Equity SNAPSHOT Friday, February 08, 2019 Danareksa Sekuritas – Equity SNAPSHOT FROM EQUITY RESEARCH Poultry : Key Meeting Takeaways with Pinsar ( Neutral ) From our meeting, we learnt that Pinsar is expecting broiler and Day Old Chick (DOC) prices to remain high this year mainly due to undersupply and higher corn costs. The undersupply owes to the lowest Grand Parent Stock (GPS) import quota back in 2016, thus affecting 2019 Final Stock (FS) production. Meanwhile, higher local corn costs due to the import ban are likely to push broiler prices higher as the cost of production will remain elevated. To see the full version of this report, please Click here MARKET NEWS SECTOR Indonesia B20 distribution reached 89% in Jan 19 CORPORATE HMSP (BUY - TP: IDR 4,200): Flat 4Q18 sales volume, FY18 +0.1% yoy* New submarine cable available for Indosat Jasa Marga: Plans to issue Dinfra worth IDR700bn in 1Q19 Semen Indonesia: Expects exports to reach more than 4.0mn tons in 2019 Vale Indonesia (INCO): Flattish nickel-in-matte production expected in 2019 Waskita Karya: Plans to divest 6 toll roads in 2019 PREVIOUS REPORT Strategy: 2018 GDP: Highest growth pace since 2013 Click here Media: MNCN has begun the year well Click here Telco Price Tracker: January heralds more product revisions Click here Vale Indonesia: 4Q18: Weak profit on lower ASP and higher costs Click here Japfa Comfeed Indonesia: Take a break Click here Unilever Indonesia: Profits boosted by one-off gains Click here Bank Rakyat Indonesia: Still a very profitable bank Click here Charoen Pokphand Indonesia: Thank you, next Click here KEY INDEX Close Chg Ytd Vol (%) (%) (US$ m) Asean - 5 Indonesia 6.536 (0,2) 5,5 485 Thailand 1.653 (0,3) 5,7 1.598 Philippines 8.100 0,5 8,5 137 Malaysia 1.693 0,6 0,2 216 Singapore 3.201 0,5 4,3 662 Regional China 2.618 1,3 5,0 23.814 Hong Kong 27.990 0,2 8,3 5.206 Japan 20.751 (0,6) 3,7 14.656 Korea 2.187 (0,8) 7,1 6.101 Taiwan 9.932 0,0 2,1 3.235 India 36.971 (0,0) 2,5 385 NASDAQ 7.288 (1,2) 9,8 113.674 Dow Jones 25.170 (0,9) 7,9 10.500 CURRENCY AND INTEREST RATE Rate w-w m-m ytd (%) (%) (%) Rupiah Rp/1US$ 13.973 - 0,8 2,9 BI7DRRR % 6,00 - - - 10y Gov Indo bond 7,81 (0,1) (0,1) (0,2) HARD COMMODITY Unit Price d-d m-m ytd (%) (%) (%) Coal US$/ton 98 (0,5) (1,3) (4,2) Gold US$/toz 1.310 0,0 1,9 2,2 Nickel US$/mt.ton 12.910 0,4 16,5 21,7 Tin US$/mt.ton 21.000 (0,3) 6,1 7,6 SOFT COMMODITY Unit Price d-d m-m ytd (%) (%) (%) Cocoa US$/mt.ton 2.245 1,6 (3,0) (5,1) Corn US$/mt.ton 135 (0,9) - 1,8 Oil (WTI) US$/barrel 53 (0,2) 5,5 15,7 Oil (Brent) US$/barrel 62 (1,7) 7,5 14,6 Palm oil MYR/mt.ton 2.093 (1,6) 2,6 7,2 Rubber USd/kg 132 (0,5) (4,8) 5,5 Pulp US$/tonne 1.205 N/A 2,8 20,5 Coffee US$/60kgbag 80 0,1 0,8 1,1 Sugar US$/MT 338 (1,1) (2,1) 1,6 Wheat US$/ton 140 (2,4) (0,7) 2,0 Soy Oil US$/lb 31 (0,3) 9,0 11,8 Soy Bean US$/by 913 (0,9) 0,1 3,5
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Equity SNAPSHOT Friday, February 08, 2019
Danareksa Sekuritas – Equity SNAPSHOT
FROM EQUITY RESEARCH
Poultry : Key Meeting Takeaways with Pinsar ( Neutral ) From our meeting, we learnt that Pinsar is expecting broiler and Day Old Chick (DOC) prices to remain high this year mainly due to undersupply and higher corn costs. The undersupply owes to the lowest Grand Parent Stock (GPS) import quota back in 2016, thus affecting 2019 Final Stock (FS) production. Meanwhile, higher local corn costs due to the import ban are likely to push broiler prices higher as the cost of production will remain elevated.
