Telcos, consumer goods to shine in 2015

JAKARTA. Telecommunication and consumer stocks will outshine other sectors in the Indonesian stock market next year while automotive and commodity-related stocks are expected to underperform in 2015 trading, Bahana Securities estimates.

Bahana Securities research head Harry Su said on Wednesday that “defensive stocks” like consumer goods and telecommunication stocks would be the stars in next year’s trading.

Harry said there was a high probability that global system for mobile communications (GSM) operators would acquire the country’s code division multiple access (CDMA) providers, a business move that would reduce competition in the telecommunication business.

“Pricing wars in the telecommunication industry will decline with a smaller number of players and existing telco companies able to push forward a more competitive price to support their financial performances,” Harry said during the presentation of the securities company’s 2015 Market Outlook report in Jakarta.

Consumer goods stocks – which include pharmaceutical stocks – are also expected to shine next year, although some of the listed firms are predicted to experience dwindling performances after the fuel price hike – assuming a 31 percent price increase in the first quarter of next year – which might lead to lower purchasing power.

Harry said that with the ASEAN Economic Community (AEC) kicking off next year, companies that had set up wide distribution networks in neighboring countries like pharmaceutical firm Kimia Farma (KAEF) and Indofood CBP (ICBP), would have an advantage.

According to him, Bahana predicted that the automotive-related and coal and mining sectors would underperform next year.

Automotive stocks are expected to underperform due to the fuel price hike and high interest rate, while coal-related stocks are projected to weaken as coal prices remain low.

Coal prices slumped by nearly 15 percent between January and September this year due to oversupply and declining demand from traditional coal importer China.

The other 11 sectors in the bourse are projected to remain neutral throughout next year.

Bahana’s top 10 stocks for next year include cellular provider state-run Telekomunikasi Indonesia (TLKM), consumer goods giant Unilever (UNVR), state-owned gas distributor Perusahaan Gas Negara (PGAS), cigarette firm Gudang Garam (GGRM) and Kalbe Farma (KLBF).

Also included on the list are Indofood CBP, toll road operator Jasa Marga (JSMR), telco operator Indosat (ISAT), handset retailer Tiphone Mobile Indonesia (TELE) and KAEF.

Meanwhile, media firms Surya Citra Media (SCMA) and Media Nusantara Citra (MNCN), consumer goods firm Mayora Indah (MYOR), Indomobil Sukses Internasional (IMAS) and Ramaya Lestari Sentosa (RALS) are on Bahana’s list of stocks to avoid.

Bahana projected that the Jakarta Composite Index (JCI) – the main price barometer in the Indonesian Stock Exchange (IDX) - would hit 5,900 by the end of 2015, supported by an 11.6 percent increase in earning per shares (EPS) on the back of listed companies’ improving performance.

This year, the index is forecast to close at 5,300, up by around 24 percent compared to last year’s closing at 4,274. (Anggi M. Lubis)