ASEAN Insight Provider, CrossASEAN Research

Angus Mackintosh

ASEAN Insight Provider

CrossASEAN Research

At CrossASEAN Research we strive to produce unbiased and differentiated on the ground insights on companies across South East Asia. Our Research is produced for the most part after face to face meetings and conversations with company management to dig deep into the long term vision and strategy of the companies we cover. We seek to deliver investable and actionable themes on sectors and markets across SE Asia, often in collaboration with other Insight Providers across the region, pooling the vast experience of the analysts within the Smartkarma Ecosystem. We also offer bespoke work and tailor made trips for our clients. 

Insights across South East Asia

Equity Bottom-Up

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<li>
<a href="https://www.smartkarma.com/entities/semen-indonesia-persero-tbk" target="_blank" data-smartkarma-citation="entities:11161:1" rel="noopener">Semen Indonesia (Gresik) (SMGR IJ)</a> is a key proxy to the recovery in the Indonesian cement market, especially bulk, given its exposure to infrastructure and SOE credentials </li>
<li>Its recent numbers were solid despite a difficult environment and it continues to develop new cement related products, as it broadens its building material solutions strategy.</li>
<li>The correction in the share price represents an opportunity to accumulate the stock given a strong 2022 outlook and it looks cheap on 7.3x FY23E EV/EBITDA at discount to history.</li>
</ul>



Semen Indonesia (Gresik) (SMGR IJ) is a key proxy to the recovery in the Indonesian cement market, especially bulk, given its exposure to infrastructure and SOE credentials 
Its recent numbers were solid despite a difficult environment and it continues to develop new cement related products, as it broadens its building material solutions strategy.
The correction in the share price represents an opportunity to accumulate the stock given a strong 2022 outlook and it looks cheap on 7.3x FY23E EV/EBITDA at discount to history.


Semen Indonesia (SMGR IJ) - Building a Solid Sustainable Future

Indocement Tunggal Prakarsa / Equity Bottom-Up

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<p><span data-preserver-spaces="true">Given we are now coming out of Indonesia's latest wave of COVID-19 and mobility and economic activity is resuming , we see <a href="https://www.smartkarma.com/entities/indocement-tunggal-prakarsa" target="_blank" data-smartkarma-citation="entities:4040:1" rel="noopener">Indocement Tunggal Prakarsa (INTP IJ)</a> as an interesting proxy for the recovery, given its exposure to West Java, infrastructure spending, and the recovering residential property market </span></p>
</div>
<p><a href="https://www.smartkarma.com/entities/indocement-tunggal-prakarsa" target="_blank" rel="noopener"><span data-preserver-spaces="true">Indocement Tunggal Prakarsa (INTP IJ)</span></a><span data-preserver-spaces="true"> released a solid set of 1H2021 results, with an increase in revenue of +8.0% YoY on the back of an increase in cement volume.  </span><span data-preserver-spaces="true">EBITDA margins improved from 15.5% to 19.2% due to savings in operating expenses and gains in other operating income, leading to an EBITDA increase of +33.6% YoY to IDR1,280.6bn. <a href="https://www.smartkarma.com/entities/indocement-tunggal-prakarsa" target="_blank" rel="noopener"></a></span><span data-preserver-spaces="true"> </span></p>
<section class="figure">One major cost pressure comes from rising coal prices, which have increased significantly over the past year and the company has been continually both increasing its usage of low calorific coal and alternative fuels over the past 5-years to offset this.</section>
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<p><a href="https://www.smartkarma.com/entities/indocement-tunggal-prakarsa" target="_blank" data-smartkarma-citation="entities:4040:1" rel="noopener">Indocement Tunggal Prakarsa (INTP IJ)</a> has a strong focus on improving its emissions, with assistance from the Heidelberg Cement Technology Centre, with a road map in place for energy efficiency and CO2 reductions.</p>
<p>The fact that around 78% of cement sales at <a href="https://www.smartkarma.com/entities/indocement-tunggal-prakarsa" target="_blank" data-smartkarma-citation="entities:4040:1" rel="noopener">Indocement Tunggal Prakarsa (INTP IJ)</a> is in bags makes branding all the more important and as a result the company is quite focused on promoting the brand through TV and social media channels.</p>
<section class="figure">The company continues with its digitalisation and has developed a fully digitalised ordering system with real time data which helps the company's sales to achieve better results both on ordering as well as on pricing.</section>
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<p><a href="https://www.smartkarma.com/entities/indocement-tunggal-prakarsa" target="_blank" data-smartkarma-citation="entities:4040:1" rel="noopener">Indocement Tunggal Prakarsa (INTP IJ)</a> estimates that national cement domestic growth will increase by +5% for FY2021 with the resumption of more infrastructure projects and private projects in 2H2021 plus more activity in residential property.</p>
<p>The company's expansion will be focused on expanding its distribution channels through possible new terminals and barge or vessel ownership, as well as potentially exploring M&amp;A opportunities. </p>
<p><span data-preserver-spaces="true"><a href="https://www.smartkarma.com/entities/indocement-tunggal-prakarsa" target="_blank" data-smartkarma-citation="entities:4040:1" rel="noopener">Indocement Tunggal Prakarsa (INTP IJ)</a> trades on 11.1x FY21E EV/EBITDA and 9.9x FY22E EV/EBITDA versus its 5-year average forward EV/EBITDA of 15x, making the company look attractive from a valuation perspective. </span></p>


