Mansek TINS:negative impact from La Nina (TINS,Rp2,800,Neutral,TP:Rp2,800)

Weighing the effect between rising tin price and the impact of La Nina,we view that Timah,on overall,will be adversely impacted:

In term of volume,La Nina will impede offshore mining so that sales volume target could be unachievable.Note that 1H10 sales volume only represented 41.2%of our FY10F.We doubt that the company could catch up the sales volume target in 2H10,considering weather in 2H10 is worse than 1H10.The impact will continue at least until 1H11F.

In term of cost,lower mining quantity means higher cost/unit due to big portion of fixed cost in offshore mining.At the same time,onshore sourcing also becomes very costly as suppliers speculate on further rise in tin ore price and ask for a substantial tin ore price increase to the company.

Considering the above factor,we are currently reviewing our forecasts of TINS.At this point we still have Neutral recommendation on TINS which is trading at PER10-11F of 17.0-11.2x.

Mansek Timah:1H10 results were below our and consensus estimates (TINS,Rp2,425,Neutral,TP:Rp2,800)

TINS reported 1H10 net income of Rp322bn (+652.6%yoy),represented 27.3%of our FY forecast and and 28.9%of consensus estimates.These results were below our and consensus expectation.The main reason of below expectation result was a decrease in production volume from 17,588 ton in 1H09 to 10,191 in 1H10,which resulted a decrease in sales volume from 19,760 ton in 1H09 to 9,990 ton in 1H10.Decrease in production volume due to bad weather.
At current price,TINS is trading at 2010F and 2011F PER of 14.7x and 9.7x.We maintain our NEUTRAL recommendation on the counter.

Mansek Aneka Tambang:1H10 net profits of Rp756bn up by more than 2-folds yoy;above ours and consensus (ANTM, Rp2,050,Neutral,TP:Rp2,500)

Due to the switch in revenue contribution from low-margin gold trading last year to higher margin nickel this year as well the improvement in selling prices of the latter,Antam ’ s 1H10 net income improved by 238%yoy to Rp756bn,despite a relatively flat top-line of Rp4.3tn(-2.1%yoy),thus running ahead of ours and consensus estimates.Additionally on the production side,the divisional production remains within FY10F target with nickel and gold production rates achieving 50%and 54%of FY10F.Currently,the stock trades at PER10F 16.7x.Additional upside would come from the appreciation of nickel prices (at US$20.6k/t as of 1H10)which runs at par with our FY10F price assumption of about US$21k/ton.

Mansek ADRO:net profit below our and consensus estimates (ADRO,Rp1,980,Buy, TP:Rp2,600)

1H10 net profit at Rp1.2tn (-48.7%yoy,-66.1%QoQ)below ours and consensus estimates.
ADRO booked revenue 1H10 at Rp12.0tn (-7.1%yoy,-9.1%QoQ)below our and consensus estimates.
In US dollar basis,revenue was at US$1.3bn (+11.9%yoy),due to increased production and sales volume.Production volume increased 20.2%yoy and sales volume increase 22.0%yoy.
The strong US dollar revenue had been offset by strengthening of rupiah against US dollar;in the first 6 months in 2010,average rupiah/US$ exchange rate strengthened 17%to Rp9,189/US$compare with Rp11,067/US$.
Cost of revenues increased by 7.9%yoy,due to increasing stripping ratio and increasing production volume.ADRO ’s cash cost (excluding royalties)increased 6%yoy,dragging down operating margin and net margin.
ADRO trades at PER10F-11F of 16.0x and 11.8x,respectively,maintain Buy.

Mansek Adaro Energy:Quarterly activities report (ADRO,Rp2,000,Buy,TP:Rp2,600)

Coal production in 2Q10 was 10.26Mt and for 1H10 was 21.62Mt (+20.2%yoy,--9.7%QoQ).The company is optimistic to achieve FY10F target totaling 45-46Mt.Low 1H10 production caused by heavy rainfall in early of this year and in June.
Sales in 2Q10 was 10.29Mt and for 1H10 was 21.75Mt (+22.0%yoy,-10.2%QoQ)
Envirocoal-Wara coal production is now at an average daily rate of 6,000 tonnes per day or 2 million tonnes per year.
ADRO trads at PER10F-11F of 16.1x and 11.9x,respectively.Maintain Buy.

Mansek Jasa Marga:1H10 net profit up by 63.7%yoy (JSMR,Rp2,175,Buy,TP:Rp2,400)

Revenue 1H10 recorded at Rp2.1tn (+23.5%yoy).This is in line with ours and consensus estimates.Net income was at Rp648bn (+63.7%yoy)in line with our estimates and above consensus.

Traffic volume in 1H10 increase by 3.3%yoy to 464.7mn vehicles.

The highest traffic growth occurred in Cipularang,which grew by 10.8%yoy.JORR contributes the biggest revenue around 20.3%of toll road revenues.Meanwhile,the highest traffic was contributed by JIRR toll road,which captured 19.9%of total traffic.

