Markets / Cement Sector / Mining Sector / BMRI / Jaya Agra / Picture of the Day (update3) - Credit Suisse

3) Local News: Mining Sector / BMRI / Jaya Agra Wattie
Please note that the items below are taken directly from local newspapers. Hence, Credit Suisse does not guarantee the accuracy of the stories.

Indonesia Mining Sector: Government to Audit 8,000 Mining Permits
Subsequent to the regulations on forestry-permit moratorium and underground mining activities, Indonesia will audit over 8,000 mining permits to ensure their compliance with the mining and environmental laws. Finance Minister, Agus Martowardojo added that there are many overlapping permits, which needs to be sorted out. However, it is still unclear if the audit results will lead to any permit cancellations.

Sales commentary: The audit would benefit large mining companies, which are more likely to be properly licensed, in our view. The audit could also result in the cracking down of small/illegal miners, who are also typically not environmental friendly, and this should exert positive impact on the sector as production would be better monitored. In the mining sector, we continue to like the coal names: Borneo Lumbung Energi (BORN, O, PT Rp2,000), Indo Tambangraya Megah (ITMG, O, PT Rp57,000), PT Bukit Asam (PTBA, O, PT Rp26,500) and Indika Energy (INDY, O, PT Rp5,400).

Bank Mandiri (BMRI, O, PT Rp8,950): Rp120/share final dividend
BMRI 2010 DPR is set at 35%, where the final dividend stands at Rp120/share (yield = 1.7%). In the AGM , BMRI reappointed Budi G. Sadikin (micro banking) and Sentot A. Sentausa (risk management) as managing directors and appointed Royke Tumilaar as managing director to replace Thomas Arifin (treasurer). BMRI is also approved to acquire 60% stake in general insurance company, PT Asuransi Dharma Bangsa. Meanwhile, BMRI is also studying to expand its operations into Malaysia by acquiring a small-to-mid-sized bank with retail or consumer banking focus.

Sales commentary: We like BMRI on its strong management and strong execution ability. BMRI is targeting to strengthen its positioning as a financial powerhouse in the Indonesian banking sector and be included in the top five banking companies in the region in the medium-term.

Jaya Agra Wattie (Not Listed): Rp500/share IPO Price
Diversified plantation company, Jaya Agra Wattie (JAW) plans to list on the IDX on May 30, 2011. In the IPO, JAW raised Rp566 bn (US$66 mn) from the sale of 1.13 bn shares (30% stake) at Rp500/share. The IPO proceeds will be used for: 1) rubber and CPO planting and development of processing facilities (90% of the proceeds); and 2) land acquisitions, working capital and capex.

Sales commentary: We notice that Hadi Surya, the Chairman and CEO of Berlian Laju Tanker (BLTA, Not Rated), sits in the management board of Jaya Agra Wattie. BLTA had also recently floated its freight transportation subsidiary, Buana Listya Tama (BULL, Not Rated).