Indonesia

• PT Trimegah Bangun Persada Tbk (Harita Nickel) (2230010D IJ) priced its IPO at IDR1,250 per share to raise gross proceeds of US$660 million. The shares will start trading tomorrow.
• We previously discussed the IPO in Harita Nickel IPO: The Bull Case, Harita Nickel IPO: The Bear Case and Harita Nickel IPO: Valuation Insights.  
• Peers have re-rated and the IPO price continues to imply a discount to the median peer CY2023 P/E multiple. Therefore, the IPO price remains attractive.

• PT Trimegah Bangun Persada Tbk (Harita Nickel) (2230010D IJ) raised around US$660m 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 trading dynamics and valuation.

• ITMG went ex-dividend yesterday, paying out a whopping 16.8% (6416 Rph/share) final dividend in addition to the interim dividend of 10.8% (4128 Rph/share), bringing the FY22 yield to >27%.
• After payment of the 474 mn USD final dividend and 223 mn USD tax liability, we estimate the company will have >1.0 bn USD net cash (~33% mkt cap). 
• At current coal prices (NEX 190 USD/ton), the Indonesian coal producer trades on a 20% dividend yield for FY23 assuming a 65% dividend payout ratio (in line with historical payout).

• Sumber Alfaria Trijaya (AMRT IJ) remains one of the most interesting proxies for retail spending in Indonesia, with a nationwide Alfamart footprint in the most popular mini-market format. 
• The company’s latest numbers confirm the momentum behind and the recovery with improving margins. Alfamart expanded its store numbers aggressively in FY2022 and will continue into 2023. 
• Sumber Alfaria Trijaya will push aggressively in expanding its Lawson convenience stores this year on top of its mini-market expansion as a future growth driver. 

• Bundamedik Tbk PT (BMHS IJ) reported 15% decline in revenue in 2022. However, non-COVID business recorded revenue growth of 17%. Contribution of core business to total revenue increased to 92%.
• All the key operating parameters improved significantly from pre-COVID level. Occupancy rate of the existing hospitals improved to 66% in 2022 from 58% in 2021. New hospitals recorded 71% occupancy.
• The company aims to achieve revenue growth of ~17% YoY and EBITDA growth of 23–24% YoY in 2023, supported by the significant development of the company’s core business.

• PT Surya Citra Media Tbk (SCMA IJ) had an exciting 2022, with a ramp-up in new audience share-winning original content along with the boost from the Word Cup rights. 
• Both SCTV and IVM gained significant audience share in 2022, and Vidio led the charge on OTT driven by killer content, finishing the year with 5m paying subscribers. 
• Profitability was hit by a sharp rise in production costs and investment in Vidio but we expect significant improvement in 2023. Valuations are attractive with SCMA on 12x FY2023E PER. 

• PT Metrodata Electronics had a strong finish to the year with FY2022 net profit growth of +14.1% YoY driven by both its ICT distribution and Solutions & Consulting (S&C) businesses.
• The S&C business continues to thrive on Indonesia’s ongoing digitalisation, especially in the financial sector with the advent of digital banking but also in the telecom and oil&gas sectors. 
• PT Metrodata sees a slower outlook for the consumer outlook but strong momentum behind commercial sales and S&C as digitalisation continues, and new growth from the Public Sector. Valuations attractive.

• Indocement Tunggal Prakarsa (INTP IJ) released solid FY2022 results despite inclement conditions for the industry, as it utilised more low CV coal and alternative fuels and raised prices.
• The company now has much better access to cheaper DMO coal, which accounted for 60% of requirements in 2H2022, which provides a lower and more sustainable cost base for 2023.
• Indocement has continued to aggressively expand its distribution footprint across Indonesia in 2022, allowing it to access regional areas of demand. Valuations are attractive versus history.

Medco Energi’s FY 2022 results were strong, in line with expectations. This was supported by increased production following the ConocoPhillips Indonesia acquisition in March, as well as the high oil-price environment. Moreover, copper and gold mining JV AMNT has started to mature, generating healthy dividends. Leverage improved to a healthy level, with Debt/EBITDA at 2.1x and Net Debt/EBITDA at 1.6x.

We expect Medco’s earnings to increase slightly in FY 2023, assuming oil prices are maintained at current levels, as ASP from its fixed-price contracts is likely to rise from a low base. In addition, the company should deleverage further going forward, supported by strong OCF generation and debt repayments. Management said that Medco intends to acquire more assets in future, although there are no imminent plans currently.

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
• Country Garden Holdings Co
• Gajah Tunggal
• NagaCorp Ltd
• Yuexiu Property

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.

• Merdeka Battery Materials (2012725D IJ)  is looking to raise around US$580m in its Indonesian IPO.
• It has the largest resource globally in terms of contained nickel at the Konawe Nickel Mine (the SCM Mine), according to Wood Mackenzie
• In this note, we undertake a quick peer comparison, talk about our earnings assumptions, and share our thoughts on valuation.

Lippo Karawaci’s (LPKR) FY 2022 results were weak as expected. While the post-pandemic recovery has benefited the company’s malls and hotels, Siloam Hospitals (the largest contributor to revenue and earnings) no longer enjoyed the boost from COVID-19-related procedures. The second-largest segment, Real Estate, was weighed down by a very challenging operating environment, with a sharp increase in mortgage rates impacting demand. The financial risk profile continued to be weak. The only positives are LPKR’s adequate liquidity and the good pro-forma debt maturity profile.

• Merdeka Battery Materials (2012725D IJ) is looking to raise around US$580m in its Indonesian IPO.
• It has the largest resource globally in terms of contained nickel at the Konawe Nickel Mine (the SCM Mine), according to Wood Mackenzie. 
• MBM aims to become a vertically integrated battery materials player. Through a series of acquisitions, it owns one of the world’s largest nickel mines. 

