Detikfinance Produksi Harian Energi Mega Tumbuh 19%

Jakarta - PT Energi Mega Persada Tbk (ENRG) telah berhasil meningkatkan produksi harian migas menjadi 29.100 barel per hari (bph) di semester I 2009. Angka ini meningkat 19% jika dibandingkan angka produksi harian pada semester yang sama di tahun lalu.

Menurut Investor Relations ENRG, Herwin W Hidayat, perseroan menargetkan pertumbuhan produksi migas sebesar 20% dibanding tahun 2008 yaitu dari 25.100 bph menjadi 30.000 bph. Target 30.000 bph terdiri dari 15.000 bph minyak dan 100 bbtud (juta kaki kubik per hari)

"Dari target produksi harian sebesar 30 ribu bph sekarang sudah mencapai 29,1 ribu bph. Kita optimis level 30 ribu bph bisa tercapai dalam waktu cepat," jelas Herwin di Wisma Mulia, Jalan Gatot Subroto, Jakarta, Senin (13/7/2009).

Untuk produksi migas semester satu tersebut, lanjut Herwin, terdiri dari produksi minyak harian sekitar 13,8 ribu bph dan produksi gas sebesar 92 BBTUD. Produksi minyak meningkat hampir 40 persen dari 10,2 ribu bph di semester I 2008 menjadi 13,8 bph di semester 1 2009. Sementara untuk produksi gas meningkat dari 86 bbtud menjadi 92 bbtud.

"Kontribusi produksi gas terbesar berasal dari blok Kangean yaitu 35-40 bbtud dan untuk minyak produksi terbesarnya berasal dari blok Malaka hampir 10 ribu bph," jelasnya. more...

Detikfinance EMP Targetkan Blok Tonga Mulai Produksi Akhir 2010

Jakarta - Blok Tonga yang dikelola PT Energi Mega Persada Tbk (ENRG) akan mulai berproduksi pada akhir tahun 2010. Produksi awal dari blok ini diperkirakan mencapai 600 barel per hari.

"Kami masih melakukan study seismik di Blok Tonga. Pada tahun 2011, kami harapkan
produksinya bisa mencapai 2.000 bph," ujar Chief Operation Officer PT Energi Mega Persada Tbk (ENRG), Amir Balfas dalam media gathering di Wisma Mulia, Jalan Gatot Subroto, Jakarta, Senin (13/7/2009).

Pada pertengahan tahun lalu, ENRG telah mengakuisisi 53,4 persen kepemilikan tidak langsung di Blok Tonga yang terletak di Sumtera Utara senilai US$ 11,8 juta. Menurut perkiraan awal, blok ini memiliki cadangan migas setara dengan 90 juta barel minyak.

Selain blok Tonga, Amir menjelaskan pihaknya menargetkan blok Gas Metana Batura (GMB) Tabulako dan Sangata-2 milik ENRG akan mulai berproduksi paling cepat 2012. Kedua blok ini dikelola ENRG melalui anak usahanya PT Artha Widya Persada dan PT Visi Multi Artha pada bulan Mei lalu.

ENRG memiliki 70 persen kepemilikan di PT Artha Widya Persada yang memiliki 100 persen kuasa pertambangan di blok GMB Tabulako di Kalimantan Selatan. Selain itu, ENRG juga memiliki 70 persen dari PT Visi Multi Artha yang pada saat ini memiliki 60 persen kuasa pertambangan di Blok GMB Sangatta-2 di Kalimantan Timur. more...

Bloomberg U.S. Stocks Advance, Led by Banks, as Whitney Says Buy Goldman

July 13 (Bloomberg) -- U.S. stocks rallied, sending the Standard & Poor’s 500 Index to its best gain in six weeks, as analyst Meredith Whitney recommended buying shares of Goldman Sachs Group Inc. and said banks may advance 15 percent.

Goldman Sachs climbed 5.3 percent as Whitney gave the firm the only “buy” rating among the eight companies she covers. Bank of America Corp. jumped 9.3 percent, the most in almost two months, after the analyst told CNBC the shares were the “cheapest” among U.S. banks. SanDisk Corp., the largest maker of flash-memory cards, led technology shares higher after Thomas Weisel Partners Group Inc. advised buying the shares.

The S&P 500 rose 2.5 percent to 901.05 at 4:05 p.m. in New York, its best advance since June 1. The Dow Jones Industrial Average added 185.16 points, or 2.3 percent, to 8,331.68. Almost nine stocks gained for each that fell on the New York Stock Exchange.

“We need to have a healthy banking sector for this economy to work properly,” said Keith Wirtz, who helps oversee $19.8 billion as chief investment officer at Fifth Third Asset Management in Cincinnati. “Any positive commentary or news will be good for the banking stocks, will be good for the psychology of the market.”

The Chicago Board Options Exchange Volatility Index, the benchmark gauge of U.S. stock options, slid the most since March. The so-called VIX, which measures the cost of using options as insurance against declines in the S&P 500, tumbled 9.3 percent to 26.31. moree...

Bloomberg Copper Prices Climb as Equity Rebound Bolsters Metal Sentiment

July 13 (Bloomberg) -- Copper prices rose in New York as equity markets rallied, boosting investor sentiment for some industrial metals.

The Standard & Poor’s 500 Index climbed as much as 2 percent on speculation that bank earnings will improve. Some traders follow equities as a gauge for the economic outlook. Last week, copper slid 4.1 percent as the S&P dropped 1.9 percent.

“Copper is following the movements in the larger markets and acting as a surrogate for the outlook for the economy,” said Donald Selkin, the chief market strategist at National Securities Corp. in New York.

Copper futures for September delivery rose 1.15 cents, or 0.5 percent, to $2.223 a pound on the Comex division of the New York Mercantile Exchange.

Freeport-McMoRan Copper & Gold Inc., the world’s biggest publicly traded copper producer, said operations at its Grasberg mine in Indonesia were normal after a third body was found in the area following weekend attacks. Grasberg is the second- largest copper mine behind Chile’s Escondida.

The attacks are “not having a major impact on prices,” said Frank McGhee, the head dealer at Integrated Brokerage Services LLC in Chicago.

On the LME, copper for delivery in three months added $37, or 0.8 percent, to $4,895 a metric ton ($2.22 a pound).

Tin jumped 2.5 percent to $12,300 a ton on the LME, and nickel gained 1.7 percent to $14,730. Aluminum, lead and zinc fell.

To contact the reporter on this story: Millie Munshi in New York at mmunshi@bloomberg.net;

Palmoil HQ More downside to crude palm oil futures market

OBSERVATIONS: Weighed down by the meltdown on global equity and commodity markets, the Kuala Lumpur CPO futures market plummeted below the psychologically significant RM2,000 a tonne level, a price not seen since early April this year.

The actively-traded September 2009 contract dived to an intra-week low of RM1,983, before recovering some on short-covering to settle last Friday at RM2,010, down RM165 or 7.59 per cent over the week.

