Indonesia

• Bukalapak released its 1Q2024 results this week with some palpable relief as it booked its first adjusted EBITDA but underlying revenue growth remains strong, especially for its O2O business. 
• The company saw take rates improve for both its Mitra O2O business and its marketplace businesses, helping to drive revenue growth. Costs were also reduced allowing for positive contribution margins. 
• Bukalapak is expected to see sustainable profitability accompanied by revenue growth, with the marketplace recovering with improving product mix. BUKA’S “orphan” cash pile remains an issue but valuations are attractive.

• Bank Negara stands out versus its peers for its value attributes, its attractive PEG ratio, and its improving pre- and post-provision returns with top NPL coverage relative to its peers
• Bank Mandiri remains a buy for its quality attributes, its premium returns, and its well-controlled CoR; Mandiri has a far better valuations-to-returns mix than mega-cap BCA 
• Bank Rakyat comes off the sell list; it registered improved pre-provision returns in 1Q24, and although cost of risk worsened, post-provision returns were maintained along with its NPL coverage ratio

• • The work-over programme has started with the first two work-overs having added a total of ~40 bbl/d.
• The third work-over was not completed as damaged equipment was encountered downhole.
• • The second tranche of work-overs will start in May.

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
• Melco Resorts and Entertainment (Philippines)
• PT Pertamina (Persero)

• Astra International (ASII IJ) just released 1Q2024 results, which reflected the softer auto and heavy equipment markets, although buoyed by better earnings for its finance arm, 
• The company’s headline net profit was down -14% YoY but stripping out value adjustments was only down -5% YoY, with management optimistic over the longer term. 
• Astra continues to mirror the Indonesian economy, with its latest investment in geothermal but its nickel businesses also growing. Valuations attractive on 6.6x FY2024E PER and a 7.2% dividend yield. 

• Bank Negara Indonesia (BBNI IJ) booked a solid set of 1Q2024 results driven by +9.6% YoY growth in loans, despite being hampered by higher cost of funds amid tighter liquidity.
• Loan growth was driven by corporate lending, with corporate SOE lending showing the strongest growth and consumer loans. Funding was driven by CASA growth which limited the squeeze on NIMs. 
• Bank Negara Indonesia booked strong growth in fee income and a reduction in provisions which helped to offset the margin squeeze. Valuations remain attractive on 1.2x FY2024E PBV.

• BFI Finance Indonesia (BFIN IJ) booked a solid set of 1Q2024 numbers with improved QoQ bookings, although with some concerns over challenging market conditions slowing the recovery.
• The NPF ratio saw an ongoing improvement, although the cost of capital increased due to higher write-offs from last year’s bookings. Revenue declined due to a shift to lower-risk products. 
• The outlook for BFIN in 2H2024 looks more positive, with the company shifting back to higher-return products and with lower expected credit costs. Valuations are appealing on 1.5x PBV.

• Siloam International Hospitals booked a solid set of 1Q2024 results, with sustained QoQ improvements in revenues, EBITDA, and profits, stripping out a one-off write-down for hospitals under development. 
• The company also saw strong improvements in operational metrics including inpatient and outpatient days, with especially strong performance in March due to a dengue epidemic, which also diluted patient intensity. 
• Siloam International Hospitals saw continuing strength in more complex treatments, as it focused on raising clinical acuity in areas such as transplants and cardiology. Valuations remain attractive relative to peers.

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
• Greentown China
• Medco Energi
• Yankuang Energy Group

• Bank Central Asia (BBCA IJ) surprised with a strong set of 1Q2024 numbers driven by unseasonably strong loan growth coupled with continuing growth in CASA, helping to underpin NIMs. 
• Loan growth was driven by corporate loans with investment loans outpacing working capital loans together with SME loans and consumer loans, especially mortgages, autos, and personal loans. 
• Digital banking initiatives drove customer numbers and transactions, whilst improving operating efficiencies. Credit costs continue to come down with falling loans at risk. Valuations remain high but credentials remain intact. 

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 Oil And Gas
• Continuum Green Energy
• Indika Energy

• There are 2 constituent changes for the LQ45 Index and 6 constituent changes for the IDX80 Index at the rebalance to be implemented at the close on 30 April.
• The largest passive inflows are expected in Amman Mineral Internasional (AMMN IJ), Indosat Tbk PT (ISAT IJ), Bank Rakyat Indonesia (BBRI IJ) and Merdeka Copper Gold Tbk PT (MDKA IJ). 
• With only 4 days to implementation, there could be relatively big moves on stocks that have large flow/impact from passive fund trading.

Indika Energy has launched a tender offer for its USD 8.25% 2025 notes, with USD 534 mn outstanding. For each USD 1,000 in principal, the tender consideration is USD 962.5 and early tender consideration is USD 50, leading to a total consideration of USD 1,012.5. Indika is concurrently launching a USD 144A/RegS offering. Holders of the 8.25% ’25s may request to receive priority allocation on the new notes.

We view initial price talk of 8.875% as attractive, given the company’s robust credit profile and improving debt maturity profile.

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.

• Pertamina Geothermal Energy PT
• Vedanta Resources

• Medikaloka Hermina (HEAL IJ) booked a strong recovery in revenues and profits in FY2023 driven by rapidly rising inpatient and outpatient volume growth with JKN patient share rising. 
• The company also saw significant improvements in working capital in 2023 and will step up its capex and hospital expansion in FY2024E helping to drive growth. 
• Medikaloka Hermina is differentiated by its women & children specialisation, higher JKN exposure, and its doctor partnership model. It trades at a discount to peers with higher growth expectations. 

• PT Avia Avian (AVIA IJ) saw a pronounced pick up in sales in 4Q2023 and the ongoing benefit of lower raw material prices boosted margins to 5-year highs. 
• The company expanded its distribution in 2023 and will continue in 2024, which coupled with new product launches, especially of economic products, should help to drive higher growth in 2024. 
• PT Avia Avian continues to drive its express service, which also helps to push new product growth. Its market leadership and track record justify valuations with further support from dividends.