Citigroup Summary Takeaways from Citi Indonesia Investor Conference – Day 2, United Tractors (UNTR.JK;Rp19,750;1L)

 Takeaways from Jakarta — United Tractors presented at Citi's Indonesia Investor Conference on Aug.4-5.Below are key takeaways.

 Orders — New orders for heavy equipment have been stable at approximately 400 units per month in the past few months.Mining sector, especially coal companies,continued to prop up demand for heavy equipment as the coal producers are embarking on aggressive expansion plans in the next few years.

 Pamapersada — Heavy rains albeit slightly improving from June levels continued to impact the coal production.In May,Pamapersada had to cease operation for 1 week due to a fatal accident.The company expects to ramp up production in the later part of 3Q10 and 4Q10 so it can meet its production target.

 Threat from Chinese equipment — United Tractors sees little threat from the potential of imports of Chinese heavy equipment,especially in the mining sector.Despite its substantially lower price,Chinese heavy equipment tends to have inferior quality and shorter useful life.Currently,Chinese heavy equipment is used only in the construction sector.However,United Tractors plans to import Chinese heavy equipment that Komatsu (6301.T;¥1,862; 1M)doesn't have the models of,so as to broaden its product lineup.

 Dividend — The company plans to pay interim dividend in November,the amount of which will be determined based on 9M10 results.United Tractors intends to maintain its 40%dividend payout.