Indonesia Market Summaries 26 June 2013 Session 2

• PT Bank Tabungan Pensiunan Nasional Tbk (BTPN) immediately finalize the acquisition of PT Bank Sahabat Purba Danarta. After 70% stock transaction valued at Rp600 billion, Bank Sahabat Purba Danarta base in Semarang city, will be sharia bank.
  
  Acquisitions that have been revealed since 2011 ago would take a majority stake in Bank Sahabat previous owner, PT Persada Triputra Rachmat, owned by former high-ranking Astra Group, Mr. Theodore Permadi Rachmat. BTPN it self, recently acquired by Sumitomo Mitsui Bank from TPG Capital. (Bisnis Indonesia, Investor Daily, Kontan)
• PT Perusahaan Gas Negara Tbk (PGAS, Rp5.100) to acquire oil and gas blocks that are already in production for 10 years, Ujung Pangkah Block, in East Java. Acquisitions worth U.S. $ 265 million (equivalent to Rp2,62 trillion) was done by buying Kufpec Indonesia (Pangkah) BV from Kuwait Foreign Petroleum Exploration Company KSC. The gas block is located 50 Km from the industrial center of Surabaya. (Bisnis Indonesia, Investor Daily)
• The oil and gas of Bakrie Group, PT Energi Mega Persada Tbk (ENRG, Rp111) plans to pay off debts totaling U.S. $ 400 million to Credit Suisse and ND Owen Holdings Ltd. (Investor Daily, Bisnis Indonesia)
• PT Benakat Petroleum Energy Tbk (BIPI, Rp139) completed the acquisition of PT Astrindo Mahakarya Indonesia. In addition to transaction valued at U.S. $ 600 million, the completion was also accompanied by the completion of the acquisition of PT Benakat Patina worth U.S. $ 105 million. (Bisnis Indonesia)

Bank Tabungan Pensiunan Nasional at an attractive valuation

Bank Tabungan Pensiunan Nasional: At an attractive valuation  (BTPN; Rp4,775, Buy, TP:Rp5,500)

We reiterate our Buy call on BTPN, which is trading at 2.8x P/BV 2013F, after its share price declined 20% from the peak. The new shareholder, SMBC, is not likely to change the business model or the management, hence concentration will remain on the high-margin micro lending and pensioners.

Sumitomo Mitsui Banking Corporation (SMBC) to become major shareholder. SMBC has bought 24.3% of BTPN shares earlier this month and plans to increase its ownership to 40% if it gets approval from the central bank. The investment, which was done at Rp6,500 or 4.9x P/BV 2012, is long-term with no intention to increase the stake beyond the 40% limit stipulated by the existing regulation. TPG Nusantara still owns 41% (previously 57.9%) but will reduce it to 25.3% when SMBC realizes its additional purchase from the company.

No change in BTPN management.  Despite there is no agreement between the management and SMBC we understand that the current management will remain intact for the foreseeable future.  BTPN’s business model on micro lending (loan to pensioners 70% and micro loans 23%), the main factor for SMBC’s decision to buy, will be unchanged, hence we expect the bank to deliver high ROE of more than 25%. In the longer term SMBC may replicate such platform in other countries in the region.

Potential lower cost of funds. BTPN’s reliance on high-rate-bearing time deposits (84% of total deposits) and borrowings may change in the long term. SMCB's higher rating may help BTPN tap the bond market with lower cost of funds. This will help maintain the high margin.

Reiterate Buy. BTPN share price has underperformed the JCI by 30% this year after outperforming the market by 39% in 2012. We believe investors had taken profit learning that there would not be any tender offer post the acquisition. While we lowered our earnings forecasts by 7% for 2013 and 5% for 2014 due to the expected slower loan growth post the fuel price increase and higher corporate income tax rate of 25% we reiterate our BUY call on the bank  with the expected 26% average ROE in 2013-15. Consequently we also lowered TP to Rp5,500 from Rp5,600 based on 3.2x P/BV 2013F.

for Indonesia Market Summaries 31 May 2013

Indonesia Market Summaries 10 May 2013

Bank BTPN - SMFG to buy more BTPN at Rp6,500

Sumitomo Mitsui Financial Group (SMFG) is buying 24.26% stake in BTPN for Rp9.2tr translating into Rp6,500/share, to be sourced from  TPG Nusantara (16.87%) and the market (7.39%). The group also plans to increase its stake up to 40% for Yen150b (US$1.5bn) without giving any time table for this. (Kontan, Bisnis Indonesia).

