Indonesia

• Launched 30 new SKUs during COVID-19 in multiple areas of health that can transform the company from herbal remedies into a bigger conglomerate of health providers. 
• PE firm that backed SIDO in the earlier years reduced its holdings but it should not be seen as a vote of negative confidence in the company. 
• Sido Muncul (SIDO IJ) can be compared to Blackmores Ltd (BKL AU) which has a wide range of health products but trades at a 100% premium to SIDO. 

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.

• Lippo Karawaci
• West China Cement

• GoTo (GOTO IJ) lists on the IDX tomorrow. The IDX has GoTo (GOTO IJ)‘s free float at 66% which would mean IDX30, LQ45 and IDX80 Fast Entry index inclusion. 
• If included in the indices at a free float of 66%, GoTo (GOTO IJ) will have a weight of 13.55% in the IDX30 Index and 12.12% in the LQ45 Index.
• Passive trackers will then need to buy 13.2% of the real float on the stock. Active funds will also buy the stock as it would appear in their benchmarks.

• This is the last trading week before the review period for the MSCI May SAIR commences next week. This is a short week with a lot of markets closed Friday.
• We see 38 potential adds and 63 potential deletes across Asia. Most changes are in China, with the most net deletions in Japan and China.
• The largest potential inclusions are Powerchip Semiconductor Manufacturing, Orient Overseas International, Pop Mart International, Jindal Steel & Power, Eva Airways, Emtek, China Airlines, Sumber Alfaria Trijaya and KT Corp.

• GoTo was initially aiming to raise around US$1.25bn from a local listing. It managed to raise US$960m after downsizing its deal and pricing close to the midpoint.
• GoTo, is an Indonesian holding company, was formed in May 2021 as a result of a merger between Gojek, leading player in ride hailing, and Tokopedia, leading e-commerce player.
• In this note, we’ll talk about the trading dynamics of the deal.

• Indonesia’s leading steel pipe company PT SPINDO published FY21 results earlier this week, crystallizing a year of record profitability with EBITDA doubling and NPAT increasing 2.8x.
• The heightened profitability is attributable to a combination of high steel prices making room for wider margins (in both percentage and absolute terms) combined with an improving product mix and unwavering demand landscape.
• We note that EPS of just IDR 5.6 in 4Q21 was well below the 9M21 run rate of IDR 62.0 and was due to several unexpected one-time expenses and provisioning for a possible tax expense

• Indonesia’s leading UHT milk and carton tea producer Ultrajaya Milk Industry booked a strong set of FY2021 results, with a convincing recovery in 4Q2021, which should carry through into FY2022. 
• The company continues to increase raw milk sourcing locally, which will alleviate rising global prices, and it is expanding its distribution network and new products to drive demand. 
• Ultrajaya is a market leader in its main product categories, yet trades at half the valuation of recently listed Cisarua Mountain Dairy, which looks excessive with potential upside to valuation.

ASRI’s FY 2021 results were much better than expected. Marketing sales, revenue and earnings surged, despite the impact of the COVID-19 Delta variant in Q3. FCF turned positive. The company appears to have benefited from the pandemic thanks to soaring demand for landed houses, similar to Lippo Karawaci. While ASRI’s financial risk profile has improved significantly from FYE 2020, the company remains levered. Positively, liquidity appears to be adequate for the next 12 months.

• Indonesia’s reopening has happened for some time but Jasa Marga (Persero) (JSMR IJ) share price has not moved much. 
• On-The-Ground sources told that the traffic is back, especially in Jakarta where Jasa Marga has the most toll roads. 
• Pre-COVID it was trading at 2-3x PBR and now it’s only 1.35x PBR, premium to Bluebird but has a bigger market capitalization that makes JSMR more investable. 

This month, we undertake a study of movements in the Lucror Analytics Risk Assessment (LARA) for issuers in the Lucror Asia HY index over the last five years.

The Asia Monthly focuses on providing updates on recent events, information on new issues and spread movements, as well as summarising our top picks, and discussing specific areas of interest in the “In-Focus” section. The Asia Monthly is intended to broaden investors’ understanding of the Asian USD high-yield market.

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.

• Japfa Comfeed Indonesia
• Jingrui Holdings
• Tata Steel Thailand
• Times China

Lippo Karawaci’s FY 2021 results were strong and exceeded expectations, with robust revenue and soaring EBITDA. Moreover, operating cash flows turned positive ahead of management’s guidance (FY 2022 onwards). The financial risk profile has improved significantly, and liquidity is sound.

We expect upward rating pressure to start building in FY 2022, as the company’s business and financial risk profile has improved significantly. Meanwhile, the agencies’ forecasts appear too conservative.

We revise our recommendation to “Buy” from “Hold” on the LPKRIJ 6.75 26. The notes dropped following Russia’s invasion of Ukraine, and are now trading at 96 and yielding 7.9%. The yields are attractive, given the fast-improving fundamentals and our expectation of robust FY 2022 results.

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. First Pacific Co
2. Yanzhou Coal Mining Company Limited H
3. Indika Energy
4. Lippo Karawaci
5. Agile Property Holdings

and more…

• Startup enabler Y Combinator has unveiled the 33 Southeast Asian startups that have been included in its latest winter 2022 cohort.

• The number is almost doubled from the last batch and amounted to around 8% of the 414 startups that were funded by the accelerator in this cohort.

• As part of the accelerator program, Y Combinator will invest US$125,000 in seed capital for a 7% stake in each startup.

• Mitra Keluarga Karyasehat Tbk (MIKA IJ) booked a strong set of FY2021 results driven by both COVID treatments and the start of a recovery in its core base case business.
• The company is back on an expansion tack in 2022, with increased capex and new hospital openings plus an increasing focus on digital initiatives.
• Mitra Keluarga Karyasehat Tbk (MIKA IJ) remains a core proxy for the growing penetration of healthcare in Indonesia and valuations are attractive versus history.

• Cisarua Mountain Dairy (CMRY IJ) booked spectacular FY2021 results with +120% YoY growth in both dairy and consumer food plus better margins due to scale and product mix benefits.
• The company continues to spend aggressively on sales and promotions ahead of new capacity coming online which will help to sustain growth, whilst also expanding exposure to general trade. 
• Cisarua Mountain Dairy (CMRY IJ) looks like a multi-year growth story in the making with a strong handle on rising commodity prices and emphasis on growing share in UHT milk.

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 Jinmao Holdings
• CIFI Holdings
• Greenko Energy Holdings
• Honghua Group
• Soechi Lines
• Zhenro Properties

• The long-awaited GoTo IPO is upon us with a listing scheduled for 4th April after the deal was priced sensibly in the middle of the range at IDR338 per share. 
• Since this was only offered to local investors and the IPO only represents 4.35% of shares in issue pre-Green Shoe, we see the potential for strong support from local institutions.
• Valuations are challenging but GoTo represents the best proxy for the Indonesian digital economy given its broad and unique exposure to key verticals of on-demand, digital finance, and e-commerce.