Mirae Company Update FY23 AKRA 1 Apr 2024 Maintain Trading Buy Higher

Equity Research April 1, 2024
Mirae Asset Sekuritas Indonesia

Robertus Hardy robertus.hardy@miraeasset.co.id
AKRA IJ · Energy – Oil & Gas Storage & Distribution
AKR Corporindo
The beneficiary of the recent surge in global fuel prices
(Maintain) Target price Upside Current price (3/28/24)
Trading Buy IDR2,000 ▲ 16.3% IDR1,720
JCI Index 7,289 Market cap (IDRbn) 34,526 Shares outstanding (mn) 20.1 Free Float (%) 38.2
Report summary
Attractive entry point following the recent share price decline

AKRA's share price fell by more than 5% after releasing its FY23 financial report. Despite a 16% YoY increase in consolidated net
profit, there is concern about the delayed revenue recognition from the sale of 67ha of land to Hebang, even though the CSPA
was signed in August. Management also indicates that this sale may only be recognized as revenue after 1Q24. However, since
our initiation report publication in May 2023, AKRA's share price has soared by 28%. Additionally, it has increased by 5% since our
latest update in January 2024. If paired with dividends during the period, the overall returns reach 33% since our initiation. We
attribute this lucrative return to its solid performance, particularly due to its robust industrial estate sales achievement, which
managed to offset a declining contribution from its fuel and chemical distribution business due to the high base effect during
the commodity boom in 2021 and 2022.
The beneficiary of the recent surge in global fuel prices: Maintaining a Trading Buy recommendation
However, going forward, we view AKRA as the beneficiary of the recent spike in fuel oil prices, therefore, we maintain a positive
outlook for this business segment. In addition, we see the potential increase in fuel and chemical distribution volume, particularly
from the mining and smelting industries, following higher production level guidance from several of the country's largest mining
companies. Therefore, we have decided to maintain AKRA with a Trading Buy recommendation at a higher TP of IDR2,000.
Key data
Price performance Earnings and valuation metrics

(D-1yr=100)
JCI AKRA (FY Dec. 31) 2021 2022 2023 2024F 2025F
120
Revenue (IDRbn) 25,707 47,540 42,087 47,168 49,845
100 Gross profit (IDRbn) 2,293 4,252 4,473 5,314 5,728
Op. profit (IDRbn) 1,455 3,123 3,499 4,211 4,551
80
Net profit (IDRbn) 1,112 2,403 2,780 3,356 3,622
60
4/23 6/23 8/23 10/23 12/23 2/24 4/24 EPS (IDR) 56.3 121.8 140.9 170.0 183.5
BPS (IDR) 466 546 561 605 638
P/E (x) 30.5 14.1 12.2 10.1 9.4
(%) 1M 6M 12M P/B (x) 3.7 3.1 3.1 2.8 2.7
Absolute 3.9 11.3 6.5 ROE (%) 11.9 21.9 24.7 27.6 28.3
Relative 3.9 6.3 -0.1 Notes: data as of March 28, 2024 closing
Source: Company data, Mirae Asset Sekuritas Indonesia Research estimates
Analysts who prepared this report are registered as research analysts in Indonesia but not in any other jurisdiction, including the US.
PLEASE SEE ANALYST CERTIFICATIONS AND IMPORTANT DISCLOSURES AND DISCLAIMERS IN APPENDIX 1 AT THE END OF THE REPORT.
AKR Corporindo April 1, 2024
C O N T E N T S
AKR Corporindo 1
Investment Thesis 3
An Attractive Entry Point Following the Recent Share Price Decline Due to Delayed Revenue
Recognition from a Sizeable Land Sale 3
Beneficiary of the Recent Fuel Price Surge 4
An integral asset to the development of the country’s energy and downstream base metal i
ndustries 5
Potentially recording another significant jump in earnings from the fuel price surge and rob
ust land sales: Trading Buy for AKRA 6
Our takeaways from the recent financial performances and corporate actions 7
Strong performance in the industrial estate segment managed to boost consolidat
ed figures 7
Disbursement of the second interim dividend and potential lucrative final dividend
following solid performance 7
Figure of recent financial performance summary 8
Valuation and recommendation 9

Maintaining with a Trading Buy recommendation 9
Potentially recording another significant jump in earnings from the fuel price surg
e and robust land sales 9
Peers’ comparison 10
Company at a glance: PT AKR Corporindo Tbk 11

An integral asset to the development of the country’s energy and downstream base metal i
ndustries 11
Fuel and chemical distribution for industrial use as its primary business 11
Fuel distribution for the retail mass market 11
Industrial estate management 12
Some possible future expansions that can potentially add new revenue streams 12
ESG and Sharia compliance 13
A brief profile of several of JIIPE's latest anchor tenants 14
Fuel pricing formula 15
Expansion to LNG business 15
Industry at a glance: Fuel & Chemical Distribution, and Industrial Estate with SEZ status 16
INVESTMENT THESIS 16
Fuel and chemical distribution to the coal mining and base metal downstream industries16
Energy demand potential growth and the rapid development of the base metal do
wnstream industry are anticipated to favor companies involved in providing the ne
cessary fuel and chemicals 16
Maintain with an Overweight rating 17

Industrial Estates with Special Economic Zone (SEZ) Status 18
SEZs are expected to accelerate the country's industrialization due to their appeali
ng schemes for investors and various industry players 18
Mirae Asset Sekuritas Indonesia Research 2

