Indonesia

• Indo Tambangraya Megah (ITMG IJ) reported its Q4 2023/FY23 numbers with revenues down 46%/35% YoY and profits down 58%/69% YoY on declining coal prices (113 USD/ton Vs 192 USD/ton) .
• We expect spot coal prices to remain range-bound between 130-150 USD/ton, resulting in company profits ranging between 350-500 mn USD (4x-6x PE range) with dividend yield ranging from 11%-15%.
• The company also has a cash buffer of 850 million USD, roughly 45% of the current market capitalization. 

Lucror Analytics’ ESG Scores are based on a 3-tiered scale and are adjusted for Controversies (if applicable).
We assess Medco Energi’s ESG as “Adequate”, in line with its scores for the Environmental, Social and Governance pillars. Controversies are “Immaterial” and Disclosure is “Adequate”.

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.

• Adaro Energy
• China Jinmao Holdings

• Komerce, an e-commerce enabler for small-to-medium enterprises (SMEs) in Indonesia, has received an undisclosed investment from Bukalapak co-founder Achmad Zaky and 500 Global.
• The funding will allow Komerce to accelerate product development and customer acquisition.
• Founded in 2020 by Darmawan, Syaefullah Syeif (COO), and Satriyo Budi Utomo (CTO), Komerce offers remote team development, shipping aggregators, e-fulfilment, omnichannel SaaS, and customer relationship management.

• GoTo held a public expose at the IDX to update investors on latest developments including the Tokopedia sale but also to outline its key strategies for 2024. 
• GoTo will start to receive the service fee from Tokopedia from 1st February despite that monitoring is ongoing by the Ministry of Trade although that is now 75% complete.
• GoTo’s focus will be on affordable products, some new premium offerings, and increasing higher take rate lending products through GoPay, with incoming fees from Tokopedia providing additional funding going forward.  

Lucror Analytics’ ESG Scores are based on a 3-tiered scale and are adjusted for Controversies (if applicable).
We assess Medco Energi’s ESG as “Adequate”, in line with its scores for the Environmental, Social and Governance pillars. Controversies are “Immaterial” and Disclosure is “Adequate”.

• Astra International booked record earnings for 2023 despite some softening of commodities, driven by strong performance from the auto division and financing plus the strong performance from motorcycles. 
• Astra has continued to invest in growth areas of the Indonesian economy with investments last year in the EV battery ecosystem, increased exposure to healthcare, and investment in data centres.
• Management flagged a potential 2H cyclical downturn but it is well-diversified enough to weather this. Valuations look attractive on 6.8x FY2024E PER and with a 6.6% dividend yield.

• Sido Muncul‘s recent results reflect a sharp recovery in its core herbal and F&B business as increased sales volumes have brought scale benefits to its iconic products. 
• The company saw recovery in both sales and profits, with margins improving considerably  in 4Q2023 due to increased volumes and lower raw material prices. 
• Tolak Angin remains an iconic brand catering to all demographics with 70% leadership of its category, with Kuku Bima being the leader in powdered energy drinks. Valuations appealing versus history. 

• BFI Finance Indonesia saw a marked turnaround in new bookings and a declining NPF ratio in 4Q2023, as its business recovered from the malware attack in May last year.
• The company has started to be more aggressive in non-dealer 4W space but remains cautious on 2W. Write-offs peaked in 4Q2023 and will decline in 2024, leading to lower CoC. 
• BFIN will launch a tripartite collaboration with GoTo and Bank Jago which will help to drive future bookings growth. Valuations remain attractive with BFIN trading in 2.0x PBV 

• Matahari Department Store (LPPF IJ) reported another slow set of results in 4Q2023, as it saw slower demand and continues to clear aged inventory. 
• The company is well-prepared for the upcoming Lebaran season with more conservative inventory levels. It will also see the benefits of new brands coming on stream this year. 
• Matahari Department Store will open 4-6 new stores in 2024 but close 10 underperforming stores, with a continued focus on new DP brands like SUKO. Valuations remain attractive. 

• EV supply chain is at a nascent stage in ASEAN and EV adoption in the region lags behind developed markets despite boasting a large population with a burgeoning middle class.
• However, Governments in the region continue to introduce new initiatives and offer incentives to promote the sector, while companies continue to attract large investment to develop the EV market.
• The four companies we looked at have reported earnings and we have discussed their latest results and our investment thesis.

• Bank Mandiri is our top pick for its quality attributes, its premium and growing pre- and post-provision returns; Mandiri provides a better valuations to returns mix than Bank Central Asia
• Bank Negara is the value pick with its low PE multiples, its attractive PEG ratio, whilst also improving pre- and post-provision returns with cost of risk well controlled
• Bank Rakyat registered worsening pre- and post-provision returns in 4Q23, with cost of risk worsening; this reflects its heavily MSME focused loan mix which keeps structural cost of risk high

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
• Citicore Renewable Energy

• Amman Mineral Internasional (AMMN IJ) raised around US$714m in its Indonesia IPO, after pricing the deal at IDR1,695/share. Its eight-month lockup will expire on 21st Feb 2024.
• Amman Mineral International (AMI) carries out exploration, development, mining, and processing. The company operates an open pit copper and gold mine known as the Batu Hijau mine in Indonesia.
• In this note, we will talk about the lock-up dynamics and updates since our last note.

• Bank Negara Indonesia (BBNI IJ) remains a laggard amongst the top 4 banks in Indonesia in valuation terms, with improving returns leading to some upward re-rating. 
• The bank continues to grow its high-quality corporate loans and consumer banking with a dramatic increase in its mobile banking users, which is helping to grow its low-cost CASA. 
• BBNI remains an interesting proxy for Indonesia’s economy, with digital banking helping to drive returns. Valuations remain below peers but the bank is now approaching fair value.