CIMB Berlian Laju Tanker – Rupiah depreciation savage earnings

FY08 Results – Berlian Laju Tanker – Rupiah depreciation savage earnings

Full year core net profit was 76-80% below estimate and consensus due to the exchange loss from the rupiah depreciation, and associate losses. Excluding these items, EBIT was only 5.7% below. BLTA consolidated its Chembulk acquisition for a full year, resulting in an approximately doubling of revenue and EBIT. Maintain OUTPERFORM, but reduce earnings and SOP target to Rp680 (from Rp900) because of lower-than-expected cash balances. We also revise our assumption to zero dividends from 2008 onwards, from Rp50/share. Our positive rating is based on BLTA’s cheap valuations, although there is no near-term catalyst as freight rates fall. We think BLTA will have to raise around US$100m within the next 12 months to meet the CB redemption, and we have factored this assumption into our model. Should BLTA fail to do so, its financial position could become perilous, but this is not our base case scenario.