Credit Suisse - Indonesian Contractors

29 June 2015
Asia Pacific/Indonesia
Equity Research
Engineering & Construction (Property MY (Asia)/Insurance MY
(Asia)/Diversified Financials SG (Asia)/Building Materials & Construction MY
Indonesia Infrastructure Sector

Rachel Tan
603 2723 2081
rachel.lr.tan@credit-suisse.com
Danny Goh
60 3 2723 2083
danny.goh@credit-suisse.com
SECTOR REVIEW
(Asia))
Some signs of revival

Figure 1: Largest contraction since the 2013 'taper tantrum'
1,080
-23%
980
140
880
130
780
680
Index
150
120
580
110
480
-55%
380
Index
Research Analysts
100
280
90
180
Contractors
06-May-15
06-Jan-15
06-Mar-15
06-Nov-14
06-Jul-14
06-Sep-14
06-May-14
06-Jan-14
06-Mar-14
06-Nov-13
06-Jul-13
06-Sep-13
06-May-13
06-Jan-13
06-Mar-13
06-Nov-12
06-Jul-12
06-Sep-12
06-May-12
06-Jan-12
80
06-Mar-12
80
JKSE
Source: Company data, Credit Suisse estimates
Largest pull back since 2013 Fed taper. Amidst the expectation of Fed
tightening in 2H15, JCI has corrected 12% from its YTD peak. In line with the
market, Indonesia contractors recorded its largest pull back (-23% from YTD
peak) since the Fed taper in 2013. The correction is likely due to
disappointment from high expectations of infrastructure spending so far.
Some signs of revival. While YTD May 2015 new order book remains in a
lull at 26% of the full-year target (aggregated), with the 'nomenclature' issue
now resolved, the award of government contracts has begun in May2015,
evidenced by a few large contracts. MOF expects the realisation of
government's capex to double (8% of full-year budget vs 4% in May) in June
2015. Consequently, SOE contractors' preliminary new order book in June
2015 saw a significant increase (+40% MoM for SOE contractors versus
15% MoM in May 2015).
P/E close to historical average. The contractors' forward P/E has
decreased by 27% to 20x, close to the historical average of 19x. TOTAL,
WIKA, and Wika Beton recorded the largest contraction from the peak, while
TOTAL, Wika Beton, and Jasa Marga are trading at the lower end of their
historical range.
Maintain OUTPERFORM. While we expect prices to remain weak in the
near term, until the market sees more evidence of a pick-up in construction
activities, we believe the weakness in the share prices would be a good
buying opportunity in anticipation of a pick-up in the implementation of
infrastructure projects post Ramadhan and leading into 2016. Preferred
stocks are Waskita, WIKA, and TOTAL.
DISCLOSURE APPENDIX AT THE BACK OF THIS REPORT CONTAINS IMPORTANT DISCLOSURES, ANALYST
CERTIFICATIONS, AND THE STATUS OF NON-US ANALYSTS. US Disclosure: Credit Suisse does and seeks to do
business with companies covered in its research reports. As a result, investors should be aware that the Firm may have a
conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in
making their investment decision.
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29 June 2015
Focus charts and tables

Figure 2: Potential Fed tightening in 2H15contractors'
Figure 3: Fed taper in 2013contractors' share prices fall
share prices fall 19% since April 2015
55% from the peak
115
220
-23%
200
110
-19%
180
-17%
-9%
100
Index
95
-55%
160
-45%
140
120
90
100
17-Jun-15
+3M
+2M
+1M
-1M
JCI
31-Dec-13
Contractors
-2M
03-Jun-15
20-May-15
06-May-15
22-Apr-15
08-Apr-15
80
31-Dec-12
JCI
25-Mar-15
11-Mar-15
25-Feb-15
11-Feb-15
28-Jan-15
14-Jan-15
31-Dec-14
85
-3M
Index
105
Contractors
Source: Thomson Reuters Analytics, Credit Suisse estimates
Figure 4: Largest contraction since 2013 'taper tantrum'
Figure 5: Contractors' P/E trend post 2012
135
30.0
125
Waskita, 110
PTPP, 101
JCI, 94
Contractors,
91
Jasa Marga,
78
Wika Beton,
77
TOTAL, 76
WIKA, 71
105
95
85
75
17-Jun-15
Average = 13.5 x
15.0
Current = 19.9 x
10.0
-1 Std dev = 7.5 x
5.0
Source: Thomson Reuters analytics, Credit Suisse estimates
Apr-15
Dec-14
Apr-14
Aug-14
Dec-13
Aug-13
Apr-13
Dec-12
Apr-12
Aug-12
Dec-11
Aug-11
Apr-11
WSKT.JK
Contractors
Dec-10
WIKA.JK
JCI
Apr-10
03-Jun-15
20-May-15
06-May-15
22-Apr-15
08-Apr-15
25-Mar-15
11-Mar-15
25-Feb-15
TOTL.JK
JSMR.JK
+1 Std dev = 19.6 x

20.0
Aug-10
PTPP.JK
WTON.JK
11-Feb-15
28-Jan-15
14-Jan-15
31-Dec-14
65
25.0
Dec-09
Index
115
Source: Thomson Reuters analytics, Credit Suisse estimates
Figure 6: Expected new order book in June 2015

Latest
May-15
MoM (%)
WIKA
PTPP
Waskita
11.0
11.8
5.7
5.8*
9.8
4.7
89%
20%
21%
Remarks
Expects to achieve by end June 2015
Mid-June 2015
First week of June 2015
SOE Contractors
28.5
20.3
40%
35% of full-year target
Source: Bisnis Indonesia, company data *preliminary
Figure 7: A snapshot of the parameters of individual infrastructure stocks

