Equity SNAPSHOT Thursday, December 28, 2017 Danareksa Sekuritas – Equity SNAPSHOT FROM EQUITY RESEARCH MARKET NEWS Macroeconomy Government: Fuel and electricity prices to remain unchanged Government: Non tax revenue may be reduced to bring about lower industrial gas price Indonesia braces for gas oversupply Sector Cement: Association estimates that cement sales will grow by 5- 6% in 2018 Plantations: Malaysia’s palm oil shipments rose 1% MoM in the first 25 days of Dec Corporate Kimia Farma plans for digitalization to improve efficiency Krakatau Steel budgets USD390mn for its FY18 capex Telkom targets the launch of 151,000 WiFi.id hotspots in FY18 Waskita Precast recorded IDR9.89tn of new contracts Waskita Beton Precast expects to receive total cash proceeds of Rp4.63tn by the end of FY17 XL Axiata to focus on outside Java expansion KEY INDEX Close Chg Ytd Vol (%) (%) (US$ m) Asean - 5 Indonesia 6,277 0.9 18.5 306 Thailand 1,753 0.0 13.6 1,891 Philippines 8,491 0.7 24.1 66 Malaysia 1,772 0.7 7.9 393 Singapore 3,392 0.4 17.7 451 Regional China 3,276 (0.9) 5.5 29,250 Hong Kong 29,598 0.1 34.5 10,644 Japan 22,911 0.1 19.9 7,884 Korea 2,437 0.4 20.2 5,252 Taiwan 10,487 0.6 13.3 3,042 India 33,912 (0.3) 27.4 1,103 NASDAQ 6,939 0.0 28.9 62,263 Dow Jones 24,774 0.1 25.4 6,340 CURRENCY AND INTEREST RATE Rate w-w m-m ytd (%) (%) (%) Rupiah Rp/1US$ 13,561 0.1 (0.4) (0.7) SBI rate % 5.90 - - (1.3) 10y Gov Indo bond 6.36 (0.1) (0.2) (1.6) HARD COMMODITY Unit Price d-d m-m ytd (%) (%) (%) Coal US$/ton 100 - 5.4 13.3 Gold US$/toz 1,287 0.0 (0.5) 11.7 Nickel US$/mt.ton 12,073 0.5 0.8 21.2 Tin US$/mt.ton 19,580 1.0 0.0 (7.7) SOFT COMMODITY Unit Price d-d m-m ytd (%) (%) (%) Cocoa US$/mt.ton 1,856 (3.2) (13.2) (13.6) Corn US$/mt.ton 126 0.3 3.6 (2.7) Oil (WTI) US$/barrel 60 (0.1) 2.8 10.9 Oil (Brent) US$/barrel 66 (0.9) 4.1 16.9 Palm oil MYR/mt.ton 2,376 0.9 (6.3) (25.7) Rubber USd/kg 149 0.2 6.7 (23.0) Pulp US$/tonne 1,000 N/A 4.2 23.6 Coffee US$/60kgbag 105 (0.4) (5.2) (27.5) Sugar US$/MT 393 1.9 (0.5) (25.0) Wheat US$/ton 117 1.4 (0.1) (10.4) Soy Oil US$/lb 33 (0.4) (1.6) (3.9) Soy Bean US$/by 956 (0.4) (4.1) (4.1) Source: Bloomberg
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Equity SNAPSHOT Thursday, December 28, 2017
Danareksa Sekuritas – Equity SNAPSHOT
FROM EQUITY RESEARCH
MARKET NEWS
Macroeconomy Government: Fuel and electricity prices to remain unchanged
Government: Non tax revenue may be reduced to bring about lower industrial gas price
Indonesia braces for gas oversupply
Sector Cement: Association estimates that cement sales will grow by 5-
6% in 2018 Plantations: Malaysia’s palm oil shipments rose 1% MoM in the
first 25 days of Dec
Corporate Kimia Farma plans for digitalization to improve efficiency
Krakatau Steel budgets USD390mn for its FY18 capex Telkom targets the launch of 151,000 WiFi.id hotspots in FY18
Waskita Precast recorded IDR9.89tn of new contracts Waskita Beton Precast expects to receive total cash proceeds of
Rp4.63tn by the end of FY17
XL Axiata to focus on outside Java expansion
KEY INDEX
Close
Chg Ytd Vol
(%) (%) (US$ m)
Asean - 5
Indonesia 6,277 0.9 18.5 306
Thailand 1,753 0.0 13.6 1,891
Philippines 8,491 0.7 24.1 66
Malaysia 1,772 0.7 7.9 393
Singapore 3,392 0.4 17.7 451
Regional
China 3,276 (0.9) 5.5 29,250
Hong Kong 29,598 0.1 34.5 10,644
Japan 22,911 0.1 19.9 7,884
Korea 2,437 0.4 20.2 5,252
Taiwan 10,487 0.6 13.3 3,042
India 33,912 (0.3) 27.4 1,103
NASDAQ 6,939 0.0 28.9 62,263
Dow Jones 24,774 0.1 25.4 6,340
CURRENCY AND INTEREST RATE
Rate
w-w m-m ytd
(%) (%) (%)
Rupiah Rp/1US$ 13,561 0.1 (0.4) (0.7)
SBI rate % 5.90 - - (1.3)
10y Gov Indo bond 6.36 (0.1) (0.2) (1.6)
HARD COMMODITY
Unit Price
d-d m-m ytd
(%) (%) (%)
Coal US$/ton 100 - 5.4 13.3
Gold US$/toz 1,287 0.0 (0.5) 11.7
Nickel US$/mt.ton 12,073 0.5 0.8 21.2
Tin US$/mt.ton 19,580 1.0 0.0 (7.7)
