Indonesia

• Siloam International Hospitals booked strong set of 3Q2023 with continuing evidence of the recovery in its core base-case business together with the effectiveness of its cost and efficiency initiatives. 
• The company saw a strong recovery across outpatient visits and inpatient admissions, with evidence of greater treatment complexity along with higher intensity with less time spent in hospital. 
• Siloam International Hospitals continues to focus on digitising its processes to improve both patient experience and its internal processes. Valuations remain attractive versus listed peers.

• BFI Finance‘s 3Q2023 results reflected the lingering impact of May’s Malware incident which interrupted collections but this situation has now been remedied and the company can resume rebuilding its book.
• 4Q2023 will likely see further write-offs but an improvement in credit costs but the company will remain cautious on building its book with a full recovery expected in 2H2024. 
• BFI Finance remains the best-quality multi-finance company in Indonesia, with a low cost of funds and a differentiated target market of used 4W and 2W non-dealer loans. Valuations are attractive. 

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. Adani Green Energy
2. Vedanta Resources
3. China Jinmao Holdings
4. Geely Auto
5. First Pacific Co

and more…

• Float and capping changes will require passive trackers to sell Bank Central Asia (BBCA) and Adaro Energy (ADRO) while buying Bank Rakyat Indonesia (BBRI) and GoTo Gojek Tokopedia (GOTO). 
• There will be passive trading to other stocks too, though the impact and flow is not material on most of the stocks.
• Passive trackers will trade at the close on 31 October, so there are only 3 days to implementation of the changes.

• Bank Rakyat Indonesia’s numbers made for positive reading with loan growth coming through in productive areas, especially for Kupedes commercial micro-loans but also from its PNM and Pegadaian subsidiaries.
• The bank maintained its funding costs at highly competitive levels despite rising rates and time deposit growth with NIMs improving due to a better loan mix in micro.
• Bank Rakyat Indonesia (BBRI IJ) remains the most direct way to get exposure to greater financial inclusion and the underbanked in Indonesia. Valuations remain attractive with rising ROA and ROE. 

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

Lucror Analytics’ ESG Scores are based on a 3-tiered scale and are adjusted for Controversies (if applicable).
We view Japfa Comfeed’s ESG as “Adequate”, in line with its Environmental, Social and Governance scores. Controversies are “Immaterial” and Disclosure is “Strong”.

• We compile our selection of small and mid-cap names with our desired characteristics of high dividend yields, value, and margin of safety.
• Our top picks are Perfect Medical Health (1830 HK), Water Oasis (1161 HK), Taste Gourmet (8371 HK), Uchi Technologies (UCHI MK), and The Keepers Holdings (KEEPR PM).
• We add the Philippine Stock Exchange (PSE PM) and Ginebra San Miguel (GSMI PM) to our list of names that we look at after our recent Philippines trip. 

• Bank Central Asia (BBCA IJ) released another set of positive numbers in 3Q2023, outperforming the overall sector on loan and CASA growth, allowing the banks to maintain NIMs and profitability.
• The bank’s digital banking franchise continues to grow, with 31 million users of its mobile banking, boosting transactions and customer numbers, with a broadening of features and service offerings available. 
• Consumer banking, SME, and Corporate lending will continue to drive loan growth and credit costs continue to come down boosting profits. Bank Central Asia remains a core holding. 

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. Medco Energi
2. NagaCorp Ltd
3. China Vanke
4. Lippo Malls Indonesia Retail Trust
5. Tata Motors Ltd

and more…

• This transaction just keeps on giving. First, you received an additional dividend. Now the Offer price has been increased. 
• On the 26 July, Geo Energy Resources (GERL SP) announced an intention to acquire a 58.65% stake in coal miner Golden Eagle Energy (SMMT IJ) (GEE).
• Geo shareholders approved the purchase on the October 13 and the acquisition was completed on the 18 October. This triggered an MTO, which has been revised upward to IDR 1,305.50.

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
• Sands China

• Medikaloka Hermina (HEAL IJ) remains a differentiated hospital player in Indonesia given its focus on the treatment of women and children plus its doctor partnership model in its hospitals.
• The company booked a strong rebound in both inpatient and outpatient volumes in 1H2023, and we expect this to continue into 2H, with two new hospitals opened in 3Q2023.
• Despite exhibiting the strongest growth amongst its peers, the company still trades at a significant discount to Mitra Keluarga Karyasehat Tbk (MIKA IJ) on 10.2x FY2024E EV/EBITDA. 

• Sariguna Primatirta (CLEO IJ) is a differentiated bottled water player in Indonesia producing pure water using nano-technology, with around 5% market share but with significant upside given low penetration. 
• The company has established a long-term growth record over the past six years and booked +14.9% sales growth and +23.2% net profit growth, driven by increased demand and new products.
• CLEO continues to expand its manufacturing and distribution to cover more areas of the country. It also has an increasingly sustainable edge and valuations are reasonable relative to growth. 

• HDFC Bank (HDFCB IN) is the largest buy (XSOE) – estimated flow $44m. Grupo Financiero Banorte SAB d (GFNORTEO MF) is the 2nd largest buy – estimated flow $40m.
• Wistron Corp (3231 TT) is the largest sell – estimated flow $68m. POSCO Holdings (005490 KS) is the 2nd largest sell – estimated flow $59m.
• Our estimate for the total value of new constituent buys is $1.38bn. We expect deletions to the value of $1.41bn to be sold down across the 3 funds.

• Back on the 26 July, Geo Energy Resources (GERL SP) announced an intention to acquire a majority stake in coal miner Golden Eagle Energy (SMMT IJ) (GEE).
• GEO shareholders have now approved the purchase of a 58.7% stake in Golden Eagle from Indonesian conglomerate Rajawali Group, triggering an MTO at IDR1,255/share, which is subject to Indonesia’s OJK.
• In addition, GEE announced a special/additional dividend, with a cum-entitlement today, the 17th of October. 

• Iconic Indonesian mass-market department store retailer Ramayana Lestari Sentosa (RALS IJ) has struggled with sluggish growth this year, especially over Lebaran but management remains confident in some recovery in 2H2023.
• The company embarked on transformation pre-pandemic but COVID put a brake on this change and forced a number of stores to close and resurrection has begun again but slowly.
• Ramayana is taking a conservative approach this year, opting not to expand its store network as anticipates weakened purchasing power but pre-election spending could provide a boost. Valuations are attractive.

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.

• Anton Oilfield
• China Jinmao Holdings
• Pan Brothers
• Tata Motors ADR