UNTR Another new record high in March - DBS Vickers

• Komatsu sales hit another record high in March
• Pama was in line; expect higher output in 2Q and 3Q
• Maintain Buy and Rp27,200TP.

Komatsu sales for Mar 11 was above our expectation.
Komatsu sales for March came in at 789 units (+63% y-oy, +15% m-o-m). This is 53% above our monthly forecast of 517 units. This data reaffirms our view of solid demand for heavy equipment especially from the mining sector, which accounts for 67% of unit sales, underpinned by strong coal demand. This year, we estimate sales volume to grow by 15% to 6,150 units, in line with the company’s guidance. 3M11 sales already account for 36% of our FY11F. However, we expect slower volume sales in 2Q to take into account potential production disruptions in Japan.

Pama was in line. Coal production and overburden at Pama increased by 8% and 4% to 6.7m tons and 56.9m bcm respectively. Although the figures are below our average
monthly forecast of 7.1m tons and 59.7m bcm respectively, they are in line with our estimates given that 1Q is usually the weakest due to the wet season. YTD sales have
reached 19.3m tons and 167.5m bcm respectively, and account for 23% of our FY11F.We expect better numbers from 2Q onwards.

Coal mining is improving. Coal sales in Feb rose by 13% mom to 369k tons supported by higher production at Tuah Turangga Agung (TTA). This year, we are expecting coal
production of 3.6m tons, of which 1.2m tons will come from TTA while DEJ is expected to contribute 2.5-2.5m tons.

Maintain Buy and Rp27,200 TP. We reiterate our Buy call for UT with DCF-based target price of Rp27,200 (WACC 12%, terminal growth 3%). The stock is trading at an
attractive 15x FY11F PE on 22% earnings CAGR in FY10-12F. UT is the prime beneficiary of rising coal mining activities in Indonesia as UT is the market leader in both construction machinery (46% market share) and mining contracting (44% market share) in Indonesia.