MORNING HIGHLIGHT. Equity Research Wednesday, March 16, 2016 FROM EQUITY RESEARCH MARKET NEWS. AUTO: Domestic car sales are still weak (NEUTRAL)

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Wednesday, March 16, 2016 MORNING HIGHLIGHT FROM EQUITY RESEARCH AUTO: Domestic car sales are still weak (NEUTRAL) Domestic car sales rose 3.8% mom to 88,250 units in February 2016.

On a yearly basis, however, domestic car sales remained weak, posting a 5.3% yoy decline to 173,262 units in 2M16. This number was within our expectation as it is 16.

1 Wednesday, March 16, 2016 MORNING HIGHLIGHT FROM EQUITY RESEARCH AUTO: Domestic car sales are still weak (NEUTRAL) Domestic car sales rose 3.8% mom to 88,250 units in February Looking forward, we believe that sales can be sustained due to the recent launch of new car models such as Honda BR-V and the second generation Toyota Fortuner and Mitsubishi Pajero. On a yearly basis, however, domestic car sales remained weak, posting a 5.3% yoy decline to 173,262 units in 2M16. This number was within our expectation as it is 16.5% of our full year domestic car sales target of 1.05mn units. We maintain a Neutral stance on the automotive sector. MARKET NEWS *Analysts comment inside ADRO s royalty dropped by 22%, pins high hopes on power plant projects (BI, TJP) BMRI rely on low-cost funds (BI) Construction business to suppot UNTR performance (ID) PTPP reduce the portion of private contracts (ID) SMBR to withdraw the Rp750 bn loan (BI) Previous Reports: KAEF: Weak 4Q15 results, ADRO: 4Q15: Weak results- Snapshot BSDE: Operationally inline, KAEF: Operationally Weak in 4Q- Snapshot PTPP: Net profit surge on higher margin, BSDE: Operationally inline- Snapshot IDX ANNOUNCEMENT Corp Action Code Action Date Time (WIB) BINA EGM 22-Mar JASS AGM 24-Mar Source: KSEI Key Index Close Chg Ytd Vol (%) (%) (US$ m) Asean - 5 Indonesia 4,850 (0.6) Thailand 1,383 (0.8) 7.4 1,253 Philippines 7, Malaysia 1,691 (0.6) (0.1) 389 Singapore 2,839 (0.3) (1.5) 702 Regional China 2, (19.1) 46,413 Hong Kong 20,289 (0.7) (7.4) 7,326 Japan 17,117 (0.7) (10.1) 11,508 Korea 1,970 (0.1) 0.4 3,529 Taiwan 8,611 (1.6) 3.3 3,520 India 24,551 (1.0) (6.0) 352 NASDAQ 4,729 (0.5) (5.6) 59,664 Dow Jones 17, (1.0) 7,240 Currency and Interest Rate Rate w-w m-m ytd (%) (%) (%) Rupiah Rp/1US$ 13,164 (0.0) SBI rate % 6.65 (0.4) (0.5) (0.6) 10y Gov Indo bond 7.77 (0.1) (0.2) (1.0) Unit Hard Commodities Price d-d m-m ytd (%) (%) (%) Coal US$/ton 52 (0.6) Gold US$/toz 1, Nickel US$/mt.ton 8,519 (0.6) 3.3 (3.0) Tin US$/mt.ton 16,905 (0.7) Unit Soft Commodities Price d-d m-m ytd (%) (%) (%) Cocoa US$/mt.ton 3, (3.9) Corn US$/mt.ton 139 (0.3) Oil (WTI) US$/barrel (0.3) Oil (Brent) US$/barrel 39 (2.0) Palm oil MYR/mt.ton 2, Rubber US$/mt ton 123 (0.9) Pulp US$/tonne 790 N/A (0.3) (1.7) Coffee US$/60kgbag (12.0) (6.6) Sugar US$/MT Wheat US$/ton 130 (0.3) Source: Bloomberg Danareksa Sekuritas

2 Wednesday, March 16, 2016 PT Danareksa Sekuritas Jl. Medan Merdeka Selatan No. 14 Jakarta Indonesia Tel (62 21) Fax (62 21) Team Anindya Saraswati (62-21) Property, Retail Armando Marulitua (62-21) Pharmaceutical, Construction Natalia Sutanto (62-21) ext.3508 Consumer, Tobacco Stefanus Darmagiri (62-21) Auto, Coal, Heavy Equip., Metal, Cement Puti Adani (62-21) Consumer Antonia Febe Hartono (62-21) ext.3504 Cement Sales team Ermawati A. Erman (62 21) ext Novrita E. Putrianti (62 21) ext Ehrliech Suhartono (62 21) ext Yunita L. Nababan (62 21) ext Laksmita Armandani (62 21) ext Muhammad Hardiansyah (62 21) ext Tuty Sutopo (62 21) ext Upik Yuzarni (62 21) ext Kevin Giarto (62 21) ext Danareksa Sekuritas

