Consumers. 1Q17: Domestic strengths to lead again. Overweight (Maintain) Consumers

Consumers 1Q17: Domestic strengths to lead again

Indonesia’s domestic assets provide buffer against external uncertainties

Overweight (Maintain) Consumers February 3, 2017 PT Mirae Asset Sekuritas Indonesia

Dang Maulida +62-21-515-1140 [email protected]

Di antara empat negara anggota Perhimpunan Bangsa-Bangsa Asia Tenggara (ASEAN), Indonesia mencatat pertumbuhan GDP tertinggi pada tahun 2015 (+ 4.78% YoY). Memang, selama 2006-16, Indonesia berhasil mencatat pertumbuhan PDB rata-rata 5,6% meskipun krisis global 2008-9, yang juga menyebabkan melemahnya harga komoditas (terendah pada tahun lalu). Dalam pandangan kami, ketahanan tersebut karena ketergantungan utama negara atas aset domestik yang dikombinasikan dengan kebijakan fiskal dan moneter secara konsisten yang hati-hati yang memungkinkan negara untuk mencatatkan pertumbuhan PDB rata-rata 5,6% selama dekade terakhir. Pasar domestik yang besar telah menyebabkan konsumsi swasta untuk berkontribusi lebih dari setengah dari nilai ekonomi Indonesia (2010-2015). Untuk tahun ini, kami percaya kekuatan domestik Indonesia kembali akan memberikan penyangga terhadap tantangan yang berkembang ketidakpastian, terutama yang berasal dari Amerika Serikat.

Overweight on consumer sector Kami melihat sektor konsumer yang merupakan terbesar kedua sebagai proxy kemajuan bagi Indonesia. YTD, sektor konsumer Jakarta (JACKONS) indeks telah bergerak seiring dengan IHSG, naik 0,64% vs IHSG 0,57%. Dengan latar belakang perkembangan ekonomi terakhir, yang menunjukkan perbaikan dan lebih baik stabilitas kami, berharap perusahaan consumer bawah cakupan kami untuk memenuhi perkiraan pendapatan saat ini. Untuk 2017, kami memperkirakan Unilever Indonesia (UNVR / Beli / TP: IDR52,500) untuk mencatatkan pendapatan dan pertumbuhan laba bersih, masing-masing, sebesar 10,7% YoY dan 10,8% YoY; Kalbe Farma (KLBF / Beli / TP: IDR2,150) untuk mencatatkan pendapatan dan pertumbuhan laba bersih, masing-masing, sebesar 8,0% dan 9,0%; Indofood CBP Sukses Makmur (ICBP / Beli / TP: IDR11,800) untuk mendapatkan pendapatan dan pertumbuhan laba bersih, masing-masing, sebesar 10,3% dan 11%; Gudang Garam (GGRM / Beli / TP: IDR82,800) untuk mencatatkan pendapatan dan pertumbuhan laba bersih sebesar, masing-masing, 12,6% dan 13%,; dan HM Sampoerna untuk memasukkan pendapatan dan pertumbuhan laba bersih sebesar 11,1% dan 12,1%, masing-masing. Kami mencatat bahwa sektor konsumen telah mencatatkan premium selama enam tahun terakhir, karena sektor ini memperhitungkan kemampuan mencatatkan pertumbuhan yang stabil dan berkelanjutan dalam jangka panjang.

Main risks for the sector this year Inflasi dan tingkat USD/IDR adalah dua variabel utama yang menentukan keinginan konsumen untuk belanja belanja. Tingkat inflasi untuk Januari bukanlah awal yang menggembirakan; tingkat inflasi bulanan 0,97% MoM (lebih tinggi dari konsensus 0,71% MoM dan 0,42% MoM bulan sebelumnya) telah memberikan sinyal waspada kepada investor serta pemerintah. Beberapa alasan untuk tingkat inflasi yang lebih tinggi pada bulan Januari mencakup tingkat yang lebih tinggi listrik, harga BBM, dan biaya pendaftaran kendaraan. Namun demikian, kita melihat bahwa pemerintah Indonesia telah bekerja untuk terus meningkatkan mekanisme kontrol untuk inflasi, termasuk menjaga pasokan produk pangan strategis dan jaringan distribusi. Kami berpikir bahwa inflasi aktual C.5%, di batas atas target untuk tahun ini, akan dapat diserap oleh konsumen. Sementara itu, USD tingkat / IDR telah stabil sejak pemilihan presiden Amerika Serikat diputuskan akhir tahun lalu. Kami percaya bank sentral Indonesia akan terus dapat melakukan intervensi terhadap volatilitas USD / IDR atas tingkat cadangan mata uang asing yang kuat. Sampai akhir Desember tahun lalu, cadangan devisa

