I have started research on indonesian equities after the recent crash. What i found is the bigger stocks are way overvalue but the smaller ones are preety much neglected. Foreigner institution dominate the market here, with >80% of the volume. Retailers are hardly here.

The stocks have been on a tear recently, with companies posting cagr of 30 to 50 pct per annum. There are a lot of good companies selling at decent valuations. The market is highly inefficient, so there much gems to be unearthed. 

Ok first stock recommendation for IDX..

Stock Code : BTPN
Current Price : Rp 4,000
Liquidity : Very Low !
Current PE : 10.8x (Reasonable)
Current DY : 0
PBV : 3.2x (quite high)
5 Year Growth : Averaging 40-50% per YEAR
Future Growth : Expect to moderate between 25-30% per year



Share price has exploded from Rp 500 to Rp 4000 in 5 years, a 800% return...

Since it is a bank we will use bank metrics...

NPL : 0.6% (very good)
CAR : 21% (very good for a bank, very good capital position)
NIM : 11.5% (the highest I have ever seen!)
Net Profit Margin : 30% (very good)

FY13 EPS : Expected Rp 385/share
FY14 EPS : Expected Rp 450/share

Investment Moats

1. This bank has captured 95% of government servants pensioners loan, which accounts for 70% of BTPN total loans. This loan has been growing at 15-20% p.a. The loan is 100% secured by pension payments, which is like Malaysia's Angkasa which is impossible to default. Also life insurance will be bought together with the loan to ensure 70% payback in case the pensioners die. Due to this the NPL of this sector is <0.1%.

2. Pioneer in super micro loans (less than Rp 5 million/loan), concentrating on the 'productive poor'. Productive poor means low income group with self sufficient business, often uneducated, no income satements and previously have zero access to financial products (except loan sharks). They represents 40% of Indonesia's population but got left behind by mainstream development. Loan are small and unsecured, but surprisingly NPL is very low at 2%, means poor people tend to pay their loans. The loans also include 3 day course at managing a business, cash flow and basic accounting (must be taken). Since most of these productive poor is illiterate, the bank will go to them instead of they going to bank. All transaction is via fingerprint machine. They have people roaming the markets, traders location with portable machine. This sector is growing at a blistering 50% per year.

3. Has recently started 'empowering' the female to be financially independent through business. Most married females (poor income group) in Indonesia tend to be housewife, so this bank has been giving seminar, courses to help this women to uplift their family finances by doing some small business. They will have a bank appointed guide (previously successful women) per kampong to teach and ensure that they can succeed at their small ventures. First loan is small and gets bigger once their repayment schedule is smooth. This business is shariah based has only started last year and growth is currently >100%.

4. This bank has some very powerful backers with years of experience in banking industry. 40% is owned by TPG group, a private equity funds which concentrate on banking with holding in china and korea banks. 24% is owned by SUmitomo Mitsui Bank from Japan which recently bought the stake from TPG group in May 2013 under private a deal and paying a huge premium of Rp 6,500 per share.

Target price : PE 14x FY14 =  Rp 6,500/share

For more info on how the bank is empowering the poor...

https://www.youtube.com/watch?v=IeXBACouh9Q

https://www.youtube.com/watch?v=CHiUkl38hXA