citi - indo property - 26 august 2o13

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Rating Target Price

Current Year Earnings Estimates

Company Ticker Old New Old New Old New Alam Sutera ASRI.JK 1 1 Rp1,300 Rp1,300 Rp92 Rp93 Bumi Serpong BSDE.JK 1 1 Rp2,400 Rp2,400 Rp118 Rp123 Lippo Karawaci LPKR.JK 1 1 Rp1,600 Rp1,600 Rp52 Rp48 Summarecon Agung SMRA.JK 1 1 Rp1,575 Rp1,575 Rp68 Rp68

26 August 2013 │ 25 pages Real Estate/Property (Citi) Asia

Indonesian Property A Close Look at Currency Impact

What's New — Following Citi’s recent update of its FX rate forecasts (Foreign Exchange Forecasts on 16 August 2013), we revise our forex assumptions for the Indonesian property companies that we cover. We also analyze the hedging plans of Alam Sutera and Lippo Karawaci, which have the most significant USD debt in the sector (at c. 27% of each company’s assets).

Still a low-geared sector with Alam Sutera as the most geared — Based on the latest data, the sector has a net gearing of 11%, vs. 7% in 1Q13. This is mainly due to higher gearing for Alam Sutera since its cash position has declined.

73% of loans are in USD, but 82% of principal is hedged — Alam Sutera has 2 USD bonds totaling $385mn, which are 78% hedged up to Rp12,500/USD, while Lippo Karawaci has a US$773mn bond, which is 84% hedged up to Rp11,500/USD. Both companies’ USD bonds are hedged using call spread options. Lippo Karawaci is more sensitive to forex movements, on our analysis. For every Rp500/USD weakness that is still within the hedging range, FY13E net profit would decline by 0.3-2.8% for Alam Sutera and by 1.4% for Lippo Karawaci. Outside the hedging range, every Rp500/USD weakness would mean net profit declining by 8% for Alam Sutera and by 27% for Lippo Karawaci. Note, these would be unrealized losses. Alam Sutera’s bonds mature in 2017 at the earliest, and Lippo Karawaci’s in 2015.

Coupon payments for USD bonds naturally hedged by USD cash balances — Alam Sutera’s current USD cash balance is sufficient for 3 years of coupon payments, while Lippo Karawaci has 2 years’ worth of coupon payments. Thus, we are confident that both companies will be able to meet their coupon obligations.

Focus on mass products — We maintain our positive view on the Indonesian property sector for the medium term, but believe that in the short term the sector will be hit by macro headwinds and tightening measures by the government. We prefer landed housing developers, especially those with products aimed at the middle low and low income segments. Top picks are 1) Bumi Serpong Damai due to its focus on mass products, premium landbank, potential pan-Indonesia reach, and strong balance sheet. The stock is trading at 11.0x 2013E PE and at a 61% discount to NAV; and 2) Alam Sutera due to its cheap valuation and upcoming Pasar Kemis launch. The stock is trading at 5.9x 2013E PE and a 62% discount to NAV.

Felicia Asrinanda Barus +62-21-5290-8298 [email protected]

Citi Research

Equities

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Indonesian Property 26 August 2013 Citi Research

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Still a low-geared sector with Alam Sutera as the most geared Based on the latest available data, the sector has a net gearing of 11%, vs. 7% in

1Q13. This is mainly due to higher gearing from Alam Sutera since its cash position has declined.

Figure 1. Gearing level of the sector is increasing…

1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 Gearing Alam Sutera 47% 41% 53% 46% 84% 74% Bumi Serpong 7% 6% 11% 11% 9% 23% Lippo Karawaci 37% 51% 48% 52% 60% 60% Summarecon Agung 43% 43% 39% 29% 34% 34% Sector 28% 32% 35% 34% 42% 46% Net gearing Alam Sutera -20% -18% 11% 11% 26% 41% Bumi Serpong -33% -35% -35% -27% -23% -16% Lippo Karawaci 16% 22% 23% 23% 37% 37% Summarecon Agung -8% -27% -31% -34% -21% -21% Total Sector -10% -10% -5% -3% 7% 11%

Note: Only Alam Sutera and Bumi Serpong Damai have released 2Q13 results. Thus, for 2Q13 figures for Lippo Karawaci and Summarecon, we are using the latest data, which are from 1Q13. Source: Company data, Citi Research

Figure 2. ...but it is still lower than the historical level

Source: Company data, Citi Research 73% of loans in USD, but 82% of the principal is hedged 73% of loans are in USD based on the latest data from the 2 property companies

with meaningful USD loans, namely Alam Sutera and Lippo Karawaci. According to the companies, ~80% of the principal of these bonds is hedged. We did a more thorough analysis of the impact of FX movement, by taking into account the impact of the hedging mechanism and the USD cash balance. Please note that

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these will be unrealized gains or losses. Alam Sutera’s bond will mature in 2017 at the earliest, and Lippo Karawaci’s in 2015.

Figure 3. USD loan exposure of the property sector is increasing (In Rp bn)

Company 4Q11 4Q12 1Q13 2Q13 Total loan

Total US$ loan

% US$ loan

Total loan

Total US$ loan

% US$ loan

Total loan

Total US$ loan

% US$ loan

Total loan

Total US$ loan

% US$ loan

Alam Sutera 554 0 0% 2,180 1,385 64% 4,326 3,592 83% 3,823 3,823 100% Bumi Serpong Damai 663 0 0% 1,125 0 0% 1,035 0 0% 2,728 0 0% Summarecon Agung 1,140 9 1% 1,122 10 1% 1,388 10 1% NA NA NA Lippo Karawaci 3,753 3,535 94% 6,014 5,944 99% 7,349 7,280 99% NA NA NA Sector 6,111 3,544 58% 10,442 7,338 70% 14,097 10,882 77% NA NA NA

Note: Only Alam Sutera and Bumi Serpong Damai have released 2Q13 results. Source: Companies, Citi Research

Alam Sutera

– Alam Sutera has 2 USD bonds totaling US$385mn, which are 78% hedged at range of Rp9,400-Rp11,500/USD with average cost of 1.26%.

– If the USD exchange rate approaches Rp10,500/USD, the company will put in additional call spread hedge from Rp11,000-Rp12,500/USD at additional cost of 1.5% pa of the principal amount.

– The company had a US$97mn cash balance as of 2Q13.

– As a result, for every Rp500/USD weakness that is still within the hedging range, its net profit would decline by 0.3-2.8%. Outside of the hedging range, net profit would decline by 8% for every Rp500/USD weakness.


