Equity SNAPSHOT Wednesday, April 24, 2019 Danareksa Sekuritas – Equity SNAPSHOT FROM EQUITY RESEARCH Mayora Indah: Upside emerges (MYOR IJ. IDR 2,520. BUY. TP IDR 3,050) We see the current weakness in MYOR’s share price performance as an opportunity to accumulate the shares given: (1) the expectation of continued solid performance in the domestic market and (2) the potential for higher demand from continued expansion in export markets. Upgrade to BUY with a higher TP of IDR 3,050 (FY19F PE of 34x). To see the full version of this report, please click here FY18 Results BANKING ▪ BTPN Syariah: The strong growth continues click here ▪ Bank Tabungan Negara: A housing-driven bank click here CONSTRUCTION ▪ Jasa Marga: Slightly better than expected click here COAL ▪ Bukit Asam: Growth continues apace click here MARKET NEWS SECTOR ▪ Retail minimarts enjoy digital wallet boom CORPORATE ▪ BTN mulls possible acquisition of Jiwasraya ▪ DMAS targets 50% net profits growth ▪ XL Axiata to upgrade its transport OTN network in Sumatra PREVIOUS REPORT ▪ Garuda Maintenance Facility: Growth strategy to support future earnings ▪ Perusahaan Gas Negara: Sector restructuring to Unlock PGN volume growth ▪ Alam Sutra Realty: Cheap valuation with better earnings prospect ▪ Strategy: The Big Day: Jokowi Leads in Quick Counts ▪ Automotive: Impressive Domestic Car Sales in Mar 2019 ▪ Kino Indonesia: Enticing turnaround story ▪ Strategy: Progression Continues ▪ Bank Tabungan Negara: Greater clarity ▪ BPD Jatim: Picking up the momentum ▪ Vale Indonesia: Set to recover KEY INDEX Close Chg Ytd Vol (%) (%) (US$ m) Asean - 5 Indonesia 6.463 0,7 4,3 435 Thailand 1.671 (0,1) 6,9 1.313 Philippines 7.819 (0,2) 4,7 91 Malaysia 1.627 0,3 (3,7) 770 Singapore 3.353 (0,1) 9,3 647 Regional China 3.199 (0,5) 28,3 66.239 Hong Kong 29.963 (0,0) 15,9 13.674 Japan 22.260 0,2 11,2 9.563 Korea 2.221 0,2 8,8 4.064 Taiwan 11.026 0,3 13,3 3.611 India 38.565 (0,2) 6,9 326 NASDAQ 8.121 1,3 22,4 114.614 Dow Jones 26.656 0,5 14,3 10.180 CURRENCY AND INTEREST RATE Rate w-w m-m ytd (%) (%) (%) Rupiah Rp/1US$ 14.080 0,0 0,7 2,2 BI7DRRR % 6,00 - - - 10y Gov Indo bond 7,66 0,0 0,1 (0,4) HARD COMMODITY Unit Price d-d m-m ytd (%) (%) (%) Coal US$/ton 85 0,2 (9,3) (17,1) Gold US$/toz 1.272 (0,1) (3,2) (0,8) Nickel US$/mt.ton 12.308 (2,2) (4,6) 16,1 Tin US$/mt.ton 19.980 (1,8) (7,0) 2,4 SOFT COMMODITY Unit Price d-d m-m ytd (%) (%) (%) Cocoa US$/mt.ton 2.339 (0,9) 6,6 (1,1) Corn US$/mt.ton 128 (1,2) (5,0) (4,1) Oil (WTI) US$/barrel 66 (0,4) 11,9 45,4 Oil (Brent) US$/barrel 75 0,6 11,2 38,5 Palm oil MYR/mt.ton 2.058 0,2 10,4 5,4 Rubber USd/kg 151 (0,1) 2,0 21,1 Pulp US$/tonne 1.205 N/A 2,8 20,5 Coffee US$/60kgbag 71 0,4 (5,3) (5,5) Sugar US$/MT 338 (0,1) 0,8 1,7 Wheat US$/ton 121 0,7 (5,5) (14,2) Soy Oil US$/lb 28 (2,2) (2,1) 1,9 Soy Bean US$/by 862 (1,7) (4,6) (2,3)
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Equity SNAPSHOT Wednesday, April 24, 2019
Danareksa Sekuritas – Equity SNAPSHOT
FROM EQUITY RESEARCH
Mayora Indah: Upside emerges
(MYOR IJ. IDR 2,520. BUY. TP IDR 3,050)
We see the current weakness in MYOR’s share price performance as an opportunity to accumulate the shares given: (1) the expectation
of continued solid performance in the domestic market and (2) the potential for higher demand from continued expansion in export
markets. Upgrade to BUY with a higher TP of IDR 3,050 (FY19F PE of 34x).
