Indonesia Morning Journal

8 Jun, 2017

Research Report Indices Last Chg (%) MoM (%) YTD (%)
Indika Energy (INDY IJ) ASEAN
Analyst: Yusuf Ade Winoto, CFA, FRM Indonesia (IDX) 5,717 0.17 0.60 7.94
Not rated Malaysia (KLCI) 1,786 (0.28) 1.31 8.78
Philippines (PCOMP) 8,002 0.62 2.04 16.98
Better days ahead
Singapore (STI) 3,230 (0.16) 0.02 12.14
A pick up in 2017 Thailand (SET) 1,567 (0.15) (0.16) 1.53
Coal mining unit to be the main driver REGIONAL & USA
No major plan in near term China (SHCOMP) 3,140 1.23 1.20 1.18
Valuation and comparison Hongkong (Hang Seng) 25,974 (0.09) 6.12 18.06
India (SENSEX) 31,271 0.26 4.73 17.44
Japan (Nikkei) 19,985 0.02 2.77 4.55
Todays Headlines Korea (KOSPI) 2,360 (0.36) 5.31 16.47
Taiwan (TWSE) 10,210 0.04 3.13 10.34
INDUSTRY USA (Dow Jones) 21,174 0.18 0.79 7.14
Economy: Bank Indonesia reported a higher Source: Bloomberg

consumer confidence in May 2017 Curre ncie s Last Chg (%) MoM (%) Ytd (%)
Government raises minimum balance of bank
USD/IDR 13,303 (0.05) 0.20 1.28
account to be reported to tax office to IDR1bn USD/IDR (1-month NDF) 13,357 (0.20) 0.11 1.68
BPJS Kesehatan booked IDR20.6tn premium EUR/IDR 14,982 (0.16) (2.47) (5.48)
income GBP/IDR 17,162 0.10 0.53 (3.65)
JPY/IDR 122 (0.56) (2.59) (5.56)
CNY/IDR 1,958 (0.06) (1.36) (0.90)
CORPORATE
SGD/IDR 9,638 (0.10) (1.44) (3.39)
United Tractors (UNTR IJ) to allocate USD560mn of USD Index 97 (0.12) 1.96 5.65
capex in 2017 Source: Bloomberg

Felda plans to increase its ownership in Eagle High Commoditie s Last Chg (%) MoM (%) YTD (%)
Plantation (BWPT IJ)
Coal (USD/ton) - Newcastle 78.5 1.95 0.58 (11.26)
Waskita Beton Precast (WSBP IJ) plan to do shares Crude oil (USD/b) - Brent 48.1 (4.11) (2.87) (18.29)
buyback Gold (USD/toz) - Spot 1,287.2 (0.56) 4.82 12.17
Waskita Karya (WSKT IJ) booked IDR14.9tn of new Nickel (USD/mt) - LME 8,810.0 (0.62) (3.61) (12.08)
contract Corn (USD/mt) - Chicago 384.8 1.99 3.78 5.63
Waskita Karya (WSKT IJ) through its subsidiary CPO (MYR/mt) - MDEX 2,886.0 1.83 (9.06) (10.32)
Waskita Realty to expand its property business by Soybean oil (USd/lb) - Chicago 31.4 (0.10) 4.19 (8.89)
Skimmed Milk (USD/mt) - NZ 2,240.0 - 4.19 (18.84)
acquiring 500ha land with close proximity to toll
Pulp (USD/t) - NBSK 879.5 - 4.04 8.73
road which own by Waskita Toll Road (18
Sugar (USD/lb) - ICE Futures 14.1 1.14 (7.64) (24.99)
concession with 988km length) Tin (USD/mt) - LME 19,310.0 (1.83) (1.35) (8.59)
Darya Varia Laboratoria (DVLA IJ) to launch new Wheat (USD/bsh) - Chicago 444.8 2.07 0.57 2.42
product Source: Bloomberg

