Asiamoney's Asiamoney’s 2013 2013 Best BestDomestic Domestic Equity House

Equity House

2014 Finance Asia's Best Equity House

Alpha Southeast Asia 2014 Best Research Call FMCG Sector

2015 Institutional Investors Highest Ranked Local Research House

Sector flash

2015 Global Banking & Finance Review Best Research House

13 January 2016

NEUTRAL

Indonesia Media

(Unchanged)

Bagus Adi Yoga Prawira E-mail: [email protected] Phone: +6221 250 5081 Ext. 3604

Improved reception

Exhibit 1. Sector relative valuation, 2016F

 Enhanced industry rate-card outlook on less discounting: Based on the figures released by Nielsen AC on December FTA TV audience shares (exhibit 9), MNCN has shown further improvement with an all-time audience share of 36.7% (+70bps m-m and +260bps y-y), particularly backed by the domination of RCTI, which is ranked No. 1 (after overtaking SCMA since July 2015) with a 19.2% share (+70bps m-m and +360bps y-y). We expect this trend to continue particularly given RCTI's airing of The Voice (1Q16) and Ninja Warriors (Dec-15), popular talent search programs, which are already attracting significant viewers. Against this backdrop, we expect better ratecard terms for media players can be reached with FMCG clients. This should bode well for the industry given that MNCN, as the market leader, is likely to limit its discounts ahead translating to 2016F healthier rate hikes.  SCMA likely to gain from MNCN’s improvements: As for SCMA, its alltime audience share slightly decreased to 30.1% in December, -30bps m-m but +230bps y-y as it has been improving since its dip in June 2015 due to programs replacements. On the rate card front, although SCMA has been able to book a higher rate card last year due to its product mix strategy, MNCN’s improvement should not only provide greater room for SCMA to obtain another rate-card hike this year in line with the industry, but also enable it to sell unsold slots at higher prices. Outlook: Possible benefit from upside in ad spend In 2016, big investments from emerging internet players on advertising to scale up their market share should provide some cushion for the top-lines of TV companies. We see FTA TV as still the most effective way to reach targeted mass market for e-commerce players. Given the on-going audience share dominance of SCMA and MNCN (2014: 60.0%; 3M15: 62.3%; 6M15: 63.4%; 2015: 63.8%), we believe both TV companies should be able to benefit from the much talked-about up cycle occurring in the local tech industry. Additionally, on the threat of Netflix's entry into Indonesia, we believe that cannibalization will be minimal. In fact, MNCN's and SCMA's status as the biggest local content providers may see possible cooperation in the likes of local content creation for Netflix’s OTT platform. While we still expect FMCG companies’ ad spend (60-70% of ad revenue) to recover slowly, operational efficiencies will be another key for SCMA and MNCN to sustain their earnings. For SCMA, the ending of its UEFA (in June 2015) and BPL broadcasting (in 1H16) should significantly lower its FX exposure amid current weak IDR. As for MNCN, the completion of the four integrated studios and its strategy to focus on talent search programs commanding higher power ratios should result in less capex, opex and debt, leading to higher margins ahead.

CP Code

TP

Mkt cap P/E

Rating (IDR) (IDR) (USDm) (x)

EPS growth (%)

SCMA

HOLD

3,100 3,250

3,258

27.1

MNCN

BUY

1,605 2,000

1,647

13.9

28.7

4,897

20.5

16.4

Sector Neutral

10.2

Source: Bloomberg, Bahana estimates (Based on closing prices of 12 January 2016)

Exhibit 2. Relative performance to JCI, ytd (%)

(%)

5

5

1.8 0

0

(2.8)

(5)

(5)

(10)

(10) (11.7)

(15)

(15) SCMA

Sector

MNCN

Source: Bloomberg

Exhibit 3. SCMA relative performance to JCI (%)

(%) 13.3

14

14

12

12 9.6

10

10

8

8

6

5.2 4.4

4 2

1.8

6

4 2

1.0

0

0 ytd

1M

3M

6M

9M

12M

SCMA IJ relative to JCI

Source: Boomberg

Exhibit 4. MNCN relative performance to JCI (%)

(%) 0

0

(5)

(5)

(15)

(6.6)

(7.2)

(10)

(10)

(11.7)

(15) (16.2)

(20)

(20)

(21.1)

(25)

(25)

(30)

(30) (31.2)

(35) ytd

1M

3M

6M

9M

(35)

12M

MNCN IJ relative to JCI

Source: Bloomberg

Recommendation: Reiterate BUY on MNCN; Maintain HOLD on SCMA We retain our NEUTRAL call on the media sector given policy-risk overhang. On stocks, we favor MNCN with an unchanged 12-month TP of IDR2,000 (based on 17.4x 2016F PE) as negative sentiment related to its major shareholder appears to be priced in (exhibit 4). On SCMA, we retain our HOLD (with an unchanged 12-month TP of IDR3,250, based on 28.5x 2016F PE) as its valuation looks rich. Upside risk for the sector: digitalization with current FTA TV players as multiplexers. Downside risks: weak GDP growth and IDR, as well as stricter interpretation of ruling No. 50/2005 and cigarette ad ban on TV. Disclosure: Bahana Securities does and seeks to do business with companies covered in its research reports. Investors should consider this report as only a single factor in making their investment decision. Please see the important disclaimer information on the back of this report

2015 Institutional Investors Highest Ranked Local Research House

Alpha Southeast Asia 2014 Best Research Call FMCG Sector

2014 Finance Asia's Best Equity House

Asiamoney's 2013 Best Domestic Equity House

2015 Global Banking & Finance Review Best Research House

15 December 2015

Exhibit 5. Peer comparison Company

Currency

PER (x)

