Mandiri Sekuritas Indofood: 1H10 net income exceeds ours and consensus expectation (INDF, Rp4,350, Buy, TP: Rp4,500)

􀂄 INDF posted 1H10 net income of Rp1.4tn (+76%yoy, +23%qoq), which is above ours and consensus estimates. The net income yoy growth was mainly due to increase in noodle selling price.

􀂄 Looking at segmental performance, CBP division performed well with 8.3%yoy growth that compensated revenues contraction from wheat flour segment. Agribusiness segment posted flat growth yoy.

􀂄 INDF is currently trading at PER10-11F consensus of 17.1-14.8x.

Mansek EXCL has allocated Rp4.5tn for network expansion (EXCL,Rp4,100,Buy,TP: Rp4,300)

EXCL has allocated Rp4.5tn for net work expansion.In 2010,EXCL targets to build 1,500-2,000 tower and BTS,while in 1H10 it has already built 900 units valued at Rp2,3tn.This year,the company allocated total capex of US$450mn.By end of Mar 2010,EXCL had 19,904 BTS which cover 90%of Indonesia and number of subscribers of 32.5mn.EXCL targets total BTS of more than 20,000 units by end 2010 and number of subscribers of 38- 39mn.EXCL trades at PER10F-11F of 15.7x and 12.2x,we have Buy
recommendation.

Mandiri Sekuritas PGAS: 1Q10 net income at Rp1.8tn, above ours and consensus estimates (PGAS, Rp4,050, Neutral, TP: Rp4,225)

􀂄 PGAS posted 1Q10 net income of Rp1.8tn (+45.2%yoy, -3.1%qoq), above ours and consensus estimates.
􀂄 The company booked forex loss reversal from Rp134bn loss in 1Q09 to Rp199bn gain in 1Q10 as most loans are US$
denominated.
􀂄 We still have Neutral recommendation on PGAS which currently is trading at PER10-11F of 18.3-17.3x.

Mandiri Sekuritas BDMN 1Q2010 results ahead of our expectation (BDMN, Rp5,500 , Neutral, TP: Rp4,900)

􀂄 Bank Danamon reported 1Q2010 earnings of Rp701 bn, a significant 78% yoy increase, led the result to above our expectation and within consensus estimates.

􀂄 The strong bottom line figure, mainly contributed by strong increase of Net-Interest Income, which jumped to Rp2.923 bn (+26.6% yoy), as higher portion of mass market loan that gives better margin for the bank, led the operating income to Rp3,088 bn (+24% yoy).

􀂄 The bank’s gross loan increased by only 1.5% qoq in the 1Q2010, as this came as the result of the slow market trend especially in wholesale (-2% qoq) and retail segments (-4%qoq). However, this is offset by the mass market loan that reached to Rp35,765 bn(+5% qoq), driven by automotive and micro lending business. Mass market currently covers 56% of total loan, versus 44% on 1Q09. As a result of higher growth in mass market loans, NIM is figured at 14.0% (vs. 10.0% 1Q09), while on the other hand ROAA is posted at 2.9%, ROAE 16.4% and CAR 21.5% (vs. 1.5%, 14.6% and 16.9% 1Q09, respectively). The bank aims to have a double growth in loans (20% yoy) by the end of the year, while provisioning is maintained at low figure.

􀂄 At present, BDMN is trading at 2010F P/BV of 2.6x and PER 16.6x. We still call Neutral on the counter.

Mandiri Sekuritas Mayora Indah: FY09 earnings of Rp372bn (+89.7% yoy), above ours and consensus expectations (MYOR, Rp4,125, Buy, TP: Rp4,700)

􀂄 Mayora delivered incredible earnings growth of 89.7% yoy and 0.4% qoq to Rp372bn in FY09. Top-line figure is within ours and consensus estimates, whereas bottom-line is significantly above our and consensus estimates. Revenue upped by 22.3% backed by stronger demand coupled with increased production capacity (do note that MYOR’s new factory has started in Aug09). Stronger rupiah exchange rate also helped to boost gross margin in 4Q09 (25.3% vs 3Q09 of 25.2%) which brought FY09 margin to 23.7%, slightly higher than company’s previous indication of 23%.