YTD rel perf
WIKA
TOTAL
Wika Beton
Jasa Marga
PTPP
Waskita*
-23%
-18%
-17%
-16%
7%
16%
Valuation (forward
PE)
18.9
13.0
20.9
12.2
20.4
30.7
Valuation (%
from peak)
-37%
-57%
-36%
-21%
-22%
-18%
Street earnings
momentum (3M)
-10%
1%
-7%
-3%
0%
4%
Foreign shareholdings
(May 2015)
15%
7%
3%
18%
18%
11%
Sentiment (YTD
change, pp)
-0.47
0.75
-0.47
0.12
0.13
-0.03
Source: Company data, Thomson Reuters Analytics, IBES estimates, Credit Suisse estimates *impact on earnings from rights issue has not
been adjusted
29 June 2015
Some signs of revival

Amidst the expectation of Fed tightening in 2H15, JCI has corrected 12% from YTD peak.
In line with the market, Indonesia contractors recorded its largest pull back since the Fed
taper in 2013 with share prices falling 23% from their peak. The correction is likely due to
disappointment from high expectations of infrastructure spending so far.
Amidst the expectation of

Fed tightening, Indonesia
contractors recorded their
largest pull back since the
Fed taper in 2013
Although the correction appears not to have fully priced in the 'lift off', compared with the
contractors' share price performance during the Fed taper in 2013 (-55% in three months
as shown in Figure 10), we believe the correction may present a good entry opportunity in
anticipation of a pick-up in the execution of infrastructure projects in 2H15 and leading into
2016.
In the past week, we have seen a slight respite (+5% from its bottom), following the lessthan-expected "hawkish" innovation in the most recent FOMC. Our CS Economics team
sticks to their call for a first rate hike of 25 bp in September 2015.
Figure 8: Largest contraction since the 2013 'taper tantrum'
1,080
-23%
980
140
880
680
120
580
110
480
-55%
380
Index
130
780
Index
150
100
280
90
180
Contractors
06-May-15
06-Jan-15
06-Mar-15
06-Nov-14
06-Jul-14
06-Sep-14
06-Mar-14
06-May-14
06-Jan-14
06-Nov-13
06-Sep-13
06-Jul-13
06-May-13
06-Jan-13
06-Mar-13
06-Nov-12
06-Sep-12
06-Jul-12
06-Mar-12
06-May-12
80
06-Jan-12
80
JKSE
Figure 9: Potential Fed tightening in 2H15contractors'
Figure 10: Fed taper in 2013contractors' share prices
share prices fall 19% since April 2015
fall 55% from the peak

220
115
-23%
200
110
-19%
180
-17%
-9%
100
Index
95
-55%
160
-45%
140
120
90
100
JCI
+3M
+2M
+1M
-1M
-2M
-3M
17-Jun-15
03-Jun-15
20-May-15
06-May-15
22-Apr-15
08-Apr-15
25-Mar-15
Contractors
80
Contractors
31-Dec-13
JCI
11-Mar-15
25-Feb-15
11-Feb-15
28-Jan-15
14-Jan-15
31-Dec-14
85
31-Dec-12
Index
105
29 June 2015
Was the correction significant?

At the current prices, the retraction of the infrastructure sector was among the largest in
the market (Figure 11within the half with large corrections). The construction sector has
fallen 19% from its YTD peak and has held up much better than toll road (-24%) and
precast concrete producer (-30%). The percentage of retraction was more than the
percentage of increase to the peak (Figure 13ratio of % of increase to peak/% of fall
from peak <1).
Construction sector prices

fell 19%, toll road fell 24%,
and precast fell 30% from
the peak
Interestingly, the trend was quite different during the 2013 taper tantrum. In 2013, toll road
recorded the second-smallest correction (-17%), while the construction sector retracted
the most (-55%). Both construction and toll road retracted less than the YTD increase to
the peak (ratio > 1x), especially for the construction sector, where the correction was only
half the YTD upgrade to peak.
Figure 11: 2015% decrease from the peak at current
Figure 12: 2013% decrease from the peak at the low,
price
post correction
Utilities
Telcos
Healthcare
Staples
JCI
CS market
Plantation
Property
Retail
Banks
Construction
Cap goods
Autos
Cement
Toll road
Precast
Media
Transport
Metal & mining
Telcos
Toll road
Metal & mining
Staples
JCI
CS market
Media
Plantation
Retail
Cap goods
Banks
Utilities
Cement
Autos
Transport
Property
Construction
(40.0)
(35.0)
(30.0)
(25.0)
(20.0)
(15.0)
(10.0)
(5.0)
(60.0)
(50.0)
(40.0)
(30.0)
(20.0)
(10.0)
% fall from the peak at low post correction
% fall from the peak at current price
Figure 13: 2015construction and toll road have de-rated
Figure 14: 2013construction and toll road were de-rated
more than its YTD increase to peak
less than their YTD increase to peak
0.5
0.3
0.2 0.3 0.3
Retail
Media
Staples
Construction
Toll road
Utilities
59.8
Property
0.5 0.5
Banks
0.3 0.4
Telcos
0.1 0.1 0.1
0.5 0.6
JCI
0.5
0.9 0.9 0.9
1.0
CS market
1.0
0.8 0.8
0.7 0.7 0.7 0.8
1.7
1.2 1.3 1.3
Cement
1.4 1.4
1.5
1.5
1.5
Cap goods
1.9 2.0
2.0
1.9
2.0
Metal & mining
2.5
2.3
Autos
3.0
2.5
2.5
Plantation
3.5
2.9
3.0
Transport
4.0
% of increase to peak / % of fall from peak
3.5
4.5
Metal & mining

