CIMB Telekomunikasi Indonesia Result note - Modest operational performance

(TLKM IJ / TLKM.JK, OUTPERFORM - Maintained, Rp8,400 - Tgt. Rp9,600, Telecommunications)

Telkom's 3Q09 results were below our expectations though in line with the market's. Annualised, core 9M09 net profit was 11% and 3% below CIMB-GK and market expectations respectively, although its operational performance was in line. The disappointment stemmed from a higher-than-expected tax. Telkom and Telkomsel have yet to release their management discussion and analysis (MD&A), which gives us very little data for interpreting the results. The telco is scheduled to hold its conference call on 4 Nov 09. While we may trim our earnings forecasts and DCF-based target price of Rp9,600 (WACC 12.5%) to reflect the 3Q09 results, our OUTPERFORM rating should stay. Telkom remains our top telco pick in Indonesia and the region for its stable operating growth and low industry risks.