To see the full version of this report, please click here
FY18 Results
BANKING ▪ BTPN Syariah: The strong growth continues click here
▪ Bank Tabungan Negara: A housing-driven bank click here CONSTRUCTION
▪ Jasa Marga: Slightly better than expected click here COAL
▪ Bukit Asam: Growth continues apace click here
MARKET NEWS
SECTOR
▪ Retail minimarts enjoy digital wallet boom CORPORATE
▪ BTN mulls possible acquisition of Jiwasraya ▪ DMAS targets 50% net profits growth
▪ XL Axiata to upgrade its transport OTN network in Sumatra PREVIOUS REPORT
▪ Garuda Maintenance Facility: Growth strategy to support future
earnings ▪ Perusahaan Gas Negara: Sector restructuring to Unlock PGN
volume growth ▪ Alam Sutra Realty: Cheap valuation with better earnings
prospect
▪ Strategy: The Big Day: Jokowi Leads in Quick Counts ▪ Automotive: Impressive Domestic Car Sales in Mar 2019
▪ Kino Indonesia: Enticing turnaround story ▪ Strategy: Progression Continues
▪ Bank Tabungan Negara: Greater clarity ▪ BPD Jatim: Picking up the momentum
www.danareksa.com See important disclosure at the back of this report 1
Equity Research Company Update
Wednesday,24 April 2019
Mayora Indah(MYOR IJ) BUY
UPGRADE Upside emerges
We see the current weakness in MYOR’s share price performance as an opportunity to accumulate the shares given: (1) the expectation of continued solid performance in the domestic market and (2) the potential for higher demand from continued expansion in export markets. Upgrade to BUY with a higher TP of IDR 3,050 (FY19F PE of 34x). Steady growth with innovative products. Mayora is one of many FMCG companies that offers consumers many new products/variants within its existing brands. Based on our survey, Mayora launched more than 10 new products/variants last year. Despite insignificant price increases, these new products/variants were able to sustain solid growth in the FY18 revenues. Supported by Indonesia’s sizeable population, the market for Cookies and Crackers is estimated to reach USD1.78bn by end-2019 with steady growth of 9.3% CAGR in 2019-23 (Statista). Additionally, the instant coffee market is also expected to book strong growth of 10.9% CAGR in the same period (Statista). Solid earnings growth expected in FY19F. Recovery in the people’s purchasing power will raise consumer demand and support FY19F revenues growth of 15.4% yoy, we believe. With the Ramadhan festive season approaching, the company will boost production given the higher demand for consumer products. At the same time, the company will also benefit from a strong export market contribution which provides natural hedging against currency volatility. With relatively stable raw material prices, we expect MYOR to maintain its gross margin at 26%. We also estimate lower A&P expenses this year which will help the FY19 bottom line to grow 17% yoy to IDR2tn. We have revised up our FY19F earnings estimate by 17.5%. Upgrade to BUY. We believe the catalysts are: (1) increasing demand from export markets and (2) continued solid local demand which will sustain earnings going forward. In our view, the current weakness in the share price represents an opportunity for investors to accumulate the shares. Taking into account our new forecast, we upgrade our recommendation to BUY with a higher TP of IDR 3,050 (FY19F PE of 34x). At the current share price, MYOR is trading at FY19F PE of 28.1x – below its average 2-y PE of 30x. The risks to our recommendation include persistently high A&P expenses that would rein in earnings as well as higher oil/raw material prices.
