Indonesia

• Startup enabler Y Combinator has unveiled the 33 Southeast Asian startups that have been included in its latest winter 2022 cohort.

• The number is almost doubled from the last batch and amounted to around 8% of the 414 startups that were funded by the accelerator in this cohort.

• As part of the accelerator program, Y Combinator will invest US$125,000 in seed capital for a 7% stake in each startup.

• Mitra Keluarga Karyasehat Tbk (MIKA IJ) booked a strong set of FY2021 results driven by both COVID treatments and the start of a recovery in its core base case business.
• The company is back on an expansion tack in 2022, with increased capex and new hospital openings plus an increasing focus on digital initiatives.
• Mitra Keluarga Karyasehat Tbk (MIKA IJ) remains a core proxy for the growing penetration of healthcare in Indonesia and valuations are attractive versus history.

• Cisarua Mountain Dairy (CMRY IJ) booked spectacular FY2021 results with +120% YoY growth in both dairy and consumer food plus better margins due to scale and product mix benefits.
• The company continues to spend aggressively on sales and promotions ahead of new capacity coming online which will help to sustain growth, whilst also expanding exposure to general trade. 
• Cisarua Mountain Dairy (CMRY IJ) looks like a multi-year growth story in the making with a strong handle on rising commodity prices and emphasis on growing share in UHT milk.

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 Jinmao Holdings
• CIFI Holdings
• Greenko Energy Holdings
• Honghua Group
• Soechi Lines
• Zhenro Properties

• The long-awaited GoTo IPO is upon us with a listing scheduled for 4th April after the deal was priced sensibly in the middle of the range at IDR338 per share. 
• Since this was only offered to local investors and the IPO only represents 4.35% of shares in issue pre-Green Shoe, we see the potential for strong support from local institutions.
• Valuations are challenging but GoTo represents the best proxy for the Indonesian digital economy given its broad and unique exposure to key verticals of on-demand, digital finance, and e-commerce. 

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.

• Lippo Karawaci
• Sunac China Holdings
• Vedanta Resources

• Prodia (PRDA IJ) released an exceptionally strong set of FY2021 results, driven partly by COVID testing but coupled by a pick-up in its core testing business and especially esoteric testing.
• It continues to see increasing tests per visit with revenue per visit increasing at the same time. Its digital strategy is working well further driving growth through an omnichannel approach.
• Prodia (PRDA IJ) continues to look dramatically undervalued versus its Indian diagnostic peers given its quality and growth prospects and remains our top Indonesian healthcare pick.

• Siloam International Hospitals (SILO IJ) held an analyst briefing recently to highlight the strong recovery of its base-case business, with very little contribution from COVID-related treatments by year-end.
• Revenues on a monthly basis have hit record highs in December and January, with increased efficiencies and improving profitability due to cost controls.
• Siloam International Hospitals (SILO IJ) remains an interesting recovery play but it has emerged even stronger from the pandemic and valuations are attractive versus peers and history. 

• Bukalapak (BUKA IJ) is rapidly broadening its exposure to a greater range of services, with the latest move increasing its exposure to gaming, a potential future cash cow. 
• We have already seen Bukalapak (BUKA IJ) making bold moves into digital banking through Allo Bank Indonesia and a direct commitment to online groceries through AlloFresh with Trans Retail Indonesia.
• We continue to focus on the improving fundamentals of Bukalapak (BUKA IJ) and its growing ecosystem and would use any short-term trading anomalies to accumulate the stock.

• GoTo (1379371D IJ) is the leading digital ecosystem in Southeast Asia. It has extended its book build for a $1.3 billion IPO to 24 March.
• In GoTo Gojek Tokopedia IPO: Valuation Insights, we noted that our valuation analysis suggests that the price range is aggressive and unattractive. 
• In this note, we compare GoTo vs Bukalapak (BUKA IJ), Grab (GRAB US) and Sea Ltd (SE US)‘s relevant businesses across GTV, take rates and segmental margins.   

• Bukalapak (Buka) raised US$1.5bn in Aug 2021 when it priced its IPO at the top end of its pricing range.
• Buka is an Indonesian e-commerce company. The company operates an online consumer-to-consumer (C2C) marketplace. It also operates Mitra Bukalapak (Mitra) which provides online-to-offline (O2O) services to MSMEs.
• The pre-IPO shareholders will be released from the lockup on 6th April 2022.

• Confidence matters
• Ahead of the industry
• Superior quality
• Generous upside potential

Reiterate BUY on BJBR with TP of IDR2,100 based on 16.6% FY22-24E average ROE, implying 1.4x FY22E P/BV. We see two key reasons to be more optimistic this year than the solid 2021 numbers suggest. First, asset mix and loan pricing power hold the potential for yield enhancement. Second, outstanding loan quality is likely to persist as economic recovery should spur healthy demand. We expect these factors to boost investors’ confidence, thus translating to stronger share price performance.

