EQUITY RESEARCH

INKP - Initiation Report - 24 January 2024

CIPTADANA SEKURITAS ASIA

BUY Indah Kiat Pulp & Paper

Earnings to stage a comeback
TP:Rp11,900 (+55.0%)

Sector Basic Materials Recovery of pulp price seen

Kraft pulp prices faced strong volatility in 2023, falling sharply from an all-time high of
Bloomberg Ticker INKP IJ
USD8,660/ton in September of 2022.to USD4,974/ton in April 2023. Then it has seen
Share Price Performance
upward momentum and traded at USD5,620/ton since the beginning of 2024 (Exhibit 5),
The observed correction in pulp prices from September 2022 to April 2023 was mainly
Last price (Rp) 7,675 due to an increase in global pulp supply, facilitated by improvements in global logistics.
Avg. daily T/O (Rpbn/USDmn) 74.2/4.7 Looking forward to 2024, global pulp markets appear to be entering the New Year on a
healthier footing. The excess inventory that overhung the market in 2023 has been
3m 6m 12m
cleared. However, we expect pulp and paper prices to recover. This recovery is expected
Absolute (%) -23.3 -13.5 -9.7 to be driven by economic growth in Asia, particularly China, Tokyo's green procurement
Relative to JCI (%) -30.6 -18.7 -15.3 policy, and the closure of certain pulp and paper mills in North America and Australia. The
current investment cycle in new market pulp capacity is also winding down, with one
52w High/Low price (Rp) 11,850/6,775
major project planned for next year and just one more in 2025.

14,000 40%
A fresh industrial paper facility set to launch
12,000 30% Indah Kiat Pulp & Paper (INKP) has ambitious plans to build a state-of-the-art mill in
10,000 20% Karawang, West Java, with an impressive total capacity of 3.9 mtpa. The construction of
8,000 10% this industrial paper mill will take place in two phases. The first phase, expected to be
6,000 0%
4,000 -10% operational in 2025, will have an installed capacity of 2.4 mtpa. This includes 1.5 mtpa of
2,000 -20% white paper and 0.9 mtpa of brown paper. The second phase, expected to start
- -30% approximately two years after the first phase, will add an additional 1.5 mtpa of white
Jan-23

Apr-23

Oct-23

Jan-24
Jul-23

paper capacity per year. This will increase the total capacity from 7.0 mtpa (current mills
in Riau of 4.7 mtpa, Serang of 2.2 mtpa and Tangerang of 120 k tons) to 10.9 mtpa.

INKP IJ 1yr Rel. to JCI (RHS)

Strong balance sheet to support growth
As of 9M23, INKP has a strong balance sheet with a DER of 0.58x and cash balance of
USD1.5 bn. We expect the company to finance the planned USD 3.6 bn investment in the
Outstanding shrs (mn) 5,471 Karawang plant through a combination of bond/loan and internal cash. With the recovery
in pulp and paper prices and the additional production capacity from the new plant, we
Mkt. Cap (Rpbn/USDmn) 41,990/2,686
expect INKP to achieve revenue growth of +11.6% YoY in FY24F to USD3.6 bn and +27.2%
Estimated free float (%) 42.2 YoY to USD4.0 bn in FY25F. In FY24F, the pulp and cultural paper segment is expected to
Major shareholders be the main source of revenue, shifting to industrial paper in FY25F (Exhibit 14). Given the
potential revenue growth and relatively stable expenses, our projections indicate that
PT APP Purinusa Eka Persada 55.5% INKP will book net profit growth of +48.1% YoY to USD611 mn in FY24F and +45.8% YoY to
Public 42.2% USD892 mn in FY25F after the new mill starts production.

Initiate coverage with Buy and TP of Rp11,900

EPS Consensus We initiate coverage on INKP with a Buy rating and a DCF-based TP of Rp11,900/share
Ciptadana Cons. % Diff
(+55% upside potential). We apply a WACC of 10.5% and a terminal growth rate of 2%.
INKP trades at an EV/EBITDA multiple of 4.3x for 2024F. We are bullish on INKP's positive
2023F 7.5 7.3 3.4 outlook for the pulp and paper industry, strong capital structure, and expansion initiatives.
2024F 11.2 10.1 10.7
Exhibit 1 : Financial Highlights
Year to 31 Dec 2021A 2022A 2023F 2024F 2025F
Revenue (USDmn) 3,517 4,003 3,565 3,978 5,060
Operating profit (USDmn) 858 1,138 590 842 1,228
Net profit (USDmn) 526 857 413 611 892
EPS (US$Cents) 9.6 15.7 7.5 11.2 16.3
EPS growth (%) 79.0 62.9 -51.8 48.1 45.8
Muhammad Gibran EV/EBITDA (x) 4.8 3.5 5.5 4.3 3.1
+62 21 2557 4800 ext. 798 PER (x) 5.6 3.2 6.8 4.7 3.1
[email protected] PBV (x) 0.6 0.5 0.5 0.4 0.4
Dividend yield (%) -0.6 -0.7 -2.0 -1.4 -2.2

http://www.ciptadana.com ROE (%) 11.0 15.3 6.9 9.4 12.1

Source : INKP, Ciptadana Estimates

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 EQUITY RESEARCH
INKP - Initiation Report - 24 January 2024
CIPTADANA SEKURITAS ASIA

Global Industry outlook

Pulp prices faced strong volatility in 2023, falling sharply from an all-time high of
USD8,660/ton in September of 2022.to USD4,974/ton in April 2023. Then it has seen upward
momentum and traded at 5,620 since the beginning of 2024 (Exhibit 5), The observed
correction in pulp prices from September 2022 to April 2023 was mainly due to an increase
in global pulp supply, facilitated by improvements in global logistics. Looking forward to
2024, global pulp markets appear to be entering the New Year on a healthier footing. The
excess inventory that overhung the market in 2023 has been cleared. However, we expect
pulp and paper prices to recover. This recovery is expected to be driven by economic growth
in Asia, particularly China, Tokyo's green procurement policy, and the closure of certain pulp
and paper mills in North America and Australia. The current investment cycle in new market
pulp capacity is also winding down, with one major project planned for next year and just one
more in 2025.