SOFT COMMODITY
Unit Price
d-d m-m ytd
(%) (%) (%)
Cocoa US$/mt.ton 1,856 (3.2) (13.2) (13.6)
Corn US$/mt.ton 126 0.3 3.6 (2.7)
Oil (WTI) US$/barrel 60 (0.1) 2.8 10.9
Oil (Brent) US$/barrel 66 (0.9) 4.1 16.9
Palm oil MYR/mt.ton 2,376 0.9 (6.3) (25.7)
Rubber USd/kg 149 0.2 6.7 (23.0)
Pulp US$/tonne 1,000 N/A 4.2 23.6
Coffee US$/60kgbag 105 (0.4) (5.2) (27.5)
Sugar US$/MT 393 1.9 (0.5) (25.0)
Wheat US$/ton 117 1.4 (0.1) (10.4)
Soy Oil US$/lb 33 (0.4) (1.6) (3.9)
Soy Bean US$/by 956 (0.4) (4.1) (4.1)
Source: Bloomberg
Equity SNAPSHOT Thursday, December 28, 2017
Danareksa Sekuritas – Equity SNAPSHOT
MACROECONOMY
Government: Fuel and electricity prices to remain unchanged Although the oil price is rising, the Government of Indonesia has decided to keep fuel and electricity prices
unchanged until the end of 1Q18. This decision was taken in view of the people’s weak purchasing power. The prices of Ron 88 and Bio Solar fuel will remain the same (IDR 6,450/ltr and IDR 5,150/ltr). For electricity, prices will
stay unchanged for all categories of customers. Also, to minimize fuel price fluctuations, the Ministry of Energy and Mineral Resources plans to adjust the fuel price formula (with the fuel price less correlated to global oil prices).
(Investor Daily)
Government: Non tax revenues may be reduced to bring about lower industrial gas prices
The Coordinating Ministry for Economic Affairs is reviewing the proposal to reduce industrial gas prices in seven sectors: steel, petrochemicals, oleo chemicals, ceramics, glass, and rubber. Currently, the average gas price is
USD 9/MMBtu – or still higher than the price promised by the government (USD 6 MMBtu). The Vice Minister of
Energy and Mineral Resources has stated that gas Non-tax revenues might be reduced to bring about lower industrial gas prices, although the fall may not be significant. If the gas non-tax revenues are reduced then the
industrial gas price might be reduced by USD 0.7 MMBtu. (Bisnis Indonesia)
Indonesia braces for gas oversupply Indonesia is bracing itself for an unexpected oversupply of gas amid slowing domestic demand, partly due to poor
government planning in arranging the country’s gas balance. Actual gas demand in 2016 from the domestic
market and exports reached 6.676mmscfd of gas, far below the projected 8.072mmscfd gas balance. As a result, Badak NGL, the operator of a major liquefied natural gas plant in Bontang has failed to find domestic buyers for
38 LNG cargoes this year, or 22.2% of its full year production of 171 cargoes. Perusahaan Gas Negara (PGAS) stated that the actual demand is far below the government’s estimates and if the government fails to respond
appropriately, there will be prolonged oversupply of gas in the country. (The Jakarta Post)
SECTOR
Cement: Association estimates that cement sales will grow by 5-6% in 2018 The Indonesian Cement Association estimates that domestic cement sales growth in 2018 will reach 5-6%, little
changed from the growth in 2017. Sharing the same view, Indocement also estimates domestic cement sales to
grow by 5-6% in 2018. Meanwhile, Semen Indonesia estimates that domestic cement sales will grow by 5-7% in 2018 while Semen Baturaja foresees growth of 7%. (Bisnis Indonesia)
Comment: We estimate that domestic cement sales will grow by 5%yoy in 2018, or lower than the growth in 2017 of 7%yoy on the back of lower growth in the infrastructure budget in 2018 (+5%) vs. 2017 (+44%). (Antonia) Plantations: Malaysia’s palm oil shipments rose 1% MoM in the first 25 days of Dec
According to Intertek Testing Services, Malaysia’s palm oil shipments rose 1% MoM to 1.1mn tons in the first 25
days of Dec. (Bloomberg) Comment: We think the recent slump in CPO prices has made it attractive for buyers to re-stock palm oil. Increased shipments may be boosted by China in anticipation of the Chinese New Year in mid-Feb. (Yudha)
