Indonesia

• XL Axiata (EXCL IJ) continues to stand as the most direct way to play the data demand in Indonesia as well as being the most convergent of the listed telcos.
• Although it saw some seasonal slowdown in 3Q, the solid growth trajectory remains intact for this year with the completion of the Link Net restructuring driving convergence growth.
• XL Axiata (EXCL IJ) raised data prices again in November and will continue to ride the wave of price reparation over the coming quarters in a more rational pricing environment. 

• Indocement (INTP IJ) is trading close to 2-year lows, which seems unjustified given the ongoing recovery and a more positive outlook for FY2024. 
• The company continues to grow its distribution reach to satisfy demand from IKN in Kalimantan, smelters in Sulawesi, and East Indonesia, with acquired Semen Grobogan feeding Central Java. 
• Indocement (INTP IJ) continues to build on its sustainable credentials through the use of alternative fuels and reducing emissions and dust. Valauations are attractive trading on 6.8x FY2024E EV/EBITDA.

• GoTo senior management hosted an analyst call last week to provide further details on both the reasons behind the Tokopedia sale and the potential synergies and benefits of the move. 
• After the deal completes, GoTo will cede all management control but will receive a revenue stream from core GTV, which excludes digital products and certain big-ticket items.
• Plumbing for this deal effectively de-risks its exposure to e-commerce given it is not required to inject any new capital but it does take away future optionality on Tokpedia’s growth.  

• Sumber Alfaria Trijaya has decided to pare back the velocity of the expansion of Lawson convenience stores as it consolidates its leading position and maximises efficiencies.
• 4Q2023 saw slower growth in November but December should be stronger, whilst its store expansion for 2023 reached 1,700 new stores, with plans for around 1,300 new stores in 2024.
• Sumber Alfaria Trijaya remains the best way to play the minimarket space in Indonesia. 4Q 2023 numbers should provide a positive catalyst given it is the seasonally high quarter. 

• Newcastle coal prices have normalized from the highs of USD 450/ton (in September 2022) to current levels of USD 145/ton (a 68% correction from the peak). 
• From profits of 100 mn USD/month, we are now down to 90-100 mn USD/quarter. Despite this, the stock trades at 4.5x PE with a 15% dividend yield. 
• An added buffer of 850 mn USD of net cash represents 50% of the market capitalization. 

• A meeting with Ace Hardware Indonesia revealed a newfound enthusiasm and confidence in the outlook for growth with new store formats and an omnichannel approach as key future drivers. 
• The company will accelerate its store buildout in 2024 with plans for 20 new stores versus 13 in 2023 with new format stores taking the lead, with an emphasis ex-Java.
• Ace Hardware Indonesia (ACES IJ) will also accelerate the buildout of smaller-sized Ace Express stores with a pilot started this year.  Recent share price weakness looks unjustified.

• GoTo Gojek Tokopedia Tbk PT (GOTO IJ) announced on Monday a partnership with TikTok  which would combine former’s e-commerce biz Tokopedia with TikTok Shop Indonesia.
• TikTok was forced to close its e-commerce services in Indonesia following regulations banning online shopping on social media platforms in September citing protection of smaller merchants and data privacy.
• It seems TikTok will certainly be a winner if the deal is approved but surprised at GoTo’s move to retain a minority stake given e-commerce business is nearing profits.

• AKR Corporindo (AKRA IJ) recently hosted an analyst meeting where it provided some positive guidance for FY2024, with projections of double digit net profit growth with growth across all segments.
• The core trading and distribution business is expected to see positive growth in 2024 with  the real kicker to come from its JIIPE industrial Estate plus recurrent income from utilities.
• AKR Corporindo (AKRA IJ) is an increasingly holistic play on Indonesia’s growth through its fuel and chemical distribution, which is being hosted by smelters and the EV battery complex.

• GoTo Gojek Tokopedia (GOTO IJ) has announced that it will sell a controlling 75.01% stake in Tokopedia to TikTok in order to create Indonesia’s leading e-commerce platform.
• There had been earlier indications that a deal was in the offing but the size of TikTok’s stake was surprising plus it has committed to invest US$1.5bn in Tokopedia. 
• GoTo will retain a 24.99% non-dilutive stake and will receive an ongoing revenue stream from Tokopedia in line with its scale and growth contributing directly to its EBITDA. 

• Merdeka Battery Materials (MBMA IJ) was listed on 18th Apr 2023, when it raised around US$591m in its Indonesian IPO. Its eight-month lockup will expire on 11th Dec 2023.
• MBMA owns one of the world’s largest nickel mines in terms of contained nickel at the Konawe Nickel Mine. 
• In this note, we will talk about the lock-up dynamics and updates since our last note.

Lucror Analytics Weekly Wraps provide an overview of all Morning Views comments and reports published by our analyst team in the past week, and also showcase a list of the most-read reports.

In this Insight:

1. Kawasan Industri Jababeka
2. China Jinmao Holdings
3. Vedanta Resources
4. Yanlord Land
5. Geely Auto

and more…