Indonesia Morning Journal

18 Jan, 2017

Research Report Indices Last Chg (%) MoM (%) YTD (%)

ASEAN
Indonesia Banking Industry Indonesia (IDX) 5,267 (0.06) 0.67 (0.56)
Malaysia (KLCI) 1,663 0.25 1.54 1.30
Analyst: Yap Swie Cu
Philippines (PCOMP) 7,123 (1.59) 3.98 4.13
4Q16 Earnings preview: Mandiri to drag down sector Singapore (STI) 3,013 (0.01) 2.55 3.82
performance Thailand (SET) 1,567 (0.32) 2.91 2.29
REGIONAL & USA
Mandiri to be the weakest, while BJB to show China (SHCOMP) 3,109 0.17 (0.45) 0.17
strongest 4Q16 net profit growth Hongkong (Hang Seng) 22,841 0.54 3.72 3.82
Loan loss provision to subside in most banks India (SENSEX) 27,236 (0.19) 2.82 2.29
Japan (Nikkei) 18,814 (1.48) (3.03) (1.57)
Margin to start declining Korea (KOSPI) 2,072 0.37 1.45 2.24
Lending to accelerate, but at modest pace Taiwan (TWSE) 9,355 0.67 0.30 1.09
USA (Dow Jones) 19,827 (0.30) (0.08) 0.32
Source: Bloomberg
Todays Headlines
Currencies Last Chg (%) MoM (%) Ytd (%)
INDUSTRY
USD/IDR 13,333 0.22 0.47 1.05
Bottled water industry aims to book 9% YoY USD/IDR (1-month NDF) 13,366 0.10 1.08 1.61
growth in 2017F EUR/IDR 14,223 (0.57) (1.72) (0.43)
GBP/IDR 16,162 (0.48) 3.07 2.31
JPY/IDR 117.7 (0.62) (3.77) (2.24)
CORPORATE CNY/IDR 1,942 (0.44) (0.79) (0.12)
Mayora Indah (MYOR IJ) will issue IDR500bn bond SGD/IDR 9,373 (0.37) (0.96) (0.67)
USD Index 100.3 0.85 2.61 1.87
with coupon rate of 9-9.5%, as part of its IDR2tn Source: Bloomberg

self-registered bond to refinance its Syariah bond Commodities Last Chg (%) MoM (%) YTD (%)
and financing its working capital
Coal (USD/ton) - Newcastle 84.6 1.99 (2.25) (4.36)
Sentul City (BKSL IJ) targets 2017 marketing sales Crude oil (USD/b) - Brent 55.5 (0.70) (0.63) (2.38)
to reach IDR1.2tn (vs 2016: IDR800bn) or grow by Gold (USD/toz) - Spot 1,217 1.19 7.24 6.06
Nickel (USD/mt) - LME 10,160 (0.97) (9.04) 1.40
50% YoY
CPO (MYR/mt) - MDEX 3,255 1.50 2.10 1.15
Astra International (ASII IJ) Astratel Nusantara Soybean oil (USd/lb) - Chicago 35.6 0.54 (3.21) 3.31
acquired 18% ownerships of PT Lintas Marga Skimmed Milk (USD/mt) - NZ 2,600 (3.70) (6.31) (5.11)
Corn (USD/mt) - Chicago 366 1.95 2.60 3.84
Sedaya (LMS) Pulp (USD/t) - NBSK 809 (0.01) 0.02 0.01
Semen Indonesia (SMGR IJ) to postpone the Sugar (USD/lb) - ICE Futures 20.7 1.02 13.78 6.25
Tin (USD/mt) - LME 21,100 0.36 (0.61) (0.12)
operation Rembang factory
Wheat (USD/bsh) - Chicago 434 1.76 5.93 6.25
Source: Bloomberg
Please see the overleaf for news details
ETF & ADR Last Chg (%) MoM (%) YTD (%)
Turnover
IDX - Top Movers & Laggards Last Chg (%)
(IDR bn) EIDO US (USD) 24.3 (0.73) 2.23 0.79
TLK US (USD) 29.6 0.44 3.93 1.47
MOVERS Source: Bloomberg

