DBS UNTR Upside surprise in 3Q09

• 3Q09 result exceeded our estimate
• Growth in mining contracting revenue and lower interest expense drove up earnings
• Raised TP to Rp12,695, but maintain HOLD recommendation.

3Q09 profit grow 3% q-o-q. This was on the back of 7% revenue growth to Rp7,417bn, led by higher Komatsu sales volume (+9%) and Pama’s coal production (+18%). But
because production costs rose only 6% q-o-q, gross profit grew 10% q-o-q to Rp1,728bn. Gross and operating margins also improved 60bp and 80bp, respectively, to
23.3% and 18.9%.

Y-o-y profit growth at 42%. Despite revenue being flat (+1% y-o-y) at Rp21,302bn, gross profit grew 20% y-o-y to Rp4,953bn on the back of 4% lower production costs. In
addition, the company booked non-operating income of Rp201bn compared to an expense in 2008, which led net profit to surge 42% y-o-y to Rp2,963bn.

FY09-10F earnings are raised by 13% and 10%, respectively, after imputing higher heavy equipment sales (+8%) and mining contracting revenue (+11%).

Maintain HOLD. The recovering coal prices and low interest rate environment will bode well for UNTR’s mining contracting and heavy equipment businesses. Following the
earnings upgrade and after rolling over our valuation window to FY10F, we raised target price to Rp12,695 based on DCF method with assumed WACC of 12.4%. This
implies 11.1x FY10F PE. However, the positives have been largely priced in as the counter is trading at 14.2x FY10F PE, above the downstream segment average of 10.1x.