Indonesia

• Indofood CBP Sukses (ICBP IJ) has weathered the worst of higher raw material prices and is now seeing the benefits of lower input costs, benefiting margins.
• The company is a core beneficiary of pre-election spending as its products are often given as gifts during campaigning. ICBP is also seeing strong performance in its export markets.
• ICBP should increasingly be seen as an emerging market staples player, with globally recognised brands such as Indomie and Chitato. Valuations do not reflect this.

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
• Yankuang Energy Group

• PT Nippon Indosari Corpindo (ROTI IJ) saw a strong QoQ recovery in sales in 3Q2023 but its return rate also increased as it adjusted to distributing new products.
• Raw material & packaging costs have abated and A&P spending stabilised, giving the company a strong base for recovery, as it expands its distribution in modern and general trade.
• The outlook for ROTI in 4Q and into FY2024 looks positive given a wider footprint and the potential for improvements in its return rate. Valuations are well below historical averages.

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. Agung Podomoro Land
2. China Jinmao Holdings
3. Geely Auto
4. First Pacific Co
5. Reliance Industries

and more…

• A company visit with Sumber Alfaria Trijaya revealed confidence in the outlook with its more aggressive store expansion on track, as it nearly draws level with Indomaret.
• The company remains focused on expanding its Lawson convenience store outlets plus larger size Midi outlets. Its membership scheme is growing fast with 10m shopping once a week. 
• Sumber Alfaria Trijaya (AMRT IJ) remains a core retail holding, with its premium valuation justified by its strong growth prospects, with estimated 2-year Forward EPS growth of +25% and +17%. 

The Asia Trade Book for November 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.

• Adani Ports & Special Economic Zone
• Agung Podomoro Land

• Erajaya Swasembada (ERAA IJ) had a tempestuous 3Q2023, with one-off write-downs of inventory in both Indonesia and Malaysia, despite booking strong sales and gross profit growth overall. 
• The company has also expanded its store network more aggressively in 9M2023, which meant higher opex and financing to build the new inventory, whilst stores take time to ramp up. 
• Erajaya should see a recovery in 4Q2023, given plans to limit store expansion plus a lack of write-offs. Trading on 5x FY2024E PER with forecast +25% EPS growth is 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.

• 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.

• Lippo Karawaci
• Softbank Group
• Xiaomi Corp

• Cisarua Mountain Dairy (CMRY IJ) stands out from the overall FMCG space in Indonesia, with 21% revenue growth versus a flat to negative performance for the overall market.
• The company’s growth in 3Q2023 was predominantly driven by premium consumer foods at +46% YoY but dairy was also positive, with the company increasing promotional spending but maintaining margins.
• The outlook for 4Q2023 looks promising driven by increased distribution outlets, especially general trade plus the launch of new products for both consumer food and dairy. 

• Ace Hardware Indonesia (ACES IJ) booked an impressive set of 3Q2023 results after registering a strong improvement in SSSG over the last few months as well as increasing store count.
• The company has booked particularly strong performance outside Java, where spending power has proved to be strong, with the company’s digital promotions boosting sales significantly and complementing offline sales. 
• Ace Hardware Indonesia (ACES IJ) has regained its lustre with a more coherent set of initiatives to drive future growth from promotions to new store formats. Valuations remain reasonable.

• Sumber Alfaria Trijaya (AMRT IJ) came through a slower 3Q2023 with much stronger growth than peers, with SSSG and rapid store expansion driving growth, and margins improving concurrently.
• The company added more than 1,300 new stores for 9M2023 and looks set to add a record 1,800 by year-end, with new Alfamidi and Lawson stores driving growth.
• AMRT will see an even stronger seasonally higher 4Q2023, with SSSG likely to pick up boosted by supplier rebates and news store contributions. FY2024 looks set to be equally strong.

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.

• Delta Dunia Makmur
• ENN Natural Gas
• Greentown China

• Recovery for Multi Bintang Indonesia (MLBI IJ) has been underwhelming with revenue/PAT for Q3 2023 coming in at -3% YoY/10% YoY.
• We expect the high season (holiday/festivity season) of Q4 to be comparatively better as 9M2023 revenue/PAT tracks 7% YoY/14% YoY, below our 15% assumption. 
• We like Multi Bintang Indonesia (MLBI IJ) as we are paid to wait in the name. The correction post earnings place it at 15.4x/12.7x PE FY23e/24e and 6% dividend yield.