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P H
Jan 11,2017 10:58:27

AKR Corporindo: Company Meeting Key Takeaways
 
We’ve met with AKR Corporindo ($AKRA) last week on business update, results preview and to ask reasons behind its recent share price correction. Key Point from the meeting;
i. Indicative full year FY16F result is expected to be relatively flat YoY and in-line with consensus (IDR1.089 tril), 5% below our estimate. This is on the back of 5% lower petroleum volume distributed and slight lower margin/litre due to 1Q16’s bad result.

ii. Share price has corrected >15% since 3 weeks ago due to a Chinese individual, not fund, hinted it to be family office. cleaning off his holding in AKRA, it is already finished.

iii. Company targeted FY17F net profit of IDR1.3trn, about 20% EPS growth in FY17F due mainly to higher sales volume to coal mining sector, higher sales volume in retail distribution, and higher margin/litre, similar to FY15F. However, guidance to analyst is only 15% YoY, to be conservative.

iv. Interesting update with the JV with BP (50.01% AKRA, 49.99% BP), BP doesn’t have distribution network, AKRA doesn’t have good brand, hence the JV.

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P H
Dec 08,2016 22:21:49

AKRA: Eyeing lucrative retail market
 
Key points from Janeman’s report below:
 
1)   AKRA’s tie-up with British Petroleum (BP) to partner in retail fuel stations and jet-fuel distribution has similarities with AKRA’s tie-up with Vopak in 2007, when it successfully doubled its fuel-tank capacity. We see potential in this tie-up as the retail market is shifting toward higher-octane fuel.
 
The math is simple: the Indonesian petrol-station market is only about 5,704 outlets compared to the population of 4-wheelers of 21m units in 2014.
 
2)   We also see infrastructure development at JIIPE as a key differentiator among its peers.  The company is building its 23MW power plant and set to start on Aug 2017. It also managed to get approval from the government to extend the Legundi-Bunder toll road to Manyar, which will connect directly to JIIPE.

We keep our 12-month target price at Rp8,400 and reiterate our BUY as the stock looks relatively cheap.  Our earnings growth of ~20% is attributed to the following assumptions from AKRA’s businesses.

$AKRA

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P H
Dec 01,2016 11:33:39

Regional Oil & Gas: OPEC Meeting: Christmas Comes Early

OPEC members have been able to resolve their differences and have all agreed to share the burden of production cuts. Starting Jan 17, production target would be 32.5mbpd, a 1.1mbpd cut from Oct 16 level of 33.6mbpd. We had initially anticipated 33mbpd production from OPEC members, as such, our view does not change dramatically as a result of this agreement. We maintain our crude oil price forecast average of USD60/bbl for 2017F and the longer-term. OVERWEIGHT maintained on the mid-stream and downstream players, with upstream players still a momentum play.

¨ We maintain our crude oil price forecast average of USD60/bbl for 2017F and longer-term, with the markets looking to be more bullish than prior to the Organisation of Petroleum Exporting Countries (OPEC) deal. However, there is downside risk from our expectations. The monitoring and implementation of the production cuts could result in non-compliance. Shale oil producers could return at a faster pace. We are also not certain how much this deal hinges on non-OPEC joining. If the deal depends on non-OPEC joining, there are higher chances of non-compliance and the deal can fall apart. Finally, Trump’s actions could provide further challenges for the upstream sector.

¨ Our view does not change much. We view that in that any action by OPEC would be self-defeating – as any intervention would result in higher oil prices, leading to higher cost producers entering the market and lowering oil prices again. We believe that the current oil market mechanism is already working, without its intervention – low crude oil prices are needed to clear the markets by cutting production at the highest cost producers. However, this agreement will in no doubt, should it be well implemented and stretched over a longer period of time, hasten the clearing of the inventory overhang.

¨ As financial markets focus on the shorter-term outlook for oil markets, upstream E&P players are looking at the longer-term picture. Mexico would be auctioning 10 deepwater blocks. This has drawn much interest from global oil majors such as Chevron (CVX US, NR), LUKOIL (LKOD LI, NR), CNOOC (883 KH, NR) and Petroliam Nasional (Petronas). This is one of the Government of Mexico’s first steps in opening up its upstream E&P business that has long been tightly held by its national oil company (NOC), Petroleos Mexicanos (Pemex).

¨ This resonates with our view that there is some glimmer of hope as we enter 2017. We believe that any conventional field development projects that have been put on hold since the oil price collapsed should start to look into locking-in contractors over the next 12 months, in order to take advantage of the current depressed market environment: Regional Oil & Gas: Glimmer Of Hope.

