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Danareksa Equity Snapshot - 22 Januari 2020
January 22, 2020 10:28

FROM EQUITY RESEARCH

 

Indocement Tunggal Prakarsa: Solid grounds for optimism (INTP IJ. IDR 18,500 BUY TP. IDR 21,600)

INTP booked cement sales in FY19 of 17.85mn tons, similar to 2018’s sales (+0.3%yoy). The flattish cement sales resulted in stable market share of 25.5% since INTP managed to maintain its sales in its home area, West Java and Java. The sales are in-line with our expectation (100.8%). We upgrade our recommendation to BUY, noting the stock’s more attractive valuation since its premium over SMGR has narrowed significantly. We maintain our forecasts on INTP.

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MARKET NEWS

MACROECONOMY

Government: Dividend income tax exemption only for repatriated dividends

In the Omnibus Law draft on Taxation, the government had previously planned to eliminate income tax on dividend income received by companies. However, the tax exemption will only be applied if the dividend income is invested (repatriated) in Indonesia, at a minimum of 30%, otherwise a normal rate of income tax will be imposed. Meanwhile, the Omnibus Law has not adjusted the current regulation on a controlled foreign company (CFC), that is the regulation to determine dividend income from non-listed foreign companies that is controlled by the domestic companies (minimum ownership of 50%). Hence, the Ministry of Finance is currently preparing a CFC ruling in Indonesia. (Kontan) 

SECTOR

Banking: Government will cut KUR’s allocation if banks do not comply with 60% exposure on productive sectors

Starting in 2021, the Ministry of Economic Coordination (Kemenko Perekonomian) will give sanctions to KUR participant banks if they cannot reach a minimal 60% exposure to productive sectors. The sanction will be in form of a cut in their KUR allocation from the Government. In 2019, the realization on productive sectors exposure reached 51.5%. Some banks highlighted that they would comply with such a requirement by targeting non-commodity sectors and the supporting sectors of the tourism industry. (Investor Daily)

Plantation: Indonesia eyeing higher exports to Italy

An MoU has been signed by Indonesia and Italy encompassing agricultural collaboration in terms of water management, farming mechanisms, research and human resource development along with trade and investments. (Investor Daily)

Poultry: The government’s culling program is 79% complete

According to the Ministry of Agriculture report on culling, 30.9mn HE, 79% of the 39mn target, has been realized from 1 – 19 January. However, from 15mn SE per week which should be distributed as CSR, only 0.6mn has been realized. To manage from the top, the government will instruct culling PS aged 55 weeks from 24 Jan – 7 Feb which will be implemented in 2 phases. The male PS and its substitution will be culled first followed by female PS (Bisnis Indonesia)

Telco :Government adding focus on the local gaming industry

Based on Newzoo members of Nielsen research, local production for gaming only contributed USD3.52mn or 0.4% from the total market of 50mn users and worth USD880mn in 2019, while Indonesia placed as number 16th in the world ranking. However, by 2025, The Tourism and Creative industry ministry projects that the contribution will increase to 20% or USD42mn from the total industry value of USD2.1bn. The industry itself may reach USD4.3bn by 2030. To that end, the government will increase investments in the digital gaming industry from USD2mn in 2019 to USD80mn within the next 5 years. Currently there are 1,200 game developers in the country to grow the sector to 10,000 game developers.

CORPORATE

Banks start to obtain wholesale funding from the capital market

Entering 2020, banks are preparing some options to strengthen their liquidity position to support business expansion. One of them, Bank Mandiri (BMRI IJ, BUY, TP IDR9,000) aims to obtain funding between IDR5tn and IDR10tn. BMRI highlighted that it would issue not only in IDR but also global bonds following 2Q19’s USD750mn global bonds issuance (part of the shelf-registered USD2bn global bonds). BPD Jabar (BJBR IJ, NOT RATED) also plans to issue IDR500bn of junior global bonds in 1Q20 as tier-2 capital. Bank Tabungan Negara (BBTN IJ, BUY, TP IDR2,700) has already issued USD300mn of junior subordinated bonds which were 12.3x oversubscribed in January 2020. (Kontan)

IPCC targets 2020 revenues growth of 5-10%yoy

IPCC targets revenues growth of 5-10%yoy in 2020 due to better market conditions. According to the Indonesian central bureau of statistics (BPS), vehicle exports in 2019 reached USD 8.16bn or up by 8.06%yoy. Overall, IPCC handled 581,272 vehicles or up by 37.97%yoy for international and domestic inbound. IPCC also recorded that the number of exported vehicles increased by 27.5%yoy while the number of imported vehicles decreased by 6.7%yoy. However, as per 9M19, the revenues of IPCC declined by 32.4%yoy. To keep with its target, IPCC plans to initiate a partnership with stakeholders (stevedoring companies, logistics and shipping line), improving its service and other inorganic expansion. IPCC plans to allocate capex of IDR 250bn to acquire land for expansion, land treatment, infrastructure development and constructing a new parking building. IPCC plans to build a vertical parking building with capacity of 144,000 vehicles which will take 6-8 months to complete. For 2020 capex, IPCC will utilize its current cash that stands at around IDR 400bn. (Kontan)

Waskita Karya: Received a IDR21.5tn payment in Dec19

Waskita Karya (WSKT) received a IDR21.5tn receivables payment in Dec19. The payment was for several completed turnkey projects amounting to IDR19.4tn, such as: the Trans Sumatra toll road project owned by Hutama Karya, the Batang – Semarang toll road, and other projects, and the repayment of land bridging funds of IDR2.05tn from LMAN (the state assets management agency). During the year, WSKT received ~IDR44.0tn from receivables payments in 2019. Hence, WSKT targets a lower gearing ratio by the end of 2019 from the interim position per Sep19 (DER: 2.82x) as IDR17.6tn of debts had been paid in Dec19 or IDR32.5tn in total in 2019. The debt is indicated to decline to IDR69.0tn by Dec19 from previously IDR86.0tn. (Investor Daily)