930 92,974
Source: Company, Shinhan Sekuritas Indonesia Estimates
Other Operating Income 12,507 14,435 21,070 23,177
Net Revenue 80,083 87,441 104,000 116,151
Dupont 2016 2017 2018F 2019F
Provision for loan loses 9,203 11,943 18,331 18,331
Net Interest Income 10% 10% 10% 10%
Net Revenue after
provision 70,879 75,497 85,669 97,820
Net Revenue 9% 8% 9% 9%
Non-interest expense 36,915 38,695 46,291 56,012
Net Revenue after provision 8% 7% 7% 8%
Operating Income 33,964 36,802 39,378 41,808
Operating Income 4% 3% 3% 3%
Net Non-Operating Losses
(Gains) 10 220 (105) 1,006
Net Income 3% 3% 3% 3%
Income before tax 33,974 37,022 39,272 42,814
ROAA 3% 3% 3% 3%
Tax 7,746 7,978 8,463 9,226
Multiplier 7 7 7 7
Net Income 26,228 29,044 30,810 33,588
ROAE 20% 18% 18% 18%
Source: Company, Shinhan Sekuritas Indonesia Estimates
Source: Company, Shinhan Sekuritas Indonesia Estimates
28
Rebalancing the loan portfolio with the more retail-centric
Back ground. BMRI is the largest bank in Indonesia and become the
systematic and important financial institution in Indonesia with the total assets
reached IDR1,155tn. The company is a state owned company which plays
important rules in Indonesia through its synergetic between government and
other SOE business that support the government related projects. The bank is
positioned as a corporate bank with the total loan shares in Indonesia at 15.2%
while the shares of its customer deposit is about 15.3% of the national saving.
Balancing the corporate exposure to be more retail centric. Bank
Mandiri is benefiting by its position as the largest state bank that have higher a
business exposure in the corporate and SOE. However, on the other side the
portfolio mix with higher exposure in corporate loan is a disadvantageous due
to its lower yield compares to the consumer segment. The stiffer competition in
the corporate loan also limits the margin expansion. To mitigate this situation,
the company aims to raise its exposure in the consumer segments that could
provide better yield than the corporate segments. The corporate segment
contributes 66% of its total assets portfolio in 1H’18 while the small-medium-
micro and consumer segment contributes 34%. The company is aiming to re-
profiling its business exposure by expanding the consumer and small medium
segment to 40% while at the same time reducing the corporate portion to 60%
by 2020. This would maintain the NIM at above 5.4%. The company is well
capitalized with its CAR stood at 20% and sound assets quality as shown in NPL
at 2.5%.
Satisfactory growth with improving assets quality. The company booked
the loan growth at 11.8%yoy in 1H to IDR762.5tn. However the NIM was
slightly declined by 14bps to 5.74% mainly due to the lower assets yield to
7.8% from 8.2% last year. The expectation of higher economic growth this
year and stabilize provisioning due to the better asset quality improvement is
expected would reduce the impact from the margin compression. We estimate
the net profit would accelerate by 24%yoy to IDR 26.6tn while the NIM is
expected to hover at 5.6% and the loan growth would be maintained at
10%yoy to IDR828tn.
Risk. The unanticipated downward credit quality, stiffer interest rate
competition, slower GDP that could slash down the earning outlook.
Valuation.Our TP at IDR8,500 is calculated from the GGM approach which
implying the PBV at 1.11 and 1.06 for 2018F and 2019F respectively. The CoE
and the ROAE is set at 14.7 % and 15% respectively.
Year to Dec. NII OP Pre-tax NP EPS Growth BVPS PER PBR ROAE CAR
(bn IDR) (bn IDR) (bn IDR) (bn IDR) (IDR) (%) (IDR) (x) (x) (%) (%)
2015 45,363 26,339 26,369 21,152 871 2% 2,561 10.6 1.8 19% 17%
2016 51,825 18,480 18,573 14,650 592 -31% 3,286 19.6 1.8 11% 19%
2017 52,327 27,170 27,112 21,443 885 46% 3,643 13.1 1.6 13% 22%
2018F 62,230 33,658 33,676 26,635 1,099 24% 3,825 11.8 1.7 15% 25%
2019F 67,417 35,843 35,823 28,333 1,169 6% 4,013 11.1 1.6 15% 25%
Source: Company, Shinhan Sekuritas Indonesia
Overweight
Current Price (IDR) (31/7) 7.350
Target price (IDR) 9.200
Upside/Downside (%) 25,2%
52 Week High (IDR) 10.175
52 Week Low (IDR) 6.750
Major Shareholders:
Government of Indonesia 60%
Stock Price Movement
Source: Bloomberg, Shinhan Sekuritas Indonesia
Helmi Therik
+6221 80869900
0
50
100
150
200
250
BBNI JCI Index
Bank Mandiri Tbk (BMRI)
(BBRI)
(BBCA)
Company Focus
29
Loan expansion improving credit risk Dominated by corporate loan - 58%
Source: Company, Shinhan Sekuritas Indonesia Estimates Source: Company, Shinhan Sekuritas Indonesia Estimates
Decent liquidity position Dominated by low cost of fund (CASA ratio at 65%)
Source: Company, Shinhan Sekuritas Indonesia Estimates Source: Company, Shinhan Sekuritas Indonesia Estimates
NIM is slightly lower and expected to stabilize Well capitalized with the strong CAR
Source: Company, Shinhan Sekuritas Indonesia Estimates Source: Company, Shinhan Sekuritas Indonesia Estimates
479,339 541,625
608,642 676,180
753,638
828,207 884,948
1.9%2.1%
2.6%
3.9%
3.3%
2.5%
2.5%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
4.5%
100,000
200,000
300,000
400,000
500,000
600,000
700,000
800,000
900,000
1,000,000
2013 2014 2015 2016 2017 2018F 2019F
Gross Loan (IDR bn) NPL
Corporate, 58%
Commercial & SME, 7%
Consumer, 11%
Micro, 12%
Subsidiary, 12%
556,342
636,382 676,387
762,501 815,807
881,071
951,557
86%85%
90%
89%
92%
94%93%
80%
82%
84%
86%
88%
90%
92%
94%
96%
100,000
200,000
300,000
400,000
500,000
600,000
700,000
800,000
900,000
1,000,000
2013 2014 2015 2016 2017 2018F 2019F
Customer Deposits (IDR bn) LDR
359,956 380,512
443,874
489,380
540,303 569,076
614,602
65%
60%
66%
64%
66%
65%65%
56%
58%
60%
62%
64%
66%
68%
100,000
200,000
300,000
400,000
500,000
600,000
700,000
2013 2014 2015 2016 2017 2018F 2019FCASA (IDR bn) CASA Ratio
5% 5% 5% 6% 6% 5% 6% 6%
8% 8%9% 9%
9%8% 9%
9%
3% 3%3% 3%
3% 3% 3%3%
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
10%
2012 2013 2014 2015 2016 2017 2018F 2019F
NIM Assets yield CoF
88,791
104,845
119,492
153,370
170,006 178,483
187,258
17%
19%
22%
25%
25% 25% 24%
0%
5%
10%
15%
20%
25%
30%
50,000
70,000
90,000
110,000
130,000
150,000
170,000
190,000
210,000
2013 2014 2015 2016 2017 2018F 2019F
Equity (IDR bn) CAR
30
Balance Sheet
Key Ratio
Year-end 31 Dec (IDRbn) 2016 2017 2018F 2019F
Year-end 31 Dec (%) 2016 2017 2018F 2019F
Cash 75,392 74,457 70,011 71,842
Growth
Inter-banking Assets 83,977 89,560 96,725 104,463
Assets 14% 8% 8% 7%
Short-Term Investments 155,533 171,767 185,508 200,349
Loans 10% 12% 10% 7%
Loan gross 676,180 753,638 828,207 884,948
Customer Deposits 13% 7% 8% 8%
Allowance for Losses 32,945 34,116 37,492 37,535
Net Interest Income 14% 1% 19% 8%
Net Loans 643,235 719,522 790,715 847,413
PPOP 11% 5% 8% 8%
Net Fixed Assets 35,663 36,619 28,180 30,168
Net Income -31% 46% 24% 6%
Other Assets 44,905 32,777 39,548 42,712
Profitability
Total Assets 1,038,706 1,124,701 1,210,687 1,296,946
Asset Yield 9% 8% 9% 9%
Customer Deposits 762,501 815,807 881,071 951,557
Cost of Fund 3% 3% 3% 3%
ST Borrowings & Repos 25,550 22,177 27,046 25,930
Net Interest Margin 6% 5% 5.6% 5.6%
Long-Term Borrowings 32,602 42,950 42,950 42,950
ROAA 2% 2% 2% 2%
Other Liabilities 64,683 73,762 81,138 89,252
ROAE 11% 13% 15% 15%
Total Liabilities 885,336 954,695 1,032,204 1,109,688
Cost Efficiency Ratio 43% 45% 43% 42%
Minority Interest 2,916 3,287 4,389 4,690
Liquidity
Shareholders' Equity 153,370 170,006 178,483 187,258
LDR 89% 92% 94% 93%
Total Liabilities & Equity 1,038,706 1,124,701 1,210,687 1,296,946
CASA Ratio 64% 66% 65% 65%
Source: Company, Shinhan Sekuritas Indonesia Estimates
Capital
CAR - without market
risk 19% 22% 25% 26%
Income Statement
CAR - considering
market risk 19% 22% 25% 25%
Year-end 31 Dec (IDRbn) 2016 2017 2018F 2019F
Assets Quality
Interest Income 76,710 79,502 91,796 99,352
NPL 3.9% 3.3% 2.5% 2.5%
Interest Expense 24,885 27,174 29,566 31,935
Coverage Ratio 125.8% 136.2% 172.0% 166.1%
Net Interest Income 51,825 52,327 62,230 67,417
Source: Company, Shinhan Sekuritas Indonesia Estimates
Other Operating Income 22,700 25,853 22,529 24,332
Net Revenue 74,526 78,181 84,759 91,749
Dupont 2016 2017 2018F 2019F
Provision for loan loses 24,778 15,580 9,691 11,182
Net Interest Income 8% 7% 8% 8%
Net Revenue after provision 49,748 62,600 75,069 80,566
Net Revenue 8% 7% 7% 7%
Non-interest expense 31,268 35,430 41,410 44,723
Net Revenue after
provision 5% 6% 6% 6%
Operating Income 18,480 27,170 33,658 35,843
Operating Income 2% 3% 3% 3%
Net Non-Operating Losses
(Gains) 93 (58) 18 (20)
Net Income 2% 2% 2% 2%
Income before tax 18,573 27,112 33,676 35,823
ROAA 2% 2% 2% 2%
Tax 3,923 5,669 7,042 7,491
Multiplier 7 7 7 7
Net Income 14,650 21,443 26,635 28,333
ROAE 11% 13% 15% 15%
Source: Company, Shinhan Sekuritas Indonesia Estimates
Source: Company, Shinhan Sekuritas Indonesia Estimates
31
Capitalizing the synergetic between SOE & corporate growth
Back ground. BBNI is a state owned company which plays an important role in
Indonesia through its synergetic between government and other SOE business
that support the government related projects. The bank is positioned as a
corporate bank with the total loan shares in Indonesia reached 9.1% while the
shares of its customer deposit is about 10% of the national saving.
Riding the infrastructure and corporate loan growth. We overweigh this
counter due to its well positioned to gain the SOE and infrastructure theme.
The company drives the loan from the corporate loan and SOE segments. The
acceleration of the government infrastructure program as shown in the higher
infrastructure spending would triggered the loan demand. About 49% came
from corporate and SOE loan while 15% from medium scale, 16% from
consumer and the rest from small commercial segment. The asset quality is
remains at the manageable level as indicated in the NPL at 2.1% while the
ability to absorb the deterioration of the loan quality is solid. The loan coverage
ratio at 150.2% is believed would be the cushion to anticipate the risk from the
unfavourable economic condition. The widespread of its distribution network
couples with its status as government has made the capacity to collect the
third party fund grew steadily at 13.5% to IDR526tn while the LDR at 87.3%.
The liquidity is satisfactory enough to meet the short term needs as reflected in
the LCR and NSFR at 239% and 140% respectively.
Sound earning profile with the stabilizing NIM. The company books a
decent loan growth that remains above the national growth (11% vs 9%). The
company expects to book the same loan growth this year and the corporate-
SOE would become one of the engines especially from manufacture and
infrastructure sector. The big three subsector in manufacture in the portfolio
are pulp and paper, palm oil company and chemical manufacture while in
infrastructure the company remains focuses in toll road, power plant, gas and
water. We expect the PPOP could grow by 11% while the net profit would reach
IDR15.9tn or up by 15% on the back of the stable NIM and stable provision
charges. The NIM is estimated to be contained at 5%.
Risk. The unanticipated downward credit quality, stiffer interest rate
competition, slower GDP that could slash down the earning outlook.
Valuation. We drive our TP at IDR9200 based on GGM which implying the PBV
at 1.5X and 1.3 for 2018F and 2019F respectively. The CoE and the ROAE is
calculated at 12.7% and 15% respectively.
Year to Dec. NII OP Pre-tax NP EPS Growth BVPS PER PBR ROAE CAR
(bn IDR) (bn IDR) (bn IDR) (bn IDR) (IDR) (%) (IDR) (x) (x) (%) (%)
2015 25,560 11,412 11,466 9,141 487 -16% 4,212 10.2 1.2 13% 17%
2016 29,995 14,229 14,303 11,410 610 25% 4,802 9.1 1.2 14% 19%
2017 31,938 17,220 17,165 13,771 733 21% 5,428 10.1 1.4 14% 22%
2018F 36,086 19,820 19,820 15,901 846 15% 6,036 8.7 1.2 15% 22%
2019F 41,217 23,150 23,150 18,571 988 17% 6,728 7.5 1.1 16% 21%
Source: Company, Shinhan Sekuritas Indonesia
Overweight
Current Price (IDR) (31/7) 7.350
Target price (IDR) 9.200
Upside/Downside (%) 25,2%
52 Week High (IDR) 10.175
52 Week Low (IDR) 6.750
Major Shareholders:
Government of Indonesia 60%
Stock Price Movement
Source: Bloomberg, Shinhan Sekuritas Indonesia
Helmi Therik
+6221 80869900
0
50
100
150
200
250
BBNI JCI Index
Bank Negara Indonesia Tbk (BBNI)
(BBRI)
(BBCA)
Company Focus
32
Loan expansion with decent risk Well diversify of loan portfolio
Source: Company, Shinhan Sekuritas Indonesia Estimates Source: Company, Shinhan Sekuritas Indonesia Estimates
Solid liquidity position Dominated by low cost of fund (CASA ratio at 65%)
Source: Company, Shinhan Sekuritas Indonesia Estimates Source: Company, Shinhan Sekuritas Indonesia Estimates
Stabilise NIM Well capitalized with the strong CAR
Source: Company, Shinhan Sekuritas Indonesia Estimates Source: Company, Shinhan Sekuritas Indonesia Estimates
203,582
254,055 279,924
334,937
393,275
457,014
517,749
590,234
2.8%
2.2%
2.0%
2.7%
3.0%
2.3%
2.9% 2.7%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
100,000
200,000
300,000
400,000
500,000
600,000
700,000
2012 2013 2014 2015 2016 FY2017 2018F 2019F
Gross Loan (IDR bn) NPL
Corporate, 30%
SOE, 19%Medium, 15%
Small, 13%
Consumer, 16%
Other, 6%
257,661 291,890 313,893
370,421
435,545
516,098
588,352
670,721
79%
87%89% 90% 90% 89% 88%
88%
1%
11%
21%
31%
41%
51%
61%
71%
81%
91%
101%
100,000
200,000
300,000
400,000
500,000
600,000
700,000
2012 2013 2014 2015 2016 FY2017 2018F 2019F
Customer Deposits (IDR bn) LDR
173,449 199,983
202,522 226,259
281,315
325,457
380,011
433,213
67%69%
65%61%
65% 63%
65%65%
1%
11%
21%
31%
41%
51%
61%
71%
81%
100,000
150,000
200,000
250,000
300,000
350,000
400,000
450,000
2012 2013 2014 2015 2016 FY2017 2018F 2019F
CASA (IDR bn) CASA Ratio
5% 5%6%
6% 6% 6%5% 5%
5%
9%8%
8%
10%9% 9%
8% 8% 8%
3%3%
2%
3% 3% 3% 3% 3% 3%
0%
2%
4%
6%
8%
10%
12%
2011 2012 2013 2014 2015 2016 FY2017 2018F 2019F
NIM Assets yield CoF
43,525 47,684
61,021
78,438 89,254
100,903 112,195
125,056
19%17%
19%
22% 22%21% 21%
21%
1%
6%
11%
16%
21%
26%
10,000
30,000
50,000
70,000
90,000
110,000
130,000
150,000
2012 2013 2014 2015 2016 FY2017 2018F 2019F
Equity (IDR bn) CAR
33
Balance Sheet
Key Ratio
Year-end 31 Dec (IDRbn) 2016 2017 2018F 2019F
Year-end 31 Dec (%) 2016 2017 2018F 2019F
Cash 47,613 44,278 64,555 62,304
Growth
Inter-banking Assets 35,326 50,607 57,692 65,769
Assets 19% 18% 13% 13%
Short-Term Investments 21,799 94,409 107,626 122,693
Loans 17% 17% 12% 14%
Loan gross 393,275 457,014 517,749 590,234
Customer Deposits 18% 18% 14% 14%
Allowance for Losses 16,681 14,524 21,960 25,035
Net Interest Income 17% 6% 13% 14%
Net Loans 376,595 442,491 495,789 565,199
PPOP 13% 9% 11% 14%
Net Fixed Assets 21,972 22,805 25,954 29,544
Net Income 25% 21% 15% 17%
Other Assets 99,728 54,741 52,573 59,933
Profitability
Total Assets 603,032 709,330 804,189 905,443
Asset Yield 9% 8% 8% 8%
Customer Deposits 435,545 516,098 588,352 670,721
Cost of Fund 3% 3% 3% 3%
ST Borrowings & Repos 20,711 21,727 22,425 23,812
Net Interest Margin 6% 5% 5% 5%
Long-Term Borrowings 33,471 41,044 41,044 41,044
ROAA 2% 2% 2% 2%
Other Liabilities 24,051 29,558 40,174 44,810
ROAE 14% 14% 15% 16%
Total Liabilities 513,778 608,427 691,994 780,386
Cost Efficiency Ratio 48% 48% 45% 45%
Minority Interest 2,097 2,311 2,744 3,128
Liquidity
Shareholders' Equity 89,254 100,903 112,195 125,056
LDR 90% 89% 88% 88%
Total Liabilities & Equity 603,032 709,330 804,189 905,443
CASA Ratio 65% 63% 65% 65%
Source: Company, Shinhan Sekuritas Indonesia Estimates
Capital
CAR - without market
risk 19% 22% 22% 21%
Income Statement
CAR - considering
market risk 19% 22% 22% 21%
Year-end 31 Dec (IDRbn) 2016 2017 2018F 2019F
Assets Quality
Interest Income 43,768 48,178 56,729 64,530
NPL 3.0% 2.3% 2.9% 2.7%
Interest Expense 13,773 16,240 20,643 23,313
Coverage Ratio 141.4% 138.8% 106.7% 109.3%
Net Interest Income 29,995 31,938 36,086 41,217
Source: Company, Shinhan Sekuritas Indonesia Estimates
Other Operating Income 9,926 11,542 12,230 13,942
Net Revenue 39,921 43,480 48,316 55,159
Dupont 2016 2017 2018F 2019F
Provision for loan loses 6,475 5,394 6,609 7,058
Net Interest Income 8% 7% 7% 8%
Net Revenue after provision 33,446 38,086 41,707 48,100
Net Revenue 7% 7% 6% 6%
Non-interest expense 19,217 20,866 21,887 24,951
Net Revenue after
provision 6% 6% 6% 6%
Operating Income 14,229 17,220 19,820 23,150
Operating Income 3% 3% 3% 3%
Net Non-Operating Losses (Gains) 74 (54) - -
Net Income 2% 2% 2% 2%
Income before tax 14,303 17,165 19,820 23,150
ROAA 2% 2% 2% 2%
Tax 2,893 3,395 3,920 4,578
Multiplier 7 7 7 7
Net Income 11,410 13,771 15,901 18,571
ROAE 14% 14% 15% 16%
Source: Company, Shinhan Sekuritas Indonesia Estimates
Source: Company, Shinhan Sekuritas Indonesia Estimates
34
Strengthen the leadership in subsidized
mortgage loan
Back ground. BBTN is a state owned company that focuses in the mortgage
loan. The underpenetrated mortgage loan in Indonesia at 2.9% of GDP
compares to Asia (>20%) is the backdrop of the industry that provide the
opportunity for BBTN to grow further. Total BBTN market shares in mortgage
loan is about 37.7%, while in term of government subsidized mortgage loan,
the company is the leader with the shares of 94%. The total deposit share is
about 3.6% of the national deposit while in the loan, the shares is at 4% of the
total national loan.
Strategic position to support government program. We overweight the
company given its position as a strategic in the mortgage loan that get the
support from the government program in housing program. The government
has budgeted IDR6tn for housing subsidies. The demand for the mid to low
market is ample given the large housing backlog in Indonesia at 11.6mn unit.
However in the other side the slightly hawkish tone in monetary policy as
shown in the higher policy rate due to the macro prudential reason would be
the challenge for the mortgage. However, we see the positive side from the
relaxation in the LTV which would counter the negative side that could increase
the accessibility for the mid to low income segment and the first buyer. The
mortgage loan requires the availability of the stable and long term funding.
With the current LDR at above 100%, the company will relies on the whole sale
funding such as bond issuance or mortgage securitization with the higher cost
and the increasing of the third party fund with the lower cost to match the
assets liability. This has made the NIM of the BBTN is slightly lower (4%) than
the other SOE bank (>5%). The assets quality remains sound as the ratio of
the NPL to collateralize value was at 274.9%.
Solid loan growth. The company posted a satisfactory loan growth in the 1H
at 19.14%yoy to IDR211.35tn on the back of the acceleration of the mortgage
that contributes 56% of the total loan while the non-housing loan increased by
14.9%yoy. The acceleration of the third party fund especially from the CASA
that picked up by 19.17% has supported the growth. We expect the company
would be able to book a loan growth at 19% while the NIM and cost of fund is
estimated 4% and 4.2% respectively this year.
Risk. The unanticipated of the downward in credit quality, stiffer interest rate
competition, slower GDP that could slash down the earning outlook.
Valuation. We drive our TP 3800 based on GGM which implying the PBV at
1.6x and 1.4x for 2018F and 2019F respectively. The CoE and the ROAE is
calculated at 15% and 13.3%.
