Credit Suisse Bank Mandiri Tbk -- 3Q09 supported by lower credit costs

● BMRI reported 9M09 net income of Rp4,620 bn, +17%YoY, with 3Q09 earnings up 26% YoY and 11% QoQ. 9M09 earnings came at 75% of our and consensus forecasts. We find positive surprise from management’s guidance of minimal 4Q09 provisioning.

● 9M09 PPOP was on the soft side (69% of our old FY09E) but management’s guidance for minimal 4Q09 provisioning leads to our 7% FY09E earnings hike. We also hike our FY10/FY11 earning estimates by 14%/16% on a lower credit costs outlook.

● Our estimates have yet to build potentially over Rp3 tn collectable from Garuda Indonesia (not listed), Rp1.4 tn upon IPO (yet to be approved by government) and Rp2 tn from the government guarantee.

● Despite a strong outlook, BMRI’s valuations are demanding and we would recommend investors to accumulate only on any weakness. We maintain our NEUTRAL rating and increase our target price from Rp3,700 to Rp4,400 on higher earning estimates.

● For further details, refer to our flash note, 3Q09: Supported by lower credit costs, 30 October 2009.

Citigroup Indosat; 3Q09 Results - Benefits From Strategy Shift Still Missing

3Q09 Results – Benefits From Strategy Shift Still Missing

 Hold/Medium Risk maintained — We believe markets looking beyond 2009 into 2010 earnings recovery are supporting the stock. However, weak 3Q09 results (net recurring profit of Rp102bn, -59%QoQ, -83%YoY) and the conf. call gave little comfort that ISAT’s strategy “volume” to “value” shift is paying off. Management does not plan to revisit strategy soon, indicating “long-term” nature of the strategy. Telkom stays our preferred pick in Indonesian telcos.

 Revenue recovery muted — Mobile rev. grew 6% QoQ, but stripping out interconnect rev. (+70%QoQ), mobile rev. fell 2.7% QoQ. Subscriber clean-up efforts have ended, though, with only 157K net reduction, and mgt pointing to growing subs base in 4Q09. MoUs have picked up in 3Q09 to 122 mins but RPMs edged lower again, a surprise given operators’ talk of price stability. We await TSEL’s/XL’s results next week to draw (revisit?) industry trends.

 Weak EBITDA margins — Of note in 3Q09 results was an unexpectedly large fall in EBITDA margins (-376bpsQoQ/-294bpsYoY) to a record low of 44.9% (Vs. Citi FY09 at 48%). Unfortunately, the declines appear structural rather than one-off. Management blames this on higher BTS site rental, utilities and seasonally higher marketing exp. No guidance forthcoming on expected margins ahead but mgt points to efforts to extract structural cost savings.

 No 2010 guidance given yet — To be unveiled sometime in November, we think. We were surprised to learn, though, that mgt expects FY09 cash capex at US$1.4bn (c.US$900m in 9M09), well ahead of US$600m guidance (which refers only to new commitments) which we and consensus assume.

CIMB Tambang Batubara Bukit Asam Result note - Higher output in store

(PTBA IJ / PTBA.JK, OUTPERFORM - Maintained, Rp14,800 - Tgt. Rp17,000, Basic Resources)

Maintain Outperform on PTBB and DCF-based target price of Rp17,000 (WACC 15%). 9M09 net profit met expectations, forming 70-75% of our FY09 and consensus FY09 forecasts. With production and sales volumes expected to improve further in 4Q09, our forecasts should be within reach. Coal price increases, plus progress at its railway projects (existing and new), could provide stock catalysts, we believe.

CIMB Semen Gresik Result note - Continues to please

(SMGR IJ / SMGR.JK, OUTPERFORM - Maintained, Rp6,650 - Tgt. Rp8,400, Construction and Materials)

Maintain Outperform on Semen Gresik. 9M09 net profit was slightly ahead of our estimate due to higher margins and other income. Semen Gresik has started spending on its new cement plant and equipment totalling Rp0.7tr (in 3Q09 alone). We expect this to boost depreciation and amortisation costs in FY09 and are thus maintaining our estimates. No change to our stock rating or end-CY10 target price of Rp8,400, DCF-based (WACC 13%, LTG 5.5%). This implies 15.9x and 14.9x CY10-11 earnings. Catalysts could include positive growth in ASP and sales volume in FY10 and the success of cost-cutting initiatives. Semen Gresik has placed out all its treasury shares this month, at Rp6,075/share, resulting in additional cash of Rp413.3bn, which should be booked in 4Q09. Given its heavy capex planned for the next few years, we believe the placement proceeds will be spent on expansion.

CLSA INDO UPDATE - SMGR 9M09 RESULTS BETTER THAN EXPECTED

SMGR result

Nick's comment:
- Strong signal about sector earnings for INTP and SMCB upcoming.
- Our past estimate on this SMGR was low
- Great margin control.
- revenue up 18% YoY, GP 26%, OP 28% and NP 34%.

It had also beat consensus' expectation (9M09 was 85% of FY2009FC consensus).

* Semen Gresik's total sales volume in 9M09 reached 12.97m tonnes or a decrease of 1.5% yoy
* Domestic sales volume increased by 0.2% yoy to 12.39m tonnes. domestic sales was 97% of total sales
* EBITDA mgn increased from 31.6% to 32.5% due to the increase in revenue and effort in controlling production cost. Revenue increased mainly due to higher ave price this year compared to last year. Price was flat for 9M09 this year
* SMGR said that October Sales should be fantastic (maybe doubling from Sep). INTP had also said Oct sales should be very good.