Bank Central Asia (BCA) first quarter 2011 results: Transactions and Consumers Driving the Business

Jakarta, April 28, 2011 – PT Bank Central Asia Tbk (JSX: BBCA) announced first
quarter 2011 results with business performance underpinned by strong growth in lending
and an increase in transactional account third party funds. The Bank’s balance sheet
grew considerably as total assets increased by 14.9% reaching Rp 326.5 trillion at the
end of the first quarter 2011 up from Rp 284.2 trillion in the end of the first quarter 2010.
BCA President Director, Mr. D.E. Setijoso stated that,” I am pleased to report that we
were able to deliver solid business performance in the first quarter 2011, in line with
Indonesia’s economic growth. A disciplined implementation of a quality growth strategy
produced positive results as transactions and the consumers segment drive the BCA
business. BCA is well poised to prosper in the current domestic economic environment
characterized by low interest rates and increasing consumer demand.”
The overall loan portfolio grew 24.4% to Rp 150.3 trillion in March 2011 while the Loan
to Deposit Ratio (LDR) improved to 54.4% in March 2011 from 49.6% in March 2010.
Consumer lending posted a growth by 36.2% yoy to Rp 38.7 trillion supported by strong
growth in mortgage loans and vehicle loans which benefited from the growth of the
middle-income segment and from the low interest rate environment. Mortgage loans
outstanding rose by 41.8% yoy to Rp 19.5 trillion while vehicle loans increased by 34.6%
yoy to Rp 14.3 trillion. In addition, credit card outstandings increased by 21.3% yoy to
Rp 4.9 trillion in March 2011.
Commercial & SME lending recorded growth of 27.9% to Rp 59.5 trillion yoy while
corporate lending grew by 14.1% yoy to Rp 52.1 trillion in March 2011. By emphasizing

P.T. Mitra Adiperkasa Tbk (MAP) ANNOUNCES 56% JUMP IN OPERATING PROFIT FOR FIRST QUARTER 2011

Jakarta, 27th April 2011 - Indonesia's leading lifestyle retailer, P.T. Mitra Adiperkasa
Tbk (MAP) today announced its financial result for first quarter ended 31st March 2011.
Operating profit jumped 56% to a record Rp 82 billion - up from the Rp 53 billion
achieved in the first quarter of 2010. Net profit grew 45% from Rp 30 billion in the
corresponding period in 2010 to Rp 44 billion. Net revenue after cost of consignment
sales increased 21% from Rp 1,048 billion to Rp 1,269 billion.
Commenting on the first quarter 2011 results, Fetty Kwartati, Corporate Secretary of
MAP said, "We had a good first quarter. Our results truly demonstrate the power of our
brands and our three-fold strategy of focusing on our existing brands, maximizing their
potential and targeting at the middle upper income group. Given the huge customer base
and growing affluence, this customer segment offers unlimited potential for our portfolio
of over 90 world class brands."
As at end March 2011, MAP has a total of 887 stores in 25 cities throughout Indonesia
with total retail footage of 425,721 sqm. New international concepts launched by the
Group in the first quarter of 2011 include Stradivarius, Bershka and Payless. Stradivarius
and Bershka are both located at Plaza Indonesia and Central Park while Payless can be

AKR Corporindo (AKRA) Reports Q1’2011 Net Profit after Tax of Rp 1,812 billion; Sales Revenue Q1’2011 grows 79% YOY to Rp 4.35 Trillion

25th April 2011

JAKARTA, April 25, 2011 - PT AKR Corporindo, Tbk. (Bloomberg: AKRA IJ), Indonesia’s
leading bulk logistics and infrastructure company and largest private sector distributor of
petroleum and basic chemicals reported net profit of Rp 1,812 billion in the quarter ended
March 31, 2011 up 2,480% from Rp 70 billion in the same period last year.
Net Profit without Extra ordinary gains (Core Profit) rose 82% to Rp 128 billion during
Q 1’2011 compared to Rp 70 billion during Q1 ‘2010. The Company booked extra ordinary
gains of Rp 1,685 billion on sale of Investment in manufacturing subsidiary, PT Sorini Agro
Asia Corporindo, Tbk. The divestment raised over Rp 2,200 billion for the Company and the
sales of Sorini shares was completed on January 28, 2011.
Sales Revenue during the quarter ended March 31, 2011 rose 79% to Rp 4,353 Billion
compared to Rp 2,433 billion during the same period last year, driven by significant increase in
petroleum sales.

