Archive Tag:PTPP

PTPP bangun apartemen di Australia

Emiten pelat merah PT PP (Persero) Tbk (PTPP) sepertinya bakal semakin ekspansif. Melalui anak usahanya, yakni PT PP Properti, perseroan sudah memegang  kontrak pembangunan apartemen di Australia.

PT PP Properti akan membangun apartemen Multiplex dan Pindan di negeri kangguru tersebut. Proyek tersebut terdiri dari 12 tower apartemen dan terdiri dari 250 unit kamar. “Nilai proyeknya sekitar Rp 1,1 triliun,” imbuh Direktur Keuangan PTPP Tumiyana, Rabu (26/11).

Saat ini, PTPP tengah menyeleksi dua perusahaan lokal yang bakal menjadi mitra pengerjaan proyek tersebut. Awal tahun depan proses seleksi dan administrasinya diharapkan sudah bisa selesai sehingga konstruksinya bisa dilakukan mulai kuartal III tahun depan.

PTPP bakal menjadi pemegang saham mayoritas, dengan menggenggam 51% saham atas proyek tersebut. Dari keseluruhan nilai proyek, sebesar 30% -nya akan diambil dari kas internal perseroan. Sementara, sisanya akan diambil dari kombinasi pinjaman bank dan kas dari perusahaan yang nantinya menjadi mitra kerja PTPP.

PTPP Q3-14 Analyst Meeting

PT PP Tbk (PTPP) catatkan kenaikan laba bersih 33% di Q3-14 sebesar Rp 290,17 miliar dari periode Q3-13 sebesar Rp 218,35 miliar. Perolehan kontrak baru tahun ini diprediksi bisa mencapai nilai Rp 22 triliun & laba bersih diperkirakan sebesar Rp 520 miliar. Pencapaian ini selain ditopang banyaknya proyek yang diperoleh, juga berasal dari efisiensi dan efektivitas dari proyek dan operasional.

PTPP mendapat kinerja yg baik dari konstribusi seluruh pilar bisnis yang menghasilkan keuntungan, yaitu konstruksi, properti, EPC, pracetak, peralatan dan investasi.

Total order book sampai dengan minggu ke-4 Okt14 mencapai Rp 36 triliun yang terdiri dari perolehan kontrak baru sebesar Rp 14,19 triliun dan carry over sebesar Rp 21,93 triliun. 

Berikut ini proyek baru yang telah diperoleh Perseroan saat ini a.l Apartemen Sawangan di Depok, Tol Depok Antasari, Lexington Apartement di Jakarta, Wang Residence Citicon, dan lainnya dng nilai lbh dari Rp 4 triliun.

PTPP berencana kembangkan bisnis EPC untuk oil & gas dan pertambangan. Selain itu, juga melakukan investasi pada beberapa proyek a.l pada hotel, PLTU, pelabuhan, dan jalan tol serta proyek-proyek infrastruktur dan konstruksi lainnya. Tahun 2015 direncanakan properti PTPP akan IPO.

PTPP saat ini Rp2.995 P/E 29,45x. Upgrade EPS growth 15-20%. Fair value PTPP Rp3.445 P/E 33,86x

PTPP menganggarkan belanja modal tahun 2015 sebesar Rp1,8 triliun

PTPP menganggarkan belanja modal tahun 2015 sebesar Rp1,8 triliun, naik 286% dibandingkan dengan alokasi tahun ini Rp466 miliar. Dari total belanja modal 2015, sebesar Rp800 miliar dialokasikan untuk proyek properti. Selain itu, PTPP juga membidik proyek lain terutama di sektor pembangkit, jalan tol, pelabuhan, dan proyek lainnya. PTPP juga menargetkan kontrak baru 2015 sebesar Rp27,5 triliun, tumbuh 25% dibandingkan target perolehan tahun ini sebesar Rp22 triliun. Sebesar 35% berasal dari proyek pemerintah, sementara 65% proyek BUMN dan swasta.

3 SOE contractors aim 2015 new contract worth IDR80.57t

Three SOE contractors have announced rough guideline for 2015 with PT Pembangunan Perumahan (PTPP) and Waskita Karya (WSKT) aim to secure 25% growth yoy to IDR27.5t and IDR23.37t respectively. More than 50% of the new contracts projected will come from government projects. Meanwhile, Wijaya Karya (WIKA) expect new contract to reach IDR29.7t new contract (+32% yoy). While Adhi Karya (ADHI) has not announced official guidance on the new contract replenishment for 2015F, the projections for the other three contractors were pretty much in line with our forecast.

Indonesia fuel price UP!

Indonesia government has raised domestic fuel price by IDR2,000/lt, or at the lower end of expectation of IDR2000-3000/lt price hike as global oil price has declined in the past few weeks. Effective from 18 Nov 2014, the gasoline price will be at IDR8,500/lt (+31%) and diesel price will be at IDR7,500/lt (+36%). We believe the price hike is positive for structural change but the magnitude is ‘just enough’ to narrow down the price gap with international price. We estimate the government will still have to spend IDR1,000-1,500/lt for fuel subsidies. This will reduce the budget for fuel subsidies from IDR280tn in 2014E to IDR50tn-75tn in 2015F, based on our estimates.

We see risks for fuel subsidies problem to return if international oil price move up or IDR depreciate further. We also expect more limited chance for President Jokowi to increase fuel price again within 12 months in the event of international oil price hike or IDR weakness.

The implications from the fuel price hike:

· Fiscal deficit will be reduced sharply, we believe. Budget for fuel subsidies (13% of budget in 2014F vs. 2.5% budget deficit) can be allocated for better use.

· We expect inflation to return to 8% (from 4.83% in Oct14). Government 10yr-bond yield may tick up by 50-100bps from currently around 8% but the BI rate is likely to go up by only 25bps-50bps from currently 7.5%.

· GDP growth is expected to remain at around 5% in 2015F.

· Foresee earnings slowdown in the next 2-3 quarters with the companies facing costs increases while pricing power is weak due to the competition.

· We see technical correction in equity market despite the positive long term impact.

· Infrastructure and healthcare sectors are the key beneficiaries.

Impact on the sectors:

Consumer: Consumers companies, especially high end retailers and automotive, are likely to face pressure from rising costs and weaker demand.

Banking: Expect tick up in NPL and thus higher provisions. Foresee slower earnings growth, but solvency risk will remains muted.

Property: We believe the property companies will struggle to drive growth in their pre-sales. Property price increase will be limited and transaction volume will fall, in our view.

Infrastructure: Foresee higher government spending from freed up budget.

Healthcare: Foresee higher government spending from freed up budget.

Commodities: Expect limited direct impact to plantation and mining sectors as they have paid market price for fuel and the smaller mines/plantations will no longer have the big cost advantage from using subsidized fuel (if any).

What to BUY now: GGRM, KLBF, JSMR, PTPP, TELE.

What to BUY in the correction: ADHI, PTPP, JSMR, BBRI, BEST, GGRM, KLBF, TELE, BRMS, INCO.

When the market sulks ..

.. that is a great opportunity to start shopping in our opinion. The new cabinet announcement disappointed the stock market, and the 9M14 results are largely uninspiring. Yet we believe Jokowi has established a solid foundation for a new Indonesia that would do wonders to equity values.

Key catalysts for a multi-year bull run are (a) raising the subsidized fuel price in Nov 2014 by a sufficient amount to almost eliminate the fuel subsidy entirely, and (b) a clear demonstration that Jokowi can bypass the opposition-controlled DPR. Private investments are key to this; we believe concrete actions by various ministers to slash red tape and reform bureaucracy will spark stock market’s appreciation.

Criticisms on a few ministerial choices miss the mark in our opinion. Rini Soemarno (State Owned Enterprises), Sudirman Said (Energy), Sofyan Djalil (Economy Coordination), and Ryamizard Ryacudu (Defence), are the ones coming under the spotlight. We explain in this report why we believe these choices will in fact aid Jokowi to reform Indonesia.

Market Outlook and stock picks. We are more confident now that the opposition club Koalisi Merah Putih (KMP) will not retard Jokowi’s program for reforms and economic development. Hence we set our JCI 2014- and 2015-end targets of 5,350 and 6,350 respectively. Our Top Picks are geared to capture this bull run : BBRI, BBCA, BBTN, SMGR, PGAS, PTPP, LSIP, CTRS and SCMA.

