(Early Bird) Euro Continues to Struggle, JCI’s Almost Reaching its Full Valuation - AmCapital

The U.S’s consumers continue to struggle as Michigan Sentiment reflected (Act 63.8 Vs cons 71.4); however, better than expected corporate profits from Google, which brought Dow (↑0.34%) and S&P (↑0.56%) into a positive territory. Continued worry on Euro’s debt is still persisting, where ECB (Euro Bank Central) refuses to take a collateral from default country. This causes Euro to open much weaker, at 1.401 while Spain’s (6%) and Italy’s yield (5.7%) keeps going new high. This triggers most of Asian Market to open lower this morning, Kospi (↓0.83%), ASX (↓0.23%) and NZX (↓0.55%). Rupiah seems to be weakening at this point, at 8,543 while Indo’s CDS is still stable at 138 bps. This means that JCI might be traded a bit lower albeit limited since it almost reaches its full valuation, PER-2011 of 14.3x (Estimate of 280 rupiah/share). We prefer buy on weaknesses on banks (BBRI IJ, BMRI IJ and BJBR IJ), consumer goods (INDF IJ and CPIN IJ), telcos (TLKM IJ and EXCL IJ), and property such as ASRI IJ and BSDE IJ) on the back of relatively lower inflation compared to that of last year.

Corporate Headlines:
PT Adaro Energy Tbk (ADRO IJ): will increase its port capacity in Central Kalimantan from 55 million tons to 80 million tons/year. This project will need fund of US$100 million and will be finished by the end of 2H-2012. The port expansion is actually meeting with the production target up 80 million tons by 2012.

PT Alam Sutera Realty Tbk (ASRI IJ): is planning to expand its land bank in Pasar Kemis, Tangerang. The company needs fund of 300-500 billion rupiah to expand its land bank. ASRI IJ already has 700 Ha of land bank in Pasar Kemis, and will plan to expand as far as 1,000 Ha. The fund source is from internal cash marketing sales. As of now, the company’s cash balance is 900 billion rupiah.