ASII IJ remains a Core Holding in Indonesian market, given 1) Strong Domestic Franchise and upside from Commodities, 2) Strong Management and Balance Sheet, and 3) Top-5 largest stocks in Indonesia. At Rp32,650/share, ASII IJ is trading on 13.7x 2010F PER with +12% EPS Growth. I personally recommend to Accumulate for 12-months horizon!
· Arief Wana (Daily): Due to the Lebaran holidays, Indonesia’s September auto sales volume dropped on both MoM (23% for cars and 33% for motorcycles) and YoY bases. Despite the seasonality, the September volume remained higher than the 1H09 average, suggesting the positive momentum. On 9M09, the volume declined by 28% YoY (versus our forecasts’ of -20%) for cars and 14% YoY (-10%) for motorcycles. We expect the momentum to reverse in the coming month and YoY growth to accelerate due to the weak 4Q08 data.
· The positive outcome is on Astra’s market shares for both cars and motorcycles, which continue to stay high (above its normal market share) despite a rising market, especially for motorcycles. The impact of new scooter capacity in motorcycle market continues to have positive impact on Astra’s market share.
· While we see earnings upside risks on the motorcycle division (currently only 10% of Astra’s profit), we maintain our earnings for the time being.
Selasa, 27 Oktober 2009
Credit Suisse - INDOSAT (ISAT): Disappointing 3Q09 despite a turnaround sign- reit Outperform rating
Prefer TLKM IJ in the short-term, given continued dominance of its 65%-owned subsidiary Telkomsel (55% of Revenue share), with ISAT IJ and EXCL IJ to me are tight in fighting for Revenue Share (17-18% and 15-16% respectively)! At Rp5,500/share, ISAT IJ is trading on 13.6x-11.5x 2009F-2010F PER and 5.2x-4.8x 2009F-2010F EV/EBITDA is strill trading at discount to TLKM IJ(vs TLKM IJ @Rp8,650- 14.7x-14.6x 2009F-2010F PER and 5.2x-4.9x 2009F-2010F EV/EBITDA)! I personally think it will be clearer if ISAT IJ could continue to show turnaround in 4Q09 results, while I think QTEL has a chance to achieve a turnaround given their investments/experiences in more than 10 countries already.
· Coin McCallum (Attached): PT Indosat Tbk (ISAT.JK, Rp5550.00, OUTPERFORM, TP Rp6450.00) published limited information on its 3Q09 operational performance last week - a subscriber figure, a consolidated revenue figure, an EBITDA figure, and a net profit figure . The consolidated revenue grew 1.5% QoQ, driven by a more than 5% QoQ increase in cellular revenue. IDD and MIDI revenues, however, declined, and no explanation has been given for this as yet, the strengthening Rupiah may have affected incoming IDD revenue. On the other hand, we note that this represents the first quarter that Indosat was able to report growth in cellular revenue in FY09, after two consecutive quarters of decline in 1Q and 2Q09.
· On the EBITDA level, Indosat.s EBITDA margin declined to 44.9% in 3Q09, from 48.7% in 2Q09 and 47.9% in 3Q08, resulting in a 6.3% QoQ and 12.5% YoY decline in EBITDA. We note that the new CFO commenced work at Indosat in September. Reported consolidated net income, which included the impact from non-operating items and forex gains/losses, declined by 50.1% QoQ but grew by 6.1% YoY in 3Q09, again, no explanation was given as to the drivers behind this.
· Relative to our FY09E projections, Indosat has therefore achieved only 64.9%, 62.6%, and 66.0% of our consolidated revenue, EBITDA, and reported net profit forecasts during 9M09. However, we believe that Indosat cellular revenue market share has probably already stopped declining in 3Q09 following the changes in management. We expect revenue growth to continue to accelerate into 4Q09. Indosat will publish the full details of its 9M09 unaudited results on 28th October 2009. We await the full explanation of the movement in MIDI and IDD revenues, EBITDA and net profit margins. Maintain OUTPERFORM rating.
· Coin McCallum (Attached): PT Indosat Tbk (ISAT.JK, Rp5550.00, OUTPERFORM, TP Rp6450.00) published limited information on its 3Q09 operational performance last week - a subscriber figure, a consolidated revenue figure, an EBITDA figure, and a net profit figure . The consolidated revenue grew 1.5% QoQ, driven by a more than 5% QoQ increase in cellular revenue. IDD and MIDI revenues, however, declined, and no explanation has been given for this as yet, the strengthening Rupiah may have affected incoming IDD revenue. On the other hand, we note that this represents the first quarter that Indosat was able to report growth in cellular revenue in FY09, after two consecutive quarters of decline in 1Q and 2Q09.
