Sponsors to sell 17 pct of Indonesia's Adaro - sources
SINGAPORE, April 16 (Reuters) - Financial sponsors are looking to sell at least a 17 percent stake in PT Adaro Energy Tbk (ADRO.JK), Indonesia's largest coal producer by market value, to strategic investors, sources told Reuters.
Based on the firm's share price, the stake is worth about $500 million.
Goldman Sachs (GS.N), which has a 9.94 percent stake in Adaro, is "coordinating" the share sale, said a source with direct knowledge of the deal.
Goldman declined to comment and Adaro was not immediately available to comment.
Financial sponsors that included Citigroup (C.N), hedge fund manager Farallon, the Government of Singapore Investment Corp (GIC), Kerry Coal and Goldman bought at least 25 percent of Adaro after an initial public offering last year, banking sources and analysts said.
Not every sponsor is looking to exit Adaro, as GIC and Kerry Coal, a firm linked to Malaysian billionaire Robert Kuok, will likely retain most of their stake, said a second source familiar with the deal.
source Reuters 17 April 2009
Sabtu, 18 April 2009
GlobalCoal UPDATE 1-Goldman, Citi to sell stake in Indonesia Adaro -sources
UPDATE 1-Goldman, Citi to sell stake in Indonesia Adaro -sources
SINGAPORE, April 16 (Reuters) - Goldman Sachs (GS.N: Quote, Profile, Research), Citigroup (C.N: Quote, Profile, Research) and hedge fund Farallon are looking to sell around 17 percent of Indonesian coal producer Adaro Energy (ADRO.JK: Quote, Profile, Research) to strategic investors, sources told Reuters.
Based on the latest share price for Indonesia's largest coal producer by market value, the stake is worth about $500 million.
The sale was expected after a lockup period ended in March for financial sponsors who had participated in Adaro's $1.3 billion initial public offering last year, analysts said.
A source with direct knowledge of the matter said Goldman Sachs (GS.N: Quote, Profile, Research), which has a 9.94 percent stake in Adaro, is coordinating the sale of the shares.
"Pure coal plays are looking at it seriously. Utilities could be interested too," said a second source close to the situation. Both sources declined to be identified because any deal is not public.
Goldman, Citigroup, Farallon, the Government of Singapore Investment Corp (GIC) and Kerry Coal had a combined 25 percent stake in Adaro as part of a consortium at the time of company's IPO in July 2008.
Goldman and Citigroup declined to comment while Farallon and GIC were not immediately available to comment.
The price these cornerstone investors paid was unclear, since many of them were existing shareholders at the time of the IPO.
Adaro shares, which closed 2 percent lower on Thursday, have fallen around 14 percent from an IPO price of 1,100 rupiah.
UBS, which has a "buy" rating on Adaro, said in a recent report the cornerstone investors could make a huge profit from the share sale.
Analysts said investors may want to sell given the uncertainty over coal prices amid an economic slowdown.
"I think the slowdown in global economic activities made the coal outlook a bit sluggish over the next 12 months," said John Teja, head of equities sales at Ciptadana Securities in Jakarta.
"Moreover tight global liquidity might force these investors to cash in."
Adaro said shareholders had not briefed them about their plans.
"They are our existing shareholders, but we have not been briefed on the plan that they have with regards to their ownership," Andre Mamuaya, director at Adaro told Reuters
CONTROVERSIAL IPO
The IPO raised eyebrows among domestic investors and some global funds, who were shut out of the country's biggest public offering as shares were distributed to connected parties. [ID:nJAK22790].
Several analysts including UBS have written in recent weeks that a share selldown was imminent.
However, not every investor is looking to exit Adaro, as GIC and Kerry Coal, a firm linked to Malaysian billionaire Robert Kuok, will likely retain most of their stake, said a third source familiar with the deal.
Shares of Adaro overtook the country's biggest coal miner Bumi Resources (BUMI.JK: Quote, Profile, Research) as Bumi's parent faced financial difficulties last year.
Adaro, which expects to produce 42-45 million tonnes of coal this year, up from 38.5 million tonnes in 2008, plans to spend up to $100 million to acquire a coal barge and trans-shipment firm to improve the supply chain for its operations in Kalimantan on Borneo island.
source: Reuters 17 April 2009
SINGAPORE, April 16 (Reuters) - Goldman Sachs (GS.N: Quote, Profile, Research), Citigroup (C.N: Quote, Profile, Research) and hedge fund Farallon are looking to sell around 17 percent of Indonesian coal producer Adaro Energy (ADRO.JK: Quote, Profile, Research) to strategic investors, sources told Reuters.
Based on the latest share price for Indonesia's largest coal producer by market value, the stake is worth about $500 million.
The sale was expected after a lockup period ended in March for financial sponsors who had participated in Adaro's $1.3 billion initial public offering last year, analysts said.
A source with direct knowledge of the matter said Goldman Sachs (GS.N: Quote, Profile, Research), which has a 9.94 percent stake in Adaro, is coordinating the sale of the shares.
"Pure coal plays are looking at it seriously. Utilities could be interested too," said a second source close to the situation. Both sources declined to be identified because any deal is not public.
Goldman, Citigroup, Farallon, the Government of Singapore Investment Corp (GIC) and Kerry Coal had a combined 25 percent stake in Adaro as part of a consortium at the time of company's IPO in July 2008.
Goldman and Citigroup declined to comment while Farallon and GIC were not immediately available to comment.
The price these cornerstone investors paid was unclear, since many of them were existing shareholders at the time of the IPO.
Adaro shares, which closed 2 percent lower on Thursday, have fallen around 14 percent from an IPO price of 1,100 rupiah.
UBS, which has a "buy" rating on Adaro, said in a recent report the cornerstone investors could make a huge profit from the share sale.
Analysts said investors may want to sell given the uncertainty over coal prices amid an economic slowdown.
"I think the slowdown in global economic activities made the coal outlook a bit sluggish over the next 12 months," said John Teja, head of equities sales at Ciptadana Securities in Jakarta.
"Moreover tight global liquidity might force these investors to cash in."
Adaro said shareholders had not briefed them about their plans.
"They are our existing shareholders, but we have not been briefed on the plan that they have with regards to their ownership," Andre Mamuaya, director at Adaro told Reuters
CONTROVERSIAL IPO
The IPO raised eyebrows among domestic investors and some global funds, who were shut out of the country's biggest public offering as shares were distributed to connected parties. [ID:nJAK22790].
Several analysts including UBS have written in recent weeks that a share selldown was imminent.
However, not every investor is looking to exit Adaro, as GIC and Kerry Coal, a firm linked to Malaysian billionaire Robert Kuok, will likely retain most of their stake, said a third source familiar with the deal.
Shares of Adaro overtook the country's biggest coal miner Bumi Resources (BUMI.JK: Quote, Profile, Research) as Bumi's parent faced financial difficulties last year.
Adaro, which expects to produce 42-45 million tonnes of coal this year, up from 38.5 million tonnes in 2008, plans to spend up to $100 million to acquire a coal barge and trans-shipment firm to improve the supply chain for its operations in Kalimantan on Borneo island.
source: Reuters 17 April 2009
GlobalCoal Newcastle Coal Index
Weekly NEWC Coal Index
20-Mar-09 60.30
27-Mar-09 61.39
03-Apr-09 60.79
10-Apr-09 63.18
17-Apr-09 63.12
Monthly NEWC Coal Index
Dec-2008 78.18
Jan-2009 82.69
Feb-2009 75.03
Mar-2009 61.37
20-Mar-09 60.30
27-Mar-09 61.39
03-Apr-09 60.79
10-Apr-09 63.18
17-Apr-09 63.12
Monthly NEWC Coal Index
Dec-2008 78.18
Jan-2009 82.69
Feb-2009 75.03
Mar-2009 61.37
LondonCommodity Chinese coal supply may be tight in the near future
The report released this week by China's customs points out that in the first two months of this year, China's coal imports declined and exports went up.
The following are the reasons. Statistics show that China's coal imports in the first two months went up by 11.5%YoY to 7.87 million tonnes worth USD 650 million and the value rose by 46.1% the average import price remained at USD 83.1 per tonne increasing by 31.1%.
1. The main reason for the drop in coal exports rests with the fact that international coal price slumped, and it was even lower than domestic coal price. In addition, as the financial crisis spreads further, coal demand in the international market also came down.
2. The export tariff imposed on coal exports also curbed the exports volume of coal.
3. The standoff between China's coal and power enterprises also contributed to the drop. As there was no agreements made between the two sides, power enterprises reasonably resorted to overseas coal resources, thereby pushing up the imports of coal.
The report also points out that coal supply may become tight in China. According to the analysis, the frequent occurrence of coal mine incidents has weakened coal supply, as coal mines maintenance has been carried out. As present, railway ex-province transportation of coal has slumped by over 20%, and coal stock at Qinhuangdao port has also experienced 11.6% drop. In the near future, China's coal supply will probably tend to be tight.
Source: MySteel
The following are the reasons. Statistics show that China's coal imports in the first two months went up by 11.5%YoY to 7.87 million tonnes worth USD 650 million and the value rose by 46.1% the average import price remained at USD 83.1 per tonne increasing by 31.1%.
1. The main reason for the drop in coal exports rests with the fact that international coal price slumped, and it was even lower than domestic coal price. In addition, as the financial crisis spreads further, coal demand in the international market also came down.
2. The export tariff imposed on coal exports also curbed the exports volume of coal.
3. The standoff between China's coal and power enterprises also contributed to the drop. As there was no agreements made between the two sides, power enterprises reasonably resorted to overseas coal resources, thereby pushing up the imports of coal.
The report also points out that coal supply may become tight in China. According to the analysis, the frequent occurrence of coal mine incidents has weakened coal supply, as coal mines maintenance has been carried out. As present, railway ex-province transportation of coal has slumped by over 20%, and coal stock at Qinhuangdao port has also experienced 11.6% drop. In the near future, China's coal supply will probably tend to be tight.
Source: MySteel
LondonCommodity Coal-Allied eyes semi-soft coking coal demand rise
Australia's Coal & Allied Ltd said on Friday it anticipated a pick-up in demand for semi-soft coking coal later this year as steelmakers use more for blending in blast furnaces, though sales will still be down 10-15 percent.
Cutbacks in steel production by more than 30 percent to date among some customers reeling from the global crash in industrial output has lowered demand for semi-soft coking coal, particularly in the first quarter of 2009, Chairman Chris Renwick told the company's annual meeting of shareholders.
"The forecast demand for semi-soft coal in 2009 however will be greater than the proportional cut in steel production, as steel mills move to a higher proportion of semi soft in the coke blend throughout the rest of 2009," he said.
Tom Albanese, chief executive of Brisbane-based Coal & Allied's 76 percent-owned parent company Rio Tinto, this week forecast a second-half recovery in steel making in China, the world's biggest supplier.
Still, Renwick said Coal & Allied expected to see a 10 to 15 percent drop in semi-soft coal sales in 2009 from its collieries in eastern Australia.
Semi-soft benchmark prices had yet to be established, though negotiations with buyers were "progressing", he also said.
Nippon Steel Corp in late March sealed a year-on-year discount of around 57 percent on coking coal contracts with Coal & Allied rival BHP Billiton Mitsubishi Alliance (BMA) for fiscal year 2009/10.
Semi-soft coking coal has some coking properties and is blended with hard and semi-hard coking coals to produce coke, essential in conventional steel making.
Last month, Coal & Allied concluded price negotiations for thermal coal on all its annual Japanese contracts at $70-$72 a tonne, but price talks in other regions were still under way, Renwick said.
Those prices were in line with terms reportedly reached in March by world No. 1 thermal coal miner Xstrata with some Japanese customers.
But this is higher than thermal coal prices on the globalCOAL Newcastle weekly index of $63.02 a tonne.
Overall demand for thermal coal was soft, though not off as much as the steel-making coal and was expected to pick up in the second half of the year, Renwick said.
"The general economic downturn has had a more adverse impact on the steel industry and the overall requirement for coking coal," he said.
Source: Reuters
Cutbacks in steel production by more than 30 percent to date among some customers reeling from the global crash in industrial output has lowered demand for semi-soft coking coal, particularly in the first quarter of 2009, Chairman Chris Renwick told the company's annual meeting of shareholders.
"The forecast demand for semi-soft coal in 2009 however will be greater than the proportional cut in steel production, as steel mills move to a higher proportion of semi soft in the coke blend throughout the rest of 2009," he said.
Tom Albanese, chief executive of Brisbane-based Coal & Allied's 76 percent-owned parent company Rio Tinto, this week forecast a second-half recovery in steel making in China, the world's biggest supplier.
Still, Renwick said Coal & Allied expected to see a 10 to 15 percent drop in semi-soft coal sales in 2009 from its collieries in eastern Australia.
Semi-soft benchmark prices had yet to be established, though negotiations with buyers were "progressing", he also said.
Nippon Steel Corp in late March sealed a year-on-year discount of around 57 percent on coking coal contracts with Coal & Allied rival BHP Billiton Mitsubishi Alliance (BMA) for fiscal year 2009/10.
Semi-soft coking coal has some coking properties and is blended with hard and semi-hard coking coals to produce coke, essential in conventional steel making.
Last month, Coal & Allied concluded price negotiations for thermal coal on all its annual Japanese contracts at $70-$72 a tonne, but price talks in other regions were still under way, Renwick said.
Those prices were in line with terms reportedly reached in March by world No. 1 thermal coal miner Xstrata with some Japanese customers.
But this is higher than thermal coal prices on the globalCOAL Newcastle weekly index of $63.02 a tonne.
Overall demand for thermal coal was soft, though not off as much as the steel-making coal and was expected to pick up in the second half of the year, Renwick said.
"The general economic downturn has had a more adverse impact on the steel industry and the overall requirement for coking coal," he said.
Source: Reuters
Palm oil supply squeeze may trigger rush to buy
Stung by the twin woes of erratic weather and aggressive replanting, palm oil traders are bracing for a supply squeeze in the months ahead, spurring importers to stock up ahead of an anticipated rise in demand.
This is already reflected in Malaysian prices - palm is one of the biggest gainers this year, soaring 42 per cent - and analysts say any further rise may force Indian and Chinese buyers to shift to soya oil, which has risen at a much lower rate.
Analysts said top producers Indonesia and Malaysia could see palm output fall in April-June, rather than a gradual increase as usually expected, driving total stocks down by more than half to below 2.5 million tonnes by the end of the period, from a record 5 million tonnes in November.
“We need to cover quickly especially if this supply tightness comes into play,” said Sandeep Bajoria, an Indian vegetable oils trader. “If things get too bad, I won’t be surprised if soya oil takes more market share from palm oil in the future.”
While palm has gained 20 per cent just this month on heavy buying from India, China and Europe, soya oil has struggled to keep up, rising only 10 per cent in 2009. Also, India recenty removed its duty on soya oil imports, bringing it on par with crude palm oil and making it an attractive option.
In addition, palm oil stocks in Malaysia hit a 20-month low by the end of March.
“Chinese traders may also shift to much cheaper soya oil if palm oil supplies dry up. So hopefully there might be a breather for stocks and prices,” said a trader.
Analysts said India, the world’s second-largest consumer of vegetable oils after China, has only covered 20 per cent of its crude palm oil requirements for May, which is generally 100,000 to 200,000 tonnes monthly, sparking some panic.
In addition, India will start buying aggressively to meet a surge in demand, which normally happens during the Hindu festival months from September to November.
“We could see prices go up to RM2,600-RM2,700 in the near term due to bad production,” said S. Paramalingam, executive director of Pelindung Bestari. “The markets have tested the 2,550 level this week, so technicals are gearing for another rally.”
Traders said even if some importers switched to buy a few cargoes from Indonesia to cover immediate needs because of high Malaysian prices that will not do much to ease Malaysian prices.
“Our port infrastructure is not ready to handle too many vessels,” said Derom Bangun, vice-chairman of the Indonesian Palm Oil Board. “If suddenly five vessels are diverted from Malaysia to Indonesia, we are not ready to accept them.”
Malaysia has approved the replanting of 110,000 hectares covered with oil palms above 25 years old, accounting for about half of the industry-wide scheme started in October that aimed to remove 700,000 tonnes of palm oil, while stocks swelled.
“The job of making production weaker is under way,” said M.R Chandran, an independent industry analyst and former head of the Malaysian Palm Oil Council.
“Now there is a proposal from the industry to replant oil palms between 20 and 25 years old as these account for a larger chunk of total hectarage.”
Traders said if the government decides to support this new scheme and implements it when production peaks towards the end of the year, at least 2 million tonnes could be taken off the market. - Reuters
This is already reflected in Malaysian prices - palm is one of the biggest gainers this year, soaring 42 per cent - and analysts say any further rise may force Indian and Chinese buyers to shift to soya oil, which has risen at a much lower rate.
Analysts said top producers Indonesia and Malaysia could see palm output fall in April-June, rather than a gradual increase as usually expected, driving total stocks down by more than half to below 2.5 million tonnes by the end of the period, from a record 5 million tonnes in November.
“We need to cover quickly especially if this supply tightness comes into play,” said Sandeep Bajoria, an Indian vegetable oils trader. “If things get too bad, I won’t be surprised if soya oil takes more market share from palm oil in the future.”