¨ OVERWEIGHT mid/downstream players. Global inventory would likely remain in oversupply in 2017 in our view, thus storage providers and tankers should still benefit – MISC and Dialog Group (DLG MK, BUY, TP: MYR1.77). As we expect markets to remain volatile, we recommend AKR Corporindo, Perusahaan Gas Negara (PGAS) and Yinson as defensive plays with strong balance sheets and negative correlation to crude oil price movements. For seasonal plays where quarterly fluctuations in demand and supply influence product prices, we like Petronas Chemicals and PTT Global Chemicals (PTTGC). Upstream companies remain momentum plays – prefer larger caps: PTT Exploration and Production (PTTEP), Keppel Corp and Sembcorp Industries. (Kannika Siamwalla CFA, Norman Choong CFA, Wan Mohd Zahidi)

$AKRA $PGAS

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P H
Nov 22,2016 10:54:37

Oil & gas: Pertamina, AKRA to distribute subsidized fuel in 2017

State owned oil & gas company, Pertamina and publicly listed fuel distributor AKRA Corporindo ($AKRA) have obtained rights to distribute subsidized diesel fuel in 2017. The total volume allocated has been set at 16mn kl, of which 15.7mn kilo liters will be distributed by Pertamina, and 300,000 kl by AKRA. Additionally, the government has finally allowed private entities, including AKRA, to sell subsidized fuel, as long as they have distribution network facilities in the country. (Petromindo, Bisnis)

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P H
Jul 27,2016 12:20:46
Talk of a Reshuffle today

Reshuffle Kabinet akan diumumkan pk.11.00 pagi ini dan Kabinet baru dilantik pk.14.00 sore ini juga.
1. Menteri Keuangan Bambang
    S Brojonegoro diganti Sri
     Mulyani Indrawati.
2. Menpan RB Yuddy
    Chrisnandi diganti Asman
    Abnur (partai PAN).
3. Kepala Bappenas Sofyan
    Djalil diganti Bambang
    Brojo.
4. Menteri ATR-BPN Ferry
    Mursidan Baldan diganti
    Sofyan Djalil.
5. Mentri Perdagangan Tomas
    Lembong diganti
    Enggartiasto Lukito.
6. Menteri Perindustrian Saleh
    Husein diganti Erlangga
    Hartarto.
7. Menteri Perhubungan Jonan
    diganti Budi Karya.
8. Mentri Desa Marwan Jaffar
    diganti Eko Putro (PKB).
9. Mentri ESDM Sudirman Said
    diganti Chandra Tahar
    (profesional).
10. Mendiknas Anis Baswedan
       diganti Prof Muhajir
       (Muhamadiyah).
11. Menkopolhukam Luhut
       Panjaitan diganti Wiranto.
12. Menko Maritim Rizal Ramli
       diganti Luhut Panjaitan.
13. Kepala BKPM Franky
      Sibarani diganti Tomas
      Lembong.
14. Franky Sibarani akan
       menjabat Wkl. Mentri
       Perindustrian.

Menteri perindustrian Erlangga Hartarto -> has a good relationship with $AKRA, which happens to have an industrial estate in East Java

Menteri perhubungan Budi Karya -> could be positive for $WIKA and $ADHI. We may see faster approvals for LRT jakarta (Adhi) and HSR (WIKA)

Menteri keuangan Sri Mulyani -> positive sentiment for index in general and banks in particular

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P H
Jul 22,2016 16:50:21
PT AKR Corporindo Tbk. ($AKRA) siap menjual lahan seluas 100 hektare kepada PT Freeport Indonesia di Java Integrated Industrial & Port Estate (JIIPE). Lahan tersebut rencananya akan digunakan untuk fasilitas smelter dengan investasi mencapai Rp 30 triliun.

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P H
May 11,2016 12:52:44
AKR Corporindo (AKRA): Revisit This Stock As Price Correction Is Overdone

Three key takeaways from the analyst meeting:
1.   There is a margins/litre vs crude oil price movement misperception;
2.   AKR remains optimistic on sales volume growth of its new product segment;
3.   Potential impairment of AKT’s receivables is manageable, as it had guided for a similar write-off last year.
We conservatively reduce FY16F-17F earnings by 6-7% respectively to reflect higher bad debts. Maintain BUY with a lower DCF-based IDR8,000 TP (from IDR8,500, 31% upside), implying 24x-21x FY16-17F P/E.

¨       1Q16 results underperformed, but not flat out bad mainly on the lower EBIT of AKR Corporindo’s (AKR) trading and distribution and industrial estate segments. We attributed this to:
              i.   1Q15’s petroleum distribution margin of IDR900/litre when normalised, while guided margin was c.IDR700/litre;
             ii.   1Q16 margin/litre came out at IDR680 on the back of a 34% drop in ASP;
            iii.   The industrial estate’s low contribution was on the timing of its bookkeeping using the completed method. AKR sold 30ha of land, with the bulk not booked yet; and,
            iv.   Seasonality-wise, 1Q15 earnings contribution was also the strongest in the last four financial years.

