+ All Categories
Home > Documents > 2017 Compendium -...

2017 Compendium -...

Date post: 14-Mar-2019
Category:
Upload: hoangdung
View: 229 times
Download: 5 times
Share this document with a friend
364
1
Transcript

1

2017 Compendium

2

TABLE OF CONTENTS MARKET STRATEGY 3-104

The big picture………………………………………………………Global economy……………………………………………………Domestic economy………………………………………………

Inflation…………………………………………………………………Interest rate…………………………………………………………

5 13 25 26 30

IDR..…………………………………………………….………..…GDP growth..……………………………………….……..……Economic forecasts..…………..……………………………

Local politics…………………………………………………..…Public policies………………………………………………..……

Various policies..………..……..……………………………

313352536980

Indonesian markets…………………………………………………Indonesia equity and bond performance………………IDR sensitivity…………………………………………………………Sector performances………………………………………………4Q16F results…………………………………………………………

83848693

100

Market valuation…………………………………………………Top picks and index target…………………………………2017 technical perspective…………………………………

101 102 103

SECTOR 105-145 Overweight

Automotive……………………………………………………………Banks……………………………………………………………………Construction, Toll road & Infra-related………………Consumer Discretionary – Media…………………………Consumer Discretionary – Retail…………………………Healthcare……………………………………………………………Property…………………………………………………………………Tobacco…………………………………………………………………Tourism…………………………………………………………………Metal Mining…………………………………………………………

106 108 114 116 118 122 136 142 144 128

Neutral Cement…………………………………………………………….…Coal………………………………………………………………….…Consumer Staples…………………………………………….Industrial Estates………………………………………………

110112120124

Neutral Oil & Gas………………………………………………………..………Plantations………………………………………………..……………Shipping………………………………………………………..…………Telecommunication…………………………………………………

130132138140

Underweight Land Transportation …………………………………………Poultry…………………………………………………………………

126 134

COMPANY 147-353 Automotive related

Astra International………………………………………………Gajah Tunggal………………………………………………………Indomobil Sukses Internasional…………………………

Banks Bank Bukopin………………………………………………………Bank Central Asia…………………………………………………Bank Danamon………………………………………………………Bank Mandiri…………………………………………………………Bank Negara Indonesia…………………………………………Bank Pembangunan Daerah Jabar Banten…………Bank Pembangunan Daerah Jawa Timur……………Bank Rakyat Indonesia………………………………….……Bank Tabungan Negara…………………………………………Bank Tabungan Pensiunan Nasional……………………

Cement Holcim Indonesia…………………………………………………Indocement Tunggal Prakarsa……………………….……Semen Baturaja…………………………………………….………Semen Indonesia…………………………………………………

Coal & mining contracting Adaro Energy…………………………………………………………Indo Tambangraya Megah…………………………….……United Tractors……………………………………………………Tambang Batubara Bukit Asam……………………………

Construction & toll roads Adhi Karya……………………………………………………………Jasa Marga……………………………………………………………Pembangunan Perumahan…………………………….……Total Bangun Persada…………………………………………Waskita Karya………………………………………………………

166 206 224

168 170 172 174 176 178 180 182 184 186

216 218 300 302

150 228 336 318

152 234 284 328 342

Waskita Beton Precast………………………………………Wijaya Karya………………………………………………………Wijaya Karya Beton……………………………………………

Consumer Discretionary - MediaGlobal Mediacom………………………………………………Link Net………………………………………………………………Media Nusantara Citra………………………………………MNC Sky Vision…………………………………………………Surya Citra Media………………………………………………Visi Media Asia………………………………………………..…

Consumer Discretionary - RetailAce Hardware Indonesia…………………………….……Catur Sentosa Adiprana……………………………………Erajaya Swasembada……………………………….………Matahari Dept. Store………………………………….……Matahari Putra Prima………………………………..………Mitra Adiperkasa………………………………………………Ramayana Lestari Sentosa……………………….………Tiphone Mobile Indonesia…………………………………

Consumer - StaplesIndofood CBP Sukses Makmur…………………………Indofood Sukses Makmur…………………………….……Kino Indonesia……………………………………………..……Mayora Indah……………………………………………….……Nippon Indosari Corpindo…………………………….……Unilever Indonesia……………………………………………

Healthcare Kalbe Farma………………………………………………………Kimia Farma………………………………………………………Mitra Keluarga Karyasehat………………….……………Sido Muncul………………………………………………………

344346348

210248266274314340

148194202258260270292326

220222244262276334

238242272304

Siloam International Hospitals………………………………Tempo Scan Pacific…………………………………………………

Industrial estatesBekasi Fajar Industrial Estate…………………………………Kawasan Industri Jababeka……………………………………Lippo Cikarang………………………………………..………………Pura Delta Lestari……………………………………..……………Surya Semesta Internusa………………………………………

Land Transportation Adi Sarana Armada…………………………………………………Blue Bird……………………………………………………..…………Express Transindo Utama………………………………………

Metal mining Aneka Tambang………………………………………………………J Resources Asia Pasifik……………………………….…………Krakatau Steel…………………………………………..……………Merdeka Copper Gold………………………………………………Timah…………………………………………………………...…………Vale Indonesia…………………………………………………………

Oil & gasAKR Corporindo…………………………………………….…………Medco Energy……………………………………………….…………Perusahaan Gas Negara…………………………………………

Plantations Astra Agro Lestari……………………………………………………London Sumatra Indonesia……………………………………Salim Ivomas Pratama……………………………………………Sampoerna Agro………………………………………………………Tunas Baru Lampung………………………………………………

PoultryCharoen Pokphand Indonesia…………………....…………

306322

188240250290316

154190204

162236246268324338

156264286

164254294296332

196

Japfa Comfeed Indonesia……………………………………Malindo Feedmill…………………………………………………

Property Alam Sutera Realty……………………………………………Bumi Serpong Damai…………………………………………Ciputra Development…………………………………………Ciputra Property…………………………………………………Intiland Development…………………………………………Lippo Karawaci……………………………………………………Pakuwon Jati………………………………………………………PP Properti……………………………………………………………Summarecon Agung……………………………………………

Shipping Pelayaran Tempuran Emas………………………..………Soechi Lines……………………………………………..…………Wintermar Offshore Marine………………………….……

TelecommunicationsAnabatic Technologies…………………………………………Indosat…………………………………………………………………Sarana Menara Nusantara…………………………………Telekomunikasi Indonesia……………………….…………Tower Bersama Infrastructure………………..…………XL Axiata……………………………………………………..………

Tobacco Gudang Garam……………………………………………………Hanjaya Mandala Sampoerna………………..…………

Tourism Garuda Indonesia……………………………………………… Panorama Sentrawisata………………………………………

232 256

158 192 198 200 230 252 278 288 312

282 308 350

160 226 298 320 330 352

212 214

208 280

Published 5 December 2016

2017 Compendium

3

MARKET STRATEGY

2017 Compendium

4

This page has been left intentionally blank

2017 Compendium

5

The big picture

2017 Compendium

6

3 sources of deflation, 2012-16 The US started tapering QE in 2013 and began interest rate

normalization in December 2015. However, we believe the market priced in the highest probability of forward-rate hikes, taking the USD to its decade high.

China started to be disciplined with debt growth when Premier Xi took office in 2012. However, that discipline reversed in 4Q15.

EU and Japan QEs have produced weaker JPY and EUR against the USD, and had contributed to deflationary forces during the period. However, weakening trends of the 2 currencies have stabilized.

China debt to GDP, 2002-16F

Source:CEIC, Bahana

JCI Index vs. Commodities Index, 2009-16

140

190

240

290

340

390

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

5,500

6,000

2009 2010 2011 2012 2013 2014 2015 2016

(pts)(pts)

JCI Index (LHS) CRB Index (RHS)

Source: Bloomberg

17

25

18 16 19

22 22

4034

2629 29

2522

23

05

1015202530354045

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016F

(% of GDP)

New Bank Lending (LHS) New Non Bank Lending (LHS)

2017 Compendium

7

US post Trump The landscape goes from monetary to fiscal stimulus as president-elect

Trump’s tax and infrastructure program reverses the declining budget deficit, while accommodative monetary policy takes a back seat.

US first, others second should redistribute growth and flows towards the US. Reindustrialization and import substitution will likely reduce long-term trade account deficit expectations. Tax and repatriation rate cuts should improve the US financial/capital account.

President-elect Trump will likely need fiscal and monetary to work together for his policies to be effective. Will there be QE4.0 or some sort?

USD and US yields

2.3

100.1

70

75

80

85

90

95

100

105

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

5.5

6.0

Jan-07 Oct-07 Jul-08 Apr-09 Jan-10 Oct-10 Jul-11 Apr-12 Jan-13 Oct-13 Jul-14 Apr-15 Jan-16 Oct-16

(pts)(%)

10yr US t-bills (LHS) Dollar Index (RHS)

Source: Bloomberg, Bahana

Indonesia post Trump Fundamentals intact, as our cyclical recovery is 100% internally driven.

Jokowi will likely continue his infrastructure agenda. Commodities have outperformed in IDR terms so far.

The negative is largely monetary. Indonesia is capital deficient and post Trump, externally sourced money will likely be more expensive. ID USD 10-year yields are already about 50bps higher (in-line with the US 10-year yield movements), and the ID IDR 10-year yield is already about 100bps higher.

Risk premiums can significantly change depending on the political outlook.

Indonesia risk premium, 2007-16

-1

2

5

8

11

14

17

20

23

Jan-07 Oct-07 Jul-08 Apr-09 Jan-10 Oct-10 Jul-11 Apr-12 Jan-13 Oct-13 Jul-14 Apr-15 Jan-16 Oct-16

(%)

10yr US t-bills yield (LHS) ID to US 10yr yield spread (LHS) 10yr ID government bond yield (LHS)

Source: Bloomberg

2017 Compendium

8

0.5% - 1.0% of GDP in infrastructure push to double growth Nominal GDP USD18.6tr Growth Target (%) 1.50% 2.00% Growth Target (USDbn) 280 370 Infra Multiplier USDbn USDbn 1.0x 280 370 2.0x 140 185 3.0x 93 123 Infra Multiplier % of GDP % of GDP 1.0x 1.51 1.99 2.0x 0.75 0.99 3.0x 0.50 0.66

Source: US Department of Treasury

>70% consumption driven now…

37.3

54.8

7.9

71

36.8

-7.8-20-10

01020304050607080

C+G I X-M

(%)

4Q10 (% of GDP, LHS) 3Q16 (% of GDP, LHS)

Source: Bloomberg

Trump’s tax and infra programme is estimated at 4% of GDP

US Federal Budget 2016

18600

USD Nominal GDP USD18.6tr

Expenditure USDtr % of GDP TrumpIncome USDtr % of

GDP Trump Social

Security 1369 7.4

Individual 1,645 8.8 (2.0) Medicare & Health

1106 5.9 ---

Corporate 473 2.5 (1.3) Military 634 3.4 +++Payroll 1,112 6.0 Interest &

Debt 283 1.5 +++

Others 295 1.6 Transport 107 0.6 + 0.5Total 3,525 19.0 (3.3) Education 80 0.4 Others 532 2.9 Deficit (586) (3.2) (3.8) Total 4111 22.1 + 0.5

Source: US Department of Treasury

… external leverage still low

73

4337 37

26 2623

13

0

10

20

30

40

50

60

70

80

Malaysia Brazil Indonesia Thailand Philippines Russia India China

(%)

Source: Bloomberg

2017 Compendium

9

Jokowi’s infrastructure initiatives intact

39.2 36.4

35.8

46.9

56.0

60.8 63.6

64.2

53.1

44.0

30

35

40

45

50

55

60

65

70

2013 2014 2015 2016F 2017F

(%)

capex + region, % of govt exp (LHS) opex + others, % of govt exp (LHS)

Source: Bloomberg, Bahana estimates

Commodities just started moving up

4,086

11,500

6,985

-

2,000

4,000

6,000

8,000

10,000

12,000

14,000

1Q00

3Q00

1Q01

3Q01

1Q02

3Q02

1Q03

3Q03

1Q04

3Q04

1Q05

3Q05

1Q06

3Q06

1Q07

3Q07

1Q08

3Q08

1Q09

3Q09

1Q10

3Q10

1Q11

3Q11

1Q12

3Q12

1Q13

3Q13

1Q14

3Q14

1Q15

3Q15

1Q16

3Q16

(USDmn)

CPO + Raw Material Exports (LHS)

Source: Bloomberg

Indonesia is capital deficient Bahana Consensus in USDbn 2015 2016F 2017F 2016F 2017F

Trade

5.0

5.8

6.5

Goods

13.3

12.0

12.1

Services

(8.3)

(6.2)

(5.6)

Income

(22.7)

(24.9)

(26.5)

CA

(17.7)

(19.1)

(20.0)

% of GDP

(2.1)

(2.0)

(2.1) (2.2) (2.5)Source: Bloomberg, Bahana forecasts

Consumer confidence index vs. IDR/ 1 USD

116.8

13,568

8,000

9,000

10,000

11,000

12,000

13,000

14,000

15,000

75

85

95

105

115

125

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

(pts) (IDR/ 1USD)

BI Consumer Confidence Index (LHS) USDIDR (RHS)

Source: Bloomberg

2017 Compendium

10

Indonesia is capital deficient & illiquid Volatility in ID Bond yields, rupiah and risk assets were common in the

past decade. Any external or internal shocks resulted in a quick inverse “V” reversal.

Indonesia’s fundamentals rarely change. Being a domestic-driven economy, consumption and government spending make up 65% of Indonesia’s economy. This inherently forms a very strong base for sustainable growth.

Indonesia needs USD20-30bn in external funding per year to sustain 5.0% growth. Every 1% incremental growth requires about USD10bn, on our estimates.

Why capital deficient and illiquid?

Indonesia is small with nominal GDP at USD1.0tn.

Indonesia is young and hungry for capital.

Indonesia is still not industrialized. The country imports everything from raw materials to heavy machinery.

Indonesia 10-year USD CDS

Source: Bloomberg, Bahana

PIIGSQE TAPER

First rate hike TRUMP ???

2008 crisis

2017 Compendium

11

Overweight Cyclicals Industrial operating deleveraging as expansion was completed in 2013-

2014, when demand growth slowed. Utilization dropped below optimum levels for Auto, Cement, Ceramics.

Property sector marketing sales declined, especially the investment due to macro prudential measures. High-end properties have one of the highest import content among the consumption goods.

Retail is a fixed-cost business, with margins a reflection of shop churn, which in turn is a reflection of the economic cycle. We are at the bottom now and valuations are not demanding, in our view.

We believe that commodities are priced at breakeven levels right now. However, current conditions do not support reserve replacement or supply expansion yet, which we think is an upside for commodities. Another factor to consider is the increased volatility of the weather, affecting production.

IPR + C

Indonesia political cycles under Jokowi (JCI Forward P/E)

5

7

9

11

13

15

17

19

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

Source: Bloomberg

Source: Bloomberg

2017 Compendium

12

Auto utilization bottomed out in 2016F

68.1

111.6

50.7

65.8

40

50

60

70

80

90

100

110

120

2008 2009 2010 2011 2012 2013 2014 2015 2016F 2017F 2018F

(%)

Source: Bloomberg

Retail profit per sqm expected to recover, 2008-17F

8.4

9.1

5.1

7.6

8.1

0.5

1.2

0.6

0.9

1.1

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

4

5

6

7

8

9

10

2008 2009 2010 2011 2012 2013 2014 2015 2016F 2017F

(IDRmn)(IDRmn)

Gross Profit/sqm (LHS) Opex + Other Costs/sqm (LHS) Net Profit/sqm (RHS)

Source: Bloomberg

Property marketing sales bottomed out in 2016

6,3106,440

10,477

17,662

27,055

32,46933,815

29,857 29,426

30,920

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

2008 2009 2010 2011 2012 2013 2014 2015 2016F 2017F

(IDRbn)

Middle High (Rpbn, LHS) Premium (Rpbn, LHS)

Source: Bloomberg

Prefer Nickel, CPO, Coal, 2004-17F

(3.0)

(2.0)

(1.0)

0.0

1.0

2.0

3.0

80

82

84

86

88

90

92

94

96

98

100

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

(Mn bbl/day)(Mn bbl/day)

Surplus / (Deficit) (RHS) Supply (LHS) Demand (LHS)

Source: Bloomberg

2017 Compendium

13

Global economy

2017 Compendium

14

Indications of inflation recovery around the globe Global inflation should bottom in 2016 together with a period of low oil

and commodity prices. Interestingly, the trends for major economies are reversing, indicating possible upturn in domestic demands.

Core inflation is still firm in major economies, with a slight uptick in US data. This condition already triggered steep increases in bonds yields around the globe.

On the producer side, positive trends also have been spotted with the China PPI achieving its first positive PPI inflation since 2012. These conditions should indicate a recovery in the China economy. This condition already brings strong dollar conditions in anticipation of a steeper-than-expected US Fed rate hike.

CPI by country, January 2014 – 3Q17F

1.4

2.2

1.4

0.7

2.3

2.11.9

2014 2014 2014 2014 2014 2014 2015 2015 2015 2015 2015 2015 2016 2016 2016 2016 2016 Q1 2017 Q3 2017-1.0

-0.5

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

US EU Japan China South Korea

2017 CPI forecast

%

-0.60.5%

2.0

3.7

Source: Bloomberg

Core inflation by country, January 2014 – October 2016

2.1

0.0

0.5

1.0

1.5

2.0

2.5

3.0

Jan-14 Apr-14 Jul-14 Oct-14 Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Apr-16 Jul-16 Oct-16

US EU Japan China South Korea

(%)

1.1

2.4

0.4

0.7

1.7

Source: Bloomberg

PPI inflation by country, January 2014 – October 2016

1.2

-8.0

-6.0

-4.0

-2.0

0.0

2.0

4.0

Jan-14 Apr-14 Jul-14 Oct-14 Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Apr-16 Jul-16 Oct-16

US EU Japan China South Korea

(%)

-4.8

3.1

-1.2

-5.9

-2.1

Source: IMF, Bloomberg

2017 Compendium

15

Global trade may be leaving its low position Interestingly, May-August global trade data point to a turnaround,

recording better numbers at -5.3% y-y in volume and -3.4% y-y in value, far higher than the 2015 year-end positions of 9.2% y-y in value and -10% y-y in volume.

We see this as partly the impact of global rebalancing, which occurred in 2015-16 as the CNY depreciated while the JPY appreciated on a REER basis. We believe continued currency adjustments due to Japan’s deflation and CNY devaluation are important to bring international trade back into balance.

Outside of supply adjustments, commodity prices should be supported by continued natural currency adjustments.

Global trade value and volume, January 2006 - August 2016

-40.0

-30.0

-20.0

-10.0

0.0

10.0

20.0

30.0

40.0

Jan-07 Sep-07 May-08 Jan-09 Sep-09 May-10 Jan-11 Sep-11 May-12 Jan-13 Sep-13 May-14 Jan-15 Sep-15 May-16

(%)

Global trade value y-y Global trade volume y-y

-33.9

-18.3-10.0

2.8

30.6

0.7

Source: Bloomberg

REER of GBP, EUR, JPY and CNY, January 2011 – October 2016

94.1

91.6

82.7

121.1

114.4

60

70

80

90

100

110

120

130

Jan-12 May-12 Sep-12 Jan-13 May-13 Sep-13 Jan-14 May-14 Sep-14 Jan-15 May-15 Sep-15 Jan-16 May-16 Sep-16

(pts)

GBP EUR JPY CNY USD

Source: Bloomberg

Commodity prices (indexed), January 2012 – October 2016

40

60

80

100

120

140

160

Jan-12 May-12 Sep-12 Jan-13 May-13 Sep-13 Jan-14 May-14 Sep-14 Jan-15 May-15 Sep-15 Jan-16 May-16 Sep-16

(pts)

Brent oil Coal Nickel Copper Tin

Source: Bloomberg

2017 Compendium

16

Real sector data provide mixed signals Even though trade data looks to be bottoming, the IMF and World

Bank remain conservative on world GDP forecasts, with the IMF expecting 3.4% world GDP growth for 2017. Interestingly, the IMF has upgraded its forecasts for China and Brazil.

On PMI sentiment, some economies like Brazil, Canada, the US and China are indicating negative production sentiment and recorded higher PMIs in September.

Improving producer sentiment is likely to converge with recent PPI improvements and be positive for commodity prices.

IMF and World Bank GDP forecasts

2016F 2017F 2016F 2017F 2016F 2017F 2016F 2017F

World Output 3.1 3.4 -0.1 -0.1 2.4 2.8 -0.5 -0.3

United States 2.2 2.5 -0.2 0.0 1.9 2.2 -0.5 -0.2

Canada 1.4 2.1 -0.1 0.2 - - - -

Euro Area 1.6 1.4 0.1 -0.2 1.6 1.6 -0.1 -0.1

Germany 1.6 1.2 0.1 -0.4 - - - -

Japan 0.3 0.1 0.3 0.1 0.5 0.5 -0.8 -0.4

France 1.5 1.2 0.4 -0.1 - - - -

Italy 0.9 1.0 -0.1 -0.1 - - - -

UK 1.7 1.3 -0.2 -0.9 - - - -

Spain 2.6 2.1 0.0 -0.2 - - - -

Brazil -3.3 0.5 0.5 0.5 -4.0 -0.2 -1.5 -1.6

Mexico 2.5 2.6 0.1 0.0 2.5 2.8 -0.3 -0.2

China 6.6 6.2 0.1 0.0 6.7 6.5 0.0 0.0

India 7.4 7.4 -0.1 -0.1 7.6 7.7 -0.2 -0.2Indonesia 4.8 5.1 0.0 0.0 5.1 5.3 -0.2 -0.2

CountriesIMF World Bank Difference from

January 2016Difference from

April 2016

Source: IMF, World Bank

Producer Price Index, December 2015 - October 2016 Countries Dec-15 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16

America Brazil 144.3 154.2 153.0 153.8 153.7 153.8 Canada 109.7 110.1 110.3 109.9 110.3 - United States 191.5 192.8 191.9 191.4 192.9 193.7 Europe Italy 100.6 99.9 101.5 101.3 101.2 - France 103.0 102.0 102.1 102.1 102.2 - Germany 102.4 102.1 102.3 102.2 102.0 102.7 Eurozone 102.1 101.6 102.0 101.8 101.9 - Asia Pacific Australia 93.4 93.3 95.7 96.6 95.7 96.7 China 112.0 105.5 105.0 104.8 105.0 104.7 Japan 86.3 81.9 82.4 92.0 81.5 89.8 Indonesia 146.1 154.9 156.5 157.0 157.8 155.6 Singapore 80.3 81.3 79.6 79.6 81.3 - South Korea 99.0 99.0 98.9 99.0 99.2 99.5

Source: Bloomberg

Purchase Manager Index, December 2015 - October 2016

Countries Dec-15 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 America Brazil 45.6 43.2 46.0 45.7 46.0 46.3 Canada 45.7 51.8 51.9 51.1 50.3 51.1 United States 48.0 53.2 52.6 49.4 51.5 51.9 Europe Italy 55.6 53.5 51.2 49.8 51.0 50.9 France 51.4 48.3 48.6 48.3 49.7 51.8 Germany 53.2 54.5 53.8 53.6 54.3 55.0 Eurozone 53.2 52.8 52.0 51.7 52.6 53.5 Asia Pacific Australia 51.5 52.1 53.0 51.7 51.0 49.2 China 49.7 50.0 49.9 50.4 50.4 51.2 Japan 52.6 48.1 49.3 49.5 50.4 51.4 Indonesia 47.8 51.9 48.4 50.4 50.9 48.7 Singapore 49.5 49.6 49.3 49.8 50.1 50.0 South Korea 50.7 50.5 50.1 48.6 47.6 48.0

Source: Bloomberg

2017 Compendium

17

Major central banks, interest rates and FX Since 2014, the ECB and BoJ have continued to provide market

stimulus measures. Currently, the BoJ balance sheet is already bigger than the Fed’s. Continued monetary stimulus is expected in Japan, while the Fed looks ready to increase interest rates even though economic growth is not firm yet.

Responding to the prospects of higher global inflation next year, the US T-bills yield curve is already in a bearish steepening formation, indicating a market bet on higher Fed rates ahead.

The Bloomberg consensus currently is expecting the interest rates of major economies to stay low while FX rates of major economies like the EU, China and Japan are expected to record some modest depreciation against the USD.

Major central banks’ balance sheets, Jan 2007 – Oct 2016

6.1

23.1

8.1

-3

2

7

12

17

22

27

Feb-05 Dec-05 Oct-06 Aug-07 Jun-08 Apr-09 Feb-10 Dec-10 Oct-11 Aug-12 Jun-13 Apr-14 Feb-15 Dec-15 Oct-16

(%)

The Fed balance sheet to GDP BoJ balance sheet to GDP ECB balance sheet to GDP

Source: Bloomberg

US T-bills yield curve, November 2016

0.62

1.38

2.34

2.98

0.49

0.99

1.83

2.58

020406080100120140160180200

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

3m 6m 1yr 2yr 3yr 5yr 7yr 10yr 30yr

(RHS)(%)

Yield change (bps) 11/28/2016 10/31/2016

Source: Bloomberg

Consensus forecasts on FX and rates, 4Q16 – 4Q17

Dollar Index 99.70 100.40 100.50 99.90 99.30

Eurozone 1.08 1.07 1.07 1.08 1.08

China 6.83 6.90 6.95 6.97 7.05

Japan 115.00 115.00 116.00 116.00 117.00

10yr govt bond yield United States 2.06 2.18 2.30 2.43 2.54

Eurozone 0.17 0.10 0.07 0.10 0.07

China 2.76 2.74 2.77 2.76 2.71

Japan 0.01 -0.03 -0.06 -0.06 -0.07

4Q174Q16

Exchange Rate

1Q17 2Q17 3Q17

Source: Bloomberg

2017 Compendium

18

President Trump: Trade policy and tax changes Donald Trump’s victory in the US presidential election is causing

market uncertainty, as trade reform and tax cuts are part of his main political agenda. Some commentators in the US have said that protectionism could send the US economy into a recession.

On trade policy, Trump has mentioned a 7-point plan, which favors American business interests and could mean increased trade tariffs and a withdrawal from the TPP agreement. We expect a major impact to be felt by the top-ten US trading partners. However, if protectionism really occurs, long-term prospects of GDP growth could be lower than before.

On taxation, Trump also has said he would support corporate income tax cuts from 35% to 15%. Calculations by the Citizens for Tax Justice indicate that around a 37% share of a given tax cut would likely benefit the top 1% of the US population.

Donald Trump’s 7-point trade plan

No. Trade policy

1 US withdrawal from TPP partnership,

2 Hiring the toughest trade negotiator to serve US interests

3 Identifying US labor market unfriendly policies

4 NAFTA renegotiation

5 Take action on China currency manipulation

6 Prevent unfair trade behavior by China

7 Utilize lawful presidential power to remedy trade disputes Source: CNN

Top ten US trading partners, percentage of total

16.6

14.9

13.5

5.14.4

2.9 2.72.0 1.8 1.7

0

2

4

6

8

10

12

14

16

18

Canada China Mexico Japan Germany South korea UK France Brazil Taiwan

(%)

Source: trade.gov

Impact of potential US corporate tax cuts

1.63.6 5.1 5.9 5.3 6.9

12.7

14

8

1619

14

37

0

5

10

15

20

25

30

35

40

Lowest20%

Second20%

Middle20%

Fourth20%

Next 15% Next 4% Top 1%

(%)

Tax change, % of income Share of tax cut

Source: Citizens for Tax Justice

2017 Compendium

19

Trade agreement: The tale of TPP and RCEP Post the US presidential election, trade agreements are hot topics,

with the TPP (Trans-Pacific Partnership) and the RCEP (Regional Comprehensive Economic Partnership) at the vortex. As the new US president is expected to withdraw from the TPP, effectiveness of this trade agreement is questionable now, in our view.

On the other side, RCEP is now seen as the likely route to achieve a free-trade bloc in the Asia-Pacific.

We believe the new trade agreement is important to keep the global economy away from the low growth and low-inflation phenomenon.

Bridges and road establishments

Source: Post Western World

TPP vs. RCEP TPP RCEP

Market access for goods a. Elimination of tariff barriers with significant WTO+ commitments

a. Progressive elimination of tariff and non-tariff barriers on substantially all trade in goods

b. Elimination of non-tariff barriers b. Comprehensive and high level of tariff liberalization

c. Negotiated market access and trade Trade facilitation a. Predictable, transparent, and

expeditious customs procedures a. Facilitate trade and investment, enhance transparency in trade and investment

b. Strong and common rules of origin b. Facilitate regional and global value chains

c. Build on WTO commitments on sanitary and phytosanitary measures (SPS) and technical barriers to trade (TBT)

d. Facilitate regional value chains Services a. Fair, open and transparent markets

for services across borders, while preserving right to regulate

a. Substantially eliminate restrictions and discriminatory measures on trade in services

b. Open trade and investment in financial services, e-commerce, and telecommunications

b. Build on commitments made by RCEP members under WTO and ASEAN+1 FTAs

c. Negotiate on a negative list basis c. Negotiate on all sectors and modes of supply

d. Transparency and efficiency in temporary entry

Investment a. Liberal access for investment and legal protection for investors

a. Liberal, facilitative, competitive investment regime

b. Expeditious, fair, and transparent investor-state dispute settlement

b. Negotiate on promotion, protection, facilitation, and liberalization

Competition a. Promote competitive business environment, protect consumers, ensure level playing field

a. Promote competition, economic efficiency, consumer welfare, curtailing anti-competitive practices

b. Establishment and maintenance of competition laws and authorities, fairness, transparency, consumer protection, private rights

b. Recognize differences in capacity in RCEP on competition policy

Intellectual property a. Ensure effective and balanced intellectual property rights

a. Reduce intellectual property related barriers to trade and investment

b. Reinforce and extend WTO TRIPS b. Promote cooperation in utilization, protection, and enforcement of intellectual property rights

c. Cover trademarks, geographical indications, copyrights, patents, trade secrets, data exclusivity

d. Cover intellectual property enforcement, genetic resources, and traditional knowledge

Source: Pacific Economic Cooperation Council

2017 Compendium

20

China economy: Stabilization indicated On the China side, there have been signs of stabilization as the PPI

has stabilized and nominal GDP has stopped decelerating since 2015, rising by 7.4% y-y in 3Q16. This is apparently related to China becoming looser on lending.

Improvement has also been seen in the PMI, with the non-manufacturing PMI rising to 55.6 in October and the manufacturing PMI at 51.3.

We believe the risk for China is likely to come from the external side, as foreign reserves continue to be drained due to capital outflows, as well as a possible negative impact from US protectionism under the new presidency.

China nominal GDP growth y-y, January 2007 - September 2016

19.6

6.4

7.4

5

7

9

11

13

15

17

19

21

Mar

-10

Jun-

10Se

p-10

Dec-1

0M

ar-1

1Ju

n-11

Sep-

11De

c-11

Mar

-12

Jun-

12Se

p-12

Dec-1

2M

ar-1

3Ju

n-13

Sep-

13De

c-13

Mar

-14

Jun-

14Se

p-14

Dec-1

4M

ar-1

5Ju

n-15

Sep-

15De

c-15

Mar

-16

Jun-

16Se

p-16

(%)

Source: Bloomberg

China foreign reserves, September 2012 – September 2016

3,993

3,166

3,000

3,200

3,400

3,600

3,800

4,000

4,200

Sep-

12

Dec-1

2

Mar

-13

Jun-

13

Sep-

13

Dec-1

3

Mar

-14

Jun-

14

Sep-

14

Dec-1

4

Mar

-15

Jun-

15

Sep-

15

Dec-1

5

Mar

-16

Jun-

16

Sep-

16

(USDbn)

Source: Bloomberg

China PMI, January 2013 – October 2016

51.7

51.2

52.7

54.0

52.0

53.0

54.0

55.0

56.0

57.0

48.5

49.0

49.5

50.0

50.5

51.0

51.5

52.0

Jan-

13

Apr-1

3

Jul-1

3

Oct-1

3

Jan-

14

Apr-1

4

Jul-1

4

Oct-1

4

Jan-

15

Apr-1

5

Jul-1

5

Oct-1

5

Jan-

16

Apr-1

6

Jul-1

6

Oct-1

6

(pts)(pts)

China manufacturing PMI (RHS) China non-manufacturing PMI(LHS)

Source: Bloomberg

2017 Compendium

21

EU economy: Pricing the Brexit impact Currently, the market is expecting some volatility as Brexit is likely to

lower the long-term growth prospects of the EU economy, especially the UK. Interestingly, the UK has continued to grow higher.

On the monetary side, the ECB recently stated that it is likely to increase monetary stimulus until June 2017 due to the election of Donald Trump.

This is fairly understandable, as the EU inflation expectation is still falling, with the 2018 number currently 1.5%, dropping from 1.6% in the July survey.

Growth comparison in some EU economies, 1Q16 – 3Q16

1.91.5 1.4

1.2

-0.9

2.1

3.1

1.3

1.9

-0.4

2.3

1.51.1

2.4

1.2

-1.5

-1.0

-0.5

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

UK Germany France Netherlands Greece

(%)

1Q16 2Q16 3Q16

Source: Bloomberg

EU unemployment and labor costs, January 2012 - October 2016

2.3

0.71.0

12.1

10.0

9.6

10.1

10.6

11.1

11.6

12.1

12.6

0.50.70.91.11.31.51.71.92.12.32.5

Jan-

12Ap

r-12

Jul-1

2Oc

t-12

Jan-

13Ap

r-13

Jul-1

3Oc

t-13

Jan-

14Ap

r-14

Jul-1

4Oc

t-14

Jan-

15Ap

r-15

Jul-1

5Oc

t-15

Jan-

16Ap

r-16

Jul-1

6Oc

t-16

(%)(%)

Labor cost, y-y (LHS) Unemployment rate (RHS)

Source: Bloomberg

EU inflation expectations, January 2016 – October 2016

1.5

1.3

1.7

1.5

1.2

1.3

1.4

1.5

1.6

1.7

1.8

Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16

(%)

EU 2017 inflation expectation EU 2018 inflation expectation

Source: Bloomberg

2017 Compendium

22

US economy: Inflation up, questionable growth Even though the Fed is planning to increase interest rates, real sector

data is pointing to a possible slowdown as the 6-month average for the US non-farm payrolls decelerated in 3Q16 and investment growth has recorded a negative number.

On the inflation side, we are seeing inflationary pressure still in the making as average hourly earnings continued to rise by 2.7% y-y in September, the highest since 2011.

On the commodity side, our sensitivity analysis indicates that assuming the Brent oil price stays at USD50/bbl, US inflation could rise as high as 2.5% in 2017.

US private consumption and investment, 2012-16

13.4

-6.6-7.9

3.1

0.8

4.6

2.1

0.00.51.01.52.02.53.03.54.04.55.0

-10

-5

0

5

10

15

Mar

-12

Jun-

12

Sep-

12

Dec-

12

Mar

-13

Jun-

13

Sep-

13

Dec-

13

Mar

-14

Jun-

14

Sep-

14

Dec-

14

Mar

-15

Jun-

15

Sep-

15

Dec-

15

Mar

-16

Jun-

16

Sep-

16

(%)(%)

Private consumption growth, y-y Private investment growth, y-y

Source: Bloomberg

US non-farm payroll and average hourly earnings, Jun 13-Oct 16

331

161

2.8

1.6

1.8

2.0

2.2

2.4

2.6

2.8

3.0

0

50

100

150

200

250

300

350

Jun-

13

Aug-

13

Oct

-13

Dec-

13

Feb-

14

Apr-1

4

Jun-

14

Aug-

14

Oct

-14

Dec-

14

Feb-

15

Apr-1

5

Jun-

15

Aug-

15

Oct

-15

Dec-

15

Feb-

16

Apr-1

6

Jun-

16

Aug-

16

Oct

-16

(%)('000)

US non-farm payroll change, m-m (LHS) Average hourly earnings, y-y (RHS)

Source: Bloomberg

Fed economic expectations, 2016F-2018F 2016F 2017F 2018F Longer run

Change real GDP (%) 1.7-1.9 1.9-2.2 1.8-2.1 1.7-2.0 June projection 1.9-2.0 1.9-2.2 1.8-2.1 1.8-2.0 March projection 2.1-2.3 2.0-2.3 1.8-2.1 1.8-2.1 Unemployement rate (%) 4.7.-4.9 4.5-4.7 4.4-4.7 4.7-5.0 June projection 4.6-4.8 4.5-4.7 4.4-4.8 4.7-5.0 March projection 4.6-4.8 4.5-4.7 4.5-5.0 4.7-5.0 PCE inflation (%) 1.2-1.4 1.7-1.9 1.8-2.0 2.0 June projection 1.3-1.7 1.7-2.0 1.9-2.0 2.0 March projection 1.0-1.6 1.7-2.0 1.9-2.0 2.0 Core PCE inflation (%) 1.6-1.8 1.7-1.9 1.8-2.0 - June projection 1.6-1.8 1.7-2.0 1.9-2.0 - March projection 1.4-1.7 1.7-2.0 1.9-2.0 - Fed funds rate (%) 0.6-0.9 1.1-1.8 1.9-2.8 2.8-3.0 June projection 0.6-0.9 1.4-1.9 2.1-2.9 3.0-3.3 March projection 0.9-1.4 1.6-2.4 2.5-3.3 3.0-3.5

Source: Bloomberg

2017 Compendium

23

Japan: Struggling with deflation Among the major economies, only Japan has not shown a significant

increase in inflationary pressure, even though commodity prices have been going up. Recently, Japan also shifted its monetary policy to a yield curve, targeting to make sure longer-term interest rates are not too far from zero.

On the trade side, continued monetary stimulus measures are not bringing back export growth.

On the debt side, in the past year, the country’s foreign debt has only marginally improved, with Malaysia’s numbers increasing the most.

Japan inflation and core inflation, January 2012 – October 2016

-0.50.0

-2

-1

0

1

2

3

4

Jan-

12

Apr-1

2

Jul-1

2

Oct-1

2

Jan-

13

Apr-1

3

Jul-1

3

Oct-1

3

Jan-

14

Apr-1

4

Jul-1

4

Oct-1

4

Jan-

15

Apr-1

5

Jul-1

5

Oct-1

5

Jan-

16

Apr-1

6

Jul-1

6

Oct-1

6

(%)

Japan inflation y-y Japan core inflation y-y

Source: Bloomberg

Japan export and import growth, January 2016 – October 2016

16.9

-10.3

-16.5

-30

-20

-10

0

10

20

30

Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 Oct-14 Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Apr-16 Jul-16 Oct-16

(%)

Japan export growth, y-y Japan import growth, y-y

26.3

-14.4

Source: Bloomberg

10-yr Japanese gov’t bond yield, January 2016 – November 2016

0.27

-0.29

0.00 -0.04

-0.4

-0.3

-0.2

-0.1

0.1

0.2

0.3

Jan-16 Mar-16 May-16 Jul-16 Sep-16 Nov-16

(%)

Source: Bloomberg

2017 Compendium

24

This page has been left intentionally blank

2017 Compendium

25

Domestic economy

2017 Compendium

26

3.1

2005- 2007 average: 7.4

2008-2010 average: 6.0

2011-2014 average: 4.3 2015-2016ytd

average: 4.4

2

3

4

5

6

7

8

9

10

11

Jan-05 Nov-05 Sep-06 Jul-07 May-08 Mar-09 Jan-10 Nov-10 Sep-11 Jul-12 May-13 Mar-14 Jan-15 Nov-15 Sep-16

(%)

Inflation: Entering a low inflation regime Indonesia’s inflation is a supply phenomenon with volatile

components taking part in determining inflation. Interestingly, the average core inflation is declining, especially following low commodity prices and muted growth.

For the volatile inflation components, improvements are also spotted. Recent government moves to stabilize staple prices and encourage more assertive anti-trust committee (KPPU) should lower inflation prospects.

Responding to the situation, Bank Indonesia has already lowered its inflation target to 3.5% for 2018, opening room for lower benchmark interest rates in 2017, in our view. We are expecting 2017 year-end inflation to be at 3.8%. The main risk for inflation next year is the prospect of higher fuel prices. Every 10% increase in the fuel price is likely to lift inflation by 0.7%, on our estimates.

Indonesia’s core inflation, January 2005 – November 2016

Source: Statistics Agency

Indonesia’s volatile component, January 2005 – November 2016

6.5

9.1

2005-2007 average: 13.5

2008-2010 average: 11.6

2011-2014average: 9.5

2015-2016ytdaverage: 7.2

0

5

10

15

20

25

Jan-

05Ap

r-05

Jul-0

5Oc

t-05

Jan-

06Ap

r-06

Jul-0

6Oc

t-06

Jan-

07Ap

r-07

Jul-0

7Oc

t-07

Jan-

08Ap

r-08

Jul-0

8Oc

t-08

Jan-

09Ap

r-09

Jul-0

9Oc

t-09

Jan-

10Ap

r-10

Jul-1

0Oc

t-10

Jan-

11Ap

r-11

Jul-1

1Oc

t-11

Jan-

12Ap

r-12

Jul-1

2Oc

t-12

Jan-

13Ap

r-13

Jul-1

3Oc

t-13

Jan-

14Ap

r-14

Jul-1

4Oc

t-14

Jan-

15Ap

r-15

Jul-1

5Oc

t-15

Jan-

16Ap

r-16

Jul-1

6Oc

t-16

(%)

Source: Statistics Agency

BI’s inflation target, 2005 – 2020F

8

6

54.5

54.5

43.5

3

4

5

6

7

8

9

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

(%)

Source: Bank Indonesia

2017 Compendium

27

Inflation: Reasonable price controls from government Food inflation is still the main driver of Indonesia’s inflation. The data

indicated that prices for spices, fats and oils are the main problems.

On the supply side, the government continues to pursue a levelled playing field in the industry. The anti-trust committee (KPPU) has already punished some unfair business practices such as price fixing to maintain supply side and lower the inflation prospect.

Currently, the KPPU is engaged in some price-fixing cases, such as cattle imports, Telkom Indihome, Scuter Matic and logistic company cases.

Main components in food inflation

2011-2016 Coeff of

variationMax (%, y-y) Min (%, y-y) Average (%, y-y)

Spices 2.91 78.92 -37.42 9.67 Fats and oils 1.37 15.23 -3.69 3.54 Beans and nuts 0.61 13.75 1.56 7.16 Meats 0.57 19.94 -2.49 7.21 Fruits 0.56 24.09 4.43 9.90 Vegetables 0.51 24.02 1.42 10.68 Cereals, cassavas 0.47 16.67 2.16 8.16 Fresh fish 0.39 15.41 2.65 7.89 Foods 0.39 15.51 1.78 7.71 Eggs, milk 0.35 10.56 1.94 6.17 Preserved fish 0.26 12.74 5.16 8.35 Others 0.21 9.01 3.83 6.45 Source: CEIC, Bahana

Recent case solved by the KPPU No. Case Type Status 1 Chicken cartel Price fixing Fined. CPIN @IDR25bn, JPFA

@IDR25bn, MAIN @IDR11bn, industry @IDR120bn

2 Onion price cartel Price fixing Fined @IDR922mn 3 Short message

service Price fixing Fined. EXCL @IDR25bn, Telkomsel

@IDR25bn, TLKM @IDR18bn, BTEL @IDR4bn, Mobile-8 @IDR5bn

4 Feedlot cartel Price fixing Fined. Industry @IDR107bn 5 EXCL and ISAT Price fixing Ongoing 6 Telkom Indihome Product

bundling Ongoing

7 Cattle import Price fixing Ongoing 8 Scuter Matic Price fixing Ongoing 9 Logistic company Price fixing Ongoing

Source: Detik, Tempo

Indonesia’s food inflation, June 2014 – November 2016

Average = 6.9

8.5

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

10.0

11.0

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

(%)

Source: Bloomberg

2017 Compendium

28

Inflation: IDR and fuel prices In the past 5 years, the main components of volatile inflation were

spices at 9.67% y-y average and vegetables at 10.7% y-y. To tackle inflation fluctuations, the government has already conducted price controls policy, especially for basic necessities such as cooking oil and beef.

In the last 2 years, core inflation had a strong correlation towards IDR movements, with stronger IDR causing lower core inflation.

Historically, the fuel price has been the number one factor for high inflation in the last 10 years. Our sensitivity analysis finds that every 10% increase in fuel price should add 0.7% m-m higher inflation. Recent higher oil prices could be a threat if the IDR/1USD were to reach 14,000 and Brent oil price above USD70/bbl.

Fuel price and Brent oil price, January 2006 – November 2016

4,500

6,500

6,550

3,997

3,966 4,282

2,200

3,200

4,200

5,200

6,200

7,200

8,200

9,200

Jan-

06Ap

r-06

Jul-0

6Oc

t-06

Jan-

07Ap

r-07

Jul-0

7Oc

t-07

Jan-

08Ap

r-08

Jul-0

8Oc

t-08

Jan-

09Ap

r-09

Jul-0

9Oc

t-09

Jan-

10Ap

r-10

Jul-1

0Oc

t-10

Jan-

11Ap

r-11

Jul-1

1Oc

t-11

Jan-

12Ap

r-12

Jul-1

2Oc

t-12

Jan-

13Ap

r-13

Jul-1

3Oc

t-13

Jan-

14Ap

r-14

Jul-1

4Oc

t-14

Jan-

15Ap

r-15

Jul-1

5Oc

t-15

Jan-

16Ap

r-16

Jul-1

6Oc

t-16

(IDR/liter)

RON-88 (RHS) Brent oil price (LHS)

Source: Bloomberg, Bahana

IDR movements and core inflation, July 2014 –November 2016

4.9

3.5

3.2

3.1

2.9

21.1

13.5

-1.9

-10.9

-5.8

-13

-8

-3

2

7

12

17

22

2.3

2.8

3.3

3.8

4.3

4.8

5.3

Jul-14 Sep-14 Nov-14 Jan-15 Mar-15 May-15 Jul-15 Sep-15 Nov-15 Jan-16 Mar-16 May-16 Jul-16 Sep-16 Nov-16

(%)(%)

Core inflation (LHS) IDR/1USD y-y (RHS)

Source: Bloomberg, Statistics Agency

Fuel prices shock and inflation, January 2007 – November 2016

33.3

44.4

30.8

-21.2

-30

-20

-10

0

10

20

30

40

50

-1.0

-0.5

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

Jan-

07Ap

r-07

Jul-0

7O

ct-0

7Ja

n-08

Apr-

08Ju

l-08

Oct

-08

Jan-

09Ap

r-09

Jul-0

9O

ct-0

9Ja

n-10

Apr-

10Ju

l-10

Oct

-10

Jan-

11Ap

r-11

Jul-1

1O

ct-1

1Ja

n-12

Apr-

12Ju

l-12

Oct

-12

Jan-

13Ap

r-13

Jul-1

3O

ct-1

3Ja

n-14

Apr-

14Ju

l-14

Oct

-14

Jan-

15Ap

r-15

Jul-1

5O

ct-1

5Ja

n-16

Apr-

16Ju

l-16

Oct

-16

(%)(%)

Inflation m-m (LHS) Fuel price change m-m (RHS)

Fuel price hike at the time of USD120/bbl oil prices

Fuel price hike due to fiscal deficit and CAD problem

Fuel price cut due to low oil price

Source: CEIC, Bahana

2017 Compendium

29

Inflation: Infrastructure development to support low inflation Recent news indicated that Jokowi’s actions in sea-toll projects already

lowered poultry and cement prices in Papua, allowing for less inefficiencies and inflation disparities among nations. October inflation data indicated that most of the eastern cities are experiencing deflation as infrastructure development started to kick in.

The Infrastructure performance index comparison shows the relation between better infrastructure development and lower average inflation. Hence, we believe that Jokowi’s actions on infrastructure development should help lower inflation prospects in Indonesia.

We expect the current ongoing trans-Sumatera toll road, light rail transit, SHIA express railway to provide room for lower transportation costs for the economy going forward.

Eastern Indonesia cities experiencing deflation No. Region City October m-m inflation (%)

1 Bali Singaraja -0.32 2 Bali Denpasar -0.19 3 Central Kalimantan Sampit -0.63 4 Central Kalimantan Palangkaraya -0.34 5 Central Sulawesi Palu -0.95 6 East Kalimantan Samarinda -0.10 7 East Kalimantan Balikpapan -0.07 8 East Nusa Tenggara Tanjung -1.08 9 Gorontalo Gorontalo -0.42

10 Maluku Ternate -0.21 11 Papua Jayapura -0.09 12 Papua Merauke -0.02 13 South Kalimantan Banjarmasin -0.26 14 South Sulawesi Watampone -0.42 15 South Sulawesi Palopo -0.20 16 West Kalimantan Singkawang -0.40 17 West Kalimantan Pontianak -0.36 18 West Nusa Tenggara Bima -0.46 19 West Papua Sorong -1.10 20 West Papua Manokwari -0.82 21 West Sulawesi Mamuju -0.17

Source: CEIC, Bahana

Infrastructure performance index and 5yr inflation average

Indonesia

Malaysia

Thailand

The PhilippinesSingapore

Taiwan

China

Thailand

India

0.0

1.0

2.0

3.0

4.0

5.0

6.0

2.3 2.8 3.3 3.8 4.3

Infla

tion

5yr

aver

age

Infrastructure performance index

(%)

(pts)

Source: CEIC, World Bank

Ongoing Indonesia’s infrastructure project

Source: Economic Affairs Ministry

2017 Compendium

30

Interest rate: rising global yields limiting BI move Since the beginning of 2016, Bank Indonesia has continued to pursue

monetary policy easing. At this point, the recent increase in US t-bill yields should limit the room for BI to cut interest rates, even though the domestic cycle fully supports the loosening cycle.

Lessons from the past, during the 2005 US tightening cycle, Indonesia was able to cut interest rates once inflation declined in 2006, even though the US Fed rate was still high.

At this point, we carefully see some room for Bank Indonesia to resume interest rate cuts in 2Q17 with a total 50bps rate cut in 2017. The room for monetary easing is largely dependent on financial market stability post the potential Fed-rate hike and the new US administration announcing their economic policy.

BI policy rate and Fed fund rates, July 2005 – December 2008

12.75

9.5

9.0

5.25

0.25

0

1

2

3

4

5

6

6

7

8

9

10

11

12

13

Jul-05 Dec-05 May-06 Oct-06 Mar-07 Aug-07 Jan-08 Jun-08 Nov-08

(%)(%)

BI Rate (LHS) Fed Fund Rate (RHS)

Source: Bloomberg, Bahana

Indonesia interest rate, September 2015-December 2017F

171bps

4.3

5.50

-200

-100

0

100

200

300

400

500

4

5

5

6

6

7

7

8

8

Jan-

11M

ar-1

1M

ay-1

1Ju

l-11

Sep-

11No

v-11

Jan-

12M

ar-1

2M

ay-1

2Ju

l-12

Sep-

12No

v-12

Jan-

13M

ar-1

3M

ay-1

3Ju

l-13

Sep-

13No

v-13

Jan-

14M

ar-1

4M

ay-1

4Ju

l-14

Sep-

14No

v-14

Jan-

15M

ar-1

5M

ay-1

5Ju

l-15

Sep-

15No

v-15

Jan-

16M

ar-1

6M

ay-1

6Ju

l-16

Sep-

16No

v-16

Jan-

17Fe

b-17

Apr-1

7Ju

n-17

Aug-

17Oc

t-17

(bps)(%)

Real interest rate (RHS) 7D reverse repo rate (LHS) BI rate (LHS)

5yr averarge real interest rate : 139bps

Source: Bloomberg, Bahana estimates

Real yield comparison, 2010 vs. 2016 ytd

4.02

0.41

-4

-2

0

2

4

6

8

10

12

Jan-

10

Apr-

10

Jul-1

0

Oct

-10

Jan-

11

Apr-

11

Jul-1

1

Oct

-11

Jan-

12

Apr-

12

Jul-1

2

Oct

-12

Jan-

13

Apr-

13

Jul-1

3

Oct

-13

Jan-

14

Apr-

14

Jul-1

4

Oct

-14

Jan-

15

Apr-

15

Jul-1

5

Oct

-15

Jan-

16

Apr-

16

(%)

Real interest rate difference Indonesia real interest rate US real interest rate

Source: Bloomberg, Statistics Indonesia, Bank Indonesia

2017 Compendium

31

IDR: Bold fundamentals meet strong dollar Recently, the phenomena of strong Dollar already made the IDR and

other emerging currencies retreat from their high positions.

Our model indicates that the rise in US t-bill yields regarding US inflation expectations already limits room for IDR appreciation.

At this stage of the cycle, regarding US tightening, we recently toned down our IDR/1USD expectations to 13,500. In a more bullish case, if the Dollar index were to end its rally, the IDR could appreciate to 13,000 by 2017 year-end.

Dollar Index and IDR/1USD, October 2004 – November 2016

8,000

9,000

10,000

11,000

12,000

13,000

14,000

15,000

70

75

80

85

90

95

100

105

110

Oct-04 Jan-06 Apr-07 Jul-08 Oct-09 Jan-11 Apr-12 Jul-13 Oct-14 Jan-16

(pts)(pts)

Dollar Index (LHS) USDIDR (RHS)

Source: Bloomberg, Bahana

Covered interest rate parity model and IDR/1USD forecast

14,411

13,500

13,600

14,280

12,920

8,000

9,000

10,000

11,000

12,000

13,000

14,000

15,000

Jan-

12

Apr-

12

Jul-1

2

Oct

-12

Jan-

13

Apr-

13

Jul-1

3

Oct

-13

Jan-

14

Apr-

14

Jul-1

4

Oct

-14

Jan-

15

Apr-

15

Jul-1

5

Oct

-15

Jan-

16

Apr-

16

Jul-1

6

Oct

-16

Jan-

17

Apr-

17

Jul-1

7

Oct

-17

(pts)

IDR/1USD Expected trading band

Source: Bloomberg, Bahana estimates

IDR/1USD forecast, 1Q15 – 4Q17F

13000

1420014,411

13,50013,500

12,300

12,800

13,300

13,800

14,300

14,800

1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17

(pts)

Bull case Bear case Base case

Source: Bloomberg, Bahana estimates

2017 Compendium

32

IDR: Supported by high FX reserves October FX reserves stood at USD115.0bn (September 2016:

USD115.7bn) supported by FX receipts, as well as the withdrawal of government loans, which outweighed the use of foreign exchange among others for repayment of government external debt and Bank Indonesia FX bills, which matured during the period.

In comparison with its peers, Indonesia’s FX reserves to short-term debt ratio is still higher than peers at 53.7%, but still below Malaysia’s at 85.7%.

On the sustainability of foreign payments, declining imports and debt payments have lifted the foreign-reserve-to-imports ratio to 10.4x months.

FX Reserves, June 2012 – Oct 2016

112.8

92.7

115.5115.0

90

95

100

105

110

115

120

Jun-12 Oct-12 Feb-13 Jun-13 Oct-13 Feb-14 Jun-14 Oct-14 Feb-15 Jun-15 Oct-15 Feb-16 Jun-16 Oct-16

(%)

Source: Bank Indonesia

Foreign reserves to short-term debt ratio, Mar 2009 – Sep 2016

89.9 88.185.4

51.7 52.7 53.7

0

10

20

30

40

50

60

70

80

90

100

Mar-16 Jun-16 Sep-16

(%)

Malaysia Thailand India Korea Taiwan Indonesia

Source: Bloomberg, World Bank

Foreign-reserves-to-imports ratio, Jan 2009 – Oct 2016

4.85

5.83

9.67

4

5

6

7

8

9

10

11

Jan-

09M

ay-0

9Se

p-09

Jan-

10M

ay-1

0Se

p-10

Jan-

11M

ay-1

1Se

p-11

Jan-

12M

ay-1

2Se

p-12

Jan-

13M

ay-1

3Se

p-13

Jan-

14M

ay-1

4Se

p-14

Jan-

15M

ay-1

5Se

p-15

Jan-

16M

ay-1

6Se

p-16

(month)

Average: 7.63

Source: Bank Indonesia, Statistics Agency, Bahana

2017 Compendium

33

GDP growth: Rate, IDR and commodity We find that the interest rate is a leading indicator of change in GDP

growth with an effective transmission period of around 2 quarters. Our findings reveal that every 1% lower interest rate is likely to add 0.31% to GDP growth in the next two quarters.

On the local currency, every 10% IDR appreciation would add around 0.4% to GDP growth.

On commodities, 10% higher coal, CPO and oil prices from current levels would lift Indonesia’s potential GDP growth to 5.5% in 2017, on our estimates.

JIBOR overnight and GDP growth, 3Q12 – 4Q17F

5.9

5.0

4.7

5.2

6.3

4.6

5.2

3.3

3.8

4.3

4.8

5.3

5.8

6.3

6.8

4.5

4.7

4.9

5.1

5.3

5.5

5.7

5.9

6.1

3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17

(%)(%)

GDP growth (LHS) JIBOR ON, two quarter advanced (RHS)

Source: Bloomberg, Bahana estimates

Change in IDR value and GDP growth, 1Q11 – 3Q16

-5.8

10.5

22.3

17.8

1.4

-5.8

6.5

5.9

5.6

5.0

4.7

5.25.0

-10

-5

0

5

10

15

20

25

4.5

5.0

5.5

6.0

6.5

1Q11

2Q11

3Q11

4Q11

1Q12

2Q12

3Q12

4Q12

1Q13

2Q13

3Q13

4Q13

1Q14

2Q14

3Q14

4Q14

1Q15

2Q15

3Q15

4Q15

1Q16

2Q16

3Q16

(%)(%)

IDR/1USD y-y (RHS) GDP growth (LHS)

Source: Bloomberg

GDP growth support from commodity channel

Potential

growth added for every 10% price increase

(%)

Price changes

-10% -5% 0% 5% 10%Coal (USD/Mt) 0.038 58 61 64 67 70 CPO (USD/Mt) 0.029 533 563 592 622 652

Oil (USD/bbl) 0.039 42 45 47 50 52

2016 Potential output growth (%) 5.04 5.10 5.15 5.20 5.31

2017 Potential output growth (%) 5.24 5.30 5.35 5.40 5.51 Source: Bahana estimates and forecasts

2017 Compendium

34

GDP growth: Becoming better insulated Indonesia’s 3Q16 GDP growth reached 5.02% y-y (2Q16: 5.19%),

with consumption expenditure firm at 5.01% y-y (2Q16: 5.06% y-y). GDP growth is likely to recover in 4Q16 due to higher government expenditure levels.

Interestingly, this time, Indonesia could grow without support from the trade sector as trade openness dropped to 40.5% in 3Q16. Trade openness is calculated as [(exports + imports)/GDP].

Some risks are coming from possible government spending cuts. However, we remain sanguine with our 5.1% GDP growth target in 2016 and 5.3% in 2017 as Indonesia’s investment is back to its up-cycle level on the back of low interest rates and lower ICOR. The main risk for Indonesia’s GDP growth would be an unexpected tightening path in the US economy.

GDP growth composition, 2Q16-3Q16

5.06 6.23

5.06

(2.42) (2.93)

5.01

(2.97)

4.06

(6.00)

(3.87)

-8.0

-6.0

-4.0

-2.0

0.0

2.0

4.0

6.0

8.0

Consumption Govt Expenditure Investment Export Import

(%)

2Q16 3Q16

Source: Statistics Agency, Bahana

Trade openness and GDP growth, 1Q11 - 3Q16

5.04

39.0

41.0

43.0

45.0

47.0

49.0

51.0

53.0

3.5

4.0

4.5

5.0

5.5

6.0

6.5

1Q12

2Q12

3Q12

4Q12

1Q13

2Q13

3Q13

4Q13

1Q14

2Q14

3Q14

4Q14

1Q15

2Q15

3Q15

4Q15

1Q16

2Q16

3Q16

(%)(%)

Economic openness (RHS) Annualized GDP growth (LHS)

Source: Bloomberg, Bahana

Trend in investments y-y and ICOR, 1Q12 - 3Q16

9.2

3.9

5.6

6.8

6.1

5.0

5.2

5.4

5.6

5.8

6.0

6.2

6.4

6.6

6.8

7.03.5

4.5

5.5

6.5

7.5

8.5

9.5

10.5

1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16

(%)(%)

Annualized investment growth (LHS) Incremental Capital to Output Ratio (Reversed, RHS)

Source: Bloomberg, Bahana

2017 Compendium

35

PMI: Changing sentiment on the ground Industry wise, the Indonesian economy has continued to record

strong growth in financial services, construction and utilities.

In 2015, pressure from IDR depreciation and weak global demand are pushing PMIs to a weakening trend, especially on continued lower new orders, lower backlog of works, and pressure on input prices.

Sentiment is changing in 2016 as inflation has eased and IDR stability improved. The sentiment on new orders, moderating price levels and a slight recovery in employment should support a better PMI reading ahead. Interestingly, October PMI dropped mildly as some indicators showed a lower trend.

GDP growth by industry, 4Q15 - 3Q16 Industry 4Q15 1Q16 2Q16 3Q16 Agriculture, Livestock, Forestry & Fisheries 1.57 1.77 3.35 2.81 Mining and Quarrying -7.9 -0.8 -0.1 0.1 Manufacturing Industries 4.4 4.6 4.6 4.6 Electricity, Gas and Water Supplies 1.8 7.5 6.2 4.9 Water Supply, Waste Treatment & Recycle 6.8 4.8 3.3 1.7 Construction 8.2 7.9 6.2 5.7 Major Trade & Retail 2.8 4.1 4.1 3.7 Transportation and Communications 7.7 7.9 6.9 8.2 Supplies of accommodation, F & B 5.8 5.6 4.9 4.6 Information and Communication 9.7 8.1 9.8 9.2 Insurance and Financial Service 12.5 9.3 13.6 8.8 Real Estate 4.3 4.9 4.5 3.7 Company Services 8.1 8.1 7.6 7.0 Govt Adm, Defense, Social Security 6.7 4.5 4.4 3.8 Education Services 5.3 5.4 5.1 1.9 Health and Social Services 7.4 8.6 6.5 4.2 Other Services 8.2 7.9 7.9 7.7

Source: Statistics Agency, Bahana

Sentiment affecting Indonesia’s PMI, September 2015 – November 2016 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16

Overall conditionsOutput New Orders New Export Orders - - - - - Backlog of Work - - - - - -Output Prices - Input Prices Suppliers’ Delivery Times - - - - - - - - -Stocks of Finished Goods - - -Quantity of Purchases - - - - - Stocks of Purchases - - - - - -EmploymentScale : Steep drop Mild drop No change Mild increase Steep increase Source: Markit Economics, Bahana

2017 Compendium

36

Trade balance: Supported by lower import prices Until September 2016, the import price index dropped faster at -

15.1% y-y than the export price index, supported by global low inflation and a recovery in commodity prices.

For the terms of trade, Indonesia’s ratio of export to import price is improving to 32.4% in 2Q16, from 20% in 1Q13, indicating positive improvement in trade balance is likely ahead .

Indonesia’s number one export commodity is fixed vegetable oils/fats, while its highest import commodity is petroleum products.

Indonesia’s export and import price index, Jan 2012 – Oct 2016

8.0

-20.0

-13.7

-10.0

-17.5

22.8

-7.9

-30

-20

-10

0

10

20

30

Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 Oct-14 Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Apr-16 Jul-16 Oct-16

(%)

Import price inflation, y-y Export price inflation, y-y

-7.6

Source: CEIC, Bahana

Indonesia’s term of trade, Jan 2011 – Aug 2016

18.3

31.8

15

20

25

30

35

40

Jan-

11

Apr-

11

Jul-1

1

Oct

-11

Jan-

12

Apr-

12

Jul-1

2

Oct

-12

Jan-

13

Apr-

13

Jul-1

3

Oct

-13

Jan-

14

Apr-

14

Jul-1

4

Oct

-14

Jan-

15

Apr-

15

Jul-1

5

Oct

-15

Jan-

16

Apr-

16

Jul-1

6

(%)

Source: CEIC, Bahana

Indonesia’s major export and import product, ytd Export products Ytd (USDmn) %, y-y Import products Ytd (USDmn) %, y-yFixed Vegetable Oils/fats 8,583 -19.9 Petroleum and Petroleum Products 9,350 -34.4Coal, Coke, and Briquettes 7,482 -24.9 General Industrial Machinery and Equipments 4,825 -8.9Miscellaneous Manufactured Articles 4,511 22.2 Electrical Machinery and Apparatus 4,700 -0.2Clothing 4,344 -3.0 Iron and Steel 3,834 -13.6Gas, Natural and Manufactured 3,914 -37.9 Machinery Specialized for Particular Industry 3,480 -4.8Petroleum and Petroleum Products 3,662 -28.8 Textile Yarns, Fabrics, and Their Products 3,474 4.8Road Vehicles 3,155 0.5 Telecommunication and Reproducers Apparatus 3,040 -13.5Electrical Machinery and Apparatus 3,056 -6.7 Road Vehicles 2,985 -11.8Footwear 2,670 1.8 Organic Chemicals 2,668 -18.0Organic Chemicals 2,489 35.0 Plastics In Primary Forms 2,658 -5.7Metalliferous Ores and Metal Scraps 2,486 -19.2 Cereals and Cereal Preparations 2,220 17.9Textile Yarns, Fabrics, and Their Products 2,434 -8.9 Power Generating Machine and Equipments 1,959 -14.0Fish, Crustaceans, Molluscs and Their Preparations 2,151 4.9 Manufactured of Metal, Nes 1,756 -10.4Paper, Paperboard, and Manufactured Thereof 2,010 -5.3 Miscellaneous Manufactured Articles 1,712 21.2Crude Rubber 1,829 -19.1 Chemical Materials and Its Products, Nes 1,612 -3.3 Source: CEIC, Bahana

2017 Compendium

37

Balance of payments & CAD: Flows back Concerns on the balance of payments eased post major central

banks having issued dovish tones as well as improvement on Indonesia’s CAD from 3.1% of GDP in 2014, to only 2.1% of GDP in 2015. We expect 2016 CAD to be at 2.0% of GDP supported by declining import prices and higher commodity prices.

Post the drop in financial markets in 3Q15, the financial account has been improving led by portfolio investment, while direct investment has been flat reflecting cautiousness in the real sector.

Since the beginning of 2016, sentiment on inflows has been positive with USD8.8bn of inflows in the stock and bond markets. In our view, the risk of a sudden capital reversal is low now on high real interest rates, declining domestic USD demand and an improving fiscal-policy mix.

Indonesia Current Account Balance, 1Q11 – 4Q17F

-2.6

-4.2

-3.7

-2.1-2.3

-4.3

-3.0-2.7

-2.0 -2.0 -1.9 -2.0 -2.1 -2.0-1.8

-2.1-2.4

-2.1-1.9 -1.9

-4.5

-4.0

-3.5

-3.0

-2.5

-2.0

-1.5

-1.0

-0.5

0.0

(%)

Source: CEIC, Bahana estimates (4Q16-4Q17F)

Indonesia financial account breakdown, 1Q11-3Q16

2.99

8.38

-6

-4

-2

0

2

4

6

8

10

12

14

16

1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16

(USDbn)

Direct investment Portfolio investment

Source: CEIC, Bahana

Flows to stock market & government bonds, Jan 2014 – Nov 2016

-3,000

-2,000

-1,000

0

1,000

2,000

3,000

4,000

Jan-

14

Feb-

14

Mar

-14

Apr-

14

May

-14

Jun-

14

Jul-1

4

Aug-

14

Sep-

14

Oct

-14

Nov

-14

Dec-

14

Jan-

15

Feb-

15

Mar

-15

Apr-

15

May

-15

Jun-

15

Jul-1

5

Aug-

15

Sep-

15

Oct

-15

Nov

-15

Dec-

15

Jan-

16

Feb-

16

Mar

-16

Apr-

16

May

-16

Jun-

16

Jul-1

6

Aug-

16

Sep-

16

Oct

-16

Nov

-16

(USDmn)

Capital inflow to stock market Capital inflow to bond market

USD8.8bn of inflows to financial market ytd

Source: CEIC, Bahana

2017 Compendium

38

Investment: Higher manufacturing investment Indonesia’s 9M16 total FDI is at USD10.6bn, with most of it coming

from manufacturing investment.

Some recovery in FDI was spotted in 3Q16, with 8.7% y-y growth.

The government recently announced regulation on removing some negative investment lists to increase FDI prospect in the future.

FDI data, 9M15 vs. 9M16 USDmn 9M15 9M16 y-y change Agriculture, Hunting, and Forestry 3,738 751 (80) Fishing 808 (366) (145) Mining and Quarrying 1,400 727 (48) Manufacturing 3,238 4,893 51 Electricity,Gas & Water Supply (339) 333 198 Construction 2 177 9,456 Wholesale and Retail Trade 885 1,673 89 Hotel & Restaurant 4 4 11 Transportation, Storage, and Communication 1,581 1,688 7 Financial Intermediation 655 192 (71) Real Estate, Renting and Business Activities 398 108 (73) Education (1) (0) 76 Health and Social Work 104 25 (76) Social services 3 5 73 Others 702 408 (42) Total 13,177 10,618 (19) Source: CEIC, Investment Board

FDI and investment realization growth, 1Q12 – 3Q16

121.6

8.7

-60

-40

-20

0

20

40

60

80

0

20

40

60

80

100

120

140

(%)(%)

Investment realization growth (LHS) FDI growth (RHS)

Source: Investment Board

Change in Indonesia’s negative investment list

Source: Economic Affairs Ministry

2017 Compendium

39

Infrastructure: Spending improvement The infrastructure budget disbursement from the Ministry of Public

Works is higher this year with 10M16 spending at 46.3% of 2016 target (10H15: 48.5%) or +16.3% y-y.

The share of infrastructure in the state budget has been increasing from 2014 (8.4%) to 2017F (19.3%), reflecting focus and consistency of the government in boosting infrastructure development over a 5-year period.

Several public works tenders with above IDR500bn in investment in 2016 include the Karangnonko road reconstruction in Yogyakarta (IDR1.5tn), the Pasar Rumput high-level rental flat construction in Jakarta (IDR1.1tn), dam construction in Way Sekampung and Pringsewu in Lampung (IDR923bn).

Ministry of public work budget disbursement, 10M16

1.9 5.2 9.915.4

22.2

32.036.8

41.7 44.846.3

31.1

0

10

20

30

40

50

60

70

80

90

100

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Realization 2016 Realization 2015

(%)

Source: Statistics Indonesia, Bahana estimates

Infrastructure budget share from state budget, 2013-2017F

9.3 8.4

12.6

15.1

19.3

-

5.0

10.0

15.0

20.0

25.0

2013 2014 2015 2016 2017F

(%)

Source: Ministry of Finance

Public works tenders (above IDR500bn), 2016 Project name (IDRbn) Region

Leuwikeris Dam, Kab.Ciamis & Kab. Tasikmalaya (Package 1) 921.1 West JavaLeuwikeris Dam, Kab.Ciamis & Kab. Tasikmalaya (Package 2) 670.5 West JavaCiawi Dam Construction 798.71 West JavaPasar Rumput high level rented flat construction 1,130.0 DKI JakartaPasar Minggu high level rented flat construction 700.0 DKI JakartaDam construction in Way Sekampung, Pringsewu (Package 1) 923.3 LampungDam construction in Way Sekampung, Pringsewu (Package 2) 863.8 LampungDam construction in Ladongi, Kolaka Timur 865.3 Southeast SulawesiNapun Gete dam construction in Sikka 880.8 NTTKarangnongko road reconstruction 1,550.0 D.I. Yogyakarta

Source: Ministry of Public Works and Public Housing

2017 Compendium

40

Infrastructure: Accelerating the growth The government is paying attention to accelerate infrastructure

development, with energy, water, transportation and the telecommunication sectors being integral parts of the plan.

Component wise, disappointment came from the oil & gas income tax, which dropped 33.2% y-y and only achieved 58.5% of 2015 target. VAT fell 3.3% while property taxes dropped 6.4%.

As a consequence, the government is required to either slow down the rate of spending, or increase tax collection to maintain a fiscal deficit below 3%.

Energy and water sector

Source: Economic Affairs Ministry

Transportation and telecommunication sector

Source: Economic Affairs Ministry

Projects timeline, 2016-23 Source: Economic Affairs Ministry

2016 2017 2018 2019

Sumatra Tol l Roa d West Semarang drinking Na tional Capita l Integra ted Coas ta l Development Bitung international hub s eaport

(Fi rst Section) water supply sys tem Light Rai l Trans i t South Sumatra Coa l power plant (Indramayu)

Light Rai l Trans i t Bogor, Depok, Bekas i Coal power pla nt (S. Suma tra)

Makas sar-Parepare ra i lway Centra l -West Java tra nsmiss ion l ine

Palapa ring High Volta ge Direct Current-HDVC

Mana do-Bitung tol l road (S. Suma tra, Lampung, Banten, West Java)

Sera ng-Panimbang tol l roa d Water power plant

Bal ikpapa n-Sa marinda tol l roa d Centra l Ja va power plant (Batang)

MRT Jakarta

2020 2021 2022 2023

Kuala Tanjung int’l hub seaport Refinery Development Mas ter Plan (RDMP) Oi l refinery (Bontang) Sumatra trans miss ion l ine

Cikarang-Bekas i-Sea Java waterways Oi l refinery (Tuban) Jakarta sewage system

Eas t Ka l imantan ra i lway Jakarta a irport express ra i lway

2017 Compendium

41

2016 infrastructure spending progress Spending on infrastructure continued in 2016 with 195MW of power

plants becoming fully operational, the completion of 268km of new toll roads, the addition of 488km of railways and 56 seaports.

Specifically, 2016 infrastructure projects focus on toll roads, an integrated water supply system, the Palapa ring system, and the Bontang oil-refinery project.

Budget wise, 10M16 disbursement of Ministry of Public Works already reached IDR48.2tn (10M15: IDR57.6tn). Lower October realization was due to the spending cuts effected prior to the tax amnesty receipts. We expect the spending to pick-up by the end of the year.

Current progress of infrastructure development

Sector 2019 target Current development Electricity sector 35 GW 195 MW fully operational 8,215 MW under construction

9,790 MW Power Purchase Agreement

Toll Roads 1,000 km 268 km Railways 3,258 km 488 km Seaports 306 56 Irrigation 3mn Ha 834k Ha Dam 65 32 Airports 15 5 Source: Ministry of Public Works and Public Housing

Bridges and road establishments

Projects Current progress

Integrated water supply system Agreement signed

Central Java steam power plant Financial closing reached

Palapa ring system Agreement signed

Balikpapan-Samarinda toll-road Agreement signed

Serang-Panimbang toll-road Location approved

Bontang oil refinery Financing scheme discussion Source: Ministry of Public Works and Public Housing

Ministry of public works disbursement, 10M16

5.5 10.316.1

23.133.3

38.343.4

48.2

0.8 2.0 4.69.8

16.524.4

37.045.3

57.6

73.7

107.3

0

20

40

60

80

100

120

Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

(IDR tn)

Realization 2016 Realization 2015

Source: Ministry of Public Works and Public Housing

2017 Compendium

42

2017 infrastructure spending plan In 2017, government is planning to spend IDR337tn on infrastructure,

while adopting a new strategy to increase the efficiency.

Next year, the government is eying to build 341km of new toll roads, 1,687km of new railways and 13 seaports.

On funding sources, government expects private sector support of around IDR154tn next year.

2017 infrastructure spending strategy

No. Initiative

1 Encouraging govt & company partnership (KPBU) on infra. projects

2 Providing infrastructure financing alternatives

3 Encouraging SOE’s to form alliances with private companies

4 Easing regulations in infrastructure sector

5 Increasing local government portion in infrastructure spending

6 Advancing land certification mechanism

7 Improving infrastructure-related human resources Source: Ministry of Public Works and Public Housing

2017 infrastructure target

Sector 2017 target

Toll road 341km of new toll roads

Railways 1,687km of new railways

Airports 2 new airports

Seaports Build and rehabilitate 13 seaports

Power plant 5,823 MW of new power plant

Dam 39 new dams

Fibre optic 5,832km of fibre optic systems Source: Ministry of Public Works and Public Housing

2017 infrastructure funding sources

IDR124tn

IDR134tn

IDR85tn

IDR2.4tn

IDR154tn

State budget Local govt budget SOE Regional SOE Private

Source: Ministry of Public Works and Public Housing

30.8% 24.8%

26.8% 17.0%

22.7%

2017 Compendium

43

Fiscal side: Tax amnesty Until 23 October 2016, tax amnesty penalties received by the

government were IDR94.9tn with IDR3,951tn of declared/repatriated assets.

This result leads us to expect IDR130tn of penalty receipts by the end of the program. Based on our market research, we believe the government will conduct some policy shock near the end of the tax amnesty period.

Ratio wise, the declared assets-to-GDP ratio in Indonesia’s tax amnesty is at IDR22.4% currently, far higher than other tax amnesty programs around the globe.

Tax amnesty result, 28 November 2016 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Total

PenaltyEntity penalty - SMEs 0 8 179 27 22 236Entity penalty - Non-SMEs 13 424 9,860 64 114 10,475Individual penalty - SMEs 2 183 2,617 518 418 3,738Individual penalty - Non-SMEs 70 2,398 77,395 338 282 80,484Total penalty received 85 3,013 90,051 947 837 94,933

AssetsRepatriated funds 41 2,262 138,420 481 1,829 143,034Declared funds - domestic 1,079 72,736 2,587,831 82,868 78,562 2,823,077Declared funds - overseas 91 15,998 954,569 6,870 7,626 985,153Total assets 1,212 90,996 3,680,820 90,220 88,017 3,951,264

Percentage (%)Entity penalty - SMEs 0.2 0.3 0.2 2.9 2.6 0.2Entity penalty - Non-SMEs 15.1 14.1 10.9 6.8 13.7 11.0Individual penalty - SMEs 2.3 6.1 2.9 54.7 49.9 3.9Individual penalty - Non-SMEs 82.5 79.6 85.9 35.6 33.7 84.8Total penalty received 100.0 100.0 100.0 100.0 100.0 100.0

Repatriated funds 3.4 2.5 3.8 0.5 2.1 3.6 Declared funds - domestic 89.1 79.9 70.3 91.9 89.3 71.4 Declared funds - overseas 7.5 17.6 25.9 7.6 8.7 24.9 Total repatriated/declared funds 100.0 100.0 100.0 100.0 100.0 100.0 Source: Tax office, Bahana

Tax amnesty tracker

3,890

0

1,000

2,000

3,000

4,000

5,000

6,000

1-Sep 8-Sep 15-Sep 22-Sep 29-Sep 6-Oct 13-Oct 20-Oct 27-Oct 3-Nov 10-Nov 17-Nov 24-Nov

(IDRtn)

Total declared/repatriated asset old model 130tn model 100tn model Source: Ministry of Finance, Bahana estimates

Declared assets-to-GDP ratio comparison of several TA programs

22.4

16.4

7.9 7.85.7

1.60.5 0.4

0

5

10

15

20

25

Indonesia Ireland Chili SouthAfrica

Italy Spain India Australia

(%)

Source: Ministry of Finance, Bahana estimates

2017 Compendium

44

Tax amnesty: Funds for infrastructure projects For infrastructure projects, the government plans to allocate

IDR93.73tn from tax amnesty funds.

The proceeds from the tax-amnesty scheme would focus on the development of water resource infrastructure, bridges, roads and drainage systems.

We believe these projects are expected to improve the efficiency of Indonesia’s economy going forward.

Water resources infrastructure Source: Ministry of Public Works and Public Housing

Bridges and road establishments Source: Ministry of Public Works and Public Housing

Drainage, drinking-water procurement system, and toll roads Source: Ministry of Public Works and Public Housing

Roads in boundaries: IDR12.07tn

Trans-Papua: IDR5.33tn Southern Java Beach roads: IDR2.15tn

Landbank procurement:

IDR27.39tn

Irrigation system: IDR2.91tn

Conservation: IDR5.48tn

South Java flyover:

IDR0.22tn

Dam management: IDR1.84tn

Water procurement: IDR0.22tn

National priority drinking water (SPAM) establishment:

IDR1.24tn

Regional drinking water system development:

IDR0.80tn

Trans Sumatera toll-road: IDR1.05tn

2017 Compendium

45

Fiscal side: Higher tax buoyancy In 2006-2015, Indonesia’s tax-to-GDP ratio ranged between 10.4-

12.3%, averaging 11.2%, while the non-O&G tax-to-GDP ratio was between 4.3-4.7%, with an average of 4.5%.

Our calculation suggests Indonesia’s non-oil and gas tax buoyancy in the 2006-2015 period was at 1.02.

With expectations of declared/repatriated assets at IDR5,700tn, we expect non-oil and gas tax buoyancy to be slightly higher at 1.04. We estimate that the tax amnesty would result in IDR57tn higher non-oil and gas tax revenues in 2017, with IDR905tn in total revenue differences in the next 10 years.

Indonesia tax to GDP ratio, 2006 - 2015

4.7 4.7 4.7 4.5 4.3 4.6 4.4 4.3 4.3 4.7

11.5 11.612.3

10.4 10.411.2 11.4 11.2 10.9 10.7

0

2

4

6

8

10

12

14

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

(%)

Non O&G tax to GDP ratio Tax to GDP ratio

Source: Ministry of Finance, Bahana

Non-oil and gas tax buoyancy calculation, 2001 - 2015

y = 1.0216x - 3.2908

4.1

4.6

5.1

5.6

6.1

6.6

7.5 8 8.5 9 9.5

Nat.

Loga

rithm

of n

on O

&G ta

x rev

enue

Natural logarithm of nominal GDP

(pts)

Source: Ministry of Finance, Bahana

Non-oil and gas tax buoyancy, 2010 – 2026F

5763

6976

83

92

101

111

121

133

1,229

1,362

30

50

70

90

110

130

150

170

190

210

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2010 2011 2012 2013 2014 2015 2016F 2017F 2018F 2019F 2020F 2021F 2022F 2023F 2024F 2025F 2026F

(IDRtn)(IDRtn)

Revenue gap (RHS) Non O&G tax without tax amnesty (LHS) Non O&G tax with tax amnesty (LHS)

Tax buoyancy: 1.02 Tax buoyancy: 1.04

Source: Ministry of Finance, Bahana estimates

2017 Compendium

46

Fiscal side: Likely improvement ahead On fiscal reform, the MoF has already stated their commitment in

doing tax intensification and broadening the tax base.

E-ID data shows that there are 173.5m prospective taxpayers, out of which only 27m currently have tax IDs.

Assuming a similar level of compliance and up to 37m new tax IDs in 2020, we expect the total government spending capacity will be IDR662.3tn higher, which would support government expenditure spending ahead.

Potential revenue increase on tax reformation

Prospective number of new tax payers Source: Domestic Affairs Ministry

Source: CEIC, Bahana estimates (2016-20)

unregistered in E-KTP children registered in E-KTP

74.5mn

173.5mn

Purposes of e-ID • Single ID

number • Avoid KTP

duplication • Avoid tax

evaders and corruption

• Ease of passport issuance in remote areas

• Avoid terrorism

With tax reformationItems (IDRtn) 2014 2015 2016 2017 2018 2019 2020Non O&G income tax 458.7 544.5 581.2 773.4 832.9 896.1 964.2Other revenue 1,091.8 963.6 918.3 861.3 946.1 1040.1 1144.2Total govt revenue 1,550.5 1,508.0 1,499.5 1,634.7 1,779.0 1,936.2 2,108.4

Personal 243.7 281.1 285.5 311.0 337.9 367.3 399.4Material 176.6 233.3 236.9 258.0 280.4 304.8 331.4Capex 147.3 215.4 218.8 238.3 259.0 281.5 306.1Interest 133.4 156.0 158.4 172.6 187.5 203.8 221.7Regional transfers 555.7 583.0 592.1 644.9 700.9 761.7 828.4Others 520.3 337.6 342.8 373.4 405.8 441.1 479.7Total govt spending 1,777 1,807 1,834.5 1,998.1 2,171.5 2,360.1 2,566.7

Fiscal deficit -226.7 -298.5 -335.0 -363.4 -392.5 -423.9 -458.3% of GDP -2.1 -2.6 -2.7 -2.7 -2.7 -2.7 -2.7

Without tax reformationItems (IDRtn) 2014 2015 2016 2017 2018 2019 2020Non O&G income tax 458.7 544.5 581.2 646.3 682.2 718.4 756.7Other revenue 1,091.8 963.6 918.3 861.3 946.1 1,040.1 1,144.2Total govt revenue 1,550.5 1,508.0 1,499.5 1,507.6 1,628.2 1,758.5 1,900.9

Personal 243.7 281.1 285.5 291.2 314.5 339.6 367.2Material 176.6 233.3 236.9 241.6 260.9 281.8 304.6Capex 147.3 215.4 218.8 223.1 241.0 260.3 281.3Interest 133.4 156.0 158.4 161.6 174.5 188.5 203.7Regional transfers 555.7 583.0 592.1 603.9 652.2 704.4 761.4Others 520.3 337.6 342.8 349.7 377.6 407.8 440.9Total govt spending 1,777 1,807 1834.5 1871.1 2020.7 2182.4 2359.2

Fiscal deficit -226.7 -298.5 -335.0 -363.4 -392.5 -423.9 -458.3% of GDP -2.1% -2.6% -2.70% -2.70% -2.70% -2.70% -2.70%

Differences - - - 127.1 150.8 177.7 207.5

2017 Compendium

47

Fiscal side: 2017 state budget is realistic In the 2017 proposed state budget, the government targets tax

revenue of IDR1,495tn (-2.8% y-y), with lower non-tax revenues.

We see this as achievable given it is equal to 11.1% of GDP, lower than the 2016 target at 12.3% of GDP. In 2010-2013, Indonesia could achieve this amount of tax ratio.

Post the tax amnesty, increasing the tax base is the new challenge for the government.

Tax target comparison, 2010-2017

Source: Ministry of Finance, Bahana

State budget assumptions, 2016 vs. 2017

Descriptions (in IDR tn) 2016 revised

budget 2017 budget % changes STATE REVENUE 1,786.2 1,750.3 (2.0) I. DOMESTIC REVENUE 1,784.2 1,748.9 (2.0) 1. Tax revenue 1,539.2 1,498.8 (2.6) a. Domestic revenue 1,503.3 1,464.8 (2.6) 1) Income tax 855.8 787.7 (8.0) - Oil and gas 36.3 35.9 (1.2) - Non-oil and gas 819.5 751.8 (8.3) 2) Value added tax 474.2 493.9 4.1 3) Land and building tax 17.7 17.3 (2.3) 4) Customs 148.1 157.2 6.1 5) Others 7.4 8.8 18.0 b. International tax 35.9 34.1 (5.0) 1) Import duties 33.4 33.7 1.1 2) Non-oil and gas 2.5 0.3 (86.4) 2. Non-tax revenue 245.1 250.0 2.0 a. Natural resources tax 90.5 87.0 (3.9) 1) Oil and gas natural resources 68.7 63.7 (7.3) 2) Non-oil and gas natural resources 1.8 23.3 6.7 b. SOEs earnings 34.2 41.0 20.0 c. Others 84.1 84.4 0.4 d. BLUs 36.3 37.6 3.7 II. GRANTS 2.0 1.4 (29.1) EXPENDITURES 2,082.9 2,080.5 (0.1) I. DOMESTIC EXPENDITURES 1,306.7 1,315.6 0.7 1. Ministries expenditures 767.8 763.6 (0.5) 2. Non-ministries expenditures 538.9 552.0 2.4 a. Interest payments 191.2 221.2 15.7 b. Subsidies 177.8 160.0 (10.0) 1) Energy 94.4 77.3 (18.1) 2) Non-energy 83.4 82.7 (0.8) c. Grants 8.5 170.8 1,900.2 II. TRANSFER TO REGION AND VILLAGE FUNDS 776.3 764.9 (1.5) 1. Transfer to region 729.3 704.9 (3.3) a. Equalization funds 705.5 677.1 (4.0) 1) General transfer funds 494.4 503.6 1.9 a) Sharing 109.1 92.8 (14.9) b) General allocation 385.4 410.8 6.6 2) Special transfer funds 211.0 173.4 (17.8) b. Incentives 5.0 7.5 50.0 c. Autonomy 18.8 20.3 7.9 2. Village funds 47.0 60.0 27.7 PRIMARY BALANCES (105.5) (109.0) 3.3 BUDGET SURPLUS (DEFICIT) (296.7) (330.2) 11.3 % of GDP (2.4) (2.4) 2.6 FUNDING 296.7 330.2 11.3 I. DEBT PAYMENT 371.6 384.7 3.5 II. INVESTMENT FUNDING (94.0) (47.5) (49.5) III. GRANT OF LOANS 0.5 (6.4) (1,490.5) IV. GUARANTEE (0.7) (0.9) 41.3 V. OTHERS 19.3 0.3 (98.4)

Source: Ministry of Finance

2017 Compendium

48

Subsidies: More allocation to fertilizer President Jokowi already has bold initiatives, planning to cut

subsidies from IDR392tn in 2014 to only IDR160tn in 2017, especially on energy. As a percentage of government spending, subsidies fell to 7.7% of total spending in 2017, vs. 23.4% in 2014.

For energy, the government already relieved the subsidy on RON-88 since 2015, allowing for better government spending allocation. Going ahead, a higher oil price is less dangerous for the state budget as the government already set the price based on global prices. Government is also planning to cut electricity subsidies in 2017.

On the productivity front, the government continues to increase non-energy subsidies, especially for fertilizer in order to raise farmer productivity.

Indonesia subsidies, 2005 – 2017F

121107

150

275

138

193

295

346 355

392

186 183160

27.9

7.7

0

5

10

15

20

25

30

70

120

170

220

270

320

370

420

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016F 2017F

(%)(IDRtn)

Government subsidies (LHS) Subsidy as percentage of spending (RHS)

Source: Ministry of Finance

Subsidized fuel volumes, 2012 -2016

28.2 29.3 29.4

15.6 15.9 15.7

17.1 15.5

1.2 1.1 0.9

0.9 0.7

05

101520253035404550

2012 2013 2014 2015 2016

(mn kl)

RON88 Diesel Kerosene

Source: Ministry of Finance

Non-energy subsidies, 2010 -201F

11 15 16 17 19 19 21 20

1516 17 16

2136 30 31

53 1 1

3

2 16 16

17 154 5

5

9

8 10

3 22 3

4

45 6

0

10

20

30

40

50

60

70

80

90

2010 2011 2012 2013 2014 2015 2016F 2017F

(IDRtn)

Food Fertilizer Project Loan Tax Others

51 5140 42

52

7080 83

Source: Ministry of Finance

2017 Compendium

49

Government bonds: IDR384tn of new debt in 2017 In 2017, government is planning to issue IDR384.7tn of new debt, to

finance the budget deficit at IDR330.2tn. The low level of Indonesia’s external debt is still manageable, in our view.

On a gross basis, the number of government bond issuance is at IDR385tn.

We foresee the number of government bond issuances remaining manageable in 2017.

Allocation of budget

Ministries and agencies (M&A)

budgetIDR763.6tn

Non M&A budgetIDR551.9tn

Centralgovernment

budgetIDR1,315.5tn

63%

Regional transferIDR705.0tn

Villages budgetIDR60.0tn

Regional transfer and villages budget

IDR765.0tn37%

SpendingIDR2,080.5tn

RevenueIDR1,750.3tn

DeficitIDR330.2tn

Tax revenueIDR1,498.9tn

86%

Non-tax revenueIDR250.0tn

Income taxIDR787.7tn

VATIDR493.9tn

Excise taxIDR157.2tn

OthersIDR60.7tn

Oil&gas IDR87tn

Others IDR163tn

2.41% of GDP

Non Debt(IDR54.5tn)

DebtIDR384.7tn

Source: Ministry of Finance, Bahana

Bond auction results

Maturity Total Auction average Total Auction average3 Months 11,700,000 975,000 18,000,000 1,636,364 6 Months 12,820,000 1,427,778 30,090,000 1,681,667

1 year 27,850,000 1,843,333 26,040,000 1,511,763 5 years 50,300,000 1,353,333 54,900,000 1,431,250

10 years 73,400,000 4,320,588 76,900,000 4,806,250 15 years 34,000,000 2,650,000 64,200,000 3,566,667 20 years 39,300,000 1,275,000 24,350,000 2,371,675 30 years 5,000,000 1,250,000 7,670,000 1,917,500

Total 254,370,000 302,150,000

Tenor Total Auction average Total Auction average6 months 14,295,000 680,714 16,985,000 808,810

2 years 26,435,000 1,846,667 32,745,000 2,641,389 5 years 9,035,000 501,944 24,231,000 1,533,667 7 years - - 10,545,000 585,833

15 years - - 20,315,000 967,381 20 years 6,525,000 652,500 - -

Total 56,290,000 104,821,000

SBSNs 2015 2016

2015 2016SBNs

Source: Ministry of Finance, Bahana

Indonesia 2016 bond issuance Revised Widening budget realization % realization

budget 2016 deficit 2.7% (as nov 23) to revised budgetGovernment securities net 364,866,887 407,885,535 408,898,016 100.25%Government securities maturing in 2016 and buyback 246,535,735 246,472,550 236,755,793 96.06%Issuance need for 2016 611,402,622 654,358,086 645,653,809 98.67%

Government Debt Securities (GDS) 465,755,157 Domestic GDS 356,716,437

Coupon GDS 247,970,000 Convention T-Bills 53,240,000 Private placement 31,895,977 Retail bonds 23,610,460

International GDS 109,038,720 USD GMTN 48,643,000 Euro GMTN 44,975,610 Samurai bonds 12,760,910 Domestic USD bonds 2,659,200

Government Islamic Debt Securities (GIDS) 179,899,452 Domestic Government Islamic Debt Securities 146,491,952

IFR/PBS/T-Bills Sukuk (Islamic bond) 109,356,830 Retail Sukuk 34,085,122 Private placement 3,050,000

Global Sukuk 33,407,500 Source: Ministry of Finance, Bahana

2017 Compendium

50

Fiscal side: Rating upgrade ahead Indonesia’s position currently is only one notch below S&P’s

investment grade with a BB+ rating, with a positive outlook. Rating improvement should add significant capital inflows and provide room for lower domestic interest rate spreads against major economies.

In last year’s review, S&P expressed their concern on Indonesia’s tax collection, relatively weak economic growth, fiscal reform and low commodity prices. Their concern should be eased with the recent successful tax amnesty and higher commodity prices.

The next step for Indonesia to sustain its path to an investment grade involves taxation and fiscal reform.

Latest BRICS-MINT countries’ sovereign ratings

Country Name

Moody's S&P Fitch

Date Rating Outlook Date Rating Outlook Date Rating Outlook

China Apr-13 Aa3 STABLE Dec-10 AA- STABLE Oct-13 A+ STABLE

Mexico Feb-14 A3 STABLE Dec-13 A STABLE May-13 A- STABLE

South Africa Nov-14 Baa2 STABLE Jun-14 BBB+ STABLE Jun-14 BBB+ NEG

Brazil Sep-14 Baa2 NEG Mar-14 BBB+ STABLE Apr-15 BBB NEG

India Apr-15 Baa3 POS Sep-14 BBB- STABLE Jun-13 BBB- STABLE

Indonesia Jan-16 Baa3 STABLE May-15 BB+ POS Jan-12 BBB- STABLE

Turkey Apr-14 Baa3 NEG May-15 BBB- NEG Nov-12 BBB STABLE

Russia Feb-15 Ba1 NEG Jan-15 BBB- NEG Jan-15 BBB- NEG

Nigeria Nov-12 STABLE Mar-15 B+ STABLE Mar-15 BB NEG Source: Bloomberg, Bahana

Tax target comparison, 2010-2017

2015 2016Political condition Lower government policy

effectivenessHigher government policyeffectiveness

Economic condition

Growth prospects lower, GDP per capital lower, consumption dominate the economy

Growth prospects higher, GDP per capita higher, investment and government spending improved

External condition Trade balance slightly improved on lower import

Trade balance significantly improved on commodity prices

Fiscal conditionTax revenue low, unrealistic target, low infrastructure spending realization

Successful tax amnesty, better fiscal credibility under new MoF, clear plan on tax reformation

Monetary conditionInflation above target, FX volatility high, monetary policy transmission weak

Inflation manageably low and fall below BI target, currency stabilized

Source: Ministry of Finance, Bahana

Indonesia’s S&P rating, 1995 - 2016

1Q1992 3Q1993 1Q1995 3Q1996 1Q1998 3Q1999 1Q2001 3Q2002 1Q2004 3Q2005 1Q2007 3Q2008 1Q2010 3Q2011 1Q2013 3Q2014 1Q2016

(Rating)

BBB

BB+

SD

CCC+

B-

B

B+

B

BBB-Investment grade

Non-investment grade

Source: Bloomberg, Bahana

This report uses credit ratings assigned by Moody’s, Standard & Poor’s and Fitch, which are not registered with Japan’s Financial Services Agency pursuant to Article 66, Paragraph 27 of the Financial Instruments and Exchange Act. Investors should read the related attachment for information on ratings assigned by unregistered rating agencies.

2017 Compendium

51

Labor market: Manageable minimum wage increases On a ytd basis, layoffs are still high, and stand at 16k. The textile

sector contributed the biggest layoffs, with 32% of total layoffs.

However, through improvement and development, the unemployment rate has decreased by 1.4%. In the Jokowi era, the unemployment rate is down by 0.2pp, from 5.81% to 5.61%. We believe that the unemployment rate will decrease more as economic growth improves.

The Ministry of Manpower has regulated to raise provincial minimum wages by up to 8.25%, with a formula of 3.07% inflation + 5.18% GDP. The biggest increase in wages should come from Aceh (20.0%), North Maluku (17.5%), and East Nusa Tenggara (15.8%), with most of the provinces following the Manpower Ministry’s term.

Lay-offs, 2016 ytd No Company Sector Status Number of workers

1 Panasonic (Pasuruan) Manufacture Laid off 800 2 Toshiba Manufacture Laid off 865 3 Shamoin Manufacture Laid off 1,166 4 Starlink Manufacture Laid off 452 5 Philips Indonesia (Sidoarjo) Manufacture Laid off 800 6 Sunstar Engineering Indonesia Manufacture Laid off 271 7 Osung Manufacture Laid off 186 8 Ford Motor Indonesia Automotive Laid off 2,000 9 General Motors Indonesia Automotive Laid off 500

10 Krama Yudha Ratu Motor Automotive Laid off 200 11 United Tractors Coal Laid off 1,500 12 Chevron Oil & gas Laid off 750 13 Jaba Garmindo Textile Laid off 4,700 14 Sandoz Indonesia Pharmaceutical Laid off 200 15 Novartis Pharmaceutical Laid off 500 16 Bank Banten Bank Laid off 1,565

Total 16,455 Source: Detik, Bahana

Unemployment rate, February 2011 – August 2016

6.96

7.48

6.37

6.13

5.88

6.17

5.70

5.94

5.81

6.18

5.50

5.61

5

6

7

Feb-11 Aug-11 Feb-12 Aug-12 Feb-13 Aug-13 Feb-14 Aug-14 Feb-15 Aug-15 Feb-16 Aug-16

(%)

Source: Statistics Agency, Bahana

Regional minimum wage, 2016-17 No Region 2016 2017 % change

1 Aceh 2,118,500 2,542,200 20.0 2 North Sumatra 1,811,875 1,961,354 8.2 3 West Sumatra 1,800,725 1,949,284 8.2 4 Lampung 1,763,000 1,908,447 8.2 5 Jambi 1,906,650 2,063,000 8.2 6 Riau 2,095,000 2,266,722 8.2 7 Riau Islands 2,178,710 2,358,454 8.3 8 South Sumatra 2,206,000 2,388,000 8.3 9 Bangka Belitung 2,341,500 2,534,673 8.2

10 Bengkulu 1,605,000 1,730,000 7.8 11 Banten 1,784,000 1,931,180 8.3 12 Jakarta 3,100,000 3,355,750 8.3 13 Yogyakarta 1,237,700 1,337,645 8.1 14 East Java 1,237,490 1,388,000 12.2 15 Central Java 1,265,000 1,367,000 8.1 16 West Java 1,312,355 1,420,624 8.2 17 Bali 1,807,600 1,956,727 8.3 18 West Nusa Tenggara 1,482,950 1,631,245 10.0 19 East Nusa Tenggara 1,425,000 1,650,000 15.8 20 West Kalimantan 1,739,400 1,882,900 8.2 21 South Kalimantan 2,085,050 2,258,000 8.3 22 Central Kalimantan 2,057,528 2,222,986 8.0 23 East Kalimantan 2,161,253 2,339,556 8.2 24 North Kalimantan 2,175,340 2,358,800 8.4 25 South Sulawesi 2,250,000 2,500,000 11.1 26 Central Sulawesi 1,670,000 1,807,775 8.3 27 North Sulawesi 2,400,000 2,598,000 8.3 28 South East Sulawesi 1,850,000 2,002,625 8.3 29 Gorontalo 1,875,000 2,030,000 8.3 30 West Sulawesi 1,864,000 2,017,780 8.3 31 Maluku 1,775,000 1,925,000 8.5 32 North Maluku 1,681,266 1,975,000 17.5 33 Papua 2,435,000 2,663,646 9.4 34 West Papua 2,237,000 2,416,855 8.0

Average 1,903,967 2,080,566 9.0 Source: Manpower Ministry, Bahana

2017 Compendium

52

Economic forecasts 1Q16 2Q16 3Q16 4Q16F 1Q17F 2Q17F 3Q17F 4Q17F 2015 2016F 2017F 2018F Real sectors GDP growth (% y-y) 4.9 5.2 5.0 5.1 5.2 5.2 5.3 5.5 4.8 5.1 5.3 5.5 Private spending (%y-y) 5.0 5.1 5.0 5.4 5.2 5.0 5.6 5.5 5.0 5.2 5.3 5.6 Investment (%y-y) 5.6 5.1 4.1 4.8 6.5 7.5 7.0 5.5 5.3 5.2 6.6 7.0 Gov’t spending (%y-y) 3.5 6.2 -3.0 5.0 7.7 4.1 2.2 6.5 4.4 6.0 5.1 5.0 Total exports (%y-y) -3.5 -2.4 -6.0 -4.2 -3.1 -2.9 -2.5 2.3 -2.0 -4.0 -1.6 2.5 Total imports (%y-y) -5.0 -2.9 -3.9 -2.5 -1.0 -1.6 -2.8 -1.9 -5.8 -3.4 -1.8 1.0

FX and interest rate 7D reverse repo rate (%) - 5.3 5.0 4.8 4.8 4.5 4.5 4.3 7.5 4.8 4.3 4.8 FASBI (%) 5.0 4.5 4.3 4.0 4.1 3.8 3.8 3.5 5.5 4.0 3.5 4.0 Lending facility (%) 7.8 7.0 5.8 5.5 5.6 5.3 5.3 5.0 8.0 5.5 5.0 5.5 10yr ID govt bond yield (%) 7.7 7.4 7.5 7.8 7.6 7.3 6.8 6.5 8.2 7.8 6.5 7.0 JIBOR 1M 6.1 6.2 6.4 6.0 6.1 5.8 5.8 5.5 7.5 6.0 5.8 IDR/1USD (end of period) 13,260 13,162 13,300 13,500 13,400 13,200 13,600 13,500 13,788 13,500 13,500 13,500 IDR/1USD (Average) 13,521 13,315 13,320 13,300 13,300 13,300 13,600 13,500 13,494 13,364 13,425 13,500

Prices & commodities Headline inflation (% y-y) 4.5 3.5 3.1 3.3 3.3 3.4 4.2 3.8 3.4 3.3 3.8 4.2 Core inflation (% y-y) 3.5 3.5 3.3 3.4 3.3 3.4 3.8 3.5 4.8 3.4 3.5 3.7 Brent oil price (USD/barrel) 40 50 50 50 53 45 50 55 37 50 55 60 Regular fuel price (IDR/Liter) 6,450 6,450 6,450 6,450 6,450 6,450 6,450 6,450 7,400 6,450 6,450 6,450

External balance CA balance (% of GDP) -2.1 -2 -2 -2.1 -2.4 -2.1 -1.9 -1.9 -2.1 -2.0 -2.1 -2.3 Fiscal deficit (% of GDP) - - - - - - - - -2.7 -2.7 -2.5 -2.5

Others GDP per capita (USD) - - - - - - - - 3212 3222 3470 3,657 Population (Mn) - - - - - - - - 256 259 262 266

Source: CEIC, Bloomberg, Bahana forecasts

2017 Compendium

53

LOCAL POLITICS

2017 Compendium

54

Jokowi’s popularity: Down, but not out Since he became President in October 2014, the satisfaction level for

Jokowi has dropped from 67% to 61%, brought down by the Ahok blasphemy case. However, we believe this is still a high level, particularly when compared with the low seen back in 1H15 of c.40%.

In the parliament, Golkar’s alliance with the Great Indonesia coalition provides Jokowi with 69% of total House seats, a clear majority.

We understand that Jokowi still has solid support from Retired General Luhut Panjaitan, allowing him to remain in the driver’s seat politically. Moreover, Jokowi’s nomination of Tito Karnavian, one of the youngest Police Chiefs in history, should bode well for national security. Finally, Jokowi’s improving relationship with Megawati, chairperson of PDI-P with significant political influence, should also help to legitimize his political power. Other important support is from Wiranto and Surya Paloh, both with considerable clout politically.

Jokowi’s satisfaction levels, January 2015 – October 2016

Source: SMRC, LSI

House’s current coalition groupings, by seat and party

KIH's coalition69%

KMP's coalition20%

SBY's camp11%

Demokrat11%

PDIP20%

Golkar16%

Nasdem6%

Hanura3%

PAN9%

PPP7%

PKB8% Gerindra

13%

PKS7%

Source: The House of Representative, Bahana

Jokowi’s team of political backup support

Luhut PanjaitanMinister of Maritime Affairs

President Joko Widodo

Megawati Soekarno PutriChief of PDI-P party

Tito KarnavianPolice Chief

Surya PalohChief of Nasdem party

WirantoChief of Hanura party

Source: Bahana

2017 Compendium

55

Jokowi: Currently strong in the Parliament Ade Komarudin, the second Speaker of the House (DPR) during the

Jokowi’s regime, a Golkar member, was removed from his post. Taking over his position is Setya Novanto, who was the original Speaker of the House, returning following his leave of absence due to his alleged involvement in the Freeport scandal.

According to the House’s Court of Honor Council (MKD), the reason for Ade’s removal was due to 2 violations: Slowing the discussion process on (1) state-owned capital injection and (2) tobacco law, which is pro-farmers and cigarette companies.

This political move suggests that Jokowi is currently very much in control of the parliament, and those who do not support his goals and objectives would be removed.

Out: Ade Komarudin In: Setya Novanto

Source: Republika

Court of Honor Council (MKD): Authority and members Violation SanctionNo law offenses Light sanctionPersonal ethics violation Written / verbal warning<40% meeting attendance in 1 session period Do law offenses Medium sanctionPublicly known ethics violation Removed from any major position Repeatedly has meeting attendance of less than 40% in the parliament in 1 session period after receiving light sanction Commit criminal offenses and sentenced above 5 year Heavy sanctionCommit any violation of parliament act Temporary (3 months) Permanently unable to serve as parliament member or totally removed from No longer eligible as parliament member parliament membershipAbsent from parliament duties for 3 months

Source: The House, Bahana

No MKD’s roles and duties1 Monitoring the framework of preventive functions of the behavior of members 2 Investigating and verifying member violation 3 Holding a hearing meeting to receive actions and / or events to decide members’ violations or offenses4 Receiving letters from law officials for investigations of members who allegedly break laws or rules 5 Requesting for information from authorized law officials for the investigation of members who allegedly

break laws or rules 6 Asking members of parliament for other members who may have broken laws or rules 7 Accompanying law officials to search for evidence in the event members commit crimes or violations

Source: The House, Bahana

Details on SoE capital injection and tobacco law No Company 2016 (in IDRbn) 2017 (in IDRbn)

1 Penjaminan Infrastruktur Indonesia 1,000 1,000 2 Sarana Multigriya Finansial 1,000 1,000 3 Sarana Multi Infrastruktur 4,160 2,000 4 Hutama Karya 3,000 - 5 Perum Bulog 2,000 - 6 Pertani 500 - 7 Perikanan Nusantara 29 - 8 Rajawali Nusantara Indonesia 693 - 9 Angkasa Pura II 2,000 -

10 Pelayaran Nasional Indonesia 565 - 11 Barata Indonesia 500 - 12 Wijaya Karya (WIKA IJ) 4,000 - 13 Pembangunan Perumahan (PTPP IJ) 2,250 - 14 Perum Perumnas 485 - 15 Industri Kereta Api 1,000 - 16 Pelindo III 1,000 - 17 Krakatau Steel (KRAS IJ) 1,500 - 18 Bahana Pembinaan Usaha Indonesia - - 19 Perusahaan Perdagangan Indonesia 1,000 - 20 PLN 23,560 - 21 Asuransi Kredit Indonesia 500 - 22 Perum Jamkrindo 500 - 23 Amarta Karya 32 - 24 Jasa Marga (JSMR IJ) 1,250 - 25 Lembaga Pembiayaan Ekspor Indonesia 4,000 3,200 26 Perkebunan Nusantara I 25 - 27 Perkebunan Nusantara VIII 33 - 28 National Health Insurance (BPJS Kesehatan) 6,828 -

TOTAL 63,410 7,200 Source: MoF, The House

Article 81) Determination of space and tobacco planting areas by the government and / or the local government based on the proposal of tobacco farmers, industry needs, and export

Article 14Market players should report projected amount and quality of tobacco needed to the government and / or regional government with no later than 1 year lead time to tobacco processing

Article 16 1) Local governments have authori es to set basic prices of tobacco at farmer levelswhich is in strategic commodity area.

2) The base price of tobacco referred to in paragraph (1) should be calculated based on the variable costs, working time and projected profit forecasts of farmers in 1 planting season

Article 20Business communities in the country are required to use domestic tobacco at least 80% andimported tobacco at most 20% of the total production capacity of tobacco products

Article 291) The government sets a pricing policy and excise on tobacco and tobacco imports2) Pricing and excise of imported tobacco products and imported tobacco as referred to paragraph (1), the use of imported tobacco is determined at least 3 times greater than prices and excise of tobacco products using domestic tobacco

2017 Compendium

56

Simultaneous regional elections: A double edged sword Indonesia is in the midst of simultaneous regional elections divided

into 7 phases from 2015-27 by the Election Committee (KPU). While campaign period has started, the actual voting for Election phase 2 will be on Wednesday, 15 February 2017 at 101 places in 7 provinces, 18 cities and 76 regencies. Without majority wins of at least 50%+1, the top two candidates of each race must go for second-round elections to be held on 19 April.

These regional elections are good for domestic consumption due to sizeable election spending. In Jakarta, there are 3 Jakarta Cards already issued by the Jokowi-Ahok administration. The Smart Jakarta Card has already been implemented for students and used in RALS stores. Jakarta One Card, issued in June 2016, was the latest card given to the public to facilitate e-money system in Jakarta.

Unfortunately, however, the Jakarta governor election, due to its importance, has resulted in political instability on the ground.

Election schedule

Phase Campaign period Election Total # of elections

1 Aug-Dec ’15 9-Dec-15 269; 9 provinces (governors), 36 cities (mayors) and 224 regencies (regents)

2 a. 26 Oct ‘16-11 Feb ’17 15-Feb-17

101 places; 7 provinces (governors), 18 cities (mayors) and 76 regencies (regents)

2 b. 4 Mar ’17-15 Apr ‘17 19-Apr-17 2nd round

3 Feb-Jun 2018* June-18 TBC 4 Mar-July 2020* 2020 TBC 5 TBC 2022 TBC 6 TBC 2023 TBC 7 TBC 2027 TBC Source: Election Committee

Some regional election places Regional Election

Province City Regency Regency Regency RegencyAceh Banda Aceh -

Aceh Aceh Singkil - Aceh

Muaro Jambi Flores Timur - East Nusa Tenggara

Seram Bagian Barat - Maluku

Bangka Belitung

Lhokseumawe -Aceh

Bireun - Aceh Sarolangun - Jambi

Lembata - East Nusa Tenggara

Buru - Maluku

DKI Jakarta Langsa - Aceh Aceh Barat Daya

Tebo - Jambi Landak - West Kalimantan

West Southeast Maluku

Banten Sabang - Aceh Aceh Tenggara Musi Banyuasin -South Sumatra

Barito Selatan - Central Kalimantan

Central Maluku

Gorontalo Tebing Tinggi -North Sumatra

Gayo Lues - Aceh

Bengkulu Tengah Kotawaringin Barat -Central Kalimantan

Morotai Island -North Maluku

West Sulawesi

Payakumbuh -West Sumatra

Aceh Barat - Aceh

Tulang Bawang Barat - Lampung

Hulu Sungai Utara -South Kalimantan

Halmahera Tengah - North Maluku

West Papua Pekanbaru - Riau Nagan Raya - Aceh

Mesuji - Lampung Barito Kuala - South Kalimantan

Tambrauw - West Papua

Cimahi - West Java

Aceh Tengah Lampung Barat Banggai Islands-Central Sulawesi

Maybrat- West Papua

Tasikmalaya -West Java

Aceh Tamiang Tulang Bawang -Lampung

Buol - Central Sulawesi Sorong - West Papua

Singkawang -West Kalimantan

Bener Meriah -Aceh

Jepara - Central Java

Kolaka Utara -Southeast Sulawesi

Tolikara - Papua

Source: Election Committee, Bahana

Jakarta’s Cards

Smart Jakarta Card

> Launched in December 2012 (Jokowi era)> To fund poor students, in elementary - high school> Coverage of funding: Tuition fees, books, stationery, uniforms, bags, nutrition, glasses and hearing aids > Public school student funds: IDR210k (elementary), IDR260k (junior high school), IDR375k (high school)> Private school student funds: IDR130k (elementary), IDR170k (junior high school), IDR290k (high school)> Coorporated with Bank DKI

Healthy Jakarta Card

> Launched in November 2012 (Jokowi era)> To fund free health services for Jakarta residents> Coverage of funding: Inpatient and outpatient services in government hospitals and appointed private hospitals> Available at 32 goverment and 16 private hospitals> Used for treatment, as well as prevention> Coorporated with Bank DKI

Jakarta One Card

> Launched in June 2016 (Ahok era)> To establish cashless society and smart city development> Not distributed yet> Can be used to purchase Transjakarta ticket, healthcare services, flat rents, retribution, tax services, parking charges and also SME loans.> Coorporated with Bank DKI

Source: Bahana, various sources

2017 Compendium

57

Jakarta governor election: An important, 3-way heated race Jakarta’s governor election, with some 12.7mn voters, is being

contested in a heated three-way race, and could be a precursor of what will unfold in 2019, in our view. Note that Jakarta accounts for around 20% of Indonesia’s GDP.

There are three political groupings within the Jakarta governor race: (1) Agus Yudyohono, SBY’s son, and Sylviana are supported by the Democratic Party, PPP, PKB and PAN political parties; (2) Ahok and Djarot supported by PDIP, Golkar, Nasdem, and Hanura; and (3) Anies and Sandiaga are backed by Gerindra and PKS political parties.

According to recent polls, Basuki Purnama (Ahok) and Djarot Hidayat poll has decreased from no. 1 pre-blasphemy case to no. 2 post-blasphemy case. If Agus, SBY’s son were to be the next Jakarta Governor, It is possible that he may follow in the previous foot step of Jokowi, and run in the 2019 Presidential elections.

Jakarta governor pairings: A precursor of 2019 Presidential race

Ahok (50) - Djarot Hidayat (54)

Anies Baswedan (47) - Sandiaga Uno (47)

Agus Yudhoyono (38) - Sylviana Murni (58)

SBY camp Jokowi camp

Prabowo camp

#1 #2

#3

Source: Election Committee, Bahana

Background of the candidates No Candidate / age Background 1 Agus Harimurti

Yudhoyono / 38 Army Mayor (2016)

Sylviana Murni / 58 Former Governor Deputy of Tourism, Central Jakarta Mayor (2010)

2 Ahok / 50 Governor of Jakarta, Vice Governor of Jakarta (2014)

Djarot Saiful Hidayat / 54

Vice Governor of Jakarta, Blitar Mayor (2010)

3 Anies Baswedan / 47

Former Minister of Education, Founder of Indonesia Mengajar (an Indonesia's NGO in education)

Sandiaga Uno / 47 Former Director of SRTG IJ, Director of ADRO (2015)

Source: Bahana, various sources

Polling on Jakarta governor candidates, Oct – Nov 2016

22.4

45.4

20.7

11.6

30.426.2 24.5

18.9

05

101520253035404550

Agus Yudhoyono -Sylviana Murni

Ahok - Djarot Hidayat Anies Baswedan -Sandiaga Uno

Swing voters

(%)

Oct-16 Nov-16

Source: SMRC, Indikator

2017 Compendium

58

Ahok: A liability for Jokowi Following his speech at Seribu Islands, current Jakarta Governor,

Ahok, a Christian, is becoming a political liability for Jokowi. If not resolved properly, this could substantially weaken Jokowi’s position, a possible market negative.

In Ahok’s public appearance, he stated that voters should not be tricked by politicians, who cite Al-Maidah verse 51 from the Holy Qur’an to justify their assertion that leaders must be Muslim. This has resulted in massive rallies by some Muslim organizations against Ahok on 4 November 2016.

Based on Indonesia’s Criminal Law Book, article No. 156, blasphemy or defamation of religious elements is a violation of the law and violators could receive a maximum 5 years of imprisonment.

Blasphemy case: Ahok summoned by …

Source: Tempo

Indonesia’s Criminal Law on blasphemy

Article 156 A person who publicly gives expression to feelings of hostility, hatred or contempt against one or more groups of the population of Indonesia, shall be punished with a maximum imprisonment of four years.

Article 156a A maximum imprisonment of five years shall be imposed upon any person who deliberately in public gives expressed feelings or commits acts: (a) which principally have the character of being at enmity with, abusing or staining a religion, adhered to in Indonesia; (b) with the intention to prevent a person to adhere to any religion based on the belief in the almighty God. Source: Hukumonline.com

1st rally: 14 October 2016

Source: Tempo

… the Police Criminal Investigation Directorate

2017 Compendium

59

Rally on blasphemy Police set up 400 Brimob (Mobile Brigade) members elected from

different regions to secure the planned demonstration on 4 November, from the Istiqlal Mosque to the State Palace. The police will use a white turban, fez Hajj and be unarmed.

Fahri Hamzah and Fadli Zon, Vice Chairmen of the House of Representatives (DPR), were reported by Team Legal Counsel of the Enforcement Committee to the Court Honor Board (MKD), for inciting a mass demonstration that occurred on 4 November in Jakarta.

On 2 December, the police has arrested eight well-known activists including: Rachmawati Soekarno Putri (Megawati’s younger sister), Ratna Sarumpaet, Ahmad Dani, Kivlan Zein, and Sri Bintang Pamungkas, for allegedly attempting to undermine the Jokowi government. This suggests that Jokowi remains firmly in power.

2nd rally: 4 November 2016

Source: Tempo

3rd rally: 2 December 2016

Source: Tempo

Some activists allegedly arrested on 2 December 2016

Ratna SarumpaetActivist

Rachmawati Soekarno PutriActivist, Megawati's sister

Sri Bintang PamungkasActivist

Kivlan ZeinFormer Army Strategic Reserves

Command Head of Staff(Kostrad)

Ahmad DhaniVice Regent candidate

of Bekasi

Adityawarman ThahaFormer Special Staff Military Chief

Rijal KobarActivist

Firza HuzeinActivist

Eko Putro SantjojoActivist

JamranCoordinator of North Jakarta

Society Alliance

Source: Tempo

2017 Compendium

60

Jokowi’s efforts to shore up support from important political figures

Source: Kompas, Bahana

11 November 2016

17 November 2016

1 November 2016

Met the army at army headquarters; Met PBNU's advisory board Ma'ruf Amin Met Prabowo Subianto at the Presidential Palace

31 October 2016

Met Prabowo Subianto, opposition head from Gerindra, at Prabowo’s ranch

Met 78 Senior Muslim leaders and scholars from modern Islamic boarding school and group in Banten and West Java

10 November 2016

a. Met marine troops at Cilandak headquartersb. Met mobile brigade corps at Kelapa Dua headquarters

7 November 2016

Met Chief of Muhammadiyah Haedar Nashir, Chief of Indonesian Ulama Council (MUI) Ma’ruf Amin, Chief of Nahdatul Ulama (PBNU) Said Aqil Siroj at the Presidential Palace

2017 Compendium

61

Source: Kompas, Bahana

Met Zulkifli Hasan, Chief of National Mandate Party (PAN) at the Presidential Palace

Met Muhaimin Iskandar, Chief of National Awakening Party (PKB) at the Presidential Palace

30 November 2016

30 November 2016

30 November 2016

United Archipelago Movement held by Armed Forces Chief, Gatot Nurmantyo; these movements were held in all provinces throughout Indonesia

2 December 2016

Jokowi joined the Friday prayer with 2 December rally participants in National Monument (Monas)

Location: Presidential Palace Met: a. Megawati Soekarnoputri, Chief of Indonesian Democratic Party of Struggle (PDI-P)

b. Rohamurmuziy, Chief of Development Unity Party (PPP) c. Surya Paloh, Chief of Democratic National Party d. Setya Novanto, Chief of Golkar party

21 and 22 November 2016

2017 Compendium

62

2nd reshuffle: Return of the queen; Possible 3rd reshuffle? Speculations are rife that there could be a 3rd cabinet reshuffle in the

offing as Jokowi asked for political support from various political parties to help tilt the balance of power given recent attempt to have him removed from office.

In August 2016’s 2nd cabinet reshuffle, the return of Sri Mulyani (No. 3) was among the biggest market surprises and has been positive due to her credibility and attitude towards good governance during her tenure as Finance Minister back in 2007-2010.

In this second cabinet reshuffle, we saw 9 new faces, with changes in 12 ministerial posts as well as the Head of the Coordinating Investment Board. With the new composition, 16 ministers (40% of the 42 cabinet members, of which 34 are ministers) belong to political parties while the remaining 60% are professionals.

New faces and rotations in the cabinet

Background of new cabinet members No Position Incumbent Current Background 1 Minister of Coordinating Political,

Legal and Security Affairs Luhut Pandjaitan Wiranto Chief of People's Conscience Party

(Hanura) 2 Minister of Coordinating Maritime

Affairs Rizal Ramli Luhut Pandjaitan Former Minister of Coordinating

Political, Legal and Security Affairs 3 Minister of Finance Bambang

Brodjonegoro Sri Mulyani World Bank Managing Director

4 Minister of National Development Planning Board

Sofyan Djalil Bambang Brodjonegoro

Former MoF

5 Minister of Agrarian and Spatial Planning

Ferry Mursidan Sofyan Djalil Former Minister of National Development Planning Board

6 Minister of Trade Thomas Lembong Enggartiasto Lukita The House member (NasDem), businessman

7 Head of Investment Coordinating Board

Franky Sibarani Thomas Lembong Former Minister of Trade

8 Minister of Transportation Ignatius Jonan Budi Karya Sumadi CEO of Angkasa Pura II (state-owned airport company)

9 Minister of Apparatus and Bureaucracy

Yuddy Chrisnandi Asman Abnur PAN's politician

10 Minister of Culture and Elementary and Secondary Education

Anies Baswedan Muhadjir Effendy Rector of Muhammadyah University, Malang

11 Minister of Industry Saleh Husein Airlangga Hartanto Former Indonesia Listed Companies Association and The House member

12 Minister of Villages, Disadvantaged Regions and Transmigration

Marwan Jafar Eko Putro Sandjojo Former GM Indonesia Farming

13 Minister of Energy & Mineral Resources

Sudirman Said Ignatius Jonan Former Minister of Transportation

14 Vice Minister of Industry - Franky Sibarani Former Head of Investment Coordinating Board

15 Vice Minister of Energy & Mineral Resources

- Archandra Tahar Former Minister of Energy & Mineral Resources

Source: Cabinet Secretary, Bahana

Source: Cabinet Secretary, Bahana

10

1

2

4

3

5

6

12

13

7

11

14

9

Incumbent New Incumbent New

8

15

2017 Compendium

63

The new Military & Intelligence Agency Chiefs For an emerging market like Indonesia, military developments remain

of paramount importance, particularly with the installation of Gatot as the new Military Chief. It is interesting to see that Megawati was neither able to assert her choice (#2) for Military Chief nor have Budi Gunawan (#5) as Police Chief.

However, as a compromise with Megawati, Jokowi has appointed Budi Gunawan as head of the new National Intelligence Agency (BIN), replacing Sutiyoso, to balance the political situation.

In his effort to improve the intelligence function in Indonesia, Jokowi has appointed Gories Mere (#6) as Intelligence Special Staff to report directly to the President himself.

Chiefs of Armed Forces New Intelligence structure

President

5

61

2 43 Special Staff

Head of BIN

Source: Tempo, Bahana

Military Chief appointments, 2006-15 General Edi Sudradjat

1993(Army)

General Feisal Tanjung

1993 - 1998(Army)

General Wiranto

1998 - 1999(Army)

Admiral Widodo Adi Sutjipto

1999 - 2002(Navy)

General Endriartono Sutarto

2002 - 2006(Army)

Marshal Djoko Suyanto

2006 - 2007(Air Force)

General Djoko Santoso

2007 - 2010(Army)

Admiral Agus Suhartono

2010 - 2013(Navy)

General Moeldoko

2013 - 2015(Army)

General Gatot Nurmantyo

2015(Army)

Source: Military, Bahana

Personal details

No Position Name/Age Background

1 Military Chief Gatot Nurmantyo/ (55)Former Commander of Army’s Strategic Reserves, Former Governor of Military Academy

2 Navy Chief Ade Supandi/ (54) Former Chief of General Staff, Former Governor of Navy Academy

3 Army Chief Mulyono/ (54) Former Commander of Army’s Strategic Reserves, Former Commander of Jayakarta’s Military Command

4 Air Force Chief Agus Supriatna/ (56) Former Chief of General Staff , Former Commander of Air Force Operations

5 National Intelligence Agency Chief Budi Gunawan/ (57) Former Vice Police Chief, Former Police’s

Education Institution

6 Intelligence Special Staff Gories Mere/ (61) Narcotics Agency Chief, Deputy of

Police’s Criminal Directorate Source: Tempo, Bahana

2017 Compendium

64

New national Police Chief: A corruption reform determinant On 14 July, Jokowi appointed Tito Karnavian as Indonesia’s new Police

Chief, leapfrogging over several older candidates and bypassing Budi Gunawan’. Overall, we believe this is positive for Jokowi’s corruption reform effort.

Comm. General Syafruddin has been named as the next Deputy Police Chief, replacing Genr Budi Gunawan, who has replaced Sutiyoso as Intelligence Agency (BIN) Chief.

General Tito Karnavian presented 11 police priority programs: (a) internal reformation, (b) public service acceleration, (c) quality improvement, (d) internal welfare development, (e) service quality, (f) crime prevention, (g) public safety, (h) professional law enforcement, (i) internal system development, (j) quick wins program and (k) public awareness of citizens’ security and public order.

Police Chief

Genr Tito KarnavianGenr Badrodin Haiti

Source: Tempo

Vice Police Chief

Comm. Genr SyafruddinGenr Budi GunawanFormer Vice National Police

Chief/ New Head of BINNew Vice National Police

Chief

Old New

Source: Tempo

Personal details No Name/Age Accomplishments Retirement

1 Genr Tito Karnavian / 51

Current Police Chief, Chief of National Counter-Terrorism Agency (BNPT), Jakarta Police Chief (2016)

2022

2 Com. Genr Syafruddin / 55

Current Vice Police Chief, Chairman of Police Educational Institution (2016) 2019

Source: Tempo, Bahana

2017 Compendium

65

Foiling corruption and terrorism cases positive for investment In 2016, Indonesia has made solid progress in arresting both

corruption and bombing suspects. On the latter, 20 suspected terrorists, most allegedly affiliated with ISIS, have been arrested by the police.

On the corruption front, total of 18 suspects were already arrested by agents of the Corruption Eradication Commission (KPK). Some of the suspects were government officials.

Corruption and security are two areas of focus in Jokowi’s administration. Based on the government’s efforts, we believe there will be improvements in the country, which would be positive for investment on the ground.

Arrested corruption suspects, 2016 ytd No Name Position Case Alleged

bribe amt 1 Handang Soekarno Tax official Bribery on corporate tax reduction IDR1.9bn 2 Officials Officials of Ministry of Transportation Extortion on permits IDR1.2bn 3 Yan Anton Ferdian Regent of Musi Banyuasin Bribery on procurement in education division IDR1bn 4 Irman Gusman Chairman Regional Representative

Council (DPD) Sugar import quota IDR100mn

5 Rohadi Substituted clerk of North Jakarta court Bribery in molestation of minors case IDR250mn 6 Putu Sudiartana Member of House Representative Bribery on road building in West Sumatra SGD40k 7 Muhammad Santoso Substituted clerk of Central Jakarta court Bribery to accelerate civil law case SGD28k 8 Janner Purba Judge of Bengkulu court Bribery to avoid state hospital official salary

corruption case IDR150mn

9 Ojang Suhandi Regent of Subang Social security fund corruption case IDR528mn 10 Devianti Roachaeni Prosecutor in West Java Court Social security fund corruption case IDR528mn 11 Fahri Nurmallo Prosecutor in West Java Court Social security fund corruption case IDR528mn 12 Edy Nasution Substituted clerk of Central Jakarta court Bribery to accelerate civil law case IDR50mn 13 M. Sanusi Member of DKI Jakarta Regional House

Representative Jakarta reclamation act discussion IDR1.1bn

14 Ariesman Widjaja President Director of PT Agung Podomoro

Jakarta reclamation act discussion IDR1.1bn

15 Sudi Wantoko CFO of PT Brantas Abipraya (SoE) PT Brantas Abipraya corruption case USD148k 16 Dandung Pamularno Senior manager of PT Brantas Abipraya

(SOE) PT Brantas Abipraya corruption case USD148k

17 Andri Tristianto Sutrisna Official on Supreme Court Civil law case in Mataram court IDR400mn 18 Damayani Wisnu Putranti Member of House Representative Bribery from CEO PT Windu Tunggal Utama IDR8bn

Source: Tempo, Bahana

Bombing cases in 3 regions, 2016 Source: liputan6.com, Bahana

Arrested bombing suspects, 2016 ytd No Suspects name Location Terrorism case Affiliation

1 RPW Majalengka, West Java Samarinda bombing Ansharut Daulah, Pepi Fernando 2 Juhanda Samarinda, East

Kalimantan Samarinda bombing Ansharut Daulah, Pepi Fernando

3 WW, S, R, D, and AU Bekasi, West Java 4 Abu Sama Kalideres, Jakarta 5 Gatot Witono Magetan, East Java Jamaah Islamiyah 6 LH Batam, Riau Islands Plan to do bombing in

Singapore Kitabah Gonggong and Bahrun Naim

7 Munir Kartono Gunung Putri, West Java Surakarta bombing Bahrun Naim 8 Santoso Poso, Central Sulawesi Poso bombing East Mujahidin Indonesia and ISIS 9 Basri Poso, Central Sulawesi Poso bombing East Mujahidin Indonesia and ISIS

10 Priyo Budi Purnomo Surabaya, East Java Plan to do bombing Abu Jandal and ISIS 11 Befri Rahmawan Norcahyono Surabaya, East Java Plan to do bombing Abu Jandal and ISIS 12 Feri Novendi Surabaya, East Java Plan to do bombing Abu Jandal and ISIS 13 Mustafa Poso, Central Sulawesi East Mujahidin Indonesia and ISIS 14 Rudi Hadiyanto Malang, East Java 15 K and LA Karawang, West Java 16 Edi Santoso Bandar Lampung,

Lampung East Mujahidin Indonesia and ISIS

17 Candra and Adri Luwu, South Sulawesi East Mujahidin Indonesia and ISIS 18 Didin Nasrul Mukmin Denpasar, Bali Sarinah bombing ISIS and Bahrun Naim 19 DAP Tangerang Sarinah bombing ISIS and Bahrun Naim 20 Kuswanto Ciputat, Tangerang Sarinah bombing ISIS and Bahrun Naim

Source: Tempo, Bahana

Sarinah Afif and 4 others, backed by ISIS, who allegedly bombed a police station and an American coffee shop in the heart of Jakarta on 14 January, targeting police officers and tourists. Seven people died, including 2 foreigners and all suspects, and some were injured.

