Holcim Indonesia
Result note - Distortion from forex - by Rania Rahmundita
(SMCB IJ / SMCB.JK, NEUTRAL - Upgraded, Rp520 - Tgt. Rp600, Construction and Materials)
Holcim's FY08 net profit was up 67% yoy, 5% above our forecast but well below consensus. However, core net profit more than doubled to some 20% above our forecast due to the tax impact of a fiscal loss in 4Q08 (forex-related). Going forward, we reckon this would remain the main source of error in our earnings estimation. Operationally, costs have started to increase in 4Q08 on higher coal prices. We cut our FY09-10 core EPS forecast by 14-16% on higher cost assumptions, but maintain our target price of Rp600 based on US$100 EV/tonne. We upgrade Holcim to Neutral from Underperform as we believe its recent share-price weakness is adequate. We anticipate catalysts from a stronger Rp which is hard to predict currently.
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