Indonesia: Premier Insight - PTRO Obtained New Contracts of US$1.01bn in 1Q18 as the Company had Signed Amendment and Extension of Contracts with Two Major Clients, Indonesia Pratama and Kideco Jaya Agung

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1. Premier Insight 13 April 2018 News & Analysis Corporates 12,000 6,400 10,000 6,350 8,000 6,250 6,000 6,200 6,150 Rp bn JCI Index 6,300 4,000 ANTM: Aneka Tambang (ANTM IJ; Rp865; Not Rated) plans to restructure its business. CEO of ANTM Arie Prabowo Ariotedjo stated that the company will focus and add its ownership on subsidiaries which engages in three commodities; bauxite, gold and nickel while divesting its subsidiary which are not related to the core mining business on these three commodities. (Detik, Jakarta Post). 6,100 2,000 6,050 12-Apr 9-Apr 11-Apr 6-Apr 10-Apr 5-Apr 4-Apr 3-Apr 2-Apr 29-Mar 28-Mar 27-Mar 26-Mar 23-Mar 22-Mar 21-Mar 20-Mar 19-Mar 16-Mar 15-Mar 14-Mar - 13-Mar 6,000 0% (0) -2% 10-Jan 2% - 11-Jan 0 (0) -4% (0) -6% (0) -8% (0) -10% (0) -12% (0) -14% (0) -16% % net buy/market turnover Foreign net buy (sell) Net buy (sell) in Rp bn Equity | Indonesia | Research Daily JCI Index 6,450 Key Indexes Index Closing 1 day 1 year YTD JCI 6,311 - 0.8% 12.4% -0.7% LQ45 1,034 - 1.3% 11.6% -4.2% 24,483 1.2% 19.7% -1.0% DJI SET 1,767 0.2% 11.2% 0.8% HSI 30,831 - 0.2% 27.1% 3.0% NKY 21,660 - 0.1% 17.5% -4.1% -5.6% FTSE 7,258 0.0% -0.9% FSSTI 3,469 - 0.3% 9.4% 1.9% 28 - 1.0% 6.3% -2.7% EIDO Commodity price Commodities Last price Ret 1 day Ret 1 year (in USD) 67.1 0.4% CPO/tonne Oil/barrel (WTI) 624.6 -0.3% -6.4% Soy/bushel 10.3 1.3% 11.5% Rubber/kg 26.3% 1.8 -0.8% -35.6% Nickel/tonne 13,671 -1.1% 41.2% Tins/tonne 20,980 -0.3% 8.2% Copper/tonne 6,787 -1.8% 21.2% Gold/try.oz (Spot) 1,335 -1.4% 3.6% 93.7 0.0% 10.8% 3.6 0.6% 4.0% 477.5 -0.7% 11.1% Coal/tonne Corn/bushel Wheat/bushel (USd) Source : Bloomberg BSDE: Bumi Serpong Damai (BSDE IJ; Rp1,775; Buy) reported marketing sales of Rp2.5tn (+58% yoy) in 1Q18, cumulating 36%/35% of our/company’s FY18 target of Rp7/7.2tn. Residential sales were Rp956bn (+129% yoy), which mainly contributed by recent launches in Zora, Jadeite and Tevana at BSD City. Commercial sales reached at Rp1.6tn (+364% yoy), consisted of Rp652bn in commercial land plot, Rp718bn in strata title, and Rp201bn of shop houses. Commercial sales in 1Q18mostly supported by recent launches in Klaska Residence Surabaya and Southgate Condominium in TB Simatupang worth of Rp366bn and Rp253bn, respectively. (Company). Comment: We continue to be positive on BSDE as the company continues to show great MS achievement. Maintain Buy on BSDE with TP of Rp2,400. INDY: Management of Indika Energy (INDY IJ; Rp3,810; Not Rated) targets revenues to increase three fold and EBITDA to jump four fold in FY18F. Mostly stemming from full-year impact of Kideco acquisition last year as INDY’s ownership in Kideco increased from 45% to 91%. The company targets Kideco coal production volumes to increase to 34mn tons. Separately, another INDY’s subsidiary, Kariangau Gapura Terminal Energi (KGTE) obtained construction and storage service contract from ExxonMobil Lubricant Indonesia worth US$108mn. (Bisnis Indonesia, Investor Daily). MPMX: Mitra Pinasthika Mustika’s (MPMX IJ; Rp975; Buy) subsidiary, Federal Karyatama, plans to expand their business to lubricants for industrial segment. The company will utilize B2B for its marketing strategy but they still not disclose yet which companies they aim as the target