SurakartaNur Rohman, a terrorist allegedly backed by ISIS, attacked a police station in Surakarta, Central Java on 5 July, targeting police officers post their morning assembly. The suspect died and a police officer who blocked the suspect was injured.

Samarinda churchJuhanda, terrorist suspect who has alleged affiliation with the Sarinah bombing suspects and ISIS, attacked a church during a service in Samarinda, East Kalimantan, on 13 November, targeting church members. The suspect was arrested. A child died and several other children were injured.

2017 Compendium

66

Corruption Commission: Investigating past cases during SBY era Jokowi is taking an interest to investigate 3 cases which were inherited

from the previous administration. Jokowi has already asked the Corruption Eradication Commission (KPK) to investigate the forgotten cases: Hambalang, Century Bank and 34 flopped power plants, which all occurred during the SBY regime.

The country has lost IDR700bn from the Hambalang project, IDR8tn from Bank Century and around IDR11tn due to 34 flopped power plants, most of which are in Kalimantan.

Two suspects have been arrested related to the state loss of IDR2tn on e-ID procurement. Likewise, there are currently two suspects related to the Bank Century case.

Hambalang suspects No Suspect name Position Alleged evidence

1 Deddy Kusdinar Sport Ministry's Head of Planning Bureau

IDR1.25bn

2 Andi Alifian Mallarangeng Former Minister of Youth and Sports IDR4bn and USD550k

3 Andi Zulkarnain Mallarangeng

Brother of A.A. Mallarangeng's IDR4bn

4 M. Nazaruddin Former Treasury of Democratic Party IDR10bn 5 Anas Urbaningrum Former Chief of Democratic Party IDR2.2bn 6 Mahfud Suroso Former CEO of Dutasari, a

subcontractor company for electricity IDR28.8bn

7 Mahyudin The House's Chief of Commission X IDR500mn 8 Olly Dondokambey The House's Budget Agency member IDR2.5bn 9 Joyo Winoto Former Head of National Land Agency IDR3bn

10 Wafid Muhamaram Former Secretary of Youth and Sports Ministry

IDR6.5bn

11 Teuku Bagus M. Noor Former ADHI's Operational Director IDR4.5bn 12 Officials Ministry of Public Works IDR135mn

Source: Tempo

Suspects in Bank Century case; Suspects in e-ID case

Robert Tantular

Owner of Bank Century (outlaw)

Budi MulyaFormer BI Deputy Governor

(suspect)

Hermawan MuslimPresident Director of

Bank Century (suspect)

IrmanFormer Domestic Affairs Ministry's

General Director of Population

SugihartoFormer Domestic Affairs Ministry's

Director

e-ID card Source: okezone.com, Bahana

34 flopped power plants Location Province Energy source Capacity Location Province Energy source Capacity

Kuala Tungkal Riau Coal fire 2x7MW Gorontalo Gorontalo Coal fire 2x25MWBengkalis Riau Coal fire 2x10MW Lapal North Sulawesi Coal fire 2x3MWTembilahan (EPC) Riau Coal fire 2x7MW Talau North Sulawesi Coal fire 2x3MWTembilahan (IPP) Riau Coal fire 2x5.5MW Alor East Nusa Tenggara Coal fire 2x3MWIpuh Seblat Bengkulu Coal fire 2x3MW Atambua East Nusa Tenggara Coal fire 4x6MWKuala Pambuang Central Kalimantan Coal fire 2x3MW Rote Ndao East Nusa Tenggara Coal fire 2x3MWMalinau North Kalimantan Coal fire 2x3MW West Sumbawa West Nusa Tenggara Coal fire 2x7MWParit Baru West Kalimantan Coal fire 2x50MW Bima West Nusa Tenggara Coal fire 2x10MWBengkayang West Kalimantan Coal fire 2x27.5MW Kendari Southeast Sulawesi Coal fire 1x10MWTanjung Redep East Kalimantan Coal fire 2x7MW Bau-Bau Southeast Sulawesi Coal fire 2x7MWTanjung Selor North Kalimantan Coal fire 2x7MW Raha Southeast Sulawesi Coal fire 2x3MWSampit Central Kalimantan Coal fire 2x25MW Wangi-Wangi Southeast Sulawesi Coal fire 2x3MWBuntok Central Kalimantan Coal fire 2x7MW Sofifi North Maluki Coal fire 2x3MWKotabaru South Kalimantan Coal fire 2x7MW Timika Papua Coal fire 4x7MWTarakan North Kalimantan Coal fire 2x7MW Waii Papua Coal fire 2x15MWJempana Bali Coal fire 2x9MW Kalibumi West Papua Mini hydro 2x6MWBuleleng Bali Coal fire 2x0.6MW Jayapura Papua Coal fire 2x15MW Source: liputan6.com, Bahana

2017 Compendium

67

Ahok’s case and Jakarta governor race: The end game

Ahok’s Jakarta Governor Race Result B L A S P H E M Y

C A S E

R E S U L T S

WIN LOSE RIOT

NOT GUILTY Positive for market: Semi negative for market: S E L L

Progressive perception on law Positive perception on law

Stronger Jokowi Very weak Jokowi

Weak opposition Raising opposition

Solid implementation of policies Some policy changes expected I N D O N E S I A

Positive attitude toward minority Semi positive sentiment toward minority

GUILTY Possible market de-rating: Negative for market:

Djarot, vice governor, to assume Ahok’s position Negative perception on law

PDIP to become stronger Deterioration in confidence for Jokowi

Slightly pessimistic perception on law Stronger opposition

Weaker Jokowi Uncertainties Unfair treatment toward minority Negative attitude toward minority Source: Bahana

2017 Compendium

68

2019 election outlook: Plenty of excitement For the first time in the history of Indonesia, the 2019 parliamentary &

presidential elections will be conducted simultaneously. The election bill is expected to be finalized in mid-2017.

In 2Q17, we will have a completely new Election Commission (KPU), including the KPU Chief, which should further strengthen Jokowi’s position as we head into 2019 Presidential elections. Juri Ardiantoro, former commissioner of the KPU, has become the current KPU Chief for the remaining leadership period of 8 months, replacing Husni Manik who passed away on 7 July.

On the 2019 presidential elections, the voting would be changed to a new online system, possibly provided by Smartmatic, a US company based in London, which had been used in countries like the Philippines. Note, however, that there have been incidences of online crime in the Philippines’ 2016 presidential vote.

How Jokowi may run in 2019

Join another political party

Source: Detik, Bahana

Election Commission Chief replacement

Husni Kamil Manik Juri Ardiantoro

Simultaneous parliament-presidential elections and electronic-based elections

No General Election Commision (KPU)1 Planning and preparing general election 2 Accepting submission, examining, and establishing political parties eligible to compete in an election3 Establishing the Indonesian Election Commission, which will coordinate election management from

central down to each polling stations 4 Establishing the number of seats for each legislative bodies (the House and Regional House) in each

electoral district 5 Establishing legislative election results (the House and Regional House) in each electoral district6 Collecting and systematically arranging materials and data for Election results data7 Leading stages of Election management

Source: Kontan, Bahana

Smartmatic’s projects

Venezuela2012 & 2015

Brazil2012

The Philippines2008, 2010, 2013 &

2016

Belgium2012

Bolivia2009

Mexico2009

Zambia2010

Indonesia2019

Source: Kontan, Bahana

2017 Compendium

69

PUBLIC POLICIES

2017 Compendium

70

SOE Super Holding Co.: Bigger & stronger SOE Minister Rini Soemarno has stated that the government plans to

establish an SOE Super Holding body to strengthen the funding foundation for SOEs.

President Jokowi, Vice President Jusuf Kalla and MoF Sri Mulyani are expected to be the commissioners of the SOE Super Holding entity, which is expected to be implemented in 2017. SOE minister Rini Soemarno would be CEO of the SOE Super Holding body.

As of 2015, compared to its peers, the SOE Super Holding company is estimated to have USD429bn in total assets, much higher than both Temasek Holdings’ (Singapore) USD295bn and Khazanah Nasional’s (Malaysia) USD22bn on a combined basis.

SOE Super Holding body

SOE Super Holding

Sectoral holdings Stand alone SOEs

Source: SOE Ministry, Bahana

SOE Super Holding: Board of Commissioners

CEO

Joko Widodo Jusuf Kalla

Rini Soemarno

Sri Mulyani

Source: CNN Indonesia, Bahana

Comparison among peer holdings, 2015

Total asset (USDbn) 295.2 21.6 429.3Total debt (USDbn) 23.7 11.9 281.2Equity (USDbn) 159 9.3 148.2Revenue (USDbn) 73.9 1.5 132.9Tax paid (USDbn) 1.8 0 3Net income (USDbn) 10.5 0.3 11.4Dividends (USDbn) n.a 0.3 2.8

Revenue to GDP (%) 2.7 0.5 15.4Asset to GDP (%) 10.8 7.3 49.8Gross gearing (%) 14.9 128 190ROE (%) 6.6 2.9 7.7Dividend contribution to government revenue (%) n.a. 0.5 2.5 Source: SOE Ministry, Temasek Holding, Khazanah Nasional, Bahana

2017 Compendium

71

SOE holdings: Consolidation in progress SOE Minister Rini Soemarno stated that the planned formation of the

7 SOE holdings: Staples, Mining, Energy, Financial Services, Construction, Housing and Maritime. Theoretically, the merger of some similar companies could introduce greater efficiencies to SOEs and deliver improved profitability for the shareholder (government). However, too much privilege on the new big SOE holdings could create some disadvantages for private corporates.

On this restructuring, the most interesting part is the merging of the 4 SOE banks, reflecting c.11% of JCI market cap. Worth noting also is the merger between PGAS and Pertagas under Pertamina which would mean less competition and greater benefit for PGAS.

Most of these SOE restructuring are likely only to commence in 2017. In general, whether the creation of these new SOE holdings would disadvantage minorities would hinge on the various share swap calculations.

Projected SOE staples holding

100.0%* 100.0%* 100.0%* 100.0%* 100.0%*100.0%* 100.0%*

Source: Kontan, Bahana

Projected SOE mining holding

65.0%* 65.0%*65.0%*

100.0%*

9.36%*

Source: Kontan, Bahana

Projected SOE energy holding

57%+x*

Public

100.0%*

43%-x*

Source: Kontan, Bahana

2017 Compendium

72

Projected SOE financial services holding

Source: Kontan, Bahana

Projected SOE toll-road and construction holding

66%* 70%* 100%* 65%* 100%*

Source: Kontan, Bahana

Projected SOE housing holding

100.0%* 51.0%* 100.0%*100.0%* 100.0%*51.0%*

Source: Kontan, Bahana

Projected SOE maritime holding

Ports

Shipping

Industrials

Source: Kontan, Bahana

2017 Compendium

73

SOE companies: Breakdown Most SOE companies are from the processing industry (25%),

transportation & warehousing (21%) and financial services (16%).

Based on 2015 data, SOE net income is mostly from financial services & insurance at USD6.5bn in total (43% of contribution), followed by IT (15%), mining (14%) and gas industry (14%).

By asset, financial services also have the highest total assets of USD200bn (49% of contribution), followed by gas, and the steam and cold air procurement sector (23% of total assets) in 2015.

Number of companies, 2015 Water supply, waste

management and recycling

2%

Transportation & warehousing

21%

Real estate2%

Professional, scientific & technical services

8%

Processing industry25%

Wholesale & retail trading

2%

Accomodation, food and beverage

1%

Construction8%

Financial services and insurance

16%

Gas, steam & cold air procurement

2%

IT2%

Mining4%

Plantation, forestry, fishery & agriculture

7%

Source: SOE Ministry, Bahana

Net income contribution, 2015

Water supply, waste management &

recycling0% Real estate

0%

Professional, scientific & technical services

0%

Wholesale & retail trading

1%

Accomodation, food and beverage

0%Construction

2%Plantation, forestry, fishery & agriculture

1%

IT15%

Transportation & warehousing

6%

Processing industry4%

Mining14%

Gas, steam & cold air procurement

14%

Financial services and insurance

43%

Source: SOE Ministry, Bahana

Asset contribution, 2015 Water supply, waste

management & recycling

0%

Real estate0%

Professional, scientific & technical services

0%

Wholesale & retail trading

0%

Accomodation, food and beverage

0%

Construction2%

Plantation, forestry, fishery & agriculture

2%IT

3% Transportation & warehousing

4%

Processing industry5%

Mining12%

Gas, steam & cold air procurement

23%

Financial services and insurance

49%

Source: SOE Ministry, Bahana

2017 Compendium

74

Jokowi’s reforms and stimulus The Jokowi government has launched 13 economic policy packages

and 204 prospective regulations, from improving national industry competitiveness to low-income residential property incentives.

So far, successful government reforms include easing investment permits, creating special economic zones and implementing a new minimum-wage formula.

Recent news reports indicate that the government may launch phase 14 of its economic policy package, focusing on e-commerce regulation. Following this, there could be packages on warehouse revitalization, incentives for the Indonesian diaspora, aviation industry development, intellectual property services, SME product standardization and sector deregulation.

Economic reforms progress No. Project Accomplishment 1. Bonded logistic centers Launched: 12; In progress: 16; including airplane

maintenance industry and oil 2. Investment permits USD16bn of registered investment commitment or 88

projects 3. Industrial zones Kendal, Demak, Ungaran, Bitung 4. New formula for wage

system 14 provinces already set 2016 minimum wage system in accordance to government regulation No. 78/2015)

5. Special economic zones 42 business sectors with total value of IDR28.7tn 6. Export financing INKA exported 150 train carriages worth USD72.3mn to

Bangladesh 7. EoDB for SMEs Simplify permits and procedures which shorten lead time

and costs in 10 indicators 8. Fiscal incentive

simplification 18 companies use it with average processing time of 13.4 days (previous: 2 years)

9. SME's export product aggregator

Launched with maiden export from North Sulawesi through SOEs' synergies program

10. Revisions on negative list Implemented since 24 June 2016 with 527 of companies participating

Source: Government, Bahana

Summary of economic stimulus packages Phase 1, 9 September 2015 Phase 7, 7 December 2015 Phase 9, 27 January 2016 Improving national industry competitiveness Stimulating business activities in labor-intensive

industries nation-wide through incentives in the form of accelerating land certification process for individuals

Accelerating electricity generation, stabilizing meat prices and improving rural-urban logistics sector

Phase 2, 29 September 2015 Phase 10, 11 February 2016 Easing permit requirement and simplifying export proceeds requirement

Revising negative investment list and improving protection for SMEs

Phase 3, 7 October 2015 Phase 11, 29 March 2016 Financial services facilitation, export financing and elimination of business unnecessary burden

Stimulating national economy through facilitation to SMEs and industries

Phase 5, 22 October 2015 Phase 12, 28 April 206 Improving industry and investment climate through tax incentives and deregulating of sharia banking

Improving Indonesia's rank on ease of doing business

Phase 6, 6 November 2015 Phase 8, 21 December 2015 Phase 13, 24 August 2016 Stimulating economic activities in border areas and facilitating strategic commodities availability

Resolving land acquisition disputes, intensifying domestic oil production, stimulating domestic parts and aviation industries

Residential property for low income families

Source: Government, Bahana

204 prospective regulations

154 ministerial decrees signed

4 presidential decrees signed

202 signed regulations

2017 Compendium

75

Jokowi’s pro grass-root projects

By October 2016, village funds utilization had reached 80% of the targeted IDR47tn full-year total amount. Based on this program, we expect to see higher village funds amounting to IDR120tn in 2018. President Jokowi is planning to increase village infrastructure and provide town planning through village funds.

By 2017, Jokowi plans to reach self-sufficiency for some staples, e.g. rice, corn, soybean, cattle, etc. Recently, Jokowi launched new seeds of corn called NASA, which can grow 2 corns in 1 stem, obtained from the ministry of agriculture.

In order to increase staples production capacity, Jokowi stated that 9mn ha land distribution scheme is currently being prepared. The land will be given to farmers for free.

Jokowi’s 2015-18 village funds program

2015

Village funds IDR20tn

Total villages74,093

Amount/ villageIDR280bn

2016

Village fundsIDR47tn( 235%)

Total villages74,754

Amount/ villageIDR650bn ( 232%)

2017

Village fundsIDR60tn( 127%)

Total villages74,954

Amount/ villageIDR790bn ( 121%)

2018

Village funds IDR120tn( 200%)

Total villages74,954

Amount/ villageIDR1.4bn( 177%)

Source: Detik, Bahana

Jokowi’s staples self-sufficiency programs, 2017 Program Current 2017 target Rice production (tpa) 79.1mn 73mn (already achieved) Corn production (tpa) 23.5mn 20mn (already achieved) Soybean production (tpa) 885.5k 1.2mn Cattle production 2.8mn cows 2mn insemination acceptors and 1,200 breeds Chili production - To be developed in 25 provinces Onion production - To be developed in 33 provinces Sugarcane crop development 62,000ha 12,000ha farm land (already achieved) Reservoir - 11 new reservoirs Agriculture land optimization - 730,000ha Fertilizer distribution - 4mn ha Farm tools supply 49,200 units Irrigation development - 700,000ha Farming roads development - 9,400km Underground water supply trench - 23,000 units

Source: Kontan, Bahana

Jokowi’s land program: Priority recipients for 9mn ha in 25 provinces

Priority 1

Priority 2

Priority 3

Priority 4

Priority 5

Priority 6

Priority 6People who work in agricultural sector

Priority 5People in priority 6 who have income

less than USD2/day

Priority 4People in priority 5 that have been

farming and have > 0.5ha land

Priority 3People in priority 4 that have been

farming and have < 0.5ha land

Priority 2People in priority 3 who work with

other farmers

Priority 1People in priority 2 who are local

residents

Source: Kontan, Bahana

2017 Compendium

76

Jokowi’s ‘magic’ cards: Benefiting the low end The Prosperous Family Card (KKS) has replaced the Social Security

Card (KPS), which had been used for receiving subsidized rice (RASKIN), cash transfers for poor students (BSM) and unconditional cash transfers (BLSM).

Since Jokowi took office in 2014, the unemployment rate has fallen to 5.6% as of August 2016 (Feb 2015: 5.81%, -20bps).

The government has begun distributing new “farmer cards” as a way to monitor the effectiveness of agricultural subsidies and assistance programs for farmers. The cards have been administered to sugar-cane farmers and are to be offered to onion, corn and rice farmers.

Jokowi’s ‘magic’ cards and new farmer-card

Unemployment rate, February 2011 - August 2016

6.96

7.48

6.37

6.13

5.88

6.17

5.70

5.94

5.81

6.18

5.50

5.61

5

6

7

Feb-11 Aug-11 Feb-12 Aug-12 Feb-13 Aug-13 Feb-14 Aug-14 Feb-15 Aug-15 Feb-16 Aug-16

(%)

Source: CEIC

Source: Detik, Bahana

Prosperous Family Card (KKS)

> Social Security Card (KPS) substitution, as ID for poor families> Distribution target of 15.5mn (current: 14.5mn)> Distributed funds: IDR6.2tn with each family receiving IDR200k/month> Payable at community level

E-money Card

> Appearance is like a SIM card, with the account number the same as the mobile number.> Each family will receive 1 e-money card to be activated in the cellphone> Distributed funds: IDR6.2tn with each family receives IDR200k/ month> Families can refer the fund distribution by dialing*141*6# on their cellphone> Payable at the post offices

Healthy Indonesia Card (KIS)

> Issued to 6m poor families > Health insurance cards and BPJS cards are still usable> Serves as an insurance card> Distribution target to 88.2m families> Available at any clinic and hospital> Used for treatments, as well as preventions

Smart Indonesia Card (KIP)

> Reaching poor and slightly-above-poverty-line students of 6m> Distribution target of 20.3m students > Have distributed to 19.5m students> Distributed funds: Around IDR6.6tn for IDR225k/ student/ semester (elementary school), IDR375k/ student/ semester (middle school) and IDR500k/ student/ semester (high school)> Distributed in cash for buying books ,uniforms and other needs> Distributed by institutions appointed by Minister of Education

Farmer-card

2017 Compendium

77

Price controls: A double-edged sword The Ministry of Trade has made regulations for floor and ceiling prices,

with 7 commodities being regulated. The government plans to maintain inflation and cut out the middle-man from the distribution channel.

Jokowi’s economic policies should provide benefits at the grass-root level, as lower prices should lead to improved purchasing power for Indonesian consumers in the mid-to-low-end segments. The Directorate General of Poultry was recently removed for failing to lower beef prices.

That said, these government policies may necessitate higher imports due to potential domestic shortages.

Ministry of Trade Regulation no. 63/ 2016

No Staples

Floor price (for farmers)

(IDR / kg)

Ceiling price (for customers)

(IDR / kg)1 Rice

Dry grain harvest 3,700 -Dried paddy 4,500 -Rice 7,000 9,500

2 Corn15% water content 3,150 3,650 20% water content 3,050 -25% water content 2,850 -30% water content 2,750 -35% water content 2,500 -

3 SoybeanLocal 8,500 9,200 Import 6,550 6,800

No Staples

Floor price (for farmers)

(IDR / kg)

Ceiling price (for customers)

(IDR / kg)

4 Sugar

Basic price 9,100 -

Auction price 11,000 13,000

5 ChillyRed chilly 15,000 28,500 Big red chilly 15,000 28,500 Small red chilly 17,000 29,000

6 Onions 15,000 28,500 7 Meats 80,000

Beefs - 80,000

Buffalo meats - 65,000 Source: Trade Ministry, Bahana

Winners Sector Stock

Foods & Beverages ICBP, MYOR, ROTI

Improved purchasing power and lower raw materials cost

Retail AMRT, DNET, RALS, MIDI Improved purchasing power

Telco TLKM, EXCL, ISAT, TELE, ERAA EXCL, ISAT, FREN

Improved purchasing powerLower interconnection rates

Car rentals ASSA Higher utilization rates, helped by greater UBER & Grab presence

Source: Bahana

Losers Sector Stock Impact

Auto/Taxi ASII, BIRD, IMAS, TAXI Lower LCGC prices (4% of ASII and 14% of IMAS revenue) to also pave the way for increased UBER and Grab fleet

Aviation GIAA Price floor removal for flight ticket prices

Banks BBCA, BBRI, BMRI, BBNI, BDMN, BTPN, BBTN, BJBR, BJTM, BBKP

Single-digit lending rates and deposit rate ceiling of not more than BI rate will likely translate into NIM contraction

Flour milling INDF Lower flour prices (24% of INDF revenue) Gas PGAS Lower gas prices (89% of PGAS revenue)

Healthcare KLBF, MIKA, SILO, TSPC, KAEF

Lower drug prices (25% of KLBF, 47% of MIKA, 33% of SILO, 26% of TSPC and 27% of KAEF revenue)

Plantations AALI, SIMP, TBLA Lower cooking oil prices (60% of SIMP and <35% of AALI, 31% of TBLA revenue)

Poultry CPIN, JPFA, MAIN, SIPD Lower beef & chicken prices: 14% chicken – CPIN; 4% beef & 37% chicken - JPFA; 8% chicken for MAIN revenue

Property LPKR, CTRA Indirect price control through higher land & building tax for 2nd homes in Jakarta (33% marketing sales of LPKR & 30% of CTRA)

Rice distribution AISA, BISI Lower rice prices (67% of AISA, 8% of BISI revenue)

Sugar import TBLA Lower sugar prices (12% of TBLA revenue) Telco TLKM Lower interconnection rates (4% of TLKM revenue)

Toll roads ASII, JSMR, WSKT, CMNP, META

Lower tariffs for Lebaran week (100% of JSMR, 1% of WSKT, <1% of ASII and 100% of CMNP revenue)

Source: Bahana

2017 Compendium

78

Sri Mulyani: Raising market confidence Sri Mulyani, a former World Bank Managing Director, was named the

new MoF on 27 July 2016, replacing Bambang Brodjonegoro, who is now Minister of National Development Planning. We believe Sri Mulyani’s appointment has instilled confidence in the market.

Since her return, Sri Mulyani has focused on fiscal policies, in particular reducing the fiscal deficit and increasing tax revenue. We believe she has been instrumental in the success of the tax amnesty program.

Sri Mulyani has cut the budget for ministries and agencies by IDR117.4tn and reduced regional transfers by IDR72.9tn. In 2017, she plans to cut an additional IDR20.7tn from ministerial budgets.

Sri Mulyani at a glance

Professional background• Minister of Finance (2016- Now)• World Bank Managing Director

and Chief Operating Officer (2010-2016)• Minister of Finance (2008-2010)• Minister of National Development Planning (2004-2005)• IMF Executive Director (2002-2004)

Educational background• Bachelor of Economics from Universitas Indonesia (1981-1986)• M.Sc and Ph.D in Economics from University of Illinois at Urbana-

Champaign (1988-1992)

Source: Bloomberg

Tax policies and reforms Source: Government, Bahana

Budget cuts, 2016 vs. 2017

Source: Ministry of Finance, Bahana

Cigarette excise tax

Export duties

Increasing cigarette excise tax to 10.5% in 2017 (2016: 11.2%).

New tax scheme for animal skins (25%), woods (2-15%), cocoa (15%), palm oil and its derivatives (USD65-262/mt) for 2016 and minerals (60%) for 2017.

Tax official arrests

Herry Setiadji, Slamet Riyana, and Indarto Catur Nugroho (Jakarta tax officials) Handang Soekarno (Tax Directorate official)

Tax Amnesty The policy aims to increase tax revenue from asset declaration and repatriation. The domestic asset declaration and foreign repatriation will be charged 2%, 4%, 6% on 1

st-3

rd and foreign asset declaration will be charged 4%,

6% and 10% respectively.

2017 Compendium

79

Management changes: The past and future The Ministry of SoE has replaced many board directors in 2015 and

2016 under the new leadership of Rini Soemarno.

Some SoE board directors have served since 2012 and must retire.

The Board of Commissioners of Indonesia Financial Services Authority (OJK) is expected to be changed in 2017 as its terms will end next year. We expect the market to watch closely the new OJK team.

OJK and BI

Bank IndonesiaBoard of Governors

Ronald Waas(Deputy of Governor)Hendar(Deputy of Governor)

OJK Board of Commisioner

Muliaman Darmansyah Hadad(Chairman)Rahmat Waluyanto(Vice Chairman)Nelson Tampubolon(Banking Supervision Chief Executive)Nurhaida(Capital Market Supervision Chief Executive)Firdaus Djaelani(Non-Bank Financial Supervision Chief Executive)Ilya Avianti(Head Board of Auditors)Kusumaningtuti Sandiharmy Soetiono(Head Board of Consumer Education and Protection)

Source: Indonesia FSA, Bank Indonesia

SOE’s newly appointed directors

Ahmad Baiquni President DirectorPanji Irawan Director

Putrama Wahyu Setyawan DirectorSuprajato Director

Rico Rizal Budidarmo DirectorHery Sidharta DirectorAdi Susilowati Director

Bob Tyasika Ananta DirectorAnggoro Eko Cahyo DirectorImam Budi Sarjito Director

Asmawi Syam President DirectorSis Apik Wijayanto Director

Priyastomo DirectorSunarso Director

Susy Liestiowaty Director

Zulhelfi Abidin DirectorDonsuwan Simatupang Director

Haru Koesmahargyo DirectorKuswiyoto Director

Mohammad Irfan DirectorKartika Wirjoatmodjo President DirectorRico Usthavia Frans. DirectorSulaiman Arif Arianto Director

Tardi DirectorAhmad Siddik Badruddin Director

Kartini Sally DirectorHandayani Director

Catur Budi Harto DirectorAdi Setianto DirectorSulis Usdoko Director

Oni Febriarto Rahardjo DirectorRizkan Chandra President DirectorAhyanizzaman Director

Darmawan Junaidi DirectorBudi Siswoyo Director

Bank Rakyat Indonesia (BBRI)

Bank Tabungan Negara (BBTN)

Semen Indonesia (SMGR)

Bank Negara Indonesia (BBNI)

Bank Mandiri (BMRI)

Appointed Director Position

Budi Harto President DirectorHaris Gunawan Director

Budi Saddewa Soediro DirectorMochtar Riza Pahlevi President Director

Purwijayanto DirectorMuhamad Rizki DirectorEmil Ermindra Director

Tumiyana President DirectorM Aprindi Director

Abdul Haris Tatang Director M Toha Fauzi Director

Agus Pubrianto DirectorGandira Gutawa Sumapraja Director

I Gusti Ngurah Askhara DirectorAntonius N.S. Kosasih Director

Dilo Seno Widagdo DirectorDanny Praditya Director

Nusantara Suyono DirectorHendi Kusnadi Director

Telkom Indonesia (TLKM) Harry M Zen DirectorKimia Farma (KAEF) M. Wahyuli Syafari Director

Tedy Badrujaman President DirectorDimas Wikan Pramudhito Director

Johan N.B. Nababan DirectorPT. Bukit Asam (PTBA) Arviyan Arifin President DirectorWaskita Karya (WSKT) Nyoman Wirya Adnyana Director

Sukandar President DirectorDanang Danusiri DirectorImam Purwanto Director

Ogi Rulino DirectorTambok P Setyawati Director

Sigit Muhartono Director Nicodemus P. Lampe Director

Desi Arryani DirectorSubakti Syukur Director

Christiantio Prihambodo DirectorAnggiasari Director

Pembangunan Perumahan (PTPP)

PT. Timah (TINS)

Adhi Karya (ADHI)

Appointed Director Position

Wijaya Karya (WIKA)

Aneka Tambang (ANTM)

Krakatau Steel (KRAS)

Perusahaan Gas Negara (PGAS)

Garuda Indonesia (GIAA)

Jasa Marga (JSMR)

Source: Company

SoE directors with terms ending

Maryono President DirectorMansyur Syamsuri Director

Krakatau Steel (KRAS) Hilman Hasyim DirectorJisman Siagian Director

Pujianto DirectorRusdi Rosman Director

Destiawan Soewardjono DirectorBambang Pramujo Director

Perusahaan Gas Negara (PGAS) Hendi Kusnadi Director

Wijaya Karya (WIKA)

Name

Bank Tabungan Negara (BBTN)

Position

Kimia Farma (KAEF)

Source: Company

2017 Compendium

80

Government & central bank policies: Impact on sectors and stocks No. Automotive Status Impact

1 Increased luxury tax to 10% for LCGC Plan Negative for ASII and IMAS

2 ERP policy (Jakarta) Plan Negative for ASII and IMAS

3 Higher taxes on motor vehicles up to 15% Signed Negative for ASII and IMAS

4 Scania buses as the provider of Transjakarta Plan Positive for ASII and UNTR as the bus provider

5 Odd/even license plate Signed Negative for ASII and IMAS but Positive for BIRD and TAXI

6 Motorcycle ban in several main roads (Jakarta) Signed Negative for ASII and IMAS

7 One price of gasoline over nationwide Signed Positive for ASII and IMAS

No. Aviation Status Impact

1 Lower ticket price ceiling by 5% Plan Neutral for GIAA due to lower fuel prices

2 No new airline establishment Signed Positive for GIAA

No. Banking Status Impact

1 Govt. urges exporters to use IDR as payment currency Plan Helps BI to maintain USD/IDR

2 BI to implement reserve requirement ratio (GWM) averaging Plan Increased liquidity in banking industry

3 BI to lower credit card interest rate ceiling from 2.95% to 2.25% Plan Lower credit yield

4 Govt. implemented national strategy of financial inclusion Signed Increased participation and liquidity in banking industry

5 Govt. appointed 19 gateway banks to accommodate tax amnesty funds Signed Spur industry liquidity

6 LPS to increase premium rate for domestic systemic important banks (DSIBs) Plan To mitigate potential systematic risk in the industry

7 BI increased the floor cap of Loan to Funding ratio (LFR) from 78% to 80% Signed Boost loan growth in the industry

8 BI eased LTV regulation (eg. lower loan to value ratio for mortgage loan) Signed Provide positive sentiment to boost mortgage loans

9 Deposit rate ceiling for SOEs equivalent to BI rate Signed Lower cost of funding

10 BI shifted Indonesia benchmark rate from BI rate to 7 Days (reverse) Repo Rate Signed Lower cost of funding

11 D-SIB requires minimum CAR at 16-17% to mitigate potential defaults Signed More prudent

12 Changes from “bail out” to “bail in” mechanism for defaulting banks during crisis Signed More prudent

13 FSA to cap deposit rate ceiling from 200bps to 75bps above BI rate for bank category 4, and from 225bps to 100bps above BI rate form banks category 3 Signed Lower cost of funding provide room to lower lending rates

14 Government to limit maximum NIM of 4% in the banking sector Plan Pressure on banks’ earnings

15 Setting minimum CAR for banks with large conglomeration Signed More prudent

16 BI increased the maximum limit for electronic money Signed Improve Digital Finance Services (LDK)

17 BI cut the reserve requirement ratio (GWM) from 8% to 7.5% Signed Increased liquidity in banking industry

18 Lower tax on asset revaluation to 4% for 1H16 and 6% for 2H16 from 10% Signed Provides additional tier-1 capital for all banks

19 The relaxation of a single obligor NPL policy to provide room for banks in doing debt restructuring on project basis and related cash flows on those debtors Signed Helps BI to maintain NPLs

20 Lowering tax rates for exporters’ profits TD by around 10% Signed Helps BI to maintain USD/IDR

21 One year lock in period for verifying DSIB included in JPSK bill Plan Positive for big banks in terms of size and complexity

22 Leeway on regulation regarding account openings for foreigners Signed Helps BI to maintain USD/IDR

23 Simplification for foreigners to open bank accounts in foreign currencies Signed Helps BI to maintain USD/IDR

24 Lower the maximum limit of USD purchases through spot transactions from USD100,000/month to USD25,000/month Signed Helps BI to maintain USD/IDR

No. Cement Status Impact

1 Price cut by IDR3,000 per 50kg bag Signed Negative for all cement players

No. Coal Status Impact

1 Electricity tariff to be set by PLN Signed Negative for coal companies with powerplant projects like ADRO and PTBA

2 China limiting coal working days to 276 days Signed Positive for Indonesian coal producers as prices have been rising ever since the new policy

3 Coal prices to be passed-on for coal fired power plants Signed Negative for coal companies with local and power plant exposures

4 Moratorium for coal export to the Philippines Signed Limited impact for Indonesian coal export as the Philippines imports only represent 3% of total exports

5 China’s coal production capacity cut on inefficient mines Signed Positive for industry

6 Export tax for coal (1.5%) Signed Negative for all covered stocks, especially exporters like ITMG and ADRO

7 China lifted 6% import tariffs on Australian coal Plan Positive for prices, negative for Indo coal volumes

8 China’s coal ban on high sulfur and ash usage Signed Positive for Indonesia’s coal mining

9 All transactions must use L/Cs Plan Lower illegal mining; Positive for price

10 Presidential decree to reduce coal license approval Plan Positive for domestic coal suppliers

11 Increased royalties on coal sales to 10-13% Plan Negative impact on IUP holders

12 Gradual divestment post 5-years production with maximum ownership of 49% after 10 years Signed Negative for foreign coal companies like ITMG

13 Mining holding (INALUM) Signed Only PTBA would be impacted

No. Consumer Status Impact

1 Staples food distribution control Plan Positive for listed FMCG stocks

2 Staples food price control Signed Negative for listed FMCG stocks

3 "IDR200/plastic bag" tax regulation being revoked Signed Positive for listed retail stocks

4 Halal certification on all F&B products Plan Positive for listed consumer stocks

5 Possible ban on sugar imports Plan Negative for MYOR

6 Tax on drinks with added sugar Plan Negative for ICBP, KLBF and SIDO

7 Excise tax on plastic packaging Plan Negative for consumer sector

No. Currency related Status Impact

1 25% hedge for net short-term foreign liabilities Signed Negative due to higher hedging costs

2 Lowering fx purchase without underlying limit to USD25,000 Plan Lowering chance on currency speculation

3 Lower SBI holiday period to 1 week Signed Trigger capitalization

4 Lower tax rate to 0-10% for exporters Signed Improve IDR stability

No. Health-care Status Impact

1 Coordination of Benefit Signed Positive for hospitals and pharmaceuticals

2 Private hospitals to accept BPJS patients Plan Negative due to lower expected margins

3 List of standard tariff for each healthcare service Signed Negative for hospitals

4 Pharmaceutical sector to be opened to foreigners with Jokowi calling for lower px Plan Negative for KLBF, TSPC, SIDO and KAEF

5 Retail price ceiling on 535 generic drugs Signed Negative for pharmaceuticals and hospitals

No. Infrastructure Status Impact

1 Putting a time limit on project permit process Signed Positive for the construction sector

2 IDR347tn infra spending in the 2017 State Budget Signed Positive for the construction sector

3 Infrastructure & construction holding Plan Positive for the construction sector

4 Tax amnesty program Signed Positive for the construction sector

No. Media Status Impact

1 Govt. launched a set of fintech regulations; Capping foreign ownership of fintech business of 20% Signed Mitigate fraud in financial-technology business

2 TV and radio cigarette ads banned in Indonesia Plan Negative for SCMA and MNCN on lower ad spend

3 1 broadcasting right owned by 1 person/entity Signed Negative for media companies

No. Metal Status Impact

1 Nickel royalties to be reduced to 2% Signed Minimal impact for INCO (already paying 2%), positive impact for ANTM (4%)

2 foreign-owned business must divest stakes to local Indonesian citizens after 5 years of production Signed Negative impact for INCO and many foreign nickel companies

3 Government to provide incentives to IUP and IUPK holders Signed Positive impact for the industry, negative impact for mining companies on growing competition

4 Permits for mining companies to export ores on smelter development (minimum 30%) Signed Positive for lower nickel grade producers currently building smelters,

like ANTM

5 20% ore export tax Signed Negative for ANTM

6 Requirement to submit mine location for refined tins Signed Positive impact for Tins, allowing reduced illegal mining

7 Standardized tin content & packaging (non-ingots) Signed TINS: limited impact; reducing illegal mining

8 Foreign ownership divestment: Up to 51% for unintegrated miners; <51% for integrated miners; no divestment for smelters/refineries Signed Limited impact for INCO as the company is already in compliance

9 Local trading and higher tin content for tin exports Signed Positive impact for TINS, as prices are higher despite lower volumes

10 Mining holding (INALUM) Plan Minimal impact for TINS and positive for ANTM, due to easier access for joint ventures or other mining projects

No. Oil & gas Status Impact

1 OPEC to cut oil production by 1.4 mbopd Signed Positive for oil and gas producing companies such as MEDC and PGAS, negative for companies with high fuel costs

2 Regulation on maximum USD6/mmbtu gas price Plan Most negative impact for PGAS, but positive impact for industries with high gas usage, like steel and petrochemicals

3 Gas prices to be max at USD6/mmbtu for poultry, steel and petrochemical sectors Signed Positive impact on KRAS, negative impact on PGAS

4 One price policy for subsidized fuel, efffective January 2017 Signed Limited impact for covered oil companies, negative impact for Pertamina

Source: Bahana

2017 Compendium

81

5 Rights for private sector to sell fuel to consumers as long as oil refineries are built Signed Positive impact for AKRA as the company is targetting retail distribution

6 Review on cost recovery regulation for oil miners Plan Positive impact for MEDC, if cost can be recovered in early years

9 Oil and gas exploration taxes removed Signed Positive for MEDC and PGAS, allowing for higher earnings

10 Energy holding Plan Positive for PGAS, on less competition from Pertagas

11 Higher margins for businesses to build fuel stations in isolated areas Signed Minimal impact for companies covered

12 Tenders to be bid, not set by officials Signed Positive impact for PGAS and MEDC to gain higher margins

13 Abandonment and Site Restoration (ASR) Plan Minimal impact for companies covered

14 Permit simplification and extend explorations permit to 10 years Signed Positive for ELSA and MEDC as the companies prefer longer permit, but may increase competition

No. Plantations Status Impact

1 Acceleration of issue time for cultivating rights certificates to 90 days Plan Neutral for all planters under coverage

2 State-owned sugar mill revitalization Plan Neutral for TBLA

3 Refined sugar for retail market Plan Positive for TBLA

4 Cooking oil price ceiling Plan Negative for SIMP and TBLA

5 Sugar price ceiling Plan Neutral for TBLA

6 Sugar price floor Signed Positive for TBLA

7 Increase peat land plantation Plan Positive for all planters under coverage

8 CPO Supporting Fund: export levies Signed Neutral for all planters under coverage

9 Revision of forest conversion permit for sugarcane plantation Plan Negative for TBLA

10 B20 biodiesel mandatory program Signed Positive for all planters under coverage

11 Refined sugar import license moratorium Signed Positive for TBLA

12 Limit foreign investment Signed Positive for all planters under coverage

No. Poultry Status Impact

1 GPS (Grand Parent Stock) import quota Signed Positive for all poultry players covered

2 Poultry supply and demand monitoring Signed Positive for all poultry players covered

3 DOC price floor Plan Positive for all poultry players covered

4 1 Slaughterhouse for every 500k broiler weekly production capacity Plan Negative for MAIN

5 50% broiler produces must be sold to independent farmers at a fair price Plan Negative for all poultry players covered

6 Corn import restriction & farmer's floor price control Signed Negative for all poultry players covered

No. Property Status Impact

1 Lower income tax (PPh) for land building transfers fee to 2.5% from 5% previously Signed Positive for all property developers

2

Revised tax thresholds for luxury properties, including houses and apartments. Lower PPh22 signed effective 30 May 2015/higher PPNBM to >IDR20bn (non strata) &>IDR10bn (strata) effective 4 Dec 2015.

Signed Neg. for all property developers

3 Government to impose 10% income tax for boarding-house Plan Positive for all property developers

4 Taxable value of property (NJOP) increase Plan Negative for all property developers

5 PPh and BPHTB reduction to 0.5% and 1% for REIT investment Signed Positive for the likes of LPKR & CTRA

6 Elimination of land and building taxes for 1st homes, raise 2nd homes; eliminate land and building certification fees in Jakarta Signed Positive for APLN & CTRA, negative for the likes of PWON, CTRP

& LPKR

7 Government to collect land banks for low-cost housing Plan Negative for PPRO, APLN and CTRA

8 Transfer of property rights for foreigners Signed Positive for all property developers, benefit CTRP, DILD & LPKR most

9 Foreigners allowed to purchase properties from secondary & primary markets (landed: >IDR10bn, strata-title: >IDR5bn) Signed Positive for all property developers, benefit CTRP, DILD & LPKR

most

10 Easing foreigners to own luxury houses and apartments (including non-resident foreigners) Signed Positive, to benefit CTRP & DILD most

11 Allowance of mixed titles within one building Signed Positive for all property developers

12 Relaxation of residential balanced regulation Plan Positive for all property developers

13 Easing of land license permit for low-cost housing Plan Positive for PPRO, APLN and CTRA

14 New public housing savings regulation (Tapera) (3% of total monthly income) Plan Negative for all property developers

15 Tightening regulations on regional building standard Plan Negative for all property developers

16 Relaxation of LTV regulation (1st mortgage: 15%, 2nd: 20%, 3rd: 25%) Signed Positive for all property developers

17 Mortgages based on % completion for 2nd homes Signed Neg. for high apt. exposures like APLN, CTRP & DILD

18 Right-to-use property is allowed for mortgage collateral Signed Positive for all property developers

19 Allowance of tax amnesty repatriated funds to be invested in the real sectors Signed Positive for all property developers, benefit CTRP, DILD & LPKR most

20 Moratorium on malls in Jakarta Signed Positive for PWON, LPKR & APLN

21 Factory relocation into industrial estates (by 2020) Signed Positive for all industrial estate players

No. Retail Status Impact

1 30% local contents for imported 4G cellphones Signed Most negative for ERAA

2 Allow 67% foreign holding in department stores with 400-2,000sqm of floor space Signed Negative for all department stores

3 Allow 49% foreign holding in e-commerce Signed Mild negative for RALS, ACES

4 Restriction on direct distribution from wholesalers to retailers Signed Mild positive for AMRT and MDRN

5 Credit card usage monitoring by tax office Revoked Negative for MAPI, ACES, LPPF

6 Paid plastic bag rule (IDR200/bag) Revoked Limited positive for low mid retailers

7 One zone one minimarket Plan Most negative for MDRN and AMRT

8 Import duty increase for consumer goods Signed Most negative for ACES and MAPI

9 Imported goods must be less than 20% of inventory Signed Most negative for RANC

10 Max 150 privately owned outlets – the rest franchised Signed Most negative for MDRN and AMRT

11 Minimarkets not to sell category A alcoholic bev. Signed Most negative for MDRN and AMRT

No. Shipping Status Impact

1 Digital port billing system Signed Positive for TMAS

2 Development of maritime holding company Plan Positive for all shipping companies

3 Deregulation on 20 laws Plan Positive for all shipping companies

4 Zero tax on O&G exploration phase Plan Positive for WINS

5 Acceleration of new seaports constructions Plan Positive for TMAS

6 Possible higher tax on revenues Cancelled Positive for all shipping companies

No. SOE Status Impact

1 Government to increase ownerships in SOEs Plan Negative for BBRI (57%), PGAS (57%), ADHI (51%), PTPP (51%), SMGR (51%) and TLKM (53%)

No. Telco Status Impact

1 Lower interconnection rates Plan Negative for TLKM

2 Network sharing plans Plan Negative for TLKM

3 Additional 20% luxury goods tax for mobile phones Plan Negative for the sector

4 Obligation to build local factory for cellular makers Signed Negative for ERAA and TELE

No. Toll roads Status Impact

1 10% VAT hike on toll roads for private vehicles Plan Negative for JSMR

2 25-35% toll-road tariffs dicount around Lebaran period Signed Negative for JSMR

No. Tobacco Status Impact

1 Double VAT (20% from 8.7% current) on tobacco products Plan Negative for HMSP and GGRM

2 Tobacco price control at farmer's level Plan Negative for HMSP and GGRM

3 Gov't subsidized rehabilitation for tobacco-related diseases Plan Positive for HMSP and GGRM

4 TV and radio cigarette advertisement ban in Indonesia Plan Negative for HMSP and GGRM

5 Outdoor tobacco and alcohol advertisement ban in Jakarta Signed Negative for HMSP and GGRM

6 Pictorial health warnings on cigarette packaging Signed Negative for HMSP and GGRM

No. Land transportation Status Impact

1 Prohibiton of LCGC utilization for online taxis Plan Positive for BIRD and TAXI

2 Allowance of MPV for taxi utilization Signed Positive for BIRD and TAXI

3 Lower taxi base fare and flag fall tariff Signed Negative for BIRD and TAXI

No. Media

1 Taxing on the media platforms Plan Positive for SCMA and MNCN

2 10-Year TV license renewal Signed Positive for SCMA,MNCN & VIVA

3 Auctioning of license from analogue to digital Plan Positive for SCMA,MNCN & VIVA

No. Tourism Status Impact

1 Free entry visas for 169 countries Signed Positive for GIAA and PANR

2 Establishment of 100 village economy halls in 10 tourism destinations Plan Positive for GIAA and PANR

3 Indonesia's 10 champion tourism development Signed Positive for GIAA and PANR

4 Allowance of loading-unloading cruise passengers in Indonesia's 5 major ports Signed Positive for PANR

5 Increased budget for tourism campaign Signed Positive for GIAA and PANR

Source: Bahana

2017 Compendium

82

This page has been left intentionally blank

2017 Compendium

83

INDONESIAN MARKETS

2017 Compendium

84

Weakened on Trump effect The Trump effect has come out of left field to adversely impact positive

inflows stemming from the government’s tax amnesty. Although we currently still have IDR25.4tn of net foreign inflow ytd, about IDR9tn in net foreign outflow has occurred on the back of the Trump election win.

The recent changes show that the 6M bond yield spread reached the highest among the bonds due to US inflation expectation.

Currently, due to the Trump effect, the foreign ownership in bonds has come down to 37.2% from 38.4% in early November. Additionally, the gap between ID to US 10yr bond yield has started to decrease.

Foreign equity capital flows in JCI, 2015-YTD November 2016

(0.2)

(10.6)

(5.4)

(5.9)

(3.5)(4.1)

(0.1)

(9.8)

(7.2)

(4.7)

(3.3)

(1.4)(2.3)

(4.1)

(2.3)

(0.3)

(0.2)

(8.8)

(11.9)(12.9)

(3.3)

(1.5)

(7.5)

(12)(11)(10)(9)(8)(7)(6)(5)(4)(3)(2)(1)0123456789

1011121314

Jan-15 Mar-15 May-15 Jul-15 Sep-15 Nov-15 Jan-16 Mar-16 May-16 Jul-16 Sep-16 Nov-16

(IDRtn)

Source: Bloomberg as of 23 November 2016

Government bond-yield curve

7.478

7.871

8.058 8.1568.564

7.070

7.630 7.9438.121

8.571

-0.1

0.0

0.1

0.2

0.3

0.4

0.5

6.0

6.3

6.5

6.8

7.0

7.3

7.5

7.8

8.0

8.3

8.5

8.8

3M 6M 1Y 2Y 3Y 4Y 5Y 7Y 8Y 9Y 10Y 15Y 20Y 25Y 30Y

(bps)(%)

change in yield w-w (bps RHS) -1 day -1 week Source: Bloomberg

ID govt bond foreign ownership & ID to US 10yr yield gap

37.20

585.91

36.0

36.5

37.0

37.5

38.0

38.5

39.0

39.5

480

500

520

540

560

580

600

26-Aug-16 6-Sep-16 17-Sep-16 28-Sep-16 9-Oct-16 20-Oct-16 31-Oct-16 11-Nov-16 22-Nov-16

(bps) (%)

Foreign position in ID Govn Bond (RHS) Indonesia to US 10yr yield gap (LHS) Source: Bloomberg, Bahana

2017 Compendium

85

IDR stability: 50% external, 50% internal The IDR movements continue to be dependent on the Fed rate hike

expectations, both in terms of magnitude and frequency. Internally, FX reserves and CAD should continue to be important determinants of the IDR, with the 2016 median estimate at IDR13,300/1USD (Bahana: IDR13,500).

Despite Trump, the IDR remains the second best performing currency in the region ytd.

In absolute as well as in USD terms, Indonesia is now the third best performing market in the region ytd.

Consensus forecasts on regional currencies

Current 2015 2016F 2016F 2016F 2017F Appreciation rate per End End End End End Potential (%)

Country Currency 1USD Low Median High Median 2016 2017 Philippines PHP 49.9 46.9 46.0 49.0 50.0 50.0 1.7 (0.3)

Malaysia MYR 4.4 4.3 4.0 4.3 4.5 4.4 3.3 0.3

Thailand THB 35.7 36.0 31.8 35.5 39.8 36.4 0.6 (2.0)

Singapore SGD 1.4 1.4 1.3 1.4 1.5 1.4 1.5 (0.6)

India INR 68.6 66.6 65.6 67.7 71.0 68.5 1.3 0.1

Indonesia IDR 13,483 13,788 12,800 13,300 13,900 13,621 1.4 (1.0)

Taiwan TWD 31.9 32.9 30.6 32.0 37.0 33.0 (0.4) (3.5)

Korea KRW 1,176 1,175 1,055 1,173 1,255 1,200 0.3 (2.0) Source: Bloomberg as of 23 November 2016

Various stock market performances Stock market YTD YTD in USD 2015 Stock market YTD YTD in USD 2015

Asia Last (%) (%) (%) Others Last (%) (%) (%)

SET (Thailand) 1,496 16.5 17.4 (5.3) IBOV (Brazil) 61,986 42.0 58.8 19.6

VNI (Vietnam) 683 16.7 16.5 11.0 RTSI (Russia) 1,017 34.5 47.4 12.0

IDX (Indonesia) 5,212 11.5 13.8 (2.0) S&P/TSX (Toronto) 15,081 15.9 18.5 4.9

TWSE (Taiwan) 9,178 9.8 13.0 (6.7) Dow Jones (USA) 19,083 9.9 9.9 (2.2)

Hang Seng (HK) 22,677 3.7 3.6 (7.2) ASX (Australia) 3,710 8.0 9.3 8.3

Nikkei (Japan) 18,163 (3.4) 3.4 12.2 S&P 500 (USA) 2,205 8.3 8.3 (0.7)

KOSPI (Korea) 1,988 0.7 0.6 9.5 NZSE (New Zealand) 1,280 5.7 8.3 20.9

STI (Singapore) 2,840 (0.8) (1.7) (7.8) Nasdaq (USA) 5,381 7.8 7.8 5.7

SENSEX (India) 26,052 0.8 (2.8) (0.3) DAX (Germany) 10,662 (0.4) (3.2) 19.8

PCOMP (Phil.) 6,837 (0.9) (6.8) 0.8 CAC 40 (France) 4,529 (1.9) (4.7) 18.8

KLCI (Mal.) 1,630 (3.9) (7.2) 14.7 SMI (Swiss) 7,752 (10.6) (7.4) (1.1)

SHENZHEN (China) 2,130 (7.8) (13.9) 67.6 MADX (Madrid) 869 (9.6) (12.4) 2.8

SHCOMP (China) 3,241 (7.8) (14.0) 13.9 FTSE 100 (UK) 3,839 (4.4) (20.0) 6.5 Source: Bloomberg as of 23 November 2016, Bahana

USD performance relative to other currencies Asia exc. Japan currencies YTD 2015 Other currencies YTD 2015 TWD (Taiwan) 3.1 (3.7) BRL (Brazil) 16.8 (32.9)

IDR (Indonesia) 2.3 (10.2) RUB (Russia) 12.8 (16.3)

THB (Thailand) 0.9 (8.7) JPY (Japan) 6.8 (0.4)

HKD (Hong Kong) (0.1) 0.1 CAD (Canada) 2.6 (16.0)

KRW (Korea) (0.1) (7.2) NZD (New Zealand) 2.6 (12.4)

VND (Vietnam) (0.2) (4.9) AUD (Australia) 1.3 (10.8)

SGD (Singapore) (0.9) (6.6) EUR (EU) (2.8) (10.2)

MYR (Malaysia) (3.4) (18.6) TRY (Turkey) (14.1) (20.0)

INR (India) (3.5) (4.7) GBP (UK) (15.6) (5.4)

PHP (Philippines) (5.9) (4.7) MXN (Mexico) (16.6) (14.3)

CNY (China) (6.1) (4.4) ARS (Argentina) (16.8) (34.5) Source: Bloomberg as of 23 November 2016, Bahana

2017 Compendium

86

Impact from weaker IDR Based on our sensitivity analysis, each 1% IDR depreciation would

lower the EPS of our covered stocks by 0.9% overall. Thus, IDR depreciation is bad for the market.

In general, IDR weakness should hurt corporates with large USD cost

and debt. Sector wise, we see negative impact on Poultry and Property. A stronger dollar, however, may spell good news for dollar earners,

although some of this positive impact would be offset by weaker commodity prices.

IDR depreciation: Sensitivity analysis Non-IDR 9M16 Sensitivity Non-IDR 9M16 Sensitivity

Ticker Sales Cost Cash Debt Net to net profit

Ticker Sales Cost Cash Debt Net to net profit

gearing on 1% IDR gearing on 1% IDR

(%) (USDmn) (%) Depreciation (%) (%) (USDmn) (%) Depreciation (%)

MSKY 0.0 40.0 4 182 87.0 (200.0) BSDE 18.0 25.0 69 225 12.3 (0.9)

SMCB 5.0 52.2 2 69 57.0 (18.6) SMBR 0.0 50.0 24 0 nc (0.7)

LPKR 14.0 20.0 17 813 54.1 (12.2) SMGR 2.0 30.0 17 0 nc (0.7)

VIVA 0.0 20.0 0 230 126.0 (12.0) CSAP 0.0 30.0 1 8 107.6 (0.7)

BMTR 0.0 30.0 13 432 40.0 (11.0) PWON 36.0 25.0 44 200 23.0 (0.7)

MAPI 3.0 60.0 2 0 54.3 (10.0) ASII 35.0 40.0 624 2,241 19.0 (0.7)

IMAS 10.0 10.0 10 271 260.0 (8.4) CTRA 5.0 27.0 6 0 18.4 (0.7)

MPPA 0.0 15.0 0 0 45.0 (7.4) SMRA 24.0 25.0 6 10 65.5 (0.6)

JPFA 0.0 60.0 21 212 39.6 (6.7) CTRP 16.0 25.0 2 0 60.2 (0.5)

PPRO 0.0 20.0 0 0 19.6 (6.7) HMSP 0.5 10.0 17 0 nc (0.4)

ASRI 5.0 25.0 3 454 26.3 (6.0) LPPF 0.0 25.0 0 0 nc (0.3)

KIJA 73.0 8.0 30 271 49.7 (5.8) GGRM 4.2 10.0 0 0 30.4 (0.3)

KAEF 6.0 70.0 4 4 nc (5.4) WTON 10.0 15.0 1 0 10.9 (0.3)

ASSA 0.0 50.0 10 0 200.7 (5.4) SIDO 5.0 17.0 11 0 nc (0.2)

DILD 18.0 20.0 2 14 71.5 (5.3) TBIG 0.0 0.0 2 1,357 822.8 0.0

KLBF 5.0 70.0 52 8 nc (5.2) SCMA 0.0 10.0 8 0 nc 0.0

CPIN 0.0 60.0 42 160 37.8 (5.2) JSMR 0.0 5.0 0 0 137.4 0.0

KINO 4.0 80.0 1 0 17.5 (5.1) WSKT 5.0 5.0 4 0 36.1 0.1

MAIN 0.0 60.0 0 5 86.3 (5.0) ERAA 0.0 25.0 3 0 33.0 0.1

SOCI 100.0 95.0 9 219 71.7 (4.5) TLKM 0.0 5.0 290 11 3.7 0.1

BEST 93.0 15.0 19 132 36.7 (4.4) LPCK 30.0 10.0 0 0 nc 0.2

INDF 7.4 55.0 191 718 35.4 (3.9) ANTM 67.0 70.0 96 530 12.1 0.2

TELE 0.0 7.5 0 47 83.0 (3.7) WIKA 15.0 15.0 27 5 87.9 0.3

EXCL 0.0 10.0 65 350 67.2 (3.6) TOWR 40.0 5.0 111 191 76.2 0.3

KRAS 75.0 65.0 89 557 92.3 (3.4) PTPP 12.0 15.0 51 0 67.1 0.3

RALS 0.0 30.0 8 0 nc (3.2) SSIA 20.0 15.0 17 0 25.3 0.3

TSPC 5.0 70.0 52 2 nc (3.2) ADHI 15.0 15.0 13 0 16.6 0.4

TAXI 0.0 50.0 1 0 171.6 (3.1) DMAS 95.0 0.0 47 0 nc 1.5

MNCN 0.0 20.0 3 250 30.8 (3.0) MEDC 100.0 95.0 174 942 204.3 1.5

ICBP 7.6 70.0 53 4 nc (2.9) INCO 100.0 95.0 193 73 nc 1.6

MYOR 42.0 75.0 73 0 56.9 (2.9) PGAS 100.0 95.0 1,099 2,491 53.9 1.7

ACES 0.0 80.0 1 0 nc (2.6) AKRA 90.0 85.0 30 35 46.5 1.7

ROTI 0.0 70.0 0 0 34.2 (2.2) SRIL 100.0 80.0 1 40 151.3 1.8

BIRD 0.0 50.0 0 0 36.6 (2.1) GIAA 45.0 70.0 180 600 68.3 1.9

ISAT 0.0 10.0 43 228 163.6 (2.0) TINS 97.0 90.0 19 26 19.2 2.2

LINK 0.0 40.0 6 14 nc (2.0) ITMG 100.0 95.0 236 na nc 2.3

WSBP 0.0 40.0 0 0 nc (1.9) PSAB 100.0 95.0 15 230 90.3 2.4

TMAS 30.0 90.0 1 10 92.5 (1.7) TBLA 70.0 45.0 11 92 109.1 2.6

INTP 1.0 80.0 26 14 31.0 (1.6) LSIP 100.0 60.0 21 0 nc 2.8

UNVR 5.0 80.0 15 0 12.5 (1.5) AALI 100.0 60.0 6 279 19.9 3.0

SILO 0.0 35.0 0 0 14.7 (1.4) ADRO 100.0 90.0 876 1,475 14.5 3.1

MIKA 0.0 35.0 2 0 nc (1.2) UNTR 100.0 82.0 579 63 nc 3.2

TOTL 0.0 20.0 8 0 nc (1.1) SGRO 100.0 60.0 107 31 96.1 3.7

JCI* 20.2 39.3 6,006 17,014 27.6 (0.9) SIMP 100.0 60.0 29 174 50.2 6.7

MSKY 0.0 40.0 4 182 87.0 (200.0) BSDE 18.0 25.0 69 225 12.3 (0.9)

SMCB 5.0 52.2 2 69 57.0 (18.6) SMBR 0.0 50.0 24 0 nc (0.7)

LPKR 14.0 20.0 17 813 54.1 (12.2) SMGR 2.0 30.0 17 0 nc (0.7)

Source: IDX, companies, Bahana *Excluding MSKY

JCI index vs. IDR currency

12,300

12,600

12,900

13,200

13,500

13,800

14,100

14,400

14,7004,000

4,200

4,400

4,600

4,800

5,000

5,200

5,400

5,600

23-Nov 23-Dec 23-Jan 23-Feb 23-Mar 23-Apr 23-May 23-Jun 23-Jul 23-Aug 23-Sep 23-Oct 23-Nov

(IDR/1USD)(JCI)

JCI index USDIDR

Recent IDR depreciation is inline with market weakness

Source: Bloomberg as of 23 November 2016, Bahana

2017 Compendium

87

Currency volatility: Top 5 winners, losers & safe havens Plantation companies are benefitting from the weaker IDR against USD

with an average 5% increase in EPS growth for every 1% IDR depreciation.

Infrastructure-related companies are considered to be the safe haven

against currency volatility with minimal impact on EPS growth. Media companies are losers of a weaker IDR due to their sizeable

amounts of USD debt in their balance sheets. Worth noting: for pay TV companies about 40% of opex (foreign content) and 60% of capex (set up boxes) are USD linked.

Winners

6.7 6.4

3.8 3.7 3.2

0

1

2

3

4

5

6

7

8

SIMP WINS PTBA SGRO UNTR

(%)

Source: Bahana

Safe Haven

0.0 0.0 0.0

0.1 0.1

0

0

0

0

0

0

0

TBIG SCMA JSMR WSKT ERAA

(%)

Source: Bahana

Losers

(200.0)

(18.6) (12.2) (12.0) (11.0)

(250)

(200)

(150)

(100)

(50)

0

MSKY SMCB LPKR VIVA BMTR

(%)

Source: Bahana

2017 Compendium

88

Signs from the real sector #1 Consumer confidence index

118116

120

117 117

111

98

108110

114

110

95

100

105

110

115

120

1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16

(point)

3Q14 1Q15 2Q16 3Q162014 2015 2016

Average: 113

Source: Bloomberg

Car sales

113 111

105

79

94 99

82

56

93

73

85

94

91

63

96

92 93

50

60

70

80

90

100

110

120

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

(`000 units)

2014 2015 2016

Source: Gaikindo

SSSG - Retail

10 9

19

6

-

2

4

6

8

10

12

14

16

18

20

1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16

(%)

SSSG (%, LHS)

average: 8%

Source: Company, Bahana estimates (based on MAPI, RALS and LPPF)

Motorcycles sales

579

726 751

707

556

503

575

422

622

520

416

563

305

528 571

280

330

380

430

480

530

580

630

680

730

780

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

(`000 units)

2014 2015 2016

Source: Gaikindo

2017 Compendium

89

Signs from the real sector #2 Cement sales, quarterly

15,542

13,624

16,499

14,230

16,933

18,088

15,229

12,000

13,000

14,000

15,000

16,000

17,000

18,000

19,000

1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16

(`000 tons)

Cement Sales (`000 tons, LHS)

Average: 14,855

Source: Indonesian Cement Association (ASI), CEIC, Bahana

Heavy equipment sales

13

(58)

(22)

9

(7)

(16)

9

(60)

(50)

(40)

(30)

(20)

(10)

-

10

1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16

(%)

Growth y-y (%, LHS)

Average: (11)

Source: United Tractors

Infrastructure spending trend

76

146

155

347

-

50

100

150

200

250

300

350

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016F 2017F

(IDRtn)

Government budget in infrastructure (IDRtn, LHS)

Source: CEIC, Bloomberg

Property – marketing sales, quarterly

11

8

12

5

10

7

5

4

5

6

7

8

9

10

11

12

13

1Q12 2Q12 3Q13 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16

(IDRtn)

Property sales quarterly (IDRtn, LHS)

Average: 9

Source: Company, Bahana

2017 Compendium

90

Signs from the real sector #3 Oil

112

53

54

35

46

30

40

50

60

70

80

90

100

110

Jan'

14

Feb'

14

Mar

'14

Apr'1

4

May

'14

Jun'

14

Jul'1

4

Aug'

14

Sep'

14

Oct

'14

Nov

'14

Dec

'14

Jan'

15

Feb'

15

Mar

'15

Apr'1

5

May

'15

Jun'

15

Jul'1

5

Aug'

15

Sep'

15

Oct

'15

Nov

'15

Dec

'15

Jan'

16

Feb'

16

Mar

'16

Apr'1

6

May

'16

Jun'

16

Jul'1

6

Aug'

16

Sep'

16

Oct

'16

Nov

'16

(USD/bbl)

Oil (USD/barrel, LHS)

Average: 66

Source: Bloomberg

Coal

78

69

63

71

51

109

99

50

60

70

80

90

100

110

Jan'

14

Feb'

14M

ar'1

4Ap

r'14

May

'14

Jun'

14

Jul'1

4Au

g'14

Sep'

14

Oct

'14

Nov

'14

Dec'

14

Jan'

15Fe

b'15

Mar

'15

Apr'1

5M

ay'1

5

Jun'

15Ju

l'15

Aug'

15Se

p'15

Oct

'15

Nov

'15

Dec'

15

Jan'

16Fe

b'16

Mar

'16

Apr'1

6M

ay'1

6

Jun'

16Ju

l'16

Aug'

16

Sep'

16O

ct'1

6

Nov

'16

(USD/lmt)

Coal (USD/mt, LHS)

Average: 65

Source: Bloomberg

CPO

930

728

625

528

720 716

500

550

600

650

700

750

800

850

900

950

1,000

Jan'

14Fe

b'14

Mar

'14

Apr'1

4M

ay'1

4Ju

n'14

Jul'1

4Au

g'14

Sep'

14O

ct'1

4No

v'14

Dec'1

4Ja

n'15

Feb'

15M

ar'1

5Ap

r'15

May

'15

Jun'

15Ju

l'15

Aug'

15Se

p'15

Oct

'15

Nov'

15De

c'15

Jan'

16Fe

b'16

Mar

'16

Apr'1

6M

ay'1

6Ju

n'16

Jul'1

6Au

g'16

Sep'

16O

ct'1

6No

v'16

(USD/mt)

CPO (USD/mt, LHS)

Average: 713

Source: Bloomberg

Sugar

392

236

290

444

497

466

200

250

300

350

400

450

500

Jan'

14Fe

b'14

Mar

'14

Apr'1

4M

ay'1

4Ju

n'14

Jul'1

4Au

g'14

Sep'

14Oc

t'14

Nov'1

4De

c'14

Jan'

15Fe

b'15

Mar

'15

Apr'1

5M

ay'1

5Ju

n'15

Jul'1

5Au

g'15

Sep'

15Oc

t'15

Nov'1

5De

c'15

Jan'

16Fe

b'16

Mar

'16

Apr'1

6M

ay'1

6Ju

n'16

Jul'1

6Au

g'16

Sep'

16Oc

t'16

Nov'1

6

(USD/mt)

Sugar (USD/mt, LHS)

Average: 348

Source: Bloomberg

2017 Compendium

91

Signs from the real sector #4 Rice

350

410

361371

326

310

330

350

370

390

410

Jan'

14Fe

b'14

Mar

'14

Apr'1

4M

ay'1

4Ju

n'14

Jul'1

4Au

g'14

Sep'

14O

ct'1

4N

ov'1

4D

ec'1

4Ja

n'15

Feb'

15M

ar'1

5Ap

r'15

May

'15

Jun'

15Ju

l'15

Aug'

15Se

p'15

Oct

'15

Nov

'15

Dec

'15

Jan'

16Fe

b'16

Mar

'16

Apr'1

6M

ay'1

6Ju

n'16

Jul'1

6Au

g'16

Sep'

16O

ct'1

6N

ov'1

6

(USD/mt)

Rice (USD/mt, LHS)

Average: 354

Source: Bloomberg

Corn

199

107

152

120

127

100

110

120

130

140

150

160

170

180

190

200

Jan'

14

Feb'

14

Mar

'14

Apr

'14

May

'14

Jun'

14

Jul'1

4

Aug

'14

Sep'

14

Oct

'14

Nov

'14

Dec

'14

Jan'

15

Feb'

15

Mar

'15

Apr

'15

May

'15

Jun'

15

Jul'1

5

Aug

'15

Sep'

15

Oct

'15

Nov

'15

Dec

'15

Jan'

16

Feb'

16

Mar

'16

Apr

'16

May

'16

Jun'

16

Jul'1

6

Aug

'16

Sep'

16

Oct

'16

Nov

'16

(USD/mt)

Corn (USD/mt, LHS)

Average: 143

Source: Bloomberg

Coffee

4,476

3,569

2,675

3,589

2,000

2,500

3,000

3,500

4,000

4,500

5,000

Jan'1

4Fe

b'14

Mar

'14Ap

r'14

May

'14Ju

n'14

Jul'1

4Au

g'14

Sep'1

4Oc

t'14

Nov'1

4De

c'14

Jan'1

5Fe

b'15

Mar

'15Ap

r'15

May

'15Ju

n'15

Jul'1

5Au

g'15

Sep'1

5Oc

t'15

Nov'1

5De

c'15

Jan'1

6Fe

b'16

Mar

'16Ap

r'16

May

'16Ju

n'16

Jul'1

6Au

g'16

Sep'1

6Oc

t'16

Nov'1

6

(USD/mt)

Coffee (USD/mt, LHS)

Average: 3,296

Source: Bloomberg

Cocoa

2,955

3,300 3,327

2,761

3,207

2,493 2,400

2,600

2,800

3,000

3,200

3,400

Jan'

14Fe

b'14

Mar

'14

Apr'1

4M

ay'1

4Ju

n'14

Jul'1

4Au

g'14

Sep'

14O

ct'1

4N

ov'1

4D

ec'1

4Ja

n'15

Feb'

15M

ar'1

5Ap

r'15

May

'15

Jun'

15Ju

l'15

Aug'

15Se

p'15

Oct

'15

Nov

'15

Dec

'15

Jan'

16Fe

b'16

Mar

'16

Apr'1

6M

ay'1

6Ju

n'16

Jul'1

6Au

g'16

Sep'

16O

ct'1

6N

ov'1

6

(USD/mt)

Cocoa (USD/mt, LHS)

Average: 3,003

Source: Bloomberg

2017 Compendium

92

Signs from the real sector #5 Gold

1,326

1,287 1,284

1,142

1,233

1,351

1,248

1,000

1,050

1,100

1,150

1,200

1,250

1,300

1,350

1,400

Jan'

14

Feb'

14

Mar

'14

Apr'1

4

May

'14

Jun'

14

Jul'1

4

Aug'

14

Sep'

14

Oct

'14

Nov

'14

Dec

'14

Jan'

15

Feb'

15

Mar

'15

Apr'1

5

May

'15

Jun'

15

Jul'1

5

Aug'

15

Sep'

15

Oct

'15

Nov

'15

Dec

'15

Jan'

16

Feb'

16

Mar

'16

Apr'1

6

May

'16

Jun'

16

Jul'1

6

Aug'

16

Sep'

16

Oct

'16

Nov

'16

(USD/toz)

Gold (USD/toz, LHS)

Average: 1,223

Source: Bloomberg

Silver

21

19

17

16

15

20

18

13

14

15

16

17

18

19

20

21

22

Jan'

14Fe

b'14

Mar

'14

Apr'1

4M

ay'1

4Ju

n'14

Jul'1

4Au

g'14

Sep'

14O

ct'1

4N

ov'1

4De

c'14

Jan'

15Fe

b'15

Mar

'15

Apr'1

5M

ay'1

5Ju

n'15

Jul'1

5Au

g'15

Sep'

15O

ct'1

5N

ov'1

5De

c'15

Jan'

16Fe

b'16

Mar

'16

Apr'1

6M

ay'1

6Ju

n'16

Jul'1

6Au

g'16

Sep'

16O

ct'1

6N

ov'1

6

(USD/toz)

Silver (USD/toz, LHS)

Average: 17

Source: Bloomberg

Tin

23,540

21,875

16,300 16,700

20,955

13,000

15,000

17,000

19,000

21,000

23,000

25,000

Jan'

14Fe

b'14

Mar

'14

Apr'1

4M

ay'1

4Ju

n'14

Jul'1

4Au

g'14

Sep'

14O

ct'1

4N

ov'1

4De

c'14

Jan'

15Fe

b'15

Mar

'15

Apr'1

5M

ay'1

5Ju

n'15

Jul'1

5Au

g'15

Sep'

15O

ct'1

5N

ov'1

5De

c'15

Jan'

16Fe

b'16

Mar

'16

Apr'1

6M

ay'1

6Ju

n'16

Jul'1

6Au

g'16

Sep'

16O

ct'1

6N

ov'1

6

(USD/mt)

Tins (USD/mt, LHS)

Average: 18,501

Source: Bloomberg

Nickel

19,250

16,275

13,950

10,060

11,033

8,000

10,000

12,000

14,000

16,000

18,000

20,000

Jan'

14Fe

b'14

Mar

'14

Apr'1

4M

ay'1

4Ju

n'14

Jul'1

4Au

g'14

Sep'

14O

ct'1

4N

ov'1

4De

c'14

Jan'

15Fe

b'15

Mar

'15

Apr'1

5M

ay'1

5Ju

n'15

Jul'1

5Au

g'15

Sep'

15O

ct'1

5N

ov'1

5De

c'15

Jan'

16Fe

b'16

Mar

'16

Apr'1

6M

ay'1

6Ju

n'16

Jul'1

6Au

g'16

Sep'

16O

ct'1

6N

ov'1

6

(USD/mt)

Nickel (USD/mt, LHS)

Average: 12,770

Source: Bloomberg

2017 Compendium

93

Sectors – Ranked by ytd performance: First Metals: Helped by China’s improving demand outlook and severe

underperformance in 2015.

Coal: Support stemming from supply reduction in China as a result of China limiting its coal-working period to 276 days.

Poultry: Recent adverse impact of weaker IDR on the sector has offset some positive benefits from easing oversupply condition allowing for higher DOC and broiler prices.

Metals sector: relative performance

117.6

24.4 22.4

65.1

106.5 99.1

(22.8) (40)

(20)

0

20

40

60

80

100

120

140

(40)

(20)

0

20

40

60

80

100

120

140

ytd 1M 3M 6M 9M 12M 2015

(%) (%)

Metals sector relative to JCI

Source: Bloomberg

Coal sector: relative performance

105.8

12.4

37.8

82.3

97.3

81.9

(19.7)(40)

(20)

0

20

40

60

80

100

120

(40)

(20)

0

20

40

60

80

100

120

ytd 1M 3M 6M 9M 12M 2015

(%) (%)

Coal sector relative to JCI

Source: Bloomberg

Poultry sector: relative performance

52.6

(4.4) (4.7)

16.1 23.9

66.0

(19.5)

(40)

(20)

0

20

40

60

80

(40)

(20)

0

20

40

60

80

ytd 1M 3M 6M 9M 12M 2015

(%) (%)

Poultry sector relative to JCI

Source: Bloomberg

2017 Compendium

94

Sectors – Ranked by ytd performance: Second Automotive: Beneficiary of lower interest rates.

Plantations: Helped by positive CPO price outlook on low inventory levels in both Malaysia and Indonesia, the 2 major producers.

Telco: Recent underperformance due to possible price war in areas outside of Java.

Automotive sector: relative performance

16.1

(5.2)

(0.6)

12.1

7.7 7.1

(7.8) (10)

(5)

0

5

10

15

20

(10)

(5)

0

5

10

15

20

ytd 1M 3M 6M 9M 12M 2015

(%) (%)

Automotive sector relative to JCI

Source: Bloomberg

Plantations sector: relative performance

8.0

14.5

2.5 4.0

1.6 2.6

(23.0) (25)

(20)

(15)

(10)

(5)

0

5

10

15

20

(25)

(20)

(15)

(10)

(5)

0

5

10

15

20

ytd 1M 3M 6M 9M 12M 2015

(%) (%)

Plantations sector relative to JCI

Source: Bloomberg

Telco sector: relative performance

5.0

(5.0)(3.1)

(8.1)

3.8

10.8

19.1

(10)

(5)

0

5

10

15

20

25

(10)

(5)

0

5

10

15

20

25

ytd 1M 3M 6M 9M 12M 2015

(%) (%)

Telco sector relative to JCI

Source: Bloomberg

2017 Compendium

95

Sectors – Ranked by ytd performance: Third Consumer staples: Hurt by recent trend to shift into higher beta stocks

and concerns over higher commodity prices applying margin pressures.

Tourism: Mainly dragged down by Garuda Indonesia as it suffers from recent higher oil prices.

Banks: Concerns on slow loan growth, higher-than-expected NPLs and

provisions still remain.

Consumer staples sector: relative performance

4.3

(4.2)(1.8)

(11.0)(13.3)

(2.2)

31.0

(20)

(15)

(10)

(5)

0

5

10

15

20

25

30

35

(20)

(15)

(10)

(5)

0

5

10

15

20

25

30

35

ytd 1M 3M 6M 9M 12M 2015

(%) (%)

Consumer staples sector relative to JCI

Source: Bloomberg

Tourism sector: relative performance

(1.0)

(9.1)

(20.3)

(31.3)

(19.3)

(3.8)

(29.4)

(35)

(30)

(25)

(20)

(15)

(10)

(5)

0

(35)

(30)

(25)

(20)

(15)

(10)

(5)

0

ytd 1M 3M 6M 9M 12M 2015

(%) (%)

Tourism sector relative to JCISource: Bloomberg

Banks sector: relative performance

(3.0)

(5.6)

0.4

6.9

0.4

(5.9)

5.8

(4)

(2)

0

2

4

6

8

(8)

(6)

(4)

(2)

0

2

4

6

8

ytd 1M 3M 6M 9M 12M 2015

(%) (%)

Banks sector relative to JCI

Source: Bloomberg

2017 Compendium

96

Sectors – Ranked by ytd performance: Fourth Property: Lower interest rates, LTV relaxation and tax amnesty have not

managed to offset weak marketing sales.

Infrastructure: Mainly dragged down by Jasa Marga, which suffered from concerns over the low inflationary outlook hurting its CPI-based toll tariff increases.

Consumer retail: Due to shifting in Lebaran period to 2Q (previous: 3Q) , the sector suffered from weak 3Q performance.

Property sector: relative performance

(6.4)

(9.1) (9.7)

(2.7)

3.1

(3.6)

10.9

(10)

(5)

0

5

10

15

(10)

(5)

0

5

10

15

ytd 1M 3M 6M 9M 12M 2015

(%) (%)

Property sector relative to JCI

Source: Bloomberg, ex. PPRO

Infrastructure sector: relative performance

(6.5)(5.2)

(13.6) (13.9)

(9.9)

(12.4)

1.5

(16)

(14)

(12)

(10)

(8)

(6)

(4)

(2)

0

2

4

(16)

(14)

(12)

(10)

(8)

(6)

(4)

(2)

0

2

4

ytd 1M 3M 6M 9M 12M 2015

(%) (%)

Infrastructure-related sector relative to JCISource: Bloomberg

Consumer retail sector: relative performance

(9.6)(11.8) (12.2)

(6.5) (8.2)

(12.7)

10.4

(15)

(10)

(5)

0

5

10

15

(15)

(10)

(5)

0

5

10

15

ytd 1M 3M 6M 9M 12M 2015

(%) (%)

Consumer retail sector relative to JCI Source: Bloomberg

2017 Compendium

97

Sectors – Ranked by ytd performance: Fifth Industrial estates: Concerns on current and prospective tenants’

willingness to move/invest in cheaper labor areas with lower land ASPs (e.g. Central and East Java).

Oil-related: Recent outperformance due to OPEC’s decision to curtail production output.

Consumer media: Suffering from lower growth in adex which is mainly fueled by the lower economic growth and purchasing power.

Industrial estates sector: relative performance

(11.5)

(8.5)

(12.0)

(4.1)

(1.6)

(12.0)

(3.3)

(14)

(12)

(10)

(8)

(6)

(4)

(2)

0

(14)

(12)

(10)

(8)

(6)

(4)

(2)

0

ytd 1M 3M 6M 9M 12M 2015

(%) (%)

Industrial estate sector relative to JCI

Source: Bloomberg

Oil-related sector: relative performance

(21.1)

8.5

(10.6)

(1.8)

(13.9)

(19.0)

(6.6)

(25)

(20)

(15)

(10)

(5)

0

5

10

(25)

(20)

(15)

(10)

(5)

0

5

10

ytd 1M 3M 6M 9M 12M 2015

(%) (%)

Oil-related sector relative to JCI

Source: Bloomberg

Consumer media sector: relative performance

(25.1)

(3.2)(6.0)

(26.2)

(8.3)

(21.6)

(7.4)

(30)

(25)

(20)

(15)

(10)

(5)

0

(30)

(25)

(20)

(15)

(10)

(5)

0

ytd 1M 3M 6M 9M 12M 2015

(%) (%)

Consumer media relative to JCI

Source: Bloomberg

2017 Compendium

98

Sectors – Ranked by ytd performance: Last Shipping: Negative sentiment due to lower freight rates and government

concerns on high logistic costs.

Cement: Concerns on price wars and over-capacity hurting the sector.

Transportation: The taxi industry has been hurt by decreased demand on

weak purchasing power and lower utilization rates on intensifying online mobile-based competition.

Shipping sector: relative performance

(30.7)

(8.1) (8.3)

(15.5) (16.8)

(27.2)

(17.8)

(35)

(30)

(25)

(20)

(15)

(10)

(5)

0

(35)

(30)

(25)

(20)

(15)

(10)

(5)

0

ytd 1M 3M 6M 9M 12M 2015

(%) (%)

Shipping sector relative to JCI

Source: Bloomberg

Cement sector: relative performance

(42.9)

(10.4)

(17.4) (17.2)

(31.5)

(42.1)

(9.8)

(45)

(40)

(35)

(30)

(25)

(20)

(15)

(10)

(5)

0

(45)

(40)

(35)

(30)

(25)

(20)

(15)

(10)

(5)

0

ytd 1M 3M 6M 9M 12M 2015

(%) (%)

Cement sector relative to JCI

Source: Bloomberg, ex. SMBR

Transportation sector: relative performance

(55.1)

(4.1)

(17.7)

(27.4)

(53.8)(58.8)

(16.1)

(70)

(60)

(50)

(40)

(30)

(20)

(10)

0

(70)

(60)

(50)

(40)

(30)

(20)

(10)

0

ytd 1M 3M 6M 9M 12M 2015

(%) (%)

Transportation sector relative to JCI Source: Bloomberg

2017 Compendium

99

3Q16 results review: The good, the bad & the ugly Stocks in our coverage overall booked 3Q16 operating-profit growth of

7.1% y-y, compared to 8.6% y-y in 3Q15 with net-profit growth of 17.7% y-y, vs. a 8.3% y-y decline in 3Q15.

The strong rebound in the 3Q16 bottom line was mainly supported by FX gains on a stronger IDR.

CPO, poultry, telco, staples, and infra related sectors were the best performing in 3Q16, while cement and coal were the worst.

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

3Q15 3Q16 3Q15 3Q16

Bahana universe 8.6 7.1 (8.3) 17.7 Source: Company, Bloomberg, Bahana estimates

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

3Q15 3Q16 3Q15 3Q16

Plantations (43.8) 42.3 na na

Poultry 101.4 39.6 7.0 270.7

Telco-related 26.0 20.1 9.7 50.9

Staples 10.0 11.7 (1.3) 23.3

Infra related 33.5 39.0 32.4 18.7 Source: Company, Bloomberg, Bahana estimates

The bad

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

3Q15 3Q16 3Q15 3Q16

Metals (42.3) (17.0) (69.7) 56.3

Oil-related (27.5) (5.5) (66.3) 47.8

Property 16.8 (25.0) (61.0) 46.2

Automotive (2.2) (4.2) (22.9) 19.0

Banks 8.9 10.0 7.9 7.3

Discre (2.1) (8.8) (34.2) 6.5 Source: Company, Bloomberg, Bahana estimates,

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

3Q14 3Q15 3Q14 3Q15

Cement (21.1) (14.1) (33.7) (7.8)

Coal related 26.1 (17.4) 46.2 (22.0) Source: Company, Bloomberg, Bahana estimates

Operating and net profit growth, 3Q14-3Q16

16.8

1.2

24.6

2.6

(8.2)

(5.7)

(8.3)

2.7

(8.5)

14.9 17.7

18.2 14.8

14.1 9.0

(0.7)

(7.7)

8.6 8.2 4.3

10.8

7.1

(15)

(10)

(5)

0

5

10

15

20

25

1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16F 2Q16 3Q16

Net profit Opt profit

Source: Companies, Bahana estimates

2017 Compendium

100

4Q16 preview round-up: The good, the bad & the ugly For the market as a whole, we expect operating performance to be

weaker in 4Q16, although we expect net profit to accelerate from 2.7% in 4Q15 to 7.0% in 4Q16.

This improved bottom line performance is mainly pushed by commodity-related sectors such as metals, oil and coal, as their losses should rapidly reverse on higher prices.

On the flip side, we expect property, cement and banks to perform the worst in 4Q16 at both the operating and net profit levels on continued tough operating conditions. However, we do expect this to reverse on expectations of an improving economic outlook in 2017.

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

4Q15 4Q16F 4Q15 4Q16F

Bahana universe 8.2 (1.7) 2.7 8.2

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

4Q15 4Q16F 4Q15 4Q16F

Metals na na (1,446.0) na

Oil-related (23.4) 30.3 na na

Coal-related (15.7) 89.1 na na

Automotive (17.6) (0.1) (36.6) 74.0

Infra-related 25.1 29.3 42.0 19.2

Discretionary 31.8 26.1 55.5 17.5

Staples 21.0 10.8 24.8 5.9

Source: Company, Bloomberg, Bahana estimates

The bad

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

4Q15 4Q16F 4Q15 4Q16F

Poultry 270.7 30.7 7.0 (10.6)

Telco-related 32.3 11.5 169.2 (22.6)Source: Company, Bloomberg, Bahana estimates

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

4Q15 4Q16F 4Q15 4Q16F

Plantations (33.0) (31.5) (27.3) 1.8

Banks 10.0 (29.3) 4.9 (26.5)

Cement (17.2) (28.9) (4.3) (27.5)

Property (18.3) (22.2) (23.7) (48.1) Source: Company, Bloomberg, Bahana estimates

Operating and net profit growth, 1Q14-4Q16F

16.8

1.2

24.6

2.6

(8.2)

(5.7)

(8.3)

2.7

(8.5)

14.9 17.7

18.2

14.8

14.1 9.0

(0.7)

(7.7)

8.6 8.2

4.3

10.8 7.1

(1.7)

8.2

(15)

(10)

(5)

0

5

10

15

20

25

30

1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16F 2Q16 3Q16 4Q16F

Net profit Opt profit

Source: Companies, Bahana estimates

2017 Compendium

101

Market valuation: More reasonable On valuation, Indonesia is currently the most expensive market in the

region, although if we strip out both Sampoerna (HMSP) and Unilever (UNVR), the two most expensive stocks in our coverage, the PER becomes more reasonable, more at par with India’s.

We expect 2017F EPS growth to reach 19.8% y-y, above the regional average of 12.5% y-y growth. However, excluding metals, ASII and BMRI, our EPS growth would fall to 15.6% y-y, compared to 12.8% in 2018.

In terms of PEG, market valuation appears attractive at a 2017 PEG of 0.8x. Excluding UNVR & HMSP, our 2017F PEG would further decrease to 0.7x.

Regional P/E comparison, 2017F

16.6 16.2 15.2 14.8 14.5 14.2 13.6 13.4

11.4 10.0

0

2

4

6

8

10

12

14

16

18

Indonesia Philippines Malaysia Indonesia* India Thailand China Singapore Hong Kong SouthKorea

(x)

Average**: 13.6

Source: Bloomberg as of 23 November 2016, Bahana *excluding UNVR and HMSP **excluding Indonesia*

Regional EPS growth comparison, 2017F

24.4

19.8

15.6 14.4 13.6 10.7

9.6 8.2 7.6

4.7

0

5

10

15

20

25

30

India Indonesia Indonesia* SouthKorea

China Thailand Hong Kong Philippines Malaysia Singapore

(%)

Average**: 12.5 %

Source: Bloomberg as of 23 November 2016, Bahana *excluding Metals, ASII & BMRI **excluding Indonesia

Regional PEG comparison, 2017F

2.9

2.0 2.0

1.3

1.2 1.0

0.8 0.7 0.7

0.6

0.0

0.5

1.0

1.5

2.0

2.5

3.0

Singapore Malaysia Philippines Thailand Hong Kong China Indonesia Indonesia* South Korea India

(x)

Average**: 1.5x

Source: Bloomberg as of 23 November 2016, Bahana *excluding UNVR and HMSP **excluding Indonesia*

2017 Compendium

102

2017 Index target: 6,000; Sector and stocks: A mixed bag With the Trump effect, we lower our end-2017 index target from

6,600 to 6,000 on a higher market risk premium, and weaker IDR assumption. Our indext target reflects expansion in line with our 2017 EPS growth of 15.6%, as discussed, excluding extraordinary earnings

At this stage, our top picks are a mixed bag of stocks: a combination of defensives and high beta stocks. On the defensive front, we prefer stocks which are relatively immune towards IDR gyrations such as HMSP and TLKM. We also like ICBP due to its ability to raise prices of its instant noodles to safeguard margins.

We overweight interest rate sensitive sectors like automotive, banks, property, construction and consumer discretionary (i.e. retailers and media), as Indonesia’s economic upturn is well insulated against external volatilities, mainly driven by domestic consumption and growth in infrastructure. On a more negative note, we have cut consumer staples to NEUTRAL on margin pressure due to the weaker IDR as well as higher commodity prices.

Favored stocks (10 Stocks), 2017F Stock Mkt cap. Price TP Upside

EPS growth

P/E P/BV Yield ROAE YTD perf.

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

HMSP 33,904 3,930 4,700 20 10.4 33.6 13.0 2.7 39.2 4.5

TLKM 29,456 3,940 5,000 27 13.9 17.4 4.1 3.7 25.0 27.5

ASII 23,345 7,775 10,000 29 27.0 15.3 2.5 2.9 17.5 29.6

BMRI 18,863 10,900 12,350 13 45.8 14.7 1.6 1.2 11.1 17.8

ICBP 7,590 8,775 10,500 20 5.5 25.0 4.9 1.5 21.0 30.2

UNTR 6,059 21,900 26,500 21 28.3 13.6 1.8 2.9 14.3 29.2

SCMA 2,581 2,380 3,000 26 18.0 19.0 8.5 3.6 45.0 (23.2)

CTRA 1,636 1,435 1,800 25 80.8 15.0 2.1 0.9 15.0 (1.1)

WIKA 1,156 2,372 3,267 38 9.5 19.6 2.2 1.5 11.5 0.6

RALS 642 1,220 1,440 18 11.6 19.3 2.3 3.0 12.0 89.1 Source: Bloomberg as of 23 November 2016, Bahana estimates

Sectoral rating summary, 2017F Rating Operating growth

(%) EPS growth (y-y

%) PER (x)

OW N UW Bahana Cons. Bahana Cons. Bahana Cons.Automotive √ 23.7 16.0 26.4 28.2 15.2 16.8 Banks √ 17.0 17.5 16.7 16.3 12.9 12.1 Cement √ 3.0 3.8 (1.6) (4.6) 45.7 32.3 Coal related √ 19.8 28.8 24.8 35.5 12.8 12.7 Infra related √ 22.0 22.6 24.5 22.2 16.8 16.7 Consumer-staples √ 10.6 11.7 9.0 12.7 32.0 32.2 Consumer-discre √ 18.1 17.4 21.5 24.1 20.8 19.2 Healthcare √ 10.4 14.7 9.9 19.2 40.3 38.3 Industrial estates √ 16.7 19.2 11.9 14.4 11.6 9.8 Media √ 13.7 14.1 16.5 18.3 16.5 13.2 Metal mining √ 267.2 206.0 479.8 135.8 43.3 26.2 Oil and gas √ 27.0 14.5 32.2 25.4 11.4 13.4 Plantations √ 62.3 27.1 46.4 24.1 12.7 14.7 Poultry √ (2.8) 13.4 (3.2) 12.5 14.1 13.9 Property √ 21.7 16.1 26.4 24.9 26.4 30.3 Shipping √ 46.2 27.7 102.0 21.6 8.0 13.7 Telcos √ 15.3 15.1 18.6 42.8 19.4 17.5 Tourism √ (310.9) 5.4 (296.9) 44.2 15.1 9.1 Transportation √ 57.7 15.2 105.8 30.9 11.2 10.8 Source: Bloomberg as of 23 November 2016, Bahana estimates

Market data 15A 16F 17F 18F

Operating profit growth (%) 0.5 4.8 18.7 12.5 EPS growth (%) (8.1) 12.4 19.8 12.8 EPS growth** (%) (15.9) 16.2 15.6 23.4 P/E (x) 22.3 19.8 16.6 14.7 P/E* (x) 20.0 17.9 14.8 13.1 PEG (x) (2.7) 1.6 0.8 1.1 EV/EBITDA (x) 13.6 13.1 11.4 10.3 P/BV (x) 9.3 8.1 7.2 6.4 P/BV (x) exc. UNVR & LPPF 5.1 4.6 4.2 3.8 Div. yield (%) 1.9 2.0 2.3 2.6 Net gearing (%) 31.6 22.3 20.2 17.1 ROE (%) 30.4 27.7 27.6 27.2 ROA (%) 11.7 12.0 12.5 12.7 ROIC (%) 33.1 27.3 26.5 24.4 Source: Bloomberg as of 23 November 2015, Bahana estimates, *excluding HMSP & UNVR **excluding Metals, ASII & BMRI

2017 Compendium

103

2017 technical perspective: A year of recovery Going into 2017, we see strong support for the JCI at the 4,900 level

and then 4,500 with resistance levels at 5,500 and 5,900.

Note that in 2015 the JCI crumbled from the Fed rate reaching its lowest level in September 2015. This fall marked around a 27% drop from its high, similar to that in 2013 (down 27% from its highest level).

On the currency front, we expect movements in 2017 to be between a Fibonacci retracement of 50% (IDR13,000 level) and 23.6% (IDR13,900).

JCI – historical chart

Source: Company, Bahana estimates

JCI – 2016 chart

Source: Bloomberg, Bahana estimates

Local currency – 2015 chart

Source: Bloomberg, Bahana estimates

2011 EU Quantitative Easing

2013 US Tappering

2015 Fed Rate Hike

2008 US Crisis

2016 Fed Rate Hike

2017 Compendium

104

Sector coverage by rating

OVERWEIGHT42%

NEUTRAL47%

UNDERWEIGHT11%

Source: Bahana

Stock under coverage and as a % of JCI, 2011-2017

51

70

83 8493

102 10367.2

71.6 71.1

68.269.4

79.4

77.5

55

58

61

64

67

70

73

76

79

82

85

40

50

60

70

80

90

100

110

2011 2012 2013 2014 2015 2016 2017

(Stocks) (%)

Stocks Bahana / JCI market cap Source: Bahana\

Stock coverage by rating

BUY72%

REDUCE14%

HOLD14%

Source: Bahana

Bahana coverage turnover vs. JCI turnover, 11M16

304.3271.7

321.6270.6

213.6

315.5

69.9

72.4

70.9

71.8

72.8 73.1

65

66

67

68

69

70

71

72

73

74

0

50

100

150

200

250

300

350

2011 2012 2013 2014 2015 11M16

(%)(USDmn)

Bahana turnover Bahana turnover / JCI turnover Source: Bahana

2017 Compendium

105

SECTOR

2017 Compendium

106

AUTOMOTIVE OVERWEIGHT Given the increased purchasing power due to likely higher GDP growth,

improved liquidity on lower rates and the tax amnesty program, we expect a recovering auto sector in 2017 with volume growth of 6% y-y to 1.1mn units for 4W, and 3% y-y to 6.3mn units for 2W. A strong IDR and manageable discount levels should also benefit the sector.

On ASII, we expect continued market share expansions to 58% in 2017 for 4W and to 75% for 2W due to its new and improved model line-up such as its 7-seater LCGCs. For IMAS, we expect launches of several models in 2017 with market share improvement materializing in 2018.

On stock calls, the rationales for our BUY ratings: ASII on improved market share and solid earnings growth; IMAS due to lower interest rates leading to a good medium-term recovery; and GJTL on single-digit PEs and a stronger local currency. Risks to our call include lower margins (ASII); lower Datsun sales (IMAS); and a weaker IDR (GJTL).

Relative valuations ----------------------------2017F----------------------------

Code Rating CP TP Market

cap EBIT

marginEPS

growth PER EV/EBITDA Yield ROAE Net

gearing (IDR) (IDR) (USDmn) (%) (%) (x) (%) (%) (x) (%) ASII BUY 7,775 10,000 23,144 9.7 27.0 15.3 12.6 2.9 17.5 31.5

IMAS BUY 1,400 2,000 287 2.7 na 13.6 20.4 1.8 5.1 317.1 GJTL BUY 1,085 1,500 280 12.3 7.9 4.7 4.2 5.3 13.1 110.8

Sector 23,711 9.6 26.4 15.2 12.6 2.9 17.3 35.9 Source: Bloomberg, Bahana estimates Note: based on 23 November 2016 closing price

Relative performance YTD to JCI

91.2

16.1 16.1

(54.3)

(30)

(20)

(10)

0

10

20

30

40

50

(80)

(60)

(40)

(20)

0

20

40

60

80

100

GJTL ASII Sector IMAS

(%)(%)

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

Domestic 2W and 4W ownership per 1,000 population, 2014-18F

35

40

45

50

250

255

260

265

270

275

2014A 2015A 2016F 2017F 2018F

Total 2W Total 4W (RHS)

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

Source: Gaikindo, AISI, Bahana

2017 Compendium

107

AUTOMOTIVE

4W sales volumes, 2014-18F

1,208

1,013 1,040

1,196

1,316

900

950

1,000

1,050

1,100

1,150

1,200

1,250

1,300

1,350

2014 2015 2016F 2017F 2018F

('000 units)

Source: Gaikindo, Bahana estimates

2W sales volumes, 2014-18F

7,867

6,480 5,897 6,044 6,195

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

2014 2015 2016F 2017F 2018F

('000 units)

Source: AISI, Bahana estimates

Top 10 passengers sales, 2013-10M16

Type Units Type Units Type Units Type Units

Avanza 100,488 Avanza 129,205 Avanza 162,070 Avanza 213,458

Innova 48,964 Agya 57,646 Mobilio 79,288 Xenia 64,611

Agya 38,933 Innova 43,444 Agya 67,074 Ertiga 63,317

HRV 37,901 Brio 43,596 Innova 56,157 Innova 64,539

Brio 37,601 Mobilio 42,932 Ertiga 47,015 Livina 35,422

Xenia 36,587 HRV 37,647 Xenia 46,710 Rush 35,004

Ayla 34,744 Xenia 36,262 Ayla 40,775 Misubishi Pikap 29,662

BRV 33,414 Ayla 35,084 Brio 38,693 Jazz 27,803

Mobilio 33,354 Ertiga 30,963 Rush 29,609 Suzuki Carry 46,208

Ertiga 25,754 Datsun 29,358 Jazz 22,329 Gran Max 48,012

Total 427,740 Total 486,137 Total 589,720 Total 628,036

2014 2013201510M16

Source: Gaikindo ggrgrgrgrgrgrgrg

Domestic market share (4W and 2W), 10M16

Daihatsu17%

Isuzu1%Nissan Diesel0%

Toyota35%

Peugeut0%

Honda19%

Mitsubishi9%

Suzuki9%

Nissan1%

Others(Non-Astra)

7%

4W

ASII74%

Yamaha24%

Others2%

2W

Source: Gaikindo, AISI

2017 Compendium

108

BANKS OVERWEIGHT Going into 2017, we expect the Indonesian banking sector to re-rate

with the perception of growth and liquidity improving due to two factors: (1) In a system with a 22% CAR, IDR130tn of repatriated funds from tax amnesty can be multiplied into IDR600tn, about 150% of excess deposits over loans of IDR400tn currently; and (2) A cyclical recovery would likely accelerate money velocity.

In an economic upcyle coupled with President Jokowi’s growth model using SOEs as investment vehicles, we are long the 3 SOE banks and short BBCA’s private status and defensive nature. BBCA’s 120% premium in 4Q15 over the 3 SOE banks has de-rated to 95% since.

At this stage of the cycle, we begin to see relative value emerging amongst the smaller banks like BBKP (1.0x 2017F PBV TP of IDR1000 59% upside) for its S&L franchise focused on SME and micro. Risk to our call: Slower-than-expected GDP growth to adversely affect NPLs.

Relative valuations ---------------------------- 2017F ----------------------

Code Rating CP TP Mkt Cap Loans GrossNPL

Net Profit ROAE NP

Growth P/E P/BV Dv. Yield

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

BBCA HOLD 14,700 15,100 26,880 446 0.9 22,309 19.5 11.1 16.2 2.9 1.3

BBRI BUY 11,500 14,900 21,041 758 2.5 27,816 19.8 9.5 10.2 1.9 2.9

BMRI BUY 10,900 12,350 18,863 729 3.6 17,267 11.1 45.8 14.7 1.6 1.2

BBNI BUY 5,125 7,000 7,089 431 2.8 12,724 14.5 17.0 7.5 1.0 2.3

BDMN BUY 3,550 4,000 2,524 125 3.0 3,312 8.9 13.8 10.3 0.9 2.9

BBTN BUY 1,720 2,100 1,351 193 3.0 2,518 15.0 14.7 7.2 1.0 2.1

BTPN BUY 2,790 3,300 1,209 70 0.8 2,023 12.3 9.3 8.1 0.9 0.0

BJBR REDUCE 1,495 1,200 1,075 78 3.0 1,773 19.8 10.2 8.2 1.5 6.7

BJTM HOLD 488 475 541 30 4.4 1,085 15.8 6.2 6.7 1.0 10.2

BBKP BUY 630 1,000 425 80 2.6 1,210 13.8 14.7 4.7 0.6 4.2 Sector 84,653 2,940 2.6 92,038 16.6 16.7 12.9 2.0 2.0 Source: Bloomberg, Bahana estimates note: based on 23 November 2016 closing price

Relative performance YTD to JCI

84.5

19.3

4.4 2.8

(1.0) (1.8) (2.5) (3.0) (3.0)(10.8)(12.8)

(23.5) (35.0)

(15.0)

5.0

25.0

45.0

65.0

85.0

(35.0)

(15.0)

5.0

25.0

45.0

65.0

85.0

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

(%)(%)

Source: Bloomberg Handi Huta Jaya ([email protected]) +6221 250 5081 ext. 3610

LDR ratio, 1Q11-3Q16

0

2

4

6

8

10

12

14

16

18

65

70

75

80

85

90

95

100

(%)(%)

Industry Big 4 Non Big 4 Ex Big 4 vs Big 4 Gap (rhs)

Source: Bahana estimates, companies, SPI

2017 Compendium

109

BANKS

PBV vs. ROE, 9M16

BBCA: 3.3

BMRI: 1.7

BBRI: 2.0

BBNI: 1.1

BDMN: 0.9BTPN: 1.0

BBTN: 1.0

BJBR: 1.5BJTM: 1.0

BBKP: 0.6

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

8.0 10.0 12.0 14.0 16.0 18.0 20.0 22.0

PBV (x)

ROE (%)

Source: Bahana estimates, Bloomberg. *Based on closing price on 23 November 2016

NIM, 4Q11-3Q16

-3.0

-2.5

-2.0

-1.5

-1.0

-0.5

0.0

0.5

1.0

4.0

4.5

5.0

5.5

6.0

6.5

7.0(%)(%)

Industry Big 4 Non Big 4 Ex Big 4 vs Big 4 Gap (rhs)

Source: Bahana estimates, companies, SPI

NPL, 1Q11-3Q16

-0.5

-0.3

-0.1

0.1

0.3

0.5

0.7

0.9

1.1

1.3

1.5

2.0

2.5

3.0

3.5

4.0

4.5(%)(%)

Industry Big 4 Non Big 4 Ex Big 4 vs Big 4 Gap (rhs)

Source: Bahana estimates, companies, SPI

Non-interest income, 1Q11-3Q16

7,500

17,500

27,500

37,500

47,500

57,500

67,500

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

100,000

(IDRbn)(IDRbn)

Industry Big 4 Non Big 4 Ex Big 4 vs Big 4 Gap (rhs)

Source: Bahana estimates, companies, SPI

2017 Compendium

110

CEMENT NEUTRAL With 100MT installed capacity and potential 20MT more expected in the

next 3 years, over-investment is expected to cap utilization rates below 75% until 2020 (assuming long-term 10% volume growth), and could prolong to 2023, assuming 5% growth as in 2016F. We also think government’s intention to apply a moratorium on cement plants for the Java island to be effective in cutting future investments for the sector.

We believe INTP’s aggressive price cuts in 3Q16 marks the beginning of the end, as the move is strategic in defining the industry’s return rate, given its Java dominance and pricing reference for the rest of the region. Thus, we think at current IDR950k/ton price and 20-25% EBIT margin, cement project IRRs are below WACC, hindering further investments.

With valuation EV/production ton below replacement, and historical P/E vs JCI testing -2 long term std dev, cement valuations may be nearing their lows. NEUTRAL. Risks: Lower/higher utilization rates.

Relative valuations

---------------------------- 2017F ----------------------

Code Rating CP TP Mkt Cap EV/ ton

EV/ EBITDA

EBITDA margin

Net Profit ROAE NP

Growth P/E Div. Yield

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

INTP HOLD 14,575 15,600 3,979 182 8.6 29.8 3,577 13.1 (6.9) 15.0 2.3

SMGR HOLD 8,400 8,940 3,695 130 6.6 25.9 4,079 13.6 1.8 12.2 2.5

SMCB HOLD 890 970 506 75 9.0 14.5 26 0.3 (128.1) 264.5 0.3

SMBR REDUCE 2,490 315 1,817 514 55.1 30.1 203 6.2 (21.4) 120.4 0.2

Sector 9,997 218 16.3 27.7 7,886 11.4 (1.6) 45.7 1.9 Source: Bloomberg, Bahana estimates note: based on 23 November 2016 closing price

Relative performance to JCI YTD

742.2

99.8

(24.0) (39.8) (42.9) (48.2) (100)

0

100

200

300

400

500

600

700

800

(100)

0

100

200

300

400

500

600

700

800

SMBR SECTOR SMCB SMGR SECTOR* INTP

(%)(%)

Source: Bloomberg, *excluding SMBR Handi Huta Jaya ([email protected]) +6221 250 5081 ext. 3610

Utilization industry, 2013-2018

60.0

65.0

70.0

75.0

80.0

85.0

90.0

95.0

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

2013 2014 2015 2016F 2017F 2018F

(%)('000 tons)

Production Consumption Utilization rate

Source: ASI, Bahana estimates

2017 Compendium

111

CEMENT

Utilization rate 4 companies, 2013-2018F

40

50

60

70

80

90

100

2013 2014 2015 2016F 2017F 2018F

(%)

SMGR INTP SMCB SMBR

Source: Indonesian Cement Association

Java & non-Java consumption, 2005-2015

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

18.0

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

(%)(IDR/mn tons)

Java Non Java Growth

Source: Indonesian Cement Association

ASP industry, 2013-ytd

700,000

750,000

800,000

850,000

900,000

950,000

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

(IDR/ ton)

2016 2015 2014 2013

Source: Companies, Bahana

Bag and Bulk 3M moving average, 2005-ytd

0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

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

(Tons)

Bag 3mth MA Bulk 3mth MA Total 3mth MA

Source: Semen Indonesia

2017 Compendium

112

COAL NEUTRAL At this stage of the coal cycle, we believe the price lows are probably

over, and we are close to the highs. The recent price spike was due to two factors: (1) Bad weather in the northern hemisphere, leading to higher-than-expected demand; (2) Excessive policy-driven supply cuts in China, as we estimate a 1.3% cut in Chinese Supply = a 10% cut in Indonesia supply. Looking ahead, with coal being an easily supplied market, we believe the commodity will eventually correct to our expected price average of USD65/ton in 2016, before falling to USD58/ton in 2017.

On a more positive note, Indonesia’s 35GW power plants, to be completed by 2020, should provide greater sustainability as 60% would be coal-fired, translating into about 70mn tons of annual domestic demand.

In terms of stock picks, we prefer to play coal through the Indonesian 35GW proxy, such as ADRO and PTBA. Risks to our call are China’s increasing its miners’ working days from the current 276 and thermal power plant delays.

Relative valuations -------------------------2017F------------------------

Mkt EV/ Net Div CP TP Cap EBITDA Margin P/E P/BV Yield

Code Rating (IDR) (IDR) (USDm) (x) (%) (x) (x) (%) UNTR BUY 21,900 26,500 6,059 5.5 11.3 13.6 1.8 2.9 ADRO BUY 1,630 2,010 3,834 5.2 11.3 12.6 1.2 3.6 PTBA BUY 11,900 14,130 2,016 8.3 13.1 12.7 2.5 3.1 ITMG BUY 16,200 19,460 1,346 5.6 7.8 11.5 1.7 8.7 Sector 13,255 5.8 11.2 13.0 1.7 3.7

Relative performance to JCI ytd

203.0

169.5 149.5

105.8

15.7

0

50

100

150

200

250

0

50

100

150

200

250

ADRO ITMG PTBA SECTOR UNTR

(%) (%)

Source: Bloomberg Andrew Hotama ([email protected]) +6221 2505081 ext. 3619 *New, please refer to appendix II

China coal mine vs total coal inventory, Jan 2008 - Aug 2016

0

5

10

15

20

25

30

80

130

180

230

280

330

380

Aug'08 Aug'09 Aug'10 Aug'11 Aug'12 Aug'13 Aug'14 Aug'15 Aug'16

China total coal inventory (LHS) China coal mine inventory (RHS)

(mt) (mt)

Source: Bloomberg, Bahana

2017 Compendium

113

COAL

Long-term correlation between coal and oil, 2010-18F

40

50

60

70

80

90

100

110

120

130

40

50

60

70

80

90

100

110

120

130

2011 2012 2013 2014 2015 2016 2017F 2018FCoal (LHS) Oil (RHS)

(USD/ton) (USD/barell)

Source: Bloomberg, Bahana research

China new energy policy The law calls for changing energy structures to reduce the percentage of coal as a

primary energy source in China. The law requires all new coal plants to have on-site washing equipment to remove sulphur and ash content, and older coal plants are to be retrofitted to meet environmental standards. Stricter enforcement measures to meet coal quality standards are introduced, so reducing China’s overall amount of usable coal, improving energy efficiency and cutting pollutant emissions.

In addition to introducing stricter enforcement standards for coal operations, the New Air Law enables regional governments to establish zones that prohibit burning fuels that emit a large amount of pollutants. In those areas, any entity that constructs or expands facilities that use high-pollution fuels can be fined up to 200,000 yuan (US$30,000). In most cases, these high-polluting fuel restriction zones will become coal-free.

Major air pollution control regions are required to limit the increase of local coal

consumption, where any new projects that use coal must offset the amount in the same region, thereby setting a coal cap. The law also requires the green dispatch of electricity to prioritise the renewable and cleaner energy dispatches over dirty power generators. This provides the legal foundation for a green dispatch program as stated in the recent Xi-Obama joint announcement on climate change. Source: Chinadialogue.net

China electricity generation by fuel source, 2012-2040F

0.08 0.25 0.51 0.65 0.90 1.141.001.89

2.14 2.392.63

2.88

0.09

0.330.45

0.750.98

1.21

3.59

4.21

4.394.35

4.274.19

0.00

1.00

2.00

3.00

4.00

5.00

6.00

7.00

8.00

9.00

10.00

2012 2020 2025 2030 2035 2040natural gas Renewables Nuclear Coal

(tkw/h)

Source: eia

35GW to be completed by Indonesia before 2010F

0

5,000

10,000

15,000

20,000

25,000

Coal-fired Gas-fired Hydropower Geothermal Wind

(MW)

Source: Jakartapost

2017 Compendium

114

CONSTRUCTION, TOLL ROAD & INFRA-RELATED OVERWEIGHT Apart from higher 2017F GDP growth of 5.4%, Indonesia’s infra-

related sector should benefit from higher government spending, supported by greater government tax revenue due to the resetting to a higher tax base following the successful tax amnesty program.

On toll roads, we see faster implementation and development prospects on improved land-clearing processes as well as the introduction of government priority projects with guaranteed funding, propelling the government’s plan to build 1,000km toll roads by 2019.

Therefore, we maintain our OVERWEIGHT sector rating on sustainable solid growth. On stock picks, we prefer WIKA due to its diversified revenue sources paving the way for higher earnings quality. We also like WSKT on solid earnings visibility, helped by its substantial owned projects. Risks to our call include delayed project execution and lower state spending on tax receipt shortfalls.

Relative valuations ---------------------2017F----------------------- Mkt EV/ EBIT Div. CP TP Cap EBITDA margin PE P/BV yield

Code Rating (IDR) (IDR) (USDm) (x) (%) (x) (x) (%) JSMR BUY 4,210 5,287 4,190 11.5 40.9 16.3 2.0 1.8

WSKT BUY 2,360 3,200 2,376 10.7 10.9 17.6 1.8 1.1

PTPP BUY 3,883 4,630 1,458 6.5 10.9 18.5 1.7 1.6

WIKA BUY 2,372 3,267 1,200 9.4 10.2 19.5 2.2 1.5

WSBP BUY 580 740 1,105 11.2 15.7 16.4 1.9 1.8

WTON BUY 830 1,100 537 10.9 10.4 18.3 2.7 1.6

ADHI BUY 2,000 3,500 528 4.7 7.6 8.4 1.1 2.4

TOTL BUY 760 1,125 192 5.4 9.5 10.1 2.5 5.3

Sector (mkt. cap wght.) 11,586 10.0 21.9 16.8 1.9 1.7

Sector (construction only) 7,396 9.2 11.2 17.1 1.9 1.6 Source: Bloomberg, Bahana estimates Note: based on 23 November 2016 closing price

Relative performance to JCI YTD

27.8

10.1

3.6

(6.5) (8.7)(12.9) (12.9)

(20.0)

(32.9)(40)

(30)

(20)

(10)

0

10

20

30

(40)

(30)

(20)

(10)

0

10

20

30

WSKT TOTL WSBP* SECTOR PTPP WIKA WTON ADHI JSMR

(%) (%)

Source: Bloomberg *Since IPO

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

Indonesia’s infrastructure targets, 2015-19 Details End 2014 Target 2019 Details End 2014 Target 2019Connectivity Basic Infrastructure National road-worthiness rate 94% 99% Electrification rate 81.5% 100.0% National road length 38,570 km 46,770km Electricity consumption per capita 843 kWh 1200 kWh New road construction (in 5-yrs) 1,028km 2,650km Household gas network 102,000 (SR) 192,000 (SR) New toll-road construction (in 5-yrs) 260km 1,000km Drink water access 70.0% 100% Railways length 5,434km 8,692km Home ownership backlog 13.5 mn 6.8 mn Seaports development 278 450 Water supply Dwelling time in ports 6-7 days 3-4 days Basic water capacity 51.4 m3/sec 118.6 m3/sec Number of airports 237 252 Storage per capita 62.3 m3 78.36 m3 Number of crossing docks 210 270 Dam construction (5-yrs) 21 dams 49 dams Logistic costs 23.5% 19.2% Irigation from dam 11% 20% Public transport rate 23% 32% Surface irigation network 7.145 mn ha 7.914 mn ha Source: National Planning Agency

2017 Compendium

115

CONSTRUCTION, TOLL ROAD & INFRA RELATED

Construction sector sales breakdown & gross margin, 2014-2018F

38,867 44,809

65,273

84,245

105,578

6,840 8,711

14,156

18,088

21,796

14.513.9 14.1 13.8 14.1

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

2014 2015F 2016F 2017F 2018F

(%)(IDRbn)

Construction Non-construction Gross margin

Source: Companies, Bahana

New contracts vs construction GDP/total GDP, 2014-18F

22,625 32,084

44,918 46,041 47,192 17,632

25,330

53,000 38,000

45,600

20,240

27,073

31,016

35,668

41,019

9,071

13,962

27,924

27,366

26,818

3,570

2,177

3,000

4,000

4,500

8.4

12.6 15.1

19.3 19.3

0

2

4

6

8

10

12

14

16

18

20

-

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

2014 2015 2016 2017F 2018F

(%)(IDRbn)

WSKT WIKA PTPP ADHI TOTL Construction GDP/total GDP

Source: Companies, Bahana

Mid-term infrastructure investment plan (RPJMN), 2015-19F Sector State budget Local budget SOE Private TotalElectricity 100.0 - 445.0 435.0 980.0 Sea transportation 498.0 - 238.2 163.8 900.0 Road 340.0 200.0 65.0 200.0 805.0 Housing 384.0 44.0 12.5 87.0 527.5 Energy (oil & gas) 3.6 - 151.5 351.5 506.6 Clean water and waste system 227.0 198.0 44.0 30.0 499.0 Water resources 275.5 68.0 7.0 50.0 400.5 Railroad 150.0 - 11.0 122.0 283.0 Information technology 12.5 15.3 27.0 223.0 277.8 Air transportation 85.0 5.0 50.0 25.0 165.0 City transportation 90.0 15.0 5.0 5.0 115.0 Land transportation 50.0 - 10.0 - 60.0 Total 2,215.6 545.3 1,066.2 1,692.3 5,519.4 Percentage 40.1% 9.9% 19.3% 30.7% 100.0%Source: National Planning Agency; Note: 2016 state budget infrastructure spending expected to only reach IDR317.1tn with budgeted amount of c.IDR346.6tn in 2017

Current and planned toll road projects, 2015-19F

Source: The Ministry of Public Works and Public Housing, Bahana; Note: 2016 toll road construction amounted to c. 130km

2017 Compendium

116

CONSUMER DISCRETIONARY - MEDIA OVERWEIGHT Indonesia’s FTA TV industry, dominated by MNCN (37.2% audience

share as of 9M16) and SCMA (25.7%), is on the verge of recovery on advertising flow of c.2x GDP growth, backed by low inflation and improving economic growth leading to higher purchasing power.

In 2016, some of the FMCG corporates held back on advertising expenditure by remaining cautious and adopting a “wait and see” mode post the bleak 2015. In 2017, we expect normalization to return, in line with GDP growth rising to 5.3%.

SCMA is our top media pick due to: (1) Sector-high ROE of c.45%, (2) Indosiar’s high double-digit strong growth outperformance to help offset SCTV’s weak rating, and (3) attractive valuation at 19x FY17F PE post pullback. MNCN is also a BUY on cheap valuation, market share gains (fuelled by RCTI), and strong FCF growth post peak capex cycle. Sector risks: Weaker GDP, stronger online ads.

Relative valuations

--------------------------2017F------------------------

Market EPS P/E

EV/ CP TP Cap growth PEG PBV EBITDA ROAE

Code Rating (IDR) (IDR) (USDmn) (%) (X) (X) (x) (x) (%) SCMA BUY 2,380 3,000 3,243 18.0 18.9 1.1 8.5 13.4 45.0 MNCN BUY 1,735 2,200 1,738 12.0 12.8 0.8 2.0 9.2 16.8 LINK HOLD 5,550 5,300 1,200 10.5 18.9 1.7 3.3 8.6 18.8 BMTR REDUCE 640 550 650 3.4 8.4 0.9 0.7 5.0 8.1 MSKY REDUCE 1,040 700 559 na na na 3.6 7.3 1.2 VIVA REDUCE 252 230 314 55 19.7 0.4 2.0 7.6 11.0

Sector 7,704 16.5 16.5 1.3 5.0 11.0 25.0 Source: Bloomberg, Bahana estimates; pricing as of 23 November 2016

Relative performance ytd to JCI

25.3

(19.9) (19.9)(25.1)

(35.6) (36.7)

(55.3) (60)

(50)

(40)

(30)

(20)

(10)

-

10

20

30

(60)

(50)

(40)

(30)

(20)

(10)

0

10

20

30

LINK MNCN VIVA Sector MSKY SCMA BMTR

(%) (%)

Source: Bloomberg

Henry Wibowo ([email protected]) +6221 2505081 ext. 3622

Bahana TV Adex vs. GDP Growth

Source: Bahana Estimates, Company Data

2017 Compendium

117

CONSUMER DISCRETIONARY – MEDIA

Advertiser Profile – FMCG remains as dominant category

Top 10 Category TV & Print (IDR b- Gross) Category Adex 1H15 Adex 1H16 YoY%

1 Government, Political Organization Govt/Politics 2,714 3,800 40%

2 Clove Cigarettes FMCG 2,288 3,500 53%

3 Communication Equipment & Services Telco 1,969 2,500 27%

4 Hair Care Products FMCG 2,083 2,500 20%

5 Coffee, Tea FMCG 1,855 2,300 24%

6 Facial Care Products FMCG 1,679 2,200 31%

7 Online Services (E-Commerce, Website, Apps) Internet 1,325 2,200 66%

8 Instant Food, Instant Noodles FMCG 1,550 2,000 29%

9 Corporate Ads, Social Services Corporate 1,624 1,900 17%

10 Snacks, Biscuits, Cookies, Cakes FMCG 1,407 1,900 35%

Source: Nielsen

All-time audience share, January 2014 – October 2016

11.7

30.8

13.0

8.05.6

Jan-

15

Feb-

15

Mar

-15

Apr

-15

May

-15

Jun-

15

Jul-

15

Aug

-15

Sep

-15

Oct

-15

Nov

-15

Dec

-15

Jan-

16

Feb-

16

Mar

-16

Apr

-16

May

-16

Jun-

16

Jul-

16

Aug

-16

Sep

-16

Oct

-16

(%)

SCTV RCTI IVM MNCTV GTV

Source: Nielsen, Bahana

Law No.32/2002 Article Clause Main content

18

1 Within one broadcasting region or multiple regions, ownership or control over non-government broadcasting institutions by either an individual or an entity must be limited

2 Directly or indirectly owned non-government broadcasting companies or entities in cross ownerships within different media type must be limited

4 The terms and conditions of clauses 1 and 2 above shall be ensured by the Indonesian Broadcasting Commission (KPI) and the government

34 4 Broadcasting licenses are non-transferable Source: Indonesian Broadcasting Commission, Bahana

Government Regulation No.50/2005 Article Clause Main content

32 1

One entity may only have two TV broadcasting licenses in two different provinces 49% maximum share ownership in a second entity 20% maximum share ownership in a third entity 5% maximum share ownership in a fourth entity

33 Cross-ownership limitations with a single entity only allowed to own one media company type

Source: Ministry of Information and Communication, Bahana

Ad Spend Trend - ICBP (Leading National FMCG Advertiser)

Source: Bahana Research, Company Data

2017 Compendium

118

CONSUMER DISCRETIONARY - RETAIL OVERWEIGHT On lower inflationary outlook (17F: 3.8%) and high GDP growth

forecast (17F: 5.3%), the retail sector is one of our top picks as we anticipate the improved purchasing power to stimulate discretionary spending particularly given the GDP/capita of more than USD3,500.

At this stage, we believe profit/sqm has bottomed (MAPI’s 9M16 SSG: 8.7% vs. 14.7% in 2014 and LPPF’s 9M16 SSG: +6% y-y down from double-digit average growth in the last 3-4 years). Thus, improving SSG ahead should directly support earnings. We also expect to see consumer behavior shifting back to hypermarket format as increasing disposable income should translate into larger basket size.

On stocks, our top picks for the sector are fashion retailers: MAPI, LPPF and RALS, while our least preferred stock is ACES on lack of catalyst and limited growth potential in tier-1 cities. Downside risk to our sector view is unexpected sales boom in e-commerce.

Relative valuations

-----------------------2017F------------------------

Market EPS EV/ CP TP Cap growth PBV EBITDA ROE

Code Rating (IDR) (IDR) (USDmn) (%) (x) (x) (%) LPPF BUY 14,575 19,100 3,154 21.1 14.4 11.6 102.0 ACES HOLD 870 850 1,107 1.6 4.5 16.7 21.3 MPPA BUY 1,705 2,250 680 91.0 3.1 12.6 7.6

RALS BUY 1,220 1,440 642 11.6 2.3 15.7 12.0

MAPI BUY 4,890 6,600 602 59.8 2.9 7.2 11.6

TELE BUY 725 880 383 22.5 1.4 8.1 16.2

CSAP BUY 484 640 145 62.4 2.1 8.5 13.4

ERAA BUY 605 820 130 17.6 0.5 5.2 8.8

Sector 6,844 21.5 8.3 12.1 54.7

Sector exc. LPPF 3,690 21.9 3.0 12.6 14.3 Source: Bloomberg, Bahana estimates; prices as of 23 November 2016 *estimated using core EPS

Relative performance ytd to JCI

75.7

15.4 9.1

(2.5)(8.0) (9.6)

(19.3) (20.1)(30.7)(35)

(15)

5

25

45

65

85

RALS MAPI CSAP ERAA ACES SECTOR TELE MPPA LPPF

(%)

Source: Bloomberg as of 23 November 2016 Richard Danusaputra ([email protected]) +6221 2505081 ext. 3605 Michael W Setjoadi ([email protected]) +6221 2505081 ext. 3620

Retail sales index, January 2013 – September 2016

217

76

96

116

136

156

176

196

216

236

Jan-10

May

-10Se

p-10

Jan-11

May

-11Se

p-11

Jan-12

May

-12Se

p-12

Jan-13

May

-13Se

p-13

Jan-14

May

-14Se

p-14

Jan-15

May

-15Se

p-15

Jan-16

May

-16Se

p-16

(pts)

Retail sales index

Source: CEIC, Bahana

average:144

2017 Compendium

119

CONSUMER DISCRETIONARY - RETAIL

Sectoral EBIT margin vs USDIDR, Jan ’05 - Sept’16

15.0

15.2

15.4

15.6

15.8

16.0

16.2

16.4

16.6

8,000

9,000

10,000

11,000

12,000

13,000

14,000

15,000

Q42010 Q42011 Q42012 Q42013 Q42014 Q42015 Q42016

USDIDR EBIT Margin (%)

Source:Bloomberg, Bahana

Population by income, 2013 and 2020F

63.3

46.9

44.0

24.5

7.1

2.6

64.2

28.3

47.9

50.5

68.2

49.2

16.5

6.9Elite

Affluent

Upper Middle

Middle

Emerging Middle

Aspirant

Poor

Indonesian population,2013 (mn)

Indonesian population,2020 (mn)

Source: Statistics Indonesia

Private consumption vs inflation y-y growth, 1Q13-4Q16F

4.8

4.9

5.0

5.1

5.2

5.3

5.4

5.5

5.6

0

1

2

3

4

5

6

7

8

9

1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16

(%)(%)

Inflation y-y (LHS) Private consumption y-y (RHS)

Source: CEIC, Bahana estimates

Profit /sqm, 2009-2018F

-

0.2

0.4

0.6

0.8

1.0

1.2

1.4

-

5.0

10.0

15.0

20.0

25.0

2009 2010 2011 2012 2013 2014 2015 2016F 2017F 2018F

(IDRmn/sqm)(IDRmn/sqm)

Revenue /sqm Operational cost /sqm Core profit /sqm (RHS)

Source: Companies, Bahana estimates

2017 Compendium

120

CONSUMER STAPLES NEUTRAL In the midst of high GDP growth outlook reaching USD3,500/capita

level, we believe the incremental consumer spending will be greater towards the discretionary sector (i.e. retailer front) relative to staples goods. Nevertheless, we continue to see sustainable and long-term consumption growth for Indonesia due to favorable demographics: young and high population base as well as growing urbanization.

Looking ahead, we expect stable FMCG demand to remain in place, but the anticipated higher soft commodity prices should result in margin pressures, in our view. Note that based on Nielsen’s latest retail Sept-16 survey data, we have not seen FMCG demand recovery.

Our bigger-cap stock pick is ICBP (higher pricing power to pass on cost inflation), while for the mid-cap it is MYOR (on higher volume growth outlook). Downside risk: Higher commodity prices/strong dollar to weaken margins; Upside risk: Less competition.

