Mansek Jasa Marga bonds oversubscribed (JSMR,Rp3,100,Buy,TP:Rp3,200)

Jasa Marga will issue a new bond which tranched into a 10 year bond,Rp1tn,with an interest of 9.35%.pa;and 3 years zero coupon bonds,under Jasa Marga I series JM-10,amounting to Rp500bn with an interest rate of 9.1%pa.Following book building period,the bonds experienced oversubscribed up to 4.5 times.The fund proceeds from bonds issuance will be used to:45%for debt repayment,27%for capex,25%for non-toll road business development,and the remaining 5%for working capital.

We estimates JSMR ’s FY10F revenue reached Rp4.3tn (+17.1%yoy)and net profit up to Rp1.3tn (+34.2%yoy);due to increasing tariff in September 2009.Currently,JSMR trades at PER11F of 14.0x.

NISP Indika obtains US$124.0mn contract from Pertagas (INDY, Rp3,200)

· Indika Energy through its subsidiary, Tripatra, has obtained a US$138.0mn contract from Pertagas to build an oil&gas construction run by the latter company.
· In addition Indika is currently participating in the US$3.15bn tender, which includes the US$1.0bn Exxon Mobil project in Cepu. However the value of the contract targeted by Indika is undisclosed.
· The company has not released its financial statements due to audit process, however it expects its half year target for coal sales volume of 14.5mn ton will be achieved.
· INDY is trading at 2011F consensus PER of 9.1x and EV/EBITDA of 31.0x.

Mansek London Sumatra:1H10 results were within ours and consensus estimates (LSIP,Rp9,300,Buy,TP:Rp10,200)

LSIP reported 1H10 net income of Rp418bn (+45.7% yoy), represented 44.5% of our FY forecast and and 44.3% of consensus estimates. These results were within our expectation. Historically, 1H net income in 2006, 2007 and 2009 represented between 30% and 41% of FY net income.

Revenue increased by 8.3% yoy. 2Q10 revenue was higher than 1Q10 by 30.3% qoq. Operating margin in 2Q10 reached 38.1%, which improved from 34.3% in 1Q10, it is higher than our target for FY10 of 35.3%.

COGS decreased by 3.3% yoy mainly due to decrease in upkeep and cultivation cost from Rp150bn in 1H09 to RpRp125bn in 1H10, which mainly due to lower fertilizer application in 1H10, therefore we expect the upkeep and cultivation cost will increase in 2H10.

There is a cost-saving initiative by reducing lavish bonus payment to employees, which paid in 1H. It results a decrease in remuneration and employee benefit expenses in G&A from Rp123bn in 1H09 to Rp108bn in 1H10.

At current price, LSIP is trading at 2010F and 2011F PER of 13.3x and 11.9x. We maintain our BUY recommendation on the counter.

Mansek London Sumatra:6M10 CPO sales volumes reached 40.4%of our FY10F (LSIP,Rp9,200,Buy,TP:Rp10,200)

6M10 CPO sales volumes reached 40.4%of our FY10F.CPO sales volumes decreased by 3.0%yoy from 164,265 ton in 6M09 to 159,257 ton in 6M10. We consider 6M10 CPO sales volumes slightly below our expectations.

6M10 rubber sales volume reached 43.2%of our FY10F.Rubber sales volume decreased by 13.1%yoy from 11,189 ton in 6M09 to 9,725 ton in 6M10,thus in-line with expectations.

We maintain our BUY recommendation.Currently,LSIP trades at FY10F and
FY11F PE of 13.1x and 11.8x,respectively.

Mansek Jasa Marga:site visit to Semarang-Ungaran toll road (JSMR,Rp2,600,Buy, TP:Rp3,200)

We visited Semarang-Ungaran (11.3Km)part of Semarang-Solo (75.7Km),on 5
Aug10,some key points are:

Land clearing has reached 100%and construction reached 90%.The toll is expected can be tested operationally on this Lebaran holiday and can be operating commercially in 4Q2010,in line with JSMR schedule.

Average traffic volume minimum for a toll road must reach 20,000 vehicles per day to meet the eligibility standards.

The company still in due diligence to acquire 2 new toll roads located in greater Jakarta,and has connecting with existing toll roads.JSMR allocated capex FY10 around Rp2.3tn.

We have Buy recommendation on JSMR,currently it trades at PER10F-11F of 13.3x and 11.7x,respectively.

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.

Mandiri Sekuritas Bank BTN : BMRI and PT Pos Agreement, a Threat for BBTN? (BBTN, Rp1,570, buy, TP: Rp1,200)

􀂄 Based on its press release April 14, 2010, BMRI has just signed a strategic cooperation agreement with PT Pos Indonesia on the aim to improve its banking services to the remote area in Indonesia. The agreement involves instant postal money order services, savings, micro banking services through post office, and post office opening outlets across BMRI regional offices. PT Pos is well-known with its vast branch network to the remote area, that serviced through currently 3,779 post offices, 1,811 post mobile, and 3,396 post agencies.

􀂄 BBTN as the current sole conventional bank to serve saving account products in conjunction with PT Pos inevitably has to align with the newly above agreement. BBTN savings contributed from PT Pos as per Mar10 accounted to around Rp1.1 tn, or equivalent to 13.6% of the total savings. The arrival of BMRI in the market, will likely to give impact of the cost of fund offered to customers having transaction through PT Pos, which on average offered at 4% compared to 5% rate that the transaction made through its own branch. However, the strategic cooperation agreement between BMRI and PT Pos still subject to approval from the central bank of Indonesia, which most likely BBTN may follow up for further negotiation. BBTN currently presents at 2,015 of the PT Pos branches.

