Indonesia Company Guide

Summarecon Agung
Version 3 | Bloomberg: SMRA IJ | Reuters: SMRA.JK Refer to important disclosures at the end of this report

DBS Group Research . Equity 18 Jul 2016

FULLY VALUED Too much premium

Last Traded Price: Rp1,805 (JCI : 5,110.18) Maintain FULLY VALUED call, despite higher TP. We nudged
Price Target : Rp1,525 (16% downside) (Prev Rp1,450) our RNAV assumptions by 4% to Rp2,250/sh (from Rp2,156/sh
previously) to reflect lower country risk-free rate (RFR) in
Potential Catalyst: Property demand recovery WACC calculations, considering declining trend of 10-year
Where we differ: We have the lowest earnings estimates, being one of Indonesia government bond yield. Subsequently, our TP is
the two houses that are bearish on the counter lifted to Rp1,525, implying 16% downside from current level.
Analyst
Edward Ariadi Tanuwijaya +6221 3003 4932 Expect some margin decline from product mix changes. As
edward.tanuwijaya@id.dbsvickers.com mentioned in our previous report, SMRA's development focus
has shifted to more high-rise buildings to target the middle-
class housing price range. Annual marketing sales from high-
rise apartments have surged fourfold from 2012 and
Price Relative represented 61% of SMRA’s consolidated marketing sales in
Rp Relative Index
2015. As more and more revenue from apartments is
219
2,039.0
199
recognised, we expect SMRA to experience a decline in
margins.
1,839.0
179
1,639.0
159
1,439.0
139
High gearing level to continue pressuring earnings. SMRA’s net
1,239.0
1,039.0 119

839.0 99 gearing of 78% (as of end-December 2015) was the highest

level in the past decade and given the slower net profit growth
639.0 79
Jul-12 Jul-13 Jul-14 Jul-15 Jul-16

Summarecon Agung (LHS) Relative JCI INDEX (RHS) and cashflow generation, we expect net gearing to stay high in
the mid-term. Our net profit forecasts are also the lowest in
Forecasts and Valuation
FY Dec (Rpbn) 2015A 2016F 2017F 2018F the street (with a flat CAGR over 2015-18F) despite moderate
Revenue 5,624 5,842 6,285 6,370 forecasted revenue growth of 4.2% over 2015-18F. We think
EBITDA 2,014 1,983 2,170 2,251 that consensus is underestimating the impact of SMRA’s high
Pre-tax Profit 1,382 1,251 1,330 1,427 leverage level.
Net Profit 855 742 785 862
Net Pft (Pre Ex.) 855 742 785 862 Valuation:
Net Pft Gth (Pre-ex) (%) (38.2) (13.3) 5.8 9.9
EPS (Rp) 59.3 51.4 54.4 59.8 Our target price of Rp1,525 is at a 32% discount to our base-
EPS Pre Ex. (Rp) 59.3 51.4 54.4 59.8 case RNAV (based on its adjusted 8-year average). SMRA is
EPS Gth Pre Ex (%) (38) (13) 6 10 currently trading at a 19% discount to its RNAV (narrower
Diluted EPS (Rp) 59.3 51.4 54.4 59.8
than its 8-year average of 47%) and at an extravagant
Net DPS (Rp) 20.0 5.00 4.59 5.04
BV Per Share (Rp) 417 463 513 568 premium of 35x FY16F PE (close to+2SD of mean forward PE).
PE (X) 30.4 35.1 33.2 30.2
PE Pre Ex. (X) 30.4 35.1 33.2 30.2 Key Risks to Our View:
P/Cash Flow (X) nm 613.3 20.9 24.9 Better-than-expected property demand recovery for SMRA’s
EV/EBITDA (X) 16.0 16.6 15.1 14.6 projects should lead to better revenue growth and upside
Net Div Yield (%) 1.1 0.3 0.3 0.3
P/Book Value (X) 4.3 3.9 3.5 3.2 potential to its margins.
Net Debt/Equity (X) 0.6 0.6 0.5 0.5
At A Glance
ROAE (%) 15.0 11.7 11.1 11.1
Issued Capital (m shrs) 14,427
Earnings Rev (%): 0 0 0 Mkt. Cap (Rpbn/US$m) 26,040 / 1,998
Consensus EPS (Rp): 64.4 79.0 88.9
Major Shareholders (%)
Other Broker Recs: B: 19 S: 3 H: 6
Semarop Agung (%) 26.2
Source of all data: Company, DBS Vickers, Bloomberg Finance L.P Sinarmegah Jaya 8.6
Free Float (%) 65.2
3m Avg. Daily Val (US$m) 3.3
ICB Industry : Real Estate / Real Estate

