We assume coverage of the three key sectors of Indonesia Infrastructure –

Tollroad (Industrial), Cement (Material), Construction (Industrial) – with selective

positioning. Infrastructure development remains a stated priority of President

Jokowi's 2020-2024 second-term administration (US$450bn+ projects). However,

state budget priority shift and lockdown measures mean COVID-19 has severely

challenged the outlook. Nevertheless, pronounced underperformance means we

see opportunity for selective bargain hunting on companies with recurring income

and exposure to end-consumers, like tollroad and cement. We expect construction

companies to face the brunt of the 34% cut in the 2020E State infra budget, with

constrained balance sheets adding to project financing challenges in skewing riskreward

unfavorably. Our top OW picks are JSMR (2021E V-shaped traffic

recovery, stable recurring income from mature toll portfolios) and INTP (Javafocused

cement producer with net cash balance sheet, owned by Germany’s

HeidelbergCement group). We are Neutral on SMGR post its 70+% rally from

Mar-bottom to end-Aug and weaker B/S. We are UW all 3 contractors, WIKA,

WSKT, PTPP, following the State budget priority shift post pandemic.