Current price Market cap

Ratings

(Loc. Cur)

(USDmn)

THAILAND

PBV (x) EV/EBITDA (x)

2016F

2016F

2016Y

Div. yield (%) 2016F

ROE (%) EPS growth (%) 2016F

1,789

19.3

0.7

2.8

2.1

2.1

2016F 23.9

BEC TB EQUITY

THB

NR

30

1,637

17.8

6.9

8.1

5.1

39.6

6.3

MC OT TB EQUITY

THB

NR

8

151

35.9

0.7

2.8

2.1

2.1

23.9

1,076

13.5

1.7

6.0

1.5

12.6

39.0

PHP

NR

60

1,076

13.5

1.7

6.0

1.5

12.6

39.0

2,865

20.4

18.8

8.1

4.9

89.3

20.2

PHILIPPINES ABS PM EQUITY MALAYSIA ASTRO MK EQUITY

MYR

2

NR

INDIA

2,865

20.4

18.8

8.1

4.9

89.3

20.2

8,290

32.3

6.1

20.7

1.4

22.3

16.1 15.1

Z IN EQUITY

INR

NR

407

5,850

38.3

6.8

25.8

0.6

20.9

SUNTV IN EQUITY

INR

NR

414

2,440

17.8

4.3

8.4

3.1

25.7

18.2

4,905

20.5

9.0

16.0

3.0

38.6

16.4 10.2

INDONESIA SC MA IJ EQUITY

IDR

HOLD

3,100

3,258

27.1

12.5

19.7

2.8

49.7

MNC N IJ EQUITY

IDR

BUY

1,605

1,647

13.9

2.1

8.7

3.6

16.8

28.7

18,926 25.2 7.6 15.1 2.4 32.5 Regional Source: Bloomberg, Bahana forecasts; prices as of 11 January 2016; note: averages are market-cap weighted, except for market cap which is the total

11.8

Exhibit 6. Media revenue vs real GDP, 2006 – 3Q15 (%)

(%)

60

07

50

Media revenue historically has high positive correlation with real GDP growth

07

40

06

30 06 20 05

10

05

00 2006

2007

2008

2009

2010

2011

2012

2013

2014

1Q15

2Q15

3Q15

-10

04 SCMA

MNCN

Real GDP (RHS)

Source: Company, Bahana

Exhibit 7. FMCG ad spend, 2004 – 2015F We see a slight upward trend in FMCG companies’ ad spend on better economic outlook (however, we note that this increase in ad spend could be allocated to direct and online marketing) ...

(IDRbn) 6,500 6,000 5,500 5,000 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1,000

500 0 2004

2005

2006

2007 UNVR

2008 INDF

2009 TSPC

2010

2011 ICBP

2012 MYOR

2013

2014

9M15

2015F

Total

Source: Companies, Bahana estimates

PT Bahana Securities – Equity Research – Indonesia Media

2

2015 Institutional Investors Highest Ranked Local Research House

Alpha Southeast Asia 2014 Best Research Call FMCG Sector

2014 Finance Asia's Best Equity House

Asiamoney's 2013 Best Domestic Equity House

2015 Global Banking & Finance Review Best Research House

15 December 2015

Exhibit 8. Consumer confidence index, 2004 – 2015F ... reflected by recent recovery in consumer confidence index

125.00

120.00 115.00 Average: 111.4 110.00

106.7

105.00 100.00 95.00 90.00 85.00

Dec-15

Oct-15

Nov-15

Sep-15

Jul-15

Aug-15

Jun-15

Apr-15

May-15

Mar-15

Jan-15

Feb-15

Dec-14

Oct-14

Nov-14

Sep-14

Jul-14

Aug-14

Jun-14

Apr-14

May-14

Mar-14

Jan-14

Feb-14

Dec-13

Oct-13

Nov-13

Sep-13

Jul-13

Aug-13

Jun-13

Apr-13

May-13

Mar-13

Jan-13

Feb-13

80.00

Consumer confidence index

Source: Bank Indonesia survey

Exhibit 9. All-time audience share, January 2014 – December 2015 (%) 19.0

19.2 18.3 17.4

17.0

16.3

15.3

18.2 17.4

17.0

17.6 17.2 16.1

14.7

16.3

14.8

14.9

14.4

14.5

14.1

14.1

15.6

15.5

9.3

10.8 10.3

10.3 9.4

14.6

15.6

14.2 15.4

15.9

10.5

12.0

5.0

6.3

11.8

9.9

12.0

15.7

14.1

12.2 11.4

10.7 10.9

11.3 11.0

10.3

9.7

13.5

11.9

11.3 11.2

8.2

6.6 5.9

16.6 15.7

16.0

14.7

7.5 6.5

16.3

14.3

7.0 6.4

18.0 16.7

11.1

11.3 10.7

10.7

6.7

6.7

8.5

8.2

6.6

17.3

15.2

9.3

9.0

9.0

15.6

15.5

14.4

11.5

9.7

15.2

16.0

17.3

14.1

12.1

12.0

8.9

15.9

12.9

10.7 9.6

16.4

15.9

14.8

13.7

9.0

18.5 17.9

15.6

13.0 11.0

18.5

16.4

15.7

15.0

18.7

6.0

5.6

6.1

RCTI

6.3

SCTV

6.5 6.0

IVM

6.5

6.1

7.8 7.3

6.4

MNCTV

MNCN (RCTI, MNC TV and GTV) still ranked No. 1 with RCTI gaining higher audience share in December following the launch Soap opera “Anak Jalanan”; SCMA still ranked No. 2 with Indosiar (IVM) gaining share due to the success of “D’Academy Asia”

7.2

6.4 6.2

GTV

Source: Nielsen

Exhibit 10. SCMA revenue vs all-time audience share, 1Q14-3Q15 (IDR bn)

(%)

1,400

30.5 30.3

1,219

1,194

1,200

29.9 1,000

957

954

30.0 1,041

951

946

29.3

29.5

Higher audience share typically attracts more ad revenue, especially of late for SCMA ...

