Market Flash: iSHARES MSCI Indonesia Investable Market Index Fund (EIDO:US) PRICE: 28.530 USD Down -0.360 (-1.246%) >>> BI: Rupiah Melemah Akibat Kondisi Eropa >>> Pertemuan FED pertimbangkan langkah baru dorong ekonomi >>> KIJA akan Terbitkan MEN Valas USD150 Juta >>> PT Indika Energy Perusahaan Teladan Dunia 2011 >>> Govt Promises Revision of Cost Recovery Regulation >>> BPMigas Demands PGN to Pay US$6 per MMBTU >>> Jababeka to Raise US$150 Million from Debt Markets >>> SCG Chemicals buys Chandra Asri >>> Solusi Tunas eyes Rp380 bio IPO >>> SMR Utama scouts Rp300 bio IPO >>> Alam Sutera picks two bond arrangers >>> ASII Tetap Rajai Penjualan Mobil Agustus 2011 >>> Perusahaan Thailand kuasai Saham TPIA senilai Rp 3,76 Triliun >>> Agis Main ke Tambang, Sahamnya Masuk Dalam Pengawasan >>> ACES Mendekati The Northern Agar Mau Kurangi Kepemilikan >>> IHSG masih harus berjuang terus bertahan diatas MA200 >>> Melirik Peluang Akumulasi di Saham Perbankan >>> Analisa Saham BUMI: Kuat Bertahan & Berpeluang Kembali Uptrend >>> Analisa Saham JSMR: Bertahan Di Support, What Next? >>> INDF Tertahan Di Area Support Kuat, Berpeluang Rebound >>> ASII Break Minor Support, Sell on Strength >>> ADRO Membentuk Descending Wedges, Berpeluang Rebound Terbatas >>> Wall Street ends flat as early gains evaporate >>> Fed begins policy meeting, tiptoes toward easing >>> Fed meeting to help decide on long-term Treasuries >>> Greece Makes 'Good Progress' in Reform Talks: EC >>> China worried Europe debt crisis will hit trade >>> China could roll out 4.65tr yuan stimulus package >>> IMF sees Mideast stagnation >>> NYMEX-Crude ends higher at Oct contract expiry >>> Asian Crude Palm Oil Up On Technical Buying, Soyoil >>> Foreign net Sell - 61.785.746

Kamis, 12 Mei 2011

Chicken run + ITMG good 1Q - JP Morgan

* Japfa Comfeed (JPFA) – this US$933mn chicken feedstock company reported impressive 1Q11 results yesterday. Net income jumped 58% yoy, driven by a 45% jump in operating profit. Annualizing the 1Q11 net profit, we would arrive at an estimated FY11 P/E ratio of 7.6x. Its local peer CPIN trades on 16x FY11 P/E, while Thailand peer CPF trades on 14.4x.

* Indo Tambangraya Megah (ITMG) – 1Q11 results out yesterday, allaying fears of further demmurage charges. Core net income up 27% yoy and 77% yoy. Stevanus Juanda’s FY11 EPS forecast of US$0.298 looking unrealistic, while consensus EPS of US$0.430 should gain credibility. ITMG’s belated 1Q11 results could provide some boost to the lagging Indo coal sector.

* Ciputra Development (CTRA) – the company is finalizing its independent NAV appraisal, with an estimated NAV/share of over Rp800. The last time CTRA provides internal NAV estimate was in early 2007, with a figure of Rp500/share. Based on the two data points, CTRA’s NAV could have grown 13% annually (compounded), that seems reasonable. The new independent NAV figure from CTRA could drive the Street’s NAV estimate upward; Liliana Bambang’s own NAV estimate is Rp695. At above Rp800, the discount to NAV would stand at around 50%.

INTP Appreciating to Intrinsic Value - Indopremier

Fiscal year 2010 and first quarter of 2011 are both in line with our expectation: revenue driven by higher selling volume and ability to maintain already high ASP. Going forward, INTP has space for growth through higher volume due to lower utilization rate of 67.95% compared to SMGR. We see the stock price is steadily appreciating from Rp 14,350 since our March update, we maintain BUY position with TP of Rp 19,300.

Aligned Performance
Revenue performance for fiscal year 2010 is fully in line with 0.22% difference in our forecast compared to actual figure. We saw minor surprise in term of higher than expected COGS and operating expense, yet all-in-all it was within narrow margin of 5.28% lower actual net income. Similarly, benchmarking from the first quarter of 2011, we foresaw little surprise going forward for FY2011 as the Q1 revenue already reach 22.79% of our full year forecast, although we do anticipate a possibility for upward revision because historically first quarter of the year is a sluggish period for INTP.

No Increase in ASP, Lower Margin
Average selling price for first quarter 2011 was maintained at already high level Rp 805,000 per ton, no chance from FY2010, so with higher oil and coal, naturally we see lower gross margin of 48,86% compared to 51,90% last year. We expect decent upward adjustment in ASP in the range of 5% driven from passing on higher cost of raw materials, however should it not materialize INTP might has an edge to reach revenue target with higher volume considering the utilization rate is at decent 67.95% compared to 93.87% of SMGR.

Maintain Buy with TP Rp 19,300
We continue to endorse INTP and maintain target price of Rp 19,250. The price has appreciated from Rp 14,350 in early March and currently fluctuates in the range of Rp 17,000s, thus presenting ca. 13.5% upside.

Delta Dunia unveils Rp1.3 trio rights issue - Insider Stories

Indonesia's second largest coal mining contractor PT Delta Dunia Makmur Tbk (DOID) aims to raise Rp1.3 trillion by issuing a 1.53 billion new shares in July.
Delta Dunia offers the exercise price of its new shares in the range of Rp850-Rp1,200 per share. Each holder of 500 existing shares will entitle 79-112 preemptive rights or 79-112 new shares to be issued by Delta Dunia, parent company of PT Bukit Makmur Mandiri Utama (BUMA).

Northstar Tambang Persada Ltd (NTP), a controlling shareholder of Delta Dunia with 40.06% stake, is acting as a standby buyer for the rights issue with a commitment to buy a maximum of 916.78 million shares which would not be exercised by public shareholders.

NTP, which is indirectly owned by Texas Pacific Group, Government of Singapore Investment Corporation, and China Investment Corporation, has vowed to exercise its rights to buy 612.63 million shares.

Delta Dunia will use 22.5%-32.5% of the proceed to pay debt to BUMA. About 60%-70% of the proceed will be utilized to underpin an organic growth and acquisition, and the remaining will be used for working capital.
Regarding to the proposed rights issue, the company schedules an extraordinary of shareholders meeting on June 13.

Indo Tambang 1Q profit rises 41.77% - Insider Stories

Coal miner PT Indo Tambangraya Megah Tbk (ITMG), that is controlled by Thai Banpu Plc, experienced a 41.77% increase in net profit for the first quarter of this year on the back of higher net sales.

Indo Tambang posted US$95.23 million net profit or US$0.08 per share in 1Q 2011 from US$67.17 million or US$0.06 per share in 1Q 2010.

Operating profit increased 25.82% to US$117.43 million from US$93,33 million, reflecting a higher margin to 25.07% from 23.17%.

Indo Tambang booked a 16.24% increase in net sales to US$468.33 million from US$402.89 billion. Enel Trade SpA made a US$48.67 million of coal purchase from Indo Tambang, counting 10.4% of consolidated total sales.

Banpu Minerals (Singapore) Pte Ltd controls 65% shareholding in Indo Tambang, President Director Hartono Widjaja owns 0.01% stake, and public shareholders own 34.99%.

Tower Bersama Siap Bagi Dividen Rp113 miliar

PT Tower Bersama Infrastructure Tbk (TBIG) siap membagikan dividen sebesar Rp25 per lembar saham. Total dividen yang dibagikan itu mencapai Rp113 miliar, atau 34,86 persen atau dari pencapaian laba bersih tahun 2010 sejumlah Rp326,7 miliar.

Demikian dikemukakan Direktur TBIG Helmi Yusman Santoso,usai acara Rapat Umum Pemegang Saham Tahunan (RUPST) di Hotel Ritz Carlton, Pacific Place, Jakarta, Rabu (11/5).

Disampaikan, pembagian dividen akan dilakukan pada tanggal 28 Juni 2011. Perseroan juga menetapkan penggunaan laba bersih tahun buku 2010, sebesar Rp10 miliar atau sekira 3,06 persen sebagai cadangan umum dan sebesar Rp202,812 juta atau 62,08 persen untuk menambah saldo laba (retained earning) untuk menduku pengembangan usaha perseoan.

BTEL Pastikan Akuisisi Perusahaan 4G Dalam Waktu Dekat - TopSaham

PT Bakrie Telecom Tbk (BTEL) mengumumkan rencananya mengakuisisi perusahaan 4G. Dopastikan rencana itu diupayakan agar bisa terealisasi dalam waktu dekat.

Demikian disampaikan, Direktur Utama Bakrie Telecom Tbk (BTEL) Aninditya Bakrie Rabu (11/5).

Menurut dia, pihaknya sedang memonitor peluang investasi di beberapa perusahaan 4G lokal. Untuk pengembangan teknologi tersebut BTEL memproyeksi memerlukan investasi sebanyak US$ 100 juta selama empat tahun ke depan. Adapun dananya akan dimasukkan dalam alokasi belanja modal yang per tahunnya mencapai US$ 200 juta. Sumber dana berasal dari kas internal perusahaan.

Indonesia Infrastructure: A US$250bn Opportunity - Morgan Stanley

We have published an in-depth report on Indonesia infrastructure, highlighting our view on the US$250bn opportunity in the space for the next 5 years.
This is quite literally a 101 – all you need to know on Indonesia Infrastructure in 101 pages.

MS ASEAN Economist Deyi Tan does a bottom up analysis of the infrastructure sector suggesting spending will accelerate over the next 5 years, shifting Indonesia's growth path by 2015. Her expectations are higher than the Government and consensus - essentially reforms have gained critical mass (think India in 2005) and the macro environment (cost of capital, external and government funding) is supportive.

