Mandiri Sekuritas United Tractors: Good 5M09 operational performance. (UNTR, Rp10,050, Buy, TP: Rp13,000)

Here is a short update on United Tractors 5M09 performance, which was well for construction machinery & mining contracting. However, coal sales were again below than expectation with the company downgrading their FY09F target from 4.0mn tons to 2.5mn tons. Below are the details on each business segment:

Construction Machinery: 5M09 unit sales were within with our expectation, with positive sign of demand recovery in various sectors. 5M09 unit sales were 1,140 units (-42.6% yoy) and in May09 unit sales were 303 units (+45.0% mom or - 27.3%yoy). We believe that May09 unit sales could be an early sign of recovery since its bottom in Dec08 unit sales. Monthly unit sales from each sector reached its year-to-date highest as commodity prices remain at favorable level and leasing rates fell. Sales to Pamapersada were steady at 21% of total sales (ytd Pamapersada contribution was 16% to sales, due to low delivery of 13.8% to Pama in Mar09). We continue to remain comfortable with our FY09F forecast and deem likely for upside to our forecast, should the unit sales continue to accelerate. In addition, spare part sales growth remains similar to 1Q09, which is positive.

Mining Contracting: 5M09 coal production was inline, with stripping ratio at its highest since 2006. 5M09 coal production was on track with our estimates at 24.4mn tons while overburden was higher at 218.2mn bcm, translating to 8.9x stripping ratio. Rainfall in the mining sites has eased down in May09 but problems in the mining site caused delay in coal production. As result, UNTR focused more on extracting overburden so that coal production can be easily upped when needed. UNTR mentioned that there were stockpile problem in Adaro site and new operation in East Block of Indominco site that caused more overburden than production. For FY09F, we still believe that our forecast can be comfortably achieved while stripping ratio could be above our expectation of 7.5x.

Coal Sales: UNTR downgraded its FY09F coal sales target to 2.5mn tons, below our target of 3.0mn tons. 5M09 coal sales showed poor results again as Glencore and Nobel delayed their shipping due to high fixedpurchase- price. As result, ytd coal sales were -40.1% yoy and UNTR downgraded their FY09F target to 2.5mn tons, below ours of 3.0mn tons. Based on current condition, it looks tough to achieve our FY09F target. However, should coal price continue to improve and start to match with average fixed-selling-price of US$82/ton, it is possible for Glencore and Nobel would start sending their shipments on time and improve UNTR’s coal sales. Note that coal sales contributed a small chunk to total EBITDA before elimination in 1Q09, at about 7.7%.

With 5M09 performance going well, we believe that we can achieve our FY09F earnings outlook comfortably. Thus, we remain a buyer for UNTR with target price of Rp13,000/share that implies to PER09F of 13.4x or P/BV09F of 2.5x. We expect EPS growth of 9.8% in FY09F and 34.0% in FY10F.

Mandiri Sekuritas Construction sector: Bappenas to prepare policy paper for PPP

We went to a workshop on the policy of public private partnership (ppp) in Indonesia yesterday. The program was initiated by National Development Planning Agency (Bappenas) in collaboration with the World Bank and Aus AID. Bappenas requested World Bank to prepare policy paper on PPP in order to inform the incoming government. There were several representatives, which consists of project owner from
government institutions, SOEs, as well as private companies.

These representatives openly discussed about the difficulties which they are facing in dealing with infrastructure related projects. These include (1) lack of government support in project financing, (2) no clear guidance on the steps required to prepare and structure PPPs, and (3) lack of leadership on the PPP agenda. Bappenas acknowledged these difficulties and will indentify binding constraints in PPP framework and program and will also provide possible solutions. The World Bank and Bappenas expect to finalize the policy paper by August 2009.

We believe once the policy paper is completed, it would hopefully pave way for more investments in infrastructure projects, thus benefiting construction companies such as Wijaya Karya (WIKA, Rp345, Buy, TP Rp390) and Adhi Karya (ADHI, Rp445, Buy, TP Rp420). WIKA and ADHI are currently trading at PER09 of 12.5x and 8.5x, respectively.