Concerns that the world economy would sink into deeper recession sent global financial markets reeling last week. Crude oil slumped to US$60 a barrel, down from the week earlier level above US$70 (US$1 = RM3.57). The catalyst was the US government report that the unemployment rate there had surged to a 26-year high of 9.6 per cent.

Feeble attempts at rallies were undermined in part by the jawboning of a clutch of so-called “experts”, who have begun talking down this market. Until the previous week those “experts” have either been silent on the trend of this market or had still held bullish views. Now the overall “expert” opinion is that palm oil is likely to trade below RM2,000 a tonne on average for the rest of this year.

The Malaysian Palm Oil Board (MPOB) report on June trade data and end-June stocks was neutral in its effect on this market. The MPOB put end-June 2009 stocks at 1,405,500 tonnes, up 34,262 tonnes or 2.5 per cent but well below market expectation of a 4.6 per cent increase in stocks.

News that India left import duties unchanged for vegetable oils, though welcome, could not lift market players’ spirits.

UOB Kay Hian -A N E K A T A M B A N G Solid Gold And Nickel Volume To Boost Future Earnings

We upgrade Aneka Tambang (ANTM) to BUY on the back of several positive catalysts:
Margin improvement for the next few quarters on higher nickel price. Due to higher nickel price recently, we believe ANTM's margin would improve in the next few quarters. We expect ferronickel cash cost to be maintained at about US$10,362/tonne (US$4.70/lb) for 2009, slightly above the 1Q09 cash cost of about US$4.60/lb. As a result of stronger gross margin expected for the remaining quarters of 2009, we expect ANTM to register gross margin of 20.2% for 2009, up from 6% in 1Q09 but still lower than the 27.6% posted in 2008.

Strong nickel price, ytd. Nickel price has jumped by 28% ytd to US$14,860/tonne (US$6.74/ lb), driven by: a) slow growth of nickel inventory in 2Q09 compared to 1Q09, b) surge in nickel demand in China and c) the start of restocking by stainless steel mills. However, we remain cautious as there is still no improvement in end-user demand. We expect LME nickel price to decline by 36% yoy to US$13,500/tonne (US$6.12/lb) in 2009 before rising 11% yoy to US$15,000/tonne (US$6.80/lb) in 2010.

Higher contribution from gold division. We expect sturdy contribution from the gold division on the back of a new gold mine operation (Cibaliung gold project) in 2H10, which will boost ANTM's gold production by 18 - 21% yoy in 2010-11. This project is expected to produce gold with annual capacity of 2,200kg and mine life operations until 2017. However, we are still conservative on forecasting the gold production of only 4,000kg for 2011 vs ANTM's expectation of about 4,800kg.

Prolonging gold mine life in existing operation. ANTM managed to boost its gold reserves and resources at the existing Pongkor mining site by about 34% during 2008 to approximately 5,337wmt. Based on the current annual production of about 2,800kg, this will prolong ANTM's mine life operation of the Pongkor gold and silver mines by five years to 2019.

Upgrade to BUY. We raise our target price to Rp2,500 from Rp1,200 based on 2.7x 2010 P/B, which is still lower than the average 3-year P/B of 3.0x given that the earnings for 2009 and 2010 are likely to hit a trough. The stock currently trades at 17.8x 2010 PE. However, under the bull case at the nickel price assumption of US$20,000/tonne for 2010, we expect 2010 PE to drop to about 13.8x. As such, we upgrade the stock from HOLD to BUY.

Mandiri Sekuritas MEDC: No immediate effects from project delays

We made a confirmation with the company in respond to the latest news article regarding the postponement of its 3 key projects. The company mentioned that the projects (Senoro, Sarulla and block A) are still in progress and on track with the company’s and our schedule, despite still waiting for green light from the government. This includes contract extension and approval to export the LNG. As such, we are maintaining our earnings forecast and target price of Rp3,700 (20% discount to our DCF-! based fai r price of around US$0.45/share). Given some 27.6% upside from current share price, we upgraded our recommendation to Buy from Neutral.

Expect the 1st LNG shipment at the beginning 2013. For the Senoro project, the company expects the first LNG shipment to be at the end 2012 or beginning 2013, which more or less similar on the delivery schedule from the gas field to the plant. The company mentioned that the construction of the LNG plant may take around 2 years to complete. Such statement indicates that the project kick-off will be sometime in 2010, which shows that they still have some time to obtain approval from the government. Note that it also applies to the other 2 projects m! entioned in the article (Block A and Sarulla). To be conservative, we assume that the Senoro project will start producing in 2014.

May obtained contract extension for Block A. For Block A in Aceh, the company is still waiting for the government to extend the contract, as the current contract expires in 2011. We believe such obstacle may be easier to solve, as the operation of this project is in line with government expectation of boosting oil production while at the same time contributes income to the country.

Still renegotiating Sarulla’s gas selling price with PLN. While for Sarulla, obstacles are slightly different from the other two projects, as it only needs PLN to agree with the electricity selling price upward adjustment of around US$7cents/kWH (from previously US$4.6cents) before they could further continue the project. We believe that they could also obtained the price adjustment in near future, as other project such as Wijaya Karya’s Tampo Mas power plant has obtained an agreement to sell the electricity to PLN with a price of around US$6.5cents/kWH.

PRC Coal - Counter Seasonal Coal Confusion

What's new? Inventories build, spot falls against 3Q seasonality - Investment cases are being challenged by data in the past month. Spot prices are falling and inventories at Qinhuangdao have increased to 6.6Mt, up 29% MoM. Prices have edged down to RMB575/t (6000Kcal) from RMB590/t, countering seasonality.

Coal Supply increases in May, +30% from Jan, up 5.8% MoM - We are seeing an increase in small mine production. On a national level Township mines production is up 5.5%MoM. Key state-owned mine production (twice as large as the townships) is up 7.7% MoM.

Shanxi Small Mines return, production up 39% MoM - One of the areas of surprise in 1Q09 was small mine production which was down 50% YoY. Production is now returning with production up to 17mtpm from lows of 7.2mtpm.

Resource Tax comes back to haunt and taunt coal names - Resource tax proposal is to be submitted to the NPC, according to www.financce.sina.com. The tax reform is to take place as the economy recovers. The reform may include: expanding the taxable item ranges (may include water and gold) and reform the taxing method (may change from tax by quantity to by price), according to MoF

The positives: June Power consumption up 3.79% YoY, generation up 4.7%
Implications: newsflow supportive of our Shenhua downgrade to Hold - With a lack of conviction of supply-demand balance and its implications for 2010 contracts. New information is confirming the negatives.

Credit Suisse Asia Equity Strategy - Indonesia Overweight

Over the last three months, we have been Overweighting Indonesia as the home of cheap cyclicals. The key question now is whether Indonesia is still undervalued as it is up 72% YTD in USD terms (similar to Shanghai’s 71% YTD performance).

On our P/BV versus ROE valuation model, Indonesia has moved from being the most undervalued (a position it got to at end- February) to now the second most undervalued market in the region. Thailand’s discount at 32% is now slightly larger than Indonesia’s at 28% (see Figure 1). Also, Indonesia’s discount narrowed from 74% at end-February to 28% now.

