Indonesia

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.

• Indika Energy
• Tata Steel Thailand

• Barito Renewables (2306028D IJ) is looking to raise around US$228m in its Indonesian IPO.
• Barito Renewables (BR) is Indonesia’s largest geothermal power producer, and the third-largest globally by installed capacity, as per the firm.
• In our previous note, we covered the company’s performance. In this note, we will undertake a quick peer comparison and share our thoughts on valuation.

• Barito Renewables (2306028D IJ) is looking to raise around US$228m in its Indonesian IPO. 
• Barito Renewables (BR) is Indonesia’s largest geothermal power producer, and the third-largest globally by installed capacity, as per the firm. 
• Its revenue has been primarily driven by electricity and steam sales to PLN as PGE’s exclusive contractor and its profitability has been on the rise over the track record period.

• Bank Mandiri (BMRI IJ) continues to positively surprise on loans, NIMs, and credit costs, with a consequential improvement in returns, only non-interest income seeing a slowdown but likely temporary.
• Digital banking initiatives through Livin’ and KOPRA continue to grow and help the bank drive higher CASA and fee income whilst reducing costs, with smart branches also improving returns.
• Bank Mandiri remains a core holding as a proxy to the Indonesian economy with its digital initiatives driving higher returns. Valuations remain attractive on 2.2x FY2023 PBV with 20% ROE.

• The bank expects its 2 new for 1 old stock split to be done on 10 October
• Total shares should move from 18.6tr to 37.3tr after the stock split
• Compared with peers, BBNI has low market cap/assets, good ROA

• Global Digital Niaga (BliBli) continues to stand out from peers given a differentiated omnichannel model plus a greater portion of 1P but 3P sales are growing driven by Tiket.com.
• TPV growth surpassed revenue growth in 1H2023 driven by Tiket.com but take rates and gross margins improved, as the company cut back on promotional spending and improved cost efficiencies. 
• BliBli booked organic growth with more users and a significant pick-up in the average order value, partially driven by Tiket.com. 

• Indonesia-based Koltiva works with producers in 52 countries and boasts over 1 million producers and 6,800 businesses

• Indonesia-based sustainable farming and supply chain traceability startup Koltiva has raised an undisclosed “seven-figure” USD in a Series A financing round led by AC Ventures.

• Silverstrand Capital, Planet Rise, Development Finance Asia, Blue 7, The Meloy Fund, and an unnamed impact investor in Southeast Asia also joined.

• Maize plays a pivotal role in Indonesian agriculture, including as a prime source of animal feed. In 2022, the country’s maize production was estimated to reach 44 million tons.

• Agritech startup Kora is one of those few startups operating in this space.

• Kora aims to improve the quality and quantity of post-harvest maize.

• Multi Bintang Indonesia (MLBI IJ) and Delta Djakarta (DLTA IJ) are cheap plays on recovery in tourism to Indonesia. July 2023 data shows a 90% recovery in Bali tourism.
• We are approaching the Q3/Q4 high season, where profitability should see a dramatic improvement in revenue and profitability. 
• We prefer to play the recovery through Multi Bintang Indonesia (MLBI IJ) trading at 15.9x/13x FY23e/24e with a 6.3%/7.5% dividend yield.

• Bank Negara Indonesia (BBNI IJ)continues to focus on growing the quality end of its corporate loan book, and de-risking its smaller sized commercial loans, whilst growing consumer exposure.
• The bank’s digital initiatives remain core, with strong growth in mobile transactions by value as well as the number of users, whilst BNI Direct is driving digitisation of business customers.
• Hibank has launched, growing FMCG related loans fast, with the help of Mayora Indah. BNI valuations remain attractive, with the bank trading on 1.2x FY2023E PBV with 15% 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.

• JSW Infrastructure
• Medco Energi

• XL Axiata (EXCL IJ) continues to impress with its growth in revenues and data, driven by its 4G focus and high-quality network, with improving margins at the same time.
• The XL convergence story continues to build, with convergence penetration increasing but the real kicker wILL come once the restructuring with Link Net completes but benefits are already accruing. 
• XL Axiata remains the purest data player in Indonesia, with convergence set to be the next driver. Valuations are attractive on 4.4x FY2024E EV/EBITDA with strong growth ahead. 

• We retain Bank Negara as our top pick for its deep value attributes of low PE multiples and its attractive PEG ratio relative to sound returns and strong liquidity metrics
• We also stick with our positive call on Bank Mandiri, for its premium returns and undemanding PE multiples; Bank Central Asia, albeit fully valued, has impressive liquidity and return metrics
• Bank Rakyat again registered worsening pre-provision returns in 2Q23, even if there was QoQ cost of risk relief; its loan mix implies a high structural cost of risk going forward

• On the 26 July, Geo Energy Resources (GERL SP) announced an agreement to acquire a majority stake in coal miner Golden Eagle Energy (SMMT IJ) (GEE).
• Via an S&P, GEO intends to buy a 58.7% stake in Golden Eagle from Indonesian conglomerate Rajawali Group for US$154.1mn.
• The completion of the S&P, which is subject to Indonesia’s OJK and Geo shareholder approval, will trigger an MTO at IDR 1,255/share.

The Asia Trade Book for September 2023 includes a summary of our recommendations, as well as our high-conviction ideas. The report also features relative-value charts and lists of the bonds across Asia HY and crossover credits.

Please reach out to our analysts to discuss any of these ideas, or other trade recommendations from our Asia coverage.

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.

• Pakuwon Jati
• Pertamina Geothermal Energy PT
• Sunny Optical Technology Group

• Astra International (ASII IJ) looks set to have another year of positive growth driven by strong performance from its Auto and 2W businesses and steady performance from United Tractors.
• The company’s move into the EV space has begun with 16 models hybrid or BEV models already launched, with 4W hybrid outperforming ICE given narrowing price differentials. 
• Astra International (ASII IJ) continues to invest in core growth areas of the Indonesian economy, with a strong sustainability bent. Valuations are attractive versus history on 8.3x FY2024E PER. 

The Asia Monthly focuses on providing updates on recent events, information on new issues and spread movements, as well as summarising our top picks. The Asia Monthly is intended to broaden investors’ understanding of the Asian USD high-yield market.

• AKR Corporindo (AKRA IJ) has secured another major land plot sale at its JIIPE industrial estate in Gresik, with an area of 67 hectares to a Chinese chemical manufacturer.
• The sale puts the company on track to exceed its full-year target sales for the estate. It has also been divulged that the Freeport Smelter is now 75% complete.
• AKR Corporindo (AKRA IJ) remains a crucial proxy for the Indonesian economy through its fuel and chemical distribution business, with JIIPE targeting the EV Battery value chain as future tenants.