ASIAN INSIGHTS VICKERS SECURITIES

ed: TH / sa: MA
Company Guide
Summarecon Agung

SMRA: RNAV summary

SMRA portfolio Stake owned Gross floor/land area (ha) RNAV

Investment Properties
Mal Kelapa Gading 100% 3,581
La Piazza 100% 291
Gading Food City 100% 53
Summarecon Mal Serpong - Phase 1 100% 623
Plaza Summarecon 100% 14
Plaza Summarecon Serpong 100% 35
Menara Satu Office 100% 105
Summarecon Mal Serpong - Phase 2 100% 824
Summarecon Mall Bekasi 100% 1,192
Harris Hotel Kelapa Gading 100% 407
POP Hotel, Kelapa Gading 100% 184
Harris Hotel Bekasi 100% 555
Investment Properties Total Surplus/(Deficit) - 1 7,862

Township developments
Kelapa Gading 100% 393
The Springs - Serpong 54% 260
Scientia Garden - Serpong 69% 766
Summarecon Bekasi 100% 5,390
Summarecon Bandung 100% 1,364
Total PV of future development profits - 2 8,174

High-rise developments
Kensington Apartments 100% 1,344
Midtown Apartment - Serpong 69% 636
Springlake Apartment - Bekasi 100% 798
High-rise development surplus value (Rpbn) - 3 2,779

Remaining landbank (still unutilised for planned future developments)

Serpong 100% 270.0 8,381

Bekasi - JV with DSA 51% 230.0 2,720
Gedebage 100% 180.0 7,144
Bogor 51% 260.0 354
Makassar 51% 150.0 311
Remaining landbank surplus value - 4 18,910

FY16F Net Cash (Debt) - 5 (5,269)

Total asset surplus value - 1+2+3+4+5 32,456

Fully Diluted Share base (bn) 14.4
RNAV per share 2,250
Source of all data: Company, DBS Vickers

ASIAN INSIGHTS VICKERS SECURITIES

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 Company Guide
Summarecon Agung

Marketing sales (Rpbn)

CRITICAL DATA POINTS TO WATCH
4,601 4,544 4,570
4,647 4,363 4,434

Earnings Drivers: 3,983

Marketing sales achievement 3,320

The property developer recognises non-recurring revenue from 2,656

marketing sales in the prevailing years. We expect revenue to 1,992

grow by an anaemic 4.2% CAGR over 2015-2018F, given the 1,328

slower revenue recognition pace particularly for the high-rise 664

apartment segment. Given the slow demand in the property 0
market at the moment, marketing sales are expected to be 2014A 2015A 2016F 2017F 2018F

flattish in the 2015-2018F period. Sales Trend

SMRA has three existing townships in three different regions of Rp bn
30.0%
Greater Jakarta and one recent newly launched township in 6,000
25.0%
Bandung (West Java). Going forward, marketing sales will be 5,000
20.0%
mostly supported by Serpong and Bekasi townships given that 4,000

the Kelapa Gading township is matured. 3,000 15.0%

2,000 10.0%
SMRA also plans to launch two more townships in the longer
future timeframe; 1) Bogor (South Jakarta suburbs) – following 1,000 5.0%

the acquisition of a 40.8% stake in the company that owns a 0 0.0%

2014A 2015A 2016F 2017F 2018F
250-ha landbank in 2014, and 2) Makassar (South Sulawesi) – a
Total Revenue Revenue Growth (%) (YoY)
51-49 JV project with local developer Mutiara Property group to
develop a 170ha township (with a similar concept to the
Profitability Trend
recently launched Bandung township). Rp bn