Exhibit 2: Global Pulp and Paper Demand

450 422 429 427 423 426 426

408 413 415 408
396 401 403 21 19 13 12
23 17
400 26 24 13
370 31 30 28
32 82 80
32 100 97 93 79
350 101
105 103
108 107
111 110
300
105

250
192 190
173 176 177 181
161 166
200 151 156
143 146
139
128
150

37 38 39 41 43 43 45
31 32 33 34 35
100 29
28

50 85 86 87 89 92 92 95 97 96 95 92 96 99
77

-
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

Other Paper and Board Tissue Containerboard Printing and Writing Newsprint

Source: Ciptadana

Key factors that drive growth and demand in P&P industries

The rise in global population and economic growth, especially in developing countries, has
significantly increased the demand for paper-based products, including packaging materials,
tissues, and printing papers. Rapid industrialization and urbanization in these regions have
led to a higher need for paper goods, supporting various industries and adapting to changing
consumer needs.

Moreover, the booming expansion of the packaging industry, driven by the growing e-
commerce and retail sectors, plays a crucial role in boosting the pulp and paper market. The
increase in online retail has created a substantial demand for corrugated boxes and other
packaging materials, contributing to the consumption of paper products.

Additionally, growing concerns about environmental impact and a collective push for
sustainability have become key factors influencing the pulp and paper market. Both
consumers and businesses are increasingly favoring eco-friendly and recyclable packaging
solutions, prompting manufacturers to adopt more sustainable practices and incorporate
recycled fibers into their products. This shift towards greener practices represents a
significant change in consumer preferences and industry standards within the pulp and
paper sector.

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INKP - Initiation Report - 24 January 2024
CIPTADANA SEKURITAS ASIA

INKP rides high on packaging surge

In the consumer market, a gradual shift from plastic to paper packaging is underway. Unlike
plastic, paper packaging exhibits economic resilience due to its affordability, user-friendly
attributes, hygiene benefits, and eco-friendliness. Additionally, an increase in tissue demand
is anticipated, aligning with heightened public activities and a focus on hygiene post-
pandemic. This upward trend should compensate for the reduced demand for paper in media
or office applications amid the ongoing digitalization trend. In the long term, we anticipate a
growing adoption of paper packaging as a substitute for plastic.

We've observed that China, as the second-largest global consumer of paper (Exhibit 3), is
proactively addressing environmental concerns through various regulatory measures. These
measures include the Environmental Protection Tax, Emission Trading, a ban on importing
unsorted wastepaper, suspension of non-compliant mills, and a reduction in the import quota
for Old Corrugated Containers. China's commitment to cleaner, recyclable, and eco-friendly
products as substitutes for plastic has the potential to positively impact global demand and
prices for pulp and paper. Given China's status as the largest consumer and importer of
paper and paperboard worldwide, it is expected to play a significant role in driving growth in
pulp consumption in the medium term.

Exhibit 3: Consumption of paper and paperboard in FY21

132,696

65,622

22,670
18,831 16,161
11,188 9,868 9,606 9,283 8,293 7,445

China United Japan Germany India Italy Mexico South Brazil France Indonesia
States Korea

Source: Statista, Ciptadana

Exhibit 4: INKP’s Export Sales Distribution by Region (3M23)

Africa, 4.7% Australia, 1.8%

Middle East, 6.9%

Europe, 7.3%

America, 6.8%

Asia, 72.4%

Source: Ciptadana, INKP

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INKP - Initiation Report - 24 January 2024
CIPTADANA SEKURITAS ASIA

The market for P&P in Indonesia

In 2022, Indonesia's Pulp and Paper sector made a notable contribution, accounting for
0.67% of the GDP and generating USD 7.5 bn in foreign exchange. Pulp exports reached USD
3.28 bn, while paper exports amounted to USD 4.22 bn, targeting key markets such as China,
Korea, India, Bangladesh, and Vietnam. With abundant raw material resources, Indonesia
presents significant business potential. As of 2022, the country's pulp production capacity
stands at 12.13 mtpa per year, and paper production capacity is 18.26 mtpa per year. The
industry directly employs over 161 k individuals and indirectly supports 1.2 mn people. To
unlock further potential, the Indonesian pulp and paper industry can enhance its value
proposition through product diversification. Exploring avenues like processing dissolving
pulp into viscose rayon for textiles holds promise, offering increased added value and a
pathway to sustained growth.

Recovery of kraft pulp price seen

Pulp prices faced strong volatility in 2023, falling sharply from an all-time high of
USD8660/tonin September of 2022 to USD4,974/ton in April 2023. Then it has seen upward
momentum and traded at 5,620 since the beginning of 2024 (Exhibit 5), The observed
correction in pulp prices from September 2022 to April 2023 was mainly due to an increase
in global pulp supply, facilitated by improvements in global logistics. Looking forward to
2024, global pulp markets appear to be entering the New Year on a healthier footing. The
excess inventory that overhung the market in 2023 has been cleared. However, we expect
pulp and paper prices to recover. This recovery is expected to be driven by economic growth
in Asia, particularly China, Tokyo's green procurement policy, and the closure of certain pulp
and paper mills in North America and Australia. The current investment cycle in new market
pulp capacity is also winding down, with one major project planned for next year and just one
more in 2025

Exhibit 5: Kraft Pulp

8,000

7,500

7,000

6,500

6,000

5,500

5,000

4,500

4,000
Feb-21
Mar-21
Apr-21

Jul-21

Oct-21

Feb-22
Mar-22
Apr-22

Jul-22

Oct-22

Feb-23
Mar-23
Apr-23

Jul-23

Oct-23
Jan-21

May-21
Jun-21

Aug-21
Sep-21

Nov-21
Dec-21
Jan-22

May-22
Jun-22

Aug-22
Sep-22

Nov-22
Dec-22
Jan-23

May-23
Jun-23

Aug-23
Sep-23

Nov-23
Dec-23

Source: Tradingeconomics, Ciptadana

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INKP - Initiation Report - 24 January 2024
CIPTADANA SEKURITAS ASIA

INKP at Glance
Indah Kiat Pulp & Paper Tbk (INKP) is a prominent player in the paper and pulp
manufacturing industry. It operates as a subsidiary of Asia Pulp & Paper (APP), a globally
recognized pulp and paper producer based in Indonesia. INKP solidifies its position as a
significant contender in the pulp and paper industry. As a subsidiary of the APP (Asia Pulp &
Paper) group, which dominates the Indonesian market with around 50-60% share and
showcases a total annual capacity of 7 mtpa, INKP strategically leverages this association to
establish a competitive edge, further bolstered by its significant pricing authority.
Additionally, it takes advantage of an advantageous cost structure, supported by holistic
upstream/downstream operations and considerable economies of scale. Presently, the
company oversees production facilities across three strategic locations: Perawang-Riau
(Pulp, paper, tissue), Tangerang, (packaging) and Serang Banten (paper). Its primary
operations encompass pulp manufacturing, tissue production, and a diverse range of cultural
papers, including coated and uncoated freesheet designed for printing and writing, as well as
photocopy paper. INKP also engages in the production of industrial paper, manufacturing
various packaging options like containerboard (linerboard and corrugated medium),
converted corrugated shipping containers, boxboard, food packaging, and specialized
colored papers.

