CLSA Aneka Kimia (AKRA IJ)

AKRA presented during CLSA Singapore Forum last week. Key takeaways:

· Expects petroleum distribution business to be robust this year. Revenue expected to be +30% YoY, from increase in volume (20%) + higher ASP from recovery in oil price this year.
· AKRA continues to clinch new contracts. Recently, mining contractor Thiess signed a contract for 60,000kl per year.
· With extra 250,000kL tank capacity from Jakarta Tank Terminal, and future 65,000kL (to be built using rights issue money), AKRA will have 563,499kL capacity, more than double from end of last year.
· Petroleum margin also remained strong at 4-5%.
· Basic chemical's distribution also experienced strong growth with demand and price recovery this year. 60% of AKR's chemical sales is caustic soda whose prices went up by 24% YoY.
· Manufacturing division experiences margin squeeze due to increase in starch prices (raw materials), Rupiah appreciation, and time lag in passing higher cost to buyers. AKRA expects volume to continue to grow with rising demand from developing countries and margin recovery from moving up the value chain.
· AKRA will enjoy 5% tax benefit post its placement which increased float to 40%.
· Dividend payout would be at least 30% consistently. Dividend for 2009 is Rp25/sh (34.4% payout ratio).