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Figure 4. Our assumptions of Alam Sutera’s FX gain/loss and hedging impact

2013E 2014E 2015E 2016E 2017E 2018E Forex (Rp/USD) 10,438 10,375 10,113 9,879 9,646 9,646 Bond I Total amount (USD mn) 150 150 150 150 0 0 Unhedged amount (USD mn) 50 50 50 50 0 0 Hedged amount (USD mn) 100 100 100 100 0 0 Hedging range Rp9,400/USD-Rp11,000/USD Fixed rate 1.3-1.35% pa Unhedged G/L (Rp bn) -115 9 39 35 0 0 Hedging impact (Rp bn) 77 -6 -26 -23 0 0 Net G/L (Rp bn) -38 3 13 12 0 0 Bond II Total amount (USD mn) 235 235 235 235 235 235 Unhedged amount (USD mn) 35 35 35 35 35 35 Hedged amount (USD mn) 200 200 200 200 200 200 Hedging range Rp9,900/USD-Rp11,500/USD Fixed rate 1.1-1.34% pa Unhedged G/L (Rp bn) -180 15 62 55 55 0 Hedging impact (Rp bn) 154 -13 -52 0 0 0 Net G/L (Rp bn) -27 2 9 55 55 0 USD cash Total amount (USD mn) 97 97 97 97 97 97 Net G/L (Rp bn) 74 -6 -25 -23 -23 0 Total forex G/L (Rp bn) 9 -1 -3 44 32 0

Source: Citi Research

Figure 5. Impact of the movement of every Rp500/USD in forex rate on Alam Sutera’s net profit

FY13E net profit (Rp bn) Change +Rp2,500/USD 1,608 -11.7% +Rp2,000/USD 1,752 -3.8% +Rp1,500/USD 1,758 -3.4% +Rp1,000/USD 1,764 -3.1% +Rp500/USD 1,770 -2.8% Base case: FY12 Rp9,670/USD, FY13E Rp10,438/USD 1,821 0.0% -Rp500/USD 1,824 0.2% -Rp1,000/USD 1,877 3.1% -Rp1,500/USD 2,062 13.3% -Rp2,000/USD 2,224 22.1% -Rp2,500/USD 2,385 31.0%

Note: The shaded columns are the FX rate change within the hedging range

Source: Citi Research Lippo Karawaci

– Lippo Karawaci has a US$773mn bond, which is 85% hedged at range of Rp9,500-Rp11,500/USD with average cost of 0.92%.

– The company had a US$100mn cash balance as of 2Q13.

– As long as the exchange rate is within the hedging range, net profit would decline/increase by 1.4% for every Rp500/USD depreciation/appreciation. Outside of the hedging range, net profit could decline by 27% for every Rp500/USD depreciation.


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Figure 6. Our assumptions of Lippo Karawaci’s FX gain/loss and hedging impact

2013E 2014E 2015E 2016E 2017E 2018E Forex (Rp/USD) 10,438 10,375 10,113 9,879 9,646 9,646 Bond Total amount (USD mn) 773 773 653 653 653 653 Unhedged amount (USD mn) 120 120 0 0 0 0 Hedged amount (USD mn) 653 653 653 653 653 653 Hedging range Rp9,500/USD-Rp11,500/USD Fixed rate 0.525%-1.45% Unhedged G/L (Rp bn) -593 49 171 153 152 0 Hedging impact (Rp bn) 501 -41 -171 -153 -152 0 Net G/L (Rp bn) -92 8 0 0 0 0 USD cash Total amount (USD mn) 100 100 100 100 100 100 Net G/L (Rp bn) 76 -6 -26 -23 -23 0 Total forex G/L (Rp bn) -15 1 -26 -23 -23 0


Figure 7. Impact of the movement of every Rp500/USD in forex rate on Lippo Karawaci’s net profit

FY13E net profit (Rp bn) Change +Rp2,500/USD 226 -79.7% +Rp2,000/USD 523 -53.0% +Rp1,500/USD 819 -26.3% +Rp1,000/USD 1,081 -2.8% +Rp500/USD 1,096 -1.4% Base case: FY12 Rp9,670/USD, FY13E Rp10,438/USD 1,112 0.0% -Rp500/USD 1,127 1.4% -Rp1,000/USD 1,274 14.5% -Rp1,500/USD 1,570 41.2% -Rp2,000/USD 1,867 67.9% -Rp2,500/USD 2,163 94.6%

Note: The shaded columns are the FX rate change within the hedging range

Source: Citi Research Bumi Serpong Damai

– The company does not have any USD debt, but it had US$98mn cash balance at the end of 2Q13


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Figure 8. Impact of the movement of every Rp500/USD in forex rate on Bumi Serpong Damai’s net profit

FY13E net profit Change +Rp2,500/USD 2,418 12.7% +Rp2,000/USD 2,364 10.2% +Rp1,500/USD 2,309 7.6% +Rp1,000/USD 2,254 5.1% +Rp500/USD 2,200 2.5% Base case 2,145 0.0% -Rp500/USD 2,090 -2.5% -Rp1,000/USD 2,036 -5.1% -Rp1,500/USD 1,981 -7.6% -Rp2,000/USD 1,926 -10.2% -Rp2,500/USD 1,872 -12.7%

Source: Citi Research Summarecon Agung

– The company had US$1mn debt from Bank Resona Perdania and US$2mn cash balance at the end of 1Q13.

Figure 9. Impact of the movement of every Rp500/USD in forex rate on Summarecon Agung’s net profit

FY13E net profit Change +Rp2,500/USD 982 0.3% +Rp2,000/USD 982 0.2% +Rp1,500/USD 981 0.2% +Rp1,000/USD 981 0.1% +Rp500/USD 980 0.1% Base case 980 0.0% -Rp500/USD 979 -0.1% -Rp1,000/USD 979 -0.1% -Rp1,500/USD 978 -0.2% -Rp2,000/USD 978 -0.2% -Rp2,500/USD 977 -0.3%

Source: Citi Research Coupon payments for USD bond are naturally hedged by USD cash balance

Alam Sutera’s current USD cash balance is sufficient for 3 years of coupon payments, while Lippo Karawaci has enough USD cash for 2 years of coupon payments.

