Credit Suisse Key Ideas

Bumi Resources (BUMI.JK, Rp1,520, N, TP Rp945) – 1Q09 ahead on lower tax rate and legacy contract

Haider Ali / Research Analyst / 65 6212 3064 / haider.ali@credit-suisse.com
At 19% of FY09E volumes, Bumi’s 11 mn tonnes (t) sales in 1Q09 were below expectations due to heavy rains. This now sets up Bumi with a challenging quarterly production target of over 15 mn t, if it is to meet guidance (56 mn t) or our estimates (58 mn t) for FY09.

Net income was ahead of our estimate (37% of FY08) on two counts. Reported FOB ASP in 1Q09 was 23% above FY09E on inclusion of legacy 2008 priced contracts. Without a pick-up in coal spot, we would expect a declining trend in quarterly ASP.

Second, Bumi’s reported tax rate in 1Q09 was 14% against 30% FY09E based on the management guidance. Profit before tax for 1Q09 was much closer at 30% of our FY09 forecast.

Positive earnings surprise of 1Q may be overstated by low tax rate and legacy contracts, while weaker volumes are concerning. Unit production cost appears to be stabilising and in line with FY09E.

Bumi’s stock price has almost tripled over the last three months, closing its valuation gap with peers. We are reviewing our estimates, pending which our NEUTRAL rating is maintained.

Perusahaan Gas Negara (PGAS.JK, Rp2,500, O, TP Rp3,000) – Strong cash flow, higher distribution volumes

Ami Tantri / Research Analyst / 62 21 255 37917 / ami.tantri@credit-suisse.com
Perusahaan Gas Negara (PGAS) reported below-market FY08 earnings due to foreign exchange translation losses, but strong 1Q09 earnings from higher distribution volumes. Cash flow remained strong from the increases in distribution volumes and the expansion of distribution margin on lower gas costs.

Distribution and transmission volumes continue to increase and distribution margin has been maintained. Despite translation losses, the company should have strong cash flow. We believe PGAS is one of the few Indonesian companies that should see revenue growth and strong cash flow this year, despite the slowdown in the economy.

We have retained our OUTPERFORM rating on the stock and Rp3,000 target price. The stock is now trading at a P/E of 9.2x 2010E and EV/EBITDA of 5.3x 2010E, which are at a discount to the regional average. We believe PGAS will be one of the few Indonesian stocks to have growth and strong cash flow this year.

Bakrieland Development (ELTY.JK, Rp169, O, TP Rp257) – 1Q09 results soft but FY09E may be skewed to 2H09E + highly undervalued

Teddy Oetomo / Research Analyst / 62 21 2553 7911 / teddy.oetomo@credit-suisse.com
ELTY reported Rp26.3 bn 1Q09A net income, -12.6%YoY and -81% QoQ, 9.2% of our FY09 and 16% of consensus’ forecasts. We expect stronger revenue in 2H09, given the handover of Bakrie Tower, Lifestyle Centre and Bali Legian Nirwana in July 2009 and the commencement of the Kanci Pejagan toll road in Aug./Sept. 2009.

ELTY is deeply undervalued, in our view, at a 64% discount to 2009E RNAV (versus the regional average of a 25% discount to RNAV) and at low end of its historical trading range, due to market sentiment on its sponsor. We believe the market’s negative sentiment towards ELTY’s sponsor may be abating, signified by the strong outperformance of other counters under ELTY’s sponsor (see our Indonesia property sector report, Take a closer look, 21 Jan. 2009).

As such, we revise our valuation from a trough 85% discount to our base-case scenario (target price of Rp70) to a base case of a 45% discount to 2009E RNAV (target price of Rp257). We upgrade our rating from Neutral to OUTPERFORM.

Kalbe Farma (KLBF.JK, Rp880, U, TP Rp765) – 1Q09 results in line but share price has rallied

Teddy Oetomo / Research Analyst / 62 21 2553 7911 / teddy.oetomo@credit-suisse.com
KLBF reported Rp213 bn in 1Q09E net income, up 24% YoY, 4.9% QoQ, and 30% of our FY09E and 29% of consensus’ FY09E. We believe that the results remain in line with our forecasts with KLBF’s 1Q historically contributes 24-32% of FY earnings, typically due to larger operating expenses in 4Q.

We believe that KLBF’s valuations are demanding, trading at the second highest 2009E and 2010E P/E among the Indonesian consumer-related counters under our coverage. KLBF is currently trading at the lower end of its historical trading range (excluding the 2005-07 period due to merger premium).

We downgrade KLBF to UNDERPERFORM, from Neutral due to its demanding valuations. We increase our target price from Rp660 to Rp765. Our new target price is based on 11x 2009E P/E, in line with the current market implied 2009E P/E for MSCI Indonesia.