Equity Strategy: Welcoming Danantara

Stock Code	Last Price	Change	Change %
RATU	6.600	350	5,60%
DNET	9.500	325	3,54%
BNLI	3.260	300	10,14%
BALI	1.815	205	12,73%
PANI	11.600	200	1,75%
TPIA	9.675	175	1,84%
DATA	1.340	160	13,56%
RDTX	12.300	150	1,23%

Equity Strategy

Welcoming Danantara

We view Danantara’s formation as potentially aligned with investors’ interests as listed companies under its management may see improved efficiency and capital allocation.
We believe that the overseeing body should help ensure clearer governance structure and transparency.
We currently have Buy ratings on BMRI (TP Rp5,900), BBNI (TP Rp5,100) and TLKM (TP Rp3,680).

Welcoming the SOE Super Holding/ SWF

President Prabowo has inaugurated Daya Anagata Nusantara (Danantara), Indonesia’s Sovereign Wealth Fund. Danantara will become the super holding for Indonesia’s seven largest SOEs and the Indonesia Investment Authority (INA), with total assets reaching US$900bn. This makes Danantara the 7th largest SWF globally in terms of assets under management. President Prabowo stated that the initial US$20bn investment allocated to Danantara comes from budget reallocations and efficiency measures. In FY25, Danantara aims to launch 15 to 20 projects.

Key features of Danantara

In FY24, dividends from the seven SOEs under Danantara amounted to US$5.2bn, representing 95% of SOE dividends received by the government. Under the amended SOE law, these funds will now be reinvested to increase asset value instead of being directly transferred to the state budget. A key feature of the new SOEs law is that investment losses from sound business decisions will no longer be classified as state losses. This allows Danantara and SOEs to operate more flexibly, expand non-state funding, and build strategic partnerships for major projects.

Potential implications for listed companies

On a positive note, we view Danantara’s formation as potentially aligned with investors’ interests as listed companies under its management are expected to benefit from improved efficiency and better capital allocation and financial discipline, including the potential for stronger dividends. We estimate potential upside in dividend yield for BMRI, BBNI, TLKM to 9.6/ 11.2 / 7.1% if the dividend payout is raised to 80% (from our base-case forecast of 7.2/ 7.7 /6.9%). Other potential implications include faster resolution of non-performing assets, which could lead to improved asset quality for SOE banks.

Upside potentials and concerns

As a centralized fund, Danantara could accelerate decision-making processes for capital injections, restructuring, and asset write-offs. Danantara's US$900bn asset base shall allow for long-term investments, particularly in strategic industries such as downstreaming to potentially enhance Indonesia’s competitiveness. On the risk front, aside from execution challenges, investors’ concerns about Danantara mainly revolve around its governance, particularly its direct reporting structure and appointment of officials. Nonetheless, we believe that the overseeing body should help ensure a clearer governance structure and transparency.

Maintain Buy rating on SOEs under Danantara

We currently have Buy ratings on BMRI (TP Rp5,900), BBNI (TP Rp5,100) and TLKM (TP Rp3,680).

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