Investment Thesis
An Attractive Entry Point Following the Recent Share Price Decline Due
to Delayed Revenue Recognition from a Sizeable Land Sale
AKRA's share price fell by more than 5% after releasing its FY23 financial report. Despite
a 16% YoY increase in consolidated net profit, there is concern about the delayed
revenue recognition from the sale of 67ha of land to Hebang, even though the CSPA was
signed in August. Management also indicates that this sale may only be recognized as
revenue after 1Q24.
• However, in 4Q23, the company managed to record sales of a similar
magnitude, totaling 61.3ha, to another party. This time, it involved a company
primarily engaged in manufacturing equipment and infrastructure for
renewable energy generation, originating from China but based in Hong Kong.
Therefore, cumulatively in FY23, AKRA's industrial land business, which contributed 22%
to its consolidated pre-tax profit, successfully sold up to 91ha of land to three companies
primarily involved in downstream base metal, petrochemical, and renewable energy
industries.
• This figure exceeded the previous target of 75ha. Currently, the company also
claims to have received interest from multiple companies reaching 665ha,
which are still in progress and expected to be recognized as revenue in the next
1-3 years. This group of clients, which are mostly from the heavy industries
category, are expected to contribute to building a value-added ecosystem in the
company's Java Integrated Industrial and Ports Estate (JIIPE) area.
The company claims that utility contributions will begin to occur significantly in 2H24,
with Freeport expected to operate in May/June 2024, followed by Hailiang and Xinyi
Glass in 2H24. The power requirements from these companies are estimated to exceed
250MW.
We see that the recent share price decline provides an attractive entry point for investors
who focus more on long-term prospects and pay less attention to quarter-on-quarter
performance dynamics. This is because, apart from already receiving 665ha of inquiries
that have the potential to be recognized as revenue in the next 1-3 years, the company
aims to sell up to 130ha of industrial land throughout this year. This figure is 43% higher
YoY.
Figure 1. Some notable land sales and prospects
Source: Company data, Mirae Asset Sekuritas Indonesia Research

Figure 2. Several anchor tenants in AKRA’s JIIPE project which are expected to be operational
in 2024 with total of ~280MW electricity demand
Beneficiary of the Recent Fuel Price Surge

AKRA's fuel and chemical distribution business segment, which contributed 78% to its
consolidated profit before tax in FY23, has expanded its fuel tank terminal to the eastern
part of the country to support the rapid development of the base metal downstream
industry in that area.
We also see that there is plenty of room for growth in the retail fuel distribution business
in Indonesia, considering there are only 8,000 fuel pump stations compared to 26,000
in Thailand and 10,800 in the Philippines. Therefore, there are only 29 fuel pump stations
per every 1 million population in Indonesia, compared to 362 in Thailand and 92 in the
Philippines. Thus, AKRA plans to open 40-50 new BP-AKR stations every year, aiming to
reach 150 outlets by 2025 from the current 46 outlets as of December 2023.
We view AKRA as the beneficiary of the recent spike in fuel oil prices, therefore, we
maintain a positive outlook for this business segment. In addition, we see the potential
increase in fuel and chemical distribution volume, particularly from the mining and
smelting industries, following higher production level guidance from several of the
country's largest mining companies.
• The fuel oil benchmark price surged 11% Ytd. Moreover, the coal production
volume of Pamapersada Nusantara (Pama), a subsidiary of UNTR and one of the
country's largest coal mining contractors, soared by 19% YoY during 2M24.
Figure 3. AKRA’s fuel distribution customer profile Figure 4. AKRA’s chemical distribution customer profile
Plantation; 2% Pulp & paper; 5%
Retail;
6%
General
industry; General
11% industries; 19% Rayon & textile;
26%
Coal mining; 49%
Non-coal mining;
14%
Nickel; 24% Alumina; 26%
Transportatio
n & logistics
(incl. trader);
18%
Source: Mirae Asset Sekuritas Indonesia Research, Company data Source: Mirae Asset Sekuritas Indonesia Research, Company data

Figure 5. Number of fuel pump stations in several neighboring Figure 6. The recent 11% Ytd surge of fuel oil prices in the
countries global futures market
Country Number of fuel Population (mn) Number of fuel

pump stations pump station per
1mn population
Indonesia 8,000 278 29
The Philippines 10,800 117 92
Thailand 26,000 72 362
Source: Mirae Asset Sekuritas Indonesia Research, Company data Source: Mirae Asset Sekuritas Indonesia Research, Tradingview market data
An integral asset to the development of the country’s energy and

downstream base metal industries
PT AKR Corporindo Tbk (AKRA) is a holding company with more than 18 subsidiaries
primarily involved in the logistics business, specifically in trading and distributing fuel
and basic chemicals that are essential to the operational cycle of the mining industry
and the downstream industry of base metals, respectively.
It operates fuel and chemical storage facilities in 17 sea ports, river ports, and main hub
terminals across the country with a capacity of over 820k KL. Additionally, AKRA has 250
units of chemical and petroleum tankers, 14 ships, 50,000sqm of bulk warehouse
capacity, and 160 retail fuel station under the brand AKR and BP-AKR, respectively.
Together with PT Pelabuhan Indonesia III, AKRA is developing the Java Integrated
Industrial and Ports Estate (JIIPE) since 2013, which in 2021 successfully obtained Special
Economic Zone (SEZ) status. This project has become an integral part of the downstream
base metal and chemical industry development in the country, as it has become a
production base for Freeport, Hailiang, Xinyi, Hebang, and several other heavy industry
players who also have prospects to enter this area.
Despite the government's guidance to increase the share of renewable energy, we

foresee that energy demand will remain high in the future, necessitating the continued
use of fossil fuels, including coal, which accounted for 51% of Indonesia's energy mix in
2023. Moreover, heavy machinery used in coal mining operations heavily relies on
dependable fuel delivery.
We also observe that the increasing number of base metal smelters beginning
operations in the coming years will ensure sustained growth potential for distributors
of essential basic chemicals. Thus, we also see AKRA as the beneficiary of the potential
growth continuation of energy demand and the rapid development of the base metal
downstream industry.

