RHB Indonesia Morning Cuppa - 13 March 2018 (Pembangunan Perumahan, Today's News)

Indonesia Morning Cuppa

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Results Review

Pembangunan Perumahan

In line with FY17 results

Pembangunan Perumahan's net income / revenues came in line at 101% / 94% of consensus estimates. Margins in FY17 was slightly better than in FY17, with gross and net margin growing by 20bps and 54bps YoY respectively. The company managed to bring in positive operating cash flow in FY17 of IDR1.46trn, resulting in a net cash position in December 2017. The stock is now trading at 10.7x FY18F / 8.7x FY19F P/E, the second lowest among the four SOE Construction companies.

Analyst: Michael Halim (6221) 2783 0719

Morning Cuppa Full Report: Indonesia Morning Cuppa 130318

Today’s News

Indonesia’s budget deficit in 2M18

Adhi Karya’s FY17 results

Mining companies to boost on acquisitions

Kimia Farma allocates IDR2.3trn to acquire seven companies

Diesel subsidy raised to IDR1,000/liter

Astra’s Rush and Terios sales

Pelindo III to issue USD1bn global bonds

Garuda Indonesia plans to issue USD750m of unsecured 5-year bonds

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.