Analysts who prepared this report are registered as research analysts in Indonesia but not in any other jurisdiction. PLEASE SEE ANALYST CERTIFICATIONS AND IMPORTANT DISCLOSURES & DISCLAIMERS IN APPENDIX 1 AT THE END OF REPORT.

mencapai USD116.4bn (dicatat bahwa tingkat ini telah memperhitungkan dalam operasi pasar untuk menstabilkan IDR setelah hasil pemilihan presiden AS pada awal November), lebih tinggi dibandingkan dengan USD105.9bn bulan yang sama pada tahun 2015 . Keseluruhan, kita berpikir sektor konsumen Indonesia akan dapat menghadapi risiko yang menyertai pertumbuhan ekonomi negara itu.

Population growth Semua hal lain dianggap sama, pertumbuhan penduduk meruapakan faktor utama yang memicu perluasan sektor konsumen. Penduduk Indonesia yang besar (c.255mn orang saat ini) adalah alasan utama mengapa itu adalah ekonomi terbesar di antara negaranegara anggota ASEAN. Tidak hanya ukuran, tetapi juga komposisi penduduk menguntungkan, dengan c.70% orang di kelompok usia produktif 15-65 tahun. Selain itu, laju pertumbuhan penduduk dicatat; antara empat negara yang paling padat penduduknya di dunia, Indonesia memiliki tingkat pertumbuhan tertinggi pada tahun 2015, 1,2%. Tingkat pertumbuhan menempatkan Indonesia satu langkah maju dalam hal modal manusia dibandingkan dengan negara-negara seperti China, Amerika Serikat, dan Brasil. Dalam hal PDB nominal, Indonesia peringkat ke-16 (2015) di dunia. Namun, diukur dengan paritas daya beli, Indonesia peringkat ke-8, di depan Korea, Inggris Raya Prancis, dan Arab Saudi, antara lain. Dengan manajemen hati-hati, kami meramalkan Indonesia bergerak naik tangga di media untuk jangka panjang, menjadi salah satu dari lima negara terbesar di dunia.

2017: The year of improved commodities YTD, rata-rata harga minyak dunia berdiri di USD53.3 / barel, lebih tinggi dari USD47.5 tahun lalu / barrel. Harga minyak menyentuh ke titik terendah dalam lima tahun, di USD36 / barel, tahun lalu. Pada saat ini, kami positif bahwa harga komoditas akan mempertahankan tren stabil atas pertumbuhan global yang lebih tinggi serta berkurangnya pasokan. Pertumbuhan ekonomi global diperkirakan oleh bank dunia sebesar 3,4% tahun ini (vs 3,1% pada tahun 2016). pertumbuhan global tahun ini didukung oleh Amerika Serikat pada 1,8% (2016F: 1,6%) dan Kanada sebesar 1,7% (2016F: 1,2%), antara lain. Sementara itu, ASEAN-4 negara diharapkan untuk mencatatkan pertumbuhan PDB di 5,1% di tahun ini (2016F: 4,8%). Sementara itu, harga komoditas juga didukung oleh pasokan yang lebih rendah sebagai hasil produksi yang lebih rendah (karena permintaan yang lebih rendah) di 2015-6. Keseluruhan, harga komoditas dunia yang stabil akan menguntungkan perekonomian Indonesia melalui nilai ekspor yang lebih tinggi, yang akan memiliki efek spillover pada bagian lain dari ekonomi dan pada gilirannya ke penerimaan negara yang lebih tinggi.