Given we are now coming out of Indonesia's latest wave of COVID-19 and mobility and economic activity is resuming , we see Indocement Tunggal Prakarsa (INTP IJ) as an interesting proxy for the recovery, given its exposure to West Java, infrastructure spending, and the recovering residential property market 

Indocement Tunggal Prakarsa (INTP IJ) released a solid set of 1H2021 results, with an increase in revenue of +8.0% YoY on the back of an increase in cement volume.  EBITDA margins improved from 15.5% to 19.2% due to savings in operating expenses and gains in other operating income, leading to an EBITDA increase of +33.6% YoY to IDR1,280.6bn.  
One major cost pressure comes from rising coal prices, which have increased significantly over the past year and the company has been continually both increasing its usage of low calorific coal and alternative fuels over the past 5-years to offset this.



Indocement Tunggal Prakarsa (INTP IJ) has a strong focus on improving its emissions, with assistance from the Heidelberg Cement Technology Centre, with a road map in place for energy efficiency and CO2 reductions.
The fact that around 78% of cement sales at Indocement Tunggal Prakarsa (INTP IJ) is in bags makes branding all the more important and as a result the company is quite focused on promoting the brand through TV and social media channels.
The company continues with its digitalisation and has developed a fully digitalised ordering system with real time data which helps the company's sales to achieve better results both on ordering as well as on pricing.





Indocement Tunggal Prakarsa (INTP IJ) estimates that national cement domestic growth will increase by +5% for FY2021 with the resumption of more infrastructure projects and private projects in 2H2021 plus more activity in residential property.
The company's expansion will be focused on expanding its distribution channels through possible new terminals and barge or vessel ownership, as well as potentially exploring M&amp;A opportunities. 
Indocement Tunggal Prakarsa (INTP IJ) trades on 11.1x FY21E EV/EBITDA and 9.9x FY22E EV/EBITDA versus its 5-year average forward EV/EBITDA of 15x, making the company look attractive from a valuation perspective. 

