Indonesia

• Adi Sarana Armada (ASSA IJ) continues to build on its three pillars of growth across transport, used car sales, and logistics including its leading last-mile delivery service under Anteraja.
• The company’s market-leading auto leasing business provides stable revenue and a source of used cars for the auction and online used car business under Caroline.
• Last-Mile delivery player Anteraja is already the largest revenue contributor and increasing profit driver, with significant upside through automation and scale. Valuations attractive after recent correction at 8.3x FY2022E EV/EBITDA.

Lucror Analytics Weekly Wraps provide an overview of all Morning Views comments and reports published by our analyst team in the past week, and also showcase a list of the most-read reports.

In this Insight:

1. Yankuang Energy Group
2. Powerlong Real Estate Holdings
3. Sawit Sumbermas Sarana
4. Vedanta Resources
5. Tata Motors Ltd

and more…

• Astra International (ASII IJ) is coming up cheap after United Tractors (UNTR IJ) positively responded to its large share buyback announcement. Yet both companies are looking attractive here. 
• Preceding my comments on Astra and United Tractor 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%.

• Yesterday, United Tractors (UNTR IJ) announced a large share buyback. It’s a big buyback but perhaps not as big as the headlines (which say “up to 20%”). 
• The buyback is for 5 trillion rupiah which is about 5% of market cap, and will be conducted on-market over the next three months.
• Looking at the early market reaction, my opinion is that the market does not seem to understand the consequences.

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
• Powerlong Commercial Management Holdings
• Sawit Sumbermas Sarana

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.

• Medco Energi
• Ronshine China Holdings
• Sands China Ltd
• Wynn Macau Ltd

• Despite what looked like a solid set of 1Q2022 results, Bank Rakyat Indonesia has seen a sharp correction in its share price, which looks unjustified given a positive outlook.
• The bank has 84% of its loan exposure to micro and ultra-micro customers, which generates higher returns than corporate lending plus it is improving returns through increasing digitalisation.
• Management guidance for this year remains positive, and the bank is well-positioned to take advantage of the economic recovery with abundant liquidity and a low cost of funds.

• Merdeka Copper Gold Tbk PT (MDKA IJ) moved from the Development Board to the Main Board of the IDX on 31 May. That makes the stock eligible for FTSE inclusion.
• Meeting the full market cap, free float market cap and liquidity requirements, Merdeka Copper Gold Tbk PT (MDKA IJ) could be added to the FTSE All-World Index in March 2023.
• Passive FTSE trackers are estimated to buy 615.4m shares (US$167m; 5.8 days ADV) of Merdeka Copper Gold Tbk (MDKA IJ). That is 4% of the real float of the stock.

The Asia Monthly focuses on providing updates on recent events, information on new issues and spread movements, as well as summarising our top picks. The Asia Monthly is intended to broaden investors’ understanding of the Asian USD high-yield market.

• Indo Tambangraya Megah (ITMG IJ) is a 2.3 bn USD company with ~880 mn USD net cash adding >100 mn USD of free cash flow a month.
• At a 103 USD/ton ASP the company made a 475 mn USD profit for 2021. We estimate prices are easily around 200 USD/ton for the company in the current environment.
• Indo Tambangraya Megah (ITMG IJ) has a track record of paying >70% of its profits as dividends since 2009 ( implying a yield of 37% for FY22 ). 

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 South City
• Country Garden Holdings Co
• Powerlong Commercial Management Holdings
• Sawit Sumbermas Sarana

• Bukalapak (BUKA IJ) held its AGM this week, which effectively repeated the messages from its 1Q2022 results including guidance for FY2022 but there is more excitement beneath the headline numbers.
• One key metric tracked by management is the contribution margin, which is moving towards positive territory put take rates will improve for both Mitra and through its specialty store strategy. 
• AlloFresh has launched and is testing the offline line efficiencies before being applied to Mitra partners and AlloBank has also started its digital journey. Bukalapak looks cheap. 

• PT Nippon Indosari Corpindo (ROTI IJ) recently announced that it will launch two new product lines away from bread including Sari Roti chocolate spread and UHT Milk. 
• Investment in these products will be relatively small but it will increase the visibility of Sari Roti brands on the shelves of modern retail adding to its bread and cakes. 
• Wheat prices have stabilised recently but ROTI may consider raising prices further after assessing June performance. 2Q2022 performance has been stronger than expected post-Lebaran, as demand improved with greater mobility.

• Axiata Group (AXIATA MK) recently completed the acquisition of a 66.03% stake in Link Net (LINK IJ).  
• Axiata is now obligated to undertake a mandatory tender (MTO) offer to acquire the remaining 33.97% equity interest in Link Net. There are no conditions attached to the MTO.
• The MTO is expected to be completed in the third quarter of 2022. The spread has narrowed, yet there is still some left.