INP_041514_03535

1 Refer to important disclosures on the last of this report

Our preferred infrastructure plays The construction sector is a key beneficiary of post-election infra spending Rising contracts-in-hand supports earnings growth and visibility We forecast sector earnings to grow by a 25% CAGR in FY13-16F We reiterate our bullish view. Top picks: PTPP (unchanged); WSKT (new) We remain bullish on all four construction stocks in our coverage, despite their massive outperformance so far in 2014 (+62% vs JCIs +9%), as we view the sector as a key beneficiary of post-election infrastructure spending. We forecast sector earnings to grow by a 25% CAGR in FY13-16F on the back of rising contracts-in-hand, expanding higher-margin precast concrete and property businesses, and better risk management, while concerns over the negative impact of currency weakness appear to be diminishing. We have added WSKT to our sector picks, along with PTPP. Infrastructure is a key economic policy issue Post-elections in 2014, a new government will likely focus on accelerating infrastructure projects to show results and achieve stronger economic growth. This is evident from the focus on infrastructure development in the economic policies promoted by most major political parties during the campaign period. Although the funding of these projects from the state budget may continue to be restrained by large fuel-subsidy spending, we expect most infrastructure financing to come from SOEs and public-private partnership (PPP) programs. Contracts-in-hand support earnings visibility The four construction companies have contracts-in-hand totaling Rp118tn in 2013, equivalent to nearly 3 years of revenue. This, coupled with a trend towards higher-margin pre-cast concrete and property businesses, better risk management and diminishing concerns over the impact of currency weakness, should support earnings visibility in the sector, in our view. WIKA and PTPP have by far the largest value of contracts-in-hand relative to revenues, reflecting their focus on multi-year projects, while ADHI is more exposed to single-year projects. Strong earnings growth outlook We forecast earnings of the four companies to grow by 25% CAGR in FY13-16F on the back of existing contracts-in-hand and a 21% CAGR in new contracts (including joint-operations). The corresponding growth of earnings and new contracts in FY10-13 were 30% and 34% CAGR, respectively, reflecting the launch of the MP3EI infrastructure development master-plan in 2011. Target price upgrades We reiterate our bullish view on the sector despite its strong outperformance year-to-date, as we believe the sector valuation is still undemanding. We have raised our target prices for WIKA, PTPP and ADHI by 21-54% and for WSKT by a steep 75%, mainly due to our FY14-15F earnings upgrades of 29-53% on our higher margin assumptions. Our revised TPs imply a target FY15F P/E of 16.4x for the sector. We believe this is still not demanding compared with the broader market, which is currently trading at a FY15F P/E of around 14x. Our top picks are PTPP and WSKT (due to their lower valuations than WIKA).

Ticker M.Cap

Rec Price (Rp)

Target (Rp)

Upside (%)

P/E at CP EPS growth (%)

P/E at TP

USDMn FY14F FY15F FY14F FY15F FY14F FY15F

ADHI 442 BUY 2,860 4,000 39.9 11.7 9.5 8.0 24.3 14.8 11.9

PTPP 709 BUY 1,790 2,200 22.9 16.6 12.1 23.8 37.2 20.5 14.9

WIKA 1,138 BUY 2,360 2,900 22.9 20.5 15.8 23.3 30.1 25.2 19.4

WSKT 577 BUY 760 1,000 31.6 15.9 12.2 24.7 41.4 21.0 16.0

Sector 17.3 13.2 21.4 33.2 21.6 16.4

Source: IndoPremier, Bloomberg. Closing price 11 April 2014

15 April 2014

Stocks Ticker Adhi Karya ADHI IJ Pembangunan Perumahan PTPP IJ Wijaya Karya WIKA IJ Waskita Karya WSKT IJ Share Performance

3 M 6 M 12 M

Absolute (%) 43.7 45.2 18.5

Relative to JCI (%) 33.8 38.4 20.8

52-wk range (Rp) 3,578 7,296

Price Chart

60

70

80

90

100

110

120

130

140

150

160

21-Mar 21-Jun 21-Sep 21-Dec 21-Mar

JCI IP Construction Basket Index

IP Construction Basket is an index that consists of ADHI, PTPP, WIKA and WSKT Source: Bloomberg

Natalia Sutanto [email protected] +62 21 5793 1168

EQUITY RESEARCH

Construction Sector

Sector Update

2

Sector Update

Quick Comparisons

Ytd relative share price performance Rolling P/E of four construction companies (2009 start)

72.8%

56.2%

31.5%

21.3%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

ADHI WSKT PTPP WIKA

Source: Bloomberg Source: Bloomberg, IndoPremier

Contracts-in-hand vs revenues, FY14F (Rp tn) Source of contracts, FY13

30.0

43.0

19.4 19.0

14.1 14.5 11.8 12.2

-

10.0

20.0

30.0

40.0

50.0

WIKA PTPP WSKT ADHI

Contracts-in-hand Revenue

6548

6678

3552

3422

0%

20%

40%

60%

80%

100%

WIKA PTPP WSKT ADHI

Govt/SOE Other

Source: IndoPremier Source: Companies

FY14-15F earnings growth (%) Gross profit contribution, FY14F

23.3 23.8 24.7

8.0

30.1

37.2

53.6

24.3

-

10.0

20.0

30.0

40.0

50.0

60.0

WIKA PTPP WSKT ADHI

2014F 2015F

49.3

94.5 96.5 83.8

50.7

5.5 3.5 16.2

0%

20%

40%

60%

80%

100%

WIKA PTPP WSKT ADHI

Construction related Property, precast, mining

Source: Companies, IndoPremier Source: Companies, IndoPremier

0

5

10

15

20

25

30

Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14

ADHI PTPP WIKA WSKT

3

Sector Update

An earnings upgrade based on expected improved margins ahead Three construction companies (ADHI, WSKT and PTPP) out of four in our coverage reported 9-16% higher-than-consensus estimates of FY13 earnings, with above estimate margins as well. We believe improved risk management, as well as increasing contracts-in-hand, was the reason behind this good result. Therefore, we have upgraded our FY14-15F earnings by 2-10%, and given a major upgrade to WSKT. Previously, we saw a risk of lower FY14-15 margins at WSKT as a result of a high government single-year project contribution to FY13 new contracts. Going into 2014, we have more confidence in WSKT following the companys focus to maintain its margins going forward through selective project acquisitions. In 2015, we also estimate a significant increase in profits from joint-operations (JO), due to the revenue recognition from a property project in Alam Sutera (Serpong) and pre-cast plants. Thus, we have revised up our WSKT FY14-15F earnings by 29-53%.