Petroleum revenues increased 149% YOY
Sales revenues growth was driven by increased sales of Petroleum products in Indonesia
which resulted in the sales revenue increasing 149% to Rp 3,461 billion during the Q 1’2011
compared to Rp 1,391 billion during the same period last year. This revenue growth was driven
by increase in supply of High speed diesel and other refined products to mining industry in
Eastern part of Indonesia along with increase in demand from other industrial sectors
Basic chemicals sales also reported 31% growth to Rp 584 billion during Q 1’2011 with
increasing demand for basic raw materials which is the raw material for production of various
industrial and consumer goods.
Demand for logistics services including stevedoring, port handling in Indonesia and China
registered 83% increase in sales revenue during Q 1’ 2011 compared to Q 1’2010.

OUTLOOK:
• Petroleum:
− With strong growth reported in Q1’2011 which is more than 28% of the full year
target, we expect sustained growth in volume of refined petroleum products during

Metropolitan Land: Offering new shares at Rp240‐300/shares

Metropolitan Land will be offering its shares at Rp240‐300 a piece on its upcoming IPO. The price range implies an estimated proceeds of Rp545‐681b, most of which will be used to finance the company’s development. The company will be listed at the IDX on 13 May 2011.

ADARO dividend 2011

In the AGM held yesterday 20 April 2011, Adaro Energy Tbk shareholders agreed to distribute Rp970.8b total dividend (43.98% DPR) for the FY10 fiscal year. As the company has paid Rp315.1b interim dividend per 10 December 2010, Adaro will pay the remaining of Rp655.7b (Rp20.5 final DPS). Payment date and other details will be announced next week.

source: Kim Eng

PT Wintermar Offshore Marine Tbk purchases a Multi Role Construction Support Vessel for USD14,025,000

PT Wintermar Offshore Marine Tbk (WINS) has entered into a Memorandum of Agreement to acquire the Neptune Trident from Neptune Marine Pacific Pte Ltd a wholly owned subsidiary of the ASX listed Neptune Marine Services Limited (" Neptune"), through our subsidiary PT Wintermar. The Neptune Trident, a 5506 BHP Multi Role construction support vessel, is equipped with Dynamic Position System(DP2) and certified FiFi-1 (Firefighting) and complements our fleet of higher value added offshore support vessels.
WINS' management is also in discussions with the management of Neptune to collaborate on future projects together, leveraging on WINS' marine expertise in offshore support vessel operations and Neptune's experience in engineering and other specialised services for the offshore

PT Media Nusantara Citra :CLARIFICATION ON THE MEDIA COVERAGE On the Law Suit Filed by Siti Hardiyanti Rukmana Against PT Berkah

In relation to the media coverage on the verdict by the Central Jakarta District
Court dated 14th April 2011 No: 10/PDT.G/2010/PN.JKT.PST on a law suit filed by
Siti Hardiyanti Rukmana against PT Cipta TPI on print media and electronic media,
we hereby wish to rectify on various misconceptions as follows:
1. The verdict by the Central Jakarta District Court dated 14th April 2011 DID
NOT PENALIZE PT Media Nusantara Citra Tk ("PT MNC Tbk") as the current
shareholder of 75% stake in PT Cipta TPI nor did the verdict by the Central
Jakarta District Court ever penalized PT MNC Tbk by surrendering the 75%
stake in MNCTV to Siti Hardiyanti Rukmana. In fact, PT MNC Tbk was not a
party in the lawsuit/not a party in the legal case. The public has been
furnished with DECEITFUL REPORTS by the media that PT MNC Tbk must
transfer their 75% ownership in PT Cipta TPI to Siti Hardiyanti Rukmana.
The verdict by the Central Jakarta District Court dated 14th April 2011 did
not affect nor incur any legal ramifications whatsoever on the status of PT
MNC Tbk's share ownership in PT Cipta TPI at this present time or in the

Adaro (ADRO IJ) invest US$100m in IndoMet Coal, a BHP Billiton project

18 april 2011

By end of 1Q10, Adaro has owned 25% stake of IndoMet coal project, while the other 75% stake is owned by BHP Billiton. This year, Adaro will start investing US$100m in the project.

source : CLSA

Berlian Laju Tanker (BLTA IJ) repays their overseas loan

18 April 2011

BLTA is repaying their overseas loan of US$593m using the loan received on Feb 2011 of US$685m. By repaying the loan, BLTA will save US$76.5m this year in interest expense. 