Tiga Pilar to IPO rice mills subsidiary (AISA IJ) ETF & ADR Last Chg (%) MoM (%) YTD (%)
Arwana Citra to expand production capacity by
EIDO US (USD) 27.0 (0.07) 0.79 11.73
31% by 2020 (ARNA IJ)
TLK US (USD) 32.6 (0.28) 0.25 11.80
Source: Bloomberg
Please see the overleaf for news details
Turnove r Indonesian Government Bond Yield - Generic
IDX - Top Move rs & Laggards Last Chg (%)
(IDR bn)
MOVERS
Yield 2Y Yield 5Y Yield 10Y
BBRI BANK RAKYAT INDONESIA PERSER 14,925 1.70 258.5
7.4
BBCA BANK CENTRAL ASIA TBK PT 17,800 1.42 264.2
7.2
UNVR UNILEVER INDONESIA TBK PT 47,200 0.80 44.4
7.0
GGRM GUDANG GARAM TBK PT 75,500 1.48 49.8
6.8
ASII ASTRA INTERNATIONAL TBK PT 8,900 0.28 121.5
LAGGARDS 6.6

HMSP HM SAMPOERNA TBK PT 3,810 (1.30) 51.1 6.4

BMRI BANK MANDIRI PERSERO TBK PT 12,400 (0.80) 153.1 6.2

ISAT INDOSAT TBK PT 6,100 (6.15) 5.2 6.0

17-Apr 24-Apr 1-May 8-May 15-May 22-May 29-May 5-Jun
BDMN BANK DANAMON INDONESIA TBK 5,125 (4.21) 15.8
LPPF MATAHARI DEPARTMENT STORE TB 14,525 (1.86) 101.7 Source: Bloomberg
Source: Bloomberg

Indonesia Morning Journal 8 Jun, 2017 Page 1 of 9

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8 Jun, 2017

Research

Indika Energy (INDY IJ)

Better days ahead
We recently met with INDY to get updates on the company and came away with these takeaways.

A pick up in 2017

INDY manage to generate a positive net profit during the 1Q17 of USD20.2mn following a net loss of USD8.1mn
in 1Q16 which was driven largely by robust growth in its coal mining unit. Note that INDY also book a net loss
of USD67.6mn for FY16 on the back of lower revenue from its coal-related subsidiaries and impairment charges
to adjust acquisition cost of some subsidiaries. The company indicates that such charges should be minimal (if
any) going forward.

Coal mining unit to be the main driver

Kideco, INDYs coal producer subsidiary (46% stake), registered a strong performance in 1Q17 with revenue and
profit increases of 18% yoy and 148% yoy each respectively. While coal sales volume actually downed by 10% yoy
to 8.5mn tonnes its ASP jumped 31% yoy to USD49.6/tonne thus able to boost the overall bottom line.
Production cash cost also decline 13% yoy to USD26/tonne. For the year, INDY is targeting a flat growth
production volume of 32mn tons with an ASP of USD38/tonne and cash cost of USD30/tonne. While the ASP
looks conservative compared to the 1Q achievement, it is expected to soften in 2Q as global coal price has been
lower as of late. Most of INDYs coal sales for the year was price base on index-link formula. Whereas some of
INDYs other business unit are expected to deliver better number, the coal related division will still deliver the
bulk of the profitability.

No major plan in near term

INDYs capital expenditure plan in 2017 is mostly allocated to its energy services unit, Petrosea (PTRO),
amounting to USD68.3mn. Note that during the 1Q17, the biggest revenue improvement came from PTRO
(+39% yoy) and coal trading (+43% yoy) that accounts for 53% of INDYs total top line revenue (Kidecos
contribution recorded as income from associates).

Valuation and comparison

It looks like INDY will be able to deliver a strong consolidated financial performance for 2017 on the back of
strong contribution from its coal-related business. While to sustain the 1Q17 achievement might be challenging
given lower coal price as of late, INDYs current valuation looks compelling compare to its peers in term of PE
multiple. On annualized basis, INDYs currently traded at 3.7x FY17E PE and 7.3x FY17E EV/EBITDA compared to
sector average of 7.8x FY17F PE and 4.2X FY17F EV/EBITDA based on Bloomberg consensus estimates. Still, the
trajectory of coal price movement will have huge impact on INDYs subsequent quarters performances.