While palm has gained 20 per cent just this month on heavy buying from India, China and Europe, soya oil has struggled to keep up, rising only 10 per cent in 2009. Also, India recenty removed its duty on soya oil imports, bringing it on par with crude palm oil and making it an attractive option.
In addition, palm oil stocks in Malaysia hit a 20-month low by the end of March.
“Chinese traders may also shift to much cheaper soya oil if palm oil supplies dry up. So hopefully there might be a breather for stocks and prices,” said a trader.
Analysts said India, the world’s second-largest consumer of vegetable oils after China, has only covered 20 per cent of its crude palm oil requirements for May, which is generally 100,000 to 200,000 tonnes monthly, sparking some panic.
In addition, India will start buying aggressively to meet a surge in demand, which normally happens during the Hindu festival months from September to November.
“We could see prices go up to RM2,600-RM2,700 in the near term due to bad production,” said S. Paramalingam, executive director of Pelindung Bestari. “The markets have tested the 2,550 level this week, so technicals are gearing for another rally.”
Traders said even if some importers switched to buy a few cargoes from Indonesia to cover immediate needs because of high Malaysian prices that will not do much to ease Malaysian prices.
“Our port infrastructure is not ready to handle too many vessels,” said Derom Bangun, vice-chairman of the Indonesian Palm Oil Board. “If suddenly five vessels are diverted from Malaysia to Indonesia, we are not ready to accept them.”
Malaysia has approved the replanting of 110,000 hectares covered with oil palms above 25 years old, accounting for about half of the industry-wide scheme started in October that aimed to remove 700,000 tonnes of palm oil, while stocks swelled.
“The job of making production weaker is under way,” said M.R Chandran, an independent industry analyst and former head of the Malaysian Palm Oil Council.
“Now there is a proposal from the industry to replant oil palms between 20 and 25 years old as these account for a larger chunk of total hectarage.”
Traders said if the government decides to support this new scheme and implements it when production peaks towards the end of the year, at least 2 million tonnes could be taken off the market. - Reuters
Bloomberg Bernanke Says Crisis Damage Likely to Be Long-Lasting
April 17 (Bloomberg) -- Federal Reserve Chairman Ben S. Bernanke said the collapse of U.S. lending will probably cause “long-lasting” damage to home prices, household wealth and borrowers’ credit scores.
“One would be forgiven for concluding that the assumed benefits of financial innovation are not all they were cracked up to be,” the Fed chairman said today in a speech at the central bank’s community affairs conference in Washington. “The damage from this turn in the credit cycle -- in terms of lost wealth, lost homes, and blemished credit histories -- is likely to be long-lasting.”
The U.S. central bank has cut the benchmark lending rate to as low as zero and taken unprecedented steps to stem the credit crisis through direct support of consumer finance and mortgage lending. The Fed plans to purchase as much as $1.25 trillion in agency mortgage-backed securities this year to support the housing market and is providing financing for securities backed by loans to consumers and small businesses.
‘Onerous’ Restrictions
“We should not attempt to impose restrictions on credit providers so onerous that they prevent the development of new products and services in the future,” Bernanke said. Regulations should ensure “innovations are sufficiently transparent and understandable to allow consumer choice to drive good market outcomes.”
‘Right Direction’
“The Fed is walking in the right direction on a number of issues, and it has opened doors for real action,” said Jim Carr, chief operating officer at the National Community Reinvestment Coalition, an association of non-profit organizations dedicated to improving financial services. “But we are still waiting for more aggressive enforcement.”
Unemployment rose to 8.5 percent in March, the highest since 1983. U.S. home prices fell 8.2 percent in 2008, according to the Federal Housing Finance Agency. Household net worth fell $11.2 trillion in 2008, according to Fed data.
Homeownership Rates
U.S. homeownership rates fell to 67.5 percent in the fourth quarter of 2008 from 68.9 percent in the same quarter of 2006, according to U.S. Census Bureau data. Black homeownership rates have fallen to 46.8 percent from 48.2 percent in the same period, and Hispanic homeownership stood at 48.6 versus 49.5 percent. more...
“One would be forgiven for concluding that the assumed benefits of financial innovation are not all they were cracked up to be,” the Fed chairman said today in a speech at the central bank’s community affairs conference in Washington. “The damage from this turn in the credit cycle -- in terms of lost wealth, lost homes, and blemished credit histories -- is likely to be long-lasting.”
The U.S. central bank has cut the benchmark lending rate to as low as zero and taken unprecedented steps to stem the credit crisis through direct support of consumer finance and mortgage lending. The Fed plans to purchase as much as $1.25 trillion in agency mortgage-backed securities this year to support the housing market and is providing financing for securities backed by loans to consumers and small businesses.
‘Onerous’ Restrictions
“We should not attempt to impose restrictions on credit providers so onerous that they prevent the development of new products and services in the future,” Bernanke said. Regulations should ensure “innovations are sufficiently transparent and understandable to allow consumer choice to drive good market outcomes.”
‘Right Direction’
“The Fed is walking in the right direction on a number of issues, and it has opened doors for real action,” said Jim Carr, chief operating officer at the National Community Reinvestment Coalition, an association of non-profit organizations dedicated to improving financial services. “But we are still waiting for more aggressive enforcement.”
Unemployment rose to 8.5 percent in March, the highest since 1983. U.S. home prices fell 8.2 percent in 2008, according to the Federal Housing Finance Agency. Household net worth fell $11.2 trillion in 2008, according to Fed data.
Homeownership Rates
U.S. homeownership rates fell to 67.5 percent in the fourth quarter of 2008 from 68.9 percent in the same quarter of 2006, according to U.S. Census Bureau data. Black homeownership rates have fallen to 46.8 percent from 48.2 percent in the same period, and Hispanic homeownership stood at 48.6 versus 49.5 percent. more...
Business Times Palm futures rise 2.2pc on tight supplies
Malaysian palm futures rose 2.2 per cent today as traders chased tight supplies, possibly restarting a rally that saw palm widen its premium to rival soyoil.“The underlying tone is panic because there is too little supply available. The funds know this and they are back,” said a trader with a local commodities brokerage.
The physical market was on the boil with dealers willing to fork out higher prices for palm oil as there appeared to be a shortage of supplies for April and May delivery.
The benchmark July contract on the Bursa Malaysia Derivatives Exchange rose RM52 to RM2,410 (US$670) per tonne by the midday break.
Other traded months rose between RM52 and RM64. Overall volume stood at 7,642 lots of 25 tonnes each.
Front month crude palm oil futures are up 52 per cent since January, while US soyoil is up only 11 per cent.
Vegetable oil markets are taking more guidance from weak soy stocks and droughts in South America rather than oil prices, which usually wield influence as soyoil and rapeseed are used as a feedstock for biofuels that compete with petroleum diesel.
US soybean prices rose 0.3 per cent to a fresh six-month high today on concerns that US supplies may hit a five-year low by August because of strong Chinese demand for American soy.
The most active September soyoil contract on China’s Dalian Commodity Exchange fell 1.3 per cent. Soyoil for May delivery at the Chicago Board of Trade rose 0.6 per cent after edging lower in the previous session.
In the Malaysian physical market, trades for April and May in the southern were done between RM2,550 and RM2,570. - Bloomberg
Associated Press Mixed signals abound, but economy remains weak
Companies are turning in surprisingly good quarterly earnings -- including better-than-expected news Friday from two relative weaklings in the banking and manufacturing industries -- but economists say a recovery is probably still months away.
Of the 52 companies in the Standard & Poor's 500 stock index that have reported first-quarter earnings so far, 62 percent have posted results that beat Wall Street expectations. And recent data has provided faint hope of a comeback.
Not so fast, economists say.
Mark Vitner, senior economist at Wachovia Corp., said that despite "that just maybe we can see some light at the end of the tunnel now," an end to the recession won't likely come until closer to year's end.
Even under that scenario, high unemployment would stretch well into 2010.
"I don't think we should oversell these flickers of improvement," said Brian Bethune, an economist with IHS Global Insight. "An actual recovery is still several months into the future -- it's not imminent."
On Friday, Citigroup Inc. and General Electric Co., two of the most beleaguered companies in their industries, turned in first-quarter results that beat Wall Street expectations.
Citi lost money for the quarter, but before paying dividends -- which were tied to the government's $45 billion investment in the company -- it actually earned $1.6 billion.
That report followed surprisingly solid earnings from JPMorgan Chase & Co., Goldman Sachs Group Inc. and Wells Fargo & Co. earlier in the week. But some analysts say the earnings announcements are concealing the depth of the financial industry's woes.
Goldman Sachs changed its calendar so a $780 million loss in December didn't drag down its reported earnings for the quarter. Wells Fargo minimized possible future losses on its purchase of failed bank Wachovia.
And thanks to a recent rule change, many banks were able to pump up the values of the toxic assets at the heart of the credit crunch. The change is "like a gain that goes right to their bottom line," said Lawrence Brown, an accounting professor at Georgia State University.
Looming over the banks is uncertainty over "stress tests" that regulators are conducting. Investors don't know how much information will be made public when results are announced May 4. But even faint reports of trouble could threaten the industry. more...
Of the 52 companies in the Standard & Poor's 500 stock index that have reported first-quarter earnings so far, 62 percent have posted results that beat Wall Street expectations. And recent data has provided faint hope of a comeback.
Not so fast, economists say.
Mark Vitner, senior economist at Wachovia Corp., said that despite "that just maybe we can see some light at the end of the tunnel now," an end to the recession won't likely come until closer to year's end.
Even under that scenario, high unemployment would stretch well into 2010.
"I don't think we should oversell these flickers of improvement," said Brian Bethune, an economist with IHS Global Insight. "An actual recovery is still several months into the future -- it's not imminent."
On Friday, Citigroup Inc. and General Electric Co., two of the most beleaguered companies in their industries, turned in first-quarter results that beat Wall Street expectations.
Citi lost money for the quarter, but before paying dividends -- which were tied to the government's $45 billion investment in the company -- it actually earned $1.6 billion.
That report followed surprisingly solid earnings from JPMorgan Chase & Co., Goldman Sachs Group Inc. and Wells Fargo & Co. earlier in the week. But some analysts say the earnings announcements are concealing the depth of the financial industry's woes.
Goldman Sachs changed its calendar so a $780 million loss in December didn't drag down its reported earnings for the quarter. Wells Fargo minimized possible future losses on its purchase of failed bank Wachovia.
And thanks to a recent rule change, many banks were able to pump up the values of the toxic assets at the heart of the credit crunch. The change is "like a gain that goes right to their bottom line," said Lawrence Brown, an accounting professor at Georgia State University.
Looming over the banks is uncertainty over "stress tests" that regulators are conducting. Investors don't know how much information will be made public when results are announced May 4. But even faint reports of trouble could threaten the industry. more...
Associated Press Stocks edge higher after Citi, GE earnings beat
NEW YORK (AP) -- Wall Street found enough in the latest earnings reports to keep its six-week rally alive.Stocks ended another winning week with a slender advance Friday as earnings from Citigroup Inc. and General Electric Co. came in ahead of the market's meager expectations.
The numbers weren't great by normal standards but were good enough to extend a rally that began in early March on signs that the economy might be finding some stability. Citigroup was the fourth bank in a week with news that pointed toward a budding recovery in the industry. But the company, echoing comments from JPMorgan Chase & Co. on Thursday, also said loan losses are expected to continue in the months ahead.
GE, meanwhile, said its first-quarter earnings dropped 36 percent as sales and profits shrank at its GE Capital financial division. The stock edged up 1 percent.
Kent Engelke, chief economic strategist at Capitol Securities Management, said the results placated investors. "If these companies didn't meet or exceed these expectations, we would have gotten killed," he said.
Wall Street showed resilience in the first big week of first-quarter earnings reports, weathering disappointments from chip maker Intel Corp. and Google Inc. While investors weren't happy with Friday's news, they weren't caving to uncertainty as they did the first two months of the year, when heavy selling brought the major indexes to 12-year lows. more...
Bloomberg Indo Tambangraya Expects Sales to Climb 17% on Higher Output
April 17 (Bloomberg) -- PT Indo Tambangraya Megah, an Indonesian coal producer, expects sales to climb by as much as 17 percent by value this year as production increases.
Sales may rise to between $1.33 billion and $1.54 billion from $1.32 billion in 2008, Finance Director Edward Manurung said at a press briefing in Jakarta. Output may expand to 20.5 million metric tons from 17.8 million tons last year, President
Somyot Ruchirawat told reporters.
Indo Tambangraya, a unit of Thailand’s Banpu Pcl., posted a fourfold increase in profit to $234.9 million in 2008 after selling more fuel at higher prices and benefiting from gains on derivative transactions.
The Jakarta-based mining company plans to set aside $126 million for capital spending this year, Somyot said. Most of that will be used for port and fleet expansion, he said.
For Related News and Information:
Indo Tambangraya’s financial analysis:
ITMG IJ FA
Stock index one-year price graph: JCI GP
--Editor: Ryan Woo.
Sales may rise to between $1.33 billion and $1.54 billion from $1.32 billion in 2008, Finance Director Edward Manurung said at a press briefing in Jakarta. Output may expand to 20.5 million metric tons from 17.8 million tons last year, President
Somyot Ruchirawat told reporters.
Indo Tambangraya, a unit of Thailand’s Banpu Pcl., posted a fourfold increase in profit to $234.9 million in 2008 after selling more fuel at higher prices and benefiting from gains on derivative transactions.
The Jakarta-based mining company plans to set aside $126 million for capital spending this year, Somyot said. Most of that will be used for port and fleet expansion, he said.
For Related News and Information:
Indo Tambangraya’s financial analysis:
ITMG IJ
Stock index one-year price graph: JCI
--Editor: Ryan Woo.
Macquarie Medco Energi – why the stock underperforming badly
Despite its dirt cheap valuation (EV to 2P reserves of around US$1/bbl), the stock has lagged the broader market on a retail buying day. The stock is trading lower now at Rp2,575 when oil is around US$50, compared to the Rp3,600 share price level in Jan-07 when oil was at the same level. I met with the company recently to identify the problem areas, and to see whether we could see any lights at the end of the tunnel. The answer is no, not quite. Key issues:
1. Lybia deal has not been closed to date. China National Petroleum Corp’s (CNPC) offer to buy Verenex, 50% partner in Medco’s Lybia project, that suppose to show the under-valuation of Medco shares and promise development capital, has not been approved by Lybian government. The offer period has expired but CNPC has not said anything thus far.
2. Senoro LNG project showing limited progress. The gas sales agreement (GSA) needs a selling agency agreement (SAA) from the Indo gov’t. The minister of energy Mr. Purnomo is unwilling to issue the SAA without approval from House of Representative, and the House thinks the agreed gas price formula is too low. In the end, this could be a political issue. Election and power struggle among political parties may have something to do with the delay. No one understands how the changing political landscape may affect Medco.
3. Debts maturing in the very near term. It has a US$220mn convertible bonds that will likely be redeemed on 12 May 2009. It has a Rp1.18trn (US$107mn) Rp bonds maturing on 12 June 2009. Per Dec ’08, Medco shows a cash position of US$350mn and a short term investment of US$173mn. The company has set aside the cash for the CB redemption, while looking to refinance the Rp bonds with another bond issue. But the company’s 2009-10 capex program is being reviewed, with around US$100mn per year committed capex for those two years. Note that redemption of the CB will release a 6.7% stake in Medco as treasury shares, adding the treasury shares available for sale to 11.7%.
4. No asset sale since October 2008. Medco sold Apexindo in Sep-08 and Tuban oil block in Oct-08, but since then the asset sale program has showed no progress. The company has been looking to sell 4 other blocks Kakap, Bawean, Lematang, and Langsa for some time now.
Before there is any progress on any of the above issues, the stock may continue to face strong headwinds despite being under-owned by institutional investors.
1. Lybia deal has not been closed to date. China National Petroleum Corp’s (CNPC) offer to buy Verenex, 50% partner in Medco’s Lybia project, that suppose to show the under-valuation of Medco shares and promise development capital, has not been approved by Lybian government. The offer period has expired but CNPC has not said anything thus far.
2. Senoro LNG project showing limited progress. The gas sales agreement (GSA) needs a selling agency agreement (SAA) from the Indo gov’t. The minister of energy Mr. Purnomo is unwilling to issue the SAA without approval from House of Representative, and the House thinks the agreed gas price formula is too low. In the end, this could be a political issue. Election and power struggle among political parties may have something to do with the delay. No one understands how the changing political landscape may affect Medco.
3. Debts maturing in the very near term. It has a US$220mn convertible bonds that will likely be redeemed on 12 May 2009. It has a Rp1.18trn (US$107mn) Rp bonds maturing on 12 June 2009. Per Dec ’08, Medco shows a cash position of US$350mn and a short term investment of US$173mn. The company has set aside the cash for the CB redemption, while looking to refinance the Rp bonds with another bond issue. But the company’s 2009-10 capex program is being reviewed, with around US$100mn per year committed capex for those two years. Note that redemption of the CB will release a 6.7% stake in Medco as treasury shares, adding the treasury shares available for sale to 11.7%.
4. No asset sale since October 2008. Medco sold Apexindo in Sep-08 and Tuban oil block in Oct-08, but since then the asset sale program has showed no progress. The company has been looking to sell 4 other blocks Kakap, Bawean, Lematang, and Langsa for some time now.
Before there is any progress on any of the above issues, the stock may continue to face strong headwinds despite being under-owned by institutional investors.