source: CLSA

Bakrie & Brothers (BNBR IJ) looks for loan in South Korea

18 April 2011

Next week, BNBR will be negotiating loan with South Korean banks for their US$2bn Tanjung Jati coal fired power plant. BNBR is partnering with Samsung for the 2x600MW power plant project. This project has been on hold since BNBR won the bid in 1996.

source : CLSA

Consumer Sector : Three trends going in the right direction

Three trends support OVERWEIGHT sector call. A strong rupiah, subsiding
inflation and strong bank deposit growth point to rising consumption and support the
case for rapid growth of the middle class. The upcoming festive season anchored by
the Muslim New Year in Aug with a full-week holiday in late Aug could turn out to be
a blockbuster for consumer spending. Key beneficiaries are Ramayana, Mitra
Adiperkasa and Gudang Garam (GG). We maintain our OVERWEIGHT on the
consumer sector.

Target price for Consumer sector stocks

• Currency and consumer confidence. Normally a barometer of confidence for
investors, the rupiah is also a gauge of consumer confidence. The Indonesian
currency has been firming for over two years and recently reached its strongest
level against the US$ since 2003. Its volatility has also dropped sharply, with the
monthly deviation being a mere ±2% over the past 15 months compared with ±10%
in the preceding 24 months. Historically, rupiah strength and stability have boosted
consumer confidence, albeit with a lag. Consumer confidence is closely correlated
to the retail sales index. The bottomline is that rupiah stability and strength bode
well for broad-based consumption growth. We think that GG, Ramayana and Ace
Hardware stand to benefit.

• Inflation and margins. Over the past six years, Indonesia has gone through two
rounds of cost-push inflation in 2005 and 2008 and is currently in its third one.

PT Bukit Asam Alert : Revising earnings on higher coal & oil price assumptions

PT Bukit Asam {Ticker: PTBA.JK, Closing Price: 22,100 ISl, Target Price: 32,100 ISl, Recommendation: Buy}

Revising 2011 and 2012 earnings forecasts on higher coal & oil price
We have increased our earnings forecasts for 2011 and 2012 by 8% and 6%, respectively. This factors in adjustments to FY10 results, as well as higher DB coal price (up 13% and 4% to USD130/t and USD140/t for JFY11 and JFY12) and higher oil price (up c. 16% to USD117/bbl for both years) assumptions.  We have also adjusted our currency to Rp8990 from Rp9200 previously.  So far, PTBA has priced around 53% of its 2011 volumes, implying a spot exposure of 47%.

Maintain Buy rating, with TP of Rp32,100 (from Rp33,300)
Our revised target price reflects the above-mentioned earnings estimate revisions, slightly offset by currency adjustments. We establish our target price by conducting a sum-of-the-parts DCF analysis; we then apply a 50% premium (unchanged), in line with our approach for the sector as a whole, to reflect the coal upcycle. Our DCF analysis assumes a WACC of 11% and a US$80/t long-term coal price benchmark. For valuation

Research Today: Astra Agro Lestari (AALI IJ), payback time

Plantation analyst Di Shui downgrades Astra Agro Lestari (AALI IJ) slightly to Outperform (from a BUY). Despite a very strong 1Q11 production number (record), our analyst lowers her recommendation on the back of valuation.

 

The TP is now Rp26,350, suggesting 16% upside. TP is derived from a sector P/E of 14.4x AALI is poised for 43% earning growth in FY11. A limited growth profile and modest capex needs in FY11 could mean higher future div payouts.

 

With parent Astra Int’l (ASII IJ) needs the cash to subscribe to UNTR’s US$700mn rights issue (ASII owns 59.5% of UNTR), the chance is good that ASII will upstream the cash from its subsidiaries. Assuming AALI to pay 100% div payout out of FY10 earnings, we are looking at 5.6% div yield.  On top of that, AALI’s balance sheet is debt free with cash holdings of over US$140mn. Special dividend is not impossible.

Key points from the report:

 

·         Off to a strong start in 2011: 1Q CPO production +26% YoY, ASP likely rose >20% from FY10.

·         We forecast 43% EPS growth in FY11 on the back of higher production (+7% YoY) and ASP (+16% YoY).

·         We like the dividend angle. Historically paid out 65% of earnings.

