We believe that UT’ March operating data (despite delays in the equipment delivery) continued to show signs of stabilisation, while the contracting and coal divisions showed MoM improvement.
The MoM drop in the equipment sales (especially in the coal sector) was due to delay in delivery. Management said that the real order was still hovering around 200 units, a stable level seen since early this year. This is in line with our forecasts.
The negative impact from heavy rains have started to ease as well, with a MoM recovery in both contracting (+6 for production and 16% for overburden) and coal divisions (+8%).
Although UT’ share price has done very well, we maintain our positive rating on the stock on the back of: 1) the earnings visibility, 2) quality (both operational and financial), and 3) valuations. We raise our sum-of-the-parts based target price by 26% to Rp9,200, incorporating the recent market re-rating and implying FY10E P/E of 10.9x, EV/EBITDA of 5.3x, and P/B of 2.2x, which are in line with its five-year historical trading average.
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