Focus shifts to more high-rise developments 1,941

SMRA’s non-recurring revenue mix is balanced between 1,741

housing, shophouses and apartment & offices. Landplots and 1,541

shophouses carry better gross profit margins (more than 60%) 1,341
than other segments. Given the launch of more high-rise
1,141
projects recently (as SMRA is targeting the middle-class housing
price range), the revenue mix will be skewed towards 941

apartments (lower profitability given the lower GP margins than 741

2014A 2015A 2016F 2017F 2018F
house, shophouse and landplot segments) in the next three Operating EBIT Pre tax Profit Net Profit

years, with c.35% of consolidated revenue – from less than

15% before 2015). Meanwhile, the recurring revenue portion Margins Trend
(from retail malls and other commercials) should remain stable 36.0%
at c.30% going forward and generate stable margins.
31.0%

Good control of operating costs 26.0%

SMRA has been able to keep SG&A expenses (as a % of
21.0%
revenue) under control, despite the more-than-average increase
in its two key items in SG&A expenses; “advertising & 16.0%

promotion” for the purpose of generating more property 11.0%

2014A 2015A 2016F 2017F 2018F
demand during this challenging period and “salaries” for both
Operating Margin % Net Income Margin %
existing and new employees to run projects in its portfolios.
Disc to RNAV Trend
Significant increase in debt to suppress earnings 100%
The shift to more high-rise developments has led to higher 90%

capex needs. SMRA has since geared up significantly (by 80%

70%
securing more loan facilities and issuing IDR bonds). As a 60%
consequence, the higher interest expense and lower expected 50%
Average 47%
GP margin (due to the higher sales portion of high-rise 40%
30%
apartments) are expected to affect SMRA’s bottom line. We 20%
forecast net profit to have a flat CAGR from FY15-18F. 10%
0%
Aug-08

Aug-09

Aug-10

Aug-11

Aug-12

Aug-13

Aug-14

Aug-15
Dec-07
Apr-08

Dec-08
Apr-09

Dec-09
Apr-10

Dec-10
Apr-11

Dec-11
Apr-12

Dec-12
Apr-13

Dec-13
Apr-14

Dec-14
Apr-15

Dec-15
Apr-16

Source: Company, DBS Vickers

ASIAN INSIGHTS VICKERS SECURITIES

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Company Guide
Summarecon Agung

Leverage & Asset Turnover (x)

0.4
0.90
Balance Sheet: 0.4
0.80
Gearing up for more high-rise projects and potential 0.70
0.4
0.3
acquisitions – the days of net cash position are gone for good 0.60
0.3
SMRA had been in net cash position from 2010 to 2013, as its 0.50 0.3

strong cash generation outpaced annual capex requirements. 0.40 0.3

0.30
However, the more high-rise projects launched and projected 0.20
0.3
0.2
land acquisitions have lifted gearing significantly. As of end-Dec 0.10 0.2
2015, net gearing reached 78%, a level not seen in the past 0.00 0.2
2014A 2015A 2016F 2017F 2018F
decade. Given the slower net profit growth and cashflow Gross Debt to Equity (LHS) Asset Turnover (RHS)
generation, we expect net gearing to stay high.
Capital Expenditure
Rpbn
Rpm
Share Price Drivers: 3,000.0

Marketing sales achievement and pipeline 2,500.0

Marketing sales achievement is a good indicator for all 2,000.0

Indonesia property developers (including SMRA), as it is a 1,500.0
leading indicator for revenue generation over the next 2-3 years
1,000.0
(depending on revenue recognition).
500.0

Policy loosening by government 0.0

2014A 2015A 2016F 2017F 2018F
The government’s drive to lower funding cost (if successful) may Capital Expenditure (-)

provide some relief for developers with high gearing in the near
ROE (%)
to mid term. In addition, of late, there has been talk that the
government is looking to cut the final tax on property sales to 25.0%

rejuvenate the property sector. Such a move may provide

20.0%
optimism for a potential property demand recovery.
15.0%

Key Risks: 10.0%

Stricter regulations for high-rise developments. Plot ratio
approvals and balanced ratio rules, when strictly implemented, 5.0%

could potentially slow property demand. 0.0%

2014A 2015A 2016F 2017F 2018F

Liquidity tightening from banks could dampen property

Forward PE Band (x)
demand further. (x)
36.9 +2sd: 37.2x
Potential interest rate hike. Property demand is sensitive to and 31.9
is negatively correlated to interest rate movements. 26.9
+1sd: 28.5x