Emiten yang sudah mengeluarkan laporan kuartal 3 dan Target Price (RHB-OSK)

Berikut adalah beberapa emiten dalam coverage RHB-OSK Research yang sudah mengeluarkan laporan kuartal 3 mereka.

Company Code Result Rating Target Price
Semen Indonesia SMGR Indofood Sukses’ 9M14 earnings jumped 58% YoY to IDR3trn, driven by higher agribusiness and Minzhong’s earnings, in line with our/street estimates. 3Q14 earnings slipped 14% QoQ to IDR764bn as expected, weighed by slower earnings from agribusiness on lower CPO prices. Higher Minzhong and Bogasari’s earnings could be a potential earnings growth catalyst. Maintain BUY and IDR8,200 TP (a 20% upside), based on a 13.8x FY15F P/E. BUY Rp8.200
Adhi Karya ADHI Adhi Karya’s 9M14 earnings plunged 44% YoY to IDR101bn while its revenue slid 8% YoY to IDR5.19trn,below our expectations. Downgrade to NEUTRAL (from Buy) with a lower IDR2,720 TP, implying a 0.9% downside and 17.4x FY15F P/E. We cut our FY14/FY15 earnings projections by 43%/48% to reflect the poor results and to tone down our previously over-aggressive stance on the company. NEUTRAL Rp2.720
Cipura Surya CTRS 3Q14 net profit of IDR132bn (12% QoQ, 72% YoY) brought 9M14 net profit to IDR380bn, in line with expectations at 77% of our/market estimates. Operating margin expanded as fewer new projects launched kept its opex low. The company remains in a net cash position with its interest-bearing debt declining 4% YTD to IDR387bn as of 9M14.  We roll over our valuation to FY15.Maintain BUY with an unchanged IDR4,830 TP (103% upside, a 50% discount to RNAV/share of IDR9,679). BUY Rp4.830
Summarecon Agung SMRA The company continues to deliver good performance, recording 9M14 net profit of IDR884bn, in line with our/market estimates. With good recurring income, savvy management and its future projects in the pipeline, Summarecon Agung’s outlook remains sound.  We trim our NAV-based TP to IDR1,570 (from IDR1,600) as we roll over our valuations to FY15 and take into account the new IDR1.1trn bonds issued in September. Maintain BUY. BUY Rp1.570
Perusahaan Gas Negara PGAS PGAS’ 3Q14 net profit of USD222m (+14.7% QoQ) brought the 9M14 amount to USD592m (-7.8% YoY), in line with estimates at 70%/75% of our/consensus FY14 target. The QoQ gain was mainly due to a forex gain of USD34m in 3Q14 (vs a USD11m forex loss in 2Q14). We see higher gas cost may squeeze gross margin in 2015F. Yet, the Government’s gas programme should support our 6.5% YoY distribution volume growth estimate for 2015.Maintain BUY and IDR6,600 TP (12% upside). BUY Rp6.600
Ciputra Development CTRA Ciputra Development’s 3Q14 net profit of IDR282bn (-24% q-o-q, +3%    y-o-y) brought 9M14 net profit to IDR882bn, in line with our/consensus expectations at 71%/73% of the respective full-year estimates. 3Q14 gross margin edged lower by 20bps to 51.3%, but was still above our 50.2% GPM estimate for FY14. We keep our earnings forecast unchanged. Maintain BUY with an IDR1,350 TP, implying an 18% upside. BUY Rp1.350
Malindo Feedmill MAIN Malindo suffered a net loss of IDR68bn in 3Q14 due to a DOC price war and weak feed market. 9M14 revenue and net profit made up 71% and only 7% of our respective full-year estimates. Downgrade to NEUTRAL (from Buy) with a lower TP of IDR2,200 (8.9% downside), due to possible lower feed prices going forward, which could impede its feed segment’s net profit recovery. NEUTRAL Rp2.200
Wintermas Offshore WINS 3Q14 net profit fell 1.3% QoQ to USD5m, bringing 9M14 earnings down 4.7% YoY to USD18m – 64%/62% of our/consensus FY14 bottomline targets respectively, iebelow our expectations. Maintain NEUTRAL, with IDR1,270 TP (10.4% upside). We expect 4Q14 gross margin and net profit to pick up QoQ on a slight utilisation rate rise for its higher-end vessels, yet inadequate to reach our FY14 goals. Hence, we cut FY14/FY15F earnings by 10.6%/5.3%. NEUTRAL Rp1.270
Semen Indonesia SMGR Semen Indonesia’s 9M14 earnings were flat at IDR4.1trn (+4.7% YoY), in line with our expectations but lower than consensus. 3Q14 earnings declined to IDR1.3trn (-17.1% QoQ), weighed by cyclically lower sales volume and higher costs. However, we expect stronger cement demand to boost earnings going forward. Upgrade to BUY (from Neutral) with an unchanged IDR18,150 TP (a 15.6% upside), based on an 18x FY15 P/E. BUY Rp18.150
Bumi Serpong Damai BSDE 9M14 earnings, excluding gains from 2013 land sales to joint-venture (JV) companies and the 34.22% stake buy in Plaza Indonesia, rose 55% YoY to IDR1.7trn – in line, at 76% of our FY14 forecast. Maintain BUY and IDR2,400 TP (52.9% upside) on 13.3x FY14F P/E. Most of 3Q14’s IDR1.48trn revenue (83%) still came from development projects. GPM rose to 79% (2Q14: 77%), as BSD City’s divisions reported improved margins. BUY Rp2.400
Pembangunan Perumahan PTPP 9M14 earnings jumped 32.9% YoY to IDR290.1bn while revenue grew 7.6% YoY to IDR7.81trn. Bottomlineexceeded our expectations, making up 56%/54% of our/consensus’ previous expectations. We keep our FY15 earnings forecast but cut our FY14 estimate to reflect a lower new contract target. Maintain NEUTRAL and IDR2,590 TP (implying 1.1% downside), based on a 17.4x FY15F P/E.    NEUTRAL Rp2.590
Gudang Garam GGRM 3Q14 net profit rose 2.8% QoQ to IDR1.33trn, bringing 9M14 earnings to IDR4.04trn, up 24.9% YoY – in line at 72%/75% of our/consensus FY14 net profit forecasts.Maintain BUY, with a IDR63,000 TP (11.8% upside). 3Q14 inventory turnover rose to 235 days (2Q14: 214) while the short-term debt hike pushed net gearing to 44% (2Q14: 36%). We view 2015’s SKM excise tax hike impact as relatively soft, ie there is some room for growth next year. BUY Rp6.300
Wijaya Karya WIKA For 9M14, Wijaya Karya’s earnings reached IDR401bn (+2.7% YoY), in line with our expectation, accounting for 62% of our projection. This was supported by 8.8% YoY revenue growth that reached IDR8.6trn. We maintain our overall projections, but based on new guidance of IDR12,300/USD, lower FY15F earnings by 4.3%. As such, our TP is now IDR2,930 (vs IDR3,100), implying 20.8x FY15F P/E and 1.4% upside. We keep our NEUTRAL call.  NEUTRAL Rp2.930
Adaro Energy ADRO Adaro reported strong 9M14 results. While a fully integrated coal mining operation should enable Adaro to maintain industry-leading EBITDA margin of USD15/tonne over 2014-16F, we see downside risks to its 5% volume CAGR in 2014-2016F. While higher Indian coal imports should support demand for Adaro’s low-rank coal, slowing imports into China will increase raise the competition among Indonesian producers to sell coal to India.Maintain Neutral with lower IDR1,250 TP (vs IDR1,320). NEUTRAL Rp1.250
Harum Energy HRUM Harum reported its lowest profit ever in 3Q14 due to rising costs and its inability to grow volume. With guidance of a rise in strip ratio (SR) and hence costs in 4Q14, Harum could report a loss in 4Q14. Our 53% volume growth estimate for 2015 is at risk as Harum did not indicate when production at its new mines would start. Expecting rising costs and lower coal prices, we lower 2015-2016F EPS by 31-33%. Downgrade to SELL with a lower IDR1,370 TP (11.3% downside). SELL Rp1.370
Bukit Asam PTBA 3Q14 output grew 9% YoY while net profit rose 14% YoY despite weak coal prices. Maintain BUY with a higher IDR14,400 TP (from IDR12,400), a 14.1% upside. Its IDR1,582bn 9M14 earnings made up 85% of our FY14 forecast. While coal output was under our estimate, thebetter-than-expected result was aided by lower-than-expected costs. FY14-16F EPS is raised by 10-25% to factor in sustained lower costs and higher USD despite lowering coal price assumptions. BUY Rp14.400
Steel Pipe Industry ISSP 3Q14 earnings rose 13.3% QoQ to IDR48bn, bringing 9M14 earnings up 22.5% YoY to IDR176bn, 67% of our FY14F. We expect 4Q14 earnings to pick up on seasonality in the construction sector, but not adequate for hitting our FY14 target. We trim FY14F earnings by 4% but maintain our FY15 estimates. The pipe industry remains attractive, and the Gresik project is a strong catalyst.Maintain BUY, with our IDR370 TP (a 36% upside) implying 7x FY15F P/E. BUY Rp370
Wijaya Karya Beton WTON 9M14 earnings rose 15% YoY to IDR223.35bn but 3Q14 net profit fell 2.5% YoY to IDR57.2bn on uncertainties during the presidential election and inauguration period, and the weakening IDR that caused higher raw materials cost. Post new IDR12,300/USD guidance, we downgrade to NEUTRAL (from Buy) and cut FY15F earnings by 11.7%, which results in a new IDR1,135 TP, a 1.3% downside, that reflects 28.38x FY15F P/E. NEUTRAL Rp1.135
Telekomunikasi Indonesia TLKM Telekomunikasi Indonesia’s (Telkom) results bore no surprises. The cluster-based pricing initiatives helped sustain Telkomsel’s double- digit revenue growth for the quarter, with average revenue per minute (RPM) rising 7% QoQ. We expect Telkomsel to stay focused on improving data yields to better monetise burgeoning data traffic. We maintain BUY, our IDR3,200 TP (WACC: 11%, TG: 1.5%, 15.9% upside) and forecasts. The stock remains our top Indonesian telco pick. BUY Rp3.200
Astra International ASII Astra’s 9M14 earnings came in at IDR14.5trn (+7.6% YoY), in line with our/consensus estimates. The improvement was driven by higher earnings from its agribusiness and contract mining unit. Meanwhile, 3Q14 earnings slipped 8.1% QoQ to IDR4.7trn in the absence of a IDR440bn gain from an acquisition that it booked in 2Q14. Excluding this one-time gain, its 3Q14 earnings were flat. We maintain NEUTRAL, with IDR7,350 TP(6.5% upside) based on 15.0x/13.3x FY14/15F P/Es. NEUTRAL Rp7.350
Astra Agro Lestari AALI Astra Agro Lestari remains our top plantation pick on the Indonesian Stock Exchange. We also keep our TP at IDR30,000 (42.4% upside),based on 16x CY15 earnings. Earnings continued to grow at a commendable double-digit pace YTD, hence sharp P/E contraction has made the stock attractive. Indonesia plantation stocks are a safe haven against a weakening IDR as palm oil prices in IDR adjust upwards to compensate for currency weakness. BUY Rp30.000
XL Axiata EXCL XL’s results were in line with our but slightly under consensus estimates. While its yield optimization initiatives have strengthened legacy revenues, this has led to higher churn among the more price-sensitive data users – a negative surprise. We advise investors to accumulate on further weakness. This follows the sharp 15% price retracement over the past month. As the upside to our TP of IDR6,280 (WACC: 9%, TG: 1.5%) is now >10%, we upgrade our call to BUY.   BUY Rp6.280
Nippon Indosari ROTI Nippon’s 9MFY14 earnings were IDR132bn (+44.9% YoY), in line with expectation. 3QFY14 earnings declined to IDR31bn (-19.7% QoQ) as sales are cyclically low during Ramadan. However, 3QFY14 EBIT margin rose to 12.1% (+228bps QoQ) due to lower costs. We envision Nippon’s earnings to accerelate in 4QFY14. We believe the counter is attractive, given its strong earnings growth (29% CAGR) and high 24% ROE. Maintain BUY and a IDR1,490 TP (25% upside), based on 29x FY15 P/E. BUY Rp1.490
Logindo Samudramakmur LEAD While Logindo’s 9M14 revenue (67% of our FY14F) was underwhelming due to its fleet expansion, its USD17m earnings (+53.0% YoY, 75% of our FY14F) were bolstered by a gain from selling a low-tier barge and lower-than-expected interest costs from a cooled-down capex. We believe its share price (-19.8% MoM) has been overly depressed. As it recently won long-term contracts and potential jobs are in store, we maintain BUY but cut our TP to IDR6,200 from IDR6,300 (12x 2015 P/E). BUY Rp6.300
Agung Podomoro APLN Agung’s 9M14 net profit slipped 15% YoY to IDR506bn, accounting for 53%/54% of our/consensus estimates. This is due to slower revenue booking – the delay in licence issuance has impeded the progress of construction. Despite lowering our FY14F net profit by 16%, we keep our BUY call and TP unchanged at IDR450, given: i) revenue booking will likely be carried over to the next year; ii) renegotiation of a 5-year rental contract with mall tenants and iii) catalyst from the Pluit City project. BUY Rp450
AKR Corporindo AKRA 3Q14’s IDR203bn earnings (up 3.6 QoQ, 16.4% YoY) raised 9M14 bottomline 10.2% YoY to IDR579bn, in line with our/street’s 72% of FY14’s net profit target.Maintain BUY and SOP-based IDR5,650 TP (14.3% upside). With 9M14’s receivables collection days up to 81 (6M14: 69), short-term debt increased IDR995bn, pushing net gearing to 81.7% (6M14: 61.2%). We take caution on faster cash inflow expectations from JIIPE’s Phase 1 landbank sales proceeds. BUY Rp5.650

