CIMB Bumi Resources Company update - Back in vogue

(BUMI IJ / BUMI.JK, TRADING BUY - Maintained, Rp2,175 - Tgt. Rp2,600, Basic Resources)

We maintain Trading Buy on Bumi, with a higher target price of Rp2,600, now based on 10x forward P/E, the sector's average valuation, from Rp1,400 on DCF previously. We raise our FY09-11 EPS estimates by 13-18% on higher ASP and lower cash cost assumptions. Despite its recent strong rally, Bumi remains the steal and the laggard of the sector. We believe downside is limited, since it is still under-owned by foreign investors with support from local investors. High earnings sensitivity to coal prices could make it fundamentally attractive again when spot coal prices recover this summer.