CIMB Tambang Batubara Bukit Asam Company update - Upside for FY09, but FY10 decline

(PTBA IJ / PTBA.JK, NEUTRAL - Maintained, Rp10,850 - Tgt. Rp11,300, Basic Resources)

We remain Neutral on Bukit Asam. Although we have upgraded our EPS estimates by 3.5-5% for FY09-11 and our DCF-based target price by 15% to Rp11,300 (WACC 16%), we believe the market has priced in its earnings superiority for FY09 and its better-than-peers corporate governance. Additionally, there is a lack of strong drivers for the stock, in our view. In a potential coal-price recovery, Bumi would be the bigger beneficiary, while for M&A potential and earnings quality, Adaro is a better proxy. We suggest a switch to Bumi or Adaro. Even for dividends, Indo Tambang would be a better alternative.