Securities company Trimegah Securities detected several positive internal 'breakthroughs' that will contribute to the optimization of the company's earnings in the future. After several years of net losses, Indosat Ooredoo finally posted net profit of IDR 428.1 billion (approx. USD $32.4 million) in the first half of 2016, improving from a net loss of IDR 733.8 billion posted in the same period one year earlier. This positive development was caused by the company's reduced US dollar-denominated debt (which fell from USD $1.16 billion to USD $227.5 million). Due to lower foreign denominated debt, the company's earnings are less prone to exchange rate volatility.

The company has also been aggressive in offering new products to the market. Given Indonesia's rising smartphone penetration and rising data traffic, new products have proved to be popular and therefore managed to support Indosat Ooredoo's earnings. The company has also been successful in expanding its 4G network to various regions in the Archipelago. The expanding 4G network is expected to give rise to a 53 percent (y/y) growth in data sales, followed by a 27 percent (y/y) growth in 2017. However, considering that the company has been eagerly offering promotion deals, it will not cause a significant rise in its profit margin on the short-term.

Trimegah Securities advises investors to invest in Indosat Ooredoo as it set the target price for the company's shares at IDR 7,900 a piece. On Tuesday (23/08) Indosat Ooredoo's shares plunged 1.60 percent to IDR 6,150 per share. However, so far this year its shares are still up 11.82 percent.

Stock Quote Indosat Ooredoo - ISAT:

Earlier in August, Indosat Ooredoo announced that it targets to raise IDR 3.46 trillion (approx. USD $262 million) from a bond issuance with the coupon rate set between 7.5 - 9.15 percent (initially the company planned to issue IDR 2 trillion worth of debt paper but due to high demand it raised the target). The issuance involves regular notes (worth IDR 3.17 trillion) and Islamic bonds (worth IDR 288 billion). Proceeds will be used to refinance existing rupiah debt at a number of creditors, including Bank Central Asia, BNP Paribas Indonesia, Sarana Multi Infrastruktur, and Bank CIMB Niaga. Fitch Ratings assigned the AAA rating to these bonds.

Future Projection Indosat Ooredoo's Financial Highlights:

       2014     2015     2016F     2017F     2018F
Operating Revenues    24,085    26,769    28,864    30,799    32,189
   10,033    11,473    12,376    12,950    13,328
Net Income (loss)
   (2,008)    (1,310)      689     1,164     1,522
P/E Ratio (x)      73.4       34      25.4

in billion IDR (rupiah), unless stated otherwise
Source: Trimegah Securities (20/08/2016)