Year to Dec. NII OP Pre-tax NP EPS Growth BVPS PER PBR ROAE CAR
(bn IDR) (bn IDR) (bn IDR) (bn IDR) (IDR) (%) (IDR) (x) (x) (%) (%)
2015 6,811 2,534 2,542 1,851 175 62% 1,311 7.4 1.0 14% 15%
2016 8,164 3,352 3,330 2,619 247 41% 1,807 7.0 1.0 16% 15%
2017 9,341 3,892 3,862 3,027 286 16% 2,046 11.0 1.5 15% 17%
2018F 11,286 4,424 4,394 3,445 325 14% 2,281 7.8 1.1 15% 20%
2019F 13,578 5,032 5,002 3,922 370 14% 2,554 6.9 1.0 15% 20%
Source: Company, Shinhan Sekuritas Indonesia
Overweight
Current Price (IDR) (31/7) 2.540
Target price (IDR) 3.800
Upside/Downside (%) 49,6%
52 Week High (IDR) 3.890
52 Week Low (IDR) 2.110
Major Shareholders:
Government of Indonesia 60%
Stock Price Movement
Source: Bloomberg, ShinhanSekuritas Indonesia
Helmi Therik
+6221 80869900
0
50
100
150
200
250
300
350
BBTN JCI Index
Bank Tabungan Negara Tbk (BBTN)
Company Focus
35
Loan expansion with satisfactory risk Well diversify of loan portfolio
Source: Company, Shinhan Sekuritas Indonesia Estimates Source: Company, Shinhan Sekuritas Indonesia Estimates
Strong liquidity position Dominated by low cost of fund (CASA ratio at 72%)
Source: Company, Shinhan Sekuritas Indonesia Estimates Source: Company, Shinhan Sekuritas Indonesia Estimates
Manageable NIM Well capitalized with the strong CAR
Source: Company, Shinhan Sekuritas Indonesia Estimates Source: Company, Shinhan Sekuritas Indonesia Estimates
81,411 100,467
115,916
138,956
164,446
198,991
237,898
275,776 4.1%4.0%
4.0%
3.4%
2.8%
2.7%
2.7%2.7%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
4.5%
10,000
60,000
110,000
160,000
210,000
260,000
310,000
2012 2013 2014 2015 2016 2017 2018F 2019F
Gross Loan (IDR bn) NPL
Subdidized-Mortgage, 30%
NonSubsidized-Mortgage, 23%
Other Mortgage, 2%
Construction loan, 21%
Non Mortgage, 23%
80,668 96,208
106,471 127,709
159,988
192,474
230,969
277,162
101%
104%
109%109%
103%
103%103%
100%
94%
96%
98%
100%
102%
104%
106%
108%
110%
10,000
60,000
110,000
160,000
210,000
260,000
310,000
2012 2013 2014 2015 2016 2017 2018F 2019F
Customer Deposits (IDR bn) LDR
27,966 34,812
43,354 49,591
62,126
80,672
95,602
45%
43%
45%
47%
49% 50% 50%
38%
40%
42%
44%
46%
48%
50%
52%
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
90,000
100,000
2012 2013 2014 2015 2016 2017 2018FCASA (IDR bn) CASA Ratio
4%5%
4% 4% 4% 4% 4%4%
9% 9%10%
10% 9%
8%8% 8%
4% 5%
6%6%
5% 5%
4% 4%
0%
2%
4%
6%
8%
10%
12%
2012 2013 2014 2015 2016 2017 2018F 2019F
NIM Assets yield CoF
10,279 11,557
12,253 13,860
19,131
21,663
24,160
27,046
18%
15%15%
17%
20% 20%
17% 17%
0%
5%
10%
15%
20%
25%
5,000
10,000
15,000
20,000
25,000
30,000
2012 2013 2014 2015 2016 2017 2018F 2019F
Equity (IDR bn) CAR
36
Balance Sheet
Key Ratio
Year-end 31 Dec (IDRbn) 2016 2017 2018F 2019F
Year-end 31 Dec (%) 2016 2017 2018F 2019F
Cash 12,025 13,582 (8,126) (5,539)
Growth
Inter-banking Assets 17,581 25,254 30,305 36,365
Assets 25% 22% 9% 19%
Short-Term Investments 3,888 11,554 13,865 16,638
Loans 19% 21% 20% 16%
Loan gross 164,446 198,991 237,898 275,776
Customer Deposits 25% 20% 20% 20%
Allowance for Losses 2,116 2,356 2,817 3,265
Net Interest Income 20% 14% 21% 20%
Net Loans 162,330 196,635 235,081 272,511
PPOP 19% 16% 26% 20%
Net Fixed Assets 4,659 4,837 4,620 7,104
Net Income 41% 16% 14% 14%
Other Assets 13,684 9,503 10,287 12,345
Profitability
Total Assets 214,168 261,365 286,032 339,425
Asset Yield 9% 8% 8% 8%
Customer Deposits 159,988 192,474 230,969 277,162
Cost of Fund 5% 5% 4% 4%
ST Borrowings & Repos 12,022 37,197 17,549 19,726
Net Interest Margin 4% 4% 4% 4%
Long-Term Borrowings 15,935 1,784 1,784 1,784
ROAA 1% 1% 1% 1%
Other Liabilities 7,094 8,248 11,571 13,707
ROAE 16% 15% 15% 15%
Total Liabilities 195,038 239,702 261,872 312,379
Cost Efficiency Ratio 57% 56% 65% 67%
Minority Interest 0 0 0 0
Liquidity
Shareholders' Equity 19,131 21,663 24,160 27,046
LDR 103% 103% 103% 100%
Total Liabilities & Equity 214,168 261,365 286,032 339,425
CASA Ratio 71% 72% 71% 71%
Source: Company, Shinhan Sekuritas Indonesia Estimates
Capital
CAR - without market risk 17% 20% 23% 23%
Income Statement
CAR - considering market
risk 15% 17% 20% 20%
Year-end 31 Dec (IDRbn) 2016 2017 2018F 2019F
Assets Quality
Interest Income 17,139 19,272 21,786 25,711
NPL 2.8% 2.7% 2.7% 2.7%
Interest Expense 8,975 9,931 10,499 12,133
Coverage Ratio 45.3% 44.6% 44.6% 44.6%
Net Interest Income 8,164 9,341 11,286 13,578
Source: Company, Shinhan Sekuritas Indonesia Estimates
Other Operating Income 1,280 1,605 2,491 2,989
Net Revenue 9,444 10,946 13,777 16,567
Dupont 2016 2017 2018F 2019F
Provision for loan loses 705 884 461 448
Net Interest Income 9% 8% 8% 8%
Net Revenue after provision 8,739 10,063 13,316 16,119
Net Revenue 5% 5% 5% 5%
Non-interest expense 5,387 6,171 8,892 11,086
Net Revenue after provision 5% 4% 5% 5%
Operating Income 3,352 3,892 4,424 5,032
Operating Income 2% 2% 2% 2%
Net Non-Operating Losses (Gains) (22) (30) (30) (30)
Net Income 1% 1% 1% 1%
Income before tax 3,330 3,862 4,394 5,002
ROAA 1% 1% 1% 1%
Tax 711 834 949 1,080
Multiplier 12 12 12 12
Net Income 2,619 3,027 3,445 3,922
ROAE 16% 15% 15% 15%
Source: Company, Shinhan Sekuritas Indonesia Estimates
Source: Company, Shinhan Sekuritas Indonesia Estimates
37
Expecting revenue growth recovery
Our consolidated pre-sales marketing has improved. This was in line with
the better GDP growth this year compared to the last year performance
(5.27% vs 5.1%) which was translated into the better consumer
confidence. The back log in the property was sizeable or at 11mn described
the huge demand for the housing ahead. The demand for the mid to low
segment is believed sizeable, while the prospect of the mid to high
segment would depend on the improvement of the consumer confidence.
The property sector demand in the previous years were weak, however the
upbeat tone in the first semester this year is expected to continue,
underpinned of the relaxation policy for LTV (loan to value).
Higher commercial and retail sales demand. Based on the BI survey on
commercial property, the recovery has been started since the second relaxation of
LTV. The retail property survey also moved at the same path when the modest GDP
and stable domestic inflation has triggered the better demand in the retail property.
Amid the higher interest rate outlook, we still believe that the huge housing backlog
at 11mn would provide the future demand in property. When the GDP continue to
pick up at above 5%, the people would consider graduating from renter and start to
be the housing owner.
Loosening policy in property through, lowering tax, relaxation of the LTV
and financing to value (FTV) as the policy mix to support the property
sector. The relaxation of LTV to 100% from 90% is believed would provide the
incentive for the new buyer as well as to the developer through the loan to finance
measure. The mild recovery has been seen since the second LTV relaxation in
September 2016 as reflected in the property loan growth, property demand index
and company property’s pre-sales. The property loan is expected to grow by
14%yoy this year after the third LTV relaxation started on August 2018, while the
challenge is the higher interest rate due to the hawkish monetary policy stance.
However, we think that the probability of steeper interest rate would diminish as the
adjustment of the interest rate has near the targeted level of the central bank. The
government has also reduced the tax from 5% to 1% for the property. This would
stimulate the property transaction in the mid-term.
Expansive infrastructure, new access and potential rising of ASP in the
medium-term. The demand index has gradually improved in line with the supply
index in retail and commercial property segment. This suggests the incremental of
the ASP would be at the modest path. However, the adjustment in the several areas
that would be connected with the new access would be meaningful. The massive
infrastructure development would benefit the company that own strategic location
especially in Java.
Our call. We overweight CTRA, given its ample land bank, diverse location and its
improving recurring income portion which provide the earning stability. We also
overweight ASRI due to its improving revenue and the prospect of the Pasar Kemis
area on the back of the toll road connection with Serpong. We overweight SMRA on
the back of its strategic location that would be benefited by the massive
infrastructure at greater Jakarta.
Overweight
Jakarta Property Index Performance
Source: Bloomberg, Shinhan Sekuritas Indonesia
Helmi Therik
+6221 80869900
70
80
90
100
110
120
Jan-18 Mar-18 May-18 Jul-18 Sep-18 Nov-18
JAKPROP JCI Index
Property Sector
Sector Focus
38
Accumulated developer & property company’s revenue GDP growth & pre-sales growth of select developer company
Source: Company, Shinhan Sekuritas Indonesia Source: Company, Shinhan Sekuritas Indonesia
Recurring income portion of total revenue Relaxation of LTV would gave a support for the retail houses
Source: Company, Shinhan Sekuritas Indonesia Source: Bank Indonesia, Shinhan Sekuritas Indonesia
Impact of relaxation of LTV would gradually increase the property loan at around 14%
The series of relaxation of LTV would be a positive for the demand as well as the supply in commercial property
Source: Bank Indonesia, Shinhan Sekuritas Indonesia Source: Bank Indonesia, Shinhan Sekuritas Indonesia
1,9263,385
2,2134,000
9,1797,186
7,640
7,722
4,300
3,000 3,600
4,000
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
2015 2016 2017 2018F
SMRA
CTRA
ASRI
5.15
4.94
5.19
5.2315,405
13,571
13,453
15,722
12,000
12,500
13,000
13,500
14,000
14,500
15,000
15,500
16,000
4.75
4.8
4.85
4.9
4.95
5
5.05
5.1
5.15
5.2
5.25
5.3
2015 2016 2017 2018F
GDP (YOY %)
Pre-Sales (IDR tn)
11%
24%
9%8%
27%
11%
0%
5%
10%
15%
20%
25%
30%
ASRI CTRA SMRA
2016
2017
0
2
4
6
8
10
12
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
Mar
08
Sep
08
Mar
09
Sep
09
Mar
10
Sep
10
Mar
11
Sep
11
Mar
12
Sep
12
Mar
13
Sep
13
Mar
14
Sep
14
Mar
15
Sep
15
Mar
16
Sep
16
Mar
17
Sep
17
Mar
18
Sep
18
JIB
OR
(1
W)%
Pro
pe
rty
ind
ex(
yoy)
by
size
Less Than 36 Square Meters
Between 36 and 70 Square Meters
Larger Than 70 Square Meters
Lower LTV Policy /
Stricker LTV limits Higher LTV/
Relaxation of LTV
0
0.05
0.1
0.15
0.2
0.25
0.3
0.35
Jan
20
13
Ap
r 2
01
3
Jul 2
01
3
Oct
20
13
Jan
20
14
Ap
r 2
01
4
Jul 2
01
4
Oct
20
14
Jan
20
15
Ap
r 2
01
5
Jul 2
01
5
Oct
20
15
Jan
20
16
Ap
r 2
01
6
Jul 2
01
6
Oct
20
16
Jan
20
17
Ap
r 2
01
7
Jul 2
01
7
Oct
20
17
Jan
20
18
Ap
r 2
01
8
Jul 2
01
8
Total Property loan House and Apartment Ownership Credits
Lower LTV Policy / Stricker LTV limits
Higher LTV/ Relaxation of
LTV
Higher LTV/ Relaxation of LTV
Higher LTV/
Relaxation of LTV
-1%
-1%
0%
1%
1%
2%
2%
3%
3%
4%
4%
Commercial Property Price Index
Demand Index
Supply Index
Higher LTV/
Relaxation of LTV
Higher LTV/ Relaxation of
LTV
39
Sound marketing sales this year on the back of
new projects Back ground. CTRA is a property development company which owned 2,521ha land
that scattered widespread across the country (33 cities). This would sustain the
business for the next 15 years. About 29% of the revenue was derived from the
recurring income while the rest was from the development revenue. This would
partially protect the revenue from the property cyclicality. Several towers or high
rise building that located at central district area are: Ciputra World I & II and
Tokopedia Tower. The company has 566,961 (sqm) sealable area for the apartment
and office-strata title and also owned 200,000 (sqm) of net leasable area (NLA) for
the mall that produced a stable recurring income ahead.
Benefited from the mid to low income demand. The potential demand for the
housing and apartment in the long term is believed would remain strong, especially
for the mid to low income class due to housing backlog at 11mn. About 41% of the
presales marketing is coming from the below IDR1bn ticket size in the 1H18. The
mid to low class segment’s (<IDR1bn @house price) composition is higher than last
year that only at 36%. The ticket size at above IDR1bn and below IDR2bn
contributed 23% of the total pre-sales. These signifying the end users (not
speculators) as the target market for the company especially for the mid to low
segments. The company also has a healthy balance sheet to support its expansion
plan as reflected in its net debt to EBITDA at 2.3x. The cyclicality in the property
that triggered by the slightly higher interest rate would be the challenge for the
company, however with the relaxation of the LTV and more loosening banking
measure through the lowering risk weighted assets (RWA) in property sector to
calculate the banking capital requirement that started to apply in 2H this year would
be a positive catalyst for the company. This was due to the sizeable payment
method through mortgage payment that amounting to 51%, while 37% was through
the installment method.
Strong revenue growth expectation on the back of the new projects. The
revenue was relatively flat in the 1H at IDR2.8tn, however the company believed to
book a solid revenue growth in 2nd semester that would spur the revenue by 20%
yoy to IDR7.7tn on the back of the new projects. The pre marketing sales target this
year is set at IDR7.7tn which would come from the several projects such as Citra
Sirkuit Residence at Sentul, Citra Maja Tanggerang, etc. The pre-sales in 1H was
about IDR3.3tn or representing 42% of the company’s target this year.
Valuation. We derived our TP at IDR1,350 based on the 69% discount to our RNAV
calculation which implies the 2018 and 2019 PE at 20x and 22x respectively or in
line with its historical average. Risk to our call: Deteriorated of the GDP, more than
expected higher interest rate.
Year to Dec. GP OP Pre-tax NP EPS Growth BVPS PER PBR ROAE ROAA
(bn IDR) (bn IDR) (bn IDR) (bn IDR) (IDR) (%) (IDR) (x) (x) (%) (%)
2015 3,290 1,960 2,165 1,740 83 -3% 846 17 1.7 14% 7%
2016 3,019 1,989 1,500 1,171 55 -33% 771 26 1.9 9% 4%
2017 3,648 2,018 1,297 1,019 48 -13% 834 25 1.4 7% 3%
2018F 3,701 2,047 1,149 1,396 66 37% 776 18 1.5 9% 4%
2019F 3,755 2,077 1,043 1,266 60 -9% 824 20 1.4 9% 3%
Source: Company, Shinhan Sekuritas Indonesia
Overweight
Current Price (IDR) (10/10) 800
Target price (IDR) 1,350
Upside/Downside (%) 68.9%
52 Week High (IDR) 1,430
52 Week Low (IDR) 730
Major Shareholders:
PT Sang Pelopor 46.96%
Stock Price Movement
Source: Bloomberg, Shinhan Sekuritas Indonesia
Helmi Therik
+6221 80869900
0
50
100
150
200
250
Jan-15 Jun-15 Nov-15 Apr-16 Sep-16 Feb-17 Jul-17 Dec-17 May-18
CTRA JCI Index
Ciputra Development Tbk (CTRA)
Company Focus
40
CTRA’s projects that scattered across cities (Well diversify)
Source: Company
CTRA’s projects portfolio at Greater Jakarta – New Infrastructure would increase the land price gradually
Source: Company
41
CTRA’s 2018 key projects at Makassar
Source: Company
CTRA’s 2018 key projects at Tanggerang (Greater Jakarta)
Source: Company
CitraMaja Raya Banten
CitraLand City Losari Makasar
42
Revenue increase on the back of the new projects Revenue by business segment
Source: Company, Shinhan Sekuritas Indonesia Estimates Source: Company, Shinhan Sekuritas Indonesia Estimates
Revenue by payment method 41% Revenue come from below IDR1bn ticket size
Source: Company, Shinhan Sekuritas Indonesia Estimates Source: Company, Shinhan Sekuritas Indonesia Estimates
Stable profitability margin Debt to EBITDA (x) and EBITDA (bn IDR)
Source: Company, Shinhan Sekuritas Indonesia Estimates Source: Company, Shinhan Sekuritas Indonesia Estimates
2,178
3,323
5,077
6,340
7,514
6,739 6,443
7,783 7,896
1,043 1,667
2,546
3,330 3,729
3,290 3,019 3,648 3,701
535 971
1,609 2,248 2,416
1,851 1,623 1,960 1,989
325 589 977
1,325 1,284 1,021 894 1,226 1,112
-
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
2011 2012 2013 2014 2015 2016 2017 2018F 2019F
Revenue Gross Profit Operating profit Net Profit
4,240
3,463
4,369
5,143 4,734
837 7641,006
1,597 1,709
5,077
4,227
5,374
6,7396,443
-
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
2013 2014 2015 2016 2017
Development Revenue Recurring Revenue Total Revenue
33% 32%
49% 48% 51%
57% 57%36% 40% 37%
10% 11% 15% 12% 12%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2014 2015 2016 2017 6M2018
Cash
Installments
Mortgage
33% 34%40% 36% 41%
32%24%
30%24%
23%
27%
26%
24%30%
28%
8%16%
6% 10% 8%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2014 2015 2016 2017 6M2018
IDR>5bn
IDR 2-5bn
IDR 1-2bn
<IDR 1bn
48% 50%50%
53%
50%
49%47% 47%
47%
25%29%
32%
35%32%
27% 25% 25%25%
15%18%
19%21%
17%15%
14% 16%14%
0%
10%
20%
30%
40%
50%
60%
2011 2012 2013 2014 2015 2016 2017 2018F 2019F
Gross Margin Operating Margin Net Margin
612
1,085
1,814
2,449 2,656
1,994 1,798
2,244 2,293
2.73
1.88
1.77
1.68
1.96
3.74
4.71
5.44 5.48
-
500
1,000
1,500
2,000
2,500
3,000
0.00
1.00
2.00
3.00
4.00
5.00
6.00
2011 2012 2013 2014 2015 2016 2017 2018F 2019F
EBIT
DA
(in
Bn
IDR
)
De
bt t
o E
BIT
DA
(x)
EBITDA Debt to EBITDA
43
Income Statement
Cashflow Analysis
Year-end 31 Dec (IDRbn) 2016 2017 2018F 2019F
Year-end 31 Dec (IDRbn) 2016 2017 2018F 2019F
Sales 6,739 6,443 7,783 7,896
CFs from operation
COGS (3,450) (3,423) (4,136) (4,196)
Net profit 1,021 894 1,226 1,112
Gross profit 3,019 3,648 3,701 3,755
Change in working capitals (2,947) (2,149) (2,090) (1,185)
EBITDA 1,994 1,798 2,244 2,293
CFs from operation (1,926) (1,255) (864) (73)
Operating expense (1,439) (1,397) (1,687) (1,712)
Operating profit 1,989 2,018 2,047 2,077
CFs from investments (1,157) (1,146) (1,135) (1,125)
Pre-tax profit 1,500 1,297 1,149 1,043
Income tax - net 329 278 247 224
CFs from financing activities (558) 5,675 (3,774) 2,726
Net profit 1,171 1,019 1,396 1,266
Net inc/(dec) in cash 433 (239) (4,794) 2,417
EPS (IDR) 55 48 66 60
Cash at end period 3,468 3,229 3,900 3,957
Source: Company, Shinhan Sekuritas Indonesia Estimates
Source: Company, Shinhan Sekuritas Indonesia Estimates
Balance Sheet
Key Ratio Analysis
Year-end 31 Dec (IDRbn) 2016 2017 2018F 2019F
Year-end 31 Dec (IDRbn) 2016 2017 2018F 2019F
Assets
Profitability
Cash and equiv 3,468 3,229 3,900 3,957
Gross margin 48.8% 46.9% 46.9% 46.9%
Receivables 938 958 1,157 1,174
Operating margin 27.5% 25.2% 25.2% 25.2%
Inventories 7,914 9,480 11,452 11,618
EBITDA margin 29.6% 27.9% 28.8% 29.0%
Others 1,360 1,501 1,813 1,840
Net profit margin 17.4% 15.8% 17.9% 16.0%
Total current assets 13,679 15,167 18,323 18,589
ROAA 4.2% 3.4% 4.1% 3.5%
Net fixed assets 12,774 13,756 14,717 15,656
ROAE 8.6% 6.8% 9.4% 8.5%
Other assets 2,619 2,783 2,958 3,144
Total assets 29,072 31,706 35,997 37,389
Growth
Revenue -10.3% -4.4% 20.8% 1.5%
Liabilities and equities
Operating Profit -23.4% -12.3% 20.8% 1.5%
Payables 1,746 1,743 2,106 2,137
EBITDA -24.9% -9.8% 24.8% 2.2%
Other Short-Term Liabilities 5,565 6,040 7,296 7,402
Net Income -32.7% -13.0% 37.1% -9.3%
Total Current Liabilities 7,311 7,783 9,402 9,539
LT. debt 4,976 6,388 10,125 10,490
Solvability
Other long term liabilities 2,487 2,085 2,085 2,085
Current ratio (x) 1.9 1.9 1.9 1.9
Total Liabilities 7,463 8,472 12,209 12,575
Quick ratio (x) 0.8 0.7 0.7 0.7
Debt to equity (x) 1.0 1.1 1.5 1.4
Minority Interest 1,654 2,073 27 27
Interest cov. (x) 0.5 0.5 0.6 0.6
Shareholders' equity 14,298 15,451 14,385 15,275
Source: Company, Shinhan Sekuritas Indonesia Estimates
BVPS (IDR) 771 834 776 824
Source: Company, Shinhan Sekuritas Indonesia Estimates
Valuation
Year-end 31 Dec (IDRbn) 2016 2017 2018F 2019F
PER (x) 26.4 24.7 17.9 19.8
PBV (x) 1.9 1.4 1.5 1.4
EV/EBITDA (x) 13.5 12.2 9.8 9.6
EV/Sales (x) 4.0 3.4 2.8 2.8
Dividend yield (%) -11% 20% 1.1% 1.0%
Source: Company, Shinhan Sekuritas Indonesia Estimates
44
Expecting revenue growth recovery Background. ASRI is a property developer company that owned 2,200ha land bank. Most
of the land bank (70% or 1,555ha) is located at Pasar Kemis (Tanggerang) followed by
262ha in North Serpong. The company also has 67,369 sqm leasable area at Mall Alam
Sutra and 107,373 sqm of office tower while in the apartment business, the company has
171,037sqm (semi gross) that ready to be monetized. The company also has contractual
land bank sales with CLFD for the projects at Pasar Kemis for 1mn (sqm) each year for the
next 3 years. This would support the revenue from the land plot sales going forward.
