Indosat (ISAT) – BUY

Indosat’s future looks bright as the company continues to expand its non-mobile segments and enhance its market position. Revenue is projected to grow by 6% year-on-year (yoy) in 2025, driven by the expansion into outer Java, including rural areas and the eastern part of Indonesia. Data traffic growth is expected to surge by 12% yoy, solidifying data services as the main revenue driver.

The company aims to capture 8-10% of the home broadband market by 2026, following its acquisition of MNC Kabel Mediacom (MNC Play). This acquisition boosted its home broadband subscriber base from 17,100 in 2Q23 to 345,400 in 2Q24.

Indosat is also tapping into the GPU-as-a-Service (GPUaaS) market, which is estimated to grow at a 29% CAGR from 2024-2029. The company has already secured ten customers for its GPUaaS service, expecting revenue between USD 50 million and USD 72 million in 2025.

Core profit growth in 2025 is projected at 9% yoy, underpinned by a 7% growth in data revenue. The operating margin is expected to improve to 21% in 2025 from 20% in 2024. The recommendation remains a “BUY” with a target price of Rp3,100, reflecting a 30.3% upside.

Kalbe Farma (KLBF) – BUY

Kalbe Farma is leveraging its innovative strategies to combat margin pressures in its pharmaceutical division. The company is focusing on biosimilars, which offer similar margins to branded generics. This approach is expected to maintain profitability despite the growth of unbranded generics.

In its nutritional division, affordability is the key driver. Falling raw material costs led to gradual margin improvements in 2024, a trend that is expected to persist into 2025. Kalbe is also ramping up its distribution division, with medical devices as the main growth driver. The company completed a surgical suture production facility in April 2023 and is developing portable X-Ray, dialysis, endoscopy, and USG machines to meet local demand.

The recommendation is a “BUY” with a target price of Rp1,800, offering a 34.3% upside, based on the historical five-year average PE of 23.1x applied to the 2025 EPS.

Astra International (ASII) – BUY

Astra International is poised to benefit from Indonesia’s rate-cut cycle as 70% of its car and motorcycle unit sales are financed. The recent rate reduction from 6.25% to 6.0% by Bank Indonesia is expected to revitalize car and motorcycle sales in 2025.

The company is also preparing for the electric vehicle (EV) market with plans to launch three new battery electric vehicle (BEV) models from Toyota and seven new electric motorcycle models by Honda by 2030. However, Astra continues to focus on hybrid models due to limited infrastructure outside Jakarta.

Despite these advancements, risks include competition from EV manufacturers like BYD and pricing challenges. The recommendation has been upgraded to a “BUY” with a target price of Rp6,000, reflecting a 21.2% upside.

Bank Negara Indonesia (BBNI) – BUY

Bank Negara Indonesia is showing signs of recovery after years of loan restructuring. Loan growth is expected to rebound in 2025, driven by lower-risk segments like corporate, mortgage, and personal loans. The net interest margin (NIM) is also projected to improve, supported by a reduction in the cost of funds.

Asset quality has significantly improved, with the loan-at-risk (LaR) ratio declining from 12.9% in December 2023 to 11.8% in September 2024. The bank’s NPL coverage is robust at 284%.

The recommendation is a “BUY” with a target price of Rp6,560, offering a 42.9% upside.

Bank Mandiri (BMRI) – BUY

Bank Mandiri continues to leverage its strong underwriting capabilities to capture loan growth in both wholesale and retail segments. CASA growth of 15% yoy has outpaced industry averages, driven by its Livin and KOPRA digital platforms.

Despite the challenging environment, Bank Mandiri delivered a 21.7% ROE in 9M24. The recommendation is a “BUY” with a target price of Rp8,120, reflecting a 38.8% upside.

Bank Rakyat Indonesia (BBRI) – BUY

Bank Rakyat Indonesia is expected to be the biggest beneficiary of Indonesia’s rate cuts, given its fixed-rate loan structure. While asset quality challenges persist, the bank’s recovery income is set to drive its 2024 net profit to Rp60-61 trillion, offering a dividend yield of 7-9%.

The recommendation is a “BUY” with a target price of Rp5,600, reflecting a 33% upside.

XL Axiata (EXCL) – BUY

XL Axiata is strengthening its position in the fixed broadband (FBB) market following its merger with Smartfren Telecom and the acquisition of Link Net’s business-to-consumer segment. With over 1 million FBB subscribers, the company now ranks second in the FBB market.

Net profit after tax (NPAT) for 2025 is projected to grow by 25% yoy. The recommendation is a “BUY” with a target price of Rp3,200, reflecting a 42.2% upside.

Cisarua Mountain Dairy (CMRY) – BUY

Cisarua Mountain Dairy continues to innovate with new product launches such as yogurt sticks and plant-based beverages. The company is also expanding its market share in the dairy and processed meat segments.

NPAT for 2024 is expected to rise by 24.1%, and the recommendation remains a “BUY” with a target price of Rp6,000, reflecting a 22% upside.

Jasa Marga (JSMR) – BUY

Jasa Marga is focusing on debt reduction and toll road expansion following its divestment of JTT. The company plans to increase toll tariffs on 21 out of 29 toll roads in 2025, which could drive revenue growth.

The recommendation is a “BUY” with a target price of Rp6,000, reflecting a 37.6% upside.

Ciputra Development (CTRA) – BUY

Ciputra Development is expected to achieve its 2024 marketing sales target of Rp10 trillion, driven by new launches and potential tax reforms under Indonesia’s new government. The company also anticipates a strong recovery in 4Q24 earnings.

The recommendation is a “BUY” with a target price of Rp1,570, reflecting a 57.8% upside.