·         However, limited capex needs, US$140m net cash B/S, and a rights issue for sister

INCO (International Nickel) - Updates

Inco is also aiming to raise nickel production by 20% in coming years. To achieve the target, they will invest USD232mn to raise its annual production from 73,000 to 90,000 metric tons in 2014-2015. Inco will pay dividend of US$0.0146/share or 2.5% div yield. Including interim, total div is USD0.0346/share or 78.6% payout. 

April 13th 2011

Bakrie-Vallar updates

Last night our staff went to the dinner at Four Seasons Jakarta for the official closure of the Bakrie-Rothschild deal. This follows Friday's purchase of 75% of Berau by Vallar and the earlier purchase of 25% in Bumi. Vallar (VAA LN) will be renamed Bumi Plc on May 10.  
Some key takeaways:
* Bakrie group is understandably very pleased to have closed the deal; they see this as the internationalization of the group.
* They have been speaking to institutional investors to swap their shares in Bumi for Vallar. Indicative terms are 57.7 BUMI sh for 1 VAA sh, according to local press which at current VAA price translates into a swap price of Rp3150/sh.
* They could do a preemptive placement of 10% in Bumi to repay the debt and swap the shares into VAA shares.
* They now want to lift VAA's stake in Bumi to 40%+ (from 25%) and hope to complete this in May this year.
* Separately, the group has said it wants to repay $375m of convertible debt this year plus $600m of the first tranche of expensive CIC debt in Oct.
* The group sees itself producing 140mt of thermal coal by 2013; a bit ambitious in our view given production constraints but their conveyor-based infrastructure gives the group a real cost advantage over those who rely on trucking the coal out from the pit.
 
We like BUMI. BUY with TP of Rp4,000.

source: CLSA 

Aneka Tambang (ANTM IJ) breaks ground on aluminium plant

Aneka Tambang, state-owned gold and nickel miner has started construction of a US$450m chemical grade alumina plant in West Kalimantan’s Tayan and expects it to be operational in 2014. The plant, which will have a capacity to produce 300k tons of aluminium oxide per annum is a JV with Japan’s Showa Denko. 

source: CLSA

BUMI Resources - analyst meeting

We attended BUMI analyst briefing held on Friday (April 8) which provide comfort to our positive view on the company. Major news from the meeting in our view is the management’s confirmation that Bumi Resources (BUMI IJ) will change its auditor to PwC to be in line with Vallar’s for financial year 2011. We believe this is positive for the share price as PwC is perceived to be a more conservative auditor. BUMI will propose the change in the upcoming AGM which is scheduled before end of 1H11. We maintain our Buy call on the stock with a price target of Rp4,300/share.

Other key takeaways from the meeting are:

1.       The accelerated payment of CIC loan of US$600mn in October 2011 will be the main focus for the Company. Additional debt reduction is the US$375mn convertible bond, so total expected debt reduction for 2011 is US$975mn. The management highlights that the operating cash flows and sales of assets will be the main source of fund for the debt repayment. At the end of 2010, ratio of debt/adjusted EBITDA was 3.7x and the target will be 2.0-2.5x;

2.       Production target for 2011 is 66mn tons, and 28mn tons out of it has been priced (no details on the price). The management guidance for 2011 ASP remains at US$77/ton for now, but they acknowledge that the ASP guidance is conservative, and are thinking of US$80-85/ton ASP for 2011. ASP details will be given later;

3.       Production in 1Q11 will be ~14mn tons, ~21% of annual target but that’s expected as 1Q is a wet quarter and production in 1H is usually 40-45% of annual production;

4.       BUMI production target for 2013 remains 100mn tons from KPC and Arutmin. Additional production

Astra International - Record 4-wheeler sales in March

Four-wheeler March sales: 81,706 units (+25% YoY; +18% MoM)

Four-wheeler sales hit a record high in March mainly following 1) negative

headwinds from fuel subsidy removal for private cars, which in the end

failed to materialize, 2) sales normalization post implementation of higher

automotive taxes in several provinces, and 3) still abundant affordable financing

especially with abating inflationary pressure and a stable interest

rate environment. Meanwhile, Astra also grew in line with the industry,

posting record-high car sales of 44,924 units (+23% YoY; +18% MoM)

maintaining its market share at 55% in March. (Please refer to table for more

details.)

 

Running better than our 2011 forecast

Both the industry and Astra showed robust sales in 1Q11, reaching 225k

units (+29% YoY; +8% QoQ) and 125k units (+27% YoY; +9% QoQ), some

26% of our full-year forecast for both the industry and Astra, respectively.

