PGN -PGAS

Macroeconomic

According to the World Bank in 3/2013 the economic growth of Indonesia will grow at 5.3 %. The nation is still having good expectation for investment. Our economic growth is driven by larger domestic consumption that contributes more than 50 % of total GDP. The challenges are still at our inflation rate, current account deficit and currency exchange rate.

One of vulnerable thing in Indonesia is the capital inflow from abroad that could change currency rate and capital market index level. Our market capitalization is only 60 % of GDP. This is lower than others nations at south East Asia such as Malaysia at 270 %, Thailand at 170 % and Philippines at 140 %.  The majority of Capital inflow from global market seems act as speculative investor which tends to invest in short time. They seem investing money not based on fundamental analysis but they tend to use technical analysis. As sample commonly emerging market does not have good stability in politic, especially in election year.  They could differentiate their stock value with derivative transaction to beat rupiah exchange rate down or up.

In other side the capital inflow could also as a good sign that the circumstances in Indonesia will be better then they will do profit taking once their stock price increase.  

In May 2014, the IHSG index exceeds level of 5000, huge capital inflow amounting to USD 184 million gets inside to Indonesia through capital market. The impact to our economic is not too significant but I think investor will remove their money if the politic circumstances will not be stable in the future especially after president election party. The rupiah exchange rate may decline.  

In global industry the oil price is affected by its production. Commonly the production of oil is affected by geopolitical issues in Middle East such as Iran, Israel, Persian Gulf and etc.

Another problem in Indonesia is our policy in subsidized oil that spends a lot of cost. If the subsidized oil is suddenly no longer exists the inflation rate will jump. in order to anticipate the condition Government has been done energy conversion from oil in to gas. Public transportation is starting to use gas as its fuel.

Based on data in the 2008 -2012 Indonesia was a net importer of oil which means its consumption exceeds its production. It was inversely with natural gas industry in Indonesia which is experiencing surplus. The production exceeds our consumption.

The gas consumption will be higher at the future as our government policy would like to reduce its subsidy in oil consumption. The natural gas industry will take more portions in producing energy and fuel consumption for public transportation.

Perusahaan Gas Negara

The revenue of the company in 2013 is 16.3 % higher compared to previous year. The gross profit margin is lower than 2012 from 57 in to 47 percent. The decline may be caused by gas price. Because of that net profit margin and EBITDA decline.

The majority of the revenue is from sale the natural gas to its client. PGN buys gas from pertamina and its join operation company to other company. In May 2013, the company buy asset of oil and gas property through its subsidiary SEI in ketapang, bangkanai and ujung pangkah. In 2012 its asset of oil and gas property is zero. PGN starts to act as gas exploration and production in 2013.

PGN has huge amount of cash and restricted cash, it is suitable with the nature of business of oil and Gas Company which is usually having huge of cash, depletion and depreciation and also huge tax.

The revenue in the future will be higher than 16 % as its acquisition in three blocks at java and Kalimantan. I just did stress test that revenue increase 5 % and the capital expenditure is 5 % of sales the company will reach similar earning per share at 0.04 the same as earning per share in 2012. I used same gross margin, activity ratio and I did adjustment the company will pay the short term debt off in 2013. If you are interested to my model, you could send sms to me.

The company has short term debt in bank Sumitomo Mitsui and bank of Tokyo Mitsubishi, the each amount is USD 200 million and USD 100 million.

  

               

BBRI

Economic condition of 2014

Indonesia seems stable in its economic growth in 2014, according to the expert it will be at range of 5.8- 6.2. It is slower than economic growth in 2013 which was forecasted at 5.7 % up. Indonesia has good competitive advantage in its economic, this is stable and this is supported by more than 50 % domestic consumption.

As long as people have strong ability in buying goods and the inflation rate is better, the condition will be better. BI rate is at 7.5 %, it is predicted that it will be higher at 2014. The deficit of current account which is contributed by oil and gas sector as main contributor make the central bank keep BI rate at the point.

The current account deficit will be still high in 2014. The lack of government policy in oil and gas sector increases its business risk and the similar problem is also occurred in biodiesel conversion policy in a mixture of diesel. It is difficult to reduce trade deficit in diesel imports. The crisis at Ukraine will trigger higher oil price and finally will increase inflation rate. Higher its rate will force central bank keep Bi rate still high.

76 % of imports are raw material items which means our consumption is not matching with domestic raw material either its number or availability.

I think if industry produce goods which are supported with more local raw material the trade deficit will be able to be reduced.

Central Bank has changed its required reserve from 5 % in to 8 %. With higher reserve, the banks are expected safer. Based on data 2013 credit growth is at 22.2 % yoy in October 2013, this is slower than its growth with 23.1 % on September 2013. This regulation increases its barrier to entry for new comers who have to have more capital to establish Bank.

Bank Rakyat Indonesia

The company still concerns in its core business, the credit retail segment. The micro segment is at 30.7 % of total loan although this is smaller than the retail banking. Since they have launched TerasBRI, its network and product development has been better. TerasBRI as the part of its micro strategic has increased both micro Loan and micro deposit significantly in 2012. Micro segment is designed for personal customer with competitive product such as Kredit Usaha Rakyat and Kupedes as the lending product and simpedes as funding product.

The company expanded its micro infrastructure with 5000 BRI units, 1,778 TerasBRI and 350 mobile TerasBRI.

In 2012 the loan of the company is at IDR 362 trillion. It increases 22.9 % higher than loan in 2011.  Based its loan composition in 2012, the biggest loan of its loan is retail segment with 42 % of total loan. I took rediction the loan will increase 19 % higher with increase of interest income at 20 % in 2014.

In 2008-2012 The company have good loan to deposit ratio, good capital adequacy ratio and low Non performing loan. The asset has average growth at 22.5 % in 2008-2012. The other good news is its average growth of fund from third party in 2008-2012 is at 27.45 %.

As the economic growth in 2014 is predicted in lower rate because of the election schedule in the year, I forecast the placement with bank Indonesia will be higher than 2013 at 20 % increase.

I took prediction that EPS will increase to 1.026, 1,357, 1,543 with consecutive growth 2014-2016 at 20%,25 %, 20%. In 2015 the loan assessment will at 25 % as the optimistic condition of new government.

As long as government could decrease deficit  in current account  inflation rate and Bi rate will be stable.      

If you are interested to my forecasting of BBRI you could send sms 081217596612.