CORPORATE
Kimia Farma plans for digitalization to improve efficiency Kimia Farma (KAEF) is establishing a partnership with Telkom (TLKM) in an attempt to digitalize the business process
in the pharmacy industry. The company targets minimal efficiency of 20% by FY19, with the target to increase the net profit margin to 5% in FY19 (vs. 2.5% currently). Digitalization includes the provision of infrastructure such as
the cloud, network, hardware, integrated system (smart stock, omni chanel, customer loyalty, big data analytics), as well as home care. (Kontan)
MARKET NEWS
Equity SNAPSHOT Thursday, December 28, 2017
Danareksa Sekuritas – Equity SNAPSHOT
Krakatau Steel budgets USD390mn for its FY18 capex
Krakatau Steel (KRAS) will allocate USD390mn on its FY18 capex, or significantly lower than FY17’s capex of
USD837mn. Capex will be used to fund its ongoing projects such as its USD450.4mn hot strip mill (HSM) #2, and a USD174.5mn 1x150MW power plant project. Meanwhile, KRAS is planning to conduct an IPO for 3 of its subsidiaries,
namely Krakatau Tirta Industri (KTI), Krakatu Bandar Samudera (KBS) and Krakatau Industrial Estate Cilegon (KIEC). Nonetheless, the timeline is yet to be announced. (Bisnis Indonesia)
Telkom targets the launch of 151,000 WiFi.id hotspots in FY18 Telkom (TLKM) is targeting the launch of 151,000 WiFi.id hotspots in FY18, consisting of 40,000 spots for WiFi.id
Corner (WiCo) 2.0 (internet access for SMEs) and 111,000 spots for WiFi Station 2.0 (internet access for corporations). This is intended to increase internet penetration in Indonesia. In terms of pricing, TLKM hopes to
quote a price of Rp3,500 for 2-hr internet access, with 30% of the revenues allocated to sellers with TLKM taking the remaining 70%. (Bisnis Indonesia)
Waskita Precast recorded IDR9.89tn of new contracts Waskita Beton Precast (WSBP) recorded new contracts of IDR9.89tn up to the third week of December 2017 and
revenues of IDR4.63tn (up by 327.77%yoy). One of the biggest revenue contributors is Becakayu toll road sections 1B and 1C. From the total receivables outstanding from the Becakayu project of IDR1.8tn, the company has received
the payment of IDR429bn. At the moment, WSBP has precast production capacity of 3.25mn tons in 11 production
plants, 70 batching plants, and 4 quarries. By the end of this year, the company aims to have 11 precast plants, 83 batching plants, and 5 quarries. (Investor Daily)
Waskita Beton Precast expects to receive total cash proceeds of Rp4.63tn by the end of FY17
Waskita Beton Precast (WSBP) is expecting to receive estimated cash proceeds of Rp4.63tn by the end of FY17 (+373% YoY). In Dec 17 alone, WSBP received Rp1.47tn of cash proceeds. One of the largest contributions came
from the Becakayu toll road turnkey project. Of the total Rp1.8tn in receivables (Becakayu project) as per 21-Dec-
17, the company collected around Rp429bn. (Bisnis Indonesia)
XL Axiata to focus on expansion outside Java XL Axiata (EXCL) is planning to focus on expansion outside Java, after it managed to construct a total of 100,000
BTS units as of Dec 17. Given that EXCL had 84,484 BTS units by the end of FY16, this implies that EXCL constructed
15,516 BTS units in FY17 (-39.4% YoY). Out of the total of 100,000 BTS units, 65% are 3G/4G BTS while the remaining 35% are 2G BTS units. Looking ahead, the company will allocate 70% of its capex on infrastructure,
particularly the construction of 3G and 4G BTS units. The company seeks to construct 60% of new BTS outside Java. (Bisnis Indonesia)
Wijaya Karya WIKA 1,545 1,560 (1.0) (3.7) (14.6) (34.5) BUY
Pakuwon Jati PWON 670 675 (0.7) 3.9 7.2 18.6 BUY
Sources: Bloomberg
COVERAGE PERFORMANCE
Equity SNAPSHOT Thursday, December 28, 2017
Danareksa Sekuritas – Equity SNAPSHOT
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