As expected, lower FY09 earnings, but above ours and consensus. With lower demand and price of nickel and a focus towards low-margin gold trading, Antam’s FY09 revenues slid by 9% yoy to Rp8.7tn. About 55% sales came from gold production and trading, 44% from ferronickel and nickel ore (25% and 19% respectively), and the balance from bauxite and silver. As a consequence of more emphasis toward gold trading and coupled by a 29%yoy drop in ferronickel production and 33%yoy slide in average price, net income fell to Rp604bn, though beating ours and consensus expectation.
Optimistic on 2010 earnings. As LME price continues to rise as well as better ferronickel production, we see Antam’s FY10F to reach some Rp1tn (+67%yoy). Potential upside could come from the stabilization of LME nickel prices, which is currently trading at 13% premium over our nickel price assumption for 2010 of US$9/lb. We maintain neutral as the stock trades at PER10F of 20.8x.
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