2

September 30, 2013

KB Financial Group

Figure 1. Mirae Asset Sekuritas Research Indonesia Cartoon

Source: Mirae Asset Sekuritas Research Indonesia

3

January 5, 2017

Construction

Figure 2. Average economic growth of 5.6% (2006-2016)

Figure 3. Private consumption of 54.5% (2010-2015)

(%, YoY) 7

0.4% 1.8% 1.1%

6.49

6.35

6.26

6.22

6.01

1.2%

5.78

6 5

Government spending 4.79

4.55

Private consumption

5.04

5.02

5.5

Investments

32.2%

4

Net exports

54.5%

3

Statistical discrepancy

2

Non-profit institutions spending Inventory changes

8.8%

1

0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Source: BPS, Mirae Asset Sekuritas Indonesia

Source: BPS, Mirae Asset Sekuritas Indonesia

Figure 4. The biggest economy in the region (ASEAN)

Figure 5. The highest economic contributor in the region (ASEAN)

(USDbn) 1,000 900 800 700 600 500 400 300 200 100 0

859.0

12.2% Indonesia 35.3%

12.0%

395.3

Thailand Malaysia

296.3 292.7 292.5

191.5

Singapore 62.9

17.8

12.9

12.0%

12.6

Phillipines Others 12.2%

16.2%

Source: ASEAN, Mirae Asset Sekuritas Indonesia

Source: ASEAN, Mirae Asset Sekuritas Indonesia

Figure 6. Consumer in the IDX in terms of market capitalization

Figure 7. Significant historical premium since 2006 (pt)

2.4%

Financials

5.0% 6.6%

Consumers 25.8% Infrastructures

7.1%

Trading 7.4%

Property Basic Industry

10.9%

Miscellaneous 22.4%

1,000 900 800 700 600 500 400 300 200 100 0

Mining 12.4%

Agriculture Consumer

Source: Bloomberg, Mirae Asset Sekuritas Indonesia

Mirae Asset Sekuritas Indonesia

JCI

Source: Bloomberg, Mirae Asset Sekuritas Indonesia

4

February 3, 2017

Consumer

Figure 8. Stabilized USD/IDR

Figure 9. Inflation rate (%, YoY)

(IDR)

5

13,700 13,600 13,500 13,400 13,300 13,200 13,100 13,000 12,900 12,800 12,700 12,600

4.42

4.5 4

4.45

4.14

3.6

3.45

3.5

3.21

3.07 3.31

3.58

3.49

3.33

3

3.02

2.5

2.79

2 1.5 1 0.5 0

Source: Bloomberg, Mirae Asset Sekuritas Indonesia

Source: BPS, Mirae Asset Sekuritas Indonesia

Figure 10. One step ahead with more human capital

Figure 11. Ranked 8th in the world (PPP GDP)

(mn people)

(%, YoY)

1,600.0 1,400.0

1,371.2

1.4

1,311.1 1.2

1.2

1.2

1,200.0

1.0

1,000.0

0.9

0.8

20,000.0 15,000.0

0.8

10,000.0

800.0 600.0

(USDbn) 25,000.0

0.6 0.5

5,000.0

0.4

321.4

400.0

257.6

207.8

200.0

-

0.0

0.2

0.0 China

India Total

United States

Indonesia

Brazil

Growth (R)

Source: World Bank, Mirae Asset Sekuritas Indonesia

Source: World Bank, Mirae Asset Sekuritas Indonesia

Figure 12. Commodities will help improve the Indonesian economy in 2017 (pt) 90 88 86 84 82 80 78

76 74 2/3/2016 3/3/2016 4/3/2016 5/3/2016 6/3/2016 7/3/2016 8/3/2016 9/3/2016 10/3/2016 11/3/2016 12/3/2016 1/3/2017

Source: Bloomberg, Mirae Asset Sekuritas Indonesia

Mirae Asset Sekuritas Indonesia

5

February 3, 2017

Consumer

APPENDIX 1 Important Disclosures & Disclaimers Disclosures As of the publication date, PT Mirae Asset Sekuritas Indonesia, and/or its affiliates do not have any special interest with the subject company and do not own 1% or more of the subject company's shares outstanding.

