RHB Indonesia Morning Cuppa - 22 February 2018 (Budget Defcit, Today's News)

Indonesia Morning Cuppa

Top Story

Economics Update

Indonesia budget deficit at 0.25% of GDP as of 31 January

Indonesia’s Finance Minister, Sri Mulyani, said that Indonesia’s budget deficit was IDR 37.1trn or 0.25% of GDP as of 31 January 2018. This is lower than last year’s deficit of 0.33% of GDP in January 2017.

Analyst: Michael Halim (6221) 2783 0719

Morning Cuppa Full Report: Indonesia Morning Cuppa 220218

Today’s News

Indonesian Government is likely to delay the implementation of Beyond Cabotage

Waskita Toll Road increases stake in Trans Jabar Tol

Garuda CEO projects net profit in 4Q17

Vale’s nickel production fell slightly in 2017

Kimia Farma’s FY18F capital expenditure and performance target

XL Axiata to strengthen its data network in Sumatra and Sulawesi

Sarana Menara Nusantara receives 2,300 orders for tower tenancy lease in FY17

Hartadinata increases production capacity by 12% after IPO

BRI to issue IDR2.44trn bonds 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.