Relative valuations -----------------------2017F----------------------------- Mkt EPS EV/ CP TP Cap growth P/E PEG P/B EBITDA ROE

Code Rating (IDR) (IDR) (USDm) (%) (X) (X) (X) (%) (%) UNVR BUY 40,450 45,000 22,891 9.9 43.1 4.3 48.5 30.7 119.7 ICBP BUY 8,775 10,500 7,590 5.5 25.0 4.5 4.9 16.6 21.0 INDF BUY 7,700 9,800 5,014 0.3 15.0 48.4 2.1 6.7 14.7 MYOR BUY 1,535 2,500 2,545 23.1 22.4 0.9 4.6 14.0 22.9 ROTI HOLD 1,540 1,600 578 10.7 24.9 2.3 4.7 13.3 20.3 KINO HOLD 3,000 3,100 318 2.8 16.2 5.8 2.0 10.1 13.0 Sector 38,936 8.8 34.1 9.8 30.2 23.3 78.3 Sector exc. UNVR 16,045 7.1 21.2 17.6 3.9 12.8 19.2

Source: Bloomberg, Bahana estimates note: based on 23 November 2016 closing prices

Relative performance ytd to JCI

35.3

16.8 12.3

8.3 4.3

(4.2)

(35.4) (40)

(30)

(20)

(10)

0

10

20

30

40

(40)

(30)

(20)

(10)

0

10

20

30

40

INDF ICBP MYOR ROTI SECTOR UNVR KINO

(%)(%)

Source: Bloomberg

Michael W. Setjoadi ([email protected]) +6221 250 5081 ext. 3620 & Renaldy Effendy ([email protected]) +6221 250 5081 ext. 3606

Consumer discretionary spending vs. staples relative to GDP

Source: BPS, Bahana

2017 Compendium

121

CONSUMER STAPLES

Top 10 FMCG products retail audit, Aug 2015-16

Source: Nielse, Bahana

Top 10 FMCG products retail audit, Aug 2015-16

Source: Nielsen, Bahana

Private consumption growth vs. inflation, 1Q14-4Q17F

4.9

5.0

5.1

5.2

5.3

5.4

3.0

4.0

5.0

6.0

7.0

8.0

9.0(%)(%)

Inflation y-y Private consumption growth y-y (RHS)

Source: CEIC, Bahana

FMCG sales value contribution, 2016 ytd

34.0

35.7

18.5

8.5 3.3

Food Beverage Personal care Homecare Pharmaceutical

Source: Nielsen Media Research, Media Index, Bahana

2017 Compendium

122

HEALTHCARE OVERWEIGHT Indonesia, the region’s lowest healthcare expenditure at 3.8% of

2016F GDP, should see spending rise to 5% of GDP by 2019, helped by the mandatory National Healthcare Insurance (JKN) scheme. With 2019F GDP of USD4,100/capita, we estimate heathcare spending to reach USD205/person, reflecting a 2013-2019F CAGR of 11.4%.

Rising middle-up income earners suggest that rapidly increasing demand for improved healthcare and services would benefit the private sector more given the state’s slow progress (e.g., long queues at medical facilities). Through CoBs, the public at large would possess access to improved medical services at affordable prices.

Our top hospital pick is SILO due to the government’s JKN and CoB schemes. On the pharmaceutical stocks, we like KLBF due to its strong products and proactive management. Risks to our call are a weak IDR due to high USD-linked costs and possible caps on drug prices.

Relative valuations

--------------------------2017F------------------------

Market EPS P/E

EV/ CP TP Cap growth PEG PBV EBITDA ROE

Code Rating (IDR) (IDR) (USDmn) (%) (X) (X) (x) (x) (%) KLBF BUY 1,500 *1,880 5,215 10.0 28.7 2.9 5.4 19.4 20.6 MIKA HOLD 2,710 2,550 2,925 10.0 52.0 5.2 10.9 41.8 21.6 KAEF REDUCE 2,700 1,650 1,108 9.8 49.1 5.0 6.3 33.7 13.6 SILO BUY 10,100 *13,100 866 25.8 94.2 3.7 4.0 20.3 5.4 TSPC REDUCE

*2,000 *1,700 668 (3.1) 18.3 -5.9 1.8 9.8 10.4

SIDO BUY 550 640 612 13.0 15.1 1.2 2.6 10.0 19.2 Sector 11,394 10.9 40.3 1.5 6.4 25.4 18.4 Source: Bloomberg, Bahana estimates Note: closing prices as of 23 November 2016 *New, please refer to appendix II

Relative performance ytd to JCI

196.9

22.0

0.8 0.2

(0.6)(10.4) (13.5) (30)

20

70

120

170

220

(30)

20

70

120

170

220

KAEF Sector TSPC KLBF MIKA SILO SIDO

(%)(%)

Source: Bloomberg, as of last closing price 23 November 2016 Renaldy Effendy ([email protected]) +6221 2505081 ext. 3606

Healthcare expenditure as % of GDP by region, 2013 (latest avail.)

3.1 3.2 3.7 4.0 4.0 4.4 4.4 4.6

5.6 6.0

9.0

10.3

17.1

-

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

18.0(%)

Source: World Bank

2017 Compendium

123

HEALTHCARE

No. of doctors per 1,000 people, 2013 (latest available)

0.30.7 0.8

1.7 1.8 1.82.2 2.2 2.2

2.6 2.6 2.8

3.4 3.4 3.6 3.8 4.0 4.2

4.9 5.0

Source: OECD

Indonesia pharmaceutical market value (IDRbn) 2011 2012 2013 2014 2015

Ethical/Prescription drugs 22,471 24,908 28,186 29,492 32,048

Growth (%) 10.2 10.8 13.2 4.6 8.7

Generic drugs 3,925 4,744 4,588 5,617 6,564

Growth (%) 18.5 20.9 -3.3 22.4 16.9

Over the counter (OTC) 16,778 19,768 22,775 24,398 23,666

Growth (%) 17 17.8 15.2 7.1 -3.0

Total Market 43,174 49,420 55,549 59,507 62,278

Growth (%) 13.5 14.5 12.4 7.1 4.7

Source: Ministry of Industry

DDI realization on pharma industry, 2011-2014 (latest avail.)

2,712

5,070

8,886

13,314

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

2011 2012 2013 2014

(USDmn)

Source: Ministry of Industry

No. of hospital beds per 10,000 people, 2015 (latest available)

28

27

22

21

18

16

12

10

7

7

6

Brunei

singapore

Vietnam

Thailand

Malaysia

ASEAN

Indonesia

Philippines

cambodia

Laos

Myanmar

Source: IMF

2017 Compendium

124

INDUSTRIAL ESTATES NEUTRAL In 2017, our NEUTRAL call on the Industrial Estates sector is

predominantly driven by the prospect of demand improvement helped by the government’s commitment to infrastructure development and recent investment incentives for the sector in the form of tax holidays and ease of permits.

We expect industrial land demand to benefit from the government’s considerable tax amnesty achievement which should pave the way for higher FDI and DDI inflows. Additionally, we expect the government’s new formula for annual wage increases (i.e., GDP growth + inflation) to spell good news for investments. Thus, we forecast 8% y-y average pre-sales growth in 2017.

Our top sector pick is LPCK on its undemanding valuation, diversified portfolio and healthy balance sheet. Upside risk: Higher-than-expected presales; Downside risk: Infrastructure project delays.

Relative valuations

-------------------------- 2017F -------------------------

Code Rating CP TP Market

cap NAV/ Share

Disc. To NAV

Land bank

EPS growth ROAE P/E P/BV

(IDR) (IDR) (IDRb) (IDR) (%) (Ha) (%) (%) (x) (x)

DMAS BUY 242 280 11,664 1,236 77 1,648 16.8 11.4 12.8 1.4

KIJA BUY 286 450 5,909 1,002 55 3,248 14.2 7.6 14.9 1.1

LPCK BUY 5,300 8,300 3,689 24,695 66 675 14.8 17.5 4.5 0.7

SSIA BUY 555 750 2,611 2,498 70 627 4.6 8.7 9.4 0.8

BEST REDUCE 260 220 2,508 889 75 954 (8.5) 6.5 11.5 0.7

Sector NEUTRAL 26,382 68 7,152 13.8 10.7 11.6 1.1 Source: Company, Bahana estimates note: based on 23 November 2016 closing price

Relative performance ytd to JCI

2.3

(0.9)

(11.5)

(25.0)

(35.9)(40.4)

(45)

(40)

(35)

(30)

(25)

(20)

(15)

(10)

(5)

0

5

(45)

(40)

(35)

(30)

(25)

(20)

(15)

(10)

(5)

0

5

KIJA DMAS SECTOR BEST SSIA LPCK

(%) (%)

Source: Bloomberg Sanni Satrio Dwi Utomo ([email protected]) +6221 2505081 ext. 3611

DDI & FDI, 2010-2016F

29.0% 30.2% 29.4% 32.2% 33.7% 33.8%

71.0%69.8%

70.6%67.8%

66.3%66.2%

0

100

200

300

400

500

600

2011 2012 2013 2014 2015 2016F

(IDRtn)

Domestic Direct Investment Foreign Direct Investment

595

251

313

399

463

520

Source: BKPM, Bahana

2017 Compendium

125

INDUSTRIAL ESTATES

Marketing sales, 2014-2018F

1,79

1

1,63

1

1,02

1

831

378

2,69

2

2,10

0

1,00

9

261 314

1,75

0

1,68

0

1,15

0

534

206

1,92

5

1,81

4

1,49

5

587

309

2,11

7

1,99

6

1,68

9

657

481

0

500

1,000

1,500

2,000

2,500

3,000

LPCK DMAS KIJA BEST SSIA

(IDRbn)

2014 2015 2016F 2017F 2018F

Source: Companies, Bahana estimates; Note: Ranked based on 2016F figures

Operating profit, 2014-2018F

1,00

3

919

893

535

472

1,29

9

993

910

558

396

842

730

703

544

339

968

831 91

5

607

366

1,06

8

912 97

6

636

410

0

200

400

600

800

1,000

1,200

1,400

DMAS LPCK KIJA SSIA BEST

(IDRbn)

2014 2015 2016F 2017F 2018F

Source: Companies, Bahana estimates; Note: Ranked based on 2016F figures

Total industrial landbank sold in Bekasi, 4Q10-2Q16

131

322

189 178

268

153

186

147

10986

5539 46

18

142

5475 81

144

87

17 19 29

0

50

100

150

200

250

300

350

(ha)

Average: 112

One-off 40ha sale from DMAS

One-off 60ha sale from DMAS

Source: Cushman & Wakefield, Bahana

Remaining gross industrial landbank, 9M16

3,248

1,648

954 675 627

0

500

1,000

1,500

2,000

2,500

3,000

3,500

KIJA DMAS BEST LPCK SSIA

(ha)

Source: Companies

2017 Compendium

126

LAND TRANSPORTATION UNDERWEIGHT In 2017, we expect conventional taxi business to face sustained fierce

competition from online transportation companies which provide drivers with higher incomes while at the same time offer passengers with cheaper fares. This will result in limited expansion for BIRD and TAXI going forward, due to driver shortages and lower demand.

On a more positive note, ASSA should see higher margins on its car disposal and auction segment due to improved Toyota Avanza’s secondary market prices and BidWin’s recent major expansion. We also expect demand for ASSA’s corporate car rentals to remain sustainable, resulting from long-term contracts with corporate customers.

We reiterate our UNDERWEIGHT call to the sector and HOLD for BIRD and REDUCE for TAXI mainly due to intense competition with online-based taxis. That said, ASSA is the only BUY in the sector. Upside risk: Higher-than-expected consumer spending on taxis.

Relative valuations ----------------------------2017F------------------------

Code Rating CP TP Market

cap EBIT

marginEPS

growth PER EV/EBITDA Yield ROAE Net

gearing (IDR) (IDR) (USDbn) (%) (%) (x) (x) (%) (x) (%)

BIRD HOLD 2,930 2,900 0.5 17.3 52.3 10.4 10.1 2.9 3.6 13.9

ASSA BUY 199 280 0.05 17.1 85.7 8.4 3.9 3.6 8.5 213.2

TAXI REDUCE 156 135 0.02 24.0 na 38.0 3.5 0.5 1.1 130.7

Sector 0.6 17.5 105.8 11.2 9.3 2.9 4.0 35.5 Source: Bloomberg, Bahana estimates note: based on 23 November 2016 closing price

Relative performance YTD to JCI

85.5

35.1

(55.1)

(72.2)

(100)

(80)

(60)

(40)

(20)

-

20

40

60

80

100

(100)

(80)

(60)

(40)

(20)

-

20

40

60

80

100

ASSA TAXI Sector BIRD

(%) (%)

Source: Bloomberg Gregorius Gary ([email protected]) +6221 2505081 ext. 3604

2012 Toyota Avanza secondary market prices, January 2016-ytd

125 125 125 125 125 125

135

130 130 130

120

122

124

126

128

130

132

134

136

Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16

(IDRmn)

Source: Bahana

2017 Compendium

127

LAND TRANSPORTATION Taxi fleet in Jakarta, 2011-2015

23,778

26,667

27,239 27,079

24,368

22,000

23,000

24,000

25,000

26,000

27,000

28,000

2011 2012 2013 2014 2015

(units)

Source: Transportation Agency, Bahana

Inspected online taxi fleet in Jakarta, 2016

UBER Grab Go-Car

Total fleet inspected (units) 3,350 2,098 474

Passed inspection (units) 3,137 2,007 446

Failed inspection (units) 213 91 28

Source: Bahana

BIRD & TAXI fleet size comparison, 2011-2018F

20,098

23,360

28,033

31,916 33,394 33,394 33,394 33,394

6,002 8,035

10,079 11,170 11,558 11,525 11,525 11,525

-

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

2011 2012 2013 2014 2015 2016F 2017F 2018F

BIRD TAXI

(units)

Source: Company, Bahana

Conventional vs. Online taxi tariff comparison, 2016

Conventional taxi Online taxi

Flag fall (IDR) 6,500 3,000

Tariff (IDR/km) 3,500 2,000

Tariff (IDR/hour) 42,000 18,000

Cancellation fee (IDR) 10,000 -

Source: Company, Bahaa

2017 Compendium

128

METAL MINING OVERWEIGHT As we progress into 2017, we expect China’s economy to improve further,

added with Trump’s infrastructure spending of around USD1tn over the next 10 years should pave the way for a recovery on the demand side for metals and putting prices on an upward trend.

Additionally, the Philippines’ recent policy on the suspension of nickel mines that fail environmental audits looks to also be supportive for nickel prices. We believe Indonesian nickel ore exporters, such as INCO and ANTM, will outperform in 2017, due to increasing demand from China.

Metal prices have been sufficiently low for longer periods for supply to adjust downward since 2012. Decreased output in metals are likely to support prices in 2017. Hence, we also expect TINS, PSAB, KRAS and MDKA to experience better performance in 2017. A downside risk is higher-than-expected Fed rate hikes, while upside risks include stronger Chinese economy and bigger-than-expected Trump infra program.

Relative valuations --------------------------2017F-------------------------

Mkt EV/ Net Div.

CP TP Cap EBITDA margin P/E P/BV yield

Code Rating (IDR) (IDR) (USDm) (x) (%) (x) (x) (%)

INCO BUY 3,370 4,000 2,462 6.5 19.0 18.5 1.4 3.2

ANTM REDUCE 975 830 1,723 25.2 1.5 124.6 1.3 0.2

KRAS BUY 790 1,020 986 16.1 (1.7) na 0.7 -

TINS BUY 1,250 1,460 685 10.6 4.8 24.6 1.6 1.2

PSAB BUY 280 340 545 5.3 10.9 16.6 1.6 -

MDKA BUY 2,020 2304 530 8.9 23.6 21.1 3.1 1.4 Sector 6,931 13.0 10.0 42.9 1.4 1.4

Relative performance YTD to JCI

197.0 171.7

134.0 117.6

92.6

(11.3) (13.2) (50)

0

50

100

150

200

250

(50)

0

50

100

150

200

250

ANTM KRAS TINS SECTOR INCO PSAB MDKA

(%) (%)

Source: Bloomberg Andrew Franklin Hotama ([email protected]) +6221 2505081 ext. 3619

Government’s revised law on minerals and coal:

1) Government will provide export permits to 8 commodities for 5 years, as long as smelters have been 30-40% developed.

2) IUP (Ijin Usaha Penambangan or Regular Mining Permit) and IUPK (Ijin Usaha Penambangan Khusus, or Special Mining Permit) holders, which are in the process of increasing their value-added chain for minerals or coal, have the right to receive fiscal and non-fiscal incentives from the government, depending on the constitutional law.

3) Following 5 years of production, businesses that hold IUP and IUPK licenses and foreign-owned shares are responsible to divest their stakes to local Indonesian citizens.

4) If the divestment from article (2) is not fulfilled, share offerings will be done through the stock exchange.

5) The government can issue both mining licenses (IUP and IUPK).

Source: Bloomberg, Bahana estimates

2017 Compendium

129

METAL MINING

Nickel global price and inventory,2000-2016

0

10,000

20,000

30,000

40,000

50,000

60,000

0

50

100

150

200

250

300

350

400

450

500

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016Inventory (LHS) Price (RHS)

(mt) (USD/ton)

Source: Bloomberg, Bahana

Steel hot-rolled coil (HRC) global price and inventory, 2008-2016

0

1,000

2,000

3,000

4,000

5,000

6,000

0

100

200

300

400

500

600

700

800

900

1,000

2008 2009 2009 2010 2010 2011 2011 2012 2012 2013 2013 2014 2014 2015 2015 2016Price (LHS) Inventory (RHS)

(mt)(USD/ton)

Source: Bloomberg, Bahana

Tin global price and inventory, 2000-2016

0

5

10

15

20

25

30

35

40

45

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Price (LHS) Inventory (RHS)

(USD/ton) (mt)

Source: Bloomberg, Bahana

Global gold prices, 2000-2016

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

(USD/kg)

Source: Bloomberg, Bahana

2017 Compendium

130

OIL & GAS NEUTRAL Based on EIA data, global oil demand growth of 600k BOPD quarterly is

expected to outstrip supply growth of 250k, leading to a global supply deficit in 4Q17. We forecast an LT global oil price of above USD50/bbl as industry economics likely cannot support LT supply growth vs. demand. We target Brent to average USD55/bbl in 2017, up from USD47 in 2016.

We expect the local gas price cut by around USD2/mmbtu, of which most would be from the government sacrificing its extraction share and taxes from the sector. To attain the USD6/mmbtu price, the government intends to cut out the middleman and/or other operating inefficiencies.

At this stage, we are NEUTRAL on the sector as we expect a slight oil surplus in 2017, limiting price increases. On stocks, our top pick is PGAS, as we believe the government would not hurt domestic gas pipeline economics to encourage continued investment. Downside risk: Shale gas production recovery stronger than expected; Upside risk: Lower-than-expected oil inventories on good demand.

Relative valuations --------------------------2017F--------------------------

Mkt EV/ Net Div.

CP TP Cap EBITDA margin P/E P/BV yield

Code Rating (IDR) (IDR) (USDmn) (x) (%) (x) (x) (%)

PGAS BUY 2,530 2,890 4,510 5.8 14.1 9.5 1.3 3.0

AKRA BUY 6,625 8,000 1,945 9.9 7.7 16.2 3.2 1.7

MEDC BUY 1,370 1,540 333 4.5 5.1 9.1 0.4 3.3 Sector 6,788 6.9 11.8 11.4 1.8 2.6

Relative performance YTD to JCI

57.6

(17.4) (21.1) (21.3) (30)

(10)

10

30

50

70

(30)

(10)

10

30

50

70

PGAS AKRA SECTOR MEDC

(%) (%)

Source: Bloomberg Andrew Franklin Hotama ([email protected]) +6221 2505081 ext. 3619

OPEC surplus capacity at multi-decade low, 1996-2017F

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0(mbopd)

Source: Bloomberg, Bahana

2017 Compendium

131

OIL & GAS EIA global supply demand surplus/deficit forecast, 2004-2017F

-3.00

-2.00

-1.00

0.00

1.00

2.00

3.00

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

(mbopd)

Source: Bloomberg, Bahana

U.S. Shale total oil & gas production, 2015-2016

46,500

47,000

47,500

48,000

48,500

49,000

49,500

50,000

50,500

4

4

5

5

5

5

5

6

6

Oil (LHS) Gas (RHS)

(mbopd) (mmcfd)

Source: Bloomberg, Bahana

Oil cost structure

0

10

20

30

40

50

60

70

80

Producingfields

Onshoremiddle east

Onshore row Offshoreshelf

Deepwater Ultradeepwater

OnshoreRussia

Extra HeavyOil

NAM Shale Oil Sands

(USD/barrel)

Source: Bloomberg, Bahana

Gas cost structure

2.6

1.2

0.9

1.2

1.5

1.4

0

1

2

3

4

5

6

7

8

9

10

cost recovery Upstreamcontractor share

gov share gov tax transmission distribution

(USD/mmbtu)

Source: Bloomberg, Bahana

2017 Compendium

132

PLANTATIONS NEUTRAL Indonesia’s estimated 2016 CPO production of 29.6mn mt (62% of global

supply) and Malaysia’s 17.9mn mt (35%) are in aggregate expected to drop 7.3% y-y on a prolonged El-Nino effect in 2015-16.

However, going into 2017, we now expect a low La Nina occurrence in key planted areas to disrupt FFB production. Hence, CPO volume will likely regain strength in 2Q17 as rainfall normalizes and FFB production recovers. As we estimate Indonesia and Malaysia’s total 2017 CPO production to reach 52.1mn mt, +9.7% y-y, we retain our average CPO price at USD700/mt (2016F: USD650, 2015:USD568).

At this stage, we retain AALI as our top sector pick given upside potential of 29.8% to our target price. Within the sector, we prefer stocks with less exposure to cooking oil due to possible further price capping policy from the government. Risks: High oil and soybean prices, weak CPO demand and lower sugar price floor.

Relative valuations ----------------------------2017F-------------------------

Code Rating CP TP Market

cap EBIT

marginEPS

growth PER EV/EBITDA Yield ROAE Net

gearing (IDR) (IDR) (USDbn) (%) (%) (x) (%) (%) (x) (%) AALI BUY 15,600 20,250 2.2 19.1 23.7 13.7 7.8 3.1 13.8 52.2

LSIP BUY 1,680 2,085 0.8 23.9 94.5 13.5 7.9 3.0 10.8 nc SIMP HOLD 505 530 0.6 11.9 64.1 12.3 4.7 1.2 4.4 52.9 TBLA BUY 920 1,475 0.4 16.9 39.3 5.8 6.2 5.0 23.0 107.1 SGRO BUY 1,900 2,175 0.3 17.1 136.5 12.4 6.3 1.1 8.5 71.0 Sector 4.3 18.7 46.4 12.7 7.2 2.8 12.4 47.8

Source: Bloomberg, Bahana estimates note: based on 23 November 2016 closing price

Relative performance YTD to JCI 66.9

37.1

13.4

8.0

(1.1)

(10.2)

(20)

(10)

-

10

20

30

40

50

60

70

(20)

(10)

-

10

20

30

40

50

60

70

TBLA SIMP LSIP Sector SGRO AALI

(%) (%)

Source: Bloomberg Gregorius Gary ([email protected]) +6221 2505081 ext. 3604

Malaysia CPO price, January 2000-ytd

100

300

500

700

900

1,100

1,300(USD/mt)

Source: Bloomberg, Bahana estimates

2017 Compendium

133

PLANTATIONS Palm oil production and consumption, 2010-17F

39.0

42.0 42.3 43.7

48.9 51.2

47.5

52.1

14.0 13.8 13.6 15.5 14.9 15.7 16.2 16.7

10.0

15.0

20.0

25.0

30.0

35.0

40.0

45.0

50.0

55.0

2010 2011 2012 2013 2014 2015 2016F 2017F

Indonesia & Malaysia production China & India demand

(mn mt)

Source: Bloomberg, Bahana forecasts

Revenue breakdown, 2016F

56.0

24.5

- - -

31.3

38.0 96.5

90.0 96.3

12.7

37.5

3.5 10.0

3.7

0

10

20

30

40

50

60

70

80

90

100

SIMP TBLA AALI LSIP SGROCooking oil CPO Others

(%)

Source: Company, Bahana forecasts

CPO premium (discount) to soy oil, January 2000-ytd

(45)

(35)

(25)

(15)

(5)

5

15

Jan-00

Apr-00

Jul-

00

Oct-

00

Jan-01

Apr-01

Jul-

01

Oct-

01

Jan-02

Apr-02

Jul-

02

Oct-

02

Jan-03

Apr-03

Jul-

03

Oct-

03

Jan-04

Apr-04

Jul-

04

Oct-

04

Jan-05

Apr-05

Jul-

05

Oct-

05

Jan-06

Apr-06

Jul-

06

Oct-

06

Jan-07

Apr-07

Jul-

07

Oct-

07

Jan-08

Apr-08

Jul-

08

Oct-

08

Jan-09

Apr-09

Jul-

09

Oct-

09

Jan-10

Apr-10

Jul-

10

Oct-

10

Jan-11

Apr-11

Jul-

11

Oct-

11

Jan-12

Apr-12

Jul-

12

Oct-

12

Jan-13

Apr-13

Jul-

13

Oct-

13

Jan-14

Apr-14

Jul-

14

Oct-

14

Jan-15

Apr-15

Jul-

15

Oct-

15

Jan-16

Apr-16

Jul-

16

Oct-

16

(%)

Source: Bloomberg, Bahana

Rainfall data in several cities, January 2006-ytd

0

100

200

300

400

500

600

700

800

900

1,000

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Max Min Mean 2016

(mm)

Source: Indonesia Meteorological and Climate Agency, Bahana

2017 Compendium

134

POULTRY UNDERWEIGHT With the view that IDR will remain weaker in 2017F against USD, we

maintain our underweight stance on the sector as 50-60% of COGS are USD-linked. Although the government closely monitors poultry supply, GPS import and breeding program, we still expect DOC price to correct in 2H16 on slightly higher 2016 GPS import quota.

On the feed division, the government has limited import quota for low-quality corn and wheat, forcing feed manufacturers to utilize the more expensive local corn. At this stage, local corn prices have soared to IDR4,200-4,500/kg levels, much higher compared to IDR3,000/kg imported corn, resulting in higher raw materials prices.

Our top sector pick is JPFA on the back of the company’s cheap valuation and manageable net gearing ratio of less than 42% in 2017. Upside risks to our call are easing policy risks from government rulings on price caps and import bans to benefit industry players.

Relative valuations -----------------------2017F----------------------------- Mkt EV/ EBIT Div. CP TP Cap EBITDA margin PE P/B yield ROE

Code Rating (IDR) (IDR) (USDm) (X) (%) (X) (X) (%) (%) CPIN HOLD 3,370 3,300 4,099 10.4 10.7 17.4 3.2 1.8 19.5 JPFA BUY 1,755 2,400 1,485 5.2 10.3 11.2 2.2 3.0 20.8 MAIN BUY 1,310 2,000 218 3.7 9.8 9.7 1.4 1.5 15.4 Sector 5,802 8.7 10.5 15.5 2.4 2.1 19.5

Source: Bloomberg, Bahana estimates note: based on 23 November 2016 closing prices

Share price performance ytd to JCI

162.9

52.6

16.1

(27.6) (50)

0

50

100

150

200

(50)

0

50

100

150

200

JPFA SECTOR CPIN MAIN

(%)(%)

Source: Bloomberg, based on 23 November 2016 closing prices Michael W. Setjoadi ([email protected]) +6221 2505081 ext. 3620

Regional GDP and chicken consumption per capita, 2015

47.0

38.0

16.0

9.0 8.06.0

2.0

88.8

10.65.8

2.5 3.7 1.50.8

0.0

20.0

40.0

60.0

80.0

100.0

0.0

20.0

40.0

60.0

Brunei Malaysia Thailand Phillipines Indonesia Vietnam Cambodia

(USD1k)(kg/annum)

Chicken consumption per capita Income per capita (RHS)

Source: Company, Bahana

2017 Compendium

135

POULTRY

Corn and soybean prices, 2010-2016 ytd

100

150

200

250

300

350

Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16Corn price Avg yearly corn prince

(USD/ ton) avg: 168

last: 145

avg: 272

ytd avg: 142

avg: 170 avg: 268 avg: 149

250300350400450500550600

Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16Soybean meal price Avg yearly soybean meal price

(USD/ ton)

avg: 429last: 316

avg: 300 avg: 429

ytd avg: 319

avg: 344 avg: 426 avg: 427 avg: 318

Source: Bloomberg Note: ytd through 23 November 2016

DOC prices, 2011-2016 ytd

-

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16

Last price:6,600

avg: 3,235 avg: 5,566 avg: 4,071 avg: 3,722(IDR/DOC)

Lebaran Lebaran

Lebaran LebaranLebaran

Source: Pinsar, Arboge, Bahana Note: ytd through 23 November 2016

Chicken prices, 2011-2016 ytd

c

10,000

13,000

16,000

19,000

22,000

25,000

Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16

Last price:18,200

avg: 17,358avg: 16,805 avg: 19,313 avg: 18,719(IDR/kg)

LebaranLebaran

Lebaran

Lebaran

Lebaran

Source: Pinsar, Arboge, Bahana Note: ytd through 23 November 2016

Poultry market share, 2015

Feed DOC Source: Company, Bahana estimates

2017 Compendium

136

PROPERTY OVERWEIGHT We believe sector is bottoming out heading into 2017 on (1)

successful tax amnesty, (2) 150bps BI rate cuts in 2016 and (3) LTV relaxation and policy easing for foreigners to own property.

Recent government deregulation on foreign ownership could be a game changer for Indonesia’s property market, in our view, since developers would be able to sell its strata-tile products under the right-to-build (HGB) permits to foreigners. Hence, we forecast total y-y marketing sales growth of 10% in 2017.

Given positive catalysts above, we raise our rating from NEUTRAL to OVERWEIGHT with SMRA as our top sector pick on its ready projects and high-value assets. We also like CTRA’s JV schemes across the archipelago, allowing for a diversified assets base, which can grow in tandem with Indonesia’s infrastructure projects. Risk: Infrastructure delays and delayed economic recovery.

Relative valuations -----------------------------2017F------------------------

Code Rating CP TP Market

cap NAV/Share

Disc.to NAV

Landbank

EPSgrowth ROAE P/E P/BV

(IDR) (IDR) (USDmn) (IDR) (%) (Ha) (%) (%) (x) (x) BSDE BUY 1,815 2,350 2,582 5,220 55 4,072 11.2 8.7 19.0 1.6 PWON HOLD 690 650 2,456 1,302 50 453 22.6 19.8 17.9 3.3 CTRA BUY 1,435 1,800 1,636 4,743 55 1,593 80.8 15.0 15.0 2.1 SMRA BUY 1,400 2,150 1,493 4,785 55 2,039 218.7 5.5 59.8 2.5 PPRO REDUCE 1,335 600 1,386 1,513 60 36 13.2 14.1 46.4 6.2 LPKR HOLD 805 800 1,373 2,009 60 675 6.0 4.6 23.2 1.1 ASRI REDUCE 382 300 555 994 70 1,898 9.9 10.5 9.8 1.0 DILD BUY 515 680 395 2,287 70 2,047 9.6 6.8 16.4 1.1 CTRP BUY 710 850 331 1,534 60 65 48.9 4.2 22.4 0.9 Sector OW 12,207 59 12,879 30.3 11.4 26.4 2.5 Source: Bloomberg, Bahana estimates note: based on 23 November 2016 closing price

Relative performance ytd to JCI

636.5

61.4 25.6

(2.1) (6.4) (8.2) (12.6) (14.6) (28.6) (36.2) (100)

0

100

200

300

400

500

600

700

(100)

0

100

200

300

400

500

600

700

PPRO CTRP PWON ASRI SECTOR* DILD BSDE CTRA SMRA LPKR

(%) (%)

Source: Bloomberg *ex. PPRO

Sanni Satrio Dwi Utomo ([email protected]) +6221 2505081 ext. 3611

Mortgage vs BI rate & inflation, 2008-7M16

14.5

20.0

32.9

22.5

16.2

12.6

7.3 6.8

6.50

6.50 6.00

5.75

7.50 7.75

7.50

5.00

2.77

6.96

3.78 3.65

8.08 8.36

3.35

3.10

0

1

2

3

4

5

6

7

8

9

10

0

5

10

15

20

25

30

35

2009 2010 2011 2012 2013 2014 2015 9M16

(%)(%)

Mortgage growth (y-y) BI rate (RHS) Inflation (RHS)

Source: Bank Indonesia, Bloomberg

2017 Compendium

137

PROPERTY Portion of revenue from recurring versus development, 2017F

6559 54

3827

19 19 149

3541 46

6273

81 8186

91

0

10

20

30

40

50

60

70

80

90

100

LPKR CTRP PWON SMRA BSDE CTRA DILD ASRI PPRO

(%)

Recurring Development

Source: Bahana estimates

Marketing sales, 2014-18F

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

CTRA BSDE SMRA PWON ASRI DILD PPRO LPKR CTRP

(IDRb)

2014 2015 2016F 2017F 2018F

Source: Companies, Bahana estimates; Note: Ranked based on 2016F

Marketing sales based on location, 2017F

0

500

1,000

1,500

2,000

2,500

3,000

3,500

BSDE SMRA CTRA ASRI LPKR PPRO PWON DILD CTRP

(IDRb)

Jabodetabek Central and East Java Island Outside Java Island Other

Source: Bahana estimates

Operating profit, 2014-18F

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

PWON BSDE CTRA LPKR ASRI SMRA DILD PPRO CTRP

(IDRb)

2014 2015 2016F 2017F 2018F

Source: Companies, Bahana estimates; Note: Ranked based on 2016F

2017 Compendium

138

SHIPPING NEUTRAL We expect Jokowi’s maritime program will continue to benefit logistics

player, particularly TMAS, as the development of 13 major ports should support the company to increase both its head and back-haul loads, resulting in lower freight cost going forward. We also expect SOCI to sustain its growth given the steady rise of oil consumption.

On the OSV industry, we believe that the worst is over given expectations of a gradual recovery on oil prices and also favorable upcoming policy from the ministry, particularly on zero tax during exploration phase. This may encourage oil producers to start exploring activities as labor and shipping rates have also adjusted with the current oil price level, implying lower break-even prices.

Our sector NEUTRAL stance is led by WINS which recently underwent aggressive cost cutting by lowering high cost labor contracts. Risks: delays for port constructions and exploring activities.

Relative valuations ----------------------------2017F----------------------------

Code Rating CP TP Market

cap EBIT

marginEPS

growth PER EV/EBITDA Yield ROAE Net

gearing (IDR) (IDR) (USDbn) (%) (%) (x) (%) (%) (x) (%) SOCI BUY 380 630 0.2 30.9 70.1 5.3 4.4 3.3 12.3 21.0

TMAS BUY 1,500 2,590 0.1 21.8 32.3 6.4 3.8 0.9 23.9 53.7 WINS BUY 178 200 0.1 11.9 na 22.3 3.8 0.6 0.9 63.3

Sector 0.4 25.6 102.0 8.0 4.1 2.3 14.0 36.4 Source: Bloomberg, Bahana estimates note: based on 23 November 2016 closing price

Relative performance YTD to JCI

(6.3)

(30.7)

(33.5)

(36.6) (40)

(35)

(30)

(25)

(20)

(15)

(10)

(5)

-

(40)

(35)

(30)

(25)

(20)

(15)

(10)

(5)

-

WINS Sector SOCI TMAS

(%) (%)

Source: Bloomberg Gregorius Gary ([email protected]) +6221 2505081 ext. 3604

Dwelling time in Tanjung Priok, 2016

5.2

4.3

3.6 3.4

3.3 3.3 3.3 3.2 3.2 3.2 3.2

2.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

5.5

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Target

(days)

Source: Detik, Bahana

2017 Compendium

139

SHIPPING Upcoming O&G development projects, 2017F-2018F

Project name Location Production target

IDD Bangka Field, East Kalimantan 2016

Bukit Tua Oyong Field, East Java 2016

Madura Madura Strait PSC, East Java 2017

Jangkrik FPU Kutei Basin, East Kalimantan 2017

Ande Ande Lumut Northwest Natuna Sea, Indonesia 2018

Tangguh Bintuni Bay, West Papua 2020

Masela Abadi field, Arafura Sea, Indonesia 2024

Source: Company, Bahana

Shipbuilding plan by government, 2016F-2019F

Vessels type 2016F 2017F 2018F 2019F

15k DWT vessels 10 9 9 8

Pioneer vessels 7 4 4 3

Various type, incl. traditional 100 120 130 100

40k DWT vessels 0 12 12 13

Total (units) 117 145 155 124

Source: Company, Bahana

Indonesia oil consumption, 2000-2016F

384397

410

437

401

463

484

300

320

340

360

380

400

420

440

460

480

500

2010 2011 2012 2013 2014 2015 2016F

(mboe)

Source: Company, Bahana

Investment in oil and gas production, 2010-2016F

15.6

16.6

19.9

22.3 22.3

18.8

15.98

11

13.9

16.5

18.9 18.7

14.8

10

12

14

16

18

20

22

24

2010 2011 2012 2013 2014 2015 2016F

Budget Realization

(USDbn)

Source: Petrodata, SKK Migas, Company

2017 Compendium

140

TELECOMMUNICATION NEUTRAL In the medium term, we expect the continued improvement in

Indonesia’s smartphone penetration from 45% currently to 90% by 2020 to positively impact data usage and ARPUs, providing solid revenue growth for the telecommunication sector.

However, despite relatively stable conditions in Greater Jakarta area and several big cities, increased risks on competition have emerged in outer Java as seen by cheap promotions from EXCL and ISAT, amplified by policy risks such as network sharing. This will translate to lower rental demand for towers, adversely impacting tower providers.

Despite expected sector consolidation into just the 3 incumbents, the sector is currently a NEUTRAL on competition. On stocks, TLKM is still our prefered choice on solid network quality, followed by ISAT on earnings recovery and cheap valuation. For tower plays, we prefer TOWR’s lower EV/EBITDA. Sector risks: Higher-or-lower margins.

Relative valuations ----------------------------2017F--------------------------

Code Rating Market

cap Current

Price Target Price

No. of subs

EV/ EBITDA

EBITDA Margin P/E P/BV Dividend

yield

(USDmn) (IDR) (IDR) (m) (x) (x) (x) (x) (%)

TLKM BUY 29,456 3,940 5,000 170 8.4 51.7 17.4 4.1 3.7 ISAT BUY 2,539 6,300 8,500 84 3.6 42.9 16.7 2.1 1.8 EXCL BUY 1,784 2,250 3,000 46 4.0 41.1 69.5 1.2 0.4

Sector 33,779 300 7.8 50.5 20.1 3.8 3.4

TOWR BUY 2,800 3,700 5,600 8.9 85.2 13.0 2.8 na

TBIG REDUCE 2,046 5,750 5,100 13.7 85.1 17.7 9.2 0.8

Sector 4,846 10.9 85.2 15.0 5.5 0.3 Source: Bloomberg, Bahana estimates Note: based on 23 November 2016 closing price

Relative performance to JCI YTD

14.0

5.0 1.1

(15.6)

(35.6)

(51.0)(30)

(20)

(10)

0

10

(60)

(50)

(40)

(30)

(20)

(10)

0

10

20

TLKM SECTOR ISAT TBIG TOWR EXCL

(%)(%)

Source: Bloomberg

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

Industry revenue growth, 3Q13-3Q16

-0.2

5.06.4

4.5

(10)

(5)

0

5

10

15

20

3Q15 4Q15 1Q16 2Q16 3Q16

EXCL TSEL ISAT Industry

(%)

Source: Companies

2017 Compendium

141

TELECOMMUNICATION

Subscriber base, 3Q13-3Q16

45.0

81.6

163.7

130

135

140

145

150

155

160

165

170

30

35

40

45

50

55

60

65

70

75

80

85

3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16

EXCL ISAT TLKM (RHS)

(mn subs) (mn subs)

Source: Companies

Average revenue per subscriber, 3Q13-3Q16

34

24

45

35

36

37

38

39

40

41

42

43

44

45

22232425262728293031323334353637383940

3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16

EXCL ISAT TLKM (RHS)

(IDRk/mth) (IDRk/mth)(IDRk/mth) (IDRk/mth)(IDRk/mth) (IDRk/mth)(IDRk/mth) (IDRk/mth)(IDRk/mth) (IDRk/mth)(IDRk/mth) (IDRk/mth)(IDRk/mth) (IDRk/mth)(IDRk/mth) (IDRk/mth)

Source: Companies

BTS units by operator, 3Q13-3Q16

39,819 49,682

56,300

78,725

57,664

83,346

100,382

124,097

22,097 37,382

46,361 54,212

119,580

170,410

203,043

257,034

10,000

30,000

50,000

70,000

90,000

110,000

130,000

150,000

170,000

190,000

210,000

230,000

250,000

270,000

3Q13 3Q14 3Q15 3Q16EXCL TLKM (RHS) ISAT Total

(units)

Source: Companies

Industry capex, 2014-2018F

24,667 26,401 27,500 29,037 30,590

8,192 6,125 7,000

7,183 7,535

7,033 10,048 7,000

7,443 7,904

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

2014 2015 2016F 2017F 2018F

TLKM EXCL ISAT

(IDRbn)

39,89242,574

41,50043,663

46,028

Source: Companies

2017 Compendium

142

TOBACCO OVERWEIGHT While cigarette prices on the ground are already expensive (relative to

our GDP/capita), the low domestic inflationary outlook ahead should support consumers’ purchasing power. Hence, we expect 1% cigarette stick sales volume growth next year with 5-6% ASP increases.

Full-flavor machine-rolled cigarettes (SKM FF) are the fastest growing segment (36% share), at the expense of hand-rolled (SKT) (19%), LTLN machine-rolled (SKM LTLN) (39%) and white (SPM) (3%) ones. However, competition in SKM FF and LTLN for key brands remains tough given the premium pricing while we see possible margin pressure on new product launches targeted towards the mass market.

Although HMSP’s huge market cap makes the stock a core holding for many investors, GGRM’s much lower valuation is certainly an attractive value play as well. Nevertheless, we change our top sector pick to HMSP on higher brand equity than GGRM.

Relative valuations

----------------------2017F-----------------------------

Mkt EV/ EBIT Div.

CP TP Cap EBITDA margin PE P/B yield ROE

Code Rating (IDR) (IDR) (USDm) (X) (%) (X) (X) (%) (%)

HMSP BUY 3,930 4,700 33,904 24.5 17.2 33.6 13.0 2.7 39.2

GGRM BUY 64,500 81,000 9,204 10.9 13.1 17.1 2.9 1.8 17.3

Sector 43,108 21.6 16.3 30.1 10.8 2.5 34.5 Source: Bloomberg, Bahana estimates note: based on 23 November 2016 closing prices

Relative performance ytd to JCI

3.8

(6.3)

(9.0) (10)

(8)

(6)

(4)

(2)

0

2

4

(10)

(8)

(6)

(4)

(2)

0

2

4

GGRM SECTOR HMSP

(%)(%)

Source: Bloomberg

Michael W Setjoadi ([email protected]) +6221 250 5081 (ext. 3620)

Excise tax net of inflation

1.8 1.8 2.4

(0.5)(0.5)

3.9 5.0

8.1

4.3

(0.8)

(2.3)

1.4

(6.4)(6.4)(6.4)

4.3 5.5

(0.9)

12.3 13.1

7.0 6.7 6.7 6.7

6.2% 6.2%6.0%

5.6%

5.0%4.8%

5.1%5.4%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

-8

-3

2

7

12

SKM SPM SKT SKM SPM SKT SKM SPM SKT SKM SPM SKT SKM SPM SKT SKM SPM SKT SKM SPM SKT SKM SPM SKT

2010 2011 2012 2013 2014 2015 2016F 2017F

Excise hike net of inflation GDP growth (RHS)

(%)

Source: Nielsen,Companies, Bahana

2017 Compendium

143

TOBACCO

Indonesia tobacco market share, September 2016

32.9%

24.8%

21.1%

6.8%

3.5%

10.9%

HMSP GGRM Djarum RMBA Nojorono Others

Source: Nielsen, Companies, Bahana

Cigarette affordability relative to GDP/capita, by country

8,226

5,628 5,401 4,202

3,468 3,252 2,799 2,530 2,297

- 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000

(packs of Marlboro)

Source: WorldBank, Bahana

Key products ASP hike premium to cost inflation ( I DR / st i c k ) M a c hi ne - r ol l e d C l ov e N e c e ssa r y AS P

P r oduc e r ( S K M ) Ful l Fl a v or 2 0 15 2 0 16 y t d a dj ust me nt i n 2 0 17 F 2 0 15 * 2 0 16 F 2 0 17 F 2 0 15 2 0 16 F

GGRM GG Surya 16 165 44 (34) - 67 94 82 = 99 48Djarum Djarum Super 12 134 88 (17) - 65 93 80 = 69 64GGRM GG Internasional 12 171 58 (15) - 67 95 83 = 104 67HM SP 234 M agnum Filter 12 106 144 (1) - 69 97 85 = 37 84

M achine- ro lled C love

Prod ucer M ild ( LTLN )

HM SP A M ild 16 125 124 (2) - 69 97 85 = 56 83GGRM GG Surya Pro M ild 16 84 50 (110) - 67 95 83 = 17 (28)Djarum LA Lights 16 122 100 (16) - 65 93 80 = 57 65GGRM GG M ild 16 128 25 (91) - 67 95 83 = 61 (9)

Hand- ro lled C love

Prod ucer ( SKT)

HM SP 234 Kretek 12 71 55 (40) - 44 62 60 = 27 20HM SP Sampoerna A Hijau 12 72 87 (7) - 44 62 60 = 28 53Djarum Djarum Coklat 12 92 71 9 - 40 58 55 = 52 65GGRM GG M erah 12 125 42 8 - 42 60 58 = 83 65Djarum Djarum 76 12 92 71 9 - 40 58 55 = 52 65

AS P hi k e Cost i nf l a t i on AS P pr e mi um t o c ost i nc r e a se

Source: Bahana estimates; Note: *using the average cost for each company

Key brands’ discounts to market leader, Dec 15 – Current

SKM FF (in IDR/stick) Dec-15

Disc. price to market leader

(%) Nov-16

Disc. price to market leader

(%)

Surya 16 GGRM 1,084 1,128

Djarum Super Djarum 1,088 (0.4) 1,175 (4.2)

Marlboro Filter Black HMSP na na 890 21.1

Dunhill Filter RMBA 775 28.5 863 23.5

L.A Bold Djarum 655 39.6 800 29.1

SKM Light (in IDR/stick) Dec-15

Disc. price to market leader

(%) Nov-16

Disc. price to market leader

(%)

A Mild 16 HMSP 1,000 1,124

Star Mild 16 RMBA 930 7.0 1,043 7.2

A Mild 12 sticks HMSP na na 988 12.1

Dunhill Mild 20 RMBA 830 17.0 930 17.3

Dunhill Mild 16 RMBA 819 18.1 900 19.9

GG Mild GGRM 781 21.9 806 28.3

Lucky Strike Mild RMBA 731 26.9 731 35.0

Surya Pro Mild GGRM 681 31.9 731 35.0 Source: Companies, Bahana

2017 Compendium

144

TOURISM OVERWEIGHT We believe tourism will benefit from Jokowi's policy with the

government’s marketing budget up sharply to USD400mn in 2016 from USD100mn in 2015 and USD40mn in 2014. This is to support the government’s target of doubling the number of foreign tourists to 20mn in 2019 from 10.4mn in 2015. Other supports are airport upgrades and free-entry visas for 169 countries.

International departures have risen from 3.7mn passengers in 2004 to 8.6mn in 2014, suggesting low air travel penetration and continued strong growth prospects backed by Indonesia’s archipelago status, which makes flying virtually a necessity.

Thus, PANR, the sector’s largest listed company, should be a major beneficiary of the industry’s promising outlook, in line with Jokowi’s growth initiatives. OVERWEIGHT. Risks to our call would include delays in tourism infrastructure project realization.

Relative valuations ----------------------------2017F--------------------------------

Code Rating CP TP Market

cap EBIT

marginEPS

growth PER EV/EBITDA Yield ROAE Net

gearing (IDR) (IDR) (USDbn) (%) (%) (x) (%) (%) (x) (%) GIAA BUY 342 400 0.7 1.3 na 15.6 5.2 - 4.9 134.0

PANR BUY 595 925 0.1 7.8 29.1 9.4 6.6 1.7 25.4 182.2

Sector 0.8 1.8 3.6 15.1 5.3 0.1 6.1 137.8 Source: Bloomberg, Bahana estimates note: based on 23 November 2016 closing price

Relative performance YTD to JCI

21.0

(1.0)

(2.8) (5)

-

5

10

15

20

25

(5)

-

5

10

15

20

25

PANR Sector GIAA

(%) (%)

Source: Bloomberg Gregorius Gary ([email protected]) +6221 2505081 ext. 3604

Tourism infrastructure development budget, 2005-2015

0

2

4

6

8

10

12

14

16

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Indonesia Malaysia Philliphines Thailand

(USDbn)

Source: Knoema.com, Bahana

2017 Compendium

145

TOURISM International arrivals, 2004-2019F

5,321 5,002 4,871 5,505

6,234 6,323 7,002

7,649 8,044 8,802

9,435 10,406

12,254

14,705

17,317

20,780

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

20,000

22,000

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016F 2017F 2018F 2019F

(k people)

Source: Indonesia Statistical Agency, Bahana

Int’l departure vs. disposable income per capita, 2004-2014

1,000

1,500

2,000

2,500

3,000

3,500

4,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

International departure (Haji trip excluded) Disposable income per capita (RHS)

(k people) (USD)

Source: Indonesia Statistical Agency, Bahana

Indonesia’s 10 champion tourism destinations

Source: Ministry of Tourism

Total foreign tourists’ annual spending, 2004-2014

4,7984,522 4,448

5,346

7,348

6,298

7,603

8,554

9,121

10,054

11,166

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

11,000

12,000

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

(USDmn)

Source: Indonesia Statistical Agency, Bahana

2017 Compendium

146

This page has been left intentionally blank

2017 Compendium

147

COMPANY

2017 Compendium

148

ACE HARDWARE INDONESIA HOLD PX: IDR870 - TP: IDR850* ACES, the market leader in home and lifestyle products with 124 stores

nationwide, has suffered from sluggish sales, falling rev/sqm and negative SSSG since Lebaran. ACES plans to pursue smaller store openings to tap demand from ex-Java customers with lower purchasing power while improving rev./sqm. Owning a 30% stake in ruparupa.com (IDR6bn investment) should help expose ACES to the e-commerce platform, which is experiencing an increased consumption shift.

On the cost front, ACES may see higher imported goods prices if the yuan were to weaken against the USD (50% of products are from China, although payments are in USD).

On valuation, we have a new 12M TP of IDR850, based on a 2017F PER of 22x, a 12% discount to the sector’s target multiple of 25x. With slight downside potential and continued operating challenges, we retain our HOLD rating on ACES. Risks: continued weak SSSG and stronger USD.

Financial highlights* Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Revenues (IDRbn) 4,541 4,743 5,059 5,513 6,073 EBIT (IDRbn) 663 688 716 795 885 Net profit (IDRbn) 549 595 653 663 733 Bahana/consensus (%) 108.3 98.0 96.2

EPS (IDR) 32.0 34.7 38.1 38.7 42.8 EPS growth (%) 7.8 8.5 9.8 1.6 10.5 EV/EBITDA (x) 13.8 18.7 18.3 16.7 14.7 P/E (x) 27.2 25.1 22.8 22.5 20.4 FCFPS (IDR) 29 28 18 20 28 FCF yield (%) 3.4 3.2 2.0 2.3 3.2 BVPS (IDR) 136 153 172 192 214 P/BV (x) 6.4 5.7 5.1 4.5 4.1 DPS (IDR) 6 16 17 17 19 Div. yield (%) 0.7 1.8 2.0 2.0 2.2 Source: Company, Bahana estimates note: based on 23 November 2016 closing price

Share price performance

Source: Bloomberg Richard Danusaputra ([email protected]) +6221 2505081 ext.3605 *New, please refer to appendix II

Major assumptions Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Ace Hardware store (unit) 110 117 126 135 145 Toys Kingdom (unit) 4 3 4 5 6 SSSG (%) 3.1 (1.8) 0.7 2.3 3.7 Total avg. rev./sqm (IDR mn) 15.3 14.6 14.7 15.2 15.9 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 1,040/730 12M high/low consensus TP (IDR) : 2,600/1,160 Majority shareholder (%) : PT Kawan Lama Sejahtera (60.0) Shares outstanding (mn)/Free float (%) : 17,150/40.0 Mkt. cap. (IDRbn/USDmn) : 14,921/1,107 3-m avg.daily t.o.(IDRbn/USDmn) : 3.6/0.3 Bloomberg/Reuters code : ACES IJ/ACES.JK

Source: Bloomberg, Reuters based on 23 November 2016 closing price

2017 Compendium

149

ACE HARDWARE INDONESIA

Profit & loss Year to 31 Dec 2014A 2015A 2016F 2017F 2018FSales 4,541 4,743 5,059 5,513 6,073Gross profit 2,194 2,254 2,414 2,619 2,891EBITDA 741 764 778 856 955Depreciation 78 76 63 61 70 EBIT 663 688 716 795 885Net interest inc./(expense) (36) (32) (23) (28) (31)

Forex gain/(losses) 4 16 (2) - - Other income/(expense) 61 64 132 59 61 Pre-tax profit 692 737 823 827 914Taxes (136) (152) (165) (165) (183) Minority interest 6 3 (5) 2 2 Extraordinary gain/(losses) - - - - - Net profit 549 595 653 663 733Source: Company, Bahana estimates

Balance sheet Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Cash and equivalents 391 622 677 680 871 S-T investments - - - - - Trade receivables 20 16 24 23 25 Inventories 1,296 1,522 1,716 1,945 2,143 Fixed assets 463 457 554 650 662 Other assets 788 650 683 715 748 Total assets 2,958 3,268 3,653 4,012 4,448 Interest bearing liabilities 27 23 25 25 25 Trade payables 107 127 170 154 179 Other liabilities 496 489 512 544 577 Total liabilities 629 639 707 723 782 Minority interest 4 1 6 4 2 Shareholders' equity 2,325 2,628 2,940 3,285 3,664 Source: Company, Bahana estimates

Cash flow Year to 31 Dec 2014A 2015A 2016F 2017F 2018FNet profit 549 595 653 663 733 Depreciation 78 76 63 61 70 Working capital (89) (243) (243) (213) (225) Other operating items 61 126 (13) (12) (13) Operating cash flow 599 553 459 499 565Net capital expenditure (95) (70) (159) (157) (81) Free cash flow 503 483 300 341 484Equity raised/(bought) - (19) - - - Net borrowings (9) (4) 2 - - Other financing (265) (230) (247) (338) (293) Net cash flow 230 230 55 3 191Cash flow at beginning 162 391 622 677 680

Ending cash flow 391 622 677 680 871Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2014A 2015A 2016F 2017F 2018F ROAE (%) 26.0 24.0 23.5 21.3 21.1 ROAA (%) 20.1 19.1 18.9 17.3 17.3 Gross margin (%) 48.3 47.5 47.7 47.5 47.6 EBITDA margin (%) 23.2 16.1 15.4 15.5 15.7 EBIT margin (%) 14.6 14.5 14.1 14.4 14.6 Net margin (%) 12.1 12.5 12.9 12.0 12.1 Payout ratio (%) 18.6 45.8 45.0 45.0 45.0 Current ratio (x) 5.1 6.0 5.9 6.5 6.9 Interest coverage (x) 18.3 21.3 31.1 28.5 28.1 Net gearing (%) NC NC NC NC NC Debtor turnover (days) 2 1 2 2 2 Creditor turnover (days) 9 10 12 10 11 Inventory turnover (days) 105 118 125 130 130 Source: Company, Bahana estimates

2017 Compendium

150

ADARO ENERGY BUY PX: IDR1,630 - TP: IDR2,010* ADRO, Indonesia’s No.1 single site coal producer with total coal

production of 54mt in 2016, is on track by 2020 to complete its first 2x1000 MW thermal power plant in Batang, central Java. Looking ahead, we believe this powerplant project, valued at IDR560/share, could add another USD24mn to ADRO’s earnings starting in 2019.

Spending USD120mn for a 75% stake in IndoMet Coal has provided exposure to 1.27Bt of coking coal resources, which we estimate will provide up to 1mt pa of added coking coal production, or USD218mn in annual revenue starting in 2017 (8.4% of total). However, to be conservative, we have not factored this acquisition into our model.

Our new SOTP-based TP of IDR2,010 values the Batang power plant at IDR560 (ADRO owns 34%) on a USD WACC of 2.05% and ADRO’s coal business at IDR1,820, based on a 10.8% WACC and LTG of 0.5%. Risks to our call relate to China’s coal policy and stronger IDR.

Financial highlights* Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Revenues (USDmn) 3,325 2,684 2,581 2,696 2,844

EBIT (USDmn) 557 410 612 648 637

Net profit (USDmn) 178 152 283 305 309

Bahana/consensus(%) 117 103 95

EPS (IDR) 66 64 120 129 130

EPS growth (%) (12.5) (2.6) 85.9 7.8 1.1

EV/EBITDA (x) 7.7 8.2 5.7 5.2 6.3

P/E (x) 24.7 25.3 13.6 12.6 12.5

FCFPS (IDR) 156 84 168 180 138

FCF yield (%) 9.6 5.1 10.3 11.1 8.5

BVPS (IDR) 1,027 1,209 1,274 1,344 1,424

P/BV (x) 1.6 1.3 1.3 1.2 1.1

DPS (IDR) 28 17 53 59 60

Div. yield (%) 1.7 1.0 3.2 3.6 3.7 Source: Company, Bahana estimates Note: based on 23 November 2016 closing price

Share price performance

0

50,000

100,000

150,000

200,000

400600800

1,0001,2001,4001,6001,8002,000

23-Nov-15 23-Jan-16 23-Mar-16 23-May-16 23-Jul-16 23-Sep-16 23-Nov-16

('000)(IDR)

Volume (RHS) ADRO IJ Px Last

203.0

12.3 54.7

133.4 162.0 171.2

0

50

100

150

200

250

0

50

100

150

200

250

ytd 1M 3M 6M 9M 12M

(%) (%)

ADRO IJ relative to JCI Source: Bloomberg Andrew Hotama ([email protected]) +6221 2505081 ext. 3619 *New, please refer to appendix II

Major assumptions Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Sales volume (mt) 55.7 51.1 54.0 55.0 58.0 Benchmark price (in USD/ton) 70.8 57.8 55.0 57.5 57.5 ADRO’s ASP (in USD/ton) 59.7 52.5 44.6 46.0 46.0 Oil price (USD/barrell) 95 62 44 55 62 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 1,735/437 12M High/low consensus TP (IDR) : 2,100/1,200 Majority shareholder (%) : PT Adaro Strategic (43.9) Shares outstanding (mn)/Free float (%) : 31,986/42.5 Mkt. cap. (IDRbn/USDmn) : 52,137/3,834 3-m avg.daily t.o.(IDRbn/USDmn) : 78.9/5.8 Bloomberg/Reuters code : ADRO IJ/ADRO JK Source: Bloomberg, Reuters; based on 23 November 2016 closing price

2017 Compendium

151

ADARO ENERGY

Profit & loss Year to 31 Dec (USDmn) 2014A 2015A 2016F 2017F 2018F Sales 3,325 2,684 2,581 2,696 2,844

Gross profit 720 543 731 763 791

EBITDA 778 632 834 880 771

Depreciation 221 221 222 232 134

EBIT 557 410 612 648 637

Net interest inc./(expense) (164) (49) (46) (31) (22)

Forex gain/(losses) (13) (16) (11) - -

Other income/(expense) (57) (65) (55) (68) (60)

Pre-tax profit 322 280 501 549 555

Taxes (138) (129) (215) (242) (244)

Minority interest (5) 1 (2) (2) (2)

Extraordinary gain/(losses) - - - - -

Net profit 178 152 283 305 309Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (USDmn) 2014A 2015A 2016F 2017F 2018F Cash and equivalents 745 702 719 653 686

S-T investments - - - - -

Trade receivables 286 196 251 222 292

Inventories 97 73 96 72 102

Fixed assets 3,715 3,494 3,417 3,349 3,382

Other assets 1,571 1,494 1,622 1,687 1,775

Total assets 6,414 5,959 6,105 5,983 6,237

Interest bearing liabilities 1,881 1,552 1,630 1,391 1,301

Trade payables 351 196 301 216 305

Other liabilities 923 857 744 794 866

Total liabilities 3,154 2,606 2,675 2,400 2,471

Minority interest 492 487 412 399 391

Shareholders' equity 2,768 2,866 3,018 3,184 3,375 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (USDmn) 2014A 2015A 2016F 2017F 2018F EBIT 557 410 612 648 637

Depreciation 221 221 222 232 134

Working capital 170 (119) (4) (8) (12)

Other operating items (424) (261) (329) (345) (331)

Operating cash flow 523 252 501 527 428

Net capital expenditure 102 53 104 100 100

Free cash flow 421 198 397 428 328

Equity raised/(bought) - - - - -

Net borrowings (325) (329) 78 (240) (90)

Other financing (32) 87 459 253 205

Net cash flow 64 (43) 16 (65) 33

Cash flow at beginning 681 745 702 719 653

Ending cash flow 745 702 719 653 686Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2014A 2015A 2016F 2017F 2018F ROAE (%) 5.5 4.6 9.5 9.8 9.7

ROAA (%) 2.7 2.5 4.7 5.0 5.1

EBITDA margin (%) 23.4 23.5 32.3 32.6 27.1

EBIT margin (%) 16.7 15.3 23.7 24.0 22.4

Net margin (%) 5.3 5.7 11.0 11.3 10.9

Payout ratio (%) 47.6 50.1 44.0 46.0 46.0

Current ratio (x) 1.6 2.4 2.2 2.2 2.0

Interest coverage (x) 3.4 8.4 13.4 20.6 28.9

Net gearing (%) 41.0 29.6 30.2 23.2 18.2

Debts to assets (%) 29.3 26.0 26.7 23.2 20.9

Debtor turnover (days) 47 47 47 46 45

Creditor turnover (days) 33 33 32 32 33

Inventory turnover (days) 14 14 17 15 15 Source: Company, Bahana estimates

2017 Compendium

152

ADHI KARYA BUY PX: IDR2,000 – TP: IDR3,500* State-owned ADHI, the fourth-largest construction company by market

cap in our coverage, is set to develop the long-awaited Greater Jakarta light-rail-transit (LRT) project. Despite the appointment delay, this LRT project should positively affect not only ADHI’s construction sales but also its property and precast businesses.

In 2017, we expect ADHI to divest its stake in the property business, Adhi Persada Properti (APP), through an IPO, and experience stronger growth in its property unit. APP has several projects in its pipeline, including Grand Dhika City Bekasi and Grand Dhika Jatiwarna, boosting its growth potential.

ADHI’s recent negative share-price performance should reverse on improving EPS growth from upcoming infrastructure projects. Our new TP of IDR3,500 is based on a 15x 2017F PER, a 25% sector discount, sufficient to factor in execution risks and possible lower LRT margins.

Financial highlights* Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Revenues (IDRbn) 8,654 9,390 16,177 21,268 24,180 EBIT (IDRbn) 653 611 1,200 1,609 1,864 Net profit (IDRbn) 329 464 673 844 1,020 Bahana/cons.(%) - - 124 114 137

EPS (IDR) 183 213 189 237 286 EPS growth (%) (19.0) 16.6 (11.2) 25.4 20.8 EV/EBITDA (x) 8.0 9.2 6.3 4.7 4.0 P/E (x) 10.9 9.4 10.6 8.4 7.0 FCFPS (IDR) (855) (113) (496) 37 79 FCF yield (%) (42.8) (5.6) (24.8) 1.8 3.9 BVPS (IDR) 911 1,450 1,613 1,812 2,051 P/BV (x) 2.2 1.4 1.2 1.1 1.0 DPS (IDR) 55 42 38 47 57 Div. yield (%) 2.7 2.1 1.9 2.4 2.9 Source: Company, Bahana estimates Note: based on 23 November 2016 closing price

Share price performance

0

20,000

40,000

60,000

80,000

100,000

120,000

1,800

2,000

2,200

2,400

2,600

2,800

3,000

23-Nov-15 23-Jan-16 23-Mar-16 23-May-16 23-Jul-16 23-Sep-16 23-Nov-16

('000)(IDR)

Volume (RHS) ADHI IJ Px Last

(20.0)

(9.4)

(24.8)(30.5) (32.3)

(26.3)

(40)

(30)

(20)

(10)

0

(40)

(30)

(20)

(10)

0

ytd 1M 3M 6M 9M 12M

(%) (%)

ADHI IJ relative to JCI Source: Bloomberg Leonardo Henry Gavaza ([email protected]) +6221 2505735 ext.3608 *New, please refer to appendix II

Major assumptions Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Carried over (IDRbn) 8,745 9,900 14,782 26,503 32,706 New contracts (IDRbn) 9,218 13,962 27,924 27,366 26,818 New contracts growth (%) (15.1) 51.5 100.0 (2.0) (2.0) Total order books (IDRbn) 17,963 23,862 42,706 53,868 59,525 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 2,910/1,955 12M high/low consensus TP (IDR) : 3,500/2,550Majority shareholder (%) : Republic of Indonesia (51.0) Shares outstanding (mn)/Free float (%) : 3,561/49.0 Mkt. cap. (IDRbn/USDmn) : 7,122/528 3-m avg.daily t.o.(IDRbn/USDmn) : 40.1/2.8 Bloomberg/Reuters code : ADHI IJ/ADHI.JK Source: Bloomberg, Reuters; based on 23 November 2016 closing price

2017 Compendium

153

ADHI KARYA

Profit & loss Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FSales 8,654 9,390 16,177 21,268 24,180Gross profit 1,009 1,007 1,822 2,423 2,790EBITDA 630 642 1,239 1,655 1,918Depreciation (24) 31 39 46 54 EBIT 653 611 1,200 1,609 1,864Net interest inc./(expense) (103) (86) (73) (134) (123) Forex gain/(losses) 100 165 (5) - - Other income/(expense) (51) 56 37 9 6 Pre-tax profit 600 746 1,160 1,484 1,748Taxes (268) (281) (486) (639) (726) Minority interest (3) (1) (1) (1) (1) Extraordinary gain/(losses) - - - - - Net profit 329 464 673 844 1,020Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018F Cash and equivalents 811 4,317 3,454 2,950 2,938 S-T investments - - - - - Trade receivables 2,896 3,311 3,479 4,384 5,121 Inventories 132 163 223 293 332 Fixed assets 857 1,477 1,728 1,972 2,209 Other assets 5,762 7,493 11,831 14,505 15,967 Total assets 10,459 16,761 20,716 24,105 26,567 Interest bearing liabilities 2,269 3,119 4,115 3,615 3,490 Trade payables 4,923 6,489 7,900 10,376 11,777 Other liabilities 1,626 1,991 2,958 3,660 3,995 Total liabilities 8,818 11,599 14,973 17,652 19,263 Minority interest 7 8 9 9 10 Shareholders' equity 1,641 5,162 5,743 6,453 7,305 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FEBIT 653 611 1,200 1,609 1,864 Depreciation (24) 31 39 46 54 Working capital (773) 1,034 (927) 135 137 Other operating items (970) (930) (767) (839) (1,011) Operating cash flow (1,114) 746 (455) 951 1,045Net capital expenditure (426) (1,147) (1,313) (820) (764) Free cash flow (1,541) (401) (1,768) 131 281Equity raised/(bought) 3 3,129 - - - Net borrowings 560 849 997 (375) - Other financing (151) (71) (92) (259) (293) Net cash flow (1,129) 3,506 (863) (504) (12)Cash balances, beginning 1,940 811 4,317 3,454 2,950 Ending cash 811 4,317 3,454 2,950 2,938Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2014A 2015A 2016F 2017F 2018F ROAE (%) 21.2 13.6 12.3 13.8 14.8 ROAA (%) 3.3 3.4 3.6 3.8 4.0 Gross margin (%) 11.7 10.7 11.3 11.4 11.5 EBITDA margin (%) 7.3 6.8 7.7 7.8 7.9 EBIT margin (%) 7.5 6.5 7.4 7.6 7.7 Net margin (%) 3.8 4.9 4.2 4.0 4.2 Payout ratio (%) 30.0 19.7 20.0 20.0 20.0 Current ratio (x) 1.3 1.6 1.5 1.4 1.4 Interest coverage (x) 6.3 7.1 16.5 12.0 15.1 Net gearing (%) 88.8 nc 11.5 10.3 7.6 Debtor turnover (days) 78 86 60 60 60 Creditor turnover (days) 218 259 200 200 200 Inventory turnover (days) 7 6 5 5 5 Source: Company, Bahana estimates

2017 Compendium

154

ADI SARANA ARMADA BUY PX: IDR199 - TP: IDR280* ASSA, Indonesia’s second-largest car rental company, is expected to

benefit from price improvements in the secondary car market, particularly Toyota Avanza and Daihatsu Xenia. As a result, we expect 36.8% y-y revenue growth for ASSA’s used car segment in 2017. Also, we now look for a higher earnings contribution from ASSA’s car auction segment, BidWin, which had recently undertaken a major expansion.

For ASSA’s rental segment, we expect stable earnings supported by long-term corporate rent contracts, in line with recent outsourcing trends in various companies to achieve cost efficiency.

We expect share-price catalysts from improved Avanza-Xenia used car prices as well as BidWin’s strong performance. Thus, we reiterate our BUY call with a new 12M TP of IDR280 on a 2017F PE of 11.9x, a 10% discount to regional peers. Risks would be lower-than-expected used car prices, lower utilization rates and fewer expansion fleets.

Financial highlights* Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Revenues (IDRbn) 1,140 1,393 1,516 1,752 2,083 EBIT (IDRbn) 184 213 232 300 381 Net profit (IDRbn) 43 34 43 80 121 Bahana/consensus (%) - - 78 108 109

EPS (IDR) 13 10 13 24 36

EPS growth (%) (53.3) (20.5) 26.6 85.7 50.7 EV/EBITDA (x) 4.5 4.4 4.0 3.9 3.6 P/E (x) 15.7 19.8 15.6 8.4 5.6 FCFPS (IDR) (78) (89) 9 (74) (63) FCF yield (%) (39) (45) 5 (37) (32) BVPS (IDR) 247 251 261 278 304 P/BV (x) 0.8 0.8 0.8 0.7 0.7 DPS (IDR) 9 5 4 7 11 Div. yield (%) 4.5 2.5 1.9 3.6 5.4 Source: Company, Bahana estimates note: based on 23 November 2016 closing price

Share price performance

0

20,000

40,000

60,000

80,000

100,000

55

105

155

205

255

23-Nov-15 23-Jan-16 23-Mar-16 23-May-16 23-Jul-16 23-Sep-16 23-Nov-16

('000)(IDR)

Volume (RHS) ASSA IJ Px Last

85.5

6.8

(2.3)

63.2

89.0

66.1

(20)

0

20

40

60

80

100

(20)

0

20

40

60

80

100

ytd 1M 3M 6M 9M 12M

(%) (%)

ASSA IJ relative to JCI Source: Bloomberg Gregorius Gary ([email protected]) +6221 2505081 ext. 3604 *New, please refer to appendix II

Major assumptions Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Fleet size (units) 14,873 17,991 18,991 21,991 24,991 Utilization rate (%) 92.1 92.6 93.0 93.0 93.0 Unit of disposal (units) 1,793 2,337 2,500 3,000 3,000 ASP used cars (IDRmn) 96.9 92.2 96.8 101.6 106.7 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 240/96 12M High/low consensus TP (IDR) : 320/90 Majority shareholder (%) : Adi Dinamika Investindo (24.9) Shares outstanding (mn)/Free float (%) : 3,398/37.4 Mkt. cap. (IDRbn/USDmn) : 670/50 3-m avg.daily t.o.(IDRbn/USDmn) : 1.3/0.1 Bloomberg/Reuters code : ASSA IJ/ASSA.JK Source: Bloomberg, Reuters; based on 23 November 2016 closing price

2017 Compendium

155

ADI SARANA ARMADA

Profit & loss Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FSales 1,140 1,393 1,516 1,752 2,083Gross profit 349 415 445 538 685EBITDA 471 548 608 689 822Depreciation 287 336 377 389 440 EBIT 184 213 232 300 381Net interest inc./(expense) (139) (171) (185) (201) (224) Forex gain/(losses) 0 (0) - - - Other income/(expense) 11 15 15 16 16 Pre-tax profit 56 57 62 115 173Taxes 13 23 19 34 52 Minority interest 0 0 0 0 0 Extraordinary gain/(losses) 2 (1) - - - Net profit 43 34 43 80 121Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018F Cash and equivalents 22 28 197 200 149 S-T investments - - - - - Trade receivables 131 168 183 211 251 Inventories 26 20 20 20 20 Fixed assets 2,193 2,538 2,543 2,896 3,251 Other assets 136 140 131 172 222 Total assets 2,507 2,893 3,073 3,499 3,893 Interest bearing liabilities 1,456 1,784 1,934 2,214 2,414 Trade payables 57 44 49 55 63 Other liabilities 157 210 203 285 383 Total liabilities 1,669 2,038 2,186 2,554 2,861 Minority interest 0 0 0 0 0 Shareholders' equity 838 855 887 945 1,032 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FEBIT 184 213 232 300 381

Depreciation 287 336 377 389 440

Working capital (6) (50) (9) (19) (23)

Other operating items (166) (124) (188) (182) (220)

Operating cash flow 299 375 411 488 579

Net capital expenditure (566) (679) (379) (741) (793)

Free cash flow (267) (304) 32 (253) (214)

Equity raised/(bought) - - - - -

Net borrowings 295 329 150 280 200

Other financing (32) (19) (13) (24) (36)

Net cash flow (4) 6 169 3 (50)

Cash flow at beginning 26 22 28 197 200

Ending cash flow 22 28 197 200 149Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2014A 2015A 2016F 2017F 2018F ROAE (%) 5.1 4.0 4.9 8.5 11.7

ROAA (%) 1.7 1.2 1.4 2.3 3.1

EBITDA margin (%) 41.3 39.4 40.1 39.3 39.4

EBIT margin (%) 16.2 15.3 15.3 17.1 18.3

Net margin (%) 3.8 2.5 2.9 4.6 5.8

Payout ratio (%) 71.1 49.7 30.0 30.0 30.0

Current ratio (x) 0.4 0.4 0.7 0.7 0.7

Interest coverage (x) 0.8 0.8 0.8 0.7 0.6

Net gearing (%) 171.1 205.6 196.0 213.2 219.5

Debts to assets (%) 58.1 61.7 63.0 63.3 62.0

Debtor turnover (days) 41.3 43.4 43.4 43.4 43.4

Creditor turnover (days) 25.7 16.3 16.3 16.3 16.3

Inventory turnover (days) 11.6 7.3 6.7 5.9 5.1 Source: Company, Bahana estimates

2017 Compendium

156

AKR CORPORINDO BUY PX: IDR6,625 - TP: IDR8,000* We expect Indonesia’s leading private petroleum distributor, AKRA, to

see an earnings turnaround in 2017. We look for volume upside from rising mining activities on a significant rebound in coal prices and higher Brent prices in 2017 as OPEC finally decides to lower output. Note that the mining industry contributes 48% of AKRA’s total sales.

On the cost side, AKRA has retained and even improved its distribution margins during the decline in sales volume due to its fixed distribution-fee scheme and higher operating efficiencies, which we think should lead to operating sustainability. In addition, we believe AKRA’s recent expansion in the retail distribution segment will support earnings.

As we expect 2017 earnings to increase by 46% y-y, we reiterate our BUY rating with an SOTP-based 12M TP of IDR8,000. Risks to our call include lower oil volume and delays at its East Java industrial estate.

Financial highlights* Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Revenues (IDRbn) 22,468 19,765 14,147 21,318 25,373 EBIT (IDRbn) 1,063 1,349 1,601 2,195 2,269 Net profit (IDRbn) 810 1,034 1,104 1,642 1,704 Bahana/consensus (%) - - 90 113 120 EPS (IDR) 208 262 280 409 423 EPS growth (%) 25.0 26.4 6.8 45.9 3.4 EV/EBITDA (x) 20.9 17.5 15.0 9.9 9.2 P/E (x) 31.9 25.3 23.7 16.2 15.7 FCFPS (IDR) 401 237 102 206 380 FCF yield (%) 6.0 3.6 1.5 3.1 5.7 BVPS (IDR) 1,383 1,546 1,739 2,045 2,349 P/BV (x) 4.8 4.3 3.8 3.2 2.8 DPS (IDR) 83 83 105 112 163 Div. yield (%) 1.3 1.3 1.6 1.7 2.5 Source: Company, Bahana estimates note: based on 23 November 2016 closing price

Share price performance

0

20,000

40,000

60,000

80,000

100,000

120,000

5,000

6,000

7,000

8,000

9,000

23-Nov-15 23-Jan-16 23-Mar-16 23-May-16 23-Jul-16 23-Sep-16 23-Nov-16

('000)(IDR)

Volume (RHS) AKRA IJ Px Last

(21.1)

5.2 3.4

(2.1)

(20.3)

(3.9)

(25)(20)(15)(10)(5)0510

(25)(20)(15)(10)(5)05

10

ytd 1M 3M 6M 9M 12M

(%) (%)

AKRA IJ relative to JCI Source: Bloomberg Gregorius Gary ([email protected]) +6221 2505081 ext. 3604 *New, please refer to appendix II

Major assumptions Year to 31 Dec 2014A 2015A 2016F 2017F 2018F ASP (IDR/litre) 9,681 6,667 4,280 6,353 6,878 growth % 11.3 (31.1) (35.8) 48.4 8.3 Petroleum sales volume (000 kl) 1,830 2,190 2,282 2,555 2,823 growth % (9.9) 19.7 4.2 12.0 10.5 Oil Price (USD/barrel) 45 54 45 51 60 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 8,450/5,725 12M High/low consensus TP (IDR) : 7,908/6,650 Majority shareholder (%) : Arthakencana Rayatama (58.9) Shares outstanding (mn)/Free float (%) : 3,992/40.7 Mkt. cap. (IDRbn/USDmn) : 26,446/1,945 3-m avg.daily t.o.(IDRbn/USDmn) : 27.4/2.0 Bloomberg/Reuters code : AKRA IJ/AKRA.JK Source: Bloomberg, Reuters; based on 23 November 2016 closing price

2017 Compendium

157

AKR CORPORINDO

Profit & loss Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FSales 22,468 19,765 14,147 21,318 25,373Gross profit 1,732 2,216 2,176 2,707 2,835EBITDA 1,396 1,681 1,946 2,891 2,993Depreciation 333 321 346 696 724 EBIT 1,063 1,360 1,601 2,195 2,269Net interest inc./(expense) (77) (25) (96) (91) (92) Forex gain/(losses) - - - - - Other income/(expense) 8 (7) (74) 23 23 Pre-tax profit 993 1,328 1,431 2,127 2,200Taxes (203) (258) (344) (492) (508) Minority interest 20 (25) 16 7 11 Extraordinary gain/(losses) - - - - - Net profit 810 1,045 1,104 1,642 1,704Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018F Cash and equivalents 897 1,291 1,997 1,766 2,034 S-T investments - - - - - Trade receivables 4,320 3,049 2,153 3,244 3,861 Inventories 916 977 657 1,022 1,238 Fixed assets 4,390 4,469 5,945 6,243 6,012 Other assets 4,268 5,416 5,148 5,138 5,142 Total assets 14,790 15,203 15,900 17,414 18,288 Interest bearing liabilities 4,126 3,856 4,702 3,804 2,834 Trade payables 4,067 3,434 2,310 3,592 4,350 Other liabilities 631 627 879 850 782 Total liabilities 8,824 7,917 7,892 8,246 7,965 Minority interest 571 1,196 1,157 1,112 1,068 Shareholders' equity 5,395 6,090 6,851 8,056 9,255 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FEBIT 1,063 1,349 1,601 2,195 2,269 Depreciation 333 321 346 696 724 Working capital 1,657 (817) 747 (499) (401) Other operating items (245) (305) (473) (585) (604) Operating cash flow 2,808 548 2,221 1,807 1,988Net capital expenditure (1,245) 387 (1,821) (995) (493) Free cash flow 1,564 935 400 812 1,495Equity raised/(bought) - 161 5 - - Net borrowings (1,019) (270) 846 (899) (970) Other financing (484) (415) (545) (145) (257) Net cash flow 60 411 706 (231) 268Cash flow at beginning 820 880 1,291 1,997 1,766 Ending cash flow 880 1,291 1,997 1,766 2,034Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2014A 2015A 2016F 2017F 2018F ROAE (%) 15.9 18.0 17.1 22.0 19.7 ROAA (%) 5.5 6.9 7.1 9.9 10.3 EBITDA margin (%) 6.2 8.5 13.8 13.6 11.8 EBIT margin (%) 4.7 6.9 11.3 10.3 8.9 Net margin (%) 3.6 5.3 7.8 7.7 6.7 Payout ratio (%) 50.0 40.0 40.0 39.0 39.2 Current ratio (x) 1.1 1.5 1.3 1.2 1.1 Interest coverage (x) 13.7 54.6 16.8 24.1 24.5 Net gearing (%) 59.9 42.1 39.5 25.3 8.6 Debts to assets (%) 27.9 25.4 29.6 21.8 15.5 Debtor turnover (days) 69 56 56 56 56 Creditor turnover (days) 71 70 70 70 70 Inventory turnover (days) 16 20 20 20 20 Source: Company, Bahana estimates

2017 Compendium

158

ALAM SUTERA REALTY REDUCE* PX: IDR382 - TP: IDR300* Despite having a 1,898ha landbank, ASRI has been unable to monetize

its assets given their unfavorable locations. Our negative view is also strengthened by its weak 9M16 pre-sales achievement of only IDR1.3tn, or just 26% of its IDR5tn full-year target (Bahana: IDR2tn) due to unsuccessful office launches.

A share-price catalyst for ASRI would be its plan to increase recurring income to 10% in 2017, supported by its mall expansions and the Garuda Wisnu Kencana theme park development. We expect ASRI’s 2016 net profit to increase by 17% y-y, backed by unrealized FX gains stemming from USD451mn in bonds.

ASRI’s lack of project launches and difficult-to-sell assets should lead to continued underperformance. Hence, we apply a 70% discount to NAV to derive our lower IDR300 TP. Lowering to REDUCE from Hold. Risks: higher-than-expected marketing sales, a stronger IDR.

Financial highlights* Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Revenues (IDRbn) 3,631 2,784 2,700 3,252 3,569 EBIT (IDRbn) 1,908 1,628 1,118 1,426 1,579 Net profit (IDRbn) 1,097 597 699 768 845 Bahana/cons.(%) - - 79 83 65

EPS (IDR) 56 30 36 39 43 EPS growth (%) 25.2 (45.6) 17.2 9.9 10.0 EV/EBITDA (x) 6.7 8.3 11.9 9.6 8.7 P/E (x) 6.8 12.6 10.7 9.8 8.9 FCFPS (IDR) (100) (33) (3) (13) 4 FCF yield (%) (26.3) (8.5) (0.7) (3.3) 1.0 BVPS (IDR) 311 328 358 390 425 P/BV (x) 1.2 1.2 1.1 1.0 0.9 DPS (IDR) 7 6 8 10 9 Div. yield (%) 1.8 1.6 2.1 2.6 2.3 Source: Company, Bahana estimates note: based on 23 November 2016 closing price

Share price performance

050,000100,000150,000200,000250,000300,000350,000400,000450,000

300

350

400

450

500

550

600

23-Nov-15 23-Jan-16 23-Mar-16 23-May-16 23-Jul-16 23-Sep-16 23-Nov-16

('000)(IDR)

Volume (RHS) ASRI IJ Px Last

(2.1)

(13.3)

(22.0)

(9.3)

0.0

(1.4)

(25)

(20)

(15)

(10)

(5)

0

5

(25)

(20)

(15)

(10)

(5)

0

5

ytd 1M 3M 6M 9M 12M

(%) (%)

ASRI IJ relative to JCI Source: Bloomberg Sanni Satrio Dwi Utomo ([email protected]) +6221 2505081 ext. 3611 *New, please refer to appendix II

NAV calculation 2017F

Land bank (Ha) 1,898 Total value (IDRbn) 30,517 NAV/share (IDR) 994 Discount (%) 70 Adjusted NAV/share (IDR) 300 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 585/317 12M High/low consensus TP (IDR) : 700/340 Majority shareholder (%) : Tangerang Fajar Industrial (25.2) Share outstanding (m)/Free float (%) : 19,649/56.1 Mkt. cap. (IDRbn/USDmn) : 7,506/555 3-m avg.daily t.o.(IDRbn/USDmn) : 20.1/1.5 Bloomberg/Reuters code : ASRI IJ/ASRI.JK Source: Bloomberg, Reuters; based on 23 November 2016 closing price

2017 Compendium

159

ALAM SUTERA REALTY

Profit & loss Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FSales 3,631 2,784 2,700 3,252 3,569Gross profit 2,307 2,056 1,518 1,870 2,075EBITDA 1,978 1,706 1,209 1,532 1,703Depreciation 70 78 91 106 124 EBIT 1,908 1,628 1,118 1,426 1,579Net interest inc./(expense) (147) (121) (108) (162) (178) Forex gain/(losses) (138) (438) 180 - - Other income/(expense) (191) (167) (192) (211) (243) Pre-tax profit 1,431 902 998 1,053 1,158Taxes (254) (217) (203) (179) (196) Minority interest (80) (88) (97) (106) (117) Extraordinary gain/(losses) - - - - - Net profit 1,097 597 699 768 845Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018F Cash and equivalents 881 638 603 694 731 S-T investments - - - - - Trade receivables 130 120 74 89 98 Inventories 3,751 5,550 5,740 6,000 6,300 Fixed assets 958 1,097 1,169 1,258 1,365 Other assets 11,204 11,304 12,241 13,259 14,422 Total assets 16,924 18,709 19,828 21,300 22,916 Interest bearing liabilities 6,606 7,368 7,488 7,950 8,050 Trade payables 161 1,033 97 114 123 Other liabilities 3,786 3,707 5,046 5,395 6,194 Total liabilities 10,553 12,107 12,631 13,459 14,366 Minority interest 253 148 163 179 197 Shareholders' equity 6,118 6,454 7,034 7,662 8,353 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FEBIT 1,908 1,628 1,118 1,426 1,579 Depreciation 70 78 91 106 124 Working capital (869) (677) 21 (66) 385 Other operating items (1,341) (371) (488) (634) (768) Operating cash flow (233) 657 742 832 1,320Net capital expenditure (1,739) (1,295) (793) (1,080) (1,247) Free cash flow (1,972) (638) (51) (247) 73Equity raised/(bought) - (123) - - - Net borrowings 2,020 762 120 462 100 Other financing (57) (243) (105) (123) (137) Net cash flow (9) (242) (35) 91 36Cash flow at beginning 890 881 638 603 694 Ending cash flow 881 638 603 694 731Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2014A 2015A 2016F 2017F 2018F ROAE (%) 19.5 9.5 10.4 10.5 10.6 ROAA (%) 7.0 3.3 3.6 3.7 3.8 Gross margin (%) 63.5 73.9 56.2 57.5 58.1 EBITDA margin (%) 54.5 61.3 44.8 47.1 47.7 EBIT margin (%) 52.5 58.5 41.4 43.9 44.2 Net margin (%) 30.2 21.4 25.9 23.6 23.7 Payout ratio (%) 12.5 20.0 20.0 20.0 20.0 Current ratio (x) 4.7 3.4 6.6 6.4 6.2 Interest coverage (x) 13.0 13.5 10.3 8.8 8.9 Net gearing (%) 93.6 104.3 97.9 94.7 87.6 Debtor turnover (days) 10 10 10 10 10 Creditor turnover (days) 109 60 75 84 98 Inventory turnover (days) - - - - - Source: Company, Bahana estimates

2017 Compendium

160

ANABATIC TECHNOLOGIES BUY PX: IDR685 - TP: IDR750* With expected GDP growth improvement, we look for ATIC, a leading

fully integrated IT company, to enjoy higher revenue growth as some large banks are due to upgrade their 20-year-old core legacy banking IT systems.

Given Indonesia’s low bank account penetration rate (20%), ATIC should benefit from new branchless banking regulations specifically aimed at serving customers in remote areas. The government’s proactive moves in extending formal financial access to the unbanked sections of the country are set to benefit from banks’ additional IT-related capex.

Based on what we see as an attractive 3-year outlook, we maintain our positive call on the stock with a TP of IDR750, based on a simple average 10Y DCF valuation and 2017F PER of 35x, at par with regional peers. Risks: Banks delaying core system upgrades and IDR depreciation.

Financial highlights* Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Revenues (IDRbn) 2,570 2,957 3,424 3,897 4,387 EBIT (IDRbn) 129 165 158 184 195 Net profit (IDRbn) 61 36 43 48 53 Bahana/consensus (%) - - na na na

EPS (IDR) 41 21 23 26 28 EPS growth (%) 60.4 (47.7) 7.3 11.9 9.3 EV/EBITDA (x) 12.5 61.1 10.4 9.6 9.3 P/E (x) 16.8 32.1 29.9 26.7 24.5 FCFPS (IDR) (11) (143) (96) (44) (5.8) FCF yield (%) (1.6) (20.9) (14.0) (6.4) (0.9) BVPS (IDR) 179 326 303 323 345 P/BV (x) 3.8 2.1 2.3 2.1 2.0 DPS (IDR) - 10 5 6 6 Div. yield (%) 0.0 1.5 0.8 0.8 0.9 Source: Company, Bahana estimates note: based on 23 November 2016 closing price

Share price performance

0

1,000

2,000

3,000

4,000

5,000

6,000

450

500

550

600

650

700

750

23-Nov-15 23-Jan-16 23-Mar-16 23-May-16 23-Jul-16 23-Sep-16 23-Nov-16

('000)(IDR)

Volume (RHS) ATIC IJ Px Last

(17.7)

1.5

16.1

(1.1)

23.7

(15.5)

(30)

(20)

(10)

0

10

20

30

(30)

(20)

(10)

0

10

20

30

ytd 1M 3M 6M 9M 12M

(%) (%)

ATIC IJ relative to JCI Source: Bloomberg Renaldy Effendy ([email protected]) +6221 2505081 ext. 3606 *New, please refer to appendix II

Major assumptions Year to 31 Dec 2014A 2015A 2016F 2017F 2018F IT industry growth (%) 17.3 13.8 12.8 13.0 12.0 IT spending/GDP (%) 1.4 1.5 1.7 2.0 2.2 Smartphone users (mn people) 61.2 74.8 89.8 103.6 121.5 Internet penetration rate (%) 83.6 93.4 102.8 112.6 123.0 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 735/461 12M high/low consensus TP (IDR) : na/naMajority shareholder (%) : Artha Investama Jaya (39.5) Shares outstanding (mn)/Free float (%) : 1,875/21.5 Mkt. cap. (IDRbn/USDmn) : 1,284/95 3-m avg.daily t.o.(IDRbn/USDmn) : 0.1/0.0 Bloomberg/Reuters code : ATIC IJ/ATIC.JK Source: Bloomberg, Reuters; based on 23 November 2016 closing price

2017 Compendium

161

ANABATIC TECHNOLOGIES

Profit & loss Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FSales 2,570 2,957 3,424 3,897 4,387Gross profit 396 505 545 633 705EBITDA 147 31 202 234 249Depreciation 19 (134) 44 50 54 EBIT 129 165 158 184 195Net interest inc./(expense) (33) (42) (51) (59) (61) Forex gain/(losses) 16 (30) 10 - - Other income/(expense) 0 (2) (1) (1) (1) Pre-tax profit 112 91 116 125 133Taxes (31) (31) (37) (40) (43) Minority interest (21) (24) (36) (37) (38) Extraordinary gain/(losses) 1 - - - - Net profit 61 36 43 48 53Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018F Cash and equivalents 281 231 195 173 178 S-T investments - - - - - Trade receivables 506 631 749 865 954 Inventories 439 483 576 664 734 Fixed assets 251 497 523 543 539 Other assets 501 437 683 782 881 Total assets 1,978 2,280 2,727 3,027 3,286 Interest bearing liabilities 833 862 1,013 1,129 1,204 Trade payables 286 256 457 519 573 Other liabilities 454 460 521 588 660 Total liabilities 1,572 1,578 1,991 2,236 2,437 Minority interest 138 153 168 185 204 Shareholders' equity 268 549 568 606 645 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FEBIT 129 165 158 184 195 Depreciation 19 (134) 44 50 54 Working capital 10 (79) (231) (154) (118) Other operating items (35) (87) (64) (78) (82) Operating cash flow 123 (134) (92) 3 49Net capital expenditure (139) (108) (87) (85) (60) Free cash flow (16) (242) (179) (82) (11)Equity raised/(bought) - 249 - - - Net borrowings 30 29 151 116 75 Other financing (3) (86) (7) (56) (59) Net cash flow 11 (50) (36) (22) 5Cash flow at beginning 270 281 231 195 173 Ending cash flow 281 231 195 173 178Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2014A 2015A 2016F 2017F 2018F ROAE (%) 25.8 8.8 7.7 8.2 8.4 ROAA (%) 3.2 1.7 1.7 1.7 1.7 Gross margin (%) 15.4 17.1 15.9 16.2 16.1 EBITDA margin (%) 5.7 1.1 5.9 6.0 5.7 EBIT margin (%) 5.0 5.6 4.6 4.7 4.4 Net margin (%) 2.4 1.2 1.3 1.2 1.2 Payout ratio (%) 0.0 25.0 25.0 25.0 25.0 Current ratio (x) 1.1 1.1 1.1 1.1 1.1 Interest coverage (x) 3.9 3.9 3.1 3.1 3.2 Net gearing (%) 205.8 114.8 143.7 157.8 158.7 Debtor turnover (days) 51 51 51 51 50 Creditor turnover (days) 68 71 72 73 71 Inventory turnover (days) 58 63 64 65 64 Source: Company, Bahana estimates

2017 Compendium

162

ANEKA TAMBANG REDUCE* PX: IDR975 – TP: IDR830* Indonesia’s leading diversified metals and mining company, ANTM, has

endured bad times and now looks ready to see improved performance in the next 3 years. ANTM is on track to finish ores smelters with varying commercial operation dates from 2018-2019. Upon its smelter completion, ANTM can utilize its ores, which are banned for export.

At this stage, we forecast higher y-y average nickel and gold prices in 2017 to boost ANTM’s revenue by 24.5% y-y. On top of that, the completion of ANTM’s Pomalaa expansion project would expand its 2018 nickel production to 27,000, a 40% rise over 2016F production.

Overall, we expect improved results for ANTM, particularly on lower costs due to the use of its own electricity and higher metal prices supporting profitability. We value ANTM’s existing businesses using a DCF valuation with a WACC of 7.2%, translating into a new IDR830 TP. Risks to our call: Fed rate hikes and and Philippines mine reopenings.

Financial highlights* Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Revenues (IDRbn) 9,421 10,532 10,371 12,917 14,293 EBIT (IDRbn) (137) (701) (135) 297 472 Net profit (IDRbn) (744) (1,441) 52 188 265 Bahana/consensus (%) na na 119

EPS (IDR) (66) (120) 2 8 11 EPS growth (%) (209.4) (83.9) 101.8 259.5 40.9 EV/EBITDA (x) 23.9 2,253.3 45.4 25.2 22.4 P/E (x) (14.9) (8.1) 448.0 124.6 88.4 FCFPS (IDR) (124) (168) (50) (113) (72) FCF yield (%) (12.7) (17.2) (5.1) (11.6) (7.4) BVPS (IDR) 1,062 1,531 764 770 779 P/BV (x) 0.9 0.6 1.3 1.3 1.3 DPS (IDR) - - 0 2 2 Div. yield (%) 0 0.2 0.2 Source: Company, Bahana estimates note: based on 23 November 2016 closing price

Share price performance

0100,000200,000300,000400,000500,000600,000700,000

200

400

600

800

1,000

1,200

23-Nov-15 23-Jan-16 23-Mar-16 23-May-16 23-Jul-16 23-Sep-16 23-Nov-16

('000)(IDR)

Volume (RHS) ANTM IJ Px Last

197.0

22.5 31.2 40.1

158.8 164.6

0

50

100

150

200

250

0

50

100

150

200

250

ytd 1M 3M 6M 9M 12M

(%) (%)

ANTM IJ relative to JCI Source: Bloomberg Andrew Hotama ([email protected]) +6221 2505081 ext. 3619 *New, please refer to appendix II

Major assumptions Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Gold sales volume (ton) 10 14 11 13 14 Ferronickel sales volume (tni) 19,809 18,620 20,000 24,000 26,000 Gold ASP (USD/oz) 1,280 1,216 1,271 1,316 1,325 Nickel ASP (USD/ton) 15,531 9,940 9,850 12,500 12,500 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 990/285 12M High/low consensus TP (IDR) : 909/265 Majority shareholder (%) : Republic of Indonesia (65.0) Shares outstanding (mn)/Free float (%) : 24,031/35.0 Mkt. cap. (IDRbn/USDmn) : 23,430/1,723 3-m avg.daily t.o.(IDRbn/USDmn) : 103.6/7.6 Bloomberg/Reuters code : ANTM IJ/ANTM.JK Source: Bloomberg, Reuters; based on 23 November 2016 closing price

2017 Compendium

163

ANEKA TAMBANG

Profit & loss Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FSales 9,421 10,532 10,371 12,917 14,293Gross profit 793 195 726 1,421 1,715EBITDA 688 6 588 1,167 1,362Depreciation 825 708 723 870 890 EBIT (137) (701) (135) 297 472Net interest inc./(expense) (58) (173) (14) (104) (151) Forex gain/(losses) (118) (290) 280 - - Other income/(expense) (478) (505) 78 57 32 Pre-tax profit (791) (1,669) 209 251 353Taxes 47 228 (157) (63) (88) Minority interest (0) 0 (0) (0) (0) Net profit (744) (1,441) 52 188 265Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018F Cash and equivalents 2,619 8,087 7,218 4,832 3,459 Trade receivables 1,068 448 625 814 901 Inventories 1,762 1,753 1,982 2,362 2,584 Fixed assets 14,406 17,349 18,205 20,228 21,808 Other assets 2,149 2,720 2,641 3,313 3,614 Total assets 22,004 30,357 30,670 31,549 32,366 Interest bearing liabilities 8,015 10,110 10,449 10,824 11,241 Trade payables 687 724 608 724 793 Other liabilities 1,252 1,206 1,252 1,489 1,609 Total liabilities 9,954 12,040 12,309 13,038 13,642 Minority interest 0 0 0 0 0 Shareholders' equity 12,050 18,317 18,361 18,511 18,724 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FEBIT (137) (701) (135) 297 472 Depreciation 825 708 723 870 890 Working capital 387 599 (439) (661) (284) Other operating items (494) (1,321) 220 (346) (352) Operating cash flow 581 (716) 368 160 726Net capital expenditure 1,984 1,288 1,568 2,884 2,463 Free cash flow (1,403) (2,004) (1,199) (2,724) (1,736)Equity raised/(bought) - 1,449 - - - Net borrowings 1,230 2,095 339 375 416 Other financing (0) 3,928 (8) (38) (53) Net cash flow (174) 5,468 (869) (2,386) (1,373)Cash flow at beginning 2,793 2,619 8,087 7,218 4,832 Ending cash flow 2,619 8,087 7,218 4,832 3,459Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2014A 2015A 2016F 2017F 2018F ROAE (%) (6.0) (9.5) 0.3 1.0 1.4 ROAA (%) (3.4) (5.5) 0.2 0.6 0.8 EBITDA margin (%) 7.3 0.1 5.7 9.0 9.5 EBIT margin (%) (1.5) (6.7) (1.3) 2.3 3.3 Net margin (%) (7.9) (13.7) 0.5 1.5 1.9 Payout ratio (%) - - 15 20 20 Current ratio (x) 1.6 2.6 2.3 1.8 1.4 Interest coverage (x) na na na 2.9 3.1 Net gearing (%) 44.8 11.0 17.6 32.4 41.6 Debts to assets (%) 36.4 33.3 34.1 34.3 34.7 Debtor turnover (days) 29 26 23 23 23 Creditor turnover (days) 41 16 22 23 23 Inventory turnover (days) 75 62 75 75 75 Source: Company, Bahana estimates

2017 Compendium

164

ASTRA AGRO LESTARI BUY PX: IDR15,600 - TP: IDR20,250 AALI, one of the largest listed oil palm planters in the world with

c.300k ha of planted area, continues to expand its downstream business by developing a PKO refinery, which is scheduled to be completed by end-2016. The refinery would allow AALI to produce and export RBDPKO, a main ingredient for liquid detergent and shampoo.

On its oil palm estate in Kumai, Central Kalimantan, AALI has forayed into the cattle breeding business, with over 2,000 cows as of 9M16. The number of livestock is expected to reach 5,000 cows in the next 1-2 years, before diversifying into the cattle fattening business.

We expect 2017 earnings to increase 24% y-y to IDR1.8tn, mainly on a positive CPO price outlook. Hence, we reiterate our BUY rating and 12M TP of IDR20,250, based on a 2017F PE of 17.8x, a c.20% discount to Malaysian peers. Risks to our call include lower-than-expected CPO prices and demand.

Financial highlights* Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Revenues (IDRbn) 16,306 13,059 13,859 15,347 17,469 EBIT (IDRbn) 3,722 1,853 2,028 2,926 4,000 Net profit (IDRbn) 2,504 619 1,447 1,790 2,516 Bahana/consensus (%) - - 101 97 118

EPS (IDR) 1,590 393 919 1,137 1,598 EPS growth (%) 39.0 (75.3) 133.8 23.7 40.6 EV/EBITDA (x) 6.4 11.7 10.1 7.8 5.8 P/E (x) 9.8 39.7 17.0 13.7 9.8 FCFPS (IDR) (558) (1,823) 4 859 1,414 FCF yield (%) (3.6) (11.7) 0.0 5.5 9.1 BVPS (IDR) 7,249 7,166 7,879 8,535 9,537 P/BV (x) 2.2 2.2 2.0 1.8 1.6 DPS (IDR) 599 472 206 481 595 Div. yield (%) 3.8 3.0 1.3 3.1 3.8 Source: Company, Bahana estimates note: based on 23 November 2016 closing price

Share price performance

0

10,000

20,000

30,000

40,000

13,000

14,000

15,000

16,000

17,000

18,000

23-Nov-15 23-Jan-16 23-Mar-16 23-May-16 23-Jul-16 23-Sep-16 23-Nov-16

('000)(IDR)

Volume (RHS) AALI IJ Px Last

(10.2)

10.5

(2.9)

0.7

(16.1)

(27.3) (30)

(20)

(10)

0

10

20

(30)

(20)

(10)

0

10

20

ytd 1M 3M 6M 9M 12M

(%) (%)

AALI IJ relative to JCI Source: Bloomberg Gregorius Gary ([email protected]) +6221 2505081 ext. 3604 *New, please refer to appendix II

Major assumptions Year to 31 Dec 2014A 2015A 2016F 2017F 2018F FFB production nucleus (k tons) 5,551 5,601 5,320 5,555 6,065 Growth (%) 49.6 0.9 (5.0) 4.4 9.2 CPO production (k tons) 1,744 1,650 1,564 1,555 1,783 Growth (%) 13.3 (5.4) (5.2) (0.6) 14.6 CPO price (USD/ton) 738 568 650 700 700 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 18,625/13,125 12M High/low consensus TP (IDR) : 21,430/16,404 Majority shareholder (%) : Astra International (79.7) Shares outstanding (mn)/Free float (%) : 1,575/20.3 Mkt. cap. (IDRbn/USDmn) : 29,767/2,208 3-m avg.daily t.o.(IDRbn/USDmn) : 45.0/3.3 Bloomberg/Reuters code : AALI IJ/AALI.JK Source: Bloomberg, Reuters; based on 23 November 2016 closing price

2017 Compendium

165

ASTRA AGRO LESTARI

Profit & loss Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FSales 16,306 13,059 13,859 15,347 17,469Gross profit 4,952 3,082 3,298 4,362 5,600EBITDA 4,450 2,738 3,199 4,053 5,197Depreciation 728 885 1,171 1,127 1,197 EBIT 3,722 1,853 2,028 2,926 4,000Net interest inc./(expense) (73) (98) (145) (134) (108) Forex gain/(losses) (127) (580) 385 - - Other income/(expense) 147 (5) (5) (5) (6) Pre-tax profit 3,690 1,176 2,264 2,786 3,886Taxes (1,069) (480) (747) (919) (1,282) Minority interest (118) (77) (69) (77) (87) Extraordinary gain/(losses) - - - - - Net profit 2,504 619 1,447 1,790 2,516Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018F Cash and equivalents 611 294 346 317 394 S-T investments - - - - - Trade receivables 33 46 92 102 116 Inventories 1,278 1,692 1,920 1,997 2,158 Fixed assets 14,342 16,048 16,934 16,798 16,321 Other assets 2,294 3,433 3,793 4,485 5,361 Total assets 18,558 21,512 23,087 23,699 24,351 Interest bearing liabilities 4,427 7,733 8,033 7,333 6,033 Trade payables 923 734 704 732 791 Other liabilities 1,376 1,347 1,459 1,634 1,860 Total liabilities 6,726 9,814 10,196 9,699 8,685 Minority interest 417 413 483 560 647 Shareholders' equity 11,415 11,285 12,408 13,440 15,019 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FEBIT 3,722 1,853 2,028 2,926 4,000 Depreciation 728 885 1,171 1,127 1,197 Working capital (746) (766) (425) (53) (94) Other operating items (980) (2,252) (710) (1,657) (2,156) Operating cash flow 2,724 (279) 2,064 2,343 2,947Net capital expenditure (3,602) (2,591) (2,057) (990) (720) Free cash flow (878) (2,870) 7 1,352 2,227Equity raised/(bought) - - - - - Net borrowings 1,704 3,306 300 (700) (1,300) Other financing (923) (753) (255) (681) (850) Net cash flow (97) (318) 52 (29) 77 Cash flow at beginning 709 611 294 346 317 Ending cash flow 612 293 346 317 394Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2014A 2015A 2016F 2017F 2018F ROAE (%) 23.5 5.5 12.2 13.8 17.7 ROAA (%) 14.9 3.1 6.5 7.7 10.5 EBITDA margin (%) 27.3 21.0 23.1 26.4 29.7 EBIT margin (%) 22.8 14.2 14.6 19.1 22.9 Net margin (%) 15.4 4.7 10.4 11.7 14.4 Payout ratio (%) 52.4 52.4 52.4 52.4 52.4 Current ratio (x) 0.6 0.8 0.4 0.4 0.5 Interest coverage (x) 50.9 19.0 14.0 21.8 37.1 Net gearing (%) 33.4 65.9 61.9 52.2 37.5 Debts to assets (%) 23.9 35.9 34.8 30.9 24.77 Debtor turnover (days) 1 2 2 2 2 Creditor turnover (days) 26 30 24 24 24 Inventory turnover (days) 33 54 66 66 66 Source: Company, Bahana estimates

2017 Compendium

166

ASTRA INTERNATIONAL BUY PX: IDR7,775 - TP: IDR10,000 In 2017, we expect ASII, Indonesia’s biggest auto player, to benefit

from solid 4W sales performance due to growing domestic demand on improved purchasing power as well as a higher market share supported by several new products in the LCGC segment. We expect ASII’s auto margin to improve on growing 4W (640k, +13% y-y) and 2W (4.7mn, +6% y-y) volume in 2017.

At this stage, we also expect ASII’s financing business to recover, helped by solid auto growth and recovering NPLs. For its commodity-related segments, we look for ASII to benefit from solid coal and CPO prices that should boost the performance of its subsidiaries.

As we expect an economic recovery in 2017, we believe ASII’s recent market outperformance should be sustainable. We maintain our BUY rating and SOTP-based TP of IDR10,000, reflecting a 2017F PE of 20.0x. Risks to our call include lower-than-expected auto sales.

Financial highlights Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Revenues (IDRbn) 201,701 184,196 178,703 208,530 229,583 EBIT (IDRbn) 20,163 17,212 16,456 20,259 22,579 Net profit (IDRbn) 19,181 14,464 16,235 20,626 22,914 Bahana/consensus(%) - - 98 108 102

EPS (IDR) 474 357 401 509 566 EPS growth (%) (1.2) (24.6) 12.2 27.0 11.1 EV/EBITDA (x) 13.2 12.7 14.8 12.6 11.2 P/E (x) 16.4 21.8 19.4 15.3 13.7 FCFPS (IDR) 154 382 233 206 331 FCF yield (%) 2.0 4.9 3.0 2.6 4.3 BVPS (IDR) 2,362 2,521 2,745 3,074 3,410 P/BV (x) 3.3 3.1 2.8 2.5 2.3 DPS (IDR) 216 177 180 229 255 Div. yield (%) 2.8 2.3 2.3 2.9 3.3 Source: Company, Bahana estimates Note: based on 23 November 2016 closing price

Share price performance

0

50,000

100,000

150,000

5,000

6,000

7,000

8,000

9,000

23-Nov-15 23-Jan-16 23-Mar-16 23-May-16 23-Jul-16 23-Sep-16 23-Nov-16

('000)(IDR)

Volume (RHS) ASII IJ Px Last

16.1

(3.5)(0.2)

12.1

7.2 9.6

(5)

0

5

10

15

20

(5)

0

5

10

15

20

ytd 1M 3M 6M 9M 12M

(%) (%)

ASII IJ relative to JCI Source: Bloomberg Leonardo Henry Gavaza, CFA ([email protected]) +6221 2505081 ext. 3608 *New, please refer to appendix II

Major assumptions Year to 31 Dec 2014A 2015A 2016F 2017F 2018F 4W sales volume (units) 614,169 510,224 565,000 693,680 763,048 4W market share (%) 51% 50% 54% 58% 58% 2W sales volume (k units) 5,051 4,454 4,364 4,594 4,709 2W market share (%) 64% 69% 74% 76% 76% Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 8,875/5,700 12M High/low consensus TP (IDR) : 10,000/6,200 Majority shareholder (%) : Jardine Cycle & Carriage L (50.1) Shares outstanding (mn)/Free float (%) : 40,484/45.1 Mkt. cap. (IDRbn/USDmn) : 312,052/23,144 3-m avg.daily t.o.(IDRbn/USDmn) : 278.6/20.7 Bloomberg/Reuters code : ASII IJ/ASII.JK Source: Bloomberg, Reuters; based on 23 November 2016 closing price

2017 Compendium

167

ASTRA INTERNATIONAL

Profit & loss Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FSales 201,701 184,196 178,703 208,530 229,583Gross profit 38,809 36,710 35,424 41,397 45,841EBITDA 27,588 28,107 23,974 28,083 31,182Depreciation 7,425 10,895 7,518 7,823 8,603 EBIT 20,163 17,212 16,456 20,259 22,579Net interest inc./(expense) 151 145 (63) 269 421 Forex gain/(losses) (126) (291) (120) - - Other income/(expense) 7,164 2,564 7,419 9,307 10,233 Pre-tax profit 27,352 19,630 23,691 29,836 33,233Taxes (5,227) (4,017) (4,601) (5,612) (6,327) Minority interest (2,944) (1,149) (2,855) (3,598) (3,993) Extraordinary gain/(losses) - - - - - Net profit 19,181 14,464 16,235 20,626 22,914Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018F Cash and equivalents 20,902 27,102 27,537 29,630 33,074 S-T investments 277 484 523 565 610 Trade receivables 24,462 21,277 21,053 24,567 27,047 Inventories 16,986 18,337 17,272 20,148 22,150 Fixed assets 61,336 58,545 60,324 63,607 64,349 Other assets 112,066 119,690 128,565 139,265 150,690 Total assets 236,029 245,435 255,274 277,780 297,918 Interest bearing liabilities 70,072 70,649 68,334 68,811 68,342 Trade payables 18,839 20,557 19,627 22,895 25,170 Other liabilities 26,794 27,696 29,260 32,008 34,634 Total liabilities 115,705 118,902 117,222 123,714 128,146 Minority interest 24,713 24,490 26,939 29,633 31,707 Shareholders' equity 95,611 102,043 111,113 124,433 138,065 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FEBIT 20,163 17,212 16,456 20,259 22,579 Depreciation 7,425 10,895 7,518 7,823 8,603 Working capital (2,620) 3,552 360 (3,122) (2,207) Other operating items (2,928) (4,467) (1,725) (1,244) (1,536) Operating cash flow 22,040 27,192 22,609 23,717 27,439Net capital expenditure (15,806) (11,715) (13,182) (15,377) (14,043) Free cash flow 6,234 15,477 9,427 8,340 13,396Equity raised/(bought) - - - - - Net borrowings 5,549 577 (2,315) 477 (469) Other financing (9,438) (9,854) (6,677) (6,724) (9,482) Net cash flow 2,345 6,200 435 2,093 3,444Cash balances, beginning 18,557 20,902 27,102 27,537 29,630 Ending cash 20,902 27,102 27,537 29,630 33,074Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2014A 2015A 2016F 2017F 2018F ROAE (%) 21.4 14.6 15.2 17.5 17.5 ROAA (%) 8.5 6.0 6.5 7.7 8.0 Gross margin (%) 19.2 19.9 19.8 19.9 20.0 EBITDA margin (%) 13.7 15.3 13.4 13.5 13.6 EBIT margin (%) 10.0 9.3 9.2 9.7 9.8 Net margin (%) 9.5 7.9 9.1 9.9 10.0 Payout ratio (%) 45.6 49.5 45.0 45.0 45.0 Current ratio (x) 1.3 1.4 1.4 1.5 1.5 Interest coverage (x) na na 259.6 na na Net gearing (%) 51.4 42.7 36.7 31.5 25.5 Debtor turnover (days) 44 42 43 43 43 Creditor turnover (days) 42 51 50 50 50 Inventory turnover (days) 38 45 44 44 44 Source: Company, Bahana estimates

2017 Compendium

168

BANK BUKOPIN BUY PX: IDR630 - TP: IDR1,000 In 2017, BBKP expects synergies with the Bosowa group, its new

owner since 2014, to kick in as BBKP’s banking platform is used to consolidate the e-banking needs of Bosowa’s auto and property industry suppliers.

The bank has been reducing its low-yielding loan exposure to Bullog, the state-owned food security agency, while continuing to grow its exposure to the micro segment though partnerships with the military and police (direct micro lending), Taspen & Asabri (pensioner loans partners), Swamitra (micro loans partners), as well as payroll loans.

As the economy recovers, BBKP’s earnings should surpise on the upside, as strategic initatives (i.e., Bosowa and loan mix shift) are essentially NIM- and ROA-accretive, but are currently being masked by BBKP’s NPL cycle. BUY with a new IDR1,000 TP, or 1.0x 2017F P/BV. Risk: Failure to manage SME-related quality loans.

Financial highlights Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Net interest income (IDRbn) 2,473 2,897 3,251 3,702 4,188 Operating income (IDRbn) 3,560 4,193 4,668 5,237 5,865 Operating profit (IDRbn) 872 1,173 1,378 1,579 1,798 Pre-tax profit (IDRbn) 899 1,179 1,385 1,587 1,807

Net profit (IDRbn) 670 960 1,056 1,210 1,378 Bahana/consensus (%) - - 100 103 102 EPS (IDR) 74 106 116 133 152 EPS growth (%) (36.0) 43.2 9.9 14.7 13.9 P/E (x) 8.5 6.0 5.4 4.7 4.2 Equity (IDRbn) 6,786 7,511 8,278 9,278 10,414 BVPS (IDR) 747 827 911 1,021 1,146 P/BV (x) 0.8 0.8 0.7 0.6 0.5 DPS (IDR) 31 32 23 27 30 Div. yield (%) 4.9 5.0 3.7 4.2 4.8 Source: Company, Bahana estimates note: based on 23 November 2016 closing price

Share price performance

0

10,000

20,000

30,000

40,000

50,000

60,000

500

550

600

650

700

750

23-Nov-15 23-Jan-16 23-Mar-16 23-May-16 23-Jul-16 23-Sep-16 23-Nov-16

('000)(IDR)

Volume (RHS) BBKP IJ Px Last

(23.5)

(0.7)(8.7)

4.2 8.8

(22.0)(30)

(20)

(10)

0

10

20

(30)

(20)

(10)

0

10

20

ytd 1M 3M 6M 9M 12M

(%) (%)

BBKP IJ relative to JCI Source: Bloomberg Handi Huta Jaya ([email protected]) +6221 250 5081 ext. 3610 Gilang Purnama ([email protected]) +6221 250 5081 ext. 3601

Major assumptions Year to 31 Dec (%) 2014A 2015A 2016F 2017F 2018F Loan growth 14.0 19.5 10.0 10.7 11.0 Deposit growth 17.1 16.5 4.5 6.1 6.7 Non interest inc./operating inc. 30.5 30.9 30.4 29.3 28.6 Corporate tax rate 25.2 18.2 23.5 23.5 23.5 Payout ratio 41.6 30.0 20.0 20.0 20.0 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 745/515 12M high/low consensus TP (IDR) : 830/640 Majority shareholder (%) : Bosowa Corp (30.0) Shares outstanding (mn)/Free float (%) : 9,087/40.5 Mkt. cap. (IDRbn/USDmn) : 5,725/425 3-m avg.daily t.o.(IDRbn/USDmn) : 2.7/0.2 Bloomberg/Reuters code : BBKP IJ/BBKP.JK Source: Bloomberg, Reuters; based on 23 November 2016 closing price

2017 Compendium

169

BANK BUKOPIN

Profit & loss Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FInterest income 7,093 8,304 8,726 9,018 9,647 Interest expense 4,620 5,407 5,475 5,316 5,459 Net interest income 2,473 2,897 3,251 3,702 4,188 Non-interest income 1,086 1,296 1,418 1,535 1,677 Total operating income 3,560 4,193 4,668 5,237 5,865 Operating expenses 2,397 2,561 2,927 3,316 3,711 Loan loss provisions 291 460 363 342 357 Operating profit 872 1,173 1,378 1,579 1,798 Non-operating inc./(exp.) 27 6 7 8 9 Pre-tax profit 899 1,179 1,385 1,587 1,807 Corporate tax (226) (214) (325) (373) (425) Minorities (2) (4) (4) (4) (4) Net profit 670 960 1,056 1,210 1,378 Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018F Loans 55,232 66,014 72,586 80,385 89,202 Cash on hand 1,023 850 1,106 1,437 1,868 Fixed assets 1,519 1,757 2,196 2,745 3,432 Other assets 21,289 25,745 31,995 33,860 38,968 Total assets 79,063 94,367 107,883 118,427 133,470 Customer deposits 65,391 76,164 79,561 84,377 90,031 Deposits from other banks 2,007 1,962 2,256 2,594 2,983 Borrowing and sub-debts 3,777 7,288 6,425 6,825 7,277 Other liabilities 1,073 1,418 11,335 15,321 22,741 Total liabilities 72,248 86,831 99,577 109,117 123,032 Minorities 20 24 28 32 36 Equity 6,786 7,511 8,278 9,278 10,414 Total liabilities and equity 79,063 94,367 107,883 118,427 133,470 Source: Company, Bahana estimates

Breakdown Year to 31 Dec 2014A 2015A 2016F 2017F 2018F% to earnings assets Gross loans 72.2 72.5 69.9 69.7 69.0 Government bonds 3.0 11.3 10.2 9.8 9.8 Other earnings assets 24.8 16.2 19.9 20.6 21.2

% to loan portfolio Loans to bulog 2.2 2.7 3.0 3.2 3.3 Commercial 45.4 45.7 48.5 48.2 47.8 MSME 38.8 36.4 38.1 37.8 37.5 Consumer 13.6 10.2 10.4 10.8 11.4

% to total deposits Core funding 37.1 32.6 33.7 34.4 34.9 Time deposits 62.9 67.4 66.3 65.6 65.1

Source: Company, Bahana estimates

Key ratios Year to 31 Dec (%) 2014A 2015A 2016F 2017F 2018F ROAA 0.9 1.1 1.0 1.1 1.1 ROAE 10.3 13.4 13.4 13.8 14.0 NIM 3.7 3.6 3.3 3.4 3.4 Loan/deposit ratio 84.5 86.7 91.2 95.3 99.1 Loan/funding ratio 77.6 77.3 82.3 85.7 88.9 Cost efficiency ratio 67.3 61.1 62.7 63.3 63.3 CIR 89.3 87.8 86.4 85.0 84.1 Gross NPL 2.8 2.8 2.7 2.6 2.6 NPL coverage 59.2 63.2 70.2 74.2 74.5 LLR 1.6 1.8 1.9 2.0 2.0 CAR-total 14.5 13.4 15.7 14.8 14.0 CAR-tier I 11.4 10.5 12.4 11.4 10.5 Source: Company, Bahana estimates

2017 Compendium

170

BANK CENTRAL ASIA HOLD PX: IDR14,700 - TP: IDR15,100 As the No.1 gateway bank for tax amnesty, BBCA is poised to receive

the most repatriated funds from the program in 2016, strengthening its liquidity position with an LDR of 78% and making it the only bank with an LDR below 90% in 2017. Thus, we look for BBCA to cherry-pick the most optimum risk-adjusted loan demand in 2017.

Going into 2017, we forecast BBCA to be more aggressive on lending, booking loan growth closer to our industry forecast of 8.1% y-y vs 5.6% y-y in 2016 and the sector’s 6-8% y-y. We also expect BBCA’s provisioning and NPLs to normalize in 2017 and 2018 as economic growth improves. We believe BBCA’s tone towards risk will incrementally improve as NPLs in its finance subsidiary normalize.

At this stage, we continue to price BBCA at a premium to the industry given management’s prudence and the bank’s superior balance sheet. Our IDR15,100 is based on a 3x 2017F PBV. Risk: Slower economy.

Financial highlights Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Net interest income (IDRbn) 32,049 35,892 39,875 41,514 44,625 Operating income (IDRbn) 44,369 51,413 56,466 60,311 66,037 Operating profit (IDRbn) 20,741 22,657 25,124 27,915 32,078 Pre-tax profit (IDRbn) 20,741 22,657 25,124 27,915 32,078

Net profit (IDRbn) 16,486 18,019 20,079 22,309 25,636 Bahana/consensus (%) - - 101 100 103 EPS (IDR) 669 731 814 905 1,040 EPS growth (%) 15.7 9.3 11.4 11.1 14.9 P/E (x) 22.0 20.1 18.0 16.2 14.1 Equity (IDRbn) 75,488 89,369 105,504 123,622 144,697 BVPS (IDR) 3,062 3,625 4,279 5,014 5,869 P/BV (x) 4.8 4.1 3.4 2.9 2.5 DPS (IDR) 148 160 170 185 205 Div. yield (%) 1.0 1.1 1.2 1.3 1.4 Source: Company, Bahana estimates note: based on 23 November 2016 closing price

Share price performance

0

20,000

40,000

60,000

12,000

13,000

14,000

15,000

16,000

23-Nov-15 23-Jan-16 23-Mar-16 23-May-16 23-Jul-16 23-Sep-16 23-Nov-16

('000)(IDR)

Volume (RHS) BBCA IJ Px Last

(3.0) (2.4)

0.8

4.8

(0.0)

(5.6)(8)(6)(4)(2)0246

(8)(6)(4)(2)0246

ytd 1M 3M 6M 9M 12M

(%) (%)

BJTM IJ relative to JCI Source: Bloomberg Handi Huta Jaya ([email protected]) +6221 250 5081 ext. 3610 Gilang Purnama ([email protected]) +6221 250 5081 ext. 3601

Major assumptions Year to 31 Dec (%) 2014A 2015A 2016F 2017F 2018F Loan growth 11.2 12.0 5.6 8.1 8.6 Deposit growth 9.5 5.9 7.1 9.1 9.4 Non interest inc./operating inc. 27.8 30.2 29.4 31.4 32.8 Corporate tax rate 20.4 20.4 20.0 20.0 20.0 Payout ratio 22.1 21.9 21.0 20.8 20.2 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 16,200/12,375 12M high/low consensus TP (IDR) : 18,000/13,250 Majority shareholder (%) : Farindo Investment Mauritius (47.2) Shares outstanding (mn)/Free float (%) : 24,655/50.9 Mkt. cap. (IDRbn/USDmn) : 362,429/26,880 3-m avg.daily t.o.(IDRbn/USDmn) : 281.8/20.9 Bloomberg/Reuters code : BBCA IJ/BBCA.JK Source: Bloomberg, Reuters; based on 23 November 2016 closing price

2017 Compendium

171

BANK CENTRAL ASIA

Profit & loss Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FInterest income 43,793 47,105 50,523 51,364 54,339 Interest expense 11,745 11,213 10,648 9,850 9,714 Net interest income 32,049 35,892 39,875 41,514 44,625 Non-interest income 12,320 15,522 16,591 18,797 21,413 Total operating income 44,369 51,413 56,466 60,311 66,037 Operating expenses 18,427 21,799 24,594 25,941 27,941 Loan loss provisions 5,201 6,958 6,748 6,455 6,018 Operating profit 20,741 22,657 25,124 27,915 32,078 Non-operating inc./(exp.) - - - - - Pre-tax profit 20,741 22,657 25,124 27,915 32,078 Corporate tax (4,229) (4,621) (5,025) (5,583) (6,416) Minorities (26) (17) (20) (23) (26) Net profit 16,486 18,019 20,079 22,309 25,636 Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018F Loans 348,694 390,618 412,628 445,855 484,043 Cash on hand 19,578 17,849 18,742 19,679 20,663 Fixed assets 8,845 9,712 12,007 14,813 18,242 Other assets 176,039 176,193 192,884 227,306 273,287 Total assets 553,156 594,373 636,261 707,653 796,235 Customer deposits 450,155 476,820 510,604 556,908 609,488 Deposits from other banks 3,754 4,156 4,639 5,222 5,930 Borrowing and sub-debts 3,081 1,805 1,833 1,925 2,021 Other liabilities 20,440 21,967 13,406 19,679 33,776 Total liabilities 477,430 504,748 530,482 583,733 651,214 Minorities 238 256 275 298 324 Equity 75,488 89,369 105,504 123,622 144,697 Total liabilities and equity 553,156 594,373 636,261 707,653 796,235 Source: Company, Bahana estimates

Breakdown Year to 31 Dec 2014A 2015A 2016F 2017F 2018F% to earnings assets Gross loans 67.6 70.1 69.4 67.7 65.9 Government bonds 5.6 4.9 4.4 4.0 3.6 Other earnings assets 26.7 25.0 26.2 28.3 30.5

% to loan portfolio Corporate 34.6 36.2 35.7 35.2 34.6 Commercial & SME 38.5 37.4 37.2 37.0 36.7 Consumer 11.2 11.1 11.5 11.9 12.4 Mortgage 15.8 15.3 15.6 15.9 16.4

% to total deposits Core funding 74.7 75.6 77.0 78.7 80.5

Time deposits 25.3 24.4 23.0 21.3 19.5 Source: Company, Bahana estimates

Key ratios Year to 31 Dec (%) 2014A 2015A 2016F 2017F 2018F ROAA 3.1 3.1 3.3 3.3 3.4 ROAE 23.7 21.9 20.6 19.5 19.1 NIM 6.5 6.7 6.8 6.6 6.4 Loan/deposit ratio 77.5 81.9 80.8 80.1 79.4 Loan/funding ratio 76.3 80.9 79.8 79.0 78.4 Cost efficiency ratio 41.5 42.4 43.6 43.0 42.3 CIR 63.0 63.8 62.6 60.2 57.7 Gross NPL 0.6 0.7 1.1 0.9 0.8 NPL coverage 320.4 320.9 290.8 420.6 513.7 LLR 1.9 2.3 3.2 3.9 4.2 CAR-total 17.2 19.0 18.7 19.3 20.1 CAR-tier I 16.2 18.2 17.6 18.2 19.0 Source: Company, Bahana estimates

2017 Compendium

172

BANK DANAMON BUY PX: IDR3,550 - TP: IDR4,000 At this stage of the market cycle, we believe BDMN’s lending franchise

is likely to attain some stabilization due to (1) its financing business focused on autos likely bottoming out in 2016, driven by volume demand growth and peaking NPLs; and (2) efforts to rationalize branches and costs with regard to its micro lending franchise.

We expect BDMN to continue its reliance on expensive deposits and wholesale funding, causing lending growth to outstrip the funding side of the business. As such, we forecast its ROE and ROA to trend back to historical averages slowly driven by (1) declining CoF on lower industry deposit rates and (2) a peaking NPL cycle in 2017.

BDMN is a now a BUY as an economic recovery should support key metrics such as loan growth, NIM and NPLs to reverse and move towards historical averages. Our new IDR4,000 TP is based on a 1.0x 2017F P/BV, in line with other small banks. Risk: Higher funding costs.

