MARKET

OUTLOOK
2024
Driving business growth in a
dynamic landscape
Shinhan Research Team
Table of Contents

I. Economic Note
II. Corporate Outlook
PT Bank Central Asia Tbk-BBCA
PT Bank Mandiri Tbk-BMRI
PT Bank Rakyat Indonesia Tbk-BBRI
PT Indofood CBP Sukses Makmur Tbk-ICBP
PT Ace Hardware Indonesia Tbk-ACES
PT Charoen Pokphand Indonesia Tbk-CPIN
PT Japfa Comfeed Indonesia Tbk-JPFA
PT Semen Indonesia Tbk-SMGR
PT Indocement Tunggal Prakarsa Tbk-INTP
PT XL Axiata Tbk-EXCL
PT Telkom Indonesia Tbk-TLKM
PT Sarana Menara Nusantara Tbk-TOWR
PT GoTo Gojek Tokopedia Tbk-GOTO

2
 Helmi Therik, FRM

Economic outlook 2024 : Expecting soft economic growth

• Indonesia economy is expected to grow at the range of 5% in 2024 or at the same path
compared to 2023. The aggregate demand growth is projected to come from the household
consumption amid the low inflation environment, stable consumer confidence, social assistance and labor
growth. The private capital formation or investment is also projected to increase by 5% yoy in 2024 that
sourced from domestic investment and also from the foreign direct investment.

• The investment is estimated to grow at the modest pace in 2024 or at around 4%-5% while the
urgency for aggressively increase the capex is not there. This was seen in the utilization rate that
increased to above 75%. The investment cycle in the next couple of quarter is possible while at the
current state the business sector is in the wait and see mode and maintaining their production and
utilization rate that remains enough to anticipate the demand growth in the next 2 years.

• Narrowing fiscal deficit. Despite the need of financing is increasing to Rp522tn in 2024 from Rp486tn,
the size of deficit is going to stronger with the fiscal deficit to GDP is set to reduce to -2.29% in 2024 from
-2.9% in 2023. The narrowing fiscal pressure is also reflected in the primary deficit that estimated to
reduce to Rp25.5tn from Rp156tn in 2023. This means that the fiscal discipline is continue while providing
the room for growth through infrastructure and social assistance to maintain the buying power.

• Pressure in rupiah currency is estimated to decline. we expect that in 2024 the trajectory of the
Fed Fund rate is expected to change. The disinflationary process that predicted will bring down the
inflation to the Fed’s desirable level at around 2% is in progress while the soft lending or slower US
growth will be afoot. This will reduce the demand for USD and will make the room for depreciation of the
emerging market currency including rupiah to be limited. The commodity price has bottoming amid the
geopolitical tension and the stable demand in China due to the government stimulus. This estimated
would be positive catalyst for the rupiah equilibrium that estimated will be at the range of Rp.15000/USD.

3
GDP growth, stability and consumer confidence

Indonesia economy is expected to grow at the range of 5% in 2024 or at the same path compared to 2023. The
aggregate demand growth is projected to come from the household consumption amid the low inflation environment,
stable consumer confidence, social assistance and labor growth. The private capital formation or investment is also
projected to increase by 5% yoy in 2024 that sourced from domestic investment and also from the foreign direct
investment.

Consumer confidence has supported the demand. The consumer confidence is estimated could be maintained and this
is reflected in the auto sales as an indicator of the consumer expectation regarding their income and their level of
confidence regarding the economy. The resiliency in the demand amid hawkish monetary policy is also seen in the other
indicator such as durable goods sales, loan growth, motorcycle sales and cement sales growth. However in 2024, we see
that the possibility of the pivoting in the interest rate is high amid the decelerate inflationary process in
regional and also in the global economy.

GDP growth by demand side. Gov. spending growth as Consumer confidence index and durable goods purchase
40 the counter cycle of economy to maintain the stability have been improved to expansion level
140
30
120
20
100
10 80

0 60
July-20
October-16
December-15

November-18
May-16

March-17

December-20
August-17
January-18

April-19
September-19
February-20

May-21
October-21
March-22
August-22
June-18

January-23
June-23

40
-10
20
-20
0
Real GDP (yoy %)
Private Consumption (yoy %)
Gross Fixed Capital Formation (yoy %)
Government Consumption (yoy %) BoI CCI Durable Goods Purchases
Exports (yoy %) BoI Consumer Confidence Index (balance +100)
4
Source: Bloomberg
Spending on non food increases which related to the improvement of the middle income
segment growth that supported the consumption

About 37% of household spending is allocated for food while 25% is for transportation. The leisure consumption such as
hotel and restaurant is spent 9% of total consumption which as a proxy for middle up consumption.

The low inflation environment has supported the purchasing power in food consumption, while the middle up spending for leisure
such as hotel and restaurant is related with the consumer confidence level regarding their income stability. In term of growth we noted
that the spending for non food recorded as the highest pace of growth especially for traveling, transportation, hotel and restaurant.
This would be the opportunity for this sector while on the other hand this phenomena describes that the people are willing
to spend more on non food which related to the improvement of the middle income segment growth that has supported the
consumption. The consumption is also supported by the capacity to spend in the middle low class as reflected in the lower poverty rate to
9.5% from 10% and lower unemployment rate that down to 5.32% along with the social assistance program through out subsidies.

We expect the consumption could increase modestly in 2024 when the GDP is expected to increase in the same path at the range of 5%.

Consumption by type of product Food and non-food consumption growth

Other Expenditures 0.08%

Share of household consumption
Restaurants and Hotels 3.20%
Food and Beverages, except of… 37%
Transportation and
4.09%
Transportation and Communication 25% Communication
Health and Education
Dwelling and Utilities Related 14% 3.82%
Services
Restaurants and Hotels 9%
Dwelling and Utilities Related 2.29%
Health and Education Services 7%
Clothing and Services Related 3.11%
Other Expenditures 4%
Food and Beverages, except
Clothing and Services Related 4% 2.34%
of Restaurants
0% 5% 10% 15% 20% 25% 30% 35% 40% Household Final Consumption
2.87%
Expenditure
0% 1% 2% 3% 4% 5%
5
Source: Bloomberg
The improvement in employment situation index has contributed to the growth of the consumption that
increased cautiously
Employment condition and retail sales growth
The consumption in the retail sales was attributed to
the improvement of the employment situation index
140 20 that at the expansion mode in last 2 years. We think that
120 15 this condition will continue to support the expansion in the
10 retail said.
100
5
80 0 However with the tighter monetary policy by
60 -5 increasing the rate last year, we also saw the
-10 expansion of the employment condition to be slower
40
-15 and the household has reduced their spending in the
20 -20 last quarter of last year. The cautious in spending due to the
0 -25 uncertainty in the economy is believed as the factor that
would make the consumption growth path in 2024 to be at
Nov-18
Dec-15
May-16
Oct-16

Sep-19
Aug-17

Apr-19

Feb-20
Jul-20
Dec-20
May-21
Oct-21

Aug-22
Mar-17

Mar-22
Jan-18
Jun-18

Jan-23
Jun-23
the modestly path.
BoI CCI Employment Conditions Retail Sales (yoy %)
Loan growth by segment
Retail sales index
4.00 7
270
3.00
250 5
2.00
230 3
1.00
210 0.00 1

Nov-17

Nov-22
Aug-16

Apr-18
Sep-18
Feb-19
Jul-19
Dec-19
May-20
Oct-20

Aug-21

Apr-23
Sep-23
Mar-16

Mar-21
Jan-17
Jun-17

Jan-22
Jun-22
190 -1.00
-1
170 -2.00
-3
150 -3.00
-4.00 -5

Domestic Auto Sales (QoQ) Real GDP (qoq %)

6
Source: Bloomberg
Slower pace in Investment, when the production capacity is still enough

Slower Investment growth (yoy) amid higher interest rate The investment is estimated to grow at the modest pace
in 2024 or at around 4%-5% while the urgency for
aggressively increase the capex is not there. This was seen
in the utilization rate that has increased to above 75%. The
8%
7%
6% 5%
investment cycle in the next couple of quarter is possible while
5% 6% at the current state the business sector is in the wait and
4% 4% 5% 5%
4% 4% 4% see mode and maintaining their production and utilization rate
3% 3%
2% 2% that remains enough to anticipate the demand growth in the
2%
next 2 years.
0%
Sep-18
Dec-18

Jun-21
Sep-19
Dec-19

Jun-20
Sep-20
Dec-20

Sep-21
Dec-21

Sep-22
Dec-22

Sep-23
Dec-23
Mar-19
Jun-19

Mar-20

Mar-21

Mar-22
Jun-22

Mar-23
Jun-23
Building, structure and machinery was 84% of the total
investment spending. The investment in the transportation in
last year recorded as the fastest growth that increase by 13%
-7% -6%
yoy. Rail ways, logistic transportation as the sector that
-9% contributes the most in transportation investment.

Utilization rate and investment loan. Slower investment loan Investment break down (Building, structure and machinery) as
amid the ample room in the production capacity. the main item
Cultivated Intellectual
20% 82 Biological Property
80 Resources Products
15% Transportation 6% 2%
78 Other
7%
10% 76 equipment
1%
75.17 74
5% Machinery
72 and Equipment
13%
0% 70
Buildings
Jul-15

Jul-16

Jul-17

Jul-18

Jul-19

Jul-20

Jul-21

Jul-22

Jul-23
Jan-15

Jan-16

Jan-17

Jan-18

Jan-19

Jan-20

Jan-21

Jan-22

Jan-23

68 and Structures
-5% 71%
66
-10% Investment loan growth (yoy) Industry Utilizaation rate 64
7
Source: Bloomberg
Manufacture, trading and agriculture as the top 3 sector or as the backbone in the GDP structure
Manufacture sector as the sector that contributes 21% of total GDP has increased by 4.9%yoy, followed by the second sector
that is trading and wholesales that responsible for 14% of GDP recorded 5.5% yoy growth of economy. The third largest sector in
Indonesia is agriculture, forestry and fishery that is 13% of GDP which has picked up by 2.2%yoy.

In manufacture sector, food and beverage as the main sector or about 34% of the total manufacture output that support
the economy in the supply side followed by 9.3% of botanical product and fabricated metal and electric equipment that also
contributed 9.3% of manufacture sector. The growing industry in Indonesia that started to down streaming is predicted would
increase the share of manufacture growth in Indonesia.

In Agriculture, plantation as the most contribute of agriculture activity or about 29%, followed by fishery activity that was
19% pf the agriculture activity. The demand in bio diesel, and sea food processing is believed would be the positive catalyst for this
sector.

GDP growth by supply side structure composition Sectoral growth

Transportation and Warehousing 18.2%

Manufacturing 21%
Accommodation and food service… 13.1%
Wholesale and retail trade;… 14%
Other services 10.3%
Agriculture, Forestry and Fishery 13%
Business services 9.3%
Construction 10%
Information and communication 7.7%
Mining and quarrying 8%
Information and communication Public administration and defence;… 5.9%
7%
Transportation and Warehousing 4% Wholesale and retail trade; repair… 5.5%
Finance and Insurance 4% Manufacturing 4.9%
Public administration and… 3% Mining and quarrying 4.9%
Accommodation and food… 3% Water supply; sewerage, waste… 4.4%
Education 3% Electricity and gas supply 4.0%
Real estate 3% Health and Social Activities 3.3%
Other services 2% Finance and Insurance 3.0%
Business services 2% Education 2.8%
Health and Social Activities 1% Agriculture, Forestry and Fishery 2.2%
Electricity and gas supply 1% Construction 1.9%
Water supply; sewerage, waste… 0% Real estate 0.6%
0% 5% 10% 15% 20% 25% 0.0% 5.0% 10.0% 15.0% 20.0%
8
Source: Bloomberg
Rupiah demand and supply from Current Account (CA) balance . The trade balance surplus as the back bone
for the CA.
Current account deficit as an indicator for demand and supply in USD against rupiah has narrowed to around USD900mn. The
positive performance in current account as the result of the trade balance surplus in goods. The trade balance surplus in goods was able to
maintain above USD10,000 since Sep’20. Along with the down streaming effort in nickel and electric vehicle industry, the export value added
in nickel and metal mining is estimated could contributes to higher level. The fluctuation in trade balance is related to the global demand
(economy), commodity price and geopolitical tension related with the commodity. The slower global economy in US and China would reduce
the trade surplus.

The tourism foreign exchange earning and remittance transfer as the second back bone of the current account balance in
Indonesia. The tourism event, tourist arrival and better tourism infrastructure has attract the traveler to visit Indonesia. This has contributed
to the better earning for the CA. The remittance or the transfer from the worker outside Indonesia has also support the balance as reflected in
the personal transfer at around USD2,735/Quarter. The personal transfer as the source of income for their family in Indonesia that contributed
to the better consumption growth,
Travel/Tourism foreign exchange earning and personal
Current Account and Trade Balance In mn USD transfer (remittance) as the secondary income that support
20,000 17,623 the current account balance
16,797
15,408 14,681 4,000
15,000 12,433
11,301 3,500 3,341
9,704 9,792 10,269
8,696 8,337 3,000 2,734
10,0007,298 7,628
6,733 6,250
2,500 2,255
3,968 4,703 4,371 5,095 4,588
3,350 3,733 3,086
5,000 2,448 2,000
1,602 1,560 2,232 1,362 1,464
790 784 85 -375 312 571 306 1,500
-556
0 -2,494 1,000
Pre Covid
Nov-10

Nov-12

Nov-14

Nov-16

Nov-18

Nov-20

Nov-22
Jul-19
Jul-11

Jul-13

Jul-15

Jul-17

Jul-21

Jul-23
Mar-10

Mar-12

Mar-14

Mar-16

Mar-18

Mar-20

Mar-22

500
-5,000 In mn USD 99
0

Nov-13
Dec-12

Oct-14

Dec-23
Sep-15
Aug-16

May-19
Apr-20
Feb-11

Jul-17

Feb-22
Mar-10

Jan-12

Jun-18

Mar-21

Jan-23
-10,000

-15,000
Current Account Goods Travel Personal Transfers
Services Primary Income
Secondary Income
9
Source: Bloomberg
Indonesia export growth is estimated could be at the modest path in 2024
Indonesia Export (yoy), China and US Leading index
Trade balance is estimated could be maintain at surplus level,
40 110 on the back of the export growth. However we see that the
30 incremental growth in export side in 2024 is limited due to the
105 expectation of lower US economic growth as captured through the
20
US leading indicator.
10 100

0 The positive catalyst for export is coming from China. This was seen
95
in the China leading index that keep raising amid the government
Dec-08
Sep-09

Dec-11
Sep-12

Dec-14
Sep-15

Dec-17
Sep-18

Dec-20
Sep-21

Dec-23
Jun-10
Mar-11

Jun-13
Mar-14

Jun-16
Mar-17

Jun-19
Mar-20

Jun-22
Mar-23
-10
90
stimulus. Indonesia export to China was about 25.7% of the total
-20 export, while to US was 9.6%, followed by 8.3% to India.
-30 85
Exports (yoy %) US Leading Indicator (yoy) Slower pace of the US leading index is predicted would be translated
to the flat growth in Indonesia that estimated at around 4.8% to
China Leading Index 5.1%.

Indonesia leading index and US leading index Indonesia and China leading index
12 110
15
10
10
105
5 8

0 6 100
Dec-08

Dec-11

Dec-14

Dec-17

Dec-20

Dec-23
Sep-09

Sep-12

Sep-15

Sep-18

Mar-20

Sep-21
Jun-10
Mar-11

Jun-13
Mar-14

Jun-16
Mar-17

Jun-19

Jun-22
Mar-23

-5 4

-10 2 95

-15
0
90
Dec-08

Dec-11

Dec-14

Dec-17

Dec-20

Dec-23
Sep-12
Sep-09

Sep-15

Sep-18

Sep-21
Jun-10
Mar-11

Jun-13
Mar-14

Jun-16
Mar-17

Jun-19
Mar-20

Jun-22
Mar-23
-20
-2
-25
Indonesia Leading Indicator (yoy) US Leading Indicator (yoy) -4 85

Indonesia Leading Indicator (yoy) China Leading Index 10

Source: Bloomberg model
Indonesia growth (Impulse reaction Function) to the commodity price, China and US growth
Indonesia Export (yoy), China and US Leading index
We simulate the impact of the global economy to Indonesia growth path
through the trading channel by using the US and China economic
0.0008 growth and its impact to the Indonesia economy.
0.0006
0.0004 By using the impulse reaction function we found that the shock in China
growth by 1% will increase the Indonesia export an also Indonesia GDP
0.0002
growth by 0.03% accumulatively in the next 4 quarter. The implication
0 is by estimating the China stimulus could spur the growth than this
-0.0002 1 2 3 4 could be the positive catalyst for Indonesia.
-0.0004
-0.0006 The highest positive impact on Indonesia economy is if the commodity
-0.0008 increase by 1% that the Indonesia GDP will increase in the next 3
quarter by
-0.001

US GDP Commodity Index Oil Slower pace of the US leading index is predicted would be translated to
the flat growth in Indonesia that estimated at around 4.8% to 5.1%.

Indonesia leading index and US leading index Indonesia and China leading index
0.0003
0.0008
0.0002
0.0006
0.0004 0.0001
0.0002 0
0 1 2 3 4 5
-0.0001
-0.0002 1 2 3 4 5
-0.0004 -0.0002

-0.0006 -0.0003
-0.0008 -0.0004
-0.001
China GDP
Commodity Index Oil

11
Source: Bloomberg model
 Rupiah , commodity price, dollar index and the fed trajectory

Rupiah (q0Q) and US Dollar Index (QoQ)

The rupiah has depreciated in 2023 along with the stronger US dollar
20 as seen in the US dollar index that represent the global demand and
supply against USD. The appreciation of the USD is related to the hawkish

US leading indicator
tone of the US monetary policy that keep increasing the interest rate more
15 than the market expectation.

10 However we see, we expect that in 2024 the trajectory of the Fed

Fund rate is expected to change. The disinflationary process that predicted
5 will bring down the inflation to the Fed’s desirable level at around 2% is in
progress while the soft lending or slower US growth will be afoot. This will
reduce the demand for USD and will make the room for depreciation of the
0 emerging market currency including rupiah to be limited.

Sep-23
May-19
Sep-19

May-20
Sep-20

May-21
Sep-21

May-22
Sep-22

May-23
Jan-19

Jan-20

Jan-21

Jan-22

Jan-23
-5 The commodity price has bottoming amid the geopolitical tension and
the stable demand in China due to the government stimulus. This
-10 estimated would be positive catalyst for the rupiah equilibrium that estimated
USD/IDR Dollar Index (DXY) will be at the range of Rp.15000/USD.

Rupiah and dollar index (in level) Rupiah and commodity price Rupiah and Dollar Index
120 18,000 270 17,000 120 18,000
Bloomberg vommodity Index

16,000
110 16,000 220 15,000 110 16,000
14,000 100 14,000

Dollar Index
100 14,000
Dollar Index

USD IDR
USD IDR

170 13,000

USD IDR
90 12,000 12,000 90 12,000

80 10,000 120 11,000 80 10,000

10,000
70 8,000 70 9,000 70 8,000
8,000
60 6,000 60 6,000
20 7,000

Nov-08

Nov-13
May-16
Nov-18

Nov-23
Feb-05
May-06
Aug-07
Feb-10
May-11
Aug-12
Feb-15
Aug-17
Feb-20
May-21
Aug-22
Nov-08

Nov-13

Nov-18
May-21
Nov-23
Feb-05
May-06

Aug-12
Aug-07
Feb-10
May-11

Feb-15
May-16
Aug-17
Feb-20
Aug-22

Mar-06
May-07
Jul-08

Nov-10
Jan-12
Mar-13
May-14
Jul-15

Nov-17
Jan-19
Mar-20
May-21
Jul-22
Sep-09

Sep-16

Sep-23

Dollar Index (DXY) USD/IDR Dollar Index (DXY) USD/IDR

Bloomberg Commodity Index USD/IDR 12
Source: Bloomberg model
Bond market outlook 2024

• The disinflationary process in US will takes time while the progress toward the desirable level at
around 2% is on progress. The impact of accumulative high interest rate to hold the economic activity
from overheating has been seen in the slower leading economic activity. This will makes the US GDP to
record at below 1.3% or below 2% while the unemployment is expected to slight higher and the wage is
projected to expand at slower pace. This will translated to the expectation of pivoting US monetary policy
stance to relax the interest rate and its monetary policy. The expectation of lower Fed Fund Rate in 2024
as the positive catalyst for rupiah and also for Indonesia bond yield that will have a room to move lower.
We expect that the 10yr yield is possibly to fluctuate at around 6.5% to 7%.

