INVESTOR DIGEST - Mandiri Sekuritas Digest... · Equity Research | 01 August 2019 Please see important disclosure at the back of this report Page 3 of 24 Margin pressure due to earnings

Page 1 of 24 Please see important disclosure at the back of this report

Latest 2019F

7-DRRR (%), eop 5.75 5.75

Inflation (YoY %) 3.28 3.21

US$ 1 = Rp, period avg 14,019 14,286

JCI Index 6,390.5 0.21%

Trading T/O ( Rp bn ) 9,041.2

Market Cap ( Rp tn ) 7,329.0

2019F 2020F

P/E (x) 17.8 16.6

P/BV (x) 2.6 2.4

EV/EBITDA (x) 14.1 13.6

Div. Yield (%) 2.5 2.6

Net Gearing (%) 19.5 18.2

ROE (%) 14.9 14.8

EPS Growth (%) 8.2 7.1

EBITDA Growth (%) 4.8 4.0

Earnings Yield (%) 5.6 6.0

* Aggregate of 75 companies in MS research universe,

representing 64.2%of JCI’s market capitalization

Economic Data

Stock Market Data (31 July 2019)

Market Data Summary*

• Adhi Karya: 2Q19 Results: Largely In-Line (ADHI; Rp1,485; Buy; TP: Rp2,035) • Alam Sutera Realty: 2Q19 - Off a Cliff (ASRI; Rp332; Sell; TP; Rp280) • Blue Bird: 2Q19 Results: Below Estimates (BIRD; Rp2,810; Buy; TP: Rp3,935) • Harum: Weak Earnings Are Anticipated (HRUM; Rp1,325; Neutral; TP: Rp1,500) • Indofood: Strong CBP and Flour Margin Outshined Weak Agri (INDF; Rp7,075; Buy;

TP: Rp9,750) • Indofood CBP: Bearing Fruits of Four-P Transformation (ICBP; Rp10,700; Buy; TP:

Rp12,350) • Pembangunan Perumahan: 2Q19 Results - Below Estimates (PTPP; Rp2,150; Buy; TP:

Rp3,085) • Surya Citra Media: 1H19 Results - Still On Track (SCMA; Rp1,550; Buy; TP: Rp2,200) • Semen Indonesia: 1H19 Results – Weak Earnings on Financing Charges (SMGR;

Rp12,875; Buy; TP: Rp16,100) • Telkom: 2Q19 Results - Telkomsel vs Non-Telkomsel Trends (TLKM; Rp4,300; Neutral;

TP: Rp4,500) • Wijaya Karya: Revenues Miss, Divestment Supported Earnings (WIKA; Rp2,340; Buy;

TP: Rp2,885) • Waskita Karya: 2Q19 Results - Below Consensus, In-Line With Ours (WSKT; Rp2,050;

Buy; TP: Rp2,280) • Excel: 2Q19 - Stronger Growth, Better Profitability (EXCL; Rp3,230; Buy; TP; Rp3,600) • Market Recap July 31st 2019; JCI 6,390.51 Points +13.51 pts (+0.21%); Valued

$646mn; Mkt Cap $507bn; USD/IDR 14,019 Adhi Karya: 2Q19 Results: Largely In-Line (ADHI; Rp1,485; Buy; TP: Rp2,035)

Mixed results of lower tax rate and higher non-core income have offset the declining revenues and OPM deterioration, translating to ADHI’s flat earnings growth (+1.1% yoy). LRT construction work is expected to be complete in 2020, as the delayed depo license in Dukuh Atas and Bekasi Timur is done.

6M19 earnings came broadly in-line. ADHI booked 2Q19 earnings of Rp139bn (+0.0% yoy; +84.6% qoq), translating to a cumulative 6M19 net profit of Rp215bn (+1.1% yoy) or accounting for 30% of our FY19 estimate and 24% of consensus, largely in-line. Note that the average 1H16-18 net profit accounted for 25% to the company’s FY19 earnings. On the top line, ADHI posted 2Q19 revenues of Rp3.1tn (+5.3% yoy; +33.1% qoq), which translate to 6M18 sales of Rp5.4tn (-10.8% yoy), accounting for 30% of our estimate and 29% of consensus.

Key things to highlight: • Lower corporate income tax. In 6M19, the company recorded tax-to-

revenue at only 2.7%, exceptionally below compared to 6M18 at 3.6% and FY18 at 3.3%. This would translate to a lower corporate income tax by 35% yoy, thus improving NPM to 4.0% (6M18: 3.5%).

HIGHLIGHT

CORPORATE

Equity Research | 01 August 2019 INVESTOR DIGEST

Equity Research | 01 August 2019


• Growing non-core income. In 6M19, ADHI posted a non-core income of Rp32.7bn (6M18: -Rp13.4bn), helping the bottom line to slightly increase by 1.1% yoy to Rp218.4bn. However, should we exclude the non-core item, ADHI’s 6M19 core profit dropped 19.4% yoy to Rp182.3bn.

• Property uplifted GPM, while JV profit helped OPM. In 6M19, the property segment accelerated 78.2% yoy with 21.5% GPM, thus helping the declining construction service by 15.5% yoy (78% of ADHI’s total revenues). This translated to a higher GPM of 15.7% compared to 15.2% in 6M18.

Meanwhile, ADHI’s operating margin increased to 11.9% in 6M19 despite a higher opex-to-sales at 6.2% (6M18: 4.8%), as the company booked a higher JV income of Rp127.0bn (+218% yoy), which was partially from greater Jakarta’s six inner-city toll roads’ contribution of Rp32.6bn (FY18: Rp24.1bn). Furthermore, ADHI’s NPM increased to 4.0% (6M18: 3.5%) due to the aforementioned lower tax rate.

− LRT updates: ADHI expects LRT construction work to be done in 2020 with commercial operation to start in 2021, as it takes six months to do a test track. Further, the depo license issuance is done for Dukuh Atas and Bekasi Timur routes; thus, an acceleration in 2H19 is widely expected, as ADHI targets 75% completion in FY19 (as of June’19: 64%). Payment-wise, the company is still expecting Rp3.1tn of payments: approx. Rp1.5tn scheduled in Aug/Sept, and Rp1.5tn in December.

Maintain BUY with PT of Rp2,035. Up to 6M19, the company has booked Rp5.4tn (-14.3% yoy), translating to 14.6% of its FY19 target. We think ADHI would revise down its new contracts target, given the Jogja-Solo toll road (approx. Rp15tn project worth) will most likely be divided into two tender phases. The company is currently trading at 7.7x PER 2019F. Key risks to our call are slower-than-expected LRT progress and new contracts deceleration.

ADHI 2Q19 RESULTS SUMMARY

Rpbn 6M19 6M18 %yoy 2Q19 1Q19 %qoq 2Q18 %yoy FY19F % of ours FY19C

% of cons.

Revenue 5,426 6,083 -10.8 3,098 2,328 33.1 2,941 5.3 18,274 29.7 18,664 29.1

Gross profit 854 923 -7.6 535 318 68.4 492 8.9 2,441 35.0 2,977 28.7

Operating profit 643 673 -4.5 389 254 53.5 363 7.2 1,981 32.5 2,287 28.1

Pretax profit 361 433 -16.7 234 127 85.1 246 -4.8 1,270 28.4 1,433 25.2

Net profit 215 213 1.1 139 76 84.6 139 0.0 721 29.8 883 24.4

Gross margin (%) 15.7 15.2

17.3 13.7

16.7

13.4

16.0

Operating margin (%) 11.9 11.1

12.6 10.9

12.4

10.8

12.3

Pretax margin (%) 6.7 7.1

7.6 5.4

8.4

6.9

7.7

Net margin (%) 4.0 3.5

4.5 3.2

4.7

3.9

4.7

Edbert Surya (+6221 5296 9623) [email protected] Adrian Joezer (+6221 5296 9415) [email protected] Alam Sutera Realty: 2Q19 - Off a Cliff (ASRI; Rp332; Sell; TP; Rp280)

ASRI booked net loss of IDR 8bn in 2Q19, impeded by delayed recognition of CFLD land sales and margin erosion from product mix. Due to the net loss, 1H19 earnings was just 15% of Mandiri’s full-year expectation and 13% of consensus’. Core profit marked an even bigger drop and made up just 12% of Mandiri’s full-year estimate.

Absence of bulk sales recognition. 2Q19 revenue of IDR 598bn marked declines of 13% QOQ and 49% YOY, as bulk sales revenue still had not contributed to revenue recognition, translating to a 1H19 revenue decline of 42% YOY to IDR 1.3tn. Comparatively in 1H18, ASRI had booked IDR 1tn in CFLD land sales. 1H19 top line translated to just 32% and 33% of Mansek’s and consensus’ respective forecasts.



Margin pressure due to earnings mix. Landed house projects had a rise in revenue recognition at 49% contribution to total 2Q19 revenue. This stands in contrast to 1Q19’s revenue mix, which comprised mainly of land plot revenue. 2Q19 saw GM decline due to landed house revenue coming mostly from Pasar Kemis, which are lower margin. Land plot revenues, also significant in revenue contribution, furthered the margin decline, because in 2Q19 they had mostly come from the Pasar Kemis project rather than commercial land in Alam Suterain 1Q19.

Net loss in 2Q19. Resultant of the above factors is a 2Q19 net loss of IDR 8bn, even after having booked forex gain of IDR 46bn. This resulted in 1H19 net profit of IDR 151bn, just 15% and 13% of Mandiri’s and consensus’ full-year forecasts, respectively. Stripping out non-core items, core profit was just IDR 131bn, 12% of Mansek’s forecast for the full-year.

Maintain Sell at IDR 280 PT. We reiterate our Sell call on ASRI at IDR 280 PT, based on DCF-based SOTP NAV, assuming 11.7% WACC. ASRI’s presales in 1H19 was also feeble, achieving only 27% of management’s full-year target. Should CFLD’s contracted sales continue facing delays, ASRI could face greater earnings pressure further ahead.

ASRI 2Q19 RESULTS VS ESTIMATES

IDRbn 1Q19 2Q19 2Q18 QoQ % YoY% 6M18 6M19 YoY% 2018 2019F 2019C % of target

% of cons

Revenue 685 598 1,182 -13% -49% 2,197 1,283 -42% 3,975 4,068 3,872 32% 33%

Gross profit 452 292 740 -36% -61% 1,373 744 -46% 2,444 2,435 2,372 31% 31%

Operating profit 323 151 613 -53% -75% 1,143 474 -59% 1,978 2,017 1,753 23% 27%

Pretax profit 193 33 276 -83% -88% 616 225 -63% 1,155 1,183 1,261 19% 18%

Net profit 159 (8) 218 -105% -104% 517 151 -71% 970 997 1,125 15% 13%

Core profit 148 (16) 239 -111% -107% 535 131 -75%

1,111

12%

Gross margin 66% 49% 63%

63% 58%

61% 60% 61%

Operating margin 47% 25% 52%

52% 37%

50% 50% 45%

Pretax margin 28% 5% 23%

28% 18%

29% 29% 33%

Net margin 23% -1% 18%

24% 12%

24% 25% 29%

Total debt 7,673 8,185 7,225

7,225 8,185

7,734 12,251

Total equity 9,711 9,706 8,986

8,986 9,706

9,551 10,532

Cash 469 1,108 676

676 1,108

459 3,887

Net gearing 74.2% 72.9% 72.9%

72.9% 72.9%

76.2% 79.4%

Source: Company, Bloomberg, Mandiri Sekuritas estimates Robin Sutanto (+6221 5296 9572) [email protected] Blue Bird: 2Q19 Results: Below Estimates (BIRD; Rp2,810; Buy; TP: Rp3,935)

The taxi segment, which contributed 75% of BIRD’s revenue, declined by 9.5% yoy in 2Q19, partly due to a riot in Jakarta area, accounting for one-tenth revenue lost in May’19. Accordingly, the persistently high airfare ticket for domestic destination caused the deterioration in BIRD’s airport taxi revenues. Meanwhile, the newly acquired Cititrans helped the operational income with an additional source of revenues of approx. Rp30bn.

6M19 earnings missed our estimate. BIRD booked relatively weak 2Q19 earnings of Rp70bn (-24.6% yoy; -21.6% qoq), which translate to 6M19 earnings of Rp158bn (-17.5% yoy), 31% to our FY19 estimate—below. Revenue-wise, the company recorded 2Q19 revenues of Rp938bn (-6.0% yoy; -4.0% qoq), accounting for 6M19 revenues of Rp1.9tn (-2.9% yoy)—slightly below Mansek’s estimate.

