A Cup of Tea 18 Aug'10

The Dow Jones industrial average rose 103.84, or 1 percent, to 10,405.85. Investors had some good news from the latest inflation reading. Prices at the wholesale level rose 0.2 percent last month. This was the first increase in producer prices since March and matched expectations of economists polled by Thomson Reuters. Excluding volatile food and energy costs, the index rose 0.3 percent in July, more than the 0.1 percent growth predicted by economists.

Our market still on consolidation, but will close positive. Telco, metal and bank will be a trigger for today. Some shares like INCO, ANTM, TINS, TLKM, BBNI and BBRI will support our market. BoW on Indosat, BDMN, SMGR, ASII, LSIP and PTBA.

PTBA was looking attractive for medium term investment.

ISAT subscriber Indosat recorded 37.8 million, up 34.5 percent

ISAT recorded a decline in net profit in 1H10 amounted to 71.5 percent when compared to the same period the previous year. Net profit in 1H10 amounted to Rp287, 1 billion or decrease up to Rp720 billion compared to the same period in 2009 and then recorded to reach Rp1, 007 trillion.

Operating revenues increased by Rp9, 66 trillion, up 5.8 percent compared with the 1H09, an increase of 4.1 percent compared with 1Q10 achievement that only Rp4, 73 trillion.

Cellular business to grow at 7.7 percent compared to 1Q10, or 14.4 percent compared with 1H09.

Outstanding earnings before interest, taxes, depreciation, and amortization (EBITDA) amounted to Rp4, 6 trillion, up 6.8 percent yoy. EBITDA improvement was driven programs pursued cost efficiency and company management.

Moreover, to position the company currently reaches debt also increased by 8.9 percent or Rp24, 7 trillion yoy.

Total cellular subscriber Indosat recorded 37.8 million, up 34.5 percent yoy.

I think at this level ISAT is very attractive for medium term investment. Indosat would continue to implement its strategy of acquiring value customers and would focus to improve its ARPU mix by retaining a larger share of medium to high end customers. Indosat expects to achieve growth in the wireless segments of ex. Java regions while growth in Java would be primarily broadband driven. The new management team is also actively crunching operating costs and capex. Rising EBITDA should facilitate Indosat’s first ever positive cellular operating free cash flow (OPFCF) result in FY10, positive consolidated OPFCF and positive consolidated free cash flow to equity. Now ISAT trade at 14.15x PE’10 and 11.84x PE’11 (EPS Consensus). Maintain Buy ISAT, I put target price for ISAT at IDR 5586 (14.3x PE’11 consensus).


Are we quite tired @ BUMI? ... HOLD

PT Bumi Resources Tbk (BUMI) is expected to record net profit increase very significantly in the second quarter-2010.

The increase in net profit is donated by the increase in revenue. The Company is also expected to record gross profit margin increase from 34% to 44.8%. In 1Q10 quarter, BUMI has increased net profit of 38% or U.S. $ 71.14 million.

BUMI tax debt decreased to U.S. $ 369.1 million, compared to the same period in 2009 of approximately U.S. $ 626.06 million.

BUMI also recorded a revenue increase of U.S. $ 1.016 billion, compared to the previous same period is only U.S. $ 832.663 million. In addition, the company also managed to pocket the profit on foreign exchange, from loss about U.S. $ 8.575 million before.


What DO U Think? ELTY Landbank (Jonggol & Bukit Sentul) four times bigger than Bogor CIty ... BUY

PT Bakrieland Development Tbk (Bakrieland) immediately build access roads connecting the Jonggol - Bukit Sentul along the 10 kilometers and will be completed late 2010.

Access roads with a width of 60 meters will be connected with road network, including highways Ciawi Bogor - Sukabumi.

Through the acquisition of both regions, PT Bakrieland Development Tbk has an area of 14 000 hectares of land bank (ha) or one-fifth of Jakarta or Bogor city four times.

The acquisition process itself is completed in June 2010 on an area of 10 400 ha Jonggol area, while the remaining 20 percent comes from land Bukit Sentul, this region will be integrated with the residential project which began the process of handover in 2010.

Development of new areas require funds of around Rp 5.5 trillion, Rp 5 trillion to Bukit Jonggol and Rp 500 billion for Bukit Sentul and diharapkam in 2011 is expected this project will contribute to the company.

PT Bakrieland Development Tbk (ELTY) has set a 40% increase in its revenue target to Rp1.5 trillion this year.

Three foreign institutions Pictet Hongkong Capital, Swiss Chartered, and Savilla Fund have exercised their rights to buy Bakrieland's new shares.


Bang Juntri
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