• Indonesia bond yield is remain attractive compared to the several countries due to the monetary
policy mix that at the hawkish tone to maintain the inflation at the manageable level. This was as
the preemptive movement from the central bank to anticipate the uncertainty in the global market that
made a volatility in the market. This policy has reflected in the lower inflation and manageable rupiah
volatility to avoid an excessive foreign capital outflow in the bond market.

• Positive real yield. The low inflation that at 2.86% is another factor that has supported the attractiveness
of the real yield to reduce the foreign outflow amid the uncertainty regarding the trajectory of the US Fed
Fund Rate.

• The bond supply to fund the fiscal deficit is believe could be absorbed by the market without
creating an excessive pressure in the price since the demand for the bond market and the liquidity from
external side is estimated will increase along with the outlook of the Fed Fund Rate to change its monetary
stance.

13
Narrowing the fiscal gap has eased the fiscal pressure amid the uncertainty
Despite the need of financing is increasing to Rp522tn in 2024 from Rp486tn, the size of deficit is going to stronger
with the fiscal deficit to GDP is set to reduce to -2.29% in 2024 from -2.9% in 2023. The narrowing fiscal pressure is
also reflected in the primary deficit that estimated to reduce to Rp25.5tn from Rp156tn in 2023. This means that the fiscal
discipline is continue while providing the room for growth through infrastructure and social assistance to maintain the buying
power. By expecting the economic growth at the range of 5% yoy and reducing fiscal deficit ratio to GDP , we expect that the
market could absorb the new bond supply without deteriorating the yield. This is because of the supporting factor from external
side especially from foreign investor is project to improve, couple with the improving of domestic saving and liquidity as the
source of the domestic financing. The manageable inflation and lower fiscal risk as the necessary condition for the bond
price to appreciate in 2024.

Narrowing fiscal deficit post-pandemic Fiscal deficit is set to narrow below -3% of GDP in 2023

3,325 0.0 0.00%

3,124
2016 2017 2018 2019 2020 2021 2022 2023 2024
-25.5
2,739 2,750 2,709 -73.1 -1.00%
-200.0 -125.6 -124.4 -111.5 -156.8
2,213 2,309 -1.80%
2,802 -269.4 -2.00%
2,007 2,637 -400.0 -308.3 -341.0-2.50% -348.7 -2.22% -328.4 -2.29%
1,864
-2.50% -431.6 -2.85% -3.00%
-600.0 -486.5
1,944 1,961 -522.8
1,744 1,841 -3.92%
1,666 1,700 -633.6 -4.00%
1,556
-800.0 -4.57%
-5.00%
-868.0
-1,000.0 -6.00%
-961.5
-1,039.2-6.14%
2016 2017 2018 2019 2020 2021 2022 2023 2024 -1,200.0 -7.00%

Gov. Spending (in Tn Rp) Gov. Revenue (in Tn Rp) Fiscal Deficit (in tn Rp) Primary deficit (in tn Rp)
Fiscal deficit to GDP (%)
14
Source: MOF,SSI
Ample real yield spread to maintain the stability in rupiah as well as in the bond market

Indonesia bond yield is remain attractive compared to the several countries due to the monetary policy mix that at the hawkish tone to
maintain the inflation at the manageable level. This was as the preemptive movement from the central bank to anticipate the uncertainty in
the global market that made a volatility in the market.

The low inflation that at 2.86% is another factor that has supported the attractiveness of the real yield to reduce the foreign outflow amid the
uncertainty regarding the trajectory of the US Fed Fund Rate.

The combination of the manageable inflation and the hawkish monetary policy has also supported the rupiah exchange rate from the further
pressure. The rupiah remain relatively resilient against the dollar in 2023 compared to the other country. The improvement of
the foreign ownership in bond market has been seen since the last 14 month and expected to improve further depend on the
US monetary tone this year. The possibility of higher foreign ownership is wider if the Fed start to change their policy.

Manageable inflation and monetary policy mix offering Manageable inflation and monetary policy mix offering attractive
attractive yield yield
1200 45%
Brazil 6.22 1077.06 40%
1000 896.63
Indonesia 3.77
35%
810.38
Thailand 3.39
800 30%
Malaysia 2.3 in Tn IDR 713.23
25%
South Korea 0.38 600
20%
US 0.32
400 15%
Singapore 0.08
10%
-0.09 UK 200
5%
-1.15 Eurozone
0 0%
-1.75 Japan

-4 -2 0 2 4 6 8
Foreign Ownership in Government Bond (in tn IDR)
% Ownership by Foreign
15
Source: Bloomberg model
 US GDP is estimated to posted a lower or below 2% due to the accumulative interest rate

US Real GDP and leading indicator The accumulative interest rate hike that has increased the cost
of credit is estimated will bring the US GDP in 2024 to fluctuate
16 0.15 at the lower growth at below 2% or somewhat at 1.3%.

US leading indicator
Real GDP yoy

0.1
11 The US leading economic indicator has also confirmed this expectation
0.05 that remained at downward trend. This means that the economic in the
6 next couple of quarters will be at the slower pace.
0

-0.05 Despite the US economic was resilience however the slower pace in
1 2024 was likely as seen in the ISM manufacture index that slightly
-0.1 below 50.
Nov-10

Nov-21
Dec-09

Oct-11
Sep-12

Jul-14
Aug-13

May-16
Apr-17

Feb-19

Dec-20

Oct-22
Sep-23
Jun-15

Mar-18

Jan-20

-4
-0.15 The soft lending scenario is likely amid the labour market that
-9 -0.2 remained tight, meaning that the spending and the consumer income
remained support the economic. However the slower pace of personal
Real GDP (yoy %) Conf. Board Leading Indicator income has been seen which support the sub par growth in 2024.

US real GDP (LHS) and US ISM manufacture index(RHS) Slower pace of retail sales and personal income growth

16 65 25

11 60 20

15
6 55

10
1 50
Nov-10

Nov-21
Dec-09

Oct-11

5
Sep-12

Jul-14
Aug-13

May-16
Apr-17

Feb-19

Dec-20

Oct-22
Sep-23
Jun-15

Mar-18

Jan-20

-4 45
0
Dec-01

Dec-04

Dec-07

Dec-10

Dec-13

Dec-16

Dec-19

Dec-22
Jun-06
Sep-02

Sep-05

Mar-07

Sep-08

Sep-11

Sep-14

Sep-17

Sep-20

Sep-23
Jun-00
Mar-01

Jun-03
Mar-04

Jun-09
Mar-10

Jun-12
Mar-13

Jun-15
Mar-16

Jun-18
Mar-19

Jun-21
Mar-22
-9 40
-5
Real GDP (yoy %) ISM Manufacturing Index (sa)
-10 16
Source: Bloomberg model
Personal Income (yoy %, sa) Retail Sales ex-Autos (yoy %)
Fed Fund Rate, inflation, wages and economic growth. The pivoting in 2024 is possible
Tight labor and wage prices as the factor that burdened the Disinflationary process is still going but need a time to tame the
Feds to tame the inflation inflation to the desirable level
10
7
8 6
6 5

4 4
3
2 3.15503
2
0
1
Nov-10

Nov-21
Dec-09

Oct-11

Dec-20
Aug-13

May-16

Oct-22
Jun-15

Apr-17
Feb-08

Sep-12

Jul-14

Feb-19

Sep-23
Mar-07

Jan-09

Mar-18

Jan-20
-2 0
-4

CPI (YoY) Average Hourly Earning (yoy)

Fed Fund Rate PCE (yoy)
US Leading Economic indicator shows a slower growth
14 Covid 15
14
12 Dotcom Subprime 10
Crisis 12
Bubble 5
10 Bursts 10
0
8 8
-5
6 6
-10
4 4
-15
2
2 -20
0
0 -25
Nov-03

Nov-08

Nov-13

Nov-18

Nov-23
Jul-00
May-01

Sep-04
Jul-05
May-06

Sep-09
Jul-10
May-11
Mar-12

Sep-14
Jul-15
May-16

Sep-19
Jul-20
May-21
Mar-02

Mar-07

Mar-17

Mar-22
Jan-03

Jan-08

Jan-13

Jan-18

Jan-23
Dec-00
Sep-01

Mar-03
Dec-03
Sep-04

Dec-06
Sep-07

Dec-09
Sep-10

Dec-12
Sep-13

Dec-15
Sep-16

Dec-18
Sep-19

Dec-21
Sep-22
Mar-00

Jun-02

Jun-05
Mar-06

Jun-08
Mar-09

Jun-11
Mar-12

Jun-14
Mar-15

Jun-17
Mar-18

Jun-20
Mar-21

Jun-23

Fed Fund Rate US Unemployment Rate

US Unemployment Rate US Leading Economic Indicator
17
Source: Bloomberg model
Core inflation, bond yield and monetary mechanism transmission as the factor to expect the yield trajectory

10yr yield and core inflation

10 20 Loan growth as the early indication of the core inflation trajectory.
9 18
To manage the higher core inflation rate, the Bank of Indonesia has
8 16
7 14 raised the 7D Repo rate to control the peak of the core inflation at a
6 12 manageable level. The aim for the higher 7D Reverse Repo rate is
5 10 to anchor the expectation of the forward core inflation rate.
4 8
3 6 We think that the BI will end its hawkish tone and will
2 4
consider to cut the rate at the second semester of 2024. The
1 2
0 0 7D RR rate is expected to hold at the range of 6% and expected to
slightly lower to 5.25%. It takes 5 to 6 Quarters to let the monetary
Nov-09

Nov-16

Nov-23
Sep-08
Apr-09

Aug-11
Mar-12
Oct-12
May-13
Dec-13
Jul-14
Feb-15
Sep-15
Apr-16

Aug-18

Oct-19
May-20
Dec-20
Jul-21
Feb-22
Sep-22
Apr-23
Jun-10
Jan-11

Jun-17
Jan-18

Mar-19

policy have an impact on the loan growth as well as the core

inflation. We expect the 10yr yield to have room to decrease at the
Core Inflation (rhs) 10yr Yield (lhs) range of 6.5% to 7% in 2024.

Core inflation (LHS) and loan growth (RHS) It takes 5 to 6 Quarter to let the monetary policy have an impact on
10 45
40 12 the core inflation 6
9
8 35
7 30 10 5
6 25
20 8 4
5
15
4 10 6 3
3 5
2 0 4 2
1 -5
0 -10
2 1
Nov-12

Nov-19
Oct-08
May-09
Dec-09
Jul-10

Jun-13
Feb-11
Sep-11

Aug-21
Apr-12

Aug-14

Oct-15
May-16
Dec-16
Jul-17
Feb-18
Sep-18
Apr-19

Oct-22
May-23
Dec-23
Jan-14

Mar-15

Jun-20
Jan-21

Mar-22

0 0
May-13

Nov-16

Nov-23
Aug-11

Oct-12

Dec-13
Jul-14
Feb-15
Sep-15
Apr-16

Aug-18

Oct-19
May-20
Dec-20
Jul-21
Feb-22
Sep-22
Apr-23
Jun-10
Jan-11

Mar-12

Jun-17
Jan-18

Mar-19
Core Inflation (rhs) Loan growth (yoy)

18
Source: Bloomberg model Jibor 1W (6Q lagging) Core Inflation (rhs)
Core inflation, bond yield and monetary mechanism transmission as the factor to expect the yield trajectory

Indonesia & US 10yr yield

The yield curve shape was reflecting the market
20
expectation toward the inflation, central bank reaction
18
function and also the expectation toward the US policy 16
trajectory toward its economy. With the considerable low 14
inflation environment and positive real yield, we think that this 12
provide room for the yield curve to slightly lower in 2024 on 10
one side. At the other side we also see that the market is also 8
anticipating the pivoting policy in US that possibly will change 6
its monetary tone in 2024 as the result of the US inflation that 4
expected to fluctuate at its desirable level at around 2%. 2
0
We saw a possibility for the 10yr yield to fluctuate at below 7%

May-06

Nov-09

May-13

Nov-16

May-20

Nov-23
Jul-07

Sep-08

Jul-14

Sep-15

Jul-21

Sep-22
Jan-11

Mar-12

Jan-18

Mar-19
or at around 6.5% in 2024.

Indonesia 10yr yield US 10yr yield

Core inflation (LHS) and loan growth (RHS)
12 Core CPI (yoy)
Core CPI (yoy %)

10
4
3.53.49 3.36
3Yr SUN 3.5 3.21 3.3 3.32
3.25 3.21
8 3.07 3.1332.95 3.07
3.03 3.02 2.94
2.82
2.72 2.87
5Yr SUN 3 2.67 2.63 2.58
2.26 2.37
6 2.5
2
10Yr SUN 1.86
2 1.6 1.49 1.56
4 15Yr SUN 1.21 1.3
1.5
2.86
20Yr SUN 1
2
Inflation 0.5
0 0
Sep-17
Sep-16

Sep-18

Sep-19

Sep-20

Sep-21

Sep-22

Sep-23
Mar-16

Mar-17

Mar-18

Mar-19

Mar-20

Mar-21

Mar-22

Mar-23
Apr-15
Oct-14

Oct-15
Apr-16
Oct-16
Apr-17
Oct-17
Apr-18
Oct-18
Apr-19
Oct-19
Apr-20
Oct-20
Apr-21
Oct-21
Apr-22
Oct-22
Apr-23
Oct-23

19
Source: Bloomberg model
 Helmi Therik, FRM

Economic projection – Expecting soft economic growth

The Indonesian economy is believed will grow by 4.8% to 5.2% in 2024. The slightly higher interest rate amid
slower global economic growth as the challenge while the expectation of pivoting in monetary policy in 2024 as
the positive factor to expect the lower volatility in the exchange rate and lower yield in 2024. The domestic
aggregate demand is believed would support the growth due to the positive consumer confidence, lower unemployment rate,
higher minimum wage, and the result of last year's additive expectation from last year income. Government spending has
been set to be consolidative or relatively neutral to the economy this year. Thus we estimate that household consumption will
grow by 4.8%, followed by investment growth that is expected to accelerate by 5%. Rupiah is estimated to steady at the
range of Rp15,000/USD on the back of the prospect of limited US dollar index appreciation amid the limited upside of the US
Fed Fund Rate. This could be the positive factor to expect the bond yield to move lower in 2024 at around 6.5%.

Indicator 2016 2017 2018 2019 2020 2021 2022 2023 2024
Economic Activity
Real GDP (YoY%) 5 5.1 5.2 5 -2 3.7 5.3 5 5
CPI (YoY%) 3.5 3.8 3.2 2.8 2 1.6 4.2 3.7 3
Unemployment (%) 5.6 5.4 5.2 5.1 6 6.4 5.9 5.4 5.4
External Balance
Curr. Acct. (% of GDP) -1.8 -1.6 -2.9 -2.7 -0.4 0.3 1 -0.3 -0.8
Fiscal Balance
Budget (% of GDP) -2.5 -2.5 -1.8 -2.2 -6.1 -4.6 -3.6 -2.1 -2.3
Interest Rates
Central Bank Rate (%) 4.75 4.25 6 5 3.75 3.5 5.5 6.05 5.45
3-Month Rate (%) 7.46 5.48 7.7 5.51 4.06 3.75 6.62 6.89 6.16
2-Year Note (%) 7.47 5.54 7.29 5.77 3.85 4.13 6.08 6.57 5.98
10-Year Note (%) 7.97 6.32 8.03 7.06 5.89 6.38 6.94 6.86 6.52
Exchange Rates
USDIDR 13,473 13,555 14,390 13,866 14,050 14,263 15,573 15,500 15,000
Source: Bloomberg, SSI
20
Equity strategy – Sectoral pick and index valuation

Telco Sector. We believe that internet consumption and the diversification of telco sector portfolio will create a higher
value. The data demand in telco industry is believed as the growth driver amid the digitalization integration. In addition to
that, the we also see healthier competition in this industry, reflected by rationalization price which will bring better margin
for telco company. We call TLKM and EXCL as our top pick in this industry. In the telco infrastructure industry we are
optimistic about TOWR’s business prospect due to long-term contracts (10 years). Going forward, both tower and fiber
optic demand continue to grow support by the 5G network due to lower penetration of the 5G network still low at ~5%.

Consumer staple. Indonesia’s demand for instant noodles reaches a multi-year high of 14,260 million servings in 2022,
while also reflecting a growth of +7.5% YoY, the fastest growth at least since 2014. The consumption accelerated
especially during the lockdown amid the Covid-19 pandemic as an alternative food stock at home. After that, the uptrend
continued even after the restriction had been revoked, on the back of its affordability amid rising energy prices and
inflation. We like ICBP due to its resilient performance, strong market position in the industry, as well as potential margin
expansion and rebound in earnings. We maintain our Buy rating on ICBP. The normalizing of input costs will support
profitability. This is also supported by the outlook of a limited US dollar index which will reduce the forex loss.

Banking sector. The stable macro economic condition that enable the loan expansion despite with the modest path as
the positive factor combine with the improvement in asset quality as shown in the lower loan at risk, digital
transformation that will contribute to the better CASA and improving NIM. We call Buy on BBCA, BMRI, and BBRI as our
top picks in this sector.

Retail discretionary. The industry retail sales growth that averaged 1.54% YoY in 2023 as well as the improvement in
the property sector which was encouraged by the implementation of value added tax incentive program couple with stable
economic activity will signify the earnings rebound while the SSSG (same-store sales growth) is expected to reach the
pre-pandemic level in 2024. We choose ACES for this industry.

Poultry industry. The prolonged demand and supply imbalance in the poultry industry has triggered the government to
lower the import of grandparent stock quota (GPS) quota to 0.67 million live birds in 2023. Considering the life cycle of
chickens, there will be a lagging effect, and a more favourable supply is expected to take effect in 2024-2025. Together
with the continuation of the culling program, following a total of 5 instructions from the government last year, it should
improve the broiler and DOC prices that remain soft until the end of December 2023. Higher ASP will help the poultry to
maintain its profitability amid rising raw material costs. We pick JPFA and CPIN for this sector.
21
Equity strategy – Sectoral pick and index valuation

Cement sector. we see the opportunity in cement sector due to the expectation of the property demand as the result of
tax incentive, growing infrastructure budget and the new capital project (IKN) in East Kalimantan especially for bulk
cement. We call SMGR and INTP as our top picks in this industry. However, we set a conservative target with overall
sales volume expected to increase modestly while the stiff competition in will be the challenge to improve the margin.

Technology. We see an opportunity in selected technology company such as GOTO. After TikTok acquired Tokopedia,
GOTO will be able to expand its resources and capital toward its market-leading on-demand services business, and
financial technology business Therefore, we think the divestment could protect GOTO from increasing costs in sizeable
amounts, as burning money strategy will remain occur due to tight e-commerce competition, especially from Shopee and
Lazada.

JCI valuation. The cautious optimistic due to the uncertainty in the US Fed policy has reflected in the index
that traded at 1 Stdv lower than average (14.2x vs 18.6x). We expect that the corporate earning would
continue to recover along with the growing GDP. The JCI Index is expected to trade at 7,800 or representing
the PE Band at 15x for FY2024E or below the historical average at 18.6x.

