Indonesia

• Amman Mineral Internasional (AMMN IJ) listed on the Main Board of the IDX in July by raising US$715m in the largest Indonesia IPO for the year.
• The stock did not get Fast Entry to any of the local or global indices given the low float, but there could be multiple index inclusions in the near future.
• The stock is up 3x from its IPO price and there could be supply from some of the investors that got in at the offering price.

• Astra International’s results are a testament to both the company’s resilience in the face of declining commodity prices, with autos. motorcycles and finance take up the reins of driving growth.
• Astra continues to introduce new EV models with a focus on hybrid variants, which have been selling well. It is increasingly investing in sustainable businesses including geothermal and nickel assets.
• Astra International (ASII IJ) remains a well-managed core proxy for Indonesia’s key growth drivers, with new investments aligning the company with the country’s growth drivers. Valuations are attractive versus history.

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. Evergrande
2. Logan Property Holdings
3. Japfa Comfeed Indonesia
4. Medco Energi
5. Zhenro Properties Group

and more…

• Mayora Indah (MYOR IJ) saw a significant positive surge in profitability from lower raw material prices and lower operating costs in 3Q2023, which suggests it will beat its FY2023 guidance.
• The company continues to launch new variants in both biscuits and beverages with a slant towards premiumisation and is also more aggressively attacking export markets, where its brands are strong.
• Mayora Indah (MYOR IJ) is expanding factory capacity to fuel growth in 2024 but should also benefit from pre-election spending from 4Q2023. Valuations look attractive versus historical comparisons.

In our view, Indika Energy’s 9M/23 results were weaker than expected due to a sharp decline in Kideco’s production and sales volume in Q3, lower-than-expected profitability at Kideco (which accounts for 90% of Indika’s EBITDA) and negative OCF, which came as a surprise. The balance sheet turned to a net debt position, after a few quarters of net cash. Liquidity remains sound, with a large (albeit fast shrinking) cash position.

OCF and FCF were negative, which was surprising as Indika has previously managed to generate positive FCF even when coal prices were lower than current levels. The last time the company generated negative FCF was in 2015, during a major coal downturn. We believe that the negative OCF may be due to the new businesses, which are ramping up. Indika’s key business strategy in the medium term is to diversify away from and reduce its reliance on coal-related activities, with the company aiming to derive 50% of its revenue from non-coal sources by 2025. The new businesses include a gold mine, renewable energy solutions (mainly solar power), electric scooters and several digital technology businesses.

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.

• Azure Power Global Ltd
• Evergrande
• Japfa Comfeed Indonesia
• Medco Energi
• Zhenro Properties Group

• GoTo Gojek Tokopedia’s 3Q2023 results were far more illuminating and encouraging than the last 2Qs, with more progress towards adjusted EBITDA breakeven, with much more colour on its new initiatives.
• The company’s focus on budget consumers and more affordable product offerings are already expanding its TAM and improving product density and productivity, speeding progress towards productivity. 
• GoTo will continue to invest in growth, which may mean it misses its 4Q adjusted EBITDA breakeven target but it has reduced cash burn significantly giving it more breathing space.

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

• Bank Negara remains our top pick for its deep value attributes of low PE multiples and its very attractive PEG ratio, whilst improving post-provision returns and registering strong liquidity
• We also keep Bank Mandiri on a buy rating, for its premium returns and undemanding PE multiples; Bank Central Asia, albeit fully valued in our view, has impressive return
• Bank Rakyat again registered worsening pre-provision returns in 3Q23, along with cost of risk; its heavily MSME focused loan mix implies a high structural cost of risk going forward

• GoTo reported 3Q2023 results on Monday. Gross revenues increased 1.4% YoY to IDR5.98trn while adj. EBITDA losses further narrowed down to IDR1.84trn vs IDR3.71trn in 3Q2022.
• GoTo Gojek Tokopedia Tbk PT (GOTO IJ) continues to see huge reduction in losses but growth rates have fallen further with cutdown on incentives and promotional spending.
• It seems that GoTo has stopped exploring growth opportunities in pursuit of profits, however, this may not be sustainable in the long-term with falling growth rates.

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

• Bukalapak (BUKA IJ) 3Q2023 results confirmed that it is on track to achieving EBITDA breakeven in 4Q2023, with strong revenue growth and a significant improvement in its contribution margin.
• The was a slight slowdown in marketplace revenue QoQ due to a high Lebaran base, mainly due to slower gaming. 4Q2023 should see a strong recovery and higher take rates. 
• Bukalapak looks to be pressing all the right buttons but more granularity on what is driving higher take rates would be well-received . Valuations look attractive relative to peers.

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.

• Pertamina Geothermal Energy PT

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
• Gajah Tunggal
• Reliance Industries
• Xiaomi Corp
• Yankuang Energy Group

• 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