Mandiri Sekuritas Improved outlook, yet risks remain

Improved sales outlook. This year, the company expects its sales to grow by 13% - 14% yoy compared with 12% yoy last year as it believes that the sales of energy drink has levelled off (the sales for energy drink is reported to improve in 4Q08 vs -39.2% qoq average in the previous three quarters). Amid the current unfavorable economic condition, demand for nutrition and ethical products will remain resilient (both took up around 50-55% of the total sales and has grown by 16% and 21% CAGR, respectively! for the past three years), hence any recovery in sales from energy drink will make the targeted sales growth of 13% yoy easy to achieve, in our view. We therefore upgraded our sales growth assumption from previously 10% yoy to 12.6% yoy.

Upgrade TP to Rp600/share. We upgraded our forecast on KLBF on the back of higher sales growth and gross margin. We arrived at net profit of Rp749bn for FY09, an increase of 26.9% from our previous forecast. At the current price, KLBF is trading at 18.0% premium over the market PER compared with at-par valuation for its peers (during 2008, KLBF was also traded at par valuation to the market). Given KLBF’s lower size and EPS growth than its peers and the lingering risks over the company’s performance t! his year, such premium is unjustified, in our view. We believe the stock should be traded at 20% discount to the market, thus resulting in a new TP of Rp600/share at targeted market PER of 10.0x (vs TP of Rp355/share previously). Upgraded to neutral.

MacQ Bank Rakyat Indonesia – buying opportunity?

Bank Rakyat Indonesia – buying opportunity?

Ferry Wong and Yofi Lasini (analysts) highlighted that BBRI has fallen by 13% over the past four days. One of the issue talked about in the market is its lending to Bakrieland. They flashed out facts on the matter and conclude that the loan poses only a small risk to BRI. They keep BBRI as one of the top five picks for Indo market with Outperform rating, on 2.1x 09 P/BV, healthy ROE of 29%, and dividend yield of 6.4 %. Thesis is that BBRI will benefit most from declining interest rate, its appointment as Indo gov’t Treasury Single Account, and gov’t efforts to stimulate micro and SME loans. The facts on Bakrieland loan:

(1) BRI lends a total Rp532.7bn to Bakrieland. Ferry and Yofi are fairly comfortable with the loan position because: (a) Avenue Capital Luxembourg is the biggest shareholder of Bakrieland with 30.8%, followed by the Bakrie family with 20%, (b) Dubai Limitless owns a 33% of PT Bakrie Swasakti Utama, (c) The loan is secured by land certificate and account receivables, (d) The financed toll-road project will start operations in June, when the revenue stream should flow.

(2) Exposure small for BRI. The loan amount comprises 1.9% of total BRI corporate loans or 0.35% of BRI's total loan book. By this, our perception on BRI remains the same as on the primary micro and SME lender in the country. Management assured us that both projects are progressing on time and there is no sign of loan defaults.

(3) What if the loan turns sour? We believe that the ~ Rp533bn loan amount will not impact BRI's asset quality significantly given its high 198% coverage ratio and Rp8.7tr in accumulated provision. If the loan does go bad, gross NPL will increase to 3.3% from the current 2.9%, and the provision coverage will rise to 186%. We believe this is sufficiently covered by our forecast of 4.7% gross NPL with 141% coverage in 2009 from 2.9% in September 2009.

CLSA Banks Sector Outlook

Research Today: Banks sector outlook (by Nico Oentung)

There has been concerns for liquidity in the Indonessian banking system. Nico highlights that indicators point to improvement in overall liquidity in the system. However, deposit rates have been relatively sticky as banks still require high premium for liquidity. Impact will be greater margin pressure for banks with weak funding franchise, while those with safe haven characteristics will benefit from liquidity flows. A lot of negative news is priced in some of these banks. At 1x PB, sales desk like Bank Mandiri.

Key takeways from research:

Liquidity improving
System LDR improved from peak of 78% in Aug 08 to 73% in Dec
Adjusted LDR (including govt. bonds) declined from 95% in Aug 08 to 88% in Dec
SBI outstanding rose by 6.4% m-o-m in Dec and 52% from Sep 08 low

Deposit rates still high
Large banks are still offering 11-12% (foreign banks: 13%) for their 1-mth TD
Negative spread between 1-mth TD and SBI rate implies premium for liquidity
Greater margin pressure for banks with weaker funding franchise such as Danamon

Liquidity concentrated in large safe-haven banks
Mandiri, BRI and BCA benefits from flight-to-safety and strong deposit franchise
Their combined LDR stood at 68% as of 3Q08 vs. 81% for rest of the sector
About two-thirds of deposit base are in the form of low cost and “sticky” current account and savings

Maintain O-PF on BCA and BRI; Sell Danamon

Warga Asing Boleh Memiliki Properti 90 Tahun

JAKARTA. Boleh jadi, Indonesia akan menjadi surga bagi orang asing yang ingin tinggal dan menetap di sini. Pemerintah berniat memperpanjang hak pakai properti bagi orang asing sampai 90 tahun.

Saat ini, bersama Badan Pertanahan Nasional (BPN), Kementerian Negara Perumahan Rakyat (Kemenpera) sedang merevisi Peraturan Pemerintah (PP) No. 41/ 1996 soal Pemilikan Rumah Tinggal atau Hunian oleh Orang Asing. Kini, peraturan itu menetapkan, hak pakai asing maksimal 70 tahun dengan dua kali perpanjangan (25+25+20 tahun).

Nah, dalam draf revisi PP ini, Kemenpera mengajukan hak pakai properti oleh orang asing bisa sampai 90 tahun sekaligus tanpa melalui perpanjangan. Penerapan aturan ini cukup mendesak. "Apalagi, banyak warga asing yang berminat berinvestasi dan menghabiskan masa pensiunnya di sini," ucap Deputi Perumahan Formal Kemenpera Zulfi Syarif Koto, Selasa (24/2).

Pengembang sempat terkejut dengan kabar ini. Ketua Umum Dewan Pimpinan Pusat Persatuan Perusahaan Real Estat Indonesia (DPP REI) Teguh Satria mengaku, saat menghadap Presiden Susilo Bambang Yudhoyono 17 Februari silam, usulan soal ini masih belum beranjak dari angka 70 tahun. "Kalau sekarang menjadi 90 tahun, tentu kami berterima kasih sekali," kata Teguh. more...

Stocks up on Bernanke remarks; focus now on Obama

NEW YORK (AP) -- Federal Reserve Chairman Ben Bernanke has given Wall Street a double dose of reassurance. Now it's President Barack Obama's turn.Bernanke told Congress on Tuesday the recession might end this year, and that regulators aren't planning to nationalize banks. The news alleviated some of investors' worries about the economy and the banking industry, and lifted the Dow Jones industrial average and Standard & Poor's 500 index off their lowest levels since 1997.

And investors are hopeful that Tuesday night, Obama will provide specifics about his plans to stabilize the financial system and further stimulate the economy. Anticipation of his remarks helped drive beaten-down financial shares up sharply.

"There's growing optimism that Obama can deliver the details that the market is so desperately looking for in his speech," said Ryan Larson, senior equity trader at Voyageur Asset Management. If it gets those details, Larson added, the market's upward momentum could continue.

Stocks remain on shaky ground, however. Bernanke may have helped stem the market's slide Tuesday, but the market also found stability from temporary technical factors: bargain-hunting, the unwinding of short bets, and selling exhaustion after six straight down days for the S&P 500. more...