 

A first move by Ministry of Public Works and Housing – Water dams development

11 dams to be built in 2015. Mr. Basuki Hadimuljono, the new Public Works and Housing minister, revealed its first plan in water dams development. His Ministry plans to develop 11 water dams, where 5 dams’ contract will be signed by end of this year and the rest of the contract will be signed next year. Total project value for the 11 dams is estimated to be around Rp8.2tn, where budget will be coming from state-budget.
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Dam projects potential in the future. His ministry has identified 73 potential dams location across Indonesia area, where 47 dams has been surveyed and 16 dams construction has been started by the previous administration. In 2014-2019, he expects at least 20 dams to be constructed to add 14bn meter cubic water supply. Dams priority project will be for Krueng Keureuto, Aceh; Pamarayan, Banten; Logung, Kudus; and Namo in Nusa Tenggara Timur.
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Cushion for Indonesia contractor’s new contract target. Ministry of Public Works and Housing will potentially tender out the 5 dams contract this year, which may help contractors to top up their new contract target this year. Currently, our top pick in the sector is PTPP.

PTPP: 3Q14: Improvement on higher revenue; Cut to HOLD on valuation

§ Earnings up 91% y-y: PTPP recorded 3Q14 net profit of IDR143bn (115% of our 3Q14 estimate), up 91% y-y, accompanied by a higher net margin of 4.5% from 2.4% in 3Q13. In 9M14, PTPP booked net profit of IDR290bn, up 32% y-y, as accounts receivable impairments declined 29% y-y to IDR45bn. The 9M14 results accounted for 58% of our 2014 estimate (consensus: 54%).

§ Improving revenue on higher construction services: PTPP booked 3Q14 revenue of IDR3.2tn, up 23% q-q and 4% y-y, higher than our projection (108%). In 9M14, revenue was up 8% y-y to IDR7.8tn, mainly due to construction service increases of 13% y-y to IDR6.6tn (84% of total 9M14 revenue). In property and realty, PTPP recorded a 96% y-y improvement to IDR355bn (4.5% of total 9M14 revenue). However, EPC revenue declined 32% y-y to IDR854bn.

§ Higher 3Q14 operating profit: In 3Q14, PTPP booked operating profit of IDR330bn (up 1% y-y, 41% q-q), higher than our estimate (108%) due to declining operating expenses (57% q-q). In 9M14, PTPP booked operating profit of IDR702bn, up 22% y-y (the 39% y-y increase in operating expenses was offset by the 26% y-y increase in gross profit).