40.00
JCI PE Band
35.00
30.00
25.00 22.94
20.00 18.60
15.00 14.25
10.00
5.00
0.00
Jan-06
Jul-06
Jan-07
Jul-07
Jan-08
Jul-08
Jan-09
Jul-09
Jan-10
Jul-10
Jan-11
Jul-11
Jan-12
Jul-12
Jan-13
Jul-13
Jan-14
Jul-14
Jan-15
Jul-15
Jan-16
Jul-16
Jan-17
Jul-17
Jan-18
Jul-18
Jan-19
Jul-19
Jan-20
Jul-20
Jan-21
Jul-21
Jan-22
Jul-22
Jan-23
Jul-23
Jan-24
*+sd3 +2sd +1sd Mean -1sd -2sd *-sd3 Forward P/E
22
Source: SSI calculation
PT Bank Central Asia Tbk-BBCA

23
 BBCA – Stronger profitability and stronger asset quality Helmi Therik, FRM

Current Price (IDR) (29/1) 9,550

• Loan growth in 2024 is expected could increase by 10% or less or slightly lower than Target price (IDR) 11,500
2024. This was due to the cautious credit disbursement due the impact of higher
Upside/Downside (%) 20.42%
interest rate. The corporate segment as the main contributor of the company or
about 45% of the loan is estimated will increase at around… or at the modest path in 52 Week High (IDR) 9,775
2024. However the improvement in the labor condition is expected will contribute to 52 Week Low (IDR) 8,250
the better salary based loan. Major Shareholders:
PT Dwimuria Investama Andalan 54.94%
• Low cost of fund through CASA is estimated to grow modestly at around 4% in
2024. The expectation of lower interest rate in the second half of 2024 is estimated Public 42.40%
would increase the CASA compare to the time deposit growth. The time deposit grew
2020 2021 2022F 2023F 2024F
last year by 12% vs CASA growth that only picked up by 4.7% due to the higher rate.
Net Interest Inco me 65,789 65,627 71,548 75,421 84,181
The CASA growth is estimated will be supported by the digital and offline channels.
The CASA was about 80% of the third party fund. The company’s effort the upgrade OP 34,874 38,670 39,506 43,009 47,896
the services through the combination of online and offline channels has supported its P re-tax 33,569 38,841 39,162 42,557 47,290
effort to maintain its healthy CASA growth. The total transaction that has been
NP 27,147 31,440 31,671 34,416 38,243
facilitated online is higher than the transaction through the branch. The digital
infrastructure has enabled the company to maintain its deposit growth as well as its EP S 220 255 257 279 310

CASA composition. B VP S 1,498 1,645 1,824 2,008 2,213

• NIM has expanded due to the higher interest rate environment and manageable Loan (in bn RP) and loan growth (yoy)
cost of fund. NIM increased to 5.5% compare to the previous level at 5.1%. The PPOP
has increase by 19% and expected to grew this year due to the higher fees and
commission transaction. The improvement of digital banking system and strong
franchise value as enable the company to recorded higher fee base income

• Lower Lar (Loan at risk) and sound credit quality. The LaR has reduced to 7.6% while
at the 2024 the LaR is estimated could reduce further to 5%. The capacity to absorb
the deterioration of assets is sound as reflected in LaR Coverage at 66.6 and NPL
coverage at 226.9%. The continuing economic growth and better loan quality as the
result of higher creditor capacity to pay will strengthen the asset quality in 2024,

• Valuation. We implement blended valuation with the Gordon method approach that
implies the fair value at Rp11,500/share. This represents 2023 and 2024 PBV at 5x and
4.5x which is at the 2 stdv historical PBV. The sound asset quality as the basis to
justify its premium valuation amid healthy economic growth. Risk to our call: lower
loan growth, deteriorated asset quality, unexpected interest rate movement. 24
 BBCA – Stronger profitability and stronger asset quality
Profitability ratio- lower CoF propelling higher NIM Loan quality ratio

8.4% 8.4% 8.4% 7.9% 8.0% 20.0% 18.7% 18.8%

9.0% 7.9% 8.1% 8.2% 8.3%
7.4% 18.0%
8.0%
7.0% 6.4% 6.7% 6.5% 6.3% 6.3% 6.2% 6.2% 6.6% 6.6% 6.6% 16.0%
6.0% 14.0% 11.7%
5.0% 12.0% 10.0%
4.0% 10.0%
3.0% 2.3% 1.9% 2.0% 8.0%
1.8% 1.9%
2.0% 1.4% 1.4% 1.4% 1.5% 1.5% 6.0% 3.6% 3.7% 3.8%
1.0% 4.0% 1.5% 1.4% 1.3% 1.8% 1.8% 2.0% 1.8%
0.0% 2.0%
2015 2016 2017 2018 2019 2020 2021 2022F 2023F 2024F 0.0%
2017 2018 2019 2020 2021 2022F 2023F
NIM Assets yield CoF NPL LaR
NPL Coverage PBV Band
323% BBCA - P/B BAND
271% 5.00
233% 4.50
197% 197% 4.00
185% 184% 179%
3.50
3.00
2.50
Jan-20
Mar-20
May-20
Jul-20
Sep-20
Nov-20
Jan-21
Mar-21
May-21
Jul-21
Sep-21
Nov-21
Jan-22
Mar-22
May-22
Jul-22
Sep-22
Nov-22
Jan-23
+2sd +1sd Mean
2017 2018 2019 2020 2021 2022F 2023F 2024F
-1sd -2sd Forward P/B
Provision to NPL
25
Balance Sheet Key Ratio
Year-end 31 Dec (Rp bn) 2020 2021 2022F 2023F 2024F Year-end 31 Dec (%) 2020 2021 2022F 2023F 2024F
Cash 51,805 89,401 285,202 266,165 300,754 Growth
Interbanking Assets 208,099 245,819 123,834 154,123 169,535 Assets 17% 14% 0% 10% 10%
Short-Term & LT. Investments 192,553 225,349 123,834 154,123 169,535 Loans -2% 8% 3% 12% 10%
Loan - gross 596,763 643,299 663,194 739,789 813,768 Customer Deposits 19% 16% -4% 10% 10%
Allowance for Losses 27,914 33,240 29,844 23,673 25,227 Net Interest Income 8% 3% 4% 3% 11%
Net Loans 568,849 610,059 633,351 716,116 788,541 PPOP 11% 6% -1% 2% 11%
Net Fixed Assets 21,915 22,169 19,365 16,629 13,791 Net Income -5% 16% 1% 9% 11%
Other Assets 32,350 35,547 39,391 43,786 48,135 Profitabilty
Total Assets 1,075,570 1,228,345 1,224,978 1,350,940 1,490,291 Asset Yield 7% 8% 8% 8% 8%
Customer Deposits 840,753 975,949 934,077 1,027,484 1,130,233 Cost of Fund 1% 1% 1% 1% 2%
ST Borrowings & Repos 11,449 11,490 15,059 17,271 19,877 Net Interest Margin 6% 6% 7% 7% 7%
Long-Term Borrowings 1,433 894 1,640 1,754 1,876 ROAA 3% 3% 3% 3% 3%
Other Liabilities 37,221 37,163 49,385 56,885 65,524 ROAE 15% 16% 15% 15% 15%
Total Liabilities 890,856 1,025,496 1,000,160 1,103,394 1,217,510 Operational Efficiency Ratio (OER)
60% 56% 58% 57% 57%
Minority Interest 118 136 118 118 118 CIR 40% 39% 41% 43% 43%
Shareholders' Equity 184,715 202,849 224,818 247,546 272,780 Liquidity
Total Liabilities & Equity 1,075,570 1,228,345 1,224,978 1,350,940 1,490,291 LDR 71% 66% 71% 72% 72%
Source: Company, Shinhan Sekuritas Indonesia CASA Ratio 76% 76% 77% 77% 77%
Capital
Income Statement CAR-Bank Only 26% 26% 26% 26% 29%
Year-end 31 Dec (Rp bn) 2020 2021 2022F 2023F 2024F Assets Quality
Interest Income 65,789 65,627 71,548 75,421 84,181 NPL 1.8% 1.8% 2.0% 1.8% 1.8%
Interest Expense 11,242 9,491 13,347 15,251 17,407 Coverage Ratio 271% 323% 233% 184% 179%
Net Interest Income 54,547 56,136 58,201 60,170 66,774 Source: Company, Shinhan Sekuritas Indonesia

Other Operating Income 20,616 22,255 22,904 25,195 27,714

Net Revenue 75,163 78,391 81,105 85,365 94,488 Dupont (as % of average assets)
2020F 2021F 2022F 2022F 2022F
Provision for loan loases 10,319 9,413 8,303 5,731 6,304 Net Interest Income 5% 5% 5% 5% 5%
Net Revenue after provision 64,843 68,978 72,802 79,634 88,184 Net Revenue 8% 7% 7% 7% 7%
Non interest expense 29,969 30,308 33,296 36,626 40,288 Net Revenue after provision 7% 6% 6% 6% 6%
Operating Income 34,874 38,670 39,506 43,009 47,896 Operating Income 3% 3% 3% 3% 3%
Net Non-Operating Losses (Gains) (1,305) 171 (344) (452) (606) Net Income 3% 3% 3% 3% 3%
Income before tax 33,569 38,841 39,162 42,557 47,290 ROAA 3% 3% 3% 3% 3%
Tax 6,421 7,401 7,491 8,141 9,046 multiplier 6 6 6 5 5
Net Income 27,147 31,440 31,671 34,416 38,243 ROAE 15% 16% 15% 15% 15%
Source: Company, Shinhan Sekuritas Indonesia Source: Company, Shinhan Sekuritas Indonesia 26
PT Bank Mandiri (Persero) Tbk-BMRI

27
 BMRI– Steady loan growth and improving asset quality Helmi Therik, FRM
• Loan is expected to grow at the range of 12% in 2024. The economic growth that predicted could
maintain its path at the range of 5% and company’s ability to allocate the loan to the selective
corporate and retail segment as the growth driver this year. The bank is also estimated to record Current Price (IDR) (29/1) 6,475
better loan yield and also higher net interest margin due to its structural shifting to increase higher Target price (IDR) 11,200
retail and micro-segment that provide higher yields compared to the corporate segment. The NIM Upside/Downside (%) 72.97%
is has expanded to 5.6% or slightly higher than 5.4% On last year despite of higher CoF to 2.17%.
52 Week High (IDR) 10,400

• The gradual shifting to the micro, consumer that provide higher yield has reflected in the lower 52 Week Low (IDR) 4,787
corporate segment to 34% compare to the earlier period at 35%. However the corporate segment Major Shareholders:
remains of the total loan while the micro and consumer loan contribute 12,3% and 8,3% Negara Republik Indonesia 52.00%
respectively. In the micro-segment, the loan is offered to the salary-based employee or represents
Public 39.92%
50% or higher than the early of 2023 at 48% which reflecting the company’s policy to shift the loan
to the better quality and better yield. The rest of micro-segment loan was related to the
government program in microloan. In the consumer segment, around 49% to 50% of the loan is 2021 2022F 2023F 2024F
used for mortgage and credit cards with the composition as 35% and 13% respectively. The Net Interest Income 98,066 115,448 129,767 146,968
improvement of the economic index, and more job hiring as the basis to expect this segment to OP 38,514 36,978 49,745 59,044
grow by 10% this year. The working capital in the corporate segment also would generate growth
Pre-tax 38,358 37,023 49,850 59,177
of at least 8% this year. Energy, shipyard manufacture and mining services as the top 3 industries
NP 30,551 28,041 37,756 44,820
that posted significant growth last year (196%,130% and 117% yoy).
EPS 655 601 810 961
• Gaining market share in CASA. The company is able to increase the market share in low cost of BVPS 4,763 5,148 5,725 6,400
fund through CASA share. The market share in CASA increase to 14.7% from 14.4% in 2022 and
13.8% in 2020. This was as the result of digital capabilities through its digital product. The company Loan (in bn RP) and loan growth (yoy)
has improved its digital services through its new apps “Kopra” and “Livin”. Livin is dedicated for
retail consumer while kopra is the digital product that dedicated to corporate client. CASA has 25% 21% 1,405 1,600
increased by 12% and we estimate the CASA would grow on the same path this year. The total 1,302 1,400
transaction conducted through “livin” apps hasi increased 37% to Rp2,400triliiun while the new 20% 17%
opening account has increased 1.5x to 6.5mn account. We believed this trend will continue and will 937 1,105 1,200
12%
strengthen the CASA and also will contributed to saving and deposit growth. 15% 11% 11% 12%
845 11%
921 1,000
754 8%
• Improving asset quality and lower loan at risk to 9.79%. The loan at risk has been improved from 10% 609 676 800
last year at 13.4%. The selective loan disbursement amid growing economic activity has strengthen 600
the creditor capacity to pay the debt. The capacity to cover the risk is also sound as seen in the 5%
NPL coverage at 299% and LaR coverage at 45.9%.. -2% 400
0%
200
• Valuation. the company’s fair value at Rp11,200 by using blended calculation. We use Gordon's 2015 2016 2017 2018 2019 2020 2021 2022F 2023F
-5% -
growth and earning multiple to calculate the fair value which implies the PBV for 2023 and 2024 at
2x and 1.8x while the historical average was at 1.5x. Risk to our call: lower loan growth, Loan in bn Rp Growth 28
deteriorated asset quality, unexpected interest rate movement.
 BMRI– Steady loan growth and improving asset quality
NIM improves amid lower CoF due to lower interest rate Loan quality ratio (NPL & LaR)
10.0% 8.7% 8.5% 12.0% 11.3% 10.9%
9.0% 7.9% 8.1% 7.8% 7.9% 8.0% 10.0% 10.0%
7.7% 7.6% 9.4%
8.0% 7.2% 10.0% 9.1%
8.3%
7.0% 5.5% 5.8%
5.3% 5.2% 5.3% 5.5% 5.1% 5.3% 5.4% 7.3%
6.0% 4.7% 8.0%
6.3%
5.0%
3.4% 3.0% 6.0%
4.0% 3.0% 2.7% 2.7% 2.6% 2.6% 2.6% 2.6% 2.6% 4.0%
3.0% 3.5%
4.0% 2.8% 3.1% 3.1% 2.7%
2.0% 2.3% 2.5% 2.3%
1.0%
0.0% 2.0%
NPL LaR
2015 2016 2017 2018 2019 2020 2021 2022F 2023F 2024F 0.0%
NIM Assets yield CoF 2016 2017 2018 2019 2020 2021 2022F 2023F 2024F

Build up provisions to cushion the credit risk PBV Band

3.00
220% 222%
200% 197% 2.50

173% 2.00

136% 141% 1.50

129%
1.00

0.50

0.00
Jan-16 Jan-17 Jan-18 Jan-19 Jan-20 Jan-21

+1 stdev +2 stdev -1 stdev

-2 stdev PBV_RATIO Average

2017 2018 2019 2020 2021 2022F 2023F 2024F 29
Provision to NPL
Balance Sheet Key Ratio
Year-end 31 Dec (Rp bn) 2020 2021 2022F 2023F 2024F Year-end 31 Dec (%) 2020 2021 2022F 2023F 2024F
Cash 74.321 122.972 259.104 101.625 102.772 Growth
Interbanking Assets 158.838 100.518 117.225 228.106 250.917 Assets 8% 21% 6% 10% 10%
Short-Term & LT. Investments 241.790 389.539 117.225 228.106 250.917 Loans -2% 17% 21% 8% 10%
Loan - gross 921.113 1.077.974 1.302.073 1.404.820 1.545.302 Customer Deposits 12% 23% 7% 10% 10%
Allowance for Losses 62.759 69.194 78.010 78.010 78.010 Net Interest Income -5% 29% 3% 15% 15%
Net Loans 858.355 1.008.781 1.224.063 1.326.811 1.467.293 PPOP -5% 25% 6% 16% 17%
Net Fixed Assets 46.728 49.145 55.880 63.606 71.997 Net Income -38% 73% -8% 35% 19%
Other Assets 49.302 54.656 61.912 69.116 76.826 Profitabilty
Total Assets 1.429.334 1.725.611 1.835.409 2.017.369 2.220.721 Asset Yield 7% 8% 8% 8% 8%
Customer Deposits 1.047.318 1.291.176 1.382.460 1.520.706 1.672.777 Cost of Fund 3% 3% 3% 3% 3%
ST Borrowings & Repos 39.026 58.719 27.506 23.097 19.199 Net Interest Margin 5% 5% 5% 5% 5%
Long-Term Borrowings 61.677 58.740 77.004 86.042 96.140 ROAA 1% 2% 2% 2% 2%
Other Liabilities 87.517 94.864 108.365 120.584 134.181 ROAE 9% 15% 12% 15% 16%
Total Liabilities 1.235.538 1.503.500 1.595.335 1.750.428 1.922.296 Operational Efficiency Ratio (OER) 80% 69% 75% 70% 69%
Minority Interest 4.653 17.425 4.653 4.653 4.653 CIR 50% 49% 50% 48% 47%
Shareholders' Equity 193.796 222.111 240.074 266.941 298.425 Liquidity
Total Liabilities & Equity 1.429.334 1.725.611 1.835.409 2.017.369 2.220.721 LDR 88% 83% 94% 92% 92%
Source: Company, Shinhan Sekuritas Indonesia CASA Ratio 66% 66% 66% 66% 66%
Capital
Income Statement CAR-Bank Only 20% 20% 20% 19% 18%
Year-end 31 Dec (Rp bn) 2020 2021 2022F 2023F 2024F Assets Quality
Interest Income 87.648 98.066 115.448 129.767 146.968 NPL 3,1% 3,1% 2,7% 2,5% 2,3%
Interest Expense 30.813 24.687 40.105 43.495 47.745 Coverage Ratio 220% 222% 200% 197% 173%
Net Interest Income 56.835 73.379 75.342 86.272 99.222 Source: Company, Shinhan Sekuritas Indonesia

Other Operating Income 25.496 27.898 33.655 37.020 40.722

Net Revenue 82.331 101.277 108.997 123.292 139.945 Dupont (as % of average assets) 2020 2021 2022F 2023F 2024F
Provision for loan loases 18.322 13.345 17.930 14.048 15.453 Net Interest Income 4% 5% 4% 4% 5%
Net Revenue after provision 64.009 87.933 91.067 109.243 124.492 Net Revenue 6% 6% 6% 6% 7%
Non interest expense 40.977 49.419 54.089 59.498 65.448 Net Revenue after provision 5% 6% 5% 6% 6%
Operating Income 23.033 38.514 36.978 49.745 59.044 Operating Income 2% 2% 2% 3% 3%
Net Non-Operating Losses (Gains) 265 -156 45 104 133 Net Income 1% 2% 2% 2% 2%
Income before tax 23.298 38.358 37.023 49.850 59.177 ROAA 1% 2% 2% 2% 2%
Tax 5.652 7.807 8.982 12.094 14.357 multiplier 7 8 8 8 7
Net Income 17.646 30.551 28.041 37.756 44.820 ROAE 9% 15% 12% 15% 16%
Source: Company, Shinhan Sekuritas Indonesia Source: Company, Shinhan Sekuritas Indonesia

30
PT Bank Rakyat Indonesia Tbk-BBRI

31
 BBRI – Improving digital ecosystem while expanding to the micro loan Helmi Therik, FRM

Current Price (IDR) (29/1) 5,575

• Expecting Improving loan growth and quality in 2024 at the range of 10% to 12%. The loan
trajectory is expected to come from the stable economic expansion in the all segment amid Target price (IDR) 6,500
low inflation environment as the necessary condition to expect better debtor real income Upside/Downside (%) 16.0%
capacity. The micro and ultra micro loan as the major contributor of the company that 52 Week High (IDR) 5,900
contribute 92% of total loan that has expanded by 12% last year. Micro loan is believed could
52 Week Low (IDR) 4,570
grow by 10% while the loan expansion through pawnshop so called “pegadaian” is estimated
would maintain its trajectory at around 17%. Loan quality is also improve as seen in the lower Major Shareholders:
loan at risk to 13,8% Vs 16,5% last year respectively. Negara Republik Indonesia 53.18%
Public 46.27%
• The net interest margin increased due to rebalancing the portfolio loan to the higher yield
product and segment. The rebalancing is important amid the higher cost of fund due to the in bn Rp 2020 2021 2022F 2023F 2024F
higher interest rate demand to maintain the third party fund. The NIM last year was about Net Interest Income 116,933 143,523 132,796 148,896 162,757
8.05% While the cost of fund has slightly increased by 8bps to 2.74%. The company strategy
OP 27,180 41,086 33,448 52,453 59,149
to shifting the loan from KUR to Kupedes combined with the allocation to the consumer loan
Pre-tax 26,725 40,992 33,297 52,261 58,928
through PNM and Pegadaian as the company’s subsidiary as the counter balance strategy to
compensate higher cost. The NIM in PNM was about 26% while the NIM in Pegadaian was at NP 18,660 33,156 23,249 36,491 41,146
19.6%. The higher net interest margin in 2024 is possible if there is a switch in the 7DR repo EPS 152 254 178 280 315
rate from BI in the second semester that would translated in the lower cost of fund amid the BVPS 1,631 2,235 2,371 2,537 2,723
lagging in loan yield adjustment.

• The third party fund and CASA is estimated to grow at the range of 10% to12% in 2024 or Loan (in bn RP) and loan growth (yoy)
the same path from last year. The higher source f fund is coming from the higher time
deposit rather than low cost of fund/ CASA. The CASA increased by 10% while the time
deposit increased by 28%. This has made the CoF increased to 2.74% from 2.66%. We
highlight the digitalization of the company as the engine to maintain its market position in
funding and lending market through its product so called “BRIMO”. The BRIMO penetration
in gathering the fund has been increased to 36.6% last year from last year at the range of
27.7%. The penetration is measured from the total customer of 111 million. The improving
user experience is believed could contributes to the improving of the CASA going forward.

• Valuation. We implement blended valuation with the Gordon method approach that implies
the fair value at Rp6,500/share. This represents 2023 and 2024 PBV at 2.2x and 2x which is
slightly lower than its average at 2xPBV. Risk to our call: lower loan growth, deteriorated
asset quality, unexpected interest rate movement.