Macquarie Retail stocks for tomorrow
The retail investor buying binge appears to be in early days, considering that 1) Bank time deposit rate has not fallen much over the last 3 months despite aggressive BI rate cuts, 2) Margin financing for retail investors has not been widely available since the collapse of the repo market in Oct-08, 3) Bakrie stocks remain on the “non marginable stock” list issued by the stock exchange. I would advice investors do more work on the following list of “retail” stocks (Not Rated by Macquarie):
1. Wijaya Karya (WIKA IJ) – state-owned construction company that will benefit if the government spending projects accelerate during SBY’s next presidential term. The company just held analyst meeting on 14 April and guides for an FY09 net income of Rp175bn or under 10x P/E. Strong balance sheet.
2. Darma Henwa (DEWA IJ) – Bumi Resources just acquired this mining contracting company (same business model as United Tractors’s subsidiary Pama) at Rp350 in Dec-08. Based on the ambitious growth plan presented by Bumi, the aggressive growth may put the stock on under 5x P/E for 2010. The company’s faith is largely under the control of parent co Bumi Resources, who could be eager to show that the acquisition is a good deal to investors.
1. Wijaya Karya (WIKA IJ) – state-owned construction company that will benefit if the government spending projects accelerate during SBY’s next presidential term. The company just held analyst meeting on 14 April and guides for an FY09 net income of Rp175bn or under 10x P/E. Strong balance sheet.
2. Darma Henwa (DEWA IJ) – Bumi Resources just acquired this mining contracting company (same business model as United Tractors’s subsidiary Pama) at Rp350 in Dec-08. Based on the ambitious growth plan presented by Bumi, the aggressive growth may put the stock on under 5x P/E for 2010. The company’s faith is largely under the control of parent co Bumi Resources, who could be eager to show that the acquisition is a good deal to investors.
Macquarie Nickel – signs of life after the collapse
PT Inco (INCO IJ) should continue to see share price strength in the near term, following the unexpected strength in the nickel price. Today, Macquarie commodities team acknowledges that when demand turns for nickel, the price turns very sharply (due to speculative over-stocking). Also, tighter scrap supplies in the upturn can lead to a massive rise in primary nickel demand. It is likely that there would be a significant lag before supply taken off-line could be brought back into production (2-6 months). Finally, history tells us that LME stocks are not always readily “available” in an upturn! The stock trades on 2.1x P/Book and Macq rates Underperform.
Some of the factors explaining the recent rally are:
(1) Short-covering: open interest on the LME has fallen over the past week as prices have rallied, indicating that speculative shorts have covered.
(2) Stainless orders on the rise: after collapsing for the past 6-9 months, reports are filtering through in Europe and in parts of Asia (especially Taiwan) of a rise in orders for stainless steel. There are also reports of a small rise in stainless steel base prices in some markets for the first time in a while.
(3) A growing shortage of secondary nickel: In the stainless steel market, almost half the nickel comes from recycled stainless steel scrap and reports from the market indicate that scrap availability will fall by more than 20% this year. In China, we have heard of a mad scramble to buy ferronickel from the import market as a result of tight scrap availability (and also a collapse in nickel pig iron production). This has run down a lot of the non-reported nickel stocks in recent months.
(4) Fear of further supply disruptions: speculation is growing about potential industrial action at Vale Inco’s Canadian nickel operations, where new labour contracts are due for renewal at the end of May. Including half the Voisey’s Bay product (which is processed at Sudbury), this could affect around 100,000tpa of nickel (around 8% of 2009 world output).
Risks: the team thinks it may be too early to be buying nickel and the risks of a short-term pull back are still quite high. But they acknowledge that risks are gradually moving to the upside as the year progresses and being short ahead of a potential Vale Inco strike may be risky. What concerns the team is the enormous stock sitting on the LME (just over a month demand compared with just over a week of demand in copper for example) and the industry is operating at such a low rate of utilisation (around 75% according to our estimates compared with over 90% in copper). Plenty of potential supply hangs over this market.
Some of the factors explaining the recent rally are:
(1) Short-covering: open interest on the LME has fallen over the past week as prices have rallied, indicating that speculative shorts have covered.
(2) Stainless orders on the rise: after collapsing for the past 6-9 months, reports are filtering through in Europe and in parts of Asia (especially Taiwan) of a rise in orders for stainless steel. There are also reports of a small rise in stainless steel base prices in some markets for the first time in a while.
(3) A growing shortage of secondary nickel: In the stainless steel market, almost half the nickel comes from recycled stainless steel scrap and reports from the market indicate that scrap availability will fall by more than 20% this year. In China, we have heard of a mad scramble to buy ferronickel from the import market as a result of tight scrap availability (and also a collapse in nickel pig iron production). This has run down a lot of the non-reported nickel stocks in recent months.
(4) Fear of further supply disruptions: speculation is growing about potential industrial action at Vale Inco’s Canadian nickel operations, where new labour contracts are due for renewal at the end of May. Including half the Voisey’s Bay product (which is processed at Sudbury), this could affect around 100,000tpa of nickel (around 8% of 2009 world output).
Risks: the team thinks it may be too early to be buying nickel and the risks of a short-term pull back are still quite high. But they acknowledge that risks are gradually moving to the upside as the year progresses and being short ahead of a potential Vale Inco strike may be risky. What concerns the team is the enormous stock sitting on the LME (just over a month demand compared with just over a week of demand in copper for example) and the industry is operating at such a low rate of utilisation (around 75% according to our estimates compared with over 90% in copper). Plenty of potential supply hangs over this market.
CLSA INDO: construction update
Hadi looks at Wijaya Karya (WIKA IJ), Indonesia’s largest construction company. He maintain the BUY rec and TP Rp400.
The whole construction sector is miniscule, with total market cap of only US$269mn. Even WIKA, the biggest one in the sector, has a market cap of only US$150mn. This one is only for the super-duper patient investors.
A big obstacle to overcome in this sector is that margins are so tiny (net profit of 2-3%) that any error/uncollectible receivables or changes in govt policy will dramatically affect the profitability. Plus industry is super competitive with thousands of active construction companies.
For example, the new 3% fixed rate tax formula for construction service introduced mid last year (applied retroactively) lacked socialisation really hurt profits. For the first 2 years of new tax formula implementation, contractors were the ones paying the expenses because the contracts had already been signed.
Key points from the report:
Rising market share in the still growing market. Expect market share to go up from 6.6% to 8% in 2010.
Expect national construction spending to recover in 2010 reaching Rp110tn or 5% CAGR 2008-10.
Infrastructure spending will be the main growth driver and we expect the property sector to recover in 2010.
WIKA has sufficient order book. It has secured Rp11.3tn order book of which Rp5.1tn will be converted as 2009 revenues] or 71% of our FY forecast.
Valuation: attractive at 6.6x PE10CL. Our TP of Rp400 is based on 10x PE10CL.
The whole construction sector is miniscule, with total market cap of only US$269mn. Even WIKA, the biggest one in the sector, has a market cap of only US$150mn. This one is only for the super-duper patient investors.
A big obstacle to overcome in this sector is that margins are so tiny (net profit of 2-3%) that any error/uncollectible receivables or changes in govt policy will dramatically affect the profitability. Plus industry is super competitive with thousands of active construction companies.
For example, the new 3% fixed rate tax formula for construction service introduced mid last year (applied retroactively) lacked socialisation really hurt profits. For the first 2 years of new tax formula implementation, contractors were the ones paying the expenses because the contracts had already been signed.
Key points from the report:
Rising market share in the still growing market. Expect market share to go up from 6.6% to 8% in 2010.
Expect national construction spending to recover in 2010 reaching Rp110tn or 5% CAGR 2008-10.
Infrastructure spending will be the main growth driver and we expect the property sector to recover in 2010.
WIKA has sufficient order book. It has secured Rp11.3tn order book of which Rp5.1tn will be converted as 2009 revenues] or 71% of our FY forecast.
Valuation: attractive at 6.6x PE10CL. Our TP of Rp400 is based on 10x PE10CL.
CLSA INDO UPDATE - INCO NOT PAYING DIVIDEND; ITMG FINAL 706/SH
INCO: coming off 2.9% now. Company announced it is not paying a dividend for 2008. Earlier rumors of a "special" dividend have helped the stock's recent strength, so some profit taking is occurring.
ITMG: at the same time ITMG said it will pay a IDR 706/sh final dividend for 2008. We expected about 450-500/sh, so this is a bit more than expected. Stock up 2.7% right now, but off morning highs.
ITMG: at the same time ITMG said it will pay a IDR 706/sh final dividend for 2008. We expected about 450-500/sh, so this is a bit more than expected. Stock up 2.7% right now, but off morning highs.
Deutsche Bank - Is This the Bottom?
The impressive rally in equity markets over the past five weeks begs the question whether having seen the worst of the recession the stage is set for growth, in which case this rally may be sustainable.
In our view, while China is recovering from the first of its two “dips” during 2009-2010 (the second trough in growth will likely be in 2010Q2) – we think it reasonable to expect that the rest of Asia will follow the US and European economies’ growth trajectory, with the trough coming around mid-year.
Picking the time in which growth bottoms out is important because equity markets in Asia have tended to begin to rally only when YoY growth troughs – not when QoQ growth starts to improve. Hence, we think this equity rally is not well founded in fundamentals and could well reverse in the coming weeks. We would be more comfortable with a rally starting around mid-year.
However, that does not mean to say we see that as the beginning of a sustained bull market. We are not as impressed with US official efforts to restructure the banking system as the markets seem to be. The Fed and Treasury policies may restore some stability – at least temporarily – to the banking system, which would itself be positive for growth. But we think a recapitalization of the US and EU banking systems is necessary for private sector demand growth to be sustained. Without a resolution of the capital deficiency, the outlook is for uneven and generally disappointingly low growth in our view. This would mean the same for Asia’s small open economies.
In our view, while China is recovering from the first of its two “dips” during 2009-2010 (the second trough in growth will likely be in 2010Q2) – we think it reasonable to expect that the rest of Asia will follow the US and European economies’ growth trajectory, with the trough coming around mid-year.
Picking the time in which growth bottoms out is important because equity markets in Asia have tended to begin to rally only when YoY growth troughs – not when QoQ growth starts to improve. Hence, we think this equity rally is not well founded in fundamentals and could well reverse in the coming weeks. We would be more comfortable with a rally starting around mid-year.
However, that does not mean to say we see that as the beginning of a sustained bull market. We are not as impressed with US official efforts to restructure the banking system as the markets seem to be. The Fed and Treasury policies may restore some stability – at least temporarily – to the banking system, which would itself be positive for growth. But we think a recapitalization of the US and EU banking systems is necessary for private sector demand growth to be sustained. Without a resolution of the capital deficiency, the outlook is for uneven and generally disappointingly low growth in our view. This would mean the same for Asia’s small open economies.
Goldman Sachs - Real Estate - A glance at residential sales and unsold backlog across Asia
Goldman Sachs - A glance at residential sales and unsold backlog across AsiaPick-up in residential transaction volume across Asia
We have witnessed a steady improvement in residential sales volume across different Asian cities in recent months, though physical price performance has been mixed. Continuous volume pick-up helps clear unsold backlog and supports our recent valuation and rating upgrades for selective developer stocks in the region, especially China developers.
The sequential improvement is stronger in China
Arguably, the increase in residential sales since the beginning of the year was partly due to seasonality because March-May is the traditional sales season for Asia’s residential markets. However, it is important to note that the 12-month rolling average monthly take-up, which helps correct seasonality in the data series, also showed a steady rising trend for most Asian cities (except Hong Kong and Tokyo) in our coverage universe and this positive trend is slightly longer in Mainland China.
Number of inventory months is falling
When one compares the unsold inventory with the 12-month rolling monthly take-up, one will realize that the major cities in Mainland China, especially Shenzhen and Guangzhou, have seen a sharp reduction in the number of months required to clear their unsold backlog. Singapore also demonstrated a similar trend, though the absolute number of unsold units is substantial. Hong Kong tended to be in the minority and recorded a higher number of inventory months in 1Q09, but the absolute level of unsold backlog is still low.
Key risk
Further deterioration of macroeconomic outlook and unexpected government policies
DBS Indonesia Industry Focus Cement Sector
Down but not out
There is a high possibility that cement sales may fall in 2009. However, we think it should recover next year driven by both recovery of the economy in general and the stimulus package launched by the government. In the long term, we foresee a strong growth for cement demand driven by huge market potential in Indonesia. Also competition should be healthy during the down time. However, coal purchase price adjustment could put pressure on FY09 gross profit margin. We reinstate our coverage on INTP with Buy call and TP: Rp6,800; and maintain our Buy call on SMGR with TP:Rp4,850
Sluggish sales. We foresee a 5% decline in cement sales in 2009 on the back of the macroeconomic environment, plunge in commodity prices as well as high base of cement sales in 2008. However, we believe that cement demand will start to recover next year and surpass 2008’s sales in 2011. We forecast cement sales to grow 6% in FY10-11.
Healthy competition for now. With the expected weak demand in 2009, we do not foresee a price war between cement producers, and they will manage to maintain market share. However, if 2006 slowdown is a guide, cement producers will start a price war upon signs of a recovery in cement demand.
Margin contraction. Despite the decline in coal price from its peak mid last year, coal price contracts between cement producers and coal miners were still low at
US$35-45/ton. As such, the current coal price has doubled compared to last year’s contract price, resulting in higher energy cost as coal accounts for 25% of the
total production cost
Down but not out. Long-term demand for cement should remain strong in Indonesia. We believe demand for cement will grow at a fast pace in the long-term as indicated by lag of infrastructure in the country shown by the current ratio of length of toll road to the population. At the same time, the expected low interest rate environment should bode well for the property development.
Top pick: INTP. We upgraded the cement sector to Positive as we believe demand will remain strong in the long-term. INTP is our top pick on the back of its strong and consistent performance and healthy balance sheet.
There is a high possibility that cement sales may fall in 2009. However, we think it should recover next year driven by both recovery of the economy in general and the stimulus package launched by the government. In the long term, we foresee a strong growth for cement demand driven by huge market potential in Indonesia. Also competition should be healthy during the down time. However, coal purchase price adjustment could put pressure on FY09 gross profit margin. We reinstate our coverage on INTP with Buy call and TP: Rp6,800; and maintain our Buy call on SMGR with TP:Rp4,850
Sluggish sales. We foresee a 5% decline in cement sales in 2009 on the back of the macroeconomic environment, plunge in commodity prices as well as high base of cement sales in 2008. However, we believe that cement demand will start to recover next year and surpass 2008’s sales in 2011. We forecast cement sales to grow 6% in FY10-11.
Healthy competition for now. With the expected weak demand in 2009, we do not foresee a price war between cement producers, and they will manage to maintain market share. However, if 2006 slowdown is a guide, cement producers will start a price war upon signs of a recovery in cement demand.
Margin contraction. Despite the decline in coal price from its peak mid last year, coal price contracts between cement producers and coal miners were still low at
US$35-45/ton. As such, the current coal price has doubled compared to last year’s contract price, resulting in higher energy cost as coal accounts for 25% of the
total production cost
Down but not out. Long-term demand for cement should remain strong in Indonesia. We believe demand for cement will grow at a fast pace in the long-term as indicated by lag of infrastructure in the country shown by the current ratio of length of toll road to the population. At the same time, the expected low interest rate environment should bode well for the property development.
Top pick: INTP. We upgraded the cement sector to Positive as we believe demand will remain strong in the long-term. INTP is our top pick on the back of its strong and consistent performance and healthy balance sheet.
CIMB Plantations Sector Note - Short-term growth spurt for CPO price
Sector Note - Short-term growth spurt for CPO price - by Ivy Ng Lee Fang CFA
We are raising our CPO price forecasts by 21% to US$600 per tonne for 2009 and by 12% to US$660 per tonne for 2010 in view of the persistent drought in South America, weaker-than-expected CPO production, lower import duties for edible oils in India and higher-than-expected CPO price in 1Q09. This results in earnings upgrades of up to 95% for almost all the regional planters under our coverage. We are also adjusting upwards their target prices by 21-62% to account for our earnings upgrade and a higher target forward P/E multiple in line with the recent upgrade of our target market P/Es across the region. Sime Darby is raised to Trading Buy from Underperform, Golden Agri goes from Neutral to Trading Buy and London Sumatra is upgraded to Outperform from Neutral. Astra Agro and Hap Seng Plantations are raised to Neutral from Underperform. Our stance on the regional plantation sector is upgraded to NEUTRAL from Underweight.
We are raising our CPO price forecasts by 21% to US$600 per tonne for 2009 and by 12% to US$660 per tonne for 2010 in view of the persistent drought in South America, weaker-than-expected CPO production, lower import duties for edible oils in India and higher-than-expected CPO price in 1Q09. This results in earnings upgrades of up to 95% for almost all the regional planters under our coverage. We are also adjusting upwards their target prices by 21-62% to account for our earnings upgrade and a higher target forward P/E multiple in line with the recent upgrade of our target market P/Es across the region. Sime Darby is raised to Trading Buy from Underperform, Golden Agri goes from Neutral to Trading Buy and London Sumatra is upgraded to Outperform from Neutral. Astra Agro and Hap Seng Plantations are raised to Neutral from Underperform. Our stance on the regional plantation sector is upgraded to NEUTRAL from Underweight.