Key points to highlight in 2Q19: 1. Taking into account Cititrans’ revenues. BIRD’s non taxi segment accelerated by 10.3% yoy in 2Q19, mainly driven

by the Cititrans acquisition in March’19 with approx. Rp30bn of revenues in this quarter. Note that BIRD’s FS only



disclose taxi and non-taxi segments without breaking down each of its business segment. We estimate Cititrans’ FY19 revenues to reach Rp105bn in FY19 after actualizing 9 months of its revenues.

2. Riot in Jakarta hammered BIRD’s regular taxi revenues in May. There was a riot in one of Jakarta’s main road due to election results. The demonstration happened in three consecutive days, followed by road blocking for almost a week by the police. This particular event caused BIRD’s May taxi revenues to drop by 13% yoy.

3. Opex remained high. In 2Q19, BIRD’s opex remained high at Rp167.6bn (+13.9% yoy; 2.6% qoq), which translated to 6M19 opex of Rp331.1bn (+15.5% yoy). Salaries expense (40% of total G&A) increased by 18% yoy. This would translate to higher opex-to-sales at 17.3% in 6M19 compared to 14.5% in 6M18.

4. Other income increased by 40% yoy. BIRD recorded 6M19 other income of Rp25.9bn (+40.0% yoy). Excluding the non-core items, the company’s 6M19 core profit stood at Rp119.5bn (-20.9% yoy).

Maintain BUY. We retain our buy recommendation with target price of Rp3,955, as we think the lessened discounts in digital payments show stabilizing tariffs in Jakarta area. BIRD is currently trading at 15.4x PER 2019F/13.5x PER 2020F. Key risks to our call are longer-than-expected price war outside Jakarta area and fuel price hike.

BIRD 2Q19 RESULTS SUMMARY

Rpbn 6M19 6M18 %yoy 2Q19 1Q19 %qoq 2Q18 %yoy FY19F % of ours

FY19C % of cons.

Revenue 1,915 1,971 -2.9 938 977 -4.0 998 -6.0 4,282 44.7 4,428 43.2

Gross profit 529 518 2.2 257 272 -5.4 259 -0.7 1,228 43.1 1,192 44.4

Operating profit 198 231 -14.3 90 108 -17.4 112 -19.9 556 35.7 775 25.6

Pretax profit 213 249 -14.7 95 118 -19.9 120 -21.4 615 34.6 676 31.4

Net profit 158 192 -17.5 70 89 -21.6 92 -24.6 458 34.6 505 31.4


27.4 27.8

25.9

28.7

26.9


9.6 11.1

11.2

13.0

17.5


10.1 12.1

12.1

14.4

15.3


7.4 9.1

9.3

10.7

11.4

Edbert Surya (+6221 5296 9623) [email protected] Adrian Joezer (+6221 5296 9415) [email protected] Harum: Weak Earnings Are Anticipated (HRUM; Rp1,325; Neutral; TP: Rp1,500)

HRUM’s 1H19 net profit was largely in-line with forecast, as we expect weaker earnings in 2H19 as a result of lower coal prices. HRUM is known for its cash rich balance sheet with USD 217mn net cash or 90% of its market cap. Maintain Neutral, Rp1,500 TP.

1H19 net profit was in-line. HRUM reported 2Q19 net profit of USD 9.1mn (+102% yoy/+43% qoq), bringing a 1H19 net profit of USD 12.7mn (-26% yoy), accounting for 57-60% of our and consensus forecasts. We believe this is largely in-line with forecast, as we expect weaker earnings in 2H19 as a result of lower coal prices. 1H19 revenue declined to USD 140mn (-9% yoy) due to lower ASP (-14% yoy), while sales volume increased by 5% yoy to 2.2mn tons. Despite higher SR to 10.9x (vs. 10.2x in 1H18), production cost declined by 8% yoy to USD 39.2/ton due to higher costs last year as a result of third party coal purchase. However, the sharp decline in ASP exceeded the cost efficiency; this has lowered the operating margin to 12.9% from 21.2% last year. The top three buyers were China (40%), India (22%), and South Korea (11%).

Key points to highlight in 2Q19: 1) ASP recovered to USD 64.0/ton (-12% yoy/+3% qoq), largely in-line with the recovery of the Indonesia coal price index (ICI index) in 1Q19. However, softer ICI index in 2Q19 should indicate lower ASP ahead. 2) FOB vessel cost increased to USD 40.1/ton (-9% yoy/+5.0% qoq). Higher qoq costs were due to increasing SR to 12.8x from 9.7x in 1Q19 on top of lower production. 3) Production stood at 0.6mn tons (-25% yoy) and sales volume at 1.0mn tons (+11% yoy).



Cost cutting initiatives ahead. With the Newcastle coal price at USD 70/ton (-30% ytd), we see an urgency for HRUM to reduce costs to avoid operating losses. The most effective way to reduce production cost is by lowering SR, as it will reduce mining cost, which represents around 50% of production cost. During the trough of the cycle in 2016, HRUM was able to reduce SR to 6x (vs. 11x in 1H19) to reduce costs. However, the ability to reduce SR may not be as easy as it seems due to the company’s limited reserves (and low reserves-to-production ratio). Other cost cutting initiatives can be done through better efficiency in overhead costs.

FINANCIAL SUMMARY

YE Dec (US$ Mn) 2017A 2018A 2019F 2020F 2021F EBITDA 80 61 42 32 31

Net Profit 45 32 22 17 15

Fully-diluted EPS 1.7 1.2 0.9 0.7 0.6

Fully-diluted EPS growth (%) 242.6 (28.0) (29.7) (25.1) (9.5)

P/E Ratio (x) 5.7 7.4 11.0 14.7 16.3

EV/EBITDA (x) 0.9 1.8 0.8 0.7 0.3

P/B Ratio (x) 0.8 0.8 0.8 0.8 0.8

Dividend Yield (%) 9.7 7.4 5.0 3.7 3.4

ROAE (%) 15.2 10.3 7.3 5.4 4.8

Source: Company (2017-2018), Mandiri Sekuritas (2019-2021)

RESULTS SUMMARY

in US$mn 2Q19 2Q18 %YoY 1Q19 %QoQ 6M19 6M18 %YoY FY19F % ours % to cons.

Revenue 67.7 66.3 2% 72.1 -6% 139.8 153.1 -9% 285 49% 43%

COGS (50.0) (46.9) 7% (52.2) -4% (102.2) (102.7) 0% (207) 49% 40%

Gross profit 17.7 19.4 -9% 19.9 -11% 37.6 50.5 -26% 78 48% 51%

Operating expenses (8.8) (8.5) 3% (10.4) -16% (19.6) (18.0) 9% (46) 43% 47%

Operating profit (loss) 8.9 10.9 -18% 9.5 -6% 18.0 32.5 -45% 33 55% 54%

Net profit (loss) 9.1 4.5 102% 6.4 43% 12.7 17.2 -26% 22 57% 60%

Gross margin 26.1% 29.3%

27.6%

26.9% 33.0%

Operating margin 13.1% 16.4%

13.1%

12.9% 21.2%

Net margin 13.4% 6.8%

8.9%

9.1% 11.2%

Coal sales (Mt) 1.0 0.9 11% 1.1 -9% 2.2 2.0 10%

ASP (US$/t) 63.1 73.1 -14% 62.1 2% 63.0 72.7 -13%

Cash cost - Ex Royalty (US$/t) 40.5 44.1 -8% 37.6 8% 39.0 42.9 -9%

Source: Company, Mandiri Sekuritas estimates, Bloomberg Indofood: Strong CBP and Flour Margin Outshined Weak Agri (INDF; Rp7,075; Buy; TP: Rp9,750)

The management held its 2Q19 analyst briefing today. Discussions were centralized on Indofood CBP’s impressive results, which contributed 129% of INDF’s 26% yoy EBIT growth in 2Q19. The time difference in Bogasari’s cost pass-throughs also lent support. Both managed to offset agribusiness’ weakness. Our Buy call is retained with a new Rp9,750 PT as we raised ICBP’s PT.

Strong CBP and Bogasari outshined weak Agribusiness. 2Q19 EBIT growth of 26% yoy and PATMI of 56% yoy were fully supported by the strong growth of Indofood CBP (ICBP) and Bogasari. The former delivered a 43% yoy EBIT growth (at INDF’s consolidated book), while the latter delivered a 62% yoy EBIT growth. This has more than offset the Rp152bn operating loss in agribusiness (from Rp84bn profit in 2Q18). A separate note detailing ICBP is available here Bearing Fruits of Four-P Transformation.

Bogasari benefitted from 2018’s price increases. Its 2Q19’s 15.2% yoy revenue growth was ASP-driven, as volume dipped ~1%, while the time lag benefitted the margin on a yoy basis. Sequentially, EBIT margin declined to 5.9% from

https://www.mandirisekuritas.co.id/r/N0rm

https://www.mandirisekuritas.co.id/r/N0rm



8.8% in 1Q19, while global wheat prices have started creeping up in May-June. While 1H19 EBIT has already reached 68% of our estimate, we keep our 6.7% EBIT margin forecast unchanged at the high-end of the management’s 5-7% guidance.

Agribusiness: weak CPO prices offset strong volume. Operational deleveraging worsened given the persistently low palm oil prices, translating into operating loss of Rp152bn in 2Q19 from a Rp111bn profit in 1Q19. CPO volume fell 4% yoy, reversing the 25% yoy increase in 1Q19, as it realized the sales of 2018 inventory.

Forecast changes. We tweaked our 2019, 2020, and 2021 EPS each by +0.4%, 0.0%, and -0.3% after incorporating our forecast upgrade on ICBP and downgrades on agribusiness and distribution and as we realigned our forecast with the latest 2Q19 data points.

Retain Buy with new PT of Rp9,750. We raised our PT from Rp9,250 as we incorporated ICBP’s new PT of Rp12,350 into our model and rolled forward our 12-month PT into mid-2020 cut off. Our new PT implies 16.8x forward PE. While ICBP continues to be a key driver, we retain our Buy rating on INDF given its attractive valuation, as it trades on 2020F PE of 13x and 40% discount to the parts.

FINANCIAL SUMMARY YE Dec (Rp Bn) 2017A 2018A 2019F 2020F 2021F EBITDA 10,696 10,734 11,421 12,405 13,437 Net Profit 4,156 4,166 4,610 4,929 5,272 Fully-diluted EPS 473 475 525 561 600 Fully-diluted EPS growth (%) 0.3 0.2 10.7 6.9 6.9 P/E Ratio (x) 14.9 14.9 13.5 12.6 11.8 EV/EBITDA (x) 8.1 8.8 8.1 7.7 7.3 P/B Ratio (x) 2.0 1.8 1.7 1.6 1.6 Dividend Yield (%) 3.3 4.3 4.3 4.7 5.1 ROAE (%) 13.8 12.8 13.3 13.4 13.6 Source: Company (2017-2018), Mandiri Sekuritas (2019-2021)

2Q19 RESULTS SUMMARY P&L (Rp bn) 6M19 6M18 YoY 2Q19 2Q18 YoY 1Q19 Revenue 38,609 36,000 7.2% 19,439 18,368 5.8% 19,170

Gross profit 11,361 10,170 11.7% 5,563 4,908 13.3% 5,797

Selling expense 4,288 4,012 6.9% 2,145 2,031 5.6% 2,143

G&A expense 2,511 2,200 14.2% 1,334 1,222 9.2% 1,177

EBIT 4,562 3,958 15.3% 2,084 1,656 25.8% 2,478

Pretax profit 4,236 3,611 17.3% 1,895 1,541 23.0% 2,341

Tax 1,300 1,177 10.4% 593 564 5.2% 706

Net profit 2,545 1,956 30.1% 1,196 767 55.8% 1,349

Core profit 2,426 1,992 21.8% 1,187 743 59.7% 1,239

Margins Gross 29.4% 28.2% 1.2% 28.6% 26.7% 1.9% 30.2%

EBIT 11.8% 11.0% 0.8% 10.7% 9.0% 1.7% 12.9%

Net profit 6.6% 5.4% 1.2% 6.2% 4.2% 2.0% 7.0%

Gross revenues Consumer branded products 21,869 19,451 12.4% 11,046 9,904 11.5% 10,823

Flour 11,600 9,985 16.2% 5,870 5,096 15.2% 5,729

Agribusiness 6,424 6,522 -1.5% 3,156 3,341 -5.5% 3,268

Distribution 2,079 2,990 -30.4% 1,050 1,508 -30.4% 1,029

EBIT Consumer branded products 3,669 2,864 28.1% 1,848 1,291 43.1% 1,821

Flour 846 551 53.6% 344 212 62.3% 502

Agribusiness (41) 433 -109.4% (152) 84 -280.2% 111

Distribution 102 104 -2.5% 44 64 -32.0% 58



P&L (Rp bn) 6M19 6M18 YoY 2Q19 2Q18 YoY 1Q19 EBIT margin Consumer branded products 16.8% 14.7% 2.1% 16.7% 13.0% 3.7% 16.8%

