PT Indosat Tbk (ISAT) mencatatkan laba bersih Rp 285,9 miliar atau melonjak 139,2 persen selama kuartal I-2010 dibanding periode sama tahun lalu Rp 119,5 miliar.
Pendapatan usaha meningkat tipis sebesar 2,5 persen dari Rp 4,61 triliun pada kuartal I-2009 menjadi Rp 4,73 triliun pada periode sama 2010.
"Kami terus melihat perbaikan yang berkelanjutan, baik dalam parameter operasional maupun dalam parameter keuangan pada kuartal I-2010," kata Direktur Utama dan Chief Executive Officer (CEO) Indosat Harry Sasongko dalam siaran pers di Jakarta, Kamis 22 April 2010.
Selama kuartal I-2010, total pelanggan selular mencapai 39,1 juta atau tumbuh 17,6 persen dibanding periode sama 2009 sebanyak 33,3 juta pelanggan.
Jumlah utang mencapai Rp 24,93 triliun atau naik 8,6 persen dibanding kuartal I-2009 sebesar Rp 22,97 triliun. Laba sebelum bunga, pajak, depresiasi, dan amortisasi (EBITDA) mencapai Rp 2,24 triliun dibanding periode sama 2009 sebesar Rp 2,17 triliun.
Jumat, 23 April 2010
Adhi Karya Bidik Proyek Kilang Cepu-Cilacap
PT Adhi Karya Tbk (ADHI) membidik tiga proyek Engineering Procurement Construction pada blok minyak Cepu dan Cilacap.
"Untuk tahap prakualifikasi kami sudah lulus, nanti tinggal menunggu tender," kata Direktur Utama Adhi Karya Bambang Triwibowo dalam paparan publik perseroan di Jakarta, Kamis 22 April 2010.
Menurut dia, proyek tersebut antara lain paket I Cepu dengan nilai proyek sebesar Rp 12 triliun, paket V senilai Rp 1,5-2 triliun, dan Cilacap sebesar Rp 9 triliun.
Menurut Direktur Keuangan Adhi Karya Supardi, proyek tersebut merupakan kilang minyak (refinery). Untuk proyek itu, Adhi Karya menggandeng SK Group dan GS Group, Korea.
Bambang menambahkan, pertimbangan perseroan untuk menggaet dua perusahaan tersebut karena pengalaman keduanya. more...
"Untuk tahap prakualifikasi kami sudah lulus, nanti tinggal menunggu tender," kata Direktur Utama Adhi Karya Bambang Triwibowo dalam paparan publik perseroan di Jakarta, Kamis 22 April 2010.
Menurut dia, proyek tersebut antara lain paket I Cepu dengan nilai proyek sebesar Rp 12 triliun, paket V senilai Rp 1,5-2 triliun, dan Cilacap sebesar Rp 9 triliun.
Menurut Direktur Keuangan Adhi Karya Supardi, proyek tersebut merupakan kilang minyak (refinery). Untuk proyek itu, Adhi Karya menggandeng SK Group dan GS Group, Korea.
Bambang menambahkan, pertimbangan perseroan untuk menggaet dua perusahaan tersebut karena pengalaman keduanya. more...
Bloomberg Oil Is Steady as Existing U.S. Home Sales Rise, Dollar Gains
April 22 (Bloomberg) -- Crude oil was little changed as increasing sales of existing U.S. homes signaled that the economy of the world’s biggest energy-consuming country is rebounding and the rising dollar curbed demand for commodities.Oil strengthened after the National Association of Realtors said that home purchases advanced 6.8 percent to a 5.35 million annual rate and a government report showed new applications for jobless benefits dropped. The euro fell against the greenback after the European Union said Greece’s budget deficit last year was worse than forecast.
“Every bit of positive economic news boosts the case for buying oil,” said Carl Larry, president of Oil Outlooks & Opinions LLC in Houston. “Investment money and the funds are looking at every dip as a buying opportunity. As the world economy grows, demand for oil is sure to grow.”
Crude oil for June delivery rose 2 cents to settle at $83.70 a barrel on the New York Mercantile Exchange. Prices climbed as much as 0.5 percent to $84.07 and dropped to $81.73 today. Futures are up 5.5 percent this year and 71 percent from a year earlier. more...
Bloomberg Wheat Rises to Seven-Week High as Speculators Unwind Short Bets
April 22 (Bloomberg) -- Wheat rose to a seven-week high, extending this month’s rally, on signs that speculators are unwinding bets on lower prices by buying back futures contracts.
Net-short positions, or bets prices will fall, were at the second-lowest level since 2005 this month, and speculators may be exiting those holdings after wheat slipped to a six-month low on April 5. Since then, the price is up 9.4 percent. “We made new daily highs, and that triggered some stops, then we got above last night’s highs, and then moved above last week, and that triggered some more buys,” said Larry Glenn, an analyst at Frontier Ag in Quinter, Kansas. “We do have a seasonal tendency to rally this time of year, but usually it’s off some sort of weather scare.” more...
Net-short positions, or bets prices will fall, were at the second-lowest level since 2005 this month, and speculators may be exiting those holdings after wheat slipped to a six-month low on April 5. Since then, the price is up 9.4 percent. “We made new daily highs, and that triggered some stops, then we got above last night’s highs, and then moved above last week, and that triggered some more buys,” said Larry Glenn, an analyst at Frontier Ag in Quinter, Kansas. “We do have a seasonal tendency to rally this time of year, but usually it’s off some sort of weather scare.” more...
Bloomberg Soybeans Rises to Three-Month High on China Food-Demand Gains
April 22 (Bloomberg) -- Soybeans rose for a third day, reaching a three-month high, on speculation that China will increase purchases of U.S. supplies to make cooking oil for a growing population and livestock feed to produce pork.
China, which suspended soybean-oil imports from Argentina more than a week ago, won’t resume purchases until producers “increase the quality and safety of the product,” the official Xinhua News Agency said today, citing Jiang Yaoping, the vice minister of commerce. Demand for soybean meal in China, will rise as farmers expand hog herds, the country’s National Grain & Oils Information Center said.
“It’s all about rising Chinese demand for U.S. soybeans,” said Don Roose, the president of U.S. Commodities Inc. in West Des Moines, Iowa. “The trend is definitely higher.” more...
China, which suspended soybean-oil imports from Argentina more than a week ago, won’t resume purchases until producers “increase the quality and safety of the product,” the official Xinhua News Agency said today, citing Jiang Yaoping, the vice minister of commerce. Demand for soybean meal in China, will rise as farmers expand hog herds, the country’s National Grain & Oils Information Center said.
“It’s all about rising Chinese demand for U.S. soybeans,” said Don Roose, the president of U.S. Commodities Inc. in West Des Moines, Iowa. “The trend is definitely higher.” more...
Bloomberg Nickel Supply May Stay in Surplus This Year, Antaike Says
April 22 (Bloomberg) -- Nickel may stay in surplus in 2010 as China’s output climbs, according to researcher Beijing Antaike Information Development Co.Global production of the metal, used to increase the corrosion-resistance of stainless steel, may exceed demand by 21,000 metric tons, compared with a surplus of 37,000 tons in 2009, Xu Aidong, an Antaike analyst, wrote in slides for a speech she will deliver today at a Beijing conference.
China’s nickel output may rise to 313,000 tons this year from 278,000 tons, driven by a rebound in nickel pig iron production, she said. Consumption may be 447,000 tons this year from 442,000 ton last year, she said.
Accumulated inventories in the country may have been as much as 140,000 tons at the end of last year, Xu said.
--Xiaowei Li. Editors: Richard Dobson, Jake Lloyd-Smith.
CLSA Chindonesia rising middle class, banks to benefit
Our Astra guru Wilianto noted that none of his domestic helpers (apparently he has many) has a bank account. They feel that it is troublesome to take money from ATM and costly to maintain. Motorcycle parking charge of Rp1000 or bus fare to ATM discourage them to go to the banks. Bank charges Rp10,000/month administration fees. At 3% interest rate (2.4% net of tax) one needs to have at least Rp5m (USD550) minimum balance to cover the admin cost. Most of them don't have Rp5mn balance as they buy farm land or cattle in the village when have enough extra money (after mobile spending, motorcycle credit installment, and of course … after buying cigarettes).
In our fresh “CLSA Mr & Mrs Asia special report, Moving Up the J-Curves” (ask me if you want a copy), we lay the case for China, India and Indonesia’s (Chindonesia) consumer sectors to exhibit J-curve hypergrowth over the next five to 10 years on rising incomes and a propensity to consume and take risks.
One interesting stats of the power of rising middle class to consume here is that Blackberry sell more devices in Indonesia than anywhere in Asia. We now have 3m+ users Vs 60m worldwide. Just surpassed Australia and on track to be the biggest blackberry market in the world by 2012/2013. And yet we dont have even have an official RIM distributor here showing that the potential for this market is still very much underestimated by multinationals.
We estimate that the middle class makes up 19% of Asia ex-Japan’s population, and that should rise to 30% in five years, or an 11% Cagr. The aggregate number of those in the region’s middle class will increase from 570m currently to 945m by 2015. Chindonesia will represent 90% of the 375m increment. This is a really huge number of people to open bank accounts and to go consume in the next few years.
Clearly one of the most direct beneficiaries of rising middle class will be the banks. We are often asked why Indonesia banks are so profitable generating the highest ROE and NIMs.
This is the reason why:
This is a SELLERs (the bank being the seller) market! While it is true NIMS and ROEs won't remain sky high forever but the sweet spot to generate supersized returns is still massive as rising income would provide the cheap capital funding (opening new accounts) for banks to lend and expand. We are still far far away until the day it would be a BUYERs market.
Some thoughts on Daniel Tabbush's piece from today pertaining to Indo:
Deposits to GDP stands at 33.8% in Indonesia
Credit to GDP in Indonesia is only 55% of the level in India and 20% of the level in China
Consumer credit to GDP is only 47% and 88% of the level of penetration China and India are at.
Looking at 2010 estimates across CL's universe it is evident why over 12 months Indo banks have outperformed their peers by nearly 40%, with ROE's and ROA's at 52% and 93% above the universe's average based on 2010 estimate, EPS growth 12% higher and on average CAR's 11% higher.
Our top picks: BCA, Mandiri and BBTN
In our fresh “CLSA Mr & Mrs Asia special report, Moving Up the J-Curves” (ask me if you want a copy), we lay the case for China, India and Indonesia’s (Chindonesia) consumer sectors to exhibit J-curve hypergrowth over the next five to 10 years on rising incomes and a propensity to consume and take risks.
One interesting stats of the power of rising middle class to consume here is that Blackberry sell more devices in Indonesia than anywhere in Asia. We now have 3m+ users Vs 60m worldwide. Just surpassed Australia and on track to be the biggest blackberry market in the world by 2012/2013. And yet we dont have even have an official RIM distributor here showing that the potential for this market is still very much underestimated by multinationals.
We estimate that the middle class makes up 19% of Asia ex-Japan’s population, and that should rise to 30% in five years, or an 11% Cagr. The aggregate number of those in the region’s middle class will increase from 570m currently to 945m by 2015. Chindonesia will represent 90% of the 375m increment. This is a really huge number of people to open bank accounts and to go consume in the next few years.
Clearly one of the most direct beneficiaries of rising middle class will be the banks. We are often asked why Indonesia banks are so profitable generating the highest ROE and NIMs.
This is the reason why:
This is a SELLERs (the bank being the seller) market! While it is true NIMS and ROEs won't remain sky high forever but the sweet spot to generate supersized returns is still massive as rising income would provide the cheap capital funding (opening new accounts) for banks to lend and expand. We are still far far away until the day it would be a BUYERs market.
Some thoughts on Daniel Tabbush's piece from today pertaining to Indo:
Deposits to GDP stands at 33.8% in Indonesia
Credit to GDP in Indonesia is only 55% of the level in India and 20% of the level in China
Consumer credit to GDP is only 47% and 88% of the level of penetration China and India are at.
Looking at 2010 estimates across CL's universe it is evident why over 12 months Indo banks have outperformed their peers by nearly 40%, with ROE's and ROA's at 52% and 93% above the universe's average based on 2010 estimate, EPS growth 12% higher and on average CAR's 11% higher.
Our top picks: BCA, Mandiri and BBTN
Citigroup Asia ex-Japan Equity Strategy - Excess Liquidity Continues To Decelerate
v From liquidity- to earnings-driven cycle — Our excess liquidity indicator for Asiaex continues to decelerate. Having peaked at 23% in March 2009, the latest reading shows growth of a mere 2%. This confirms our thesis that market direction
is now all about earnings; the baton has passed from liquidity to earnings.
v Phase 2 of the market cycle, the one we are in, is all about earnings — At the same time as excess liquidity is decelerating, so the earnings revisions ratio is rolling over. Fear not, analysts are not cutting their earnings forecasts, but they no longer are revising up as furiously. Phase 2 of the market cycle, the one we are in, is all about earnings. Delivery is critical for the well-being of markets.
v Continue to focus on markets/sectors offering earnings reliability — Asian markets
have rallied off the lows, which has been nice. But with earnings revisions remaining weak, liquidity decelerating and leading indexes rolling over, the concern is that this rally will prove unsustainable. We continue to advise that investors focus on markets/sectors most likely to deliver earnings, and where valuations still make sense and USD strength has less of an impact. Underweight China, India and ASEAN, real estate, industrials and materials. See stock lists at the end of this report.
is now all about earnings; the baton has passed from liquidity to earnings.
v Phase 2 of the market cycle, the one we are in, is all about earnings — At the same time as excess liquidity is decelerating, so the earnings revisions ratio is rolling over. Fear not, analysts are not cutting their earnings forecasts, but they no longer are revising up as furiously. Phase 2 of the market cycle, the one we are in, is all about earnings. Delivery is critical for the well-being of markets.
v Continue to focus on markets/sectors offering earnings reliability — Asian markets
have rallied off the lows, which has been nice. But with earnings revisions remaining weak, liquidity decelerating and leading indexes rolling over, the concern is that this rally will prove unsustainable. We continue to advise that investors focus on markets/sectors most likely to deliver earnings, and where valuations still make sense and USD strength has less of an impact. Underweight China, India and ASEAN, real estate, industrials and materials. See stock lists at the end of this report.
Danareksa Bank Rakyat Indonesia (BBRI IJ, Rp8,450 BUY) Micro driven growth
Reality check; BUY retained
We raise our 3-yr CAGR loan growth estimate to 23% p.a., driven largely by brisker micro loans expansion, supported by stronger consumption growth and benign inflation. This is a reasonable estimate, we believe, since BBRI’s micro loans have grown 23% over the past 5 years, exceeding the industry average of 21%. BBRI’s uncontested rural presence, with 4,500 micro outlets, has helped the bank grow its high yielding loans - and deposits too. This shall remain the case going forward, in our view. Along with higher loans growth, we raise our provisioning expenses to around 2.0-2.5% of average loans to be on the conservative side and trim our NIM to 8.7% - lower yes, but still far above the industry’s average. Our FY10-11 EPS estimates are therefore lowered by 6-14%. However, we still arrive at a higher TP of Rp9,900 thanks to the increase in our loans growth estimate. Our new DDM derived TP implies 3.9-3.3x P/BV 2010-11, at the high-end of its trading range, but justified by the bank’s above-industry loan growth, superlative NIM and robust ROE.
Plenty of room to grow its micro loans
We expect BBRI’s micro loans to grow 24% over the next 2 years, accounting for 28% of the total loans portfolio. Competition to extend micro loans has admittedly escalated in recent years - with banks attempting to extend higher yielding loans to the growing middle-low income population – amidst stronger consumption growth. However, BBRI remains ahead of the pack thanks to its extensive infrastructure and, in particular, its rural network. This year, the bank will open another 50 micro outlets. Some of them will even be in major cities with the idea of garnering cheap deposits so that they can later be channeled to borrowers in rural areas as high yielding fixed rate loans. With an estimated LDR of 86%, the bank has to search for more deposits. The prospects in this segment are good and it is important to realize that it is far from mature - micro loans per borrower are estimated to be only Rp2.2mn in 2009, or far below BBRI’s average of Rp10mn per borrower and significantly below BI’s limit of Rp50mn/ borrower.
Cross selling shall help the bank grow its deposits
The bank’s NIM shall inevitably decline this year (to 8.7%, in our estimates). Larger deposits are needed, especially if BBRI is to grow its loans in excess of 20% p.a., but the focus is more on growing its low cost funds. Opening micro outlets is an alternative, but corporates is another option. The idea is to lend to corporates at 50bps below the normal rate of 11-12% or at the prime rate, with the aim of attaining greater fee-based income and deposits. The lending rate will be low, but with the overall lending to corporates kept at about 18-20% of the bank’s total loan portfolio, there will be minimal impact on BBRI’s overall asset yield. The focus will be on SOE companies, for which NPLs are virtually zero.
Sub-debt issuance is a likely scenario
There is potential risk to BBRI’s CAR of 13% - in particular since implementation of the Basel II accord on operational risk shall cut its CAR by 1.5-2.0%, in our estimates. BBRI views 12% as a minimum level for CAR, although this is insufficient if it seeks to grow its loans in excess of 22% p.a. Unlike other SOE banks, the issuance of sub-debt - rather than raising equity – is the best option for the bank given that the latter would result in potential earnings dilution with no extra tax benefits (one downside though is the higher COF from the additional cost of debt). While we believe that the bank’s capital is sufficient this year (partly due to last year’s Rp2trn sub-debt issuance), a further decline in capital is expected next year. For now, there is no definite plan for additional sub-debt issuance although the bank’s management hasn’t ruled out the possibility of a sub-debt issuance in 2H10.
We raise our 3-yr CAGR loan growth estimate to 23% p.a., driven largely by brisker micro loans expansion, supported by stronger consumption growth and benign inflation. This is a reasonable estimate, we believe, since BBRI’s micro loans have grown 23% over the past 5 years, exceeding the industry average of 21%. BBRI’s uncontested rural presence, with 4,500 micro outlets, has helped the bank grow its high yielding loans - and deposits too. This shall remain the case going forward, in our view. Along with higher loans growth, we raise our provisioning expenses to around 2.0-2.5% of average loans to be on the conservative side and trim our NIM to 8.7% - lower yes, but still far above the industry’s average. Our FY10-11 EPS estimates are therefore lowered by 6-14%. However, we still arrive at a higher TP of Rp9,900 thanks to the increase in our loans growth estimate. Our new DDM derived TP implies 3.9-3.3x P/BV 2010-11, at the high-end of its trading range, but justified by the bank’s above-industry loan growth, superlative NIM and robust ROE.
Plenty of room to grow its micro loans
We expect BBRI’s micro loans to grow 24% over the next 2 years, accounting for 28% of the total loans portfolio. Competition to extend micro loans has admittedly escalated in recent years - with banks attempting to extend higher yielding loans to the growing middle-low income population – amidst stronger consumption growth. However, BBRI remains ahead of the pack thanks to its extensive infrastructure and, in particular, its rural network. This year, the bank will open another 50 micro outlets. Some of them will even be in major cities with the idea of garnering cheap deposits so that they can later be channeled to borrowers in rural areas as high yielding fixed rate loans. With an estimated LDR of 86%, the bank has to search for more deposits. The prospects in this segment are good and it is important to realize that it is far from mature - micro loans per borrower are estimated to be only Rp2.2mn in 2009, or far below BBRI’s average of Rp10mn per borrower and significantly below BI’s limit of Rp50mn/ borrower.
