Mandiri Sekuritas Aneka Tambang: mulls rights issue to fund projects (ANTM, Rp2,575, Neutral, TP: Rp2,350)

Antam’s President Directors was quoted as saying that it is taking a look at a rights issue as one of its options to funds its future projects. This year the company has allotted capex of Rp2.35tn from Rp594bn last year. The substantial spike is bought about by the US$400mn Tayan chemical grade alumina project, which Antam has a 65% stake (remainder is owned by Showa Denko and Marubeni of Japan). Other future project includes a US$300mn power plant in Pomalaa (20% stake), Feni Halmaherea worth US$1.2bn and smelter grade alumina project worth US$900mn in collaboration with Hangzou Jinjiang Group of China. We have yet to incorporate these future projects in our forecasts. Additionally, company mentioned that it has yet to approach government with regards to the rights issue as an option for fund raising. We remain neutral on the stock, currently trading at PER10F of 24.3x.