RHB Indonesia - Telekomunikasi Indonesia - 1Q17 Results Flash (Telekomunikasi Indonesia, Matahari Department Store, Bank Tabungan Unknown Kamis, 27 April 2017




Good morning,

Telekomunikasi Indonesia – 1Q17 Results Flash
1Q17 core EBITDA/core earnings formed 25%/32-31% of our/consensus estimates. Overall group revenue, EBITDA and core earnings recorded YoY growth of 10.4%/13.0%/47% and QoQ growth of 2.9%/11.2%/48.9% respectively, driven by the good performance of its mobile arm, Telkomsel.

We are keeping our earnings forecast, BUY rating and DCF based TP of IDR5,000 pending the results call with management on 2nd of May.

Some highlights

¨ Another quarter of strong data revenue growth despite of first quarter’s weak seasonality, mobile data traffic surged 115.5% YoY (+11.8% QoQ) in 1Q17, more than offset the continued erosion in data yield (-11% QoQ to IDR21 per MB), driving the 25.4% yoy (+23.4% QoQ) expansion in mobile data revenue.
¨ Both prepaid and post-paid subscriber net addition was flat QoQ, this gave hints to existing subs of migrating to 3G/4G devices, or current smart phone subscribers upgrading their data package, pending more colors from management team.
¨ Telkomsel’s mobile WIFI business is also doing well, recorded 58.9% YoY and 14.9% QoQ subscriber growth which complements its cellphone segment’s voice/sms to data migration.
¨ Marketing cost was down 35% QoQ but still 31% up YoY due to continued 4G and IndiHome promotions.
¨ EBITDA was in-line with ours/consensus forecast, the out performance on core net profit was more of a function of lower effective tax rate of 1Q17. (Norman Choong, CFA)

Link to Daily report: Indonesia Morning Cuppa 270417



Results Review:

Matahari Department Store (LPPF IJ, Neutral, TP: IDR16,000), 1Q17 Result Highlights

Matahari Department Store held a conference call discussing 1Q17 performance. Here are the key highlights:

*1Q17 net sales is 17.5% of RHB estimate and 16.9% from consensus. Historically, Q1 represents c.17% of total full year sales. Thus, it is IN-LINE with RHB's and consensus' estimates.
*1Q17 net income achieved 11.5% of our estimate and 10.9% of consensus. Historically, Q1 represents c.9% of total full year net income. Thus, the 1Q15 net income is IN-LINE with RHB's and Consensus' estimates.
*Although net sales decreased by 0.55% YoY, gross margin increased by 100bps YoY due to improving margin in direct purchase segment. This improvement was caused by the increase in selling price and maintained efficiency.
*SSSG was negative as expected in 1Q17 with -3.5% (9.4% in 1Q16). The SSSG figure is composed of prices rising by 4.2% while sales volume slips by 7.7%. This is the first negative quarterly SSSG figure since 3Q15. LPPF’s weak SSSG performance was due to continued weakness in demand, the high base of last year, and the shift of Easter holiday to 2Q17. Furthermore, the company projects 3-6% SSSG in FY17, with Easter and Lebaran supporting SSSG in 2Q17.
*LPPF plans to open 3-6 new stores in FY17 mainly in Java (ex. Greater Jakarta) with 3 stores expected to open prior to Lebaran period.
*We maintain our NEUTRAL call on LPPF with a TP of IDR16,000 (Stifanus Sulistyo)


Bank Tabungan Pensiunan Nasional (BTPN IJ, BUY, TP IDR3,400), Continue on High Yield Segment

BTPN just released 1Q17 results following analyst meeting today. Our GGM-derived TP implies 1.17x 2017F P/BV multiple. The main drawback on BTPN is the low liquidity shares in the market.

Key highlights:

1Q17 performance:
¨ Net interest income up by 17.2% YoY accounted for 26.9% of our forecast on the back of 9.7% YoY loans growth.
¨ NIM expanded to 12% from 10.6% in 1Q16.
¨ Cost to Income Ratio (CIR) still hover at 63% as BTPN continue to invest in its branchless banking platform (BTPN Wow! and Jenius) with 17.7% YoY opex growth.
¨ Credit cost stood at 161bps (4Q16: 171bps, 1Q16: 144bps), still fairly manageable in our view given stable gross NPL ratio at 0.8%.
¨ IDR478bn net profit represents 27.3% of our forecast.

What to expect:
¨ Asset yield would slightly fall due to rebalanced loan mixture with high growth coming from iSME loan and productive poor loan (sharia). As such, we expect asset yield of 17.9% in FY17 (FY16: 18%).
¨ NIM would stable at 11.6% for FY17 (FY16: 11.6%) in our forecast as we also expect a slight drop in blended CoF to 6.8%. So our model suggest more upside risks on the NIMs side that may come from lower blended CoF if BTPN can push its CASA deposits further from its BTPN Wow! and Jenius initiatives.
¨ Asset quality should not be the main issue for BTPN given its long track record on managing its prudent risk management policy.
¨ Our key concern is the high growth in opex to build its new business units in branchless banking platform, BTPN Wow! for mass market segment and Jenius for mass affluent market segment. Yet we anticipate the impact from these two platforms would help its customer deposits structure significantly by end-2017 at the soonest in our view. (Eka Savitri)

Media Highlights:

Economics

Indonesia reaches 24.4% of 2017 investment target in 1Q17

Corporate

Adaro Energy distributes 30% of 2016 net income
Indofood divest shares in China Minzhong Foods
Wijaya Karya predicts achieving 60% of new contracts target in 1H17
Saratoga prepares USD100mn for investments

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Best regards,

Helmy Kristanto
Director
Head of Indonesia Research
PT. RHB Securities Indonesia


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