Indocement Tunggal Prakasa (INTP IJ) - Bulky Recovery in Place

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Event-Driven

<p>The Indonesia Stock Exchange (IDX) has announced a change in the <a href="https://www.smartkarma.com/entities/jakarta-stock-exchange-composite-index" target="_blank" data-smartkarma-citation="entities:22914:1" rel="noopener">Jakarta Stock Exchange Composite Index (JCI INDEX)</a> calculation methodology to make it a free float market cap weighted index from a full market cap weighted index. Additionally, there will be a 9% capping on the weight of a single stock in the index.</p><p>The change will take place in a phased manner in 3 stages: at the beginning of October 2020, January 2021 and April 2021.</p><p>The biggest beneficiaries of the change are expected to be <a href="https://www.smartkarma.com/entities/telekomunikasi-indonesia" target="_blank" data-smartkarma-citation="entities:1051:1" rel="noopener">Telekomunikasi Indonesia (TLKM IJ)</a>, <a href="https://www.smartkarma.com/entities/bank-rakyat-indonesia-persero" target="_blank" data-smartkarma-citation="entities:484:1" rel="noopener">Bank Rakyat Indonesia Persero (BBRI IJ)</a>, <a href="https://www.smartkarma.com/entities/astra-international-tbk-pt" target="_blank" data-smartkarma-citation="entities:46:1" rel="noopener">Astra International (ASII IJ)</a>, <a href="https://www.smartkarma.com/entities/bank-mandiri-persero-tbk-pt" target="_blank" data-smartkarma-citation="entities:441:1" rel="noopener">Bank Mandiri Persero (BMRI IJ)</a>, <a href="https://www.smartkarma.com/entities/merdeka-copper-gold-tbk-pt" target="_blank" data-smartkarma-citation="entities:28447:1" rel="noopener">Merdeka Copper Gold Tbk PT (MDKA IJ)</a>, <a href="https://www.smartkarma.com/entities/charoen-pokphand-indonesi-pt" target="_blank" data-smartkarma-citation="entities:10889:1" rel="noopener">Charoen Pokphand Indonesi (CPIN IJ)</a>, <a href="https://www.smartkarma.com/entities/semen-indonesia-persero-tbk" target="_blank" data-smartkarma-citation="entities:11161:1" rel="noopener">Semen Indonesia (Gresik) (SMGR IJ)</a>, <a href="https://www.smartkarma.com/entities/sarana-menara-nusantara-pt" target="_blank" data-smartkarma-citation="entities:6848:1" rel="noopener">Sarana Menara Nusantara (TOWR IJ)</a>, <a href="https://www.smartkarma.com/entities/indofood-sukses-makmur-tbk-p" target="_blank" data-smartkarma-citation="entities:1053:1" rel="noopener">Indofood Sukses Makmur Tbk P (INDF IJ)</a> and <a href="https://www.smartkarma.com/entities/bank-negara-indonesia-persero" target="_blank" data-smartkarma-citation="entities:8285:1" rel="noopener">Bank Negara Indonesia Persero (BBNI IJ)</a>.</p><p>The biggest falls in index weight are expected on <a href="https://www.smartkarma.com/entities/bank-central-asia-tbk-pt" target="_blank" data-smartkarma-citation="entities:440:1" rel="noopener">Bank Central Asia (BBCA IJ)</a>, <a href="https://www.smartkarma.com/entities/hm-sampoerna-tbk-pt" target="_blank" data-smartkarma-citation="entities:617:1" rel="noopener">HM Sampoerna (HMSP IJ)</a>, <a href="https://www.smartkarma.com/entities/unilever-indonesia-tbk-pt" target="_blank" data-smartkarma-citation="entities:231:1" rel="noopener">Unilever Indonesia (UNVR IJ)</a>, <a href="https://www.smartkarma.com/entities/chandra-asri-petrochemical" target="_blank" data-smartkarma-citation="entities:2556:1" rel="noopener">Chandra Asri Petrochemical (TPIA IJ)</a>, <a href="https://www.smartkarma.com/entities/bank-permata-tbk-pt" target="_blank" data-smartkarma-citation="entities:728:1" rel="noopener">Bank Permata (BNLI IJ)</a>, <a href="https://www.smartkarma.com/entities/bank-brisyariah-tbk-pt" target="_blank" data-smartkarma-citation="entities:26981:1" rel="noopener">Bank Brisyariah (BRIS IJ)</a>, <a href="https://www.smartkarma.com/entities/elang-mahkota-teknologi-tbk" target="_blank" data-smartkarma-citation="entities:7752:1" rel="noopener">Emtek (EMTK IJ)</a>, <a href="https://www.smartkarma.com/entities/bayan-resources-group" target="_blank" data-smartkarma-citation="entities:8039:1" rel="noopener">Bayan Resources (BYAN IJ)</a> and <a href="https://www.smartkarma.com/entities/bank-jago-tbk-pt" target="_blank" data-smartkarma-citation="entities:31094:1" rel="noopener">Bank Jago Tbk PT (ARTO IJ)</a>.</p><p>Among the upweights, there could be over 2 days of ADV to trade on <a href="https://www.smartkarma.com/entities/charoen-pokphand-indonesi-pt" target="_blank" data-smartkarma-citation="entities:10889:1" rel="noopener">Charoen Pokphand Indonesi (CPIN IJ)</a> and <a href="https://www.smartkarma.com/entities/semen-indonesia-persero-tbk" target="_blank" data-smartkarma-citation="entities:11161:1" rel="noopener">Semen Indonesia (Gresik) (SMGR IJ)</a> while there could be over 1 day of ADV to trade on <a href="https://www.smartkarma.com/entities/telekomunikasi-indonesia" target="_blank" data-smartkarma-citation="entities:1051:1" rel="noopener">Telekomunikasi Indonesia (TLKM IJ)</a>, <a href="https://www.smartkarma.com/entities/indofood-sukses-makmur-tbk-p" target="_blank" data-smartkarma-citation="entities:1053:1" rel="noopener">Indofood Sukses Makmur Tbk P (INDF IJ)</a>, <a href="https://www.smartkarma.com/entities/sarana-menara-nusantara-pt" target="_blank" data-smartkarma-citation="entities:6848:1" rel="noopener">Sarana Menara Nusantara (TOWR IJ)</a> and <a href="https://www.smartkarma.com/entities/astra-international-tbk-pt" target="_blank" data-smartkarma-citation="entities:46:1" rel="noopener">Astra International (ASII IJ)</a>.</p><p><a href="https://www.smartkarma.com/entities/hm-sampoerna-tbk-pt" target="_blank" data-smartkarma-citation="entities:617:1" rel="noopener">HM Sampoerna (HMSP IJ)</a>, <a href="https://www.smartkarma.com/entities/chandra-asri-petrochemical" target="_blank" data-smartkarma-citation="entities:2556:1" rel="noopener">Chandra Asri Petrochemical (TPIA IJ)</a> and <a href="https://www.smartkarma.com/entities/unilever-indonesia-tbk-pt" target="_blank" data-smartkarma-citation="entities:231:1" rel="noopener">Unilever Indonesia (UNVR IJ)</a> would be the most impacted stocks with potential outflows.</p>

