Equity Valuation

Matahari Putra Prima, Tbk

October 26, 2015 Target Price Low 3,310

Primary Report

High 3,845 Retail

Stock Performance

Defensive Mode is “On”

Source: Bloomberg, PEFINDO Research and Consulting Equity & Index Valuation Division

Stock Information

IDR

Ticker code

MPPA

Market price as of October 23, 2015

2,570

Market price – 52 week high

4,470

Market price – 52 week low

1,895

Market cap – 52 week high (bn)

24,040

Market cap – 52 week low (bn)

10,191

Last 4 Weeks of Price and Volume

Source: Bloomberg, PEFINDO Research and Consulting Equity & Index Valuation Division

Shareholders

(%)

Multipolar

50.23

Prime Star Investment Pte. Ltd

26.09

Public (each below 5%)

23.68

Contact: Equity & Index Valuation Division Phone: (6221) 7884 0200 [email protected] “Disclaimer statement in the last page is an integral part of this report” www.pefindo-consulting.co.id

Established in 1986, PT Matahari Putra Prima Tbk (“MPPA”) is an Indonesia-based modern retailers, focusing on distributing and selling fast-moving consumer goods (FMCG) to end-users through a vast network of Hypermart, Foodmart, and Boston Health & Beauty outlets. With an aggressive expansion of 45 new stores across all formats in 2014, MPPA has distinguished itself as a No.1 multiformat retailer in Indonesia. As of December 2014, MPPA operates 107 stores of Hypermart, 58 multi-format stores of Foodmart, and 102 stores of Boston Health & Beauty. To provide a new shopping experience for its customers, MPPA has built a new concept of modern Hypermart, known as Hypermart G7 in North Lippo Karawaci, Foodmart Primo in several locations, and new concept of Boston Health & Beauty outlets. MPPA is also in the process of opening a new wholesale store. Taping a new way of shopping, as part of people lifestyle, MPPA has also launched Hypermart Online stores, in which customers can select the products and have them delivered or picked up at the chosen stores. With such expansion and innovation, we believe that MPPA will at least hold a modern trade market share of 35.6% in 2015.

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Matahari Putra Prima, Tbk INVESTMENT PARAMETER Turning on the Defensive Mode In 2014, MPPA managed to open 45 new stores: 8 Hypermart, 28 Foodmart and 9 Boston Health and Beauty, making up a total of 267 stores under its management. We are of the view that MPPA is now turning on their defensive mode, since the weakening of Indonesia economy has also affected MPPA’s performance in 1H2015. Looking at it cautiously, we estimate that MPPA will only open 25 – 30 stores in 2015, and will be more focused on the renovation or refurbishment of its stores. We believe that MPPA is now on the defensive mode, since an aggressive expansion under prevailing economy outlook will not help to improve its financial performance. New Concepts Will Attract Customers In late 2014, MPPA managed to introduce a new concept of its Hypermart known as Hypermart G7, which offers a more convenient way of shopping for customers. MPPA plans to re-modelling around 10 – 12 of its existing Hypermart outlets to apply the G7 concept. Beside that, MPPA plans to launch a new concept of Foodmart retail outlet, known as Foodmart Primo, and a fresh format of wholesale store in Jakarta. We believe that such initiatives will attract more customers and hence provide a strong contribution to MPPA’s revenues in 2016. Benefited by Joint Marketing Program During 1H2015, we view that MPPA’s joint marketing program proves to be useful at the time when revenue growth was limited. The cooperation with several vendors to promote their products in MPPA’s retail outlets provide other revenues from the marketing activities. Such program contributed IDR201.3 billion in 1H2015, up from IDR188.6 billion in 1H2014. Business Prospects Despite the slowing down of Indonesia economic growth to 4.7% in 1H2015, retail sales in Indonesia was growing. Supported by the strong sales of information and communication equipment, food and beverages and tobacco products, domestic retail sales posted a 22.4% YoY growth in April 2015. However, the state of slowing economic growth has cautioned many Indonesian retailers, including MPPA. Taking this situation prudently, MPPA will only open around 25 – 30 new stores in 2015, down from 45 new stores in 2014, and will start focusing on renovating its existing stores or altering them into a new concept of stores. As a result, we estimate that MPPA’s revenue growth will slow down to 13% at the end of 2015, and 11.7% CAGR during the period 2014 – 2019. Table 1: Performance Summary 2012 10,868

2013 11,913

2014 13,590

2015P 15,358

2016P 17,354

Pre-tax profit [IDR bn]

