CIMB 4Q08 Results – Inco Indonesia – First quarterly loss

4Q08 Results – Inco Indonesia – First quarterly loss
Inco's FY08 net profit was disappointing, at 20% and 5% below consensus and our forecasts respectively. Inco booked a loss in 4Q08. The main culprit was the usage of costly HSFO inventory. We may not see a special dividend from the company in the near term, given shrinking free cash flow while capex requirements remain high. We remain cautious as Inco would be susceptible to volatile nickel and oil prices. Even if its poor earnings have been priced in, we see a lack of catalysts. Antam could be more interesting given the current strong momentum in gold. Maintain Underperform and target price of Rp1,850, still based on DCF valuation (WACC 16%).