􀂄 However, operating margin dropped in 4Q09 which mainly due to significantly higher G&A expenses. G&A expenses jumped 3-folds on quarterly basis to Rp74bn in 4Q09. We think this is largely due to salaries and bonuses which book in 4Q09.

􀂄 All in all, FY10F sales is likely to grow by 20%yoy to Rp5.6tn, in our view. This is to take into account for improving purchasing power, coupled with fully implementation of company’s new plant.

􀂄 Currently, Mayora is trading at PER10F of 8.4x.

Mandiri Sekuritas Perusahaan Gas: Collated negative news (PGAS, Rp4,325, Neutral, TP: Rp4,650)

􀂄 No possible return of supply. Upstream oil and gas regulator BPMigas says there is no more gas available to cope with the gas shortage being suffered by state power firm PT PLN. “The only available solution is that we must wait for the completion of the planned LNG [liquefied natural gas] receiving terminals,” BPMigas’ head of public relations Sulistya Hastuti Wahyu told reporters on Thursday. PLN’s Muara Tawar power plant in Bekasi, West Java, receives gas supply from state gas distributor PT Perusahaan Gas Negara (PGAS). But, since early March this year, the supply has dropped to 100 billion British thermal units of gas per day (BBTUD) from an average of 250 BBTUD in 2009. PLN said it had already spent as much as Rp 2.4 trillion (US$263 million) to buy oil-based fuels to replace gas for power plants. 1 BBTUD= 1 MMSCFD (Jakarta Post, Fri 26-03-2010)

􀂄 Conoco-Chevron gas transportation agreement to be effective. Conoco will sign a gas transportation agreement (GTA) with Chevron. Volume gas to be supplied will be not far different from currently supplied that is 402 MMSCFD. (Bisnis Indonesia, Sat, 27-03-2010)

􀂄 Minister of Industry asked PGAS to cancel plan ton raise tariff. Minister of Industry, MS Hidayat, is going to asked PGAS to cancel its plan to raise tariff by 15% and additional surcharge of 200% for excess gas usage, Previously PGAS planned to apply the new price formula from April 1, 2010. Theoretically, Minister has no executive power to cancel tariff plan as regulation stated that gas price of industry is set through a business-to business method. (Kontan, Mon, 30-03-2010)

􀂄 These are sorts of bad news that we are expecting when we downgrade PGAS recommendation from Buy to Neutral. Although we still believe PGAS can execute its price formula, we are more concern on the short supply and potential price increase on its supply if PGAS can increase its delivered gas price. At Rp4,325, PGAS is trading at PER10F and PER11F of 20.3x and 19.1x, respectively.

Mandiri Sekuritas Bank Danamon: notes from company visit (BDMN, Rp4,575, Sell, TP: Rp4,000)

􀂄 Our latest visit to the bank highlighted flat loan growth recorded in 2Q09, yet the bank still expect the bottom line to improve on quarterly basis. Such flat loan growth was as a result of tighter underwriting criteria adopted since the beginning of the year due to uncertainties in the macro economic condition.
􀂄 However, new booking for mass market businesses has shown improvement from Rp170bn in May09 to Rp250bn in Jun09. Overall, the bank expects its mass market loans to grow by over 20% yoy this year from its Dec08’s figures of Rp13.1tn.
􀂄 Up to May09, NPL was recorded at 3.5%, yet concerns remain on the bank’s exposure to CMM (Consumer Mass Market) segment due to increasing possibility of employees being laid off.
􀂄 At current price, Bank Danamon is trading at 2009F P/BV of 2.4x and PER of 20.3x. Even though Bank Danamon will benefit most from the declining SBI rates as its funding are biased toward high cost deposits, we still believe that the current valuation is already high. We therefore have a sell recommendation on the stock.