268

585

731

769

864

Net profit [IDR bn]

239

445

554

577

648

41.0

82.7

103.0

107

121

105.0

85.8

24.5

4,1

12,4

P/E [x]

25.8

25.6

29.6

24.0*

21.3*

PBV [x]

1.6

3.5

5.8

4.0*

3.4*

Sales [IDR bn]

EPS [IDR] EPS growth [%]

Source: PT Matahari Putra Prima Tbk, PEFINDO Research & Consulting Equity & Index Valuation Division Estimatates * based on share price as of October 23, 2015 – IDR2,570/share

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October 26, 2015

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Matahari Putra Prima, Tbk MACROECONOMY & INDUSTRY Sluggish Economy in 1H2015, but Slightly Improved in the Second Half The country’s economy performance has been disappointing in the first half of this year. The GDP growth decelerated to a multi-year low in Q1 and recent data is pointing to continued sluggishness in Q2. In May, exports registered an eight consecutive loss and the manufacturing index remained stuck in a contractionary territory amidst ongoing declines in production and new orders. Moreover, the government’s highly touted public spending program is off to a worryingly slow start. Limited progress has been made on the implementation of new infrastructure projects due to bureaucratic obstacles and land disputes. The delays are a concern because government spending was expected to offset weakness in the external sector and was foreseen as the main driver of growth this year. Consumer prices increased 0.54% in June 2015 over the previous month, or hit 7.3% of annual inflation. Price pressures typically increase during the holy month of Ramadhan, which began this year in mid-June. As a result, the Bank Indonesia decided to hold the BI policy rate at 7.5%, as expected by the market. Table 2: Macroeconomic Indicators Indicators Inflation (%) GDP Growth (%) BI Rate (%)

2013

2014

1H15

2015F*

6.4 5.6 7.5

6.4 5.0 7.75

7.3 4.7 7.5

6.5 5.0 7.2

Source: Bank Indonesia, PEFINDO Research & Advisory – Equity & Index Valuation Division Notes:* Projection

However, we projected that the economic growth will be picking-up later in 2015 and strengthen further in 2016, as public spending gathers pace, and confidence recovers. The abolition of fuel subsidies has provided the necessary fiscal space for increased public infrastructure investment. After spiking, following the removal of fuel subsidies, inflation is now moderating in large part because of the fall in energy prices. Inflation is likely to stay at 6.5%, as the recent currency weakness offsets lower energy prices. Slowing Down of Retail Sales Growth Revenue of Indonesia’s retail sector as of July 2015 (as depicted by Real Sales Index) only post a slightly growth of 4.8% YoY or amounted to 197.4 points, dropped significantly from the 22.3% YoY growth in the same period of last year. Almost all of product types showed a decreasing, including food and beverages as well as tobacco which post a declining growth of 6% YoY from 30.4% YoY of previous growth. Jakarta posted a biggest contraction of -39.2% YoY. Retail sales is estimated to pick-up its pace in August 2015 citing an index of 185.4, or improved by 10.6% YoY, higher than the previous period of 4.8%. However, for the next three or six months, the sales price will increase due to the upcoming 2016 new year celebration.

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October 26, 2015

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Matahari Putra Prima, Tbk

Figure 1: Indonesia Retail Sales, Dec’14 – July’15 (Yoy growth)

Source: Bank Indonesia, PEFINDO Research & Consulting – Equity & Index Valuation Division

Many Challenges Ahead Modern retailers continue to record a rapid growth. Within modern retailers, grocery stores managed to perform much better than non-grocery. Groceries being a basic need amongst consumers remained the priority in terms of household spending compared to non-grocery items. Therefore, despite weakening purchasing power, the shift of consumer spending towards modern retailers greatly benefited the channel which continued to record positive growth of 14% YoY in 2014 and a moderate growth of 6.6% YoY in 1H2015. However, companies faced challenges in terms of burgeoning costs within retailing such as limited rental space available in key cities especially Jakarta, increasing rental rates especially in prime locations, as well as increasing tariffs for electricity. Therefore, streamlining business process such as optimizing rental space per outlet and reducing costs as necessary became an increasing focus compared to expansion plans during the year.

