Indonesia

• Superapp GoTo (GOTO IJ) made its public debut on the Indonesian Stock Exchange on 11th April. The company set the final IPO price at IDR338 per share.  
• GoTo’s shares surged nearly 23% to IDR416 a piece on the open, boosting the company’s market cap to more than IDR497trn.
• GoTo’s share price has continued to slide and our SOTP valuation suggests that there is further downside.

• The review period for the MSCI May 2022 SAIR started yesterday. As of the close on 15 April, we see 45 potential adds and 65 potential deletions for Asia.
• At a country level, the most changes are in China, while the largest net change is expected in Japan (16 deletions) and China (10 deletions). Indonesia could have five inclusions.
• The largest potential inclusions are Powerchip Semiconductor Manufacturing Corp, Tata Elxsi Ltd, Orient Overseas International, Pop Mart International Group Limited, Eva Airways, Jindal Steel & Power and China Airlines.

The Asia HY Trade Book for the month of April includes a summary of our recommendations, as well as our high-conviction ideas. The report also features relative-value charts and lists of the bonds in the Lucror Asia HY index.

• Bukalapak’s (BUKA IJ) results saw very strong growth from its Mitra Business, with a much slower marketplace but we see the latter picking up as its specialty strategy is developed. 
• The launch of both Allo Bank Indonesia and Allo Fresh over the next two quarters should provide some excitement, whilst its gaming marketplace Itemku is already profitable. 
• Take rates should improve in 2022 as Bukalapak (BUKA IJ) offers a broadening array of services across its Mitra and marketplace verticals. Valuations look attractive versus peers. 

• Ace Hardware Indonesia (ACES IJ) recently released its FY2021 results which reflected the intermittent lockdowns on the top line but cost controls meant the bottom line finish almost flat.
• The company benefitted from its regional diversity during the pandemic as not all cities were affected in the same way but its exposure to malls is quite high.
• Ace Hardware will resume its expansion plans in 2022 with plans for 15 new stores plus it will be a big beneficiary of easing mobility, given low online sales.

We are initiating coverage on PT Pertamina (Persero), a vertically integrated oil & gas (O&G) company in Indonesia.

We view Pertamina as “Low Risk” on our LARA scale, primarily driven by the company’s strategic importance to Indonesia and its status as a state-owned enterprise (100% owned by the government). Pertamina is the state holdco for Indonesia’s O&G assets, and the government’s vehicle for managing retail fuel prices. We like the company’s vertically integrated operations and large scale. It owns most of Indonesia’s refineries, fuel stations and gas pipelines. Pertamina’s O&G production is expected to rise towards 1,000 mboepd in FY 2022 (FY 2020: 863 mboepd), following the takeover of the Rokan block in November 2021. Credit metrics are healthy, with Net Debt/EBITDA of slightly over 1x. Negatively, the government requires Pertamina to sell petroleum products at subsidised prices. As a result, the company will incur losses if Brent exceeds USD 60/bbl. While the government subsidises the revenue shortfall, these subsidies are paid in arrears, which impacts the timing of cash inflows.

Our Credit Bias is “Stable”. Rising O&G prices will likely support the upstream segment, and help offset the regulated low selling prices of the downstream segment.

We recommend to “Hold” the PERTIJ notes.

• Mitra Adiperkasa’s results this week confirm a strong recovery is in place, with improving margins and growth across all verticals and a return to profitability for FY2021. 
• Growth was evident in both online and offline channels as the company’s unified retail strategy continues to yield strong results plus inventory levels improved dramatically QoQ in 4Q2021.
• Mitra Adiperkasa (MAPI IJ) remains a key proxy for the retail recovery in Indonesia and has remoulded itself to changing consumer behaviour. Valuations remain attractive versus historical levels. 

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. China Jinmao Holdings
2. Guangzhou R&F Properties
3. Sunac China Holdings
4. Greenland Hong Kong Holdings
5. Evergrande

and more…

For our next Corporate Webinar we are glad to welcome Arwana Citramulia (ARNA IJ) CFO & Corporate Secretary, Rudy Sujanto.

In the upcoming webinar, Rudy will share a short company presentation, after which he will engage in a fireside chat with Smartkarma Analyst, Angus Mackintosh. A live Q&A session will follow.

