NISP Jasa Marga bonds oversubscribes by 3.3x times (JSMR, Rp3,100)

· Jasa Marga has received Rp6.40tn of demand for its upcoming Rp1.50tn bonds during the book building period. However the company states that it will not increase the size of the issue.

· Potential buyers mostly are institutional investors such as bank, insurance companies, and asset management which are the biggest buyer. The bonds have received an AA rating from Pefindo.

· JSMR is trading at 2011F PER of 16.3x and EV/EBITDA of 10.8x.

NISP Jasa Marga enters 3 new businesses (JSMR, Rp3,100)

· Jasa Marga is preparing a min. of Rp2.70tn for 2011 capex, up by 12.5% YoY. This is due to the company’s plan to expand outside of its toll road business and enter the property, fiber optic, and engineering business. Rp400.0bn is set aside for this endeavor.
· In the property and fiber optic lines, Jasa Marga plans to work together with Pembangunan Perumahan (PTPP, Rp950) and Telkom (TLKM, Rp9,250). The company plans to set up a new subsidiary in charge for its non-core business. Management expects that these lines will contribute an accumulated total Rp200.0bn to revenue until 2013.
· For its Rp1.00tn upcoming bonds, the company has set coupon rate between 8.75%-9.95%. The bonds have a tenor of 10 years with a quarterly payment. In addition the company will issue Rp500.0bn worth of zero coupon bonds with a tenor of 3 years and yield indication around 8.5-9.7% per year.
· JSMR is trading at 2011F PER of 16.3x and EV/EBITDA of 10.8x.

NISP Astra Agro Lestari divests ownership in subsidiary (AALI, Rp20,100)

· Astra Agro Lestari sold 100% of its ownership in Surya Panen Subur, AAL’s subsidiary in Aceh. This transaction is worth US$27.33mn and AAL cited that SPS’ area of 3,000 ha could not meet AAL’s economic production scale. AAL aquired SPS in 2007 with acquisition value of Rp161.0bn.
· AAL added that the conditional sales and purchase agreement has been signed last month with the buyer, PT Agro Maju Raya and PT Hamparan Sawit Nusantara.
· The impact on AAL’s production is less significant assuming the area yields around 13,000 tons of CPO compared to AAL’s production target of 1mn tons.
· Currently, AALI is trading at 2011F PER of 16.1x and EV/EBITDA of 8.7x.

Mansek Jasa Marga and Citra Marga eyeing operator role in Cilincing-Rorotan (JSMR,Rp2,650,Buy,TP:Rp3,200)(CMNP,Rp930,Neutral,TP:Rp1,100)

Cilincing-Rorotan toll road (3.4Km),or Tanjung Priok toll section E1,has been completed and currently will take an eligibility test conducted by Toll Road Authority (BPJT).If the toll past the test,BPJT will open a tender offer to be the operator on the toll road,so it can commercially operate by end of this year.Tanjung Priok toll road has total length 12Km with total investment needed amounting Rp4.2tn,and the development divided into 4 sections.Jasa Marga and Citra Marga has expressed they interest to participate in the tender.

We have a Buy recommendation on JSMR,trades at PER10F-11F of 13.5x and 11.9x,respectively.

We have a Neutral recommendation on CMNP,trades at PER10F-11F of 3.7x and 3.9x,respectively of 16.5x).

OSK Semen Gresik (SMGR IJ – Buy, target price Rp10,100), Bottom in-line

Sales came in at Rp6.7t in 1H10 (+5.2% QoQ or -1.6% YoY), slightly below our expectation because of lower sales volume. However, better-than-expected operating efficiency and lower effective tax rate have caused bottom-line profit to be in line with our expectation, coming in at Rp1.7t in 1H10 (+16.9% QoQ or 15.0% YoY), reaching 48.8% of our full-year estimate. We maintain our forecast and BUY recommendation with target price of Rp10,100 at which the counter will be traded at 16.8-13.5x FY10-11 PE. SMGR is attractively trading at 15.1-12.2x FY10-11 PE, much lower than its peers, Indocement (INTP) and Holcim Indonesia (SMCB) which are trading at 17.3-15.6x FY10-11 PE and 17.6-14.0x FY10-11 PE, respectively. Given SMGR’s strong cash position, strong profitability, and strong position in domestic market, it is unjustified to trading at discount to its peers.

