Indonesia

• Challenger Position in a Concentrated Market: PT Bentoel Internasional Investama Tbk (Bentoel) is the fourth-largest tobacco manufacturer in Indonesia, a market dominated by three major players. As a subsidiary of British American Tobacco (BAT), Bentoel possesses a significant portfolio of global brands like Dunhill and Lucky Strike, alongside local kretek brands.
• Financial Turnaround Amidst Revenue Pressure: The company has demonstrated a notable turnaround from a significant loss in 2020 to profitability in 2022. However, this was achieved despite a consistent decline in annual revenue over the same period, indicating successful cost management and efficiency improvements but also highlighting underlying market share or volume pressures.
• Navigating a Complex Regulatory Environment: The Indonesian tobacco industry faces persistent regulatory risks, including the potential for significant excise tax hikes, and stricter packaging and advertising rules. Bentoel’s future performance will be heavily influenced by its ability to adapt to these evolving regulations while managing competitive pressures.

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• Integrated Business Model Offers Resilience: Lippo Karawaci‘s unique combination of real estate development and a significant healthcare portfolio provides a diversified and resilient revenue stream. The recurring income from its healthcare and lifestyle segments helps to counterbalance the cyclical nature of property development.
• Strategic Focus on Affordable Housing: The company is strategically targeting the affordable and mid-market housing segments, which are supported by strong demographic trends, urbanization, and a growing middle class in Indonesia. This focus aligns with government priorities and captures a large, underserved market.
• Attractive Valuation with Turnaround Potential: Trading at a significant discount to its book value, LPKR presents a compelling valuation case. Successful execution of its strategy, including asset recycling and deleveraging, could unlock substantial value for shareholders. Analyst consensus reflects a ‘Strong Buy’ rating with significant upside potential to the average price target.

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• State-Owned Enterprise Under Financial Strain: PT PP is a major state-owned construction company in Indonesia, integral to national infrastructure development. However, it faces severe financial challenges, evidenced by a significant net loss in 2025, negative cash flows, and a high debt-to-equity ratio of 5.01.
• Strategic Realignment and Government Support: The company is undergoing a strategic shift, focusing on its core construction business, divesting non-core assets to reduce debt, and improving risk management. As a state-owned enterprise, it is part of a broader government-led restructuring of the construction sector, which could provide a pathway to recovery and access to financing.
• Pivotal Role in National Projects Amidst High Risks: PT PP is a key contractor for Indonesia’s new capital city (IKN) and other national strategic projects, securing significant contracts. This provides a revenue pipeline, but the company’s poor financial health, coupled with the inherent execution risks of large-scale projects, presents a high-risk, high-reward scenario for investors.

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• TBS Energi Utama (TOBA) is in the midst of a critical strategic transformation, pivoting from its legacy coal and palm oil businesses towards a green portfolio focused on waste management, renewable energy, and electric vehicles (EVs).
• The company’s financial performance has been under significant pressure, with declining revenues and a substantial net loss in the most recent fiscal year, reflecting the high costs and execution risks associated with its transition.
• The long-term success of TOBA hinges on the successful execution of its ‘TBS2030’ carbon neutrality goal, particularly the scaling of its Electrum EV joint venture with Gojek and the profitable operation of its new renewable energy assets.

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• Wijaya Karya is currently navigating a severe financial crisis, characterized by significant net losses, negative cash flow, and a high debt burden. A comprehensive debt restructuring program and a planned rights issue are critical to its survival and recovery.
• The company’s future is intrinsically linked to the Indonesian government’s commitment to infrastructure development. A robust pipeline of national strategic projects presents a significant opportunity, but the company’s ability to secure and profitably execute these projects is hampered by its weak financial position.
• Management’s strategic shift towards more selective project bidding (prioritizing healthier margins and cash flow), divestment of non-core assets, and operational efficiencies through ‘lean construction’ are necessary steps, but execution remains a key uncertainty.

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• Despite US-Iran war, revenues increased by 3% on yony basis
• Operating Profit was up 15% on a year-on-year basis, indicating the new management strategy is working and Net Profits are up 30%
• Our channel check indicates that the flight from the Middle East to Indonesia has resumed back to normal since the beginning of the US-Iran war

• Q2 FY26 net sales of Rph 961 bn rose 19.9% YoY; net income of Rph 300 bn grew 30.8%, the strongest second quarter on record.
• Gross margin expanded by 337 bps to 63.2%, but selling and G&A expenses grew by 32.5%, absorbing the gain; EBITDA margin was flat at 47.5%.
• At Rph 6,800, the numbers imply 11.0x FY26E P/E, 7.0x EV/EBITDA, and 9.1% yield; H1 tracks ahead of FY26E revenue assumptions.

