2011 Economic Yearly Highlight - Deserve a Premium

Indonesia Stock Exchange (JCI)
Price: 3,531.2 – Target Price: 4,209

Deserve a Premium
Investment Thesis:

  • JCI has impressively outperformed regional peers YTD’10 supported by rising risk appetite on Emerging Asian nations, strong capital flows and accelerated corporate earnings growth.
  • We view that JCI deserves to be traded at premium due to resilient economy and improvement in the country rating comparable to BRIC countries.
  • Using bottom-up approach, we set our 2011 index target at 4,209, supported by higher earnings growth, strong fund flows and investment rating upgrades.
  • Our target index implies 19.2% upside and 2011 PER of 16.7x.

Our top sector picks are:

  • Banking
  • Energy & Resources
  • Cement
  • Infrastructure