Garuda Indonesia

(GIAA IJ)
New captain on board

1Q17 review: Time to buckle up, again

Infrastructure In 1Q17, Garuda Indonesia (GIAA) reported a net loss of USD99.1mn. Revenue
growth was soft (+6.2% YoY to USD909.5mn) owing to weak seasonal demand and
heightened competition, and thus could not cover the sharp growth in expenses
Company Report
during the quarter (total expenses jumped 21.3% YoY to USD1.0bn). With regard to
May 2, 2017 GIAA’s operations, we highlight the following points:

 Passenger growth picked up across Garuda’s full-service carrier (+8.4% YoY,

(Upgrade) Buy domestic and international combined) and low-cost carrier Citilink (+8.2% YoY).
However, passenger yield compressions were seen in both domestic (USc7.7;
-7.4% YoY) and international (USc5.9; -9.7% YoY) flights. We suspect Garuda is
Target Price (12M, IDR) 444
maintaining its strategy of sacrificing margins (P) for volume (Q).
Share Price (4/28/17, IDR) 368  Encouragingly, RPK picked up faster than ASK at both the full-service carrier
(FSC; ASK +11.8% vs. RPK +16.6% YoY) and low-cost carrier (LCC; ASK +6.6% vs.
Expected Return 20.7% RPK +9.3% YoY). Given improvement in seat load factor (+2.9%p to 72.1% at the
FSC and +1.8%p to 74.6% at the LCC), we think the pickup in RPK resulted from
management’s route optimization combined with lower ticket prices.

Consensus OP (17F, IDRtr) 1.4  Cargo revenue continued its strong performance, with the FSC servicing
90,500 tonnes (+21.6% YoY) and the LCC 17,900 tonnes (+13.5% YoY). Amid tight
EPS Growth (17F, %) 250.0 competition to fill seats in the passenger segment, Garuda appears to be
P/E (17F, x) 25.6 continuing its strategic focus on cargo segment penetration.
Industry P/E (17F, x) 14.2
Benchmark P/E (17F, x) 16.2  Higher fuel prices and increased ASK (greater fuel burn) put increased pressure
Market Cap (IDRbn) 9,526.3
on CASK. The FSC’s CASK inched up 4.3% YoY to USc6.1, while the LCC’s CASK
increased 14.2% YoY to USc4.9. However, considering that the average
Shares Outstanding (mn) 25,886.6 Singapore jet fuel swap price in 1Q17 jumped 48.1% YoY to USD64.5/bbl, we
Free Float (mn) 3,862.1 think fuel prices were well managed (e.g., hedging strategy). Going forward, the
Institutional Ownership (%) 85.9 extension of OPEC/non-OPEC crude oil supply cuts should be the near-term
Beta (Adjusted, 24M) 1.1 price driver.
52-Week Low (IDR) 320
52-Week High (IDR) 520 Garuda’s financials are below break-even
GIAA has yet to reach the break-even point, based on our analysis. From a
(%) 1M 6M 12M
contribution margin angle, we find that GIAA is generating insufficient revenue to
Absolute 7.0 -2.1 -16.9
cover its fixed costs. See our analysis on the next page of this report.
Relative 5.3 -7.0 -34.4
Positive on new CEO; Upgrade to Buy
(D-1yr=100) JCI GIAA
130 Mr. Pahala Nugraha Mansury was recently appointed as the new CEO of Garuda
Indonesia. Given his longstanding experience as CFO with Bank Mandiri
95 (BMRI/Hold/TP: IDR11,380), we expect Mr. Mansury to prudently assess the
financials of GIAA and add stability. As earnings volatility is one of the airline’s key
60 discount factors, we believe greater earnings stability/clarity should lift the
10/16
11/16
12/16
4/16