Land bank and the prospect of the Pasar Kemis area. The average sales price for the
land bank in Pasar Kemis is lower than the Serpong area (IDR 4mn/m2 vs IDR15mn/m2).
This would make the attraction point that could be offered to the customer. We think that
the prospect of the rising in the ASP especially at Pasar Kamis would come from the
development of the toll road that will connect the Serpong-Balaraja and the toll road from
Balaraja to the Airport. This would reduce the pricing gap at Tanggerang especially between
Serpong and Pasar Kamis. The toll road is expected to commercially operating next year.
Managable debt level. Debt level is at manageable level due to its Debt to EBITDA ratio
at IDR4.2x while the EBITDA is estimated to grow by 9% to IDR2.2tn this year. However
the risk would come from the forex loss due to its USD bond at USD245mn matured at
2020 and USD235mn matured at 2022. With the rupiah that depreciated by 7.4%yoy
would cause the forex loss at IDR235bn and the net profit margin would be lower to 20%
this year from 35.4% last year. The refinancing of the Debt is likely as the company still
have a decent Debt to EBITDA and the total estimated land bank value at IDR29tn.
Strong revenue growth. The company derived 40% revenue from the land plot sales,
followed by 33% from the house and shop houses. The company is targeting to sell
another IDR2tn land this year to CLFD (China Property Developer) that owned the projects
at Pasar Kemis named “Lavon City”. We expect the company would post the revenue
growth this year by 22%yoy to IDR4.6tn, while at the 1H, the revenue represented 47% of
our target at IDR2,2tn or up by 30%yoy. The pre marketing sales in 1H was IDR2.9tn or
representing 72% of the full year target, which indicates that the revenue target is
attainable. The positive factor that would support the property sector in the 2H would
come from the relaxation in the banking policy regarding the LTV, the risk weighted assets
to calculate the banking capital adequacy and the launching of the new projects as about
40% sales is done through mortgage loan. The marketing sales in the 2H are estimated to
come from the “Loyd” low base apartment and the residential at Pasar Kemis that targets
the mid to high segment.
Valuation. The negative factor regarding the solvability amid the weaker rupiah has
depressed the price to its lower PE band. However we see an upbeat on the 1H
performance while the negative factored has factorized on its low ‘18PE at 7x and ‘19PE at
5x. We set our TP at IDR 440 which reflects 70% discount to our RNAV calculation.
Year to Dec. GP OP Pre-tax NP EPS Growth BVPS PER PBR ROAE ROAA
(bn IDR) (bn IDR) (bn IDR) (bn IDR) (IDR) (%) (IDR) (x) (x) (%) (%)
2015 1,465 2,278 759 684 30.4 -42% 336 11.3 1.0 11% 4%
2016 2,376 2,390 591 510 25.9 -25% 366 13.6 1.0 7% 3%
2017 2,783 2,508 1,445 1,385 70.2 171% 436 5.1 0.8 18% 7%
2018F 2,920 2,633 884 920 46.7 -34% 470 6.2 0.6 10% 4%
2019F 3,064 2,764 1,231 1,282 65.0 39% 522 4.5 0.6 13% 6%
Source: Company, Shinhan Sekuritas Indonesia
Overweight
Current Price (IDR) (3/10) 284
Target price (IDR) 440
Upside/Downside (%) 54,9%
52 Week High (IDR) 420
52 Week Low (IDR) 278
Major Shareholders:
PT Tanggerang Fajar Industrial 25.21%
Stock Price Movement
Source: Bloomberg, Shinhan Sekuritas Indonesia
Helmi Therik
+6221 80869900
0
50
100
150
200
250
ASRI IJ JCI Index
Alam Sutera Realty Tbk (ASRI)
Company Focus
45
ASRI Ownership Structure.
Source: Company
ASRI main land bank location at Pasar Kemis Tanggerang
Source: Company
46
Lloyd Apartment – A low base apartment concept Lloyd Apartment – Combines landed style living and convenience apartment facilities
Source: Company Source: Company
Suvarna Sutra Township Land price at Suvarna Sutra gradually increases
Source: Company Source: BPS, Shinhan Sekuritas Indonesia
Prominence office tower Land price for commercial area per sqm in IDR mn
Source: Company, Shinhan Sekuritas Indonesia Source: Company, Shinhan Sekuritas Indonesia
2.8
4
55.2 5.2 5.5
2.7
3.3
4.14.2
4.7
0
1
2
3
4
5
6
2012 2013 2014 2015 2016 2017
Residential (Suvarna Padi)
Residential (Suvarna Sutra)
8.4
12.5
17.3
23.1 2225
0
5
10
15
20
25
30
2012 2013 2014 2015 2016 2017
Commercial
47
Revenue increase on the back of the new projects Revenue by payment method
Source: Company, Shinhan Sekuritas Indonesia Estimates Source: Company, Shinhan Sekuritas Indonesia Estimates
Revenue by segment (in IDR bn) Revenue composition in (%)
Source: Company, Shinhan Sekuritas Indonesia Estimates Source: Company, Shinhan Sekuritas Indonesia Estimates
Decent profitability margin Debt to EBITDA (x) and EBITDA (bn IDR)
Source: Company, Shinhan Sekuritas Indonesia Estimates Source: Company, Shinhan Sekuritas Indonesia Estimates
3,631
2,784 2,716
3,917
4,5884,813
0
1,000
2,000
3,000
4,000
5,000
6,000
2014 2015 2016 2017 2018F 2019F
Total Revenue
4%
56%
40%
0%
10%
20%
30%
40%
50%
60%
Hard Cash CashInstallment
Mortgage loan
3,312
2,420 2,340
3,543
1,999
302 302 302 305 164
3,631
2,784 2,716
3,917
2,197
- 500
1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500
2014 2015 2016 2017 20181H
Property Development (Real estate)Recurring Revenue (Hospitality & Infrastructure)Tourism & Others
91%87% 86%
90% 91%
8%11% 11%
8% 7%
0% 2% 3% 2% 2%
75%
80%
85%
90%
95%
100%
Others
RecurringRevenue
PropertyDevelopment
59.0% 60.0%49.9%
63.5%73.9%
53.9%
60.7% 60.7%60.7%
50% 51%
42%
53%58%
40%51% 50%
50%44%
50%
24%30%
21%19%
35%
20%
27%
0%
10%
20%
30%
40%
50%
60%
70%
80%
2011 2012 2013 2014 2015 2016 2017 2018F 2019F
Gross Margin Operating Margin Profit Margin
697
1,263
1,562
1,970
1,706
1,142
2,071
2,372 2,493
1.21.5
2.73.3
4.7
7.8
4.53.9 3.8
-
500
1,000
1,500
2,000
2,500
3,000
-
1
2
3
4
5
6
7
8
9
2011 2012 2013 2014 2015 2016 2017 2018F 2019F
in b
n I
DR
De
bt
to E
BIT
DA
EBITDA Debt to EBITDA
48
Income Statement
Cashflow Analysis
Year-end 31 Dec (IDRbn) 2016 2017 2018F 2019F
Year-end 31 Dec (IDRbn) 2016 2017 2018F 2019F
Sales 2,716 3,917 4,588 4,813
CFs from operation
COGS (1,251) (1,541) (1,805) (1,894)
Net profit 509 1,380 917 1,277
Gross profit 2,376 2,783 2,920 3,064
Change in working capitals (659) (1,378) (612) (1,175)
EBITDA 1,142 2,071 2,372 2,493
CFs from operation (151) 2 305 102
Operating expense (368) (390) (505) (529)
Operating profit 2,390 2,508 2,633 2,764
CFs from investments (1,093) (1,307) (1,270) (1,262)
Pre-tax profit 591 1,445 884 1,231
Income tax - net 81 60 37 51
CFs from financing activities 1,211 (510) (2,027) 317
Net profit 510 1,385 920 1,282
Net inc/(dec) in cash 551 (471) (2,259) 180
EPS (IDR) 26 70 47 65
Cash at end period 1,189 718 841 882
Source: Company, Shinhan Sekuritas Indonesia Estimates
Source: Company, Shinhan Sekuritas Indonesia Estimates
Balance Sheet
Key Ratio Analysis
Year-end 31 Dec (IDRbn) 2016 2017 2018F 2019F
Year-end 31 Dec (IDRbn) 2016 2017 2018F 2019F
Assets
Profitability
Cash and equiv 1,189 718 841 882
Gross margin 53.9% 60.7% 60.7% 60.7%
Receivables 178 210 246 258
Operating margin 40.4% 50.7% 49.7% 49.7%
Inventories 1,208 961 1,125 1,181
EBITDA margin 42.0% 52.9% 51.7% 51.8%
Others 506 429 462 473
Net profit margin 18.8% 35.4% 20.1% 26.6%
Total current assets 3,082 2,318 2,675 2,795
ROAA 2.6% 6.8% 4.3% 5.6%
Net fixed assets 11,326 12,678 14,021 15,355
ROAE 7.4% 17.6% 10.3% 13.2%
Other assets 5,778 5,732 5,659 5,587
Total assets 20,186 20,728 22,355 23,737
Growth
Revenue -2.4% 44.2% 17.1% 4.9%
Liabilities and equities
Operating Profit -32.6% 81.1% 14.7% 4.9%
Payables 903 772 904 948
EBITDA -33.1% 81.4% 14.5% 5.1%
Other Short-Term Liabilities 2,531 2,372 2,778 2,915
Net Income -25.4% 171.5% -33.6% 39.3%
Total Current Liabilities 3,434 3,143 3,682 3,863
LT. debt 7,511 7,194 7,629 7,808
Solvability
Other long term liabilities 2,053 1,818 1,818 1,818
Current ratio (x) 0.9 0.7 0.7 0.7
Total Liabilities 9,564 9,012 9,447 9,626
Quick ratio (x) 0.5 0.4 0.4 0.4
Debt to equity (x) 1.8 1.4 1.4 1.3
Minority Interest 105 107 27 27
Interest cov. (x) 6.4 7.3 9.1 9.6
Shareholders' equity 7,188 8,573 9,226 10,248
Source: Company, Shinhan Sekuritas Indonesia Estimates
BVPS (IDR) 366 436 470 522
Source: Company, Shinhan Sekuritas Indonesia Estimates
Valuation
Year-end 31 Dec (IDRbn) 2016 2017 2018F 2019F
PER (x) 13.6 5.1 6.2 4.5
PBV (x) 1.0 0.8 0.6 0.6
EV/EBITDA (x) 16.3 8.8 7.6 7.3
EV/Sales (x) 6.9 4.7 3.9 3.8
Dividend yield (%) -1% 1% 3.2% 4.5%
Source: Company, Shinhan Sekuritas Indonesia Estimates
49
Innovate with living concept to enhance the
growth
Background. SMRA is a property development company with the total land
bank of 2,233ha and 283k m2 of NLA (net leasable area). SMRA has several
well-known projects brands such as Kelapa Gading Mall, Summarecon Mall
Serpong and Summarecon Mall Bekasi. The company derived 64% of the
revenue from development revenue while 25% is generated from recurring
income. About 22% of its land bank is located at the prime area at Serpong
which provided a higher ASP, followed by 18% at Bekasi and 19% at Bogor as
the second and third dynamic sub urban area. The new accessibility on the
backed off the toll road and LRT would be a beneficiary for the company in
term of the prospects of the rising ASP.
Penetrate to the lower income class. Amid the slower property growth, the
company launched the new projects with the smaller ticket size (below IDR1bn)
while waiting for the better momentum for the middle up class segments. The
prospect of the mid to upper class relates with the level of the confidence
regarding the stability of the economic growth. During the political year, the
growth pace would remain slower, but the prospects of the incremental ASP is
wide open due to the massive infrastructure that has been developed by the
government. The company guides the conservatives tone on its CAPEX to relax
its balance sheet amid the slightly higher interest rate policy outlook. The
company’s Debt to EBITDA is slightly above 4x which suggests an opportunity
for refinancing through the external financing, however the higher interest rate
would burdened its margin amid the flattish ASP in the short term. We think
that the opportunity for the better property outlook would come from the
relaxation of the LTV especially for the first buyer.
Improving pre-marketing. The company expects to record the pre sales
marketing this year at IDR4tn while in November, the pre marketing sales was
at IDR1.5tn or 28.7% of the target. However, the company believes that the
target is achievable due to the upcoming projects in 2H such as from Srimaya
residence at Bekasi, Summarecon Mutiara at Makassar and new projects at its
existing land bank at Serpong. The marketing sales in 1Q at 2019 is estimated
at the modest path while at Q2, we expect the marketing sales would be more
upbeat due to the political election at April 2019.
Valuation. We set our TP at IDR 1,100 which reflecting 50% discount to our
RNAV calculation. The price is traded at the attractive level or fluctuated at 24x
2019 PE or below its historical level at 37x.
Year to Dec. GP OP Pre-tax NP EPS Growth BVPS PER ROAE ROAA
(bn IDR) (bn IDR) (bn IDR) (bn IDR) (IDR) (%) (IDR) (x) (%) (%)
2015 2,601 1,515 1,064 1,064 59 -38% 522 28 15% 6%
2016 2,567 1,581 616 605 22 -64% 566 61 8% 3%
2017 2,901 1,673 540 532 25 16% 579 38 6% 3%
2018F 3,046 1,772 619 628 30 18% 477 28 8% 3%
2019F 3,223 1,879 684 694 33 11% 503 25 10% 3%
Source: Company, Shinhan Sekuritas Indonesia
Overweight
Current Price (IDR) (17/12) 835
Target price (IDR) 1,100
Upside/Downside (%) 31.7%
52 Week High (IDR) 1,230
52 Week Low (IDR) 550
Major Shareholders:
PT Semarop Agung 33.52%
Stock Price Movement
Source: Bloomberg, Shinhan Sekuritas Indonesia
Helmi Therik
+6221 80869900
50
70
90
110
130
150
Jan-18 Mar-18 May-18 Jul-18 Sep-18 Nov-18
SMRA JCI Index
Summarecon Agung Tbk (SMRA)
Company Focus
50
SMRA’s location at Jakarta, Bekasi, Serpong, Karawang and Bogor.
Source: Company
SMRA’s location that would be benefited through the planned of Jakarta-Bandung high speed Train, elevated toll road Jakarta-Cikampek, and elevated LRT Jakarta-Bekasi. This would be the attractive point for the projects location
Source: Company
51
Shopping Mall at every residential project would accelerate the incremental of average sales price
(ASP) of its land bank
Summarecon Kelapa Gading Mall Plaza Summarecon Serpong
Source: Company Source: Company
Summarecon Mall Bekasi Summarecon Bekasi Mall
Source: Company Source: Company
52
Revenue increase due to the new concept housing Revenue by business segment : Recurring contributes 26%.
Source: Company, Shinhan Sekuritas Indonesia Estimates Source: Company, Shinhan Sekuritas Indonesia
Marketing contribution by project location. Mostly driven by Serpong and Bekasi
Gross Margin by product type. Landplot sales and housing provides the highest margin
Source: Company, Shinhan Sekuritas Indonesia Source: Company, Shinhan Sekuritas Indonesia
Manageable profitability margin Debt to EBITDA (x) and EBITDA (bn IDR)
Source: Company, Shinhan Sekuritas Indonesia Estimates Source: Company, Shinhan Sekuritas Indonesia Estimates
2,359
3,463 4,094
5,757 5,624 5,398 5,641
6,375 6,738
1,312 1,871 1,955
2,700 2,717 2,797 3,074
3,474 3,693
572 1,011
1,347
2,095 1,790
1,410 1,341 1,515 1,581
392 798
1,102 1,385
855 312 362 427 472
-
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
2011 2012 2013 2014 2015 2016 2017 2018F 2019F
Revenue Gross Profit Operating profit Net Profit
60%
26%
13%
Property Development
Investment Properties
Others
6%
7%
21%
34%
23%
10%
0% 5% 10% 15% 20% 25% 30% 35% 40%
Makasar
Karawang
Bandung
Serpong
Bekasi
Kelapa Gading
57%
55%
76%
32%
0% 10% 20% 30% 40% 50% 60% 70% 80%
House
Shop
Landplot
Apartment
54%48% 47%
48%52%
54% 54%55%
29%33% 36%
32%
26% 24% 24%23%
23%
27%24%
15%
6% 6% 7% 7%
0%
10%
20%
30%
40%
50%
60%
2012 2013 2014 2015 2016 2017 2018F 2019F
Gross Margin Operating Margin Net Margin
612
1,085
1,814
2,449 2,656
1,994 1,798
2,244 2,293
2.73
1.88
1.77
1.68
1.96
3.74
4.71
5.44 5.48
-
500
1,000
1,500
2,000
2,500
3,000
0.00
1.00
2.00
3.00
4.00
5.00
6.00
2011 2012 2013 2014 2015 2016 2017 2018F 2019F
EBIT
DA
(in
Bn
IDR
)
De
bt t
o E
BIT
DA
(x)
EBITDA Debt to EBITDA
53
Income Statement
Cashflow Analysis
Year-end 31 Dec (IDRbn) 2016 2017 2018F 2019F
Year-end 31 Dec (IDRbn) 2016 2017 2018F 2019F
Sales 5,398 5,641 6,375 6,738
CFs from operation
COGS (2,797) (3,074) (3,474) (3,693)
Net profit 312 362 427 472
Gross profit 2,567 2,901 3,046 3,223
Change in working capitals (1,343) 645 (609) (606)
EBITDA 1,680 1,679 1,849 1,924
CFs from operation (1,031) 1,007 (182) (134)
Operating expense (1,191) (1,226) (1,386) (1,465)
Operating profit 1,581 1,673 1,772 1,879
CFs from investments (678) (358) (423) (507)
Pre-tax profit 616 540 619 684
Income tax - net 10 8 9 10
CFs from financing activities 2,014 (1,473) (3,329) 1,658
Net profit 605 532 628 694
Net inc/(dec) in cash 536 (557) (3,593) 1,394
EPS (IDR) 22 25 30 33
Cash at end period 2,039 1,482 1,675 1,771
Source: Company, Shinhan Sekuritas Indonesia Estimates
Source: Company, Shinhan Sekuritas Indonesia Estimates
Balance Sheet
Key Ratio Analysis
Year-end 31 Dec (IDRbn) 2016 2017 2018F 2019F
Year-end 31 Dec (IDRbn) 2016 2017 2018F 2019F
Assets
Profitability
Cash and equiv 2,039 1,482 1,675 1,771
Gross margin 48.2% 45.5% 45.5% 45.2%
Receivables 539 645 729 771
Operating margin 26.1% 23.8% 23.8% 23.5%
Inventories 5,531 6,498 7,345 7,807
EBITDA margin 31.1% 29.8% 29.0% 28.6%
Others 555 532 601 636
Net profit margin 11.2% 9.4% 9.8% 10.3%
Total current assets 8,664 9,158 10,351 10,985
ROAA 3.1% 2.5% 2.8% 2.9%
Net fixed assets 11,096 11,179 11,252 11,316
ROAE 7.7% 6.4% 8.2% 9.8%
Other assets 1,051 1,325 1,675 2,119
Total assets 20,810 21,663 23,278 24,419
Growth
Revenue -4.0% 4.5% 13.0% 5.7%
Liabilities and equities
Operating Profit -21.3% -4.9% 13.0% 4.3%
Payables 1,930 1,686 1,905 2,014
EBITDA -10.6% -0.1% 10.1% 4.1%
Other Short-Term Liabilities 2,288 4,590 5,188 5,483
Net Income -43.1% -12.0% 17.9% 10.6%
Total Current Liabilities 4,217 6,276 7,093 7,497
LT. debt 6,024 5,589 7,862 8,222
Solvability
Other long term liabilities 2,403 1,444 1,444 1,444
Current ratio (x) 2.1 1.5 1.5 1.5
Total Long-Term Liabilities 8,427 7,033 9,306 9,666
Quick ratio (x) 0.7 0.4 0.4 0.4
Debt to equity (x) 1.5 1.6 2.4 2.4
Minority Interest 1,923 1,844 27 27
Interest cov. (x) 0.6 0.6 0.7 0.7
Shareholders' equity 8,166 8,354 6,878 7,256
Source: Company, Shinhan Sekuritas Indonesia Estimates
BVPS (IDR) 566 579 477 503
Source: Company, Shinhan Sekuritas Indonesia Estimates
Valuation
Year-end 31 Dec (IDRbn) 2016 2017 2018F 2019F
PER (x) 61.3 37.6 27.5 24.9
EV/EBITDA (x) 11.4 8.1 6.4 6.1
EV/Sales (x) 3.5 2.4 1.8 1.7
Dividend yield (%) 0.4% 0.7% 0.7% 0.8%
Source: Company, Shinhan Sekuritas Indonesia Estimates
54
Remain Upbeat on Selected Retail and
Consumer Company
Fiscal stimulus to spur consumption. Indonesia minimum wage will be increased by
8.03% YoY in 2019. The government also raises the social protection budget by
32.8% YoY to IDR 381Tn next year. These fiscal policies expected to lead to
purchasing power recovery, which then translate to increase aggregate demand. We
expect private consumption to accelerate and become the growth driver for
consumers and retailers.
Consumer spending started to pick up. Household consumption grew by 5.01% YoY in
3Q18, higher compared to 4.93% YoY in 3Q17. Food and beverage segment became the
highest contributor with 36.69% of total household consumption. Purchasing intention
increased thanks to controlled CPI inflation at 2.5% YtD until November 2018. Stable fuel price
and electricity tariffs help to maintain the purchasing power of the middle-low class segment,
while the government energy subsidies was increased in October 2018 by 56.2% YoY to IDR
160.36Tn. Improving consumer spending reflected in the performance of consumer staples
under our coverage, which revenue was increased by 7.2% YoY in 9M18. ICBP has enjoying
Indonesian appetite for instant noodles, with average consumption per capita 15-19F CAGR of
9.1%. To secure future growth, the company also continues its penetration in the dairy market,
which consumption 15-19F CAGR of 16.8% surpassed instant noodles market. This is in line
with CAMP efforts to capture the growth of ice cream market in Indonesia, with consumption
15-19F CAGR of 9.3%.