• Unwarranted premium
• Underutilized deposit franchise
• Fading superiority in quality
• Narrowing ROE gap with peers

Reiterate SELL on BBCA with TP of IDR6,400 based on 17.8% FY22-24E average ROE, implying 3.6x FY22E P/BV. Current premium valuation of 4.5x for the stock over peers’ 1.7x average reflects high expectations. However, we see a disconnect between BBCA’s fundamentals and premium valuation given its fading superiority in ROE, NPL and LLC, all of which are unlikely to show swift recovery.

• Testing business model
• Tough competition
• Margin expansion likely to stall
• Still benefitting from cleaner balance sheet

Reiterate BUY on BDMN with TP of IDR2,700 based on 6.0% FY22-24E average ROE, implying 0.6x FY22E P/BV. The collaboration with MUFG will continue to act as a growth driver for BDMN. While the new wholesale-funded lower-yield business model of the bank will still be tested over the medium term as competition in the sector is likely to intensify, we see upside to profitability from lower credit cost outlook.

• Equipped to seize future growth
• Flushed with liquidity
• Benefiting from improving quality
• More upside

Reiterate BUY on BMRI with TP of IDR9,500, based on 17.1% FY22-24E average ROE, implying 2.0x FY22E P/BV. We remain favourably biased towards playing recovery beneficiaries like BMRI. The bank has the expertise to balance expansion with strong risk control. Its capital base is robust, being cleanly structured and core equity-based, therefore being supportive of growth and with strong capacity to absorb credit risk.

• Time to start collecting
• Gaining market share
• Well-guarded quality
• ROE uptrend here to stay

Reiterate BUY on BBNI with TP of IDR9,600 based on 13.5% FY22-24E average ROE, implying 1.3x FY22E P/BV. Low funding cost and ample liquidity has enabled the bank to compete with bigger peers and gain 200bps loan market share since 2015. At the same time, BBNI is moving to mitigate risk and refocusing expansion into higher-quality sectors. Yet it is trading at only 1.1x FY22E P/BV, making BBNI one of the best value-growth combinations within our coverage.

• Advantages priced in
• Supported by micro lending
• Largest scope to absorb risk
• Higher liquidity needed

We upgrade BBRI to HOLD with TP at IDR4,600 based on 15.6% FY22-24E average ROE, implying 2.3x FY22E P/BV. The stickiness of its micro franchise and the steps taken to mitigate risk should limit the downside for earnings. Valuation is fair even after factoring in challenging near-term funding growth, margin, and asset-quality dynamics. This, in our opinion, leads to a balanced risk-return trade-off for the stock.

• Muted ROE expansion
• Sensitive to funding cost
• Credit cost to remain elevated
• In need of capital raising

We downgrade BBTN to HOLD with TP at IDR1,800 based on 11.8% FY22-24E average ROE, implying 0.8x FY22E P/BV. We think expansion in mortgages will remain limited by funding and capital constraints despite the resilient source of demand in the mid-low end housing segment. This results in a relatively flat medium-term ROE outlook. Hence, despite the discounted valuation, we see limited upside from current valuation.

• Superapp GoTo has filed for an IPO to list its shares on the Indonesian Stock Exchange to raise US$1.2bn at a market capitalisation of US$25.0bn.
• The company plans to use most of the proceeds on developing its businesses including Gojek, Tokopedia and fintech services.
• Our analysis on the company’s financials suggests the company has been burning cash to grow its business and may not be able to generate any profits in the near future.

• Matahari Department Store’s results marked a turning point in terms of profitability, and this year will see the company back in expansion mode, with a new strategy in place.
• Management is pushing hard to entrench its position in existing categories as well as pushing into new ones, with an omnichannel approach and new partnerships in place. 
• Matahari Department Store has the potential for a re-rating as it regains its place on the winning podium amongst Indonesian retailers in very reasonable valuations.

• Superapp GoTo (1379371D IJ) has filed for an IPO to list its shares on the Indonesian Stock Exchange to raise US$1.1-1.25bn at a valuation of about US$24-26bn.
• The company plans to use the proceeds to develop its business including for customer acquisition, product development and sales and marketing.
• Our SOTP valuation implies that GoTo’s shares are overvalued at the indicative IPO price range.

• GoTo (1379371D IJ) is the leading digital ecosystem in Southeast Asia. It seeking to raise up to $1.3 billion. Bookbuilding ends on 21 March.
• In GoTo Gojek Tokopedia IPO Initiation: Island Shopping, we noted that the fundamentals are mixed as the high growth is accompanied by ongoing losses and cash burn. 
• Our valuation analysis suggests that the price range is aggressive and unattractive. We would give the IPO a pass.