Indonesia Politics (Many Claims to the Throne) 20140410
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8/12/2019 Indonesia Politics (Many Claims to the Throne) 20140410
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IndonesiaMarket strategy
Quick count result
Source: Cyrus - CSIS
Find CLSA research on Bloomberg, Thomson Reuters, CapIQ and themarkets.com - and profit from our evalu@tor proprietary database at clsa.com
NasDem
7%
PKB
11%PKS7%
PDI-P19%
Golkar14%
Gerindra
12%
Demokrat9%
PAN
7%
PPP
7%
Hanura5%
PBB2%
PKP
1%
Jayden [email protected]+62 21 2554 8834
Sarina Lesmina+62 21 2554 8820
10 April 2014
IndonesiaPolitics
www.clsa.com
Many claims to the throneThe quick count results are in for Indonesias legislative election. PDI-P
garnered much less of the legislative vote than expected (19% vs 30-
35% anticipated vote). Next will come negotiation amongst parties in
forming presidential tickets ahead of the July vote. The field remains wide
open which will create uncertainty in the process. Near term defensives
should outperform (TLKM, PGAS, JSMR) and weakness may create
opportunities to accumulate infra stocks (WIKA, INTP) and interest rate
sensitives (BMRI, BBRI, PWON and SMRA).
More even than expectedq PDI-P garnered 19% of votes. It was the consistent favourite according to recent
polls with Jokowi as its announced Presidential candidate with 30-35% implied inpre-election polling.
q Golkar, led by Bakrie, achieved 14% of votes, Prabowos Gerindra 12% and SBYsDemokrat party 9% of votes (17% counting affiliate PAN).
q Anecdotally, a level of complacency/apathy set in with many Indonesians assumingthe presidential vote more important. Poll observers estimate a 75% turnout rate.
Key positive is the peaceful processq The major positive of the day is that the election process was peaceful. There was
no major violence on election day, consistent with the campaign period.
q Indonesians voted in temporary voting stations throughout the country with votingcards distributed by neighbourhood heads.
Coalition forming ahead of July presidential run-offq Next will come the negotiations amongst parties in forming coalitions to put forth
Presidential-Vice Presidential pairings. Indonesia will vote in round 1 for its next
president in July allowing ~3 months for this process.q Based on the legislative outcome, many combinations are possible. A PDI-P-Golkar
ticket would need support of at least a third party.
q Gerindras performance in the polls as well as its early alliance with Islamic partyPPP means a Probowo-led coalition will feature prominently in the presidential race.
q A wider coalition of parties means less room for qualified technocrats, and morepolitical appointees to ministries.
Less certaintyq Based on the quick count and existing political allegiances we estimate any
government is going to require a coalition of 4+ parties.
q Against this backdrop, the market may pause or even give back some of its strongrecent gains. Near term this may favour relative defensives (TLKM, PGAS, JSMR).
q A smooth negotiation process delivering a narrower coalition of parties would
favour the infrastructure theme (INTP, SMGR, WIKA, PTPP) and interest ratesensitives (BMRI, BBRI, PWON, SMRA).
