Indonesia

• GoTo (GOTO IJ) reported 4Q2022 and full-year 2022 results yesterday. Gross revenue increased 18.0% YoY to IDR6.3trn while adjusted EBITDA losses declined to IDR3.1trn vs IDR6.5trn in 4Q2021.
• However, adjusted EBITDA as % of net revenues has increased considerably compared to 3Q2022 due to increase in variable costs.
• GoTo’s ambitious profitability target would prevent the company from fully exploiting growth opportunities which will lead to further decline in growth rates.

• PT Trimegah Bangun Persada Tbk (Harita Nickel) (2230010D IJ), an Indonesian nickel play, has launched an IDX IPO to raise US$1 billion. Book building ends on 24 March.
• We previously discussed the IPO in Harita Nickel IPO: The Bull Case and Harita Nickel IPO: The Bear Case.  
• In this note, we discuss valuation. Our analysis suggests that Harita is fairly valued at the IPO IPO price range of IDR1,220-1,250 per share. We would participate in the IPO.

• PT Trimegah Bangun Persada Tbk (Harita Nickel) (2230010D IJ), an Indonesian nickel play, has launched an IDX IPO to raise US$1 billion. Book building ends on 24 March.
• In Harita Nickel IPO: The Bull Case, we highlighted the key elements of the bull case. In this note, we outline the bear case.
• The key elements of the bear case rest on weakening market sentiment, high single customer dependence, gross margin pressure, high cash burn, rising cash collection cycle and deteriorating cash conversion.

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

• PT Trimegah Bangun Persada Tbk (Harita Nickel) (2230010D IJ) is looking to raise about US$650m in its Indonesian IPO.
• PT Trimegah Bangun Persada Tbk (Harita Nickel, HN) is a vertically integrated pure-play nickel company operating on Obi Island, Indonesia.
• In this note, we will look at our earnings assumptions, and share our thoughts on valuation.

• PT Trimegah Bangun Persada Tbk (Harita Nickel) (2230010D IJ) is looking to raise about US$650m in its Indonesian IPO.
• Harita Nickel is a vertically integrated pure-play nickel company operating on Obi Island, Indonesia.
• For our peer comparison exercise, we looked at international nickel mining companies and also included downstream players in the nickel value chain such as Huayou Cobalt and Lygend 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.

• Japfa Comfeed Indonesia
• Lippo Karawaci
• Times China

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. China Jinmao Holdings
2. Lifestyle International Holdings
3. Geely Auto
4. First Pacific Co
5. Tata Motors Ltd

and more…

The Asia HY Trade Book for March 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 (ex-Japan) HY and crossover credits.

• PT Trimegah Bangun Persada Tbk (Harita Nickel) (2230010D IJ) is looking to raise about US$650m in its Indonesian IPO.
• PT Trimegah Bangun Persada Tbk (Harita Nickel, HN) is a vertically integrated pure-play nickel company operating on Obi Island, Indonesia.
• In this note, we will talk about the not so positive aspects of the deal.

• PT Trimegah Bangun Persada Tbk (Harita Nickel) (2230010D IJ), an Indonesian nickel play, has launched an IDX IPO to raise US$650 million. Book building ends on 21 March.
• Harita is expected to become Indonesia’s largest pure nickel producer based on volume expectations of Harita’s nickel mining production in 2022.
• The key elements of the bull case rest on good underlying revenue growth, near-term capacity expansion, high profitability, capex nearing the peak and manageable leverage.

• Broom, an all-in-one automotive SME solutions startup in Indonesia, has secured US$10 million in a pre-Series A funding round

• Jakarta-headquartered Broom will use the money to diversify its product offerings and further accelerate dealer inventory turnover.

• Established in 2021, Broom provides an end-to-end financial solution for auto dealer inventories.

• PT Trimegah Bangun Persada Tbk (Harita Nickel) (2230010D IJ) is looking to raise about US$650m in its Indonesian IPO.
• PT Trimegah Bangun Persada Tbk (Harita Nickel, HN) is a vertically integrated pure-play nickel company operating on Obi Island, Indonesia.
• In this note, we will talk about the positive aspects of the deal.

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
• Lippo Karawaci

• Prodia (PRDA IJ) has released a new app called U by Prodia. Initially, U by Prodia users will be able to access laboratory examination, health supplement purchasing, and home services.
• Given its expected miniscule contribution of 15–17% to total revenue, digital platform even if being on a higher growth trajectory, cannot be a significant revenue driver.
• Declining COVID testing revenue are negatively impacting diagnostic players globally. During 9M2022, Prodia reported revenue of IDR1,580B, representing 21% decline, while net profit plunged 46% to IDR275B.

• PT Nippon Indosari Corpindo (ROTI IJ) booked results well above market expectations despite pressure from wheat flour and packaging costs, with greater efficiencies and cost savings boosting operating margins.
• Modern trade continues to be the growth driver but general trade continues to grow plus the company’s new Sari Kue cake products showed a strong performance at the margin. 
• PT Nippon Indosari Corpindo (ROTI IJ) should see further positive growth in 2023, with the potential for improving margins as input costs subside. Valuations are significantly below historical levels.

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.

• Adaro Energy
• China Vanke
• Hopson Development

• Indo Tambangraya Megah (ITMG IJ) dividend yield at an assumed 150 USD/ton price in FY23e ( FY22 px: 192 USD/ton) is over 20% (FY22 yield 25-28%).  
• Investors staying over FY22/FY23e will get 45-48% of the share price returned in dividends assuming a 70% payout ratio, and the company’s cash pile will be >1.5 bn USD.
• Coal prices have been softer recently, but the recent mining incident threatens a slower rebound in coal production from China. The company looks cheap at 3-3.5x PE FY23e.

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.

In our view, Japfa Comfeed’s FY 2022 results were decent, considering the difficult operating conditions following two years of COVID-19, the high-cost environment (owing to geopolitical tensions) as well as heightened inflation. Revenue growth was reasonable, while profitability was under pressure. Credit metrics deteriorated, but remained modest. Liquidity continues to be weak, due to material short-term debt.

We expect better FY 2023 results. We believe that operating conditions will improve, with the surge in soft commodity prices gradually being passed through to the end-consumer. We project: [1] steady revenue growth of c. 10%; [2] stable margins (with room for upside, considering FY 2022 was a weak year); [3] that leverage will at least remain stable, or improve slightly; [4] that (EBITDA-Capex)/Interest should deteriorate, due to the expected higher capex in FY 2023 for continued capacity expansion.

We do not foresee any rating pressure. Japfa is rated B+ (stable) and BB- (stable) by S&P and Fitch, respectively.