NISP Antam posts superb performance in 1H10 (ANTM, Rp2,050, Buy)

· Antam posted 238.0% YoY growth in net income to Rp756.3bn compared to Rp223.8bn a year earlier. The result may exceed our full year expectation as it came in 60.9% to our 2010F net income estimate at Rp1.2tn while consensus expects Rp1.3tn of full year net income.

· Such increase was largely due to Antam’s ability to improve its profitability where operating margin rose to 32.6% in 1H10 from 10.2% a year earlier. This was a result from the company’s recovery in nickel business in 1H10. During the period Antam sold 52.1% YoY higher ferronickel at 6,082 tons with 70.2% YoY increase on ASP at US$9.4/lb from as low as US$5.5/lb a year earlier.

· Despite such higher volume, COGS was lower at Rp2.9tn, 26.5% YoY lower from Rp4.0tn in 1H09. This was due to small contribution from gold trading business and also stronger Rupiah exchange rate.

· On quarterly basis, revenue leapt by 60.7% QoQ due to delay shipment in 1Q10 that booked in 2Q10 period.

· In all, Antam managed to deliver a positive surprise in 1H10 period. Currently the company is trading at 2011F PER of 11.0x and EV/EBITDA of 5.7x, Buy.