While the discount has narrowed, we note four positives for Indonesia. Firstly, it is a domestic growth story similar to China (H shares discount is 17%) and India (14% discount). Second, it has been associated with strong upgrades to consensus EPS (see Figure 2). Third, there is potential room for one more rate cut and if not stable rates. Finally, if the exit polls are accurate, there is a potential for a stronger government after Wednesday’s Presidential elections.

Indonesia moves from being the most undervalued to second most undervalued Over the last three months, we have been Overweighting Indonesia as the home of cheap cyclicals. The key question now for investors is whether Indonesia is still undervalued as it is up 72% YTD in USD terms (versus 34% for MSCI Asia ex-Japan in USD terms).

On our P/BV versus ROE valuation model, Indonesia has moved from being the most undervalued (a position it got to at end-February) to now the second most undervalued market in the region. Thailand’s discount at 32% is now slightly larger than Indonesia’s at 28%. Also, the discount narrowed from 74% at end-February to 28% now.

While Indonesia’s P/B at 2.8x is much higher than Asia’s 1.73x, we note that we get the 28% discount as Indonesia’s ROE of 20.7% is close to double Asia’s ROE of 10.8%.

Figure 2 highlights that 2009E consensus EPS revisions have been accelerating in Indonesia from +0.1% in April to +3.5% in May to +3.2% in June and +2.8% in just the first week of July. Indonesia’s consensus EPS upgrades appear to be broad-based with only telcos (-0.8%) and industrials (-0.3%) associated with downgrades so far in
July.

The strongest upgrades so far in July have been in Indonesian energy (+12%), utilities (+4%), materials (+3.4%), consumer cyclicals (+2%) and financials (+1.4%). Significantly, all these sectors are trading at a discount to the region.

The biggest discounts are in energy (142%), consumer cyclicals (47%), consumer staples (44%), materials (25%) and financials (20%). Within energy, we estimate a 159% discount for coal (versus just 20% for Chinese coal) and 59% for palm oil (versus a 14% premium for Singapore/Malaysian palm oil).

While the Indonesian energy discount is probably overstated as the current ROE is unsustainably high at 29.3%, we estimate that the sector is priced for ROE to fall to 14%. In other words with a 14% ROE, the discount goes to zero.

So for investors like us who are keen on cheap cyclicals, Indonesia is still the place to be.

CLSA Bumi Resources – Teaming up with local government for Newmont Nusa Tenggara acquisition?

It was reported that Bumi Resources subsidiary, Multicapital, has been appointed by local governments of West Nusa Tenggara, both provincial and regency, as the partner to finance acquisition of 10% stakes in Newmont Nusa Tenggara (NNT), the gold and copper mine controlled by Newmont of the US. Multicapital might need to spend around US$390m to finance the deal. JV with local government company, Daerah Maju Bersaing (DMB), would soon be finalized. We have yet to receive confirmation from Bumi Resources on this news.

Based on NNT contract of work, Newmont is required to divest up to 51% of its stakes in NNT to Indonesian entities. As the central government has stated that it had no interest to acquire the stakes offered, local government and several state-owned companies have been pushing hard for the stakes.

Note that NNT is more of a copper company rather than gold. Around 60% of NNT revenue and profit comes from copper while the rest comes from gold. NNT contributes to around 5% of Newmont total gold production while produces almost all of Newmont copper outputs.

How the whole transaction would affect Bumi Resources would depend on 1) the price paid for the whole transaction and 2) whether Bumi could eventually control NNT.

At this juncture, details of the potential deal are still very sketchy. Note that as the financier, we are not sure what role could Bumi Resources have on NNT. Reportedly, Bumi would get 25% of revenue of the planned JV, mostly from dividend stream of NNT, but unlikely, at lest for now, to have management installed. We understand that there is another 21% of NNT stakes to be available but government would be the one to decide the preferred bidders for these stakes, likely to be announced in early August, with other parties, reportedly, also interested. Note that negotiation for pricing of these stakes is still on going. There is another 20% of NNT stakes owned by an Indonesian company called Pukuafu Indah, controlled by Merukh family.

CLSA Research Today: Astra (ASII IJ) upgrade, from SELL to OPF

Our Astra super bear turned semi-bullish on Astra (ASII IJ)…..Ummmm. Wilianto upgrades the stock from a SELL to OPF and our TP is raised from Rp13,500 to Rp27,000 (13x 10 PE). Admittedly, Wili has been too negative on the stock on the back of our previous 0.8% GDP forecast (recently upped to 3.7%). Indonesia’s economy has been a lot more resilient than most thought. Every business unit of Astra performed better than our expectation. United Tractors (UNTR I) continues to surprise on the upside, NPL in the car and motorcycle financing units barely move up during this crisis (interest rate trending down), and auto sales are not as bad as Wili feared.

Astra is THE proxy for Indo market and is a play on Chindonesia theme with its strong exposure to domestic consumption and effect of rising income from commodities. However, the sales desk thinks the stock is prone to a short term correction given its trading at 1sd of its 5 year historical mean. Would only accumulate on weakness. UNTR is a better option at this point. It is the biggest growth drive of Astra trading on multiples of a conglomerate.

Key points from the report:
We have raised our earnings by 19% in 2009 and 28% in 2010.
UNTR will continue to deliver strong result. Heavy equipment demand from mining sector remains strong. Pama (contract mining) also benefits from easing competition.
NPL in the financing unit: no spike. NPL of car financing remain below 1% against previous expectation of 3% while NPL in motorcycle financing subsidiary (FIF) remain low at 2.39% vs. expectation of 4%.
Auto sales: not that bad. We have changed our assumption of car sales from a 40% decline to 25% decline and motorcycle sales from 30% decline to 20% decline.
The motorcycle business (Astra Honda) is also facing strong competition from Yamaha.
Profit per unit sales of Astra Honda has declined from Rp1.5mn per unit to Rp0.7m in the past five years.
We still do not expect major recovery in auto sales in 2010 as GDP growth expectation remains below 5%.
Our TP of Rp27,000 is based on 13x PE 2010CL with the assumption of falling interest rate and Indonesia economy will hold up better than expected.

CIMB Tobacco - Pharmaceutical Sector Note - Capping tax deductible for A-P spending

Purportedly to boost tax revenue, the Ministry of Finance has issued a ministerial decree capping the amount of tax deductible allowed for expenses arises from advertising and promotions by tobacco and pharmaceutical companies. In our estimates, the earnings of Kalbe and Gudang Garam, should they maintain their A&P spending, could decline by 45% and 15.7% respectively in FY09, all else the same. Given a lack of clarity in implementation and our view that the regulation could be reviewed, diluted or even postponed, we have not made any changes to our estimates for Kalbe and Gudang Garam. Both remain Outperform with DCF-based target prices of Rp1,170 and Rp17,100 respectively.