1/17
5/16
6/16
7/16
8/16
9/16

2/17
3/17

valuation discount currently imposed on GIAA. We upgrade our investment call

on GIAA to Buy.
PT. Mirae Asset Sekuritas Indonesia FY (Dec.) 12/13 12/14 12/15 12/16 12/17F 12/18F
Total OP (USDmn) 3,759.5 3,933.5 3,815.0 3,863.9 4,008.0 4,267.9
Transportation
Operating profit (USDmn) 19.1 -342.0 119.3 100.7 109.4 157.8
Taye Shim OP Margin (%) 0.5 -8.7 3.1 2.6 2.7 3.7
+62-21-515-3281 Net Profit (USDmn) 10.8 -373.0 76.5 8.1 27.0 57.7
taye.shim@ miraeasset.com EPS (IDR) 5 -177 41 4 14 31
Mangesti Diah Sulistiani BPS (IDR) 504 418 492 526 513 550
+62-21-515-1140 (ext. 127) P/E (x) 99.7 N/A 7.5 77.7 25.6 12.0
mangesti@ miraeasset.co.id P/B (x) 0.98 1.33 0.63 0.64 0.72 0.67
ROE (%) 1.0 -37.8 8.4 0.8 2.7 5.6
ROA (%) 0.4 -12.2 2.4 0.2 0.7 1.2
Note: Net profit refers to net profit attributable to controlling interests
Source: Company data, Mirae Asset Sekuritas Indonesia Research

PLEASE SEE ANALYST CERTIFICATIONS AND IMPORTANT DISCLOSURES & DISCLAIMERS IN APPENDIX 1 AT THE END OF REPORT.
May 2, 2017 Garuda Indonesia

Break-even analysis: Garuda needs to sell more tickets

Below, we examine the cost structure of Garuda Indonesia in greater detail. Briefly, we
believe GIAA has yet to reach the break-even point. From a contribution margin angle,
we find that GIAA is not generating sufficient revenue to cover its fixed expenses. Our
analysis follows.

Given limited information available, we use our own assumptions in deriving Garuda Indonesia’s contribution margin
(revenue – variable expenses). To break down operating expenses, we assume fuel (flight operations), commissions and
reservations (ticketing, sales and promotion), maintenance and overhaul, spare parts and fuel (maintenance and
overhaul), passenger service (passenger service), aircraft and flight services and ground handling (user charges and
station) to be variable expenses. We assume the rest of the expenses to be fixed expenses. The analysis below (see Table
3) is conducted to illustrate the importance of revenue generation and cost management.

 Variable costs vary in total directly and proportionately with changes in the airline’s
activity. For Garuda to generate a higher contribution margin, it would need to
generate higher revenue. However, the key challenge is heightened competition. As
the airline industry is getting overheated (as evidenced by Garuda’s falling passenger
yield), we think management needs to implement a prudent strategy to enhance
revenue. In our view, the airline should revisit its strategy of sacrificing P
(margins/ASP) for Q (passenger volume/market share), given that passenger volume
(average household demand) is unlikely to pick up significantly in the near term.

Table 1. Break-even point analysis (USD thousand)

2014 2015 2016
Revenue 3,933,530 3,814,990 3,863,922
Variable expenses 2,540,530 1,931,660 1,867,439
Contribution margin 1,393,000 1,883,329 1,996,483
Fixed expenses 1,827,365 1,868,710 2,016,768
Break-even point Below Above Below
Source: Company data, Mirae Asset Sekuritas Indonesia Research

 The other alternative to improving bottom line is to take a microscopic view of fixed
costs. Fixed costs are costs that remain the same in total regardless of changes in
activity level. Hence, cost management (i.e., improved efficiency) should be actively
implemented on the fixed-cost side of the equation.

 We note that aircraft and charter (flight operations) is the largest single expense
item, accounting for 50.2% of total fixed expenses (as of 2016). Hence, we strongly
believe Garuda Indonesia should prioritize aircraft and charter efficiency over other
fixed expenses. Related to this, we are encouraged by the fact that management is
looking to add only three new aircraft this year, which should ease investor concerns
over inflated aircraft and charter expenses going forward.