ASII ASTRA INTERNATIONAL TBK PT 8,050 0.94 47.1 Indonesian Government Bond Yield - Generic
TOWR SARANA MENARA NUSANTARA PT 3,500 6.38 2.8
TLKM TELEKOMUNIKASI INDONESIA PER 3,970 0.51 182.3 Yield 2Y Yield 5Y Yield 10Y

BDMN BANK DANAMON INDONESIA TBK 3,800 3.26 13.0 8.5

BBNI BANK NEGARA INDONESIA PERSER 5,525 0.91 101.2 8.0

LAGGARDS 7.5
HMSP HM SAMPOERNA TBK PT 3,920 (0.76) 22.2
7.0
AMRT SUMBER ALFARIA TRIJAYA TBK P 560 (8.94) 0.0
SMBR 1,995 (8.49) 29.6
6.5
SEMEN BATURAJA PERSERO TBK P
BNLI BANK PERMATA TBK PT 670 (10.07) 72.2 6.0
27-Nov 4-Dec 11-Dec 18-Dec 25-Dec 1-Jan 8-Jan 15-Jan
GGRM GUDANG GARAM TBK PT 62,500 (1.11) 17.0
Source: Bloomberg Source: Bloomberg

Indonesia Morning Journal 18 Jan, 2017 Page 1 of 8

 Indonesia Morning Journal
18 Jan, 2017

Research

Indonesia Banking Industry

4Q16 Earnings preview: Mandiri to drag down sector performance
Mandiri to be the weakest, while BJB to show strongest 4Q16 net profit growth. 4Q16 earnings season is getting
underway. We project 4Q16 net profit from the seven banks under our coverage to fell by 12.4% QoQ, dragged
down by 33% QoQ decline in Bank Mandiris (BMRI IJ) 4Q16 net profit, as the bank indicated that it would still set
aside massive loan loss provision in the final quarter of 2016. Declining margin, in addition to spiking operating
expenses which usually happens in 4Q, would also lower the average net profits compared to previous quarter.
BPD Jawa Barat & Banten (BJB/BJBR IJ) would post the strongest QoQ net profit growth (+15.2% QoQ), according to
our projection, amid low base in 3Q16 and the acceleration of lending growth.

Loan loss provision to subside in most banks. We expect most of the banks under our coverage would lower their
credit costs in the final quarter of the year, in line with slower formation of new NPL. We estimate average
annualized credit cost in 4Q16 to fall to 2.0% from 2.5% in a quarter before. Bank Mandiri is expected to book the
highest annualized credit cost of 3.2% as it intends to improve its loan loss coverage to 140% level from 126% at
end 3Q16. Meanwhile, Bank Central Asia (BBCA IJ) would book the lowest annualized credit cost of 1% as it had the
highest provision coverage of slightly above 200%.

Margin to start declining. From the recent 11M16 unconsolidated results, we notice that net interest income
showed decelerating growth in contrast to the acceleration of lending growth, which indicated that margin
compression was in sight. Highest contraction may happen at Bank Rakyat Indonesia (BRI/BBRI IJ) as its time
deposit portion rose significantly during the first two months of 4Q16 to catch up the robust lending growth.

Lending to accelerate, but at modest pace. Due to seasonal factor, lending growth was accelerated in 4Q16,
though the pace was lower compared to previous years amid weak economic condition. In 11M16, state banks
showed above average lending growth, like we had expected before, benefitted by governments infrastructure
projects, micro lending and low-cost housing programs. Bank Negara Indonesia (BNI/BBNI IJ) showed the highest
lending growth of 17.8% YTD in 11M16, followed by BJB at 15.2% YTD, Bank Tabungan Negara (BTN/BBTN IJ) at
13.7% YTD, BRI at 12.3% YTD and Bank Mandiri at 7.2% YTD. Meanwhile, Bank Central Asia showed flat lending
growth (0.5% YTD) in the period, while Bank Danamons total lending contracted by 8% YTD.

Top pick. We believe the top four banks - Bank Mandiri, Bank Rakyat Indonesia, Bank Central Asia, and Bank
Negara Indonesia would have better position better compared to smaller peers to face new challenge of tight
liquidity and declining margin in the coming quarters. Beside having better liquidity position, their more advance
banking infrastructure would allow them to have faster fee-based business growth and operate more efficiently to
offset falling net interest income growth. Among these four banks, BRI and BNI are having more attractive
valuation at FY17F PE of 9.6x and 8.7x, respectively.

