DBS Timah: Buy; Rp2,400; TP Under Review; TINS IJ

4Q09 net profit below expectations

Timah (TINS) reported 4Q09 net profit of Rp147bn (+15% q-o-q), bringing full-year FY09 net profit to Rp318bn (-76% y-o-y). This came short of our Rp433bn estimate, mostly dragged by FX losses of Rp120bn booked in FY09. Excluding FX losses, FY09 net profit would have been c.Rp382bn (net of tax), or c.12% below our expectations due to lower-than-expected net interest income.

Operating profit nevertheless exceeded our expectations, driven by higher-than-expected revenues which more than offset the lower-than-expected margins. On yearly basis, revenues were still down by 15% y-o-y, mostly dragged by the dip in refined tin prices during FY09. TINS has yet to reveal its full-year production volumes.

Balance sheet turned stronger with net cash position in 4Q09, from 8.0% net gearing in 3Q09. We attribute this to stronger cash balance which more than doubled q-o-q to Rp502bn as of end-4Q09 (despite of debt repayments), likely as a result of stronger operational results.