CIMB Timah Result Note

Timah Result note - 4Q08 is a red flag - by Rania Rahmundita
(TINS IJ / TINS.JK, UNDERPERFORM - Maintained, Rp1,060 - Tgt. Rp770, Basic Resources)

Timah's FY08 net profit declined 25% yoy to Rp1.34tr, 20% below consensus but largely in line with ours. Core net profit however is 10-17% below our forecast and consensus. It was loss-making in 4Q08, in line with our expectation, but tax rate was higher than our forecast. We think 1Q09 earnings may still look ugly, given the soft tin price and sluggish demand at present, with a double whammy to profitability coming from its high inventory costs. Cash too could be in shortage, if this condition persists. Maintain Underperform and target price of Rp770 (WACC 16%, life-of-mine).