2014

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May 7, 2015 - country's largest listed containerized cargo services company with 22 vessels or a total of 202k DWT ... C
2014 Asiamoney's Asiamoney’s Finance Asia's 2013 2013 Best Best Domestic Best Domestic Equity House Equity House Equity House

Alpha Southeast Asia 2014 Best Research Call FMCG Sector

Spotlight 7 May 2015

Pelayaran Tempuran Emas

BUY

Sector: Shipping (Neutral)

(Initial coverage)

Agustinus Reza Kirana

PX:IDR1,955–TP:IDR3,000 TP/consensus: na; TP momentum*: na JCI: 5,185

E-mail: [email protected] Phone: +6221 250 5081 ext. 3616

Smooth sailing Biggest listed container cargo services play with diversified client base 87.8%-owned by Harto Kusumo, Tempuran Emas (TMAS) (exhibit 6) is the country’s largest listed containerized cargo services company with 22 vessels or a total of 202k DWT (Dead Weight Ton), capable of transporting 12,838 TEUs (Twenty-foot Equivalent Units) per trip. Over the medium-to-long term, TMAS is likely to enjoy Indonesia’s potential economic growth through its distribution of consumer goods (40%), cement (30%), raw materials (20%) and vehicles (10%) for a variety of customers, such as Holcim (SMCB), Indocement (INTP), Mayora (MYOR) and Bogasari, Indofood’s (INDF) flour division. We like TMAS as it is not reliant on a single company/ sector. Beneficiary of Jokowi’s maritime measures, lower rentals/fuel costs In the next five years, we expect TMAS to benefit from structural changes from Jokowi’s maritime measures, which will mean greater domestic port efficiencies and margins. We note that the government plans to cut ships’ average dwelling time from 8 days to 4.7 days (pre-custom clearance: 2.7 days, custom clearance: 0.5 days, and post-custom clearance: 1.5 days). At the Pontianak (West Kalimantan) port, dwelling time has fallen from 7-10 days last year to just 1 day, and from 3-4 days to 1 day at the Belawan (North Sumatra) port. TMAS had also invested IDR118bn in heavy equipment (exhibit 11) in 2013 to develop its stevedoring business (loading and discharge of container vessels at terminal ports), which has reached 40% of total 2014 revenue (exhibit 16). Today, TMAS has 14 mechanical operations at 7 port terminals in Jakarta, Surabaya and Makassar, allowing for lower rental charges on heavy equipment for terminal activities (lift on lift off). We also expect the current low oil price to support TMAS’ operations. This coupled with lower rental costs and higher port efficiency should increase 2015 net margin to 14% (2013: 5%, 2014: 12%).

Exhibit 1. Company information Market cap (IDRb/USDm) : 3M avg.daily t.o.(IDRb/USDm) : Bloomberg code :

2,225 /170 1.2/0.1 TMAS IJ

Source: Bloomberg

Exhibit 2. Shareholders information Temas Lestari (%) : Free float (%) :

87.8 12.2

Source: Bloomberg

Exhibit 3. Key forecasts and valuations 2013 2014 2015F 2016F Year to 31 Dec Revenue (IDRb) 1,384 1,687 1,819 2,203 EBIT (IDRb) 136 324 395 455 Net profit (IDRb) 70 203 258 305 Bahana/cns. (%) EPS (IDR) 62 178 226 268 EPS growth (%) (41.2) 187.7 27.5 18.2 EPS momentum na na EV/EBITDA (x) 10.5 6.3 5.4 4.7 PER (x) 31.7 11.0 8.6 7.3 FCFPS (IDR) (10) 83.7 (49) 12 FCF yield (%) (0.5) 4.3 (2.5) 0.6 BVPS (IDR) 316 270.5 633 834 PBV (x) 6.2 7.2 3.1 2.3 DPS (IDR) 11 57 67 Yield (%) 0.5 2.9 3.4 ROAA (%) 4.2 12.5 13.2 13.2 ROAE (%) 21.0 38.2 35.8 32.1 EBIT margin (%) 9.8 19.2 21.7 20.7 Net gearing (%) 272.4 141.1 119.0 95.3 Source: Bloomberg, Bahana estimates Note: Pricing as of close on 6 May 2015

Exhibit 4. Relative share price performance (%)