A fresh industrial paper facility set to launch

Indah Kiat Pulp & Paper (INKP) has ambitious plans to build a state-of-the-art mill in
Karawang, West Java, with an impressive total capacity of 3.9 mtpa. The construction of this
industrial paper mill will take place in two phases. The first phase, expected to be
operational in 2025, will have an installed capacity of 2.4 mtpa. This includes 1.5 mtpa of
white paper and 0.9 mtpa of brown paper. The subsequent phase, expected to start
approximately two years after the first phase, will add an additional installed capacity of 1.5
mtpa of white paper annually. This will raise total capacity from 7.0 mtpa (current factories
in Riau of 4.7 mtpa, Serang of 2.2 mtpa and Tangerang of 120 ktons) to 10.9 mtpa, an implied
growth of 55%.
Exhibit 7: Front view of the planned power plant construction
Exhibit 6: Front view of the planned power plant construction site
site

Source: Ciptadana Sekuritas Asia,INKP Source: Ciptadana Sekuritas Asia, INKP

Exhibit 8: Sales distribution channel Exhibit 9: New Plant Layout

Source: Ciptadana Sekuritas Asia Source: Ciptadana Sekuritas Asia

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INKP - Initiation Report - 24 January 2024
CIPTADANA SEKURITAS ASIA

Exhibit 10: Forecasted Plant Capacity of INKP After Incorporating the New Plan

7,000
2nd stage will contribute addtional 1.5 mtpa
6,000
1st stage will contribute additional 2.4 mtpa
5,000

4,000

3,000

2,000

1,000

-
2019 2020 2021 2022 2023 F 2024 F 2025 F 2026 F 2027 F 2028 F
Pulp Cultural Paper Industrial Paper

Source: INKP, Ciptadana

We expect INKP to face minimal challenges in raising the necessary funds, given its robust
position in the paper industry, backed by a substantial cash and cash equivalent reserve of
USD 1.58 bn.. The company's creditworthiness is further underscored by a favorable
'idA+/Stable rating for its bond and sukuk from Credit Rating Agency Pefindo, amplifying
'idA+/Stable'
investor interest and rendering INKP's bonds an appealing investment prospect. It's
important to note that INKP has a track record of issuing bonds and sukuk, primarily for
refinancing and bolstering working capital. In alignment with its strategic expansion goals,
INKP has outlined a comprehensive CAPEX budget amounting to USD 3.6 bn. This financial
commitment will be sourced from a combination of internal cash reserves (60%) and
external loans (40%). Notably, INKP is actively in the process of issuing bonds valued at USD
150 mn,, distributed across two series, with the potential for additional bond
bon issuances in the
future.

Exhibit 11: INKP's CAPEX for the construction of new plant facilities
Breakdown Cost (k USD)
Land 16.549
Building (Civil structure & Architectural
works) 602.466
Machinery and equipment 3.013.593
013.593
Packages (Main Equipments) 2.299.052
299.052
Mechanical 136.877
Piping 92.648
Electrical 265.893
Instrument/Automaton 62.706
MEI Works 126.278
Engineering Cost 30.139
Total 3.632.608
632.608

Source: Ciptadana, INKP

a notable ESG initiative also involves the innovative plant's power supply, which will
primarily
imarily come from bio-mass—a
bio a renewable energy source obtained from organic and
plant based waste materials. This choice strongly resonates with the company's dedication
plant-based
to sustainable energy practices for future power generation.

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INKP - Initiation Report - 24 January 2024
CIPTADANA SEKURITAS ASIA

Earnings will be boosted by 45% in FY25F after the new plant finish
The upcoming expansion is poised to significantly boost INKP's earnings starting in FY25F,
thanks to efficient asset utilization and a strong cash flow. The added production capacity
from the new facility, combined with synergies from INKP’s current operations is expected to
lead to a notable increase in the FY25F top line. This will be driven by a significant
contribution (+2.4 mtpa from the new factory) from the industrial paper segment, along with
a constant ASP. This positions the company for projected revenue growth of +11.6% YoY in
FY24F and +27.2% YoY in FY25F. Additionally, we estimate that the primary revenue source
is expected to shift from the pulp and cultural paper segment to the industrial paper segment
in FY25F (Exhibit 14). With the potential for substantial revenue growth and relatively stable
expenses, our projections suggest that INKP is on course for a +45.8% YoY increase in
operating profit and a +45.8% YoY growth in net profit in FY25F once the new factory
commences production.

Exhibit 12: INKP’s revenue mix by segment( in k USD) Exhibit 13: INKP’s profitability

6,000,000 40%

35%
5,000,000
30%
4,000,000
25%
3,000,000 20%

2,000,000 15%

10%
1,000,000
5%
-
2,022 2023 F 2024 F 2025 F 2026 F 2027 F 2028 F 0%
2021 2022 2023 F 2024 F 2025 F 2026 F 2027 F 2028 F
Pulp Cultural Paper Industrial Paper GPM OPM NPM

Source: Ciptadana Sekuritas Asia,INKP Source: Ciptadana Sekuritas Asia, INKP

We conducted a sensitivity analysis to assess how fluctuations in production volume within

the industrial paper segment in FY25F (when the production plant starts operating) could
impact INKP's revenue, EBITDA, and net income. Our findings indicate that a 5% increase or
decrease in production volume is expected to result in a -2.2%/+2.2% impact on revenue, a -
2.2%/+2.2% impact on EBITDA, and a -3.2%/+3.2% impact on net profit. Additionally, we
project that a 10% increase or decrease in production volume will result in a -4.4%/+4.4%
impact on revenue, a -4.4%/+4.4% impact on EBITDA, and a -6.4%/+6.4% impact on net
income in FY25F.