2013 2014F 2015F Drivers

Revenue ADHI -6.1% 1.0% 9.2% Higher FY15 revenue on stronger FY14-15

growth in new contracts Net profit ADHI 3.6% 1.9% 6.7% Spill-over effect of higher FY15 revenue with

maintained margins WIKA 1.8% 4.0% 9.8% Improved margins on more oil and gas

projects WSKT 8.0% 29.3% 53.2% Higher JO profit from property and improved

FY14-15 margins on the construction division Source: IndoPremier

. also led to higher TPs with a further rerating Construction companies share prices have outperformed the JCI by 62% ytd, with the expectation that a new government will prioritize infrastructure development, with construction companies the major beneficiaries. Therefore, in line with our expectation of seeing improved margins from most of these construction companies, we expect a further rerating ahead and therefore upgrade our TPs by 20-75%. Based on our new TPs, we expect the construction sector to trade at a FY15F P/E of 16.4x, which is in line with the broader market.

Old forecast

New forecast

% TP Increase

Old TP P/E 14F P/E 15F New TP P/E 14F P/E 15F

ADHI 2,600 7.1 9.2 4,000 16.4 13.2 54%

PTPP 1,750 12.1 11.9 2,200 20.5 14.9 26%

WIKA 2,400 17.4 17.6 2,900 25.2 19.4 21%

WSKT 570 13.8 13.0 1,000 21 16 75%

Sector 14.3 14.4

21.8 16.4

Source: IndoPremier

4

Sector Update

Peer comparison

WIKA PTPP WSKT ADHI Sector

Recommendation BUY BUY BUY BUY

Target price (Rp) 2,900 2,200 1,000 4,000

Current price (Rp) 2,120 1,675 685 2,805

Upside (%) 36.8 31.3 46.0 42.6

Market cap (Rp tn) 13.0 8.1 6.6 5.1

Avg daily turnover (Rp bn) 88.3 37.5 56.3 83.7

Market cap (USDMn) 1,138 709 577 442

Avg daily turnover (USD million) 7.7 3.3 4.9 7.3

Float (%) 34.6% 42.8% 32.0% 49.0%

Majority shareholder Govt of Indonesia (65.2%)

Govt of Indonesia (51%)



PE (FY14F) at TP (x) 25.2 20.5 21.0 16.4 21.8

PE (FY15F) at TP (x) 19.4 14.9 14.8 13.2 16.4

PE (FY14F) at CP (x) 18.4 15.6 14.4 11.5 15.8

PE (FY15F) at CP (x) 14.2 11.4 10.2 9.3 11.9

ROE FY14F (%) 18.4 21.9 16.3 23.6 19.7

Gross margin after JO FY14F (%) 13.6 11.4 10.4 13.1 12.3

Operating margin FY14F (%) 10.4 9.8 6.9 9.8 9.5

Net margin FY14F (%) 5.0 3.6 3.9 3.6 4.2

Debt to equity FY14F (%) 53.7 96.1 72.2 95.7 74.4

Interest coverage FY14F (x) 24.0 4.0 3.2 9.2 12.6

FY14F Earnings growth (%) 23.3 23.8 24.7 8.0 21.4

FY15F Earnings growth (%) 30.1 37.2 41.4 24.3 33.2 Source: IndoPremier, Bloomberg. Closing price: 11 April 2014

5

Sector Update

Bigger and better Large contracts-in-hand should support visibility of revenue and earnings As an experienced port developer, we expect more major projects with

significant contract values ahead Diversification into higher-margin businesses (property and pre-cast) Undemanding valuation; PTPP is our top pick, with a TP of Rp2,200

We reiterate our BUY recommendation on PTPP on the back of: 1) large contracts-in-hand of Rp47tn, which would translate into greater visibility on revenue and earnings; 2) on track to obtain major projects (Pelindo, PLN) given its experience in the port and electricity businesses. We expect PTPP to book a FY13-16F earnings CAGR of 27% with a net margin in the range 3.6%-3.9%. Diversification efforts into pre-cast and property will also sustain earnings growth ahead. BUY with a higher TP of Rp 2,200, translating into an implied 2014-15 P/E of 20.5x-14.9x.

Large contracts-in-hand for greater earnings visibility In 2013, PTPP booked new contracts worth Rp19.6tn, with major contributions from building (57%), EPC (13%) and roads & bridges (13%). This led to FY14F total contracts-inhand of Rp43tn (including JO Rp47tn), providing greater visibility on our FY14F revenue forecast of Rp14.5tn, +24% yoy. Indonesias huge infrastructure development needs, which will be realized through increased projects from government and SOEs, should support the company to book FY14F new contracts of Rp23tn, +20% yoy. By 1Q14, PTPP had booked new contracts worth Rp3.6tn (15% of our FY14F target), mostly from coal terminal construction in East Kalimantan and property projects.

In line for the next major projects Backed by its experience in developing Phase I of the Kalibaru Port, we expect PTPP to be in line for further major projects from Pelindo, which has stated its intention of expanding the new port (Phases II and III), as well as developing existing ports in several provinces across Indonesia. The recently completed Compressed Natural Gas (CNG) storage owned by PLN also provides a sound track record of accomplishment for PTPP, given its position as the license holder to build an upcoming five new CNG storages.

FY13-16F earnings CAGR of 27% PTPP reported higher-than-expected FY13 earnings, at about 9% above consensus, but in line with our forecast. In 2014, we estimate the company to book a FY14F top line of Rp14.5tn, translating into a FY12-14F CAGR of 29%. We estimate a FY14F net profit of Rp521bn, +24% yoy with maintained margin at 3.6%. Downside risk to our forecast is a high contribution of building (57%) to FY13 new contracts, which could distort construction margins if there are defaults from project owners resulting in higher allowance for bad receivables.

Expanding business with attractive valuation, reiterate BUY PTPP is trading at attractive valuation of a FY14F P/E of 15.6x, at par with the sector P/E of 15.8x. The companys expansion into property and precast, as well as swelled FY14F contracts-in-hand, should continue to support PTPPs outperformance, in our view. Thus, we reiterate our BUY recommendation on PTPP with a TP Rp2,200, and an implied FY15F P/E of 14.9x.