· On the EBITDA level, Indosat.s EBITDA margin declined to 44.9% in 3Q09, from 48.7% in 2Q09 and 47.9% in 3Q08, resulting in a 6.3% QoQ and 12.5% YoY decline in EBITDA. We note that the new CFO commenced work at Indosat in September. Reported consolidated net income, which included the impact from non-operating items and forex gains/losses, declined by 50.1% QoQ but grew by 6.1% YoY in 3Q09, again, no explanation was given as to the drivers behind this.
· Relative to our FY09E projections, Indosat has therefore achieved only 64.9%, 62.6%, and 66.0% of our consolidated revenue, EBITDA, and reported net profit forecasts during 9M09. However, we believe that Indosat cellular revenue market share has probably already stopped declining in 3Q09 following the changes in management. We expect revenue growth to continue to accelerate into 4Q09. Indosat will publish the full details of its 9M09 unaudited results on 28th October 2009. We await the full explanation of the movement in MIDI and IDD revenues, EBITDA and net profit margins. Maintain OUTPERFORM rating.
Credit Suisse - BANK DANAMON (BDMN): Flash Report- In Line Strong +23% YoY 3Q09 PPOP- reit Buy
Teddy Oetomo is forecasting average ROE of 23% in 2011F, which justify 3x 2010F PBR Target Price of Rp5,700 (implying 17.5x 2010F PER and 12.3x 2011F PER). Again during Peak Historical PBR in 200F was 4x and average Historical 2007 PBR was 3.5x. At Rp4,800, BDMN is trading on 14.7x 2010F PER with +67% EPS Growth and 2.2x 2010F PBR, on the back of Quality Management, strong back-up from Temasek Group, and clear beneficiary of remained low prospective domestic interest rates historically! Buy BDMN!
· Teddy Oetomo (Flash Report): Robust PPOP growth; FY09-11E earnings revised down by 3.3-4.5%,: BDMN is on track to deliver a robust outlook for 2010, in our view. In 3Q09A, BDMN achieved 100 bp QoQ NIM growth, leading to robust pre-provision profit growth (+13.4% YoY for 9M09A and 23% YoY for 3Q09A). Its normalised 3Q09A net income was up by 4% YoY (+5% QoQ).
· On track for robust 2010E: Including derivative loss write-offs, BDMN’s 9M09A net income was 67% of our old forecasts and 72% of consensus’ estimates. We expect BDMN’s ROE to expand from 14.4% in FY09 to 18.5% in FY10, given: 1) the absence of derivative loss write-offs (which itself may boost earnings by 20%); 2) stronger loan growth (8.7% in FY09 versus 30% in FY10); 3) a robust NIM outlook, supported by a strengthening low-cost funding base. We tweak our FY09-11E earnings down by 3.3-4.5%, given softer than expected loan growth and higher than expected provision expenses.
· Sustainability of profitability: We expect BDMN’s superior 3Q09A NIM to be sustainable in 4Q09A, given the recent agreement by 14 banks to lower deposit rates to a maximum of 7% by December 2009. However, we expect BDMN’s NIM to compress from 11.8% in 3Q09A to 10.7% in FY10E (though remain 90 bps higher than its FY08A NIM of 9.8%). We commend BDMN for its strengthening low-cost deposit base, which puts downward pressure on future funding costs, in our view.
· Reasonable valuations: BDMN is currently trading in line with regional peers (based on P/B and ROE valuations). However, we believe that it offers attractive value with potential for rapid ROE recovery. In 2010, we expect BDMN to achieve 18.5% ROE (11% below its 2007 ROE of 20.9%), while our target price implies 2010E P/B of 3x, remaining at a 14% discount to the average 2007A P/B of 3.5x. We maintain our OUTPERFORM rating and target price of Rp5700.