Her report evaluates:
* Parallels with India and what has changed to facilitate infrastructure dollars
* Investment outlook and comparisons for 6 core sectors - electricity, telecom, roads, railways, air transport, ports

Deyi takes pains to dissect by sector, a snapshot of where we are, the trends, the obstacles, the reforms taken (what has changed and how effective it has been) .. all from an economics point of view.

Pls let us know if a call with Deyi will also be helpful


KEY SUMMARY

Conclusions: The bull story for Indonesia is now well known (See “Indonesia: Adding Another ‘I’ to the B-R-I-C Story” June 12, 2009). We think infrastructure spend is a key driver of this bullish outlook & an important source of positive surprise. Working from a bottom-up perspective & drawing insights from India’s experience, we expect +20% CAGR in infrastructure spend, totaling US$250bn over the next five years. This implies infrastructure spend will rise from 3.9% of GDP in 2009 to 5.9% in 2015, helping to push GDP growth to 7.2% by 2015. In our bull case, infrastructure spend could rise to 7% by 2015, lifting potential GDP growth to 8.0%. In the bear case, infrastructure spend stays at 4% and potential GDP growth at 6%.

How we differ: The government is more conservative than us, targeting +14%CAGR in 2009-2014, a total of US$203bn in infrastructure spend, averaging 5% of GDP each year. Our back-of-envelope calculations suggest consensus is likely factoring in only a mild rise in infra spend to around ~4.5% of GDP by 2015. Overall infra spend data is hard to come by. We estimate the headline number from bottom-up sources. We highlight that despite perceived slow reforms, infra spend has actually increased from 3.2% of GDP in 2005 to 3.9% in 2009. In our view, 2 factors will help support a faster pace of spend going forward:

1) Reforms gaining critical mass: We believe Indonesia is now where India was 6 years ago. India started its infrastructure reforms in 2000 but it wasn’t till 2005 that reforms gained critical mass & infrastructure spend began to accelerate. For Indonesia, 2005 marked the inflection point in reforms. Time was needed to implement these reforms & reforms are now building towards critical mass. Already, 17 important regulatory reforms have been passed. Some sector laws will be effective this year & next, and a new land acquisition law is in the pipeline in 2H11. Such reforms create the right micro environment for infra spend to pick up further.

Bumi Serpong Damai (BSDE-BUY-IDR910-TP:IDR1,160) Size does matter - Bahana

Big land bank with big opportunity; Reiterate BUY with higher TP
BSD City, a key development of Bumi Serpong Damai (BSDE) located in Serpong-South Tangerang, will continue to be the choice for many future home owners due to supportive infrastructure development in our view. In terms of size, BSDE has a huge land bank (4,945ha), the second biggest amongst our property coverage (after ELTY), to support sales growth in the coming years. We see strong demand to continue this year stemming from Indonesia’s young and productive population, supported also by the current low interest rate environment. Following 10 to 15% y-y higher selling prices in property products, we apply 8.3% higher average land price to BSDE and arrive at NAV/share of IDR1,456. Thus, we upgrade its TP to IDR1,160 based on 20% discount to NAV. Within the property sector, BSDE has the second largest market cap with reasonable liquidity. BUY.

2011 net profit to grow 74% y-y
We estimate modest 2011 revenue growth of 9% y-y to IDR2.7t as most growth will come from BSD city, since projects from 3 sister companies are already at maturing stages. On the back of high marketing sales in 4Q09 and 1H10, we estimate 2011 development revenue to grow 10% y-y to reach IDR2t while recurring earnings from DUTI and SMT commercial projects (ITC, hotels and offices) will only grow 5% y-y to IDR680b. We estimate flat 2011 gross margin resulting from more revenue booked from houses and more infrastructure developments. While we maintain 2011-12 operating margins at 35%, we estimate 2011-12 net margins to reach 25-27% respectively, translating to 74-19% y-y net profit growth.

3M11 sales reached 28% of total 2011 target
BSDE continues to book high quarterly sales in 1Q11 (exhibit 6), mostly stemming from launches in 12.8ha residential clusters targeted to the middle and middle-up market segment. In the coming months, BSDE plans to launch more residential clusters and commercial areas. The company also plans to start offering non-polluting industrial area totaling to 300ha. Combined with upcoming plans to launch a new satellite city in Benowo-Surabaya (250ha area) and continued residential development in Balikpapan (200ha), BSDE is optimistic to reach IDR3.3t (+40% y-y) marketing sales this year.

1Q11 results: On target to achieve our 2011 projections
BSDE reported 1Q11 results which were mostly in line with our full-year expectations. 1Q11 bottom line doubled on y-y basis to IDR162b, helped by higher net interest income, other incomes and the absence of extraordinary losses. We estimate lower interest expense paid this year following its IDR600b bonds due this year and will be paid through its internal cash generation. As per 3M11, BSDE reported high cash position of IDR3.7t to support its capex expansion of IDR2t and bond payment. Net interest income and other incomes led to 26.1% net margin in 1Q11, compared to our 2011 net margin estimate of 25.1%.

PT Bank Central Asia Tbk. Flat Bottom Line Growth - AAA

In the longer term, the bank’s ROE will still stay at a premium level of 25%. However, this year we foresee the possibility of flat bottom line growth because yield declines faster than COF and provisioning will resume to normal. Our assign TP is at par with its +1.5 Std at 4.6x PBV and currently the stock is traded at 4.4x PBV. Given its high valuation and weak growth we reiterate our HOLD recommendation.

± Weakest Quarterly Bottom Line Result
BCA reported the weakest quarterly result ever since, with net profit only rose 4% yoy to Rp2 trillion. The major cause of this flat growth was the provisioning expense that come back to normal, is in line with our thesis on previous report “Remain Solid” where we mentioned our concerns : 1) Yield declining faster than COF. 2) Provisioning would resume to normal. 3) Most likely lower payout. In 1Q11, provisioning expense was up 142% yoy to Rp129 billion vs. reversal of Rp304 billion in 1Q10. On annual basis, yield declined 90 bps to 8% vs. COF that slid only 20 bps to 2.8% resulted in slightly lower NIM of 5.4% from 5.5% and ROE down to 26%. We anticipated lower payout this year at around 30% to sustain the bank’s CAR ratio at 14% level.

± 2011 Catalyst: Strong Consumer Loan
While deposit plunged 1% yoy (-3,4% qoq), savings and demand deposits increased by 19% and 20% respectively, pushing up CASA to 76% vs. 73% in 1Q10. Overall loan grew 24% yoy with strongest growth booked by consumer loan at 36% yoy. In 2011, main catalyst for BBCA will be the growth on consumer loan. The latter is supported by rising middle-income population that has reached 57% in 2010 vs. 38% in 2003 (ref: The World Bank). Higher middle income population benefits auto and real estate industry, two sectors that comprised 37% and 50% of BBCA consumer loan.

± Valuation, HOLD with TP Rp7,600
We reiterate our HOLD recommendation with unchanged TP at Rp7,600 implying 4.6x PBV which is at par with its +1.5 Std historical PBV. Currently, the BBCA’s share is traded at 4.4x, hence providing only a limited potential upside to its fair value given high possibility of flat bottom line growth.

FLASH..!! Astra Int will see faster than expected recovery - Nomura

Toyota (Japan) said this afternoon that it expects output to be 70% of normal by Jun11, faster than initial expectation of Jul-Aug. Parts in shortage supply also fell from 150 in Apr to 30 now.

This is good news for Astra International (ASII IJ - BUY) as demand remain strong thus production recovery will result in strong and swift recovery in sales volume. We initially expect Jun11 production to remain at 50% and only start to recover in Jul11. Given that most of car sold in Indonesia of lower specs, we expect Astra production recovery is of higher percentage than global’s 70%.

We retain our BUY recommendation on Astra Int.

MYOR:Margin squeeze - Mandiri

MYOR posted 1Q11 net profit of Rp91bn (-23.9%yoy, -44.1%qoq), in line with our projection, but only 17.5% of consensus estimate. The company suffered from commodity price pressure that squeezed its gross margin from 22.9% in 1Q10 to 18.7% in 1Q11, something we have expected, but the market has not. The margin contraction was similar with what happened in FY08. Looking at the recent commodity prices, we think the margin contraction risk is still imminent for the rest of the FY11F. Even though it may be mitigated by ASP increase, we estimate FY11F net profit may decline by 9.2%yoy due to limited volume growth. We maintain our Sell stance on MYOR which trades at PER11-12F of 22.0-16.5x.

1Q11 results were in line with ours but way below consensus FY11F estimates. MYOR posted 1Q11 revenue of Rp1.9tn (+28.6%yoy, -6.7%qoq). However, its net income was only Rp91bn (-23.9%yoy, -44.1%qoq). This net income figure represented 22.6% of our FY11F but only 17.5% of consensus estimate. We consider the net income figure was inl ine with our estimate as 2H sales is usually slightly stronger due to holidays.

Raw material cost pressures remain. The company’s gross margin declined from 22.9% in 1Q10 and 24.4% in 4Q10 to 18.7% in 1Q11 due to raw material cost pressures while the company maintained stable ASP. The four largest raw material prices are still rising presently, with: wheat having increased by 62%yoy, CPO by 43%yoy, sugar by 36%yoy, and coffee by 78%yoy. Therefore, we think the situation in 2Q11 will be as challenging as that in1Q11.

ASP increase may help, but at the expense of volume contraction risk. We think it will be very difficult to maintain profit margin by reducing products’ size as it did in the past because the sizes are already very small. On the other hand, ASP increase may cause a contraction in sales volume as the company’s target market is the low- to- mid income segment that is sensitive toward price. We estimate MYOR’s FY11F gross margin of 19.2% and net profit of Rp401bn.

Maintain Sell. Our DCF valuation with WACC of 12.6% and TG rate of 5.0% results in TP of Rp8,500/share. We maintain our Sell recommendation as the current PER11F of 22.0x looks pricey for MYOR that historically has been traded at 12.0x of average PER plus 1 standard deviation.