Cross selling shall help the bank grow its deposits
The bank’s NIM shall inevitably decline this year (to 8.7%, in our estimates). Larger deposits are needed, especially if BBRI is to grow its loans in excess of 20% p.a., but the focus is more on growing its low cost funds. Opening micro outlets is an alternative, but corporates is another option. The idea is to lend to corporates at 50bps below the normal rate of 11-12% or at the prime rate, with the aim of attaining greater fee-based income and deposits. The lending rate will be low, but with the overall lending to corporates kept at about 18-20% of the bank’s total loan portfolio, there will be minimal impact on BBRI’s overall asset yield. The focus will be on SOE companies, for which NPLs are virtually zero.
Sub-debt issuance is a likely scenario
There is potential risk to BBRI’s CAR of 13% - in particular since implementation of the Basel II accord on operational risk shall cut its CAR by 1.5-2.0%, in our estimates. BBRI views 12% as a minimum level for CAR, although this is insufficient if it seeks to grow its loans in excess of 22% p.a. Unlike other SOE banks, the issuance of sub-debt - rather than raising equity – is the best option for the bank given that the latter would result in potential earnings dilution with no extra tax benefits (one downside though is the higher COF from the additional cost of debt). While we believe that the bank’s capital is sufficient this year (partly due to last year’s Rp2trn sub-debt issuance), a further decline in capital is expected next year. For now, there is no definite plan for additional sub-debt issuance although the bank’s management hasn’t ruled out the possibility of a sub-debt issuance in 2H10.
DBS Highlights Plantation
Raising expectations
• CY10F-12F CPO prices raised by 1-3% on narrower discount to soybean oil, as we cut CPO inventories
• Potentially stronger RMB risks measures to protect China ’s domestic interests. Wilmar may benefit
• Sugar and rubber prices raised; fertilizer price cut – more boost to profits • 1QCY10 earnings to seasonally weaken, as 11-13% stronger prices is offset by c.6-50% volume drops
• We prefer China processors and volume plays: Wilmar,First R, IndoAgri (upgraded to Buy), and Sampoerna A.
CPO prices raised on lower discount to soybean oil. We lifted CY10-12F CPO price forecasts by 1.2-3.4% (see table below right), as we cut palm oil supply and inventory forecasts given drops in Malaysian yields in Jan–Feb10.
Potentially stronger RMB may benefit Wilmar. Stronger RMB should make palm and soybean oils cheaper in China . But as imported soybeans are already cheaper; a RMB revaluation may prompt measures to protect domestic interests to keep domestic prices from dropping too much. Wilmar’s oilseeds processing margins could see an expansion on lower feedstock costs and steady ASP. We also upgrade Wilmar on more aggressive rice & flour milling expansions.
Sugar and rubber prices upgraded, potash prices cut. We were too bearish. Indonesian sugar prices are still hovering c.US$1,200-1,400/MT and rubber prices have shot up to c.US$3,300/MT – compared to previous expectations of c.US$540 and c.US$1,960, respectively. CY10F-12F rubber prices are now adjusted by 39-44%; while CY10F-12F Indonesian sugar prices are raised to Rp9.8k-10.2k/kg from Rp5.2k-5.5k/kg. We also cut potash price assumptions by half to US$500/MT this year, given drop since last year. Biggest beneficiary: IndoAgri (FY11F revenue contribution: 5.3% rubber, 11.6% sugar).
Seasonally lower 1QCY10 earnings. Malaysian planters 1QCY10 earnings should drop q-o-q, as 12% higher prices would not be enough to offset 23-25% volume drops. Indonesian planters should book even lower earnings q-o-q, on expectations of 28-50% volume drops and faster IDR appreciation. Kencana’s 6% q-o-q FFB volume drop is an exception.
We prefer China processors and strong volume plays. We prefer processors such as Wilmar. For upstream planters, recommend strong volume plays: First R., IndoAgri (upgraded to Buy) and Sampoerna A.
• CY10F-12F CPO prices raised by 1-3% on narrower discount to soybean oil, as we cut CPO inventories
• Potentially stronger RMB risks measures to protect China ’s domestic interests. Wilmar may benefit
• Sugar and rubber prices raised; fertilizer price cut – more boost to profits • 1QCY10 earnings to seasonally weaken, as 11-13% stronger prices is offset by c.6-50% volume drops
• We prefer China processors and volume plays: Wilmar,First R, IndoAgri (upgraded to Buy), and Sampoerna A.
CPO prices raised on lower discount to soybean oil. We lifted CY10-12F CPO price forecasts by 1.2-3.4% (see table below right), as we cut palm oil supply and inventory forecasts given drops in Malaysian yields in Jan–Feb10.
Potentially stronger RMB may benefit Wilmar. Stronger RMB should make palm and soybean oils cheaper in China . But as imported soybeans are already cheaper; a RMB revaluation may prompt measures to protect domestic interests to keep domestic prices from dropping too much. Wilmar’s oilseeds processing margins could see an expansion on lower feedstock costs and steady ASP. We also upgrade Wilmar on more aggressive rice & flour milling expansions.
Sugar and rubber prices upgraded, potash prices cut. We were too bearish. Indonesian sugar prices are still hovering c.US$1,200-1,400/MT and rubber prices have shot up to c.US$3,300/MT – compared to previous expectations of c.US$540 and c.US$1,960, respectively. CY10F-12F rubber prices are now adjusted by 39-44%; while CY10F-12F Indonesian sugar prices are raised to Rp9.8k-10.2k/kg from Rp5.2k-5.5k/kg. We also cut potash price assumptions by half to US$500/MT this year, given drop since last year. Biggest beneficiary: IndoAgri (FY11F revenue contribution: 5.3% rubber, 11.6% sugar).
Seasonally lower 1QCY10 earnings. Malaysian planters 1QCY10 earnings should drop q-o-q, as 12% higher prices would not be enough to offset 23-25% volume drops. Indonesian planters should book even lower earnings q-o-q, on expectations of 28-50% volume drops and faster IDR appreciation. Kencana’s 6% q-o-q FFB volume drop is an exception.
We prefer China processors and strong volume plays. We prefer processors such as Wilmar. For upstream planters, recommend strong volume plays: First R., IndoAgri (upgraded to Buy) and Sampoerna A.
DBS Bukit Asam: Buy; Rp17,900; TP Rp18,550; PTBA IJ
To distribute 45% dividend payout
Bukit Asam plans to pay a total of Rp 516.6 per share (45% dividend payout) The company has paid Rp66.75/share interim dividend in December 09 and Rp449.85/share of final dividend, yielding 2.5%, will be paid on 15 June. Meanwhile, the company plans to spend Rp1.44t capex this year which includes capital spending to acquire two coal mines in Kalimantan . Capex will be funded with internal cash.
Bukit Asam plans to pay a total of Rp 516.6 per share (45% dividend payout) The company has paid Rp66.75/share interim dividend in December 09 and Rp449.85/share of final dividend, yielding 2.5%, will be paid on 15 June. Meanwhile, the company plans to spend Rp1.44t capex this year which includes capital spending to acquire two coal mines in Kalimantan . Capex will be funded with internal cash.
Mandiri Sekuritas BTEL may repayment US$175mn of debt (BTEL, Rp138, Neutral, TP: Rp128)
The company plans to issue US$250mn of global bonds, which around US$170mn will be used for debt repayment and the rest, US$75mn to finance its 2010 capex. Budgeted capex for this year reach US$200mn which will be used to network expansion. The bond has B rating from Fitch Ratings and will mature on 2015.Starting today until next month, the company conducting a road show to foreign investors in Singapore, Hong Kong, USA, and Europe. (Kontan)
Mandiri Sekuritas Bank Tabungan Pensiunan Nasional: BTPN 1Q2010 Result Increased Significantly (BTPN, Rp7,850, Not Rated)
BTPN posted a significant increase in Net Profit of its 1Q2010 result to reach Rp154.6 bn (+165.2% yoy), which within our expectation based on the projection of our Bonds report and the consensus estimates.
BTPN’s net interest income for 1Q2010 is reported at Rp782.2 bn, a 127.6% increase as the result from higher portion of its micro loan that gives higher margin for the bank, which this is reflected on the NIM figure that arrived at 14.9% (vs. 12.2% FY09 and 9.8% 1Q09.
The bank booked gross loan of Rp17.7 tn (+12.7% qoq), which expected as the bank plans to gain more contribution from the micro loan this year. NPL is figured at 1.5% (vs. 0.5% Fy09), while ROE is 30.3%, LDR 87.5%, CAR 17.6% (vs. 23.0%, 84.9% and 18.5% for FY09, respectively. The bank plans to issue Rp750 bn conventional bonds on the 2Q this year, which aimed to support its long term funding. Third party funds of the bank is currently Rp20,2 tn (+9.1% qoq).
Based on Bloomberg consensus, the bank is currently trading at P/BV10 3.0x and PER10 15.9x. We don’t have recommendation on the counter.
BTPN’s net interest income for 1Q2010 is reported at Rp782.2 bn, a 127.6% increase as the result from higher portion of its micro loan that gives higher margin for the bank, which this is reflected on the NIM figure that arrived at 14.9% (vs. 12.2% FY09 and 9.8% 1Q09.
The bank booked gross loan of Rp17.7 tn (+12.7% qoq), which expected as the bank plans to gain more contribution from the micro loan this year. NPL is figured at 1.5% (vs. 0.5% Fy09), while ROE is 30.3%, LDR 87.5%, CAR 17.6% (vs. 23.0%, 84.9% and 18.5% for FY09, respectively. The bank plans to issue Rp750 bn conventional bonds on the 2Q this year, which aimed to support its long term funding. Third party funds of the bank is currently Rp20,2 tn (+9.1% qoq).
Based on Bloomberg consensus, the bank is currently trading at P/BV10 3.0x and PER10 15.9x. We don’t have recommendation on the counter.
Mandiri Sekuritas Alam Sutera: ASRI Indicates a Surge in 1Q2010 Results (ASRI, Rp205, Not Rated)
ASRI hints to post a surge on its 1Q2010 net profit as a result from the marketing sales hikes in 2009 that reached to Rp1.0 tn, compared to Rp492 bn in 2008. On the phone discussion with company’s corporate secretary yesterday, it is indicated that the revenue will be booked at around Rp200 bn (+290% yoy), thanks to higher margin from commercial area sales that booked around 70% of the total marketing sales last year, which slid to the bottom line to post around Rp72.5 bn (+866.7%)
In 2010, the company sets its marketing sales Rp1.2 tn, a 20% increase of the 2009’s figure, that mainly be focusing on the development of 2 shophouses projects, Pasar 8 modern market and 300 units residential of Sutera Renata cluster on the 23 ha land bank. As per Mar10, the company has booked of total Rp458bn marketing sales, or 38% of total target this year
Based on Bloomberg consensus, ASRI is currently trading at PER10 15.5x and P/BV10 3.5x. We still don’t have rating on the stock
In 2010, the company sets its marketing sales Rp1.2 tn, a 20% increase of the 2009’s figure, that mainly be focusing on the development of 2 shophouses projects, Pasar 8 modern market and 300 units residential of Sutera Renata cluster on the 23 ha land bank. As per Mar10, the company has booked of total Rp458bn marketing sales, or 38% of total target this year
Based on Bloomberg consensus, ASRI is currently trading at PER10 15.5x and P/BV10 3.5x. We still don’t have rating on the stock
Mandiri Sekuritas Bukit Asam : Bukit Asam, China Private Equity Funds in Talks on Sumatra Railway (PTBA, Rp17,900, Buy, TP: Rp18,750)
PTBA on Wednesday said two China-based private equity funds were in talks about partly funding a $1.3 billion coal railway in Sumatra. Last month, PTBA signed contracts for a total of $4.8 billion for a new rail project to transport its coal to a port in Sumatra, a deal that is expected to increase PTBA’s coal-transportation capacity significantly. The deal consisted of a US$1.3bn contract for the construction of a new rail line and an operation and maintenance contract worth US$3.5bn over 20 years, both with China Railway Engineering Corp. The project involves the construction of a 307- kilometer railway from Bukit Asam’s Banko coal mine in South Sumatra to the port of Srengsem in Lampung province. Together with the
improvement in existing railways, PTBA expects to produce 48Mt in 2014 compared to their 2010 estimate production of 15.5Mt
PTBA’s CEO Sukrisno said the railway consortium was in talks with private equity funds including two China-based investors — Beijing-based Hopu Investment Management and a private equity unit of China Development Bank — for the $1.3 billion project. China Export-Import Bank has been chosen as the main financier for the project, he said.
The consortium had agreed to increase the debt portion of the project to 85% from 70 %, China Railway said it needed six months for design and therefore project construction is estimated to start in 1H2011. Privately owned PT Trans¬pacific Railway Infrastructure owns 80%, while Bukit Asam and China Railway Engineering Corp. each own 10%. (Jakarta Globe)
PTBA is also planning to pay a dividend of Rp466/share in June 15, as final dividend for 2009 result, as previously they have paid Rp67/share. Total dividend payout is 45%. PTBA expect a weaker than 1Q09 revenue achievement in 1Q10 due to lower price. PLN paid PTBA Rp685k/ton for 5.5Mt coal delivery in 2010, 22.5% lower than price they paid in 2009 for 6.1Mt. PTBA booked Rp2.3tn of revenue in 1Q09. We are forecasting Rp10.2tn revenue for FY10 (FY09A: Rp8.9tn). We are expecting prices to recover in the following quarters and a 23% increase in the sales volume to 14.8Mt. At Rp17,900/share, PTBA is trading at 14.0x and 12.7x PERFY10F and PERFY11F, respectively.
improvement in existing railways, PTBA expects to produce 48Mt in 2014 compared to their 2010 estimate production of 15.5Mt
PTBA’s CEO Sukrisno said the railway consortium was in talks with private equity funds including two China-based investors — Beijing-based Hopu Investment Management and a private equity unit of China Development Bank — for the $1.3 billion project. China Export-Import Bank has been chosen as the main financier for the project, he said.
The consortium had agreed to increase the debt portion of the project to 85% from 70 %, China Railway said it needed six months for design and therefore project construction is estimated to start in 1H2011. Privately owned PT Trans¬pacific Railway Infrastructure owns 80%, while Bukit Asam and China Railway Engineering Corp. each own 10%. (Jakarta Globe)
PTBA is also planning to pay a dividend of Rp466/share in June 15, as final dividend for 2009 result, as previously they have paid Rp67/share. Total dividend payout is 45%. PTBA expect a weaker than 1Q09 revenue achievement in 1Q10 due to lower price. PLN paid PTBA Rp685k/ton for 5.5Mt coal delivery in 2010, 22.5% lower than price they paid in 2009 for 6.1Mt. PTBA booked Rp2.3tn of revenue in 1Q09. We are forecasting Rp10.2tn revenue for FY10 (FY09A: Rp8.9tn). We are expecting prices to recover in the following quarters and a 23% increase in the sales volume to 14.8Mt. At Rp17,900/share, PTBA is trading at 14.0x and 12.7x PERFY10F and PERFY11F, respectively.
Kamis, 22 April 2010
Kuartal I, Antam Cetak Laba Rp201,94 Miliar
JAKARTA - PT Aneka Tambang Tbk (ANTM) berhasil mencatatkan kenaikan laba bersih menjadi Rp201,94 miliar pada kuartal I-2010 ini dari periode yang sama tahun sebelumnya sebesar Rp89,88 miliar.
Demikian diungkapkan oleh Direktur Utama Antam Alwin Syah Loebis dalam laporaan keuangan perseroan kuartal I-2010, di Jakarta, Kamis (22/4/2010).
Kenaikan laba bersih perseroan ini tidak diiringi oleh penjualan bersih perseroan yang turun menjadi sebesar Rp1,655 triliun dari sebelumnya sebesar Rp2,64 miliar.
Sementara penurunan ini beriringan dengan beban pokok penjualan yang juga turun menjadi sebesar Rp1,18 triliun dari sebelumnya yang sebesar Rp2,48 triliun.
Alhasil, laba kotornya meningkat Rp474,35 miliar dari sebelumnya yang sebesar Rp162,07 miliar. Sementara laba usaha juga naik menjadi sebesar Rp343,31 miliar dari sebelumnya Rp54,7 miliar.
Sedangkan untuk jumlah kewajiban dan ekuitas perseroan menjadi sebesar Rp10,07 triliun, turun dari sebelumnya yang sebesar Rp10,3 triliun.
Demikian diungkapkan oleh Direktur Utama Antam Alwin Syah Loebis dalam laporaan keuangan perseroan kuartal I-2010, di Jakarta, Kamis (22/4/2010).
Kenaikan laba bersih perseroan ini tidak diiringi oleh penjualan bersih perseroan yang turun menjadi sebesar Rp1,655 triliun dari sebelumnya sebesar Rp2,64 miliar.
Sementara penurunan ini beriringan dengan beban pokok penjualan yang juga turun menjadi sebesar Rp1,18 triliun dari sebelumnya yang sebesar Rp2,48 triliun.
Alhasil, laba kotornya meningkat Rp474,35 miliar dari sebelumnya yang sebesar Rp162,07 miliar. Sementara laba usaha juga naik menjadi sebesar Rp343,31 miliar dari sebelumnya Rp54,7 miliar.
Sedangkan untuk jumlah kewajiban dan ekuitas perseroan menjadi sebesar Rp10,07 triliun, turun dari sebelumnya yang sebesar Rp10,3 triliun.
Antam Bantah Akan Right Issue
JAKARTA - PT Aneka Tambang Tbk (ANTM) mengklarifikasi bahwa perseroan belum berencana melakukan right issue untuk mendanai proyek-proyek yang ada.
Ditegaskannya, bagi setiap perusahaan publik right issue adalah salah satu langkah alternatif pendanaan yang dapat digunakan untuk bertumbuh selain melakukan pinjaman perbankan maupun kemitraan strategis dengan perusahaan lainnya.
“Realisasi proyek-proyek pertumbuhan sangat penting bagi peningkatan nilai pemegang saham. Kami akan meningkatkan kegiatan pengolahan untuk menambah nilai cadangan yang dimiliki,” ujar Direktur Utama ANTM Alwin Syah Loebis, dalam keterangan tertulisnya kepada Bursa Efek Indonesia (BEI), Jakarta, Kamis (22/4/2010).
Saat ini Antam, bersama mitranya masih berfokus pada penyelesaian retender proyek Chemical Grade Alumina (CGA) Tayan. Selain itu, Antam juga tengah melanjutkan pembahasan dengan Hangzhou Jinjiang Group (HJG) dari China untuk menyelesaikan perjanjian usaha patungan proyek Smelter Grade Alumina (SGA) Mempawah.
