Earnings trimmed but still a BUY with a TP of Rp19,200
We adjust our coal sales forecast, ASP, stripping ratio and capex for 2010F, to take into account PTBA’s lower-than-expected 1H10 results. As a result, our FY10F EPS forecast is trimmed by 8.2% to Rp956/share. Nonetheless, we still believe the stock offers good value as the company’s long-term prospects are rosy. Besides revising our assumptions, we also extend our 12-month TP, resulting in a new TP of Rp19,200, implying FY11F P/E of 14.4x. The stock offers 14% upside from the current share price.
1H10 results below expectations
PTBA’s 1H10 net income is below expectations. Production volume reached 5.8Mt or 44.1% of our initial full year forecast, while sales volume reached 6.5Mt or 43.8% of our initial full year forecast. The 1H10 domestic ASP reached Rp601.1k/t, while for exports the ASP was USD61.15/t. All in all, the 1H10 ASP were lower than our expectation. This reflects the lower-than-expected contract prices for the Tarahan and Bukit Asam power plants, and also the higher proportion of sub-bituminous coal the company is selling.
Coal sales target toned down
We trim our 2010F coal sales target to 14.1Mt, or down 4.2% from our previous forecast. Note the company has also reduced its FY10F coal sales target. This downgrade reflects the problems in railway transportation and the repairs at the unloading facility at the Tarahan Port that were borne by PTBA in 1H10. Although PTBA expects the unloading facility to be fully repaired by the end of September 2010, we expect the railway problems to continue in the near future – thereby affecting PTBA’s ability to transport coal from its pits to the port.
Export ASP expected to pick up in 2H10
Our ASP for FY10F domestic sales are trimmed to Rp629.3k/t as lower-than-expected contract prices for the Tarahan and Bukit Asam power plants have been finalized. At the same time, our 2010F ASP for exports remain unchanged at USD67/t. However, given that the export ASP in 1H10 were only USD61.15/t, ASP should be much higher in 2H10 as PTBA has committed itself to delivering 75-80% of its export volume for FY10F at an ASP of $70-72/t - as of yet only small portion delivered.
Rabu, 28 Juli 2010
UOB KLBF 1H10: Further improvement in 2Q10, Buy TP IDR 2850
Results
1H10 results in line with our expectations. Kalbe Farma (KLBF) reported 1H10 net profit of Rp572b (+43.5% yoy), translating into 2Q10net profit of Rp316b (+23.3% qoq).
Net profit growth driven by better margins and lower minorityinterests. 1H10 revenue increased 11.6% yoy, but net profit growthwas significantly higher at 43.5%. The drivers were: a) better marginson stronger Rupiah against US$, and b) higher contributions fromEnseval Putera Megatrading (EPMT) and Saka Farma Laboratories dueto increased ownership in these two subsidiaries.
Recovery within consumer health segment.Consumer healthrevenue growth improved to 7.7% qoq (+3.6% yoy) from 5.5% qoq (-2.2% yoy) in 1Q10. We think the improvement was driven by betterenergy drink performance, particularly as new products, such as E-JussMango and Orange, focus on natural and healthy energy drink concept, and were met with good response so far.
Positive response on Zee powdered milk. Revenue from nutritionalsegment booked the highest segmental growth of 31.2% qoq in 2Q10,or 19.8% yoy in 1H10. This is a significant improvement from -23.3%qoq (+0.3% yoy) in 1Q10. The growth was partly driven by its new “Zee”powdered milk that targets kids, teens and tweens. We expect revenuefrom nutritional segment to grow 13% yoy in 2010, driven by a 10% volume growth and 3% increase in average selling price
1H10 results in line with our expectations. Kalbe Farma (KLBF) reported 1H10 net profit of Rp572b (+43.5% yoy), translating into 2Q10net profit of Rp316b (+23.3% qoq).