Outlook: Challenges in improving EPC and property businesses
As infrastructure development may experience glitches, we expect PTPP to face substantial challenges in its EPC business. PTPP is also facing challenges in improving its property business due to tighter competition in the domestic property industry. One of the plans is that in 1Q15, PTPP plans to develop office buildings in cooperation with BPJS Ketenagakerjaan in South Jakarta.

Recommendation: Downgrade to HOLD, maintain TP of IDR2,800
We assign an unchanged 2015F multiple of 20x, at par with the sector target, to arrive at our 12-month TP of IDR2,800 (7% upside potential). We downgrade the stock to HOLD from Buy as its valuation appears unattractive due to its significant market outperformance (exhibit 4). Risks: macro headwinds including higher interest rates stemming from the government’s plan to raise subsidized fuel prices, which could lead to lower revenues.

PTPP: think that Jokowi’s administration is very serious on executing the transportation initiatives by putting Mr. Ignatius Jonan at the Transportation Minister post

We think that Jokowi’s administration is very serious on executing the transportation initiatives by putting Mr. Ignatius Jonan at the Transportation Minister post. He has a proven track record of transforming PTKAI and executed the US$1bn, 727km Surabaya – Jakarta double track this year. This is positive for the sector and PTPP (BUY, TP Rp2,800, Current Price Rp2,500) is our top pick.

  

Positive on the infrastructure sector. Strong executor is a key to develop infrastructure. We also think that as long as Jokowi’s administration is creative enough to leverage its state-owned enterprise muscle and private sector potential, then the fact that Jokowi’s cabinet is not controlling the House of Representatives would not significantly delay its infrastructure initiatives in the future. PTPP (Rp2,800 TP) is our top pick in the sector.

Marketing takeaways construction sector

· We had the pleasure to meet with investors in SG and HK last week and came home with a sense that investors were largely in agreement with our view that the positive structural story for the bright outlook in the infrastructure sector remains unchanged. We note, however, it will not be a smooth ride for Jokowi in the short term, given recent political developments.

· Higher fuel prices will likely result in negative sentiment on share prices in the short term, which could be seen as an opportunity to accumulate. On a more positive note, this should allow for potentially higher allocation for infrastructure in the 2015 budget.

· Recent revision to full-year new contract target by PTPP (to IDR22t from IDR24t) and ADHI (to IDR15t from IDR21t) were actually in line with our conservative estimates.

· Under the environment of higher fuel prices and potential share-price correction, it is likely that WIKA and PTPP will be the most preferred plays given more resilient earnings profile, while WSKT’s more than 50% contribution from public work project would allow the company to be the main beneficiary of higher government infrastructure budget. ADHI will be a laggard play and ultimately benefit from higher infrastructure spending. Valuation re-rating would hinge on project-quality turnaround.

JSMR mempertimbangkan untuk menyerap saham PT Hutama Karya (Persero) dalam investasi proyek pembangunan jalan tol

Perusahaan pengelola jalan tol PT Jasa Marga Tbk (JSMR) mempertimbangkan untuk menyerap saham PT Hutama Karya (Persero) dalam investasi proyek pembangunan jalan tol. Pihaknya masih menunggu surat resmi dari Hutama Karya terkait pengunduran diri sebagai investor dal

Menurutnya, pembangunan proyek tol sepanjang 61,8 km itu dikerjakan oleh konsorsium BUMN. JSMR memiliki saham sebesar 55% dari total investasi sebesar Rp6 triliun. Sisa saham masing-masing dimiliki oleh Hutama Karya 15%, PT Waskita Karya Tbk (WSKT) 15% dan PT Pembangunan Perumahan Tbk (PTPP) sebesar 15%.

PTPP membukukan kontrak baru hingga 3Q14 sebesar Rp12T

PT Pembangunan Perumahan (PTPP) membukukan kontrak baru hingga 3Q14 sebesar Rp12T . Perseroan optimistis dapat meraih target kontrak baru sebesar Rp24T. Untuk belanja modal (capex) telah terserap Rp160M dari total anggaran Rp446M. Tahun ini, PTPP membidik perolehan laba bersih mencapai Rp560 miliar hingga Rp600 miliar. Hingga 2018, perseroan memproyeksikan laba bersih dapat mencapai Rp1,7 triliun.

PTPP /WIKA : Bergabung dengan Wika & Pelindo Bangun Pelabuhan

PT PP (Persero) Tbk (PTPP) berencana membentuk anak usaha dengan PT Pelindo I dan PT Waskita Karya Tbk (WIKA). Perusahaan tersebut, akan berada di Bandara Kuala Namu, Medan, Sumatera Utara.

Direktur Utama PTPP Bambang Triwibowo menjelaskan, anak usaha tersebut berencana untuk membangun pelabuhan. Saat ini, pelabuhan tersebut sudah masuk dalam tahap penyesuaian izin-izin terkait.

“Kita bersama-sama buat pelabuhan, kita kemarin 10 hari lalu baru tanda tangan, kita lihat ternyata menguntungkan, sekarang sedang persiapan izin-izin,” kata Bambang saat ditemui di Gedung PPM Manajemen, Jakarta, (okezone)
———–

Prabowo’s dominance: Negative political development with PDI-P powerless in the House

Negative political development with PDI-P powerless in the House
In the first plenary meeting of new parliament members, all key positions in the House were dominated by Prabowo’s Red and White coalition (exhibit 1). Setya Novanto (Golkar) was elected as House Chairman along with four deputies comprised of Fadli Zon (Gerindra), Agus Hermanto (Demokrat), Fahri Hamzah (PKS) and Taufik Kurniawan. SBY’s son, Edhie Baskoro Yudhoyono (exhibit 4) is now Demokrat’s faction head. Meanwhile, Jokowi’s coalition: PDIP, Nasdem, PKB and Hanura, with only 37% of total House seats (exhibit 2), walked out of the meeting, citing unfair election system.
Plenty of political pitfalls ahead
This result spells bad news for the upcoming Jokowi regime, suggesting plenty of challenges ahead to pass through necessary policies and reforms. Even if Jokowi is able to secure a greater coalition ahead, his political cost has certainly increased. It is ironic that Jokowi did not want to horse-trade and be “non-transactional”, but he now has to negotiate with a new House Chairman who is an expert at deal making. Note that the House may soon pass procedures for presidential impeachment (exhibit 3).
Risk on sectors dependent on government regulations
At this stage, we view higher risks for sectors that are dependent on government regulation and state budget, including infrastructure. Our study (exhibit 11) also shows that the infrastructure sector would typically experience market underperformance post the announcement of fuel-price hikes in the 2005-2013 periods. We think share price appreciation (exhibit 7) leading up to the fuel price announcement should be used as a mechanism to take profit. Among the construction/infrastructure counters that have gained and are likely to see profit taking are WSKT (WSKT), PTPP (PTPP), and WTON (WTON) while WIKA (WIKA), as the sector’s most widely-held stock, is also likely to suffer from a correction, in our view.
Stay defensive as a shield against volatility
Given recent market volatility, we continue to recommend avoidance of interest-rate sensitive sectors like automotive, consumer discretionary (retail, media), banks and property with a preference for a defensive stance. Our top-10 defensive picks are as follows (exhibit 5): 3 from the telco sector (TLKM, ISAT, TELE), 5 consumer stocks (UNVR, GGRM, KLBF, INDF, ROTI), 1 from the oil and gas space (PGAS) and a toll-road operator (JSMR).

