ANALYSTS SAY: Buy, Sell, Hold (20 Dec)

MAYBANK KIM ENG

Bank Rakyat Indonesia (BBRI IJ)
Full speed ahead

Upgrade to BUY; raising TP to IDR5,300
We upgrade BBRI to BUY due to strengthening loan growth and loan quality improvement. Reflecting management’s robust loan growth forecast and significant improvement in cost of credit for 4Q22, we upgrade our forecast loan growth for 22E/23E/24E to 11%/11%/12% from 9%/11%/13%, altering our FY22/23/24 earnings growth forecasts to 55%/14%/12%. We
roll forward our valuation base to FY23E, resulting in a higher TP of IDR5,300 (from IDR4,600), based on a higher 2.4x 23E P/BV (from 2.3x 22E PBV) with ROE of 17.8%, COE of 12.6%, and a long-term growth rate of 8.9%. Downside risks to our call include: 1) tight funding competition; and 2) weaker loan growth. We transfer coverage to Jeffrosenberg Chen Lim.

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Telkom Indonesia Persero (TLKM IJ)
Operations intact; Goto flesh wound

Maintain BUY with a new TP of IDR5,300
We maintain our BUY call on TLKM with a new TP of IDR5,300 (from IDR5,500). We like TLKM for 1) its strong network across Indonesia, 2) dividend play, 3) market leader. 9M22 core-operations fell in line with our
expectation (see Fig 1). Our lower DCF-based TP reflects an adjustment for GOTO’s share price, capex, and dividend payout (see Fig 11). We think the recent sell-off offers an opportunity, with 44% upside to our TP and
with TLKM trading at a discount to regional peers (see Fig 14)

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LIM & TAN

Keppel Corporation ($7.31, down 2 cents) announced that through its indirect wholly-owned subsidiary, Gadius Pte Ltd (“Gadius”) is divesting 100% of its equity interest in Shanghai Fengwo to Shanghai Jindi. Shanghai Fengwo owns 100% of the equity interest in Taicang Xinwu which in turn owns 15% equity interest in Taicang Zhuchong. Taicang Zhuchong indirectly owns Upview, an 8.4-ha residential project in Jiading District, Shanghai, China.

Keppel Corporation’s market cap stands at S$12.81 bln and currently trades at 13.74x Forward PE and 1.1x PB, with a dividend yield of 4.2%. Consensus target price stands at S$9.18, representing 25.6% upside from current share price. We continue to like Keppel Corp’s asset monetization strategy and the latest slew of positive announcements such as revised terms for its KOM benefitting Keppel directly, and strong 3Q22 business updates where Keppel saw revenue rising 24%yoy, helped by an improving energy/environmental and asset management business segments. Given undemanding valuations, we continue to recommend an “Accumulate” rating on Keppel Corp.

CapitaLand Investment / CLI ($3.65, up 0.03), Ally Logistic Property (ALP) and Pruksa Holding PCL (PSH) are pleased to announce a strategic partnership to establish a S$1 billion CapitaLand SEA Logistics Fund (CSLF). CLI, ALP and PSH have committed an initial equity investment of S$270 million with an option to increase their investment up to S$540 million, and a target to achieve assets under management of S$1 billion. CLI, ALP and PSH will contribute their respective strengths and network in this partnership to grow CSLF’s logistics portfolio in Southeast Asia.

We believe that this partnership would allow CLI to be at the forefront to capitalize on the global supply chain’s diversification out of the North Asian markets into the South East Asian markets to reduce the dependence on the global supply chain on China. The rising recurring income stream would allow management to raise their dividend payments on a sustainable basis over the medium-longer term period. We thus maintain an “Accumulate” rating on CLI given its strong recurring income stream and 17% upside to Bloomberg consensus target price of $4.30. CLI is trading at a Forward PE of 17x and provides a dividend yield of 3.3%.