Net profit growth driven by better margins and lower minorityinterests. 1H10 revenue increased 11.6% yoy, but net profit growthwas significantly higher at 43.5%. The drivers were: a) better marginson stronger Rupiah against US$, and b) higher contributions fromEnseval Putera Megatrading (EPMT) and Saka Farma Laboratories dueto increased ownership in these two subsidiaries.
Recovery within consumer health segment.Consumer healthrevenue growth improved to 7.7% qoq (+3.6% yoy) from 5.5% qoq (-2.2% yoy) in 1Q10. We think the improvement was driven by betterenergy drink performance, particularly as new products, such as E-JussMango and Orange, focus on natural and healthy energy drink concept, and were met with good response so far.
Positive response on Zee powdered milk. Revenue from nutritionalsegment booked the highest segmental growth of 31.2% qoq in 2Q10,or 19.8% yoy in 1H10. This is a significant improvement from -23.3%qoq (+0.3% yoy) in 1Q10. The growth was partly driven by its new “Zee”powdered milk that targets kids, teens and tweens. We expect revenuefrom nutritional segment to grow 13% yoy in 2010, driven by a 10% volume growth and 3% increase in average selling price
Mansek Jul10 CPI inflation and Jun10 trade preview
We expect Jul10 inflation to reach 1.02%mom or increase 5.65%yoy in Jul10, lower than consensus estimate of 1.10%mom or 5.73%yoy.Besides the seasonally higher education costs during the beginning of schools season in Jul- Aug,the pass-through impact of electricity tariff hike in Jul10 and higher food prices as a result of climate anomaly would have driven inflation higher.
On trade data,we estimate total exports to be steady around US$12bn in Jun10, or increasing around 28%yoy from last year.Meanwhile,total imports likely continued to increase by 35%yoy supported by robust domestic demand, dragging the trade surplus to US$1.2bn from US$2.5bn in May10.
On trade data,we estimate total exports to be steady around US$12bn in Jun10, or increasing around 28%yoy from last year.Meanwhile,total imports likely continued to increase by 35%yoy supported by robust domestic demand, dragging the trade surplus to US$1.2bn from US$2.5bn in May10.
Danareksa Bank Negara Indonesia (BBNI IJ, Rp2,975 BUY) Still upbeat
1H10 result beats forecast, TP of Rp3,650
We upgrade our FY10-11E EPS estimates by 15-10% respectively on lower provisioning charges – mainly due to loan recovery. While loan recovery may not recur next year, the bank’s aggressive internal restructuring will ensure that such low provisioning charges be maintained in 2011. Provisioning aside, loans growth is still weak, as corporates settle their debts, about Rp6.7trn in 1H10. Loan quality improved, however - albeit largely on write-offs. The NIM stabilized at 5.8% on a QoQ basis and remains above the industry average. We extend our TP to a 12-mth period, raising it to Rp3,650 or some 2.4x FY11 PBV. BBNI remains our preferred stock in the banking sector, given its cheap valuation and turnaround story. BUY.
Accelerating loans growth
Loans growth was unexciting in 1H10. We feel this partly reflects BBNI’s internal restructuring that may delay approvals amid changes in key personnel. Debt settlement of corporate loans also exacerbated the situation. However, the 2010F guidance remains at 14-17%, a target that can easily be surpassed if the bank maintains a NIM of 5.7-6.0% this year. Also helping is the fact that BBNI has cleaned up all of its bad debts, opening the way for more aggressive loans expansion. Thus far, corporate and SME loans have dominated the loans – at some 80% of the bank’s total loans, but the trend appears to be shifting towards high yielding consumer loans. Note that loans extended to consumers have grown by 13% year-to-date, far exceeding the other segments. Mortgages still account for almost half of BBNI’s consumer loans, as interest rates are low. In a way, expanding its loans to the consumer segment helps sustain its overall loan quality as the NPLs were a mere 1.6% in 1H10.
