BCAS Vista 15 Jan-20

Fitch Ratings, through its publication report, Fitch Ratings 2020 Outlook: Global Banks Compendium, published on 13th Jan-20, labels a stable rating outlook with a negative sector outlook for Indonesia Banking sector due to asset quality risk, tighter funding conditions and near-term M&A. Note that, out of 9 developing market being assessed in the report, 5 of them got negative outlook on their Banking sector, including China, India, Mexico and South Africa. (CNBC Indonesia)

 

Coal DMO target set higher than 2019

The Energy ministry has set coal DMO at 155mn tons, higher than 2019’s target of 128mn tons. The government has also set the production target at 550mn tons. Note that the 2019 DMO realization of 138mn tons has exceeded last year’s target. (Bisnis Indonesia)

 

Semarang – Demak toll road section II to operate by 2021

Director of Pembangunan Perumahan Semarang Demak, Handoko Yudianto, stated that Semarang – Demak toll road section II has began its construction with a completion target by 2021. Currently, land acquisition for section II has reached 60%. Note that Semarang – Demak section II total investment of IDR5.4tn and owned by PTPP, WIKA and M3. (Investor Daily)

 

Aggressive 2020 capex by plantation companies

Several plantation companies are allocating aggressive 2020 capex to support their expansion in the midst of better prospect of CPO price. CEO of Astra Argo Lestari (AALI), Santosa, stated that they are allocating 2020 capex of IDR1.3-1.6tn (23.1% YoY from the 2019’s allocation) with potential adjustments depending on the fluctuating CPO price. On the other hand, Sawit Sumbermas Sarana (SSMS) is allocating 2020 capex of IDR617bn (50.5% from 2019’s allocation). While, Sampoerna Agro (SGRO) also plans to allocate  IDR600bn for their 2020 capex, which have not change for the past 3 years. (Bisnis Indonesia)

Comment: This is in-line with our estimate. Our discussion with AALI confirms that more favorable CPO prices provide more room to set higher budget, especially for replanting program

 

Green light for renewal energy reference revision

The government has given its approval on the revision of electricity purchase reference price from renewal energy power plant, from previously cost method to the project’s IRR. The minister of energy, Arifin Tasrif, has stated that the reference price will depend on the project’s IRR and other barriers. While the government is still reviewing the scheme, there is a high possibility that the government will implement a feed in tariff, which will be implemented to a smaller capacity power plant. While pricing for a high capacity power plant will be through tender or direct appointment by PLN. (Bisnis Indonesia)

 

Truck and bus businesses’ concern on B30 implementation

Trucking and bus businesses are concerned with the B30 mixtures that could lead to a decline in machine performance. The Head of Indonesian Young Bus Employers (IPOMI), Kurnia Lesani Adnan, mentioned that the biodiesel implementation has causes the emergence of gel in the solar’s filter that leads to the bus companies would have to spend more expenses for filters. Currently, no solution has found yet to eliminate the gel formation. Note that, the B30 is the mixture of 70% pure solar from FAME and 30% palm oil. (Bisnis Indonesia)

 

Government plans to change subsidy scheme for 3kg gas in 2H20

The government plans to change the scheme for subsidy on 3kg gas (LPG) starting 2H20. Although the government has not decided the new method for subsidy disbursement, one of the option will be using the QR code technology, where low income household will receive the subsidy when they purchase 3kg gas. Note that after implemented, all of the 3kg gas will be sold at market price, and ESDM ministry expects ~30% saving in term of yearly subsidy. (Investor Daily)

 

Government plans to carry out 270 projects equivalent to IDR353.4tn in Central Java 

Government plans to carry out 270 projects equivalent to IDR353.4tn in Central Java for the next 5 years as a strategy to accelerate the Central Java’s economy, which will be done through various schemes, including Public Private Partnership (KPBU), with an estimation of 42.56% equivalent to IDR150.4tn of the total projects. 107 out of 270 projects will be listed in National Medium-Term Development Plan (RPJMN) 2020-2024, and the other 163 projects will be listed in the Ministry’s annual strategic plan. According to a document received by Bisnis Indonesia:

•   107 projects included in RPJMN 2020-2024 will be divided to 2 categories: 68 projects which are linked with major projects, from the construction of Solo-Jogja toll road to Pertamina's refinery development master plan (RDMP) in Cilacap; and the other 39 projects will be accommodated in the RPJMN 2020-2024 development matrix.

•   As instructed by the President, 3 regions will become a priority of the development acceleration, which are 1) The Regions Strategic National Tourism (KSPN) in Borobudur, 2) The development in Kendal Industrial Estate (KIK), and 3) The development in Brebes Industrial Estate (KIB)

(Bisnis Indonesia)

 

Wijaya Karya (WIKA) booked IDR42tn new contract in 2019 ; Targets IDR65tn new contract in 2020

WIKA booked IDR42tn (-16% YoY) new contract until Dec-19, which accounts for 69% of total FY19 targets. The last new contract in Dec – 19 comes from the construction of smelter in Bangka, with a total contract of IDR770bn. In 2020, the company set IDR65tn new contract targets (+7% YoY).

Comment: Soft 2019 realization was somewhat anticipated. WIKA’s FY20 new contract target is relatively in line with ours of IDR61tn.

 

Salim Group became majority shareholder of Bank Ina

Based on the material information disclosed on IDX, Anthony Salim has officially became the ultimate shareholder of Bank Ina Perdana (BINA) through Indolife Pensiontama, alongside with Pieter Tanuri, through Philadel Terra Lestari. Note that, Indolife Pensiontama currently has 22.47% ownership on BINA, while Philadel Terra Lestari owns 9.98%. (Bisnis Indonesia, Bloomberg, IDX)

 

Blue Bird (BIRD) plans to add 200 electric cars

BIRD plans to expand their EV fleet by adding another 200 cars. Note that currently the company only operates a total of 29 units of EV. The next expansion in the pipeline will be expansion for the rental fleet, where currently company operates a total of 5k rental units. (Kontan)

 

Bank CIMB Niaga (BNGA) to focus on consumer and SME segment

BNGA’s CEO, Tigor M. Siahaan, stated that the company will focus on SME and consumer segment, particularly mortgage segment, as these two segments have successfully contributed the highest loan growth during 2019. In addition, 2019 mortgage growth stood at 12% YoY, while 2019 SME still grew at a double digit number. (Bisnis Indonesia)

 

Lippo Karawaci (LPKR) issued USD325mn bonds

LPKR has issued a five-year bond, with interest of 8.125%, valued at USD325mn on 14th Jan-20. The proceed will be allocated to partially repay their USD410mn bonds which will mature in 2022 (7.0% p.a.) while company is currently on the progress in securing a loan facility to refinance the remaining. (Company)

 

Morris Garage (MG) to enter Indonesia

MG, a Chinese – British car manufacturer, will enter the Indonesian market this year. A representative of Gaikindo has stated that MG has enlisted to Gaikindo and is prepared to join GIIAS later this year. There are still no details on the value of investment to setup the production line. Note that MG is a subsidiary of Shanghai Automotive Industry Corporation (SAIC), a part of SAIC-General Motors-Wuling Alliance. (Bisnis Indonesia)