FROM EQUITY RESEARCH DESK

IDEA OF THE DAY

Bank Rakyat Indonesia: KTA from Pegadaian’s Galeri 24 Site Visit (NOT RATED)

• Galeri 24’s profitability continues to grow rapidly as shown by its net profit of Rp250bn in 1Q25, reaching 50% of its FY25 target.
• Its gold sales have been robust, with a 70% own-brand contribution, while plans are underway to expand refinery capacity.
• BBRI currently trades at 1.8x FY25C PBV, near -1SD of its 5-year mean, with an implied CoE of 11.9% (-2.5SD of its 5-year mean).

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RESEARCH COMMENTARY

ACES (Buy, TP: Rp600) – KTA from 1Q25 Earnings Call

• ACES reported 1Q25 revenue growth of 7.2% yoy, supported by SSSG of 2.2%. Growth was led by categories related to Ramadan (home living, appliances, kitchenware electrical, and homeware). Gross profit increased by 6.0% yoy, but GPM declined by 50bps yoy/140bps qoq to 48% due to product mix. Combined with higher opex—particularly in employee costs, A&P, and rental expenses—1Q25 operating profit fell by 49% yoy.
• The mgmt. reported slightly better festive performance than last year but noted softer April sales post-Ramadan.
• AHI opened 4 new stores in 1Q25 (two in Java ex-Jakarta and two ex-Java), reaching 249 stores. It plans to open four more in 2Q25, with the rest in 2H25. Over the next five years, ACES aims for a 55:45 sales mix between Java and ex-Java (currently around 61:39).
• AHI will focus on expanding in second and third-tier cities while boosting productivity. Given weak consumer confidence and global and domestic uncertainties, mgmt. targets ≥5% sales growth, SSSG ≥1%, and 25-30 new store openings in FY25.

 

ARTO (Buy, TP: Rp3,400) MESOP Plan Part II

• The company has announced its plan 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.
• If all the stock options under the 2025–2030 MESOP are exercised, shareholders’ ownership will be diluted by a maximum of 1.41%.
• A General Meeting of Shareholders to decide on this non-preemptive capital increase will be held on 14 May 2025.
• Phase I will be carried out in June 2025, covering up to 80% of the total stock options under the MESOP program. Phase II will be conducted no later than June 2026, covering the remaining undistributed stock options.
• The option validity period (5 years) will last until 14 May 2030, subject to exercise windows determined by the company.
• ARTO previously launched a MESOP for 2023–2028, as approved in the shareholders’ meeting on 25 May 2023.
• In the 2023–2028 MESOP plan, there are still 133 million shares yet to be exercised, which could translate into c. 1% dilution.
• We believe the total 2.4% dilution is not significant over the next 5-year period as the bank is still in its growth phase. Despite the neutral impact on book value, the MESOP plan—which is heavily weighted in Phase I (Jun25)—will put pressure on the bank’s 2Q25 reported earnings.
• Link to the news: FINAL- Perubahan/Tambahan KI MESOP  (Victor Stefano & Naura Reyhan Muchlis – BRIDS)

 

ASII (Buy, TP: Rp5,800) – KTA from 1Q25 Earnings Call 

4W business:

• 1Q25 volume: -5% yoy. Mgmt thinks that it’s premature to conclude that FY25 market will continue to see contraction like in 1Q25, as historically 1Q is always the lowest sales;
• Thus, mgmt. reiterates FY25 market growth expectation of flat yoy (820-865k units)
• Downside risk in 2Q25: in addition to the general econ weakness, in Apr25 and May25 some provinces has stopped subsidy for opsen tax;
• Mgmt confirms that price discounts have not been excessive. Its dealership business has also been supported by revenue from after-sales services.
• ASII aims to launch a hybrid product (a 7-seater) in affordable price range and thus far sees limited competition from Chinese players in the hybrid segment.

 

2W business:

• 1Q25: -3% yoy; weak purchasing power due to layoffs in the manufacturing sector; harvest results not yet optimum.
• 2Q25 onwards: stable commodities prices, good harvest result in 2Q-3Q25 and social assistance should offer support for sales.
• AHM is maintaining a healthy stock level and price adjustments. The high-end segment (e.g., Honda PCX) continues to do well relative to the lower-end.