• Fore Kopi Indonesia (FORE IJ)  was founded in 2018 by East Venture and listed in 2025. The company is focused on providing affordable premium coffee for aspirational consumers across Indonesia.
• Fore is focused on expanding into 2nd&3rd-tier cities where competition is less intense. The company is also expanding into doughnuts through Fore Donut, selling doughnuts with a healthy edge.
• The company is an interesting proxy for young aspirational consumers in Indonesia, with high-quality, locally focused products and relatively attractive pricing. Valuations remain attractive versus growth.

• • Criterium continues to target first gas in 3Q26.
• The company received a gas allocation letter from SKK MIGAS in June, a critical milestone toward finalizing the binding Gas Sales Agreement.
• Both the GSA and a Facility Sharing Agreement now await regulatory approval.

• • Criterium continues to target first gas in 3Q26.
• The company received a gas allocation letter from SKK MIGAS in June, a critical milestone toward finalizing the binding Gas Sales Agreement.
• Both the GSA and a Facility Sharing Agreement now await regulatory approval.

• MAPI’s capital allocation framework enforces a strict hurdle rate of a 15% to 18% return on invested capital (ROIC) and a 20% internal rate of return (IRR) for brand acquisitions. Legacy brands like Zara and Marks & Spencer provide cash flow stability, while the company maintains a disciplined approach to brand termination, exiting any partnership that fails to achieve positive EBITDA within three years.
• The unit economics of domestic tier-2 and tier-3 Indonesian cities are superior to regional ASEAN expansions in the short term, boasting payback periods of 12 to 18 months due to high developer concessions, revenue-sharing rent structures, and lower capital expenditure. Conversely, Vietnam and the Philippines require 2.5 to 3.5 years to pay back due to fixed-rent dynamics and local conglomerate leverage, though they offer vital long-term scale and risk diversification.
• Digital investments through MAP Club and corporate venture initiatives function as core operational hubs, not just tech novelties. Data-sharing models have successfully driven cross-brand conversions, and advanced inventory visibility helped normalize bloated inventory days down to 136 days in Q1 2026.
• Corporate incentives have been realigned from simple top-line sales to Gross Margin Return on Inventory Investment (GMROI), directly curbing historical margin erosion from aggressive markdowns. This structural shift, alongside the expansion of MAP Active, has helped the company offset the headwinds from the geopolitical boycotts impacting the F&B segment.

• Aspirasi Hidup Indonesia is in the midst of a strategic turnaround, capitalizing on its extensive store network and brand recognition to drive sales growth, which was up +6.3% YoY in the first half of 2026.
• The company presents a compelling deep-value investment case, trading at an attractive valuation with a low Price-to-Earnings ratio of 8.8x and a high dividend yield of 9.46%.
• Key risks to the outlook include sensitivity to softer consumer discretionary spending, which has recently impacted same-store sales growth, and potential margin compression from a significant depreciation of the Indonesian Rupiah.

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• Structural Shift in Sales DNA: The post-merger integration of Tokopedia and TikTok Shop has systematically dismantled Tokopedia’s legacy, high-touch sales-force model. Over 40% of legacy sales and business development roles have been eliminated, shifting the merchant acquisition and retention strategy from relationship-driven account management to an algorithm-driven, self-serve advertising model.
• Defending Market Share via Automation: While Shopee maintains a high-touch, human-centric approach to lock in mid-market merchants, the downsized TikTok-Tokopedia entity relies on automated onboarding and ad optimization. This leaner structure successfully defends its 30% to 35% market share, but it creates a service gap that Shopee is actively exploiting to capture dissatisfied Tier-2 and Tier-3 merchants.
• Monetization vs. GMV Risk: Pushing combined take rates above 8% to 10% via aggressive ad monetization initiatives is meeting resistance. Because GoTo’s high-margin e-commerce service fee (estimated at approximately 0.4% of quarterly GMV) is tied directly to transaction volumes rather than net take rates, aggressive merchant extraction that slows down GMV growth directly threatens GoTo’s cash flow stability.

• Indonesian equities are clearly out of favor. Our friends at Variant Perception recently noted a negative bubble signal in MSCI Indonesia, suggesting recent panic selling.

• One of the stocks that has declined a fair bit is Indonesian paint manufacturer Avia Avian (AVIA IJ – US$1.1 billion) (“Avian”).

• This company is often seen as a proxy for the Indonesian consumer. And the consumer is weak right now, hurt by the high interest rate environment and rising import costs.

• Astra International (ASII IJ)‘s implied stub and simple ratio (Astra/United Tractors (UNTR IJ) are both around multi-year lows. Forward growth for deconsolidated ops appears strong. 
• Preceding my comments on Astra are the current setup/unwind tables for Asia-Pacific Holdcos.
• These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.