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8 Jun, 2017

News

INDUSTRY
Economy: Bank Indonesia reported a higher consumer confidence in May 2017
The Consumer Confidence Index (CCI) survey conducted by Bank Indonesia (BI) shows an improvement of 125.9
level in May 2017, an increase from previous month of 123.7. It is the highest level of CCI in the last 3 years. The
key catalyst for CCI improvement were preparation to celebrate Ramadan festivities, improvement in labor market
and confidence for better economic prospect going forward. On the flip side, the risk factors that consumers sees in
the near term are higher electricity tariff (especially for the 900Watt customers) and higher food prices. (Kontan)

Government raises minimum balance of bank account to be reported to tax office to IDR1bn
The Ministry of Finance increased the minimum balance of bank account that must be reported to the tax office to
IDR1bn from IDR200mn previously. With the change in the minimum limit to IDR1bn, the number of accounts that
must be reported is about 496,000 accounts, or 0.25% of the total accounts currently registered.

Comment:
The revision should remove the pressure to the banking sector which were negatively affected by the initial
requirement. With lower number of accounts that must be reported, the administration cost related to this
requirement should be consequently lower. Also, the banks effort in gathering deposit funding from customers
should be less affected under current requirement.

BPJS Kesehatan booked IDR20.6tn premium income

During the first four months in 2017, BPJS managed to earn IDR20.6tn premium income, which was up from
IDR14.93 over the same period a year before. For 2017, BPJS Kesehatan set IDR80tn for the full year target.
Moreover, it also also plan to achieve 201mn members at the end of year. As per 1Q17, it already has 175mn
members, which was higher than 1Q16 at 164 members. To this end, the government plans to expand its network.
BPJS Kesehatan already partnered with Mandiri Bank, BNI, BRI, and BTN with more than 400,000 online payment
points. BPJS monthly transaction stood at 5.8mn times transaction, which IDR3.2tn came from PPOB. For the end of
2017, BPJS estimates to have IDR3.6tn deficit. To overcome that deficit, BPJS already obtained IDR6.8tn from state
equity participation while the government also earmarked IDR3.8tn to cover the premium deficit. (Bisnis Indonesia)

CORPORATE
United Tractors (UNTR IJ) to allocate USD560mn of capex in 2017
The budget allocation was two times higher than it was in 2016 and will be fully funded by internal cash. As of
1Q17, the company has a total cash balance of IDR19.97trn. Most of the capex will be allocated for heavy
equipment segment (80%), notably for mining industry as demand remains strong on the back of higher coal price.
Another 20% of capex will be allocated for the development of UNTRs coking coal mine that it acquired at end of
1Q17. (Kontan)

Felda plans to increase its ownership in Eagle High Plantation (BWPT IJ)
Felda plans to increase its ownership in Eagle High Plantation which could make it as the BWPTs major shareholder.
However, BWPTs management hasnt acknowledge that information. As a remainder, Felda already acquired 37% of
the BWPTs share from Rajawali Group on the mid-April this year. (Kontan)

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8 Jun, 2017

Waskita Beton Precast (WSBP IJ) plan to do shares buyback

WSBP plan to do shares buyback to anticipate shares undervalue. Moreover, the corporate action will be subject of
approval in AGMS on 26 July 2017. Currently the shares is trading at IDR492 per share, close to IPO price of IDR490
per share. (Bisnis Indonesia)

Waskita Karya (WSKT IJ) booked IDR14.9tn of new contract

WSKT booked IDR14.9tn of new contract in 5M17, equivalent to 21.2% of FY17 new contract target. Most of new
contract achievement in May came from Jakarta Cikampek toll road project amounted IDR6.2tn and Kunciran
Serpong toll road project amounted IDR1.1tn. (Kontan)

Waskita Karya (WSKT IJ) through its subsidiary Waskita Realty to expand its property business by acquiring 500ha
land with close proximity to toll road which own by Waskita Toll Road (18 concession with 988km length). (Kontan)

Darya Varia Laboratoria (DVLA IJ) to launch new product

The company plans to strengthen its business by launching new products in consumer health segment. It plans to
launch it on the third quarter in 2017. Darya Varia also plans to enhance its participation on governments universal
healthcare program. However, the company plans to selectively choose the products. It also plans to increase its
utilization rate to 10%. (Kontan)

