NISP Bumi Resources declares objection on stock exchange’s stern warning (BUMI, Rp2,150, Buy)

· Bumi Resources shared its objection on BEI’s stern warning on the company’s 2009 financial report. The Bourse put its warning due to the mismatch on Bumi’s COGS with Darma Henwa’s (DEWA, Rp76) revenue.
· The issue popped out in July 2010 where differences are seen between Bumi’s COGS and Darma Henwa’s of US$455.6mn, which did not match with Darma Henwa’s revenue of US$156.6mn from Bumi.
· Bumi defended its case, stating it had explained in early 2H10 that the mismatch was due to a problem in spread sheet, hence, resulting wrong accounting record. Bumi added that the US$314.35mn of the COGS recorded on Darma Henwa is an allocation for Thiess, Bumi’s other coal contractor. Thus, COGS allocation for Darma Henwa was only US$141.27mn. Bumi had also revised its 2009’s COGS and there were no changes in the company’s total COGS amount.
· In the flip side, BEI received the objection and said it will collaborate with Bapepam on this matter.
· We view this is a non event for the company’s fundamental where Bumi had explained the difference back in July 2010.
· Currently, BUMI is trading at 2011F PER of 13.7x and EV/EBITDA of 5.8x, Buy.

Mansek Indocement:To build new plant (INTP,Rp16,150,Neutral,TP:Rp16,600)

Aside from the new 1.5mn tons cement mill which will start operating this month,they will build another cement mill in Citeureup with a total investment cost of around US$300-450mn.This is sooner than their previous plan,given unexpectedly strong demand.They previously mentioned that new plant will have a capacity of 2-3mn tons/year.

As for this year,they budgeted around US$75mn for FY10 capex,which some US$18.7mn has been spent in 1H10.Other than that,the company will also build its own power plant with a capacity of 2X50MW.On valuation basis,the company is currently trading at PER10F of 17.7x (vs average peers of 16.5x).

Mandiri Sekuritas Unilever: 1H10 results are inline with ours and consensus estimate (UNVR, Rp17,150, Buy, TP: Rp13,000)

􀂄 UNVR posted 1H10 net income of Rp1.8tn (+18%yoy, -18%qoq), which is inline with ours and consensus estimate.
􀂄 Net profit qoq decline was mainly due to increase in selling expense by 16%qoq and 28%yoy.
􀂄 We have Buy recommendation on UNVR which currently is trading at PER10-11F of 38.7-32.9x.

Mandiri Sekuritas Holcim Indonesia: The government to reevaluate its limestone mining agreement (SMCB, Rp2,150, Neutral, TP: Rp2,500)

Minister of Forestry together with Minister of Law and Human Rights plans to reevaluate Holcim’s limestone mining license in Nusakambangan and Jeruklegi, Cilacap. The government has formed a team to evaluate and analyze the contract. On the other hand, Holcim believes that they have abided the regulation for their exploitation activities. Furthermore, they just utilize the land of only 112 ha from 1,000 ha concession license. Should the government revoke the license, it will have a negative impact to Holcim Indonesia. Currently, SMCB is trading at EV/ton of US$234, which still below than average peers of US$271.

Mandiri Sekuritas Perusahaan Gas : Lowering the volume target? (PGAS, Rp4,150, Neutral, TP:Rp4,650)

In a hearing with House of Representatives yesterday, PGAS, CEO Hendi Prio, is mentioning about a target which is the same as last year, 700-800 MMSCFD. The target is below current guidance of 800-900 MMSCFD. PGAS sold 792 MMSCFD in 2009. Our current model is based on 810 MMSCFD of volume distributed. At Rp4,150, PGAS is trading at 19.2x and 18.1x PER10F and PER11F respectively according to our estimates. We are waiting for company confirmation on the new guidance, however we unlikely change
our forecasts as our current forecasts already 17.4% and 24.5% lower than consensus estimates for FY10 and FY11 earnings.

BASML ASII Would Accumulate Upon Correction. Buy PxT idr14,150

ASII guides for downbeat car & 2-wheeler volume for 2009; This is not surprising due to weak commodity px and lack of affordable financing. We like ASII as one of the best name for investor who are willing to sit/wait in a bit of pain for LT gain. Tom Price expects thermal coal contracts settled in next few months at lower range at US$60-70/t. Pls join our conf call w/ Dave Rosenberg this Friday at 9am HK/Singp. He brings forward the trough and now expects Q309 to be the first quarter of positive growth in the US.

ASII: 2009 guidance
Management guides for 2-wheeler sales to decline by 20-25% to 4.8mn units (10% above MLf) and car sales to drop 30-35% to 415k (6% above MLf) in 2009. The weakness is due to: (1) lack of affordable financing as lending rates for 2-wheelers have risen by 2ppt YoY to 35% and car by 7ppt to 25%, (2) higher down-payment, and (3) collapse in commodity px which adversely affected demand from outer Java. Good news is delinquency rates at end-08 was lower than expected at 2.7% for 2-wheeler (overdue >60 days) vs 5% in 2005-06, while NPL for car was only 1.7%. ASII expects moderate deterioration in NPL in 2009, thanks to resilient domestic economy and govt’s fiscal stimulus program which will strengthen purchasing power. Watch these catalysts: (1) stable Rp will enable greater flexibility in monetary & fiscal policies, and (2) 3-4ppt decline in financing companies’ borrowing costs, and lower down payment. Shr price has declined 55% from 2008 peak but increased 18% YTD. ASII is Indo's blue chip with prudent mgmt, solid B/S and good brand equity;

Would accumulate upon correction. Buy PxT Rp 14,150.