Key Financials 2012A 2013A 2014F 2015F 2016F

Revenue (Rp bn) 8,004 11,656 14,504 18,347 22,047 Gross profit (Rp bn) 855 1,273 1,532 1,945 2,338 Operating profit (Rp bn) 853 1,168 1,417 1,806 2,160

Net income (Rp bn) 310 421 521 714 870 EPS (Rp) 64 87 108 148 180 EPS growth (%) 29 36 24 37 22 P/E (x) 26.2 19.3 15.6 11.4 9.3 P/BV (x) 4.9 4.1 3.4 2.8 2.3 EV/EBITDA (x) 5.2 8.8 7.7 6.1 5.2 ROE (%) 19 21 22 24 24

Source: PTPP, IndoPremier estimates. Closing price 11 April 2014

PTPP IJ BUY Target Price Rp2,200 Previous TP Rp1,750 Current Price Rp1,675 Upside (downside) 31% Share Performance

3 M 6 M 12 M

Absolute (%) 27.4 50.9 30.9

Relative to JCI (%) 17.5 44.1 33.1

52-wk range (Rp) 830 1,960

Price Chart

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200

21-Mar 21-Jun 21-Sep 21-Dec 21-MarJCI PTPP

Source: Bloomberg

Share Data

Out shares (m) 4,842

Market Cap (US$ m) 710.6

6 M avg.daily (US$) 2,886,745

Shareholder Information

Government of Indonesia 51.0%

Employees Cooperative 6.1%

Free float 42.9%

Pembangunan Perumahan

6

Sector Update

Large contracts-in-hand for greater revenue visibility (Rp tn)

FY13-16F new contracts CAGR of 18% (Rp tn)

23.9

33.9

43.0

54.9

65.5

8.0 11.7

14.5 18.3

22.0

-

10.0

20.0

30.0

40.0

50.0

60.0

70.0

2012 2013 2014F 2015F 2016F

Contracts in hand Revenue

19.6

23.4

29.3

32.2

15.0

20.0

25.0

30.0

35.0

2013 2014F 2015F 2016F

Source: PTPP, IndoPremier Source: PTPP, IndoPremier

Revenue contributions, FY10-15F Increasing revenue with improved margin

82%85% 86% 87% 87%

17%12% 12% 11% 11%

60%

80%

100%

2012 2013 2014F 2015F 2016F

Construction EPC Realty Property

Source: PTPP, IndoPremier Source: PTPP, IndoPremier

PTPP rolling P/E PTPP relative share price performance

0

5

10

15

20

Feb-10 Feb-11 Feb-12 Feb-13 Feb-14

19x (+2 Std. Dev.)

15x (+1 Std. Dev.)

5x (-2 Std. Dev.)

12x (average)

8x (-1 Std. Dev.)

31.5%

-7.2%

17.5%

44.1%

33.1%

-10%

0%

10%

20%

30%

40%

50%

Ytd 1 Mo 3 Mo 6 Mo 12 Mo

Source: Bloomberg, IndoPremier estimates Source: Bloomberg

3.9%

3.6% 3.6%

3.9%

3.9%

2.0%

2.5%

3.0%

3.5%

4.0%

4.5%

0

5

10

15

20

25

2012 2013 2014F 2015F 2016F

Revenue (Rp tn) Net Profit Margin (RHS)

7

Sector Update

Financial Summary

Income Statement

Balance Sheet

Year to Dec 31 (Rp bn) 2013 2014F 2015F 2016F


Revenue and sales 11,656 14,504 18,347 22,047 Cash 2,397 1,890 1,662 1,843

COGS 10,383 12,972 16,402 19,709 Receivables 6,418 7,982 9,895 11,433

Gross profit 1,273 1,532 1,945 2,338

Inventories 1,777 2,239 2,921 4,314

Operating income 1,168 1,417 1,806 2,160 Investments 290 308 328 347

Interest expense (267) (297) (286) (326) Fixed assets 377 609 859 1,079

Impairment expense (107) (133) (165) (190)

Other 1,157 1,449 1,913 2,317

EBT 767 947 1,299 1,582 Total assets 12,416 14,477 17,578 21,334

Tax (346) (426) (584) (712) Payables 6,726 8,048 10,207 12,552

EAT 421 521 714 870

Interest bearing debts 2,065 2,285 2,202 2,506

Non-controlling interest (0) (0) (0) (0)

Shareholders' equity 1,984 2,378 2,936 3,592

Net profit 421 521 714 870 Non-controlling interest 1 1 1 1

Other 1,641 1,765 2,232 2,682

Total liabilities & equity 12,416 14,477 17,578 21,334

Cash Flow Statement

Key Ratios

Year to Dec 31 (Rp bn) 2013 2014F 2015F 2016F Year to Dec 31 2013 2014F 2015F 2016F

Net income 421 521 714 870

Profitability

Depreciation 12 18 25 31

Gross margin 10.9% 10.6% 10.6% 10.6%

Non cash adjustments 1 0 0 0 Gross margin after JO 11.7% 11.4% 11.4% 11.4%

Net interest effect 255 282 275 309 EBITDA margin 10.1% 9.9% 10.0% 9.9%

Changes in net WC 24 (967) (714) (809)

Pre-tax margin 6.6% 6.5% 7.1% 7.2%

CFO 712 (147) 300 401 Net margin 3.6% 3.6% 3.9% 3.9%

Capex (148) (260) (285) (260) ROA 3.4% 3.6% 4.1% 4.1%

Change in non-current assets (16) (3) (7) (8)

ROE 21.2% 21.9% 24.3% 24.2%

Interest income 13 15 11 17

CFI (152) (248) (280) (251) Growth

Debts (314) 103 (82) 304

Revenue and sales 45.6% 24.4% 26.5% 20.2%

Equity issuance 0 - - - EBITDA 37.2% 21.6% 27.6% 19.7%

Interest expenses (267) (297) (286) (326) Pre-tax profit 40.6% 23.5% 37.2% 21.8%

Dividends (93) (126) (156) (214)

Net profit 35.8% 23.8% 37.2% 21.8%

Other 1,208 208 278 267

EPS 35.8% 23.8% 37.2% 21.8%

CFF 534 (112) (247) 31

Leverage

Cash flow 1,094 (507) (227) 181

Debt to asset 16.6% 15.8% 12.5% 11.7%

Beginning cash balance 1,303 2,397 1,890 1,662 Debt to equity 104.1% 96.0% 75.0% 69.7%

