Credit Suisse - Lower-than-expected 9M09 earnings ANTM (TP Rp2,200)

● Antam reported net profit of Rp293 bn in 9M09, down 82% YoY due to lower nickel price and ferronickel sales volume. This is significantly lower than market expectation due to the impact of the appreciation of rupiah. Antam’s revenue is USD based and the company reports in rupiah.

● The company has not announced the operational results, but indicated earlier that ferronickel output was around 10,500 tonnes in 9M09, down 25% YoY. Sales revenue was down 17% YoY to Rp6.3 tn reflecting the lower volume and price. However, Antam was able to offset the decline in ferronickel sales volume with more gold trading activities.

● We believe that the market has been pricing in the upside risks on Antam due to positive movement in nickel price and the possibility for taking over 14% stake in Batu Hijau. We upgrade our target price to Rp2,200 (from Rp950), which is based on 2.2x P/B 10E, reflecting the average P/B in the rising nickel price environment.

We retain our NEUTRAL rating, recommend profit taking.