Tiga Pilar to IPO rice mills subsidiary (AISA IJ)

Tiga Pilar aims to offer 20%-30% stake in Dunia Pangan, its rice mills subsidiary which contribute around 64% of its
consolidated revenues in 1Q17. AISA will use June 2017 book, thus the IPO should proceed before YE2017. (Bisnis
Indonesia)

Arwana Citra to expand production capacity by 31% by 2020 (ARNA IJ)

Arwana plans to increase its production capacity by 31% by 2020 through expansion of its factory in East Java and
in South Sumatra. The company earmarks IDR750bn for this purpose (IDR300bn in 2018, IDR150bn in 2019, and
IDR300bn in 2020). (Bisnis Indonesia)

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8 Jun, 2017

Fixed income idea

Helmi Therik

6221-5153608
The US bond prices were largely down or reverse its
helmi.therik@yuanta.co.id
previous movement while the yield curve ended
steepening. The market sense that the economy would
continue to get stronger thus ensuring higher rate next
Currency week. However, the slower consumer credit growth in
April at USD8.2bn or below the previous month at
06/08/2017 06/07/2017 USD19.5bn pointing to slower spending, restrains the
USD/IDR 13315 13303 steepness level of the yield curve. We think the sideways
pattern in the bond prices would continue. The 2yr US
EUR/USD 1.125 1.1257 treasury yield inched higher by 2bps to 1.32% while the
USD/JPY 109.89 109.82 30yr yield rose by 3bps to 2.84%.
USD/SGD 1.3831 1.3825 Following suit, the domestic bond market continues to
trade at the little range. The improvement of the risk
appetite has supported the bond market so far. The
Government Bond Ownership (in trilion) foreign ownership increases to IDR759tn from IDR742tn
Investor 06/06/2017 06/05/2017
last month. We think that the market would maintained its
position in the current level while waits for the next week
BI 57.35 57.35 FOMC meeting. The fair 10yr Indo Treasury yield was at
Bank 509.13 511.85 7.11% while the 20yr yield at 7.60%.

Foreign 759.38 756.89

Others 605.05 604.82 Valuation. Selected bonds such as FR0059 and
FR0054 traded at 100.59 and 117.40 respectively,
Total 1,930.91 1,930.91 which based on our calculation was at the fair
price (neutral).

Most Active Government Bond Inflation and 10Yr Gov. Bond Yield
Series Tenor Price 12

FR0059 9.94 100.59

FR0047 10.7 120.75 10

FR0052 13.19 125.5

8
FR0054 14.11 117.4

Indonesia Rating
4
S&P BB+
Moodys Baa3 2
Fitch BBB- Inflation (yoy) 10Yr Gov Bond

Key Market Indicators

BI Rate 6.50%
JCI 5,717 Source: Yuanta Securities Indonesia estimation
Inflation (YoY) 4.33%
Inflation (MoM) 0.39%
Source: Bloomberg, Yuanta Securities Indonesia

Indonesia Morning Journal 8 Jun, 2017 Page 5 of 9

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8 Jun, 2017

Figure 1: Bond Valuation (NelsonSiegelSvensson Model)