SMRA: Serpong new direct toll entrance - Mandiri

We recently spoke with SMRA and learnt an update with regards to a plan for the construction of a direct toll entrance from its area in Serpong, which will be done with Paramount Serpong, the company’s ex-affiliate, and BSDE. This was initially a plan discussed 2 years ago between SMRA and Paramount, yet it was shelved following hurdle over problem in the land clearing process. However, given continued rising traffic in the Serpong main road, the construction becomes an urgent matter while developments in the surrounding areas continue vigorously. The incentive for SMRA to build a toll entrance is expectation that it will increase its land prices. SMRA’s land price remains laggard behind its neighbor ASRI, who has seen its price doubling since the opening of a direct toll access to its area in 2008. We are confident with the positive results, although risk remains on getting permit from the local authority. We upgraded our TP on SMRA to Rp1,375/share. The stock currently trades at 42% discount to RNAV11F and PE11F 25.2x. Buy.

1Q11 results in line considering cyclicality factor. SMRA’s 1Q11 net profit was 19.9% against our expectation. Considering cyclicality factor and notably slow sales during 4Q09 and 1Q10, this was in line with our forecast as we expect its sales should pick up in the following quarters. Flat GPM was experienced due to different product mix, as more realization from Serpong sales during 1Q11 versus last year.

Direct access to become urgent concern. SMRA and Paramount Serpong are
reviving the plan to construct a new direct toll entrance from its area in Serpong (see exhibit 2). BSDE will also join the pair, upon the opening of a shortcut access that will connect BSDE and SMRA area. Although official announcement is yet released, we believe on the progress of the discussion this time, given the traffic
urgency and continued rolling-out of SMRA’s land (515ha).

Main risk remains on permits. Based on SMRA’s calculation, the costs, including the land clearing, would be Rp50bn at most, which is relatively small for the company. If they give it a go, the construction will take about a year and should immediately boost the company’s ASP soon as they reveal the official announcement. The biggest risk would remain on securing permit from the local authority that may take longer than expected. SMRA said they will firm-up the discussion at the latest end of this year.

Our top pick, Buy. Given the land value prospect, we upgraded TP on SMRA to Rp1,375/share, with rating Buy. SMRA is now our top pick in the property sector. Note that our forecast and valuation haven’t taken into account the possible higher ASP if the toll entrance project is materialized.

Indofood Sukses Makmur - An opportunity to lighten - Macquarie

Event
􀂃 Over the past few weeks, INDF’s share price has remained firm, in spite of a soft 1Q11A result (9.5% below our quarterly forecast), and the share prices of its two key investments ICBP (Rp5,200, Neutral, Rp5,700 PT) and IFAR (S$2.05, Not Rated) continuing to decline (collectively 75% of INDF’s NAV).
􀂃 We highlight that this divergence has increased the implied value of Bogasari to Rp14.5tr, and quite likely reflects anticipatory buying in the lead-up to the SIMP IPO. However, we believe the view that the IPO will act as a positive catalyst for INDF’s share price to be misplaced, and we expect the reverse to occur, and the stock to sell off after the IPO. We recommend investors utilise the current strength as a short term trading opportunity to lighten.

Impact
􀂃 We do not believe SIMP’s IPO will act as positive catalyst for INDF: While INDF’s share price has been strong in recent weeks, IFAR’s share price (the vehicle actually conducting the IPO) has continued to weaken, indicating that investors are concerned about the dilutionary consequences of the offer, and/or the transaction converting IFAR into a holding company. Certainly there are no indications from IFAR’s share price that the IPO is about to imminently crystallise value or trigger a positive re-rating. In addition, we would also flag that after a strong run in the lead-up to ICBP’s IPO, INDF’s share price collapsed by c10–15% in the days following the IPO. Successfully trading around the ICBP IPO required selling out before the IPO, not after.
􀂃 Valuation difficult to justify: INDF's share price relative to ICBP and IFAR’s is now implying a Rp14.5tr valuation for Bogasari – representing a 13.5x FY11E PER based on normalised (10-year average) margins of 9.5% (which is high by global flour-milling standard). We note that 1Q11A margins were below mid-cycle levels, at 8.0%, and could fall further in coming quarters with wheat prices remaining elevated. We believe Bogasari warrants a large PER discount to the JCI (c14x FY11E PER) given its relatively poor economics.

Earnings and target price revision
􀂃 No change. We expect to update our earnings forecasts following INDF’s recent 1Q11A result in coming weeks.

Price catalyst
􀂃 12-month price target: Rp5,300 based on a RNAV methodology.
􀂃 Catalyst: SIMP IPO (expected in early June).

Action and recommendation
􀂃 We maintain our neutral call on valuation grounds but flag a negative short term trading view: We believe INDF’s share price has remained buoyant in recent weeks as investors have been hesitant to take underweight positions pre SIMP’s IPO. However, as soon as the IPO occurs and removes this “event uncertainty”, we believe this artificial support will disappear and valuation considerations will resurface and become INDF’s primary share price driver. We believe this holds out scope for INDF’s share price to rapidly retrace to Rp5,000–5,500 (more in line with our Rp5,300 valuation).

Astra (ASII I) and United Tractors (UNTR IJ) updates, from Sarina - CLSA

We asked Astra on why 2W April sales was down, if it wasn't due to components:
According to Astra, the statement in the paper: "because of production capacity" was not correct. Honda has increased capacity.
The reason for a 1.2% drop in MoM sales was due to the fact that financial year ends in March for Japanese companies, hence principals tend to 'flush' the market in March, so March sales is usually high and is an anomaly.
Anyway, April sales only dropped 1.2% MoM from high March of 713,672 units. All-time high sales of 732,132 units was booked in August 2010 (Ramadhan season).
4M11 sales rose 17% YoY to 2.69m units. We forecast a 15% YoY growth this year.
On Komatsu, United Tractors (UNTR IJ) said the news that Komatsu might relocate their Japanese plants here is not true. Komatsu here produces small and medium-sized equipments but plans to increase capacity to cater for bigger equipments.

LSIP More on SIMP listing (LSIP IJ / LSIP.JK, OUTPERFORM - Maintained, Rp2,400 - Tgt. Rp3,200, Palm Oil & Rubber) - CIMB

SIMP's 20% share offering has been indicatively priced at Rp1,060-1,700 a share, giving it a potential market cap of Rp17tr-27tr vs. IFAR's Rp21tr and LSIP's Rp16.4tr. Using the low and high pricing, valuation is 8.1-12.9x CY11 earning. Since the listing announcement, IFAR has lost 17%, LSIP gained 14%, while INDF has appreciated 20%. Though the SIMP listing has no financial impact on LSIP, the latter stands to gain, particularly if SIMP is priced at higher multiples. Mid-term, LSIP investors should expect higher dividends as IFAR needs to make good on its promise to pay more dividends after SIMP's listing. No change to our earnings estimates or target price of Rp3,200 (15x CY12 P/E). A successful SIMP listing should provide a short-term lift for LSIP, particularly if the valuation gap is wide. Another potential catalyst is dividend upside.

MAPI upgrade - CLSA

Jessica Irene revised up her earnings forecast for mid-high end retailer Mitra Adiperkasa (MAPI IJ) by 10% on better than expected 1Q11. Even as compared to our forecast (which is more aggressive than the peers), MAPI’s operating profit in 1Q11 is about 15% of the FY11 CLSA forecast. Looking very strong vs. previous years’ figures (actual). Earnings momentum is clearly accelerating for Mapi. Maintain BUY, upgrade TP to Rp3,900 (from Rp3,300) . Our DCF fair value is Rp5,900.

Key points from the report:
· We revise up our 2011 earnings forecasts by 10% on better than expected 1Q11.
· Our SSG assumption of 7% is revised up to 9% following the 10% SSG achieved in 1Q11.
· EBIT margins in 1Q11 were improved by 150bps following the divestment of nonperforming luxury brands in 2H10.
· Deleveraging balance sheet, operating leverage, maturing F&D business, and strong growth driven by rising income in the middle class are the key themes and drivers for the stock.
· Maintain our BUY recommendation on MAPI and upgrade our target price to Rp3,900 per share based on 20x 11CL PE, in line with its regional peers.
· On a PEG basis, MAPI looks cheap trading at 0.5x versus peers at 1.8x.

Indofood Agri Resources Ltd - Target price range of Rp1,060 to Rp1,700 per share for PT SIMP - ALERT - JP Morgan

• PT SIMP target price range set: According to a press release by IndoAgri, SIMP has announced a targeted indicative price range of Rp1,060 – Rp1,700 per share for its Indonesia IPO. This implies the following:
• 1) Valuation (based on our estimate for IndoAgri’s earnings growth): FY11E: 12.0x – 19.2x; and FY12E: 10.0x – 16.1x. Current Indonesia CPO sector average is 12.7x/11.3x for FY11E/FY12E.
• 2) Proceeds from listing the maximum 20% of SIMP: We estimate Rp3,353 billion – Rp5,378 billion (US$392 million – US$628 million); where: (a) 40% will be used for debt repayment; (b) 50% will be used for Plantation division new planting and maintenance, construction of processing mills and supporting infrastructure within 5 years; and (c) 10% will be used for Edible Oils & Fats division for the construction of production facilities and the purchase of vessels for CPO transportation.
• 3) Balance sheet of SIMP pre- and post-listing: Based on our estimates using data from IndoAgri’s financials and circular for the listing, PT SIMP has a net gearing of 81%, which will fall to 7%-26% post the listing, based on the above target price range.
• Target price range implies holding company discount of 0%-40% for IndoAgri: IndoAgri, which currently holds 90% of SIMP (and no other business), trades at 11.8x/9.9x FY11E/FY12E P/E, implying a holding company discount of 0%-40% based on FY12E targeted valuation for SIMP.
• IndoAgri likely to trade with a holding company discount: We believe that IndoAgri will likely trade with a holding company discount to SIMP’s valuation given that (1) there is no other business at the IndoAgri level outside of SIMP currently, and (2) IndoAgri’s receipt of SIMP’s dividend payout will be subject to withholding tax of 10% versus domestic SIMP shareholders who will be able to receive their dividends without incurring any withholding tax. Subsequently, any re-rating/closing of the holding company discount will depend on what assets IndoAgri acquires at the parent level.