32
BBRI – Improving digital ecosystem while expanding to the micro loan

NIM improves amid lower CoF due to lower interest rate Loan quality ratio (NPL & LaR)
13.0% 30.0% 28%
10.4% 10.5% 10.5% 10.0% 10.0% 10.2% 24%
11.0% 9.6% 9.4% 25.0%
8.9% 8.8% 20%
9.0% 7.1% 7.3% 7.4% 7.5%
7.0% 6.4% 6.7% 20.0% 16%
7.0% 6.1%
15.0%
5.0% 3.7% 3.5% 9% 9% 10%
3.3% 3.3% 3.5% 3.0% 3.0% 3.0% 2.6% 10.0%
3.0% 2.9% 3.1% 3.5% 3.0%
5.0% 2.1% 2.2% 2.6%
1.0%
0.0%
-1.0% 2015 2016 2017 2018 2019 2020 2021 2022F 2023F 2017 2018 2019 2020 2021 2022F 2023F
NIM Assets yield CoF
NPL LaR

Build up provision to cushion the credit risk PBV Band

348% 3.50

3.00
297% 294%
2.50
252%
2.00
198% 203%
174% 1.50

1.00

0.50

0.00
Jan-16 Jan-17 Jan-18 Jan-19 Jan-20 Jan-21

+1 stdev +2 stdev -1 stdev

2017 2018 2019 2020 2021 2022F 2023F
-2 stdev PBV_RATIO Average
Provision to NPL
33
Balance Sheet Key Ratio
Year-end 31 Dec (Rp bn) 2020 2021 2022F 2023F 2024F Year-end 31 Dec (%) 2020 2021 2022F 2023F 2024F
Cash 83,693 82,727 357,261 277,710 305,707 Growth
Interbanking Assets 122,401 127,928 157,366 204,084 218,370 Assets 7% 11% 7% 8% 8%
Short-Term & LT. Investments 328,302 377,421 157,366 204,084 218,370 Loans 2% 14% 5% 10% 7%
Loan - gross 929,324 1,062,230 1,113,158 1,224,507 1,310,222 Customer Deposits 10% 2% 12% 7% 7%
Allowance for Losses 65,378 86,419 101,625 113,684 126,588 Net Interest Income -3% 44% -21% 21% 10%
Net Loans 863,946 975,811 1,011,533 1,110,822 1,183,634 PPOP -15% 40% -19% 30% 11%
Net Fixed Assets 32,185 47,970 68,156 89,558 111,787 Net Income -46% 78% -30% 57% 13%
Other Assets 81,278 66,241 51,802 56,284 60,810 Profitabilty
Total Assets 1,511,805 1,678,098 1,803,485 1,942,543 2,098,679 Asset Yield 9% 9% 10% 10% 10%
Customer Deposits 1,121,102 1,138,743 1,271,554 1,360,563 1,455,802 Cost of Fund 3% 3% 3% 3% 3%
ST Borrowings & Repos 93,518 91,898 138,649 168,824 204,997 Net Interest Margin 6% 9% 7% 7% 8%
Long-Term Borrowings 42,670 75,107 21,030 14,764 10,365 ROAA 1% 2% 1% 2% 2%
Other Liabilities 54,603 80,563 62,729 67,235 72,065 ROAE 9% 13% 8% 11% 12%
Total Liabilities 1,311,893 1,386,311 1,493,962 1,611,386 1,743,229 Operational Efficiency Ratio (OER) 80% 77% 79% 70% 69%
Minority Interest 2,534 3,052 2,534 2,534 2,534 CIR 52% 54% 52% 47% 46%
Shareholders' Equity 199,911 291,787 309,522 331,157 355,450 Liquidity
Total Liabilities & Equity 1,511,805 1,678,098 1,803,485 1,942,543 2,098,679 LDR 83% 93% 88% 90% 90%
Source: Company, Shinhan Sekuritas Indonesia CASA Ratio 60% 60% 60% 60% 60%
Capital
Income Statement CAR-Bank Only 21% 25% 24% 28% 31%
Year-end 31 Dec (Rp bn) 2020 2021 2022F 2023F 2024F Assets Quality
Interest Income 116,933 143,523 132,796 148,896 162,757 NPL 2.9% 3.1% 3.5% 3.0% 3.0%
Interest Expense 37,723 29,429 43,193 40,370 43,610 Coverage Ratio 252% 297% 294% 348% 363%
Net Interest Income 79,210 114,094 89,603 108,526 119,147 Source: Company, Shinhan Sekuritas Indonesia

Other Operating Income 21,932 33,712 24,875 26,617 28,480

Net Revenue 101,142 147,807 114,478 135,143 147,627 Dupont (as % of average assets) 2020 2021 2022F 2023F 2024F
Provision for loan loases 21,798 27,395 21,866 19,384 20,741 Net Interest Income 5% 7% 5% 6% 6%
Net Revenue after provision 79,344 120,412 92,612 115,759 126,886 Net Revenue 7% 9% 7% 7% 7%
Non interest expense 52,164 79,326 59,164 63,306 67,737 Net Revenue after provision 5% 8% 5% 6% 6%
Operating Income 27,180 41,086 33,448 52,453 59,149 Operating Income 2% 3% 2% 3% 3%
Net Non-Operating Losses (Gains) (455) (94) (151) (193) (220) Net Income 1% 2% 1% 2% 2%
Income before tax 26,725 40,992 33,297 52,261 58,928 ROAA 1% 2% 1% 2% 2%
Tax 8,064 7,836 10,048 15,770 17,782 multiplier 7 6 6 6 6
Net Income 18,660 33,156 23,249 36,491 41,146 ROAE 9% 13% 8% 11% 12%
Source: Company, Shinhan Sekuritas Indonesia Source: Company, Shinhan Sekuritas Indonesia
34
PT Indofood CBP Sukses Makmur Tbk-ICBP

35
 ICBP – Making the most of picking up demand Billy Ibrahim Djaya

• Instant noodle consumption is in the sky. Indonesia’s demand for instant noodles reaches a
multi-year high of 14,260 million servings in 2022, while also reflecting a growth of +7.5% YoY, the Current Price (IDR) (24/01) 11,400
fastest growth at least since 2014. The consumption accelerated especially during the lockdown Target price (IDR) 13,900
amid the Covid-19 pandemic as an alternative food stock at home. After that, the uptrend continued
Upside/Downside (%) 21.93%
even after the restriction had been revoked, on the back of its affordability amid rising energy prices
and inflation. In the meantime, price pressure began to subside, including for rice inflation from 52 Week High (IDR) 11,925
+5.61% in September to +0.43% in December, but the average rice price level in wholesale 52 Week Low (IDR) 9,275
Indonesia remained high at IDR 13,458 per kg in December (vs IDR 11,363 in December 2022).
Major Shareholders:
The low production of rice is estimated to persist until the end of El Nino in April 2024 and keep
prices elevated. For most people, instant noodles are considered to be a substitute for rice, which PT Indofood Sukses Makmur Tbk 80.53%
will support the demand in 2024F. Public 19.47%

• The bottom line soared +113.3% YoY in 9M23. ICBP’s top line reached IDR 51.31tn in 9M23 Revenue NP EPS PER PBV
(+4.9% YoY) with the noodles segment as the backbone with revenue of IDR 38.11tn (+6.6% YoY) Year To Dec.
(Bn IDR) (Bn IDR) (IDR) (x) (x)
which was driven by sales volume growth of +9% YoY. That achievement managed to offset the
decline in the dairy segment of IDR 6.82tn (-5.7% YoY) as the competition in the industry remained 2021 56,804 6,388 548 15.9 3.0
tight, reflected in the drop of Indomilk market share in UHT milk to 12% in 9M23 (vs 13% in 9M22). 2022 64,798 4,587 393 22.1 2.8
Meanwhile, the GPM still managed to expand from 32.7% to 36.3% thanks to lower COGS by -1.1%
2023E 71,417 9,073 778 17.9 3.7
YoY as input costs already subsided including for wheat (-20.75% YoY) and skimmed milk powder (-
9.9% YoY) prices. Moreover, operating income also rose by +14.1% YoY to IDR 10.89tn, while 2024F 76,100 9,338 801 13.2 2.5
previously ICBP, suffered from net losses on forex difference from financing activities. As a result,
2025F 80,921 10,233 877 12.1 2.2
the net profit enjoyed a robust growth of +113.3% YoY to IDR 7.06tn. In FY24F, we estimated the
positive trend to continue on the back of noodles' performance given its flexibility as the market
ICBP’s Net Profit Projection
leader and steady decline in input costs, which will bring the top line to IDR 11.06tn (+6.6% YoY)
and net profit of IDR 9.33tn (+2.9% YoY). (Bn IDR) (%)
Net Profit (LHS) Net Profit Growth YoY (RHS)
12,000 150
• Gradual increase of export contribution. The domestic market would still be resilient despite the 10,233
looming risk of higher food inflation and weakening of purchasing power that will be outweighed by 9,073 9,338
the 13.1% YoY increase in the social protection budget from the government in the 2024 State 9,000 97.8 100
Budget and higher minimum wage. Apart from the limited growth from inside the country, ICBP will
6,388
pursue growth drivers from export sales to the Middle East and Africa, especially Nigeria and Saudi 6,000 50
Arabia. Both countries ranked #11 and #17 in terms of instant 2022 annual noodles consumption 4,587
with 2,790 million and 870 million servings, respectively. The revenue contribution from the region
9.6
in 9M23 reached IDR 11.54trn (+6.3% YoY) or accounted for 22.5% of total revenue. 3,000 -3.0 2.9 0

-28.2
• Valuation. We maintained our Buy rating for ICBP with a TP of IDR 13,900 per share and a
0 -50
potential upside of 20% by using the blended DCF methodology. The target price reflecting FY24F
2021 2022 2023F 2024F 2025F
P/E of 17.9x which is still below its 5-year historical mean of 18.3x. The risks to our call include a
deteriorating Rupiah exchange rate and a higher-than-expected inflation rate.
Source: Company, Shinhan Sekuritas Indonesia
ICBP – Making the most of picking up demand
ICBP’s Revenue Projection Indonesia Noodles’ Consumption Trend

(Bn IDR) Sales (LHS) Sales Growth YoY (RHS) (%) (Bn Servings)
100,000 25.0 15
14.26
21.8 80,921
80,000 76,100 20.0 14
71,417 13.43
64,798 13.20 13.27
13.01
60,000 56,804 15.0 13 12.62 12.54 12.64
14.1 12.52

40,000 10.2 10.0 12

6.6 6.3
20,000 5.0 11

0 0.0 10
2021 2022 2023F 2024F 2025F 2014 2015 2016 2017 2018 2019 2020 2021 2022

Source: Company, Shinhan Sekuritas Indonesia Source: WINA, Shinhan Sekuritas Indonesia

The Average Rice Price in Level Wholesale

Indonesia (Estates) P/E Band

(IDR/Kg)
Price Growth (YoY) ICBP - P/E BAND
14,000 25% 30.00
21% 22% 22%
13,300 18% 20% 25.00

16% 16% 16% 16% 16%

15% 15%
20.00
12,600 15%
11%
15.00
11,900 10%
10.00

11,200 5%
5.00
Jan-18
Mar-18
May-18
Jul-18
Sep-18
Nov-18
Jan-19
Mar-19
May-19
Jul-19
Sep-19
Nov-19
Jan-20
Mar-20
May-20
Jul-20
Sep-20
Nov-20
Jan-21
Mar-21
May-21
Jul-21
Sep-21
Nov-21
Jan-22
Mar-22
May-22
Jul-22
Sep-22
Nov-22
Jan-23
Mar-23
May-23
Jul-23
Sep-23
Nov-23
Jan-24
10,500 0%
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Forward P/E +2sd +1sd Mean -1sd -2sd

Source: Statistics Indonesia, Shinhan Sekuritas Indonesia Source: Company, Shinhan Sekuritas Indonesia
ICBP – Making the most of picking up demand
Income Statement Cash Flows
Year-End 31 Dec (Bn IDR) 2021 2022 2023F 2024F 2025F Year-End 31 Dec (Bn IDR) 2021 2022 2023F 2024F 2025F
Revenue 56,804 64,798 71,417 76,100 80,921 Net Profit 6,388 4,587 9,073 9,338 10,233
COGS -36,526 -43,005 -46,689 -49,798 -52,202 Change in Working Capital 1,601 4,217 2,464 2,010 2,774
Gross Profit 20,277 21,792 24,728 26,302 28,719 CFs from Operating 7,989 8,804 11,536 11,347 13,008
EBITDA 12,930 14,707 16,067 16,725 18,382
Operating Expenses -8,619 -8,415 -10,055 -11,063 -11,890 CFs from Investing -3,100 -1,506 -1,046 -1,119 -1,196
Operating Profit 11,659 13,378 14,673 15,239 16,829
Pre-Tax Profit 9,935 7,525 13,570 14,237 15,843 CFs from Financing 5,906 -12,826 -5,366 -4,066 -2,549
Income Tax Expenses -2,035 -1,803 -3,308 -3,436 -3,794
Net Profit 6,388 4,587 9,073 9,338 10,233 Net Inc./(Dec.) in Cash 10,850 -4,637 5,346 6,387 9,551
EPS (IDR) 548 393 778 801 877 Cash at End. Period 20,378 15,741 21,097 27,481 37,031
Source: Company, Shinhan Sekuritas Indonesia Source: Company, Shinhan Sekuritas Indonesia

Balance Sheet Key Ratio

Year-End 31 Dec (Bn IDR) 2021 2022 2023F 2024F 2025F Year-End 31 Dec 2021 2022 2023F 2024F 2025F
Assets Profitability
Cash & Cash Equivalents 20,378 15,741 21,097 27,481 37,031 Gross Margin 35.7% 33.6% 34.6% 34.6% 35.5%
Accounts Receivable 6,834 7,228 8,453 8,884 9,350 Operating Margin 20.5% 20.6% 20.5% 20.0% 20.8%
Inventories 5,857 7,132 7,503 8,082 8,507 EBITDA Margin 22.8% 22.7% 22.5% 22.0% 22.7%
Other Current Assets 928 969 1,903 1,864 1,959 Profit Margin 11.2% 7.1% 12.7% 12.3% 12.6%
Total Current Assets 33,998 31,070 38,957 46,311 56,847 ROAA 5.4% 4.0% 7.4% 7.2% 7.3%
Net Fixed Assets 14,176 14,521 14,589 14,498 14,417 ROAE 18.9% 12.6% 20.9% 19.0% 18.4%
Other Assets 69,893 69,714 69,436 69,159 68,884
Total Assets 118,067 115,306 122,981 129,969 140,147 Growth
Revenue 21.8% 14.1% 10.2% 6.6% 6.3%
Liabilities and equities Gross Profit 17.7% 7.5% 13.5% 6.4% 9.2%
Accounts Payables 5,750 5,779 7,444 7,474 7,866 Operating Profit 26.7% 14.7% 9.7% 3.9% 10.4%
Other Short-Term Liabilities 13,146 4,255 4,285 4,566 4,855 EBITDA 25.4% 13.7% 9.2% 4.1% 9.9%
Total Current Liabilities 18,896 10,034 11,729 12,040 12,722 Net Profit -3.0% -28.2% 97.8% 2.9% 9.6%
Long-Term Borrowings 40,731 44,516 40,921 40,135 40,961
Other Long-Term Liabilities 3,716 3,282 6,022 7,708 9,809 Solvability
Total Liabilities 63,343 57,833 58,672 59,883 63,492 Current Ratio (x) 1.80 3.10 3.32 3.85 4.47
Minority Interest 20,842 20,954 20,954 20,954 20,954 Quick Ratio (x) 1.46 2.30 2.60 3.10 3.72
Total Equity 54,724 57,473 64,309 70,086 76,655 Debt to Equity (x) 1.2 1.0 0.9 0.9 0.8
BVPS (IDR) 2,905 3,131 3,718 4,213 4,776 Interest Coverage (x) 6.4 6.3 10.0 11.1 12.2
Source: Company, Shinhan Sekuritas Indonesia Source: Company, Shinhan Sekuritas Indonesia
PT Ace Hardware Indonesia Tbk-ACES

39
 ACES – Earnings turnaround at hand Billy Ibrahim Djaya

• Remained on track to secure the first positive net profit growth since the pandemic. The Current Price (IDR) (24/01) 825
trajectory of ACES earnings performance has gradually increased after being impacted by the lockdown
during the Covid-19 pandemic. The company’s net profit declined during 2020-2022, but the story is Target price (IDR) 990
different this year with a double-digit bottom-line growth of +38.1% YoY to IDR 486bn in 9M23. This Upside/Downside (%) 19.52%
was mainly driven by robust revenue growth of +12.2% YoY to IDR 5.49trn along with surging sales of
52 Week High (IDR) 890
home improvement and lifestyle products by +11.1% YoY and 12.4% YoY, respectively. This is in line
with the industry retail sales growth that averaged 1.54% YoY in 2023 as well as the improvement in the 52 Week Low (IDR) 432
property sector which was encouraged by the implementation of value added tax incentive program. Major Shareholders:

• Ex-Java as the driver for SSSG. In FY23, ACES’ SSSG came in above expectation at +8.1% YoY or Kawan Lama Sejahtera 59.97%
exceeded the company’s initial target of +6.5% YoY. This was a huge improvement compared with the Public 39.86%
annual SSSG of only +3.20% YoY in the previous year. The solid performance is attributable to the
contribution from ex-Java as the company has continued to increase its presence in tier-2 and tier-3 Revenue NP EPS PER PBV
cities outside the Java region in the past year to balance store penetration in Java for the mid to longer Year To Dec.
(Bn IDR) (Bn IDR) (IDR) (x) (x)
term. As of 9M23, ACES has opened a total of 7 stores in the ex-Java area including in North
Kalimantan, Sumatra, Bali, South Sulawesi, Bali, West Kalimantan, and East Kalimantan. Moreover, 2021 6,543 704 41 31.1 4.0
strong SSSG was also boosted by significant foot traffic recovery triggered by various effective marketing
2022 6,763 664 39 12.8 1.4
campaigns.
2023E 7,424 727 42 16.9 1.9
• Capitalizing the solid fundamental. Given ACES’ healthy balance sheet as a net cash company, 2024F 8,139 809 47 15.2 1.8
various strategic expansions and innovations are expected to be implemented to encourage business
activities. At the end of December 2023, there were 235 ACE stores in Indonesia spread over 67 cities, 2025F 9,406 912 53 13.5 1.7
while the number of new stores in FY24F is estimated to grow by 10% YoY. The focus would be on the
addition of ACE Xpress format size is usually below 1,000 sqm, different from regular ACE stores that are Indonesia GDP Growth and ACES Annual SSSG
usually sized 1,000 to 3,000 sqm. It is also projected to enable penetration near housing areas and
(%) (%)
increase traffic, as well as maintain optimization, hence higher productivity. This has already been Annual SSSG (LHS)
reflected in the space per employee which was maintained at 44 sqm in 9M23 (vs 43 sqm in FY22) while 20.00 Indonesia Annual GDP Growth (RHS) 7.5
the sales per employee increased higher by +7% YoY to IDR 555mn.

• Maintain the leading position amid tighter competition. The total membership of ACES gradually 10.00 5.0
increased and reached 4,956 thousand in 1H23. This allowed the company to be favoured with higher
average ticket members of IDR 1,030 thousand as 79% of sales was contributed by members. The figure
0.00 2.5
also solidifies ACES's position as the leading home improvement and lifestyle retailer despite the
increasing number of new players such as KKV and DIY. ACES’ retail space transformation also will help
to sustain its market share by adopting an open-concept-floor plan that gives a spacious layout and is -10.00 0.0
equipped with an interactive display and informative visualization.