Toll road
Cement
Precast
Plantation
Media
JCI
Telcos
CS market
Construction
Autos
Transport
Banks
Staples
Retail
Property
Cap goods
Healthcare
Utilities
% of increase to peak / % of fall from peak
5.0
29 June 2015
Among the infrastructure stocks, WIKA and TOTAL got corrected the most at 29% and
24%, respectively, offering attractive potential upside upon recovery. Waskita is the only
stock in the infrastructure sector whose YTD performance remained positive, despite the
retraction (+10%), while PTPP's share price held up well (+1% YTD).
WIKA and TOTAL have

corrected the most
Figure 15: Individual contractors

135
125
Index
115
Waskita, 110
105
PTPP, 101
JCI, 94
95
Contractors, 91
85
75
PTPP.JK
WTON.JK
TOTL.JK
JSMR.JK
WIKA.JK
JCI
17-Jun-15
03-Jun-15
20-May-15
06-May-15
22-Apr-15
08-Apr-15
25-Mar-15
11-Mar-15
25-Feb-15
11-Feb-15
28-Jan-15
14-Jan-15
31-Dec-14
65
Jasa Marga, 78
Wika Beton, 77
TOTAL, 76
WIKA, 71
WSKT.JK
Contractors
Contractors P/E fall close to their historical average

The contractors' forward P/E decreased by 28% to 20x, close to the historical average of
19x, following the pull back in share prices. We highlight some P/E trends among
individual contractors below:
Largest contraction. TOTAL, WIKA, and Wika Beton's P/E contracted the most from
the peak (at 57%, 37%, and 36%, respectively).
Trades close to the historical low. TOTAL and Wika Beton currently trade at 1
standard deviation below their historical range, a whisker away from the historical low,
while WIKA trades close to the lower end of its historical range. Jasa Marga currently
trades below the lower end of its EV/EBITDA historical range, close to the historical
low.
Lowest contraction. While Waskita, Jasa Marga, and PTPP recorded the lowest
contraction from their peak, a reduction of more than 10% (18%, 21%, and 22%,
respectively) seems significant.
Trades above the historical average. Waskita and PTPP are trading above their
historical average at 36% and 26% above the historical average.
Contractors' forward P/E

decreased by 28% to 20x,
close to the historical
average of 19x
29 June 2015
Figure 16: Peak and trough P/E (EV/EBITDA) post 2012TOTAL and WIKA record the highest correction from peak
PE (x)
Current
Peak
Trough
Historical Average
% from peak
% to trough
% to historical average
13.0
18.9
20.9
20.4
12.2
30.7
19.9
30.1
29.8
32.5
26.1
15.5
37.6
27.7
10.4
15.8
19.0
9.6
12.2
10.7
11.8
16.8
22.0
25.6
16.2
13.7
22.5
18.9
-57%
-37%
-36%
-22%
-21%
-18%
-28%
25%
20%
10%
113%
0%
187%
70%
-23%
-14%
-18%
26%
-11%
36%
6%
TOTAL
WIKA
Wika Beton
PTPP
Jasa Marga#
Waskita*
Contractors
Source: Company data, Thomson Reuters Analytics, Credit Suisse estimates * impact on earnings from rights issue has not been adjusted,
#
Jasa Marga's EV/EBITDA
Figure 17: Contractors' P/E trend
Figure 18: Contractors' P/E trend post 2012
30.0
30.0
25.0
25.0
+1 Std dev = 19.6 x
+1 Std dev = 23.3 x
20.0
15.0
Current = 19.9 x
20.0
Average = 13.5 x
Current = 19.9 x
Average = 18.9 x
15.0
10.0
-1 Std dev = 14.5 x
-1 Std dev = 7.5 x

10.0
Apr-15
Jun-15
Feb-15
Oct-14
Dec-14
Aug-14
Apr-14
Jun-14
Feb-14
Dec-13
Oct-13
Jun-13
Aug-13
Apr-13
5.0
Feb-13
Apr-15
Dec-14
Apr-14
Aug-14
Dec-13
Aug-13
Apr-13
Dec-12
Apr-12
Aug-12
Dec-11
Apr-11
Aug-11
Dec-10
Apr-10
Aug-10
Dec-09
Dec-12
5.0
Source: Company data, Thomson Reuters Analytics, Credit Suisse

estimates

estimates
Figure 19: WIKAP/E trend post 2012
Figure 20: PTPPP/E trend post 2012
35.0
30.0
25.0
30.0
+1 std dev = 26x

25.0
+1 std dev = 21.4x
20.0
Average = 16.2x
Average = 22.1x
15.0
20.0
10.0
-1 std dev = 11x
-1 std dev = 18.1x

15.0
5.0
10.0
0.0
Dec-12
Apr-13
Aug-13
Dec-13
Apr-14
Aug-14
Dec-14
Apr-15

estimates
Dec-12
Apr-13
Aug-13
Dec-13
Apr-14
Aug-14
Dec-14
Apr-15

estimates
29 June 2015
Figure 21: WaskitaP/E trend post 2012
Figure 22: TOTALP/E trend post 2012
40.0
35.0
35.0
30.0
+1 std dev = 30.2x
30.0
25.0
25.0
Average = 22.5x
+1 std dev = 20.3x
20.0
20.0
15.0
-1 std dev = 15x
Average = 16.8x
15.0
10.0
5.0
-1 std dev = 13.2x
10.0
Apr-15
Jun-15
Feb-15
Oct-14
Dec-14
Jun-14
Aug-14
Apr-14
Feb-14
Oct-13
Dec-13
Jun-13
Aug-13
Apr-13
Feb-13
Dec-12
0.0
5.0
Dec-12
Apr-13
Aug-13
Dec-13
Apr-14
Aug-14
Dec-14
Apr-15

estimates

estimates
Figure 23: Wika BetonP/E trend
Figure 24: Jasa MargaEV/EBITDA trend post 2012

