Mandiri Sekuritas ISAT Neutral Ground

ISAT reported revenue growth of 13.2%yoy in FY08 resulting in 4.7%yoy growth in operating profit. Margins narrowed slightly from 27.4% to 25.4%, which is resonable after massive expansion in FY08. Based on the FY08 results we have fine-tuned our underlying assumptions for FY09-10, resulting in only 0.5-%-0.7% slash in earnings in FY09-10 respectively. We gave a 10.6% discount to our old DCF-derived TP of Rp4,700/share and arrived at Rp4,500/share! so as to imply PER09F of 11.6x, which is in line with regional peer average. It’s offering 5.3% upside to the current price; hence we maintain Neutral call. Note at our TP, ISAT trades at premium to TLKM given its higher growth.