RHB Indonesia Morning Cuppa - 20 March 2018 (AKR Corporindo, Indofood CBP, Alam Sutera, Today's News)

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Results Review

AKR Corporindo

Results in line with promising 4Q17

AKR’s FY17 net income came in at IDR1.2trn (+19% YoY), achieving 106% of consensus after booking IDR303bn profit from its discontinued operations. Revenues was IDR18.3trn in FY17 (+20% YoY), achieving 97% of consensus after a higher volume from its core business, and also helped with its impressive industrial development sales. Gross profit was IDR1.87trn (-0.4% YoY) with gross margin squeezed by -210bps YoY due to oil price recovery. However, 4Q17 was better with gross profit growing by 23.4% QoQ and 12.3% YoY. The counter is trading at 19.7x FY18F P/E, not rated.

Analyst: Michael Halim (6221) 2783 0719

Morning Cuppa Full Report: Indonesia Morning Cuppa 200318

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Results Review

Indofood CBP

FY17 earnings up 5.4% YoY, in line

Indofood CBP’s FY17 earning came in at 3.8trn (+5.4% YoY), in line, achieved 98% of our and street full year expectation.

4Q17 earning slipped to IDR755bn (-20.5% QoQ), driven by lower sales which declined to IDR8.2trn (-8.8% QoQ), as well as narrowed EBIT margin (4Q17: 14.9% versus 3Q17: 15.4%). We see higher input cost – especially flour – was likely main driven of narrower EBIT margin. In our calculation, 4Q17 GPM slipped to 29.7% (3Q17: 31.5%). Our further review to follow after this morning analyst meeting.

Maintain BUY with DCF-based TP of IDR9,700 (10% upside), implying 26x and 24x FY18F-19F P/Es.

Analyst: Andrey Wijaya (6221) 2970 7058

Morning Cuppa Full Report: Indonesia Morning Cuppa 200318

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Results Review

Alam Sutera

Above expectations

Alam Sutera (ASRI IJ) FY17 results came above ours & consensus expectations with bottom line accounting for 150% & 126% from our & consensus estimates. We will revisit our assumptions.

Analyst: Yualdo Tirtakencana Yudoprawiro (6221) 2970 7062

Morning Cuppa Full Report: Indonesia Morning Cuppa 200318

Today’s News

Wijaya Karya to spend IDR37trn capex in 2018

Economic minister predicts slower growth in 1Q18

Wika Beton to issue MTN and distribute dividend of FY17

Surya Semesta Internusa adds more shares in Nusa Raya Cipta

Imported rice to push down prices

Ciputra Group to prepare IDR2.25trn for mixed-use project in Bandung

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.