16.0
35.0
33.0
15.0
+1 std dev = 30.4x
31.0
29.0
+1 std dev = 14.5x
14.0
27.0
25.0
13.0
Average = 25.7x
23.0
21.0
+1 std dev = 12.5x
12.0
-1 std dev = 21.0x
19.0
+1 std dev = 13.5x
17.0
11.0

estimates
Jun 15
Mar 15
Dec 14
Sep 14
Jun 14
Mar 14
Dec 13
Sep 13
Jun 13
Mar 13
Dec 12
Sep 12
Jun 12
Mar 12
10.0
Dec 11
08-Jun-15
08-May-15
08-Apr-15
08-Mar-15
08-Feb-15
08-Jan-15
08-Dec-14
08-Nov-14
08-Oct-14
08-Sep-14
08-Aug-14
08-Jul-14
08-Jun-14
08-Apr-14
08-May-14
15.0

estimates
May 2015 new order book remains in a lull

YTD May 2015 new order book remains in a lull at 26% of the contractors' full-year target
(aggregated) and recorded a lower MoM growth of 14% vs 26% in April 2015. Private
contracts, which comprise 55% of the total new order book, remain the largest.
Government contracts doubled during April to May 2015, increasing their proportion from
18% to 26%. This is a positive indication on the potential improvement in the award of
government contracts in 2H15.
YTD May 2015 new order

book remains in a lull at
26% of full year target
PTPP maintains its lead among the SOE contractors, achieving Rp9.8 tn YTD May 2015,
36% of its full-year target of Rp27 tn. The remaining SOE contractors recorded less than
30% of their full-year target, with the weakest coming from WIKA at 18%.
TOTAL's (private contractor) YTD May 2015 new order book grew 25% MoM, ahead of its
full-year target of Rp3 tn.
29 June 2015
Figure 25: YTD May 2015 new order book is 31% of contractors' full-year target
YTD May-15
YTD May-14
% YoY
YTD Apr-15
% MoM
% full-year target
% CS est
WIKA
PTPP
Waskita
TOTAL
Wika Beton
5.8*
9.8
4.7
1.5
1.1
6.1
6.6
5.0
1.5
n.a.
-5%
48%
-5%
1%
n.a.
4.9
7.6
3.7
1.2
1.0
20%
29%
27%
25%
10%
18%
36%
23%
50%
28%
21%
36%
23%
50%
28%
Contractors
21.8
19.2
14%
17.4
26%
26%
28%
Source: Company data, Credit Suisse estimates, * preliminary
Figure 26: YTD May 2015 new order book breakdown by
Figure 27: YTD Mar 2015 new order book breakdown by
client type
client type
100%
100%
90%
90%
80%
70%
59%
54%
58%
60%
64%
22%
34%
44%
36%
24%
7%
WIKA
30%
10%
5%
31%
Waskita
SOE
SOE contractors
WIKA
Private
22%
40%
30%
18%
2%
0%
PTPP
Gov
27%
40%
20%
10%
0%
60%
68%
50%
6%
30%
20%
70%
60%
16%
50%
40%
33%
80%
40%
PTPP
Gov
Waskita
SOE
SOE contractors
Private
with some signs of revival

In a recent meeting with MOF, they assured that the 'nomenclature' issue of the Ministry of
Public Works has been resolved in May 2015 and they expect the realisation of
government's capex to double in June 2015 (8% versus 4% as at end-May 2015)
translating into a significant pick-up in the award of infrastructure contracts, as evidenced
by the award of a few large government contracts during the month. Moreover, the
Ministry of Public Works proposes to begin the tender process of FY16 projects in August
2015, in order to accelerate the execution of infrastructure projects.
Expect a pick-up in the

award of infrastructure
contracts in 2H15, following
a pick-up in the realisation
of government's capex
We list a few of the announced contracts in June 2015 below:
Soreang-Pasirkoja Toll Road (Rp1.8 tn) was awarded to CMNP-Jasa Sarana-WIKA

consortium in the third week of June 2015.
The announcement of the winners of four out of the targeted 13 water dam projects to
be awarded this year (contract has yet to be signed).
-
Karian project (Rp1.1 tn) awarded to Daelim-WIKA-Waskita consortium
Passeloreng project (Rp0.7 tn) awarded to WIKA-Bumi Karsa consortium
Tanju and Mila projects (Rp0.4 tn) awarded to Nindya Karya-Hutama Karya
consortium
Consequently, SOE contractors' preliminary new order book in June 2015 saw a
significant increase (+40% MoM for SOE contractors versus 15% MoM in May 2015).
WIKA, which has lagged other SOEs, expects to achieve almost double its order book by
end-June 2015.
29 June 2015
Figure 28: Expected new order book in June 2015