29.0

800 28.6 600 28.2

28.0

28.3

28.5 28.0

400

27.5

200

27.0

0

26.5 1Q14

2Q14

3Q14

SCMA revenue

4Q14

1Q15

2Q15

3Q15

SCMA all-time audience share

Source: Company, Nielsen, Bahana

PT Bahana Securities – Equity Research – Indonesia Media

3

Alpha Southeast Asia 2014 Best Research Call FMCG Sector

2014 Finance Asia's Best Equity House

Asiamoney's 2013 Best Domestic Equity House

2015 Institutional Investors Highest Ranked Local Research House

2015 Global Banking & Finance Review Best Research House

15 December 2015

Exhibit 11. MNCN revenue vs all-time audience share, 1Q14-3Q15 (IDR bn)

(%)

2,000

36.0

1,876

1,817

1,800

1,671

1,600

35.2

1,622

35.0

34.2

1,514

1,496

1,700

34.0

34.0

1,400

33.0 32.8

1,200

32.0

... with MNCN experiencing a similar pattern, except for the 2Q-3Q14 period during which ad revenue was likely supported by the election campaign

1,000

31.0

31.1

800 600

30.0

29.8

30.1

29.0

400

28.0

200 0

27.0 1Q14

2Q14

3Q14

4Q14

MNCN revenue

1Q15

2Q15

3Q15

MNCN all-time audience share

Source: Company, Nielsen, Bahana

Exhibit 12. Media revenue vs investment y-y growth, 1Q13 – 4Q16F (%)

(%)

30

8 7

25

6 20

4.6

5

Given positive historical correlation, we expect media revenue to slightly follow the trends in investment growth ahead

4

15

3

10

2

4.3

5

1 0

0 1Q13

2Q13

3Q13

4Q13

1Q14

2Q14

3Q14

4Q14

1Q15

2Q15

3Q15

4Q15F 1Q16F 2Q16F 3Q16F 4Q16F

-5

-1 -2

-10

-3 Media Revenue growth

Investment growth (RHS)

Source: CEIC, Companies, Bahana estimates

Exhibit 13. MNCN and SCMA ad revenue breakdown by sector MNCN ad revenue breakdown

FMCG companies’ ad spend is still the biggest contribution to MNCN’s and SCMA’s ad revenue

SCMA ad revenue breakdown

9

5

5

6

10

7

4

5

65

9

10

65

FMCG

Telco

Cigarette

FMCG

Telco

Cigarette

Pharmaceutical

Internet

Others

Auto

Internet

Others

Source: Company, Bahana estimates based on 9M15 results

PT Bahana Securities – Equity Research – Indonesia Media

4

Asiamoney's 2013 Best Domestic Equity House

2014 Finance Asia's Best Equity House

Alpha Southeast Asia 2014 Best Research Call FMCG Sector

2015 Institutional Investors Highest Ranked Local Research House

2015 Global Banking & Finance Review Best Research House

15 December 2015

Exhibit 14. MNCN integrated programming strategy MNCN fully controls the integration from talent management to content production and broadcasting, which would be further supported by the completion of the four integrated studios allowing USD3-4mn savings in rental cost per year going forward

Source: Company

Exhibit 15. Law No.32/2002 Article

Clause

Main content Within one broadcasting region or multiple regions, ownership or control over non-government broadcasting institutions by either an individual or an entity must be limited Directly or indirectly-owned non-government broadcasting companies or entities in cross ownerships within different media type must be limited The terms and conditions of clause 1 and 2 above shall be arranged by the Indonesian Broadcasting Commission (KPI) and the Government Broadcasting licenses are non-transferable

1 18

2 4

34

4

This broadcasting law further elucidated by ...

is

Source: Indonesian Broadcasting Commission, Bahana

Exhibit 16. Government Regulation No.50/2005 Article

32

33

Clause

1

Main content  One entity may only have two TV broadcasting licenses in two different provinces  49% maximum share ownership in a second entity  20% maximum share ownership in a third entity  5% maximum share ownership in a fourth entity Cross-ownership limitations with a single entity only allowed to own one media company type

Source: Ministry of Information and Communication, Bahana

PT Bahana Securities – Equity Research – Indonesia Media

... this government regulation, which suggests that media companies under our coverage are not in compliance posing downside risks should its interpretation becomes stricter

5

Asiamoney's 2013 Best Domestic Equity House

2014 Finance Asia's Best Equity House

Alpha Southeast Asia 2014 Best Research Call FMCG Sector

2015 Institutional Investors Highest Ranked Local Research House

2015 Global Banking & Finance Review Best Research House

15 December 2015

Surya Citra Media Year to 31 December PROFIT & LOSS (IDRbn) Sales Gross profit EBITDA Depreciation EBIT Net interest income/(expense) Forex gain/(losses) Other income/(expense) Pre-tax profit Taxes Minority interest Extraordinary gain/(losses) Net profit

