AAA PT International Nickel Indonesia Tbk (TP Rp 5.400 – Downgrade to HOLD)

- Hefty Nickel Player-
Hasil kinerja INCO tahun 2009 rata-rata jauh diatas konsensus namun mendekati estimasi kami. Penjualan dibukukan US$ 761 juta turun 42% YoY dan laba bersih dibukukan US$ 170 juta turun 53% YoY. Penurunan kinerja didominasi oleh turunnya harga jual sebesar 37% YoY mencapai US$ 5,1/lb. Namun demikian marjin operasional masih cukup bagus dibukukan 30%, hal ini dikarenakan biaya kas produksi yang relatif efisien sebesar US$ 2,9/lb akibat hanya menggunakan generator diesel hanya 15 minggu atau turun 65% dari tahun lalu.

Sentimen positif muncul dari sektor industri baja di pasar Asia terutama di China dimana telah mengindikasikan adanya rencana kenaikan harga jual mereka di kuartal kedua 2010 sebesar 15%. Di samping itu ketatnya persediaan bahan baku biji besih telah menyebabkan produsen besar seperti Vale SA dan BHP memiliki posisi yang diuntungkan dengan daya jual yang tinggi. Alhasil kedua perusahaan tersebut telah berhasil melakukan reformasi pada sistem penjualan kontrak tahunan dan memenangkan rata-rata kenaikan harga jual 90% melalui kontrak jangka pendek per kuartalan. Di samping itu stok LME dalam beberapa pekan ini telah menunjukkan pemulihan dimana telah turun sekitar 7% dari level tertingginya di 166 ribu ton menjadi 155 ribu ton.

Kami melakukan beberapa penyesuaian asumsi kami terutama terkait dengan harga refrensi LME untuk estimasi kami periode 2010 dan 2011 masing-masing naik 14,2% dan 18,9% menjadi US$ 20.000/ton dan US$ 22.000/ton menyebabkan kenaikan laba bersih periode 2010F dan 2011F naik 23,8% dan 8,9% menjadi US$ 355 juta dan US$ 416 juta. Perubahan asumsi kami cukup moderat mempertimbangkan masih adanya downside risk mengingat stok kumulatif LME selama 3 tahun masih cukup tinggi di level 155 ribu ton, disertai bayangan oversupply dari 5 proyek nickel di dunia yang akan beroperasi per 2013 dengan proyek Goro berkapasitas 60ribu ton dijadwalkan tahun ini dan kemungkinan kembali beroperasinya beberapa proyek Vale Kanada yang masih dalam aksi mogok di SudBurry

Penyesuaian beberapa asumsi kami dan menggunakan valuasi tahun dasar 2011 telah menghasilkan TP baru di Rp 5.400 per saham mengimplikasikan 16,8x – 13.6x P/E 2010F-11F dan 9,6x – 7,6x EV/EBITDA 2010F – 11F. Saat ini INCO sudah diperdagangkan di 14,8x – 12x P/E 2010F-11F, dimana masih mengimplikasikan adanya upside risk mempertimbangkan dari hasil angka multiples relative valuation nya

CLSA BBTN INITIATION: BUY, 2000 TP

BTN is the dominant mortgage lender in Indonesia with 27% market share. More importantly, BTN holds a virtual monopoly on the subsidized housing market. This subsidy continues to increase and is expected to rise at least 75% in 2010 to Rp3.1tn and potentially higher.


* Indonesia consists of 61.5M hh, and 71% live on less than $3K per year. This market is the target for BTN's subsidized mortgage product. Indo mortgages represents 2.3% of GDP, with natural growth to $23bn ($1.0tn GDP by 2014). An extended period of low rates, mortgages could approach 4% of GDP, or $40bn in 2014. With 27% market share this implies BTN has $11bn in mortgages or nearly a 300% rise over the next 5 years

* The scheme offers subsidized mortgage flexibility. The subsidy is projected to rise to Rp3.1tn from approximately Rp1.8tn in 2009 and the tenor of the subsidy could increase to the entire 10-15yr mortgage as opposed to the existing 6 year subsidy with rates adjusting higher after year 6.

* Selling price of subsidized homes to Rp62.5m from Rp55m, increasing the selling price for developers and making construction more profitable. This could fuel a significant rise in subsidized home construction versus the current level of 100-120k units p.a.

* ROE is low and LDR is high. This is not a problem for the bank. The ROE is low because of the recent IPO. Whats more important is that loan growth remains strong, allowing the ROE to increase as capital is fully deployed. The LDR on an adjusted basis falls to approximately 75% when accounting for the equity overhang. LDR can climb north of 120% without a capital raise being necessary by our calculations.

