Mansek Gajah Tunggal:points from annual public expose (GJTL,Rp2,075,Not-rated)

1H10 revenue was Rp4.8tn (+27.3%yoy)and net profit was Rp415bn (+188.2%yoy)
Sales volume in 1H10: radial tire was 5.1mn unit(+54.5%yoy),bias tire was 2.1mn unit(+31.3%yoy)and motorcycle tire was 10.1mn unit(+23.2%yoy).
Production capacity by 1H10:radial tire was 37,000tire/day (utilization rate:77%),bias tire was 13,600tire/day (utilization: 87%),motorcycle tire was 67,000tire/day (utilization:85%),synthetic rubber was 60,000ton/yr (utilization:55%)and tire cord was 36,000ton/yr (utilization:66%)
GJTL plans to increase production capacity for radial tire gradually to become 40.000tire/day and 45,000tire/day by end 2010 and 2011,respectively;and motorcycle tire will expand gradually to become 75,000tire/day,95,000tire/day and 105,000tire/day by end 2010,2011 and 2012,respectively.
The radial tire capacity expansion is supported by increasing demand from Michelin.In FY09 tire sales to Michelin reached 1.9mn unit.This year tire demand from Michelin totaling 3mn unit and become 4mn unit and 5mn unit in 2011 and 2012,respectively.
Capex allocated in FY10F amounting to US$40mn,around US$20mn is allocated for expansion and the remaining is for maintenance and working capital.
Currently,we do not cover GJTL.Based on Bloomberg estimates,it is trading at PE11F of 7.8x.

Mandiri Sekuritas We visited GJTL yesterday, some key takeaways: (GJTL, Rp990, Not-rated)

􀂄 Revenue FY09 reaches Rp7.9tn (-0.3%yoy), due to volume decreases in the export markets. Around 38% of sales contribute from export, 10% from OEM and the rest 52% for replacement.
􀂄 Gross profit increase 60.5% to Rp1.8tn, as the company benefited from lower raw material inventory costs ordered in the first part of 2009, consequently, gross margin increase to 23.0% compare with 14.3% in 2008.
􀂄 Net profit improve significantly to Rp905bn compared with net loss of Rp625bn in 2008, due to improving operational margin and gain from foreign exchange of Rp487bn compare with loss of Rp786bn in previous year.
􀂄 For 2010, GJTL targets sales volume will increase by 15-20%, due to additional demand from Michelin and automotive sales growth. In FY10F, demand for tires from Michelin is estimated reaches 3mn units, compared with 1.9mn in 2009, and become 5mn units in 2011.
􀂄 The company plans to expand its production capacity, especially for radial tire and motorcycle tire. Currently, radial tire has capacity of 35,800 pcs/day (utilization 61%) and become 45.000 pcs/day by 2011. Motorcycle tire capacity is 60,000 pcs/day (utilization 82%) and targeted become 90,000 in 2011 and reaches 105,000 in 2012.
􀂄 We do not cover on this stock, and there is only one analyst on market covering the stock.

Mandiri Sekuritas Jasa Marga and PP form a joint subsidiary (JSMR, Rp1760, Buy, TP: Rp2100); (PTPP, Rp650, Not-rated)

Jasa Marga and PT Pembangunan Perumahan (PTPP) will work together to form a subsidiary in the property sector and still looking for another private company to join the venture, which scheduled to be formed in semester II- 2010. Both companies have prepared funds of Rp100bn for initial capital.

The new subsidiary will focus in housing and office property and will start the operation in Sidoarjo, East Java, near with JSMR’s toll road. We see that the plan will provide added value for JSMR due to increasing property prices in the region through which the highway. We still maintain BUY on JSMR, currently trades at P/E’10 of 8.9x and PBV10 of 1.5x.