Antam saat ini sedang melakukan commissioning tambang emas Cibaliung dengan estimasi operasi komersial pada Juli 2010. Antam berharap tambang emas Cibaliung akan dapat memproduksi 500 kg emas di 2010 sebagai tambahan produksi dari tambang emas Pongkor.(css)
Ditegaskannya, bagi setiap perusahaan publik right issue adalah salah satu langkah alternatif pendanaan yang dapat digunakan untuk bertumbuh selain melakukan pinjaman perbankan maupun kemitraan strategis dengan perusahaan lainnya.
“Realisasi proyek-proyek pertumbuhan sangat penting bagi peningkatan nilai pemegang saham. Kami akan meningkatkan kegiatan pengolahan untuk menambah nilai cadangan yang dimiliki,” ujar Direktur Utama ANTM Alwin Syah Loebis, dalam keterangan tertulisnya kepada Bursa Efek Indonesia (BEI), Jakarta, Kamis (22/4/2010).
Saat ini Antam, bersama mitranya masih berfokus pada penyelesaian retender proyek Chemical Grade Alumina (CGA) Tayan. Selain itu, Antam juga tengah melanjutkan pembahasan dengan Hangzhou Jinjiang Group (HJG) dari China untuk menyelesaikan perjanjian usaha patungan proyek Smelter Grade Alumina (SGA) Mempawah.
Antam saat ini sedang melakukan commissioning tambang emas Cibaliung dengan estimasi operasi komersial pada Juli 2010. Antam berharap tambang emas Cibaliung akan dapat memproduksi 500 kg emas di 2010 sebagai tambahan produksi dari tambang emas Pongkor.(css)
Bullish Bullion: Gold to gain 10%, Silver 20%
The multi-faceted yellow metal gold had a hard time during the wake of the worst recession since the Second World War as an untimely rise in US dollar eclipsed the safety haven appeal of the metal. Gold was also caught up in the imbroglio where panic selling engulfed the market. The metal usually shares an inverse relationship with US dollar as it is considered an alternative investment to the currency.However, the metal benefited from m the subsequent dip in the economical cycle, which pummeled the US currency, driving investors towards the safety of gold. The metal, since then, went o on to explore new heights with investment and safety buying piling up, lending the metal with wings to rise.
Economies through out the world introduced stimulus packages and bailouts in their r desperate efforts to resist inflation and rekindle growth. These financial inducements seem to be bearing fruit with economic data releases slowly creeping into positive territory. Favorable economic c conditions have once again put US dollar in the lime light with the culmination of the year 2009, in turn weighing on prices of gold.
Prices well supported by rising physical and investment demand
Gold prices, during February 2010,, hit its lowest level since the month of November 2009 as technical selling that emerged following a stronger US dollar and Macro Economic concerns that threatened the European nations and its currency put pressure on the market.
However, prices of gold have held up well at supports after falling almost 15 percent from the all time high of $1226.
Emergence of significant physical d demand at lows has helped the metal keep most of its gains from the Bull Run that commenced during the beginning of the 21st century. Investment demand of the metal has also been supporting prices.
Physical demand from the major importers like India and Turkey has been encouraging. According to the Bombay Bullion Association imports of India during the month of March 2010 has jumped towards 23-28 tonnes as compared to 4.8 tonnes during the same time last year. Higher imports of gold from India are attributed to the wedding season in the country, which begins in the month of April 2010. more...
Bloomberg Oil Falls After Supplies Climb at Delivery Hub
April 21 (Bloomberg) -- Crude oil dropped in New York after a U.S. Energy Department report showed supplies surged at the delivery point for the U.S. benchmark grade as imports climbed to the highest level since September.Inventories of crude at Cushing, Oklahoma, where New York- traded West Texas Intermediate oil is stored, surged 5.8 percent to 34.1 million barrels, the highest since the week ended Jan. 8. Supplies of crude oil rose 1.89 million barrels to 355.9 million, the Energy Department report showed. A 750,000-barrel drop was forecast, according to a Bloomberg survey.
“There was a massive build at Cushing, which should be very bearish,” said Stephen Schork, president of consultant Schork Group Inc. in Villanova, Pennsylvania. “Between mid- February and mid-April supplies at Cushing have gone from a year-on-year deficit of 13 percent to a 15 percent surplus.”
Crude oil for June delivery fell 17 cents, or 0.2 percent, to settle at $83.68 a barrel on the New York Mercantile Exchange. Prices are up 5.4 percent this year and 80 percent higher than a year earlier. more...
Bloomberg Soybeans Jump to Three-Month High, Corn Gains on Chinese Demand
April 21 (Bloomberg) -- Soybeans topped $10 a bushel for the first time since January and corn gained on speculation that China will boost imports from the U.S., the world’s largest shipper of the crops.
U.S. exporters sold 174,000 metric tons of soybeans to China, the Department of Agriculture said today. Yesterday, the agency reported a sale of 232,000 tons. Chinese government data showed that oilseed purchases rose 8.7 percent in the first quarter, and corn imports were 12 times higher than a year earlier.
“Some people are looking for much larger soybean imports from China this year,” said Roy Huckabay, the executive vice president at the Linn Group in Chicago. Demand is rising for feed grains after drought damaged the corn crop last year and wet, cold weather slowed planting progress this month, he said.
Soybean futures for July delivery climbed 12 cents, or 1.2 percent, to $10.06 a bushel on the Chicago Board of Trade. Earlier, the price reached $10.155, the highest level for a most-active contract since Jan. 11. The oilseed has dropped 4.1 percent this year on USDA estimates for record global stockpiles.
Corn futures for July delivery rose 3.75 cents, or 1 percent, to $3.69 a bushel, the seventh gain in eight sessions. The price has dropped 11 percent this year on forecasts for combined production to rise 13 percent in Brazil and Argentina, the biggest exporters behind the U.S.
China Prices
Grain prices in China, the second-largest corn consumer and top soybean importer, may rise by more than 5 percent this year, the China Securities Journal said today, citing a report by the Chinese Academy of Social Sciences.
“The world’s transition to supplies from South America has been delayed by farmers’ unwillingness to sell” newly harvested crops, said Greg Grow, the director of agribusiness at Archer Financial Services in Chicago. “Demand for U.S. exports has been sustained longer than expected this year.”
Corn is the top U.S. crop, valued at $48.6 billion in 2009, followed by soybeans at $31.8 billion, government data show.
U.S. exporters sold 174,000 metric tons of soybeans to China, the Department of Agriculture said today. Yesterday, the agency reported a sale of 232,000 tons. Chinese government data showed that oilseed purchases rose 8.7 percent in the first quarter, and corn imports were 12 times higher than a year earlier.
“Some people are looking for much larger soybean imports from China this year,” said Roy Huckabay, the executive vice president at the Linn Group in Chicago. Demand is rising for feed grains after drought damaged the corn crop last year and wet, cold weather slowed planting progress this month, he said.
Soybean futures for July delivery climbed 12 cents, or 1.2 percent, to $10.06 a bushel on the Chicago Board of Trade. Earlier, the price reached $10.155, the highest level for a most-active contract since Jan. 11. The oilseed has dropped 4.1 percent this year on USDA estimates for record global stockpiles.
Corn futures for July delivery rose 3.75 cents, or 1 percent, to $3.69 a bushel, the seventh gain in eight sessions. The price has dropped 11 percent this year on forecasts for combined production to rise 13 percent in Brazil and Argentina, the biggest exporters behind the U.S.
China Prices
Grain prices in China, the second-largest corn consumer and top soybean importer, may rise by more than 5 percent this year, the China Securities Journal said today, citing a report by the Chinese Academy of Social Sciences.
“The world’s transition to supplies from South America has been delayed by farmers’ unwillingness to sell” newly harvested crops, said Greg Grow, the director of agribusiness at Archer Financial Services in Chicago. “Demand for U.S. exports has been sustained longer than expected this year.”
Corn is the top U.S. crop, valued at $48.6 billion in 2009, followed by soybeans at $31.8 billion, government data show.
Bloomberg Copper Drops on Concern Over China Property Curbs; Nickel Falls
April 21 (Bloomberg) -- Copper declined for the fourth time in five days as some investors deemed the metal’s surge by the most in two weeks excessive amid concern that China may curb lending and property speculation. Nickel, zinc and lead declined.
“The metals are going to face continued volatility as we keep getting a flow of both good and bad news which affect investor sentiment,” Wang Jianchao, an analyst at Dahua Futures Co., said from Beijing. “The global economy seems to be slowly recovering. However, any sign that China’s demand will weaken will weigh on prices.”
Zinc fell 1.4 percent to $2,416 a ton, lead slid 1.2 percent to $2,326 a ton and nickel lost 2 percent to $26,700 a ton. Aluminum rose 0.3 percent to $2,393 a ton, and tin hadn’t traded by 11:21 a.m. in Singapore. more...
“The metals are going to face continued volatility as we keep getting a flow of both good and bad news which affect investor sentiment,” Wang Jianchao, an analyst at Dahua Futures Co., said from Beijing. “The global economy seems to be slowly recovering. However, any sign that China’s demand will weaken will weigh on prices.”
Zinc fell 1.4 percent to $2,416 a ton, lead slid 1.2 percent to $2,326 a ton and nickel lost 2 percent to $26,700 a ton. Aluminum rose 0.3 percent to $2,393 a ton, and tin hadn’t traded by 11:21 a.m. in Singapore. more...
Credit Suisse: SEA COAL SECTOR: New coal price $95/t - Upgrade EPS/DCF - Sensitivity Analysis
Upside risk is there as CS average coal price assumption is US$95/t 2010F, $90/t 2011F-2012F, $86/t 2013F, $80/LT; compared to NEWC steam coal spot FOB weekly price US$97.50/t (as of April 16th). In Indonesia Coal Sector, I continue to PREFER ITMG/ADRO/UNTR, while BUMI (Restricted, @Rp2,400- 13.3x 2010 IBES Consensus PER) and DOID (non-rated, @Rp1,070- 7.4x 2010 IBES Consensus PER) are laggards; we maintain Underperform rating on PTBA!
Please see Sensitivity Analysis if coal price is flat $95/t & flat $100/t for 2010F:
(2010F, Rp) RO ITMG PTBA BANPU
EPS $95/t 2010F 121 US$0.29 987 Bt53.2
DCF $95/t 2010F 2,000 36,800 11,000 Bt722
Stock Price 2,200 38,350 17,600 Bt624
PER @$95/t 2010F 18.2x 14.7x 17.8x 11.7x
DCF IF $95/t flat 3,110 49,900 13,400 Bt851
Implied Upside +41% +30% -24% +36%
DCF IF $100/t flat 3,510 55,600 14,100 Bt907
Implied Upside 59% +45% -20% +45%
Please see Sensitivity Analysis if coal price is flat $95/t & flat $100/t for 2010F:
(2010F, Rp) RO ITMG PTBA BANPU
EPS $95/t 2010F 121 US$0.29 987 Bt53.2
DCF $95/t 2010F 2,000 36,800 11,000 Bt722
Stock Price 2,200 38,350 17,600 Bt624
PER @$95/t 2010F 18.2x 14.7x 17.8x 11.7x
DCF IF $95/t flat 3,110 49,900 13,400 Bt851
Implied Upside +41% +30% -24% +36%
DCF IF $100/t flat 3,510 55,600 14,100 Bt907
Implied Upside 59% +45% -20% +45%
Credit Suisse: BANK DANAMON (PNBN): In line (above consensus) robust +65% 1Q10 EPS- reit Buy
· Teddy Oetomo (Daily): Our FY10E earnings are 19% ahead of consensus and BDMN’s 1Q10A shows that the consensus is too conservative. BDMN’s 1Q10A normalised earnings grew by 65% YoY, 22% of our forecast and 26% of consensus’ expectations. Historically, BDMN’s 1Q contributes 21.3% of normalised earnings.
· We like BDMN as a momentum play and maintain our OUTPERFORM rating on BDMN and a target price of Rp6700, based on Gordon’s Growth model, implying 3x 2010E P/B and 17.5x 2010E P/E (remain relatively undemanding as the counter is still trading in line with its average historical P/B). We believe that the bank’s share price will follow the strong FY10E earnings growth momentum, with even stronger YoY earnings growth in the coming quarter as 1Q09A captures only 6% of the Rp504 bn derivative loss written-off in FY09A.
Next week CEO change (AGM on April 29th) will be another catalyst, on the back of expected consensus upgrades on the back of robust normalising (no more derivative loss) 1Q10 EPS. At Rp5,250- BDMN is trading on undemanding 13.7x 2010F PER (+110% EPS Growth), 2.4x 2010F PBR (RoE 19% 2010F & 23% 2011F), and implying 28% upside to TP Rp6,700 (3x PBR), we reiterate Buy BDMN due to its superior earnings growth, as CEO departure partly in the price, Derivative loss behind us, NPL recovery, and improving mid-term RoE to circa 25% level
· We like BDMN as a momentum play and maintain our OUTPERFORM rating on BDMN and a target price of Rp6700, based on Gordon’s Growth model, implying 3x 2010E P/B and 17.5x 2010E P/E (remain relatively undemanding as the counter is still trading in line with its average historical P/B). We believe that the bank’s share price will follow the strong FY10E earnings growth momentum, with even stronger YoY earnings growth in the coming quarter as 1Q09A captures only 6% of the Rp504 bn derivative loss written-off in FY09A.
Next week CEO change (AGM on April 29th) will be another catalyst, on the back of expected consensus upgrades on the back of robust normalising (no more derivative loss) 1Q10 EPS. At Rp5,250- BDMN is trading on undemanding 13.7x 2010F PER (+110% EPS Growth), 2.4x 2010F PBR (RoE 19% 2010F & 23% 2011F), and implying 28% upside to TP Rp6,700 (3x PBR), we reiterate Buy BDMN due to its superior earnings growth, as CEO departure partly in the price, Derivative loss behind us, NPL recovery, and improving mid-term RoE to circa 25% level
Credit Suisse: ASTRA INTERNATIONAL (ASII): Strong - Above 1Q10 car - motorcycle-reit Core Buy
· Arief Wana (Daily Attached): Indonesia’s March automotive data continued show a strong rebound. Car volumes almost doubled YoY to a new high of 65,523 units and motorcycle volumes jumped 40% YoY to 1.6 mn units. Thus, 1Q10 data was higher than our expectation. While we maintain our positive view on Astra International as a core holding for the Indonesian market, we put our earnings forecasts under review. Maintain OUTPERFORM.
· Astra’s market share for cars declined in March but stayed dominant at above 55% for 1Q10. The good news is that its motorcycle market share rebounded in March to a high of 48%, beating its biggest rival Yamaha for the first time this year. However, we believe it is too early to expect lesser competition. Astra’s earnings are more sensitive towards car market than they are for motorcycles. On sensitivity analysis, every 1% increase in car sales volumes (assuming financing stays the same) would impact Astra group’s net income by 0.3%. Every 1% increase in motorcycle volumes would impact Astra’s net profit by 0.1%.
UNTR EPS upgrade and Above expectation 1Q10 car (29% of 2010F) and motorcycle (26% of 2010F), we continue recommend Buy as Core Holding ASII due to its Diversified Consumer/Commodity earnings, Largest market cap in JCI (Bloomberg = JCI WGT), Strong Management & Balance sheet, and remains at relative valuation discount (currently 14.8x 2010F PER vs 15.1x 2010F CS Indonesia Universe which Target Index 17.5x 2010F)
· Astra’s market share for cars declined in March but stayed dominant at above 55% for 1Q10. The good news is that its motorcycle market share rebounded in March to a high of 48%, beating its biggest rival Yamaha for the first time this year. However, we believe it is too early to expect lesser competition. Astra’s earnings are more sensitive towards car market than they are for motorcycles. On sensitivity analysis, every 1% increase in car sales volumes (assuming financing stays the same) would impact Astra group’s net income by 0.3%. Every 1% increase in motorcycle volumes would impact Astra’s net profit by 0.1%.
UNTR EPS upgrade and Above expectation 1Q10 car (29% of 2010F) and motorcycle (26% of 2010F), we continue recommend Buy as Core Holding ASII due to its Diversified Consumer/Commodity earnings, Largest market cap in JCI (Bloomberg = JCI
Credit Suisse: UNITED TRACTORS (UNTR): Above 1Q10 Operating Data = Upgrade EPS/SoTP = Buy
· Arief Wana (Daily Attached): Based on the robust rebound in March operating data and higher coal prices (and volumes), we increase our earnings estimates by 5-7%, putting our forecasts 14% above consensus’. Based on the above, we increase our SOTP-based target price by 4% to Rp24,000, implying 25% potential upside. Strong operating data and, therefore, earnings are the key catalyst for the share price, we maintain our OUTPERFORM rating.
· Given our positive view on commodity prices and a better credit market, we have increased our Equipment sales volumes forecasts by 16%, which is similar to the peak 2008 and above street’s and the company’s conservative guidance. We have also incorporated our new, higher coal prices and stronger sales volumes for UT’s coal mining divisions. Meanwhile, we maintain our positive view on the mining contracting division, though the YoY growth is also showing upside risk to our forecast.
On the back of upgrades in equipments volumes, coal mining volume and new coal price upgrade ($95/t for 2010F), once again put our earnings estimates 14% above 2010-2011 consensus. At Rp19,150- UNTR is trading on undemanding 13.4x 2010F PER with +24% EPS Growth & implying 25% upside to SoTP Rp24,000 (implies 16.8x 2010F PER, in line with our Index target multipler 17.5x 2010F PER), we reiterate Top-Buy UNTR within coal sector and Indonesia market, as a leveraged play on domestic coal production volume with upside from coal mine acquisitions and infrastructure sector recovery backed by strong management and balance sheet
· Given our positive view on commodity prices and a better credit market, we have increased our Equipment sales volumes forecasts by 16%, which is similar to the peak 2008 and above street’s and the company’s conservative guidance. We have also incorporated our new, higher coal prices and stronger sales volumes for UT’s coal mining divisions. Meanwhile, we maintain our positive view on the mining contracting division, though the YoY growth is also showing upside risk to our forecast.
On the back of upgrades in equipments volumes, coal mining volume and new coal price upgrade ($95/t for 2010F), once again put our earnings estimates 14% above 2010-2011 consensus. At Rp19,150- UNTR is trading on undemanding 13.4x 2010F PER with +24% EPS Growth & implying 25% upside to SoTP Rp24,000 (implies 16.8x 2010F PER, in line with our Index target multipler 17.5x 2010F PER), we reiterate Top-Buy UNTR within coal sector and Indonesia market, as a leveraged play on domestic coal production volume with upside from coal mine acquisitions and infrastructure sector recovery backed by strong management and balance sheet
UBS Jasa Marga (JSMR Buy PT 2,400): Best conference call YTD. High convinction BUY
UBS held a conference call with JSMR yesterday – the best of the year so far.
Better land acquisition regulations
· Revolving fund. Uses govt money first, Jasa Marga pays back ONLY after land acquisition is 100% completed.
· Landcapping: Toll road owners only liable for 10% higher than budgeted land acquisition cost. Anything above that is paid by government.
Further regulatory improvement in the future
· Management sees more political willingness from govt to make toll road projects more attractive, i.e. through subsidies.