Nevertheless, we need to see more clarity regarding supply availability due

to Japan's catastrophe, which is expected to start having an impact on sales

in May.

 

Maintain Buy rating on Astra Int'l with TP of Rp79,000

We believe that Astra Int'l would be the main beneficiary from credit expansion,

doubling middle income consumers and strong GDP per capita

Indonesia Stock : Bakrie Sumatera Plantations (UNSP-HOLD-IDR360-TP:IDR325)

4Q10’s 283% q-q earnings growth: Unsustainable on one-off gains
Despite having booked significant Domas-related restructuring one-off gains from in its 2010 results (60% of net income), Bakrie Sumatera Plantations (UNSP) only managed to register lackluster 2010 diluted EPS of IDR63.9 per share, down 1.27% y-y (exhibit 1).  The inclusion of Domas allowed 2010 revenue to rise 29% y-y to IDR3,004b, allowing operating profit to come in at IDR850b (+81% y-y) and net profit to reach IDR806b (+218% y-y).  In 4Q10, UNSP reported top line of IDR1,108b, up 46% q-q and 62% y-y, mainly on increased CPO sales and CPO average selling price, bringing 4Q10 operating profit to IDR282b, up just 20% q-q.  Meanwhile, net profit reached IDR560b, up 283% q-q, but mostly coming from other incomes related to the Domas acquisition. We do not see this level of net income margin (i.e. 50.6% in 4Q10, up from 19.2% in 3Q10) as sustainable going forward.  
Domas acquisition: Not an attractive deal
Having spent roughly IDR330b for the Domas acquisition (IDR110b equity portion and IDR220b on capex & working capital), UNSP management expects to have significant revenue expansion in 2014 when the utilization rate of Domas reaches 90%. However, this is not that exciting in our view for three reasons. First, UNSP’s margin will experience significant contraction by entering the upstream industry (exhibit 23), translating to significant revenue increase but much more subdued at the bottom line level.  Second, we expect return on equity to stay low going forward as it did in 2010A ROE of 5%, which was lower than 2009A ROE of 10% (exhibit 13). Third, the impact of consolidated debt from Domas will continue to burden UNSP, as displayed by 2010 net gearing of 26.8%, up from 10.9% in 2009.  UNSP earnings in the next few years will depend on its IDR3t debt restructuring result (exhibit 22). 
 
Underperforming estates to persist
The Agri Resources B.V. (ARBV) acquisition (32k ha planted from 56k ha area) has a negative impact on the overall 2010 productivity of UNSP with FFB yield of 13.8, down 19% y-y, and 32% discount from the industry (exhibit 16). Note that UNSP’s estates are currently in their productive stage, with average age of 12 year old (exhibit 20).  Thus, while we expect some improvement ahead, we believe productivity will still remain below industry average with unexciting

Indonesia Stock Exchange - Market News (April 8th, 2011)

Jasa Marga expects 1Q11 revenue to reach Rp1.1tn or 10% YoY growth.  1Q11 traffic volume is expected to increase by 3-4% YoY to 226.5m.  Separately, JSMR hopes that government will allow a lower dividend this year to enable Jasa Marga to have more cash to fund expansion.  Comment:  This indication is in line with our expectation where 1Q11 revenue of Rp1.1tn is 22% of our FY11 forecast of Rp4.9tn, and company’s guidance of Rp4.8tn. Tariff increase in Sep for 11 out of its 13 toll roads will provides additional boost to revenue on top of higher traffic during Moslem holiday.  On dividend, last payout ratio was a high 60%; Jasa Marga hopes for a lower payout this year.

 

Agung Podomoro (APLN IJ) sold Rp1.12tn of property in 1Q11.  Comment:  1Q11 pre-sales reached 28% of company’s full-year target of Rp4tn.  APLN expects a growth of 43% in marketing sales this year.  Profit guidance for 2011 is Rp500-550bn, from Rp242bn in FY10.

 

Telkom (TLKM IJ) update: more noise in the daily press on a daily basis about the Indo Govt trying to swap Singapore Telecom's stake in Telkomsel into TLKM.

 

Krakatau (KRAS IJ) plans to add 15% at Krakatau Posco.  Local newspaper reported that Krakatau Steel, the state-owned steel maker, plans to increase its stake by 15% to 45% at Krakatau Posco, a joint venture company with Korean’s Posco. Krakatau Posco will build a steel plant with production capacity to produce 6m tons in West Java’s Banten.