Mandiri Sekuritas Bumi Resources : Winning the Newmont bid (BUMI, Rp1,800, Buy, TP:Rp2,400)

A consortium of three local governments in Indonesia have appointed PT Multicapital, reportedly to be 100% owned by Bumi Resources, to help finance the purchase of a 10% stake in a unit of Newmont Mining Corp a local mining official The governments of West Nusa Tenggara province, West Sumbawa regency and Sumbawa regency, the three areas where the mine is located, and Multicapital would form a joint venture company to negotiate a price with Newmont, Heryadi Rachmat, the head of West Nusa Tenggara provincial mining office, said. There was an initial agreement for the local governments and Multicapital to split revenue 25% and 75% respectively. In late March, an arbitration court ordered the foreign owners of Newmont Nusa Tenggara (NNT) to sell a 17% stake to the Indonesian government within six months, of which a 10% stake should go to the local governments. The foreign owners began offering NNT shares for sale in 2006, initially offering a 3% stake for $109mn. The following year they offered a 7% stake worth $282mn, and another 7 percent stake worth $426mn in 2008. Newmont has valued the whole of NNT at $4.9bn and has started negotiations with the government over the price. The government said it planned to use an independent appraiser to value the unit. (Reuters).

Newmont’s Batu Hijau mine is located on the island of Sumbawa, approximately 950 miles (1,529 kilometers) east of Jakarta. Batu Hijau is a porphyry copper/gold deposit. In 2008, copper sales were 289.7 mn pounds (130.4 mn equity pounds), while gold sales were 298,900 ounces (134,500 equity ounces). At December 31, 2008, it reported 3,950mn equity pounds of copper reserves and 4.1mn equity ounces of gold reserves at Batu Hijau. The Comp Newmont Corp. owned 45% of the Batu Hijau mine through the Nusa Tenggara Partnership (NTP) with an affiliate of Sumitomo Corporation of Japan. The Company has a 56.25% interest in NTP and the Sumitomo affiliate holds the remaining 43.75%. NTP in turn owns 80% of Newmont Nusa Tenggara (NNT), the Indonesian subsidiary that owns Batu Hijau. The remaining 20% interest in NNT is owned by Pukuafu Indah (PTPI). Newmont is the operator of the Batu Hijau mine (Reuters).

In 2009, NNT plans to produce 455mn pounds of copper and 485,531 ounces of gold. The revenue from copper and gold sales following deduction of concentrate smelting and refinery costs substraction is US$1.149bn or Rp12tn. Expenditures for production costs, shipment costs, royalties, interest expenses, etc. are $657.57mn or Rp6.89tn. As a result, NNT in 2009 is estimated to earn pre-tax profit of $491.92mn or Rp5.16tn. After-tax net profit is expected at approx. $316.95mn or Rp3.32 tn. (newmont.co.id)

Based on US$391mn acquisition price for 7.5% stake, the acquisition will be valued at 10.6x PE09E, much cheaper than Freeport Mc Moran PE09E according to Bloomberg consensus of 32.6x. We have a Buy on Bumi with Rp2,400 target price. At Friday closing price of Rp1,800/share, Bumi is traded at 8.2x and 7.5x, PER09F, and PER10F, respectively.

Mandiri Sekuritas Cement sector: 1H09 temporary figure shows a decline of 9.1% yoy (Neutral)

Temporary ASI data shows that 1H09 consumption falls 9.1% yoy or 1.7% mom. Note that historically, June consumption tends to be flat or slightly lower compare with May. Thus, should the actual figure match the temporary data, the trend is still similar compare with previous years, excluding 2008. We expect a flat domestic consumption for FY09F compare with last year. Currently SMCB is trading at the lowest EV/ton of US$149 compare with SMGR of US$151 and INTP of US$153, respectively.

Bloomberg Oil to Average $65 in Second Half on Economic Outlook, UBS Says

Crude oil is expected to average $65 a barrel during the second half of this year as the outlook for the global economy improves and on increased appetite for risk among investors, UBS AG said in a report.

UBS raised its forecast for West Texas Intermediate, the U.S. benchmark crude variety, from $55 a barrel, analysts from the bank wrote in a report dated yesterday. Oil for August delivery traded at $60.36 at 1:50 p.m. Sydney time on the New York Mercantile Exchange.

“Greater risk appetite and some greater optimism concerning the future are likely to see prices tend towards the top half of a trading range of around $55 to $75 a barrel in the second half of 2009,” UBS analysts led by Melbourne-based Gordon Ramsay wrote.

Oil reached a record $147.27 a barrel on July 11, 2008 before dropping to $32.40 on Dec. 19 as the global recession curbed energy use. Prices are up 35 percent this year and reached an eight-month high of $73.38 on June 30.

UBS also raised its 2010 forecast to $70 a barrel from $58, the analysts said. Oil prices will be supported by a weaker U.S. dollar, UBS said. A fall in the dollar spurs demand for commodities as a hedge against inflation.

---Editor: Amit Prakash, John Viljoen.

Bloomberg IEA Sees Oil Demand Rising in 2010 After 2-Year Drop (Update2)

The International Energy Agency predicts global oil demand will rebound next year, recovering from the fastest drop since the early 1980s as the world economy emerges from its slump.

Worldwide consumption of crude oil will increase by 1.4 million barrels a day, or 1.7 percent, to 85.2 million barrels a day next year, the adviser said in its first monthly report to include a forecast for 2010. The growth will be concentrated in emerging economies outside the Organization for Economic Cooperation and Development.

Oil prices have advanced 34 percent this year on optimism that government stimulus will lift countries out of the worst global recession in six decades. Crude traded at less than $60 a barrel today in New York, a day before the July 11 anniversary when prices reached a record $147.27 last year.

“We expect demand to rebound based on the forecasts of major institutions,” David Fyfe, head of the IEA’s oil industry and markets division, said in an interview from Paris. “There’s still a strong note of caution. Demand data coming in for 2009 is still weak on a trend basis.”

The International Monetary Fund, in a forecast before the IEA prepared its outlook, estimated that the world economy will expand by 2.5 percent in 2010. The IEA said its 2010 view may remain “broadly unchanged” once it includes the revised IMF forecast, whose changes mainly reflected developed economies, where crude use is less intense. more...

Bloomberg Retail Probably Rose, Factory Slump Eased: U.S. Economy Preview

July 12 (Bloomberg) -- Retail sales in the U.S. probably increased in June for a second straight month and factory production fell at a slower pace as the recession abated, economists said before reports this week.

Sales gained 0.4 percent after a 0.5 percent increase in May, according to the median estimate in a Bloomberg News survey before the Commerce Department’s report on July 14. The next day, Federal Reserve figures may show industrial output fell 0.6 percent last month after a 1.1 percent drop in May.

Consumers are venturing back into stores, seeking discounts and favoring necessities such as food or fuel. Even as the projected increase in sales and reports this week on housing may show the worst of the downturn has passed, a turnaround is likely to be gradual.

“The spending is more on staples than discretionary purchases,” Tom Porcelli, a senior economist at RBC Capital Markets in New York, said last week. “Aggregate demand is still amazingly weak. Things aren’t falling apart, but don’t expect a robust recovery.”

