RHB Indonesia Morning Cuppa - 03 April 2018 (Inflation, Mitra Adiperkasa, Today's News)

Indonesia Morning Cuppa

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Economic Update

Inflation Picks Up In March

Headline inflation picked up to 3.4% YoY in March (+3.2% in February). This was due to faster growth in the price of raw food and cost of transport and health. 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: will be sent out later

Morning Cuppa Full Report: Indonesia Morning Cuppa 030418

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Results Review

Mitra Adiperkasa

In line FY17 results

Mitra Adiperkasa (MAPI IJ, Under Review) booked IDR335bn net income in FY17 (+61% YoY) which reached 96% of consensus estimates. Revenue came in at IDR16.3trn (+15% YoY), achieving 103% of consensus. Gross margin was lower at 48.2% (-40bps YoY), while EBIT and net margin grew 60bps YoY on lower operating expenses and effective tax rate. In quarterly terms, MAPI booked IDR86bn net income in 4Q17 (-2% YoY | +17% QoQ) while revenues grew to IDR4.6trn (+20% YoY | +16% QoQ). The stock is trading at 24x FY18F P/E, our rating is under review.

Analyst: Michael Halim (6221) 2783 0719

Morning Cuppa Full Report: Indonesia Morning Cuppa 030418

Today’s News

Finance Ministry to issue new fiscal incentive

Bank Bukopin seeks IDR2trn from rights issue in June 2018

Vietnam to ship 300,000 tonnes of rice to Indonesia

Petrosea records USD356.7m new contracts in 3M18

FSA gives green light for Danamon acquisition

Dharma Satya Nusantara allocates IDR600bn in capital expenditure

Alfamart to strengthen its Philippines market

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.