Macquarie United Tractors – Premature profit taking

United Tractors – Premature profit taking

Following the stock’s strong performance of late, last Friday we saw a 10% drop on the share price on the back of heavy equipment sales data for the month of March. Albert Saputro and Adam Worthington (analysts) are not concerned by the data; they maintain estimate and re-iterate Outperform rating, as they see a further 33% upside to PxT of Rp8,400. For FY09 they forecast an EPS of Rp865, 26% above consensus of Rp683.

Our channel checks confirmed that UNTR sold a total of 189 heavy equipment units in March ’09, which includes 26 units of internal sales to Pama. Total units were down 15% MoM, but units excluding internal sales were only down by 6% MoM. In February, UNTR sold 223 units in total including 50 units of internal sales. For March, the internal sales figure for Pama should have reached 50 units based on the purchase order; had it not because of delayed shipments and manufacturing delays. In short, the 1Q09 total units run rate was around 209 units per month, versus Macquarie’s forecasted run rate of 216 units per month for FY09, or a total figure of 2,600 units for the year.

Despite the strong run, the stock still trades on 7.3x FY09 P/E versus a 10-year average forward P/E of 9.0x and a 5-year average P/E of 11.0x. I see UNTR as a mid-term beneficiary of this global crisis, especially on the mining contracting side of the business (45% of gross profit vs. 37% from heavy equipment). Major foreign competitors, Leighton and Thiess, are cutting back staffs at the moment (business development division most affected), while at the same time limiting working capital allocation from HQ. For them, Indonesian business has been more resilient than that of the other countries, but they are reducing single country exposure to avoid bond rating downgrade. Smaller domestic competitors are having financing difficulties at the same time, which is key for importation of heavy equipment in this tight USD environment.

CS Indo: Global, Asian and Indonesia Equity Strategy

GLOBAL EQUITY STRATEGY: Inflation versus Deflation
· Andrew Garthwaite: We think the most critical issue for investors currently is whether to position their portfolios for deflation (i.e., focus on the next 2–4 years) or inflation (i.e., focus on the end game).
· Over the next few years, we believe the inflation risk has been exaggerated: the US output gap is rising to levels that could leave core CPI falling by 2% and, at the earliest, will close in 2013; we cannot see GDP reverting to trend until 2011; many structural forces of deflation are still in place; already retail sales deflators (ex food) are falling by more than 3% a year in the UK and US; and finally, China is exporting deflation again (with export prices in dollar terms falling 4% a year).
· What asset class tends to do well in periods of rising inflation? We believe gold, index-linked bonds and equities are the best plays (in that order) for hedging inflation. Sectors with a short asset life, high leverage and high correlation with lead indicators should also benefit.

ASIAN EQUITY STRAT: April Consensus EPS Revisions- still early days (Indo Banks)
· Sakthi Siva (Daily): We do not normally comment on trends in consensus EPS revisions until we have at least one full week of data for the month. But this time around, we are rather excited to report that so far in April 2009E, financials EPS has been revised up by 0.7%. We all know the huge outperformance enjoyed by tech on the back of a slowing in the rate of consensus EPS downgrades.
· The next key issues are where are these upgrades in financials coming from, and could it just be a blip. The early April upgrade in financials is coming from three countries – China (+1.8%), Indonesia (+1.3%) and India (+0.4%).

INDONESIA EQUITY STRATEGY: Peaceful 3 weeks campaign- still low political risk
· Arief Wana (Daily): After a peaceful 20-day campaigning, the parliament elections are entering the final phase. Despite the increase in political parties to 38, we believe the key focus remains on the top three – Demokrat, PDIP and Golkar.
· All in all, we believe Indonesia’s political risk is relatively low (which is positive for the market) as the president, SBY, is likely to be re-elected. The worst case, in our view, is going back on current stable but compromised reforms.
· Our top picks remain the domestic players with quality: Telkom, PGAS, United Tractors, Indocement and BBRI.