Figure 10. USD cash balance and interest coverage

US$ interest expense/year

(US$ mn)

US$ interest expense/year (Rp bn)

US$ cash (US$ mn)

US$ cash (Rp bn)

US$ cash coverage of

interest expense

% of US$ cash from the total cash balance

FY13E Earnings (Rp bn)

US$ interest expense as a % of

earnings Alam Sutera 32 339 97 950 3 57% 1,817 19% Bumi Serpong Damai 0 0 98 960 NA 21% 2,070 0% Summarecon Agung 0 1 2 23 26 1% 977 0% Lippo Karawaci 55 577 100 977 2 34% 1,201 48% Sector 88 917 297 2,909 3 25% 6,066 15%

Note: Alam Sutera and Bumi Serpong’s cash balances are from 2Q13, while Summarecon Agung and Lippo Karawaci are from 1Q13 Source: Companies, Citi Research


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Focus on mass products We maintain our positive view on the Indonesian property sector for the medium

term, but believe that in the short term the sector will be hit by macro headwinds and tightening measures by the government. We prefer landed housing developers, especially those with products aimed at the middle low and low income segments.

Top picks are 1) Bumi Serpong Damai due to its focus on mass products, premium landbank, potential pan-Indonesia reach, and strong balance sheet. The stock is trading at 11.0x 2013E PE and at a 61% discount to NAV; and 2) Alam Sutera due to its cheap valuation and upcoming Pasar Kemis launch. The stock is trading at 5.9x 2013E PE and a 62% discount to NAV..

Figure 11. Change in forecasts

2013E 2014E 2015E Forex rate End of period forex rate (Rp/USD) Before 9,802 9,703 9,621 After 10,438 10,375 10,113 Change 6% 7% 5% Average forex rate (Rp/USD) Before 9,802 9,703 9,621 After 10,135 10,462 10,206 Change 3% 8% 6% Net profit (Rp bn) Alam Sutera - Due to change in forex assumptions and inclusion of FX impact of the USD cash balance Before 1,817 2,211 3,125 After 1,821 2,194 3,111 Change 0% -1% 0% Bumi Serpong - Due to change in forex assumptions and inclusion of FX impact of the USD cash balance Before 2,070 2,111 2,551 After 2,145 2,125 2,544 Change 4% 1% 0% Lippo Karawaci - Due to change in forex assumptions and inclusion of FX impact of the USD cash balance as well as the hedging cost Before 1,201 2,132 2,754 After 1,112 2,095 2,686 Change -7% -2% -2% Summarecon - Due to change in forex assumptions and inclusion of FX impact of the USD cash balance Before 977 1,211 1,401 After 980 1,211 1,401 Change 0% 0% 0%


Figure 12. Valuation table

8/23/2013 RIC Code Price NAV Disc. To NAV

Mkt cap Rating TP ETR EPS growth PE ROE ROA PBV ADT (Rp) (Rp) (US$ M) 2013E 2014E 2013E 2014E 2013E 2013E 2013E (US$M) Bumi Serpong Damai BSDE.JK 1,350 3,423 61% 2,184 1 2,396 78% 67% -1% 11.0 11.1 24.5% 11.6% 2.5 9.9 Lippo Karawaci LPKR.JK 1,050 2,315 55% 2,240 1 1,350 29% 5% 88% 21.8 11.6 10.0% 4.2% 2.1 16.0 Summarecon Agung SMRA.JK 870 2,094 58% 1,160 1 1,570 80% 23% 24% 12.8 10.4 24.7% 8.6% 2.9 4.0 Sentul City BKSL.JK 215 783 73% 624 1 390 81% 47% 29% 16.8 13.0 8.0% 5.5% 1.3 4.5 Alam Sutera ASRI.JK 550 1,733 68% 999 1 1,300 136% 53% 20% 5.9 4.9 34.0% 13.8% 1.8 9.9 Sector 61% 7,207 12.1 9.6 18.9% 8.4% 2.1



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Alam Sutera Realty (ASRI.JK) Widest Hedging Range New forex assumptions have minimal impact; still within hedging range —

Alam Sutera has 2 USD bonds totaling $385mn, which are 78% hedged at range of Rp9,400-Rp11,500/USD with average cost of 1.26%. If the USD exchange rate approaches Rp10,500/USD, the company will put in additional call spread hedge from Rp11,000-Rp12,500/USD at additional cost of 1.5% pa of the principal amount. As a result, for every Rp500/USD weakness that is still within the hedging range, its net profit would decline by 0.3-2.8%. Outside of the hedging range, net profit would decline by 8% for every Rp500/USD weakness.

Additional hedging cost can still be covered by ASRI margin — Additional hedging cost that will be put at Rp11,000-Rp12,500/USD, will add Rp46bn to the expense and shave another 1.1% of FY13E net margin. Nonetheless, the company would still be able to maintain the second highest net margin in the sector.

Keeping sufficient USD cash balance — The company does not hedge its coupon payments. Instead, it plans to maintain a natural hedge by keeping sufficient USD cash balance for at least 2 years of coupon payments at any time. The company has US$97mn cash balance as of 2Q13, sufficient to cover 3 years of coupon payments.

Maintain ASRI as a Buy – Valuation looks cheap at 5.9x FY13E PE and 4.9x FY14E PE. The stock is currently trading at 62% discount to NAV. Next catalyst should be the outcome of its upcoming Pasar Kemis grand launching next month.

Company Focus

Buy 1 Price (23 Aug 13) Rp550 Target price Rp1,300 Expected share price return 136.4% Expected dividend yield 2.2% Expected total return 138.6% Market Cap Rp10,807,177M US$1,003M

Price Performance (RIC: ASRI.JK, BB: ASRI IJ)

Statistical Abstract

Year to Net Profit Diluted EPS EPS growth P/E P/B ROE Yield 31 Dec (RpB) (Rp) (%) (x) (x) (%) (%)

2011A 602 34 107.1 16.3 3.6 24.3 0.7

2012A 1,193 61 80.2 9.1 2.4 32.6 1.1

2013E 1,821 93 52.7 5.9 1.8 34.0 2.2

2014E 2,194 112 20.5 4.9 1.4 31.1 3.4

2015E 3,111 158 41.8 3.5 1.0 33.4 4.1 Source: Powered by dataCentral

Estimate Change

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Fiscal year end 31-Dec

2011 2012 2013E 2014E 2015E Valuation Ratios

P/E adjusted (x) 16.3 9.1 5.9 4.9 3.5 P/E reported (x) 16.3 9.1 5.9 4.9 3.5 P/BV (x) 3.6 2.4 1.8 1.4 1.0 Dividend yield (%) 0.7 1.1 2.2 3.4 4.1 Per Share Data (Rp)