An index consumer confidence dropped last week on concerns about job losses, sending stocks lower. The Standard & Poor’s 500 Index closed at 879.13 in New York on July 10, down 0.4 percent from the previous day, capping its fourth straight weekly loss. The Dow Jones Industrial Average closed down 0.5 percent to 8146.52. more...

TEMPO Interaktif BUMI Group Mitra Pemda NTB dalam Divestasi Newmont Nusa Tenggara

BUMI Group Mitra Pemda NTB dalam Divestasi Newmont Nusa Tenggara
Sabtu, 11 Juli 2009 | 15:53 WIB
TEMPO Interaktif, Mataram - Gubernur Nusa Tenggara Barat (NTB) Muhammad Zainul Madjdi, Bupati Kabupaten Sumbawa Barat (KSB) Zulkifli Muhadly, Bupati Kabupaten Sumbawa (KS) Jamaludin Malik sepakat menunjuk Multy Capital (MC), --anak perusahaan dari BUMI Group, perusahaan pertambangan milik konglomerasi Aburizal Bakrie, yang juga Menteri Koordinator Kesejahteraan Rakyat-- sebagai mitra perusahaan daerah PT Daerah Maju Bersaing untuk melakukan divestasi (pembelian) saham PT Newmont Nusa Tenggara (NNT).

Dalam perusahaan yang akan dibentuk bersama nanti, pemerintah daerah mendapatkan saham sebesar 25 persen. Segala pembiayaan pendirian perusahaan dan pembayaran divestasi akan ditanggung oleh Multy Capital. Selain itu, Multy Capital juga menjanjikan membangun smelter (untuk prosesing konsentrat tambang menjadi logam) di Nusa Tenggara Barat.

Penetapan Multy Capital sebagai mitra tersebut diputuskan dalam pertemuan ketiga kepala daerah tersebut bersama komisaris dan direksi PT Daerah Maju Bersaing yang berlangsung selama dua jam di ruang Mawar Hotel Grand Legi, Sabtu (11/7) siang ini. "Dalam waktu empat belas hari (akan) disusun nota kesepakatannya,’’ kata Direktur Utama PT Daerah Maju Bersaing Andy Hadianto yang juga juru bicara Gubernur Nusa Tenggara Barat. Kalau tidak terjadi kesepakatan, maka penetapan dibatalkan dan akan menunjuk perusahaan lainnya.

Adapun kesepakatan tersebut akan mengatur tentang obyek, subyek, dan kedudukan dari perusahaan tersebut yang harus berada di Mataram, tata cara pembayaran devident serta besaran pembayarannya dan konsekwensinya apabila terjadi wanprestasi. "MC (Multy Capital) juga tidak diizinkan mengalihkan sahamnya kepada pihak lain,’’ ujar Andy, didampingi komisaris PT Daerah Maju Bersaing Heryadi Rachmad yang juga masih menjabat sebagai Kepala Dinas Pertambangan dan Energi Nusa Tenggara Barat.

Sesuai tawaran Multy Capital, pemerintah daerah berhak membayar untuk memilik 10 persen saham PT Newmont Nusa Tenggara yang menambang tembaga, perak dan emas di lokasi Batu Hijau Kecamatan Jereweh KSB. Juga, berhak menempatkan orang yang ditunjuk menjadi komisaris dan direksi pada perusahaan kerja sama yang dibentuk, serta penempatannya pada PT Newmont Nusa Tenggara.

Enam perusahaan calon mitra PT Daerah Maju Bersaing yang ikut menawarkan membeli saham PT Newmont Nusa Tenggara adalah PT Valco Mulia Internasional, PT Batavia Plc – dari group Amstelco London, Multy Capital – dari group Bumi Resources, Media Group – milik Surya Paloh, Multy Indonesia Trading, dan perusahaan lokal PT Sinar Rinjani Tambora.

Menurutnya, perusahaannya akan menginginkan membayar seluruh saham jatah nasional hingga 51 persen. Bukan hanya 10 persen untuk divestasi 2006-2007 sebesar US $ 391 juta. Tahun 2008 saham yang harus didivestasikan sebanyak tujuh persen yang ditawarkan US $ 426 juta dan jatah divestasi tahun 2009 sebesar tujuh persen senilai US $ 348 juta. Belum dibicarakan divestasi tahun 2010 sebesar tujuh persen.
Bahkan duapuluh persen yang kini sudah dimiliki pengusaha nasional Yusuf Merukh – PT Pukuafu Indah

Detikfinance Antam Kucurkan Rp 4,8 Miliar untuk Eksplorasi Juni 2009

Jakarta - PT Aneka Tambang Tbk (Antam) membelanjakan Rp 4,8 miliar sebagai biaya eksplorasi selama Juni 2009. Dana sebesar itu digunakan untuk mengeksplorasi 4 jenis komoditas yang menjadi fokus Antam.

"Kegiatan eksplorasi Antam berfokus pada nikel, emas, bauksit dan batubara," demikian disampaikan Sekretaris Perusahaan Antam Bimo Budi Satriyo dalam keterbukaan yang dikutip detikFinance, Minggu (12/7/2009).

Nikel
Untuk eksplorasi nikel dilakukan di daerah Maluku Utara dan Sulawesi Tenggara. Total biaya eksplorasinya mencapai Rp 1 miliar.

Emas
Kegiatan eksplorasi emas dilaksanakan di Aceh Tengah-NAD, Tapanuli Utara-Sumatera Utara, Batangasai-Jambi, Pongkor dan Papandayan–Jawa Barat, Ajibarang dan Tirtomoyo-Jawa Tengah, Wowoni dan Ranteangin-Sulawesi Tenggara dan Mao Batuisi-Sulawesi Barat. Total biaya eksplorasi emas mencapai Rp 3,3 miliar.

Bauksit
Eksplorasi bauksit dilaksanakan di daerah Kalimantan Barat yakni Mempawah, Tayan dan Munggu Pasir. Total biaya eksplorasi bauksit mencapai Rp 278,7 juta.

Batubara
Antam melakukan aktivitas pemeliharaan di Muara Tebo-Jambi dengan total biaya mencapai Rp 209,5 juta.

CNBC Sector Snap: Strong outlook for coal forecast

DENVER - Improving economic indicators indicate a positive outlook for coal despite a near-term slowdown in China's imports, an analyst said Wednesday.

Citi Investment Research analyst Alan Heap told clients in a research note he believes demand is recovering for both thermal, used in heating, and coking coal, used in manufacturing.

"Our preferred commodity exposures to the economic recovery are copper and coal," he said. "China's import growth will slow...but investment flows will limit the retreat."

GlobalCoal Newc Coal Index

Weekly Newc Coal Index
12-Jun-09 76.75
19-Jun-09 70.81
26-Jun-09 68.69
03-Jul-09 73.13
10-Jul-09 71.63

Monthly Newc Coal Index
Mar-2009 61.37
Apr-2009 62.55
May-2009 64.24
Jun-2009 72.64

PalmOil HQ Crude palm oil futures have 2nd weekly loss

Palm oil futures had a second weekly loss yesterday as output grew faster than exports in Malaysia, the second- biggest producer, expanding the country’s stockpiles by 2.5 per cent in June.