NEWS 1 October 2014

·         RIGS Akan Ekspansi ke Thailand dan Malaysia

·         PGAS Bangun SPBG di Jawa Timur

·         TBLA Siapkan Pembayaran Bunga Obligasi Rp26,25 Miliar

·         HEXA Siapkan Capex USD16 Juta

·         UNTR Proyeksikan Capex 2015 Sebesar USD300 Juta

·         PTPP Lunasi MTN Total Senilai Rp530 Miliar

·         Dividen INKP Rp25/saham dan TKIM Rp10/saham, cum 17 Oktober 2014

·         SIAP tunda akuisisi perusahaan distributor BBM

·         PGLI batalkan rights issue

·         PTPP dan WSKT akan kembangkan Pelabuhan Kuala Tanjung di Medan dengan nilai proyek Rp700 miliar

·         OJK batasi suku bunga simpanan maksimal 225 basis poin dari BI Rate

  (disclaimer on – RL)

Asian Games 2018: the game changer

Asian Games 2018 in Indonesia: Jakarta, Palembang and Bandung…
The past weekend saw several Indonesian government officials including the
national sports committee (KONI) and Vice Governor of Jakarta, Basuki
Purnama, making a trip to Incheon, Korea to witness the opening games of
Asian Games 2014. At the same time, Indonesia has been formally assigned to
host Asian Games 2018, with Jakarta, Palembang and Bandung co-hosting the
sport events.

…translates to mega infra projects in host cities…
We strongly believe international events, such as the Asian Games (the world’s
second-largest sporting event after the Olympics), will boost not only more but
also faster construction completion in the next 3-4 years before the 2018 Asian
Games. Historically, we have also witnessed major infra projects completed
ahead of major international events. For example, Cipularang toll road
(connecting Jakarta-Bandung) was completed in 2005 for the Asian Africa
Conference (KAA) in Bandung and Bali Toll Road was completed in 2013 for
the APEC Indonesia Conference. Looking further back in 1962 when Jakarta
last hosted the Asian Games, projects completed in conjunction with the event
include the national football stadium Gelora Bung Karno (GBK), Hotel
Indonesia, Wisma Warta (at the site of current Plaza Indonesia shopping
center) and the Sarinah commercial area in Thamrin. We believe the situation
this time would be the same. Some of the identified projects in Jakarta that
would be completed for the Asian Games include: 1) six inner toll road projects
worth Rp40tr; 2) the Rp16tr Jakarta MRT project; and 3) revitalization of GBK
Stadium and construction of a new BMW stadium in Sunter, Jakarta. Longer
term, there will be more infra projects in Jakarta, which include: 1) the Giant
Sea Wall project in the northern coast of Jakarta; and 2) expansion of MRT
Phase II (Bundaran HI – Kp Bandan) and the East-West line / LRT project.

Execution is key; leadership is paramount
We believe that in order to accomplish these projects, execution within tight
timeline will be crucial. Under the strong leadership of Vice Governor Basuki
Purnama, as well as incoming President Joko Widodo, we have conviction the
projects will be on the right track.

Benefitting for construction companies involved
These projects would be supported by major construction companies,
including WIKA (MRT project), PTPP and ADHI (to participate in inner toll roads
project). Other infra-related names that would participate include Jaya Group
companies/JKON (as a partly owned company by the Jakarta provincial
government) as well as toll operator CMNP. We also do not rule out WSKT
participating in other infra projects, for example, sports facilities projects and
Giant Sea Wall.

Construction sector: Temporary headwinds from fuel hike

Temporary adverse impact of fuel-subsidy removal on share prices is imminent, but structural reform of higher allocation for infrastructure budget will be positive for sector, raising the government’s capacity to increase its infrastructure budget 1.5x-2x from the current USD17b. Negative sentiment will likely emerge as seen in the past with average share-price correction of 30%-40% following the fuel-price increase announcement with a recovery period of six to nine months. This, however, should be seen as an opportunity to accumulate as the structural story of continued infrastructure development remains intact.

On earnings, as most of the contractors’ order books are multi-year projects, potential cost pressure will unlikely deter earnings outlook given room for cost escalation. Recall that in 2008 and 2013 when the government raised the fuel price by 33% and 44%, operating profit remained isolated, growing at 28% YoY and 31% YoY. Our Top Pick continues to be PTPP given it has the strongest carry-over projects. We also like ADHI as a laggard and long-term play as the company is slated to ultimately benefit from higher infrastructure spending ahead. Under the higher fuel-price policy, PTPP and WIKA are likely to be the most resilient and post swifter share-price recovery.

Indonesia Investor Summit 2014: Day 2: 16 companies

Day 2: 16 companies
On the second day of the Indonesian Stock Exchange’s Investor Summit 2014, our research analysts attended all presentations made by the 16 companies (exhibit 3). We list some of the salient and interesting points from the companies’ presentations below:

§ London Sumatra (LSIP): Benny Tjoeng, the CEO of LSIP, stated that they plan to increase their new planting in East Kalimantan and South Sumatera areas going ahead. Additionally, LSIP also plans to build a plant in East Kalimantan with total investment of IDR300bn. Separately, the management also stated that they are planning to implement a buyback program for up to 31mn shares, which would be executed through the end of November 2014.

§ Sampoerna Agro (SGRO): The management of SGRO is committed to continue expanding by adding new planting areas totaling 5,000ha per annum. In 2015, the company allocated IDR1tn to increase its palm acreage. Separately, SGRO is planning to utilize increased mechanization using less labor for its operations, particularly if the government were to decide in continuing to substantially hike workers’ salaries ahead.

§ Aneka Tambang (ANTM): ANTM’s management stated that the performance of the company will only start to improve in 2015, helped by increased commodity prices following the government’s recent ore export ban. Additionally, ANTM plans 2015F capex to rise USD70mn following negotiations with contractors to defer payments until next year. ANTM is also planning to borrow USD100mn from various national and private banks for its expansion purpose.

§ PT Pembangunan Perumahan (PTPP): PTPP plans to allocate IDR1.7tn to develop its property business in Perth, West Australia, focusing mainly on residential projects. The management plans to hold 85%-90% of the stake in this project. In 2014, the company is targeting an 24% y-y increase in its bottom line.

§ Wijaya Karya (WIKA): Bintang Perbowo, Director of WIKA, stated that the company will expand to 5 countries with contract value amounting to USD100-200mn in each country. WIKA will be working on toll road project in Aljazeera and Timor-Leste, towers and skyscrapers in Myanmar and UEA, as well as a shopping arcade in Malaysia.

§ Unilever Indonesia (UNVR): Sancoyo Antarikso, Director of UNVR, stated that the company has increased their product prices by an average of 5% this month in an effort to anticipate margin pressure due to further weakening of the local currency. This is the second time UNVR has increased its product prices this year following the first increment back in 1Q14.

PTPP pada 2015 akan ekspansi bisnis properti hingga ke Australia dengan membangun kawasan residensial dan komersial di Perth dengan nilai investasi Rp1,6-1,7T

PT PP (PTPP) pada 2015 akan ekspansi bisnis properti hingga ke Australia dengan membangun kawasan residensial dan komersial di Perth dengan nilai investasi Rp1,6-1,7T. Rencananya akan dibentuk joint venture dimana perseroan sebagai mayoritas 85-90%. Dari domestik, perseroan mendapat proyek pengerjaan ruas tol Medan-Tebing Tinggi yang merupakan proyek konsorsium BUMN dengan total nilai Rp4T.

Panin Sekuritas 17 September 2014

IHSG kemarin ditutup melemah meski sempat menguat pada pembukaan. Melemahnya indeks didorong oleh berlanjutnya  aksi jual investor asing serta terus melemahnya nilai tukar rupiah.  Bursa regional Asia dibuka menguat menyusul laporan Bank sentral China mengucurkan stimulus untuk mendukung pertumbuhan ekonomi.  The People’s Bank of Chinamenyediakan dana 500M Yuan atau sekitar USD81,4M kepada 5 bank besar sebagai langkah untuk mendukung pertumbuhan ekonomi. Hal ini juga dilakukan setelah melihat target pertumbuhan 7,5% tahun ini terancam tidak tercapai karena kelesuan sektor property. Investor global tampaknya juga masih menanti hasil pertemuan The Fed yang akan mengkaji kebijakan terkait suku bunga. Bloomberg survey memperkirakan The Fed Chair, Janet Yellen, tampaknya hanya akan menaikkan suku bunga secara bertahan dalam kurun waktu 2015-2017, meski pertumbuhan ekonomi stabil. Hari ini kami proyeksikan IHSG berpeluang untuk rebound. Disisi lain pergerakan indeks masih akan dibayangi oleh gejolak nilai tukar rupiah. Kisaran support-resistance 5.112-5.178. Saham Pilihan : BOW : GGRM, MNCN, CPIN, WSKT, PTPP, BBRI, SMGR, BWPT.

