U.S. main indexes posted another sharp decline as technology shares extended last week’s selloff. The Nasdaq closed down more than 1% after sliding a combined 3.6% on Thursday and Friday. The S&P and Dow also finished 1% lower with the Dow closing near its nadir of the day. Even worse news is that all three of these major US stock indexes are now negative for the year. The decrease happened as investors are rotating out of growth stocks, especially in the tech sector, and reinvesting into value stocks.
Despite the JCI managed to post solid gains despite weak global stock market condition yesterday, we foresee possibility for a decrease in the JCI ahead of the general election tomorrow. This would be added by pressure from commodities prices, in particular CPO and coal prices. CPO price decreased to RM2,668/ton or the lowest level since February 2014, meanwhile, coal (Newcastle) fell to US$72.7/ton, or the new low since 2009. This would affect the JCI movement today and trigger profit taking that could drag the index into negative area.
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• The company is going to spend Rp22.9bn to acquired Mido Uniforms (Singapore’s clothing company). TRIS will control 85% of the shares of this uniforms company (currently operating for Marina Bay Sands and Singapore Airlines uniforms).
• This acquisition is expected to contribute 6% net sales to TRIS organic clothing. For example; after the acquisition sales will grow 24% to Rp830bn and net profit increase 8-13% to Rp34.6bn.
• Mido is serving in various sectors such as: hotel and resort, hospitals, government agency, banking, and etc. Thus make the company optimist of this growth especially with the rising middle class in domestic market. The company is preparing Rp41bn capex for 2014 (Rp17bn loan from UOB and the rest from internal cash).
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• This expansion is going to target 2mn of homepass customers and aim to get 10mn homepass by the end of 2014. For the homepass alone, the company needs around US$100-300mn. The capex this year is going to reach Rp17.8tn-Rp22.3tn or 20%-25% from target income in 2014, Rp89.1tn.
• The priority for this homepass development is area where it has base transceiver station (BTS), buildings and housings. The plan is to spread this to 30 cities and for now TLKM prioritize 6 broadband cities; Medan, Jakarta, Bandung, Surabaya, Denpasar, and Makassar.
• TLKM is trading at 2014F consensus PER of 14.9x and EV/EBITDA of 5.5x
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• This global bond will be offered at max coupon of 8% per year and will be paid every 6 months. Right now, this bond will mature in 2021 (or until further agreement). For your information, the EGM is scheduled on 8 May 2014. The fund will be used for expansion plan and refinancing. With that being said, TBIG is still considering other options beside global bond. Last year, the company has issued US$300mn global bond which is lower than the plan. In addition, the company has also issued bond in domestic market worth of Rp740bn which is from series of bonds of total Rp4tn (TBIG still has Rp3.3tn).
• In 2013, TBIG booked income of Rp2.6tn or increase 52.9% than the previous year and net profit of Rp1.3tn jumped 40.1%.
• TBIG is trading at 2014F consensus PER of 20.8x and EV/EBITDA of 15.8x
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• HITS is targeting on Rp2tn new contract and approximately Rp1.5tn is coming from LNG sector. In addition, the company is also targeting Rp500bn new contracts from offshore sector and Rp50bn from petrochemical.
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RESEARCH
Bagus Hananto [email protected] (62-21) 3190-1777 ext. 219
Maisyarah Johan [email protected] (62-21) 3190-1777
EQUITY SALES
Dick Hermanto [email protected] (62-21) 3162-063
Agi Susanti [email protected] (62-21) 3162-075
Siti Qobtiah [email protected] (62-21) 3162-065
Pandu Endra [email protected] (62-21) 3190-1777
Supardi [email protected] (62-21) 3162-025
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