3 Jun-15 Aug-15 Oct-15 Dec-15 Feb-16 Mar-16 Jun-15 Aug-15 Oct-15 Dec-15 Feb-16 Mar-16 Jun-15 Aug-15 Oct-15 Dec-15 Feb-16 Mar-16 Wednesday, March 16, 2016 NEUTRAL ASII relative to JCI Index (Rp) (%) 4 ASII (LHS) xxxx relative to JCI Index xxxx relative to JCI Index Relative to JCI (RHS) (Rp) (%) 20 IMAS (LHS) Relative to JCI (RHS) (Rp) (%) AUTO (LHS) Relative to JCI (RHS) Stefanus Darmagiri (62-21) ext3530 stefanus.darmagiri@danareksa.com Automotive Sector Domestic car sales are still weak Domestic car sales rose 3.8% mom to 88,250 units in February Looking forward, we believe that sales can be sustained due to the recent launch of new car models such as Honda BR-V and the second generation Toyota Fortuner and Mitsubishi Pajero. On a yearly basis, however, domestic car sales remained weak, posting a 5.3% yoy decline to 173,262 units in 2M16. This number was within our expectation as it is 16.5% of our full year domestic car sales target of 1.05mn units. We maintain a Neutral stance on the automotive sector. February 2016: slight improvement in domestic car sales, but still down on a yoy basis Domestic car sales edged up by 3.8% mom to 88,250 units in February 2016 following the launch of several new car models such as the second generation Toyota Fortuner and Mitsubishi Pajero as well as the Honda BR-V in January Nonetheless, on a cumulative basis, domestic car sales were down by 5.3% yoy to 173,262 units in 2M16 as we believe that the spillover effect from challenging economic conditions will persist. Coupled with the weak Rupiah/US Dollar exchange rate and lackluster commodity prices, consumer purchasing power has taken a hit. Higher market share for Honda on delivery of Honda BR-V While most car brands reported a decline in car sales volume in 2M16, Honda s car sales by contrast jumped 24.1% yoy to 37,904 units in 2M16. This increase was supported by the launch of the new Honda BR-V in the beginning of the year as well as strong Honda HR-V sales volume (+27.4% yoy). Sales volume of Honda BR-V, a 7-seater crossover Sport Utility Vehicle accounted for about 32.2% of Honda s sales volume in 2M16. While Honda Mobilio posted a decline in sales volume by 22.7% yoy in 2M16, strong sales volume of Honda BR-V and HR-V helped to increase Honda s market share to 21.9% in 2M16 from 16.7% in 2M15. Toyota is still the leading brand with a slight decline in market share The launch of the second generation Toyota Fortuner at the end of January 2016 is reflected in 2.6% mom higher Toyota sales volume in February However, on a cumulative basis, Toyota sales volume still declined by 6.6% yoy to 50,432 units in 2M16. Hence, Toyota s market share slipped to 29.1% in 2M16 from 29.5% in 2M15. However, we believe that Toyota can maintain market share in 2016 (2015: 31.8%), supported by the launch of Toyota Kijang Innova in November 2015 and Toyota Fortuner at the end of January Although Daihatsu managed to improve its market share to 16.1% in 2M16 from 15.9% in 2M15, the market share of Astra International still posted a slight decline to 46.8% in 2M16 from 47.7% in 2M15. Domestic car sales to recover only slightly in 2016 Although the IDR has strengthened against the US Dollar recently, we expect that with the IDR remaining at its current level, consumer purchasing power will remain rather weak. As such, we are only targeting a slight recovery in domestic car sales volume in 2016 at 5% yoy growth vs. negative growth of 16.1% yoy in While interest rate cuts will positively impact domestic car sales, Bank Indonesia s recent rate cuts in January and February 2016 to 7.00% will only have a marginal impact on domestic car sales. We believe that only more aggressive BI interest rate cuts would lead to higherthan-expected domestic car sales. We maintain our Neutral stance on the automotive sector. Upside potential would come from: a) faster-than-expected BI rate cuts and b) strengthening of the Rupiah against the US Dollar. Company Recom. Current price Target price PE, x EV/EBITDA, x EPS CAGR ROE, % Net gearing Rp Rp 2016F 2016F FY14-FY16F, % 2016F 2016F Sector average (3.0) ASII HOLD 7,100 6, (3.0)

