Macquarie Coal update

Adam Worthington (analyst) came back from his first China trip still feeling cautious toward thermal coal price. They think that China thermal coal market could be over-supplied by between 100-400mn tons, and that China domestic coal price is at artificially high level due to “temporary” maintenance schedule at QHD port, that handles around 10% of China coal volumes. This artificially high domestic price in China is causing the country to import thermal coal, temporarily sustaining the international price. Separately, Yeeman Chin (China coal analyst) wrote a comment on NDRC analysis of China coal market in 1Q09 below.

Personally, I still have my doubts that a temporary maintenance schedule at one port that only handles 10% of volume can cause this much price disturbance. There could be bigger forces (ie: re-stocking or normalization of production activities) at work here, that warrant some optimism. Having said that, I think investors should consider taking some profits out of PTBA and Adaro Energy. Meanwhile, Bumi Resources and ITMG appear to be relatively better bet for the next three months.

PTBA just reported a solid but in-line 1Q09 results with revenue +89% y-o-y (22% of FY), EBIT +201% (29% of FY), NPAT +221% (32% of FY), and a net cash position of Rp3.5trn (US$321mn). What worries me today is the comment by PTBA CEO Mr.Sukrisno, saying that the company is evaluating the purchase of a 17% stake in Adaro Energy (Rp5.4trn value at Rp1000/share vs. PTBA market cap of Rp20trn), in a bid to boost its coal reserves. The market may react negatively to this comment, as the market may struggle to understand the logic of the acquisition and start pricing-in an increased acquisition risks (thanks to net cash position). Macq rates the stock a Neutral on 6.7x and 14.4x P/E for 2009-10 and Rp7,500/share DCF.

Adaro Energy received a good news yesterday after the controlling shareholders (Dianlia) won the case against Beckkett in the Singapore Court of Appeal, saying that they are the rightful owner of the company. Irrelevant to Adaro’s investment case, Beckkett won the case against Deutsche Bank for selling the stake to Dianlia without a proper procedure, although Deutsche Bank could be looking to counter-suit Beckkett for the loan default. All said, the stock may have a hard time pushing through the IPO price of Rp1,100/share, with potential overhang from the 17% stake sale owned by the private equity firms. Macq rates the stock a Neutral on 6.3x and 14.7x P/E for 2009-10 and 890/share DCF.

[BRIGHT INFO] Why Jakarta Composite Index Looks Forward, Not Back?

Jakarta Composite Index doesn’t care about a company’s earnings last quarter. The only thing that matters is the performance going forward.

What’s going on here? Jakarta Composite Index sees signs of an economic global recovery.

The focus is shifting from defense to growth stocks because money managers expect a much better business environment six to nine months from now. That means Jakarta Composite Index, addicted as it is to growth. Smart investors should do the same. The next stop target Jakarta Composite Index is 1897.342.

[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.

Bloomberg South African Export Coal Retreats on Weaker European Demand

April 27 (Bloomberg) -- Prices for coal shipped from South Africa’s Richards Bay, site of the world’s largest export terminal for the fuel, fell for a second consecutive week on weaker demand and sufficient stockpiles in Europe.

Export prices at the port, Europe’s biggest single source for coal burned for power, dropped $1.30, or 2.1 percent, to an average of $61.50 a metric ton in the week ended April 24, according to McCloskey Group Ltd. Prices have fallen 45 percent over the past 12 months as demand for power slumped after manufacturers cut output to grapple with the global recession. The world economy will shrink 1.3 percent this year, according to the International Monetary Fund.

“There’s lots of stocks in Europe and not many buyers around,” John Howland, an analyst at Petersfield, England-based McCloskey Group Ltd., said today by telephone. The “coal of choice” at the moment in Europe is Colombian, he said. That may ease demand for South African imports.

Colombian coal supplies may increase after a strike ended this month at Fenoco, a rail company 40 percent-owned by Xstrata Plc. That, plus the end of weather disruption in Australia, will help push prices down to an average $55 a ton in the second and third quarters, Jim Lennon, a Macquarie Group Ltd. analyst in London, wrote in a report dated today. “The market is generally well-supplied,” he said.