 

©Panin Sekuritas 

Pejagan – Pemalang toll road acquisition

WSKT mengakuisisi 100% PT Pejagan Pemalang Toll Road (PPTR) dari Group MNC. Dalam transaksi senilai Rp300 miliar itu, MNC memiliki call option senilai Rp450 miliar untuk 3 tahun ke depan (17 Agustus) yang setara dengan return tahunan 14% (di luar keuntungan konstruksi).

WSKT akan menyediakan seluruh pendanaan untuk proyek tersebut. Perseroan juga berencana menerbitkan obligasi senilai Rp500 miliar-Rp1 triliun tahun ini untuk memenuhi sebagian pendanaan proyek. WSKT akan menjadi kontraktor proyek (Rp2,2 triliun investasi dan Rp1,5 triliun nilai konstruksi), yang pelaksanaannya akan dimulai bulan depan dan selesai dalam 2 tahun.

What we think? Jika opsi tersebut diambil oleh Grup MNC, WSKT akan menerima return tahunan dari investasi awalnya (termasuk potensi keuntungan dari pengerjaan konstruksi) hingga 20%.

Meskipun demikian, ada risiko bahwa opsi itu tidak diambil oleh Grup MNC, yang berarti WSKT harus memasukkan seluruh investasi jalan tol tersebut ke dalam neraca keuangannya. Pertumbuhan EPS dan kinerja return on equity (ROE) emiten dapat tertekan mulai 2017.

On-track new contract achievement. WSKT sudah mendapatkan kontrak baru senilai Rp10,7 triliun per Agustus (57% dari target manajemen vs tahun lalu 56%). Pesaingnya yaitu PT PP Tbk (PTPP) membukukan kontrak baru sebesar 45% dan PT Wijaya Karya Tbk (WIKA) sebesar 34%.

NEUTRAL with Rp850,- TP. Meskipun adanya pencapaian kontrak baru yang meyakinkan sejak awal tahun (YTD), kami menilai tidak cukup banyak kenaikan dari valuasi dan transaksi jalan tol yang baru terjadi dapat memberikan potensi kenaikan laba dan margin secara jangka panjang.

Kami meningkatkan prediksi laba setelah pajak (NPAT) 2014 sebesar 10% dan turun -5% untuk 2015. TP kami sudah mencerminkan valuasi rasio harga per laba (PE ratio) sebesar 2015 dan 2016 sebesar 16x dan 13x. Kami memprediksi ROE 2015 dan 2016 sebesar 17%.

Risk. Anggaran infrastruktur pemerintah yang lebih lambat, aturan akuisisi lahan yang tidak efektif, dan volume lalu lintas Trans Java yang lebih rendah daripada prediksi.

PTPP precast unit eyeing seaport projects

PTPP menargektkan produksi beton pracetak sebanyak 228.000 ton tahun ini, yang akan diproduksi oleh pabrik Cilegon dan Sadang. Pabrik Sadang memiliki kapasitas sebanyak 160.000 ton per tahun. Tahun depan, PTPP akan menambah kapasitas pabrik Bakauheni dan Pasuruan. Unit bisnis itu menargetkan kontrak baru senilai Rp1,05 triliun tahun ini, di mana per Juli realisasinya sudah 50% dari target.

Indonesia Construction: Infrastructure infusion

Sector re-rating on accelerated infrastructure growth
Following a relatively smooth transfer of power to Jokowi in the making, we are upgrading the 2015-16F performances of the state-owned construction companies under our coverage on the back of accelerated infrastructure-related growth. Additionally, we see upside to the government’s lower 2015F infrastructure budget proposal of IDR169tn (2014 budget: IDR207tn) on the back of expected higher fuel prices at the pump later this year.

Possible short-term hiccup, but a positive long-term story on MP3EI In the medium term, we remain positive on the construction sector, backed by the government’s MP3EI (Master Plan for Acceleration and Expansion of Indonesia’s Economic Development) through 2025 to invest IDR1,786tn. Supported by 2015F performance upgrades (exhibits 8-11) and the government’s plan for boosting infrastructure development, we raise the sector’s rating to Overweight. Risk to our call would be short-term hiccup from the government’s plan to raise subsidized fuel prices which would lead to higher CPI and interest rates, creating negative sentiment for the sector.

Raising construction companies’ TPs, except for TOTL’s and WTON’s
At this stage, we have 4 BUY ratings (exhibit 1) on ADHI (32% potential upside), WIKA (20%), PTPP (16%) and WSKT (13%). On the other two stocks within our coverage: TOTL (4%) and WTON (5%), we currently have HOLD ratings due to their limited upside potential. On valuation, currently the construction sector is trading on 2015 PE of 17.6x, which we think should re-rate to 21x, around 25% premium to the region’s current valuation. This is warranted due to our higher EPS growth of 32.3%, relative to the region’s 21.8% (exhibit 2). Based on potential upside, our top pick is ADHI.
§ On ADHI, we maintain a BUY with our new TP of IDR4,000 (32% potential upside), translating to a 2015F PER of 13.2x, still the sector’s cheapest.
§ For WIKA, our new TP of IDR3,350 is based on 25x 2015F PER, around 20% premium to the sector at our target price. We think this is warranted due to WIKA’s excellent management team, integrated portfolio and diversified businesses. Reiterate BUY.
§ For PTPP, our new target price of IDR2,800, reflecting 20x PE, or some 20% premium to its regional peers, justified by its above-average EPS growth of 36%. Thus, we raise rating from Reduce to BUY.
§ For WSKT, our new target price of IDR1,000, translates to 18x 2015F PER, around 15% discount to sector’s target average. Upgrade to BUY.
§ We maintain TOTL’s TP of IDR825, but raise TOTL’s rating to HOLD, in line with the 2015F regional average of around 16.5x.
We downgrade our rating on WTON to HOLD from Buy and maintain our TP of IDR1,070, which translates to 2015F PER of 23.6x, around 15% premium to the 2015F regional concrete players average.

21.4km, US$300mn Depok – Antasari toll road concession may be signed end of this month

Pemegang konsesi jalan tol Depok-Antasari adalah PT Citra Marga Nusaphala Persada Tbk (CMNP), PT Waskita Karya Tbk (WSKT), PT Pembangunan Perumahan Tbk (PTPP) dan PT Hutama Karya.

Konstruksi kemungkinan akan dilakukan bagi anggota pemegang konsesi, kecuali CMNP. Akuisisi lahan tahap pertama telah mencapai 65% target dan groundbreaking sudah dilakukan sejak Mei 2014. Angka traffic diprediksi mencapai 47.000 per hari.

State – owned companies, JSMR-WSKT-PTPP, seek debt Rp 4tn to build Kuala Namu – Tebing Tinggi toll road along 60 km

State – owned companies, JSMRWSKTPTPP, seek debt Rp 4tn to build Kuala Namu – Tebing Tinggi toll road along 60 km. JSMR will hold majority portion 60% -65%; WSKT by 15%; the remaining 20% -25% will be divided between PTPP and Hutama Karya. JSMR needs a loan Rp 3.6tn – 3.9tn; WSKT Rp 900bn, and PTPP – Hutama Karya around Rp 1.2tn – 1.5tn.

Road construction projects Medan-Kuala Namu – Tebing Tinggi toll will be started at the beginning of Sep14 where currently awaiting for approval by the Minister of Public Works

Road construction projects Medan-Kuala Namu – Tebing Tinggi toll will be started at the beginning of Sep14 where currently awaiting for approval by the Minister of Public Works. Consortium is consisting of PT Jasa Marga Tbk (JSMR); PT Waskita Karya Tbk (WSKT); PT Hutama Karya and PT Pembangunan Perumahan Tbk (PTPP). The consortium will work on Kuala Namu – Tebing Tinggi along the 43.9 km, while the Medan-Kuala Namu segment (17.8 km) will be developed by the government by using loans from China 90% and 10% from the State Budget.

