CIMB Quick Takes – Energi Mega

Quick Takes – Energi Mega – Affected by low oil prices & high interest costs
Energi's FY08 core profit of Rp46.74bn was 83% below our expectation due to lower-than-expected sales and gross margins, and higher interest expenses. FY08 sales were up 63% yoy, while EBITDA was up 174% yoy. However, net profit was hit by a jump in interest expense. Energi's FY09 earnings should continue to be affected by low oil prices and high interest costs. We are ceasing coverage of the stock with immediate effect due to a lack of institutional interest, and consensus estimates. Our current forecasts do not incorporate this latest set of results. Our last rating for the stock was Neutral with a target price of Rp150, based on DCF valuation (discount rate of 14.0%).