Flour 7.3% 5.5% 1.8% 5.9% 4.2% 1.7% 8.8%

Agribusiness -0.6% 6.6% -7.3% -4.8% 2.5% -7.3% 3.4%

Distribution 4.9% 3.5% 1.4% 4.1% 4.2% -0.1% 5.7% Source: Company, Mandiri Sekuritas estimates KEY FORECAST CHANGES New Old Chg

(Rp bn) 2019F 2020F 2021F 2019F 2020F 2021F 2019F 2020F 2021F Revenues 72,709 77,154 82,712 71,829 76,648 81,802 1.2% 0.7% 1.1%

Gross profit 20,945 22,372 24,012 21,027 22,644 24,279 -0.4% -1.2% -1.1%

EBIT 8,776 9,459 10,169 9,005 9,816 10,588 -2.5% -3.6% -4.0%

Pretax profit 8,077 8,739 9,402 8,311 9,105 9,840 -2.8% -4.0% -4.5%

Net profit 4,610 4,929 5,272 4,592 4,929 5,286 0.4% 0.0% -0.3%

Gross margin 28.8% 29.0% 29.0% 29.3% 29.5% 29.7% -0.5% -0.5% -0.6%

EBIT margin 12.1% 12.3% 12.3% 12.5% 12.8% 12.9% -0.5% -0.5% -0.6%

Revenues ICBP 43,297 46,834 50,588 42,417 45,878 49,548 2.1% 2.1% 2.1%

Flour 14,056 14,347 15,218 14,056 14,347 15,218 0.0% 0.0% 0.0%

Agribusiness 11,239 11,520 12,096 11,239 11,971 12,228 0.0% -3.8% -1.1%

Distribution 4,117 4,453 4,810 4,117 4,453 4,809 0.0% 0.0% 0.0%

EBIT ICBP 7,151 7,606 8,246 6,971 7,415 8,045 2.6% 2.6% 2.5%

Flour 1,239 1,353 1,390 1,239 1,353 1,390 0.0% 0.0% 0.0%

Agribusiness 181 278 292 561 795 879 -67.7% -65.0% -66.8%

Distribution 206 223 241 235 254 274 -12.3% -12.3% -12.3%

EBIT margin Noodles 16.5% 16.2% 16.3% 16.4% 16.2% 16.2% 0.1% 0.1% 0.1%

Dairy 8.8% 9.4% 9.1% 8.8% 9.4% 9.1% 0.0% 0.0% 0.0%

Nutrition & Special Foods 1.6% 2.4% 2.4% 5.0% 6.6% 7.2% -3.4% -4.2% -4.8%

Food seasonings 5.0% 5.0% 5.0% 5.7% 5.7% 5.7% -0.7% -0.7% -0.7% Source: Company, Mandiri Sekuritas estimates Adrian Joezer (+6221 5296 9415) [email protected] Riyanto Hartanto (+6221 5296 9488) [email protected] Lakshmi Rowter (+6221 5296 9549) [email protected] Indofood CBP: Bearing Fruits of Four-P Transformation (ICBP; Rp10,700; Buy; TP: Rp12,350)

We attended the company’s 2Q19 analyst briefing. In a nutshell, its products, marketing, and distribution strategy continued to bear fruits, a reason we have ICBP as our most preferred FMCG. As outlaid in our thematic report: How Four P’s Transformations Drive Growth, micro factors are equally important as macro with the changing consumer behavior. Buy call retained with new Rp12,350 PT.

Impressive set of results. While the macro indicators are slowing down, ICBP delivered an impressive 40% yoy EBIT growth in 2Q19, the highest among the mid-to-large-cap FMCGs. The strengths of its product innovations, marketing, and distribution continued to bear fruits, especially within instant noodles, which now contributes 83% of EBIT. The management shared how Indofood Group evolved its strategy into consumer-focused from distribution-focused (i.e. product push) as it adapts into the changing landscape.

https://www.mandirisekuritas.co.id/r/cpj3

https://www.mandirisekuritas.co.id/r/cpj3



Noodles and dairy powered 2Q19 with 28% and 44% yoy growths in EBIT, respectively, topping our estimates. Noodles volume strength continued with another ~9% yoy growth in 2Q19, thanks to a blend of solid product innovation, ground-breaking marketing strategy, and higher rural distribution penetration. Implied ASP trend is sequentially positive, suggesting a likely favorable mix trend. Dairy’s EBIT also benefitted from the favorably low sugar prices, though we admitted that skimmed milk powder prices had risen while stronger competition is on path. We provided detailed takeaways on p.3-4.

Raised EPS by 2% higher. We raised 2019-21F EPS by 2.2% each and EBIT by 2.5-5-2.6% as we lifted EBIT forecasts for noodles, dairy, and food seasonings, while trimming nutrition and special foods. Our new 2H19F EPS is 9% above the street. We think consensus estimates are too conservative with the implied flat EBIT and EPS yoy growths in 2H19F.

Valuation: Buy with new PT of Rp12,350. With the higher EPS, we raised our 12-month forward PT by 6%, as we rolled forward our SOTP valuation model to mid-2020 cut-off. Our new PT implies 25.5x 12-month forward PE, which we think is reasonable considering the company’s Four-P transformation.

FINANCIAL SUMMARY YE Dec (Rp Bn) 2017A 2018A 2019F 2020F 2021F EBITDA 6,000 6,154 8,416 8,713 9,562

Net Profit 3,797 4,576 5,042 5,414 5,889

Fully-diluted EPS 326 392 432 464 505

Fully-diluted EPS growth (%) 5.4 20.5 10.2 7.4 8.8

P/E Ratio (x) 32.9 27.3 24.7 23.0 21.2

EV/EBITDA (x) 19.8 19.9 14.6 14.1 12.9

P/B Ratio (x) 6.4 5.8 5.2 4.6 4.2

Dividend Yield (%) 1.4 1.6 2.0 2.2 2.3

ROAE (%) 20.5 22.2 22.0 21.2 20.7


2Q19 RESULTS SUMMARY P&L (Rp bn) 6M19 6M18 YoY 2Q19 2Q18 YoY 1Q19 QoQ

Revenue 22,130 19,459 13.7% 10,874 9,579 13.5% 11,256 -3.4%

Gross profit 7,512 6,289 19.4% 3,724 3,084 20.7% 3,788 -1.7%

Selling expense 2,593 2,366 9.6% 1,271 1,220 4.2% 1,322 -3.9%

G&A expense 1,140 988 15.3% 602 541 11.3% 538 11.9%

EBIT 3,779 2,935 28.8% 1,851 1,324 39.8% 1,928 -4.0%

Pretax profit 3,827 3,222 18.8% 1,869 1,558 20.0% 1,957 -4.5%

Tax (1,098) (907) 21.1% (560) (446) 25.6% (538) 4.0%

Net profit 2,575 2,291 12.4% 1,238 1,078 14.8% 1,337 -7.5%

Margins Gross 33.9% 32.3% 1.6% 34.2% 32.2% 2.0% 33.7% 0.6%

EBIT 17.1% 15.1% 2.0% 17.0% 13.8% 3.2% 17.1% -0.1%

Net profit 11.6% 11.8% -0.1% 11.4% 11.3% 0.1% 11.9% -0.5%

Gross revenue breakdown Noodles 14,573 12,690 14.8% 7,121 6,136 16.1% 7,452 -4.4%

Dairy 4,073 3,792 7.4% 2,019 1,909 5.8% 2,054 -1.7%

Food Seasonings 1,275 715 78.4% 602 387 55.5% 673 -10.6%

Snack Foods 1,413 1,425 -0.9% 699 698 0.1% 714 -2.0%

Nutrition and Special Foods 447 395 13.3% 225 186 20.8% 223 0.7%

Beverage 976 945 3.2% 522 528 -1.3% 454 14.9%

EBIT breakdown Noodles 3,122 2,598 20.2% 1,536 1,201 27.9% 1,586 -3.2%

Dairy 650 439 48.2% 315 219 43.7% 335 -6.2%



P&L (Rp bn) 6M19 6M18 YoY 2Q19 2Q18 YoY 1Q19 QoQ

Food Seasonings 150 60 150.3% 75 30 150.1% 75 0.3%

Snack Foods (63) (18) 250.0% (34) (22) 54.2% (29) 19.0%

Nutrition and Special Foods 20 19 1.5% 11 11 -2.9% 9 18.9%

Beverage (100) (159) -37.0% (53) (113) -52.7% (47) 13.9%

EBIT margin (gross sales) Noodles 21.4% 20.5% 1.0% 21.6% 19.6% 2.0% 21.3% 0.3%

Dairy 16.0% 11.6% 4.4% 15.6% 11.5% 4.1% 16.3% -0.8%

Food Seasonings 11.8% 8.4% 3.4% 12.5% 7.8% 4.7% 11.2% 1.4%

Snack Foods -4.4% -1.3% -3.2% -4.9% -3.2% -1.7% -4.0% -0.9%

Nutrition and Special Foods 4.4% 4.9% -0.5% 4.7% 5.9% -1.2% 4.0% 0.7%

Beverage -10.3% -16.8% 6.6% -10.2% -21.3% 11.1% -10.3% 0.1% Source: Company, Mandiri Sekuritas estimates FORECAST CHANGES New Old Chg

(Rp bn) 2019F 2020F 2021F 2019F 2020F 2021F 2019F 2020F 2021F

Revenues 43,297 46,834 50,588 42,417 45,878 49,548 2.1% 2.1% 2.1%

Gross profit 14,519 15,741 17,012 14,201 15,400 16,646 2.2% 2.2% 2.2%

EBIT 7,151 7,606 8,246 6,971 7,415 8,045 2.6% 2.6% 2.5%

Pretax profit 7,283 7,745 8,374 7,102 7,552 8,168 2.5% 2.6% 2.5%

Net profit 5,042 5,414 5,889 4,931 5,296 5,763 2.2% 2.2% 2.2%

Gross margin 33.5% 33.6% 33.6% 33.5% 33.6% 33.6% 0.1% 0.0% 0.0%

EBIT margin 16.5% 16.2% 16.3% 16.4% 16.2% 16.2% 0.1% 0.1% 0.1%

Revenues Noodles 27,855 30,124 32,504 27,594 29,842 32,201 0.9% 0.9% 0.9%

Dairy 8,251 8,908 9,617 8,145 8,793 9,493 1.3% 1.3% 1.3%

Nutrition & Special Foods 899 982 1,073 915 1,000 1,092 -1.8% -1.8% -1.8%

Food seasonings 1,948 2,129 2,326 1,420 1,551 1,695 37.3% 37.3% 37.3%

Snack foods 2,493 2,714 2,956 2,493 2,714 2,956 0.0% 0.0% 0.0%

Beverage 1,851 1,977 2,111 1,851 1,977 2,111 0.0% 0.0% 0.0%

EBIT Noodles 5,973 6,585 7,261 5,898 6,503 7,170 1.3% 1.3% 1.3%

Dairy 1,162 1,008 933 1,071 910 827 8.4% 10.8% 12.8%

Nutrition & Special Foods 34 33 32 32 31 29 5.7% 7.0% 8.5%

Food seasonings 270 291 314 257 283 312 4.9% 2.8% 0.7%

Snack foods (102) (113) (125) (102) (113) (125) N.M N.M N.M

Beverage (185) (198) (169) (185) (198) (169) 0.0% 0.0% 0.0%

EBIT margin Noodles 21.4% 21.9% 22.3% 21.4% 21.8% 22.3% 0.1% 0.1% 0.1%

Dairy 14.1% 11.3% 9.7% 13.2% 10.3% 8.7% 0.9% 1.0% 1.0%

Nutrition & Special Foods 3.7% 3.3% 3.0% 3.5% 3.1% 2.7% 0.3% 0.3% 0.3%

Food seasonings 13.8% 13.6% 13.5% 18.1% 18.2% 18.4% -4.3% -4.6% -4.9%

Snack foods -4.1% -4.2% -4.2% -4.1% -4.2% -4.2% 0.0% 0.0% 0.0%

Beverage -10.0% -10.0% -8.0% -10.0% -10.0% -8.0% 0.0% 0.0% 0.0% Source: Mandiri Sekuritas estimates Adrian Joezer (+6221 5296 9415) [email protected] Riyanto Hartanto (+6221 5296 9488) [email protected] Lakshmi Rowter (+6221 5296 9549) [email protected]



Pembangunan Perumahan: 2Q19 Results - Below Estimates (PTPP; Rp2,150; Buy; TP: Rp3,085)

Construction service’s solid growth lifted PTPP’s overall revenues despite declining property and EPC segments, which are the high margin businesses. Thus, PTPP’s operating margins deteriorated in 6M19 along with declining JV income. We expect the EPC segment to recover on the back of the Balikpapan RDMP project, while the Semarang–Demak toll road (Rp15.6tn) will be awarded in 3Q19, contributing around 14% of PTPP’s FY19 target, we estimate.