United Tractors - Turning more sanguine - Citigroup

 Reiterate Buy; Raising target price by 18% to Rp26,000 — The hike follows higher earnings forecasts for 2011-12E factoring in higher Komatsu sales volume and valuation rollover to June 2012E (15x 12-month forward P/E). The good share price performance (+8% since the announcement of rights issue plan) suggests the market views the plan positively, and we concur. We maintain our Buy call on the stock’s undemanding valuations of 2012E P/E of 11.8x vs. 15.5% earnings CAGR in 2012-13.
 Pamapersada's margins to improve in 2Q-4Q11 — Still unfavorable weather and strong rupiah in 1Q11 continued to weaken margins of UT’s mining contracting unit. We expect margins to bottom out in 1Q11 as we expect better weather condition to reduce operating costs and improve productivity and hence improve margins.
 Upside risks to Komatsu's sales — While the impact of the Japan quake and supply availability remain quite uncertain, we think there are upside risks to the market’s expectation of 6,500 units in 2011. Under our very conservative assumptions (please see overleaf), we think UT can deliver at least 7,000 units in 2011E.
 Rights issue: Positive for medium and long-term earnings — United Tractors is slated to raise US$700m from the upcoming rights issue. We view positively UT’s plans to acquire minority stakes in medium-sized coal mines, using the rights issue proceeds, with the intention to secure exclusive contracting contracts. This will enable Pamapersada to grow faster and enhance margins as room for substantial margin
expansion from existing top clients is quite limited.
 Catalysts — We expect firmer margins in 2Q11 results (to be released in late July), largely on Pamapersada’s higher margins to positively surprise the market. This, coupled with potential upside risks to heavy equipment delivery, should prop up the share price, in our view.

Ramayana Lestari Sentosa (RALS IJ, Rp730 BUY) A return to the good times? - Danareksa

Reiterate BUY, TP of Rp850
We reinitiate coverage on RALS with a BUY recommendation. Things seem to be going RALS’s way, helped by a strengthening macro-economy with restrained inflation, stronger purchasing power and higher sales on the back of increases in commodity prices. More importantly, in our view, is the management’s optimism on this year’s planned expansion. Cooperation with several potential foreign partners is also in the offing – if this materializes, it could boost growth further. Valuation wise, the stock looks good value compared to its peers and company committed to paying out around 50% of its earnings as dividends, which translate into dividend yield 3.6%. Such is the basis for our BUY recommendation. Our TP is set at Rp850, implying 15.8x and 14.8x PE FY11-12.

Benefiting from a low inflationary environment…
Our chief economist expects Indonesian consumers to continue fuelling economic growth in 2011. Indeed, the Indonesian economy is expected to grow a brisk 6.4% in 2011 on the back of stronger consumption. According to the draft 2011 state budget, the government will increase civil servant salaries by around 10% this year. At the same time, minimum regional wages have also been increased in the private sector. And for regions out of Java, we believe that the commodity price boom should help give an additional boost to sales given that many workers are employed in the plantations and mining sectors. Moreover, we expect stable inflation of 6.2% which leads to higher purchasing power as consumers tend to have more disposable income. Thus, we remain positive on the company’s outlook this year, and expect sales growth of 11% pa 3-year CAGR, based on higher same-store growth of 8% pa (assuming the opex to sales is flat at around 21%). This is a significant increase from the sales growth recorded in the past 3 years which reached a mere 7% pa cagr.

Aggressive expansion planned
Location is one of the key factors for RALS’s expansion strategy. The management is maintaining its expansionary strategy. There will be 6 new stores (adding approximately 80,000sqm) – three in Java and three “out of Java”. One store already opened in Padalarang (West Java) with 2 more new stores to be opened in Garut and Kediri before Idul Fitri. Moreover, Ramayana just added 2 distribution centers last year in Samarinada and Pekanbaru, so Ramayana now has 6 distribution centers which will help the company to further penetrate the market. All in all, the company expects to spend around Rp400bn on capex.

Supermarket JV still possible
Ramayana’s supermarket business is expected to contribute around 28%-29% to total sales. The supermarket gross margin is 12%-13% with productivity of Rp1-1.25mn/sqm - still low compared to its competitors who enjoy gross margins of around 15%-16%. By comparison, the fashion division has a much better gross margin of around 31%-33%. However, RALS has kept the supermarket business since it provides a boost in traffic to the Ramayana stores on weekdays. To improve the return, RALS may seek foreign expertise or consider the possibility of entering into a JV with several foreign companies. One possibility would be to spruce up its supermarket division. Assuming that the supermarket chain can achieve a similar standard (i.e. gross margin of 15%-16%), then we estimate that the net profit for FY11 could improve by 15%.

High dividends
High dividends are another attraction. Ramayana is committed to paying out around 50% of its 2010 earnings as dividends. This reflects the company’s good financial health and translates into a dividend yield of 3.6% - higher compared to the average of less than 1%. The company is able to pay high dividends as it is cash rich and has positive retained earnings. Although the stock has shown poor performance since last year - largely reflecting a lack of growth – the shares are now attractively priced in our view. At the current price, the stock is now trading at 13.6x PE FY11, or lower than the retailers’ average of 22.2x PE FY11.

Rabu, 11 Mei 2011

Switch from Indofood (INDF) to London Sumatera (LSIP) - JP Morgan

Ying-Jian Chan (analyst) alerted us about the IPO price range for PT SIMP of Rp1,060-1,700 per share, implying 12.0-19.2x P/E for FY11. He is Neutral on PT SIMP’s parent company IFAR SP, but with negative bias on the back of the listing. He thinks IndoAgri will likely trade with a holding company discount to SIMP’s valuation given that (1) there is no other business at the IndoAgri level outside of SIMP currently, and (2) IndoAgri’s receipt of SIMP’s dividend payout will be subject to withholding tax of 10% versus domestic SIMP shareholders who will be able to receive their dividends without incurring any withholding tax. Subsequently, any re-rating/closing of the holding
company discount will depend on what assets IndoAgri acquires at the parent level.
https://mm.jpmorgan.com/PubServlet?action=open&doc=GPS-592538-0.pdf

My take – Sell INDF to Buy LSIP. LSIP trades on 10.9x FY11 P/E, versus the lowest valuation range for SIMP of 12.0x. On the run-up to the listing, LSIP may trade-up closer to its parent co valuation.

The share price divergence between INDF and IFAR has surprised a lot of people. Sentiment is negative on IFAR (the stock has corrected by 15% since mid-Feb, further correction is probable). But INDF has gone up by 14%. INDF is composed of IFAR and ICBP (+14% also), pretty much. So INDF’s holding company discount has been narrowing, limiting further upside.

Delta Dunia to launch rights issue - Insider Stories

PT Delta Dunia Makmur Tbk (DOID), parent of Indonesia's second largest coal mining contractor PT Bukit Makmur Mandiri Utama (BUMA), is nigh to launch a preemptive rights issue in a bid to put down its leverage.

For sure, Delta Dunia, which is indirectly owned by Texas Pacific Group, Government of Singapore's Investment Corporation, and China Investment Corporation, urgently requires an equity injection to underpin its expansion strategy.

If you compare with the leverage of PT United Tractors Tbk (UNTR), parent of Indonesia's largest coal mining contractor PT Pamapersada Nusantara, DOID's debt to equity ratio (DER) is 5 folds higher than United Tractors's DER, a measure that calculates a company's leverage.

In tandem with the proposed rights issue, DOID is underway to seal a new loan facilities to refinance existing of US$600 million which was secured in November. At what price the rights issue? and how much the size?

Indonesia May Extend Interest-Rate Pause - Bloomberg

Indonesia’s central bank will probably keep interest rates unchanged for a third consecutive meeting to support the economy, allowing gains in the rupiah to reduce inflationary pressures.

Bank Indonesia will keep its benchmark reference rate at 6.75 percent, according to all 10 economists surveyed by Bloomberg News. The central bank is due to release its decision in Jakarta tomorrow.

Indonesia has refrained from boosting borrowing costs since increasing the key rate in February for the first time in more than two years, in contrast with neighbors from Malaysia to India where officials have accelerated monetary tightening. President Susilo Bambang Yudhoyono’s policy makers have extended fuel subsidies and let the rupiah climb the most in Asia after Taiwan this year to contain imported inflation.

“There’s no strong reason for Bank Indonesia to raise rates this month and by holding, it will provide an opportunity for banks to give credit and that will boost economic growth for the rest of this year,’ said Eric Alexander Sugandi, a Jakarta- based economist at Standard Chartered Plc. “We’ve adjusted the timing of the next rate increase to August.”

The Indonesian rupiah climbed to its strongest level since 2004 this month and has gained about 5 percent this year, according to data compiled by Bloomberg. The central bank is allowing the rupiah to appreciate, Bambang Brodjonegoro, head of fiscal policy at the nation’s finance ministry, said last week.
Neighbors Move

Consumer prices in Indonesia, Southeast Asia’s largest economy, rose 6.16 percent last month from a year earlier, slower than the 6.65 percent pace in March. Prices fell in April compared with March. Core inflation accelerated to 4.62 percent from 4.45 percent. More ...

Coal Price to Rise as Japan Rebuilds, Standard Chartered Says - Bloomberg

Asian benchmark coal prices may rise 5.1 percent next quarter as the biggest importer Japan rebuilds ports and cities devastated by the March earthquake and tsunami, increasing demand for the fuel, Standard Chartered Plc said.

Coal shipped from Newcastle, Australia averaged $120.85 a metric ton in the week to May 6, according to data from Petersfield, England-based researcher IHS McCloskey. That’s a 12 percent rise over the past 12 months. Prices may average $124 this quarter and $127 in the third, Raymond Chan, an analyst with Standard Chartered in Singapore, forecast in a report today.

“Japanese utilities have been asking J-Power to provide more coal for summer demand,” Chan said. “As the rebuilding program progresses, this should eventually support demand and therefore Pacific coal prices.”
The March 11 earthquake and tsunami crippled power plants and caused the worst nuclear disaster, since the Chernobyl accident 25 years earlier, at Tokyo Electric Power Co.’s Fukushima Dai-Ichi facility.