· Govt aims to propose new land acquisition law to parliament as early as May this year. Biggest difference: revocation of land rights.
More toll road acquisitions
· Management is performing due diligence on two toll roads (greenfield) that are part of JORR 2 (Jakarta Outer Ring Road 2).
· We like toll road acquisitions in Greater Jakarta area (lowest traffic risk), and they are connected to Jasa Marga's other toll roads.
Better land acquisition regulations
· Revolving fund. Uses govt money first, Jasa Marga pays back ONLY after land acquisition is 100% completed.
· Landcapping: Toll road owners only liable for 10% higher than budgeted land acquisition cost. Anything above that is paid by government.
Further regulatory improvement in the future
· Management sees more political willingness from govt to make toll road projects more attractive, i.e. through subsidies.
· Govt aims to propose new land acquisition law to parliament as early as May this year. Biggest difference: revocation of land rights.
More toll road acquisitions
· Management is performing due diligence on two toll roads (greenfield) that are part of JORR 2 (Jakarta Outer Ring Road 2).
· We like toll road acquisitions in Greater Jakarta area (lowest traffic risk), and they are connected to Jasa Marga's other toll roads.
CIMB BBTN Feedback from Asian roadshow
Maintain OUTPERFORM.
We recently brought BBTN’s senior management to meet investors in Kuala Lumpur, Singapore and Hong Kong and to present the bank’s latest performance updates along with its new strategic initiatives. Investors who held BBTN
shares were happy with the stellar performance of the last two quarters and reiterated their confidence in the bank, which indicates no plans to sell. Most potential investors also gave the impression that they liked BBTN’s business model although a small number were still sceptical. In our view, there are multiple reasons to be bullish about BBTN’s ability to unlock the next layer of upside to its loan growth, cost-income ratio and NIM given the 1) new emphasis on the funding franchise, 2) potential subsidy scheme changes that could boost loans, 3) technological and organisational breakthrough to reduce expenses, and 4) expansion into white and brown goods lending, leading to enhanced NIMs. We maintain our OUTPERFORM call and keep BBTN as one of our top banking picks with an unchanged target price of Rp1,900 (GGM, 16% discount rate). There is no change to our forecasts.
We recently brought BBTN’s senior management to meet investors in Kuala Lumpur, Singapore and Hong Kong and to present the bank’s latest performance updates along with its new strategic initiatives. Investors who held BBTN
shares were happy with the stellar performance of the last two quarters and reiterated their confidence in the bank, which indicates no plans to sell. Most potential investors also gave the impression that they liked BBTN’s business model although a small number were still sceptical. In our view, there are multiple reasons to be bullish about BBTN’s ability to unlock the next layer of upside to its loan growth, cost-income ratio and NIM given the 1) new emphasis on the funding franchise, 2) potential subsidy scheme changes that could boost loans, 3) technological and organisational breakthrough to reduce expenses, and 4) expansion into white and brown goods lending, leading to enhanced NIMs. We maintain our OUTPERFORM call and keep BBTN as one of our top banking picks with an unchanged target price of Rp1,900 (GGM, 16% discount rate). There is no change to our forecasts.
UBS BUMI RESOURCES: Opportunities, risks and Delta Dunia
Opportunities versus risks
Despite the legacy ownership risk, aggressive debt raising and the current tax
investigation, investor interest in Bumi has regained momentum due to recent
acquisitions and coal price momentum. We assess the near-term risks and
opportunities for Bumi Resources accordingly.
Strong opportunity for capital generation…
The Bakrie Group’s political influence and strong funding ability has resulted in it
acquiring some of Indonesia’s most valuable mining assets. For Bumi, we estimate
an annual EBITDA of US$1-1.5bn in 2010-12, while estimating potential proceeds
of US$1bn from the potential listing of Bumi’s non-coal assets. We believe capital
constraints may limit governance risk in the short term.
… and equally strong investment and earnings risk
Bumi’s overhang risk has increased significantly following aggressive capital
raising over the past 12 months. Additional risks we see include over US$1bn in
back tax and penalties, 10% EPS dilution and the possible acquisition of Delta
Dunia in the medium term. Bumi’s management has no stated intention to carry
out such an acquisition, however, given the Bakrie Group’s reported partial
ownership of Delta Dunia, we outline the potential.
Valuation
Our Rp3,700 price target implies a 30% governance discount and a 10% potential
rights issue dilution, but excludes potential back-tax payments and penalties. Our
price target is based on a WACC of 16.4% and a 12-month implied PE of 11.8x.
Despite the legacy ownership risk, aggressive debt raising and the current tax
investigation, investor interest in Bumi has regained momentum due to recent
acquisitions and coal price momentum. We assess the near-term risks and
opportunities for Bumi Resources accordingly.
Strong opportunity for capital generation…
The Bakrie Group’s political influence and strong funding ability has resulted in it
acquiring some of Indonesia’s most valuable mining assets. For Bumi, we estimate
an annual EBITDA of US$1-1.5bn in 2010-12, while estimating potential proceeds
of US$1bn from the potential listing of Bumi’s non-coal assets. We believe capital
constraints may limit governance risk in the short term.
… and equally strong investment and earnings risk
Bumi’s overhang risk has increased significantly following aggressive capital
raising over the past 12 months. Additional risks we see include over US$1bn in
back tax and penalties, 10% EPS dilution and the possible acquisition of Delta
Dunia in the medium term. Bumi’s management has no stated intention to carry
out such an acquisition, however, given the Bakrie Group’s reported partial
ownership of Delta Dunia, we outline the potential.
Valuation
Our Rp3,700 price target implies a 30% governance discount and a 10% potential
rights issue dilution, but excludes potential back-tax payments and penalties. Our
price target is based on a WACC of 16.4% and a 12-month implied PE of 11.8x.
Danareksa Telekomunikasi Indonesia (TLKM IJ, Rp7,950 BUY) Further growth in the distance
The data segment offers the greatest potential
Indonesia’s telecommunications industry is nearing maturity. Cellular subscribers have reached 197mn (based on data from BRTI), translating into a penetration rate of 85%. This number could be overstated as it is based on SIM card penetration. Nonetheless, we think that with this level of market penetration, the voice and SMS segment has reached maturity. Thus, natural growth should follow the real GDP growth. In contrast, the data segment is still promising as the penetration rate is still quite low. Factors affecting growth in this segment include: 1) purchasing power 2) equipment prices 3) software applications and 4) pricing of data services.
The price war to be resumed?
We notice that the telecom operators have been offering very low SMS prices, even after a gentleman’s agreement among the operators (witnessed by the BTRI regulatory body) to avoid a costly price war. The main operators are offering free SMS that can be used both “on-net” and “off-net”. The common structure is that for a certain usage of voice calls and/or SMS, users will be eligible for a certain amount of free SMS that can be sent to any operator. However, there are different types of segmentation based on geographical area, time of usage and activation periods (old vs. new customers) before a customer is eligible for free SMS. We believe it is more of a marketing gimmick than anything, given the complicated nature of the terms and conditions which apply.
Maintaining its dominant position
Telkom has announced its FY09 results. They are within expectations down to the operating level. However, we underestimated the interest expenses and tax payment, meaning the bottom line was lower than expected. Telkom has maintained its market leadership in almost all segments. Going forward, Telkom does not plan to reduce its capex as its competitors do. This is key to maintaining its dominant market position even with the market mature. The second wave of growth will come from data transmission. Telkom intends to spend about US$2.0bn on capex in FY10. This will give it the edge in the data market.
Maintain BUY despite earnings downgrade
We have revised our earnings estimate mainly to align our numbers with the FY09 results. The most significant change is a higher tax rate of 30% compared to 23% previously. Earlier we had expected Telkom to be eligible to enjoy tax incentives due to its high free float. However, this did not turn out to be the case and the effective tax rate was 29% in FY09. As a result, we lower our EPS estimates by 7.2% for FY10 and by 15.4% for FY11. Nonetheless, we remain positive on Telkom. It has strong cash flow which allows the company to continue to invest for future growth. Despite our lower Target Price of Rp9,650 we maintain our BUY recommendation on the stock.
Indonesia’s telecommunications industry is nearing maturity. Cellular subscribers have reached 197mn (based on data from BRTI), translating into a penetration rate of 85%. This number could be overstated as it is based on SIM card penetration. Nonetheless, we think that with this level of market penetration, the voice and SMS segment has reached maturity. Thus, natural growth should follow the real GDP growth. In contrast, the data segment is still promising as the penetration rate is still quite low. Factors affecting growth in this segment include: 1) purchasing power 2) equipment prices 3) software applications and 4) pricing of data services.
The price war to be resumed?
We notice that the telecom operators have been offering very low SMS prices, even after a gentleman’s agreement among the operators (witnessed by the BTRI regulatory body) to avoid a costly price war. The main operators are offering free SMS that can be used both “on-net” and “off-net”. The common structure is that for a certain usage of voice calls and/or SMS, users will be eligible for a certain amount of free SMS that can be sent to any operator. However, there are different types of segmentation based on geographical area, time of usage and activation periods (old vs. new customers) before a customer is eligible for free SMS. We believe it is more of a marketing gimmick than anything, given the complicated nature of the terms and conditions which apply.
Maintaining its dominant position
Telkom has announced its FY09 results. They are within expectations down to the operating level. However, we underestimated the interest expenses and tax payment, meaning the bottom line was lower than expected. Telkom has maintained its market leadership in almost all segments. Going forward, Telkom does not plan to reduce its capex as its competitors do. This is key to maintaining its dominant market position even with the market mature. The second wave of growth will come from data transmission. Telkom intends to spend about US$2.0bn on capex in FY10. This will give it the edge in the data market.
Maintain BUY despite earnings downgrade
We have revised our earnings estimate mainly to align our numbers with the FY09 results. The most significant change is a higher tax rate of 30% compared to 23% previously. Earlier we had expected Telkom to be eligible to enjoy tax incentives due to its high free float. However, this did not turn out to be the case and the effective tax rate was 29% in FY09. As a result, we lower our EPS estimates by 7.2% for FY10 and by 15.4% for FY11. Nonetheless, we remain positive on Telkom. It has strong cash flow which allows the company to continue to invest for future growth. Despite our lower Target Price of Rp9,650 we maintain our BUY recommendation on the stock.
DBS Bank Danamon: Hold; Rp5,500; TP Rp4,800; BDMN IJ Turnaround seen
At a Glance
• 1Q10 annualised net profit was inline with consensus but above ours. Higher non-interest income was the key deviation.
• Asset quality on a clear improving trend but loan and deposit growth has yet to pick up.
• Maintain Hold and Rp4,800 TP.
Comment on Result
1Q10 net profit was driven by mainly lower provisions. Provisions were lower with the absence of the non-recurring provisions set aside for the foreign exchange forward contracts related to the defaults on derivatives contracts last year. Further improvements were seen in the cost of credit for auto finance and micro lending inline with the recovery on the macro front. Separately, there was a reclassification of acquisition costs for new business which is now deducted from interest income (previously from fee income) in line with the new accounting standards. In addition, there was Rp4bn gain on marketable securities booked in 1Q10. NIM remained robust at 12.6% despite the reclassification of interest income as part of the implementation of PSAK 50 and 55. NPL ratio has started to show a declining trend to 4.0% from 4.5% the previous quarter, while loan loss coverage stood at 102%. Loan growth was decent at 2% q-o-q while deposits continued to slide by 4% q-o-q mainly from lower term deposits.
With the implementation of Basel II, BDMN saw a 2%ppt negative impact on its CAR for operational risk charge which left its CAR at 19.7%. Excluding the operational risk impact, CAR would have increased to 21.5%.
BDMN plans to pay out 50% of its FY09 net profit as dividend subject to shareholders approval in the upcoming general meeting.
Recommendation
While BDMN’s NIM is the highest among peers and the worst is over for asset quality and provisions, it would need to improve its deposit franchise to ensure ROEs are comparable with peers. Maintain Hold with RP4,800 TP based on the Gordon Growth Model with implied 2.3x FY10 P/BV.
• 1Q10 annualised net profit was inline with consensus but above ours. Higher non-interest income was the key deviation.
• Asset quality on a clear improving trend but loan and deposit growth has yet to pick up.
• Maintain Hold and Rp4,800 TP.
Comment on Result
1Q10 net profit was driven by mainly lower provisions. Provisions were lower with the absence of the non-recurring provisions set aside for the foreign exchange forward contracts related to the defaults on derivatives contracts last year. Further improvements were seen in the cost of credit for auto finance and micro lending inline with the recovery on the macro front. Separately, there was a reclassification of acquisition costs for new business which is now deducted from interest income (previously from fee income) in line with the new accounting standards. In addition, there was Rp4bn gain on marketable securities booked in 1Q10. NIM remained robust at 12.6% despite the reclassification of interest income as part of the implementation of PSAK 50 and 55. NPL ratio has started to show a declining trend to 4.0% from 4.5% the previous quarter, while loan loss coverage stood at 102%. Loan growth was decent at 2% q-o-q while deposits continued to slide by 4% q-o-q mainly from lower term deposits.
With the implementation of Basel II, BDMN saw a 2%ppt negative impact on its CAR for operational risk charge which left its CAR at 19.7%. Excluding the operational risk impact, CAR would have increased to 21.5%.
BDMN plans to pay out 50% of its FY09 net profit as dividend subject to shareholders approval in the upcoming general meeting.
Recommendation
While BDMN’s NIM is the highest among peers and the worst is over for asset quality and provisions, it would need to improve its deposit franchise to ensure ROEs are comparable with peers. Maintain Hold with RP4,800 TP based on the Gordon Growth Model with implied 2.3x FY10 P/BV.
DBS Telecommunication Regulator warns telcos for free off-net SMS
Bisnis Indonesia reported that Indonesian telco regulator BRTI has advised 5 telcos to scale back free off-net SMS promotions. The 5 telcos affected are XL (66% owned by Axiata), Indosat, Telkomsel (65% owned by Telkom and 35% owned by SingTel), Natrindo and Hutchinson. Since there is no interconnect charge for off-net SMS, terminating (receiving) telcos do not get paid for delivering SMS (to end users) through their networks. As such, sending massive amounts of SMS to a competitor’s subscribers could choke up its network without compensating the receiving telco. Hence, the regulator is concerned about deterioration in quality of services that phone subscribers would eventually endure, and deems such free off-net SMS as an unhealthy trend. Unless Telcos scale back their existing offerings, BRTI would ignore requests from telcos, including requests for new phone numbers. This would hamper telcos’ ability to add subscribers.
As XL and Indosat were among the early telcos who participated in the off-net SMS price war (in 4Q09), they grew 4Q09 revenues by 12% and 11% q-o-q respectively, while increasing subscriber base by 5.9m (+23% q-o-q) and 4.4m (+15%). In comparison, late comer Telkomsel (in 1Q10) added only 1.9m (+2.3%) and raised revenue by a minimal 2%. We think that the telcos would concede to BRTI’s sanction, and foresee XL and ISAT as potentially the bigger losers while Telkomsel would be the least affected among the Big 3 cellular operators.
With the potential end of the off-net SMS price war, we foresee normalization of the telecommunication industry. In our view, Telkomsel is the major “winner” in this case. We reiterate our BUY call on TLKM with a DCF-based price target of Rp10,000.
As XL and Indosat were among the early telcos who participated in the off-net SMS price war (in 4Q09), they grew 4Q09 revenues by 12% and 11% q-o-q respectively, while increasing subscriber base by 5.9m (+23% q-o-q) and 4.4m (+15%). In comparison, late comer Telkomsel (in 1Q10) added only 1.9m (+2.3%) and raised revenue by a minimal 2%. We think that the telcos would concede to BRTI’s sanction, and foresee XL and ISAT as potentially the bigger losers while Telkomsel would be the least affected among the Big 3 cellular operators.
With the potential end of the off-net SMS price war, we foresee normalization of the telecommunication industry. In our view, Telkomsel is the major “winner” in this case. We reiterate our BUY call on TLKM with a DCF-based price target of Rp10,000.
CLSA Bank Danamon (BDMN IJ) Earnings Recap, from Bret Ginesky
Bank Danamon reported after the market closed yesterday and they were ahead of our expectations and well ahead of consensus. Net profit of Rp701bn was 24% of our FY10 estimate of Rp2.97tn, whereas 1Q is seasonally the slowest quarter of the year. We will review our recommendation and earnings forecast in our follow up note, both are under review.
1Q10 earnings of Rp701bn were up 65% YoY fueled by a 12.6% NIM and YoY revenue expansion of 24%. The COF decreased to 5.4% as the longer maturity time deposits matured, we do not anticipate any more COF improvements in 2010.
Provisions decreased from 2H09 levels as we anticipated, and no extraordinary items were recorded.
Loan growth is starting to ramp up, the bank booked Rp1tn in loans in the month of march alone and the pipeline is robust. Overall QoQ loan growth was up 2%, a solid figure given seasonality impact.
From indications, it appears Henry Ho will be introduced as the new President Director on April 29. This is not confirmed.
ROA and ROE improved to 2.9% and 18% in the period while NPL's decreased to 4% from 4.5% in 4Q09.
Overall the results were solid and ahead of estimates. We expect slight upward revision to our forecast and we note that we were already 10% ahead of the street. We expect larger earnings revisions of street estimates.
1Q10 earnings of Rp701bn were up 65% YoY fueled by a 12.6% NIM and YoY revenue expansion of 24%. The COF decreased to 5.4% as the longer maturity time deposits matured, we do not anticipate any more COF improvements in 2010.
Provisions decreased from 2H09 levels as we anticipated, and no extraordinary items were recorded.
Loan growth is starting to ramp up, the bank booked Rp1tn in loans in the month of march alone and the pipeline is robust. Overall QoQ loan growth was up 2%, a solid figure given seasonality impact.
From indications, it appears Henry Ho will be introduced as the new President Director on April 29. This is not confirmed.
ROA and ROE improved to 2.9% and 18% in the period while NPL's decreased to 4% from 4.5% in 4Q09.
Overall the results were solid and ahead of estimates. We expect slight upward revision to our forecast and we note that we were already 10% ahead of the street. We expect larger earnings revisions of street estimates.
Danareksa Bank Danamon (BDMN IJ, Rp5,500 BUY) Strong profits, loan growth still lacking
Headlines:
l 1Q10 NPAT rose 78% YoY to Rp701bn thanks to a 28% YoY increase in net interest income coupled with stringent and effective cost management. On a QoQ basis, the strong earnings are attributable to the absence of an extraordinary item related to derivative transactions –reaching Rp218bn in 4Q09 alone. Without derivative related provisions, NPAT grew 81% QoQ. Loans growth remains weak, however, with loans growing a mere 1% QoQ.
l The NIM eased to 12.6% from 4Q09’s 13.4%, largely due to reclassification of acquisition costs from previously deducting fee income to now deducting interest income. NPLs declined slightly to 4.0% from 4Q09’s 4.5%, with the largest NPLs still contributed by the micro lending business. Provisioning coverage remains above 100%.
l CAR is strong at 21.5% prior to implementation of the Basel II Accord on operational risk. With operational risk taken into account, the CAR declines by 1.76% to 19.7%. Meanwhile, the ROAE improved to 18.0% from 1Q09’s 14.4%.
