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Danareksa Equity Snapshot - UNTR, 26 Juni 2019
June 26, 2019 10:48 WIB

United Tractors (UNTR IJ)

Slight improvement in Komatsu sales in May 2019

 

United Tractors (UNTR) reported Komatsu sales of 289 units in May 2019 (+10.7% mom, but -34.5% yoy). The soft improvement was supported by sales to the construction, forestry and agri sectors. Cumulatively, the impact of weak coal prices resulted in lower Komatsu sales (-17.5% yoy to 1,731 units in 5M19) yet still within our full year forecast (43.3%). We maintain our Komatsu sales estimate of 4,000 units for 2019. BUY maintained with a target price of IDR36,000 (based on DCF valuation).

 

Soft improvement in Komatsu sales in May 2019.  Although Komatsu monthly sales increased by 10.7% mom to 289 units in May 2019 thanks to better sales to the construction, forestry and agri sectors, the number is still soft. Year-to-date Komatsu sales fell by 17.5% yoy to 1,731 units in 5M19 owing to weak coal prices. This resulted in lower Komatsu sales to the mining sector (-29.5% yoy). As such, the sales contribution to the mining sector declined to 47% in 5M19 from 55% in 5M18. By contrast, the sales contribution to the construction sector increased to 27% in 5M19 (5M18: 22%)

 

We maintain our Komatsu sales target of 4,000 units for 2019.  We expect Komatsu sales to remain soft in Jun 2019 as delivery of heavy equipment to the construction and mining sectors will be impacted by the Lebaran holidays in the first week of June 2019. We maintain our Komatsu sales volume target of 4,000 units for 2019, of which 800 units will be large-sized machinery.

 

Solid coal production despite unfavorable weather conditions in April 2019.  Coal production and OB removal under its subsidiary Pamapersada Nusantara (Pama) rose by 8.5% yoy to 50.8mn tons and by 7.4% yoy to 394.0mn bcm in 5M19 respectively. This was mainly due to favorable weather conditions. The numbers are within our expectations. We expect flattish coal production and OB removal under PAMA. Meanwhile, coal sales volume jumped by 3.9% yoy to 4.0mn tons, with the growth coming from sales of coking coal. As such, the contribution from coking coal increased to 13.5% in 5M19 (5M18: 7.3%). For 2019, the management indicates coal sales volume of 9.0mn tons (+28.2% yoy) with the contribution from coking coal reaching 16.6% (2018: 11.5%)

 

Maintain BUY with a target price of IDR36,000 (based on DCF valuation with WACC of 12.8% and long-term growth of 3%). The stock is trading at -1.5SD. We expect more delivery of heavy equipment in 2H19 to sustain Komatsu sales in 2019.

 

 

… read more 20190626 UNTR


Danareksa Equity Snapshot - 26 Juni 2019
June 26, 2019 10:47 WIB

FROM EQUITY RESEARCH

Property:  Easing of the super luxury tax creates a mismatch (OVERWEIGHT)

Aside from reducing the tax rate from 5% to 1% for property categorized as super luxury as promised, the government also eased the criteria for super luxury property (by raising the threshold to IDR30bn from IDR5bn previously). High rise residential property with selling prices of IDR5-9bn should benefit as they will enjoy the full 5% reduction whereas high rise property with selling prices of above IDR9bn will only enjoy the reduction in super luxury tax from 5% to 1% (since their building area would exceed the threshold of 150sqm). For landed residential property, by comparison, the high threshold for the size of the property’s land (2,000sqm) means more properties should benefit.

To see the full version of this report, pleaseclick here

 

United Tractors: Slight improvement in Komatsu sales in May 2019 (UNTR IJ. IDR 27,800 BUY TP. IDR 36,000)

United Tractors (UNTR) reported Komatsu sales of 289 units in May 2019 (+10.7% mom, but -34.5% yoy). The soft improvement was supported by sales to the construction, forestry and agri sectors. Cumulatively, the impact of weak coal prices resulted in lower Komatsu sales (-17.5% yoy to 1,731 units in 5M19) yet still within our full year forecast (43.3%). We maintain our Komatsu sales estimate of 4,000 units for 2019. BUY maintained with a target price of IDR36,000 (based on DCF valuation).