21.9
Strict implementation of potential revisions to housing 16.9
Avg: 19.7x

development balance ratio for low-end, middle-range and 11.9

-1sd: 11x
luxury houses. If implemented strictly and retroactively, such 6.9
revisions could translate into additional costs for property 1.9 -2sd: 2.2x
developers and more complicated property development Jul-12 Jul-13 Jul-14 Jul-15

planning. PB Band (x)

(x)
Company Background 5.3
+2sd: 5x
SMRA is one of Indonesia's most established property 4.8

developers. It has three existing township developments and 4.3

+1sd: 4.13x
several investment properties in its portfolio which generate 3.8

3.3 Avg: 3.26x

sizeable recurring income – forming c.30% of revenues.
2.8

2.3 -1sd: 2.38x

1.8
-2sd: 1.51x
1.3
Jul-12 Jul-13 Jul-14 Jul-15

Source: Company, DBS Vickers

ASIAN INSIGHTS VICKERS SECURITIES

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Summarecon Agung

Key Assumptions
FY Dec 2014A 2015A 2016F 2017F 2018F
Marketing sales 4,601 4,363 4,434 4,544 4,570

Segmental Breakdown
FY Dec 2014A 2015A 2016F 2017F 2018F
Revenues (Rpbn)
Houses 1,987 1,353 1,547 2,058 2,261
Shophouses 1,478 954 312 259 228
Landplots 625 37.2 84.9 117 214
Increasing portion of
Apartments & Offices 116 1,633 2,171 2,034 1,754 high-rise developments
Others 1,551 1,646 1,727 1,817 1,913 as SMRA has shifted its
Total 5,757 5,624 5,842 6,285 6,370 development focus
Gross Profit (Rpbn)
Houses 1,029 752 859 1,183 1,300
Shophouses 999 682 223 185 163
Landplots 390 36.0 67.9 93.7 171
Apartments & Offices 59.3 748 999 915 789
Others 580 689 704 741 780
Total 3,057 2,907 2,853 3,118 3,204
Gross Profit Margins (%)
Houses 51.8 55.6 55.6 57.5 57.5
Consolidated GP margin
Shophouses 67.6 71.5 71.5 71.5 71.5
is lower than before due
Landplots 62.5 96.7 80.0 80.0 80.0 to higher proportion of
Apartments & Offices 51.1 45.8 46.0 45.0 45.0 high-rise developments
Others 37.4 41.9 40.8 40.8 40.8 (with lower margins)
Total 53.1 51.7 48.8 49.6 50.3

Income Statement (Rpbn)

FY Dec 2014A 2015A 2016F 2017F 2018F
Revenue 5,757 5,624 5,842 6,285 6,370
Cost of Goods Sold (2,700) (2,717) (2,989) (3,167) (3,166)
Gross Profit 3,057 2,907 2,853 3,118 3,204
Other Opng (Exp)/Inc (980) (1,139) (1,139) (1,225) (1,242)
Operating Profit 2,077 1,768 1,714 1,893 1,962
Other Non Opg (Exp)/Inc 18.8 23.8 23.8 23.8 23.8
Associates & JV Inc (0.9) 0.0 0.0 0.0 0.0
Net Interest (Exp)/Inc (159) (409) (487) (587) (559)
Exceptional Gain/(Loss) 0.0 0.0 0.0 0.0 0.0
Considerably flat
Pre-tax Profit 1,936 1,382 1,251 1,330 1,427
growth in revenue,
Tax (319) (318) (321) (346) (350)
lower margins and
Minority Interest (232) (209) (188) (200) (214) increasing interest
Preference Dividend 0.0 0.0 0.0 0.0 0.0 expense to suppress net
Net Profit 1,385 855 742 785 862 profit.
Net Profit before Except. 1,385 855 742 785 862
EBITDA 2,304 2,014 1,983 2,170 2,251
Growth
Revenue Gth (%) 26.6 (2.3) 3.9 7.6 1.4
EBITDA Gth (%) 29.4 (12.6) (1.5) 9.4 3.7
Opg Profit Gth (%) 27.9 (14.9) (3.0) 10.4 3.6
Net Profit Gth (Pre-ex) (%) 27.1 (38.2) (13.3) 5.8 9.9
Margins & Ratio
Gross Margins (%) 53.1 51.7 48.8 49.6 50.3
Opg Profit Margin (%) 36.1 31.4 29.3 30.1 30.8
Net Profit Margin (%) 24.1 15.2 12.7 12.5 13.5
ROAE (%) 28.2 15.0 11.7 11.1 11.1
ROA (%) 9.2 4.9 3.8 3.8 4.1
ROCE (%) 15.7 9.7 7.9 8.2 8.6
Div Payout Ratio (%) 30.4 20.8 8.4 8.9 9.3
Net Interest Cover (x) 13.1 4.3 3.5 3.2 3.5
Source: Company, DBS Vickers