(%) 700

Aggressive expansion with USD100mn investment through 2017 Going forward, TMAS plans to aggressively expand its capacity in shipping containers and terminals, targeting to spend USD100mn in total until 2017. The company is currently building 2 new vessels (3,000 DWT) and upgrading 6 vessels (up to 5,300 DWT), which should be completed by end-2015. TMAS is also constructing a terminal in Jakarta, bringing the total 2015 capex to USD40mn. These new expansion plans and increased operating activities (see major assumptions overleaf) should support our 2015 revenue forecast of IDR1.8tn, up 8% y-y. Improved earnings and margins in 2014 have resulted in a healthier balance sheet with net gearing dropping to 141% (2013: 272%), allowing TMAS to increase its loans to finance its USD100mn investment plans in the next 2 years. Cheap on 54% discount to the region; BUY on 53% upside potential On valuation, TMAS is currently trading at a 2015F PE of 8.6x, an attractive 54% discount to regional peers (exhibit 23). Its 11% ytd underperformance (exhibit 4) was due to negative sentiment from increased revenue tax, which has now been canceled by the government. Hence, we expect improved sentiment ahead, and we initiate coverage with a 12M TP of IDR3,000 based on 2015F PE of 13.2x, around 30% discount to region (exhibit 23). Downside risk includes more available containers resulting in greater competition.

700 581.1

600 500

600 500

406.6

400

400

300

300

200

200

100

17.8

0 (100)

100

8.7

0

(0.3)

(10.9)

(100)

ytd

1M

3M

6M

9M

12M

TMAS IJ relative to JCI

Source: Bloomberg, Bahana

Exhibit 5. Share price performance (IDR)

('000)

2,500

8,000

7,000 2,000

6,000 5,000

1,500

4,000 1,000

3,000 2,000

500

1,000 0 6-May-14

6-Jul-14

6-Sep-14 Volume (RHS)

6-Nov-14

6-Jan-15

6-Mar-15

0 6-May-15

TMAS IJ Px Last

Source: Bloomberg, Bahana

Disclosure: Bahana Securities does and seeks to do business with companies covered in its research reports. Investors should consider this report as only a single factor in making their investment decision. Please see the important disclaimer information on the back of this report

*Based on consensus’ recent changes ↑ (up), ↓ (down), ↔ (unchanged)

Asiamoney's 2013 Best Domestic Equity House

2014 Finance Asia's Best Equity House

Alpha Southeast Asia 2014 Best Research Call FMCG Sector

7 May 2015

Pelayaran Tempuran Emas Year to 31 December PROFIT & LOSS (IDRbn) Sales Gross profit EBITDA Depreciation EBIT Net interest inc./(expense) Forex gain/(losses) Other income/(expense) Pre-tax profit Taxes Minority interest Extraordinary gain/(losses) Net profit

2012

2013

2014

2015F

2016F

1,086 196 249 125 124 (64) 15 65 141 (21) (0) 120

1,384 200 301 165 136 (89) 32 14 92 (21) (0) 70

1,687 388 471 146 324 (89) 2 (1) 236 (33) (1) 203

1,819 463 570 174 395 (100) (1) 295 (36) (1) 258

2,203 539 661 206 455 (105) (1) 349 (43) (1) 305

BALANCE SHEET (IDRbn) Cash and equivalents S-T investments Trade receivables Inventories Fixed assets Other assets Total assets Interest bearing liabilities Trade payables Other liabilities Total liabilities Minority interest Shareholders' equity

43 134 32 1,304 21 1,534 869 238 77 1,185 0 349

53 176 28 1,353 60 1,671 967 299 68 1,334 1 336

43 198 27 1,295 64 1,627 792 190 113 1,095 1 531

42 221 30 1,609 50 1,953 902 223 105 1,230 1 722

45 268 32 1,899 61 2,305 952 274 127 1,353 1 951

CASH FLOW (IDRbn) EBIT Depreciation Working capital Other operating items Operating cash flow Net capital expenditure Free cash flow Equity raised/(bought) Net borrowings Other financing Net cash flow Cash flow at beginning Ending cash flow

