Last week, I provided a basic introduction to investments in Indonesia's capital markets. Now, I will devote my column to the ten largest Indonesian companies by market capitalization. But first let me explain why I take the ten largest companies? Well, simply because these ten companies account for 43.71 percent of Indonesia's total market capitalization. In other words, they reflect almost half of the current condition of the country's capital markets.
Below is the list with Indonesia's largest companies by market capitalization. To view the performance of these companies, visit our Portfolio Market Capitalization section.
|Listed Company Name (Ticker)||Market Capitalization
million IDR | (% of total)
| 2012 Earnings
|Type of Industry|
| 1. Astra International (ASII)
| 2. HM Sampoerna (HMSP)
| 3. Bank Central Asia (BBCA)
| 4. Bank Mandiri (BMRI)¹
|5. Telekomunikasi Indonesia (TLKM)¹||182,447,993 (4.42%)||17.19%||Telecom.|
|6. Bank Rakyat Indonesia (BBRI)¹||169,736,169 (4.11%)||23.85%||Banking|
|7. Unilever Indonesia (UNVR)||159,085,500 (3.85%)||16.23%||Consumption|
|8. Perusahaan Gas Negara (PGAS)¹||111,510,938 (2.70%)||30.86%||Mining|
|9. Gudang Garam (GGRM)||108,326,154 (2.62%)||–19.99%||Tobacco|
|10. Semen Indonesia (SMGR)¹||94,014,592 (2.28%)||23.48%||Cement|
¹ indicates a state-owned enterprise
In the list above we count five privately-held companies and five state-owned enterprises (SOEs). If we take a look at the type of industry these companies are engaged in, we see the presence of three banks (BBCA, BMRI and BBRI) and three companies from Indonesia's consumption sector (UNVR, GGRM and HMSP). Another interesting fact is that two companies are engaged in the country's tobacco industry (GGRM and HMSP). Furthermore, TLKM leads the telecommunications sector, PGAS leads the gas infrastructure sector, and SMGR leads the country's cement sector. Lastly, there is ASII - Indonesia's largest company - which has a diversified business structure. It dominates the country's car industry but also has stakes in other types of businesses, including agriculture, insurance, banking and infrastructure (toll roads).
From the composition of this top ten ranking we can also draw conclusions about which sectors are currently the strength or backbone of the Indonesian economy. Some sectors, such as mining or agriculture that had been pillars of the economy in recent years, have seen their shares towards the Indonesian economy diminished due to falling commodity prices. However, I want to emphasize that Indonesia's economy does not depend on the export of commodities and mining products alone.
Indonesia's banking sector is attractive. The central bank (Bank Indonesia) has maintained its benchmark reference rate (BI Rate) at 5.75 percent since February 2012. For deposits, Indonesian banks usually give interest of about six percent. For loans, however, the banks charge high interest rates, sometimes over 11 percent. The difference between these two interest rates has been the trigger for banks' annual net profits of over 20 percent. Moreover, Indonesia's population relies heavily on bank loans as a source for capital. This has been a positive catalyst for the country's banking sector.
Apart from banking, Indonesia's consumption sector also shows promising results due to the population's increasing purchasing power. During 2012, almost all businesses that relied on domestic sales showed positive growth. Gudang Garam, however, showed declining earnings (see table above). This is related to the increased global price of clove in combination with reduced margins due to a government regulation regarding the selling price of cigarettes.
Last week, the Indonesia Stock Exchange (through its IHSG) reached the new record of 4,992, although it closed lower on Friday (4,296), with foreign investors engaging in net purchases amounting to IDR 800 billion (about USD $82.5 million). I still signal investors' appetite to continue the purchase of Indonesian assets in the long term. For the shorter term, there will be temporary corrections due to profit taking by short-term investors. This week, the IHSG is vulnerable to such a correction; it might consolidate but with downward pressures.
David Sutyanto is a research analyst at First Asia Capital in Jakarta.