Financial highlights Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Net interest income (IDRbn) 13,774 13,887 13,957 14,115 14,490 Operating income (IDRbn) 19,452 18,638 19,010 19,597 20,245 Operating profit (IDRbn) 4,063 3,944 4,606 5,241 5,886 Pre-tax profit (IDRbn) 3,554 3,282 3,913 4,514 5,125

Net profit (IDRbn) 2,604 2,393 2,912 3,312 3,718 Bahana/consensus (%) - - 92 93 91 EPS (IDR) 272 250 304 346 388 EPS growth (%) (35.6) (8.1) 21.7 13.8 12.2 P/E (x) 13.1 14.2 11.7 10.3 9.2 Equity (IDRbn) 32,409 33,932 36,126 38,565 41,289 BVPS (IDR) 3,381 3,540 3,769 4,023 4,308 P/BV (x) 1.0 1.0 0.9 0.9 0.8 DPS (IDR) 82 75 91 104 116 Div. yield (%) 2.3 2.1 2.6 2.9 3.3 Source: Company, Bahana estimates note: based on 23 November 2016 closing price

Share price performance

0

7,000

14,000

21,000

28,000

35,000

2,500

3,000

3,500

4,000

4,500

23-Nov-15 23-Jan-16 23-Mar-16 23-May-16 23-Jul-16 23-Sep-16 23-Nov-16

('000)(IDR)

Volume (RHS) BDMN IJ Px Last

(2.5)(6.9)

(0.9)

8.5

(15.5)

10.6

(20)(15)(10)(5)051015

(20)(15)(10)(5)05

1015

ytd 1M 3M 6M 9M 12M

(%) (%)

BDMN IJ relative to JCI Source: Bloomberg Handi Huta Jaya ([email protected]) +6221 250 5081 ext. 3610 Gilang Purnama ([email protected]) +6221 250 5081 ext. 3601

Major assumptions Year to 31 Dec (%) 2014A 2015A 2016F 2017F 2018F Loan growth 2.6 (6.8) (2.8) 0.6 1.3 Deposit growth 6.7 (1.2) (1.3) 1.7 2.7 Non interest inc./operating inc. 29.2 25.5 26.6 28.0 28.4 Corporate tax rate 24.5 24.8 23.4 24.4 25.2 Payout ratio 30.0 30.0 30.0 30.0 30.0 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 4,220/2,775 12M high/low consensus TP (IDR) : 4,850/2,500 Majority shareholder (%) : Asia Financial (67.4) Shares outstanding (mn)/Free float (%) : 9,585/32.5 Mkt. cap. (IDRbn/USDmn) : 34,025/2,524 3-m avg.daily t.o.(IDRbn/USDmn) : 8.6/0.6 Bloomberg/Reuters code : BDMN IJ/BDMN.JK Source: Bloomberg, Reuters; based on 23 November 2016 closing price

2017 Compendium

173

BANK DANAMON

Profit & loss Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FInterest income 22,750 22,421 22,046 21,702 21,827 Interest expense 8,976 8,534 8,088 7,588 7,338 Net interest income 13,774 13,887 13,957 14,115 14,490Non-interest income 5,678 4,751 5,052 5,482 5,755 Total operating income 19,452 18,638 19,010 19,597 20,245Operating expenses 11,402 9,612 9,553 9,728 9,926 Loan loss provisions 3,986 5,082 4,851 4,628 4,433 Operating profit 4,063 3,944 4,606 5,241 5,886Non-operating inc./(exp.) (510) (662) (694) (727) (761) Pre-tax profit 3,554 3,282 3,913 4,514 5,125Corporate tax (871) (812) (914) (1,102) (1,291) Minorities (79) (76) (87) (100) (115) Net profit 2,604 2,393 2,912 3,312 3,718Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018F Loans 137,478 128,095 124,494 125,204 126,827 Cash on hand 2,856 2,728 3,137 3,608 4,149 Fixed assets 5,137 5,219 6,002 6,902 7,937 Other assets 50,349 52,016 50,643 52,950 56,401 Total assets 195,821 188,057 184,276 188,663 195,315 Customer deposits 116,495 115,142 113,624 115,574 118,687 Deposits from other banks 2,429 1,827 2,009 2,209 2,430 Borrowing and sub-debts 34,824 28,037 27,521 27,102 26,775 Other liabilities 9,426 8,837 4,653 4,819 5,659 Total liabilities 163,174 153,843 147,806 149,704 153,551 Minorities 238 283 344 394 475 Equity 32,409 33,932 36,126 38,565 41,289 Total liabilities and equity 195,821 188,057 184,276 188,663 195,315 Source: Company, Bahana estimates

Breakdown Year to 31 Dec 2014A 2015A 2016F 2017F 2018F% to earnings assets Gross loans 73.6 72.1 72.4 72.2 72.0 Government bonds 3.5 3.9 4.0 3.9 3.8 Other earnings assets 22.9 24.1 23.6 23.9 24.2

% to loan portfolio Corporate 12.8 13.8 14.9 15.6 16.2 Commercial 31.3 33.0 32.0 30.1 28.1 Retail 5.0 5.4 5.6 5.6 5.5 Mass market 50.9 47.8 47.5 48.8 50.2

% to total deposits Core funding 48.7 42.3 42.4 42.3 42.0 Time deposits 51.3 57.7 57.6 57.7 58.0

Source: Company, Bahana estimates

Key ratios Year to 31 Dec (%) 2014A 2015A 2016F 2017F 2018F ROAA 1.3 1.2 1.6 1.8 1.9 ROAE 8.2 7.2 8.3 8.9 9.3 NIM 8.4 8.3 8.1 8.2 8.3 Loan/deposit ratio 118.0 111.2 109.6 108.3 106.9 Loan/funding ratio 89.4 88.3 87.0 0.0 0.0 Cost efficiency ratio 58.6 51.6 50.3 49.6 49.0 CIR 85.7 85.5 83.0 80.7 78.7 Gross NPL 2.4 3.0 3.1 3.0 3.0 NPL coverage 86.7 86.3 99.0 90.2 59.4 LLR 2.0 2.6 3.1 2.7 1.8 CAR-total 17.9 19.7 20.0 20.8 21.9 CAR-tier I 17.3 18.8 19.0 19.9 20.9 Source: Company, Bahana estimates

2017 Compendium

174

BANK MANDIRI BUY PX: IDR10,900 - TP: IDR12,350 In 2017, BMRI, Indonesia’s largest bank by assets, should grow in line

with industry growth with a slight edge in the corporate and consumer segments. BMRI continues to compete for government and SOE institutional businesses, in particular payroll management, which would then be cross-sold against its consumer banking products ranging from credit cards to autos and mortgages.

We forecast 11.3% y-y loan growth and a 3.6% NPL in 2017, reflecting improvements from 10.1% y-y loan growth and a 3.8% NPL in 2016. Provisioning should normalize post 2016 as kitchen-sinking ends and micro segment NPLs peak. We are already below consensus on our 2017 net profit forecast of IDR17tn for BMRI.

Also in line is our TP, set at a 1.8x 2017F PBV vs. a 16% 2017F ROE, resulting in an IDR12,350 valuation with 13.3% upside potential. Risks: Government policies, high low-margin infra-project financing.

Financial highlights Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Net interest income (IDRbn) 39,132 45,363 49,710 54,867 60,970 Operating income (IDRbn) 56,941 67,316 71,122 79,224 88,206 Operating profit (IDRbn) 25,978 26,339 15,969 22,958 27,589 Pre-tax profit (IDRbn) 26,008 26,369 16,003 22,995 27,630

Net profit (IDRbn) 19,872 20,335 11,842 17,267 20,778 Bahana/consensus (%) - - 69 80 89 EPS (IDR) 852 871 508 740 890 EPS growth (%) 9.2 2.3 (41.8) 45.8 20.3 P/E (x) 12.8 12.5 21.5 14.7 12.2 Equity (IDRbn) 102,658 117,070 148,389 163,190 180,854 BVPS (IDR) 4,400 5,017 6,360 6,994 7,751 P/BV (x) 2.5 2.2 1.7 1.6 1.4 DPS (IDR) 213 261 102 130 156 Div. yield (%) 2.0 2.4 0.9 1.2 1.4 Source: Company, Bahana estimates note: based on 23 November 2016 closing price

Share price performance

0

20,000

40,000

60,000

80,000

100,000

8,000

9,000

10,000

11,000

12,000

23-Nov-15 23-Jan-16 23-Mar-16 23-May-16 23-Jul-16 23-Sep-16 23-Nov-16

('000)(IDR)

Volume (RHS) BMRI IJ Px Last

4.4

1.2 0.1

12.2

4.9

10.6

0

5

10

15

0

5

10

15

ytd 1M 3M 6M 9M 12M

(%) (%)

BMRI IJ relative to JCI Source: Bloomberg Handi Huta Jaya ([email protected]) +6221 250 5081 ext. 3610 Gilang Purnama ([email protected]) +6221 250 5081 ext. 3601

Major assumptions Year to 31 Dec (%) 2014A 2015A 2016F 2017F 2018F Loan growth 12.2 12.4 10.1 11.3 12.3 Deposit growth 14.4 6.3 8.6 9.4 10.4 Non interest inc./operating inc. 31.3 32.6 30.1 30.7 30.9 Corporate tax rate 20.6 19.8 20.0 20.0 20.0 Payout ratio 25.0 30.0 20.0 17.5 17.5 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 11,950/8,450 12M high/low consensus TP (IDR) : 13,700/8,896 Majority shareholder (%) : Republic of Indonesia (60.0) Shares outstanding (mn)/Free float (%) : 23,333/40.0 Mkt. cap. (IDRbn/USDmn) : 254,333/18,863 3-m avg.daily t.o.(IDRbn/USDmn) : 229.7/17.4 Bloomberg/Reuters code : BMRI IJ/BMRI.JK Source: Bloomberg, Reuters; based on 23 November 2016 closing price

2017 Compendium

175

BANK MANDIRI

Profit & loss Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FInterest income 62,638 71,570 72,763 77,677 84,227 Interest expense 23,506 26,207 23,054 22,810 23,256 Net interest income 39,132 45,363 49,710 54,867 60,970 Non-interest income 17,809 21,952 21,412 24,357 27,236 Total operating income 56,941 67,316 71,122 79,224 88,206 Operating expenses 25,233 29,151 33,396 38,011 43,389 Loan loss provisions 5,730 11,826 21,756 18,255 17,228 Operating profit 25,978 26,339 15,969 22,958 27,589 Non-operating inc./(exp.) 30 30 34 37 41 Pre-tax profit 26,008 26,369 16,003 22,995 27,630 Corporate tax (5,353) (5,217) (3,201) (4,599) (5,526) Minorities (783) (817) (960) (1,129) (1,326) Net profit 19,872 20,335 11,842 17,267 20,778 Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018F Loans 529,190 594,854 654,646 728,653 818,360 Cash on hand 20,705 25,109 28,875 33,207 38,188 Fixed assets 15,487 17,470 46,024 52,927 60,866 Other assets 289,658 272,631 251,040 252,390 260,809 Total assets 855,040 910,063 980,586 1,067,177 1,178,224 Customer deposits 636,382 676,387 734,587 803,511 886,809 Deposits from other banks 17,772 12,952 14,894 17,129 19,698 Borrowing and sub-debts 51,136 58,188 59,472 64,974 64,367 Other liabilities 44,905 43,045 20,245 14,698 22,025 Total liabilities 750,195 790,572 829,198 900,312 992,899 Minorities 2,187 2,422 2,998 3,675 4,471 Equity 102,658 117,070 148,389 163,190 180,854 Total liabilities and equity 855,040 910,063 980,586 1,067,177 1,178,224 Source: Company, Bahana estimates

Breakdown Year to 31 Dec 2014A 2015A 2016F 2017F 2018F% to earnings assets Gross loans 66.7 70.6 72.1 70.2 68.6 Government bonds 10.7 12.2 10.4 8.3 6.5 Other earnings assets 22.6 17.3 17.5 21.6 24.9

% to loan portfolio Corporate 36.9 36.9 38.1 38.9 39.3 Commercial 29.5 30.2 28.9 28.1 27.6 Micro and small 19.8 19.3 19.1 18.9 18.8 Consumer 13.8 13.6 13.9 14.2 14.4

% to total deposits Core funding 56.5 62.3 63.7 64.8 65.3 Time deposits 43.5 37.7 36.3 35.2 34.7

Source: Company, Bahana estimates

Key ratios Year to 31 Dec (%) 2014A 2015A 2016F 2017F 2018F ROAA 2.5 2.3 1.3 1.7 1.9 ROAE 20.9 18.5 8.9 11.1 12.1 NIM 5.9 5.9 6.0 5.9 5.8 Loan/deposit ratio 83.2 87.9 89.1 90.7 92.3 Loan/funding ratio 75.0 79.6 80.9 82.3 84.3 Cost efficiency ratio 44.3 43.3 47.0 48.0 49.2 CIR 67.7 71.8 83.0 77.5 75.2 Gross NPL 2.2 2.6 3.8 3.6 3.2 NPL coverage 155.6 144.1 152.9 186.7 186.7 LLR 3.3 3.7 5.8 6.7 7.0 CAR-total 16.1 18.0 10.5 9.9 10.9 CAR-tier I 14.8 15.7 9.3 8.6 9.6 Source: Company, Bahana estimates

2017 Compendium

176

BANK NEGARA INDONESIA BUY PX: IDR5,125 - TP: IDR7,000 BBNI, the smallest of the four big banks by market cap, should see

two key initiatives from its new management to continue driving outperformance against the industry to end-2017: (1) Refocusing on SOE commercial banking, and (2) Remodeling lending model for its SME business. In 3Q16, both divisions generated strong growth, with 32% y-y for corporate and 30% y-y for SME loans.

The initiatives have also grown BBNI’s funding franchise. Despite tilting to deposits as we expect the CASA ratio to drift from 61% in 2015 to 62-63% in 2016-17, CoF should remain flat at 3.1% in 2015 vs. 2.9-2.6% in 2016-17. In 2017, active loan restructuring should see high provisioning.

At a 1.0x 2017F PBV, we think BBNI offers one of the most attractive risk/reward profiles in the sector, and we have an IDR7,000 TP on a 1.4x 2017F PBV. Risk: momentum loss as strategies run their course and BBNI’s outperformance realigns towards the industry average.

Financial highlights Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Net interest income (IDRbn) 22,376 25,560 30,151 33,025 35,379 Operating income (IDRbn) 35,246 35,298 40,847 45,009 48,606 Operating profit (IDRbn) 12,967 11,057 13,250 15,530 18,070 Pre-tax profit (IDRbn) 13,524 11,466 13,701 16,027 18,618

Net profit (IDRbn) 10,783 9,067 10,876 12,724 14,782 Bahana/consensus (%) - - 103 101 100 EPS (IDR) 578 486 583 682 793 EPS growth (%) 19.1 (15.9) 20.0 17.0 16.2 P/E (x) 8.9 10.5 8.8 7.5 6.5 Equity (IDRbn) 56,889 74,158 82,767 93,316 105,871 BVPS (IDR) 3,051 3,976 4,438 5,004 5,677 P/BV (x) 1.7 1.3 1.2 1.0 0.9 DPS (IDR) 145 122 117 119 139 Div. yield (%) 2.8 2.4 2.3 2.3 2.7 Source: Company, Bahana estimates note: based on 23 November 2016 closing price

Share price performance

0

20,000

40,000

60,000

80,000

100,000

120,000

4,000

4,500

5,000

5,500

6,000

23-Nov-15 23-Jan-16 23-Mar-16 23-May-16 23-Jul-16 23-Sep-16 23-Nov-16

('000)(IDR)

Volume (RHS) BBNI IJ Px Last

(10.8)

(2.1)

(8.0)

2.4

(8.1)

(15.2)(20)

(15)

(10)

(5)

0

5

(20)

(15)

(10)

(5)

0

5

ytd 1M 3M 6M 9M 12M

(%) (%)

BBNI IJ relative to JCI Source: Bloomberg Handi Huta Jaya ([email protected]) +6221 250 5081 ext. 3610 Gilang Purnama ([email protected]) +6221 250 5081 ext. 3601

Major assumptions Year to 31 Dec (%) 2014A 2015A 2016F 2017F 2018F Loan growth 10.7 17.4 17.3 12.9 11.9 Deposit growth 7.5 18.0 12.0 11.1 10.2 Non interest inc./operating inc. 36.5 27.6 26.2 26.6 27.2 Corporate tax rate 19.9 20.3 20.0 20.0 20.0 Payout ratio 25.0 25.0 20.0 17.5 17.5 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 5,975/4,270 12M high/low consensus TP (IDR) : 7,200/4,469 Majority shareholder (%) : Republic of Indonhpesia (60.0) Shares outstanding (mn)/Free float (%) : 18,649/39.7 Mkt. cap. (IDRbn/USDmn) : 95,574/7,089 3-m avg.daily t.o.(IDRbn/USDmn) : 135.5/10.0 Bloomberg/Reuters code : BBNI IJ/BBNI.JK Source: Bloomberg, Reuters; based on 23 November 2016 closing price

2017 Compendium

177

BANK NEGARA INDONESIA

Profit & loss Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FInterest income 33,365 36,895 43,778 47,120 49,421 Interest expense 10,989 11,335 13,627 14,094 14,043 Net interest income 22,376 25,560 30,151 33,025 35,379 Non-interest income 12,870 9,738 10,696 11,984 13,228 Total operating income 35,246 35,298 40,847 45,009 48,606 Operating expenses 18,578 16,840 20,246 22,667 23,857 Loan loss provisions 3,702 7,401 7,351 6,813 6,679 Operating profit 12,967 11,057 13,250 15,530 18,070 Non-operating inc./(exp.) 557 409 451 497 548 Pre-tax profit 13,524 11,466 13,701 16,027 18,618 Corporate tax (2,695) (2,326) (2,740) (3,205) (3,724) Minorities (47) (74) (85) (98) (112) Net profit 10,783 9,067 10,876 12,724 14,782 Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018F Loans 277,360 325,748 382,247 431,390 482,750 Cash on hand 11,436 12,890 13,535 14,212 14,922 Fixed assets 12,510 26,349 30,301 34,846 40,073 Other assets 115,268 143,609 165,985 141,105 176,511 Total assets 416,574 508,595 592,068 621,553 714,256 Customer deposits 313,893 370,421 414,854 461,004 507,917 Deposits from other banks 4,015 5,163 5,350 5,975 6,730 Borrowing and sub-debts 26,154 39,938 37,824 38,957 40,150 Other liabilities 11,415 14,636 46,992 18,021 49,308 Total liabilities 355,478 430,157 505,020 523,957 604,105 Minorities 4,207 4,280 4,280 4,280 4,280 Equity 56,889 74,158 82,767 93,316 105,871 Total liabilities and equity 416,574 508,595 592,068 621,553 714,256 Source: Company, Bahana estimates

Breakdown Year to 31 Dec 2014A 2015A 2016F 2017F 2018F% to earnings assets Gross loans 69.9 69.3 67.4 72.6 70.6 Government bonds 11.0 10.0 8.4 7.7 6.4 Other earnings assets 19.1 20.7 24.2 19.8 23.0

% to loan portfolio Corporate 43.2 42.3 42.7 42.9 43.2 Commercial & SME 29.1 28.6 29.3 29.8 30.0 Consumer 18.8 17.7 16.9 16.5 16.2 Others 9.0 11.4 11.1 10.8 10.6

% to total deposits Core funding 65.8 62.2 62.5 63.3 63.5 Time deposits 34.2 37.8 37.5 36.7 36.5

Source: Company, Bahana estimates

Key ratios Year to 31 Dec (%) 2014A 2015A 2016F 2017F 2018F ROAA 2.7 2.0 2.0 2.1 2.2 ROAE 20.6 13.8 13.9 14.5 14.8 NIM 6.3 6.4 5.8 5.7 5.5 Loan/deposit ratio 88.4 87.9 92.1 93.6 95.0 Loan/funding ratio 80.6 78.4 83.5 85.3 87.0 Cost efficiency ratio 52.7 47.7 49.6 50.4 49.1 CIR 72.0 76.3 75.7 73.7 71.2 Gross NPL 2.0 2.7 3.0 2.8 2.7 NPL coverage 123.4 134.1 144.3 162.1 169.5 LLR 2.4 3.6 4.3 4.5 4.5 CAR-total 16.3 16.9 13.6 13.1 12.4 CAR-tier I 15.2 13.8 10.6 10.4 10.0 Source: Company, Bahana estimates

2017 Compendium

178

BANK PEMB. DAERAH JAWA BARAT DAN BANTEN REDUCE PX: IDR1,495 - TP: IDR1,200 BJBR, as the biggest regional bank, continues to experience difficulties

with its loan portfolio outside the civil servant payroll segment. First, micro NPLs reached 25% of the portfolio. Then the mortgage segment saw 6% NPLs. Currently, BJBR is allocating loans toward the commercial side.

Going into 2017, we are cautiously optimistic as the West Java economic activities are doing well, helped by the construction sector which is driven by government infrastructure projects.

We forecast higher provisioning with gross NPLs maintained at 3% of total loans, but could revisit our forecasts if BJBR’s corporate loan segment does not generate NPLs by 1H17. BJBR is a REDUCE as the recent rally seems to have priced in recent improvements in micro NPLs and the corporate loan focus. Our IDR1,200 TP values BJBR at a 1.2x 2017F PBV. Risk: Improvement in West Java economy and NPLs.

Financial highlights Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Net interest income (IDRbn) 4,462 4,976 6,385 7,068 7,847 Operating income (IDRbn) 6,021 6,987 9,147 9,811 10,634 Operating profit (IDRbn) 1,327 1,736 2,045 2,255 2,529 Pre-tax profit (IDRbn) 1,423 1,766 2,077 2,289 2,565

Net profit (IDRbn) 1,108 1,381 1,609 1,773 1,987 Bahana/consensus (%) - - 100 99 100 EPS (IDR) 114 142 166 183 205 EPS growth (%) (19.8) 24.8 16.8 10.2 12.1 P/E (x) 13.1 10.5 9.0 8.2 7.3 Equity (IDRbn) 7,041 7,713 8,500 9,387 10,399 BVPS (IDR) 726 795 877 968 1,072 P/BV (x) 2.1 1.9 1.7 1.5 1.4 DPS (IDR) 72 85 91 101 113 Div. yield (%) 4.8 5.7 6.1 6.7 7.5 Source: Company, Bahana estimates note: based on 23 November 2016 closing price

Share price performance

020,00040,00060,00080,000100,000120,000140,000

700

900

1,100

1,300

1,500

1,700

23-Nov-15 23-Jan-16 23-Mar-16 23-May-16 23-Jul-16 23-Sep-16 23-Nov-16

('000)(IDR)

Volume (RHS) BJBR IJ Px Last

84.5

(6.9) (3.8)

51.6 56.0

87.4

(20)

0

20

40

60

80

100

(20)

0

20

40

60

80

100

ytd 1M 3M 6M 9M 12M

(%) (%)

BJBR IJ relative to JCI Source: Bloomberg Handi Huta Jaya ([email protected]) +6221 250 5081 ext. 3610 Gilang Purnama ([email protected]) +6221 250 5081 ext. 3601

Major assumptions Year to 31 Dec (%) 2014A 2015A 2016F 2017F 2018F Loan growth 10.4 12.1 13.2 14.1 14.4 Deposit growth 15.5 17.1 12.9 12.7 13.2 Non interest inc./operating inc. 25.9 28.8 30.2 28.0 26.2 Corporate tax rate 22.2 21.8 22.6 22.6 22.6 Payout ratio 62.9 59.7 55.0 55.0 55.0 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 1,760/705 12M high/low consensus TP (IDR) : 2,050/1,200 Majority shareholder (%) : West Java Provincial Govt. (38.3) Shares outstanding (mn)/Free float (%) : 9,696/25.0 Mkt. cap. (IDRbn/USDmn) : 14,496/1,075 3-m avg.daily t.o.(IDRbn/USDmn) : 21.6/1.6 Bloomberg/Reuters code : BJBR IJ/BJBR.JK Source: Bloomberg, Reuters; based on 23 November 2016 closing price

2017 Compendium

179

BANK PEMB. DAERAH JAWA BARAT DAN BANTEN

Profit & loss Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FInterest income 8,792 10,084 11,081 12,120 13,168 Interest expense 4,330 5,108 4,696 5,052 5,321 Net interest income 4,462 4,976 6,385 7,068 7,847 Non-interest income 1,559 2,011 2,762 2,744 2,786 Total operating income 6,021 6,987 9,147 9,811 10,634 Operating expenses 3,146 3,848 4,569 5,097 5,692 Loan loss provisions 1,547 1,404 2,533 2,460 2,412 Operating profit 1,327 1,736 2,045 2,255 2,529 Non-operating inc./(exp.) 96 31 32 34 36 Pre-tax profit 1,423 1,766 2,077 2,289 2,565 Corporate tax (315) (385) (468) (516) (579)Minorities (4) (4) - - -Net profit 1,104 1,377 1,609 1,773 1,987 Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018F Loans 53,969 60,488 68,451 78,091 89,342 Cash on hand 2,768 2,403 2,763 3,177 3,654 Fixed assets 1,799 1,865 2,144 2,466 2,836 Other assets 17,326 23,943 27,812 32,869 39,796 Total assets 75,861 88,697 101,171 116,604 135,628 Customer deposits 57,741 67,606 76,299 85,982 97,313 Deposits from other banks 3,924 4,088 3,706 4,150 4,648 Borrowing and sub-debts 4,260 5,835 5,807 6,464 7,217 Other liabilities 2,855 3,412 6,815 10,576 16,006 Total liabilities 68,780 80,940 92,627 107,172 125,184 Minorities 41 44 44 44 44 Equity 7,041 7,713 8,500 9,387 10,399 Total liabilities and equity 75,861 88,697 101,171 116,604 135,628 Source: Company, Bahana estimates

Breakdown Year to 31 Dec 2014A 2015A 2016F 2017F 2018F% to earnings assets Gross loans 75.2 71.5 70.9 70.3 69.2 Government bonds 0.0 0.0 0.0 0.0 0.0 Other earnings assets 24.8 28.5 29.1 29.7 30.8

% to loan portfolio Consumer 68.0 69.1 69.9 70.4 70.6 Commercial 13.9 16.7 17.1 16.9 16.9 Micro 9.1 6.0 5.4 5.3 5.2 Others (incl. mortgage) 9.0 8.2 7.6 7.5 7.3

% to total deposits Core funding 60.4 50.4 51.0 51.5 51.7 Time deposits 39.6 49.6 49.0 48.5 48.3

Source: Company, Bahana estimates

Key ratios Year to 31 Dec (%) 2014A 2015A 2016F 2017F 2018F ROAA 1.5 1.7 1.7 1.6 1.6 ROAE 16.1 18.7 19.8 19.8 20.1 NIM 6.8 6.3 6.9 6.7 6.5 Loan/deposit ratio 93.5 89.5 89.7 90.8 91.8 Loan/funding ratio 81.9 78.0 79.8 80.8 81.8 Cost efficiency ratio 52.2 55.0 49.9 51.9 53.5 CIR 87.2 85.6 85.2 84.8 84.1 Gross NPL 4.2 2.9 3.0 3.0 2.9 NPL coverage 75.4 75.9 73.5 73.9 73.6 LLR 3.1 2.2 2.2 2.2 2.2 CAR-total 16.1 16.2 16.3 14.9 13.3 CAR-tier I 15.1 15.2 15.3 13.9 12.3 Source: Company, Bahana estimates

2017 Compendium

180

BANK PEMBANGUNAN DAERAH JAWA TIMUR HOLD PX: IDR488 - TP: IDR475 BJTM, the second-biggest regional bank by market cap, has so far

failed to retain NPLs whenever it tries to grow outside its civil servant payroll loan segment, in particular micro.

Thus, we expect higher 2017-18 provisions, holding net profit growth to low-single-digit levels. In 2016, we forecast BJTM to deliver 16% y-y net profit growth, before normalizing at 6% y-y in 2017 as its strategy to dispose of excess savings through lower deposit rates and micro expansion continues to cause balance sheet inefficiencies. The LDR has risen from 70% in 2009 at its IPO to 85% currently.

BJTM remains a HOLD on falling net profit growth momentum, as low hanging fruit from a higher LDR base effect runs out. We set our TP at IDR475, reflecting a 1.0x 2017F PBV. Tactically, we think BJTM is worth a trade during the Mar-Apr dividend period due to the IDR50/share dividend or 2017F yield of 10.2%. Downside risk to our call: Lower-than-expected provisions.

Financial highlights Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Net interest income (IDRbn) 2,881 3,113 3,394 3,576 3,753 Operating income (IDRbn) 3,254 3,558 3,890 4,134 4,383 Operating profit (IDRbn) 1,351 1,208 1,347 1,430 1,533 Pre-tax profit (IDRbn) 1,376 1,261 1,363 1,447 1,550

Net profit (IDRbn) 939 885 1,022 1,085 1,162 Bahana/consensus (%) - - 99 94 101 EPS (IDR) 63 59 69 73 78 EPS growth (%) 13.9 (5.8) 15.6 6.2 7.1 P/E (x) 7.8 8.2 7.1 6.7 6.3 Equity (IDRbn) 6,044 6,295 6,676 7,088 7,509 BVPS (IDR) 405 422 448 475 503 P/BV (x) 1.2 1.2 1.1 1.0 1.0 DPS (IDR) 42 43 45 50 55 Div. yield (%) 8.6 8.8 9.3 10.2 11.2 Source: Company, Bahana estimates note: based on 23 November 2016 closing price

Share price performance

0

100,000

200,000

300,000

400,000

500,000

600,000

400

450

500

550

600

650

700

23-Nov-15 23-Jan-16 23-Mar-16 23-May-16 23-Jul-16 23-Sep-16 23-Nov-16

('000)(IDR)

Volume (RHS) BJTM IJ Px Last

(1.8)

(8.2)

(16.9)

(0.3)

8.9

0.4

(20)(15)(10)(5)051015

(20)(15)(10)(5)05

1015

ytd 1M 3M 6M 9M 12M

(%) (%)

BJTM IJ relative to JCI Source: Bloomberg Handi Huta Jaya ([email protected]) +6221 250 5081 ext. 3610 Gilang Purnama ([email protected]) +6221 250 5081 ext. 3601

Major assumptions Year to 31 Dec (%) 2014A 2015A 2016F 2017F 2018F Loan growth 18.6 8.5 2.4 2.8 3.3 Deposit growth 16.5 13.2 (0.4) 2.6 3.2 Non interest inc./operating inc. 11.5 12.5 12.7 13.5 14.4 Corporate tax rate 31.7 29.9 25.0 25.0 25.0 Payout ratio 66.5 72.5 65.9 68.3 70.1 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 720/404 12M high/low consensus TP (IDR) : 550/470 Majority shareholder (%) : East Java Provincial Govt. (51.4) Shares outstanding (mn)/Free float (%) : 14,945/20.1 Mkt. cap. (IDRbn/USDmn) : 7,293/541 3-m avg.daily t.o.(IDRbn/USDmn) : 18.2/1.4 Bloomberg/Reuters code : BJTM IJ/BJTM.JK Source: Bloomberg, Reuters; based on 23 November 2016 closing price

2017 Compendium

181

BANK PEMBANGUNAN DAERAH JAWA TIMUR

Profit & loss Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FInterest income 4,084 4,611 4,721 4,877 5,041 Interest expense 1,203 1,498 1,326 1,301 1,288 Net interest income 2,881 3,113 3,394 3,576 3,753 Non-interest income 373 445 496 559 630 Total operating income 3,254 3,558 3,890 4,134 4,383 Operating expenses 1,395 1,750 1,859 2,000 2,154 Loan loss provisions 507 601 684 704 696 Operating profit 1,351 1,208 1,347 1,430 1,533 Non-operating inc./(exp.) 24 54 16 16 17 Pre-tax profit 1,376 1,261 1,363 1,447 1,550 Corporate tax (437) (377) (341) (362) (387) Minorities - - - - - Net profit 939 885 1,022 1,085 1,162 Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018F Loans 26,195 28,412 29,080 29,885 30,869

Cash on hand 1,889 2,112 2,429 2,793 3,212

Fixed assets 622 682 885 885 885

Other assets 9,293 11,598 12,735 13,212 14,038

Total assets 37,998 42,804 45,129 46,775 49,005

Customer deposits 30,270 34,264 34,141 35,019 36,126

Deposits from other banks 612 853 870 888 906

Borrowing and sub-debts 317 490 477 477 477

Other liabilities 755 901 1,205 1,295 1,384

Total liabilities 31,954 36,508 36,694 37,679 38,893 Minorities - - - - -

Equity 6,044 6,295 6,676 7,088 7,509

Total liabilities and equity 37,998 42,804 43,370 44,767 46,402 Source: Company, Bahana estimates

Breakdown Year to 31 Dec 2014A 2015A 2016F 2017F 2018F% to earnings assets Gross loans 73.2 70.4 69.3 68.0 68.2 Government bonds 2.0 3.0 4.0 4.0 4.0 Other earnings assets 24.8 26.6 26.7 28.0 27.8

% to loan portfolio Consumer 63.8 64.0 63.8 63.3 62.5 SME 16.4 15.9 16.0 16.1 16.0 Commercial 19.8 20.1 20.2 20.6 21.5 Others 0.0 0.0 0.0 0.0 0.0

% to total deposits Core funding 74.8 79.9 80.6 80.9 81.2 Time deposits 25.2 20.1 19.4 19.1 18.8

Source: Company, Bahana estimates

Key ratios Year to 31 Dec (%) 2014A 2015A 2016F 2017F 2018F ROAA 2.6 2.2 2.3 2.4 2.4 ROAE 16.0 14.3 15.8 15.8 15.9 NIM 6.9 6.4 6.5 6.5 6.3 Loan/deposit ratio 86.5 82.9 85.2 85.3 85.4 Loan/funding ratio 84.0 79.8 81.9 82.1 82.3 Cost efficiency ratio 42.9 49.2 47.8 48.4 49.1 CIR 69.7 76.1 74.2 73.7 73.0 Gross NPL 3.3 4.3 4.5 4.4 4.3 NPL coverage 75.0 81.1 83.4 87.9 86.5 LLR 2.5 3.5 3.7 3.9 3.7 CAR-total 22.2 21.2 20.9 20.1 19.9 CAR-tier I 21.2 20.2 19.8 19.1 18.9 Source: Company, Bahana estimates

2017 Compendium

182

BANK RAKYAT INDONESIA BUY PX: IDR11,500 - TP: IDR14,900 In 2017, we estimate that BBRI will be the biggest bank by assets, and

we believe this would be attributable to its unique micro banking franchise to allow for superior profit sustainability.

On our calculation, the stock is already factoring in a 17% yield for KUR in 2017 and a 1% decline in micro-loan yields per annum from 22% in 2016, to 21% in 2017 and 20% in 2018. Even with sustained provisioning at about IDR13tn (almost double the past-3-year average), BBRI should continue to generate a >7.5% NIM and >20% ROE into 2018. This shows the profit capacity of BBRI, in our view.

The tactical risk of long BBRI is its management change due 1Q17. However, we already build in IDR13tn of flat provisioning in 2017-18, when other banks would be seeing lower provisions on higher economic growth. We have a IDR14,900 TP and would accumulate up to a 2.4x 2017F PBV. Risk: Falling profitability due to KUR.

Financial highlights Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Net interest income (IDRbn) 51,490 58,279 66,212 72,424 79,750 Operating income (IDRbn) 60,789 70,688 80,091 88,055 97,049 Operating profit (IDRbn) 28,309 30,511 30,579 33,648 37,363 Pre-tax profit (IDRbn) 30,804 32,494 32,585 35,678 39,418

Net profit (IDRbn) 24,215 25,398 25,404 27,816 30,733 Bahana/consensus (%) - - 99 96 94 EPS (IDR) 982 1,030 1,030 1,128 1,246 EPS growth (%) 13.4 4.9 0.0 9.5 10.5 P/E (x) 11.7 11.2 11.2 10.2 9.2 Equity (IDRbn) 97,531 112,833 130,549 150,744 173,132 BVPS (IDR) 3,954 4,574 5,292 6,111 7,018 P/BV (x) 2.9 2.5 2.2 1.9 1.6 DPS (IDR) 295 312 309 338 374 Div. yield (%) 2.6 2.7 2.7 2.9 3.2 Source: Company, Bahana estimates note: based on 23 November 2016 closing price

Share price performance

0

20,000

40,000

60,000

80,000

100,000

9,000

10,000

11,000

12,000

13,000

23-Nov-15 23-Jan-16 23-Mar-16 23-May-16 23-Jul-16 23-Sep-16 23-Nov-16

('000)(IDR)

Volume (RHS) BBRI IJ Px Last

(12.8)

(1.9)

1.5 2.3

(4.1)

(10.6)

(15)

(10)

(5)

0

5

(15)

(10)

(5)

0

5

ytd 1M 3M 6M 9M 12M

(%) (%)

BBRI IJ relative to JCI Source: Bloomberg Handi Huta Jaya ([email protected]) +6221 250 5081 ext. 3610 Gilang Purnama ([email protected]) +6221 250 5081 ext. 3601

Major assumptions Year to 31 Dec (%) 2014A 2015A 2016F 2017F 2018F Loan growth 13.9 13.8 14.1 14.3 14.5 Deposit growth 23.4 7.5 12.5 12.7 13.1 Non interest inc./operating inc. 15.3 17.6 17.3 17.8 17.8 Corporate tax rate 21.4 21.8 22.0 22.0 22.0 Payout ratio 30.0 30.3 30.0 30.0 30.0 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 12,975/9,525 12M high/low consensus TP (IDR) : 15,000/8,221 Majority shareholder (%) : Republic of Indonesia (56.8) Shares outstanding (mn)/Free float (%) : 24,669/43.2 Mkt. cap. (IDRbn/USDmn) : 283,695/21,041 3-m avg.daily t.o.(IDRbn/USDmn) : 265.5/19.7 Bloomberg/Reuters code : BBRI IJ/BBRI.JK Source: Bloomberg, Reuters; based on 23 November 2016 closing price

2017 Compendium

183

BANK RAKYAT INDONESIA

Profit & loss Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FInterest income 75,170 85,435 93,298 101,037 111,061

Interest expense 23,681 27,156 27,085 28,613 31,311

Net interest income 51,490 58,279 66,212 72,424 79,750

Non-interest income 9,299 12,409 13,879 15,631 17,299

Total operating income 60,789 70,688 80,091 88,055 97,049 Operating expenses 26,760 31,285 35,901 40,893 46,392

Loan loss provisions 5,719 8,891 13,611 13,514 13,294

Operating profit 28,309 30,511 30,579 33,648 37,363 Non-operating inc./(exp.) 2,495 1,983 2,006 2,030 2,055

Pre-tax profit 30,804 32,494 32,585 35,678 39,418 Corporate tax (6,578) (7,083) (7,169) (7,849) (8,672)

Minorities (12) (13) (13) (13) (13)

Net profit 24,215 25,398 25,404 27,816 30,733 Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018F Loans 510,428 580,753 662,903 757,952 867,947

Cash on hand 22,469 28,772 30,210 31,721 33,307

Fixed assets 11,583 14,687 19,828 26,768 36,137

Other assets 257,504 254,214 251,767 269,434 286,847

Total assets 801,984 878,426 964,708 1,085,875 1,224,237

Customer deposits 622,322 668,995 752,512 848,156 958,922

Deposits from other banks 8,655 11,165 12,902 14,915 17,248

Borrowing and sub-debts 25,064 35,537 37,324 39,202 41,176

Other liabilities 48,237 49,602 22,921 32,545 33,437

Total liabilities 704,278 765,299 833,856 934,818 1,050,783 Minorities 175 294 303 313 322

Equity 97,531 112,833 130,549 150,744 173,132

Total liabilities and equity 801,984 878,426 964,708 1,085,875 1,224,237 Source: Company, Bahana estimates

Breakdown Year to 31 Dec 2014A 2015A 2016F 2017F 2018F% to earnings assets Gross loans 67.3 70.3 71.5 72.4 73.6 Government bonds 0.6 0.5 0.4 0.4 0.3 Other earnings assets 32.2 29.3 28.1 27.2 26.1

% to loan portfolio Corporate 25.6 27.9 28.9 29.8 30.9 SME 26.5 24.3 23.5 22.8 22.1 Consumer 17.2 15.8 15.4 14.9 14.5 Micro 30.7 32.0 32.2 32.4 32.6

% to total deposits Core funding 53.2 58.7 59.6 60.5 61.5 Time deposits 46.8 41.3 40.4 39.5 38.5

Source: Company, Bahana estimates

Key ratios Year to 31 Dec (%) 2014A 2015A 2016F 2017F 2018F ROAA 3.4 3.0 2.8 2.7 2.7 ROAE 27.4 24.1 20.9 19.8 19.0 NIM 8.5 8.1 8.1 7.7 7.5 Loan/deposit ratio 82.0 86.8 88.1 89.4 90.5 Loan/funding ratio 77.8 81.1 82.6 84.0 85.3 Cost efficiency ratio 44.0 44.3 44.8 46.4 47.8 CIR 66.5 68.8 71.5 71.2 70.9 Gross NPL 1.7 2.0 2.6 2.5 2.1 NPL coverage 184.2 146.3 148.0 171.7 209.2 LLR 3.1 3.0 3.8 4.2 4.3 CAR-total 18.1 20.4 15.0 13.8 12.9 CAR-tier I 17.1 16.7 11.7 10.8 10.1 Source: Company, Bahana estimates

2017 Compendium

184

BANK TABUNGAN NEGARA BUY PX: IDR1,720 - TP: IDR2,100 In 2017, we expect policy-driven subsidized mortgage demand to

continue supporting CASA and loan growth for BBTN, one of the largest low-end mortgage providers. We expect 2017-18 subsidized mortgages to grow 20% y-y, supporting loan growth of 17-18%.

Strong subsidized mortgage loans should squeeze out non-mortgage lending and we expect this segment’s contribution to total loans to continue to fall from 10% in 2016 to 9% in 2017 and 8% in 2018. This also should have a positive impact on NPLs, which BBTN aims to lower to <3% by end-2016. We expect this to be realized only in 2018.

BBTN remains our small-bank top pick, as its franchise growth and improving operational matrices are a natural consequence of policies focused on solving Indonesia’s huge low-cost housing deficit. Our TP for BBTN is IDR2,100, or a 1.2x 2017F PBV on an industry ROE-adjusted average. Risk: Delays in government funding disbursements.

Financial highlights Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Net interest income (IDRbn) 5,482 6,867 7,556 8,529 9,633 Operating income (IDRbn) 6,405 7,998 8,898 10,018 11,327 Operating profit (IDRbn) 1,576 2,534 2,920 3,350 3,701 Pre-tax profit (IDRbn) 1,578 2,542 2,928 3,357 3,708

Net profit (IDRbn) 1,145 1,851 2,196 2,518 2,781 Bahana/consensus (%) - - 96 92 86 EPS (IDR) 108 175 207 238 263 EPS growth (%) (26.7) 61.6 18.6 14.7 10.4 P/E (x) 15.9 9.8 8.3 7.2 6.5 Equity (IDRbn) 12,253 13,860 15,686 17,820 20,223 BVPS (IDR) 1,158 1,310 1,482 1,684 1,911 P/BV (x) 1.5 1.3 1.2 1.0 0.9 DPS (IDR) 21 35 36 36 39 Div. yield (%) 1.2 2.0 2.1 2.1 2.3 Source: Company, Bahana estimates note: based on 23 November 2016 closing price

Share price performance

0

30,000

60,000

90,000

120,000

1,000

1,200

1,400

1,600

1,800

2,000

23-Nov-15 23-Jan-16 23-Mar-16 23-May-16 23-Jul-16 23-Sep-16 23-Nov-16

('000)(IDR)

Volume (RHS) BBTN IJ Px Last

19.3

(7.5) (10.4)(7.1) (7.1)

25.2

(20)

(10)

0

10

20

30

(20)

(10)

0

10

20

30

ytd 1M 3M 6M 9M 12M

(%) (%)

BBTN IJ relative to JCI Source: Bloomberg Handi Huta Jaya ([email protected]) +6221 250 5081 ext. 3610 Gilang Purnama ([email protected]) +6221 250 5081 ext. 3601

Major assumptions Year to 31 Dec (%) 2014A 2015A 2016F 2017F 2018F Loan growth 15.4 19.9 17.7 17.7 17.6 Deposit growth 10.7 19.9 16.5 15.6 15.7 Non interest inc./operating inc. 14.4 14.1 15.1 14.9 15.0 Corporate tax rate 27.4 27.2 25.0 25.0 25.0 Payout ratio 19.5 20.0 17.5 15.0 15.0 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 2,100/1,215 12M high/low consensus TP (IDR) : 2,420 /1,700 Majority shareholder (%) : Republic of Indonesia (60.0) Shares outstanding (mn)/Free float (%) : 10,582/39.9 Mkt. cap. (IDRbn/USDmn) : 18,215/1,351 3-m avg.daily t.o.(IDRbn/USDmn) : 29.9/2.2 Bloomberg/Reuters code : BBTN IJ/BBTN.JK Source: Bloomberg, Reuters; based on 23 November 2016 closing price

2017 Compendium

185

BANK TABUNGAN NEGARA

Profit & loss Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FInterest income 13,374 15,567 16,594 17,735 19,189 Interest expense 7,893 8,700 9,039 9,206 9,556 Net interest income 5,482 6,867 7,556 8,529 9,633 Non-interest income 923 1,132 1,342 1,489 1,694 Total operating income 6,405 7,998 8,898 10,018 11,327 Operating expenses 4,052 4,563 5,275 5,947 6,902 Loan loss provisions 777 901 703 721 724 Operating profit 1,576 2,534 2,920 3,350 3,701 Non-operating inc./(exp.) 2 8 8 7 7 Pre-tax profit 1,578 2,542 2,928 3,357 3,708 Corporate tax (433) (691) (732) (839) (927) Minorities - - - - - Net profit 1,145 1,851 2,196 2,518 2,781 Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018F Loans 115,916 138,956 163,595 192,531 226,364 Cash on hand 920 1,181 1,477 1,846 2,307 Fixed assets 3,001 3,237 3,885 4,662 5,128 Other assets 24,745 28,433 30,126 30,725 31,285 Total assets 144,582 171,808 199,082 229,762 265,084 Customer deposits 106,479 127,746 148,723 171,917 198,888 Deposits from other banks 1,770 3,255 1,979 2,276 2,618 Borrowing and sub-debts 18,752 20,796 26,621 31,210 36,194 Other liabilities 5,329 6,151 6,073 6,539 7,161 Total liabilities 132,329 157,947 183,396 211,943 244,861 Minorities - - - - - Equity 12,253 13,860 15,686 17,820 20,223 Total liabilities and equity 144,582 171,808 199,082 229,762 265,084 Source: Company, Bahana estimates

Breakdown Year to 31 Dec 2014A 2015A 2016F 2017F 2018F% to earnings assets Gross loans 88.7 93.1 94.3 95.2 96.0 Government bonds 6.3 5.5 4.5 3.7 3.0 Other earnings assets 5.0 1.4 1.2 1.1 1.0

% to loan portfolio Subsidized mortgage 29.6 31.3 35.0 38.0 40.5 Non-subsidized mortgage 39.3 38.5 37.1 35.8 34.3 Housing related loans 19.6 20.0 19.0 18.4 18.0 Non-housing related loans 11.5 10.1 8.8 7.8 7.2

% to total deposits Core funding 46.6 48.6 49.3 50.6 52.0 Time deposits 53.4 51.4 50.7 49.4 48.0

Source: Company, Bahana estimates

Key ratios Year to 31 Dec (%) 2014A 2015A 2016F 2017F 2018F ROAA 0.8 1.2 1.2 1.2 1.1 ROAE 9.6 14.2 14.9 15.0 14.6 NIM 4.5 4.9 4.4 4.6 4.9 Loan/deposit ratio 108.9 108.8 110.0 112.0 113.8 Loan/funding ratio 91.3 91.5 92.3 93.7 95.2 Cost efficiency ratio 63.3 57.1 59.3 59.4 60.9 CIR 89.0 84.8 83.7 82.6 82.3 Gross NPL 4.0 3.4 3.1 3.0 2.9 NPL coverage 33.8 43.1 47.8 44.8 41.0 LLR 1.4 1.5 1.4 1.2 1.1 CAR-total 14.6 17.0 16.7 16.5 16.1 CAR-tier I 14.1 14.9 15.4 15.2 14.9 Source: Company, Bahana estimates

2017 Compendium

186

BANK TABUNGAN PENSIUNAN NASIONAL BUY PX: IDR2,790 - TP: IDR3,300 In 2017, we expect BTPN to continue its foray into the SME segment, as

it has been squeezed out by the government’s KUR program in the low-income target market. As such, we expect the SME weight as a percentage of total loans to growth to fall from 14% in 2016 to 15% in 2017. We expect BTPN’s lending franchise to perform above the industry growth rate of 15% y-y in 2017 on its superior track record.

BTPN is also most leveraged to falling industry deposit rates, as CASA only forms less than 13% of its total funding mix. It is also the most dependent on wholesale funding, with 5% derived from stand-by facility loans from IFC and SMBC.

Our TP is set at a 1.1x 2017F PBV, translating into IDR3,300 for 18.3% upside potential. BUY. We believe BTPN’s foray into digital banking and new loan segments targets reflects creativity and flexibility, essential in today’s competitive environment. Risk: Founder’s further divestment plan.

Financial highlights Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Net interest income (IDRbn) 7,041 7,696 8,096 8,413 8,973 Operating income (IDRbn) 7,804 8,460 8,847 9,193 9,784 Operating profit (IDRbn) 2,557 2,460 2,576 2,820 3,110 Pre-tax profit (IDRbn) 2,544 2,433 2,546 2,787 3,073

Net profit (IDRbn) 1,869 1,702 1,851 2,023 2,228 Bahana/consensus (%) - - 103 98 97 EPS (IDR) 320 291 317 346 381 EPS growth (%) (12.3) (8.9) 8.8 9.3 10.1 P/E (x) 8.7 9.6 8.8 8.1 7.3 Equity (IDRbn) 11,680 13,576 15,427 17,450 19,678 BVPS (IDR) 2,000 2,325 2,641 2,988 3,369 P/BV (x) 1.4 1.2 1.1 0.9 0.8 DPS (IDR) - - - - - Div. yield (%) - - - - - Source: Company, Bahana estimates note: based on 23 November 2016 closing price

Share price performance

0

3,000

6,000

9,000

12,000

15,000

18,000

2,000

2,200

2,400

2,600

2,800

3,000

23-Nov-15 23-Jan-16 23-Mar-16 23-May-16 23-Jul-16 23-Sep-16 23-Nov-16

('000)(IDR)

Volume (RHS) BTPN IJ Px Last

2.8

8.0 10.9

(0.5)

(9.4) (10.2)(15)

(10)

(5)

0

5

10

15

(15)

(10)

(5)

0

5

10

15

ytd 1M 3M 6M 9M 12M

(%) (%)

BTPN IJ relative to JCI Source: Bloomberg Handi Huta Jaya ([email protected]) +6221 250 5081 ext. 3610 Gilang Purnama ([email protected]) +6221 250 5081 ext. 3601

Major assumptions Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Loan growth 12.8 12.7 8.9 9.4 9.8 Deposit growth 2.2 13.0 9.0 9.7 10.5 Non interest inc./operating inc. 9.8 9.0 8.5 8.5 8.3 Corporate tax rate 25.9 28.0 25.0 25.0 25.0 Payout ratio 0.0 0.0 0.0 0.0 0.0 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 3,100/2,000 12M high/low consensus TP (IDR) : 3,900/2,100 Majority shareholder (%) : GSI Sumitomo (40.0) Shares outstanding (mn)/Free float (%) : 5,840/50.8 Mkt. cap. (IDRbn/USDmn) : 16,294/1,209 3-m avg.daily t.o.(IDRbn/USDmn) : 0.4/0.0 Bloomberg/Reuters code : BTPN IJ/BTPN.JK Source: Bloomberg, Reuters; based on 23 November 2016 closing price

2017 Compendium

187

BANK TABUNGAN PENSIUNAN NASIONAL

Profit & loss Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FInterest income 12,293 13,004 13,196 14,007 14,936 Interest expense 5,252 5,308 5,101 5,595 5,963 Net interest income 7,041 7,696 8,096 8,413 8,973 Non-interest income 764 764 752 780 811 Total operating income 7,804 8,460 8,847 9,193 9,784 Operating expenses 4,480 5,156 5,339 5,568 5,759 Loan loss provisions 768 845 933 805 916 Operating profit 2,557 2,460 2,576 2,820 3,110 Non-operating inc./(exp.) (13) (27) (30) (33) (36) Pre-tax profit 2,544 2,433 2,546 2,787 3,073 Corporate tax (659) (680) (636) (697) (768) Minorities (16) (51) (58) (67) (77) Net profit 1,869 1,702 1,851 2,023 2,228 Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018F Loans 51,994 58,587 63,813 69,822 76,657 Cash on hand 1,130 1,352 1,623 1,947 2,337 Fixed assets 1,507 1,888 2,359 2,949 3,687 Other assets 20,429 19,213 21,260 24,585 28,335 Total assets 75,059 81,041 89,056 99,304 111,016 Customer deposits 53,335 60,273 65,689 72,039 79,634 Deposits from other banks - - 25 43 74 Borrowing and sub-debts 8,214 5,342 6,446 7,735 9,282 Other liabilities 1,583 1,500 1,080 1,601 1,858 Total liabilities 63,132 67,116 73,240 81,418 90,848 Minorities 247 348 389 436 490 Equity 11,680 13,576 15,427 17,450 19,678 Total liabilities and equity 75,059 81,041 89,056 99,304 111,016 Source: Company, Bahana estimates

Breakdown Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018F% to earnings assets Gross loans 73.7 77.0 76.1 75.2 74.3 Government bonds - - - - - Other earnings assets 26.3 23.0 23.9 24.8 25.7

% to loan portfolio Loans to pensioners 66.8 65.0 64.5 64.2 64.0 Micro & SME loans 24.5 27.0 26.0 25.0 23.9 Others 3.9 1.7 1.7 1.7 1.8 Syariah 4.8 6.3 7.8 9.1 10.3

% to total deposits Core funding 16.4 14.1 13.3 13.1 12.7 Time deposits 83.6 85.9 86.7 86.9 87.3

Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2014A 2015A 2016F 2017F 2018F ROAA 2.6 2.2 2.2 2.1 2.1 ROAE 17.3 13.5 12.8 12.3 12.0 NIM 11.4 11.3 11.0 10.4 10.0 Loan/deposit ratio 97.5 97.2 97.1 96.9 96.3 Loan/funding ratio 84.5 89.3 88.4 87.5 86.1 Cost efficiency ratio 57.4 60.9 60.3 60.6 58.9 CIR 80.4 82.1 81.5 80.9 80.3 Gross NPL 0.7 0.7 0.9 0.8 0.7 NPL coverage 140.3 132.5 116.3 120.7 123.9 LLR 1.0 0.9 1.1 0.9 0.9 CAR-total 23.4 23.8 17.0 16.3 16.1 CAR-tier I 22.5 22.9 15.3 14.5 14.4 Source: Company, Bahana estimates

2017 Compendium

188

BEKASI FAJAR INDUSTRIAL ESTATE REDUCE PX: IDR260 - TP: IDR220* Despite having the most strategic landbank (closest to Jakarta), BEST

is struggling to capitalize on its 954ha in assets given current macro headwinds. In 9M16, the company booked 7ha in land sales, only 23% of its 30ha full-year target (Bahana: 18ha). We believe investors will lose their appetite for BEST due to its high land price (30% premium). Thus, we expect flat pre-sales growth in 2017.

On the bottom line, we expect 2017 net earnings to be hampered by weak 2016 marketing sales achievement and interest charges stemming from its huge debt level (3Q16 debt: IDR1.7tn).

A low portion of recurring income and an undiversified business have us lowering our 12M TP from IDR300 to IDR220, based on a 75% discount to 2017F NAV (sector average discount to NAV: 68%). The new NAV is calculated using different discounts for each landbank. REDUCE. Risks: Higher-than-expected marketing sales and FDI.

Financial highlights* Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Revenues (IDRbn) 840 687 597 648 725 EBIT (IDRbn) 472 396 339 366 410 Net profit (IDRbn) 391 212 238 218 235 Bahana/consensus (%) - - 71 52 56

EPS (IDR) 41 22 25 23 24 EPS growth (%) (47.4) (46.0) 12.6 (8.5) 7.8 EV/EBITDA (x) 5.6 8.8 11.1 11.1 10.8 P/E (x) 6.4 11.9 10.5 11.5 10.7 FCFPS (IDR) (14) (91) (30) (33) (44) FCF yield (%) (5.4) (35.0) (11.7) (12.9) (16.8) BVPS (IDR) 295 315 338 358 380 P/BV (x) 0.9 0.8 0.8 0.7 0.7 DPS (IDR) 2 3 3 3 3 Div. yield (%) 0.9 1.2 1.2 1.2 1.2 Source: Company, Bahana estimates note: based on 23 November 2016 closing price

Share price performance

0

100,000

200,000

300,000

400,000

500,000

600,000

190

230

270

310

350

390

23-Nov-15 23-Jan-16 23-Mar-16 23-May-16 23-Jul-16 23-Sep-16 23-Nov-16

('000)(IDR)

Volume (RHS) BEST IJ Px Last

(25.0)(19.9) (22.3)

(5.9)

(16.3)

(43.5) (50)

(40)

(30)

(20)

(10)

0

(50)

(40)

(30)

(20)

(10)

0

ytd 1M 3M 6M 9M 12M

(%) (%)

BEST IJ relative to JCI Source: Bloomberg Sanni Satrio Dwi Utomo ([email protected]) +6221 2505081 ext. 3611 *New, please refer to appendix II

NAV calculation 2017F Land bank (Ha) 954 Total value (IDRbn) 15,588 NAV/share (IDR) 889 Discount (%) 75 Adjusted NAV/share (IDR) 220 Source: Company, Bahana estimates

Company information 12M High/low (IDR) : 390/194 12M High/low consensus TP (IDR) : 500/238 Majority shareholder (%) : Argo Manunggal Land Dev (48.1) Share outstanding (mn)/Free float (%) : 9,647/41.8 Mkt. cap. (IDRbn/USDmn) : 2,508/186 3-m avg.daily t.o.(IDRbn/USDmn) : 19.3/1.4 Bloomberg/Reuters code : BEST IJ/BEST.JK Source: Bloomberg, Reuters; based on 23 November 2016 closing price

2017 Compendium

189

BEKASI FAJAR INDUSTRIAL ESTATE

Profit & loss Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FSales 840 687 597 648 725Gross profit 580 486 419 458 513EBITDA 478 402 348 379 429Depreciation 6 6 9 13 19 EBIT 472 396 339 366 410Net interest inc./(expense) (33) (86) (97) (121) (146) Forex gain/(losses) (6) (70) 22 - - Other income/(expense) 1 5 6 6 7 Pre-tax profit 433 245 269 251 271Taxes (42) (33) (31) (32) (36) Minority interest (0) (0) (0) (0) (0) Extraordinary gain/(losses) - - - - - Net profit 391 212 238 218 235Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018F Cash and equivalents 318 378 365 321 282 S-T investments - - - - - Trade receivables 36 105 41 44 52 Inventories 2,493 3,103 3,623 3,979 4,466 Fixed assets 77 110 134 172 226 Other assets 729 935 1,043 1,159 1,287 Total assets 3,653 4,631 5,206 5,675 6,313 Interest bearing liabilities 466 1,423 1,723 2,023 2,424 Trade payables 47 64 12 13 15 Other liabilities 290 102 211 183 202 Total liabilities 803 1,589 1,947 2,219 2,642 Minority interest 2 2 2 2 2 Shareholders' equity 2,848 3,040 3,257 3,454 3,669 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FEBIT 472 396 339 366 410 Depreciation 6 6 9 13 19 Working capital (2) (119) 9 (6) (9) Other operating items (310) (442) (83) (274) (266) Operating cash flow 166 (159) 274 99 155Net capital expenditure (302) (719) (567) (422) (575) Free cash flow (136) (878) (292) (323) (420)Equity raised/(bought) 3 0 (0) - - Net borrowings (75) 957 300 300 401 Other financing (22) (19) (20) (21) (20) Net cash flow (230) 60 (13) (44) (39)Cash flow at beginning 548 318 378 365 321 Ending cash flow 318 378 365 321 282Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2014A 2015A 2016F 2017F 2018F ROAE (%) 14.7 7.2 7.6 6.5 6.6 ROAA (%) 11.2 5.1 4.8 4.0 3.9 Gross margin (%) 69.1 70.7 70.3 70.6 70.8 EBITDA margin (%) 56.9 58.6 58.3 58.4 59.2 EBIT margin (%) 56.2 57.6 56.9 56.4 56.6 Net margin (%) 46.6 30.8 39.9 33.6 32.4 Payout ratio (%) 5.6 9.6 9.0 9.0 9.0 Current ratio (x) 2.7 4.8 7.0 6.0 5.2 Interest coverage (x) 14.3 4.6 3.5 3.0 2.8 Net gearing (%) 5.2 34.4 41.7 49.3 58.4 Debtor turnover (days) 25 25 25 25 26 Creditor turnover (days) 47 14 12 13 15 Inventory turnover (days) - - - - - Source: Company, Bahana estimates

2017 Compendium

190

BLUE BIRD HOLD PX: IDR2,930 - TP: IDR2,900* BIRD, Indonesia’s largest conventional taxi operator, is undergoing a

major restructuring at the management and operational levels. We believe revamping its mobile app should improve order flow and ease non-cash payments and result in higher utilization rates.

Additionally, BIRD should benefit from reduced competition as LCGC utilization for online taxis is unlikely to be approved. Nevertheless, rivalry with online taxis and driver shortages should remain. We expect the limitation on driver-hiring to result in just 1.8% y-y fleet growth in 2017 to 27,219 units, and result in revenue growth of 11.7% in 2017.

Given some 72% 12M share price correction from its peak, we think BIRD’s current share price has factored in most of the bad news. HOLD. On valuation, our new 12M TP of IDR2,900 reflects a 2017F PE of 10.3x, at par with the regional peer valuation of 10.7x. Risk: Government policies.

Financial highlights* Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Revenues (IDRbn) 4,759 5,472 4,925 5,502 5,721 EBIT (IDRbn) 1,052 1,173 667 952 1,077 Net profit (IDRbn) 735 824 461 703 819 Bahana/consensus (%) - - 73 93 100

EPS (IDR) 294 329 184 281 327

EPS growth (%) 3.8 12.2 (44.0) 52.3 16.6 EV/EBITDA (x) 13.1 13.0 11.9 10.1 10.8 P/E (x) 10.0 8.9 15.9 10.4 9.0 FCFPS (IDR) (125) (197) 177 357 327 FCF yield (%) (43) (67) 60 122 111 BVPS (IDR) 1,416 1,701 1,830 2,027 2,256 P/BV (x) 2.1 1.7 1.6 1.4 1.3 DPS (IDR) 258 43 55 84 98 Div. yield (%) 8.8 1.5 1.9 2.9 3.4 Source: Company, Bahana estimates note: based on 23 November 2016 closing price

Share price performance

0

1,000

2,000

3,000

4,000

5,000

6,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

23-Nov-15 23-Jan-16 23-Mar-16 23-May-16 23-Jul-16 23-Sep-16 23-Nov-16

('000)(IDR)

Volume (RHS) BIRD IJ Px Last

(72.2)

(4.2)(19.1)

(36.1)

(61.5)(72.8) (80)

(60)

(40)

(20)

0

(80)

(60)

(40)

(20)

0

ytd 1M 3M 6M 9M 12M

(%) (%)

BIRD IJ relative to JCI Source: Bloomberg Gregorius Gary ([email protected]) +6221 2505081 ext. 3604 *New, please refer to appendix II

Major assumptions Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Total regular taxi fleet (units) 25,545 26,719 26,719 27,219 27,719 Utilization rate (%) 79 77 73 75 75 Avg. daily income/unit (IDRmn) 0.57 0.61 0.58 0.62 0.63 Number of disposed fleet (units) 4,205 4,149 4,340 4,353 4,458 Source: Company, Bahana estimates Company information 12M high/low (IDR) : 8,150/2,600 12M High/low consensus TP (IDR) : 9,024/3,124 Majority shareholder (%) : Pusaka Citra Djokosoetono (37.2) Shares outstanding (mn)/Free float (%) : 2,502/15.8 Mkt. cap. (IDRbn/USDmn) : 7,268/539 3-m avg.daily t.o.(IDRbn/USDmn) : 3.0/0.2 Bloomberg/Reuters code : BIRD IJ/BIRD.JK Source: Bloomberg, Reuters; based on 23 November 2016 closing price

2017 Compendium

191

BLUE BIRD

Profit & loss Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FSales 4,759 5,472 4,925 5,502 5,721Gross profit 1,453 1,672 1,120 1,457 1,604EBITDA 1,698 1,868 1,400 1,747 1,770Depreciation 646 694 733 796 693 EBIT 1,052 1,173 667 952 1,077Net interest inc./(expense) (263) (193) (210) (172) (133) Forex gain/(losses) (5) (25) - - - Other income/(expense) 202 150 162 162 154 Pre-tax profit 986 1,105 619 942 1,098Taxes (247) (276) (154) (235) (274) Minority interest (5) (5) (3) (4) (5) Extraordinary gain/(losses) - - - - - Net profit 735 824 461 703 819Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018F Cash and equivalents 951 271 434 795 1,047 S-T investments - - - - - Trade receivables 178 211 190 213 221 Inventories 12 12 12 13 13 Fixed assets 5,563 6,196 5,990 5,949 6,026 Other assets 467 462 463 463 465 Total assets 7,172 7,153 7,091 7,433 7,772 Interest bearing liabilities 2,050 1,969 1,824 1,499 1,175 Trade payables 231 104 104 111 113 Other liabilities 1,280 752 508 673 757 Total liabilities 3,562 2,825 2,437 2,283 2,044 Minority interest 68 72 75 79 84 Shareholders' equity 3,542 4,256 4,579 5,071 5,644 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FEBIT 1,052 1,173 667 952 1,077 Depreciation 646 694 733 796 693 Working capital 92 (181) 20 (17) (8) Other operating items (236) (852) (449) (84) (175) Operating cash flow 1,554 834 971 1,646 1,588Net capital expenditure (1,867) (1,327) (527) (754) (771) Free cash flow (313) (493) 444 892 817Equity raised/(bought) 2,308 - - - - Net borrowings (660) (81) (145) (325) (325) Other financing (651) (106) (136) (207) (241) Net cash flow 684 (680) 163 361 251Cash flow at beginning 267 951 271 434 795 Ending cash flow 951 271 434 795 1,047Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2014A 2015A 2016F 2017F 2018F ROAE (%) 7.8 5.3 2.6 3.6 3.8 ROAA (%) 3.0 2.9 1.6 2.4 2.7 EBITDA margin (%) 35.7 34.1 28.4 31.8 30.9 EBIT margin (%) 22.1 21.4 13.5 17.3 18.8 Net margin (%) 15.4 15.1 9.4 12.8 14.3 Payout ratio (%) 91.3 14.6 16.8 45.7 35.0 Current ratio (x) 0.8 0.6 0.8 1.4 1.9 Interest coverage (x) 4.0 6.1 3.2 5.5 8.1 Net gearing (%) 31.0 39.9 30.4 13.9 2.3 Debts to assets (%) 28.6 27.5 25.7 20.2 15.1 Debtor turnover (days) 26.3 27.3 27.3 27.3 27.3 Creditor turnover (days) 25.2 9.9 9.9 9.9 9.9 Inventory turnover (days) 1.4 1.2 1.2 1.2 1.2 Source: Company, Bahana estimates

2017 Compendium

192

BUMI SERPONG DAMAI BUY PX: IDR1,815 - TP: IDR2,350 With the largest landbank and market cap under our coverage, BSDE is

developing its BSD City mega project development given its 1,500ha ready-to-develop land. As most of its products are landed, BSDE has the highest gross margin in the sector (9M16: 74%).

Going into 2017, we expect BI’s LTV relaxation implementation in 3Q16 would boost sales as more than 60% of BSDE’s payment methods are using mortgage. Thus, we forecast 2017 marketing sales growth of 9% y-y, of which 72% of the total sales would be derived from the BSD City project.

Due to its healthy balance sheet, diversified products and secured landbank, we apply a 55% discount to our 2017F NAV to determine our IDR2,350 12M target price. BUY. Risks to our call are BSD City’s infrastructure development delays as well as increases in high-rise property demand in the future.

Financial highlights* Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Revenues (IDRbn) 5,614 6,210 6,033 6,534 7,155 EBIT (IDRbn) 2,664 2,901 2,616 2,890 3,174 Net profit (IDRbn) 3,818 2,139 1,656 1,841 2,065 Bahana/cons.(%) - - 75 71 68

EPS (IDR) 208 111 86 96 107 EPS growth (%) 35.1 (46.5) (22.6) 11.2 12.2 EV/EBITDA (x) 12.7 11.5 13.6 12.4 11.1 P/E (x) 8.7 16.3 21.1 19.0 16.9 FCFPS (IDR) (158) (91) (146) (60) 8 FCF yield (%) (8.7) (5.0) (8.1) (3.3) 0.5 BVPS (IDR) 835 979 1,056 1,143 1,241 P/BV (x) 2.2 1.9 1.7 1.6 1.5 DPS (IDR) 16 11 9 10 11 Div. yield (%) 0.9 0.6 0.5 0.5 0.6 Source: Company, Bahana estimates note: based on 23 November 2016 closing price

Share price performance

0

20,000

40,000

60,000

80,000

100,000

120,000

1,600

1,800

2,000

2,200

2,400

23-Nov-15 23-Jan-16 23-Mar-16 23-May-16 23-Jul-16 23-Sep-16 23-Nov-16

('000)(IDR)

Volume (RHS) BSDE IJ Px Last

(12.6) (13.5) (13.3)

(9.3)

(3.8)

(6.1)

(14)(12)(10)(8)(6)(4)(2)0

(14)(12)(10)(8)(6)(4)(2)0

ytd 1M 3M 6M 9M 12M

(%) (%)

BSDE IJ relative to JCI Source: Bloomberg Sanni Satrio Dwi Utomo ([email protected]) +6221 2505081 ext. 3611 *New, please refer to appendix II

NAV Calculation 2017F

Land bank (Ha) 4,072 Total value (IDRbn) 110,202 NAV/share (IDR) 5,220 Discount (%) 55 Adjusted NAV/share (IDR) 2,350 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 2,380/1,580 12M High/low consensus TP (IDR) : 2,790/1,260 Majority shareholder (%) : Paraga Artamida (26.6) Share outstanding (mn)/Free float (%) : 19,247/38.9 Mkt. cap. (IDRbn/USDmn) : 34,933/2,582 3-m avg.daily t.o.(IDRbn/USDmn) : 60.3/4.5 Bloomberg/Reuters code : BSDE IJ/BSDE.JK Source: Bloomberg, Reuters; based on 23 November 2016 closing price

2017 Compendium

193

BUMI SERPONG DAMAI

Profit & loss Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FSales 5,614 6,210 6,033 6,534 7,155Gross profit 4,167 4,638 4,372 4,792 5,257EBITDA 2,796 3,097 2,807 3,128 3,459Depreciation 132 196 191 238 285 EBIT 2,664 2,901 2,616 2,890 3,174Net interest inc./(expense) (107) (324) (409) (453) (453) Forex gain/(losses) 30 139 (5) - - Other income/(expense) 1,717 (0) 50 53 55 Pre-tax profit 4,304 2,715 2,251 2,490 2,776Taxes (310) (364) (362) (392) (429) Minority interest (176) (212) (233) (256) (282) Extraordinary gain/(losses) - - - - - Net profit 3,818 2,139 1,656 1,841 2,065Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018F Cash and equivalents 2,820 6,109 4,009 4,342 4,695 S-T investments 6,032 6,097 6,097 6,097 6,097 Trade receivables 134 168 175 189 208 Inventories 5,016 6,548 6,642 6,968 7,592 Fixed assets 4,460 5,414 5,764 7,164 8,564 Other assets 9,746 11,685 14,550 16,872 17,242 Total assets 28,208 36,022 37,238 41,634 44,399 Interest bearing liabilities 4,172 7,659 7,975 9,175 9,175 Trade payables 156 317 308 333 365 Other liabilities 5,439 5,950 5,058 6,195 6,655 Total liabilities 9,767 13,925 13,340 15,703 16,195 Minority interest 3,092 3,247 3,572 3,929 4,322 Shareholders' equity 15,349 18,850 20,326 22,002 23,882 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FEBIT 2,664 2,901 2,616 2,890 3,174 Depreciation 132 196 191 238 285 Working capital (1,469) (2,618) (2,861) (543) 276 Other operating items 1,374 (489) (1,126) (1,088) (1,113) Operating cash flow 2,701 (10) (1,180) 1,497 2,622Net capital expenditure (5,466) (1,576) (1,381) (2,555) (2,478) Free cash flow (2,765) (1,586) (2,562) (1,058) 144Equity raised/(bought) 1,613 1,653 - - - Net borrowings 79 3,487 316 1,200 0 Other financing (404) (266) 146 192 209 Net cash flow (1,477) 3,288 (2,100) 333 353Cash flow at beginning 4,297 2,820 6,109 4,009 4,342 Ending cash flow 2,820 6,109 4,009 4,342 4,695Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2014A 2015A 2016F 2017F 2018F ROAE (%) 29.9 12.5 8.5 8.7 9.0 ROAA (%) 15.0 6.7 4.5 4.7 4.8 Gross margin (%) 74.2 74.7 72.5 73.3 73.5 EBITDA margin (%) 49.8 49.9 46.5 47.9 48.3 EBIT margin (%) 47.5 46.7 43.4 44.2 44.4 Net margin (%) 68.0 34.5 27.4 28.2 28.9 Payout ratio (%) 7.6 10.0 10.0 10.0 10.0 Current ratio (x) 3.4 4.3 5.0 4.3 4.1 Interest coverage (x) 24.8 9.0 6.4 6.4 7.0 Net gearing (%) 8.8 8.2 19.5 22.0 18.8 Debtor turnover (days) 9 9 10 10 10 Creditor turnover (days) 30 57 70 69 70 Inventory turnover (days) - - - - - Source: Company, Bahana estimates

2017 Compendium

194

CATUR SENTOSA ADIPRANA BUY* PX: IDR484 - TP: IDR640* CSAP, the country’s largest modern distributor of building materials, is

experiencing strong growth in its FMCG segment, handling over 25,000 products with 24 major principals, including P&G and Frisian Flag. CSAP is set to improve its 2016 performance with growth propelled by sales of ceramics (9M16 +17.7% y-y) and FMCG (9M16 +17.1% y-y).

On the cost front, we expect margins to continue improving, following higher contributions from direct purchases and private labels (e.g., paint and ceramics). In addition, CSAP plans to start expanding aggressively its home improvement retail segment brand, Mitra 10, pledging to double the number of its stores to 50 by 2020.

On valuation, we initiate coverage with a BUY and 12M TP of IDR640, using the simple average of DCF and a 2017F 15x PER. Risks: Acquisition difficulties of construction licenses and a slower economy.

Financial highlights* Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Revenues (IDRbn) 7,144 7,285 8,146 9,272 10,685 EBIT (IDRbn) 138 87 151 204 260 Net profit (IDRbn) 112 41 72 117 163 Bahana/consensus (%) 90.5 100.7 105.1

EPS (IDR) 28 10 18 29 40 EPS growth (%) 56.8 (63.6) 76.8 62.4 39.6 EV/EBITDA (x) 15.1 21.5 12.9 8.5 6.7 P/E (x) 17.6 48.3 27.3 16.8 12.0 FCFPS (IDR) 24 (43) (30) (24) (29) FCF yield (%) 4.9 (8.8) (6.3) (5.0) (6.0) BVPS (IDR) 181 189 203 226 259 P/BV (x) 2.7 2.6 2.4 2.1 1.9 DPS (IDR) 4 4 4 6 8 Div. yield (%) 0.7 0.7 0.7 1.2 1.7 Source: Company, Bahana estimates note: based on 23 November 2016 closing price

Share price performance

Source: Bloomberg Richard Danusaputra ([email protected]) +6221 2505081 ext. 3605 *New, please refer to appendix II

Major assumptions Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Total store space (k sqm) 216 216 226 243 265 Total number of stores (units) 98 92 96 103 111 SSSG (%) (7.6) 1.1 6.4 4.0 4.0 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 510/352

12M High/low consensus TP (IDR) : 640/447

Majority shareholder (%) : Buanatata Adisentosa (35.2)

Share outstanding (mn)/Free float (%) : 4,053/39.8

Mkt. cap. (IDRbn/USDmn) : 1,962/145

3-m avg.daily t.o.(IDRbn/USDmn) : 2.9/0.2

Bloomberg/Reuters code : CSAP IJ/CSAP.JK Source: Bloomberg, Reuters; based on 23 November 2016 closing price

2017 Compendium

195

CATUR SENTOSA ADIPRANA

Profit & loss Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FSales 7,144 7,285 8,146 9,272 10,685Gross profit 932 979 1,149 1,354 1,613EBITDA 179 135 234 365 483Depreciation 41 48 83 161 223 EBIT 138 87 151 204 260Net interest inc./(expense) (100) (103) (115) (127) (139) Forex gain/(losses) 4 6 (7) - - Other income/(expense) 109 62 68 81 98 Pre-tax profit 151 52 97 158 219Taxes 29 9 19 32 44 Minority interest 10 2 6 10 12 Extraordinary gain/(losses) - - - - - Net profit 112 41 72 117 163Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018F Cash and equivalents 51 63 28 39 29 S-T investments - - - - - Trade receivables 1,139 1,042 1,161 1,296 1,464 Inventories 1,243 1,352 1,495 1,627 1,814 Fixed assets 642 779 881 1,030 1,187 Other assets 233 287 291 333 394 Total assets 3,309 3,523 3,855 4,325 4,889 Interest bearing liabilities 805 1,000 1,090 1,191 1,301 Trade payables 1,511 1,488 1,649 1,887 2,162 Other liabilities 172 181 199 227 263 Total liabilities 2,488 2,669 2,938 3,305 3,725 Minority interest 86 87 93 102 115 Shareholders' equity 735 767 824 918 1,049 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FNet income 112 41 72 117 163 Depreciation 41 48 83 161 223 Working capital (74) (34) (102) (28) (81) Other operating items (34) (42) 9 (38) (43) Operating cash flow 45 12 62 212 262Net capital expenditure 51 (185) (185) (310) (380) Free cash flow 96 (172) (123) (99) (118)Equity raised/(bought) - - - - - Net borrowings (114) 181 87 100 100 Other financing 12 3 1 10 8 Net cash flow (6) 12 (35) 11 (10)Cash flow at beginning 57 51 63 28 39 Cash flow at end 51 63 28 39 29Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2014A 2015A 2016F 2017F 2018F ROAE (%) 16.2 5.4 9.0 13.4 16.6 ROAA (%) 3.5 1.2 1.9 2.9 3.5 Gross margin (%) 13.0 13.4 14.1 14.6 15.1 EBITDA margin (%) 2.5 1.8 2.9 3.9 4.5 EBIT margin (%) 1.9 1.2 1.9 2.2 2.4 Net margin (%) 1.6 0.6 0.9 1.3 1.5 Payout ratio (%) 13.0 35.6 20.0 20.0 20.0 Current ratio (x) 1.1 1.1 1.1 1.1 1.1 Interest coverage (x) 1.4 0.8 1.3 1.6 1.9 Net gearing (%) 102.7 122.2 128.8 125.4 121.3 Debtor turnover (days) 91 88 86 87 87 Creditor turnover (days) 58 52 52 51 50 Inventory turnover (days) 75 80 78 75 73 Source: Company, Bahana estimates

2017 Compendium

196

CHAROEN POKPHAND INDONESIA HOLD PX: IDR3,370- TP: IDR3,300 CPIN, Indonesia’s largest poultry company with a 36% market share in

poultry feed (59% of sales), has started to consolidate the broiler division into the listed company, which should lead to higher earnings volatility. This should cause CPIN’s premium valuation to de-rate.

CPIN’s recent move to the low-mid market ready-to-drink tea and mineral water segment that has a long breakeven period is a negative development, in our view. However, increasing purchasing power and the short-term DOC price hike should support operating performance.

Our unchanged TP of IDR3,400 is based on a 17x 2017F PE, a 15% premium to peers. Given the limited upside potential to our TP and expected earnings volatility, we maintain a HOLD rating on CPIN. Downside risks include local corn supply shortage and weaker IDR, while upside risks include higher-than-expected poultry prices.

Financial highlights Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Revenues (IDRbn) 29,150 30,108 37,842 41,451 43,932 EBIT (IDRbn) 2,627 3,443 4,334 4,449 3,826 Net profit (IDRbn) 1,746 1,837 3,130 3,176 2,708 Bahana/consensus (%) 110.2 94.5 64.4

EPS (IDR) 106 112 191 194 165 EPS growth (%) (31.0) 5.2 70.4 1.5 (14.7) EV/EBITDA (x) 18.0 13.5 10.7 10.4 11.5 P/E (x) 31.7 30.1 17.7 17.4 20.4 FCFPS (IDR) (138.1) (46.1) 33.1 65.9 74.9 FCF yield (%) (4.1) (1.4) 1.0 2.0 2.2 BVPS (IDR) 670 765 923 1059 1166 P/BV (x) 5.0 4.4 3.7 3.2 2.9 DPS (IDR) 46 18 35 59 60 Div. yield (%) 1.4 0.5 1.0 1.8 1.8 Source: Company, Bahana estimates note: based on 23 November 2016 closing price

Share price performance

0

5,000

10,000

15,000

20,000

25,000

30,000

2,500

3,000

3,500

4,000

23-Nov-15 23-Jan-16 23-Mar-16 23-May-16 23-Jul-16 23-Sep-16 23-Nov-16

('000)(IDR)

Volume (RHS) CPIN IJ Px Last

16.1

(2.2)(8.9)

(6.8) (5.7) (4.3)

(15)(10)(5)05101520

(15)(10)(5)05

101520

ytd 1M 3M 6M 9M 12M

(%) (%)

CPIN IJ relative to JCI Source: Bloomberg Michael W. Setjoadi ([email protected]) +6221 2505081 ext. 3620

Major assumptions Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Feed ASP (IDR/kg) 6,174 6,056 6,259 6,564 6,725 Feed volume (k ton) 3,605 3,629 3,557 3,628 3,700 DOC ASP 4,557 5,507 6,370 6,531 6,313 DOC volume (mn birds) 715 708 730 759 789 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 4,195/1,400 12M high/low consensus TP (IDR) : 4,800/3,100 Majority shareholder (%) : Central Agromina (55.5) Shares outstanding (mn)/Free float (%) : 16,398/44.2 Mkt. cap. (IDRbn/USDmn) : 55,917/4,099 3-m avg.daily t.o.(IDRbn/USDmn) : 20.3/1.5 Bloomberg/Reuters code : CPIN IJ/CPIN.JK Source: Bloomberg, Reuters; based on 23 November 2016 closing price

2017 Compendium

197

CHAROEN POKPHAND INDONESIA

Profit & loss Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FSales 29,150 30,108 37,842 41,451 43,932Gross profit 4,134 5,140 6,425 6,785 6,333EBITDA 3,063 4,105 5,148 5,334 4,793Depreciation 437 662 813 885 967 EBIT 2,627 3,443 4,334 4,449 3,826Net interest inc./(expense) (261) (620) (597) (550) (515) Forex gain/(losses) (271) (587) 108 - - Other income/(expense) 11 45 57 63 66 Pre-tax profit 2,106 2,282 3,903 3,961 3,377Taxes 360 449 781 792 675 Minority interest (0) (4) (7) (8) (6) Extraordinary gain/(losses) - - - - - Net profit 1,746 1,837 3,130 3,176 2,708Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018F Cash and equivalents 885 1,679 1,286 653 641 S-T investments - - - - - Trade receivables 3,159 2,998 2,903 3,407 3,611 Inventories 4,321 5,454 7,316 8,073 8,756 Fixed assets 9,058 11,123 12,110 13,225 14,258 Other assets 3,418 3,430 4,183 4,446 4,267 Total assets 20,842 24,685 27,799 29,804 31,533 Interest bearing liabilities 6,597 8,264 7,500 6,900 6,300 Trade payables 1,591 2,464 3,100 3,421 3,710 Other liabilities 1,649 1,396 2,047 2,100 2,396 Total liabilities 9,837 12,123 12,648 12,421 12,406 Minority interest 18 14 14 15 15 Shareholders' equity 10,987 12,547 15,137 17,368 19,112 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FEBIT 2,627 3,443 4,334 4,449 3,826 Depreciation 437 662 813 885 967 Working capital (1,059) (482) (1,384) (1,019) (594) Other operating items (1,164) (1,651) (1,420) (1,234) (971) Operating cash flow 841 1,972 2,343 3,080 3,228Net capital expenditure (3,105) (2,728) (1,800) (2,000) (2,000) Free cash flow (2,264) (755) 543 1,080 1,228Equity raised/(bought) - - - - - Net borrowings 3,707 1,667 (764) (600) (600) Other financing (728) (449) (237) (1,045) (764) Net cash flow (262) 794 (393) (634) (11)Cash flow at beginning 1,147 885 1,679 1,286 653 Ending cash flow 885 1,679 1,286 653 641Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2014A 2015A 2016F 2017F 2018F ROAE (%) 16.6 15.6 22.6 19.5 14.8 ROAA (%) 9.6 8.1 11.9 11.0 8.8 Gross margin (%) 14.2 17.1 17.0 16.4 14.4 EBITDA margin (%) 10.5 13.6 13.6 12.9 10.9 EBIT margin (%) 9.0 11.4 11.5 10.7 8.7 Net margin (%) 6.0 6.1 8.3 7.7 6.2 Payout ratio (%) 43.2 16.1 25.0 25.0 25.0 Current ratio (x) 2.2 2.1 2.2 2.3 2.4 Interest coverage (x) 0.4 0.4 0.6 0.6 0.6 Net gearing (%) 52.0 52.5 41.1 36.0 29.6 Debtor turnover (days) 23 36 36 36 36 Creditor turnover (days) 40 36 28 30 30 Inventory turnover (days) 63 80 85 85 85 Source: Company, Bahana estimates

2017 Compendium

198

CIPUTRA DEVELOPMENT BUY PX: IDR1,435 - TP: IDR1,800* Having the most geographically varied landbank with different target

markets, CTRA is benefiting from its diversified portfolio given continued soft high-end property demand. However, lower-margin mid-low products are likely to be a drag on 2017 gross margins, which we expect to reach 49%, relatively flat on a y-y basis.

The rationale for the planned merger of CTRA’s two subsidiaries (CTRP & CTRS) is (1) higher total market cap to c.USD2.1bn from USD1.8bn currently; (2) optimization of business structure; and (3) greater financial strength. The merger could also raise our 2017 EPS forecast 6% to IDR106/sh and NAV/sh to IDR5,876 (+25% before discount).

On valuation, our new IDR1,800 TP is based on a 55% discount to our 2017F NAV. Our positive view is based on its diversified products, which could grow along with the government’s infrastructure projects. BUY. Risks: Delays in project launches and infrastructure construction.

Financial highlights* Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Revenue (IDRbn) 6,340 7,514 6,593 9,424 9,817 EBIT (IDRbn) 2,204 2,353 1,682 2,673 2,748 Net profit (IDRbn) 1,325 1,284 810 1,465 1,537 Bahana/cons.(%) - - 57 89 93

EPS (IDR) 86 84 53 96 100 EPS growth (%) 34.2 (3.1) (36.9) 80.8 4.9 EV/EBITDA (x) 9.6 9.4 13.0 8.6 8.3 P/E (x) 16.6 17.1 27.1 15.0 14.3 FCFPS (IDR) (152) (79) (71) (62) (70) FCF yield (%) (10.6) (5.5) (4.9) (4.3) (4.9) BVPS (IDR) 499 548 592 680 765 P/BV (x) 2.9 2.6 2.4 2.1 1.9 DPS (IDR) 8 6 6 13 14 Div. yield (%) 0.6 0.4 0.4 0.9 1.0 Source: Company, Bahana estimates note: based on 23 November 2016 closing price

Share price performance

0

20,000

40,000

60,000

80,000

100,000

120,000

1,1001,2001,3001,4001,5001,6001,7001,800

23-Nov-15 23-Jan-16 23-Mar-16 23-May-16 23-Jul-16 23-Sep-16 23-Nov-16

('000)(IDR)

Volume (RHS) CTRA IJ Px Last

(14.6)

(4.4)

(10.5)

(1.7)

(5.4)

(0.6)

(16)(14)(12)(10)(8)(6)(4)(2)0

(16)(14)(12)(10)(8)(6)(4)(2)0

ytd 1M 3M 6M 9M 12M

(%) (%)

CTRA IJ relative to JCI Source: Bloomberg Sanni Satrio Dwi Utomo ([email protected]) +6221 2505081 ext. 3611 *New, please refer to appendix II

NAV Calculation 2017F

Land bank (Ha) 1,593 Total value (IDRbn) 82,120 NAV/share (IDR) 4,743 Discount (%) 55 Adjusted NAV/share (IDR) 1,800 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 1,745/1,138 12M High/low consensus TP (IDR) : 2,150/1,004 Majority shareholder (%) : Sang Pelopor (30.6) Share outstanding (m)/Free float (%) : 15,425/69.4 Mkt. cap. (IDRbn/USDmn) : 22,135/1,636 3-m avg.daily t.o.(IDRbn/USDmn) : 29.1/2.2 Bloomberg/Reuters code : CTRA IJ/CTRA.JK Source: Bloomberg, Reuters; based on 23 November 2016 closing price

2017 Compendium

199

CIPUTRA DEVELOPMENT

Profit & loss Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FSales 6,340 7,514 6,593 9,424 9,817Gross profit 3,330 3,729 3,210 4,630 4,840EBITDA 2,403 2,577 1,880 2,859 2,942Depreciation 199 223 199 186 194 EBIT 2,204 2,353 1,682 2,673 2,748Net interest inc./(expense) (46) (199) (308) (287) (283) Forex gain/(losses) - - (1) - - Other income/(expense) 48 69 92 122 162 Pre-tax profit 2,205 2,223 1,464 2,508 2,627Taxes (411) (483) (369) (528) (550) Minority interest (470) (457) (285) (515) (540) Extraordinary gain/(losses) - - - - - Net profit 1,325 1,284 810 1,465 1,537Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018F Cash and equivalents 2,889 3,034 2,168 2,145 2,118 S-T investments 1 1 1 1 1 Trade receivables 765 874 723 1,033 1,076 Inventories 6,429 7,531 9,038 11,297 14,121 Fixed assets 2,352 2,962 3,678 4,262 4,586 Other assets 11,104 11,856 12,797 13,873 15,106 Total assets 23,538 26,258 28,404 32,610 37,008 Interest bearing liabilities 4,021 5,277 4,696 4,639 4,586 Trade payables 773 914 788 1,116 1,159 Other liabilities 7,092 7,018 8,263 9,747 11,514 Total liabilities 11,886 13,208 13,747 15,502 17,259 Minority interest 4,004 4,646 5,575 6,690 8,028 Shareholders' equity 7,648 8,404 9,082 10,418 11,721 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FEBIT 2,204 2,353 1,682 2,673 2,748 Depreciation 199 223 199 186 194 Working capital (1,695) (1,226) (478) (1,045) (1,396) Other operating items (1,269) (1,149) (1,105) (1,478) (1,522) Operating cash flow (561) 202 297 336 24Net capital expenditure (1,769) (1,408) (1,378) (1,289) (1,101) Free cash flow (2,330) (1,207) (1,081) (952) (1,077)Equity raised/(bought) 125 (211) - - - Net borrowings 804 1,254 (581) (57) (53) Other financing 825 310 797 985 1,104 Net cash flow (576) 146 (866) (23) (27)Cash flow at beginning 3,465 2,889 3,034 2,168 2,145 Ending cash flow 2,889 3,034 2,168 2,145 2,118Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2014A 2015A 2016F 2017F 2018F ROAE (%) 18.7 16.0 9.3 15.0 13.9 ROAA (%) 6.1 5.2 3.0 4.8 4.4 Gross margin (%) 52.5 49.6 48.7 49.1 49.3 EBITDA margin (%) 37.9 34.3 28.5 30.3 30.0 EBIT margin (%) 34.8 31.3 25.5 28.4 28.0 Net margin (%) 20.9 17.1 12.3 15.6 15.7 Payout ratio (%) 9.2 10.3 16.0 16.0 16.0 Current ratio (x) 1.0 1.1 1.2 1.2 1.3 Interest coverage (x) 47.5 11.8 5.5 9.3 9.7 Net gearing (%) 14.8 26.7 27.8 23.9 21.1 Debtor turnover (days) 40 40 40 40 40 Creditor turnover (days) 85 85 85 85 85 Inventory turnover (days) - - - - - Source: Company, Bahana estimates

2017 Compendium

200

CIPUTRA PROPERTY BUY* PX: IDR710 - TP: IDR850* As we expect tax amnesty-related money to begin to find its way into

the property market in 2017, CTRP, known as a premium high-rise and mixed-use specialist, should benefit the most. Moreover, the government’s foreign property ownership easing should bode well for CTRP’s luxury apartments in Ciputra World Jakarta. As such, we forecast 2017 pre-sales to grow 12% y-y.

Other catalysts would stem from CTRA’s plan to exchange CTRP’s public shares with CTRA’s using a 0.54x swap ratio. Using CTRA’s 23 Nov closing price of IDR1,435, CTRP shares would be worth IDR775/share (1,435 x 0.54= IDR775), for 9% upside potential.

Given CTRP’s high-end concentration and strategically located landbank, we reduce our 2017F NAV discount from 70% to 60%, resulting in a higher 12M TP of IDR850 (from IDR500). BUY (from REDUCE). Risk: Weak pre-sales, soft post tax-amnesty demand.

Financial highlights* Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Revenues (IDRbn) 1,662 2,460 1,629 1,897 2,101 EBIT (IDRbn) 667 754 484 581 671 Net profit (IDRbn) 394 327 133 198 277 Bahana/cons.(%) - na na na na

EPS (IDR) 64 52 21 32 44 EPS growth (%) (6.5) (18.3) (59.4) 48.9 40.0 EV/EBITDA (x) 8.4 7.9 13.1 11.4 10.0 P/E (x) 11.1 13.6 33.4 22.4 16.0 FCFPS (IDR) (142) (75) (286) (32) 5 FCF yield (%) (20.0) (10.5) (40.2) (4.5) 0.7 BVPS (IDR) 701 736 742 767 802 P/BV (x) 1.0 1.0 1.0 0.9 0.9 DPS (IDR) 10 16 6 9 13 Div. yield (%) 1.4 2.2 0.9 1.3 1.9 Source: Company, Bahana estimates note: based on 23 November 2016 closing price

Share price performance

0

30,000

60,000

90,000

120,000

150,000

180,000

300

400

500

600

700

800

23-Nov-15 23-Jan-16 23-Mar-16 23-May-16 23-Jul-16 23-Sep-16 23-Nov-16

('000)(IDR)

Volume (RHS) CTRP IJ Px Last

61.4

5.1 18.3

34.7

84.2

40.9

0

20

40

60

80

100

0

20

40

60

80

100

ytd 1M 3M 6M 9M 12M

(%) (%)

CTRP IJ relative to JCI Source: Bloomberg Sanni Satrio Dwi Utomo ([email protected]) +6221 2505081 ext. 3611 *New, please refer to appendix II

NAV Calculation 2017F

Land bank (Ha) 65 Discount (%) 60 Total value (IDRbn) 10,296 Adjusted NAV (IDR) 5,316 Adjusted NAV/share (IDR) 850 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 815/333 12M High/low consensus TP (IDR) : 500/500 Majority shareholder (%) : Ciputra Development (56.3) Share outstanding (m)/Free float (%) : 6,316/43.7 Mkt. cap. (IDRbn/USDmn) : 4,484/331 3-m avg.daily t.o.(IDRbn/USDmn) : 12.7/0.9 Bloomberg/Reuters code : CTRP IJ/CTRP.JK Source: Bloomberg, Reuters; based on 23 November 2016

2017 Compendium

201

CIPUTRA PROPERTY

Profit & loss Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FSales 1,662 2,460 1,629 1,897 2,101Gross profit 957 1,131 757 903 1,010EBITDA 767 874 670 782 889Depreciation 99 120 186 201 218 EBIT 667 754 484 581 671Net interest inc./(expense) (167) (254) (280) (299) (297) Forex gain/(losses) (3) 2 (2) - - Other income/(expense) 21 5 6 6 6 Pre-tax profit 517 507 207 287 380Taxes (118) (157) (65) (76) (84) Minority interest (5) (22) (9) (13) (19) Extraordinary gain/(losses) - - - - - Net profit 394 327 133 198 277Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018F Cash and equivalents 568 687 554 601 656 S-T investments 1 1 1 1 1 Trade receivables 288 471 156 182 201 Inventories 1,067 714 1,313 1,226 1,345 Fixed assets 4,908 5,720 6,508 7,551 8,700 Other assets 2,030 2,231 2,503 2,681 2,932 Total assets 8,862 9,824 11,035 12,242 13,835 Interest bearing liabilities 2,611 3,174 4,868 5,091 5,103 Trade payables 203 206 119 136 149 Other liabilities 1,167 1,208 714 1,455 2,729 Total liabilities 3,981 4,588 5,701 6,682 7,982 Minority interest 567 630 693 762 838 Shareholders' equity 4,314 4,606 4,641 4,798 5,015 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FEBIT 667 754 484 581 671 Depreciation 99 120 186 201 218 Working capital (499) 290 (901) 780 1,105 Other operating items (395) (255) (409) (327) (387) Operating cash flow (127) 909 (640) 1,235 1,607Net capital expenditure (748) (1,376) (1,147) (1,434) (1,577) Free cash flow (875) (468) (1,787) (200) 30Equity raised/(bought) - - - - - Net borrowings 550 563 1,694 223 13 Other financing (85) 24 (40) 24 12 Net cash flow (409) 119 (133) 48 54Cash flow at beginning 977 568 687 554 601 Ending cash flow 568 687 554 601 656Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2014A 2015A 2016F 2017F 2018F ROAE (%) 9.4 7.3 2.9 4.2 5.6 ROAA (%) 4.8 3.5 1.3 1.7 2.1 Gross margin (%) 57.5 46.0 46.5 47.6 48.1 EBITDA margin (%) 46.1 35.5 41.1 41.2 42.3 EBIT margin (%) 40.1 30.7 29.7 30.6 31.9 Net margin (%) 23.7 13.3 8.2 10.4 13.2 Payout ratio (%) 15.6 30.0 30.0 30.0 30.0 Current ratio (x) 1.4 1.3 2.1 1.3 0.8 Interest coverage (x) 4.0 3.0 1.7 1.9 2.3 Net gearing (%) 47.4 54.0 93.0 93.6 88.7 Debtor turnover (days) 42 35 35 35 35 Creditor turnover (days) 84 50 50 50 50 Inventory turnover (days) - - - - - Source: Company, Bahana estimates

2017 Compendium

202

ERAJAYA SWASEMBADA BUY* PX: IDR605 - TP: IDR820* ERAA, Indonesia’s largest mobile phone distributor with licenses to

distribute several popular brands, including Apple and Samsung could continue to do well in a consolidating handset distribution market.

On the margin front, we expect to see an uptick by capitalizing on the ongoing exclusive partnership with ISAT and EXCL to develop and run their cellular stores. ERAA should also gain from the rapid rise of its e-commerce platform (Erafone.com) which, together with its brick & mortar stores, provides both comfort and a unique shopping experience.

On valuation, we expect ERAA’s net profit to continue to recover, in line with rising GDP. We upgrade ERAA to a BUY with a DCF-based TP of IDR820, reflecting a 2017F PE of 7.8x. Risks: Slower purchasing power, delayed JV with ISAT & EXCL and failure to stop illegal handset imports due to unaccommodating government policies.

Financial highlights* Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Revenues (IDRbn) 14,451 20,008 21,755 23,540 25,479 EBIT (IDRbn) 409 393 428 468 540 Net profit (IDRbn) 212 226 257 302 362 Bahana/consensus (%) 118.6 110.1 n.a

EPS (IDR) 73 78 89 104 125 EPS growth (%) (39.3) 6.9 13.9 17.6 19.7 EV/EBITDA (x) 7.0 6.4 5.8 5.2 4.4 P/E (x) 8.3 7.8 6.8 5.8 4.8 FCFPS (IDR) 12 156 134 80 130 FCF yield (%) 2.0 25.8 22.2 13.2 21.6 BVPS (IDR) 1,019 1,082 1,144 1,220 1,315 P/BV (x) 0.5 0.5 0.5 0.5 0.5 DPS (IDR) - 20 27 32 41 Div. yield (%) - 3.3 4.5 5.3 6.7 Source: Company, Bahana estimates note: based on 23 November 2016 closing price

Share price performance

Source: Bloomberg Richard Danusaputra ([email protected]) +6221 2505081 ext. 3605 *New, please refer to appendix II

Major assumptions Year to 31 Dec 2014A 2015A 2016F 2017F 2018F ASP (IDR’000) 1,168 1,290 1,355 1,409 1,465 Cellular phones (mn units) 10,529 13,260 13,918 14,474 15,053 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 930/482

12M High/low consensus TP (IDR) : 850/700

Majority shareholder (%) : PT Eralink International (60.0)

Share outstanding (mn)/Free float (%) : 2,900/39.7

Mkt. cap. (IDRbn/USDmn) : 1,755/130

3-m avg.daily t.o.(IDRbn/USDmn) : 6.3/0.5

Bloomberg/Reuters code : ERAA IJ/ERAA.JK Source: Bloomberg, Reuters; based on 23 November 2016 closing price

2017 Compendium

203

ERAJAYA SWASEMBADA

Profit & loss Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FSales 14,451 20,008 21,755 23,540 25,479Gross profit 1,289 1,506 1,648 1,764 1,943EBITDA 549 503 498 559 621Depreciation 140 110 69 91 81 EBIT 409 393 428 468 540Net interest inc./(expense) (181) (154) (140) (126) (118) Forex gain/(losses) (3) (2) 2 - - Other income/(expense) 71 84 82 94 99 Pre-tax profit 296 320 372 436 521Taxes (82) (91) (112) (131) (156) Minority interest (3) (4) (3) (3) (3) Extraordinary gain/(losses) - - - - - Net profit 212 226 257 302 362Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018F Cash and equivalents 170 127 130 133 117 S-T investments - - - - - Trade receivables 1,746 2,387 2,346 2,470 2,674 Inventories 2,000 2,553 1,653 1,790 1,870 Fixed assets 402 437 494 523 542 Other assets 1,803 2,297 2,404 2,562 2,707 Total assets 6,122 7,800 7,027 7,477 7,910 Interest bearing liabilities 1,563 1,590 1,289 1,290 1,090 Trade payables 1,326 2,855 2,131 2,367 2,687 Other liabilities 224 154 221 215 249 Total liabilities 3,112 4,595 3,638 3,868 4,022 Minority interest 53 67 70 73 75 Shareholders' equity 2,957 3,138 3,319 3,536 3,813 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FNet income 212 226 257 302 362 Depreciation 140 110 69 91 81 Working capital (288) 336 217 (25) 36 Other operating items 298 (74) (32) (25) (31) Operating cash flow 361 597 516 352 478Net capital expenditure (326) (144) (127) (120) (100) Free cash flow 35 453 389 232 378Equity raised/(bought) - - - - - Net borrowings 393 24 (300) - (200) Other financing (339) (520) (86) (229) (194) Net cash flow 89 (43) 3 3 (15)Cash flow at beginning 80 170 127 130 133 Ending cash balance 170 127 130 133 117Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2014A 2015A 2016F 2017F 2018F ROAE (%) 7.4 7.4 8.0 8.8 9.9 ROAA (%) 3.9 3.2 3.5 4.2 4.7 Gross margin (%) 8.9 7.5 7.6 7.5 7.6 EBITDA margin (%) 3.1 2.5 2.3 2.4 2.4 EBIT margin (%) 2.8 2.0 2.0 2.0 2.1 Net margin (%) 1.5 1.1 1.2 1.3 1.4 Payout ratio (%) - 0.4 0.4 0.4 0.4 Current ratio (x) 1.5 1.2 1.3 1.3 1.4 Interest coverage (x) n.a n.a n.a n.a n.a Net gearing (%) 47.1 46.5 34.9 32.7 25.4 Debtor turnover (days) 26 20 18 17 14 Creditor turnover (days) 33 51 33 34 36 Inventory turnover (days) 32 34 31 31 31 Source: Company, Bahana estimates

2017 Compendium

204

EXPRESS TRANSINDO UTAMA REDUCE* PX: IDR156 - TP: IDR135* The second-largest conventional taxi operator in Indonesia, TAXI is still

experiencing major problems in retaining and hiring drivers. In order to overcome this issue, TAXI has substantially cut its daily mandatory payments to IDR150k, down 37.5% from IDR240k, effectively raising take-home driver pay.

In the midst of intense industry competition causing severe earnings drops, TAXI has decided to initiate 4 cost-cutting programs to be executed in 2017: (1) closing poorly performing taxi depots, (2) reducing the number of employees, (3) selling non-performing assets, and (4) loan restructuring.

On sustained fierce competition with online-based taxis and possible financial distress faced by the company, we downgrade our rating from Buy to REDUCE and lower our 12M TP to IDR135, based on a 2017F P/BV of 0.4x. Risks to our call include higher fleet utilization rates.

Financial highlights* Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Revenues (IDRbn) 890 970 644 688 698 EBIT (IDRbn) 283 240 (0) 165 145 Net profit (IDRbn) 118 32 (120) 8.8 8.3 Bahana/consensus (%) - - na 100 99

EPS (IDR) 55 15 (56) 4.1 3.9 EPS growth (%) (10.8) (72.7) (471.8) na (5.2) EV/EBITDA (x) 3.6 3.6 6.0 3.5 3.6 P/E (x) 2.8 10.4 (2.8) 38.0 40.0 FCFPS (IDR) (444) 9 190 (39) (13) FCF yield (%) (284.8) 6.0 121.8 (24.8) (8.2) BVPS (IDR) 416 429 371 385 388 P/BV (x) 0.4 0.4 0.4 0.4 0.4 DPS (IDR) 10.0 2.7 (10.1) 0.7 0.7 Div. yield (%) 6.4 1.7 (6.4) 0.5 0.4 Source: Company, Bahana estimates note: based on 23 November 2016 closing price

Share price performance

0

80,000

160,000

240,000

320,000

400,000

50

100

150

200

250

23-Nov-15 23-Jan-16 23-Mar-16 23-May-16 23-Jul-16 23-Sep-16 23-Nov-16

('000)(IDR)

Volume (RHS) TAXI IJ Px Last

35.1

(6.2)(18.2) (19.7)

6.2

(0.1)

(40)

(20)

0

20

40

(40)

(20)

0

20

40

ytd 1M 3M 6M 9M 12M

(%) (%)

TAXI IJ relative to JCI Source: Bloomberg Gregorius Gary ([email protected]) +6221 2505081 ext. 3604 *New, please refer to appendix II

Major assumptions Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Regular taxi (units) 10,550 10,050 8,250 8,250 8,250 Eagle taxi (units) 500 1,000 2,150 2,150 2,150 Premium taxi (units) 120 120 300 300 300 VATB (units) 282 282 228 228 258 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 248/73 12M High/low consensus TP (IDR) : 307/128 Majority shareholder (%) : Rajawali Group (51) Shares outstanding (mn)/Free float (%) : 2,146/49 Mkt. cap. (IDRbn/USDmn) : 332/25 3-m avg.daily t.o.(IDRbn/USDmn) : 1.7/0.1 Bloomberg/Reuters code : TAXI IJ/TAXI.JK Source: Bloomberg, Reuters; based on 23 November 2016 closing price

2017 Compendium

205

EXPRESS TRANSINDO UTAMA

Profit & loss Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FSales 890 970 644 688 698Gross profit 398 341 80 249 231EBITDA 521 514 234 399 384Depreciation 239 274 234 234 239 EBIT 283 240 (0) 165 145Net interest inc./(expense) (133) (198) (181) (163) (144) Forex gain/(losses) - - - - - Other income/(expense) 3 8 9 10 11 Pre-tax profit 153 51 (172) 13 12Taxes (34) (18) 51 (4) (4) Minority interest (0) (0) 0 (0) (0) Extraordinary gain/(losses) - - - - - Net profit 118 32 (120) 9 8Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018F Cash and equivalents 216 137 462 300 182 S-T investments - - - - - Trade receivables 281 420 233 249 252 Inventories 14 14 12 9 10 Fixed assets 2,124 2,024 1,840 1,847 1,871 Other assets 376 289 302 318 338 Total assets 3,011 2,884 2,850 2,723 2,653 Interest bearing liabilities 1,747 1,633 1,523 1,380 1,237 Trade payables 127 79 248 193 206 Other liabilities 245 251 283 324 376 Total liabilities 2,119 1,963 2,055 1,897 1,818 Minority interest 1 1 1 1 1 Shareholders' equity 891 920 794 825 834 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FEBIT 283 240 (0) 165 145 Depreciation 239 274 234 234 239 Working capital (273) (85) 347 (82) (8) Other operating items (301) (304) (489) (399) (362) Operating cash flow (53) 125 91 (83) 14Net capital expenditure (900) (105) 316 0 (41) Free cash flow (953) 20 408 (83) (28)Equity raised/(bought) (1) 17 0 0 0 Net borrowings 836 (114) (110) (143) (143) Other financing 19 (2) 28 64 52 Net cash flow (100) (79) 326 (162) (119)Cash flow at beginning 316 216 137 462 300 Ending cash flow 216 137 462 300 182Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2014A 2015A 2016F 2017F 2018F ROAE (%) 14.0 3.6 (14.0) 1.1 1.0 ROAA (%) 4.6 1.1 (4.2) 0.3 0.3 EBITDA margin (%) 58.6 53.0 36.3 58.0 55.0 EBIT margin (%) 31.8 24.7 (0.0) 24.0 20.8 Net margin (%) 13.3 3.3 (18.6) 1.3 1.2 Payout ratio (%) 18.2 18.0 18.0 18.0 18.0 Current ratio (x) 1.3 1.5 1.3 1.4 1.3 Interest coverage (x) 2.1 1.2 (0.0) 1.0 1.0 Net gearing (%) 171.7 162.7 133.6 130.9 126.9 Debts to assets (%) 58.0 56.6 53.5 50.7 46.6 Debtor turnover (days) 87 132 132 132 132 Creditor turnover (days) 178 139 139 139 139 Inventory turnover (days) 10 8 8 8 8 Source: Company, Bahana estimates

2017 Compendium

206

GAJAH TUNGGAL BUY PX: IDR1,085 - TP: IDR1,500* Earnings for GJTL, Indonesia’s leading tire maker focusing on the

lower-segment through its brand GT Radial, should have bottomed in 2016, and we expect EPS growth recovery to take place on a stronger IDR outlook. Backed by a strong-in house R&D facility, the company’s efforts to expand margins should help to minimize pressure from high commodity prices.

We expect GJTL’s 2017 top line to grow 6% y-y as demand from overseas markets (43% of revenues) should remain solid. Closer to home, our expectation of higher GDP growth to 5.4% in 2017 should lend support to GTJL’s local tire sales.

On valuation, GJTL looks attractive, trading at a 2017F PE of 4.2x, a 50% discount to regional peers. We reaffirm our BUY call with a lower DCF-based 12-month TP of IDR1,500. Risks to our call are a weaker-than-expected IDR and higher-than-expected commodity prices.

Financial highlights* Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Revenues (IDRbn) 13,071 12,970 13,691 14,481 15,202 EBIT (IDRbn) 1,154 1,112 1,622 1,788 1,877 Net profit (IDRbn) 270 (313) 739 797 878 Bahana/consensus (%) - - na na na

EPS (IDR) 77 (90) 212 229 252 EPS growth (%) 123.4 (216.1) (335.7) 7.9 10.2 EV/EBITDA (x) 5.3 6.2 4.8 4.2 3.8 P/E (x) 14.0 (12.1) 5.1 4.7 4.3 FCFPS (IDR) (190.0) (28.0) 147.9 372.4 402.2 FCF yield (%) (17.5) (2.6) 13.6 34.3 37.1 BVPS (IDR) 1,618 1,548 1,656 1,837 2,028 P/BV (x) 0.7 0.7 0.7 0.6 0.5 DPS (IDR) 10 - 53 57 63 Div. yield (%) 0.9 - 4.9 5.3 5.8 Source: Company, Bahana estimates note: based on 23 November 2016 closing price

Share price performance

0

20,000

40,000

60,000

80,000

100,000

450

750

1,050

1,350

1,650

23-Nov-15 23-Jan-16 23-Mar-16 23-May-16 23-Jul-16 23-Sep-16 23-Nov-16

('000)(IDR)

Volume (RHS) GJTL IJ Px Last

91.2

(13.3) (23.7)

33.6

115.0

72.4

(50)

0

50

100

150

(50)

0

50

100

150

ytd 1M 3M 6M 9M 12M

(%) (%)

GJTL IJ relative to JCI Source: Bloomberg Gilang Purnama ([email protected]) +6221 2505081 ext. 3601 *New, please refer to appendix II

Major assumptions Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Domestic 4W Volume (mn) 6.3 5.4 5.6 6.0 6.5 Growth (%) (1.6) (15.0) 4.2 8.4 7.8 Domestic 2W Volume (mn) 10.0 10.8 11.6 12.5 13.1 Growth (%) 19.0 8.4 7.5 7.5 4.7 Export volumes (mn) 24.1 23.0 23.7 23.0 23.0 Growth (%) 1.3 (4.6) 3.0 (2.9) - Source: Company, Bahana estimates

Company information

12M high/low (IDR) : 1,755/470 12M High/low consensus TP (IDR) : na/na Majority shareholder (%) : Denham (49.5) Shares outstanding (mn)/Free float (%) : 3,485/39.3 Mkt. cap. (IDRbn/USDmn) : 3,781/280 3-m avg.daily t.o.(IDRbn/USDmn) : 12.9/1.0 Bloomberg/Reuters code : GJTL IJ/GJTL.JK Source: Bloomberg, Reuters; based on 23 November 2016 closing price

2017 Compendium

207

GAJAH TUNGGAL

Profit & loss Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FSales 13,071 12,970 13,691 14,481 15,202Gross profit 2,445 2,624 3,217 3,476 3,649EBITDA 1,722 1,755 2,350 2,580 2,715Depreciation 569 643 729 792 839 EBIT 1,154 1,112 1,622 1,788 1,877Net interest inc./(expense) (571) (688) (731) (706) (684) Forex gain/(losses) (179) (705) 111 - - Other income/(expense) (9) (51) (17) (19) (22) Pre-tax profit 394 (332) 985 1,062 1,170Taxes (124) 19 (246) (266) (293) Minority interest - - - - - Extraordinary gain/(losses) - - - - - Net profit 270 (313) 739 797 878Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018F Cash and equivalents 957 642 792 1,074 1,557 S-T investments 93 339 339 339 339 Trade receivables 2,069 2,411 2,251 2,381 2,499 Inventories 2,247 2,113 2,066 2,171 2,279 Fixed assets 7,611 8,734 9,301 9,454 9,560 Other assets 3,145 3,271 3,387 3,484 3,582 Total assets 16,122 17,509 18,136 18,902 19,816 Interest bearing liabilities 6,370 7,700 8,294 8,166 8,166 Trade payables 1,205 1,429 1,148 1,206 1,266 Other liabilities 2,910 2,986 2,925 3,127 3,316 Total liabilities 10,485 12,115 12,367 12,499 12,748 Minority interest - - - - - Shareholders' equity 5,637 5,394 5,769 6,403 7,068 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FEBIT 1,154 1,112 1,622 1,788 1,877 Depreciation 569 641 729 792 839 Working capital (488) (106) (293) (72) (76) Other operating items (9) 103 (170) (179) (184) Operating cash flow 1,225 1,750 1,888 2,330 2,455Net capital expenditure (1,668) (1,937) (1,252) (945) (945) Free cash flow (443) (187) 635 1,385 1,510Equity raised/(bought) - - - - - Net borrowings 410 1,147 593 (127) - Other financing (1,021) (1,276) (1,079) (975) (1,027) Net cash flow (1,055) (315) 150 283 483Cash balances, beginning 1,999 957 642 792 1,074 Ending cash 957 642 792 1,074 1,557Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2014A 2015A 2016F 2017F 2018F ROAE (%) 4.8 (5.7) 13.2 13.1 13.0 ROAA (%) 1.7 (1.9) 4.1 4.3 4.5 Gross margin (%) 18.7 20.2 23.5 24.0 24.0 EBITDA margin (%) 13.2 13.5 17.2 17.8 17.9 EBIT margin (%) 8.8 8.6 11.8 12.3 12.3 Net margin (%) 2.1 (2.4) 5.4 5.5 5.8 Payout ratio (%) 12.9 - 25.0 25.0 25.0 Current ratio (x) 2.0 1.8 1.7 1.9 2.1 Interest coverage (x) 2.0 1.6 2.2 2.5 2.7 Net gearing (%) 96.0 130.9 130.0 110.8 93.5 Debtor turnover (days) 43 43 40 40 40 Creditor turnover (days) 58 58 60 60 60 Inventory turnover (days) 70 70 72 72 72 Source: Company, Bahana estimates

2017 Compendium

208

GARUDA INDONESIA BUY* PX: IDR342 - TP: IDR400 With more than 70 domestic and international flight destinations, GIAA

is a potential beneficiary of Jokowi’s accelerated tourism development program via airport upgrades, creation of 10 champion tourist destinations and free-entry visas for 169 countries.

At this stage, we expect improved performance for GIAA’s domestic flights and Citilink on expectation of a higher seat-load factor of 75% in 2017F (2015: 77.2%, 2016F: 72%). This should allow for a slightly higher market share of 42% in 2017F (2015: 43%, 2016F: 40.5%).

GIAA’s severe 6M market underperformance of 38% on recent ticket price wars, coupled with sizeable route expansion, has run its course, in our view. Thus, we upgrade GIAA to BUY from Reduce with a TP of IDR400, representing 2017F EV/EBITDAR of 7x. Risks: Continued ticket price wars, especially on overseas routes, higher jet-fuel price and possible failure in market positioning for Citilink as premium LCC.

Financial highlights* Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Operating revenues (USDmn) 3,934 3,815 4,318 4,873 5,365 EBITDAR (USDmn) 586 1,163 1,238 1,507 1,671 EBIT (USDmn) (359) 83 (48) 62 122 Net profit (USDm) (370) 76 (30) 46 72 EPS (IDR) (179) 37 (15) 22 35 EPS growth (%) na na (139.8) na 57.8 EV/EBITDA (x) (8.4) 6.2 7.6 5.2 5.2 Adjusted EV/EBITDAR (x) 10.4 6.0 6.3 5.8 5.8 P/E (x) na 9.3 (23.4) 15.6 9.9 FCFPS (IDR) (14) (4) (3) (10) (17) FCF yield (%) (4.2) (1.2) (0.9) (3.0) (5.1) BVPS (IDR) 418 447 447 438 434 P/BV (x) 0.8 0.8 0.8 0.8 0.8 DPS (IDR) - - - - - Source: Company, Bahana estimates note: based on 23 November 2016 closing price

Share price performance

0

50,000

100,000

150,000

200,000

250,000

250300350400450500550600

23-Nov-15 23-Jan-16 23-Mar-16 23-May-16 23-Jul-16 23-Sep-16 23-Nov-16

('000)(IDR)

Volume (RHS) GIAA IJ Px Last

(2.8)

(8.7)

(22.2)

(34.5)

(23.4)

(3.7)

(40)

(30)

(20)

(10)

0

(40)

(30)

(20)

(10)

0

ytd 1M 3M 6M 9M 12M

(%) (%)

GIAA IJ relative to JCI Source: Bloomberg Gregorius Gary ([email protected]) +6221 2505081 ext. 3604 *New, please refer to appendix II

Major assumptions Year to 31 Dec 2014A 2015A 2016F 2017F 2018F ASK (mn) 50,155 54,812 53,136 58,051 65,282 RPK (mn) 35,997 42,324 42,969 47,751 53,271 Total aircraft 169 187 197 211 221 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 605/290 12M High/low consensus TP (IDR) : 496/398 Majority shareholder (%) : Republic of Indonesia (60.5) Shares outstanding (mn)/Free float (%) : 25,869/14.9 Mkt. cap. (IDRbn/USDmn) : 8,771/651 3-m avg.daily t.o.(IDRbn/USDmn) : 5.0/0.4 Bloomberg/Reuters code : GIAA IJ/GIAA.JK Source: Bloomberg, Reuters; based on 23 November 2016 closing price

2017 Compendium

209

GARUDA INDONESIA

Profit & loss Year to 31 Dec (USDmn) 2014A 2015A 2016F 2017F 2018FOperating revenue 3,934 3,815 4,318 4,873 5,365EBITDA (179) 258 218 379 477EBITDAR (excl. wet lease) 586 1,163 1,238 1,507 1,671Depr., amort. & leasing excl.

et lease945 1,080 1,290 1,448 1,553

EBIT (359) 83 (48) 62 122Net interest income/(expense) (61) (62) (86) (89) (114) Forex gain/(losses) - - - - - Other income/(expense) (36) 86 86 87 88 Pre-tax profit (456) 107 (47) 61 96Taxes 88 (29) 17 (15) (24) Minority interest (1) (1) (1) (1) (1) Extraordinary gain/(losses) - - - - - Net profit (370) 76 (30) 46 72Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (USDmn) 2014A 2015A 2016F 2017F 2018F Cash and equivalents 434 520 625 484 440 S-T investments - - - - - Trade receivables 121 122 137 155 170 Inventories 85 92 104 114 124 Fixed assets 135 867 852 816 768 Other assets 2,338 1,710 1,761 2,138 2,743 Total assets 3,113 3,310 3,478 3,702 4,251 Interest bearing liabilities 1,230 1,410 1,562 1,732 2,213 Trade payables 216 149 214 235 257 Other liabilities 788 800 750 783 825 Total liabilities 2,234 2,359 2,525 2,750 3,294 Minority interest (52) 20 19 20 22 Shareholders' equity 931 931 934 932 936 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (USDmn) 2014A 2015A 2016F 2017F 2018FEBIT (359) 83 (48) 62 122 Depreciation 130 96 133 158 176 Working capital 54 (143) 110 (30) (62) Other operating items (149) (257) (99) (210) (268) Operating cash flow (324) (220) 90 (20) (37)Net capital expenditure (51) 116 (171) (250) (416) Free cash flow (375) (105) (81) (270) (452)Equity raised/(bought) 125 - - - - Net borrowings 205 196 150 169 481 Other financing (1) (5) 38 (43) (66) Net cash flow (46) 86 105 (143) (40)Cash flow at beginning 480 434 520 627 480 Ending cash flow 434 520 625 484 440Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2014A 2015A 2016F 2017F 2018F ROAE (%) (37.5) 8.5 (3.3) 4.9 7.9 ROAA (%) (12.1) 2.4 (0.9) 1.3 1.8 EBITDAR margin (%) 14.9 30.5 28.7 30.9 31.1 EBIT margin (%) (9.1) 2.2 (1.1) 1.3 2.3 Net margin (%) (9.4) 2.0 (0.7) 0.9 1.3 Payout ratio (%) - - - - - Current ratio (x) 0.7 0.8 0.8 0.7 0.7 Interest coverage (x) na 1.3 na 0.7 1.1 Net gearing (%) 85.5 95.5 100.4 134.0 189.5 Debts to assets (%) 39.5 42.6 44.9 46.8 52.1 Debtor turnover (days)-AR 12 12 12 12 12 Creditor turnover (days)-AP 18 18 18 18 18 Inventory turnover (days) 8 9 9 9 9 Source: Company, Bahana estimates

2017 Compendium

210

GLOBAL MEDIACOM REDUCE PX: IDR640 - TP: IDR550* BMTR is the media holding co. of Hary Tanoe’s MNC Group, consisting

of FTA TV & Content assets via its c.61% stake in MNCN, Pay TV assets via its c.88% stake in MSKY, and other new media ventures such as broadband (Playmedia) & online (Letang). While BMTR is a cheaper alternative play for exposure to MNCN, the company has suffered from underperformance of its Pay-TV arm amid competition.

FX volatility plays a big role in BMTR’s bottom line given its high unhedged USD debt exposure (c.USD450mn) and opex exposure to USD content cost (c.25%) vs. the bulk of its revenue in IDR.

Despite Hary Tanoe’s big plans to unlock the value of new subsidiary SKY Vision Network (SVN), we rate BMTR a REDUCE, given 11% downside potential to our TP of IDR550, based on 50% discount to our SOTP. Risks to our call: successful fundraising of SVN and higher-than-expected earnings growth for MNCN.

Financial highlights Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Revenues (IDRbn) 10,657 10,573 11,086 12,260 13,547 EBIT (IDRbn) 2,675 2,050 2,419 2,563 2,881 Net profit (IDRbn) 703 52 1,017 1,051 1,233 Bahana/consensus (%) - - na na na

EPS (IDR) 50 4 72 74 87 EPS growth (%) 14.4 (92.6) 1849.5 3.4 17.3 EV/EBITDA (x) 5.3 6.1 5.3 5.0 4.4 P/E (x) 12.5 168.7 8.7 8.4 7.1 FCFPS (IDR) (151) (11) 89 103 141 FCF yield (%) (24) (2) 14 17 23 BVPS (IDR) 794 750 892 945 1,010 P/BV (x) 0.8 0.8 0.7 0.7 0.6 DPS (IDR) 24 25 5 21 22 Div. yield (%) 4.0 4.0 0.8 3.5 3.6 Source: Company, Bahana estimates note: based on 23 November 2016 closing price

Share price performance

0

20,000

40,000

60,000

80,000

100,000

500

700

900

1,100

1,300

23-Nov-15 23-Jan-16 23-Mar-16 23-May-16 23-Jul-16 23-Sep-16 23-Nov-16

('000)(IDR)

Volume (RHS) BMTR IJ Px Last

(55.3)

(18.3)(25.9)

(49.8)

(29.9)(37.7)

(60)

(50)

(40)

(30)

(20)

(10)

0

(60)

(50)

(40)

(30)

(20)

(10)

0

ytd 1M 3M 6M 9M 12M

(%) (%)

BMTR IJ relative to JCI Source: Bloomberg Henry Wibowo ([email protected]) +6221 2505081 ext.3622

Major assumptions Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Adex Growth (%) 6.4 (0.8) 4.9 10.6 10.5 Pay TV Subs Revenue Growth (%) 14.6 4.2 (0.8) 12.5 10.0 EBITDA Margin (%) 36.7 32.2 35.2 34.3 34.6 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 1,260/610 12M High/low consensus TP (IDR) : 1,636/1,267 Majority shareholder (%) : PT MNC Investama Tbk (47.8) Shares outstanding (mn)/Free float (%) : 14,199 / 51.6 Mkt. cap. (IDRbn/USDmn) : 8,732 / 650 3-m avg.daily t.o.(IDRbn/USDmn) : 13.9 / 1.1 Bloomberg/Reuters code : BMTR.IJ/BMTR.JK Source: Bloomberg, Reuters based on 23 November 2016 closing price

2017 Compendium

211

GLOBAL MEDIACOM

Profit & loss Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FSales 10,657 10,573 11,086 12,260 13,547 Gross profit 4,369 4,022 4,587 4,948 5,504 EBITDA 3,914 3,404 3,907 4,200 4,682 Depreciation 1,239 1,353 1,488 1,637 1,801 EBIT 2,675 2,050 2,419 2,563 2,881 Net interest inc./(expense) (273) (483) (314) (284) (224) Forex gain/(losses) (246) (862) 100 - - Other income/(expense) (240) (91) (110) (60) (110) Pre-tax profit 1,915 615 2,095 2,219 2,547 Taxes (627) (331) (524) (555) (637) Minority interest (585) (231) (554) (613) (677) Extraordinary gain/(losses) - - - - - Net profit 703 52 1,017 1,051 1,233 Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018F Cash and equivalents 1,485 631 2,047 2,709 3,402 S-T investments 2,664 2,125 2,125 2,500 2,500 Trade receivables 3,617 3,913 4,103 4,537 5,013 Inventories 2,039 1,912 1,897 2,134 2,347 Fixed assets 6,299 7,949 8,061 7,473 6,922 Other assets 9,259 9,962 9,521 9,521 9,521 Total assets 25,364 26,492 27,753 28,875 29,706 Interest bearing liabilities 7,172 8,146 6,852 6,352 5,352 Trade payables 1,306 2,117 2,100 2,363 2,599 Other liabilities 1,000 935 933 933 933 Total liabilities 9,478 11,198 9,885 9,648 8,884 Minority interest 4,606 4,643 5,198 5,811 6,488 Shareholders' equity 11,280 10,651 12,670 13,416 14,334 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FEBIT 2,675 2,050 2,419 2,563 2,881 Depreciation 1,239 1,353 1,488 1,637 1,801 Working capital (2,040) 733 (192) (784) (453) Other operating items (1,387) (1,286) (847) (898) (970) Operating cash flow 487 2,851 2,868 2,518 3,258 Net capital expenditure (2,632) (3,003) (1,600) (1,050) (1,250) Free cash flow (2,145) (152) 1,268 1,468 2,008 Equity raised/(bought) 639 (1,001) 353 - - Net borrowings 2,776 931 (1,293) (500) (1,000) Other financing (1,314) (631) 1,087 (305) (315) Net cash flow (44) (854) 1,415 663 693 Cash flow at beginning 1,530 1,485 631 2,047 2,709 Ending cash flow 1,485 631 2,047 2,709 3,402 Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2014A 2015A 2016F 2017F 2018F ROAE (%) 6.8 0.5 8.7 8.1 8.9 ROAA (%) 3.0 0.2 3.8 3.7 4.2 Gross margin (%) 41.0 38.0 41.4 40.4 40.6 EBITDA margin (%) 36.7 32.2 35.2 34.3 34.6 EBIT margin (%) 25.1 19.4 21.8 20.9 21.3 Net margin (%) 6.6 0.5 9.2 8.6 9.1 Payout ratio (%) 56.1 50.5 136.1 30.0 30.0 Current ratio (x) 4.2 1.5 3.8 4.0 4.1 Interest coverage (x) 9.8 4.2 7.7 9.0 12.9 Net gearing (%) 34.2 46.8 24.9 17.1 7.7 Debtor turnover (days) 115 119 119 119 119 Creditor turnover (days) 68 90 90 90 90 Inventory turnover (days) 118 107 107 107 107 Source: Company, Bahana estimates

2017 Compendium

212

GUDANG GARAM BUY PX: IDR64,500 - TP: IDR81,000 Experiencing volume drops, GGRM, Indonesia’s largest machine-rolled

full-flavor (SKM FF) cigarette player, is suffering from its relatively lower brand equity and late entry into the light segment, particularly as current smoking trends continue to shift to low-tar/low-nicotine (LTLN) products and Bold (between LTLN and SKM FF).

While competitive pressure may persist for the company, we expect improving consumer purchasing power on higher commodity prices, and a lower y-y excise tax hike to allow recovery in GGRM’s 2017 stick sales following its premium product pricing in 2016.

Our IDR81,000 TP, based on a 2017F PE of 21x (5-year mean), should be supported by increased farmer incomes for GGRM’s low-end target market cigarettes and lower capex to improve free cash flow. Risks include possible market share losses on the recent launch of Marlboro Filter Black, which competes directly with Surya 16.