124 125 46 54 349 (592) (243) 5 261 (13) 10 34 43

136 165 (80) (226) (5) (6) (11) 98 (77) 10 43 53

324 146 3 (277) 196 (32) 164 (171) (3) (10) 53 43

395 174 (87) (107) 376 (432) (56) 106 (51) (1) 43 42

455 206 (28) (187) 446 (432) 14 50 (61) 3 42 45

34.3 7.8 18.1 22.9 11.4 11.0 0.5 1.9 237.0 56.7 45 98 13

21.0 4.2 14.5 21.7 9.8 5.1 17.0 0.5 1.5 272.4 57.9 46 92 9

38.2 12.5 23.0 27.9 19.2 12.0 0.5 3.6 141.1 48.7 50 95 12

35.8 13.2 25.4 31.3 21.7 14.2 25.0 0.5 4.0 119.0 46.2 45 60 8

32.1 13.2 24.5 30.0 20.7 13.9 25.0 0.6 4.3 95.3 41.3 45 60 7

26 224 198,028 1,058

22 181 237,405 1,229

22 202 270,105 1,481

25 244 300,701 1,555

29 283 345,218 1,835

RATIOS ROAE (%) ROAA (%) Gross margin (%) EBITDA margin (%) EBIT margin (%) Net margin (%) Payout ratio (%) Current ratio (x) Interest coverage (x) Net gearing (%) Debts to assets (%) Debtor turnover (days) Creditor turnover (days) Inventory turnover (days) MAJOR ASSUMPTIONS Total vessels (unit) Total capacity (k DWT) Total container delivery (TEUs) Total trips Source: Company, Bahana estimates

Agustinus Reza ([email protected]) +6221 2505081 ext. 3616

On higher trip frequencies and cost efficiencies, 2014 net profit jumped to IDR203bn, up 190% y-y, before averaging to a more manageable level of 23% in 2015-16

Expansion in the next 2 years will likely raise its fixed assets, to be funded mainly by retained net profit and loans …

… for a total capex IDR864bn until 2016F,

of

… resulting in a lower net gearing

We expect total trips to increase in 2015-16 on higher market demand

Asiamoney's 2013 Best Domestic Equity House

2014 Finance Asia's Best Equity House

Alpha Southeast Asia 2014 Best Research Call FMCG Sector

7 May 2015

Exhibit 6. Corporate structure TMAS’ parent company, Temas Lestari, owned by Harto Khusumo, has close to 88% stake in the company

TEMAS LESTARI Public

12.22%

87.78%

PT Pelayaran Tempuran Emas 0.33%

99.00%

Harto Khusumo

Harto Khusumo

99.69%

99.80%

99.67%

0.31% 1.00%

0.2%

PT. Tirtamas Express

Anemi Maritime Co. Ltd

PT. BM Olah Jasa Trisari Andal

PT. Escorindo Stevedoring

Source: Company, Bloomberg

Exhibit 7. Subsidiaries’ profiles Subsidiaries PT. Tirtamas Express Anemi Maritime Co. Ltd PT. BM Olah Jasa Trisari Andal PT. Escorindo Stevedoring

Location Jakarta Malta Jakarta Jakarta

Business activities Shipping Containers leasing Stevedoring and other related activities Stevedoring

Year of operational 2000 2003 1989 2003*

TMAS has four subsidiaries for its various businesses

Source: Company; *acquisition in 2013

Exhibit 8. Network services mapping Currently, TMAS has operations in all major islands in Indonesia …

Source: Company

Exhibit 9. Domestic services Jakarta Base Jakarta  Pontianak Jakarta  Palembang Jakarta  Banjarmasin Jakarta  Batam Jakarta–Pekanbaru–Dumai–Jakarta Jakarta–Balikpapan–Samarinda-Jakarta

Source: Company

Surabaya Base Surabaya  Banjarmasin Surabaya  Ambon Surabaya  Jayapura Surabaya–Balikpapan–Samarinda-Surabaya Surabaya–Makassar–Papua-Surabaya Surabaya–Pontianak–Pekanbaru-Jakarta Surabaya–Belawan–Pekanbaru

Makassar Base Makassar  Kupang Makassar  Banjarmasin Makassar-Jayapura-Surabaya Makassar-Surabaya-Jakarta

… with the largest bases in Jakarta, Surabaya and Makassar

Asiamoney's 2013 Best Domestic Equity House

2014 Finance Asia's Best Equity House

Alpha Southeast Asia 2014 Best Research Call FMCG Sector

7 May 2015

Exhibit 10. List of vessels, 2014 No. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22

List of vessels Belik Mas Estuari Mas Guhi Mas Hilir Mas Jales Mas Kali Mas Kanal Mas Kedung Mas Kuala Mas Lagoa Mas Lagun Mas Mare Mas Samudera Mas Segora Mas Selat Mas Sendang Mas Strait Mas Spring Mas Tasik Mas Telaga Mas Umbul Mas Warih Mas Total

Deadweight (tonnes) 8,180 8,100 5,200 8,180 8,100 8,100 8,180 7,400 8,700 8,753 5,200 8,100 5,222 5,252 18,106 6,200 18,106 24,341 8,180 8,180 8,180 8,180 202,140

Capacity (TEUs) 558 537 283 558 537 537 558 488 538 538 283 537 296 296 1,048 406 1,048 1,560 558 558 558 558 12,838

Age (years old) 3 7 7 3 7 7 3 32 8 7 7 7 11 11 21 11 21 18 3 3 3 3 9*

As at end-2014, TMAS owned 22 vessels for its shipping activities, with a total normal capacity of 12,838 TEUs and average container delivery of 22,509 TEUs at a utilization rate of 1.87x