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October 26, 2015

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Matahari Putra Prima, Tbk BUSINESS INFORMATION MPPA at a Glance MPPA was established in 1986, and throughout the years they finally marked themselves as the leader in terms of number of retail outlets. In 2012, MPPA divested its non-core businesses, which enabled them to focus on its Fast Moving Consumer Goods business. Focusing on that, MPPA has completely operates 109 Hypermart, 68 Foodmart, and 104 Boston Health & Beauty (“Boston”) stores, as of March 2015. In 2013, MPPA was accomplished to open 39 new stores across all formats, and continued opening another 45 stores in 2014, including new concept stores of Hypermart G7 in North Lippo Karawaci. Table 3: Differentiation of Hypermart, Foodmart and Boston Characteristics Hypermart Foodmart Boston Target customers Mid-class society Mid-class society Mid-class society Format Weekly and Weekly and Providing monthly shopping monthly healthy lifestyle destination for shopping with affordable basic necessities. destination for price for the basic necessities. families. Number of outlets 109 outlets 68 outlets 104 outlets Average area of 6,080 sqm 150 sqm – 1,780 53 sqm each outlet sqm Number of products 26,000 – 31,000 4,500 – 10,000 1,300 – 3,000 sold in each outlet Type of products Household Household Health care and sold appliances, fresh appliances, fresh beauty products food, non-food food, non-food and electronics and electronics Sales contribution +/- 92.1% +/- 7.2% +/- 0.7% Source: PT Matahari Putra Prima Tbk, PEFINDO Research & Consulting – Equity & Index Valuation Division

Continue to Expand Its Stores After setting its focus on FMCG products, MPPA continues to expand its stores networking. From 80, 29, and 78 stores of Hypermart, Foodmart and Boston in 2012, it grew to 109, 68 and 104 stores, respectively, as of 1H2015. Such progress has brought MPPA to be a market leader in terms of number of stores in Indonesia. Figure 2: Number of Stores, 2012 – 1H2015

Source: PT Matahari Putra Prima Tbk, PEFINDO Research and Consulting Equity & Index Valuation Division Estimates

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October 26, 2015

Will Benefit from Outside Java Network In 2015, it is envisioned that > 60% of MPPA’s new stores will be opened outside Java island. We view such strategy will provide much benefit since Page 5 of 14

Matahari Putra Prima, Tbk the competition is relatively low in that market. Growing, but still underserved, coupled with high GPD per capita, geographic markets such as Sulawesi and Kalimantan are MPPA’s target for expansion. Leveraging its logistic infrastructure and advanced distribution practices, MPPA will be able to excel the operations in that market and make it profitable in near term.

Figure 3: Stores Location, 2014

Source: PT Matahari Putra Prima Tbk, PEFINDO Research and Consulting - Equity & Index Valuation Division Estimates

Light and Scalable Business Model We need to highlight MPPA’s light and scalable business model and view it works well with current macroeconomic conditions. In financing its stores expansion, MPPA relies considerably on their internal cash with a target of 4% - 5% of sales. Employing this kind of strategy allows MPPA to better manage its financial risk at time of uncertainty like today. With scalable outlet area (under lease), which is relatively smaller than most competitors’ outlets, MPPA will likely generate positive cash flows in the first year of the outlet operation. In turn, this strategy has allowed MPPA to penetrate market faster. Efficient Logistic Platform In order to keep their cost low, MPPA now operates the three major distribution centers in Java to serve its network of retail outlets. The distribution centers are located in Balaraja – Banten, Surabaya – East Java, and Cibitung – West Java. Dry products are distributed from Balaraja and Surabaya, while fresh products are dispatched from Cibitung. Using their own distribution centers, MPPA has been able to reduce its logistic costs to just 0.3% of sales, since 59% of its total sales is distributed from its own distribution centers. Figure 4: Allocation from Distribution Center

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October 26, 2015

Source: PT Matahari Putra Prima Tbk, PEFINDO Research and Consulting - Equity & Index Valuation Division Estimates

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Matahari Putra Prima, Tbk

New Types of Store Coming Up By late 2014, MPPA launched a new format for Hypermart stores, known as Hypermart G7. This new format will provide a more convenient way of shopping, since it will provide larger alleys for customers. Beside Hypermart G7, MPPA introduced Foodmart Primo, which is also different than the existing format of Foodmart Gourmet, Foodmart Supermarket, and Foodmart Express. Further, MPPA made a foray into a wholesale business by setting up first store in Jakarta. For Boston Health & Beauty, MPPA plans to have its stores free-standing, apart from Hypermart and Foodmart. With a compact store area, we think that the number of Boston Health & Beauty stores will outnumber that of Hypermart in the future. Figure 5: MPPA’s New Type of Stores

Source: PT Matahari Putra Prima Tbk, PEFINDO Research and Consulting - Equity & Index Valuation Division Estimates

Accolades for Their Achievement During 2014, MPPA received many awards for their performance and achievement as form of recognition from respectable parties. To name a few; MPPA was awarded the Best Company for Corporate Governance with Best Investor Relation by Asia money, the Most Admired Companies by Fortune Indonesia, Excellence Service Experience Award from Bisnis Indonesia & Carre CCSL.