Yield
Last Fair Bps Curve Spread to Trading
Series Tenor Coupon Price Price (+/-) YTM (NSS) YC (bps) Idea
FR0028 0.1 10.0% 100.57 100.52 0.05 4.05% 4.0% 0.1 Neutral
FR0032 1.1 15.0% 109.65 109.3 0.35 5.79% 5.9% -0.1 Neutral
FR0038 1.19 11.6% 106.45 106.15 0.3 5.87% 6.0% -0.1 Neutral
FR0048 15.03 9.0% 103.56 128.45 -24.89 6.03% 6.1% 0 Neutral
FR0036 2.27 11.5% 110.52 110.79 -0.27 6.40% 6.2% 0.2 Neutral
FR0031 9.28 11.0% 113.19 129.72 -16.53 6.64% 6.6% 0 Neutral
FR0034 4.02 12.8% 121.27 121 0.27 6.68% 6.7% 0 Neutral
FR0053 4.1 8.3% 105.52 105.69 -0.17 6.69% 6.7% 0 Neutral
FR0035 5.02 12.9% 125.77 125.19 0.58 6.76% 6.8% 0 Neutral
FR0043 5.1 10.3% 114.68 114.63 0.05 6.79% 6.8% 0 Neutral
FR0039 6.19 11.8% 124.06 124.33 -0.27 6.90% 6.8% 0.1 Neutral
FR0044 7.28 10.0% 116.58 116.82 -0.24 7.04% 7.0% 0.1 Neutral
FR0040 8.28 11.0% 124.18 124.68 -0.5 7.08% 7.0% 0.1 Neutral
FR0037 9.28 12.0% 133.53 132.37 1.16 7.02% 7.1% -0.1 Neutral
FR0056 9.28 8.4% 109.63 108.55 1.08 6.95% 7.1% -0.1 Neutral
FR0059 9.94 7.0% 100.59 99.29 1.3 6.92% 7.1% -0.2 Neutral
FR0047 10.7 10.0% 120.75 121.14 -0.39 7.18% 7.1% 0.1 Neutral
FR0052 13.19 10.5% 125.5 126.07 -0.57 7.43% 7.3% 0.1 Neutral
FR0054 14.11 9.5% 117.4 118.55 -1.15 7.48% 7.3% 0.1 Neutral
FR0058 15.03 8.3% 106.73 108.56 -1.83 7.50% 7.3% 0.2 Neutral
FR0045 19.95 9.8% 119.26 121.61 -2.35 7.83% 7.7% 0.2 Neutral
FR0050 21.12 10.5% 127.23 128.98 -1.75 7.84% 7.7% 0.2 Neutral
FR0057 23.95 9.5% 117.64 118.4 -0.76 7.85% 7.8% 0.1 Neutral

Source: Yuanta Securities Indonesia

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8 Jun, 2017

Figure 2: Yuantas Fair Yield Curve Vs Actual

Source: Yuanta Securities Indonesia

Indonesia Morning Journal 8 Jun, 2017 Page 7 of 9

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8 Jun, 2017

Research

Yusuf Ade Winoto, CFA, FRM
Head of Research
Strategy, conglomerate, mining
+62 21 515 5890
yusuf.winoto@yuanta.co.id
Lucky Ariesandi, CFA Helmi Therik
Deputy Head of Research Head of Fixed Income Research
Telco, tower, consumer, oil & gas Fixed Income
+62 21 515 5891 +62 21 515 3608
lucky@yuanta.co.id Helmi.therik@yuanta.co.id

Wendy Chandra Yap Swie Cu Vanessa Karmajaya

Analyst Analyst Analyst
Tobacco, property, retail, media Banking Healthcare, plantation, poultry
+62 21 515 3608 +62 21 515 3608 +62 21 515 3608
wendy@yuanta.co.id swiecu@yuanta.co.id vanessa.karmajaya@yuanta.co.id

Andreas Kristo Saragih

Analyst
Construction, cement,
industrial estates
+62 21 515 3608
andreas.kristo@yuanta.co.id

Institutional Sales

Amelia Husada Evelyn Njohana Shela Tanado

Head of Institutional Sales Institutional Sales Institutional Sales
+62 21 278 38917 +62 21 278 38913 +62 21 278 38912
amelia.husada@yuanta.co.id evelyn@yuanta.co.id shela@yuanta.co.id

Kevin Tandrawan
Sales Trader
+62 21 278 38914
kevin.tandrawan@yuanta.co.id

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8 Jun, 2017

Global Disclaimer
2015 Yuanta. All rights reserved. The information in this report has been compiled from sources we believe to be reliable, but we do not hold
ourselves responsible for its completeness or accuracy. It is not an offer to sell or solicitation of an offer to buy any securities. All opinions and
estimates included in this report constitute our judgment as of this date and are subject to change without notice.

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Attn: Research
Yuanta Securities Investment Consulting
4F, 225,
Section 3 Nanking East Road, Taipei 104
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Indonesia persons wishing to obtain further information on any of the securities mentioned in this publication should contact:

Attn: Research
PT YUANTA SECURITIES INDONESIA
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Tel: (6221) 5153608 (General)

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