4 Jan-13 Mar-13 May-13 Jul-13 Sep-13 Nov-13 Jan-14 Mar-14 May-14 Jul-14 Sep-14 Nov-14 Jan-15 Mar-15 May-15 2W sales, '000 units ASII market share, % 4W sales, '000 units 4W market share Jan-13 Mar-13 May-13 Jul-13 Sep-13 Nov-13 Jan-14 Mar-14 May-14 Jul-14 Sep-14 Nov-14 Jan-15 Mar-15 May-15 4W sales, '000 units ASII market share, % 16 March 2016 Automotive Sector Monthly recovery in motorcycle sales volume in Feb 2016, but still lower in 2M16 After domestic motorcycle sales volume posted a 17.2% mom decline in January 2016 due to high inventory levels at the motorcycle manufacturers, sales volume recovered by 26.1% mom to 524,864 units in February Honda remains the market leader with market share of 69.1% (sales of 362,668 units), followed by Yamaha with 26.5% market share (with sales of 139,235 units), Suzuki (2.2%) with sales of 11,721 units and Kawasaki (2.1%) with sales of 11,081 units. On a cumulative basis, the weak sales volume in January 2016 was reflected in an 11.1% yoy decline in domestic motorcycle sales volume to 941,127 units in 2M16. Cumulative motorcycle sales volume in 2M16 was still below our expectation as it is only about 13.8% of our full year forecast of 6.8mn units (+5% yoy). Exhibit 1. New models launched to sustain monthly car sales volume in February Exhibit 2. Car sales volume by brand Source: Gaikindo, Astra International Exhibit 3. Market share by brand 2M15 2M16 2M15 2M % 30.0% 25.0% 20.0% 15.0% 10.0% 5.0% 29.5% 29.1% 16.1% 15.9% 16.7% 12.4% 11.4% 21.9% 2.8% 1.8% 0 Toyota Daihatsu Suzuki Honda Nissan 0.0% Toyota Daihatsu Suzuki Honda Nissan Source: Gaikindo, Astra International Source: Gaikindo, Astra International Exhibit 4. Recovery in motorcycle sales volume in February Source: AISI, Astra International 2

5 Wednesday, March 16, 2016 MARKET NEWS ADRO s royalty dropped by 22%, pins high hopes on power plant projects (BI) Adaro Energy (ADRO) royalty payment s decreased by 22% to US $ 227mn, compared to the previous year's royalty paid at US $ 354 mn. Royalties paid is 13% from total cost of revenue throughout 2015 worth US$2.14 bn. The average selling price of ADRO fell by 14% compared to 2014, with sales volume fell by 7% to 53.11ton. Total production fell by 8% to 51.46mn tonnes, below the targeted figure in the range 51-54mn tons. Despite not reaching its production target last year, ADRO has projected higher production this year anchoring its hopes in local and overseas coal-fueled power plants. ADRO plans to increase production to between million tons from ton last year. ADRO President Director expressed optimism that film would be able to continue tapping into domestic and Southeast Asian markets considering countries promising coal demand growth. BMRI rely on low-cost funds (BI) Bank Mandiri (BBRI) will increase the low cost funds to realize the reduction in lending rates to single digits by the end of this year. Director of Consumer Banking BMRI, Hery Gunardi stated that the current, BMRI is increasing portion of savings and checking accounts with interest below 2%. Heri also stated that the capping deposits to BOOK IV was set at 75 bps above the BI rate asserted to not directly impact to lower lending rates. Construction business to suppot UNTR performance (ID) United Tractors (UNTR) plans to sell units of Komatsu tractors for 2016, down 6% yoy, and putting more focus to the construction sector. Previously, UNTR along with Sumitomo Corp. and Kansai Electric Power Co. Inc. plans for the construction of 2x1000MW Tanjung Jati 5 & 6 power plant, to start in April On this US$4.2 bn project, UNTR will have a minority stake, and the construction is expected to be completed in In addition to operating, the consortium would also supply electricity to PLN for 25 year. Currently UNTR also eyeing mine mouth steam power plant projects with a capacity of 2x300MW in South Sumatra. PTPP reduce the portion of private contracts (ID) Pembangunan Perumahan (PTPP) plans to reduce portion of private sector projects in the new contracts in Corporate Secretary PTPP said private portion will be accounted for about 20% (from 44.86% in 2015) while the government and stateowned project by 80% (from 55.14% in 2015). Until January 2016, PTPP has won a new contract as Rp1.06tn consisting of Rp671.3bn contract at the parent company level and Rp396.4tn contract in subsidiary level. SMBR to withdraw the Rp750 bn loan (BI) Semen Baturaja (SMBR) will withdraw IDR750 bn loan to fund projects Baturaja II plant in 4Q16. Director of SMBR stated drawdown is part of a plan Rp1.5tn loan. In addition, the company plans to attract loan Rp 750 bn in Besides bank loan, funding source Baturaja II plant project will come from internal funds as well as IPO proceed. The investment value of the plant is estimated to be Rp3.85tn Balfour II with a capacity of 1.85 million tons. Danareksa Sekuritas