Ease cost pressure from foreign exchange rate. The currency has strengthened by 6.5%
from its lowest this year at IDR 15,235 per USD to IDR 14,302 per USD by the end of
November 2018. The recent gain of Rupiah was on the back of declining oil price which
expected to support Indonesia’s current account deficit. Easing cost pressures will benefit
consumer staples and retailers, which import most of its raw material needs. Profitability was
stable for market leader such as SPTO, which gives room for ASP adjustment. EBIT margin of
consumers under our coverage recorded at 16.7% in 9M18 (15.1% in 9M17), while retailer’s
EBIT margin recorded at 7.4% (6.1% in 9M17).
Accelerated retail sales growth. Retail sales growth in September 2018 recorded at 4.8%
YoY, higher compared to 1.8% YoY in the same period last year. In terms of commodity group,
Clothing were the main driver of retail sales, achieving growth of 28.1% YoY (-1.6% YoY in
September 2017). Robust sales growth of retailer under our coverage was attributed to
aggressive expansion, as total outlet of retailer under our coverage increased by 12.6% YoY in
9M18. Among our coverage, ERAA has expanded the most with 121 new stores in 9M18.
Additional outlet not only focused in Greater Jakarta, but retailer also undertook market
penetration to tier-2 and tier 3 cities, in order to reach potential demand from Indonesia
smartphone users which expected to reach 70.2 million in FY18F. Along with the resilience
spending of the middle-up class segment and improving macroeconomic condition, we expect
the average SSSG of retailer under our coverage to improve in FY18F to 7.1% YoY (5.5% YoY
in FY17). ACES’s SSSG expected to be the highest at 13.2% YoY, and followed by PZZA at
5.2% YoY and RALS at 4.9% YoY.
Our call. We overweight ICBP due to its leading position and steady growth. CAMP is on the
right track to capture an ample room of growth in ice cream market. We also overweight ERAA
and ACES on the back of its stellar earnings performance, supported by outlet expansion. RALS
improving operating margin after closing unprofitable supermarket. PZZA due to its increasing
SSSG along with PHD expansion, which better suit with current lifestyle. We overweight SPTO
on the back of its dominance in sanitary wares and stable margin.
Overweight
Avg. SSI Consumer Performance
Source: Bloomberg, Shinhan Sekuritas Indonesia
Billy Ibrahim
+6221 80869900
90
95
100
105
110
115
May-18 Jun-18 Jul-18 Aug-18 Sep-18 Oct-18 Nov-18
JCI Index Avg. SSI Consumers and Retailers
Consumer Sector
Sector Focus
55
Consumer remain upbeat reflected in CCI above the historical
mean Retailers still optimistic with 4.8% YoY growth in September
Source: Trading Economics, Shinhan Sekuritas Indonesia Source: Trading Economics, Shinhan Sekuritas Indonesia
Consumer revenue and EBIT margin trend Retailer revenue and EBIT margin trend
Source: Company, ShinhanSekuritas Indonesia Source: Company, Shinhan Sekuritas Indonesia
Consumer valuation matrix Retailer valuation matrix
Source: Company, Shinhan Sekuritas Indonesia Source: Company, Shinhan Sekuritas Indonesia
70
85
100
115
130
145
Dec-17 Feb-18 Apr-18 Jun-18 Aug-18 Oct-18
Indonesia Consumer Confidence Index Avg. CCI 2000-2018(P)
-3
0
3
6
9
150
175
200
225
250
Oct-17 Dec-17 Feb-18 Apr-18 Jun-18 Aug-18
Indonesia Retail Sales Index (RHS)
Retail Sales Growth YoY (LHS)
Avg. Retail Sales Growth TTM
(P) (%)
10
12
13
15
16
25,000
30,000
35,000
40,000
45,000
15 16 17 18F 19F
Consumer Revenue Consumer EBIT Margin(Bn IDR) (%)
3
4
5
6
7
8
20,000
30,000
40,000
50,000
60,000
70,000
15 16 17 18F 19F
Retailer Revenue Retailer EBIT Margin(Bn IDR) (%)
ICBP
CAMP
Average
0
5
10
15
20
25
0 10 20 30 40 50
RO
AE
PER
PZZA
RALS
ACESERAA
SPTO
Average
0
6
12
18
24
30
0 5 10 15 20 25
RO
AE
PER
56
Noodles consumption (15-19F CAGR: 9.1%) and Dairy
consumption (15-19F CAGR: 16.8%) Ice cream consumption (15-19F CAGR: 9.3%)
Source: Statista, Shinhan Sekuritas Indonesia Source: Statista, Shinhan Sekuritas Indonesia Estimates
Retailer numbers of outlet Retailer annual SSSG
Source: Company, Shinhan Sekuritas Indonesia Source: Company, Shinhan Sekuritas Indonesia
Smartphone users and penetration Sanitary Wares and Fittings sales volume
Source: Statista, Shinhan Sekuritas Indonesia Source: Euromonitor, Shinhan Sekuritas Indonesia
0
6
12
18
24
30
15 16 17 18F 19F
(Kg) Noodles Consumption Per Capita
Dairy Consumption Per Capita
0.3
0.4
0.5
0.6
0.7
0.8
15 16 17 18F 19F
(Kg)
0 500 1,000 1,500 2,000
15
16
17
9M18
(Unit)
PZZA ACES RALS ERAA
-4
0
4
8
12
16
15 16 17 18F 19F
(%) PZZA ACES RALS
12
18
24
30
30
50
70
90
15 16 17 18F 19F
Smartphone Users (LHS)
Smartphone Penetration (RHS)
(Millions) (%)
0
90
180
270
360
450
12 16 19F
Sanitary Wares Fittings(Mn USD)
57
Gradual increase of private consumption Ease cost pressure from Rupiah exchange rate
Source: Statistics Indonesia, Company, Shinhan Sekuritas Indonesia Source: Bloomberg, Shinhan Sekuritas Indonesia
Social protection budget surge in State Budget 2019 Energy subsidy spending to controlled electricity and fuel price
Source: Finance Ministry, Shinhan Sekuritas Indonesia Source: Finance Ministry, Shinhan Sekuritas Indonesia Estimates
Indonesia total population and minimum monthly wages Stock price performance
Source: Statista, Trading Economics, Shinhan Sekuritas Indonesia Source: Bloomberg, Shinhan Sekuritas Indonesia
0.0
1.3
2.5
3.8
5.0
1,500
1,700
1,900
2,100
2,300
1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18
(Tn IDR)Private Consumption Growth, QoQ (RHS)
Private Consumption (LHS)(%)
2.2
2.4
2.6
2.8
3.0
3.2
13,000
13,500
14,000
14,500
15,000
15,500
Dec-17 Feb-18 Apr-18 Jun-18 Aug-18 Oct-18
CPI (RHS) USDIDR (LHS)(IDR) (%)
0
10
20
30
40
0
750
1,500
2,250
3,000
Government
Revenue
Government
Spending
Village Funds Health
Budget
Education
Budget
Social
Protection
Budget
State Budget 2018 (LHS)
State Buget 2019 (LHS)
Growth (RHS)
(Tn IDR) (%)
10
20
30
40
50
60
0
30
60
90
120
150
15 16 17 18F
(Tn IDR)
Fuel & LNG (LHS)
Electricity (LHS)
Indonesia Crude Price (RHS)
(USD/Barrel)
0
1
2
3
4
230
240
250
260
270
12 13 14 15 16 17 18
Indonesia Total Population (LHS)
Indonesia Minimum Monthly Wages (RHS)
(Million) (Mn IDR)
40
60
80
100
120
140
160
May-18 Jun-18 Jul-18 Aug-18 Sep-18 Oct-18 Nov-18
CAMP ICBP PZZA ACES RALS ERAA SPTO
(22/05/2018 = 100)
58
Maintain leading position and solid
profitability
Background. PT Indofood CBP Sukses Makmur Tbk (ICBP) has become one
of the leaders in consumer branded product with around 40 leading product
brands. Its business operation is supported by more than 50 factories
located in key area across Indonesia. Besides in Indonesia, ICBP products
are also present in more than 60 countries around the world.
Maintain market share in noodles. ICBP through its so-called ‘Indomie’
products managed to be a top brand in Asia and Africa, as ranked 8th in the
global FMCG brand ranking according to Kantar Worldpanel. Moreover,
Indomie market share in the Asia Pacific region ranked at 6th, above Mie
Sedaap by Wings Group which ranked at 10th. In 2018, ICBP expected to
maintain its market share, especially in Indonesia noodles market,
supported by effective advertising and promotions. The company has spent
USD 10mn to become the official partner in the event of 2018 Asian Games
held in Jakarta and Palembang.
Resilient to the depreciation of Rupiah. In the midst of Rupiah
deterioration, we expect ICBP’s EBIT margin to remain stable at double
digits. ICBP impacted by the exchange rate fluctuation as the company
obtained its raw material such as wheat, from imports. Nevertheless, ICBP
is exceptionally resilient company which able to keep its profitability stable
amid the high volatility of the Rupiah. It was reflected in 2013, when the
Rupiah was depreciate by 26.1% in 2013, from IDR 9,650 per USD to IDR
12,170 per USD. In that period, ICBP kept its EBIT margin steady and only
down by 2% from 13.1% in 2012, to 11.0% in 2013. While in 2014, the
EBIT margin was recorded at 10.7%, and started to pick up again to 12.5%
in 2015. ICBP able to adjust it ASP during unfavorable economic condition
given its strong market position.
Rising social assistance program to spur consumption. The Indonesia
government plans to increase the social assistance program from IDR
41.3Tn in 2018 to IDR 59.43Tn in 2019 State Budget. We expect household
consumption to improve and ICBP would be benefited along with the
expansion of the social spending under the so-called ‘Family Hope Program’.
Cash transfer to the poorest household will spur consumption and increase
the company’s sales volume growth.
Valuation. We apply the blended DCF method to obtain the target price of
IDR 10,200 (15.5% Upside). The target price implies a 2019F P/E of 25x,
justified by improvement in operating margin and double digit net profit
growth.
Year to Dec. Sales OP Pre-tax NP EPS BPS PER EV/EBITDA PBV ROAE
(Bn IDR) (Bn IDR) (Bn IDR) (Bn IDR) (IDR) (IDR) (x) (x) (x) (%)
2016 34,375 4,864 4,989 3,600 309 1,586 27.8 18.4 5.4 20.6
2017 35,607 5,222 5,207 3,797 326 1,743 27.3 18.0 5.1 19.6
2018F 38,652 5,816 5,864 4,244 364 1,925 24.5 16.1 4.6 19.8
2019F 42,235 6,529 6,591 4,770 409 2,129 21.8 14.4 4.2 20.2
2020F 45,893 7,025 7,060 5,108 438 2,348 20.3 13.2 3.8 19.6
Source: Company, Shinhan Sekuritas Indonesia
Overweight
Current Price (IDR) (31/8) 8,850
Target price (IDR) 10,200
Upside/Downside (%) 15.3%
52 Week High (IDR) 9,275
52 Week Low (IDR) 7,900
Major Shareholders:
First Pacific 80.53%
Matthews International 1.8%
Stock Price Movement
Source: Bloomberg, Shinhan Sekuritas Indonesia
Billy Ibrahim
+6221 80869900
0
50
100
150
200
250
Jan-15 Jul-15 Jan-16 Jul-16 Jan-17 Jul-17 Jan-18 Jul-18
ICBP JCI Index
PT Indofood CBP Sukses Makmur Tbk (ICBP)
Company Focus
59
The increase in household consumption to boost revenue
growth USDIDR exchange rate and noodles EBIT growth
Source: Bloomberg, Company, Shinhan Sekuritas Indonesia Source: Company, Shinhan Sekuritas Indonesia
Sales contribution mainly comes from noodles segment with
64% of total sales (1H18) EBIT margin of noodles segment remain the highest at 20%
(1H18)
Source: Company, Shinhan Sekuritas Indonesia Source: Company, Shinhan Sekuritas Indonesia
Revenue expected to grow by 8.5% YoY in 2018F Expecting double digit bottom line growth of 11.8% YoY in
2018F
Source: Company, Shinhan Sekuritas Indonesia Estimates Source: Company, Shinhan Sekuritas Indonesia Estimates
4.5
4.7
4.9
5.1
5.3
5.5
1.0
4.0
7.0
10.0
13.0
16.0
13 14 15 16 17 18F
(%) Noodles Revenue Growth (LHS)
Household Consumption Growth (RHS)
(%)
-30
-15
0
15
30
45
13 14 15 16 17 1H18
(%) USDIDR Exchange Rate Noodles EBIT Growth
Noodles, 64%Dairy, 19%
Snack Foods, 7%
Beverages, 5%
Food Seasoning, 2% Nutrition and Special Foods, 2%
-17%
-1%
5%
8%
12%
20%
-20% -10% 0% 10% 20% 30%
Beverages
Snack Foods
Nutrition and Special Foods
Food Seasoning
Dairy
Noodles
0
3
6
9
12
25,000
30,000
35,000
40,000
45,000
15 16 17 18F 19F
(Bn IDR)Sales (LHS) Sales Growth (RHS) (%)
6
9
12
15
18
2,000
3,500
5,000
6,500
8,000
15 16 17 18F 19F
(Bn IDR) Operating Profit (LHS) Net Profit (LHS)
Operating Profit Margin (RHS) Net Profit Margin (RHS)
(%)
60
Noodles Brands Dairy Brands
Source: Company Source: Company
Snack Foods Brands Food Seasonings Brands
Source: Company Source: Company
Nutrition & Special Foods Brands Beverages Brands
Source: Company Source: Company
61
Income Statement Cashflow Analysis
Year-end 31 Dec (Bn IDR) 2016 2017 2018F 2019F
Year-end 31 Dec (Bn IDR) 2016 2017 2018F 2019F
Sales 34,375 35,607 38,652 42,235
CFs from Operation
COGS (23,607) (24,548) (26,536) (28,686)
Net Profit 3,600 3,797 4,244 4,770
Gross Profit 10,768 11,059 12,116 13,549
Change in NWC (4,028) (4,022) (4,299) (4,158)
EBITDA 5,497 5,857 6,500 7,158
CFs from Operation (428) (225) (54) 611
Operating Expense (5,904) (5,837) (6,300) (7,021)
Operating Profit 4,864 5,222 5,816 6,529
CFs from Investments (731) (1,710) (621) (705)
Pre-Tax Profit 4,989 5,207 5,864 6,591
Income Tax - Net (1,358) (1,663) (1,583) (1,780)
CFs from Financing (235) 360 (465) (123)
Net Profit 3,600 3,797 4,244 4,770
Net Inc./(Dec.) in Cash 714 425 983 2,169
EPS (IDR) 309 326 364 409
Cash at End Period 8,372 8,797 9,779 11,948
Source: Company, Shinhan Sekuritas Indonesia Estimates
Source: Company, Shinhan Sekuritas Indonesia Estimates
Balance Sheet
Key Ratio Analysis
Year-end 31 Dec (Bn IDR) 2016 2017 2018F 2019F
Year-end 31 Dec (Bn IDR) 2016 2017 2018F 2019F
Assets Profitability
Cash and Equivalent 8,372 8,797 9,779 11,948 Gross Margin 31% 31% 31% 32%
Receivables 3,721 3,871 4,202 4,223 Operating Margin 14% 15% 15% 15%
Inventories 3,110 3,262 3,526 3,442 EBITDA Margin 16% 16% 17% 17%
Others 368 650 693 571 Net Income Margin 10% 11% 11% 11%
Total Current Assets 15,571 16,579 18,200 20,184 ROAA 13% 13% 13% 14%
Net Fixed Assets 7,114 8,120 8,741 9,446 ROAE 21% 20% 20% 20%
Total Assets 28,902 31,620 33,861 36,550
Growth
Liabilities and Equities Revenue 8% 4% 9% 9%
Payables 5,103 5,204 5,649 5,913 Operating Profit 22% 7% 11% 12%
Other Short-Term Liabilities 1,366 1,624 1,762 1,926 EBITDA 22% 7% 11% 10%
Total Current Liabilities 6,470 6,828 7,412 7,839 Net Income 20% 5% 12% 12%
LT. Debt 872 955 490 367
Other Long Term Liabilities 3,059 3,513 3,513 3,513 Solvability
Total Long-Term Liabilities 3,931 4,468 4,003 3,880 Current Ratio (x) 2.4 2.4 2.5 2.6
Total Liabilities 10,401 11,295 11,415 11,719 Quick Ratio (x) 1.9 2.0 2.0 2.1
Minority Interest 937 761 761 761 Debt to Equity (x) 0.6 0.6 0.5 0.5
Shareholders' Equity 18,501 20,324 22,446 24,831 Interest Coverage (x) 27.2 33.9 23.2 29.0
BVPS (Rp) 1,586 1,743 1,925 2,129 Source: Company, Shinhan Sekuritas Indonesia Estimates
Source: Company, Shinhan Sekuritas Indonesia Estimates
Valuation
Year-end 31 Dec 2016 2017 2018F 2019F
PER (x) 27.8 27.3 24.5 21.8
PBV (x) 5.4 5.1 4.6 4.2
EV/EBITDA (x) 18.4 18.0 16.1 14.4
EV/Sales (x) 2.9 3.0 2.7 2.4
Source: Company, Shinhan Sekuritas Indonesia Estimates
62
The prominent ice cream producer
One of the largest Indonesian ice cream producers. PT Campina Ice
Cream Industry Tbk (CAMP) established in 1972 and succeeds to become one
of the largest Indonesian ice cream producers. According to Nielsen, CAMP’s
market share reached 20.7% in 2017. The company produced various types
and flavors of ice cream through its brands such as Concerto and Hula-Hula.
The company owned an ice cream factory in Surabaya, which in the last three
years the average production capacity reached 23 million liters per year.
Capturing potential growth through vast distribution points. Indonesia
ice cream consumption per capita was 0.6 kilograms in 2017, based on the
data from Statista. Furthermore, ice cream volume growth was expected to
grow by 8.7% 2013-2018 CAGR according to Euromonitor. Indonesia with its
relatively young population pyramid, increasing trend of GDP per capita, and
almost entirely tropical climate, is an attractive market for the ice cream
business. CAMP expects to capture this opportunity through its 60 distribution
points that spread across the archipelago of Indonesia to penetrate
undeveloped markets. The company’s sales channel is dominated by general
trade that contributes 40% of the total sales. This will be the company’s
competitive advantage as new players and small competitors having difficulties
to make extensive distribution points through this channel.
Expecting 8% YoY of revenue growth. The company revenue recorded at
IDR 488bn in 1H18, slightly grew by 1.6% YoY, supported by the increase of
sales volume in the midst of tight competition. This figure is still on track or
representing 47.9% of our revenue target this year. Moreover, the company
managed to create efficiency by implementing clustering product distribution
which leads operating expense to decline by 10.0% YoY. As a result, operating
income jumped by 51.1% YoY to IDR 52bn, or representing 43.4% of our
estimate for FY18F. Net profit also rose by 225.3% YoY to IDR 32bn,
accounting for 52.0% of our net profit target in FY18F. Going forward, the
company will introduce three new products in 2H18 to boost top line growth.
One of which, CAMP will optimize its license obtained from PT Walt Disney
Indonesia, by launching new ice cream with Captain America character. This
product development expected to create new excitement for customers and
also help CAMP to differentiate with the competitors, especially for the teens
and kids segments.
Valuation. We overweight on CAMP with TP of IDR 448 (16.6% Upside)
derived using blended DCF methods based on WACC of 11% and risk free rate
of 8.40%. Our target price represents 2019F target multiple of 27.9x P/E, still
below Consumer Goods Industry sector of 30.4x. The risk to our call includes
increasing competition, depreciation of Rupiah, and slower consumer spending.