The port of Rotterdam, Europe’s biggest, imported 7.7 million tons of coal in the first quarter of this year, up 24 percent from the same period of 2008, the port said in an e-mail on April 9. That may indicate a buildup of stocks.

Power station coal prices at Australia’s Newcastle port, a benchmark for Asia, were almost unchanged in the week to April 24, falling one cent to $63.11 a metric ton, according to the globalCOAL NEWC Index.

Benchmark European coal derivatives fell. Coal for delivery to Amsterdam, Rotterdam or Antwerp with settlement next year retreated $2.50, or 3 percent, to $81 a ton as of 2:49 p.m. in London. The data from ICAP Plc reflect actual trades.

Source: Bloomberg (28 Apr 2009)

Beckett Pte Ltd vs Deutsche Bank

Jakarta - Pihak Beckett Pte Ltd yang memenangkan kasus dengan Deutsche Bank di Pengadilan Banding Singapura mulai berhitung jumlah kompensasi yang harus dibayar Deutsche Bank.

Dalam hitungan Backett, Deutsche Bank kemungkinan harus membayar lebih dari US$ 250 juta sebagai kompensasi setelah keluarnya keputusan Pengadilan Banding Singapura 27 April 2009 yang memenangkan Beckkett.

Pihak Beckett mengatakan jika mengacu pada valuasi Deutsche Bank melalui Deutsche Capital Singapore untuk Deutsche Bank sendiri, nilai total dari Adaro dan IBT adalah US$ 689,3 juta per Agusutus 1999.

Pernyataan Dianlia
Inti dari keputusan Pengadilan Tinggi Singapura dapat dilihat pada paragraf 152 dan 153 dimana:
a. Gugatan Beckkett dikabulkan dalam hal Deutsche Bank tidak melaksanakan kewajibannya sebagai pemegang gadai saham SME, namun Beckkett gagal membuktikan bahwa Deutsche Bank menjual saham-saham tersebut di bawah harga yang semestinya, untuk itu Beckkett mendapat ganti rugi sebesar 1.000 dolar Singapura.
b. Tuduhan Beckkett mengenai adanya konspirasi terhadap Deutsche Bank dan DSM (Dianlia Setyamukti) ditolak.
c. Gugatan balik Deutsche Bank terhadap Beckkett ditolak.

Paragraf 153:
b. Beckkett harus membayar biaya pengacara kepada Deutsche Bank dan DSM dalam hal gugatan konspirasi.
c. Deutsche Bank harus membayar biaya pengacara kepada Beckkett dalam hal gugatan balik.

Saham Gadai Sah
Sementara Presiden Direktur Garibaldi Thohir PT Adaro Energy Tbk mengakui bahwa Pengadilan Banding Singapura(Singapore Court of Appeal) telah mengeluarkan keputusan akhir yang mengikat secara hukum atas perkara Beckkett vs Deutsche Bank sebagai Tergugat I dan Dianlia sebagai Tergugat II.

Pengadilan Banding Singapura berpihak kepada Dianlia dan memutuskan bahwa pembelian atas saham-saham PT Adaro Indonesia dan PT Indonesia Bulk Terminal (IBT) yang digadaikan, yang dilakukan pada tahun 2001 adalah sah.

Crude palm oil futures close lower

Crude palm oil futures prices on Bursa Malaysia Derivatives closed lower yesterday on continuing fears that the current swine flu epidemic will reduce demand for grains and meat, dealers said.

Vegetable oil prices have a tendency to move in tandem with grains prices.

“However, palm oil prices will likely rebound in the near future as demand has remained steady for palm oil amid reducing stocks,” a dealer said.

Positive export figures, he said, will also boost prices by the end of the week or next week.

Cargo surveyor, Intertek Testing Services reported that Malaysian exports of palm oil products for April 1-25 rose seven per cent to 973,825 tonnes from 908,404 tonnes for the period of March 1-25.