The JCI broke its all time record high and closed at 2,887 yesterday. Astra International (ASII IJ) continues to break out, setting new record high and cementing its position as the new king in the market – now the largest publicly traded stock with US$20.9bn market cap. BCA (BBCA IJ) is also following ASII’s lead by repeatedly breaking its own all time high share price at Rp5,750 yesterday. Newsflow continues to be positive – latest inflation numbers are benign; the Rupiah is the 3rd best performing currency in Asia, forex reserve at US$71bn is anther record high, and perhaps most importantly -- political stability with President SBY remaining highly popular.
It is also encouraging to see that the market leaders are companies with strong corporate governance, solid balance sheets, and conservative management. No need too be overly creative. Stick to basics - These companies are just focusing on being the best in their respective markets and creating value for shareholders. Like strategist Chris Wood said “Do not invest in something that cannot be explained in a single sentence”
On a separate note, last week we attended a luncheon where the CEO of state-owned power company PLN, Dahlan Iskan was key speaker. Dahlan has an impressive background. He started as a journalist and founded the Jawa Post which he led to become the third-most circulated newspaper in the nation. Dahlan also controlled independent power producer (IPP) in Sulawesi before agreeing to head the PLN just three months ago.
Dahlan certainly has his work cut out for him. PLN has barely made any profit for a long time. The politics of the organization make it difficult to implement reform. And interestingly, PLN’s own labor union held demonstrations rejecting him for the top post just before he even started the job. So for the first time in the history of the SOE, as CEO, Mr Dahlan was given the authority to select his own Board of Directors (BOD). The first thing he quickly changed: streamlined decision making process (does not need approval of the whole BOD). He rejects the use of a special elevator reserved for CEO, moved to a smaller office and has an open door policy.
With Indonesia having a low electrification ratio of 65% and rolling power blackouts frequently experienced in the region, Mr. Dahlan’s immediate goal is to eliminate the black outs in major cities by June 2010. Indeed, I recently visited Medan in North Sumatera and learned that unscheduled power blackouts have stopped since Dahlan came aboard PLN. He replaced the regional PLN head there and business people in the city have noticed a more responsive team.
One of the things Dahlan emphasized last week was the chronic need for gas. If PLN can get the much needed gas (an additional 1000mmscfd – more than PGAS current distribution volumes), the company would save as much as US$1.5bn per annum! And unlike his predecessors, Dahlan is also willing to pay for it “We have to face the new reality that gas prices will be higher.” - and has assumed new gas price to be at US$9/mmbtu (currently around US$5.5/mmbtu) in PLN’s budget.
Nevertheless, the recent diversion of Conoco gas volume to Chevron (instead to PGAS) has put downward pressure on the stock. This is mostly mitigated by two more positive, also recent developments such as 1) average gas price hike by 18% and 2) more gas volumes from Medco & Pertamina (about 40mmscfd) – Swati estimates that in a worse case scenario (permanent decrease in gas volumes from Conoco + 18% price hike + additional gas volumes from Medco and Pertamina), the impact on earnings this year is around flat to -4%. In light of the very tight gas supply, we believe that the Conoco gas issue will be resolved.
Trading wise, PGAS has been a laggard YTD compared to the other ten largest stock (market cap wise). At 11.8x 2011 earnings PGAS is one of the cheapest big cap stock commanding a stunning 59% ROAE. BUY.
Tidak ada komentar:
Posting Komentar