PTPP telah mengeluarkan laporan keuangan (belum audit) dengan penjualan pada semester I-2014 sebesar Rp4,6 triliun

PP (PTPP) telah mengeluarkan laporan keuangan (belum audit) dengan penjualan pada semester I-2014 sebesar Rp4,6 triliun, naik 10% dibandingkan dengan pendapatan pada semester I-2013 sebesar Rp4,2 triliun. Laba kotor pada semester I-2014 tercatat sebesar Rp537 miliar, meningkat 32% dibandingkan periode yang sama tahun sebelumnya sebesar Rp408 miliar. Marjin laba kotor perseroan pada semester I-2014 naik menjadi 12% dari 10% pada semester I-2013. Sementara itu, laba sebelum pajak perseroan tumbuh 9% menjadi Rp292 miliar pada semester I-2014 dari Rp269 miliar pada semester I-2013. Laba bersih perseroan tercatat sebesar Rp147 miliar, meningkat 2% dibandingkan dengan laba bersih tahun sebelumnya sebesar Rp717 miliar. Marjin laba bersih perseroan turun tipis menjadi 3,2% pada semester I-2014 dari 3,4% pada semester I-2013.

Kabar duka kembali datang dari dunia penerbangan Malaysia, setelah Kamis sebuah pesawat milik Malaysian Airline MH17 jenis B 777-200 ER diduga ditembak jatuh oleh pasukan Rusia atau Separatis Ukraine dan jatuh menewaskan 295 penumpang diperbatasan Ukraine-Rusia

Kabar duka kembali datang dari dunia penerbangan Malaysia, setelah Kamis sebuah pesawat milik Malaysian Airline MH17 jenis B 777-200 ER diduga ditembak jatuh oleh pasukan Rusia atau Separatis Ukraine dan jatuh menewaskan 295 penumpang diperbatasan Ukraine-Rusia dimana ditembak jatuhnya pesawat MH17 memunculkan ketegangan global geopolitik baru terlebih Amerika Serikat baru kembali menerapkan sanksi ekonomi baru atas Rusia dimana jatuhnya MH17 juga mendorong jatuhnya DJIA sebesar -161.39 poin (-0.94%) ditengah ramainya perdagangan tercermin dlm volume perdagangan berjumlah 6.63 miliar saham (diatas rata-rata volume perdagangan sepanjang bln Juni yg berjumlah 5.8 miliar saham atau diatas rata-rata perdagangan dari awal Juli hingga 17 Juli yg berjumlah 5.48 miliar saham).

Kombinasi meningkatnya ketegangan geopolitik global, kejatuhan DJIA -0.94%, turunnya EIDO -2.15% & aksi menunggu pengumuman pemenang pilpres 22 Juli menjadi faktor negatif pendorong IHSG kembali turun dalam perdagangan Jumat.

DJIA -161.39 -0.94% 16,976.81
NASDAQ -62.52 -1.41% 4,363.44
OIL +2.59 +2.56% 103.79
GOLD +19.10 +1.47% 1318.90
TIN +25 +0.11% 22,125
NICKEL -100 -0.52% 19,200
CPO -14 -0./1% 2,293
EIDO -0.62 -2.15% $28.20
TLK 44.43 (2,596)
IDR 11,686

Friday IDX Range: 4,985 – 5,125

SELL: BMRI, BBNI, ANTM

BUY: TBIG, PTPP, BBCA, ICBP

BOW: CTRA, TOTL, WIKA, PGAS, GGRM, SMGR, JSMR, INCO, INDF, ADRO (ES CSA®-MNC Sec/Disc On)

PTPP and WSKT 1H14 new contract

PT Pembangunan Perumahan Tbk (PTPP) and PT Waskita Karya Tbk (WSKT) 1H14 new contract and PTPP revised. Investor Daily melaporkan bahwa PTPP dan WSKT membukukan kontrak baru, masing-masing sebesar Rp8,4 triliun dan Rp7 triliun.

Dalam laporan berbeda, PTPP juga merevisi target laba setelah pajaknya (NPAT) dari Rp520 miliar menjadi Rp600 miliar (naik 15%).

Menurut kami di Mandiri Sekuritas, PTPP dan WSKT telah mengantongi 35% dan 37% dari target manajemen sepanjang tahun ini (vs capaian tahun lalu 50% dan 46%) sepanjang semester I/2014. Sebagai tambahan, sebelum mendapatkan konfirmasi dari manajemen emiten, kenaikan target dari manajemen masih cukup dan dapat memberikan sentimen positif di pasar.

Saat ini, PTPP ditransaksikan dengan valuasi rasio harga per laba (PE ratio) 2014 sebesar 19,5x berdasarkan hitungan Mansek dan PE ratio 2014 sebesar 16,8x berdasarkan hitungan manajemen. PT Wijaya Karya Tbk (WIKA, Rp2.465, BUY, TP Rp2.300) dan WSKT saat ini ditransaksikan pada PE ratio 2014 dengan hitungan Mansek sebesar 23x dan 18x.

Taking a leap of faith

The quick count indicates that Jokowi may have won the presidential election but Prabowo has not conceded. Uncertainty may prevail until the official results are announced, expected on 22 Jul. Our view is that the Jokowi win based on the quick count will stand. We expect the market to rally eventually, albeit cautiously at first. We raise our end-2014 index target to 5,400, now based on 14.5% COE (0.5 s.d. below the 3-year mean P/BV). Near-term risk is the prolonged uncertainty about the election results, mid-term risk is Jokowi not meeting his campaign promises. The big-cap stocks may lead, given their liquidity. Cyclicals should outperform defensive stocks. Key picks are BMRI, BBRI, INTP, WSKT and PTPP.

What Happened

Based on the quick count, Jokowi may have won the presidential election by a margin of 5%. However, Prabowo also claims victory, based on his quick count data. The official results announcement is expected on 22 Jul.

What We Think

The data from five credible quick counts show that Jokowi may have won (within a margin of error) but the margin is not wide enough for Prabowo to concede. There is going to be a nervous period until the official results are released. Our view is that Jokowi’s win will stand. We expect the market to start nervously but the rally will gather momentum once the final results are official. The caveat is that the process is peaceful and the loser accepts defeat gracefully. In the medium term, the risk premium is expected to decline, consistent with the trend after past elections. Growth expectations may also pick up, leading to upgrades of earnings expectations. These will feed into a virtuous bull cycle, in our view. We think that the market may test +2 s.d. eventually, consistent with the past euphoric rally.

What You Should Do

The near-term uncertainty may rattle confidence but we think that it is an opportune time to buy into the market. The bulls may predict a structural rally, lasting for a few years, which we concur with. The big and more liquid stocks will lead though a better bet is to overweight sectors that could benefit from the new government’s initiatives, such as on infra and consumer-related.

Key questions if the surveys are right and Jokowi wins

Key questions if the surveys are right and Jokowi wins:
1. How long the honeymoon rally will last? Our view: Three weeks in 2004 when SBY win the election for his first term. Then fundamentals take over. Rising commodity prices continue to push JCI higher to +41% in six months until the negative sentiment from domestic fuel price hike take over in Mar2005.

2. How is the current underlying fundamentals? Our view: Indonesia underlying fundamental remain solid with >5% GDP growth, relatively low leverage in economy (28% debt to GDP), young demographic, and falling inflation. But there is a hurdle in the medium term as we believe government budget for fuel subsidy (12% of budget) is not sustainable. Structural reform of removing fuel subsidy will lead to temporary high inflation and another cycle of margin pressure as seen last year.

3. What to BUY? Our view: Winners of Jokowi’s economic development programs are infrastructure, healthcare, and mass consumption sector such as: WIKA, ADHI, PTPP, WSKT, JSMR, INTP, SMGR, GGRM, MYOR, RALS, TELE, KLBF, and KAEF.

4. Which sector to take profit on post honeymoon rally? Our view: Investors should increasingly cautious on interest sensitive stocks post relief rally. We tend to take the opportunity to take profit in some banks, automotive, and property sectors once the honeymoon rally is over and market start to embrace the potential correction in anticipation of fuel price hike (which we see as a the next entry point).