Financial highlights Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Revenues (IDRbn) 65,186 70,366 78,019 85,936 93,965 EBIT (IDRbn) 8,574 9,906 10,047 11,281 12,226 Net profit (IDRbn) 5,406 6,436 6,533 7,258 8,013 Bahana/consensus (%) - 97.9 95.7 91.2

EPS (IDR) 2,810 3,345 3,395 3,772 4,165 EPS growth (%) 24.9 19.1 1.5 11.1 10.4 EV/EBITDA (x) 14.0 12.2 12.2 10.9 10.0 P/E (x) 23.0 19.3 19.0 17.1 15.5 FCFPS (IDR) (2,062) 183 207 1,590 1,606 FCF yield (%) (3.2) 0.3 0.3 2.5 2.5 BVPS (IDR) 17,151 19,698 20,493 23,077 25,921 P/BV (x) 3.8 3.3 3.1 2.9 2.5 DPS (IDR) 823 815 2,600 1,188 1,320 Div. yield (%) 1.3 1.3 4.0 1.8 2.0 Source: Company, Bahana estimates note: based on 23 November 2016 closing price

Share price performance

0

1,000

2,000

3,000

4,000

5,000

6,000

45,000

55,000

65,000

75,000

23-Nov-15 23-Jan-16 23-Mar-16 23-May-16 23-Jul-16 23-Sep-16 23-Nov-16

('000)(IDR)

Volume (RHS) GGRM IJ Px Last

3.8 2.2 0.1

(22.6)(14.4)

15.5

(30)

(20)

(10)

0

10

20

(30)

(20)

(10)

0

10

20

ytd 1M 3M 6M 9M 12M

(%) (%)

GGRM IJ relative to JCISource: Bloomberg Michael W Setjoadi ([email protected]) +6221 250 5081 (ext.3620)

Major assumptions Year to 31 Dec 2014A 2015A 2016F 2017F 2018F SKM sales volume (mn sticks) 72,551 70,161 69,109 69,800 70,498 SKM ASP (IDR/stick) 810 903 1,011 1,102 1,202 SKT sales volume (mn sticks) 8,046 8,486 8,656 8,742 8,830 SKT ASP (IDR/stick) 608 687 763 839 923 GGRM market share 24.2 23.8 23.9 24.0 24.2 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 63,700/40,500 12M High/low consensus TP (IDR) : 65,000/46,900 Majority shareholder (%) : Suryaduta Investama (69.3) Shares outstanding (mn)/Free float (%) : 1,924/23.5 Mkt. cap. (IDRbn/USDmn) : 124,104/9,204 3-m avg.daily t.o.(IDRbn/USDmn) : 49.3/3.6 Bloomberg/Reuters code : GGRM IJ/GGRM.JK Source: Bloomberg, Reuters; based on 23 November 2016 closing price

2017 Compendium

213

GUDANG GARAM

Profit & loss Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FSales 65,186 70,366 78,019 85,936 93,965Gross profit 13,380 15,486 16,712 18,953 20,829EBITDA 10,014 11,621 11,968 13,354 14,493Depreciation 1,440 1,715 1,921 2,073 2,267 EBIT 8,574 9,906 10,047 11,281 12,226Net interest inc./(expense) (1,372) (1,430) (1,336) (1,608) (1,576) Forex gain/(losses) 17 72 (15) - - Other income/(expense) 36 87 100 84 120 Pre-tax profit 7,255 8,635 8,796 9,757 10,771Taxes 1,822 2,182 2,223 2,466 2,722 Minority interest 27 17 40 33 36 Extraordinary gain/(losses) - - - - - Net profit 5,406 6,436 6,533 7,258 8,013Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018F Cash and equivalents 1,588 2,726 1,276 1,657 1,826 S-T investments - - - - - Trade receivables 1,532 1,568 1,739 1,915 2,094 Inventories 34,739 37,256 41,619 45,144 49,092 Fixed assets 18,973 20,106 21,994 22,748 24,069 Other assets 1,401 1,849 2,050 2,258 2,469 Total assets 58,234 63,505 68,678 73,723 79,551 Interest bearing liabilities 18,147 20,561 23,645 23,172 22,709 Trade payables 4,871 2,370 2,648 2,893 3,406 Other liabilities 2,081 2,566 2,845 3,134 3,427 Total liabilities 25,100 25,498 29,138 29,199 29,542 Minority interest 134 107 110 123 135 Shareholders' equity 33,000 37,900 39,430 44,401 49,874 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FEBIT 8,574 9,906 10,047 11,281 12,226 Depreciation 1,440 1,715 1,921 2,073 2,267 Working capital (5,224) (5,050) (4,246) (3,446) (3,602) Other operating items (3,132) (3,371) (3,515) (4,023) (4,213) Operating cash flow 1,658 3,201 4,207 5,885 6,678Net capital expenditure (5,625) (2,848) (3,808) (2,827) (3,589) Free cash flow (3,967) 352 399 3,058 3,089Equity raised/(bought) - - - - - Net borrowings 5,169 2,414 3,084 (473) (463) Other financing (1,017) (1,628) (4,933) (2,204) (2,457) Net cash flow 184 1,138 (1,450) 381 169Cash flow at beginning 1,404 1,588 2,726 1,276 1,657 Ending cash flow 1,588 2,726 1,276 1,657 1,826Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2014A 2015A 2016F 2017F 2018F ROAE (%) 17.4 18.2 16.9 17.3 17.0 ROAA (%) 9.9 10.6 9.9 10.2 10.5 EBITDA margin (%) 15.4 16.5 15.3 15.5 15.4 EBIT margin (%) 13.2 14.1 12.9 13.1 13.0 Net margin (%) 8.3 9.1 8.4 8.4 8.5 Payout ratio (%) 36.6 29.0 77.7 35.0 35.0 Current ratio (x) 1.6 1.8 1.7 1.8 2.0 Interest coverage (x) 6.2 6.9 7.5 7.0 7.8 Net gearing (%) 50.2 47.1 56.7 48.5 41.9 Debts to assets (%) 31.2 32.4 34.4 31.4 28.5 Debtor turnover (days) 34 16 16 16 17 Creditor turnover (days) 9 8 8 8 8 Inventory turnover (days) 245 248 248 246 245 Source: Company, Bahana estimates

2017 Compendium

214

HM SAMPOERNA BUY PX: IDR3,930 - TP: IDR4,700* Armed with its strong brand equity and extensive distribution,

Indonesia’s largest market cap company (owned by Phillip Morris with an estimated 35% market share) HMSP must deal with tough competition and a high real excise tax hike ahead. On a brighter note, we expect improving purchasing power to support HMSP’s top line.

HMSP’s highest sales contributor, A Mild (35% of total stick sales), has successfully regained its market share of 33%, despite a few ASP hikes, raising pricing to beyond the IDR1,000/stick psychological level. Additionally, HMSP recently launched Marlboro Filter Black to compete in the machine-rolled (SKM) full flavor (FF) segment.

On valuation, our IDR4,700 TP, based on 40x 2017F PER at par with our target PER for UNVR, is warranted due to the following two risk factors: Government policy risks on excise and health awareness as well as a change in the top management.

Financial highlights* Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Revenues (IDRbn) 80,690 89,069 96,475 108,243 117,758 EBIT (IDRbn) 13,805 14,048 15,737 18,119 19,652 Net profit (IDRbn) 10,167 10,347 12,296 13,575 14,617 Bahana/consensus (%) - - 104.4 104.2 100.8

EPS (IDR) 92 93 106 117 126 EPS growth (%) (5.9) 0.4 14.3 10.4 7.7 EV/EBITDA (x) 30.5 30.4 28.2 24.5 22.6 P/E (x) 42.6 42.4 37.1 33.6 31.2 FCFPS (IDR) 86 0 97 90 108 FCF yield (%) 2.2 0.0 2.5 2.3 2.7 BVPS (IDR) 122 286 292 303 330 P/BV (x) 32.1 13.7 13.5 13.0 11.9 DPS (IDR) 96 110 89 106 99 Div. yield (%) 2.5 2.8 2.3 2.7 2.5 Source: Company, Bahana estimates note: based on 23 November 2016 closing price

Share price performance

0

50,000

100,000

150,000

3,500

3,700

3,900

4,100

4,300

4,500

27-Nov-15 27-Jan-16 27-Mar-16 27-May-16 27-Jul-16 27-Sep-16 27-Nov-16

('000)(IDR)

Volume (RHS) HMSP IJ Px Last

(9.0)

(2.1)

0.8

(8.6)

(19.8)

(11.9)

(25)

(20)

(15)

(10)

(5)

0

5

(25)

(20)

(15)

(10)

(5)

0

5

ytd 1M 3M 6M 9M 12M

(%) (%)

HMSP IJ relative to JCISource: Bloomberg Michael W Setjoadi ([email protected]) +6221 250 5081 (ext. 3620) *New, please refer to appendix II

Major assumptions Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Machine-rolled cig. Vol. (bn sticks) 69.0 70.9 69.1 73.6 75.4 Machine-rolled cig. ASP (IDR/stick) 758 825 924 1,009 1,095 Hand-rolled cig. Vol. (bn sticks) 24.6 23.1 20.2 18.8 17.2 Hand-rolled cig. ASP (IDR/stick) 706 784 863 942 1,022 Marlboro vol. (bn sticks) 16.1 15.9 15.0 14.7 14.6 Marlboro ASP (IDR/stick) 755 839 939 1,033 1,137 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 4,456/3,605 12M High/low consensus TP (IDR) : 4,800/3,232 Majority shareholder (%) : Philip Morris Indonesia (92.5) Shares outstanding (mn)/Free float (%) : 116,318/7.5 Mkt. cap. (IDRbn/USDmn) : 457,130/33,904 3-m avg.daily t.o.(IDRbn/USDmn) : 33.2/2.5 Bloomberg/Reuters code : HMSP IJ/HMSP.JK Source: Bloomberg, Reuters; based on 23 November 2016 closing price

2017 Compendium

215

HM SAMPOERNA

Profit & loss Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FSales 80,690 89,069 96,475 108,243 117,758Gross profit 20,500 21,764 23,565 27,097 29,555EBITDA 14,235 14,467 16,215 18,657 20,230Depreciation 430 419 479 537 578 EBIT 13,805 14,048 15,737 18,119 19,652Net interest inc./(expense) 10 (69) 929 269 125 Share of net results of associates - - - - - Other income/(expense) (111) (62) (105) (105) (105) Pre-tax profit 13,704 13,917 16,560 18,284 19,672Taxes 3,537 3,569 4,265 4,709 5,055 Minority interest - - - - - Extraordinary gain/(losses) - - - - - Net profit 10,167 10,347 12,296 13,575 14,617Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018F Cash and equivalents 65 1,719 2,992 1,252 2,383 S-T investments - - - - - Trade receivables 1,010 2,459 2,663 2,988 3,251 Inventories 17,432 19,072 20,503 22,350 23,695 Fixed assets 5,920 6,281 6,662 7,492 7,862 Other assets 3,955 8,481 7,568 8,142 8,541 Total assets 28,381 38,011 40,388 42,224 45,732 Interest bearing liabilities 2,835 - - - - Trade payables 2,761 3,191 3,142 3,364 3,518 Other liabilities 9,286 2,804 3,279 3,611 3,881 Total liabilities 14,883 5,995 6,421 6,975 7,399 Minority interest - - - - - Shareholders' equity 13,498 32,016 33,967 35,249 38,333 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FEBIT 13,805 14,048 15,737 18,119 19,652 Depreciation 430 419 479 537 578 Working capital 1,172 (9,032) (1,836) (2,084) (1,539) Other operating items (4,304) (4,624) (2,191) (4,792) (5,204) Operating cash flow 11,103 811 12,188 11,781 13,487Net capital expenditure (1,641) (781) (860) (1,367) (948) Free cash flow 9,462 30 11,328 10,414 12,539Equity raised/(bought) (21) 20,414 - - - Net borrowings 393 (2,835) - - - Other financing (10,427) (15,955) (10,055) (12,154) (11,409) Net cash flow (592) 1,654 1,273 (1,740) 1,130Cash flow at beginning 657 65 1,719 2,992 1,252 Ending cash flow 65 1,719 2,992 1,252 2,383Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2014A 2015A 2016F 2017F 2018F ROAE (%) 73.5 45.5 37.3 39.2 39.7 ROAA (%) 36.5 31.2 31.4 32.9 33.2 EBITDA margin (%) 25.4 24.4 24.4 25.0 25.1 EBIT margin (%) 17.6 16.2 16.8 17.2 17.2 Net margin (%) 17.1 15.8 16.3 16.7 16.7 Payout ratio (%) 12.6 11.6 12.8 12.6 12.4 Current ratio (x) 98.4 120.3 100.0 100.0 85.0 Interest coverage (x) 1.5 6.6 6.7 6.4 6.6 Net gearing (%) 291.2 101.5 na na na Debts to assets (%) 20.5 nc nc nc nc Debtor turnover (days) 54 17 16 15 15 Creditor turnover (days) 5 10 10 10 10 Inventory turnover (days) 106 103 103 101 98 Source: Company, Bahana estimates

2017 Compendium

216

HOLCIM INDONESIA HOLD* PX: IDR890 - TP: IDR970* Fundamentals for SMCB, among the big 3 Indonesia cement players,

are still the worst, as operating income remains in the red. Its East Java plant is still ramping up after 2 years, resulting in continued incurred losses. West Java competition is driving SMCB to tap the South Sumatra market which is currently weak given the region’s exposure to CPO for income.

While Holcim and La Farge’s ongoing merger may provide some synergies at the group level, direct operational synergies are still being ironed out and appear to still be years away from implementation. We are not building in any assumptions regarding this in our numbers.

SMCB is now trading at steep discounts to INTP or SMGR on P/Sales and EV/EBITDA. We will only be excited about SMCB once the turnaround in fundamentals occur, perhaps in 2H17. HOLD with TP at IDR970 based on 2017F 0.9x PBV.Risk: More/less intense competition.

Financial highlights* Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Revenues (IDRbn) 9,484 9,239 9,097 9,340 9,717 EBIT (IDRbn) 1,230 324 463 471 540 Net profit (IDRbn) 619 175 (92) 26 87 Bahana/consensus (%) - - (36) 7 20

EPS (IDR) 86 23 (12) 3 11 EPS growth (%) (30.7) (73.5) (152.4) (128.1) 237.5 EV/EBITDA (x) 6.3 15.3 10.1 9.0 7.8 P/E (x) 10.3 38.9 (74.3) 264.5 78.4 FCFPS (IDR) (132) 24 (107) 109 133 FCF yield (%) (14.9) 2.7 (12.0) 12.2 15.0 BVPS (IDR) 1,119 1,103 1,081 1,086 1,090 P/BV (x) 0.8 0.8 0.8 0.8 0.8 DPS (IDR) 65 17 (9) 3 9 Div. yield (%) 7.3 1.9 (1.0) 0.3 1.0 Source: Company, Bahana estimates; note: based on 23 November 2016 closing price

Share price performance

0

6,000

12,000

18,000

24,000

30,000

800

900

1,000

1,100

1,200

1,300

23-Nov-15 23-Jan-16 23-Mar-16 23-May-16 23-Jul-16 23-Sep-16 23-Nov-16

('000)(IDR)

Volume (RHS) SMCB IJ Px Last

(24.0)

(5.8)

(22.3) (21.8)(15.4)

(30.7)

(40)

(30)

(20)

(10)

0

(40)

(30)

(20)

(10)

0

ytd 1M 3M 6M 9M 12M

(%) (%)

SMCB IJ relative to JCI Source: Bloomberg Handi Huta Jaya ([email protected]) +6221 250 5081 ext. 3610 *New, please refer to appendix II

Major assumptions Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Volume capacity ('000 tons) 10,400 13,300 15,300 15,300 15,300 Export volumes ('000 tons) 0 347 300 330 330 Domestic volumes ('000 tons) 8,756 8,635 8,203 8,613 9,044 Total volumes ('000 tons) 8,756 8,981 8,503 8,943 9,374 Utilization rate (%) 84 68 56 58 61 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 1,385/865 12M high/low consensus TP (IDR) : 2,500/650 Majority shareholder (%) : Holderfin BV (80.6) Shares outstanding (mn)/Free float (%) : 7,663/19.4 Mkt. cap. (IDRbn/USDmn) : 6,820/506 3-m avg.daily t.o.(IDRbn/USDmn) : 2.8/0.2 Bloomberg/Reuters code : SMCB IJ/SMCB.JK Source: Bloomberg, Reuters based on 23 November 2016 closing price

2017 Compendium

217

HOLCIM INDONESIA

Profit & loss Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FSales 9,484 9,239 9,097 9,340 9,717Gross profit 2,776 2,139 2,109 2,185 2,261EBITDA 1,914 794 1,296 1,354 1,438Depreciation 684 469 833 883 898 EBIT 1,230 324 463 471 540Net interest inc./(expense) (298) (419) (489) (395) (380) Forex gain/(losses) (31) 136 22 - - Other income/(expense) 960 215 (66) 34 116 Pre-tax profit 929 350 (44) 34 116Taxes (310) (151) (48) (9) (29) Minority interest - - - - - Extraordinary gain/(losses) - - - - - Net profit 660 175 (92) 26 87Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018F Cash and equivalents 215 638 343 1,540 1,908 S-T investments - - - - - Trade receivables 1,035 1,070 994 1,021 1,062 Inventories 629 553 668 686 715 Fixed assets 14,498 14,427 16,293 15,847 15,248 Other assets 822 633 546 522 559 Total assets 17,199 17,322 18,845 19,615 19,492 Interest bearing liabilities 5,374 5,962 6,554 6,904 6,311 Trade payables 1,067 1,082 1,118 1,152 1,198 Other liabilities 2,176 1,828 2,885 3,235 3,632 Total liabilities 8,617 8,872 10,558 11,290 11,142 Minority interest 4 - - - - Shareholders' equity 8,578 8,450 8,287 8,325 8,350 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FEBIT 1,230 324 463 471 540Depreciation 684 469 833 883 898 Working capital 366 (197) 682 155 142 Other operating items (478) (14) (100) (239) (259) Operating cash flow 1,832 1,802 583 1,879 1,270Net capital expenditure (2,815) (398) (2,699) (437) (300) Free cash flow (1,013) 185 (820) 834 1,022Equity raised/(bought) - - - - - Net borrowings 1,749 587 593 350 (593) Other financing (897) (348) (68) 13 (61) Net cash flow (161) 424 (295) 1,196 368Cash flow at beginning 376 215 638 343 1,540 Ending cash flow 215 638 343 1,540 1,908Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2014A 2015A 2016F 2017F 2018F ROAE (%) 7.1 2.1 (1.1) 0.3 1.0 ROAA (%) 3.9 1.0 (0.5) 0.1 0.4 Gross margin (%) 29.3 23.2 23.2 23.4 - EBITDA margin (%) 20.2 8.6 14.2 14.5 14.8 EBIT margin (%) 13.0 3.5 5.1 5.0 5.6 Net margin (%) 6.5 1.9 (1.0) 0.3 0.9 Payout ratio (%) 75.5 75.0 75.0 75.0 75.0 Current ratio (x) 0.6 0.7 0.7 1.1 1.1 Interest coverage (x) 4.1 0.8 0.9 1.2 1.4 Net gearing (%) 60.2 63.0 74.9 64.4 52.7 Debtor turnover (days) 38 43 40 40 40 Creditor turnover (days) 38 45 45 45 45 Inventory turnover (days) 33 35 35 35 35 Source: Company, Bahana estimates

2017 Compendium

218

INDOCEMENT TUNGGAL PRAKASA HOLD* PX: IDR14,575 - TP: IDR15,600* INTP, Indonesia’s second largest cement company, cut prices by 7% in

2Q16 causing its EBIT margin to drop to 20%-25%, per management’s guidance. We need to see if competitors follow suit, and if its market share loss stabilizes. INTP’s regional competitors target bulk markets, which are contracted before project life; hence, INTP’s price cuts may start to show results only after 6-9 months, at the earliest.

In this cycle, INTP has seen the worst fall in supply share, with its fundamentals affected the most as it operates in a region where the utilization rate is the lowest, as INTP, SMCB, Siam Cement, Wilmar add 23mn tons pa grinding capacity to a market consuming 19mn.

INTP is our second sector pick, given its size and balance sheet strength which should allow for mid-term investment to repair its supply share. HOLD with IDR15,600 TP (2017F 16x PE). Risk: Lower/higher-than-expected intense competition.

Financial highlights* Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Revenues (IDRbn) 19,996 17,798 15,424 16,390 17,500 EBIT (IDRbn) 5,880 5,029 3,572 3,789 4,015 Net profit (IDRbn) 5,291 4,357 3,841 3,577 3,789 Bahana/consensus (%) - - 91 90 86

EPS (IDR) 1,437 1,184 1,043 972 1,029 EPS growth (%) 5.6 (17.7) (11.8) (6.9) 5.9 EV/EBITDA (x) 6.4 7.7 9.5 8.6 0.0 P/E (x) 10.1 12.3 14.0 15.0 14.2 FCFPS (IDR) 657 687 675 959 1,044 FCF yield (%) 7.1 7.5 7.3 10.4 11.3 BVPS (IDR) 6,676 6,483 7,112 7,719 8,408 P/BV (x) 2.2 2.2 2.0 1.9 1.7 DPS (IDR) 1,350 414 365 340 360 Div. yield (%) 9.3 2.8 2.5 2.3 2.5 Source: Company, Bahana estimates note: based on 23 November 2016 closing price

Share price performance

0

2,000

4,000

6,000

8,000

14,000

16,000

18,000

20,000

22,000

23-Nov-15 23-Jan-16 23-Mar-16 23-May-16 23-Jul-16 23-Sep-16 23-Nov-16

('000)(IDR)

Volume (RHS) INTP IJ Px Last

(48.2)

(8.6)(15.4)

(20.2)

(36.2) (39.9)

(60)

(50)

(40)

(30)

(20)

(10)

0

(60)

(50)

(40)

(30)

(20)

(10)

0

ytd 1M 3M 6M 9M 12M

(%) (%)

INTP IJ relative to JCISource: Bloomberg Handi Huta Jaya ([email protected]) +6221 250 5081 ext. 3610 *New, please refer to appendix II

Major assumptions Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Volume capacity ('000 tons) 20,500 20,500 24,900 24,900 24,900 Export volumes ('000 tons) 68 176 220 275 343 Domestic volumes ('000 tons) 18,189 16,784 16,113 16,999 18,019 Total volumes ('000 tons) 18,257 16,960 16,332 17,273 18,362 Utilization rate (%) 89 83 66 69 74 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 22,800/14,275 12M high/low consensus TP (IDR) : 22,000/13,750 Majority shareholder (%) : Birchwood Omnia Limited (51.0) Shares outstanding (mn)/Free float (%) : 3,681/36.0 Mkt. cap. (IDRbn/USDmn) : 53,654/3,979 3-m avg.daily t.o.(IDRbn/USDmn) : 26.8/2.0 Bloomberg/Reuters code : INTP IJ/INTP.JK Source: Bloomberg, Reuters based on 23 November 2016 closing price

2017 Compendium

219

INDOCEMENT TUNGGAL PRAKASA

Profit & loss Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FSales 19,996 17,798 15,424 16,390 17,500Gross profit 9,106 7,909 6,372 6,755 7,166EBITDA 6,640 5,887 4,626 4,891 5,156Depreciation 760 858 1,054 1,103 1,142 EBIT 5,880 5,029 3,572 3,789 4,015Net interest inc./(expense) 993 710 656 691 737 Forex gain/(losses) - - - - - Other income/(expense) (57) (94) 35 36 44 Pre-tax profit 6,815 5,645 4,263 4,516 4,796Taxes (1,521) (1,288) (422) (939) (1,007) Minority interest (3) - - - - Extraordinary gain/(losses) - - - - - Net profit 5,291 4,357 3,841 3,577 3,789Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018F Cash and equivalents 11,256 8,656 9,540 11,687 14,272 S-T investments - - - - - Trade receivables 2,640 2,508 1,999 2,132 2,253 Inventories 1,666 1,521 1,305 1,389 1,557 Fixed assets 12,144 13,814 16,392 17,498 18,312 Other assets 1,180 1,140 1,229 1,367 1,577 Total assets 28,885 27,638 30,465 34,074 37,972 Interest bearing liabilities 76 61 31 16 9 Trade payables 1,175 1,103 904 960 1,031 Other liabilities 3,057 2,608 3,349 4,682 5,981 Total liabilities 4,308 3,773 4,284 5,659 7,021 Minority interest - - - - - Shareholders' equity 24,577 23,866 26,182 28,415 30,952 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FEBIT 5,880 5,029 3,572 3,789 4,015 Depreciation 760 858 1,054 1,103 1,142 Working capital (77) 256 584 (91) (134) Other operating items (339) (1,059) 993 1,038 896 Operating cash flow 6,224 5,084 6,102 5,839 5,918Net capital expenditure (3,807) (2,556) (3,616) (2,309) (2,074) Free cash flow 2,417 2,528 2,486 3,529 3,844Equity raised/(bought) - - - - - Net borrowings (17) (15) (30) (15) (8) Other financing (3,739) (5,114) (1,571) (1,367) (1,251) Net cash flow (1,339) (2,600) 885 2,147 2,585Cash balances, beginning 12,595 11,256 8,656 9,540 11,687 Ending cash 11,256 8,656 9,540 11,687 14,272Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2014A 2015A 2016F 2017F 2018F ROAE (%) 22.3 18.0 15.3 13.1 12.8 ROAA (%) 19.1 15.4 13.2 11.1 10.5 Gross Margin (%) 45.5 44.4 41.3 41.2 41.0 EBITDA margin (%) 33.2 33.1 30.0 29.8 29.5 EBIT margin (%) 29.4 28.3 23.2 23.1 22.9 Net margin (%) 26.5 24.5 24.9 21.8 21.6 Payout ratio (%) 93.9 35.0 35.0 35.0 35.0 Current ratio (x) 4.9 4.9 4.6 4.3 4.0 Interest coverage (x) na na na na na Net gearing (%) nc nc nc nc nc Debtor turnover (days) 47 48 47 47 47 Creditor turnover (days) 37 36 36 36 36 Inventory turnover (days) 53 53 53 53 55 Source: Company, Bahana estimates

2017 Compendium

220

INDOFOOD CBP SUKSES MAKMUR BUY PX: IDR8,775 - TP: IDR10,500 Indonesia’s largest consumer-packaged food company (70%+ market

share in instant noodles), ICBP, is likely to continue enjoying margin expansion on a stronger IDR outlook and soft raw materials prices like flour (20% of COGS) and skim milk (35%) on favorable weather.

In 2017, we continue to like ICBP’s defensive nature as its noodles should remain one of the most affordable staples in the market, priced at below USD0.20/pack, despite past price hikes which have allowed for margin support. At this stage, we like ICBP’s ability to grab higher market share for its condensed and liquid milk divisions, helped by more aggressive promotions.

On valuation, our 12-month TP of IDR10,500 is based on a 2017F PE of 30x, at par with ICBP’s historical trading average. BUY. Risks include continued losses of its beverages division on rising A&P to gain market share and higher raw material prices.

Financial highlights* Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Revenues (IDRbn) 30,022 31,741 35,154 38,396 41,522 EBIT (IDRbn) 3,063 3,908 5,096 5,085 5,269 Net profit (IDRbn) 2,604 3,001 3,876 4,091 4,275 Bahana/consensus (%) - - 110 103 108 EPS (IDR) 223 257 332 351 367 EPS growth (%) 17.0 15.2 29.2 5.5 4.5 EV/EBITDA (x) 28.9 22.3 17.0 16.6 15.9 P/E (x) 39.3 34.1 26.4 25.0 23.9 FCFPS (IDR) 10 9 22 7 20 FCF yield (%) 0.1 0.1 0.3 0.1 0.2 BVPS (IDR) 1,207 1,355 1,560 1,775 2,001 P/BV (x) 7.3 6.5 5.6 4.9 4.4 DPS (IDR) 95 111 128 135 141 Div. yield (%) 1.1 1.3 1.5 1.5 1.6 Source: Company, Bahana estimates note: based on 23 November 2016 closing price

Share price performance

0

5,000

10,000

15,000

20,000

5,000

6,000

7,000

8,000

9,000

10,000

23-Nov-15 23-Jan-16 23-Mar-16 23-May-16 23-Jul-16 23-Sep-16 23-Nov-16

('000)(IDR)

Volume (RHS) ICBP IJ Px Last

16.8

(4.7)(2.4)

(0.0)

2.9

22.3

(10)(5)0510152025

(10)(5)05

10152025

ytd 1M 3M 6M 9M 12M

(%) (%)

ICBP IJ relative to JCISource: Bloomberg Michael W Setjoadi ([email protected]) +6221 250 5081 (ext. 3620) *New, please refer to appendix II

Major assumptions Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Noodles sales volume (bn packs) 12.6 12.7 12.8 13.0 13.2 Avg. price per pack (IDR) 1,582 1,651 1,767 1,882 1,957 Dairy sales vol. ('000tons) 198 232 283 297 327 Dairy ASP (IDR/kg) 21,009 19,959 19,559 19,755 20,150 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 10,275/5,663 12M high/low consensus TP (IDR) : 11,800/8,100 Majority shareholder (%) : First Pacific Co. Ltd. (80.5) Shares outstanding (mn)/Free float (%) : 11,662/19.5 Mkt. cap. (IDRbn/USDmn) : 102,333/7,590 3-m avg.daily t.o.(IDRbn/USDmn) : 51.5/3.8 Bloomberg/Reuters code : ICBP IJ/ICBP.JK Source: Bloomberg, Reuters; based on 23 November 2016 closing price

2017 Compendium

221

INDOFOOD CBP SUKSES MAKMUR

Profit & loss Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FSales 30,022 31,741 35,154 38,396 41,522Gross profit 8,060 9,619 11,142 11,689 12,411EBITDA 3,400 4,381 5,618 5,699 5,861Depreciation 337 473 523 614 592 EBIT 3,063 3,908 5,096 5,085 5,269Net interest inc./(expense) 175 280 52 237 285 Forex gain/(losses) 115 (168) (100) - - Other income/(expense) 36 (10) (11) (12) (13) Pre-tax profit 3,389 4,010 5,036 5,310 5,542Taxes (857) (1,086) (1,245) (1,313) (1,370) Minority interest 73 78 85 94 103 Extraordinary gain/(losses) - - - - - Net profit 2,604 3,001 3,876 4,091 4,275Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018F Cash and equivalents 7,343 7,658 10,949 11,387 13,142 S-T investments 60 99 90 82 75 Trade receivables 2,902 3,364 3,725 4,069 4,400 Inventories 2,822 2,547 2,764 3,468 3,781 Fixed assets 5,809 6,556 7,133 8,519 9,227 Other assets 5,945 6,337 7,394 8,753 10,648 Total assets 24,881 26,560 32,056 36,280 41,274 Interest bearing liabilities 3,406 2,869 4,140 3,880 3,787 Trade payables 2,813 2,581 2,801 3,116 3,396 Other liabilities 3,493 4,553 5,705 7,226 9,257 Total liabilities 9,870 10,174 12,843 14,448 16,700 Minority interest 963 932 1,025 1,128 1,242 Shareholders' equity 14,078 15,804 18,188 20,704 23,332 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FEBIT 3,063 3,908 5,096 5,085 5,269 Depreciation 337 473 523 614 592 Working capital 461 391 (195) (506) (159) Other operating items (1,674) (2,786) (2,363) (2,568) (2,637) Operating cash flow 2,188 1,986 3,060 2,625 3,066Net capital expenditure (1,302) (1,219) (1,100) (2,000) (1,300) Free cash flow 886 767 1,960 625 1,766Equity raised/(bought) - - - - - Net borrowings 886 (537) 1,271 (260) (93) Other financing 45 85 60 72 81 Net cash flow 1,817 315 3,291 438 1,755Cash flow at beginning 5,526 7,343 7,658 10,949 11,387 Ending cash flow 7,343 7,658 10,949 11,387 13,142Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2014A 2015A 2016F 2017F 2018F ROAE (%) 19.5 20.1 22.8 21.0 19.4 ROAA (%) 11.3 11.7 13.2 12.0 11.0 EBITDA margin (%) 11.3 13.8 16.0 14.8 14.1 EBIT margin (%) 10.2 12.3 14.5 13.2 12.7 Net margin (%) 8.7 9.5 11.0 10.7 10.3 Payout ratio (%) 42.5 43.1 38.5 38.5 38.5 Current ratio (x) 2.2 2.3 2.4 2.5 2.7 Interest coverage (x) na na na na na Net gearing (%) nc nc nc nc nc Debts to assets (%) 13.7 10.8 12.9 10.7 9.2 Debtor turnover (days) 35 39 39 39 39 Creditor turnover (days) 47 43 43 43 43 Inventory turnover (days) 47 42 42 47 47 Source: Company, Bahana estimates

2017 Compendium

222

INDOFOOD SUKSES MAKMUR BUY PX: IDR7,700 - TP: IDR9,800* INDF, the holding company of the Salim Group, is likely to benefit

from higher CPO prices (18% of sales) and the continued success of its subsidiary ICBP (48% of revenues), particularly amid less intense flour (24% of 9M16 revenues) competition, which has seen closures of 3 flour millers from 33 players to 30.

Another positive catalyst stems from the recent Min Zhong divestment, although there has been no significant gain/loss; nevertheless, INDF has received SGD235mn of exchangeable bonds and SGD416mn of cash, mostly to be used for deleveraging.

Our 12-month TP of IDR9,800 is based on a 2017F PE of 19x, and set at a 40% discount to our target PE for ICBP (30x), as we take into account INDF’s holding-company status and higher portion of volatile, commodity-based earnings. BUY. Risks include intensifying flour competition and lower-than-expected CPO prices.

Financial highlights* Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Revenues (IDRbn) 63,594 64,062 70,120 76,004 81,562 EBIT (IDRbn) 6,874 6,877 8,876 9,488 9,771 Net profit (IDRbn) 3,885 2,968 4,498 4,512 4,652 Bahana/consensus (%) - 91 109 96 99 EPS (IDR) 443 338 512 514 530 EPS growth (%) 55.2 (23.6) 51.6 0.3 3.1 EV/EBITDA (x) 9.1 9.4 7.1 6.7 0.0 P/E (x) 17.4 22.8 15.0 15.0 14.5 FCFPS (IDR) 315.1 (80.7) 402.2 339.2 581.1 FCF yield (%) 4.1 (1.0) 5.2 4.4 7.5 BVPS (IDR) 2,927 3,106 3,368 3,640 3,928 P/BV (x) 2.6 2.5 2.3 2.1 2.0 DPS (IDR) 220 164 248 249 256 Div. yield (%) 2.9 2.1 3.2 3.2 3.3 Source: Company, Bahana estimates note: based on 23 November 2016 closing price

Share price performance

0

10,000

20,000

30,000

40,000

50,000

4,500

5,500

6,500

7,500

8,500

9,500

23-Nov-15 23-Jan-16 23-Mar-16 23-May-16 23-Jul-16 23-Sep-16 23-Nov-16

('000)(IDR)

Volume (RHS) INDF IJ Px Last

35.3

(8.1)

1.3 2.1 1.7

26.5

(20)

(10)

0

10

20

30

40

(20)

(10)

0

10

20

30

40

ytd 1M 3M 6M 9M 12M

(%) (%)

INDF IJ relative to JCISource: Bloomberg Michael W Setjoadi ([email protected]) +6221 250 5081 (ext. 3620) *New, please refer to appendix II

Major assumptions Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Flour sales volume ('000 tons) 2,880 2,937 3,050 3,174 3,303 Average flour price per kg (IDR) 6,918 6,530 6,207 6,369 6,117 Wheat price (USD/tons) 285 260 255 255 255 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 9,200/4,84012M high/low consensus TP (IDR) : 11,500/5,830Majority shareholder (%) : First Pacific Co. Ltd. (50.1)Shares outstanding (mn)/Free float (%) : 8,780/49.9Mkt. cap. (IDRbn/USDmn) : 67,609/5,0143-m avg.daily t.o.(IDRbn/USDmn) : 96.2/7.2Bloomberg/Reuters code : INDF IJ/INDF.JKSource: Bloomberg, Reuters; based on 23 November 2016 closing price

2017 Compendium

223

INDOFOOD SUKSES MAKMUR

Profit & loss Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FSales 63,594 64,062 70,120 76,004 81,562Gross profit 17,050 17,258 20,236 21,725 22,902EBITDA 8,842 8,744 11,571 12,330 12,680Depreciation 1,968 1,867 2,695 2,842 2,909 EBIT 6,874 6,877 8,876 9,488 9,771Net interest inc./(expense) (882) (935) (781) (944) (814) Forex gain/(losses) 29 (1,132) 450 - - Other income/(expense) 207 152 (363) (340) (301) Pre-tax profit 6,229 4,962 8,183 8,204 8,656Taxes (1,828) (1,730) (2,864) (2,789) (2,943) Minority interest (1,261) (742) (1,220) (1,242) (1,311) Income from discountinued op. 745 478 400 340 250 Net profit 3,885 2,968 4,498 4,512 4,652Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018F Cash and equivalents 14,158 13,076 14,477 17,986 20,951 S-T investments 665 1,091 776 853 939 Trade receivables 4,340 5,117 5,455 5,913 6,345 Inventories 8,455 7,627 8,200 8,923 9,643 Fixed assets 30,575 34,184 36,289 38,447 38,839 Other assets 27,270 39,825 28,115 30,661 33,191 Total assets 86,059 100,920 93,312 102,784 109,907 Interest bearing liabilities 31,084 33,637 29,224 31,869 31,852 Trade payables 5,151 5,174 6,044 6,577 7,108 Other liabilities 8,595 18,986 12,476 14,775 17,094 Total liabilities 44,829 57,798 47,744 53,221 56,053 Minority interest 15,529 15,853 16,000 17,600 19,360 Shareholders' equity 25,701 27,269 29,568 31,963 34,494 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FEBIT 6,874 6,877 8,876 9,488 9,771 Depreciation 1,968 1,867 2,695 2,842 2,909 Working capital 1,506 (2,127) 405 (618) (520) Other operating items (2,710) (2,665) (3,645) (3,734) (3,757) Operating cash flow 7,639 3,952 8,332 7,978 8,403Net capital expenditure (4,872) (4,661) (4,800) (5,000) (3,300) Free cash flow 2,767 (709) 3,532 2,978 5,103Equity raised/(bought) - 396 3,678 - - Net borrowings 3,764 2,554 (4,413) 2,645 (17) Other financing (6,040) (3,322) (1,395) (2,114) (2,121) Net cash flow 491 (1,081) 1,401 3,509 2,964Cash flow at beginning 13,666 14,158 13,076 14,477 17,986 Ending cash flow 14,158 13,076 14,477 17,986 20,951Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2014A 2015A 2016F 2017F 2018F ROAE (%) 15.8 11.2 15.8 14.7 14.0 ROAA (%) 4.7 3.2 4.6 4.6 4.4 EBITDA margin (%) 13.9 13.6 16.5 16.2 15.5 EBIT margin (%) 10.8 10.7 12.7 12.5 12.0 Net margin (%) 6.1 4.6 6.4 5.9 5.7 Payout ratio (%) 49.9 48.2 47.0 47.0 47.0 Current ratio (x) 1.8 1.7 2.3 1.9 1.8 Interest coverage (x) 7.8 7.4 11.4 10.0 12.0 Net gearing (%) 49.6 53.2 49.9 43.4 31.6 Debts to assets (%) 31.3 27.3 31.3 31.0 29.0 Debtor turnover (days) 28 27 28 27 27 Creditor turnover (days) 39 40 41 42 43 Inventory turnover (days) 65 63 58 58 58 Source: Company, Bahana estimates

2017 Compendium

224

INDOMOBIL SUKSES INTERNATIONAL BUY PX: IDR1,400 - TP: IDR2,000 Going into 2017, IMAS, the second-largest listed auto player, plans to

expand its product lines by launching a new SUV model (Datsun) and new Nissan Juke model, targetting the IDR150mn and IDR250mn markets. IMAS plans to launch several new products thereafter.

As a cyclical company with high operating leverage, IMAS should benefit from higher 2017F GDP growth of 5.3% and a lower interest rate environment. A stable IDR would also support equity income from the manufactruring side. IMAS should also enjoy strong growth from its financial services, rental and logistics subsidiary, IMJS.

We expect IMAS’s net profit to fully recover in 2018, following higher auto sales and market share. Thus, we expect IMAS’s severe market underperformance to reverse and maintain our BUY rating and DCF-based TP of IDR2,000 reflecting a 2017F PE of 20x (20% premium to region). Risks: Lower auto sales and margins.

Financial highlights Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Revenues (IDRbn) 19,458 18,100 15,278 19,604 30,828 EBIT (IDRbn) 224 98 161 532 951 Net profit (IDRbn) (147) (46) (207) 285 830 Bahana/consensus (%) - - (32) 44 127

EPS (IDR) (53) (17) (75) 103 300 EPS growth (%) na na na na 190.6 EV/EBITDA (x) 23.5 27.9 29.9 20.4 17.0 P/E (x) na na na 13.6 4.7 FCFPS (IDR) 269 152 (115) (36) (430) FCF yield (%) 19.2 10.9 (8.2) (2.6) (30.7) BVPS (IDR) 2,070 2,033 1,958 2,062 2,336 P/BV (x) 0.7 0.7 0.7 0.7 0.6 DPS (IDR) 10 - - 26 75 Div. yield (%) 0.7 - - 1.8 5.4 Source: Company, Bahana estimates Note: based on 23 November 2016 closing price

Share price performance

0

500

1,000

1,500

2,000

1,200

1,700

2,200

2,700

23-Nov-15 23-Jan-16 23-Mar-16 23-May-16 23-Jul-16 23-Sep-16 23-Nov-16

('000)(IDR)

Volume (RHS) IMAS IJ Px Last

(54.3)

9.7

(6.2)(19.3)

(46.7)(61.0)

(80)

(60)

(40)

(20)

0

20

(80)

(60)

(40)

(20)

0

20

ytd 1M 3M 6M 9M 12M

(%) (%)

IMAS IJ relative to JCI Source: Bloomberg Leonardo Henry Gavaza, CFA ([email protected]) +6221 2505735 ext. 3608 *New, please refer to appendix II

Major assumptions Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Automotive Market Sales (‘000) 1,208 1,013 1,040 1,196 1,316 Nissan Market Share (%) 4.4 5.4 4.1 4.5 7.5 IMAS retail sales (unit) 52,736 54,493 42,276 54,298 98,336 EBIT Margin (%) 1.2 0.5 1.1 2.7 3.1 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 2,650/1,250 12M High/low consensus TP (IDR) : 2,000/1,200 Majority shareholder (%) : Gallant Venture (71.5) Shares outstanding (mn)/Free float (%) : 2,765/10.5 Mkt. cap. (IDRbn/USDmn) : 3,871/287 3-m avg.daily t.o.(IDRbn/USDmn) : 0.03/0.0 Bloomberg/Reuters code : IMAS IJ/IMAS.JK Source: Bloomberg, Reuters; note: based on 23 November 2016 closing price

2017 Compendium

225

INDOMOBIL SUKSES INTERNATIONAL

Profit & loss Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FSales 19,458 18,100 15,278 19,604 30,828Gross profit 2,636 2,748 2,710 3,376 4,721EBITDA 692 629 664 1,077 1,535Depreciation 468 531 503 546 584 EBIT 224 98 161 532 951Net interest inc./(expense) (704) (656) (688) (802) (978) Forex gain/(losses) 53 36 11 - - Other income/(expense) 445 725 281 658 1,113 Pre-tax profit 19 203 (235) 388 1,086Taxes (105) (226) 47 (78) (217) Minority interest (61) (23) (20) (25) (40) Extraordinary gain/(losses) - - - - - Net profit (147) (46) (207) 285 830Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018F Cash and equivalents 1,134 1,323 1,466 975 1,007 S-T investments - - - - - Trade receivables 3,012 3,252 3,208 3,725 5,549 Inventories 3,366 2,819 2,514 3,246 5,221 Fixed assets 4,378 4,593 4,791 5,145 5,461 Other assets 11,583 12,874 14,380 15,840 18,421 Total assets 23,474 24,861 26,358 28,930 35,659 Interest bearing liabilities 13,496 15,024 17,458 19,052 23,186 Trade payables 2,320 2,339 1,622 2,094 3,369 Other liabilities 937 800 770 965 1,487 Total liabilities 16,754 18,164 19,849 22,110 28,041 Minority interest 995 1,074 1,094 1,119 1,159 Shareholders' equity 5,725 5,623 5,415 5,701 6,459 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FEBIT 224 98 161 532 951 Depreciation 468 531 503 546 584 Working capital 808 88 (711) (858) (2,721) Other operating items 340 499 328 581 896 Operating cash flow 1,840 1,216 281 800 (290)Net capital expenditure (1,097) (795) (600) (900) (900) Free cash flow 743 421 (319) (100) (1,190)Equity raised/(bought) 66 (29) - - - Net borrowings 957 1,528 2,433 1,594 4,134 Other financing (1,754) (1,732) (1,971) (1,985) (2,912) Net cash flow 13 189 143 (491) 33Cash balances, beginning 1,122 1,134 1,323 1,466 975 Ending cash 1,134 1,323 1,466 975 1,007Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2014A 2015A 2016F 2017F 2018F ROAE (%) (2.6) (0.8) (3.8) 5.1 13.6 ROAA (%) (0.6) (0.2) (0.8) 1.0 2.6 Gross margin (%) 13.5 15.2 17.7 17.2 15.3 EBITDA margin (%) 3.6 3.5 4.3 5.5 5.0 EBIT margin (%) 1.2 0.5 1.1 2.7 3.1 Net margin (%) (0.8) (0.3) (1.4) 1.5 2.7 Payout ratio (%) (18.7) - - 25.0 25.0 Current ratio (x) 1.0 0.9 0.9 0.9 0.9 Interest coverage (x) 0.3 0.1 0.2 0.7 1.0 Net gearing (%) 215.9 243.7 295.3 317.1 343.4 Debtor turnover (days) 41 41 41 41 41 Creditor turnover (days) 23 23 23 23 23 Inventory turnover (days) 43 43 43 43 43 Source: Company, Bahana estimates

2017 Compendium

226

INDOSAT OOREDOO BUY PX: IDR6,300 - TP: IDR8,500 ISAT, a telco operator with the second largest number of subscribers,

should continue to benefit from its aggressive promotions in the Outer Java area as well as its attractive packages in the Greater Jakarta area.

Going into 2017, we expect ISAT to continue its strong momentum, booking solid revenue growth helped by higher data usage and improved pricing policy. Thus, increasing top lines, coupled with well-maintained operating costs, should lead to higher EBITDA margins and strong net earnings of IDR2tn in 2017, +93% y-y, and IDR3.1tn in 2018, +53% y-y.

The stock is arguably the cheapest telco play in the region on a 2017 EV/EBITDA of 3.6x, and we reaffirm our BUY call with a DCF-based TP of IDR8,500, reflecting a 2017F EV/EBITDA of 4.4x, still an attractive 51% discount to its regional peers. Main risk: Weak IDR on USD debt.

Financial highlights* Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Revenues (IDRbn) 24,085 26,769 28,945 31,388 33,979 EBIT (IDRbn) 1,807 2,704 3,663 4,568 5,467 Net profit (IDRbn) (2,008) (1,310) 1,062 2,045 3,131 Bahana/consensus (%) - - 107 109 119

EPS (IDR) (370) (241) 195 376 576 EPS growth (%) na na na 92.6 53.1 EV/EBITDA (x) 5.4 4.7 4.2 3.6 3.0 P/E (x) na na 32.2 16.7 10.9 FCFPS (IDR) 420 (152) 146 625 752 FCF yield (%) 6.7 (2.4) 2.3 9.9 11.9 BVPS (IDR) 2,506 2,297 2,551 3,041 3,790 P/BV (x) 2.5 2.7 2.5 2.1 1.7 DPS (IDR) - - 59 113 173 Div. yield (%) - - 0.9 1.8 2.7 Source: Company, Bahana estimates Note: based on 23 November 2016 closing price

Share price performance

0

1,000

2,000

3,000

4,000

5,000

4,500

5,000

5,500

6,000

6,500

7,000

7,500

23-Nov-15 23-Jan-16 23-Mar-16 23-May-16 23-Jul-16 23-Sep-16 23-Nov-16

('000)(IDR)

Volume (RHS) ISAT IJ Px Last

1.1 2.1 6.2

(15.1)

16.6

(0.2)

(20)

(10)

0

10

20

(20)

(10)

0

10

20

ytd 1M 3M 6M 9M 12M

(%) (%)

ISAT IJ relative to JCI Source: Bloomberg Leonardo Henry Gavaza, CFA ([email protected]) +6221 2505081 ext. 3608 *New, please refer to appendix II

Major assumptions Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Subscribers (‘000) 63,200 69,800 81,666 83,708 85,800 Net additional (‘000) 3,600 6,600 11,866 2,042 2,093 ARPU (IDR’000/month) 27 26 26 28 30 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 7,125/4,700 12M High/low consensus TP (IDR) : 10,900/5,900 Majority shareholder (%) : Ooredoo Asia Pte Ltd (65.0) Share outstanding (mn)/Free float (%) : 5,434/20.7 Mkt. cap. (IDRbn/USDmn) : 34,234/2,539 3-m avg.daily t.o.(IDRbn/USDmn) : 4.1/0.3 Bloomberg/Reuters code : ISAT IJ/ISAT.JK Source: Bloomberg, Reuters; based on 23 November 2016 closing price

2017 Compendium

227

INDOSAT OOREDOO

Profit & loss Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FSales 24,085 26,769 28,945 31,388 33,979Gross profit - - - - -EBITDA 10,033 11,473 12,452 13,479 14,495Depreciation 8,226 8,769 8,789 8,911 9,028 EBIT 1,807 2,704 3,663 4,568 5,467Net interest inc./(expense) (2,264) (2,611) (2,168) (1,712) (1,144) Forex gain/(losses) (243) (1,293) 130 - - Other income/(expense) (1,262) (587) 2 100 100 Pre-tax profit (1,962) (1,786) 1,627 2,956 4,423Taxes 84 622 (407) (739) (1,106) Minority interest (130) (147) (158) (172) (186) Extraordinary gain/(losses) - - - - - Net profit (2,008) (1,310) 1,062 2,045 3,131Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018F Cash and equivalents 3,486 3,701 2,123 2,452 2,802 S-T investments - - - - - Trade receivables 2,101 2,741 2,824 3,062 3,315 Inventories 49 39 67 72 76 Fixed assets 40,776 41,822 39,808 38,115 36,765 Other assets 6,858 7,085 6,432 6,949 7,498 Total assets 53,270 55,389 51,254 50,650 50,456 Interest bearing liabilities 23,146 23,676 20,676 16,676 11,676 Trade payables 691 764 790 838 891 Other liabilities 15,134 17,685 15,056 15,651 16,232 Total liabilities 38,971 42,125 36,522 33,165 28,799 Minority interest 681 781 868 963 1,065 Shareholders' equity 13,618 12,483 13,863 16,522 20,593 Source: Company, Bahana estimates

Cashflow Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FEBIT 1,807 2,704 3,663 4,568 5,467 Depreciation 8,226 8,769 8,789 8,911 9,028 Working capital 521 (557) (85) (194) (204) Other operating items (1,241) (1,692) (4,576) (2,446) (2,304) Operating cash flow 9,313 9,225 7,791 10,839 11,987Net capital expenditure (7,033) (10,048) (7,000) (7,443) (7,904) Free cash flow 2,280 (823) 791 3,396 4,084Equity raised/(bought) - - - - - Net borrowings (785) 530 (3,000) (4,000) (5,000) Other financing (243) 509 631 933 1,267 Net cash flow 1,252 215 (1,578) 329 350Cash balances, beginning 2,234 3,486 3,701 2,123 2,452 Ending cash 3,486 3,701 2,123 2,452 2,802Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2014A 2015A 2016F 2017F 2018F ROAE (%) (13.5) (10.0) 8.1 13.5 16.9 ROAA (%) (3.7) (2.4) 2.0 4.0 6.2 EBITDA margin (%) 41.7 42.9 43.0 42.9 42.7 EBIT margin (%) 7.5 10.1 12.7 14.6 16.1 Net margin (%) (8.3) (4.9) 3.7 6.5 9.2 Payout ratio (%) - - 30.0 30.0 30.0 Current ratio (x) 0.4 0.5 0.4 0.5 0.7 Interest coverage (x) 0.8 1.0 1.7 2.7 4.8 Net gearing (%) 144.4 160.0 133.8 86.1 43.1 Debts to assets (%) 43.5 42.7 40.3 32.9 23.1 Debtor turnover (days) 33 33 36 36 36 Creditor turnover (days) 8 11 11 11 11 Inventory turnover (days) 1 1 1 1 1 Source: Company, Bahana estimates

2017 Compendium

228

INDO TAMBANGRAYA MEGAH BUY PX:IDR16,200 – TP:IDR19,460 Going into 2017, ITMG, Indonesia’s leading coal supplier known for its

coal quality, is in a sweet spot given the current low oil price, high coal price operating conditions. Additionally, having formed a JV company, ITM Banpu Power, it plans to deal directly in IPP tenders focusing on big powerplant capacity that ranges between 800-1,000MW.

Supported by higher coal index prices, we expect ITMG to experience gross margin expansion, leading to 2017F net profit growth of 25.5% y-y and 11.9% y-y in 2018F.

Despite the short mine life of 8-10 years, we expect Indo Tambangraya Megah to perform much better in 2017F and 2018F as the company focuses on: (1) Internal mining contracts, (2) IPP tenders and (3) mine acquisitions. We retain our BUY rating with a 12M DCF-based TP of IDR19,460 and WACC of 14.5%. Risks to our call: Lower coal price and higher-than-expected stripping ratio.

Financial highlights* Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Revenues (USDm) 1,943 1,589 1,220 1,513 1,540 EBIT (USDm) 237 194 150 188 199 Net profit (USDm) 201 63 94 118 132 Bahana/consensus (%) 104 96 98

EPS (IDR) 2,113 754 1,122 1,408 1,577 EPS growth (%) 1.4 (64.3) 48.9 25.5 12.0 EV/EBITDA (x) 4.4 4.7 7.2 5.6 4.2 P/E (x) 7.7 21.5 14.4 11.5 10.3 FCFPS (IDR) 1,625 1,838 1,612 1,383 1,265 FCF yield (%) 10.0 11.3 10.0 8.5 7.8 BVPS (IDR) 9,296 9,966 9,928 9,783 9,862 P/BV (x) 1.7 1.6 1.6 1.7 1.6 DPS (IDR) 1,682 811 1,122 1,408 1,498 Div. yield (%) 10.4 5.0 6.9 8.7 9.2 Source: Company, Bahana estimates note: based on 23 November 2016 closing price

Share price performance

0

5,000

10,000

15,000

2,000

6,000

10,000

14,000

18,000

23-Nov-15 23-Jan-16 23-Mar-16 23-May-16 23-Jul-16 23-Sep-16 23-Nov-16

('000)(IDR)

Volume (RHS) ITMG IJ Px Last

169.5

26.4 50.1

84.7

167.3

108.7

0

50

100

150

200

0

50

100

150

200

ytd 1M 3M 6M 9M 12M

(%) (%)

ITMG IJ relative to JCI Source: Bloomberg Andrew Hotama ([email protected]) +6221 2505081 ext. 3619 *New, please refer to appendix II

Major assumptions Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Sales volume (mt) 29.0 28.2 26.3 27.5 27.5

Newcastle spot price (USD/ton) 70.8 57.8 55.0 57.5 57.5

Avg. selling price (USD/ton) 67.0 56.0 46.4 55.0 56.0 Stripping ratio 10.1 8.5 8.4 10.1 9.5 Avg. exchange rate (IDR/USD) 11,875 13,494 13,500 13,500 13,500 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 18,350/4,675 12M High/low consensus TP (IDR) : 14,108/5,740 Majority shareholder (%) : Banpu Minerals (65.1) Shares outstanding (mn)/Free float (%) : 1,130/29.1 Mkt. cap. (IDRbn/USDmn) : 18,305/1,346 3-m avg.daily t.o.(IDRbn/USDmn) : 30.0/2.2 Bloomberg/Reuters code : ITMG IJ/ITMG.JK Source: Bloomberg, Reuters; based on 23 November 2016 closing price

2017 Compendium

229

INDO TAMBANGRAYA MEGAH

Profit & loss Year to 31 Dec (USDmn) 2014A 2015A 2016F 2017F 2018FSales 1,943 1,589 1,220 1,513 1,540Gross profit 409 350 259 331 345EBITDA 301 233 186 240 255Depreciation 64 39 37 52 56 EBIT 237 194 150 188 199Net interest inc./(expense) 6 4 3 3 3 Forex gain/(losses) (1) (5) (2) - - Other income/(expense) 21 (54) (17) (24) (15) Pre-tax profit 263 139 133 167 187Taxes (62) (76) (39) (49) (55) Minority interest - - - - - Extraordinary gain/(losses) - - - - - Net profit 201 63 94 118 132Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (USDmn) 2014A 2015A 2016F 2017F 2018F Cash and equivalents 226 268 304 300 284 S-T investments - - - - - Trade receivables 170 112 102 124 127 Inventories 150 117 84 104 105 Fixed assets 286 255 250 255 255 Other assets 478 427 371 385 368 Total assets 1,310 1,178 1,111 1,168 1,138 Interest bearing liabilities - - - - - Trade payables 165 121 98 141 101 Other liabilities 261 223 182 207 212 Total liabilities 426 344 280 349 313 Minority interest - - - - - Shareholders' equity 885 835 831 819 825 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (USDmn) 2014A 2015A 2016F 2017F 2018FEBIT 237 194 150 188 199 Depreciation 64 39 37 52 56 Working capital (36) 19 (10) (4) (41) Other operating items (63) (90) (8) (58) (46) Operating cash flow 202 162 169 177 167Net capital expenditure (47) (8) (34) (62) (62) Free cash flow 155 154 135 116 106Equity raised/(bought) - - - - - Net borrowings (2) 1 (1) - - Other financing (215) (113) (97) (120) (123) Net cash flow (63) 42 36 (4) (17)Cash flow at beginning 289 226 268 304 300 Ending cash flow 226 268 304 300 284Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2014A 2015A 2016F 2017F 2018F ROAE (%) 22.6 7.3 11.1 14.3 16.1 ROAA (%) 15.2 5.1 6.8 8.4 11.4 EBITDA margin (%) 15.5 14.7 15.3 15.8 16.6 EBIT margin (%) 12.2 12.2 12.3 12.4 12.9 Net margin (%) 10.3 4.0 7.7 7.8 8.6 Payout ratio (%) 99.5 181.5 1.0 1.0 1.0 Current ratio (x) 1.6 1.8 2.2 1.9 2.1 Interest coverage (x) na na na na na Net gearing (%) nc nc nc nc nc Debts to assets (%) - - - - - Debtor turnover (days) 39 36 37 37 37 Creditor turnover (days) 32 26 30 30 30 Inventory turnover (days) 36 35 32 32 32 Source: Company, Bahana estimates

2017 Compendium

230

INTILAND DEVELOPMENT* BUY PX: IDR515 - TP: IDR680 Known as a high-end specialist with more than 40 years’ experience,

DILD is focusing on high-rise projects in order to maximize its expensive landbanks located in the Greater Jakarta and Surabaya areas. Further catalysts should be derived from plans to develop its mid-low end 1,083ha Maja and H island reclamation projects in 2018.

In 2017, post the tax amnesty program, we believe DILD will benefit from an expected increase in high-end property demand. With DILD having 4 ready-to-sell luxury apartments worth IDR1.4tn priced at IDR25-50mn/sqm, we forecast 15% marketing sales growth in 2017.

Given DILD’s high-value assets, ample landbank and solid project take-up rates, we initiate coverage on the counter with a 12-month target price of IDR680, based on 70% discount to our 2017F NAV. BUY. Risks to our call include infrastructure-development delays and continued slow high-end property demand.

Financial highlights* Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Revenues (IDRbn) 1,828 2,201 2,059 2,214 2,361 EBIT (IDRbn) 598 457 512 569 624 Net profit (IDRbn) 429 402 294 323 366 Bahana/cons.(%) - - 81 74 70

EPS (IDR) 42 39 29 31 36 EPS growth (%) 33.7 (6.3) (26.7) 9.6 13.6 EV/EBITDA (x) 13.6 16.5 15.6 15.0 14.3 P/E (x) 12.3 13.2 18.0 16.4 14.4 FCFPS (IDR) (43) 15 (80) 6 13 FCF yield (%) (0.4) 0.1 (0.8) 0.1 0.1 BVPS (IDR) 435 465 471 478 485 P/BV (x) 1.2 1.1 1.1 1.1 1.1 DPS (IDR) 8 8 8 6 6 Div. yield (%) 1.6 1.6 1.5 1.1 1.2 Source: Company, Bahana estimates note: based on 23 November 2016 closing price

Share price performance

0

50,000

100,000

150,000

200,000

450

500

550

600

650

700

23-Nov-15 23-Jan-16 23-Mar-16 23-May-16 23-Jul-16 23-Sep-16 23-Nov-16

('000)(IDR)

Volume (RHS) DILD IJ Px Last

(8.2) (7.6) (8.9)

(12.7)

(7.6)

(10.1)

(14)(12)(10)(8)(6)(4)(2)0

(14)(12)(10)(8)(6)(4)(2)0

ytd 1M 3M 6M 9M 12M

(%) (%)

DILD IJ relative to JCI Source: Bloomberg Sanni Satrio Dwi Utomo ([email protected]) +6221 2505081 ext. 3611 *New, please refer to appendix II

NAV Calculation 2017F

Land bank (Ha) 2,047 Total value (IDRbn) 13,929 Discount (%) 70 Adjusted NAV (IDR) 7,012 Adjusted NAV/share (IDR) 680 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 665/455 12M High/low consensus TP (IDR) : 780/595 Majority shareholder (%) : UBS AG/Singapore (22.2) Share outstanding (mn)/Free float (%) : 10,267/80.9 Mkt. cap. (IDRbn/USDmn) : 5,338/395 3-m avg.daily t.o.(IDRbn/USDmn) : 14.1/1.1 Bloomberg/Reuters code : DILD IJ/DILD.JK Source: Bloomberg, Reuters; based on 23 November 2016 closing price

2017 Compendium

231

INTILAND DEVELOPMENT

Profit & loss Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FSales 1,828 2,201 2,059 2,214 2,361Gross profit 993 1,043 942 1,032 1,118EBITDA 605 488 591 655 730Depreciation 7 31 80 87 106 EBIT 598 457 512 569 624Net interest inc./(expense) (87) (71) (133) (153) (168) Forex gain/(losses) (0) 0 3 - - Other income/(expense) 17 33 30 30 33 Pre-tax profit 528 419 411 446 489Taxes (96) (0) (99) (106) (105) Minority interest (3) (18) (18) (18) (18) Extraordinary gain/(losses) - - - - - Net profit 429 402 294 323 366Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018F Cash and equivalents 552 405 448 467 511 S-T investments - - - - - Trade receivables 116 236 154 155 177 Inventories 3,125 2,013 2,839 3,605 4,078 Fixed assets 258 225 277 332 417 Other assets 4,957 7,410 8,131 8,685 9,419 Total assets 9,008 10,289 11,849 13,244 14,601 Interest bearing liabilities 2,120 3,193 4,386 5,042 5,650 Trade payables 112 333 158 182 202 Other liabilities 2,307 1,993 2,471 3,117 3,767 Total liabilities 4,539 5,518 7,015 8,341 9,620 Minority interest 87 89 94 98 103 Shareholders' equity 4,382 4,682 4,740 4,805 4,878 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FEBIT 598 457 512 569 624 Depreciation 7 31 80 87 106 Working capital (1,091) 942 (683) 27 263 Other operating items 392 (453) (201) (46) (56) Operating cash flow (95) 977 (293) 637 937Net capital expenditure (345) (824) (526) (575) (806) Free cash flow (440) 153 (819) 62 132Equity raised/(bought) - - - - - Net borrowings 470 (197) 1,094 210 201 Other financing (7) (103) (231) (253) (288) Net cash flow 23 (148) 43 19 44Cash flow at beginning 529 552 405 448 467 Ending cash flow 552 405 448 467 511Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2014A 2015A 2016F 2017F 2018F ROAE (%) 10.2 8.9 6.2 6.8 7.6 ROAA (%) 5.2 4.2 2.7 2.6 2.6 Gross margin (%) 54.3 47.4 45.7 46.6 47.4 EBITDA margin (%) 33.1 22.2 28.7 29.6 30.9 EBIT margin (%) 32.7 20.8 24.8 25.7 26.4 Net margin (%) 23.4 18.2 14.3 14.6 15.5 Payout ratio (%) 25.3 19.1 20.0 20.0 20.0 Current ratio (x) 1.4 1.9 1.7 1.6 1.5 Interest coverage (x) 6.9 6.5 3.8 3.7 3.7 Net gearing (%) 35.8 59.6 83.1 95.2 105.4 Debtor turnover (days) 20 29 27 26 27 Creditor turnover (days) 47 70 52 56 59 Inventory turnover (days) - - - - - Source: Company, Bahana estimates

2017 Compendium

232

JAPFA COMFEED INDONESIA BUY PX: IDR1,755 - TP: IDR2,400 JPFA, Indonesia’s second-largest and most integrated poultry player

with exposure in aquaculture and cattle, is the main beneficiary of the current high prices of DOC and broiler, with both contributing nearly 45% to total sales, higher compared to feed sales of 38%.

Kohlberg Kravis Roberts (KKR) recently purchased 10.4% of JPFA’s total shares, with a holding period of 3-5 years. As KKR has many businesses in poultry and aquaculture feeds, the tie-up should bring positive synergies to JPFA. Additionally, the government has signed an MoU with the associations, citing the need for large poultry farmers to build slaughterhouses, which should increase broiler demand.

JPFA trades at 10.8x 2017F PE, a 37% discount to CPIN. Thus, we retain our positive view and raise our TP to IDR2,400, based on a 15x 2017F PE, more than a 10% discount to CPIN, sufficient to account for JPFA’s high leverage. Risk: High corn prices in 2017.

Financial highlights Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Revenues (IDRbn) 24,459 25,023 27,875 30,503 31,727 EBIT (IDRbn) 1,285 1,728 3,506 3,130 2,278 Net profit (IDRbn) 339 468 2,025 1,789 1,196 Bahana/consensus (%) - 264.5 193.3 85.6

EPS (IDR) 32 44 185 157 105 EPS growth (%) (43.0) 38.0 320.2 (15.0) (33.1) EV/EBITDA (x) 10.8 8.3 4.7 5.2 6.5 P/E (x) 55.1 40.0 9.5 11.2 16.7 FCFPS (IDR) (26) 12 125 83 58 FCF yield (%) (1.5) 0.7 7.1 4.7 3.3 BVPS (IDR) 446 526 744 790 847 P/BV (x) 3.9 3.3 2.4 2.2 2.1 DPS (IDR) 10 - 13 53 47 Div. yield (%) 0.6 - 0.7 3.0 2.7 Source: Company, Bahana estimates note: based on 23 November 2016 closing price

Share price performance

0

10,000

20,000

30,000

40,000

50,000

60,000

400

900

1,400

1,900

23-Nov-15 23-Jan-16 23-Mar-16 23-May-16 23-Jul-16 23-Sep-16 23-Nov-16

('000)(IDR)

Volume (RHS) JPFA IJ Px Last

162.9

2.0 10.2

84.0 110.2

297.2

0

50

100

150

200

250

300

0

50

100

150

200

250

300

ytd 1M 3M 6M 9M 12M

(%) (%)

JPFA IJ relative to JCISource: Bloomberg Michael W. Setjoadi ([email protected]) +6221 2505081 ext. 3620

Major assumptions Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Feed ASP (IDR/kg) 5,929 5,810 5,845 6,059 6,172 Feed volume (k ton) 2,776 2,610 2,610 2,688 2,769 DOC ASP (IDR/chick) 4,540 5,601 6,299 6,434 6,258 DOC volume (mn bird) 556 564 575 604 634 Broiler ASP (IDR/kg) 16,153 17,526 21,733 22,602 21,472 Broiler volume (k tons) 583 586 574 603 633

Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 1,975/416

12M high/low consensus TP (IDR) : 2,500/1,400

Majority shareholder (%) : Japfa Pte. Ltd. (51.0)

Shares outstanding (mn)/Free float (%) : 10,640/37.0

Mkt. cap. (IDRbn/USDmn) : 20,025/1,485

3-m avg.daily t.o.(IDRbn/USDmn) : 12.3/0.9

Bloomberg/Reuters code : JPFA IJ/JPFA.JK Source: Bloomberg, Reuters; based on 23 November 2016 closing price

2017 Compendium

233

JAPFA COMFEED INDONESIA

Profit & loss Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FSales 24,459 25,023 27,875 30,503 31,727Gross profit 3,426 3,993 6,126 5,997 5,260EBITDA 1,729 2,247 4,118 3,831 3,076Depreciation 445 519 612 701 799 EBIT 1,285 1,728 3,506 3,130 2,278Net interest inc./(expense) (678) (663) (539) (462) (496) Forex gain/(losses) (78) (479) 53 - - Other income/(expense) 22 112 5 5 5 Pre-tax profit 551 698 3,025 2,672 1,787Taxes 160 173 756 668 447 Minority interest 53 56 243 215 144 Extraordinary gain/(losses) - - - - - Net profit 339 468 2,025 1,789 1,196Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018F Cash and equivalents 768 901 1,939 1,296 823 S-T investments 11 11 11 11 11 Trade receivables 1,243 1,200 1,375 1,504 1,565 Inventories 5,134 5,855 5,959 6,714 7,251 Fixed assets 6,362 6,809 7,099 7,398 7,599 Other assets 2,241 2,383 2,518 2,714 2,815 Total assets 15,759 17,159 18,900 19,637 20,064 Interest bearing liabilities 7,240 6,828 5,946 5,346 4,800 Trade payables 2,004 2,746 2,681 3,021 3,263 Other liabilities 1,335 1,476 1,644 1,799 1,871 Total liabilities 10,579 11,050 10,272 10,167 9,934 Minority interest 425 497 459 459 460 Shareholders' equity 4,755 5,612 8,169 9,011 9,670 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FEBIT 1,285 1,728 3,506 3,130 2,278 Depreciation 445 519 612 701 799 Working capital 338 102 (468) (630) (376) Other operating items (815) (1,233) (1,377) (1,254) (1,041) Operating cash flow 1,252 1,115 2,273 1,947 1,658Net capital expenditure (1,528) (993) (900) (1,000) (1,000) Free cash flow (277) 123 1,373 947 658Equity raised/(bought) - - 702 - - Net borrowings (372) (412) (881) (600) (546) Other financing (329) 422 (156) (989) (585) Net cash flow (978) 133 1,038 (643) (473)Cash flow at beginning 1,746 768 901 1,939 1,296 Ending cash flow 768 901 1,939 1,296 823Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2014A 2015A 2016F 2017F 2018F ROAE (%) 7.2 9.0 29.4 20.8 12.8 ROAA (%) 2.2 2.8 11.2 9.3 6.0 Gross margin (%) 14.0 16.0 22.0 19.7 16.6 EBITDA margin (%) 7.1 9.0 14.8 12.6 9.7 EBIT margin (%) 5.3 6.9 12.6 10.3 7.2 Net margin (%) 1.4 1.9 7.3 5.9 3.8 Payout ratio (%) 31.4 - 30.0 30.0 30.0 Current ratio (x) 1.8 1.8 2.5 2.4 2.2 Interest coverage (x) 1.9 2.5 6.3 6.2 4.4 Net gearing (%) 136.1 105.6 49.1 45.0 41.1 Debtor turnover (days) 35 48 45 45 45 Creditor turnover (days) 19 17 18 18 18 Inventory turnover (days) 89 102 100 100 100 Source: Company, Bahana estimates

2017 Compendium

234

JASA MARGA BUY PX: IDR4,210 - TP: IDR5,287 JSMR, Indonesia’s leading toll road operator with a 61% market share, is

likely to enjoy significant growth ahead as its operating assets should jump from 593km currently (19 toll road concessions) to 1,224km (30 toll road concessions) in 2020 with new projects in Greater Jakarta, Java, Sumatera, Kalimantan and Sulawesi.

At the same time, JSMR should also improve its cost structure as the company plans to increase its electronic transactions from 22% currently to 80% in 2020, resulting in lower labor costs (20% of revenue). Going forward, JSMR should also benefit from lower interest rates given our high net gearing estimate of 180% for 2017.

On Indonesia’s long-term infra spending and economic growth, JSMR is a BUY with a DCF-based TP of IDR5,287, implying 2017F PER of 22.5x. Risks: land clearing delays, lower inflation-based tariff hikes, continued resistance from labor unions on the electronic payment system.

Financial highlights Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Revenues (IDRbn) 7,253 7,646 8,785 9,648 11,228 EBIT (IDRbn) 2,805 3,235 3,691 3,948 4,532 Net profit (IDRbn) 1,422 1,466 1,734 1,871 2,025 Bahana/cons.(%) - - 103 110 119

EPS (IDR) 196 202 239 258 279 EPS growth (%) 38.4 3.1 18.3 7.9 8.2 EV/EBITDA (x) 11.2 10.9 10.1 11.5 9.8 P/E (x) 21.5 20.8 17.6 16.3 15.1 FCFPS (IDR) (274) (285) (1,015) (1,979) (164) FCF yield (%) (6.5) (6.8) (24.1) (47.0) (3.9) BVPS (IDR) 1,309 1,442 1,884 2,066 2,263 P/BV (x) 3.2 2.9 2.2 2.0 1.9 DPS (IDR) 68 40 72 77 84 Div. yield (%) 1.6 1.0 1.7 1.8 2.0 Source: Company, Bahana estimates Note: based on 23 November 2016 closing price

Share price performance

0

10,000

20,000

30,000

40,000

3,500

4,000

4,500

5,000

5,500

6,000

6,500

23-Nov-15 23-Jan-16 23-Mar-16 23-May-16 23-Jul-16 23-Sep-16 23-Nov-16

('000)(IDR)

Volume (RHS) JSMR IJ Px Last

(32.9)

(3.0)

(13.7)

(30.1)(34.4)

(29.5)

(40)

(30)

(20)

(10)

0

(40)

(30)

(20)

(10)

0

ytd 1M 3M 6M 9M 12M

(%) (%)

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

Major assumptions Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Traffic volumes ('000,000) 1,313 1,374 1,440 1,515 1,619 Volumes growth (%) 4.3% 4.6% 4.8% 5.2% 6.8% Avg. tariff (%) 5,060 5,184 5,666 5,913 6,459 Tariff growth (%) 9.8 2.5 9.3 4.4 9.2 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 6,250/4,190 12M high/low consensus TP (IDR) : 8,800/4,600Majority shareholder (%) : Republic of Indonesia (70.0) Shares outstanding (mn)/Free float (%) : 6,800/30.0 Mkt. cap. (IDRbn/USDmn) : 28,628/4,190 3-m avg.daily t.o.(IDRbn/USDmn) : 41.6/3.1 Bloomberg/Reuters code : JSMR IJ/JSMR.JK Source: Bloomberg, Reuters based on 23 November 2016 closing price

2017 Compendium

235

JASA MARGA

Profit & loss Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FSales 7,253 7,646 8,785 9,648 11,228Gross profit - - - - -EBITDA 3,621 3,949 4,551 4,998 5,872Depreciation 816 714 860 1,050 1,340 EBIT 2,805 3,235 3,691 3,948 4,532Net interest inc./(expense) (950) (1,231) (1,391) (1,708) (2,166) Forex gain/(losses) - - - - - Other income/(expense) (5) 65 60 60 60 Pre-tax profit 1,850 2,068 2,360 2,300 2,426Taxes (614) (749) (802) (782) (825) Minority interest 185 147 177 353 424 Extraordinary gain/(losses) - - - - - Net profit 1,422 1,466 1,734 1,871 2,025Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018F Cash and equivalents 3,291 3,323 4,022 4,204 4,341 S-T investments 7 7 8 8 9 Trade receivables 48 164 189 217 250 Inventories - - - - - Fixed assets 24,643 25,779 35,935 52,641 56,559 Other assets 3,871 7,452 7,083 7,208 7,536 Total assets 31,860 36,725 47,237 64,279 68,695 Interest bearing liabilities 13,283 15,921 19,775 31,035 31,599 Trade payables 1,253 1,847 2,149 2,360 2,746 Other liabilities 6,303 6,588 7,623 8,412 9,495 Total liabilities 20,839 24,356 29,547 41,807 43,840 Minority interest 1,561 1,950 4,078 7,546 8,505 Shareholders' equity 9,460 10,419 13,612 14,927 16,349 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FEBIT 2,805 3,235 3,691 3,948 4,532 Depreciation 816 714 860 1,050 1,340 Working capital 14 346 296 204 397 Other operating items (1,180) (2,719) (1,963) (1,745) (2,196) Operating cash flow 2,456 1,575 2,884 3,456 4,073Net capital expenditure (4,437) (3,637) (10,217) (17,755) (5,257) Free cash flow (1,981) (2,062) (7,333) (14,299) (1,184)Equity raised/(bought) - - - - - Net borrowings 1,167 2,638 3,853 11,261 562 Other financing 591 (544) 4,178 3,221 759 Net cash flow (223) 32 698 183 137Cash balances, beginning 3,514 3,291 3,323 4,022 4,204 Ending cash 3,291 3,323 4,022 4,204 4,341Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2014A 2015A 2016F 2017F 2018F ROAE (%) 15.7 14.8 14.4 13.1 13.0 ROAA (%) 4.7 4.3 4.1 3.4 3.0 EBITDA margin (%) 49.9 51.6 51.8 51.8 52.3 EBIT margin (%) 38.7 42.3 42.0 40.9 40.4 Net margin (%) 19.6 19.2 19.7 19.4 18.0 Payout ratio (%) 34.5 20.0 30.0 30.0 30.0 Current ratio (x) 0.8 0.5 0.5 0.4 0.4 Interest coverage (x) 3.0 2.6 2.7 2.3 2.1 Net gearing (%) 105.6 120.9 115.7 179.8 166.7 Debts to assets (%) 41.7 43.4 41.9 48.3 46.0 Debtor turnover (days) 2 8 8 8 8 Creditor turnover (days) 9 7 7 7 7 Inventory turnover (days) na na na na na Source: Company, Bahana estimates

2017 Compendium

236

J RESOURCES BUY PX: IDR280 – TP: IDR340* PSAB, Indonesia’s leading pure gold miner, should be one of best ways

for investors to play on gold prices given increasing uncertainities in the global economic outlook, especially post the election victory of Donald Trump in the US. We note that PSAB books all of its gold revenue at spot prices with a minimal time lag towards an impact on earnings.

Other than the possible benefit stemming from higher ASPs, PSAB is likely to enjoy increased production output in 2017 from the company’s new production mine sites in PANI and DOUP (ex-BHP assets). PSAB’s current FY17E PER of 16.6x and EV/EBITDA of 6.7x look undemanding at 30-50% discounts compared to regional gold miners.

We utilize the DCF method, based on WACC of 11% and LTG of 1%, and arrive at a 12-month target price of IDR340, translating to 21% upside potential from the current price level. Risks to our call include Fed rate hikes/strong US dollar, and a low exploration success rate.

Financial highlights* Year to 31 Dec 2014A 2015A 2016F 2017F 2018FRevenues (USDm) 280 287 267 304 338 EBIT (USDm) 69 82 89 98 109 Net profit (USDm) 23 24 28 33 39 Bahana/consensus (%) - - 122 53 na

EPS (IDR) 12 12 14 17 20 EPS growth (%) 194.0 5.3 15.8 17.7 17.9 EV/EBITDA (x) 9.9 7.4 6.3 5.3 5.9 P/E (x) 23.9 22.7 19.6 16.6 14.1 FCFPS (IDR) (11) 24 17 17 13 FCF yield (%) (3.8) 8.6 6.2 6.2 4.8 BVPS (IDR) 126 139 153 170 184 P/BV (x) 2.2 2.0 1.8 1.6 1.5 DPS (IDR) - - - - - Div. yield (%) - - - - - Source: Company, Bahana estimates note: based on 23 November 2016 closing price

Share price performance

0

50,000

100,000

150,000

200,000

250,000

150

200

250

300

350

400

23-Nov-15 23-Jan-16 23-Mar-16 23-May-16 23-Jul-16 23-Sep-16 23-Nov-16

('000)(IDR)

Volume (RHS) PSAB IJ Px Last

(11.3) (8.9)(14.3)

16.3 12.5

(15.8) (20)

(10)

0

10

20

(20)

(10)

0

10

20

ytd 1M 3M 6M 9M 12M

(%) (%)

PSAB IJ relative to JCI Source: Bloomberg Andrew Hotama ([email protected]) +6221 2505081 ext. 3619 *New, please refer to appendix II

Major assumptions Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Gold sales volume (oz) 210,000 244,850 210,000 231,000 256,000 Gold ASP (USD/oz) 1,280 1,216 1,271 1,316 1,325 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 414/280 12M High/low consensus TP (IDR) : 600/600 Majority shareholder (%) : J Resources Mining Limited (92.5) Shares outstanding (mn)/Free float (%) : 26,460 /7.5 Mkt. cap. (IDRbn/USDmn) : 7,409/545 3-m avg.daily t.o.(IDRbn/USDmn) : 3.9/0.3 Bloomberg/Reuters code : PSAB IJ/PSAB.JK Source: Bloomberg; based on 23 November 2016 closing price

2017 Compendium

237

J RESOURCES

Profit & loss Year to 31 Dec (USDmn) 2014A 2015A 2016F 2017F 2018FSales 280 287 267 304 338Gross profit 129 149 158 178 201EBITDA 102 126 134 152 173Depreciation 33 44 45 54 64 EBIT 69 82 89 98 109Net interest inc./(expense) (27) (27) (30) (31) (27) Forex gain/(losses) - - - - - Other income/(expense) 4 3 3 3 4 Pre-tax profit 46 58 62 71 85Taxes (20) (26) (28) (32) (38) Minority interest (3) (7) (6) (6) (8) Extraordinary gain/(losses) - - - - - Net profit 23 24 28 33 39Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (USDmn) 2014A 2015A 2016F 2017F 2018F

Cash and equivalents 11 6 22 4 6

Trade receivables 2 2 2 2 2

Inventories 46 42 33 39 42

Fixed assets 717 696 694 692 692

Other assets 80 83 83 83 82

Total assets 857 829 834 819 826

Interest bearing liabilities 398 334 315 262 238

Trade payables 44 26 21 24 27

Other liabilities 130 152 152 152 152

Total liabilities 571 512 487 438 417

Minority interest 39 45 47 47 49

Shareholders' equity 247 272 300 334 360 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (USDmn) 2014A 2015A 2016F 2017F 2018FEBIT 69 82 89 98 109 Depreciation 33 55 45 54 64 Working capital 8 (10) 3 (2) (1)

Other operating items (43) (44) (61) (64) (81) Operating cash flow 67 82 77 85 91Net capital expenditure (88) (35) (43) (52) (65) Free cash flow (21) 47 34 34 26Equity raised/(bought) (0) - - - - Net borrowings (8) (64) (19) (53) (25) Other financing 13 11 1 1 1 Net cash flow (16) (6) 16 (18) 2Cash flow at beginning 27 11 6 22 4 Ending cash flow 11 6 22 4 6Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2014A 2015A 2016F 2017F 2018F ROAE (%) 9.8 9.3 9.6 10.4 11.2 ROAA (%) 2.8 2.9 3.0 3.5 4.7 EBITDA margin (%) 36.6 44.0 50.3 49.9 51.1 EBIT margin (%) 24.7 28.5 33.3 32.2 32.2 Net margin (%) 8.2 8.4 10.5 10.9 11.5 Payout ratio (%) - - - - - Current ratio (x) 0.4 0.3 0.4 0.4 0.4 Interest coverage (x) 2.5 3.0 2.9 3.2 4.0 Net gearing (%) 156.7 120.7 97.7 77.5 64.2 Debts to assets (%) 46.4 40.3 37.8 32.0 28.8 Debtor turnover (days) 3 2 2 2 2 Creditor turnover (days) 107 69 69 69 72 Inventory turnover (days) 112 112 112 112 112 Source: Company, Bahana estimates

2017 Compendium

238

KALBE FARMA BUY PX: IDR 1,500 - *TP: IDR1,880 As Indonesia’s leading listed pharmaceutical company with 100%

hospital and pharmacy coverage on the ground, KLBF is one of the major beneficiaries of the growing healthcare demand, supported by the government’s National Health Insurance program. At this stage, KLBF’s products (5% exported) are mainly backed by its fastest growing division, nutritionals (28% of revenues), followed by distribution (30%), prescription (24%) and consumer health (18%).

In 2017, we believe the stable IDR and growing high-yield oncology products will help offset margin pressure from higher contribution by lower-margin products (unbranded generics) and business (logistics).

KLBF’s market outperformance should persist with likely high ROEs of 20%+. BUY with a IDR1,880 TP, based on a 2017F PE of 36x, a 25% discount to UNVR’s target PE. Risks: IDR weakness, higher raw materials prices and price caps from competition/policy risks.

Financial highlights Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Revenues (IDRbn) 17,369 17,887 19,584 21,622 23,945 EBIT (IDRbn) 2,763 2,647 2,974 3,208 3,515 Net profit (IDRbn) 2,066 2,004 2,229 2,451 2,701 Bahana/cons. (%) - - 99 97 96 EPS (IDR) 44 43 48 52 58 EPS growth (%) 7.6 (3.0) 11.2 10.0 10.2 EV/EBITDA (x) 23.3 23.8 21.1 19.4 17.6 P/E (x) 34.0 35.1 31.6 28.7 26.0 FCFPS (IDR) 33 33 33 34 42 FCF yield (%) 2.2 2.2 2.2 2.3 2.8 BVPS (IDR) 208 233 253 278 300 P/BV (x) 7.2 6.4 5.9 5.4 5.0 DPS (IDR) 17 19 24 26 29 Div. yield (%) 1.2 1.3 1.6 1.7 1.9 Source: Company, Bahana estimates note: based on 23 November 2016 closing price

Share price performance

0

100,000

200,000

300,000

400,000

1,100

1,300

1,500

1,700

1,900

23-Nov-15 23-Jan-16 23-Mar-16 23-May-16 23-Jul-16 23-Sep-16 23-Nov-16

('000)(IDR)

Volume (RHS) KLBF IJ Px Last

0.2

(9.1)

(13.6)

(2.7)

2.5

(1.1)

(15)

(10)

(5)

0

5

(15)

(10)

(5)

0

5

ytd 1M 3M 6M 9M 12M

(%) (%)

KLBF IJ relative to JCISource: Bloomberg

Renaldy Effendy ([email protected]) +6221 2505081 ext 3606 *New, please refer to appendix II

Major assumptions Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Sales growth (%) 8.5 3.0 9.5 10.4 10.7 Prescription (%) 11.9 (0.8) 7.0 9.0 11.0 Consumer Health (%) 16.7 4.9 6.0 8.5 8.0 Nutritionals (%) 20.8 11.6 11.0 12.0 12.5 Distribution (%) (5.2) (2.2) 12.0 11.0 10.6

Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 1,815/1,185 12M high/low consensus TP (IDR) : 2,150/1,250 Majority shareholder (%) : The Kalbe Family (56.6) Shares outstanding (mn)/Free float (%) : 46,875/43.4 Mkt. cap. (IDRbn/USDmn) : 70,313/5,215 3-m avg.daily t.o.(IDRbn/USDmn) : 48.6/3.6 Bloomberg/Reuters code : KLBF IJ/KLBF.JK Source: Bloomberg, Reuters; based on 23 November 2016 closing price

2017 Compendium

239

KALBE FARMA

Profit & loss Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FSales 17,369 17,887 19,584 21,622 23,945Gross profit 8,476 8,592 9,280 10,156 11,129EBITDA 2,947 2,854 3,209 3,473 3,811Depreciation 184 207 235 265 296 EBIT 2,763 2,647 2,974 3,208 3,515Net interest inc./(expense) 27 77 115 128 135 Forex gain/(losses) 14 42 13 - - Other income/(expense) (38) (45) (79) (69) (59) Pre-tax profit 2,766 2,721 3,022 3,267 3,591Taxes (643) (663) (734) (751) (826) Minority interest (57) (53) (59) (64) (65) Extraordinary gain/(losses) - - - - - Net profit 2,066 2,004 2,229 2,451 2,701Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018F Cash and equivalents 1,895 2,719 2,992 3,233 3,556 S-T investments 0 0 0 0 0 Trade receivables 2,347 2,355 2,320 2,306 2,298 Inventories 3,091 3,003 2,996 3,167 3,363 Fixed assets 3,404 3,938 4,741 5,341 5,940 Other assets 1,703 1,681 1,941 2,204 2,434 Total assets 12,439 13,696 14,990 16,250 17,592 Interest bearing liabilities 331 428 485 399 403 Trade payables 1,133 1,069 1,185 1,319 1,474 Other liabilities 1,211 1,261 1,477 1,509 1,644 Total liabilities 2,675 2,758 3,147 3,227 3,521 Minority interest 434 473 512 563 609 Shareholders' equity 9,330 10,465 11,331 12,460 13,462 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FEBIT 2,763 2,647 2,974 3,208 3,515 Depreciation 184 207 235 265 296 Working capital (133) 114 117 (112) (51) Other operating items (563) (593) (536) (763) (787) Operating cash flow 2,251 2,374 2,790 2,598 2,972Net capital expenditure (724) (820) (1,250) (1,000) (1,000) Free cash flow 1,527 1,554 1,540 1,598 1,972Equity raised/(bought) - - - - - Net borrowings (277) 97 57 (86) 4 Other financing 28 80 (209) (46) (302) Net cash flow 468 824 274 240 324Cash flow at beginning 1,426 1,895 2,719 2,992 3,233 Ending cash flow 1,895 2,719 2,992 3,233 3,556Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2014A 2015A 2016F 2017F 2018F ROAE (%) 23.7 20.2 20.4 20.6 20.8 ROAA (%) 17.4 15.3 15.5 15.7 16.0 EBITDA margin (%) 17.0 16.0 16.4 16.1 15.9 EBIT margin (%) 15.9 14.8 15.2 14.8 14.7 Net margin (%) 11.9 11.2 11.4 11.3 11.3 Payout ratio (%) 39.2 45.2 50.0 50.0 50.0 Current ratio (x) 3.4 3.7 3.5 3.5 3.4 Interest coverage (x) na na na na na Net gearing (%) nc nc nc nc nc Debts to assets (%) 21.5 20.1 21.0 19.9 20.0 Debtor turnover (days) 46 41 41 41 41 Creditor turnover (days) 49 47 43 38 35 Inventory turnover (days) 125 116 105 99 94 Source: Company, Bahana estimates

2017 Compendium

240

KAWASAN INDUSTRI JABABEKA BUY PX: IDR286 - TP: IDR450 Having the largest landbank (3,248ha) and highest recurring income

(9M16: 65%, from its 130MW power plant) in the sector, KIJA is enjoying greater income stability despite the current weak industrial land demand on the ground. Looking ahead, we see a positive catalyst from KIJA’s plan to build a 220MW power plant in Cikarang.

We remain positive on the planned launch of KIJA’s Kendal industrial estates in 2017 given the current weak demand in Cikarang. Thus, we have a 2017 marketing sales target of IDR1.5tn (+30% y-y), of which 20% would be derived from Kendal.

We maintain our 12-month target price of IDR450 based on a 55% discount to the 2017F NAV, below the sector average of 68% given KIJA’s high recurring income portion. Risks to our call would be IDR depreciation given its USD261mn debt as well as any delay in the management’s plan to launch the Kendal project.

Financial highlights* Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Revenues (IDRbn) 2,799 3,140 2,789 3,229 3,443 EBIT (IDRbn) 893 910 703 915 976 Net profit (IDRbn) 406 339 346 395 437 Bahana/consensus (%) - - 72 73 80

EPS (IDR) 20 16 17 19 21 EPS growth (%) 295.3 (18.4) 2.3 14.2 10.5 EV/EBITDA (x) 8.0 8.3 10.0 8.1 7.6 P/E (x) 14.2 17.5 17.1 14.9 13.5 FCFPS (IDR) (14) (23) 18 (6) (1) FCF yield (%) (4.8) (8.1) 6.3 (1.9) (0.2) BVPS (IDR) 211 227 242 260 280 P/BV (x) 1.4 1.3 1.2 1.1 1.0 DPS (IDR) 1 1 1 1 1 Div. yield (%) 0.5 0.4 0.4 0.5 0.5 Source: Company, Bahana estimates note: based on 23 November 2016 closing price

Share price performance

0

80,000

160,000

240,000

320,000

200

250

300

350

23-Nov-15 23-Jan-16 23-Mar-16 23-May-16 23-Jul-16 23-Sep-16 23-Nov-16

('000)(IDR)

Volume (RHS) KIJA IJ Px Last

2.3

(1.7)

(9.0)

3.6

14.1 16.4

(10)

(5)

0

5

10

15

20

(10)

(5)

0

5

10

15

20

ytd 1M 3M 6M 9M 12M

(%) (%)

KIJA IJ relative to JCI Source: Bloomberg Sanni Satrio Dwi Utomo ([email protected]) +6221 2505081 ext. 3611 *New, please refer to appendix II

NAV calculation NAV Table 2017F Land bank (Ha) 3,248 Total value (IDRbn) 24,535 NAV/share (IDR) 1,002 Discount (%) 55 Adjusted NAV/share (IDR) 450 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 340/209 12M High/low consensus TP (IDR) : 500/320 Majority shareholder (%) : Meadwood Capital (16.1) Shares outstanding (mn)/Free float (%) : 20,662/76.6 Mkt. cap. (IDRbn/USDmn) : 5,909/438 3-m avg.daily t.o.(IDRbn/USDmn) : 5.3/0.4 Bloomberg/Reuters code : KIJA IJ/KIJA.JK Source: Bloomberg, Reuters; based on 23 November 2016 closing price

2017 Compendium

241

KAWASAN INDUSTRI JABABEKA

Profit & loss Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FSales 2,799 3,140 2,789 3,229 3,443Gross profit 1,252 1,389 1,158 1,404 1,504EBITDA 1,006 1,039 855 1,072 1,141Depreciation 113 129 151 157 165 EBIT 893 910 703 915 976Net interest inc./(expense) (316) (476) (352) (360) (368) Forex gain/(losses) (66) (324) 140 - - Other income/(expense) 54 299 (6) - - Pre-tax profit 565 408 485 556 608Taxes (166) (77) (146) (168) (178) Minority interest 7 7 7 7 7 Extraordinary gain/(losses) - - - - - Net profit 406 339 346 395 437Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018F Cash and equivalents 595 827 1,055 974 997 S-T investments - - - - - Trade receivables 292 377 260 301 321 Inventories 660 688 757 802 850 Fixed assets 2,228 2,192 2,144 2,096 2,092 Other assets 971 1,220 1,263 1,314 1,375 Total assets 8,509 9,741 10,566 11,255 12,103 Interest bearing liabilities 2,684 3,510 3,686 3,746 3,813 Trade payables 164 245 102 114 121 Other liabilities 1,016 1,008 1,650 1,887 2,242 Total liabilities 3,864 4,763 5,439 5,747 6,177 Minority interest 294 293 120 129 139 Shareholders' equity 4,351 4,685 5,007 5,379 5,787 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FEBIT 893 910 703 915 976 Depreciation 113 129 151 157 165 Working capital (35) (44) (71) (47) (31) Other operating items (721) (707) 342 (351) (262) Operating cash flow 249 288 1,125 674 847Net capital expenditure (527) (767) (753) (788) (862) Free cash flow (277) (479) 373 (114) (14)Equity raised/(bought) 28 112 - - - Net borrowings 132 826 177 60 67 Other financing 116 (226) (321) (26) (29) Net cash flow (0) 232 228 (81) 23Cash flow at beginning 595 595 827 1,055 974 Ending cash flow 595 827 1,055 974 997Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2014A 2015A 2016F 2017F 2018F ROAE (%) 9.8 7.5 7.1 7.6 7.8 ROAA (%) 4.8 3.7 3.4 3.6 3.7 Gross margin (%) 44.7 44.2 41.5 43.5 43.7 EBITDA margin (%) 35.9 33.1 30.6 33.2 33.1 EBIT margin (%) 31.9 29.0 25.2 28.3 28.3 Net margin (%) 14.5 10.8 12.4 12.2 12.7 Payout ratio (%) 6.9 6.9 7.0 7.0 7.0 Current ratio (x) 4.8 5.0 8.2 7.5 7.2 Interest coverage (x) 2.8 1.9 2.0 2.5 2.7 Net gearing (%) 48.0 57.3 52.6 51.5 48.7 Debtor turnover (days) 34 34 34 34 34 Creditor turnover (days) 23 23 23 23 23 Inventory turnover (days) - - - - - Source: Company, Bahana estimates

2017 Compendium

242

KIMIA FARMA REDUCE PX: IDR2,700 - TP: IDR1,650 The largest state-owned pharmaceutical company, KAEF, has plenty

of growth catalysts ahead: adding 100 pharmacies p.a. (current: 800) and 50 clinics p.a. (current: 350), and higher demand for generic drugs under the National Health Insurance (JKN) scheme.

KAEF expects its import dependency to fall 40%, supported by its new Active Pharmaceutical Ingredients plant with total capacity of 30tons/annum and 2nd phase of the pharmaceutical salt ingredient plant (capacity 4k tons/annum, which is expected to be operational in 2H18. Separately, KAEF is planning to conduct a rights issue on top of its IDR300bn MTN issuance in 2017 to finance future expansions.

We see KAEF as overvalued given its 2017F PE of 49.1x, at a 70% premium to KLBF despite its small-cap status. REDUCE with IDR1,650 TP, based on 30x 2017F PE, on a more reasonable 17% discount to KLBF’s valuation at target. Risk: Accelerated JKN program.

Financial highlights Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Revenues (IDRbn) 4,521 4,860 5,591 6,452 7,572 EBIT (IDRbn) 314 310 380 445 530 Net profit (IDRbn) 256 249 278 305 341 Bahana/consensus (%) - - 100 102 114

EPS (IDR) 46 45 50 55 61 EPS growth (%) 19.3 (2.8) 11.7 9.8 11.6 EV/EBITDA (x) 43.1 44.0 37.6 33.7 29.7 P/E (x) 58.6 60.3 53.9 49.1 44.0 FCFPS (IDR) 45 9 (108) (117) (128) FCF yield (%) 1.7 0.3 (4.0) (4.3) (4.7) BVPS (IDR) 306 331 379 430 485 P/BV (x) 8.8 8.2 7.1 6.3 5.6 DPS (IDR) 10 8 9 10 12 Div. yield (%) 0.4 0.3 0.3 0.4 0.4 Source: Company, Bahana estimates note: based on 23 November 2016 closing price

Share price performance

0

50,000

100,000

150,000

500

1,000

1,500

2,000

2,500

3,000

3,500

23-Nov-15 23-Jan-16 23-Mar-16 23-May-16 23-Jul-16 23-Sep-16 23-Nov-16

('000)(IDR)

Volume (RHS) KAEF IJ Px Last

196.9

18.1 38.1

120.9 136.9 156.6

0

50

100

150

200

250

0

50

100

150

200

250

ytd 1M 3M 6M 9M 12M

(%) (%)

KAEF IJ relative to JCI Source: Bloomberg Renaldy Effendy ([email protected]) +6221 2505081 ext. 3606

Major assumptions Year to 31 Dec 2014A 2015A 2016F 2017F 2018F % generic to sales 12.6 15.5 17.1 18.3 18.6 BPJS members (mn) 116 135 150 170 195 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 3,400/785 12M high/low consensus TP (IDR) : 2,600/1,300Majority shareholder (%) : Republic of Indonesia (100.0) Shares outstanding (mn)/Free float (%) : 5,554/0.0 Mkt. cap. (IDRbn/USDmn) : 14,940/1,108 3-m avg.daily t.o.(IDRbn/USDmn) : 235.5/17.5 Bloomberg/Reuters code : KAEF IJ/KAEF.JK Source: Bloomberg, Reuters; based on 23 November 2016 closing price

2017 Compendium

243

KIMIA FARMA

Profit & loss Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FSales 4,521 4,860 5,591 6,452 7,572Gross profit 1,385 1,537 1,778 2,078 2,484EBITDA 343 337 412 482 573Depreciation 29 28 32 37 43 EBIT 314 310 380 445 530Net interest inc./(expense) (27) (36) (62) (107) (149) Forex gain/(losses) 9 0 2 - - Other income/(expense) 48 64 59 78 83 Pre-tax profit 344 338 379 417 464Taxes (86) (85) (96) (105) (117) Minority interest (2) (4) (5) (6) (6) Extraordinary gain/(losses) - - - - - Net profit 256 249 278 305 341Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018F Cash and equivalents 573 461 386 334 191 S-T investments - - - - - Trade receivables 525 576 613 689 809 Inventories 687 742 841 965 1,122 Fixed assets 569 682 1,569 2,469 3,430 Other assets 658 775 804 883 907 Total assets 3,013 3,236 4,213 5,341 6,459 Interest bearing liabilities 335 323 877 1,577 2,207 Trade payables 505 531 637 731 850 Other liabilities 452 520 573 631 694 Total liabilities 1,292 1,374 2,088 2,939 3,752 Minority interest 22 26 19 14 15 Shareholders' equity 1,699 1,836 2,105 2,388 2,692 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FEBIT 314 310 380 445 530 Depreciation 29 28 32 37 43 Working capital (27) (165) (62) (139) (197) Other operating items 28 36 4 7 13 Operating cash flow 344 209 353 350 389Net capital expenditure (95) (158) (950) (1,000) (1,100) Free cash flow 250 50 (597) (650) (711)Equity raised/(bought) - - - - - Net borrowings 285 (12) 555 700 630 Other financing (356) (151) (33) (102) (62) Net cash flow 179 (112) (75) (51) (144)Cash flow at beginning 394 573 461 386 334 Ending cash flow 573 461 386 334 191Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2014A 2015A 2016F 2017F 2018F ROAE (%) 16.1 14.1 14.1 13.6 13.4 ROAA (%) 9.3 8.0 7.5 6.4 5.8 EBITDA margin (%) 7.6 6.9 7.4 7.5 7.6 EBIT margin (%) 6.9 6.4 6.8 6.9 7.0 Net margin (%) 5.7 5.1 5.0 4.7 4.5 Payout ratio (%) 21.0 18.9 18.9 18.9 18.9 Current ratio (x) 2.4 2.4 1.9 1.2 0.9 Interest coverage (x) 11.7 8.6 6.1 4.2 3.6 Net gearing (%) nc nc 23.3 52.0 74.9 Debts to assets (%) 11.1 10.0 20.8 29.5 34.2 Debtor turnover (days) 43 44 41 40 39 Creditor turnover (days) 49 57 57 61 61 Inventory turnover (days) 70 77 79 81 81 Source: Company, Bahana estimates

2017 Compendium

244

KINO INDONESIA HOLD PX: IDR3,000 - *TP: IDR3,100 KINO, a sizeable FMCG company, should use its 25 years of

experience in the industry to deal with higher raw materials prices which have resulted in 2016 margin pressure across more than its 20 brands and 15 product categories, including personal care (49% of sales), beverages (35%), food (16%) and recently pharmaceutical.

Given its innovative profile, KINO is expanding its product portfolio by launching 76 new SKUs this year and another 50 in 2017, with an additional 30% capacity production at its personal care plant. Its products are distributed overseas and locally with more than 250 distribution points in general trade (75%) and modern trade (25%).

On valuation, our IDR3,100 TP reflects a 2017F PE of 16.7x, at 25% discount to the sector ex-UNVR given slower earnings growth expected ahead due to increasing competition. Downside risk: Higher commodity prices. Upside risk: strong sales in new products.

Financial highlights* Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Revenues (IDRbn) 3,339 3,604 3,719 4,006 4,419 EBIT (IDRbn) 186 428 383 401 436 Net profit (IDRbn) 104 263 258 265 290 Bahana/consensus (%) - - 118 104 97

EPS (IDR) 112 184 181 186 203 EPS growth (%) 103.6 64.0 (2.0) 2.8 9.3 EV/EBITDA (x) 15.0 9.7 10.6 10.1 9.2 P/E (x) 26.7 16.3 16.6 16.2 14.8 FCFPS (IDR) (450) (267) (36) (37) (1) FCF yield (%) (15.0) (8.9) (1.2) (1.2) (0.0) BVPS (IDR) 714 1,244 1,367 1,497 1,639 P/BV (x) 4.2 2.4 2.2 2.0 1.8 DPS (IDR) 24 - 54 56 61 Div. yield (%) 0.8 - 1.8 1.9 2.0 Source: Company, Bahana estimates note: based on 23 November 2016 closing price

Share price performance

0

5,000

10,000

15,000

20,000

2,500

3,500

4,500

5,500

6,500

7,500

23-Nov-15 23-Jan-16 23-Mar-16 23-May-16 23-Jul-16 23-Sep-16 23-Nov-16

('000)(IDR)

Volume (RHS) KINO IJ Px Last

(35.4)(18.8)

(42.6)

(58.6)

(29.7)

0.0

(80)

(60)

(40)

(20)

0

(80)

(60)

(40)

(20)

0

ytd 1M 3M 6M 9M 12M

(%) (%)

KINO IJ relative to JCI Source: Bloomberg Renaldy Effendy ([email protected]) +6221 2505081 ext. 3606 *New, please refer to appendix II

Major assumptions Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Personal care growth (%) 19 22 (5) 2 5 Beverages growth (%) 29 15 6 13 15 Foods growth (%) 338 (27) 20 10 10 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 7,175/2,930 12M high/low consensus TP (IDR) : 4,900/2,500Majority shareholder (%) : Kino Investindo (69.5) Shares outstanding (mn)/Free float (%) : 1,429/9.6 Mkt. cap. (IDRbn/USDmn) : 4,286/318 3-m avg.daily t.o.(IDRbn/USDmn) : 4.9/0.4 Bloomberg/Reuters code : KINO IJ/KINO.JK Source: Bloomberg, Reuters; based on 23 November 2016 closing price

2017 Compendium

245

KINO INDONESIA

Profit & loss Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FSales 3,339 3,604 3,719 4,006 4,419Gross profit 1,146 1,468 1,454 1,557 1,716EBITDA 225 456 427 461 517Depreciation 39 28 44 60 81 EBIT 186 428 383 401 436Net interest inc./(expense) (59) (85) (70) (70) (70) Forex gain/(losses) (4) (9) 1 - - Other income/(expense) 15 3 16 9 5 Pre-tax profit 138 337 330 340 372Taxes (34) (74) (72) (75) (82) Minority interest 0 0 0 0 0 Extraordinary gain/(losses) 1 (0) (0) (0) (0) Net profit 104 263 258 265 290Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018F Cash and equivalents 44 666 592 453 382 S-T investments - - - - - Trade receivables 446 924 886 954 1,002 Inventories 330 343 391 422 466 Fixed assets 870 1,007 1,213 1,403 1,572 Other assets 173 271 294 324 367 Total assets 1,863 3,211 3,376 3,556 3,789 Interest bearing liabilities 643 787 848 840 855 Trade payables 426 460 380 368 366 Other liabilities 131 187 196 209 227 Total liabilities 1,201 1,435 1,423 1,418 1,448 Minority interest 1 1 1 1 2 Shareholders' equity 661 1,775 1,952 2,137 2,341 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FEBIT 186 428 383 401 436 Depreciation 39 28 44 60 81 Working capital (250) (502) (102) (122) (113) Other operating items (82) (165) (125) (135) (147) Operating cash flow (108) (211) 201 203 258Net capital expenditure (310) (170) (253) (256) (259) Free cash flow (418) (382) (52) (53) (1)Equity raised/(bought) (11) 796 - - - Net borrowings 294 138 61 (7) 15 Other financing 117 69 (82) (79) (85) Net cash flow (19) 622 (74) (139) (72)Cash flow at beginning 63 44 666 592 453 Ending cash flow 44 666 592 453 382Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2014A 2015A 2016F 2017F 2018F ROAE (%) 18.5 21.6 13.8 13.0 12.9 ROAA (%) 6.5 10.4 7.8 7.6 7.9 Gross margin (%) 34.3 40.7 39.1 38.9 38.8 EBITDA margin (%) 6.7 12.7 11.5 11.5 11.7 EBIT margin (%) 5.6 11.9 10.3 10.0 9.9 Net margin (%) 3.1 7.3 6.9 6.6 6.6 Payout ratio (%) 21.1 - 30.0 30.0 30.0 Current ratio (x) 1.6 2.2 2.4 2.5 2.6 Interest coverage (x) 3.1 5.1 5.5 5.7 6.2 Net gearing (%) 90.4 6.8 13.1 18.1 20.2 Debtor turnover (days) 41 69 89 84 81 Creditor turnover (days) 70 76 75 74 73 Inventory turnover (days) 46 58 59 61 60 Source: Company, Bahana estimates

2017 Compendium

246

KRAKATAU STEEL BUY PX: IDR790 - TP: IDR1,020 As Indonesia’s largest steel maker, KRAS should be positively affected

by higher steel demand from the government’s infrastructure projects and stronger steel prices, amid the Chinese government’s announcement of the 150-200mn mt capacity closure target by 2020.

Completion of its blast furnace complex, which is expected to be operational (first blow-in) by end-2016, will reduce HRC production cost by about USD58.3/ton (18% of the 2015 HRC production cost). The government’s plan to reduce the industrial gas price from USD9/mmbtu to USD5-6/mmbtu could potentially help KRAS reduce its production cost by a further USD12/ton.

On valuation, we have a DCF-based TP of IDR1,020 (WACC 10.9%) and BUY rating on improved local demand, KRAS’ operating efficiency and medium-term steel price recovery prospects. Risks: Lower-than-expected steel-price recovery and weaker infrastructure demand.

Financial highlights* Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Revenues (USDmn) 1,869 1,322 1,466 1,592 1,771 EBIT (USDmn) (108) (184) 44 98 142 Net profit (USDmn) (150) (320) (96) (26) 38 Bahana/cons.(%) - - - - -

EPS (IDR) (113) (274) (63) (17) 25 EPS growth (%) na na na na na EV/EBITDA (x) (54.4) (20.6) 22.1 16.1 13.3 P/E (x) na na na na 31.0 FCFPS (IDR) (215) (1,364) (243) (213) (119) FCF yield (%) (27.2) (172.7) (30.8) (27.0) (15.0) BVPS (IDR) 664 1,523 1,186 1,169 1,193 P/BV (x) 1.2 0.5 0.7 0.7 0.7 DPS (IDR) - - - - - Div. yield (%) - - - - - Source: Company, Bahana estimates note: based on 23 November 2016 closing price

Share price performance

0

100,000

200,000

300,000

400,000

200

400

600

800

1,000

23-Nov-15 23-Jan-16 23-Mar-16 23-May-16 23-Jul-16 23-Sep-16 23-Nov-16

('000)(IDR)

Volume (RHS) kras IJ Px Last

171.7

23.9 2.0

44.7

118.3 153.0

0

50

100

150

200

0

50

100

150

200

ytd 1M 3M 6M 9M 12M

(%) (%)

KRAS IJ relative to JCISource: Bloomberg Mardy Oramahi Alhusnah ([email protected]) +6221 2505081 ext.3621 *New, please refer to appendix II

Major assumptions Year to 31 Dec 2014A 2015A 2016F 2017F 2018F HRC price (USD per ton) 645 484 436 467 500 CRC price (USD per ton) 756 595 538 573 608 HRC volume ('000 tons) 1,313 927 1,159 1,275 1,338 CRC volume ('000 tons) 528 532 612 643 675 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 905/275 12M high/low consensus TP (IDR) : 1,050/690Majority shareholder (%) : Republic of Indonesia (80.0) Shares outstanding (mn)/Free float (%) : 15,775/20.0 Mkt. cap. (IDRbn/USDmn) : 13,409/986 3-m avg.daily t.o.(IDRbn/USDmn) : 45.0/3.3 Bloomberg/Reuters code : KRAS IJ/KRAS.JK Source: Bloomberg, Reuters based on 23 November 2016 closing price

2017 Compendium

247

KRAKATAU STEEL

Profit & loss Year to 31 Dec (USDmn) 2014A 2015A 2016F 2017F 2018FSales 1,869 1,322 1,466 1,592 1,771Gross profit 41 (36) 229 293 353EBITDA (39) (117) 115 174 223Depreciation 69 68 71 75 82 EBIT (108) (184) 44 98 142Net interest inc./(expense) (46) (83) (100) (115) (124) Forex gain/(losses) 4 52 (11) - - Other income/(expense) (33) (113) (51) (16) 32 Pre-tax profit (183) (327) (117) (32) 49Taxes 26 1 18 5 (12) Minority interest 7 6 4 1 1 Extraordinary gain/(losses) - - - - -Net profit (150) (320) (96) (26) 38Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (USDmn) 2014A 2015A 2016F 2017F 2018F Cash and equivalents 237 133 292 219 213 S-T investments - - - - - Trade receivables 249 211 181 232 262 Inventories 481 409 423 427 466 Fixed assets 1,097 2,359 2,638 2,812 2,981 Other assets 535 590 544 567 591 Total assets 2,598 3,702 4,078 4,258 4,512 Interest bearing liabilities 1,340 1,615 1,915 2,090 2,265 Trade payables 203 152 161 169 185 Other liabilities 163 147 167 189 214 Total liabilities 1,707 1,914 2,243 2,448 2,663 Minority interest 12 7 11 12 13 Shareholders' equity 879 1,781 1,824 1,798 1,836 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (USDmn) 2014A 2015A 2016F 2017F 2018FEBIT (108) (184) 44 98 142 Depreciation 69 68 71 75 82 Working capital 139 9 34 (38) (42) Other operating items (75) (158) (84) (134) (114) Operating cash flow 24 (266) 66 1 68Net capital expenditure (308) (1,329) (350) (250) (250) Free cash flow (284) (1,595) (284) (249) (182)Equity raised/(bought) (1) - 140 - - Net borrowings 334 274 300 175 175 Other financing (2) 1,216 4 1 1 Net cash flow 47 (104) 159 (73) (6)Cash balances, beginning 190 237 133 292 219 Ending cash 237 133 292 219 213Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2014A 2015A 2016F 2017F 2018F ROAE (%) (15.7) (24.1) (5.3) (1.5) 2.1 ROAA (%) (6.0) (10.2) (2.8) (0.6) 0.9 Gross margin (%) 2.2 (2.8) 15.6 18.4 19.9 EBITDA margin (%) (2.1) (8.8) 7.9 10.9 12.6 EBIT margin (%) (5.8) (13.9) 3.0 6.2 8.0 Net margin (%) (8.0) (24.2) (6.6) (1.7) 2.1 Payout ratio (%) - - - - - Current ratio (x) 1.0 0.7 0.6 0.6 0.5 Interest coverage (x) (2.3) (2.2) 0.4 0.9 1.1 Net gearing (%) 125.6 83.2 88.9 104.0 111.8 Debtor turnover (days) 51 64 45 53 54 Creditor turnover (days) 38 48 48 48 48 Inventory turnover (days) 100 120 125 120 120 Source: Company, Bahana estimates

2017 Compendium

248

LINK NET HOLD PX: IDR5,550 - TP: IDR5,300 LINK, Indonesia’s 2nd largest cable broadband provider (after

Telkom) with 1.79m home passes and 506k subscribers as at 9M16, primarily targets customers in the bigger cities (JKT, SBY, BDG) with higher purchasing power, and generates strong >55% EBITDA margin & c.18% ROE. It is sensitive to USD:IDR movements as 40% of Opex and 60% of Capex are USD-linked vs. 100% revenue in IDR.

Talks in 2015 of CVC and Lippo divesting their 67% stake in LINK attracted bidders like Indosat, XL and MNC Media. The plan was called off in early 2016, but cannot be completely ruled out, in our view.

While 1H16 growth slowed on competition from TLKM’s Indihome, LINK showed promising recovery in 3Q16 with EBITDA/NPAT up 19%/41% y-y. We have a HOLD rating and DCF (10.5% WACC) derived 12-month TP of IDR5,300. Upside/downside risks: Less/ more competition from Indihome.

Financial highlights Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Revenues (IDRbn) 2,136 2,564 2,933 3,241 3,515 EBIT (IDRbn) 837 935 1,076 1,191 1,223 Net profit (IDRbn) 558 640 801 885 908 Bahana/consensus (%) 98 98 EPS (IDR) 183 210 263 291 299 EPS growth (%) 54.0 14.7 25.3 10.5 2.6 EV/EBITDA (x) 12.8 10.9 9.7 8.6 8.0 P/E (x) 28.8 25.1 20.9 18.9 18.4 FCFPS (IDR) 37 7 (41) 69 163 FCF yield (%) 0.7 0.1 0.1 1.3 3.0 BVPS (IDR) 997 1,205 1,427 1,665 1,905 P/BV (x) 5.3 4.4 3.9 3.3 2.9 DPS (IDR) 14 - 42 53 58 Div. yield (%) 0.3 - 0.8 1.0 1.1 Source: Company, Bahana estimates note: based on 23 November 2016 closing price

Share price performance

0

5,000

10,000

15,000

20,000

25,000

2,5003,0003,5004,0004,5005,0005,5006,000

23-Nov-15 23-Jan-16 23-Mar-16 23-May-16 23-Jul-16 23-Sep-16 23-Nov-16

('000)(IDR)

Volume (RHS) LINK IJ Px Last

25.3 19.0 21.4 22.3

44.3

31.3

0

10

20

30

40

50

0

10

20

30

40

50

ytd 1M 3M 6M 9M 12M

(%) (%)

LINK IJ relative to JCISource: Bloomberg Henry Wibowo ([email protected]) +6221 2505081 ext. 6049

Major assumptions Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Subscribers Growth (%) 18.5 17.9 11.7 10.0 7.5 ARPU Growth (%) 13.4 3.2 -3.5 0.0 0.0 EBITDA Margin (%) 57.6 56.5 57.9 59.4 58.8 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 5,500/2,875

12M High/low consensus TP (IDR) : 7,700/3,700

Majority shareholder (%) : PT First Media Tbk (33.8)

Shares outstanding (mn)/Free float (%) : 3,043/32.7

Mkt. cap. (IDRbn/USDmn) : 16,887/1,200

3-m avg.daily t.o.(IDRbn/USDmn) : 9.6/0.7

Bloomberg/Reuters code : LINK.IJ/LINK.JK Source: Bloomberg, Reuters based on 23 November 2016 closing price

2017 Compendium

249

LINK NET

Profit & loss Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FSales 2,136 2,564 2,933 3,241 3,515 Gross profit 1,662 1,994 2,260 2,487 2,686 EBITDA 1,231 1,450 1,697 1,924 2,067 Depreciation (393) (515) (621) (734) (844) EBIT 837 935 1,076 1,191 1,223 Net interest inc./(expense) (38) (57) (4) (5) (7) Forex gain/(losses) - - - - - Other income/(expense) (43) (21) - - - Pre-tax profit 756 856 1,072 1,185 1,216 Taxes (198) (217) (271) (300) (308) Minority interest (0) (0) - - - Extraordinary gain/(losses) - - - - - Net profit 558 640 801 885 908 Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018F Cash and equivalents 359 325 299 356 681 S-T investments - - - - - Trade receivables 177 242 201 222 241 Inventories - - - - - Fixed assets 2,694 3,493 4,417 5,089 5,499 Other assets 513 378 378 378 378 Total assets 3,742 4,438 5,294 6,045 6,799 Interest bearing liabilities 182 101 190 190 190 Trade payables 113 177 209 234 258 Other liabilities 413 492 555 555 555 Total liabilities 707 771 954 979 1,002 Minority interest - - - - - Shareholders' equity 3,035 3,667 4,340 5,066 5,797 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FEBIT 837 935 1,076 1,191 1,223 Depreciation 393 515 621 734 844 Working capital 58 54 136 4 5 Other operating items (279) (302) (275) (305) (315) Operating cash flow 1,009 1,202 1,557 1,623 1,757 Net capital expenditure (898) (1,181) (1,544) (1,406) (1,255) Free cash flow 111 21 13 217 502 Equity raised/(bought) - - - - - Net borrowings (95) (81) 89 - - Other financing 14 27 - - - Net cash flow (11) (33) (26) 57 325 Cash flow at beginning 370 359 325 299 356 Ending cash flow 359 326 299 356 681 Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2014A 2015A 2016F 2017F 2018F ROAE (%) 20.1 19.1 20.0 18.8 16.7 ROAA (%) 16.0 15.6 16.5 15.6 14.1 Gross margin (%) 77.8 77.8 77.0 76.7 76.4 EBITDA margin (%) 57.6 56.5 57.9 59.4 58.8 EBIT margin (%) 39.2 36.5 36.7 36.7 34.8 Net margin (%) 26.1 24.9 27.3 27.3 25.8 Payout ratio (%) 11.6 0.0 20.0 20.0 20.0 Current ratio (x) 1.0 0.9 0.7 0.8 1.3 Interest coverage (x) 22.0 16.0 269.0 223.0 175.0 Net gearing (%) (5.8) (6.1) (2.5) (3.3) (8.5) Debtor turnover (days) 30 34 34 34 34 Creditor turnover (days) 87 113 113 113 113 Inventory turnover (days) 0 0 0 0 0 Source: Company, Bahana estimates

2017 Compendium

250

LIPPO CIKARANG BUY PX: IDR5,300 - TP: IDR8,300 Having the largest residential and commercial portfolio (9M16: 51% of

total revenue) among its peers, LPCK should still be able to reach our IDR1.9tn (+10% y-y) pre-sales target in 2017 despite the current weak industrial land demand in Cikarang.

Despite slow ASP growth in Cikarang, LPCK should benefit from the ground-breaking of the Jakarta-Bandung high-speed railway at the end of 2016. Thus, we expect LPCK’s industrial and residential land prices to increase by 10-15% y-y in 2017, allowing for increased 2017-18F gross margins of 55.6-56.3%.

At this stage of the cycle, we retain our 12M TP of IDR8,300 using a 66% discount to NAV, reflecting 57% upside potential. Given LPCK’s well-diversified businesses as well as zero debt level, LPCK’s severe ytd market underperformance should reverse. BUY. Risks: High-speed rail project delays and slower project take-ups causing poor pre-sales.

Financial highlights* Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Revenues (IDRbn) 1,803 2,121 1,647 1,855 2,017 EBIT (IDRbn) 919 993 730 831 912 Net profit (IDRbn) 846 911 719 825 911 Bahana/consensus (%) - - 86 100 113

EPS (IDR) 1,215 1,308 1,032 1,185 1,308 EPS growth (%) 41.4 7.7 (21.1) 14.8 10.4 EV/EBITDA (x) 3.6 3.2 4.4 3.8 3.4 P/E (x) 4.4 4.1 5.1 4.5 4.1 FCFPS (IDR) (576) 392 36 (248) (181) FCF yield (%) (10.9) 7.4 0.7 (4.7) (3.4) BVPS (IDR) 3,848 5,220 6,173 7,360 8,670 P/BV (x) 1.4 1.0 0.9 0.7 0.6 DPS (IDR) - - - - - Div. yield (%) - - - - - Source: Company, Bahana estimates note: based on 23 November 2016 closing price

Share price performance

01,0002,0003,0004,0005,0006,0007,000

5,000

6,000

7,000

8,000

23-Nov-15 23-Jan-16 23-Mar-16 23-May-16 23-Jul-16 23-Sep-16 23-Nov-16

('000)(IDR)

Volume (RHS) LPCK IJ Px Last

(40.4)

(10.2)(19.7)

(32.2)(25.8)

(46.8) (50)

(40)

(30)

(20)

(10)

0

(50)

(40)

(30)

(20)

(10)

0

ytd 1M 3M 6M 9M 12M

(%) (%)

LPCK IJ relative to JCI Source: Bloomberg Sanni Satrio Dwi Utomo ([email protected]) +6221 2505081 ext. 3611 *New, please refer to appendix II

NAV calculation NAV Table 2017F Land bank (Ha) 675 Discount (%) 66 Adjusted NAV (IDRbn) 5,775 Adjusted NAV/share (IDR) 8,298 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 8,100/5,075 12M High/low consensus TP (IDR) : 10,000/8,300 Majority shareholder (%) : Kemuning Satiatama (42.2) Shares outstanding (mn)/Free float (%) : 696/57.8 Mkt. cap. (IDRbn/USDmn) : 3,689/274 3-m avg.daily t.o.(IDRbn/USDmn) : 4.8/0.4 Bloomberg/Reuters code : LPCK IJ/LPCK.JK Source: Bloomberg, Reuters; based on 23 November 2016 closing price

2017 Compendium

251

LIPPO CIKARANG

Profit & loss Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FSales 1,803 2,121 1,647 1,855 2,017Gross profit 1,060 1,198 904 1,032 1,136EBITDA 930 1,005 740 842 924Depreciation 11 12 10 11 12 EBIT 919 993 730 831 912Net interest inc./(expense) 12 16 28 29 31 Forex gain/(losses) - - (2) - - Other income/(expense) 13 7 62 67 78 Pre-tax profit 944 1,016 817 927 1,022Taxes (98) (101) (99) (102) (111) Minority interest - (4) - - - Extraordinary gain/(losses) - - - - - Net profit 846 911 719 825 911Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018F Cash and equivalents 300 507 446 495 518 S-T investments - - - - - Trade receivables 66 210 90 102 111 Inventories 2,908 2,765 2,765 2,986 3,135 Fixed assets 54 81 86 89 92 Other assets 1,063 1,915 2,379 2,848 3,455 Total assets 4,390 5,477 5,766 6,519 7,311 Interest bearing liabilities - 30 - - - Trade payables 49 70 - - - Other liabilities 1,663 1,743 1,469 1,396 1,276 Total liabilities 1,712 1,844 1,469 1,396 1,276 Minority interest - - - - - Shareholders' equity 2,678 3,633 4,297 5,123 6,035 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FEBIT 919 993 730 831 912 Depreciation 11 12 10 11 12 Working capital (392) (177) (147) (406) (304) Other operating items (599) (463) (483) (235) (318) Operating cash flow (61) 366 111 201 302Net capital expenditure (340) (93) (85) (374) (428) Free cash flow (401) 273 25 (172) (126)Equity raised/(bought) 8 48 (56) - - Net borrowings - 30 (30) - - Other financing 384 (143) (0) 221 149 Net cash flow (9) 207 (61) 49 23Cash flow at beginning 308 300 507 446 495 Ending cash flow 300 507 446 495 518Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2014A 2015A 2016F 2017F 2018F ROAE (%) 37.6 28.9 18.1 17.5 16.3 ROAA (%) 20.5 18.5 12.8 13.4 13.2 Gross margin (%) 58.8 56.5 54.8 55.6 56.3 EBITDA margin (%) 51.6 47.4 44.9 45.4 45.8 EBIT margin (%) 51.0 46.8 44.3 44.8 45.2 Net margin (%) 46.9 42.9 43.6 44.5 45.2 Payout ratio (%) - - - - - Current ratio (x) 23.4 11.5 13.7 14.4 14.6 Interest coverage (x) - - - - - Net gearing (%) nc nc nc nc nc Debtor turnover (days) 20 20 20 20 20 Creditor turnover (days) - - - - - Inventory turnover (days) - - - - - Source: Company, Bahana estimates

2017 Compendium

252

LIPPO KARAWACI HOLD PX: IDR805 - TP: IDR800* Unlike other property companies, LPKR should benefit from high

recurring income (9M16: 51% to revenue) helped by contributions from the biggest private hospital chain it owns. However, a higher recurring income contribution means lower margins for LPKR. Thus, we forecast lower 2016-17 gross margins of c.43% (2015: 46.2%).

On marketing sales, we maintain our 2016-17F numbers at IDR2.0-2.7tn as we believe LPKR will postpone its IDR1.7tn asset sale to REITs this year. Our 2016 target is strengthened by LPKR’s poor 9M16 pre-sales achievement of IDR754bn, only 22% of management’s IDR3.5tn revised full-year target due to a lack of project launches.

As we revisit our numbers on several project delays, we lower our TP to IDR800 from IDR1,100 on a 60% discount to 2017F NAV. Retain HOLD on solid hospital business growth and possible one-off REIT sales. Upside risk: Stronger IDR; Downside risk: More project delays.

Financial highlights* Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Revenues (IDRbn) 11,655 8,910 9,497 10,016 10,160 EBIT (IDRbn) 3,278 1,727 1,547 1,681 1,724 Net profit (IDRbn) 2,549 535 756 801 872 Bahana/cons.(%) - - 59 55 54

EPS (IDR) 110 23 33 35 38 EPS growth (%) 107.5 (79.0) 41.2 6.0 8.9 EV/EBITDA (x) 6.8 13.3 15.7 14.3 13.7 P/E (x) 7.3 34.7 24.6 23.2 21.3 FCFPS (IDR) 4 (179) 86 32 65 FCF yield (%) 0.5 (22.2) 10.7 4.0 8.0 BVPS (IDR) 676 710 740 766 795 P/BV (x) 1.2 1.1 1.1 1.1 1.0 DPS (IDR) 16 4 8 9 9 Div. yield (%) 2.0 0.4 1.0 1.1 1.2 Source: Company, Bahana estimates note: based on on 23 November 2016 closing price

Share price performance

050,000100,000150,000200,000250,000300,000350,000

800

900

1,000

1,100

1,200

1,300

1,400

23-Nov-15 23-Jan-16 23-Mar-16 23-May-16 23-Jul-16 23-Sep-16 23-Nov-16

('000)(IDR)

Volume (RHS) LPKR IJ Px Last

(36.2)

(7.5)

(26.9) (23.9)(32.5)

(51.0) (60)

(50)

(40)

(30)

(20)

(10)

0

(60)

(50)

(40)

(30)

(20)

(10)

0

ytd 1M 3M 6M 9M 12M

(%) (%)

LPKR IJ relative to JCI Source: Bloomberg Sanni Satrio Dwi Utomo ([email protected]) +6221 2505081 ext. 3611 *New, please refer to appendix II

NAV Calculation 2017F

Land bank (Ha) 675 Total value (IDRbn) 61,917 NAV/share (IDR) 2,009 Discount (%) 60 Adjusted NAV/share (IDR) 800 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 1,380/775

12M High/low consensus TP (IDR) : 1,460/900

Majority shareholder (%) : Pacific Asia Holding (17.9)

Share outstanding (m)/Free float (%) : 23,078/94.7

Mkt. cap. (IDRbn/USDmn) : 18,578/1,373

3-m avg.daily t.o.(IDRbn/USDmn) : 77.0/5.7

Bloomberg/Reuters code : LPKR IJ/LPKR.JK Source: Bloomberg, Reuters; based on 23 November 2016 closing price

2017 Compendium

253

LIPPO KARAWACI

Profit & loss Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FSales 11,655 8,910 9,497 10,016 10,160Gross profit 5,397 4,119 4,098 4,334 4,493EBITDA 3,667 2,196 1,814 1,991 2,056Depreciation 389 469 266 310 332 EBIT 3,278 1,727 1,547 1,681 1,724Net interest inc./(expense) (122) (177) (329) (290) (234) Forex gain/(losses) 182 (155) 77 - - Other income/(expense) 358 96 51 61 67 Pre-tax profit 3,696 1,491 1,346 1,453 1,557Taxes (560) (467) (389) (416) (427) Minority interest (588) (489) (201) (237) (258) Extraordinary gain/(losses) - - - - - Net profit 2,549 535 756 801 872Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018F Cash and equivalents 3,529 1,839 2,889 2,608 2,699 S-T investments 8,111 8,797 9,061 9,333 9,613 Trade receivables 951 1,434 1,249 1,317 1,336 Inventories 16,553 20,459 20,514 20,764 21,264 Fixed assets 3,209 2,732 2,307 2,278 2,256 Other assets 5,408 6,065 6,577 8,445 9,954 Total assets 37,761 41,327 42,597 44,745 47,122 Interest bearing liabilities 9,997 12,365 12,833 12,592 12,192 Trade payables 395 783 765 807 819 Other liabilities 9,723 9,262 10,242 11,916 13,944 Total liabilities 20,115 22,410 23,840 25,315 26,954 Minority interest 2,041 2,523 1,688 1,749 1,815 Shareholders' equity 15,605 16,394 17,069 17,681 18,353 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FEBIT 3,278 1,727 1,547 1,681 1,724 Depreciation 389 469 266 310 332 Working capital 788 (929) 210 19 41 Other operating items (4,052) (5,060) 294 (357) 504 Operating cash flow 403 (3,793) 2,318 1,653 2,601Net capital expenditure (315) (332) (327) (904) (1,111) Free cash flow 88 (4,124) 1,991 749 1,490Equity raised/(bought) - - - - - Net borrowings 2,190 2,368 468 (241) (401) Other financing (602) 66 (1,409) (790) (998) Net cash flow 1,676 (1,690) 1,050 (281) 91Cash flow at beginning 1,855 3,529 1,839 2,889 2,608 Ending cash flow 3,529 1,839 2,889 2,608 2,699Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2014A 2015A 2016F 2017F 2018F ROAE (%) 17.9 3.3 4.5 4.6 4.8 ROAA (%) 7.4 1.4 1.8 1.8 1.9 Gross margin (%) 46.3 46.2 43.2 43.3 44.2 EBITDA margin (%) 31.5 24.7 19.1 19.9 20.2 EBIT margin (%) 28.1 19.4 16.3 16.8 17.0 Net margin (%) 21.9 6.0 8.0 8.0 8.6 Payout ratio (%) 14.9 15.1 25.0 25.0 25.0 Current ratio (x) 5.4 5.7 5.9 5.8 5.9 Interest coverage (x) 26.9 9.8 4.7 5.8 7.4 Net gearing (%) 41.4 64.2 58.3 56.5 51.7 Debtor turnover (days) 48 48 48 48 48 Creditor turnover (days) 29 29 29 29 29 Inventory turnover (days) - - - - - Source: Company, Bahana estimates

2017 Compendium

254

LONDON SUMATRA INDONESIA BUY PX: IDR1,680 - TP: IDR2,085 LSIP, the sector’s third-largest CPO company in terms of planted area

with 114k ha (83% oil palm, 14% rubber, 3% other), should be the main beneficiary of a CPO price recovery due to its pure upstream status, with around 90% of sales from palm products.