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Equity Research Result Note
Tuesday,23 April 2019
BTPN Syariah (BTPS IJ) BUY
Maintain The strong growth continues
We reiterate our BUY call on BTPS with a GGM-derived TP of IDR2,400 (implying 3.5x 2019F P/BV) following the release of the 1Q19 results that are inline with our expectation. NIM will remain high in our view despite the gradual decline to 38.0% this year as BTPS will maintain its core business in the productive female borrowers segment. As for the funding mix, it will still be dominated by TD with a 79.8% contribution to deposits by 2019F. All in all, we assume a 408bps credit cost and 19.7% yoy net profits growth this year. 1Q19 highlights. The 1Q19 net profits of IDR288bn (+35.8% yoy) are inline with our estimate supported by strong 20.3% yoy financing growth and a lower credit cost of 353bps with a 1.4% gross NPLs ratio as of March 2019. The loans loss coverage (LLC) ratio climbed to 227% as of March 2019 due to the bank’s decision to allocate ample provisions on its financing exposure in Lombok and coastal towns on the Sunda Straits. If we strip out this one-off event, the LLC ratio would stand at 159%. An exceptionally high NIM. Thanks to BTPS’ one-of-a-kind business model, its NIM will remain far above the industry level. However, we do expect the NIM to gradually decline to 38.0% in FY19F given higher individual financing exposure. This individual financing is still in the pilot project stage and only offered to borrowers who have already passed cycle 5 (each cycle has a 52-week tenor). Meanwhile, funding is still largely provided by wealthy individuals who place their funds in TD products (under the mudharabah scheme). Thus, we assume a 5.8% blended CoF this year. Decent ROAE outlook at above 20%. High loans growth of at least 20% in the next two years should offset the lower expected NIM. Fee-income is not yet the focus as BTPS still seeks to grow its assets further. Credit costs, additionally, should be predictable given the bank’s financing portfolio. We assume dividends will only be distributed from FY21F’s net profit and beyond. This is because BTPN, as BTPS’ biggest shareholder, views that BTPS still needs sufficient capital to support its expansive financing growth. Thus, assuming net profits growth of 19.7% this year, the ROAE should reach 26.0%.
Maintain BUY with a higher TP of IDR2,400. We maintain our BUY call on BTPS with a higher GGM-derived TP of IDR2,400 assuming 8.9% CoE, 23.9% sustainable ROAE and 3% long-term growth. Our TP implies 3.5x 2019F P/BV.
www.danareksa.com See important disclosure at the back of this report 1
Equity Research Result Note
Tuesday,24 April 2019
Bank Tabungan Negara (BBTN IJ) BUY
Maintain A housing-driven bank
We continue to like BBTN given its strong core business model in the housing-related segment. Nonetheless, the implementation plans for PSAK 71 in 2020 remain an overhang with a 45.1% coverage ratio as of March-2019. As such, the short-term priority for BBTN is to increase its coverage ratio followed by a rights issue. We believe that BBTN will likely conduct the rights issue in 2020F following the formation of the SOE’s financial services holding entity. Maintain BUY with an unchanged TP of IDR3,000.
1Q19 highlights. The net profits of IDR723bn are inline with our forecast and the consensus as 1Q accounted for 18.8%-24.2% of FY performance in the past three years. Loans growth remained strong at 19.6% yoy in March 2019 supported by 28.9% yoy growth in subsidized mortgages. NIM itself dropped to 3.6% due to higher pressure on the blended CoF. In addition, credit costs of 42bps in 1Q19 were lower than our forecast of 77bps in FY19F. The gross NPLs ratio stood at 2.9% as of March 2019. Subsidized mortgages remain the growth driver. BBTN’s management reaffirmed its commitment toward providing subsidized mortgages under the FLPP and interest rate subsidy schemes. The IDR5.2tn allocation for the FLPP funding scheme is likely to maintain the 75:25 ratio between the government and SMF. As for the SSB scheme (IDR3.4tn), the government will continue to use the 12-month SBI (current rate: 6.77%) as its reference rate for interest rate subsidies. As such, with more flexibility in the government’s schemes coupled with the affordable funding provided by SMF, we expect 17.0% growth in subsidized mortgages in 2019F.
Seeking a higher coverage ratio in the short-term. BBTN’s management still seeks to increase its coverage ratio to 76% by end-2019F. Nonetheless, we expect a 67.9% coverage ratio assuming 14.5% yoy loans growth and a 2.6% gross NPLs ratio this year, higher than BBTN’s management guidance of a 2.4% gross NPLs ratio. To reach 100% coverage by January 1, 2020, BBTN will need to allocate an additional IDR2.3tn of provisions, which would likely offset its equity. Thus, CAR would drop by c.1.5% from 16.6% by the end of 2020F.
BUY with a TP of IDR3,000. Maintain BUY with a GGM-derived TP of IDR3,000 assuming a CoE of 10.5%, a sustainable ROAE of 12.0% and 3% long-term growth. Our TP implies 1.2x 2019F PBV (-0.25SD of its 10-yr mean).