Potentially recording another significant jump in earnings from the fuel

price surge and robust land sales: Trading Buy for AKRA
Since our initiation report publication in May 2023, AKRA's share price has soared by
28%. Additionally, it has increased by 5% since our latest update in January 2024. If
paired with dividends during the period, the overall returns reach 33% since our
initiation.
We attribute this lucrative return to its solid performance, particularly due to its
expansion to industrial estate business, which has helped offset a declining contribution
from its fuel and chemical distribution business. This decline was due to the high base
effect during the commodity boom in 2021 and 2022.
Following the anticipated operation of Freeport's copper smelter in the JIIPE SEZ this
year, several companies in the downstream industries of base metals, glass
manufacturing, and petrochemicals have purchased several pieces of land in the area.
AKRA has managed to surpass its previous target for marketing sales and is currently
receiving a significant number of inquiries, which are expected to be converted into
marketing sales in the near future.
Therefore, due to its Special Economic Zone (SEZ) status and integration with a deep
seaport, which makes it attractive to several heavy industry players, we expect the
company to continue selling a higher volume of land in the future.
Thus, we have decided to maintain AKRA with a Trading Buy recommendation at a higher
TP of IDR2,000.
Table 1. Cumulative land sales (Ha)

Year Cumulative land sales volume
2024F 414
2023 404
2022 313
2021 268
2020 172
2019 163
2018 52
2017 52
2016 24
Source: Mirae Asset Sekuritas Indonesia, Company data
Figure 7. AKRA is being traded near its -2SD from its average P/E in the past 10 years
(x) P/E Average +1SD +2SD -1SD -2SD

35
30
25
20
15
10
5
0
1/14 1/15 1/16 1/17 1/18 1/19 1/20 1/21 1/22 1/23 1/24
Source: Mirae Asset Sekuritas Indonesia Research, IDX & Bloomberg market data

Our takeaways from the recent financial performances and

corporate actions
Strong performance in the industrial estate segment managed to boost

consolidated figures
4Q23 profit before tax in AKRA's core business of fuel and chemical distribution, which
contributed 64% to its consolidated figure, grew by 8% QoQ to IDR925bn following a 9%
QoQ increase in revenue to IDR10.9tr.
• This growth is a result of higher distribution volume, driven by several miners

seeking economies of scale, especially considering the weakening of several
mineral and energy commodity prices at the end of the year.
• Looking ahead, with the recent 11% Ytd increase in fuel oil futures prices and
the guidance of potentially higher production levels from several of the
country's largest mining companies, we expect this segment to record a higher
figure in 1Q23.
4Q23 profit before tax in AKRA’s industrial estate business segment soared by 264%
QoQ to IDR509bn, following a 390% QoQ revenue jump to IDR1.4tr. This increase was
primarily due to significant land sales to a company from Hong Kong that is mainly
involved in the manufacturing of renewable energy generation equipment and
infrastructure.
Cumulatively in FY23, AKRA's consolidated net profit of IDR2.8tr is 16% YoY higher
despite an 11% YoY decrease in Revenue to IDR42.1tr due to a relatively high-base
achievement in FY22. This net profit achievement reflects 100% of our previous
forecasts, indicating alignment.
Recently, the company provided guidance indicating that its net profit growth potential
for FY24 could reach 12-15% YoY. Therefore, AKRA's net profit in FY24 is likely to reach
between IDR3.1tr to IDR3.2tr. However, our projection is ~5% higher, between IDR3.3tr
to IDR3.4tr.
Since FY19, AKRA's revenue and net profit managed to surge 23% and 74% CAGR, each,
to IDR42.1tr and IDR2.8tr, respectively, in FY23. Besides being supported by the
increasing energy demand for the mining and smelting industries, the company's
decision to expand into the industrial estate management business appears to have
yielded satisfactory results, with a continually increasing contribution to the
consolidated performance.
Disbursement of the second interim dividend and potential lucrative final

dividend following solid performance
Thanks to its solid performance, AKRA managed to disburse a second interim dividend
in November-2023, at an amount of IDR25 per share. This comes in addition to its first
interim dividend disbursed in August-2023, which was IDR50 per share.
Given its abundant cash balance, which reached IDR6.5tr as of December 2023, we
anticipate the company announcing a potential final dividend of between IDR493bn and
IDR987bn in its AGMS scheduled for 29-April 2024. This would be equivalent to IDR25 to
IDR50 per share, reflecting a potential yield of 1.5% to 2.9% from its current price.

Figure of recent financial performance summary
Figure 8. AKRA’s recent financial performances: by segment and consolidated
Figure 9. Revenue and NP margin trend
Revenue (IDRbn, L) Net profit margin (%, R)
70,000 8
60,000 Commodity 7
boom
50,000
6
40,000
Pandemic 5
30,000
4
20,000
10,000 3
- 2
2019 2020 2021 2022 2023 2024F 2025F 2026F 2027F 2028F
Source: Company data, Mirae Asset Sekuritas Indonesia Research estimate

Valuation and recommendation
Maintaining with a Trading Buy recommendation

Potentially recording another significant jump in earnings from the fuel price
surge and robust land sales
Since our initiation report publication in May 2023, AKRA's share price has soared by
28%. Additionally, it has increased by 5% since our latest update in January 2024. If
paired with dividends during the period, the overall returns reach 33% since our
initiation.
We attribute this lucrative return to its solid performance, particularly due to its
expansion to industrial estate business, which has helped offset a declining contribution
from its fuel and chemical distribution business. This decline was due to the high base
effect during the commodity boom in 2021 and 2022.
However, going forward, we view AKRA as the beneficiary of the recent spike in fuel oil
prices, therefore, we maintain a positive outlook for this business segment. In addition,
we see the potential increase in fuel and chemical distribution volume, particularly from
the mining and smelting industries, following higher production level guidance from
several of the country's largest mining companies.
Following the anticipated operation of Freeport's copper smelter in the JIIPE SEZ this
year, several companies in the downstream industries of base metals, glass
manufacturing, and chemicals have purchased several pieces of land in the area. AKRA
has managed to surpass its previous target for marketing sales and is currently receiving
a significant number of inquiries, which are expected to be converted into marketing
sales in the near future.
Therefore, due to its Special Economic Zone (SEZ) status and integration with a deep
seaport, which makes it attractive to several heavy industry players, we expect the
company to continue selling a higher volume of land in the future.
Thus, we have decided to maintain AKRA with a Trading Buy recommendation at a higher
TP of IDR2,000.
We value the company using the SOTP method
1) By applying a P/E multiple of 14x to its fuel and chemical distribution net
profit of IDR 2.5/2.7tr in 24F/25F, we arrive at a TP of IDR1,725/share.
2) We value the NAV of AKRA’s more than 800ha of available land for sales at
IDR18.5tr (USD 140-145 /sqm). Therefore, by applying a discount of 70%,
we arrive at a TP of IDR276/share.
3) Therefore, with a total TP of IDR2,002/share, we recommend a Trading Buy

for AKRA. Our rounded TP of IDR2,000 implies 11.8/10.9x of its 24F/25F P/E
ratio, with a potential 27.6/28.3% ROE.
Aside being traded at a lower P/E valuation of only 10x compared to the median of IDX
ENERGY companies with similar net profit margins of 12x, AKRA also deserves a higher
valuation due to its superior ROE, in our view. Its ROE of 27.6% is significantly higher
compared to IDX ENERGY median of only 9.2%.

