Category: Industries

Jokowi’s State Capitalism: 2019 Budget (1)

President Joko ‘Jokowi’ Widodo shows his consistency in accelerating infrastructure development with Rp420.5 trillion of budget for infrastructure next year, an increase of 2.46% from this year. Budget for viability gap fund (VGF) for infrastructure projects, meanwhile, jumped by 50% to Rp4.5 trillion. 

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More Promising Cement Data in July, but…

Domestic cement sales volume reached 6.34 million tons last month, an increase of 12.6% year-on-year. PT Semen Indonesia Tbk (SMGR), the market leader, also reported 11.4% growth year-on-year in the month. President Joko ‘Jokowi’ Widodo’s decision to expand 2019 Budget for Infrastructure, including public housing, might prevent deeper correction of margins.

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The Collapse of Electronic Solution

Indonesian Court had on August 16, 2018 granted the Suspension and Debt Payment Obligations (PKPU) Petition filed by Bank Resona Perdana against PT Sumber Electrindo Makmur, operator of Electronic Solutions outlet. Under PKPU, PT Sumber is given a temporary moratorium of 45 days, which can be extended to a fixed moratorium not exceeding 270 days, during which period a composition plan will have to be submitted for approval by PT Sumber’s creditors.

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Connectivity Report: Sumatra

Sumatra is the second most populous island in Indonesia, home to nearly 60 million people. Improved connectivity should unlock economic potentials in the island, which will likely be started in North Sumatra, South Sumatra, and Lampung. North Sumatra, the most populous province in the island, is set to grow faster than other provinces.

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On Delong’s US$950 Million Steel Project in Sulawesi

Minority shareholders of SGX-listed Delong Holdings demanded the Company to suspend the US$950 million steel mill project in the so-called Indonesia Morowali Industrial Park (IMIP), Sulawesi Island, pointing to the company’s unsuccessful attempt in geographical diversification (outside China, especially Thailand). The board of Delong, however, insisted to proceed, expecting commercial operation in the coming months.

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Connectivity Report: Java

Slightly behind schedule, President Joko ‘Jokowi’ Widodo is expected to inaugurate Section III and IV of the Pejagan-Pemalang toll road, developed by Waskita Karya (WSKT), this month. Physical construction of the toll road has been 100% completed. We, accordingly, are moving closer to full connectivity of trans-Java.

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Connectivity Report: Greater Jakarta

Greater Jakarta should be a better place to live in 12 months time, in the context of public infrastructure. The first light rail transit (LRT) in the city, connecting Kelapa Gading and Velodrome Rawamangun might miss the target for operation during Asian Games (starting in two weeks time), but it should be in commercial operation months after that. No problem. Trial operation of the first mass rapid transit (MRT) in Jakarta, and the country, might also be behind schedule next month. But, overall outlook is positive.

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Political Support for Electric Vehicles in Indonesia

“Can you produce it here?” asked President Joko ‘Jokowi’ Widodo to executives of Toyota, when he visited the company’s booth and saw a Prius at Gaikindo Indonesia International Auto Show (GIIAS) Thursday (Aug 2). Earlier on Wednesday, energy and mineral resources repeated his statements about why he is a big supporter of electric vehicles in Indonesia.

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Bright Spot of The Economy: Pulp & Paper

Pulp and paper producers are clear winners of the year, so far. Shares of PT Fajar Surya Wisesa (FASW) Tbk, for example, have gained nearly 100% in the past 12 months. Indah Kiat (INKP) and Tjiwi Kimia (TKIM), meanwhile, have skyrocketed 623% and 1,091% respectively in the same period. Apparently, these companies reported strong financial performance in the first half.

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Xiaomi Beats Samsung

Pretty much as predicted, Zhuhai Xiaomi Communication Co has grown significantly its sales in Indonesia. For the first time, Xiaomi surpassed Samsung in sales, at least based on financial report of Erajaya Swasembada (ERAA), the largest retailer of cellular and smartphones in Indonesia, in the first half of 2018.

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Indocement in First Half: Margins Squeezed Further

Cement producers yet to see the light, and probably have to wait few more years. Indocement Tunggal Prakarsa (INTP), the second largest player in the market, booked net profit of Rp355 billion in the first half of 2018, crashed by 60% from the corresponding period last year as profit margins were squeezed further.

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First Half Results & The Market

Composite index of Indonesia Stock Exchange (IDX) finally returned to above 6,000 this morning, lifted by positive sentiment from first half results of companies. Tire manufacturer Goodyear, steel pipe producer Citra Tubindo, ICT distributor Metrodata, and mining company Kapuas Prima Coal reported significantly stronger performance in the period.

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