Daily Focus 22 Feb 2011 - DBS Vickers

Multistrada Arah Sarana: Not Rated; Rp280; MASA IJ

EGM results
Multistrada held its extraordinary shareholder general meeting yesterday with two main outcomes. First, the company added two new directors to its Board. Second, the quorum also agreed to add new business scope on its Articles of Association to accommodate Multistrada’s expansion into plantation business. If this plan materializes, the company would need additional funding between US$50-100m. It is likely that the additional funding will fund its expansion beyond the upstream industry.



United Tractors: Buy; Rp23,450; TP Rp27,200 prev Rp25,000; UNTR IJ

A strong start to 2011
• Jan11 Komatsu sales hit record high
• Pama operations were in line, expect output to accelerate in 2Q and 3Q
• Maintain Buy, TP raised to Rp27,200 (from Rp25,000)

Jan11 Komatsu sales hit record high. Jan11 Komatsu sales reached 731 units (+134%mom, +116%yoy), underpinned by strong demand from mining. It is 42% above our monthly average forecast of 513 units, as we expect 6,150 units for FY11F (+15% yoy). We suspect the strong January sales could be due to carry over demand following weak Dec10 sales of only 313 units. Sales to mining was 70% of total unit sales.

Pama ops in line. Pama’s coal production and overburden was 6.3m tons (-11%mom, 5%yoy) and 55.4m bcm (0%mom, +20%yoy), respectively, below our monthly average of 6.8m tons and 59m bcm. We understand that 1Q output is usually the weakest and represents 20-24% of full year output. We are expecting better output in 2Q with 3Q usually the strongest quarter. Meanwhile coal sales volume reached 307k tons (+16% yoy), in line with our estimate. We raised FY11-12F earnings by 2.9%-3.6% after imputing 7-10% higher ASP for those years to US$95-97/ton. Coal mining is expected to contribute 8% of FY11F revenue.

Maintain Buy, raised TP. We raised our DCF-based TP to Rp27,200 (from Rp25,000) following the earnings upgrade, and after rolling over valuation base to 2011. UT is trading at attractively 15x FY11F PE, in line with its 5-year average but below its peak of 25x.