Mandiri Sekuritas Charoen Pokphand : Launching buyback program (CPIN, Rp7,650, Not rated)

Charoen Pokphand Indonesia (CPIN) will launch a buyback program with maximum amount of Rp50bn to buy a maximum of 7mn shares (implying a maximum price of Rp7,143/share). CPIN share was closed yesterday at Rp7,650/share. Impact on the buyback if it is fully exercised at Rp7,600/share on proforma June 30, 2010 is higher ROE by 43bps from 29.15% to 29.58%. Buyback shares will not be resold and will be used to reduce paid up capital. CPIN will hold its EGM on October 19, 2010 to get shareholders approval on the buyback program and its planned stock split. We did not have a rating on the stock. At current share price, CPIN is traded at PER11F Bloomberg consensus of 13.0x, and EV/EBITDA11F of 8.8x.