UBS Indonesia Nickel
Rally overdone, fundamentals still weak
A sentiment-based rather than a fundamentals rally
Although equity markets, by nature, trade ahead of fundamentals, we think the 103% rally in Indonesian nickel stocks is premature. We see no near-term recovery in nickel demand, and highlight that the metal is not a primary beneficiary of stimulus investment. As such, we believe Antam and PT Inco Indonesia are overvalued; we reiterate our Sell ratings on these stocks and cut our price targets.
Outlook for nickel remains weak
Nickel’s c400% price growth in 2005-07 resulted in significant new production and oversupply. This hit the market in mid-2008, just as demand was falling. Although much output has been cut since then, anecdotal evidence suggests that the nickel market will remain oversupplied this year.
Stainless steel profit warnings supports bearish sentiment
As stainless steel accounts for 65% of nickel consumption, we believe the sector’s bearish sentiment supports our expectation of further nickel demand and price weakness. For example, metal conglomerate ThyssenKrupp recently exhibited a Q109 loss in stainless steel earnings due to price weakness and inventory writedowns, which our European analyst expects to continue in Q2 and Q3 2009.
Implied nickel price at 70% premium to spot
We think Indonesian nickel stocks, Antam and Inco, are overvalued, trading at 17.4x and 33.2x 2009E PE. We highlight that although high mining multiples usually represent a cyclical trough, we think the 103% rally since October 2008 is overdone. We highlight that the implied nickel price is 70% above the spot price.
A sentiment-based rather than a fundamentals rally
Although equity markets, by nature, trade ahead of fundamentals, we think the 103% rally in Indonesian nickel stocks is premature. We see no near-term recovery in nickel demand, and highlight that the metal is not a primary beneficiary of stimulus investment. As such, we believe Antam and PT Inco Indonesia are overvalued; we reiterate our Sell ratings on these stocks and cut our price targets.
Outlook for nickel remains weak
Nickel’s c400% price growth in 2005-07 resulted in significant new production and oversupply. This hit the market in mid-2008, just as demand was falling. Although much output has been cut since then, anecdotal evidence suggests that the nickel market will remain oversupplied this year.
Stainless steel profit warnings supports bearish sentiment
As stainless steel accounts for 65% of nickel consumption, we believe the sector’s bearish sentiment supports our expectation of further nickel demand and price weakness. For example, metal conglomerate ThyssenKrupp recently exhibited a Q109 loss in stainless steel earnings due to price weakness and inventory writedowns, which our European analyst expects to continue in Q2 and Q3 2009.
Implied nickel price at 70% premium to spot
We think Indonesian nickel stocks, Antam and Inco, are overvalued, trading at 17.4x and 33.2x 2009E PE. We highlight that although high mining multiples usually represent a cyclical trough, we think the 103% rally since October 2008 is overdone. We highlight that the implied nickel price is 70% above the spot price.
Jumat, 17 April 2009
Market News
GDP China
China posted its slowest ever quarterly growth in a signal of the frailty of the global economy. Economy grew a slower-than-expected 6.1 percent in the first quarter.
The Fed
The Federal Reserve’s Beige Book, based on observations from March through April 6, reported that overall economic activity remained weak and contracted further in some cases.
INDF
Rumors, PT Indofood Sukses Makmur Tbk (INDF) had plans to start exploring Initial Public Offering (IPO) Bogasari. In addition, the estimated first quarter 2009 profit company that predicted an increase of 15%. The growth of sales in 2009 of PT Indofood Sukses Makmur Tbk (INDF) also predicted increased. With the strengthening of the rupiah exchange rate of loss will be lower when compared to 2008 and the company will have incentives PPh because the number of free float above 40%.
Wheat
Wheat prices rose for the first time in three days on signs that freeze damage to winter crops in parts of Oklahoma and southwest Kansas was worse than estimated. Temperatures in the region fell below 20 degrees Fahrenheit (minus 7 Celsius) on April 6 and April 7, government data show. The freeze probably harmed plants as they were beginning to produce grain
TIN
Tin climbed $150, or 1.3 percent, to $11,500 a ton. A close at that price would be the highest since Jan. 27. The amount of the metal scheduled to be withdrawn from LME-monitored warehouses more than doubled to 835 tons, exchange data today showed. Increases in so-called canceled warrants may indicate stronger demand.
Nickel
Nickel declined $50, or 0.4 percent, to $12,450 a ton. Inventories rose for the first time since April 7, climbing 84 tons to 105,348 tons.
Elnusa
State of the Ministry of State Owned (BUMN) to encourage PT Pertamina to increase the portion of shares of PT Elnusa Tbk (Elsa) during action against the corporation is profitable takeovers.
China posted its slowest ever quarterly growth in a signal of the frailty of the global economy. Economy grew a slower-than-expected 6.1 percent in the first quarter.
The Fed
The Federal Reserve’s Beige Book, based on observations from March through April 6, reported that overall economic activity remained weak and contracted further in some cases.
INDF
Rumors, PT Indofood Sukses Makmur Tbk (INDF) had plans to start exploring Initial Public Offering (IPO) Bogasari. In addition, the estimated first quarter 2009 profit company that predicted an increase of 15%. The growth of sales in 2009 of PT Indofood Sukses Makmur Tbk (INDF) also predicted increased. With the strengthening of the rupiah exchange rate of loss will be lower when compared to 2008 and the company will have incentives PPh because the number of free float above 40%.
Wheat
Wheat prices rose for the first time in three days on signs that freeze damage to winter crops in parts of Oklahoma and southwest Kansas was worse than estimated. Temperatures in the region fell below 20 degrees Fahrenheit (minus 7 Celsius) on April 6 and April 7, government data show. The freeze probably harmed plants as they were beginning to produce grain
TIN
Tin climbed $150, or 1.3 percent, to $11,500 a ton. A close at that price would be the highest since Jan. 27. The amount of the metal scheduled to be withdrawn from LME-monitored warehouses more than doubled to 835 tons, exchange data today showed. Increases in so-called canceled warrants may indicate stronger demand.
Nickel
Nickel declined $50, or 0.4 percent, to $12,450 a ton. Inventories rose for the first time since April 7, climbing 84 tons to 105,348 tons.
Elnusa
State of the Ministry of State Owned (BUMN) to encourage PT Pertamina to increase the portion of shares of PT Elnusa Tbk (Elsa) during action against the corporation is profitable takeovers.
Crude palm oil futures slide on long liquidation
Crude palm oil (CPO) futures prices on Bursa Malaysia Derivatives closed lower yesterday on long liquidation, dealers said.They said the market saw profit-taking activities for the second consecutive day after having been overbought for a week.
“The market went up so fast. It has gone up more than RM300 in a week and now it’s time for profit-taking,” one of the dealers said.
According to him, the market will see further liquidation today if the crude oil and soyoil markets continue to be weak.
The support and resistance levels of the CPO futures prices are expected to be between RM2,300 and RM2,400 per tonne today, he said.
At the close yesterday, May 2009 fell RM75 to RM2,500 per tonne, June 2009 dropped RM49 to RM2,410, June 2009 declined RM40 to RM2,358 per tonne and July 2009 stood unchanged at RM2,316 per tonne.
Volume was lower at 16,116 lots compared with 21,681 lots on Wednesday and open interests declined to 85,448 contracts from 85,992 contracts previously.
On the physical market, April South went down by RM20 to settle at RM2,600 per tonne.
Bloomberg Crude Oil Rises After Unexpected Decline in U.S. Jobless Claims
April 16 (Bloomberg) -- Crude oil rose after the number of U.S. workers claiming jobless benefits unexpectedly fell last week, indicating the pace of economic decline may be slowing.
Oil climbed as much as 2.5 percent after the Labor Department reported that claims decreased by 53,000 to 610,000 in the week ended April 11, the fewest since January. Chinese industrial production expanded by 8.3 percent in March from a year earlier, up from 3.8 percent in the first two months, the statistics bureau said today in Beijing.
“The rise in prices has nothing directly to do with oil,” said Nauman Barakat, senior vice president of global energy futures at Macquarie Futures USA Inc. in New York. “We are getting tidbits of news from China and the U.S. that hint that the worst may be over.”
Crude oil for May delivery rose 73 cents, or 1.5 percent, to settle at $49.98 a barrel at 2:49 p.m. on the New York Mercantile Exchange. Prices are up 12 percent so far this year.
The Federal Reserve said in its Beige Book business survey yesterday that economic contractions were slowing or stabilizing in San Francisco, the largest district, as well as in New York, Chicago, Kansas City and Dallas. more...
Oil climbed as much as 2.5 percent after the Labor Department reported that claims decreased by 53,000 to 610,000 in the week ended April 11, the fewest since January. Chinese industrial production expanded by 8.3 percent in March from a year earlier, up from 3.8 percent in the first two months, the statistics bureau said today in Beijing.
“The rise in prices has nothing directly to do with oil,” said Nauman Barakat, senior vice president of global energy futures at Macquarie Futures USA Inc. in New York. “We are getting tidbits of news from China and the U.S. that hint that the worst may be over.”
Crude oil for May delivery rose 73 cents, or 1.5 percent, to settle at $49.98 a barrel at 2:49 p.m. on the New York Mercantile Exchange. Prices are up 12 percent so far this year.
The Federal Reserve said in its Beige Book business survey yesterday that economic contractions were slowing or stabilizing in San Francisco, the largest district, as well as in New York, Chicago, Kansas City and Dallas. more...
Business Times CPO futures prices down on profit-taking
CPO
Crude palm oil (CPO) futures prices on Bursa Malaysia Derivatives closed mostly lower yesterday on profit-taking after a two-day rally, a dealer said.
"The market which gained in early trade failed to sustain its momentum as the market has been overbought and some corrections are going on right now.
"..and the not-so-impressive export data had also weigh down the market sentiment," the dealer explained.
Cargo surveyor Societe Generale de Surveillance said today exports for the first 15 days rose slightly by 1.6 per cent from 582,823 to 592,071 tonnes in the same period last month.
Intertek Testing Services reported 3.7 per cent increase to 613,677 tonnes from 591,567 tonnes shipped between March 1 and 15.
At the close yesterday, April 2009 was down by RM20 to settle at RM2,580 a tonne while May 2009 rose RM15 to RM2,575 a tonne.
June 2009 eased RM26 to settle at RM2,459 a tonne and July 2009 edged down RM40 to RM2,398 a tonne.
Turnover fell to 21,681 lots from 3,064 on Tuesday.
Open interests soared to 85,992 contracts from 84,609 previously.
In the physical market, April South was unchanged at on Tuesday's RM2,600 a tonne.
Crude palm oil (CPO) futures prices on Bursa Malaysia Derivatives closed mostly lower yesterday on profit-taking after a two-day rally, a dealer said.
"The market which gained in early trade failed to sustain its momentum as the market has been overbought and some corrections are going on right now.
"..and the not-so-impressive export data had also weigh down the market sentiment," the dealer explained.
Cargo surveyor Societe Generale de Surveillance said today exports for the first 15 days rose slightly by 1.6 per cent from 582,823 to 592,071 tonnes in the same period last month.
Intertek Testing Services reported 3.7 per cent increase to 613,677 tonnes from 591,567 tonnes shipped between March 1 and 15.
At the close yesterday, April 2009 was down by RM20 to settle at RM2,580 a tonne while May 2009 rose RM15 to RM2,575 a tonne.
June 2009 eased RM26 to settle at RM2,459 a tonne and July 2009 edged down RM40 to RM2,398 a tonne.
Turnover fell to 21,681 lots from 3,064 on Tuesday.
Open interests soared to 85,992 contracts from 84,609 previously.
In the physical market, April South was unchanged at on Tuesday's RM2,600 a tonne.
Reuters Wall Street soars on tech bets and JPMorgan
NEW YORK (Reuters) - Stocks surged on Thursday as expectations of reassuring results from bellwethers, including Google, lifted technology shares, while JPMorgan's better-than-expected profit added to bank stabilization hopes.
Investors, encouraged by recent signs the economic slump may be abating, bet that technology earnings would show upside surprises, driving Google's stock up 2.4 percent to $388.74 ahead of the Web search leader's results after the close.
And indeed, Google delivered by reporting a stronger-than-expected first-quarter profit. Its stock popped up 5 percent to $408.00 in after-hours trading following the results and then slipped to $385.41.
During the regular session, Hewlett-Packard (HPQ.N) rose 5 percent to $36.60, while International Business Machines Corp (IBM.N) gained 2.6 percent to $101.43. On Nasdaq, Apple Inc (AAPL.O) shares climbed 3.2 percent to $121.45. The semiconductor index .SOXX rose 3.4 percent.
"People are starting to feel that maybe there's a slight chance this is not just a bear market rally," said John O'Brien, senior vice president at MKM Partners LLC in Cleveland, referring to the market's 28 percent rebound since the 12-year closing low of March 9.
"People are anticipating a pretty good number from Google," O'Brien told Reuters ahead of Google's earnings report. "They seem to like to under-promise and over-deliver."
The Dow Jones industrial average .DJI rose 95.81 points, or 1.19 percent, to 8,125.43. The Standard & Poor's 500 Index .SPX gained 13.24 points, or 1.55 percent, to 865.30. The Nasdaq Composite Index .IXIC jumped 43.64 points, or 2.68 percent, to 1,670.44. more...
Investors, encouraged by recent signs the economic slump may be abating, bet that technology earnings would show upside surprises, driving Google's stock up 2.4 percent to $388.74 ahead of the Web search leader's results after the close.
And indeed, Google delivered by reporting a stronger-than-expected first-quarter profit. Its stock popped up 5 percent to $408.00 in after-hours trading following the results and then slipped to $385.41.
During the regular session, Hewlett-Packard (HPQ.N) rose 5 percent to $36.60, while International Business Machines Corp (IBM.N) gained 2.6 percent to $101.43. On Nasdaq, Apple Inc (AAPL.O) shares climbed 3.2 percent to $121.45. The semiconductor index .SOXX rose 3.4 percent.
"People are starting to feel that maybe there's a slight chance this is not just a bear market rally," said John O'Brien, senior vice president at MKM Partners LLC in Cleveland, referring to the market's 28 percent rebound since the 12-year closing low of March 9.
"People are anticipating a pretty good number from Google," O'Brien told Reuters ahead of Google's earnings report. "They seem to like to under-promise and over-deliver."
The Dow Jones industrial average .DJI rose 95.81 points, or 1.19 percent, to 8,125.43. The Standard & Poor's 500 Index .SPX gained 13.24 points, or 1.55 percent, to 865.30. The Nasdaq Composite Index .IXIC jumped 43.64 points, or 2.68 percent, to 1,670.44. more...
Danareksa SMRA Good value
Decent 2008 marketing sales
SMRA’s marketing sales rose 5% yoy to Rp 920bn in 2008 despite the economic slowdown. For 2009, the company is taking a cautious stance and is targeting marketing sales of Rp818bn. Its focus shall be on its existing estates at Kelapa Gading (the Grand Orchard project) and at Serpong (Scientia Garden).
Rosy outlook for the property sector
Benign inflation has given room to the government to cut interest rates to their current level of 7.50 percent. And looking ahead, further rate cuts remain on the cards as well. In time, the lower interest rates should be accompanied by lower lending rates. This will encourage consumers to take on mortgages to purchase property. The improving optimism on the property sector is reflected in the 8% increase in the Jakprop index since April 3rd,2009 (the last time interest rates were cut). In the same period, SMRA’s share price has risen 22%.
A lower effective tax rate
We apply the new 5% final sales tax to the company’s non-recurring revenues starting 2009 onwards. The impact is positive since the company will experience a lower effective tax on its high margin assets. Our calculations show that the effective tax rate will decline to 25%-31% in FY09-11 from an effective tax rate of 44% in 2008. This will help give a boost to profitability. We forecast net margins of 7%-23% in FY09-15F.
BUY recommendation maintained
We derive our TP of Rp295 by applying a 45% discount to our SOTP NAV/share of Rp533. This compares to our property universe’s discount to NAV of 58.5%. Our TP of Rp295 offers 28% upside to the current share price, meaning that the stock is relatively more attractive than CTRA which offers 20% upside. BUY recommendation maintained.
SMRA’s marketing sales rose 5% yoy to Rp 920bn in 2008 despite the economic slowdown. For 2009, the company is taking a cautious stance and is targeting marketing sales of Rp818bn. Its focus shall be on its existing estates at Kelapa Gading (the Grand Orchard project) and at Serpong (Scientia Garden).
Rosy outlook for the property sector
Benign inflation has given room to the government to cut interest rates to their current level of 7.50 percent. And looking ahead, further rate cuts remain on the cards as well. In time, the lower interest rates should be accompanied by lower lending rates. This will encourage consumers to take on mortgages to purchase property. The improving optimism on the property sector is reflected in the 8% increase in the Jakprop index since April 3rd,2009 (the last time interest rates were cut). In the same period, SMRA’s share price has risen 22%.
A lower effective tax rate
We apply the new 5% final sales tax to the company’s non-recurring revenues starting 2009 onwards. The impact is positive since the company will experience a lower effective tax on its high margin assets. Our calculations show that the effective tax rate will decline to 25%-31% in FY09-11 from an effective tax rate of 44% in 2008. This will help give a boost to profitability. We forecast net margins of 7%-23% in FY09-15F.
