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Good morning,
Telekomunikasi
Indonesia (TLKM IJ, BUY, TP: IDR5,200), Another One For the Road
Telkom’s FY16 core
EBITDA/core earnings formed 100%/97-98% of our/consensus estimates
respectively. Overall group revenue, EBITDA and core earnings sustained YoY
double-digit growth of 14%/16%/25%, supported by the continuing robust
showing at its mobile arm, Telkomsel.
Our earnings
forecast, BUY rating and DCF TP of IDR5,200 are unchanged pending the results
call with management later today.
Some key highlights
♦ Marketing
cost was up 71% qoq and 37% in FY16 on seasonality, 4G and the IndiHome
(triple play) promotions which led to the 3% decline in EBITDA
♦ Alongside
higher deprecation from rapid 4G network investments and higher interest
expense, core earnings fell 8.2% sequentially.
♦ Telkomsel
added a record 10m subs in 4Q16 (48% of FY16 net-adds in 4Q16), which fuelled
the strong 6.2% qoq subs growth and 2.4% qoq mobile revenue growth.
♦ YTD,
the industry leading mobile revenue growth of 14% was led by i) the 38%
growth in mobile data revenue, and ii) 9.1% rise in voice revenue which more
than offset the decline in SMS revenue (-3%).
♦ Strong
voice revenue growth reflects the large proportion of 2G customers outside of
Java (non-smartphone users) and the aggressive promotion to migrate pay as
you use (PAYU) customers to voice packages. Consequently, voice RPM rose for
the third consecutive quarter to IDR194. Revenue per SMS (RPSMS) was up 2%
qoq to IDR77.
♦ Mobile
data traffic surged 117% yoy (+30% qoq) in 4Q16, which more than offset the
erosion in data yield (-18% qoq to IDR23 per MB), driving the 27% yoy (+6.4%
qoq) expansion in mobile data revenue (FY16: +38% yoy).
♦ Indi-Home
subs base only saw a slight increase qoq to 1.6m. With the focus on higher
quality subs, APRU improved 9% qoq to IDR341k. (Jeffrey
Tan)
Link to Daily
report: Indonesia Morning Cuppa 070317
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Results
Review:
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AKR
Corpindo (AKRA IJ, BUY, TP: IDR7,500), FY16 net
profit came out in-line with ours (98%) and consensus estimate (96%)
In general, 4Q16 operating
performance were worse than to 3Q16 due to lower gross profit and higher
other expenses. However, the quarterly results were guided ahead by
management team and looks to be priced in, as reflected in ours/consensus
estimate.
♦ Key takewayfrom this set of number are QoQ revenue improvement
of 18.6% but gross profit saw a QoQ decline of -13.7%, although AKR booked
additional IDR100bn of land sales in this quarter versus zero in 3Q16, this
suggest AKR's dollar margin of RP/liter saw a QoQ decline. We only have
volume data at this juncture and management has yet to send out the
supplementary info, as such, we cant derive the actual RP/liter margin for
4Q16, however, FY16 average margin/liter should be around IDR700/liter, in
line with management guidance.
♦ Fuel distribution volume of 4Q16 has indeed started to pick up,
recording a QoQ increase of 11.3%, with majority of coal miners
looking to increase production this year, higher sales volume is possible,
mining sector contribute about 30% of its total petroleum distribution
volume. AKR is also looking to ramp up ron92 gasoline distribution after
forming a joint venture with BP and hoping to increase the land sales of
JIIPE with the completion of power plant and water treatment plant by 2Q17.We
maintain our BUY recommendation on and SOP based TP of IDR7,500 (20%
upside)due to better outlook this year, medium term outlook supported by the
structural growth story of retail and JIIPE,AKRA IJ is currently trading at
18.9x FY17F PER on our estimate, in-line with its 5 years historical mean.
♦ For FY17F, we assumed flat margin/liter and 2.3mn KL of total
sales versus 2.08mn actual of FY16, 11% volume growth.
Other highlights:
♦ AKR has maintained its petroleum distribution gross margin at
above IDR600/litre on the back of a 30% decline of ASP (due to lower average
crude oil price of FY16), lower YoY RP/liter margin (about -10.5% decline)
was due mainly to 1Q15's high base effect (IDR900/liter)versus 1Q16's
IDR600/litre.
♦ Full year petroleum distribution volume saw a 5.8% YoY decline
due to lower take up from coal mining sector, improvement was seen in 4Q16.
♦ Retail distribution sales volume surged from 110k KL in 9M16 to
160KL in 12M16, this QoQ improvement is meaningful because AKR is pushing its
RON92 gasoline that was introduced earlier last year.
♦ JIIPE land sales is still slow, new acreage of 20 ha sold in
FY16, below target of 40-50 ha, AKR has booked about 20 ha so far, backlog of
20ha remained to be booked.
♦ Net gearing remains stable at 0.33x (Norman
Choong, CFA)
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Media
Highlights:
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Economics
Tax revenue slows down in February 2017
Corporates
Telkom realised
IDR29.1trn capex during 2016 period
HM Sampoerna booked
net profit growth of 23.15% YoY in 2016
Indo Tambangraya
aims contribution of electricity business to reach 30%
Astra Nusantara
targets 5-15% traffic growth on its toll roads
The government to
revise regulation on taxi business
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Our
Recent Publication:
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IndonesiaStrategy: Needs Accelerant
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Initiating Coverage: Harum Energy – Higher
Production To Boost Earnings
Link to report: Harum Energy : Higher Production To Boost Earnings
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Results Review: Japfa Comfeed – Weaker
Growth Outlook
Link to report: Japfa Comfeed Indonesia : Weaker Growth Outlook
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Results Review: PP London Sumatra Indonesia
– CPO Production To Keep Recovering
Link to report: PP
London Sumatra Indonesia : CPO Production To Keep Recovering
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Economic Update – Inflation Continues to
Pick Up in February
Link to report: Inflation
Continues to Pick Up in February
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Results Review: United Tractors - Profit
Margin Recovery But Most Likely Already Priced In
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Sarana Menara Nusantara - Still Our Preffered
Pick
Link to report: Sarana
Menara Nusantara : Still Our Preferred Pick
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Economic Update - M2 Moderates, Loan Growth
Surges At Start 2017
Link to report: M2
Moderates, Loan Growth Surges At Start 2017
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Re-initiating Coverage: Adaro Energy –
Power Plants As The Locomotive Of Growth
Link to report: Adaro
Energy : Power Plants As The Locomotive Of Growth
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Results Review: Astra International –
Tailwinds Dampen Outlook
Link to report: Astra
International : Tailwinds Dampen Outlook
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Best regards,
Helmy Kristanto
Director
Head of Indonesia
Research
PT. RHB Securities
Indonesia
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