Earnings came below our/consensus estimates. PTPP recorded 2Q19 net profit of Rp188bn (-42.0% yoy; +6.9% qoq) with a cumulative 6M19 earnings of Rp363.4bn (-24.3% yoy), accounting for 21% and 22% of our and consensus’ respective FY19 estimates, as the average 1H16-18 net profit contributed 35% to the full-year figure. On the core profit, PTPP booked 6M19 core income of Rp272bn (-25.0% yoy). On the top line, the company recorded 2Q19 revenues of Rp5.7tn (-1.2% yoy; +15.8% qoq) with 6M19 revenues of Rp10.7tn (+12.8%).

Key things to highlight: − Construction service grew by 33% yoy in 6M19. PTPP’s construction service topped the declining EPC and real

estate segments by growing 33% yoy, while EPC and real estate in 6M19 deteriorated each by 44% and 19% yoy. Note that among the big four SOE contractors, PTPP is the only construction company which recorded yoy revenues growth in 6M19.

− Margins eroded due to declining EPC and property segments. On the back of declining property and EPC segments, PTPP’s GPM collapsed to 13.6% in 6M19 compared to 15.4% in 6M18. This trickled down to lower OPM/NPM by 160-190 bps.

− Lower JV income by 52.1% yoy. PTPP recorded a declining JV income by 52.1% yoy to Rp34.3bn despite booking a lower opex-to-sales at 4.2% in 6M19 compared to 4.7% in 6M18. This would translate to a declining operating profit by 3.0% yoy.

What to expect in 2H19? We expect EPC revenues will start to accelerate in 2H19, supported by the Balikpapan RDMP project, as PTPP has been awarded ca.Rp10tn worth of contracts from the project. Meanwhile, we also expect the potential sizable new contracts from the Semarang–Demak toll road (PTPP’s stake: 65%) with estimated construction works of Rp7.0tn, assuming 70% of total investment translated to new contracts, or accounting for 14% of PTPP’s new contracts target in 2019.

Maintain BUY. Up to 6M19, PTPP has booked new contracts of Rp14.8tn (-15.9% yoy), accounting for 29.4% of the its FY19 target. We retain our BUY recommendation with target price of Rp3,085. Key risks to our call are delays in the Balikpapan RDMP project and lower-than-expected new contracts achievement.

PTPP 2Q19 RESULTS SUMMARY

Rpbn 6M19 6M18 %yoy 2Q19 1Q19 %qoq 2Q18 %yoy FY19F % of ours

FY19C % of cons.

Revenue 10,724 9,507 12.8% 5,754 4,970 15.8 5,824 -1.2 28,956 37.0 28,834 37.2

Gross profit 1,463 1,463 0.0% 804 659 21.9 905 -11.2 4,391 33.3 4,292 34.1

Operating profit 1,045 1,078 -3.0% 578 468 23.6 708 -18.4 3,904 26.8 3,314 31.5

Pretax profit 845 947 -10.8% 444 400 11.0 623 -28.7 3,270 25.8 3,011 28.1

Net profit 363 480 -24.3% 188 176 6.9 324 -42.0 1,731 21.0 1,657 21.9


14.0 13.3

15.5

15.2

14.9


10.0 9.4

12.2

13.5

11.5


7.7 8.1

10.7

11.3

10.4


3.3 3.5

5.6

6.0

5.7

Edbert Surya (+6221 5296 9623) [email protected] Adrian Joezer (+6221 5296 9415) [email protected]



Surya Citra Media: 1H19 Results - Still On Track (SCMA; Rp1,550; Buy; TP: Rp2,200)

SCM reported Rp2.77tn revenues and Rp782bn PATAMI in 1H19, following digital assets acquisition in May 2019 and 1H18 financial restatements. Full earnings impact of digital assets acquisition will be more fairly reflected in 2H19, but 1H19 PATAMI is still relatively on track to meet our/consensus FY19 PATAMI expectation.

Key highlights: − 1H19 Revenues of Rp2.77tn, up 6.9% YoY. We highlight that 1H18 revenues had been restated upwards by

Rp108bn, or 4.4% higher than previously, to factor in digital assets integration. 1H19 revenues form 50.2%/50.6% of our/consensus FY19 revenue expectations.

− 1H19 Operating Income of Rp895bn, down 5.7% YoY. We highlight that 1H18 Operating Profit had been restated down by Rp126bn, or 11.7% lower than previously, as the company reflected Rp234bn additional opex (including D&A) from digital assets integration.

− 1H19 PATAMI of Rp782bn, down 7.3% YoY. 1H19 PATAMI form 53.2%/48.6% of our/consensus FY19 PATAMI expectations.

Retain BUY. Concerns around earnings drag from digital business expansion are rather exaggerated, while improving macro backdrop in 2H19 should help regain revenue growth momentum in FTA TV business – SCM’s core business. We think continued FTA TV growth and better calibration of digital business growth plans in 2H19 could help return positive sentiment on the stock, which currently trades at around negative 1 standard deviation from its long term PER average of ~17x. More details to follow after full FY19 financial disclosures and restatement guidance.

SCMA: 2Q19 RESULTS

in Rp bn 1H18 - Old 1H18 -

Restated 1H19 YoY - vs

Restated

% of FY19 Cons.

% of FY19 Mansek

Revenues 2,479 2,587 2,766 6.9% 50.6% 50.2%

Program and broadcasting expenses 972 1,124 1,267 12.7%

Gross Profit 1,506 1,463 1,499 2.4% % Margin 60.8% 56.6% 54.2% -236 bps

Operating expenses 432 515 604 17.4%

Operating profit 1,074 948 895 -5.7% 42.8% 47.4%

% Margin 43.3% 36.7% 32.3% -432 bps

Interest income 7 8 29 249.6%

Interest expense (2) (2) (1) -45.7%

Share of profit (loss) of associated companies 11 11 1 -89.4%

Extraordinary items 4 - - n.a.

Others 2 18 (8) n.a.

Total other income ( losses) 22 36 22 -38.6%

Pretax profit 1,097 984 916 -6.9%

Tax expense (260) (262) (237) -9.6%

% Tax rate 23.7% 26.6% 25.8% -79 bps

Merging entities income

114 80

PAT before merging entities income 837 837 759



in Rp bn 1H18 - Old 1H18 - Restated

1H19 YoY - vs

Restated

% of FY19 Cons.

% of FY19 Mansek

Minority interest (8) (8) (23) 198.4%

PATAMI 844 844 782 -7.3% 48.6% 53.2%

% margin 34.1% 32.6% 28.3% -435 bps

Source: Company data, Mandiri Sekuritas Research estimates Kresna Hutabarat (+6221 5296 9542) [email protected] Henry Tedja (+6221 5296 9434) [email protected] Semen Indonesia: 1H19 Results – Weak Earnings on Financing Charges (SMGR; Rp12,875; Buy; TP: Rp16,100)

SMGR 1H19’s net income fell below expectations at 21%/22% of FY19 consensus and ours, attributed to higher interest expenses. Both EBIT & EBITDA grew modest at +26%yoy, while PATMI declined -50%yoy despite improvement in corporate income tax rate in 2Q19. Maintain BUY with TP of Rp16,800.

SMGR booked consolidated net income of Rp485bn, -50% yoy, accounting for 21% of consensus and 22% of our expectations – below expectations. Declined in bottom line growth was the result of a significant increase in interest expenses of +227% yoy, which are related to the acquisition of Lafarge Holcim (renamed to Solusi Bangun Indonesia - SBI). However, both EBIT/EBITDA grew modest at +26% yoy as opex grew at a slower rate of 20% yoy than gross profit growth of +23% yoy. Meanwhile depreciation expenses increased +27% yoy. Blended ASP, COGS/ton and cash cost/ton each declined at 6% yoy. Corporate income tax, which reached 48% in 1Q19, went down to 29% level in 1H19 due to readjustment of tax rate on the subsidiary used for the Lafarge Holcim acquisition. Further explanation on this will be provided in the analyst call scheduled in the next few days. Please refer to our note on “1Q19 Earnings Call Takeaways” dated 17 May 2019 for further explanation on the higher tax in 1Q19.

1H19 top line missed consensus. SMGR’s top line fell below consensus expectations at 40% due to lower sales volume in both SMGR and SBI level. SMGR’s sales volume (domestic and export) declined -4.9% yoy to 12.68m tons while SBI’s sales volume declined -2.1%yoy to 4.70m tons in 1H19 (SBI was consolidated into SMGR starting Feb19). Blended ASP/ton declined 6% yoy, however, SBI managed to adjust their cement ASP by +5.5% yoy, while blended ASP increased by +1.3%yoy in 1H19, with pricing of SBI’s product approaching those produced by SMGR.

Margins are stable yoy. Consolidated 1H19 gross and EBIT margins of 28.5% and 12.5%, respectively, did not vary much from 1H18. EBITDA margin improved to 19.2% in 1H19 from 18.6% in 1H18, however net margin declined to 3.0% due to losses incurred by SBI. Despite the losses, SBI has started to show margin improvement in 1H19 due to cost saving initiatives on the COGS and operating expenses level. SBI’S 1H19 net losses was half of the 1H18 level. On the quarterly basis, margins are weaker in 2Q19 than 2Q18 due to lower margins recorded in SBI.

Financial highlights: − Consolidated net gearing increased to 95% in Jun19 from 13% in Dec18 due to additional loans taken up for SBI

acquisition. SMGR quarterly earnings

1Q18 2Q18 1Q19 2Q19 YoY QoQ 6M18 6M19 YoY %ofcons. 6M19as%FY19F

Domestic cement sales ('000 tonne)

6,193 5,630 7,518 8,078 43% 7% 11,823 15,596 32%

Export ('000 tonne) 591 908 829 938 3% 13% 1,499 1,767 18%

Total ('000 tonne) 6,783 6,538 8,347 9,016 38% 8% 13,321 17,363 30%

Blended ASP 976 1,023 974 912 -11% -6% 999 942 -6%

ASP Blended/ton (w/o 848 810 842 770 -5% -9% 829 805 -3%



SMGR quarterly earnings 1Q18 2Q18 1Q19 2Q19 YoY QoQ 6M18 6M19 YoY %ofcons. 6M19as%FY19F

TL)

COGS Blended/ton 722 705 708 640 -9% -10% 714 673 -6%

Cash Cost/ton 809 817 787 738 -10% -6% 813 761 -6%

Sales 6,618 6,691 8,127 8,224 23% 1% 13,308 16,351 23% 40,773 40% 42,679 38%

COGS 4,901 4,609 5,913 5,773 25% -2% 9,510 11,686 23%

Gross profit 1,717 2,082 2,214 2,451 18% 11% 3,799 4,665 23% 11,463 41% 12,077 39%

Operating expense 1,016 1,163 1,153 1,471 26% 28% 2,179 2,623 20%

Operating profit 701 919 1,061 980 7% -8% 1,620 2,041 26% 5,355 38% 5,874 35%

EBITDA 1,128 1,351 1,560 1,572 16% 1% 2,480 3,133 26% 7,684 41% 8,579 Int exp (229) (231) (712) (793) 244% 11% (460) (1,505) 227%

Others and int income 88 70 105 35 -50% -67% 158 140 -12%

Pretax profit 560 758 454 222 -71% -51% 1,318 676 -49% 3,137 22% 3,299 21%

Net Profit 411 554 238 243 -56% 2% 965 481 -50%

PATMI 412 560 268 217 -61% -19% 971 485 -50% 2,338 21% 2,253 22%

Tax rate -26.6% -26.9% -47.6% 9.4%

-26.8% -28.9%

Gross margin 25.9% 31.1% 27.2% 29.8% -

1.3% 2.6% 28.5% 28.5% 0%

Operating margin 10.6% 13.7% 13.1% 11.9% -

1.8% -1.1% 12.2% 12.5% 0%

Net income margin 6.2% 8.4% 3.3% 2.6% -

5.7% -0.7% 7.3% 3.0% -4%

EBITDA margin 17.1% 20.2% 19.2% 19.1% -

1.1% -0.1% 18.6% 19.2% 1%

EBITDA 1,128 1,351 1,560 1,572

2,480 3,133

Priscilla Thany (+62 21 5296 9546) [email protected] Tjandra Lienandjaja (+6221 5296 9617) [email protected] Telkom: 2Q19 Results - Telkomsel vs Non-Telkomsel Trends (TLKM; Rp4,300; Neutral; TP: Rp4,500)

Telkomsel’s revenue growth recovery is well-expected, but its cost discipline came as a positive surprise in 2Q19. Meanwhile, Non-Telkomsel YoY revenue growth stalled in 2Q19 and Non-Telkomsel’s high EBITDA margin run-rate in 1H19 should normalize down to ~30% level in 2H19, we estimate. Stay Neutral.

