Mansek Panin Bank:update from a company visit (PNBN,Rp1,180,Sell,TP: Rp1,050)

We visited Panin Bank yesterday with the following highlights:

The bank expects loans to grow by 30.0%yoy this year to Rp56tn,mainly
supported by commercial and consumer segment.

The bank estimated a gain of Rp300bn from the selling of its 14%
ownership in ANZ Panin Bank to ANZ Banking Group Limited.This
transaction is currently awaiting for BI ’s approval,hence no certainty yet
when the gain will be booked.

There is no further news on the possible acquisition of Panin Bank by other
parties.

At current price,Panin Bank is trading at 2011F P/BV of 2.3x and PER of
19.3x.We maintained our sell recommendation on the counter.

Mandiri Sekuritas ACE Hardware: 1H10 net income was below our and consensus (ACES, Rp1,840, Neutral, TP: Rp1,790)

􀂄 ACES booked 1H10 revenue of Rp737.3bn (+19.2%yoy), and net income of Rp77.6bn (+15.5%yoy), which is below our estimates and consensus.
􀂄 We have a Neutral recommendation on ACES, it trades at PER10F of 18.9x.

Mandiri Sekuritas Bumi Serpong Damai: BSDE reported net profit of Rp182.5bn, in line with ours (BSDE, Rp810, Buy, TP: Rp1,100)

BSDE 1H10 net profit increased by 45.9% yoy to Rp182.5bn, in line with ours and consensus estimates. Company reported improved net margin to 30.1%, compared to 23.2% same period last year, as a result of better GPM 56.4% (vs. 47.9%) following lower COGS from Rp277.0 bn to Rp264.6bn. Based on yesterday’s price, BSDE trades at 48% discount to our NAV10 and PE10 23.4x.

Mandiri Sekuritas Lautan Luas: 1H10 results are inline with ours and consensus estimate (LTLS, Rp800, Buy, TP: Rp1,000)

􀂄 LTLS posted 1H10 net income of Rp45bn (-9%yoy, -17%qoq), which is inline with ours and consensus estimate.
􀂄 The decline in net profit was mainly due to strengthening Rupiah.
􀂄 We have Buy recommendation on LTLS which currently is trading at PER10-11F of 6.5-5.3x.

Mandiri Sekuritas Citra Marga: net income 1H10 above our estimates and consensus (CMNP, Rp890, Neutral, TP: Rp1,100)

􀂄 The company posted 1H10 revenues of Rp365.7bn (+25.7%yoy), and net income of Rp399.5bn compared with Rp31.0bn in 1H09. The company booked unrealized gain from debt revaluation amounting Rp236.1bn. These results are above our estimates and consensus.
􀂄 We have a Neutral recommendation on CMNP, due to lack of new project, it trades at PER10F of 3.7x.

Mandiri Sekuritas Summarecon Agung: SMRA reported sold out of 1st phase Summarecon Bekasi (SMRA, Rp910, Buy, TP: Rp1,130)

􀂄 Summarecon Agung (SMRA) reported sold out of sales of its 2 clusters launched consist of 475 units residential in Bekasi within in only 6 hours. This first phase of the project is calculated to worth around 300 bn, which expected to be incurred to company’s revenue in 2011. The company targets to reach marketing sales of Rp1.6 tn this year, a 32,1% yoy increase from last year. As per Mar10, the company’s marketing sales indicated a 36%yoy jump to Rp321bn or about 20% of FY10F. Although running slightly below FY10F target, the chunk of demand is destined for 2Q10, including the Bekasi project

􀂄 At the same, as told Investor Daily , the company declared dividend from 2009 net income amounting to Rp8 / share this year or equal to 30% dividend pay out ratio, on June, 2 2010. It results in dividend yields 2010 of 0.2%

􀂄 Currenty, SMRA is trading at 44% to our NAV10. We still maintain Buy on the stock

Mandiri Sekuritas Kalbe Farma: a takeaway from a plant visit (KLBF, Rp1,970, Buy, TP: Rp1,900)

We visited Kalbe Farma’s pharma plant at Cikarang and powder milk plant at Cikampek yesterday and found out some interesting highlights.

􀂄 The plant has consistently met the current GMP (Good Manufacturing Practices) requirement as the company put a great concern about the quality of the product.

􀂄 The pharma plant has 10 lines and majority of them is running at full capacity. There is a dedicated and fully utilized line for Promag and Procold OTC products, which has become the company’s blockbuster products).

􀂄 The powder milk plant runs at 50-60% utilization under the Chil Kid/Chil School brand. The company’s new milk powder products, Zee, is produced at third party manufacturers (toll out).he company’s M&A process is still underway, no definite
timeline yet when it will be completed.