Latest
May-15
% MoM
WIKA
PTPP
Waskita
11.0
11.8
5.7
5.8*
9.8
4.7
89%
20%
21%
Remarks
Expects to achieve by end-June 2015
Mid-June 2015
First week of June 2015
SOE contractors
28.5
20.3
40%
35% of full-year target
Source: Bisnis Indonesia, Company data, *preliminary
Potential headwinds that may cause weakness in

share prices
Another correction when actual "lift off" happens or Fed turns 'hawkish'
While the market may experience another retraction when the actual "lift off" happens,
the pull-back may be muted now that the market is leaning towards a more gradual
Fed tightening, following a less-than expected 'hawkish' innovation delivered on the
most recent FOMC.
Another correction when

actual "lift off" happens
However, we do not rule out the possibility of Fed turning 'hawkish' on execution and
the dip being larger than expected.
Cabinet reshuffling
The potential reshuffling of cabinet, post Ramadhan, may disrupt the operations of
infrastructure-related ministries, causing further delays in the much-anticipated
execution of infrastructure projects.
Potential cabinet reshuffling

may cause further delays
Earnings remain weak up to 3Q15

Earnings may remain weak up to 3Q15, following delays in the execution of
infrastructure projects until after Ramadhan. This may lead to revisions of FY15
targets.
Earnings may remain weak

up to 3Q15 which may lead
to revisions of FY15 targets
Oil price as the 'wild card'

We held a call recently with Dr Fesharaki, the Chairman of FACTS Global Energy, a
leading oil and gas consultancy. He believes that the agreement to lift the sanctions on
Iran is already in place and will be finalised by July 2015. In case Libya ramps up its
production, oil prices may fall by USD10-15/bbl, adding to the potential impact. A
significant fall in oil prices reduces stress on inflation and adds pressure on the
government to quicken its pace on infrastructure development, while cost is low.
A significant fall in oil prices

could be the 'wild card'
Investment strategy
While we expect prices to remain weak in the near term, until the market sees more
evidence of a pick-up in construction activities, we believe the weakness in the share
prices would be a good buying opportunity, in anticipation of a pick-up in the
implementation of infrastructure projects, post Ramadhan, and leading into 2016.
Expect prices to remain

weak in the near term, but
could be a good buying
opportunity
We maintain OUTPERFORM on the infrastructure stocks. Our preferred picks are

Waskita, WIKA, and TOTAL. With concerns over new order book growth, Waskita offers a
better order book visibility, following the equity injection from the government and with the
lowest foreign shareholdings among SOE contractors. WIKA and TOTAL have lagged the
rest in terms of performance (YTD relative performance of -23% and -18%, respectively)
and foreign shareholdings have fallen from a peak to 15% and 7%, respectively, close to
their recent lows of 13% and 6.6%, respectively.
Maintain OUTPERFORM on
the infrastructure stocks.
Preferred picks are Waskita,
WIKA, and TOTAL
We provide a snapshot of the parameters of individual infrastructure stocks in the table

below:
29 June 2015
Figure 29: A snapshot of the parameters of individual infrastructure stocks

YTD rel perf
WIKA
TOTAL
Wika Beton
Jasa Marga
PTPP
Waskita*
-23%
-18%
-17%
-16%
7%
16%
Valuation (forward
P/E)
18.9
13.0
20.9
12.2
20.4
30.7
Valuation
(% from peak)
-37%
-57%
-36%
-21%
-22%
-18%
Street earnings
momentum (3M)
-10%
1%
-7%
-3%
0%
4%
Foreign shareholdings
(May 15)
15%
7%
3%
18%
18%
11%
Sentiment (YTD
change, pp)
-0.47
0.75
-0.47
0.12
0.13
-0.03
Source: Company data, Thomson Reuters Analytics, IBES estimates, Credit Suisse estimates *impact on earnings from rights issue has not
been adjusted
Figure 30: Valuation summary

Wijaya Karya
PT PP
Waskita Karya*
Total Bangun
Wika Beton
WIKA.JK
2,660
1,228
O
4,150
56.0%
24.3%
PTPP.JK
3,585
1,303
O
4,800
33.9%
36.5%
WSKT.JK
1,585
1,614
O
2,200
38.8%
33.6%
TOTL.JK
855
219
O
1,200
40.4%
23.5%
WTON.JK
1,010
661
N
1,670
65.3%
25.5%
13.8
16.8
21.5
26.5
28.6
12.8
17.4
24.6
32.6
41.3
18.0
27.2
35.3
42.9
58.5
9.5
11.6
14.7
17.8
15.0
13.6
18.3
25.1
26.8
36.2
14.8
20.6
27.2
34.0
42.8
2017E
2016E
2015E
2014A
2013A
ROE (%)
2.7
3.1
3.6
4.1
5.5
3.6
4.7
5.9
7.3
8.8
3.1
3.8
4.6
5.4
6.4
2.3
2.7
3.2
3.7
3.9
2.7
3.2
3.7
4.1
12.9
3.1
3.8
4.7
5.5
6.7
2017E
2016E
2015E
2014A
2013A
ROA (%)
21.1
20.0
17.8
17.7
20.6
31.9
30.0
26.5
24.3
23.1
26.8
23.9
19.8
19.2
16.8
26.6
25.4
23.2
21.1
27.5
21.8
18.6
15.3
23.1
39.2
26.7
24.7
21.4
20.4
20.3
5.2
4.5
4.3
4.8
30.0
26.5
24.3
23.1
5.1
4.4
4.7
4.3
9.3
7.8
6.9
9.1
11.8
9.3
9.8
9.1
12.8
11.2
10.6
10.3
Ticker
Price (Rp)
Market Cap (USD mn)
Rating
Target Price (Rp)
Upside/(Downside)
3-yr EPS growth (%)
Sector
4,365
P/E
2017E
2016E
2015E
2014A
2013A
P/B
2017E
2016E
2015E
2014A
2013A
Source: Company data, Thomson Reuters Analytics, Credit Suisse estimates *impact on earnings from rights issue has not been adjusted
10
29 June 2015
Companies Mentioned (Price as of 29-Jun-2015)