Indonesia Morning Journal 18 Jan, 2017 Page 2 of 8

 Indonesia Morning Journal
18 Jan, 2017

News

INDUSTRY
Bottled water industry aims to book 9% YoY growth in 2017F
According to Bottled Water Industry Association (Aspadin) this industry is expected to grow by 9% YoY in 2017F,
equal to the 2016FY growth at 8.5-9% YoY. The increment is mainly driven by sales volume growth that expected to
reach 2.41bn liters as the Aspadin members dont plan to set higher price sales. To capture this, the Aspadin
members plans to increase its production volume despite utilization rate that already reached 90%. (Investor Daily)

CORPORATE
Mayora Indah (MYOR IJ) will issue IDR500bn bond with coupon rate of 9-9.5%, as part of its IDR2tn self-registered
bond to refinance its Syariah bond and financing its working capital. (Kontan)

Sentul City (BKSL IJ) targets 2017 marketing sales to reach IDR1.2tn (vs 2016: IDR800bn) or grow by 50% YoY.
(Bisnis Indonesia)

Astra International (ASII IJ) Astratel Nusantara acquired 18% ownerships of PT Lintas Marga Sedaya (LMS)
Wiwiek Santoso, Director of PT Astratel Nusantara (AN) said that the total transaction acquiring 22.3% of LMS (Cipali
toll road operator) total shares reach IDR2.5tn. Currently, AN has acquired 18% of the shares while the rest is
shareholders loan which will be converted to shares. (Bisnis Indonesia)

Semen Indonesia (SMGR IJ) to postpone the operation Rembang factory

Semen Indonesia postpones the operation of its Rembang factory as Ganjar Pranowo, Governor of Middle Java,
revoked operating factory license and environmental raw material mining license. Semen Indonesia will implement
Supreme Courts (MA) recommendation to improve the environmental impact assessment (AMDAL). (Kontan)

Indonesia Morning Journal 18 Jan, 2017 Page 3 of 8

 Indonesia Morning Journal
18 Jan, 2017

Helmi Therik

6221-5153608 Fixed income idea

The US short term yield curve shifted down as the latest
helmi.therik@yuanta.co.id economic data came with the soft figure. The empire state
manufacture figure was below the consensus which
pointing the modest activity. On the other hand, the hint
Currency from the FOMC member voters was not clear regarding
the rate trajectory. The strengthening US dollar would
01/17/2017 01/16/2017 reduce the inflation risk ahead while on the other hand
USD/IDR 13330 13333 the uncertainty regarding the detail of the fiscal spending
remained. Thus, the market will continue to monitor the
EUR/USD 1.0705 1.0713 upcoming indicator as a basis to move the market such as
USD/JPY 112.79 112.62 December CPI, industrial output and jobless claim. The
2yr yield was down by 5bps to 1.17% while that of 30yr
USD/SGD 1.4187 1.4154 yield decreased by 6bps to 2.93%.

The taming of US bond trading has transmitted into the

Government Bond Ownership (in trilion) domestic bond market that moved at the thin range. The
expectation of the benign inflation expectation from the
Investor 01/16/2017 01/13/2017 domestic side was another positive sentiment but we still
BI 24.28 32.24 expect for the steady 7D repo rate at 4.75%. However, we
felt that the wait and see mode still sway the trading
Bank 512.91 506.72
toward the Trumps inauguration this week. The 10yr yield
Foreign 673.46 672.57 was at 7.83%, while the 20yr yield closed at 8.0%.
Others 575.04 575.33
Most active on the market. The most actively
Total 1,785.69 1,786.86 traded bonds were FR0059 with total value of IDR
3927bn, followed by FR0072with total value of
IDR 2014bn and FR0074 with total value of
Most Active Government Bond
IDR892bn.