Figure 10. AKRA is being traded near its -2SD from its average P/E in the past 10 years
(x) P/E Average +1SD +2SD -1SD -2SD

35
30
25
20
15
10
5
0
1/14 1/15 1/16 1/17 1/18 1/19 1/20 1/21 1/22 1/23 1/24
Peers’ comparison
Aside being traded at a lower P/E valuation compared to the median of IDX ENERGY
companies with similar net profit margins, AKRA also deserves a higher valuation due to
its superior ROE, in our view.
Table 2. IDX Energy peers with similar NP margin

Ticker Mkt cap (IDRbn) P/E (x) NP margin (%) ROE (%)
PGAS 32,970 7.7 7.6 10.3
INDY 7,790 4.0 4.1 10.3
AKRA 34,526 10.1 7.1 27.6
TCPI 36,380 200.6 9.9 9.2
SEMA 180 13.8 5.9 8.9
ARTI 23 12.0 1.5 (1.2)
WINS 2,200 21.4 9.2 5.0
Average 38.5 6.5 10.0
Median 12.0 7.1 9.2
Data as of 28-Mar-2024 closing
Figure 11. Fuel storage facility Figure 12. JIIPE’s masterplan

Company at a glance: PT AKR Corporindo Tbk
An integral asset to the development of the country’s energy and

downstream base metal industries
Fuel and chemical distribution for industrial use as its primary business
PT AKR Corporindo Tbk (AKRA) is a holding company with more than 18 subsidiaries
primarily involved in the logistics business, specifically in trading and distributing fuel
and basic chemicals that are essential to the operational cycle of the mining industry
and the downstream industry of base metals, respectively.
• It operates fuel and chemical storage facilities in 17 sea ports, river ports, and
main hub terminals across the country with a capacity of over 820k KL.
• Additionally, AKRA has 250 units of chemical and petroleum tankers, 14 ships,
50,000sqm of bulk warehouse capacity, and 160 retail fuel station under the
brand AKR and BP-AKR, respectively.
In FY23, the trading and distribution of fuel and chemical products contributed 78% of
AKRA’s consolidated profit before tax, followed by the industrial estate segment (22%).
In FY23, total fuel sales to the coal and non-coal mining industries accounted for 49%
and 14% of the company's consolidated figure, respectively. This was followed by
transportation and logistics (18%), general industry (11%), retail mass market (6%), and
the plantation industry (2%).
• As for chemical sales, 26% and 24% were to the alumina and nickel smelting
industries, respectively, followed by rayon and textiles (26%), general industries
(19%), and pulp & paper (5%).
Fuel distribution for the retail mass market

AKRA aims to open 50 new fuel stations this year for the retail mass market under the
joint venture brand with British Petroleum (BP), in addition to its existing 120 AKR-
branded stations and 50 BP-AKR-branded stations as of December 2023.
• The scalability of its fuel station expansion is expected to accelerate following
the adoption of a franchise system, in addition to its existing COCO (company-
owned, company-operated) system.
• The company's goal is to operate a total of 350 outlets by 2028, which is faster
than its previous target of by 2030.
• Contribution of its retail fuel sales is expected to increase to 15% by 2028F, from
only 6% in 2023.
Figure 13. AKRA’s fuel distribution customer profile Figure 14. AKRA’s chemical distribution customer profile
Plantation; 2% Pulp & paper; 5%
Retail;
6%
General
industry; General
11% industries; 19% Rayon & textile;
26%
Coal mining; 49%
Non-coal mining;
14%
Nickel; 24% Alumina; 26%
Transportatio
n & logistics
(incl. trader);
18%

Industrial estate management

In 2015, AKRA, together with Pelindo III (the state port operator), established PT Berkah
Kawasan Manyar Sejahtera (BKMS) with 60% ownership. In 2016, it commenced the
operations of the Java Integrated Industrial and Ports Estate (JIIPE) in Gresik (East Java),
which was officially recognized as a Special Economic Zone (SEZ) by the government in
2021. JIIPE spans a total area of 3,000ha.
• In October 2021, President Joko Widodo officiated the groundbreaking
ceremony for PT Freeport Indonesia’s (PTFI) new copper smelter in JIIPE. The
project spans a total land area of 105ha, with a long-term lease agreement and
an option to purchase. The total investment for the project is USD3bn
(equivalent to IDR42tn based on exchange rate at that moment), and it has an
annual processing capacity of 1.7mn MT of copper concentrate and 35-54 MT of
gold.
• Due to the potential abundant supply of copper concentrate, therefore, in
March 2023, BKMS managed to sell 19.6ha of land to Zheijang Hailiang Co., Ltd
(Hailiang), a prominent manufacturer of high-end copper products which will
be the off taker of PTFI’s products.
• Copper Slag is one of the by-products of the copper smelting process. It
contains various oxides, primarily silica (SiO2), alumina (Al2O3), and iron oxide
(FeO, Fe2O3), which are also key components in glass manufacturing.
Therefore, In August 2022, BKMS managed to sell 37.5ha of land to PT Xinyi
Glass Indonesia, a subsidiary of Xinyi Glass Holdings Ltd, a leading
manufacturer of various glass products.
• Sodium Carbonate (soda ash) is one of the important base chemical used in
glass manufacturing, therefore, in August 2023, BKMS managed to sell 67ha of
land to Sichuan Hebang Biotechnology Co. (Hebang) to build a Petrochemical
plant. According to Hebang's official release, the plant will have an annual
capacity of 600,000 tons of Sodium Carbonate and Ammonium Chloride, as well
as 200,000 tons of Glyphosate.
All land purchase and leasing agreements are accompanied by agreements to subscribe
to BKMS’ utilities, including electricity, water, natural gas, sewage treatment,
telecommunication, internet facilities, and the usage of the deep-sea port facility.
As of 2023, JIIPE has successfully sold and leased 404 hectares of industrial land to more
than 20 registered tenants.
Among other prominent tenants that are already operating in 2023 are: PT
Unichemcandi Indonesia, PT Nippon Indosari Corporindo, PT Fertilizer Inti Technology,
PT Clariant Adsorbent Indonesia, PT Cahaya Maju Lestari, Pangansari Utama Food
Distribution, Adhimix, Waskita Beton Precast, Sumberbaja Sejati, Tirtamas Warehouse,
Bank Indonesia’s main cash depot for the eastern part of Indonesia, etc.
Some possible future expansions that can potentially add new revenue streams
• Due to its partnership with BP which is also actively developing EV battery charging
station and swap station infrastructures in its global operation, we believe that the
company is adaptive to the possible shift of energy usage from petroleum based to
battery based.
• AKRA is also planning to enter the LNG distribution business in 2027. In December
2023, the company entered into a Joint Development Agreement with BP Gas &
Power Investments Ltd (BP) to jointly develop an LNG import project involving a
regasification terminal in AKRA's JIIPE area. This project is designed with the aim of
providing a reliable gas supply for JIIPE's tenants, with the potential for excess
capacity to be used to supply the existing pipelined gas network in East Java. The
project is expected to come online in 2027, coinciding with the start-up dates of
many major gas-consuming projects in JIIPE.

