Mandiri (CC)
HMSP
Limited Downside, Turning Positive
We upgrade HMSP’s rating from Neutral to Buy. We believe the market has priced in most of the negatives while we started seeing potential volume catalysts that should re-rate the stock. HMSP’s mild brands could eventually be off the hook from diminishing competition by “Plus 4” cigarettes, while Marlboro Filter Black’s increasing market share could partly mitigate SKT’s weakness.
Upgrade to Buy, PT raised to Rp4,300. We leave our numbers unchanged, but raise our three-stage DCF-based PT to Rp4,300 after adjusting WACC to 9.1% (from 9.6%) on lower risk-free-rate assumption. We upgrade our rating from Neutral to Buy for 16% upside.
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