2Q19 Telkomsel Revenues of Rp22.9tn (+9.9% YoY, +3.4% QoQ) came 1.1% above our expectation. Broadband and Digital Lifestyle revenue growth accelerated in 2Q19, both running >30% YoY in the quarter vs. <30% in 1Q18. Indeed, mobile data yield continued to decline to Rp7.7/MB in 2Q19, vs. Rp8.4/MB in 1Q19. But, this yield decline is justified by the Broadband revenue growth acceleration in 2Q19, implying data subscription tiers upgrade by subscribers. Surprisingly, Voice revenues picked up 1.7% QoQ in 2Q19 after 7 quarters of consecutive decline. On a 6-month basis, Telkomsel booked Rp45.1tn revenues in 1H19, up 5.5% YoY and marking steady industry growth recovery.

2Q19 Telkomsel EBITDA of Rp12.1tn (+18.0% YoY, -0.3% QoQ) came 3.1% above our expectation. Cash opex growth was well-contained, only up 2.0% YoY in 2Q19, as the company lowered Interconnection, Marketing, and G&A expenses on YoY basis. As a result, EBITDA margin improved materially from 49.1% in 2Q18 to 52.8% in 2Q19. On a 6-month basis, Telkomsel booked Rp24.2tn EBITDA in 1H19, up 9.0% YoY, and delivered 53.7% EBITDA margin in 1H19, vs. 53.2% in FY18. The steady EBITDA growth recovery can be attributed to revenue growth rebound and solid cost discipline in 1H19.

2Q19 Telkomsel Net Income of Rp6.23tn (+17.5% YoY, -3.7% QoQ) came 4.1% above our expectation. D&A charges grew 15.7% YoY in 2Q19, in-line with the continued 4G network investments and IT system enhancement. Meanwhile, Non-Operating Expenses increased due to higher debt balances (including Finance Leases), which saw Rp8.96tn add in



2Q19. Effective tax rate also stood at 26.1% in 2Q19, indicating potential earnings support in 2H19 once effective tax rate normalizes. On a 6-month basis, Telkomsel booked Rp12.7tn Net Income in 1H19, up 8.4% YoY and delivered 28.2% net margin, vs. 28.6% in FY18. The net income rebound in 1H19 was achievable as EBITDA rebound more than offset the higher D&A and non-operating expenses.

FINANCIAL SUMMARY YE Dec (Rp Bn) 2017A 2018A 2019F 2020F 2021F EBITDA 64,609 59,181 63,494 67,269 71,844

Net Profit 22,145 18,032 19,217 20,207 21,578

Fully-diluted EPS 224 182 194 204 218

Fully-diluted EPS growth (%) 13.9 (18.6) 6.6 5.2 6.8

P/E Ratio (x) 19.2 23.6 22.2 21.1 19.7

EV/EBITDA (x) 7.1 8.0 7.6 7.3 6.8

P/B Ratio (x) 4.6 4.3 4.1 3.9 3.7

Dividend Yield (%) 3.9 3.8 3.4 3.6 3.8

ROAE (%) 25.0 18.8 19.0 19.0 19.4


TELKOMSEL: 2Q19 TRENDS

Telkomsel - 2Q19 Results

in Rp bn 2Q18 1Q19 2Q19 2Q19F YoY QoQ vs

Mansek's 1H18 1H19 YoY

Voice 8,374 6,824 6,938 6,700 -17.1% 1.7% 3.6% 17,046 13,762 -19.3%

SMS 1,684 1,196 1,058 1,000 -37.2% -11.5% 5.8% 3,622 2,254 -37.8% Broadband

Revenue 9,271 11,879 12,517 12,900 35.0% 5.4% -3.0% 18,431 24,396 32.4%

Digital Service Revenue

1,457 1,730 1,946 1,835 33.6% 12.5% 6.0% 2,803 3,676 31.1%

Others 81 551 467 250 476.3% -15.2% 87.0% 839 1,018 21.4%

Total Revenues 20,867 22,180 22,926 22,685 9.9% 3.4% 1.1% 42,741 45,106 5.5%

Operation and Maintenance

6,301 6,348 6,397 6,500 1.5% 0.8% -1.6% 12,354 12,745 3.2%

Personnel 1,021 1,051 1,249 1,150 22.3% 18.8% 8.6% 1,907 2,300 20.6%

Marketing 853 583 781 750 -8.4% 34.0% 4.1% 1,604 1,364 -15.0%

Interconnection 820 671 572 800 -30.2% -14.8% -28.5% 1,556 1,243 -20.1% General and Admin.

655 348 647 695 -1.2% 86.0% -6.8% 1,001 995 -0.6%

Others 965 1,043 1,184 1,055 22.7% 13.6% 12.3% 2,080 2,227 7.1% Operating expenses

10,615 10,044 10,831 10,950 2.0% 7.8% -1.1% 20,502 20,875 1.8%

EBITDA 10,252 12,136 12,096 11,735 18.0% -0.3% 3.1% 22,239 24,232 9.0%

% margin 49.1% 54.7% 52.8% 51.7% 363 bps -196 bps 103 bps 52.0% 53.7% 169 bps

D&A 3,101 3,495 3,588 3,535 15.7% 2.7% 1.5% 6,689 7,083 5.9%

Operating profit 7,151 8,641 8,507 8,200 19.0% -1.5% 3.7% 15,550 17,148 10.3%


Non-operating items

(40) (8) (77) (215) 95.9% 867.5% -64.0% 49 (85) -276.1%

Pre-tax profit 7,112 8,633 8,430 7,985 18.5% -2.4% 5.6% 15,599 17,063 9.4%

Taxes 1,806 2,161 2,197 1,996 21.7% 1.7% 10.1% 3,877 4,358 12.4%

% effective tax rate 25.4% 25.0% 26.1% 25.0% 67 bps 103 bps 106 bps 24.9% 25.5% 69 bps

Net profit 5,306 6,472 6,233 5,989 17.5% -3.7% 4.1% 11,722 12,705 8.4%




Operating stats 2Q18 1Q19 2Q19 YoY QoQ 1H18 1H19 YoY

Total Subscribers (mn) 177,888 168,642 167,792 -5.7% -0.5% 177,888 167,792 -5.7%

Smartphone Subscribers (mn)

112,100 111,304 114,099

1.8% 2.5%

112,100 114,099 1.8%

% penetration 63.0% 66.0% 68.0%

498 bps 200 bps

63.0% 68.0% 498 bps

MoU (in bn minutes)

52.2 47.7 43.8

-16.1% -8.2%

103.9 91.5 -11.9%

Voice yield (Rp) 160 143 158

-1.3% 10.7%

164 150 -8.3%

SMS (in bn minutes)

20.3 14.6 14.1

-30.6% -3.4%

43.5 28.7 -34.0%

SMS yield (Rp) 82.9 81.9 75.0

-9.5% -8.4%

83 79 -5.7%

Data payload (TB) 1,044,098 1,408,872 1,623,270

55.5% 15.2%

1,943,698 3,032,142 56.0% Data yield (Rp/MB) 8.9 8.4 7.7 -13.2% -8.5% 9.5 8.0 -15.2%

Source: Company data, Mandiri Sekuritas Research estimates Kresna Hutabarat (+6221 5296 9542) [email protected] Henry Tedja (+6221 5296 9434) [email protected] Wijaya Karya: Revenues Miss, Divestment Supported Earnings (WIKA; Rp2,340; Buy; TP: Rp2,885)

One-off gain from the Surabaya–Mojokerto toll road divestment lifted WIKA’s bottom line in 1H19 despite a relatively weak revenues generation from its main construction service and EPC. Yet, excluding the non-core items, WIKA’s 6M19 core profit nosedived 54.7% yoy.

Earnings beat estimates on the back of divestment. WIKA recorded 2Q19 earnings of Rp605bn (+74.8% yoy; +111.6% qoq) with a cumulative 6M19 net profit of Rp891bn (+72.2% yoy), accounting for 42% and 44% of our and consensus’ FY19 estimates—above seasonality, as 1H18 net profit contributed 30% to FY18 net profit.

On the top line, the company booked 2Q19 revenues of Rp4.9tn (-27.7% yoy; -25.3% qoq) and 6M19 revenues of Rp11.4tn (-12.4% yoy), at 31% and 29% of our and consensus’ FY19 estimate, respectively.

Key things to highlight: − Divestment helped the bottom line. In May 2019, the company managed to divest the Surabaya–Mojokerto toll

road to Astra Infra. WIKA’s equity value for the Surabaya–Mojokerto toll road stood at Rp165.1bn, thus, this transaction would translate to 4.3x PBV (2.4x PBV from WIKA’s total investment), accounting one-off gain of Rp412bn net after-tax. Note that our FY19 earnings estimate at Rp2.1tn has not taken into account the divestment gain. The company’s 6M19 core profit stood at Rp177bn (-54.7% yoy), excluding other income, divestment, and account receivables impairment.

− Unexpectedly declining revenues. In 6M19, WIKA’s construction service (64% of total revenues) declined by 14.7% yoy; followed by deteriorating EPC segment (16.4% of total revenues) by 24.7% yoy. We suspect this was primarily due to mixed effects from the delayed land clearing process, Lebaran, and election.

− Higher JV income has offset higher opex-to-sales. The company’s 6M19 JV income grew to Rp319.2bn (6M18: Rp151.9bn), which was primarily driven by the high speed railway (HSR) project, offsetting the higher opex-to-sales at 3.9% (6M18: 3.1%). This translated to a higher OPM at 10.7% in 6M19 compared to 9.5% in 6M18.

Maintain BUY. Up to 6M19, WIKA has booked Rp14.7tn of new contracts (-28.5% yoy), or accounting for 23.8% of its FY19 target. The company will host an analyst meeting on Aug 2nd, 2019, to discuss about its outlook. We retain our BUY recommendation with target price of Rp2,885. Key risks to our call are lower-than-expected new contracts achievement and slower-than-expected HSR progress.



WIKA 2Q19 RESULTS SUMMARY


% of cons.

Revenue 11,364 12,977 -12.4 4,859 6,504 -25.3 6,720 -27.7 36,846 30.8 39,564 28.7

Gross profit 1,337 1,486 -10.0 623 714 -12.8 861 -27.7 4,438 30.1 4,748 28.2

Operating profit 1,218 1,237 -1.5 552 666 -17.1 712 -22.5 4,196 29.0 4,141 29.4

Pretax profit 1,439 1,017 41.5 899 540 66.6 624 44.1 3,664 39.3 3,459 41.6

Net profit 891 517 72.2 605 286 111.6 346 74.8 2,101 42.4 2,025 44.0


12.8 11.0

12.8

12.0

12.0


11.4 10.2

10.6

11.4

10.5


18.5 8.3

9.3

9.9

8.7


12.4 4.4

5.1

5.7

5.1

Edbert Surya (+6221 5296 9623) [email protected] Adrian Joezer (+6221 5296 9415) [email protected] Waskita Karya: 2Q19 Results - Below Consensus, In-Line With Ours (WSKT; Rp2,050; Buy; TP: Rp2,280)

Slowdown in construction service revenue (93% of WSKT’s total revenues) was primarily driven by shortage of new contracts achievement in FY18. Furthermore, turnkey project completion translated to lower operating margins in overall. We believe divestment is key for WSKT’s asset recycling plan, while also a validation for turnkey scheme in Indonesia.

Earnings came below consensus estimate. WSKT posted 2Q19 earnings of Rp282bn (-80.8% yoy; 60.7% qoq), which translated to 6M19 net profit of Rp998bn (-66.6% yoy) or accounted for 37% of our estimate—in-line, while only contributing 28.0% to consensus FY19 estimate—below. The company’s 6M19 core income stood at Rp784bn (-39.3% yoy). Revenue-wise, the company recorded 2Q19 revenues of Rp6.1tn (-41.8% yoy; -29.6% qoq) with a cumulative 6M19 revenues of Rp14.8tn (-35.4% yoy).

Key things to highlight: − Curtailed construction service revenue. WSKT’s construction service, which contributed 93% to company’s total

revenues, dropped 39% qoq or 46.6% yoy in 2Q19 with normalized GPM at 17.4% (1Q19: 19.3%; 2Q18: 18.1%). This led to lower construction service at 42.4% yoy or Rp2.5tn in 6M19. Note that WSKT’s new contracts declined 51.5% yoy in FY18, thus deceleration in the segment should be anticipated.

− Declining margins are widely expected. WSKT’s overall 6M19 GPM slightly declined to 19.7% (6M18: 20.6%) mainly due to several turnkey projects’ completion, in our view. Meanwhile the company’s OPM deteriorated 150 bps to 16.6%, as we saw an increase in 6M19 opex-to-sales at 3.1% compared to 2.6% in 6M18.