Japanese Prime Minister Naoto Kan said today he will reconsider a plan to increase the country’s dependence on nuclear energy.
“We should start from scratch,” Kan said at a press conference in Tokyo. “We will need to make nuclear energy safer and more strongly promote renewable energy.”
Electric Power Development Co., also known as J-Power, is Japan’s biggest power wholesaler.

Salim Ivomas IPO at Rp1,060-Rp1,700 - Insider Stories

PT Salim Ivomas Pratama Tbk (SIMP), an edible oil, vegetable fat, and sugar care producer, plans to spend Rp2.2 trillion capital expenditure this year.
Salim Ivomas will use proceed of initial public offering (IPO) to fulfill the capex. The company aims to raise Rp3.35 trillion-Rp5.37 trillion or US$617.47 million, equals to Rp1,060-Rp1,700 per share.

Salim Ivomas Pratama Tbk (SIMP) today launches 3.16 billion of new shares or 20% of its enlarged capital during inital public offering (IPO) scheduled on June 8 2011.
PT Kim Eng Securities, PT Deutsche Securities Indonesia, and PT Mandiri Sekuritas have obtain a full commitment underwriting mandate from Salim Ivomas, said an official prospectus published.

About 40% of the IPO proceed will be used by Salim Ivomas to pay bank loan facilities. The company will use 50% of the proceed to bankroll plantation division for new planting, plantation maintenance, establishment of infrastructure facilities, and the remaining is aimed to support edible and vegetable fat division.
SIMP is a subsidiary of Indonesia's largest instant noodle maker PT Indofood Sukses Makmur Tbk (INDF), controlled by Salim family, with focus business to produce edible oil, margarine, and vegetable oil products.

The company has exported its edible oil and vegetable fat products to 42 countries such as China, Nigeria, Angola, Sri Lanka, Phillippine, and Timor Leste.
Post IPO, Indofood Oil and Fats Pte Ltd will control 72% shareholding in SIMP, Indofood Sukses will own 6.40%, PT Mandiri Investama Sejari will hold 1.03% stake, PT Bina Makna Indopratama and PT Multi Langgeng Nusantara will hold 0.31% and 0.26% respectively, and public investor will own 20%.

Selasa, 10 Mei 2011

INCO:Bottom-up control - Mandiri

INCO held a conference call yesterday. The main highlights from the conference call were the indicative 71k tons production volume in FY11F, 5% higher than our FY11F estimate of 68k tons and cost saving from the Karebbe project. INCO has confirmed the limited impact in the Japanese market since Vale’s operation in the Matsuzaka regency still runs at full capacity and steels demand is picking up following the rapid recovery post tsunami tragedy. Lower production in 1Q11 of 16,501tons (-8.4% yoy, -8.3% qoq) was mainly due to temporary shutdown on its production activities due to 6.1 SR earthquake that jolted Sorowako in February 2011. We still like INCO considering its bottom-up control, becoming the most cost efficient company with operating margin of 50%, the highest in the metal industry. We maintain our Buy rating and TP at Rp6,700/share..

1Q11 in line. INCO reported 1Q11’s revenue of US$322mn (+26.2%yoy, - 2.1%qoq) followed by net profit of US$111.9mn (+46.7%yoy, +2.7%qoq), in line with our and consensus estimates, accounting for 23-25% FY11F estimates. Nickel-in-matte production in 1Q11 was 16,501tons (-8.4%yoy, -8.3%qoq) accounted for 24.3% our FY11F estimate of 68,000tons. 1Q11’s ASP was US$20,246/tons (+42.8%yoy, +12.4% qoq), 8% higher than our FY11F’s estimate.

5% higher than our production target. The 2nd electric furnace rebuilding program is expected to lead a partial 13-week shutdown in 4Q11 and 8-week in 1Q12. We can expect 30% reduction of production volume in 4Q11 out of its normal level of 19k tons last year based on the company’s guidance or about 13-14k tons output in 4Q11. Interestingly, INCO’s expects 71k tons production volume in FY11F, about 5% higher than our FY11F estimate. Accounting these numbers, INCO needs to produce 20.5k tons nickel-in-matte in 2Q and 3Q 2011.

6% cost saving from Karrebbe. The Karebbe project has already been 87% completed by end of 1Q11. Our calculation shows that diesel consumption per ton might reduce by 50% from its current consumption learning from the 2009 figures when its thermal generators were turned off. Overall, we expect the company could save around 6%% in its total production cost post Karebbe completion and gradual 5-6% production growth up to 90k tons by 2015.

Retain Buy rating. We prefer to be conservative by maintaining our forecast despite of higher indicated volume and ASP until we get the 2Q11 figures. We maintain our TP of Rp6,700/share implying 15.1xPER11F and our Buy rating.

Economy: Rupiah weakened slightly on easing global economic outlook - Mandiri

Rupiah weakened slightly on easing global economic outlook

Market review
§ Weaker US labor data and tighter monetary policy in Asia have increased concerns over slower global economic growth momentum. The rupiah and Jakarta stock market index slipped. Commodities dropped last week.

Global economic update
§ High unemployment in the US and escalating fiscal problem in European countries will curtail demand from advance countries.
§ At the same time, inflationary pressures continue to loom in Asia region, which prompted further monetary policy tightening.

Domestic economic update
§ Indonesian economic growth momentum remained strong, despite of slower 1Q11 GDP growth of 6.46% yoy in 1Q11 (vs. 6.9% yoy in 4Q10). Slower GDP growth in 1Q11 was attributed to weaker external demand.
§ Apr11 inflation eased to 6.16% yoy in April, but core pressures continued to increase. Yet, we expect no interest rate hike this week.
§ Consumer confidence remained strong in April, despite of rising commodity prices
§ Pressure on budget rises, as oil lifting and subsidized fuel consumption quota missed government budget target.

RALS:Return of the urban - Mandiri

Interesting phenomena found in RALS 1Q11 performance was the relative strength of Java costumers vs ex Java. In the last 3 years (excluding 2009 when commodity prices got trashed), ex Java led the SSG growth. However as Jakarta and the rest of Java took the lead in 1Q11, the role of ex Java as a growth provider is in question. Revenue in 1Q11 was only 5.2% of our FY11 estimates while the last 5 years 1Q contributed 6.3% of total full year. We are maintaining our estimates as according to RALS, 1Q11 weakness was also due to fashion inventory problem. To reflect peers comparison, we changed our target price calculation method from DCF to PEG. Based on PEG of 1.0x using our FY12/FY11 net income growth, our target price drops from Rp1,100/share to Rp880/share. We are maintaining our Buy call.

Weak 1Q11 results. Operating income was 5.2% of our and 4.8% of consensus estimates. Since 2006, 1Q usually contributed 6.3% of the total full-year operating income. SSG (same store growth) in March was just 2.0%, an improvement over Feb 0.5%, but significantly lower than January 6.7%. Ex Java contracted 1.3%, while the Greater Jakarta grew 2.1%, and rest of Java +8.0%. Over the past three months ex Java recorded a declining SSG performance. Revenue in 1Q11 was 94.8% of RALS internal target. The company attributed part of SSG weakness on fashion inventory problem.

Shortened cash cycle. We think fashion inventory problem has resulted in a lower operating margin of 1.8% vs 1Q10 of 2.0% as cash cycle actually improved in 1Q11. Cash cycle in 1Q11 was 20 days from 1Q10 of 28 days with inventory days dropping 15 days to 67 days. The reduction of inventory days also explained the fashion inventory cleanout.

Reduce target price, maintained Buy. We admit it is difficult to find catalyst for the stock. Excitement on the counter can only begin if the management implements an out-of-the box solution to current business model or returning the cash to shareholders.

AALI Solid Management and Bright Outlook - AAA

± Summary
We re-initiate the coverage of AALI with BUY recommendation at Rp29,295 target price. The important factors that based our BUY recommendation are positive outlook of CPO price and AALI’s well-known good corporate governance and plantation management. Furthermore, AALI’s 1Q11 performance is convincing, with sales and net profit increase by 69.3% and 140% respectively due to both higher ASP and higher sales volume. We use a blended valuation method (DCF, PE and EV/EBITDA) in arriving at our target price which provides about 23% upside potential.

± Convincing 1Q11 Financial Performance
AALI begins 2011 with startling 1Q11 performance with overall sales increase by 69.3%. Most of the increase is contributed by 27.3% higher CPO sales volume and 26.5% increase in ASP to Rp 8,278/kg from Rp6,544/kg. Other products (PKO and palm kernel) contributed to the remaining increase. As such, AALI booked higher gross profit margin and EBIT margin of 38.9% (1Q10: 34.4%) and 33.2% (1Q10: 26.7%) respectively. In turn, 1Q11 net profit increased to Rp682 bn (1Q10: Rp284 bn) or about 140% higher YoY.

± Sustainability
AALI has maintained a strong balance sheet with almost zero debt for quite some time. Compared to other publicly traded CPO companies, AALI currently owns the largest plantation area (263,281 ha) consisted of 77% mature plantation and 78% nucleus. AALI is also well known for its good corporate governance and plantation management. The only concern is that the average age of the trees is slowly shifting from the prime to old age. The average age of the trees now is about 14.2 years old. In dealing with this issue, AALI plans to spend more working capital for replanting and new planting. In 2010, AALI has conducted new planting of 3,577 ha and replanting 3,693 ha. We are sure that with its extensive experience in generating profit in this business, ample cash balance, strong cash flow from operation and unused debt capacity, AALI will have no problem in carrying out this plan.

± Valuation – Bullish
With robust demand on CPO, we expect price to remain strong for quite some time. Using a blended valuation method of DCF, PE and EV/EBITDA, we come out with the result of AALI’s fair value at Rp29,295. In our calculation, WACC is 13.6%, debt portion is 0%, target PE is 16.1x and target EV/EBITDA 9.4x. Since our TP provides 23% upside potential, we thus recommend BUY on the counter.

