Left Brain Right B - the DBS Vickers Securities Equities Research

More documents

Recommendations

Info

Regional Equity Strategy 4Q 2009 Country Assessment Infrastructure project Province Quantity Project cost (US$m) North Sumatra 7 1,954.0 West Sumatra 2 1,213.0 Riau 1 845.0 Riau Archipelago 1 220.0 South Sumatra 5 1,578.0 Lampung 4 1,723.0 Banten 4 1,201.0 DKI Jakarta 10 5,945.0 West Java 20 3,711.0 Central Java 6 2,326.0 D.I. Yogyakarta 2 842.0 East Java 3 1,556.0 Bali 3 198.0 Central Kalimantan 10 9,009.0 East Kalimantan 3 878.5 North Sulawesi 3 726.0 South Sulawesi 2 212.0 Papua 1 2.0 Total 87 34,139.5 Sector/sub-sector Quantity Project cost (US$m) Air transportation 3 1,416.5 Land transportation 2 94.0 Marine transportation 5 947.0 Railways 15 11,960.0 Toll roads 32 15,248.0 Water resources 0 - Water supply 20 659.0 Solid waste and sanitation 2 120.0 Telecommunication 0 - Power 8 3,695.0 Oil and gas 0 - Total 87 34,139.5 Source: State Ministry of National Development Planning/National Development Planning Agency GROWTH Indonesia is in a enviable position amid the global contraction with its domestically driven economy. The Indonesian economy grew 4.0% yoy in 2Q09 (+4.4% in 1Q), within expectation, which marks further acceleration in growth momentum. Nevertheless, the growth appears to have relied heavily on fiscal policies as consumer spending was weaker than expected. Consumer spending rose 4.8% y-o-y, lower than the 1Q09 growth of 6%. On the contrary, government spending rose 17% y-o-y for the rest of the year, recovery in consumer and investment spending will take over as the main engines of growth. GDP growth %-pt contrib to QoQ sa growth 4 3 2 1 0 -1 Latest: 2Q09 -2 Mar-07 Sep-07 Mar-08 Sep-08 Mar-09 PCE GCE Capex Stocks Net X GDP QoQ sa Source: DBS estimates DBS Economics believes that Bank Indonesia and the government will maintain accommodative monetary and fiscal policies. As such, DBS Economics foresees that BI rate will remain at 6.5% until 2Q10 before gradually being raised to compensate for the inflation rate. However, the rise in BI rate will be at a manageable level for business and capital markets. Lending was relatively flat in 6M09 with 1.3% YTD growth. However, with strong growth in the agribusiness sector as well as the consumer segment, we believe that loan growth should accelerate in 2H09. This view is also supported by the surprising strength of BBRI’s 2Q09 loan growth of 11.7% q- o-q, driven by SME and consumer segments. At the same time, the agreement between 14 banks to lower deposit rates is expected to boost lending as the banks will be able to offer a lower lending rate. We are positive on the banking sector. Loan growth 32.0% 24.0% 16.0% 26.0% 30.8% 8.0% 0.0% Source: BI 1.3% 2007 2008 Ytd09 Page 133
Regional Equity Strategy 4Q 2009 Country Assessment Loan growth by economic sector 2008 1Q09 Q-o-Q 1Q09 Y-o-Y Jun09 Y-o-Y Jun09 Ytd Total 30.8% -0.4% 26.1% 15.9% 1.3% Agriculture 18.6% 1.8% 22.5% 19.3% 8.0% Mining 20.5% -5.9% 4.0% -8.3% -12.5% Manufacturing Industry 32.1% -1.8% 24.9% 6.2% -8.3% Trade 21.0% 0.1% 22.5% 15.3% 4.7% Services 45.4% -1.7% 36.4% 22.9% 0.3% Electricity, Gas and Water 143.0% 6.4% 99.6% 115.7% 18.0% Construction 32.9% 0.0% 31.8% 18.5% 5.4% Transportation 70.0% -1.2% 52.1% 37.5% 2.9% Business Services 39.4% -3.7% 28.8% 12.9% -5.1% Social Services 13.6% -0.6% 22.7% 16.5% 3.0% Others 30.0% 1.2% 24.4% 19.1% 6.6% Source: BI Infrastructure, the old story that was very slow to materialize, has started to attract attention with the progress of some toll roads