CIMB Berlian Laju Tanker Quick takes - Rights issue dilutive

(BLTA IJ / BLTA.JK, UNDERPERFORM - Downgraded, Rp920 - Tgt. Rp600, ResearchWise Industrial)

BLTA announced today a renounceable 1-for-3 rights issue of up to 1,392.3m new shares at Rp425 each to raise US$60m. We are not surprised, as the market had been speculating on a rights issue for some time. The rights will help reduce its 1-year funding gap to a manageable US$28m by May 2010, against unencumbered assets worth US$300m. Despite this, we downgrade the stock to UNDERPERFORM (from Outperform) because of its substantial share-price outperformance. We also reduce our sum-of-the-parts target price to Rp600 (from Rp630) due to an expanded share base and other reasons. Our core earnings forecasts have been slashed by 53-92% for 2009-11 following a sharp drop in spot chemical rates in 1Q09, which should flow through to BLTA's future earnings.