Stock Ratings Buy

Industry Ratings

Hold

Relative performance of 20% or greater Relative performance of 10% or greater, but with volatility Relative performance of -10% and 10%

Sell

Relative performance of -10%

Trading Buy

Overweight

Fundamentals are favorable or improving

Neutral

Fundamentals are steady without any material changes

Underweight

Fundamentals are unfavorable or worsening

* Ratings and Target Price History (Share price (----), Target price (----), Not covered (■), Buy (▲), Trading Buy (■), Hold (●), Sell (◆)) * Our investment rating is a guide to the relative return of the stock versus the market over the next 12 months. * Although it is not part of the official ratings at Mirae Asset Sekuritas Indonesia, we may call a trading opportunity in case there is a technical or short-term material development. * The target price was determined by the research analyst through valuation methods discussed in this report, in part based on the analyst’s estimate of future earnings. The achievement of the target price may be impeded by risks related to the subject securities and companies, as well as gener al market and economic conditions. Analyst Certification The research analysts who prepared this report (the “Analysts”) are registered with the Indonesian jurisdiction and are subject to Indonesian securities regulations. They are neither registered as research analysts in any other jurisdiction nor subject to the laws and regulations thereof. Opinions expressed in this publication about the subject securities and companies accurately reflect the personal views of the Analysts primarily responsible for this report. Except as otherwise specified herein, the Analysts have not received any compensation or any other benefits from the subject companies in the past 12 months and have not been promised the same in connection with this report. No part of the compensation of the Analysts was, is, or will be directly or indirectly related to the specific recommendations or views contained in this report but, like all employees of PT Mirae Asset Sekuritas Indonesia, the Analysts receive compensation that is impacted by overall firm profitability, which includes revenues from, among other business units, the institutional equities, investment banking, proprietary trading and private client division. At the time of publication of this report, the Analysts do not know or have reason to know of any actual, material conflict of interest of the Analyst or PT Mirae Asset Sekuritas Indonesia except as otherwise stated herein. Disclaimers This report is published by PT Mirae Asset Sekuritas Indonesia (“Mirae”), a broker-dealer registered in the Republic of Indonesia and a member of the Indonesia Exchange. Information and opinions contained herein have been compiled from sources believed to be reliable and in good faith, but such information has not been independently verified and Mirae makes no guarantee, representation or warranty, express or implied, as to the fairness, accuracy, completeness or correctness of the information and opinions contained herein or of any translation into English from the Bahasa Indonesia. If this report is an English translation of a report prepared in the Indonesian language, the original Indonesian language report may have been made available to investors in advance of this report. Mirae, its affiliates and their directors, officers, employees and agents do not accept any liability for any loss arising from the use hereof. This report is for general information purposes only and it is not and should not be construed as an offer or a solicitation of an offer to effect transactions in any securities or other financial instruments. The intended recipients of this report are sophisticated institutional investors who have substantial knowledge of the local business environment, its common practices, laws and accounting principles and no person whose receipt or use of this report would violate any laws and regu lations or subject Mirae and its affiliates to registration or licensing requirements in any jurisdiction should receive or make any use hereof. Information and opinions contained herein are subject to change without notice and no part of this document may be copied or reproduced in any manner or form or redistributed or published, in whole or in part, without the prior written consent of Mirae. Mirae, its affiliates and their directors, officers, employees and agents may have long or short positions in any of the subject securities at any time and may make a purchase or sale, or offer to make a purchase or sale, of any such securities or other financial instruments from time to time in the open market or otherwise, in each case either as principals or agents. Mirae and its affiliates may have had, or may be expecting to enter into, business relationships with the subject companies to prov ide investment banking, market-making or other financial services as are permitted under applicable laws and regulations. The price and value of the investments referred to in this report and the income from them may go down as well as up, and investors may realize losses on any investments. Past performance is not a guide to future performance. Future returns are not guaranteed, and a loss of original capital may occur.

