MacQ United Tractors: January Data Shows some Light?

*United Tractors: January data shows some light?*

The January operating data shows (1) Total heavy equipment sales of 216 units (-56% YoY), in-line with the guided run-rate of around 200 per month, (2) Mining contracting coal production of 4.8mt (+4% YoY), and (3) Own coal mining production of 201,000 tons (-44% YoY) due to heavy rain. On the surface, the heavy equipment sales number is on-track with the management’s conservative guidance of 2,400 units (2,000 pre-order and 400 additional). Below the surface, the sales mix between big and small equipment is encouraging. Of the 216 units, 100 or 46% turns out to be bigger units. For the full year 2008, big units only comprise of 18% of total unit sales.

This could be the area where most sell side analysts miss when they slashed EPS estimate based on lower management guidance several months back. The sales mix among agro, construction, forestry, and mining equipment supports our theory – in Jan-09, mining equipment accounts for 80% of unit sales, whereas in Jan-08, it only accounts for 39%. Agro equipment, on the other hand, accounts for 11% in Jan-09, compared to 31% in Jan-08. On Macq forecast the stock trades on FY09 PER of 6.7x , 7.2% div yield, and 9.4% FCF yield. Macquarie’s estimate, where Albert Saputro is already above consensus by 17% on EBITDA and by 22% on EPS. Comparable Leighton Holdings trades on 8.6x PER.