Ending cash balance 2,397 1,890 1,662 1,843

Net debt/(cash) to equity -16.6% 16.6% 18.4% 18.5%

Interest cover (x) 4.4 4.8 6.4 6.7 Sources: PTPP, IndoPremier estimates

8

Sector Update

Better days ahead, upgrade TP to Rp1,000 Selective project acquisitions for improved risk mitigation Further income diversified from FY15 onwards into property and precast Major beneficiary of government infrastructure spending Reiterate our BUY call with a higher TP of Rp1,000/share

We believe WSKT will continue to see better days ahead with greater earnings visibility, supported by (1) improved risk management through selective project acquisitions, (2) mounting contracts-in-hand, and (3) further diversification into pre-cast and property, as well as investment projects including power plants and toll roads. Following higher-than-expected FY13 earnings, we have upgraded our FY14-15F earnings by 29-53%, as we expect the company to improve margins going forward. We believe WSKT will remain a major beneficiary of increasing government and SOE spending ahead, which could contribute 70-80% of the companys total contracts. We reiterate our BUY with a higher TP of Rp1,000/share

Selective project acquisitions would sustain high margins As the only pure construction play, Waskita has improved its profitability through continued efficiencies, lowering financing cost combined with an enlarged FY11-13 new contract CAGR of 34%, which led to a FY11-13 earnings CAGR of 44% and a near doubling of FY13 net margin to 3.8% (FY10: 2.1%). To mitigate the impact of currency weakness last year, the company has persistently negotiated for USD-linked contracts, resulting in only 12% of total contracts being negatively impacted by rupiah depreciation. This small portion of total contracts was offset by the companys receivables in USD. In 2014, the companys focus on improved risk management by selective project acquisitions based on required margins should sustain the margin improvement story ahead, in our view.

On track to book FY14 new contracts of Rp15.7tn In March 2014, the company reported 1Q14 new contracts of Rp3.3tn, on track to reach our FY14 new contracts target of Rp15.7tn (including JO), +19% yoy. The companys continued focus on government infrastructure and SOE projects (70-80% of total portfolio) should generate sizeable contracts this year, in our view. Total 2014 contracts-in-hand of Rp25.3tn should also provide greater earnings visibility this year.

Diversified earnings from 2015 onwards; reiterate BUY with a higher TP We estimate WSKT to book strong FY14-15F top line growth of 22%. Combined with additional JO earnings from property, we estimate the company to book strong FY14-15F bottom line growth of 25-41%, with a net margin ranging from 3.9-4.5%. Going forward, WSKT will continue to diversify into property (adding two new projects), and precast (building new plants), as well as investments in power plants (total five new power plants in the next five years) and toll roads. Reiterate our BUY recommendation on WSKT with a higher TP of Rp1,000 as our second top pick, translating into an undemanding FY14-15 P/E of 21.0x and 14.8x. Risks to our call would include lower-than-expected project acquisitions/realizations, and higher funding costs.

Sources: WSKT, IndoPremier estimates. Closing price 11 April 2014

WSKT IJ BUY Target Price Rp1,000 Previous TP Rp570 Current Price Rp685 Upside (downside) 46% Share Performance

3 M 6 M 12 M

Absolute (%) 34.3 18.1 -2.1

Relative to JCI (%) 24.4 11.3 0.1

52-wk range (Rp) 400 1,080

Price Chart

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21-Mar 21-Jun 21-Sep 21-Dec 21-Mar

JCI WSKT Source: Bloomberg

Share Data



6 M avg.daily (US$) 3,534,375



Free float 32.0%


Revenue (Rp bn) 8,808 9,687 11,836 14,432 18,108

Gross profit (Rp bn) 732 911 1,066 1,334 1,672 Operating profit (Rp bn) 540 672 822 1,090 1,425

Net income (Rp bn) 254 368 459 649 916 EPS (Rp) 26 38 48 67 95 EPS growth (%) -8 45 25 41 41 P/E (x) 26.0 17.9 14.4 10.2 7.2 P/BV (x) 3.3 2.8 2.3 1.9 1.5 EV/EBITDA (x) 25.6 14.0 11.6 8.9 6.6

ROE (%) 13 15 16 19 21

Waskita Karya

9

Sector Update

Increasing new contracts, FY12-16F (Rp tn) Government and SOEs as major contract contributors

12.3 13.2

15.7

19.7

24.9

10.0

15.0

20.0

25.0

30.0

2012 2013 2014F 2015F 2016F

32%23% 22%

39%23%

11% 23% 22%

27%

23%

56% 54% 56%

34%

54%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2010 2011 2012 2013 2014F

Private SOE Government

Source: WSKT, IndoPremier Source: WSKT, IndoPremier

Increasing contracts-in-hand for greater revenue visibility (Rp tn)

Strong earnings growth with expanding margin

18.8

22.0

25.3

30.3

37.3

8.8 9.7 11.8

14.4

18.1

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

2012 2013 2014F 2015F 2016F

Total contracts-in-hand Revenue

2.0%

2.5%

3.0%

3.5%

4.0%

4.5%

5.0%

5.5%

-

200

400

600

800

1,000

1,200

1,400

2012 2013 2014F 2015F 2016F

Net profit - Rp bn (LHS) Net margin (RHS)

Source: WSKT, IndoPremier Source: WSKT, IndoPremier

WSKT rolling P/E WSKT relative share price performance

5

10

15

20

25

Dec-12 Mar-13 Jun-13 Sep-13 Dec-13 Mar-14

22x (+2 Std. Dev.)

18x (+1 Std. Dev.)

7x (-2 Std. Dev.)

14x (average)

11x (-1 Std. Dev.)