BSDE: Bringing in more crowds - Mandiri

Thanks to Indonesia’s continued stronger economic fundamentals economy, BSDE has been one of the beneficiaries of the robust demand in property, not to mention office space. We noted some land plots were sold in 2010 for offices to some companies such as Unilever Indonesia (Rp80bn), Freeport (Rp30bn) and AJBS (Rp100bn). Unilever alone will bring in up to 1,000 new jobs to the area, as it plans to use build its new HQs there. This will simultaneously boost demand for BSDE’s residential houses and ASP. As of Mar11, BSDE claimed its ASP has increased by 15% QoQ to Rp3.1mn/sqm, the fastest, at least, in the past 5 years. BSDE is one of our favorite property stocks. We upgraded our TP to Rp1,100/share. The stock currently trades at 49% discount to RNAV11F and PE11F 19.9x

1Q11 results in line. BSDE’s 1Q11 net profit accounted for 21% of our estimates. But, we considered this in line with our forecast considering cyclicality factor. Despite of a slip in gross margin to 61.0% (vs. 1Q10 63.4%) due to different product mix, but landed housing margin picked up to 46% (vs 1Q10 45%) on the back of further 22% increase in ASP for the past two consecutive years.

Non-CBD office development expands towards Serpong. Recent Procon Indah research highlighted growth of office development in the South Jakarta (Non-CBD), the area that witnessed the most active development in the last 5 years (see exhibit 2). It’s learned that demand has been encouraged by relocation of some multinational companies. As demand accelerates, we noticed the trend of relocation has seen to have expanded towards Serpong area in recent years, given its price attractiveness and close proximity to the residential area.

More commercial office development to boost land value. We noted some big companies have expanded their offices towards Serpong area, namely CIMB-Niaga, Permata Bank and Dexa Pharmaceutical, who relocated their offices to Bintaro (JRPT), about 10 minutes away from BSDE. The idea was then followed by Unilever (3ha), Freeport (7,000m2) and AJBS (2ha) who plan to relocate their HQs to BSDE after they have bought land plots there in 2010. These are expected to simultaneously boost demand of residential houses in the area, including BSDE that should be on top of the list given its competitive prices. We expect to see more major businesses to continue pouring into the area, which will positively affect its land value.

TP upgraded to Rp1,100/share, Buy. We continue to pick BSDE as one of our favorite property stocks. We upgraded our TP to Rp1,100/share. BSDE currently trades at 49% discount to RNAV11F and PE11F 19.8x.

Contributions from subsidiaries give BSDE an extra oomph - UOBKH

Buy Bumi Serpong Damai, BSDE IJ, TP:Rp1,050 , Share Price: Rp910, Upside:15.4%
~buy on pullback
Strong sales will come in upcoming quarters, with management expectation of 12% YoY growth, reaching Rp3.4tn in sales.
Higher ASP for the area, an increase of about 10-15% on average
New launches of several residential and commercial clusters. This year BSDE is launching 10 sub clusters and sales of The Park project.
BSDE developments will still be the main revenue contributor, while subsidiaries DUTI will add to recurring income.
Financially flexible. 2011 Capex of Rp2.5tn for projects developments and land acquisitions. The company is also repaying BSDE Rp600bn bonds in Oct 2011 and DUTI RP500bn bonds in Jul 2012
Trading at 30% discount to RNAV/share of Rp1,507

International Nickel: Key takeaways from conference call (INCO, 4,825, Buy, TP: Rp6,700) - Mandiri

􀂄 The 2nd electric furnace rebuilt program will be taking partially 13 weeks shut down in 4Q11 and 8weeks in 1Q12. INCO expects 30% reduction in its production volume in 4Q11 from its normal capacity of 19-20k tons in 4Q10, translating production volume around 14k tons in 4Q11.
􀂄 Interestingly, INCO is expecting 71k tons production volume in FY11F, about 5% higher than our FY11F estimate of 68k tons. Taking into account this numbers, we might expect INCO needs to produce around 20k tons nickel in matte in 2Q11 and 3Q11 to compensate lower volume in 1Q11 due to earthquake in Sorowako
􀂄 Karebbe hydro electric project is expected to have 10 times cheaper energy cost compared to thermal cost. Overall, post the Karebbe project completion, we can expect around 6% reduction in its production cost per ton, considering its heavy fuel costs contributed around 45% of its total COGS, where diesel component contributed around 25% of overall fuel costs last year (we expect diesel consumption might reduce by 50% from current consumption, learned from 2009 figures when INCO turned off its thermal generators). And production volume is expected to grow gradually around 5-6% per annum up to its production target of 90k tons by 2015.
􀂄 Currently we have Buy rating on the stock. INCO is traded at 10.9xPER11F

ELTY?s calling, but no answer - Mandiri

We still saw no surprises on ELTY’s 1Q11 operation, but its performance was in line with our 1Q11 forecasts. Major sale was still contributed by the Epicentrum’s Bakrie Tower, whose office spaces were mainly taken up by its Bakrie comrades. In the meantime, the company, again, is pushing back schedule on its plan to reveal blue print of the Jonggol and Karang Tengah project (13,000ha) that was initially said to be in 1Q this year. We expect the market to remain skeptical on the project, given lack of infrastructure in that area which may require sometimes to be materialized. We prefer to wait for the firmer plan on the Jonggol project and a pickup on its sales performance. Maintain Neutral. Our TP of Rp163/share is based on 70% to its RNAV11F.

In-line 1Q11 operational, yet still doubtful. Despite being in line with our ELTY’s 1Q11 operating performance, we are yet to see much turnaround in its sales, with the Bakrie Tower remain being the major contributor (48.7% of total revenue Rp424.9bn). Please also note that most of the office space in the tower was sold to its fellow Bakrie companies.

Bakrie Toll Road IPO to take off interest expense burden. The company hinted the IPO plan for Bakrie Toll Road either in the 4Q this year or early next year. They expect its the bottom line to improve following the IPO as ELTY plans to divest as much as 50%, hence it will be freed from high interest expenses from the toll road projects. Nonetheless, we think the bottom line is not our main concern. Instead the turnaround performance of its property sales and also solid plan for its Jonggol and Karang Tengah land that currently remains unclear.

New strategy still in an open invitation. In the meantime, in order to improve its sales, ELTY has been trying to invite fellow developers to also involve in the development of its assets, including in the Kuningan’s Epicentrum and Jonggol projects. However, so far this has been unresponded, among others recent news related to Agung Podomoro entering its Kuningan Epicentrum as well as one that claimed to be mid-size prominent developer who will join Jonggol development.

Awaiting firmer Jonggol plan and solid sales, maintain Neutral. Given continued pessimistic market, we are concerned with the continuing underperforming stock performance in the near term. As similar to us, the market implicitly is awaiting clearer plan related to the Jonggol and Karang Tengah and also pickup on its sales performance, indicated through high discount applied to its valuation. We maintain Neutral on ELTY, with TP Rp163/share, based on 70% discount to its RNAV11F.

Bayan Resources - Resourceful (BYAN-BUY-IDR17,000-TP:IDR19,500) - Bahana

ASP upgraded 7%; Minority interest adjustment with earnings +34%
ASP of USD97.2/ton achieved in 1Q11 is not only highest in the sector, but it was way above BYAN’s guidance of USD85-87/ton. Though BYAN has not revised their ASP guidance, the company has disclosed contracted sales of 14.5m tons (96% of production), of which 80% have been locked in at USD97.36/ton while 20% is based on floating rate. Thus, we feel comfortable raising our ASP 7% to USD95/ton. We also adjust our minority interest calculation with the net impact of 34% higher earnings in 2011 (exhibit 6).

2011-2013: Strong production growth
BYAN is currently producing at least 25% below its capacity, and in line with the management’s guidance we expect optimum capacity of 20m tons reached by 2013, representing a production CAGR of 21% per annum, the third highest in the sector (after PTBA and HRUM). Furthermore, in order to increase its capacity above 20m tons from 2014 onwards, BYAN plans 2011-12 capex of USD180-200m, having spent just USD8.5m in 1Q11.

Coal up-gradation to start: A key catalyst
BYAN currently supplies 1m tons (7% of production) of its 4,217kcal coal to “White Energy”, responsible for upgrading its coal to 5,900-6,000kcal coal. However, as White Energy’s coal up-gradation plant is the first of its kind in the world, there were some technical and engineering issues in dust extraction system and production, handling and cooling system. This failure to produce caused BYAN to book IDR117b (about USD13m) loss in 2010. Based on our conversation with White Energy, these engineering issues will be resolved by end of September 2011. However, we estimate loss of around IDR88b in 9M11 with about 200k tons of coal up-graded in full-year 2011. In 2012-2014, 1m tons or the plant’s optimal capacity should be up-graded. Thus, in 1H12, White Energy expects to construct 4 new coal up-gradation plants, which will take 2 years to complete and be operational latest by end 2014. Therefore, from 2015 onwards, we assume coal up-gradation to rise to 5m tons (22% of production).

Possible huge valuation upside on coal upgrades & new concessions
BYAN has an agreement with White energy for a maximum of 15m tons, which if it can occur post 2015 would translate to a huge upside potential for valuation. Separately, each coal up-gradation plant requires 1.5m tons to produce 1m tons of upgraded coal with a fixed operational cost of USD10-12m per annum, which have been taken into account in our model. While we do not have production guidance for the 9 new concessions to be acquired in June 2011 for about USD200m, we understand that some of these mines are already in production. Though production maybe small initially, we expect a gradual ramp up as the new mines have reserves of about 410m tons, doubling BYAN’s existing reserves. Thus, we provide 20% premium to our revised DCF equity value of IDR16,200 and arrive at TP of IDR19,500. BUY.

Sell PGAS, buy Energi Mega - JP Morgan

Stevanus Juanda (analyst) has downgraded his rating on PGAS from O/W to U/W. He cuts his FY11-12 EPS by 12% and 20%, placing it below consensus (4% lower on FY11). He cuts his DCF driven PxT by 30%, from Rp5400 to Rp3750, on the back of 11-13% lower distribution volume assumption over the forecast horizon, with 3-8% higher gas input cost (while maintaining selling price). On his new FY11 forecast the stock trades on 14.8x P/E. One important statement to highlight from the recent management call (1Q11 results) is that they are not expecting any hike in gas selling price in 2Q & 3Q of year 2011.
https://mm.jpmorgan.com/PubServlet?action=open&doc=GPS-590569-0.pdf

My take – I would agree with Steve’s call on PGAS, as I too listened-in to the fairly depressing 1Q11 results call. The company does not seem to have good handle on the security of its gas supply, as BPMigas can divert them away anytime when there is higher priority use for the gas. On this event alone, the investment community should have factored-in a higher risk profile and higher effective WACC.

