A Cup of Tea 9 May'10

How should you be positioned now? This is Beginning or Opportunity?

There are fundamental problems in this market. We have a debt crisis in Europe, China tightening, a resource tax in Australia and MoF resignation. The IDR was getting weakness versus US$.

A couple weeks ago I had mention that it would be wise to maintain our cash at JSX 2991 level and recommended to wait until 2650 level. We’ve been looking for a 10% correction and now we’ve seen it.

I believe reasonably high and sustainable economic growth is still within reach for Indonesia. I’d take it as a ‘Buy’ signal because prices are being artificially depressed by an external event. Sometimes a sharp sell-off like the one we saw on Thursday and Friday is the best time to go bargain hunting. While everyone else was in panic mode the traders went cherry-picking.

Technically there are magnets lower and the JSX has to hold 2650 level before I can become a buyer for JSX at 3050 level by yearend. However, if we get good news out of Europe over the weekend and we see mutual fund inflows on Monday and I think the market could pop.

“But will it hold longer term?”

Which One?

BMRI: Fundamental was solid soft NPL level with improving on asset quality, maintain Buy

BBRI: BBRI's prospects remain healthy with strong NIM, maintain Buy

UNTR: The result managed to satisfy. I believe the company will post faster growth in the next quarters amid higher demand on heavy equipment products and also higher production volume form mining contracting business, Buy.

PGAS: I Expect stronger 2Q after 15% average gas price hike effective Apr10, Buy.

JSMR: Attractive valuations and maintain Buy.

LSIP: The result slightly below consensus but with higher ASP from rubber, efficiency improvements and higher CPO prices at mid-term I still put Hold recommendation.

BUMI: BUMI will post a positive growth in its 1Q10 results amid higher sales volume booked during the quarter. Valuation BUMI also looks attractive, trading on 9.16x PER 2010 vs 10.2x PER ASEAN Coal sector and 13x in 2010E PER China Coal Sector, Buy.

PTBA: The share price had under pressure due to the 1Q10 earnings, but with stronger coal price and railway project I still have Buy recommendation on PTBA. The stock slipped about 15% from last week high.

ASII: Even Earning upside risk was limited and valuation could be peaking, the stock had slipped about 20% so this is very interesting to speculative buy for short term trading.

INCO: The results were6% above consensus. Inco is a pure nickel producer hence greater leverage on nickel price recovery. We see stock catalysts from further sets of strong results, Buy.

Bang Juntri
DISCLAIMER: This report is issued by Bang Juntri. Although the contents of this document may represent the personal opinion of Bang Juntri. We cannot guarantee its accuracy and completeness.