In 2017, we forecast an ASP of USD666/ton, +11.6% y-y, and CPO sales volume of 415k tons, +12.8% y-y, helped by higher FFB yields of 14 tons/ha and an oil extraction rate of 23%. LSIP’s plantation estates also feature a favorable average productive age profile of 14.4 years.

As we expect 2017 earnings to increase to IDR849bn, +95% y-y, LSIP is our second most preferred stock within the sector (after AALI) with a 12M TP of IDR2,085, based on a 2017F PE of c.17x, implying around a 30% discount to its Malaysian peers. Thus, we reiterate our BUY call on 24% upside potential to our TP. Risks to our call include lower-than-expected CPO prices and production.

Financial highlights* Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Revenues (IDRbn) 4,727 4,190 3,711 4,521 4,991 EBIT (IDRbn) 1,209 764 609 1,080 1,224 Net profit (IDRbn) 929 623 436 849 972 Bahana/consensus (%) - - 88 122 121

EPS (IDR) 135 101 64 124 142 EPS growth (%) 16.9 (25.4) (36.7) 94.5 14.6 EV/EBITDA (x) 7.3 10.9 12.7 7.9 6.7 P/E (x) 12.4 16.6 26.3 13.5 11.8 FCFPS (IDR) 22 (45) 6 54 110 FCF yield (%) 1.3 (2.7) 0.4 3.2 6.6 BVPS (IDR) 1,026 1,074 1,098 1,197 1,290 P/BV (x) 1.6 1.6 1.5 1.4 1.3 DPS (IDR) 56 40 26 50 57 Div. yield (%) 3.3 2.4 1.5 3.0 3.4 Source: Company, Bahana estimates note: based on 23 November 2016 closing price

Share price performance

020,00040,00060,00080,000100,000120,000140,000

1,100

1,300

1,500

1,700

1,900

23-Nov-15 23-Jan-16 23-Mar-16 23-May-16 23-Jul-16 23-Sep-16 23-Nov-16

('000)(IDR)

Volume (RHS) LSIP IJ Px Last

13.4

17.2

8.5

3.3

10.3 12.1

0

5

10

15

20

0

5

10

15

20

ytd 1M 3M 6M 9M 12M

(%) (%)

LSIP IJ relative to JCI Source: Bloomberg Gregorius Gary ([email protected]) +6221 2505081 ext. 3604 *New, please refer to appendix II

Major assumptions Year to 31 Dec 2014A 2015A 2016F 2017F 2018F FFB production nucleus (k tons) 1,341 1,397 1,066 1,203 1,333 Growth (%) 7.3 4.1 (23.7) 12.8 10.8 CPO production (k tons) 443 475 368 415 460 Growth (%) 11.8 7.3 (22.7) 12.8 10.8 CPO price (USD/ton) 738 568 650 700 700 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 1,840/1,200 12M High/low consensus TP (IDR) : 1,778/1,568 Majority shareholder (%) : Salim Ivomas Pratama (59.5) Shares outstanding (mn)/Free float (%) : 6,822/40.5 Mkt. cap. (IDRbn/USDmn) : 11,330/840 3-m avg.daily t.o.(IDRbn/USDmn) : 34.1/2.5 Bloomberg/Reuters code : LSIP IJ/LSIP.JK Source: Bloomberg, Reuters; based on 23 November 2016 closing price

2017 Compendium

255

LONDON SUMATRA INDONESIA

Profit & loss Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FSales 4,727 4,190 3,711 4,521 4,991Gross profit 1,536 1,116 1,074 1,574 1,735EBITDA 1,389 987 858 1,359 1,523Depreciation 181 222 249 279 299 EBIT 1,209 764 609 1,080 1,224Net interest inc./(expense) 80 53 35 35 54 Forex gain/(losses) - - - - - Other income/(expense) (67) 11 (70) - - Pre-tax profit 1,222 828 574 1,116 1,278Taxes (293) (205) (137) (267) (306) Minority interest - - - - - Extraordinary gain/(losses) - - - - - Net profit 929 623 436 849 972Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018F Cash and equivalents 1,357 737 532 752 1,195 S-T investments - - - - - Trade receivables 21 23 41 50 55 Inventories 380 398 440 491 543 Fixed assets 5,964 6,317 6,933 7,237 7,323 Other assets 992 1,374 1,167 1,410 1,551 Total assets 8,713 8,849 9,113 9,941 10,667 Interest bearing liabilities - - - - - Trade payables 283 171 371 452 499 Other liabilities 1,427 1,340 1,243 1,315 1,362 Total liabilities 1,710 1,511 1,614 1,768 1,861 Minority interest 0 7 7 7 7 Shareholders' equity 7,003 7,331 7,492 8,166 8,799 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FEBIT 1,209 764 609 1,080 1,224 Depreciation 181 222 249 279 299 Working capital 37 (209) 85 53 0 Other operating items (279) (141) (173) (232) (252) Operating cash flow 1,147 637 770 1,180 1,271Net capital expenditure (995) (945) (728) (814) (519) Free cash flow 153 (307) 42 366 752Equity raised/(bought) - - - - - Net borrowings - - - - - Other financing (32) (378) (247) (146) (310) Net cash flow 121 (685) (205) 220 443Cash flow at beginning 1,401 1,357 737 532 752 Ending cash flow 1,357 737 532 752 1,195Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2014A 2015A 2016F 2017F 2018F ROAE (%) 13.9 8.7 5.9 10.8 11.5 ROAA (%) 11.1 7.1 4.9 8.9 9.4 EBITDA margin (%) 29.4 23.6 23.1 30.1 30.5 EBIT margin (%) 25.6 18.2 16.4 23.9 24.5 Net margin (%) 19.7 14.9 11.8 18.8 19.5 Payout ratio (%) 41.1 40.0 40.0 40.0 40.0 Current ratio (x) 2.5 2.2 1.6 1.7 2.2 Interest coverage (x) na na na na na Net gearing (%) nc nc nc nc nc Debts to assets (%) - - - - - Debtor turnover (days) 4 6 4 4 4 Creditor turnover (days) 23 37 37 37 37 Inventory turnover (days) 43 56 61 61 61 Source: Company, Bahana estimates

2017 Compendium

256

MALINDO FEED-MILL BUY PX: IDR1,310 - TP: IDR2,000 MAIN, the third-largest listed poultry player and the fastest growing

company in the sector, is likely to enjoy high DOC and broiler prices ahead. Its fastest-growing segments are broiler chickens (9%) and processed foods (1%). The other 2 segments are poultry feed (6M16: 64% of revenues) and day-old chicks (DOC) (18%).

Following the government’s MoU with the associations, MAIN will focus more on expanding its slaughterhouses and increasing its processed foods contribution in the eastern part of Indonesia i.e. Sulawesi and East Nusa Tenggara (NTT).

On valuation, MAIN’s 9.8x 2017F PER, at more than a 42% discount to the industry’s leader CPIN, is unjustified given its solid corporate governance. Our unchanged IDR2,000 TP reflects a 2016F PE of 15x, around a 10% discount to CPIN’s target PE to account for MAIN’s smaller market cap. Risk: High domestic corn prices.

Financial highlights Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Revenues (IDRbn) 4,502 4,775 5,282 5,858 6,203 EBIT (IDRbn) 15 206 549 575 486 Net profit (IDRbn) (85) (63) 288 304 234 Bahana/consensus (%) - - 148.3 117.6 65.6

EPS (IDR) (48) (33) 129 136 104 EPS growth (%) (133.7) (30.5) (485.7) 5.5 (23.0) EV/EBITDA (x) 16.4 6.8 4.0 3.7 4.0 P/E (x) (27.3) (39.3) 10.2 9.7 12.5 FCFPS (IDR) (583) (216) (72) (52) (108) FCF yield (%) (44.5) (16.5) (5.5) (4.0) (8.3) BVPS (IDR) 613 823 821 937 1,022 P/BV (x) 2.1 1.6 1.6 1.4 1.3 DPS (IDR) 20 - - 19 20 Div. yield (%) 1.5 - - 1.5 1.6 Source: Company, Bahana estimates note: based on 23 November 2016 closing price

Share price performance

0

2,000

4,000

6,000

8,000

10,000

12,000

1,000

1,200

1,400

1,600

1,800

2,000

23-Nov-15 23-Jan-16 23-Mar-16 23-May-16 23-Jul-16 23-Sep-16 23-Nov-16

('000)(IDR)

Volume (RHS) MAIN IJ Px Last

(27.6)

(7.8)

(25.6)

(16.3)

(8.8)

(3.8)

(30)

(25)

(20)

(15)

(10)

(5)

0

(30)

(25)

(20)

(15)

(10)

(5)

0

ytd 1M 3M 6M 9M 12M

(%) (%)

MAIN IJ relative to JCI Source: Bloomberg Michael W. Setjoadi ([email protected]) +6221 2505081 ext. 3620

Major assumptions Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Feed ASP (IDR/kg) 6,060 6,065 6,307 6,686 6,886 Feed Volume (Mton) 534,000 535,000 526,975 537,515 550,952 DOC ASP (IDR/chick) 3,899 4,597 5,609 5,889 5,653 DOC Volume (k birds) 181,516 203,800 210,933 227,808 246,032 Broiler ASP (IDR/kg) 21,813 20,792 22,248 23,360 22,426 Broiler Volume (ton) 23,035 25,600 31,232 34,980 39,177

Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 2,080/1,175 12M high/low consensus TP (IDR) : 2,555/1,400 Majority shareholder (%) : Dragon Amity Ltd. (57.1) Shares outstanding (mn)/Free float (%) : 2,239/42.9 Mkt. cap. (IDRbn/USDmn) : 2,910/218 3-m avg.daily t.o.(IDRbn/USDmn) : 1.6/0.1 Bloomberg/Reuters code : MAIN IJ/MAIN.JK Source: Bloomberg, Reuters based on 23 November 2016 closing price

2017 Compendium

257

MALINDO FEED-MILL

Profit & loss Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FSales 4,502 4,775 5,282 5,858 6,203Gross profit 322 540 936 1,005 941EBITDA 141 365 733 787 732Depreciation (126) (159) (184) (212) (246) EBIT 15 206 549 575 486Net interest inc./(expense) (91) (167) (186) (170) (174) Forex gain/(losses) (38) (112) 21 - - Other income/(expense) 5 - - - - Pre-tax profit (108) (72) 384 405 312Taxes (24) (10) 96 101 78 Minority interest 0 (1) - - - Extraordinary gain/(losses) - - - - - Net profit (85) (63) 288 304 234Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018F Cash and equivalents 310 525 505 414 166 S-T investments - - - - - Trade receivables 464 441 507 530 561 Inventories 610 551 572 612 663 Fixed assets 1,577 1,822 2,088 2,426 2,780 Other assets 569 624 696 790 868 Total assets 3,530 3,962 4,367 4,771 5,039 Interest bearing liabilities 1,888 1,981 2,122 2,191 2,231 Trade payables 418 263 238 293 317 Other liabilities 143 170 171 191 206 Total liabilities 2,450 2,413 2,531 2,674 2,754 Minority interest (3) (1) (2) (2) (2) Shareholders' equity 1,083 1,550 1,838 2,099 2,287 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FEBIT 15 206 549 575 486 Depreciation 36 33 26 27 34 Working capital (474) (84) (163) (65) (108) Other operating items (123) (283) (282) (288) (267) Operating cash flow (546) (129) 130 249 146Net capital expenditure (484) (278) (291) (366) (388) Free cash flow (1,031) (407) (161) (116) (243)Equity raised/(bought) 336 534 - - - Net borrowings 914 92 142 69 41 Other financing (33) (4) 0 (43) (46) Net cash flow 227 215 (20) (91) (248)Cash flow at beginning 83 310 525 505 414 Ending cash flow 310 525 505 414 166Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2014A 2015A 2016F 2017F 2018F ROAE (%) (8.7) (4.8) 17.0 15.4 10.7 ROAA (%) (3.0) (1.7) 6.9 6.6 4.8 Gross margin (%) 7.2 11.3 17.7 17.2 15.2 EBITDA margin (%) 3.1 7.6 13.9 13.4 11.8 EBIT margin (%) 0.3 4.3 10.4 9.8 7.8 Net margin (%) (1.9) (1.3) 5.4 5.2 3.8 Payout ratio (%) 14.8 - 15.0 15.0 15.0 Current ratio (x) 1.1 1.3 1.5 1.4 1.3 Interest coverage (x) 0.2 1.2 2.9 3.3 2.7 Net gearing (%) 145.7 93.9 88.0 84.7 90.3 Debtor turnover (days) 38 34 35 33 33 Creditor turnover (days) 37 23 20 22 22 Inventory turnover (days) 53 47 48 46 46 Source: Company, Bahana estimates

2017 Compendium

258

MATAHARI DEPARTMENT STORE BUY PX: IDR14,575 - TP: IDR19,100* LPPF, the largest department store with large exposure to the middle-

income segment, has slowed its expansion in 2016 to 6 new store openings due to the economic slowdown. On a more positive note, LPPF was still able to book one of the strongest SSSG in the sector at 7-8%, which we expect to return to double-digits going forward.

We believe concerns on online competition (1.2% of total retail sales) are overdone given lower A&P spending from e-commerce players that caused weakness in LPPF’s top line. On the cost front, we expect margin support from continued higher private label sales contribution.

Given the recent slowdown in SSSG and possible cash drain due to online investments, we lower our 12-month target price from IDR21,800 to IDR19,100, reflecting a 2017F PER of 22.5x, a 10% discount to its 5-year historical trading average. Risk to our call: unexpectedly stronger e-commerce boom.

Financial highlights Year to 31 Dec 2014A 2015A 2016F 2017F 2018F

Revenues (IDRbn) 7,926 9,007 10,196 11,994 13,400 EBIT (IDRbn) 2,111 2,330 2,568 3,107 3,561 Net profit (IDRbn) 1,419 1,781 2,046 2,477 2,865 Bahana/consensus (%) - - 92.8 97.5 100.7

EPS (IDR) 486 610 701 849 982 EPS growth (%) 23.4 25.5 14.9 21.1 15.7 EV/EBITDA (x) 18.1 16.2 14.3 11.6 9.8 P/E (x) 30.0 23.9 20.8 17.2 14.8 FCFPS (IDR) 477 628 694 870 1,000 FCF yield (%) 3.3 4.3 4.8 6.0 6.9 BVPS (IDR) 55 379 653 1,011 1,399 P/BV (x) 267.0 38.4 22.3 14.4 10.4 DPS (IDR) 292 427 491 594 687 Div. yield (%) 2.0 2.9 3.4 4.1 4.7 Source: Company, Bahana estimates note: based on 23 November 2016 closing price

Share price performance

Source: Bloomberg Richard Haditya Danusaputra ([email protected]) +6221 2505081 ext.3605 *New, please refer to appendix II

Major assumptions Year to 31 Dec 2014A 2015A 2016F 2017F 2018F

SSSG (%) 10.7 6.8 7.1 9.0 9.5 Number of outlets (stores) 131 142 149 158 166 Total store area (k sqm) 854 932 971 1,029 1,081 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 22,575/13,325

12M high/low consensus TP (IDR) : 24,300/16,300

Majority shareholder (%) : PT Multipolar Tbk (17.5)

Shares outstanding (mn)/Free float (%) : 2,918/82.5

Mkt. cap. (IDRbn/USDmn) : 42,529/3,154

3-m avg.daily t.o.(IDRbn/USDmn) : 116.4/8.6

Bloomberg/Reuters code : LPPF IJ/LPPF.JK Source: Bloomberg, Reuters; based on 23 November 2016 closing price

2017 Compendium

259

MATAHARI DEPARTMENT STORE

Profit & loss Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018F

Sales 7,926 9,007 10,196 11,994 13,400Gross profit 5,048 5,671 6,330 7,450 8,385EBITDA 2,339 2,570 2,860 3,451 3,964Depreciation 228 241 291 345 403 EBIT 2,111 2,330 2,568 3,107 3,561Net interest inc./(expense) (233) (93) 5 9 15 Forex gain/(losses) - - - - - Other income/(expense) (27) 8 6 6 6 Pre-tax profit 1,851 2,245 2,579 3,122 3,582Taxes (431) (464) (533) (645) (716) Minority interest - - - - - Extraordinary gain/(losses) - - - - - Net profit 1,419 1,781 2,046 2,477 2,865Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018F

Cash and equivalents 786 947 1,557 2,507 3,661 S-T investments - - - - - Trade receivables 45 39 39 44 47 Inventories 955 1,008 1,059 1,245 1,374 Fixed assets 726 877 961 1,046 1,093 Other assets 901 1,019 1,232 1,459 1,543 Total assets 3,413 3,889 4,847 6,301 7,718 Interest bearing liabilities 689 - - - - Trade payables 1,411 1,552 1,695 1,967 2,144 Other liabilities 1,154 1,232 1,247 1,383 1,492 Total liabilities 3,254 2,783 2,942 3,351 3,636 Minority interest - - - - - Shareholders' equity 159 1,106 1,905 2,950 4,082 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018F

EBIT 2,111 2,330 2,568 3,107 3,561 Depreciation 228 241 291 345 403 Working capital (77) 125 113 105 99 Other operating items (637) (469) (573) (588) (695) Operating cash flow 1,625 2,227 2,399 2,968 3,368Net capital expenditure (232) (393) (375) (430) (450) Free cash flow 1,392 1,834 2,024 2,538 2,917Equity raised/(bought) - - - - - Net borrowings (907) (689) - - - Others (472) (984) (1,413) (1,588) (1,763) Net cash flow 14 161 611 950 1,154Cash flow at beginning 772 786 947 1,557 2,507 Ending cash flow 786 947 1,557 2,507 3,661Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2014A 2015A 2016F 2017F 2018F

ROAE (%) - 281.5 135.9 102.0 81.5 ROAA (%) 44.7 48.8 46.8 44.4 40.9 Gross margin (%) 34.8 35.2 35.4 36.2 36.8 EBITDA margin (%) 16.1 15.9 16.0 16.8 17.4 EBIT margin (%) 14.6 14.4 14.4 15.1 15.6 Net margin (%) 9.8 11.0 11.5 12.0 12.6 Payout ratio (%) 60.0 70.0 70.0 70.0 70.0 Current ratio (x) 0.8 0.9 1.1 1.4 1.7 Interest coverage (x) 9.0 25.1 na na na Net gearing (%) nc nc nc nc nc Debtor turnover (days) 2 2 2 2 2 Creditor turnover (days) 170 162 160 158 156 Inventory turnover (days) 106 106 100 100 100 Source: Company, Bahana estimates

2017 Compendium

260

MATAHARI PUTRA PRIMA BUY PX: IDR1,705 - TP: IDR2,250 MPPA, Indonesia’s fastest growing multi-format retailer, is bringing

down its number of SKUs from 140k to 40k, paving the way for greater economies of scale and higher pricing power against its suppliers.

While still at a nascent stage, purchasing power recovery appears to have materialized in the low-income segment, with an increasing basket size to the benefit of MPPA. Furthermore, the company is embarking on a new pricing strategy, targeting just 300 SKUs instead of 2,000 items, to regain market share from minimarkets.

On valuation, we retain our IDR2,250 TP, based on an unchanged 0.74x 2017F P/S (a 10% discount to MPPA’s 5-year historical trading P/S). Risks include a possible Temasek exit in 2018 and potential structural risk as consumers shift towards the minimarket format in the near future.

Financial highlights Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Revenues (IDRbn) 13,590 13,929 14,415 16,204 18,175 EBIT (IDRbn) 647 282 212 332 377 Net profit (IDRbn) 554 183 116 221 251 Bahana/consensus (%) - - 59.4 76.7 74.9

EPS (IDR) 103 34 22 41 47 EPS growth (%) 24.5 (67.0) (36.8) 91.0 13.6 EV/EBITDA (x) 9.3 16.0 16.4 12.6 9.8 P/E (x) 16.6 50.1 79.3 41.5 36.6 FCFPS (IDR) 127 (144) (16) 2 (41) FCF yield (%) 7.4 (8.4) (0.9) 0.1 (2.4) BVPS (IDR) 526 516 529 554 582 P/BV (x) 3.2 3.3 3.2 3.1 2.9 DPS (IDR) 186 43 9 16 19 Div. yield (%) 10.9 2.5 0.5 1.0 1.1 Source: Company, Bahana estimates note: based on 23 November 2016 closing price

Share price performance

Source: Bloomberg Richard Danusaputra ([email protected]) +6221 2505081 ext.3605 Michael W.Setjoadi ([email protected]) +6221 2505081 ext.3620

Major assumptions Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Total store opening (units) 8 63 20 27 24 Average selling area (k sqm) 668 721 763 829 825 SSSG (%) 5.4 (1.9) (2.8) 1.9 3.3 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 2,130/1,185

12M High/low consensus TP (IDR) : 4,800/3,100

Majority shareholder (%) : PT Multipolar (50.2)

Shares outstanding (mn)/Free float (%) : 5,378/40.0

Mkt. cap. (IDRbn/USDmn) : 9,169/680

3-m avg.daily t.o.(IDRbn/USDmn) : 5.9/0.4

Bloomberg/Reuters code : MPPA IJ/MPPA.JK Source: Bloomberg, Reuters based on 23 November 2016 closing price

2017 Compendium

261

MATAHARI PUTRA PRIMA

Profit & loss Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FSales 13,590 13,929 14,415 16,204 18,175Gross profit 2,354 2,356 2,436 2,899 3,252EBITDA 909 590 573 757 873Depreciation 262 307 361 425 497 EBIT 647 282 212 332 377Net interest inc./(expense) 19 (36) (65) (51) (57) Forex gain/(losses) - - - - - Other income/(expense) 65 (14) - - - Pre-tax profit 731 233 147 281 319Taxes (177) (50) (32) (60) (69) Minority interest - - - - Extraordinary gain/(losses) - - - - - Net profit 554 183 116 221 251Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018F Cash and equivalents 748 409 372 218 264 S-T investments - - - - - Trade receivables 31 26 27 30 34 Inventories 2,655 2,759 2,790 2,989 3,271 Fixed assets 1,273 1,462 1,628 1,795 1,082 Other assets 1,127 1,639 1,389 1,472 1,803 Total assets 5,834 6,294 6,206 6,504 6,453 Interest bearing liabilities - 650 600 600 150 Trade payables 1,893 1,763 1,772 1,968 2,208 Other liabilities 1,112 1,105 988 958 967 Total liabilities 3,006 3,519 3,361 3,527 3,325 Minority interest - - - - - Shareholders' equity 2,828 2,775 2,845 2,977 3,128 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FEBIT 647 282 212 332 377 Depreciation 262 307 361 425 497 Working capital (283) (691) (40) (134) (143) Other operating items 507 (138) (91) (22) (283) Operating cash flow 1,133 (240) 442 602 447Net capital expenditure (452) (533) (527) (593) (665) Free cash flow 681 (773) (85) 9 (218)Equity raised/(bought) - - - - - Net borrowings (188) 650 (50) - (450) Other financing (1,048) (216) 98 (163) 713 Net cash flow (555) (339) (37) (154) 45Cash flow at beginning 1,303 748 409 372 218 Ending cash flow 748 409 372 218 264Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2014A 2015A 2016F 2017F 2018F ROAE (%) 18.1 6.5 4.1 7.6 8.2 ROAA (%) 8.9 3.0 1.9 3.5 3.9 Gross margin (%) 17.3 16.9 16.9 17.9 17.9 EBITDA margin (%) 6.7 4.2 4.0 4.7 5.1 EBIT margin (%) 4.8 2.0 1.5 2.1 2.1 Net margin (%) 4.1 1.3 0.8 1.4 1.4 Payout ratio (%) 34.9 35.0 40.0 40.0 40.0 Current ratio (x) 1.1 1.1 1.1 1.1 1.1 Interest coverage (x) nc 7.9 3.3 6.5 6.6 Net gearing (%) nc 8.7 8.0 12.8 nc Creditor turnover (days) 62 56 54 54 54 Debtor turnover (days) 1 1 1 1 1 Inventory turnover (days) 86 87 85 82 80 Source: Company, Bahana estimates

2017 Compendium

262

MAYORA INDAH BUY PX: IDR1,535 - *TP: IDR2,500 MYOR, Indonesia’s largest confectionery manufacturer, aims to grow

2017 revenue by c.15%, primarily on volume growth. We believe this to be a reasonable target. To support volume growth, MYOR has guided for higher 2017-18 capex, as utilization rates at both its food and coffee segments are already running at around 80%.

Looking ahead, we expect sustained growth from MYOR’s ability to not only promote its product locally (50% of revenues), but also overseas (50%) with a high success rate of new product launches at above 65% (industry: c.20%) while maintaining A&P below 11-12% of sales.

Going into 2017, we maintain our BUY rating on sustained volume growth and margins as well as continued deleveraging from strong free cash flow generation. Our TP of IDR2,500, based on a 2017F PER of 36x, reflects a 25% discount to UNVR’s valuation. Risks to our call include higher raw material prices and rising competition.

Financial highlights Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Revenues (IDRbn) 14,169 14,819 17,559 20,869 24,877 EBIT (IDRbn) 891 1,863 2,045 2,394 2,828 Net profit (IDRbn) 403 1,220 1,248 1,535 1,832 Bahana/consensus (%) - - 98 103 103

EPS (IDR) 18 55 56 69 82 EPS growth (%) (61.3) 202.4 2.3 23.1 19.4 EV/EBITDA (x) 29.6 15.7 16.2 14.0 12.0 P/E (x) 85.1 28.1 27.5 22.4 18.7 FCFPS (IDR) 17 69 66 86 100 FCF yield (%) 1.1 4.5 4.3 5.6 6.5 BVPS (IDR) 182 232 278 334 401 P/BV (x) 8.4 6.6 5.5 4.6 3.8 DPS (IDR) 9 7 11 14 16 Div. yield (%) 0.6 0.4 0.7 0.9 1.1 Source: Company, Bahana estimates note: based on 23 November 2016 closing price

Share price performance

0

2,000

4,000

6,000

8,000

10,000

12,000

900

1,100

1,300

1,500

1,700

23-Nov-15 23-Jan-16 23-Mar-16 23-May-16 23-Jul-16 23-Sep-16 23-Nov-16

('000)(IDR)

Volume (RHS) MYOR IJ Px Last

12.3 4.6 5.8

(13.9)

30.1 36.6

(20)

(10)

0

10

20

30

40

(20)

(10)

0

10

20

30

40

ytd 1M 3M 6M 9M 12M

(%) (%)

MYOR IJ relative to JCI Source: Bloomberg Renaldy Effendy ([email protected]) +6221 2505081 ext. 3606 *New, please refer to appendix II

Major assumptions Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Confectionaries price growth (%) 10.0 7.0 5.5 5.8 6.1

Coffee price growth (%) 4.9 5.5 8.8 7.5 7.8

A&P to sales (%) 8.6 6.8 11.6 8.5 8.0 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 1,800/1,020 12M High/low consensus TP (IDR) : 2,200/1,528 Majority shareholder (%) : Unita Branindo (32.9) Shares outstanding (mn)/Free float (%) : 22,359/66.9 Mkt. cap. (IDRb/USDmn) : 34,321/2,545 3-m avg.daily t.o.(IDRbn/USDmn) : 1.3/0.1 Bloomberg/Reuters code : MYOR IJ/MYOR.JK Source: Bloomberg, Reuters; based on 23 November 2016 closing price

2017 Compendium

263

MAYORA INDAH

Profit & loss Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FSales 14,169 14,819 17,559 20,869 24,877Gross profit 2,535 4,198 4,723 5,601 6,663EBITDA 1,290 2,327 2,259 2,620 3,063Depreciation 399 464 214 226 235 EBIT 891 1,863 2,045 2,394 2,828Net interest inc./(expense) (326) (362) (290) (317) (352) Forex gain/(losses) (19) 152 (65) - - Other income/(expense) (17) (12) (12) (12) (12) Pre-tax profit 529 1,640 1,677 2,064 2,464Taxes (120) (390) (399) (491) (586) Minority interest (6) (30) (31) (38) (45) Extraordinary gain/(losses) - - - - -Net profit 403 1,220 1,248 1,535 1,832Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018F Cash and equivalents 713 1,682 1,488 1,904 2,246 S-T investments - - - - - Trade receivables 3,046 3,368 3,951 4,649 5,487 Inventories 1,967 1,763 2,110 2,484 2,934 Fixed assets 3,585 3,771 4,057 4,531 5,146 Other assets 987 758 938 1,141 1,477 Total assets 10,298 11,343 12,544 14,710 17,290 Interest bearing liabilities 4,603 3,808 3,754 4,144 4,614 Trade payables 823 1,023 1,236 1,470 1,754 Other liabilities 796 1,317 1,339 1,623 1,950 Total liabilities 6,221 6,148 6,329 7,238 8,318 Minority interest 93 118 140 168 202 Shareholders' equity 3,984 5,077 6,075 7,304 8,769 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FEBIT 891 1,863 2,045 2,394 2,828 Depreciation 399 464 214 226 235 Working capital 447 501 513 853 1,020 Other operating items (487) (643) (797) (859) (996) Operating cash flow 1,250 2,185 1,975 2,614 3,087Net capital expenditure (870) (650) (500) (700) (850) Free cash flow 380 1,535 1,475 1,914 2,237Equity raised/(bought) - - - - - Net borrowings 730 (795) (54) 391 470 Other financing (2,052) 377 (1,365) (1,582) (1,998) Net cash flow (1,148) 969 (194) 416 342Cash flow at beginning 1,860 713 1,682 1,488 1,904 Ending cash flow 713 1,682 1,488 1,904 2,246Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2014A 2015A 2016F 2017F 2018F ROAE (%) 10.4 26.9 22.4 22.9 22.8 ROAA (%) 4.0 11.3 10.4 11.3 11.5 Gross margin (%) 17.9 28.3 26.9 26.8 26.8 EBITDA margin (%) 9.1 15.7 12.9 12.6 12.3 EBIT margin (%) 6.3 12.6 11.6 11.5 11.4 Net margin (%) 2.8 8.2 7.1 7.4 7.4 Payout ratio (%) 51.0 12.2 20.0 20.0 20.0 Current ratio (x) 2.1 2.4 2.4 2.5 2.7 Interest coverage (x) 2.7 5.2 7.1 7.5 8.0 Net gearing (%) 97.6 41.9 37.3 30.7 27.0 Debtor turnover (days) 25 35 35 35 35 Creditor turnover (days) 77 82 81 80 79 Inventory turnover (days) 61 60 59 59 58 Source: Company, Bahana estimates

2017 Compendium

264

MEDCO ENERGI BUY PX: IDR1,360 - TP: IDR1,540* With some recent recovery in oil prices, MEDC, the largest listed upstream

oil company, looks on track to book 2016F net profit of USD31mn (from a loss in 2015), in line with our view that the worst is over for the industry. Furthermore, given our expectation of a better balanced oil market in 2H17 and 2018F, MEDC’s earnings should gradually improve.

We also believe Medco’s recent acquisition of Newmont Nusa Tenggara (not in our forecast yet; still awaiting details from the management) will be the game changer as higher gold prices in 2017F, coupled with a lower global oil production rate in 2018F, should increase Medco’s revenue by more than 28% y-y in 2017F and 54% y-y in 2018F.

We maintain our BUY rating on MEDC with a new TP of IDR1,540 as we believe a better future awaits Medco in 2017-18F. Our new TP is derived from DCF valuation, with WACC of 7.3% and LTG of 0.1%. Risks: OPEC failing to limit production.

Financial highlights* Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Revenues (USDm) 751 628 568 729 1,121 EBIT (USDm) 156 90 119 194 442 Net profit (USDm) 5 (188) 31 37 57 Bahana/consensus (%) - - 131 112 85

EPS (IDR) 19 (762) 128 150 230 EPS growth (%) (54.2) (4,180.7) 116.7 17.6 53.4 EV/EBITDA (x) 5.2 6.7 6.2 4.5 2.6 P/E (x) 72.8 (1.8) 10.7 9.1 5.9 FCFPS (IDR) (189) 503 (45) 609 1,409 FCF yield (%) (13.9) 37.0 (3.3) 44.7 103.6 BVPS (IDR) 3,127 2,820 3,039 3,144 3,314 P/BV (x) 0.4 0.5 0.4 0.4 0.4 DPS (IDR) 7 (305) 51 45 60 Div. yield (%) 0.5 (22.4) 3.8 3.3 4.4 Source: Company, Bahana estimates note: based on 23 November 2016 closing price

Share price performance

0

10,000

20,000

30,000

40,000

50,000

60,000

500

750

1,000

1,250

1,500

1,750

2,000

23-Nov-15 23-Jan-16 23-Mar-16 23-May-16 23-Jul-16 23-Sep-16 23-Nov-16

('000)(IDR)

Volume (RHS) MEDC IJ Px Last

57.6

1.8

(17.4) (18.6)

54.9

4.0

(40)

(20)

0

20

40

60

80

(40)

(20)

0

20

40

60

80

ytd 1M 3M 6M 9M 12M

(%) (%)

MEDC IJ relative to JCI Source: Bloomberg Andrew Franklin Hotama ([email protected]) +6221 2505081 ext. 3619 *New, please refer to appendix II

Major assumptions Year to 31 Dec 2014A 2015A 2016F 2017F 2018F ASP oil (USD/barrell) 97.8 49.3 43.8 51.9 58.5 Growth (%) (9.6) (49.6) (11.1) 18.4 12.8

\ASP gas (USD/mmbtu) 5.6 5.4 5.7 6.0 6.9 Growth (%) 8.6 (3.5) 5.2 5.7 14.9 Production per day (MBOED) 55 55 56 62 94 Source: Company, Bahana estimates

Company information

12M high/low (IDR) : 1,950/670 12M High/low consensus TP (IDR) : 2,000/1,300 Majority shareholder (%) : Encore Energy (50.7) Shares outstanding (mn)/Free float (%) : 3,332/49.0 Mkt. cap. (IDRbn/USDmn) : 4,532/333 3-m avg.daily t.o.(IDRbn/USDmn) : 6.8/0.5 Bloomberg/Reuters code : MEDC IJ/MEDC.JK Source: Bloomberg, Reuters; based on 23 November 2016 closing price

2017 Compendium

265

MEDCO ENERGI

Profit & loss Year to 31 Dec (USDmn) 2014A 2015A 2016F 2017F 2018FSales 751 628 568 729 1,121Gross profit 271 208 219 303 574EBITDA 253 215 247 346 623Depreciation 97 126 128 152 181 EBIT 156 90 119 194 442Net interest inc./(expense) (61) (71) (73) (89) (78) Forex gain/(losses) - - - - - Other income/(expense) 11 (165) (14) (15) (16) Pre-tax profit 106 (146) 32 90 348Taxes (98) (34) (1) (54) (296) Minority interest (4) (2) 0 1 5 Extraordinary gain/(losses) 1 (6) - - - Net profit 5 (188) 31 37 57Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (USDmn) 2014A 2015A 2016F 2017F 2018F Cash and equivalents 207 463 106 112 135 S-T investments 269 229 11 17 24 Trade receivables 102 99 89 114 176 Inventories 42 40 33 41 52 Fixed assets 89 69 70 71 72 Other assets 1,960 2,010 2,324 2,337 2,367 Total assets 2,668 2,910 2,633 2,691 2,827 Interest bearing liabilities 1,186 1,580 1,300 1,325 1,400 Trade payables 92 77 64 78 101 Other liabilities 503 551 514 508 504 Total liabilities 1,781 2,208 1,878 1,911 2,005 Minority interest 9 6 5 4 4 Shareholders' equity 878 696 750 776 818 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (USDmn) 2014A 2015A 2016F 2017F 2018FEBIT 156 90 119 194 442 Depreciation 97 126 128 152 181 Working capital 17 142 (149) (24) (58) Other operating items (37) (23) (3) (37) (81) Operating cash flow 232 334 95 285 484Net capital expenditure (285) (210) (106) (134) (136) Free cash flow (53) 124 (11) 150 348Equity raised/(bought) - - - - - Net borrowings 193 351 (280) 25 75 Other financing (203) (218) (66) (169) (399) Net cash flow (63) 256 (358) 6 23Cash balances, beginning 270 207 463 106 112 Ending cash 207 463 106 112 135Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2014A 2015A 2016F 2017F 2018F ROAE (%) 0.6 (23.9) 4.3 4.9 7.1 ROAA (%) 0.2 (6.7) 1.6 1.7 2.1 Gross margin (%) 36.1 33.1 38.5 41.6 51.2 EBITDA margin (%) 33.7 34.3 43.5 47.4 55.5 EBIT margin (%) 20.7 14.2 21.0 26.6 39.4 Net margin (%) 0.7 (29.9) 5.5 5.1 5.1 Payout ratio (%) 40 40 40 40 40 Current ratio (x) 1.6 2.0 3.6 2.0 2.3 Interest coverage (x) 2.6 1.3 1.6 2.2 5.6 Net gearing (%) 111.6 160.4 159.2 156.4 154.6 Debtor turnover (days) 49 57 57 57 57 Creditor turnover (days) 70 67 67 67 67 Inventory turnover (days) 32 35 35 35 35 Source: Company, Bahana estimates

2017 Compendium

266

MEDIA NUSANTARA CITRA BUY PX: IDR1,735 - TP: IDR2,200 MNCN, Indonesia’s leading media company (c.45% prime time market

share), is enjoying a strong TV ratings surge ytd, driven by RCTI’s succesful hit drama series, but investors are puzzled by the lack of monetization as EBIT growth is not reflective of the strong ratings. We expect a better translation of ratings towards adex revenue in 2017.

As Hary Tanoe was recently replaced with David Audy as CEO, management can have more focus on execution with 100% of its time dedicated to business vs. politics, although the political affiliation risk will continue to be there but to a lesser degree, in our view.

All in all, MNCN remains the cheapest media and consumer-driven Indonesian stock, trading at a 2017F PE of 12.8x, 50% discount to the sector. Following its massive share price correction, we currently have a BUY on MNCN and a 12M TP of IDR2,200, based on a 2017F PE of 16x. Risks: Online ads and unhedged USD250mn debt.

Financial highlights Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Revenues (IDRbn) 6,666 6,445 7,013 7,636 8,410 EBIT (IDRbn) 2,604 2,194 2,524 2,787 3,109 Net profit (IDRbn) 1,762 1,186 1,706 1,913 2,155 Bahana/consensus (%) - - 102 99 98

EPS (IDR) 125 84 121 136 153 EPS growth (%) 4 -33 44 12 13 EV/EBITDA (x) 10.0 11.7 10.2 9.2 8.3 P/E (x) 13.9 20.6 14.3 12.8 11.3 FCFPS (IDR) (83) 9 71 87 98 FCF yield (%) -4.9 0.5 4.2 5.2 5.8 BVPS (IDR) 624 628 657 836 920 P/BV (x) 2.8 2.8 2.6 2.1 1.9 DPS (IDR) 43 63 150 61 68 Div. yield (%) 2.5 3.6 8.6 3.5 3.9 Source: Company, Bahana estimates note: based on 23 November 2016 closing price

Share price performance

0

50,000

100,000

150,000

1,000

1,250

1,500

1,750

2,000

2,250

2,500

23-Nov-15 23-Jan-16 23-Mar-16 23-May-16 23-Jul-16 23-Sep-16 23-Nov-16

('000)(IDR)

Volume (RHS) MNCN IJ Px Last

(19.9)(14.1)

(0.4)

(32.8)

(7.2)(13.3)

(40)

(30)

(20)

(10)

0

(40)

(30)

(20)

(10)

0

ytd 1M 3M 6M 9M 12M

(%) (%)

MNCN IJ relative to JCISource: Bloomberg Henry Wibowo ([email protected]) +6221 2505081 ext.3622

Major assumptions Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Ad Revenue Growth (%) 9.3 (3.3) 6.7 9.1 10.3 COGS Growth (%) (1.3) 1.7 6.5 8.0 9.0 EBITDA Margin (%) 41.7 36.9 38.8 39.3 39.8 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 2,405/1,190 12M High/low consensus TP (IDR) : 3,130/1,950Majority shareholder (%) : Global Mediacom (58.3) Shares outstanding (mn)/Free float (%) : 14,276/41.7 Mkt. cap. (IDRbn/USDmn) : 23,555/1,738 3-m avg.daily t.o.(IDRbn/USDmn) : 22.0/1.6 Bloomberg/Reuters code : MNCN IJ/MNCN.JK Source: Bloomberg, Reuters based on 23 November 2016 closing price

2017 Compendium

267

MEDIA NUSANTARA CITRA

Profit & loss Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FSales 6,666 6,445 7,013 7,636 8,410 Gross profit 3,853 3,584 3,966 4,345 4,822 EBITDA 2,779 2,379 2,722 3,001 3,343 Depreciation 176 185 198 214 235 EBIT 2,604 2,194 2,524 2,787 3,109 Net interest inc./(expense) 28 (133) (122) (104) (78) Forex gain/(losses) (77) (315) - - - Other income/(expense) (11) (65) - - - Pre-tax profit 2,544 1,681 2,401 2,683 3,031 Taxes (660) (404) (600) (671) (758) Minority interest (121) (91) (95) (99) (118) Extraordinary gain/(losses) - - - - - Net profit 1,762 1,186 1,706 1,913 2,155 Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018F Cash and equivalents 1,132 398 223 2,064 2,731 S-T investments 1,887 1,127 900 900 900 Trade receivables 2,994 3,020 3,287 3,578 3,941 Inventories 1,635 1,593 1,697 1,833 1,998 Fixed assets 2,659 4,145 4,745 5,045 5,345 Other assets 3,302 4,190 4,008 4,100 3,534 Total assets 13,609 14,475 14,860 17,521 18,450 Interest bearing liabilities 3,182 3,757 3,596 3,546 3,096 Trade payables 244 140 140 140 140 Other liabilities 789 1,011 1,050 1,102 1,164 Total liabilities 4,216 4,908 4,786 4,788 4,400 Minority interest 486 601 696 795 912 Shareholders' equity 8,907 8,966 9,378 11,938 13,137 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FEBIT 2,604 2,194 2,524 2,787 3,109 Depreciation 176 185 198 214 235 Working capital (1,965) 318 (193) (468) (579) Other operating items (889) (1,079) (921) (989) (1,070) Operating cash flow (74) 1,617 1,608 1,544 1,694 Net capital expenditure (1,117) (1,486) (600) (300) (300) Free cash flow (1,191)

(1 191) 131 1,008 1,244 1,394

Equity raised/(bought) 256 (266) (680) 1,500 - Net borrowings 2,989 553 (119) (50) (450) Other financing (1,605) (1,179) (358) (853) (276) Net cash flow 448 (760) (149) 1,841 667 Cash flow at beginning 684 1,132 372 223 2,064 Ending cash flow 1,132 398 223 2,064 2,731 Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2014A 2015A 2016F 2017F 2018F ROAE (%) 20.6 12.5 17.4 16.8 16.1 ROAA (%) 15.2 8.4 11.6 11.8 12.0 Gross margin (%) 57.8 55.6 56.6 56.9 57.3 EBITDA margin (%) 41.7 36.9 38.8 39.3 39.8 EBIT margin (%) 39.1 34.0 36.0 36.5 37.0 Net margin (%) 26.4 18.4 24.3 25.1 25.6 Payout ratio (%) 35.8 50.4 49.5 50.0 50.0 Current ratio (x) 9.7 7.4 7.3 9.0 9.7 Interest coverage (x) na 16 21 27 40 Net gearing (%) 21.3 34.0 32.5 10.9 1.9 Debtor turnover (days) 164 171 171 171 171 Creditor turnover (days) 52 65 65 65 65 Inventory turnover (days) 212 203 203 203 203 Source: Company, Bahana estimates

2017 Compendium

268

MERDEKA COPPER GOLD BUY PX: IDR2,020 – TP: IDR2,304* Being Indonesia’s second largest gold company with total proven gold

reserves of 898k oz and 19bn lbs of copper resources, MDKA’s annual 97,500 oz gold production has come at a good time as prices bottom out, while volumes are driven by solid demand out of China and India.

Using the heap-leach method that requires low CAPEX (USD131mn), MDKA focuses on producing gold for the first 9 years of production before switching to underground copper & gold thereafter. We forecast MDKA to book net earnings of USD25mn in 2017 and earnings growth of 49% y-y in 2018, mostly due to our assumption of higher gold prices.

On valuation, we use P/E methodology with premium of around 20% to MDKA’s regional peers, given its status as one among the few companies with significant copper and gold reserves. We maintain our BUY rating on MDKA with a new TP of 2,304, based on 2017F PE of 24x. Risk to our call includes higher-than-expected Fed rate hikes.

Financial highlights* Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Revenues (USDmn) - - - 107 129 EBIT (USDmn) - (5) (5) 48 70 Net profit (USDmn) - (5) (3) 25 38 Bahana/consensus (%) - - - - -

EPS (IDR) - (20) (13) 96 143 EPS growth (%) - (18.1) 34.3 838.9 48.9 EV/EBITDA (x) - na 50.0 8.9 6.4 P/E (x) - na na 21.1 14.2 FCFPS (IDR) - (195) (308) 59 154 FCF yield (%) - (9.6) (15.3) 2.9 7.6 BVPS (IDR) - 602 590 657 756 P/BV (x) - 3.4 3.4 3.1 2.7 DPS (IDR) - - - 29 43 Div. yield (%) - - - 1.4 2.1 Source: Company, Bahana estimates note: based on 23 November 2016 closing price

Share price performance

0

100

200

300

400

500

600

1,500

1,700

1,900

2,100

2,300

23-Nov-15 23-Jan-16 23-Mar-16 23-May-16 23-Jul-16 23-Sep-16 23-Nov-16

('000)(IDR)

Volume (RHS) MDKA IJ Px Last

(13.2)

9.4 8.5

(9.4)(5.7)

(13.0) (15)

(10)

(5)

0

5

10

15

(15)

(10)

(5)

0

5

10

15

ytd 1M 3M 6M 9M 12M

(%) (%)

MDKA IJ relative to JCI Source: Bloomberg Andrew Hotama ([email protected]) +6221 2505081 ext. 3619 *New, please refer to appendix II

Major assumptions Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Gold sales volume (oz) - - - 97,500 97,500 Gold ASP (USD/oz) - - - 1,100 1,325 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 2,230/1,625 12M High/low consensus TP (IDR) : na/na Majority shareholder (%) : PT Mitra Daya Mustika (16.5) Shares outstanding (mn)/Free float (%) : 3,570 /17.0 Mkt. cap. (IDRbn/USDmn) : 7,211/530 3-m avg.daily t.o.(IDRmn/USDthousands) : 19.1/1.4 Bloomberg/Reuters code : MDKA IJ/MDKA.JK Source: Bloomberg, Reuters; based on 23 November 2016 closing price

2017 Compendium

269

MERDEKA COPPER GOLD

Profit & loss Year to 31 Dec (USDmn) 2014A 2015A 2016F 2017F 2018F

Sales - - - 107 129

Gross profit - - - 54 76

EBITDA - (5) 12 66 88

Depreciation - 0 17 18 18

EBIT - (5) (5) 48 70

Net interest inc./(expense) - (1) (1) (1) (0)

Forex gain/(losses) - (2) - - -

Other income/(expense) - (0) (0) (0) (0)

Pre-tax profit - (9) (7) 47 70

Taxes - 4 3 (19) (28)

Minority interest - 0 0 (3) (4)

Extraordinary gain/(losses) - - - - -

Net profit - (5) (3) 25 38Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (USDmn) 2014A 2015A 2016F 2017F 2018F

Cash and equivalents - 19 12 16 24

Trade receivables - - - 1 1

Inventories - 0 0 7 7

Fixed assets - 152 256 248 239

Other assets - 8 12 12 12

Total assets - 178 281 284 284

Interest bearing liabilities - 2 77 71 50

Trade payables - 2 15 5 5

Other liabilities - 15 33 33 27

Total liabilities - 19 125 109 83

Minority interest - 0 0 1 1

Shareholders' equity - 159 156 174 200 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (USDmn) 2014A 2015A 2016F 2017F 2018FEBIT - (5) (5) 48 70 Depreciation - 0 17 18 18 Working capital - (9) 13 (18) (0)

Other operating items - (4) 15 (23) (38) Operating cash flow - (18) 40 25 50Net capital expenditure - (34) (122) (9) (9) Free cash flow - (52) (82) 15 41Equity raised/(bought) - 10 (0) - - Net borrowings - (79) 75 (5) (21) Other financing - 135 0 (7) (11) Net cash flow - 15 (6) 3 9Cash flow at beginning - 4 19 12 16 Ending cash flow - 19 12 16 24Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2014A 2015A 2016F 2017F 2018F ROAE (%) - (5.8) (2.1) 15.4 20.2 ROAA (%) - (3.4) (1.5) 9.0 13.3 EBITDA margin (%) - na na 61.6 68.2 EBIT margin (%) - na na 44.8 54.2 Net margin (%) - na na 23.6 29.2 Payout ratio (%) - 0.0 0.0 30.0 30.0 Current ratio (x) - 1.6 0.5 1.6 2.1 Interest coverage (x) - na na 42.9 604.9 Net gearing (%) - na 41.2 32.1 13.1 Debts to assets (%) - 0.8 27.3 25.1 17.7 Debtor turnover (days) - na na 35 35 Creditor turnover (days) - na na 4 4 Inventory turnover (days) - na na 50 50 Source: Company, Bahana estimates

2017 Compendium

270

MITRA ADIPERKASA BUY PX: IDR4,890 - TP: IDR6,600* Indonesia’s largest lifestyle retailer with over 2,000 retail stores and

150 brands under its portfolio, MAPI has seen higher margins in 2016 due to an improved inventory system and the divestment of non-performing brands. MAPI is currently in its final stage of restructuring its department stores with expected lower inventory turnover.

In 2017, MAPI plans to focus more on opening F&B stores, especially Starbucks, in tier-2 cities, capturing improved purchasing power across Indonesia. Also, the company has just expanded to Vietnam and plans to open more Zara outlets due to promising results.

On valuation, we set our TP at IDR6,600 on MAPI’s expected sustained long-term growth backed by well-known brands like Inditex and Starbucks, which cater to Indonesia’s growing middle-income segment. Risks: Weaker IDR given high import content and softer demand causing inventory issues to resurface.

Financial highlights Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Revenues (IDRbn) 11,822 12,833 15,501 17,615 19,766 EBIT (IDRbn) 531 523 858 993 1,121 Net profit (IDRbn) 78 37 195 311 486 Bahana/consensus (%) - - 106.7 97.0 110.9

EPS (IDR) 47.6 22.5 117.4 187.6 292.7 EPS growth (%) (75.9) (52.7) 421.2 59.8 56.0 EV/EBITDA (x) 10.2 10.2 8.4 7.2 6.7 P/E (x) 102.7 217.2 41.7 26.1 16.7 FCFPS (IDR) (323

)(275

)163 528 375

FCF yield (%) (6.6) (5.6) 3.3 10.8 7.7 BVPS (IDR) 1,526 1,792 1,561 1,674 1,850 P/BV (x) 3.2 2.7 3.1 2.9 2.6 DPS (IDR) 20 - 47 75 117 Div. yield (%) 11,822 12,833 15,501 17,615 19,766 Source: Company, Bahana estimates note: based on 23 November 2016 closing price

Share price performance

Source: Bloomberg Richard Danusaputra ([email protected]) +6221 2505081 ext. 3605 *New, please refer to appendix II

Major assumptions Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Sales growth (%) 21.4 8.5 20.8 13.6 12.2 Total store space (k sqm) 650 669 727 777 828 SSSG (%) 4.8 3.7 7.9 4.4 5.6 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 5,900/3,500

12M High/low consensus TP (IDR) : 7,200/3,270

Majority shareholder (%) : PT Satya Mulia Gema Gemil (56.0)

Share outstanding (mn)/Free float (%) : 1,660/44.0

Mkt. cap. (IDRbn/USDmn) : 8,117/602

3-m avg.daily t.o.(IDRbn/USDmn) : 7.2/0.5

Bloomberg/Reuters code : MAPI IJ/MAPI.JK Source: Bloomberg, Reuters; based 23 November 2016 closing price

2017 Compendium

271

MITRA ADIPERKASA

Profit & loss Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FSales 11,822 12,833 15,501 17,615 19,766Gross profit 5,470 5,783 7,131 8,111 9,132EBITDA 1,079 1,101 1,369 1,631 1,792Depreciation 447 397 511 638 671 EBIT 531 523 858 993 1,121Net interest inc./(expense) (376) (388) (384) (309) (184) Forex gain/(losses) 15 (32) 3 - - Other income/(expense) 7 46 45 3 - Pre-tax profit 178 148 521 688 937Taxes 99 118 156 206 281 Minority interest (0) (7) - - - Extraordinary gain/(losses) - - (170) (170) (170) Net profit 78 37 195 311 486Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018F Cash and equivalents 513 504 1,357 1,762 1,827 S-T investments - 4 - - - Trade receivables 359 334 637 724 812 Inventories 3,203 3,356 3,555 3,983 4,370 Fixed assets 2,548 2,438 2,627 2,690 2,719 Other assets 2,077 2,847 8,246 9,610 10,628 Total assets 8,701 9,483 10,873 12,299 13,347 Interest bearing liabilities 3,426 3,656 4,755 5,441 5,720 Trade payables 1,154 1,156 2,225 2,604 2,913 Other liabilities 1,589 1,697 1,302 1,476 1,644 Total liabilities 6,168 6,508 8,282 9,521 10,277 Minority interest (0) 7 - - - Shareholders' equity 2,533 2,968 2,592 2,779 3,070 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FNet income 79 37 195 311 486 Depreciation 447 397 511 638 671 Working capital (446) (184) 190 (137) (165) Other operating items (131) (420) 75 764 332 Operating cash flow (51) (169) 971 1,576 1,323Net capital expenditure (486) (287) (700) (700) (700) Free cash flow (537) (456) 271 876 623Equity raised/(bought) - - - - - Net borrowings 681 370 1,093 (212) (190) Other financing 3 77 (511) (259) (368) Net cash flow 145 (9) 853 405 65Cash flow at beginning 369 513 504 1,357 1,762 Ending cash flow 513 504 1,357 1,762 1,827Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2014A 2015A 2016F 2017F 2018F ROAE (%) 3.2 1.4 7.0 11.6 16.6 ROAA (%) 0.9 0.4 1.9 2.7 3.8 Gross margin (%) 46.3 45.1 46.0 46.1 46.2 EBITDA margin (%) 9.1 8.6 8.8 9.3 9.1 EBIT margin (%) 4.5 4.1 5.5 5.6 5.7 Net margin (%) 0.7 0.3 1.3 1.8 2.5 Payout ratio (%) 42.0 - 40.0 40.0 40.0 Current ratio (x) 1.3 1.7 1.8 1.6 1.5 Interest coverage (x) 1.4 1.3 2.2 3.2 6.1 Net gearing (%) 112.9 105.9 131.1 132.4 126.8 Debtor turnover (days) 99 91 97 100 100 Creditor turnover (days) 15 16 15 15 15 Inventory turnover (days) 184 174 155 153 150 Source: Company, Bahana estimates

2017 Compendium

272

MITRA KELUARGA KARYASEHAT HOLD PX: IDR2,710 - TP: IDR2,550 MIKA is undergoing expansion delays on new hospitals, likely until

1Q18. Given its already high occupancy rate in 2016, we see limited patient volume growth in 2017 in line with the limited new operational beds. Separately, its 3 hospitals have become CoB-ineligible based on the new CoB regulation.

Organically, MIKA aims to open 6 new hospitals with 200-bed capacity in major cities and an additional 250 beds in its existing hospitals by 2019. MIKA is also planning to acquire existing small hospitals to be categorized as second-tier BPJS-hospitals. This expansion we conservatively assume to occur by 2019.

Our IDR2,550 DCF-based TP reflects terminal growth of 5% and a WACC of 9.4%. We believe MIKA’s higher margins are well supported with a 2017F EV/EBITDA of 41.8x, reflecting 170% premium to SILO’s valuation. Risk: Higher/lower occupancy rates.

Financial highlights* Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Revenues (IDRbn) 1,946 2,141 2,468 2,724 3,162 EBIT (IDRbn) 548 600 706 788 906 Net profit (IDRbn) 519 567 689 758 872 Bahana/consensus (%) - - 102 97 92

EPS (IDR) 38 41 47 52 60 EPS growth (%) 28.5 8.3 16.6 10.0 15.0 EV/EBITDA (x) 59.1 51.6 46.6 41.8 35.6 P/E (x) 72.2 66.7 57.2 52.0 45.2 FCFPS (IDR) 31 34 35 36 43 FCF yield (%) 1.1 1.3 1.3 1.3 1.6 BVPS (IDR) 124 229 234 249 267 P/BV (x) 21.9 11.8 11.6 10.9 10.1 DPS (IDR) 34 21 33 36 42 Div. yield (%) 1.3 0.8 1.2 1.3 1.5 Source: Company, Bahana estimates note: based on 23 November 2016 closing price

Share price performance

0

10,000

20,000

30,000

40,000

50,000

2,000

2,200

2,400

2,600

2,800

3,000

23-Nov-15 23-Jan-16 23-Mar-16 23-May-16 23-Jul-16 23-Sep-16 23-Nov-16

('000)(IDR)

Volume (RHS) MIKA IJ Px Last

(0.6)(1.3)

3.1

(5.6)

18.0

(10.1)

(20)

(10)

0

10

20

(20)

(10)

0

10

20

ytd 1M 3M 6M 9M 12M

(%) (%)

MIKA IJ relative to JCI Source: Bloomberg Renaldy Effendy ([email protected]) +6221 2505081 ext. 3606 *New, please refer to appendix II

Major assumptions Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Beds occupancy rate (%) 64 58 65 64 63 Inpatient volume growth (%) 0.6 (1.3) 14.7 4.5 10.3 Outpatient volume growth (%) 3.1 (0.5) 4.5 8.3 11.2 No. of beds in operation 1,647 1,725 1,825 1,908 2,108 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 2,980/2,010 12M high/low consensus TP (IDR) : 3,320/1,820Majority shareholder (%) : Lion Investments Partner (49.7) Shares outstanding (mn)/Free float (%) : 14,551/18.0 Mkt. cap. (IDRbn/USDmn) : 39,432/2,925 3-m avg.daily t.o.(IDRbn/USDmn) : 15.1/1.1 Bloomberg/Reuters code : MIKA IJ/MIKA.JK Source: Bloomberg, Reuters; based on 23 November 2016 closing price

2017 Compendium

273

MITRA KELUARGA KARYASEHAT

Profit & loss Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FSales 1,946 2,141 2,468 2,724 3,162 Gross profit 865 972 1,160 1,285 1,484 EBITDA 618 686 796 887 1,043 Depreciation 70 86 90 99 137 EBIT 548 600 706 788 906 Net interest inc./(expense) 80 135 191 188 184 Forex gain/(losses) - - - - - Other income/(expense) 41 5 6 9 23 Pre-tax profit 669 740 902 985 1,113 Taxes (133) (151) (185) (197) (212) Minority interest (17) (22) (28) (30) (30) Extraordinary gain/(losses) - - - - - Net profit 519 567 689 758 872 Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018F Cash and equivalents 970 2,387 2,378 2,326 2,284 S-T investments - - - - - Trade receivables 132 136 154 170 197 Inventories 39 38 43 47 55 Fixed assets 771 884 1,094 1,352 1,629 Other assets 257 274 325 383 457 Total assets 2,169 3,720 3,994 4,278 4,623 Interest bearing liabilities - - - - - Trade payables 65 66 67 66 70 Other liabilities 336 374 437 490 565 Total liabilities 400 441 504 556 635 Minority interest 61 83 88 92 97 Shareholders' equity 1,708 3,196 3,402 3,630 3,891 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FEBIT 548 600 706 788 906 Depreciation 70 86 90 99 137 Working capital 58 (14) (3) (16) (15) Other operating items (5) 7 19 11 (27) Operating cash flow 671 679 812 883 1,001 Net capital expenditure (243) (199) (300) (357) (375) Free cash flow 428 480 512 526 626 Equity raised/(bought) (3) 1,212 (0) (0) (0) Net borrowings (50) - - - - Other financing (513) (275) (521) (578) (667) Net cash flow (138) 1,417 (9) (52) (42)Cash flow at beginning 1,108 970 2,387 2,378 2,326 Ending cash flow 970 2,387 2,378 2,326 2,284 Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2014A 2015A 2016F 2017F 2018F ROAE (%) 30.9 23.1 20.9 21.6 23.2 ROAA (%) 24.0 19.3 17.9 18.3 19.6 Gross margin (%) 44.4 45.4 47.0 47.2 46.9 EBITDA margin (%) 31.7 32.1 32.3 32.6 33.0 EBIT margin (%) 28.2 28.0 28.6 28.9 28.7 Net margin (%) 26.7 26.5 27.9 27.8 27.6 Payout ratio (%) 90.6 51.3 70.0 70.0 70.0 Current ratio (x) 5.8 12.7 11.3 10.7 9.5 Interest coverage (x) na na na na na Net gearing (%) nc nc nc nc nc Debtor turnover (days) 24 21 19 17 15 Creditor turnover (days) 23 23 21 22 21 Inventory turnover (days) 13 12 11 11 11 Source: Company, Bahana estimates

2017 Compendium

274

MNC SKY VISION REDUCE PX: IDR1,040- TP: IDR700 MSKY, Indonesia’s largest satellite-based Pay TV operator with >60%

market share (c.2.5m subs) as at 9M16, is seeing ARPU trending down to c.IDR100k/month vs. IDR130k/month 3-4 years ago. It operates under 3 brands: Indovision, Oke Vision and Top TV.

Group CEO Hary Tanoe has publicly disclosed his intention to privatise MSKY and to merge it with sister co. Playmedia (Cable broadband); under a new entity Sky Vision Network (SVN).

Among its peers, MSKY has the best local content (leveraging on MNCN’s large content library). Nonetheless, its satelitte based service is a disadvantage as it can not offer broadband bundle packs like their competitors. Further, competition among the satellite-based players are intense with aggresive discounts being offered by new players like Big TV & Orange TV. We have a DCF-based 12M TP of IDR700 (11.8% WACC) on MSKY and REDUCE call. Key risk: Stronger IDR.

Financial highlights Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Revenues (IDRbn) 3,279 3,235 3,273 3,501 3,814 EBIT (IDRbn) 245 51 82 235 377 Net profit (IDRbn) (155) (776) (32) 26 133 Bahana/consensus (%) na na na na na EPS (IDR) (22) (110) (4) 3 17 EPS growth (%) (68) 402 (96) na 403 EV/EBITDA (x) 7.9 8.5 8.3 7.3 6.3 P/E (x) (48.4) (9.6) (232.3) 284.3 56.5 FCFPS (IDR) (90) (136) (5) (42) (45) FCF yield (%) (8.7) (13.1) (0.5) (4.0) (4.3) BVPS (IDR) 221 193 298 292 310 P/BV (x) 4.7 5.4 3.5 3.6 3.4 DPS (IDR) - - - - - Div. yield (%) - - - - - Source: Company, Bahana estimates note: based on 23 November 2016 closing price

Share price performance

0

500

1,000

1,500

2,000

2,500

300

550

800

1,050

1,300

1,550

23-Nov-15 23-Jan-16 23-Mar-16 23-May-16 23-Jul-16 23-Sep-16 23-Nov-16

('000)(IDR)

Volume (RHS) MSKY IJ Px Last

(35.6)

56.6

23.3

(23.2) (20.0) (20.7)

(60)(40)(20)020406080

(60)(40)(20)

020406080

ytd 1M 3M 6M 9M 12M

(%) (%)

MSKY IJ relative to JCI Source: Bloomberg Henry Wibowo ([email protected]) +6221 2505081 ext. 6049

Major assumptions Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Subscribers Growth (%) 10.0 (3.8) 4.9 4.7 6.7 ARPU Growth (%) (9.9) (2.0) - 2.0 2.0 EBITDA Margin (%) 38.4 35.9 36.4 39.0 41.0 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 1,410/482 12M High/low consensus TP (IDR) : 1,100/1,017 Majority shareholder (%) : PT Global Mediacom Tbk (83.5) Shares outstanding (mn)/Free float (%) : 7205.2/1.7 Mkt. cap. (IDRbn/USDmn) : 7,493/559 3-m avg.daily t.o.(IDRbn/USDmn) : 0.4/0.03 Bloomberg/Reuters code : MSKY.IJ/MSKY.JK Source: Bloomberg, Reuters based on 23 November 2016 closing price

2017 Compendium

275

MNC SKY VISION

Profit & loss Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FSales 3,279 3,235 3,273 3,501 3,814 Gross profit 391 187 225 393 550 EBITDA 1,258 1,160 1,191 1,366 1,565 Depreciation 1,013 1,109 1,109 1,131 1,188 EBIT 245 51 82 235 377 Net interest inc./(expense) (176) (207) (175) (200) (200) Forex gain/(losses) (168) (527) 50 - - Other income/(expense) 0 0 0 0 0 Pre-tax profit (190) (824) (43) 35 177 Taxes (35) (47) (11) 9 44 Minority interest - - - - - Extraordinary gain/(losses) - - - - - Net profit (155) (776) (32) 26 133 Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018F Cash and equivalents 66 47 853 980 757 S-T investments - 0 - - - Trade receivables 456 484 359 384 418 Inventories 402 312 312 318 334 Fixed assets 3,346 4,048 4,548 5,048 5,548 Other assets 1,606 1,679 1,593 1,594 1,596 Total assets 5,875 6,569 7,664 8,324 8,652 Interest bearing liabilities 3,052 3,447 3,500 4,000 4,100 Trade payables 856 1,008 1,252 1,448 1,520 Other liabilities 376 726 766 775 799 Total liabilities 4,284 5,180 5,518 6,223 6,419 Minority interest - - - - - Shareholders' equity 1,591 1,389 2,145 2,101 2,233 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FEBIT 245 51 82 235 377 Depreciation 1,013 1,109 1,109 1,131 1,188 Working capital (139) 547 436 172 44 Other operating items (400) (828) (114) (209) (244) Operating cash flow 719 880 1,513 1,330 1,364 Net capital expenditure (1,368) (1,862) (1,548) (1,631) (1,688) Free cash flow (649) (982) (36) (302) (324)Equity raised/(bought) 0 570 789 (71) - Net borrowings 199 396 53 500 100 Other financing 5 (8) 4 - - Net cash flow (447) (23) 807 127 (224)Cash flow at beginning 513 66 47 853 980 Ending cash flow 66 47 853 980 757 Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2014A 2015A 2016F 2017F 2018F ROAE (%) (9.3) (52.1) (1.8) 1.2 6.1 ROAA (%) (2.6) (12.5) (0.5) 0.3 1.6 Gross margin (%) 11.9 5.8 6.9 11.2 14.4 EBITDA margin (%) 38.4 35.9 36.4 39.0 41.0 EBIT margin (%) 7.5 1.6 2.5 6.7 9.9 Net margin (%) (4.7) (24.0) (1.0) 0.8 3.5 Payout ratio (%) - - - - - Current ratio (x) 0.8 0.2 0.8 0.8 0.7 Interest coverage (x) 1.4 0.2 0.5 1.2 1.9 Net gearing (%) 178.8 234.3 121.7 142.0 143.6 Debtor turnover (days) 51 55 40 40 40 Creditor turnover (days) 108 121 150 170 170 Inventory turnover (days) 51 37 37 37 37 Source: Company, Bahana estimates

2017 Compendium

276

NIPPON INDOSARI CORPINDO HOLD* PX: IDR1,540 - TP: IDR1,600 Indonesia’s growing modern channel is a double edge sword for the

country’s largest producer of bread products (90% market share), ROTI. While it is set to continue benefiting from Indonesia’s modern consumption trend of moving away from rice-base diet, we see increasing return rate of more than 15% (vs. 13% in 2015), which is likely to persist into 2017F driven by growth in modern trade retailers (c.80% of total distribution channels).

On a more positive note, current intense competition among flour producers should enable ROTI to obtain more beneficial raw materials prices going forward.

On valuation, our IDR1,600 TP implies 2017F PE of 25.9x, a 25% discount to the consumer staples sector. HOLD on limited upside potential. Downside risk: Intensifying competition from other bread makers. Upside risk: Lower wheat prices to support earnings.

Financial highlights Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Revenues (IDRbn) 1,880 2,175 2,517 2,989 3,506

EBIT (IDRbn) 263 416 432 487 540

Net profit (IDRbn) 189 271 283 313 349

Bahana/consensus (%) - 115 94 86 96

EPS (IDR) 37 53 56 62 69

EPS growth (%) 19.4 43.4 4.5 10.7 11.6

EV/EBITDA (x) 23.6 15.7 14.6 13.3 10.4

P/E (x) 41.3 28.8 27.6 24.9 22.3

FCFPS (IDR) (58) 69 48 6 20

FCF yield (%) (3.8) 4.5 3.1 0.4 1.3

BVPS (IDR) 188 235 282 329 381

P/BV (x) 8.2 6.6 5.5 4.7 4.0

DPS (IDR) 3 6 8 15 17

Div. yield (%) 0.2 0.4 0.5 1.0 1.1 Source: Company, Bahana estimates note: based on 23 November 2016 closing price

Share price performance

02,0004,0006,0008,00010,00012,00014,000

1,100

1,300

1,500

1,700

1,900

23-Nov-15 23-Jan-16 23-Mar-16 23-May-16 23-Jul-16 23-Sep-16 23-Nov-16

('000)(IDR)

Volume (RHS) ROTI IJ Px Last

8.3

(0.1)

0.3

(0.3)

2.1

12.0

(5)

0

5

10

15

(5)

0

5

10

15

ytd 1M 3M 6M 9M 12M

(%) (%)

ROTI IJ relative to JCI Source: Bloomberg Renaldy Effendy ([email protected]) +6221 2505081 ext. 3606 *New, please refer to appendix II

Major assumptions Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Net volume (packs mn) 381 486 551 645 737 Sales return to net revenue (%) 14.3 13.2 15.1 15.3 15.5 Blended ASP (IDR’000) 5.0 4.4 4.5 4.6 4.7 HRW wheat price (USD/ton) 222 189 211 205 189 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 1,770/1,160 12M high/low consensus TP (IDR) : 2,000/1,450Majority shareholder (%) : Indoritel Makmur Intl. (31.5) Shares outstanding (mn)/Free float (%) : 5,062/30.6 Mkt. cap. (IDRbn/USDmn) : 7,770/578 3-m avg.daily t.o.(IDRbn/USDmn) : 3.6/0.3 Bloomberg/Reuters code : ROTI IJ/ROTI.JK Source: Bloomberg, Reuters; based on 23 November 2016 closing price

2017 Compendium

277

NIPPON INDOSARI CORPINDO

Profit & loss Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FSales 1,880 2,175 2,517 2,989 3,506Gross profit 901 1,155 1,312 1,526 1,761EBITDA 359 528 559 626 714Depreciation 98 117 127 140 174 EBIT 263 416 432 487 540Net interest inc./(expense) (46) (72) (71) (73) (80) Forex gain/(losses) 4 - 1 - - Other income/(expense) 32 34 26 15 18 Pre-tax profit 253 378 387 429 479Taxes (64) (108) (105) (116) (129) Minority interest - - - - - Extraordinary gain/(losses) - - - - - Net profit 189 271 283 313 349Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018F Cash and equivalents 163 515 609 446 342 S-T investments - - - - - Trade receivables 213 249 265 315 369 Inventories 41 43 48 58 69 Fixed assets 1,680 1,821 1,934 2,406 2,827 Other assets 46 78 143 152 162 Total assets 2,143 2,706 2,998 3,377 3,769 Interest bearing liabilities 836 995 994 994 994 Trade payables 126 160 175 213 254 Other liabilities 228 363 399 505 595 Total liabilities 1,189 1,518 1,569 1,713 1,843 Minority interest - - - - - Shareholders' equity 954 1,188 1,429 1,664 1,926 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FEBIT 263 416 432 487 540 Depreciation 98 117 127 140 174 Working capital (54) 78 18 62 41 Other operating items (3) (13) (102) (62) (78) Operating cash flow 303 599 475 627 677Net capital expenditure (598) (248) (231) (599) (576) Free cash flow (295) 350 244 28 101Equity raised/(bought) - (1) 1 - - Net borrowings 179 160 (1) - - Other financing 178 (153) (142) (178) (187) Net cash flow 63 356 102 (150) (85)Cash flow at beginning 100 159 507 596 428 Ending cash flow 163 515 609 446 342Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2014A 2015A 2016F 2017F 2018F ROAE (%) 21.8 25.3 21.6 20.3 19.5 ROAA (%) 9.5 11.2 9.9 9.8 9.8 Gross margin (%) 47.9 53.1 52.1 51.1 50.2 EBITDA margin (%) 19.1 24.3 22.2 21.0 20.4 EBIT margin (%) 14.0 19.1 17.2 16.3 15.4 Net margin (%) 10.0 12.4 11.2 10.5 10.0 Payout ratio (%) 8.4 10.3 15.0 25.0 25.0 Current ratio (x) 1.4 2.1 2.3 1.7 1.4 Interest coverage (x) 5.8 5.8 6.1 6.7 6.8 Net gearing (%) 70.6 40.4 27.0 32.9 33.8 Debtor turnover (days) 53 53 53 53 53 Creditor turnover (days) 38 38 38 38 38 Inventory turnover (days) 14 14 14 14 14 Source: Company, Bahana estimates

2017 Compendium

278

PAKUWON JATI HOLD PX: IDR690 - TP: IDR650 Under our property coverage (ex those with hospitals), PWON has the

largest recurring income base from its malls (48% of total revenue), which has experienced 2% y-y decline in occupancy rates due to tenant relocations. Hence, we lower our 2016F recurring income contribution by 3% on lower assumptions of ARR and occupancy rate.

With weakness in its recurring portion, PWON’s development income should rise to 50% in 2017F (2016F: 46%) helped by PWON’s ready-to-sell high-end projects and incoming tax amnesty funds. Thus, we expect PWON to book double-digit 2017 EPS growth of 22.6% y-y.

On valuation, we reiterate our 12M TP of IDR650 based on a 50% discount to 2017F NAV, driven by strong recurring income and plenty of ready high-end projects. HOLD as story well priced. Downside risk: Worse-than-expected modern retail sales growth holding back rental rates; Upside risk: Better-than-expected economic recovery.

Financial highlights* Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Revenues (IDRbn) 3,872 4,625 4,907 5,578 6,422 EBIT (IDRbn) 1,889 2,265 2,316 2,702 3,124 Net profit (IDRbn) 2,515 1,262 1,512 1,854 2,176 Bahana/cons.(%) - - 79 78 73

EPS (IDR) 52 26 31 38 45 EPS growth (%) 122.0 (49.8) 19.8 22.6 17.4 EV/EBITDA (x) 14.2 14.2 13.4 11.7 10.3 P/E (x) 13.2 26.3 22.0 17.9 15.3 FCFPS (IDR) (66) (20) 5 (7) (8) FCF yield (%) (9.5) (2.9) 0.8 (1.0) (1.2) BVPS (IDR) 128 150 177 211 250 P/BV (x) 5.4 4.6 3.9 3.3 2.8 DPS (IDR) 4 4 4 5 6 Div. yield (%) 0.7 0.7 0.6 0.7 0.8 Source: Company, Bahana estimates note: based on 23 November 2016 closing price

Share price performance

050,000100,000150,000200,000250,000300,000350,000400,000

400450500550600650700750800

23-Nov-15 23-Jan-16 23-Mar-16 23-May-16 23-Jul-16 23-Sep-16 23-Nov-16

('000)(IDR)

Volume (RHS) PWON IJ Px Last

25.6

(0.5)

11.6

24.1

36.6 37.6

(10)

0

10

20

30

40

(10)

0

10

20

30

40

ytd 1M 3M 6M 9M 12M

(%) (%)

PWON IJ relative to JCI Source: Bloomberg Sanni Satrio Dwi Utomo ([email protected]) +6221 2505081 ext. 3611 *New, please refer to appendix II

NAV Calculation 2017F

Land bank (Ha) 453 Total value (IDRbn) 70,435 NAV/share (IDR) 1,302 Discount (%) 50 Adjusted NAV/share (IDR) 650 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 765/416 12M High/low consensus TP (IDR) : 865/460 Majority shareholder (%) : Burgami Investments (20.9) Share outstanding (m)/Free float (%) : 48,160/47.8 Mkt. cap. (IDRbn/USDmn) : 33,230/2,456 3-m avg.daily t.o.(IDRbn/USDmn) : 58.4/4.3 Bloomberg/Reuters code : PWON IJ/PWON.JK Source: Bloomberg, Reuters; based on 23 November 2016 closing price

2017 Compendium

279

PAKUWON JATI

Profit & loss Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FSales 3,872 4,625 4,907 5,578 6,422Gross profit 2,158 2,669 2,793 3,209 3,727EBITDA 2,471 2,535 2,678 3,098 3,558Depreciation 581 271 362 396 434 EBIT 1,889 2,265 2,316 2,702 3,124Net interest inc./(expense) (77) (74) (219) (246) (282) Forex gain/(losses) (40) (277) 81 - - Other income/(expense) 1,086 (172) (189) (47) (24) Pre-tax profit 2,859 1,741 1,989 2,408 2,818Taxes (260) (341) (319) (363) (417) Minority interest (84) (139) (158) (192) (224) Extraordinary gain/(losses) - - - - - Net profit 2,515 1,262 1,512 1,854 2,176Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018F Cash and equivalents 2,809 2,071 2,668 2,903 3,014 S-T investments - - - - - Trade receivables 263 268 322 380 454 Inventories 3,133 3,846 4,615 5,268 6,024 Fixed assets 9,120 10,344 12,477 14,705 16,709 Other assets 1,445 2,249 2,041 2,325 2,675 Total assets 16,770 18,778 22,123 25,580 28,875 Interest bearing liabilities 4,596 4,908 5,222 5,772 6,272 Trade payables 134 198 92 110 132 Other liabilities 3,764 4,217 5,809 6,834 7,436 Total liabilities 8,494 9,323 11,123 12,716 13,840 Minority interest 2,110 2,236 2,460 2,706 2,976 Shareholders' equity 6,166 7,219 8,540 10,158 12,059 Source: Company, Bahana estimates

Cashflow Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FEBIT 1,889 2,265 2,316 2,702 3,124 Depreciation 581 271 362 396 434 Working capital (914) (447) 980 166 (368) Other operating items 364 (1,563) (913) (965) (1,135) Operating cash flow 1,921 525 2,744 2,299 2,054Net capital expenditure (5,078) (1,491) (2,494) (2,624) (2,439) Free cash flow (3,157) (966) 250 (325) (384)Equity raised/(bought) - - - - - Net borrowings 2,182 312 314 550 500 Other financing 1,658 (83) 33 11 (5) Net cash flow 683 (738) 597 235 110Cash flow at beginning 2,126 2,809 2,071 2,668 2,903 Ending cash flow 2,809 2,071 2,668 2,903 3,014Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2014A 2015A 2016F 2017F 2018F ROAE (%) 50.1 18.9 19.2 19.8 19.6 ROAA (%) 19.3 7.1 7.4 7.8 8.0 Gross margin (%) 55.7 57.7 56.9 57.5 58.0 EBITDA margin (%) 63.8 54.8 54.6 55.5 55.4 EBIT margin (%) 48.8 49.0 47.2 48.4 48.6 Net margin (%) 65.0 27.3 30.8 33.2 33.9 Payout ratio (%) 8.6 17.1 12.8 12.8 12.8 Current ratio (x) 0.9 0.8 0.8 0.8 0.8 Interest coverage (x) 24.7 30.4 10.6 11.0 11.1 Net gearing (%) 29.0 39.3 29.9 28.2 27.0 Debtor turnover (days) 24 24 24 25 26 Creditor turnover (days) 16 16 16 17 18 Inventory turnover (days) na na na na na Source: Company, Bahana estimates

2017 Compendium

280

PANORAMA SENTRAWISATA* BUY PX: IDR595- TP: IDR925 PANR, Indonesia’s largest listed tour operator, stands to benefit from

many new government incentives to stimulate tourism, in line with Jokowi’s initiatives. The company has five main segments: outbound tours (38% of gross sales), airplane ticketing (26%), hotel vouchers (25%), inbound tours (9%), and others (2%) from documentation and conventions.

PANR’s strong offline channels (i.e. more than 2,000 hotel partners), one of the largest in the country, enables the company to grow its online hotel and ticket sales. Additionally, PANR recently announced its hotel-voucher subsidiary’s rights issue plan.

On valuation, we have a 12-month target price of IDR925, based on c.40% discount to our SOTP valuation, reflecting 16.8x 2017F PER. We initiate our coverage on PANR with a BUY. Downside risks include delay in government tourism projects and macroeconomic slowdown.

Financial highlights* Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Revenues (IDRbn) 1,956 1,919 2,011 2,340 2,701 EBIT (IDRbn) 122 110 165 183 212 Net profit (IDRbn) 46 50 54 66 85 Bahana/consensus (%) - - 2 3 3

EPS (IDR) 39 42 45 55 71 EPS growth (%) 18 9 8 21 29 EV/EBITDA (x) 7 10 7 6 5 P/E (x) 15.4 14.2 13.2 10.9 8.4 FCFPS (IDR) (112) (132) (9) (13) (2) FCF yield (%) (18.8) (22.1) (1.5) (2.2) (0.4) BVPS (IDR) 364 344 421 517 644 P/BV (x) 1.6 1.7 1.4 1.2 0.9 DPS (IDR) 8 6 9 9 11 Div. yield (%) 1.4 1.0 1.4 1.5 1.8 Source: Company, Bahana estimates note: based on 23 November 2016 closing price

Share price performance

0

5,000

10,000

15,000

20,000

25,000

0

1,000

2,000

3,000

4,000

5,000

7-Oct-15 7-Dec-15 7-Feb-16 7-Apr-16 7-Jun-16 7-Aug-16 7-Oct-16

('000)(IDR)

Volume (RHS) CPIN IJ Px Last

(5.5)

(15.6)

(9.0) (7.0)

9.3

(26.5) (30)

(20)

(10)

0

10

20

(30)

(20)

(10)

0

10

20

ytd 1M 3M 6M 9M 12M

(%) (%)

CPIN IJ relative to JCI Source: Bloomberg Michael W. Setjoadi ([email protected]) +6221 2505081 ext. 3620 *New, please refer to appendix II

Major assumptions Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Airplane ticket sales vol. (pax) 361,720 394,004 401,884 434,035 468,758 Hotel vouchers sales vol. (nights) 755,440 973,405 992,873 1,072,303 1,158,087 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 670/424 12M high/low consensus TP (IDR) : 680/670 Majority shareholder (%) : Panorama Tirta Anugerah (64.3) Shares outstanding (mn)/Free float (%) : 1,200/32.3 Mkt. cap. (IDRbn/USDmn) : 744/55 3-m avg.daily t.o.(IDRbn/USDmn) : 1.8/0.1 Bloomberg/Reuters code : PANR IJ/PANR.JK

Source: Bloomberg, Reuters; based on 23 November 2016 closing price

2017 Compendium

281

PANORAMA SENTRAWISATA

Profit & loss Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FSales 1,956 1,919 2,011 2,340 2,701Gross profit 389 400 445 516 602EBITDA 147 146 193 218 255Depreciation 26 36 28 36 43 EBIT 122 110 165 183 212Net interest inc./(expense) (70) (68) (100) (105) (101) Forex gain/(losses) 20 (0) (0) - - Other income/(expense) 10 28 22 25 16 Pre-tax profit 81 69 87 102 127Taxes 21 17 24 26 33 Minority interest 14 2 9 10 10 Extraordinary gain/(losses) - - - - - Net profit 46 50 54 66 85Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018F Cash and equivalents 140 101 127 209 321 S-T investments 40 21 25 30 36 Trade receivables 305 303 324 384 444 Inventories 4 3 3 3 4 Fixed assets 531 811 832 850 871 Other assets 650 507 549 629 717 Total assets 1,670 1,746 1,859 2,106 2,392 Interest bearing liabilities 500 813 814 864 915 Trade payables 325 230 246 292 337 Other liabilities 407 290 294 329 368 Total liabilities 1,233 1,333 1,354 1,486 1,620 Minority interest 177 223 273 335 417 Shareholders' equity 260 190 232 285 355 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FEBIT 122 110 165 183 212 Depreciation 26 36 28 36 43 Working capital 20 (90) 572 679 784 Other operating items (257) (130) (725) (857) (980) Operating cash flow (90) (74) 40 40 59Net capital expenditure (44) (84) (51) (56) (62) Free cash flow (134) (158) (11) (16) (3)Equity raised/(bought) - - - - - Net borrowings (5) 312 1 50 50 Other financing 114 (193) 35 48 65 Net cash flow (26) (39) 25 82 112Cash flow at beginning 166 140 101 127 209 Ending cash flow 140 101 127 209 321Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2014A 2015A 2016F 2017F 2018F ROAE (%) 19.2 22.4 25.7 25.4 26.5 ROAA (%) 3.1 3.0 3.0 3.3 3.8 Gross margin (%) 19.9 20.8 22.1 22.1 22.3 EBITDA margin (%) 7.5 7.6 9.6 9.3 9.5 EBIT margin (%) 6.2 5.7 8.2 7.8 7.8 Net margin (%) 2.4 2.6 2.7 2.8 3.1 Payout ratio (%) 21.2 14.5 18.9 16.5 15.5 Current ratio (x) 1.0 1.0 1.1 1.2 1.4 Interest coverage (x) 1.7 1.6 1.7 1.7 2.1 Net gearing (%) 138.6 374.7 296.1 229.7 167.1 Debtor turnover (days) 61 44 45 46 46 Creditor turnover (days) 57 58 59 60 60 Inventory turnover (days) 1 1 1 1 1 Source: Company, Bahana estimates

2017 Compendium

282

PELAYARAN TEMPURAN EMAS BUY PX: IDR1,500 - TP: IDR2,590* TMAS, one of the leading players in container shipping, is likely to

benefit from the massive USD75bn government spending allocation on maritime-related investments. This would improve sea transportation efficiencies, eventually leading to higher cargo traffic. Implementation of Cabotage law should also limit competition in the shipping space.

Having restructured post the difficult period of 2009-11, TMAS now has the youngest fleet and is in a solid position to capture industry demand growth. Its USD100mn capex to purchase 11 vessels and raise total capacity by 30% should yield high returns given the resilient outlook.

On the back of capacity expansion and improving margins due to operating efficiencies, TMAS should see a 2014-18F EPS CAGR of 33%. Hence, we retain our positive view with 12M TP of IDR2,590, based on a 2017F PE of 11x. Risks to our call: execution delays, higher competition and slower-than-expected infrastructure progress.

Financial highlights* Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Revenues (IDRbn) 1,522 1,621 1,661 1,933 2,275 EBIT (IDRbn) 316 357 338 422 500 Net profit (IDRbn) 203 317 203 269 289 Bahana/consensus (%) - - 76 77 na

EPS (IDR) 178 278 178 236 253 EPS growth (%) 187.7 56.4 (35.9) 32.3 7.4 EV/EBITDA (x) 5.3 4.7 4.6 3.8 3.5 P/E (x) 8.4 5.4 8.4 6.4 5.9 FCFPS (IDR) 106 (12) 63 32 (270) FCF yield (%) 7.1 (0.8) 4.2 2.2 (18.0) BVPS (IDR) 270.5 713 875 1,096 1,334 P/BV (x) 5.5 2.1 1.7 1.4 1.1 DPS (IDR) - 18 11 14 15 Div. yield (%) - 1.2 0.7 0.9 1.0 Source: Company, Bahana estimates note: based on 23 November 2016 closing price

Share price performance

0

2,000

4,000

6,000

8,000

10,000

12,000

1,200

1,400

1,600

1,800

2,000

23-Nov-15 23-Jan-16 23-Mar-16 23-May-16 23-Jul-16 23-Sep-16 23-Nov-16

('000)(IDR)

Volume (RHS) TMAS IJ Px Last

(36.6)

(10.1)

(3.0)

(26.5)(32.0)

(39.8)(50)

(40)

(30)

(20)

(10)

0

(50)

(40)

(30)

(20)

(10)

0

ytd 1M 3M 6M 9M 12M

(%) (%)

TMAS IJ relative to JCI Source: Bloomberg Gregorius Gary ([email protected]) +6221 2505081 ext. 3604 *New, please refer to appendix II

Major assumptions Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Total vessels (unit) 22 25 28 31 35 Total capacity (k DWT) 202 233 269 298 336 Total TEUs Delivery (k unit) 270 284 300 317 340 Total calls 1,481 1,777 2,133 2,666 3,332 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 2,050/1,365 12M High/low consensus TP (IDR) : 3,132/3,002 Majority shareholder (%) : Temas Lestari (80) Shares outstanding (mn)/Free float (%) : 1,141/18.7 Mkt. cap. (IDRbn/USDmn) : 1,697/126 3-m avg.daily t.o.(IDRbn/USDmn) : 2.7/0.2 Bloomberg/Reuters code : TMAS IJ/TMAS.JK Source: Bloomberg, Reuters; based on 23 November 2016 closing price

2017 Compendium

283

PELAYARAN TEMPURAN EMAS

Profit & loss Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FSales 1,522 1,621 1,661 1,933 2,275Gross profit 388 454 439 539 637EBITDA 462 518 523 629 769Depreciation 146 161 184 207 269 EBIT 316 357 338 422 500Net interest inc./(expense) (89) (70) (83) (84) (127) Forex gain/(losses) 2 (21) 7 - - Other income/(expense) 7 51 14 13 12 Pre-tax profit 236 318 275 351 385Taxes (33) (0) (71) (81) (96) Minority interest (1) (0) (1) (1) (1) Extraordinary gain/(losses) - - - - - Net profit 203 317 203 269 289Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018F Cash and equivalents 43 24 85 101 194 S-T investments - - - - - Trade receivables 198 182 202 235 277 Inventories 27 23 25 28 32 Fixed assets 1,295 1,459 1,702 1,910 2,484 Other assets 64 94 71 91 105 Total assets 1,627 1,782 2,084 2,365 3,093 Interest bearing liabilities 792 772 782 773 1,186 Trade payables 190 93 211 238 277 Other liabilities 113 102 92 100 112 Total liabilities 1,095 967 1,084 1,112 1,576 Minority interest 1 1 2 3 4 Shareholders' equity 531 814 998 1,250 1,523 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FEBIT 316 357 338 422 500 Depreciation 146 161 184 207 269 Working capital 3 (5) (10) (18) (20) Other operating items (268) (220) (126) (253) (190) Operating cash flow 196 294 387 358 559Net capital expenditure 12 (308) (315) (321) (867) Free cash flow 208 (14) 72 37 (308)Equity raised/(bought) - - - - - Net borrowings (171) (19) 5 (9) 413 Other financing (47) 15 (17) (12) (12) Net cash flow (10) (18) 60 17 93Cash flow at beginning 53 43 24 85 101 Ending cash flow 43 24 85 101 194Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2014A 2015A 2016F 2017F 2018F ROAE (%) 46.8 47.2 22.4 23.9 20.8 ROAA (%) 12.3 18.6 10.5 12.1 10.6 EBITDA margin (%) 30.3 31.9 31.5 32.5 33.8 EBIT margin (%) 20.7 22.0 20.4 21.8 22.0 Net margin (%) 13.3 19.5 12.2 13.9 12.7 Payout ratio (%) - 6.4 6.0 6.0 6.0 Current ratio (x) 0.5 0.6 0.6 0.6 0.6 Interest coverage (x) 3.5 5.1 4.1 5.0 3.9 Net gearing (%) 141.1 91.9 69.9 53.7 65.2 Debts to assets (%) 48.7 43.3 37.5 32.7 38.4 Debtor turnover (days) 50 45 45 45 45 Creditor turnover (days) 95 60 60 60 60 Inventory turnover (days) 12 8 7 7 7 Source: Company, Bahana estimates

2017 Compendium

284

PEMBANGUNAN PERUMAHAN BUY **PX: IDR3,883 - **TP: IDR4,630 State-owned PTPP, Indonesia’s second largest listed construction

company by market cap, is likely to benefit from the booming infrastructure and energy segments through its spin-off strategy. PTPP’s 5 subsidiaries in property, infrastructure, energy, precast and machinery should enjoy significant growth ahead, in our view.

Capitalizing on its IDR4.4tn rights issue in 2016 and upcoming corporate actions of its subsidiaries in 2017, PTPP will have plenty of capacity to expand its order book from IDR57tn in 2015 to IDR98tn in 2018, supported by its low net gearing. Building construction will likely remain the biggest segment of PTPP’s new contracts ahead.

Solid project execution and solid net profit growth ahead have us maintaining our BUY rating on PTPP with a 12-month TP of IDR4,630, based on a PE of 22.4x 2017F EPS, relatively at par with the sector. Risk: Payment delays on private projects.

Financial highlights Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Revenues (IDRbn) 12,427 14,217 20,126 24,935 29,923 EBIT (IDRbn) 1,328 1,664 2,225 2,728 3,266 Net profit (IDRbn) 532 742 1,010 1,302 1,623 Bahana/cons.(%) - - 105 106 106

EPS (IDR) 110 153 204 210 262 EPS growth (%) 25.1 39.4 33.1 3.0 24.6 EV/EBITDA (x) 13.2 11.0 7.3 6.5 5.8 P/E (x) 35.3 25.4 19.0 18.5 14.8 FCFPS (IDR) (153) 1 (565) (398) (322) FCF yield (%) (3.9) 0.0 (14.6) (10.3) (8.3) BVPS (IDR) 485 905 1,993 2,220 2,500 P/BV (x) 8.0 4.3 1.9 1.7 1.6 DPS (IDR) 33 46 61 63 79 Div. yield (%) 0.8 1.2 1.6 1.6 2.0 Source: Company, Bahana estimates Note: based on 23 November 2016 closing price

Share price performance

0

10,000

20,000

30,000

40,000

50,000

3,200

3,700

4,200

4,700

23-Nov-15 23-Jan-16 23-Mar-16 23-May-16 23-Jul-16 23-Sep-16 23-Nov-16

('000)(IDR)

Volume (RHS) PTPP IJ Px Last

(8.7)

(1.9)

(8.9)

6.1

(2.0)

(8.4) (10)

(5)

0

5

10

(10)

(5)

0

5

10

ytd 1M 3M 6M 9M 12M

(%) (%)

PTPP IJ relative to JCI Source: Bloomberg Leonardo Henry Gavaza, CFA ([email protected]) +6221 2505081 ext. 3608 *New, please refer to appendix II ** TERP (Theoretical Ex-Rigths Price)

Major assumptions Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Carried over (IDRbn) 22,278 29,867 39,590 48,530 57,020 New contracts (IDRbn) 20,240 27,073 31,016 35,668 41,019 New contracts growth (%) 3.4 33.8 14.6 15.0 15.0 Total order books (IDRbn) 42,518 56,940 70,606 84,198 98,039 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 4,850/3,300 12M high/low consensus TP (IDR) : 5,500/3,935Majority shareholder (%) : Republic of Indonesia (51.0) Shares outstanding (mn)/Free float (%) : 4,842/49.0 Mkt. cap. (IDRbn/USDmn) : 19,660/1,458 3-m avg.daily t.o.(IDRbn/USDmn) : 35.4/2.6 Bloomberg/Reuters code : PTPP IJ/PTPP.JK Source: Bloomberg, Reuters based on 23 November 2016 closing price

2017 Compendium

285

PEMBANGUNAN PERUMAHAN

Profit & loss Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FSales 12,427 14,217 20,126 24,935 29,923Gross profit 1,604 2,074 2,694 3,284 3,933EBITDA 1,473 1,765 2,348 2,873 3,434Depreciation 146 101 123 145 168 EBIT 1,328 1,664 2,225 2,728 3,266Net interest inc./(expense) (320) (257) (356) (313) (308) Forex gain/(losses) 2 71 13 (8) (8) Other income/(expense) (90) (189) (90) (120) (138) Pre-tax profit 919 1,289 1,792 2,286 2,812Taxes (387) (442) (644) (798) (958) Minority interest - (105) (138) (186) (232) Extraordinary gain/(losses) - - - - - Net profit 532 742 1,010 1,302 1,623Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018F Cash and equivalents 2,408 3,025 5,530 3,718 2,577 S-T investments 203 277 277 277 277 Trade receivables 2,300 2,927 4,136 5,124 6,148 Inventories 2,502 2,499 2,786 3,111 3,478 Fixed assets 713 3,102 3,735 4,344 4,931 Other assets 6,453 7,298 8,502 11,788 15,027 Total assets 14,579 19,129 24,964 28,362 32,439 Interest bearing liabilities 3,032 3,678 3,928 3,623 3,648 Trade payables 7,022 7,888 7,216 8,958 10,750 Other liabilities 2,176 2,444 3,357 4,139 4,952 Total liabilities 12,229 14,010 14,500 16,720 19,349 Minority interest 1 737 811 892 981 Shareholders' equity 2,348 4,382 9,653 10,750 12,108 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FEBIT 1,328 1,664 2,225 2,728 3,266 Depreciation 146 101 123 145 168 Working capital (1,005) (602) (1,902) (834) (910) Other operating items (600) (578) (1,286) (1,412) (1,613) Operating cash flow (132) 584 (840) 628 911Net capital expenditure (610) (578) (1,897) (2,557) (2,469) Free cash flow (742) 6 (2,737) (1,929) (1,559)Equity raised/(bought) (0) 226 4,412 - - Net borrowings 792 720 525 (69) 270 Other financing (39) (334) 304 187 148 Net cash flow 11 618 2,504 (1,811) (1,141)Cash balances, beginning 2,397 2,408 3,025 5,530 3,718 Ending cash 2,408 3,026 5,530 3,718 2,577Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2014A 2015A 2016F 2017F 2018F ROAE (%) 24.8 22.0 14.4 12.8 14.2 ROAA (%) 3.9 4.4 4.6 4.9 5.3 Gross margin (%) 12.9 14.6 13.4 13.2 13.1 EBITDA margin (%) 11.9 12.4 11.7 11.5 11.5 EBIT margin (%) 10.7 11.7 11.1 10.9 10.9 Net margin (%) 4.3 5.2 5.0 5.2 5.4 Payout ratio (%) 30.0 30.0 30.0 30.0 30.0 Current ratio (x) 1.4 1.4 1.7 1.6 1.5 Interest coverage (x) 4.1 6.5 6.2 8.7 10.6 Net gearing (%) 26.6 14.9 nc nc 8.8 Debtor turnover (days) 59 67 75 75 75 Creditor turnover (days) 223 223 150 150 150 Inventory turnover (days) 69 75 55 49 46 Source: Company, Bahana estimates

2017 Compendium

286

PERUSAHAAN GAS NEGARA BUY PX: IDR2,530 - TP: IDR2,890* Three key risks remain for PGAS investors in 2017: (1) Valuation of share

swaps between PGAS and Pertagas during their planned merger under Pertamina, (2) Could GCG become a new risk under Pertamina leadership, and (3) Gas price cut PGAS has to undertake, as it currently generates about 12% to 14% IRR for its pipe investments, which is on the high side of the government’s target of 12%.

On operations, PGAS continues to lose volumes on (1) lower industry demand and (2) higher gas prices as legacy contracts continue to be repriced higher at around USD6-8/mmbtu, while PGAS continues to import LNG to make up for lost volumes at a cost of about USD10/mmbtu.

In terms of valuation, our 12-month target price of IDR2,890/share reflects USD3/mmbtu long-term PGAS gross margins without factoring in any of the above risks. Hence, we will revisit our BUY rating when there is clarity on the above-mentioned risks.

Financial highlights* Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Revenues (USDmn) 3,253 3,069 2,885 3,371 3,965 EBIT (USDmn) 859 565 565 663 702 Net profit (USDmn) 711 401 367 476 510 Bahana/consensus (%) 94 113 120

EPS (IDR) 348 223 204 265 284 EPS growth (%) (11.6) (35.9) (8.6) 29.8 7.2 EV/EBITDA (x) 7.1 6.9 6.8 5.8 7.2 P/E (x) 7.3 11.3 12.4 9.5 8.9 FCFPS (IDR) (317) (109) 114 220 276 FCF yield (%) (12.5) (4.3) 4.5 8.7 10.9 BVPS (IDR) 1,409 1,681 1,804 1,994 2,177 P/BV (x) 1.8 1.5 1.4 1.3 1.2 DPS (IDR) 223 154 88 75 97 Div. yield (%) 8.8 6.1 3.5 3.0 3.8 Source: Company, Bahana estimates note: based on 23 November 2016 closing price

Share price performance

0

50,000

100,000

150,000

200,000

250,000

300,000

2,000

2,250

2,500

2,750

3,000

3,250

3,500

23-Nov-15 23-Jan-16 23-Mar-16 23-May-16 23-Jul-16 23-Sep-16 23-Nov-16

('000)(IDR)

Volume (RHS) PGAS IJ Px Last

(21.3)

7.3

(16.1)

(0.3)

(16.2)

(29.6)(40)

(30)

(20)

(10)

0

10

(40)

(30)

(20)

(10)

0

10

ytd 1M 3M 6M 9M 12M

(%) (%)

PGAS IJ relative to JCI Source: Bloomberg Andrew Hotama ([email protected]) +6221 2505081 ext. 3619 *New, please refer to appendix II

Major assumptions Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Distribution volume (mmscfd) 865 802 818 882 942 Growth (%) 5.0 (7.3) 2.0 7.8 6.9 Tariff (USD/mmbtu) 9.2 8.9 8.5 8.7 8.9 Growth (%) 0.1 (3.1) (4.8) 1.9 2.2 LNG price (USD/mmbtu) 14.5 8.6 8.9 10.0 9.3 Source: Company, Bahana estimates

Company information

12M high/low (IDR) : 3,520/2,170 12M High/low consensus TP (IDR) : 4,000/1,500 Majority shareholder (%) : Republic of Indonesia (57.0)

0)Shares outstanding (mn)/Free float (%) : 24,242/43.0 Mkt. cap. (IDRbn/USDmn) : 61,331/4,510 3-m avg.daily t.o.(IDRbn/USDmn) : 126.2/9.3 Bloomberg/Reuters code : PGAS IJ/PGAS.JK Source: Bloomberg, Reuters; based on 23 November 2016 closing price

2017 Compendium

287

PERUSAHAAN GAS NEGARA

Profit & loss Year to 31 Dec (USDmn) 2014A 2015A 2016F 2017F 2018FSales 3,253 3,069 2,885 3,371 3,965Gross profit 1,285 963 913 1,060 1,250EBITDA 979 1,002 880 991 961Depreciation 125 142 157 188 154 EBIT 859 565 565 663 702Net interest inc./(expense) (42) (101) (95) (90) (83) Forex gain/(losses) 49 (14) (21) - - Other income/(expense) 63 (7) 42 64 64 Pre-tax profit 930 443 491 637 683Taxes (219) (40) (123) (159) (171) Minority interest 0 (2) (1) (2) (2) Extraordinary gain/(losses) - - - - -Net profit 711 401 367 476 510Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (USDmn) 2014A 2015A 2016F 2017F 2018F Cash and equivalents 1,131 1,136 1,504 1,766 2,112 S-T investments 93 65 65 65 65 Trade receivables 295 287 271 316 372 Inventories 63 43 65 76 89 Fixed assets 3,242 3,565 3,720 3,711 3,635 Other assets 866 1,400 1,390 1,386 1,383 Total assets 5,690 6,495 7,014 7,321 7,656 Interest bearing liabilities 1,853 2,709 2,985 2,934 2,901 Trade payables 138 117 108 127 149 Other liabilities 823 646 680 678 694 Total liabilities 2,814 3,472 3,773 3,739 3,744 Minority interest 0 2 2 2 3 Shareholders' equity 2,876 3,021 3,239 3,580 3,909 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (USDmn) 2014A 2015A 2016F 2017F 2018FEBIT 859 565 565 663 702 Depreciation 125 142 157 188 154 Working capital 42 (78) 19 (39) (31) Other operating items (239) (101) (40) (46) (82) Operating cash flow 787 528 701 765 743Net capital expenditure (1,434) (751) (469) (316) (179) Free cash flow (646) (222) 232 449 563Equity raised/(bought) - - - - - Net borrowings 919 856 276 (51) (32) Other financing (375) (629) (141) (136) (185) Net cash flow (103) 5 368 262 346Cash balances, beginning 1,234 1,131 1,136 1,504 1,766 Ending cash 1,131 1,136 1,504 1,766 2,112Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2014A 2015A 2016F 2017F 2018F ROAE (%) 25.9 13.6 11.5 14.0 13.6 ROAA (%) 14.5 6.6 4.9 5.5 5.8 Gross margin (%) 39.5 31.4 31.7 31.4 31.5 EBITDA margin (%) 30.1 32.6 30.5 29.4 24.2 EBIT margin (%) 26.4 18.4 19.6 19.7 17.7 Net margin (%) 21.9 13.1 12.7 14.1 12.9 Payout ratio (%) 55 55 55 55 55 Current ratio (x) 2.6 2.6 3.0 3.5 4.0 Interest coverage (x) 20.6 5.6 5.9 7.4 8.4 Net gearing (%) 25.1 52.0 45.7 32.6 20.2 Debtor turnover (days) 34 34 34 34 34 Creditor turnover (days) 40 30 20 20 20 Inventory turnover (days) 4 12 12 12 12 Source: Company, Bahana estimates

2017 Compendium

288

PP PROPERTI REDUCE* PX: IDR1,335 - TP: IDR600 Known as a mid-low cost apartment specialist, PPRO, a subsidiary of

PTPP, is currently struggling to diversify its portfolio due to a limited 36ha landbank. To address the landbank issue, PPRO has issued IDR600bn in bonds that will likely increase the company’s gearing to more than 39% in 2016.

PPRO booked weak marketing sales of IDR1.5tn in 9M16, around 60% of its IDR2.5tn full-year target, on tough macro conditions and the government’s aggressive taxation drive in 1H16. Thus, we maintain our conservative 2016-17F pre-sales of IDR2.1-2.3tn.

As valuation looks unattractive and due to a limited landbank and low recurring income portion (9M16: 9%), we downgrade our call to REDUCE. On valuation, based on a 60% discount to our 2017F NAV, we maintain our 12M TP of IDR600. Risks to our call: Faster project realization and higher mid-low cost property demand.

Financial highlights* Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Revenues (IDRbn) 555 1,505 1,898 2,095 2,329 EBIT (IDRbn) 128 385 505 578 643 Net profit (IDRbn) 106 300 357 404 457 Bahana/cons.(%) - - 93 81 na

EPS (IDR) 12 21 25 29 33 EPS growth (%) 115.4 84.0 18.9 13.2 13.2 EV/EBITDA (x) 90.9 47.6 36.9 32.0 28.5 P/E (x) 114.9 62.5 52.5 46.4 41.0 FCFPS (IDR) (18.69) (106.02) (6.27) 16.1 11.8 FCF yield (%) (0.2) (0.8) (0.0) 0.1 0.1 BVPS (IDR) 113 179 194 215 238 P/BV (x) 11.8 7.4 6.9 6.2 5.6 DPS (IDR) 2 4 8 9 10 Div. yield (%) 0.2 0.3 0.6 0.6 0.7 Source: Company, Bahana estimates note: based on 23 November 2016 closing price

Share price performance

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

100300500700900

1,1001,3001,500

23-Nov-15 23-Jan-16 23-Mar-16 23-May-16 23-Jul-16 23-Sep-16 23-Nov-16

('000)(IDR)

Volume (RHS) PPRO IJ Px Last

636.5

1.1 71.7

250.9

569.2 573.4

0100200300400500600700

0100200300400500600700

ytd 1M 3M 6M 9M 12M

(%) (%)

PPRO IJ relative to JCI

Source: Bloomberg Sanni Satrio Dwi Utomo ([email protected]) +6221 2505081 ext. 3611 *New, please refer to appendix II

NAV Calculation 2017F

Land bank (Ha) 36 Total value (IDRbn) 24,707 NAV/share (IDR) 1,509 Discount (%) 60 Adjusted NAV/share (IDR) 600 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 1,490/165 12M high/low consensus TP (IDR) : 600/193 Majority shareholder (%) : PP (65.0) Share outstanding (m)/Free float (%) : 14,044/35.0 Mkt. cap. (IDRbn/USDmn) : 18,749/1,386 3-m avg.daily t.o.(IDRbn/USDmn) : 89.2/6.6 Bloomberg/Reuters code : PPRO IJ/PPRO.JK Source: Bloomberg, Reuters; based on 23 November 2016 closing price

2017 Compendium

289

PP PROPERTI

Profit & loss Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FSales 555 1,505 1,898 2,095 2,329Gross profit 143 448 566 639 705EBITDA 135 415 538 619 693Depreciation 7 29 33 41 49 EBIT 128 385 505 578 643Net interest inc./(expense) 1 (14) (54) (70) (71) Forex gain/(losses) - - - - - Other income/(expense) 2 1 1 1 1 Pre-tax profit 131 373 452 509 574Taxes (25) (72) (95) (105) (116) Minority interest (0) (0) (0) (0) (0) Extraordinary gain/(losses) - - - - - Net profit 106 300 357 404 457Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018F Cash and equivalents 229 357 396 476 510 S-T investments - - - - - Trade receivables 439 1,379 1,560 1,722 1,914 Inventories 1,529 1,498 1,656 1,723 1,795 Fixed assets 217 1,674 1,842 2,175 2,840 Other assets 316 410 596 943 1,480 Total assets 2,730 5,319 6,048 7,038 8,539 Interest bearing liabilities 307 1,329 1,478 1,528 1,529 Trade payables 171 659 1,095 997 1,112 Other liabilities 1,222 814 751 1,500 2,560 Total liabilities 1,699 2,801 3,323 4,024 5,200 Minority interest (0) 2 3 4 6 Shareholders' equity 1,031 2,516 2,722 3,010 3,333 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FEBIT 128 385 505 578 643 Depreciation 7 29 33 41 49 Working capital (175) (257) (107) 471 890 Other operating items (22) (94) (163) (195) (235) Operating cash flow (62) 64 269 895 1,348Net capital expenditure (109) (1,553) (357) (669) (1,183) Free cash flow (171) (1,489) (88) 226 165Equity raised/(bought) - 849 - - - Net borrowings 296 (104) 962 (30) 0 Other financing 71 873 (835) (115) (132) Net cash flow 196 129 38 81 33Cash flow at beginning 32 229 357 396 476 Ending cash flow 229 357 396 476 510Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2014A 2015A 2016F 2017F 2018F ROAE (%) 10.8 16.9 13.6 14.1 14.4 ROAA (%) 5.1 7.5 6.3 6.2 5.9 Gross margin (%) 25.7 29.8 29.8 30.5 30.3 EBITDA margin (%) 24.3 27.6 28.3 29.5 29.8 EBIT margin (%) 23.1 25.6 26.6 27.6 27.6 Net margin (%) 19.1 19.9 18.8 19.3 19.6 Payout ratio (%) 30.0 20.0 30.0 30.0 30.0 Current ratio (x) 2.1 2.1 2.0 1.6 1.2 Interest coverage (x) na 27.8 9.3 8.2 9.1 Net gearing (%) 7.5 38.6 39.8 34.9 30.6 Debtor turnover (days) 210 300 300 300 300 Creditor turnover (days) 85 300 300 250 250 Inventory turnover (days) na na na na na Source: Company, Bahana estimates

2017 Compendium

290

PURADELTA LESTARI BUY PX: IDR242 - TP: IDR280* As the purest industrial estate player, DMAS is currently undergoing

portfolio diversification by developing a 126-unit service apartment tower. All units have been booked for the next 2 years with total rental income of around IDR30bn/annum, allowing DMAS to target 13% higher recurring income in 2017, up from just 6% in 9M16.

In 2017, DMAS is poised to benefit from an expected pick-up in the 4W auto market given plenty of auto-related tenants. We expect its solid 8M16 pre-sales of 51ha, above DMAS’s internal full-year target, to further improve and support our 2017F EPS growth of 17% y-y.

Based on our new NAV calculation using different discounts for each land bank value, we retain our BUY call but lower our 12M TP to IDR280 from IDR290, based on a 77% discount to 2017F NAV (previous: 60%). Our positive view is also cemented by DMAS’s healthy balance sheet and solid pre-sales. Risks: Worse-than-expected 4W demand and FDI.

Financial highlights* Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Revenues (IDRbn) 1,538 2,286 1,515 1,708 1,840 EBIT (IDRbn) 1,003 1,299 842 968 1,068 Net profit (IDRbn) 964 1,368 783 914 1,043 Bahana/consensus (%) - - 82 87 101

EPS (IDR) 20 28 16 19 22 EPS growth (%) 2.4 41.9 (42.8) 16.8 14.1 EV/EBITDA (x) 10.8 8.1 12.9 11.1 10.0 P/E (x) 12.1 8.5 14.9 12.8 11.2 FCFPS (IDR) 17 21 (3) 7 9 FCF yield (%) 6.9 8.5 (1.3) 3.1 3.5 BVPS (IDR) 133 149 160 173 188 P/BV (x) 1.8 1.6 1.5 1.4 1.3 DPS (IDR) - 11 5 6 6 Div. yield (%) - 4.5 2.0 2.4 2.7 Source: Company, Bahana estimates note: based on 23 November 2016 closing price

Share price performance

050,000100,000150,000200,000250,000300,000350,000

180

200

220

240

260

280

300

23-Nov-15 23-Jan-16 23-Mar-16 23-May-16 23-Jul-16 23-Sep-16 23-Nov-16

('000)(IDR)

Volume (RHS) DMAS IJ Px Last

(0.9)(3.3)

(9.2)

5.4 3.4

1.0

(10)

(5)

0

5

10

(10)

(5)

0

5

10

ytd 1M 3M 6M 9M 12M

(%) (%)

DMAS IJ relative to JCISource: Bloomberg Sanni Satrio Dwi Utomo ([email protected]) +6221 2505081 ext. 3611 *New, please refer to appendix II

NAV calculation 2017F Land bank (Ha) 1,648 Discount (%) 77 Total value (IDRbn) 12,734 Adjusted NAV/share (IDR) 280 Source: Company, Bahana estimates

Company information 12M High/low (IDR) : 296/183 12M High/low consensus TP (IDR) : 350/260 Majority shareholder (%) : AFP International Capital (53.9) Share outstanding (mn)/Free float (%) : 48,198/20.0 Mkt. cap. (IDRbn/USDmn) : 11,664/865 3-m avg.daily t.o.(IDRbn/USDmn) : 13.4/1 Bloomberg/Reuters code : DMAS IJ/DMAS.JK Source: Bloomberg, Reuters; based on 23 November 2016 closing price

2017 Compendium

291

PURADELTA LESTARI

Profit & loss Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FSales 1,538 2,286 1,515 1,708 1,840Gross profit 1,076 1,449 939 1,078 1,178EBITDA 1,006 1,303 846 972 1,073Depreciation 3 4 4 4 5 EBIT 1,003 1,299 842 968 1,068Net interest inc./(expense) 22 18 10 12 12 Forex gain/(losses) (4) 135 (39) (30) - Other income/(expense) 26 43 51 57 62 Pre-tax profit 1,047 1,495 865 1,006 1,142Taxes (83) (127) (82) (92) (99) Minority interest (0) (0) (0) (0) (0) Extraordinary gain/(losses) - - - - - Net profit 964 1,368 783 914 1,043Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018F Cash and equivalents 1,381 1,175 784 870 970 S-T investments - - - - - Trade receivables - - - - - Inventories 6,029 5,737 6,037 6,537 7,237 Fixed assets 134 183 178 174 169 Other assets 60 912 1,004 1,105 1,216 Total assets 7,604 8,008 8,003 8,685 9,593 Interest bearing liabilities 593 - - - - Trade payables 5 54 54 54 54 Other liabilities 610 793 240 282 459 Total liabilities 1,208 847 294 336 513 Minority interest 3 3 4 4 5 Shareholders' equity 6,393 7,158 7,705 8,345 9,075 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FEBIT 1,003 1,299 842 968 1,068 Depreciation 3 4 4 4 5 Working capital (14) 56 (0) (0) (1) Other operating items (293) (598) (702) (111) 44 Operating cash flow 700 761 144 862 1,116Net capital expenditure 101 229 (301) (502) (702) Free cash flow 801 990 (157) 360 413Equity raised/(bought) - 978 - - - Net borrowings (706) (593) - - - Other financing 0 (1,580) (234) (274) (313) Net cash flow 96 (206) (391) 86 101Cash flow at beginning 1,285 1,381 1,175 784 870 Ending cash flow 1,381 1,175 784 870 970Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2014A 2015A 2016F 2017F 2018F ROAE (%) 16.3 20.2 10.5 11.4 12.0 ROAA (%) 12.6 17.5 9.8 11.0 11.4 Gross margin (%) 70.0 63.4 62.0 63.1 64.0 EBITDA margin (%) 65.4 57.0 55.9 56.9 58.3 EBIT margin (%) 65.2 56.8 55.6 56.7 58.0 Net margin (%) 62.7 59.8 51.7 53.5 56.7 Payout ratio (%) - 38.7 30.0 30.0 30.0 Current ratio (x) 4.0 5.4 13.2 12.8 9.1 Interest coverage (x) na na na na na Net gearing (%) nc nc nc nc nc Debtor turnover (days) - - - - - Creditor turnover (days) - - - - - Inventory turnover (days) - - - - - Source: Company, Bahana estimates

2017 Compendium

292

RAMAYANA LESTARI SENTOSA BUY PX: IDR1,220- TP: IDR1,440* RALS, Indonesia’s largest low-end department store chain with 113

outlets, is making a comeback, backed by positive post-Lebaran SSSG (9M16: +7.1%) and improving working capital management. Furthermore, the recent collaboration with Tokopedia allows RALS to gain a foothold in Indonesia’s rapidly growing e-commerce market.

RALS’s robust performance is likely to persist as a result of the consumer purchasing power recovery coupled with Jokowi’s initiatives for low-end consumers. In addition, the company will likely experience margin expansion from the improved sales/sqm and higher sales contribution from the outright segment in particular.

Looking ahead, we are positive on RALS’ outlook with a TP of IDR1,440, based on a 2017F PE of 22.5x, a 10% discount to the sector multiple of 25x. Downside risks include a lower-than-expected SSSG on the back of weak GDP growth and intense competition.

Financial highlights Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Revenues (IDRbn) 7,942 7,786 8,202 8,681 9,208 EBIT (IDRbn) 294 234 361 417 461 Net profit (IDRbn) 356 336 402 449 495 Bahana/consensus (%) 103.0 98.9 101.2 EPS (IDR) 50 47 57 63 70 EPS growth (%) (8.9) (5.5) 19.6 11.6 10.4 EV/EBITDA (x) 16.4 20.6 17.3 15.7 14.4 P/E (x) 24.3 25.8 21.5 19.3 17.5 FCFPS (IDR) (19) 64 47 31 57 FCF yield (%) (1.5) 5.2 3.9 2.5 4.6 BVPS (IDR) 469 470 515 541 570 P/BV (x) 2.6 2.6 2.4 2.3 2.1 DPS (IDR) 30 27 32 36 40 Div. yield (%) 2.5 2.2 2.6 3.0 3.3 Source: Company, Bahana estimates note: based on 23 November 2016 closing price

Share price performance

Source: Bloomberg Richard Danusaputra ([email protected]) +6221 250 5081 ext. 3604 *New, please refer to appendix II

Major assumptions Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Net Sales Growth (%) (0.3) (2.0) 5.8 4.8 5.8 Sales/sqm (IDR mn) 8.0 8.0 8.5 8.8 9.1 SSSG (%) 0.6 (2.7) 6.4 4.1 4.3 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 1,410/550

12M high/low consensus TP (IDR) : 2,000/850

Majority shareholder (%) : PT Ramayana Makmursentosa (55.9)

Shares outstanding (mn)/Free float (%) : 7,096/29.6

Mkt. cap. (IDRbn/USDmn) : 8,657/642

3-m avg.daily t.o.(IDRbn/USDmn) : 12.3/0.9

Bloomberg/Reuters code : RALS IJ/RALS.JK Source: Bloomberg, Reuters; based on 23 November 2016 closing price

2017 Compendium

293

RAMAYANA LESTARI SENTOSA

Profit & loss Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FSales 7,942 7,786 8,202 8,681 9,208Gross profit 2,048 1,996 2,174 2,327 2,495EBITDA 491 380 445 491 526Depreciation 197 146 83 75 65 EBIT 294 234 361 417 461Net interest inc./(expense) 90 114 89 99 104 Forex gain/(losses) (6) (0) (0) - - Other income/(expense) 11 18 18 12 18 Pre-tax profit 389 365 468 528 583Taxes (33) (29) (67) (79) (87) Minority interest - - - - - Extraordinary gain/(losses) - - - - - Net profit 356 336 402 449 495Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018F Cash and equivalents 625 844 981 961 1,074 S-T investments 36 0 13 18 12 Trade receivables 23 34 45 48 50 Inventories 809 824 815 852 894 Fixed assets 1,375 1,333 1,358 1,391 1,452 Other assets 1,697 1,539 1,525 1,727 1,789 Total assets 4,566 4,575 4,738 4,997 5,272 Interest bearing liabilities - - - - - Trade payables 889 900 755 794 838 Other liabilities 351 342 328 368 386 Total liabilities 1,240 1,241 1,083 1,162 1,224 Minority interest - - - - - Shareholders' equity 3,326 3,334 3,655 3,835 4,048 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FNet income 356 336 402 449 495 Depreciation 197 146 83 75 65 Working capital 55 (15) (147) (0) (1) Other operating items (615) 91 105 (197) (32) Operating cash flow (7) 558 443 326 527Net capital expenditure (127) (104) (108) (108) (126) Free cash flow (134) 454 335 218 401Equity raised/(bought) - (136) 136 - - Net borrowings - - - - - Other financing (110) (100) (334) (238) (288) Net cash flow (244) 219 137 (20) 113Cash at the beg. 869 625 844 981 961 Cash at the end 625 844 981 961 1,074

Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2014A 2015A 2016F 2017F 2018F ROAE (%) 10.9 10.1 11.5 12.0 12.6 ROAA (%) 8.0 7.4 8.6 9.2 9.6 Gross margin (%) 25.8 25.6 26.5 26.8 27.1 EBITDA margin (%) 6.2 4.9 5.4 5.7 5.7 EBIT margin (%) 3.7 3.0 4.4 4.8 5.0 Net margin (%) 4.5 4.3 4.9 5.2 5.4 Payout ratio (%) 59.9 57.0 57.0 57.0 57.0 Current ratio (x) 2.8 2.9 3.5 3.6 3.6 Interest coverage (x) na na na na na Net gearing (%) nc nc nc nc nc Debtor turnover (days) 85 85 93 75 75 Creditor turnover (days) 1 1 2 2 2 Inventory turnover (days) 82 77 85 81 81 Source: Company, Bahana estimates

2017 Compendium

294

SALIM IVOMAS PRATAMA HOLD PX: IDR505 - TP: IDR530 In 2017, SIMP, an integrated palm oil company, is focusing on 4 key

strategies: (1) prioritizing its immature planting development, (2) building 3 new CPO mills in South Sumatera and Kalimantan, (3) replanting some old-aged CPO estates in North Sumatra and Riau, and (4) expanding Surabaya refinery facility by 1,000mt/day.

Furthermore, we also expect LSIP’s production recovery to benefit SIMP in 2017. Note that LSIP contributes c.44% of SIMP’s CPO production. However, we see possible risk of lower refinery margins going forward, stemming from the government’s plan on setting price caps for cooking oil products, which contributes c.70% of total sales.

On possible price cap on cooking oil prices limiting margin expansion, we retain our HOLD rating with 12M TP of IDR530, based on 2017F PE of 12.9x. Downside risks: Higher downstream competition and further intervention on cooking oil prices; Upside risk: Higher CPO prices.

Financial highlights Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Revenues (IDRbn) 14,963 13,835 14,120 16,211 17,374 EBIT (IDRbn) 2,480 1,632 1,206 1,930 2,098 Net profit (IDRbn) 866 264 395 648 715 Bahana/consensus (%) - - 91 107 109

EPS (IDR) 55 17 25 41 45 EPS growth (%) 65.2 (69.5) 49.7 64.1 10.4 EV/EBITDA (x) 4.1 5.6 6.3 4.7 4.5 P/E (x) 9.2 30.3 20.2 12.3 11.2 FCFPS (IDR) (42) (113) (7) (11) (39) FCF yield (%) (5.7) (15.2) (1.0) (1.4) (5.3) BVPS (IDR) 877 887 909 947 986 P/BV (x) 0.6 0.6 0.6 0.5 0.5 DPS (IDR) 8 2 4 6 6 Div. yield (%) 1.6 0.5 0.7 1.2 1.3 Source: Company, Bahana estimates note: based on 23 November 2016 closing price

Share price performance

0

20,000

40,000

60,000

80,000

100,000

250

300

350

400

450

500

550

23-Nov-15 23-Jan-16 23-Mar-16 23-May-16 23-Jul-16 23-Sep-16 23-Nov-16

('000)(IDR)

Volume (RHS) SIMP IJ Px Last

37.1

5.3 1.8

(1.6)

18.6 11.8

(10)

0

10

20

30

40

(10)

0

10

20

30

40

ytd 1M 3M 6M 9M 12M

(%) (%)

SIMP IJ relative to JCI Source: Bloomberg Gregorius Gary ([email protected]) +6221 2505081 ext. 3604 *New, please refer to appendix II

Major assumptions Year to 31 Dec 2014A 2015A 2016F 2017F 2018F FFB production nucleus (k tons) 3,259 3,414 3,452 3,637 5,768 Growth (%) 12.6 4.8 1.1 6.7 11.9 CPO production (k tons) 957 1,002 1,015 1,134 1,269 Growth (%) 18.1 4.7 1.3 11.8 11.9 CPO price (USD/ton) 738 568 650 700 700 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 555/285 12M High/low consensus TP (IDR) : 586/473 Majority shareholder (%) : Indofood Agri Resources Ltd (72.0) Shares outstanding (mn)/Free float (%) : 15,816/21.5 Mkt. cap. (IDRbn/USDmn) : 7,840/581 3-m avg.daily t.o.(IDRbn/USDmn) : 4.2/0.3 Bloomberg/Reuters code : SIMP IJ/SIMP.JK Source: Bloomberg, Reuters; based on 23 November 2016 closing price

2017 Compendium

295

SALIM IVOMAS PRATAMA

Profit & loss Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FSales 14,963 13,835 14,120 16,211 17,374Gross profit 4,035 3,100 2,728 3,581 3,805EBITDA 3,460 2,768 2,507 3,373 3,676Depreciation 980 1,136 1,301 1,444 1,579 EBIT 2,480 1,632 1,206 1,930 2,098Net interest inc./(expense) (658) (899) (497) (509) (537) Forex gain/(losses) (78) (249) 214 - - Other income/(expense) (34) 193 2 4 3 Pre-tax profit 1,710 677 925 1,424 1,564Taxes (572) (313) (427) (658) (723) Minority interest (272) (100) (102) (118) (126) Extraordinary gain/(losses) - - - - - Net profit 866 264 395 648 715Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018F Cash and equivalents 2,696 1,461 1,654 1,779 1,117 S-T investments - - - - - Trade receivables 989 1,106 856 954 1,022 Inventories 1,773 1,937 1,569 1,801 1,930 Fixed assets 18,644 18,852 21,216 22,173 14,097 Other assets 6,894 8,341 7,215 7,273 25,125 Total assets 30,996 31,697 32,509 33,980 34,884 Interest bearing liabilities 8,888 9,107 9,407 9,707 9,707 Trade payables 862 813 759 842 905 Other liabilities 4,834 4,546 3,811 4,257 5,371 Total liabilities 14,584 14,465 13,977 14,806 15,033 Minority interest 2,534 3,206 3,249 3,300 3,354 Shareholders' equity 13,878 14,026 14,383 14,974 15,597 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FEBIT 2,480 1,632 1,206 1,930 2,098 Depreciation 980 1,136 1,301 1,444 1,579 Working capital 56 (295) 419 52 (65) Other operating items (1,223) (2,915) 626 (1,194) (1,334) Operating cash flow 2,293 (442) 3,552 2,231 2,277Net capital expenditure (2,960) (1,344) (3,666) (2,400) (2,900) Free cash flow (667) (1,785) (114) (169) (623)Equity raised/(bought) (174) 8 - - - Net borrowings 1,002 219 300 300 - Other financing 423 323 6 (6) (39) Net cash flow 583 (1,235) 192 125 (662)Cash flow at beginning 2,113 2,696 1,461 1,654 1,779 Ending cash flow 2,696 1,461 1,654 1,779 1,117Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2014A 2015A 2016F 2017F 2018F ROAE (%) 6.3 1.9 2.8 4.4 4.7 ROAA (%) 2.9 0.8 1.2 2.0 2.1 EBITDA margin (%) 23.1 20.0 17.8 20.8 21.2 EBIT margin (%) 16.6 11.8 8.5 11.9 12.1 Net margin (%) 5.8 1.9 2.8 4.0 4.1 Payout ratio (%) 14.3 14.3 14.3 14.3 14.3 Current ratio (x) 0.9 0.9 0.8 0.8 4.5 Interest coverage (x) 3.8 1.8 2.4 3.8 3.9 Net gearing (%) 44.6 54.5 53.9 52.9 55.1 Debts to assets (%) 28.7 28.7 28.9 28.6 27.8 Debtor turnover (days) 26 28 22 21 21 Creditor turnover (days) 25 24 24 24 24 Inventory turnover (days) 56 63 41 41 41 Source: Company, Bahana estimates

2017 Compendium

296

SAMPOERNA AGRO BUY PX: IDR1,900 - TP: IDR2,175 With its total oil palm planted area of 138k ha (second smallest in our

coverage), SGRO expects an improved outlook in 2017 on higher CPO prices and an improving production recovery that had started in 3Q16, after 10 consecutive months of production downturn.

