Indonesia

• Waaay back in June 2023, MUFG (8306 JP) and 92.7%-held Adira Dinamika (ADMF IJ) entered into SPAs with key shareholders to acquire an 80.6% stake in Mandala Multifinance (MFIN IJ).
• MFIN’s shareholders overwhelmingly approved the change of control at the 13th Feb EGM. OJK signing off was the next hurdle.
• The Tender Offer is now open, at the (expected) price of  IDR 3,297/share. The close of the Offer is the 21st August, with payment on the 28th August. 

• There is 1 constituent change for the LQ45 Index and 2 constituent changes for the IDX80 Index at the rebalance to be implemented at the close on 31 July.
• The largest passive inflows are expected in Amman Mineral Internasional (AMMN), Bank Rakyat Indonesia (BBRI), Bank Central Asia (BBCA), Bank Mandiri Persero (BMRI) and Jasa Marga (Persero) (JSMR). 
• The adds have moved higher over the recent past and are near their highs while the deletes have dropped over the last few years and are trading near their lows.

• Arwana Citramulia (ARNA IJ) is Indonesia’s leading ceramic tile producer catering to the mass market but expanding into the higher-end porcelain tile space competing with Chinese imports at lower costs.
• The recent move by the government to extend the gas subsidy for the industry bodes well for Arwana given the strides it has already made in reducing gas consumption.
• Arwana continues to expand its capacity, especially in higher-margin porcelain tiles, which will help to drive future growth and profitability. Valuations are attractive as capacity-driven growth kicks in.

• Ciputra Development (CTRA IJ) continued to book strong marketing sales in 1H2024 and looks well on track to meet or beat its FY2024E guidance with a strong pipeline of projects.
• CTRA has the most geographically diversified portfolios in the sector and operates an asset-light joint operating scheme strategy allowing for faster expansion and a good portion of recurrent rental income. 
• The VAT exemption program looks set to continue to drive residential demand in 2H2024 with CTRA riding the affordability wave having also repositioned its target market. 

• DCI Indonesia (DCII IJ) is Indonesia’s leading operator of Tier 4 data centres, which require the highest operational standards, with its main business in co-location services.
• The company has a long track record of growth in both sales and profits, making it more than a concept, with a well-thought-out expansion at its three existing data centres.
• DCI Indonesia is hard to justify on current valuations but has a strong track record on execution with a high pedigree management team and customer base, with backing from Salim.

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

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 Vanke
• PT Pertamina (Persero)
• Sunny Optical Technology Group

• Barito Pacific (BRPT IJ)‘s 64.7% stake in Barito Renewables Energy (BREN IJ) (now Indonesia’s largest company by market cap), is worth 8x its market cap. That’s unsustainable.
• Preceding my comments on the Barito complex are the current setup/unwind tables for Asia-Pacific Holdcos.
• These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.

• Selamat Sempurna is one of the most interesting industrial companies in Indonesia, with a leading market share in filters for auto and heavy equipment markets in Indonesia and overseas.
• 1Q2024 was impacted by a seasonal slowdow ahead of Lebaran and a decline in sales to Russia, offset by strong US sales. Management remains confident in the outlook for FY2024.
• Selamat Sempurna will continue to benefit from growth in the filter replacement market for both auto and heavy equipment markets and already has exposure to EVs. Valuations are attractive. 

• PT Metrodata Electronics (MTDL IJ) saw a strong rebound in 1Q2024 for its distribution business, especially for telco products, which partially offset the slower growth in solutions & consulting. 
• Solutions&consulting saw slow growth due to some delays over projects due to political uncertainty ahead of the election but it did have the support of recurrent income from software.
• PT Metrodata Electronics should see a recovery in solutions & consulting in 2H2024, with increasing demand from AI-related projects, which will further drive future growth. Valuations remain attractive.