2013

2014

2015F

2016F

2017F

3,695 2,313 1,846 87 1,759 5 1,764 (448) (6) (30) 1,280

4,056 2,576 1,968 51 1,917 0 1,917 (469) 6 1,454

4,253 2,673 2,050 53 1,997 23 2,020 (494) (7) 1,519

4,573 2,910 2,247 56 2,192 35 2,226 (544) (8) 1,674

4,983 3,190 2,466 58 2,408 50 2,457 (601) (8) 1,848

We forecast top-line growth in 2016 of 5% y-y on contributions from ecommerce companies, (ie, from Bukalapak.com which is an affiliated company)

BALANCE SHEET (IDRbn) Cash and equivalents S-T investments Trade receivables Inventories Fixed assets Other assets Total assets Interest bearing liabilities Trade payables Other liabilities Total liabilities Minority interest Shareholders' equity

1,043 1,015 375 725 853 4,010 51 989 180 1,221 52 2,738

1,246 1,291 462 762 967 4,728 102 931 218 1,250 32 3,446

837 1,360 459 809 982 4,446 112 973 189 1,273 32 3,140

1,151 1,462 478 853 993 4,937 88 1,023 193 1,304 32 3,600

1,478 1,593 511 895 1,011 5,487 71 1,083 198 1,353 32 4,102

Maintaining levels on …

CASH FLOW (IDRbn) EBIT Depreciation Working capital Other operating items Operating cash flow Net capital expenditure Free cash flow Equity raised/(bought) Net borrowings Others Net cash flow Cash flow at beginning Cash flow at end

1,759 87 (92) (541) 1,213 (102) 1,111 (218) 51 (967) (22) 1,066 1,043

1,917 51 (329) (498) 1,141 (88) 1,053 (19) 50 (881) 203 1,043 1,246

1,997 53 (79) (428) 1,542 (100) 1,442 10 (1,862) (410) 1,246 837

2,192 56 (109) (490) 1,648 (100) 1,548 (23) (1,211) 314 837 1,151

2,408 58 (144) (536) 1,786 (100) 1,686 (17) (1,342) 327 1,151 1,478

RATIOS ROAE (%) ROAA (%) Gross margin (%) EBITDA margin (%) EBIT margin (%) Net margin (%) Payout ratio (%) Current ratio (x) Interest coverage (x) Net gearing (%) Debts to assets (%) Debtor turnover (days) Creditor turnover (days) Inventory turnover (days)

47.6 32.6 62.6 50.0 47.6 34.6 58.3 3.6 37.6 nc 1.3 99 51 85

47.0 33.3 63.5 48.5 47.3 35.8 70.2 3.9 28.3 nc 2.1 102 51 103

46.1 33.1 62.8 48.2 46.9 35.7 75.0 3.3 46.8 nc 2.5 115 51 106

49.7 35.7 63.6 49.1 47.9 36.6 75.0 3.7 109.6 nc 1.8 115 51 105

48.0 35.5 64.0 49.5 48.3 37.1 75.0 4.0 151.2 nc 1.3 115 51 104

MAJOR ASSUMPTIONS Revenue growth rate (%) Prog. cost to rev. (%)

12.7 35.7

9.8 34.6

4.9 35.1

7.5 34.6

9.0 34.1

Source: Company, Bahana estimates

sufficient

… conservative assumptions

cash

capex

EBIT margin to decline in 2015F before picking up again in 2016F on an improved macro outlook and a relatively lower cost structure

Lower programming costs expected, following the end of the UEFA and BPL broadcast contracts

Bagus Adi Yoga Prawira ([email protected]) +6221 250 5081 ext. 3604

PT Bahana Securities – Equity Research – Indonesia Media

6

Asiamoney's 2013 Best Domestic Equity House

2014 Finance Asia's Best Equity House

Alpha Southeast Asia 2014 Best Research Call FMCG Sector

2015 Institutional Investors Highest Ranked Local Research House

2015 Global Banking & Finance Review Best Research House

15 December 2015

Media Nusantara Citra Year to 31 December PROFIT & LOSS (IDRbn) Sales Gross profit EBITDA Depreciation EBIT Net interest income/(expense) Forex gain/(losses) Other income/(expense) Pre-tax profit Taxes Minority interest Extraordinary gain/(losses) Net profit

2013

2014

2015F

2016F

2017F

6,522 3,672 2,721 161 2,560 (10) (134) (23) 2,394 (584) (119) 1,691

6,666 3,853 2,779 176 2,604 28 (77) (11) 2,544 (660) (121) 1,762

6,675 3,838 2,759 179 2,580 (123) (420) (73) 1,963 (589) (94) 1,280

7,006 4,039 2,920 196 2,724 (120) (210) (12) 2,381 (619) (114) 1,648

7,519 4,336 3,153 217 2,936 (106) 75 (14) 2,892 (763) (138) 1,990

BALANCE SHEET (IDRbn) Cash and equivalents S-T investments Trade receivables Inventories Fixed assets Other assets Total assets Interest bearing liabilities Trade payables Other liabilities Total liabilities Minority interest Shareholders' equity

575 3,062 1,333 1,543 3,104 9,615 535 631 706 1,872 358 7,386

1,132 3,215 1,635 2,659 4,968 13,609 3,199 403 613 4,216 486 8,907

1,112 3,283 1,576 3,766 5,154 14,890 3,971 567 512 5,051 535 9,304

1,348 3,406 1,604 4,195 5,389 15,941 3,911 593 536 5,040 589 10,313

1,879 3,421 1,675 4,643 5,560 17,178 3,798 636 617 5,051 647 11,479

2,560 161 (286) (1,096) 1,339 (706) 633 (249) (193) (145) 46 528 575

2,604 176 (812) (1,693) 275 (1,287) (1,012) 256 2,665 (1,351) 557 575 1,132

2,580 179 156 (1,338) 1,577 (1,335) 242 772 (1,034) (20) 1,132 1,112

2,724 196 (125) (1,011) 1,784 (701) 1,084 (61) (787) 236 1,112 1,348

2,936 217 (43) (850) 2,261 (752) 1,509 (112) (865) 531 1,348 1,879

RATIOS ROAE (%) ROAA (%) Gross margin (%) EBITDA margin (%) EBIT margin (%) Net margin (%) Payout ratio (%) Current ratio (x) Interest coverage (x) Net gearing (%) Debts to assets (%) Debtor turnover (days) Creditor turnover (days) Inventory turnover (days)

