FROM EQUITY RESEARCH DESK
IDEA OF THE DAY
Indo Tambangraya Megah: Deploying Cost Efficiency Plan Amid Weak Coal Price (ITMG.IJ Rp 22,550; BUY TP Rp 26,500)
- ITMG’s weaker 1Q25 result was in line with seasonality, though the ASP dropped -13% qoq due to a lower CV mix from GPK.
- ITMG have started to lower its expenses through several cost efficiency measures amid weak export demand and lower coal index prices.
- We reiterate our Buy rating with a downgraded TP of Rp26,500. Key risks to our call include lower coal price, sales volume, and higher stripping ratio.
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RESEARCH COMMENTARY
ARTO (BUY, TP: 3,400) - MESOP Plan
- At the recent AGMS, ARTO secured shareholder approval to implement a Management and Employee Stock Ownership Program (MESOP) for the period 2025–2030, by granting stock options to program participants. This will be done through the issuance of up to 200 million new shares, equivalent to 1.44% of the company’s issued and paid-up capital.
- ARTO has also previously launched a MESOP for 2023–2028, as approved in the shareholders’ meeting on 25 May 2023.
- Exercise price:
- Phase I, Period I (part of the 2025-2030 MESOP): Rp2,150/share
- Phase II, Period I (part of the 2023-2028 MESOP): Rp2,150/share
- Exercise Window for both:
- June 2, 2025 - July 16, 2025.
- Number of options:
- Phase I, Period I (part of the 2025-2030 MESOP): 55,719,100 shares, or 28% of the 200mn shares, which below the initially planned max 80% of the total stock options under the program, the remaining can be exercised in the next phase until Jun26.
- Phase II, Period I (part of the 2023-2028 MESOP): 2,500,000 shares.
- After the implementation of these stock options, shareholders’ ownership will be diluted by 0.4%. (Victor Stefano & Naura Reyhan Muchlis – BRIDS)
BI rate cut: a boost for sentiment and growth outlook
BI’s policy rate cut to 5.5% is in-line with BRIDS macro team and consensus’ expectation. We believe the rate cut should support positive sentiment for the market as JCI has historically demonstrated a clear inverse relationship with the policy rate, with a +21% return during the last FY16-18 (125bps) rate cut.
Sector winners:
- During the FY16-18 rate cut period, return for big cap (LQ45: +32%) outpaced small cap (SMC Index: +21%). In terms of sectors, banks have demonstrated the highest inverse relationship during FY16-18 cut (+74-108% return), followed by JSMR (+25%), ASII (+18%).
- In the property sector, our analyst observed that policy rate cuts have historically translated into a reduction in discount to RNAV despite limited impact to marketing sales.
- Banks with higher portion of TD are potential winners: Our Banks analyst Victor Stefano sees that rate cut will benefit banks with a higher portion of TD more, such as BBTN (52%), BRIS (38%), and BBRI (36%). This could also alleviate pressure on BMRI and BBNI, which have c. 40% of their CA deposit in the special rate category. In terms of loan yield, BBCA and BBRI have the upper hand with their fixed/floating rate of 50/12% and 60/7% of total loans, respectively. The banks are also confident about managing the rate of managed-rate loans steady amid lower benchmark rate.
More accommodative liquidity conditions: a tailwind for EPS growth outlook
- Despite a limited scope for further cuts (to 5.25%, based on our economist's forecast), we also see potential support for growth outlook from BI’s decision to loosen liquidity conditions. We retain our FY25-end JCI target of 7,350 for now, based on our EPS growth of 4.5% and 13.5x forward PE. (Erindra Krisnawan – BRIDS)
MARKET NEWS
MACROECONOMY
Bank Indonesia cut the BI Rate by 25bps to 5.50% in May25
Bank Indonesia cut the BI Rate by 25bps to 5.50% in May25, citing weaker macro data and IDR stability. It also lowered its 2025 GDP and loan growth forecasts, and eased liquidity by raising the foreign funding ratio and cutting the liquidity buffer. These steps reflect BI’s urgency to support growth beyond rate cuts, with further easing dependent on global conditions and fiscal support in 2H25. (Bank Indonesia)
Indonesia: Free Nutritious Meal Program Reaches 4mn Beneficiaries Ahead of Target
The Head of the National Nutrition Agency (BGN) announced that Free Nutritious Meal (MBG) program has reached its target of 4mn beneficiaries by the end of May25. As of now, 1,397 Nutrition Food Service Units (SPPG) are operating across 38 provinces, serving 3.9mn people. This number is expected to rise to 4.8mn beneficiaries through 1,691 SPPGs by May 29, 2025. Weekly menus are designed by nutritionists to meet established dietary standards. (Kontan)
SECTOR
Commodity Price Daily Update May 21, 2025
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Cigarette: Government Signals Tobacco Excise Hike in 2026 to Boost Revenue
