Indonesia

• Ciputra Development (CTRA IJ) continued to book strong marketing sales in 1H2024 and looks well on track to meet or beat its FY2024E guidance with a strong pipeline of projects.
• CTRA has the most geographically diversified portfolios in the sector and operates an asset-light joint operating scheme strategy allowing for faster expansion and a good portion of recurrent rental income. 
• The VAT exemption program looks set to continue to drive residential demand in 2H2024 with CTRA riding the affordability wave having also repositioned its target market. 

• DCI Indonesia (DCII IJ) is Indonesia’s leading operator of Tier 4 data centres, which require the highest operational standards, with its main business in co-location services.
• The company has a long track record of growth in both sales and profits, making it more than a concept, with a well-thought-out expansion at its three existing data centres.
• DCI Indonesia is hard to justify on current valuations but has a strong track record on execution with a high pedigree management team and customer base, with backing from Salim.

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.

• Lippo Karawaci

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.

• China Vanke
• PT Pertamina (Persero)
• Sunny Optical Technology Group

• Barito Pacific (BRPT IJ)‘s 64.7% stake in Barito Renewables Energy (BREN IJ) (now Indonesia’s largest company by market cap), is worth 8x its market cap. That’s unsustainable.
• Preceding my comments on the Barito complex are the current setup/unwind tables for Asia-Pacific Holdcos.
• These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.

• Selamat Sempurna is one of the most interesting industrial companies in Indonesia, with a leading market share in filters for auto and heavy equipment markets in Indonesia and overseas.
• 1Q2024 was impacted by a seasonal slowdow ahead of Lebaran and a decline in sales to Russia, offset by strong US sales. Management remains confident in the outlook for FY2024.
• Selamat Sempurna will continue to benefit from growth in the filter replacement market for both auto and heavy equipment markets and already has exposure to EVs. Valuations are attractive. 

• PT Metrodata Electronics (MTDL IJ) saw a strong rebound in 1Q2024 for its distribution business, especially for telco products, which partially offset the slower growth in solutions & consulting. 
• Solutions&consulting saw slow growth due to some delays over projects due to political uncertainty ahead of the election but it did have the support of recurrent income from software.
• PT Metrodata Electronics should see a recovery in solutions & consulting in 2H2024, with increasing demand from AI-related projects, which will further drive future growth. Valuations remain attractive.

• Bank Rakyat Indonesia (BBRI IJ) have seen a significant correction on the back of concerns over credit quality, as provisions increased in 1Q2024, the bank addressed its problem micro-loans
• The bank is addressing these loans with some further provisions likely over the coming quarter but special mention loans should plateau in July signifying a turn. 
• Bank Rakyat Indonesia will slow micro-lending and grow corporate loans this year to address the cost of credit. Profits will likely be flat and dividend payout up. Valuations are attractive.

• Recently listed Ecocare Indo Pasifik (HYGN IJ) is a small-cap with significant potential as a leader in hygiene services in Indonesia, which is a segment with a secular growth story.
• The company operates a rental model which means recurrent revenues with a high retention rate and annual price increases in a market with high barriers to entry. 
• Ecocare Indo Pasifik (HYGN IJ) has entered the pest control market with services that can be offered to its existing 13,000 corporate customers, with cleaning services as an additional add-on. 

• Sariguna Primatirta (CLEO IJ) is Indonesia’s fastest growing bottled water players with an edge over competition is that it sells “pure” water, which is filtered using nanotechnology from the US. 
• The company sell both gallon and bottled water in sustainable innovative packaging and has a well-developed distribution coverage. It continues to build new factories to drive future growth across Indonesia. 
• Sariguna Primatirta (CLEO IJ) is a rising star in the consumer staples space in Indonesia, with a strong track record in executing its expansion. Valuations are attractive versus growth.

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.

• Medco Energi