Mandiri Sekuritas ID (13-Jan-2011) Plantation: Tightness demand-supply on CPO and Soybean Oil is favorable for the price; HRUM: Key takeaways from meeting with the CEO; ELTY: To divest 75% ownership in Bakrie Toll, yet to remain its majority stakes

Plantation: Tightness demand-supply on CPO and Soybean Oil is favorable for the pricex
􀂄 United States Department of Agriculture (USDA) released its Jan11 forecast on demand supply of CPO and Soybean Oil on 12 January 2011.
􀂄 Based on USDA’s Jan11 forecast, tightness in demand-supply on CPO and Soybean oil is projected to continue, which is favorable for the price of CPO and Soybean oil.
􀂄 We maintain overweight recommendation on Plantation. Our Top Picks are London Sumatra (LSIP, Rp12,050, Buy, TP:Rp14,100) and Sampoerna Agro (SGRO, Rp3,125, Buy, TP:Rp3,950). Currently, LSIP is trading at PER FY11F of 12.8x. Meanwhile, SGRO is trading at PER FY11F of 12.4x.

Harum Energy: Key takeaways from meeting with the CEO (HRUM, Rp 9,350, Buy, TP: Rp 10,000)
􀂄 Harum Energy has confirmed to meet its FY10 coal production target of 7.3Mt combining Mahakam Sumber Jaya (MSJ) and Santan Batubara (SB).
􀂄 Pricing for 1Q11 is 75% fixed and 25% index linked, while the rest quarters have not been priced yet. 1Q11 volume is expected to contribute 25% of total FY11 sales volume, so it will lead to only 18%-19% fixed price for FY11 sales volume.
􀂄 This is great pricing strategy in our view amid coal price hike. Therefore we expect much higher selling price for 2Q11
which potentially to reach around US$ 90/ton.
􀂄 Our previous FY11 forecasts still use conservative average selling price assumption at only US$ 82.5/ton. So we still expect large potential upside for HRUM if thermal coal price benchmark remain stable at range US$ 115 - 120/ton
􀂄 Currently we have Buy rating on HRUM. HRUM is trading at 13.3x adjusted PER11F.


Bakrieland Development: ELTY to divest 75% ownership in Bakrie Toll, yet to remain its majority stakes (ELTY, Rp144, Under review)
􀂄 Bakrieland Development (ELTY) plans to divest up to 75% its ownership in Bakrie Toll Road (Bakrie Toll)¸ the company’s toll-road operator subsidiary. Based on news in Investor Daily, the President Director, Hiramsyah Thaib, mentioned that the company plans to IPO a totaling 20-30% of its ownership through IPO, while the remaining will be divested to strategic partner(s). ELTY will assure the majority stakeholder in the company by holding 25% ownership.
􀂄 Following Avenue Capital Group's non-participation in ELTY’s recent rights issue, we may suspect that the fund may return to the company through the private placement mechanism mentioned above. We note that the fund has been a long-run infrastructure investor in Philippines, while its representative in ELTY’s BoC is also a long-term experienced individual in the industry.
􀂄 Nevertheless, the time frame of the IPO is still unclear. Based from our recent talk with the company, it is indicated that the soonest will be end of 2011, awaiting performance progress of the only recently opened Kanci-Pejagan toll road. As at end of 2010, Kanci-Pejagan toll road has tapped of an average 15,000/day car traffic, below its initial target of an average 17,000/day. The company expects the traffic to improve up to average 19,000/day at end of 2011. Kanci-Pejagan toll road is expected to contribute up to 10% of total revenue in our forecast 2011.
􀂄 We are still reviewing our forecast on the stock. ELTY currently trades at 59% discount to our RNAV11F.