¨       Margins/litre vs oil price misperception. A lot of questions revolved around why quarterly margins/litre shrank instead of expanding. Comparisons were made to AKR’s margins/litre expansion in late FY14 in tandem with the crude oil price correction. Management said margins/litre did not track crude oil prices entirely, but was also a mix of buyers. It added that the extremely low oil price in 1Q16 had exerted pressure on its distribution margin, citing a stable Brent oil price of about USD45/barrel (bbl) as ideal for higher margins.

¨       Management remains sanguine on volume growth. AKR maintains a FY16 volume growth guidance of 10-12%. It said that volume would be driven by the contribution of its power sector and sales of AKRA92 fuel it introduced in January. AKRA92’s sales volume has been in line with AKR’s targets so far.

¨       Asmin Koalindo Tuhup’s (AKT) receivables impairment manageable. Our channel checks suggest that the court ruling clarifies the issue with AKT (see the paragraph at the bottom of page 3 for more on this issue).

¨       Time to revisit. We deem our FY16 earnings achievable on a petroleum margins/litre level of IDR700 and volume growth of 8% while other segments maintain stable performances. We expect AKR to generate 29% YoY net profit growth in FY16. Its share price has corrected by 30% since February and the counter is currently trading at 17.4x FY16F P/E. This is below its 5-year historical average of 18.5x. The downside risk to our BUY call is higher-than-expected impairment of bad debts.

$AKRA

Bull
P H
May 09,2016 17:52:37
AKRA: down but not out

As we revise down our earnings forecasts, we lower our DCF-based (WACC: 10.5%) PT to IDR7,500, which suggests 26.7-22.0x FY16-17 PER. However, maintain BUY as AKRA offers unique exposure to the petroleum-distribution business and we expect stronger earnings due to seasonally-higher volume and better ASP and margins in 2Q15 onwards. It’s trading at 21.0x FY16 PER, slightly lower than its 3-year mean of 21.7x.

$AKRA

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P H
Apr 20,2016 11:27:08
ASEAN Infrastructure Development Beneficiaries

Summary

- ASEAN is made up of over 600 million people living within the region, with a combined GDP of $2.6 trillion, making it the 7th largest economic bloc globally and 3rd largest in Asia, while its labour force is the third largest globally after China and India.

- Underbuilt and growing from low base - On a per capita basis, ASEAN nations have only a small proportion of the roads and railways found in OECD countries, with significantly lower electricity, clean water and sanitation. For example, for every 1000 people in ASEAN, an estimated 10km of roads have been built, a far cry from the ~200km of roads per 1000 people in economically advanced countries (source: ADB).

- Infrastructure needs - ASEAN needs an estimated $100bln yearly in investments to address its infrastructure needs, but is currently investing less than the amount, which results in infrastructure bottlenecks and high logistics costs for businesses.

- Encouraging signs of regional efforts and policies moving in the right direction - With the region’s sizable private savings and foreign exchange reserves, regional efforts are ongoing to address the under-built infrastructure status through multiple infrastructure projects on roads, railways, power, clean water supply and other critical infrastructure.

- While the process will take time with funding & execution risks, investor expectations are low. The structural story is attractive from a multi-year perspective, while increases in near term pump-priming by regional governments to stimulate the economies will act as a positive growth cushion against external macro headwinds.

$JSMR $AKRA
Bull
P H
Mar 14,2016 12:42:55
Integrated Oil & Gas – Bull In a Bear Market

Several news items that may further support oil prices this week:
1. The IEA says crude oil prices may have bottomed out;
2. Iran’s exports post sanctions have been below expectations;
3. Non-OPEC production is falling in a meaningful way.

On the other hand, a production freeze may be harder to attain as Iran may refuse to join negotiations until it is able to boost production to pre-sanction levels. We maintain our view that the oil market remains fundamentally weak and are NEUTRAL on the oil markets.

¨ We do not believe the rally is sustainable with the fundamentals of the oil market remaining weak, given overproduction, historic high inventories, major capex cuts, and huge layoffs. We believe that there is a true misalignment between the real and the financial world at the moment. At the end of the day, the valuations of these upstream oil & gas stocks would seem relatively expensive – under the current bear market – once the rally ends. For more details, please see our 8 Mar report Integrated Oil & Gas: True Misalignment.

¨ The International Energy Agency (IEA) stated that crude oil prices may have bottomed out, reiterating what we have been saying since February. The agency said Organisation of the Petroleum Exporting Countries (OPEC) production fell slightly by 90,000 barrels (bbls)/day (bpd) in February to 32.61mbpd, with losses from Iraq, Nigeria and the United Arab Emirates (UAE) partly offset by Iran. Iran’s exports increased by only 220,000bpd vs an expected initial export of 500,000bpd. The IEA estimates that output from non-OPEC producers are expected to fall by 750,000bpd (of which 530,000bpd is from shale oil producers) to 57mbpd in 2016, with additional demand for 2016 expected at 1.2mbpd, with risks more on the downside than upside. Although this does not mean that the worst is over, there are signs that prices may have bottomed out.