Bakrie Brothers (BNBR IJ) aims to deleverage its balance sheet by Rp3tn (US$344.8m). Bakrie Brothers plans to refinance its debts by Rp3tn to Rp3.5tn or 42.8% of the total debts as of Dec 2010. The company is in talks with several potential lenders on the plan and aiming to issue US$100m bonds to finance its expansion in coal and palm oil. 

Mayora Indah - 2011 forecast and 2010 performance overview

• Maintain Neutral and target price of Rp12,300, still based on 14x CY12 P/E, in line
with our market P/E target. Mayora’s better-than-expected results in 4Q10 could be
short-lived, in our assessment, as 4Q10 margins were boosted by: 1) a larger portion
of higher-margin products and lower-cost inventory; and 2) maximum efficiency from
high factory utilisation rates. Higher costs of inputs, depleting low-cost inventories as
well as a normalisation of its product mix should bring down its margins sharply in
1Q11. On the brighter side, demand remains buoyant and gradual price increases
have been introduced. We fined-tune our FY11-12 earnings forecasts by -0.2% to
+1% to account for lower G&A expense but higher debt. We may like Mayora’s
growth prospects but it would have to weather near-term margin squeezes before its
share-price rally can be sustained, in our opinion.
• 2010 boosted by seasonality and efficiencies. Higher-margin sales, typical of 4Q
which is characterised by festive spending, lower-cost inputs and efficiencies
converged to boost Mayora’s 4Q10 gross margins to 24.4%, its best quarter in the

PT Wintermar Offshore Marine Tbk records net profit of Rp106billion for FY2010, and plans to acquire 12 additional offshore support vessels in 2011 to capitalize on strong demand from rising offshore oil exploration activity

PT Wintermar Offshore Marine Tbk (WINS) recorded a net profit of Rp106billion for FY2010,on a revenue base of Rp669billion. Stronger than expected performance from the chartering division contributed to the 70% yoy jump in revenues. Activity in the offshore sector picked up momentum in 2010 and several new clients started exploration activities. In line with our fleet renewal policy, in 2010 the company acquired 8 new offshore vessels in the mid and high tier category for a total of US$74million, while 4 vessels in the low tier category were sold at a profit of Rp5.2 billion. Associate company net income posted a solid contribution of
Rp12.6bn, largely derived from the recently acquired stake in Fast Offshore Supply Pte Ltd in Singapore which specialises in owning and operating their innovatively designed high end fast multi purpose supply vessels.
Activity in the offshore oil and gas industry has picked up momentum in 2010 and 2011 as the Indonesian government continues to commit resources to increase oil production in order to boost the oil revenues in the state budget. This continues to underpin the strong upside in demand for our offshore support vessels in the coming years. Our fleet expansion plan to add 12 offshore vessels in 2011 is on target, with 6 vessels expected to be delivered in the first half of 2011.

About Wintermar
PT Wintermar Offshore Marine Tbk (WINS) is an offshore marine services company that owns a fleet of

Perusahaan Gas Negara - 2011 Outlook

At a Glance
• FY10 core earnings were within expectations
• Larger capacity and potential gas price hike are key catalysts
• Maintain Buy for attractive valuation with superior yields and
ROE.

Comment on Result
Perusahaan Gas Negara’ FY10 revenue grew 10% yoy to Rp19.8tr following larger
volumes of both gas distribution (+4%) and transmission (+9%)
due to stronger industrial demand. EBITDA improved by a stronger
15% yoy to Rp2.4tr, helped by 3ppt improvement in operating
margin following average 15% hike in gas prices for industrial and
commercial users in Indonesia effective 1 April 2010.
Perusahaan Gas Negara registered Rp369b forex translation loss (on loans) in FY10 due
to Rp exchange rate changes against the US$ and Yen. Excluding
the non-cash translation loss, FY10 core net profit of Rp6.6tr
(+32% yoy) was within our and market estimates.
Perusahaan Gas Negaras’ earnings outlook is promising given new sources of gas from
LNG terminals and larger domestic supply. Its distribution volume
might increase to 1,050 MMScfd in FY14 (+23% from FY10) upon
completion of the West Java terminal. Pgas is also well-poised to
receive additional domestic gas supply as new regulations mandate
upstream natural gas producers to sell 25% of their production to
the domestic market.