Restructuring continues
NPLs dropped to 4.3% in 1H10, albeit largely on write-offs. Indeed, about Rp2.2trn of total loans were written off and much of them were related to the middle segment, for which NPLs were as high as 8.5% in 1H10. A lack of industry focus is cited as the reason. Nonetheless, further declines in the middle segment NPLs are expected as the bank’s management attempts to tackle the problem by identifying the specific industries to which it will channel its loans in the future. All segments saw relatively stable NPLs, with the exception of the Sharia business, where NPLs rose to 4.2% from 1Q10’s 3.7%. The coverage ratio went up to 123% from FY09’s 120% - partly due to lower NPLs aside from an additional Rp2trn in provisions. Interestingly, along with the significant loans written-off, the recovery rate has picked up in recent years. On average, the recovery rate is around 28%.
Attacking its COF
Now the name of the game is for the bank to keep its NIM above 5.7%, especially since loan growth is still lacking. The COF declined to 4.2% in 1H, as low cost funding (CASA) picked up to 60% from FY09’s 54%. BBNI’s aggressive lending to consumers has in fact yielded some additional savings. Cross selling activities also help. The idea is to provide loans to corporates at prime rates, with the expectation of managing transactional activities related to the debtor. This has worked well so far. The management has indicated that such a proportion of CASA can be maintained in the long run.
10 months transformation
The bank’s so-called “consumer centric” approach aims to align business strategies – be they lending or securing funding – based on consumer profiles. Put simply, the focus is now on customers rather than products. This is a good strategy, we believe, and could create closer long-term relationships and therefore better profitability. The strategy is put to work in two phases. Firstly the bank has to hire the right people – something which BBNI has done recently - and secondly the bank has to implement the strategies top down. Three key new directors are already in place. Honggo, a prominent banker, is responsible for the bank’s business network; he is the one tasked with changing the bank’s corporate culture towards being profit-oriented. Darmadi, meanwhile, is responsible for growing BBNI’s consumer loans and securing retail funding. The other new director, Adi, is responsible for treasury. The transformation has already begun and the first phase is expected to take 10 months to complete. The impact is not expected to be seen until next year.
We upgrade our FY10-11E EPS estimates by 15-10% respectively on lower provisioning charges – mainly due to loan recovery. While loan recovery may not recur next year, the bank’s aggressive internal restructuring will ensure that such low provisioning charges be maintained in 2011. Provisioning aside, loans growth is still weak, as corporates settle their debts, about Rp6.7trn in 1H10. Loan quality improved, however - albeit largely on write-offs. The NIM stabilized at 5.8% on a QoQ basis and remains above the industry average. We extend our TP to a 12-mth period, raising it to Rp3,650 or some 2.4x FY11 PBV. BBNI remains our preferred stock in the banking sector, given its cheap valuation and turnaround story. BUY.
Accelerating loans growth
Loans growth was unexciting in 1H10. We feel this partly reflects BBNI’s internal restructuring that may delay approvals amid changes in key personnel. Debt settlement of corporate loans also exacerbated the situation. However, the 2010F guidance remains at 14-17%, a target that can easily be surpassed if the bank maintains a NIM of 5.7-6.0% this year. Also helping is the fact that BBNI has cleaned up all of its bad debts, opening the way for more aggressive loans expansion. Thus far, corporate and SME loans have dominated the loans – at some 80% of the bank’s total loans, but the trend appears to be shifting towards high yielding consumer loans. Note that loans extended to consumers have grown by 13% year-to-date, far exceeding the other segments. Mortgages still account for almost half of BBNI’s consumer loans, as interest rates are low. In a way, expanding its loans to the consumer segment helps sustain its overall loan quality as the NPLs were a mere 1.6% in 1H10.
Restructuring continues
NPLs dropped to 4.3% in 1H10, albeit largely on write-offs. Indeed, about Rp2.2trn of total loans were written off and much of them were related to the middle segment, for which NPLs were as high as 8.5% in 1H10. A lack of industry focus is cited as the reason. Nonetheless, further declines in the middle segment NPLs are expected as the bank’s management attempts to tackle the problem by identifying the specific industries to which it will channel its loans in the future. All segments saw relatively stable NPLs, with the exception of the Sharia business, where NPLs rose to 4.2% from 1Q10’s 3.7%. The coverage ratio went up to 123% from FY09’s 120% - partly due to lower NPLs aside from an additional Rp2trn in provisions. Interestingly, along with the significant loans written-off, the recovery rate has picked up in recent years. On average, the recovery rate is around 28%.
