RHB Indonesia Morning Cuppa - 05 March 2018 (Waskita Karya, Today's News)

Indonesia Morning Cuppa

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Results Review

Waskita Karya

Waskita Karya released its FY17 results that came above consensus estimates, continuing strong performance from its toll roads acquisitions. Net income more than doubled while revenues almost doubled YoY. Its new contracts in FY17 was in line with company’s target of IDR55trn, making its orderbook at the end of FY17 of just below IDR140trn. Waskita’s net gearing was still deep in the red while net gearing increases, putting more emphasis on the importance of its toll road divestment process. The company is trading at 10.5x / 9.4x FY18F/FY19F P/E, with our rating Under Review.

Analyst: Michael Halim (6221) 2783 0719

Morning Cuppa Full Report: Indonesia Morning Cuppa 050318

Today’s News

Indonesia’s January 2018 foreign tourist arrivals fall 6.17% YoY

Financial Services Authority targets below 2% NPL by end of 2018

Erajaya Swasembada plans to triple its capex in FY18

Barito Pacific’s rights issue schedule

Bulog to disburse 400,000 tonnes of subsidised rice in March

Mayora targets IDR22trn revenue in FY18

Mitsubishi targets to sell 53,000 units commercial vehicles in FY18

Pelindo II teams up with Japanese firms in Patimban Port bidding

Intiland targets 15ha of land sales

Indosat to expand beyond Java area

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.