EPS adjusted 34 61 93 112 158 EPS reported 34 61 93 112 158 BVPS 153 232 313 406 542 NAVps ordinary na na 1,733 1,733 1,733 DPS 4 6 12 19 22 Profit & Loss (RpB)

Net operating income (NOI) 776 1,398 2,483 2,959 4,018 G&A expenses -77 -132 -148 -164 -184 Other Operating items -5 -12 -28 -31 -97 EBIT including associates 694 1,254 2,308 2,764 3,737 Non-oper./net int./except. -22 90 -232 -300 -279 Pre-tax profit 671 1,344 2,076 2,464 3,458 Tax -68 -128 -220 -204 -306 Extraord./Min. Int./Pref. Div. -1 -23 -35 -66 -41 Reported net income 602 1,193 1,821 2,194 3,111 Adjusted earnings 602 1,193 1,821 2,194 3,111 Adjusted EBIT 694 1,254 2,308 2,764 3,737 Adjusted EBITDA 699 1,266 2,336 2,795 3,834 Growth Rates (%)

NOI 99.2 80.2 77.6 19.2 35.8 EBIT adjusted 102.2 80.8 84.0 19.8 35.2 EPS adjusted 107.1 80.2 52.7 20.5 41.8 Cash Flow (RpB)

Operating cash flow 1,419 2,031 1,003 2,667 2,580 Depreciation/amortization 5 12 28 31 97 Net working capital 209 540 -1,207 12 -1,023 Investing cash flow -1,112 -3,278 -1,963 -1,694 -1,304 Capital expenditure -226 -1,434 -308 -208 -319 Acquisitions/disposals -210 -2,226 -1,655 -1,486 -986 Financing cash flow -195 2,039 1,036 -527 -803 Borrowings -115 1,626 1,601 202 -9 Dividends paid -72 -120 -239 -365 -439 Change in cash 112 791 76 446 472 Balance Sheet (RpB)

Total assets 6,008 10,946 15,474 17,742 20,950 Cash & cash equivalent 1,130 2,012 2,089 2,534 3,007 Net fixed assets 342 708 990 1,170 1,394 Total liabilities 3,221 6,215 9,126 9,498 9,994 Total Debt 554 2,180 3,782 3,984 3,975 Shareholders' funds 2,787 4,732 6,349 8,244 10,956 Profitability/Solvency Ratios

EBIT margin adjusted (%) 50.2 51.3 52.5 67.7 61.0 ROE adjusted (%) 24.3 32.6 34.0 31.1 33.4 ROA adjusted (%) 11.4 14.1 13.8 13.2 16.1 Net debt to equity (%) -20.7 3.5 26.7 17.6 8.8 Interest coverage (x) 24.6 15.1 9.7 9.3 13.9

For further data queries on Citi's full coverage universe please contact Citi Research Data Services at [email protected]


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Bumi Serpong Damai (BSDE.JK) Has USD Cash, But No USD Debt Exposure US$98mn cash balance — The company is keeping USD cash for construction

of its high rises, such as DeBreeze Mall, new BSD city office tower, as well as Saveria and Rasuna epicentrum condominium. The main reason is that the required amount of steel in high rise projects is higher than in landed products. While steel is priced in Rupiah, the price is linked to USD movement. As a result, for every Rp500/USD weakness, FY13E net profit would increase by 2.5%.

Maintain Buy – we like the stock due to its focus on mass products, premium landbank, potential pan-Indonesia reach, and strong balance sheet. The stock is currently trading at 11.1x 2014E PE and a 61% discount to NAV.

Company Focus

Buy 1 Price (23 Aug 13) Rp1,350 Target price Rp2,400 Expected share price return 77.8% Expected dividend yield 1.9% Expected total return 79.7% Market Cap Rp23,620,945M US$2,191M

Price Performance (RIC: BSDE.JK, BB: BSDE IJ)


Year to Net Profit Diluted EPS EPS growth P/E P/B ROE Yield 31 Dec (RpM) (Rp) (%) (x) (x) (%) (%)

2011A 840,780 48 39.9 28.1 3.4 12.9 0.4

2012A 1,286,047 74 53.0 18.4 3.0 17.4 0.7

2013E 2,144,859 123 66.8 11.0 2.5 24.5 1.9

2014E 2,124,992 121 -0.9 11.1 2.1 20.3 1.9

2015E 2,544,075 145 19.7 9.3 1.8 20.7 2.2 Source: Powered by dataCentral

Estimate Change

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EPS adjusted 48 74 123 121 145 EPS reported 48 74 123 121 145 BVPS 393 452 550 646 761 NAVps ordinary na 3,423 3,423 3,423 3,423 DPS 6 10 26 25 30 Profit & Loss (RpM)

Net operating income (NOI) 1,478,651 2,094,304 3,477,694 3,229,766 3,882,937 G&A expenses -478,303 -613,398 -639,622 -669,684 -752,332 Other Operating items 82,369 99,892 107,456 25,720 2,151 EBIT including associates 1,082,717 1,580,798 2,945,528 2,585,802 3,132,756 Non-oper./net int./except. 87,513 115,766 103,175 60,994 55,709 Pre-tax profit 1,170,231 1,696,564 3,048,703 2,646,796 3,188,464 Tax -158,197 -217,705 -391,213 -339,640 -409,147 Extraord./Min. Int./Pref. Div. -171,254 -192,812 -512,631 -182,164 -235,242 Reported net income 840,780 1,286,047 2,144,859 2,124,992 2,544,075 Adjusted earnings 840,780 1,286,047 2,144,859 2,124,992 2,544,075 Adjusted EBIT 1,028,812 1,537,710 2,897,791 2,532,825 3,073,315 Adjusted EBITDA 1,112,304 1,628,757 3,057,288 2,710,177 3,275,826 Growth Rates (%)

NOI 15.2 41.6 66.1 -7.1 20.2 EBIT adjusted 9.9 49.5 88.4 -12.6 21.3 EPS adjusted 39.9 53.0 66.8 -0.9 19.7 Cash Flow (RpM)

Operating cash flow 984,957 222,678 3,199,761 982,323 1,772,452 Depreciation/amortization 83,493 91,047 159,496 177,352 202,511 Net working capital 681,481 442,074 382,775 -1,502,185 -1,209,376 Investing cash flow -67,235 -57,411 -2,828,153 -1,301,000 -1,311,748 Capital expenditure -777,090 -2,938,181 -1,813,403 -1,196,734 -1,216,439 Acquisitions/disposals -169,462 -66,852 -1,380,164 -317,664 -337,415 Financing cash flow -987,179 304,093 -446,354 -486,380 -614,433 Borrowings -646,500 470,759 0 -44,160 -85,000 Dividends paid -104,982 -174,970 -446,354 -442,220 -529,433 Change in cash -66,302 482,382 -74,747 -805,057 -153,729 Balance Sheet (RpM)

