Market udpate : Japan's impact - Japanese jitter - Bahana Sekuritas

Numbers related to Japan suggest adverse impact on Indonesia
The paralysis affecting parts of Japan will have some adverse impact on Indonesia as well as Indonesian equity in our view. We expect investment from Japan into Indonesia to decline. Additionally, there will be delays in shipping schedules for Japan’s exports and imports given infrastructure damage, including ports. To assess the severity of this situation, it is important to observe the numbers related to Japan:

§ 9 = The revised up magnitude of the quake, the biggest ever for Japan

§ 13 = Percent of Indonesia’s non-oil/gas exports to Japan (exhibit 1), equivalent to USD16.5b, the biggest market for Indonesia’s exports. Among the top items exported are iron and ashes (exhibit 2).

§ 15 = Percent of Indonesia’s overall imports from Japan, second largest importer of non-oil and gas goods after China, with nearly USD17b in total 2010 imported products (exhibit 3). Imports of machinery and vehicles (exhibit 4) are likely to fall.

§ 1,700 = Number of factories closed down

§ 1,800 = Houses destroyed in Miyagi

§ 2,400 = Houses wiped out by the Tsunami

§ 11, 700 = Missing and dead

§ 350,028 = Number of people evacuated

Mining/coal sectors most exposed to Japan
Based on our coverage of Indonesian stocks, the mining/coal sectors have the largest exposure to Japan with ANTM exporting 40% of its nickel ore to Japan (exhibit 6) while on the coal front, BUMI exports 21% of its sales to Japan, followed by ITMG (20%), see exhibit 5 for details. While Japanese plants being shut down means less coal usage, it is possible that disruptions in Japan’s nuclear power could result in greater coal imports. However, both ASII and UNTR could be adversely impacted by delays in their supplies coming out of Japan. Based on our sensitivity analysis, ASII’s net profit will fall by 1.3% with every 1% shortfall in top line while the impact on UNTR is slightly less at 1% (exhibit 7). Our study shows that the metal sector is the most sensitive to decline in sales, led by TINS, which will see 1.8% fall in net profit with every 1% decline in top line.

Sector to benefit: Airlines
The airline sector is likely to benefit from more flights and higher ticketing to and from Japan as tourists cut short their visits. While we may see a rise in exports for products such as cement and steel needed for reconstruction, these will be minimal as steel could be supplied by Korea and cement by China. Imports will depend on how quickly electricity supply in Japan can be restored, minimizing impact on Indonesian imports.