DBS United Tractors: Buy; Rp20,200; TP Rp22,100; UNTR IJ

August operational data were inline

August10 Komatsu sales fell slightly to 453 units (-3%m-o-m, +49%yoy) as demand from commodity related unit softened. YTD sales are inline with our estimates with Komatsu sales have hit 3,653 units (+81% y-o-y), accounting for 72% of our FY10F of 5,100 units.

Pama coal production and overburden up by 8% m-o-m to 6.8m tons and 57.8m bcm, resulting in a total of 50.8m tons and 426m bcm YTD, respectively. Annualizing the number will come up at 76m and 639m bcm, which is close to our assumption of 75m tons and 650m bcm respectively. We see less impact on prolonged rainfall to Pama’s production but we believe cost could increase, as more efforts are needed to achieve production target. We maintain our Buy call for UNTR, TP of Rp22,100/share. We like UNTR for its strong position as market leader in heavy equipment and mining contracting business, which will benefit from surging coal mining activities in Indonesia . UNTR is currently priced at 13.8x FY11 PE.