RHB Indonesia Morning Cuppa - 19 February 2018 (Exports-Imports, Nippon Indosari, BI Rate, Today's News)

Indonesia Morning Cuppa

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Economics Update

Exports, Imports Picks Up In January

Exports picked up to a growth of 7.9% YoY in Jan 2018, following an increase of 7.5% in December 2017. This was led by stronger non-oil & gas exports. Moving forward, we envisage the export of goods and services to grow by a healthy 10% in 2018, despite moderating from last year’s stellar pace, due to a high base effect.

Analyst: Rizki Fajar (6221) 2970 7065

Morning Cuppa Full Report: Indonesia Morning Cuppa 190218

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Company Update

Nippon Indosari (ROTI IJ, Neutral, TP: IDR1,180)

We met Indosari’s new Investor Relation, Lukito Gozali, keys highlight of our visit are as follows:

¨ On Philippine expansion, new Sarimonde plant is estimated to commence its operation in 2Q18.

¨ Indosari is to build two new plants located in Gresik and Lampung. These new plants are expected to start operation in 2019.

¨ The new frozen dough plant may be located in Gresik

¨ Kohlberg Kravis Roberts (KKR) now owns 15.2% stake in Indosari (from 12.6% in Oct-17), at average purchase price of IDR1,275/share.

¨ FY17 financial results likely to be announced at end of March.

¨ We maintain Neutral with DCF-based TP of IDR1,180 (5% downside) which implies 25x FY18F P/E.

Analyst: Andrey Wijaya (6221) 2970 7058

Economics Update

BI Continues To Pause In February

As expected, Bank Indonesia’s (BI) board of governors continued to keep the 7-day repo rate – the benchmark policy rate – unchanged on 15 Feb. This was for the fifth straight month after the central bank cut rates in August and September 2017. As major central banks are on tightening mode– and BI has front-loaded its interest rate cuts – we believe the central bank is likely to keep its key policy rate unchanged in 2018.

Analyst: Rizki Fajar (6221) 2970 7065

Today’s News

Bank Indonesia: 2017 loan growth 8.2% YoY

Indonesia’s Trade Ministry plans to issue poultry ceiling and floor price.

Jasa Marga still discusses to acquire Waskita’s toll roads

Unilever Indonesia to use IDR3trn loan facility in FY18

Bumi Serpong Damai targets IDR1.8trn land sales in FY18

Car sales in January 2018, the highest for the last three years

Summarecon targets 11.11% YoY sales growth for FY18

Mitra Adiperkasa targets 15% YoY sales growth in FY18

Top BUYs
		TP	Upside	Catalysts
		(IDR)	(%)	Catalysts
Astra International		9,500	13	Given the robust of the All New Toyota Rush and Daihatsu Terios sales orders, Astra has raised its monthly sales target. Its lowering of Daihatsu Terios’ selling price while positioning Toyota Rush at a higher class are seen as a good strategy to reclaim market share. We also see the company’s coal mining unit benefiting from higher coal prices. We raise its earnings estimates, and SOP-based TP to IDR9,500 (from IDR9,200, 13% upside), implying 16-15x FY18F-19F P/Es. Key risk is the intense competition in the auto industry. SAIC-GM Wuling just launched its 1.8-litre MPV – Wuling Cortez – with an attractive selling price. Maintain BUY.
BSD City		2,650	44	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		4,100	20	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	28	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	34	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.