􀂄 At the current price, the stock is trading at 2010F PER of 16.6x and EV/EBITDA of 6.6x. We are currently reviewing our recommendation on the company as the share price has already exceeded our TP of Rp1,900/share.

Mandiri Sekuritas Lautan Luas: 1Q10 net income was inline with our forecast (LTLS, Rp830, Buy, TP: Rp1,000)

􀂄 Lautan Luas posted 1Q10 net income of Rp24bn (+14.3%yoy, -1.5%qoq), which is inline with our FY10F forecast.

􀂄 Revenues in Rp declined by 8.1%yoy and 16.2%qoq due to strengthening Rp. It also results in lower gross margin. However, the company booked forex loss reversal so that net margin showed improvement.

􀂄 We have Buy recommendation on LTLS which currently is trading at PER10-11F of 5.8-3.6x.

Mandiri Sekuritas Ciputra Development: CTRA 1Q2010 results below expectation (CTRA, Rp890, Buy, TP: Rp1,100)

􀂄 CTRA reported declined in earnings for its 1Q2010 results to Rp33.8 bn (-37.2% yoy), which below our expectation (- 42.6%) and consensus estimates (-37.5%). The low in bottom line figure, however, resulted from booking of company’s marketing sales mainly in late 2008, which due to the global downturn, the company was only able to meet on average 40% of its sales target.

􀂄 In addition, the income statement also gained pressure from forex loss of Rp17.4 bn, which the amount nurtured from company’s deposit in foreign exchange, which depreciated due to the strengthening Rupiah.

􀂄 However, we believe the low figure will not be occurring for the rest of the year, as sales pick up in 2009 will reflect supports in earnings throughout the year. In the mean time, the company keeps showing improvement in sales this year,
which as of Mar10, the marketing sales has booked 26.6% of total target this year, thanks to low mortgage rate.

􀂄 CTRA is currently trading at 38% discount to NAV10. We still maintain Buy on the stock.

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 Adaro Energy: Revenue FY09 in line with our estimates and consensus (ADRO, Rp1,910, Neutral, TP: Rp1,800)

􀂄 Adaro managed to increase its margins. Gross margin, operating margin, and net margins are improving significantly.

􀂄 Adaro recorded gain on foreign exchange of Rp100bn compare with loss of Rp455bn in previous year, meanwhile interest expenses up by 49%yoy. Hence, net income was at Rp4.4tn (+392%yoy), below our expectation but in line with consensus.

􀂄 We will review our estimation due to the results. Maintain Buy.

Mandiri Sekuritas AKR Corporindo: FY09F net income was in line with our estimate, but 7% below consensus (AKRA, Rp950, Buy, TP: Rp1,300/share)

􀂄 AKRA posted FY09 revenues of Rp8.96tn (-5.4%yoy, +11.9%qoq). This translates to net income of Rp275bn (+30.8%yoy, +1.9%qoq)

􀂄 Revenues increase was due to strong 2H09 sales supported by fuel sales volume that up by 53% due to strong demand from coal companies in Kalimantan. This positive result is slightly negated by weakening performance in chemical distribution division.

􀂄 The company posted forex loss reversal from Rp149bn loss to be Rp50bn gain due to strengthening Rp. As we expect strengthening Rp in 2010F, we expect this forex gain will be booked again in 2010F. Starting in 2010, the company will also start to enjoy tax reduction benefit of 5% due to higher floating shares as a results of last right issue.

􀂄 We still maintain Buy recommendation on AKRA which is trading at PER10-11F of 9.5-7.5x.

Mandiri Sekuritas Bumi Resources: Some key points from yesterday AGM and EGM (BUMI, Rp1,880/share, Neutral, TP: Rp1,820)

The company will pay dividend from 2008 profit amounting to Rp50.6/share (15% payout ratio) or equal to 2.6% dividend yield.

The EGM approved company plan to pledge its assets (including KPC, Arutmin, and Herald Resources) in order to obtain new loan. Orally, they mentioned that the maximum loan amount they are looking for is up to EBITDA figures (note that FY08 EBITDA was around US$1.2bn). The loan will be used for expansion on coal related businesses.

The company revised Fajar Bumi shares acquisition from 77% stakes to 50% stakes. For this 50% stakes, the company will pay around Rp1.4tn.

The company plans to regroup its business units by separating coalrelated and non coal business units.

BUMI is currently trading at PER09F of 7.5x, maintain Neutral recommendation.

