印尼策略2020：沒有危險的一年

1、9December 2019IndonesiaEQUITIESThe market trades attractively, ex 2 large cap quality stocks (BCA and Unilever) which have continued re-rating on a rising quality premium16Indonesia StrategyKey pointsKey points Valuations provide a margin of safety. Stripping out BCA and Unilever (20% of the MSCI In

2、do Index) the market is on 11.7x 2020E PER. Politically stable, with no major elections and no opposition since 4Q19. The broad consensus means reforms will underwhelm though, in ourview. We set a 7,000 year-end 2020 JCI target. Stock selection is tilted towards banks, telcos and plantations. Extern

3、al reflation will be the keytrigger.x1514131211109PE NTM +/- 1std-devConclusionWe see 2020 as a year of relative safety for investors in Indonesia as valuations are attractive and the absence of any heightened politicalriskSource: Thomson, Macquarie Research, December 2019Terms of trade to keep GDP

4、subdued in 1H20Index,should support the market. As a terms-of-trade economy, the key question will be the timing of reflation to drive a re-rating. We are overweight financials, telcos/towers and plantations, with a skew towards value in our positioning.1Q05=1004Q074Q084Q074Q084Q094Q104Q114Q124Q134Q

5、144Q154Q164Q174Q184Q194Q204Q21Weighted commo dity Real GDP growth (RHS)7.00%6.50%6.00%5.50%5.00%4.50%4.00%ImpactValuations offer a margin of safety. Stripping out index heavy-weights BCA and Unilever (combined 20% of MSCI Indo), the market is trading on an undemanding 11.7x PER, at the lower end of

6、the past decade range. Quality stocks are at an all-time high premium over their perceived lower quality value peers, providing upside into any re-rating. We set a 7,000 year-end 2020 JCI target factoring in 8% expected EPS growth and a partial reversion in valuations.Politics shaping up to be uneve

7、ntful. There is essentially nownoSource: Govt of Indonesia, Macquarie Research, December 2019Indonesia Model Portfolio 3 changesShareTargetTickerMktcapUS$mpriceRp/shRecpriceRp/shPER(x)20eTLKM28,5954,060OP4,70014.7UNVR* 22,86642,150NR40.5BMRI23,8067,175OP8,90010.3BBNI9,8787,450OP9,8207.4INDF*7,875NR1

8、3.0TOWR2,684740OP77015.3BDMN2,5503,670OP5,6858.2PTBA2,0972,560OP3,4508.3CTRA1,306990OP1,44018.7ISAT1,2093,130OP5,000NmLSIP6771,395OP1,62025.1With this report we add BDMN, PTBA and LSIP, remove JSMR* Denotes consensus expectations.Source: FactSet Consensus, Macquarie Research, December 2019Priced as

9、at December 5thAnalystsPT Macquarie Sekuritas IndonesiaJayden Vantarakis +62 21 2598 8310 HYPERLINK mailto:jayden.vantarakis jayden.vantarakisRichard Danusaputra +62 21 2598 8368 HYPERLINK mailto:richard.danusaputra richard.danusaputraparliamentary opposition in Indonesia with the major opposition p

10、arties joining the ruling coalition in exchange for cabinet positions in 4Q19. Following the simultaneous presidential and parliamentary elections in 2019, the largest-ever regional elections in 2018 and the controversial Jakarta Gubernatorial elections in 2017, 2020 will feel far less eventful with

11、 only smaller regional elections in 3Q20, including nine relatively less populousregions.Several reforms are steps in the right direction, but no silver bullet. The re-elected Jokowi administration continues to push a business-friendly agenda, now planning an Omnibus law (affecting taxation with som

12、e de- regulation sprinkled in) and labour reform as key plans for 2020. The cost of having a broad political consensus means the lowest common denominator will prevail on reform, and we expect the measures wont go far enough to spur FDI and arrest the trend ofde-industrialisation.The big question is

13、 reflation. Indonesia remains a terms-of-trade economy with commodities the major driver of GDP, so global reflation is key. Our top- down model predicts a further slowdown in GDP to 4.8-4.9% followed by a rebound in 2H20 to 5.1% levels. Macquaries global strategist Viktor Shvets believes of the maj

14、or global economies, only China will be willing to provide stimulus. Macquarie Desk Strategys China economist, Dr Larry Hu, expects more drastic Level 3 stimulus to begin post a property slowdown in1H20.Stock selection: Banks, plantations, telcosOur model portfolio stock selection is highlighted lef

