Mansek ISAT:1H10 results hurt by higher financing cost and lower forex gains (ISAT,Rp4,625,Buy,TP:Rp5,400)

As we reported last week,ISAT ’s net profit fell to Rp287bn (-72%yoy)even though operationally the results were in-line on revenue and operating levels.The rise in financing costs (+22%yoy)to Rp1.1tn and lower forex gain due to Rupiah strengthening (-49%yoy)of Rp370bn led to the shortfall in net earnings way below consensus and ours.Additionally, 1H10 subscribers were at 37.8mn (+35%yoy),however this is lower than the subscriber base in 1Q10 of 39.1mn.

Apparently,among the 3 major telco operators,only Indosat registered a qoq decline on subscribers as of 1H10.On the bright-side,despite the drop in subscriber numbers,its cellular revenues grew the highest qoq at 7.7%versus EXCL and Telkomsel ’ s 4.2%and 5.7% growth respectively.Among the big 3 operator ’s revenue market share of ISAT stood at 18% and continues to trail Telkom (66%revenue market share)but is still ahead of EXCL (which accounted for 16%revenue market share among the 3 operators).Currently the stock trades at PER10F 15.4x.

Mansek International Nickel:1H10 net income above ours and consensus estimates (INCO,Rp4,125,BUY,TP:Rp5,900)

INCO reported 1H10 net income of US$219mn (+61.1%yoy),represented 66.3%of our FY forecast and 63.4%of consensus estimates.
Actual average HSFO (High Sulphur Fuel Oil)price of US$76.79 per barrel in 2Q10 and US$76.03 per barrel in 1Q10 was lower than our average HSFO price assumption of US$95.00 per barrel.
The company ’s 1H10 sales grew by 27.8%yoy.2Q10 sales was higher than in 1Q10 of,42.3%qoq,margin reached 47.4%,which increase from 41.2%in 1H09 (vs our target for FY10 of 41.6%)
At current price,INCO is trading at 2010F and 2011F PER of 13.8x and 9.4x.We maintain our BUY recommendation on the counter.

Mansek Indosat:has issued US$650mn bonds (ISAT, Rp4,950,Buy,TP:Rp5,400)

Indosat Palapa Company BV,a subsidiary of ISAT has issued a 10 years Guaranteed Senior Notes amounting to US$650mn;callable after 5 years and guaranteed by ISAT.The bond got Ba1 rating from Moody ’s,BB from Standard and Poors and BBB-from Fitch rating agency.The bonds priced at 99.478%and provide yield at 7.45%and will be listed in SGX-ST,Singapore.The bond proceed will be used for debt refinancing.

ISAT will allocate capex FY10 totaling US$550-700mn,which around 70%will be used for networking and equipment. The company aims,subscribers to reach 39.1mn by end 1H10,compared with 33.1mn by end 2009.ISAT trades at PER10F of 16.1x,we have a Buy recommendation.

Mandiri Sekuritas Inco: 1Q10 net earnings up by 344%yoy, in-line with ours but slightly above consensus (INCO, Rp4,475, Buy, TP:Rp5,900)

􀂄 Yesterday, Inco reported net income of US$76mn, up by more than 3-folds yoy on the back of sharp recovery of nickel prices and higher sales volumes. ASP for 1Q10 grew by 71%yoy to US$14,182/t, while nickel in matte sales volume improved by 23%yoy. The company was also able to pare down costs as well in areas of supplies, contracts and services which further contributed to its much improved margins. We maintain buy on the stock, currently having a 32% upside to our TP and trading at PER10F of 15.1x.