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Danareksa Equity Snapshot - BSDE 22 Mei 2017
May 22, 2017 09:17 WIB

BSDE: Stellar 1Q17 performance (BSDE IJ. Rp1,750. BUY. TP Rp2,200)

  • BSDE recorded net profits of IDR733bn in 1Q17, up by 183.3%yoy, reaching 23.5% of our full year forecast (INLINE) and 31.1% of consensus estimates (ABOVE).
  • The stellar performance mainly owed to: (i) strong development revenues (+80.5%yoy in 1Q17) given the handover of more landed residential units, (ii) IDR19bn of forex gains in 1Q17 (vs. IDR9bn of forex losses in 1Q16), (iii) lower interest expenses in 1Q17 thanks to debt restructuring undertaken to refinance short-term bank loans that carried higher interest rates (8-10%) and more bond issuances (5.5%-9.25%).
  • BSDE managed to maintain its net gearing at 14.5% in 1Q17, or lower than the gearing of its peers (14.5%-91.1%). Although BSDE has just issued USD70mn of additional global bonds, we believe that BSDE’s gearing ratio will remain below 20% in 2017.
  • BSDE is conducting product knowledge for its newest landed residential project, Avezza Mozia, which is located in the BSD phase II area. The company will offer 128 units for sale with prices ranging from IDR1.3bn to 2.2bn/unit. With an average take-up rate for landed residential property in BSD City reaching 70-80%, we forecast additional marketing sales of IDR170bn in 2Q17.
  • We maintain our BUY rating on BSDE with an unchanged target price of IDR2,200 (SOTP based valuation with WACC of 13.5% and Terminal Growth of 4.0%). BSDE is currently trading at a hefty 67.8% discount to its NAV.

… read more 20170522 BSDE

Danareksa Equity Snapshot - Market Outlook: Investment grade! 22 Mei 2017
May 22, 2017 09:06 WIB

Market Outlook

Investment grade!

S&P finally upgraded Indonesia’s sovereign rating to BBB-, investment grade. The impact is fundamentally positive for the equity market as it lowers the risk free rate and ultimately reduces the cost of debt shouldered by companies listed on the Indonesian Stock Exchange. While we are still assessing the impact on the risk free rate, we note that some sectors which are driven by debt financing will benefit from this upgrade. Property, construction, as well as the automotive and cement sectors should be the main beneficiaries.

S&P has upgraded Indonesia’s sovereign rating to BBB- which automatically makes Indonesia an investment grade country. After a long wait of two years, the upgrade comes as a relief for the government and investors as it should lower the cost of funds. The yield on 10-year government bonds declined by 50bps from 7.3% in the morning to 6.8% following the upgrade. The impact on the equity market is less direct, in our view. The risk free rate, as a basis for making equity valuations should also be adjusted. However, we need to assess the impact further as the yield decline may also be affected by the market’s over-reaction.

Some sectors stand to be the main beneficiaries. As the downward shift in the yield curve should reflect a lower cost of debt, companies in sectors whose growth is driven by the availability of affordable financing should benefit the most. We believe that the property, construction, automotive and cement sectors will be the main beneficiaries. By comparison, the banking sector - which profits from the interest rate spread - may not benefit that much from the upgrade, other than obtaining broader access to debt markets.

Cheaper mortgages translate into more affordable property. We also believe that the rating upgrade will positively impact the property sector since the mortgage rate may potentially decline. This, in turn, will make property more affordable. Among the property companies under our coverage, the proportion of properties sold to consumers using mortgages ranges from 5-60%. However, as marketing sales are a function of overall economic growth, in the absence of a considerable improvement in purchasing power, marketing sales are unlikely to see a significant improvement in our opinion.

Upgrade has been priced in. We believe that the run-up in Indonesian stock valuations over the last 4 years has been driven by the phenomenon of fund flows into Emerging Markets. As for the S&P upgrade, we believe that it is likely to have only a short-term impact as investors will ultimately judge companies by their earnings growth and quality. For FY17, we forecast 14% EPS growth coming off a low base in 2016 along with a visible recovery in line with the rebound in commodity prices. Nonetheless, the JCI is now trading at 20.9x 12 months fwd PE – all positive expectations have been priced in, our view.

… read more 20170522-outlook

Danareksa Equity Snapshot - Automotive Sector Mei 2017
May 18, 2017 09:54 WIB

Automotive Sector

April 2017: Weak monthly car sales


Gaikindo reported domestic car sales of 89,588 units in April 2017 (-12.5% mom, but +5.6% yoy). Cumulatively, domestic car sales rose by 6.1% yoy to 373,407 units in 4M17 with the LCGC segment posting the strongest growth of 52% yoy to 84,087 units. The April sales figure is within our expectation. With moderate economic growth, we expect mild growth in domestic car sales of 5% yoy in 2017. We remain Neutral on the automotive sector.

April 2017: Fewer working days led to lower monthly sales.  Domestic car sales dropped by 12.5% mom to 89,588 units in April. The decline owed to fewer working days. The lower sales were also in-line with the weaker consumer confidence (Danareksa Research Institute’s consumer confidence index fell to 97.6 in April 2017 from 98.3 in the previous month). Cumulatively, however, domestic car sales improved by 6.1% yoy to 373,407 units in 4M17 with the LCGC segment posting the strongest growth of 52.2% yoy to 84,087 units. Following the recent motor show, where 11,604 cars and motorcycles were sold, coupled with positive sentiment ahead of Lebaran, we expect better monthly car sales in May 2016.

LCGC to boost Toyota and Daihatsu sales.  Toyota reported the highest car sales growth of 26.3% yoy to 141,051 units in 4M16. Sales were boosted by the launch of the 7-seater LCGC car, Toyota Calya, as well as the aggressive launching of other Toyota models in 2016. As such, Toyota managed to improve its market share to 37.8% in 4M17 from 31.7% in 4M16. Meanwhile, Daihatsu sales rose by 14.8% yoy to 65,265 units, supported by the launch of the 7-seater LCGC Daihatsu Sigra. With ASII’s LCGC sales almost doubling (+94.2% yoy), ASII’s market share increased to 56.7% in 4M17 from 49.4% in 4M16. In 2017, we expect ASII’s market share to improve slightly to around 56% from 55% in 2016.

Lower non-Astra sales.  Non-Astra domestic car sales declined by 9.1% yoy in 4M17 with three non-Astra leading brands - Honda, Suzuki and Mitsubishi - recording lower sales of 7.0% yoy, 6.3% yoy and 4.7% yoy, respectively. Although Honda’s market share dropped to 18.1% in 4M17 from 20.7% in 4M16, the brand still has the second-largest market share after Toyota.

Motorcycle sales remain weak.  Domestic motorcycle sales declined by 18.1% mom to 388,045 units in April 2017. With higher administrative fees for vehicle licenses and lower discounts, on a cumulative basis, motorcycle sales declined by 9.7% yoy to 1.79mn units in 4M17. Also, weaker consumer confidence has hit

low-income consumers. Honda motorcycles remain the market leader with 75.3% market share. With consumer purchasing power remaining lackluster, domestic motorcycle sales are expected to remain weak in 2017.


We remain Neutral on the automotive sector even though rising commodity prices are helping to improve demand for both cars and motorcycles. As such, we maintain our conservative domestic car sales volume growth target of only 5.0% yoy for 2017, noting that moderate economic growth of an estimated 5.1% yoy will have an impact on consumer purchasing power. This will restrict further growth in domestic car sales.

… read more 20170518 AUTO