150126 Designed for Infrastructure - 2015 Market Strategy

Designed for InfrastructureProfindo Market Outlook 2015

PT Profindo International SecuritiesGedung Permata Kuningan Lt. 19. Jl. Kuningan Mulia Kav 9C. Guntur Jakarta Selatan 12980

Profindo Research TeamBayu Cahyadi

Abdul Aziz

DISCLAIMERThis research report is prepared by PT PROFINDO INTERNATIONAL SECURITIES for information purposes only and is not to be used or considered as an offer or thesolicitation of an offer to sell or to buy or subscribe for securities or other financial instruments. The report has been prepared without regard to individual financialcircumstance, need or objective of person to receive it. The securities discussed in this report may not be suitable for all investors. The appropriateness of anyparticular investment or strategy whether opined on or referred to in this report or otherwise will depend on an investors individual circumstance and objectiveand should be independently evaluated and confirmed by such investor, and, if appropriate, with his professional advisers independently before adoption orimplementation (either as is or varied).

Designed for Infrastructure

AGENDA

2014

2015

Recommendation


2014


July 9Pemilu 2014

Jokowi Effect after Quick

Count DampakPengesahan

RUU Pilkada 25 September

2014

PelantikanPresiden Jokowi

Harga BBM Subsidi Naik

6500 8500

Jokowimengumumkan

jadi calonpresiden

POLITICAL SWING IN 2014

Pelaranganekspor mineral

The Fed tidakakan terburu-

buru menaikkansuku bunga


HIGH INFLATION IN 2014


Stable Currency Movement

CURRENCY REMAINS STRONG


FOREIGN BUY/SELL IN 2014 (RG + NG)

STOCK VALUE (BILLION) PERCENTAGE

BTPN 5,430 8.2%

BBRI 4,318 6.5%

BMRI 4,035 6.1%

TLKM 3,551 5.4%

KPIG 3,184 4.8%

BBNI 2,588 3.9%

TBIG 2,472 3.7%

JSMR 2,313 3.5%

MYRX 2,193 3.3%

SCMA 2,103 3.2%

OTHERS 33,791 51.2%

TOTAL NET BUY 65,978 100%

NET BUY 2014 (ALL)


MAIN 1,784 11.6%

SIAP 1,673 10.9%

SUGI 1,123 7.3%

AALI 970 6.3%

TELE 948 6.2%

BCAP 931 6.1%

BBTN 545 3.6%

BABP 456 3.0%

MASA 402 2.6%

DILD 401 2.6%

OTHERS 6,119 39.9%

TOTAL NET SELL 15,352 100%

NET SELL 2014 (ALL)


FOREIGN TOP 10 SECTOR BUY/SELL IN 2014 (RG + NG)


FOREIGN BUY/SELL IN 2014 (RG)


BBRI 3,998 9.9%

BMRI 3,519 8.7%

TLKM 3,007 7.4%

BBNI 2,667 6.6%

PGAS 2,370 5.8%

JSMR 2,330 5.7%

ASII 2,099 5.2%

UNTR 1,243 3.1%

LPPF 1,211 3.0%

ADRO 1,068 2.6%

OTHERS 17,020 42.0%


NET BUY 2014 (REGULER)


AALI 1,011 16.1%

BBTN 467 7.4%

BUMI 298 4.8%

WTON 255 4.1%

AKRA 242 3.9%

ASRI 202 3.2%

PTBA 199 3.2%

VIVA 194 3.1%

UNVR 186 3.0%

JPFA 174 2.8%

OTHERS 3,041 48.5%


NET SELL 2014 (REGULER)


FOREIGN TOP 10 SECTOR BUY/SELL IN 2014 (RG)


SECTOR PERFORMANCE IN 2014

Top GainerProperty +53%Finance +34%Infrastructure +24%

Top Loser IndexAgriculture -4%


PROPERTY STOCKS PERFORMANCE 2014

Top GainerSMRA +85%PWON +84%

LaggardAPLN +23%LPKR +12%


CONSTRUCTION NAMES 2014

Top GainerWSKT +250%PTPP +200%


MAJOR GLOBAL EVENT IN 2014

Plunging Global Oil Price

5 Year Oil Price Chart 1 Year Oil Price Chart

Positive Impact on Indonesia

Oil Net Importer

Better Consumer Purchasing Power

Budget Allocation: subsidy to infrastructure


2015


2015: MORE UPSIDE ON PROPERTY?

Property index outperforms other sector indices, while agriculture and basic industry underperform JCI

Consumer outperforms JCI, betting on better purchasing power


20% NET BUY ON BMRI AND BBRI

Jan 1 Jan 23, 2015


BMRI 622 11.8%

SDRA 436 8.3%

MNCN 439 8.4%

BBRI 435 8.3%

AKRA 244 4.6%

EXCL 225 4.3%

TLKM 206 3.9%

PTPP 214 4.1%

NIRO 192 3.7%

BSDE 163 3.1%

OTHERS 2,075 39.5%


NET BUY 2015 (ALL)


PGAS 1,083 16.5%

SMGR 806 12.3%

SIAP 605 9.2%

PWON 483 7.4%

MSKY 474 7.2%

GGRM 276 4.2%

ICBP 327 5.0%

BBCA 233 3.6%

WIKA 204 3.1%

BBTN 238 3.6%

OTHERS 1,826 27.9%


NET SELL 2015 (ALL)


