RHB Indonesia Morning Cuppa - 15 December 2017 (Strategy, BI Rate, Today's News) Unknown Jumat, 15 Desember 2017



Indonesia Morning Cuppa



Top Story
Straegy
Indonesia: Domestic Demand Drive

We remain positive on Indonesia’s macroeconomics, as consumer spending is likely to improve, driven by higher government stimuli. Further, robust direct investment realisation – which has hit new records – should create more jobs. Spending on infrastructure projects is also likely to remain high. We are OVERWEIGHT on sectors that benefit from accelerated domestic demand, eg auto, consumer, property, tobacco, and telcos. Keys risks to our call would be political instability during regional elections and lower-than-expected government revenue collection.


Analyst: Andrey Wijaya (6221) 2970 7058
Morning Cuppa Full Report: Indonesia Morning Cuppa 151217

Other Stories
Economic Update
Indonesia: BI Continues To Pause In December Despite Of FFR Hike

As expected, BI’s board of governors continued to keep the 7-day repo rate – the benchmark policy rate – unchanged on 14 Dec. This was for the third straight month after the central bank cut rates in August and September. As external risks linger – and BI has front-loaded its interest rate cuts – we believe the central bank is likely to maintain its key policy rate unchanged in 2018 as well.

Analyst: Rizki Fajar (6221) 2970 7065
Link to Report: will be sent out later
Morning Cuppa Full Report: Indonesia Morning Cuppa 151217


Oil and gas revenue reached USD13bn YTD
Bukit Asam prepares IDR6.5trn capex in 2018
Timah allocates IDR2.65trn capex in FY18
Waskita Beton targets IDR11.52trn new contracts in FY18


TP
Upside
Catalysts
(IDR)
(%)
Astra International
9,200
16
Management said that Astra International (Astra) is likely to launch a new Toyota Rush model in the near term. We see this is a good catalyst to boost Astra’s market share. In addition, the company is to double its coking coal production to boost coal mining earnings. For its property business, Astra has started selling property in the South Jakarta (TB Simatupang) and East Jakarta areas. The company also sees traffic at the Cikopo-Palimanan toll road increasing significantly once the Java toll road is fully connected. This is likely to be in 2019.
BSD City
2,650
54
Expectations of higher marketing sales due to lower interest rates, which ought to incentivise mortgage users. BSD City has the largest proportion of mortgage users vis-à-vis other developers. There is also better monetisation from its large landbank.
Bukit Asam
17,400
59
Bukit Asam is the cheapest coal counter in our coal universe. We think earnings growth should be the catalyst for its share price. We believe investors’ concerns about a potential cost-plus margins formula in determining coal selling prices to domestic power plants should fade. This is based on our checks with several competent sources. The formula is only valid for coal sales to new mine mouth power plants. It is not for existing/under construction mine mouth power facilities.
Indofood Sukses Makmur
10,300
25
We expect higher domestic consumer spending in 2018. This would be thanks to the Government stimulus initiatives for low-end consumers. Indofood Sukses Makmur, as one of the largest food & beverage (F&B) players, should benefit from this situation. F&B accounted for around 62% of its total 9M17 EBIT. Higher flour prices may also boost Bogasari Flour Mills’ earnings, which accounted for around 14% of the company’s EBIT.

Ramayana Lestari
1,550
76
Consumer spending recovery – especially from the lower income segment in 2018 – is likely to benefit Ramayana Lestari after a flat performance in 2017. This is due to increased subsidies by the Government that have been allocated in the 2018 budget via the Ministry of Social Affairs. In addition, President Joko Widodo’s (Jokowi) work-for-cash programme is likely to help raise consumer spending.







Recent Stories
To access the following reports, please click on the link:
Trading Idea: Petrosea: Volume Growth To Continue
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Economics Update: November Inflation Continues To Ease; Lowering Forecasts
Economics Update: October M2 Growth Edges Down, Loans Pick Up
Company Update: XL Axiata: In a Good Position Amidst Rising Competition
Company Update: Bukit Asam: The Establishment Of An SOE Mining Holding Firm
Company Update: United Tractors: Performance Remains On Track
Company Update: Surya Semesta Internusa: Subang & Patimban As Future Catalyst
Economics Update: BI Continues To Pause In November After Easing In August-September
Economics Update: October Exports And Imports Accelerated
Company Update: Indocement Tunggal Prakarsa – Intense Competition Likely To Sustain Through 2018



RHB Guide to Investment Ratings
Buy: Share price may exceed 10% over the next 12 months
Trading Buy: Share price may exceed 15% over the next 3 months, however longer-term outlook remains uncertain
Neutral: Share price may fall within the range of +/- 10% over the next 12 months
Take Profit: Target price has been attained. Look to accumulate at lower levels
Sell: Share price may fall by more than 10% over the next 12 months
Not Rated: Stock is not within regular research coverage

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