Production climbed 3.6 per cent 1.446 million metric tons in June, pushing inventories to 1.41 million tons from 1.37 million tons in May, according to Malaysian Palm Oil Board data released today. Exports climbed 3.1 percent to 1.27 million tons.

“It’s no secret that we’re entering the higher production period,” Carey Wong, an analyst at OCBC Investment Research, said by phone from Singapore yesterday.

“The big unknown is the demand.”

Palm oil for September delivery dropped 1.8 per cent to RM2,010 a metric ton on the Malaysia Derivatives Exchange, after losing as much as 2.2 per cent. The most-active contract lost 7.6 per cent this week, extending last week’s 6.2 per cent drop.

Malaysia’s palm oil exports from July 1 to 10 increased to 419,100 tons, up from 289,437 tons over the same period in June, independent surveyor Intertek said yesterday.

Declining crude oil prices may limit any gains, as lower oil prices reduce demand for biofuels made from vegetable oils and increase concern that palm oil output will outpace consumption, Wong said.

Crude oil for August delivery slipped as much as 1.5 per cent to US$59.52 a barrel in New York.

Pam oil futures may drop as much as 15 per cent in the coming months as Indonesia and Malaysia, the biggest producers, enter the peak output season, Dinesh Shahra, managing director of Mumbai-based Ruchi Soya Industries Ltd., said July 3.

Third- quarter output is typically the highest every year, Ivy Ng, a plantation analyst at CIMB Investment Bank Bhd said July 3.

PalmOil HQ Crude palm oil futures gain for first time in 4 days

Crude palm oil futures yesterday gained for the first time in four days on speculation that an 8 per cent drop in the previous three days was excessive and may lure buyers.

The futures slipped below RM2,000 a metric ton Wednesday for the first time since March 31 on concern a seasonal increase in production in the second half would swell stockpiles and after soybeans, crushed to produce a rival edible oil, dropped to the lowest in more than three months.

“While we are of the view that prices are not likely to turn around in a significant manner from current levels over the next few months, we believe that the RM2,000 a ton mark is a good fundamental support level,” a report by RHB Research Institute analyst Hoe Lee Leng said yesterday.

Palm oil for September delivery on the Malaysia Derivatives Exchange gained 2.3 per cent to RM2,047 a ton after earlier touching RM2,000.

Prices won’t “fall substantially below” RM2,000 in the short term, the RHB Research report said.

Palm oil for January delivery in Dalian closed unchanged, after falling for five days for a loss of 9.6 per cent, at 5,542 yuan a ton. China is the biggest consumer of edible oils and the largest importer of palm oil.

Oil crushed from soybeans competes with palm oil as the two are used in applications including cooking and biofuel. Soybean oil is trading at a premium of about 29 per cent to palm oil, according to Bloomberg data.

Stockpiles in Malaysia gained for the first time in six months in May as production climbed 8.5 per cent, the biggest month-on-month increase in a year, the Malaysian Palm Oil Board said on June 10. It will announce June data today.

JPM: Oil Markets Weekly: Prices fall, Ironies abound

We have spent the past six months listening to producer and consumer governments as well as oil companies indicate that $75 is a "fair price" for a barrel of oil. Messer's Brown and Sarkozy tell us that producers and consumers are now closer together on the issue of upstream investment (and implicitly the price needed to fund it) for the first time in 30 years. Yet when the oil market brushes that price target, helped in no small order by signals from OPEC that it will manage supply to hit that goal, it is regarded as acting irrationally and without economic justification.

We, like most analysts see the oil market going into a supply deficit in the second half of the year. But to add to the irony, the market is starting to question the deliverability of such a goal by OPEC.

Just one week into July, and with data that covers just the pre-July 4 holiday in the US it is somewhat premature to argue that such a deficit will not materialize. Further, we are seeing signs that both Saudi Arabia and the UAE appear to be tightening August supplies to Asia - alongside ongoing outages in Nigeria and the possibility of stronger compliance elsewhere ahead of the September OPEC meeting. Seasonality should boost demand as the third quarter goes on and there is also a strong likelihood that industrial activity will be grinding higher as well.

But the market has been discounting a tighter second half scenario for some months now. It now wants proof that stocks are drawing. That is not easy. Floating storage numbers are opaque, and as everyone digs down into the nitty gritty they are uncovering more and more cargoes on the water. Some of these are likely to be part of the usual trade flows, rather than genuine floating storage. We prefer to use timespreads as our guide, and these suggest crude stocks are still falling and distillates are flat. The large net crude and product build shown in the US weekly data may however not be perfect as a global guide - in Japan there was a net fall in total petroleum stocks, and we suspect that with the fullness of time a modest deficit will be shown to be in place. Still the market is right to demand proof and until it gets it, the correction could stay in place.

CLSA INDO: Enter The Komodo

It is time to add Indonesia to the mix of China and India, the future’s growth engine. We first highlighted the investment case behind Chindia in 2006. Now it is time to add Indonesia to the duo. Out of the ashes of 1998, Indonesia has reshaped its political and economic structures, to become the 18th largest economy in the world and the third fastest growing in Asia.

China + India + Indonesia = Chindonesia

Nick Cashmore coined the term Chindonesia earlier this year, making a modest case to link Indonesia with China and India. Wikipedia has now recognized Chindia, we think it is just a matter of time they will add Chindonesia.

In the very long run, the rise of Chindonesia and, in the broader context, Asia represents a restoration of the region’s former pre-eminence in the global economy.

A demographic decline in the developed economies will accelerate the swing to Asia. Peter Drucker referred to demography as “the future that has already happened”. The demographic decline in the developed world is both certain and lasting. For the first time since 1400, Europe is on the brink of a net decline in its workforce. The population of Japan and Russia is already shrinking.

By contrast, in the next decade another 170mn people will join the workforce in Chindonesia. The region is set to reap a rich demographic dividend, boosting its growth and global standing.

CHINDONESIA, KEY POINTS:
Indonesia is the third fastest growing economy in Asia and the 18th largest globally.
It is a globally significant supplier to China and India in resources and, as such, is a leveraged bet on the growth of those two economies.
It has a large domestic economy that has side-stepped the global financial crisis and will grow larger in the decade ahead, reaching 260m people with 60% urbanisation rate.
As a commodity-reliant economy it benefits from efforts by developed world economies to reflate demand through higher commodity prices.
Chindonesia as an economy already generates economic activity equal to 44% of the US economy and within five years, GDP for this group will surpass US$10tn.


Whats the best play? Here is our Chinonesia portfoio:
Domestic demand – Astra, Telkom, Indocement, Bank Mandiri, Pgas
Commodiies - Golden Agri, London Sumatra, Bakrie Plantations, Adaro Energy, ITMG ,United Tractors

Mandiri Sekuritas Strategy: Back to fundamentals

With the end of elections, we expect fundamental issues to be back in the driving! seat. Wi th IDX mostly concentrated in commodity stocks (32%) besides financial (30%), its trend will be heavily influenced by movements in commodity prices globally. We are maintaining our FY09E IDX target at 2,140, a PE09F of 14.0x. As the trend of global economic recovery is still debated, we stick to our domestic demand story with a bias on energy. We like sectors with near full utilization rates such as cement, electricity or its proxy, and infrastructure. We also like consumer goods. Despite our target prices for some stocks have been exceeded, we think these counters still have catalysts to outperform the market.

