Mandiri Sekuritas Kawasan Jababeka: PLN to buy electricity from Bekasi Power (KIJA, Rp123, Sell, TP: Rp70)

PLN will buy some 37MW of power from KIJA’s 100%-owned Bekasi Power top augment the power shortage caused by the Cawang Power Station. This shall be priced at US$8.85 cents/kwh and only good for 2 months while extendible. While we think this is a positive step towards the long-delayed operations of the power plant, questions remains to (a) operating license of the plant, which is yet to be secured and (b availability of supply of natural gas. We maintain sell on the stock, without incorporating any contribution for the power plant. The stock currently trades at 54% discount to NAV09F.