Mansek Bank Negara Indonesia:1H10 results in line with our expectation and consensus estimates (BBNI,Rp2,975,Buy,TP: Rp3,500)

BNI reported net profit of Rp1.9 tn for 1H10 (+60.9%yoy),in line with our expectation and consensus estimates.

The bank recorded higher than expected provisioning expenses in 2Q09 despite lower NPL during the quarter.According to the management,the allocation was intended to increase the bank ’s coverage ratio.At end Jun10,coverage ratio recorded at 122.5%in Jun10 from 121.8%in Mar10.

Meanwhile,loans was quite strong at 9.1%qoq in 2Q10 (-4.3%qoq in 1Q10),bringing LDR to increase to 68.2%at end Jun10 from 67.7%at end Mar10.Consumer loans posted the highest growth of 16.9%qoq to Rp20.5tn,representing 16.2%of total loans at end Jun10.

At current price,BNI is trading at 2011F P/BV of 1.8x and PER of 8.2x,respectively..We maintained our buy recommendation.

Mansek Medco Energi:Discovers additional oil in Libya ’s Area 47 (MEDC,Rp2,975, Buy,TP Rp3,500)

The company reported an additional oil discovery in Area 47,Libya.The discovery is the twelfth oil &gas discovery out of 17 wells drilled.This discovery will enhance the overall and ultimate potential in such block. Aside from that,PT Pertamina ’s President Director said that they will set up a joint venture with MEDC to develop an oil block in Libya.We view that both issues should have a positive impact to MEDC.Currently,the company is trading at EV/2P reserves of US$2.4/boe and US$3.9/boe,with or without Libya block in their portfolio.

OSK - Perusahaan Gas Negara BUY Price Rp3,150 Target Rp3,975

On A Solid Platform

Perusahaan Gas Negara (PGAS) is well positioned to be one of key beneficiaries in
Indonesia’s moves to commercialize its large gas reserves, reduce dependency on
crude oil, and support adequate gas supply to meet domestic demand given the
company’s strategic assets and favorable pricing. Expanded pipeline coverage
should build PGAS a solid platform to deliver the goods and generate strong free
cash flows to undergo expansion within and beyond the pipelines. Higher than
expected gas price increases may present as catalyst, while new gas supply is
adding positive into the counter. We initiate our coverage on PGAS at BUY with
DCF-derived target price of Rp3,975, based on 11.0% WACC and 5% terminal value
growth, implying 2010-11F PER of 18.3- 15.0x.