FROM EQUITY RESEARCH DESK

IDEA OF THE DAY

United Tractors: Earnings Risk Persist in 2Q25; Lowering Est. and TP (UNTR.IJ Rp 21,950; BUY TP Rp 24,900)

• Following 1Q25 earnings miss, we expect 2Q25 earnings to remain soft due to the still above-normal rainfall conditions and weaker coal price.
• We lowered our FY25-27F net profit forecast by -14%/-11%/-3%, taking into account flat growth for Pama’s production and lower coal price.
• We maintain our Buy rating but with a lower TP of Rp24,900, as we see that the current 4.5x P/E has priced in the softer earnings expectation.

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Macro Strategy: Unraveling The Reset

• US-China “Total Reset” deal brough significant relief to global economic specters, although rising short end yield signal lesser rate cuts.
• We observe the 4 factors to assess BI’s potential imminent rate cuts, with more factors points to rate cut, aside from rising swap cost.
• The current economic moderation could be prolonged, requiring an integral approach to fiscal and monetary counter-cyclical policies.

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RESEARCH COMMENTARY

ESSA (Buy, TP Rp750) - KTA from 1Q25 Earnings Call

Ammonia business

• 1Q25 production: -15% yoy.
• Production drop was due to a disruption at the gas supplier (caused by leakage).
• Repair work is currently still underway, with expected completion by Jun25 – mgmt. expects ammonia plant utilization rate to return to optimum level of 113-114% by Jul25 (vs. 1Q25: 104%).

 

LPG business

• 1Q25 production: -7% yoy, due to lower proportion of propane and butane.
• 1Q25 margin expansion was mainly due to timing differences in the booking of maintenance expenses; hence, expects 2Q25 margin to normalize.

 

FY25 guidance

• Mgmt guides for flat Revenue and net profit.
• Expects ammonia price to be rangebound at FY24 level (US$330-380/t).
• Ammonia plant maintenance to proceed as scheduled in 4Q25.

 

SAF project

• Estimated capex: US$400mn (with conventional debt: equity funding), with 30-35 months construction period.
• ESSA will hold majority stake.
• Still premature to indicate project IRR.

 

Blue ammonia project

• Completed the phase-1 data collection and area screening.
• Expects FS study phase-2 in 3Q25.
• Expected commissioning in 4Q28. (Erindra Krisnawan – BRIDS)

 

INCO (Hold, TP Rp3,900) - KTA from 1Q25 Earnings Call

• INCO updated its capex schedule for its growth projects up to 2029, which highlights a decline of US$800mn or a -21% reduction in Pomalaa HPAL capex to US$2.7bn, implying capex intensity of US$22.5k/ton, down from US$28.3k/ton. Furthermore, we also noticed a notable decrease in mining capex for its Pomalaa, Sorowako, and Bahodopi sites.
• INCO announced its 1st resource totaling 825mn wmt of Saprolite and 533mn wmt of Limonite ore. The company also announced a notable increase in limonite reserve to 564mn wmt, +63% yoy, as it converts resources to reserves in 2024.
• Project timeline was slightly changed, with a faster Bahodopi mine expected completion in 3Q25 (vs. 4Q25), whilst other projects are delayed by 1-2 quarter (ex. 4). Mgmt. is confident in the execution of these growth projects as the extension of its concession will be decided based on the completion of its downstream projects.
• INCO submitted 2.2Mtpa of RKAB in Apr25, currently awaiting approval and is ready to sell by 3Q25 after the commencement of Bahodopi mine.
• The one-off gain in derivative contracts recorded in 1Q25 was mainly affected by the approval of tax holiday for BNSI which improved project economics, rather than changes in LME nickel price.
• is negotiating with its offtaker on the possibility of higher payability for its nickel matte as the current market payability could be as high as 85% vs. INCO’s 78%.
• Initial mining cost in Bahodopi is estimated to be at US$10-11/wmt and Pomalaa at US$7.5-8.5/wmt. Pomalaa’s cost is lower due to it being closer to port (22km) vs. Bahodopi (67km), and Pomalaa operates at a much larger scale of 28mtpa vs. Bahodopi (16mtpa). (Timothy Wijaya – BRIDS)

 

 

MAPI (Buy, TP: Rp2,000)/MAPA (Buy, TP: Rp1,250) - KTA 1Q25 Earnings Call

• FY25 Guidance:

• MAPI: High single-digit top-line growth, low single-digit SSSG, 700 gross additional stores (vs. 819 in FY24), maintain GPM ( ̴ 43%) and EBIT margin ( ̴ 9%), capex Rp2tr (Rp1tr for MAPA).
• MAPA: Mid-teens top-line growth, low single-digit SSSG, 450 new stores (within MAPI's 700), maintain GPM ( ̴ 46%) and EBIT margin ( ̴ 13%).