Exhibit 14: Sensitivity analysis

(USD bn) -10% -5% base case 10% 5%
2025F Revenue 4,838 4,949 5,060 5,281 5,170
EBITDA 1,524 1,559 1,593 1,663 1,628
Net Income 835 863 892 949 920
% Changes in Volume -10% -5% base case 10% 5%
2025F Revenue -4.4% -2.2% 0.0% 4.4% 2.2%
EBITDA -4.4% -2.2% 0.0% 4.4% 2.2%
Net Income -6.4% -3.2% 0.0% 6.4% 3.2%

Source: Ciptadana, INKP

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INKP - Initiation Report - 24 January 2024
CIPTADANA SEKURITAS ASIA

Strong balance sheet to support growth

Below are historical data and our key assumptions for INKP's operational forecasts from
2022 to 2028, following the completion of the new plant in Karawang, contributing to
production. We estimate that the production capacity volume for industrial paper will reach
4.7 mtpa by 2028, up from 2.1 mtpa in 2022. This increase is primarily attributed to INKP's
new plant capacity in Karawang. Regarding ASP in FY25F, we assume prices for pulp,
cultural paper, and industrial paper to reach USD 729/ton, USD 1,082ton, and USD 784/ton,
respectively.

Exhibit 15: INKP's Operational and ASP after new plant finish
K ey Assumption 2022 2023F 2024F 2025F 2026F 2027F 2028F
O perational Numbers
C apacity ('000 T on)
Pulp 3100 3100 3100 3100 3100 3100 3100
C ultural Paper 1700 1700 1700 1700 1700 1700 1700
Indstrial Paper 2308 2308 2308 4708 4708 6208 6208
Production Volume ('000 T on)
Pulp 2956 3061 3061 3061 3061 3061 3061
C ultural Paper 1354 1411 1411 1411 1411 1411 1411
Indstrial Paper 2143 2193 2193 3531 3766 4346 4966
Sales Volume ('000 T on)
Pulp 1875 1531 1684 1837 1377 1224 1071
C ultural Paper 1392 1199 1391 1391 1391 1391 1391
Industrial Paper 1846 1754 1754 2825 3013 3476 3973
Financial Numbers
ASP (USD /T on)
Pulp 648 661 694 729 736 744 751
C ultural Paper 962 982 1031 1082 1093 1104 1115
Industrial Paper 784 784 784 784 784 784 784

Source: Ciptadana, INKP

INKP will employ internal cash for its expansion plans. As of 9M23, INKP demonstrated a
favorable solvency ratio with a DER of 0.58x, an interest coverage ratio of 2.8x, and cash
balance of USD 1.5 bn.

Exhibit 16: INKP's Solvability ratio

1.00
0.90
0.80
0.70
0.60
0.50
0.40
0.30
0.20
0.10
-
2020 2021 2022 2023 F 2024 F 2025 F 2026 F 2027 F 2028 F

DAR DER Net Gearing Ratio

Source: Ciptadana, INKP

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INKP - Initiation Report - 24 January 2024
CIPTADANA SEKURITAS ASIA

The Porter's Five Forces analysis

We conducted a Porter’s Five Forces analysis, revealing that while INKP enjoys certain
barriers to entry and possesses some bargaining power, it contends with fierce competition
among established rivals. Managing buyer power and addressing potential threats from
substitutes, especially in a shifting digital landscape, are critical challenges for the company.

Threat of New Entrants (Low-Moderate):

 Capital Intensive: The paper and pulp industry requires substantial capital
investment for manufacturing facilities and forestry operations, creating a barrier
to entry for new competitors.
 Economies of Scale: Established companies like INKP benefit from economies of
scale, making it challenging for newcomers to compete on cost-efficiency.
 Regulatory Compliance: Compliance with environmental regulations and
sustainable practices adds complexity and costs, deterring potential new entrants.

Bargaining Power of Suppliers (Moderate):

 Wood Pulp Suppliers: INKP's bargaining power with wood pulp suppliers might be
moderate due to the availability of multiple suppliers, although fluctuations in wood
pulp prices could impact supplier power.
 Chemical and Energy Suppliers: Suppliers of chemicals and energy might have
some influence, but INKP's ability to negotiate contracts and diversify suppliers can
mitigate this power.

Bargaining Power of Buyers (Moderate-High):

 Diverse Customer Base: INKP serves various industries, giving it some leverage,
but large buyers might exert significant influence, especially when purchasing in
bulk.
 Product Differentiation: High-quality paper products might lessen buyer power, but
price sensitivity and availability of alternative materials can affect negotiations.

Threat of Substitutes (Moderate):

 Digitalization: The increasing digitalization of information poses a moderate threat
as electronic alternatives impact demand for traditional paper products.
 Substitute Materials: Despite digitalization, certain segments still prefer paper-
based packaging and specialty papers, reducing the threat of substitutes in those
markets.

Rivalry Among Existing Competitors (High):

 Industry Competition: Intense competition exists among paper and pulp
manufacturers, including both domestic and international players, leading to price
competition and aggressive marketing strategies.
 Market Saturation: The industry faces challenges due to market saturation and
slow demand growth, increasing rivalry among competitors for market share.

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INKP - Initiation Report - 24 January 2024
CIPTADANA SEKURITAS ASIA

SWOT analysis
We have performed a SWOT analysis to capture an understanding of INKP’s internal
strengths and weaknesses, as well as the external opportunities and threats it faces. It's
crucial to underscore the importance of devising strategic plans and risk mitigation
strategies to leverage strengths and opportunities, while effectively managing weaknesses
and addressing potential threats within the continually evolving paper and pulp industry

Strengths
 Diversified Product Portfolio. INKP offers a wide range of paper and packaging
products catering to various industries, ensuring revenue stability and market
adaptability.
 Strong Market Presence. It holds a significant position in Indonesia's paper and
pulp industry and has expanded its reach internationally, contributing to a robust
market presence.
 Vertical Integration. INKP's vertical integration, from forestry operations to
manufacturing, provides better control over the supply chain, ensuring quality and
cost efficiencies.
 Sustainable Practices. The company is committed to sustainable sourcing and
production methods, aligning with global environmental standards, which enhances
its brand reputation.

Weaknesses
 Dependency on Raw Material Costs. Fluctuations in raw material prices,
particularly wood pulp, can impact production costs, potentially affecting profit
margins.
 Market Sensitivity. The industry is susceptible to changes in market demand,
affected by economic conditions, digitalization, and alternative materials,
influencing sales volumes and revenues.
 Regulatory Challenges. Compliance with evolving environmental regulations and
sustainability standards might require significant investments in technology and
processes, impacting operational costs.