Comments:
l In short, no surprises. Worth noting, however, is reclassification related to implementation of IFRS. This has led to a decline in interest income and hence the asset yield. Indeed, the asset yield dropped by 130bps from 4Q09’s 18.3%, more than offsetting the 60bps decline in quarterly COF. NIM therefore eased, although it is still higher than 1Q09’s 10%. As for the remainder of the year, the bank’s guidance is for NIM of around 11-12%.
l Profitability is strong, with the bank posting its largest ever quarterly profits. Derivative related provisions are no longer an issue and the bank posted a huge increase in ROE despite last year’s rights issue. All in all, the bank is looking for 20% ROE by the end of the year.
l Non-recurring items aside, higher profits are also attributable to a lower cost of credit of Rp578bn in 1Q10 compared to 4Q09’s Rp762bn besides better cost management that has led to a decline in the cost-to-income ratio to 48% from 4Q09’s 51%. Note that operating income related to the mass-market business increased by 2% YoY even though the bank aggressively grew its mass market business – an effective and efficient strategy.
l Loans growth is still lacking, but optimism remains. This year, the management is looking for 20% loans growth. Among the segments, growth was only seen in the mass market segment with the other segments showing a QoQ decline in loans growth. However, the prospects for further lending remain bright - especially for SME and commercial loans, according to the management. The mass-market business grew 5% QoQ, backed by strong auto financing and micro lending. It now accounts for 56% of the bank’s total loans portfolio. The idea is for the bank to sustain its high asset yields but with loans of a longer duration.
l Funding could be a concern in the near term, we believe. Deposits have not grown as expected, despite a better deposits structure. Yes, low cost CASA now represent around 35% of the total deposits thanks to retirement of costly deposits amidst improving liquidity. However, this may not last, especially since the LDR has reached 94%. As such we expect the proportion of time deposits to increase in the next 1-2 quarters before easing in the last quarters of the year. Note that deposits fund 89% of BDMN’s total lending. The remainder comes from bonds, REPO and other LT borrowings.
l We keep our forecast intact for now. BDMN remains our top pick in the sector given: 1) its strong capital base with the CAR expected to reach 19% by YE10, 2) a robust NIM in excess of 13% and 3) potentially solid loans growth post the clean-up of its balancesheet. Our DDM derived TP is Rp6,850, implying 3.3x-3.0x FY10-11E PBV.
l 1Q10 NPAT rose 78% YoY to Rp701bn thanks to a 28% YoY increase in net interest income coupled with stringent and effective cost management. On a QoQ basis, the strong earnings are attributable to the absence of an extraordinary item related to derivative transactions –reaching Rp218bn in 4Q09 alone. Without derivative related provisions, NPAT grew 81% QoQ. Loans growth remains weak, however, with loans growing a mere 1% QoQ.
l The NIM eased to 12.6% from 4Q09’s 13.4%, largely due to reclassification of acquisition costs from previously deducting fee income to now deducting interest income. NPLs declined slightly to 4.0% from 4Q09’s 4.5%, with the largest NPLs still contributed by the micro lending business. Provisioning coverage remains above 100%.
l CAR is strong at 21.5% prior to implementation of the Basel II Accord on operational risk. With operational risk taken into account, the CAR declines by 1.76% to 19.7%. Meanwhile, the ROAE improved to 18.0% from 1Q09’s 14.4%.
Comments:
l In short, no surprises. Worth noting, however, is reclassification related to implementation of IFRS. This has led to a decline in interest income and hence the asset yield. Indeed, the asset yield dropped by 130bps from 4Q09’s 18.3%, more than offsetting the 60bps decline in quarterly COF. NIM therefore eased, although it is still higher than 1Q09’s 10%. As for the remainder of the year, the bank’s guidance is for NIM of around 11-12%.
l Profitability is strong, with the bank posting its largest ever quarterly profits. Derivative related provisions are no longer an issue and the bank posted a huge increase in ROE despite last year’s rights issue. All in all, the bank is looking for 20% ROE by the end of the year.
l Non-recurring items aside, higher profits are also attributable to a lower cost of credit of Rp578bn in 1Q10 compared to 4Q09’s Rp762bn besides better cost management that has led to a decline in the cost-to-income ratio to 48% from 4Q09’s 51%. Note that operating income related to the mass-market business increased by 2% YoY even though the bank aggressively grew its mass market business – an effective and efficient strategy.
l Loans growth is still lacking, but optimism remains. This year, the management is looking for 20% loans growth. Among the segments, growth was only seen in the mass market segment with the other segments showing a QoQ decline in loans growth. However, the prospects for further lending remain bright - especially for SME and commercial loans, according to the management. The mass-market business grew 5% QoQ, backed by strong auto financing and micro lending. It now accounts for 56% of the bank’s total loans portfolio. The idea is for the bank to sustain its high asset yields but with loans of a longer duration.
l Funding could be a concern in the near term, we believe. Deposits have not grown as expected, despite a better deposits structure. Yes, low cost CASA now represent around 35% of the total deposits thanks to retirement of costly deposits amidst improving liquidity. However, this may not last, especially since the LDR has reached 94%. As such we expect the proportion of time deposits to increase in the next 1-2 quarters before easing in the last quarters of the year. Note that deposits fund 89% of BDMN’s total lending. The remainder comes from bonds, REPO and other LT borrowings.
l We keep our forecast intact for now. BDMN remains our top pick in the sector given: 1) its strong capital base with the CAR expected to reach 19% by YE10, 2) a robust NIM in excess of 13% and 3) potentially solid loans growth post the clean-up of its balancesheet. Our DDM derived TP is Rp6,850, implying 3.3x-3.0x FY10-11E PBV.
Mandiri Sekuritas BDMN 1Q2010 results ahead of our expectation (BDMN, Rp5,500 , Neutral, TP: Rp4,900)
Bank Danamon reported 1Q2010 earnings of Rp701 bn, a significant 78% yoy increase, led the result to above our expectation and within consensus estimates.
The strong bottom line figure, mainly contributed by strong increase of Net-Interest Income, which jumped to Rp2.923 bn (+26.6% yoy), as higher portion of mass market loan that gives better margin for the bank, led the operating income to Rp3,088 bn (+24% yoy).
The bank’s gross loan increased by only 1.5% qoq in the 1Q2010, as this came as the result of the slow market trend especially in wholesale (-2% qoq) and retail segments (-4%qoq). However, this is offset by the mass market loan that reached to Rp35,765 bn(+5% qoq), driven by automotive and micro lending business. Mass market currently covers 56% of total loan, versus 44% on 1Q09. As a result of higher growth in mass market loans, NIM is figured at 14.0% (vs. 10.0% 1Q09), while on the other hand ROAA is posted at 2.9%, ROAE 16.4% and CAR 21.5% (vs. 1.5%, 14.6% and 16.9% 1Q09, respectively). The bank aims to have a double growth in loans (20% yoy) by the end of the year, while provisioning is maintained at low figure.
At present, BDMN is trading at 2010F P/BV of 2.6x and PER 16.6x. We still call Neutral on the counter.
The strong bottom line figure, mainly contributed by strong increase of Net-Interest Income, which jumped to Rp2.923 bn (+26.6% yoy), as higher portion of mass market loan that gives better margin for the bank, led the operating income to Rp3,088 bn (+24% yoy).
The bank’s gross loan increased by only 1.5% qoq in the 1Q2010, as this came as the result of the slow market trend especially in wholesale (-2% qoq) and retail segments (-4%qoq). However, this is offset by the mass market loan that reached to Rp35,765 bn(+5% qoq), driven by automotive and micro lending business. Mass market currently covers 56% of total loan, versus 44% on 1Q09. As a result of higher growth in mass market loans, NIM is figured at 14.0% (vs. 10.0% 1Q09), while on the other hand ROAA is posted at 2.9%, ROAE 16.4% and CAR 21.5% (vs. 1.5%, 14.6% and 16.9% 1Q09, respectively). The bank aims to have a double growth in loans (20% yoy) by the end of the year, while provisioning is maintained at low figure.
At present, BDMN is trading at 2010F P/BV of 2.6x and PER 16.6x. We still call Neutral on the counter.
Mandiri Sekuritas We visited GJTL yesterday, some key takeaways: (GJTL, Rp990, Not-rated)
Revenue FY09 reaches Rp7.9tn (-0.3%yoy), due to volume decreases in the export markets. Around 38% of sales contribute from export, 10% from OEM and the rest 52% for replacement.
Gross profit increase 60.5% to Rp1.8tn, as the company benefited from lower raw material inventory costs ordered in the first part of 2009, consequently, gross margin increase to 23.0% compare with 14.3% in 2008.
Net profit improve significantly to Rp905bn compared with net loss of Rp625bn in 2008, due to improving operational margin and gain from foreign exchange of Rp487bn compare with loss of Rp786bn in previous year.
For 2010, GJTL targets sales volume will increase by 15-20%, due to additional demand from Michelin and automotive sales growth. In FY10F, demand for tires from Michelin is estimated reaches 3mn units, compared with 1.9mn in 2009, and become 5mn units in 2011.
The company plans to expand its production capacity, especially for radial tire and motorcycle tire. Currently, radial tire has capacity of 35,800 pcs/day (utilization 61%) and become 45.000 pcs/day by 2011. Motorcycle tire capacity is 60,000 pcs/day (utilization 82%) and targeted become 90,000 in 2011 and reaches 105,000 in 2012.
We do not cover on this stock, and there is only one analyst on market covering the stock.
Gross profit increase 60.5% to Rp1.8tn, as the company benefited from lower raw material inventory costs ordered in the first part of 2009, consequently, gross margin increase to 23.0% compare with 14.3% in 2008.
Net profit improve significantly to Rp905bn compared with net loss of Rp625bn in 2008, due to improving operational margin and gain from foreign exchange of Rp487bn compare with loss of Rp786bn in previous year.
For 2010, GJTL targets sales volume will increase by 15-20%, due to additional demand from Michelin and automotive sales growth. In FY10F, demand for tires from Michelin is estimated reaches 3mn units, compared with 1.9mn in 2009, and become 5mn units in 2011.
The company plans to expand its production capacity, especially for radial tire and motorcycle tire. Currently, radial tire has capacity of 35,800 pcs/day (utilization 61%) and become 45.000 pcs/day by 2011. Motorcycle tire capacity is 60,000 pcs/day (utilization 82%) and targeted become 90,000 in 2011 and reaches 105,000 in 2012.
We do not cover on this stock, and there is only one analyst on market covering the stock.
Mandiri Sekuritas Aneka Tambang: mulls rights issue to fund projects (ANTM, Rp2,575, Neutral, TP: Rp2,350)
Antam’s President Directors was quoted as saying that it is taking a look at a rights issue as one of its options to funds its future projects. This year the company has allotted capex of Rp2.35tn from Rp594bn last year. The substantial spike is bought about by the US$400mn Tayan chemical grade alumina project, which Antam has a 65% stake (remainder is owned by Showa Denko and Marubeni of Japan). Other future project includes a US$300mn power plant in Pomalaa (20% stake), Feni Halmaherea worth US$1.2bn and smelter grade alumina project worth US$900mn in collaboration with Hangzou Jinjiang Group of China. We have yet to incorporate these future projects in our forecasts. Additionally, company mentioned that it has yet to approach government with regards to the rights issue as an option for fund raising. We remain neutral on the stock, currently trading at PER10F of 24.3x.
Danareksa Bumi Resources (BUMI IJ Rp2,400 BUY) Growing pains
TP reduced to Rp3,450 but still a BUY
We maintain our Buy recommendation on BUMI. The outlook looks bright and we forecast revenues to grow a brisk 25% in 2010 due to better selling prices and higher sales volumes as coal demand strengthens further. Better coal pricing – as seen in BUMI’s ability to secure a benchmark selling price of USD104/t for its coal sales to a Japanese customer – may raise the 10F ASP to USD68/t from our previous assumption of USD60/t since the price will serve as a benchmark for BUMI’s other deals. However, much of the positive is offset by higher expected production costs and a higher tax rate assumption of 45%. As a result, we arrive at a lower TP of Rp3,450 (Rp3,650 previously). Our new TP implies a PE 10F/11F of 20.6x/21.9x, or slightly less than the historical 2-year rolling PE of 22.7x.
Resolution of tax issues will take some time
BUMI believes that its tax issues can be resolved within the next three months. We doubt this, however. In general, the rule is that tax underpayments are penalized at 2% interest per month on the amount of tax underpaid, calculated from the time of the submission of the earlier Annual Tax Returns to the time of the payment of the additional tax expense. In this case, since BUMI recognizes it has underpaid USD600mn of tax in the fiscal periods of 2005-2007, we calculate that BUMI might have to pay a USD430mn interest penalty (i.e. an average of 72% interest). By comparison, BUMI has so far only recognized a USD42mn interest penalty for the late payment of the 2008 income tax. Hence, if the interest penalty were to be paid in 2010, it could push down BUMI’s 2010 net profits by 71% to USD95mn and its NAV to only Rp2,500/share. It is also important to realize that the Tax Directorate may have a differing opinion in regard to the amount of tax BUMI underpaid. And with the spotlight on the Tax Directorate because of the Gayus Tambunan “tax mafia” case, it may take longer for BUMI’s tax case to be resolved.
In need of external financing
USD575mn of BUMI’s debts will mature in 2010. We believe that BUMI will need to raise funds from external sources in addition to using its own money to repay these debts. After making a USD600mn payment to recognize its tax underpayment, BUMI’s cash at the end of 2009 was only USD60mn. Thus, in our estimates, BUMI will need at least USD1bn of external financing to both service its debts due in 2010 and to finance its capex (estimated at USD395mn). Besides getting loans other options may include: (1) selling assets such as Bumi Resources Mineral (BRM). In this regard, BUMI has already indicated that it may sell a 28-30% stake in BRM. Based on BRM’s asset value of USD1.9bn, a 28-30% stake could possibly sell for USD570mn; (2) issuing 10% non-preemptive shares - although this option is subject to the resolution of BUMI’s tax issue; (3) conduct a rights issue (subject to meeting certain financial ratios such as a debt/EBITDA ratio of not more than 4x – which may be possible for BUMI to achieve this year).
We maintain our Buy recommendation on BUMI. The outlook looks bright and we forecast revenues to grow a brisk 25% in 2010 due to better selling prices and higher sales volumes as coal demand strengthens further. Better coal pricing – as seen in BUMI’s ability to secure a benchmark selling price of USD104/t for its coal sales to a Japanese customer – may raise the 10F ASP to USD68/t from our previous assumption of USD60/t since the price will serve as a benchmark for BUMI’s other deals. However, much of the positive is offset by higher expected production costs and a higher tax rate assumption of 45%. As a result, we arrive at a lower TP of Rp3,450 (Rp3,650 previously). Our new TP implies a PE 10F/11F of 20.6x/21.9x, or slightly less than the historical 2-year rolling PE of 22.7x.
Resolution of tax issues will take some time
BUMI believes that its tax issues can be resolved within the next three months. We doubt this, however. In general, the rule is that tax underpayments are penalized at 2% interest per month on the amount of tax underpaid, calculated from the time of the submission of the earlier Annual Tax Returns to the time of the payment of the additional tax expense. In this case, since BUMI recognizes it has underpaid USD600mn of tax in the fiscal periods of 2005-2007, we calculate that BUMI might have to pay a USD430mn interest penalty (i.e. an average of 72% interest). By comparison, BUMI has so far only recognized a USD42mn interest penalty for the late payment of the 2008 income tax. Hence, if the interest penalty were to be paid in 2010, it could push down BUMI’s 2010 net profits by 71% to USD95mn and its NAV to only Rp2,500/share. It is also important to realize that the Tax Directorate may have a differing opinion in regard to the amount of tax BUMI underpaid. And with the spotlight on the Tax Directorate because of the Gayus Tambunan “tax mafia” case, it may take longer for BUMI’s tax case to be resolved.
In need of external financing
USD575mn of BUMI’s debts will mature in 2010. We believe that BUMI will need to raise funds from external sources in addition to using its own money to repay these debts. After making a USD600mn payment to recognize its tax underpayment, BUMI’s cash at the end of 2009 was only USD60mn. Thus, in our estimates, BUMI will need at least USD1bn of external financing to both service its debts due in 2010 and to finance its capex (estimated at USD395mn). Besides getting loans other options may include: (1) selling assets such as Bumi Resources Mineral (BRM). In this regard, BUMI has already indicated that it may sell a 28-30% stake in BRM. Based on BRM’s asset value of USD1.9bn, a 28-30% stake could possibly sell for USD570mn; (2) issuing 10% non-preemptive shares - although this option is subject to the resolution of BUMI’s tax issue; (3) conduct a rights issue (subject to meeting certain financial ratios such as a debt/EBITDA ratio of not more than 4x – which may be possible for BUMI to achieve this year).
Credit Suisse: Bank Danamon (BDMN.JK, Rp5250, O, TP Rp6700) - Strong earnings growth momentum started
n Our FY10E earnings are 19% ahead of consensus and BDMN's 1Q10A shows that the consensus is too conservative.
n BDMN’s 1Q10A normalised earnings grew by 65% YoY, 22% of our forecast and 26% of consensus’ expectations. Historically, BDMN’s 1Q contributes 21.3% of normalised earnings.
n We like BDMN as a momentum play as we believe that the bank’s share price will follow the strong FY10E earnings growth momentum. We expect even stronger YoY earnings growth in the coming quarter as 1Q09A captures only 6% of the Rp504 bn derivative loss written-off in FY09A.
n We maintain our OUTPERFORM rating on BDMN and a target price of Rp6700, based on Gordon’s Growth model, implying 3x 2010E P/B and 17.5x 2010E P/E. We believe that BDMN’s valuation will remain relatively undemanding as the counter is still trading in line with its average historical P/B.
n BDMN’s 1Q10A normalised earnings grew by 65% YoY, 22% of our forecast and 26% of consensus’ expectations. Historically, BDMN’s 1Q contributes 21.3% of normalised earnings.
n We like BDMN as a momentum play as we believe that the bank’s share price will follow the strong FY10E earnings growth momentum. We expect even stronger YoY earnings growth in the coming quarter as 1Q09A captures only 6% of the Rp504 bn derivative loss written-off in FY09A.
n We maintain our OUTPERFORM rating on BDMN and a target price of Rp6700, based on Gordon’s Growth model, implying 3x 2010E P/B and 17.5x 2010E P/E. We believe that BDMN’s valuation will remain relatively undemanding as the counter is still trading in line with its average historical P/B.
DMG Research Bank Danamon 1Q10 results – in line with expectations (BUY)
Bank Danamon: Rp5,500 BUY (TP: Rp6,500)
1Q10 results - in line with expectations
In-line results. Danamon’s 1Q10 net earnings rose threefold QoQ or 88% YoY largely on the back of lower provision charges (-51% QoQ; +8% YoY) and prudent cost management (-17% QoQ; -2% YoY). The net profit is in line with our forecast (~24% of our full-year estimates) and consensus’ (26%).