• Valuation. ACES's net profit in FY24F is estimated to reach IDR 809bn (+11.3%) on the back of -20.00 -2.5
economic recovery momentum, the resilience of Indonesia's upper-middle-class spending, and strategic 2017 2018 2019 2020 2021 2022 2023F 2024F
expansion. Therefore, we maintain our Buy rating on ACES with a TP of IDR 990 based on the blended
DFC method, reflecting FY24F P/E of 15.2x or still below its 5-year historical mean of 27.5x. Source: Company, Shinhan Sekuritas Indonesia
ACES – Earnings turnaround at hand
ACES’ Monthly SSSG ACES’ Store Categories

(Stores)
(%) 320
Home Center
90
Hardware
Xpress
60 240
18 17
10 13
10
30
160

160 166 170

0 148 157

80
-30
Oct-22

Oct-23
Dec-22

Dec-23
Jan-22

Jan-23
Nov-22

Nov-23
Mar-22

May-22

Aug-22

Mar-23

May-23

Aug-23
Jun-22
Jul-22

Jun-23
Jul-23
Feb-22

Apr-22

Sep-22

Feb-23

Apr-23

Sep-23

39 41 43 44 45
0
2019 2020 2021 2022 9M23

Source: Company, Shinhan Sekuritas Indonesia Source: Company, Shinhan Sekuritas Indonesia

ACES’ Operating and Net Profit Projection P/E Band

(Bn IDR) Operating Profit (LHS) Net Profit (LHS) (%) ACES - P/E BAND
Operating Profit Margin (RHS) Net Profit Margin (RHS)
1,200 16
14.1 50

13.0
11.8 12.3 11.9 40
12
800 30
10.8
9.8 9.8 9.9 9.7 8 20

400 10
4
0
Jan-18
Mar-18
May-18
Jul-18
Sep-18
Nov-18
Jan-19
Mar-19
May-19
Jul-19
Sep-19
Nov-19
Jan-20
Mar-20
May-20
Jul-20
Sep-20
Nov-20
Jan-21
Mar-21
May-21
Jul-21
Sep-21
Nov-21
Jan-22
Mar-22
May-22
Jul-22
Sep-22
Nov-22
Jan-23
Mar-23
May-23
Jul-23
Sep-23
Nov-23
Jan-24
0 0 +2sd +1sd Mean -1sd -2sd Forward P/E
2021 2022 2023F 2024F 2025F

Source: Company, Shinhan Sekuritas Indonesia Source: Company, Shinhan Sekuritas Indonesia
ACES – Earnings turnaround at hand
Income statement Cashflow analysis
Year-end 31 Dec (Rp bn) 2021 2022 2023F 2024F 2025F Year-end 31 Dec (Rp bn) 2021 2022 2023F 2024F 2025F
Sales 6,543 6,763 7,424 8,139 9,406 CFs from Operation
COGS -3,331 -3,495 -3,830 -4,185 -4,867 Net Profit 704 664 727 809 912
Gross Profit 3,213 3,268 3,595 3,955 4,539 Change in Working Capitals -660 -1,298 -618 -744 -479
EBITDA 1,057 1,008 1,001 1,144 1,286 CFs from Operation 1,305 619 109 64 433
Operating Expense -2,287 -2,392 -2,716 -2,953 -3,418
Operating Profit 925 876 879 1,002 1,121 CFs from Investments -83 -102 51 13 -18
Pre-Tax Profit 859 821 856 953 1,074
Income Tax - Net -140 -147 -128 -143 -161 CFs from Financing Activities -898 -939 -71 -68 -74
Net Profit 704 664 727 809 912 Net Inc./(Dec.) in Cash 324 -410 500 454 853
EPS (Rp) 41 39 42 47 53 Cash at End Period 2,544 2,133 2,634 3,088 3,941
Source: Company, Shinhan Sekuritas Indonesia Source: Company, Shinhan Sekuritas Indonesia

Balance sheet Key ratio analysis

Year-end 31 Dec (Rp bn) 2021 2022 2023F 2024F 2025F Year-end 31 Dec (Rp bn) 2021 2022 2023F 2024F 2025F
Assets Profitability
Cash and Equivalent 2,544 2,133 2,634 3,088 3,941 Gross Margin 49.1% 48.3% 48.4% 48.6% 48.3%
Receivables 67 86 130 142 165 Operating Margin 14.1% 13.0% 11.8% 12.3% 11.9%
Inventories 2,368 2,811 2,681 2,720 2,433 EBITDA Margin 16.2% 14.9% 13.5% 14.1% 13.7%
Others 214 333 365 401 463 Net Income Margin 10.8% 9.8% 9.8% 9.9% 9.7%
Total Current Assets 5,192 5,363 5,810 6,351 7,002 ROAA 9.8% 9.2% 9.8% 10.2% 10.7%
Net Fixed Assets 460 426 453 511 596 ROAE 13.1% 11.6% 11.8% 12.3% 12.9%
Other Assets 1,538 1,461 1,382 1,311 1,245
Total Assets 7,190 7,249 7,645 8,173 8,842 Growth
Revenue -11.7% 3.4% 9.8% 9.6% 15.6%
Liabilities and Equities Operating Profit -6.5% -5.3% 0.3% 14.0% 11.9%
Payables 127 144 148 244 376 EBITDA -26.0% -4.6% -0.7% 14.3% 12.4%
Other Short-Term Liabilities 596 525 577 632 731 Net Income -3.9% -5.7% 9.4% 11.3% 12.7%
Total Current Liabilities 723 670 725 877 1,107
LT. Debt 572 450 398 353 313 Solvability
Other Long Term Liabilities 383 196 176 154 121 Current Ratio (x) 7.2 8.0 8.0 7.2 6.3
Total Long-Term Liabilities 955 645 575 507 433 Quick Ratio (x) 3.9 3.8 4.3 4.1 4.1
Total Liabilities 1,677 1,315 1,300 1,384 1,540 Debt to Equity (x) 0.3 0.2 0.2 0.2 0.2
Minority Interest 31 44 44 44 44 Interest Coverage (x) 13.9 15.9 39.4 20.5 23.8
Shareholders' Equity 5,513 5,934 6,345 6,789 7,302 Source: Company, Shinhan Sekuritas Indonesia
BVPS (Rp) 322 347 371 397 427
PT Charoen Pokphand Indonesia Tbk-CPIN

43
 CPIN – Light at the end of the tunnel Billy Ibrahim Djaya

• Take the edge off the oversupply condition. The prolonged demand and supply imbalance in the Current Price (IDR) (24/01) 4,600
poultry industry has triggered the government to lower the import of grandparent stock quota (GPS)
Target price (IDR) 5,500
quota to 0.67 million live birds in 2023. Considering the life cycle of chickens, there will be a lagging
effect, and a more favorable supply is expected to take effect in 2024-2025. Together with the Upside/Downside (%) 19.80%
continuation of the culling program, following a total of 5 instructions from the government last year,
52 Week High (IDR) 5,975
it should improve the broiler and DOC prices that remain soft until the end of December 2023. Higher
ASP will help CPIN to maintain its profitability amid rising raw material costs. 52 Week Low (IDR) 4,330
Major Shareholders:
• Fundamental improvement in earnings performance. CPIN’s booked revenue of IDR 16.24trn (- Charoen Pokphand Indonesia 55.53%
1% QoQ, +10% YoY) in 3Q23, which brings the cumulative 9M23 revenue to IDR 47.13trn (+8.5%
Public 40.13%
YoY). The broiler segment became the backbone as contributed by 51.9% to total revenue, despite
the flat growth of only +1.1% YoY to IDR 24.45trn. The source of growth came in from the feed
segment at IDR 12.77trn (+19.5% YoY) and the DOC segment at IDR 1.41trn (+18.8% YoY). In Revenue NP EPS PER PBV
Year To Dec.
terms of profitability, GPM was lower from 15.9% in 9M22 to 14.7% in 9M23 because of the increase (Bn IDR) (Bn IDR) (IDR) (x) (x)
in input cost which consists of 50% from corn and 25% from soybean meal. The operating margin
was maintained thanks to the profitability of the feed segment at 25.5% (vs 21.8% in 9M22) as CPIN 2021 51,698 3,621 221 26.9 3.9
can pass through rising costs to the consumer. Net profit improved in 3Q23 to IDR 1.30trn (+14% 2022 56,868 2,928 179 31.6 3.5
QoQ, +69% YoY), even though the 9M23 results still experienced a decline of -16% YoY to IDR
2023E 62,448 3,438 210 24.0 2.9
2.68trn.
2024F 66,545 3,870 236 21.3 2.7
• Withstanding sticky corn price. The increase in poultry feed prices is projected to persist until 2025F 71,095 4,586 280 18.0 2.5
early 2024 due to the depletion of corn availability as the production of corn in 2023 fell by 2 million
tons from the previous year. Currently, the price of corn at the farmer level is hovering at IDR CPIN’s Revenue Projection
6,900/kg-IDR 7,000/kg or higher than the reference price (HAP) of IDR 5,000/kg. At the same time,
the selling price of broiler and DOC has not improved which put pressure on the margin. To mitigate
(Bn IDR) (%)
this risk, the government has increased the target for local corn production in 2024 to 16.6 million Revenue (LHS) Revenue Growth (RHS)
75,000 90
tons. The production of corn in January-February 2024 is estimated to reach 2.2 million tons, in line
with the national corn consumption at around 1.1 million–1.2 million tons per month.
60,000 65

• Hold a positive view in FY24F. We expect an improvement across most of its business segments
45,000 40
especially from the broiler and DOC segments on the back of selling price recovery amid the resilient
purchasing power of the Indonesian growing middle class which will boosted by increasing economic
30,000 15
activity during the election period. Thus, we estimate a top line of IDR 66.5trn (+6.6% YoY) and a
bottom line of IDR 3.87trn (+12.6% YoY) with a higher NPM of 5.8% in FY24F.
15,000 -10

• Valuation. We recommend Buy in CPIN, given its strong market share position to capture the
0 -35
potential growth of Indonesia's attractive poultry market. The company also has better profitability 2021 2022 2023F 2024F 2025F
compared to its domestic peers, including JPFA and MAIN. We derived our TP at IDR 5,500 (20%
Upside) based on the blended DCF method, reflecting an FY24F P/E of 21.3x.
Source: Company, Shinhan Sekuritas Indonesia
CPIN – Light at the end of the tunnel
CPIN’s Revenue Breakdown in 9M23 CPIN’s Operating and Net Profit Projection

Processed Others, 3% (Bn IDR) Operating Profit (LHS) Net Profit (LHS) (%)
Chicken, 3%
7,500 Operating Profit Margin (RHS) Net Profit Margin (RHS) 12

DOC, 15%
6,000
9

4,500
Feed, 52% 6
3,000

3
Broiler, 27% 1,500

0 0
2021 2022 2023F 2024F 2025F

Source: Company, Shinhan Sekuritas Indonesia Source: Company, Shinhan Sekuritas Indonesia

CPIN’s Gross Margin per Segment P/E Band

(%) 9M22 45.00

60
52.8 9M23
36.00

40
27.00
25.5
21.8
20 18.00
8.8 9.8
2.5 0.6 1.5
9.00
0

-4.6
0.00
Jan-16
Apr-16
Jul-16
Oct-16
Jan-17
Apr-17
Jul-17
Oct-17
Jan-18
Apr-18
Jul-18
Oct-18
Jan-19
Apr-19
Jul-19
Oct-19
Jan-20
Apr-20
Jul-20
Oct-20
Jan-21
Apr-21
Jul-21
Oct-21
Jan-22
Apr-22
Jul-22
Oct-22
Jan-23
Apr-23
Jul-23
Oct-23
Jan-24
-20 -15.8
Feed Broiler Day Old Processed Others +2sd +1sd Mean -1sd -2sd Forward P/E

Chicks Chicken

Source: Company, Shinhan Sekuritas Indonesia Source: Company, Shinhan Sekuritas Indonesia
 CPIN – Light at the end of the tunnel
Income statement Cashflow analysis
Year-end 31 Dec (Rp bn) 2021 2022 2023F 2024F 2025F Year-end 31 Dec (Rp bn) 2021 2022 2023F 2024F 2025F
Sales 51,698 56,868 62,448 66,545 71,095 CFs from Operation
COGS -43,559 -48,724 -53,759 -56,387 -60,117 Net Profit 3,621 2,928 3,438 3,870 4,586
Gross Profit 8,139 8,144 8,689 10,158 10,979 Change in Working Capitals -1,499 -1,254 -342 -3,289 -4,109
EBITDA 5,916 5,125 5,897 7,006 7,610 CFs from Operation 2,122 1,674 3,096 581 477
Operating Expense 3,204 4,160 3,877 4,296 4,571
Operating Profit 4,934 3,984 4,812 5,862 6,408 CFs from Investments -2,819 -2,613 -1,932 -2,094 -2,211
Pre-Tax Profit 4,634 3,537 4,320 4,864 5,764
Income Tax - Net -1,015 -607 -884 -995 -1,179 CFs from Financing Activities -316 928 -253 -234 -207
Net Profit 3,621 2,928 3,438 3,870 4,586 Net Inc./(Dec.) in Cash -875 239 2,808 389 590
EPS (Rp) 221 179 210 236 280 Cash at End Period 1,803 2,042 4,850 5,239 5,829
Source: Company, Shinhan Sekuritas Indonesia Source: Company, Shinhan Sekuritas Indonesia

Balance sheet Key ratio analysis

Year-end 31 Dec (Rp bn) 2021 2022 2023F 2024F 2025F Year-end 31 Dec (Rp bn) 2021 2022 2023F 2024F 2025F
Assets Profitability
Cash and Equivalent 1,803 2,042 4,850 5,239 5,829 Gross Margin 15.7% 14.3% 13.9% 15.3% 15.4%
Receivables 1,794 2,094 3,122 3,327 3,555 Operating Margin 9.5% 7.0% 7.7% 8.8% 9.0%
Inventories 11,588 13,263 11,945 11,965 12,156 EBITDA Margin 11.4% 9.0% 9.4% 10.5% 10.7%
Others 530 633 695 741 791 Net Income Margin 7.0% 5.1% 5.5% 5.8% 6.5%
Total Current Assets 15,715 18,031 20,613 21,272 22,331 ROAA 10.2% 7.3% 7.7% 8.2% 9.1%
Net Fixed Assets 16,256 17,628 19,028 20,429 21,829 ROAE 14.4% 11.1% 12.2% 12.7% 13.9%
Other Assets 3,475 4,188 4,720 5,414 6,224
Total Assets 35,446 39,848 44,361 47,115 50,384 Growth
Revenue 21.6% 10.0% 9.8% 6.6% 6.8%
Liabilities and Equities Operating Profit -4.0% -19.3% 20.8% 21.8% 9.3%
Payables 2,402 2,446 3,747 3,993 4,266 EBITDA -3.7% -13.4% 15.1% 18.8% 8.6%
Other Short-Term Liabilities 5,434 7,663 9,232 9,838 10,510 Net Income -5.8% -19.1% 17.4% 12.6% 18.5%
Total Current Liabilities 7,836 10,109 12,979 13,830 14,776
LT. Debt 1,358 2,312 2,048 1,814 1,607 Solvability
Other Long Term Liabilities 1,102 1,099 1,111 1,111 1,111 Current Ratio (x) 2.0 1.8 1.6 1.5 1.5
Total Long-Term Liabilities 2,460 3,411 3,159 2,925 2,718 Quick Ratio (x) 0.5 0.5 0.7 0.7 0.7
Total Liabilities 10,296 13,520 16,138 16,755 17,494 Debt to Equity (x) 0.4 0.5 0.6 0.6 0.5
Minority Interest 15 17 16 16 16 Interest Coverage (x) 15.0 9.5 10.4 5.9 9.7
Shareholders' Equity 25,150 26,327 28,223 30,359 32,890 Source: Company, Shinhan Sekuritas Indonesia
BVPS (Rp) 1,534 1,606 1,721 1,851 2,006
Source: Company, Shinhan Sekuritas Indonesia
PT Japfa Comfeed Indonesia Tbk-JPFA

47
 JPFA – The only way is up from the rock bottom Billy Ibrahim Djaya

• Live birds’ price fluctuation persists in the market. The prolonged demand and supply
imbalance in DOC and broiler since 2022 resulted in weak poultry prices, but began to rebound after Current Price (IDR) (24/01) 1,065
supply adjustments in 2Q23. The average monthly price of broiler in 3Q23 stood at IDR 21,051/kg (- Target price (IDR) 1,300
0.5% MoM, +12.2% YoY) while DOC recorded at IDR 6,887/kg (+26.6% MoM, +31.4% YoY) or
Upside/Downside (%) 21.8%
already near their peak level. However, the price began to subside in 4Q23 especially for DOC which
was experienced a steep decline of -63.5% MoM to the average of IDR 1,754/kg. The prices of DOC 52 Week High (IDR) 4,500
and broiler are subject to fluctuations due to market demand and supply dynamics, which in turn 52 Week Low (IDR) 3,390
affect the average selling prices (ASPs) and profitability of JPFA. The quarterly cyclicality is expected
Major Shareholders:
to even out in the long term, as the prospects of protein consumption remain solid.
Japfa Ltd 55.43%
• Acceleration of performance in 3Q23. The higher ASP of feed boosted JPFA’s revenue in 3Q23 to Public 43.62%
IDR 13.61trn (+10.6% YoY), while the 9M23 performance relatively flat at IDR 37.77trn (+2.6%
YoY). Feed remains a pillar of profitability and JPFA continues to pass on raw material price increases Revenue NP EPS PER PBV
in JPFA selling prices. Feed margins also have shown recent improvements from 18.9% in 9M22 to Year To Dec.
(Bn IDR) (Bn IDR) (IDR) (x) (x)
21.5% in 9M23. However, profitability decreases annually with GPM of 15.7% (vs 16.7% in 9M22)
and NPM of 2.5% (vs 3.9% in 9M22) mainly due to lower DOC and broiler selling prices. This was 2021 44,878 2,023 174 9.9 1.5
partly cushioned by improvements in the downstream performance as the poultry processing and 2022 48,972 1,420 122 10.6 1.1
consumer products segment began to gain a traction with contribution to total EBIT of 7.4%.
2023E 53,176 1,250 108 11.0 0.9
• Strengthening the downstream business. JPFA's decision to acquire 100% ownership in PT So 2024F 57,188 1,527 131 9.0 0.9
Good Food and PT So Good Food Manufacturing in 2020 through its subsidiary PT Ciomas Adisatwa
2025F 60,881 1,723 148 8.0 0.8
has enabled the company to increase the capacity of its processed meat production facilities. This
move aligns with JPFA's strategy to strengthen its downstream business, particularly in poultry
JPFA’s Revenue Projection
processing and consumer products, and to promote retail sales growth through both offline and online
outlets. The acquisition has contributed to enhancing JPFA's downstream business through increased
(Bn IDR) Revenue (LHS) Revenue Growth (RHS) (%)
capacity and production efficiency, supporting its strategic direction.
75,000 25

• Aquafeed as the future platform of growth. JPFA's aquaculture business, which includes fish and 21.4 60,881
60,000 57,188 20
shrimp feed production, shrimp hatchery, and shrimp farming, is expected to be the next growth 53,176
48,972
driver for the company. Aquafeed represents 75% of the aquaculture revenue. Furthermore, JPFA has 44,878
45,000 15
a joint venture with Hendrix Genetics to cultivate Kona Bay shrimp broodstock from Hawaii, which is
known for its high performance in the hatchery and on the farm. Kona Bay is a market leader
30,000 10
supplying more than 50% of shrimp broodstock in Indonesia. 9.1 8.6
7.5
6.5
• Valuation. We reiterate our Buy recommendation on JPFA with a TP of IDR 1,300, reflecting a 22% 15,000 5

upside. This TP is based on the blended DCF calculation method. It corresponds to a FY24F P/E of
9.0x, which we consider attractive compared to its peers. The risks to our recommendation include 0 0
2021 2022 2023F 2024F 2025F
lower than expected broiler and day-old-chick (DOC) prices.

