Jefferies Outlook on Indonesian Materials Stocks Linked to AI Data Center Expansion

Jefferies Hong Kong team, operating through Mandiri Sekuritas, highlighted that the rapid build‑out of artificial‑intelligence (AI) data centres in Indonesia is set to create a distinct demand profile for power and water infrastructure, which could materially benefit domestic materials companies. AI‑focused server racks consume up to twenty times the power of conventional racks; typical configurations may require 200 kilowatts versus 10 kilowatts for traditional servers, and Nvidia’s Blackwell GB200 NVL72 model operates at 120 kilowatts. The resulting heat load mandates liquid‑cooling solutions, specifically direct‑to‑chip cooling that relies on extensive water‑pipe networks.

Companies Poised to Benefit

  • AVIA: Approximately 20 % of AVIA’s revenue stems from the distribution of water pipes. Although this segment yields lower margins than its core decorative‑paint business, the anticipated surge in water‑pipe demand for data‑centre cooling could lift AVIA’s top line.
  • ISSP: ISSP manufactures steel pipes already used in data‑centre rack structures. Jefferies noted that the stock’s relatively low turnover may pose execution challenges, but the underlying product relevance remains a positive catalyst.
  • KIJA: Through its subsidiary Bekasi Power, KIJA operates a 130‑megawatt gas‑fired power plant in Cikarang. The plant is positioned to meet the heightened electricity requirements of AI‑driven facilities, and its 20‑year power‑purchase agreement (PPA) with state utility PLN is scheduled to expire in 2032.

Caution on Recent Market Moves

Jefferies cautioned that the recent one‑month price appreciation of industrial‑estate stocks DMAS (up 24 %) and BEST (up 36 %) appears disproportionate to the broader market, where the Jakarta Composite Index recorded a 5 % gain. The analysts attributed the over‑performance to land‑availability constraints and limited capacity for these firms to capture recurring revenue streams from the projected power and water demand.

Data‑Centre Capacity Outlook

In a meeting with the Nusantara Data Centre Academy, Jefferies learned that Indonesia’s data‑centre pipeline capacity is projected to quadruple by 2030, reaching roughly 2 gigawatts of installed power.

Additional Context

The article was generated with AI assistance and subsequently reviewed by an editor, as noted in the publication’s disclaimer.