56.2%

-13.3%

24.4%

11.3%

0.1%

-20%

-10%

0%

10%

20%

30%

40%

50%

60%


Source: Bloomberg, IndoPremier Source: Bloomberg

10

Sector Update

Earnings revision

Changes in earnings forecast

Old

New

Changes

2013F 2014F 2015F 2013A 2014F 2015F 2013A 2014F 2015F

Revenue 10,370 12,117 14,149 9,687 11,836 14,432 -6.6% -2.3% 2.0%

Gross profit 881 1,007 1,179 911 1,066 1,334 3.3% 5.9% 13.1%

Gross profit after JO 987 1,130 1,323 1,012 1,225 1,568 2.6% 8.4% 18.5%

Operating profit 646 722 833 672 822 1,090 4.0% 13.9% 30.9%

Net profit 341 355 424 368 459 649 8.0% 29.3% 53.2%

Margins

GPM 8.5% 8.3% 8.3% 9.4% 9.0% 9.2%

GPM after JO 9.5% 9.3% 9.3% 10.5% 10.4% 10.9%

OPM 6.2% 6.0% 5.9% 6.9% 6.9% 7.6%

NPM 3.3% 2.9% 3.0% 3.8% 3.9% 4.5%

Source: WSKT, IndoPremier estimates

11

Sector Update

Financial Summary

Income Statement

Balance Sheet


Year to Dec 31 (Rp bn)

2013 2014F 2015F 2016F


COGS 8,776 10,770 13,098 16,436

Receivables 2,003 2,292 2,795 3,507

Gross profit 911 1,066 1,334 1,672

Inventories 194 37 45 56

Gross profit after JO 1,012 1,225 1,568 2,008 Investments 196 196 196 196

Operating income 672 822 1,090 1,425

Fixed assets 453 707 898 1,076

Interest expense (97) (132) (136) (138)

Other 4,823 5,706 6,967 8,324

Impairment expense 5 6 6 6 Total assets 8,788 10,530 12,430 15,064

EBT 611 722 970 1,320

Payables 4,228 4,669 5,670 7,103

Tax (243) (263) (321) (404)

Bank loans/bonds 1,623 2,033 2,099 2,121

EAT 368 459 649 916 Shareholders' equity 2,382 2,815 3,427 4,291

Non-controlling interest 0 0 0 0 Non-controlling interest 1.0 1.0 1.0 1

Net profit 368 459 649 916 Other 554 1,012 1,233 1,547

Total liabilities and equity 8,788 10,530 12,430 15,064

Cash Flow Statement

Key Ratios


Net income 368 459 649 916

Profitability

Depreciation 52 46 59 71 Gross margin 9.4% 9.0% 9.2% 9.2%

Non cash adjustments 1 - - -

Gross margin after JO

10.5% 10.4% 10.9% 11.1%

Net interest effect 70 108 113 109

EBITDA margin 7.5% 7.3% 8.0% 8.3%

Changes in net wc (623) 184 (182) (35) Pre-tax margin 6.3% 6.1% 6.7% 7.3%

CFO (133) 797 639 1,061

Net margin 3.8% 3.9% 4.5% 5.1%

Capex (480) (801) (711) (681)

ROA 4.2% 4.4% 5.2% 6.1%

Change in non-current assets (2) - - -

ROE 15.4% 16.3% 18.9% 21.3%


CFI (455) (777) (688) (652) Growth

Debts (296) 410 66 22 Revenue and sales 10.0% 22.2% 21.9% 25.5%

Equity issuance 30 - - -

EBITDA 32.7% 20.0% 32.3% 30.2%

Interest expenses (97) (132) (136) (138) Pre-tax profit 32.9% 18.1% 34.4% 36.1%

Dividends (20) (29) (37) (52) Net profit 44.9% 24.7% 41.4% 41.2%

Other (90) 200 94 134

EPS 44.9% 24.7% 41.4% 41.2%

CFF (474) 449 (13) (35)

Leverage

Cash flow (1,062) 470 (61) 374

Debt to asset 18.5% 19.3% 16.9% 14.1%

Beginning cash balance 2,184 1,122 1,592 1,531 Debt to equity 68.1% 72.2% 61.2% 49.4%


Net debt/(cash) to equity 21.1% 15.7% 16.6% 5.0%

Interest cover (x) 7.5 6.6 8.4 10.9 Sources: WSKT, IndoPremier estimates

12

Sector Update

Most diversified High-margin businesses contribute 45-50% to WIKAs profit Expanding property, precast and mining businesses Large contracts to support FY14-15 revenue Reiterate BUY with a higher TP of Rp2,900

WIKA has successfully diversified its revenue sources towards higher- margin businesses, which now account for 30-33% of the top line and contributes 45-50% to WIKAs earnings. The recent acquisition of asphalt/bitumen producer (Sarana Karya) will enable WIKA to form vertical integration supporting its main construction business. Continued expansion into related businesses such as property and precast, as well as the companys proven capabilities in the oil and gas sector, should pave the way for sustainable earnings growth, in our view. Thus, we upgrade our TP to Rp2,900 with an implied FY14-15F P/E of 25.2x-19.4x. BUY

Large contracts, mostly from government and SOEs In 2014, WIKA will continue to focus on projects funded by government and SOEs (61% of total), as well as the private sector, mostly in the oil and gas sector. By 1Q14, WIKA had obtained Rp4.8tn new contracts, mostly from two EPC projects from Pertamina, which should support our FY14F new contract target of Rp20tn. Large FY14F total contracts-in-hand totaling Rp44tn should also support greater revenue and earnings visibility.

Diversifying towards higher-margin businesses WIKA has successfully diversified its revenue stream towards higher-margin businesses. With the recent acquisition of Sarana Karya, businesses that produced double-digits margin (precast, property and mining/asphalt sales) will contribute around 30% of the companys total top line. However, these businesses should provide greater impact on earnings with a 45-50% contribution, enabling WIKA to maintain its position in SOE construction with the highest margins among its peers.

Unlocking value from WIKA Beton, support for expansion ahead Through the listing of WIKA Beton, the company obtains Rp1.2tn to finance further expansions ahead. The company plans to add another three precast plants in the next three years, bringing total capacity to 2.6mn tons by 2016. Having a larger capacity than its competitors, we believe the expansion of pre-cast should support the companys vertical integration into the construction industry and provide economies of scale for more competitive contracts going forward.

More investments to sustain earnings, reiterate BUY with a higher TP WIKA has several expansion plans in the pipeline to sustain future earnings. Other than pre-cast and property, the company will also focus more on investments, including water projects, the leasing of container terminals and industrial plants. Once materialized, these projects should generate recurring income and sustainable earnings going forward. We estimate WIKA to book a FY13-16F earnings CAGR of 24%, with improved margins. We reiterate our BUY recommendation with a TP Rp2,900, translating to an implied FY14-15 P/E of 25.2x-19.4x. WIKAs premium valuation is warranted in our view, given its high net margins compared with its peers, its diversified businesses, proven track record, and solid expansion plan. BUY.