15、t. For the local Index, we set a 7,000 year-end 2020E JCI index target (+13%upside).Please refer to page 20 for important disclosures and analyst certification, or on our website HYPERLINK /research/disclosures /research/disclosures.The year of not living dangerouslyThe year of living dangerously, w

16、as a novel by Christoper Koch and later adapted into a film by Peter Weir starring Mel Gibson and Sigourney Weaver. The story centres around the chaotic political events of 1965, which culminated in the demise of Indonesias first President Soekarno and the rise of General Soeharto as President. Due

17、to the sensitivity of the events in the 1965 period, which included a purge of the nascent Indonesian Communist Party and its sympathisers, the movie could not be filmed in Indonesia and was banned for any screening until after the fall of Soeharto in 1999. Indonesia in contrast today stands as one

18、of the most democratic nations in theregion.Contrary to the chaos depicted in the film, we see 2020 as a year of stability for Indonesia. It is unlikely to be a year of dangerous political conflict or daring reforms, in our assessment. There will be no large elections contested in 2020, save for reg

19、ional elections in 3Q20 that will cover nine relatively smaller provinces (measured by population). Following the controversial, identity-politics charged Jakarta Gubernatorial elections in 2017, the largest ever regional elections in 2018 and major Presidential and Parliamentary elections in 2019,

20、2020 should feel very much less eventfulpolitically.The stability will have a cost, however. The broad political cabinet achieved in October and effective removal of any real parliamentary opposition means extra compromise in policy making to accommodate the lowest common denominator in terms of ref

21、orm. For this reason, we dont expect the hyped Omnibus law or labour law to be any real silver bullet for investment, rather incremental steps in the right direction. The 2015 stimulus packets and subsequent retracting of many of the announced initiatives serve as a reminder of the difficulty Indone

22、sia faces inderegulation.Separately, the distraction with initiatives that, in our view, only serve the agenda of political elites into the 2024 Presidential and Parliamentary election (such as the proposed removal of direct Presidential elections, reverting to the direct appointment system of the P

23、eoples Consultative Assembly (MPR), instituting a criminal code heavily influenced by conservative religious factions and ongoing resistance following the Corruption Eradication Commission (KPK) law change) threatens to possibly derail or distract from otherwise positive businessreforms.In terms of

24、business, the state sector will continue to lead in 2020. Rather than take tough decisions to close down or diminish the role of inefficient or ailing state-owned enterprises (such as those in the life insurance, energy, agriculture, steel and aerospace industries), the government continues to try t

25、o fix them either with star personnel appointments and/or the injection of further equity capital; the prevailing view remains an enlarged state sector is a precursor to higher economicgrowth.There are two key reforms the equity market will be looking for in 1H20. Our view is both will be achieved,

26、but the substance contained therein will underwhelm due to the broad coalition that will need to provide endorsement: The Omnibus law, being promoted as a reform to address multiple business hampering laws at the same time. A key part of this law is taxation, with tax cuts from 25% to 20% slated to

27、come through in stages from 2021. Labour reform. At a maximum of 32 months severance, Indonesia remains amongst the most generous nations on earth for severance. Only Sierra Leone and Mauritius have longer severance terms, World Bank data shows. The plan is to cut this in half to 16 months for new w

28、orkers, however in our view this isnt far enough, as Indonesia would still remain amongst the least attractive in Asia on this point post this adjustment.Our conclusion is, given the ongoing picture of stability and lack of investment cycle (in particular FDI), Indonesias economic growth, corporate

29、earnings and valuation will continue to be driven by external reflation. We continue to look for bottom-up value in our stock selection to eventually profit from such external reflation when itarrives.Valuations offer a margin of safetyWe see Indonesian equities as attractive, with many large caps a

30、t reasonable valuations for the potential growth on offer. Stripping out index heavy-weights BCA and Unilever (combined 20% of the MSCI Indo index and 16% of the local Jakarta Composite Index), the market is trading on an undemanding 11.7x PER, at the lower end of the past decaderange.Theheadlineval

31、uation(left)appearselevatedinthecontextofthepastdecade,butisheavilydistorted in ourview.Fig 1 MSCI Indonesia past10-yearrangeFig 2 MSCI Indonesia ex BCA andUnilever18171817161514131211101615141312111098 +1 AveragIndone siaAverag e +1 -1 SDAdjustedSource: Thomson, Macquarie Research,December2019Sourc

