Good morning,
Acceleration in
Infrastructure Development
The Finance
Ministry, Darmin Nasution, stated that 86 out of 225 of the president’s
priority projects have started while the remaining is still in the planning
process. For the electricity project, out of 35,000 MW, the government has
signed 17,800 MW contract and will try to realise the remaining target by the
end of this year. The Minister stated that there are 15,500 MW IPP contracts
and 3,750 MW PLN contracts that will be signed later this year.
President Joko
Widodo has instructed the ministers to speed up the planning process of these
priority projects. He later added that the ministers have to decide the
funding scheme for these projects. The funding scheme has to be stated if the
project is funded by the state budget, SOE, local SOE or private entities. (Detik)
We believe all the
SOEs will be the direct beneficiaries of these actions given that most of
them are the main contractors for several top priority projects. Having said
that, we also believe that Government will likely to forge ahead to
accelerate the construction progress of LRT Greater Jakarta which is built by
Adhi Karya (ADHI IJ, BUY, TP: IDR3,400). Currently, the civil work progress
of this project is slowing down due to a disagreement between Ministry of
Transportation and Governor of Jakarta regarding over track gauge and source
of fund. Therefore, provided such an order from President Jokowi, Adhi will
likely receive certainty on LRT Greater Jakarta project in the near term and record
it as new contract in 2H16. (Dony Gunawan)
Link to Daily
report: Indonesia Morning Cuppa - 070616
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Media Highlights:
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Bank Indonesia
prepares IDR160.4trn for Ramadan festivities
Government spending
realisation reached IDR691.35trn in May
Indonesia retail
sector jump to 5th position
Corporates
Bumi Serpong Damai
received IDR650bn from bond offering
Bumi Serpong Damai (BSDE
IJ, BUY, TP: IDR2,540) only received IDR650bn or 56.7% lower than the initial
target of IDR1.5trn. The company offered 2 bonds series, series A with 5
years tenor and 9% coupon and series B with 7 years tenor and 9.2% coupon.
BSD will allocate 40% of the proceeds for land acquisition, another 40% for
property projects development and the remaining for working capital. (Bisnis
Indonesia)
Comments: Note that as of
3M16, BSDE’s gearing is at 0.35x while net gearing is at 0.1x. Thus if we
added the IDR650bn bonds proceeds, BSDE gearing should stands at 0.37 with
net gearing of 0.1x. We believe the company balance sheet still at healthy
level comparet to average industry gearing of 0.65x and net gearing of 0.5x,
respectively. Lower than expected bonds proceed should cause no harm for both
balance sheet and company’s expansion strategy, as company advise that
marketing sales up to May has reached IDR2trn or 30% of the company FY16
presales target, translating into sufficient internal cash financing. Additionally,
FY16 capex allocation is IDR4trn, which is lower than IDR5trn annual capex in
previous years. Maintain BUY, TP IDR2,540 . (Lydia Suwandi)
Industrial land
price reached IDR3m per sqm
Indoritel to
finalise the selling of new shares amounted to IDR1trn
Surya Toto to invest
in new factory worth USD29mn
Best regards,
Helmy Kristanto
Director
Head of Indonesia Research
PT. RHB Securities Indonesia
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