Revenue and sales (Rp bn) 9,905 11,885 14,129 17,124 20,044 Gross profit (Rp bn) 958 1,322 1,595 1,953 2,319 Operating profit (Rp bn) 870 1,216 1,475 1,780 2,088 Net income (Rp bn) 476 570 703 914 1,100

EPS (Rp) 78 93 115 150 180 EPS growth (%) 32.6 19.7 23.3 30.1 20.4 P/E (x) 27.2 22.7 18.4 14.2 16.1

P/BV (x) 4.6 4.0 3.4 2.8 3.2 EV/EBITDA (x) 9.2 13.5 11.2 9.2 7.1 ROE (%) 16.8 17.7 18.4 20.0 20

Source: WIKA, IndoPremier estimates. Closing price 11 April 2014

WIKA IJ BUY Target Price Rp2,900 Previous TP Rp2,400 Current Price Rp2,120 Upside (downside) 37% Share Performance

3 M 6 M 12 M

Absolute (%) 9.3 12.2 -3.6

Relative to JCI (%) -0.6 5.4 -1.4

52-wk range (Rp) 1,350 2,900

Price Chart

60

80

100

120

140

160

180

21-Mar 21-Jun 21-Sep 21-Dec 21-MarJCI WIKA

Source: Bloomberg

Share Data


Market Cap (US$ m) 1,139.3

6 M avg.daily (US$) 5,358,674



Free float 34.8%

Wijaya Karya

13

Sector Update

Precast, property and Asphalt, which generate double-digit gross margins, contribute around 30-33% to revenue .

. with higher contributions (45-50%) to gross profit

70% 67% 67% 68%

30% 33% 33% 32%

0%

20%

40%

60%

80%

100%

2012 2013 2014F 2015F

Construction, Electricity, EM Precast, Property, Asphalt

55% 50% 52% 53%

45% 50% 48% 47%

0%

20%

40%

60%

80%

100%

2012 2013 2014F 2015F

Construction, Electricity, EM Precast, Property, Asphalt

Source: WIKA, IndoPremier Source: WIKA, IndoPremier

Large contracts-in-hand for greater revenue visibility (Rp tn)

Strong earnings growth with expanding margin

25.0 25.9

30.0

34.8

41.0

9.911.9

14.1

17.1

20.0

5

10

15

20

25

30

35

40

45

2012 2013 2014F 2015F 2016F

Total contracts in hand Revenue

4.8%

4.8%5.0%

5.3%

5.5%

4.5%

4.7%

4.9%

5.1%

5.3%

5.5%

5.7%

-

5.00

10.00

15.00

20.00

25.00

2012 2013F 2014F 2015F 2016F

Revenue NPM (RHS)

Source: WIKA, IndoPremier Source: WIKA, IndoPremier

Contracts-in-hand by segment, 2009-13 Wika Betons capacity compared with its closest competitor

20.9 16.5 18.9 19.2 22.5

29.333.2 27.4 26.3

9.5 12.815.3 20.2 23.93.2 3.4

4 5.45.8

19.2 17.88.7 6.2 1.5

12 9.9 9.2 9.9 10.3

0%

20%

40%

60%

80%

100%

2009 2010 2011 2012 2013

Toll, road, bridge Port, Irrigation & barrage Power plant and Ind. Plant

Building Realty Industry and Manufacturing

Precast Industry

39%

16%

10%7%

4%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

WB AdhimixPrecast

Jaya Beton JHS Concrete Beton Prima

Source: WIKA Source: BCI Asia

14

Sector Update

WIKA rolling P/E WIKA relative share price performance

0

5

10

15

20

25

30


21x (+2 Std. Dev.)

16x (+1 Std. Dev.)

2x (-2 Std. Dev.)

12x (average)

7x (-1 Std. Dev.)

21.3%

-13.8%

-0.6%

5.4%

-1.4%

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

25%


Source: Bloomberg, Indopremier Source: Bloomberg

Earnings revision


(old) (new) (%)

change

Year to Dec 31 (Rp bn) 2013F 2014F 2015F 2013A 2014F 2015F 2013 2014 2015

Revenue 11,552 13,943 16,911 11,885 14,129 17,124 2.9% 1.3% 1.3%

COGS 10,388 12,550 15,221 10,562 12,534 15,172 1.7% -0.1% -0.3%

Gross profit 1,163 1,394 1,690 1,322 1,595 1,953 13.7% 14.5% 15.6%

EBIT 1,044 1,265 1,542 1,216 1,475 1,780 16.5% 16.6% 15.4%

Net income 560 676 833 570 703 914 1.8% 4.0% 9.8%

Margins

Gross margin 10.1% 10.0% 10.0% 11.1% 11.3% 11.4%

EBIT margin 9.0% 9.1% 9.1% 10.2% 10.4% 10.4%

Net margin 4.8% 4.8% 4.9% 4.8% 5.0% 5.3%

Source: WIKA, IndoPremier estimates

15

Sector Update

Financial Summary

Income Statement

Balance Sheet




COGS 10,562 12,534 15,172 17,725

Receivables 4,043 5,032 6,099 6,590

Gross profit 1,322 1,595 1,953 2,319

Inventories 1,118 1,889 1,870 2,185

Gross profit after JO 1,583 1,921 2,324 2,732 Investments 1,548 1,768 1,990 2,213

Operating income 1,216 1,475 1,780 2,088 Fixed assets 1,705 2,167 2,600 3,003


Other 2,655 3,135 3,653 4,054

Impairment expense (85) (99) (100) (103) Total assets 12,456 15,647 18,141 21,612

EBT 1,017 1,238 1,583 1,881 Payables 5,465 6,809 7,942 9,645

Tax (392) (466) (579) (672)

Bank loans 1,672 2,045 2,115 2,182

EAT 624 772 1,005 1,209 Shareholders' equity 2,949 3,481 4,184 5,010

Non-controlling interest (54) (70) (90) (109) Non-controlling interest 278 330 398 480

Net profit 570 703 914 1,100

Other 2,231 2,982 3,502 4,295


Cash Flow Statement

Key Ratios


Net income 570 703 914 1,100

Profitability

Depreciation 120 137 167 197 Gross margin 11.1% 11.3% 11.4% 11.6%

Non cash adjustments 38 52 68 82

Gross margin after JO 13.3% 13.6% 13.6% 13.6%


Operating margin 10.2% 10.4% 10.4% 10.4%

Changes in net WC (263) (10) 33 1,136 EBITDA margin 11.2% 11.4% 11.4% 11.4%

CFO 505 950 1,252 2,590 Pre-tax margin 8.6% 8.8% 9.2% 9.4%

Capex (1,051) (1,070) (1,072) (974)

