Daily Brief Indonesia: PT Metrodata Electronics, Adaro Energy and more

• PT Metrodata Electronics remains one of the key enablers for the digital economy and overall digitalisation of corporate Indonesia through both providing hardware, software, solutions, and consulting services. 
• The key driver for its ICT distribution comes from PCs, laptops, smartphones, and gaming whilst its solutions and consulting business is driven increasingly by the formation of digital banks.  
• PT Metrodata Electronics is benefitting from increasing mobility, which has started to boost its higher margin solutions and consulting business. Valuations are attractive and it’s in a net cash position.

We view Adaro as “Low Risk” on the LARA scale, due to: [1] the company’s large scale (being the second-largest coal miner in Indonesia) and low-cost position ( However, Adaro’s coal product mix has a low calorific value of 5,000 CV/kg, hence it commands lower prices (30-45% below the benchmark). Customers are primarily (c. 90%) power plants in the region which exhibit stable demand patterns. The company’s coal, Environcoal, is environmentally friendly (low ash, sulfur and nitrogen content). The main risk factors are significant operational and regulatory risks due to Adaro’s primary reliance on a single-site coal mine. 

Our Credit Bias is “Positive”, given the improving fundamentals amid a highly favourable operating environment.

Controversies are “Immaterial”, with Adaro only facing one tax issue. That said, the tax issue is a non-concern for investors. The ESG Impact on Credit is “Neutral”.