Year to Dec. Sales OP Pre-tax NP EPS BPS PER EV/EBITDA PBV ROAE
(Bn IDR) (Bn IDR) (Bn IDR) (Bn IDR) (IDR) (IDR) (x) (x) (x) (%)
2016 931 125 75 53 - - - - - 10.0
2017 945 101 58 43 7.4 142.4 160.6 40.7 8.3 6.2
2018F 1,020 119 84 62 10.6 230.9 38.6 9.3 1.8 5.7
2019F 1,112 140 116 86 14.7 239.6 27.9 7.7 1.7 6.2
2020F 1,207 164 144 107 18.2 250.3 22.5 6.4 1.6 7.4
Source: Company, Shinhan Sekuritas Indonesia
Overweight
Current Price (IDR) (4/9) 384
Target price (IDR) 448
Upside/Downside (%) 16.6%
52 Week High (IDR) 1,855
52 Week Low (IDR) 290
Major Shareholders:
Prawirawidjadja Sabana 83.8%
Hadipranoto Darmo 3.8%
Stock Price Movement
Source: Bloomberg, Shinhan Sekuritas Indonesia
Billy Ibrahim
+6221 80869900
0
100
200
300
400
500
Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18
CAMP JCI Index
PT Campina Ice Cream Industry Tbk (CAMP)
Company Focus
63
Local ice cream producer with the largest market share in 2017 Vast distribution sales channel dominated by general trade
Source: Nielsen, Shinhan Sekuritas Indonesia Source: Company, Shinhan Sekuritas Indonesia
Underpenetrated (0.6 kg/cap) with the highest 13-18F CAGR Expanding target market to support demand (GDP & demographic by aging profile)
Source: Statista, Euromonitor, Shinhan Sekuritas Indonesia Source: Bloomberg, Shinhan Sekuritas Indonesia
Expecting higher revenue growth Profit margin expected to improve on the back of efficiency
Source: Company, Shinhan Sekuritas Indonesia Estimates Source: Company, Shinhan Sekuritas Indonesia Estimates
Unilever; 70,5%
Campina; 21,1%
Glico Wings; 4,6%
Others; 2,2%Indoeskrim;
1,6%
General Trade; 40%
Modern Trade; 30%
Others (Mobile Unit,
Home Delivery, etc);
30%
2.4 2.3
1.7
0.70.6
4.8
3.1
2.02.4
8.8
0
2
4
6
8
10
0.0
0.5
1.0
1.5
2.0
2.5
Thailand Malaysia Singapore Philippines Indonesia
(Kg)
2017 Average Ice Cream Consumption Per Capita
Ice Cream Volume 13-18F CAGR (%)
3,000
3,250
3,500
3,750
4,000
4,250
0
75
150
225
300
12 13 14 15 16 17 18F
(Millions)
0-19 20-39 40-59 60-79 80-99 GDP Per Capita
(USD)
0
3
6
9
12
600
750
900
1,050
1,200
15 16 17 18F 19F
(Bn IDR)Sales (LHS) Sales Growth (RHS)
(%)
0
4
7
11
14
18
30
60
90
120
150
15 16 17 18F 19F
(Bn IDR) Operating Profit (LHS) Net Profit (LHS)
Operating Profit Margin (RHS) Net Profit Margin (RHS)
(%)
64
Products Portfolio for Kids Segment
Source: Company
Products Portfolio for Teens Segment Products Portfolio for Adults Segment
Source: Company Source: Company
65
Income Statement Cashflow Analysis
Year-end 31 Dec (Bn IDR) 2016 2017 2018F 2019F
Year-end 31 Dec (Bn IDR) 2016 2017 2018F 2019F
Sales 931 945 1,020 1,112
CFs from Operation
COGS (364) (363) (388) (412)
Net Profit 53 43 62 86
Gross Profit 567 582 633 701
Change in NWC (38) (197) (60) (71)
EBITDA 184 168 189 224
CFs from Operation 15 (154) 2 15
Operating Expense (441) (480) (513) (560)
Operating Profit 125 101 119 140
CFs from Investments (42) 14 (4) (7)
Pre-Tax Profit 75 58 84 116
Income Tax - Net (23) (15) (22) (30)
CFs from Financing 10 753 (124) (38)
Net Profit 53 43 62 86
Net Inc./(Dec.) in Cash 33 639 (90) 22
EPS (IDR) - 7 11 15
Cash at End Period 365 520 915 936
Source: Company, Shinhan Sekuritas Indonesia Estimates
Source: Company, Shinhan Sekuritas Indonesia Estimates
Balance Sheet
Key Ratio Analysis
Year-end 31 Dec (Bn IDR) 2016 2017 2018F 2019F
Year-end 31 Dec (Bn IDR) 2016 2017 2018F 2019F
Assets Profitability
Cash and Equivalent 365 520 915 936 Gross Margin 61% 62% 62% 63%
Receivables 162 170 173 178 Operating Margin 13% 11% 12% 13%
Inventories 127 152 162 169 EBITDA Margin 20% 18% 19% 20%
Others 16 22 20 11 Net Income Margin 6% 5% 6% 8%
Total Current Assets 670 865 1,271 1,294 ROAA 5% 4% 4% 5%
Net Fixed Assets 217 220 200 177 ROAE 10% 6% 6% 6%
Other Assets 143 127 151 181
Total Assets 1,031 1,211 1,622 1,652 Growth
Revenue 3% 2% 8% 9%
Liabilities and Equities Operating Profit -4% -19% 18% 18%
Payables 62 48 61 78 EBITDA 4% -9% 13% 18%
Other Short-Term Liabilities 107 7 7 8 Net Income -29% -17% 44% 38%
Total Current Liabilities 169 55 68 86
LT. Debt 260 260 136 98 Solvability
Other Long Term Liabilities 49 59 59 59 Current Ratio (x) 4.0 15.8 18.6 15.1
Total Liabilities 478 373 263 242 Quick Ratio (x) 3.2 13.0 16.2 13.2
Minority Interest - - - - Debt to Equity (x) 0.9 0.4 0.2 0.2
Shareholders' Equity 553 838 1,359 1,410 Interest Coverage (x) 2.4 2.4 3.5 5.9
BVPS (IDR) - 142 231 240 Source: Company, Shinhan Sekuritas Indonesia Estimates
Source: Company, Shinhan Sekuritas Indonesia Estimates
Valuation
Year-end 31 Dec 2016 2017 2018F 2019F
PER (x) - 160.6 38.6 26.6
PBV (x) - 8.3 1.8 1.6
EV/EBITDA (x) - 40.7 9.3 7.2
EV/Sales (x) - 7.2 1.7 1.4
Source: Company, Shinhan Sekuritas Indonesia Estimates
66
New Store Expansion Drives Top Line
Growth
9M18 results are still on track. PT Sarimelati Kencana Tbk (PZZA) net sales in
3Q18 came in at IDR 854Bn (+14.5% YoY, -6.9% QoQ), bringing cumulative 9M18
net sales to IDR 2,575Bn (+17.9% YoY). PZZA’s 9M18 net sales are still on track
with our estimates by achieving 74.5% of the full year target. The company
managed to maintain double digit top line growth through aggressive expansion, as
until 9M18 PZZA has open 39 new outlets. The slowdown in 3Q18 was due to
seasonality as the company benefited from the peak season of Ramadhan in the
previous quarter. Sales contribution from Food segment reached IDR 2,233Bn
(+18.9% YoY) in 9M18, or 86.7% of total net sales. Meanwhile, beverage segment
reached IDR 344Bn (+9.8% YoY), or contributing 13.3% of total net sales.
Profitability remains steady. Gross profit recorded at IDR 1,728Bn (+18.1% YoY)
in 9M18, while the gross margin relatively unchanged and maintained at 67.1%, in
the midst of increasing number of outlets and the weakening of the Rupiah. The
company directly imports some of its raw materials, including cheese, meat, and
flour that are influenced by foreign currency fluctuations. Operating profit reached
IDR 159Bn (+17.7% YoY), representing an operating margin of 6.2%. Net profit
margin also stable at 3.9%, with a value of IDR 102Tn (+20.5%). We estimated
PZZA will be able to achieve our net profit target for FY18F of IDR 160Bn, along with
the festive season of Christmas and New Year Holiday in 4Q18.
Addition of new outlets to fuel growth. PZZA has opened 42 new outlets since
the beginning of 2018, bring a total of 434 outlets as of early November. In 4Q
alone, the company opened a standalone outlet in the Jakarta Garden City and
Basuki Rahmat Surabaya. Besides that, there’s also new outlets that opened in
shopping malls located in Gresik Icon Mall. Standalone outlet will create cost
efficiency through lower rental rate compared to shopping malls, while its also offer
more flexible operating hours which will increase productivity.
More focused on PHD. The company has an agreement with Yum! Pizza Hut Asia
to open 175 new outlets in 2017-2019. The composition will be focused on Pizza Hut
Delivery (PHD) with 75% and Pizza Hut Restaurant (PHR) with 25%. The investment
cost for PHD is lower than PHR as it requires a smaller area with an average of
100sqm compared to 250sqm. Moreover, PHD has a wider range of market segment
with its fast food delivery service which suitable for the current lifestyle, where the
number of working women and people working overtime are rising, coupled with bad
traffic in big cities. PHD also has better SSSG compared to PHR, as reflected in 2017
where PHR’s SSSG recorded at 5.5%, while PHD’s SSSG was higher at 8.7%.
Valuation. PZZA as the leading chained pizza consumer foodservice in terms of
market share in Indonesia, should continue its dominance on the back of outlet
expansion and market penetration to potential tier-2 and tier-3 cities. We maintain
Overweight on PZZA and maintain our TP at IDR 1,170 (36.0% Upside), based on
the blended DCF method with 17x 2019F P/E.
Year to Dec. Sales OP Pre-tax NP EPS BPS PER EV/EBITDA PBV ROAE
(Bn IDR) (Bn IDR) (Bn IDR) (Bn IDR) (IDR) (IDR) (x) (x) (x) (%)
2016 2,695 207 176 130 - - - - - 41.7
2017 3,027 223 189 141 - - - - - 39.9
2018F 3,458 252 215 160 66 452 13.2 7.5 1.9 21.9
2019F 3,962 265 222 166 69 486 12.8 7.4 1.8 14.6
2020F 4,543 323 274 204 85 528 10.4 6.6 1.7 16.7
Source: Company, Shinhan Sekuritas Indonesia
Overweight
Current Price (IDR) (16/11) 860
Target price (IDR) 1,170
Upside/Downside (%) 36%
52 Week High (IDR) 1,465
52 Week Low (IDR) 850
Major Shareholders:
Sriboga Raturaya 64.79%
Stock Price Movement
Source: Bloomberg, Shinhan Sekuritas Indonesia
Billy Ibrahim
+6221 80869900
70
85
100
115
130
May-18 Jun-18 Jul-18 Aug-18 Sep-18 Oct-18
PZZA JCI Index
PT Sarimelati Kencana Tbk (PZZA)
Company Focus
67
PZZA Latest Financial Highlight
Bn IDR 6M18 6M17 YoY 9M18 9M17 YoY
Net Sales 1,721 1,438 19.6% 2,575 2,185 17.9% Gross Profit 1,163 964 20.6% 1,728 1,463 18.1% Operating Expense (1,034) (885) 16.9% (1,569) (1,328) 18.1% Operating Income 128 79 61.6% 159 135 17.7% Income Before Tax 108 66 64.6% 137 113 20.6% Net Income 82 49 65.5% 102 84 20.5%
(%) 6M18 6M17 YoY 9m18 9M17 YoY
Gross Margin 67.6 67.0 67.1 67.0 Operating Margin 7.5 5.5 6.2 6.2 Net Margin 4.8 3.4 3.9 3.9
Source: Company, Shinhan Sekuritas Indonesia
Continuing innovation by introducing new menu in 4Q18 Promotional campaign buy 1 get 1 free on weekdays
Source: Company Source: Company
PHR new outlet in Jakarta Garden City PHD official mobile apps to support delivery services
Source: Company Source: Company
68
The ongoing expansion through outlet addition will be the main
revenue driver for PZZA PHD’s SSSG exceeded PHR in 2017
Source: Company, Shinhan Sekuritas Indonesia Source: Company, Bloomberg, Shinhan Sekuritas Indonesia
Foods segment managed to grow by 18.9% YoY in 9M18, while
beverages increased by 9.8% YoY Jakarta with Java and Bali represents 73.1% of 9M18
total sales
Source: Company, Shinhan Sekuritas Indonesia Source: Company, Shinhan Sekuritas Indonesia
Sales expected to grow by 14.2% YoY to IDR 3,458Bn in 18F Operating and profit margin remain steady at 7.3% and
4.6% in 18F
Source: Company, Shinhan Sekuritas Indonesia Company, Shinhan Sekuritas Indonesia
2,000
2,400
2,800
3,200
3,600
4,000
250
300
350
400
450
500
15 16 17 9M18 18F
(Unit)
Sales (RHS) Total Outlets (LHS)
(Bn IDR)
-15
-11
-7
-3
1
5
0
2
4
6
8
10
15 16 17 18F 19F
(%) SSSG (LHS) PHR SSGS (LHS)
PHD SSSG (LHS) USD to IDR Exchange Rate (RHS)
(%)
0
800
1,600
2,400
3,200
4,000
15 16 17 9M18 18F
(Bn IDR)Beverages Foods Gross Sales
Jakarta, 43.4%
Java and Bali, 29.7%
Sumatera, 12.9%
Sulawesi, 6.7%
Kalimantan, 5.6%Eastern Indonesia, 1.7%
4
7
10
13
16
2,000
2,600
3,200
3,800
4,400
16 17 18F 19F
(Bn IDR)Sales (LHS) Sales Growth (RHS)
(%)
0
2
4
6
8
10
0
70
140
210
280
15 16 17 18F 19F
(Bn IDR) Operating Profit (LHS) Net Profit (LHS)
Operating Profit Margin (RHS) Net Profit Margin (RHS)
(%)
69
Income Statement Cashflow Analysis
Year-end 31 Dec (Bn IDR) 2016 2017 2018F 2019F
Year-end 31 Dec (Bn IDR) 2016 2017 2018F 2019F
Sales 2,695 3,027 3,458 3,962
CFs from Operation
COGS (873) (1,002) (1,145) (1,323)
Net Profit 130 141 160 166
Gross Profit 1,823 2,025 2,314 2,638
Change in NWC (51) (209) (136) (141)
EBITDA 318 343 365 392
CFs from Operation 79 (68) 24 25
Operating Expense (1,616) (1,803) (2,061) (2,373)
Operating Profit 207 223 252 265
CFs from Investments (80) (225) (218) (176)
Pre-Tax Profit 176 189 215 222
Income Tax - Net (46) (48) (55) (57)
CFs from Financing (1) 461 457 (11)
Net Profit 130 141 160 166
Net Inc./(Dec.) in Cash 50 (37) 343 (79)
EPS (IDR) - - 66 69
Cash at End Period 113 75 419 396
Source: Company, Shinhan Sekuritas Indonesia Estimates
Source: Company, Shinhan Sekuritas Indonesia Estimates
Balance Sheet
Key Ratio Analysis
Year-end 31 Dec (Bn IDR) 2016 2017 2018F 2019F
Year-end 31 Dec (Bn IDR) 2016 2017 2018F 2019F
Assets Profitability
Cash and Equivalent 113 75 419 396 Gross Margin 67.6% 66.9% 66.9% 66.6%
Receivables 12 15 17 19 Operating Margin 7.7% 7.4% 7.3% 6.7%
Inventories 148 269 307 355 EBITDA Margin 11.8% 11.3% 10.6% 9.9%
Others 125 157 179 205 Net Income Margin 4.8% 4.7% 4.6% 4.2%
Total Current Assets 398 515 921 975 ROAA 11.9% 10.7% 8.9% 7.4%
Net Fixed Assets 499 671 808 881 ROAE 41.7% 39.9% 21.9% 14.6%
Other Assets 255 308 389 492
Total Assets 1,152 1,494 2,118 2,348 Growth
Liabilities and Equities Revenue 8.1% 12.3% 14.2% 14.6%
Payables 322 378 432 495 Operating Profit 69.3% 7.6% 13.5% 5.1%
Other Short-Term Liabilities 201 231 264 303 EBITDA 41.2% 8.0% 6.6% 7.4%
Total Current Liabilities 523 609 696 797 Net Income 112.5% 8.4% 13.5% 3.5%
LT. Debt 79 226 42 87
Other Long Term Liabilities 211 289 289 289 Solvability
Total Long-Term Liabilities 290 515 331 376 Current Ratio (x) 0.8 0.8 1.3 1.2
Total Liabilities 813 1,124 1,027 1,173 Quick Ratio (x) 0.5 0.4 0.9 0.8
Shareholders' Equity 339 370 1,092 1,175 Debt to Equity (x) 2.4 3.0 0.9 1.0
BVPS (Rp) - - 452 486 Interest Coverage (x) 6.4 6.6 6.6 6.1
Source: Company, Shinhan Sekuritas Indonesia Estimates Source: Company, Shinhan Sekuritas Indonesia Estimates
Valuation
Year-end 31 Dec 2016 2017 2018F 2019F
PER (x) - - 13.2 12.8
PBV (x) - - 1.9 1.8
EV/EBITDA (x) - - 7.5 7.4
EV/Sales (x)
- - 0.8 0.7
Source: Company, Shinhan Sekuritas Indonesia Estimates
70
Data Revenue is Still the Main Catalyst
9M2018 Performance Relatively In-Line. TLKM’s revenue growth in
9M2018 seen slightly better than in 1H2018 as the company managed to
record revenue growth of +2.2% YoY to IDR 99.2trn, better than +0.5% YoY
growth in 1H2018. The result was also equal to 74.6% of consensus. The better
growth in 9M2018 period was driven by 10.1% QoQ revenue growth in 3Q2018
supported by its digital business which grew by 16.2% QoQ.
Increasing Operation & Maintenance Expenses Resulting Lower EBITDA
Margin. TLKM’s Operation & Maintenance (O&M) Expenses continue to increase
by 23.3% YoY in 9M2018 due to company’s aggressive effort to grow digital
business both in cellular and fixed-line services. This condition resulted a
decrease in TLKM’s EBITDA Margin to go below 50% in 9M2018. With TLKM’s
EBITDA Margin persistently below 50% throughout this year, we decided to
lower our EBITDA margin forecast in 2018F and 2019F from 50.1% and 49.4%
to 47.2% and 48.2%.
However, Data, Internet & IT Services Revenues continue to show
strong growth. Meanwhile, Data revenue continue to improve in 3Q2018 as it
grew by 11.3% QoQ after Telkomsel decided to raise data price nationwide by
4% - 11% last early July. Despite the increase of the pricing from Telkomsel,
TLKM’s data traffic still able to increase significantly by +116.3% YoY to 3.01
PB. Based on this condition, we eventually decided to upgrade our TLKM’s data
payload forecast in 2018F and 2019F from 4.55 PB and 9.56 PB to 5.20 PB and
10.41 PB.
Legacy Business still in Slow-Down Mode. TLKM’s legacy business revenue
still seen lower in 9M2018 with -21.3% YoY lower in the period as a result from
traffic decline in both voice and SMS services. Meanwhile, TLKM’s total prepaid
subscribers continue to decline by -12.7% YoY in 9M2018 period influenced by
the effect of implementation of prepaid SIM card registration. However, TLKM’s
total postpaid subscribers remain strong in the same period with +21.6% YoY
growth. Based on this condition, we also decided to adjust our total subscribers
forecast both in Postpaid and prepaid for 2018F and 2019F.
Valuation. On the back of strong and consistent TLKM’s data revenue growth
and TLKM’s pricing recovery since 2H2018, we maintain our overweight
recommendation in TLKM with higher TP of IDR 4,550 (12.9% higher than our
previous TP at IDR 4,030) based on 23.6x FY2019F P/E (+2.5 Standard
Deviation P/E).
Year to Revenues OP Pre-tax NP EPS BVPS PER EV/EBITDA PBV ROAE
Dec. (bn IDR) (bn IDR) (bn IDR) (bn IDR) (IDR) (IDR) (x) (x) (x) (%)
2016 116,333 39,195 38,189 19,352 196 1,070 20.3 7.2 3.7 19.5
2017 128,256 43,933 42,659 22,145 224 1,132 19.9 7.6 3.9 20.3
2018F 134,585 38,792 36,327 18,792 190 1,277 19.3 6.5 2.9 15.7
2019F 142,748 39,655 36,980 19,130 193 1,447 19.0 5.9 2.5 14.2
Source: Company, Shinhan Sekuritas Indonesia
Overweight
Current Price (IDR) (5/10) 3,990
Target price (IDR) 4,550
Upside/Downside (%) 14.0%
52 Week High (IDR) 4,419
52 Week Low (IDR) 3,250
Major Shareholders:
Republic of Indonesia 52.09%
Bank of New York Mellon Corp 5.49%
Stock Price Movement
Source: Bloomberg, Shinhan Sekuritas Indonesia
Teuku Hendry Andrean
+62 21 80869900
70
80
90
100
110
120
Jan-18 Mar-18 May-18 Jul-18 Sep-18 Nov-18
TLKM JCI Index
PT Telekomunikasi Indonesia Tbk (TLKM)
Company Focus
71
TLKM Forward P/E Band
Source: Shinhan Sekuritas Indonesia
Forecast Changes Lower EBITDA Margin due to high O&M Expenses
Source: Company, Shinhan Sekuritas Indonesia Estimates Source: Company, Shinhan Sekuritas Indonesia Estimates
Rapid Growth of Data Traffic Continues Postpaid subs growth is still positive
Source: Company, Shinhan Sekuritas Indonesia Estimates Source: Company
10.00
12.00
14.00
16.00
18.00
20.00
22.00
24.00
26.00
2-Ja
n-13
2-Ap
r-13
2-Ju
l-13
2-Oc
t-13
2-Ja
n-14
2-Ap
r-14
2-Ju
l-14
2-Oc
t-14
2-Ja
n-15
2-Ap
r-15
2-Ju
l-15
2-Oc
t-15
2-Ja
n-16
2-Ap
r-16
2-Ju
l-16
2-Oc
t-16
2-Ja
n-17
2-Ap
r-17
2-Ju
l-17
2-Oc
t-17
2-Ja
n-18
2-Ap
r-18
2-Ju
l-18
2-Oc
t-18
TLKM Forward P/E Band
Forward P/E Mean +1sd -1sd +2.5sd -2.5sd
2018F 2019F 2018F 2019F 2018F 2019F
Postpaid Subs (Mn Subs) 5.37 6.25 5.81 6.85 8.1% 9.6%
Prepaid Subs (Mn Subs) 216.24 245.09 190.63 216.06 -11.8% -11.8%
MoU (in Bn Minutes) 203.33 195.19 201.21 191.15 -1.0% -2.1%
Data payload (TB) 4,553,315 9,561,960 5,203,788 10,407,576 14.3% 8.8%
Revenue (IDR, bn) 128,965 139,140 134,585 142,748 4.4% 2.6%
EBITDA (IDR, bn) 64,598 68,786 63,512 68,786 -1.7% 0.0%
Net Profit (IDR, bn) 20,022 20,432 18,792 19,130 -6.1% -6.4%
EBITDA margin (%) 50.1% 49.4% 47.2% 48.2%
Net margin (%) 15.5% 14.7% 14.0% 13.4%
Previous Current Changes
45.0%
46.0%
47.0%
48.0%
49.0%
50.0%
51.0%
52.0%
-
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
2015 2016 2017 2018F 2019F
EBITDA (In IDR Bn) EBITDA Margin %
492.2 958.7
2,168.2
5,203.8
10,407.6
-
2,000.0
4,000.0
6,000.0
8,000.0
10,000.0
12,000.0
2015 2016 2017 2018F 2019F
Data Payload (In PB)
145,000
150,000
155,000
160,000
165,000
170,000
175,000
180,000
185,000
190,000
195,000
-
1,000
2,000
3,000
4,000
5,000
6,000
1Q17 1H17 9M17 FY17 1Q18 1H18 9M18
Postpaid Subscribers (000) Prepaid Subscribers (000)
72
Income Statement Cashflow Analysis
Year-end 31 Dec (Bn IDR) 2016 2017 2018F 2019F
Year-end 31 Dec (Bn IDR) 2016 2017 2018F 2019F
Revenues 116,333 128,256 134,585 142,748
CFs from operation
EBITDA 59,498 64,609 63,512 68,786
Net profit 19,352 22,145 18,792 19,130
Expenses (77,138) (84,323) (95,793) (103,092)
Change in working capitals (473) (3,742) 9,028 (11,151)
Operating profit 39,195 43,933 38,792 39,655
CFs from operation 47,231 49,405 61,241 45,962
Pre-tax profit 38,189 42,659 36,327 36,980
Income tax - net (9,017) (9,958) (8,577) (8,732)
CFs from investments (27,557) (33,007) (36,338) (38,542)
Net profit 19,352 22,145 18,792 19,130
EPS (Rp) 196 224 190 193
CFs from financing (17,905) (21,052) (2,796) (745)
Source: Company, Shinhan Sekuritas Indonesia Estimates
Net inc/(dec) in cash 1,769 (4,654) 22,107 6,675
Cash at end period 29,767 25,145 47,252 53,927
Source: Company, Shinhan Sekuritas Indonesia Estimates
Balance Sheet
Key Ratio Analysis
Year-end 31 Dec (Bn IDR) 2016 2017 2018F 2019F
Year-end 31 Dec (Bn IDR) 2016 2017 2018F 2019F
Assets Profitability
Cash and equiv 29,767 25,145 47,252 53,927 Operating margin 33.7% 34.3% 28.8% 27.8%
Receivables 7,900 9,564 9,163 9,931 EBITDA margin 51.1% 50.4% 47.2% 48.2%
Inventories 584 631 536 537 Net Income margin 16.6% 17.3% 14.0% 13.4%
Others 9,450 12,221 12,620 12,620 ROAA 11.2% 11.7% 8.8% 8.0%
Total current assets 47,701 47,561 69,571 77,016 ROAE 19.5% 20.3% 15.7% 14.2%
Net fixed assets 114,498 130,171 141,101 150,502
Other assets 17,412 20,752 19,175 19,452 Growth
Total assets 179,611 198,484 229,847 246,970 Revenue 13.5% 10.2% 4.9% 6.1%
Operating Profit 20.9% 12.1% -11.7% 2.2%
Liabilities and equities EBITDA 15.7% 8.6% -1.7% 8.3%
Payables 13,690 15,791 16,439 16,809 Net Income 24.9% 14.4% -15.1% 1.8%
Other Short-Term Liabilities 26,072 29,585 38,805 38,805
Total Current Liabilities 39,762 45,376 55,244 55,614 Solvability
LT. debt 26,367 27,974 35,041 35,041 Current ratio (x) 1.2 1.0 1.3 1.4
Other long term liabilities 47,700 58,380 68,259 68,629 Quick ratio (x) 1.2 1.0 1.2 1.4
Total Liabilities 74,067 86,354 103,300 103,670 Debt to equity (x) 0.7 0.8 0.8 0.7
Minority Interest 21,160 19,417 28,375 37,493 Interest cov. (x) 0.1 0.1 0.1 0.1
Shareholders' equity 105,544 112,130 126,547 143,300 Source: Company, Shinhan Sekuritas Indonesia Estimates
BVPS (Rp) 1,070 1,132 1,277 1,447
Source: Company, Shinhan Sekuritas Indonesia Estimates
Valuation
Year-end 31 Dec 2016 2017 2018F 2019F
PER (x) 20.3 19.9 19.3 19.0
PBV (x) 3.7 3.9 2.9 2.5
EV/EBITDA (x) 7.2 7.6 6.5 5.9
EV/Sales (x) 3.7 3.8 3.1 2.8
Source: Company, Shinhan Sekuritas Indonesia Estimates
73
Boosted by Strong Growth of Audience
Share
Background. PT Surya Citra Media Tbk (SCMA) started its journey from 1999 by
establishing the second private national TV station in Indonesia (SCTV). In 2013,
SCMA committed a merger with PT Indosiar Karya Mandiri Tbk (IDKM) which owns
another FTA (Free-To-Air) TV in Indonesia, Indosiar. Since then, SCMA controls
32.8% audience share in Indonesia which is top 2 in total audience share in
Indonesia.