ASIAN INSIGHTS VICKERS SECURITIES

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Summarecon Agung

Quarterly / Interim Income Statement (Rpbn)

FY Dec 1Q2015 2Q2015 3Q2015 4Q2015 1Q2016

Revenue 942 1,655 1,900 1,127 1,047

Cost of Goods Sold (363) (840) (969) (544) (570)
Gross Profit 579 814 931 583 477
Other Oper. (Exp)/Inc (192) (372) (263) (312) (217)
Operating Profit 387 442 668 271 259
Other Non Opg (Exp)/Inc 0.90 3.40 3.00 16.5 0.50
Associates & JV Inc 0.0 0.0 0.0 0.0 0.0
Net Interest (Exp)/Inc (91.6) (73.9) (121) (123) (117)
Exceptional Gain/(Loss) 0.0 0.0 0.0 0.0 0.0
Pre-tax Profit 296 372 549 165 143
Tax (53.6) (89.2) (103) (72.4) (60.6)
Minority Interest 4.60 (0.5) (168) (44.8) (54.3)
Net Profit 247 282 278 47.9 28.3
Net profit bef Except. 247 282 278 47.9 28.3
EBITDA 421 446 670 288 293 Weakest quarter since 1Q11

Growth
Revenue Gth (%) (49.5) 75.6 14.8 (40.7) (7.1)
EBITDA Gth (%) (46.1) 5.8 50.5 (57.1) 2.0
Opg Profit Gth (%) (49.2) 14.3 51.0 (59.4) (4.3)
Net Profit Gth (Pre-ex) (%) (51.8) 14.1 (1.4) (82.8) (40.9)
Margins
Gross Margins (%) 61.5 49.2 49.0 51.7 45.5
Opg Profit Margins (%) 41.1 26.7 35.1 24.0 24.8
Net Profit Margins (%) 26.2 17.0 14.6 4.2 2.7

Balance Sheet (Rpbn)

FY Dec 2014A 2015A 2016F 2017F 2018F

Net Fixed Assets 4,387 4,732 4,687 4,733 4,768

Invts in Associates & JVs 0.0 0.0 0.0 0.0 0.0
Other LT Assets 5,631 6,736 7,269 7,996 8,703
Cash & ST Invts 1,771 1,504 1,727 1,330 522
Inventory 3,341 4,925 5,976 5,875 5,975
Debtors 77.2 146 152 163 165
Other Current Assets 667 715 715 715 715
Total Assets 15,873 18,758 20,527 20,813 20,848

ST Debt 506 983 175 375 465

Creditor 71.0 63.0 69.3 73.6 73.3
Other Current Liab 3,117 3,363 3,469 3,583 3,605
LT Debt 3,876 5,214 6,822 5,871 4,792
Other LT Liabilities 1,886 1,604 1,604 1,604 1,604
Shareholder’s Equity 5,422 6,011 6,681 7,400 8,189
Minority Interests 993 1,517 1,705 1,904 2,118
Total Cap. & Liab. 15,871 18,757 20,525 20,811 20,847