To see the full version of this report, please Click here
MARKET NEWS
SECTOR Indonesia B20 distribution reached 89% in Jan 19
See important disclosure at the back of this report www.danareksa.com
Friday,08 February 2019
Poultry NEUTRAL
Key Meeting Takeaways with Pinsar
From our meeting, we learnt that Pinsar is expecting broiler and Day Old Chick (DOC) prices to remain high this year mainly due to undersupply and higher corn costs. The undersupply owes to the lowest Grand Parent Stock (GPS) import quota back in 2016, thus affecting 2019 Final Stock (FS) production. Meanwhile, higher local corn costs due to the import ban are likely to push broiler prices higher as the cost of production will remain elevated. Expect prices to surge due to the general elections and Lebaran. Pinsar is expecting broiler and DOC prices to increase this year as supply is expected to remain tight. The peak of chicken prices is expected to materialize in April, affected by the general elections and Lebaran. However, the government may feel the need to act given the upcoming elections. To lower chicken prices, the government can either allow corn imports or end the ban on chicken imports. The government is, however, hesitant to allow corn imports as data from the Ministry of Agriculture shows that corn production is in surplus. Allowing chickens to be imported is the last resort to reduce prices as this move would affect the long-term supply-demand dynamics in Indonesia’s poultry industry.
Farmers want the ban on corn imports lifted. Farmers would oppose chicken imports as the cost of production in Indonesia is still high, i.e. broiler prices from Brazil can be as low as IDR 12,000/kg. After losing in the World Trade Organization (WTO) regarding the ban on chicken imports, chicken products from Brazil are a possibility. The government is currently negotiating through a bilateral agreement. Negotiations to lift the ban on corn imports are still being held between farmers and the government. Cheap corn stocks in feed millers’ silos can only last for another 25 days. If corn costs are high, poultry feed producers are likely to pass on the higher raw material costs. The new corn costs range from IDR 6,000-6,300/kg which reflects the late harvest season in late 2018.
The AGP ban is reducing productivity but opening room for exports. After banning the use of AGP, farmers experienced a higher mortality rate and a lower productivity ratio. The Feed Conversion Ratio (FCR) for open house and close house increased to 1.3x and 1.6x from 1.1x and 1.3x, respectively. However, since the antibiotic content in broilers due to the use of AGP is higher than the standard in most countries, broilers were rarely exported. Now with the absence of AGP, there may be room to export broilers. Feasibility studies from Saudi Arabia and Japan are being conducted.
Company Ticker Rec (Rp) (RpBn) 2018F 2019F 2018F 2019F 2019F
Charoen Pokphand Indonesia
CPIN IJ SELL 5,700 135,283.5 29.3 34.2 7.0 6.3 19.5
Japfa Comfeed Indonesia JPFA IJ HOLD 2,950 31,949.5 12.8 14.4 3.1 2.7 20.2
Equity SNAPSHOT Friday, February 08, 2019
Danareksa Sekuritas – Equity SNAPSHOT
SECTOR Indonesia B20 distribution reached 89% in Jan 19
According to the local press, Indonesia’s B20 distribution reached 89% in Jan 19. The lower-than-expected
realization mostly owed to: 1) distribution disruption caused by unfavorable weather and high tides and 2) the fact that the Tuban floating storage for the biodiesel mix has yet to operate optimally. (Kontan)
CORPORATE
HMSP (BUY - TP: IDR 4,200): Flat 4Q18 sales volume, FY18 +0.1% yoy* HMSP’s FY18 sales volume rose 0.1% yoy (lower than our estimate of 0.3% yoy), driven by Dji Sam Soe (DSS)
(+28.3% yoy), mainly supported by Magnum Mild 16s. By contrast, Sampoerna A reported declining sales volume
(-7.5% yoy) – following the impact of its higher retail selling prices. Based on our survey, Sampoerna A 16s retail selling prices in 4Q18 were around IDR23,500/pack, +11.9% yoy.
HMSP maintained its FY18 market share at 33%, mainly supported by increasing market share of DSS to 9.5%
(FY17: 7.4%), while Sampoerna A and other brands booked lower market share.
On a quarterly basis, HMSP reported flat 4Q18 sales volume yoy but up 1.5% qoq – mainly supported by DSS and
Sampoerna A. However, lower 4Q18 market share of Sampoerna A and Other brands put pressure on HMSP’s 4Q18 market share, which declined to 32.7% (3Q18: 33%).