Source: Company; *average

Exhibit 11. List of heavy equipment, 2014 No. 1 2 3 4 5 6 7 8 9 10 11 12 13 14

List of heavy equipment HMC GHMK 4406 + Spreader HMC GHMK 4406 + Spreader Reach stacker C4531 Reach stacker C4531 Reach stacker C4531 Reach stacker C4531 Reach stacker C4531 Forklift linde H320 Forklift linde H320 Forklift linde H320 SL Handler Model C90/8 SL Handler Model C90/8 SL Handler Model C90/7 HMC Gottwald

Year of purchasing October 2014 October 2014 October 2014 October 2014 October 2014 October 2014 October 2014 October 2013 October 2013 October 2013 October 2013 October 2013 October 2013 October 2013

Location Jakarta terminal 3 Jakarta terminal 4 Surabaya Surabaya Jakarta depo tembang Makassar Jakarta terminal 1 Jakarta terminal 1 Surabaya Jakarta terminal 3 Jakarta terminal 3 Jakarta – Depo cakung Surabaya Surabaya

Investment on heavy equipment in 2013-2014 has resulted in decreased rental costs

Source: Company

Exhibit 12. List of customers TMAS benefits from a variety of customers and is not dependent on single customer

Source: Company

Exhibit 13. List of port developments, 2015 No. 1 2 3 4 5 6 7 8

Location Kuala Tanjung port, Medan, North Sumatra Tanjung Perak port, Semarang, Middle Java Pontianak Bitung Makassar Banjarmasin Kupang Halmahera

Source: Various media sources, Bahana

The government has allocated IDR17.7tn in the state budget for sea transportation including port developments, new vessel purchases, jetty renovations and telecommunication installation

Asiamoney's 2013 Best Domestic Equity House

2014 Finance Asia's Best Equity House

Alpha Southeast Asia 2014 Best Research Call FMCG Sector

7 May 2015

Exhibit 14. Market share by company, 2014

Others 22%

TMAS is currently the third largest (but the largest listed) containerized cargo service company in Indonesia with a 17% market share, representing 22 vessels and around 12,800 TEUs

Meratus 23%

Spil 16% Tanto 22% Temas 17% Source: Company

Exhibit 15. Revenue CAGR, 2011-2016F (IDRbn) 2,400 2,203

2,200 2,000 1,819

1,800

1,687

1,600

We forecast a 2011-16F revenue CAGR of 18%, mainly supported by higher efficiencies at domestic ports as the government plans to decrease ships’ dwelling time from 8 days to 4.7 days (pre-custom clearance of 2.7 days, custom clearance of 0.5 days, and postcustom clearance of 1.5 days)

1,384

1,400 1,200

1,086 958

1,000 800

2011

2012

2013

2014

2015F

2016F

Source: Company, Bahana estimates

Exhibit 16. Revenue breakdown, 2014 Stevedoring (terminal activities) contributed around 40% to overall revenue in 2014 with a gross margin of 22.3% (2013: 19.5%; 2012: -14.0%)

Stevedoring 39% Shipping 61%

Source: Company

Asiamoney's 2013 Best Domestic Equity House

2014 Finance Asia's Best Equity House

Alpha Southeast Asia 2014 Best Research Call FMCG Sector

7 May 2015

Exhibit 17. EBITDA CAGR, 2011-2016F We expect a 2011-16F EBITDA CAGR of 18.5% …

(IDRbn) 700

661

650 600

570

550 500

471

450 400 350

300

301

283 249

250 200 2011

2012

2013

2014

2015F

2016F

Source: Company, Bahana estimates

Exhibit 18. Net profit CAGR, 2011-2016F … and a net profit CAGR of 63% on the back of …

(IDRbn) 350 305 300 258 250 203

200 150

120

100 50

70 27

2011

2012

2013

2014

2015F

2016F

Source: Company, Bahana estimates

Exhibit 19. Margins, 2011-2016F … increasing margins before a slight decrease in 2016 as we expect oil prices to recover …

(%) 35 30 25 20 15 10 5 0 2011

2012

EBITDA margin Source: Company, Bahana estimates

2013

2014

Gross margin

2015F

Net margin

2016F

Alpha Southeast Asia 2014 Best Research Call FMCG Sector

2014 Finance Asia's Best Equity House

Asiamoney's 2013 Best Domestic Equity House

7 May 2015

Exhibit 20. Cost structures, 2013-2014

2013 Rent 7%

… given that fuel costs represent 30% of total COGS

2014

Others 6%

Rent 1%

Others 7%

Maintenances 5%

Maintenances 4%

Salaries 5% Stevedoring 36%

Salaries 5%

Stevedoring 40% Depreciation 11%

Depreciation 14%

Fuel and Oil 31%

Fuel and Oil 28%

Source: Company

Exhibit 21. List of some listed domestic shipping companies Company Name Wintermar Offshore Marine Logindo Samudramakmur Soechi Lines

