Indo Premier UNTR (BUY - TP Rp 7.884)

UNTR - BUY TP Rp 7.884

2 (two) potential upsides
Our current estimates of Rp2.32 triliun (-13%, YoY) net profit and Rp30.6trn (+10%, YoY) revenues, provide two (2) potential upsides. First, from heavy equipment units which has registered higher-than-estimated units sold in the first two months of 2009. With lending rate expected to decrease for the rest of the year possibilities that HE unit can posted higher-than-estimated unit for the rest of the months in 2009. Second, from strenghtening of global coal price that has recovered from this year’s low of US$56/ton. Higher world coal price will support DEJ contract performances (UNTR already contracted coal sales at US$82/ton) and price of the unsold portion. Given these circumstances, UNTR business model (stock note 03/02/2009), and moderate balance sheet (36% debt-to-equity ratio in 2008), reward (and risk) outlook of UNTR deserves investors’ action.

BUY Recommendation
At present, we are comfortable with our current FY2009 forecast that call for revenue of Rp30.6 triliun (+10%, YoY) and net profit of Rp2.3 triliun (-13%, YoY). We will see credit development in 1Q09 that will affect performance of CM division and development of coal price. With WACC of 16.5% and LTG of 3%, our DCF calculation calls for the share price to be valued at Rp7.884 per share. We continue to like UNTR and maintain our BUY rating for the counter.