Mansek AALI:Key Takeaway from company visit (AALI,Rp20,950,SELL,TP:Rp18,000)

AALI estimate FY11F CPO production equals to FY10 CPO production (no growth in CPO production)due to its old plantation.Currently,we estimate CPO production in FY11F will be grow by 1.8%YoY from 1,060,589 ton in FY10F to 1,079,386 ton in FY11F.
AALI indicated Sep ’10 CPO production will be around 90 thousand ton (increase around 15%from Sep ’09 CPO production of 78 thousand ton).
Currently,AALI is trading at PER FY10F and FY11F of 17.5x and 17.4x.

NISP TB Bukit Asam to build Rp1.00tn port in Lampung (PTBA, Rp20,000, Buy)

· TB Bukit Asam is allocating Rp1.00tn of budget for loading port facility in Lampung in order to support the company’s Tanjung Enim – Lampung railway project. The company cited that the plan is currently in preparation phase and expects to build the port next year.

· The commencement schedule is in 2013 and at full capacity the port can handle 25mn tons of coal per annum.

· This project is part of the company’s target to achieve 70mn tons of coal production in 2016. TB Bukit Asam will use its internal cash for this Rp1.00tn project as the company sees it still has an ample cash position.

· We view this as a progress of the company long term projects, including three railway projects that would unlock TB Bukit Asam’s ability to access its abundant reserves. Currently, TB Bukit Asam holds 2.0bn tons of coal reserves or equal to 29.4% of total coal reserves in Indonesia.

· PTBA is trading at 2011F PER of 15.8x and EV/EBITDA of 10.3x, Buy.

Mansek UNTR:Slower growth (UNTR,Rp20,200,Buy,TP:Rp21,700)

Komatsu sales volume in Aug ’10 increased by 49.0%YoY from Aug ’10.This slower growth dragged down YoY growth from 87.1%in 7M10 to 81.4%in 8M10.8M10 komatsu sales volume of 3,653 units represented 73.4%of our FY10F of 4,978 units.This is still within our expectation due to we expect slower YoY growth up to end of year.

Overburden removal and coal production in Aug ’10 also recorded slower growth.8M10 Overburden removal represented 79.8%of our FY10F estimate,meanwhile 8M10 coal production represented 71.3%of our FY10F estimate. These are still within our expectation as we expect slower YoY growth in overburden removal and coal production up to end of year due to mining activities usually slower in 4Q.

Currently,UNTR is trading at PER10F and PER11F of 15.5x and 14.6x,respectively.

NISP United Tractors may post soft 3Q10 revenue (UNTR, Rp20,200, Hold)

· During 8M10, UT sold 3,653 units of heavy equipment, 81.4% YoY higher from 2,014 units a year earlier. Such increase was attributable to increase in all segments, including heavy equipment sales for mining that jumped to 2,188 units, or increased by 1,024 units compared to 1,164 units in 8M09.

· This was also followed by heavy equipment sales for agribusiness, construction and forestry. Similar achievement was also posted by UT’s other business, where mining contracting posted 20.1% YoY growth in 8M10, while coal mining performance was relatively stable as it only posted a slight 0.2% YoY decrease during the same period.

· Despite impressive YoY performance, UT posted a decrease in its August heavy equipment sales volume of 453 units compared to 468 units a month earlier. Also, coal mining division posted 20.5% MoM decrease on coal sales volume at 174k tons in August 2010 from 219k tons a month earlier. The only division that managed to record growth in August was mining contracting, Pama Persada, that produced higher coal of 7.6% MoM to 6.8mn tons from 6.3mn tons in the same period.

· This translates into a possibility of soft 3Q10 revenue compared to the previous quarter as long holiday season in September may affect the company’s operational data. Thus, we still maintain our Hold stance on UT, which currently trades at 2011F PER of 13.9x and EV/EBITDA of 7.3x.

NISP United Tractors eyes US$1.2bn power plant projects (UNTR, Rp20,850, Hold)

· UT is currently eyeing 2 power plant projects worth US$1.2bn, which consist of 2x300MW thermal power plant in Palembang and another 2x300MW in Riau. For the project in Palembang, UT holds a consortium with Wijaya Karya (WIKA, Rp630) and municipal government, while for Riau, UT cooperate with municipal government on the project.
· UT is currently preparing fresh cash to finance the project as it has to be started imminently after the winner is announced. The company is currently waiting for the announcement from PLN.
· UT balance sheet position is healthy with net cash position as of 1H10 and this would enable the company to finance this project and also maintain its capex without any difficulty.
· However our concern is on the company’s margin due to mounting cost from its mining contracting business. Currently UNTR is trading at 2011F PER of 14.3x and EV/EBITDA of 7.5x, Hold.

NISP Astra Agro Lestari divests ownership in subsidiary (AALI, Rp20,100)

· Astra Agro Lestari sold 100% of its ownership in Surya Panen Subur, AAL’s subsidiary in Aceh. This transaction is worth US$27.33mn and AAL cited that SPS’ area of 3,000 ha could not meet AAL’s economic production scale. AAL aquired SPS in 2007 with acquisition value of Rp161.0bn.
· AAL added that the conditional sales and purchase agreement has been signed last month with the buyer, PT Agro Maju Raya and PT Hamparan Sawit Nusantara.
· The impact on AAL’s production is less significant assuming the area yields around 13,000 tons of CPO compared to AAL’s production target of 1mn tons.
· Currently, AALI is trading at 2011F PER of 16.1x and EV/EBITDA of 8.7x.

NISP Astra Agro Lestari expects a flat growth in revenue (AALI, Rp20,000)

• AAL expects its 2010F revenue to come at around its 2009’s at Rp7.42tn. The company explained that higher CPO price will help AAL’s performance despite its sales volume is expected to come slightly lower at 1mn tons (-0.1% YoY).

• AAL added that its current action in replanting its estate will improve its harvest despite the impact is not imminent. The company plans to spend Rp1.40tn this year to replant almost 10% of its total plantation.

• We view that AAL’s solid net cash position will enable the company to flexibly nurture its estates and to easily obtain loans should it aims for an expansion.

• AALI is trading at 2011F PER of 16.0x and EV/EBITDA of 8.6x.

Mandiri Sekuritas United Tractor: 1H10 results are below ours and consensus estimate (UNTR, Rp20,050, Buy, TP: Rp21,700)

􀂄 UNTR posted 1H10 net income of Rp1.9tn (+0.8%yoy, +8.0%qoq), which is below ours and consensus estimate.
􀂄 Revenue growth mainly came from construction machinery sales (+56%yoy). However, gross margin contracted yoy at machinery division (27% to be 21%), and mining contracting division (22% to be 16%). The decline was due to operational drawback in Pama as a result of heavy rainfall, particulary in Adaro and Jembayan. Second reason was due to rupiah strengthening.
􀂄 We have Buy recommendation on UNTR which currently trades at PER10-11F of 15.3-14.5x

Mansek AALI:6M10 CPO sales volume reach 45%of our FY10F assumption (AALI, Rp20,250,BUY,TP:Rp24,500)

AALI ’s 6M10 CPO sales volume decreased by 3.3%yoy from 494,018 ton in 6M09 to 477,639 ton in 6M10.This 6M10 CPO sales volume represents 45.0%of our FY10F assumption.We will maintain our CPO sales volume assumption.

AALI ’s 6M10 CPO sales price increased by 3.2%yoy from Rp6,386/kg in 6M09 to Rp6,590/kg in 6M10.

Currently,AALI trades at FY10F and FY11F PE of 14.6x and 12.5x, respectively.