Table 2. Aircraft and charter expense is the largest single fixed expense (USD thousand)
2014 2015 2016
Fixed expenses 1,827,365.2 1,868,709.5 2,016,767.5
Flight operations 1,001,982.7 1,140,787.5 1,262,664.4
Aircraft and charter 765,872.8 904,774.8 1,011,777.2
Aircraft and charter expense to total fixed expenses 41.9% 48.4% 50.2%
Source: Company data, Mirae Asset Sekuritas Indonesia Research

 In 2016, the airline would have incurred a sizeable pickup in fixed expenses if not for
employee benefit adjustments, pulling bottom-line earnings into the red.

 We expect to see (and advise management to pursue) pockets of improvements in

fixed expenses in the areas of i) flight operations (+10.7% YoY), ii) passenger services
(+16.8% YoY), iii) user charges and station (+21.4% YoY), and iv) finance expenses
(+28.7% YoY).

Mirae Asset Sekuritas Indonesia Research 2

May 2, 2017 Garuda Indonesia

Table 3. Garuda’s contribution margin is lower than its fixed expenses (USDthousand)
2014 2015 2016
Revenue 3,933,530 3,814,990 3,863,922

Variable expenses 2,540,530 1,931,660 1,867,439

Flight operations 1,560,266 1,049,820 924,652
Fuel 1,560,266 1,049,820 924,652
Ticketing, sales and promotion 240,190 224,576 240,983
Commissions 127,356 127,979 131,535
Reservations 112,835 96,597 109,447
Maintenance and overhaul 253,995 215,125 235,519
Maintenance and overhaul 179,443 136,122 134,062
Spare part 73,396 77,816 100,073
Fuel 1,156 1,187 1,383
Passenger services 187,451 175,727 175,305
Passenger services 187,451 175,727 175,305
User charges and station 298,628 266,413 290,980
Aircraft and flight services 196,214 183,802 205,526
Ground handling 102,414 82,611 85,454

Contribution margin 1,393,000 1,883,329 1,996,483

Fixed expenses 1,827,365 1,868,710 2,016,768

Flight operations 1,001,983 1,140,787 1,262,664
Aircraft and charter 765,873 904,775 1,011,777
Salaries and allowances 151,868 143,470 186,475
Depreciation expenses 59,803 67,656 61,580
Insurance 17,863 16,368 13,367
Employee benefits 4,871 5,448 -12,532
Others 1,704 3,070 1,997
Ticketing, sales and promotion 109,481 79,845 64,299
Salaries and allowances 50,455 42,304 49,476
Promotions 46,180 27,107 18,263
Rental 10,944 8,616 2,311
Professional services and training 1,897 627 0
Employee benefit expenses 5 1,190 -5,751
Others 5,170 5,188 4,906
Maintenance and overhaul 166,892 161,376 157,790
Depreciation expenses 92,181 84,931 81,189
Salaries and allowances 54,729 61,677 78,052
Rental 8,891 5,747 13,920
Employee benefits 8,076 6,062 -18,599
Insurance 633 1,123 1,421
Others 2,382 1,836 1,806
Passenger services 115,457 95,023 110,985
Salaries and allowances 107,433 87,547 113,039
General inventories consumption 2,942 2,582 1,797
Employee benefit expenses -61 2,367 -7,219
Professional services and training 2,229 274 265
Others 2,915 2,254 3,103
User charges and station 40,372 35,468 43,067
Salaries and allowances 19,623 17,045 22,733
Rental 13,554 12,536 18,417
Depreciation expenses 3,649 2,010 2,125
Employee benefits 1,636 307 -3,736
Others 1,910 3,571 3,529
General and administrative 246,049 224,907 226,798
Hotel operation 34,078 29,699 28,180
Transportation operations 17,799 17,529 17,849
Network operation 16,763 10,304 11,952
Finance expenses 73,321 68,585 88,279
Source: Company data, Mirae Asset Sekuritas Indonesia Research

Mirae Asset Sekuritas Indonesia Research 3

May 2, 2017 Garuda Indonesia

Introducing the new chief of Garuda Indonesia

On April 12th, 2017, Mr. Pahala Nugraha Mansury was appointed as the new President
Director and CEO of Garuda Indonesia. Prior to joining the largest airline of Indonesia, he
served as the CFO of Bank Mandiri (BMRI/Hold/TP: IDR11,380). After joining the bank in
2003, Mr. Mansury assumed various strategic positions, such as leading the banking group’s
corporate development, change management, and economic research offices. In 2006, Mr.
Mansury served as the bank’s EVP coordinator of finance & strategy and as CFO. And from
2010 until moving to his current position, he served as the bank’s managing director of
finance & strategy. In short, Mr. Mansury has extensive experience within the financial
industry, particularly as the CFO of the banking group. Mr. Mansury is a Chartered
Financial Analyst (CFA) and currently serves as the vice president of CFA Indonesia.