The Indonesia Stock Exchange (IDX) has announced a change in the Jakarta Stock Exchange Composite Index (JCI INDEX) calculation methodology to make it a free float market cap weighted index from a full market cap weighted index. Additionally, there will be a 9% capping on the weight of a single stock in the index.The change will take place in a phased manner in 3 stages: at the beginning of October 2020, January 2021 and April 2021.The biggest beneficiaries of the change are expected to be Telekomunikasi Indonesia (TLKM IJ), Bank Rakyat Indonesia Persero (BBRI IJ), Astra International (ASII IJ), Bank Mandiri Persero (BMRI IJ), Merdeka Copper Gold Tbk PT (MDKA IJ), Charoen Pokphand Indonesi (CPIN IJ), Semen Indonesia (Gresik) (SMGR IJ), Sarana Menara Nusantara (TOWR IJ), Indofood Sukses Makmur Tbk P (INDF IJ) and Bank Negara Indonesia Persero (BBNI IJ).The biggest falls in index weight are expected on Bank Central Asia (BBCA IJ), HM Sampoerna (HMSP IJ), Unilever Indonesia (UNVR IJ), Chandra Asri Petrochemical (TPIA IJ), Bank Permata (BNLI IJ), Bank Brisyariah (BRIS IJ), Emtek (EMTK IJ), Bayan Resources (BYAN IJ) and Bank Jago Tbk PT (ARTO IJ).Among the upweights, there could be over 2 days of ADV to trade on Charoen Pokphand Indonesi (CPIN IJ) and Semen Indonesia (Gresik) (SMGR IJ) while there could be over 1 day of ADV to trade on Telekomunikasi Indonesia (TLKM IJ), Indofood Sukses Makmur Tbk P (INDF IJ), Sarana Menara Nusantara (TOWR IJ) and Astra International (ASII IJ).HM Sampoerna (HMSP IJ), Chandra Asri Petrochemical (TPIA IJ) and Unilever Indonesia (UNVR IJ) would be the most impacted stocks with potential outflows.