CIMB Astra Internasional Company update - Factoring in a re-rating

(ASII IJ / ASII.JK, NEUTRAL - Upgraded, Rp23,200 - Tgt. Rp21,600, Automobiles and Parts)

Astra's May car and motorcycle wholesale volumes rebounded by 4% and 18% mom (estimated) respectively. On the cautious side, we are maintaining our estimates, believing that a sustained recovery would be over six rather than four quarters, or by 2Q2010. On the other hand, we now share the view that Astra's re-rating could be sustained should Indonesian economic growth stay resilient and support a sustained auto recovery. We raise our earnings estimates by 3-6%, and upgrade Astra to Neutral from Underperform with a higher target price of Rp21,600, now on par with its NAV using sum-of-the-parts valuation (from Rp16,200, 15% discount to NAV previously). This implies 13.5x and 11.7x CY09-10 earnings respectively.

[BRIGHT INFO] "Just a Note"

Good day to you
U.S. stocks fell, sending the Standard & Poor’s 500 Index to its biggest two-day tumble since April. Stocks rose in early trading as a better-than-estimated report on housing starts spurred a rally in homebuilders and commodity shares climbed with metal and oil prices.

Southeast Asian stock markets fell on Tuesday, worried about the pace of recovery in the global economy, with Singapore tumbling to near three-week lows 2.2% while stocks in Jakarta down 1.9% and Bangkok slid close to two-week lows 2.7%.

Many markets in Asia turned up slightly in late trade simply because investors took their lead from Dow Jones futures and oil prices. Markets will remain cautious in coming sessions as investors are less optimistic over the global recovery.

Crude oil was little changed as U.S. equities dropped and the dollar rebounded. Crude oil for July delivery fell 15 cents to settle at $70.47 a barrel. Tin advanced 0.3 percent to $15,100 a ton. Nickel gained 0.8 percent to $14,900 a ton.

I think investors need more clear evidence of growth to restart the market's rally. A pause in the rally is necessary for stocks to move higher. The market is overbought right now and what it needs to do is consolidate and it needs to have a series of days like this.

For today, I think our market still on consolidation with support 1998-2010 point index. We are still on defensive stock recommendation with high yield dividend.

We are still positive on TLKM, TINS, ANTM, INCO, BUMI, DEWA and BNBR. Buy on Weakness on the lower range index. Interesting on RALS?

“UP & DOWN THAT’S LIFE JUST SMILE BECAUSE IT HAPPENED”


[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.

Reuters Wall Street hit by economic, consumer jitters

NEW YORK (Reuters) - U.S. stocks slipped on Tuesday as mixed economic data and Best Buy's (BBY.N) disappointing sales spurred worries about an anemic recovery.

After a three-month run that lifted the S&P 500 as much as 40 percent from 12-year lows, analysts said the economy needs to start showing real improvement to support optimism about a budding recovery.

A rebound in May housing starts pointed to some stabilization in that sector, but another government report showed industrial production had a steeper-than-expected slide last month.

Industrial production fell 1.1 percent in May, while capacity utilization, a measure of slack in the U.S. economy, slumped to its lowest level on records dating back to 1967.

"It indicates that at a minimum, the market's taking a breather and may be starting a meaningful correction," said Hugh Johnson, chief investment officer of Johnson Illington Advisors in Albany, New York, concerning the market's losses.

"The worry is we've gone too far too fast and that we've overstated the strength of a recovery in the economy and earnings."

Best Buy Co Inc (BBY.N), the largest U.S. consumer electronics retailer, posted weaker-than-expected sales in its first quarter and suggested earnings for the rest of the year would be worse than forecast. Its shares dropped 7.3 percent to $35.84. The S&P retail index .RLX tumbled 3.1 percent.

Indexes ended at session lows. The Dow Jones industrial average .DJI fell 107.46 points, or 1.25 percent, to 8,504.67. The Standard & Poor's 500 Index .SPX lost 11.75 points, or 1.27 percent, to 911.97. The Nasdaq Composite Index .IXIC was off 20.20 points, or 1.11 percent, to 1,796.18.

The S&P 500 is still up 34.8 percent from March's 12-year closing low. Declines have been shallow and short-lived, but analysts are increasingly looking for a larger pullback. more...