32、e: Thomson, Macquarie Research, December2019Fig 3 Local JCI Index weights BCA and Unilever 16% combined of the marketFig 4 Absolute market cap has continued to rise, especially for BCA over the past 3 years% 12.0%US$b 60.010.0%50.08.0%40.06.0%30.04.0%20.02.0%10.0Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Ja

33、n-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18Jan-19Jan-02 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18Jan-19Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-1

34、3 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18Jan-19BCAUnileverBCAUnileverSource: Bloomberg, Macquarie Research,December2019Source: Bloomberg, Macquarie Research, December2019Quality stocks are at an all-time high premium over their perceived lower-quality peers, providing upside into any broad re-rating. As

35、an example, two of the highest quality stocks, BCA and Ace Hardware, are at elevated premia over peers in theirspace.A Quality screen from Macquaries Quant team across the 50 largest stocks is shown below. Quality is one factor in the quant model and in this context refers to Earnings Visibility, Ea

36、rnings Stability, Operating Accruals to reflect the quality and stability of a companys earningsstream.Fig 5 BCA to Mandiri P/BV relative all-timehighFig 6 ACE Hardware to Ramayana PER relative elevatedx -Source: FactSet, Macquarie Research,December2019Source: FactSet, Macquarie Research, December20

37、19Fig 7 Macquarie Quant model quality scoresscore1.501.000.500.00HMSP SCMA INTP MIKA KLBF UNVR ACES CPIN PTBA GGRM INCO ICBP MYOR SMGR MAPI JPFA TPIA EMTK JSMR TLKM BBCA AALI INDF ASII BTPS PWON MNCN BBRI PNBN CTRA BDMN ADRO BBNI BMRI ANTM BBTN PGAS WIKA UNTR MDKA BSDE EXCL TOWR TBIG BNLI FREN INKP

38、WSKT TKIM BRPTHMSP SCMA INTP MIKA KLBF UNVR ACES CPIN PTBA GGRM INCO ICBP MYOR SMGR MAPI JPFA TPIA EMTK JSMR TLKM BBCA AALI INDF ASII BTPS PWON MNCN BBRI PNBN CTRA BDMN ADRO BBNI BMRI ANTM BBTN PGAS WIKA UNTR MDKA BSDE EXCL TOWR TBIG BNLI FREN INKP WSKT TKIM BRPTQuality alpha scoreTop 50 stocks by m

39、arket cap and liquidity Source: Macquarie Research, December 2019We set a 7,000 year-end 2020 JCI index targetFor the past two years, the Index as a whole hasnt moved, despite a 9.5% 2-year CAGR in earnings. And given the concentration in performance across a couple of large stocks, as we have highl

40、ighted, this has meant a de-rating from 15x forward PER to 11-12x. We had previously set a 6,800 year-end Index target for 2019, however it appears the year will close falling short, driven by multiple compression.For 2020, our base case is for a 7,000 year-end JCI target factoring in 8% expected EP

41、S growth and some reversion in valuations. A bull case (full valuation reversion) would see 7,300 while a bear case (de-rating to trough) would see only minimal downside at 5,990 or-3%.Fig 8 A bull case would be c. 7,300CurrentEPS growthBase caseBull caseBear caseJakarta Composite Index (JCI)6,1866,

42、6817,0007,3005,990Upside (downside)8%13%18%-3%Source: Bloomberg, Macquarie Research, December 2019We start with EPS growth (top-down derived) of 8%. This is referenced to our top-down terms-of-trade model for Indonesia which correlates to GDP and nominal corporate earnings, discussed subsequently in

43、 this report. Note, for the stocks under coverage (29 at the time of writing), we have 12% EPS growth driven by banks (lower credit charges) whereas other sectors should belower. In addition to the EPS growth assumption, our base case 7,000 target allows for re-rating of Indonesian equities (ex BCA,

44、 Unilever) to 12.2x forward PER from the current 11.5x (and we build in some rotation effect with 1.5x PER de-rating in BCA and Unilever). A bull case allows for a full re-rating to mean (13x), providing up to 7,300 for the index A bear case we assume is 5,990, which assumes a de-rating to the past

45、decade forward PER trough multiple (10 x) and a further rotation to quality (+1 PER point to BCA/Unilever).Several reforms are steps in the right direction, but no silver bulletThe re-elected Jokowi administration continues to push a business-friendly agenda, now planning an Omnibus law (affecting t

