Market Watch: What Are the Best Indonesian Stocks to Buy?
On Thursday (06/07) Indonesia's benchmark Jakarta Composite Index advanced 0.42 percent to 5,849.58 points amid mixed Asian markets. Indonesian stocks are now again approaching the record high level that was set earlier this week. Local Indonesian securities companies are confident to see the benchmark index of Indonesia rising further in the remainder of the year, passing beyond the 6,000 level. Which Indonesian stocks do these companies recommend?
(1) Accelerating economic growth, (2) a stable rupiah, (3) easing tensions surrounding the Jakarta gubernatorial election and Ahok's blasphemy case, (4) the recent ratings upgrade (to investment grade) by Standard & Poor's, (5) an under-control current account deficit, (6) under-control inflation, as well as (7) the nation's fiscal stability are all cited as factors that boost investor appetite on the Indonesia Stock Exchange.
However, there are also factors that are considered a threat to the performance of Indonesian stocks: (1) unpredictable policies in the USA by the Donald Trump administration, (2) looming further monetary tightening in the USA, (3) rising tensions in the Middle East and North Korea, as well as (4) the bleak crude oil price.
Still, Indonesian securities companies expect the positive factors to compensate more than enough for the negative factors and therefore they expect the Jakarta Composite Index to reach beyond the 6,000 level later this year. So, which Indonesian stocks do they recommend?
Harry Su, Head of Research at Bahana Securities, put the target for the Jakarta Composite Index at 6,300 points in 2017 amid the improving macroeconomic situation of Indonesia and easing domestic political turmoil.
Stock Tips Bahana Sekuritas:
| Company | Target Price (rupiah/share) |
Core Business |
| Astra International | 10,000 | Automotive |
| Bank Mandiri | 15,000 | Bank |
| Bank Negara Indonesia | 8,000 | Bank |
| Semen Indonesia | 11,600 | Cement |
| Bank CIMB Niaga | 1,500 | Bank |
| Ciputra Development | 1,800 | Property |
| Mitra Adiperkasa | 8,300 | Retail |
| United Tractors | 32,000 | Heavy Equipment |
| Surya Citra Media | 3,350 | Media |
| Ramayana Lestari Sentosa | 1,440 | Department Stores |
Source: Bahana Sekuritas
Surya Citra Media and Ramayana Lestari Sentosa were recently added to Bahana Sekuritas' top ten Indonesian stocks as there is regarded more upward growth room for their shares compared to that of Jasa Marga and Summarecon Agung (that were removed from the list). Obvious from the table above, the banking sector is expected to show good growth in 2017.
Meanwhile, Danareksa Sekuritas expects Indonesian shares in the property, plantations, and banking sector to perform well in the second half of 2017, supported by improving purchasing power, stable interest rates, accelerated economic growth, and recovering crude palm oil production volumes.
Stock Tips Danareksa Sekuritas:
| Company | Target Price (rupiah/share) |
Core Business |
| Lippo Karawaci | 771 | Property |
| Agung Podomoro Land | 206 | Property |
| PP London Sumatra Indonesia | 1,543 | Palm Oil |
| Bumi Serpong Damai | 1,992 | Property |
| Astra Agro Lestari | 1,500 | Palm Oil |
| Eagle High Plantations | 259 | Palm Oil |
| Bank Central Asia | 20,368 | Bank |
| Bank Rakyat Indonesia | 6,872 | Bank |
| Bank Mandiri | 14,790 | Bank |
| Bank Negara Indonesia | 7,381 | Bank |
Source: Danareksa Sekuritas
Lastly, Binaartha Parama Sekuritas said it still has not revised its target for the Jakarta Composite Index this year, hence the targets are still at 5,750 - 6,243 (best resistance) and 5,250 - 5,300 (worst resistance).
Stock Tips Binaartha Parama Sekuritas:
| Company | Target Price (rupiah/share) |
Core Business |
| Astra International | 9,550 | Automotive |
| Telekomunikasi Indonesia | 5,200 | Telecommunication |
| Unilever Indonesia | 51,250 | Home & Personal Care |
| Indofood CBP Sukses Makmur | 9,850 | Food |
| Charoen Pokphand Indonesia | 3,800 | Poultry Feed |
| Indo Tambangraya Megah | 20,275 | Coal Mining |
| Tambang Batubara Bukit Asam | 14,260 | Coal Mining |
| Indocement Tunggal Prakarsa | 20,500 | Cement |
| Bank Rakyat Indonesia | 16,550 | Bank |
| Terregra Asia Energy | 530 | Energy |
Source: Binaartha Parama Sekuritas