Indonesia

• Astra International’s results reflected its exposure to commodities, especially coal, through heavy equipment and mining through United Tractors (UNTR IJ) but most divisions booked growth as the economy recovered.
• The company’s core auto and financing business made much more than half of its profits and also contributed to its growth with a slower performance from agri-business and construction.
• Astra International (ASII IJ) announced a generous 85%-dividend payout to reward investors for its coal exposure in 2022, implying a 10% dividend yield. Valuations remain significantly below historical averages.

• Arwana Citramulia released a solid set of numbers for FY2022 but we expect growth to continue for the next two years driven by new capacity in higher margin products.
• The company’s new capacity will be focused on expanding its porcelain tile business but it will also expand its higher-margin DigI UNO ceramic product, which will be positive for margins.
• Arwana Citramulia (ARNA IJ) remains a top-quality and high-growth industrial choice in Indonesia. Valuations are attractive with a single-digit PER and high teens EOS growth for the next two years.

• Kalbe Farma (KLBF IJ) revealed an indicative set of 2022 numbers, which fell slightly short of estimates due to product mix changes and inflationary pressure from higher input costs.
• Management guidance for 2023 looks more positive and implies stable margins in the coming year, with strong momentum across prescription drugs, consumer health, nutritionals, and logistics and less inflationary pressure.
• Kalbe Farma looks interesting with more positive expectations for earnings growth in 2023, coupled with valuations below its 5-year average forward PER.

• Matahari Department Store (LPPF IJ) continued to benefit from positive consumer sentiment at year-end after faltering in October, driving a solid finish to the year and decent annual growth.
• The company has resumed its store rollout for FY2023 with 12-15 new stores planned plus a new premium format, and the company’s omnichannel strategy achieving strong results.
• Matahari has rebranded itself and improved its merchandise mix with a push towards millennials and more affluent consumers. Valuations are attractive, with the added support of a 10% dividend yield.

• Pertamina Geothermal Energy (PGE) raised around US$600m in its Indonesia IPO. PGE is an Indonesian state owned power producer which utilizes geothermal energy to produce electricity.
• PGE currently manages 13 Geothermal Working Areas with a total capacity of 1,877 MW, of which 672 MW is owned by it, while 1,205 MW is via joint operations.
• In our previous notes, we looked at the company’s past performance and valuations. In this note, we talk about the deal dynamics ahead of its listing.

• Pertamina Geothermal Energy (PGEO IJ) priced its IPO at IDR875 per share to raise gross proceeds of IDR9.1 trillion (US$600 million). The shares will start trading tomorrow.
• We previously discussed the IPO in Pertamina Geothermal IPO: The Investment Case and Pertamina Geothermal IPO: Valuation Insights. 
• Peers have modestly re-rated and the IPO price continues to imply a discount to the median peer CY2023 EV/EBITDA multiple. Therefore, the IPO price remains attractive.

• GoTo (GOTO IJ)  announced last week that it is accelerating its profit targets and aims to achieve positive adjusted EBITDA by 4QFY2023, advanced by five quarters.
• The company also expects Group’s contribution margin to become positive within the first quarter of 2023 accelerated by four quarters compared to the company’s previous guidance.
• Having analyzed the company’s revenue and cost base, we think this is too much to ask for as aggressive cost cutting would lead to giving up future growth opportunities.

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. Alam Sutera Realty
2. China SCE
3. China Jinmao Holdings
4. Lifestyle International Holdings
5. Geely Auto

and more…

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
• Hopson Development

• Yesterday, Indonesia’s second largest coal mining business Adaro Energy (ADRO IJ) announced a buyback. This follows another buyback which ended in December 2022.
• The Sep21-Dec22 buyback bought back 1bn shares, but did not spend all the money allocated to the buyback. This new one might buy back a similar quantity.
• Looking at Real World Float is the right frame of reference. And the stock was at a recent low vs a Peer Basket. 

• Relatively newly formed, increased free float, dominant Shariah market share
• All 9 peer Shariah banks combined have less branches than BRIS
• 57% market share of Shariah lending, where growth is highest

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. Wynn Macau Ltd
2. Vedanta Resources
3. Softbank Group
4. Country Garden Holdings Co
5. China Hongqiao

and more…

• Bank Rakyat Indonesia (BBRI IJ) did not disappoint with a strong set of FY2022 results, which came in around  4% above expectations, driven by strong micro and expanding NIMS.
• The bank also saw improving credit costs and declining provisions, which helped to drive profits and returns close to pre-pandemic levels plus the bank continues its advance on digitalisation. 
• Bank Rakyat will drive growth through MSME lending, which now makes up 82.5% of loans, with micro and ultra-micro having significant upsides. Valuations are attractive on 2.1x FY2023 PBV.

• Blue Bird is an iconic brand in Indonesia, where consumers take a BlueBird not a taxi, much like taking a Gojek, and in taxi terms, it embodies trust and reliability. 
• The company had a tough time through COVID but is now firmly on a recovery track, with revenue per taxi in 4Q2022 20% above pre-pandemic levels, with more to come.
• Blue Bird (BIRD IJ) is a beneficiary of the tech winter in that ride-hailing companies are spending less on promotions, easing competition. Valuations are attractive in recovery.