Following a retail price increase on tobacco, the government plans to raise tobacco excise rates in 2026 to boost state revenue. According to the 2026 KEM-PPKF document, the policy will focus on controlling consumption, increasing revenue, supporting labor, and curbing illegal cigarettes. The Ministry of Finance is preparing a 2026–2029 excise and pricing roadmap aligned with the 2025–2029 national development plan. The roadmap will consider the entire tobacco industry chain and guide future excise hikes, price policies, and structural simplification. (Kontan)
Healthcare: KSBSI Rejects KRIS Implementation in BPJS Health Services
The Central Executive Board of the Confederation of Indonesian Prosperous Labor Unions (DPP KSBSI) has rejected the implementation of the Standard Inpatient Class (KRIS) system under the National Health Insurance (JKN) program managed by the Social Security Administering Body for Health (BPJS Kesehatan). The organization urged President Prabowo Subianto and relevant regulators to review various social security policies to ensure they do not place additional burdens on the public, particularly on workers. (Bisnis)
Tech: KPPU Awaits Grab-GoTo Merger Filing, Starts Early Review
The Indonesian Competition Commission (KPPU) stated it cannot evaluate the proposed Grab-GoTo merger until it receives a formal notification within 30 days after the merger becomes legally effective, as required under Indonesia’s post-merger notification system. While awaiting the official filing, KPPU has launched preliminary research to assess potential impacts, including market entry barriers, anti-competitive risks, and effects on MSMEs. KPPU emphasized its authority to impose sanctions or cancel the merger if it violates competition laws. (TechInAsia)
CORPORATE
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BYD Launches New Seal 2025 in Indonesia BYD Indonesia launched the New Seal 2025 with major updates, including the DiSus C suspension system on the Performance variant and FSD on the Premium. Priced at Rp639mn and Rp750mn respectively, both models offer new tech features and design upgrades, while maintaining the same 82.56 kWh Blade battery with a 650 km range. (Kontan)
DSSA Invests US$2.2mn in Vidio DSSA has invested Rp32.8bn (US$2.2mn) in Vidio. The capital injection, part of a rights issue by Vidio, subsidiary of SCMA under EMTK, aims to strengthen Vidio’s capital structure, support local content production, advance technology, and enhance monetization strategies. (TechInAsia)
INTP to Distribute Rp868bn in Dividends INTP will distribute Rp868bn in cash dividends, or Rp259/share (yield: 4.9%), representing 43% of its 2024 net profit of Rp2tr. The remaining Rp1.14tr will be retained. The dividend schedule begins with the cum date on June 2, 2025, and payment on June 20, 2025. (Emiten News)
ISAT Launches AI Experience Center in Papua ISAT has launched an AI Experience Center in Jayapura, Papua, on May 21, 2025, aiming to expand access to AI-driven solutions in eastern Indonesia. Focused on education and healthcare, the center leverages ISAT’s 5G network and Huawei’s technology to offer personalized learning for remote students and AI-powered diagnostic tools for faster disease detection, including tuberculosis. (TechInAsia)
JPFA’s Subsidiary Achieves Authorized Economic Operator (AEO) Status JPFA's subsidiary, PT Suri Tani Pemuka (STP), which operates in the integrated aquaculture sector, has officially received Authorized Economic Operator (AEO) status from the Directorate General of Customs and Excise (DJBC) of Indonesia. This move aims to position the company as a global player in the aquaculture industry. According to management, this achievement underscores the company’s commitment to implementing safe, efficient business practices in line with international standards. (Investor Daily)
MEDC Targets Major Renewable Projects in 2025 MEDC is ramping up its renewable energy efforts in 2025 with four key projects, including the planned export of 600 MW of solar power to Singapore via the PLTS Bulan project, which will require 2 GW of installed capacity. The company, through Medco Power, is also advancing the second phase of the Ijen Geothermal Plant (targeting 100–105 MW) after completing phase one with 35 MW. Additionally, MEDC has secured new geothermal exploration rights in Samosir, North Sumatra. (Kontan)
MEDC Signs Domestic Gas Swap Agreement at IPA Convex 2025 MEDC, through its subsidiaries Medco E&P Natuna Ltd. and Medco E&P Grissik Ltd., signed a Domestic Gas Swap Agreement at the 2025 Indonesian Petroleum Association Convention and Exhibition (IPA Convex) at ICE BSD, Tangerang. The agreement was signed with key partners including PT Pertamina (Persero), Premier Oil Natuna Sea B.V., Star Energy (Kakap) Ltd., Sembcorp Gas Pte Ltd., Gas Supply Pte Ltd., PetroChina International Jabung Ltd., and PT Perusahaan Gas Negara (Persero) Tbk (PGN). (Kontan)
UNTR Expands Solar Power Projects UNTR, via subsidiary EPN, installed rooftop solar panels at two IPPI sites in Karawang and Bekasi with 807.69 kWp capacity. The system is expected to generate 823,042 kWh annually and cut 691 tons of COâ‚‚ emissions, supporting Astra Group’s ESG goals. (Kontan) |
