Indonesia

• GoTo Gojek Tokopedia together with Alibaba Group Holding announced a strategic partnership that locks the latter in for the next 5-years, with GOTO committing to utilising Alibaba Cloud.
• This move lifts a significant share price overhang and should provide GOTO with both cost benefits and AI capabilities cementing and aligning the interests of the two companies. 
• GoTo Gojek Tokopedia (GOTO IJ) continues to move the needle on its progress towards adjusted EBITDA breakeven by 4Q2024 led by product-led initiatives. 

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.

• Gajah Tunggal

• Adaro Energy (ADRO IJ) has announced that it intends to spin off its thermal coal related assets under Adaro Andalan Indonesia, allowing it to focus purely on its sustainable businesses. 
• The move will potentially allow it to realise a higher valuation for its pure coal assets while paving the way for access to sustainable financing for its renewable businesses. 
• This will help the group accelerate the progress towards having more than 50% of its revenues from non-coal businesses by 2023. Adaro Energy (ADRO IJ) can trade at higher multiples.

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
• Vedanta Resources
• Yankuang Energy Group

• Sumber Alfaria Trijaya (AMRT IJ) booked a solid set of 1H2024 results despite a seasonally slower quarter with margins holding up well and market share improving versus competition.
• Outlet expansion for Alfamart is running ahead of guidance, with Alfamidi growing in line and a more measured expansion for Lawson, as it beds down last year’s aggressive rollout. 
• Outside Java is seeing the strongest growth in sales and the focus on expansion of DCs and stores plus Alfamart is increasing the number of chillers. Valuations reflecting growth prospects.

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
• Greentown China

• Indosat (ISAT IJ) remains optimistic about the outlook for its core mobile business as it expands into rural areas and simultaneously increases ARPUs, with the growing use of AI tools. 
• The company also seeks to become an AI Native Telco whilst also pursuing a separate AI business through its tie-up with NVIDIA, and building a data centre edge through BDx.
• Indosat Tbk PT (ISAT IJ) is also optimistic about its home broadband business projecting 2m subscribers by 2028. Valuations remain attractive relative to peers, especially given ISAT’s growth outlook. 

• Negara value attributes, its growth potential captured by its low PEG ratio and its improving efficiency ratio all stand out; pre- and post-provision returns edged higher, with high NPL coverage
• We are also positive on Mandiri for its quality attributes, its premium returns, and its strong credit quality metrics; Mandiri has the second-best efficiency ratio after mega-cap Bank Central Asia
• Bank Mega has seen credit quality stabilise in 2Q24, but its returns are under pressure, with the efficiency ratio worsening steadily; cost of risk is likely to increase going forward

• Indo Tambangraya Megah (ITMG IJ) recently announced an underwhelming 1228 Rph/share dividend for H1 FY24 (implying a 9% annualized yield).
• Core profits for H1 2024 were 157 mn USD ( excluding 21 mn USD forex and a six mn USD write-off). We are confident of sequential improvement in earnings. 
• The company has deep value: 43% of its market cap is in cash, its PE is 5.7x, and its yield, based on a 65% payout ratio, is 11%.

• Erajaya Swasembada (ERAA IJ) booked a solid set of 1H2024 results driven by the availability of affordable handsets, with volumes driving growth despite lower prices. 
• The company’s Erablue consumer electronics JV with Mobile World Investment (MWG VN) now has 61 outlets and is set to break even in 2024, with 80 stores expected by year-end. 
• The other growth drivers will come from private-label accessories and its Grand Lucky supermarket expansion. Valuations look attractive will the company trading on a 6x forward PER multiple.

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.

• Greentown China
• Medco Energi

• Ace Hardware Indonesia has been rebranded to Aspirasi Hidup Indonesia after the franchise agreement with ACE US was not renewed. Given ACES’s long-standing independence, we see this as an opportunity. 
• The new names for the company will not be the brand names for the stores and Ace Hardware products are a tiny portion of the Indonesian company’s SKUs anyway.
• Concerns over the separation look overblown with ACES seeing a strong YTD performance above guidance with valuations looking attractive after recent share price weakness, with new store rollout ongoing.

• Bank Negara Indonesia (BBNI IJ) presented an optimistic picture from 2Q2024, with management upgrading the loan growth forecast range for the year by a notch with an improving liquidity backdrop.
• Credit costs remain low with the SME segment the only segment with lingering problems from vintage pre-2022 loans but otherwise, LAR are in decline with room to cut coverage ratios.
• BNI made a big fanfare of the launch of its brand new “wondr” banking app which is already off to a strong start with more active users. Valuations are attractive. 

• Bank Mandiri’s recent results reflect the success of the bank’s strategy to grow higher-yielding loans and its strength in corporate, commercial, and consumer loans, with micro showing slower growth.
• The bank funding base remains solid with strong CASA growth, helping it to maintain NIMs. Mandiri’s mobile banking under Livin’ continues to drive its transactional banking, loan and deposit growth.
• Bank Mandiri‘s upgrade to its loan growth projects speaks volumes about its confidence. With credit costs at less than 1% and ample liquidity, the bank is well-positioned for growth.