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.

• Medco Energi

• Erajaya Swasembada (ERAA IJ) is back on track with its handset business, with stronger volume growth driven by more affordable models from Infinix and Techno brands.
• The company’s buildout of its electrical retailer Erablue, a JV with Mobile World, is gaining momentum and should become a significant growth driver along with Grand Lucky supermarket.
• Erajaya will slow its store buildout this year as it focuses on productivity ny it still expected to add 200 new stores over in Indonesia. Valuation is attractive.

• Barito Renewables Energy (BREN IJ) listed on the IDX in October 2023 and inclusion in global indices was expected in June and August.
• The IDX threw a spanner in the works by placing Barito Renewables Energy (BREN IJ) onto its Watchlist under criteria 10. That resulted in cancellation of index inclusion in June.
• Barito Renewables Energy (BREN IJ) will come off the Watchlist today and that could see a renewed move higher in the stock over the next few weeks.

• Prodia (PRDA IJ) suffered from a seasonal downturn in 1Q2024 as Lebaran slowed its testing volumes from corporates, with opex related to Prodia Digital impacting margins in the quarter.
• The company’s testing mix is shifting in a meaningful way towards esoteric testing, which commands significantly higher margins plus it is building out its genomic testing, which yields higher returns.
• Investment in Prodia Digital should slow in the coming quarters, helping to improve margins. with new outlets driving revenues. Valuations are unjustifiably low with 2Q2024 numbers likely to be positive.

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.

• Alam Sutera Realty
• China Hongqiao
• Lippo Karawaci
• Tata Motors ADR

• Indo Tambangraya Megah (ITMG IJ) reported an inline Q1 FY24, with stabilizing price. Net cash at 875 mn USD is 50% of mkt cap. 
• If coal prices remain stable at 135 USD/ton, the company will be able to churn out 400 mn USD of profits (~24 mnt sales).  
• With a minimum 65% dividend payout ratio, we derive a dividend yield of 15%. This number could be an upside risk as payout ratios have also been 100%.

• A follow-up call with Alfamart management confirmed the positive growth outlook for the coming year despite a slower store build-out and a sanguine view of the competitive environment. 
• Alfamart will slow its store build-out for Lawson as it optimises its existing stores but will still open 250 new Lawson outlets out of a total of 1,500 new outlets.
• The company will expand more aggressively in the outer islands and build five new DCs to support expansion, with Alfamidi seeing a pick-up in new store openings.  Valuations are reasonable.

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

• Sumber Alfaria Trijaya (Alfamart) booked a solid set of 1Q2024 results, a testament to its resilience during an election period, with the seasonal impact of Lebaran. 
• Minimarkets continue to be the winning format in Indonesia and Alfamart continued to gain share during 1Q2024, neck and neck with Salim-backed Indomaret if you include Alfamidi, Lawson, and Dan+Dan. 
• Alfamart will slow store openings to 1,300 stores this year after adding more than 1,800 outlets in 2023, with growth prospects remaining positive and profitability intact with a 25% ROE. 

• Ace Hardware Indonesia (ACES IJ) continues to impress both in terms of SSSG and profitability, with numerous initiatives to drive future growth including more regular promotional campaigns and upgraded formats.
• SSSG for 5M2024 is well ahead of full-year guidance with strong growth momentum driven by ongoing campaigns, brighter new concept formats, and successful omnichannel initiatives providing additional growth impetus. 
• Ace Hardware Indonesia remains a top pick amongst Indonesian retailers, with valuations well below historical levels, despite the resurgence of growth and numerous initiatives in place both online and offline. 

• Cisarua Mountain Dairy booked a strong set of 1Q2024 results, with sequential quarterly growth in revenues and more so profits as margins recovered driven by both dairy and consumer foods. 
• The company ramped up its advertising, promotion, and marketing spending as it launched new products in the more affordable segments including new flavours for stick yoghurts and affordable consumer foods.
• Cimory remains optimistic for 2024 for a more pronounced recovery in dairy as it pushes out products into general trade and takes more shelf space in modern trade driving growth.