BUY recommendation maintained
We derive our TP of Rp295 by applying a 45% discount to our SOTP NAV/share of Rp533. This compares to our property universe’s discount to NAV of 58.5%. Our TP of Rp295 offers 28% upside to the current share price, meaning that the stock is relatively more attractive than CTRA which offers 20% upside. BUY recommendation maintained.
CIMB Bank Mandiri Quick takes – A 'win-win' proposal
Bank Mandiri
Quick takes – A 'win-win' proposal - by Mulya Chandra CFA
(BMRI IJ / BMRI.JK, OUTPERFORM - Maintained, Rp2,350 - Tgt. Rp3,450, Financial Services)
Mandiri is proposing a 7% share divestment in order to qualify for a 5% tax-reduction incentive. A combination of pre-emptive rights and private placement would be a win-win way of achieving this, in our opinion. By that, Mandiri could benefit from a lower tax and fresh capital. The government could receive divestment proceeds while minorities would benefit from EPS accretion. We view the proposal positively. Maintain Outperform and DDM-based target price of Rp3,450.
Quick takes – A 'win-win' proposal - by Mulya Chandra CFA
(BMRI IJ / BMRI.JK, OUTPERFORM - Maintained, Rp2,350 - Tgt. Rp3,450, Financial Services)
Mandiri is proposing a 7% share divestment in order to qualify for a 5% tax-reduction incentive. A combination of pre-emptive rights and private placement would be a win-win way of achieving this, in our opinion. By that, Mandiri could benefit from a lower tax and fresh capital. The government could receive divestment proceeds while minorities would benefit from EPS accretion. We view the proposal positively. Maintain Outperform and DDM-based target price of Rp3,450.
Barclays Capital - Federal Reserve commentary: Fed Beige Book
The Federal Reserve’s Beige Book, based on observations from March through April 6, reported that overall economic activity remained weak and contracted further in some cases. However, some districts saw signs that activity has started to stabilize. This is consistent with the recent data that have shown improvement in some sectors of the economy, particularly consumption and housing. A few key takeaways:
In most industries and districts, manufacturing continued to decline. In particular, aircraft makers and aerospace manufacturers noted a decrease in demand and an increase in cancellations. However, orders and sales of high-tech equipment reportedly stabilized at low levels. In addition, on an uplifting note, manufacturers’ assessment of future conditions improved. This is consistent with the latest manufacturing survey data, which show a notable slowdown in the pace of decline.
Consumer spending was described as “generally weak.” However, several districts reported a moderation in the pace of decline of sales and, in some cases, an improvement. Specifically, sales of food and necessities fared better than sales of luxury and big-ticket goods.
Although the housing market remains depressed, there were signs that conditions may be stabilizing. In particular, lower mortgage rates have spurred refinancing and boosted buyer interest. However, home construction and prices have continued to decline.
The commercial real estate market weakened further, reflecting a decrease in credit availability and markdowns on commercial property.
The description of the labor market was downbeat, reporting lay-offs, a reduction in work hours, and hiring freezes. In addition, the outlook was bleak, with many districts expecting further cuts in jobs and hours.
The Beige Book reported downward pressure on prices, reflecting discounting among retailers, lower product prices, and service sector fee reductions. Furthermore, the weak labor market reduced wage pressures.
In most industries and districts, manufacturing continued to decline. In particular, aircraft makers and aerospace manufacturers noted a decrease in demand and an increase in cancellations. However, orders and sales of high-tech equipment reportedly stabilized at low levels. In addition, on an uplifting note, manufacturers’ assessment of future conditions improved. This is consistent with the latest manufacturing survey data, which show a notable slowdown in the pace of decline.
Consumer spending was described as “generally weak.” However, several districts reported a moderation in the pace of decline of sales and, in some cases, an improvement. Specifically, sales of food and necessities fared better than sales of luxury and big-ticket goods.
Although the housing market remains depressed, there were signs that conditions may be stabilizing. In particular, lower mortgage rates have spurred refinancing and boosted buyer interest. However, home construction and prices have continued to decline.
The commercial real estate market weakened further, reflecting a decrease in credit availability and markdowns on commercial property.
The description of the labor market was downbeat, reporting lay-offs, a reduction in work hours, and hiring freezes. In addition, the outlook was bleak, with many districts expecting further cuts in jobs and hours.
The Beige Book reported downward pressure on prices, reflecting discounting among retailers, lower product prices, and service sector fee reductions. Furthermore, the weak labor market reduced wage pressures.
CLSA Panin Bank downgrade, higher NPL risks
Panin Bank downgrade, higher NPL risks
Nico Oentung downgrades Panin Bank (PNBN IJ) from BUY to SELL. New TP is Rp450 (from Rp800). Nico also downgrades PNBN’s earnings by 5-26% reflecting weaker revenue dynamics (slower loan growth, thus lower NIM) and higher NPL.
One of the main reasons to buy PNBN is the M&A catalyst. As global banks continue to de-leverage and focus on the domestic market, M&A catalyst is unlikely to return in the near future.
Key points from the report:
Higher NPL risk due to aggressive loan growth.
PNBN has almost doubled its loan book in the last two years vs. 65% for banking sector.
New loans now account for 50% of its total loan portfolio vs. 39% for the sector.
Sharp pick-up of NPL and special mention loans in 4Q08.
Weak revenue dynamics + higher volatility: expect NIM to be under pressure as loan growth continues to slow from tightening of underwriting.
PNBN has the lowest provisions in the sector at 79%. We expect provisions to almost double in 09.
Valuation not attractive. PNBN trades at 1.5x P/B and ROAE about 8% (due to weak revenue dynamics + rising provisions). As a comparison, Bank Danamon (BDMN IJ) also trades at 1.5x P/B but ROE is higher at mid-teen percentage.
Nico Oentung downgrades Panin Bank (PNBN IJ) from BUY to SELL. New TP is Rp450 (from Rp800). Nico also downgrades PNBN’s earnings by 5-26% reflecting weaker revenue dynamics (slower loan growth, thus lower NIM) and higher NPL.
One of the main reasons to buy PNBN is the M&A catalyst. As global banks continue to de-leverage and focus on the domestic market, M&A catalyst is unlikely to return in the near future.
Key points from the report:
Higher NPL risk due to aggressive loan growth.
PNBN has almost doubled its loan book in the last two years vs. 65% for banking sector.
New loans now account for 50% of its total loan portfolio vs. 39% for the sector.
Sharp pick-up of NPL and special mention loans in 4Q08.
Weak revenue dynamics + higher volatility: expect NIM to be under pressure as loan growth continues to slow from tightening of underwriting.
PNBN has the lowest provisions in the sector at 79%. We expect provisions to almost double in 09.
Valuation not attractive. PNBN trades at 1.5x P/B and ROAE about 8% (due to weak revenue dynamics + rising provisions). As a comparison, Bank Danamon (BDMN IJ) also trades at 1.5x P/B but ROE is higher at mid-teen percentage.
CIMB Banks Sector Note - Preventive restructuring
Sector Note - Preventive restructuring - by Mulya Chandra CFA
( - )
Indonesia's central bank has clarified that the early restructuring of performing loans can be done without marking them as NPLs first. This should encourage bankers to embark on the early restructuring of grading-2 loans and fight NPLs early. Unofficial data indicated that sector gross NPL ratio reached 4.2% in Mar 09, a level similar to Feb 08, but much lower than 2005-06's 6-8%. Although the NPL cycle is very likely to extend into early 2Q09, we expect the ratio to stabilise by end-2Q09. Maintain Overweight on the sector. Mandiri, Danamon, and BRI remain as our top picks.
( - )
Indonesia's central bank has clarified that the early restructuring of performing loans can be done without marking them as NPLs first. This should encourage bankers to embark on the early restructuring of grading-2 loans and fight NPLs early. Unofficial data indicated that sector gross NPL ratio reached 4.2% in Mar 09, a level similar to Feb 08, but much lower than 2005-06's 6-8%. Although the NPL cycle is very likely to extend into early 2Q09, we expect the ratio to stabilise by end-2Q09. Maintain Overweight on the sector. Mandiri, Danamon, and BRI remain as our top picks.
Kamis, 16 April 2009
Reuters Asian shares pare gains after China disappoints
HONG KONG (Reuters) - Asian stocks pulled back from a six-month high on Thursday, while the safe-haven yen gained after China posted its slowest ever quarterly growth in a signal of the frailty of the global economy.
A day after a mixed set of economic data from the United States, it was China's turn, saying its economy grew a slower-than-expected 6.1 percent in the first quarter, but posting other data, such as industrial output, that signaled some optimism.
After an impressive month-long rally in global equities investors still appear conflicted between seeing glimmers of hope that the world economic downturn is showing signs of easing and other indicators that point to more pain ahead.
Riskier assets, such as oil, also pared gains but not by too much, helped as well by speculation that China could implement a new stimulus package reinforced hopes that policy maker worldwide are in battle mode amidst the worst global downturn in decades.
Central bankers are cutting interest rates and flooding liquidity into financial systems, further reinforcing some of these hopes.
"No doubt China has felt the ramifications of the global crisis and growth has moderated, but the economy is showing signs of stabilizing and we can expect a recovery in the second half," said Su-Lin ong, a senior economist at RBC Capital Markets in Sydney. more...
A day after a mixed set of economic data from the United States, it was China's turn, saying its economy grew a slower-than-expected 6.1 percent in the first quarter, but posting other data, such as industrial output, that signaled some optimism.
After an impressive month-long rally in global equities investors still appear conflicted between seeing glimmers of hope that the world economic downturn is showing signs of easing and other indicators that point to more pain ahead.
Riskier assets, such as oil, also pared gains but not by too much, helped as well by speculation that China could implement a new stimulus package reinforced hopes that policy maker worldwide are in battle mode amidst the worst global downturn in decades.
Central bankers are cutting interest rates and flooding liquidity into financial systems, further reinforcing some of these hopes.
"No doubt China has felt the ramifications of the global crisis and growth has moderated, but the economy is showing signs of stabilizing and we can expect a recovery in the second half," said Su-Lin ong, a senior economist at RBC Capital Markets in Sydney. more...
Market News
CPO
Exports of Malaysian palm oil products for April 1-15 rose 3.7 per cent to 613,677 tonnes from 591,567 tonnes shipped between March 1 and 15, cargo surveyor Intertek Testing Services said today. - Reuters
Nickel
Among other industrial metals, steel making ingredient nickel
MNI3 closed at $12,500 -- its highest since early January --
from $11,850 the day before.
TIN
Tin MSN3 ended at $11,350 from $11,000. It earlier hit a
day's high of $11,430 -- its highest since early February.
Wheat
Wheat fell for the sixth time in seven sessions on signs of increased competition for U.S. grain from Russia and Ukraine’s Black Sea ports.
TLKM
PT Telekomunikasi Indonesia Tbk (Telkom) expects dividend deposit year 2008 could be down 50 percent compared to last year which reached 70 percent.
Therefore it is presented by the Director of Telkom Rinaldi Firmansyah Main Office in the State Ministry of State Owned (BUMN), Garuda Building, Medan Merdeka Selatan, Jakarta, Wednesday
ACES
Aces Hardware Tbk PT (Aces) akan share cash dividend for the year 2008 of Rp 7.6 per shares. The company net profit for the year 2008 reached Rp 130 billion and sales reached Rp 1.28 trillion. Previously, for the year 2007, the Aces share dividend of Rp 3.4 per share.
Exports of Malaysian palm oil products for April 1-15 rose 3.7 per cent to 613,677 tonnes from 591,567 tonnes shipped between March 1 and 15, cargo surveyor Intertek Testing Services said today. - Reuters
Nickel
Among other industrial metals, steel making ingredient nickel
MNI3 closed at $12,500 -- its highest since early January --
from $11,850 the day before.
TIN
Tin MSN3 ended at $11,350 from $11,000. It earlier hit a
day's high of $11,430 -- its highest since early February.
Wheat
Wheat fell for the sixth time in seven sessions on signs of increased competition for U.S. grain from Russia and Ukraine’s Black Sea ports.
TLKM
PT Telekomunikasi Indonesia Tbk (Telkom) expects dividend deposit year 2008 could be down 50 percent compared to last year which reached 70 percent.
Therefore it is presented by the Director of Telkom Rinaldi Firmansyah Main Office in the State Ministry of State Owned (BUMN), Garuda Building, Medan Merdeka Selatan, Jakarta, Wednesday
ACES
Aces Hardware Tbk PT (Aces) akan share cash dividend for the year 2008 of Rp 7.6 per shares. The company net profit for the year 2008 reached Rp 130 billion and sales reached Rp 1.28 trillion. Previously, for the year 2007, the Aces share dividend of Rp 3.4 per share.
Danareksa: UNVR From strength to strength
Excellent FY08 results
Unilever has delivered again, recording a 23% YoY increase in net profits to Rp2.4 tn in FY08. At the top line, sales grew 24% YoY helped by price increases of 14% as well as higher volumes. The gross margin slipped to 49% in FY08 from 50% in FY07 due to higher commodity prices and rupiah depreciation. The operating margin was stable, however, at 22%. As a result of the rupiah depreciation in 4Q08, Unilever recorded forex losses of Rp60 bn (mostly comprising hedging costs). At the same time, however, the company also received additional income from a Rp32 bn income tax refund. This partially offset the forex losses.
Indonesia’s most profitable company
Unilever has shown time and time again that it is Indonesia’s most profitable company. For three years in a row, the company has managed to increase its ROE such that it reached its highest ever level of 83% in FY08. Coupled with a ROA of 40% - the highest in the region – it is clear that Unilever is doing an excellent job in generating returns for its shareholders. And at the same time, the management has also indicated that it will continue to pay out high dividends. What more could shareholders ask for?
BUY with a TP of 9,050
Unilever has performed consistently over the last 11 years. On the back of 22.6% sales growth, core earnings have grown 35.4% p.a. on average. Operating margins have been stable at around 22% (the highest in our consumer universe) and the ROE is, as previously noted, at record levels. Recent pressure on the share price has presented investors with a good opportunity to BUY, we believe. Our TP of Rp9,050 translates into 2009F P/BV of 19.63x and 25.4-22.0x PE09-10F.
The outlook remains bright
The company’s management remains upbeat. It still expects the top line and earnings growth to be in low double digits in 2009. Sales, we believe, should be supported by two factors. First of all, consumer purchasing power has been given a boost by cuts in fuel prices. Thus, consumer spending should, overall, hold up going forward. And secondly it should be noted that Unilever’s products – which are basically consumer essentials - have an extremely strong brand image. As such, they should continue to sell well. Historically, it can be seen that Unilever has grown at more than twice the pace of GDP. Going forward, we expect this trend to continue. As such, we expect the company’s sales growth to surpass 11% this year and to reach 13% p.a. on a 5-year forward looking basis as the economy is expected to quickly recover.
Despite the company’s resilience to economic downturns, gross margins tend to weaken when the rupiah comes under pressure. Nonetheless, the company has had the prescience to hedge its foreign currency exposure. This will minimize the impact of rupiah weakness. At the same time, the company has also implemented a new SAP system which is expected to help rein in sales and distribution expenses. Thus, while we expect gross margins to weaken slightly to 48.3% in 2009, operating margins should be relatively stable at 22%. In regard to earnings, we expect growth to slow to 12.1% in 2009, before it bounces back to 14-15% in 2010.
Unilever has delivered again, recording a 23% YoY increase in net profits to Rp2.4 tn in FY08. At the top line, sales grew 24% YoY helped by price increases of 14% as well as higher volumes. The gross margin slipped to 49% in FY08 from 50% in FY07 due to higher commodity prices and rupiah depreciation. The operating margin was stable, however, at 22%. As a result of the rupiah depreciation in 4Q08, Unilever recorded forex losses of Rp60 bn (mostly comprising hedging costs). At the same time, however, the company also received additional income from a Rp32 bn income tax refund. This partially offset the forex losses.
Indonesia’s most profitable company
Unilever has shown time and time again that it is Indonesia’s most profitable company. For three years in a row, the company has managed to increase its ROE such that it reached its highest ever level of 83% in FY08. Coupled with a ROA of 40% - the highest in the region – it is clear that Unilever is doing an excellent job in generating returns for its shareholders. And at the same time, the management has also indicated that it will continue to pay out high dividends. What more could shareholders ask for?
BUY with a TP of 9,050
Unilever has performed consistently over the last 11 years. On the back of 22.6% sales growth, core earnings have grown 35.4% p.a. on average. Operating margins have been stable at around 22% (the highest in our consumer universe) and the ROE is, as previously noted, at record levels. Recent pressure on the share price has presented investors with a good opportunity to BUY, we believe. Our TP of Rp9,050 translates into 2009F P/BV of 19.63x and 25.4-22.0x PE09-10F.
The outlook remains bright
The company’s management remains upbeat. It still expects the top line and earnings growth to be in low double digits in 2009. Sales, we believe, should be supported by two factors. First of all, consumer purchasing power has been given a boost by cuts in fuel prices. Thus, consumer spending should, overall, hold up going forward. And secondly it should be noted that Unilever’s products – which are basically consumer essentials - have an extremely strong brand image. As such, they should continue to sell well. Historically, it can be seen that Unilever has grown at more than twice the pace of GDP. Going forward, we expect this trend to continue. As such, we expect the company’s sales growth to surpass 11% this year and to reach 13% p.a. on a 5-year forward looking basis as the economy is expected to quickly recover.
