FROM EQUITY RESEARCH DESK

IDEA OF THE DAY

XL Axiata: Merger Plan Advancing Smoothly: Securing Approvals, Buyback Readiness and Valuation Upside (EXCL.IJ Rp 2,270; BUY TP Rp 2,800)

• Merger plan progresses smoothly as EXCL secures approvals from creditors, vendors, Komdigi all expected before the March 25th EGMS.
• Funding secured for buyback of Rp3.09tr initially at Rp2,350/sh, backed by Axiata’s RM1bn facility and DSSA IJ from Sinar Mas side.
• Maintain BUY rating on EXCL; Axiata’s 13.14% stake sale at Rp3,189/sh sets a benchmark for the mergeCo XLSmart, implying a 40%+ upside.

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MARKET NEWS

MACROECONOMY

China Targets 5% Economic Growth in 2025

China has set an ambitious target of around 5% growth for 2025, in a defiant show of confidence as it braces for the fallout from escalating American tariffs on its export-driven economy. The target “underscores our resolve to meet difficulties head-on and strive hard to deliver,” Premier Li Qiang, China’s No. 2 official, said on Wednesday. (CNN)

 

Trump Grants One-Month Auto Tariff Exemption for Mexico and Canada

President Donald Trump has granted an exemption on auto tariffs on Mexico and Canada for one-month, White House Press Secretary Karoline Leavitt confirmed Wednesday. (CNN)

 

US ISM Services PMI Increased to 53.5 in Feb25

US ISM Services PMI unexpectedly increased to 53.5 in Feb25 from 52.8 in Jan25, beating forecasts of 52.6. (Trading Economics)

 

SECTOR

Commodity Price Daily Update Mar 5, 2025

Technology: Ministry of Manpower proposes cash THR for Ojol drivers

Kemenaker, together with ride-hailing platforms, is designing a THR scheme for ojol drivers in the form of incentives/bonuses. The ministry is finalizing the formula, considering parameters such as transportation type, services, and working hours, which is why the process takes time. Kemenaker aims to issue the circular letter today, ensuring THR is available by the weekend. The government has also confirmed that THR will be in cash, not in basic necessities (sembako).

 

Additionally, discussions between the government and DPR on the RUU LLAJ (Traffic and Road Transport Bill) continue, particularly on the employment status of ojol drivers. Kemenaker is reviewing models from several European countries, where taxi and ride-hailing drivers are classified as workers, aligning with ILO principles that governments must prevent worker exploitation.

 

Maxim has argued that the RUU LLAJ should maintain the partnership model, emphasizing flexibility and job protection. Meanwhile, DPR is focused on safety, urging platforms to ensure their drivers have roadworthy vehicles and adequate driving skills. DPR also stresses that ride-hailing platforms must comply with government-set tariffs and take-rate regulations. (Katadata, Kontan)

 

Comment:

THR has historically been at the discretion of ride-hailing platforms. A circular letter and subsequent regulations will improve transparency in the annual THR process, with eventual input and support from platforms. The government is still weighing the partner vs. worker status, focusing on safety, exploitation risks, and fair tariffs. We believe the government is strengthening its bargaining position to ensure key driver concerns are addressed. (Niko Margaronis & Kafi Ananta – BRIDS)

 

CORPORATE

ADRO Allocates US$525mn in Capex for 2025

ADRO has announced a capex budget of up to US$525mn (Rp8.4tr) for 2025. In its official statement, ADRO specified that the capex range for 2025 will be between US$475mn and US$525mn, including equity investments in industrial zone projects in North Kalimantan. Meanwhile, throughout 2024, the company spent US$514mn on capital expenditure. (Bisnis)

 

ERAA to Expand Retail Network Beyond Java in 2025

ERAA plans to expand its retail network outside Java in 2025 to broaden market reach and improve product accessibility. Corporate Secretary Amelia Allen stated that the company is committed to opening new stores in strategic locations to support this expansion. (Bisnis)

 

ESSA Allocates $20mn Capex, Advances Blue Ammonia & SAF Projects

ESSA has set aside US$20mn for ammonia plant maintenance in Q4 2025, fully funded from cash flow. It is also advancing blue ammonia and SAF projects, with blue ammonia commissioning set for Q4 2028. Its SAF facility in Central Java, with a 150,000 MT annual capacity, is finalizing key components, targeting construction in 2026 and commissioning in 1Q28. (Kontan)

 

ISAT partners with Nokia and Nvidia to develop Indonesia’s first AI-RAN

ISAT has formed a strategic partnership with Nokia and Nvidia to introduce Artificial Intelligence Radio Access Network (AI-RAN) across Indonesia. The collaboration combines Nokia’s cutting-edge 5G Cloud RAN solutions with NVIDIA’s Aerial AI platform, creating an advanced computing infrastructure capable of simultaneously operating AI and RAN. A small-scale commercial trial for AI inferencing workloads on NVIDIA’s AI-RAN infrastructure is scheduled for the second half of 2025, with further development planned for 2026. (Bisnis)

 

INET and APJII to build 58 Internet Exchange Nodes in Java

INET in collaboration with the Indonesian Internet Service Providers Association (APJII), is working to establish 58 Internet Exchange (IIX) nodes across Java. The construction of these nodes will continue and is targeted for completion by 3Q25. Currently, the project has already covered around 10 cities. This initiative aims to boost internet speed for network users in smaller cities, reducing dependence on interconnection from Jakarta. (Kontan)

 

JSMR to Continue Asset Recycling in 2025

JSMR plans to continue its asset recycling strategy in 2025 to reduce financial burden after a profit decline in 2024. The company is open to investor interest in its toll road assets but ruled out deals larger than its previous 35% stake sale in PT Jasamarga Transjawa Tol (JTT). (Kontan)

 

LPPF Plans Share Buyback Up to Rp150bn

LPPF plans to buy back up to 10% of its paid-up capital in Series C shares, with a budget cap of Rp150bn. The buyback, pending shareholder approval at the 10th Apr25 AGMS, will be executed within 12 months. (Bisnis)

 

UNTR’s January Heavy Equipment Sales Increase

United Tractors (UNTR) recorded heavy equipment sales of 536 units throughout January 2025, marking a 29% increase from 518 units sold in January 2024. The majority of Komatsu heavy equipment sales were absorbed by the mining sector (72%), followed by construction (11%), forestry (9%), and agriculture (8%). (Bisnis)