Mandiri Sekuritas Antam: FY09 net income falls 56%yoy, though higher than expected (ANTM, Rp2,200, Neutral, Rp2,350)

􀂄 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.