23.4 18.2 56.3 41.7 39.3 25.9 29.4 4.2 62.4 nc 5.6 159 81 158

21.6 15.2 57.8 41.7 39.1 26.4 50.1 9.7 44.7 23.2 23.5 172 82 193

14.1 9.0 57.5 41.3 38.6 19.2 50.0 8.4 14.4 30.7 26.7 167 73 203

16.8 10.7 57.6 41.7 38.9 23.5 50.0 8.2 16.1 24.8 24.5 166 73 197

18.3 12.0 57.7 41.9 39.1 26.5 50.0 7.5 19.0 16.7 22.1 155 73 192

MAJOR ASSUMPTIONS Revenue growth rate (%) Prog. cost to rev. (%)

6.8 38.5

3.6 38.0

0.1 38.6

4.7 38.4

6.7 38.3

CASH FLOW (IDRbn) EBIT Depreciation Working capital Other operating items Operating cash flow Net capital expenditure Free cash flow Equity raised/(bought) Net borrowings Others Net cash flow Cash flow at beginning Cash flow at end

Source: Company, Bahana estimates

Earnings likely to recover this year mostly as we expect less FX losses and more operational efficiencies Increasing cash levels on …

… lower capex assumptions ...

... leading to no further debt required and margin expansion ahead

Completion of the four integrated studios also frees up significant rental costs for content production and lower programming cost

Bagus Adi Yoga Prawira ([email protected]) +6221 250 5081 ext. 3604

PT Bahana Securities – Equity Research – Indonesia Media

7

Research: +62 21 250 5081 Harry Su [email protected] Senior Associate Director Head of Corporate Strategy & Research Consumer, Strategy ext 3600 direct: +62 21 250 5735

Fakhrul Fulvian [email protected] Economist ext 3602

Sanni Satrio Dwi Utomo [email protected] Research Analyst Industrial Estate, Property ext 3611

Muhammad Wafi [email protected] Technical Analyst ext 3609

Made Ayu Wijayati [email protected] Research Executive ext 3607

Dealing Room: +62 21 527 0808 (Foreign Institutional)

Natalia Surjadiputra [email protected]

Director of Sales & Client Relationship Management ext 2500

Amelia Husada [email protected] Vice President Institutional Equity Sales ext 2552

Bram Taarea [email protected] Institutional Equity Sales ext 2524

Teguh Hartanto [email protected] Associate Director Deputy Head of Research Banks, Cement, Aviation ext 3610

Bob Setiadi [email protected] Research Analyst Cement, Infratructure,Toll roads ext 3605

Renaldy Effendy [email protected] Research Analyst Consumer, Healthcare ext 3606

Nyoman Widita Prabawa [email protected] Research Associate ext 3623

Zefanya Halim [email protected] CA Manager ext 3612

Leonardo Henry Gavaza, CFA [email protected] Senior Research Manager Auto, Heavy equipment, Telco ext 3608

Agustinus Reza Kirana [email protected] Research Analyst Plantations, Shipping, Transportation ext 3616

Jozabad Jonathan [email protected] Research Analyst Poultry ext 3620

Sarah Jessica Hutapea [email protected] Research Associate ext 3693

Senior Equity Institutional Sales ext 2545

John M. Dasaad [email protected] Institutional Equity Sales ext 2549

Nurul Farida [email protected] Institutional Equity Sales ext 2547

Bagus Adi Yoga Prawira [email protected] Research Analyst Consumer, Media ext 3604

Melvin Mikha Reminov [email protected] Research Associate ext 3621

Gilang Purnama [email protected] Research Associate ext 3601

Novianty Permata Sari [email protected] CA ext 3618

+62 21 250 5508 (Domestic Institutional)

Inca Aditya [email protected]

Arandi Ariantara [email protected] Research Analyst Coal, Metals, Oil & Gas ext 3619

+62 31 535 2788 (Surabaya Branch)

Ashish Agrawal [email protected] Vice President Institutional Equity Sales ext 2550 / 2553

Reynard Poernawan [email protected] Institutional Equity Sales ext 2528

Ari Santosa [email protected] Sales Trader ext 2554

Yohanes Adhi Handoko [email protected] Manager, Surabaya Branch ext 7250

Suwardi Widjaja [email protected] Institutional Equity Sales ext 2548

Hanna Marionda [email protected] Sales Trader ext 2525

Adriana Kosasih [email protected] Sales Executive ext 2541

Head Office Graha Niaga, 19th Floor Jl. Jend. Sudirman Kav. 58 Jakarta 12190 Indonesia Tel. 62 21 250 5081 Fax. 62 21 522 6049

http://www.bahana.co.id

Surabaya Branch Wisma BII, Ground Floor Jl. Pemuda 60-70 Surabaya 60271 Indonesia Tel. 62 31 535 2788 Fax. 62 31 546 1157

