2Q10 Operating profit of U$86m, up 53% qoq
Combined net profit of US$91m from a net loss of US$89m last year
The strong result is due to strong pulp, paper prices. While the pulp prices have peaked, they should remain stable. Indah Kiat is one of the lowest cost pulp producers in the world.
10% increase in pulp prices can have 30% impact on earnings.
The stock is trading at a cheap 6x 2010E (Annualized). While not for the faint hearted, we believe the worst is over and expect stock to re-rate over time
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