Indonesia

• Axiata Group (AXIATA MK) has convened an EGM on the 26 May to vote on its proposed acquisition of Indonesian broadband play Link Net (LINK IJ).
• The vote, which for all intent and purposes is a rubber stamp, is one of the SPA conditions to acquire 66.03% of LINK. 
• Trading at a gross/annualised spread of 7.1%/22.3%. Get involved here.

• XL Axiata (EXCL IJ) results were encouraging with +8% revenue growth driven by data (95.5% of service revenues), with stable ARPUs and price competition easing during 1Q2022.
• The march towards being truly converged continues with the completion of the Link Net acquisition giving it a significant leg up and due for completion on 27th May.
• XL Axiata remains our top pick amongst Indonesia’s telcos, with the highest exposure to data and Indonesia’s headlong growth into all things digital and compelling valuations.

• Mitra Keluarga Karyasehat released 1Q2022 results recently which reflected a changing patient mix with less COVID-related patients and a recovery in its core patient business. 
• Hospital occupancy is rising whilst Mitra Keluarga is also increasing bed numbers but margins have been impacted by changing patient mix but this is a positive long-term trend.
• Mitra Keluarga Karyasehat (MIKA IJ) remains a key proxy for rising healthcare penetration in Indonesia, with valuation attractive from a historical basis. 

• The Axiata Group (AXIATA MK) EGM to approve the ordinary resolution relating to the proposed acquisition of Link Net (LINK IJ) shares and the proposed MTO is on 26 May. 
• The proposed acquisition is targeted to be complete by 2Q and the subsequent MTO at IDR4,800 per share will complete by 3Q.
• At the last close, the gross and annualised spread to the MTO price for a 3Q completion is 7.1% and 11.7%, respectively.

• Hiding spots that are coming under pressure –  Indonesia’s JKSE just cracked key support that makes the USD/IDR one of the last holdouts to see a big USD move.
• USD/IDR bull triangle breakout unfolding with risk of a big USD short squeeze.
• USD/MYR break above 4.50 would increase odds of devaluation and a more painful USD move in Asian FX. A huge pivot level to watch.

Jababeka has delivered acceptable FY 2021 results, with slight revenue and earnings increases. The financial risk profile improved slightly, but remained weak with elevated leverage and thin coverage ratios. Liquidity is adequate for the next 12 months. The strong FY 2021 and Q1/22 marketing sales will likely support decent growth in revenue and earnings from the Real Estate pillar.

However, the key concern remains refinancing risk for the USD 300 mn 6.5 2023 notes that will mature in October. The company announced in late July 2021 that it plans to buy back the 2023 notes, with the intention of issuing USD 350 mn in new notes to fund this transaction. No further details were provided, and Jababeka has not released an update in this regard.

• 4Q21 performance lifted by year-end sales festivities: 4Q21 revenue grew 5.9% QoQ to IDR98.1bn, primarily due to a 7.2x QoQ surge in advertising revenue as eCommerce platforms spent big on OOH media during year-end sales promotions.

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. Sunac China Holdings
2. Kawasan Industri Jababeka
3. Kwg Property Holding
4. Tata Steel Ltd
5. China Jinmao Holdings

and more…

• PT Nippon Indosari Corpindo (ROTI IJ) released an impressive set of 1Q2022 results with higher wheat prices being offset by price rises plus greater operational efficiencies.
• Modern trade saw an especially strong recovery in 1Q2022 but general trade also saw good growth and continues to hit record highs.
• PT Nippon Indosari Corpindo (ROTI IJ) management remains optimistic on the outlook for 2022, with guidance for +15% growth in sales together with improving margins. 

This month, we provide an update on the developments in the Oil & Gas sector following Russia’s invasion of Ukraine.

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.

• Gajah Tunggal
• Times China

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.

• Jingrui Holdings
• Lippo Karawaci
• MGM China Holdings
• Powerlong Commercial Management Holdings
• SJM Holdings
• Tata Motors ADR

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.

• Guangzhou R&F Properties
• Medco Energi

• Bukalapak (BUKA IJ) 1Q2022 results were all about execution, with significant improvements in take-rates for its Mitra business, and even more so for its marketplace segment. 
• The launch of AlloFresh and Allo Bank Indonesia will add some further depth and breadth to the platform’s product offering and help to accerlate the move towards profitabilty.
• Bukalapak (BUKA IJ) looks like an increasingly interesting way to play the Indonesian digital economy with an expanding ecosystem and increasing take-rates at the same time. 

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…

• Astra International 1Q2022 numbers reflect its prime positioning as a beneficiary of recovering domestic growth in Indonesia and its exposure to the commodities boom through United Tractors (UNTR IJ).
• It has increased market share in autos through Toyota and Daihatsu plus holds a strong position in providing auto, motorcycle, and heavy equipment financing providing further geared exposure. 
• Astra International has a war chest from the sale of Bank Permata which is yet to be deployed but could be in the digital space as a future potential catalyst.

• Arwana Citramulia (ARNA IJ) released a strong set of 1Q2022 surpassing expectations and paving the way for strong growth in 2022 driven by an improving product mix.
• ASPs for Arwana are increasing through changing product mix, which is improving margins but not suppressing demand with a move to higher-end Digi Uno and ARNA products. 
• A webinar with management confirmed the positive outlook for 2022, with an estimate of +30% bottom-line growth forecast from increased volumes, greater efficiencies, and higher ASPs through improved product mix.

• Bank Negara Indonesia (BBNI IJ) released a solid set of 1Q2022 results, with new loan bookings improving to pre-pandemic levels, strong non-interest income, and improving credit costs.
• The bank continues to pursue a multi-pronged digital strategy, with strong growth in mobile banking which now surpasses ATMs on transactions plus the launch of Bank Mayora digital bank.
• Bank Negara Indonesia (BBNI IJ) has already seen some upward re-rating since the last results but this can continue as its digital strategy bites and loan growth and NIMs improve.

• AKR Corporindo (AKRA IJ) results continued to reflect its key exposure to both economic recovery in Indonesia and its exposure to rising commodity prices through its chemical distribution.
• Volume growth in petroleum distribution may surprise on the upside, whilst chemical prices remain elevated boosting that business.
• The pipeline for its JIIPE industrial estate looks promising and management remains confident in targeting 40 ha land sales with potential upside from Freeport Smelter related demand. 

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.

• PT Pertamina (Persero)
• Sands China Ltd
• Vedanta Resources