CLSA IndoCoal - ITM 1Q09 reuslts look in line

ITM posted US$102m in 1Q09, up by 437% YoY and flat QoQ, while representing some 40% of our full year forecast. Overall, the numbers were in line with our estimates.
Growth was largely driven by 70% YoY higher ASP, while volume was down by 6% YoY. Production at 4.4m tonnes in 1Q09 looks on track to meet our forecast of 19.0m tonnes in FY09 but below management guidance.
ASP was US$85/t in 1Q09, up by 70% YoY and 3% QoQ. The company has contracted 95% of its targeted volume this year and priced 76% at around US$77/t. Price looks slightly better than assumed.
There was US$29m hedging gain in 1Q09.

Mandiri Sekuritas BNBR: For those who miss the rally

Lower solvability risk. The company entered into debt restructuring agreement that provides some relaxation after high solvability tension resulting from its Rp4.26tn obligation to Northstar consortium which originally scheduled to mature this year. Basically, this debt restructuring agreed on (1) lengthening debt maturity (Rp310bn on 2009, and Rp3.95tn on 2012), and (2) charging interest expense (15.0%-19.0% ) that will be deferred and paid as a bullet payment along with principal maturity.

Stronger cash position. In late April 2009, the company sold 24.5% ownership in SPIJ, steel pipe manufacture subsidiary, raising US$55.5mn cash. We view it positively because (1) SPIJ has been less profitable relative to BNBR's listed subsidiaries, and (2) the proceeds ensure the company's solvability to meet its Rp279.0bn tranche B debt which l matures on Sept 2009.

Buy BNBR, get UNSP, BTEL, and ENRG for free! A check on BNBR value composition reveals that at the current price of Rp83/share, BNBR value is approximately equal to its ownership only in BUMI and ELTY. Therefore, rather than collecting all of BNBR's subsidiaries stocks individually, it would be more profitable to acquire them collectively by buying BNBR shares. Moreover, investors would get not only its listed subsidiaries, but also its non-listed infrastructure subsidiaries. These non-listed subsidiaries have already won several infrastructure projects which are expected to start in the next couple of years, once the economy recovers.

Valuation. We derived BNBR's fair price using SOTP method. We apply a book-value multiple of 1.0x to value the non-listed subsidiaries. For listed subsidiaries, we use market prices and Mandiri Sekuritas' fair price estimate separately (except for ENRG that uses consensus fair price estimate because it is outside our coverage). Market price-based SOTP results in BNBR fair price of Rp129/share while fair price-based SOTP results in BNBR fair price of Rp106/share.

What are the risks? Main risks in investing on BNBR stock are changes in ownership on its subsidiaries and commodity price fluctuation that heavily impacted BUMI, UNSP and ENRG performance.

Price Earning Ratio Regional

Price Earning Ratio indeks harga saham gabungan yang sebesar 11.22X di akhir perdagangan bulan April, lebih kecil dibandingkan dengan indeks Dow Jones yang sebesar 16.62X, Kuala Lumpur yang sebesar 14.02X, Hangseng yang sebesar 13.93X, dan Nikkei yang sebesar 12.63X dapat mengartikan
secara relatif IHSG masih lebih murah dibandingkan beberapa indeks bursa regional.

CNBC Oil Prices Back to $100 a Barrel? Not Likely, Many Traders Believe

Oil prices have jumped more than 70% since February on expectations of an improving economy, but traders say crude isn't likely to head back up to $100 a barrel anytime soon.

A year ago, oil was barreling towards a staggering $147, which translated into $4 a gallon at the gas pump. But when the financial crisis sent the economy reeling last fall, oil plummeted below $35 a barrel.

Since the low of $33.55 in February, US light, sweet crude[US@CL.1 58.5 --- UNCH (0)] has followed stocks in rallying on hopes of economic recovery. The price retreated a bit on Monday, but on Friday traded up $1.92 to settle at $58.63 a barrel, another high for the year.

Even so, traders don't see oil rising much beyond $70 a barrel. They argue that with the economy posting only tepid signs of recovery, the dollar holding fairly strong and demand remaining relatively low, there seems to be little impetus for a rise back towards last summer's record-breaking highs.

"Those levels around $60 or $65 could be attainable even though the fundamentals are bearish," says oil trader Daniel Cronin, senior commodities analyst at PitGuru. "Unless we have a real rip-roaring equity market I really don't see crude higher than $60. I don't see any kind of fundamental reason for it other than speculation like we saw last year. That's not the same game anymore."

That should mean good news for companies that spend a lot on sending their goods long distances. And that effect should transfer over to the stock market at some point.

"There's potential for pretty good profit growth for the next 18 months," says Kurt Karl, chief economist at Swiss Re. "The market will eventually feel that in a much fuller way."

Consumers, of course, are already feeling the benefits of lower gasoline and heating oil costs.

The drop in oil prices provides a saving of $160 billion to taxpayers, amounting to more than 1 percent of gross domestic product. That in turn helps consumer-based companies that benefit from more consumer spending.

Some believe the fall in energy prices to levels more accurately representing market value already has at least partly contributed to the gains in stocks. more...

Associated Press Financials pull stocks lower after fanning rally

NEW YORK (AP) -- The financial stocks that fueled Wall Street last week ran dry on Monday.

Bank shares dragged the market lower as traders worried that stocks, and particularly the hard-hit financials, had risen too quickly since the stock market's rally began two months ago.

Some of last week's relief over the reassuring marks most banks earned during government "stress tests" evaporated Monday as investors looked ahead.

Four of the banks that Washington determined were sound enough to survive a worsening in the economy said Monday they planned to issue shares to help repay loans the government doled out last fall to lubricate the nation's stalled financial system.

While it's a welcome sign that banks can again turn to Wall Street to raise money by selling stock, the reality of extra shares pouring into the market weighed on financial stocks. Technology shares fared better after Microsoft Corp. moved ahead with its first-ever debt offering.

The Dow Jones industrial average fell 156 points. The KBW Bank Index, which tracks 24 of the nation's largest banks, slid 7.1 percent after jumping 12.1 percent Friday.

U.S. Bancorp, Capital One Financial Corp. and BB&T Corp. said they hoped to raise $1.5 billion to $2.5 billion through stock sales. Bank of New York Mellon Corp. said it would offer $1 billion in stock.

Scott Fullman, director of derivatives investment strategy for WJB Capital Group in New York, noted that the Dow has risen about 30 percent since March -- about twice as much as the market might do in a full year of strong gains.

"To take a break here is healthy," he said.

The sell-off wasn't across the board and trading was light compared with last week. That suggests many buyers were taking a break, and not that sellers were out in force.

Two stocks fell for every one that rose on the New York Stock Exchange as analysts said the market was overdue for a break. Last week alone, Wells Fargo & Co. jumped 43.7 percent and JPMorgan Chase & Co. rose 19.9 percent.