AmCapital News Highlights

Holcim Indonesia (SMCB, Rp2,125)
Confirming the US$450mn new plant in East Java
World’s second-largest cement maker, Holcim Ltd, said it will spend US$450mn to build a cement factory in Indonesia as the Swiss company aims to capture resurging demand for construction in Asia. The plant, in the eastern part of the main island of Java, will have capacity of 1.6mn tons p.a. and go into service in 1H13, it said. – Bloomberg

CIMB Niaga (BNGA, Rp970)
Parent CIMB may be interested in dual listing in Indonesia
CIMB Group Holdings Bhd. told Indonesia’s capital-markets regulator that it is interested in a dual listing in the country, Malaysia’s Star reported, as quoted by the Bloomberg news. Earnings from its Indonesian business will likely overtake Malaysia’s in 2015, the Group CEO Nazir Razak was cited as saying, after the bank’s annual general meeting. CIMB Niaga, the Indonesian subsidiary contributed about 29% of the group’s earnings in 2009. – Bloomberg

Medco Energi (MEDC, Rp2,775)
Area 47 block targets commercialization by 2014, considering 50% payout from FY09 net profit
Medco Energi said its Libyan venture with Libyan Investment Authority had invested US$312mn for exploration activities in Area 47 Block with estimated reserves of 352mmboe. The Joint Venture is now seeking commercialization agreement stage 1 from Libya’s National Oil Company by June 2010 and the stage 2 is expected by December 2010, citing Lukman Mahfoedz, a Project Director at Medco. Exploration activities are expected to be completed by 2011, construction process is expected to be completed by 2012-2013 and production by 2014, he said. Medco has been appointed as the operator of Area 47 block by March 2010. Separately, Medco will propose a dividend payout of 50% of last year’s net profit at its upcoming shareholders meeting, President Commissioner Hilmi Panigoro said. – Bisnis Indonesia, BloombergB

Barito Pacific (BRPT, Rp1,120)
Entering into plantation and oil and gas
Barito Pacific, the holding company of petrochemical giant Candra Asri and Tri Polyta, said it is processing a 100% share acquisition in Royal Indo Mandiri (RIM). RIM currently has 29k ha of landbank in West Kalimantan and is targeting to have landbank of 41k ha with planted area of oil palm amounting 14k ha. In additionally, it also has signed an agreement on May 5, 2010, to buy a 49% stake in Petrogas Pantai Madura. The deal allows Barito to own 4.9% of Madura Offshore PSC, oil and gas block located in East Java, in which Petrogas has a 10% stake, the company said in its statement to the Indonesia stock exchange. – Bisnis Indonesia, Bloomberg

Indosat (ISAT, Rp5,600)
Five banks may be hired for US$500mn of bonds sales
Indonesia’s second-largest telecom service provider by subscriber, Indosat, hired five banks to help it sell as much as US$500mn of bonds, a source told Bloomberg. Citigroup Inc., HSBC Holdings Plc, Deutsche Bank AG, DBS Group Holdings Ltd. and Royal Bank of Scotland Group Plc are managing the sale, the report said. – Bloomberg

Multistrada Arah Sarana (MASA, Rp255)
Seeking US$175mn loans for capacity upgrade
Tires producer Multistrada Arah Sarana may seek as much as US$175mn of loans in a bid to finance its plan to upgrade capacity. The company is planning to increase capacity of its 4W tires from 16,000 units per day to 28,500 units per day and double its 2W tires’ capacity from 8,000 units per day to 16,000 units per day. – Bisnis Indonesia

Banking Sector
State banks to payout dividend with ratio of less than 50%
State-owned Enterprise Minister Mustafa Abubakar stated that state banks will distribute dividend with payout ratio of less than 50% this year to maximize the expansion plan of the banks. Bank Mandiri and Bank Rakyat Indonesia plan to distribute 35% of its 2009 net profit as dividend, while Bank Negara Indonesia and Bank Tabungan Negara plan to have payout ratio of 10%. – Investor Daily

Outstanding loans grew 14% yoy
Data from Bank Indonesia showed total outstanding loans grew by 14% yoy to Rp1,477.4tn as of end April 2010. For the period of January to April 2010, total loans increased by Rp39.5tn (+2.7% ytd) whereas mostly distributed to industrial and trading sectors. – Bisnis Indonesia

Infrastructure Sector
Government may terminate contracts of twenty toll road projects
The Government via the Department of Public Works may terminate the contracts of twenty toll road projects, after ensuring the capability of investors to continue the projects and considering the economic feasibility of such projects, local newspaper reported. However, that is the final way, citing Minister of Public Works, Djoko Kirmanto. To speed up construction of toll roads, a Minister Regulation will be issued on the near term. According to BPJT, the toll road regulator, 50% of twenty toll road projects may not be eligible to continue and it may be terminated. President Director of Jasa Marga, Indonesia’s largest toll road operator, said such regulation may not bring significant changes to toll road projects, as the solution urgently needed is amendment in land acquisition for public interest law which has not been finalized by the Government and the Parliament, the report said. – Bisnis Indonesia

Mining Sector
Avocet Mining Plc sold its stakes in Southeast Asia-based mine
UK-based Avocet Mining Plc sold entirely its stake in Southeast Asia-based mines, including in Indonesia and Malaysia, to Indonesian entrepreneur Jusuf Merukh-controlled Merukh Enterprises for US$250mn, as the group is shifting its focus to Africa, local newspaper reported. Avocet Mining Plc, as the report said, has a gold mine in Penjom, Malaysia, and in Lanut, North Sulawesi, Indonesia. Merukh Enterprise plans to consolidate the mining assets it bought from Avocet before selling its shares via IPO in Hongkong, the report said. – Bisnis Indonesia, Kontan

Oil and Gas Sector
Senoro-Donggi LNG project may be delayed to 2015
The government may approve the Donggi-Senoro gas project that will involve LNG plant on Sulawesi towards the year-end, delaying its completion to 2015 instead of 2014, citing Evita Legowo, director general of oil and gas at the Ministry of Energy and Mineral Resources. The government and the project’s partners disagreed on whether gas from the 2mn tons p.a. plant should be exported or sold locally. Donggi-Senoro is 51% owned by Mitsubishi with Pertamina has a 29 percent stake and Medco the rest. Gas supplies for the proposed plant will come from the Senoro and Matindok fields, in which Medco and Pertamina hold equal stakes in the Senoro field, while Matindok is owned by Pertamina. – Bloomberg

Economic Update
Government to limit consumption of subsidized fuel oil by 3Q10
The Government may set quota of subsidized fuel oil by 3Q10 in order to meet the target set in the Amended-State Budget of 36.5mn kilo liters, citing Evita Legowo, Director General of Oil and Gas at the Office of Minister of Energy and Mineral Resources. If such consumption not limited, the downstream regulator BPH Migas estimated the subsidized fuel oil may reach 40.1mn kilo liters this year. – Bisnis Indonesia