Mixed but decent starting trend. Total loans only grew 2% QoQ and YoY however its core mass market business posted an encouraging 5% QoQ and 16% YoY growth. We expect other segments to catch up in the following quarters as economic activities pick up. Deposit shrank 4% QoQ or 12% YoY as time deposits matured hence the slight increase in CASA to 35%. Net interest margins inched down QoQ but remained high at 11.9% (4Q09: 12.8%; 1Q09: 9.6%). Discipline expense management drove cost-to-income down 7% QoQ, 8% YoY to ~50%.
Positive turnaround in asset quality. Absolute NPLs fell Rp256bn QoQ after seeing five quarters of sequential increase, taking gross NPL ratio down on QoQ basis to 4.0% (4Q09: 4.4%). Loan loss coverage improved to 90%. Mass market continues to form the majority of NPL (43%) but despite the increase in proportion in loan book (56% of Danamon’s loans book versus 49% last year), quarterly credit costs assigned to this segment only rose by 2% YoY. Underlying credit costs have also normalised to ~2.4% (4Q09: 5%). CAR remains high at 16.8% at the bank level or 19.7% on consolidated basis post-implementation of the first phase of Basel II.
Maintain BUY. Danamon has rallied 21% YTD but we believe there is still upside given the positive earnings trajectory. We maintain our earnings forecast and reiterate our positive conviction on Danamon as continued realisation of recovery will outweigh the relatively bearish sentiment on the counter. Our two-stage DDM-derived TP of Rp6,500 implies 3.12x 2010f BVPS or 19.0x 2010f EPS. 18% upside from current level.
1Q10 results - in line with expectations
In-line results. Danamon’s 1Q10 net earnings rose threefold QoQ or 88% YoY largely on the back of lower provision charges (-51% QoQ; +8% YoY) and prudent cost management (-17% QoQ; -2% YoY). The net profit is in line with our forecast (~24% of our full-year estimates) and consensus’ (26%).
Mixed but decent starting trend. Total loans only grew 2% QoQ and YoY however its core mass market business posted an encouraging 5% QoQ and 16% YoY growth. We expect other segments to catch up in the following quarters as economic activities pick up. Deposit shrank 4% QoQ or 12% YoY as time deposits matured hence the slight increase in CASA to 35%. Net interest margins inched down QoQ but remained high at 11.9% (4Q09: 12.8%; 1Q09: 9.6%). Discipline expense management drove cost-to-income down 7% QoQ, 8% YoY to ~50%.
Positive turnaround in asset quality. Absolute NPLs fell Rp256bn QoQ after seeing five quarters of sequential increase, taking gross NPL ratio down on QoQ basis to 4.0% (4Q09: 4.4%). Loan loss coverage improved to 90%. Mass market continues to form the majority of NPL (43%) but despite the increase in proportion in loan book (56% of Danamon’s loans book versus 49% last year), quarterly credit costs assigned to this segment only rose by 2% YoY. Underlying credit costs have also normalised to ~2.4% (4Q09: 5%). CAR remains high at 16.8% at the bank level or 19.7% on consolidated basis post-implementation of the first phase of Basel II.
Maintain BUY. Danamon has rallied 21% YTD but we believe there is still upside given the positive earnings trajectory. We maintain our earnings forecast and reiterate our positive conviction on Danamon as continued realisation of recovery will outweigh the relatively bearish sentiment on the counter. Our two-stage DDM-derived TP of Rp6,500 implies 3.12x 2010f BVPS or 19.0x 2010f EPS. 18% upside from current level.
Credit Suisse: South-East Asia Coal Sector - Raising 2010 coal prices by 6%
Companies Mentioned (Price as of 19 Apr 10)
Banpu Public Co Ltd (BANP.BK, Bt590.00, OUTPERFORM [V], TP Bt722.00)
PT Indo Tambangraya Megah (ITMG.JK, Rp38200.00, NEUTRAL [V], TP Rp36800.00)
PT Adaro Energy Tbk (ADRO.JK, Rp2200.00, NEUTRAL, TP Rp2000.00)
PT Tambang Batubara Bukit Asam Tbk (PTBA.JK, Rp18150.00, UNDERPERFORM [V], TP Rp11000.00)
Xstrata Plc (XTA.L, 1225.50 p, OUTPERFORM [V], TP 1500.00 p, OVERWEIGHT)
● On the back of CS’s quarterly commodity price revision, we raise our seaborne thermal coal price assumptions by 6% to US$95/t and for QHD thermal in China by 2% to US$97/t. We keep our long-term price unchanged at US$80/t.
● We raise our 2010E earnings by 4.5-11.5% for SEA coal stocks to reflect higher prices in 2010. We are slightly above consensus, except for PTBA, where we are below the market.
● We raise our DCF-based target prices across the board to reflect our new price assumptions and change in discount rate for Adaro to be in line with others. We also provide sensitivities to DCF, assuming long-term coal prices between US$90/t and US$100/t.
● Our top pick in SEA coal remains Banpu, given its lagging performance due to political problems in Thailand. Its businesses are largely based in China and Indonesia. We raise our target price for Banpu to Bt722 (from Bt694).
Banpu Public Co Ltd (BANP.BK, Bt590.00, OUTPERFORM [V], TP Bt722.00)
PT Indo Tambangraya Megah (ITMG.JK, Rp38200.00, NEUTRAL [V], TP Rp36800.00)
PT Adaro Energy Tbk (ADRO.JK, Rp2200.00, NEUTRAL, TP Rp2000.00)
PT Tambang Batubara Bukit Asam Tbk (PTBA.JK, Rp18150.00, UNDERPERFORM [V], TP Rp11000.00)
Xstrata Plc (XTA.L, 1225.50 p, OUTPERFORM [V], TP 1500.00 p, OVERWEIGHT)
● On the back of CS’s quarterly commodity price revision, we raise our seaborne thermal coal price assumptions by 6% to US$95/t and for QHD thermal in China by 2% to US$97/t. We keep our long-term price unchanged at US$80/t.
● We raise our 2010E earnings by 4.5-11.5% for SEA coal stocks to reflect higher prices in 2010. We are slightly above consensus, except for PTBA, where we are below the market.
● We raise our DCF-based target prices across the board to reflect our new price assumptions and change in discount rate for Adaro to be in line with others. We also provide sensitivities to DCF, assuming long-term coal prices between US$90/t and US$100/t.
● Our top pick in SEA coal remains Banpu, given its lagging performance due to political problems in Thailand. Its businesses are largely based in China and Indonesia. We raise our target price for Banpu to Bt722 (from Bt694).
Rabu, 21 April 2010
The Energy Information Administration's (EIA) Short Term Energy Outlook (STEO) : Natural gas, coal use expected to increase
The Energy Information Administration's (EIA) Short Term Energy Outlook (STEO) for April predicts the use of natural gas and coal will continue to increase in 2010.
EIA expects natural gas consumption to increase almost 2 percent in 2010 and fall by less than 1 percent in 2011. The STEO also expects the production of natural gas to increase this year before declining in 2011.
The price of natural gas at to the Henry Hub averaged $4.29 per MMBtu in March. Spot price forecast averages are $4.44/ MMBtu in 2010 and $5.33/MMBtu in 2011.
The use of coal is expected to increase 4 percent in the electric power sector in 2010 and an additional 1.1 percent in 2011. Coal use in the electric power sector has been more than 1 billion short tons from 2003 through 2008.
Coal production fell 8 percent in 2009 in response to lower U.S. coal use, fewer exports and higher inventories. Production is expected to decline another 4 percent in 2010 before seeing a forecasted 5 percent rise in 2011. Meanwhile, the price of coal in the electric power sector is expected to fall to $2.14 per MMBtu in 2010.
In 2009, electricity generation from coal declined almost 11 percent. Generation from natural gas increased by 5 percent with the help of lower natural gas prices. EIA projects total natural gas generation in the electric power sector to increase in 2010. Because of a low snow pack in the Northwest, hydropower generation is also expected to be low in 2010, dropping under 8 percent for the entire United States.
Growth in the U.S. economy combined with an increased use of coal in the electric power sector is expected to contribute to an increase in carbon dioxide emissions of 2.1 percent this year and 1 percent in 2011. Even with the projected increases in 2011, emissions levels are still lower than annual levels between 1999 and 2008.
EIA expects natural gas consumption to increase almost 2 percent in 2010 and fall by less than 1 percent in 2011. The STEO also expects the production of natural gas to increase this year before declining in 2011.
The price of natural gas at to the Henry Hub averaged $4.29 per MMBtu in March. Spot price forecast averages are $4.44/ MMBtu in 2010 and $5.33/MMBtu in 2011.
The use of coal is expected to increase 4 percent in the electric power sector in 2010 and an additional 1.1 percent in 2011. Coal use in the electric power sector has been more than 1 billion short tons from 2003 through 2008.
Coal production fell 8 percent in 2009 in response to lower U.S. coal use, fewer exports and higher inventories. Production is expected to decline another 4 percent in 2010 before seeing a forecasted 5 percent rise in 2011. Meanwhile, the price of coal in the electric power sector is expected to fall to $2.14 per MMBtu in 2010.
In 2009, electricity generation from coal declined almost 11 percent. Generation from natural gas increased by 5 percent with the help of lower natural gas prices. EIA projects total natural gas generation in the electric power sector to increase in 2010. Because of a low snow pack in the Northwest, hydropower generation is also expected to be low in 2010, dropping under 8 percent for the entire United States.
Growth in the U.S. economy combined with an increased use of coal in the electric power sector is expected to contribute to an increase in carbon dioxide emissions of 2.1 percent this year and 1 percent in 2011. Even with the projected increases in 2011, emissions levels are still lower than annual levels between 1999 and 2008.
Bloomberg Coal India Defers Plan to Import 10 Million Tons of Fuel
(Bloomberg) -- Coal India Ltd., the nation’s monopoly producer of the fuel, has deferred its first-ever tender to import 10 million metric tons of coal, which was to be issued in April, an official said.
Coal India, which plans to sell shares for the first time, may not be able to call for the tender before June as it waits for power producers to confirm their needs, said a company official who declined to be identified, citing policy.
State-owned Coal India, based in Kolkata, West Bengal, also needs clarity on how coal will be transported from the Visakhapatnam and Gangavaram ports on the east coast, where a shortage of railway wagons has led to pile up of imported coal, the official said.
State-run generators in India, Asia’s third-biggest energy consumer, are expected to import more coal this year as the nation seeks to cut electricity shortages. India’s thermal coal imports surged last year to about 60 million tons from about 30 million tons in 2008, Macquarie Group said in March.
India plans to increase its coal imports to 81 million tons in the year ending March 2012, Sriprakash Jaiswal, coal minister, said on Nov. 23.
About 75 percent of India’s power output is coal-fired, Finance Minister Pranab Mukherjee said in his budget speech on Feb. 26. The South Asian nation plans to double electricity generation capacity by 2012, when the coal shortage may exceed 200 million tons.
Coal India, which plans to sell shares for the first time, may not be able to call for the tender before June as it waits for power producers to confirm their needs, said a company official who declined to be identified, citing policy.
State-owned Coal India, based in Kolkata, West Bengal, also needs clarity on how coal will be transported from the Visakhapatnam and Gangavaram ports on the east coast, where a shortage of railway wagons has led to pile up of imported coal, the official said.
State-run generators in India, Asia’s third-biggest energy consumer, are expected to import more coal this year as the nation seeks to cut electricity shortages. India’s thermal coal imports surged last year to about 60 million tons from about 30 million tons in 2008, Macquarie Group said in March.
India plans to increase its coal imports to 81 million tons in the year ending March 2012, Sriprakash Jaiswal, coal minister, said on Nov. 23.
About 75 percent of India’s power output is coal-fired, Finance Minister Pranab Mukherjee said in his budget speech on Feb. 26. The South Asian nation plans to double electricity generation capacity by 2012, when the coal shortage may exceed 200 million tons.
Bloomberg Gold Rises for First Time in Three Days on Inflation Concerns
April 20 (Bloomberg) -- Gold futures rose for the first time in three sessions on speculation that signs of inflation will revive demand for the metal as a store of value. Palladium extended a rally to the highest level since March 2008.India raised interest rates for the second time in a month to tame rising consumer prices, and the U.K.’s inflation rate in March jumped more than economists forecast. The metal dropped 2.1 percent in the previous two sessions as a U.S. government lawsuit against Goldman Sachs Group Inc. curbed demand for commodities.
“If inflation begins to creep back, that’s a good environment for gold,” said Martyn Whitehead, the head of metal sales at Barclays Capital in London.
Gold futures for June delivery advanced $3.40, or 0.3 percent, to $1,139.20 an ounce on the Comex in New York. Yesterday, the price touched $1,124.30, the lowest level since April 6.
India, the world’s largest buyer of gold for jewelry, has inflation of almost 15 percent. In the U.K., consumer prices last month climbed 3.4 percent from a year earlier, compared with a 3 percent increase in February.
In the U.S., the Federal Reserve has kept its benchmark interest rate at zero percent to 0.25 percent since December 2008 to revive the economy.
“Accommodative policy that remains in place will support gold prices due both to inflation fears and its attraction of safe-haven inflows due to competition with low-yielding credit instruments,” said Tom Pawlicki, an analyst at MF Global Holdings Inc. in Chicago.
Bloomberg Oil Trades Near $84 as Airspace Reopens, Crude Supplies Decline
April 21 (Bloomberg) -- Oil traded near $84 a barrel after rising as European airspace began to reopen, restoring some demand for jet fuel, and an industry report showed U.S. crude stockpiles fell.Oil climbed yesterday as Paris, Frankfurt and Amsterdam reopened airports shut by ash from a volcanic eruption in Iceland. Futures also advanced after crude oil inventories declined 741,000 barrels, according to the American Petroleum Institute. A U.S. government report today will probably say crude supplies dropped, a Bloomberg analyst survey shows.
“The flights resuming raises expectations that some of that jet fuel demand is going to come back,” said Tom Bentz, a broker at BNP Paribas Commodity Futures Inc. in New York.
Crude oil for June delivery was at $83.93 a barrel, up 8 cents, in electronic trading on the New York Mercantile Exchange at 8:54 a.m. in Sydney. Yesterday, the contract rose 72 cents, or 0.9 percent, to settle at $83.85. May futures, which rose $2 to $83.45, expired at the close of floor trading.
Oil also advanced as U.S. equities rose, snapping a two-day drop for the MSCI World Index, as improving corporate earnings boosted confidence in the global recovery. The Standard & Poor’s 500 Index gained 0.8 percent in New York.
Jet fuel consumption in Europe has fallen by about two- thirds after flights in the region were halted. Deutsche Lufthansa AG, Europe’s second-biggest airline, terminated some oil deliveries.
Crude Supplies
U.S. inventories of crude oil probably declined 750,000 barrels last week from 354 million barrels as imports slowed, according to the median estimate of 19 analysts in a Bloomberg News survey before the Energy Department report. Supplies increased for 10 consecutive weeks to reach a nine-month high of 356.2 million barrels in the period ended April 2. more...
Bloomberg Corn, Soybeans Rise on Speculation Chinese Demand Will Increase
April 20 (Bloomberg) -- Corn gained the most in almost two weeks and soybeans rose on speculation that China’s surging economy will bolster demand for grain and oilseeds from the U.S., the world’s biggest shipper.
U.S. exporters sold 232,000 metric tons of soybeans to China for delivery after Sept. 1, the Department of Agriculture said today. The Asian country sold all of the corn offered in an auction held in major producing regions, indicating tightening domestic supplies, analysts said. China’s economy in the first quarter expanded at the fastest pace in almost three years.
“People continue to speculate that China will buy more U.S. soybeans and begin to import corn or other feed grains from other countries later this year,” said Chad Henderson, a market analyst at Prime Agricultural Consultants in Brookfield, Wisconsin. “China’s economy still looks strong and they want to control food prices.”
Corn futures for July delivery rose 8 cents, or 2.2 percent, to $3.6525 a bushel on the Chicago Board of Trade, the biggest gain for a most-active contract since April 7. Yesterday, the price tumbled 4.5 percent as U.S. farmers accelerated planting last week at the fastest pace since 2004.
Soybean futures for July delivery climbed 7.5 cents, or 0.8 percent, to $9.94 a bushel on the CBOT. Yesterday, the price dropped 0.9 percent, snapping a six-session rally.
China Buying
China, the second-biggest consumer of corn and the largest buyer of soybeans, has been increasing purchases of dried distiller’s grain, a byproduct of ethanol production from corn that is used in animal feed, Henderson said. Corn futures on China’s Dalian Commodity Exchange have gained 16 percent in the past year on speculation that a drought last year may have cut output by more than the government’s official estimate. more...
U.S. exporters sold 232,000 metric tons of soybeans to China for delivery after Sept. 1, the Department of Agriculture said today. The Asian country sold all of the corn offered in an auction held in major producing regions, indicating tightening domestic supplies, analysts said. China’s economy in the first quarter expanded at the fastest pace in almost three years.
“People continue to speculate that China will buy more U.S. soybeans and begin to import corn or other feed grains from other countries later this year,” said Chad Henderson, a market analyst at Prime Agricultural Consultants in Brookfield, Wisconsin. “China’s economy still looks strong and they want to control food prices.”
Corn futures for July delivery rose 8 cents, or 2.2 percent, to $3.6525 a bushel on the Chicago Board of Trade, the biggest gain for a most-active contract since April 7. Yesterday, the price tumbled 4.5 percent as U.S. farmers accelerated planting last week at the fastest pace since 2004.
Soybean futures for July delivery climbed 7.5 cents, or 0.8 percent, to $9.94 a bushel on the CBOT. Yesterday, the price dropped 0.9 percent, snapping a six-session rally.
China Buying
China, the second-biggest consumer of corn and the largest buyer of soybeans, has been increasing purchases of dried distiller’s grain, a byproduct of ethanol production from corn that is used in animal feed, Henderson said. Corn futures on China’s Dalian Commodity Exchange have gained 16 percent in the past year on speculation that a drought last year may have cut output by more than the government’s official estimate. more...
Mandiri Sekuritas MAPI: We liked what we saw
We saw MAPI reducing its debt from Rp1.4bn in FY08 to Rp1,1bn by end-FY09. This was done while MAPI expanded from 349k sqm by end-FY08 to 382k sqm at end-FY09. MAPI also reduced its derivative position and paid down its tranche B syndicated forex loan. This was the catalyst that we have waited for, and we liked it. The next step would be an improvement in operating margin, which did not happen in FY09 (Op Margin : 7.5% vs 8.7% in FY08). However, asset turnover improved (1.2x vs 0.9x in FY08). If it! keeps im proving, we could expect a re-rating on MAPI’s valuation which currently is trading at 0.8x FY10F P/BV.
Lower debt. MAPI paid its tranche B (US$16.5mn and JPY2.7bn by end FY08), and replaced it with Rp364bn IDR bond. Despite argument that MAPI imports products in US$, we do not think the company needs significant US$ loan as most of the volatility can be passed through to its customers. MAPI still has Tranche A loan (US$9.2mn and JPY1.9bn by end FY09). As MAPI paid 12.25% p.a. interest on its IDR bonds, and annual return on its capital (Asset turnover x Operating margin) was just 9%, MAPI should continue to reduce its geari! ng. The o ther alternative is to raise return on its capital.
