CIMB Timah Result note - Earnings momentum continues

(TINS IJ / TINS.JK, OUTPERFORM - Maintained, Rp1,990 - Tgt. Rp2,950, Basic Resources)

Maintain Outperform on Timah. 9M09 reported profit was well below consensus and our expectations because of unexpectedly high forex losses, taxes and expenses. Core profit was 61% of our forecast, some 10% short. We have cut our reported FY09 net profit by 20% to factor in the huge forex losses, but only cut core profit by 10% on a higher effective tax and higher costs. FY10-11 EPS estimates have been cut by 5% on higher cost assumptions. Our DCF-based target price falls by 5% to Rp2,950 (WACC 14%, LTG 0%) but Timah remains an Outperform due to its earnings growth momentum going into 1H10, on a low base and expectations of tin-price stability.