I would also agree on the call that gas input price may rise faster than selling price, such that the market could have been overly aggressive with PGAS long term margin assumptions. Some Indonesian gas suppliers seem to have managed to renegotiate their contracted gas selling price (which is input cost for the likes of PLN and PGAS), with backing from BPMigas. See my recent write-up on Energi Mega Persada (ENRG), titled “Postcard from conference #3”. Its average gas selling price is clearly on the rise: from US$2.7/mcf in 2009, to US$2.9 in 2010, which is expected to go up to US$3.5 in 2011, and to US$5.0 in 2012.

[Sales note re-run] Postcard from JPM Indo conference #3 – Energi Mega Persada
Management presentation gave strong impression of a turnaround, supported by its financial figures in 4Q10. A few more quarters of financial recovery and coverage by Street analysts may drive substantial re-rating.

4Q10 turnaround; 1Q11 may set bullish tone for the year
ENRG managed to further increase its gas selling price to PLN in 4Q10, which resulted in higher quarterly profit run-rate. Higher oil price in 4Q10 also boosted quarterly profits, more than offseting the production decline. Given the higher gas price contract for its TSB gas, the company is forecasting average gas selling price to reach US$5.69/mcf in year 2012.

IDR bn Jan-Sep 2010 4Q10
Sales 830.6 419.2
EBITDA 135.6 237.2
Oil price US$78.0/bbl US$87.9/bbl
Gas price US$2.7/mcf US$3.7/mcf
Oil production 6,536 bopd 6,437 bopd
Gas production 41 mmscfd 38.5 mmscfd
Source: ENRG

Clarity over production growth targets; cross-checking possible
Average daily production came in at 13.1 thousand barrels of oil equivalent per day in year 2010 (1H10=13.3), with 49:51 split between oil and gas. This time around, the management communicates clearly what the company is looking to achieve (50.2 thousand boepd in year 2012), and how to get there (25k additional from Kangean TSB in March 2012). Keen investors can monitor the progress of the Floating Production Unit (FPU) being ordered from US-listed company BW Offshore Ltd (BGSWF US), which is 43% complete as of Feb-11. The management displays high confidence with regards to March 2012 target.

Capex needs to get to 50.2k boepd production are well funded
The TSB project is part of the bigger Kangean PSC, where its 50% partner Japex would support 100% of the capex needs (capex-carry-loan scheme), to be gradually re-paid using oil/gas output once the TSB production commence.

Major balance sheet issue resolved
One day before Lehman Brothers event, ENRG issued US$200mn junior loan with an all-in cost of 25% IRR, on top of the US$250mn senior loan at Libor+900. ENRG did a rights issue in Jan-2010, partly to accommodate the conversion of the US$200mn junior debt, plus the US$42mn adjustment to achieve 25% IRR, into equity. So as of Dec-10, total debt stood at US$407mn (US$200mn CS facility and the rest being capex-carry-loan scheme with Japex) or DER ratio of 0.6x, versus US$606mn debt as of Dec-09 or DER ratio of 3.3x.

EV-to-2P reserves of US$2/bbl, vs brent price of US$124/bbl
ENRG has 223 mmboe of net proved and probable reserves (2P) excluding Masela, or 531mmboe including its proportionate ownership in Masela.

Perusahaan Gas Negara: Buy; Rp4,200; TP Rp4,850; PGAS IJ - DBS Vickers

PGAS cancels Duri gas pipeline

It was reported that Perusahaan Gas Negara (PGN) has cancelled the plan to build gas pipeline linking gas field in Duri to customers in Dumai and Medan due to lack of gas supply. However, we believe the impact from the cancellation should be minimal. We understand that there should be a small increase in gas supply of 100mmscfd in 2H as they are close to concluding negotiations with supplier and normalization of supply from ConocoPhillips should happen towards year end. However, we expect flat volume growth until LNG Terminal kicks in in FY13. We believe that PGN’s structural story remains intact with strong growth from FY13 and potentially higher tariff due to rising input cost.

We reiterate our Buy call for PGN with DCF-derived target price of Rp4,850 for its promising outlook and attractive valuation. PGN is trading at 14x FY11 PE, a discount to regional gas peers of 16x, but offers higher yields of 4% against peers’ average of 2%.

SMRA: Serpong new direct toll entrance - Mandiri

We recently spoke with SMRA and learnt an update with regards to a plan for the construction of a direct toll entrance from its area in Serpong, which will be done with Paramount Serpong, the company’s ex-affiliate, and BSDE. This was initially a plan discussed 2 years ago between SMRA and Paramount, yet it was shelved following hurdle over problem in the land clearing process. However, given continued rising traffic in the Serpong main road, the construction becomes an urgent matter while developments in the surrounding areas continue vigorously. The incentive for SMRA to build a toll entrance is expectation that it will increase its land prices. SMRA’s land price remains laggard behind its neighbor ASRI, who has seen its price doubling since the opening of a direct toll access to its area in 2008. We are confident with the positive results, although risk remains on getting permit from the local authority. We upgraded our TP on SMRA to Rp1,375/share. The stock currently trades at 42% discount to RNAV11F and PE11F 25.2x. Buy.

1Q11 results in line considering cyclicality factor. SMRA’s 1Q11 net profit was 19.9% against our expectation. Considering cyclicality factor and notably slow sales during 4Q09 and 1Q10, this was in line with our forecast as we expect its sales should pick up in the following quarters. Flat GPM was experienced due to different product mix, as more realization from Serpong sales during 1Q11 versus last year.

Direct access to become urgent concern. SMRA and Paramount Serpong are reviving the plan to construct a new direct toll entrance from its area in Serpong (see exhibit 2). BSDE will also join the pair, upon the opening of a shortcut access that will connect BSDE and SMRA area. Although official announcement is yet released, we believe on the progress of the discussion this time, given the traffic urgency and continued rolling-out of SMRA’s land (515ha).

Main risk remains on permits. Based on SMRA’s calculation, the costs, including the land clearing, would be Rp50bn at most, which is relatively small for the company. If they give it a go, the construction will take about a year and should immediately boost the company’s ASP soon as they reveal the official announcement. The biggest risk would remain on securing permit from the local authority that may take longer than expected. SMRA said they will firm-up the discussion at the latest end of this year.

Our top pick, Buy. Given the land value prospect, we upgraded TP on SMRA to Rp1,375/share, with rating Buy. SMRA is now our top pick in the property sector. Note that our forecast and valuation haven’t taken into account the possible higher ASP if the toll entrance project is materialized.

EXCL-Nimble proven operator/ASII-all in price - BNP

Good morning, we have initiated a growth play, EXCL IJ, in a matured (in my view) telco industry and raised TP of Indo's benchmark stock, ASII IJ. Below are the bullet points of these two names: XL Axiata (EXCL IJ): Nimble operator.

• Our ASEAN telco analyst Foong has initiated on XL Axiata with a BUY rating and a target price of IDR 7,150.
• EXCL remains the fastest growing telco operator in Indonesia. Growth in coming years will be fueled by expanding to the outer islands (ex-Java) where EXCL does not yet have presence.
• Proven management team has successfully transformed EXCL by growing subscriber base 3x over 3 years and through a stringent opex and capex program making it the lowest cost operator in Indonesia.
• Short-term, our BUY rating notwithstanding, Foong prefers TLKM IJ as it is cheaper.

Astra International – CONVICTION BUY
• Our ASII IJ analyst, Elvira argues in her latest note that most of the negative news on the 2W/4W auto division have largely in the price.
• In addition, stronger commodity prices will more than offset the negtives on auto division. In fact, Elvira is increasing her earning forecasts for 2011 and 2012 by 10% pa.
• Valuation is now compelling with ASII now trading at more than 10% discount to mkt 2011 PER.

- Kwek Thong How, ASEAN Product Mgr

Asia ex-Japan Strategy - Caveat venditor - Macquarie

A correction, not an inflection
§ Risk aversion is back again – for the moment – with this week‟s volatility in the commodities and energy complex, but the medium-term outlook for growth/reflation plays still strikes us as well-supported by both monetary conditions and demand fundamentals. Another trading correction, another dipbuying opportunity.
§ Calling a precise bottom in this environment would be guesswork, but with the Asia ex-Japan index at just 12.3x forward PER (amid positive overall 2011 consensus EPS revisions) – and with MSCI Asia ex-Japan Materials and Energy both in the 11.0–11.5x range -- we would be comfortable buying beta after as little as another 5% index downside (Figure 6, below).

Monetary accommodation + ongoing global expansion
§ We only expect a concerted and more sustainable USD rally and a rockier path for emerging markets once the prospect for a genuine US monetary tightening becomes more clear and present. But at this stage, such risks remain comfortably distant, in our view – a story for 2012 that markets may not need to discount until, say, 4Q11 at the earliest. The coming June end of the Fed‟s quantitative easing („QE2‟) exercise will not equate to the “start of tightening” – and may yet even prove a windfall boost for equities if it motivates asset allocators to reduce fixed income exposure, as we expect.
§ Meantime, low/negative real interest rates remain the single most critical variable still pointing lower for the dollar and higher for the „reflation trade‟ medium-term. The real Fed Funds rate, at -2.4%, is 120bp lower today than at end-2010, and is almost certain to decline further in the second half as the Fed continues to stand pat. China‟s real base lending rate, meanwhile, is just 0.7%, and the GDP-weighted real policy rate for all Asia ex-Japan has similarly declined 22bp YTD (Figure 1). Even gold‟s correction this week has taken it back only to mid-April levels (roughly US$1,480/oz.), still up 23% YoY.
§ We also remain generally constructive on global demand expansion into the second half, seeing 1) the 1Q11 US GDP pullback as a temporary „soft patch‟; 2) robust core European (especially German) growth largely undiminished by the noise from sovereign flare-ups in the smaller peripheral euro-area economies; and 3) China nearing the point at which it will be able to back off from the credit tightening that has fuelled investor caution recently.

