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Good morning,
Indonesian
Government plans to restrict coal exports in 2019
Jakarta Post cited
Sri Raharjo, the coal and mineral program supervision director at the energy
and mineral resources ministry, that Indonesian Government plans to tighten
coal export policy starting 2019 in order to preserve coal supply for
domestic power generation amid growing demand in Southeast Asia.
According to the
Government, domestic consumption on coal is expected to soar to 240m tonnes
in 2019 from 111m tonnes in 2016. The Government plans to restrict production
to 400m tonnes in 2019 from 419m tonnes in 2016. Indonesia may complete
additional capacity of the 35,000MW power plants program by 2021 or 2022.
Comment:
If the Government
succeeds in limiting coal export volume in order to fulfill increasing
domestic coal demand, this should be positive for coal price as Indonesia and
Australia are the two largest coal exporters.
In coal sector, We
like Bukit Asam (PTBA IJ, Buy, TP:IDR17,600) due to its higher earnings
visibility. Being the only listed state-owned-enterprise (SOE) coal mining
company, it benefits from the synergy between SOEs, which leads to continual
increase in coal sales volumes due to the long-term domestic coal
commitments.
We
also like Delta Dunia (DOID IJ, Buy, TP:IDR1,500) because of: 1) Sizable
forecast earnings growth; 2) Undemanding valuations – it is trading at FY17F
P/E of 6.0x and EV/EBITDA of 3.5x. By comparison, its closest peer, United
Tractors is trading at FY17F P/E of 13.4x and EV/EBITDA of 6.0x. 3) Inclusion
into MSCI Small Cap Index effective after the end of trading period on 31 May
2017. (Hariyanto Wijaya, CFA, CPA)
Link
to daily report: Indonesia Morning Cuppa 180517
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Company Update:
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Kino Indonesia (KINO IJ, NR) – Key takeaway
from 1Q17 Public Expose
We attended the public expose of Kino
Indonesia (KINO IJ, NR) on Wednesday (17/7). Here are the key takeaways:
¨ Kino Indonesia
targets a rather flat revenue growth of 3% in 2017 amidst challenging
business conditions. In 1Q17, revenue declined by 22% YoY to IDR670bn;
consistently decreasing from 3Q16. There is limited sign of a turnaround with
intense competition and lower consumer spending for discretionary products
contributing to the weak economy.
¨ Revenue mix is expected
to remain unchanged in 2017, with the personal care and beverage products as
its major contributors. These two divisions supply >80% of revenues
combined, which dropped by 28% and 11% YoY respectively in 1Q17. No new
breakthrough products are announced from the two divisions. The company will
also try to penetrate the e-commerce segment with a new product, but we see
limited uplift from this action.
¨ Going forward, the
company expects to increase its export sales to 3-4% of revenues, and the
recently-acquired Dua Putri – a herbal drinks company – to boost its revenues
in 2017.
¨ The company hopes to
improve its margins by cutting its manpower and logistic costs. Its operating
margin slumped by 844bps to 2.6% in 1Q17 due to the resistant nature of its
operating costs and lower revenue. We currently do not have a rating for the
stock. (Michael Halim)
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Media Highlights:
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Corporate
Rukun Raharja plans for pipeline gas
projects
Tower Bersama targets 2,500 new tenants
Dian Swastatika Sentosa to utilize loan
facility
Wicaksana Overseas targets IDR 1.3 trillion
revenue in 2017
Indofarma still suffers losses
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Our
Recent Publication:
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Sector Update: Coal Mining – Welcoming New
Members Into MSCI Small Cap Index
Link to report: Welcoming
New Members Into MSCI Small Cap Index
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Economics Update: April Exports and Imports Moderate
Link to report: April
Exports And Imports Moderate
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Results Review: Tower Bersama
Infrastructure – No Suprises
Link to report: Tower
Bersama Infrastructure : No Surprises
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Economics Update: CAD Starts To Widen In
1Q17, BOP Surplus Sustains
Link to report: CAD
Starts To Widen In 1Q17, BOP Surplus Sustains
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Sector Update: Coal Mining – Recent
Pullback Creates Opportunity To Accumulate
Link to report: Recent
Pullback Creates Opportunity To Accumulate
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Sector Update: Engineering & Construction
– Key Takeaways From
Marketing In Singapore
Link to report: Key
Takeaways From Marketing In Singapore
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Sector Update: Plantation – Stock-To-Usage
Ratio To Normalise Soon
Link to report: Plantation – Stock-To-Usage Ratio
To Normalise Soon
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Corporate News Flash: Alam Sutera – A
Decent Take-Up Rate For Chiara
Link to report: Alam
Sutera : A Decent Take-Up Rate At Chiara
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Company Update: Surya Semesta
Internusa – Positive Outlook Unchanged
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Economics Update: Economic Growth Sustained
In 1Q17
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Company Update: Bank Mandiri – Spring Has
Finally Sprung
Link to report: Bank
Mandiri : Spring Has Finally Sprung
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Company Update: Waskita Karya – Stellar
Performance
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Best regards,
Helmy Kristanto
Director
Head of Indonesia Research
PT. RHB Securities Indonesia
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