The Corporate Webinar will be hosted on Tuesday, 26 April 2022, 17:00 SGT.

• Launched 30 new SKUs during COVID-19 in multiple areas of health that can transform the company from herbal remedies into a bigger conglomerate of health providers. 
• PE firm that backed SIDO in the earlier years reduced its holdings but it should not be seen as a vote of negative confidence in the company. 
• Sido Muncul (SIDO IJ) can be compared to Blackmores Ltd (BKL AU) which has a wide range of health products but trades at a 100% premium to SIDO. 

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
• West China Cement

• GoTo (GOTO IJ) lists on the IDX tomorrow. The IDX has GoTo (GOTO IJ)‘s free float at 66% which would mean IDX30, LQ45 and IDX80 Fast Entry index inclusion. 
• If included in the indices at a free float of 66%, GoTo (GOTO IJ) will have a weight of 13.55% in the IDX30 Index and 12.12% in the LQ45 Index.
• Passive trackers will then need to buy 13.2% of the real float on the stock. Active funds will also buy the stock as it would appear in their benchmarks.

• This is the last trading week before the review period for the MSCI May SAIR commences next week. This is a short week with a lot of markets closed Friday.
• We see 38 potential adds and 63 potential deletes across Asia. Most changes are in China, with the most net deletions in Japan and China.
• The largest potential inclusions are Powerchip Semiconductor Manufacturing, Orient Overseas International, Pop Mart International, Jindal Steel & Power, Eva Airways, Emtek, China Airlines, Sumber Alfaria Trijaya and KT Corp.

• GoTo was initially aiming to raise around US$1.25bn from a local listing. It managed to raise US$960m after downsizing its deal and pricing close to the midpoint.
• GoTo, is an Indonesian holding company, was formed in May 2021 as a result of a merger between Gojek, leading player in ride hailing, and Tokopedia, leading e-commerce player.
• In this note, we’ll talk about the trading dynamics of the deal.

• Indonesia’s leading steel pipe company PT SPINDO published FY21 results earlier this week, crystallizing a year of record profitability with EBITDA doubling and NPAT increasing 2.8x.
• The heightened profitability is attributable to a combination of high steel prices making room for wider margins (in both percentage and absolute terms) combined with an improving product mix and unwavering demand landscape.
• We note that EPS of just IDR 5.6 in 4Q21 was well below the 9M21 run rate of IDR 62.0 and was due to several unexpected one-time expenses and provisioning for a possible tax expense

• Indonesia’s leading UHT milk and carton tea producer Ultrajaya Milk Industry booked a strong set of FY2021 results, with a convincing recovery in 4Q2021, which should carry through into FY2022. 
• The company continues to increase raw milk sourcing locally, which will alleviate rising global prices, and it is expanding its distribution network and new products to drive demand. 
• Ultrajaya is a market leader in its main product categories, yet trades at half the valuation of recently listed Cisarua Mountain Dairy, which looks excessive with potential upside to valuation.

ASRI’s FY 2021 results were much better than expected. Marketing sales, revenue and earnings surged, despite the impact of the COVID-19 Delta variant in Q3. FCF turned positive. The company appears to have benefited from the pandemic thanks to soaring demand for landed houses, similar to Lippo Karawaci. While ASRI’s financial risk profile has improved significantly from FYE 2020, the company remains levered. Positively, liquidity appears to be adequate for the next 12 months.

• Indonesia’s reopening has happened for some time but Jasa Marga (Persero) (JSMR IJ) share price has not moved much. 
• On-The-Ground sources told that the traffic is back, especially in Jakarta where Jasa Marga has the most toll roads. 
• Pre-COVID it was trading at 2-3x PBR and now it’s only 1.35x PBR, premium to Bluebird but has a bigger market capitalization that makes JSMR more investable. 

This month, we undertake a study of movements in the Lucror Analytics Risk Assessment (LARA) for issuers in the Lucror Asia HY index over the last five years.

The Asia Monthly focuses on providing updates on recent events, information on new issues and spread movements, as well as summarising our top picks, and discussing specific areas of interest in the “In-Focus” section. The Asia Monthly is intended to broaden investors’ understanding of the Asian USD high-yield market.

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.

• Japfa Comfeed Indonesia
• Jingrui Holdings
• Tata Steel Thailand
• Times China