BANKS ARE STILL FOREIGNS TOP 10 FAVORITE

Jan 1 Jan 23, 2015


23% BMRI AND BBRI ON REGULAR MARKET


BMRI 555 15.2%

BBRI 286 7.9%

BSDE 277 7.6%

AKRA 238 6.5%

MPPA 150 4.1%

EXCL 144 4.0%

SCMA 136 3.7%

PTPP 131 3.6%

LPKR 116 3.2%

SSMS 105 2.9%

OTHERS 1,505 41.3%


NET BUY 2015 (REGULER)


PGAS 1,061 22.3%

SMGR 831 17.5%

PWON 265 5.6%

GGRM 218 4.6%

BBTN 247 5.2%

INTP 178 3.7%

WIKA 199 4.2%

BBNI 159 3.3%

ICBP 247 5.2%

BBCA 167 3.5%

OTHERS 1,186 24.9%


NET SELL 2015 (REGULER)


BANKS DOMINATE FOREIGN NET BUY

Jan 1 Jan 23, 2015


GOVERNMENT PROGRAMS

Consumer outperforms JCI, betting on better purchasing power

Infrastructure Program Sea Toll Road 24 seaports 10 airports 1000 KM New Toll Road 35K MW Power Plant

Healthcare Program BPJS targets 168 million population

JKN


OUR ASSUMPTION FOR 2015

Yearly Inflation 3-5%

JCI: 5750-5850GDP +5.4-5.5% YOY

Exchange Rate: 12000-12500

BI Rate 7.25-7.75% CAD < 3% GDP

Fed Rate ~1.25%US Inflation ~2%

China economy grows ~7%More stimulus from Japan

ECB QE 60 bn Euro / month Program Execution from President Jokowi


RecommendatioN


OUR RECOMMENDATION

Construction

Pharmacy

Consumer

Banks

Infrastructure

Construction Top Pick Target PricePT Waskita Karya Tbk 1750PT PP Tbk 4250

Pharmacy Top Pick Target PricePT Kalbe Farma Tbk 1885PT Kimia Farma Tbk 1530

Consumer Top Pick Target PricePT Tiga Pilar Sejahtera Tbk 2300PT Charoen Pokphand Tbk 4200

Banks Top Pick Target PricePT Bank Mandiri Tbk 11500PT Bank Rakyat Indonesia Tbk 12500

Infrastructure Top Pick Target PricePT Telekomunikasi Indonesia Tbk 3150PT Jasa MargaTbk 7500


CONSTRUCTION

Government Incentives to

Capital Injection to ADHI, WSKT

Dividend allocation for working capital: WIKA, WSKT, ADHI, WTON and PTPP

Lower Cement Price

One million houses per year

Government budget for construction increases 100% from 150-200 Tn to 300-400 Tn

Recommendation

WSKT Target Price Rp 1.750 (assuming 47% RI)

WIKA Target price Rp 4.000

PTPP Target price Rp 4.250

ADHI Target price Rp 4.500


PHARMACY

In 2015, BPJS Targets 168 Million People, +26% YOY

More budget allocation for healthcare

FY09-13 CAGR of 10.95% and still growing

Recommendation

KAEF Target price Rp1.530

INAF Target price Rp465

KLBF Target price Rp1.885


CONSUMER

Consumer Spending 3Q14 +2.7% to 407.134

Lower gasoline price will add consumer purchasing power

Japan allow Indonesia poultry companies to export processed chicken products to Japan

Government limit Grand Parent Stock (GPS) Import

Recommendation AISA Target price Rp 2.300 CPIN Target price Rp 4.200


BANKS

Steady Interest Rates 7.75%

Infrastructure programs need financing

Dividend pay out ratio is cut by 10%

Still double digit loan growth in 2015

Growing fee based income

Recommendation BBRI Target price Rp 12.500 BMRI Target price Rp 11.500


INFRASTRUCTURE

Telco Growing subscribers of 37% per year from 2005 to 2015 Fourth biggest mobile phone market in the world, 278 million population

Toll Road Tariff adjustment in accordance with regional inflation rate Growing vehicles by 24%/year Trans Sumatera, Trans Java and 1000 KM new Toll Road Program

Recommendation TLKM Target price Rp 3.150 ISAT Target price Rp 4.300 JSMR Target price Rp 7.500


THANK YOU

Research Team

PT Profindo International Securities

DISCLAIMERThis research report is prepared by PT PROFINDO INTERNATIONAL SECURITIES for information purposes only and is not to be used or considered as an offer or thesolicitation of an offer to sell or to buy or subscribe for securities or other financial instruments. The report has been prepared without regard to individual financialcircumstance, need or objective of person to receive it. The securities discussed in this report may not be suitable for all investors. The appropriateness of anyparticular investment or strategy whether opined on or referred to in this report or otherwise will depend on an investors individual circumstance and objectiveand should be independently evaluated and confirmed by such investor, and, if appropriate, with his professional advisers independently before adoption orimplementation (either as is or varied).

150126 Designed for Infrastructure - 2015 Market Strategy

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