We have a Buy recommendation on JSMR,it trades at PER10F-11F of 12.5x and 11.3x,respectively.

Mansek Kalbe Farma:1H10 results indication are inline with our forecast (KLBF, Rp2,450,Buy,TP:Rp2,500)

KLBF management indicated 1H10 revenues reached Rp4.73tn (+12%yoy)
and net income reached Rp518bn (+30%yoy).These indicative results
confirm our previous indicative results in our July 9 report.The Rp518bn
net profit,considering seasonality effect,is inline with our forecast as it
represents 41%of our FY10F forecast.

The management is targeting FY10 revenues of Rp10.45tn (inline with
ours),and net income of Rp1.11tn (13%below ours).

Regarding IGAR,KLBF decided to sell none-core packaging business IGAR.
IGAR was sold at Rp185/share (or a total of Rp113bn)with the transaction
to be completed within this year.According to the company,this is not a
material transaction.

We still have Buy recommendation for KLBF which is trading at PER10-11F
of 19.6-16.1x.

Mandiri Sekuritas Bank Negara Indonesia:targets rights issue of Rp5-6tn (BBNI,Rp1,970, Buy,TP:Rp2,300)

According to the Ministry of State Owned Enterprises,BNI targets to raise Rp5.-6 tn of fresh funds from the rights issue in 2H10.At the same time,the bank will also sell its 4.14%green shoe option.

In addition,BNI is also reported to have intention to issue subdebt amounted to Rp1-2 tn.

Based on previous rights issue,it takes quite sometimes (around 6-12 months)for BNI to get approval on its rights issue plan from the House of Representative.So,we think that the rights issue will likely occur in 4Q10 the soonest.

At the current price,the stock is trading at 2010F P/BV of 1.4x and PER of 8.6x.We maintained our buy recommendation on the counter.

Mandiri Sekuritas Bumi Resources : Winning the Newmont bid (BUMI, Rp1,800, Buy, TP:Rp2,400)

A consortium of three local governments in Indonesia have appointed PT Multicapital, reportedly to be 100% owned by Bumi Resources, to help finance the purchase of a 10% stake in a unit of Newmont Mining Corp a local mining official The governments of West Nusa Tenggara province, West Sumbawa regency and Sumbawa regency, the three areas where the mine is located, and Multicapital would form a joint venture company to negotiate a price with Newmont, Heryadi Rachmat, the head of West Nusa Tenggara provincial mining office, said. There was an initial agreement for the local governments and Multicapital to split revenue 25% and 75% respectively. In late March, an arbitration court ordered the foreign owners of Newmont Nusa Tenggara (NNT) to sell a 17% stake to the Indonesian government within six months, of which a 10% stake should go to the local governments. The foreign owners began offering NNT shares for sale in 2006, initially offering a 3% stake for $109mn. The following year they offered a 7% stake worth $282mn, and another 7 percent stake worth $426mn in 2008. Newmont has valued the whole of NNT at $4.9bn and has started negotiations with the government over the price. The government said it planned to use an independent appraiser to value the unit. (Reuters).

Newmont’s Batu Hijau mine is located on the island of Sumbawa, approximately 950 miles (1,529 kilometers) east of Jakarta. Batu Hijau is a porphyry copper/gold deposit. In 2008, copper sales were 289.7 mn pounds (130.4 mn equity pounds), while gold sales were 298,900 ounces (134,500 equity ounces). At December 31, 2008, it reported 3,950mn equity pounds of copper reserves and 4.1mn equity ounces of gold reserves at Batu Hijau. The Comp Newmont Corp. owned 45% of the Batu Hijau mine through the Nusa Tenggara Partnership (NTP) with an affiliate of Sumitomo Corporation of Japan. The Company has a 56.25% interest in NTP and the Sumitomo affiliate holds the remaining 43.75%. NTP in turn owns 80% of Newmont Nusa Tenggara (NNT), the Indonesian subsidiary that owns Batu Hijau. The remaining 20% interest in NNT is owned by Pukuafu Indah (PTPI). Newmont is the operator of the Batu Hijau mine (Reuters).

In 2009, NNT plans to produce 455mn pounds of copper and 485,531 ounces of gold. The revenue from copper and gold sales following deduction of concentrate smelting and refinery costs substraction is US$1.149bn or Rp12tn. Expenditures for production costs, shipment costs, royalties, interest expenses, etc. are $657.57mn or Rp6.89tn. As a result, NNT in 2009 is estimated to earn pre-tax profit of $491.92mn or Rp5.16tn. After-tax net profit is expected at approx. $316.95mn or Rp3.32 tn. (newmont.co.id)

Based on US$391mn acquisition price for 7.5% stake, the acquisition will be valued at 10.6x PE09E, much cheaper than Freeport Mc Moran PE09E according to Bloomberg consensus of 32.6x. We have a Buy on Bumi with Rp2,400 target price. At Friday closing price of Rp1,800/share, Bumi is traded at 8.2x and 7.5x, PER09F, and PER10F, respectively.