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.

Mansek Bukit Asam : New JV with Lanco Infratech – Unlikely to realize ((PTBA, Rp16,350,Buy,TP:Rp18,750)

Investor Daily quoting Business Standard reporting that Lanco Infractech is ready to develop 600MW coal fired power plant in Muara Enim,South Sumatera through a BOT (Build,Operate,Transfer)with PLN, with investment of US$751.3mn in a JV with Bukit Asam.We deemed it is unlikely. Bukit Asam has already a plan to build 4x600MW US$3bn power plant with China Huandian Corp.The problem with its 4x600MW is no take- up in demand in South Sumatera.PLN firstly need to build connecting cable to link Sumatera grid with Java grid,where most of the demand is located.Until the grid plan is developed it is unlikely for the project to start.

At Rp16,360,PTBA is trading at PER10F,and PER11F of 16.9x,and 11.7x, respectively with EV/EBITDA10F and EV/EBITDA11F of 11.1x,and 7.3x, respectively.

Mansek Bukit Asam :A lot of catching up to do (PTBA,Rp16,550,Neutral,TP:Rp18,650)

Bukit Asam announced its new contract price and amount for PLN power plants,Tarahan and Bukit Asam.Tarahan will received 750k tons at Rp570,000/ton and Bukit Asam will receive 1.1Mt at Rp430,000/tons.With this announcement PTBA has settled all the contracts with PLN including January 21,2010 contract to supply Suralaya power plant 5.5Mt at Rp685,000/tons.With the contracted amount and prices with PLN,we expects PTBA has a lot to catch up on the export front

Catching up the volume.With PLN contracted amount and export in 1Q10 (we assume no domestic sales aside from PLN in 1Q10),PTBA has to find market for its 6,978k tons of coal.This assumed PTBA will fulfill its 15.6Mt of FY10 sales guidance.Can they make it since 1Q10 they only sold 3.2Mt (20.5%of FY10 guidance)and April sales is only 828k tons. Based on April 2010 sales volume it will be tough to maintain guidance.

And also ASP.We also estimated that PTBA need to have an ASP of US$63.6/ton for its remaining volume.Can they achieve it,considering ASP 1Q10 for export is just US$57/ton.That also assumed that all the remaining volume is for export which is usually have higher price.PTBA mentioned that 1Q10 export was mainly on coal with 5,900 kcal,and expect to send higher calorific coals in the future.Based on these recent data,we conclude that there is likelihood of downward adjustments in consensus forecast.

Mandiri Sekuritas Bukit Asam: Bukit Asam : Conclude the EPC agreement with China Railway (PTBA, Rp16,350, Buy, TP:Rp18,750)

􀂄 China Railway Group said on Thursday that it had won an Indonesian coal transport contract worth US$4.8bn. China Railways will be responsible for the design, construction and maintenance of the South Sumatra project, with design and construction priced at US$1.3bn and maintenance at US$3.5 bn. The contract with Indonesia's Bhakta Hill Pan Pacific Railway Corporation includes four years of construction with an operational period of 20 years, the company said. (Reuters)

􀂄 We will further seek information from Bukit Asam regarding the contract, proposed financing, and the existence of Bhakta Hill Pan Pacific. Previously it was understood that Transpacific, PTBA partners in the project would team up with Prayogo Pangestu from Barito Pacific. We consider the appointment of EPC contractor, is a positive step forward in the long awaited progress on the deal. The project calls for construction of a 300- kilometer railway from Bukit Asam’s Banko coal concession in South Sumatra to Srengsem Port in Lampung. It has been stalled since 2007, when Bukit Asam, Transpacific Railways and China Railway Engineering formed a
joint venture company named PT Bukit Asam Transpacific Railway to develop the project. It finally approved by the Transportation Ministry in October 2009. In its full capacity, the railway could carry 20Mtpa of coal, an increase from PTBA 2009 production of 11.6Mt. At Rp16,350, PTBA is traded at PER10F and PER11F of 12.8x, and 11.6x, respectively.