Series Tenor Price Valuation. The select bond such as FR0059 and
FR0072 traded at 96.50 and 102.20 respectively,
FR0059 10.33 96.50
which based on our calculation was at the fair
FR0072 19.33 102.22 price (neutral).
FR0074 15.58 97.14
Foreign Reserve in bn USD
FR0068 17.16 102.85

Indonesia Rating
S&P BB+
Moodys Baa3
Fitch BBB-

Key Market Indicators

BI Rate 6.50%
JCI 5,267
Inflation (YoY) 3.02%
Inflation (MoM) 0.42%
Source: Bloomberg, Yuanta Securities Indonesia Source: Yuanta Securities Indonesia estimation

Indonesia Morning Journal 18 Jan, 2017 Page 4 of 8

 Indonesia Morning Journal
18 Jan, 2017

Figure 1: Bond Valuation (NelsonSiegelSvensson Model)

Yield
Last Fair Bps Curve Spread to Trading
Series Tenor Coupon Price Price (+/-) YTM (NSS) YC (bps) Idea
SPN03170209 0.06 5.8% 99.74 100.06 -0.32 4.55% 4.4% 0.1 Neutral
SPNS24022017 0.1 6.0% 99.55 100.11 -0.56 4.55% 4.6% -0.1 Neutral
SPN12170302 0.12 6.3% 99.44 100.15 -0.71 4.90% 4.7% 0.2 Neutral
SPN12170511 2.74 6.2% 98.53 102.23 -3.7 4.88% 5.3% -0.4 Neutral
PBS009 1.02 0.0% 101.6 94.02 7.58 6.02% 6.3% -0.2 Neutral
SR007 1.14 8.3% 101.35 102.09 -0.74 7.02% 6.3% 0.7 Under value
ORI012 1.74 9.0% 103.4 103.71 -0.31 6.92% 6.6% 0.3 Neutral
SR008 2.14 0.0% 102.1 86.9 15.2 7.33% 6.8% 0.5 Neutral
FR0069 2.24 7.9% 102.1 102.1 0 6.84% 6.8% 0 Neutral
PBS006 3.66 0.0% 100.93 77.43 23.5 7.25% 7.2% 0 Neutral
FR0031 3.83 11.0% 112.75 112.12 0.63 7.12% 7.2% -0.1 Neutral
FR0053 4.49 8.3% 103.8 103.37 0.43 7.24% 7.4% -0.1 Neutral
FR0061 5.32 7.0% 99.25 97.94 1.31 7.17% 7.5% -0.3 Neutral
FR0063 6.32 5.6% 90.75 90.21 0.54 7.49% 7.6% -0.1 Neutral
FR0070 7.16 8.4% 104.5 103.87 0.63 7.55% 7.7% -0.1 Neutral
FR0040 8.66 11.0% 120.4 119.52 0.88 7.72% 7.8% -0.1 Neutral
FR0056 9.66 8.4% 105.58 103.69 1.89 7.58% 7.8% -0.2 Neutral
FR0059 10.33 7.0% 96.5 94.21 2.29 7.49% 7.8% -0.3 Neutral
FR0047 11.08 10.0% 115.26 115.42 -0.16 7.91% 7.9% 0.1 Neutral
FR0073 14.33 8.8% 106.75 106.95 -0.2 7.95% 8.0% 0 Neutral
FR0054 14.5 9.5% 112.14 112.87 -0.73 8.06% 8.0% 0.1 Neutral
PBS012 14.83 0.0% 105.5 32.14 73.36 8.22% 8.0% 0.3 Neutral
FR0058 15.42 8.3% 102.5 102.88 -0.38 7.96% 8.0% 0 Neutral
FR0065 16.33 6.6% 90 87.76 2.24 7.71% 8.0% -0.3 Neutral
FR0072 19.33 8.3% 102.22 102.93 -0.71 8.02% 8.0% 0 Neutral
FR0057 24.34 9.5% 111 115.07 -4.07 8.43% 8.1% 0.4 Neutral
FR0062 25.25 6.4% 77.5 82.27 -4.77 8.56% 8.1% 0.5 Neutral
FR0067 27.09 8.8% 103.56 107.68 -4.12 8.41% 8.1% 0.3 Neutral

Source: Yuanta Securities Indonesia

Indonesia Morning Journal 18 Jan, 2017 Page 5 of 8

 Indonesia Morning Journal
18 Jan, 2017

Figure 2: Yuantas Fair Yield Curve Vs Actual

Source: Yuanta Securities Indonesia

Indonesia Morning Journal 18 Jan, 2017 Page 6 of 8

 Indonesia Morning Journal
18 Jan, 2017

Research

Kim Kwie Sjamsudin Lucky Ariesandi, CFA Helmi Therik

Head of Research Deputy Head of Research Head of Fixed Income Research
Strategy, construction, Astra group Telco, tower, media, oil & gas Fixed Income
+62 21 515 5890 +62 21 515 5891 +62 21 515 3608
kim.kwie@yuanta.co.id lucky@yuanta.co.id Helmi.therik@yuanta.co.id

