CIMB Indo Tambangraya Megah Result note - Superior 1Q, but on a decline

(ITMG IJ / ITMG.JK, TRADING SELL - Maintained, Rp18,650 - Tgt. Rp15,000, Basic Resources)

We maintain Trading Sell on IndoTambang with a higher DCF-based target price of Rp15,000 from Rp13,000 (WACC 15%), after raising our earnings forecasts by 30% for FY09 and 8-10% for FY10-11 in light of the higher-than-expected ASPs in 1Q09. 1Q09 core profit was well ahead of consensus and our estimates due to superior ASPs. Given the likelihood of a high base in FY09, ASPs may decline in FY10. So could earnings, as FY10 production may only grow by 10% yoy. We believe dividend is the only catalyst later in 2H09.