Total assets 12,787,377 16,756,718 20,166,111 22,221,936 25,674,574 Cash & cash equivalent 3,479,082 3,961,465 3,886,718 3,081,660 2,927,931 Net fixed assets 4,979,316 7,616,791 10,286,841 11,411,882 12,531,815 Total liabilities 4,530,152 6,225,014 7,423,271 7,614,160 8,816,915 Total Debt 663,401 1,125,409 1,126,802 1,084,035 1,000,428 Shareholders' funds 8,257,225 10,531,704 12,742,839 14,607,775 16,857,659 Profitability/Solvency Ratios

EBIT margin adjusted (%) 36.7 41.2 53.2 41.7 39.2 ROE adjusted (%) 12.9 17.4 24.5 20.3 20.7 ROA adjusted (%) 6.9 8.7 11.6 10.0 10.6 Net debt to equity (%) -34.1 -26.9 -21.7 -13.7 -11.4 Interest coverage (x) na na na na na



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Lippo Karawaci (LPKR.JK) More Sensitive to Forex Movement 85% of the bond principal is hedged — Lippo Karawaci has a US$773mn

bond, which is 85% hedged at range of Rp9,500-Rp11,500/USD with average cost of 0.92%. As long as the exchange rate is within the hedging range, net profit will decline/increase by 1.4% for every Rp500/USD depreciation/ appreciation. Outside of the hedging range, net profit could decline by 27% for every Rp500/USD depreciation.

Reducing FY13E net profit by 7% due to hedging cost and new forex assumption — This is due to the inclusion of Rp61bn hedging cost, 6% increase in end of period FY13E forex rate to Rp10,438/USD, and 3% increase in average forex rate to Rp10,135/USD.

Sufficient cash balance for coupon payment — The company does not hedge its coupon payments and plans to maintain a natural hedging by keeping USD cash balance. By the end of 1Q13, the company had a US$100mn cash balance, sufficient to cover 2 years of coupon payments.

Maintain Buy – The stock trades at a 55% discount to NAV, inline with the sector, and 11.6x FY14E PE. Our earnings do not factor in an asset divestment plan, which, if executed, would equate to 74% upside potential to our FY13E earnings.

Company Focus

Buy 1 Price (23 Aug 13) Rp1,050 Target price Rp1,600 Expected share price return 52.4% Expected dividend yield 1.1% Expected total return 53.5% Market Cap Rp24,231,575M US$2,248M

Price Performance (RIC: LPKR.JK, BB: LPKR IJ)


Year to Net Profit Diluted EPS EPS growth P/E P/B ROE Yield 31 Dec (RpM) (Rp) (%) (x) (x) (%) (%)

2011A 708,282 32 4.1 33.3 2.7 8.6 0.6

2012A 1,060,222 46 45.6 22.9 2.3 10.9 0.7

2013E 1,111,942 48 4.9 21.8 2.1 10.0 1.1

2014E 2,095,356 91 88.4 11.6 1.8 16.9 1.2

2015E 2,685,656 116 28.2 9.0 1.6 18.7 2.2 Source: Powered by dataCentral

Estimate Change

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EPS adjusted 32 46 48 91 116 EPS reported 32 46 48 91 116 BVPS 383 462 498 577 670 NAVps ordinary na na na na na DPS 7 8 12 12 23 Profit & Loss (RpM)

Net operating income (NOI) 1,678,539 2,366,279 2,654,327 4,214,961 5,177,462 G&A expenses -596,035 -679,995 -490,528 -396,439 -336,695 Other Operating items -152,142 -183,014 -375,480 -558,912 -694,188 EBIT including associates 930,363 1,503,270 1,788,319 3,259,611 4,146,578 Non-oper./net int./except. 54,448 73,818 -125,636 -206,070 -269,792 Pre-tax profit 984,810 1,577,088 1,662,683 3,053,541 3,876,786 Tax -170,716 -254,241 -249,402 -492,259 -624,974 Extraord./Min. Int./Pref. Div. -105,812 -262,625 -301,339 -465,926 -566,157 Reported net income 708,282 1,060,222 1,111,942 2,095,356 2,685,656 Adjusted earnings 708,282 1,060,222 1,111,942 2,095,356 2,685,656 Adjusted EBIT 927,996 1,477,008 1,758,185 3,213,018 4,089,963 Adjusted EBITDA 1,082,504 1,686,284 2,163,799 3,818,522 4,840,766 Growth Rates (%)

NOI 25.5 41.0 12.2 58.8 22.8 EBIT adjusted 28.6 59.2 19.0 82.7 27.3 EPS adjusted 4.1 45.6 4.9 88.4 28.2 Cash Flow (RpM)

Operating cash flow 374,527 1,288,793 -276,024 1,083,560 1,667,966 Depreciation/amortization 154,508 209,276 405,614 605,504 750,803 Net working capital -1,347,779 -418,971 -2,226,914 -1,976,114 -2,084,893 Investing cash flow -2,905,342 -1,704,447 -3,244,807 -3,820,470 -2,564,875 Capital expenditure -586,649 -1,295,158 -3,244,807 -3,820,470 -2,564,875 Acquisitions/disposals -1,858,847 -1,194,819 0 0 0 Financing cash flow 1,037,745 1,536,825 1,078,992 2,748,330 1,287,325 Borrowings 373,245 1,952,538 1,348,992 3,031,501 1,820,936 Dividends paid -100,000 -177,500 -270,000 -283,171 -533,611 Change in cash -1,485,526 1,162,797 -2,441,840 11,419 390,415 Balance Sheet (RpM)

Total assets 18,259,171 24,869,296 28,374,007 36,946,440 43,281,782 Cash & cash equivalent 2,174,561 3,337,357 895,517 906,937 1,297,352 Net fixed assets 2,084,525 2,524,123 5,363,317 8,578,283 10,392,354 Total liabilities 8,850,153 13,399,189 15,760,620 22,054,943 25,672,083 Total Debt 3,753,098 6,014,354 7,895,956 10,878,798 12,508,430 Shareholders' funds 9,409,018 11,470,106 12,613,387 14,891,497 17,609,699 Profitability/Solvency Ratios

EBIT margin adjusted (%) 22.2 24.0 24.9 29.4 30.8 ROE adjusted (%) 8.6 10.9 10.0 16.9 18.7 ROA adjusted (%) 4.1 4.9 4.2 6.4 6.7 Net debt to equity (%) 16.8 23.3 55.5 67.0 63.7 Interest coverage (x) nm na 13.9 15.1 16.7



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Summarecon Agung (SMRA.JK) Least Impacted in Sector By Forex Movements Minimal USD exposure — The company had US$1mn debt from Bank Resona

Perdania and US$2mn cash balance at the end of 1Q13. As a result, for every Rp500/USD weakness, its FY13E net profit would increase by only 0.05%.