Jasa Marga (Persero) TBK PT (JSMR.JK, Rp5,350, OUTPERFORM, TP Rp8,800)
PT PP (Persero) (PTPP.JK, Rp3,525, OUTPERFORM[V], TP Rp4,800)
Total Bangun Persada (TOTL.JK, Rp830, OUTPERFORM[V], TP Rp1,200)
Waskita Karya (WSKT.JK, Rp1,525, OUTPERFORM[V], TP Rp2,200)
Wijaya Karya (WIKA.JK, Rp2,510, OUTPERFORM, TP Rp4,150)
Wijaya Karya Beton (WTON.JK, Rp990, OUTPERFORM, TP Rp1,670)
Disclosure Appendix
Important Global Disclosures
I, Danny Goh, certify that (1) the views expressed in this report accurately reflect my personal views about all of the subject companies and
securities and (2) no part of my compensation was, is or will be directly or indirectly related to the specific recommendations or views expressed in
this report.
3-Year Price and Rating History for Jasa Marga (Persero) TBK PT (JSMR.JK)
JSMR.JK
Date
13-Aug-12
14-Jan-15
23-Feb-15
Closing Price
(Rp)
5,800
7,000
7,050
Target Price
(Rp)
6,750
8,700
8,800
Rating
O
* Asterisk signifies initiation or assumption of coverage.
O U T PERFO RM
3-Year Price and Rating History for PT PP (Persero) (PTPP.JK)

PTPP.JK
Date
27-Nov-14
15-Apr-15
Closing Price
(Rp)
3,000
3,970
Target Price
(Rp)
4,067
4,800
Rating
O*
O U T PERFO RM
11
29 June 2015
3-Year Price and Rating History for Total Bangun Persada (TOTL.JK)
TOTL.JK
Date
27-Nov-14
16-Mar-15
Closing Price
(Rp)
975
975
Target Price
(Rp)
1,331
1,200
Rating
O*
O U T PERFO RM
3-Year Price and Rating History for Waskita Karya (WSKT.JK)

WSKT.JK
Date
27-Nov-14
26-Feb-15
Closing Price
(Rp)
1,014
1,774
Target Price
(Rp)
1,341
2,200
Rating
O*
O U T PERFO RM
3-Year Price and Rating History for Wijaya Karya (WIKA.JK)

WIKA.JK
Date
27-Nov-14
17-Mar-15
Closing Price
(Rp)
3,000
3,390
Target Price
(Rp)
3,826
4,150
Rating
O*
O U T PERFO RM
12
29 June 2015
3-Year Price and Rating History for Wijaya Karya Beton (WTON.JK)
WTON.JK
Date
27-Nov-14
11-Mar-15
Closing Price
(Rp)
1,225
1,355
Target Price
(Rp)
1,345
1,670
Rating
N*
O
N EU T RA L
O U T PERFO RM
The analyst(s) responsible for preparing this research report received Compensation that is based upon various factors including Credit Suisse's
total revenues, a portion of which are generated by Credit Suisse's investment banking activities
As of December 10, 2012 Analysts stock rating are defined as follows:

Outperform (O) : The stocks total return is expected to outperform the relevant benchmark*over the next 12 months.
Neutral (N) : The stocks total return is expected to be in line with the relevant benchmark* over the next 12 months.
Underperform (U) : The stocks total return is expected to underperform the relevant benchmark* over the next 12 months.
*Relevant benchmark by region: As of 10th December 2012, Japanese ratings are based on a stocks total return relative to the analyst's coverage universe which
consists of all companies covered by the analyst within the relevant sector, with Outperforms representing the most attractive, Neutrals the less attractive, and
Underperforms the least attractive investment opportunities. As of 2nd October 2012, U.S. and Canadian as well as European ra tings are based on a stocks total
return relative to the analyst's coverage universe which consists of all companies covered by the analyst within the relevant sector, with Outperfor ms representing the
most attractive, Neutrals the less attractive, and Underperforms the least attractive investment opportunities . For Latin American and non-Japan Asia stocks, ratings
are based on a stocks total return relative to the average total return of the relevant country or regional benchmark; prior to 2nd October 2012 U.S. and Canadian
ratings were based on (1) a stocks absolute total return potential to its current share price and (2) the relative attractiveness of a stocks total return pote ntial within
an analysts coverage universe. For Australian and New Zealand stocks, the expected total return (ETR) calculation inc ludes 12-month rolling dividend yield. An
Outperform rating is assigned where an ETR is greater than or equal to 7.5%; Underperform where an ETR less than or equal to 5%. A Neutral may be assigned
where the ETR is between -5% and 15%. The overlapping rating range allows analysts to assign a rating that puts ETR in the context of associated risks. Prior to 18
May 2015, ETR ranges for Outperform and Underperform ratings did not overlap with Neutral thresholds between 15% and 7.5%, wh ich was in operation from 7 July
2011.
Restricted (R) : In certain circumstances, Credit Suisse policy and/or applicable law and regulations preclude certain types of communications,
including an investment recommendation, during the course of Credit Suisse's engagement in an investment banking transaction and in certain other
circumstances.
Volatility Indicator [V] : A stock is defined as volatile if the stock price has moved up or down by 20% or more in a month in at least 8 of the past 24
months or the analyst expects significant volatility going forward.
Analysts sector weightings are distinct from analysts stock ratings and are based on the analysts expectations for the fundamentals and/or
valuation of the sector* relative to the groups historic fundamentals and/or valuation:
Overweight : The analysts expectation for the sectors fundamentals and/or valuation is favorable over the next 12 months.
Market Weight : The analysts expectation for the sectors fundamentals and/or valuation is neutral over the next 12 months.
Underweight : The analysts expectation for the sectors fundamentals and/or valuation is cautious over the next 12 months.
*An analysts coverage sector consists of all companies covered by the analyst within the relevant sector. An analyst may cov er multiple sectors.
Credit Suisse's distribution of stock ratings (and banking clients) is:

Global Ratings Distribution
Rating
Versus universe (%)
Of which banking clients (%)
Outperform/Buy*
52%
(25% banking clients)
Neutral/Hold*
33%
Underperform/Sell*
13%
Restricted
2%
*For purposes of the NYSE and NASD ratings distribution disclosure requirements, our stock ratings of Outperform, Neutral, an d Underperform most closely
correspond to Buy, Hold, and Sell, respectively; however, the meanings are not the same, as our stock ratings are determined on a relative basis. (Please refer to
definitions above.) An investor's decision to buy or sell a security should be based on investment objectives, current holdin gs, and other individual factors.
13
29 June 2015
Credit Suisses policy is to update research reports as it deems appropriate, based on developments with the subject company, the sector or the
market that may have a material impact on the research views or opinions stated herein.
Credit Suisse's policy is only to publish investment research that is impartial, independent, clear, fair and not misleading. For more detail please refer
to Credit Suisse's Policies for Managing Conflicts of Interest in connection with Investment Research: http://www.csfb.com/research-andanalytics/disclaimer/managing_conflicts_disclaimer.html
Credit Suisse does not provide any tax advice. Any statement herein regarding any US federal tax is not intended or written to be used, and cannot
be used, by any taxpayer for the purposes of avoiding any penalties.
Price Target: (12 months) for Jasa Marga (Persero) TBK PT (JSMR.JK)
Method: Our discounted cash flow (DCF)-based target price of Rp8.800 for Jasa Marga is based on a weighted average cost of capital (WACC) of
11.2%, based on cost of equity of 14% and cost of debt of 9%.
Risk:
The key risk to our Rp8,800 target price for Jasa Marga is the tariff structure and traffic growth, which both have very high sensitivity
towards Jasa Marga's earnings and DCF value. Further risks are related to toll-road tariffs as tariff adjustments are evaluated by the
goverment and are based on domestic inflation rates. We believe any risk in inflation could increase this tariff risk. If the goverment fails to
unveil a master plan for toll roads and surrounding road networks this would have an effect on toll-road investments and JM's profitability.
Also if the goverment changes its regulations on toll-roads, projects could be affected, and effect profitabilty. There are also macro risks
relating to Indonesia's economic, political and social development.
Price Target: (12 months) for PT PP (Persero) (PTPP.JK)

Method: Our target price of Rp4,800 for PTPP is based on the price-to-earnings (P/E)-to-growth method, using a P/E-to-growth ratio of 0.9 x and 2yr EPS growth of 36.5%
Risk:
The main risks to our target price of Rp 4,800 for PTPP include: 1) changes in political power, 2) raw material price fluctuations, 3)
changes in government policy on infrastructure spending and 3) possible changes in economic environment.
Price Target: (12 months) for Total Bangun Persada (TOTL.JK)

Method: Our target price of Rp1,200 for Total Bangun Persada is based on the price-to-earnings (P/E)-to-growth method, using a P/E-to-growth
ratio of 0.9x and EPS growth of 23%.
Risk:
The main risks to our target price of Rp1,200 for Total Bangun Persada include: (1) changes in political power, (2) raw material price
fluctuations, (3) changes in government policy on infrastructure spending and (4) possible changes in the economic environment.
Price Target: (12 months) for Wijaya Karya (WIKA.JK)

Method: Our target price of Rp4,150 for WIKA is based on an average of sum-of-the-parts method and price-to-earnings (P/E)-to-growth method.
We have used a P/E-to-growth ratio of 1.3x. In our sum-of-the-parts value, we have used a discounted cash flow method to value most of
its operating units based on discount rates of 11%.
Risk:
The main risks to our target price of Rp4,150 for WIKA include: 1) changes in political power, 2) raw material price fluctuations, 3) changes
in government policy on infrastructure spending and 3) possible changes in economic environment.
Price Target: (12 months) for Waskita Karya (WSKT.JK)

Method: Our target price of Rp2,200 for Waskita Karya is based on the price-to-earnings (P/E)-to-growth method, using a P/E-to-growth ratio of
1.0x and 3-year EPS growth of 34%.
Risk:
The main risks to our target price of Rp2,200 for Waskita Karya include: 1) changes in political power, 2) raw material price fluctuations, 3)
changes in government policy on infrastructure spending and 3) possible changes in economic environment.
Price Target: (12 months) for Wijaya Karya Beton (WTON.JK)

Method: Our target price of Rp1,670 for Wijaya Karya Beton is based on the price-to-earnings (P/E)-to-growth method, using a P/E-to-growth
multiple of 1.4x and a 3-yr EPS CAGR of 25.5%
Risk:
The main risks to our target price of Rp1,670 for Wijaya Karya Beton include: 1) changes in political power, 2) raw material price
fluctuations, 3) changes in government policy on infrastructure spending and 3) possible changes in economic environment.
Please refer to the firm's disclosure website at https://rave.credit-suisse.com/disclosures for the definitions of abbreviations typically used in the
target price method and risk sections.
See the Companies Mentioned section for full company names
14
29 June 2015
The subject company (JSMR.JK, PTPP.JK, WIKA.JK, WTON.JK) currently is, or was during the 12-month period preceding the date of distribution of
this report, a client of Credit Suisse.
Credit Suisse provided investment banking services to the subject company (JSMR.JK, PTPP.JK, WIKA.JK, WTON.JK) within the past 12 months.
Credit Suisse has managed or co-managed a public offering of securities for the subject company (PTPP.JK) within the past 12 months.
Credit Suisse has received investment banking related compensation from the subject company (JSMR.JK, PTPP.JK, WIKA.JK, WTON.JK) within
the past 12 months
Credit Suisse expects to receive or intends to seek investment banking related compensation from the subject company (JSMR.JK, PTPP.JK,
WIKA.JK, WTON.JK) within the next 3 months.
Credit Suisse may have interest in (JSMR.JK, PTPP.JK, TOTL.JK, WIKA.JK, WSKT.JK, WTON.JK)
Important Regional Disclosures

