Indonesia

• Finally, Blue Bird (BIRD IJ) is back on profit in two consecutive quarters, highlighting the comeback mode in Indonesia. 
• It went on to sign a partnership to develop and integrate big data analytics with PT LRT Jakarta and BCA app users can call Bluebird from the app. 
• It is still trading at 0.6x PBR while pre COVID level was 1.3-1.5x PBR. 

• Bank Central Asia (BBCA IJ) released its 1Q2022 this week, reflecting an ongoing recovery and the bank’s strong positioning to take advantage, with new lending picking up strongly.
• The bank is seeing strong growth in CASA driven by its lead in transactional banking and digital initiatives, with its CASA ratio hitting 80% by the end of 2022. 
• Credit costs are also forecast to fall further this year, which will provide an additional boost to profitability. It trades at a premium to peers but generates consistent returns.

• Float and capping changes will require passive trackers to buy Bank Central Asia (BBCA IJ) and sell Bank Rakyat Indonesia Persero (BBRI IJ) at the close on 28 April.
• There will be passive changes to other stocks too, though the impact will not be material on most of the stocks.
• GoTo (GOTO IJ) could be added to the IDX30, LQ45 and IDX80 indices in May. With the oversubscription option nearly all used up, the stock should trade weak near-term.

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.

• Delta Dunia Makmur
• Jingrui Holdings
• KWG Living Group

• The review period for the price cutoff of the MSCI May SAIR commenced last week and will run through the coming week. MSCI normally chooses a day from week 1.
• Yangzijiang Financial Holding Ltd (YZJFH) will list on 28 April and one stock will be deleted from the FTSE Straits Times Index (STI) (STI INDEX) at the close on 4 May.
• There were inflows to China and Taiwan focused ETFs, while there were outflows from Korea focused ETFs.

• Adi Sarana Armada (ASSA IJ) booked a strong set of FY2021 results with sales growing by +68% and net profit by +64%, driven by a strong performance from logistics business.
• Anteraja now makes up 54% of sales and broke even in FY2021, delivering an average of 650,000 parcels per day in 2021, expected to rise to 1.5m by December 2022.
• Adi Sarana Armada (ASSA IJ) is a proxy for mobility through car leasing, online and offline used car sales through Autopedia, and last-mile deliveries through Anteraja.

• Superapp GoTo (GOTO IJ) made its public debut on the Indonesian Stock Exchange on 11th April. The company set the final IPO price at IDR338 per share.  
• GoTo’s shares surged nearly 23% to IDR416 a piece on the open, boosting the company’s market cap to more than IDR497trn.
• GoTo’s share price has continued to slide and our SOTP valuation suggests that there is further downside.

• The review period for the MSCI May 2022 SAIR started yesterday. As of the close on 15 April, we see 45 potential adds and 65 potential deletions for Asia.
• At a country level, the most changes are in China, while the largest net change is expected in Japan (16 deletions) and China (10 deletions). Indonesia could have five inclusions.
• The largest potential inclusions are Powerchip Semiconductor Manufacturing Corp, Tata Elxsi Ltd, Orient Overseas International, Pop Mart International Group Limited, Eva Airways, Jindal Steel & Power and China Airlines.

The Asia HY Trade Book for the month of April includes a summary of our recommendations, as well as our high-conviction ideas. The report also features relative-value charts and lists of the bonds in the Lucror Asia HY index.

• Bukalapak’s (BUKA IJ) results saw very strong growth from its Mitra Business, with a much slower marketplace but we see the latter picking up as its specialty strategy is developed. 
• The launch of both Allo Bank Indonesia and Allo Fresh over the next two quarters should provide some excitement, whilst its gaming marketplace Itemku is already profitable. 
• Take rates should improve in 2022 as Bukalapak (BUKA IJ) offers a broadening array of services across its Mitra and marketplace verticals. Valuations look attractive versus peers. 

• Ace Hardware Indonesia (ACES IJ) recently released its FY2021 results which reflected the intermittent lockdowns on the top line but cost controls meant the bottom line finish almost flat.
• The company benefitted from its regional diversity during the pandemic as not all cities were affected in the same way but its exposure to malls is quite high.
• Ace Hardware will resume its expansion plans in 2022 with plans for 15 new stores plus it will be a big beneficiary of easing mobility, given low online sales.

We are initiating coverage on PT Pertamina (Persero), a vertically integrated oil & gas (O&G) company in Indonesia.

We view Pertamina as “Low Risk” on our LARA scale, primarily driven by the company’s strategic importance to Indonesia and its status as a state-owned enterprise (100% owned by the government). Pertamina is the state holdco for Indonesia’s O&G assets, and the government’s vehicle for managing retail fuel prices. We like the company’s vertically integrated operations and large scale. It owns most of Indonesia’s refineries, fuel stations and gas pipelines. Pertamina’s O&G production is expected to rise towards 1,000 mboepd in FY 2022 (FY 2020: 863 mboepd), following the takeover of the Rokan block in November 2021. Credit metrics are healthy, with Net Debt/EBITDA of slightly over 1x. Negatively, the government requires Pertamina to sell petroleum products at subsidised prices. As a result, the company will incur losses if Brent exceeds USD 60/bbl. While the government subsidises the revenue shortfall, these subsidies are paid in arrears, which impacts the timing of cash inflows.

Our Credit Bias is “Stable”. Rising O&G prices will likely support the upstream segment, and help offset the regulated low selling prices of the downstream segment.

We recommend to “Hold” the PERTIJ notes.

• Mitra Adiperkasa’s results this week confirm a strong recovery is in place, with improving margins and growth across all verticals and a return to profitability for FY2021. 
• Growth was evident in both online and offline channels as the company’s unified retail strategy continues to yield strong results plus inventory levels improved dramatically QoQ in 4Q2021.
• Mitra Adiperkasa (MAPI IJ) remains a key proxy for the retail recovery in Indonesia and has remoulded itself to changing consumer behaviour. Valuations remain attractive versus historical levels. 

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. China Jinmao Holdings
2. Guangzhou R&F Properties
3. Sunac China Holdings
4. Greenland Hong Kong Holdings
5. Evergrande

and more…

For our next Corporate Webinar we are glad to welcome Arwana Citramulia (ARNA IJ) CFO & Corporate Secretary, Rudy Sujanto.

In the upcoming webinar, Rudy will share a short company presentation, after which he will engage in a fireside chat with Smartkarma Analyst, Angus Mackintosh. A live Q&A session will follow.

The Corporate Webinar will be hosted on Tuesday, 26 April 2022, 17:00 SGT.