Maintain Buy – The stock is currently trading at a 58% discount to NAV and 10.4x FY14E PE.

Company Focus

Buy 1 Price (23 Aug 13) Rp870 Target price Rp1,575 Expected share price return 81.0% Expected dividend yield 2.6% Expected total return 83.6% Market Cap Rp12,551,300M US$1,164M

Price Performance (RIC: SMRA.JK, BB: SMRA IJ)


Year to Net Profit Diluted EPS EPS growth P/E P/B ROE Yield 31 Dec (RpB) (Rp) (%) (x) (x) (%) (%)

2011A 392 29 67.9 30.5 4.9 17.0 0.6

2012A 797 55 93.8 15.7 3.4 26.1 1.3

2013E 980 68 22.9 12.8 2.9 24.7 2.6

2014E 1,211 84 23.6 10.4 2.5 25.7 3.1

2015E 1,401 97 15.7 9.0 2.1 25.2 3.9 Source: Powered by dataCentral

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EPS adjusted 29 55 68 84 97 EPS reported 29 55 68 84 97 BVPS 179 252 298 354 418 NAVps ordinary na na na na na DPS 5 12 22 27 34 Profit & Loss (RpB)

Net operating income (NOI) 1,047 1,592 1,971 2,356 2,668 G&A expenses -374 -476 -537 -578 -635 Other Operating items -106 -132 -155 -203 -245 EBIT including associates 567 984 1,279 1,575 1,787 Non-oper./net int./except. -36 2 -68 -77 -53 Pre-tax profit 531 986 1,212 1,498 1,734 Tax -142 -194 -239 -295 -342 Extraord./Min. Int./Pref. Div. 3 6 7 8 9 Reported net income 392 797 980 1,211 1,401 Adjusted earnings 392 797 980 1,211 1,401 Adjusted EBIT 567 984 1,279 1,575 1,787 Adjusted EBITDA 673 1,116 1,434 1,778 2,032 Growth Rates (%)

NOI 40.1 52.0 23.8 19.5 13.2 EBIT adjusted 50.2 73.5 30.0 23.1 13.4 EPS adjusted 67.9 93.8 22.9 23.6 15.7 Cash Flow (RpB)

Operating cash flow 491 2,063 385 1,828 1,626 Depreciation/amortization 106 132 155 203 245 Net working capital -2 970 -750 415 -20 Investing cash flow -421 -1,465 -1,991 -997 -585 Capital expenditure -425 -1,467 -1,991 -997 -585 Acquisitions/disposals 0 0 0 0 0 Financing cash flow 298 358 281 -469 -604 Borrowings 366 -19 602 -74 -116 Dividends paid -69 -158 -321 -395 -488 Change in cash 367 956 -1,325 362 436 Balance Sheet (RpB)

Total assets 8,099 10,876 11,830 13,289 14,832 Cash & cash equivalent 1,496 2,428 1,103 1,465 1,901 Net fixed assets 2,230 2,832 3,872 4,214 4,138 Total liabilities 5,622 7,061 7,357 7,999 8,630 Total Debt 1,431 1,445 2,048 1,973 1,857 Shareholders' funds 2,477 3,815 4,474 5,289 6,202 Profitability/Solvency Ratios

EBIT margin adjusted (%) 24.0 28.4 31.1 33.6 32.5 ROE adjusted (%) 17.0 26.1 24.7 25.7 25.2 ROA adjusted (%) 5.5 8.4 8.6 9.6 10.0 Net debt to equity (%) -2.6 -25.8 21.1 9.6 -0.7 Interest coverage (x) 19.4 45.5 15.9 18.9 26.7



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Alam Sutera Realty Company description Alam Sutera Realty was established in Nov 1993 under the name of PT Adhihutama Manunggal by Harjanto Tirtohadiguno, son in law of the Nin King, part of the Argo Manunggal Group. The company changed its name to PT Alam Sutera Realty Tbk on 19 Sep 2007 and was listed on the Indonesian Stock Exchange on 18 December 2007. ASRI developed its first project in 1994 in an integrated area called "Alam Sutera" in Serpong region and has so far transformed 70% of its 800ha Serpong landbank to a well established township with over 4,000 homes. The company is looking to diversify its demographic base by starting a new township development in Pasar Kemis with more than 1,400ha landbank, and diversify into the tourism industry by acquiring a 90.3% stake in Garuda Wisnu Kencana (GWK) Cultural Park in Bali. ASRI is one of Indonesia's largest landbank owners (~2,000ha) in the domestic residential-listed real estate segment. Investment strategy We maintain our Buy rating on Alam Sutera due to its cheap valuation and sufficient forex hedging mechanism. We believe the next key catalyst for ASRI will be the success of grand launching of Pasar Kemis mass products in 3Q13. Valuation Using a sum-of-the-parts methodology for landbank and DCF for recurring income, we arrive at a per-share NAV estimate of Rp1,733 for Alam Sutera. Our target price of Rp1,300 is based on a 25% discount to our NAV, which takes into consideration ASRI's diversification risk as well as expansion into Pasar Kemis, but acknowledges the company's solid execution in its first township. We value the operating township land bank using land development value, the non operating township using acquisition cost, and the investment properties as well as strata titled properties using DCF (WACC 12.2%). Risks Downside risks that could cause the shares to fail to reach our target price include: 1) an economic downturn causing demand to slow; 2) further depreciation of the rupiah that exceeds the company’s hedging range; 3) delay in land acquisitions and infrastructure projects; and 4) failure to monetize Pasar Kemis and GWK Bali.

Bumi Serpong Damai Company description Bumi Serpong Damai (BSDE) was established in 1984 by a consortium of shareholders to develop BSD City as an independent township southwest of Jakarta. It is currently run solely by the Sinar Mas Group. BSDE is the second largest property developer in the Greater Jakarta area based on the size of landbank after Sentul City. It currently owns close to 3,800ha of landbank in BSD City alone with up to 5,950ha licensed area. It also owns another 1,600ha under its subsidiaries, which mostly are located on Java Island. BSDE acquired Duta Pertiwi in late 2010 and has a current ownership interest of 85.3%.