Opportunities
 Growing Global Demand. Increasing global demand for sustainable paper products
presents an opportunity for INKP to expand its market share, especially in eco-
friendly segments.
 Technological Advancements. Investing in innovative technologies can improve
production efficiency, reduce costs, and offer opportunities for new product
development.
 Emerging Markets. Expanding into emerging markets with rising paper and
packaging demands could offer avenues for growth and diversification.

Threats
 Competition and Price Wars. Intense competition within the industry and potential
price wars may lead to margin pressures and reduced profitability.
 Substitution by Digitalization. The ongoing digitalization trend poses a threat to
traditional paper products, affecting demand and profitability in certain segments.
 Volatility in Currency and Global Economy. Currency fluctuations and global
economic uncertainties can impact export revenues and raw material costs, posing
financial risks.

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INKP - Initiation Report - 24 January 2024
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Exhibit 17: ESG Assessment

ESG aspects ESG Assessment
1. INTP implements circular economy and international
Environmental standards in environmental management through ISO
14001:2015 Environmental Management System (EMS) and
ISO50001:2018 Energy Management
2. the company's efforts to reduce water usage, energy
consumption, and waste generation in its manufacturing
processes.
3. INKP's initiatives to minimize greenhouse gas emissions and
increase energy efficiency, including the adoption of
renewable energy sources. In their development projects.

1. APP Academy including the Company, we develop and

implement the Company’s various training programs. In 2022,
we conducted an average of 15 hours of training per
Social employee.
2. In 2022, INKP provided 10,360 hours of human rights training
to employees, with 100% of INKP employees participating.
3. Ensuring fair labor practices, including competitive wages,
safe working conditions, and opportunities for career
advancement, can be part of their employment policies.

1. Promoting diversity within the company's board and

leadership positions can lead to better decision-making and
Government representation of diverse perspectives.
2. Enforcing an anti-corruption and anti-bribery code of conduct
is essential. This ensures that the company's operations are
ethical and free from corrupt practices.
3. There is no female in BOD and BOC
Source : KPIG

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Initiate Coverage with Buy and TP of Rp11,900

We utilized the DCF method to determine the firm’s fair share value, incorporating the
following assumptions: 1) Terminal growth rate of 2%, grounded in our conservative
estimate of the global pulp and paper demand outlook for 2024-2033, which exhibits a CAGR
of 4.1% (Source: InsightSlice), 2) Risk-free rate of 6.6%, 3)Equity risk premium of 6.52%, 4)
Beta of 0.9 and a 36%/63% debt/equity proportion, 5) Weighted Average Cost of Capital
(WACC) of 10.5%.

The fair equity value for the firm in FY24F is USD 6.3 bn or Rp11,900/share (assuming a
USD/IDR exchange rate of 15,500). This implies an EV/EBITDA of 5.4x Given the positive
outlook for the pulp & paper industry, the robust capital structure, and the expansion
initiatives contributing to a substantial 2 fold growth in the industrial paper segment.
Additionally, INKP is a part of the Sinar Mas’s Asia Pulp & Paper (APP) group, which ranks as
the world’s second-largest pulp & paper producer. Risks include lower-than-expected selling
prices, intense competition, exchange rate fluctuations, and regulatory changes.

Exhibit 18: DCF Valuation

Y ear 2024 F 2025 F 2026 F 2027 F 2028 F T erminal Value
Y ear Number 1 2 3 4 5

E BIT 842,290 1,228,317 899,059 844,029 782,939

Add (+) D epreciation 330,221 365,105 397,745 406,925 416,105
Less (-) Tax (135,513) (197,605) (136,648) (151,313) (135,588)
Less (-) C apex (1,050,000) (855,000) (800,000) (225,000) (225,000)
C hange in W C (7,013) (368,647) (102,005) (131,610) (143,207)
FC F (20,015) 172,170 258,151 743,031 695,248 8,415,577
D iscount Factor 1.1 1.2 1.3 1.5 1.6 -
PV FC F (k USD ) (18,125) 141,192 191,713 499,702 423,419 5,125,237
E quity Value (k USD ) 6,363,137
D ebt (k USD ) (3,990,725)
C ash (k USD ) 1,816,746
E nterprise Value (k USD ) 4,189,157
Shares 5,470,983
E quity Value/share(R p) 11,900
Valuation Summary
Beta 0.9
R isk Free 6.6%
R isk Premium 6.5%
C ost of E quity 12.5%
C ost of D ebt 7.1%
C ost of D ebt net tax 5.7%
WAC C 10.4%
Source: Ciptadana Sekuritas Asia, Bloomberg

Exhibit 19: Pulp & Paper Industry Valuation

Mkt Cap P/E (x) P/B (x) EV / EBITDA (x)
Ticker Name
(USDmn) 2023F 2024F 2023F 2024F 2023F 2024F
MERC US MERCER INTERNATI 654.6 n.a n.a 1.0 1.3 7.4 4.5
IP US INTL PAPER CO 13,034.5 17.9 16.5 1.5 1.5 7.8 7.7
WRK US WESTROCK CO 10,693.8 15.9 11.5 1.0 1.0 6.1 6.1
UPM FH UPM-KYMMENE OYJ 20,288.4 26.6 15.3 1.6 1.5 13.3 9.3
STERV FH STORA ENSO OYJ-R 10,658.5 80.4 19.5 0.8 0.8 12.6 8.3
METSA FH MESA BOARD OYJ 2,940.3 34.4 20.4 1.6 1.6 12.4 8.5
SUZB3 BZ SUZANO SA 14,664.0 6.2 11.7 1.7 1.5 7.2 7.1
CMPC CI CMPC 4,570.8 9.1 11.7 0.5 0.5 6.3 5.9
3861 JT OJI HOLDINGS COR 4,033.0 9.8 8.5 0.6 0.6 7.7 7.1
2689 HK NINE DRAGONS PAP 1,901.3 49.3 6.8 0.3 0.3 11.3 8.3
INKP IJ INDAH KIAT PULP 2,876.0 7.2 5.2 n.a n.a 7.6 7.3
Weighted Average 86,315.0 25.4 13.9 1.2 1.2 9.5 7.7
Source: Ciptadana Sekuritas Asia, Bloomberg

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Board of Commissioners

Saleh Husin, President Commissioner

He served as the Director of PT Shelbi Pratama (1989-1990), Director of PT Mandrapura
Aditama (1991-1996), Commissioner of PT Ades Alfindo Putra Setia Tbk (1993-2005),
Commissioner of PT Kayu Sengon (1993-1996), Commissioner of PT Sengon Mas Fajar
Satryo (1993-1996), and Vice Chairman of the Hanura Party (2017-2018). In June 2017, he
assumed the position of President Commissioner of PT Pabrik Kertas Tjiwi Kimia Tbk,
Director of CV Guna Citra Bersama and CV Abadi Langgeng Wijaya (2017 - present), General
Chairman of Yayasan Muslim Sinar Mas (2018 - present), Chairman of Majelis Wali Amanat
Universitas Indonesia (MWA MUI) (2019 - present), and Expert Team Member of the Vice
President of the Republic of Indonesia (2019 - present). He has held the role of President
Commissioner of the Company since 2017 to the present.