Mr. Mansury made significant contributions during his tenure at Bank Mandiri. In 2013, he
won the “Best CFO in Indonesia” award in Southeast Asia, as surveyed by the Institutional
Investor Corporate Awards. Bank Mandiri also won several awards at the same event thanks
in large part to Mr. Mansury’s contributions. In 1Q13, he helped Bank Mandiri achieve loan
disbursement of IDR391.6tr, a 19.7% YoY improvement from the same period of 2012
(IDR327.2tr).

Mr. Mansury graduated from the University of Indonesia with a BSc in Accounting and later
received his MBA in Finance from Stern School of Business, New York University. He started
his career as a change management consultant with Andersen Consulting, based in Jakarta.
Later, he joined Booz Allen & Hamilton as a senior consultant for a year and soon moved to
Boston Consulting Group. He was promoted as a Project Leader in several banking projects
until 2003.

According to the statement from Mr. Gatot Trihargo (Deputy Assistant in Ministry of SoE),
one of the key reasons for the appointment of Mr. Mansury as the new President Director of
Garuda Indonesia is Garuda’s need for a figure who can handle the airline’s financial and
operational affairs. We firmly believe Mr. Mansury has the qualifications, experience, and
insights to take the airline to greater heights.

Figure 1. Mr. Pahala Nugraha Mansury

Source: Internet, Mirae Asset Sekuritas Indonesia Research

Earnings stability ahead; We upgrade investment call to Buy

Given Mr. Mansury’s proven track record as a financial specialist, we expect to see more
earnings clarity ahead. We revised down our 2017F (from USD57.9mn to USD27.0mn) and
2018F (from USD70.2mn to USD57.7mn) earnings forecasts to reflect soft 1Q17 results.
However, we think earnings projections are likely to be more reliable (and sustainable)
going forward. Of note, we have yet to factor in the tax amnesty related expenses
(USD137mn) which is expected to have been booked into the P&L during April (2Q17). We
will factor in the extraordinary expenses to our forecast once we gain clarity on the issue.
We assign a higher target P/B of 0.84x (from 0.75x previously), as we lower the risk-free rate
(falling market yield) and risk premium imposed on the company. Our revised TP of IDR444
implies 20.6% upside from the current price.

Mirae Asset Sekuritas Indonesia Research 4

May 2, 2017 Garuda Indonesia

Figure 2. 12M Forward P/B trend (Current share price represents 36.2% discount to 5yr average)

(x)
1.8

1.6

1.4

1.2
Avg 12MF P/B: 1.01x
1.0

0.8

0.6 0.64x

0.4

0.2

0.0
1/12 7/12 1/13 7/13 1/14 7/14 1/15 7/15 1/16 7/16 1/17

Source: Mirae Asset Sekuritas Indonesia Research

Figure 3. Passengers carried Figure 4. Passenger growth by segment

(1,000 pax) (YoY, %)

10,000 140 Garuda domestic
Citilink
9,000 Garuda international
Garuda international 120
Citilink
8,000
Garuda domestic Total
100
7,000
6,000 80
5,000
60
4,000
40
3,000
2,000 20
1,000
0
0
-20
4Q10 4Q11 4Q12 4Q13 4Q14 4Q15 4Q16

Source: Company data, Mirae Asset Sekuritas Indonesia Research Source: Company data, Mirae Asset Sekuritas Indonesia Research

