CIMB United Tractors Result note - Strong set of results

(UNTR IJ / UNTR.JK, OUTPERFORM - Maintained, Rp7,950 - Tgt. Rp10,850, Industrial Goods and Services)

UNTR's 1Q09 earnings of Rp812bn are above our forecast and consensus, due to stellar performances from all its divisions. Heavy equipment caught us by surprise with margin improvements. Pama benefited from higher production and a depreciating rupiah. We upgrade our EPS estimates by 14-33% for FY09-11 to incorporate the good 1Q09. Maintain OUTPERFORM with a higher target price of Rp10,850 (from Rp9,600) following our earnings upgrade, still based on 12x CY10 earnings. With easing worries on its heavy equipment business coupled with its sizeable market cap, UNTR should able to maintain its premium to the market.