Daily Brief Indonesia: PT Metrodata Electronics, Indocement Tunggal Prakarsa, Medco Energi and more

• PT Metrodata Electronics had a strong finish to the year with FY2022 net profit growth of +14.1% YoY driven by both its ICT distribution and Solutions & Consulting (S&C) businesses.
• The S&C business continues to thrive on Indonesia’s ongoing digitalisation, especially in the financial sector with the advent of digital banking but also in the telecom and oil&gas sectors. 
• PT Metrodata sees a slower outlook for the consumer outlook but strong momentum behind commercial sales and S&C as digitalisation continues, and new growth from the Public Sector. Valuations attractive.

• Indocement Tunggal Prakarsa (INTP IJ) released solid FY2022 results despite inclement conditions for the industry, as it utilised more low CV coal and alternative fuels and raised prices.
• The company now has much better access to cheaper DMO coal, which accounted for 60% of requirements in 2H2022, which provides a lower and more sustainable cost base for 2023.
• Indocement has continued to aggressively expand its distribution footprint across Indonesia in 2022, allowing it to access regional areas of demand. Valuations are attractive versus history.

Medco Energi’s FY 2022 results were strong, in line with expectations. This was supported by increased production following the ConocoPhillips Indonesia acquisition in March, as well as the high oil-price environment. Moreover, copper and gold mining JV AMNT has started to mature, generating healthy dividends. Leverage improved to a healthy level, with Debt/EBITDA at 2.1x and Net Debt/EBITDA at 1.6x.

We expect Medco’s earnings to increase slightly in FY 2023, assuming oil prices are maintained at current levels, as ASP from its fixed-price contracts is likely to rise from a low base. In addition, the company should deleverage further going forward, supported by strong OCF generation and debt repayments. Management said that Medco intends to acquire more assets in future, although there are no imminent plans currently.