Sukirta Mangku Djaja, Commissioner

He commenced his career as a member of the accounting staff at PT Tunas Bintang Motor
(1981-1982) and later assumed the role of Department Head in the Tax Division at PT Pabrik
Kertas Tjiwi Kimia Tbk and the Sinar Mas Group from 1983 onward. Subsequently, he served
as a Commissioner at PT Lontar Papyrus Pulp & Paper Industry from 1994 to July 2018. In
June 2017, he was appointed as Commissioner at PT Pabrik Kertas Tjiwi Kimia Tbk. Since
August 2018, he has held the position of Commissioner and has been a member of the
Nomination and Remuneration Committee at PT OKI Pulp & Paper Mills since March 2021. He
has been serving as a Commissioner of the Company since 2014 to the present.

Kosim Sutiono, Commissioner

He commenced his career as a Management Trainee at PT Bank Bali Tbk (currently known as
PT Bank Permata Tbk), ultimately reaching the position of Officer in the Corporate Finance
Group Division from 1993 to 2000. In 2000, he joined PT Pabrik Kertas Tjiwi Kimia Tbk. He
assumed the role of Chief Financial Officer at PT Pindo Deli Pulp And Paper Mills in 2006 and
was later appointed as a director of PT Pindo Deli Pulp And Paper Mills in 2011.
Subsequently, he became a director of PT Lontar Papyrus Pulp & Paper Industry in 2018. He
has been serving as a Commissioner of the Company since 2017 to the present.

Andrie Setiawan Yapsir, Commissioner

He began his career at IBM Corporation in Hopewell Junction, New York, USA, where he
received awards for his outstanding achievements. In 1996, he returned to Indonesia and
joined McKinsey & Company, Jakarta. He then joined PT Indah Kiat Pulp & Paper Tbk, serving
as Head of the Uncoated Paper Business Unit from 2015 to 2018, Deputy CEO Forestry from
2018 to 2020, and Head of the Chairman's Office from 2020 to the present. In June 2022, he
was appointed as a Commissioner at PT Pabrik Kertas Tjiwi Kimia Tbk. His notable
professional achievements include holding US patents in semiconductor processing
technology and authoring or co-authoring numerous scientific publications. He has been
serving as a Commissioner of the Company since 2022 to the present

Pande Putu Raka, Commisioner

He commenced his career at the Ministry of Finance of the Republic of Indonesia, where he
held various roles, including Head of Subdivision of Education and Training Plan in the
Financial Education and Training Agency (1977-1979), Head of Sub Directorate of Export
Evaluation in the Directorate General of International Monetary Affairs (1979-1988), and
Head of Division of Export Analysis in the Agency for State Finance, Credit, and Balance of
Payment Analysis (1988-1992). Additionally, he served as the Head of Division of Regional
Tax Analysis in the same agency in 1992, followed by appointments as Secretary of the
Financial and Monetary Analysis Agency (1992-1998) and Secretary of the Capital Market
Supervisory Agency (1998-2004). From July 2018 to September 2021, he was a Member of
the Audit Committees and has been the Chairman of the Audit Committees of PT Lontar
Papyrus Pulp & Paper Industry since September 2021 and PT OKI Pulp & Paper Mills since
March 2021. He was initially appointed as an Independent Commissioner of the Company in
2007 and continues to serve in that capacity to the present.

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Ramelan, Independent Commissioner

He had a career in the District Attorney's Office of the Republic of Indonesia for over 35
years, attending various official education programs such as the appointment of District
Attorney (1971), Education on the Operation of the Attorney General's Office (1982), On March
15, 2013, he was appointed as the Commissioner of PT ASDP Indonesia Ferry (Persero).Since
2014, he has been the Audit Committee’s Chairman of PT Pabrik Kertas Tjiwi Kimia Tbk and
the Company. He was initially appointed as an Independent Commissioner of the Company in
2007 and continues to serve in that capacity to the present.

Rizal Affandi Lukman, Independent Commissioner

As the Director for Bilateral Economic Cooperation at the Coordinating Ministry for Economic
Affairs (2001-2005), Director for Asia Economic and Financial Cooperation at the
Coordinating Ministry for Economic Affairs (2005-2008), Assistant to the 6th President of the
Republic of Indonesia Private Secretary at the Presidential Palace Office (2008-2009), Acting
Deputy Minister for International Economic Cooperation, In September 2021, he was
appointed as a member of the Audit Committee at the Company, PT Lontar Papyrus Pulp &
Paper Industry, and PT Pabrik Kertas Tjiwi Kimia Tbk. He was initially appointed as an
Independent Commissioner of the Company in 2021 and continues to serve in that capacity to
the present.

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Board of Directors
Hendra Jaya Kosasih, President Director
He currently holds the position of Vice President Director at PT Pindo Deli Pulp And Paper
Mills since 1997. His roles within the Company include serving as Vice President Director
from 2013 to 2015, President Director from 2015 to 2016, and Director from 2016 to 2019.
He then assumed the position of President Commissioner from 2019 to 2022. He has also
served as Director from 2002 to 2018 and as a Commissioner of PT Pabrik Kertas Tjiwi Kimia
Tbk since June 2018. His association with the Company dates back to his appointment as
Vice President Director from 1997 to 2017, and he has been serving as President Director
since 2017 to the present

Suhendra Wiriadinata, Vice President Director

He joined PT Pabrik Kertas Tjiwi Kimia Tbk and served as Director from 2011 to 2017. Since
June 2017, he has held the position of President Director. Additionally, at PT Pindo Deli Pulp
And Paper Mills, he served as Director from 2006 to 2011, Commissioner from 2011 to 2012,
Director from 2012 to 2022, and was appointed as President Commissioner in April 2022.
Furthermore, he held various positions at PT OKI Pulp & Paper Mills, including Director from
2011 to 2019. Since 2019, he has been serving as Vice President Director of the Company. In
March 2021, he was appointed as a Member of the Nomination and Remuneration Committee
and later appointed as President Commissioner since November 2022.