ESG and Sharia compliance

Regarding its ESG and sharia compliance, the company is currently a member of four
local ESG indexes, which are: 1) IDX ESG Star Listed Company, 2) IDX ESG Leader Index,
3) ESG Sector Leaders IDX KEHATI and 4) ESG Quality 45 IDX KEHATI, and three local
sharia indexes, which are: 1) ISS, 2) JII, 3) JII70, and 4) IDX Sharia Growth
In February 2022, the company installed 764 solar panels procured by PT Xurya Daya
Indonesia (an investee of SRTG Tbk) on the rooftop of its utilities building in JIIPE.
According to the company’s statement, it is expected to save 483,917 kWh and reduce
CO2 production by 451,978 kg annually, which equivalent to planting 5,671 trees for 10
years and using 126,236 liters of gasoline every year.
Figure 15. Rooftop solar panel installation at JIIPE’s utilities Figure 16. One of the company’s vessel activities
building
Source: Company data, Mirae Asset Sekuritas Indonesia Research Source: Company data, Mirae Asset Sekuritas Indonesia Research
Figure 17. The traffic in one of its AKR-BP fuel stations Figure 18. BP’s EV charging station in cooperation with DiDi in
China
Source: Company data, Mirae Asset Sekuritas Indonesia Research Source: BP, Mirae Asset Sekuritas Indonesia Research

A brief profile of several of JIIPE's latest anchor tenants

Hailiang’s Copper Foil Factory
On March 30, 2023, BKMS sold 19.6ha of land to PT Hailiang Nova Material (Hailiang) to
establish a Copper Foil Factory. Simultaneously, Hailiang also signed an agreement with
BKMS for cooperation in providing various utilities, including electricity, water, natural
gas, waste processing, telecommunications, and internet facilities, as well as other
infrastructure and facilities to support the development and operation of Hailiang's
Copper Processing facility in the JIIPE SEZ.
• Zhejiang Hailiang Co Ltd (listed on the Chinese stock exchange) is mainly engaged
in the manufacturing of high-grade copper products, among others are copper
pipes, rods, pipe connectors, new conductor materials, and copper processing
equipment, etc. Currently, Hailiang has become one of the world's largest and most
competitive copper processors, as well as the largest exporter of copper pipes and
connectors in China, and a benchmark in copper processing. Hailiang has a network
and long-term cooperation with over 800 clients in 188 countries and regions
worldwide, operating 22 production facilities in the United States, Europe,
Southeast Asia, and China.
Hebang's Chemical Plant
On August 31, 2023, AKRA announced that Sichuan Hebang Biotechnology Co. (Hebang)
has signed a Conditional Sales and Purchase Agreement (CSPA) with BKMS for the
purchase of a 67ha land to establish a Petrochemical plant in the JIIPE SEZ. This sale is
expected to be recorded as revenue for AKRA this year, contributing 51% of the run rate
towards its marketing sales target of 130ha for this year.
• Hebang, a publicly listed Chinese company that integrates chemical, photovoltaic,

and mineral products, revealed plans to invest USD800mn in the project to build a
Petrochemical plant primarily to produce Sodium Carbonate (soda ash), Ammonium
Chloride, and Glyphosate, among other products. Simultaneously, Hebang signed a
Term Sheet with AKRA to establish a joint venture (JV) that will serve as the
investment, construction, and operation entity for the project in Indonesia, with a
proposed ownership of 90% of the shares by Hebang (or its affiliates or
subsidiaries), and AKRA (or its affiliates or subsidiaries) holding 10% of the shares in
the JV.
• According to Hebang's official release, the plant will have an annual capacity of
600,000 tons of Sodium Carbonate and Ammonium Chloride, as well as 200,000 tons
of Glyphosate. Ammonium Chloride is an agricultural fertilizer that provides
nitrogen for plant growth and is particularly suitable for palm trees. Glyphosate is
the most widely used herbicide in the world.
Renewable Energy Equipment Manufacturer
In December 2023, AKRA announced that BKMS successfully sold 61.3ha of land to a
company originally from China and registered in Hong Kong, primarily engaged in the
manufacturing of renewable energy equipment.
• We suspect that this company is mainly involved in the production of solar panels,
considering the potential abundant supply of glass from Xinyi, copper from Hailiang,
and necessary chemicals from Hebang.