TV remains the highest reach in Indonesia. According to Nielsen, TV is still the
media with the highest reach in Indonesia with 96% penetration in 2017. Meanwhile,
according to Media Partners Asia, FTA TV Advertising-Expense (adex) is still leading
by far, aligning well with the aggressive growth of digital media. Media Partners Asia
is expecting gross adex in FTA TV to reach IDR 25.2 trn in year 2022F, while gross
adex in Digital Media to reach IDR 10.4trn in year 2022F.
Increasing audience share for both FTA TV in 9M2018. SCMA managed to
increase its average audience shares in 9M2018 with SCTV recorded 16.3% YoY
increase to 17.1% all time audience share, while Indosiar (IVM) recorded 26.4% YoY
increase to 15.8% all time audience share. The increase of audience share for SCTV
was boosted by the good improvement of prime time audience share from 17.6% in
July 2018 to 18.2% in August 2018 following good rating of its leading drama series,
Cinta Suci. Meanwhile, the increase of audience share for IVM was boosted by
significant improvement of prime time audience share from 17.6% in July 2018 to
21.6% in August 2018 following good improvement from various programs ranging
from live variety, entertainment shows, sports and its new prime time slot FTV Azab.
The increase eventually leads to a better performance in 9M2018. SCMA’s
success in increasing its prime time audience shares led by IVM’s 4 points increase
in July-August 2018 period eventually made SCMA’s 9M2018 YoY revenue growth
seen better with 10.8% YoY growth. The growth was an improvement from only
2.6% YoY growth in 1H2018 period. We expect SCMA to have another improvement
in 4Q2018 period mainly from the successful 2018 Asian Games where PT Elang
Mahkota Teknologi (EMTK), the holding company of SCMA, secured the broadcast
right of the event.
Valuation. On the back of FTA TV position which is still the strongest media
penetration in Indonesia and a potential better financial performance in 2H2018
onward for SCMA, we recommend overweight in SCMA. We derived our TP at IDR
1,940 as we use one year forward P/E Band methodology based on 5 year historical
data. We apply -2 standard deviation for the TP which is equal to 19.9x forward P/E
average.
Year to Revenues OP Pre-tax NP EPS BVPS PER EV/EBITDA PBV ROAE
Dec. (bn IDR) (bn IDR) (bn IDR) (bn IDR) (IDR) (IDR) (x) (x) (x) (%)
2016 4,524 2,003 2,024 1,501 103 253 27.3 19.4 11.0 42.2
2017 4,454 1,772 1,772 1,331 91 301 27.2 19.3 8.2 32.8
2018F 4,888 1,953 1,953 1,476 101 329 19.2 13.3 5.9 32.0
2019F 5,366 2,212 2,212 1,669 114 368 17.0 11.7 5.3 32.7
Source: Company, Shinhan Sekuritas Indonesia
Overweight
Current Price (IDR) (25/10) 1,620
Target price (IDR) 1,940
Upside/Downside (%) 19.8%
52 Week High (IDR) 2,980
52 Week Low (IDR) 1,590
Major Shareholders:
Elang Mahkota (EMTK) 60.84%
Matthews Intl Capital 2.88%
Stock Price Movement
Source: Bloomberg, Shinhan Sekuritas Indonesia
Teuku Hendry Andrean
+62 21 80869900
0
50
100
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Jan-15 Jul-15 Jan-16 Jul-16 Jan-17 Jul-17 Jan-18 Jul-18
SCMA JCI Index
PT Surya Citra Media Tbk (SCMA)
Company Focus
74
SCMA Forward P/E Band
Source: Bloomberg, Shinhan Sekuritas Indonesia
Indonesia Media Penetration (2017) Indonesian Advertising – by Media
Source: Company, Nielsen Source: Company, Media Partners Asia
FTA TV All Time Audience Share Strong Audience Share Growth Especially IVM
Source: Company Source: Company
20.4 20.5 20.221.0
17.918.8
17.618.2
15.615.0
14.1 14.215.1
12.1
17.6
21.6
0.0
5.0
10.0
15.0
20.0
25.0
Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18
SCTV RCTI IVM (Indosiar) TRANS MNCTV ANTV TRANS7 TVONE GTV METRO TVRI1 LOKAL TV
96%
53% 51%
37%
7% 3%
Television OOH (Out-Of-Home Advertising)
Internet Radio
Newspaper Tabloid Magazine
10.3 14.1
17.0 17.9 19.2 22.9 25.2 4.1
5.2
6.0 5.4 5.4
5.0 4.6
0.3
0.9
1.9 3.7
4.9
8.7 10.4
2010 2012 2014 2016 2017F 2020F 2022F
FTA TV Pay TV Print Digital Others
Gross Adex, In Trillion IDR
15.00
20.00
25.00
30.00
35.00
40.00
45.00
SCMA Forward P/E Band
Forward P/E Mean -2sd +2sd +1sd -1sd
75
Revenue & Gross Profit Margin Net Profit & Net Profit Margin
Source: Company, Shinhan Sekuritas Indonesia Estimates Source: Company, Shinhan Sekuritas Indonesia Estimates
EBITDA & EBITDA Margin SCTV Programs
Source: Company, Shinhan Sekuritas Indonesia Estimates Source: Company
Indosiar (IVM) Programs SCMA Line of Business
Source: Company Source: Company
56.5%
57.0%
57.5%
58.0%
58.5%
59.0%
59.5%
60.0%
60.5%
61.0%
-
1,000.00
2,000.00
3,000.00
4,000.00
5,000.00
6,000.00
7,000.00
2016 2017 2018F 2019F 2020F
Revenue (IDR bn) Gross Profit Margin (%)
41.0%
42.0%
43.0%
44.0%
45.0%
46.0%
47.0%
48.0%
-
500.00
1,000.00
1,500.00
2,000.00
2,500.00
3,000.00
2016 2017 2018F 2019F 2020F
EBITDA (IDR bn) EBITDA Margin (%)
28.0%
29.0%
30.0%
31.0%
32.0%
33.0%
34.0%
-
200.00
400.00
600.00
800.00
1,000.00
1,200.00
1,400.00
1,600.00
1,800.00
2,000.00
2016 2017 2018F 2019F 2020F
Net Profit (IDR bn) Net Profit Margin (%)
76
Income Statement Cashflow Analysis
Year-end 31 Dec (Bn IDR) 2016 2017 2018F 2019F
Year-end 31 Dec (Bn IDR) 2016 2017 2018F 2019F
Revenues 4,524 4,454 4,888 5,366
CFs from operation
Program & Broadcasting Exp. (1,782) (1,835) (2,047) (2,248)
Net profit 1,501 1,331 1,476 1,669
Gross profit 2,742 2,619 2,840 3,118
Change in working capitals (253) (231) 605 (142)
EBITDA 2,140 1,922 2,117 2,392
CFs from operation 1,385 1,251 2,246 1,707
Expenses (738) (847) (888) (906)
Operating profit 2,003 1,772 1,953 2,212
CFs from investments (250) (526) (300) (300)
Pre-tax profit 2,024 1,782 1,977 2,238
Income tax - net (510) (464) (515) (583)
CFs from financing (1,368) (1,000) (1,067) (1,097)
Net profit 1,501 1,331 1,476 1,669
Net inc/(dec) in cash (233) (276) 878 310
EPS (Rp) 103 91 101 114
Cash at end period 455 234 1,167 1,532
Source: Company, Shinhan Sekuritas Indonesia Estimates
Source: Company, Shinhan Sekuritas Indonesia Estimates
Balance Sheet
Key Ratio Analysis
Year-end 31 Dec (Bn IDR) 2016 2017 2018F 2019F
Year-end 31 Dec (Bn IDR) 2016 2017 2018F 2019F
Assets Profitability
Cash and equiv 455 234 1,167 1,532 Gross margin 60.6% 58.8% 58.1% 58.1%
Receivables 1,534 1,556 1,695 1,785 Operating margin 44.3% 39.8% 40.0% 41.2%
Inventories 689 766 813 867 EBITDA margin 47.3% 43.1% 43.3% 44.6%
Others 275 153 153 153 Net Income margin 33.2% 29.9% 30.2% 31.1%
Total current assets 2,952 2,709 3,828 4,336 ROAA 32.0% 26.1% 26.3% 26.9%
Net fixed assets 967 1,029 1,165 1,285 ROAE 42.2% 32.8% 32.0% 32.7%
Other assets 902 1,648 865 913
Total assets 4,821 5,386 5,858 6,534 Growth
Revenue 6.8% -1.6% 9.7% 9.8%
Liabilities and equities Operating Profit -0.6% -11.5% 10.2% 13.3%
Payables 385 437 440 470 EBITDA -0.1% -10.2% 10.2% 13.0%
Other Short-Term Liabilities 605 306 306 306 Net Income -1.5% -11.3% 10.8% 13.1%
Total Current Liabilities 990 743 746 776
LT. debt 0 2 2 2 Solvability
Other long term liabilities 1,115 978 1,042 1,146 Current ratio (x) 3.0 3.6 5.1 5.6
Total Liabilities 1,115 980 1,044 1,148 Quick ratio (x) 2.3 2.6 4.0 4.5
Minority Interest 279 504 504 504 Debt to equity (x) 0.3 0.2 0.2 0.2
Shareholders' equity 3,705 4,405 4,814 5,386 Interest cov. (x) 0.0 0.0 0.0 0.0
BVPS (Rp) 253 301 329 368 Source: Company, Shinhan Sekuritas Indonesia Estimates
Source: Company, Shinhan Sekuritas Indonesia Estimates
Valuation
Year-end 31 Dec 2016 2017 2018F 2019F
PER (x) 27.3 27.2 19.2 17.0
PBV (x) 11.0 8.2 5.9 5.3
EV/EBITDA (x) 19.4 19.3 13.3 11.7
EV/Sales (x) 9.2 8.3 5.8 5.2
Source: Company, Shinhan Sekuritas Indonesia Estimates
77
Stellar Growth Maintained
9M2018 performance still strong. PT MNC Studios International Tbk
(MSIN) managed to record 40.4% YoY growth in its 9M2018 revenue to IDR
1.1trn from IDR 800 bn in 9M2017. The achievement was also in-line with
ours and company’s forecast (70.2% of SSIe – Shinhan Sekuritas Indonesia
estimates). Meanwhile, MSIN also managed to keep direct cost to grow
below the growth of the revenue with 30.5% YoY growth to IDR 781.8bn.
This condition eventually resulted MSIN’s 9M2018 Gross Profit to grow by
65.3% YoY to IDR 323.1bn. On the bottom line MSIN also showed
significant growth with the company’s net profit in 9M2018 managed to
grow by 49% YoY to IDR 168.1bn.
Drama series still garnered strong ratings. MSIN’s success in
maintaining strong performance in 9M2018 is propelled by its drama series
performance which still stays in top 10 drama series. Based on the
company’s calculation, per 3Q2018 MSIN’s hit drama series “Cinta yang
Hilang” and “Dunia Terbalik” still seen at no. 1 and 2 spot, while “TOP –
Tukang Ojek Pengkolan” still seen at no. 6 spot in the list. The success of
MSIN to maintain its drama series performance eventually lead to a stellar
39.7% YoY growth in its 9M2018 Advertising, Television and Movie Program
Revenue to IDR 1.1trn.
Additional drama series and sequel to a hit Indonesian Box Office
Cinema to roll out in 4Q2018.In order to strengthen MSIN’s drama series
production performance MSIN has also launched new FTV series “Cahaya
Hikmah” aired on MNC TV during non-prime time slots. MSIN expects the
new FTV series will be another revenue growth driver as it will provide the
company with 2 additional titles supplied on a daily basis. In 4Q2018, MSIN
also plans to add another new drama series in Prime Time slot. The new
drama series is expected to strengthen MSIN’s good performance in prime-
time slot. Meanwhile, MSIN is also ready to roll out a sequel to a 2015
Indonesian Box Office Cinema, “3 Dara” in October 25, 2018. “3 Dara 2” is
expected to score another box office and keep MSIN’s stellar growth
condition until the end of 2018.
Valuation. On the back of continuous good performance from MSIN’s
drama series which resulted another stellar revenue growth in 9M2018, we
maintain our Overweight recommendation in MSIN and maintain our TP at
IDR 428 (25.9% upside) based on blended DCF by using 10% WACC and
5% Terminal Growth.
Year to Revenues OP Pre-tax NP EPS BVPS PER EV/EBITDA PBV ROAE
Dec. (bn IDR) (bn IDR) (bn IDR) (bn IDR) (IDR) (IDR) (x) (x) (x) (%)
2016 698 71 72 53 - - - 1.2 - 22.3
2017 1,112 157 162 121 - - - 2.2 - 34.7
2018F 1,600 290 291 214 67 223 5.2 4.8 1.6 38.3
2019F 1,963 330 329 242 76 295 4.6 4.4 1.2 29.4
Source: Company, Shinhan Sekuritas Indonesia
Overweight
Current Price (IDR) (1/11) 350
Target price (IDR) 428
Upside/Downside (%) 22.3
52 Week High (IDR) 550
52 Week Low (IDR) 308
Major Shareholders:
Media Nusantara Citra 70.01%
HSBC Fund Service 7.66%
Stock Price Movement
Source: Bloomberg, Shinhan Sekuritas Indonesia
Teuku Hendry Andrean
+62 21 80869900
60
72
84
96
108
120
Jun-18 Jun-18 Jul-18 Aug-18 Aug-18 Sep-18 Oct-18 Nov-18
MSIN JCI Index
PT MNC Studios International Tbk (MSIN)
Company Focus
78
MSIN Latest Financial Highlight
Source: Company, Shinhan Sekuritas Indonesia
Strong Top Line Performance Maintained Prime Time Audience Shares still the Highest
Source: Company, Shinhan Sekuritas Indonesia Source: Company, Nielsen
EBITDA & EBITDA Margin still On Track Q3-2018 Top 10 Drama Series
Source: Company, Shinhan Sekuritas Indonesia Source: Company, Nielsen
Financial Highlights 2015 2016 2017 9M2017 9M2018
Revenues (In Rp bn) 523 698 510 800 1,123
Gross Profit (In Rp bn) 74 121 220 195 323
Gross Profit Margin 14.1% 17.4% 43.2% 24.4% 28.8%
Operating Profit (In Rp bn) 27 71 157 149 246
Operating Profit Margin 5.2% 10.2% 30.7% 18.6% 21.9%
EBITDA (In Rp bn) 35 80 168 157 269
EBITDA Margin 6.6% 11.5% 33.0% 19.6% 24.0%
Net Profit (In Rp bn) 21 53 121 113 168
Net Profit Margin 4.0% 7.6% 23.8% 14.1% 15.0%
EPS 0 0 0
ROAE 11.3% 22.3% 34.7%
ROAA 5.3% 12.1% 17.8%
523
698
1,112
800
1,123
-
200
400
600
800
1,000
1,200
2015 2016 2017 9M2017 9M2018
Revenues
40.4%
(In Rp bn)
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
-
50
100
150
200
250
300
2015 2016 2017 9M2017 9M2018
EBITDA & EBITDA Margin
EBITDA EBITDA Margin
(In Rp bn)
79
Strong Revenue Growth Potential Profit Margin Remains Above 10%
Source: Company, Shinhan Sekuritas Indonesia Estimates Source: Company, Shinhan Sekuritas Indonesia Estimates
Steady Growth of EBITDA Content is still MSIN’s Primary Revenue Driver
Source: Company, Shinhan Sekuritas Indonesia Estimates Source: Company, Shinhan Sekuritas Indonesia
94.5%
5.5%
Revenues Portion
Advertising, Television &Movie Programs
Talent Management
0%
5%
10%
15%
20%
25%
0
50
100
150
200
250
300
350
400
16 17 18F 19F
(Rp Bn) EBITDA (LHS) EBITDA Margin (RHS) (%)
698
1,112
1,600
1,963
0
500
1,000
1,500
2,000
2,500
16 17 18F 19F
(Bn IDR)
0.0%
5.0%
10.0%
15.0%
20.0%
0
50
100
150
200
250
300
350
16 17 18F 19F
(Bn IDR) Operating Profit (LHS) Net Profit (LHS)
Operating Profit Margin (RHS) Net Profit Margin (RHS)
(%)
80
Income Statement Cashflow Analysis
Year-end 31 Dec (Bn IDR) 2016 2017 2018F 2019F
Year-end 31 Dec (Bn IDR) 2016 2017 2018F 2019F
Revenues 698 1,112 1,600 1,963
CFs from operation
COGS (577) (892) (1,219) (1,521)
Net profit 53 121 214 242
Gross profit 121 220 381 442
Change in working capitals (58) (183) (344) (315)
EBITDA 80 168 304 361
CFs from operation (5) (62) (131) (73)
Operating expense (50) (63) (91) (112)
Operating profit 71 157 290 330
CFs from investments (82) (60) (28) (176)
Pre-tax profit 72 162 291 329
Income tax - net (19) (41) (77) (87)
CFs from financing 202 4 298 -
Net profit 53 121 214 242
Net inc/(dec) in cash 21 1 246 (128)
EPS (Rp) - - 67 76
Cash at end period 96 98 237 221
Source: Company, Shinhan Sekuritas Indonesia Estimates
Source: Company, Shinhan Sekuritas Indonesia Estimates
Balance Sheet
Key Ratio Analysis
Year-end 31 Dec (Bn IDR) 2016 2017 2018F 2019F
Year-end 31 Dec (Bn IDR) 2016 2017 2018F 2019F
Assets Profitability
Cash and equiv 96 98 237 221 Gross margin 17.4% 19.8% 27.6% 28.3%
Receivables 215 252 362 444 Operating margin 10.2% 14.1% 18.1% 16.8%
Inventories 24 299 408 509 EBITDA margin 11.5% 15.1% 19.0% 18.4%
Others 38 58 84 103 Net Income margin 7.6% 10.9% 13.4% 12.3%
Total current assets 374 706 1,090 1,278 ROAA 12.1% 17.8% 19.7% 16.4%
Net fixed assets 25 69 85 249 ROAE 22.3% 34.7% 38.3% 29.4%
Other assets 85 101 112 125
Total assets 484 876 1,288 1,652 Growth
Revenue 33.4% 59.3% 43.8% 22.7%
Liabilities and equities Operating Profit 162.2% 119.8% 84.9% 13.7%
Payables 181 441 554 680 EBITDA 131.2% 110.4% 80.4% 19.0%
Other Short-Term Liabilities 6 14 16 20 Net Income 154.0% 129.2% 76.1% 13.1%
Total Current Liabilities 187 456 570 700
LT. debt - - - 6 Solvability
Other long term liabilities 7 11 11 11 Current ratio (x) 2.0 1.5 1.9 1.8
Total Liabilities 194 467 581 717 Quick ratio (x) 1.9 0.9 1.2 1.1
Minority Interest 0 0 0 0 Debt to equity (x) 0.7 1.1 0.8 0.8
Shareholders' equity 289 409 707 935 Interest cov. (x) 0.4 0.5 0.5 0.4
BVPS (Rp) - - 223 295 Source: Company, Shinhan Sekuritas Indonesia Estimates
Source: Company, Shinhan Sekuritas Indonesia Estimates
Valuation
Year-end 31 Dec 2016 2017 2018F 2019F
PER (x) 0.0 0.0 5.2 4.6
PBV (x) 0.0 0.0 1.6 1.2
EV/EBITDA (x) 1.2 2.2 4.8 4.4
EV/Sales (x) 0.1 0.3 0.9 0.8
Source: Company, Shinhan Sekuritas Indonesia Estimates
81
Transformation Leads to Solid Operating
Performance
Background. PT Ramayana Lestari SentosaTbk (RALS) has been established since
1978 as a department store which offers a full range of clothing, shoes, bags,
accessories, special buy, toys & stationery, housewares, and supermarket. RALS is
the market leader, especially in middle-low retail segment and operates 118 stores
in 54 major cities. Currently, RALS is going through a major transformation by
introducing “Ramayana Prime” outlet to attract Indonesia massive young population
and large middle class with rising levels of disposable income.
Supermarket business swings back to positive. RALS has closed down 18 loss
making Supermarket outlet since last year. As a result, Supermarket net sales
decline by -16.6% YoY in 9M18. Nevertheless, Supermarket operating profit
managed to swing back to positive at IDR 43.4Bn in 9M18.Previously, Supermarket
recorded operating loss of IDR 37.2Bn in FY17 and weighed down overall operating
margin to 6.7%. The loss was attributable to increased competition from mini
markets such as Indomaret and Alfamart. The company will be focusing on Fashion
and Accessories business as it provides more sustainable growth that grew by
11.6% YoY to IDR 3.3Tn or contributed 72.9% of total net sales in 9M18.