Continuing expansion, but we prefer to see more intensification. In FY09, MAPI expanded 9.4% from 348,949sqm by end FY08 to 381,753 sqm by end FY09. Department stores which comprised 65% of total space expanded 11.2% with Sogo and Debenhams as the engines. We doubt Debenhams’ success, and after the acquisition of Matahari to CVC (Debenham Plc majority shareholders), we are hoping MAPI could gradually retreat from the brand or find better! effectiv e use of Debenhams’ 24,286sqm areas. MAPI is planning to add another 50,000sqm in 2010, 50% for department stores, 25% each to specialty stores and F&B. Total capex to be spent in 2010 is Rp300-350bn which will be funded internally.
We upgrade our forecast and target price. We think MAPI deserves valuation of FY10F 1.0x P/BV or Rp880/share. Our previous target price was Rp 775/share. At our TP, MAPI is traded at 7.6x PER10F, a discount of 53% to current market PER10F of 16.3x. ROAE FY10F of 13.9% is less than Mandiri universe ROAE FY10F of 21% but not justified by the deep discount in PER and P/BV. With improvements in MAPI, we believe ‘reversion to the mean’ will result in MAPI’s valuation closing to the greater bourse.
Lower debt. MAPI paid its tranche B (US$16.5mn and JPY2.7bn by end FY08), and replaced it with Rp364bn IDR bond. Despite argument that MAPI imports products in US$, we do not think the company needs significant US$ loan as most of the volatility can be passed through to its customers. MAPI still has Tranche A loan (US$9.2mn and JPY1.9bn by end FY09). As MAPI paid 12.25% p.a. interest on its IDR bonds, and annual return on its capital (Asset turnover x Operating margin) was just 9%, MAPI should continue to reduce its geari! ng. The o ther alternative is to raise return on its capital.
Continuing expansion, but we prefer to see more intensification. In FY09, MAPI expanded 9.4% from 348,949sqm by end FY08 to 381,753 sqm by end FY09. Department stores which comprised 65% of total space expanded 11.2% with Sogo and Debenhams as the engines. We doubt Debenhams’ success, and after the acquisition of Matahari to CVC (Debenham Plc majority shareholders), we are hoping MAPI could gradually retreat from the brand or find better! effectiv e use of Debenhams’ 24,286sqm areas. MAPI is planning to add another 50,000sqm in 2010, 50% for department stores, 25% each to specialty stores and F&B. Total capex to be spent in 2010 is Rp300-350bn which will be funded internally.
We upgrade our forecast and target price. We think MAPI deserves valuation of FY10F 1.0x P/BV or Rp880/share. Our previous target price was Rp 775/share. At our TP, MAPI is traded at 7.6x PER10F, a discount of 53% to current market PER10F of 16.3x. ROAE FY10F of 13.9% is less than Mandiri universe ROAE FY10F of 21% but not justified by the deep discount in PER and P/BV. With improvements in MAPI, we believe ‘reversion to the mean’ will result in MAPI’s valuation closing to the greater bourse.
Deutsche Bank Resources Alert : China coal market: Renewed regulatory attention
Resources Alert : China coal market: Renewed regulatory attention Coal price rises WoW: Spot coal price rose by Rmb10/t WoW to Rmb690/t on 19 April 2010 (Qinhuangdao's Shanxi 5,500kcal blend). The price bounced Rmb15/t from the recent trough of Rmb675/t on the back of 1) renewed regulatory attention after the Wangjialing (WJL) mine accident and 2) the impact of recent drought on hydro output.
Renewed regulatory attention: After the WJL accident, the State Administration of Coal Mine Safety indicated it will conduct a nationwide safety review of 7,000 mines, covering 1.5bn tons of production. Today, the NDRC website released a notice on mine construction safety. The notice stipulates that the approval for mine construction resulting in 600ktpa of incremental output or a higher regulatory level of production (ranging from 30-600ktpa incremental output) will need to be copied to the NDRC and the National Energy Administration. The notice also specifies safety requirements and milestones to measure the progress of construction. The impact on production has not been notable, but the renewed regulatory attention increases the supply risk, which is a key thesis in our multi-year tight supply-demand view.
Drought: As we discussed in our China Coal Watch dated 13 April, supply-demand can tighten in case the drought persists. There has not been significant improvement since, and the recent moves in spot prices and the drop in IPPs' coal inventory also suggests that the situation has not improved.
Renewed regulatory attention: After the WJL accident, the State Administration of Coal Mine Safety indicated it will conduct a nationwide safety review of 7,000 mines, covering 1.5bn tons of production. Today, the NDRC website released a notice on mine construction safety. The notice stipulates that the approval for mine construction resulting in 600ktpa of incremental output or a higher regulatory level of production (ranging from 30-600ktpa incremental output) will need to be copied to the NDRC and the National Energy Administration. The notice also specifies safety requirements and milestones to measure the progress of construction. The impact on production has not been notable, but the renewed regulatory attention increases the supply risk, which is a key thesis in our multi-year tight supply-demand view.
Drought: As we discussed in our China Coal Watch dated 13 April, supply-demand can tighten in case the drought persists. There has not been significant improvement since, and the recent moves in spot prices and the drop in IPPs' coal inventory also suggests that the situation has not improved.
Mandiri Sekuritas Weekly Debt Research The yields continued sliding
The rupiah bond yields continued to fall. The average yield of the government’s rupiah bonds continued to fall to 8.61% on April. 15, to the lowest points in nearly twenty months following foreign fund flows according to the Mandiri Sekuritas Government Bond Index (MSGBI). But the yield slightly increased at the end of the week to 8.63% due to some profit taking by Banks. Foreign investors have added more than Rp3tn to Rp140.1tn during the week, according to the latest data from the Finance Ministry as of 15-Apr. Foreign fund inflows also drove the rupiah higher against the greenback. Year-to-date, the rupiah remains the best performer in the region as it has appreciated by over 4.2%. The yield of the 2-year FR18 closed 13bp lower to 7.11% whilst the 10-year ! FR31 drop ped 28bps to 8.70%. According to our Mandiri Sekuritas Government Bond Index (MSGBI), the total return investing in the government bonds reached almost 1.3% as of the end of the Apr 12-16 week following the rally (8.48% ytd).
The rally happened in solid trading volume mostly coming from long end tenors. Total value of the transaction in the secondary bond market was solid reaching over Rp7tn on average per day. The most actively traded security was the longest tenor series such as the 20-year FR52 and the 18-year FR47, both accounting almost 38% of the total transaction for the week. The FR52 traded at 104.75, up by 1.6percentage point yielding
9.95% from a week earlier. Meanwhile, the FR47 was also up by 1.1percentage point to 101.28 yielding 9.84%. Our fair yields for those bonds were 9.82% and 9.68%, thus we think both are still attractive. There’s also SPN 20100415 bonds mature on 15-April amounting Rp3.95tn.
Sukuk auction results. After absorbing only Rp620bn in the previous auctions, the government managed to raise Rp925bn in the latest sukuk sale. Demand was good, with total bids reaching Rp2.4tn, or higher than in the previous sukuk auctions, i.e. Rp1.7tn. The Government only issued IFR03, IFR06 and IFR08 series with average yields awarded being 8.31%, 10.29% and 9.125%- or in line with our projection i.e. 8.3% - 8.4%, 10.19%-10.29% and 9.1%-9.2% respectively. Investors still bid higher yields for the IFR05, and IFR07 ranging 8.75%-10% and 9.91%- 11% respectively. Meanwhile, our forecast for those bonds were 8.68% (ranging from 8.63%-8.73%) and 9.83% (9.78%-9.88%) respectively. We view positively the government’s continued sukuk auction as more issuance might lessen liquidity risk in the sukuk instrument! s. We bel ieve that liquidity risk is the most influencing factors why investors bid higher yields for sukuk than conventional government bonds.
Government has issued more than 41% of its target. Thus the government has issued Rp73.1tn (incl. global bonds issuances i.e. US$2bn) or more than 41% of the new total target to finance budget deficit, which is projected to be 2.1% of GDP this year. In 2Q, the government's target issuance is Rp29.4tn. Assuming that the government's global bond issuance will raise another US$2bn (samurai bonds & global sukuk) and retail bonds targeting 10tn, thus the government only needs to issue Rp8.3tn on average per month. The government proposed to increase net bond issuances slightly by Rp1.8tn to Rp106.3 as it proposed a wider budget deficit to 2.1% of GDP from 1.6% initially.
Outlook: is the rupiah sovereign yield curve will be more flattened? Rupiah government bond yield curve has flattened due to significant bond prices rally especially in long-end tenor in the last one month. The question is will the rupiah bond yield curve will be more flattening? We don’t think so, with four arguments:
1. Rupiah bond yield curve slope is more flat compared with regional peers. The slope between the 10-year local currency sovereign bond yield against the reference rate for Indonesia is 2.2ppt, meanwhile, for Thailand, P! hilippine s and Vietnam the slope is 2.3ppt, 3.96ppt and 4.56ppt respectively.
2. With the 10-year currently trading at 8.7% and long term average 10-year yield spread over inflation 4.3ppt, ceteris paribus, the market priced the bonds valuation at 4.4%. We think it’s overshooting, our rough calculation using historical inflation pattern - excluding increasing administered price such as electricity and fuel price, the inflation might come at 4.7% by 2010. But, with increasing electricity tariff plan on July! -10, we b elieve that the inflation might be higher than 4.7%. Our economist expect that inflation will be 5.5% YE10 revised down from 6.3% previous forecast.
3. The 10-year yield spread between the government’s rupiah bond and US Treasury notes currently is only 4.95ppt vs. 5.1ppt last week or long-term average of 7.3ppt. Although the minimum yield spread was 3.9ppt on 12-July-07, but our model suggests that the fair yield spread is still high i.e. 6.4ppt, assuming GDP growth 5.5% and rating of BB+ or CDS spread of 155ppt. The rupiah has also strengthened significantly to Rp9,008 agai! nst the U S dollar, close to our economist’s forecast of Rp8,900 for YE10, that’s we believe might reduce foreign fund inflows.
4. We believe that the government should do debt switching more frequently as the bond mature in 2011-2013 is still high. It has issued Rp18tn SPN series -T-bill year to date.
However, in real term (nominal yield minus core inflation), the rupiah sovereign yields are still attractive compared with regional peers i.e. 5.6% compared with 0.3%, 3.89% and 3.8% for Thailand, the Philippines and Vietnam respectively. The 10-year rupiah yield also still trading higher than foreign investor costs - Libor rate+CDS premium+rupiah curency swap (8.7% vs. 7.5%) as CDS has dropped significantly to only 154. But in terms of risk reward wise, we still maintain our strategy from barbell to bullet shortening duration (see: our strategy reports on 15-Mar for the detail).
Bond Auction Tuesday. The government will reopen the 1-year SPN20110407, 5-year FR27, 15-year FR40 and 18-year FR47 with total target of Rp5tn Tuesday. Currently, the FR27, FR40 and FR47 are trading at yields of 8.12%, 9.42% and 9.79% respectively. Our yield curve indicates that the fair yields are 8%, 9.44% and 9.68% respectively. We will update our yield auction prediction on Tuesday morning following the information on bonds’ closing prices Monday. If the demand is high, it will be positive for the bond market.
The rally happened in solid trading volume mostly coming from long end tenors. Total value of the transaction in the secondary bond market was solid reaching over Rp7tn on average per day. The most actively traded security was the longest tenor series such as the 20-year FR52 and the 18-year FR47, both accounting almost 38% of the total transaction for the week. The FR52 traded at 104.75, up by 1.6percentage point yielding
9.95% from a week earlier. Meanwhile, the FR47 was also up by 1.1percentage point to 101.28 yielding 9.84%. Our fair yields for those bonds were 9.82% and 9.68%, thus we think both are still attractive. There’s also SPN 20100415 bonds mature on 15-April amounting Rp3.95tn.
Sukuk auction results. After absorbing only Rp620bn in the previous auctions, the government managed to raise Rp925bn in the latest sukuk sale. Demand was good, with total bids reaching Rp2.4tn, or higher than in the previous sukuk auctions, i.e. Rp1.7tn. The Government only issued IFR03, IFR06 and IFR08 series with average yields awarded being 8.31%, 10.29% and 9.125%- or in line with our projection i.e. 8.3% - 8.4%, 10.19%-10.29% and 9.1%-9.2% respectively. Investors still bid higher yields for the IFR05, and IFR07 ranging 8.75%-10% and 9.91%- 11% respectively. Meanwhile, our forecast for those bonds were 8.68% (ranging from 8.63%-8.73%) and 9.83% (9.78%-9.88%) respectively. We view positively the government’s continued sukuk auction as more issuance might lessen liquidity risk in the sukuk instrument! s. We bel ieve that liquidity risk is the most influencing factors why investors bid higher yields for sukuk than conventional government bonds.
Government has issued more than 41% of its target. Thus the government has issued Rp73.1tn (incl. global bonds issuances i.e. US$2bn) or more than 41% of the new total target to finance budget deficit, which is projected to be 2.1% of GDP this year. In 2Q, the government's target issuance is Rp29.4tn. Assuming that the government's global bond issuance will raise another US$2bn (samurai bonds & global sukuk) and retail bonds targeting 10tn, thus the government only needs to issue Rp8.3tn on average per month. The government proposed to increase net bond issuances slightly by Rp1.8tn to Rp106.3 as it proposed a wider budget deficit to 2.1% of GDP from 1.6% initially.
Outlook: is the rupiah sovereign yield curve will be more flattened? Rupiah government bond yield curve has flattened due to significant bond prices rally especially in long-end tenor in the last one month. The question is will the rupiah bond yield curve will be more flattening? We don’t think so, with four arguments:
1. Rupiah bond yield curve slope is more flat compared with regional peers. The slope between the 10-year local currency sovereign bond yield against the reference rate for Indonesia is 2.2ppt, meanwhile, for Thailand, P! hilippine s and Vietnam the slope is 2.3ppt, 3.96ppt and 4.56ppt respectively.
2. With the 10-year currently trading at 8.7% and long term average 10-year yield spread over inflation 4.3ppt, ceteris paribus, the market priced the bonds valuation at 4.4%. We think it’s overshooting, our rough calculation using historical inflation pattern - excluding increasing administered price such as electricity and fuel price, the inflation might come at 4.7% by 2010. But, with increasing electricity tariff plan on July! -10, we b elieve that the inflation might be higher than 4.7%. Our economist expect that inflation will be 5.5% YE10 revised down from 6.3% previous forecast.
3. The 10-year yield spread between the government’s rupiah bond and US Treasury notes currently is only 4.95ppt vs. 5.1ppt last week or long-term average of 7.3ppt. Although the minimum yield spread was 3.9ppt on 12-July-07, but our model suggests that the fair yield spread is still high i.e. 6.4ppt, assuming GDP growth 5.5% and rating of BB+ or CDS spread of 155ppt. The rupiah has also strengthened significantly to Rp9,008 agai! nst the U S dollar, close to our economist’s forecast of Rp8,900 for YE10, that’s we believe might reduce foreign fund inflows.
4. We believe that the government should do debt switching more frequently as the bond mature in 2011-2013 is still high. It has issued Rp18tn SPN series -T-bill year to date.
However, in real term (nominal yield minus core inflation), the rupiah sovereign yields are still attractive compared with regional peers i.e. 5.6% compared with 0.3%, 3.89% and 3.8% for Thailand, the Philippines and Vietnam respectively. The 10-year rupiah yield also still trading higher than foreign investor costs - Libor rate+CDS premium+rupiah curency swap (8.7% vs. 7.5%) as CDS has dropped significantly to only 154. But in terms of risk reward wise, we still maintain our strategy from barbell to bullet shortening duration (see: our strategy reports on 15-Mar for the detail).
Bond Auction Tuesday. The government will reopen the 1-year SPN20110407, 5-year FR27, 15-year FR40 and 18-year FR47 with total target of Rp5tn Tuesday. Currently, the FR27, FR40 and FR47 are trading at yields of 8.12%, 9.42% and 9.79% respectively. Our yield curve indicates that the fair yields are 8%, 9.44% and 9.68% respectively. We will update our yield auction prediction on Tuesday morning following the information on bonds’ closing prices Monday. If the demand is high, it will be positive for the bond market.
Credit Suisse: GLOBAL: Banks post Goldman Sachs, Oil to range $70-90/bbl, April Net Foreign Buy
· Andrew Garthwaite (Daily attached): The real risk to the economic recovery is that regulators over-regulate. Admittedly, trying to gauge the possible financial impact is guesswork – yet if we assume the cost of civil settlements and regulatory fines are twice as bad as those that followed the dot.com bust, then the cost to investment banks would equate to about 5% of their equity and third of their 2010 estimated net income. We note that the P/E relative of investment banks is close to its long-run average (a 33% discount to the market compared to a long-run average discount of 28%).
· Prashant Gokhale (Daily Attached): So far we have been beating the drum about spare capacity in oil markets. What supports oil prices is a US demand recovery, which depends on consumer, and which is showing signs of picking up. What caps upside is pretty much everything else – slowing China momentum, peaking global IP growth, slack refining, spare capacity and beyond a point of affordability. We think oil will be range bound – US$70-90/bbl. Once US demand recovery is priced in, oil should trade at the lower end of the range, as spare capacity gets absorbed. We expect this until the demand needle moves either way – upside surprise or greater evidence of gas substitution in emerging markets and/or greater evidence of supply growth.
· Sakthi Siva (Daily Attached): As of 16 April, net foreign buying in Emerging Asia (excluding China and Malaysia, for which we have no data) has reached US$7.6 bn (right most column in Figure 1). While the USD amount was a record high in March, with net foreign buying of US$14.6 bn, we note that as a percentage of market capitalisation, it was 0.4% while the previous high was 0.7% in late 2003. On a rolling 12-month basis, cumulative net foreign buying in Emerging Asia is now 2.2% of market capitalisation versus a high of 4% in 2004. On a cumulative rolling 12-month basis, the Philippines and Indonesia look the least “crowded” at 0.5% and 0.6% of market cap, respectively.
Financial intermediation remains key to support global economic recovery, albeit I personally think Consumers in US/UK/Japan remain highly leveraged. Our mid-term Oil range forecast of US$70-90/bbl is in line with CS forecast of $83/bbl for 2010F and $80/bbl 2011F onwards. Despite strong Net Foreign inflow in Asia, Indonesia remains the least “crowded” and we continue to recommend Overweight Indonesia with JCI Target 3,300pts end-2010F (implying 17.5x 2010F PER) and Top-5 stock picks (INDF, UNTR, SMGR, BMRI, BBRI)!
· Prashant Gokhale (Daily Attached): So far we have been beating the drum about spare capacity in oil markets. What supports oil prices is a US demand recovery, which depends on consumer, and which is showing signs of picking up. What caps upside is pretty much everything else – slowing China momentum, peaking global IP growth, slack refining, spare capacity and beyond a point of affordability. We think oil will be range bound – US$70-90/bbl. Once US demand recovery is priced in, oil should trade at the lower end of the range, as spare capacity gets absorbed. We expect this until the demand needle moves either way – upside surprise or greater evidence of gas substitution in emerging markets and/or greater evidence of supply growth.