 

Financing:

• Mgmt acknowledges the tighter liquidity condition may start to impact its financing business, but thus far sees limited increase in CoF (+20bps yoy).
• Impact to NIM and NPL are still manageable.
• It aims to maintain prudent practice for downpayment in 2W segment to limit NPL. 

 

Our take:

• ASII’s 1Q25 earnings drop (-9% yoy, forming 20%/ 21% of our/ cons. FY25F) was largely contributed by UNTR (-30% yoy; 26% of net profit) due to shortfall in UNTR mining service production and coal ASP, as well as impairment in NIC.
• The overall auto business (37% of net profit) have in 1Q25 demonstrated limited impact from the slowing demand (segment net profit: -4% yoy) due to its diversified exposure, with mid-high segment proving to be more resilient.
• Current valuation of 0.9x PBV, -1.5SD to its 5-year mean should limit downside risk. (Erindra Krisnawan – BRIDS)

 

MARKET NEWS

MACROECONOMY

Fed Holds Interest Rates Steady for The Third Time

Fed holds interest rates steady for the third straight time and warned that the chances of both higher unemployment and higher inflation had climbed in the wake of President Donald Trump's tariffs plan (NBC)

 

SECTOR

Commodity Price Daily Update May 8, 2025

Cigarette: Tobacco Excise Revenue Projected to Decline in 2025

The Directorate General of Customs and Excise under the Ministry of Finance projects that tobacco excise revenue will decline this year. According to the Ministry, the potential decrease is driven by the absence of a tariff increase in 2025 and the continued trend of downtrading, where consumers shift to lower-priced cigarette products. In the 1Q25, tobacco excise revenue reached Rp55.7tr, marking a 5.6% yoy increase. However, cigarette production fell by 4.2% yoy during the same period. (Bisnis)

 

CORPORATE

Grab Looks to Strike a Deal to Acquire GOTO in 2Q25

Grab plans to acquire GOTO in the second quarter of this year and has appointed advisers to oversee the deal. However, the transaction remains contingent on several conditions, including financing discussions currently underway with banks. Both Grab and GOTO have declined to comment. The potential deal is estimated to be worth around US$7bn, though it is not yet finalized and negotiations are still ongoing. (Reuters)

 

JSMR to Distribute Rp1.13tr in FY24 Dividends

JSMR will distribute Rp1.13tr in dividends, or Rp156.23 per share (yield: 3.7%), representing 25% of its FY24 net profit. This payout, up 312.61% from last year, follows solid performance, with core profit rising 35.95% to Rp3.7tr and revenue growing 20.32% to Rp18.7tr with payment is set for 21 May 2025. (Kontan)

 

PGAS to Build 44,000 Gas Connections in Surabaya

PGAS plans to build 44,000 new household gas connections in Surabaya between 2025-2026, funded by its internal resources. The project is being fast-tracked due to strong local demand and full support from the Surabaya City Government, aiming for completion ahead of schedule to expand access to clean natural gas. (Kontan)

 

PRDA Allocates Up to Rp200bn for Share Buyback Program

PRDA has allocated a maximum of Rp200bn for a share buyback program. The buyback funds will be entirely sourced from the company's internal cash reserves. This amount will cover stock purchases on the market, broker commissions, and other related costs. The corporate action will take place over a three-month period, from May 8, 2025, to August 7, 2025. According to PRDA, this initiative is aimed at enhancing shareholder value and improving the company's profitability. (Bisnis)

 

TPIA's Aster Chemicals to Acquire 100% of Chevron Phillips Singapore Chemicals

TPIA’s Aster Chemicals, a joint venture with Glencore, will acquire 100% of Chevron Phillips Singapore Chemicals (CPSC), which operates a 400,000-ton polyethylene plant on Jurong Island. Aster also runs a 237,000 bpd refinery and a 1.1 million-ton ethylene cracker in Singapore. (Emiten News)