Seven out of eight names in our portfolio delivered double-digit returns for the month of Nov 18. This compares with the JCI’s 3.8% return during the same month. Big-cap names with sizeable upside are GGRM and BBNI. Other big caps such as ASII, BBRI and BMRI now have single-digit upside, but we keep them in the portfolio as they will be beneficiaries if the market appreciates. Other smaller caps with sizeable upside are AKRA and TOWR

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WHAT’S NEW
Double-digit returns in Nov 18. The JCI rose 3.8% in US$ terms during Nov 18. Most of our picks (seven out of eight) delivered double-digit returns – AKRA: 18.6%, ASII: 14.2%, BBNI 22%, BBRI 20.8%, BMRI 14%, GGRM 19.3% and TOWR 14.4%. These returns compare with the JCI’s 3.8% return in Nov 18. Only LSIP experienced a 6.5% decline in Nov 18. In summary, Nov 18 has been a great month for our portfolio.

Expected to ride the wave of the rising market; keeping big-cap picks. Some of our big-cap names are now trading at average historical PE and P/B. They have single-digit upside to our target prices, which are usually pegged at the historical average.

At this point, we have decided not to remove them from our portfolio as we think there is more room for the valuation to rerate to +1SD before the valuations are stretched. The re-rating will be caused by: a) foreign investors’ return to Indonesia, and b) the window dressing effect in Dec 18.

Investors can add positions on undervalued smaller caps. Investors can add positions on mid- and small-cap names such as AKRA and TOWR. Large caps with sizeable upside are BBNI and GGRM.

ACTION
No change in our portfolio. At this point, we have decided not to change our portfolio

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