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Investment strategy We rate BSDE as with a target price of Rp2,400. Our positive view on the company is primarily driven by its focus on mass products, premium land bank, potential pan-Indonesia reach, and strong balance sheet. It is also accelerating asset monetization by entering JV with Hong Kong Land and Aeon to develop BSD City land. It has been actively acquiring new landbank not only in Jakarta, but also in East Java and ex-Java, to tap into regional economic growth. We expect pre-sales to grow 11% yoy in 2014E and 25% yoy in 2015E as: 1) we expect two new projects to start in 2014 - the JV with Hong Kong Land and Rasuna CBD apartment, and 2) new projects should increase sales volume as they enter the second year of operation. As a result, we expect net profit to grow at 26% CAGR in 2012-2015E. Valuation Our RNAV calculation indicates a fair value of the company at Rp3,423/sh, which is derived from a sum of the parts (SOTP) methodology comprising of operating townships at market value, non-operating land bank at acquisition cost, and the investment properties valued using DCF. We then apply a 30% discount to RNAV (based on the historical average discount to NAV) to derive our target price on BSDE of Rp2,400. Risks Key downside risks to our investment thesis and target price on BSDE include: 1) A downturn in the economy, which would affect demand; 2) Higher mortgage rates; 3) Delays in infrastructure development; 4) Rising construction costs; and 5) Competition from surrounding areas.

Lippo Karawaci Company description Lippo Karawaci is one of the most diversified property companies in Indonesia with recurring and non-recurring income almost equal at 50%. It currently owns about 1,411ha of gross landbank in Indonesia with the largest holding in Lippo Cikarang (693ha), followed by Tanjung Bunga (326ha), Lippo Village (291ha), and San Diego Hills (101ha). Its business divisions are divided into 1) residential, 2) large scale integrated dev, 3) retail malls, 4) healthcare, 5) hospitality & infrastructure, and 6) property and portfolio management. Investment strategy We rate Lippo Karawaci as Buy with a target price of Rp1,600. Lippo is one of the most diversified property companies in Indonesia and has one of the most visible income streams, with recurring income (mainly from its healthcare ventures) accounting for about half of total revenue. With improving ASP in its Lippo Village and Lippo Cikarang, as well as higher margin trends in its industrial estate and healthcare business, we believe the stock provides attractive exposure to the increasing domestic consumption story of Indonesia. Valuation Our target price for LPKR of Rp1,600/sh is set at a 30% discount to our estimated NAV of Rp2,315/share. We calculate our NAV by using estimated market prices to value the landbank and DCF models to value on-going projects in large-scale


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integrated developments, retail malls, healthcare, hospitality & infrastructure, and asset management. Our 30% discount is premium to the historical average discount to NAV due to LPKR's improved earning outlook. At our Rp1,600/sh target price, the stock would trade at a 2013E PER of 33x, a premium to its peers. However, if its asset sales plan is executed by the end of this year, our FY13E earnings would have 74% upside potential. Risks Downside risks that could prevent the stock from achieving our target price include: 1) delays in project developments, 2) rising material costs due to inflation, 3) higher interest rates, and 4) global economic pressures that might affect Indonesia's macroeconomics. Upside risks that could mean the stock exceeds our target price include: 1) higher property prices, 2) the passage of new foreign ownership regulations, and 3) a better-than-expected macro situation for Indonesia.

Summarecon Agung Company description Summarecon was established in 1975 by The Nagaria Family and Associates. It commenced its initial development in North Jakarta by successfully converting a 10.8ha of land into an integrated township called Kelapa Gading. Currently its main business segments are classified into 1) property development (landed housing, apartment, landplot, and shophouses) and 2) investment property (mall, office, and hotel). Summarecon develops three townships in the Greater Jakarta area, which are namely Kelapa Gading, Serpong, and Bekasi, and will start establish a new township in Bandung (West Java) as well as in south of Jakarta. Investment strategy We have a Buy rating on Summarecon with a target price of Rp1,575, which is set at a 25% discount to our RNAV/share assumption. We are positive on the name given that demand in Indonesia's property market should remain healthy due to low mortgage rates, a strong macroeconomic outlook, and rising incomes. Our RNAV assumption reflects the increasing size of the company's landbank inside and outside the Greater Jakarta area and the appreciation in land prices. We apply a lower discount rate for SMRA than for its peers due to the company's good historical track record in execution. Valuation Our target price of Rp1,575 is based on a 25% discount to our NAV estimate of Rp2,094 as we believe the company has one of the best execution track records and corporate governance as compared to our coverage universe. Using P/E multiples, the target price implies 23x 2013E EPS which is at a premium from the 5-year historical mean at 22x. Risks Risks that could prevent the stock from achieving our target price include: 1) a higher interest rate environment; 2) delays in launching projects; 3) global economic meltdown that might affect domestic macroeconomics; and 4) faster-than-expected inflation of building material costs.


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Appendix A-1 Analyst Certification The research analyst(s) primarily responsible for the preparation and content of this research report are named in bold text in the author block at the front of the product except for those sections where an analyst's name appears in bold alongside content which is attributable to that analyst. Each of these analyst(s) certify, with respect to the section(s) of the report for which they are responsible, that the views expressed therein accurately reflect their personal views about each issuer and security referenced and were prepared in an independent manner, including with respect to Citigroup Global Markets Inc and its affiliates. No part of the research analyst's compensation was, is, or will be, directly or indirectly, related to the specific recommendation(s) or view(s) expressed by that research analyst in this report.