* Shares trade at a discount to Indonesian peers, currently at 1.6x / 9.4x 2011 PBV and PE for a bank with a virtual monopoly on subsidized housing in Indonesia. The valuation metrics represent a discount of 31% and 25% to Indonesian peers. Our fair value is based on a modest premium at 2011 PBV/PE of 2.3x and PE 13.5x,justified by 50% earnings growth through 2012, ROE surpassing 20%

DBS Perusahaan Gas Negara: Buy; Rp4,250; TP Rp4,800; PGAS IJ

Expect more price hike

At a Glance
• FY09 result exceeded expectation due to additional gas distribution in 4Q09
• Gas price hike reinforces our positive view; expect more volume and price-led growth
• Reasonable valuation with attractive 4% yield
• Maintain Buy with upgraded TP of Rp4,800

Comment on Result
Pgas’s FY09 revenue grew 41% following a 37% increase in gas distribution volume. Net profit improved significantly to Rp6.2tr, against Rp634b in FY08, due to higher distribution volume and Rp1.2tr forex gain against Rp2.5tr forex loss in FY08. Excluding forex effect, FY09 core profit grew 59% y-o-y due to higher distribution volume and estimated 3% increase in ASP.

Pgas’ FY09 net profit was 12% ahead of our and market expectations due to additional 60mmscfd gas distribution in 4Q09 to PLN’s plants in Cilegon and Tanjung Priok.
We upgraded FY10-12F net profit by between 8% and 18% after factoring in the 15% increase in average gas price effective 1 Apr 2010. We understand that the average cost for Medco’s new supply is US$5/mmbtu, which will kick in from 2Q10 onwards. We expect more price hikes over the next 1-2 years to adjust for higher input costs.

Recommendation
We continue to like Pgas for its volume and price-led growth. Valuation is undemanding at 13x FY11F PE against 53% ROE, FY09-12F CAGR of 12%, and net yield of 4%. The growing profitability and improving FCF yields (7%) is also likely to translate into higher dividends. Maintain Buy with upgraded DCF-derived target price of Rp4800 following the earnings upgrade.

JP Morgan - Research call - ADRO (O/W)

FY09 net income in line: Adaro recorded FY09 net income of Rp4.367 trillion, up 392.3% Y/Y from Rp887 billion in FY08. The strong Y/Y
results were driven by the significant growth in average selling price that rose from US$45.4/ton to US$63.2/ton, up 39.2% Y/Y. Sales volume growth was flat Y/Y from 41.1MM tons to 41.4MM tons. Production volume increased by 5.5% from 38.5MM tons in FY08 to 40.6MM tons in FY09. The reported net income was in line with both J.P. Morgan's (0.9% above) and consensus' (1.9% below) expectation of Rp4.33 trillion and Rp4.45 trillion, respectively.

Adaro to acquire 25% of BHP Maruwai: BHP Billiton announced it has entered into binding agreements to create a new joint venture for its Indonesian Coal Project (ICP) with Adaro in which Adaro has agreed to acquire a 25% interest. BHP Billiton will hold the remaining 75%. ICP covers seven CCOW coking coal projects located in East and Central Kalimantan in Indonesia. ICP's undeveloped metallurgical and thermal coal resources are estimated to be 774 million tones.

https://mm.jpmorgan.com/servlet/PubServlet?skey=R1BTLTM5MjM5MC0w&Name=GPS-392390-0.pdf

JP Morgan - Research call - PGAS (O/W)

FY09 core net income ahead of our estimate (7.5%) but in line with consensus: PGAS reported FY09 core net income of Rp5.473 trillion, up 123.5%Y/Y. The result is 7.5% above J.P. Morgan's forecast of Rp5.1 trillion but in line (1.7% below) with the consensus estimate of Rp5.6 trillion. Distribution volume increased from 577MMScfd to 792MMScfd - a steep increase of 37.3%Y/Y. Gas selling prices remained stable (flat at -1.0%) but gas costs declined by 5.9%.

Price increase enacted: Yesterday, the industry association and PGAS reached an agreement on the adjustment of gas selling prices. For industrial customers in West Java Area, the base rate for customers using more than 300,000 m³/month (90-95% of total volume) will be raised from US$5.50/MMbtu to US$6.37/MMbtu. The surcharge rate will be raised from 1.5x the base rate to 3.0x base rate. (Assuming the new base rate is US$6.37/MMbtu, the original surcharge of US$9.555/MMbtu is now US$19.11/MMbtu.) Outside of West Java, the rate will be US$6.36/MMbtu, while the surcharge will be raised from 1.5x the base rate to 2.0x the base rate.

https://mm.jpmorgan.com/servlet/PubServlet?skey=R1BTLTM5MjU4Ny0w&Name=GPS-392587-0.pdf