Mansek Bakrieland Development:Avenue ownership diluted on ELTY,eyes Bakrie Toll Road (ELTY,Rp104,Buy,TP:Rp200)

Following Avenue Capital Group ’s decision not to participate on ELTY ’s latest Rp3.2tn Right Issue transaction,Avenue ’s ownership on the company was diluted from 24.2%to 12.16%.It is said by Investor Daily this morning that Avenue has now more interest on ELTY ’s toll-road project,evidenced through its new loan commitment of US$55mn,an addition of earlier US$45mn.On the telephone discussion with ELTY ’s corporate secretary,it is confirmed that Avenue sees promising value on ELTY ’s infrastructure project,and likely to be involve in the ownership through IPO that be
conducted by Bakrie Toll Road sometime next year.Avenue has long experienced in the infrastructure project through past project financing the fund involved in Philippines,aside of Edgar Bautista,ELTY ’s commissioner, who also had experiences in infrastructure companies in the past.

However,on the flip side,it leaves us question whether Avenue did not subscribe over ELTY ’s latest Right Issue which offered at Rp160/share,yet on earlier corporate actions,Avenue have always participated even when the share price (ie rights issue,etc)were at least Rp200/share.We are still reviewing forecast on ELTY,however the company currently trades at 74% discount to NAV10 and PER10F 63.2x.

Mansek Energi Mega Persada:1H10 net loss narrowed to Rp79bn,inline with our estimate (ENRG,Rp102,Buy,TP:Rp200)

1H10 revenue fell 19.0%yoy to Rp568bn,which was due to lower daily oil &gas production rate volumes of -18.7%yoy and -30.5%yoy,respectively.Mainly was driven by the lack of drilling activities in the previous year.Nevertheless,gross margin improved as well as its EBITDA by 82.3%yoy,as ENRG continues to drill lower cost development and work over
wells which resulted in a 26%drop in its COGS.

We also noticed that financing charges drop significantly by 47.1%yoy,which resulted in narrowed net loss to Rp79bn from Rp245bn in 1H09.Overall,such result is inline with ours as we expect that there will be additional oil &gas production from North Pagerungan field of Kangean PSC and Segat field of Bentu PSC in 4Q10.