• In 1Q25, most store expansions were in Indonesia, with 137 gross additional stores for MAPI (6% overseas) and 82 for MAPA (9% overseas), reflecting a conservative expansion strategy.
• 1Q25 SSSG for MAPI and MAPA was 0.1% and 2.9%, respectively. The mgmt. noted a demand slowdown post-festive, but iPhone 16 sales exceeded expectations and are expected to support 2Q25 performance.
• Inventory in 1Q25 rose to Rp9.8tr (+11% yoy) due to new store additions, festive stock-up, and iPhone 16 stock-up at the end of Mar25 for sale in Apr25, resulting in inventory days of 145. The mgmt. expects FY25 inventory days at  ̴ 130-135. (Sabela Amalina – BRIDS)

 

MARKET NEWS

MACROECONOMY

Indonesia’s Retail Sales Rose 5.5% yoy in Mar25 Indonesia’s retail sales rose 5.5% yoy in Mar25, sharply revised up from the initial 0.5% estimate, driven by Ramadan demand for food, apparel, and cultural goods. April retail sales is projected to contract by 2.2% yoy, weighed by the decline in FnB category. (Bank Indonesia)

 

SECTOR

Commodity Price Daily Update May 14, 2025

CORPORATE

ADRO Announces Revised Schedule for Share Buyback Implementation

ADRO has announced a change in the schedule for its share buyback program in line with adjustments to the Annual General Meeting of Shareholders (AGMS) schedule. Once the share buyback plan is approved, the buyback period will commence on June 3, 2025, and will continue for the following 12 months. (Kontan)

 

ASII Records Slight Vehicle Sales Growth in Apr25

ASII reported a 0.25% yoy/-28.51% mtm in vehicle sales to 26,976 units in Apr25. From January to April 2025, Astra's total sales reached 137,788 units, down 5.95% yoy. Major contributors were Toyota + Lexus (16,268 units), Daihatsu (8,884 units), and Isuzu (1,802 units). Low-cost green car (LCGC) sales fell 6.86% yoy in April and 19.52% yoy in 4M25. The sales drop was linked to the Eid holiday, which reduced working days. Despite this, Astra maintained a 54% market share, while national vehicle sales rose 5% yoy to 51,205 units. (Bisnis)

 

EDGE Allocates US$30mn to Expand Fiber Optic Network

EDGE (Indonet) has invested US$30mn since 2024 to expand its fiber optic network, aiming to enhance data traffic management and strengthen inter-data center connectivity. The company plans to add 30–40 kilometers of fiber in Jakarta and surrounding areas this year, building on its existing 700 km network to support more complex digital infrastructure demands. (Kontan)

 

HERO Continues Idle Asset Sales to Improve Financials

HERO continues selling idle assets, including land, buildings, and former Giant stores, to reduce liabilities. The mgmt. stated the strategy avoids maintenance costs. However, potential buyers remain limited, with transactions dependent on market prices. (Investor Daily)

 

Hyundai Indonesia Targets 80,000 Vehicle Production in 2025

HMMI aims to produce 80,000 vehicles in 2025, including EVs and ICE models, at its Cikarang plant, which can scale to 250,000 units annually. Around 60-70% will be exported to 70 countries. Models include Santa Fe Hybrid, Kona EV, Stargazer, Creta, and IONIQ. (Kontan)

 

MIDI and AMRT Sign Share Purchase Agreement for 70% Stake in LWS

MIDI announced the signing of a share purchase agreement with AMRT for the sale of PT Lancar Wiguna Sejahtera (LWS) shares. The agreement was finalized on 14th May25. MIDI sold 1.48bn shares, representing 70% of its ownership in LWS, to AMRT at a price of Rp135 per share, totaling Rp200.4bn. (IDX)

 

NFCX Plans Private Placement of 66.7mn Shares

NFCX is preparing a private placement of 66.7mn new shares, equivalent to 10% of its total issued capital. Proceeds will fund strategic investments to boost NFCX’s digital ecosystem across product aggregation, cloud ads, clean energy, wholesale, and entertainment. Controlling shareholder MCAS and its affiliates will not participate in the placement. (Emiten News)