CLSA INDO: United Tractors (UNTR IJ), most downside priced in? from Sarina Lesmina

Sarina visited UNTR and came away more optimistic about the stock.

UT is guiding for an increase of heavy equipment sales (Komatsu) by 15% in 2011 to 6,000 units.  Their internal assessment on total industry demand for heavy equipment to increase by 11%. UT believes mining is still the growth driver, with 50-60% sales goes to mining.
This year, agri business might also increase demand but estimated that land clearing for agri will increase just by 5-8%.  Current confirmed order is 1,200 units (mostly big machineries).  so that's 20% of their FY target already.
UT is guiding for a conservative ~8-10% growth across the businesses. UT's share price has fallen 15% from its peak in a week.  If weather improves, we believe there is upside to the mining contracting and the coal mining business.

Heavy equipment sales might also be higher than expected.  At current consensus number, the stock is trading at 14.9x. not cheap enough but there might be upside risk to the earnings forecasts.  Please see pdf file for more details.