Credit Suisse Kalbe Farma - Not surprising results

● We assume coverage of Kalbe Farma (KLBF.JK) with a NEUTRAL rating and a target price of Rp1,870 (17.1x P/E 2010E).

● Kalbe reported strong 1H10 results, but an expected one. This was underpinned by the strong IDR, thus margins expanded.

● Net profit in 1H10 rose 44% YoY to Rp572 bn, accounting for 52% of our FY10E net profit, on the back of a 12% higher revenue to Rp4.7 tn, or 44% of our FY10E.

● It has a healthy balance sheet, with net cash position, at Rp1.3 tn as at the end of June 2010, and bank loans of Rp160 bn.

● Kalbe has treasury stock of 782.49 mn shares, at an average price of Rp880/share. It has started to sell back its T-stock to the market from 18 June. As at 21 June, it had sold 1.5 mn shares, at an average price of Rp2,100/share.

● The company has recently divested its 58.1% ownership at the packaging company, Kageo Igar (IGAR.JK, Not Rated) for Rp112.9 bn to PT Kingsford Holdings. The packaging division contributes 5% of Kalbe consolidated sales.