CLSA INDO: United Tractors - Positive momentum continuing in February - O-PF

United Tractors has just released its Feb10 data, overall look strong. Komatsu unit sales were particularly strong while Pama figures look in line. We have also seen some improvement on coal sales.

Komatsu sales numbers were robust. United Tractors sold 394 Komatsu units in Feb10, up by 77% YoY and 16% MoM. Annualized sales in Feb10 would translate to 4,400 units, 15% higher than assumed. Note that Feb10 sales were also the highest February sales ever.

Sales to agro and forestry sectors were the main drivers in Feb10, up by 415% YoY and 967% YoY while growing by 91% MoM and 52% MoM, respectively. Mining sector demand remained firm as sales to the sector were up by 25% YoY and 1% MoM. These three sectors contributed to around 85% of total unit sales up to Feb10.

Pama coal extraction up to Feb10 reached around 17% of full year target, on track. Coal extraction in Feb10 was running at 6.3m tonnes in Feb10, up by 5% MoM. Overburden removal was 53.2m bcm during the month, translating to stripping ratio of 8.4 bcm/t, up from 7.7bcm/t in Jan10.

Coal sales from own mine is recovering. Coal sales reached 251kt in Jan10, up by 6% MoM and 8% YoY. Note that the tonnage is contracted at around US$80/t and we expect more volume to be sold in the coming months as current spot price is hovering above US$90/t.

We maintain our Outperform rating on United Tractors We think there is some upside risk to our earning forecast as evidenced by strong unit sales and production during the first two months of the year. We still keep our earning forecast and target price of Rp19,200.