Theme 1 : Demand resiliency. As shown in 1Q GDP contributor, private consumption grew 5.8% yoy, one of the strongest growth post Asian crisis. Election campaign spending was one of the main contributors, but anecdotal evidences indicated that demand still grew at a healthy pace. In IDX! , we can only think of one name, which we think still has the upside : Indofood (INDF), a leader in noodle, milk products, snacks, and baby food.

Theme 2 : Infrastructure bottleneck. This theme could probably be the most overplayed theme for Indonesia. Progress has been slow, but it progresses anyhow. We picked proxy to electricity, coal producers such as Bukit Asam (PTBA), Indika Energy (INDY), proxy for infrastructure Semen Gresik (SMGR).

Theme 3 : Government’s larger role in economy. With governments everywhere unleashing stimulus programs, Indonesia also launched its own in the amount of 1.4% of GDP. This would benefit paying agents such as SOE banks, particularly Bank Rakyat Indonesia (BBRI). These banks could act as conduit for the programs and benefit from the multiplier effects of the program.

Goldman Sachs JBWere - Coal Price Forecast Upgrade

We have raised our coal price forecasts principally in response to improving supply/demand fundamentals in Asia/Pacific. We now believe that the balance of risk for 2010/11 fixed price contracts is for a price increase rather than a decrease. We prefer metallurgical coal over thermal coal.

Metallurgical Coal
• We have raised our 2010/11 Australia/Japan benchmark forecast for hard coking coal to US$140/t (previously US$120/t) and have maintained prices at this level in 2011/12 (previously US$110/t).
• Strong demand from China and India, together with an anticipated recovery in demand from key importers such as Europe and Japan will put pressure on Australian supply chains, drawing more higher cost north American and possibly Russian coal into the system.
• PCI price forecast raised to $100/t, largely due to Chinese demand.

Thermal Coal
• Fundamentals slightly less robust than for metallurgical but export constraints in Australia (and possibly Indonesia) could result in a much tighter market by late 2009, paving the way for higher contract prices.
• We have raised our benchmark 2010/11 price forecast to $80/t.

Where are the Risks?
• Weaker than expected pick up in steel production outside China (notably Europe and Japan) leading to delayed/muted re-stocking.
• Chinese contractual performance risk: foreign coal could price itself out of the market leading to defaults on booked tonnage.

CIMB Market outlook Strategy - Secular bull

Quick counts suggest that SBY could win by a landslide 60% or 74m votes assuming a 70% turnout, exceeding the 69.3m votes he mustered in the second round of the 2004 presidential election. This would be an unprecedented mandate in a direct presidential election. In his second and final term, SBY might push harder for reforms now that he is backed by a stronger mandate and a larger share of parliamentary seats. With the earnings momentum picking up and post-election euphoria, we would not be surprised if investors react strongly, pushing the market ahead of fundamentals. Still on a bottom-up basis, our end-2009 index target has been lifted from 1,900 to 2,250, pricing in a cost of equity of 17% and implying 14.5x and 12.5x CY09-10 earnings. Consumer, bank and infrastructure-related sectors are our key overweights. Our top five picks are Gudang Garam, Indofood, Mandiri, United Tractors and Adaro.

CIMB Tempo Scan Pacific Quick takes - Ceasing coverage

(TSPC IJ / TSPC.JK, Ceased coverage, Rp640, Healthcare)

We are ceasing coverage of Tempo Scan. Post-tender offer, the public now owns less than 5% of its outstanding shares, while daily stock trading has been less than Rp1bn. We had an Outperform rating previously with a target price of Rp869, based on DCF valuation.

JPM - Sustained economic recovery into 2010

The stock market may consolidate in the summer after the rapid run-up in 2Q09. Fundamentals continue to move in the right direction, in our view. 2Q09 economic data should confirmt the strong re-acceleration of the economy, with surprises likely still onthe upside despite significant consensus upward revisions lately. We still expect a sustained economic recovery into 2010, and ongoing positive earnings revisions for both FY09E and FY10E should underpin a notably higher move in China’s equity markets after a brief consolidation.

Ongoing tailwinds, including the continuation of the current accommodative policy environment, strong Y/Y loan growth, and credit expansion should continue to bolster the earnings visibility of domestic demand-sensitive companies, especially banks and property developers. We expect a continued stable policy environment in real estate. When external demand remains weak and the authorities have to further sustain and stimulate domestic demand, they are unlikely to come out with widespread policies to suppress household demand for property/real estate, in our view.

We believe a more private and domestic demanddrive growth could help further re-rate MSCI China. We raise our MSCI China Dec-09 target from 50 to 60. At 60, MSCI China would be valued at 12.9x FY10E P/E (based on our FY10E EPS growth of 20%), largely on par with its median historical one-year forward P/E of 13.2x. We raise our H-share Dec-09 target to 12500 (previously 10000).

Corporate sales and profits are expected to show marked sequential improvements. We remain positive on the A-share market on improving fundamentals and favorable liquidity conditions.

We still see a possible near-term RRR cut, and a cut in the deposit rate (although the chance would be smaller if inflation expectations continue to strengthen). We continue to increase exposure to small-to-mid-cap banks and property, and recommend accumulating these stocks if there is any share price consolidation in the summer.

Nomura: Growth scare is priced into markets

Financial markets are in a holding period waiting for the next set of data points to confirm or deny the recovery thesis. Economic visibility remains low and investors lack the confidence necessary to fully embrace the next leg of the advance in equities, credit, emerging markets and carry trades. The clear and present danger for markets is an emerging growth scare, threatening to unravel the recent love affair with risk. The signals that are flashing yellow are:
Crude oil prices are declining
US and G10 Economic Surprise Indices are rolling over
MSCI BRIC relative to the World equity index has returned to the 2007 level and is now rolling over
The Baltic Dry Index, a proxy for global trade is turning lower.

Mr. Macro argues that the foundations of a sustainable economic recovery and a bull market in stocks are shaky. The US fiscal stimulus is not large enough to offset the hole in private demand. Following the short-term bounce based on this stimulus, the economy should lose momentum once again. The oil price, a barometer of growth expectations, is a warning sign of that possibility. The growth scare is echoed by weakness in economic surprise indices (US and G10), underperformance of BRIC equity markets relative to the world, and the Baltic Dry Index, a barometer of global trade. There are two major facets of the growth scare – weak US consumer fundamentals and a weaker demand for commodities from China.

The current market-moving theme is a growth scare, centred on the US consumer and Chinese demand for commodities. This supports long fixed income trades and is negative for risky assets. Mr. Macro is highly uncertain about the short-term tactics with most fixed income markets back at the highs and the SP500 and SX5E near the 200-day moving average. It is possible that markets lack the necessary momentum to aggressively discount the growth scare at this time and the recent moves could be reversed. Mr. Macro advises caution. This is not the place to add to fixed income longs or to sell equities. Wait for better entry levels.