Consignment sales contribution to total gross sales gradually increased. The
contribution of consignment sales reached 44.9% in 3Q18, compared to 38.2% in
FY16. More consignment means reducing operational costs, as the direct purchase
come along with full operational costs, including payroll, capital costs, carrying, and
the damage goods among others. The growth of consignment by 11.7% YoY also
offset the declining direct purchase of 0.6% YoY in 9M18. This is in line with the
company’s strategy to utilize additional retailing space, after the closure of several
Supermarket outlets, by re-assigning the space to potentially more profitable
divisions.
Major transformation through Ramayana Prime.RALS have been known for its
retail philosophy as “cheap but good” which appeal to the middle-low segment. The
company intended to change the philosophy to “lifestyle experience” by introducing
Ramayana Prime store, which the first one is located in City Plaza Jatinegara, East
Jakarta. Ramayana Prime offered various shopping experience by lease its retail
space to well-known tenants, such as Starbucks, Ace Hardware, KFC, and Cinema
XXI to increase the customer traffic of its department store.
Valuation. RALS solid 9M18 earnings performance is in line with our expectation, as
net sales grew by 2.2% YoY and represents 74.6% of our full-year estimates.
Operating and net profit also recorded robust growth by 56.3% YoY and 43.4% YoY,
respectively. Going forward, we believe RALS will continue to reap the benefits from
the closed down of unprofitable Supermarket and encouraging consignment sales
growth performance. Therefore, we overweight on RALS with TP of IDR 1,425
derived from blended DCF method and implying 15x 2019F P/E.
Year to Dec. Sales OP Pre-tax NP EPS BPS PER EV/EBITDA PBV ROAE
(Bn IDR) (Bn IDR) (Bn IDR) (Bn IDR) (IDR) (IDR) (x) (x) (x) (%)
2016 5,857 368 465 408 60 490 19.9 15.9 2.4 12.2
2017 5,623 377 467 407 60 520 19.8 15.6 2.3 11.9
2018F 6,053 586 686 598 89 554 12.9 10.7 2.1 16.6
2019F 6,612 625 741 645 96 591 12.0 10.0 1.9 16.8
2020F 7,204 646 779 679 101 630 11.4 9.5 1.8 16.5
Source: Company, Shinhan Sekuritas Indonesia
Overweight
Current Price (IDR) (02/11) 1,150
Target price (IDR) 1,425
Upside/Downside (%) 23.9%
52 Week High (IDR) 1,555
52 Week Low (IDR) 880
Major Shareholders:
Ramayana Makmursentosa 55.88%
Stock Price Movement
Source: Bloomberg, Shinhan Sekuritas Indonesia
Billy Ibrahim
+6221 80869900
0
50
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Jan-15 Jul-15 Jan-16 Jul-16 Jan-17 Jul-17 Jan-18 Jul-18
RALS JCI Index
PT Ramayana Lestari Sentosa Tbk (RALS)
Company Focus
82
SSSG in 9M18 reached 2.4%, improved from -0.7% in the same
period last year The peak season of Ramadhan period has been shifted
to Q2
Source: Company, Shinhan Sekuritas Indonesia Source: Company, Shinhan Sekuritas Indonesia
Major transformation through Ramayana Prime 18 unprofitable supermarkets have been shut down
since 2017
Source: Company Source: Company
RALS shut down 1 outlet, while opening 3 new outlets this year, which bring a total of 118 outlets in 9M18
Source: Company
-5.0
-1.3
2.5
6.3
10.0
6,000
7,000
8,000
9,000
10,000
14 15 16 17 9M18
(IDR Bn)Gross Sales (LHS) SSSG (RHS)
(%)
20.2 20.2 18.5 19.2 23.3
25.1 25.435.3
42.4
54.1
33.6 31.424.0
17.0
22.621.1 22.9 22.1 21.4
0%
20%
40%
60%
80%
100%
2014 2015 2016 2017 9M18
Q1 Q2 Q3 Q4
83
Consignment Sales growth recorded at double digit 11.7% YoY,
offset Direct Purchase decline of 0.6% YoY in 9M18 Consignment sales contribution to total gross sales
increased gradually and reached 44.9% in 3Q18
Source: Company, Shinhan Sekuritas Indonesia Source: Company, Shinhan Sekuritas Indonesia
Sales Breakdown based on region dominated by Jawa, Bali, and
Nusa Tenggara with 67.2% of total net sales in 9M18 Supermarket sales decline due to the closing of
unprofitable outlet, while operating profitable to improve
Source: Company, Shinhan Sekuritas Indonesia Source: Company, Shinhan Sekuritas Indonesia
Net Sales expected to reach IDR 6,053Bn (+7.6% YoY) in FY18F driven by consignment sales Profit margin to increase on the back of ease pressure
from supermarket loss
Source: Company, Shinhan Sekuritas Indonesia Company, Shinhan Sekuritas Indonesia
-10
-5
0
5
10
15
2,000
2,750
3,500
4,250
5,000
5,750
14 15 16 17 9M18
(Bn IDR) DP (LHS)
Consignment Sales (LHS)
DP Growth (RHS)
Consignment Sales Growth (RHS)
(%)
61.8 58.8 58.8 55.1 55.1
38.2 41.2 41.2 44.9 44.9
0%
20%
40%
60%
80%
100%
16 17 1Q18 2Q18 3Q18
Direct Purchase Consignment Sales
Sumatera, 17.0%
Jawa, Bali, and Nusa Tenggara,
67.2%
Kalimantan, 7.6%
Sulawesi and Papua, 8.1%
-120
-80
-40
0
40
80
500
1,000
1,500
2,000
2,500
3,000
14 15 16 17 9M18
(Bn IDR)Supermarket Sales
Supermarket Operating Profit
(Bn IDR)
-8
-4
0
4
8
12
-2,000
0
2,000
4,000
6,000
8,000
15 16 17 18F 19F
(Bn IDR)Sales (LHS) Sales Growth (RHS)
(%)
3
5
6
8
9
11
200
300
400
500
600
700
15 16 17 18F 19F
(Bn IDR) Operating Profit (LHS) Net Profit (LHS)
Operating Profit Margin (RHS) Net Profit Margin (RHS)
(%)
84
Income Statement Cashflow Analysis
Year-end 31 Dec (Bn IDR) 2016 2017 2018F 2019F
Year-end 31 Dec (Bn IDR) 2016 2017 2018F 2019F
Sales 5,857 5,623 6,053 6,612
CFs from Operation
COGS (3,655) (3,410) (3,584) (3,815)
Net Profit 408 407 598 645
Gross Profit 2,202 2,212 2,469 2,796
Change in NWC (601) (481) (524) (589)
EBITDA 555 558 773 820
CFs from Operation (192) (75) 73 57
Operating Expense 1,834 1,836 1,883 2,171
Operating Profit 368 377 586 625
CFs from Investments (72) 18 (42) (61)
Pre-Tax Profit 465 467 686 741
Income Tax - Net (57) (60) (88) (95)
CFs from Financing 35 48 30 41
Net Profit 408 407 598 645
Net Inc./(Dec.) in Cash (241) 148 293 285
EPS (IDR) 60 60 89 96
Cash at End Period 604 752 1,045 1,330
Source: Company, Shinhan Sekuritas Indonesia Estimates
Source: Company, Shinhan Sekuritas Indonesia Estimates
Balance Sheet
Key Ratio Analysis
Year-end 31 Dec (Bn IDR) 2016 2017 2018F 2019F
Year-end 31 Dec (Bn IDR) 2016 2017 2018F 2019F
Assets Profitability
Cash and Equivalent 604 752 1,045 1,330 Gross Margin 37.6% 39.3% 40.8% 42.3%
Receivables 52 57 51 60 Operating Margin 6.3% 6.7% 9.7% 9.5%
Inventories 834 741 707 676 EBITDA Margin 9.5% 9.9% 12.8% 12.4%
Others 1,341 1,543 1,652 1,793 Net Income Margin 7.0% 7.2% 9.9% 9.8%
Total Current Assets 2,831 3,093 3,454 3,859 ROAA 8.9% 8.5% 11.7% 11.7%
Net Fixed Assets 1,279 1,235 1,208 1,168 ROAE 12.2% 11.9% 16.6% 16.8%
Other Assets 537 563 632 733
Total Assets 4,647 4,892 5,294 5,760 Growth
Liabilities and Equities Revenue 5.9% -4.0% 7.6% 9.2%
Payables 1,009 1,049 1,190 1,366 Operating Profit 46.9% 2.3% 55.5% 6.7%
Other Short-Term Liabilities - - - - EBITDA 36.9% 0.6% 38.5% 6.1%
Total Current Liabilities 1,009 1,049 1,190 1,366 Net Income 21.6% -0.5% 47.0% 8.0%
LT. Debt - - - -
Other Long Term Liabilities 301 349 379 420 Solvability
Total Long-Term Liabilities 301 349 379 420 Current Ratio (x) 2.8 3.0 2.9 2.8
Total Liabilities 1,310 1,398 1,569 1,786 Quick Ratio (x) 2.0 2.2 2.3 2.3
Shareholders' Equity 3,337 3,494 3,725 3,974 Debt to Equity (x) 0.4 0.4 0.4 0.4
BVPS (Rp) 490 520 554 591 Interest Coverage (x) -16.1 -19.1 -27.6 -27.0
Source: Company, Shinhan Sekuritas Indonesia Estimates Source: Company, Shinhan Sekuritas Indonesia Estimates
Valuation
Year-end 31 Dec 2016 2017 2018F 2019F
PER (x) 19.9 19.8 12.9 12.0
PBV (x) 2.4 2.3 2.1 1.9
EV/EBITDA (x) 15.9 15.6 10.7 10.0
EV/Sales (x) 1.5 1.5 1.4 1.2
Source: Company, Shinhan Sekuritas Indonesia Estimates
85
Leading home improvement and lifestyle retailer
Background. PT Ace Hardware Indonesia Tbk (ACES) engages in the retail of
quality home improvement and lifestyle products. The company has been
established since 1995 as a subsidiary of PT Kawan Lama Sejahtera. It offers around
68,000 stock keeping units (SKU), through 144 Ace Hardware stores and 30 Toys
Kingdom store, spread in 36 cities in Indonesia.
Expecting double digit top line growth. We believe ACES would be able to
surpass the company’s 10% YoY target, and book revenue growth of 17.3% YoY on
the back of higher same store sales growth (SSSG) which has been improving since
2016. SSSG expected to be at 13.2% YoY in 2018F, supported by the resiliency of
middle and upper class segment to economic turbulence. ACES sales in 1H18
increase by 22.6% YoY to IDR 3.33Tn, or represent 48.6% of our sales target for
2018F. In the past five years, the average sales contribution in 1H accounted for
46.9% of total sales. This showed that ACES revenue usually peaked in 2H along
with Christmas and New Year holiday.
Minimum impact from import tariff policy. The impact of rising import tax,
which refer to import income tax (PPh impor) or PPh 22 regulation, will be minimum
due to high inventory level worth IDR 2.03Tn in 1H18, with expected of 202
inventory days in 2018F. ACES also has a healthy balance sheet with a huge
amount of cash to compensate the cost increase from new import tariffs. Moreover,
ACES imports ~80% of its products, which makes earnings performance is subject to
the currency fluctuation. However, we think that the company would be able to pass
through the cost pressure to the customer, even though selling price is still stable
until 9M18. Operating and profit margin remains steady as spending intention
expected to improve in 2H18, reflected by the increase in CCI to 122.4 in September
and higher retail sales in August to 6.1% YoY. The resiliency of the margin amid
Rupiah depreciation could be seen at 2013-2015 when the net margin decreased
less than 1%.
Store expansion exceeds the initial target. Up until the beginning of October
2018, the company has opened 20 new stores, already exceeds the initial target of
15 new stores until the end of 2018. This October, the company also plans to open
two new Ace Hardware store in Bekasi with an area of 3,900 sqm and in North
Sumatera with an area of 2,670 sqm. We expect that further expansion will
strengthen the company’s sales performance not only in Greater Jakarta, but also
ex-Java Island.
Valuation. Based on a strong position in the retail of home improvement and
lifestyle market with no significant competitor, we recommend overweight in ACES.
We derived our TP at IDR 1,680 (20.9%), which implies 2019F P/E at 27x. Our TP
justified by improving and double digit SSSG, also with solid fundamentals.
Year to Dec. Sales OP Pre-tax NP EPS BPS PER EV/EBITDA PBV ROAE
(Bn IDR) (Bn IDR) (Bn IDR) (Bn IDR) (IDR) (IDR) (x) (x) (x) (%)
2016 4,936 881 863 711 42 179 20.0 16.3 4.7 25.0
2017 5,939 968 960 778 46 206 25.3 19.0 5.6 23.7
2018F 6,966 1,128 1,118 926 54 238 25.2 19.3 5.8 24.5
2019F 7,918 1,290 1,278 1,059 62 275 22.1 16.6 5.0 24.2
2020F 8,885 1,457 1,443 1,195 70 316 19.5 14.5 4.3 23.8
Source: Company, Shinhan Sekuritas Indonesia
Overweight
Current Price (IDR) (11/10) 1,390
Target price (IDR) 1,680
Upside/Downside (%) 20.9%
52 Week High (IDR) 1,560
52 Week Low (IDR) 1,100
Major Shareholders:
Kawan Lama Sejahtera 59.97%
Capital Group Cos Inc 4.99%
Stock Price Movement
Source: Bloomberg, Shinhan Sekuritas Indonesia
Billy Ibrahim
+6221 80869900
0
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Jan-15 Jul-15 Jan-16 Jul-16 Jan-17 Jul-17 Jan-18 Jul-18
ACES JCI Index
PT Ace Hardware Indonesia Tbk (ACES)
Company Focus
86
PT Kawan Lama Sejahtera owns 59.97% of ACES shares 144 Ace Hardware and 30 Toys Kingdom outlet in 2017
Source: Company Source: Company, Shinhan Sekuritas Indonesia
Indonesia retail sales increased 6.1% YoY in August 2018 Indonesia consumer confidence index recorded at
122.6 in September 2018
Source: Trading Economics, Shinhan Sekuritas Indonesia Source: Trading Economics, Shinhan Sekuritas Indonesia
Stores network spread in 36 cities in Indonesia, with a total area of more than 371,600 sqm
Source: Company
116
120
124
128
132
Oct-17 Dec-17 Feb-18 Apr-18 Jun-18 Aug-18
(P)
30
70
110
150
190
230
11 12 13 14 15 16 17 18F
Ace Hardware Outlet
Toys Kingdom Outlet
(Number of Stores)
-4
-1
2
5
8
11
Sep-17 Nov-17 Jan-18 Mar-18 May-18 Jul-18
(%)
87
Revenue in the last 5 years peaked in Q4 High level of inventory with expected 202 inventory days
in 18F
Source: Company, Shinhan Sekuritas Indonesia Source: Company, Shinhan Sekuritas Indonesia
Revenue contribution still dominated by home improvement
products SSSG has been improving since 2016
Source: Company, Shinhan Sekuritas Indonesia Source: Company, Shinhan Sekuritas Indonesia
Sales expected to grow by 14.2% YoY to IDR 3,458Bn in 18F Operating and profit margin steady at 7% and 5% in 18F
Source: Company, Shinhan Sekuritas Indonesia Company, Shinhan Sekuritas Indonesia
22,8 23,7 23,4 23,5 21,8
23,1 24,2 23,5 23,8 24,7
25,7 26,0 26,0 24,6 24,6
28,4 26,2 27,1 28,1 28,9
0%
25%
50%
75%
100%
13 14 15 16 17
Q1 Q2 Q3 Q4
1,000
1,300
1,600
1,900
2,200
2,500
180
190
200
210
220
230
15 16 17 18F 19F
(%) Inventories (RHS)
Inventory Days (LHS)
(Bn IDR)
0
900
1.800
2.700
3.600
4.500
11 12 13 14 15 16 17 18F
Home Improvement Lifestyle Toys
(Bn IDR)
4,0
4,5
5,0
5,5
6,0
6,5
0
5
10
15
20
25
11 12 13 14 15 16 17 18F
Annual SSSG (LHS)
Indonesia Annual GDP Growth (RHS)
(%) (%)
0
6
12
18
24
3,000
4,500
6,000
7,500
9,000
15 16 17 18F 19F
(Bn IDR)Sales (LHS) Sales Growth (RHS)
(%)
10
12
14
16
18
20
400
600
800
1,000
1,200
1,400
15 16 17 18F 19F
(Bn IDR) Operating Profit (LHS) Net Profit (LHS)
Operating Profit Margin (RHS) Net Profit Margin (RHS)
(%)
88
Income Statement Cashflow Analysis
Year-end 31 Dec (Bn IDR) 2016 2017 2018F 2019F
Year-end 31 Dec (Bn IDR) 2016 2017 2018F 2019F
Sales 4,936 5,939 6,966 7,918
CFs from Operation
COGS (2,584) (3,104) (3,650) (4,141)
Net Profit 711 778 926 1,059
Gross Profit 2,352 2,835 3,316 3,777
Change in NWC (1,007) (1,026) (1,010) (919)
EBITDA 874 1,036 1,221 1,405
CFs from Operation (296) (248) (85) 140
Operating Expense (1,471) (1,866) (2,188) (2,487)
Operating Profit 881 968 1,128 1,290
CFs from Investments (109) (162) (351) (240)
Pre-Tax Profit 863 960 1,118 1,278
Income Tax - Net (157) (179) (201) (230)
CFs from Financing 62 150 22 42
Net Profit 711 778 926 1,059
Net Inc./(Dec.) in Cash 82 198 131 566
EPS (IDR) 42 46 54 62
Cash at End Period 704 902 1,058 1,599
Source: Company, Shinhan Sekuritas Indonesia Estimates
Source: Company, Shinhan Sekuritas Indonesia Estimates
Balance Sheet
Key Ratio Analysis
Year-end 31 Dec (Bn IDR) 2016 2017 2018F 2019F
Year-end 31 Dec (Bn IDR) 2016 2017 2018F 2019F
Assets Profitability
Cash and Equivalent 704 902 1,058 1,599 Gross Margin 47.6% 47.7% 47.6% 47.7%
Receivables 28 90 105 79 Operating Margin 17.8% 16.3% 16.2% 16.3%
Inventories 1,590 1,849 2,117 2,319 EBITDA Margin 17.7% 17.5% 17.5% 17.7%
Others 500 517 606 633 Net Income Margin 14.4% 13.1% 13.3% 13.4%
Total Current Assets 2,822 3,358 3,887 4,631 ROAA 20.3% 19.1% 19.0% 18.3%
Net Fixed Assets 277 359 666 851 ROAE 25.0% 23.7% 24.5% 24.2%
Other Assets 632 711 756 810
Total Assets 3,731 4,429 5,309 6,292 Growth
Liabilities and Equities Revenue 4.1% 20.3% 17.3% 13.7%
Payables 161 258 348 475 Operating Profit 14.5% 10.0% 16.5% 14.4%
Other Short-Term Liabilities 227 220 418 633 EBITDA 4.7% 18.6% 17.9% 15.0%
Total Current Liabilities 389 478 766 1,109 Net Income 20.8% 9.4% 19.0% 14.4%
LT. Debt 0 0 25 19
Other Long Term Liabilities 294 440 462 485 Solvability
Total Long-Term Liabilities 294 440 487 505 Current Ratio (x) 7.3 7.0 5.1 4.2
Total Liabilities 682 918 1,253 1,613 Quick Ratio (x) 3.2 3.2 2.3 2.1
Shareholders' Equity 2,329 2,629 3,049 3,510 Debt to Equity (x) 0.2 0.3 0.3 0.3
BVPS (Rp) 3,049 3,510 4,056 4,679 Interest Coverage (x) 60.4 193.6 323.9 325.9
Source: Company, Shinhan Sekuritas Indonesia Estimates Source: Company, Shinhan Sekuritas Indonesia Estimates
Valuation
Year-end 31 Dec 2016 2017 2018F 2019F
PER (x) 20.0 25.3 25.2 22.1
PBV (x) 4.7 5.6 5.8 5.0
EV/EBITDA (x) 16.3 19.0 19.3 16.6
EV/Sales (x) 2.9 3.3 3.4 3.0
Source: Company, Shinhan Sekuritas Indonesia Estimates
89
Indonesia’s Leading Retailer of Mobile Communication Device
Background. PT Erajaya Swasembada Tbk (ERAA) has established itself to
become the leading retailer & distributor of mobile communication device, IOT
(Internet-Of-Things) and gadgets. ERAA was firstly established in 1996 and
successfully grew to become the no. 1 handset retailer and distributor in
Indonesia with 35% market share.
Benefitting from continuous growth of Smartphone User Penetration in
Indonesia. According to Statista, Smartphone penetration rate in Indonesia is
expected to reach 32.1% of the total population in year 2022 from only 17.1%
of the total population in year 2015. We view that ERAA will enjoy the benefit
from the continuous growth of smartphone penetration in Indonesia as ERAA
distributes renowned phone brands such as Samsung, Apple (exclusive right),
Motorola, Nokia, Sony, Xiaomi (exclusive right), Oppo, Huawei, Vivo, etc. ERAA
can also reach nationwide as the company owns Nationwide Omnichannel
Network with 855 retail outlets, 84 distribution centers and ~51,000 third party
outlets.
Continuous aggressive retail expansion to maintain the company’s
stellar growth momentum. ERAA continue its aggressive retail expansion
with 26% YoY growth of store opening, from 96 store opening in 9M2017 to
121 store opening in 9M2018. ERAA is going to keep doing store expansion
with major focus in tier 2 and tier 3 cities. Majority of new stores are going to
be ERAA’s multi-brand format : Erafone, with several Mi-Stores and Samsung
Experience Stores to complement the expansion.
Stellar growth maintained in 9M2018. In 9M2018 period, ERAA managed to
keep its stellar growth momentum by recording 52.1% YoY growth in its
Revenue from IDR 16.7trn in 9M2017 to IDR 25.3trn in 9M2018. ERAA’s
9M2018 revenue growth was boosted by the company’s ASP growth by 14.5%
YoY along with the company’s sales volume growth by 37.4% YoY in the period.
The stellar growth eventually lead to impressive 9M2018 Net Profit growth by
185.8% YoY from IDR 223bn in 9M2017 to IDR 637bn in 9M2018.
Valuation. On the back of ERAA’s opportunity to become a major beneficiary
from continuous growth of Smartphone Penetration in Indonesia and
impressive 9M2018 financial performance, we recommend overweight in
ERAA. We derived our TP at IDR 2,670 as we use one year forward P/E Band
methodology based on 4 year historical data. We apply Mean P/E for the TP
which is equal to 9.3x forward P/E average.
