CIMB 1QFY10 Results – Indocement Tunggal Prakarsa – Best is yet to come?

Maintain Outperform on Indocement. 1Q10 results met our expectations, forming 23% of our FY10 forecast and 24% of consensus. EBITDA margins of 45% exceeded our forecast of 40.5%, driven by a stronger rupiah (Rp9,261/US$ vs. our Rp9,500/US$ assumption for FY10). Despite the higher margins, we maintain our margin assumptions, earnings estimates and DCF-based target price of Rp16,600 (WACC 12%), assuming 2H contributions will not be typically as strong. We see stock catalysts coming from continuous rupiah strength, a minimum impact from electricity tariff hikes and eventually higher operating margins.