Deutsche United Tractors Alert - Strong operating performance, though it's just February

United Tractors {Ticker: UNTR.JK, Closing Price: 17,550 IDR, Target Price: 20,400 IDR, Recommendation: Buy}

*February Komatsu sales: 394 units; +77% YoY & +16% MoM
The heavy equipment sales grew stronger in February amid buoyant
demand from all sectors particularly plantation sector (pls refer to
table below). Overall, Komatsu sales in 2M10 reached 733 units (+67%
YoY, avg. 367units/month) and could be easily achieve our full year
target of 4,200 units (some 600 units more or 17% higher than the
company's forecast of 3,600 units).

*Mining Contract registered strong operating performance
Pama Persada's coal delivery and overburden removal rose by 34% YoY to
6.3mn tons and 39% YoY to 53.2m bcm in February 2010. Overall, the
results were inline with our forecasts, which are 5-7% higher than
company's forecasts, accounting for 16% and 14% of our 2010F coal
delivery and overburden removal, respectively.

*Coal sales volumes started to show encouraging improvement
Dasa Eka Jasatama (DEJ) recorded a 6% YoY (+8% MoM) increase in its
coal sales volumes to 251k tons in February 2010. Overall, DEJ coal
sales reached 483k tons (+11% YoY) in 2M10 and were on track to meet
our full year forecast of 4mn tons including Tuah Turangga Agung's 1mn
tons.

*Reiterate Buy rating with TP of Rp20,400
United Tractors has a good corporate governance track record and
exciting earnings prospect supported by buoyant commodity prices
particularly coal palm oil, and Indonesian coal mines' expansion
project . Also, faster infrastructure projects realization and coal
price >US$90/ton provide upside earnings risks. The stock is
attractive trading at 13.5x earnings in 2010F before falling to 11.3x
in 2011F.