• Siloam International Hospitals (SILO IJ) is coming out of the COVID period with guns blazing as base case revenues continue to grow, surpassing pre-pandemic levels and with margins improving. 
• 2022 was a year of two halves and 2H2022 saw a clear resumption of base case patient activity, Siloam also saw the benefits of unified pricing and improved efficiencies.
• Siloam looks well-positioned to grow its base case revenues further in the coming year, with a healthy cost base and more beneficial pricing. Valuations are attractive on 9.4x FY2023E EV/EBITDA.

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. Japfa Comfeed Indonesia
2. Yankuang Energy Group
3. Anton Oilfield
4. China Jinmao Holdings
5. Lifestyle International Holdings

and more…

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

Pakuwon Jati’s (PWON) FY 2022 results were acceptable. This was despite the company missing its pre-sales and earnings targets, given the sharp deterioration in the operating environment in H2 on the back of a steep rise in interest rates. Growth in y-o-y revenue, earnings and cash-flow was expected, given the COVID-19 lockdowns in FY 2021. Positively, the balance sheet remains in great shape, with net cash and no short-term debt. The company has the best credit profile among the companies under our Indonesian real estate coverage, and is the only one that has not carried out any bond tender offer below par. PWON has the best quality portfolio of retail assets and the highest portion of recurrent rental income among peers.

• Bukalapak (BUKA IJ) may have disappointed some in missing on TPV but that is unimportant when it executes convincingly on improving take rates for both marketplace and its Mitra business. 
• The number of Mitra Bukalapak partners has increased to over 16m, with active Mitras taking increasing services and higher take rate products from Buka’s marketplace and specialty stores.
• Bukalapak beat on revenues and adjusted EBITDA and its guidance for adjusted EBITDA-positive by 4Q2023, with continuing improvements to take rates driving improvements. Valuations are attractive at <1x FY2024E EV/Sales.

• Cisarua Mountain Dairy (CMRY IJ) is one of the most interesting consumer staples players in Indonesia, with a leading position in dairy and specifically yoghurt, and increasingly premium consumer foods.
• 4Q2022 saw a slowdown in sales growth as consumers returned to the mall due to inflationary pressure but December saw a sharp recovery and 2023 should see continued recovery.
• Flavoured UHT Milk and a new Yoghurt stick aimed at the mass market will help to fuel growth and raw material cost pressures have started to alleviate. Valuations are attractive. 

• Prodia (PRDA IJ) FY2022 results saw declines in revenues and profits but from a COVID-high base and the numbers are now well-above 2019, with strong prospects ahead.
• The company is seeing a return to routine testing with tests per visit back to pre-COVID and revenues per visit also rising strongly, with a diverse customer base providing comfort.
• Prodia also has an increasing digital angle with the rising use of its app and a new app that tracks patients’ health just launched. Prodia (PRDA IJ) is too cheap.

• We rate Bank Mandiri as our top pick with its attractive valuations including PEG ratio relative to solid returns and strong balance sheet – including liquidity –  metrics
• We also continue to favour Bank Negara, but it is our secondary value pick to Mandiri; Bank Central Asia, albeit fully valued, has impressive liquidity and return metrics
• Bank Rakyat had mixed returns in 4Q22, with pre-provision returns declining sharply QoQ although cost of risk continued to improve, due to better credit quality, thereby supporting post-provision profits

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
• Meituan

• Mitra Adiperkasa continus to execute on its unified retail model that utilises multiple channels to serve customers but offline activity has picked up most, driving a very strong 4Q2022. 
• The company continues to see improving margins across the board as sales growth has picked up across all segments. Online sales also remained relevant at 9% of sales in 2022.
• Mitra Adiperkasa continues to recover, utilising its MAPCLUB members to drive sales through more effective targeted promotions and efficiencies. Valuations are attractive versus historical levels.

• Indonesian insurtech startup Qoala announced that it has raised US$7.5 million in a series B extension round led by Europe’s responsAbility Investments.
• Existing investors Eurazeo and Indogen as well as new investor AppWorks also participated in the round.
• The startup declined to comment on its valuation, but VentureCap Insights currently pegs it at US$310 million following the fundraise.

• Telekomunikasi Indonesia (TLKM IJ) results reflect a company increasingly digital in nature with legacy services fading away and an increasing focus on building both quality infrastructure and subscribers. 
• Despite losing subscribers last year, customer data consumption picked up and the ARPUs also improved reflecting a more profitable subscriber base. Indihome continues to see growth in its customer base.
• Telkom continues to strengthen its presence in the cloud business and data centres as future growth drivers. Valuations are attractive versus historical levels with strong growth prospects ahead. 

• AKR Corporindo (AKRA IJ) booked an impressive set of numbers significantly above consensus with net profit increasing +117% YoY driven by strong performance across all segments.
• Trading & Distribution will be driven by both the demand for petroleum products together with chemicals, especially from the increasing number of smelters in Indonesia, both for copper and nickel.
• JIIPE industrial estate booked 44.5 ha of sales, above guidance, with expectations for 70-75 hectares of land sales this year. Valuations are significantly below the historical average and consensus low.

• Earnings fall 80% YoY on slow revenue recognition, higher interest expense and FX loss. 1H18 presales momentum remains strong.
• TP lowered to IDR2,000, valuations look undemanding.
• With a vast and low cost landbank centred on its BSD City township, BSDE offers attractive exposure to Indonesia’s long term growth in property demand, especially in the wealthy Greater Jakarta region.

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.

• ENN Natural Gas
• Japfa Comfeed Indonesia
• Vedanta Resources