Source: Company, Shinhan Sekuritas Indonesia

JPFA – The only way is up from the rock bottom
Livebirds and DOC Monthly Avg. Prices in West Java Corn and Soybean Meal Price Trend

(IDR/Kg) (IDR/Kg)
Livebirds DOC
25,000 8,000

20,000 6,400

15,000 4,800

10,000 3,200

5,000 1,600

0 0
Jan-22
Feb-22
Mar-22
Apr-22
May-22
Jun-22
Jul-22
Aug-22
Sep-22
Oct-22
Nov-22
Dec-22
Jan-23
Feb-23
Mar-23
Apr-23
May-23
Jun-23
Jul-23
Aug-23
Sep-23
Oct-23
Nov-23
Dec-23

Source: Company, Shinhan Sekuritas Indonesia Source: Company, Shinhan Sekuritas Indonesia

JPFA’s Net Profit Projection P/E Band

(Bn IDR) Net Profit (LHS) Net Profit Growth (RHS) (%) JPFA - P/E BAND
2,400 160 25.00

2,023
120.6 1,723 120 20.00

1,800
1,527
1,420 15.00

1,250 80
1,200 10.00

40
22.1 5.00
600 12.9
0
-11.9 0.00
Jan-16
Apr-16
Jul-16
Oct-16
Jan-17
Apr-17
Jul-17
Oct-17
Jan-18
Apr-18
Jul-18
Oct-18
Jan-19
Apr-19
Jul-19
Oct-19
Jan-20
Apr-20
Jul-20
Oct-20
Jan-21
Apr-21
Jul-21
Oct-21
Jan-22
Apr-22
Jul-22
Oct-22
Jan-23
Apr-23
Jul-23
Oct-23
Jan-24
-29.8
0 -40
Forward P/E +2sd +1sd Mean -1sd -2sd
2021 2022 2023F 2024F 2025F

Source: Company, Shinhan Sekuritas Indonesia Source: Company, Shinhan Sekuritas Indonesia
JPFA – The only way is up from the rock bottom
Income statement Cashflow analysis
Year-end 31 Dec (Rp bn) 2021 2022 2023F 2024F 2025F Year-end 31 Dec (Rp bn) 2021 2022 2023F 2024F 2025F
Sales 44,878 48,972 53,176 57,188 60,881 CFs from Operation
COGS 36,858 41,289 45,189 48,050 51,446 Net Profit 2,023 1,420 1,250 1,527 1,723
Gross Profit 8,020 7,683 7,987 9,138 9,436 Change in Working Capitals -3,633 -1,186 -428 -791 -855
EBITDA 4,740 3,966 4,042 4,674 5,028 CFs from Operation -1,610 234 822 736 868
Operating Expense -4,798 -4,880 -5,690 -6,232 -6,164
Operating Profit 3,222 2,803 2,297 2,905 3,272 CFs from Investments -222 -1,261 -1,049 -408 35
Pre-Tax Profit 2,794 1,955 1,975 2,383 2,646
Income Tax - Net -663 -464 -652 -763 -820 CFs from Financing Activities 73 950 -812 -668 -670
Net Profit 2,023 1,420 1,250 1,527 1,723 Net Inc./(Dec.) in Cash -251 726 -182 570 1,339
EPS (Rp) 174 122 108 131 148 Cash at End Period 1,085 1,811 1,629 2,198 3,537
Source: Company, Shinhan Sekuritas Indonesia Source: Company, Shinhan Sekuritas Indonesia

Balance sheet Key ratio analysis

Year-end 31 Dec (Rp bn) 2021 2022 2023F 2024F 2025F Year-end 31 Dec (Rp bn) 2021 2022 2023F 2024F 2025F
Assets Profitability
Cash and Equivalent 1,085 1,811 1,629 2,198 3,537 Gross Margin 17.9% 15.7% 15.0% 16.0% 15.5%
Receivables 2,429 2,496 2,712 2,859 2,983 Operating Margin 7.9% 5.6% 5.1% 5.7% 6.0%
Inventories 10,356 12,456 12,653 12,493 12,347 EBITDA Margin 10.6% 8.1% 7.6% 8.2% 8.3%
Others 291 238 670 612 600 Net Income Margin 4.7% 3.0% 2.5% 2.8% 3.0%
Total Current Assets 14,161 17,001 17,663 18,163 19,467 ROAA 7.8% 4.9% 3.9% 4.6% 5.1%
Net Fixed Assets 11,510 12,497 13,175 13,234 12,851 ROAE 17.4% 11.1% 9.4% 10.9% 11.4%
Other Assets 2,919 3,192 3,564 3,912 4,259
Total Assets 28,590 32,691 34,402 35,309 36,578 Growth
Revenue 21.4% 9.1% 8.6% 7.5% 6.5%
Liabilities and Equities Operating Profit 22.3% -13.0% -18.0% 26.5% 12.6%
Payables 3,030 4,135 5,318 6,291 7,306 EBITDA 30.3% -16.3% 1.9% 15.6% 7.6%
Other Short-Term Liabilities 4,034 5,277 5,761 5,454 5,273 Net Income 120.6% -29.8% -11.9% 22.1% 12.9%
Total Current Liabilities 7,064 9,412 11,079 11,745 12,579
LT. Debt 7,132 8,430 7,691 6,950 6,280 Solvability
Other Long Term Liabilities 1,291 1,193 1,193 1,193 1,193 Current Ratio (x) 2.0 1.8 1.6 1.5 1.5
Total Long-Term Liabilities 8,423 9,624 8,884 8,143 7,474 Quick Ratio (x) 0.5 0.5 0.5 0.5 0.6
Total Liabilities 15,487 19,036 19,963 19,888 20,052 Debt to Equity (x) 1.2 1.4 1.4 1.3 1.2
Minority Interest 869 907 907 907 907 Interest Coverage (x) 4.4 3.4 3.2 3.3 3.3
Shareholders' Equity 13,103 13,655 14,439 15,421 16,525 Source: Company, Shinhan Sekuritas Indonesia
BVPS (Rp) 1,126 1,175 1,243 1,327 1,422
Source: Company, Shinhan Sekuritas Indonesia
PT Semen Indonesia (Persero) Tbk-SMGR

51
 SMGR – Promising demand for the bulk segment Anissa Septiwijaya

• Strong export sales in 9M23. SMGR remains to recorded an increased its sales volume by 5.95% YoY
to 29.20 mn tons, which mainly from domestic sales of 23.44 mn tons (+0.74% YoY) supported by bulk Current Price (IDR) (17/01) 6,075
segment, followed by regional sales of 5.76 mn tons (+34.15% YoY). The solid regional sales mainly Target price (IDR) 8,000
contributed by export sales from Indonesia facilities which generated 4.72mn tons, increased by 61.9%
Upside/Downside (%) 20.75%
YoY, while from Vietnam facilities was corrected by 24.5%. The export sales volume was mostly sold to
Australia, Bangladesh, Philippines, Taiwan, Sri Lanka, and Timor Leste. 52 Week High (IDR) 7,775
52 Week Low (IDR) 5,625
The market leader in the IKN project. SMGR generated revenue from the cement segment of IDR
22.67 trillion, which inched up 1.59% YoY. Meanwhile, revenue from precast and ready-mix concrete of Major Shareholders:
IDR 1.36 trillion, rose by 7.68% YoY as the company supplied to the new capital city project (IKN) in the Government of RI 51.20%
East Kalimantan. We highlight that the demand for bulk cement will be a positive catalyst for overall
SMGR’s sales volume due to the company carter around 71% market share in the new capital project Public and Others 48.80%
(IKN) in East Kalimantan per September 2023. SMGR’s management is targeting 400,000 – 500,000 tons
for the project, while the IKN project is estimated to need for bulk cement of 700,000 tons. Per Revenue NP EPS PER PBV
Year To Dec.
September 2023, SMGR has supplied around 300,000 tons and is expected to exponentially increase in (Bn IDR) (Bn IDR) (IDR) (x) (x)
the 4Q of this year, as well as SMGR’s sales volume which increased by 22% YoY in 4Q23. For next year,
the IKN project is expected to need 1.2 – 1.3 mn tons of bulk cement, and SMGR will potentially supply 2021 34,958 2,021 299 22.1 1.1
80% of the bulk cement demand. 2022 36,379 2,365 350 18.9 0.9

• Cost discipline must continue to support SMGR’s margin. In 9M23, SMGR was successful in 2023E 34,803 2,063 306 26.2 1.1
maintaining its profitability, including NPM at 6.20%, compared to 6.33% in 9M22 despite higher fuel and 2024F 35,669 2,203 326 24.5 1.1
energy costs. For note, the fuel price increase that occurred in 2H 2022 impacted the logistics cost related
to energy, distribution, and raw materials. Meanwhile, for coal prices, we believe SMGR doesn’t have any
2025F 37,074 2,538 376 21.3 1.1
issue in terms of coal procurement as SMGR has managed full DMO coal for 2023. On the other hand,
Operating expenses declined by 8.09% YoY to IDR 3.99 trillion due to a decrease in transportation and SMGR’s sales volume (*including Semen Baturaja)
handling costs by 29.06% to IDR 1.17 trillion compared to last year of IDR 1.65 trillion. With this result,
OPM and EBITDA were recorded at 12.48% and 21.483% in 9M23 (Vs 13.37% and 22.65% in 9M22). In '000 Ton
addition, SMGR’s financial cost is seen to lower by 4.20% YoY to IDR 1.03 trillion, in line with the decline 4,500
in its interest-bearing debt. 4,000
3,500
• Decarbonization is still on track. SMGR also contributes to cost efficiency through collaboration with PT 3,000
Perusahaan Listrik Negara (Persero) Tbk to develop solar panels as a source of renewable energy. There
2,500
was around 5.4 MWp – 32 MWp of solar energy will be used in the early stage and will be increased up to
2,000
541 MWp to meet around 20% of electricity needs. Furthermore, considering that electricity is 2nd largest
1,500
contribution to SIG's cost of revenue, SMGR is targeted to reduce Scope 2 CO2 emission intensity by 24%
in 2030. 1,000
500
• Valuation. We maintain our BUY rating for SMGR with TP IDR 8,000 per share, reflecting an FY24F PE 0
and EV/EBITDA at 24.5x and 8.91x. For this year, we set a conservative target with overall sales volume Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

expected to increase by 1.5% YoY due to the presidential election. Downside risk: 1). Increasing energy 2022 2023
cost than expected, 2). Lower ASP and weak domestic demand, 3). Slower than expected demand in bulk
due to the postponement of several projects. Source: Company, Shinhan Sekuritas Indonesia
SMGR – Promising demand for the bulk segment
Revenue Breakdown in 9M23 Revenue and Net Income Projection

Others 40,000 3,000

4%
Precast and
2,400
readymix 30,000
Clinker
concrete
9%
5% 1,800

Bn IDR

Bn IDR
20,000
1,200

10,000
Cement 600
82%

- -
2020 2021 2022E 2023F 2024F 2025F

Revenue Net Profit (RHS)

Source: Company, Shinhan Sekuritas Indonesia Source: Company, Shinhan Sekuritas Indonesia

Profitability Trend 3-Years Forward PE (x)

40%

30%

20%

10%

0%
2020 2021 2022E 2023F 2024F 2025F

GPM OPM NPM

Source: Company, Shinhan Sekuritas Indonesia Source: Company, Shinhan Sekuritas Indonesia
SMGR – Promising demand for the bulk segment
Income Statement Cash Flows
Year-End 31 Dec (Bn IDR) 2021 2022 2023E 2024F 2025F Year-End 31 Dec (Bn IDR) 2021 2022 2023E 2024F 2025F
Sales 34,958 36,379 34,803 35,669 37,074 Net Profit 2,021 2,365 2,063 2,203 2,538
Cost of Revenue (24,005) (25,701) (25,058) (25,682) (26,879) Change in Working Capital 1,150 (437) (952) 190 58
Gross Profit 10,953 10,678 9,745 9,987 10,195 CFs from Operating 5,860 7,100 4,181 5,493 5,728
EBITDA 7,823 9,241 6,949 7,057 7,079
Operating Expenses (5,979) (6,052) (5,866) (6,031) (6,248) CFs from Investing (1,895) (6,165) (1,932) (1,680) (1,680)
Operating Profit 4,974 (1,327) 3,879 3,956 3,947
Pre-Tax Profit 3,470 3,299 2,645 2,824 3,254 CFs from Financing (4,425) 2,616 (2,014) (2,381) (5,312)
Income Tax Expenses (1,388) (800) (582) (621) (716)
Net Profit 2,021 2,365 2,063 2,203 2,538 Net Inc./(Dec.) in Cash (460) 3,551 235 1,433 (1,265)
EPS (IDR) 299 350 306 326 376 Cash at End. Period 2,470 6,007 6,242 7,675 6,410
Source: Company, Shinhan Sekuritas Indonesia Source: Company, Shinhan Sekuritas Indonesia

Balance Sheet Key Ratio

Year-End 31 Dec (Bn IDR) 2021 2022 2023E 2024F 2025F Year-End 31 Dec 2021 2022 2023E 2024F 2025F
Assets Profitability
Cash & Cash Equivalents 2,470 6,007 6,242 7,675 6,410 Gross Margin 31.3% 29.4% 28.0% 28.0% 27.5%
Accounts Receivable 5,871 5,885 6,025 6,024 6,254 Operating Margin 14.2% -3.6% 11.1% 11.1% 10.6%
Inventories 4,615 5,610 4,707 4,936 5,297 EBITDA Margin 22.4% 25.4% 20.0% 19.8% 19.1%
Other Current Assets 2,313 1,377 1,377 1,377 1,377 Profit Margin 5.8% 6.5% 5.9% 6.2% 6.8%
Total Current Assets 15,270 18,879 18,350 20,012 19,338 ROA 2.6% 2.9% 2.5% 2.7% 3.2%
Net Fixed Assets 54,720 57,806 56,669 55,248 53,796 ROE 5.1% 5.0% 4.3% 4.4% 5.0%
Other Assets 6,514 6,275 6,275 6,275 6,275
Total Assets 76,504 82,960 81,294 81,535 79,409 Growth
Revenue -0.6% 4.1% -4.3% 2.5% 3.9%
Liabilities and equities Gross Profit -7.4% -2.5% -8.7% 2.5% 2.1%
Accounts Payables 7,879 8,450 6,735 7,154 7,802 Operating Profit -11.9% -126.7% -392.4% 2.0% -0.2%
Other Short-Term Liabilities 6,331 4,611 4,726 4,647 4,401 EBITDA -9.6% 18.1% -24.8% 1.6% 0.3%
Total Current Liabilities 14,210 13,061 11,461 11,801 12,204 Net Profit -27.6% 17.0% -12.8% 6.8% 15.2%
Long-Term Borrowings 12,936 13,077 12,608 11,491 8,006
Other Long-Term Liabilities 7,794 7,133 7,133 7,133 7,133 Solvability
Total Liabilities 34,940 33,271 31,201 30,425 27,342 Current Ratio (x) 1.1 1.4 1.6 1.7 1.6
Dana Syirkah Funds 1,781 2,450 1,736 1,582 1,102 Quick Ratio (x) 0.6 0.9 1.1 1.2 1.0
Total Equity 39,783 47,239 48,357 49,528 50,964 Debt to Equity (x) 0.5 0.4 0.4 0.3 0.2
BVPS (IDR) 5,892 6,997 7,162 7,336 7,549 Interest Coverage (x) 3.1 553.7 2.5 2.8 4.0
Source: Company, Shinhan Sekuritas Indonesia Source: Company, Shinhan Sekuritas Indonesia
PT Indocement Tunggal Prakarsa Tbk-INTP

55
 INTP – Focusing on increasing market share Anissa Septiwijaya

• Margin improvement. In total, INTP’s revenue in 9M23 of IDR 12.93 trillion, rose by +10.86% Current Price (IDR) (18/01) 9,175
YoY, supported by the increase in sales volume (+8.30% YoY) coupled with a higher blended ASP
Target price (IDR) 11,200
(+2.37% YoY). Furthermore, thanks to lower energy costs due to DMO coal which offset an increase
in raw material cost and manufacturing overhead cost, then resulting to GPM was at 31.63% in Upside/Downside (%) 22.1%
9M23, (Vs 29.52% in 9M22). We also note that recovery in sales volume and ASP were affected by 52 Week High (IDR) 11,850
OPM and EBITDA margin which expanded to 11.72% and 19.57% in 9M23, compared to 9.99% and
52 Week Low (IDR) 9,025
17.47% in 9M22. In addition, the robust net profit growth of 33.84% YoY to IDR 1.27 trillion in
9M23, resulted in INTP’s NPM of 9.80% (Vs 8.12% in 9M22). Major Shareholders:
Heidelberg Material AG 51.00%
• Another room to boost performance. INTP seems to strive for its performance by increasing its
Public and Others 49.00%
market share through the acquisition of PT Semen Grobogan. For note, Semen Grobogan is a
cement producer that operates in Grobogan Regency, Central Java, which has a production capacity
Revenue NP EPS PER PBV
of 8,000 tons per day, equivalent to 2.5 million tons per year, with a utilization rate of 50% and Year To Dec.
potentially the capacity increased improve up to 2.9mn ton. More than 90% of its sales are in the (Bn IDR) (Bn IDR) (IDR) (x) (x)
central Java region. After this consolidation, INTP production capacity will reach 28 mn tons with the 2021 14,772 1,788 521 27.8 2.4
company potentially gaining an additional market share of around 2% -3% from this acquisition.
2022 16,328 1,842 537 17.1 1.6
For note, central Java was contributing around 11% of total domestic demand. Through this
synergy, we believe INTP will enjoy the benefit of additional sales volume due to taking over the 2023E 17,282 1,757 512 21.9 1.7
existing sales volume of about 1.5 million tons per year under the existing Semen Grobogan brand
2024F 18,960 1,972 574 19.5 1.7
and network. Meanwhile, from cost structure, INTP will maximize its profitability margin due to
saving transportation and production costs as Semen Grobogan’s plant is strategically located close 2025F 19,887 2,101 612 18.3 1.7
to key markets in Central Java with the lowest weighted average logistics cost to the other players. Market share INTP in Central Java after acquired Semen
Currently, Semen Grobogan has an EBITDA margin of 35%, higher than INTP’ at 19.6%. Grobogan

• Strong demand from outside Java. INTP reported its overall sales volume throughout 2023 of
17.48 mn ton (+8.77% YoY), or 97% of our expectation, supported by the bag market at +6.8%
and bulk market at +14.9%. Strong demand still coming from outside Java which grew by 29.6%
YoY or accounting for 37% of INTP’s total sales volume. This was in line with increasing supply to
the construction of IKN and higher market penetration to Nusa Tenggara and other East Indonesia
areas. This year, INTP will also continue to supply more bulk cement to IKN due to its Samarinda
Terminal starting to operate in full swing by December 2023 by having a 4x2500 ton capacity and a
new 8-spout packer. Meanwhile, in the first quarter of this year, we expect that there will be a
seasonal slowdown of cement demand due to more rains and weights from the Presidential Election
in February 2024.

• Valuation. We maintain our BUY for INTP with a TP of IDR 11,200 per share, reflecting our
PE and EV/EBITDA in FY24F at 19.5x and 8.8x. Downside our call: 1). Slower demand growth
than expected, 2). Higher coal prices than expected, and 3). Change in DMO regulation.
Source: Company, Shinhan Sekuritas Indonesia
INTP – Focusing on increasing market share
Historical Sales Volume vs ASP Revenue and Net Income Projection

000 Ton 000 IDR/ton Bn IDR Bn IDR

6,000 1,000 24,000 2,400

5,000 20,000
900
1,800
4,000 16,000
800
3,000 12,000 1,200

700
2,000 8,000
600
600 4,000
1,000

- 500 - -
2021 2022 2023E 2024F 2025F
1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23
Revenue Net income (RHS)
Sales volume ASP Blended

Source: Company, Shinhan Sekuritas Indonesia Source: Company, Shinhan Sekuritas Indonesia

Profitability Trend 3-Years Forward PE (x)

40.0% 40

35

30.0%
30

25
20.0%
20

10.0% 15

10
Jul-20

Jul-21

Jul-22

Jul-23

Nov-23
May-20

Nov-20
Jan-21

May-21

Nov-21

May-22

Nov-22

May-23
Jan-20
Mar-20

Sep-20

Mar-21

Sep-21

Jan-22
Mar-22

Sep-22

Jan-23
Mar-23

Sep-23
0.0%
2021 2022 2023E 2024F 2025F

GPM OPM NPM

PE Average +1 Stdev +2 Stdev -1 Stdev -2 Stdev

Source: Company, Shinhan Sekuritas Indonesia Source: Company, Shinhan Sekuritas Indonesia
INTP – Focusing on increasing market share

Income Statement Cash Flows

Year-End 31 Dec (Bn IDR) 2021 2022 2023E 2024F 2025F Year-End 31 Dec (Bn IDR) 2021 2022 2023E 2024F 2025F
Sales 14,772 16,328 17,282 18,960 19,887 Net Profit 1,788 1,842 1,757 1,972 2,101
COGS (9,646) (11,185) (12,019) (13,147) (13,839) Change in Working Capital 1,073 1,012 1,209 1,407 1,604
Gross Profit 5,126 5,143 5,263 5,813 6,048 CFs from Operating 2,791 2,247 3,462 3,190 3,659
EBITDA 3,278 3,239 3,196 3,743 4,005
Opearing Expenses (3,219) (3,334) (3,706) (3,920) (4,104) CFs from Investing (827) (1,607) (2,000) (2,000) (2,000)
Operating Profit 2,071 2,226 1,987 2,336 2,401
Pre-Tax Profit 2,234 2,289 2,252 2,528 2,694 CFs from Financing (3,604) (2,255) 736 (1,685) (1,807)
Income Tax Expenses (446) (447) (495) (556) (593)
Net Profit 1,788 1,842 1,757 1,972 2,101 Net Inc./(Dec.) in Cash (1,641) (1,615) 2,197 (495) (148)
EPS (IDR) 521 537 512 574 612 Cash at End. Period 6,141 4,526 6,723 6,228 6,080
Source: Company, Shinhan Sekuritas Indonesia Source: Company, Shinhan Sekuritas Indonesia