Despite the company’s resilience to economic downturns, gross margins tend to weaken when the rupiah comes under pressure. Nonetheless, the company has had the prescience to hedge its foreign currency exposure. This will minimize the impact of rupiah weakness. At the same time, the company has also implemented a new SAP system which is expected to help rein in sales and distribution expenses. Thus, while we expect gross margins to weaken slightly to 48.3% in 2009, operating margins should be relatively stable at 22%. In regard to earnings, we expect growth to slow to 12.1% in 2009, before it bounces back to 14-15% in 2010.
Business Times Palm hits 8-month high
Malaysian palm futures gained 1.2 per cent today, touching a 8-month high after healthy export data triggered concerns about a possible stock drawndown.
Strength in Dalian soyoil markets has also been boosting palm oil, which has risen nearly 50 per cent so far this year.
“Exports were around the same levels but there is talk of
lower production and therefore, lower stocks,” said a trader with a foreign commodities brokerage.
The benchmark June contract on the Bursa Malaysia Derivatives Exchange rose as much as RM37 to RM2,522 per tonne, a level unseen since September 3.
By midday, the contract stood at RM2,514. Other traded months rose between RM5 and RM34. Overall volume jumped to 9,262 lots of 25 tonnes each. - Reuters
Strength in Dalian soyoil markets has also been boosting palm oil, which has risen nearly 50 per cent so far this year.
“Exports were around the same levels but there is talk of
lower production and therefore, lower stocks,” said a trader with a foreign commodities brokerage.
The benchmark June contract on the Bursa Malaysia Derivatives Exchange rose as much as RM37 to RM2,522 per tonne, a level unseen since September 3.
By midday, the contract stood at RM2,514. Other traded months rose between RM5 and RM34. Overall volume jumped to 9,262 lots of 25 tonnes each. - Reuters
Bloomberg Crude Oil Falls as U.S. Supplies Rise to the Highest Since 1990
April 15 (Bloomberg) -- Crude oil fell after a government report showed that U.S. stockpiles climbed to the highest level in almost 19 years as demand dropped.Inventories rose 5.67 million barrels to 366.7 million last week, the highest since September 1990, the Energy Department said today. Total daily fuel demand averaged over the past four weeks was 18.7 million barrels, down 5.2 percent from a year earlier, according to the department.
“Demand stinks,” said Chip Hodge, who oversees a $9 billion natural-resource-company bond portfolio as managing director at MFC Global Investment Management in Boston. “Until you see consumption increase and inventories drop, this market will remain range-bound.”
Crude oil for May delivery fell 16 cents, or 0.3 percent, to $49.25 a barrel at 2:52 p.m. on the New York Mercantile Exchange, the lowest settlement since April 7. Futures have traded between $43.62 and $54.66 a barrel over the past month. Prices are up 10 percent so far this year.
The contract was up 32 cents, or 0.7 percent, at $49.73 a barrel at 4:14 p.m. in after-hours electronic trading.
Supplies were forecast to increase by 1.75 million barrels, according to the median of 14 analyst estimates in a Bloomberg News survey. more...
Reuters Wall Street rises on hints recession easing
NEW YORK (Reuters) - Stocks rose on Wednesday amid numerous signs the recession could be abating and data from American Express signaled the ability of some consumers to pay their bills is stabilizing.
Intel Corp (INTC.O) limited the Nasdaq's gains, however, saying economic uncertainty ruled out a clear revenue forecast and its stock fell 2.4 percent.
Financial stocks provided a major lift late in the session as American Express Co (AXP.N) climbed almost 12 percent after defaults rose only slightly after months of deterioration.
Along with American Express, JPMorgan Chase & Co (JPM.N) ranked among the Dow's biggest advancers as investors bet the bank will post robust quarterly results Thursday morning.
Hope that the economic slump was showing signs of abating rose after a report said manufacturing activity in New York State contracted less severely in April, while the Federal Reserve's Beige Book indicated the economy continued to weaken, but the contraction's speed was fading.
"The Beige Book is feeding into the whole general picture of the market," said Carl Birkelbach, chairman and CEO of Birkelbach Investment Securities in Chicago.
"It indicated that there would be negative things out there, but it also used the word bottoming, and that was positive." more...
Intel Corp (INTC.O) limited the Nasdaq's gains, however, saying economic uncertainty ruled out a clear revenue forecast and its stock fell 2.4 percent.
Financial stocks provided a major lift late in the session as American Express Co (AXP.N) climbed almost 12 percent after defaults rose only slightly after months of deterioration.
Along with American Express, JPMorgan Chase & Co (JPM.N) ranked among the Dow's biggest advancers as investors bet the bank will post robust quarterly results Thursday morning.
Hope that the economic slump was showing signs of abating rose after a report said manufacturing activity in New York State contracted less severely in April, while the Federal Reserve's Beige Book indicated the economy continued to weaken, but the contraction's speed was fading.
"The Beige Book is feeding into the whole general picture of the market," said Carl Birkelbach, chairman and CEO of Birkelbach Investment Securities in Chicago.
"It indicated that there would be negative things out there, but it also used the word bottoming, and that was positive." more...
Cautious views on palm oil exports
While exports of crude palm oil (CPO) have been unexpectedly strong in the first three months and so far in April, analysts remain wary of the sustainability of demand due to the unprecedented global recession.Maybank Investment Bank, which remains cautious on the sector, said in a research report dated Monday that exports in March to price-sensitive economies of Pakistan and India were “notably lower”.
But in total, exports of Malaysian palm oil products for the first 10 days of April rose 8% to 399,703 tonnes from 369,265 tonnes shipped from March 1 and 10, cargo surveyor Intertek Testing Services said on Friday.
Another cargo surveyor, Societe Generale de Surveillance, reported a 3.7% rise to 391,223 tonnes for the same period.
Together with news on Friday that stockpiles in March had fallen 13% to 1.36 million tonnes – its lowest level since July 2007 – this prompted CPO futures prices to rise 8% in the past two trading days.
Of the top five export markets, demand from the United States and European Union (EU) looks stable, but China and India are more unpredictable, while Pakistan has newly joined the ranks.
Exports to India tapered off in February and March at 125,214 and 78,364 tonnes respectively, versus December and January when they were 259,937 and 203,080 tonnes. Even so, the last two months’ figures do not look too bad considering last year’s monthly average of only 80,890 tonnes.
Exports to China are recovering to their previous 300,000-tonne-plus levels in February and March, rising from a low of 154,267 tonnes in January.
An analyst at a bank-backed brokerage said China was building up its commodity stockpiles as part of its stimulus package, “while also looking for a decent inventory level to protect against market fluctuations.” Therefore, if prices shoot up it may drop again.
As for India, users are stocking up in anticipation of a rise in tariffs on CPO, but last month the Indian government lifted the tariff on soyoil instead.
The analyst said with the month-long Indian general election expected to continue into mid-May, there were no expectations of any import tariff on CPO until at least then.
Except for a jump to 232,106 tonnes and 244,182 tonnes in October and December 2008 respectively, exports of CPO to the EU remained pretty steady at about the 100,000 to 150,000 tonnes.
CPO exports to the region are not expected to be affected much by the union’s new biodiesel regulation, EU Reneweble Energy Directive, that imposes stricter restrictions on carbon savings.
“The EU has never really been that enthusiastic on using palm-based biodiesel, so there is not much of an impact from the new rules,” the analyst said. “They are using about 50% of their rapeseed oil production for biodiesel.”
As for the United States, Malaysia’s exports are being maintained at 80,000 tonnes a month as food producers there are moving towards using non-transfat oils.
As for Pakistan, CPO exports from Malaysia in the first three months totalled 553,446 tonnes, almost doubled that in the same period of 2008.
The analyst believes Malaysia’s efforts to form better trade ties with Pakistan are the main reasons for the improvement.
On CPO futures, Interband Group palm oil trader Jim Teh believes that prices are speculative at present. “As exports improve, stock levels will fall because production would definitely not be able to catch up so fast. Together with the rising equities market, speculation is entering the market,” he said. “It is good for the plantation owners but not so much for the buyers.”
CLSA Property Sector
Property Sector visit, from Nico Oentung
Our banking analyst and poker champ Nico Oentung has taken over property sector coverage from Daniel Oen (who is now enjoying his life as at the sales desk). Yesterday, Nico was visiting several large property developers for a business update.
Unlike in many other places, property price in Indonesia has been resilient, which is a stark contrast to some other places. Reason? Property prices in Indonesia has only gone up in line with inflation in the last few years. No big and exciting boom here.
Plus, the finance industry in Indonesia is still immature: about 30% of population have a savings account, less than 3% have credit cards, and less than 1% invest in stocks. May be one of the reasons why the economy is not hit as much by the financial crisis.
And equally important is the fact that most property owners here do not finance their property purchases with mortgage. Mortgage to GDP ratio here is about 2%, tiny compared to around 10% in the neighboring countries, let alone comparing it with the western world. So, there is no rush to sell when things get ugly.
One interesting point from Nico’s visit is that developers are now focusing more on faster moving low-middle income residential units. This particular segment of the market relies heavily on mortgages to finance their property purchase (most leveraged to mortgages are developers CTRA, SMRA, and BSDE as more than 50% of pre-sales come are mortgage financed)
This may be a timely move by property developers as banks have also started lowering mortgage rates again as liquidity in the banking sector is improving. Bank Permata (BNLI IJ), CIMB Niaga (BNGA IJ), and BCA (BBCA IJ) are the active names in the mortgage market. BNGA offers 5.5% fixed for 1 year and BBCA offers 12.5% fix and cap products.
Also worth mentioning that the most liquid names in the sector are Ciputra Development (CTRA IJ) and Bakrieland (ELTY IJ). The latter name is also a beneficiary of the proposed governmental relaxation of foreign property ownership (foreigners may control high-end apartments for 70 years).
Key points from his report:
Managements are generally cautious on the outlook.
With improving liquidity situation, banks are starting to lower mortgage rates.
Focus will be on faster moving low-middle income residential units.
Little demand for high-end residential (yeah, this is the crisis of the rich)
Property companies have drawn down unused credit lines and liquidity management is priority.
Our banking analyst and poker champ Nico Oentung has taken over property sector coverage from Daniel Oen (who is now enjoying his life as at the sales desk). Yesterday, Nico was visiting several large property developers for a business update.
Unlike in many other places, property price in Indonesia has been resilient, which is a stark contrast to some other places. Reason? Property prices in Indonesia has only gone up in line with inflation in the last few years. No big and exciting boom here.
Plus, the finance industry in Indonesia is still immature: about 30% of population have a savings account, less than 3% have credit cards, and less than 1% invest in stocks. May be one of the reasons why the economy is not hit as much by the financial crisis.
And equally important is the fact that most property owners here do not finance their property purchases with mortgage. Mortgage to GDP ratio here is about 2%, tiny compared to around 10% in the neighboring countries, let alone comparing it with the western world. So, there is no rush to sell when things get ugly.
One interesting point from Nico’s visit is that developers are now focusing more on faster moving low-middle income residential units. This particular segment of the market relies heavily on mortgages to finance their property purchase (most leveraged to mortgages are developers CTRA, SMRA, and BSDE as more than 50% of pre-sales come are mortgage financed)
This may be a timely move by property developers as banks have also started lowering mortgage rates again as liquidity in the banking sector is improving. Bank Permata (BNLI IJ), CIMB Niaga (BNGA IJ), and BCA (BBCA IJ) are the active names in the mortgage market. BNGA offers 5.5% fixed for 1 year and BBCA offers 12.5% fix and cap products.
Also worth mentioning that the most liquid names in the sector are Ciputra Development (CTRA IJ) and Bakrieland (ELTY IJ). The latter name is also a beneficiary of the proposed governmental relaxation of foreign property ownership (foreigners may control high-end apartments for 70 years).
Key points from his report:
Managements are generally cautious on the outlook.
With improving liquidity situation, banks are starting to lower mortgage rates.
Focus will be on faster moving low-middle income residential units.
Little demand for high-end residential (yeah, this is the crisis of the rich)
Property companies have drawn down unused credit lines and liquidity management is priority.
Citigroup - Reserve Currencies, the USD - Premature Rumours
The USD’s role as the world’s pre-eminent reserve currency is unlikely to be threatened in the short term. But the Euro’s ascendancy in global reserve holdings is likely to expand further, eventually leading to a more multi-polar – and thus more stable – FX world.
The Renminbi’s role is unlikely to extend beyond that of a regional trading vehicle, even in the medium term. Further expansion would at a minimum require greater financial development and the establishment of a widely accepted institutional framework.
Increased use of SDRs represents an alluring supplement to existing reserve currencies. However, such a set-up is not without challenges and represents a long term prospect at best. But while establishing a new monetary order will be highly useful in time, it is not critical to overcome the current financial crisis.
The Renminbi’s role is unlikely to extend beyond that of a regional trading vehicle, even in the medium term. Further expansion would at a minimum require greater financial development and the establishment of a widely accepted institutional framework.
Increased use of SDRs represents an alluring supplement to existing reserve currencies. However, such a set-up is not without challenges and represents a long term prospect at best. But while establishing a new monetary order will be highly useful in time, it is not critical to overcome the current financial crisis.
Goldman Sachs - Asia Pacific Portfolio Strategy: Cyclical selection
Tricky juncture for markets; we prefer to wait
We believe Asian markets are at a tricky juncture post the recent 30% rally. Although markets could squeeze higher based on stabilizing macro momentum, broad-based policy response and conservative investor positioning, we remain concerned about macro headwinds, optimistic earnings expectations, and full valuations relative to profitability.
Poor entry point for broad cyclical exposure
We would wait for a better risk/reward point before adding to cyclicals. Cyclical outperformance during the recent rally looks stretched, and historical bear bottoms suggest there would be multiple pullbacks even at turns to bull markets, providing better cyclical entry points. Recent declines in sector correlations also point to a greater need for differentiation.
Prefer domestic demand within cyclicals
For investors feeling underexposed, we prefer domestically-oriented cyclicals, which offer a more favorable intersection between fundamentals, valuation and price rebound potential. We emphasize machinery, construction, energy and real estate (especially those oriented towards China/India) as attractive sub-sectors to gain cyclical exposure. We also screen for stocks in cyclical sectors based on valuations and profitability.
We believe Asian markets are at a tricky juncture post the recent 30% rally. Although markets could squeeze higher based on stabilizing macro momentum, broad-based policy response and conservative investor positioning, we remain concerned about macro headwinds, optimistic earnings expectations, and full valuations relative to profitability.
Poor entry point for broad cyclical exposure
We would wait for a better risk/reward point before adding to cyclicals. Cyclical outperformance during the recent rally looks stretched, and historical bear bottoms suggest there would be multiple pullbacks even at turns to bull markets, providing better cyclical entry points. Recent declines in sector correlations also point to a greater need for differentiation.
Prefer domestic demand within cyclicals
For investors feeling underexposed, we prefer domestically-oriented cyclicals, which offer a more favorable intersection between fundamentals, valuation and price rebound potential. We emphasize machinery, construction, energy and real estate (especially those oriented towards China/India) as attractive sub-sectors to gain cyclical exposure. We also screen for stocks in cyclical sectors based on valuations and profitability.
CIMB Cement Sector Note - Seeing catalysts
Cement Sector Note - Seeing catalysts - by Rania Rahmundita
We upgrade the Indonesian cement sector to Overweight from Neutral on the back of: 1) a stabilising rupiah and subsiding risk premium; 2) our belief that domestic demand could recover in 2H09; and 3) domestic price strength, thanks to a higher level of domestic utilisation. We increase our target prices for our cement stocks, now based on US$125 EV/tonne, the mid-cycle valuation, from US$100 EV/tonne. Looking ahead into 2H09, we expect Java to rebound and favour Indocement as our top pick. We also upgrade Holcim to Trading Buy from Neutral as it has been a laggard and for its high beta.
We upgrade the Indonesian cement sector to Overweight from Neutral on the back of: 1) a stabilising rupiah and subsiding risk premium; 2) our belief that domestic demand could recover in 2H09; and 3) domestic price strength, thanks to a higher level of domestic utilisation. We increase our target prices for our cement stocks, now based on US$125 EV/tonne, the mid-cycle valuation, from US$100 EV/tonne. Looking ahead into 2H09, we expect Java to rebound and favour Indocement as our top pick. We also upgrade Holcim to Trading Buy from Neutral as it has been a laggard and for its high beta.
Macquarie Further re-rating for BDMN
Bank Danamon: least expensive bank with top-end growth prospect
Given the strong rally we saw across Indo banks universe, I take a step back to identify which of the bank stock is still worth chasing at this point. Some of the bigger banks are trending towards the upper-end of its PBV trading range. It appears to me that Bank Danamon has some further re-rating to go. Historically, there is a valuation discount for the stock due to its inferior daily trading liquidity, compared to the peers BBRI, BBCA, and BMRI. But note that ex-rights, since 1 April 2009 the stock has traded with an average daily trading value of around US$5mn/day, in-line with that of BBCA and BMRI, while BBRI remains on-top with around US$15m/day.
In terms of fundamental valuation, there is room for BDMN (1.4x FY09) to narrow the PBV disount to BBRI (2.3x FY09), as the company re-deploys its fresh capital into high margin loans. Note that the two banks have comparable NIMs, while the Street has been conservative with BDMN’s loan growth forecast, vis-à-vis BBRI. I would have thought that BDMN should be able to grow its loan book faster than BBRI, given BDMN’s fresh capital and BBRI’s lower Tier-1 ratio. In other words, the RoE uplift for BDMN could surprise the market if Indonesia’s economy is as resilient as expected.