Mandiri Sekuritas Aneka Tambang: increases stake in gold project (ANTM, Rp2,000, Neutral, TP: Rp2,200)

The company has increased its stakes in the Gold Cibaliung project from 5% to 100%after the shareholders of Arc Exploration (ex owners of the gold project) approved its full divestment. Antam acquired the 95% additional stake for US$8mn from internal cash while another US$40mn has been set aside for project development costs. Exploitation is targeted by second half 2010. Estimated reserves is currently at 12.8ton (thus equivalent acquisition cost, excluding development cost is US$0.625/t), while expected production upon commercial operations will be 500kg (2010) and 2,000kg (2011-onwards). We deem this the development as positive as Antam eventually shifts towards gold mining from lower margin gold sales trading despite mine life being relatively short of less than 5 years based on ANTM’s 2008 gold production. In 2008, the company produced 2,833kg of gold while gold sales were at 9,820kg coming mostly from gold trading with third parties. Currently, we have neutral stance on the stock which now trades at PER09-10F of 55.3x and 29.9x, respectively.

Mandiri Sekuritas Bank Danamon: notes from company visit (BDMN, Rp4,575, Sell, TP: Rp4,000)

􀂄 Our latest visit to the bank highlighted flat loan growth recorded in 2Q09, yet the bank still expect the bottom line to improve on quarterly basis. Such flat loan growth was as a result of tighter underwriting criteria adopted since the beginning of the year due to uncertainties in the macro economic condition.
􀂄 However, new booking for mass market businesses has shown improvement from Rp170bn in May09 to Rp250bn in Jun09. Overall, the bank expects its mass market loans to grow by over 20% yoy this year from its Dec08’s figures of Rp13.1tn.
􀂄 Up to May09, NPL was recorded at 3.5%, yet concerns remain on the bank’s exposure to CMM (Consumer Mass Market) segment due to increasing possibility of employees being laid off.
􀂄 At current price, Bank Danamon is trading at 2009F P/BV of 2.4x and PER of 20.3x. Even though Bank Danamon will benefit most from the declining SBI rates as its funding are biased toward high cost deposits, we still believe that the current valuation is already high. We therefore have a sell recommendation on the stock.

BAS-ML INDO ITMG initiation PGAS raise PO

ITMG: initiate w/ Buy PO Rp 25,000
Daisy Suryo initiated on Indo Tambangraya (ITMG) with a Buy PO Rp 25,000 driven by its potential big dividend, and healthy volume growth. She expects ITMG to generate FCF of US$333mn (13% yield) in 2010, able to payout dividend of US$174mn (8% yield) based on 60% historical payout. We see upside for an even bigger dividend as capex is limited (no big-ticket items such as infrastructure, and capex for volume growth will be borne by 3rd-party contractors). We project 10% volume growth from 20mt in 2009 to 27mt in 2012 of which ~90% is exported. This will translate into Ebitda and net profit CAGR of 14% over 2009-12 (vs. Indo’s peers of ~4%). Having Banpu, which operates an expanding power bizz in Thailand & China, as the core shareholder also provide demand security. ITMG is now Daisy’s top pick in the sector for its highest divvy yield, one of the best corporate governance among Indo coal companies, and attractive valuation. Trades at 6.8x '10 PE or 36% disc to peers. Current share price implies US$67/t coal px. Our PO implies 8.7x 2010E PE.

PGAS: raised PO to Rp 4,000
Daisy raised PO by 25% to Rp4,000 to reflect 4-11% higher gas volume and 5% lower tax by 2010. She also lowered the execution discount to 10% from 20% as PGAS’ volume delivery has beaten our forecasts for the past 2 mths, and the building of the new gas offtake with PLTU Cilegon and PLTU Tanjung Priok are now completed and connecting pipeline construction is underway. We raise earnings by 8%, 20%, 5%, 9% for 2009-12. We continue to see potential for high dividend yield with PGAS expected to generate FCF of US$908mn or 11% yield in 2010, and able to pay dividend US$390mn or 5% yield. Trades at 10x 2010 PE, a 28% disc to regional utilities. Our Rp 4,000 PO is based on YE10 NPV which is raised by 15%.

MandiriSekuritas Telecommunication sector: Still upside

Tariff war in FY08 benefited smaller players at the expense of big players, but in FY09 we expect slow growth for all operators. Big operators because of their large base while small operators losing out to big operators as now the rule of game lies on brand, coverage and capacity where big players lead. Hence, we accept slow growth as industry’s trend as competition has created a loss-loss situation for all. Without any change in fundamentals other than for EXCL, we upgraded TPs for tel! co stocks under our coverage, as we lower our WACC on the back of lower risk-free rate and market risk premium. Our new TPs are at least 10% upside to current price and therefore we have a Buy for all (TLKM, ISAT and BTEL) except EXCL. With 3 Buys from 4 stocks under our coverage, we upgraded our call from Neutral to Buy on Telco sector.

Tariff war changed market dynamics. With continuous tariff cuts in last 1 year, we see tariffs dropped by as much as ±80% from ±Rp1,200/minute to ±Rp200/minute. Tariff war last year increased wireless penetration from ±38% to ±62%, and market shares shifted from Telkomsel to smaller or newer players. The impact of tariff war in GSM also spilled over to CDMA segment, leaving them with smaller market share. Going forward, with still 10 player industry, we expect growth to be limited for each operator as competition has left a loss-loss situation for all. Among! st all, we view Telkomsel’s simPATI would emerge market winner, as it has the best brand visibility, coverage and signal quality.

More stabilization but no win-win situation for any operator. simPATI’s leadership will only partially offset the negative impact of Telkomsel’s high base and lackluster performance of its other brands. To add on, lower realizations from fixed-line business would negatively impact TLKM’s earnings. ISAT have a better fate given that fixed-line contributes marginally to its revenues, while its internet business is growing rapidly. We expect EXCL to lose out to big players therefore implying a low growth going forward. Lastly, while BTEL’s growth has been affected, we view its growth story is still strong enough to be able to outperform its peers.

Buy for telco sector. We reduced our WACC estimates to factor in lower risk free-rate (now at 9.5%) and market premium (now at 5.0%). We also adjusted our beta estimates. The cut resulted in increase in TP for TLKM from Rp8,200/share to Rp9,300/share (WACC: 13.6% to 12.5%), and therefore we maintain our Buy call. For ISAT, the TP increased from Rp5,000/share to Rp6,600/share (WACC: 13.8% to 11.9%) while for BTEL from Rp96/share to Rp150/sha! re (WACC: 14.2% to 12.2%). We therefore upgraded our call from Neutral to Buy for both stocks. Lastly, we give discount of about ±38% to EXCL’s DCF derived equity value of Rp2,100/share to arrive at TP of Rp1,300/share. (We also adjusted our forecasts and upgraded our TG from 0% to 3%) The discount is given because EXCL’s free float is only 0.2%.