Recommendation
We reiterate our Buy call for Pgas for its promising outlook and
attractive valuation. Pgas is trading at a discount to regional gas
peers, at 12x FY11F PE against peers’ average of 16x, but offers
higher yields of 4% against peers’ average of 2%.

ANTAM Tbk - 2011 Financial forecast

• Positive takeaways: (1) Ramp up of ore shipment in FY11 by 15% Y/Y

from 7MM tons in FY10. (2) Despite budgeting US$750/t.oz, Antam (ANTM)

views that the cost to produce gold could be US$650/t.oz. (3) Ground

breaking from Tayan Chemical Grade Alumina should start within

weeks. (4) Securement of US$1 bn line of credit line.

• Negative takeways: (1) Conversion from oil to coal based operation

using the 2x75MW power plant is cancelled. (2) Major maintainance

capex amounting to US$450-500MM and the cost of Feni Halmahera

increased from US$1.4 bn to US$1.6 bn. (3) High grade ore is no longer

available at Pamola limiting the output ability of ANTM's Pamola's

facility.

• Model adjusted: With these we incorporate the following adjustments

to our model: (1) Adjust the ore sales volume upwards in FY11E by

39%. (2) Adjust the gold production cost from US$750/t.oz to

US$663/t.oz. (3) Increase the capex spending in FY11E to FY16E from

Indopoly (IPOL) Recorded Positive Performance in 2010: Net Profit Increased by 82%

Jakarta, Indonesia, March 30, 2011 – 

PT Indopoly Swakarsa Industry Tbk. (the Company), one of the leading manufacturer of flexible packaging film in Indonesia with ticker symbol IPOL, has issued its 2010 audited financial statements and reported an increase in net sales in 2010 by 32% to IDR1,625 billion from IDR1,230 billion in 2009, while gross profit in 2010 reached IDR440 billion representing 65% increase from 2009 gross profit of IDR266 billion. In addition, the Company reported operating profit and net profit of IDR 278 billion and IDR 170 billion respectively, an increase of 160% and 82% respectively, from prior year.

The significant rise in sales and gross profit in 2010 were due to a combination of several positive factors:

(a) full year sales from second BOPP line that has been completed and has started operating since July

2009;
(b) better product mix; and
(c) improved production efficiency. Year-on-year gross margin rate rose by 5%, from 22% in 2009 to 27% in 2010. Increase in operating income is supported by management’s ability to maintain steady level of expenses leading the Company’s operating margin and net profit margin to more than 17% and 10%, respectively.

Moreover, the Company would like to report the progress of its expansion projects in its factories in

Indonesia and China as follows:

1. The extrusion coating unit for thermal lamination film in Suzhou China, with annual capacity of 5,700 tonnes, has been installed and is expected to be ready for commissioning in April 2011. This new investment supports the Company’s commitment for producing green products which is in line with the world trend of low carbon economy. This widely required film does not need chemical adhesive and other substance while being laminated to paper; therefore it helps to reduce carbon foot print.

This value added product is targeted to serve customers in China, United States, and Europe where the film is used for various high-end consumer product packaging applications. The film is also used for books, magazines and a variety of printed material applications.

2. The first metalizing unit in Purwakarta Indonesia, with annual capacity of approximately 7,000 tonnes, has been commissioned in January 2011 and run at full capacity end of March 2011. The second unit of the same capacity is expected to be commissioned in September 2011. These

Indonesia 2Q11stock picks

The market started taking a little breather after last week's strong performance with all the strong data points (earnings and macro).  For now, it appears we are back to a trading environment with a dearth of news flow.

One of the steady performers remains the currency.  Currently trading at a 4 year high, further appreciation is in the cards.  Anecdotal and other evidence all points to the Central Bank's change of tack and its currency willingness to use currency strength to battle inflation.

After managing to eak out a respectable performance of +2.6% vs. -0.7% of the JCI for the 1Q stock pick, sales + research have come up with our picks for the 2Q. Looking at the list, appears to have a good balance of resources and domestic consumption plays. 

However, what is interesting to note is that out of the 14 names, 11 are either small caps or turnaround plays.  Clearly, we feel that most of the big cap blue chips ain't cheap and rising risk appetite will mean outperformance from out of favored names. 

Here is the list:

BUMI Resources (BUMI IJ)  

Most leveraged coal play financially and operationally.   Catalyst from repayment of CIC debt. Stand to save US$100m in annual interest payments (Net profit was US$311m in 2010).