Ticker WINS IJ LEAD IJ SOCI IJ

Humpus Intermoda Trans

HITS IJ

Pelayaran Nelly Dwi Putri

NELY IJ

Mitrabahtera Segara Sejati

MBSS IJ

Business lines Offshore support vessel Offshore support vessel Chartering services Chartering services Chartering services and shipyard for new buildings and maintenances Chartering & Logistics services

Transpower Marine

TPMA IJ

Plyr. Nasional Bina Buana Raya

BBRM IJ

Chartering services

SMDR IJ

Transportation marine, containerized, logistics, offshore support vessels, termintals

Samudera Makmur

Transportation marine

Type of goods Oil & gas offshore services Oil & gas offshore services Fuel, gas and liquors Oil, Liquors, mining bulks, cements, offshore services

No. of vessels 76 vessels 59 vessels 33 tankers 16 vessels

Timber, mining bulks, construction equipment

77 vessels

Coal, cements

169 vessels

Coal, woodchips, clinkers, sponge rotary Coal, iron ores, ,commodities, Oil & gas offshore services Oil, Liquors, mining bulks, cements, consumer goods, offshore services

Some listed shipping companies with details of their business lines and assets

120 vessels 84 vessels

47 vessels

Source: Bloomberg, Bahana

Exhibit 22. TMAS IJ 1Q15 Results summary (IDRb) 1Q14 4Q14 Sales 382 510 Gross Profit 102 125 EBITDA 126 127 Operating expense (14) (24) Operating profit 88 101 Net int. inc./(exp.) (23) (23) Forex gain/(loss) (5) 1 Other inc./(exp.) 1 (1) Pretax profit 61 78 Taxation (7) (10) Minority interest 0 (1) Net profit 54 67 BS & Ratio analysis 1Q14 4Q14 Operating margin (%) 26.6 24.4 EBITDA margin (%) 22.9 19.8 Pretax margin (%) 33.1 24.9 Net margin (%) 16.0 15.3 Inventory days 14.0 13.1 Receivable days 41 50 Payable Days 41 95 Total cash (IDRb) 21 43 Total debt (IDRb) 870 792 Net gearing (%) 205.9 141.1 Source: Company, Bloomberg, Bahana estimates

1Q15 401 97 116 (19) 78 (19) 3 3 66 (6) (0) 60 1Q15 24.2 19.5 28.9 16.4 15.0 42 41 34 793 132.6

q-q (%) (21.4) (22.2) (8.7) (20.6) (22.6) (17.6) 360.0 (547.6) (15.8) (45.3) (94.4) (10.3) 2014 23.0 18.7 27.9 14.0 12.0 50 95 43 792 141.1

y-y (%) 5.0 (4.7) (8.2) 32.9 (10.7) (16.7) (157.1) 300.7 7.7 (24.3) (134.4) 11.9 2015F 25.4 21.2 31.3 16.2 14.2 45 60 42 902 119.0

3M15/ 2015 22

20

23 2016F 24.5 20.4 30.0 15.9 13.9 45 60 45 952 95.3

Due to rainy season in JanuaryMarch 2015, 1Q15 revenue reached IDR401bn, +5% y-y but -21% q-q, translating to IDR60bn net profit, +12% y-y but -10% q-q, representing 23% of our full-year forecast as we expect acceleration in TMAS’ 2Q-3Q15 performance

