continue like UNTR as a unique play on Coal Sector (proxy to national coal production growth), with upside from coal mines acquisitions, backed by Strong Management and Strong Balance sheet! At Rp15,900/share, UNTR IJ is trading on 13.7x 2010F PER with 7% EPS Growth. I continue to recommend Buy on UNTR!
· Arief Wana (Daily): Due to the Lebaran holidays, United Tractor’s September operating data was seasonally weak, but we continue to see positive momentum emerging. Construction machinery sales volume declined 27% MoM (-27% YoY) to 223 units, bringing the YTD figures to 2,237 units (-41% YoY). It was on track to meet our forecasts. We continued to see recovery in the non-mining sector.
· The mining contracting business continued to be the star among UT’s other divisions. Its monthly production volume continued to improve by 25% YoY (despite -3% MoM) leading to YTD data reaching 75-79% of our forecasts. In addition, its mining stripping ratio continued to remain high (9.0x).
· The coal mining division came in flat on MoM basis, while it is down 34% YoY. It remains the weakest point due to its higher contracted price locked in agreements.
· We continue to believe that UT is well positioned to benefit from the recovery in commodity prices and the infrastructure sector. We maintain our OUTPERFORM rating on the stock.
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