Berlain Laju (BLTA IJ)  

Trading at 0.5x book value, rapidly de-leveraging balance sheet with listing of Indo business as near-term catalyst.   Both chemical tankering (80% of its revenues) and oil & gas tankering (20% of revenue) has started trending up nicely.

Delta Dunia (DOID IJ)  

2nd largest coal mining contractor with 1.5x growth of UNTR.  Balance sheet is deleveraging and new blue chip majority shareholders will bring down cost of capital.   

Energi Mega (ENRG IJ) 

Trading on EV/2P of only $1.36/boe, this is the cheapest oil and gas play in the region by far.  Balance sheet is also deleveraging as the current key assets starting to get monetized.  4Q2011 saw a huge turnaround and momentum will gain in 2012. 

Intraco Penta (INTA IJ)  

plans to double net profit through organic and inorganic growth. Coal mine injection by 3Q of US$200-300mn (2x

Total Bangun Persada : Margins powered growth

Target price: Rp380
current price : Rp 255 (31 march 2011)
Mkt.Cap: Rp870bn/US$100m


10% ahead; maintain Outperform. FY10 core profit leapt 50% yoy to Rp79bn,
10% ahead of our forecast and 13% ahead of consensus. Total appeared to have
applied more direct contracting to project owners, leading to lower revenue but this
was more than offset by higher margins. Indeed, gross and net margins were the
highest since 2008, at 12.7% and 5.2% respectively. We raise our FY11-12
earnings estimates by 1-3% to reflect higher margins and a lower tax burden, while
introducing FY13 forecasts. On the other hand, we lower our target price to Rp380
from Rp425. This is still set at a 20% discount to our market P/E target, which is
now 14x instead of 16x. We continue to see stock catalysts from contributions from
its property project in Bali and better-than-expected margins.

• Margins peaked. Revenue of Rp1.5tr was down 11% yoy, offset by higher-thanexpected
construction margins of 13.2% (1.5% above our estimate), probably
contributed by a higher portion of direct contracting. Net margins hit 5.2%, the
highest since the implementation of a 3% final tax in 2008. Tax savings (courtesy of
direct contracting) were evident from the decline in its effective tax rate from 67% in
4Q08, when the new tax rule was introduced, to 36% in 2010. Guidance is 10-15%
revenue growth to Rp1.7tr this year on Rp2.8tr order book. Order-book

Indocement (INTP IJ), In the driving seat

Nick Cashmore sees INTP as an excellent proxy for Indonesia’s urbanization, industrialization and an expanding middle class.

 

The second largest producer of cement with 18.6m tons is well positioned with US$530m of cash on hand. ROE, still superior, is coming down from 28.4% in FY09 to 26.9% in FY10, and 25.6% in FY11. The decline in ROE reflects the build up in cash. But on a ROIC basis, returns continue to improve.

 

All this will drive future price performance and remains a conviction holding. TP of Rp19k gives 19%, BUY.

 

Key points from report:

• Every 1 % swing in price affects earnings by 1.9%. With USD costs making up 70% of COGS, expected 3% rupiah appreciation = 2.4% price increase
• Greatest flexibility with capacity utilization at only 67%, with spare capacity 4.5m mt.
• 11CL assumes 4% price increase and 7% volume growth, and stable margins overall
• Has US$530m cash on hand (31% of assets), with modest immediate capex needs. With US$425m in FCF a year, dividend payout can rise from the current 35%
• Domestic demand for cement grew at 6% Cagr over 10 yrs to 40.4m mt, in line with GDP growth.

United Tractors - RIght Issue plan

Details of the Rights Issue:

 

Ratio: 4 rights for every 33 existing shares (4 for 33), in total representing 403,257,853 New Shares to raise up Rp 6,069,030,687,650 (US$696m)

Rights Price: Rp 15,050, representing 30.8% discount to the closing price of Rp21,750 on 30 March 2011. Discount to TERP is 28.4%

Standby Purchaser: Astra

Use of proceeds:

90% business expansion (including mine contracting and coal infrastructure related projects), 10% working capital

Joint Financial Advisors: CLSA and UBS

 

Timetable:

 

02 May Shareholder EGM to approve the rights issue

10 May Ex-Rights Date

12 May Record Date

16 May Commence Rights Trading Period (Rights Exercise/Subscription)