2010 inflation reaches 6.96% YoY
· Indonesian inflation in 2010 reached 6.96% YoY. This exceeded the government’s, Bank Indonesia’s and consensus’s target which called for 5.3%, 5% ±1%, and 6.7%. December inflation surpassed expectation with 0.92% MoM compared to the forecast of 0.71%, where volatile goods price jumped a sharp 3.29% MoM, which was especially influenced by the fluctuations of rice.
· The price of rice increased by 7.7% MoM from Rp 6,793 per kg to Rp7319 per kg. This increase is even higher if compared to price in December 2009 where price of rice was only Rp5,795 per kg, which translates into 26.3% YoY growth. Rice is the biggest contributor to inflation in 2010, contributing 1.29% to the bottom line inflation of 6.96% YoY. The second biggest contributor to inflation was the increase in the electricity tariff which rose at an average of 15% this year.
Higher registration tax and progressive tax to push automotive product prices· The government’s plan to increase registration tax by two fold and implementation of progressive tax are considered to curb automotive sales volume growth and will require producer to adjust selling price.
· Producer said they will meet difficulties in determining new sales price as the implementation is different for each regional area. However, rough calculation for new selling price will be 5% - 7% higher.
· It still hard to asses the impact, however, as the implementation is also coupled with limitation in subsidized fuel consumption, these new regulations is likely to curb domestic automotive sales volume growth, in particular for car sales.
Astra Honda Motor sells 3.4mn motorcycles in 2010 (ASII, Rp54,400, Buy)
· During 2010, Astra Honda Motor, Astra’s arm in 2W, managed to sell 3.4mn units of motorcycle (+25.9% YoY), which is higher than the company’s target of 3.3mn units. The figure is also new record high for Astra Honda Motor compared to latest all time high of 2.9mn units in 2008.
· During December, Honda’s sales volume decreased to 216 thousand units (-29.4% MoM) amid regular factory maintenance and public holidays.
· This year, Astra Honda Motor sees total domestic motorcycle sales volume to grow by 10% YoY and AHM expects to maintain its position by introducing two new types in 1H11. Although AHM has not described the types, we foresee one of the company’s new products to be the 250cc sport type, which has already been promoted in latest motorcycle show.
· In all, Astra is likely to maintain revenue growth from motorcycle business along with robust outlook for its mining and CPO business.
· ASII is trading at 2011F PER of 14.1x and EV/EBITDA of 10.3x, Buy.
TB Bukit Asam explores possibility for external financing (PTBA, Rp23,950, Buy)
· TB Bukit Asam is currently exploring possibility for US$272mn bank loans in order to support the company’s plan in increasing ownership in Bukit Asam Transpacific Railway (BATR). The company intends to increase ownership to 30% by acquiring 20% stake from Rajawali Corporation.
· Several banks have showed their interest to support the company’s plan. TB Bukit Asam needs to raise US$320mn for another 20% participation in this project, US$272mn of which will be financed through bank loans.
· We see the company will meet no difficulties in raising such amount of loans as TB Bukit Asam has Rp4.8tn cash in hand (9M10) with debt free position.
· Currently, PTBA is trading at 2011F PER of 18.0x and EV/EBITDA of 11.9x, Buy.
Indofood buys back ICBP shares (INDF, Rp 4,975, Buy; ICBP, Rp4,725, Buy)
· Indofood Sukses Makmur has bought 26.87mn shares of Indofood CBP (ICBP), increasing the parent’s stake from 80% to 80.46%. The transaction was conducted between December 20-29, 2010, where INDF bought directly from the market.
· Assuming an average price of Rp4,575 during that period, transaction value reached Rp118.95bn.
· INDF is trading at 2011F consensus PER of 12.7x and EV/EBITDA of 4.7x, Buy. ICBP is trading at 2011F consensus PER of 15.3x and EV/EBITDA of 7.6x, Buy)
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