Mansek Hexindo

Securing a piece of the whole KPC pie

Hexindo Adiperkasa (HEXA) confirmed that a US$130mn deal with Kaltim Prima Coal (KPC) has been signed. We revised our FY09F earnings estimates by 33.0% to Rp205bn (-7.2% yoy), taking account the KPC deal. We believe that risk of low unit sales, expectation on poor earnings, and limited liquidity have been reflected in current price, which is now trading at a low PER09F of 2.5x. Thus, we upgrade our recommendation to Buy from erstwhile Sell with new target price to Rp760/share, providing an attractive upside of 26.7%.