· Sakthi Siva (Daily Attached): As of 16 April, net foreign buying in Emerging Asia (excluding China and Malaysia, for which we have no data) has reached US$7.6 bn (right most column in Figure 1). While the USD amount was a record high in March, with net foreign buying of US$14.6 bn, we note that as a percentage of market capitalisation, it was 0.4% while the previous high was 0.7% in late 2003. On a rolling 12-month basis, cumulative net foreign buying in Emerging Asia is now 2.2% of market capitalisation versus a high of 4% in 2004. On a cumulative rolling 12-month basis, the Philippines and Indonesia look the least “crowded” at 0.5% and 0.6% of market cap, respectively.
Financial intermediation remains key to support global economic recovery, albeit I personally think Consumers in US/UK/Japan remain highly leveraged. Our mid-term Oil range forecast of US$70-90/bbl is in line with CS forecast of $83/bbl for 2010F and $80/bbl 2011F onwards. Despite strong Net Foreign inflow in Asia, Indonesia remains the least “crowded” and we continue to recommend Overweight Indonesia with JCI Target 3,300pts end-2010F (implying 17.5x 2010F PER) and Top-5 stock picks (INDF, UNTR, SMGR, BMRI, BBRI)!
Credit Suisse: BANK PANIN (PNBN): To divest 14% in ANZ Panin - paving for PNBN sale to ANZ?
· Bisnis Indonesia today: Bank Panin will divest 14% stake in ANZ Panin Bank to ANZ (currently own 85) for circa US$44m. We believe the proceed should be positive as one-off gain to eps and bvps.
· Teddy Oetomo (previous daily attached): We recently increased our target price for PNBN from Rp900 to Rp1,100 on lower risk free rate assumptions (from 10% to 9%). Our target price for PNBN implies 2.2x 2010E P/B and 19.9x 2010E P/E. Despite stronger outlook, we maintain our NEUTRAL rating on PNBN, as we believe that valuations have caught up. However, we also believe that PNBN is the only sizeable bank in the Indonesian banking sector that may be an acquisition target.
This is paving the potential divestment of PNBN to ANZ. Currently ANZ owns 40% of PNBN and the Panin Group owns at least 51% (42% through PNLF and at least 9% under the family). @Rp1,170- PNBN is trading on premium 21.2x-14.4x 2010F-2011F PER and 2.4x-2.0x 2010F-2011F PBR and slight premium to our Target Price Rp1,100. I think if PNBN divestment is done at 3x 2011F PBR that will imply 50% speculative Upside.
· Teddy Oetomo (previous daily attached): We recently increased our target price for PNBN from Rp900 to Rp1,100 on lower risk free rate assumptions (from 10% to 9%). Our target price for PNBN implies 2.2x 2010E P/B and 19.9x 2010E P/E. Despite stronger outlook, we maintain our NEUTRAL rating on PNBN, as we believe that valuations have caught up. However, we also believe that PNBN is the only sizeable bank in the Indonesian banking sector that may be an acquisition target.
This is paving the potential divestment of PNBN to ANZ. Currently ANZ owns 40% of PNBN and the Panin Group owns at least 51% (42% through PNLF and at least 9% under the family). @Rp1,170- PNBN is trading on premium 21.2x-14.4x 2010F-2011F PER and 2.4x-2.0x 2010F-2011F PBR and slight premium to our Target Price Rp1,100. I think if PNBN divestment is done at 3x 2011F PBR that will imply 50% speculative Upside.
Credit Suisse: MOBILE 8 (FREN): Disappointing FY09 + 0.4% revenue share = Terminate coverage
· Colin McCallum: Mobile 8 reported a 6.4% QoQ and 19.9% YoY decline in telecom service revenue in 4Q09. Mobile 8’s subscriber base has proven vulnerable to competition from cellular players after the 2008 collapse in GSM price points, and also from the aggressive on-net promotions offered by TelkomFlexi (Not listed), the CDMA fixed-wireless competitor, over the last 12-15 months. After seeking protection from creditors in 2008 (having failed to meet interest and principal repayments), Mobile 8‘s capex and marketing programmes have been all but suspended, further contributing to the loss of momentum.
· Relative to our full year projections, Mobile 8’s FY09 revenue therefore came in a full 52.0% below our forecasts. We estimate that Mobile 8’s revenue market share has declined to only 0.4%, from a peak of 1.4% in 2Q08. This in our mind represents an example of de facto consolidation versus the prospect of 10 players with nationwide spectrum attempting nationwide rollout, and bodes well for relatively stable tariffs from the top three (GSM) players, who together comprise 90.1% of market revenue.
· Sales and marketing costs declined sharply QoQ and YoY, however, the lack of top line growth has meant that the revenue generated is still not enough to cover operations, maintenance and general/administrative costs. Thus Mobile 8 remained EBITDA negative in 4Q09. Forecasts and DCF-based target price of Rp2/share maintained, though risks to our current projections look to be to the downside. We note that our target price is below the minimum Jakarta Composite Index (JCI) quote price of Rp50/share, and so we acknowledge that in practice the listed shares may not actually be able to reach this level. However, we clearly expect that the shares will continue to languish at the index minimum tick-price.
We continue to Prefer the Top-3 Incumbents from this 10-players consolidation. 4Q09 Revenue market share showed ISAT (18.1% vs 17.0% 3Q09), EXCL (16.9% vs 16.2% 3Q09) and Telkomsel (55.2% vs 56.8%). Colin’s sector Top-Buy is ISAT (@Rp5,900- 21.1x-16.6x 2010F-2011F PER & implying 20% upside to DCF Rp7,100) due to Management turnaround, while Neutral on EXCL (@Rp3,425- 20.9x-15x 2010F-2011F PER & implying 12% upside to DCF Rp3,850) and also Neutral on TLKM (@Rp7,900- 12.4x-11.2x 2010F-2011F PER with 5.4% 2010F Dividend Yield & implying 16% upside to DCF Rp9,200) despite Value emerges.
· Relative to our full year projections, Mobile 8’s FY09 revenue therefore came in a full 52.0% below our forecasts. We estimate that Mobile 8’s revenue market share has declined to only 0.4%, from a peak of 1.4% in 2Q08. This in our mind represents an example of de facto consolidation versus the prospect of 10 players with nationwide spectrum attempting nationwide rollout, and bodes well for relatively stable tariffs from the top three (GSM) players, who together comprise 90.1% of market revenue.
· Sales and marketing costs declined sharply QoQ and YoY, however, the lack of top line growth has meant that the revenue generated is still not enough to cover operations, maintenance and general/administrative costs. Thus Mobile 8 remained EBITDA negative in 4Q09. Forecasts and DCF-based target price of Rp2/share maintained, though risks to our current projections look to be to the downside. We note that our target price is below the minimum Jakarta Composite Index (JCI) quote price of Rp50/share, and so we acknowledge that in practice the listed shares may not actually be able to reach this level. However, we clearly expect that the shares will continue to languish at the index minimum tick-price.
We continue to Prefer the Top-3 Incumbents from this 10-players consolidation. 4Q09 Revenue market share showed ISAT (18.1% vs 17.0% 3Q09), EXCL (16.9% vs 16.2% 3Q09) and Telkomsel (55.2% vs 56.8%). Colin’s sector Top-Buy is ISAT (@Rp5,900- 21.1x-16.6x 2010F-2011F PER & implying 20% upside to DCF Rp7,100) due to Management turnaround, while Neutral on EXCL (@Rp3,425- 20.9x-15x 2010F-2011F PER & implying 12% upside to DCF Rp3,850) and also Neutral on TLKM (@Rp7,900- 12.4x-11.2x 2010F-2011F PER with 5.4% 2010F Dividend Yield & implying 16% upside to DCF Rp9,200) despite Value emerges.
CIMB Sector Update – Infrastructure – PPP: Picture Perfect Projects??
Maintain Overweight on toll-road, cement and coal sectors, which are main beneficiaries of infrastructure development in the country. Although we do not expect an immediate roll out of major infrastructure projects this year, which is also the consensus view, we have strong conviction that it should start to roll out in FY11.
Catalyst would come from the amendment of a land acquisition law by year-end that could help break through the bottleneck in infrastructure progress. Improvements in
land acquisition and/or construction in FY11 could fuel excitement in the infrastructure-related sectors and could spur multi-year growth. While it looks perfect
on paper, we will only find out by next year whether it will truly be picture perfect. Key beneficiaries would be Jasa Marga, Indocement, Indika and Adaro.
Catalyst would come from the amendment of a land acquisition law by year-end that could help break through the bottleneck in infrastructure progress. Improvements in
land acquisition and/or construction in FY11 could fuel excitement in the infrastructure-related sectors and could spur multi-year growth. While it looks perfect
on paper, we will only find out by next year whether it will truly be picture perfect. Key beneficiaries would be Jasa Marga, Indocement, Indika and Adaro.
CIMB Astra Agro Lestari TP 30200
Astra Agro Lestari said 1Q10 palm oil sales volume fell 1.2% from a year earlier to
223,308 metric tons. Astra Agro’s average palm oil selling price rose 19% in 1Q10 to
Rp6,554 a kilogram, the Indonesian palm oil producer said yesterday. (Bloomberg)
Sales formed 20% of our full year est, in line with past seasonality. Given Mar
production mending from low in Feb, there's upside potential assuming weather does
not turn worse from present. On ASP, it's slightly ahead of our est by some 1.3%.
Maintain OP and TP of Rp30200, based on 18x CY11 earnings.
223,308 metric tons. Astra Agro’s average palm oil selling price rose 19% in 1Q10 to
Rp6,554 a kilogram, the Indonesian palm oil producer said yesterday. (Bloomberg)
Sales formed 20% of our full year est, in line with past seasonality. Given Mar
production mending from low in Feb, there's upside potential assuming weather does
not turn worse from present. On ASP, it's slightly ahead of our est by some 1.3%.
Maintain OP and TP of Rp30200, based on 18x CY11 earnings.
Mandiri Sekuritas PNBN to divest 14% share-ownership in ANZ Panin. (PNBN, Rp1,170, Neutral, TP: Rp780)
PT Bank Pan Indonesia (PNBN) will divest its 14% share-ownership in PT Bank ANZ Panin to Australia and New Zealand Banking Group Limited (ANZ). The divestment, however, is still subject to approval from the Central Bank of Indonesia or Reserve Bank or Australia. Following the divestment, the ownership of ANZ in the bank will increase to 99% from previously 85%. ANZ is preparing US$44 mn for the acquisition.
Based on data from Bank Indonesia, as per Nov 09, ANZ Panin’s earnings declined by 84.27% yoy to Rp28.54bn, compared to Rp181.5 bn in 2008. However, the bank has booked a slight increase in credit expansion by 1.9% yoy to Rp8.82 tn, while third party funds reported at Rp11.56tn, increased from Rp7.58tn in the previous year. We still maintain Neutral recommendation on PNBN with P/BV 2.5x and P/E10 23.4x.
Based on data from Bank Indonesia, as per Nov 09, ANZ Panin’s earnings declined by 84.27% yoy to Rp28.54bn, compared to Rp181.5 bn in 2008. However, the bank has booked a slight increase in credit expansion by 1.9% yoy to Rp8.82 tn, while third party funds reported at Rp11.56tn, increased from Rp7.58tn in the previous year. We still maintain Neutral recommendation on PNBN with P/BV 2.5x and P/E10 23.4x.
Mandiri Sekuritas Adhi Karya: FY10F revenue to grow 11.8% yoy (ADHI, Rp580, Buy, TP Rp800)
In its latest presentation material which was released yesterday evening for the next public expose (22 April 2010), the company reveals its new contract target for 2010 of some Rp9tn (+36.8% yoy). Around 65% of its portfolio will be government related project. They expect revenue and net profit to grow by 11.8% yoy (to Rp8.6tn) and 12.1% yoy (to Rp185bn), respectively. Note that this target has factored in another provision for Al Habtoor projects as much as Rp146bn, yet still above our and consensus
estimates. Their earnings expectation reflects PER10F of 5.6x, slightly lower compare with our projections of 6.3x.
estimates. Their earnings expectation reflects PER10F of 5.6x, slightly lower compare with our projections of 6.3x.
Citigroup Astra Agro Lestari - Buy: March 2010 Key Operating Statistics
Maintain Buy with Rp29,210 target price — Although strong soybean harvest prospects in South America may have a dampening effect on CPO prices nearterm, we don’t expect a substantial deterioration in CPO prices. Firm oil prices and healthy demand from key consuming countries should provide support and keep CPO prices range-bound within the US$720-760 level. We maintain our Buy rating on the stock with a Rp29,210 target price.
FFB harvest in line with historical trends — March FFB harvest rose 24.9% MoM to 300.5k tons. This generally reflects historical trends over the past five years where FFB harvest typically would decline first in Feb (-1.3% to - 16.5%) before picking up again in March (+6.9% to +17.2%). On a YTD basis, FFB harvest is down 5.1% YoY to 841.9k tons on the back of a) replanting efforts for some of its older trees in Sumatra and b) previous fertilizer usage cuts amongst plasma farmers.
CPO production: Higher OER is key —Despite 8.6% lower FFB processed to 919.6k tons, OER is higher at 23.79% (vs. 3M09’s 22.47%). As such, overall CPO production was only 3.2% YoY lower to 218.8k tons and accounts for 19.6% of our FY10E CPO production of 1.1m tons. 1H is typically weaker than 2H.
Higher CPO prices compensate lower sales volume — AALI’s YTD March CPO ASP rose 19.1% YoY to Rp6,544/kg and should more than compensate the marginal 1.2% decline in CPO sales volume to 223.3k tons (+0.4% MoM to 66.3k tons)
FFB harvest in line with historical trends — March FFB harvest rose 24.9% MoM to 300.5k tons. This generally reflects historical trends over the past five years where FFB harvest typically would decline first in Feb (-1.3% to - 16.5%) before picking up again in March (+6.9% to +17.2%). On a YTD basis, FFB harvest is down 5.1% YoY to 841.9k tons on the back of a) replanting efforts for some of its older trees in Sumatra and b) previous fertilizer usage cuts amongst plasma farmers.
CPO production: Higher OER is key —Despite 8.6% lower FFB processed to 919.6k tons, OER is higher at 23.79% (vs. 3M09’s 22.47%). As such, overall CPO production was only 3.2% YoY lower to 218.8k tons and accounts for 19.6% of our FY10E CPO production of 1.1m tons. 1H is typically weaker than 2H.
Higher CPO prices compensate lower sales volume — AALI’s YTD March CPO ASP rose 19.1% YoY to Rp6,544/kg and should more than compensate the marginal 1.2% decline in CPO sales volume to 223.3k tons (+0.4% MoM to 66.3k tons)
NISP Adhi Karya sets target of Rp8.6tn for 2010F revenue (ADHI, Rp580)
• Adhi Karya aims to post Rp8.6tn of revenue for 2010F period, 11.5% YoY higher compared to Rp7.7tn last year. The company believes this revenue will be generated from Adhi’s existing and new projects booked this year. Adhi elaborates that 63% of the revenue will be generated from infrastructure projects with the balance from building projects.
• Inline with higher revenue, the company foresees its net income will reach Rp185bn, or 11.8% YoY higher from Rp165.5bn in 2009. To support the target, Adhi plans to spend Rp82.5bn of capex this year.
• Meanwhile, as of February 2010, the company managed to secure Rp600bn of new projects.
• The company’s target is above the market expectation of Rp7.8tn on revenue and Rp140.8bn on net income.
• The company is trading at 2010F consensus PER of 7.4x and EV/EBITDA of 3.8x.
• Inline with higher revenue, the company foresees its net income will reach Rp185bn, or 11.8% YoY higher from Rp165.5bn in 2009. To support the target, Adhi plans to spend Rp82.5bn of capex this year.
• Meanwhile, as of February 2010, the company managed to secure Rp600bn of new projects.
• The company’s target is above the market expectation of Rp7.8tn on revenue and Rp140.8bn on net income.
• The company is trading at 2010F consensus PER of 7.4x and EV/EBITDA of 3.8x.
NISP Bakrie Sumatera’s acquisition of Domba Mas raises questions (UNSP, Rp490)
• Bank Mandiri has questioned the follow up to Bakrie Sumatera’s acquisition of Domba Mas’ assets. Previously Bakrie Sumatera has vowed to complete the process between February-March 2010, however the process has stalled.
• Bank Mandiri as one of Domba Mas’ main creditors. It was reported that the acquisition has been agreed by the company’s creditors, Mandiri, Credit Suisse, and P&G, as Bakrie Sumatera had submitted a proposal to restructure Domba Mas’ principal debt payment. Domba Mas currently owes a total of US$269mn to its three creditors.
• Bakrie Sumatera itself said there were no problems with the acquisition and still ongoing with financing from proceeds of UNSP’s recent rights issue. However until now, UNSP management has not disclosed any explanation to shareholders on the utilization of the funds.
• UNSP is trading at 2010F consensus PER of 8.7x and EV/EBITDA of 9.8x.
• Bank Mandiri as one of Domba Mas’ main creditors. It was reported that the acquisition has been agreed by the company’s creditors, Mandiri, Credit Suisse, and P&G, as Bakrie Sumatera had submitted a proposal to restructure Domba Mas’ principal debt payment. Domba Mas currently owes a total of US$269mn to its three creditors.
• Bakrie Sumatera itself said there were no problems with the acquisition and still ongoing with financing from proceeds of UNSP’s recent rights issue. However until now, UNSP management has not disclosed any explanation to shareholders on the utilization of the funds.
• UNSP is trading at 2010F consensus PER of 8.7x and EV/EBITDA of 9.8x.
NISP Astra Agro Lestari posts higher selling price (AALI, Rp23,200)
• AAL managed to book a higher sales volume of Rp6,544/kg in 1Q10, 19.1% YoY higher from Rp5,494/kg in 1Q09 period. This higher sales price managed to balance the impact from lower sales volume of 223,308 tons (-1.18% YoY) and helped the company post 17.74% YoY increase in its revenue to Rp1.5tn in 1Q10 as compared to Rp1.2tn a year earlier.
• The company also managed to post higher sales price on kernel where AAL recorded a selling price of Rp3,083/kg or increased by 46.2% YoY.
• Despite the company has not released its full financial statement, these figures indicates that AALI’s revenue in 1Q10 may come below the market expectation as the consensus foresees a Rp2.0tn of revenue for 1Q10F.
• AALI is trading at 2010F consensus PER of 14.9x and EV/EBITDA of 9.7x.
• The company also managed to post higher sales price on kernel where AAL recorded a selling price of Rp3,083/kg or increased by 46.2% YoY.
• Despite the company has not released its full financial statement, these figures indicates that AALI’s revenue in 1Q10 may come below the market expectation as the consensus foresees a Rp2.0tn of revenue for 1Q10F.
• AALI is trading at 2010F consensus PER of 14.9x and EV/EBITDA of 9.7x.