Table 4. March operating performance of Garuda Group

3/16 1/17 2/17 3/17 MoM YoY
Passengers carried (pax) 2,636,021 2,951,014 2,489,734 2,946,776 18.4% 11.8%
ASK (‘000) 4,771,803 5,534,726 4,868,919 5,403,515 11.0% 13.2%
RPK (‘000) 3,375,236 4,011,076 3,434,946 4,013,900 16.9% 18.9%
SFL (%) 70.7 72.5 70.6 74.3 5.3% 5.1%
Aircraft utilization 8:33 9:22 9:19 N/A NM NM
Frequency 22,141 23,698 20,862 23,310 11.7% 5.3%
OTP 91.9 89.1 85.4 N/A -100.0% -100.0%
Fuel burn (L) 165,172,373 192,112,542 169,606,901 187,443,458 10.5% 13.5%
Block hours (hours) 45,422 51,090 45,213 49,964 10.5% 10.0%
Cargo carried 30,970,314 36,261 32,887 39,247 19.3% -99.9%
CLF (%) 48.2 49.3 51.8 N/A NM NM
Yield (US cent) 6.8 6.4 6.2 6.3 2.4% -7.4%
CASK (US cent) 5.6 5.8 6.2 5.9 -4.8% 5.4%
CASK ex-fuel (US cent) 4.3 4.0 4.4 4.1 -6.2% -4.7%
Average fuel price USD/L 0.39 0.51 0.52 0.50 -3.8% 28.2%
Source: Company data, Mirae Asset Sekuritas Indonesia Research

Mirae Asset Sekuritas Indonesia Research 5

May 2, 2017 Garuda Indonesia

Figure 5. ASK vs. RPK Figure 6. Passenger yield trend

(bn km) (USc)

Garuda domestic
18 13
ASK Garuda international
RPK 12 Citilink
16
11 Garuda group
14
10
12 9

10 8

7
8
6
6
5

4 4
4Q10 4Q11 4Q12 4Q13 4Q14 4Q15 4Q16 4Q10 4Q11 4Q12 4Q13 4Q14 4Q15 4Q16

Source: Company data, Mirae Asset Sekuritas Indonesia Research Source: Company data, Mirae Asset Sekuritas Indonesia Research

Figure 7. CASK vs. CASK ex-fuel Figure 8. Fleet structure

(USc) (fleets) Citilink Wide body (YoY, %)

9 CASK 250 Narrow body Growth (R) 40

CASK-ex fuel 35
8
200
30
7
52 55
44
36 25
150
6
30 33 36 34 20
30
5
100 21 24 15
4 17
10
50 103 110 108 110
3 86
68 5

2 0 0
4Q10 4Q11 4Q12 4Q13 4Q14 4Q15 4Q16 2012 2013 2014 2015 2016 2017F

Source: Company data, Mirae Asset Sekuritas Indonesia Research Source: Company data, Mirae Asset Sekuritas Indonesia Research

Mirae Asset Sekuritas Indonesia Research 6

May 2, 2017 Garuda Indonesia

Garuda Indonesia (GIAA IJ/Buy/TP: IDR444)

Income Statement (Summarized) Balance Sheet(Summarized)