Given the strong rally we saw across Indo banks universe, I take a step back to identify which of the bank stock is still worth chasing at this point. Some of the bigger banks are trending towards the upper-end of its PBV trading range. It appears to me that Bank Danamon has some further re-rating to go. Historically, there is a valuation discount for the stock due to its inferior daily trading liquidity, compared to the peers BBRI, BBCA, and BMRI. But note that ex-rights, since 1 April 2009 the stock has traded with an average daily trading value of around US$5mn/day, in-line with that of BBCA and BMRI, while BBRI remains on-top with around US$15m/day.
In terms of fundamental valuation, there is room for BDMN (1.4x FY09) to narrow the PBV disount to BBRI (2.3x FY09), as the company re-deploys its fresh capital into high margin loans. Note that the two banks have comparable NIMs, while the Street has been conservative with BDMN’s loan growth forecast, vis-à-vis BBRI. I would have thought that BDMN should be able to grow its loan book faster than BBRI, given BDMN’s fresh capital and BBRI’s lower Tier-1 ratio. In other words, the RoE uplift for BDMN could surprise the market if Indonesia’s economy is as resilient as expected.
Macquarie PGAS divvy surprise
PGAS – 4Q08 results delay well-intentioned
I sense that investors are getting nervous about PGAS management’s decision to delay FY08 results subsmission, as the company is reportedly asking for approval to capitalize FX loss, rather than expense it in one year. Making the matter worse is the Street talk that Bapepam (capital market regulator) has voted down the request, as Indonesia is moving towards international accounting standard.
After speaking with a company contact, I get the impression that PGAS management is acting in the best interest of the shareholders, when it tries to capitalize FX loss. I take it as a sign that the management wants to pay significantly bigger dividend than the current consensus DPS estimate of Rp61 (or 2.6% gross yield). Mind you, the govt of Indonesia has a set dividend income target from all SOEs, but the state banks are set to lower dividend payout in 2009 to conserve capital. So the government could be looking for a positive offset from the cash generative PGAS and PT Telkom.
Do watch out for a positive market reaction after PGAS released its 4Q08 results and its management discussed the rationale and outlook. The positive dividend surprise is still looking likely, despite the fact that PGAS won’t capitalize its FX loss. Macq’s FY09 DPS estimate is Rp74 (or 3.2% gross yield).
Let me run through my thought process:
1. The company guides for an FX loss of around Rp2.1trn vs. Macq’s forecast of Rp1.3trn. Macq’s FY08 net income estimate is Rp2.4trn, consensus is at Rp2.1trn. Using Macq’s forecast but adjusted for the bigger-than-expected FX loss, FY08 NPAT could come in around Rp1.8trn.
2. Macq’s DPS estimate of Rp74 equates to a total dividend bill of Rp1.7trn, or a payout ratio of 70%. Consensus DPS estimate of Rp61 equates to a total dividend bill of Rp1.4trn, or a payout ratio of 60%.
3. These pay-out ratios are within the prospectus mandate. Why would the management go into a great length trying to capitalize FX if it is only looking to pay between Rp61-74 DPS ??
4. I got the re-assurance from a company contact that there is no other reason for the FX capitalization other than an attempt to maximize dividend flow. Operational results are doing fine up to March.
5. Stress-testing the balance sheet, PGAS can afford to double the consensus DPS estimate of Rp61 for FY09. At Rp122 DPS (or 5.2% gross yield), the pay-out ratio based on adjusted Macq’s forecast (using company’s FX loss guidance) is 150%. I understand that there could be some regulations that make it difficult for a company to have more than 100% pay-out ratio.
On Macq forecast the stock trades on 8.7x and 7.1x adjusted P/E for 2009 and 2010, with a mid-teen growth outlook for FY10-12. Attractively valued for a cash generative utility with above-average growth prospects. Outperform, PxT Rp3,100.
I sense that investors are getting nervous about PGAS management’s decision to delay FY08 results subsmission, as the company is reportedly asking for approval to capitalize FX loss, rather than expense it in one year. Making the matter worse is the Street talk that Bapepam (capital market regulator) has voted down the request, as Indonesia is moving towards international accounting standard.
After speaking with a company contact, I get the impression that PGAS management is acting in the best interest of the shareholders, when it tries to capitalize FX loss. I take it as a sign that the management wants to pay significantly bigger dividend than the current consensus DPS estimate of Rp61 (or 2.6% gross yield). Mind you, the govt of Indonesia has a set dividend income target from all SOEs, but the state banks are set to lower dividend payout in 2009 to conserve capital. So the government could be looking for a positive offset from the cash generative PGAS and PT Telkom.
Do watch out for a positive market reaction after PGAS released its 4Q08 results and its management discussed the rationale and outlook. The positive dividend surprise is still looking likely, despite the fact that PGAS won’t capitalize its FX loss. Macq’s FY09 DPS estimate is Rp74 (or 3.2% gross yield).
Let me run through my thought process:
1. The company guides for an FX loss of around Rp2.1trn vs. Macq’s forecast of Rp1.3trn. Macq’s FY08 net income estimate is Rp2.4trn, consensus is at Rp2.1trn. Using Macq’s forecast but adjusted for the bigger-than-expected FX loss, FY08 NPAT could come in around Rp1.8trn.
2. Macq’s DPS estimate of Rp74 equates to a total dividend bill of Rp1.7trn, or a payout ratio of 70%. Consensus DPS estimate of Rp61 equates to a total dividend bill of Rp1.4trn, or a payout ratio of 60%.
3. These pay-out ratios are within the prospectus mandate. Why would the management go into a great length trying to capitalize FX if it is only looking to pay between Rp61-74 DPS ??
4. I got the re-assurance from a company contact that there is no other reason for the FX capitalization other than an attempt to maximize dividend flow. Operational results are doing fine up to March.
5. Stress-testing the balance sheet, PGAS can afford to double the consensus DPS estimate of Rp61 for FY09. At Rp122 DPS (or 5.2% gross yield), the pay-out ratio based on adjusted Macq’s forecast (using company’s FX loss guidance) is 150%. I understand that there could be some regulations that make it difficult for a company to have more than 100% pay-out ratio.
On Macq forecast the stock trades on 8.7x and 7.1x adjusted P/E for 2009 and 2010, with a mid-teen growth outlook for FY10-12. Attractively valued for a cash generative utility with above-average growth prospects. Outperform, PxT Rp3,100.
JP Morgan - Indonesia March09 Cement sales
Indonesian cement demand fell by 10% y/y in March: Indonesian
cement consumption in March (2.66 mt) fell 10% y/y, bringing 1Q FY09
volume contraction to 5.8% y/y. This is the weakest 1Q performance since 1999, when 1Q demand contracted by 8.1% y/y. Demand was weak across the country, with particularly surprising weakness in central & East Java. We suspect that apparently healthy volumes in Sulawesi may be slightly overstated by dispatches that are finding their way to Java.
• Poor sequential momentum a concern: Sequentially, demand grew by 1.2% m/m. We do not take much cheer in the m/m stability, given seasonal factors. In every one of the previous 7 years, demand in March grew by over 10% m/m, and the lack of momentum in 2009 is worrying to us, even considering that an extended wet season may have played a part.
• We continue to be worried about the threat to price stability: At close to $100/T, high cement prices are attracting the interest of the fair trade commission. Cement manufacturers raised prices in January on optimism that election spending would boost demand. March volumes belie that expectation and reinforce our concern that price stability could break down in coming months if demand stays slack.
• We remain unconvinced about the sector stocks: Cement companies in Indonesia tend to exhibit somewhat defensive performance. Over the last quarter, INTP has been a slight underperformer relative to the JCI while SMGR has moved in line with the index. Recently however, we have received some interest in the names as candidates for rotational buying into cyclicals. We are unconvinced of their merit at this time, believing that the cyclical positioning is poor (volumes still accelerating on the downside), and valuations are not compellingly cheap at an EV/T of $100-110.
cement consumption in March (2.66 mt) fell 10% y/y, bringing 1Q FY09
volume contraction to 5.8% y/y. This is the weakest 1Q performance since 1999, when 1Q demand contracted by 8.1% y/y. Demand was weak across the country, with particularly surprising weakness in central & East Java. We suspect that apparently healthy volumes in Sulawesi may be slightly overstated by dispatches that are finding their way to Java.
• Poor sequential momentum a concern: Sequentially, demand grew by 1.2% m/m. We do not take much cheer in the m/m stability, given seasonal factors. In every one of the previous 7 years, demand in March grew by over 10% m/m, and the lack of momentum in 2009 is worrying to us, even considering that an extended wet season may have played a part.
• We continue to be worried about the threat to price stability: At close to $100/T, high cement prices are attracting the interest of the fair trade commission. Cement manufacturers raised prices in January on optimism that election spending would boost demand. March volumes belie that expectation and reinforce our concern that price stability could break down in coming months if demand stays slack.
• We remain unconvinced about the sector stocks: Cement companies in Indonesia tend to exhibit somewhat defensive performance. Over the last quarter, INTP has been a slight underperformer relative to the JCI while SMGR has moved in line with the index. Recently however, we have received some interest in the names as candidates for rotational buying into cyclicals. We are unconvinced of their merit at this time, believing that the cyclical positioning is poor (volumes still accelerating on the downside), and valuations are not compellingly cheap at an EV/T of $100-110.
CLSA IndoCoalUpdate - Some supports from Europe and China
Some supportive data for thermal coal from Europe and China, and this might indicate that downside risk on spot thermal coal price in Asia and Australia (Newcastle Spot) is somewhat limited. We have assumed contract price of US$72/t for FY09 while Newcastle spot price currently hovered around US$63/t. Note that since average FOB cash cost for thermal coal from Indonesia and Australia hover around US$45/t to US$50/t, there had been concern that spot thermal coal price could dip closer to this level.
Figure 1
Thermal coal price FOB Newcastle and Richard Bay
Thermal coal future in Europe (API4, the blue line) bounced strongly from its low in the last 4 weeks, massively outperforming spot thermal coal price in Newcastle, Australia (CLSPAUNE, the red line). Our sources in the industry mentioned that thermal coal fundamentals in Europe remains weak as port and power station stockpiles are still at high level, seasonally coal burn is falling due to milder weather, and gas prices are declining. There are, though, some positives that supported European thermal coal price, including 1) Russians suppliers pulling out from the market as they have the highest cash costs, around US$65/t, 2) no supply from the US for the same reason as the Russian, 3) South African supply remains tight because of inland transport constraints, and 4) Colombia has endured a series of strikes for about 3-4 weeks, affecting many producers. Worth highlighting that the US export was quite strong, up by 38% YoY in FY08, but no official data is available of export during 1Q09.
Figure 2
Coal inventory at Qinhuangdao
Meanwhile, CLSA China Reality Research (CRR) reported that spot thermal coal prices in Qinhuangdao port in China rose for the second week, up around 1.2% to 2.1% WoW. As inventory declines at the port, CRR hears that key coal producers such as Shenhua (1088 HK) and Datong Group have temporarily halted spot market sales of their coal to give priority to contract clients and this move could support spot prices.
Figure 1
Thermal coal price FOB Newcastle and Richard Bay
Thermal coal future in Europe (API4, the blue line) bounced strongly from its low in the last 4 weeks, massively outperforming spot thermal coal price in Newcastle, Australia (CLSPAUNE, the red line). Our sources in the industry mentioned that thermal coal fundamentals in Europe remains weak as port and power station stockpiles are still at high level, seasonally coal burn is falling due to milder weather, and gas prices are declining. There are, though, some positives that supported European thermal coal price, including 1) Russians suppliers pulling out from the market as they have the highest cash costs, around US$65/t, 2) no supply from the US for the same reason as the Russian, 3) South African supply remains tight because of inland transport constraints, and 4) Colombia has endured a series of strikes for about 3-4 weeks, affecting many producers. Worth highlighting that the US export was quite strong, up by 38% YoY in FY08, but no official data is available of export during 1Q09. Figure 2
Coal inventory at Qinhuangdao
Meanwhile, CLSA China Reality Research (CRR) reported that spot thermal coal prices in Qinhuangdao port in China rose for the second week, up around 1.2% to 2.1% WoW. As inventory declines at the port, CRR hears that key coal producers such as Shenhua (1088 HK) and Datong Group have temporarily halted spot market sales of their coal to give priority to contract clients and this move could support spot prices.
Indonesia's PT BISI INTERNATIONAL, TBK
BISI: Initiate BUY recommendation with TP of Rp 1,940
We initiate coverage on BISI with a BUY recommendation at a target price of Rp1,940, a DCF-calculation based on WACC of 17% and LTG of 3%. At our TP, the stock is trading at a PER of 21.8 times FY09 earnings, providing an upside potential of 26.0%. We considered BISI a well-diversified company involved in a defensive sector of Indonesian agriculture commanding significant market share of 60% for corn seeds and 40% for rice seeds. Aside from fundamental perspective, we view the stock trading at an attractive 2nd lowest range of historical PER of 13 times (exhibit 17) which suggest lower downside for the stock price.
We initiate coverage on BISI with a BUY recommendation at a target price of Rp1,940, a DCF-calculation based on WACC of 17% and LTG of 3%. At our TP, the stock is trading at a PER of 21.8 times FY09 earnings, providing an upside potential of 26.0%. We considered BISI a well-diversified company involved in a defensive sector of Indonesian agriculture commanding significant market share of 60% for corn seeds and 40% for rice seeds. Aside from fundamental perspective, we view the stock trading at an attractive 2nd lowest range of historical PER of 13 times (exhibit 17) which suggest lower downside for the stock price.
Rabu, 15 April 2009
Market News
CPO
Cargo surveyor Intertek Testing Services announced exports in the first 10 days of April rose eight per cent to 399,703 tonnes from 369,265 tonnes shipped during the same period last month. Another cargo surveyor Societe Generale de Surveillance reported exports for the same period jumped just 3.7 per cent to 391,223. The April inventory was expected to be below 1.2 million tonnes against 1.36 million tonnes recorded last month.
Nickel
LME nickel MNI3 closed at $11,850 from $11,040, having surged to $11,750 and touching its highest since early February. "You haven't seen any fresh fundamental news flow supporting prices," said Sudakshina Unnikrishna, and analyst at Barclays Capital on nickel.
Tin
Tin MSN3 was last bid at $11,000 a tonne from $10,995. Canceled warrants for tin were at 945 tonnes, up from 650 tonnes last week, while LME inventories rose 135 tonnes to 12,070 tonnes.
WIKA
Jakarta - PT Wijaya Karya Tbk (WIKA) targeting new acquisition contract of Rp 9,394 trillion in 2009. Company's focus on pursuing the government rather than private sector projects. "This year we target a new contract of Rp 9,394 trillion," said Director WIKA, Stars Perbowo in shelf building in WIKA, Jl DI Panjaitan, Jakarta, Selasa (14/4/2009).
WIKA & PLN
This year, PT PLN (Persero) menggandeng PT Wijaya Karya Tbk (WIKA) to become a supplier of coal to several power plant. "We will supply coal to PLN for 5 years," said Director of Operations WIKA Slamet Maryono, after public exposure event in Jakarta on Tuesday (14 / 4). The value of investment for the project to reach Rp 1.9 trillion, with the details of 520 thousand metric tons per year.
IDR
SINGAPORE. According to Barclays Capital, Indonesian rupiah have strong possibility to strongest level against dollar in six months. This triggered the improvement of the global economy so that encourage foreign investors to buy assets in Indonesia. "Scenario base so we can encourage the entrance capital flows to Indonesia."
Cargo surveyor Intertek Testing Services announced exports in the first 10 days of April rose eight per cent to 399,703 tonnes from 369,265 tonnes shipped during the same period last month. Another cargo surveyor Societe Generale de Surveillance reported exports for the same period jumped just 3.7 per cent to 391,223. The April inventory was expected to be below 1.2 million tonnes against 1.36 million tonnes recorded last month.
Nickel
LME nickel MNI3 closed at $11,850 from $11,040, having surged to $11,750 and touching its highest since early February. "You haven't seen any fresh fundamental news flow supporting prices," said Sudakshina Unnikrishna, and analyst at Barclays Capital on nickel.
Tin
Tin MSN3 was last bid at $11,000 a tonne from $10,995. Canceled warrants for tin were at 945 tonnes, up from 650 tonnes last week, while LME inventories rose 135 tonnes to 12,070 tonnes.
WIKA
Jakarta - PT Wijaya Karya Tbk (WIKA) targeting new acquisition contract of Rp 9,394 trillion in 2009. Company's focus on pursuing the government rather than private sector projects. "This year we target a new contract of Rp 9,394 trillion," said Director WIKA, Stars Perbowo in shelf building in WIKA, Jl DI Panjaitan, Jakarta, Selasa (14/4/2009).
WIKA & PLN
This year, PT PLN (Persero) menggandeng PT Wijaya Karya Tbk (WIKA) to become a supplier of coal to several power plant. "We will supply coal to PLN for 5 years," said Director of Operations WIKA Slamet Maryono, after public exposure event in Jakarta on Tuesday (14 / 4). The value of investment for the project to reach Rp 1.9 trillion, with the details of 520 thousand metric tons per year.
