Uploaded byAndrew Stotz, PhD, CFA
Watching The Street: Indonesia
The document presents an analysis of analyst recommendations for Indonesian companies as of July 2016, highlighting a gradual improvement, with the construction sector receiving the most positive ratings. In contrast, gold and nickel miners are among the most negatively evaluated, and overall earnings expectations have been low for four consecutive years. Additionally, discrepancies between expected and actual earnings growth, as well as target price returns, are discussed, indicating complexities in the market landscape.
Watching The Street: Indonesia
- 1. Presented by: Dr.Andrew Stotz, CFA 21 August 2016 Watching the Street: Indonesia
- 2. 28 July 20162 Companies with the most positive recommendations Companies with the most negative recommendations Sources: A. Stotz Investment Research, Thomson Reuters Note: For methodology explanation visit BecomeaBetterInvestor.net/blog/how-to-benefit-from-our-watching-the-street-charts/ Analyst recommendations have gradually improved over the past 5 years and now Indonesia is on the verge of analyst’s calling it a Buy Top 3 with the most positive recommendations are all related to construction in Indonesia, WTON isn’t in construction but is a precast concrete manufacturer Gold and Nickel miners INCO and ANTM are having a tougher time and are among the most negative recommendations Indonesia: Consensus recommendations Bottom-up country relative consensus recommendation Sell Sell Sell Neutral Neutral 1 3 5 7 9 1 3 5 7 9 2012 2013 2014 2015 YTD16 Indonesia Buy Sell Company name RIC code Sector Mcap (US$m) 3MADTO (US$m) Adhi Karya ADHI.JK Industrials 742 4.1 Wijaya Karya Beton WTON.JK Materials 658 1.3 Pembangunan Perumahan PTPP.JK Industrials 1,463 2.0 Pakuwon Jati PWON.JK Financials 2,333 2.7 Bukit Asam PTBA.JK Energy 1,767 2.9 Company name RIC code Sector Mcap (US$m) 3MADTO (US$m) Semen Baturaja SMBR.JK Materials 533 1.7 Vale Indonesia INCO.JK Materials 1,926 1.7 Aneka Tambang ANTM.JK Materials 1,485 6.6 Lippo Karawaci LPKR.JK Financials 2,042 4.9 Unilever Indonesia UNVR.JK Cons. Staples 26,021 6.1
- 3. 28 July 20163 Companies with the highest consensus EPS growth estimates Companies with the lowest consensus EPS growth estimates Sources: A. Stotz Investment Research, Thomson Reuters Note: *Available 12 month forward EPS estimates. For methodology explanation visit BecomeaBetterInvestor.net/blog/how-to-benefit-from-our-watching-the-street-charts/ Expectations have been 10-15% EPS growth, but Indonesia have seen 4 years of falling earnings Earnings estimates for 2016 are lower; at 4% Analysts’ expect that the palm oil producer AALI is about to turn from a poor net profit in 2015 due to improving crude palm oil price PTBA, ADRO, and ITMG are all in the coal business. EPS is expected to be lower, but share price performance has been strong for all in 2016 Indonesia: Consensus earnings estimates Consensus EPS growth estimates versus actual EPS growth 13 15 15 10 4 (20) (10) - 10 20 2012 2013 2014 2015 2016 Actual EPS growth Consensus' estimate - 1yr fwd (%, YoY) Company name RIC code Sector Mcap (US$m) EPS g* (%) Astra Agro Lestari AALI.JK Cons. Staples 2,232 194 Lippo Karawaci LPKR.JK Financials 2,042 183 Matahari Putra Prima MPPA.JK Cons. Staples 753 150 Alam Sutera Realty ASRI.JK Financials 757 98 Wijaya Karya Beton WTON.JK Materials 658 95 Company name RIC code Sector Mcap (US$m) EPS g* (%) Bukit Asam PTBA.JK Energy 1,767 (25) Adhi Karya ADHI.JK Industrials 742 (16) Adaro Energy ADRO.JK Energy 2,611 (7) Gudang Garam GGRM.JK Cons. Staples 11,010 (5) Indo Tambangraya Megah ITMG.JK Energy 1,034 (4)
- 4. 28 July 20164 Companies with the highest consensus target price expected return Companies with the lowest consensus target price expected return Sources: A. Stotz Investment Research, Thomson Reuters Note: *Actual return from March 2016 to year-to-date. For methodology explanation visit BecomeaBetterInvestor.net/blog/how-to-benefit-from-our-watching-the-street-charts/ Analysts were negative in 2012-2014, but only guessed the right direction of the market in 2013 Target price expected return and actual return are currently in line, but the year is not yet over EXCL is part of one of the largest Telecom groups in Asia, Axiata Group Bhd (AXIA.KL), but faces tough competition from Telekomunikasi Indonesia (TLKM.JK) ANTM, ITMG, INCO, and ADRO have among the most negative recommendations or lowest EPS growth Indonesia: Consensus target price Consensus target price expected return versus actual return (25) (25) (10) 2 6 1 (40) (20) - 20 2012 2013 2014 2015 2016* 12mth fwdActual return Est upside (%) Company name RIC code Sector Mcap (US$m) Up/Dn (%) XL Axiata EXCL.JK Telecom 3,025 17 Matahari Putra Prima MPPA.JK Cons. Staples 753 16 Astra Agro Lestari AALI.JK Cons. Staples 2,232 15 Jasa Marga JSMR.JK Industrials 2,840 14 Pembangunan Perumahan PTPP.JK Industrials 1,463 14 Company name RIC code Sector Mcap (US$m) Up/Dn (%) Semen Baturaja SMBR.JK Materials 533 (41) Aneka Tambang ANTM.JK Materials 1,485 (40) Indo Tambangraya Megah ITMG.JK Energy 1,034 (36) Vale Indonesia INCO.JK Materials 1,926 (20) Adaro Energy ADRO.JK Energy 2,611 (15)
- 5. 6 May 201628July 2016 5 Want more of our research? Sign up for our free newsletter at: BecomeaBetterInvestor.net/join