46、axation with some de-regulation sprinkled in) and labour reform as key plans for2020.The cost of having a broad political consensus means the lowest common denominator will prevail on reform, we think. There are six parties in the parliamentary ruling coalition, and the 44 cabinet members includes41

47、%politicalappointees(includingcontentiouslyfromGerindra,whichwasthemainopposition in the election), 34% business people, 9% retired military personnel (co-ordinating Minister for Economy, Health, Religious Affairs, Presidents Chief of Staff) with only 16% technocrats of bureaucrats.While we expect t

48、he measures wont go far enough to spur FDI and arrest the trend of de- industrialisation, we believe the agenda is positive at the margin, especially fordomestic business.Fig 9 The coalition of parties have c. 75% of the parliamentary voteFig 10 A broad split of political appointees, businesspeople,

49、 former senior military alongside technocrats in the CabinetPANBureaucrat TechnocratPKS 9%Demokrat 9%Gerindra 14%PPP 5%7%PKB 11%PDI-P 21%Nasdem 10%Golkar 14%Military9%9%Business 34%Political parties 41%Golkar 7%PDIP 14%Nasdem 7%PKB 7%PPP 2%Gerindra 4%Gerindra was in opposition but subsequently joine

50、dgoverningcoalitionMilitary refers to former position, none areactiveSource: Govt of Indonesia, Macquarie Research,December2019Source: Govt of Indonesia, Macquarie Research, December2019Omnibus law: Setting the stage for tax cutsTheOmnibus lawisintendedtoreplaceupto74existinglaws,withanintentionofas

51、sistingbusiness to create jobs in the economy. The government would like to speed up passage of the law, however the parliament doesnt want to be rushed with thelegislation.The most important change for business would be taxation, with corporate tax rates to be reduced from 25% currently to 22% in 2

52、021 and 20% in 2023. The government wants to do the change in stages as it will drastically alter the tax base (most of Indonesias taxes come from corporates). Listed companies fulfilling free float requirements will see their tax rate reduced from 20% to17%.Aside from taxation, the focus of the cha

53、nge will be simplifying regulation, with President Jokowi continuingtoclaimIndonesiahastoomanyregulations.PreviouslythePresidenthadsignalledasmany as 25 industries would be opened to foreign investment, however these remain unclear and attempts in recent years to make similar moves have met resistan

54、ce from local business groups. Drafts of the Omnibus law are expected to be submitted by year end with parliamentary discussion to begin in January. This law appears to be higher priority than the labour reformbill.Fig 11 Details are still emerging. The Omnibus law is aimed at encouraging investment

55、CorporatetaxesReduction from 25% to 20% headline rate instagesPersonaltaxesRelaxing expatriate income tax for Indonesians and foreign citizens working in Indonesia Negative investment list Opening 25 sectors to foreign investors (yet to be specified)De-regulationReplacing 74 separate regulations wit

56、h a new set of business regulations Source:Mediareports(includingJakartaGlobe,TheJakartaPost),MacquarieResearch,December2019Fig 12 The headline corporate tax rate is planned to be lowered to 20% (and 17% for large float listed companies)Fig 13 Businesses contribute half the tax base with corporate t

57、ax a major part of revenues2520252020172520151050Private / listed with2x P/BV M&Aprice.Bank Danamon (BDMN IJ) - Asean conference 2019: Capital returns a possibility post insurance sale Bank Danamon (BDMN IJ) - Supportive backdrop and valuationTelcos and towers 21% upsideTelcos and towers 21% upsideT

58、elkom Indonesia TLKM OP Rp4,700/sh, price target 21%, 12mth forecast TSRTelkom Indonesia TLKM OP Rp4,700/sh, price target 21%, 12mth forecast TSRIndonesias incumbent dominant telco, and majority owner of Telkomsel (alongside Singtel). We continue to see competition in the sector as rational, with Ax

59、iata group (owner of XL, the number 2 operator) confirming recently the market has been settling down after a round of unlimited data plans were offered earlier in2019.As the largest player in the space, Telkomsel enjoys 60% data revenue market share driven by its ongoing 4G network roll-out (the op

60、erator has a larger network than players 2 and 3 combined by BTS count).Thestockretainsappealwitha5%dividendyieldin2020,amongstthehighestofthelargecaps,and 12-3% EPS growth, which is above our market projection of8%.PT Telkom (TLKM IJ) - Asean Conference 2019: Competition remains rational PT Telkom