Jakarta Composite Index: Impact of Change to Capped Free Float Weighting

<p><a href="https://www.smartkarma.com/entities/indocement-tunggal-prakarsa" target="_blank" rel="noopener"><span data-preserver-spaces="true">Indocement Tunggal Prakarsa (INTP IJ)</span></a><span data-preserver-spaces="true"> released results last week with an -11%  decrease in sales to IDR 14,184.3bn but only a -1.6% decrease in net profit to IDR1,803.3bn, with a number of cost reduction initiatives baring fruit in 2020 and we see these initiative continuing into 2021 on top of higher sales.</span></p><p><span data-preserver-spaces="true">The company saw resilient performance last year from its bag cement sales but bulk cement demand suffered as infrastructure projects stalled but we expect this situation to reverse this year.</span></p><p><span data-preserver-spaces="true">The cost of revenues decreased last year due to lower volumes and continuous savings on fuel and power with lower coal prices but with greater use of LCV coal, alternative fuels, and other operational cost savings, plus the ongoing digitalization at the company. </span></p><p><a href="https://www.smartkarma.com/entities/indocement-tunggal-prakarsa" target="_blank" data-smartkarma-citation="entities:4040:1" rel="noopener">Indocement Tunggal Prakarsa (INTP IJ)</a> will continue to push these cost initiatives in 2021, with the potential to further increase the use of LCV coal and alternative fuels.</p><p>The company has seen a slow start to the year due to heavy rains but we should expect a strong rebound from April onwards as projects get underway.</p><p><a href="https://www.smartkarma.com/entities/indocement-tunggal-prakarsa" target="_blank" data-smartkarma-citation="entities:4040:1" rel="noopener">Indocement Tunggal Prakarsa (INTP IJ)</a> continues to improve its sustainability credentials with lower emissions and new environmentally friendly products. </p><p><a href="https://www.smartkarma.com/entities/indocement-tunggal-prakarsa" target="_blank" data-smartkarma-citation="entities:4040:1" rel="noopener">Indocement Tunggal Prakarsa (INTP IJ)</a> trades on 13.2x FY21E EV/EBITDA and 12.0x FY22E EV/EBITDA versus its 5-year average of 14.4x forward EV/EBITDA, making the company look relatively attractive from a valuation standpoint.</p>

Indocement Tunggal Prakarsa (INTP IJ) released results last week with an -11%  decrease in sales to IDR 14,184.3bn but only a -1.6% decrease in net profit to IDR1,803.3bn, with a number of cost reduction initiatives baring fruit in 2020 and we see these initiative continuing into 2021 on top of higher sales.The company saw resilient performance last year from its bag cement sales but bulk cement demand suffered as infrastructure projects stalled but we expect this situation to reverse this year.The cost of revenues decreased last year due to lower volumes and continuous savings on fuel and power with lower coal prices but with greater use of LCV coal, alternative fuels, and other operational cost savings, plus the ongoing digitalization at the company. Indocement Tunggal Prakarsa (INTP IJ) will continue to push these cost initiatives in 2021, with the potential to further increase the use of LCV coal and alternative fuels.The company has seen a slow start to the year due to heavy rains but we should expect a strong rebound from April onwards as projects get underway.Indocement Tunggal Prakarsa (INTP IJ) continues to improve its sustainability credentials with lower emissions and new environmentally friendly products. Indocement Tunggal Prakarsa (INTP IJ) trades on 13.2x FY21E EV/EBITDA and 12.0x FY22E EV/EBITDA versus its 5-year average of 14.4x forward EV/EBITDA, making the company look relatively attractive from a valuation standpoint.

