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On 19 September 2014 we held a 1-day site visit trip with investors to four of Spindo’s East Java plants which contributes 81% of its production capacity in 1H14. We were able to see how the new Sidoarjo plant operates so efficiently relative to its older plants. This arise our confidence in Spindo’s commitment in.

We initiate coverage on Spindo with a DCF-derived TP of IDR370 which represents a 100% potential return upside and recommend a BUY. Our TP implies a 7.0x FY15F earnings. Main triggers: i) its dominance in the domestic steel pipe market with a 30% share; ii) the company being a beneficiary of the nation’s growing gas.

We initiate Spindo with BUY conviction premised on: 1) Its dominant position in domestic steel pipe market (~30% share); 2) Main beneficiaries to the nation’s rise in gas infrastructure, construction developments and higher local content requirements in the automotive sector; and 3) Super appealing 3.3x FY15F P/E with 13% ROAE and PEG of 0.1x. We.

We initiate Spindo with a BUY conviction premised on: 1) Its dominant position in domestic steel pipe market (~30% share); 2) Strong proxies to the nation’s rise in gas infrastructure, construction developments and higher local content requirements in the automotive sector; and 3) Super appealing 3.3x FY15F P/E, 15% ROAE and PEG of only 0.1x..

We initiate ISSP with a BUY premised on 1) Its dominant position in domestic steel pipe market (~30% share); 2) A strong proxy to the oil & gas (O&G) pipes demand, construction/infrastructure developments and higher local content requirements in the automotive sector; and 3) Highly appealing 3.3x FY15F P/E, 15% ROAE and PEG of only.

We attended Logindo’s site visit on 16 May at Batam to see its recent USD22.5m 8k hp anchor handling tug supply (AHTS) dynamic positioning (DP2) vessel purchase, which is the 2nd vessel purchase this year from its 4 new vessel full year target. This specifically well equipped, technologically advanced vessel is well designed to support.

SMGR stands to benefit the most from higher domestic cement demand as it has the most unutilised capacity among its peers. The diversified locations of its plants also help to facilitate the group’s cement supply across Indonesia. SMGR is trading at c.1 SD below its 5-year average forward rolling P/E, which we deem a good.

Investment Merits WIKA’s strong ties with the national power and oil & gas (O&G) companies make it the frontrunner to secure high-margin engineering, procurement and construction (EPC) projects. Strategic ownership of precast manufacturer WIKA Beton ensures consistent supply despite increasingly tight raw materials market. Widest net margins among other national construction companies (5.0% in FY13F),.

Voksel Electric (VOKS)’s 1Q13 revenue rose 13% y-o-y to IDR600.4bn, but net profit edged down 2% y-o-y to IDR26.8bn. Yet, we believe margins are set to improve going into the year as commodity prices are bottoming out, thus allowing the group to accumulate raw materials at lower costs. VOKS’ IDR1.6trn orderbook as at end-April reaches.

WIKA’s 1Q13 net profit surged 65% y-o-y to IDR157bn, representing 28% of the company’s and our FY13 estimates – a strong sign for a robust year ahead as the company has historically booked a mere 18%-22% net profit in 1Q. WIKA remains our top pick for the construction sector. Maintain strong BUY at IDR2,200 TP..