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October 26, 2015

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Matahari Putra Prima, Tbk FINANCE Limited Growth of Revenue, Erodes Bottom Line During 1H2015, to certain extent MPPA was also affected by the weakening Indonesia economy. With the economic growth in Indonesia slowing down, MPPA only managed to book a 6.65% sales growth during 1H2015, the lowest growth since 2013. Although booked a negative growth of bottom line, MPAA slowly improves its net margin. In 1H2015, its net income margin booked a negative growth of -13.60 YoY with margin of 2.56%, drop from the same period in 2014 of 3.16%. Increasing salary and employment benefit due to higher minimum salary erodes such margin. Figure 6: MPPA’s Revenue and Growth, 1Q2012 – 1H2015

Source: PT Matahari Putra Prima Tbk, PEFINDO Research and Consulting - Equity & Index Valuation Division Estimates

Figure 7: Net Income and Growth, 1Q2012 – 1H2015

Source: PT Matahari Putra Prima Tbk, PEFINDO Research and Consulting - Equity & Index Valuation Division

Revenue from Joint Marketing Supports Operating Profit Growth In their outlets, MPPA has launched joint marketing initiatives with several vendors to promote their products since 2014. Such strategy proves to benefit MPPA, since it has significantly reduced MPPA’s selling expenses from outlet rentals. Figure 8: MPPA’s Selling Expenses, 1Q2012 – 1Q2015

Source: PT Matahari Putra Prima Tbk, PEFINDO Research & Consulting - Equity & Index Valuation Division

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October 26, 2015

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Matahari Putra Prima, Tbk Relatively No Debt After paying off its bonds and sukuk in 2013, MPPA’s balance sheet turned very strong. Today, it carries almost no interest bearing debt in their book, which reduced the interest expenses to only IDR281 million for 1Q2015. However, in 1H2015, there was a slight increase of MPPA’s interest bearing debt to IDR125 billion, which carried its interest expenses to IDR5.69 billion. With scalable and asset light business model, plus sufficient cash (around IDR218 billion as of 1H2015), a procurement of new debt is not required in the near term to finance the expansion capex. Figure 9: MPPA’s Interest Bearing Debt, 2012 – 1H2015

Source: PT Matahari Putra Prima Tbk, PEFINDO Research & Consulting - Equity & Index Valuation Division

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October 26, 2015

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Matahari Putra Prima, Tbk SWOT ANALYSIS

Table 4: SWOT Analysis Strength   

 

Weakness

Proven track record as a modern retailer. Rapid store expansion. New format of Hypermart, Foodmart and Bostons’ stores. Efficient Logistic platform. Relatively has no debt. Opportunity

 

Rising middle class leads to higher disposable income. Low penetration of modern retail outlets, especially outside Java.



Limited private lable products that can improve margins.



Changing government regulations could impact retail industry. Tough competition, especially for products price.



Threat

Source: PEFINDO Research & Consulting Equity & Index Valuation Division

PEERS COMPARISON Table 5: MPPA and Peers Performance Summary as of March 2015

Sales [IDR bn] Gross Profit [IDR bn] Operating Profit [IDR bn] Net Profit [IDR bn] Total Asset [IDR bn] Total Liabilities [IDR bn] Total Equity [IDR bn]

MPPA

HERO

6,854

7,481

1,203

1,677

220.3

(31)

175.4

(32)

6,681

8,969

3,877

3,546

2,803

5,423

Growth YoY Sales [%] Operating Profit [%] Net Profit [%]

6.6

15.1

(13.9)

(138.9)

(13.6)

(133.3)

3.2

(0.4)

2.6

(0.4)

2.6

(0.0)

0.1

(0.1)

0.04

0.06

Profitability Operating Margin [%] Net Margin [%] ROA [%] ROE [%] Leverage Interest bearing debt to equities (%)

Source: PT Matahari Putra Prima (Persero) Tbk, PT Hero Supermarket Tbk., PEFINDO Equity & Index Valuation Division

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October 26, 2015

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Matahari Putra Prima, Tbk TARGET PRICE Valuation 

Methodology We applied the Discounted Cash Flow (DCF) method as the main valuation approach considering that its income growth is the main driver for MPPA valuation instead of asset growth. Furthermore, we applied Guideline Company Method (GCM) as a comparative method. This valuation is based on 100% MPPA’s shares price as of October 23, 2015, using MPPA’s financial report as of June 30, 2015 for our fundamental analysis.