Year to Revenues OP Pre-tax NP EPS BVPS PER EV/EBITDA PBV ROAE
Dec. (bn IDR) (bn IDR) (bn IDR) (bn IDR) (IDR) (IDR) (x) (x) (x) (%)
2016 20,547 484 384 339 91 1,176 6.6 8.5 0.5 7.9
2017 24,230 523 480 837 117 1,278 6.3 10.1 0.6 9.8
2018F 32,559 1,228 1,185 931 288 1,278 6.0 9.1 1.4 23.1
2019F 43,715 1,362 1,319 966 321 1,582 5.4 9.7 1.1 23.0
Source: Company, Shinhan Sekuritas Indonesia
Overweight
Current Price (IDR) (19/11) 1,980
Target price (IDR) 2,670
Upside/Downside (%) 34.8%
52 Week High (IDR) 3,400
52 Week Low (IDR) 680
Major Shareholders:
PT Eralink International 54.51%
Norges Bank 1.88%
Stock Price Movement
Source: Bloomberg, Shinhan Sekuritas Indonesia
Teuku Hendry Andrean
+62 21 80869900
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Jan-1
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Mar-
15
May-1
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Jul-
15
Sep-1
5
Nov-1
5
Jan-1
6
Mar-
16
May-1
6
Jul-
16
Sep-1
6
Nov-1
6
Jan-1
7
Mar-
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May-1
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Jul-
17
Sep-1
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Nov-1
7
Jan-1
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Mar-
18
May-1
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Jul-
18
Sep-1
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Nov-1
8
ERAA JCI Index
PT Erajaya Swasembada Tbk (ERAA)
Company Focus
90
ERAA Forward P/E Band
Source: Bloomberg, Shinhan Sekuritas Indonesia
Smartphone Penetration Rate in Indonesia 2015 - 2022 ERAA’s Business Structure
Source: Statista Source: Company
Aggressive Retail Expansion
Source: Company
17.1%
20.6%
23.7%
26.3%28.3%
29.9%31.2%
32.1%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
2015 2016 2017 2018 2019 2020 2021 2022
-
5.00
10.00
15.00
20.00
25.00
ERAA Forward P/E Band
Forward P/E Mean +0.5sd -0.5sd +1sd -1sd
91
Stellar Revenue Growth Maintained On The Back of Higher ASP
Source: Company Source: Company
And Strong Sales Volume Growth Therefore, we expect the positive trend to continue
Source: Company Source: Company, Shinhan Sekuritas Indonesia Estimates
ERAA’s Nationwide Omni channel Network
Source: Company
20,54724,230
32,559
43,715
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
50,000
16 17 18F 19F
(Bn IDR)
92
Income Statement
Cashflow Analysis
Year-end 31 Dec (Bn IDR) 2016 2017 2018F 2019F
Year-end 31 Dec (Bn IDR) 2016 2017 2018F 2019F
Revenues 20,547 24,230 32,559 43,715
CFs from operation
COGS (18,755) (22,071) (29,303) (39,861)
Net profit 264 339 837 931
Gross profit 1,792 2,159 3,256 3,854
Change in working capitals 57 (990) (1,383) (1,633)
EBITDA 600 677 1,314 1,474
CFs from operation 321 (651) (546) (701)
Operating expense (1,309) (1,636) (2,028) (2,492)
Operating profit 484 523 1,228 1,362
CFs from investments 78 67 (174) (152)
Pre-tax profit 384 480 1,185 1,319
Income tax - net 122 133 329 366
CFs from financing (115) 57 (2) -
Net profit 264 339 837 931
Net inc/(dec) in cash 488 (248) (303) (388)
EPS (Rp) 91 117 288 321
Cash at end period 615 366 733 984
Source: Company, Shinhan Sekuritas Indonesia Estimates
Source: Company, Shinhan Sekuritas Indonesia Estimates
Balance Sheet
Key Ratio Analysis
Year-end 31 Dec (Bn IDR) 2016 2017 2018F 2019F
Year-end 31 Dec (Bn IDR) 2016 2017 2018F 2019F
Assets Profitability
Cash and equiv 615 366 733 984 Gross margin 8.7% 8.9% 11.8% 11.1%
Receivables 1,442 1,571 2,111 2,834 Operating margin 2.4% 2.2% 3.8% 3.1%
Inventories 2,203 3,388 4,498 6,119 EBITDA margin 2.9% 2.8% 4.0% 3.4%
Others 909 1,359 1,827 2,453 Net Income margin 1.3% 1.4% 2.6% 2.2%
Total current assets 5,168 6,685 9,169 12,390 ROAA 3.4% 4.3% 8.4% 7.2%
Net fixed assets 457 486 750 988 ROAE 7.9% 9.8% 23.1% 23.0%
Other assets 1,799 1,703 1,613 1,527
Total assets 7,425 8,874 11,532 14,905 Growth
Revenue 2.7% 17.9% 34.4% 34.3%
Liabilities and equities Operating Profit 23.1% 8.2% 134.8% 10.9%
Payables 2,614 2,619 3,946 5,298 EBITDA 13.3% 12.9% 93.9% 12.2%
Other Short-Term Liabilities 1,322 2,429 2,674 3,591 Net Income 13.9% 32.6% 146.5% 11.3%
Total Current Liabilities 3,935 5,049 6,620 8,889
LT. debt 3 4 1,091 1,311 Solvability
Other long term liabilities 78 114 114 114 Current ratio (x) 1.3 1.3 1.4 1.4
Total Liabilities 4,015 5,167 7,825 10,314 Quick ratio (x) 0.8 0.7 0.7 0.7
Minority Interest 61 79 79 79 Debt to equity (x) 1.2 1.4 2.1 2.2
Shareholders' equity 3,409 3,707 3,707 4,591 Interest cov. (x) 0.5 0.6 0.7 0.7
BVPS (Rp) 1,176 1,278 1,278 1,582 Source: Company, Shinhan Sekuritas Indonesia Estimates
Source: Company, Shinhan Sekuritas Indonesia Estimates
Valuation
Year-end 31 Dec 2016 2017 2018F 2019F
PER (x) 6.6 6.3 6.0 5.4
PBV (x) 0.5 0.6 1.4 1.1
EV/EBITDA (x) 8.5 10.1 9.1 9.7
EV/Sales (x) 0.2 0.3 0.4 0.3
Source: Company, Shinhan Sekuritas Indonesia Estimates
93
Strengthening the leadership in sanitary wares
In line revenue growth in 9M. The company recorded a modest revenue growth
in 9M this year by 6%yoy to IDR1.6tn or representing 73% of our full year
estimation at IDR2.2tn. About 89% of the revenue growth came from the local
goods product under ‘Toto’ brand while 11% from imported goods product or the
premium product items. The imported goods posted a satisfactory result that up by
11%yoy to IDR180bn while the local goods increased with the modest pace by
5%yoy to IDR1.4tn.
Stable margin. The company was able to maintain the margin at the stable path as
reflected in the gross margin and operating margin that unchanged at 24% and 13%
in 9M this year compared to the last year amid the rupiah weakening. This was due
to the strong brand position in the market that could pass through the cost pressure
to the customer despite about 80% of the raw materials were imported. The rupiah
depreciation has a minimum impact on the net profit margin that slashed down by
only 1% to 8% from last year at 9% due to the forex losses. We maintained our net
profit estimation this year at IDR217bn.
New gallery, new tower. The company has just inaugurated the new gallery on its
new tower in third quarter this year. The new gallery at the prime road was believed
would leverage its brand equity to maintain its leadership in the market. The new
gallery would enhance the user experience while at the same time educate the
market regarding its new product. The company believes that the strong brand
equity would protect the deterioration of the profitability from the unfavorable price
competition.
Production line development to anticipate the demand. The company
continued to add the new production line gradually to anticipate the demand from
China as well as from the domestic market. The underpenetrated of the sanitary
ware in Indonesia was the positive backdrop for the company to grow further while
at the same time the environmental issue in China have caused on the factory
shutdown which would be the positive catalyst for Indonesia factory due to the
production reallocation. About 67.89% of the households (68mn) in Indonesia have
an access for improved sanitary and approximately 50% of the toilet in Indonesia is
dominated by the squat toilet. This point to the ample room for the company to grow
further. The new production line under the SPN is estimated at 1mn pcs/annum after
the completion of the second line production in the 1Q next year.
Valuation. We reiterate our overweight call with the TP at IDR 1,250 based on the
blended DCF which implies the PE 2018 and 2019 PE at 13.8 and 12.8 respectively
or at attractive level compares to the peer that trades above 20x PE.
Year to Dec. GP OP Pre-tax NP EPS Growth BVPS PER PBR ROAE ROAA
(bn IDR) (bn IDR) (bn IDR) (bn IDR) (IDR) (%) (IDR) (x) (x) (%) (%)
2015 491 282 276 205 na na na na na 82% 19%
2016 511 296 292 218 na 6% na na na 65% 18%
2017 517 311 286 222 na 2% na na na 37% 13%
2018F 543 327 281 218 82.1 -2% 622 12.3 1.62 18% 9%
2019F 570 343 295 229 86.2 5% 669 11.7 1.51 13% 8%
Source: Company, Shinhan Sekuritas Indonesia
Overweight
Current Price (IDR) (5/10) 895
Target price (IDR) 1,250
Upside/Downside (%) 39.7%
52 Week High (IDR) 1,300
52 Week Low (IDR) 820
Major Shareholders:
PT Multifortuna Asindo 30%
PT Suryaparamitra Abadi 30%
Public 40%
Stock Price Movement
Source: Bloomberg, Shinhan Sekuritas Indonesia
Helmi Therik
+6221 80869900
30
40
50
60
70
80
90
100
110
May-18 Jun-18 Jul-18 Aug-18 Sep-18 Oct-18
spto JCI Index
PT Surya Pertiwi Tbk (SPTO)
Company Focus
94
IDR Billion 6M18 6M17 YoY 9m18 9M17 YoY
Net Sales 1,084 1,043 4% 1,641 1,552 6% Gross Profit 259 259 0% 400 376 6% Operating Expense (117) (122) -4% (192) (175) 10% Operating Income 143 137 5% 208 201 3% Income Before Tax 117 137 -14% 179 196 -9% Net Income 90 98 -9% 136 138 -2%
(%) 6M18 6M17 YoY 9m18 9M17 YoY
Gross Margin 24% 25% 24% 24% Operating Margin 13% 13% 13% 13% Net Margin 8% 9% 8% 9% 6M18 6M17 YoY 9m18 9M17 YoY Net Sales 1,084 1,043 4% 1,641 1,552 6% Gross Profit 259 259 0% 400 376 6% Operating Expense (117) (122) -4% (192) (175) 10% Operating Income 143 137 5% 208 201 3% Income Before Tax 117 137 -14% 179 196 -9%
Source: Company, Shinhan Sekuritas Indonesia
Surya Pertiwi Nusantara (SPN) with estimated capacity for 1,000,000pcs/annum)
First line capacity 1 line = 500,000 pcs/annum. First production line commenced operations in end –April 2018. The second line installation is targeted at 1Q19. The second line is dedicated to anticipate the order from Toto China that estimated at 700,000pcs or up from currently at 70,000 pcs.
Source: Company
SPTO New Gallery at Toto Tower
Source: Shinhan Sekuritas Indonesia
95
Improving market size Potential demand on the back of demographic & improving per capita income
Source: Company, Euromonitor Source: BPS, Shinhan Sekuritas Indonesia Estimates
Revenue growth Sales break down
Source: Company, Shinhan Sekuritas Indonesia Estimates Source: Company, Shinhan Sekuritas Indonesia Estimates
Stable profitability margin Operation cost structure
Source: Company, Shinhan Sekuritas Indonesia Estimates Source: Company, Shinhan Sekuritas Indonesia Estimates
128138 154
167
198217
237
259
120130
144156
185206
229
256
0
50
100
150
200
250
300
2012 2013 2014 2015 2016 2017 2018F 2019F
Sanitary ware market size (USD mn) Fittings market size (USD mn)
30
35
40
45
50
55
60
65
70
75
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
20
00
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
13
20
14
20
15
20
16
20
17
20
18
20
21
F
Numb. of Household (in mn) Per Capita Income (in USD)-Current Price
1,775
2,039
2,171 2,072
2,142 2,249
2,361
1,000
1,200
1,400
1,600
1,800
2,000
2,200
2,400
2,600
2013 2014 2015 2016 2017 2018F 2019F
Projects, 31%
Retail (Distributors & Dealers)
69%
21%19%
21%
24% 24% 24% 24%
9%
13%
9.5%10.5% 10.3% 10.3% 10.3%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
2013 2014 2015 2016 2017 2018F 2019F
Gross margin Net profit margin
Freight, 26%
Promotion, 8%
Salaries and allowances, 32
%
Rent, 13%
Employee benefits, 3%
Others, 17%
96
Income Statement
Cashflow Analysis
Year-end 31 Dec (IDRbn) 2016 2017 2018F 2019F
Year-end 31 Dec (IDRbn) 2016 2017 2018F 2019F
Sales 2,072 2,142 2,249 2,361
CFs from operation
COGS (1,581) (1,631) (1,732) (1,818)
Net profit 222 225 222 233
Gross profit 511 517 543 570
Change in working capitals (248) (108) (172) (221)
EBITDA 293 289 284 299
CFs from operation (26) 117 50 12
Operating expense (204) (224) (235) (247)
Operating profit 296 311 327 343
CFs from investments (261) (479) (197) (197)
Pre-tax profit 292 286 281 295
Income tax - net 74 64 63 66
CFs from financing activities 180 551 763 (19)
Net profit 218 222 218 229
Net inc/(dec) in cash (55) 16 737 (76)
EPS (IDR) - - 82 86
Cash at end period 139 160 893 817
Source: Company, Shinhan Sekuritas Indonesia Estimates
Source: Company, Shinhan Sekuritas Indonesia Estimates
Balance Sheet
Key Ratio Analysis
Year-end 31 Dec (IDRbn) 2016 2017 2018F 2019F
Year-end 31 Dec (IDRbn) 2016 2017 2018F 2019F
Assets
Profitability
Cash and equiv 139 160 893 817
Gross margin 23.7% 23.9% 23.0% 23.0%
Receivables 374 429 406 427
Operating margin 13.9% 13.4% 12.5% 12.5%
Inventories 261 328 348 366
EBITDA margin 14.1% 13.5% 12.6% 12.6%
Others 52 93 98 103
Net profit margin 10.5% 10.3% 9.7% 9.7%
Total current assets 827 1,011 1,745 1,712
ROAA 17.7% 13.1% 8.8% 7.5%
Net fixed assets 276 769 967 1,164
ROAE 65.5% 37.2% 17.8% 13.1%
Other assets 253 240 240 239
Total assets 1,356 2,020 2,951 3,115
Growth
Revenue -4.6% 3.4% 5.0% 5.0%
Liabilities and equities
Operating Profit 5.8% -0.1% -1.7% 5.0%
Payables 456 497 522 548
EBITDA 6.1% -1.4% -1.7% 5.1%
Other Short-Term Liabilities 302 542 569 597
Net Income 6.2% 1.6% -1.7% 5.0%
Total Current Liabilities 759 1,038 1,090 1,145
LT. debt 2 96 70 51
Solvability
Other long term liabilities 179 112 112 112
Current ratio (x) 1.1 1.0 1.6 1.5
Total Liabilities 181 208 182 164
Quick ratio (x) 0.7 0.7 1.3 1.2
Minority Interest 139 482 482 482
Debt to equity (x) 2.3 1.6 0.8 0.7
Shareholders' equity 417 773 1,679 1,807
Source: Company, Shinhan Sekuritas Indonesia Estimates
BVPS (IDR) na na 622 669
Source: Company, Shinhan Sekuritas Indonesia Estimates
Valuation
Year-end 31 Dec (IDRbn) 2016 2017 2018F 2019F
PER (x) na na 12.3 11.7
PBV (x) na na 1.6 1.5
EV/EBITDA (x) na na 9.2 9.2
EV/Sales (x) na na 1.2 1.2
Dividend yield (%) na na 3.7% 3.8%
Source: Company, Shinhan Sekuritas Indonesia Estimates
97
Shining performance through dedicated car terminal services
Background. IPCC focuses in the vehicle terminal services such as stevedoring,
cargodoring, receiving and delivery. Besides that the company has also cater other
services such as vehicle processing center (VPC), equipment processing center
(EPC), port stock and transshipment roro services. IPCC is a subsidiary of PT
Pelabuhan Indonesia II (Persero) or Indonesia Port Corporation (IPC). The strong
support from its parent company provides the protection on its business
sustainability through 2,806ha of total concession area in Java, Sumatra &
Kalimantan in the port terminal area. About 627ha of land concession is located in
Tanjung Periok Jakarta-the busiest port in Indonesia that handled 30% of non-oil
and gas cargo and around 50% of the entire flows of goods into and out of
Indonesia. IPCC managed 31ha of the total area. This makes the IPCC as the third
largest port operator in Asean behind PSA Singapore and Namyong Terminal
Thailand. The improving export-import and interregional trading especially for
vehicle would benefit the company’s performance ahead.
Car terminal services as the main business. IPCC, drives its revenue mainly
from car cargo which contributed 62% of the total revenue in 1H this year at
IDR155bn, followed by 34% or IDR84.8bn of heavy equipment and the rest was
spare parts and miscellaneous. The company expects the revenue this year to reach
IDR585bn or 38%yoy on the back of the car trading and heavy equipment
movement which triggered by the infrastructure development. It seen attainable due
to its 1H revenue at IDR250bn was 43% of the target. The higher revenue in the
second half is expected to come from the transfer of the throughput business from
its affiliates business for the zoning and specialization strategy under its parents-
Pelindo II. The throughput business previously was managed by Port of Tanjung
Priok (IPCC’s affiliates). The company also expects to record the net profit growth by
69%yoy to IDR220bn.
Solid profit margin. The company recorded a solid profitability with the EBITDA
margin at 37.4% in 2015, 42.4% in 2016 and 41.5 in 2017. The cost of revenue is
mainly consisting of 28.5% from salary, 25% from rental, 26.6% from rental. The
margin stability is determined by the rate tariff through the agreement with the
association. With its geographical position (secured land concession) and thus
monopoly by its nature, the company would have a strong position to negotiate the
tariff. However, the tariff adjustment would be linked to the cost escalation or the
inflation in general.
Expansion plan by increasing the yard area. The company plans to expand its
yard from 31ha to 89,5ha or almost triple with the total 2,1mn vehicle from the
current capacity at 700k vehicle. This would make the IPCC 5 largest car terminal
operator in the world that would be realized gradually until 2022. The company is
also eying to capture the transshipment opportunity from PSA Singapore on the back
of the geographical advantage that would facilitate the penetration of the Japan’s car
that located at Indonesia and Thailand as the production bases to Australia as the
market destination.
Valuation. Before IPO the company distributed around 80% for dividend while the
dividend policy ahead is estimated at above 30%. The company is traded at 13.4x of
2018 PE based on the expected net profit growth. This was lower compares to the
Namyong Terminal as the closed peer that trades at 14.8x.
Unrated
Current Price (IDR) (31/7) 1.680
Target price (IDR) NA
Upside/Downside (%) NA
52 Week High (IDR) 1.750
52 Week Low (IDR) 995
Major Shareholders:
PT Pelabuhan Indonesia II 71.28%
Stock Price Movement
Source: Bloomberg, Shinhan Sekuritas Indonesia
Helmi Therik
+6221 80869900
0
20
40
60
80
100
120
IPCC JCI Index
Indonesia Kendaraan Terminal Tbk (IPCC)
Company Focus
98
IPCC Ownership Structure. Dedicated Port facility for vehicles
Source: Company Source: Company
IPCC’ s yard area expansion
Source: Company
99
Operation activity at IPCC terminal
Source: Company
Illustration of IPCC’s business model : Stevedoring (Loading)
Source: Company
Illustration of IPCC’s business model : Stevedoring (Unloading)
Source: Company
100
Monthly Car Sales Revenue and profitability profile
Source: Bloomberg, Gaikindo, Shinhan Sekuritas Indonesia Source: BPS, Shinhan Sekuritas Indonesia Estimates
Revenue composition by activity Revenue break down
Source: Company, Shinhan Sekuritas Indonesia Estimates Source: Company, Shinhan Sekuritas Indonesia Estimates
Improving profitability margin Equity and liability to equity ratio
Source: Company, Shinhan Sekuritas Indonesia Estimates Source: Company, Shinhan Sekuritas Indonesia Estimates
-30%
-20%
-10%
0%
10%
20%
30%
40%
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
Ap
r-1
2
Jul-
12
Oct
-12
Jan
-13
Ap
r-1
3
Jul-
13
Oct
-13
Jan
-14
Ap
r-1
4
Jul-
14
Oct
-14
Jan
-15
Ap
r-1
5
Jul-
15
Oct
-15
Jan
-16
Ap
r-1
6
Jul-
16
Oct
-16
Jan
-17
Ap
r-1
7
Jul-
17
Oct
-17
Jan
-18
Ap
r-1
8
Jul-
18
Cars
Car Sales (SAAR)
Car Sales-SAAR (yoy)
247
117.692.3
68.6
314.3
164.5133.4
98.4
422.1
208.6175.4
130.1
250.3
105.994.9
0
100
200
300
400
500
Revenue GrossProfit
EBITDA NetProfit
In IDR bn
2015
2016
2017
1H2018
Terminal services, 93%
Cargo services, 6%
Miscellaneous services, 1%
Land, building,water and
electricity, 0.2
%
93%
7%
International (Exim)
Domestic
48%
52%49%
42%
37%
42% 42%
50%
28%31% 31%
38%
0%
10%
20%
30%
40%
50%
60%
2015 2016 2017 1H2018
Gross Margin
EBITDA Margin
Net profit margin
155.8
185.6
237.0227.8
46%
43%
42%57%
0
50
100
150
200
250
0%
10%
20%
30%
40%
50%
60%
2015 2016 2017 1H2018
Equity Liability to Equity (%)
101
Research Team
Helmi Therik Head of Research [email protected]
Teuku Hendry Andrean Research Manager [email protected]
Billy Ibrahim Djaya Research Analyst [email protected]
Disclaimer : All opinions and estimates included in this report constitute our judgments as of the date of this report and are subject
to changes without notice. This information has been compiled from sources we believe to be reliable, but we do not hold ourselves
responsible for its completeness or accuracy. It is not an offer to sell or solicitation of an offer to buy any securities. Clients should
consider whether it is suitable for their particular circumstances before acting on any opinions and recommendations in this report.
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Office
PT. Shinhan Sekuritas Indonesia
Member of Indonesia Stock Exchange
Head Office :
International Finance Center 2 Floor. 30
Jl. Jendral Sudirman Kav. 22-23
Karet
Jakarta 12920 Indonesia
Telp.: (+62-21) 80869900
Fax : (+62-21) 22057925
PT Shinhan Sekuritas Indonesia
International Finance Center 2 , 30th floor
Jl. Jend. Sudirman Kav. 22-23
Jakarta 12920 - Indonesia
Phone (62 21) 8086 9900
Fax. (62 21) 2205 7925
Website www.shinhansekuritas.co.id