RHB Indonesia Morning Cuppa - 02 March 2018 (Astra International, Inflation, Bumi Serpong Damai, Today's News)

Indonesia Morning Cuppa

Top Story

Company Update

Astra International

More Optimistic About 2018

Astra’s management is more optimistic about 2018, on better expected domestic demand. Rush and Terios sales orders increased significantly in February. We estimate that these new models’ monthly sales will likely be close to Avanza’s and Xenia’s, Astra’s current backbone models. Its new guidance for heavy equipment sales is above our expectations. We see positive synergies with GO-JEK since Astra would benefit from the former’s experience in developing digital platforms. Maintain BUY with unchanged SOP-based TP of IDR9,500 (18% upside), which implies 16-15x FY18F-19F P/Es respectively. Key risk to our call is the intense competition in the domestic 4W market.

Analyst: Andrey Wijaya (6221) 2970 7058

Link to report: Astra International : More Optimistic About 2018

Morning Cuppa Full Report: Indonesia Morning Cuppa 020318

Other Stories

Economic Update

Inflation

Inflation Continues To Moderate In February

Headline inflation moderated to 3.2% YoY in February (+3.3% in January). This was due to slower growth in the cost of housing & utilities, transport and clothing. Looking ahead, we expect the headline inflation to inch lower to 3.6% in 2018, from +3.8% in 2017. This is on account of:

1. The Government’s commitment to keep energy prices stable;

2. Manageable volatile food prices.

Analyst: Rizki Fajar (6221) 2970 7065

Link to report: Inflation Continues To Moderate In February

Morning Cuppa Full Report: Indonesia Morning Cuppa 020318

Other Stories

Company Update

Bumi Serpong Damai

Bulk Land Sales Boosts FY17 Earnings

BSD booked stellar FY17 earnings growth, which beat our and consensus estimates. This was due to recognition of large land sales in 4Q17. As a result, we adjust our revenue recognition method to reflect the actual FY17 revenue, which leads to lower FY18F earnings – we believe it is normalising. We still like BSD’s solid fundamentals and cheap valuation. Maintain BUY and IDR2,210 TP (14% upside), which implies a 53% discount to NAV. It is currently trading at a 59% discount to NAV.

Analyst: Yualdo Tirtakencana Yudoprawiro (6221) 2970 7062

Link to report: Bumi Serpong Damai : Bulk Land Sales Boosts FY17 Earnings

Morning Cuppa Full Report: Indonesia Morning Cuppa 020318

Today’s News

Antam to build new plant and sold 20% its ownership in the end of FY17

AKR Corporindo divested its subsidiary’s assets

Mandom Indonesia targets double-digit growth in FY18

BCA targets its mortgage to grow at 12% YoY

Samudera Indonesia to build new warehouse in Jakarta in FY18

Kimia Farma to open 60 new outlets in Saudi Arabia

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.