Wendy Chandra Yap Swie Cu Vanessa Karmajaya

Analyst Analyst Analyst
Tobacco, cement, property, retail Banking Healthcare, plantation
+62 21 515 3608 +62 21 515 3608 +62 21 515 3608
wendy@yuanta.co.id swiecu@yuanta.co.id vanessa.karmajaya@yuanta.co.id

Andreas Kristo Saragih

Analyst
Construction, cement,
industrial estates
+62 21 515 3608
andreas.kristo@yuanta.co.id

Institutional Sales

Amelia Husada Evelyn Njohana Shela Tanado

Head of Institutional Sales Institutional Sales Institutional Sales
+62 21 278 38917 +62 21 278 38913 +62 21 278 38912
amelia.husada@yuanta.co.id evelyn@yuanta.co.id shela@yuanta.co.id

Kevin Tandrawan
Sales Trader
+62 21 278 38914
kevin.tandrawan@yuanta.co.id

Indonesia Morning Journal 18 Jan, 2017 Page 7 of 8

 Indonesia Morning Journal
18 Jan, 2017

Global Disclaimer
2015 Yuanta. All rights reserved. The information in this report has been compiled from sources we believe to be reliable, but we do not hold
ourselves responsible for its completeness or accuracy. It is not an offer to sell or solicitation of an offer to buy any securities. All opinions and
estimates included in this report constitute our judgment as of this date and are subject to change without notice.

This report provides general information only. Neither the information nor any opinion expressed herein constitutes an offer or invitation to make
an offer to buy or sell securities or other investments. This material is prepared for general circulation to clients and is not intended to provide
tailored investment advice and does not take into account the individual financial situation and objectives of any specific person who may
receive this report. Investors should seek financial advice regarding the appropriateness of investing in any securities, investments or
investment strategies discussed or recommended in this report. The information contained in this report has been compiled from sources
believed to be reliable but no representation or warranty, express or implied, is made as to its accuracy, completeness or correctness. This
report is not (and should not be construed as) a solicitation to act as securities broker or dealer in any jurisdiction by any person or company
that is not legally permitted to carry on such business in that jurisdiction.

Yuanta research is distributed in the United States only to Major U.S. Institutional Investors (as defined in Rule 15a-6 under the Securities
Exchange Act of 1934, as amended and SEC staff interpretations thereof). All transactions by a US person in the securities mentioned in this
report must be effected through a registered broker-dealer under Section 15 of the Securities Exchange Act of 1934, as amended. Yuanta
research is distributed in Taiwan by Yuanta Securities Investment Consulting. Yuanta research is distributed in Hong Kong by Yuanta Securities
(Hong Kong) Co. Limited, which is licensed in Hong Kong by the Securities and Futures Commission for regulated activities, including Type 4
regulated activity (advising on securities). In Hong Kong, this research report may not be redistributed, retransmitted or disclosed, in whole or in
part or and any form or manner, without the express written consent of Yuanta Securities (Hong Kong) Co. Limited.

Taiwan persons wishing to obtain further information on any of the securities mentioned in this publication should contact:

Attn: Research
Yuanta Securities Investment Consulting
4F, 225,
Section 3 Nanking East Road, Taipei 104
Taiwan

Hong Kong persons wishing to obtain further information on any of the securities mentioned in this publication should contact:

Attn: Research
Yuanta Securities (Hong Kong) Co. Ltd
23/F, Tower 1, Admiralty Centre
18 Harcourt Road,
Hong Kong

Indonesia persons wishing to obtain further information on any of the securities mentioned in this publication should contact:

Attn: Research
PT YUANTA SECURITIES INDONESIA
(A member of the Yuanta Group)
Equity Tower, 10th Floor Unit EFGH
SCBD Lot 9
Jl. Jend. Sudirman Kav. 52-53
Tel: (6221) 5153608 (General)

Indonesia Morning Journal 18 Jan, 2017 Page 8 of 8