Important Disclosures and Disclaimer This publication is prepared by PT.Bahana Securities and reviewed by Daiwa Securities Group Inc. and/or its affiliates, and distributed outside Indonesia by Daiwa Securities Group Inc. and/or its affiliates, except to the extent expressly provided herein. Certain copies of this publication may be distributed inside and outside of Indonesia by PT. Bahana Securities in accordance with relevant laws and regulations. This publication and the contents hereof are intended for information purposes only, and may be subject to change without further notice. Any use, disclosure, distribution, dissemination, copying, printing or reliance on this publication for any other purpose without our prior consent or approval is strictly prohibited. Any review does not constitute a full verification of the publication and merely provides a minimum check. Neither Daiwa Securities Group Inc. nor any of its respective parent, holding, subsidiaries or affiliates, nor any of its respective directors, officers, servants and employees, represent nor warrant the accuracy or completeness of the information contained herein or as to the existence of other facts which might be significant, and will not accept any responsibility or liability whatsoever for any use of or reliance upon this publication or any of the contents hereof. Neither this publication, nor any content hereof, constitute, or are to be construed as, an offer or solicitation of an offer to buy or sell any of the securities or investments mentioned herein in any country or jurisdiction nor, unless expressly provided, any recommendation or investment opinion or advice. Any view, recommendation, opinion or advice expressed in this publication constitutes the views of the analyst(s) named herein and does not necessarily reflect those of Daiwa Securities Group Inc. and/or its affiliates nor any of its respective directors, officers, servants and employees except where the publication states otherwise. This research report is not to be relied upon by any person in making any investment decision or otherwise advising with respect to, or dealing in, the securities mentioned, as it does not take into account the specific investment objectives, financial situation and particular needs of any person. Neither Daiwa Securities Group Inc. nor any of its affiliates is licensed to undertake any business within the Republic of Indonesia. Any display of any trade name or logo of the Daiwa Securities Group Inc. on this publication shall not be deemed to be an undertaking of any business within the Republic of Indonesia. Daiwa Securities Group Inc., its subsidiaries or affiliates, or its or their respective directors, officers and employees fro m time to time may have trades as principals, or have positions in, or have other interests in the securities of the company under research including market making activities, derivat ives in respect of such securities or may have also performed investment banking and other services for the issuer of such securities. The following are additional disclosures. Ownership of Securities For “Ownership of Securities” information, please visit BlueMatrix disclosure link at https://daiwa3.bluematrix.com/sellside/Disclosures.action. Investment Banking Relationship For “Investment Banking Relationship”, please visit BlueMatrix disclosure link at https://daiwa3.bluematrix.com/sellside/Disclosures.action. Japan Daiwa Securities Co. Ltd. and Daiwa Securities Group Inc. Daiwa Securities Co. Ltd. is a subsidiary of Daiwa Securities Group Inc. Investment Banking Relationship Within the preceding 12 months, The subsidiaries and/or affiliates of Daiwa Securities Group Inc. * has lead-managed public offerings and/or secondary offerings (excluding straight bonds) of the securities of the following companies: Modern Land (China) Co. Ltd (1107 HK); econtext Asia Ltd (1390 HK); Accordia Golf Trust (AGT SP); GF Securities Co Ltd (1776 HK); Mirae Asset Life Insurance Co Ltd (085620 KS); China Reinsurance Group Corporation (1508 HK). *Subsidiaries of Daiwa Securities Group Inc. for the purposes of this section shall mean any one or more of: • Daiwa Capital Markets Hong Kong Limited (大和資本市場香港有限公司) • Daiwa Capital Markets Singapore Limited • Daiwa Capital Markets Australia Limited • Daiwa Capital Markets India Private Limited • Daiwa-Cathay Capital Markets Co., Ltd. • Daiwa Securities Capital Markets Korea Co., Ltd Disclosure of Interest of Bahana Securities Investment Banking Relationship Within the preceding 12 months, Bahana Securities has lead-managed public offerings and/or secondary offerings (excluding straight bonds) of the securities of the following companies: Waskita Karya Persero Tbk PT (WSKT IJ); Adhi Karya Persero Tbk PT (ADHI IJ); PP Properti Tbk PT (PPRO IJ); Merdeka Copper Gold Tbk PT (MDKA IJ); Anabatic Technologies Tbk PT (ATIC IJ); Aneka Tambang Persero Tbk PT (ANTM IJ). Hong Kong This research is distributed in Hong Kong by Daiwa Capital Markets Hong Kong Limited (大和資本市場香港有限公司) (“DHK”) which is regulated by the Hong Kong Securities and Futures Commission. Recipients of this research in Hong Kong may contact DHK in respect of any matter arising from or in connection with this research. Relevant Relationship (DHK) DHK may from time to time have an individual employed by or associated with it serves as an officer of any of the companies under its research coverage. Singapore This research is distributed in Singapore by Daiwa Capital Markets Singapore Limited and it may only be distributed in Singapore to accredited investors, expert investors and institutional investors as defined in the Financial Advisers Regulations and the Securities and Futures Act (Chapter 289), as amended from time to time. By virtue of distribution to these category of investors, Daiwa Capital Markets Singapore Limited and its representatives are not required to comply with Section 36 of the Financial Advisers Act (Chapter 110) (Section 36 relates to disclosure of Daiwa Capital Markets Singapore Limited’s interest and/or its representative’s interest in securities). Recipients of this research in Singapore may contact Daiwa Capital Markets Singapore Limited in respect of any matter arising from or in connection with the research. Australia This research is distributed in Australia by Daiwa Capital Markets Australia Limited and it may only be distributed in Australia to wholesale investors within the meaning of the Corporations Act. Recipients of this research in Australia may contact Daiwa Capital Markets Stockbroking Limited in respect of any matter arising from or in connection with the research. India This research is distributed in India to Institutional Clients only by Daiwa Capital Markets India Private Limited (Daiwa India) which is an intermediary registered with Securities & Exchange Board of India as a Stock Broker, Merchant Bank and Research Analyst. Daiwa India, its Research Analyst and their family members and its associates do not have any financial interest save as disclosed or other undisclosed material conflict of interest in the securities or derivatives of any companies under coverage. Daiwa India and its associates may have received compensation for any products o ther than Investment Banking (as disclosed) or brokerage services from the subject company in this report during the past 12 months. Unless othe rwise stated in BlueMatrix disclosure link at https://daiwa3.bluematrix.com/sellside/Disclosures.action, Daiwa India and its associates do not hold more than 1% of any companies covered in this research report. There is no material disciplinary action against Daiwa India by any regulatory authority impacting equity research analysis activities as of the date of this report.