Asiamoney's 2013 Best Domestic Equity House

2014 Finance Asia's Best Equity House

Alpha Southeast Asia 2014 Best Research Call FMCG Sector

7 May 2015

Exhibit 23. Peer comparison, 2015F Company Name SINGAPORE (OFFSHORE MARINE) EZRA HOLDINGS LTD PACIFIC RADIANCE LTD EZION HOLDINGS LTD MALAYSIA (OFFSHORE MARINE) ALAM MARITIM RESOURCES BHD BUMI ARMADA BERHAD PERDANA PETROLEUM BHD DAYANG ENTERPRISE HLDGS BHD Regional Average (Offshore Marine) VIETNAM (OIL & GAS TANKER) PETROVIETNAM TRANSPORTATION OTHERS (OIL & GAS TANKER) GREAT EASTERN SHIPPING CO CHINA SHIPPING DEVELOPMENT-H EURONAV SA Regional Average (Oil & Gas Tanker) INDIA (CARGO) ALLCARGO LOGISTICS LTD GATEWAY DISTRIPARKS LTD TRANSPORT CORP OF INDIA LTD JAPAN (CARGO) NIPPON YUSEN NIPPON EXPRESS CO LTD HITACHI TRANSPORT SYSTEM LTD SANKYU INC SENKO CO LTD SINGAPORE (CARGO) SINGAPORE POST LTD PAN-UNITED CORP LTD Regional Average (Cargo) INDONESIA (SHIPPING) SOECHI LINES (OIL & GAS TANKER)* WINTERMAR OFFSHORE MARINE* PELAYARAN TEMPURAN EMAS (CARGO)* Regional Average

Market Cap (USDb) 2.2 0.3 0.4 1.5 3.2 0.2 2.1 0.3 0.7 5.4 0.1 0.1 6.7 0.8 5.9 0.0 6.9 1.6 0.7 0.6 0.3 15.5 5.3 5.9 1.8 1.5 0.9 3.4 3.1 0.3 20.4 0.6 0.3 0.1 0.2 32.7

P/E (x)

PBV (x)

ROE (%)

6.0 6.5 5.2 6.1 14.7 10.0 16.6 11.6 11.1 11.2 3.7 3.7 13.9 7.6 14.7 10.5 13.7 19.2 16.8 20.7 21.3 17.6 14.5 21.2 19.7 14.6 12.9 24.7 26.1 12.2 18.9 7.9 7.8 7.4 8.6 16.5

0.9 0.3 0.8 1.0 1.4 0.8 1.1 1.3 2.5 1.2 1.0 1.0 0.7 0.7 0.7 1.2 0.7 2.9 2.1 3.7 3.0 1.1 0.8 1.3 1.2 1.2 1.3 4.3 4.6 1.5 1.8 1.6 1.1 0.6 3.1 1.5

15.6 5.4 14.6 18.1 10.4 7.2 6.8 11.9 21.8 12.5 12.8 12.8 5.8 9.6 5.2 13.0 5.9 16.4 11.3 19.0 22.1 6.7 6.0 6.4 6.4 8.6 10.3 22.1 23.1 12.8 10.0 18.9 14.8 6.7 35.8 9.6

EV/ EBITDA (x) 7.8 11.9 6.6 7.1 8.5 9.4 8.4 10.0 7.9 8.2 8.2 8.2 16.1 4.8 17.7 7.0 15.9 11.0 9.3 12.9 10.8 8.3 8.7 8.6 7.3 6.9 9.6 17.7 18.8 7.6 10.1 4.4 3.3 5.9 5.4 11.0

Source: Bloomberg, *Bahana estimates; based on pricing as of 6 May 2015

Net margin (%) 37.0 2.2 30.2 46.6 18.9 15.7 18.1 24.4 20.1 26.2 5.3 5.3 10.8 20.1 9.5 32.4 10.7 9.1 4.2 17.2 3.5 1.8 1.8 1.7 1.6 2.5 1.8 15.7 16.9 4.7 4.7 19.2 25.4 11.5 14.2 9.5

EPS growth (%) 17.4 8.9 (6.7) 25.4 0.3 (9.0) 0.0 (7.8) 7.0 7.2 197.4 197.4 247.2 27.0 278.6 (849.4) 246.2 40.2 42.6 42.5 30.3 25.2 33.0 24.5 1.7 32.0 19.7 7.4 9.0 (7.0) 23.4 (4.0) (17.1) (13.8) 27.5 67.4

Net gearing (%) 84.7 116.2 52.5 85.7 45.8 7.7 43.0 89.9 nc 61.5 37.0 37.0 153.3 43.3 168.9 68.1 151.0 27.2 37.7 nc 59.4 61.0 85.1 37.1 45.6 43.7 135.5 68.5 68.5 59.7 77.9 65.5 54.0 119.0 79.1

Regional cargo sector now trades at a 2015F PE of 18.9x, 120% premium to TMAS’ current 2015 PE valuation of 8.6x

Research: +62 21 250 5081

Harry Su [email protected] Senior Associate Director Head of Research Strategy, Consumer ext 3600 direct: +62 21 250 5735

Teguh Hartanto [email protected] Associate Director Deputy Head of Research Banks, Cement, Aviation ext 3610

Leonardo Henry Gavaza, CFA [email protected] Senior Research Manager Auto, Heavy equipment, Telco ext 3608

Arandi Nugraha [email protected] Research Analyst Coal, Metals, Oil & Gas ext 3619