Indocement Tunggal Prakarsa (INTP IJ) - Bunkering Down for a Better Year

Asian Insight Provider - Actionable ideas, CrossASEAN Research

Henry Soediarko

Asian Insight Provider - Actionable ideas

<p>Currently, <a href="https://www.smartkarma.com/entities/jasa-marga-persero-tbk-pt" target="_blank" data-smartkarma-citation="entities:12747:1" rel="noopener">Jasa Marga (Persero) (JSMR IJ)</a> debt to equity is at 2.5x, a five-year high and its earnings multiple is also at the 5 years high at 35x. Some of the bullishness comes from the creation of the INA, the first sovereign wealth fund of Indonesia that will create another funding avenue for Jasa Marga. </p><p>The commencement of vaccination for public servants and elderlies has also sparked positivity although the result (more traffic) is yet to be seen. At the current level, Jasa Marga's profitability is 28% lower than the peers despite almost having a 100% higher D/E ratio. It is also trading at 64% PER premium and 10% PBR premium. </p><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/192/999/original/image_59574917191615277295474.png?1615277295" class="editor-image img-responsive" data-smartkarma-image-id="192999"></figure><div class="content-remarks"><p>source: Capital IQ</p></div><p>At the current level, investors should wait before adding more Jasa Marga into the portfolio as it is trading at 5 years high in PER and also its D/E ratio as well. </p>

Currently, Jasa Marga (Persero) (JSMR IJ) debt to equity is at 2.5x, a five-year high and its earnings multiple is also at the 5 years high at 35x. Some of the bullishness comes from the creation of the INA, the first sovereign wealth fund of Indonesia that will create another funding avenue for Jasa Marga. The commencement of vaccination for public servants and elderlies has also sparked positivity although the result (more traffic) is yet to be seen. At the current level, Jasa Marga's profitability is 28% lower than the peers despite almost having a 100% higher D/E ratio. It is also trading at 64% PER premium and 10% PBR premium. source: Capital IQAt the current level, investors should wait before adding more Jasa Marga into the portfolio as it is trading at 5 years high in PER and also its D/E ratio as well. 

Jasa Marga (JSMR): High Debt and Fully Valued

Indonesia

PT Semen Indonesia (Persero) Tbk, also known as SIG, is an Indonesian state-owned holding company providing building material solutions. The company's main business is in the cement sector and its derivative products such as concrete, mortar, precast, and aggregate, with additional services including construction, logistics, and industrial estate management. It was founded in 1957 and is headquartered in Jakarta, Indonesia.

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Semen Indonesia Group (SMGR IJ)

Semen Indonesia (SMGR IJ) - Building a Solid Sustainable Future

Semen Indonesia is geared toward recovery in infrastructure and SOE construction activity, which will drive demand for bulk cement in FY2021, with...

Angus Mackintosh

Indocement Tunggal Prakasa (INTP IJ) - Bulky Recovery in Place

We see Indocement as an interesting and high-quality proxy to the recovery in the Indonesian economy, given its exposure to infrastructure through...

Angus Mackintosh

Jakarta Composite Index: Impact of Change to Capped Free Float Weighting

The JCI will change from a full market cap weighted index to a capped free float mkt cap weighted index. Beneficiaries are TLKM, BBRI, ASII, BMRI &...

Brian Freitas

Indocement Tunggal Prakarsa (INTP IJ) - Bunkering Down for a Better Year

Indocement is a high-quality core holding for exposure to the recovery in cement demand this year and next, with lower costs and digitalization...

Angus Mackintosh

Jasa Marga (JSMR): High Debt and Fully Valued

At the current level, investors should wait before adding more Jasa Marga into the portfolio as it is trading at 5 years high in PER and also its D...

Henry Soediarko

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