IMPORTANT DISCLOSURES


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Within the past 12 months, Citigroup Global Markets Inc. or its affiliates has acted as manager or co-manager of an offering of securities of Lippo Karawaci. Citigroup Global Markets Inc. or its affiliates has received compensation for investment banking services provided within the past 12 months from Lippo Karawaci. Citigroup Global Markets Inc. or an affiliate received compensation for products and services other than investment banking services from Bumi Serpong Damai in the past 12 months. Citigroup Global Markets Inc. currently has, or had within the past 12 months, the following as investment banking client(s): Lippo Karawaci. Citigroup Global Markets Inc. currently has, or had within the past 12 months, the following as clients, and the services provided were non-investment-banking, non-securities-related: Bumi Serpong Damai. Analysts' compensation is determined based upon activities and services intended to benefit the investor clients of Citigroup Global Markets Inc. and its affiliates ("the Firm"). Like all Firm employees, analysts receive compensation that is impacted by overall firm profitability which includes investment banking revenues. For important disclosures (including copies of historical disclosures) regarding the companies that are the subject of this Citi Research product ("the Product"), please contact Citi Research, 388 Greenwich Street, 28th Floor, New York, NY, 10013, Attention: Legal/Compliance [E6WYB6412478]. In addition, the same important disclosures, with the exception of the Valuation and Risk assessments and historical disclosures, are contained on the Firm's disclosure website at https://www.citivelocity.com/cvr/eppublic/citi_research_disclosures. Valuation and Risk assessments can be found in the text of the most recent research note/report regarding the subject company. Historical disclosures (for up to the past three years) will be provided upon request. Citi Research Equity Ratings Distribution 12 Month Rating Relative Rating Data current as of 30 Jun 2013 Buy Hold Sell Buy Hold Sell Citi Research Global Fundamental Coverage 48% 40% 12% 6% 88% 6%

% of companies in each rating category that are investment banking clients 53% 50% 45% 58% 51% 49% Guide to Citi Research Fundamental Research Investment Ratings: Citi Research stock recommendations include an investment rating and an optional risk rating to highlight high risk stocks. Risk rating takes into account both price volatility and fundamental criteria. Stocks will either have no risk rating or a High risk rating assigned. Investment Ratings: Citi Research investment ratings are Buy, Neutral and Sell. Our ratings are a function of analyst expectations of expected total return ("ETR") and risk. ETR is the sum of the forecast price appreciation (or depreciation) plus the dividend yield for a stock within the next 12 months. The Investment rating definitions are: Buy (1) ETR of 15% or more or 25% or more for High risk stocks; and Sell (3) for negative ETR. Any covered stock not


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assigned a Buy or a Sell is a Neutral (2). For stocks rated Neutral (2), if an analyst believes that there are insufficient valuation drivers and/or investment catalysts to derive a positive or negative investment view, they may elect with the approval of Citi Research management not to assign a target price and, thus, not derive an ETR. Analysts may place covered stocks "Under Review" in response to exceptional circumstances (e.g. lack of information critical to the analyst's thesis) affecting the company and / or trading in the company's securities (e.g. trading suspension). As soon as practically possible, the analyst will publish a note re-establishing a rating and investment thesis. To satisfy regulatory requirements, we correspond Under Review and Neutral to Hold in our ratings distribution table for our 12-month fundamental rating system. However, we reiterate that we do not consider Under Review to be a recommendation. Relative three-month ratings: Citi Research may also assign a three-month relative call (or rating) to a stock to highlight expected out-performance (most preferred) or under-performance (least preferred) versus the geographic and industry sector over a 3 month period. The relative call may highlight a specific near-term catalyst or event impacting the company or the market that is anticipated to have a short-term price impact on the equity securities of the company. Absent any specific catalyst the analyst(s) will indicate the most and least preferred stocks in the universe of stocks under consideration, explaining the basis for this short-term view. This three-month view may be different from and does not affect a stock's fundamental equity rating, which reflects a longer-term total absolute return expectation. For purposes of NASD/NYSE ratings-distribution-disclosure rules, most preferred calls correspond to a buy recommendation and least preferred calls correspond to a sell recommendation. Any stock not assigned to a most preferred or least preferred call is considered non-relative-rated (NRR). For purposes of NASD/NYSE ratings-distribution-disclosure rules we correspond NRR to Hold in our ratings distribution table for our 3-month relative rating system. However, we reiterate that we do not consider NRR to be a recommendation. Prior to October 8, 2011, the firm's stock recommendation system included a risk rating and an investment rating. Risk ratings, which took into account both price volatility and fundamental criteria, were: Low (L), Medium (M), High (H), and Speculative (S). Investment Ratings of Buy, Hold and Sell were a function of the Citi Research expectation of total return (forecast price appreciation and dividend yield within the next 12 months) and risk rating. Additionally, analysts could have placed covered stocks "Under Review" in response to exceptional circumstances (e.g. lack of information critical to the analyst's thesis) affecting the company and/or trading in the company's securities (e.g. trading suspension). Stocks placed "Under Review" were monitored daily by management and as practically possible, the analyst published a note re-establishing a rating and investment thesis. For securities in developed markets (US, UK, Europe, Japan, and Australia/New Zealand), investment ratings were:Buy (1) (expected total return of 10% or more for Low-Risk stocks, 15% or more for Medium-Risk stocks, 20% or more for High-Risk stocks, and 35% or more for Speculative stocks); Hold (2) (0%-10% for Low-Risk stocks, 0%-15% for Medium-Risk stocks, 0%-20% for High-Risk stocks, and 0%-35% for Speculative stocks); and Sell (3) (negative total return). For securities in emerging markets (Asia Pacific, Emerging Europe/Middle East/Africa, and Latin America), investment ratings were:Buy (1) (expected total return of 15% or more for Low-Risk stocks, 20% or more for Medium-Risk stocks, 30% or more for High-Risk stocks, and 40% or more for Speculative stocks); Hold (2) (5%-15% for Low-Risk stocks, 10%-20% for Medium-Risk stocks, 15%-30% for High-Risk stocks, and 20%-40% for Speculative stocks); and Sell (3) (5% or less for Low-Risk stocks, 10% or less for Medium-Risk stocks, 15% or less for High-Risk stocks, and 20% or less for Speculative stocks). Investment ratings are determined by the ranges described above at the time of initiation of coverage, a change in investment and/or risk rating, or a change in target price (subject to limited management discretion). At other times, the expected total returns may fall outside of these ranges because of market price movements and/or other short-term volatility or trading patterns. Such interim deviations from specified ranges will be permitted but will become subject to review by Research Management. Your decision to buy or sell a security should be based upon your personal investment objectives and should be made only after evaluating the stock's expected performance and risk. NON-US RESEARCH ANALYST DISCLOSURES Non-US research analysts who have prepared this report (i.e., all research analysts listed below other than those identified as employed by Citigroup Global Markets Inc.) are not registered/qualified as research analysts with FINRA. Such research analysts may not be associated persons of the member organization and therefore may not be subject to the NYSE Rule 472 and NASD Rule 2711 restrictions on communications with a subject company, public appearances and trading securities held by a research analyst account. The legal entities employing the authors of this report are listed below: PT Citigroup Securities Indonesia Felicia Asrinanda Barus

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