Mandiri Sekuritas Bumi Serpong Damai: BSDE reported net profit of Rp182.5bn, in line with ours (BSDE, Rp810, Buy, TP: Rp1,100)

BSDE 1H10 net profit increased by 45.9% yoy to Rp182.5bn, in line with ours and consensus estimates. Company reported improved net margin to 30.1%, compared to 23.2% same period last year, as a result of better GPM 56.4% (vs. 47.9%) following lower COGS from Rp277.0 bn to Rp264.6bn. Based on yesterday’s price, BSDE trades at 48% discount to our NAV10 and PE10 23.4x.

Mandiri Sekuritas Citra Marga: net income 1H10 above our estimates and consensus (CMNP, Rp890, Neutral, TP: Rp1,100)

􀂄 The company posted 1H10 revenues of Rp365.7bn (+25.7%yoy), and net income of Rp399.5bn compared with Rp31.0bn in 1H09. The company booked unrealized gain from debt revaluation amounting Rp236.1bn. These results are above our estimates and consensus.
􀂄 We have a Neutral recommendation on CMNP, due to lack of new project, it trades at PER10F of 3.7x.

Mandiri Sekuritas Ciputra Development: Key Takeaway from Company Visit (CTRA, Rp800, BUY, TP: 1,100)

We visited CTRA last Wednesday, and found some highlights as follow:

􀂄 CTRA is enjoying the current low mortgage rate trend that carries out good result of their YTD marketing sales, which has tapped 37.2% of this year’s sales target. Mortgage scheme covers up until 99% of its middle-low end segment residential sales, including in-house financing.

􀂄 Pressure from forex loss on their 1Q2010 result has been anticipated by reducing its foreign exchange cash reserves to 30% of its total cash from previously 50%, where expected to eliminate burden of its book throughout the year.

􀂄 However, the company will not be expecting any upside coming from its Ciputra World projects, both Jakarta and Surabaya, as low confidence on the approval of the new foreign ownership government regulation at least until end of this year.

􀂄 The company plans to do revaluation to its landbank assets with Richard Ellis at end of this month, to expect increase of its current discount to NAV to more than 50%. At the moment, the company trades at 44% discount to our NAV10. We still call Buy on the stock.

Mandiri Sekuritas Bumi Serpong: 1Q10 net earnings inline with ours and consensus (BSDE, Rp840, Buy, Rp1,100)

􀂄 BSDE reported net income of Rp82bn (+55%yoy) on the back of realized revenues of Rp311bn (+48%yoy) in 1Q10. 1Q10 net earnings came within ours and consensus estimates. With a revenue mix largely catered to residential properties which accounted for 70% of realized revenues, the company saw an improvement in both gross and operating margins.

􀂄 Additionally, BSDE attained 1Q10 marketing sales of Rp545bn, which represents about 27% of FY10F marketing sales target of Rp2tn. As a principal beneficiary of low interest rates and strong demand from the middle income segment, we think our FY10F earnings growth of 22%yoy can be reasonably achieved. This year the company plans to build some 2,000 housing units divided into clusters with 150-200 housing units. We maintain buy as the stock currently trades at a 46% discount to NAV10F.

Mandiri Sekuritas Ciputra Development: CTRA 1Q2010 results below expectation (CTRA, Rp890, Buy, TP: Rp1,100)

􀂄 CTRA reported declined in earnings for its 1Q2010 results to Rp33.8 bn (-37.2% yoy), which below our expectation (- 42.6%) and consensus estimates (-37.5%). The low in bottom line figure, however, resulted from booking of company’s marketing sales mainly in late 2008, which due to the global downturn, the company was only able to meet on average 40% of its sales target.

􀂄 In addition, the income statement also gained pressure from forex loss of Rp17.4 bn, which the amount nurtured from company’s deposit in foreign exchange, which depreciated due to the strengthening Rupiah.

􀂄 However, we believe the low figure will not be occurring for the rest of the year, as sales pick up in 2009 will reflect supports in earnings throughout the year. In the mean time, the company keeps showing improvement in sales this year,
which as of Mar10, the marketing sales has booked 26.6% of total target this year, thanks to low mortgage rate.

􀂄 CTRA is currently trading at 38% discount to NAV10. We still maintain Buy on the stock.

