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Danareksa Equity Snapshot - 16 Agustus 2019
August 16, 2019 17:17 WIB

FROM EQUITY RESEARCH

July Update: Back to Deficit

In July 2019, Indonesia’e exports and imports both rose on a monthly basis to USD15.4bn (+31.0% mom) and USD15.5bn (+35.0% mom), respectively, monthly highs in 2019. As a result, the trade balance posted a deficit of USD63.5mn in July 2019, albeit smaller than median consensus of a USD420mn deficit and Danareksa’s estimate of a USD482.5mn deficit. In Jan-Jul period, Indonesia’s trade deficit reached USD1.9bn, or still lower than in the previous year (USD3.21bn deficit).

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Semen Indonesia:  Still weak if SBI is excluded (SMGR.IJ IDR. 12,950 BUY TP IDR. 17,000)

Semen Indonesia Group booked cement sales in Jul19 of 3.82 mn tons, +27.7%yoy on the back of consolidation with SBI. However, excluding SBI, domestic cement sales were down by 6.0%yoy, worse than the industry’s decline of -2.22%yoy. Group sales in 7M19 reached 21.26mn tons, +20.5%yoy. The group had a majority 53% of the domestic cement market.

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MARKET NEWS

MACROECONOMY

Government: Increase in foreign debt

Indonesia's foreign debt has been increasing in line with the country’s domestic financing needs. However, domestic income has not been able to offset the increase in debt. Bank Indonesia (BI) notes that Indonesia's foreign debt reached USD391.8bn (+10.1%yoy) in 2Q19. The government's foreign debt totals USD192.5bn (+9.1%yoy), lifted by higher purchases of net domestic and global government bonds (SBN) by foreign parties. For private foreign debt including SOE debt, the figure reached USD196.3bn (+11.4%yoy), in-line with rising corporate loan payments. The debt to service ratio (DSR) has increased with the tier-1 DSR reaching 28.48% as of Jun19, driven by slow exports growth that reached 6.58% yoy in 1H19. All in all, BI believes that Indonesia’s foreign debt position is still manageable. (Kontan)

 

CORPORATE

Perusahaan Gas Negara: Targets LNG business in the Philippines

Perusahaan Gas Negara (PGAS) is targeting business expansion in LNG in Southeast Asia, especially the Philippines. PGAS has already sent a Letter of Intent (LoI) to be discussed and finalized later. The company believes that gas business outside Indonesia is still developing and therefore the company should utilize it. PGAS would share the investment costs and risks with prospective partners from the Philippines and global LNG players. (Investor Daily)

 

UNVR spent IDR650bn on capex in 1H19

Unilever Indonesia (UNVR) spent IDR650bn on capex by the end of June 2019 from a total IDR1.1tn of budgeted capex this year. The company seeks to boost the capacity of its ice cream and deodorant products. UNVR will also add freezers in the Jabodetabek area to sell its new ice cream brand – Juara, targeted at the grass roots. This year, UNVR has launched several new brands: Nameera, Love Beauty, Planet and Hellmanns (Mayonnaise). (Kontan)

 

Waskita Beton Precast: 7M19 new contracts are 32% of the full year target

Waskita Beton Precast (WSBP) booked IDR3.29tn of new contracts as of Jul19. This is 31.7% of the full year target set at IDR10.4tn. The major contracts include Kirian – Legundi Bunder – Manyar section 2 and 3, Jakarta – Cikampek II elevated, Cibitung – Cilincing, and PIK Agung Sedayu Group. (Kontan)

 

Wijaya Karya Beton: Has met 43% of its new full year contracts target

Wijaya Karya Beton (WTON) had an order book as of Jul19 of IDR9.33tn consisting of IDR5.41tn of carry over contracts and IDR3.92tn of new contracts. The 7M19 new contracts are 43.2% of the full year target of IDR9.1tn. Infrastructure projects still dominated the contracts with a contribution reaching 68.97%, followed by energy projects (18.9%), property (7.0%), industry (3.9%), and mining (1.3%). (Bisnis Indonesia)

 


Danareksa Equity Snapshot - SMGR, 16 Agustus 2019
August 16, 2019 17:13 WIB

Semen Indonesia(SMGR IJ)

Still weak if SBI is excluded

Semen Indonesia Group booked cement sales in Jul19 of 3.82 mn tons, +27.7%yoy on the back of consolidation with SBI. However, excluding SBI, domestic cement sales were down by 6.0%yoy, worse than the industry’s decline of -2.22%yoy. Group sales in 7M19 reached 21.26mn tons, +20.5%yoy. The group had a majority 53% of the domestic cement market.

Semen Indonesia Group (SMIG) booked cement sales in Jul19 of 3.82mn tons. Sales grew by +27.7%yoy on the back of consolidation with SBI and soared +66.0%mom as demand normalized post the Lebaran Holidays in Jun19. Excluding SBI, cement sales reached 2.88mn tons (-3.7%yoy and +65.9%mom) on the back of soft domestic sales by SMGR (-6.0%yoy to 2.35mn tons). SMIG’s share of the domestic market reached 52.5% in Jul19, higher than the previous year’s 37.5% before consolidation.