6 Equity Valuation Rating Price (Rp) Price Mkt Cap Core EPS (Rp) EPS Growth PER (x) EV / EBITDA (x) PBV (x) Net profit, Rp bn EPS (Rp) Net Gearing ROE Target Rp Bn Danareksa Universe 2,303, , , % 8% Auto 298,080 16,781 19, % 14% Astra International HOLD 7,100 6, ,433 16,050 18, % 13% Gajah Tunggal BUY , % 138% Selamat Sempurna BUY 4,530 5,300 6, % 6% net cash 36.0 Banks 979,972 73,678 79, % 8% BCA BUY 13,575 15, ,692 18,062 19, % 10% NA NA NA NA 21.4 BNI BUY 5,350 5,850 99,770 7,506 8, % 15% NA NA NA NA 12.1 BRI BUY 11,075 13, ,211 24,352 25, , ,048 0% 6% NA NA NA NA 23.0 Bank Tabungan Negara BUY 1,750 1,450 18,529 1,588 1, % 24% NA NA NA NA 12.4 Bank Mandiri BUY 10,175 11, ,417 20,144 21, % 6% NA NA NA NA 18.2 Bank Tabungan Pensiunan BUY 2, ,353 2,026 2, % 10% NA NA NA NA 15.8 Cement 141,711 9,876 9, % 0% Indocement HOLD 20, ,741 4,915 4,919 1,335 1,336 1,305 1,306-9% 0% net cash net cash 16.9 Semen Indonesia BUY 10,475 12,300 62,133 4,608 4, % 1% net cash Semen Baturaja HOLD , % -1% net cash net cash 12.5 Cigarettes 139,931 15,573 12,886 8,094 6,697 89% -17% Gudang Garam BUY 65,600 68, ,220 5,478 5,760 2,847 2,993 2,847 2,993 2% 5% Construction 116,139 4,375 5, % 26% Jasa Marga BUY ,400 1,531 1, % 28% Wijaya Karya HOLD 2,545 2,900 15, % 27% Pembangunan Perumahan BUY 3,885 4,700 18, % 35% Adhi Karya BUY 2,735 2,750 9, % 40% net cash 12.1 Waskita Karya BUY 1,925 2,150 26, , % 31% net cash 14.2 Wika Beton HOLD 965 1,350 8, % 24% net cash net cash 17.1 Consumer 501,884 13,566 14, % 7% Indofood CBP BUY 15,625 13,800 91,109 3,033 3, % 9% net cash net cash 20.3 Indofood BUY 7,425 7,100 65,195 3,704 4, % 10% Unilever BUY 44, ,102 6,036 6, % 10% Nippon Indosari Corpindo BUY 1,245 1,680 6, % 16% Mandom BUY 15,800 21,170 3, ,618 1, , % -47% net cash 35.7 Healthcare 112,197 2,964 3, % 24% Kalbe Farma HOLD 1,305 1,355 61,172 2,040 2, % 12% net cash net cash 20.6 Kimia Farma HOLD 1,255 1,130 6, % 11% net cash Siloam Hospital HOLD 7, , % 44% Mitra Keluarga BUY 2,400 2,580 34, % 13% net cash net cash 22.4 Heavy Equipment 57,341 6,331 6,015 1,385 1,316 14% -5% Hexindo Adiperkasa HOLD 1,210 3,650 1, % 18% net cash net cash 8.0 United Tractors HOLD 15, ,325 6,111 5,756 1,638 1,543 1,638 1,543 14% -6% net cash net cash 16.5 Mining 81,191 6,032 4, % -22% Adaro Energy BUY ,390 2,249 1, % -30% Timah HOLD , % 78% Vale Indonesia BUY 1, , % -67% net cash net cash 3.0 Aneka Tambang BUY ,886 (706) (293) (74) (31) (74) (31) -5% -59% (6.1) (14.8) Bukit Asam BUY 6,150 7,800 14,170 1,970 1, % -27% net cash net cash 21.4 Indo Tambangraya Megah HOLD 6 7,300 7,345 1, , , % -46% net cash net cash 14.1 Harum Energy HOLD , (123) 10 (45) 10 (45) 471% -540% 81.0 (18.4) net cash net cash 0.8 Property 98,995 8,896 10, % 15% Alam Sutera BUY ,506 1,254 1, % 21% Bumi Serpong Damai BUY 1,775 2,100 34,163 2,369 2, % 10% net cash net cash 16.6 Metropolitan Land BUY , % 11% Surya Semesta Internusa HOLD 705 1,040 3, % -11% net cash net cash 16.9 Lippo Karawaci BUY 1,105 1,200 25,501 1,565 1, % 13% PP Properti BUY ,202 1,626 1, % 27% Summarecon BUY 1,640 2,045 23,660 1,327 1, % 21% Retail 28,055 1,039 1, % 17% Mitra Adi Perkasa BUY 4,870 4,650 8, % 71% Ramayana HOLD , % 3% net cash net cash 9.4 Ace Hardware HOLD , % 9% net cash net cash 22.4