http://www.clsa.com/http://www.clsa.com/ -
8/12/2019 Indonesia Politics (Many Claims to the Throne) 20140410
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Many claims to the throne Indonesia
10 April 2014 [email protected] 2
Figure 1
Election timeline
Source: Government of Indonesia, media, CLSA
Figure 2 Figure 3
What was expected in pre-election polling what the quick count showed
Source: CSIS Source: Cyrus, CSIS
Figure 4
Voter turnout
Source: CSIS
11 January 05 April2014: campaigning
9 Apr 2014 -Legislativeelection
07-09 May2014: Theannouncement of theresult of the legislative
election and the partieswhich fulfill the 3%threshold
26 April 06 May 2014:
Counting the ballots onnational level
Mid May 2014: Maxseven days after theannouncement ofLegislative election
result, Political Partiesmust reveal theirPresidential candidates
06-08 April 2014: thecalm before theLegislative election
25 April 25 May 2014:Campaign fund audit
09 July 2014 -the Presidentialelection
Sept 2014 shouldthere be a secondround
Oct 2014 newPresident will starthis tenure
15.0
33.4
15.5
3.2 3.0 3.81.8
4.6
1.5
14.5
0
5
10
15
20
25
30
35
40
Golkar
PDI-P
Gerindra
Demokrat
PAN
PKB
PPP
Hanura
Nasdem
Undecided
Nov 13 (Jokowi not nominated)
Nov 13 (Jokowi nominated)
Mar 14
NasDem
7%
PKB10%
PKS7%
PDI-P
19%
Golkar
14%
Gerindra
12%
Demokrat
9%
PAN
7%
PPP
7%
Hanura5%
PBB
2%
PKP
1%
93.3
84.07
70.9975.3
0
10
20
30
40
50
60
70
80
90
100
1999 2004 2009 2014
%
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8/12/2019 Indonesia Politics (Many Claims to the Throne) 20140410
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Many claims to the throne Indonesia
10 April 2014 [email protected] 3
Figure 5 Figure 6
Volunteers at work in a polling booth in Jakarta Security staff supervise; inked pinkie after voting
Source: CLSA Source: CLSA
Figure 7 Figure 8
Voters inspect the roll of candidates in their area Voters can buy a t-shirt after the election
Source: CLSA Source: CLSA
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Many claims to the throne Indonesia
10 April 2014 [email protected] 4
Figure 9
Indonesian large cap valuations
Market cap P/E (x) Price to book (x) ROE (%)
Ticker Name US$b Rec 14CL 15CL 14CL 15CL 14CL 15CL
Conglomerates
ASII IJ Astra Intl 28.7 U-PF 15.7 13.3 3.4 3.0 23 23
.
Banks
BBCA IJ BCA 23.9 O-PF 16.4 14.0 3.6 3.1 24 24
BBRI IJ BRI 22.2 O-PF 10.6 9.5 2.6 2.2 27 27
BMRI IJ Bank Mandiri 21.2 O-PF 11.8 10.3 2.3 2.0 21 21
BBNI IJ BNI 8.6 U-PF 10.1 9.0 1.8 1.5 19 19
.
Utilities
TLKM IJ Telkom 20.8 BUY 15.0 13.9 3.3 3.0 23 23PGAS IJ Perusahaan Gas 11.3 O-PF 11.8 12.7 3.8 3.4 33 33
.
Infrastructure
SMGR IJ Semen Indonesia 8.8 O-PF 19.1 17.3 4.4 3.9 24 24
INTP IJ Indocement 8.1 BUY 17.0 15.3 3.4 2.9 22 22
UNTR IJ United Tractors 6.9 SELL 16.3 13.1 2.3 2.0 14 14
.
Consumer
UNVR IJ Unilever Indo 20.0 U-PF 37.6 34.0 43.9 39.1 123 123
GGRM IJ Gudang Garam 8.6 O-PF 19.6 16.8 3.0 2.7 16 16
KLBF IJ Kalbe Farma 6.3 BUY 31.3 26.0 7.6 6.6 26 26
INDF IJ Indofood 5.6 U-PF 14.3 12.8 2.5 2.2 18 18ICBP IJ ICBP 5.2 U-PF 21.4 19.6 4.1 3.7 20 20
Source: CLSA. Note top 15 covered stocks by market cap
Companies mentionedBank Mandiri (BMRI IJ - RP10,250 - OUTPERFORM)
BRI (BBRI IJ - RP10,175 - OUTPERFORM)
Indocement (INTP IJ - RP24,950 - BUY)
Jasa Marga (JSMR IJ - RP6,100 - BUY)
Pakuwon (PWON IJ - RP387 - BUY)
Perusahaan Gas (PGAS IJ - RP5,275 - OUTPERFORM)
Semen Indonesia (SMGR IJ - RP16,800 - OUTPERFORM)
Summarecon (SMRA IJ - RP1,115 - BUY)
Telkom (TLKM IJ - RP2,330 - BUY)
Wijaya Karya (WIKA IJ - RP2,440 - BUY)
https://www.clsa.com/member/company/index.asp?clsa_id=1726https://www.clsa.com/member/company/index.asp?clsa_id=1827https://www.clsa.com/member/company/index.asp?clsa_id=162705874https://www.clsa.com/member/company/index.asp?clsa_id=1853https://www.clsa.com/member/company/index.asp?clsa_id=130005757https://www.clsa.com/member/company/index.asp?clsa_id=162705835 -
8/12/2019 Indonesia Politics (Many Claims to the Throne) 20140410
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