Sales in 7M19 reached 21.26mn tons in total, +20.5%yoy. Excluding SBI, the cumulative sales reached 16.56mn tons, or -6.1%yoy, on the back of soft domestic cement sales and lower sales from TLCC (-22.7%yoy to 1.19mn tons). SMGR’s domestic cement sales in 7M19 reached 13.49mn tons, or -5.8%yoy, worse than the domestic consumption growth. Hence, SMGR’s market share declined from 39.3% in 7M18 to 37.8% in 7M19. However, including SBI, SMIG still had a majority 53% of the domestic cement market.

Domestic cement consumption in 7M19 reached 35.67mn tons, or -2.20%yoy, dragged down by soft demand in 2Q19. Based on the region, the strongest demand growth occurred in East Indonesia (+11.49%yoy), followed by Nusa Tenggara (+3.18%yoy), Sulawesi (+2.48%yoy), Kalimantan (+0.20%yoy). However, sales in Java and Sumatra were -2.63%yoy and -6.42%yoy. Java contributed 56% of the domestic demand, while Sumatra contributed 21%. On a monthly basis, cement consumption in Jul19 reached 6.28mn tons (-2.22%yoy, +68.0%mom).

We might cut our 2019 sales volume target. Based on our current target of 34.16mn tons, given 3.04%yoy growth and excluding the consolidation of SBI, SMGR needs to sell 17.6mn tons of cement in the remaining 5 months of 2019, implying growth of +13.5%yoy. Assuming FY19 growth of -1.0%yoy to 2.0%yoy, SMGR would have to book 4.9%yoy to 11.3%yoy growth in the coming months. 

Maintain BUY. We maintain our BUY call on SMGR given its dominant position in the domestic cement market. However, we are reviewing our cement sales target given the weak 7M19 cement sales.

 

… read more 20190816 SMGR


Danareksa Equity Snapshot - 15 Agustus 2019
August 15, 2019 09:03 WIB

FROM EQUITY RESEARCH

Bank Rakyat Indonesia:  Still the most profitable bank in Indonesia (Not Rated)

BBRI’s 1H19 net profits of IDR16.1tn are slightly below the consensus (44%). Loans still grew at a strong pace of 11.8% yoy with higher micro lending exposure of 34.7% of the total loans portfolio as of June 2019. NIM declined to 6.8% owing to pressure on the blended CoF following a total of 175bps of policy rate hikes last year. Assets quality remains manageable with a gross NPLs ratio of 2.5% and 239bps credit costs. Going forward, BBRI’s management will continue to focus on its micro lending business with KUR and Kupedes as its core products. BBRI’s management therefore targets 40% micro lending exposure to the total loans book by the end of 2022.

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Indocement Tunggal Prakarsa: Cement sales normalized (INTP.IJ IDR. 21,850 HOLD TP IDR. 20,900)

INTP sold 1.71mn tons of cement in Jul19, the highest monthly sales this year. Sales grew by 0.8%yoy and 70.4%mom as demand normalized following the Lebaran Holidays in Jun19. Cumulatively, INTP’s cement sales in 7M19 reached 9.42mn tons, or -1.4%yoy. This is in line with the domestic cement consumption which was -1.8%yoy to 35.82mn tons, dragged down by weak demand in 2Q19. As such, INTP managed to maintain its market share at 26.3% as of Jul19. Maintain HOLD.

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MARKET NEWS

MACROECONOMY

Government: The digital economy boosts economic growth

According to the National Development Planning Board (Bappenas), the digital economy will improve economic growth up to 2% above the baseline of 5% growth. By utilizing industry 4.0, the national economy will experience job losses while creating new job opportunities from the increasing number of technology-based startups with up to 10 million new jobs expected to be created by 2030. The utilization of blockchain technology in the financial and manufacturing sectors will also help the national economy to become more efficient and competitive over the next few years. (Investor Daily)

 

SECTOR

Retail: Modern retailers achieved IDR150tn of turnover in 1H19

Modern retailers achieved 50% growth yoy in sales revenues, translating into IDR150tn of turnover. Better purchasing power due to realization of regional government expenditures and positive sentiment during the general elections were the main contributors behind the strong growth in sales.  Demand for food and beverages was lifted during the campaign period ahead of the general elections while retailers also recorded stronger sales during the Lebaran period. The turnover of retailers is projected to reach IDR260tn by the end of 2019. (Investor Daily)

 

CORPORATE

Ace Hardware: To open 10 new outlets

Ace Hardware Indonesia (ACES) plans to open 10 new outlets in 2H19 to achieve its sales growth target of 15% in 2019. IDR250bn of capex is needed to build the new outlets, using internal cash flow. The company currently has 187 outlets. This year the company plans to open 20-25 new outlets. In 1H19, SSSG reached 6.9%. For full year 2019, the company targets 6% SSSG. (Bisnis Indonesia)

 

Adhi Karya: Awarded IDR1.3tn of contracts to develop Jakarta Inner toll road section 1B

Adhi Karya (ADHI) will be one of the participant contractors for the development of Jakarta Inner toll road section 1, Semaman – Sunter – Pulogebang. For this project, ADHI has won the construction works in the B segment, Semaman – Grogol (9.5km), worth IDR1.28tn. ADHI will have 30% of the works on the B segment, while the remaining works will be carried out by its JV partners, Jaya Konstruksi Manggala Pratama (JKON) and Wijaya Karya (WIKA). The total contracts for section B are IDR4.0tn, and construction is targeted to start in Sep19. (Bisnis Indonesia)