[BRIGHT INFO] Our Focus Metal Sector

A rebound in China's official purchasing managers' index (PMI) in March shows that the Chinese economy may have bottomed out. China's official PMI, a measure of activity in the manufacturing sector, rose to 52.4 in March from 49.0 in February, marking the first time the index has been in expansionary territory since September. A reading above 50 indicates expansion. The March PMI also showed that China's economic stimulus measures had created demand and boosted growth, he said.

On the other hand, The Global Total Output Index, produced by JP Morgan on Friday with research and supply management organizations, rose to a 5-month high of 40.1 in March from 37.4 in February, but remained below the 50.0 mark that divides growth from contraction.



The 16-nation euro zone's dominant service sector contracted sharply again in March, but not as rapidly as in February, while the UK service sector PMI reached a 6-month high. The index combines data from countries including the United States, Japan, Germany, France, Britain, China and Russia.




US manufacturing contracted in March as the PMI registered 36.3 percent, which is 0.5 percentage point higher than the 35.8 percent reported in February.



This is the 14th consecutive month of contraction in the manufacturing sector. A reading above 50 percent indicates that the manufacturing economy is generally expanding; below 50 percent indicates that it is generally contracting.



ISM: It seems as if the industries are bouncing along the bottom, the good news is that it does appear to be stabilizing over the last three months. Things aren't improving but it doesn't look as if the situation is deteriorating.


The March ISM manufacturing report was mildly encouraging because new orders look relatively strong.


It's a fairly striking move up in the orders index. Some of that has to be for real. Now only 9 points away from a reading of 50 and a reading of 50 reflects stability. Optimists would see hints of a beginning of the end of the inventory correction.

We agree that demand for metal like Nickel and Tin still low in the short-term. But with this situation we believe that demand from manufacturing will start improve. We believe demand for Nickel, Tin and another base metal will picking up on 2H09 and getting better on 2010. The price for Nickel and Tin looks stable and we think the price had reach the bottom.

Our recommendation is start accumulating metal sector like INCO, ANTM and TINS for mid to long-term investment.

[Personal Opinion ]
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DISCLAIMER: This report is issued by [BRIGHT INFO]. Although the contents of this document may represent the opinion of [BRIGHT INFO]. We cannot guarantee its accuracy and completeness.

[BRIGHT INFO] Our Focus BTEL

Pendapatan kotor naik 67,8% pada 2008 didorong oleh faktor kenaikan laju pertumbuhan pelanggan yang mencapai 91,2% (3.8 juta vs 7.3 juta) pelanggan. Pendapatan bersih pada 2008 sebesar Rp 2,202 triliun meningkat 70,7% vs 2007. EBITDA perusahaan tumbuh 50,9% (545,4 miliar vs Rp 822,7). Laba operasional perusahaan naik 19,0% (Rp 378,6 miliar vs Rp 318,). Laba bersih tahun 2008 mencapai Rp 136,8 miliar.

BTEL membukukan kerugian kurs sebesar Rp 44,5 miliar menyusul melemahnya nilai tukar dari Rp 9.419 menjadi Rp 10.950 per dolar AS. Namun ini lebih merupakan dampak dari belanja modal dalam dolar AS yang dilakukan perusahaan selama tahun 2008. Sementara untuk utang dalam mata uang asingnya, BTEL telah melakukan lindung nilai.

BTEL menargetkan bisa meraih 10,5 juta pelanggan tahun ini dan akan mensinergikan layanan interlokal serta internasional. Selain itu juga memperluas wilayah layanan nasional. Dalam tiga bulan terakhir Esia & Wifone menambah 9 kota lagi. Total wilayah yang dilayani Esia saat ini sudah mencapai 64 kota.