(USDmn) 12/15 12/16 12/17F 12/18F (USDmn) 12/15 12/16 12/17F 12/18F
Revenue 3,815.0 3,863.9 4,008.0 4,267.9 Cash and equivalents 520.0 578.7 619.2 659.5
Scheduled airline services 3,208.5 3,279.8 3,352.1 3,544.3 Total current assets 1,007.8 1,165.1 1,347.4 1,464.1
Non-scheduled airline services 261.9 192.1 225.8 248.8 Fixed assets 867.1 926.7 1,072.7 1,132.0
Others 344.6 392.0 430.0 474.7 Total assets 3,310.0 3,737.6 4,433.3 5,019.7
Cost of revenue 3,139.7 3,201.0 3,317.4 3,499.2 Short-term bank loan 1,195.8 1,563.6 2,141.2 2,683.3
Gross profit 675.3 663.0 690.6 768.7 Long-term bank loan (current) 1,163.4 1,164.1 1,283.3 1,271.9
Operating expenses 555.9 562.3 581.2 610.8 Lease liabilities (current) 2,359.3 2,727.7 3,424.6 3,955.2
Operating profit 119.3 100.7 109.4 157.8 Long-term bank loan 1,309.4 1,309.4 1,309.4 1,309.4
EBITDA 294.6 264.7 269.0 314.9 Bonds payable -33.9 -33.9 -33.9 -33.9
Total non-operating items -12.7 -82.9 -71.5 -78.7 Lease liabilities -130.8 -70.5 -72.7 -58.2
Interest expenses 64.4 88.8 96.4 105.4 Total liabilities 2.8 2.8 2.8 2.8
Losses on foreign exchange -15.2 19.2 1.9 2.0 Paid-in capital -214.0 -215.0 -193.4 -135.7
Net non-operating gains 36.5 25.0 26.8 28.7 Capital surplus 950.7 1,009.9 995.4 1,067.8
Pretax profit 106.7 17.8 37.9 79.2 Other comprehensive income -130.8 -70.5 -72.7 -58.2
Corporate tax 28.7 8.4 9.5 19.8 Stock option 2.8 2.8 2.8 2.8
Minority interest 1.5 1.3 1.4 1.6 Retained earnings -214.0 -215.0 -168.7 -98.5
Attributable net profit 76.5 8.1 27.0 57.7 Shareholders' equity 950.7 1,009.9 1,020.1 1,105.0

Growth indicators Key indicators

(%) 12/15 12/16 12/17F 12/18F 12/15 12/16 12/17F 12/18F
Revenue -3.0 1.3 3.7 6.5 ROE (%) 8.4 0.8 2.7 5.6
Scheduled airline services -5.2 2.2 2.2 5.7 ROA (%) 2.4 0.2 0.7 1.2
Non-scheduled airline services 28.4 -26.6 17.5 10.2 EPS (IDR) 41 4 14 31
Others -0.2 13.7 9.7 10.4 BPS (IDR) 492 526 513 550
Cost of revenue -13.4 1.9 3.6 5.5 P/E (x) 7.5 77.7 25.6 12.0
Gross profit 118.9 -1.8 4.2 11.3 P/B (x) 0.63 0.64 0.72 0.67
Operating expenses -14.5 1.1 3.4 5.1 Gross margin (%) 17.7 17.2 17.2 18.0
Operating profit NM -15.6 8.6 44.3 OP margin (%) 3.1 2.6 2.7 3.7
EBITDA NM -10.2 1.6 17.0 Net profit margin (%) 2.0 0.2 0.7 1.4
Total non-operating items NM 554.4 -13.8 10.1 EBITDA margin (%) 7.7 6.8 6.7 7.4
Interest expenses -5.9 37.9 8.6 9.3 Interest coverage ratio (x) 1.9 1.1 1.1 1.5
Losses on foreign exchange NM -226.0 -90.0 5.0 Debt to equity ratio (x) 0.9 1.1 1.4 1.6
Net non-operating gains -163.9 -31.4 7.2 6.9 Total passenger (pax) 33.0 34.8 37.9 41.6
Pretax profit NM -83.3 113.0 108.9 Seat load factor (%) 77.2 73.8 72.2 70.5
Corporate tax NM -70.6 12.4 108.9 Passenger yield (USc) 7.4 6.9 6.9 6.8
Minority interest 40.1 -13.3 11.6 12.5 ASK (mn) 51,868 58,591 62,001 67,482
Attributable net profit NM -89.4 234.3 114.1 RPK (mn) 40,049 43,245 47,440 52,373
Source: Company data, Mirae Asset Sekuritas Indonesia Research Source: Company data, Mirae Asset Sekuritas Indonesia Research

Mirae Asset Sekuritas Indonesia Research 7

May 2, 2017 Garuda Indonesia

APPENDIX 1

Important Disclosures & Disclaimers

Disclosures
As of the publication date, PT. Mirae Asset Sekuritas Indonesia, and/or its affiliates do not have any special interest with the subject company and
do not own 1% or more of the subject company's shares outstanding.

