Indonesia

We view Alam Sutera (ASRI) as “High Risk” on the LARA scale, given the company’s refinancing risk amid the challenging financing environment. ASRI’s pre-sales have been soft, which is a concern for rating agencies. We also note the group’s asset concentration and cash-flow volatility. The company was highly reliant on land sales to key partner CFLD until 2021, when CFLD defaulted on debt. Execution risks are increasing due to ASRI’s shift away from developing townships to high-rise buildings.

The company has very low recurring income compared to peers. That said, it has a large and low-cost land bank that is bigger than most peers’. The land bank has high potential value, and could be a source of liquidity, supporting high margins for the business. Positively, ASRI’s successful cash tender offer in October 2022 has alleviated refinancing risk. It now has no significant maturities until 2025.

We maintain our “Stable” Credit Bias, as we expect the company’s operations to remain satisfactory, with some positive FCF, and no significant maturities until 2025.

Controversies are “Immaterial” and the ESG Impact on Credit is “Neutral”.

• Selamat Sempurna (SMSM IJ) remains one of the best quality Indonesian industrial companies, as the leading auto and heavy equipment filter producers for both OEM and the aftermarket.
• The company booked a strong set of 9M2022 results, with sales up +21% YoY and net profit increasing +30% YoY, driven by both domestic and export markets.
• Selamat Sempurna (SMSM IJ) maintains it FY2022 target for 15% sales and profits growth for FY2022, which looks conservative after the performance at 9M stage despite potential global headwinds.

• Privy has 30M+ verified users and 1,800 enterprise consumers and processes 40M+ digital signatures per year.

• Jakarta-based digital signature and identity company Privy has secured US$48 million in a Series C funding round.
• Privy will use the capital to support the development of its new consumer and enterprise products. The company also intends to expand into overseas markets to accelerate growth further.

• In this 3Q22 Indonesian banks screener, we rate Bank Negara as our key value pick with its very attractive valuations including PEG ratio and its improving cost of risk trends
• We continue to also favour Bank Mandiri, but, in the wake of the share price re-rating, it is our secondary value pick to Negara
• Bank Rakyat has delivered improved returns in 3Q22, and shows signs of “turn around” potential; we look for management to improve credit quality and especially the Special Mention Loans Ratio

• Bloomberg reported on Friday that GoTo (GOTO IJ) is planning to cut more than 1k jobs across all its divisions to cutdown its costs and improve its financials.
• Though GoTo’s top line has continued to expand, the company continues to burn cash and the losses have further widened during the recent quarters.
• GoTo’s shares rose 11.7% during Friday’s trade, however, share price is still down by about 45%  from the company’s IPO price.

• Prodia (PRDA IJ) is a stand out amongst Indonesia’s healthcare players given it is the only company in Indonesia with accreditation from the College of American Pathologists. 
• 3Q2022 reflected a normalisation of the testing business towards routine testing but at higher levels, and with a greater variety of tests with more advanced levels of digitalisation. 
• Prodia (PRDA IJ) stands out in terms of its strong market positioning and track record together with attractive valuations, especially versus Indian peers in the diagnostic space.

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.

• Central China Securities
• China Fortune Land
• Country Garden Holdings Co
• Kawasan Industri Jababeka
• Longfor Properties
• Medco Energi

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.

• China SCE
• Country Garden Holdings Co
• Kawasan Industri Jababeka

• PT Global Digital (BliBli) raised around US$517m in its Indonesian IPO, after using the upsize option and pricing its deal just below the top-end.
• BliBli provides e-commerce services across Indonesia to both retail consumers and institutions.
• In our previous notes, we have looked at the company’s past performance. In this note, we will talk about the trading dynamics.

• Blibli (1437710D IJ) priced its IPO at IDR450 per share to raise net proceeds of US$508 million. The shares will start trading on 8 November.
• We have previously discussed the IPO in Blibli IPO: The Bull Case, Blibli IPO: The Bear Case, Blibli Vs Tokopedia Vs Bukalapak Vs Lazada Vs Shopee, Blibli IPO: Valuation Insights.   
• Despite peer multiple derating, the IPO price remains unattractive compared to global and Asian-focused e-commerce peers. 

• Astra International (ASII IJ)‘s recent 9M2022 numbers confirmed its position as a well-rounded way to play Indonesia’s economic recovery through autos and commodities through its controlling stake in United Tractors.
• The company has continued to deploy its war chest of funds from the Bank Permata sale, investing in commercial vehicle leasing, hydro-power, and digital banking in 3Q2022 alone.
• Astra International (ASII IJ trades on 9.0x FY2023 PER and 8.5x FY2024E PER versus its 5-year average forward PER of 14x, making it attractive at current levels. 

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.

• ABM Investama
• NagaCorp Ltd
• Times China
• Yuexiu Property