that were previously overlooked. The progress of Jakarta outer ring road (JORR) and some toll roads in West Java have convinced investors that infrastructure development will accelerate in SBY’s second term. The infrastructure project developments will create a multiplier effect on other sectors. Cement sector is a direct beneficiary of infrastructure development. VALUATION AND STRATEGY YTD, JCI has outperformed other markets in the region. It even featured as one of the best performers in the global market, with JCI posting a 78.6% return YTD, and is currently trading at 13.3x FY10 PER. The strong performance is supported by the fact that i) Indonesia’s economy is in a better position with GDP growth of 4% in 2Q09, ii) from the 2Q09 results of companies under our universe, 26% of the companies’ FY09 estimates had to be revised up to anticipate better than expected FY09 performance. JCI PER band 3,000 2,500 2,000 1,500 1,000 500 0 96 97 98 99 00 01 02 03 04 05 06 07 08 09 Source: Bloomberg We believe that the investment theme for 4Q09 onwards should be based on increasing economic growth momentum, a low interest rate environment and a pick up in infrastructure related sector. As such, we are positive on banking, cement & construction, energy and telecommunication sectors. We pick BBRI and PTBA as our top picks in 4Q09 on the back of expected stronger revenue growth. BBRI will benefit from faster growth in corporate (infrastructure), SME and consumer segments, while its NIM will also stabilize with the decline in cost of funds. PTBA is a beneficiary of rising domestic demand, especially with the development of infrastructure and power plant projects. 15x 13x 11x 9x 7x 5x Page 134
Page 1:
Equity Strategy and Large Cap Stock
Page 4 and 5:
Regional Equity Strategy 4Q 2009 Ta
Page 6 and 7:
Regional Equity Strategy 4Q 2009 St
Page 8 and 9:
Page 10 and 11:
Page 12 and 13:
Page 14 and 15:
Page 16 and 17:
Page 18 and 19:
Page 20 and 21:
Page 22 and 23:
Page 24 and 25:
Page 26 and 27:
Page 28 and 29:
Page 30 and 31:
Page 32 and 33:
Page 34 and 35:
Page 36 and 37:
Page 38 and 39:
Page 40 and 41:
Regional Equity Strategy 4Q 2009 Re
Page 42 and 43:
Regional Equity Strategy 4Q 2009 Co
Page 44 and 45:
Page 46 and 47:
Page 48 and 49:
Page 50 and 51:
Page 52 and 53:
Page 54 and 55:
Page 56 and 57:
Regional Equity Strategy 4Q 2009 Mo
Page 58 and 59:
Regional Equity Strategy 4Q 2009 Si
Page 60 and 61:
Regional Equity Strategy 4Q 2009 SP
Page 62 and 63:
Regional Equity Strategy 4Q 2009 Su
Page 64 and 65:
Income Statement (S$ m) Balance She
Page 66 and 67:
Page 68 and 69:
Page 70 and 71:
Page 72 and 73:
Page 74 and 75:
Page 76 and 77:
Page 78 and 79:
Page 80 and 81:
Page 82 and 83:
Regional Equity Strategy 4Q 2009 Ba
Page 84 and 85: Regional Equity Strategy 4Q 2009 Ba
Page 86 and 87: Regional Equity Strategy 4Q 2009 Ch
Page 88 and 89: Regional Equity Strategy 4Q 2009 Ch
Page 90 and 91: Regional Equity Strategy 4Q 2009 MT
Page 92 and 93: Regional Equity Strategy 4Q 2009 Co
Page 108 and 109: Income Statement (RM m) Balance She
Page 110 and 111: Regional Equity Strategy 4Q 2009 MI
Page 126 and 127: Regional Equity Strategy 4Q 2009 Si
Page 128 and 129: Regional Equity Strategy 4Q 2009 Th
Page 130 and 131: Regional Equity Strategy 4Q 2009 To
Page 140 and 141: Income Statement (Rp bn) Balance Sh
Page 142 and 143: Income Statement (Rp bn) Balance Sh
Page 144: Regional Equity Strategy 4Q 2009 2)
show all

Left Brain Right B - the DBS Vickers Securities Equities Research

Create successful ePaper yourself

Delete template?

Save as template?