¨ Production freeze update. A meeting among oil producers to discuss a global pact on freezing production is set to take place in Russia on 20 Mar. However, whether or not the meeting would move forward remains uncertain at this juncture, as Iran may refuse to cooperate. Iran has so far rejected freezing its output at January levels and has repeatedly said that it plans to up its production to pre-sanctions level. Kuwait has indicated that it is to join the production freeze if all other producers also freeze output.

¨ Crude oil price forecasts. We expect markets to remain highly volatile. We are expecting a gradual rebound in crude oil prices, with our average crude oil price (Brent) forecasts at USD30/USD35/USD40/USD45/bbl for 1Q16-4Q16 respectively. So the current rally may put oil prices slightly ahead of our forecasts. We maintain our crude oil prices at USD37.50/USD45/USD60/bbl for 2016-2018 respectively.

¨ Regional Top Picks: We recommend stocks with strong fundamentals under the current volatile markets, ie China Resources Gas (HK:1193), AKR Corporindo ($AKRA), SapuraKencana Petroleum, Keppel Corp (SG:BN4) and PTT Global Chemical. Inside this report, we include a list of recovery stocks that have the highest correlation to the Brent.

$IHSG
Bull
P H
Mar 07,2016 10:53:12
AKR Corporindo ($AKRA): Retail Gasoline Segment to Rake It In

We believe the retail distribution arm of AKR would make a fortune this year as pump prices have fallen slower than crude oil prices. While the stock re-rating that we advocated has been fully priced in, its premium valuation is likely to stay as earnings remain on a high double-digit growth trajectory and ROE is still increasing. We increase our FY16-17 earnings forecasts and maintain BUY with a higher SOP-based TP of IDR8,500 (from IDR7,000, 12% upside including dividend yield).

¨ Retail gasoline segment to make a killing. As this segment becomes profitable (higher margin than non-subsidised diesel now) compared to last year, AKR Corporindo (AKR) intends to ramp up this segment via its 130 petrol stations. Furthermore, it has started selling non-subsidised RON 92 grade gasoline since 1Q16. All in, it expects to increase total sales volume from the retail segment to 250,000m litres, from 150,000m litres in FY15.

¨ JIIPE buoyed by hope of higher FDI. Although contribution is still small (about 5% of GP), Java Integrated Industrial and Post Estate (JIIPE) would likely benefit from the series of stimulus aimed at attracting foreign direct investment (FDI) into Indonesia. Furthermore, the stable IDR and higher GDP growth forecast this year mean that FDI could eventually go up.

¨ FY15 distribution volume exceeded our expectation. Management shared that its FY15 petroleum distribution volume would be at least 2.2bn litres (vs our expectation of 2.1bn litres) while margin is maintained at IDR700-750/litre. Further, management guided for FY16 volume of 2.5bn litres (subsidised and non-subsidised) and margins to be maintained. We believe it is achievable.

¨ Expect another round of earnings estimates upgrade. Our new estimates for FY16-17 are about 10% higher than consensus estimates as we turn more bullish on its newfound prospects in the retail distribution.

¨ Maintain BUY on good growth and improving ROE. We believe AKR would maintain its earnings momentum, given the robustness of its fuel distribution business post-subsidy rationalisation and the stickiness of its ASP (ie its ASP reduction is lower than the decline in Brent crude oil prices). We expect topline to be flat this year on lower ASPs, but project earnings to be strong and ROE to improve, driven by margin expansion and strong cash flow generation. Our new TP implies FY16F-17F P/Es of 23x-20x.

¨ Key risk: further deregulation of fuel distribution. Based on our channel checks and conversation with management, we are aware that the final pump prices at gasoline stations as well as industrial product prices did not drop as much as the Brent oil price decline this year. Hence, we see the possibility of government intervention in the future.
Bull
P H
Feb 18,2016 23:26:54
AKR Corporindo (AKRA): Ajukan pailit perusahaan tambang

• Dikutip dari Bisnis Indonesia, AKR Corporindo ($AKRA) sedang berupaya mempailitkan PT Sinar Intijaya Putraperkasa dan PT Kartika Selabumi Mining lewat Pengadilan Niaga Jakarta Barat.

• Permohonan pailit diajukan karena kedua perusahaan tidak kunjung membayar hutang jatuh tempo senilai USD1.97juta dan IDR43.98juta.
Bull
Quotes delayed, except where indicated otherwise.
AKRA
7,275.00 175.00 (2.35%)
AKR Corporindo Tbk.
Last Update 02:54:10