Indonesia

4Q21 beats, but FY22 outlook moderates

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
• Jingrui Holdings
• Tata Motors ADR

Solid achievement in 2021

• Astra International (ASII IJ) FY2021 results reflect a rapid recovery in its core auto business plus commodity-related businesses, with +96% YoY net profit growth stripping out Bank Permata (BNLI IJ). 
• The auto and related finance businesses should continue to perform well in 2022, with government luxury tax stimulus measures in place plus commodity prices will support United Tractors’ performance.  
• Astra International (ASII IJ) remains a top pick for the economic recovery in Indonesia plus the company continues to look for investment opportunities to redeploy funds raised from Permata sales.

• Indosat (ISAT IJ)‘s recent results reflect a company going through a positive transition with sales up by +12.4% and EBITDA up +21.4% suggesting a turnaround in the making.
• The company’s acquisition of Hutchison’s 3 looks astute, removing an aggressive competitor, propelling into the number two slot, as well as providing potential operational and scale-related synergies. 
• 2022 will be the company’s year of transition, with higher capex to realised synergies and keep improving the network quality. Valuations are appealing for long-term investors. 

• 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.
• GoTo raised more than US$1.3bn in its pre-IPO funding which was reported in November 2021, see here.  Valuation was said to be between  US$28.5-30.0bn.
• The company had already announced that it would look to undertake a dual listing in Indonesia and the US.

• Kalbe Farma (KLBF IJ) released a reassuring set of results with sales growing +13.6% and net profit by +12.5% in 2021, with growth coming from prescription drugs and distribution
• 2022 should see growth picking up across all of its divisions with recovery for consumer health and nutritionals plus its digital strategies are starting to make a difference. 
• Kalbe Farma trades in 22.8x FY22E PER and 21.0x FY23E PER versus its 5-year average forward PER of 26.3x forward PER, making it look attractive at current levels. 

• Fazz Financial Group is looking to raise a series C funding round this year, and it has already drawn the interest of several “top-tier US tech investors.”
• The Southeast Asian fintech firm also said that its monthly revenue jumped 2x to US$2.6 million in December 2021
• Its monthly transactions also hit over US$800 million, a threefold increase from the same period the previous year.

Despite slow in January, February operationals should be higher

• BFI Finance Indonesia (BFIN IJ) released an impressive set of FY2021 results, as new financing picked up significantly and funding and credit costs declined in 4Q2021.
• Management is optimistic on the outlook for new financing in 2022 plus the potential for significant tailwinds from the association with GoTo plus inorganic growth opportunities. 
• BFI Finance Indonesia trades on 2.2x FY22E PBV with a forecast ROE of 16.2%, above its 5-year average PBV but it deserves a re-rating given its association with GoTo.

January 2022 SSSG: Remain negative

• XL Axiata (EXCL IJ) continues to see strong growth in data revenues and traffic with data -pricing improving in 4Q2021 and consumers taking more.
• The company continues to stress its aim to be the number one convergent operator and the successful completion of the Link Net (LINK IJ) acquisition accelerates this move.
• XL Axiata continues to raise data prices and will start to see synergies from Link Net from 3Q2022, including potential cost and revenue benefits. Valuations are attractive. 

• AKR Corporindo (AKRA IJ) paints an optimistic finish to 2021, with indications of +20-30% QoQ growth for both chemical and fuel distribution in 4Q2021.
• The outlook for FY2022 looks equally promising for the distribution business, with a ramp-up of retail fuel distribution plus a strong pipeline of demand for its JIIPE industrial estate.
• AKR Corporindo (AKRA IJ) remains an interesting industrial proxy for the recovery of the overall Indonesian economy trading at a significant discount to its historical average.

• FTSE announced the results of the March SAIR for the FTSE All-World/All-Cap indices on Friday. There are 337 changes (adds, deletes, migrations across AW/AC) across Asia-Pac.
• Nongfu Spring (9633 HK) will have the largest inflows and is a high probability inclusion to the FTSE China 50 index. Its inclusion in the HSI INDEX was announced Friday.
• FTSE will switch index membership from the US ADRs to the HK listings for ZTO Express, GDS Holdings, Baidu and Bilibili. This should result in larger CCASS holdings.