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Equity Research Results Note
Wednesday,24 April 2019
Jasa Marga(JSMR IJ) BUY
Maintain Slightly better than expected
JSMR booked flattish earnings growth in 1Q19 of 0.3%yoy to IDR585bn on the back of 5.7%yoy growth in revenues and higher interest expenses. The result is slightly above our estimate and the consensus. We maintain our BUY call on JSMR given: 1) potentially higher traffic on the Jakarta – Cikampek toll road from a change in the payment system at the Cikarang Utama toll gates, 2) potential tariff adjustments on the Jakarta – Cikampek toll road when the Jakarta – Cikampek elevated toll road begins operation, and 3) potential gains booked from divestment through DINFRA.
JSMR booked flattish earnings growth in 1Q19 of 0.3%yoy to IDR585bn (1Q18: IDR583bn) on the back of 5.7%yoy revenues growth and higher interest expenses. The result is 27.7% of our full year target and 29.9% of the consensus. Last year, the 1Q18 earnings were 26.5% of the full year number, while the average rate in the past two years is 25.7%. Hence, the 1Q19 result is slightly above our estimate and the consensus.
Toll and other operating revenues in 1Q19 reached IDR2.4tn, up moderately by 5.7%yoy, reflecting delays in tariff increases on the Jakarta – Cikampek and Prof. Dr. Sedyatmo toll roads. Nonetheless, the Jakarta – Cikampek toll road remains the main revenues contributor (11.4% of JSMR’s toll revenues), followed by JORR section non S (10.9%) and Cikampek – Padalarang (10.1%). Meanwhile, the Prof. Dr. Sedyatmo toll road saw an increase in its tariffs by IDR500/car to IDR7,500/car as of 14 Feb 19.
We like JSMR given: 1) potential changes in the payments scheme for the Jakarta – Cikampek toll road. JMSR plans to stop using the Cikarang Utama gate to reduce congestion on the Jakarta – Cikampek toll road. Starting in May19, vehicles going to Bandung will have to pay at Sadang at KM 72. Meanwhile, vehicles going to Central Java will pay in Cikopo. This should reduce the congestion and result in increased traffic on the toll road.
2) JSMR might make tariff adjustments when the Jakarta – Cikampek elevated toll road begins operation. The new elevated toll road is targeted to start commercially in Sep19. We acknowledge that the current Jakarta – Cikampek toll road tariff is only IDR15,000/car for 73km, which will be significantly different for the new elevated toll road. Based on a 36.4km length for the new elevated toll road and a tariff of IDR1,250/km, the tariff for the elevated toll road should reach IDR45,500/car or more than three times the tariff for the existing toll road. A higher tariff would naturally boost JSMR’s revenues. This toll road had traffic of 181.6mn vehicles in 2018 and accounted for 14.3% of JSMR’s traffic.
Reiterate BUY. We adjust our model on the back of the 1Q19 result. We expect FY19 earnings to decline by 0.5%yoy given IDR877bn of one-time gains from divestment booked in 2018.
www.danareksa.com See important disclosure at the back of this report 1
Equity Research Results Note
Wednesday,24 April 2019
Bukit Asam (PTBA IJ) BUY
Maintain Growth continues apace
Bukit Asam (PTBA) reported net profits of IDR1.1tn (+3.9% qoq, but -21.6% yoy) in 1Q19. The net profit is slightly below our forecast (22.0%) but within consensus estimates (24%). With the expectation of greater railway capacity, we believe that the company can further increase coal production going forward. Maintain BUY with a target price of IDR5,200 (based on DCF valuation with WACC of 12.7%). Higher quarterly net profits. Net profits rose by 3.9% qoq to IDR1.1tn in 1Q19 thanks to: a) higher revenues (+4.0% qoq) and b) lower operating expenses (-53.4% qoq) mainly due to significant declines in general & administration expenses. As the company booked higher COGS, its gross margin went down to 33.3% in 1Q19 (4Q18: 36.6%), but its operating margin climbed to 26.6% in 1Q19 from 21.6% in 4Q18. Lower revenues and higher costs dragged down the yearly net profits. On a yearly comparison, net profits were down by 21.6% yoy in 1Q19, reflecting: a) 7.2% qoq lower revenues, which we believe owed to lower ASP given the impact of weak coal prices, and b) 12.4% yoy higher COGS. Nonetheless, 34.0% yoy lower operating expenses - mainly from lower selling expenses and a lower tax rate of 25.4% in 1Q19 (1Q18: 29.1%) helped to cushion the decline in net profits. The result is slightly below our expectation (22% of our FY forecast). Expect an increase in coal production in 2019. The company expects an increase in coal production to around 27.3mn tons (+3.4% yoy) in 2019. This will be supported by greater railway capacity, which is targeted to increase further by 9.5% yoy to 25.3mn tons at the end of 2019. Going forward, with KAI planning to further increase its railway capacity to 30mn tons by 2020, we believe that the company can further increase its coal production. Maintain BUY with a target price of IDR5,200 (based on DCF valuation with WACC of 12.7% and long-term growth of 3.0%). We expect higher earnings in 2019 despite expected consolidation in the coal price owing to higher production and a greater contribution of higher calorific value coal in the product mix. Our new target price implies 10.9x 2019F PE.