SGRO’s lower-margin plasma business is being surpassed by its nucleus production. We also expect less production volatility due to the rising production proportion from its Kalimantan estate. In addition, SGRO’s nucleus estates’ average age profile has reached a favorable production level of 10 years, providing growth support.

As we expect 2017F earnings to reach IDR289bn, +136% y-y, we reiterate our BUY rating on SGRO with a 12M TP of IDR2,175, based on a 2017F PE of 14.2x, set at a c.40% discount to its regional peers due to its small-cap status. Risks: Volatile production on plasma proportion and lower-than-expected CPO prices.

Financial highlights Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Revenues (IDRbn) 3,242 2,999 2,486 3,548 3,804 EBIT (IDRbn) 542 467 10 606 691 Net profit (IDRbn) 340 248 122 289 327 Bahana/consensus (%) - - 54 95 97

EPS (IDR) 180 131 65 153 173 EPS growth (%) 186 (27) (51) 136 13 EV/EBITDA (x) 6.6 8.1 15.6 6.3 6.1 P/E (x) 10.6 14.5 29.4 12.4 11.0 FCFPS (IDR) (177) (359) (35) (223) (253) FCF yield (%) (9.3) (18.9) (1.8) (11.8) (13.3) BVPS (IDR) 1,572 1,650 1,735 1,867 2,015 P/BV (x) 1.2 1.2 1.1 1.0 0.9 DPS (IDR) 19 19 9 22 25 Div. yield (%) 1.0 1.0 0.5 1.1 1.3 Source: Company, Bahana estimates note: based on 23 November 2016 closing price

Share price performance

0

1,000

2,000

3,000

4,000

5,000

6,000

1,300

1,500

1,700

1,900

2,100

2,300

23-Nov-15 23-Jan-16 23-Mar-16 23-May-16 23-Jul-16 23-Sep-16 23-Nov-16

('000)(IDR)

Volume (RHS) SGRO IJ Px Last

(1.1)

2.9

(0.7)(9.3) (11.5)

22.1

(20)

(10)

0

10

20

30

(20)

(10)

0

10

20

30

ytd 1M 3M 6M 9M 12M

(%) (%)

SGRO IJ relative to JCI Source: Bloomberg Gregorius Gary ([email protected]) +6221 2505081 ext. 3604 *New, please refer to appendix II

Major assumptions Year to 31 Dec 2014A 2015A 2016F 2017F 2018F FFB production nucleus (k tons) 786 995 917 1,114 1,208 Growth (%) 21.6 26.6 (7.9) 21.5 8.4 CPO production (k tons) 321 390 286 363 383 Growth (%) 18.5 21.2 (26.5) 26.6 5.5 CPO price (USD/ton) 738 568 650 700 700 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 2,180/1,370 12M High/low consensus TP (IDR) : 2,256/1,656 Majority shareholder (%) : Sampoerna Agri Resources (67.1) Shares outstanding (mn)/Free float (%) : 1,890/27.2 Mkt. cap. (IDRbn/USDmn) : 3,579/265 3-m avg.daily t.o.(IDRbn/USDmn) : 0.3/0.02 Bloomberg/Reuters code : SGRO IJ/SGRO.JK Source: Bloomberg, Reuters; based on 23 November 2016 closing price

2017 Compendium

297

SAMPOERNA AGRO

Profit & loss Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FSales 3,242 2,999 2,486 3,548 3,804Gross profit 869 834 407 1,029 1,143EBITDA 765 696 359 968 1,087Depreciation 223 229 348 362 396 EBIT 542 467 10 606 691Net interest inc./(expense) (62) (112) (171) (179) (208) Forex gain/(losses) - - - - - Other income/(expense) 31 41 - - - Pre-tax profit 510 396 (160) 427 483Taxes (160) (140) 289 (128) (145) Minority interest (10) (8) (7) (10) (11) Extraordinary gain/(losses) - - - - - Net profit 340 248 122 289 327Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018F Cash and equivalents 195 760 798 440 532 S-T investments - - - - - Trade receivables 90 143 216 309 331 Inventories 298 469 433 525 554 Fixed assets 3,675 4,279 4,547 4,961 5,304 Other assets 1,212 1,644 1,377 1,642 1,769 Total assets 5,469 7,295 7,371 7,877 8,490 Interest bearing liabilities 1,690 2,773 2,815 2,945 3,559 Trade payables 332 405 354 429 453 Other liabilities 436 700 617 660 344 Total liabilities 2,459 3,878 3,786 4,033 4,355 Minority interest 40 299 306 316 326 Shareholders' equity 2,970 3,118 3,279 3,528 3,809 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FEBIT 542 467 10 606 691 Depreciation 223 229 348 362 396 Working capital 248 2 (109) (194) (374) Other operating items (229) (224) 141 (336) (368) Operating cash flow 784 474 391 438 344Net capital expenditure (1,119) (1,152) (457) (860) (822) Free cash flow (335) (678) (66) (422) (478)Equity raised/(bought) - - - - - Net borrowings 393 1,083 42 130 614 Other financing (26) 160 63 (66) (44) Net cash flow 32 565 38 (358) 92Cash flow at beginning 163 195 760 798 440 Ending cash flow 195 760 798 440 532Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2014A 2015A 2016F 2017F 2018F ROAE (%) 12.1 8.1 3.8 8.5 8.9 ROAA (%) 6.8 3.9 1.7 3.8 4.0 EBITDA margin (%) 23.6 23.2 14.4 27.3 28.6 EBIT margin (%) 16.7 15.6 0.4 17.1 18.2 Net margin (%) 10.5 8.3 4.9 8.2 8.6 Payout ratio (%) 10.4 14.2 14.2 14.2 14.2 Current ratio (x) 1.8 3.4 4.1 3.0 3.1 Interest coverage (x) 8.7 4.2 0.1 3.4 3.3 Net gearing (%) 50.4 64.6 61.5 71.0 79.5 Debts to assets (%) 30.9 38.0 38.2 37.4 41.9 Debtor turnover (days) 24 32 32 32 32 Creditor turnover (days) 45 62 62 62 62 Inventory turnover (days) 44 65 76 76 76 Source: Company, Bahana estimates

2017 Compendium

298

SARANA MENARA NUSANTARA BUY PX: IDR3,700 - TP: IDR5,600 On the back of a mid-2016 EXCL tower acquisition amounting to 2,500

units, TOWR has cemented its status as Indonesia’s largest independent provider with 14,775 towers. Looking into 2017, TOWR will likely enjoy an increased number of tenants to 26,568 (+21% y-y) as the company’s number of towers reaches 15,837 (+4.5% y-y), reflecting a collocation rate of 1.7x, relatively flat on a y-y basis.

Going forward, TOWR’s growth should be backed by telco operators’ strategies to pursue asset-light business models and continue selling down non-core assets such as towers to tower companies. On the balance sheet side, we expect TOWR to have a solid cash position to support both future organic and inorganic expansions.

On valuation, we retain our BUY rating with a DCF-based (WACC: 9.2%) 12-month target price of IDR5,600. Risks to our call include greater-than-expected competition and higher operating costs.

Financial highlights* Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Revenues (IDRbn) 4,106 4,470 4,956 5,637 6,087 EBIT (IDRbn) 3,080 3,386 3,767 4,282 4,649 Net profit (IDRbn) 1,100 2,958 2,806 2,900 3,360 Bahana/consensus (%) - - 120 105 105 EPS (IDR) 108 290 275 284 329 EPS growth (%) 552.7 169.0 (5.2) 3.4 15.9 EV/EBITDA (x) 13.2 11.8 10.8 8.9 7.7 P/E (x) 34.3 12.8 13.5 13.0 11.2 FCFPS (IDR) 38 59 (57) 249 296 FCF yield (%) 1.0 1.6 (1.6) 6.7 8.0 BVPS (IDR) 463 753 1,028 1,312 1,641 P/BV (x) 8.0 4.9 3.6 2.8 2.3 DPS (IDR) - - - - - Div. yield (%) - - - - - Source: Company, Bahana estimates note: based on 23 November 2016 closing price

Share price performance

0

3,000

6,000

9,000

12,000

15,000

3,500

4,000

4,500

5,000

23-Nov-15 23-Jan-16 23-Mar-16 23-May-16 23-Jul-16 23-Sep-16 23-Nov-16

('000)(IDR)

Volume (RHS) TOWR IJ Px Last

(35.6)

1.2 0.8

(15.8) (18.1)

(26.6)

(40)

(30)

(20)

(10)

0

10

(40)

(30)

(20)

(10)

0

10

ytd 1M 3M 6M 9M 12M

(%) (%)

TOWR IJ relative to JCI Source: Bloomberg Gilang Purnama (gilang.purnama.co.id) +6221 2505081 ext. 3601 *New, please refer to appendix II

Major assumptions Year to 31 Dec 2014A 2015A 2016F 2017F 2018F ASP (IDR mn) 204 212

212194 212 221

Tower sites (units) 11,595 12,237 15,157 15,837 16,517 Collocation (x) 8,543 8,801 10,391 10,731 11,071 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 4,850/3,600 12M High/low consensus TP (IDR) : 5,800/4,000 Majority shareholder (%) : Sapta Adhikari Investama (32.7) Share outstanding (mn)/Free float (%) : 10,203/66.0 Mkt. cap. (IDRbn/USDmn) : 37,751/2,800 3-m avg.daily t.o.(IDRbn/USDmn) : 0.4/0.0 Bloomberg/Reuters code : TOWR IJ/TOWR.JK Source: Bloomberg, Reuters; based on 23 November 2016 closing price

2017 Compendium

299

SARANA MENARA NUSANTARA

Profit & loss Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FSales 4,106 4,470 4,956 5,637 6,087Gross profit 3,530 3,898 4,287 4,874 5,288EBITDA 3,418 3,776 4,225 4,805 5,189Depreciation 338 390 459 523 540 EBIT 3,080 3,386 3,767 4,282 4,649Net interest inc./(expense) (849) (550) (584) (542) (465) Forex gain/(losses) (5) (428) 54 - - Other income/(expense) (669) 1,550 669 296 306 Pre-tax profit 1,557 3,958 3,906 4,037 4,489Taxes (458) (993) (1,094) (1,130) (1,122) Minority interest 1 (6) (6) (6) (7) Extraordinary gain/(losses) - - - - - Net profit 1,100 2,958 2,806 2,900 3,360Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018F Cash and equivalents 2,010 2,987 4,225 5,567 7,582 S-T investments - - - - - Trade receivables 572 471 601 683 738 Inventories - 11 1 1 1 Fixed assets 12,368 14,683 18,322 18,854 19,377 Other assets 2,332 3,265 3,662 3,656 3,655 Total assets 17,282 21,417 26,810 28,761 31,353 Interest bearing liabilities 9,354 9,903 11,903 10,703 9,703 Trade payables 472 217 239 260 268 Other liabilities 2,740 3,619 4,183 4,413 4,638 Total liabilities 12,566 13,738 16,325 15,375 14,608 Minority interest (8) (2) (2) (2) (2) Shareholders' equity 4,724 7,680 10,486 13,387 16,747 Source: Company, Bahana estimates

Cashflow Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FEBIT 3,080 3,386 3,767 4,282 4,649 Depreciation 338 390 459 523 540 Working capital 147 (111) (59) (29) (34) Other operating items (1,450) (2,584) (1,082) (1,673) (1,586) Operating cash flow 2,115 1,081 3,084 3,103 3,569Net capital expenditure (1,730) (475) (3,669) (561) (554) Free cash flow 385 606 (585) 2,542 3,015Equity raised/(bought) - - - - - Net borrowings 46 549 2,000 (1,200) (1,000) Other financing 72 (177) (177) - - Net cash flow 504 977 1,238 1,342 2,015Cash balances, beginning 1,506 2,010 2,987 4,225 5,567 Ending cash 2,010 2,987 4,225 5,567 7,582Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2014A 2015A 2016F 2017F 2018F ROAE (%) 26.1 47.7 30.9 24.3 22.3 ROAA (%) 6.7 15.3 11.6 10.4 11.2 EBITDA margin (%) 83.3 84.5 85.3 85.2 85.2 EBIT margin (%) 75.0 75.8 76.0 76.0 76.4 Net margin (%) 26.8 66.2 56.6 51.5 55.2 Payout ratio (%) - - - - - Current ratio (x) 1.3 1.8 2.0 2.6 3.5 Interest coverage (x) 3.6 6.2 6.4 7.9 10.0 Net gearing (%) 155.5 90.0 73.2 38.4 12.7 Debts to assets (%) 54 46 44 37 31 Debtor turnover (days) 51 38 44 44 44 Creditor turnover (days) 723 435 414 395 376 Inventory turnover (days) - - 410 410 410 Source: Company, Bahana estimates

2017 Compendium

300

SEMEN BATURAJA REDUCE PX: IDR2,490 - TP: IDR315* Going forward, we expect SMBR’s operating margin of 20% to be

sustainable, having fully reflected the already fierce competitive landscape within South Sumatra’s cement industry, in our opinion. On a more positive note, SMBR’s strategic location provides the company with an edge over its competitors which have to import their goods from West Java, or West Sumatra.

South Sumatra and Palembang will see superior volume growth looking ahead, as the region is sensitive to commodities prices especially CPO, for which we have a constructive view. Palembang is also hosting the ASEAN games in 2018, and there are ample other government projects to support bulk demand around the area.

On 638% share price appreciation in the past 12 months, we rate SMBR a REDUCE, with IDR315 TP or 15x 2017F P/E, in line with industry average P/E. Risk: Continued retail investors’ excitement in the share price.

Financial highlights* Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Revenues (IDRbn) 1,215 1,461 1,408 1,493 1,605 EBIT (IDRbn) 246 331 280 290 300 Net profit (IDRbn) 336 354 259 203 185 Bahana/consensus (%) - - 103 97 80

EPS (IDR) 34 36 26 21 19 EPS growth (%) (3.0) 5.4 (26.9) (21.4) (9.1) EV/EBITDA (x) 69.8 55.1 68.6 55.1 54.1 P/E (x) 72.9 69.2 94.6 120.4 132.4 FCFPS (IDR) 28 (21) (218) 22 (40) FCF yield (%) 1.1 (0.8) (8.8) 0.9 (1.6) BVPS (IDR) 273 300 324 340 354 P/BV (x) 9.1 8.3 7.7 7.3 7.0 DPS (IDR) 8 9 7 5 5 Div. yield (%) 0.3 0.4 0.3 0.2 0.2 Source: Company, Bahana estimates note: based on 23 November 2016 closing price

Share price performance

0

150,000

300,000

450,000

600,000

750,000

250

750

1,250

1,750

2,250

23-Nov-15 23-Jan-16 23-Mar-16 23-May-16 23-Jul-16 23-Sep-16 23-Nov-16

('000)(IDR)

Volume (RHS) SMBR IJ Px Last

742.2

23.0 82.9

361.6

644.4 637.6

0

200

400

600

800

0

200

400

600

800

ytd 1M 3M 6M 9M 12M

(%) (%)

SMBR IJ relative to JCISource: Bloomberg Handi Huta Jaya ([email protected]) +6221 250 5081 ext. 3610 *New, please refer to appendix II

Major assumptions Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Volume capacity ('000 tons) 2,000 2,000 2,000 3,850 3,850 Export volumes ('000 tons) - - - - - Domestic volumes ('000 tons) 1,263 1,538 1,538 1,630 1,753 Total volumes ('000 tons) 1,263 1,538 1,538 1,630 1,753 Utilization rate (%) 63 77 77 42 46 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 2,500/283 12M high/low consensus TP (IDR) : 1,580/400Majority shareholder (%) : Republic of Indonesia (76.2) Shares outstanding (mn)/Free float (%) : 9,838/23.8 Mkt. cap. (IDRbn/USDmn) : 24,496/1,817 3-m avg.daily t.o.(IDRbn/USDmn) : 47.3/3.5 Bloomberg/Reuters code : SMBR IJ/SMBR.JK Source: Bloomberg, Reuters based on 23 November 2016 closing price

2017 Compendium

301

SEMEN BATURAJA

Profit & loss Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FSales 1,215 1,461 1,408 1,493 1,605Gross profit 379 494 453 475 497EBITDA 322 422 360 449 466Depreciation 75 91 79 159 165 EBIT 246 331 280 290 300Net interest inc./(expense) 152 120 54 (32) (64) Forex gain/(losses) - - - - - Other income/(expense) 7 (8) (7) (7) (8) Pre-tax profit 405 443 328 251 228Taxes (69) (89) (69) (48) (43) Minority interest - - - - - Extraordinary gain/(losses) - - - - - Net profit 336 354 259 203 185Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018F Cash and equivalents 2,054 1,251 329 492 301 S-T investments - - - - - Trade receivables 81 39 58 61 66 Inventories 187 186 184 196 214 Fixed assets 558 787 3,157 3,157 3,649 Other assets 49 1,005 539 539 636 Total assets 2,928 3,269 4,268 4,447 4,867 Interest bearing liabilities - - 500.00 750 1,000 Trade payables 91 110 99 106 115 Other liabilities 154 209 227 247 269 Total liabilities 245 319 827 1,103 1,384 Minority interest - - - - - Shareholders' equity 2,683 2,949 3,191 3,344 3,483 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FEBIT 336 354 259 203 185Depreciation 75 91 79 159 165 Working capital (73) (350) (44) (2) (101) Other operating items (18) 18 11 12 13 Operating cash flow 320 114 306 373 262Net capital expenditure (63) (828) (1,961) (159) (657) Free cash flow 257 (715) (1,655) 214 (395)Equity raised/(bought) - - - - - Net borrowings - - 750 - 250 Other financing (86) (87) (17) (51) (46) Net cash flow 171 (802) (922) 163 (191)Cash balances, beginning 1,883 2,054 1,251 329 492 Ending cash 2,054 1,252 329 492 301Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2014A 2015A 2016F 2017F 2018F ROAE (%) 13.1 12.6 8.4 6.2 5.4 ROAA (%) 11.9 11.4 6.9 4.7 4.0 Gross margin (%) 31.2 33.8 32.2 31.8 31.0 EBITDA margin (%) 26.5 28.9 25.5 30.1 29.0 EBIT margin (%) 20.3 22.6 19.9 19.4 18.7 Net margin (%) 27.7 24.2 18.4 13.6 11.5 Payout ratio (%) 24.4 25.0 25.0 25.0 25.0 Current ratio (x) 13.0 7.6 4.1 4.4 3.8 Interest coverage (x) na na na 9.2 4.7 Net gearing (%) nc nc 5.35 7.70 20.06 Debtor turnover (days) 17 15 15 15 15 Creditor turnover (days) 35 38 38 38 38 Inventory turnover (days) 70 70 70 70 70 Source: Company, Bahana estimates

2017 Compendium

302

SEMEN INDONESIA HOLD PX: IDR8,400 - TP: IDR8,940* SMGR, Indonesia’s largest cement company, still has the best

franchise given: (1) it is away from the epicentre of price war in West Java/Banten areas, (2) it is a beneficiary of direct demand from government infrastructure projects due to SOE status – we forecast eventual increase in receivable days to reflect this, and (3) it is best positioned in outer Java, which remains the hot spot of growth with recovery in commodities and government’s regional development focus

SMGR was the first big cement player to cut prices, when fuel prices were lowered in 1Q15; since then, it had EBIT margins of about 20%, sustainable in our view given INTP’s higher margins of 20%-25%.

Its Rembang plant’s environmental issues may cause persistent negative sentiment. On valuation, we set SMGR’s TP at IDR8,940, reflecting a 13x 2017F PE, a 20% discount to its long-term relative to JCI P/E band on unexciting EPS growth. Risk: Intense/low competition.

Financial highlights* Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Revenues (IDRbn) 26,987 26,948 26,473 27,776 29,468 EBIT (IDRbn) 6,947 5,899 5,128 5,176 5,398 Net profit (IDRbn) 5,560 4,521 4,006 4,079 4,351 Bahana/consensus (%) - - 97 95 92

EPS (IDR) 937 762 675 688 734 EPS growth (%) 3.5 (18.7) (11.4) 1.8 6.7 EV/EBITDA (x) 6.0 6.9 7.3 6.6 5.8 P/E (x) 9.0 11.0 12.4 12.2 11.5 FCFPS (IDR) 567 173 443 554 751 FCF yield (%) 6.8 2.1 5.3 6.6 8.9 BVPS (IDR) 4,054 4,454 4,813 5,297 5,822 P/BV (x) 2.1 1.9 1.7 1.6 1.4 DPS (IDR) 375 229 203 206 220 Div. yield (%) 4.5 2.7 2.4 2.5 2.6 Source: Company, Bahana estimates; note: based on 23 November 2016 closing price

Share price performance

0

15,000

30,000

45,000

60,000

75,000

8,000

9,000

10,000

11,000

12,000

23-Nov-15 23-Jan-16 23-Mar-16 23-May-16 23-Jul-16 23-Sep-16 23-Nov-16

('000)(IDR)

Volume (RHS) SMGR IJ Px Last

(39.8)

(11.9) (15.0) (15.9)

(28.2)

(37.8)

(50)

(40)

(30)

(20)

(10)

0

(50)

(40)

(30)

(20)

(10)

0

ytd 1M 3M 6M 9M 12M

(%) (%)

SMGR IJ relative to JCISource: Bloomberg Handi Huta Jaya ([email protected]) +6221 250 5081 ext. 3610 *New, please refer to appendix II

Major assumptions Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Volume capacity ('000 tons) 31,800 33,300 40,300 42,100 42,100 Export volumes ('000 tons) 197 490 548 614 688 Domestic volumes ('000 tons) 26,156 25,969 25,460 26,902 28,639 Total volumes ('000 tons) 26,353 26,458 26,007 27,516 29,327 Utilization rate (%) 82.9 79.5 64.5 65.4 69.7 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 11,875/8,150 12M high/low consensus TP (IDR) : 16,000/8,300 Majority shareholder (%) : Republic of Indonesia (51.0) Shares outstanding (mn)/Free float (%) : 5,932/49.0 Mkt. cap. (IDRbn/USDmn) : 49,825/3,695 3-m avg.daily t.o.(IDRbn/USDmn) : 80.8/6.0 Bloomberg/Reuters code : SMGR IJ/SMGR.JK Source: Bloomberg, Reuters; based on 23 November 2016 closing price

2017 Compendium

303

SEMEN INDONESIA

Profit & loss Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FSales 26,987 26,948 26,473 27,776 29,468Gross profit 11,579 10,646 9,885 10,298 10,886EBITDA 8,184 7,265 6,785 7,201 7,691Depreciation 1,237 1,366 1,657 2,025 2,293 EBIT 6,947 5,899 5,128 5,176 5,398Net interest inc./(expense) (97) (129) (146) (16) 134 Forex gain/(losses) 75 (11) 56 - - Other income/(expense) 152 92 102 92 86 Pre-tax profit 7,077 5,851 5,140 5,253 5,619Taxes (1,510) (1,325) (1,129) (1,168) (1,263) Minority interest (8) (4) (4) (5) (5) Extraordinary gain/(losses) - - - - - Net profit 5,560 4,521 4,006 4,079 4,351Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018F Cash and equivalents 4,926 3,964 5,570 7,531 8,602 S-T investments 106 28 32 36 42 Trade receivables 2,554 2,716 2,469 2,653 2,782 Inventories 2,812 2,409 2,799 2,799 2,975 Fixed assets 20,221 25,168 26,099 26,804 26,520 Other assets 3,714 3,868 4,063 4,373 4,765 Total assets 34,332 38,153 41,032 44,196 45,687 Interest bearing liabilities 4,100 4,197 5,122 5,150 3,164 Trade payables 3,032 3,783 3,636 3,831 4,073 Other liabilities 2,195 2,732 2,755 2,875 3,058 Total liabilities 9,327 10,712 11,512 11,856 10,294 Minority interest 958 1,021 973 920 861 Shareholders' equity 24,046 26,420 28,547 31,420 34,531 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FEBIT 6,947 5,899 5,128 5,176 5,398 Depreciation 1,237 1,366 1,657 2,025 2,293 Working capital (251) 1,126 (551) (252) (334) Other operating items (1,952) (977) (949) (848) (777) Operating cash flow 5,981 7,414 5,285 6,101 6,580Net capital expenditure (2,615) (6,389) (2,656) (2,817) (2,123) Free cash flow 3,366 1,024 2,629 3,284 4,457Equity raised/(bought) - - - - - Net borrowings (170) 88 981 20 (1,994) Other financing (2,341) (2,074) (2,004) (1,344) (1,392) Net cash flow 855 (962) 1,606 1,961 1,072Cash balances, beginning 4,070 4,926 3,964 5,570 7,531 Ending cash 4,926 3,964 5,570 7,531 8,602Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2014A 2015A 2016F 2017F 2018F ROAE (%) 24.7 17.9 14.6 13.6 13.2 ROAA (%) 17.1 12.5 10.1 9.6 9.7 Gross margin (%) 42.9 39.5 37.3 37.1 36.9 EBITDA margin (%) 30.3 27.0 25.6 25.9 26.1 EBIT margin (%) 25.7 21.9 19.4 18.6 18.3 Net margin (%) 20.6 16.8 15.1 14.7 14.8 Payout ratio (%) 40.0 30.0 30.0 30.0 30.0 Current ratio (x) 2.2 1.6 2.1 1.6 1.7 Interest coverage (x) 71.7 45.8 35.2 319.2 na Net gearing (%) nc 0.9 nc nc nc Debtor turnover (days) 32 36 34 35 34 Creditor turnover (days) 66 76 80 80 80 Inventory turnover (days) 65 58 58 58 58 Source: Company, Bahana estimates

2017 Compendium

304

SIDO MUNCUL BUY PX: IDR550 - TP: IDR640 As Indonesia’s leading traditional herbal medicine maker, SIDO’s

herbal division (57.4%) is its growth backbone, particularly given continued competitive pressure on its beverage segment (39.5%) and maximum capacity on the pharma division (3.1%).

Supported by its strongest brand, Tolak Angin (70% market share), SIDO is currently in the process of doubling its liquid herbal capacity to a total of 150mn sachets/month by 4Q17, in line with Indonesia’s growing demand for herbal-health remedies. We expect to see extra c.IDR400bn in 2017F revenue, derived from 25% higher utilization rates as production from the new plant commences.

Our IDR640 TP is based on 2017F PE of 17.6x, a 20% discount to the sector, sufficient to take into account its small market cap and tough energy drink market. Risks: Worse energy drinks performance and higher herbal competition raising A&P costs and lowering margins.

Financial highlights* Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Revenues (IDRbn) 2,198 2,219 2,528 2,890 3,354 EBIT (IDRbn) 436 478 562 657 774 Net profit (IDRbn) 418 437 482 545 628 Bahana/consensus (%) - - 103 103 101

EPS (IDR) 28 29 32 36 42 EPS growth (%) (7.2) 4.8 10.2 13.0 15.3 EV/EBITDA (x) 14.2 13.2 11.5 10.0 8.7 P/E (x) 19.8 18.9 17.1 15.1 13.1 FCFPS (IDR) 17 13 19 22 29 FCF yield (%) 3.3 2.6 3.7 4.4 5.7 BVPS (IDR) 175 173 186 192 200 P/BV (x) 2.9 2.9 2.7 2.6 2.5 DPS (IDR) 27 24 26 30 34 Div. yield (%) 5.3 4.8 5.2 5.9 6.8 Source: Company, Bahana estimates note: based on 23 November 2016 closing price

Share price performance

0

20,000

40,000

60,000

80,000

480

530

580

630

23-Nov-15 23-Jan-16 23-Mar-16 23-May-16 23-Jul-16 23-Sep-16 23-Nov-16

('000)(IDR)

Volume (RHS) SIDO IJ Px Last

(13.5)

3.6

(3.0)(7.1)

(1.8)

(16.6)(20)

(15)

(10)

(5)

0

5

(20)

(15)

(10)

(5)

0

5

ytd 1M 3M 6M 9M 12M

(%) (%)

SIDO IJ relative to JCI Source: Bloomberg Renaldy Effendy ([email protected]) +6221 2505081 ext. 3606 *New, please refer to appendix II

Major assumptions Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Herbal growth (%) 4.4 6.5 29.5 25.0 25.5 Energy drinks growth (%) 8.1 (9.0) (3.0) (1.0) (1.0) Pharmacy growth (%) - 183.7 2.0 1.0 1.0 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 620/494 12M high/low consensus TP (IDR) : 730/550Majority shareholder (%) : Sulistio Desi (40.5) Shares outstanding (mn)/Free float (%) : 15,000/19.0 Mkt. cap. (IDRbn/USDmn) : 8,250/612 3-m avg.daily t.o.(IDRbn/USDmn) : 2.6/0.2

Bloomberg/Reuters code : SIDO IJ/SIDO.JK Source: Bloomberg, Reuters; based on 23 November 2016 closing price

2017 Compendium

305

SIDO MUNCUL

Profit & loss Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FSales 2,198 2,219 2,528 2,890 3,354Gross profit 840 883 1,034 1,213 1,438EBITDA 494 548 642 748 874Depreciation 58 69 80 91 100 EBIT 436 478 562 657 774Net interest inc./(expense) 104 71 56 44 34 Forex gain/(losses) (1) (2) (1) - - Other income/(expense) 9 13 9 7 8 Pre-tax profit 549 560 626 708 816Taxes (131) (123) (144) (163) (188) Minority interest - - - - - Extraordinary gain/(losses) - - - - - Net profit 418 437 482 545 628Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018F Cash and equivalents 1,255 1,027 880 766 680 S-T investments - - - - - Trade receivables 323 336 374 428 505 Inventories 231 265 295 335 388 Fixed assets 791 962 1,092 1,201 1,280 Other assets 221 207 354 373 384 Total assets 2,820 2,796 2,994 3,102 3,238 Interest bearing liabilities 0 0 0 0 0 Trade payables 137 148 151 161 178 Other liabilities 58 50 55 58 64 Total liabilities 195 198 206 219 243 Minority interest 0 0 (1) (2) (2) Shareholders' equity 2,625 2,598 2,789 2,885 2,997 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FEBIT 436 478 562 657 774 Depreciation 58 69 80 91 100 Working capital 31 (45) (82) (104) (118) Other operating items 35 (69) (70) (113) (147) Operating cash flow 560 434 490 532 609Net capital expenditure (309) (239) (210) (200) (180) Free cash flow 252 194 280 332 429Equity raised/(bought) - - - - - Net borrowings 0 0 - - - Other financing (546) (422) (428) (445) (515) Net cash flow (294) (228) (147) (114) (86)Cash flow at beginning 1,549 1,255 1,027 880 766 Ending cash flow 1,255 1,027 880 766 680Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2014A 2015A 2016F 2017F 2018F ROAE (%) 15.9 16.8 17.9 19.2 21.4 ROAA (%) 14.5 15.6 16.7 17.9 19.8 Gross margin (%) 22.5 24.7 25.4 25.9 26.1 EBITDA margin (%) 19.9 21.6 22.2 22.7 23.1 EBIT margin (%) 19.0 19.7 19.1 18.9 18.7 Net margin (%) 97.0 82.3 82.3 82.3 82.3 Payout ratio (%) 10.3 9.3 8.6 8.2 7.7 Current ratio (x) na na na na na Interest coverage (x) nc nc nc nc nc Net gearing (%) 6.9 7.1 6.9 7.1 7.5 Debtor turnover (days) 54 54 51 51 51 Creditor turnover (days) 42 39 37 34 32 Inventory turnover (days) 70 68 68 69 69 Source: Company, Bahana estimates

2017 Compendium

306

SILOAM INTERNATIONAL HOSPITAL BUY PX: IDR10,100 - *TP: IDR13,100 SILO, Indonesia’s largest private hospital chain, is currently enjoying

double-digit patient volume growth. We expect this to continue as SILO aims to double operational beds, increase its hospital network from 24 to 50 by 2019 and tap patients from the National Health Insurance (JKN) program through its 14 BPJS-provider hospitals.

Following its rights issue proceeds of IDR1.3tn, we expect SILO’s 22% net gearing to reverse to a net cash position, allowing for 2017 net interest expense to come down by IDR24bn post the IDR351bn debt repayment, paving the way for earnings support.

Following SILO’s market underperformance, valuation looks more reasonable, and we have a IDR13,100 12-month TP based on a 26.4x 2017F EV/EBITDA, 33% discount to MIKA’s valuation on higher blended occupancy rate and margins. Risk: Longer average length of stay and lower occupancy rate on its new hospitals.

Financial highlights Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Revenues (IDRbn) 3,341 4,144 5,255 6,722 8,578 EBIT (IDRbn) 180 211 273 332 418 Net profit (IDRbn) 72 70 99 139 188 Bahana/consensus (%) - - 102.5 106.1 112.2

EPS (IDR) 62 61 85 107 145 EPS growth (%) 24.6 (2.0) 40.0 25.8 34.9 EV/EBITDA (x) 23.9 22.0 18.6 20.3 15.9 P/E (x) 162.5 165.9 118.5 94.2 69.8 FCFPS (IDR) (84) 16 (10) (759) (77) FCF yield (%) (0.8) 0.2 (0.1) (7.5) (0.8) BVPS (IDR) 1,431 1,509 1,581 2,554 2,753 P/BV (x) 7.1 6.7 6.4 4.0 3.7 DPS (IDR) - 5 6 8 11 Div. yield (%) - 0.1 0.1 0.1 0.1 Source: Company, Bahana estimates note: based on 23 November 2016 closing price

Share price performance

0

5,000

10,000

15,000

20,000

25,000

7,000

8,000

9,000

10,000

11,000

12,000

23-Nov-15 23-Jan-16 23-Mar-16 23-May-16 23-Jul-16 23-Sep-16 23-Nov-16

('000)(IDR)

Volume (RHS) SILO IJ Px Last

(10.4)

(2.0)

0.2 (0.1)

14.3

(8.2)(15)(10)(5)05101520

(15)(10)(5)05

101520

ytd 1M 3M 6M 9M 12M

(%) (%)

SILO IJ relative to JCI Source: Bloomberg Renaldy Effendy ([email protected]) +6221 2505081 ext. 3606 *New, please refer to appendix II

Major assumptions Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Beds occupancy rate (%) 56.2 56.1 57.1 59.2 61.1 Ave. IPD length of stay (days) 4.1 3.8 3.9 3.9 3.9 IPD/OPD admissions (%) 7.7 7.9 8.1 7.8 7.7 No. of beds in operation 2,277 2,841 3,503 4,165 4,975 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 11,750/7,225 12M high/low consensus TP (IDR) : 13,700/8,825Majority shareholder (%) : LPKR IJ (70.8) Shares outstanding (mn)/Free float (%) : 1,156/29.2 Mkt. cap. (IDRbn/USDmn) : 11,677/866 3-m avg.daily t.o.(IDRbn/USDmn) : 7.6/0.6 Bloomberg/Reuters code : SILO IJ/SILO.JK Source: Bloomberg, Reuters; based on 23 November 2016 closing price

2017 Compendium

307

SILOAM INTERNATIONAL HOSPITAL

Profit & loss Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FSales 3,341 4,144 5,255 6,722 8,578Gross profit 952 1,177 1,524 1,959 2,529EBITDA 499 545 641 644 827Depreciation 319 334 368 312 409 EBIT 180 211 273 332 418Net interest inc./(expense) (40) (52) (51) (18) 1 Forex gain/(losses) - - - - - Other income/(expense) (34) (53) (63) (81) (106) Pre-tax profit 106 106 159 232 314Taxes (37) (44) (64) (95) (129) Minority interest 3 9 3 2 3 Extraordinary gain/(losses) - - - - - Net profit 72 70 99 139 188Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018F Cash and equivalents 280 160 113 127 62 S-T investments - - - - - Trade receivables 399 572 731 952 1,238 Inventories 106 140 159 183 232 Fixed assets 1,589 1,553 1,535 2,523 2,614 Other assets 473 561 594 635 705 Total assets 2,846 2,986 3,131 4,419 4,850 Interest bearing liabilities 519 444 390 53 54 Trade payables 193 255 330 417 524 Other liabilities 475 547 579 625 688 Total liabilities 1,186 1,246 1,299 1,095 1,266 Minority interest 5 (4) 4 3 4 Shareholders' equity 1,655 1,744 1,828 3,321 3,580 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FEBIT 180 211 273 332 418 Depreciation 319 334 368 312 409 Working capital 18 (88) (129) (139) (198) Other operating items (109) (141) (174) (192) (230) Operating cash flow 408 316 338 312 399Net capital expenditure (506) (298) (350) (1,300) (500) Free cash flow (98) 18 (12) (988) (101)Equity raised/(bought) (26) - - 1,310 - Net borrowings 74 (74) (54) (337) 20 Other financing (186) (64) 18 30 15 Net cash flow (235) (120) (47) 15 (65)Cash flow at beginning 515 280 160 113 127 Ending cash flow 280 160 113 127 62Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2014A 2015A 2016F 2017F 2018F ROAE (%) 4.4 4.1 5.5 5.4 5.5 ROAA (%) 2.6 2.4 3.2 3.7 4.1 Gross margin (%) 28.5 28.4 29.0 29.1 29.5 EBITDA margin (%) 14.9 13.1 12.2 9.6 9.6 EBIT margin (%) 5.4 5.1 5.2 4.9 4.9 Net margin (%) 2.2 1.7 1.9 2.1 2.2 Payout ratio (%) - 8.4 10.0 10.0 10.0 Current ratio (x) 1.7 1.5 1.6 1.7 1.7 Interest coverage (x) 4.5 4.0 5.3 18.7 na Net gearing (%) 14.4 16.3 15.2 nc nc Debtor turnover (days) 29 31 32 32 32 Creditor turnover (days) 43 51 51 52 53 Inventory turnover (days) 16 17 16 14 14 Source: Company, Bahana estimates

2017 Compendium

308

SOECHI LINES BUY PX: IDR380 - TP: IDR630 SOCI, a leading oil tanker logistics in Indonesia, is set to enjoy strong

growth driven by rising oil consumption, in our view. Its business would not be impacted oil price fluctuations, allowing generation of stable earnings on secured long-term contracts. Moreover, Cabotage law should protect the industry from foreign competition.

On SOCI’s shipyard business, we see promising outlook with huge potential demand resulting from aging fleet replacements as well as fleet expansions. In addition, the regulation which favor local shipyard should ensure domestic players to benefit from rising fleet demand.

Valuation-wise, SOCI looks attractive at current cheap 2017 PE of 5.3x, while we believe market has yet to price in its attractive shipyard business. We maintain our BUY rating with 12M TP of IDR630, based on 2017F PE of 8.8x, c.40% discount to regional peers. Risks are aging tanker fleets and slower expansion on Pertamina’s oil distribution.

Financial highlights Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Revenues (USDmn) 127 142 127 155 176 EBIT (USDmn) 45 44 34 48 61 Net profit (USDmn) 33 41 22 37 50 Bahana/consensus(%) - - 41 63 na

EPS (IDR) 84 81 42 71 96 EPS growth (%) (18.2) (3.8) (48.2) 70.1 34.9 EV/EBITDA (x) 6.3 6.6 6.6 4.4 2.9 P/E (x) 4.5 4.7 9.0 5.3 3.9 FCFPS (IDR) (31) (54) 147 46 59 FCF yield (%) (8) (14) 39 12 16 BVPS (IDR) 658 532 551 610 685 P/BV (x) 0.6 0.7 0.7 0.6 0.6 DPS (IDR) - - 23 13 21 Div. yield (%) - - 6.2 3.3 5.6 Source: Company, Bahana estimates note: based on 23 November 2016 closing price

Share price performance

0

20,000

40,000

60,000

80,000

100,000

120,000

250

300

350

400

450

500

550

23-Nov-15 23-Jan-16 23-Mar-16 23-May-16 23-Jul-16 23-Sep-16 23-Nov-16

('000)(IDR)

Volume (RHS) SOCI IJ Px Last

(33.5)

(5.0) (6.6) (6.0)

(26.6)(21.6)

(40)

(30)

(20)

(10)

0

(40)

(30)

(20)

(10)

0

ytd 1M 3M 6M 9M 12M

(%) (%)

SOCI IJ relative to JCI Source: Bloomberg Gregorius Gary ([email protected]) +6221 2505081 ext. 3604

Major assumptions Year to 31 Dec 2014A 2015A 2016F 2017F 2018F General purpose vessels (unit) 24 26 25 24 23 Medium Range vessels (unit) 3 3 3 3 3 Aframax tanker & VLCC (unit) 8 8 7 8 9 Utilization rate (%) 89.1 85.0 85.0 85.0 89.0 IDR/USD 12,385 14,000 13,500 13,500 13,500 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 535/350 12M High/low consensus TP (IDR) : 728/633 Majority shareholder (%) : Soechi Group (80) Shares outstanding (mn)/Free float (%) : 7,059/15 Mkt. cap. (IDRbn/USDmn) : 2,659/197 3-m avg.daily t.o.(IDRbn/USDmn) : 2.3/0.2 Bloomberg/Reuters code : SOCI IJ/SOCI.JK Source: Bloomberg, Reuters; based on 23 November 2016 closing price

2017 Compendium

309

SOECHI LINES

Profit & loss Year to 31 Dec (USDmn) 2014A 2015A 2016F 2017F 2018FSales 127 142 127 155 176Gross profit 51 52 42 56 70EBITDA 56 57 47 61 74Depreciation 11 14 13 13 13 EBIT 45 44 34 48 61Net interest inc./(expense) (10) (7) (8) (9) (8) Forex gain/(losses) 1 7 (2) - - Other income/(expense) (1) (1) - - - Pre-tax profit 35 42 24 39 53Taxes (2) (1) (2) (2) (2) Minority interest (0) (0) (0) (0) (0) Extraordinary gain/(losses) - - - - - Net profit 33 41 22 37 50Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (USDmn) 2014A 2015A 2016F 2017F 2018F Cash and equivalents 21 11 83 136 189 S-T investments - - - - - Trade receivables 7 13 19 24 27 Inventories 5 3 4 4 4 Fixed assets 383 445 382 365 347 Other assets 24 41 36 39 41 Total assets 440 513 524 567 609 Interest bearing liabilities 171 189 195 203 203 Trade payables 13 14 14 16 17 Other liabilities 17 30 27 29 30 Total liabilities 202 234 236 248 251 Minority interest 0 0 0 0 0 Shareholders' equity 238 279 288 319 358 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (USDmn) 2014A 2015A 2016F 2017F 2018FEBIT 45 44 34 48 61 Depreciation 11 14 13 13 13 Working capital 18 (2) (9) (3) (2) Other operating items (23) (12) (14) (17) (17) Operating cash flow 50 44 24 41 54Net capital expenditure (61) (72) 53 8 9 Free cash flow (11) (28) 77 50 63Equity raised/(bought) 66 - - - - Net borrowings (10) 18 6 8 0 Other financing (27) 9 (11) (5) (10) Net cash flow 18 (1) 72 53 53Cash flow at beginning 3 21 11 83 136 Ending cash flow 21 20 83 136 189Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2014A 2015A 2016F 2017F 2018F ROAE (%) 17.7 15.9 7.8 12.3 14.9 ROAA (%) 8.2 8.6 4.2 6.8 8.6 EBITDA margin (%) 43.7 40.5 37.1 39.3 41.9 EBIT margin (%) 35.0 30.7 26.7 30.9 34.7 Net margin (%) 26.0 28.9 17.2 24.1 28.7 Payout ratio (%) - 30.0 30.0 30.0 30.0 Current ratio (x) 0.6 0.5 1.0 1.4 1.9 Interest coverage (x) 4.6 6.4 4.0 5.5 7.2 Net gearing (%) 63.2 63.9 38.7 21.0 3.9 Debts to assets (%) 38.9 36.9 37.2 35.8 33.3 Debtor turnover (days) 30 50 50 50 50 Creditor turnover (days) 75 60 60 60 60 Inventory turnover (days) 5 15 15 15 15 Source: Company, Bahana estimates

2017 Compendium

310

SRI REJEKI ISMAN BUY PX: IDR244 - *TP: IDR300 Despite recent IDR appreciation, SRIL, Southeast Asia’s largest fully

integrated textile player, has managed stable margins backed by its sales mix towards high-yield products: garments (26% of sales) and finishing (21%), although spinning remains its biggest sales contributor at 41%, while weaving (12%) is mostly used internally.

Management is confident to achieve 2016 revenue growth of 5-8% y-y (Bahana: 8%) and net profit growth of 8-15% y-y (Bahana: 10%) since SRIL’s production line is already fully booked. Going into 2017, we expect to see stronger growth backed by additional capacity from its new plants, expected to be operational in mid-2017.

With expected 2017 sales growth acceleration to more than 15% y-y, mainly supported by 10% volume expansion, we retain our positive view on SRIL. At our TP of IDR300, or an 5.7x 2017F PE, reflecting a 50% discount to its peers. Risk: Stronger IDR.

Financial highlights* Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Revenues (IDRbn) 555 622 672 757 852 EBIT (IDRbn) 95 98 104 121 134 Net profit (IDRbn) 50 56 61 70 78 Bahana/cons.(%) - - 122 98 110

EPS (IDR) 38 42 46 53 59 EPS growth (%) 49.1 10.3 10.4 13.7 11.8 EV/EBITDA (x) 6.4 6.2 6.2 5.4 25.0 P/E (x) 6.4 5.8 5.3 4.6 4.1 FCFPS (IDR) (5) 0 (1) 3 5 FCF yield (%) (2.2) 0.1 (0.3) 1.0 1.9 BVPS (IDR) 174 208 254 299 349 P/BV (x) 1.4 1.2 1.0 0.8 0.7 DPS (IDR) 2 6 7 8 1 Div. yield (%) 0.9 2.5 2.7 3.1 0.2 Source: Company, Bahana estimates note: based on 23 November 2016 closing price

Share price performance

0

200,000

400,000

600,000

800,000

1,000,000

180

230

280

330

380

430

23-Nov-15 23-Jan-16 23-Mar-16 23-May-16 23-Jul-16 23-Sep-16 23-Nov-16

('000)(IDR)

Volume (RHS) SRIL IJ Px Last

(50.8)

(0.3) (4.5)

(15.3) (16.7)

(52.5) (60)

(50)

(40)

(30)

(20)

(10)

0

(60)

(50)

(40)

(30)

(20)

(10)

0

ytd 1M 3M 6M 9M 12M

(%) (%)

SRIL IJ relative to JCI Source: Bloomberg Renaldy Effendy ([email protected]) +6221 2505081 ext. 3606 *New, please refer to appendix II

Major assumptions Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Spinning volume (bale of yarn) 509 520 532 574 601 Garment volume (pieces) 12.6 17.2 16.7 17.4 18.7 Finishing volume (yarn) 110 106 120 127 134 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 417/204 12M high/low consensus TP (IDR) : 490/190Majority shareholder (%) : Huddleston Indonesia (56.1) Shares outstanding (mn)/Free float (%) : 18,593/43.9 Mkt. cap. (IDRbn/USDmn) : 4,537/336 3-m avg.daily t.o.(IDRbn/USDmn) : 46.6/3.5 Bloomberg/Reuters code : SRIL IJ/SRIL.JK Source: Bloomberg, Reuters; based on 23 November 2016 closing price

2017 Compendium

311

SRI REJEKI ISMAN

Profit & loss Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FSales 555 622 672 757 852Gross profit 122 133 143 165 185EBITDA 109 118 125 145 160Depreciation 14 20 21 24 26 EBIT 95 98 104 121 134Net interest inc./(expense) (28) (34) (39) (42) (45) Forex gain/(losses) (2) (1) 4 - - Other income/(expense) 1 1 2 2 1 Pre-tax profit 66 65 71 81 91Taxes (15) (9) (10) (11) (13) Minority interest (0) (0) (0) (0) - Extraordinary gain/(losses) - - - - - Net profit 50 56 61 70 78Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018F Cash and equivalents 82 77 72 39 61 S-T investments - - - - - Trade receivables 129 102 133 149 168 Inventories 110 136 155 173 195 Fixed assets 323 441 490 526 526 Other assets 56 27 43 40 40 Total assets 699 783 892 927 990 Interest bearing liabilities 412 452 495 465 457 Trade payables 19 11 29 32 37 Other liabilities 37 44 30 34 32 Total liabilities 467 507 555 531 526 Minority interest 0 0 0 0 0 Shareholders' equity 232 276 337 396 464 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FEBIT 95 98 104 121 134 Depreciation 17 20 21 24 26 Working capital (101) 31 (67) (28) (38) Other operating items (15) (8) (8) (10) (11) Operating cash flow (4) 141 51 107 111Net capital expenditure (90) (138) (70) (60) (26) Free cash flow (94) 3 (19) 47 85Equity raised/(bought) (0) (0) - - - Net borrowings 212 40 44 (30) (8) Other financing (42) (47) (30) (51) (55) Net cash flow 75 (4) (5) (33) 22Cash flow at beginning 6 82 77 72 39 Ending cash flow 82 77 72 39 61Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2014A 2015A 2016F 2017F 2018F ROAE (%) 24.0 21.9 20.0 19.1 18.2 ROAA (%) 8.7 7.5 7.3 7.7 8.2 Gross margin (%) 22.1 21.4 21.2 21.8 21.8 EBITDA margin (%) 19.6 18.9 18.7 19.2 18.8 EBIT margin (%) 17.1 15.7 15.5 16.0 15.7 Net margin (%) 9.1 8.9 9.1 9.2 9.2 Payout ratio (%) 6.0 14.4 14.4 14.4 14.4 Current ratio (x) 5.1 4.8 4.8 4.4 3.3 Interest coverage (x) 0.3 0.3 0.4 0.3 0.3 Net gearing (%) 142.7 135.3 125.7 107.6 85.6 Debtor turnover (days) 63 72 72 72 72 Creditor turnover (days) 26 20 20 20 20 Inventory turnover (days) 97 107 107 107 107 Source: Company, Bahana estimates

2017 Compendium

312

SUMMARECON AGUNG BUY PX: IDR1,400 - TP: IDR2,150 SMRA, arguably Indonesia’s best property developer in terms of asset

price appreciation, is expected to target IDR2.5tn of projects in 4Q16, as it attempts to tap demand post the tax amnesty program. As such, with IDR2.4tn achieved in 10M16, we believe SMRA should be on target to book IDR4.5tn of marketing sales by end-2016.

Further, we expect management to change its project product mix, focusing more on landed housing sales, contributing to around 60% by 2017 (2015: 33%; 9M16: 73%). This should improve profitability and cash flow for SMRA in 2017-18.

To better reflect this shift in product mix, we alter our landbank calculation as well as raise our ASP assumptions, resulting in SMRA’s NAV/share of IDR4,785. At this stage, we think SMRA offers value as our TP of IDR2,150 uses a low- to mid-cycle discount to NAV of 55%. Risks: Unsuccessful project launches, infrastructure project delays.

Financial highlights* Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Revenues (IDRbn) 5,757 5,624 5,046 5,623 6,252 EBIT (IDRbn) 2,077 1,768 1,132 1,392 1,677 Net profit (IDRbn) 1,386 855 106 338 466 Bahana/cons.(%) - - 12 33 40

EPS (IDR) 96 59 7 23 32 EPS growth (%) 21.6 (38.3) (87.6) 218.7 37.8 EV/EBITDA (x) 11.2 13.9 20.3 17.0 13.6 P/E (x) 14.6 23.6 190.5 59.8 43.4 FCFPS (IDR) (204) (165) (80) (29) (35) FCF yield (%) (14.6) (11.8) (5.7) (2.1) (2.5) BVPS (IDR) 445 522 527 561 601 P/BV (x) 3.1 2.7 2.7 2.5 2.3 DPS (IDR) 18 12 2 5 5 Div. yield (%) 1.3 0.9 0.1 0.4 0.4 Source: Company, Bahana estimates note: based on 23 November 2016 closing price

Share price performance

0

30,000

60,000

90,000

1,200

1,400

1,600

1,800

2,000

23-Nov-15 23-Jan-16 23-Mar-16 23-May-16 23-Jul-16 23-Sep-16 23-Nov-16

('000)(IDR)

Volume (RHS) SMRA IJ Px Last

(28.6)

(13.0)

(24.0)(20.7) (20.9)

(23.0)(30)

(25)

(20)

(15)

(10)

(5)

0

(30)

(25)

(20)

(15)

(10)

(5)

0

ytd 1M 3M 6M 9M 12M

(%) (%)

SMRA IJ relative to JCI Source: Bloomberg Sanni Satrio Dwi Utomo ([email protected]) +6221 2505081 ext. 3611 *New, please refer to appendix II

NAV Calculation 2017F

Land bank (Ha) 2,039 Total value (IDRbn) 81,247 NAV/share (IDR) 4,785 Discount (%) 55 Adjusted NAV/share (IDR) 2,150 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 1,970/1,225 12M High/low consensus TP (IDR) : 2,300/1,275 Majority shareholder (%) : Semarop Agung (25.4) Share outstanding (m)/Free float (%) : 14,427/67.7 Mkt. cap. (IDRbn/USDmn) : 20,197/1,493 33-m avg.daily t.o.(IDRbn/USDmn) : 43.0/3.2 Bloomberg/Reuters code : SMRA IJ/SMRA.JK Source: Bloomberg, Reuters; based on 23 November 2016 closing price

2017 Compendium

313

SUMMARECON AGUNG

Profit & loss Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FSales 5,757 5,624 5,046 5,623 6,252Gross profit 3,057 2,907 2,195 2,532 2,869EBITDA 2,282 1,994 1,412 1,706 2,155Depreciation 204 227 280 314 478 EBIT 2,077 1,768 1,132 1,392 1,677Net interest inc./(expense) (159) (409) (510) (600) (645) Forex gain/(losses) - - - - - Other income/(expense) 19 24 25 24 27 Pre-tax profit 1,937 1,382 648 816 1,059Taxes (319) (318) (283) (315) (350) Minority interest (232) (209) (259) (163) (244) Extraordinary gain/(losses) - - - - - Net profit 1,386 855 106 338 466Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018F Cash and equivalents 1,771 1,504 1,175 1,394 1,504 S-T investments - - - - - Trade receivables 77 146 180 200 223 Inventories 3,341 4,925 5,910 7,092 8,652 Fixed assets 4,387 4,732 5,409 6,141 6,899 Other assets 6,297 7,452 8,247 9,505 10,950 Total assets 15,873 18,758 20,921 24,333 28,227 Interest bearing liabilities 4,382 6,201 6,878 7,378 7,878 Trade payables 71 63 172 186 204 Other liabilities 5,003 4,965 6,265 8,680 11,478 Total liabilities 9,456 11,228 13,315 16,245 19,560 Minority interest 993 1,517 1,669 1,835 2,019 Shareholders' equity 5,424 6,013 5,937 6,253 6,648 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FEBIT 2,077 1,768 1,132 1,392 1,677 Depreciation 204 227 280 314 478 Working capital (1,554) (1,506) (491) (39) (227) Other operating items (1,387) (887) (829) (443) (533) Operating cash flow (659) (398) 92 1,223 1,395Net capital expenditure (2,285) (1,987) (1,244) (1,648) (1,898) Free cash flow (2,945) (2,385) (1,152) (425) (503)Equity raised/(bought) - - - - - Net borrowings 1,864 1,860 852 500 500 Other financing 33 258 (30) 145 113 Net cash flow (1,048) (267) (329) 220 109Cash flow at beginning 2,819 1,771 1,504 1,175 1,394 Ending cash flow 1,771 1,504 1,175 1,394 1,504Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2014A 2015A 2016F 2017F 2018F ROAE (%) 28.2 15.0 1.8 5.5 7.2 ROAA (%) 9.2 4.9 0.5 1.5 1.8 Gross margin (%) 53.1 51.7 43.5 45.0 45.9 EBITDA margin (%) 39.6 35.5 28.0 30.3 34.5 EBIT margin (%) 36.1 31.4 22.4 24.8 26.8 Net margin (%) 24.1 15.2 2.1 6.0 7.4 Payout ratio (%) 19.2 21.0 21.0 21.0 21.0 Current ratio (x) 2.7 2.6 3.1 2.7 2.5 Interest coverage (x) 13.1 4.3 2.2 2.3 2.6 Net gearing (%) 48.2 78.1 96.1 95.7 95.9 Debtor turnover (days) 13 13 13 13 13 Creditor turnover (days) 22 22 22 22 22 Inventory turnover (days) - - - - - Source: Company, Bahana estimates

2017 Compendium

314

SURYA CITRA MEDIA BUY PX: IDR2,380 - TP: IDR3,000* SCMA, Indonesia’s most profitable media company (40+% ROE), is

currently underperforming the industry growth, largely due to decline in SCTV’s ratings, with RCTI & ANTV gaining. As at end-9M16, management was still unable to bring back its audience share to where it was in 2015, leading to negative earnings growth in 3Q16.

For 2017, management is likely to focus on 2 key aspects: (1) SCTV’s turnaround by refreshing program content, and (2) Cost efficiency as management plans to retire costly programs like Torabika Soccer League (Previously ISL) and BPL. Notable margin expansion is on the cards, in our view.

As we roll over to 2017F, our 12M TP of IDR3,000, based on PE of 25x, provides room for upside from current levels. BUY. Risk to our call includes continued decline in weak audience share on intense competition.

Financial highlights Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Revenues (IDRbn) 4,075 4,238 4,467 4,816 5,380 EBIT (IDRbn) 1,928 2,015 1,999 2,321 2,618 Net profit (IDRbn) 1,455 1,524 1,529 1,787 2,031 Bahana/consensus (%) 95 98 EPS (IDR) 100 104 105 123 139 EPS growth (%) 14 5 0 18 13 EV/EBITDA (x) 16.1 15.3 15.5 13.4 11.9 P/E (x) 22.9 21.9 22.3 18.9 16.8 FCFPS (IDR) 69 78 93 108 110 FCF yield (%) 3 3 4 5 5 BVPS (IDR) 235 215 234 274 315 P/BV (x) 9.7 10.6 9.9 8.5 7.4 DPS (IDR) 51 70 83 83 98 Div. yield (%) 2.2 3.1 3.6 3.6 4.2 Source: Company, Bahana estimates note: based on 23 November 2016 closing price

Share price performance

0

20,000

40,000

60,000

80,000

2,000

2,250

2,500

2,750

3,000

3,250

3,500

23-Nov-15 23-Jan-16 23-Mar-16 23-May-16 23-Jul-16 23-Sep-16 23-Nov-16

('000)(IDR)

Volume (RHS) SCMA IJ Px Last

(36.7)

(6.5)

(23.9)

(37.8)

(24.3)

(40.2)(50)

(40)

(30)

(20)

(10)

0

(50)

(40)

(30)

(20)

(10)

0

ytd 1M 3M 6M 9M 12M

(%) (%)

SCMA IJ relative to JCI Source: Bloomberg Henry Wibowo ([email protected]) +6221 250 5081 Ext.3622

Major assumptions Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Advertising rate growth (%) 10 4 5 8 12 Prog. cost rate growth (%) 7 3 11 -3 11 Operating exp. to revenue (%) 50 51 48 51 52 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 3,500/2,220 12M High/low consensus TP (IDR) : 2,950/3,800 Majority shareholder (%) : Elang Mahkota Teknologi Tbk (60.3) Shares outstanding (mn)/Free float (%) : 14,622/39.6 Mkt. cap. (IDRbn/USDmn) : 33,922 /2.5 3-m avg.daily t.o.(IDRbn/USDmn) : 33.0/2.5 Bloomberg/Reuters code : SCMA IJ/SCMA.JK Source: Bloomberg, Reuters based on 23 November 2016 closing price

2017 Compendium

315

SURYA CITRA MEDIA

Profit & loss Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FSales 4,075 4,238 4,467 4,816 5,380 Gross profit 2,591 2,712 2,773 3,172 3,561 EBITDA 2,038 2,142 2,139 2,475 2,787 Depreciation 110 127 140 154 169 EBIT 1,928 2,015 1,999 2,321 2,618 Net interest inc./(expense) (0) 24 40 61 89 Forex gain/(losses) - - - - - Other income/(expense) (1) (0) - - - Pre-tax profit 1,927 2,038 2,039 2,382 2,707 Taxes (469) (513) (510) (596) (677) Minority interest (5) (2) - - - Extraordinary gain/(losses) 3 0 - - - Net profit 1,455 1,524 1,529 1,787 2,031 Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018F Cash and equivalents 1,249 686 893 835 1,009 S-T investments 3 - - - - Trade receivables 1,270 1,380 1,455 1,568 1,752 Inventories 464 533 591 598 662 Fixed assets 764 962 1,062 1,162 1,362 Other assets 1,001 1,005 939 942 946 Total assets 4,749 4,566 4,941 5,104 5,731 Interest bearing liabilities 350 207 423 - - Trade payables 228 155 172 174 193 Other liabilities 683 791 652 654 666 Total liabilities 1,262 1,152 1,248 828 859 Minority interest 51 267 267 267 267 Shareholders' equity 3,437 3,146 3,426 4,009 4,604 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FEBIT 1,928 2,015 1,999 2,321 2,618 Depreciation 110 127 140 154 169 Working capital (367) (207) (38) (119) (221) Other operating items Operating cash flow 1,198 1,444 1,594 1,821 1,979 Net capital expenditure (193) (305) (240) (254) (369) Free cash flow 1,005 1,139 1,354 1,567 1,610 Equity raised/(bought) - (4) - - - Net borrowings 51 47 (150) - - Other financing (109) (151) 217 (423) - Net cash flow 201 (796) 208 (74) 186 Cash flow at beginning 1,046 1,249 686 893 820 Ending cash flow 1,249 686 893 820 1,006 Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2014A 2015A 2016F 2017F 2018F ROAE (%) 46 44 43 45 44 ROAA (%) 33 33 32 36 37 Gross margin (%) 64 64 62 66 66 EBITDA margin (%) 50 51 48 51 52 EBIT margin (%) 47 48 45 48 49 Net margin (%) 36 36 34 37 38 Payout ratio (%) 58 126 80 80 80 Current ratio (x) 3.9 3.3 4.2 4.3 4.7 Interest coverage (x) na na na na na Net gearing (%) -23 -10% -13 -20 -21 Debtor turnover (days) 114 119 119 119 119 Creditor turnover (days) 39 25 25 25 25 Inventory turnover (days) 79 87 87 87 87 Source: Company, Bahana estimates

2017 Compendium

316

SURYA SEMESTA INTERNUSA BUY PX: IDR555 - TP: IDR750 Having the largest construction business amongst its peers, SSIA is

attempting to diversify its revenue contributors by aggressively acquiring industrial land in Subang, West Java (9M16: 470ha). The plan is supported by the September 2016 IDR900bn bond issue, which should allow the Subang launch to move from 2019 to 2018.

SSIA’s construction business, NRCA, is involved in 3 project tenders worth IDR2.2tn in 4Q16, meaning possible new contracts of IDR3tn (9M16: IDR1.9tn), assuming a 50% tender achievement of IDR1.1tn. Our 2017 contract target is 10% higher on 7 planned hotel launches.

Our IDR750 TP is based on a 70% discount to our 2017F NAV, above the sector’s 68% average due to SSIA’s weak land sales (9M16: 1.1ha) and low-margin construction business. However, severe market underperformance reflects value at this stage, hence our BUY rating. Risks: Infrastructure projects and Subang delays.

Financial highlights* Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Revenues (IDRbn) 4,464 4,868 4,651 4,998 5,304 EBIT (IDRbn) 535 558 544 607 636 Net profit (IDRbn) 415 334 267 279 327 Bahana/consensus (%) - - 82 81 79

EPS (IDR) 88 71 57 59 69 EPS growth (%) (39.9) (19.6) (20.0) 4.6 17.0 EV/EBITDA (x) 4.1 4.4 5.0 5.0 4.6 P/E (x) 6.3 7.8 9.8 9.4 8.0 FCFPS (IDR) (47) (29) (67) (104) (17) FCF yield (%) (8) (5) (12) (19) (3) BVPS (IDR) 558 618 661 709 766 P/BV (x) 1.0 0.9 0.8 0.8 0.7 DPS (IDR) 18 14 11 14 14 Div. yield (%) 3.2 2.6 2.0 2.5 2.5 Source: Company, Bahana estimates note: based on 23 November 2016 closing price

Share price performance

020,00040,00060,00080,000100,000120,000140,000160,000

500

550

600

650

700

750

23-Nov-15 23-Jan-16 23-Mar-16 23-May-16 23-Jul-16 23-Sep-16 23-Nov-16

('000)(IDR)

Volume (RHS) SSIA IJ Px Last

(35.9)

(1.5)

(10.8)

(22.5)(27.2)

(18.3)

(40)(35)(30)(25)(20)(15)(10)(5)0

(40)(35)(30)(25)(20)(15)(10)(5)0

ytd 1M 3M 6M 9M 12M

(%) (%)

SSIA IJ relative to JCI Source: Bloomberg Sanni Satrio Dwi Utomo ([email protected]) +6221 2505081 ext. 3611 *New, please refer to appendix II

NAV calculation NAV Table 2017F Land value (IDRbn) 1,617 (Based on 70% discount to NAV) Property value (IDRbn) 1,774 (Based on DCF) Construction business (IDRbn) 1,594 (Based on 14x 2017F P/E) Total Value (IDRbn) 4,986 NAV/share (IDR) 750 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 770/520 12M High/low consensus TP (IDR) : 1,400/650 Majority shareholder (%) : Arman Investment Utama (9.6) Shares outstanding (mn)/Free float (%) : 4,705/71.7 Mkt. cap. (IDRbn/USDmn) : 2,611/194 3-m avg.daily t.o.(IDRbn/USDmn) : 5.9/0.4 Bloomberg/Reuters code : SSIA IJ/SSIA.JK Source: Bloomberg, Reuters; based on 23 November 2016 closing price

2017 Compendium

317

SURYA SEMESTA INTERNUSA

Profit & loss Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FSales 4,464 4,868 4,651 4,998 5,304Gross profit 1,054 1,179 1,158 1,260 1,343EBITDA 668 695 682 748 781Depreciation 133 137 138 142 145 EBIT 535 558 544 607 636Net interest inc./(expense) (64) (111) (171) (221) (181) Forex gain/(losses) 6 45 (5) - - Other income/(expense) (34) 88 89 91 87 Pre-tax profit 671 579 456 476 542Taxes (158) (172) (130) (140) (149) Minority interest (98) (73) (59) (57) (67) Extraordinary gain/(losses) - - - - - Net profit 415 334 267 279 327Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018F Cash and equivalents 1,173 924 1,729 1,276 973 S-T investments - - - - - Trade receivables 470 421 434 477 536 Inventories 351 476 523 576 633 Fixed assets 1,688 1,754 1,916 2,074 2,229 Other assets 2,312 2,889 3,111 3,842 4,383 Total assets 5,993 6,464 7,714 8,245 8,754 Interest bearing liabilities 1,279 1,377 2,524 2,425 1,975 Trade payables 356 417 448 529 579 Other liabilities 1,349 1,333 1,161 1,438 2,024 Total liabilities 2,984 3,126 4,133 4,391 4,578 Minority interest 385 430 473 520 572 Shareholders' equity 2,624 2,908 3,108 3,334 3,604 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FEBIT 535 558 544 607 636 Depreciation 133 137 138 142 145 Working capital 279 (294) (142) 220 475 Other operating items (857) (297) (225) (337) (315) Operating cash flow 90 103 315 631 941Net capital expenditure (311) (237) (630) (1,120) (1,020) Free cash flow (221) (134) (315) (489) (79)Equity raised/(bought) 53 76 - - - Net borrowings 1 98 1,147 (100) (450) Other financing (352) (289) (26) 135 227 Net cash flow (520) (249) 806 (454) (302)Cash flow at beginning 1,692 1,173 924 1,729 1,276 Ending cash flow 1,173 924 1,729 1,276 973Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2014A 2015A 2016F 2017F 2018F ROAE (%) 16.9 12.1 8.9 8.7 9.4 ROAA (%) 7.0 5.4 3.8 3.5 3.8 Gross margin (%) 23.6 24.2 24.9 25.2 25.3 EBITDA margin (%) 15.0 14.3 14.7 15.0 14.7 EBIT margin (%) 12.0 11.5 11.7 12.1 12.0 Net margin (%) 9.3 6.9 5.7 5.6 6.2 Payout ratio (%) 20.2 20.0 20.0 20.0 20.0 Current ratio (x) 1.5 1.4 1.3 1.1 1.1 Interest coverage (x) 8.4 5.0 3.2 2.7 3.5 Net gearing (%) 4.1 15.6 25.6 34.5 27.8 Debtor turnover (days) 48 33 35 38 41 Creditor turnover (days) 38 38 40 40 42 Inventory turnover (days) - - - - - Source: Company, Bahana estimates

2017 Compendium

318

TAMBANG BUKIT ASAM BUY PX: IDR11,900 - TP: IDR14,130* Heading into 2017, Tambang Bukit Asam (PTBA), Indonesia’s largest coal

producing company in terms of reserves and resources, is aiming to significantly boost production to 43-45mt in 2019-2020. We think this is highly possible considering that Kereta Api Indonesia is in the process of completing double-track railway construction that could cut PTBA’s coal transporting days by 40-50% to 2-3 days.

Despite PTBA’s low exports relative to peers, it is still benefiting from China’s and Taiwan’s greater coal demand. At this stage, we believe that the coal seaborne market will on average improve on a y-y basis, allowing for higher ASPs of IDR686k/ton in 2017 and IDR687k/ton in 2018.

Our BUY rating is mainly driven by PTBA’s prospective performance coming into 2017; hence, we have a DCF-based 12M TP of IDR14,130 (WACC: 13.2%; TG: 1%). Risks to our call: Changes in China’s policy driving the market to oversupply conditions, and a stronger IDR.

Financial highlights* Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Revenues (IDRbn) 13,078 13,734 14,596 16,464 19,246 EBIT (IDRbn) 2,126 2,416 1,667 2,773 3,378 Net profit (IDRbn) 1,861 2,036 1,325 2,157 2,607 Bahana/consensus (%) 77 89 102

EPS (IDR) 808 884 575 936 1,131 EPS growth (%) 1.9 9.4 (34.9) 62.8 20.9 EV/EBITDA (x) 11.0 9.4 12.7 8.3 6.9 P/E (x) 14.7 13.5 20.7 12.7 10.5 FCFPS (IDR) (258) 253 58 134 490 FCF yield (%) (2.2) 2.1 0.5 1.1 4.1 BVPS (IDR) 3,649 3,982 4,357 4,816 5,280 P/BV (x) 3.3 3.0 2.7 2.5 2.3 DPS (IDR) 306 265 190 374 453 Div. yield (%) 2.6 2.2 1.6 3.1 3.8 Source: Company, Bahana estimates note: based on 23 November 2016 closing price

Share price performance

0

20,000

40,000

60,000

80,000

2,000

5,000

8,000

11,000

14,000

23-Nov-15 23-Jan-16 23-Mar-16 23-May-16 23-Jul-16 23-Sep-16 23-Nov-16

('000)(IDR)

Volume (RHS) PTBA IJ Px Last

149.5

2.8 24.0

75.3

116.9

85.2

0

50

100

150

200

0

50

100

150

200

ytd 1M 3M 6M 9M 12M

(%) (%)

PTBA IJ relative to JCI Source: Bloomberg Andrew Hotama ([email protected]) +6221 2505081 ext. 3619 *New, please refer to appendix II

Major assumptions Year to 31 Dec 2014A 2015A 2016F 2017F 2018F sales volume (mt) 18.0 19.2 22.0 24.0 28.0 Newcastle spot price (USD/ton) 70.8 57.8 55.0 57.5 57.5

Avg. selling price (IDR/ton) 726,915 709,261 663,468 685,980 687,353 Stripping ratio (x) 4.6 4.5 5.5 4.8 4.8 Avg. exchange rate (IDR/1USD) 11,875 13,494 13,500 13,500 13,500 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 13,775/4,150 12M High/low consensus TP (IDR) : 14,900/13,600 Majority shareholder (%) : Republic of Indonesia (65.0) Shares outstanding (mn)/Free float (%) : 2,304/35 Mkt. cap. (IDRbn/USDmn) : 27,419/2,016 3-m avg.daily t.o.(IDRbn/USDmn) : 48.2/3.6 Bloomberg/Reuters code : PTBA IJ /PTBA.JK Source: Bloomberg, Reuters; based on 23 November 2016 closing price

2017 Compendium

319

TAMBANG BUKIT ASAM

Profit & loss Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FSales 13,078 13,734 14,596 16,464 19,246Gross profit 3,922 4,140 3,506 4,782 5,688EBITDA 2,339 2,815 2,096 3,322 4,028Depreciation 213 399 428 548 649 EBIT 2,126 2,416 1,667 2,773 3,378Net interest inc./(expense) 219 115 (76) (113) (157) Forex gain/(losses) - - - - - Other income/(expense) 69 132 143 161 189 Pre-tax profit 2,414 2,664 1,734 2,821 3,410Taxes (550) (627) (407) (663) (801) Minority interest (3) (1) (1) (2) (2) Extraordinary gain/(losses) - - - - - Net profit 1,861 2,036 1,325 2,157 2,607Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018F Cash and equivalents 4,039 3,115 2,852 2,498 2,510 S-T investments - - - - - Trade receivables 1,439 1,596 1,493 1,999 1,830 Inventories 1,033 1,233 1,078 1,409 1,319 Fixed assets 6,746 8,582 9,994 11,812 13,825 Other assets 1,602 2,368 2,431 2,607 3,183 Total assets 14,861 16,894 17,849 20,325 22,667 Interest bearing liabilities 2,255 2,022 2,075 2,514 2,939 Trade payables 546 1,146 939 1,274 1,142 Other liabilities 3,535 4,438 4,671 5,318 6,302 Total liabilities 6,336 7,606 7,685 9,106 10,383 Minority interest 117 113 124 122 120 Shareholders' equity 8,408 9,175 10,040 11,097 12,164 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FEBIT 2,126 2,416 1,667 2,773 3,378 Depreciation 213 399 428 548 649 Working capital 219 394 79 (328) 323 Other operating items (408) 38 (309) (342) (380) Operating cash flow 2,150 3,247 1,866 2,652 3,971Net capital expenditure (2,745) (2,664) (1,733) (2,343) (2,842) Free cash flow (595) 583 133 308 1,129Equity raised/(bought) - - - - - Net borrowings 2,178 (233) 53 439 425 Other financing (887) (1,273) (449) (1,102) (1,542) Net cash flow 695 (924) (263) (354) 12Cash flow at beginning 3,344 4,039 3,115 2,852 2,498 Ending cash flow 4,039 3,115 2,852 2,498 2,510Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2014A 2015A 2016F 2017F 2018F ROAE (%) 23.1 22.9 13.8 20.4 22.2 ROAA (%) 14.0 12.8 7.6 11.3 12.1 EBITDA margin (%) 17.9 20.5 14.4 20.2 20.9 EBIT margin (%) 16.3 17.6 11.4 16.8 17.6 Net margin (%) 14.2 14.8 9.1 13.1 13.5 Payout ratio (%) 37.9 30.0 33.0 40.0 40.0 Current ratio (x) 2.1 1.5 1.5 1.3 1.2 Interest coverage (x) na na 21.8 24.5 21.5 Net gearing (%) nc nc nc 0.1 3.5 Debts to assets (%) 15.2 12.0 11.6 12.4 13.0 Debtor turnover (days) 20 32 34 34 34 Creditor turnover (days) 40 40 39 40 40 Inventory turnover (days) 39 43 42 41 41 Source: Company, Bahana estimates

2017 Compendium

320

TELEKOMUNIKASI INDONESIA BUY PX: IDR3,940- TP: IDR5,000 Given its 50% domestic cellular market share through 65%-owned

Telkomsel (35%-owned by Singtel), TLKM should benefit from higher ARPUs on data migration as we expect the Indonesian smartphone subscriber portion to rise from 45% in 6M16 to 90% in 2020.

Despite competition risks from outer Java areas, we believe TLKM will still be able to book solid revenue growth on a sustainable EBITDA margin. TLKM should also benefit from the continued expansion of its IndiHome triple-play business (cable, internet and fixed line), reaching 2017F subscribers of 3mn, allowing for additional revenue of IDR11tn.

At this stage, we expect continued outperformance for TLKM on strong data growth and stable EBITDA margins. Our DCF-based TP of IDR5,000 reflects a 2017F EV/EBITDA of 11.0x, around 30% premium to regional peers. Risks to our call: Lower-than-expected EBITDA margins on tougher-than-expected competition.

Financial highlights Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Revenues (IDRbn) 89,696 102,470 116,758 130,417 144,994 EBIT (IDRbn) 28,542 32,881 41,686 47,200 52,956 Net profit (IDRbn) 14,471 15,489 20,059 22,853 25,844 Bahana/consensus (%) - - 100 99 101

EPS (IDR) 144 154 199 227 256 EPS growth (%) 1.2 6.0 29.5 13.9 13.1 EV/EBITDA (x) 12.3 11.1 9.5 8.4 7.4 P/E (x) 27.4 25.6 19.8 17.4 15.4 FCFPS (IDR) 64 73 58 126 160 FCF yield (%) 1.6 1.9 1.5 3.2 4.1 BVPS (IDR) 672 745 857 955 1,064 P/BV (x) 5.9 5.3 4.6 4.1 3.7 DPS (IDR) 87 87 100 147 167 Div. yield (%) 2.2 2.2 2.5 3.7 4.2 Source: Company, Bahana estimates Note: based on 23 November 2016 closing price

Share price performance

0

100,000

200,000

300,000

400,000

2,500

3,000

3,500

4,000

4,500

5,000

23-Nov-15 23-Jan-16 23-Mar-16 23-May-16 23-Jul-16 23-Sep-16 23-Nov-16

('000)(IDR)

Volume (RHS) TLKM IJ Px Last

14.0

(2.8) (2.8) (3.7)

10.9

26.6

(10)

0

10

20

30

(10)

0

10

20

30

ytd 1M 3M 6M 9M 12M

(%) (%)

TLKM IJ relative to JCI Source: Bloomberg Leonardo Henry Gavaza, CFA ([email protected]) +6221 2505081 ext. 3608 *New, please refer to appendix II

Major assumptions Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Subscribers (‘000) 140,585 152,640 166,378 170,537 174,800 Net additional (‘000) 9,073 12,055 13,738 4,159 4,263 ARPU (IDR’000/month) 39 43 45 47 51 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 4,570/2,837 12M High/low consensus TP (IDR) : 5,200/3,200 Majority shareholder (%) : Republic of Indonesia (51.2) Shares outstanding (mn)/Free float (%) : 100,800/48.8 Mkt. cap. (IDRbn/USDmn) : 397,152/29,456 3-m avg.daily t.o.(IDRbn/USDmn) : 384.6/28.5 Bloomberg/Reuters code : TLKM IJ/TLKM.JK Source: Bloomberg, Reuters; based on 23 November 2016 closing price

2017 Compendium

321

TELEKOMUNIKASI INDONESIA

Profit & loss Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FSales 89,696 102,470 116,758 130,417 144,994Gross profit - - - - -EBITDA 45,673 51,415 60,060 67,486 75,270Depreciation 17,131 18,534 18,373 20,286 22,314 EBIT 28,542 32,881 41,686 47,200 52,956Net interest inc./(expense) (576) (1,074) (1,067) (1,076) (850) Forex gain/(losses) (14) (46) (81) - - Other income/(expense) 661 (419) (419) (419) (419) Pre-tax profit 28,613 31,342 40,119 45,705 51,688Taxes (7,339) (8,025) (10,030) (11,426) (12,922) Minority interest (6,803) (7,828) (10,030) (11,426) (12,922) Extraordinary gain/(losses) - - - - - Net profit 14,471 15,489 20,059 22,853 25,844Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018F Cash and equivalents 17,672 28,117 27,037 27,870 30,531 S-T investments 2,797 2,818 3,269 3,652 4,060 Trade receivables 6,997 7,517 14,595 16,302 18,124 Inventories 474 528 626 693 767 Fixed assets 94,809 103,700 113,750 123,423 132,622 Other assets 19,073 23,493 24,220 27,053 30,077 Total assets 141,822 166,173 183,497 198,993 216,181 Interest bearing liabilities 23,452 34,612 33,612 32,612 31,612 Trade payables 12,362 13,994 13,698 14,649 15,651 Other liabilities 20,016 24,139 28,495 31,828 35,386 Total liabilities 55,830 72,745 75,804 79,089 82,648 Minority interest 18,271 18,292 21,277 23,676 26,314 Shareholders' equity 67,721 75,136 86,416 96,228 107,219 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FEBIT 28,542 32,881 41,686 47,200 52,956 Depreciation 17,131 18,534 18,373 20,286 22,314 Working capital (174) 1,058 (7,472) (824) (894) Other operating items (14,389) (18,694) (19,194) (24,921) (27,662) Operating cash flow 31,110 33,779 33,394 41,742 46,714Net capital expenditure (24,667) (26,401) (27,500) (29,037) (30,590) Free cash flow 6,443 7,378 5,894 12,705 16,125Equity raised/(bought) 576 36 - - -

Net borrowings 3,196 11,160 (1,000) (1,000) (1,000)

Other financing (7,239) (8,129) (5,974) (10,871) (12,464) Net cash flow 2,976 10,445 (1,080) 833 2,661Cash balances, beginning 14,696 17,672 28,117 27,037 27,870 Ending cash 17,672 28,117 27,037 27,870 30,531Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2014A 2015A 2016F 2017F 2018F ROAE (%) 22.7 21.7 24.8 25.0 25.4 ROAA (%) 10.7 10.1 11.5 11.9 12.4 EBITDA margin (%) 50.9 50.2 51.4 51.7 51.9 EBIT margin (%) 31.8 32.1 35.7 36.2 36.5 Net margin (%) 16.1 15.1 17.2 17.5 17.8 Payout ratio (%) 60.7 56.7 50.2 65.0 65.0 Current ratio (x) 1.1 1.4 1.4 1.4 1.4 Interest coverage (x) 49.6 30.6 39.1 43.9 62.3 Net gearing (%) 8.5 8.6 7.6 4.9 1.0 Debts to assets (%) 16.5 20.8 18.3 16.4 14.6 Debtor turnover (days) 29 27 36 45 45 Creditor turnover (days) 75 70 68 63 61 Inventory turnover (days) 3 3 3 3 3 Source: Company, Bahana estimates

2017 Compendium

322

TEMPO SCAN PACIFIC REDUCE* PX: IDR2,000 - *TP: IDR1,700 TSPC, one of Indonesia’s largest listed pharmaceutical companies, is

experiencing heavy burden on advertising and promotion spending to boost its pharmaceutical and nutrition product variants. As of 9M16, A&P spending stood at 15% of sales, up from 13.7% in 9M15. Unfortunately, the surge in A&P (23% y-y) was not accompanied by stronger revenue growth (13% y-y), resulting in margin pressure.

Going forward, we are of the view that its new nutrition segment, under “Vidoran“ brand could be one of TSPC’s long-term growth drivers aside from its pharmaceutical segment, which is supported by the government’s national health care insurance program (JKN).

With the company’s operating challenges, we downgrade TSPC to REDUCE with TP a of IDR1,700 based on 5-year average historical PE of 15.5x 2017F PE, reflecting a 62% discount to the sector. Upside risk is higher-than-expected nutrition growth.

Financial highlights Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Revenues (IDRbn) 7,512 8,181 8,962 9,841 10,807 EBIT (IDRbn) 632 654 638 624 623 Net profit (IDRbn) 581 522 508 492 486 Bahana/consensus (%) - - 71.5 69.3 68.4

EPS (IDR) 129 116 113 109 108 EPS growth (%) (8.5) (10.1) (2.7) (3.1) (1.3) EV/EBITDA (x) 10.3 9.3 9.7 9.8 9.7 P/E (x) 15.5 17.2 17.7 18.3 18.5 FCFPS (IDR) 40 51 45 56 57 FCF yield (%) 2.0 2.6 2.2 2.8 2.8 BVPS (IDR) 897 953 1,000 1,110 1,218 P/BV (x) 2.2 2.1 2.0 1.8 1.6 DPS (IDR) 75 64 66 64 63 Div. yield (%) 3.8 3.2 3.3 3.2 3.1 Source: Company, Bahana estimates note: based on 23 November 2016 closing price

Share price performance

0

500

1,000

1,500

2,000

2,500

3,000

1,500

1,700

1,900

2,100

2,300

2,500

23-Nov-15 23-Jan-16 23-Mar-16 23-May-16 23-Jul-16 23-Sep-16 23-Nov-16

('000)(IDR)

Volume (RHS) TSPC IJ Px Last

0.8

(3.8)(5.7) (6.5)

2.3 4.3

(8)(6)(4)(2)0246

(8)(6)(4)(2)0246

ytd 1M 3M 6M 9M 12M

(%) (%)

TSPC IJ relative to JCI Source: Bloomberg Renaldy Effendy ([email protected]) +6221 2505081 ext. 3606 *New, please refer to appendix II

Major assumptions Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Indo pharma. sales (USDbn) 4.6 4.9 5.9 6.6 7.4 Sales growth (%) 14.7 3.4 8.4 10.9 10.9 Gross margin (%) 37.5 39.7 39.2 39.7 40.0 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 2,380/1,625 12M high/low consensus TP (IDR) : 2,900/2,000Majority shareholder (%) : Bogamulia Nagadi (78.3) Shares outstanding (mn)/Free float (%) : 4,500/21.7 Mkt. cap. (IDRbn/USDmn) : 9,000/668 3-m avg.daily t.o.(IDRbn/USDmn) : 0.6/0.04 Bloomberg/Reuters code : TSPC IJ/TSPC.JK Source: Bloomberg, Reuters; based on 23 November 2016 closing price

2017 Compendium

323

TEMPO SCAN PACIFIC

Profit & loss Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FSales 7,512 8,181 8,962 9,841 10,807Gross profit 2,940 3,118 3,381 3,636 3,931EBITDA 741 787 801 810 832Depreciation 109 134 163 186 209 EBIT 632 654 638 624 623Net interest inc./(expense) 78 68 63 56 48 Forex gain/(losses) - - - - - Other income/(expense) 28 (14) (11) (9) (7) Pre-tax profit 738 707 690 671 664Taxes (153) (178) (174) (169) (167) Minority interest (5) (7) (8) (10) (11) Extraordinary gain/(losses) - - - - - Net profit 581 522 508 492 486Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018F Cash and equivalents 1,460 1,736 1,268 1,097 936 S-T investments - - - - - Trade receivables 840 923 1,120 1,230 1,351 Inventories 1,056 1,233 1,361 1,513 1,677 Fixed assets 1,554 1,617 1,865 2,085 2,277 Other assets 699 776 628 917 1,209 Total assets 5,610 6,285 6,242 6,842 7,451 Interest bearing liabilities 89 87 70 56 46 Trade payables 818 1,300 1,063 1,182 1,310 Other liabilities 621 561 554 551 551 Total liabilities 1,527 1,948 1,687 1,789 1,906 Minority interest 46 48 54 59 65 Shareholders' equity 4,037 4,289 4,501 4,994 5,480 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FEBIT 632 654 638 624 623 Depreciation 109 134 163 186 209 Working capital (158) (133) (179) (137) (154) Other operating items (2) 0 3 3 3 Operating cash flow 581 655 626 676 681Net capital expenditure (400) (425) (425) (425) (425) Free cash flow 181 230 201 251 256Equity raised/(bought) - - - - - Net borrowings (96) (2) (17) (14) (11) Other financing (417) 48 (652) (408) (405) Net cash flow (332) 276 (468) (171) (160)Cash flow at beginning 1,792 1,460 1,736 1,268 1,097 Ending cash flow 1,460 1,736 1,268 1,097 936Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2014A 2015A 2016F 2017F 2018F ROAE (%) 14.8 12.5 11.6 10.4 9.3 ROAA (%) 10.5 8.8 8.1 7.5 6.8 Gross margin (%) 39.1 38.1 37.7 36.9 36.4 EBITDA margin (%) 9.9 9.6 8.9 8.2 7.7 EBIT margin (%) 8.4 8.0 7.1 6.3 5.8 Net margin (%) 7.7 6.4 5.7 5.0 4.5 Payout ratio (%) 58.1 58.1 40.0 40.0 40.0 Current ratio (x) 3.0 2.5 2.8 2.6 2.5 Interest coverage (x) na na na na na Net gearing (%) nc nc nc nc nc Debtor turnover (days) 43 44 46 46 46 Creditor turnover (days) 63 66 70 70 70 Inventory turnover (days) 81 86 89 89 89 Source: Company, Bahana estimates

2017 Compendium

324

TIMAH BUY* PX: IDR1,250 – TP: IDR1,460* We believe the tin price uptrend will continue to benefit the world’s largest

tin exporter, TINS; we forecast tin prices of USD21,179/t and USD21,062/t in 2017F and 2018F respectively. Moreover, we are of the view that numerous illegal mining shutdowns by the local government have helped reduce the tin surplus, likely supporting prices ahead.

We target TINS’ 2017F net profit to reach IDR378bn, +306% y-y, backed by higher tin prices and increased efficiencies through the application of the new “borehole” mining technology allowing for smaller waste from refined tin production. In the next 5 years, earnings support should stem from a higher non-tin segment portion of 30% (current: 5%).

Given our new DCF-based (WACC: 12%; LTG: 1.5%) TP of IDR1,460/ share, showing a 17% upside potential, TINS is now raised from Reduce to BUY. Risks to our call: tin mining not being strictly regulated, leading to a rise in illegal activities, and global tin production far exceeding demand.

Financial highlights* Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Revenues (IDRbn) 7,518 6,874 6,840 7,863 7,961 EBIT (IDRbn) 963 81 91 500 357 Net profit (IDRbn) 673 102 93 378 291 Bahana/consensus (%) 57 125 88

EPS (IDR) 90 14 13 51 39 EPS growth (%) 10.4 (84.9) (7.9) 304.5 (23.0) EV/EBITDA (x) 8.5 18.7 18.5 10.6 11.6 P/E (x) 13.8 91.7 99.6 24.6 32.0 FCFPS (IDR) (88.8) (53.6) 65 24 45 FCF yield (%) (7.1) (4.3) 5.2 1.9 3.6 BVPS (IDR) 604 721 738 804 854 P/BV (x) 2.1 1.7 1.7 1.6 1.5 DPS (IDR) 38 26 4 15 12 Div. yield (%) 3.0 2.1 0.3 1.2 0.9 Source: Company, Bahana estimates note: based on 23 November 2016 closing price

Share price performance

020,00040,00060,00080,000100,000120,000140,000

350500650800950

1,1001,2501,4001,550

23-Nov-15 23-Jan-16 23-Mar-16 23-May-16 23-Jul-16 23-Sep-16 23-Nov-16

('000)(IDR)

Volume (RHS) TINS IJ Px Last

134.0

67.0 51.7

81.0

111.2 121.1

0

50

100

150

0

50

100

150

ytd 1M 3M 6M 9M 12M

(%) (%)

TINS IJ relative to JCI Source: Bloomberg Andrew Hotama ([email protected]) +6221 2505081 ext. 3619 *New, please refer to appendix II

Major assumptions Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Refined tin sales voume (mt) 26,907 30,087 28,000 29,000 30,000 Refined tin ASP (USD/mt) 21,686 16,186 18,506 21,179 21,062 Oil price (USD/barrel) 95 62 44 55 62 Source: Company, Bahana estimates Company information 12M high/low (IDR) : 1,285/451 12M High/low consensus TP (IDR) : 850/510 Majority shareholder (%) : Republic of Indonesia (65.0) Shares outstanding (mn)/Free float (%) : 7,448/35.0 Mkt. cap. (IDRbn/USDmn) : 9,310/685 3-m avg.daily t.o.(IDRbn/USDmn) : 28.4/2.1 Bloomberg/Reuters code : TINS IJ/TINS.JK Source: Bloomberg, Reuters; based on 23 November 2016 closing price

2017 Compendium

325

TIMAH

Profit & loss Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FSales 7,518 6,874 6,840 7,863 7,961Gross profit 1,615 686 754 1,137 1,006EBITDA 1,326 583 562 956 838Depreciation 363 501 471 456 481 EBIT 963 81 91 500 357Net interest inc./(expense) (95) (121) (109) (100) (96) Forex gain/(losses) - - - - - Other income/(expense) 157 207 162 182 187 Pre-tax profit 1,025 168 144 582 448Taxes (352) (67) (50) (204) (157) Minority interest - - - - - Extraordinary gain/(losses) - - - - - Net profit 673 102 93 378 291Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018F Cash and equivalents 346 497 341 530 904 S-T investments - - - - - Trade receivables 1,484 483 487 560 567 Inventories 3,384 3,102 3,051 3,372 3,487 Fixed assets 3,005 3,522 3,729 3,521 3,264 Other assets 1,624 1,674 1,655 1,751 1,892 Total assets 9,844 9,280 9,263 9,735 10,114 Interest bearing liabilities 2,334 2,115 1,450 1,350 1,300 Trade payables 851 583 717 792 819 Other liabilities 2,159 1,211 1,604 1,608 1,632 Total liabilities 5,344 3,909 3,771 3,750 3,752 Minority interest - - - - - Shareholders' equity 4,500 5,371 5,492 5,985 6,362 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FEBIT 963 81 91 500 357 Depreciation 363 501 471 456 481 Working capital (997) 1,015 181 (318) (95) Other operating items (360) (978) 418 (215) (183) Operating cash flow (30) 619 1,161 423 560Net capital expenditure (631) (1,018) (681) (247) (224) Free cash flow (661) (399) 480 175 336Equity raised/(bought) 121 - - - - Net borrowings 979 (220) (665) (100) (50) Other financing (706) 770 28 113 87 Net cash flow (267) 151 (156) 189 373Cash flow at beginning 614 346 497 341 530 Ending cash flow 346 497 341 530 904Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2014A 2015A 2016F 2017F 2018F ROAE (%) 15.1 2.1 1.7 6.6 4.7 ROAA (%) 7.4 1.1 1.0 4.0 2.9 EBITDA margin (%) 17.6 8.5 8.2 12.2 10.5 EBIT margin (%) 12.8 1.2 1.3 6.4 4.5 Net margin (%) 9.0 1.5 1.4 4.8 3.7 Payout ratio (%) 47 28 30 30 30 Current ratio (x) 1.8 1.8 2.0 2.3 2.5 Interest coverage (x) 10.1 0.7 0.8 5.0 3.7 Net gearing (%) 44.2 30.1 20.2 13.7 6.2 Debts to assets (%) 23.7 22.8 15.7 13.9 12.9 Debtor turnover (days) 53 34 43 43 43

Creditor turnover (days) 72 26 26 26 26

Inventory turnover (days) 209 183 183 183 183 Source: Company, Bahana estimates

2017 Compendium

326

TIPHONE MOBILE INDONESIA BUY

2008APX: IDR725 - TP: IDR880*

TELE, the largest Telkomsel (TSEL) pre-paid card and voucher distributor, should continue to lead the traditional market segment. Recent cluster re-arrangement and utilization of machine-to-machine (M2M) distribution system should not only boost revenue, but also create a more sustainable revenue stream, despite lower margins.

Capitalizing on GO-Jek’s wide scope (+200k drivers in 10 cities), TELE collaborates with drivers to market & sell its vouchers. Additional potential growth would likely stem from TSEL’s handset, in particular BB Merah Putih bundling programs in the near future.

Looking ahead, TELE should benefit from sustainable growth on the back of rising voucher contribution due to higher market share and solid TSEL’s performance. We maintain our BUY rating on TELE with DCF-based TP of IDR880 reflecting 2017F PE of 11.3x, supported by its strong growth outlook. Risk: Slow purchasing power recovery.

Financial highlights Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Revenues (IDRbn) 14,590 22,040 26,697 30,831 33,970 EBIT (IDRbn) 516 749 890 987 1,089 Net profit (IDRbn) 311 370 456 559 633 Bahana/consensus (%) - 99.7 102.6 103.8

EPS (IDR) 44 53 64 78 89 EPS growth (%) 5.5 19.1 21.7 22.5 13.3 EV/EBITDA (x) 11.7 9.5 8.7 8.1 7.4 P/E (x) 16.4 13.8 11.3 9.2 8.2 FCFPS (IDR) (139) (128) (65) (12) 18 FCF yield (%) (19.1) (17.7) (9.0) (1.7) 2.4 BVPS (IDR) 355 400 451 520 597 P/BV (x) 2.0 1.8 1.6 1.4 1.2 DPS (IDR) - 10 8 10 12 Div. yield (%) - 1.4 1.1 1.3 1.6 Source: Company, Bahana estimates note: based on 23 November 2016 closing price

Share price performance

Source: Bloomberg Richard Danusaputra ([email protected]) +6221 2505081 ext. 3608 *New, please refer to appendix II

Major assumptions Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Vouchers and starter kit (IDRbn) 8,799 14,605 20,629 24,052 26,395 Cellphones (IDRbn) 5,426 7,432 6,066 6,777 7,572 Telkomsel market share (%) 13 13 21 30 33 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 975/495 12M High/low consensus TP (IDR) : 1,160/900 Majority shareholder (%) : Upaya Cipta Sejahtera (38.8) Shares outstanding (mn)/Free float (%) : 7,124/23.0 Mkt. cap. (IDRbn/USDmn) : 5,165/383 3-m avg.daily t.o.(IDRbn/USDmn) : 7.3/0.6 Bloomberg/Reuters code : TELE IJ/TELE.JK Source: Bloomberg, Reuters; based on 23 November 2016 closing price

2017 Compendium

327

TIPHONE MOBILE INDONESIA

Profit & loss Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FSales 14,590 22,040 26,697 30,831 33,970Gross profit 819 1,208 1,456 1,652 1,835EBITDA 533 782 927 1,032 1,141Depreciation 17 31 39 46 51 EBIT 516 749 890 986 1,090Net interest inc./(expense) (122) (262) (369) (357) (365) Forex gain/(losses) 1 (13) (34) - - Other income/(expense) 25 27 130 137 143 Pre-tax profit 420 501 617 766 868Taxes 109 130 160 207 234 Minority interest - - - - - Extraordinary gain/(losses) - - - - - Net profit 311 370 456 559 633Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018F Cash and equivalents 638 1,173 556 317 301 S-T investments 1,642 2,274 2,926 3,294 3,630 Trade receivables 383 155 - - - Inventories 949 1,894 2,282 2,558 2,729 Fixed assets 145 164 187 200 196 Other assets 1,261 1,470 1,781 2,056 2,266 Total assets 5,018 7,129 7,732 8,426 9,123 Interest bearing liabilities 1,753 3,456 3,477 3,499 3,523 Trade payables 673 671 813 959 1,056 Other liabilities 93 186 226 261 287 Total liabilities 2,518 4,313 4,516 4,720 4,867 Minority interest 1 2 1 1 1 Shareholders' equity 2,499 2,814 3,215 3,705 4,255 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FEBIT 516 749 890 987 1,089 Depreciation 17 31 39 46 51 Working capital (1,302) (1,298) (896) (634) (512) Other operating items (199) (334) (433) (428) (456) Operating cash flow (969) (852) (401) (29) 173Net capital expenditure (7) (50) (62) (58) (48) Free cash flow (976) (902) (463) (87) 125Equity raised/(bought) 807 11 - - - Net borrowings 277 1,703 21 22 23 Other financing 37 (277) (174) (174) (164) Net cash flow 145 535 (616) (239) (16)Cash at beginning 493 638 1,173 556 317 Ending cash balance 638 1,173 556 317 301Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2014A 2015A 2016F 2017F 2018F ROAE (%) 16.0 13.9 15.1 16.2 15.9 ROAA (%) 7.3 6.1 6.1 6.9 7.2 Gross margin (%) 5.6 5.5 5.5 5.4 5.4 EBITDA margin (%) 3.6 3.5 3.5 3.3 3.4 EBIT margin (%) 3.5 3.4 3.3 3.2 3.2 Net margin (%) 2.1 1.7 1.7 1.8 1.9 Payout ratio (%) - 22.9 15.0 15.0 15.0 Current ratio (x) 1.8 5.1 4.7 4.5 4.5 Interest coverage (x) 4.2 2.9 2.4 2.8 3.0 Net gearing (%) 44.6 81.1 90.9 85.9 75.7 Debtor turnover (days) 18 12 12 12 12 Creditor turnover (days) 51 40 40 39 39 Inventory turnover (days) 25 33 33 32 31

Source: Company, Bahana estimates

2017 Compendium

328

TOTAL BANGUN PERSADA BUY PX: IDR760 - *TP: IDR1,125 TOTL, the smallest construction player under our coverage, is one of

the most renowned private contractors for high-rise buildings. We expect TOTL, which has solid project execution, to continue booking strong new contracts (2017F: IDR4tn, +33% y-y).

In 2017, TOTL plans to focus on office and commercial projects, where it has abundant experience, such as in the current development of Living World, Pekan Baru and Menara Astra, Jakarta. Other growth potential should stem from demand in the residential sector (around 52% of TOTL’s 2Q16 revenue) on an economic turnaround in 2017.

On valuation, our 12M TP of IDR1,125 is based on a 2017F PE of 15x, a 25% discount to the sector due to TOTL’s smaller market cap. Retain BUY on TOTL’s proven track record and management team as well as a solid dividend yield (2017F: 5.3%). Risk to our call include IDR depreciation causing high costs and project delays.

Financial highlights Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Revenues (IDRbn) 2,106 2,266 2,515 3,142 3,926 EBIT (IDRbn) 177 229 264 298 374 Net profit (IDRbn) 164 191 210 257 318 Bahana/cons.(%) - - 98 97 97

EPS (IDR) 48 56 62 75 93 EPS growth (%) (15.7) 16.8 9.8 22.4 23.7 EV/EBITDA (x) 10.9 7.4 6.4 5.4 4.2 P/E (x) 15.8 13.6 12.3 10.1 8.1 FCFPS (IDR) 120 80 50 57 65 FCF yield (%) 15.7 10.6 6.6 7.5 8.5 BVPS (IDR) 234 249 270 306 350 P/BV (x) 3.2 3.1 2.8 2.5 2.2 DPS (IDR) 35 30 40 40 49 Div. yield (%) 4.6 3.9 5.3 5.3 6.5 Source: Company, Bahana estimates Note: based on 23 November 2016 closing price

Share price performance

0

20,000

40,000

60,000

80,000

100,000

500

600

700

800

900

23-Nov-15 23-Jan-16 23-Mar-16 23-May-16 23-Jul-16 23-Sep-16 23-Nov-16

('000)(IDR)

Volume (RHS) TOTL IJ Px Last

10.1

(8.5) (8.9)

2.7

23.7

2.1

(20)

(10)

0

10

20

30

(20)

(10)

0

10

20

30

ytd 1M 3M 6M 9M 12M

(%) (%)

TOTL IJ relative to JCISource: Bloomberg Leonardo Henry Gavaza ([email protected]) +6221 2505735 ext.3608 *New, please refer to appendix II

Major assumptions Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Carried over (IDRbn) 4,242 5,706 5,978 6,476 7,349 New contracts (IDRbn) 3,570 2,177 3,000 4,000 4,500 New contracts growth (%) 82.5 (39.0) 37.8 33.3 12.5 Total order books (IDRbn) 7,812 7,883 8,978 10,476 11,849 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 920/545 12M high/low consensus TP (IDR) : 1,340/940Majority shareholder (%) : Total Inti Persada (56.5) Shares outstanding (mn)/Free float (%) : 3,410/34.8 Mkt. cap. (IDRbn/USDmn) : 2,592/192 3-m avg.daily t.o.(IDRbn/USDmn) : 2.8/0.2 Bloomberg/Reuters code : TOTL IJ/TOTL.JK Source: Bloomberg, Reuters based on 23 November 2016 closing price

2017 Compendium

329

TOTAL BANGUN PERSADA

Profit & loss Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FSales 2,106 2,266 2,515 3,142 3,926Gross profit 330 405 478 544 680EBITDA 184 250 288 324 401Depreciation 7 22 24 25 27 EBIT 177 229 264 298 374Net interest inc./(expense) 37 54 45 46 52 Forex gain/(losses) (3) 14 9 - - Other income/(expense) 30 (33) (25) 15 21 Pre-tax profit 241 197 293 361 448Taxes (77) (6) (83) (104) (130) Minority interest (0) (0) (0) (0) (0) Extraordinary gain/(losses) - - - - - Net profit 164 191 210 257 318Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018F Cash and equivalents 579 733 741 834 922 S-T investments 67 76 83 86 88 Trade receivables 418 351 379 473 592 Inventories - 6 14 18 22 Fixed assets 71 194 203 211 216 Other assets 1,348 1,486 1,506 1,606 1,724 Total assets 2,484 2,846 2,926 3,228 3,564 Interest bearing liabilities - 40 - - - Trade payables 70 156 159 203 254 Other liabilities 1,615 1,785 1,827 1,964 2,098 Total liabilities 1,685 1,980 1,987 2,167 2,352 Minority interest 2 18 18 18 18 Shareholders' equity 797 849 922 1,043 1,194 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FEBIT 177 229 264 298 374 Depreciation 7 22 24 25 27 Working capital 191 79 (1) (146) (176) Other operating items 35 75 (65) 55 34 Operating cash flow 411 405 221 232 258Net capital expenditure (3) (131) (51) (37) (38) Free cash flow 408 274 170 194 220Equity raised/(bought) - - - - - Net borrowings (93) 40 (40) - - Other financing (284) (159) (123) (102) (132) Net cash flow 31 154 8 93 89Cash balances, beginning 548 579 733 741 834 Ending cash 579 733 741 834 922Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2014A 2015A 2016F 2017F 2018F ROAE (%) 21.1 23.2 23.7 26.2 28.4 ROAA (%) 7.0 7.2 7.3 8.4 9.4 Gross margin (%) 14.6 15.1 17.4 15.7 15.7 EBITDA margin (%) 8.7 11.0 11.4 10.3 10.2 EBIT margin (%) 8.4 10.1 10.5 9.5 9.5 Net margin (%) 7.8 8.4 8.4 8.2 8.1 Payout ratio (%) 72.9 53.5 64.9 53.1 52.5 Current ratio (x) 1.3 1.3 1.3 1.3 1.4 Interest coverage (x) na na na na na Net gearing (%) nc nc nc nc nc Debtor turnover (days) 58 64 55 55 55 Creditor turnover (days) 16 22 28 28 28 Inventory turnover (days) 15 1 2 2 2 Source: Company, Bahana estimates

2017 Compendium

330

TOWER BERSAMA INFRASTRUCTURE REDUCE PX: IDR5,750 - TP: IDR5,100* As one of Indonesia’s largest independent tower provider, with 13,067

towers and 20,969 tenants (as of 1H16) and a tenancy ratio of 1.65x, TBIG, due to its limited financial flexibility is planning to focus on organic growth, going forward.

However, this strategy has limited prospect, in our view as operators have the propensity to avoid using third-party tower providers for most of their tower requirements. On the EBITDA front, TBIG may see limited margin improvement due to our expectation of relatively flat ASP in 2017F on subdued inflation outlook.

On valuation we maintain our REDUCE rating given 2017F EV/EBITDA of 13.7x, a 20% premium to its local peers and limited growth potential. Our 12M TP of IDR5,100 is based on 2017F EV/EBITDA of 12.2x. Upside risks: Faster-than-expected growth in smartphone penetration, leading to robust 4G network demand from operators.

Financial highlights* Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Revenues (IDRbn) 3,307 3,421 3,805 4,169 4,529 EBIT (IDRbn) 2,505 2,661 2,972 3,257 3,537 Net profit (IDRbn) 1,301 1,430 1,374 1,559 1,694 Bahana/consensus (%) - - 108 105 97 EPS (IDR) 271 298 286 325 353 EPS growth (%) 4.3 9.9 (3.9) 13.5 8.7 EV/EBITDA (x) 15.7 15.7 14.5 13.7 12.7 P/E (x) 21.2 19.3 20.1 17.7 16.3 FCFPS (IDR) (216) 24 (162) (53) (45) FCF yield (%) (3.8) 0.4 (2.8) (0.9) (0.8) BVPS (IDR) 830 319 548 625 932 P/BV (x) 6.9 18.0 10.5 9.2 6.2 DPS (IDR) 60 - 55 49 53 Div. yield (%) 1.0 - 0.9 0.8 0.9 Source: Company, Bahana estimates note: based on 23 November 2016 closing price

Share price performance

0

5,000

10,000

15,000

20,000

25,000

5,000

5,500

6,000

6,500

7,000

23-Nov-15 23-Jan-16 23-Mar-16 23-May-16 23-Jul-16 23-Sep-16 23-Nov-16

('000)(IDR)

Volume (RHS) TBIG IJ Px Last

(15.6)

(2.6)

3.2

(22.4)

(7.9)

(29.8)(40)

(30)

(20)

(10)

0

10

(40)

(30)

(20)

(10)

0

10

ytd 1M 3M 6M 9M 12M

(%) (%)

TBIG IJ relative to JCI Source: Bloomberg Gilang Purnama ([email protected]) +6221 2505081 ext. 3601 *New, please refer to appendix II

Major assumptions Year to 31 Dec 2014A 2015A 2016F 2017F 2018F ASP (IDR mn) 173 173 177 180 183 Tower sites (unit) 11,820 12,389 13,380 14,384 15,390 Collocation (x) 1.6 1.6 1.6 1.6 1.6 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 7,000/5,275 12M High/low consensus TP (IDR) : 7,200/4,550 Majority shareholder (%) : Wahana Anugerah Sejahtera (21.1) Share outstanding (mn)/Free float (%) : 4,797/50.9 Mkt. cap. (IDRbn/USDmn) : 27,580/2,046 3-m avg.daily t.o.(IDRbn/USDmn) : 15.8/1.2 Bloomberg/Reuters code : TBIG IJ/TBIG.JK Source: Bloomberg, Reuters; based on 23 November 2016 closing price

2017 Compendium

331

TOWER BERSAMA INFRASTRUCTURE

Profit & loss Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FSales 3,307 3,421 3,805 4,169 4,529Gross profit 2,797 2,972 3,319 3,640 3,954EBITDA 2,717 2,911 3,237 3,546 3,853Depreciation 212 250 265 289 316 EBIT 2,505 2,661 2,972 3,257 3,537Net interest inc./(expense) (972) (1,465) (1,523) (1,582) (1,610) Forex gain/(losses) (192) (45) 10 - - Other income/(expense) 89 (61) (7) (7) (7) Pre-tax profit 1,431 1,089 1,452 1,669 1,921Taxes (58) 356 (58) (67) (192) Minority interest (71) (15) (20) (43) (34) Extraordinary gain/(losses) - - - - - Net profit 1,301 1,430 1,374 1,559 1,694Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018F Cash and equivalents 901 296 334 317 311 S-T investments 2 1 1 1 1 Trade receivables 491 482 761 834 906 Inventories 404 307 463 510 556 Fixed assets 15,515 16,654 18,284 19,920 21,649 Other assets 4,722 5,060 5,662 6,149 6,631 Total assets 22,034 22,799 25,506 27,731 30,054 Interest bearing liabilities 16,062 18,480 19,680 21,230 21,780 Trade payables 178 193 302 333 363 Other liabilities 1,663 2,536 2,851 3,124 3,395 Total liabilities 17,903 21,209 22,834 24,687 25,538 Minority interest 150 61 45 48 45 Shareholders' equity 3,981 1,530 2,628 2,996 4,471 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FEBIT 2,505 2,661 2,972 3,257 3,537 Depreciation 212 250 265 289 316 Working capital 69 10 (411) (110) (109) Other operating items (2,108) (1,842) (2,131) (2,211) (2,382) Operating cash flow 678 1,080 694 1,225 1,361Net capital expenditure (1,714) (966) (1,469) (1,480) (1,578) Free cash flow (1,036) 114 (775) (255) (217)Equity raised/(bought) (555) (669) - - - Net borrowings 3,081 3,639 1,337 1,680 679 Other financing (1,237) (3,688) (524) (1,442) (468) Net cash flow 253 (604) 38 (17) (7)Cash balances, beginning 647 901 296 334 317 Ending cash 901 296 334 317 311Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2014A 2015A 2016F 2017F 2018F ROAE (%) 32.7 51.9 66.1 55.4 45.4 ROAA (%) 6.4 6.4 5.7 5.9 5.9 EBITDA margin (%) 82.2 85.1 85.1 85.1 85.1 EBIT margin (%) 75.8 77.8 78.1 78.1 78.1 Net margin (%) 39.4 41.8 36.1 37.4 37.4 Payout ratio (%) 22.1 - 19.1 15.0 15.0 Current ratio (x) 0.3 1.4 1.6 1.5 1.5 Interest coverage (x) 2.6 1.8 2.0 2.1 2.2 Net gearing (%) 380.9 1,188.5 736.1 698.0 480.2 Debts to assets (%) 72.9 81.1 77.2 76.6 72.5 Debtor turnover (days) 66 33 56 101 101 Creditor turnover (days) 62 76 96 112 112 Inventory turnover (days) 506 359 487 487 487 Source: Company, Bahana estimates

2017 Compendium

332

TUNAS BARU LAMPUNG BUY *PX: IDR920 - TP: IDR1,475 TBLA, the beneficiary of a 4mn-ton structural deficit within the

domestic sugar industry, should see strong profit growth to IDR853bn, +39% y-y, backed by the commencement of its sugar mill in 2017. TBLA should benefit from industry inefficiency with 2017F production cost of only IDR4,402/kg, 50% lower than the average farmer price of IDR8,790/ kg, which is used as the government’s the sugar floor price.

At this stage, we expect greater sustainability from TBLA’s sugar refinery business based on recent government discussions to prohibit importers lacking sugar plantations from obtaining import permits and plans to allow refined sugar to be sold at the retail level.

Based on a strong 68% EPS CAGR in 2015-18F we have an SOTP-based TP of IDR1,475, reflecting 60% upside potential. Risks include delays in the completion of TBLA’s sugar mills, as well as policy risks stemming from lower the sugar import quota and sugar price ceiling.

Financial highlights Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Revenues (IDRbn) 6,338 5,331 6,609 7,444 8,293 EBIT (IDRbn) 795 604 952 1,258 1,350 Net profit (IDRbn) 433 197 612 853 940 Bahana/consensus(%) - - 90 95 99

EPS (IDR) 88 37 115 160 176 EPS growth (%) 414 (58) 211 39 10 EV/EBITDA (x) 7.5 11.8 8.6 6.2 5.6 P/E (x) 10.5 24.9 8.0 5.8 5.2 FCFPS (IDR) (92.2) (118.4) (32.5) 110.3 118.5 FCF yield (%) (10.0) (12.9) (3.5) 12.0 12.9 BVPS (IDR) 493 536 636 750 863 P/BV (x) 1.9 1.7 1.4 1.2 1.1 DPS (IDR) 12 23 15 46 64 Div. yield (%) 1.3 2.5 1.6 5.0 6.9 Source: Company, Bahana estimates note: based on 23 November 2016 closing price

Share price performance

05,00010,00015,00020,00025,00030,00035,00040,000

400

600

800

1,000

1,200

23-Nov-15 23-Jan-16 23-Mar-16 23-May-16 23-Jul-16 23-Sep-16 23-Nov-16

('000)(IDR)

Volume (RHS) TBLA IJ Px Last

66.9

(10.0)

24.8

44.7

72.4 67.4

(20)

0

20

40

60

80

(20)

0

20

40

60

80

ytd 1M 3M 6M 9M 12M

(%) (%)

TBLA IJ relative to JCI Source: Bloomberg Gregorius Gary ([email protected]) +6221 2505081 ext. 3604 *New, please refer to appendix II

Major assumptions Year to 31 Dec 2014A 2015A 2016F 2017F 2018F FFB production (k tons) 719 542 462 527 577 CPO production (k tons) 214 296 213 232 299 CPO price (USD/ton) 738 568 650 700 700 Sugar plantation (ha) 1,133 3,913 7,326 11,326 14,424 ASP Sugar (IDR/kg) - - 11,000 10,000 10,000 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 1,150/480 12M High/low consensus TP (IDR) : 1,485/563 Majority shareholder (%) : Budi Delta Swakarya (27.8) Shares outstanding (mn)/Free float (%) : 5,342/45.6 Mkt. cap. (IDRbn/USDmn) : 4,872/361 3-m avg.daily t.o.(IDRbn/USDmn) : 6.0/0.45 Bloomberg/Reuters code : TBLA IJ/TBLA.JK Source: Bloomberg, Reuters; based on 23 November 2016 closing price

2017 Compendium

333

TUNAS BARU LAMPUNG

Profit & loss Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FSales 6,338 5,331 6,609 7,444 8,293Gross profit 1,293 1,170 1,452 2,039 2,292EBITDA 1,065 598 1,165 1,511 1,633Depreciation 270 (6) 213 252 283 EBIT 795 604 952 1,258 1,350Net interest inc./(expense) (201) (219) (266) (244) (232) Forex gain/(losses) (105) (165) 34 - - Other income/(expense) 73 43 50 57 63 Pre-tax profit 562 263 770 1,071 1,180Taxes (126) (62) (154) (214) (236) Minority interest (3) (4) (4) (4) (4) Extraordinary gain/(losses) (0) 0 (0) 0 0 Net profit 433 197 612 853 940Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018F Cash and equivalents 520 296 248 298 394 S-T investments 10 10 10 10 10 Trade receivables 711 797 1,017 1,145 1,276 Inventories 956 1,146 1,289 1,351 1,500 Fixed assets 2,843 4,442 5,338 5,240 5,038 Other assets 2,288 2,601 2,544 2,988 3,501 Total assets 7,328 9,293 10,447 11,032 11,719 Interest bearing liabilities 3,194 4,690 4,890 4,590 4,390 Trade payables 292 330 382 400 444 Other liabilities 1,388 1,386 1,748 2,003 2,243 Total liabilities 4,875 6,406 7,020 6,994 7,078 Minority interest 18 21 26 30 33 Shareholders' equity 2,435 2,866 3,401 4,008 4,608 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FEBIT 795 604 952 1,258 1,350 Depreciation 270 (6) 213 252 283 Working capital (308) (0) (111) (183) (268) Other operating items (214) (517) 115 (257) (244) Operating cash flow 543 80 1,169 1,070 1,120Net capital expenditure (999) (713) (1,342) (481) (487) Free cash flow (455) (632) (174) 589 633Equity raised/(bought) 289 (5) - - - Net borrowings 105 360 199 (299) (200) Other financing (67) 161 (73) (241) (337) Net cash flow (128) (116) (48) 50 96Cash flow at beginning 648 520 296 248 298 Ending cash flow 520 296 248 298 394Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2014A 2015A 2016F 2017F 2018F ROAE (%) 20.5 7.4 19.5 23.0 21.8 ROAA (%) 6.4 2.4 6.2 7.9 8.3 EBITDA margin (%) 16.0 15.4 17.6 20.7 20.2 EBIT margin (%) 12.5 11.3 14.4 16.9 16.3 Net margin (%) 6.8 3.7 9.3 11.5 11.3 Payout ratio (%) 70.3 28.3 40.0 40.0 40.0 Current ratio (x) 1.1 1.1 1.0 1.2 1.5 Interest coverage (x) 2.9 4.0 2.8 3.6 5.2 Net gearing (%) 109.8 153.3 136.6 107.1 86.7 Debts to assets (%) 43.6 50.5 46.8 41.6 37.5 Debtor turnover (days) 32 58 56 56 56 Creditor turnover (days) 17 27 27 27 27 Inventory turnover (days) 63 94 91 91 91 Source: Company, Bahana estimates

2017 Compendium

334

UNILEVER INDONESIA BUY PX: IDR40,450 - TP: IDR45,000* In 2017, helped by low inflation outlook and improved purchasing

power, UNVR, Indonesia’s largest non-tobacco FMCG company, should see solid earnings growth, relatively at par with market performance.

On a more negative side, however, we note a growing concern on greater competition in UNVR’s ice cream division (some 15% of UNVR’s sales with 70% market share). Note that Ezaki Glico and Wings group have started ice cream production in 4Q16. Compounding the problem will be ICBP’s plan to also invest heavily in ice cream in 2017.

On valuation, UNVR has been de-rated to 43.1x 2017F PER, mainly on fund-outflows and concerns on intense ice-cream competition, which we believe are overdone. Thus, we retain BUY with IDR45,000 TP, based on a 2017F PE of 48x. Risk to our call includes margin pressure on continued weaker IDR and higher petroleum prices.

Financial highlights* Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Revenues (IDRbn) 34,512 36,484 39,675 44,251 48,956

EBIT (IDRbn) 7,779 7,944 8,837 9,672 10,716

Net profit (IDRbn) 5,739 5,852 6,514 7,162 7,965

Bahana/consensus (%) - - 101 98 97

EPS (IDR) 752 767 854 939 1,044

EPS growth (%) 7.2 2.0 11.3 9.9 11.2

EV/EBITDA (x) 39.0 37.2 33.8 30.7 27.7

P/E (x) 53.8 52.7 47.4 43.1 38.7

FCFPS (IDR) 932 891 975 1,100 1,216

FCF yield (%) 2.3 2.2 2.4 2.7 3.0

BVPS (IDR) 603 633 735 833 948

P/BV (x) 67.1 63.9 55.0 48.5 42.7

DPS (IDR) 752 721 802 882 981

Div. yield (%) 1.9 1.8 2.0 2.2 2.4 Source: Company, Bahana estimates note: based on 23 November 2015 closing price

Share price performance

0

2,000

4,000

6,000

8,000

30,000

35,000

40,000

45,000

50,000

23-Nov-15 23-Jan-16 23-Mar-16 23-May-16 23-Jul-16 23-Sep-16 23-Nov-16

('000)(IDR)

Volume (RHS) UNVR IJ Px Last

(4.2) (4.7)(7.3)

(15.7) (16.7)

(7.1)

(20)

(15)

(10)

(5)

0

(20)

(15)

(10)

(5)

0

ytd 1M 3M 6M 9M 12M

(%) (%)

UNVR IJ relative to JCISource: Bloomberg Michael W Setjoadi ([email protected]) +6221 250 5081 ext. 3620 *New, please refer to appendix II

Major assumptions Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Sales growth (%) 12.7 12.2 4.6 11.5 13.1

Gross margin (%) 51.3 49.5 51.2 51.4 51.7 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 47,800/34,150 12M high/low consensus TP (IDR) : 52,700/30,700 Majority shareholder (%) : Unilever Indonesia Holding (85.0) Shares outstanding (mn)/Free float (%) : 7,630/15.0 Mkt. cap. (IDRbn/USDmn) : 308,634/22,891 3-m avg.daily t.o.(IDRbn/USDmn) : 84.5/6.3 Bloomberg/Reuters code : UNVR IJ/UNVR.JK Source: Bloomberg, Reuter; based on 23 November 2015 closing price

2017 Compendium

335

UNILEVER INDONESIA

Profit & loss Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FSales 34,512 36,484 39,675 44,251 48,956Gross profit 17,099 18,649 20,537 22,682 25,109EBITDA 7,923 8,316 9,158 10,053 11,142Depreciation 144 372 321 381 426 EBIT 7,779 7,944 8,837 9,672 10,716Net interest inc./(expense) (86) (110) (112) (80) (48) Forex gain/(losses) - - - - - Other income/(expense) (17) (4) (5) (5) (6) Pre-tax profit 7,677 7,829 8,720 9,587 10,662Taxes (1,938) (1,978) (2,206) (2,426) (2,698) Minority interest 0 0 0 0 0 Extraordinary gain/(losses) - - - - - Net profit 5,739 5,852 6,514 7,162 7,965Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018F Cash and equivalents 859 628 931 858 771 S-T investments - - - - - Trade receivables 2,896 3,245 3,173 3,539 3,916 Inventories 2,326 2,298 2,412 2,896 3,201 Fixed assets 7,348 8,321 10,000 11,119 12,493 Other assets 838 1,239 506 393 435 Total assets 14,281 15,730 17,022 18,806 20,817 Interest bearing liabilities 1,250 1,700 1,400 1,000 600 Trade payables 4,632 4,842 4,614 5,082 5,488 Other liabilities 3,800 4,360 5,399 6,365 7,495 Total liabilities 9,682 10,903 11,413 12,447 13,583 Minority interest 0 0 0 0 0 Shareholders' equity 4,599 4,827 5,609 6,359 7,234 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FEBIT 7,779 7,944 8,837 9,672 10,716 Depreciation 144 372 321 381 426 Working capital 314 (170) 278 (161) (62) Other operating items - - - - 1 Operating cash flow 8,237 8,146 9,436 9,892 11,079Net capital expenditure (1,126) (1,345) (2,000) (1,500) (1,800) Free cash flow 7,111 6,801 7,436 8,392 9,279Equity raised/(bought) - - - - - Net borrowings 273 450 (300) (400) (400) Other financing (6,786) (7,482) (6,833) (8,064) (8,966) Net cash flow 598 (231) 303 (73) (87)Cash flow at beginning 261 859 628 931 858 Ending cash flow 859 628 931 858 771Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2014A 2015A 2016F 2017F 2018F ROAE (%) 129.6 124.2 124.8 119.7 117.2 ROAA (%) 42.5 39.0 39.8 40.0 40.2 EBITDA margin (%) 23.0 22.8 23.1 22.7 22.8 EBIT margin (%) 22.5 21.8 22.3 21.9 21.9 Net margin (%) 16.6 16.0 16.4 16.2 16.3 Payout ratio (%) 94.0 94.0 94.0 94.0 94.0 Current ratio (x) 0.8 0.7 0.7 0.8 0.8 Interest coverage (x) 90.9 72.3 78.7 121.5 225.0 Net gearing (%) 8.5 22.2 8.4 2.2 nc Debts to assets (%) 8.8 10.8 8.2 5.3 2.9 Debtor turnover (days) 29 29 29 29 29 Creditor turnover (days) 88 90 88 86 84 Inventory turnover (days) 46 47 46 49 49 Source: Company, Bahana estimates

2017 Compendium

336

UNITED TRACTORS BUY* PX: IDR21,900 - TP: IDR26,500 UNTR, Indonesia’s largest heavy equipment and mining contracting

company, should experience an earnings recovery on the improved coal price outlook. We expect Pama, UNTR’s mining contracting subsidiary, to book improved volumes and mining fees as coal prices reach USD80/ton (+41.8% y-y).

This upward price trend should also benefit UNTR’s coal business unit. On the heavy equipment front, we expect improved 2017 heavy equipment sales of 2.3k units, +9% y-y, on the back of the improved mining and solid construction segments.

UNTR will also likely benefit from several new business initiatives such as the power plants, gold mining and construction segments. Thus, we maintain our BUY rating with our SOTP-based TP of IDR26,500, and expect its ytd market underperformance to reverse ahead. Risks to our call: Lower coal prices and a stronger IDR.

Financial highlights* Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Revenues (IDRbn) 53,142 49,347 44,611 53,237 55,585 EBIT (IDRbn) 8,866 8,586 6,341 7,850 8,260 Net profit (IDRbn) 5,369 3,853 4,695 6,022 6,407 Bahana/consensus(%) - - 103 112 109

EPS (IDR) 1,439 1,033 1,259 1,614 1,718 EPS growth (%) 11.1 (28.2) 21.8 28.3 6.4 EV/EBITDA (x) 5.8 5.5 6.6 5.5 5.0 P/E (x) 15.2 21.2 17.4 13.6 12.7 FCFPS (IDR) 1,081 1,112 1,358 1,362 1,815 FCF yield (%) 4.9 5.1 6.2 6.2 8.3 BVPS (IDR) 9,828 10,166 10,733 11,844 12,917 P/BV (x) 2.2 2.2 2.0 1.8 1.7 DPS (IDR) 545 691 503 646 687 Div. yield (%) 2.5 3.2 2.3 2.9 3.1 Source: Company, Bahana estimates Note: based on 23 November 2016 closing price

Share price performance

0

5,000

10,000

15,000

20,000

12,000

14,400

16,800

19,200

21,600

24,000

23-Nov-15 23-Jan-16 23-Mar-16 23-May-16 23-Jul-16 23-Sep-16 23-Nov-16

('000)(IDR)

Volume (RHS) UNTR IJ Px Last

15.7 12.1

28.9

51.5

33.8

16.6

0

10

20

30

40

50

60

0

10

20

30

40

50

60

ytd 1M 3M 6M 9M 12M

(%) (%)

UNTR IJ relative to JCI Source: Bloomberg Leonardo Henry Gavaza, CFA ([email protected]) +6221 2505081 ext. 3608 *New, please refer to appendix II

Major assumptions Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Komatsu 3,513 2,124 2,206 2,393 2,573 Coal extraction (mn tons) 114 109 107 112 115 Ovr. Removal (mn bcm) 806 767 694 763 782 Coal mines (mn tons) 5.4 4.6 6.5 7.5 7.5 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 23,975/12,550 12M High/low consensus TP (IDR) : 26,575/10,400 Majority shareholder (%) : Astra International (59.5) Shares outstanding (mn)/Free float (%) : 3,730/40.5 Mkt. cap. (IDRbn/USDmn) : 81,690/6,059 3-m avg.daily t.o.(IDRbn/USDmn) : 95.0/7.0 Bloomberg/Reuters code : UNTR IJ/UNTR.JK Source: Bloomberg, Reuters; based on 23 November 2016 closing price

2017 Compendium

337

UNITED TRACTORS

Profit & loss Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FSales 53,142 49,347 44,611 53,237 55,585Gross profit 12,070 11,702 8,884 10,885 11,429EBITDA 13,034 12,585 10,093 11,502 11,886Depreciation 4,169 3,999 3,752 3,651 3,626 EBIT 8,866 8,586 6,341 7,850 8,260Net interest inc./(expense) 154 72 212 219 322 Forex gain/(losses) 5 239 (253) - - Other income/(expense) (2,404) (4,705) 55 61 67 Pre-tax profit 6,622 4,193 6,356 8,130 8,649Taxes (1,782) (1,400) (1,589) (2,033) (2,162) Minority interest 530 1,061 (72) (76) (79) Extraordinary gain/(losses) - - - - - Net profit 5,369 3,853 4,695 6,022 6,407Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018F Cash and equivalents 10,060 15,413 17,319 20,361 24,719 S-T investments 1,856 2,297 2,297 2,297 2,297 Trade receivables 13,587 12,170 11,307 13,858 14,850 Inventories 7,770 8,328 8,100 9,834 10,495 Fixed assets 22,774 17,658 16,406 15,255 14,129 Other assets 4,245 5,849 5,657 6,246 6,406 Total assets 60,292 61,715 61,086 67,851 72,896 Interest bearing liabilities 3,432 2,676 2,095 1,936 1,932 Trade payables 12,624 13,887 11,746 14,214 15,122 Other liabilities 5,659 5,902 5,806 6,042 6,107 Total liabilities 21,715 22,465 19,647 22,192 23,161 Minority interest 1,917 1,331 1,403 1,478 1,558 Shareholders' equity 36,660 37,920 40,037 44,181 48,177 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FEBIT 8,866 8,586 6,341 7,850 8,260 Depreciation 4,169 3,999 3,752 3,651 3,626 Working capital (1,427) 2,482 (1,146) (1,581) (681) Other operating items (5,093) (7,039) (1,383) (2,342) (1,934) Operating cash flow 6,515 8,028 7,564 7,578 9,271Net capital expenditure (2,483) (3,878) (2,500) (2,500) (2,500) Free cash flow 4,032 4,149 5,064 5,078 6,771Equity raised/(bought) - - - - - Net borrowings (1,507) (756) (581) (159) (4) Other financing (401) 1,960 (2,578) (1,878) (2,409) Net cash flow 2,124 5,354 1,905 3,042 4,358Cash balances, beginning 7,936 10,060 15,413 17,319 20,361 Ending cash 10,060 15,413 17,319 20,361 24,719Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2014A 2015A 2016F 2017F 2018F ROAE (%) 15.4 10.3 12.0 14.3 13.9 ROAA (%) 9.1 6.3 7.6 9.3 9.1 Gross margin (%) 22.7 23.7 19.9 20.4 20.6 EBITDA margin (%) 24.5 25.5 22.6 21.6 21.4 EBIT margin (%) 16.7 17.4 14.2 14.7 14.9 Net margin (%) 10.1 7.8 10.5 11.3 11.5 Payout ratio (%) 37.9 66.9 66.9 40.0 40.0 Current ratio (x) 2.1 2.1 2.6 2.6 2.8 Interest coverage (x) na na na na na Net gearing (%) nc nc nc nc nc Debtor turnover (days) 93 90 93 95 98 Creditor turnover (days) 112 135 120 123 125 Inventory turnover (days) 69 81 83 87 87 Source: Company, Bahana estimates

2017 Compendium

338

VALE INDONESIA BUY PX: IDR3,370- TP: IDR4,000* INCO, Indonesia’s largest metal play by market cap, should see higher

nickel prices on policies from the Philippines and Indonesia. With selling prices contracted at 78% of spot, and COGS at USD6,573/ton, INCO should translate price gains north of USD9,000/ton into pre-tax profit.