Didi Harsa Tanaja, Director

He gained experience as an Import Assistant at NV Sidik Bogor (1972-1973) and as
Procurement and Export Manager at PT Squibb Indonesia (1973-1989). He has been with the
Company since 1989 and was appointed as a Director in 2003, serving in that capacity until
the present.

Agustian R. Partawidjaja, Director

He began his career as the Broadcasting Head of Suara Kejayaan Private Radio, Jakarta
(1973-1984). Later, he joined PT Bank Duta as special staff to the President Director of
Promotions and Public Relations (1984-1989) and served as the Department Head of
Consumer Banking for PT Bank Duta’s Main Branch in Kebon Sirih, Jakarta (1989-1994).
Further, he has held the positions of Director and Corporate Secretary (2003-2015) and was
reappointed as a Director of PT Pabrik Kertas Tjiwi Kimia Tbk since 2017. He was also
appointed as a Director of PT Pindo Deli Pulp And Paper Mills from 2011 to 2018 and a
Director of PT Lontar Papyrus Pulp & Paper Industry from 2011 to July 2018. He has been
serving as a Director of the Company since 2003 to the present.

Kurniawan Yuwono, Director

He joined Sinarmas Pulp and Paper Products in 1997 and subsequently held the position of
Assistant Manager in Asia Pulp and Paper (APP) Singapore from 1999 to 2002. Since 2006,
he has been serving as a Director of PT UniCharm Indonesia Tbk. Additionally, he served as a
Director of PT Lontar Papyrus Pulp & Paper Industry from April 2011 to November 2019. He
held the positions of Director from August 2013 to March 2021 and Commissioner from
November 2022 at PT OKI Pulp & Paper Mills. He was appointed as a Director of the Company
in 2011 and continues to serve in that capacity to the present.

Heri Santoso, Director

He commenced his career at Prasetio, Utomo & Co. as a Junior Auditor, eventually reaching
the position of Supervisor from 1994 to 1999. Following that, he worked at PT Pindo Deli Pulp
And Paper Mills from 1999 to 2009. Subsequently, he served as the Corporate Secretary of
PT Dian Swastatika Sentosa Tbk from 2009 to March 2011 and later as Director and
Corporate Secretary of PT Pabrik Kertas Tjiwi Kimia Tbk from June 2015 to June 2017. Since
2017, he has been appointed as Director and Corporate Secretary of the Company, serving in
that capacity to the present.

Lioe Djohan, Director

He joined the Sinar Mas group in 1992 to handle marketing export and has been serving as a
Director of the Company since 2010 to the present.

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Exhibit 20 - Income Statement

Year to 31 Dec (USDmn) 2021A 2022A 2023F 2024F 2025F
Revenue 3,517 4,003 3,565 3,978 5,060
COGS -2,288 -2,413 -2,564 -2,669 -3,225
Gross profit 1,228 1,590 1,001 1,310 1,834
Oper. expenses -370 -452 -410 -467 -606
Oper. profit 858 1,138 590 842 1,228
EBITDA 1,142 1,384 878 1,173 1,593
Interest income 12 16 37 48 53
Interest expense -252 -254 -271 -292 -340
Other income (exp.) 42 148 148 148 148
Pre-tax profit 661 1,047 504 747 1,089
Income tax -134 -190 -92 -136 -198
Minority interest 0 0 0 0 0
Net profit 526 857 413 611 892

Exhibit 21 - Balance Sheet

Year to 31 Dec (USDmn) 2021A 2022A 2023F 2024F 2025F
Cash & cash equivalent 1,059 1,265 1,671 1,817 2,471
Acct, receivables 1,406 1,820 1,386 1,381 1,687
Inventory 442 487 517 538 650
Other curr, asset 1,795 1,905 1,905 1,905 1,905
Total current asset 4,702 5,477 5,479 5,641 6,713
Fixed assets - net 3,430 3,263 3,975 4,695 5,185
Other non-curr.asset 846 902 911 920 929
Total asset 8,978 9,641 10,364 11,256 12,827

ST debt + curr. maturity 1,899 1,833 1,645 1,777 2,078

Acct, payable 261 254 267 277 326
Advances received 0 0 0 0 0
Other curr. liab 105 153 154 155 155
Long term debt 1,670 1,523 2,049 2,214 2,589
Other non-curr, liab, 279 272 286 300 315
Total liabilities 4,214 4,036 4,401 4,722 5,463
Shareholder equity 4,764 5,605 5,963 6,533 7,363
Minority interest 1 1 0 0 0
Total liab + SHE 8,978 9,641 10,364 11,256 12,827

Exhibit 22 - Per Share Data

(US$Cents) 2021A 2022A 2023F 2024F 2025F
EPS 9.6 15.7 7.5 11.2 16.3
BVPS 0.9 1.0 1.1 1.2 1.3
DPS -0.3 -0.3 -1.0 -0.8 -1.1
FCF per share 0.1 0.1 0.0 0.0 0.0

Source : INKP, Ciptadana Estimates

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Exhibit 23 - Cash Flow

Year to 31 Dec (USDmn) 2021A 2022A 2023F 2024F 2025F
Net income 526 857 413 611 892
Depreciation 284 246 287 330 365
Chg in working cap. -153 -479 416 -7 -369
Other 54 -48 1 1 1
CF-Oper activities 712 576 1,118 936 889

Capital expenditure -338 -78 -1,000 -1,050 -855

Others -67 -56 -9 -9 -9
CF-Investing activities -406 -134 -1,009 -1,059 -864

Net change in debt -92 -212 338 296 676

Net change in equity 2 2 0 0 0
Dividend payment -19 -19 -55 -41 -61
Other financing -14 -7 14 14 15
CF-Financing activities -123 -236 296 269 630

Net cash flow 183 206 405 146 655

Cash - begin of the year 871 1,059 1,265 1,671 1,817
Cash - end of the year 1,053 1,265 1,671 1,817 2,471

