CLSA Adhi Karya (ADHI IJ) FY08 results update

Extraordinary 4Q boosted FY08 performance.
FY08 net profit Rp81bn, down 27%YoY but almost triple of our estimate on the back of strong revenue generation.
FY08 revenue Rp6.6tn grew 33.5%YoY on the back of an extraordinary 4Q08 performance.
Approximately 45% of FY08 revenue booked in 4Q which was significantly higher than 36%-38% historical.

Revenue boost was provided from speedy construction of the Kanci-Pejagan tollroad (estimated contract value Rp2tn).
The company also allocated Rp147bn of provisions which include Rp100bn or 80% of aging receivables from the Monorail project.
Despite 5% provisions, receivables have not yet improved at Rp3tn or 166 days TO.
Thus we remain cautious for future earnings cut due to higher risk of aging receivables.

Our preferred contractor Wijaya Karya (WIKA IJ) has stronger balance sheet and currently trading at attractive 6.6x PE2010.

CLSA Indo Malaysian plantation, OWT

Wilianto looks at the CPO sector and he continues to advise clients to overweight Indo plantation and re-initiates Malaysian plantation sector with an overweight. Yes, Wili now has extra responsibility to cover Malaysian CPO sector.

We suspect that Wili wants to spend more time for his 3 true loves: (1) Wili’s wife is Malaysian and he wants to explore the side of his wife’s family further (2) Wili’s love for plantation (3) his love for Malaysian FOOD, including durian and Malaysian-style kwe tiaw (I like it too…)

The key points from his report:
Both CPO and soybean supplies are tight. CPO supply remains tight (poor harvest + bad weather) supply is just as tight after poor harvest in Argentina.
Strong production in 2H09 is priced in. Any sign of supply disruption will send CPO price even higher.
Palm oil production needs to pick up by 25% to replenish Malaysian inventory to 2m tons. This might not happen as farmers cut down fertiliser usage last year (impact is 12 month lagging).
Risk: US soybean planting exceeding intention to plant (flat acreage yoy). However, as inventory is low.
In Indonesia, Wili has BUY calls on Lonsum (LSIP IJ) and Sampoerna Agro (SGRO IJ).

Macquarie PGAS: to sign gas sales contract by end of this month

PGAS investor relations said the company will within this month sign the gas sales agreement with Muara Kawang power plant, who has agreed to take on 30 mmscfd gas from PGAS. The price will be set at market price of US$5.5/mmbtu. First gas flow is targeted for June 2009. Macquarie assumes the first gas flow will only come in December. The earlier realization will lift FY09 EPS by around 2%. Macq rates Outperform with PxT of Rp3,100.

Macquarie Bukit Asam (PTBA): 1Q09 results indication

Corporate secretary told Investor Daily newspaper 1Q09 sales and net profit have more than doubled y-o-y. PTBA reported a sales of Rp1.23trn and a net profit of Rp286bn in 1Q08. Doubling these figures, we would get a sales of Rp2.46tn (23% of Macq’s FY est) and a net profit of Rp572bn (20% of Macq’s FY est).

1Q09 should be a strong quarter for PTBA, as the company books its export volumes (35% of total) at 2008 prices of over US$90/t. 2Q09 onward, export prices will fall to between US$60-70/t based on JFY09 settlement. But offseting the high export prices would be the 1) seasonally low sales volume in 1Q, 2) yet-to-be-repriced domestic volumes from Bukit Asam and Tarahan mines (10% of total), that we expect to be re-priced up by 30-50% retroactively.

Macquarie rates the stock a NEUTRAL on 6.8x and 15.0x P/E for 2009 and 2010. We forecast a 51% y-o-y decline in FY10 net income, as we assume domestic coal price to go from US$73 à US$48, and export price to go from US$60 à US$56. We also assume a strengthening Rp/US$ exchange rate from Rp11,125 à Rp9,625, which is a negative for PTBA. If we assume a flat exchange rate, the FY10 P/E will be around 11.5x based on a 38% y-o-y profit decline.

Macquarie Bakrie Group: to fully restructure debt by year-end

Bakrie & Brothers investor relations Dileep Srivastava spoke to Investor Daily & Kontan newspapers, summarized as follows:

1. BNBR expects to repay all of its debt and repo obligations at the latest by year-end. But earlier completion is possible. BNBR has Rp4.2trn debt remaining (Rp231bn to PNM, Rp55bn to Recapital, and Rp157bn to Brentwood), from an original amount of Rp16.1trn.

2. BNBR hopes to increase its stakes in Bumi Resources, Bakrie Plantations, and Bakrieland. This can be achieved by buying in the market or exercising the call option.

3. Completion of JV scheme between BNBR and Northstar Pacific, who took over US$575mn from Odickson, will be announced in 2-3 weeks.

4. According to initial agreement, the convertible bond deal between BNBR and Northstar must be issued by May 2009. BNBR CFO Yuanita Rohali said she expects to hold a public expose soon.