With existing volume guidance and profit/ton at USD440, INCO’s cash flows is likely to be insufficient to expand capacity. Thus, INCO’s current focus is to cut costs by investing in its electric furnace, kiln and transformers. Capacity expansion would require INCO to build an 80km road from Sorowako to Bahodopi, to increase the quality of ore feed into its smelter. This could raise yields by 10-15% in the medium term.

INCO is a BUY largely due to nickel price expectations, which we expect to average USD12,500/ton in 2017 (2016F: USD9,850), reflecting 34.6% 2017F revenue growth. Our IDR4,000 TP is based on a DCF valuation (WACC: 5.1%). Risk: Lower nickel prices.

Financial highlights* Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Revenues (USDm) 1,038 790 567 763 859 EBIT (USDm) 249 80 12 198 252 Net profit (USDm) 172 51 3 145 187 Bahana/consensus (%) - - na 356 221

EPS (IDR) 206 69 4 182 236 EPS growth (%) 406.1 (67.2) (93.7) 4,121.1 29.4 EV/EBITDA (x) 7.4 13.7 16.4 6.5 7.1 P/E (x) 16.4 49.1 780.7 18.5 14.3 FCFPS (IDR) 295 27 196 241 329 FCF yield (%) 8.8 0.8 5.8 7.1 9.8 BVPS (IDR) 2,134 2,491 2,328 2,453 2,579 P/BV (x) 1.6 1.4 1.4 1.4 1.3 DPS (IDR) - 39 3 109 141 Div. yield (%) - 1.2 0.1 3.2 4.2 Source: Company, Bahana estimates note: based on 23 November 2016 closing price

Share price performance

0

10,000

20,000

30,000

40,000

50,000

60,000

1,000

1,500

2,000

2,500

3,000

3,500

4,000

23-Nov-15 23-Jan-16 23-Mar-16 23-May-16 23-Jul-16 23-Sep-16 23-Nov-16

('000)(IDR)

Volume (RHS) INCO IJ Px Last

92.6

28.5 26.8

112.6 109.0

83.5

0

20

40

60

80

100

120

0

20

40

60

80

100

120

ytd 1M 3M 6M 9M 12M

(%) (%)

INCO IJ relative to JCI Source: Bloomberg Andrew Hotama ([email protected]) +6221 2505081 ext. 3619 *New, please refer to appendix II

Major assumptions Year to 31 Dec 2014A 2015A 2016F 2017F 2018F sales volume (mt) 79,477 82,907 75,000 80,000 90,000 Avg. selling price (USD/ton) 13,061 9,526 7,722 9,750 9,750 Production cost (USD/ton) 8,942 7,648 6,573 6,449 6,196 Avg. exchange rate 11,875 13,494 13,500 13,500 13,500 Nickel ASP (USD/ton) 15,531 9,940 9,850 12,500 12,500 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 3,550/1,340 12M High/low consensus TP (IDR) : 2,410/1,140 Majority shareholder (%) : VALE SA (58.73) Shares outstanding (mn)/Free float (%) : 9,936/20.5 Mkt. cap. (IDRbn/USDmn) : 33,485/2,462 3-m avg.daily t.o.(IDRbn/USDmn) : 47.1/3.5 Bloomberg/Reuters code : INCO IJ /INCO.JK Source: Bloomberg, Reuters; based on 23 November 2016 closing price

2017 Compendium

339

VALE INDONESIA

Profit & loss Year to 31 Dec (USDmn) 2014A 2015A 2016F 2017F 2018FSales 1,038 790 567 763 859Gross profit 307 118 34 222 277EBITDA 372 201 141 331 388Depreciation 122 121 129 132 136 EBIT 249 80 12 198 252Net interest inc./(expense) (13) (10) (8) (5) (3) Forex gain/(losses) - - - - - Other income/(expense) - - - - - Pre-tax profit 237 70 4 193 250Taxes (65) (19) (1) (48) (62) Minority interest - - - - - Extraordinary gain/(losses) - - - - -Net profit 172 51 3 145 187Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (USDmn) 2014A 2015A 2016F 2017F 2018F Cash and equivalents 302 195 275 413 530 S-T investments 16 123 123 123 123 Trade receivables 93 78 56 76 85 Inventories 139 104 44 58 61 Fixed assets 1,609 1,603 1,524 1,462 1,401 Other assets 175 186 186 186 187 Total assets 2,334 2,289 2,209 2,318 2,387 Interest bearing liabilities 183 146 113 75 38 Trade payables 74 86 68 69 74 Other liabilities 292 223 221 224 226 Total liabilities 549 455 402 368 337 Minority interest - - - - - Shareholders' equity 1,785 1,834 1,807 1,950 2,050 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (USDmn) 2014A 2015A 2016F 2017F 2018FEBIT 249 80 12 198 252 Depreciation 122 121 129 132 136 Working capital (12) 47 62 (30) (6) Other operating items (36) (114) (9) (53) (65) Operating cash flow 323 134 194 247 317Net capital expenditure (76) (114) (50) (70) (75) Free cash flow 247 20 144 177 242Equity raised/(bought) - - - - - Net borrowings (37) (37) (34) (38) (38) Other financing (108) (89) (30) (2) (87) Net cash flow 102 (106) 80 138 118Cash flow at beginning 200 302 195 275 413 Ending cash flow 302 196 275 413 530Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2014A 2015A 2016F 2017F 2018F ROAE (%) 9.8 2.8 0.2 7.7 9.4 ROAA (%) 7.5 2.2 0.1 5.7 8.0 EBITDA margin (%) 35.8 25.5 24.9 43.3 45.2 EBIT margin (%) 24.0 10.1 2.1 26.0 29.4 Net margin (%) 16.6 6.4 0.6 19.0 21.8 Payout ratio (%) - - 60 60 60 Current ratio (x) 3.0 4.0 4.6 5.8 6.4 Interest coverage (x) 19.9 8.0 1.6 38.9 99.0 Net gearing (%) nc nc nc nc nc Debts to assets (%) 7.8 6.4 5.1 3.2 1.6 Debtor turnover (days) 32 36 36 36 36 Creditor turnover (days) 34 41 41 41 41 Inventory turnover (days) 70 69 56 30 39 Source: Company, Bahana estimates

2017 Compendium

340

VISI MEDIA ASIA REDUCE PX: IDR252 - TP: IDR230 VIVA, Indonesia’s third largest media company, focusing mainly on TV

broadcasting and online news portal, has managed to succesfully turnaround its TV channel ANTV from being No.5-6 in 2013 to No.2-3 TV station now by altering its content focus from variety shows to popular Indian dramas.

Through 2 national FTA TV stations ANTV (focusing on Indian dramas) and TV One (news channel), Viva currently has 18.6% TV audience share (All-Time) as at end-10M16. Management’s next priority will be to de-leverage VIVA’s balance sheet (>160% net gearing) and refinance its existing USD230mn debt.

At this stage, we rate VIVA a REDUCE given its weak balance sheet and low clarity on its debt-refinancing plan. The USD debt exposure (at 20% IRR) could also put pressure on its bottom line with lofty interest expense and FX loss. Upside risk: Successful debt refinancing.

Financial highlights Year to 31 Dec 2014A 2015A 2016F 2017F 2018FRevenues (IDRbn) 2,273 2,109 2,383 2,799 3,286 EBIT (IDRbn) 772 523 603 799 1,086 Net profit (IDRbn) 144 (512) 136 211 367 Bahana/consensus (%) na na na EPS (IDR) 9 (31) 8 13 22 EPS growth (%) 31 (455) (127) 55 74 EV/EBITDA (x) 8.1 11.2 9.8 7.6 5.7 P/E (x) 28.7 (8.1) 30.6 19.7 11.3 FCFPS (IDR) (54) (19) (9) (0) (18) FCF yield (%) (21) (8) (4) 0 (7) BVPS (IDR) 134 103 111 124 146 P/BV (x) 1.9 2.5 2.3 2.0 1.7 DPS (IDR) 0 0 0 0 0 Div. yield (%) 0 0 0 0 0 Source: Company, Bahana estimates note: based on 23 November 2016 closing price

Share price performance

0

10,000

20,000

30,000

40,000

200

250

300

350

400

450

500

23-Nov-15 23-Jan-16 23-Mar-16 23-May-16 23-Jul-16 23-Sep-16 23-Nov-16

('000)(IDR)

Volume (RHS) VIVA IJ Px Last

(19.9)

(5.7)(12.0)

(42.6)

(28.1)(21.2)

(50)

(40)

(30)

(20)

(10)

0

(50)

(40)

(30)

(20)

(10)

0

ytd 1M 3M 6M 9M 12M

(%) (%)

VIVA IJ relative to JCI Source: Bloomberg Henry Wibowo ([email protected]) +6221 250 5081 Ext.3622

Major assumptions Year to 31 Dec 2014A 2015A 2016F 2017F 2018FAd Revenue Growth (%) 46 (7) 13 17 17 COGS Growth (%) 78 (4) 15 15 10 EBITDA Margin (%) 38 30 30 33 37

Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 190/450

12M High/low consensus TP (IDR) : na/na

Majority shareholder (%) : PT Bakrie Global Ventura / 53.7

Shares outstanding (mn)/Free float (%) : 16,464 / 45

Mkt. cap. (IDRbn/USDmn) : 4,149/314

3-m avg.daily t.o.(IDRbn/USDmn) : 2.6/0.2

Bloomberg/Reuters code : VIVA.IJ/VIVA.JK Source: Bloomberg, Reuters based on 23 November 2016 closing price

2017 Compendium

341

VISI MEDIA ASIA

Profit & loss Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FSales 2,273 2,109 2,383 2,799 3,286 Gross profit 1,526 1,391 1,558 1,850 2,242 EBITDA 866 628 721 932 1,232 Depreciation (94) (106) (119) (133) (146) EBIT 772 523 603 799 1,086 Net interest inc./(expense) (562) (583) (369) (370) (387) Forex gain/(losses) (37) (190) 150 - - Other income/(expense) 203 (96) (29) (32) (35) Pre-tax profit 375 (346) 355 397 664 Taxes (202) (136) (195) (159) (266) Minority interest (29) (30) (24) (28) (32) Extraordinary gain/(losses) - - - - - Net profit 144 (512) 136 211 367 Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FCash and equivalents 463 65 624 592 256 S-T investments - - - - - Trade receivables 965 588 665 781 1,260 Inventories 209 366 425 489 537 Fixed assets 941 857 1,007 1,207 1,407 Other assets 3,585 4,329 4,245 4,152 4,160 Total assets 6,162 6,206 6,966 7,221 7,621 Interest bearing liabilities 2,902 3,009 4,000 4,000 4,000 Trade payables 106 245 281 324 356 Other liabilities 511 795 798 800 801 Total liabilities 3,519 4,049 5,080 5,123 5,157 Minority interest 439 464 58 58 58 Shareholders' equity 2,204 1,693 1,829 2,040 2,406 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FEBIT 772 523 603 799 1,086 Depreciation 94 106 119 133 146 Working capital (751) 958 (11) (43) (503) Other operating items (562) (815) (593) (561) (688) Operating cash flow (446) 771 117 328 42 Net capital expenditure (441) (1,092) (269) (333) (346) Free cash flow (888) (321) (152) (5) (304)Equity raised/(bought) (20) 1 - - - Net borrowings 148 108 991 - - Other financing 407 (185) (280) (28) (32) Net cash flow (353) (398) 559 (32) (336)Cash flow at beginning 816 463 65 624 592 Ending cash flow 463 65 624 592 256 Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2014A 2015A 2016F 2017F 2018FROAE (%) 6 (21) 7 11 16 ROAA (%) 3 (8) 2 3 5 Gross margin (%) 67 66 65 66 68 EBITDA margin (%) 38 30 30 33 37 EBIT margin (%) 34 25 25 29 33 Net margin (%) 6 (24) 6 8 11 Payout ratio (%) 0 0 0 0 0 Current ratio (x) 2.9 1.4 2.9 2.8 2.9 Interest coverage (x) 1.4 0.9 1.6 2.2 2.8

Net gearing (%) 92 136 179 162 152 Debtor turnover (days) 155 102 102 102 140 Creditor turnover (days) 52 124 124 124 124 Inventory turnover (days) 103 188 188 188 188 Source: Company, Bahana estimates

2017 Compendium

342

WASKITA KARYA BUY *PX: IDR2,360- TP: IDR3,200 WSKT, the biggest state-owned construction company by market cap,

should continue to book solid new contracts supported by its enlarged balance sheet due to its WSBP IPO and WTR private placements. Going forward, we expect WSKT’s 2017 order book to reach IDR97tn, up 20% y-y, before rising to IDR106tn (2015: IDR52tn) in 2018.

WSKT’s stake in several high-profile toll roads in Greater Jakarta, Trans Java and Trans Sumatera should support longer-term revenue growth. Furthermore, with 2017F net gearing of 63%, WSKT’s below-the-line performance would be supported by a lower interest-rate environment.

On valuation, we think our SOTP-based TP of IDR3,200 reflecting a 2017F PE of 24x (20% premium to the sector), is justified by solid earnings visibility, as most of its projects come from the government and other SOEs. Risks to our call include land-clearing and project delays.

Financial highlights Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Revenue (IDRbn) 10,287 14,153 25,267 33,515 43,570 EBIT (IDRbn) 886 1,415 2,977 3,638 4,366 Net profit (IDRbn) 512 1,048 1,504 1,796 2,280 Bahana/cons.(%) - - 102 99 95

EPS (IDR) 53 91 112 134 170 EPS growth (%) 37.7 73.1 23.4 19.4 26.9 EV/EBITDA (x) 26.5 18.3 11.3 10.7 10.2 P/E (x) 44.8 25.9 21.0 17.6 13.9 FCFPS (IDR) (94) (596) (550) (453) (403) FCF yield (%) (4.0) (25.2) (23.3) (19.2) (17.1) BVPS (IDR) 284 713 1,189 1,295 1,430 P/BV (x) 8.3 3.3 2.0 1.8 1.6 DPS (IDR) 10 16 22 27 34 Div. yield (%) 0.4 0.7 1.0 1.1 1.4 Source: Company, Bahana estimates Note: based on 23 November 2016 closing price

Share price performance

0

50,000

100,000

150,000

200,000

250,000

300,000

1,500

2,000

2,500

3,000

23-Nov-15 23-Jan-16 23-Mar-16 23-May-16 23-Jul-16 23-Sep-16 23-Nov-16

('000)(IDR)

Volume (RHS) WSKT IJ Px Last

27.8

(5.9)(11.3) (13.5)

13.2

22.0

(20)

(10)

0

10

20

30

(20)

(10)

0

10

20

30

ytd 1M 3M 6M 9M 12M

(%) (%)

WSKT IJ relative to JCI Source: Bloomberg Leonardo Henry Gavaza ([email protected]) +6221 2505081 ext.3608 *New, please refer to appendix II

Major assumptions Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Carried over (IDRbn) 10,516 20,277 35,534 50,770 58,232 New contracts (IDRbn) 22,625 32,084 44,918 46,041 47,192 New contracts growth (%) 69.9 41.8 40.0 2.5 2.5 Total order books (IDRbn) 33,141 52,361 80,451 96,810 105,423 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 2,860/1,605 12M high/low consensus TP (IDR) : 3,800/2,200Majority shareholder (%) : Republic of Indonesia (66.1) Shares outstanding (mn)/Free float (%) : 13,573/34.0 Mkt. cap. (IDRbn/USDmn) : 32,033/2,376 3-m avg.daily t.o.(IDRbn/USDmn) : 71.4/5.3 Bloomberg/Reuters code : WSKT IJ/WSKT.JK Source: Bloomberg, Reuters; based on 23 November 2016 closing price

2017 Compendium

343

WASKITA KARYA

Profit & loss Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FSales 10,287 14,153 25,267 33,515 43,570Gross profit 1,109 1,921 3,757 4,567 5,531EBITDA 923 1,880 3,234 3,959 4,713Depreciation 37 465 257 322 346 EBIT 886 1,415 2,977 3,638 4,366Net interest inc./(expense) (140) (267) (670) (805) (1,248) Forex gain/(losses) (3) 13 (5) - - Other income/(expense) 24 237 (9) 14 12 Pre-tax profit 766 1,398 2,294 2,847 3,130Taxes (254) (350) (758) (804) (1,046) Minority interest 0 0 (31) (244) 195 Extraordinary gain/(losses) - - - - -Net profit 512 1,048 1,504 1,798 2,280Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018F Cash and equivalents 1,675 5,511 3,581 2,667 2,590 S-T investments 24 11 11 11 11 Trade receivables 2,307 4,654 5,884 7,805 10,146 Inventories 604 826 1,252 1,520 1,830 Fixed assets 622 1,923 2,221 2,495 2,743 Other assets 7,310 17,384 29,222 39,274 49,964 Total assets 12,542 30,309 42,172 53,770 67,285 Interest bearing liabilities 3,163 8,292 8,489 13,590 19,256 Trade payables 2,572 5,472 7,072 9,517 12,506 Other liabilities 4,042 6,841 10,407 12,917 15,850 Total liabilities 9,777 20,605 25,968 36,024 47,612 Minority interest 6 157 298 415 532 Shareholders' equity 2,759 9,547 15,905 17,331 19,141 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FEBIT 886 1,415 2,977 3,638 4,366 Depreciation 37 465 257 322 346 Working capital (183) 743 (1,542) (1,428) (1,148) Other operating items (445) (925) (1,817) (2,200) (2,523) Operating cash flow 295 1,698 (125) 331 1,042Net capital expenditure (1,211) (9,671) (7,232) (6,397) (6,431) Free cash flow (916) (7,974) (7,358) (6,066) (5,389)Equity raised/(bought) 59 5,385 - - - Net borrowings 1,544 5,655 236 5,132 5,225 Other financing (131) 769 5,192 20 88 Net cash flow 556 3,836 (1,930) (914) (76)Cash balances, beginning 1,120 1,675 5,511 3,581 2,667 Ending cash 1,675 5,511 3,581 2,667 2,590Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2014A 2015A 2016F 2017F 2018F ROAE (%) 20.1 17.0 11.8 10.8 12.5 ROAA (%) 4.8 4.9 4.2 3.3 3.8 Gross margin (%) 10.8 13.6 14.9 13.6 12.7 EBITDA margin (%) 9.0 13.3 12.8 11.8 10.8 EBIT margin (%) 8.6 10.0 11.8 10.9 10.0 Net margin (%) 5.0 7.4 6.0 5.4 5.2 Payout ratio (%) 19.6 20.0 20.0 20.0 20.0 Current ratio (x) 1.4 1.3 1.3 1.4 1.1 Interest coverage (x) 6.3 5.3 4.4 4.5 3.5 Net gearing (%) 53.9 29.1 30.9 63.0 87.1 Debtor turnover (days) 97 120 120 120 120 Creditor turnover (days) 71 90 85 85 85 Inventory turnover (days) 18 21 18 17 16 Source: Company, Bahana estimates

2017 Compendium

344

WASKITA BETON PRECAST BUY PX: IDR580- TP: IDR740 WSBP, WSKT’s subsidiary in the precast concrete business, should

continue to enjoy sustained demand from toll-road projects with a total value of IDR20tn through 2018. Due to its state-owned status and affiliation with WSKT, WSBP will partake in national strategic projects.

In order to support WSBP’s sizeable potential projects ahead, the management will expand its capacity from 1.8mn tons in 2015 to 3.8mn tons in 2018, making it the biggest precast concrete maker in Indonesia. WSBP will also expand its ready mix business from 1.8mn cm/annum in 2015 to 6mn cm/annum by 2018.

With high certainty and sustainability of most its future revenues due to WSKT’s support, WSBP will likely experience a solid 2016-18 net profit CAGR of 35% y-y. Thus, WSBP is a BUY with a TP of IDR740, based on a 2017F PE of 21x, relatively at par to the regional peers. Risks: project delays and lower margins from third-party customers.

Financial highlights* Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Revenues (IDRbn) 1,025 2,644 4,513 7,230 8,708 EBIT (IDRbn) 171 364 863 1,135 1,366 Net profit (IDRbn) 149 335 595 931 1,059 Bahana/cons.(%) - - - - -

EPS (IDR) 9 21 23 35 40

EPS growth (%) - 124.6 6.5 56.4 13.8

EV/EBITDA (x) 52.1 21.8 13.0 11.2 9.3 P/E (x) 61.5 27.4 25.7 16.4 14.4

FCFPS (IDR) - (74.5) (113.9) (99.4) 11.3

FCF yield (%) - na na na na

BVPS (IDR) 54 84 280 305 333

P/BV (x) 10.7 6.9 2.1 1.9 1.7

DPS (IDR) - - - 11 12

Div. yield (%) - - - 1.8 2.1 Source: Company, Bahana estimates note: based on 23 November 2016 closing price

Share price performance

0

500

1,000

1,500

2,000

500

550

600

650

20-Sep-16 4-Oct-16 18-Oct-16 1-Nov-16 15-Nov-16

('000)(IDR)

Volume (RHS) WSBP IJ Px Last

17.4

3.6

0

5

10

15

20

0

5

10

15

20

Since IPO 1M

(%) (%)

WSBP IJ relative to JCI Source: Bloomberg Leonardo Henry Gavaza, CFA ([email protected]) +6221 2505081 ext.3608 *New, please refer to appendix II

Major assumptions Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Precast sales volumes (mn tons) 0.5 1.2 2.0 2.6 3.0 Precast ASP (IDR mn/ton) 1.6 1.8 1.9 2.0 2.1 Ready-mix sales volumes (mn) tons) 0.3 0.6 0.8 2.1 2.4 Ready-mix ASP (IDR mn/ton) 0.8 0.9 0.9 1.0 1.0

Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 645/490 12M high/low consensus TP (IDR) : 770/640Majority shareholder (%) : Republic of Indonesia (66.1) Shares outstanding (mn)/Free float (%) : 26,361/40.0 Mkt. cap. (IDRbn/USDmn) : 14,894/1,105 3-m avg.daily t.o.(IDRbn/USDmn) : 115.4/8.6 Bloomberg/Reuters code : WSBP IJ/WSBP.JK Source: Bloomberg, Reuters based on 23 November 2016 closing price

2017 Compendium

345

WASKITA BETON PRECAST

Profit & loss Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FSales 1,025 2,644 4,513 7,230 8,708Gross profit 186 419 945 1,267 1,525EBITDA 171 452 1,038 1,470 1,774Depreciation - 87 176 336 407 EBIT 171 364 863 1,135 1,366Net interest inc./(expense) 3 3 62 120 58 Forex gain/(losses) - - - - - Other income/(expense) (20) (20) (9) (14) (13) Pre-tax profit 154 346 915 1,241 1,412Taxes (4) (11) (320) (310) (353) Minority interest - - - - - Extraordinary gain/(losses) - - - - - Net profit 149 335 595 931 1,059Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018F Cash and equivalents 272 98 4,665 1,321 1,603 S-T investments 35 5 11 18 22 Trade receivables 879 2,832 5,373 8,398 9,017 Inventories 21 55 84 157 160 Fixed assets 280 987 1,928 3,589 4,079 Other assets 101 355 384 465 509 Total assets 1,588 4,332 12,445 13,948 15,390 Interest bearing liabilities - 761 2,911 2,511 2,811 Trade payables 300 730 922 1,729 1,863 Other liabilities 430 1,510 1,220 1,665 1,931 Total liabilities 730 3,001 5,053 5,905 6,605 Minority interest - - - - - Shareholders' equity 858 1,331 7,392 8,043 8,785 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FEBIT - 364 863 1,135 1,366 Depreciation - 87 176 336 407 Working capital - (1,659) (2,321) (2,373) (532) Other operating items - 794 (604) 278 (45) Operating cash flow - (414) (1,887) (624) 1,196Net capital expenditure - (764) (1,116) (1,997) (897) Free cash flow - (1,178) (3,003) (2,621) 299Equity raised/(bought) - 200 5,467 - - Net borrowings - 761 2,150 (400) 300 Other financing - 43 (47) (323) (317) Net cash flow - (174) 4,567 (3,344) 282Cash flow at beginning - 272 98 4,665 1,321 Ending cash flow - 98 4,665 1,321 1,603Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2014A 2015A 2016F 2017F 2018F ROAE (%) 17.4 30.6 13.6 12.1 12.6 ROAA (%) 9.4 11.3 7.1 7.1 7.2 Gross margin (%) 18.2 15.9 20.9 17.5 17.5 EBITDA margin (%) 16.7 17.1 23.0 20.3 20.4 EBIT margin (%) 16.7 13.8 19.1 15.7 15.7 Net margin (%) 14.6 12.7 13.2 12.9 12.2 Payout ratio (%) - - - 30.0 30.0 Current ratio (x) 1.7 1.5 3.5 2.5 2.3 Interest coverage (x) na na na na na Net gearing (%) nc 49.8 nc 14.8 13.8 Debtor turnover (days) - 256 332 348 365 Creditor turnover (days) - 85 85 81 91 Inventory turnover (days) - 5 6 6 7 Source: Company, Bahana estimates

2017 Compendium

346

WIJAYA KARYA BUY **PX: IDR2,372 - **TP: IDR3,267 As the most diversified construction company in the sector, WIKA

should benefit most from Indonesia’s GDP upcycle, backed by its IDR6.2tn rights issue proceeds, to be used in several projects such as toll roads and power plants.

Growth support in 2017-19 would come from WIKA’s involvement in the Jakarta-Bandung high speed railway (HSR) project worth IDR64tn. Moreover, Indonesia’s huge infrastructure spending should provide increased demand for WIKA’s precast products, currently the most dominant in the marketplace.

If the higher government infra budget in 2017 materializes, WIKA’s share price underperformance should reverse. On valuation, WIKA looks attractive on 30% upside potential to our TP of IDR3,267, based on 2017F PE of 22.0x in line with its 5-year historical average PE. Risks: Lower infra spending and project realization delays.

Financial highlights Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Revenues (IDRbn) 12,463 13,620 19,500 26,400 33,390 EBIT (IDRbn) 1,401 1,514 1,988 2,689 3,504 Net profit (IDRbn) 615 625 865 1,332 1,595 Bahana/cons.(%) - - 109 130 156

EPS (IDR) 100 102 136 149 178 EPS growth (%) 7.9 1.6 33.2 9.6 19.7 EV/EBITDA (x) 16.9 15.4 10.0 9.4 8.1 P/E (x) 42.3 41.7 30.1 19.5 16.3 FCFPS (IDR) (310) (125) (388) (670) (413) FCF yield (%) (10.3) (4.2) (12.9) (22.3) (13.8) BVPS (IDR) 633 713 1,746 1,346 1,470 P/BV (x) 4.7 4.2 1.7 2.2 2.0 DPS (IDR) 20 15 41 45 53 Div. yield (%) 0.7 0.5 1.4 1.5 1.8 Source: Company, Bahana estimates Note: based on 23 November 2016 closing price

Share price performance

0

20,000

40,000

60,000

80,000

100,000

2,000

2,200

2,400

2,600

2,800

3,000

3,200

23-Nov-15 23-Jan-16 23-Mar-16 23-May-16 23-Jul-16 23-Sep-16 23-Nov-16

('000)(IDR)

Volume (RHS) WIKA IJ Px Last

(12.9)

5.8

(15.0)

(0.5)

(9.8)

(22.2)(30)

(20)

(10)

0

10

(30)

(20)

(10)

0

10

ytd 1M 3M 6M 9M 12M

(%) (%)

WIKA IJ relative to JCI Source: Bloomberg Leonardo Henry Gavaza, CFA ([email protected]) +6221 2505081 ext. 3608 *New, please refer to appendix II ** TERP (Theoretical Ex-Rigths Price)

Major assumptions Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Carried over (IDRbn) 24,141 22,751 31,677 57,177 63,552 New contracts (IDRbn) 17,632 25,330 53,000 38,000 45,600 New contracts growth (%) (0.6) 43.7 109.2 (28.3) 20.0 Total order books (IDRbn) 41,773 48,081 84,677 95,177 109,152 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 3,139/2,037 12M high/low consensus TP (IDR) : 3,982/2,461Majority shareholder (%) : Republic of Indonesia (65.1) Shares outstanding (mn)/Free float (%) : 6,294/35.0 Mkt. cap. (IDRbn/USDmn) : 16,179/1,200 3-m avg.daily t.o.(IDRbn/USDmn) : 54.4/4.0 Bloomberg/Reuters code : WIKA IJ/WIKA.JK Source: Bloomberg, Reuters based on 23 November 2016 closing price

2017 Compendium

347

WIJAYA KARYA

Profit & loss Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FSales 12,463 13,620 19,500 26,400 33,390Gross profit 1,794 1,943 2,548 3,447 4,462EBITDA 1,589 1,748 2,273 3,026 3,892Depreciation 188 234 285 336 388 EBIT 1,401 1,514 1,988 2,689 3,504Net interest inc./(expense) (124) (372) (250) (232) (502) Forex gain/(losses) (2) 28 (9) - - Other income/(expense) (129) (72) (146) (138) (167) Pre-tax profit 1,146 1,098 1,582 2,319 2,835Taxes (395) (395) (585) (792) (1,002) Minority interest (136) (78) (133) (195) (238) Extraordinary gain/(losses) - - - - - Net profit 615 625 865 1,332 1,595Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018F Cash and equivalents 2,301 2,560 5,151 1,642 1,624 S-T investments - - - - 1 Trade receivables 1,963 2,782 3,473 5,063 6,404 Inventories 817 1,031 1,423 1,930 2,442 Fixed assets 2,676 3,184 3,799 4,363 4,875 Other assets 8,152 10,045 15,479 24,566 31,959 Total assets 15,909 19,602 29,325 37,563 47,304 Interest bearing liabilities 3,032 3,510 1,914 3,914 7,164 Trade payables 3,974 4,420 6,395 8,672 10,975 Other liabilities 4,027 6,234 8,770 11,743 14,755 Total liabilities 11,032 14,164 17,079 24,329 32,895 Minority interest 989 1,063 1,116 1,172 1,230 Shareholders' equity 3,888 4,375 11,130 12,062 13,179 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FEBIT 1,401 1,514 1,988 2,689 3,504 Depreciation 188 234 285 336 388 Working capital (166) (1,686) (365) (1,701) (1,409) Other operating items (1,573) (73) (412) (449) (990) Operating cash flow (150) (11) 1,495 876 1,493Net capital expenditure (1,751) (758) (3,969) (6,883) (5,195) Free cash flow (1,902) (769) (2,474) (6,007) (3,701)Equity raised/(bought) 717 (3) 6,149 - - Net borrowings 1,359 479 (1,596) 2,000 3,250 Other financing 740 552 512 498 433 Net cash flow 914 259 2,591 (3,509) (18)Cash balances, beginning 1,387 2,301 2,560 5,151 1,642 Ending cash 2,301 2,560 5,151 1,642 1,624Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2014A 2015A 2016F 2017F 2018F ROAE (%) 18.2 15.1 11.2 11.5 12.6 ROAA (%) 4.3 3.5 3.5 4.0 3.8 Gross margin (%) 14.4 14.3 13.1 13.1 13.4 EBITDA margin (%) 12.7 12.8 11.7 11.5 11.7 EBIT margin (%) 11.2 11.1 10.2 10.2 10.5 Net margin (%) 4.9 4.6 4.4 5.0 4.8 Payout ratio (%) 20.0 15.1 30.0 30.0 30.0 Current ratio (x) 1.1 1.2 1.4 1.1 1.0 Interest coverage (x) 11.3 4.1 7.9 11.6 7.0 Net gearing (%) 18.8 21.7 nc 18.8 42.0 Debtor turnover (days) 52 66 65 70 70 Creditor turnover (days) 120 133 135 135 60 Inventory turnover (days) 32 28 30 30 30 Source: Company, Bahana estimates

2017 Compendium

348

WIJAYA KARYA BETON BUY PX: IDR830- TP: IDR1,100 On the back of improved infrastructure spending in Indonesia, WTON,

the largest concrete maker in Indonesia, will likely benefit due to its sizeable market share based on total national capacity of approximately 35%. Furthermore, WTON’s growth ahead should also benefit from WIKA’s (its parent company) substantial order book, especially in the HSR project.

Going forward, WTON aims to continue to improve its products’ technological competitiveness to help maintain its market share. That, coupled with improved utilization rates, should support our 2017 GPM forecast of 13.3% (2016F: 13.0%). We expect WTON to expand its capacity to 3.3mn tons/annum (2016F:2.5mn tons/annum) in 2018.

Given the experienced management team and 2017F EPS growth of 39% y-y, we maintain our BUY rating with a TP of IDR1,100, based on 24x our 2017F EPS, at par with regional peers. Risks: Delays in several WIKA projects, lower market share and declining ASPs.

Financial highlights* Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Revenues (IDRbn) 3,277 2,653 4,003 5,483 6,812 EBIT (IDRbn) 410 238 404 568 700 Net profit (IDRbn) 330 174 285 394 488 Bahana/cons.(%) - - 98 109 135

EPS (IDR) 41 20 33 45 56 EPS growth (%) 12.6 (51.4) 64.0 38.3 23.9 EV/EBITDA (x) 13.7 21.1 14.3 10.9 9.0 P/E (x) 20.2 41.6 25.4 18.3 14.8 FCFPS (IDR) (62) (8) (68) (14) 11 FCF yield (%) (7.5) (0.9) (8.2) (1.7) 1.4 BVPS (IDR) 246 253 272 304 343 P/BV (x) 3.4 3.3 3.1 2.7 2.4 DPS (IDR) 11 6 10 14 17 Div. yield (%) 1.4 0.7 1.2 1.6 2.0 Source: Company, Bahana estimates Note: based on 23 November 2016 closing price

Share price performance

0

20,000

40,000

60,000

80,000

100,000

750

800

850

900

950

1,000

1,050

23-Nov-15 23-Jan-16 23-Mar-16 23-May-16 23-Jul-16 23-Sep-16 23-Nov-16

('000)(IDR)

Volume (RHS) WTON IJ Px Last

(12.9)

(4.6)

(10.6)

(18.2)

(25.5) (25.5)(30)

(25)

(20)

(15)

(10)

(5)

0

(30)

(25)

(20)

(15)

(10)

(5)

0

ytd 1M 3M 6M 9M 12M

(%) (%)

WTON IJ relative to JCISource: Bloomberg Leonardo Henry Gavaza, CFA ([email protected]) +6221 2505081 ext. 3608 *New, please refer to appendix II

Major assumptions Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Sales volumes (mn tons) 1.7 1.4 2.0 2.6 3.1 Prod. capacity (mn tons/annum) 2.2 2.3 2.5 3.0 3.3 Price/ton (IDRmn) 2.0 1.9 2.0 2.1 2.2 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 1,075/780 12M high/low consensus TP (IDR) : 1,300/975Majority shareholder (%) : Wijaya Karya (60.0) Shares outstanding (mn)/Free float (%) : 8,715/40.0 Mkt. cap. (IDRbn/USDmn) : 7,234/537 3-m avg.daily t.o.(IDRbn/USDmn) : 14.6/1.1 Bloomberg/Reuters code : WTON IJ/WTON.JK Source: Bloomberg, Reuters based on 23 November 2016 closing price

2017 Compendium

349

WIJAYA KARYA BETON

Profit & loss Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FSales 3,277 2,653 4,003 5,483 6,812Gross profit 487 329 520 727 897EBITDA 495 328 536 724 881Depreciation 85 90 132 156 181 EBIT 410 238 404 568 700Net interest inc./(expense) 6 (26) (29) (52) (60) Forex gain/(losses) (5) (8) (2) - - Other income/(expense) 4 3 7 7 7 Pre-tax profit 413 206 378 521 645Taxes (89) (34) (87) (120) (148) Minority interest 6 2 (6) (7) (8) Extraordinary gain/(losses) - - - - - Net profit 330 174 285 394 488Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018F Cash and equivalents 1,038 824 205 111 40 S-T investments - - - - - Trade receivables 476 570 603 826 1,026 Inventories 458 622 763 1,043 1,296 Fixed assets 1,671 1,998 2,290 2,659 2,953 Other assets 159 442 597 764 897 Total assets 3,802 4,456 4,460 5,403 6,212 Interest bearing liabilities 565 531 620 760 730 Trade payables 420 557 549 749 932 Other liabilities 615 1,104 856 1,176 1,483 Total liabilities 1,600 2,193 2,025 2,685 3,144 Minority interest 59 58 64 71 79 Shareholders' equity 2,143 2,205 2,370 2,647 2,988 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FEBIT 410 238 404 568 700 Depreciation 85 90 132 156 181 Working capital 432 (166) (247) (182) (126) Other operating items (726) 187 (458) (139) (183) Operating cash flow 201 349 (168) 402 572Net capital expenditure (744) (416) (425) (525) (475) Free cash flow (543) (67) (592) (121) 99Equity raised/(bought) 1,151 (13) - - - Net borrowings 26 (33) 89 140 (30) Other financing (11) (101) (115) (113) (141) Net cash flow 625 (214) (618) (94) (72)Cash balances, beginning 413 1,038 824 205 111Ending cash 1,038 824 205 111 40Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2014A 2015A 2016F 2017F 2018F ROAE (%) 39.8 8.0 12.5 15.7 17.3 ROAA (%) 9.8 4.2 6.4 8.0 8.4 Gross margin (%) 14.9 12.4 13.0 13.3 13.2 EBITDA margin (%) 15.1 12.4 13.4 13.2 12.9 EBIT margin (%) 12.5 9.0 10.1 10.4 10.3 Net margin (%) 10.1 6.6 7.1 7.2 7.2 Payout ratio (%) 30.0 30.0 30.0 30.0 30.0 Current ratio (x) 1.4 1.4 1.3 1.2 1.2 Interest coverage (x) na 0.1 0.1 0.1 0.1 Net gearing (%) nc nc 17.5 24.5 23.1 Debtor turnover (days) 50 72 55 55 55 Creditor turnover (days) 49 77 58 58 58 Inventory turnover (days) 85 85 80 80 80 Source: Company, Bahana estimates

2017 Compendium

350

WINTERMAR OFFSHORE MARINE BUY* PX: IDR178 - TP: IDR200* Looking ahead, WINS, the largest domestic provider of offshore marine

services, is expected to experience slight demand rise given bottoming out oil prices. In addition, there are several O&G development projects in Indonesia which are scheduled to start operations in 2017.

During the downward trend in OSV charter rates following low exploration activities in 9M16, WINS managed to lower its direct expenses by 15% on lower crew and fuel costs, resulting in an improved margin of 10.2% at the operating level, compared to 3% in 9M15. We believe this will continue, providing margin support for exploration activities at lower oil prices.

Due to poor earnings and a bleak industry outlook, WINS has already underperformed market by 22% in the last 12M. This provides limited downside, in our view. Hence, WINS is a BUY with a DCF-based 12M TP of IDR200. Risks: Continued project delays and rebound in oil price.

Financial highlights Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Revenues (USDmn) 177 100 101 117 136 EBIT (USDmn) 45 3 6 14 22 Net profit (USDmn) 22 (6) (6) 2 12 Bahana/consensus (%) - - 105 109 104

EPS (IDR) 50 (20) (21) 8 43

EPS growth (%) (20.6) (140.0) 4.6 na 437.9 EV/EBITDA (x) 2.9 6.6 5.3 3.8 3.0 P/E (x) 3.6 na na 22.3 4.1 FCFPS (IDR) (52) 33 43 86 34 FCF yield (%) (29.0) 18.7 24.3 48.2 18.8 BVPS (IDR) 641 545 595 617 655 P/BV (x) 0.3 0.3 0.3 0.3 0.3 DPS (IDR) 11 - - 1 6 Div. yield (%) 6.2 - - 0.6 3.3 Source: Company, Bahana estimates note: based on 23 November 2016 closing price

Share price performance

0

10,000

20,000

30,000

40,000

50,000

60,000

90

140

190

240

290

23-Nov-15 23-Jan-16 23-Mar-16 23-May-16 23-Jul-16 23-Sep-16 23-Nov-16

('000)(IDR)

Volume (RHS) WINS IJ Px Last

(6.3)(18.5) (27.4) (24.6)

55.3

(22.0)(40)

(20)

0

20

40

60

(40)

(20)

0

20

40

60

ytd 1M 3M 6M 9M 12M

(%) (%)

WINS IJ relative to JCI Source: Bloomberg Gregorius Gary ([email protected]) +6221 2505081 ext. 3604 *New, please refer to appendix II

Major assumptions Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Number of vessels (low tier) 27 25 20 20 20 Number of vessels (mid-high) 50 50 50 50 50 Utilization rates (%) 71.0 56.3 48.9 54.6 57.5 Additional vessels 6 (2) (5) - - Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 268/97 12M High/low consensus TP (IDR) : 264/185 Majority shareholder (%) : Wintermarjaya Lestari (48.7) Shares outstanding (mn)/Free float (%) : 4,031/42.2 Mkt. cap. (IDRbn/USDmn) : 717/53 3-m avg.daily t.o.(IDRbn/USDmn) : 0.3/0.02 Bloomberg/Reuters code : WINS IJ/WINS.JK Source: Bloomberg, Reuters; based on 23 November 2016 closing price

2017 Compendium

351

WINTERMAR OFFSHORE MARINE

Profit & loss Year to 31 Dec (USDmn) 2014A 2015A 2016F 2017F 2018FSales 177 100 101 117 136Gross profit 58 13 17 25 34EBITDA 71 31 35 45 56Depreciation 25 28 29 31 34 EBIT 45 3 6 14 22Net interest inc./(expense) (12) (9) (9) (8) (5) Forex gain/(losses) - 0 - - - Other income/(expense) (0) (2) 0 1 1 Pre-tax profit 33 (9) (2) 6 17Taxes (3) (1) (2) (2) (2) Minority interest (9) 4 (2) (2) (3) Extraordinary gain/(losses) - - - - - Net profit 22 (6) (6) 2 12Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (USDmn) 2014A 2015A 2016F 2017F 2018F Cash and equivalents 30 19 2 19 1 S-T investments - - - - - Trade receivables 52 31 30 30 31 Inventories 0 0 0 0 0 Fixed assets 380 380 376 369 387 Other assets 40 36 36 37 40 Total assets 501 466 443 455 458 Interest bearing liabilities 155 155 135 135 115 Trade payables 20 12 11 11 12 Other liabilities 63 55 57 64 72 Total liabilities 238 223 203 211 200 Minority interest 46 55 58 61 63 Shareholders' equity 217 188 182 183 195 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (USDmn) 2014A 2015A 2016F 2017F 2018FEBIT 45 3 6 14 22 Depreciation 25 28 29 31 34 Working capital 16 11 3 6 7 Other operating items 1 (1) (0) (0) (0) Operating cash flow 87 41 39 51 62Net capital expenditure (105) (30) (26) (25) (52) Free cash flow (17) 11 13 26 10Equity raised/(bought) 20 (20) - - - Net borrowings 22 - (20) 0 (20) Other financing (20) (2) (10) (9) (8) Net cash flow 4 (11) (17) 16 (18)Cash flow at beginning 25 30 19 2 19 Ending cash flow 30 19 2 19 1Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2014A 2015A 2016F 2017F 2018F ROAE (%) 9.0 (2.3) (2.4) 0.9 4.9 ROAA (%) 4.7 (1.2) (1.3) 0.5 2.7 EBITDA margin (%) 40.0 30.9 35.0 38.2 41.0 EBIT margin (%) 25.5 2.9 5.9 11.9 16.2 Net margin (%) 12.3 (5.7) (5.7) 2.0 9.1 Payout ratio (%) 13.3 - - 15.0 15.0 Current ratio (x) 1.2 1.4 0.9 1.6 1.0 Interest coverage (x) 3.9 0.3 0.7 1.7 4.1 Net gearing (%) 57.8 72.7 73.1 63.3 58.6 Debts to assets (%) 31.0 33.3 30.5 29.7 25.1 Debtor turnover (days) 112 149 107 91 80 Creditor turnover (days) 77 68 51 45 42 Inventory turnover (days) 0 0 0 0 0 Source: Company, Bahana estimates

2017 Compendium

352

XL AXIATA BUY* PX: IDR2,250 - TP: IDR3,000 EXCL, a pure GSM mobile telecommunication operator and third

largest in terms of subscribers, will start expanding to the outer Java areas, supported by a conducive regulatory environment and its partnership with ISAT for a joint expansion program.

Additionally, we believe that EXCL will benefit from the sector’s strong improvements in both ARPUs and data usage, allowing for stronger EBITDA margins ahead, helped also by the company’s continued enhanced pricing strategy. Below the line, we expect support to stem from lower interest expenses due to EXCL’s tower sales and rights issue as well as higher forex gains backed by a stronger IDR outlook.

On valuation, EXCL is a BUY with our DCF-based TP of IDR3,000, reflecting a 2017F EV/EBITDA of 4.7x, around a 45% discount to its regional peers. Risks: Change in EXCL’s higher-value strategy that results in higher revenue growth.

Financial highlights Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Revenues (IDRbn) 23,460 22,876 21,383 22,130 23,575 EBIT (IDRbn) 8,623 8,393 8,299 9,100 9,782 Net profit (IDRbn) (775) (25) (247) 345 446 Bahana/consensus (%) - - (22.8) 31.9 41.1

EPS (IDR) (73) (2) (23) 32 42 EPS growth (%) na na na na 29.2 EV/EBITDA (x) 5.4 5.7 4.4 4.0 3.7 P/E (x) na na na 69.5 53.8 FCFPS (IDR) (534) (97) 439 (12) 13 FCF yield (%) (23.7) (4.3) 19.5 (0.5) 0.6 BVPS (IDR) 1,317 1,321 1,927 1,949 1,979 P/BV (x) 1.7 1.7 1.2 1.2 1.1 DPS (IDR) - - - 10 13 Div. yield (%) - - - 0.4 0.6 Source: Company, Bahana estimates Note: based on 23 November 2016 closing price

Share price performance

0

20,000

40,000

60,000

80,000

100,000

120,000

2,000

2,500

3,000

3,500

4,000

4,500

23-Nov-15 23-Jan-16 23-Mar-16 23-May-16 23-Jul-16 23-Sep-16 23-Nov-16

('000)(IDR)

Volume (RHS) EXCL IJ Px Last

(51.0)

(6.4)

(29.4)(39.6)

(52.0) (53.9) (60)

(50)

(40)

(30)

(20)

(10)

0

(60)

(50)

(40)

(30)

(20)

(10)

0

ytd 1M 3M 6M 9M 12M

(%) (%)

EXCL IJ relative to JCI Source: Bloomberg Leonardo Henry Gavaza, CFA ([email protected]) +6221 2505081 ext. 3608 *New, please refer to appendix II

Major assumptions Year to 31 Dec 2014A 2015A 2016F 2017F 2018F Subscribers ('000) 59,623 42,037 44,139 46,125 47,993 Net adds ('000) (954) (17,586) 2,102 1,986 1,868 ARPU ('000) 26 34 38 38 39 Source: Company, Bahana estimates

Company information 12M high/low (IDR) : 4,217/2,150 12M High/low consensus TP (IDR) : 4,080/2,330 Majority shareholder (%) : Axiata Group (66.4) Shares outstanding (mn)/Free float (%) : 10,688/33.6 Mkt. cap. (IDRbn/USDmn) : 24,048/1,784 3-m avg.daily t.o.(IDRbn/USDmn) : 43.9/3.2 Bloomberg/Reuters code : EXCL IJ/EXCL.JK Source: Bloomberg, Reuters; based on 23 November closing price

2017 Compendium

353

XL AXIATA

Profit & loss Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FSales 23,460 22,876 21,383 22,130 23,575Gross profit - - - - -EBITDA 8,623 8,393 8,299 9,100 9,782Depreciation 6,841 7,135 7,624 7,578 8,119 EBIT 1,782 1,258 675 1,522 1,663Net interest inc./(expense) (1,397) (1,080) (1,720) (1,220) (1,227) Forex gain/(losses) (1,295) (2,521) 200 - - Other income/(expense) (44) 1,713 516 159 159 Pre-tax profit (953) (631) (329) 460 595Taxes 179 605 82 (115) (149) Minority interest - - - - - Extraordinary gain/(losses) - - - - - Net profit (775) (25) (247) 345 446Source: Company, Bahana estimates

Balance sheet Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018F Cash and equivalents 6,951 3,312 3,707 3,477 3,486 S-T investments - - - - - Trade receivables 1,188 921 731 757 806 Inventories 77 79 104 103 110 Fixed assets 35,207 33,427 32,624 32,451 32,088 Other assets 20,207 21,106 18,111 17,998 18,560 Total assets 63,631 58,844 55,277 54,785 55,050 Interest bearing liabilities 29,628 26,953 15,953 15,953 15,953 Trade payables 4,444 5,283 4,816 4,792 5,096 Other liabilities 15,510 12,516 13,953 13,243 12,892 Total liabilities 49,583 44,753 34,722 33,989 33,941 Minority interest - - - - - Shareholders' equity 14,048 14,092 20,555 20,796 21,109 Source: Company, Bahana estimates

Cash flow Year to 31 Dec (IDRbn) 2014A 2015A 2016F 2017F 2018FEBIT 1,782 1,258 675 1,522 1,663 Depreciation 6,841 7,135 7,624 7,578 8,119 Working capital (1,617) (2,636) 4,180 (645) (666) Other operating items (4,511) (666) (794) (1,398) (1,438) Operating cash flow 2,496 5,091 11,685 7,057 7,678Net capital expenditure (8,192) (6,125) (7,000) (7,183) (7,535) Free cash flow (5,696) (1,033) 4,685 (126) 143Equity raised/(bought) - - - - - Net borrowings 11,807 (2,675) (11,000) - - Other financing (478) 69 6,710 (104) (134) Net cash flow 5,633 (3,639) 395 (230) 9Cash balances, beginning 1,318 6,951 3,312 3,707 3,477 Ending cash 6,951 3,312 3,707 3,477 3,486Source: Company, Bahana estimates

Key ratios Year to 31 Dec 2014A 2015A 2016F 2017F 2018F ROAE (%) (5.3) (0.2) (1.4) 1.7 2.1 ROAA (%) (1.5) (0.0) (0.4) 0.6 0.8 EBITDA margin (%) 36.8 36.7 38.8 41.1 41.5 EBIT margin (%) 7.6 5.5 3.2 6.9 7.1 Net margin (%) (3.3) (0.1) (1.2) 1.6 1.9 Payout ratio (%) - - - 30.0 30.0 Current ratio (x) 0.9 0.6 0.6 0.6 0.6 Interest coverage (x) 1.3 1.2 0.4 1.2 1.4 Net gearing (%) 161.4 167.8 59.6 60.0 59.1 Debts to assets (%) 46.6 45.8 28.9 29.1 29.0 Debtor turnover (days) 19 16 12 12 12 Creditor turnover (days) 65 82 85 85 85 Inventory turnover (days) 1 1 2 2 2 Source: Company, Bahana estimates

2017 Compendium

354

This page has been left intentionally blank

2017 Compendium

355

APPENDIX

2017 Compendium

356

APPENDIX I: STOCK HIGHLIGHTS Stock JCI code Ticker Rating Price TP Shares Free float Mkt cap 3M avg to

(IDR) (IDR) (m) (%) (IDRb) (IDRb) 2016F 2017F 2016F 2017F 2016F 2017F 2016F 2017F 2016F 2017F 2016F 2017F 2016F 2017F 2016F 2017F 2016F 2017F 2016F 2017F 2016F 2017F 2016F 2017F

AUTOMOTIVE OW 319,704 291.5 207,671 242,616 18,239 22,578 16,766 21,708 18.9 26.4 19.0 15.2 14.9 12.6 2.8 2.5 2.3 2.9 40.9 35.9 14.9 17.3 6.4 7.6 9.1 10.9 Astra International ASII IJ Equity ASII IJ BUY 7,775 10,000 40,484 45 312,052 278.6 178,703 208,530 16,456 20,259 16,235 20,626 12.2 27.0 19.4 15.3 14.8 12.6 2.8 2.5 2.3 2.9 36.7 31.5 15.2 17.5 6.5 7.7 9.2 11.1 Indomobil Sukses Makmur IMAS IJ Equity IMAS IJ BUY 1,400 2,000 2,765 11 3,871 0.0 15,278 19,604 161 532 (207) 285 na na na 13.6 29.9 20.4 0.7 0.7 - 1.8 295.3 317.1 (3.8) 5.1 (0.8) 1.0 (1.0) 1.2 Gajah Tunggal GJTL IJ Equity GJTL IJ BUY 1,085 1,500 3,485 39 3,781 12.9 13,691 14,481 1,622 1,788 739 797 (335.7) 7.9 5.1 4.7 4.8 4.2 0.7 0.6 4.9 5.3 130.0 110.8 13.2 13.1 4.1 4.3 5.7 6.0

BANKS OW 1,092,080 993.9 302,986 330,588 99,795 116,726 78,846 92,038 (3.8) 16.7 15.5 12.9 na na 2.3 2.0 1.8 2.0 nc nc 16.7 16.6 2.4 2.5 na naBank Central Asia BBCA IJ Equity BBCA IJ HOLD 14,700 15,100 24,655 51 362,429 281.8 56,466 60,311 25,124 27,915 20,079 22,309 11.4 11.1 18.0 16.2 na na 3.4 2.9 1.2 1.3 nc nc 20.6 19.5 3.3 3.3 na naBank Rakyat Indonesia BBRI IJ Equity BBRI IJ BUY 11,500 14,900 24,669 43 283,695 265.5 80,091 88,055 30,579 33,648 25,404 27,816 0.0 9.5 11.2 10.2 na na 2.2 1.9 2.7 2.9 nc nc 20.9 19.8 2.8 2.7 na naBank Mandiri BMRI IJ Equity BMRI IJ BUY 10,900 12,350 23,333 40 254,333 229.7 71,122 79,224 15,969 22,958 11,842 17,267 (41.8) 45.8 21.5 14.7 na na 1.7 1.6 0.9 1.2 nc nc 8.9 11.1 1.3 1.7 na naBank Negara Indonesia BBNI IJ Equity BBNI IJ BUY 5,125 7,000 18,649 40 95,574 135.5 40,847 45,009 13,250 15,530 10,876 12,724 20.0 17.0 8.8 7.5 na na 1.2 1.0 2.3 2.3 nc nc 13.9 14.5 2.0 2.1 na naBank Danamon BDMN IJ Equity BDMN IJ BUY 3,550 4,000 9,585 32 34,025 8.6 19,010 19,597 4,606 5,241 2,912 3,312 21.7 13.8 11.7 10.3 na na 0.9 0.9 2.6 2.9 nc nc 8.3 8.9 1.6 1.8 na naBank Tabungan Pensiunan Nasio BTPN IJ Equity BTPN IJ BUY 2,790 3,300 5,840 50 16,294 0.4 8,847 9,193 2,576 2,820 1,851 2,023 8.8 9.3 8.8 8.1 na na 1.1 0.9 - - nc nc 12.8 12.3 2.2 2.1 na naBank Tabungan Negara BBTN IJ Equity BBTN IJ BUY 1,720 2,100 10,590 40 18,215 29.9 8,898 10,018 2,920 3,350 2,196 2,518 18.6 14.7 8.3 7.2 na na 1.2 1.0 2.1 2.1 nc nc 14.9 15.0 1.2 1.2 na naBank Jabar BJBR IJ Equity BJBR IJ REDUCE 1,495 1,200 9,696 25 14,496 21.6 9,147 9,811 2,045 2,255 1,609 1,773 16.8 10.2 9.0 8.2 na na 1.7 1.5 6.1 6.7 nc nc 19.8 19.8 1.7 1.6 na naBank Jatim BJTM IJ Equity BJTM IJ HOLD 488 475 14,945 20 7,293 18.2 3,890 4,134 1,347 1,430 1,022 1,085 15.6 6.2 7.1 6.7 na na 1.1 1.0 9.3 10.2 nc nc 15.8 15.8 2.3 2.4 na naBank Bukopin BBKP IJ Equity BBKP IJ BUY 630 1,000 9,087 41 5,725 2.7 4,668 5,237 1,378 1,579 1,056 1,210 9.9 14.7 5.4 4.7 na na 0.7 0.6 3.7 4.2 nc nc 13.4 13.8 1.0 1.1 na na

CEMENT N 134,795 157.7 52,402 54,999 9,443 9,726 8,015 7,886 (14.8) (1.6) 23.6 45.7 19.5 16.3 2.9 2.7 1.9 1.9 4.8 4.7 13.0 11.4 10.2 8.8 16.8 14.9 Semen Gresik SMGR IJ Equity SMGR IJ HOLD 8,400 8,940 5,932 49 49,825 80.8 26,473 27,776 5,128 5,176 4,006 4,079 (11.4) 1.8 12.4 12.2 7.3 6.6 1.7 1.6 2.4 2.5 nc nc 14.6 13.6 10.1 9.6 14.6 14.3 Indocement INTP IJ Equity INTP IJ HOLD 14,575 15,600 3,681 36 53,654 26.8 15,424 16,390 3,572 3,789 3,841 3,577 (11.8) (6.9) 14.0 15.0 9.5 8.6 2.0 1.9 2.5 2.3 nc nc 15.3 13.1 13.2 11.1 24.0 21.4 Holcim SMCB IJ Equity SMCB IJ HOLD 890 970 7,663 19 6,820 2.8 9,097 9,340 463 471 (92) 26 (152.4) (128.1) (74.3) 264.5 10.1 9.0 0.8 0.8 (1.0) 0.3 74.9 64.4 (1.1) 0.3 (0.5) 0.1 (0.6) 0.2 Semen Baturaja SMBR IJ Equity SMBR IJ REDUCE 2,490 315 9,838 24 24,496 47.3 1,408 1,493 280 290 259 203 (26.9) (21.4) 94.6 120.4 68.6 55.1 7.7 7.3 0.3 0.2 5.3 7.7 8.4 6.2 6.9 4.7 10.2 5.8

COAL RELATED N 179,551 252.0 110,530 126,511 18,288 21,905 11,112 13,893 26.0 24.8 16.5 13.0 7.3 5.8 1.9 1.7 2.9 3.7 8.8 6.7 11.4 13.9 6.7 8.3 5.6 7.0 Adaro* ADRO IJ Equity ADRO IJ BUY 1,630 2,010 31,986 42 52,137 78.9 34,848 36,392 8,261 8,749 3,824 4,123 85.9 7.8 13.6 12.6 5.7 5.2 1.3 1.2 3.2 3.6 30.2 23.2 9.5 9.8 4.7 5.0 7.3 7.8 Indo Tambangraya Megah* ITMG IJ Equity ITMG IJ BUY 16,200 19,460 1,130 29 18,305 30.0 16,474 20,419 2,019 2,533 1,268 1,591 48.9 25.5 14.4 11.5 7.2 5.6 1.6 1.7 6.9 8.7 nc nc 11.1 14.3 6.8 8.4 11.4 14.7 Tambang Batubara Bukit Asam PTBA IJ Equity PTBA IJ BUY 11,900 14,130 2,304 35 27,419 48.2 14,596 16,464 1,667 2,773 1,325 2,157 (34.9) 62.8 20.7 12.7 12.7 8.3 2.7 2.5 1.6 3.1 nc 0.1 13.8 20.4 7.6 11.3 15.3 21.2 United Tractor UNTR IJ Equity UNTR IJ BUY 21,900 26,500 3,730 41 81,690 95.0 44,611 53,237 6,341 7,850 4,695 6,022 21.8 28.3 17.4 13.6 6.6 5.5 2.0 1.8 2.3 2.9 nc nc 12.0 14.3 7.6 9.3

CONSUMER - DISCRETIONARY OW 92,275 161.9 109,972 123,650 6,185 7,302 4,197 5,099 17.6 21.5 28.2 20.8 14.4 12.1 12.1 8.3 2.4 2.9 20.8 21.0 69.7 54.7 26.3 25.3 379.2 296.4 Matahari Department Store LPPF IJ Equity LPPF IJ BUY 14,575 19,100 2,918 83 42,529 116.4 10,196 11,994 2,568 3,107 2,046 2,477 14.9 21.1 20.8 17.2 14.3 11.6 22.3 14.4 3.4 4.1 nc nc 135.9 102.0 46.8 44.4 806.2 626.3 ACE Hardware ACES IJ Equity ACES IJ HOLD 870 850 17,150 40 14,921 3.6 5,059 5,513 716 795 653 663 9.8 1.6 22.8 22.5 18.3 16.7 5.1 4.5 2.0 2.0 nc nc 23.5 21.3 18.9 17.3 30.3 27.0 Mitra Adiperkasa MAPI IJ Equity MAPI IJ BUY 4,890 6,600 1,660 44 8,117 7.2 15,501 17,615 858 993 195 311 421.2 59.8 41.7 26.1 8.4 7.2 3.1 2.9 1.0 1.5 131.1 132.4 7.0 11.6 1.9 2.7 3.2 5.0 Ramayana Lestari Sentosa RALS IJ Equity RALS IJ BUY 1,220 1,440 7,096 30 8,657 12.3 8,202 8,681 361 417 402 449 19.6 11.6 21.5 19.3 17.3 15.7 2.4 2.3 2.6 3.0 nc nc 11.5 12.0 8.6 9.2 15.6 16.2 Matahari Putra Prima MPPA IJ Equity MPPA IJ BUY 1,705 2,250 5,378 40 9,169 5.9 14,415 16,204 212 332 116 221 (36.8) 91.0 79.3 41.5 16.4 12.6 3.2 3.1 0.5 1.0 8.0 12.8 4.1 7.6 1.9 3.5 3.8 6.9 Catur Sentosa Adiprana CSAP IJ Equity CSAP IJ BUY 484 640 4,053 40 1,962 2.9 8,146 9,272 151 204 72 117 76.8 62.4 27.3 16.8 12.9 8.5 2.4 2.1 0.7 1.2 128.8 125.4 9.0 13.4 1.9 2.9 4.0 5.9 Tiphone Mobile Indonesia TELE IJ Equity TELE IJ BUY 725 880 7,124 23 5,165 7.3 26,697 30,831 890 987 456 559 21.7 22.5 11.3 9.2 8.7 8.1 1.6 1.4 1.1 1.3 90.9 85.9 15.1 16.2 6.1 6.9 8.1 8.6 Erajaya Swasembada ERAA IJ Equity ERAA IJ BUY 605 820 2,900 40 1,755 6.3 21,755 23,540 428 468 257 302 13.9 17.6 6.8 5.8 5.9 5.2 0.5 0.5 4.5 5.3 34.9 32.7 8.0 8.8 3.5 4.2 5.7 6.6

CONSUMER - STAPLES N 1,106,186 324.5 343,239 380,693 51,453 56,926 35,504 38,711 17.0 9.0 35.2 32.0 25.1 22.4 22.1 20.0 2.3 2.3 13.5 10.4 56.1 55.3 27.1 27.7 51.5 53.6 Unilever Indonesia UNVR IJ Equity UNVR IJ BUY 40,450 45,000 7,630 15 308,634 84.5 39,675 44,251 8,837 9,672 6,514 7,162 11.3 9.9 47.4 43.1 33.8 30.7 55.0 48.5 2.0 2.2 8.4 2.2 124.8 119.7 39.8 40.0 108.8 113.9 Indofood CBP Sukses Makmur ICBP IJ Equity ICBP IJ BUY 8,775 10,500 11,662 19 102,333 51.5 35,154 38,396 5,096 5,085 3,876 4,091 29.2 5.5 26.4 25.0 17.0 16.6 5.6 4.9 1.5 1.5 nc nc 22.8 21.0 13.2 12.0 34.6 33.3 Indofood Sukses Makmur INDF IJ Equity INDF IJ BUY 7,700 9,800 8,780 50 67,609 96.2 70,120 76,004 8,876 9,488 4,498 4,512 51.6 0.3 15.0 15.0 7.1 6.6 2.3 2.1 3.2 3.2 49.9 43.4 15.8 14.7 4.6 4.6 10.4 10.0 Mayora Indah MYOR IJ Equity MYOR IJ BUY 1,535 2,500 22,359 67 34,321 1.3 17,559 20,869 2,045 2,394 1,248 1,535 2.3 23.1 27.5 22.4 16.2 14.0 5.5 4.6 0.7 0.9 37.3 30.7 22.4 22.9 10.4 11.3 16.1 17.2 Nippon Indosari Corpindo ROTI IJ Equity ROTI IJ HOLD 1,540 1,600 5,062 31 7,770 3.6 2,517 2,989 432 487 283 313 4.5 10.7 27.6 24.9 14.6 13.3 5.5 4.7 0.5 1.0 27.0 32.9 21.6 20.3 9.9 9.8 16.2 15.5 Kino Indonesia KINO IJ Equity KINO IJ HOLD 3,000 3,100 1,429 10 4,286 4.9 3,719 4,006 383 401 258 265 (2.0) 2.8 16.6 16.2 10.6 10.1 2.2 2.0 1.8 1.9 13.1 18.1 13.8 13.0 7.8 7.6 12.6 11.2 Gudang Garam GGRM IJ Equity GGRM IJ BUY 64,500 81,000 1,924 24 124,104 49.3 78,019 85,936 10,047 11,281 6,533 7,258 1.5 11.1 19.0 17.1 12.3 11.0 3.1 2.8 4.0 1.8 60.0 52.2 16.9 17.3 9.9 10.2 10.7 11.1 HM Sampoerna HMSP IJ Equity HMSP IJ BUY 3,930 4,700 116,318 8 457,130 33.2 96,475 108,243 15,737 18,119 12,296 13,575 14.3 10.4 37.1 33.6 28.2 24.5 13.5 13.0 2.3 2.7 nc nc 37.3 39.2 31.4 32.9 37.3 39.2

HEALTHCARE N 153,612 310.0 44,388 50,251 5,532 6,053 4,285 4,691 10.9 9.9 45.4 40.3 27.9 25.6 7.1 6.4 1.5 1.7 3.8 5.4 18.1 18.3 14.0 14.2 35.2 32.4 Kalbe Farma KLBF IJ Equity KLBF IJ BUY 1,500 1,880 46,875 43 70,313 48.6 19,584 21,622 2,974 3,208 2,229 2,451 11.2 10.0 31.6 28.7 21.1 19.4 5.9 5.4 1.6 1.7 nc nc 20.4 20.6 15.5 15.7 26.0 26.5 Mitra Keluarga Karyasehat MIKA IJ Equity MIKA IJ HOLD 2,710 2,550 14,551 18 39,432 15.1 2,468 2,724 706 788 689 758 16.6 10.0 57.2 52.0 46.6 41.8 11.6 10.9 1.2 1.3 nc nc 20.9 21.6 17.9 18.3 75.2 65.1 Kimia Farma KAEF IJ Equity KAEF IJ REDUCE 2,700 1,650 5,554 18 14,940 235.5 5,591 6,452 380 445 278 305 11.7 9.8 53.9 49.1 37.6 33.7 7.1 6.3 0.3 0.4 23.3 52.0 14.1 13.6 7.5 6.4 13.2 10.1 Siloam International Hospital SILO IJ Equity SILO IJ BUY 10,100 13,100 1,156 29 11,677 7.6 5,255 6,722 273 332 99 139 40.0 25.8 118.5 94.2 18.6 20.3 6.4 4.0 0.1 0.1 15.2 nc 5.5 5.4 3.2 3.7 4.8 5.2 Tempo Scan Pacific TSPC IJ Equity TSPC IJ REDUCE 2,000 1,700 4,500 22 9,000 0.6 8,962 9,841 638 624 508 492 (2.7) (3.1) 17.7 18.3 9.7 9.8 2.0 1.8 3.3 3.2 nc nc 11.6 10.4 8.1 7.5 17.1 13.6 Sido Muncul SIDO IJ Equity SIDO IJ BUY 550 640 15,000 19 8,250 2.6 2,528 2,890 562 657 482 545 10.2 13.0 17.1 15.1 11.5 10.0 2.7 2.6 5.2 5.9 6.9 7.1 17.9 19.2 16.7 17.9 25.5 25.8

INDUSTRIAL ESTATES N 26,382 48.7 11,199 12,439 3,158 3,687 2,353 2,632 (25.6) 11.9 13.1 11.6 10.1 8.8 1.2 1.1 1.3 1.5 18.3 19.6 10.4 10.7 7.7 8.3 10.5 10.5 Puradelta Lestari DMAS IJ Equity DMAS IJ BUY 242 280 48,198 20 11,664 13.4 1,515 1,708 842 968 783 914 (42.8) 16.8 14.9 12.8 12.9 11.1 1.5 1.4 2.0 2.4 nc nc 10.5 11.4 9.8 11.0 12.1 12.7 Kawasan Industri Jababeka KIJA IJ Equity KIJA IJ BUY 286 450 20,662 77 5,909 5.3 2,789 3,229 703 915 346 395 2.3 14.2 17.1 14.9 10.0 8.1 1.2 1.1 0.4 0.5 52.6 51.5 7.1 7.6 3.4 3.6 4.6 5.0 Bekasi Fajar Industrial Estate BEST IJ Equity BEST IJ REDUCE 260 220 9,647 42 2,508 19.3 597 648 339 366 238 218 12.6 (8.5) 10.5 11.5 11.1 11.1 0.8 0.7 1.2 1.2 41.7 49.3 7.6 6.5 4.8 4.0 5.5 4.5 Surya Semesta Internusa SSIA IJ Equity SSIA IJ BUY 555 750 4,705 72 2,611 5.9 4,651 4,998 544 607 267 279 (20.0) 4.6 9.8 9.4 5.0 5.0 0.8 0.8 2.0 2.5 25.6 34.5 8.9 8.7 3.8 3.5 7.3 6.7 Lippo Cikarang LPCK IJ Equity LPCK IJ BUY 5,300 8,300 696 58 3,689 4.8 1,647 1,855 730 831 719 825 (21.1) 14.8 5.1 4.5 4.4 3.8 0.9 0.7 - - nc nc 18.1 17.5 12.8 13.4 20.5 19.5

Net profit (IDRb) EPS growth (%) PER (x) EV/EBITDA (x) P/BV (x) Net gearing (%) ROAE (%) ROAA (%) ROIC (%)Yield (%)Revenue (IDRb) Opt. profit (IDRb)

Source: Bloomberg, Bahana estimates; note: based on 23 November 2016 closing price

2017 Compendium

357

APPENDIX I: STOCK HIGHLIGHTS (cont’d) Stock JCI code Ticker Rating Price TP Shares Free float Mkt cap 3M avg to

(IDR) (IDR) (m) (%) (IDRb) (IDRb) 2016F 2017F 2016F 2017F 2016F 2017F 2016F 2017F 2016F 2017F 2016F 2017F 2016F 2017F 2016F 2017F 2016F 2017F 2016F 2017F 2016F 2017F 2016F 2017F

INFRASTRUCTURE OW 128,342 375.7 100,887 131,622 13,612 16,612 6,877 8,727 36.1 24.5 21.1 16.8 10.2 10.0 2.0 1.9 1.3 1.7 35.1 61.9 13.2 12.6 4.6 4.5 8.6 8.2 Jasa Marga JSMR IJ Equity JSMR IJ BUY 4,210 5,287 6,800 30 28,628 41.6 8,785 9,648 3,691 3,948 1,734 1,871 18.3 7.9 17.6 16.3 10.1 11.5 2.2 2.0 1.7 1.8 115.7 179.8 14.4 13.1 4.1 3.4 5.8 4.3 Wijaya Karya WIKA IJ Equity WIKA IJ BUY 2,372 3,267 6,294 35 16,179 54.4 19,500 26,400 1,988 2,689 865 1,332 33.2 9.6 30.1 19.5 10.0 9.4 1.7 2.2 1.4 1.5 nc 18.8 11.2 11.5 3.5 4.0 8.3 9.2 Pembangunan Perumahan PTPP IJ Equity PTPP IJ BUY 3,883 4,630 4,842 49 19,660 35.4 20,126 24,935 2,225 2,728 1,010 1,302 33.1 3.0 19.0 18.5 7.3 6.5 1.9 1.7 1.6 1.6 nc nc 14.4 12.8 4.6 4.9 9.3 9.3 Waskita Karya WSKT IJ Equity WSKT IJ BUY 2,360 3,200 13,573 34 32,033 71.4 25,267 33,515 2,977 3,638 1,504 1,796 23.4 19.4 21.0 17.6 11.3 10.7 2.0 1.8 1.0 1.1 30.9 63.0 11.8 10.8 4.2 3.3 7.1 6.5 Wijaya Karya Beton WTON IJ Equity WTON IJ BUY 830 1,100 8,715 40 7,234 14.6 4,003 5,483 404 568 285 394 64.0 38.3 25.4 18.3 14.3 10.9 3.1 2.7 1.2 1.6 17.5 24.5 12.5 15.7 6.4 8.0 10.0 12.5 Waskita Beton WSBP IJ Equity WSBP IJ BUY 580 740 26,361 40 14,894 115.4 4,513 7,230 863 1,135 595 931 6.5 56.4 25.7 16.4 13.0 11.2 2.1 1.9 - 1.8 nc 14.8 13.6 12.1 7.1 7.1 13.5 11.9 Adhi Karya ADHI IJ Equity ADHI IJ BUY 2,000 3,500 3,561 49 7,122 40.1 16,177 21,268 1,200 1,609 673 844 (11.2) 25.4 10.6 8.4 6.3 4.7 1.2 1.1 1.9 2.4 11.5 10.3 12.3 13.8 3.6 3.8 7.3 8.4 Total Bangun Persada TOTL IJ Equity TOTL IJ BUY 760 1,125 3,410 35 2,592 2.8 2,515 3,142 264 298 210 257 9.8 22.4 12.3 10.1 6.4 5.4 2.8 2.5 5.3 5.3 nc nc 23.7 26.2 7.3 8.4 23.2 26.0

INDUSTRY-VARIOUS N 5,821 46.7 12,497 14,111 1,564 1,820 873 991 10.8 13.6 10.7 9.5 7.1 6.3 1.2 1.1 2.3 2.6 129.7 118.6 17.3 16.7 6.1 6.4 7.5 7.6 Sri Rejeki Isman SRIL IJ Equity SRIL IJ BUY 244 300 18,593 44 4,537 46.6 9,073 10,214 1,406 1,635 830 943 10.4 13.7 5.3 4.6 6.2 5.4 1.0 0.8 2.7 3.1 125.7 107.6 20.0 19.1 7.3 7.7 8.7 8.8 Anabatic Technologies ATIC IJ Equity ATIC IJ BUY 685 750 1,875 21 1,284 0.1 3,424 3,897 158 184 43 48 7.3 11.9 29.9 26.7 10.4 9.6 2.3 2.1 0.8 0.8 143.7 157.8 7.7 8.2 1.7 1.7 3.3 3.1

MEDIA OW 94,738 81.5 31,155 34,252 8,702 9,895 5,157 5,874 96.0 16.5 17.4 16.5 11.4 11.0 5.3 5.0 3.6 2.7 27.8 22.6 24.3 25.0 17.7 19.0 26.5 28.6 Surya Citra Media SCMA IJ Equity SCMA IJ BUY 2,380 3,000 14,622 40 33,922 33.0 4,467 4,816 1,999 2,321 1,529 1,787 0.4 18.0 22.3 19.0 15.5 13.4 9.9 8.5 3.6 3.6 nc nc 43.0 45.0 32.2 35.6 53.0 58.3 Media Nusantara Citra MNCN IJ Equity MNCN IJ BUY 1,735 2,200 14,276 42 23,555 22.0 7,013 7,636 2,524 2,787 1,706 1,913 44.0 12.8 14.3 12.4 10.2 9.2 2.6 2.0 8.6 3.5 32.5 10.9 17.4 16.8 11.6 11.8 12.9 13.9 Global Mediacom BMTR IJ Equity BMTR IJ REDUCE 640 550 14,199 52 8,732 13.9 11,086 12,260 2,419 2,563 1,017 1,051 na 3.4 8.7 12.2 5.3 5.0 0.7 0.7 0.8 3.5 24.9 17.1 8.7 8.1 3.8 3.7 5.8 6.2 MNC Sky Vision MSKY IJ Equity MSKY IJ REDUCE 1,040 700 7,205 2 7,493 0.4 3,273 3,501 82 235 (32) 26 na na na na 8.3 7.3 3.5 3.6 - - 121.7 142.0 (1.8) 1.2 (0.5) 0.3 (0.7) 0.5 Link Net LINK IJ Equity LINK IJ HOLD 5,550 5,300 3,043 33 16,887 9.6 2,933 3,241 1,076 1,191 801 885 25.3 18.9 20.9 19.3 9.7 8.6 3.9 3.3 0.8 1.0 nc nc 20.0 18.8 16.5 15.6 20.9 19.4 Visi Media Asia VIVA IJ Equity VIVA IJ REDUCE 252 230 16,464 45 4,149 2.6 2,383 2,799 603 799 136 211 na 55.0 30.6 19.7 9.8 7.6 2.3 2.0 - - 179.0 162.0 7.0 11.0 2.1 3.0 2.6 3.9

METALS OW 94,254 228.0 48,253 58,125 1,844 6,771 (777) 2,951 (84.0) 479.8 400.1 42.9 26.4 13.0 1.5 1.4 0.1 1.4 29.9 32.7 0.1 5.4 (0.1) 3.4 0.1 5.1 Vale Indonesia INCO IJ Equity INCO IJ BUY 3,370 4,000 9,936 20 33,485 47.1 7,651 10,304 163 2,676 45 1,955 (93.7) 4,121.1 780.7 18.5 16.4 6.5 1.4 1.4 0.1 3.2 nc nc 0.2 7.7 0.1 5.7 0.2 8.9 Aneka Tambang ANTM IJ Equity ANTM IJ REDUCE 975 830 24,031 35 23,430 103.6 10,371 12,917 (135) 297 52 188 101.8 259.5 448.0 124.6 45.4 25.2 1.3 1.3 0.0 0.2 17.6 32.4 0.3 1.0 0.2 0.6 0.2 0.8 Timah Persero TINS IJ Equity TINS IJ BUY 1,250 1,460 7,448 35 9,310 28.4 6,840 7,863 91 500 93 378 (7.9) 304.5 99.6 24.6 18.5 10.6 1.7 1.6 0.3 1.2 20.2 13.7 1.7 6.6 1.0 4.0 1.4 5.6 J Resources PSAB IJ Equity PSAB IJ BUY 280 340 26,460 8 7,409 3.9 3,603 4,104 1,199 1,323 378 446 15.8 17.7 19.6 16.6 6.3 5.3 1.8 1.6 - - 97.7 77.5 9.6 10.4 3.0 3.5 4.6 5.6 Merdeka Copper Gold MDKA IJ Equity MDKA IJ BUY 2,020 2,304 3,570 17 7,211 0.0 - 1,448 (72) 649 (46) 342 34.3 838.9 na 21.1 50.0 8.9 3.4 3.1 - 1.4 41.2 32.1 (2.1) 15.4 (1.5) 9.0 (1.9) 11.3 Krakatau Steel* KRAS IJ Equity KRAS IJ BUY 790 1,020 15,775 20 13,409 45.0 19,787 21,490 598 1,325 (1,300) (358) na na na na 22.1 16.1 0.7 0.7 - - 88.9 104.0 (5.3) (1.5) (2.8) (0.6) (2.8) (0.7)

OIL & GAS N 92,309 160.4 60,755 76,672 10,834 13,758 6,478 8,566 60.8 32.2 15.5 11.4 9.1 6.9 2.0 1.8 3.0 2.6 49.5 36.6 12.7 15.8 5.3 6.6 8.7 11.6 Perusahaan Gas Negara* PGAS IJ Equity PGAS IJ BUY 2,530 2,890 24,242 43 61,331 126.2 38,943 45,509 7,623 8,946 4,948 6,424 (8.6) 29.8 12.4 9.5 6.8 5.8 1.4 1.3 3.5 3.0 45.7 32.6 11.5 14.0 4.9 5.5 7.7 10.1 AKR Corporindo AKRA IJ Equity AKRA IJ BUY 6,625 8,000 3,992 41 26,446 27.4 14,147 21,318 1,601 2,195 1,104 1,642 6.8 45.9 23.7 16.2 15.0 9.9 3.8 3.2 1.6 1.7 39.5 25.3 17.1 22.0 7.1 9.9 12.1 16.7 Medco Energy* MEDC IJ Equity MEDC IJ BUY 1,360 1,540 3,332 49 4,532 6.8 7,665 9,845 1,610 2,618 425 500 116.7 17.6 10.7 9.1 6.2 4.5 0.4 0.4 3.8 3.3 159.2 156.4 4.3 4.9 1.6 1.7 1.6 1.9

PLANTATIONS N 57,388 89.6 40,786 47,071 4,805 7,800 3,010 4,406 54.3 46.4 19.3 12.7 11.1 7.2 1.6 1.5 1.2 2.8 55.5 47.8 9.8 12.4 8.4 11.5 6.2 8.2 Astra Agro Lestari AALI IJ Equity AALI IJ BUY 15,600 20,250 1,575 20 29,767 45.0 13,859 15,347 2,028 2,926 1,448 1,772 133.9 23.7 17.0 13.7 11.7 7.8 2.0 1.8 1.3 3.1 61.9 52.2 12.2 13.8 6.4 7.1 7.5 8.4 Salim Ivomas Pratama SIMP IJ Equity SIMP IJ HOLD 505 530 15,816 21 7,840 4.2 14,120 16,211 1,206 1,930 395 648 49.7 64.1 20.2 12.3 6.2 4.7 0.6 0.5 0.7 1.2 53.9 52.9 2.8 4.4 25.4 37.8 1.8 2.9 London Sumatra Indonesia LSIP IJ Equity LSIP IJ BUY 1,680 2,085 6,822 41 11,330 34.1 3,711 4,521 609 1,080 433 844 (37.2) 94.5 26.5 13.6 12.8 7.9 1.5 1.4 1.5 2.9 nc nc 5.9 10.8 4.9 9.0 6.3 11.7 Sampoerna Agro SGRO IJ Equity SGRO IJ BUY 1,900 2,175 1,890 27 3,579 0.3 2,486 3,548 10 606 122 289 (50.6) 136.5 29.4 12.4 15.6 6.3 1.1 1.0 0.5 1.1 61.5 71.0 3.8 8.5 1.7 3.8 2.3 5.1 Tunas Baru Lampung TBLA IJ Equity TBLA IJ BUY 920 1,475 5,342 46 4,872 6.0 6,609 7,444 952 1,258 612 853 209.7 39.3 8.0 5.8 8.4 6.2 1.4 1.2 1.6 5.0 143.8 107.1 19.6 23.0 6.2 7.9 7.9 10.1

POULTRY UW 78,852 34.2 71,000 76,795 8,389 8,343 5,443 5,408 142.7 (0.0) 15.3 15.5 8.9 8.7 3.3 2.4 0.9 2.1 51.9 43.4 24.1 19.5 11.6 10.7 15.1 13.9 Charoen Pokhpand Indonesia CPIN IJ Equity CPIN IJ HOLD 3,370 3,300 16,398 44 55,917 20.3 37,842 40,864 4,334 4,551 3,130 3,258 70.4 4.1 17.7 17.4 10.7 10.4 3.7 3.2 1.0 1.8 41.1 34.7 22.6 19.5 11.9 11.3 15.5 14.5 Japfa Comfeed Indonesia JPFA IJ Equity JPFA IJ BUY 1,755 2,400 10,640 37 20,025 12.3 27,875 30,174 3,506 3,222 2,025 1,851 320.2 (12.1) 9.5 11.2 4.7 5.2 2.4 2.2 0.7 3.0 72.8 58.9 29.4 20.8 11.2 9.6 15.3 13.0 Malindo Feedmill MAIN IJ Equity MAIN IJ BUY 1,310 2,000 2,239 43 2,910 1.6 5,282 5,757 549 570 288 300 (485.7) 4.2 10.2 9.7 4.0 9.8 1.6 1.4 - 1.5 115.4 104.6 17.0 15.2 6.9 6.6 7.7 7.3

PROPERTY OW 165,151 403.8 40,362 46,631 11,911 14,491 6,323 7,992 (17.9) 26.4 46.5 26.4 17.2 14.7 2.8 2.5 0.6 0.8 46.3 45.5 9.9 11.4 4.1 4.6 7.4 8.5 Bumi Serpong Damai BSDE IJ Equity BSDE IJ BUY 1,815 2,350 19,247 39 34,933 60.1 6,033 6,534 2,616 2,890 1,656 1,841 (22.6) 11.2 21.1 19.0 13.6 12.4 1.7 1.6 0.5 0.5 19.5 22.0 8.5 8.7 4.5 4.7 7.4 7.2 Lippo Karawaci LPKR IJ Equity LPKR IJ HOLD 805 800 23,078 95 18,578 77.3 9,497 10,016 1,547 1,681 756 801 41.2 6.0 24.6 23.2 15.7 14.3 1.1 1.1 1.0 1.1 58.3 56.5 4.5 4.6 1.8 1.8 2.8 2.9 Pakuwon Jati PWON IJ Equity PWON IJ HOLD 690 650 48,160 48 33,230 58.4 4,907 5,578 2,316 2,702 1,512 1,854 19.8 22.6 22.0 17.9 13.4 11.7 3.9 3.3 0.6 0.7 29.9 28.2 19.2 19.8 7.4 7.8 14.3 15.4 Summarecon Agung SMRA IJ Equity SMRA IJ BUY 1,400 2,150 14,427 68 20,197 43.0 5,046 5,623 1,132 1,392 106 338 (87.6) 218.7 190.5 59.8 20.3 17.0 2.7 2.5 0.1 0.4 96.1 95.7 1.8 5.5 0.5 1.5 0.9 2.8 Ciputra Development CTRA IJ Equity CTRA IJ BUY 1,435 1,800 15,425 69 22,135 29.1 6,593 9,424 1,682 2,673 810 1,465 (36.9) 80.8 27.1 15.0 13.0 8.6 2.4 2.1 0.4 0.9 27.8 23.9 9.3 15.0 3.0 4.8 7.3 12.0 Alam Sutera Realty ASRI IJ Equity ASRI IJ REDUCE 382 300 19,649 56 7,506 20.1 2,700 3,252 1,118 1,426 699 768 17.2 9.9 10.7 9.8 11.9 9.6 1.1 1.0 2.1 2.6 97.9 94.7 10.4 10.5 3.6 3.7 5.2 5.3 Ciputra Property CTRP IJ Equity CTRP IJ BUY 710 850 6,316 44 4,484 12.7 1,629 1,897 484 581 133 198 (59.4) 48.9 33.4 22.4 13.1 11.4 1.0 0.9 0.9 1.3 93.0 93.6 2.9 4.2 1.3 1.7 1.7 2.2 PP Property PPRO IJ Equity PPRO IJ REDUCE 1,335 600 14,044 35 18,749 89.2 1,898 2,095 505 578 357 404 18.9 13.2 52.5 46.4 36.9 32.0 6.9 6.2 0.6 0.6 39.8 34.9 13.6 14.1 6.3 6.2 9.8 10.3 Intiland Development DILD IJ Equity DILD IJ BUY 515 680 10,267 81 5,338 13.8 2,059 2,214 512 569 294 323 (26.7) 9.6 18.0 16.4 15.6 15.0 1.1 1.1 1.5 1.1 83.1 95.2 6.2 6.8 2.7 2.6 3.6 3.6

SHIPPING N 5,073 5.2 4,748 5,605 879 1,285 421 834 (48.0) 102.0 3.8 8.0 6.6 4.1 0.9 0.8 44.0 2.3 69.2 36.4 11.1 14.0 5.4 7.7 6.3 9.5 Soechi Lines SOCI IJ Equity SOCI IJ BUY 380 630 7,059 15 2,659 2.3 1,719 2,090 459 647 297 504 12.9 70.1 4.1 5.3 8.4 4.4 0.6 0.5 83.4 3.3 68.6 21.0 7.6 12.3 3.9 6.1 4.6 7.4 Pelayaran Tempuran Emas TMAS IJ Equity TMAS IJ BUY 1,500 2,590 1,141 19 1,697 2.7 1,661 1,933 338 451 203 298 (35.9) 32.3 8.4 6.4 4.6 3.8 1.7 1.3 0.7 0.9 70.0 53.7 22.4 13.9 10.5 13.4 12.5 16.5 Wintermar Offshore Marine WINS IJ Equity WINS IJ BUY 178 200 4,031 42 717 0.3 1,367 1,581 81 188 (78) 31 4.6 na (8.5) 22.3 5.1 3.8 0.3 0.3 - 0.6 69.6 63.3 (2.9) 0.9 (1.2) 0.5 (1.7) 0.8

TELCO-RELATED N 520,765 448.8 175,848 193,740 60,386 68,408 25,054 29,702 35.1 18.6 19.3 19.4 9.3 8.2 4.5 4.0 2.0 3.0 61.6 51.9 25.1 24.7 10.0 10.5 15.1 16.0 Telekomunikasi Indonesia TLKM IJ Equity TLKM IJ BUY 3,940 5,000 100,800 49 397,152 384.6 116,758 130,417 41,686 47,200 20,059 22,853 29.5 13.9 19.8 17.4 9.5 8.4 4.6 4.1 2.5 3.7 7.6 4.9 24.8 25.0 11.5 11.9 17.5 18.4 XL Axiata EXCL IJ Equity EXCL IJ BUY 2,250 3,000 10,688 34 24,048 43.9 21,383 22,130 8,299 9,100 (247) 345 na na na 69.5 4.4 4.0 1.2 1.2 - 0.4 59.6 60.0 (1.4) 1.7 (0.4) 0.6 (0.6) 1.0 Tower Bersama Infrastructure TBIG IJ Equity TBIG IJ REDUCE 5,750 5,100 4,797 51 27,580 15.8 3,805 4,169 2,972 3,257 1,374 1,559 (3.9) 13.5 20.1 17.7 14.5 13.7 10.5 9.2 0.9 0.8 736.1 698.0 66.1 55.4 5.7 5.9 6.6 6.8 Sarana Menara Nusantara TOWR IJ Equity TOWR IJ BUY 3,700 5,600 10,203 66 37,751 0.4 4,956 5,637 3,767 4,282 2,806 2,900 (5.2) 3.4 13.5 13.0 10.8 8.9 3.6 2.8 - - 73.2 38.4 30.9 24.3 11.6 10.4 17.1 15.8 Indosat ISAT IJ Equity ISAT IJ BUY 6,300 8,500 5,434 21 34,234 4.1 28,945 31,388 3,663 4,568 1,062 2,045 na 92.6 32.2 16.7 4.2 3.6 2.5 2.1 0.9 1.8 133.8 86.1 8.1 13.5 2.0 4.0 3.0 6.0

TOURISM OW 9,515 6.8 60,300 68,122 (487) 1,026 (352) 693 (131.4) na (19.1) 15.1 7.3 5.3 0.1 0.1 0.3 0.1 107.8 137.8 (1.3) 6.1 (0.6) 1.4 (1.0) 2.6 Garuda Indonesia* GIAA IJ Equity GIAA IJ REDUCE 342 400 25,869 15 8,771 5.0 58,289 65,782 (651) 844 (411) 617 (139.8) na (21.7) 15.6 7.3 5.2 0.1 0.1 - - 100.4 134.0 (3.2) 4.9 (0.9) 1.3 (1.6) 2.3 Panorama Sentrawisata PANR IJ Equity PANR IJ BUY 595 925 1,200 32 744 1.8 2,011 2,340 165 183 59 76 17.2 29.1 12.1 9.4 7.6 6.6 1.1 1.0 3.5 1.7 194.5 182.2 21.1 20.1 3.0 3.3 5.9 7.0

TRANSPORTATION UW 8,270 6.0 7,085 7,942 899 1,417 385 792 (56.8) 105.8 15.1 11.2 6.0 9.3 1.5 1.3 1.6 2.8 47.9 35.5 9.0 4.0 5.6 8.7 6.7 10.8 Blue Bird BIRD IJ Equity BIRD IJ HOLD 2,930 2,900 2,502 16 7,268 3.0 4,925 5,502 667 952 461 703 (44.0) 52.3 15.9 10.4 6.2 10.1 1.6 1.4 1.9 2.9 30.4 13.9 10.4 3.6 6.5 9.7 7.7 12.0 Express Transindo Utama TAXI IJ Equity TAXI IJ REDUCE 156 135 2,146 49 332 1.7 644 688 (0) 165 (120) 9 (471.8) na (2.8) 38.0 6.0 3.5 0.4 0.4 (6.4) 0.5 133.6 130.7 (14.0) 1.1 (4.2) 0.3 (5.6) 0.5 Adi Sarana Armada ASSA IJ Equity ASSA IJ BUY 199 280 3,398 37 670 1.3 1,516 1,752 232 300 43 80 26.6 85.7 15.6 8.4 4.0 3.9 0.8 0.7 1.9 3.6 196.0 213.2 5.0 8.5 1.4 2.4 1.7 2.9 Market Market N 4,365,061 4,427 1,836,062 2,082,437 335,431 396,531 219,968 263,592 12.4 19.8 19.8 16.6 13.1 11.4 8.1 7.2 2.0 2.3 22.3 20.2 27.7 27.6 12.0 12.5 27.3 26.5

Note: *USD reportingOW: Overweight, N: Neutral, UW: Underweight

Net profit (IDRb) EPS growth (%) PER (x) EV/EBITDA (x) P/BV (x) Net gearing (%) ROAE (%) ROAA (%) ROIC (%)Yield (%)Revenue (IDRb) Opt. profit (IDRb)

Source: Bloomberg, Bahana estimates; note: based on 23 November 2016 closing price

2017 Compendium

358

APPENDIX II: EARNINGS REVISIONS TABLE Ticker Valuation basis Valuation basis

New Old 2016F 2017F 2018F 2016F 2017F 2018F New Old New Old 2016F 2017F 2018F 2016F 2017F 2018F New OldAUTOMOTIVE INDUSTRY - VARIOUSASII 10,000 10,000 16,293 20,709 23,012 16,363 20,093 22,256 BUY BUY SOTP Valuation SRIL* 300 340 61 70 78 61 71 82 BUY BUY PE 5.7x 2017FIMAS 2,000 3,000 (207) 285 830 (37) 34 34 BUY BUY DCF Valuation ATIC 750 800 43 48 53 60 110 146 BUY BUY PE 35.0x 2017FGJTL 1,500 1,700 739 797 878 739 797 878 BUY BUY DCF Valuation

METALSCEMENT INCO* 4,000 3,500 3 145 187 33 66 106 BUY BUY DCF valuationSMGR 8,940 8,900 4,006 4,079 4,351 4,919 5,256 5,301 HOLD HOLD PE 13x 2017F ANTM 830 764 52 188 265 (449) (172) 228 REDUCE BUY DCF valuationINTP 15,600 13,950 3,841 3,577 3,789 4,742 5,352 5,734 HOLD REDUCE PE 16x 2017F TINS 1,460 411 93 378 291 16 14 (31) BUY REDUCE DCF valuationSMCB 970 850 (92) 26 87 170 210 418 HOLD REDUCE PBV 0.9x 2017F PSAB* 340 413 28 33 39 32 58 114 BUY BUY DCF valuationSMBR 315 400 259 203 185 385 331 452 REDUCE REDUCE PE 15x 2017F MDKA* 2,304 2,200 (3) 25 38 (7) (15) 17 BUY BUY PE 24x 2017F

KRAS* 1,020 1,020 (96) (26) 38 (89) (26) 40 BUY BUY DCF valuationCOALADRO* 2,010 1,717 283 305 309 215 229 242 BUY BUY SOTP valuation OIL & GASPTBA 14,130 14,562 1,325 2,157 2,607 1,415 2,230 2,682 BUY BUY DCF valuation PGAS* 2,890 3,200 367 476 510 404 470 - BUY BUY DCF valuationUNTR 26,500 26,500 4,695 6,022 6,407 4,579 5,040 5,461 BUY BUY SOTP Valuation AKRA 8,000 8,000 1,104 1,642 1,704 1,255 1,409 1,490 BUY BUY SOTP valuation

MEDC* 1,540 1,300 31 37 57 (26) 13 21 BUY BUY DCF valuationCONS. & TOLL ROADSJSMR 5,100 6,000 1,734 1,871 2,025 1,540 1,372 1,608 BUY BUY DCF Valuation PLANTATIONSWSKT 3,200 3,500 1,504 1,798 2,280 1,690 1,971 2,623 BUY BUY PE 24.0x 2017F AALI 20,250 20,250 1,447 1,790 2,516 1,448 1,772 2,431 BUY BUY 17.8x 2017F PEWIKA 3,267 3,100 865 1,332 1,595 651 789 1,111 BUY BUY PE 22.0x 2017F LSIP 2,085 2,085 436 849 972 433 844 971 BUY BUY 16.8x 2017F PEPTPP 4,630 4,300 1,010 1,302 1,623 871 1,018 1,197 BUY BUY PE 22.4x 2017FWTON 1,100 1,100 285 394 488 369 472 508 BUY BUY PE 24.0x 2017F PROPERTY ADHI 3,500 3,200 673 844 1,020 627 777 1,072 BUY BUY PE 15.0x 2017F BSDE 2,350 2,350 1,656 1,841 2,065 2,244 2,458 - BUY BUY 55% discount to NAVTOTL 1,125 940 210 257 318 180 189 213 BUY BUY PE 15.0x 2017F PWON 650 650 1,512 1,854 2,176 1,658 2,167 2,538 HOLD HOLD 50% discount to NAVWSBP 740 740 595 931 1,059 495 683 825 BUY BUY PE 21.0x 2017F CTRA 1,800 1,700 810 1,465 1,537 1,399 1,570 - BUY BUY 55% discount to NAV

PPRO 600 600 357 404 457 327 368 - REDUCE HOLD 60% discount to NAVCONSUMER - DISCRE. LPKR 800 1,100 756 801 872 1,246 1,317 - HOLD HOLD 60% discount to NAVLPPF 19,100 21,800 2,046 2,477 2,865 2,094 2,547 3,041 BUY HOLD PE 22.5x 2017F ASRI 300 500 699 768 845 805 978 - REDUCE HOLD 70% discount to NAVACES 850 975 653 663 733 608 674 - HOLD BUY PE 22.0x 2017F DILD 680 - 294 323 366 - - - BUY - 70% discount to NAVRALS 1,440 1,875 402 449 495 452 530 - BUY BUY PE 22.5x 2017F CTRP 850 500 133 198 277 217 259 - BUY REDUCE 60% discount to NAVMAPI 6,600 3,975 195 311 486 277 399 - BUY REDUCE DCF & PE 22.5x 2017FTELE 880 1,180 456 559 633 456 609 - BUY BUY PE 11.3x 2017F SHIPPINGCSAP 640 - 72 117 163 - - - BUY - DCF & PE** 15x 2017F SOCI* 630 630 22 37 50 45 51 55 BUY BUY 8.8x 2017F PEERAA 820 800 257 302 362 244 291 343 BUY REDUCE PE 7.8x 2017F TMAS 2,590 3,000 203 269 289 425 571 355 BUY BUY 11.0x 2017F PE

WINS* 200 184 (6) 2 12 2 5 12 BUY HOLD DCF valuationCONSUMER - STAPLESHMSP 4,700 4,400 12,296 13,575 14,617 12,296 12,895 13,631 BUY BUY PE 40x 2017F TELCOSMYOR 2,500 2,200 1,248 1,535 1,832 1,210 1,429 1,755 BUY BUY PE 36x 2017F TLKM 5,000 5,000 20,059 22,853 25,844 17,604 20,371 22,950 BUY BUY DCF ValuationUNVR 45,000 50,500 6,514 7,162 7,965 5,852 6,459 7,276 BUY BUY PE 48x 2017F EXCL 3,000 3,000 (247) 345 446 440 1,183 1,381 BUY BUY DCF ValuationICBP 10,500 10,500 3,876 4,091 4,275 3,651 4,091 4,609 BUY BUY PE 30x 2017F TOWR 5,600 5,600 2,806 2,900 3,360 2,221 2,635 3,071 BUY BUY DCF 12M 2017FINDF 9,800 9,650 4,498 4,512 4,652 4,023 4,466 4,873 BUY BUY PE 19x 2017F ISAT 8,500 8,500 1,062 2,045 3,131 1,102 2,108 3,179 BUY BUY DCF ValuationTSPC 1,700 2,000 508 492 486 622 672 720 REDUCE BUY PE 15.5x 2017F TBIG 5,100 5,750 1,374 1,559 1,694 1,430 1,357 1,577 REDUCE REDUCE EV/EBITDA 12.2x 2017FROTI 1,600 1,450 283 313 349 322 416 455 HOLD BUY PE 25.9x 2017FKAEF 1,650 1,600 278 305 341 283 318 402 REDUCE REDUCE PE 30.0x 2017F TOURISMMIKA 2,550 2,550 689 758 872 677 705 769 HOLD HOLD DCF WACC 9.4% GIAA IJ* 400 400 (30) 46 72 113 143 84 BUY REDUCE Adjusted EV/EBITDARSILO 13,100 13,700 99 139 188 101 152 217 BUY BUY EV/EBITDA 26.4x 2017F PANR IJ 925 - 54 66 85 - - - BUY - SOTP ValuationKLBF 1,880 2,050 2,229 2,451 2,701 2,218 2,458 2,721 BUY BUY PE 36.0x 2017FKINO 3,100 5,450 258 265 290 316 364 435 HOLD BUY PE 16.7x 2017F TRANSPORTATION

ASSA 280 290 43 80 121 54 77 146 BUY BUY 11.9x 2017F PEINDUSTRIAL ESTATES BIRD 2,900 2,975 461 703 819 723 721 852 HOLD REDUCE 10.3x 2017F PEDMAS 280 290 783 914 1,043 762 932 977 BUY BUY 77% discount to NAV TAXI 135 208 (120) 9 8 37 45 8 REDUCE BUY 0.4X 2017F P/BVKIJA 450 450 346 395 437 432 393 600 BUY BUY 55% discount to NAVLPCK 8,300 8,300 719 825 911 997 1,158 - BUY BUY 66% discount to NAVSSIA 750 750 267 279 327 255 274 324 BUY BUY 70% discount to NAVBEST 220 300 238 218 235 184 264 - REDUCE REDUCE 75% discount to NAV

Target price New earnings Old earnings Rating RatingOld earningsNew earningsTarget price

Source: Bahana estimates * Reporting currency in USD; earnings figures are in USDm

2017 Compendium

359

Disclaimer This publication is prepared by PT.Bahana Securities and reviewed by Daiwa Securities Group Inc. and/or its affiliates, and distributed outside Indonesia by Daiwa Securities Group Inc. and/or its affiliates, except to the extent expressly provided herein. Certain copies of this publication may be distributed inside and outside of Indonesia by PT. Bahana Securities in accordance with relevant laws and regulations. This publication and the contents hereof are intended for information purposes only, and may be subject to change without further notice. Any use, disclosure, distribution, dissemination, copying, printing or reliance on this publication for any other purpose without our prior consent or approval is strictly prohibited. Any review does not constitute a full verification of the publication and merely provides a minimum check. Neither Daiwa Securities Group Inc. nor any of its respective parent, holding, subsidiaries or affiliates, nor any of its respective directors, officers, servants and employees, represent nor warrant the accuracy or completeness of the information contained herein or as to the existence of other facts which might be significant, and will not accept any responsibility or liability whatsoever for any use of or reliance upon this publication or any of the contents hereof. Neither this publication, nor any content hereof, constitute, or are to be construed as, an offer or solicitation of an offer to buy or sell any of the securities or investments mentioned herein in any country or jurisdiction nor, unless expressly provided, any recommendation or investment opinion or advice. Any view, recommendation, opinion or advice expressed in this publication constitutes the views of the analyst(s) named herein and does not necessarily reflect those of Daiwa Securities Group Inc. and/or its affiliates nor any of its respective directors, officers, servants and employees except where the publication states otherwise. This research report is not to be relied upon by any person in making any investment decision or otherwise advising with respect to, or dealing in, the securities mentioned, as it does not take into account the specific investment objectives, financial situation and particular needs of any person.

Neither Daiwa Securities Group Inc. nor any of its affiliates is licensed to undertake any business within the Republic of Indonesia. Any display of any trade name or logo of the Daiwa Securities Group Inc. on this publication shall not be deemed to be an undertaking of any business within the Republic of Indonesia.

Daiwa Securities Group Inc., its subsidiaries or affiliates, or its or their respective directors, officers and employees from time to time may have trades as principals, or have positions in, or have other interests in the securities of the company under research including market making activities, derivatives in respect of such securities or may have also performed investment banking and other services for the issuer of such securities. The following are additional disclosures.

Ownership of Securities

For “Ownership of Securities” information, please visit BlueMatrix disclosure link at https://daiwa3.bluematrix.com/sellside/Disclosures.action.

Investment Banking Relationship

For “Investment Banking Relationship”, please visit BlueMatrix disclosure link at https://daiwa3.bluematrix.com/sellside/Disclosures.action.

Japan Daiwa Securities Co. Ltd. and Daiwa Securities Group Inc.

Daiwa Securities Co. Ltd. is a subsidiary of Daiwa Securities Group Inc.

Investment Banking Relationship

Within the preceding 12 months, The subsidiaries and/or affiliates of Daiwa Securities Group Inc. * has lead-managed public offerings and/or secondary offerings (excluding straight bonds) of the securities of the following companies: Neo Solar Power Corp (3576 TT).

*Subsidiaries of Daiwa Securities Group Inc. for the purposes of this section shall mean any one or more of: • Daiwa Capital Markets Hong Kong Limited (大和資本市場香港有限公司) • Daiwa Capital Markets Singapore Limited • Daiwa Capital Markets Australia Limited • Daiwa Capital Markets India Private Limited • Daiwa-Cathay Capital Markets Co., Ltd. • Daiwa Securities Capital Markets Korea Co., Ltd

Disclosure of Interest of Bahana Securities

Investment Banking Relationship

Within the preceding 12 months, Bahana Securities has lead-managed public offerings and/or secondary offerings (excluding straight bonds) of the securities of the following companies: PT Telekomunikasi Indonesia (Persero) Tbk (TLKM IJ); PT Waskita Beton Precast Tbk (WSBP IJ).

Hong Kong

This research is distributed in Hong Kong by Daiwa Capital Markets Hong Kong Limited (大和資本市場香港有限公司) (“DHK”) which is regulated by the Hong Kong Securities and Futures Commission. Recipients of this research in Hong Kong may contact DHK in respect of any matter arising from or in connection with this research.

Relevant Relationship (DHK)

DHK may from time to time have an individual employed by or associated with it serves as an officer of any of the companies under its research coverage.

Singapore This research is distributed in Singapore by Daiwa Capital Markets Singapore Limited and it may only be distributed in Singapore to accredited investors, expert investors and institutional investors as defined in the Financial Advisers Regulations and the Securities and Futures Act (Chapter 289), as amended from time to time. By virtue of distribution to these category of investors, Daiwa Capital Markets Singapore Limited and its representatives are not required to comply with Section 36 of the Financial Advisers Act (Chapter 110) (Section 36 relates to disclosure of Daiwa Capital Markets Singapore Limited’s interest and/or its representative’s interest in securities). Recipients of this research in Singapore may contact Daiwa Capital Markets Singapore Limited in respect of any matter arising from or in connection with the research.

2017 Compendium

360

Taiwan This research is solely for reference and not intended to provide tailored investment recommendations. This research is distributed in Taiwan by Daiwa-Cathay Capital Markets Co., Ltd. and it may only be distributed in Taiwan to specific customers who have signed recommendation contracts with Daiwa-Cathay Capital Markets Co., Ltd. and non-customers including (i) professional institutional investors, (ii) TWSE or TPEx listed companies, upstream and downstream vendors, and specialists that offer or seek advice, and (iii) potential customers with an actual need for business development in accordance with the Operational Regulations Governing Securities Firms Recommending Trades in Securities to Customers. Recipients of this research including non-customer recipients of this research shall not provide it to others or engage in any activities in connection with this research which may involve conflicts of interests. Neither Daiwa-Cathay Capital Markets Co., Ltd. nor its personnel who writes or reviews the research report has any conflict of interest in this research. Since Daiwa-Cathay Capital Markets Co., Ltd. does not operate brokerage trading business in foreign markets, this research is “without recommendation” to any foreign securities and Daiwa-Cathay Capital Markets Co., Ltd. does not accept orders from customers to trade in such securities that are without recommendation. Recipients of this research in Taiwan may contact Daiwa-Cathay Capital Markets Co., Ltd. in respect of any matter arising from or in connection with the research.

Philippines This research is distributed in the Philippines by DBP-Daiwa Capital Markets Philippines, Inc. which is regulated by the Philippines Securities and Exchange Commission and the Philippines Stock Exchange, Inc. Recipients of this research in the Philippines may contact DBP-Daiwa Capital Markets Philippines, Inc. in respect of any matter arising from or in connection with the research. DBP-Daiwa Capital Markets Philippines, Inc. recommends that investors independently assess, with a professional advisor, the specific financial risks as well as the legal, regulatory, tax, accounting, and other consequences of a proposed transaction. DBP-Daiwa Capital Markets Philippines, Inc. may have positions or may be materially interested in the securities in any of the markets mentioned in the publication or may have performed other services for the issuers of such securities. For relevant securities and trading rules please visit SEC and PSE link at http://www.sec.gov.ph and http://www.pse.com.ph/ respectively.

United Kingdom This research report is produced by Daiwa Securities Co. Ltd. and/or its affiliates and is distributed in the European Union, Iceland, Liechtenstein, Norway and Switzerland. Daiwa Capital Markets Europe Limited is authorised and regulated by The Financial Conduct Authority (“FCA”) and is a member of the London Stock Exchange and Eurex. This publication is intended for investors who are not Retail Clients in the United Kingdom within the meaning of the Rules of the FCA and should not therefore be distributed to such Retail Clients in the United Kingdom. Should you enter into investment business with Daiwa Capital Markets Europe’s affiliates outside the United Kingdom, we are obliged to advise that the protection afforded by the United Kingdom regulatory system may not apply; in particular, the benefits of the Financial Services Compensation Scheme may not be available.

Daiwa Capital Markets Europe Limited has in place organisational arrangements for the prevention and avoidance of conflicts of interest. Our conflict management policy is available at http://www.uk.daiwacm.com/about-us/corporate-governance-regulatory.

Australia This research is distributed in Australia by Daiwa Capital Markets Australia Limited and it may only be distributed in Australia to wholesale investors within the meaning of the Corporations Act. Recipients of this research in Australia may contact Daiwa Capital Markets Stockbroking Limited in respect of any matter arising from or in connection with the research.

India This research is distributed in India to Institutional Clients only by Daiwa Capital Markets India Private Limited (Daiwa India) which is an intermediary registered with Securities & Exchange Board of India as a Stock Broker, Merchant Bank and Research Analyst. Daiwa India, its Research Analyst and their family members and its associates do not have any financial interest save as disclosed or other undisclosed material conflict of interest in the securities or derivatives of any companies under coverage. Daiwa India and its associates, may have received compensation for any products other than Investment Banking (as disclosed)or brokerage services from the subject company in this report or from any third party during the past 12 months. Daiwa India and its associates may have debt holdings in the subject company. For information on ownership of equity, please visit BlueMatrix disclosure Link at https://daiwa3.bluematrix.com/sellside/Disclosures.action. There is no material disciplinary action against Daiwa India by any regulatory authority impacting equity research analysis activities as of the date of this report. Associates of Daiwa India, registered with Indian regulators, include Daiwa Capital Markets Singapore Limited and Daiwa Portfolio Advisory (India) Private Limited.

Germany This document is distributed in Germany by Daiwa Capital Markets Europe Limited, Niederlassung Frankfurt which is regulated by BaFin (Bundesanstalt fuer Finanzdienstleistungsaufsicht) for the conduct of business in Germany.

Bahrain This research material is distributed by Daiwa Capital Markets Europe Limited, Bahrain Branch, regulated by The Central Bank of Bahrain and holds Investment Business Firm – Category 2 license and having its official place of business at the Bahrain World Trade Centre, South Tower, 7th floor, P.O. Box 30069, Manama, Kingdom of Bahrain. Tel No. +973 17534452 Fax No. +973 535113

This material is provided as a reference for making investment decisions and is not intended to be a solicitation for investment. Investment decisions should be made at your own discretion and risk. Accordingly, no representation or warranty, express or implied, is made as to and no reliance should be placed on the fairness, accuracy, completeness or correctness of the information and opinions contained in this document, Content herein is based on information available at the time the research material was prepared and may be amended or otherwise changed in the future without notice. All information is intended for the private use of the person to whom it is provided without any liability whatsoever on the part of Daiwa Capital Markets Europe Limited, Bahrain Branch, any associated company or the employees thereof. If you are in doubt about the suitability of the product or the research material itself, please consult your own financial adviser. Daiwa Capital Markets Europe Limited, Bahrain Branch retains all rights related to the content of this material, which may not be redistributed or otherwise transmitted without prior consent.

2017 Compendium

361

United States This report is distributed in the U.S. by Daiwa Capital Markets America Inc. (DCMA). It may not be accurate or complete and should not be relied upon as such. It reflects the preparer’s views at the time of its preparation, but may not reflect events occurring after its preparation; nor does it reflect PT.Bahana Securities’ or DCMA’s views at any time. Neither PT.Bahana Securities, DCMA nor the preparer has any obligation to update this report or to continue to prepare research on this subject. This report is not an offer to sell or the solicitation of any offer to buy securities. Unless this report says otherwise, any recommendation it makes is risky and appropriate only for sophisticated speculative investors able to incur significant losses. Readers should consult their financial advisors to determine whether any such recommendation is consistent with their own investment objectives, financial situation and needs. This report does not recommend to U.S. recipients the use of any of PT.Bahana Securities’ or DCMA’s non-U.S. affiliates to effect trades in any security and is not supplied with any understanding that U.S. recipients of this report will direct commission business to such non-U.S. entities. Unless applicable law permits otherwise, non-U.S. customers wishing to effect a transaction in any securities referenced in this material should contact a Daiwa entity in their local jurisdiction. Most countries throughout the world have their own laws regulating the types of securities and other investment products which may be offered to their residents, as well as a process for doing so. As a result, the securities discussed in this report may not be eligible for sales in some jurisdictions. Customers wishing to obtain further information about this report should contact DCMA: Daiwa Capital Markets America Inc., Financial Square, 32 Old Slip, New York, New York 10005 (Tel no. 212-612-7000). Ownership of Securities For “Ownership of Securities” information please visit BlueMatrix disclosure Link at https://daiwa3.bluematrix.com/sellside/Disclosures.action . Investment Banking Relationships For “Investment Banking Relationships” please visit BlueMatrix disclosure link at https://daiwa3.bluematrix.com/sellside/Disclosures.action. DCMA Market Making For “DCMA Market Making” please visit BlueMatrix disclosure link at https://daiwa3.bluematrix.com/sellside/Disclosures.action. Research Analyst Conflicts For updates on “Research Analyst Conflicts” please visit BlueMatrix disclosure link at https://daiwa3.bluematrix.com/sellside/Disclosures.action. The principal research analysts who prepared this report have no financial interest in securities of the issuers covered in the report, are not (nor are any members of their household) an officer, director or advisory board member of the issuer(s) covered in the report, and are not aware of any material relevant conflict of interest involving the analyst or DCMA, and did not receive any compensation from the issuer during the past 12 months except as noted: no exceptions. Research Analyst Certification For updates on “Research Analyst Certification” and “Rating System” please visit BlueMatrix disclosure link at https://daiwa3.bluematrix.com/sellside/Disclosures.action. The views about any and all of the subject securities and issuers expressed in this Research Report accurately reflect the personal views of the research analyst(s) primarily responsible for this report (or the views of the firm producing the report if no individual analysts[s] is named on the report); and no part of the compensation of such analyst(s) (or no part of the compensation of the firm if no individual analyst[s)] is named on the report) was, is, or will be directly or indirectly related to the specific recommendations or views contained in this Research Report. For stocks and sectors in Indonesia covered by Bahana Securities, the following rating system is in effect: Stock ratings are based on absolute upside or downside, which is the difference between the target price and the current market price. Unless otherwise specified, these ratings are set with a 12-month horizon. It is possible that future price volatility may cause a temporary mismatch between upside/downside for a stock based on the market price and the formal rating. "Buy": the price of the security is expected to increase by 10% or more. "Hold": the price of the security is expected to range from an increase of less than 10% to a decline of less than 5%. "Reduce": the price of the security is expected to decline by 5% or more. Sector ratings are based on fundamentals for the sector as a whole. Hence, a sector may be rated “Overweight” even though its constituent stocks are all rated “Reduce”; and a sector may be rated “Underweight” even though its constituent stocks are all rated “Buy”. “Overweight”: positive fundamentals for the sector. “Neutral”: neither positive nor negative fundamentals for the sector. “Underweight”: negative fundamentals for the sector. Ownership of Securities For “Ownership of Securities” information, please visit BlueMatrix disclosure Link at https://daiwa3.bluematrix.com/sellside/Disclosures.action. Investment Banking Relationships For “Investment Banking Relationship”, please visit BlueMatrix disclosure Link at https://daiwa3.bluematrix.com/sellside/Disclosures.action. Relevant Relationships (Bahana Securities) Bahana Securities may from time to time have an individual employed by or associated with it serves as an officer of any of the companies under its research coverage. Bahana Securities market making Bahana Securities may from time to time make a market in securities covered by this research.

2017 Compendium

362

Explanatory Document of Unregistered Credit Ratings In order to ensure the fairness and transparency in the markets, Credit Rating Agencies became subject to the Credit Rating Agencies’ registration system based on the Financial Instruments and Exchange Act. In accordance with this Act, in soliciting customers, Financial Instruments Business Operators, etc. shall not use the credit ratings provided by unregistered Credit Rating Agencies without informing customers of the fact that those Credit Rating Agencies are not registered, and shall also inform customers of the significance and limitations of credit ratings, etc. The Significance of Registration Registered Credit Rating Agencies are subject to the following regulations: 1) Duty of good faith. 2) Establishment of control systems (fairness of the rating process, and prevention of conflicts of interest, etc.). 3) Prohibition of the ratings in cases where Credit Rating Agencies have a close relationship with the issuers of the financial instruments to be rated, etc. 4) Duty to disclose information (preparation and publication of rating policies, etc. and public disclosure of explanatory documents). In addition to the above, Registered Credit Rating Agencies are subject to the supervision of the Financial Services Agency (“FSA”), and as such may be ordered to produce reports, be subject to on-site inspection, and be ordered to improve business operations, whereas unregistered Credit Rating Agencies are free from such regulations and supervision. Credit Rating Agencies < Moody’s > The Name of the Credit Rating Agency Group, etc The name of the Credit Rating Agencies group: Moody’s Investors Service, Inc. ("MIS") The name and registration number of the Registered Credit Rating Agency in the group: Moody’s Japan K.K. (FSA commissioner (Rating) No.2) How to acquire information related to an outline of the rating policies and methods adopted by the person who determines Credit Ratings The information is posted under “Unregistered Rating explanation” in the section on “The use of Ratings of Unregistered Agencies” on the website of Moody’s Japan K.K. (The website can be viewed after clicking on “Credit Rating Business” on the Japanese version of Moody’s website (https://www.moodys.com/pages/default_ja.aspx) Assumptions, Significance and Limitations of Credit Ratings Credit ratings are Moody’s Investors Service, Inc.’s (“MIS”) current opinions of the relative future credit risk of entities, credit commitments, or debt or debt-like securities. MIS defines credit risk as the risk that an entity may not meet its contractual, financial obligations as they come due and any estimated financial loss in the event of default. Credit ratings do not address any other risk, including but not limited to: liquidity risk, market value risk, or price volatility. Credit ratings do not constitute investment or financial advice, and credit ratings are not recommendations to purchase, sell, or hold particular securities. No warranty, express or implied, as to the accuracy, timeliness, completeness, merchantability or fitness for any particular purpose of any such rating or other opinion or information, is given or made by MIS in any form or manner whatsoever. Based on the information received from issuers or from public sources, the credit risks of the issuers or obligations are assessed. MIS adopts all necessary measures so that the information it uses in assigning a credit rating is of sufficient quality and from sources MIS considers to be reliable. However, MIS is not an auditor and cannot in every instance independently verify or validate information received in the rating process. This information is based on information Daiwa Securities Co. Ltd. has received from sources it believes to be reliable as of May 13th, 2016, but it does not guarantee accuracy or completeness of this information. For details, please refer to the website of Moody’s Japan K.K. (https://www.moodys.com/pages/default_ja.aspx) < Standard & Poor’s > The Name of the Credit Rating Agencies group, etc. The name of the Credit Rating Agencies group: S&P Global Ratings ("Standard & Poor’s ") The name and registration number of the Registered Credit Rating Agency in the group: Standard & Poor’s Ratings Japan K.K. (FSA commissioner (Rating) No.5) How to acquire information related to an outline of the rating policies and methods adopted by the person who determines Credit Ratings The information is posted under “Unregistered Rating Information” (http://www.standardandpoors.co.jp/unregistered) in the “Library and Regulations” section on the website of Standard & Poor’s ratings Japan K.K. (http://www.standardandpoors.co.jp) Assumptions, Significance and Limitations of Credit Ratings Credit ratings assigned by Standard & Poor's are statements of opinion on the future credit quality of specific issuers or issues as of the date they are expressed and they are not indexes which show the probability of the occurrence of the failure to pay by the issuer or a specific debt and do not guarantee creditworthiness. Credit ratings are not a recommendation to purchase, sell or hold any securities, or a statement of market liquidity or prices in the secondary market of any issues. Credit ratings may change depending on various factors, including issuers' performance, changes in external environment, performance of underlying assets, creditworthiness of counterparties and others. Standard & Poor's conducts rating analysis based on information it believes to be provided by the reliable source and assigns credit ratings only when it believes there is enough information in terms of quality and quantity to make a conclusion. However, Standard & Poor's does not perform an audit, due diligence or independent verification of any information it receives from the issuer or a third party, or guarantee its accuracy, completeness or timeliness of the results by using the information. Moreover, it needs to be noted that it may incur a potential risk due to the limitation of the historical data that are available for use depending on the rating.

2017 Compendium

363

This information is based on information Daiwa Securities Co. Ltd. has received from sources it believes to be reliable as of May 13th, 2016, but it does not guarantee accuracy or completeness of this information. For details, please refer to the website of Standard & Poor’s Ratings Japan K.K. (http://www.standardandpoors.co.jp) < Fitch > The Name of the Credit Rating Agency group, etc The name of the Credit Rating Agencies group: Fitch Ratings ("Fitch") The name and registration number of the Registered Credit Rating Agency in the group: Fitch Ratings Japan Limited (FSA commissioner (Rating) No.7) How to acquire information related to an outline of the rating policies and methods adopted by the person who determines Credit Ratings The information is posted under “Outline of Rating Policies” in the section of “Regulatory Affairs” on the website of Fitch Ratings Japan Limited (https://www.fitchratings.co.jp/web/) Assumptions, Significance and Limitations of Credit Ratings Ratings assigned by Fitch are opinions based on established criteria and methodologies. Ratings are not facts, and therefore cannot be described as being "accurate" or "inaccurate". Credit ratings do not directly address any risk other than credit risk. Credit ratings do not comment on the adequacy of market price or market liquidity for rated instruments. Ratings are relative measures of risk; as a result, the assignment of ratings in the same category to entities and obligations may not fully reflect small differences in the degrees of risk. Credit ratings, as opinions on relative ranking of vulnerability to default, do not imply or convey a specific statistical probability of default. In issuing and maintaining its ratings, Fitch relies on factual information it receives from issuers and underwriters and from other sources Fitch believes to be credible. Fitch conducts a reasonable investigation of the factual information relied upon by it in accordance with its ratings methodology, and obtains reasonable verification of that information from independent sources, to the extent such sources are available for a given security or in a given jurisdiction. The assignment of a rating to any issuer or any security should not be viewed as a guarantee of the accuracy, completeness, or timeliness of the information relied on in connection with the rating or the results obtained from the use of such information. If any such information should turn out to contain misrepresentations or to be otherwise misleading, the rating associated with that information may not be appropriate. Despite any verification of current facts, ratings can be affected by future events or conditions that were not anticipated at the time a rating was issued or affirmed. For the details of assumption, purpose and restriction of credit ratings, please refer to “Definitions of ratings and other forms of opinion” on the website of Fitch Rating Japan Limited. This information is based on information Daiwa Securities Co. Ltd. has received from sources it believes to be reliable as of May 13th, 2016, but it does not guarantee accuracy or completeness of this information. For details, please refer to the website of Fitch Rating Japan Limited (https://www.fitchratings.co.jp/web/) Additional information may be available upon request. Japan - additional notification items pursuant to Article 37 of the Financial Instruments and Exchange Law (This Notification is only applicable where report is distributed by Daiwa Securities Co. Ltd.)

If you decide to enter into a business arrangement with us based on the information described in materials presented along with this document, we ask you to pay close attention to the following items.

• In addition to the purchase price of a financial instrument, we will collect a trading commission* for each transaction as agreed beforehand with you. Since commissions may be included in the purchase price or may

not be charged for certain transactions, we recommend that you confirm the commission for each transaction. • In some cases, we may also charge a maximum of ¥ 2 million (including tax) per year as a standing proxy fee for our deposit of your securities, if you are a non-resident of Japan. • For derivative and margin transactions etc., we may require collateral or margin requirements in accordance with an agreement made beforehand with you. Ordinarily in such cases, the amount of the transaction will

be in excess of the required collateral or margin requirements. • There is a risk that you will incur losses on your transactions due to changes in the market price of financial instruments based on fluctuations in interest rates, exchange rates, stock prices, real estate prices,

commodity prices, and others. In addition, depending on the content of the transaction, the loss could exceed the amount of the collateral or margin requirements. • There may be a difference between bid price etc. and ask price etc. of OTC derivatives handled by us. • Before engaging in any trading, please thoroughly confirm accounting and tax treatments regarding your trading in financial instruments with such experts as certified public accountants.

*The amount of the trading commission cannot be stated here in advance because it will be determined between our company and you based on current market conditions and the content of each transaction etc.

When making an actual transaction, please be sure to carefully read the materials presented to you prior to the execution of agreement, and to take responsibility for your own decisions regarding the signing of the agreement with us.

Corporate Name: Daiwa Securities Co. Ltd. Financial instruments firm: chief of Kanto Local Finance Bureau (Kin-sho) No.108 Memberships: Japan Securities Dealers Association, Financial Futures Association of Japan Japan Securities Investment Advisers Association Type II Financial Instruments Firms Association

Andrew Franklin [email protected]

Research AnalystCoal, Metals, Oil & Gas

ext 3619

Richard Haditya [email protected]

Research AnalystRetail

ext 3605

Henry [email protected]

Research AnalystBanks, Internet, Media

ext 3622

Heribertus [email protected]

Research Associateext 3624

Alvin [email protected]

Institutional Equity Salesext 2591

Michael W Setjoadi [email protected]

Research AnalystConsumer, Poultry

ext 3620

Dealing Room: +62 21 527 0808

Research: +62 21 250 5081

Harry [email protected]

Senior Associate DirectorHead of Strategy & Research

ext 3600direct: +62 21 250 5735

Handi Huta [email protected]

Strategist and Product HeadBanks, Cement

ext 3610

Leonardo Henry Gavaza, [email protected]

Senior Research ManagerAuto, Telco, Infrastructure

ext 3608

Made Ayu [email protected]

Research Executiveext 3607

Zefanya [email protected]

CA Managerext 3612

Novianty Permata [email protected]

CAext 3618

Ashish [email protected]

Vice PresidentInstitutional Equity Sales

ext 2550 / 2553

John M. [email protected]

Institutional Equity Salesext 2549

Yohanes Adhi [email protected]

Manager, Surabaya Branchext 7250

Suwardi Widjaja [email protected]

Institutional Equity Salesext 2548

+62 31 535 2788 (Surabaya Branch)

Fakhrul [email protected]

Economistext 3602

Sanni Satrio Dwi [email protected]

Research AnalystIndustrial Estates, Property

ext 3611

Natalia [email protected] of Sales &

Client Relationship Management ext 2500

Sarah Jessica [email protected]

Macro & Fixed Income Associateext 3693

Renaldy [email protected]

Research AnalystConsumer, Healthcare

ext 3606

Gilang [email protected]

Research AnalystIndustrialsext 3601

Adriana [email protected]

Sales Executiveext 2541

Hanna [email protected]

Sales Traderext 2525

Bram [email protected]

Institutional Equity Salesext 2524

Muhammad [email protected] Analyst

ext 3609

Kartika Sutandi, [email protected]

Head of Equity Institutional Salesext 2590

Mardy Oramahi [email protected]

Research AnalystSmall Capsext 3621

Gregorius [email protected]

Research AnalystTransportation, Plantations

ext 3604

Fikri Dzikrian [email protected] Associate

ext 3623

Fauzan Luthfi [email protected] Associate

ext 3613

Naarah [email protected] Equity Sales

ext 2592


Recommended