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Danareksa Equity Snapshot - 14 Februari 2020
February 14, 2020 09:55

FROM EQUITY RESEARCH

 

Danareksa Research Institute: January Outlook: Remaining Soft  

The latest LEI data indicates sluggish growth in Indonesia’s major trading partners, where the composite LEI slipped further in November by 0.5% mom after failing 0.4% mom in October. On the prices side, the average prices of Indonesia’s major commodity exports increased for the 4th consecutive month. These indicate soft exports demand amid better commodity prices. Meanwhile, the average 3M IDR/USD appreciated 0.2% mom (+5.1%yoy) in December and the headline inflation rate was still benign. The stable IDR and inflation rate led to stable imports. Against this backdrop, we expect Indonesia’s trade deficit of USD0.24bn in January 2020.

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Indocement Tunggal Prakarsa: Bad weather resulted in sluggish sales (INTP.IJ IDR 15,725 BUY TP. IDR 21,600)

The extreme weather and heavy rainfall which caused floods in many areas in Indonesia hit cement demand in Jan20. INTP booked cement sales of 1.30mn tons (-10%yoy and -20%mom) with sales sluggish in Java and Sumatra. Historically, sales in 1Q account for 23% of the full year sales, while sales in Jan contribute 8% of the full year sales and 35% of the 1Q sales. INTP’s sales in Jan are 7% of our FY target. Maintain BUY.

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Semen Indonesia : Supported by solid export sales (SMGR.IJ IDR 11,175 BUY TP. IDR 17,500)

SMGR booked cement sales volume in Jan 20 of 3.36mn tons, or +34.5%yoy on the back of consolidation with SBI but -14.6%mom due to the extreme weather in Indonesia which caused floods in many areas. Domestic cement sales were down 6.2%yoy while exports jumped by 30.1%yoy. SMGR’s domestic sales amounted to 55% of the national cement consumption. Its Jan 2020 sales are in-line with our forecast as they are 7.8% of our FY target.

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MARKET NEWS

MACROECONOMY

The government sets an inflation target for volatile foods

In order to maintain price stability, the government via the Central Inflation Controller Team (TPPI) set an inflation rate target for volatile foods of 4+1% and maintained its CPI inflation rate target at 3+1% in 2020. Notably, volatile foods provides the highest contribution to inflation. (Investor Daily)

Tax Examination Abroad implementation to improve tax compliance

The Directorate General of Tax (DGT) has implemented Tax Examination Abroad (TEA) to chase assets from taxpayers in other countries since the end of January 2020 to improve tax compliance of the taxpayers and thus increasing tax revenues this year. There are 68 countries to be the target of the TEA program, comprising the tax treaty of 70 countries, excluding Switzerland and Saudi Arabia. (Kontan)

SECTOR

Plantation: Amdal waivered from the regulation

In an effort to provide support to the plantations sector, the Amdal regulation will be waived although the government will still enforce environmental regulations. Lifting restrictions on licenses tenure, which brings certainty to yet-to-be utilized land bank, is also on the cards via the proposed Omnibus Law. Previously the law on land use stated a minimal of 30% has to be utilized by year 3 from the first date of the license, and by year 6 it must be fully utilized or otherwise the license will be revoked. (Investor Daily)

Poultry: New Reference Price for Poultry

With the issuance of Minister of Trade regulation No.7/2020, the broiler reference price has been increased by IDR1,000/kg from IDR18,000-20,000/kg to IDR19,000-21,000/kg. Meanwhile, the DOC reference price was set at IDR5,000-6,000/chick. This is the first time DOC prices have been regulated. Chicken prices at the consumer level also increased by the same amount from IDR34,000/kg to IDR35,000/kg. (Kontan)

CORPORATE

Adhi Karya: Booked IDR408bn of new contracts in Jan 2020

Adhi Karya (ADHI) secured IDR408bn of new contracts in Jan20 out of IDR35.0tn of the target. The Jan new contracts were dominated by high rise buildings such as Oyama Plaza Apartment worth IDR201bn and Legi market worth IDR121bn. Hence, its order book as of Jan20 reached IDR32.0tn which is dominated by carry over contracts. ADHI targets new contracts in 2020 to reach IDR35.0tn, more than double the new contracts booked in 2019 of IDR14.7tn. ADHI is also pursuing some major projects such as: Solo – Jogja – Kulon Progo worth IDR3.5tn, the JORR elevated toll road with the route Ulujami – Jati Asih worth IDR2.8tn, and the Jakarta MRT phase 2 package CP201 worth IDR4.1tn. ADHI has allocated 2020 capex of IDR5.5tn with IDR3.9tn for fixed assets on property, IDR1.0tn for investment, and IDR600bn for a capital injection into a subsidiary. (Bisnis Indonesia)

Waskita Beton Precast: Targets IDR3.0tn of new contracts in 1Q20

Waskita Beton Precast (WSBP) targets IDR3.0tn of new contracts in 1Q20. The target is 32%yoy higher than the IDR2.3tn booked in 1Q19 and is 25.2% of the target. The major projects the company seeks include the contract for the renovation and development of a port of Pertamina Trans Kontinental (PTK). For the project, WSBP will act as the engineering and contractor of the project. Recently, WSBP signed a MoU of partnership with PTK regarding the project. Meanwhile, WSBP is eyeing bigger external contracts this year. WSBP targets 2020 new contracts of IDR11.9tn of which half of them or IDR5.98tn are external contracts. The external contracts target of IDR5.98tn represents 35%yoy growth from IDR4.44tn in 2019. Meanwhile, external contracts in 2018 only reached IDR2.43tn. (Kontan)

Qatar Ooredoo reports strong quarterly growth for Indosat


Based on data from Qatar Ooredoo, the parent of Indosat Ooredoo, its subsidiary had a robust 2019 as it refreshed its strategy to serve the needs of Indonesia’s evolving telecommunications landscape. The company reported year on year growth of 2% in its customer base to reach 59 million customers, supported by the expansion and improvements to its 4G BTS network and the use of digitisation to enhance its customer experience. Based on rough estimates, Indosat’s revenues appear to have grown in 4Q19 with 2-digit growth QoQ, maintaining the growth on a YoY basis. According to Qatar Ooredoo, Indosat also offers upside in 4Q19 in terms of its EBITDA margin.