Singapore recipients should contact Credit Suisse AG, Singapore Branch for any matters arising from this research report.
The analyst(s) involved in the preparation of this report have not visited the material operations of the subject company (JSMR.JK, PTPP.JK,
TOTL.JK, WIKA.JK, WSKT.JK, WTON.JK) within the past 12 months
Restrictions on certain Canadian securities are indicated by the following abbreviations: NVS--Non-Voting shares; RVS--Restricted Voting Shares;
SVS--Subordinate Voting Shares.
Individuals receiving this report from a Canadian investment dealer that is not affiliated with Credit Suisse should be advised that this report may not
contain regulatory disclosures the non-affiliated Canadian investment dealer would be required to make if this were its own report.
For Credit Suisse Securities (Canada), Inc.'s policies and procedures regarding the dissemination of equity research, please visit https://www.creditsuisse.com/sites/disclaimers-ib/en/canada-research-policy.html.
Credit Suisse has acted as lead manager or syndicate member in a public offering of securities for the subject company (PTPP.JK) within the past 3
years.
As of the date of this report, Credit Suisse acts as a market maker or liquidity provider in the equities securities that are the subject of this report.
Principal is not guaranteed in the case of equities because equity prices are variable.
Commission is the commission rate or the amount agreed with a customer when setting up an account or at any time after that.
To the extent this is a report authored in whole or in part by a non-U.S. analyst and is made available in the U.S., the following are important
disclosures regarding any non-U.S. analyst contributors: The non-U.S. research analysts listed below (if any) are not registered/qualified as research
analysts with FINRA. The non-U.S. research analysts listed below may not be associated persons of CSSU and therefore may not be subject to the
NASD Rule 2711 and NYSE Rule 472 restrictions on communications with a subject company, public appearances and trading securities held by a
research analyst account.
Credit Suisse Securities (Malaysia) Sdn Bhd. .................................................................................................................. Danny Goh ; Rachel Tan
For Credit Suisse disclosure information on other companies mentioned in this report, please visit the website at https://rave.creditsuisse.com/disclosures or call +1 (877) 291-2683.
15
29 June 2015
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Credit Suisse - Indonesian Contractors

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29 June 2015

Indonesia Infrastructure Sector

Some signs of revival

Source: Company data, Credit Suisse estimates

CREDIT SUISSE SECURITIES RESEARCH & ANALYTICS

Focus charts and tables

Figure 3: Fed taper in 2013contractors' share prices fall

share prices fall 19% since April 2015

55% from the peak

Source: Thomson Reuters Analytics, Credit Suisse estimates

Source: Thomson Reuters Analytics, Credit Suisse estimates

Figure 4: Largest contraction since 2013 'taper tantrum'

Figure 5: Contractors' P/E trend post 2012

-1 Std dev = 7.5 x

Source: Thomson Reuters analytics, Credit Suisse estimates

+1 Std dev = 19.6 x

Source: Thomson Reuters analytics, Credit Suisse estimates

Figure 6: Expected new order book in June 2015

35% of full-year target

Source: Bisnis Indonesia, company data *preliminary

Figure 7: A snapshot of the parameters of individual infrastructure stocks

Indonesia Infrastructure Sector

Some signs of revival

Amidst the expectation of

Source: Thomson Reuters Analytics, Credit Suisse estimates

Figure 9: Potential Fed tightening in 2H15contractors'

Figure 10: Fed taper in 2013contractors' share prices

share prices fall 19% since April 2015

fall 55% from the peak

Source: Thomson Reuters Analytics, Credit Suisse estimates

Indonesia Infrastructure Sector

Source: Thomson Reuters Analytics, Credit Suisse estimates

Was the correction significant?

Construction sector prices

Figure 12: 2013% decrease from the peak at the low,

% fall from the peak at low post correction

% fall from the peak at current price

Source: Thomson Reuters Analytics, Credit Suisse estimates

Source: Thomson Reuters Analytics, Credit Suisse estimates

Figure 13: 2015construction and toll road have de-rated

Figure 14: 2013construction and toll road were de-rated

more than its YTD increase to peak

less than their YTD increase to peak

Source: Thomson Reuters Analytics, Credit Suisse estimates

Indonesia Infrastructure Sector

0.1 0.1 0.1

0.9 0.9 0.9

1.2 1.3 1.3

Metal & mining

% of increase to peak / % of fall from peak

Metal & mining

% of increase to peak / % of fall from peak

Source: Thomson Reuters Analytics, Credit Suisse estimates

WIKA and TOTAL have

Figure 15: Individual contractors

Source: Company data, Credit Suisse estimates

Contractors P/E fall close to their historical average

Indonesia Infrastructure Sector

Contractors' forward P/E

Figure 17: Contractors' P/E trend

Figure 18: Contractors' P/E trend post 2012

+1 Std dev = 19.6 x

+1 Std dev = 23.3 x

-1 Std dev = 14.5 x