Potential divestment in Aug 2019. In the recent news, the management targeted the divestment for the Solo–Ngawi and Ngawi–Kertosono toll roads to be completed in Aug’19. We think the divestment is positive for WSKT, as the two aforementioned toll roads in the news translates to approx. Rp2.5tn BV (WSKT's portion). This would translate to a potential one off gain of Rp3.75tn, assuming transaction at 2.0x PBV - tax 25 pct, reducing net gearing by ca.30 bps to 170%.

Maintain BUY. Up to 6M19, the company has bagged Rp8.2tn of new contracts (+6.9% yoy), accounting for 14.6% of its FY19 target. We believe WSKT’s divestment is a game-changer for the company, as it will be a validation for turnkey-scheme in Indonesia. We retain our BUY recommendation with target price of Rp2,280. Key risks to our call are delays in divestment and lower-than-expected new contracts achievement.



WSKT 2Q19 RESULTS SUMMARY


% of cons.

Revenue 14,795 22,900 -35.4 6,113 8,682 -29.6 10,503 -41.8 48,964 30.2 50,337 29.4

Gross profit 2,914 4,729 -38.4 1,165 1,749 -33.4 1,938 -39.9 8,442 34.5 9,047 32.2

Operating profit 2,455 4,137 -40.7 917 1,538 -40.4 1,452 -36.8 6,868 35.7 7,580 32.4

Pretax profit 1,391 5,276 -73.6 365 1,026 -64.4 2,227 -83.6 3,961 35.1 5,583 24.9

Net profit 998 2,990 -66.6 282 716 -60.7 1,470 -80.8 2,699 37.0 3,558 28.0


19.1 20.1

18.5

17.2

18.0


15.0 17.7

13.8

14.0

15.1


6.0 11.8

21.2

8.1

11.1

Net margin (%) 6.7 13.1

4.6 8.2

14.0

5.5

7.1

Edbert Surya (+6221 5296 9623) [email protected] Adrian Joezer (+6221 5296 9415) [email protected] Excel: 2Q19 - Stronger Growth, Better Profitability (EXCL; Rp3,230; Buy; TP; Rp3,600)

XL delivered another quarter of very solid performance with revenues up 13.4% YoY and EBITDA up 23.6% YoY in 2Q19, driven by consistent smartphone subscribers add and higher data usage. Continued 4G LTE investment nationwide will form stronger growth foundation in 2H19 and beyond. Maintain BUY.

2Q19 Revenues of Rp6.29tn (+13.4% YoY, +5.4% QoQ) beat our estimate by 1.6%. XL reported cellular revenue growth of 15.8% YoY/5.0% QoQ in 2Q19, with Data segment growing 34.3% YoY/7.6% QoQ in the quarter. For comparison, Telkomsel reported service revenue growth of 9.6% YoY/3.2% QoQ in 2Q19, with Data/Broadband segment growing 35.0% YoY/5.4% QoQ in the quarter. XL’s cellular revenue growth outperformance in 2Q19 was driven by the continued smartphone subscriber add and higher data usage on the network. To note, XL has lower legacy revenue mix than peers as Data already formed 79.1% of the company’s cellular revenue base in 2Q19. On a 6-month basis, XL reported Rp12.3tn of revenues in 1H19, up 11.0% YoY vs. in 1H18 and forming 49.1%/49.8% of ours/consensus estimate.

2Q19 EBITDA of Rp2.47tn (+23.6% YoY, +8.4% QoQ) beat our estimate by 4.7%. Cash opex grew 7.7% YoY in 2Q19, with Infrastructure expenses driving the bulk of the growth. The pick-up in Infrastructure expenses, however, was partly offset by the decline in Interconnection and Sales & Marketing expenses on YoY basis in 2Q19 – a trend likely caused by lower churn and more data-focused subscription in the network. As a resut, EBITDA margin increased to 39.3% in 2Q19, the highest level in the past 12 quarters. On a 6-month basis, XL reported Rp4.75tn of EBITDA in 1H19, up 19.2% YoY vs. in 1H18 and forming 49.6%/50.0% of ours/consensus estimate. XL also booked 38.8% EBITDA margin in 1H19, up from 36.1% in 1H18. This strong EBITDA achievement in 1H19 can be explained by the strong data revenue growth momentum and well-managed cost structure.

D&A charges declined 5.0% YoY/0.6% QoQ in 2Q19, running below our expectation. We highlight that Management previously guided for FY19 D&A to grow 6%-7% YoY from the normalized D&A run-rate in FY18. On a 6-month basis, D&A charges stood at Rp3.53tn in 1H19, down 4.6% vs. in 1H18. So, the latest D&A run-rate came behind guidance. Assuming no D&A guidance change, we expect potential D&A pick-up in 2H19. To note, XL booked Rp1.22tn operating profit in 1H19, grew about 3-fold from Rp284bn in 1H18.

2Q19 Net Profit of Rp225bn, a reversal from Rp97bn net loss in 2Q19. Non-operating expenses grew 64.8% YoY in 2Q19, mainly due to the pick-up in Interest Expense. The higher Interest Expense was a result from USD-debt refinancing into IDR-debt and additional finance leases (related to tower rentals). Meanwhile, effective tax rate stood at 32.1% in 2Q19, ahead of the statutory tax rate. On a 6-month basis, XL reported Rp282bn Net Profit in 1H19, a reversal from Rp82bn net loss in 1H18. XL’s 1H19 net profit achievement already surpassed our FY19 net profit estimate and formed 60.4% of consensus FY19 net profit estimate.



Maintain BUY. XL’s strong earnings turnaround in 1H19 was made possible by the continued focus in delivering 4G LTE network nationwide with steady cost structure. Data pricing remains a challenge for better monetization, but the evidently strong demand for mobile internet, hence data volume, should help sustain earnings growth and profitability turnaround at XL going forward.

EXCL: 2Q19 RESULTS

in Rp bn 2Q18 1Q19 2Q19 2Q19F YoY QoQ vs

Mansek's 1H18 1H19 YoY %

FY19F Mansek

% FY19F

Cons

Cellular 5,169 5,701 5,988 5,830 15.8% 5.0% 2.7% 10,334 11,689 13.1%

Data 3,527 4,400 4,736 4,650 34.3% 7.6% 1.8% 6,989 9,136 30.7%

Non-data 1,315 1,017 966 900 -26.5% -4.9% 7.4% 2,706 1,983 -26.7%

Interconnection 327 284 286 280 -12.7% 0.5% 2.1% 638 570 -10.7%

Non-Cellular 393 273 307 392 -21.7% 12.5% -21.6% 733 581 -20.8% Bundling

revenues 145 54 58 150 -60.2% 5.9% -61.6% 159 112 -29.4%

Leased towers 81 75 77 75 -4.8% 1.9% 2.4% 162 152 -5.8%

Leased lines 62 51 47 57 -23.1% -7.2% -16.7% 125 99 -21.3%

Others 105 92 125 110 19.0% 35.9% 14.0% 287 218 -24.2%

Discount (17) (7) (6) (30) -67.2% -18.1% -81.0% (21) (13) -38.4%

Revenues (net of discount)

5,545 5,967 6,290 6,192 13.4% 5.4% 1.6% 11,046 12,257 11.0% 49.1% 49.8%

IC & service charges

613 446 516 529 -15.9% 15.7% -2.5% 1,098 961 -12.5%

Salaries and employee benefits

264 301 323 300 22.3% 7.5% 7.7% 527 624 18.4%

Sales and marketing

574 457 490 515 -14.6% 7.3% -4.9% 1,147 947 -17.4%

Infrastructure 1,984 2,316 2,353 2,365 18.6% 1.6% -0.5% 4,068 4,670 14.8%

G&A and others 111 169 136 124 23.3% -19.3% 9.9% 220 305 38.5%

Operating expenses

3,545 3,688 3,818 3,833 7.7% 3.5% -0.4% 7,060 7,507 6.3%

EBITDA 2,000 2,279 2,471 2,359 23.6% 8.4% 4.7% 3,986 4,750 19.2% 49.6% 50.0%

% margin 36.1% 38.2% 39.3% 38.1% 323 bps 110 bps 119 bps 36.1% 38.8% 267 bps

EBITDA less Net Interest Expenses 1,618 1,756 1,963 1,824 21.4% 11.8% 7.6% 3,259 3,719 14.1%

D&A 1,854 1,772 1,761 1,860 -5.0% -0.6% -5.3% 3,702 3,532 -4.6%

Operating profit 146 507 711 499 386.9% 40.1% 42.3% 284 1,218 329.1% 71.4% 60.0%

% margin 2.6% 8.5% 11.3% 8.1% 867 bps 280 bps 324 bps 2.6% 9.9% 737 bps

Share of results from jointly-controlled entity

- - - - N.A. N.A. N.A. - - N.A.

Interest income 32 21 25 10 -19.8% 18.6% 153.6% 67 47 -30.2%

Interest expenses (414) (544) (533) (545) 28.9% -2.0% -2.1% (794) (1,078) -26.3%

FX gain/(loss) (43) (15) 4 - N.A. N.A. N.A. (44) (12) N.A.

Extraordinary items 106 106 106 106 0.0% 0.0% -0.3% 211 211 0.0%

Others 89 9 20 15 -78.0% N.A. 31.3% 121 28 -76.5%

Non-operating items

(230) (424) (379) (414) 64.8% -10.5% -8.4% (439) (803) 82.8%

Pretax profit (84) 84 332 85 N.A. 295.3% 288.9% (155) 416 N.A.

Taxes 13 27 106 21 713.4% 298.7% 399.2% (73) 133 N.A.

% effective tax rate N.A. 31.8% 32.1% 25.0% N.A. 27 bps 709 bps 47.3% 32.0% -1529 bps

Net profit (97) 57 225 64 N.A. 293.8% 252.2% (82) 282 N.A. 150.0% 60.4%



in Rp bn 2Q18 1Q19 2Q19 2Q19F YoY QoQ vs Mansek's

1H18 1H19 YoY %

FY19F Mansek

% FY19F

Cons

% margin -1.8% 1.0% 3.6% 1.0% N.A. 262 bps 255 bps -0.7% 2.3% N.A.

Normalized Net profit (144) (11) 143 (16) N.A. N.A. N.A. (207) 133 N.A.

% margin N.A. N.A. 2.3% N.A. N.A. N.A. N.A. -1.9% 1.1% N.A.

Operating stats 2Q18 1Q19 2Q19 2Q19F YoY QoQ vs

Mansek's 1H18 1H19

Total Subscribers (mn) 53.8 55.0 56.6 55.6 5.1% 2.7% 1.6% 53.8 56.6 5.1% Smartphone Subscribers (mn)

40.8 46.3 48.6 47.1 19.1% 5.0% 3.2% 40.8 48.6 19.1%

% penetration 75.8% 84.1% 85.9% 84.6% 1009 bps 183 bps 130 bps 75.8% 85.9%

1009 bps

Data payload (TB) 530,229 727,450 840,499 807,450 58.5% 15.5% 4.1% 957,742 1,567,949 63.7%

Data yield (Rp/MB) 6.7 6.0 5.6 5.8 -15.3% -6.8% -2.2% 7.3 5.8 -20.2% Source: Company data, Mandiri Sekuritas Research estimates Kresna Hutabarat (+6221 5296 9542) [email protected] Henry Tedja (+6221 5296 9434) [email protected] Market Recap July 31st 2019; JCI 6,390.51 Points +13.51 pts (+0.21%); Valued $646mn; Mkt Cap $507bn; USD/IDR 14,019

TOP TURNOVER: TLKM HMSP BBRI ASII BBCA GGRM BMRI UNVR BBNI ERAA UNTR INTP SMGR BTPS PGAS INDF BRPT (38%)

ADVANCING SECTOR: consumer+1.4%; plantation+0.7%; financial flat

DECLINING SECTOR: auto-2.1%; property-1%; mining-0.5%; cement-0.3%; construction & telco-0.1%

Indo shares were on defensive, with the IDR stabilizing at 14019 level, rattled by fresh trade war concerns following threats from President Trump to Beijing. Trump warned China against waiting out his current presidential term before finalizing a trade deal. As a new round of US-China trade negotiations started in Shanghai, Trump tweeted that, if he wins re-election in Nov 2020, the outcome could be no agreement or a harsher one. Later in the day, the US Fed is widely expected to cut interest rates for the first time since the financial crisis more than a decade ago by 25 bps, and by another 25 bps in Sept. Trump on Tuesday reiterated his call for the Fed to make a large interest rate cut, saying he was disappointed in the US central bank and that it had put him at a disadvantage by not acting sooner. The stock price movements were basically dictated by 2Q19 results. SOE contractors mostly were on the loss after reporting unexpectedly weak results: WSKT-2.4% WIKA-2.1% ADHI-1.7% PTPP-0.5%. While consumers fared better than expected, led by HMSP+2.7% INDF+2.5% MYPR+1.6% UNVR+1.3% ICBP+0.7% KLBF+0.7%. Retailers also moved up led by MAPA+7.8% ERAA+5.3% AMRT+3.8% MAPI+2.7% RALS+2.3% CSAP+2% ACES+1.7%. In the end, the JCI rose 0.2% at 6390 level in strong turnover of $646MN (excluding $27.5MN ASII; $22.2MN BBCA; $18MN BBRI; $18MN SRAJ; $7.8MN DILD; $7MN TOPS; $6.8MN HOME; $5.8MN BULL crossing). Foreign participants rose to 37% and came up better seller for 17%. Losers beat gainers by 11 to 10.