Balance Sheet Key Ratio

Year-End 31 Dec (Bn IDR) 2021 2022 2023E 2024F 2025F Year-End 31 Dec 2021 2022 2023E 2024F 2025F
Assets Profitability
Cash & Cash Equivalents 6,141 4,526 6,723 6,228 6,080 Gross Margin 34.7% 31.5% 30.5% 30.7% 30.4%
Accounts Receivable 2,587 2,652 3,066 3,314 3,434 Operating Margin 14.0% 13.6% 11.5% 12.3% 12.1%
Inventories 2,267 2,831 2,182 2,387 2,512 EBITDA Margin 22.2% 19.8% 18.5% 19.7% 20.1%
Other Current Assets 341.25 304.21 297.95 300.20 301.29 Profit Margin 12.1% 11.3% 10.2% 10.4% 10.6%
Total Current Assets 11,337 10,312 12,268 12,229 12,328 ROA 6.8% 7.2% 6.2% 6.8% 7.1%
Net Fixed Assets 14,342 14,895 15,686 16,279 16,675 ROE 8.7% 9.4% 7.9% 8.8% 9.3%
Other Assets 456.97 499.16 499.16 499.16 499.16
Total Assets 26,136 25,706 28,453 29,007 29,503 Growth
Revenue 4.1% 10.5% 5.8% 9.7% 4.9%
Liabilities and equities Gross Profit 0.2% 0.3% 2.3% 10.5% 4.0%
Accounts Payables 2,955 2,583 2,838 3,104 3,306 Operating Profit 10.4% 7.5% -10.8% 17.6% 2.8%
Other Short-Term Liabilities 1,692 2,239 2,167 2,177 2,184 EBITDA 0.0% -1.2% -1.3% 17.1% 7.0%
Total Current Liabilities 4,647 4,822 5,004 5,281 5,490 Net Profit -1.0% 3.0% -4.7% 12.3% 6.5%
Long-Term Borrowings 114 634 503 522 535
Other Long-Term Liabilities 755 683 722 764 811 Solvability
Total Liabilities 5,515 6,139 6,229 6,568 6,836 Current Ratio (x) 2.4 2.1 2.5 2.3 2.2
Minority Interest - - - - - Quick Ratio (x) 2.0 1.6 2.0 1.9 1.8
Shareholders' equity 20,621 19,567 22,224 22,439 22,667 Debt to Equity (x) 0.0 0.1 0.0 0.0 0.0
BVPS (IDR) 6,006 5,699 6,473 6,535 6,602 Interest Coverage (x) 65.5 51.9 58.3 66.0 66.3
Source: Company, Shinhan Sekuritas Indonesia Source: Company, Shinhan Sekuritas Indonesia
PT XL Axiata Tbk-EXCL

59
 EXCL – In the race for FMC business Anissa Septiwijaya

• EBITDA was manageable despite seasonality. In 3Q23, EXCL recorded a net profit of IDR
Current Price (IDR) (19/01) 2,370
359.92 billion, which declined by 19.98% QoQ in line with a lower revenue of 1.39% QoQ to IDR
8.10 trillion. This lowered top-line performance was mainly caused by a decrease in data and Target price (IDR) 2,900
digital services revenue by 2.53% QoQ as well as seasonality. This was also reflected in flat traffic Upside/Downside (%) 22.4%
data to 2,453 PB (+0.04% QoQ) in 3Q23. However, the company successfully depressed its opex
52 Week High (IDR) 2,560
by 3.56% QoQ to IDR 4.00 trillion, bringing EBITDA to IDR 4.10 trillion (+0.84% QoQ, +12.63%
YoY), accounting for EBITDA margin at 50.6%, compared to 48.5% in 2Q23 and 48.1% in 3Q22. 52 Week Low (IDR) 1,695
Major Shareholders:
• Higher tariff price in line with industry consolidation. In 9M23, EXCL reported double-digit
Axiata Investments (Indonesia) Sdn. Bhd 66.25%
revenue growth to IDR 23.87 trillion (+12.01% YoY), above our expectations. This solid revenue
growth premillary contributed by data and digital services revenue of IDR 21.72 trillion (+10.20% Public and Others 33.75%
YoY) on the back of strong data traffic growth coupled with higher blended ARPU at IDR 41k in
9M23, compared to IDR 38k, which was driven by retention quality of subscriber and strong base Revenue NP BVPS PBV EV/EBITDA
Year To Dec.
for further price reparation. This offset EXCL's lower subscribers by 500k to 57.5 mn subs. We also (Bn IDR) (Bn IDR) (IDR) (x) (x)
see that continued improvement in ARPU is supported by healthy conduct and industry pricing
2021 26,754 1,288 1,530 1.5 4.8
rationalization. Additionally, based on cable.co.uk, the average domestic mobile internet price
tends to be cheap with only USD 0.28/GB, compared to Thailand (USD 0.41/GB), Philippines (USD 2022 29,142 1,109 1,963 1.1 4.6
0.59/GB), and Singapore (USD 0.63/GB). However, in this condition, higher ARPU will align with 2023E 30,963 1,148 2,015 1.4 5.4
the strengthened infrastructure to improve service quality and customer experience. In 9M23,
2024F 33,590 1,321 2,079 1.4 5.0
EXCL’s BTS reached 158,225 BTS with 65% of total BTS being 4G and fiberization rate at 61%.
Accordingly, XL delivered a median download speed of 20.79 Mbps in 3Q23, compared to 4Q22 at 2025F 35,501 1,484 2,156 1.3 4.7
19.19 Mbps based on Speedtest.
EXCL’s Blended ARPU continues to improve
• FBB and FMC business continues to accelerate. EXCL seems to have shown positive results
from its FMC business through its product, XL Satu to create another revenue stream. Currently, Mn subs '000 IDR
XL Satu is available in 75 cities, compared to only 12 cities in 2Q23 along with the company’s 59 50

expansion. EXCL reported that has 206k home connect, of which 143k were XL Satu subscribers, 58
40
representing a convergence penetration of 69%, massively increased from 32% in 3Q22. EXCL has
57
committed to continue to expand the FMC business, with a target of providing XL Satu products in 30
100 cities throughout Indonesia. Besides that, by collaborating with Link Net, EXCL is optimistic 56

about improving convergence penetration in Indonesia with a targeted 8 million home passes over 20
55
the next 5 years.
10
54

• Valuation. We also highlight the possibility merger between EXCL and FREN would accelerate 53 0
EXCL’s FBB business due to FREN owns around 18.3% stake in PT Mora Telematika Indonesia
(MORA) through its subsidiary PT Smart Telecom (Smartel). MORA provides Fiber to the home
Subscribers ARPU Blended (RHS)
(FTTH) business service under the brand Oxygen.id which has more than 110k subscribers with
covers an area from Jabodetabek to Pekalongan and Bandung. We recommend BUY for EXCL
Source: Company, Shinhan Sekuritas Indonesia
with a TP of IDR 2,900 per share based on EV/EBITDA FY24E at 5.0x.
EXCL – In the race for FMC business
Revenue and Net Profit Projection Convergence Progress

40,000 1,800 250 80%

35,000
1,500 69% 70%
200
30,000 60%
56%
1,200
25,000 150 50%
Bn IDR

Bn IDR
44%
20,000 900 40%
37%
100 32% 30%
15,000 28%
600
10,000 19% 20%
50
300
5,000 10%

- - 0 0%
2021 2022 2023E 2024F 2024F 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23

Revenue Net profit (RHS) XL Home subscribers (000) Convergence Penetration

Source: Company, Shinhan Sekuritas Indonesia Source: Company, Shinhan Sekuritas Indonesia

Traffic Data 3-Years Forward EV/EBITDA (x)

(x)
20,000
6.5
18,000
16,000
14,000
In PB (Petabyte)

5.5
12,000
10,000
8,000 4.5
6,000
4,000
2,000 3.5

Jul-22
Jul-20

Jul-21

Jul-23
Nov-20
May-20

May-21

Sep-21
Nov-21

May-22

Nov-22

May-23

Nov-23
Jan-20
Mar-20

Sep-20

Jan-21
Mar-21

Jan-22
Mar-22

Sep-22

Jan-23
Mar-23

Sep-23
-
FY18 FY19 FY20 FY21 FY22 FY23E FY24F FY24F
Axis Title EV/EBITDA Average +1 stdev +2 stdev -1 stdev -2 stdev

Source: Company, Shinhan Sekuritas Indonesia Source: Company, Shinhan Sekuritas Indonesia
EXCL – In the race for FMC business
Income Statement Cash Flows
Year-End 31 Dec (Bn IDR) 2021 2022 2023E 2024F 2025F Year-End 31 Dec (Bn IDR) 2021 2022 2023E 2024F 2025F
Sales 26,754 29,142 30,963 33,590 35,501 Net Profit 1,288 1,109 1,148 1,321 1,484
Infrastructure Expenses (7,990) (7,734) (8,297) (8,769) (9,361) Change in Working Capital 3,196 206 685 803 758
Depreciation Expenses (9,956) (10,570) (10,077) (11,135) (11,918) CFs from Operating 11,899 10,710 11,921 13,273 14,170
EBITDA 13,287 14,235 15,010 16,733 17,598
Operating Expenses (2,866) (2,971) (3,173) (3,274) (3,464) CFs from Investing (13,858) (20,851) (16,691) (16,444) (12,272)
Operating Profit 3,989 4,015 4,835 5,499 5,581
Pre-Tax Profit 1,708 1,353 1,507 1,731 1,942 CFs from Financing 1,642 12,610 1,514 3,259 (1,795)
Income Tax Expenses (420) (232) (347) (398) (447)
Net Profit 1,288 1,109 1,148 1,321 1,484 Net Inc./(Dec.) in Cash (317) 2,469 (3,257) 88 103
EPS (IDR) 98 85 87 101 113 Cash at End. Period 2,664 5,184 1,928 2,016 2,119
Source: Company, Shinhan Sekuritas Indonesia Source: Company, Shinhan Sekuritas Indonesia

Balance Sheet Key Ratio

Year-End 31 Dec (Bn IDR) 2021 2022 2023E 2024F 2025F Year-End 31 Dec 2021 2022 2023E 2024F 2025F
Assets Profitability
Cash & Cash Equivalents 2,664 5,184 1,928 2,016 2,119 Operating Margin 14.9% 13.8% 15.6% 16.4% 15.7%
Accounts Receivable 610 852 602 653 690 EBITDA Margin 49.7% 48.8% 48.5% 49.8% 49.6%
Inventories 156 408 424 456 486 Profit Margin 4.8% 3.8% 3.7% 3.9% 4.2%
Other Current Assets 4,302 3,964 3,964 3,964 3,964 ROA 1.8% 1.3% 1.3% 1.4% 1.5%
Total Current Assets 7,733 10,408 6,918 7,090 7,260 ROE 6.4% 4.3% 4.3% 4.8% 5.2%
Net Fixed Assets 51,912 60,474 66,768 71,741 71,740
Other Assets 13,108 16,396 16,715 17,051 17,406
Total Assets 72,753 87,278 90,402 95,882 96,406 Growth
Revenue 2.9% 8.9% 6.2% 8.5% 5.7%
Liabilities and Equities Operating Profit 51.6% 0.6% 20.4% 13.7% 1.5%
Accounts Payables 10,638 11,337 11,789 12,675 13,500 EBITDA 1.7% 7.1% 5.4% 11.5% 5.2%
Other Short-Term Liabilities 10,316 15,013 16,723 17,816 17,379 Net Profit 246.6% -13.9% 3.5% 15.0% 12.3%
Total Current Liabilities 20,954 26,351 28,512 30,491 30,879
Long-Term Borrowings 28,356 30,680 30,941 33,403 32,601
Other Long-Term Liabilities 3,355 4,473 4,495 4,698 4,614 Solvability
Total Liabilities 52,665 61,504 63,948 68,592 68,095 Current Ratio (x) 0.4 0.4 0.2 0.2 0.2
Minority Interest - - - - - Quick Ratio (x) 0.4 0.4 0.2 0.2 0.2
Total Equity 20,089 25,774 26,454 27,290 28,311 Debt to Equity (x) 1.8 1.7 1.7 1.8 1.6
BVPS (IDR) 1,530 1,963 2,015 2,079 2,156 Interest Coverage (x) 1.7 1.4 1.4 1.4 1.5
Source: Company, Shinhan Sekuritas Indonesia Source: Company, Shinhan Sekuritas Indonesia
PT Telkom Indonesia (Persero) Tbk-TLKM

63
 TLKM – Accelerate business diversification Anissa Septiwijaya

• OPEX was manageable amid the low season. In 3Q23, TLKM recorded a revenue of IDR 37.76
trillion, which only inched up 0.99% QoQ. Revenue from data, internet & IT service was flat to IDR Current Price (IDR) (19/01) 3,940
21.74 trillion (+0.00% QoQ) in line with slowing traffic growth by only 0.3% QoQ due to seasonal Target price (IDR) 4,800
factors. Meanwhile, revenue from SMS, fixed and cellular voice revenue keeps on decreasing to IDR
Upside/Downside (%) 21.8%
3.31 trillion (-4.80% QoQ, -23.84% YoY) due to continued transition from legacy to data. Operating
profit was at IDR 11.96 trillion, which rose by 3.24% QoQ due to TLKM's success manage the expenses 52 Week High (IDR) 4,500
healthy. Moreover, EBITDA also improved to IDR 20.68 trillion, increased by 6.65% QoQ, representing 52 Week Low (IDR) 3,390
an EBITDA margin of 54.76%, compared to 51.86% in the previous quarter. Accordingly, with a higher
Major Shareholders:
top line coupled with lower opex, net income rose by 6.49% QoQ to IDR 6.74 trillion.
Indonesia Government 52.09%
• Maximize adding value from Indihome business. Indihome officially integrated into Telkomsel on Public and Others 47.91%
July 2023, and Telkomsel successfully accelerated IndiHome customers towards 8.5 million customers
in 9M23 driven by cross-selling and up-selling activities. For note, the purpose of this spin-off is to Revenue NP BPS PBV EV/EBITDA
maintain the competitiveness and superiority of Telkom in facing competition in Indonesia's Year To Dec.
telecommunication sector. Besides that, We also believe that spin off Indihome to Telkomsel was part
(Bn IDR) (Bn IDR) (IDR) (x) (x)
of TLKM's plan to boost the Fixed Mobile Convergence (FMC) business. This was seen by Telkomsel 2021 143,210 24,760 1,468 2.8 5.7
launched a new product under the brand “Telkomsel One” which offers broadband services with a
2022 147,306 20,753 1,507 2.6 5.8
variety of added values, reliable capabilities in one network, the convenience and advantages of
Telkomsel Prepaid, Halo, Orbit, and IndiHome services in one solution, one application, and one bill, 2023E 152,183 23,912 1,586 3.0 6.8
which further enhances customer experience for more seamless broadband connectivity access, to 2024F 159,120 25,894 1,660 2.9 6.5
support the various needs and activities of the digital lifestyle. Indihome prove to record a solid
performance with a revenue of IDR 21.79 trillion (+2.77 QoQ, +4.79% YoY) or 19.6% of TLKM’s 2025F 166,155 28,003 1,733 2.8 6.2
revenue in 9M23.
TLKM’s revenue breakdown
• Mitratel continues to improve its profitability. In 9M23, revenue from the network and other telco
services recorded positive growth by 12.20% YoY to IDR 8.64 trillion. This is primarily contributed by Bn IDR
tower leasing revenue as well as growing network business. Mitratel (MTEL), as TLKM’s subsidiary 50,000

continues to record solid performance with an EBITDA margin strengthening to 80.6% in 9M23,
40,000
compared to 78.5% in 9M22 which was backed by expanding in tenancy ratio to 1.50x, from the
previous 1.44x. Moreover, Mitratel also has to expand its portfolio from the fiber optic sector, with a 30,000

total fiber optic length of 29,042 km in 9M23. We expect demand for fiber optic will continue growth 20,000
due to fiberization of devices in the tower can support mobile operators to capture the opportunity of
10,000
increased data demand from customers and increase revenue in these locations. Apart from that, data
center and cloud business also recorded a positive growth which grew by 9.1% YoY to IDR 1.4 trillion -
in 9M23. As of September 2023, TLKM has a total of 32 data center facilities (27 domestic and 5 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23

overseas) with an average utilization rate of 70% spread over 4 countries (Indonesia, Singapore, Data, internet & IT service SMS, Fixed and cellular voice

Hongkong, and Timor Leste). Indihome Interconnection

Network and other telco service

• Valuation. We believe that internet consumption and the diversification of TLKM’s portfolio will create
a higher value for the company, therefore We maintain our BUY rating for TLKM with a TP of IDR Source: Company, Shinhan Sekuritas Indonesia
4,800 per share. Our TP reflects EV/EBITDA at 6.5x in FY24F.
TLKM – Accelerate business diversification
Revenue Breakdown Profitability Margin

Bn IDR Bn IDR 60.0%

180,000 30,000
50.0%
160,000
25,000
140,000 40.0%
120,000 20,000
30.0%
100,000
15,000
80,000 20.0%
60,000 10,000
10.0%
40,000
5,000
20,000 0.0%
- - 2021 2022 2023E 2024F 2025F
2020 2021 2022 2023E 2024F 2025F
OPM EBITDA Margin NPM
Revenue Net income (RHS)

Source: Company, Shinhan Sekuritas Indonesia Source: Company, Shinhan Sekuritas Indonesia

Traffic Data and ARPU 3-Years Forward EV/EBITDA (x)

Petabyte 000 IDR (X)

7.5
5,000 60
7.0
50
4,000 6.5

40 6.0
3,000
30 5.5

2,000 5.0
20
4.5
1,000
10 4.0
Jan-20 Jun-20 Nov-20 Apr-21 Sep-21 Feb-22 Jul-22 Dec-22 May-23 Oct-23
- -
1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 EV/EBITDA Average +1 Stdev
+2 Stdev -1 Stdev -2 Stdev
Data payload (PB) ARPU (RHS)

Source: Company, Shinhan Sekuritas Indonesia Source: Company, Shinhan Sekuritas Indonesia
TLKM – Accelerate business diversification
Income Statement Cash Flows
Year-End 31 Dec (Bn IDR) 2021 2022 2023E 2024F 2025F Year-End 31 Dec (Bn IDR) 2021 2022 2023E 2024F 2025F
Sales 143,210 147,306 152,183 159,120 166,155 Net Profit 24,760 20,753 23,912 25,894 28,003
EBITDA 75,723 72,836 74,826 78,470 82,425 Change in Working Capital 3,254 602 (513) 333 292
Operating Profit 47,563 39,581 42,600 44,778 47,264 CFs from Operating 45,787 36,551 40,276 44,609 48,186
Pre-Tax Profit 43,678 36,339 39,538 42,079 44,783
Income Tax Expenses (9,730) (8,659) (8,698) (9,257) (9,852) CFs from Investing (31,161) (18,554) (30,000) (25,000) (25,000)
Net Profit 24,760 20,753 23,912 25,894 28,003
EPS (IDR) 250 209 241 261 283 CFs from Financing 1,115 (25,774) (12,615) (22,173) (25,135)
Source: Company, Shinhan Sekuritas Indonesia
Net Inc./(Dec.) in Cash 15,741 (7,777) (2,340) (2,564) (1,949)
Cash at End. Period 38,311 31,947 29,607 27,044 25,094
Source: Company, Shinhan Sekuritas Indonesia

Balance Sheet Key Ratio

Year-End 31 Dec (Bn IDR) 2021 2022 2023E 2024F 2025F Year-End 31 Dec 2021 2022 2023E 2024F 2025F
Assets Profitability
Cash & Cash Equivalents 38,311 31,947 29,607 27,044 25,094 Operating Margin 33.2% 26.9% 28.0% 28.1% 28.4%
Accounts Receivable 8,705 8,879 9,173 9,591 10,015 EBITDA Margin 52.9% 49.4% 49.2% 49.3% 49.6%
Inventories 779 1,144 1,182 1,236 1,290 Profit Margin 17.3% 14.1% 15.7% 16.3% 16.9%
Other Current Assets 13,482 13,087 13,087 13,087 13,087 ROA 8.9% 7.5% 8.3% 8.9% 9.4%
Total Current Assets 61,277 55,057 53,049 50,957 49,487 ROE 17.0% 13.9% 15.2% 15.8% 16.3%
Net Fixed Assets 165,026 173,329 187,225 194,655 200,615
Other Assets 50,881 46,806 46,806 46,806 46,806
Total Assets 277,184 275,192 287,080 292,418 296,908 Growth
Revenue 4.9% 2.9% 3.3% 4.6% 4.4%
Liabilities and equities Operating Profit 9.3% -16.8% 7.6% 5.1% 5.6%
Accounts Payables 17,779 18,920 18,739 19,544 20,315 EBITDA 5.1% -3.8% 2.7% 4.9% 5.0%
Other Short-Term Liabilities 51,352 51,468 55,330 54,797 53,983 Net Profit 19.0% -16.2% 15.2% 8.3% 8.1%
Total Current Liabilities 69,131 70,388 74,069 74,342 74,298
Long-Term Borrowings 46,745 41,067 41,416 39,196 36,443
Other Long-Term Liabilities 15,909 14,475 14,475 14,475 14,475 Solvability
Total Liabilities 131,785 125,930 129,959 128,013 125,215 Current Ratio (x) 0.89 0.78 0.72 0.69 0.67
Minority Interest 23,753 20,004 20,004 20,004 20,004 Quick Ratio (x) 0.69 0.60 0.54 0.51 0.49
Shareholders' equity 145,399 149,262 157,121 164,405 171,693 Debt to Equity (x) 0.48 0.42 0.42 0.38 0.34
BVPS (IDR) 1,468 1,507 1,586 1,660 1,733 Interest Coverage (x) 10.90 9.81 10.02 10.94 12.62
Source: Company, Shinhan Sekuritas Indonesia Source: Company, Shinhan Sekuritas Indonesia
PT Sarana Menara Nusantara Tbk-TOWR

