Indonesia Autos, Consumer and ASEAN Metals: What can go right for Indonesian stocks under our coverage?

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Indonesia Autos, Consumer and ASEAN Metals: What can go right for Indonesian stocks under our coverage?

Morgan Sekuritas Indonesia

overall fiscal situation has improved, with the gov't looking to cut spending on Steven Suntoso

several programs (link to our Economist’s report). Assuming the worst of the (622-1) 5291 8090

fiscal situation is behind us, investors expect a less aggressive stance on the steven.suntoso@jpmorgan.com

commodity sector, which was one of the underperformers in 2Q. We also PT J.P. Morgan Sekuritas Indonesia

highlighted to investors in our marketing that domestic institutional investors Anuja Mandvekar

are relatively high in cash levels and a rebound could be quick on low liquidity (91-22) 6157-3369

anuja.mandvekar@jpmorgan.com

levels. J.P. Morgan India Private Limited

• Stocks in focus: BCA, ASII and ANTM. These stocks are our current top

picks as we are cognizant of liquidity constraints. Unsurprisingly, there was

limited pushback from investors given the stocks have returned between -20%

and +2% this year (vs JCI -26%). Investors are a lot more comfortable in ASII

and BBCA compared to ANTM, as investors expect ANTM’s gold margin to

drag the upcoming 2Q results and potentially also 3Q depending on how much

gold ANTM has in its inventory by June. We agree that gold margins will be

weak, but we also highlighted that higher ore ASPs will mitigate the 2Q

earnings decline. On the other hand, investors feel more comfortable with ASII

due to its IDR8tn buyback program and also potentially earnings bottoming out

in 2Q as UT’s gold mine has started operating. BBCA is a beta trade for

investors, with many agreeing that the 2Q print will be unexciting.

• SOE banks: opinions skew to negative but this is the most debated space.