Fuel pricing formula

AKRA is implementing a pricing formula that successfully passes through the volatility
of global fuel prices to its respective clients.
• The company does not take any position or implement sophisticated

commodity hedging facilities. This is reflected in the relatively stable profit
before tax margin in its trading and distribution segment, with a standard
deviation of only 1.1% over several past fiscal periods.
• Therefore, the outlook of its earnings will depend more on the expected growth
of distribution volume. As for its chemical product distribution business, AKRA's
earnings are based on a pre-agreed percentage of commission.
Expansion to LNG business

Natural gas could gradually replace coal and petroleum (diesel) in generating electricity
in the future, considering its lower emissions. Therefore, we consider AKRA's plan to
enter the LNG distribution business in 2027 as a strategic move to further leverage its
partnership with BP.
• In addition to its Tangguh block operation in West Papua, BP has also signed
Production Sharing Contracts (PSC) for the Agung I and Agung II blocks, located
in the northern sea of Bali and Lombok, respectively, which are not far away
from AKRA's main operational area in East Java.
Figure 19. Profit before tax margin has been steady with only 1.1% of standard deviation
PBT mar gin (%, L) Average PBT margin (%, R)

10 10
9 9
8 8
7 7
6 6
5 5
4 4
3 3
2 2
1 1
0 0
2020 2021 2022 1Q23 2Q23 3Q23 4Q23
Figure 20. The location of BP’s Agung I and Agung II gas blocks which are close to East Java
Source: BP, Mirae Asset Sekuritas Indonesia Research

Industry at a glance: Fuel & Chemical Distribution, and Industrial

Estate with SEZ status
INVESTMENT THESIS
Fuel and chemical distribution to the coal mining and base metal
downstream industries
Energy demand potential growth and the rapid development of the base metal
downstream industry are anticipated to favor companies involved in providing
the necessary fuel and chemicals
Companies engaged in the fuel distribution business in Indonesia typically have their
largest customer base in the coal mining industry, followed by other mining industries
(including nickel, bauxite, tin, gold, copper, etc.), transportation and logistics, general
industry, retail (mass market), and plantations.
• Coal and other mineral mining operations heavily rely on high-quality fuel, which
must be delivered punctually to ensure the continuous functioning of heavy
machinery in production. Over the past five years, the production volume of
Indonesia's coal mining industry has managed to grow by an average of 5% per year,
reaching over 600mn tons in the FY21, FY22, and FY23 periods, respectively. In
addition to China and India, Indonesia is one of the top five coal producers globally,
with reserves and resources amounting to over 34bn tons and 99bn tons,
respectively, as of 2022.
• Looking ahead, although the government has a vision to increase the mix of
renewable energy, we foresee that the demand for coal will remain high in the near
term. This is evident considering that approximately 37,000 MW of the 73,000 MW of
installed electricity generation capacity in Indonesia in 2022 is still contributed by
coal. This figure represents a 51% contribution.
• Between 55-60% of Indonesia's coal production is sold to foreign markets, primarily

China, India, and Japan. Given the continued strictness of mining operation permits
in China due to past workplace accidents, the dry season reducing hydro power
capacity in India, and earthquakes that have threatened the continuity of nuclear
power plants in Japan, we see that the fuel distribution business serving the coal
mining industry has the potential to continue benefiting from the still high level of
production volume.
As of 2023, Indonesia has only 8,000 fuel pump stations compared to 26,000 in Thailand
and 10,800 in the Philippines. Therefore, there are only 29 fuel pump stations per every
1 million population in Indonesia, compared to 362 in Thailand and 92 in the Philippines.
This provides more growth opportunities for players in the fuel distribution business
for the retail mass market, including Pertamina, AKR, BP-AKR, and Shell, especially
following the departure of Petronas and Total in recent years.

Companies engaged in the basic chemical distribution business in Indonesia typically

have their largest customer base in the alumina and nickel smelter industry, followed by
rayon and textiles, general industry, as well as pulp and paper.
• Following the implementation of the nickel ore export ban in January 2020, to
encourage the development of base metal downstream industry, the government
has also increased export tariffs or completely prohibited the export of other mineral
ores, including copper, bauxite, and tin.
• In the last three years up to 2023, more than 10 new nickel smelters have begun
commercial operations. Looking forward, up to 2030, there are plans for over 10
additional nickel smelters to commence their commercial operations.
• Our channel checks with some IDX-listed companies revealed that ANTM's annual
production volume of ferronickel has been steady at an average of 25.4k tons from
2019 to 2022, and its alumina production volume managed to surge 15% CAGR to
151.6k tons in 2022 from only 104.5k tons in 2019. Meanwhile, INCO’s annual
production volume of nickel matte reached an average of 67.2k tons from 2019 to
2022.
• Sulfuric Acid and Sodium Hydroxide are two basic chemicals that are crucial in the
smelting processes of nickel and alumina. Therefore, we see significant opportunities
for companies engaged in the distribution of basic chemicals to continue growing in
the long term.
Maintain with an Overweight rating

We maintain the Fuel and Chemical Distribution sector with an Overweight rating. We
observe that the still high energy demand, along with several base metal smelters
expected to commence operations, could provide sustainable growth opportunities for
companies engaged in the distribution of related fuels and chemicals.
Figure 21. Fuel distribution activity using AKRA’s tanker

Industrial Estates with Special Economic Zone (SEZ) Status

SEZs are expected to accelerate the country's industrialization due to their
appealing schemes for investors and various industry players
AKRA is a company under our coverage that has expanded into the industrial estate
management business. Therefore, we provide a brief outlook on this industry.
Indonesia is home to over 140 industrial estates, of which 20 have been designated as
Special Economic Zones (SEZs). In addition to an easier business licensing process, which
requires only a single point of contact, prospective tenants in these zones can also
benefit from various fiscal and non-fiscal advantages. These include tax incentives,
customs and duty benefits, land ownership, employment regulations, immigration
facilities, and simplified procedures for goods traffic.
Table 3. List of mineral ore export ban

Commodity Date of Export Ban
Nickel Jan-20
Bauxite Jan-23
Copper Jun-23
Tin TBA
Company data, Ministry of Energy and Mineral Resources, Mirae Asset Sekuritas Indonesia Research
Figure 22. Trajectory of caustic soda demand Figure 23. Trajectory of base chemical demand
(Th MT) Rayon Nickel (MT) Smelter General market

