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.

• PT Pertamina (Persero)
• Softbank Group

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 Hongqiao
• Gajah Tunggal

• Indosat (ISAT IJ) 2Q2023 saw the benefit of surging seasonal demand driving data usage coupled with its stronger network post the 3 integration. 
• The company saw a further increase in subscribers in 2Q2023 to over 100m, along with higher ARPUs, which rose by +8.6% YoY in 2Q2023 helping to improve returns.
• Indosat (ISAT IJ) continues to invest in maintaining the quality of its network as well as offering new value-added products to customers, boosting retention and profitability.

• BintanGo, which provides tools for digital content creators in Indonesia, has raised US$2.2 million in a seed extension round joined by Investible, Contents Technologies, and other investors.
• This brings its total funds raised to US$4.8 million so far. The startup closed a US$500,000 pre-seed round in June 2021 and a US$2.1 million seed round in April 2022.
• With the latest investment, BintanGo plans to extend its services to live commerce platforms, said CEO and co-founder Jason Lee in a statement.

• Indonesia-based virtual influencer and meta-human company Genexyz has secured US$1 million in seed funding led by East Ventures.
• Emtek, MDI Ventures, Trinity Optima, and Massive Music also joined.
• The company will use the funds to expand into Southeast Asia and develop more interactive technology to connect with relevant communities.

• GoTo Gojek Tokopedia (GOTO IJ) released results for 2Q2023, which reflected a slower growth environment exacerbated by lower incentive spend but some significant progress towards its profitability goals for 2023.
• The company continues to focus on maintaining high-quality users but with an increasing focus on more affordable offerings to expand its demographic reach with the potential to double its users.
• GoTo is undergoing a full assessment across all divisions, with a focus on improving synergies, with new strategies for growth to be revealed next quarter.

• Indo Tambangraya Megah (ITMG IJ) provides investors with fat dividends. We estimate from 2021-2023e, the company will have paid over 20,000 Rph (70% of the current share price) in dividends.
• Despite these dividend payouts, cash on the balance sheet by the end of FY23e will easily exceed one bn USD or about 50% of the market capitalization.
• Weak results/degrowth are expected due to unsustainably high coal prices in 2022. Nevertheless, there is a good case for future value as hefty dividends will continue to be paid.

• Proptech firm Goro is betting on fractional property investments in Indonesia. With its namesake being derived from the Indonesian term Gotong Royong or mutual cooperation, its platform allows users to purchase a fraction of a property starting from US$0.7.
• Returns come in the form of monthly paid-out rental income and capital gains when the property is sold.
• Since launching earlier this year, Goro said its user base has grown 15% per week. The company added that its current portfolio, which is picked by professional property managers, is generating 11% net annualized rental yield for its users.

• GoTo is laser-focused on shifting the needle towards a semblance of profitability and likely with renewed vigour with a new management team in place. 
• 2Q2023 results will likely reflect a slower headline GMV but should show an improvement in take rates and contribution margin. More colour on recent initiatives would be welcomed by investors.
• GoTo has launched a standalone GoPay app which should help to boost its off-platform usage and has the potential to nurture more collaboration with Bank Jago.

• GoTo Gojek Tokopedia Tbk PT (GOTO IJ) reported 2Q2023 results. Gross revenue increased 5.6% YoY to IDR5.83trn while adj. EBITDA losses further narrowed down to IDR1.21trn vs IDR4.3trn in 2Q2022.
• The company’s cost discipline measures have helped cut down on losses but growth rates have seen huge declines over the last few quarters.
• Demand for food delivery has declined in Indonesia while entry of TikToK Shop has posed significant threat on Tokopedia, Shopee and other e-commerce platforms in the country.

• Bukalapak continues to demonstrate the effectiveness of circular nature of its business model in 2Q2023, with demand from its O2O business fueling growth in its marketplace, creating a flywheel effect.
• Although TPV growth slowed slightly in 2Q2023, revenues saw much stronger growth, especially its marketplace business, which booked much higher take-rates driven by its specialty verticals, including gaming and gadgets.
• Bukalapak will continue to benefit from expanding take rates as specialty, such as AlloFresh feed in more SKUs and new verticals gain traction. Valuations remain attractive on 0.85x FY2023E EV/Sales.

• Adi Sarana Armada remains an interesting way to play the used car theme in Indonesia with its leading car leasing business fuelling used car sales.
• The company continues developing its logistics capabilities, thrusting towards B2B and value-added cold chain logistics. Anteraja has slowed along with e-commerce but is more focused on profitability. 
• Adi Sarana Armada continues to benefit from synergies across its vehicle ecosystem through leasing, auction and used cars. Valuations are attractive with the company trading on 11x forward 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.

• Halodoc, the Indonesia-based healthtech firm, raked in US$100 million in series D funding in a round led by returning investor Astra Digital International, according to a statement.
• This boosts Astra’s total investments in the company to US$135 million. In 2021, the local conglomerate also led the US$80 million series C round of Halodoc.
• With the new capital, Halodoc has raised at least US$258 million, according to Tech in Asia data.

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 Green Energy
• Gajah Tunggal
• Indika Energy
• Road King Infrastructure
• Sands China

Japfa Comfeed’s H1/23 results remained weak, with a large drop in profitability on account of an oversupply of poultry, higher raw-material costs and lower consumer demand. While there was sequential improvement in Q2, the overall H1 results remained significantly weaker y-o-y. The company’s financial risk profile continued to deteriorate, while liquidity worsened.

We revise our LARA on Japfa to “High Risk” from “Medium Risk”, given the company’s quickly deteriorating liquidity profile and increasing leverage. The inadequate liquidity position and fast-rising leverage are no longer in line with that of a “Medium Risk” credit.