NISP Bank Mandiri to continue growth momentum in micro loans (BMRI, Rp5,100)

• Bank Mandiri aims to post a minimum of 20% YoY growth on its micro loans disbursement to Rp6.4tn compared to Rp5.4tn in 2009. The bank saw that the segment managed to post superb 40.0% YoY growth last year and intends to keep the growth momentum this year.

• Separately, Bank Mandiri stated that its TPF will increase by 15% YoY to Rp344.7tn from Rp299.7tn last year.

• Meanwhile, for 1Q10, Bank Mandiri shared its total loans figure that reaches Rp199.9tn or 13.0% YoY higher from Rp176.9tn in 1Q09. The figure is also slightly higher than 4Q09 figure of Rp198.5tn despite the repayment season that occurs in every first quarter of each year.

• The bank plans to release its 1Q10 financial publication later this week.

• BMRI is trading at 2010F consensus PER of 13.0x and PBV of 2.7x.

Mandiri Sekuritas Jasa Marga: strong FY09 results, above our estimate and consensus: (JSMR, Rp1,780, Buy, TP: Rp2,100)

􀂄 JSMR reported revenue FY09 of Rp3.7tn (+10%yoy) due to higher traffic and an increasing tariff in Sep-09. This figure is slightly above our expectation and consensus. Traffic volume in 2009 grew by 4.1%yoy reached 916.0mn of vehicles.

􀂄 The company booked extraordinary income of Rp124bn, boosted net margin to 27% compared with 21% in previous year, meanwhile operating margin and pre-tax margin relatively constant. Consequently, net income was Rp993bn (+40%yoy), above our estimate and consensus.

􀂄 Therefore, with traffic growth targeted 7.0%yoy, JSMR targets revenue FY10F may reach Rp4.3tn (+16.2%).

􀂄 Currently, JSMR is trading at P/E10F of 9.0x and P/B10F of 1.5x. Maintain Buy.

Mandiri Sekuritas Bayan: Red Signal (BYAN, Rp5,650, Sell, TP: Rp2,100)

We have downgraded our WACC estimate drastically from 16.4% to 9.6%, taking into account the reductions in (1) risk-free rate assumption from 11.0% to 6.2% (2) Market risk premium from 7.2% to 5% and (3) Beta estimate of 1.4x to 1.1x.

The benefit of lower WACC has however been offset by our lower exchange rate assumption. Besides this, we also fine-tune our assumptions for production and fuel rate. After all changes, our DCFderived target price fell from Rp2,400/share to Rp2,100/share.

Market has seen a rally in last 2 months with JCI up by about 50%ytd, but BYAN’s share price outperformed the market, rising by 511%ytd. As our DCF-derived target price is 62.8% lower than the current price, we affirm our Sell call on BYAN.

Long term catalyst for the stock is the BYAN plans to upgrade majority of its coal from 4,217 kcal coal to 6,263 kcal. However, in the absence of complete information we have not considered the impact of upgradation in our DCF derived target price.

Mandiri Sekuritas Excelcomindo: FY08 earnings drop, below our and consensus estimates. (EXCL, Rp1,000,Neutral, TP:1,100)

Though revenues grew by 51%yoy, EXCL’s highest so far and way above expected industry average, EXCL reported a net loss of Rp15bn in FY08. This is because of 1) Higher operating cost on the back of higher depreciation cost , and network cost as company expands significantly in FY08. 2) Interest expenses (+62%yoy) as debt almost doubled (From Rp9.6tn to Rp18.7tn). 3) Around 50% of debt is US$ leading to huge
forex loss in FY08 of Rp332bn.

Our estimates are way above primarily because of our under estimation of opex. 9M08 operating margin was 22.5% but it declined to 14.5% for the full year as 4Q08 performance was below expectation. 4Q08 reported an operating loss of Rp300bn. Operating margin is a loss of 10.1% in 4Q08. We have a net profit of Rp999bn and consensus of Rp1017bn.

Going forward, we expect less room to grow; Sim-card penetration has reached 70% because of so much competition. We don’t expect any operator to benefit from this competition as the subscriber base gets divided amongst all big players more balanced way, leading to loss-loss situation for all.

We maintain our neutral call. Currently trades at PER09F of 7.9x.