RHB Indonesia Morning Cuppa - 12 April 2018 (Bukit Asam, Today's News)

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Bukit Asam

Dividend Yield Of 9.3% Surprises On The Upside

On 11 Apr 2018, Bukit Asam declared a dividend payout of 75% from its FY17 earnings, which is equivalent to a dividend/share of IDR318.52. This generates a sizable dividend yield of 9.3% with a cum date of 18 Apr. The dividend yield is higher than our and consensus expectations (street estimates for FY18F dividend yield is at 3.6%). The AGM also saw a change in a top management, ie Mr Mega as the newly appointed Finance director, taking over from Mr Orias. Considering the track record of Mr Mega, we think he is well qualified. We reiterate our BUY call with a TP of IDR3,900 (14% upside). We think FY18 should present a potential earnings surprise, as Bukit Asam should book an earnings growth during this financial year. Our FY18 earnings forecast is 23% higher than consensus.

Analyst: Hariyanto Wijaya, CFA, CFP, CA, CPA (Aust.), CFTe, CMT (6221) 2970 7061

Link to report: Bukit Asam : Dividend Yield Of 9.3% Surprises On The Upside

Morning Cuppa Full Report: Indonesia Morning Cuppa 120418

Today’s News

Indonesia 2018 thermal coal demand seen rising to 92m tonnes

Domestic cement consumption growth increases 6.6% YoY in 1Q18

Ramayana Lestari targets IDR4.9trn revenue in 1H18

Astra Graphia allocates IDR400bn capital expenditure

Shareholders approve Barito Pacific’s rights issuance plan

Oil and gas upstream investments increase by 26.3% YoY in 1Q18

Aneka Tambang continues impressive gold sales volume trend

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		9,500	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 64% of its total FY17 EBIT. The company is attractively trading at low earning multiple.
	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.