Stock Ratings Industry Ratings

Buy Relative performance of 20% or greater Overweight Fundamentals are favorable or improving
Trading Buy Relative performance of 10% or greater, but with volatility Neutral Fundamentals are steady without any material changes
Hold Relative performance of -10% and 10% Underweight Fundamentals are unfavorable or worsening
Sell Relative performance of -10%
* Our investment rating is a guide to the relative return of the stock versus the market over the next 12 months.
* Although it is not part of the official ratings at Mirae Asset Sekuritas Indonesia, we may call a trading opportunity in case there is a technical or
short-term material development.
* The target price was determined by the research analyst through valuation methods discussed in this report, in part based on the analyst’s
estimate of future earnings.
The achievement of the target price may be impeded by risks related to the subject securities and companies, as well as general market and
economic conditions.

Analyst Certification
Opinions expressed in this publication about the subject securities and companies accurately reflect the personal views of the Analysts primarily
responsible for this report. PT. Mirae Asset Seukritas Indonesia (“Mirae Asset Daewoo”) policy prohibits its Analysts and members of their
households from owning securities of any company in the Analyst’s area of coverage, and the Analysts do not serve as an officer, director or
advisory board member of the subject companies. Except as otherwise specified herein, the Analysts have not received any compensation or any
other benefits from the subject companies in the past 12 months and have not been promised the same in connection with this report. No part of
the compensation of the Analysts was, is, or will be directly or indirectly related to the specific recommendations or views contained in this report
but, like all employees of Mirae Asset Daewoo, the Analysts receive compensation that is determined by overall firm profitability, which includes
revenues from, among other business units, the institutional equities, investment banking, proprietary trading and private client division. At the
time of publication of this report, the Analysts do not know or have reason to know of any actual, material conflict of interest of the Analyst or
Mirae Asset Daewoo except as otherwise stated herein.

Disclaimers
This report is published by Mirae Asset Daewoo, a broker-dealer registered in the Republic of Indonesia and a member of the Indonesia Stock
Exchange. Information and opinions contained herein have been compiled in good faith and from sources believed to be reliable, but such
information has not been independently verified and Mirae Asset Daewoo makes no guarantee, representation or warranty, express or implied, as
to the fairness, accuracy, completeness or correctness of the information and opinions contained herein or of any translation into English from the
Indonesian language. In case of an English translation of a report prepared in the Indonesian language, the original Indonesian language report
may have been made available to investors in advance of this report.
The intended recipients of this report are sophisticated institutional investors who have substantial knowledge of the local business environment,
its common practices, laws and accounting principles and no person whose receipt or use of this report would violate any laws and regulations or
subject Mirae Asset Daewoo and its affiliates to registration or licensing requirements in any jurisdiction shall receive or make any use hereof.
This report is for general information purposes only and it is not and shall not be construed as an offer or a solicitation of an offer to effect
transactions in any securities or other financial instruments. The report does not constitute investment advice to any person and such person shall
not be treated as a client of Mirae Asset Daewoo by virtue of receiving this report. This report does not take into account the particular investment
objectives, financial situations, or needs of individual clients. The report is not to be relied upon in substitution for the exercise of independent
judgment. Information and opinions contained herein are as of the date hereof and are subject to change without notice. The price and value of
the investments referred to in this report and the income from them may depreciate or appreciate, and investors may incur losses on
investments. Past performance is not a guide to future performance. Future returns are not guaranteed, and a loss of original capital may occur.
Mirae Asset Daewoo, its affiliates and their directors, officers, employees and agents do not accept any liability for any loss arising out of the use
hereof.
Mirae Asset Daewoo may have issued other reports that are inconsistent with, and reach different conclusions from, the opinions presented in this
report. The reports may reflect different assumptions, views and analytical methods of the analysts who prepared them. Mirae Asset Daewoo may
make investment decisions that are inconsistent with the opinions and views expressed in this research report. Mirae Asset Daewoo, its affiliates
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under applicable laws and regulations.
No part of this document may be copied or reproduced in any manner or form or redistributed or published, in whole or in part, without the prior
written consent of Mirae Asset Daewoo.

Mirae Asset Sekuritas Indonesia Research 8

May 2, 2017 Garuda Indonesia

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Mirae Asset Sekuritas Indonesia Research 9