7 Tuesday, March 15, 2016 COVERAGE PERFORMANCE LEADERS Price as on Code 14-Mar Mar-2016 Chg, % w-w, % m-m, % YTD, % Rating Alam Sutera ASRI BUY Indosat ISAT 6 5, BUY Semen Baturaja SMBR HOLD Timah TINS HOLD Gajah Tunggal GJTL BUY MNC Sky Vision MSKY 1,135 1, (4.2) (15.0) HOLD Jasa Marga JSMR 5,575 5, (3.5) 6.7 BUY Bumi Serpong Damai BSDE 1,775 1, (1.4) BUY XL Axiata EXCL 4,205 4, BUY Aneka Tambang ANTM BUY Sources: Bloomberg LAGGARD Price as on Code 14-Mar Mar-2016 Chg, % w-w, % m-m, % YTD, % Rating Kimia Farma KAEF 1,280 1,295 (1.2) HOLD Wika Beton WTON (1.0) 1.1 (5.9) 15.8 HOLD Pembangunan Perumahan PTPP 3,900 3,935 (0.9) 5.3 (2.1) 0.6 BUY PP London Sumatra LSIP 1,695 1,710 (0.9) HOLD Ramayana RALS (0.7) (9.8) HOLD Siloam Hospital SILO 7,950 8 (0.6) - (9.7) (18.9) HOLD Bank Negara Indonesia BBNI 5,325 5,350 (0.5) 0.9 (1.4) 6.7 BUY Bank Tabungan Negara BBTN 1,695 1,700 (0.3) BUY Selamat Sempurna SMSM 4,505 4,510 (0.1) (5.4) BUY Bank Tabungan Pensiunan Nasional BTPN 2,800 2, BUY Sources: Bloomberg Danareksa Sekuritas

8 Tuesday, March 15, 2016 Disclaimer The information contained in this report has been taken from sources which we deem reliable. However, none of P.T. Danareksa Sekuritas and/or its affiliated companies and/or their respective employees and/or agents makes any representation or warranty (express or implied) or accepts any responsibility or liability as to, or in relation to, the accuracy or completeness of the information and opinions contained in this report or as to any information contained in this report or any other such information or opinions remaining unchanged after the issue thereof. We expressly disclaim any responsibility or liability (express or implied) of P.T. Danareksa Sekuritas, its affiliated companies and their respective employees and agents whatsoever and howsoever arising (including, without limitation for any claims, proceedings, action, suits, losses, expenses, damages or costs) which may be brought against or suffered by any person as a results of acting in reliance upon the whole or any part of the contents of this report and neither P.T. Danareksa Sekuritas, its affiliated companies or their respective employees or agents accepts liability for any errors, omissions or misstatements, negligent or otherwise, in the report and any liability in respect of the report or any inaccuracy therein or omission there from which might otherwise arise is hereby expresses disclaimed. The information contained in this report is not be taken as any recommendation made by P.T. Danareksa Sekuritas or any other person to enter into any agreement with regard to any investment mentioned in this document. This report is prepared for general circulation. It does not have regards to the specific person who may receive this report. In considering any investments you should make your own independent assessment and seek your own professional financial and legal advice. Danareksa Sekuritas

MORNING HIGHLIGHT. Equity Research Wednesday, January 27, 2016 FROM EQUITY RESEARCH MARKET NEWS

MORNING HIGHLIGHT. Equity Research Wednesday, January 27, 2016 FROM EQUITY RESEARCH MARKET NEWS Equity Research Wednesday, January 27, 2016 MORNING HIGHLIGHT FROM EQUITY RESEARCH SMBR: The King of Cement in Southern Sumatera (Non Rated) Despite having low production capacity, Semen Baturaja (SMBR)