Riena Kirana
FR CGS_CIMb (YU) : Matahari Department Store | PDF
Losing its shine
LPPF IJ / LPPF.JK | REDUCE - Downgrade | Rp7,950.00 tp:Rp7,100.00▼
Mkt.Cap:US$1,609.00m | Avg.Daily Vol:US$2.49m | Free Float:82.50%
Retail
Author(s):Kevie ADITYA +62 (21) 3006 1738,

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■ LPPF’s core NP growth was flat yoy in 1H18, below expectations and in stark contrast to the 20% growth recorded by its peers amid the recovery in purchasing power.
■ The shift in strategy to DP products amid execution challenges in its merchandising initiatives, while facing store realignment, suggest growth may take a backseat.
■ With growth slowing to a trickle, we forecast flatearnings CAGR in 2017-20F and a rapidly declining FCF. We expect more market downgrades to follow.
■ We cut 2018-20F EPS by 4-18%. We downgrade our rating to Reduce and cut our TP to Rp7,100, based on 10.7x P/E or a 50% discount to sector’s target P/E.
Riena Kirana
FR CGS-CIMB (YU) : Delta Dunia Makmur | PDF
If coal prices stay higher for longer...
DOID IJ / DOID.JK | ADD - Maintained | Rp775.00 tp:Rp1,200.00▼
Mkt.Cap:US$460.50m | Avg.Daily Vol:US$1.20m | Free Float:53.30%
Ind Goods & Services
Author(s):Felica TRENSENO +62 (21) 3006 1722,

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■ 1H18 net profit of US$18m (+110% yoy) was below expectations at 23% of our and 21% of Bloomberg consensus full-year forecasts; the weather was to be blamed.
■ Margin recovery in 2H18Fhinges upon delivery of new equipment, weather, resilient coal price, and new clients in the pipeline.
■ FY18-20F earnings cut by 8-11% to reflect more conservative overburden volume.
■ We like DOID for its order book: new contracts booked in 1H18 amounted to US$2bn; its long-term order book now stands at US$7bn.
■ Add call maintained on attractive valuations and resilient coal prices. Our new TP of Rp1,200 is now pegged to its 8-year mean EV/EBITDA of 4.6x.
Riena Kirana
FR CGS-CIMB (YU) : Kalbe Farma | PDF
Unexciting growth as the new norm
KLBF IJ / KLBF.JK | REDUCE - Downgrade | Rp1,360.00 tp:Rp1,200.00▼
Mkt.Cap:US$4,423.00m | Avg.Daily Vol:US$1.88m | Free Float:43.50%
Pharmaceuticals
Author(s):Patricia GABRIELA +62 (21) 3006 1734,

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■ 1H18 net profit was flat yoy at Rp1.2tr and in line at 48/49% of consensus/CIMB FY18F; however, below company’s initial guidance of 5-7% yoy net profit growth.
■ Margin was under pressure (2Q18 GPM down 0.6% pt qoq and 0.9% pt yoy), though EBIT margin was flat. Currency headwinds may emerge.
■ KLBF plans to raise prices for consumer health and nutritional products by c.2-4% in 2H18; below 1% pt impact on blended FY18F sales growth but risks volume decline.
■ We cut FY18-19F earnings by 4-7% with a view of gradual recovery in 2020F; though risk is on the downside given the lack of pricing power and unexciting volume growth.
■ Downgrade to Reduce with a lower Rp1,200 TP, implying 23x FY18F P/E, lower end of the past 5-year P/E range to reflect lack of growth.
Riena Kirana
FR CGS-CIMB (YU) : Economic Update | PDF
Jul 2018 CPI inflation
Author(s):Yee Ping LIM +60 (3) 2261 9083, Michelle CHIA

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■ Headline inflation edged up to 3.2% yoy in Jul, as accelerating food and core inflation was mitigated by the slower gain in administered prices.
■ Rising input costs as a result of currency weakness has yet to significantly affect overall consumer prices.
■ Our average inflation forecast of 3.4% for 2018 remains intact.
Riena Kirana
FR CGS-CIMB (YU) : Pembangunan Perumahan | PDF
Risks priced in; undemanding valuation
PTPP IJ / PTPP.JK | ADD - Maintained | Rp2,050.00 tp:Rp3,700.00▼
Mkt.Cap:US$880.20m | Avg.Daily Vol:US$1.84m | Free Float:21.50%
Construction
Author(s):Aurelia BARUS +62 (21) 3006 1721,

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■ PTPP’s 1H18 core NP of Rp472bn (-18% yoy, -29% qoq) was below expectations, mainly due to a 74% yoy increase in interest expenses.
■ 1H revenue also missed at Rp9.5tr (+17% yoy, -58% qoq), offset by improvement in GPM to 15.4% which was boosted by the property business. This led to in-line EBIT.
■ While debt could increase, weighted average cost of debt could fall despite rising interest rates. Debt-to-equity should remain manageable at 0.3-0.6x in FY18-20F.
■ Assuming longer receivable and inventory days, as well as higher bad debt expenses, PTPP should still have positive operating cashflow in FY18-20F.
■ Add call maintained with a lower SOP-based TP of Rp3,700.
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