Mansek Jasa Marga:1H10 net profit up by 63.7%yoy (JSMR,Rp2,175,Buy,TP:Rp2,400)

Revenue 1H10 recorded at Rp2.1tn (+23.5%yoy).This is in line with ours and consensus estimates.Net income was at Rp648bn (+63.7%yoy)in line with our estimates and above consensus.

Traffic volume in 1H10 increase by 3.3%yoy to 464.7mn vehicles.

The highest traffic growth occurred in Cipularang,which grew by 10.8%yoy.JORR contributes the biggest revenue around 20.3%of toll road revenues.Meanwhile,the highest traffic was contributed by JIRR toll road,which captured 19.9%of total traffic.

We have a Buy recommendation on JSMR,it trades at PER10F-11F of 12.5x and 11.3x,respectively.

Mandiri Sekuritas Perusahaan Gas : Price increase did not suffice potential increase in COGS (PGAS, Rp4,175, Neutral, TP:Rp4,650)

􀂄 PGAS formally announced the increase of an average 15% (our calculation is 15.8%) from US$5.49/MMBTU to US$6.36/MMBTU. However, post coverage of gas shortage (with several assumptions), we conclude that the increase is just enough to cover the average increase in cost of gas.

􀂄 Assumptions that we use: a flow of 900 MMSCFD (maximum flow previously guided by PGAS), a deficit of 150 MMSCFD (as stated by PGAS CEO in various sources, today). We use US$2.6/MMBTU as average cost of gas for 750 MMSCFD (current flow with low cost, a cost PGAS has for 900 MMSCFD if there is no shortage), and US$5.4/MMBTU as gas price to cover the deficit. Our calculation showed an increase in average cost of gas from US$2.6MMBTU to US$3.07/MMBTU. That is an increase of 17.9%.

􀂄 Coupled with strengthening Rupiah we might saw a decline in profits. As PGAS charged in US$, and Rupiah 1Q10 (9264/US$) was 11% stronger than FY09 average of 10,396, we might see a drop in operating profits. Therefore it emphasizes our Neutral recommendation for PGAS. At Rp4,175, PGAS is trading at 19.6x and 18.4x FY10F and FY11F PER, respectively.

NISP PGN raises selling price by 15% on average next month (PGAS, Rp4,175, Buy)

• Perusahaan Gas (PGN) and the industry association have come into agreement during a meeting with government on the adjustment of gas sales price, the gas surcharge and guarantee of payment.

• Starting from April 1, PGN will start new gas pricing for all industries and commercial costumers in West Java area. Gas selling price for customers using more than 300,000 m3/month is US$4,30/MMBTU+Rp750/m3 or equivalent to approximately US$6,37/MMBTU.

• The company will also implement the application of surcharge amounting to 300% for the volume exceeding maximum contract and payment guarantee to cover 2 months worth of gas usage for all customers.

• This selling price adjustment beat our expectations as we had only expected a 5% hike on selling price in 2H10. This action surely will affect our earnings forecast for PGN with huge potential upgrade for 2010F and 2011F earnings by 6% on the revenue and 13% on the bottom line.

• This action may also prompt our target price on PGN higher by 11% to reach Rp4.939/share. We still maintain Buy on PGN with current 2010F PER of 16.4x and EV/EBTIDA of 10.1x.