marketing. Further, the company will aim to two major market. First, manufacturing industry on which require lubricants for its machine. Second, public transport industry which require lubricants to its fleets. (Kontan). Comment: This is a good news as lubricants for industry is still controlled with imported products which is relatively more expensive to local brand. We believe this will be a good support for MPMX top line going forward. PPRO: PP Properti (PPRO IJ; Rp174; Not Rated) booked marketing sales of Rp703bn (+9.3% yoy) in 1Q18, cumulating to 18% of company’s FY18 target of Rp3.8tn. Marketing sales in 1Q18 were supported by sales in Grand Shamaya project in Surabaya and Grand Kamala lagoon in Bekasi worth Rp290bn and Rp50bn, respectively. PPRO estimate 1Q18 revenue to reach Rp640-648bn (+15% yoy). In addition, PPRO believes that their marketing sales would be hugely improved in Q2 going forward. (Bisnis Indonesia). PTRO: Petrosea (PTRO IJ; Rp2,380; Not Rated) obtained new contracts of US$1.01bn in 1Q18 as the company had signed amendment and extension of contracts with two major clients, Indonesia Pratama and Kideco Jaya Agung. The new contracts period reached up to five years. (Investor Daily). Refer to Important disclosures in the last page of this report
2. PremierInsight Markets & Sector Retail sector: According to Savills Indonesia, as of 1Q18 modern retail remain weak as the vacancy rate in shopping malls keep increasing qoq from previously 12.1% in 4Q17 to 12.7% in 1Q18. The highest vacancy rate is in high-end shopping malls from previously 6.4% in 4Q17 to 8.6% in 1Q18. Increasing supply will make Jakarta to have 450K m2 retail space in 2021 with upper grade to have 56% and middle up for 44%. (Investor Daily). Economic Sovereign rating: Moody’s Investors Service has revised up Indonesia’s sovereign credit rating to Baa2 from Baa3 and changed its outlook from positive to stable. Its rationale for the rating revision are: (1) Fiscal policy, which has remained conservative and prudent with projected debt-to-GDP ratio of 30% within next few years, (2) Monetary policy, which has proven record of prioritising stability over short-term growth & willingness to employ macroprudential measures – lowering risk of inflation rise, and (3) Strengthening Indonesia’s external position and development of reserve buffers as well a shift away from commodities, which increase the country’s resilience. At the same time, Moody’s also highlights increasing contingent liability related to SOEs as well as government revenue prospect as risks for the economy and the rating position. (Moody’s Investors Service). Comment: We believe this update is positive and should be catalyst for bond and, expectedly, equity markets. To note, Moody’s rating revision had been awaited since February. As of now, four major rating agencies have revised up Indonesia’s rating to one notch higher than investment grade, namely Fitch, JCR, R&I, and Moody’s. Business survey: Business expanded by 8.2% in 1Q18 (vs 4.8% 1Q17) according to BI’s business survey and driven by finance, real estate, and company services (2.6%) and followed by agriculture and forestry (2.4%). The PMI also showed positive improvement to 50% from 48% in 1Q17. It is expected that business will remain improving in 2Q18 by 18% and PMI to increase by 54%, respectively (vs 17.4% and 52%). (Bank Indonesia). Refer to Important disclosures in the last page of this report 2
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