Alumnia Soap
Other + MSG + Textile Total 14,000,000
5,000
4,093 12,000,000
4,000 10,000,000
3,254 3,364
3,000 2,714 8,000,000

2,205
1,741 1,651 6,000,000
2,000 1,512 1,532 1,572
1,337
4,000,000
1,000
2,000,000
0 0
2015 2016 2017 2018 2019 2020 2021 2022 2023F 2024F 2025F 2022 2023F 2024F 2025F
Source: Company data, Mirae Asset Sekuritas Indonesia Research estimates Source: Company data, Mirae Asset Sekuritas Indonesia Research estimates
Figure 24. Location of several SEZs
Source: Mirae Asset Sekuritas Indonesia Research, KEK

Table 4. Projection of electricity demand and land requirement in JIIPE-SEZ

Industry Total foreseeable electricity (MW) Land requirement (ha)
PTFI 145 105
XYG 65 38
Base metal refinery 147 60
Copper manufacturer 70 80
EV battery 100 100
Lithium plant 67 47
Ferro nickel refinery 80 52
Solar panel glass 100 32
TOTAL 774 514
Sources: Company data, Mirae Asset Sekuritas Indonesia Research
Figure 25. Tax holidays and allowance for SEZ tenants Figure 26. Fiscal and non-fiscal incentives for SEZ tenants
Source: KEK, Mirae Asset Sekuritas Indonesia Research Source: KEK, Mirae Asset Sekuritas Indonesia Research

AKR Corporindo (AKRA IJ)
Income statement (summarized) Balance sheet (summarized)

(IDRbn) 12/21 12/22 12/23 12/24F (IDRbn) 12/21 12/22 12/23 12/24F
Revenue 25,707 47,540 42,087 47,168 Cash 2,600 4,338 6,536 6,232
Gross profit 2,293 4,252 4,473 5,314 Industrial land inventory 2,127 2,169 1,621 1,708
Income frm operations 1,455 3,087 3,561 4,280 Others 7,295 9,334 9,965 10,503
Operating profit 1,455 3,123 3,499 4,211 Total Current Assets 12,023 15,841 18,121 18,443
Profit before final tax 1,437 3,086 3,687 4,438 Property & equipment 2,566 2,587 3,026 3,190
Profit before income tax 1,395 3,024 3,668 4,414 Fixed assets&others 8,920 8,759 9,107 9,599
Profit after income tax 1,135 2,479 3,078 3,712 Total Non-current Assets 11,486 11,346 12,134 12,789
Net profit 1,112 2,403 2,780 3,356 Total Assets 23,509 27,188 30,255 31,232
Per share data (IDR) 12/21 12/22 12/23 12/24F Payables 7,767 9,239 9,519 9,614
EPS 55 120 139 167 Loans,lease&cntrct liabs 825 798 1,399 1,346
BPS 466 546 561 605 Others 715 1,243 1,615 1,631
Total Current Liabilities 9,307 11,280 12,533 12,591
Growth (%) 12/21 12/22 12/23 12/24F Loans,lease&cntrct liabs 2,684 2,524 3,474 3,321
Revenue 45.1 84.9 -11.5 12.1 Others 219 229 205 207
EBITDA 17.8 93.2 11.1 19.9 Total Non-current Liabilities 2,903 2,752 3,678 3,528
Income frm operations 15.7 112.2 15.3 20.2 Total Liabilities 12,210 14,033 16,212 16,119
Operating profit 21.1 114.6 12.0 20.4 Net debt (cash) 909 -1,016 -1,663 -1,565
Net profit 15.6 116.2 15.7 20.7
Capital stock 401 401 401 401
Additional paid-in capital 1,287 1,287 1,287 1,287
Margins (%) 12/21 12/22 12/23 12/24F Others 138 186 176 179
EBITDA 7.0 7.4 9.2 9.9 Retained earnings
Income frm operations 5.7 6.5 8.5 9.1 App 3 4 4 4
Operating profit 5.7 6.6 8.3 8.9 Unapp 7,515 9,090 9,394 10,274
Net profit 4.3 5.1 6.6 7.1 Net equity attributable to:
Owners 9,345 10,969 11,263 12,145
Cash Flows (IDRbn) 12/21 12/22 12/23 12/24F NC interest 1,954 2,186 2,780 2,968
Change in working capital 1,276 -107 1,171 -568 Total Equity 11,299 13,155 14,043 15,113
Net income 1,112 2,403 2,780 3,356 Total Liabilities & Equity 23,509 27,188 30,255 31,232
Net CF from Operation 2,387 2,296 3,951 2,788
Chg in nc assets -845 140 -787 -655 Financial Ratios 12/21 12/22 12/23 12/24F
Net CF from Investment -845 140 -787 -655 Current ratio (%) 129.2 140.4 144.6 146.5
Chg in nc liabs -122 -150 926 -150 Quick ratio (%) 50.8 57.7 65.1 63.1
Chg in Equity 155 280 584 191 Net debt (cash) to assets (%) 3.9 -3.7 -5.5 -5.0
Dividend -533 -829 -2,467 -2,467 Net debt (cash) to equity (%) 9.7 -9.3 -14.8 -12.9
Others 9 1 -9 -10 ROE (%) 11.9 21.9 24.7 27.6
Net CF from Financing -491 -698 -966 -2,436 ROA (%) 4.7 8.8 9.2 10.7
Net Cash Flows 1,051 1,737 2,198 -303 P/S ratio (x) 1.6 0.8 1.0 0.9
Cash beginning balance 1,549 2,600 4,338 6,536 P/E ratio (x) 30.5 14.1 12.2 10.1
Cash ending balance 2,600 4,338 6,536 6,232 P/B ratio (x) 3.7 3.1 3.1 2.8
Source: Company data, Mirae Asset Sekuritas Indonesia Research estimates