Comment: at Rp6,500 SMFG values the bank at 4.9x and 3.7x P/BV for 2012 and 2013E compared to the industry average of 3.5x and 2.9x. Based on P/E this translates into 19.2x and 15.0x versus the industry average of 15.4x and 12.5x for the same period.

PT Timah delays Myanmar expansion

TINS’ plan to expand to Myanmar has been delayed due to new local regulation requiring local companies to be involved in the mining investment. Thus, TINS is required to start a JV company with a local partner. (Bisnis Indonesia)

Deltamas aims for US$200-300mn IPO

PT Pembangunan Deltamas, the developer of Sinarmas Land’s Kota Deltamas, is aiming for an IPO proceeds of US$200-300mn or equivalent to Rp1.9-2.9tn. The IPO will be conducted in the near term this year. Currently, Deltamas is 50% owned by Sinarmas Land, 25% by Sojitz Corporation, and 25% by Fame Bridge Investment. Kota Deltamas is a 3,000ha township with an industrial estate as well as commercial and residential estates. (Investor Daily)

Surya Semesta recorded industrial land sales decline of 22.6%

In 1Q13, SSIA booked industrial land sales of Rp260bn which declined by 22.6% where the company only sold 28.8ha compared to 43.5ha last year. SSIA claimed that they had difficulties in handing over the land and will only manage to book the sales in the next quarter. The company still believes that they will be able to sell at least 100ha with an ASP of US$125 psqm this year. (Bisnis Indonesia)

General Motors reopens Bekasi Factory

General Motors reopened its factory in Bekasi, West Java, on Wednesday to domestically produce its car for the first time in the Indonesian market in seven years. GM injected US$150mn into the shuttered plant as part of a greater push into lucrative Asian markets. The 58,000sqm facility will assemble up to 40,000 vehicles a year when fully operational. Most of the vehicles will be sold in Indonesia. GM’s international operations president stated that Indonesia is one of GM’s fastest growing markets. GM recently rolled out Chevrolet Spin, a 7-seater MPV (pricing point of Avanza/Xenia at Rp170mn) that is also the first vehicle it made for the domestic market since the Chevrolet Blazer ceased production in 2006. (Jakarta Globe)

Agung Podomoro to pay Rp123bn dividend

Quoted on the news that APLN is paying a Rp123bn dividend in June 2013 or equivalent to Rp6/sh. (Bisnis Indonesia) Comments: The dividend payment implied a yield of 1.3% in 2013.

for Indonesia Market Summaries, 10 May 2013

BTPN's first quarter of 2013 results is in line with expectations

BTPN 1Q13 results - in line with expectations (Rp5,100; Buy; TP Rp5,600)

Results in line. The Rp573bn net profit, +30% YoY, is in line with expectations, accounting to 22% of our full year expectation (similar to 1Q12) and 24% of the consensus.

NIM declined to 11.4% in 1Q13. Despite the lower NIM the strong loan growth of 28% helped support  the 26% YoY growth in net interest income. Lower NIM was recorded given the decline in average interest yield of 17.5% in 1Q13 compared to 18.9% in 1Q12 while the decline in average cost of funds was slower at 6.8% vs. 7.8%. With deposit growth of 25% YoY gross LDR reached the new record of 88%. Of the total loans we believe loans to pensioners (consumer loans) still account for around 72% while micro loans at 23%. On the deposit side, there is not much change in the composition with CASA deposits make up 16% and time deposits 84%.

Low NPL maintained at 0.7%. This level is the same as in March 2012 but it increased from 0.6% recorded in December 2012. With the estimated write-off of Rp95bn in 1Q13 coverage ratio is now at 155% compared to 170% in December 2012 and 144% in March 2012.

High capital. CAR is one of the highest in the industry at 22.8% with Tier I CAR of 21.9%.