PTPP: Well armoured

5M14 new contracts reached IDR6.63t (Unofficial 6M14: IDR8.4t), accounting for 30% (6M14: 40% of 12M14) of our full-year forecast of IDR22t. PTPP will be least affected by the recent government reduction in infrastructure spending, given it has the lowest exposure to government public work projects among other SOE contractors. This, coupled with PTPP having the strongest carry-over order book growth of 29% YoY, will be more than enough to underpin double-digit revenue growth in 2014-2015. This means that if tenders for new contracts were to slow, PTPP is well-equipped to sustain its solid growth. It is also worth noting that PTPP has the highest order book to revenue (2.8x vs. 2.3 sector) and backlog order to revenue (1.5x vs. 1x sector). Thus, with long-term structural story remaining intact, PTPP remains a BUY with unchanged TP of IDR2,200 (implied 2015 PE of 17x).

Rupiah is likely to weaken further and pose a risk to Indonesian macroeconomic stability if the election outcome does not satisfy investors

Rupiah is likely to weaken further and pose a risk to Indonesian macroeconomic stability if the election outcome does not satisfy investors. We expect exporters/USD earners and companies with very defensive business to be more resilient under this scenario. Investors that look to hedge against risk of depreciating IDR should BUY into PGAS, AALI, LSIP, BWPT, INCO, BRMS, and TINS. Alternatively, stocks that are more defensive due to the nature of their business are GGRM, JSMR, PGAS, and TLKM.

We are of the view that Jokowi is likely to win given he still lead in the many latest surveys (albeit at narrower margin). Investors that would like to invest in stocks that benefit from Jokowi’s economic development programs should focus on infrastructure, healthcare, and mass consumption sector such as: WIKA, ADHI, PTPP, WSKT, JSMR, INTP, SMGR, GGRM, MYOR, RALS, TELE, KLBF, and KAEF.

TINS will attempt next year to diversify business by exploring property business in Sumatra and Borneo

TINS will attempt next year to diversify business by exploring property business in Sumatra and Borneo. TINS will work with state-owned companies in the construction and property business lines namely WIKA, ADHI, WSKT, and PTPP. Looking ahead, TINS will have four business lines consisting of tin main business lines, business lines of non tin (mineral and coal), property lines of business, and business lines downstream where TINS will sell directly to the end user mine (end users) .

Infrastructure project in Sumatra

Infrastructure project in Sumatra. Four SOE banks BBRI, BMRI, BBNI and BBTN to fund infra project in eastern coast of Sumatra with BBNI as the leader for syndicated loans. The banks will fund the 1,120km electricity transmition project together with some other regional banks. The project itself is worth US$10tn and 70% of which will be funded by loans. PLN (state-owned electricity firm) teams up with four state-owned construction companies (WIKA, WSKT, PTPP and Hutama Karya) will also take part in building the transmission line.

What we like at the moment as news flow is still all about politics

In the last minutes, Golkar Party throw its support behind Prabowo Subianto, making Gerindra led coalition now control more parliament seats vs. PDI-P led coalition. This appears to be taken negatively by market, thus profit taking was seen in JCI after the announcement.

While we are increasingly cautious in the near term, our concern is much less about Jokowi’s ability to win presidential election, but more about ability of PDI-P to control parliament in order to support Jokowi’s government. Based on the current position (see table below), PDI-P will have a choice between securing more parliament support from a few more smaller parties or securing support from Golkar to gain at least 51% parliament seats. Neither one is likely to happen without “semi-transactional” coalition vs. non-transactional coalition promoted by Jokowi.

Our preferred sector in Indonesia remains health care (KLBF, KAEF), infrastructure (JSMR, PTPP, ADHI, INTP), mass market consumers (RALS, GGRM, MPPA), and selected commodities (INCO, TINS, AALI, BRMS). The biggest wildcard remains Bakrie related stocks as he appears to remain highly influential in Indonesian politics after the parliament election.

Indonesia construction marketing takeaways

We recently met with over 35 clients in KL, SG, and HK with most of the investors had only invested in WIKA given it has the largest market cap, better liquidity, and proven management track record.
Our top pick remains on PTPP as it has the second highest earnings visibility in the constructions sector with an upside risk of potentially higher than expected earnings in 2014.

PTPP 3M14 result is in line with ours and consensus estimate

PTPP membukukan laba bersih kuartal I/2014 sebesar Rp61 miliar, naik 44,3% YoY.

Capaian itu 18% di atas estimasi Mandiri Sekuritas dan 23% di atas estimasi konsensus pelaku pasar (laba bersih kuartal I/2013 berporsi 10,1% dari capaian setahun 2013). Target Mandiri Sekuritas itu 4,7% di atas target konsensus.

Meskin margin kotor perusahaan naik (karena beragamnya segmen usaha), margin laba bersih perusahaan masih lebih lemah dibandingkan dengan periode sebelumnya (karena besarnya beban bunga dan beban penurunan nilai/impairment expense).

Per Maret 2014, PTPP sudah mengantongi Rp3,9 triliun kontrak baru yang akan meningkatkan prospek pendapatan perusahaan tahun ini. Kami masih memiliki rekomendasi BUY dengan TP Rp2.100 per saham. Saat ini saham perseroan ditransaksikan dengan valuasi rasio harga saham per laba bersih (PE ratio) 2014 dan 2015 sebesar 17,4x dan 14,5x.

PTPP membukukan laba bersih kuartal I/2014 sebesar Rp61 miliar, naik 44,3% YoY

PTPP membukukan laba bersih kuartal I/2014 sebesar Rp61 miliar, naik 44,3% YoY.

Capaian itu 18% di atas estimasi Mandiri Sekuritas dan 23% di atas estimasi konsensus pelaku pasar (laba bersih kuartal I/2013 berporsi 10,1% dari capaian setahun 2013). Target Mandiri Sekuritas itu 4,7% di atas target konsensus.

Meskin margin kotor perusahaan naik (karena beragamnya segmen usaha), margin laba bersih perusahaan masih lebih lemah dibandingkan dengan periode sebelumnya (karena besarnya beban bunga dan beban penurunan nilai/impairment expense).

Per Maret 2014, PTPP sudah mengantongi Rp3,9 triliun kontrak baru yang akan meningkatkan prospek pendapatan perusahaan tahun ini. Kami masih memiliki rekomendasi BUY dengan TP Rp2.100 per saham. Saat ini saham perseroan ditransaksikan dengan valuasi rasio harga saham per laba bersih (PE ratio) 2014 dan 2015 sebesar 17,4x dan 14,5x.

Indonesian construction: Diminished Jokowi effect

Three stocks go to HOLD, with ADHI as only Buy; TOTL now a REDUCE
Following a worse-than-expected parliamentary election outcome and given possible weaker government formation, which is required to push through reforms and policies, we are downgrading most of our construction stocks (exhibit 1). At this stage of the cycle, we think the three biggest construction plays by market cap are WIKA, PTPP and WSKT, for which we now have HOLDs on limited upside potential to our new target prices. On a more positive note, we maintain one BUY rating, on ADHI, while at the other end of the spectrum we downgrade our rating on TOTL to REDUCE.
§ For WIKA, our new target price of IDR2,250 is based on a 20% premium to the 2014F regional peer average PE of 16.5x (exhibit 1). We think this premium is warranted due to WIKA’s integrated business portfolio and diversified businesses with the least dependence on the construction segment within our coverage. WIKA also has exposure in engineering, procurement and construction (EPC), and concrete and property businesses. However, with minimal upside potential of 6% to our new TP, we cut WIKA to HOLD.
§ For PTPP, our new target price of IDR1,650 is in line with the 16.5x 2014F average. With 3% downside potential, we lower PTPP to HOLD.
§ For WSKT, our new target price of IDR710 is in line with the 2014F average of 16.5x. We cut our rating to HOLD on limited upside potential.
§ ADHI is now our only BUY within the construction sector. We see 16% upside potential based on our new target price of IDR3,300, which translates into a 2014F PE of 15x (10% discount to the 2014F average).
§ We downgrade TOTL to REDUCE with a new TP of IDR700, in line with the 2014F regional average of 16.5x, and with13% downside potential.

A long-term positive on high infrastructure spending through MP3EI Over the longer term, we remain positive on the construction sector, backed by the government’s mega plan of MP3EI (Master Plan for Acceleration and Expansion of Indonesia’s Economic Development) for 2011–2025 to invest IDR1,786tn in infrastructure, mainly for energy (IDR681tn), followed by roads (IDR339tn) and railways (IDR326tn). Furthermore, whoever becomes president in 2014-19 is expected to accelerate infrastructure-related spending to boost Indonesia’s economic growth.