CIMB Indosat Result note - Weak 1Q09 performance

(ISAT IJ / ISAT.JK, NEUTRAL - Maintained, Rp5,100 - Tgt. Rp5,200, Telecommunications)

When annualised, Indosat's core net profit is 34% and 29% below CIMB-GK and market expectations respectively, due to weaker-than-expected revenue. Unlike previous quarters, Indosat did not release its information memo which contains detailed operating indicators and did not hold a conference call as it is in the midst of raising debt. Operating performance was weak due to economic and seasonal weakness. We have lowered our FY09-11 core net profit estimates by 4-13% on lower ARPU, subscriber growth and capex assumptions, and stronger Rp/US$ estimates but raised our DCF-based target price by Rp300 to Rp5,200 because of lower capex and a stronger Rp. We believe Indosat lacks catalysts as growth should remain unexciting and prefer Telkom which has a more solid franchise and more attractive dividend yields of 4-5%.