Muhammad Wafi [email protected] Technical Analyst ext 3609

Michael W Setjoadi [email protected] Research Analyst Consumer, Poultry ext 3613

Robin Sutanto [email protected] Research Analyst Property ext 3620

Wendy Chandra [email protected] Research Analyst Consumer, Media ext 3606

Bob Setiadi [email protected] Research Analyst Cement, Infratructure,Toll roads ext 3605

Agustinus Reza Kirana [email protected] Research Analyst Plantations, Shipping, Transportation ext 3616

Andre Natala Susanto [email protected] Research Associate ext 3601

Sanni Satrio Dwi Utomo [email protected] Research Associate ext 3611

Chandra Widjanarka Bagus Adi Yoga Prawira [email protected] [email protected] TechnicalAssociate Analyst Research ext3604 1252 ext

Zefanya Halim [email protected] CA Manager ext 3612

Novianty Permata Sari [email protected] CA ext 3618

Adrian Mahendra Putra [email protected] Research Analyst Industrial Estate ext 3614

Andre Susanto MadeNatala Ayu Wijayati Chandra Widjanarka [email protected] [email protected] [email protected] Research Associate Research TechnicalExecutive Analyst ext1252 3601 3607 ext

+62 31 535 2788 (Surabaya Branch)

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Ltd (1107 HK econtext Asia Ltd (1390 HK); Rexlot Holdings Ltd (555 HK); Neo Solar Power Corp (3576 TT); Accordia Golf Trust (AGT SP); Hua Hong Semiconductor Ltd (1347 HK). *Subsidiaries of Daiwa Securities Group Inc. for the purposes of this section shall mean any one or more of: • Daiwa Capital Markets Hong Kong Limited (大和資本市場香港有限公司) • Daiwa Capital Markets Singapore Limited • Daiwa Capital Markets Australia Limited • Daiwa Capital Markets India Private Limited • Daiwa-Cathay Capital Markets Co., Ltd. • Daiwa Securities Capital Markets Korea Co., Ltd Disclosure of Interest of Bahana Securities Investment Banking Relationship Within the preceding 12 months, Bahana Securities has lead-managed public offerings and/or secondary offerings (excluding straight bonds) of the securities of the following companies: PT Telekomunikasi Indonesia (Persero) Tbk (TLKM IJ); Garuda Indonesia (Persero) (GIAA IJ); Wijaya Karya Beton Tbk PT (WTON IJ); J Resources Asia Pasific Tbk PT (PSAB IJ) Hong Kong This research is distributed in Hong Kong by Daiwa Capital Markets Hong Kong Limited (大和資本市場香港有限公司) (“DHK”) which is regulated by the Hong Kong Securities and Futures Commission. 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United States This report is distributed in the U.S. by Daiwa Capital Markets America Inc. (DCMA). It may not be accurate or complete and should not be relied upon as such. It reflects the preparer’s views at the time of its preparation, but may not reflect events occurring after its preparation; nor does it reflect PT.Bahana Securities’ or DCMA’s views at any time. Neither PT.Bahana Securities, DCMA nor the preparer has any obligation to update this report or to continue to prepare research on this subject. This report is not an offer to sell or the solicitation of any offer to buy securities. Unless this report says otherwise, any recommendation it makes is risky and appropriate only for sophisticated speculative investors able to incur significant losses. Readers should consult their financial advisors to determine whether any such recommendation is consistent with their own investment objectives, financial situation and needs. This report does not recommend to U.S. recipients the use of any of PT.Bahana Securities’ or DCMA’s non-U.S. affiliates to effect trades in any security and is not supplied with any understanding that U.S. recipients of this report will direct commission business to such non-U.S. entities. Unless applicable law permits otherwise, non-U.S. customers wishing to effect a transaction in any securities referenced in this material should contact a Daiwa entity in their local jurisdiction. Most countries throughout the world have their own laws regulating the types of securities and other investment products which may be offered to their residents, as well as a process for doing so. As a result, the securities discussed in this report may not be eligible for sales in some jurisdictions. Customers wishing to obtain further information about this report should contact DCMA: Daiwa Capital Markets America Inc., Financial Square, 32 Old Slip, New York, New York 10005 (telephone 212-612-7000). Ownership of Securities For “Ownership of Securities” information please visit BlueMatrix disclosure Link at https://daiwa3.bluematrix.com/sellside/Disclosures.action .

