July heavy equipment sales: +50% YoY; -8% MoM
Komatsu sales in July reached 468 units, as improvements were dominated by commodity-related sectors (mining, agriculture, forestry) with double digit increases, while construction division remained stable. Overall, Komatsu sales are in line with our forecast with sales reaching 3,200 units (+87% YTD), accounting 63% of our 2010 target of 5,050 units.
Mining contracting had flat MoM performance
In July, Pama Persada's coal delivery and overburden posted a slight YoY increase (+3% and +2%) and flat MoM of 6.3 mn tons and 53.7m bcm. To date, Pama's sales reached 44mn tons and 368.2m bcm, accounting 54% and 51% for coal removal and overburden, respectively.
Coal sales continued to show MoM improvements
Despite the continuous heavy rain, United Tractor's coal mining division recorded further sales improvements reaching 219k tons (-6% YoY; +29% MoM; excl. Tuah Turangga Agung (TTA)) due to smoother delivery processes. Coal sales are expected to continue improving, as currently TTA's small contribution has not been accounted yet. Up to July, coal business reached 36% of our full-year target of 4mn tons translating to 1.42mn tons or +2% YTD.
Reiterate Buy rating with TP Rp22,250
United Tractors' good corporate governance and strong earnings prospects are sustained by buoyant commodity prices, esp. palm oil and Indonesian coal mines' expansion. Faster realization of infrastructure projects and coal price of more than US$85/ton provide upside catalysts.
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