Mandiri Sekuritas Adaro: Green Signal (ADRO,Rp1,180, Buy, TP: Rp1,400)

Reduction in WACC. We have reduced our WACC estimate from 16.4% to 9.9% as a result of lower risk-free rate assumption and market risk premium given better market condition. The benefit of lower WACC has however been partially offset by lower exchange rate. We keep our key assumptions constant, aside from fine-tuning our long term production numbers and increasing our fuel price. After composite adjustments, our DCF derived equity value rises from Rp1,150/share to Rp1,400/share.

Re-negotiation is only a short-term benefit. ADRO renegotiated rices for coal sold under legacy contract in FY09 but as the price increase upset ADRO’s customers, ADRO will recoup this short-term gain in later years by adjusting prices of long-term contracts accordingly.

Orchard Maritime (OML) acquisition should be beneficial. ADRO has acquired OML, which is a coal barging company and its affiliate. Acquisition is not cheap yet fair as the acquisition price of US$78.5mn implies about 5-6x Enterprise’s liabilities are however not less, with outstanding debt of US$135mn. The benefit of the acquisition includes amongst others - 1) Other income from selling extra barging service and transshipment service in the spot market 2) Lower demurrage cost.

Production at Wara mine to stream-line. ADRO has signed three new contracts out of which one contract relates to Wara coal (about 3900kcal), implying that production at wara mine will soon stream-line and that its ASP will lower in future.

Buy call. Our TP of Rp1,400/share implies PER09F of 10.4x and EV/Reserves of 4.8x. Its 18.6% upside to current price so we maintain our Buy call.

Mandiri Sekuritas Bumi Resources: Acquisitions controversy – more palatable on hindsight? (BUMI, Rp2,100, Neutral,TP: Rp1,815)

Today, according to news reports, Society of Valuers (MAPPI) independent valuation report findings, assigned by Indonesian Bourse, will be opened to public. The report will reveal MAPPI valuations on three controversial acquisitions made by Bumi Resources last year. These acquisitions, two in coal mining concessions (Fajar Bumi, and Pendopo Energi), and one in mining contracting (Dharma Henwa) raised public inquiries as they were considered expensive and involved majority shareholders.

But that was then. Since end of 2008, oil price (CL1) surged 58.4% to US$70.7/barrel raising the possibility of improvement in coal price. In retrospective, we think the acquisitions on the two coal concessions are relatively acceptable (please see table below), however we think Dharma Henwa acquisitions was relatively on the aggressive end.

How does it fare to other acquisitions?

Mining concessions. Fajar Bumi was acquired at EV/reserves of US$2.8/ton (Fajar Bumi has reserves of 98mn tons), while Pendopo Energi which is a greenfield low rank coal mining was acquired at US$0.19/ton (Pendopo has 675mn ton reserves). Recent acquisition made by Indika Energi on greenfield medium rank coal mining in West Kalimantan was priced at US$0.12/ton of reserves. As for Fajar Bumi, in recent Coaltrans meeting, the going rate for mining acquisitions was US$6-7/ton of reserves.

Mining contracting. Dharma Henwa was acquired at 7.5x 2008 EBITDA (Dharma Henwa 2008 EBITDA was US$60.9mn). Petrosea acquisitions by Indika was at 5.7x 2008 EBITDA, and Adaro acquisitions of Orchard Maritime Logistics, a coal transshipment company was at 6-6.5x 2008 EBITDA.

We have a Neutral recommendation for BUMI with Rp1,815 target price. At Rp2,100, Bumi is trading at 8.3x PER09F and 5.0x EV/EBITDA 09F.

Mandiri Sekuritas Bank Negara Indonesia: a visit to SKC (BBNI, Rp720, Buy, TP: Rp1,000)

We visited Bank BNI’s small business center (SKC) at Bekasi, Eastern Jakarta yesterday. This center focuses on extending loans below Rp10bn and has total loan exposure of Rp470bn at end Dec08 offered at around 15-16% p.a.

BNI targets loans growth this year to be derived mostly from small sized loans as this type of loans are believed to be resilient during economic crisis. Our visit supported the argument. Even though the NPL at this center is relatively high at 5.2%, the outlook is encouraging as the debtors are mostly cooperatives. Moreover, selling the loan collateral is easy as its loan collateral value is relatively small.

The center’s NPL is mainly derived from developer of low cost housing, trader of scrap steel, plastic and textile. This year, the center is targeted to book additional Rp200bn of new loans, 50% of which should be extended to loans below Rp1bn. In Jan09 only, the center managed to book additional loans of over Rp20bn.

We like BNI’s transparency and believe that its strategy to focus on small sized loans to be appropriate given prolong economic crisis. Currently, Bank BNI is trading at 2009F P/BV of 0.6x and PER09F of 4.8x. We maintained our buy recommendation on the counter.