· Teddy Oetomo (Flash Report): Robust PPOP growth; FY09-11E earnings revised down by 3.3-4.5%,: BDMN is on track to deliver a robust outlook for 2010, in our view. In 3Q09A, BDMN achieved 100 bp QoQ NIM growth, leading to robust pre-provision profit growth (+13.4% YoY for 9M09A and 23% YoY for 3Q09A). Its normalised 3Q09A net income was up by 4% YoY (+5% QoQ).
· On track for robust 2010E: Including derivative loss write-offs, BDMN’s 9M09A net income was 67% of our old forecasts and 72% of consensus’ estimates. We expect BDMN’s ROE to expand from 14.4% in FY09 to 18.5% in FY10, given: 1) the absence of derivative loss write-offs (which itself may boost earnings by 20%); 2) stronger loan growth (8.7% in FY09 versus 30% in FY10); 3) a robust NIM outlook, supported by a strengthening low-cost funding base. We tweak our FY09-11E earnings down by 3.3-4.5%, given softer than expected loan growth and higher than expected provision expenses.
· Sustainability of profitability: We expect BDMN’s superior 3Q09A NIM to be sustainable in 4Q09A, given the recent agreement by 14 banks to lower deposit rates to a maximum of 7% by December 2009. However, we expect BDMN’s NIM to compress from 11.8% in 3Q09A to 10.7% in FY10E (though remain 90 bps higher than its FY08A NIM of 9.8%). We commend BDMN for its strengthening low-cost deposit base, which puts downward pressure on future funding costs, in our view.
· Reasonable valuations: BDMN is currently trading in line with regional peers (based on P/B and ROE valuations). However, we believe that it offers attractive value with potential for rapid ROE recovery. In 2010, we expect BDMN to achieve 18.5% ROE (11% below its 2007 ROE of 20.9%), while our target price implies 2010E P/B of 3x, remaining at a 14% discount to the average 2007A P/B of 3.5x. We maintain our OUTPERFORM rating and target price of Rp5700.
Credit Suisse - ECONOMICS: Trip notes and BI vs FX Intervention policy & New Cabinet- remains Positive
Market Events are now 1) 3Q09 earnings season this week until end-October, 2) The 100 days progress of President SBY from October 21st until end-January, 3) January Effect, 4) 4Q09 results in Feb-April, and 5) 1Q10 results by end-April. At JCI 2,468pts (14.0x 2010F PER with 19.3% EPS Growth), we continue to be Positive with Indonesian markets with 6-9 months Index Target circa 2,700pts (15.2x 2010F PER, based on average 1992-1997 market PER), with Top-Picks remain UNTR (13.7x), INDF (13.8x), BBRI (10.1x)/BDMN (14.7x), PGAS (11.5x), ASII (13.7x)/BBCA (15.4x), SMGR (10.4x) and PTBA (8.8x)/ITMG (13.9x)! My small cap picks are SGRO (12.0x)/LSIP (13.7x), ELTY (45% Discount to RNAV)/CTRA (41% Discount to RNAV) and JSMR (14.1x)!
· Cem Karacadag (Daily): We visited Jakarta recently. Our main takeaways are: 1) there should be no surprises in the new cabinet or policy programme due by this and the next weeks, 2) the appreciation of the Indonesian rupiah may have run its course, with the balance of risks potentially favouring its stability, if not a pull back, in the rest of 2009, and 3) inflation could become a thorn in 2010, although Bank Indonesia is in no hurry to hike rates.
· Arief Wana (Attached New Cabinet): My view on New Cabinet announcement last week is that it looks disappointing at the surface (20 out of 34 are from political parties, including Golkar), but to be fair, these political parties have signed an agreement with SBY's democrat to support the coalition. This agreement would also enable SBY to reshuffle if targets or achievements were not met. And this could be a soon as the first 100days. SBY has been quoted as saying that the ministers are responsible to President, not their political leaders. So, it is premature to say that SBY's strong mandate is not going to be effective, in my view.
· Cem Karacadag (Daily): We visited Jakarta recently. Our main takeaways are: 1) there should be no surprises in the new cabinet or policy programme due by this and the next weeks, 2) the appreciation of the Indonesian rupiah may have run its course, with the balance of risks potentially favouring its stability, if not a pull back, in the rest of 2009, and 3) inflation could become a thorn in 2010, although Bank Indonesia is in no hurry to hike rates.