Appendix 1
Important disclosures and disclaimers

Two-year rating and TP history
Company Date Rating TP (IDR)
(IDR) AKRA Analyst's TP
AKR Corporindo (AKRA) 4/1/2024 Trading Buy 2,000
1/30/2024 Trading Buy 1,900 2,000
10/27/2023 Buy 1,780
9/14/2023 Buy 1,780 1,500
7/28/2023 Buy 1,780
5/22/2023 Buy 1,780 1,000
500
Apr-22 Apr-23 Apr-24
Stock ratings Sector ratings

Buy Expected 12-month performance: +20% or greater Overweight Expected to outperform the market over 12 months
Trading Buy Expected 12-month performance: +10% to +20% Neutral Expected to perform in line with the market over 12 months
Hold Expected 12-month performance: -10% to +10% Underweight Expected to underperform the market over 12 months
Sell Expected 12-month performance: -10% or worse
Rating and TP history: Share price (─), TP (▬), Not Rated (■), Buy (▲), Trading Buy (■), Hold (●), Sell (♦)
* Our investment rating is a guide to the expected return of the stock over the next 12 months.
* Outside of the official ratings of PT Mirae Asset Sekuritas Indonesia, analysts may call trading opportunities should technical or short-term material developments arise.
* The TP was determined by the research analyst through valuation methods discussed in this report, in part based on estimates of future earnings.
* TP achievement may be impeded by risks related to the subject securities and companies, as well as general market and economic conditions.
Disclosures
As of the publication date, PT Mirae Asset Sekuritas Indonesia (“MASID”) and/or its affiliates do not have any special interest in the subject company and do not own 1% or
more of the subject company's shares outstanding.
Analyst certification
The research analysts who prepared this report (the “Analysts”) are certified to the Indonesia Financial Services Authority and are subject to Indonesian
Capital Market regulations. They are neither registered as research analysts in any other jurisdiction nor subject to the laws or regulations thereof. Each
Analyst responsible for the preparation of this report certifies that (i) all views expressed in this report accurately reflect the personal views of the Analyst
about any and all of the issuers and securities named in this report; (ii) no part of the compensation of the Analyst was, is, or will be directly or indirectly
related to the specific recommendations or views contained in this report; and (iii) The report does not contain any material non-public information. Except
as otherwise specified herein, the Analysts have not received any compensation or any other benefits from the subject companies in the past 12 months and
have not been promised the same in connection with this report. Like all employees of MASID, the Analysts receive compensation that is determined by
overall firm profitability, which includes revenues from, among other business units, the institutional equities, investment banking, proprietary trading, and
etc. At the time of publication of this report, the Analysts do not know or have reason to know of any actual, material conflict of interest of the Analyst or
MASID except as otherwise stated herein.
Disclaimers
This report was prepared by MASID, a broker-dealer registered in the Republic of Indonesia and a member of the Indonesia Stock Exchange; on behalf of
MASID and its affiliated companies and is provided for information purposes only. Information and opinions contained herein have been compiled in good
faith and from sources believed to be reliable, but such information has not been independently verified and MASID (including but not limited to the Analyst,
respective employees who owns the expertise) makes no guarantee, representation or warranty, express or implied, as to the fairness, accuracy,
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Equity Research April 1, 2024

Mirae Asset Sekuritas Indonesia

AKRA IJ · Energy – Oil & Gas Storage & Distribution

(Maintain) Target price Upside Current price (3/28/24)

Trading Buy IDR2,000 ▲ 16.3% IDR1,720

Attractive entry point following the recent share price decline

Price performance Earnings and valuation metrics

Figure of recent financial performance summary 8

Valuation and recommendation 9

Company at a glance: PT AKR Corporindo Tbk 11

Fuel distribution for the retail mass market 11

Industrial estate management 12

ESG and Sharia compliance 13

A brief profile of several of JIIPE's latest anchor tenants 14

Fuel pricing formula 15

Expansion to LNG business 15

Maintain with an Overweight rating 17

Mirae Asset Sekuritas Indonesia Research 2

Figure 1. Some notable land sales and prospects

Source: Company data, Mirae Asset Sekuritas Indonesia Research

Mirae Asset Sekuritas Indonesia Research 3

Source: Company data, Mirae Asset Sekuritas Indonesia Research

Beneficiary of the Recent Fuel Price Surge

Plantation; 2% Pulp & paper; 5%

Mirae Asset Sekuritas Indonesia Research 4

Country Number of fuel Population (mn) Number of fuel

An integral asset to the development of the country’s energy and

Despite the government's guidance to increase the share of renewable energy, we

Mirae Asset Sekuritas Indonesia Research 5

Potentially recording another significant jump in earnings from the fuel

Table 1. Cumulative land sales (Ha)

(x) P/E Average +1SD +2SD -1SD -2SD

Mirae Asset Sekuritas Indonesia Research 6

Our takeaways from the recent financial performances and

Strong performance in the industrial estate segment managed to boost

• This growth is a result of higher distribution volume, driven by several miners

Disbursement of the second interim dividend and potential lucrative final

Mirae Asset Sekuritas Indonesia Research 7

Figure of recent financial performance summary

Figure 8. AKRA’s recent financial performances: by segment and consolidated

Source: Company data, Mirae Asset Sekuritas Indonesia Research

Figure 9. Revenue and NP margin trend

Revenue (IDRbn, L) Net profit margin (%, R)

Source: Company data, Mirae Asset Sekuritas Indonesia Research estimate

Mirae Asset Sekuritas Indonesia Research 8

Valuation and recommendation

Maintaining with a Trading Buy recommendation

We value the company using the SOTP method

3) Therefore, with a total TP of IDR2,002/share, we recommend a Trading Buy

Mirae Asset Sekuritas Indonesia Research 9

(x) P/E Average +1SD +2SD -1SD -2SD

Table 2. IDX Energy peers with similar NP margin

Figure 11. Fuel storage facility Figure 12. JIIPE’s masterplan

Mirae Asset Sekuritas Indonesia Research 10

Company at a glance: PT AKR Corporindo Tbk

An integral asset to the development of the country’s energy and

Fuel distribution for the retail mass market

Plantation; 2% Pulp & paper; 5%

Mirae Asset Sekuritas Indonesia Research 11