Non-Cash Wkg. Capital 896 2,360 3,305 3,097 3,177

Net Cash/(Debt) (2,612) (4,694) (5,269) (4,916) (4,735) Gearing up due to
Debtors Turn (avg days) 8.2 7.2 9.3 9.1 9.4 higher working capital
Creditors Turn (avg days) 10.4 9.2 9.2 9.2 9.2 requirements for high-
Inventory Turn (avg days) 489.4 720.6 795.1 736.1 751.8 rise projects
Asset Turnover (x) 0.4 0.3 0.3 0.3 0.3
Current Ratio (x) 1.6 1.7 2.3 2.0 1.8
Quick Ratio (x) 0.5 0.4 0.5 0.4 0.2
Net Debt/Equity (X) 0.4 0.6 0.6 0.5 0.5
Net Debt/Equity ex MI (X) 0.5 0.8 0.8 0.7 0.6
Capex to Debt (%) 58.7 32.0 10.5 16.4 19.2
Z-Score (X) 2.9 2.4 2.4 2.5 2.6
Source: Company, DBS Vickers

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Summarecon Agung

Cash Flow Statement (Rpbn)

FY Dec 2014A 2015A 2016F 2017F 2018F

Pre-Tax Profit 1,936 1,382 1,251 1,330 1,427

Dep. & Amort. 209 222 245 254 266
Tax Paid (319) (318) (321) (346) (350)
Assoc. & JV Inc/(loss) 0.0 0.0 0.0 0.0 0.0
Chg in Wkg.Cap. (1,571) (1,464) (945) 208 (80.4)
Other Operating CF (254) (187) (188) (200) (214)
Net Operating CF 1.50 (365) 42.5 1,246 1,048
Capital Exp.(net) (2,574) (1,983) (733) (1,027) (1,007)
Other Invts.(net) 284 0.0 0.0 0.0 0.0
Invts in Assoc. & JV 387 524 188 200 214
Div from Assoc & JV 0.0 0.0 0.0 0.0 0.0
Other Investing CF (696) 28.4 0.0 0.0 0.0
Net Investing CF (2,599) (1,430) (545) (827) (793)
Div Paid (332) (288) (72.1) (66.2) (72.7)
Chg in Gross Debt 1,881 1,815 799 (750) (990)
Capital Issues 0.0 0.0 0.0 0.0 0.0
Other Financing CF (0.5) 0.30 0.0 0.0 0.0
Net Financing CF 1,549 1,528 727 (817) (1,062)
Currency Adjustments 0.0 0.0 0.0 0.0 0.0
Chg in Cash (1,048) (267) 224 (397) (808)
Opg CFPS (Rp) 109 76.2 68.4 72.0 78.2
Free CFPS (Rp) (178) (163) (47.9) 15.2 2.80
Source: Company, DBS Vickers

Target Price & Ratings History

Rp
1883 Closing T arget
S.No. Dat e Rat ing
Price Price
1783 1: 03 Sep 15 1525 1855 BUY

1683 2: 16 Sep 15 1245 1855 BUY

4 6 3: 30 Nov 15 1550 1855 BUY
1583 4: 05 J an 16 1575 1650 HOLD
8
5 7 5: 19 Feb 16 1565 1650 HOLD
1483 3
1 6: 30 Mar 16 1590 1650 HOLD
1383 7: 08 Apr 16 1585 1450 FULLY V ALUED
2 8: 02 May 16 1495 1450 FULLY V ALUED
1283

1183

1083

983
Jul-15 Nov-15 Mar-16 Jul-16
Not e : Share price and Target price are adjusted for corporate actions.

Source: DBS Vickers

ASIAN INSIGHTS VICKERS SECURITIES

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Summarecon Agung

DBS Vickers recommendations are based an Absolute Total Return* Rating system, defined as follows:
STRONG BUY (>20% total return over the next 3 months, with identifiable share price catalysts within this time frame)
BUY (>15% total return over the next 12 months for small caps, >10% for large caps)
HOLD (-10% to +15% total return over the next 12 months for small caps, -10% to +10% for large caps)
FULLY VALUED (negative total return i.e. > -10% over the next 12 months)
SELL (negative total return of > -20% over the next 3 months, with identifiable catalysts within this time frame)
Share price appreciation + dividends