67
 TOWR - Reaping the rewards from the expansion of the fiber optic business. Anissa Septiwijaya

• Stable EBITDA margin. In 3Q23, TOWR booked an increase on its bottom line by 7.41%
Current Price (IDR) (22/01) 955
QoQ to IDR 866.45 billion, mainly supported by lower finance cost by -8.14% QoQ while the
revenue only grew by 1.08% QoQ to IDR 2.94 trillion. This result brought total revenue in Target price (IDR) 1,230
9M23 at IDR 8.72 trillion, increased by 7.55% or 72.8% of our targets. Based on customers, Upside/Downside (%) 29.5%
PT Indosat Ooredoo Hutchison Tbk (ISAT) and PT XL Axiata Tbk (EXCL) were the main
52 Week High (IDR) 1,140
contributors with the contribution of 38% and 31%, respectively. Meanwhile, the EBITDA
52 Week Low (IDR) 820
margin was stable at 85.1% due to manageable operating costs by the company. Apart from
that, an increase in finance cost by 23.79% YoY to IDR 2.17 trillion impacted lowered TOWR’s Major Shareholders:
net profit to IDR 2.42 trillion (-5.20% YoY), representing 69% of ours. PT Sapta Adhikari Investama 54.42%
PT Dwimuria Investama Andalan 5.00%
• The prospective outlook from fiber optic-based business. Performance from business
Public and others 40.58%
non-tower remains positive with a revenue of IDR 2.42 trillion (+46.87% YoY) in 9M23, or
accounting for 27.8% of total revenue in 9M23, higher than 9M22 at 20.3%. Moreover, this
tough result coming from FTTT revenue of IDR 1.38 trillion, jumped by 78.30% YoY, with
178,329 km of fiber optic generating revenue by the end of September 2023. As we know the Revenue NP BPS PBV EV/EBITDA
Year To Dec.
FTTT business similar to the tower model, with noncancellable, long-term contracts and (Bn IDR) (Bn IDR) (IDR) (x) (x)
opportunities for higher utilization with other fiber solutions for customers. Furthermore, we
2021 8,635 3,427 242 4.6 13.2
believe that the FTTT business is the main growth driver for TOWR due to MNOs having a
2022 11,036 3,442 290 3.9 10.6
growing need for additional scope from TowerCos tower providers. Going forward, both tower
and fiber optic demand continue to grow support by the 5G network due to lower penetration 2023E 11,649 3,328 320 3.8 10.4
of the 5G network still low at ~5%. On the other hand, the company also builds synergies 2024F 12,467 3,649 359 3.4 9.7
among its fiber-based business including connectivity, FTTT, and Fiber to the home (FTTH). As
2025F 13,013 3,831 398 3.1 9.3
of 9M23, the number of activations under connectivity reached 12,510 activations and FTTH
assets reached ~559,800 home passes. We view positively that the company’s commitment to
Number of tower and Tenancies
expand its fiber optic-based business will provide added value and cost efficiency on its
performance. 60,000 2.20

50,000
• Attractive valuation. We are optimistic about TOWR’s business prospect due to long-term
40,000 1.80
contracts and commitments underwrite more IDR 67.7 trillion of committed future revenue
through 2042, not including the value of potential future contract renewals. Moreover, the 30,000

catalyst also comes from surging internet demand in Indonesia. Moreover, we also see that the 20,000 1.40

pressure from interest expense will soften in the future as the prospect of lower global interest 10,000

rates. For note, around 49% of long-term debt is based on a floating rate. We recommend - 1.00
BUY for TOWR with a TP of IDR 1,230 per share based on EV/EBITDA FY24E 9.7x.
Downgrade our call: 1). Increased interest rate above the expectation, 2). Unfavourable Towers Tenancies Tenancy ratio (x)
macroeconomic situation, 3). USD/IDR currency weaker than the expected 4). Lower leased
rate than the expectation. Source: Company, Shinhan Sekuritas Indonesia
TOWR - Reaping the rewards from the expansion of the fiber optic business.
Revenue Breakdown Revenue and Net Profit Forecast

Bn IDR Bn IDR
3,500 16,000

3,000

2,500 12,000

2,000
8,000
1,500

1,000
4,000
500

-
-
4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23
2021 2022 2023E 2024F 2025F
Tower Non-tower
Revenue Net income EBITDA

Source: Company, Shinhan Sekuritas Indonesia Source: Company, Shinhan Sekuritas Indonesia

Profitability Trend 3-Years Forward EV/EBITDA (x)

(x)
18.0
100%
16.0
80%
14.0
60%
12.0
40%
10.0
20%
8.0
0%
2021 2022 2023E 2024F 2025F
6.0
GPM OPM EBITDA Margin NPM Jan-20 Jun-20 Nov-20 Apr-21 Sep-21 Feb-22 Jul-22 Dec-22 May-23 Oct-23

EV/EBITDA Average +1 stdev +2 stdev -1 stdev -2 stdev

Source: Company, Shinhan Sekuritas Indonesia Source: Company, Shinhan Sekuritas Indonesia
TOWR - Reaping the rewards from the expansion of the fiber optic business.
Income Statement Cash Flows
Year-End 31 Dec (Bn IDR) 2021 2022 2023E 2024F 2025F Year-End 31 Dec (Bn IDR) 2021 2022 2023E 2024F 2025F
Sales 8,635 11,036 11,649 12,467 13,013 Net Profit 3,427 3,442 3,328 3,649 3,831
Cost of Revenue (2,340) (2,914) (3,083) (3,273) (3,464) Change in Working Capital 134 (1,155) (95) (138) (73)
Gross Profit 6,295 8,121 8,566 9,194 9,549 CFs from Operating 8,023 3,600 4,604 5,003 5,375
Operating Expenses (1,426) (1,586) (1,738) (1,880) (2,052)
EBITDA 7,434 9,517 10,040 10,706 11,122 CFs from Investing (30,620) (4,601) (1,182) (2,865) (2,990)
Operating Profit 5,397 6,828 7,140 7,608 7,811
Pre-Tax Profit 3,399 4,051 4,459 4,313 4,809 CFs from Financing 25,899 (3,441) (3,155) (2,022) (2,330)
Income Tax Expenses (603) (963) (931) (1,106) (1,161)
Net Profit 3,427 3,442 3,328 3,649 3,831 Net Inc./(Dec.) in Cash 3,303 (4,442) 267 116 55
EPS (IDR) 68.8 69.1 66.8 73.3 76.9 Cash at End. Period 4,750 309 576 692 746
Source: Company, Shinhan Sekuritas Indonesia Source: Company, Shinhan Sekuritas Indonesia

Balance Sheet Key Ratio

Year-End 31 Dec (Bn IDR) 2021 2022 2023E 2024F 2025F Year-End 31 Dec 2021 2022 2023E 2024F 2025F
Assets Profitability
Cash & Cash Equivalents 4,750 309 576 692 746 Gross Margin 72.9% 73.6% 73.5% 73.7% 73.4%
Accounts Receivable 2,184 2,616 2,761 2,955 3,084 Operating Margin 62.5% 61.9% 61.3% 61.0% 60.0%
Inventories - - - - - EBITDA Margin 86.1% 86.2% 86.2% 85.9% 85.5%
Other Current Assets 463 727 727 727 727 Profit Margin 39.7% 31.2% 28.6% 29.3% 29.4%
Total Current Assets 7,398 3,651 4,064 4,373 4,558 ROA 5.2% 5.2% 5.0% 5.4% 5.5%
Net Fixed Assets 32,951 37,152 37,129 38,682 40,246 ROE 28.4% 23.8% 20.9% 20.4% 19.3%
Other Assets 25,479 24,822 24,932 25,053 25,186
Total Assets 65,829 65,625 66,125 68,108 69,990 Growth
Revenue 16.0% 27.8% 5.6% 7.0% 4.4%
Liabilities and equities Gross Profit 16.9% 29.0% 5.5% 7.3% 3.9%
Accounts Payables 1,587 862 912 969 1,025 Operating Profit 18.2% 26.5% 4.6% 6.6% 2.7%
Other Short-Term Liabilities 20,294 13,584 13,575 13,811 14,037 EBITDA 16.1% 28.0% 5.5% 6.6% 3.9%
Total Current Liabilities 21,880 14,446 14,488 14,780 15,063 Net Profit 20.9% 0.4% -3.3% 9.6% 5.0%
Long-Term Borrowings 30,191 35,409 34,350 34,111 33,747
Other Long-Term Liabilities 1,695 1,338 1,340 1,343 1,345 Solvability
Total Liabilities 53,767 51,193 50,178 50,233 50,155 Current Ratio (x) 0.3 0.3 0.3 0.3 0.3
Minority Interest 31 32 30 30 30 Quick Ratio (x) 0.3 0.2 0.2 0.2 0.3
Shareholders' equity 12,062 14,432 15,947 17,875 19,835 Debt to Equity (x) 3.9 3.1 2.7 2.4 2.2
BVPS (IDR) 242 290 320 359 398 Interest Coverage (x) 3.9 2.9 2.5 2.7 2.8
Source: Company, Shinhan Sekuritas Indonesia Source: Company, Shinhan Sekuritas Indonesia
PT GoTo Gojek Tokopedia Tbk-GOTO

71
 GOTO – Securing positive profitability outlook Research Team

• Rumor has turned into reality. Recently, GOTO finally announced that Tokopedia and TikTok Shop
Indonesia’s business will collaborate under the existing PT Tokopedia entity in which TikTok will take a 75.01% Current Price (IDR) (24/01) 84
controlling stake equivalent to USD 1.5 billion. After this transaction, GOTO’s ownership in Tokopedia will be Target price (IDR) 109
diluted to 24.99% from the previous 99.99%. However, there is a clause of the non-dilutive shareholder's
scheme, that if there is a further capital injection in the combined entity, GOTO’s stake will remain at 24.99%, Upside/Downside (%) 29.8%
meaning no further dilution going forward. The transaction is structured as follows: 1). TikTok will spend USD
52 Week High (IDR) 147
840 million to acquire new shares issued by Tokopedia. 2). Tokopedia will receive USD 1 billion from TikTok in
the form of a promissory note, which will be used for Tokopedia's working capital needs in the future. 3). 52 Week Low (IDR) 54
Tokopedia will buy the exclusive rights to own and operate the TikTok Shop in Indonesia from TikTok for USD
Major Shareholders:
340 million. Following this collaboration, Tokopedia will gain a powerful customer acquisition funnel due to
TikTok’s massive 125 million monthly active user base in Indonesia, which presents a valuable top funnel for Taobao China Holding Limited 8.72%
Tokopedia and GOTO to convert and cross-sell across various product categories. SVF GT Subco (Singapore) 7.62%

• Service fees will boost GOTO’S EBITDA. GOTO will receive a cash flow from a service fee after collaboration
Public and others 83.66%
between Tokopedia and Tik Tok shop completed (The overall transaction is expected to be completed in 1Q24).
The service fee will be charged to TikTok Shop+Tokopedia in regard to the GMV size of the enlarged entity.
Valuation
GOTO potentially receives >USD 100 million e-commerce service fee p.a. The “service fee” would be at ~40 bps
of GMV and paid quarterly basis. Assuming TikTok Shop+Tokopedia market share at 40% by 2024F, the annual 2024F valuation w/o deal 2024F valuation with deal
Key Segments Valuation Method
service fee is estimated to reach USD 138 million or equivalent to IDR 2.1 trillion (USD/IDR at 15,500). Ownership Multiple Value Ownership Multiple Value
Hereafter this should immediately accretive to GOTO’s cash-flow and EBITDA. (Fig.1)
On-demand services EV/Sales 100% 4.3 54,979 100% 5.2 81,766
• Tokopedia's deconsolidation should relieve pressure on its bottom-line significantly. Positive GOTO’s E-commerce EV/Sales 100% 2.4 28,731 25% 3.6 16,287
adjusted EBITDA in FY24F will be achievable on the back of this deal as GOTO no longer needs to fund the e-
Financial technology EV/Sales 100% 5.5 16,389 100% 6.5 23,227
commerce unit (Tokopedia), which has sustained a high cash burn but at a lower incremental contribution
margin than its other core business, on-demand services. In 9M23, most of GOTO’s costs and expenses come ARTO Mark to Market 21% N/A 9,633 21% N/A 9,633
from the e-commerce business at 31.6% of total cost and contributing 23.6% to GOTO’s operating loss. Implied Equity Value 109,732 130,912
However, GOTO’s adjusted EBITDA loss in 3Q23 worth IDR 942 billion, dramatically declined by 74.5% YoY.
Share Outstanding (bn) 1,201 1,201
Cumulatively, the adjusted EBITDA loss GOTO reached IDR 3.75 trillion in 9M23, while the management’s
guidance expected FY23E group Adjusted EBITDA loss to be between IDR 4.5 and IDR 3.8 trillion. After TikTok Price Target (IDR/Share) 91 109
acquired Tokopedia, GOTO will be able to expand its resources and capital toward its market-leading on-demand
services business, and financial technology business Therefore, we think the divestment could protect GOTO Source: Company, Shinhan Sekuritas Indonesia
from increasing costs in sizeable amounts, as burning money strategy will remain occur due to tight e-commerce
competition, especially from Shopee and Lazada. We calculate adjusted EBITDA without the contribution from Fig 1. Estimated service fee TikTok Shop + Tokopedia.
Tokopedia which came in at ~USD 306mn or equivalent to IDR 4.75 trillion, compared to our estimation which
Estimated GMV 2024F (USD Bn) 28.7
still including Tokopedia only at IDR 598 billion. Stripping Tokopedia, GOTO could reduce operational loss by
24% YoY in FY24F due to operational efficiency. %Core GMV 30%
Core GMV (USD Bn) 8.6
• Valuation. Under the scenario of no deal with TikTok, GOTO’s FY24F fair value using SOTP at IDR91/share or Quarterly service fee 0.4%
relatively in line with the current market price (Fig.2). However, we anticipated a higher transaction growth from
Annual service fee 1.6%
on-demand service & fintech business as a result of TikTok Shop+Tokopedia as GOTO is the most preferred
partner for TikTok in Indonesia despite the dilution. Considering this deal we re-calculate the fair price of GOTO Net service fee (USD Mn) 138
to be at IDR109/share or 19% higher than in the no-deal scenario and 17% potential upside from the current Est exchange rate ('000 IDR) 15.50
price. Our TP (after the synergy) implies EV/Sales FY24F at 2.90x. IDR bn 2,132

Source: Company, Shinhan Sekuritas Indonesia

GOTO – Securing positive profitability outlook
Tokopedia GMV size forecast & market share Current e-commerce market share in Indonesia

TikTok Shop +
TikTok Shop
90 Tokopedia only Tokopedia
5%
80 BELI
4%
70
BUKA
60
10%
50 Shopee
36%
40 Lazada
10%
30

20
43%
40% Tokped
10 30%
34% 26% 35%
-
2021 2022 2023E 2024F 2025F

TTS + Tokped Others

Source: Company, Shinhan Sekuritas Indonesia Source: Company, Shinhan Sekuritas Indonesia

Transaction overview TikTok will be completing GOTO’s business portfolio

73
Source: Company, Shinhan Sekuritas Indonesia Source: Company, Shinhan Sekuritas Indonesia
 GOTO – Securing positive profitability outlook
Income Statement Cash Flows
Year-End 31 Dec (Bn IDR) 2021 2022 2023F 2024F 2025F Year-End 31 Dec (Bn IDR) 2021 2022 2023F 2024F 2025F
Revenue 4,536 11,349 14,471 18,640 22,349 Net Profit -21,391 -39,571 -11,470 -8,058 -6,509
Cost of Revenue -3,776 -5,480 -5,065 -5,033 -5,364 Change in Working Capital 7,800 3,185 6,531 2,091 3,077
Gross Profit 760 5,869 9,406 13,607 16,986 CFs from Operating -13,591 -36,386 -4,939 -5,967 -3,433
Operating Expenses -23,145 -36,199 -21,364 -22,165 -23,871
EBIT -22,385 -30,330 -11,958 -8,558 -6,885 CFs from Investing -110,726 11,453 2,158 -326 -368
D&A Expense -2,417 -2,913 -2,552 -2,593 -2,639
EBITDA -19,968 -27,417 -9,406 -5,965 -4,246 CFs from Financing 140,147 22,572 2,217 -343 -231
Adjusted EBITDA -16,500 -16,000 -4,370 598 1,060
Profit before income tax -22,211 -40,545 -11,508 -8,086 -6,531 Net Inc./(Dec.) in Cash 15,830 -2,362 -564 -6,637 -4,031
Income tax benefits -218 136 39 27 22
Net Profit -21,391 -39,571 -11,470 -8,058 -6,509 Cash at Beg. Period 15,319 31,151 29,009 28,445 21,808
EPS (IDR) -159 -39 -11 -8 -6 Cash at End. Period 31,151 29,009 28,445 21,808 17,777
Source: Company, Shinhan Sekuritas Indonesia Source: Company, Shinhan Sekuritas Indonesia

Balance Sheet Key Ratio

Year-End 31 Dec (Bn IDR) 2021 2022 2023F 2024F 2025F Year-End 31 Dec 2021 2022 2023F 2024F 2025F
Assets Profitability
Cash & Cash Equivalents 31,151 29,009 28,445 21,808 17,777 Gross Margin 16.8% 51.7% 65.0% 73.0% 76.0%
Accounts Receivable 2,937 2,461 3,216 3,644 3,911 EBIT Margin -493.5% -267.2% -82.6% -45.9% -30.8%
Inventories 34 71 68 72 83 EBITDA Margin -440.2% -241.6% -65.0% -32.0% -19.0%
Other Current Assets 1,941 2,639 3,049 3,043 3,103 Adjusted EBITDA Margin -363.8% -141.0% -30.2% 3.2% 4.7%
Total Current Assets 36,064 34,180 34,777 28,567 24,873 Profit Margin -471.6% -348.7% -79.3% -43.2% -29.1%
Net Fixed Assets 1,470 1,457 1,258 1,059 859 ROE -15.4% -32.2% -10.0% -7.6% -6.5%
Other Assets 117,603 103,579 99,068 97,000 94,930
Total Assets 155,137 139,217 135,103 126,626 120,662 Growth
GTV 39.8% 32.9% 0.0% 10.5% 7.4%
Liabilities and equities Gross Revenue 28.1% 51.0% 2.6% 18.1% 12.8%
Accounts Payables 5,546 6,951 11,872 11,797 12,573 Net Revenue 36.3% 150.2% 27.5% 28.8% 19.9%
Other Short-Term Liabilities 6,748 5,212 5,345 5,356 5,385 Gross Profit -14.5% 672.2% 60.3% 44.7% 24.8%
Total Current Liabilities 12,294 12,162 17,218 17,153 17,958 EBIT 120.2% 35.5% -60.6% -28.4% -19.5%
Long-Term Borrowings 776 1,826 1,348 995 734 EBITDA 123.9% 37.3% -65.7% -36.6% -28.8%
Other Long-Term Liabilities 3,043 2,505 2,307 2,307 2,307 Adjusted EBITDA N/A -3.0% -72.7% -113.7% 77.2%
Total Liabilities 16,113 4,331 3,654 3,301 3,041 Net Profit 50.5% 85.0% -71.0% -29.7% -19.2%
Minority Interest 1,292 2,198 2,120 2,120 2,120
Total Equity 139,024 122,723 114,231 106,172 99,663 Solvability
BVPS (IDR) 1,032 120 112 104 98 DER (x) 9.5 0.7 2.0 1.5 1.3
Source: Company, Shinhan Sekuritas Indonesia Source: Company, Shinhan Sekuritas Indonesia
Research Team
Helmi Therik, FRM Head of Research [email protected]
Billy Ibrahim Djaya Research Analyst [email protected]
Anissa Septiwijaya Research Analyst [email protected]

Office

PT. Shinhan Sekuritas Indonesia

Member of Indonesia Stock Exchange

Head Office :
Equity Tower Floor. 50
Sudirman Central Business District Lot 9
Jl. Jend. Sudirman Kav. 52-53
Senayan
Jakarta 12920 Indonesia
Telp.: (+62-21) 80869900
Fax : (+62-21) 22057925

Disclaimer : All opinions and estimates included in this report constitute our judgments as of the date of this report and are subject to
changes without notice. This information 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. Clients should
consider whether it is suitable for their particular circumstances before acting on any opinions and recommendations in this report. This
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 “Looking at Indonesia investment opportunities in the dynamic world.”

Head Office :
Equity Tower Floor. 50
Sudirman Central Business District Lot 9
Jl. Jend. Sudirman Kav. 52-53
Senayan
Jakarta 12920 Indonesia shinhansekuritas
Telp.: (+62-21) 80869900
Fax : (+62-21) 22057925 www.shinhansekuritas.co.id
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