Mirae Asset Sekuritas Indonesia

6

February 3, 2017

Consumer

Distribution United Kingdom: This report is being distributed by Mirae Asset Securities (Europe) Ltd. in the United Kingdom only to (i) investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the “Order”), and (ii) high net worth companies and other persons to whom it may lawfully be communicated, falling within Article 49(2)(A) to (E) of the Order (all such persons together being referred to as “Relevant Persons”). This report is directed only at Relevant Persons. Any person who is not a Relevant Person should not act or rely on this report or any of its contents. United States: This report is distributed in the U.S. by Mirae Asset Securities (America) Inc., a member of FINRA/SIPC, and is only intended for major institutional investors as defined in Rule 15a-6(b)(4) under the U.S. Securities Exchange Act of 1934. All U.S. persons that receive this document by their acceptance thereof represent and warrant that they are a major institutional investor and have not received this report under any express or implied understanding that they will direct commission income to Mirae or its affiliates. Any U.S. recipient of this document wishing to effect a transaction in any securities discussed herein should contact and place orders with Mirae Asset Securities (America) Inc., which accepts responsibility for the contents of this report in the U.S. The securities described in this report may not have been registered under the U.S. Securities Act of 1933, as amended, and, in such case, may not be offered or sold in the U.S. or to U.S. persons absent registration or an applicable exemption from the registration requirements. Hong Kong: This document has been approved for distribution in Hong Kong by Mirae Asset Securities (Hong Kong) Ltd., which is regulated by the Hong Kong Securities and Futures Commission. The contents of this report have not been reviewed by any regulatory authority in Hong Kong. This report is for distribution only to professional investors within the meaning of Part I of Schedule 1 to the Securities and Futures Ordinance of Hong Kong (Cap. 571, Laws of Hong Kong) and any rules made thereunder and may not be redistributed in whole or in part in Hong Kong to any person. All Other Jurisdictions: Customers in all other countries who wish to effect a transaction in any securities referenced in this report should contact Mirae or its affiliates only if distribution to or use by such customer of this report would not violate applicable laws and regulations and not subject Mirae and its affiliates to any registration or licensing requirement within such jurisdiction.

Mirae Asset Sekuritas Indonesia International Network PT. Mirae Asset Sekuritas Indonesia Equity Tower 50th Floor Jl.Jend Sudirman, SCBD Lot 9 Jakarta 12190

Mirae Asset Securities Co. Ltd. (Seoul) Head Office 14, Eunhaeng-ro, Yeongdeungpo-gu Seoul 150-973 Korea Tel: 82-2-768-3026

Mirae Asset Securities (Hong Kong) Ltd. Suites 2005-2012 Two International Finance Centre 8 Finance Street, Central Hong Kong Tel: 85-2-2514-1304 Mirae Asset Securities (Singapore) Pte. Ltd. Six Battery Road #11-01 Singapore, 049909

United States Tel: 1-212-407-1000

Mirae Asset Securities (Europe) Ltd. 41st Floor, Tower 42 25 Old Broad Street London EC2N 1HQ United Kingdom Tel: 44-20-7982-8000

Tokyo Representative Office 7F, Yusen Building, 2-3-2 Marunouchi, Chiyoda-ku Tokyo 100-0005 Japan Tel: 81-3- 3211-5511

Beijing Representative Office 2401A, 24th Floor. East Tower Twin Tower, B-12 Jianguomenwai Avenue Chaoyang District, Beijing 100022 China Tel: 86-10-6567-9699

Shanghai Representative Office Room 38T31, 38F SWFC 100 Century Avenue, Pudong New Area, Shanghai, 200120 China Tel: 86-21-5013-6392

Ho Chi Minh Representative Office

Mirae Asset Investment Advisory (Beijing) Co., Ltd

Mirae Asset Securities (Mongolia) LLC

Suites 901B. Centec Tower 72-74 Nguyen Thi Minh Khai St, Ward 6 District 3, HCMC

2401B,24th Floor. East Tower Twin Tower, B-12 Jianguomenwai Avenue Chaoyang District, Beijing 100022 China

#406, Blue Sky Tower, Peace Avenue 17 1 Khoroo, Sukhbaatar District Ulaanbaatar 14240 Mongolia

Tel: 84-8-3910-6000

Tel: 86-10-6567-9699

Tel: 976-7011-0807

Tel: 62-21-515-1140 Mirae Asset Securities (America) Inc. 320 Park Avenue, 31st Floor. New York, NY 10022

Mirae Asset Sekuritas Indonesia

Tel: 65-6671-9845

7