BNP Paribas SMGR BUY Maintained With Higher TP

We have raised our TP to IDR4,050 as we turn more positive on the pricing environment in 2009 BUY.
Pricing discipline would result in decent earnings growth this year despite flat volume.
Supportive cost milieu and de-bottlenecking would underpin 17% earnings CAGR in 2009-10.

Pricing power
BUY maintained with higher TP
We are turning more positive on the pricing environment in 2009 as domestic prices continued to hold up well in 4Q08 despite slowing demand. So, we raised our TP to IDR4,050 from IDR2,840 on higher multiple based on 10x 2009 P/E. Stripping the company’s huge net cash, at our TP the stock would trade at just 2009 P/E of 8.4x, which is not demanding, given a 17% earnings CAGR in 2009-10. BUY maintained.