US consumer spending and prices rose moderately in June, pointing to slower economic growth and benign inflation that cemented expectations of Fed rate cuts. In Asia, a key manufacturing survey out of China will be a main focus for traders. In currency markets, the British pound remains near a 28-month low hit the previous day on growing concerns

MARKET



about a disorderly Brexit. Sterling traded at $1.2164, up 0.13% so far on the day, but not far from $1.2120 marked on Tue. It has fallen 4.2% so far this month, on course to log its worst monthly performance since Oct 2016. In addition to Brexit, markets are starting to price in the BoE moving to dovish from hawkish at its next meeting. Other major currencies were less volatile with the yen flat at 108.58 yen to the dollar. The euro stood little changed at $1.1158. Oil prices held firm near two-week highs after 2% gains on Tue. US WTI crude gained 0.41% to $58.29 per barrel in early Asian trade.

Sales Team +6221 527 5375

BRTI ban distributor to sell foreign SIM Card Indonesian Telecommunication Regulation Office (BRTI) sent circular letter to ban distributor and retailers selling foreign SIM card. The law is issued as a response to Zain’s sim card, which is sold in retailers in last few weeks. (Bisnis) Government to reduce the non-contributory (PBI) recipient capacity Government will reduce the PBI capacity from 96.8mn to 91.58mn recipients as of Aug’19. Febri Hendri, Staff Specialist of Ministry of Social Services, said that the reduction of 5.11mn PBI recipients is resulted from invalidity of identification number and 114k recipients have passed away. In the same manner, Jusuf Kalla, Vice President of Indonesia, said the government has agreed to increase BPJS Kesehatan premium. In separate news, BPJS Kesehatan proposes a Rp9,000 premium increase for all classes. (Kontan, CNBC.com, CNN.com) IHS Markit's Indonesia Manufacturing PMI declined to 49.6 in July 2019 The figure fell from 50.6 in June 2019 to 49.6 in July 2019. PMI below 50 means that there was a declining performance of Indonesia manufacturing in the beginning of 3Q19. IHS Markit survey found a mild growth of overall new orders. Increasing stocks of final goods and signs of spare capacity forced firms to cut back production volume. Consequently, factories reduced their purchasing activity and cut their input inventories. (IHS Markit) Nestle Indonesia (NI) to invest Rp1.4trn for factory expansion NI plans to use the fund to expand their 3 factories namely in Karawang (West Java), Kejayan (East Java) and Panjang (Lampung). With the expansion, NI expects to increase the total production capacity by 775k ton/year or 25% higher to current capacity of 620k ton/year. (Kontan)

FROM THE PRESS



Indices and Fund Flows Currencies and Bonds Major Commodities

Indices Last Chg (%) YTD Chg (%)

Currency Last Chg (%) YTD Chg (%)

Last Chg (%) YTD Chg (%)

JCI 6,390.5 +0.2 +3.2 Rp/US$ 14,107 +0.62 +2.2 Oil spot (US$/bl) 58.58 +0.9 +29.0

Dow Jones 26,864.3 -1.2 +15.2 US$/EUR 1.108 -0.71 +3.5 Nickel spot (US$/mt) 14,452 +0.9 +36.3

Nikkei 21,521.5 -0.9 +7.5 YEN/US$ 108.78 +0.16 +0.8 Gold spot (US$/oz) 1,414 -1.2 +10.2

Hang Seng 27,777.8 -1.3 +7.5 SGD/US$ 1.374 +0.28 -0.8 Tin 3-month (US$/mt) 17,315 -0.8 -11.1

STI 3,300.8 -1.5 +7.6 CPO futures (Ringgit/ton) 2,070 +0.4 -2.4

Ishares indo 25.7 -1.0 +3.6 Coal (US$/ton) 69.5 -0.3 -31.9

Rubber forward (US¢/kg) 160.0 +0.0 +7.7

Foreign Fund Flows (US$mn)

Last Chg YTD Chg

Gov. Bond Yield

Last Chg

(bps)

YTD Chg

(bps)

Soybean oil (US$/100gallons)

27.75 -2.0 +0.7

Equity Flow -0.8 +4,826 5Yr 6.84 +7 -107 Baltic Dry Index 1,899.0 -1.0 +49.4

Bonds Flow -14.3 +8,328 10Yr 7.38 +4 -65



Equity Valuation Price Price % of Mkt Cap Net Profit PER (x) P/BV (x) EV/EBITDA (x) EPS Growth Div.Yield

Code Rating (Rp) Target PT (Rp Bn) 2019 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 2020

MANSEK universe 6,391 6,800 6.4 4,703,507 262,920 282,611 17.8 16.6 2.6 2.4 14.1 13.6 8.2% 7.1% 2.5% 2.6%

Financials 1,696,214 104,492 116,425 16.2 14.6 2.4 2.2 0.0 0.0 13.2% 11.4% 2.1% 2.4%

BBCA Neutral 30,950 26,500 (14.4) 763,072 29,483 32,062 25.9 23.8 4.4 3.9 N.A. N.A. 14.0% 8.7% 1.1% 1.2%

BBNI Neutral 8,475 9,000 6.2 158,047 16,642 18,879 9.5 8.4 1.4 1.3 N.A. N.A. 10.8% 13.4% 3.8% 4.7%

BBRI Buy 4,480 5,000 11.6 552,377 36,551 41,656 15.1 13.3 2.7 2.5 N.A. N.A. 13.0% 14.0% 2.9% 3.3%

BBTN Buy 2,460 2,900 17.9 26,051 2,614 3,901 10.0 6.7 1.0 0.9 N.A. N.A. -6.9% 49.2% 2.2% 2.2%

BDMN Neutral 5,075 4,900 (3.4) 49,601 5,849 4,698 8.3 10.4 1.1 1.0 N.A. N.A. 49.1% -19.7% 2.8% 4.1%

BJBR Neutral 1,590 1,770 11.3 15,990 1,444 1,838 11.1 8.7 1.3 1.3 N.A. N.A. -8.8% 27.4% 5.6% 5.0%

BJTM Neutral 640 630 (1.6) 9,547 1,145 1,221 8.3 7.8 1.1 1.0 N.A. N.A. -9.2% 6.7% 7.3% 6.6%

BNGA Neutral 1,075 1,350 25.6 27,016 3,946 4,261 6.8 6.3 0.6 0.6 N.A. N.A. 13.3% 8.0% 2.6% 2.9%

BNLI Neutral 945 465 (50.8) 26,500 1,081 1,409 24.5 18.8 1.2 1.1 N.A. N.A. 69.0% 30.3% 0.0% 0.0%

PNBN Buy 1,440 1,550 7.6 34,686 2,990 3,318 11.6 10.5 0.9 0.8 N.A. N.A. -3.0% 11.0% 0.0% 0.0%

BTPS Buy 3,170 3,150 (0.6) 24,421 1,307 1,648 18.7 14.8 4.6 3.7 N.A. N.A. 35.4% 26.1% 0.0% 1.1%

BFIN Buy 595 900 51.3 8,904 1,441 1,532 6.2 5.8 1.2 1.1 N.A. N.A. -1.9% 6.4% 4.9% 4.9%

Construction & materials 284,361 14,748 17,645 19.3 16.1 2.0 1.8 11.2 10.6 -5.0% 19.6% 1.3% 1.6%

INTP Buy 22,475 23,500 4.6 82,736 1,868 2,478 44.3 33.4 3.4 3.1 23.6 18.8 65.5% 32.7% 0.5% 0.8%

SMGR Buy 12,875 16,100 25.0 76,368 2,253 3,708 33.9 20.6 2.4 2.2 12.5 10.3 -26.8% 64.6% 1.1% 1.6%

ADHI Buy 1,485 2,035 37.0 5,288 721 672 7.3 7.9 0.8 0.7 5.7 5.8 11.9% -6.8% 2.4% 2.7%

PTPP Buy 2,150 3,085 43.5 13,330 1,731 2,088 7.7 6.4 0.9 0.8 5.2 4.7 15.3% 20.6% 3.4% 3.9%

WIKA Buy 2,340 2,885 23.3 20,967 2,101 2,002 10.0 10.5 1.3 1.2 6.4 5.9 21.4% -4.7% 2.0% 1.9%

WSKT Buy 2,050 2,280 11.2 27,431 2,699 2,997 10.2 9.2 1.4 1.2 12.1 12.4 -31.9% 11.1% 2.0% 2.2%

WTON Buy 585 700 19.7 5,099 525 608 9.7 8.4 1.5 1.3 5.3 4.6 8.0% 15.7% 2.9% 3.1%

WSBP Buy 364 480 31.9 9,595 1,268 1,409 7.6 6.8 1.1 1.1 4.7 4.1 15.1% 11.1% 5.7% 6.6%

JSMR Buy 6,000 5,600 (6.7) 43,547 1,583 1,683 27.5 25.9 2.5 2.3 14.3 15.6 -15.9% 6.3% 0.9% 0.7%

Consumer staples 1,157,011 46,283 49,692 25.0 23.3 6.3 5.8 16.1 15.0 5.2% 7.4% 2.8% 2.8%

ICBP Buy 10,700 11,600 8.4 124,782 4,931 5,296 25.3 23.6 5.2 4.7 14.9 14.4 7.8% 7.4% 2.0% 2.1%

INDF Buy 7,075 9,250 30.7 62,118 4,592 4,929 13.5 12.6 1.7 1.6 7.9 7.5 10.2% 7.3% 4.3% 4.7%

MYOR Neutral 2,490 2,850 14.5 55,674 1,864 2,152 29.9 25.9 5.8 5.1 15.7 13.8 8.6% 15.5% 1.2% 1.3%

UNVR Neutral 43,600 48,200 10.6 332,668 7,361 7,969 45.2 41.7 57.1 51.7 31.2 28.7 -19.2% 8.3% 2.7% 2.2%

GGRM Buy 75,500 99,000 31.1 145,269 9,462 10,433 15.4 13.9 2.8 2.5 10.1 9.1 21.4% 10.3% 2.0% 2.0%

HMSP Neutral 3,030 3,500 15.5 352,444 14,702 15,230 24.0 23.1 9.6 9.4 18.2 17.6 8.6% 3.6% 3.8% 4.1%

KLBF Buy 1,470 1,700 15.6 68,906 2,631 2,856 26.2 24.1 4.3 3.9 16.5 15.1 7.5% 8.6% 1.7% 1.9%

SIDO Buy 1,010 1,050 4.0 15,150 739 827 20.5 18.3 4.6 4.1 14.8 13.1 11.4% 11.9% 3.8% 4.3%

Healthcare 49,408 818 970 60.4 50.9 4.1 3.7 19.1 16.2 5.1% 18.6% 0.2% 0.2%

MIKA Buy 2,030 2,300 13.3 29,538 643 713 45.9 41.4 7.4 5.8 28.3 25.6 4.8% 10.9% 0.0% 0.0%

SILO Buy 6,300 5,950 (5.6) 10,238 6 29 1,743.3 356.0 1.6 1.6 11.9 9.8 -63.5% 389.6% 0.0% 0.0%

HEAL Buy 3,240 4,500 38.9 9,633 169 228 57.0 42.2 5.1 4.7 15.0 12.0 13.6% 35.1% 0.8% 0.9%

Consumer discretionary 397,416 29,584 29,881 13.4 13.3 2.1 2.0 9.3 9.4 4.9% 1.0% 3.4% 3.6%

ACES Buy 1,835 1,700 (7.4) 31,470 1,113 1,232 28.3 25.5 6.4 5.5 21.8 19.6 14.8% 10.6% 1.2% 1.4%

LPPF Buy 3,730 7,500 101.1 10,884 2,092 2,278 5.2 4.8 3.1 2.5 2.5 2.0 48.9% 8.9% 9.0% 13.5%

MAPI Buy 945 1,100 16.4 15,687 815 815 19.2 19.3 3.0 2.7 7.9 7.7 13.4% 0.0% 0.7% 0.8%