To see the full version of this report, pleaseclick here

 

To see the full version of our snapshot, please  click here

 

MARKET NEWS

 

MACROECONOMY

Government: Higher budget deficit to support economic growth

In the government’s 2019 budget, the budget deficit is targeted at 1.84% of GDP or IDR 296 trn. It is still below the maximum level permitted (3% of GDP) but higher than the budget deficit realisation in 2018 of 1.76% of GDP. Meanwhile, budget deficit realisation as of May 2019 reached IDR 127.45 trn or 0.79% of GDP. To achieve the government’s economic growth target of 5.2% in the current year, Bank Indonesia (BI) has implemented some policies such as decreasing the reserve requirement by 50 bps and maintaining the key policy rate. At the same time, BI also stated that there will be policy rate cuts this year. Furthermore, the Ministry of Finance stated that expenditures in ministries and institutions should be maintained productively, mainly in the Family Hope Program (PKH) and social assistance expenditures to drive economic growth. (Investor Daily)

 

SECTOR

PS culling program

The government is planning to reduce DOC FS production by undertaking a culling program of PS aged 68 weeks or cutting HE by 30%.

 

CORPORATE

Adhi Karya: To issue IDR1.0tn of bonds

Adhi Karya (ADHI) will issue IDR1.02tn of self-registered bonds stage 2. ADHI is issuing two series of bonds:  IDR556bn of A Series bonds with a 9.25%pa coupon rate and 3-year tenor, and IDR473.5bn of B Series bonds with a 9.75% coupon rate and 5-year tenor. The rating is A- and all the proceeds will be used to finance working capital. Furthermore, ADHI has a IDR250bn bond maturing in Jul19. Meanwhile, ADHI booked new contracts in 5M19 of IDR4.6tn accounted for 15.3% of the full year target set at IDR30.0tn. (Bisnis Indonesia)

 

Comment: The DER stood at 1.32x as of Mar19. Adding IDR1.02tn of debts, the ratio will become 1.48x. (Maria Renata)

 

HERO - Closing another 6 Giant Stores

The company will close another 6 stores by July 2019, following the closure of 26 stores in 2018. The stores to be closed are: Pondok Timur, Cinere Mall, Mampang, Jati Makmur, Mitra 10 Cibubur, and Wisma Asri. The company cites tight competition and changes in consumer shopping behavior as the main culprits. Currently, the company is preparing a multi-year transformation by re-accessing its general merchandising, best store size, scale, and also refreshing the stores. (Kontan)

 

Comment: Supermarkets and Hypermarkets are feeling the brunt of competition from Minimarkets which are gaining customers whilst also benefiting from scale, as reflected in a higher rebate handed out by suppliers. Worth noting is that Supermarkets and Hypermarkets’ market share has fallen from 8.1% in 2015 to 6.2% of total retail sales according to a Nielsen Retail Audit.


Danareksa Equity Snapshot - ASII, 24 Juni 2019
June 24, 2019 10:25 WIB

Astra International(ASII IJ)

Flattish domestic car salesin May 2019

 

Based on the latest data from Gaikindo, domestic car sales reached 84,146 units in May 2019 (+0.1% mom, -16.3% yoy). Cumulatively, sales fell by 14.7% yoy to 422,038 units in 5M19, reined in by the high interest rates environment, a lack of new model launches and volatility in commodity prices. The 5M19 sales number is below our full year forecast (36.4%). Nonetheless, Astra International (ASII) still managed to maintain solid market share of 53.8% in 5M19. Maintain BUY with a TP of IDR8,800 (based on SOTP valuation).

 

Flattish monthly domestic car sales in May 2019.  Domestic car sales were flattish at 84,146 units in May 2019 (April 2019: 84,029 units). Cumulatively, the sales volume dropped by 14.7% yoy to 422,038 units in 5M19 with sales of the major car brands posting declines, mainly reflecting: a) the high interest rates environment with only modest economic growth, b) the lack of new model launches in the popular segments and c) muted commodity prices.

 

ASII maintained solid market share above 50% in 5M19.  Although ASII’s car sales declined by 6.1% yoy in 5M19, the company still managed to improve its market share to 53.8% (5M18: 48.8%) as sales of Toyota and Daihatsu declined in only single digits (-4.9% yoy and -8.2% yoy respectively vs. double digit negative growth for other major brands). We believe that ASII’s sales were supported by sales of Rush and Terios and new facelift versions of the Avanza and Xenia. All in all, we maintain our conservative car market share assumption for ASII at around 50% for 2019.

 

Expect better car sales in 2H19.  We expect seasonally weak car sales in June 2019 given the one-week Idul-Fitri holidays. Thereafter, with more working days in 2H19 and the upcoming Gaikindo motor show in Jul 2019, we believe that car sales will be higher in 2H19 than in 1H19. Nonetheless, for 2019, we expect flattish growth in domestic car sales of 1.16mn units.

 

Maintain BUY on ASII with a target price of IDR8,800 (based on the SOTP valuation). While we expect tight competition in the domestic car market to persist, we believe that ASII will be able to maintain its market share above 50% thanks to new facelift versions of the Avanza and Xenia and solid sales of its Rush and Terios models. The stock is trading at an undemanding valuation at -1.5SD. Our target price implies 15.0x 2019F PE.

 

 

… read more 20190624 ASII