IDR
SINGAPORE. According to Barclays Capital, Indonesian rupiah have strong possibility to strongest level against dollar in six months. This triggered the improvement of the global economy so that encourage foreign investors to buy assets in Indonesia. "Scenario base so we can encourage the entrance capital flows to Indonesia."
Crude palm oil futures surge, stockpile seen falling further
April 15, 2009 3:00 GMT+8 Crude palm oil futures prices on Bursa Malaysia Derivatives ended sharply higher yesterday on expectation of further drop in stockpile this month.
A dealer said the April inventory was expected to be below 1.2 million tonnes against 1.36 million tonnes recorded last month.
He said investors are looking forward for the first 15 days data to be released today for a new direction.
“Both cargo surveyors will release their figures tomorrow which are expected to be good,” the dealer said yesterday.
Cargo surveyor Intertek Testing Services last Friday announced exports in the first 10 days of April rose eight per cent to 399,703 tonnes from 369,265 tonnes shipped during the same period last month.
Another cargo surveyor Societe Generale de Surveillance reported exports for the same period jumped just 3.7 per cent to 391,223.
At the close of trading yesterday, the CPO futures contracts for April 2009 jumped RM105 to RM2,560 per tonne, May 2009 surged RM142 to RM2,560, June 2009 went up RM150 to RM2,485 and July 2009 added RM148 to RM2,438 per tonne.
Yesterday’s volume amounted to 23,790 lots, up from Monday’s 14,825 lots, while open interests slide to 84,609 contracts from 85,966 previously.
As for the physical market, the CPO for April shipments in the southern region was higher at RM2,600 per tonne compared with Monday’s RM2,480 per tonne.
Reuters Indonesia's Timah to cut tin output to support market
* To slash output by as much as 8 pct to prop up prices
* Analysts say cut won't lift prices much, mkt in deficit
* More chances for spot trade with fewer long-term deals (Adds analyst comment, details)
By Fitri Wulandari
JAKARTA, April 14 (Reuters) - Indonesia's PT Timah Tbk (TINS.JK), the world's biggest integrated tin miner, said on Tuesday it expected to cut its refined tin output by as much as 8 percent this year to avoid depressing global prices further.
But analysts said the move would not have a major impact on the market unless the Indonesian government took stronger action to curb exports in the world's top exporter, despite the prospect of another global supply deficit this year.
The firm planned to produce 45,000-48,000 tonnes of refined tin this year, down from 49,029 tonnes in 2008, although this could be scaled back even further if prices continued to fall, Timah spokesman Abrun Abubakar said.
"We will see the price situation. We don't want to flood the market because it would push down prices," Abubakar told reporters on the sidelines of a forestry conference.
The price of tin, used in food packaging and soldering of electronic components, has fallen about 56 percent from an all-time high of $25,500 a tonne hit last May as the global economic crisis hit, although has stabilised in recent months.
The price of tin MSN3 on the London Metal Exchange stood at $11,100/$11,105 a tonne on Tuesday. more...
* Analysts say cut won't lift prices much, mkt in deficit
* More chances for spot trade with fewer long-term deals (Adds analyst comment, details)
By Fitri Wulandari
JAKARTA, April 14 (Reuters) - Indonesia's PT Timah Tbk (TINS.JK), the world's biggest integrated tin miner, said on Tuesday it expected to cut its refined tin output by as much as 8 percent this year to avoid depressing global prices further.
But analysts said the move would not have a major impact on the market unless the Indonesian government took stronger action to curb exports in the world's top exporter, despite the prospect of another global supply deficit this year.
The firm planned to produce 45,000-48,000 tonnes of refined tin this year, down from 49,029 tonnes in 2008, although this could be scaled back even further if prices continued to fall, Timah spokesman Abrun Abubakar said.
"We will see the price situation. We don't want to flood the market because it would push down prices," Abubakar told reporters on the sidelines of a forestry conference.
The price of tin, used in food packaging and soldering of electronic components, has fallen about 56 percent from an all-time high of $25,500 a tonne hit last May as the global economic crisis hit, although has stabilised in recent months.
The price of tin MSN3 on the London Metal Exchange stood at $11,100/$11,105 a tonne on Tuesday. more...
CNBC Pre-Market
NEW YORK (Reuters) - S&P 500 and Nasdaq 100 stock index futures fell on Tuesday following results from top global chipmaker Intel Corp (INTC.O) that beat expectations, but only gave an informal revenue outlook for the current quarter.
Shares of Intel fell 4.4 percent to $15.30 in extended trading.
S&P 500 futures fell 3.80 points and were below fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures climbed 10 points, while Nasdaq 100 futures lost 17.25 points.
(Reporting by Leah Schnurr)
Shares of Intel fell 4.4 percent to $15.30 in extended trading.
S&P 500 futures fell 3.80 points and were below fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures climbed 10 points, while Nasdaq 100 futures lost 17.25 points.
(Reporting by Leah Schnurr)
CNBC Stocks Still Rattled by Signs The Economy Remains Weak
Consumer weakness—as shown by Tuesday's retail sales numbers—serves as a reminder that the economy still poses a danger to the stock market.
Investors otherwise in a good mood over the relative health of the financial sector retreated a bit, signaling that while a fairly firm market bottom may have been put in, the race to the top won't be a picnic either.
* What $1 Trillion Looks Like
* Take Profits Now on Bank Stocks?
Retail sales dropped an unexpected 1.1 percent, leading to a negative day on Wall Street. Even comments from President Obama and Fed Chairman Ben Bernanke that the economy was showing signs of recovering didn't help investors' mood.
That the selloff was not more dramatic may have provided some encouragement that the market can withstand bad news. Nonetheless, there was a pervasive feeling that there's work to be done before investors can feel safe again.
"We've had various things happen that in the past several months would have caused a (major) selloff and that's not happening," says Richard Sparks, senior analyst at Schaeffer's Investment Research in Cincinnati. "By the same token I don't see us at least in the near term jumping back up to 10,000 on the Dow—which would suggest to me that we're in a grind phase." more...
Investors otherwise in a good mood over the relative health of the financial sector retreated a bit, signaling that while a fairly firm market bottom may have been put in, the race to the top won't be a picnic either.
* What $1 Trillion Looks Like
* Take Profits Now on Bank Stocks?
Retail sales dropped an unexpected 1.1 percent, leading to a negative day on Wall Street. Even comments from President Obama and Fed Chairman Ben Bernanke that the economy was showing signs of recovering didn't help investors' mood.
That the selloff was not more dramatic may have provided some encouragement that the market can withstand bad news. Nonetheless, there was a pervasive feeling that there's work to be done before investors can feel safe again.
"We've had various things happen that in the past several months would have caused a (major) selloff and that's not happening," says Richard Sparks, senior analyst at Schaeffer's Investment Research in Cincinnati. "By the same token I don't see us at least in the near term jumping back up to 10,000 on the Dow—which would suggest to me that we're in a grind phase." more...
Selasa, 14 April 2009
WIKA Bidik Kontrak Baru Rp 9 T
Jakarta - PT Wijaya Karya Tbk (WIKA) menargetkan perolehan kontrak baru sebesar Rp 9,394 triliun di tahun 2009. Perseroan fokus mengejar proyek pemerintah ketimbang swasta. "Tahun ini kami menargetkan kontrak baru sebesar Rp 9,394 triliun," ujar Direktur Utama WIKA, Bintang Perbowo dalam paparan di gedung WIKA, Jl DI Panjaitan, Jakarta, Selasa (14/4/2009).
Tahun lalu, kontrak yang dipegang WIKA sebesar Rp 7,79 triliun. Jika target kontrak baru tahun ini tercapai, maka total nilai kontrak berjalan (carryover) WIKA di akhir tahun 2009 akan mencapai Rp 17,184 triliun. "Tahun ini, kami akan lebih fokus pada proyek-proyek pemerintah dan BUMN ketimbang proyek-proyek swasta," ujar Direktur Keuangan WIKA, Ganda Kusuma.
Tahun lalu, proyek pemerintah mengambil porsi 10% dari total nilai kontrak sebesar Rp 7,79 triliun atau setara dengan Rp 779 miliar. Sedangkan proyek BUMN sebesar 40% atau sekitar Rp 3,116 triliun. Proyek WIKA dari perusahaan swasta di tahun 2008 sebesar 47% atau setara dengan Rp 3,661 triliun. Sisanya proyek-proyek di luar negeri sebesar Rp 233,7 miliar (3%).
"Tahun ini, porsi proyek pemerintah akan menjadi 18% dan BUMN sebesar 41%, sedangkan porsi swasta kita turunkan jadi 40%. Luar negeri tetap 3%," jelas Ganda. Mengacu pada target kontrak baru sebesar Rp 9,394 triliun di 2009, maka nilai proyek WIKA dari pemerintah akan menjadi Rp 1,690 triliun.
Proyek dari BUMN jadi sebesar Rp 3,851 triliun, lebih besar dari proyek swasta yang ditargetkan sebesar Rp 3,757 triliun di 2009. Proyek dari luar negeri sebesar Rp 281,82 miliar.
"Alasan kami lebih mengejar proyek-proyek pemerintah, karena dalam kondisi seperti ini, dimana perbankan sangat ketat dalam memberikan pendanaan, swasta agak tersendat. Oleh sebab itu, kami lebih mengejar proyek pemerintah yang dananya lebih pasti," jelas Ganda. Hingga 31 Maret 2009, WIKA telah berhasil meraih kontrak baru sebesar Rp 2,711 triliun, naik 26,03% dari perolehan kontrak baru pada periode yang sama tahun 2008 sebesar Rp 2,151 triliun.
"Nilai terbesar diperoleh dari kontrak pasokan batubara dengan PLN senilai Rp 1,96 triliun selama 5 tahun. Per tahun WIKA akan memasok 520 ribu ton batubara per tahun ke PLTU Tanjung Jati B," ujar Ganda.
Kinerja keuangan triwulan I-2009 juga cukup positif. WIKA membukukan pendapatan sebesar Rp 1,26 triliun, naik 10,30% dibanding triwulan I-2008 sebesar Rp 1,142 triliun. "Tahun ini kami menargetkan pendapatan sebesar Rp 7,481 triliun, naik 14,03% dibanding pendapatan tahun 2008 sebesar Rp 6,56 triliun," ujar Ganda.
WIKA juga membidik laba bersih sebesar Rp 175 miliar di 2009, naik 12,17% dibanding perolehan laba bersih tahun 2008 sebesar Rp 156 miliar.
Mengenai dividen, manajemen berencana mengajukan pembagian dividen 2008 sebesar 30% kepada pemegang saham. "Kita maunya 30% seperti dividen tahun 2007. Tapi tergantung pemegang saham," ujar Ganda.
Tahun lalu, kontrak yang dipegang WIKA sebesar Rp 7,79 triliun. Jika target kontrak baru tahun ini tercapai, maka total nilai kontrak berjalan (carryover) WIKA di akhir tahun 2009 akan mencapai Rp 17,184 triliun. "Tahun ini, kami akan lebih fokus pada proyek-proyek pemerintah dan BUMN ketimbang proyek-proyek swasta," ujar Direktur Keuangan WIKA, Ganda Kusuma.
Tahun lalu, proyek pemerintah mengambil porsi 10% dari total nilai kontrak sebesar Rp 7,79 triliun atau setara dengan Rp 779 miliar. Sedangkan proyek BUMN sebesar 40% atau sekitar Rp 3,116 triliun. Proyek WIKA dari perusahaan swasta di tahun 2008 sebesar 47% atau setara dengan Rp 3,661 triliun. Sisanya proyek-proyek di luar negeri sebesar Rp 233,7 miliar (3%).
"Tahun ini, porsi proyek pemerintah akan menjadi 18% dan BUMN sebesar 41%, sedangkan porsi swasta kita turunkan jadi 40%. Luar negeri tetap 3%," jelas Ganda. Mengacu pada target kontrak baru sebesar Rp 9,394 triliun di 2009, maka nilai proyek WIKA dari pemerintah akan menjadi Rp 1,690 triliun.
Proyek dari BUMN jadi sebesar Rp 3,851 triliun, lebih besar dari proyek swasta yang ditargetkan sebesar Rp 3,757 triliun di 2009. Proyek dari luar negeri sebesar Rp 281,82 miliar.
"Alasan kami lebih mengejar proyek-proyek pemerintah, karena dalam kondisi seperti ini, dimana perbankan sangat ketat dalam memberikan pendanaan, swasta agak tersendat. Oleh sebab itu, kami lebih mengejar proyek pemerintah yang dananya lebih pasti," jelas Ganda. Hingga 31 Maret 2009, WIKA telah berhasil meraih kontrak baru sebesar Rp 2,711 triliun, naik 26,03% dari perolehan kontrak baru pada periode yang sama tahun 2008 sebesar Rp 2,151 triliun.
"Nilai terbesar diperoleh dari kontrak pasokan batubara dengan PLN senilai Rp 1,96 triliun selama 5 tahun. Per tahun WIKA akan memasok 520 ribu ton batubara per tahun ke PLTU Tanjung Jati B," ujar Ganda.
Kinerja keuangan triwulan I-2009 juga cukup positif. WIKA membukukan pendapatan sebesar Rp 1,26 triliun, naik 10,30% dibanding triwulan I-2008 sebesar Rp 1,142 triliun. "Tahun ini kami menargetkan pendapatan sebesar Rp 7,481 triliun, naik 14,03% dibanding pendapatan tahun 2008 sebesar Rp 6,56 triliun," ujar Ganda.
WIKA juga membidik laba bersih sebesar Rp 175 miliar di 2009, naik 12,17% dibanding perolehan laba bersih tahun 2008 sebesar Rp 156 miliar.
Mengenai dividen, manajemen berencana mengajukan pembagian dividen 2008 sebesar 30% kepada pemegang saham. "Kita maunya 30% seperti dividen tahun 2007. Tapi tergantung pemegang saham," ujar Ganda.
PLN Gandeng WIKA Pasok Batubara
Jakarta - Tahun ini, PT PLN (Persero) menggandeng PT Wijaya Karya Tbk (WIKA) untuk menjadi pemasok batu bara ke beberapa pembangkit tenaga listrik.
"Kita akan suplai batu bara ke PLN selama 5 tahun," ujar Direktur Operasional WIKA Slamet Maryono, usai acara paparan publik di Jakarta, Selasa (14/4).
Adapun nilai investasi untuk proyek tersebut mencapai Rp 1,9 triliun, dengan perincian 520 ribu metrik ton per tahun.
Selain dengan PLN, perseroan juga menjalin kerjasama dengan PT Pelindo III senilai Rp 13,2 miliar, dengan Departemen Pekerjaan Umum senilai Rp 46,73 miliar, dengan PT Poso Energy senilai Rp 47,57 miliar, dengan PT Bimara Transia senilai Rp 4,33 miliar, dengan PT Indomico Mandiri senilai Rp 70,68 miliar, dan dengan PT Karunia Berca Indonesia senilai Rp 12,55 miliar.
Sedangkan kontrak baru yang disumbangkan oleh anak perusahaan WIKA mencapai Rp 616,51 miliar, sehingga nilai total kontrak baru yang dimiliki WIKA sampai Maret 2009 mencapai Rp 2,71 triliun.
Sementara ketika dikonfirmasi kepastian niat perseroan untuk mengakuisisi perusahaan yang bergerak dibidang tambang batu bara, Slamet hanya mengatakan secara normatif. "Kita lihat dulu lah pasarnya, kalau sudah ada baru kita jalan," pungkasnya.
Sebelumnya, WIKA menargetkan untuk dapat menyelesaikan akusisi pada semester satu tahun ini. Adapun perusahaan yang dibidik adalah sebuah kontraktor batu bara dengan jumlah saham yang akan dimiliki sebanyak 70%.
"Kita akan suplai batu bara ke PLN selama 5 tahun," ujar Direktur Operasional WIKA Slamet Maryono, usai acara paparan publik di Jakarta, Selasa (14/4).
Adapun nilai investasi untuk proyek tersebut mencapai Rp 1,9 triliun, dengan perincian 520 ribu metrik ton per tahun.
Selain dengan PLN, perseroan juga menjalin kerjasama dengan PT Pelindo III senilai Rp 13,2 miliar, dengan Departemen Pekerjaan Umum senilai Rp 46,73 miliar, dengan PT Poso Energy senilai Rp 47,57 miliar, dengan PT Bimara Transia senilai Rp 4,33 miliar, dengan PT Indomico Mandiri senilai Rp 70,68 miliar, dan dengan PT Karunia Berca Indonesia senilai Rp 12,55 miliar.
Sedangkan kontrak baru yang disumbangkan oleh anak perusahaan WIKA mencapai Rp 616,51 miliar, sehingga nilai total kontrak baru yang dimiliki WIKA sampai Maret 2009 mencapai Rp 2,71 triliun.
Sementara ketika dikonfirmasi kepastian niat perseroan untuk mengakuisisi perusahaan yang bergerak dibidang tambang batu bara, Slamet hanya mengatakan secara normatif. "Kita lihat dulu lah pasarnya, kalau sudah ada baru kita jalan," pungkasnya.
Sebelumnya, WIKA menargetkan untuk dapat menyelesaikan akusisi pada semester satu tahun ini. Adapun perusahaan yang dibidik adalah sebuah kontraktor batu bara dengan jumlah saham yang akan dimiliki sebanyak 70%.
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