􀂄 At present, BBTN is trading at P/BV10 2.4x and P/E10 17.4x. We are reviewing our forecast on the bank. For the time being, we maintained our buy recommendation on the counter.

Mandiri Sekuritas BBTN: 1Q10 results in line with our expectation and consensus (BBTN, Rp1,450, Buy, TP: Rp1,200)

􀂄 BTN recorded a net profit of Rp188bn (+71.6% yoy) in 1Q10, which was inline with our expectation and consensus estimates.

􀂄 The bank actually recorded higher than expected net interest income,msupported by lower interest expenses. This led to a high NIM of 5.6% in 1Q09 compared with 4.7% for FY09. Such strong NIM was supported by strong growth in loans (+28.6% yoy to Rp43.1 tn at end Mar10), which is dominated by housing loans (93% of total loans). Meanwhile, fee based income also grew high at 136.8% yoy to Rp266bn in 1Q10. S

􀂄 Such strong performance in NII and fee based income allowed the increase in provisioning expenses to Rp107 bn in 1Q10 from Rp3 bn in 1Q09). Such high provisioning expenses was partly to cover higher NPL recorded in 1Q10 of 4.0% at end Mar10 compared with 3.4% at end Dec09.

􀂄 At present, BTN is trading at 2010F P/BV of 2.1x and PER ofr 14.0x. We are reviewing our forecast on the bank. For the time being, we maintained our buy recommendation on the counter.

Mandiri Sekuritas Sampoerna Agro: FY09 earnings of Rp282bn, in line with our estimates (SGRO, Rp2,650, Buy, TP: Rp3,200)

􀂄 Sampoerna Agro (SGRO) delivered FY09 revenue and earnings of Rp1.8tn and Rp282bn, down by 20.7% and 35.9% respectively. Bottom figure is in line with our and consensus expectations. Production number has yet to be disclosed, but we estimate CPO production in 4Q09 was around 90-95k tons which bring total cumulative production of 270-275k tons, slightly above our estimates.

􀂄 However, we highlighted that company manage to book lower-than-expected cost and therefore the operating margin decline is relatively small on yearly basis (-5.2% yoy). Noted that lower net margin (15.5% in FY09 vs 19.2% in FY08) was largely due to Rp20bn forex loss.

􀂄 We maintain our Buy recommendation on the counter with TP of Rp3,200/share.Currently, the stock is trading at PER10F of 11.3x.

Mandiri Sekuritas Aneka Tambang: increases stake in gold project (ANTM, Rp2,000, Neutral, TP: Rp2,200)

The company has increased its stakes in the Gold Cibaliung project from 5% to 100%after the shareholders of Arc Exploration (ex owners of the gold project) approved its full divestment. Antam acquired the 95% additional stake for US$8mn from internal cash while another US$40mn has been set aside for project development costs. Exploitation is targeted by second half 2010. Estimated reserves is currently at 12.8ton (thus equivalent acquisition cost, excluding development cost is US$0.625/t), while expected production upon commercial operations will be 500kg (2010) and 2,000kg (2011-onwards). We deem this the development as positive as Antam eventually shifts towards gold mining from lower margin gold sales trading despite mine life being relatively short of less than 5 years based on ANTM’s 2008 gold production. In 2008, the company produced 2,833kg of gold while gold sales were at 9,820kg coming mostly from gold trading with third parties. Currently, we have neutral stance on the stock which now trades at PER09-10F of 55.3x and 29.9x, respectively.

Mandiri Sekuritas Telkom: Go Defensive (TLKM, Rp7,300, Buy, TP: Rp8,200)

TLKM share price has increased by 5.8% ytd. Despite an indication by the company that earnings dropped by around 12%yoy in FY08, we have see TLKM stock price rise by 5.8% ytd. The main reason being that it’s considered a defensive play, and it had been trading at discount to regional peers.

Still a slow growth going forward, but TLKM is our sector pick. Though we stick to our view on low growth (EPS to grow by 1.4%yoy in FY09F), we flip our call on the stock from Sell to Buy, as we see “growth” is no more a distinguishing factor to chose our sector top pick. We put a Buy for the stock and now rely our call amongst others on TLKM’s highest free float (48.8% vs 20% for ISAT), and dividend yield (4.4% vs 3.5% for ISAT), its large cap (Market cap of Rp144tn vs Rp30tn for ISAT) and
overall a defensive play. We don’t like small caps – EXCL because of huge forex debt and losses, low free-float and while we have a Buy for BTEL considering its cheap valuation vise, we like to emphasize that the stock will underperform given the risk exposed to Bakrie Group.

Reverse our call from Sell to Buy. We arrive at a new TP of Rp8,200/share (+12.3% upside) after fine tuning our earnings and adjusting our WACC from 14.9% to 13.6%. Our TP implies PER09F of 14.2x, higher than regional peer average but lower than ISAT. Note that though ISAT has historically traded at premium to TLKM given its better growth, but now given that ISAT’s free float is about half of TLKM, we think TLKM should trade inline with ISAT. In order for TLKM to trade inline with ISAT, TP should be Rp9,100/share, indicating a further 10.9% upside to our TP. Currently Telkom PER09F 12.6x.