GENERAL DISCLOSURE/DISCLAIMER
This report is prepared by PT DBS Vickers Securities Indonesia. This report is solely intended for the clients of DBS Bank Ltd and DBS Vickers
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The research set out in this report is based on information obtained from sources believed to be reliable, but we (which collectively refers to DBS
Bank Ltd., its respective connected and associated corporations, affiliates and their respective directors, officers, employees and agents (collectively,
the “DBS Group”)) do not make any representation or warranty as to its accuracy, completeness or correctness. Opinions expressed are subject to
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persons associated with any of them may from time to time have interests in the securities mentioned in this document. The DBS Group may have
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Any valuations, opinions, estimates, forecasts, ratings or risk assessments herein constitutes a judgment as of the date of this report, and there can
be no assurance that future results or events will be consistent with any such valuations, opinions, estimates, forecasts, ratings or risk assessments.
The information in this document is subject to change without notice, its accuracy is not guaranteed, it may be incomplete or condensed and it
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This publication has not been reviewed or authorized by any regulatory authority in Singapore, Hong Kong or elsewhere.

The valuations, opinions, estimates, forecasts, ratings or risk assessments described in this report were based upon a number of estimates and
assumptions and are inherently subject to significant uncertainties and contingencies. It can be expected that one or more of the estimates on
which the valuations, opinions, estimates, forecasts, ratings or risk assessments were based will not materialize or will vary significantly from actual
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UPON as a representation and/or warranty by the DBS Group (and/or any persons associated with the aforesaid entities), that:

(a) such valuations, opinions, estimates, forecasts, ratings or risk assessments or their underlying assumptions will be achieved, and
(b) there is any assurance that future results or events will be consistent with any such valuations, opinions, estimates, forecasts, ratings or risk
assessments stated therein.

Any assumptions made in this report that refers to commodities, are for the purposes of making forecasts for the company (or companies)
mentioned herein. They are not to be construed as recommendations to trade in the physical commodity or in the futures contract relating to the
commodity referred to in this report.

DBS Vickers Securities (USA) Inc ("DBSVUSA")"), a U.S.-registered broker-dealer, does not have its own investment banking or research
department, has not participated in any public offering of securities as a manager or co-manager or in any other investment banking transaction
in the past twelve months and does not engage in market-making.

ANALYST CERTIFICATION
The research analyst(s) primarily responsible for the content of this research report, in part or in whole, certifies that the views about the
companies and their securities expressed in this report accurately reflect his/her personal views. The analyst(s) also certifies that no part of his/her
compensation was, is, or will be, directly, or indirectly, related to specific recommendations or views expressed in this report. As of 18 Jul 2016, the

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analyst(s) and his/her spouse and/or relatives who are financially dependent on the analyst(s), do not hold interests in the securities recommended
in this report (“interest” includes direct or indirect ownership of securities).

COMPANY-SPECIFIC / REGULATORY DISCLOSURES

1. PT DBS Vickers Securities Indonesia (''DBSVI'') have a proprietary position in Summarecon Agung recommended in this report as of 15 July
2016.

2. Compensation for investment banking services:

DBSVUSA does not have its own investment banking or research department, nor has it participated in any public offering of securities as a
manager or co-manager or in any other investment banking transaction in the past twelve months. Any US persons wishing to obtain further
information, including any clarification on disclosures in this disclaimer, or to effect a transaction in any security discussed in this document
should contact DBSVUSA exclusively.

RESTRICTIONS ON DISTRIBUTION
General This report is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or
located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be
contrary to law or regulation.

Australia This report is being distributed in Australia by DBS Bank Ltd. (“DBS”) or DBS Vickers Securities (Singapore) Pte Ltd (“DBSVS”),
both of which are exempted from the requirement to hold an Australian Financial Services Licence under the Corporation Act
2001 (“CA”) in respect of financial services provided to the recipients. Both DBS and DBSVS are regulated by the Monetary
Authority of Singapore under the laws of Singapore, which differ from Australian laws. Distribution of this report is intended
only for “wholesale investors” within the meaning of the CA.

Hong Kong This report is being distributed in Hong Kong by DBS Vickers (Hong Kong) Limited which is licensed and regulated by the
Hong Kong Securities and Futures Commission and/or by DBS Bank (Hong Kong) Limited which is regulated by the Hong
Kong Monetary Authority and the Securities and Futures Commission. Where this publication relates to a research report,
unless otherwise stated in the research report(s), DBS Bank (Hong Kong) Limited is not the issuer of the research report(s).
This publication including any research report(s) is/are distributed on the express understanding that, whilst the information
contained within is believed to be reliable, the information has not been independently verified by DBS Bank (Hong Kong)
Limited. This report is intended for distribution in Hong Kong only to professional investors (as defined in the Securities and
Futures Ordinance (Chapter 571 of the Laws of Hong Kong) and any rules promulgated thereunder.)