· Arief Wana (Attached New Cabinet): My view on New Cabinet announcement last week is that it looks disappointing at the surface (20 out of 34 are from political parties, including Golkar), but to be fair, these political parties have signed an agreement with SBY's democrat to support the coalition. This agreement would also enable SBY to reshuffle if targets or achievements were not met. And this could be a soon as the first 100days. SBY has been quoted as saying that the ministers are responsible to President, not their political leaders. So, it is premature to say that SBY's strong mandate is not going to be effective, in my view.
Mandiri Sekuritas UNSP: Ready to take off
Bakrie Sumatera Plantations (UNSP), via its subsidiary BSP Finance B.V.has issued US$25mn bond with coupon rate of 10.75% which will mature in 2011. Note that the buyer of this bond is Bookwise Investments Limited – a new company fully owned by PT Nibung Arthamulia (90% owned by UNSP). Therefore, an additional interest expense of US$0.6-2.7mn for FY09F-10F would be netted off at consolidated level. Overall, there is no earnings impact from this transaction, but more on preparation for another huge expansion, in our view. Reiterate our ! Buy call with TP of Rp1,100/share.
New US$25mn treasury bond issue. UNSP has recently issued US$25mn bond with coupon rate of 10.75%l maturing in 2011. The terms and conditions of this new bond were similar with its current outstanding bonds of US$160mn. However, the new bond would not be listed in the market since the buyer would be Bookwise Investments Limited, the subsidiary of PT Nibung Arthamulia (90% owned by UNSP). Hence, there is no cash inflow for now. Based on our recent conversation with management, this deal is intended for future funding purpose.
No impact on earnings. Since this is an inter-company debt, an additional interest expense of US$0.6mn for FY09F and US$2.7mn for FY10F would be netted off at consolidated level. Thus, such transaction would not affect our financial projections. Our net gearing assumption of 47.5% and 39.2% for FY09-10F remains intact. At this juncture, this deal would only provide greater flexibility to future expansion or acquisition project, in our view.
Expecting 7-10% CPO production growth. Considering its young plantation profile, UNSP expected to reach around 7-10% CPO production growth this year. In terms of capex, UNSP has spent around Rp300bn as of 9M09, while full year target was at Rp300-350bn. Therefore, we positively view company’s CPO production growth going forward. As of FY09F, we foresee some 6.3% yoy growth in CPO production.
Maintain our forecast, target price, and recommendation. We maintain our earnings forecast intact at this point. Currently, the stock is trading at PER09-10F of 10.5x and 8.7x and EV/ha of US$5,904. On average, plantation companies under our coverage are trading at PER09F-10F of 16.8x and 12.8x. We retain our Buy call and target price of Rp1,100/share as we believe that valuations are still cheap. Our target price was derived from DCF valuation ! (WACC: 12 1% and TG: 5.0%).
New US$25mn treasury bond issue. UNSP has recently issued US$25mn bond with coupon rate of 10.75%l maturing in 2011. The terms and conditions of this new bond were similar with its current outstanding bonds of US$160mn. However, the new bond would not be listed in the market since the buyer would be Bookwise Investments Limited, the subsidiary of PT Nibung Arthamulia (90% owned by UNSP). Hence, there is no cash inflow for now. Based on our recent conversation with management, this deal is intended for future funding purpose.
No impact on earnings. Since this is an inter-company debt, an additional interest expense of US$0.6mn for FY09F and US$2.7mn for FY10F would be netted off at consolidated level. Thus, such transaction would not affect our financial projections. Our net gearing assumption of 47.5% and 39.2% for FY09-10F remains intact. At this juncture, this deal would only provide greater flexibility to future expansion or acquisition project, in our view.
Expecting 7-10% CPO production growth. Considering its young plantation profile, UNSP expected to reach around 7-10% CPO production growth this year. In terms of capex, UNSP has spent around Rp300bn as of 9M09, while full year target was at Rp300-350bn. Therefore, we positively view company’s CPO production growth going forward. As of FY09F, we foresee some 6.3% yoy growth in CPO production.
Maintain our forecast, target price, and recommendation. We maintain our earnings forecast intact at this point. Currently, the stock is trading at PER09-10F of 10.5x and 8.7x and EV/ha of US$5,904. On average, plantation companies under our coverage are trading at PER09F-10F of 16.8x and 12.8x. We retain our Buy call and target price of Rp1,100/share as we believe that valuations are still cheap. Our target price was derived from DCF valuation ! (WACC: 12 1% and TG: 5.0%).
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