 Value Estimates We employed Cost of Capital of 10.34% and Cost of Equity of 10.42% based on the following assumption: Table 6: Assumption Risk free rate [%]* Risk premium [%]* Beta [x]** Cost of Equity [%] Marginal tax rate [%] Interest Bearing Debt to Equity Ratio [x] WACC [%]

8.66 1.34 1.32 10.42 25.0 0.03 10.34

Source: Bloomberg, PEFINDO Research & Consulting - Equity & Index Valuation Division Estimates Notes: * As of October 23, 2015 **PEFINDO Beta Saham as of October 22, 2015

The Target Price for 12 months, based on the valuation as per October 23, 2015, is as follows:  Using DCF method with discount rate assumption 10.34% is IDR3,736 – IDR4,128 per share.  Using GCM method (PBV 3.07X and P/E 26.36X) is IDR2,322 – IDR3,177 per share. In order to arrive at a value which represents both value indications, we have weighted the results from DCF and GCM methods by 70%:30%. Based on the above calculation, the Target Price of MPPA for 12 month is IDR3,310 – IDR3,845 per share. Table 7: Summary of DCF Method Valuation Conservative

Moderate

Aggressive

1,281 18,741 584 515 20,092 5,378 3,736

1,349 19,728 584 515 21,145 5,378 3,932

1,416 20,714 584 515 22,199 5,378 4,128

PV of Free Cash Flows [IDR bn] PV Terminal Value [IDR bn] Non-Operating Assets – [IDR bn] Interest Bearing Debt [IDR bn] Total Equity Value [IDR bn] Number of Share [mn shares] Fair Value per Share [IDR] Source: PEFINDO Equity & Index Valuation Division Estimates

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October 26, 2015

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Matahari Putra Prima, Tbk Table 8: GCM Comparison

P/E [x] P/BV [x]

MPPA

HERO

Average

26.36

n.a

26.36

4.93

1.20

3.07

Source: Bloomberg, PEFINDO Research and Consulting Equity & Index Valuation Division

Table 9: Summary of GCM Method Valuation

P/E [x] P/BV

Multiple [x]

Est. Earning/share [IDR]

Est. BV/share [Rp]

Value [IDR]

26.61 3.07

121

-

3,177

-

758

2,322

Source: Bloomberg, PEFINDO Research and Consulting Equity & Index Valuation Division Estimates

Table 10: Fair Value Reconciliation Fair Value per Share [IDR] DCF

GCM

Average

Upper limit

4,138

3,127

3,835

Bottom limit

3,754

2,455

3,365

70%

30%

Weight

Source: PEFINDO Research and Consulting Equity & Index Valuation Division Estimates

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October 26, 2015

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Matahari Putra Prima, Tbk

Table 11: Consolidated Statement of Comprehensive Income

Figure 10: Market Value Added and Market Risk

(IDR bn)

2012

2013

2016P

10,868

COGS

(8,971) (10,024) (11,236) (12,686) (14,337)

Operating expense

1,898

1,889

(1,585) (1,300)

13,590

2015P

Sales Gross profit

11,913

2014

15,358

17,354

2,354

2,672

3,016

(1,643)

(1,921)

(2,173)

Operating profit

313

588

712

751

843

Other income (charges)

(46)

(3)

19

18

21

1

-

-

-

-

Equity in net earning (loss) of associates Pre-tax profit

268

585

731

769

864

Tax

(29)

(140)

(177)

(192)

(216)

Net profit

239

445

554

577

726

Source: Bloomberg, PEFINDO Research & Consulting Equity & Index Valuation Division

Source: PT Matahari Putra Prima Tbk, PEFINDO Research and Consulting - Equity & Index Valuation Division Estimates

Figure 11: ROA, ROE and Assets Turnover

Table 12: Consolidated Statement of Financial Position

(IDR bn)