MPPA Sell 206 250 21.4 1,108 -335 -462 -3.3 -2.4 0.6 0.8 16.7 42.0 -20.3% -37.9% -7.5% -9.1%

RALS Buy 1,345 1,700 26.4 9,544 558 626 17.1 15.2 2.4 2.2 11.1 9.9 9.2% 12.2% 3.2% 3.5%

ASII Buy 7,000 8,200 17.1 283,385 21,698 21,514 13.1 13.2 1.9 1.8 9.7 10.2 0.1% -0.9% 3.4% 3.4%

SCMA Buy 1,550 2,200 41.9 22,663 1,628 1,773 13.9 12.8 5.0 4.6 9.8 9.1 8.5% 8.9% 5.7% 6.3%

MNCN Buy 1,375 1,250 (9.1) 17,631 1,586 1,610 11.1 11.0 1.7 1.5 6.6 6.3 15.3% 1.5% 3.6% 3.7%

MSIN Buy 380 570 50.0 1,977 229 257 8.6 7.7 1.4 1.3 4.8 4.0 27.2% 12.1% 5.8% 6.5%

PZZA Buy 1,015 1,400 37.9 3,067 199 239 15.4 12.8 2.3 2.0 7.3 6.4 24.2% 20.0% 0.0% 0.0%

Commodities 295,599 29,873 28,599 9.8 10.3 1.1 1.1 4.4 4.3 -9.0% -4.9% 4.0% 3.7%

AALI Buy 9,975 14,200 42.4 19,199 1,817 1,968 10.6 9.8 1.0 0.9 4.1 3.3 16.6% 8.3% 3.2% 3.8%

LSIP Buy 1,060 1,450 36.8 7,232 650 665 11.1 10.9 0.8 0.8 3.8 3.4 11.4% 2.3% 3.2% 3.6%

SSMS Neutral 1,010 1,300 28.7 9,620 1,158 1,263 8.3 7.6 1.7 1.5 5.2 4.5 27.0% 9.1% 2.8% 3.6%

BWPT Neutral 143 195 36.4 4,508 -67 -189 -66.8 -23.8 0.8 0.8 7.5 6.6 70.0% -180.3% 0.0% 0.0%

UNTR Buy 24,925 31,200 25.2 92,974 10,892 10,254 8.5 9.1 1.5 1.4 4.4 4.5 -2.1% -5.9% 3.5% 3.3%

ADRO* Neutral 1,270 1,300 2.4 40,622 380 313 7.5 9.3 0.7 0.7 3.4 3.4 -9.1% -17.6% 5.3% 4.0%



Price Price % of Mkt Cap Net Profit PER (x) P/BV (x) EV/EBITDA (x) EPS Growth Div.Yield

Code Rating (Rp) Target PT (Rp Bn) 2019 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 2020

HRUM* Neutral 1,325 1,500 13.2 3,401 22 17 10.7 14.5 0.8 0.8 0.6 0.6 -29.7% -25.1% 5.1% 3.8%

INDY* Neutral 1,485 1,500 1.0 7,737 46 50 11.9 10.9 0.5 0.5 2.4 2.1 -42.8% 10.3% 2.1% 2.3%

ITMG* Neutral 16,825 17,500 4.0 18,450 150 127 8.7 10.4 1.4 1.5 3.5 4.1 -42.2% -15.2% 9.8% 8.2%

PTBA Neutral 2,740 3,000 9.5 31,572 3,957 3,476 7.6 9.0 1.8 1.7 5.6 5.6 -23.9% -16.4% 6.3% 5.5%

ANTM Buy 935 1,100 17.7 22,469 924 1,006 24.3 22.3 1.1 1.1 11.2 10.4 5.7% 8.9% 1.4% 1.6%

INCO* Buy 3,030 4,000 32.0 30,107 54 111 39.3 19.3 1.1 1.1 8.2 6.0 -11.0% 106.7% 0.8% 1.6%

TINS Buy 1,035 2,200 112.6 7,708 1,262 1,492 6.1 5.2 1.0 0.9 3.7 3.2 137.4% 18.3% 5.7% 6.8%

Property & Industrial Estate 156,406 10,292 10,878 14.3 14.4 1.2 1.2 11.3 11.4 20.7% -0.4% 1.0% 1.1%

ASRI Sell 332 280 (15.7) 6,524 997 1,578 6.5 4.1 0.6 0.5 7.3 5.7 5.8% 58.3% 0.6% 0.6%

BSDE Neutral 1,420 1,450 2.1 27,330 1,972 2,043 13.9 13.4 0.9 0.9 11.9 12.3 10.0% 3.6% 0.0% 0.0%

CTRA Buy 1,235 1,450 17.4 22,922 981 1,039 23.4 22.1 1.5 1.4 14.1 13.8 -14.0% 5.9% 0.8% 0.7%

JRPT Buy 555 980 76.6 7,631 1,005 919 7.6 8.3 1.1 1.0 6.6 7.1 5.7% -8.6% 3.7% 2.5%

PWON Neutral 735 680 (7.5) 35,397 2,399 2,426 14.8 14.6 2.5 2.1 10.7 10.8 4.8% 1.2% 0.8% 0.8%

SMRA Buy 1,325 1,200 (9.4) 19,115 313 486 61.1 39.3 2.7 2.6 16.5 14.2 -1.8% 55.3% 0.4% 0.4%

LPKR Buy 280 360 28.6 19,766 1,498 993 9.3 19.9 0.6 0.6 10.3 14.7 24.6% -53.4% 0.3% 0.4%

DMAS Buy 304 390 28.3 14,652 675 855 21.7 17.1 2.0 2.0 20.3 16.3 36.1% 26.6% 4.1% 5.2%

BEST Buy 318 400 25.8 3,068 452 540 6.8 5.7 0.7 0.6 6.6 6.2 7.0% 19.4% 2.9% 3.5%

Telco 548,163 21,434 22,888 25.6 24.0 3.7 3.5 7.5 7.1 33.9% 6.8% 3.0% 3.2%

EXCL Buy 3,230 3,600 11.5 34,522 188 497 183.4 69.4 1.9 1.8 6.2 5.7 N/M 164.1% 0.0% 0.0%

TLKM Neutral 4,300 4,500 4.7 425,968 19,217 20,207 22.2 21.1 4.1 3.9 7.6 7.3 6.6% 5.2% 3.4% 3.6%

ISAT Neutral 3,410 3,000 (12.0) 18,530 -2,159 -2,253 -8.6 -8.2 2.1 2.7 5.9 5.4 10.2% -4.4% 0.0% 0.0%

LINK Buy 4,520 5,500 21.7 13,161 1,126 1,132 11.9 11.8 2.5 2.2 5.6 5.3 42.7% 0.5% 4.3% 4.3%

TBIG Buy 4,200 5,700 35.7 18,232 795 938 22.9 19.4 5.0 4.3 10.5 10.0 16.8% 17.9% 2.7% 2.2%

TOWR Buy 740 1,000 35.1 37,751 2,266 2,367 16.7 15.9 4.1 3.7 9.0 8.7 2.5% 4.5% 3.2% 3.2%

Chemical 56,219 1,949 1,888 28.8 29.8 2.9 2.7 8.3 8.2 22.9% -3.2% 0.0% 0.0%

AGII Buy 670 700 4.5 2,055 105 136 19.6 15.1 0.6 0.6 7.0 6.5 5.0% 29.5% 0.0% 0.0%

BRPT* Neutral 3,880 2,640 (31.9) 54,164 129 125 29.4 30.9 3.4 3.1 8.4 8.4 25.4% -3.4% 0.0% 0.0%

Airlines 5,986 427 529 14.0 11.3 1.2 1.1 7.9 6.7 -2.9% 24.0% 0.0% 0.0%

GMFI* Neutral 212 275 29.6 5,986 30 38 14.0 11.3 1.2 1.1 7.9 6.7 -2.0% 26.1% 0.0% 0.0%

Oil and Gas 49,695 2,564 2,693 19.4 18.5 1.0 1.0 6.1 5.8 12.6% 5.0% 1.8% 2.0%

PGAS* Buy 2,050 3,150 53.7 49,695 180 192 19.4 18.5 1.0 1.0 6.1 5.8 13.7% 6.8% 1.8% 2.0%

Transportation 7,031 458 522 15.4 13.5 1.3 1.2 6.2 5.8 0.1% 14.0% 1.8% 2.1%

BIRD Buy 2,810 3,935 40.0 7,031 458 522 15.4 13.5 1.3 1.2 6.2 5.8 0.1% 14.0% 1.8% 2.1%

Note: - *) net profit in USD mn - U/R means Under Review - n/a means Not Available - N/M means Not Meaningful - N.A means Not Applicable

Mandiri Sekuritas A subsidiary of PT Bank Mandiri (Persero) Tbk Menara Mandiri Tower I, 25th floor, Jl. Jend. Sudirman Kav. 54 – 55, Jakarta 12190, Indonesia

General: +62 21 526 3445, Fax : +62 21 527 5374 (Equity Sales)

Adrian Joezer Head of Equity Research, Strategy, Consumer [email protected] +6221 5296 9415 Tjandra Lienandjaja Deputy Head of Equity Research, Banking [email protected] +6221 5296 9617 Ariyanto Kurniawan Automotive, Coal, Chemical [email protected] +6221 5296 9682 Kresna Hutabarat Telecom, Media [email protected] +6221 5296 9542 Priscilla Thany Banking, Building Material [email protected] +6221 5296 9569 Lakshmi Rowter Healthcare, Consumer [email protected] +6221 5296 9549 Robin Sutanto Property [email protected] +6221 5296 9572 Edbert Surya Construction, Transportation [email protected] +6221 5296 9623 Silvony Gathrie Research Assistant [email protected] +6221 5296 9544 Riyanto Hartanto Research Assistant [email protected] +6221 5296 9488 Henry Tedja Research Assistant [email protected] +6221 5296 9434 Leo Putera Rinaldy Chief Economist [email protected] +6221 5296 9406 Silva Halim Head Institutional Equities [email protected] +6221 527 5375 Andrew Handaya Institutional Sales [email protected] +6221 527 5375 Feliciana Ramonda Institutional Sales [email protected] +6221 527 5375 Henry Pranoto Institutional Sales [email protected] +6221 527 5375 Kevin Giarto Institutional Sales [email protected] +6221 527 5375 Sharon Anastasia Tjahjadi Institutional Sales [email protected] +6221 527 5375 Talitha Medha Anindya Institutional Sales [email protected] +6221 527 5375 Kusnadi Widjaja Equity Dealing [email protected] +6221 527 5375 Edwin Pradana Setiadi Equity Dealing [email protected] +6221 527 5375 Jane Theodoven Sukardi Equity Dealing [email protected] +6221 527 5375 Michael Taarea Equity Dealing [email protected] +6221 527 5375 Andreas M. Gunawidjaja Head Retail Equities [email protected] +6221 526 9693 Boy Triyono Jakarta [email protected] +6221 526 5678 Dhanan Febrie Handita Bandung [email protected] +6222 426 5088 Yogiswara Perdana Yogyakarta [email protected] +62274 560 596 Widodo Solo [email protected] +62271 788 9290 Linawati Surabaya [email protected] +6231 535 7218 Ruwie Medan [email protected] +6261 8050 1825 Aidil Idham Palembang [email protected] +62711 319 900 Yuri Ariadi Pontianak [email protected] +62561 582 293

INVESTMENT RATINGS: Indicators of expected total return (price appreciation plus dividend yield) within the 12-month period from the date of the last published report, are: Buy (15% or higher), Neutral (-15% to15%) and Sell (-15% or lower). DISCLAIMER: This report is issued by PT. Mandiri Sekuritas, a member of the Indonesia Stock Exchanges (IDX) and Mandiri Sekuritas is registered and supervised by the Financial Services Authority (OJK). Although the contents of this document may represent the opinion of PT. Mandiri Sekuritas, deriving its judgement from materials and sources believed to be reliable, PT. Mandiri Sekuritas or any other company in the Mandiri Group cannot guarantee its accuracy and completeness. PT. Mandiri Sekuritas or any other company in the Mandiri Group may be involved in transactions contrary to any opinion herein to make markets, or have positions in the securities recommended herein. PT. Mandiri Sekuritas or any other company in the Mandiri Group may seek or will seek investment banking or other business relationships with the companies in this report. For further information please contact our number 62-21-5263445 or fax 62-21-5275374. ANALYSTS CERTIFICATION: Each contributor to this report hereby certifies that all the views expressed accurately reflect his or her views about the companies, securities and all pertinent variables. It is also certified that the views and recommendations contained in this report are not and will not be influenced by any part or all of his or her compensation.

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INVESTOR DIGEST - Mandiri Sekuritas Digest... · Equity Research | 01 August 2019 Please see important disclosure at the back of this report Page 3 of 24 Margin pressure due to earnings