Net margin 4.8% 5.0% 5.3% 5.5%

Change in non-current assets 111 84 77 70 ROA 4.5% 4.5% 5.0% 5.1%


ROE 17.7% 18.4% 20.0% 20.0%

CFI (915) (962) (969) (880)

Debts 417 373 70 67 Growth

Equity issuance (78) - - -

Revenue and sales 20.0% 18.9% 21.2% 17.0%

Interest expenses (64) (92) (95) (98) EBITDA 39.9% 20.7% 20.7% 17.3%

Dividends (137) (171) (211) (274) Pre-tax profit 22.1% 21.8% 27.9% 18.8%

Other 127 171 227 232

Net profit 19.7% 23.3% 30.1% 20.4%

CFF 264 281 (9) (73)

EPS 19.7% 23.3% 30.1% 20.4%

Cash flow (145) 269 274 1,637

Leverage

Beginning cash balance 1,532 1,387 1,656 1,929

Debt to asset 13.3% 13.1% 11.7% 10.1%

Ending cash balance 1,387 1,656 1,929 3,567 Debt to equity 51.8% 53.7% 46.1% 39.7%

Net debt/(cash) to equity 8.9% 10.2% 4.0% -25.2% Interest cover (x) 20.9 17.5 20.5 23.3 Sources: WIKA, IndoPremier estimates

16

Sector Update

Cheap construction play At 73% ytd, the highest performing construction stock, yet it remains

cheap Rp22tn contracts-in-hand to support FY14F revenue and earnings Potential rerating on positive outlook for the sector Reiterate BUY with a higher TP of Rp4,000

ADHI is the top performing stock in the sector (73% ytd, compared with the JCI), but remains the cheapest within our coverage. At the current price, ADHI is trading at an FY14F P/E of 11.5x, still a 27% discount to the sectors 15.8x. In our view, the positive outlook for continued infrastructure spending from the realization of MP3EI should drive a potential rerating. The realization of monorail projects this year should provide upside for our FY14F new contracts target and further catalysts for share-price performance. BUY with a higher TP of Rp4,000, translating into an implied FY14-15F P/E of 16.4x-13.2x Higher-than-consensus FY13 earnings on forex gain ADHI reported 16% higher-than-consensus FY13 net profit but in line with our forecast. The construction/EPC division, which contributed 93% to the companys FY13 revenue, reported a lower margin of 10% (FY12: 11.5%), due to higher raw material costs/rupiah weakness during 2H13. However, a 7% revenue contribution from property and realty supported ADHI to maintain a FY13 gross margin of 12.2%. Manageable opex and a Rp110bn forex gain helped ADHI to book a FY13 net profit of Rp406bn, +92% yoy. Excluding forex gains and asset sales, ADHIs FY13 net profit was still Rp285bn, +48% yoy. FY14F earnings of Rp438bn, +8% yoy Supported by carry-over contracts of Rp8.7tn and a FY14F new contracts estimate of Rp13.4tn, we estimate ADHI FY14F revenue of Rp12.2tn, +24% yoy with the major contribution from construction/EPC (93%). Property and realty should contribute 7% to ADHIs FY14F revenue, with a 16% contribution to gross profit. We estimate a FY14F gross margin of 12.1%, with support from the construction and property businesses. Higher interest expenses to support the companys expansion and the continued high allowance for impairment of receivables will continue to put pressure on the bottom line, in our view. We estimate FY14 net profit at Rp438bn, +8% yoy with a lower net margin of 3.6%. Potential rerating ahead, BUY with higher TP of Rp4,000 ADHI is the top outperformer construction stock within the sector (73% ytd - compared to JCI), yet remains the cheapest within our coverage. At the current price, ADHI is trading at a FY14F P/E of 11.5x, still at a 27% discount to the sector P/E of 15.8x. In our view, the positive outlook for future infrastructure spending will create a potential rerating ahead. From the company, the realization of monorail projects this year should provide upside for our FY14F new contracts target and further catalysts for share price performance. BUY with a higher TP of Rp4,000.


Revenue and sales (Rp bn) 7,628 9,800 12,165 15,163 19,339

Gross profit (Rp bn) 956 1,193 1,478 1,817 2,219 Operating profit (Rp bn) 792 919 1,197 1,483 1,828

Net income (Rp bn) 212 406 438 545 708 EPS (Rp) 117 225 243 302 393 EPS growth (%) 16 92 8 24 30 P/E (x) 23.9 12.4 11.5 9.3 7.1 P/BV (x) 4.3 3.3 2.7 2.2 1.8 EV/EBITDA (x) 4.0 6.8 5.2 4.0 3.0

ROE (%) 18 26 24 24 25 Source: ADHI, IndoPremier estimates. Closing price 11 April 2014

ADHI IJ BUY

Target Price Rp4,000 Previous TP Rp2,600 Current Price Rp2,805 Upside (downside) 28%

Share Performance

3 M 6 M 12 M

Absolute (%) 68.0 50.0 -4.9

Relative to JCI (%) 58.0 43.2 -2.7

52-wk range (Rp) 1,425 4,000

Price Chart

40

50

60

70

80

90

100

110

120

130

140

21-Mar 21-Jun 21-Sep 21-Dec 21-MarJCI ADHI

Source: Bloomberg

Share Data



6 M avg. daily (US$) 5,377,143



ABN Amro Bank N.V 5.0%

Free float 44.0%

Adhi Karya

17

Sector Update

Increasing contracts-in-hand to support revenue visibility (Rp tn)

Government still the major contract contributor

7.6 9.8

12.2

15.2

19.3

14.8

20.1 22.2

24.8 26.0

5.0

10.0

15.0

20.0

25.0

30.0

2012 2013 2014F 2015F 2016F

Revenue Contracts in hand

77 82 74

52

79

23 18 26

48

21

0%

20%

40%

60%

80%

100%

2010 2011 2012 2013 2014F

Govt (APBN, APBN, BUMN/D) Private

Source: ADHI, IndoPremier Source: ADHI, IndoPremier

Construction services and EPC provide more than 70% contribution to the top line

We estimate flat 2014-15 net margins

83.1 73.5

85.7 87.8 88.6

10.6 19.3

7.7 6.5 6.6 6.3 7.2 6.6 5.7 4.8

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2012 2013 2014F 2015F 2016F

Construction EPC Property and real estate

3.3%

2.7% 2.8%

4.1%

3.6%

3.6%

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%

4.5%

-

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

2010 2011 2012 2013 2014F 2015F

Revenues Net margin

Source: ADHI, IndoPremier Source: ADHI, IndoPremier

ADHI rolling P/E band ADHI - relative share price performance

0

2

4

6

8

10

12

14

16

18


15x (+2 Std. Dev.)