2012

2013

2014 2015P

2016P

Cash and cash equivalents

1,362

1,303

748

1,065

Short-term investment

1,554

63

-

-

-

Receivables

324

414

383

856

967

Inventories

1,671

2,274

2,655

2,954

3,339

175

115

118

162

179

5,085

4,168

3,904

5,037

5,594

Fixed assets

775

1,087

1,273

1,431

1,808

Other assets

2,365

1,325

651

733

825

8,225

6,580

5,827

7,201

8,227

1,422

1,989

1,893

1,738

1,964

Short-term liabilities

537

188

-

527

543

Other short-term liabilities

757

861

856

1,164

1,254

Assets

Other assets

Total Current Assets

Total assets

1,109

Liabilities Trade payables

Long-term debts

Source: PT Matahari Putra Prima Tbk, PEFINDO Research & Consulting Equity & Index Valuation Division

Table 13: Key Ratios 2012

2014 2015P 2016P

Growth [%] Net sales Operating profit Net profit

1,475

-

-

-

-

188

247

229

348

393

Total liabilities

4,379

3,285

2,979

3,776

4,153

Profitability [%]

Total equity

3,846

3,295

2,849

3,425

4,074

Gross margin

Other long-term liabilities

2013

Source: PT Matahari Putra Prima Tbk, PEFINDO Research and Consulting - Equity & Index Valuation Division Estimates

22.0

9.6

14.1

13.0

13.0

209.5

88.1

20.9

5.6

12.2

99.1

85.8

24.5

4.1

12.4

17.5

15.9

17.3

17.4

17.4

Operating margin

2.9

4.9

5.2

4.9

4.9

Net margin

2.2

3.7

4.1

3.8

3.7

ROA

2.9

6.8

9.5

8.0

7.8

ROE

6.2

13.5

19.4

16.8

15.9

Liabilities to equity

1.1

1.0

1.0

1.1

1.0

Liabilities to assets

0.5

0.5

0.5

0.5

0.5

Solvability [x]

Source: PT Matahari Putra Prima Tbk, PEFINDO Research and Consulting - Equity & Index Valuation Division Estimates

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October 26, 2015

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Matahari Putra Prima, Tbk DISCLAIMER This report was prepared based on trusted and reliable sources. Nevertheless, we do not guarantee its completeness, accuracy and adequacy. Therefore, we are not respon sible for any investment decisions made based on this report. All assumptions, opinions and predictions were solely our internal judgments as of the reporting date, and those judgments are subject to change without further notice. We are not responsible for any mistakes or negligence that occurs by using this report. Recent performance cannot always be used as a reference for future outcome. This report does not offer a recommendation to purchase or hold particular shares. This report might not be suitable for some investors. All opinions in this report have been presented fairly as of the issuing date with good intentions; however, they could change at any time without further notice. The price, value or income of each share of the Company stated in this r eport might be lower than investor expectations, and investors may obtain returns lower than the invested amount. Investment is defined as the probable income that will be received in the future; nonetheless such returns may fluctuate. As for companies whose shares are denominated in a currency other than Rupiah, foreign exchange fluctuation may reduce their share value, price or the returns for investors. This report does not contain any information for tax considerations in investment decision -making. The share price target in this report is a fundamental value, not a fair market value or a transaction price reference required by regulations. The share price target report issued by the PT PEFINDO Riset Konsultasi (“PRK”) or “PEFINDO Research and Consulting” is not a recommendation to buy, sell or hold particular shares. It should not be considered as investment advice from the PRK and its scope of service to some parties, including listed companies, financial advisors, brokers, investment banks, finan cial institutions and intermediaries, does not correlate with receiving rewards or any other benefits from such parties. This report is not intended for any particular investor and cannot be used as part of an objective investment analysis of particular shares, an investment recommendation, or an investment strategy. We strongly recommend investors to consider the suitability of the situation and conditions before making a decision in relation with the figures in this report. If necessary, consult with you r financial advisor. PEFINDO keeps the activities of the Equity Valuation Division separate from its Ratings Division to preserve the independence and objectivity of its analytical processes and products. PEFINDO has established policies and procedures to maintain the confidentiality of non-public information received in connection with each analytical process. The entire process, methodology and the database used in the preparation of the Reference Share Price Target Report as a whole are different from the processes, methodologies and databases used by PEFINDO in issuing ratings. This report was prepared and composed by PRK with the objective of enhancing the transparency of share prices of listed companies in the Indonesia Stock Exchange (IDX). This r eport is also free of influence from any other party, including pressure or force either from IDX or the listed company reviewed. PRK earns a reward from IDX and the reviewed company for issuing this report twice a year. For further information, please visit our website at http://www.pefindo -consulting.co.id This report was prepared and composed by the PEFINDO Research & Consulting - Equity & Index Valuation Division. In Indonesia, this report is published in our website and in the IDX website.

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October 26, 2015

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