United Tractors (UNTR Sell PT12,100): Management upgrades sales volume target
UNTR is targeting 38-45% YoY growth in Komatsu machinery sales to 4,300-4,500 units in 2010. UNTR is targeting to command 43-45% market share in the Indonesian machinery industry in 2010.
Sales comment: We target UNTR’s Komatsu machinery sales at only 3,800 units for 2010 – vs. Q110 figure at 1,218 units. Assuming 4,400 units in our forecast, we would have to upgrade our EPS by 6%. Risk to our earnings forecast is to the upside. UNTR is trading at 16.4x 2010 and 15x 2011 PE, with 3-yr EPS projection of 9.9%.
Ciputra Development (CTRA Buy PT 1,160): Progress on Ciputra World
CTRA subsidiary Ciputra Property (CTRP, Not Rated) is allocating Rp1.5 tr on capital expenditure for 2010 and 2011. Most of the money will be used to complete the development of the Rp3 tn project, Ciputra World. The company has also appointed contractors to build the upper structure of the superblock. These three contractors are JKON, Tata, and NRC. The mall is expected to be completed in Q112, the apartments and offices in H212, and the hotel in Q412.
Sales comment: Last month, we upgraded CTRA PT by 45% to reflect positive developments at subsidiary companies. In our Apr 13th daily we highlighted, with pictures, that the long delayed Ciputra World development start to take shape.
Indosat (ISAT Neutral Rp6,100): Issuing US$500 mn global bond
ISAT has appointed underwriters to issue a US$500 mn global bond, to be listed in Singapore, for refinancing, working capital and capex.
Sales comment: ISAT’s 2010 net-debt-to-equity is projected at 1.2x. With the bond issue above, ISAT’s 2010 net-debt-to-equity would remain manageable at 1.4x. ISAT is trading at 20.6x 2010 and 19.4x 2011 PE, with unexciting 3-yr EPS CAGR of 7.1%.
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