Retail minimarts are enjoying a digital wallet boom, as the segment gets promotions from platforms such as Go-Pay, Ovo, and LinkAja to name but a few. Family Mart’s management indicated double-digit growth in the number
of consumers utilizing the services. Alfamart (AMRT) has also benefitted, with strong SSSG in January and February at 9.4% and 11.1% respectively, up from 8.4% in 4Q18. AMRT plans to open around 500 new stores in FY19.
(Bisinis Indonesia and Company)
CORPORATE
BTN mulls possible acquisition of Jiwasraya PT Bank Tabungan Negara Tbk (BBTN IJ, BUY, TP IDR3,000) is currently assessing its acquisition plans for Asuransi
Jiwasraya. BBTN’s management has already hired an external consultant to undertake the assessment and expects it to be done in 1H19. (Kontan)
DMAS targets 50% net profits growth Puradelta Lestari (DMAS) is targeting a 50% increase in net profits in 2019 in line with the growth in industrial land
sales. The revenues growth target is set at 20% this year. This optimism reflects the fact that the company has already booked marketing sales of IDR 914 billion, or equal to 73% of its FY19 target of IDR 1.25 trillion. The
company will distribute a total of IDR 1.01 trillion as dividends or equivalent to IDR 21/share. (BI)
XL Axiata to upgrade its transport OTN network in Sumatra
It was announced on April 23, that XL Axiata will be supplied with Infinera XTC’s platform. XL will use the platform to upgrade its terrestrial fiber network in South Sumatra as well as its capacity in the B2JS (Jakarta-Bangka-Batam-
Singapore) submarine network that connects Jakarta and Singapore. Infinera’s solution for this subsea and terrestrial network upgrade enables the delivery of cloud-scale capacity with the benefit of intelligent Optical Transport
Network (OTN) switching to enable XL to keep pace with growing bandwidth demand especially in 5G.
Indocement INTP 21.175 21.250 (0,4) 0,4 0,6 14,8 HOLD
Tower Bersama TBIG 3.650 3.660 (0,3) (3,9) (13,1) 1,4 BUY
Bank Rakyat Indonesia BBRI 4.430 4.440 (0,2) 2,8 9,1 21,0 BUY
Jasa Marga JSMR 5.975 5.975 - (0,4) 12,2 39,6 BUY
Sources: Bloomberg
COVERAGE PERFORMANCE
Equity SNAPSHOT Wednesday, April 24, 2019
Danareksa Sekuritas – Equity SNAPSHOT
PREVIOUS REPORTS
▪ Garuda Maintenance Facility: Growth strategy to support future earnings, Perusahaan Gas Negara: Sector
restructuring to Unlock PGN volume growth SnapShot20190423 ▪ Alam Sutra Realty: Cheap valuation with better earnings prospect SnapShot20190422
▪ Strategy: The Big Day: Jokowi Leads in Quick Counts, Automotive: Impressive Domestic Car Sales in Mar 2019, Kino Indonesia: Enticing turnaround story SnapShot20190418
▪ Semen Indonesia (Persero): Year of consolidation SnapShot20190405 ▪ Poultry: Will this year mimic 2017?, Indocement Tunggal Prakarsa: Steady growth despite a difficult first half,
Pembangunan Perumahan: Growing moderately SnapShot20190404
[email protected] (62-21) 29555 888 ext.3511 Media, Research Associate
Equity SNAPSHOT Wednesday, April 24, 2019
Danareksa Sekuritas – Equity SNAPSHOT
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