Buy with TP Rp5,600. The bank, which has been recording 23-35% ROE in the past nine years is trading at 2.9x P/B 2013F. Maintain Buy with TP of Rp5,600 based on 3.2x P/B 2013F.

For today March 22 2013

Modernland acquiring land to further develop industrial estate

Modernland (MDLN) is serious in acquiring land 1,300ha and 1,000ha in Jakarta and Banten respectively, to develop their industrial estate. In Eastern Jakarta, the company is planning to acquire 750ha this year first and the rest next year. MDLN will develop industrial estate on half of the land and a residential on the other half where construction will take 2 years. Meanwhile in Banten, MDLN is planning to add 1,000ha to its Modern Cikande industrial estate. The company stated that they will acquire 400ha next year and 200ha in 2015. MDLN expects land sales of 100ha per year. CAPEX for this year is allocated at Rp1.9tn from land sales and internal cash, while revenue is targeted to be Rp2tn. (Kontan)

Modernland (MDLN) issuing USD150million bond

Bank Tabungan Pensiunan Nasional - Mitsubishi has little interest to acquire BTPN

In contrast to the earlier news, Bank of Tokyo-Mitsubishi UFJ said that there is small chance for the group to acquire Bank Tabungan Pensiunan Nasional (BTPN) from TPG Group. They however stated that they were looking at several small and mid-sized banks to be acquired to increase the penetration in the Indonesian market. Comment: this leaves another Japanese group, Sumitomo Mitsui, is the only group that may acquire BTPN, currently 57.9% owned by TPG Group. With the market cap of US$3.1b the bank is trading at 3.0x P/BV 2013 consensus.
Bank Tabungan Negara results in line with expectations

Chili price on the rise

Investor Daily newspaper reported that while garlic price is easing though not significantly, chili price is gaining pace. The Ministry of Agriculture is investigating whether it is cause by supply scarcity or market manipulation. However, the ministry’s Vice Minister Rusman Heriawan suspect weather as the culprit (Investor Daily)

The government considers to cut capital spending budget

 The Minister of Finance Agus Martowardojo expressed that underachieving state revenue due to external pressure and exports weakening and potentially swelling subsidized fuel are risking an increase in state budget deficit which currently set at 1.65% of GDP or Rp153.3tn in 2013. Therefore, The Ministry of Finance considers to cut ministerial/institution budget including capital spending if subsidized fuel rationing and consumption control programs are not able to meet target. This is considering historical track that very few ministerial/institution spending realization can achieve 90% of budget. Consequently, there may be a downward revision in 2013 economic growth projection. The government aims for 6.8% economic growth this year (Bisnis Indonesia)

Industrial and finance ministers have signed the low carbon emission program draft regulation

Industrial Minister M.S. Hidayat and Finance Minister Agus Martowardojo reportedly have signed draft regulation on low carbon emission program, the umbrella of LCGC. It is further stated that the draft must be signed by three other ministers before it is submitted and signed by the President. The government previously hinted for the regulation to be out this month. (Bisnis Indonesia)

Sinarmas Securities Recommendation for March 14 2013

Sinarmas Securities RECOMMENDATION: INTP, BTPN, ADHI & WIIM

In trading Thursday (14/3), we expect Indeks Harga Saham Gabungan ( IHSG / JCI ) will move down in the range of 4811-4864. Note INTP, BTPN, ADHI, and WIIM.

Factors which driving the index from the country, we thought was the government's plans to change the policy of fuel subsidy.

From abroad, the data on the euro zone's industrial production is expected potential to fall, giving a sentiment to index movement. Note the retail sales data and U.S. export-import.
(Bisnis Indonesia)

Targeted by Foreign Investors - BTPN go to top gainers

Shares of PT Bank Tabungan Pensiunan Negara Tbk (BTPN) to be one of the targeted stock by foreign investors this morning (7/3/2013) At 9:19 pm. BTPN shares entering the top gainers chart, rise 5.38% to Rp 4900.

The foreign investors' interest is presumably related to rumors circulating this morning. According to two Bloomberg sources declined to be named, The Mitsubishi UFJ will buy the BPN stokcs from TPG Capital, USD1.6 billion. (Kontan)