Indonesia This report is being distributed in Indonesia by PT DBS Vickers Securities Indonesia.

Malaysia This report is distributed in Malaysia by AllianceDBS Research Sdn Bhd ("ADBSR"). Recipients of this report, received from
ADBSR are to contact the undersigned at 603-2604 3333 in respect of any matters arising from or in connection with this
report. In addition to the General Disclosure/Disclaimer found at the preceding page, recipients of this report are advised that
ADBSR (the preparer of this report), its holding company Alliance Investment Bank Berhad, their respective connected and
associated corporations, affiliates, their directors, officers, employees, agents and parties related or associated with any of
them may have positions in, and may effect transactions in the securities mentioned herein and may also perform or seek to
perform broking, investment banking/corporate advisory and other services for the subject companies. They may also have
received compensation and/or seek to obtain compensation for broking, investment banking/corporate advisory and other
services from the subject companies.

Wong Ming Tek, Executive Director, ADBSR

Singapore This report is distributed in Singapore by DBS Bank Ltd (Company Regn. No. 196800306E) or DBSVS (Company Regn No.
198600294G), both of which are Exempt Financial Advisers as defined in the Financial Advisers Act and regulated by the
Monetary Authority of Singapore. DBS Bank Ltd and/or DBSVS, may distribute reports produced by its respective foreign
entities, affiliates or other foreign research houses pursuant to an arrangement under Regulation 32C of the Financial
Advisers Regulations. Where the report is distributed in Singapore to a person who is not an Accredited Investor, Expert
Investor or an Institutional Investor, DBS Bank Ltd accepts legal responsibility for the contents of the report to such persons
only to the extent required by law. Singapore recipients should contact DBS Bank Ltd at 6327 2288 for matters arising from,
or in connection with the report.

Thailand This report is being distributed in Thailand by DBS Vickers Securities (Thailand) Co Ltd. Research reports distributed are only
intended for institutional clients only and no other person may act upon it.

United Kingdom This report is being distributed in the UK by DBS Vickers Securities (UK) Ltd, who is an authorised person in the meaning of
the Financial Services and Markets Act and is regulated by The Financial Conduct Authority. Research distributed in the UK is
intended only for institutional clients.

Dubai This research report is being distributed in The Dubai International Financial Centre (“DIFC”) by DBS Bank Ltd., (DIFC Branch)
having its office at PO Box 506538, 3rd Floor, Building 3, East Wing, Gate Precinct, Dubai International Financial Centre (DIFC),
Dubai, United Arab Emirates. DBS Bank Ltd., (DIFC Branch) is regulated by The Dubai Financial Services Authority. This

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research report is intended only for professional clients (as defined in the DFSA rulebook) and no other person may act upon
it.

United States This report was prepared by PT DBS Vickers Securities Indonesia. DBSVUSA did not participate in its preparation. The
research analyst(s) named on this report are not registered as research analysts with FINRA and are not associated persons of
DBSVUSA. The research analyst(s) are not subject to FINRA Rule 2241 restrictions on analyst compensation, communications
with a subject company, public appearances and trading securities held by a research analyst. This report is being distributed
in the United States by DBSVUSA, which accepts responsibility for its contents. This report may only be distributed to Major
U.S. Institutional Investors (as defined in SEC Rule 15a-6) and to such other institutional investors and qualified persons as
DBSVUSA may authorize. Any U.S. person receiving this report who wishes to effect transactions in any securities referred to
herein should contact DBSVUSA directly and not its affiliate.

Other jurisdictions In any other jurisdictions, except if otherwise restricted by laws or regulations, this report is intended only for qualified,
professional, institutional or sophisticated investors as defined in the laws and regulations of such jurisdictions.

PT DBS Vickers Securities Indonesia

DBS Bank Tower, Ciputra World 1, 32/F
Jl. Prof. Dr. Satrio Kav. 3-5, Jakarta 12940, Indonesia
Tel. 6221-3003 4900, Fax: 6221-3003 4943

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