11x (+1 Std. Dev.)

0x (-2 Std. Dev.)

3x (-1 Std. Dev.)

7x (Average)

Source: Bloomberg, IndoPremier Source: Bloomberg

72.8%

-7.0%

58.0%

43.2%

-2.7%

-20%

-10%

0%

10%

20%

30%

40%

50%

60%

70%

80%


18

Sector Update

Earnings revision


(old)

(new)

(%) change

Year to Dec 31 (Rp bn) 2013F 2014F 2015F 2013A 2014F 2015F 2013 2014 2015

Revenue 10,436 12,040 13,887 9,800 12,165 15,163 -6.1% 1.0% 9.2%

COGS 9,119 10,572 12,203 8,606 10,687 13,346 -5.6% 1.1% 9.4%

Gross profit 1,317 1,468 1,684 1,193 1,478 1,817 -9.4% 0.7% 7.9%

EBIT 1,136 1,236 1,424 919 1,197 1,483 -19.2% -3.2% 4.1%

Net income 392 430 511 406 438 545 3.6% 1.9% 6.7%

Margins

Gross margin 12.6% 12.2% 12.1% 12.2% 12.1% 12.0%

EBIT margin 10.9% 10.3% 10.3% 9.4% 9.8% 9.8%

Net margin 3.8% 3.6% 3.7% 4.1% 3.6% 3.6%

Source: ADHI, IndoPremier estimates

19

Sector Update

Financial Summary

Income Statement

Balance Sheet




COGS 8,606 10,687 13,346 17,120

Receivables 5,158 7,003 8,517 10,863

Gross profit 1,193 1,478 1,817 2,219

Inventories 162 205 256 328

Gross profit after JO 1,248 1,590 1,932 2,367 Investments 257 664 817 969

Operating income 919 1,197 1,483 1,828 Fixed assets 271 336 429 525


Other 1,933 2,660 3,252 4,000

Impairment expense (65) (140) (222) (218) Total assets 9,721 12,887 15,653 19,839

EBT 714 874 1,107 1,425 Payables 5,466 7,791 9,741 12,492

Tax (306) (432) (559) (713)

Bank loans 212 277 331 353

EAT 408 441 548 713 Bonds and sukuk payable 1,497 1,497 1,498 1,874

Non-controlling interest (2) (3) (3) (4) Shareholders' equity 1,539 1,854 2,267 2,812

Net profit 406 438 545 708

Non-controlling interest 9 12 15 19

Other 998 1,455 1,800 2,288


Cash Flow Statement

Key Ratios


Net income 406 438 545 708

Profitability

Depreciation 10 12 15 18

Gross margin 12.2% 12.1% 12.0% 11.5%

Non cash adjustments 2 3 3 4 Gross margin after JO 12.7% 13.1% 12.7% 12.2%


Operating margin 9.4% 9.8% 9.8% 9.5%

Changes in net WC 343 310 314 241

EBITDA margin 9.5% 9.9% 9.9% 9.5%

CFO 837 881 1,000 1,127 Pre-tax margin 7.3% 7.2% 7.3% 7.4%

Capex (502) (683) (461) (466) Net margin 4.1% 3.6% 3.6% 3.7%

Change in non-current assets (31) 62 (2) (3) ROA 4.2% 3.4% 3.5% 3.6%

Interest income 33 24 23 23 ROE 26.4% 23.6% 24.0% 25.2%

CFI (501) (598) (441) (447)

Debts 760 66 55 398 Growth

Equity 1 (2) - - Revenue and sales 28.5% 24.1% 24.6% 27.5%

Interest expenses (108) (142) (146) (178)

EBITDA 16.9% 30.1% 23.9% 23.3%

Dividends (42) (122) (132) (163) Pre-tax profit 68.8% 22.3% 26.8% 28.7%

Other 43 (3) 26 35 Net profit 91.9% 8.0% 24.3% 30.0%

CFF 654 (203) (197) 91

EPS 91.9% 8.0% 24.3% 30.0%

Cash flow 991 81 362 771 Leverage

Beginning cash balance 949 1,940 2,020 2,383

Debt to asset 18.2% 13.8% 11.7% 11.2%


Debt to equity 114.0% 95.1% 80.1% 78.6%

Net debt/(cash) to equity -11.3% -13.2% -24.2% -32.7% Interest cover (x) 8.6 8.5 10.2 10.4 Sources: ADHI, IndoPremier estimates

Benny B. Soebagjo

Head of Equities [email protected]

Angkula Ruriawan Equity Sales [email protected]

Alexander Salim Equity Sales [email protected]

Edward Azizy Equity Sales [email protected]

Henry Sutanto Equity Sales [email protected]

Isna Alfiathi Equity Sales [email protected]

Thomas Samuil Sales Trader [email protected]

INVESTMENT RATINGS Buy : Expected total return of 10% or more within a 12-month period Hold: Expected total return between -10% and 10% within a 12-month period Sell : Expected total return of -10% or worse within a 12-month period ANALYSTS CERTIFICATION. The views expressed in this research report accurately reflect the analyst's personal views about any and all of the subject securities or issuers; and no part of the research analyst's compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed in the report. DISCLAIMER: This research is based on information obtained from sources believed to be reliable, but we do not make any representation or warranty nor accept any responsibility or liability as to its accuracy, completeness or correctness. Opinions expressed are subject to change without notice. This document is prepared for general circulation. Any recommendation contained in this document does not have regard to the specific investment objectives, financial situation and the particular needs of any specific addressee. This document is not and should not be construed as an offer or a solicitation of an offer to purchase or subscribe or sell any securities. PT. Indo Premier Securities or its affiliates may be involved in transactions contrary to any opinion herein to make markets, or have positions in the securities recommended herein. PT. Indo Premier Securities or its affiliates may seek or will seek investment banking or other business relationships with the companies in this report.

PT INDO PREMIER SECURITIES Wisma GKBI 7/F Suite 718 Jl. Jend. Sudirman No.28 Jakarta 10210 - Indonesia p +62.21.5793.1168 f +62.21.5793.1167

Head Office

Institutional Equity & Private Client

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