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Strategy Outlook - Tapering growth expectations

Strategy Outlook – Tapering growth expectations

With the World Bank and Bank of Indonesia both lowering their 2015 GDP growth targets, we adjust our JCI year-end target to reflect slower economic and earnings growth for the year.  We also anticipate an interest rate cut by the Bank of Indonesia no earlier than 4Q15 which will be too late to positively impact 2015 corporate earnings though it should stimulate greater growth for 2016.

 

Coal Sector – China’s import drop worsens coal price outlook

Coal Sector – Neutral (Maintain)

China’s import drop worsens coal price outlook

  • No catalyst in sight for coal price.
  • Indonesia production down 19.4% at 5M15 YoY.
  • Valuations look reasonable after recent correction with ADRO as top pick.

 

AALI - Expectation is too high

Astra Agro Lestari (AALI) – HOLD (Maintain)

Price: Rp22,650 – Target Price: Rp20,000

Expectation is too high

  • Temperature in Pacific Oceanis increasing, El-Nino to occur.
  • HOLD with 12% downside due to demanding PE’15E of 23.7x.


 

WINS – A challenging environment to navigate

Wintermar Offshore Marine (WINS) – BUY (Maintain)

Price: Rp399 – Target Price: Rp440

A challenging environment to navigate

  • Expecting further margin pressure after difficult 1Q15.
  • Return of large development projects in 2016 is key.
  • Maintain HOLD.

 

BBNI - Better performer within the industry

Bank Negara Indonesia (BBNI) – BUY (Maintain)

Price: Rp6,850 – Target Price: Rp7,880

Better performer within the industry

  • Better than peers.
  • Expect SME and consumer loans to maintain performance.
  • Special mention could rise in 2Q15.