ANTM Increased in production - Recapital

Performance In 2010. Antam’s net profit of Rp.1,683 trillion was 179% higher over 2009 net profit of Rp604,3 billion. Antam’s earnings per share in 2010 was Rp.176,77 over Rp63.46 in 2009. Antam’s net margin in 2010 of 19% was significantly higher over 7% net margin of 2009 Antam’s sales revenue reached Rp 8 744 trillion with ferronickel, a processed commodity, as the biggest contributor with 42% contribution. Although Antam’s consolidated audited sales revenue of Rp. 8,745 trillion was a slight increase over Rp. 8,711 trillion in 2009, the significant increase of ferronickel sales, which had high margins, was higher than the
decrease of precious metals trading activities which was significantly reduced at the beginning of 2010 to reduce the risk of price fluctuation.

Increased in ferronickel production. In 2010, production of ferronickel jumped 49% over 2009 to 18.688 tones nickel contained in ferronickel (TNi). Antam’s ferronickel sales volume was 29% higher over 2009 to 18,254 Tni. Antam’s nickel ore sales in 2010 rose 20% over 2009 to 5.863.840 wmt with production also rose by 20% to 6.993.454 wmt. Antam’s nickel ore contributed 27% of sales in 2010. As Antam began the commercial operation of the Cibaliung gold mine, gold production
rose 6% over 2009 to 2.776 kg. Sales volume of gold decreased by 49% to 6,561 kg as Antam significantly reduced precious metals trading activities to reduce the risk in price fluctuation. As a result, contribution of gold to Antam’s sales was 27% compared to 50% in 2009.

Valuation. Our Valuation on ANTM is Rp 2.867 based on DCF
valuation assuming 14,1 % WACC and 5% terminal growth. At our target price ANTM will be traded at 10 33 X FY11 PE With FY11 price, 10,33 PE. estimated ROE of 32,14%, we see ANTM a very attractive choice of investment.