Pada awal tahun ini BTEL resmi mengantongi ijin layanan SLJJ dan SLI. BTEL merupakan operator ketiga yang memiliki ijin SLI dan SLJJ setelah Telkom dan Indosat. Bakrie Telecom menargetkan SLI dan SLJJ dapat mulai beroperasi paling lambat akhir tahun ini. Bahkan SLI sudah bisa beroperasi mulai April menggunakan kode akses 009.

BTEL berencana menuntaskan serta mengumumkan pemenang tender 543 menaranya konservatif akhir April 2009. Target harga penawaran telah terlampaui di kisaran Rp 380 miliar. Ini merupakan langkah positif BTEL.

Lembaga perbankan Cerdit Suisse Singpore Branch S/A Long Haul Holdings memiliki 8,09% setara dengan 2.300.000.000 lembar saham di BTEL. First Financial Company Limited sebanyak 6,64% setara dengan 1.886.832.000. Hal ini diungkapkan Badan Administeasi efek, PT Ficomindo Buana Register tertanggal 27 Februari 2008 dalam laporan ke BEI, Jumat (6/3).

Point yang dapat kami ambil
•Pertumbuhan pelanggan merupakan kunci penting untuk memperkuat positioning perusahaan
•Menurut pandangan kami dengan kondisi pelemahan ekonomi global laporan keuangan BTEL masih cukup baik, faktor negative terletak pada rugi kurs akibat belanja modal.
•Kami percaya industri bahwa kedepan CDMA akan bertumbuh dengan pesat
•Penjualan menara BTS, pengoperasian SLI dan SLJJ akan memperkokoh kinerja BTEL kedepan.
•Valuasi BTEL di harga idr50 sangatlah murah sentiment GCG yang menyebabkan harga saham BTEL tertahan.
•Kami merekomendasikan Buy untuk saham BTEL untuk mid dan long-term investment.

[Personal Opinion ]
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DISCLAIMER: This report is issued by [BRIGHT INFO]. Although the contents of this document may represent the opinion of [BRIGHT INFO]. We cannot guarantee its accuracy and completeness.

Bloomberg Crude Oil Set for Rally to $68, Banks Say: Technical Analysis

April 3 (Bloomberg) -- Crude oil’s rally may carry on to $68 a barrel, technical analysts at Credit Suisse Group AG and BNP Paribas SA said.

Oil futures in New York formed a “base” between $40 and $50 a barrel in the first quarter from which prices can rally further, David Sneddon, head of technical analysis at Credit Suisse in London, and Andrew Chaveriat, a BNP analyst in New York, said separately.

Having broken out of the range set by the rally from Dec. 19’s four-year low of $32.40 to the high of $50.47 on Jan. 6, prices are poised to move higher. Oil may repeat the $18.07 a barrel gain of that December-to-January advance, giving a target of about $68.50 a barrel, the analysts said.

“You wouldn’t give up on the rally yet, it still has legs,” Sneddon, said yesterday at a London presentation hosted by Bloomberg LP, the parent company of Bloomberg News.

Futures on the New York Mercantile Exchange, 19 percent higher this year, traded at $53.07 a barrel today.

Crude will first be drawn to $59.50, a price target shown on a so-called Fibonacci chart as a 23.6 percent recovery of last year’s crash from July’s record of $147.27 down to $32.40. Prices may then peak near $68.50, Sneddon said.

The ratios used in Fibonacci analysis are based on the sequence identified by Italian mathematician Leonardo Fibonacci in the 13th century and used to predict support and resistance levels for prices.

In contrast to Seddon, BNP’s Chaveriat said crude may surpass the target near $68 and rise above $70 a barrel in the next three months. The contract will be drawn towards its next Fibonacci level of $76.28, a 38.2 percent retracement of last year’s decline, Chaveriat said.

“It would not be unreasonable to see $71 or $72 later this summer,” Chaveriat added. “The best barometer showing the path of least resistance is upwards in the medium term is the big base we built back in December, January.”

To contact the reporter on this story: Grant Smith in London at gsmith52@bloomberg.net