Attacking its COF
Now the name of the game is for the bank to keep its NIM above 5.7%, especially since loan growth is still lacking. The COF declined to 4.2% in 1H, as low cost funding (CASA) picked up to 60% from FY09’s 54%. BBNI’s aggressive lending to consumers has in fact yielded some additional savings. Cross selling activities also help. The idea is to provide loans to corporates at prime rates, with the expectation of managing transactional activities related to the debtor. This has worked well so far. The management has indicated that such a proportion of CASA can be maintained in the long run.
10 months transformation
The bank’s so-called “consumer centric” approach aims to align business strategies – be they lending or securing funding – based on consumer profiles. Put simply, the focus is now on customers rather than products. This is a good strategy, we believe, and could create closer long-term relationships and therefore better profitability. The strategy is put to work in two phases. Firstly the bank has to hire the right people – something which BBNI has done recently - and secondly the bank has to implement the strategies top down. Three key new directors are already in place. Honggo, a prominent banker, is responsible for the bank’s business network; he is the one tasked with changing the bank’s corporate culture towards being profit-oriented. Darmadi, meanwhile, is responsible for growing BBNI’s consumer loans and securing retail funding. The other new director, Adi, is responsible for treasury. The transformation has already begun and the first phase is expected to take 10 months to complete. The impact is not expected to be seen until next year.
JPM Jasa Marga: best SOE efficiency play + inflation hedge
No one has expected this state toll-road company to become more efficient, in the year when the company hikes its toll tariff by 11%, on average. But they did. Overall opex came in flat YoY in 1H10, and flat sequentially in 2Q10. That was the source of the positive surprise; JPMorgan analyst Liliana Bambang is upping her FY10-11 EPS estimate by 11-14%, consensus may need to go up by 15-20%. PxT raised by 11% from Rp2600 to Rp2900.
Where is the efficiency gain coming from? The company started re-organizing its employment structure in 2009, streamlining the sub-divisions and increasing efficiency in outsourcing costs. They started implementing e-toll card in early 2009 as well. Year-on-year, number of employees in branch offices is already declining, per Dec 2009 (down by 3% yoy to 4726). E-toll transaction now accounts for 3-5% of total transactions, and the trend is picking-up.
Unique to JSMR (compared to other SOEs) is the fact that 20% of its employee base is outsourced. As such, any efficiency gain that the company achieve can flow straight to the bottom-line, without being accompanied by big one-off early retirement costs. Looking forward, I see room for JSMR to continue gaining efficiency, while its inflation-linked tariff is a good inflation hedge for the robust Indonesian economy. At the same time, cost of borrowing for JSMR should continue to decline, driving both EPS and NPV higher still. One of my top picks for the market. BUY.
Where is the efficiency gain coming from? The company started re-organizing its employment structure in 2009, streamlining the sub-divisions and increasing efficiency in outsourcing costs. They started implementing e-toll card in early 2009 as well. Year-on-year, number of employees in branch offices is already declining, per Dec 2009 (down by 3% yoy to 4726). E-toll transaction now accounts for 3-5% of total transactions, and the trend is picking-up.
Unique to JSMR (compared to other SOEs) is the fact that 20% of its employee base is outsourced. As such, any efficiency gain that the company achieve can flow straight to the bottom-line, without being accompanied by big one-off early retirement costs. Looking forward, I see room for JSMR to continue gaining efficiency, while its inflation-linked tariff is a good inflation hedge for the robust Indonesian economy. At the same time, cost of borrowing for JSMR should continue to decline, driving both EPS and NPV higher still. One of my top picks for the market. BUY.
Langganan:
Postingan (Atom)