Indonesia

• Bank Rakyat Indonesia (BBRI IJ) have seen a significant correction on the back of concerns over credit quality, as provisions increased in 1Q2024, the bank addressed its problem micro-loans
• The bank is addressing these loans with some further provisions likely over the coming quarter but special mention loans should plateau in July signifying a turn. 
• Bank Rakyat Indonesia will slow micro-lending and grow corporate loans this year to address the cost of credit. Profits will likely be flat and dividend payout up. Valuations are attractive.

• Recently listed Ecocare Indo Pasifik (HYGN IJ) is a small-cap with significant potential as a leader in hygiene services in Indonesia, which is a segment with a secular growth story.
• The company operates a rental model which means recurrent revenues with a high retention rate and annual price increases in a market with high barriers to entry. 
• Ecocare Indo Pasifik (HYGN IJ) has entered the pest control market with services that can be offered to its existing 13,000 corporate customers, with cleaning services as an additional add-on. 

• Sariguna Primatirta (CLEO IJ) is Indonesia’s fastest growing bottled water players with an edge over competition is that it sells “pure” water, which is filtered using nanotechnology from the US. 
• The company sell both gallon and bottled water in sustainable innovative packaging and has a well-developed distribution coverage. It continues to build new factories to drive future growth across Indonesia. 
• Sariguna Primatirta (CLEO IJ) is a rising star in the consumer staples space in Indonesia, with a strong track record in executing its expansion. Valuations are attractive versus growth.

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.

• Medco Energi

• Erajaya Swasembada (ERAA IJ) is back on track with its handset business, with stronger volume growth driven by more affordable models from Infinix and Techno brands.
• The company’s buildout of its electrical retailer Erablue, a JV with Mobile World, is gaining momentum and should become a significant growth driver along with Grand Lucky supermarket.
• Erajaya will slow its store buildout this year as it focuses on productivity ny it still expected to add 200 new stores over in Indonesia. Valuation is attractive.

• Barito Renewables Energy (BREN IJ) listed on the IDX in October 2023 and inclusion in global indices was expected in June and August.
• The IDX threw a spanner in the works by placing Barito Renewables Energy (BREN IJ) onto its Watchlist under criteria 10. That resulted in cancellation of index inclusion in June.
• Barito Renewables Energy (BREN IJ) will come off the Watchlist today and that could see a renewed move higher in the stock over the next few weeks.

• Prodia (PRDA IJ) suffered from a seasonal downturn in 1Q2024 as Lebaran slowed its testing volumes from corporates, with opex related to Prodia Digital impacting margins in the quarter.
• The company’s testing mix is shifting in a meaningful way towards esoteric testing, which commands significantly higher margins plus it is building out its genomic testing, which yields higher returns.
• Investment in Prodia Digital should slow in the coming quarters, helping to improve margins. with new outlets driving revenues. Valuations are unjustifiably low with 2Q2024 numbers likely to be positive.

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.

• Alam Sutera Realty
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• Lippo Karawaci
• Tata Motors ADR

• Indo Tambangraya Megah (ITMG IJ) reported an inline Q1 FY24, with stabilizing price. Net cash at 875 mn USD is 50% of mkt cap. 
• If coal prices remain stable at 135 USD/ton, the company will be able to churn out 400 mn USD of profits (~24 mnt sales).  
• With a minimum 65% dividend payout ratio, we derive a dividend yield of 15%. This number could be an upside risk as payout ratios have also been 100%.

• A follow-up call with Alfamart management confirmed the positive growth outlook for the coming year despite a slower store build-out and a sanguine view of the competitive environment. 
• Alfamart will slow its store build-out for Lawson as it optimises its existing stores but will still open 250 new Lawson outlets out of a total of 1,500 new outlets.
• The company will expand more aggressively in the outer islands and build five new DCs to support expansion, with Alfamidi seeing a pick-up in new store openings.  Valuations are reasonable.

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