Indosat Ooredoo along with companies like Google, Singtel, and Telstra recently announced the implementation of
the INDIGO submarine cable system with the completion of the «West Indigo» cable and «Indigo Central» cable on time. The cables completed are the Singapore 4,600km undersea cable to Perth (Indigo West) and another 4,600
km cable between Perth and Sydney (Indigo Central). Transmission testing will begin immediately and the cables are targeted to be ready for use before mid-2019. The CTO of Indosat Ooredoo commented that the INDIGO
submarine cable is part of Indosat Ooredoo's ambitious three-year program and once operational, it will increasingly
scale up the traffic between Australia and SE Asia providing lower latency and increased reliability.
Jasa Marga: Plans to issue Dinfra worth IDR700bn in 1Q19 Jasa Marga (JSMR) seeks to raise IDR700bn from the issuance of a new financing instrument, Dinfra, in 1Q19. The
asset underlying this instrument is the Gempol – Pandaan toll road (13.6km). (Bisnis Indonesia)
MARKET NEWS
Equity SNAPSHOT Friday, February 08, 2019
Danareksa Sekuritas – Equity SNAPSHOT
Waskita Karya: Plans to divest 6 toll roads in 2019 Waskita Toll Road (WTR), a subsidiary of Waskita Karya (WSKT), seeks to raise ~IDR10.0tn from the divestment of
6 toll roads in 2019. The toll roads are: Pejagan – Pemalang, Kanci – Pejagan, Pasuruan – Probolinggo, Bekasi – Cawang – Kampung Melayu, Solo – Ngawi, and Batang – Semarang. In 2018. WTR divested a 70% stake in Waskita
Transjawa Tollroad by issuing a mutual fund (RDPT) and raised IDR5.0tn. WTR owns 18 toll roads with a total
length of 1,015km. Around 468km of the toll roads are in operation. The equity investment needed to build the 18 toll roads is IDR34.7tn, while WTR had collected IDR20.0tn as of 2018. As such, WTR needs another ~IDR14.7tn of
funds for the equity investment. (Bisnis Indonesia)
Semen Indonesia: Expects exports to reach more than 4.0mn tons in 2019
Semen Indonesia (SMGR) targets cement exports of 4.0mn tons in 2019, higher than the ~3.0mn tons booked in
2018. In the sector, most cement producers have increased exports to help production achieve economies of scale. Total cement exports from Indonesia have increased significantly from only 2.9mn tons in 2015 to 5.7mn tons in
2018. The Indonesian Cement Association (ASI) expects cement exports to reach 7.0mn tons in 2019, +22.8%yoy. Export destinations include: Sri Lanka, Tahiti, Timor-Leste, Tonga, UAE, Yemen, the Philippines, China, Australia,
Austria, Maldives, India, and Bangladesh. The higher exports have been possible given the large idle production
capacity in the sector since domestic capacity has reached 110mn tons while domestic demand is only 69.5mn tons, translating into a utilization rate of 63.2%. (Bisnis Indonesia)
Vale Indonesia (INCO): Flattish nickel-in-matte production expected in 2019 Vale Indonesia (INCO) expects flattish nickel-in-matte production of around 74,000 – 76,000 tons in 2019 from
74,806 tons in the previous year as the company plans to modernize its hydro power plant that has been operated for about 40 years. This will require a shutdown of 10 weeks of the Larona Canal Lining. Meanwhile, in regard to
the divestment of a 20% stake, INCO has sent a letter to MEMR and the company expects the divestment process to be conducted through business to business (B to B) before October 2019. (Source: Bisnis Indonesia)
Summarecon Agung SMRA 950 970 (2,1) (4,5) 10,5 18,0 BUY
Sources: Bloomberg
COVERAGE PERFORMANCE
Equity SNAPSHOT Friday, February 08, 2019
Danareksa Sekuritas – Equity SNAPSHOT
PREVIOUS REPORTS
Strategy : 2018 GDP: Highest growth pace since 2013, Media: MNCN has begun the year well, Telco Price
Tracker: January heralds more product revisions SnapShot20190207 Vale Indonesia: 4Q18: Weak profit on lower ASP and higher costs SnapShot20190206
Japfa Comfeed Indonesia : Take a break, Unilever Indonesia: Profits boosted by one-off gains SnapShot20190201 Bank Rakyat Indonesia: Still a very profitable bank SnapShot20190131
Charoen Pokphand Indonesia: Thank you, next, Danareksa Consumer Confidence: More Optimistic at the Beginning of the Year SnapShot20190130
[email protected] (62-21) 29555 888 ext.3511 Media, Research Associate
Equity SNAPSHOT Friday, February 08, 2019
Danareksa Sekuritas – Equity SNAPSHOT
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