Exhibit 24 - Key Ratios

Year to 31 Dec 2021A 2022A 2023F 2024F 2025F
Growth
Revenue (%) 17.8 13.8 -10.9 11.6 27.2
Operating profit (%) 61.5 32.6 -48.1 42.7 45.8
Net profit (%) 79.0 62.9 -51.8 48.1 45.8
Profitability Ratios
Gross margin (%) 34.9 39.7 28.1 32.9 36.3
Operating margin (%) 24.4 28.4 16.6 21.2 24.3
EBITDA margin (%) 32.5 34.6 24.6 29.5 31.5
Net margin (%) 15.0 21.4 11.6 15.4 17.6
ROA (%) 5.9 8.9 4.0 5.4 7.0
ROE (%) 11.0 15.3 6.9 9.4 12.1
Liquidity Ratios
Current ratio (x) 2.1 2.4 2.7 2.6 2.6
Quick ratio (x) 1.9 2.2 2.4 2.3 2.4
Cash conversion cycle (days) 185.6 197.2 211.1 175.6 162.5
Activity Ratio
Inventory turnover (days) 70.4 73.6 73.6 73.6 73.6
Receivable turnover (days) 140.2 147.1 164.1 127.0 110.7
Payable turnover (days) 25.0 23.5 26.7 25.0 21.7
Solvency Ratio
Interest cover (x) 4.5 5.4 3.2 4.0 4.7
Debt to equity ratio (x) 0.7 0.6 0.6 0.6 0.6
Net debt to equity (x) 0.5 0.4 0.3 0.3 0.3

Source : INKP, Ciptadana Estimates

Please see analyst certification and other important disclosures at the back of this report 18
 EQUITY RESEARCH
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EQUITY RESEARCH

HEAD OF RESEARCH ECONOMIST ANALYST

Arief Budiman Renno Prawira Erni Marsella Siahaan, CFA
Strategy, Automotive, Heavy Equipment, Economist Banking, Hospital
Construction, Oil & Gas and Shipping T +62 21 2557 4800 ext 735 T +62 21 2557 4800 ext 919
T +62 21 2557 4800 ext 819 E [email protected] E [email protected]
E [email protected]

ANALYST ANALYST ANALYST

Yasmin Soulisa Gani Thomas Radityo
Property, Plantations Telco, Tower, Media, Technology Coal, Metal Mining
T +62 21 2557 4800 ext 799 T +62 21 2557 4800 ext 734 T +62 21 2557 4800 ext 795
E [email protected] E [email protected] E [email protected]

ANALYST ANALYST ANALYST

Putu Chantika Putri Nicko Yosafat Muhammad Gibran
Consumer, Cigarette Retail, Pharmaceutical Cement, Poultry, Toll road
T +62 21 2557 4800 ext 740 T +62 21 2557 4800 ext 760 T +62 21 2557 4800 ext 798
E [email protected] E [email protected] E [email protected]

TECHNICAL ANALYST RESEARCH ASSISTANT

Asrul Husni Sumarni
T +62 21 2557 4800 ext 780 T +62 21 2557 4800 ext 920
E [email protected] E [email protected]

EQUITY SALES

DIRECTOR OF INSTITUTIONAL EQUITY SALES

Dadang Mulyana
Plaza ASIA Office Park unit 2
Jl. Jend. Sudirman Kav. 59
Jakarta - 12190
T +62 21 2557 4800 ext 838
F +62 21 2557 4900
E [email protected]

BRANCH OFFICES

JAKARTA - MANGGA DUA SURABAYA

Komplek Harco Mangga Dua Intiland Tower Surabaya
Rukan Blok C No.10 Ground Floor Suite 5 & 6
Jl. Mangga Dua Raya Jl. Panglima Sudirman 101-103
Jakarta - 10730 Surabaya - 60271
T +62 21 600 2850 T +62 31 534 3938
F +62 21 612 1049 F +62 31 534 3886

Please see analyst certification and other important disclosures at the back of this report 19
 EQUITY RESEARCH
INKP - Initiation Report - 24 January 2024
CIPTADANA SEKURITAS ASIA

Analyst Certification

Each contributor to this report hereby certifies that all the views expressed accurately reflect his or her personal views about the
companies, securities and all pertinent variables. It is also certified that the views and recommendations contained in this report are not
and will not be influenced by any part or all of his or her compensation.

Disclaimer

This report does not constitute an offer or a solicitation to buy or sell any security/instrument (i.e. securities mentioned herein or of the
same issuer and options, warrants or rights to or interest in any such securities), invitation to offer or recommendation to enter into any
transaction. Nor are we acting in any other capacity as a fiduciary to you. Recipients of this report shall carefully judge their own
investment risk and take full responsibility for the results of any resulting investments in the companies and/or sectors featured in this
report. When making an investment decision, you should determine, without reliance upon us or our affiliates, the economic risks and
merits (and independently determine that you are able to assume these risks) as well as the legal, tax and accounting characterizations
and consequences of any such transaction. In this regard, by accepting this report, you acknowledge that (a) we are not in the business of
providing (and you are not relying on us for) legal, tax or accounting advice, (b) there may be legal, tax or accounting risks associated with
any transaction, (c) you should receive (and rely on) separate and qualified legal, tax and accounting advice and (d) you should apprise
senior management in your organization as to such legal, tax and accounting advice (and any risks associated with any transaction and our
disclaimer on these matters).

The information and opinions contained in this report have been compiled from or arrived at in good faith from sources believed to be
reliable; however, we do not represent that it is accurate, current, complete, or error free. Assumptions, estimates and opinions contained
in this report constitute our judgment as of the date of the document and are subject to change without further notice. Any projections are
based on a number of assumptions as to market conditions and there can be no guarantee that any projected results will be achieved. Past
performance is not a guarantee of future results. PT CIPTADANA SECURITIES AND ITS AFFILIATES SPECIFICALLY DISCLAIMS ALL
LIABILITY FOR ANY DIRECT, INDIRECT, CONSEQUENTIAL OR OTHER LOSSES OR DAMAGES INCLUDING LOSS OF PROFITS REVENUES OR
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ACCURACY, COMPLETENESS OR TIMELINESS THEREOF.

Disclaimer: No representation or warranty, expressed or implied, is made by PT CIPTADANA SECURITIES or any other member of the
Ciptadana Capital, including any other member of the Ciptadana Group of Companies from whom this document may be received, as to the
accuracy or completeness of the information contained herein. All opinions and estimates in this report constitute our judgment as of this
date and there can be no assurance that future results or events will be consistent with any such opinions, forecasts or estimates. This
report and the contents hereof are intended for information purposes only, and may be subject to change without further notice; its
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Please see analyst certification and other important disclosures at the back of this report 20