CLSA Stocks to trust, from Nick Cashmore

Research Today: Stocks to trust, from Nick Cashmore

“Trust – a firm belief in the reliability or truth or strength of a person or thing; a confident expectation; reliance on the truth of a statement etc without examination.” Oxford English Dictionary

Indeed, trust is a fundamental thesis behind the functioning capital markets and over the last 12 months, this most basic assumption has, however, been tested like never before.

In this note, we highlight some of the Indonesian companies we believe have earned the right to deserve investors’ trust. The list is not long and it is also subjective.

While earnings may face a cyclical downturn, investors should have comfort their interests as minority shareholders are being fairly represented.

(1) Unilever Indonesia (UNVR IJ): Indo’s largest consumer company earnings up 19 out of 20 years, significant outperformer.
(2) Bank Central Asia (BBCA IJ): Indo’s largest private sector bank, a third of the country’s GDP is transacted through the bank’s network each year, conservative, well capitalised, ROE has averaged 20%.
(3) Astra Group: non-core assets divested, financial risk eliminated, focused on core competency, has emerged stronger from each economic crisis
(4) Indocement (INTP IJ): Indo’s largest cement producer by capacity, lowest cost producer, the only one to sell carbon credits.
(5) Inco Indonesia (INCO IJ): Asia’s largest nickel producer, debt free, and one of the lowest cost nickel producers globally.
(6) Indo Tambang (ITMG IJ): Indo’s 4th largest coal miner, parent company Banpu has built a reputation as a reliable supplier in energy.