Taiwan This research is distributed in Taiwan by Daiwa-Cathay Capital Markets Co., Ltd and it may only be distributed in Taiwan to institutional investors or specific investors who have signed recommendation contracts with Daiwa-Cathay Capital Markets Co., Ltd in accordance with the Operational Regulations Governing Securities Firms Recommending Trades in Securities to Customers. Recipients of this research in Taiwan may contact Daiwa-Cathay Capital Markets Co., Ltd in respect of any matter arising from or in connection with the research. Philippines This research is distributed in the Philippines by DBP-Daiwa Capital Markets Philippines, Inc. which is regulated by the Philippines Securities and Exchange Commission and the Philippines Stock Exchange, Inc. Recipients of this research in the Philippines may contact DBP-Daiwa Capital Markets Philippines, Inc. in respect of any matter arising from or in connection with the research. DBP-Daiwa Capital Markets Philippines, Inc. recommends that investors independently assess, with a professional advisor, the specific financial risks as well as the legal, regulatory, tax, accounting, and other consequences of a proposed transaction. DBP-Daiwa Capital Markets Philippines, Inc. may have positions or may be materially interested in the securities in any of the markets mentioned in the publication or may have performed other services for the issuers of such securities. For relevant securities and trading rules please visit SEC and PSE link at http://www.sec.gov.ph/irr/AmendedIRRfinalversion.pdf and http://www.pse.com.ph/ respectively. United Kingdom This research report is produced by Daiwa Securities Co. Ltd. and/or its affiliates and is distributed in the European Union, Iceland, Liechtenstein, Norway and Switzerland. Daiwa Capital Markets Europe Limited is authorised and regulated by The Financial Conduct Authority (“FCA”) and is a member of the London Stock Exchange and Eurex. This publication is intended for investors who are not Retail Clients in the United Kingdom within the meaning of the Rules of the FCA and should not therefore be distributed to such Retail Clients in the United Kingdom. Should you enter into investment business with Daiwa Capital Markets Europe’s affiliates outside the United Kingdom, we are obliged to advise that the protection afforded by the United Kingdom regulatory system may not apply; in particular, the benefits of the Financial Services Compensation Scheme may not be available. Daiwa Capital Markets Europe Limited has in place organisational arrangements for the prevention and avoidance of conflicts of interest. Our conflict management policy is available at http://www.uk.daiwacm.com/about-us/corporate-governance-regulatory. Germany This document is distributed in Germany by Daiwa Capital Markets Europe Limited, Niederlassung Frankfurt which is regulated by BaFin (Bundesanstalt fuer Finanzdienstleistungsaufsicht) for the conduct of business in Germany. Bahrain This research material is distributed by Daiwa Capital Markets Europe Limited, Bahrain Branch, regulated by The Central Bank of Bahrain and holds Investment Business Firm – Category 2 license and having its official place of business at the Bahrain World Trade Centre, South Tower, 7th floor, P.O. Box 30069, Manama, Kingdom of Bahrain. Tel No. +973 17534452 Fax No. +973 535113 This material is provided as a reference for making investment decisions and is not intended to be a solicitation for investment. Investment decisions should be made at your own discretion and risk. Accordingly, no representation or warranty, express or implied, is made as to and no reliance should be placed on the fairness, accuracy, completeness or correctness of the information and opinions contained in this document, Content herein is based on information available at the time the research material was prepared and may be amended or otherwise changed in the future without notice. All information is intended for the private use of the person to whom it is provided without any liability whatsoever on the part of Daiwa Capital Market s Europe Limited, Bahrain Branch, any associated company or the employees thereof. If you are in doubt about the suitability of the product or the research material itself, please consult your own financial adviser. Daiwa Capital Markets Europe Limited, Bahrain Branch retains all rights related to the content of this material, which may not be redistributed or otherwise transmitted without prior consent. United States This report is distributed in the U.S. by Daiwa Capital Markets America Inc. (DCMA). It may not be accurate or complete and should not be relied upon as such. It reflects the preparer’s views at the time of its preparation, but may not reflect events occurring after its preparation; nor does it reflect PT.Bahana Securities’ or DCMA’s views at any time. Neither PT.Bahana Securities, DCMA nor the preparer has any obligation to update this report or to continue to prepare research on this subject. This report is not an offer to sell or the solicitation of any offer to buy securities. Unless this report says otherwise, any recommendation it makes is risky and appropriate only for sophisticated speculative investors able to incur significant losses. Readers should consult their financial advisors to determine whether any such recommendation is consistent with their own investment objectives, financial situation and needs. This report does not recommend to U.S. recipients the use of any of PT.Bahana Securities’ or DCMA’s non-U.S. affiliates to effect trades in any security and is not supplied with any understanding that U.S. recipients of this report will direct commission business to such non-U.S. entities. Unless applicable law permits otherwise, non-U.S. customers wishing to effect a transaction in any securities referenced in this material should contact a Daiwa entity in their local jurisdiction. Most countries throughout the world have their own laws regulating the types of securities and other investment products which may be offered to their residents, as well as a process for doing so. As a result, the securities discussed in this report may not be eligible for sales in some jurisdictions. Customers wishing to obtain further information about this report should contact DCMA: Daiwa Capital Markets America Inc., Financial Square, 32 Old Slip, New York, New York 10005 (Tel no. 212-612-7000). Ownership of Securities For “Ownership of Securities” information please visit BlueMatrix disclosure Link at https://daiwa3.bluematrix.com/sellside/Disclosures.action . Investment Banking Relationships For “Investment Banking Relationships” please visit BlueMatrix disclosure link at https://daiwa3.bluematrix.com/sellside/Disclosures.action. DCMA Market Making For “DCMA Market Making” please visit BlueMatrix disclosure link at https://daiwa3.bluematrix.com/sellside/Disclosures.action. Research Analyst Conflicts For updates on “Research Analyst Conflicts” please visit BlueMatrix disclosure link at https://daiwa3.bluematrix.com/sellside/Disclosures.action. The principal research analysts who prepared this report have no financial interest in securities of the issuers covered in the report, are not (nor are any members of their household) an officer, director or advisory board member of the issuer(s) covered in the report, and are not aware of any material relevant conflict of interest involving the analyst or DCMA, and did not receive any compensation from the issuer during the past 12 months except as noted: no exceptions. Research Analyst Certification For updates on “Research Analyst Certification” and “Rating System” please visit BlueMatrix disclosure link at https://daiwa3.bluematrix.com/sellside/Disclosures.action. The views about any and all of the subject securities and issuers expressed in this Research Report accurately reflect the personal views of the research analyst(s) primarily responsible for this report (or the views of the firm producing the report if no individual analysts[s] is named on the report); and no part of the compensation of such analyst(s) (or no part of the compensation of the firm if no individual analyst[s)] is named on the report) was, is, or will be directly or indirectly related to the specific recommendations or views contained in this Research Report.