Investment Banking Relationships For “Investment Banking Relationships” please visit BlueMatrix disclosure link at https://daiwa3.bluematrix.com/sellside/Disclosures.action . DCMA Market Making For “DCMA Market Making” please visit BlueMatrix disclosure link at https://daiwa3.bluematrix.com/sellside/Disclosures.action . Research Analyst Conflicts For updates on “Research Analyst Conflicts” please visit BlueMatrix disclosure link at https://daiwa3.bluematrix.com/sellside/Disclosures.action. The principal research analysts who prepared this report have no financial interest in securities of the issuers covered in the report, are not (nor are any members of their household) an officer, director or advisory board member of the issuer(s) covered in the report, and are not aware of any material relevant conflict of interest involving the analyst or DCMA, and did not receive any compensation from the issuer during the past 12 months except as noted: no exceptions. Research Analyst Certification For updates on “Research Analyst Certification” and “Rating System” please visit BlueMatrix disclosure link at https://daiwa3.bluematrix.com/sellside/Disclosures.action . The views about any and all of the subject securities and issuers expressed in this Research Report accurately reflect the personal views of the research analyst(s) primarily responsible for this report (or the views of the firm producing the report if no individual analysts[s] is named on the report); and no part of the compensation of such analyst(s) (or no part of the compensation of the firm if no individual analyst[s)] is named on the report) was, is, or will be directly or indirectly related to the specific recommendations or views contained in this Research Report. For stocks and sectors in Indonesia covered by Bahana Securities, the following rating system is in effect: Stock ratings are based on absolute upside or downside, which is the difference between the target price and the current market price. Unless otherwise specified, these ratings are set with a 12-month horizon. It is possible that future price volatility may cause a temporary mismatch between upside/downside for a stock based on the market price and the formal rating. "Buy": the price of the security is expected to increase by 10% or more. "Hold": the price of the security is expected to range from an increase of less than 10% to a decline of less than 5%. "Reduce": the price of the security is expected to decline by 5% or more. Sector ratings are based on fundamentals for the sector as a whole. Hence, a sector may be rated “Overweight” even though its constituent stocks are all rated “Reduce”; and a sector may be rated “Underweight” even though its constituent stocks are all rated “Buy”. “Overweight”: positive fundamentals for the sector. “Neutral”: neither positive nor negative fundamentals for the sector. “Underweight”: negative fundamentals for the sector. Ownership of Securities For “Ownership of Securities” information, please visit BlueMatrix disclosure Link at https://daiwa3.bluematrix.com/sellside/Disclosures.action . Investment Banking Relationships For “Investment Banking Relationship”, please visit BlueMatrix disclosure Link at https://daiwa3.bluematrix.com/sellside/Disclosures.action . Relevant Relationships (Bahana Securities) Bahana Securities may from time to time have an individual employed by or associated with it serves as an officer of any of the companies under its research coverage. Bahana Securities market making Bahana Securities may from time to time make a market in securities covered by this research. Additional information may be available upon request. Japan - additional notification items pursuant to Article 37 of the Financial Instruments and Exchange Law (This Notification is only applicable where report is distributed by Daiwa Securities Co. Ltd.) If you decide to enter into a business arrangement with us based on the information described in materials presented along with this document, we ask you to pay close attention to the following items.  In addition to the purchase price of a financial instrument, we will collect a trading commission* for each transaction as agreed beforehand with you. Since commissions may be included in the purchase price or may not be charged for certain transactions, we recommend that you confirm the commission for each transaction.  In some cases, we may also charge a maximum of ¥ 2 million (including tax) per year as a standing proxy fee for our deposit of your securities, if you are a non-resident of Japan.  For derivative and margin transactions etc., we may require collateral or margin requirements in accordance with an agreement made beforehand with you. Ordinarily in such cases, the amount of the transaction will be in excess of the required collateral or margin requirements.  There is a risk that you will incur losses on your transactions due to changes in the market price of financial instruments based on fluctuations in interest rates, exchange rates, stock prices, real estate prices, commodity prices, and others. In addition, depending on the content of the transaction, the loss could exceed the amount of the collateral or margin requirements.  There may be a difference between bid price etc. and ask price etc. of OTC derivatives handled by us.  Before engaging in any trading, please thoroughly confirm accounting and tax treatments regarding your trading in financial instruments with such experts as certified public accountants. *The amount of the trading commission cannot be stated here in advance because it will be determined between our company and you based on current market conditions and the content of each transaction etc. When making an actual transaction, please be sure to carefully read the materials presented to you prior to the execution of agreement, and to take responsibility for your own decisions regarding the signing of the agreement with us. Corporate Name: Daiwa Securities Co. Ltd. Financial instruments firm: chief of Kanto Local Finance Bureau (Kin-sho) No.108 Memberships: Japan Securities Dealers Association, Financial Futures Association of Japan Japan Securities Investment Advisers Association Type II Financial Instruments Firms Association