Error
  • SERVER_CONNECT_FAILED, failed to open stream: php_network_getaddresses: getaddrinfo failed: Name or service not known
Close
< September 2018 >
Mon
Tue
Wed
Thu
Fri
Sat
Sun
 
 
 
 
 
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30

Stock Index
Bahana Securities

26 Sep 2018 | 13:20 WIB
INDEX
SCORE
POIN
%
COMPOSITE
5.867,577
-14,643
-0,249%
Last 1 day
IDX30
506,315
-1,426
-0,281%
Last 1 day
MBX
1.652,827
-3,955
-0,239%
Last 1 day
DBX
973,853
-3,190
-0,326%
Last 1 day
KOMPAS100
1.191,793
-3,851
-0,322%
Last 1 day
BISNIS-27
512,230
-1,815
-0,353%
Last 1 day

Currencies
Bahana Securities

26 Sep 2018 | 13:20 WIB
KURS
BUY
SELL

Q4 corporate earnings: The good, the bad and the ugly

Out of 97 companies (78.7% of total market cap of the JCI) under our coverage that have announced their 4Q15 results, only 24 corporates (25%) booked net earnings that were above expectations, 36 companies (37%) in line and 37 (38%) below.

For the market as a whole (exhibit 1), actual 4Q15 y-y operating profit growth reached +7.0% (3Q15: +8.3%, 2Q15: -7.7%), vs. +9.0% in 4Q14. On the bottom line, 4Q15 y-y net profit decelerated from to -6.7% (4Q14: +1.4%, 3Q15: -7.4%, 2Q15: -6.7%).

The culprits behind the 4Q15 earnings slowdown would be IDR depreciation against the USD, and weak domestic consumption despite some 4Q15 GDP growth improvement to 5.04% in 4Q15 (1Q15: 4.71%, 2Q15: 4.67%; 3Q15: 4.73%; 2015: 4.79%).


Five sectors, which saw higher-than the market’s operating and net profit growth performances, are in the good sector (exhibit 2). In 4Q15, the poultry sector, which benefited from some IDR appreciation and the culling program that allowed for higher chicken prices, experienced the biggest improvements as its net earnings reversed from negative to positive, helped also by the 2014 low-base effect as the industry suffered from oversupply and FX losses.

On the telcos, the sector was propped up by solid data growth and industry ARPU that increased 11% y-y to IDR37k.

For construction/infrastructure, both WSKT and PTPP displayed 35% y-y operating profit growth in 4Q15 while JSMR benefited from a 23% y-y decrease in opex on the back of an accounting change (amortization methodology was altered to unit of traffic base to better reflect current company condition).

On the banks, the industry experienced slower loan growth and higher provisioning, causing y-y deceleration in 4Q15 bottom-line growth. We continue to remain cautious on Indonesian banks on policy risks which have caused our banking analyst to recently cut 2016 earnings, particularly as we expect the sector’s NPLs to start rising in 1Q16.

In the consumer sector, the staples performance was stellar, although overall results were dragged down by the discretionary side, which was mainly hurt by three stocks: MLPL/MPPA (due to less rebates from suppliers and inventory cost clean up) and HERO (caused by store rationalization program and underperforming convenience stores).


Only one sector in the bad section (exhibit 3), which experienced mixed results relative to the market (ie, operating performance worse than the market, but net profit growth better, supported by interest income on its solid balance sheet). At the operating level, cement suffered from low demand caused by the weak property market while margins suffered from the government’s price intervention as well as intense competition as new players entered the fray.

Within the ugly section (exhibit 4), the automotive sector experienced disappointing revenues on weak demand while ASII’s net profit was dragged down by UNTR’s asset-impairment charges.


In property, corporate earnings were hit by slower revenue recognition from soft 2014 pre-sales as demand began to weaken on the slowing economy. Hence, property counters suffered from flat ASP and weak margins.

On plantations, as with other commodity-related industries, lower price was the biggest culprit, as the CPO price plunged 25% y-y to USD614/ton in 4Q15. Moving on to oil, the sector experienced an earnings reversal from positive growth to negative as oil prices plunged 47% y-y in 4Q15 to average at USD53/bbl. At the company level, both MEDC and PGAS suffered from impairment charges, which pulled down their bottom lines.


For coal, sales volumes fell 4% y-y to 107.2m tons (28% of total national figure of 383m tons, -16% y-y) for the companies under our coverage while the coal price also decreased 18% y-y to USD58m/ton in 4Q15. Finally, in the metal industry, companies were disadvantaged by lower prices with ANTM’s earnings pulled down by poor cash costs due to third-party purchases and low gold prices, which fell 8% y-y to USD1,160/toz, as well as nickel prices having fallen 30% y-y to USD11,807/ton.


Overall, the scarcity of growth that we had seen in 3Q15 has persisted into 4Q15, and this will likely mean further earnings downgrades in the market place going forward. We continue to remain cautious in sectors related to big-ticket items like Auto and Property, suffering from the government’s aggressive taxation drive. Weakness in property should also filter through to cement.


However, on a more positive note, we believe the solid performance of the IDR should remain supportive of the market and we retain our 2016 index target at 5,300, helped by lower interest rates to support economic growth ahead.

At this stage of the cycle, we continue to advise investors to remain in staples, telcos and construction/ infrastructure, which have higher earnings visibility, supported by Jokowi’s initiatives to provide job creation through an infrastructure push.

❮ Back to previous page