For stocks and sectors in Indonesia covered by Bahana Securities, the following rating system is in effect: Stock ratings are based on absolute upside or downside, which is the difference between the target price and the current market price. Unless otherwise specified, these ratings are set with a 12-month horizon. It is possible that future price volatility may cause a temporary mismatch between upside/downside for a stock based on the market price and the formal rating. "Buy": the price of the security is expected to increase by 10% or more. "Hold": the price of the security is expected to range from an increase of less than 10% to a decline of less than 5%. "Reduce": the price of the security is expected to decline by 5% or more. Sector ratings are based on fundamentals for the sector as a whole. Hence, a sector may be rated “Overweight” even though its constituent stocks are all rated “Reduce”; and a sector may be rated “Underweight” even though its constituent stocks are all rated “Buy”. “Overweight”: positive fundamentals for the sector. “Neutral”: neither positive nor negative fundamentals for the sector. “Underweight”: negative fundamentals for the sector. Ownership of Securities For “Ownership of Securities” information, please visit BlueMatrix disclosure Link at https://daiwa3.bluematrix.com/sellside/Disclosures.action . Investment Banking Relationships For “Investment Banking Relationship”, please visit BlueMatrix disclosure Link at https://daiwa3.bluematrix.com/sellside/Disclosures.action . Relevant Relationships (Bahana Securities) Bahana Securities may from time to time have an individual employed by or associated with it serves as an officer of any of the companies under its research coverage. Bahana Securities market making Bahana Securities may from time to time make a market in securities covered by this research. Additional information may be available upon request. Japan - additional notification items pursuant to Article 37 of the Financial Instruments and Exchange Law (This Notification is only applicable where report is distributed by Daiwa Securities Co. Ltd.) If you decide to enter into a business arrangement with us based on the information described in materials presented along with this document, we ask you to pay close attention to the following items.  In addition to the purchase price of a financial instrument, we will collect a trading commission* for each transaction as agreed beforehand with you. Since commissions may be included in the purchase price or may not be charged for certain transactions, we recommend that you confirm the commission for each transaction.  In some cases, we may also charge a maximum of ¥ 2 million (including tax) per year as a standing proxy fee for our deposit of your securities, if you are a non-resident of Japan.  For derivative and margin transactions etc., we may require collateral or margin requirements in accordance with an agreement made beforehand with you. Ordinarily in such cases, the amount of the transaction will be in excess of the required collateral or margin requirements.  There is a risk that you will incur losses on your transactions due to changes in the market price of financial instruments based on fluctuations in interest rates, exchange rates, stock prices, real estate prices, commodity prices, and others. In addition, depending on the content of the transaction, the loss could exceed the amount of the collateral or margin requirements.  There may be a difference between bid price etc. and ask price etc. of OTC derivatives handled by us.  Before engaging in any trading, please thoroughly confirm accounting and tax treatments regarding your trading in financial instruments with such experts as certified public accountants. *The amount of the trading commission cannot be stated here in advance because it will be determined between our company and you based on current market conditions and the content of each transaction etc. When making an actual transaction, please be sure to carefully read the materials presented to you prior to the execution of agreement, and to take responsibility for your own decisions regarding the signing of the agreement with us. Corporate Name: Daiwa Securities Co. Ltd. Financial instruments firm: chief of Kanto Local Finance Bureau (Kin-sho) No.108 Memberships: Japan Securities Dealers Association, Financial Futures Association of Japan Japan Securities Investment Advisers Association Type II Financial Instruments Firms Association