Your neighbour may be buying this dip
§ In any case, as discussed separately in our May 6 Weekly Fund Flow Tracker, the past week has by no means been a period of indiscriminate foreign dumping of Asian stock: Although Wednesday (May 4) did see one-day foreign net-selling of US$499m among the six Asian markets that provide daily data (Korea, Taiwan, India + the TIPs), daily aggregate net-buying was recorded Monday, Tuesday and Thursday – with cumulative week-to-date buying in positive territory as of Thursday‟s close, at US$175m (Figure 5).
§ In Hong Kong, admittedly, short-selling this week has risen back to highs around 8% that have only been exceeded once in the two years since the Global Financial Crisis. But the two previous post-Crisis instances of shorting at these levels have prefigured HSCEI rallies averaging 20% and lasting roughly 10 weeks (Figure 2).
§ For investors willing to grasp the nettle and buy the latest market dip, we note that the cheapest beta in Asia ex-Japan by sector (in terms of current forward PER vs. 10-year average) is now found in Property, Capital Goods, Tech and Transport (Figure 3).

Switch from cement (big cap) to property/construction stocks - JP Morgan

Liliana Bambang (analyst) has downgraded rating on SMGR from O/W to U/W, saying there is 6% downside risk to FY11 consensus. Its sales volume is only up 1% yoy in 1Q11, while at best selling price may be hiked by 5% in FY11. So the Street’s 14% revenue growth could be looking optimistic, where Liliana is forecasting 9%. Big proportion of national growth in cement consumption is happening in Jakarta and West Java, where SMGR’s competitors Holcim (SMCB) and Indocement (INTP) have stronger preference.
https://mm.jpmorgan.com/PubServlet?action=open&doc=GPS-591751-0.pdf

My take – I would agree with the call to reduce SMGR. I would reduce INTP at the same time, rather than switching from SMGR to INTP. With Liliana’s lower-than-consensus forecast on SMGR, the relative pricing between the two stocks seem fair (with both seemingly expensive), at 12.7x FY12 for SMGR vs. 14.6x for INTP. By year 2012, both SMGR and INTP should have spare capacity (with SMGR’s new cement plant coming on), so arguably INTP should no longer trade at big premium to SMGR.

Personally, I would advocate investors to switch into property and construction stocks. (1) property price gains are both accelerating and broadening, (2) cement price is capped by competition, cartel investigation, and new capacity in 2012-13, (3) cement purchases account for 15-20% of COGS for property and construction companies, (4) APLN, ASRI, and PTPP trade on 10-11x P/E for FY11 vs. SMGR and INTP at 14.7x and 17.0x, (5) my proposed property and construction basket trade around US$10mn/day vs. SMGR and INTP that together trade around US$15mn/day – with scope to be double bagger, if Indonesia’s new land acquisition law and investment grade come to fruitition.

Based on a series of interview with senior government officials (including FinMin Agus Marto) and senior management of construction, cement, and infrastructure companies, decision makers are cautiously optimistic that the new land acquisition bill can happen by September 2011.

Bakrie & Brothers Akan Kuasi Reorganisasi - VivaNews

Kuasi reorganisasi itu akan diwujudkan setelah mendapat persetujuan pemegang saham.

PT Bakrie & Brothers Tbk menyampaikan rencana kuasi reorganisasi kepada Badan Pengawas Pasar Modal dan Lembaga Keuangan (Bapepam-LK). Kuasai reorganisasi dilakukan sesuai prinsip akuntansi yang diterima secara umum di Indonesia, yakni Pedoman Standar Akuntansi Keuangan (PSAK) No. 51 dan peraturan Bapepam-LK.

"Rencana ini bertujuan untuk melakukan restrukturisasi modal perseroan dengan menghapuskan defisit dan menilai kembali aset berikut kewajiban-kewajibannya," kata Direktur Utama dan Chief Executive Officer (CEO), Bakrie & Brothers, Bobby Gafur Umar, dalam keterangan tertulis di Jakarta, Selasa 10 Mei 2011.

Namun, kuasi reorganisasi itu akan diwujudkan setelah mendapat persetujuan pemegang saham.

Bobby mengatakan, per 31 Desember 2010, Bakrie & Brothers mencatatkan defisit dan selisih nilai restrukturisasi entitas sepengendali sebesar Rp38,2 triliun. Dari jumlah tersebut, sebesar Rp27,7 triliun merupakan defisit perseroan yang diakibatkan oleh kerugian investasi pasca krisis 2008.

"Berdasarkan rencana yang telah ditetapkan, dalam pelaksanaannya nanti, perseroan akan menempuh dua tahapan, yaitu pertama, secara proporsional mengubah semua nilai nominal saham perseroan, dan kedua, memperhitungkan serta menyatukan modal disetor tambahan yang saat ini masih terpisah," ujar Bobby.

Melalui kuasi reorganisasi itu, perseroan akan memperoleh beberapa manfaat bagi pemegang saham, di antaranya nilai buku Bakrie & Brothers memperlihatkan kondisi yang sesungguhnya, tanpa dibebani defisit. Perseroan juga dapat menilai kembali seluruh aset dan kewajiban, serta dapat membagi dividen kepada pemegang saham di masa datang.

Atas rencana itu, perseroan akan meminta persetujuan pemegang saham pada rapat umum pemegang saham luar biasa pada Juni 2011.

BRI Masuk Daftar 500 Bank Bernilai Tinggi Sedunia - Republika

Bank Rakyat Indonesia (BRI) meraih peringkat terbaik dalam jajaran 500 merk bank paling bernilai tinggi sedunia. Penghargaan yang diberikan oleh Brand Finance PLC ini diharapkan dapat meningkatkan minat investor terhadap saham BRI.

Selain Bank BRI, Bank Mandiri, BCA, BNI, dan Danamon juga masuk dalam Top 500 Most Valuable Banking Brands 2011. Namun, Bank BRI menempati peringkat lebih baik ketimbang empat bank Indonesia lainnya. "Kami peringkat 193 dari 500 bank di dunia," ujar Direktur Operasional Bank BRI, Sarwono Sudarto. Dalam penilaian Brand Finance PLC, merek dagang Bank BRI bernilai 682 juta dolar AS.

Sarwono menyampaikan apresiasi dan terima kasih kepada Brand Finance. "Penghargaan ini merupakan pengakuan atas kinerja bank BRI yang baik," katanya. Sarwono menambahkan, prestasi ini merupakan hasil kerja keras dari semua jajaran pekerja dan manajemen Bank BRI. "Prestasi yang membanggakan bagi kami. Merek Bank BRI makin dikenal luas di seluruh dunia," tegas Sarwono.

Penghargaan ini menurut Sarwono akan meningkatkan minat investor dan menaikkan kapitalisasi pasar BRI. "Ini tentu menjadi salah satu faktor investment decision bagi investor yang akan meningkatkan harga saham dan tentu pada akhirnya peningkatan market capital BRI," katanya.

Dia mengatakan, merek perbankan Bank BRI dimulai dari micro finance kemudian menguat secara korporasi. Namun sekarang segmennya berkembang luas dan pesat ke segmen lainnya, termasuk konsumer banking dan layanan e-banking BRI. "Ini sudah menjadi bagian dari strategi kami, tidak hanya kuat di pedesaan. Namun juga mampu berperan di perkotaan," katanya.

Segmen-segmen tersebut diharapkan akan makin memperkuat brand banking BRI hingga tingkat internasional. Konsultan spesialis valuasi merek global yang berbasis di London, Brand Finance PLC , setiap tahunnya, mengadakan penilaian merek-merek bank ternama di dunia.

Caranya dengan menghitung nilai masing-masing merek bank dengan memakai metode royalty relief. Metode ini telah disahkan oleh International Standard Organisation (ISO) 10668. Royalty relief mengestimasi harga royalty yang harus dibayar sebuah perusahaan pelaksana kepada perusahaan pemilik merek.

Permintaan batubara China akan naik - Bisnis Indonesia

Harga batu bara di pelabuhan Qinhuangdao, patokan di China, naik dalam minggu keenam ke level tertinggi selama lebih dari dua tahun karena permintaan melonjak.

Menurut Asosiasi Transportasi dan Distribusi Batubara China batu bara dengan nilai energi 5.500 kkal per kg naik 0,6% menjadi 810 yuan (US$125) hingga 825 yuan per metrik ton per Senin dibandingkan dengan pekan sebelumnya. Harga tersebut yang tertinggi sejak Oktober 2008.

Data asosiasi menunjukkan persediaan bahan bakar di Qinhuangdao jatuh ke level terendah dalam hampir satu tahun minggu lalu.

Sedangkan pertumbuhan industri yang diikuti rendahnya produksi listrik tenaga air meningkatan penggunaan batubara, menguntungkan Cina Shenhua Energy Co., produsen terbesar negara itu.

Kapasitas pasokan listrik dari pembangkit listrik tenaga air China diperkirakan merosot seiring kekeringan yang mengurangi pasokan air. Hasil riset UBS menyebutkan PLTA China berkontribusi 15%, terbesar kedua setelah batu bara, terhadap total listrik negara tersebut.

China tercatat menjadi impotir batubara Indonesia. BPS menyebutkan bahwa pada 2009 China menjadi tujuan utama ekspor batu bara Indonesia dengan menyerap 29,45 juta ton dengan nilai US$1,58 miliar. Sedangkan Jepang berada di urutan kedua dengan 23,61 juta ton senilai US$1,62 miliar, dan diikuti India dengan 22,72 juta ton senilai US$1,22 miliar.

Sementara itu data Asosiasi Pertambangan Indonesia (APBI) menunjukkan produksi batu bara Indonesia meningkat menjadi 32,43 juta metrik ton pada Maret dari 27,15 juta pada Februari dan 29,54 juta pada Januari.

Ketua APBI Bob Kamandanu, sebagaimana dikutip Bloomberg, mengatakan produksi batubara di Indonesia akan naik menjadi antara 335 juta dan 370 juta ton tahun ini. Produksi naik menjadi 325 juta ton pada 2010 dari 283 juta pada tahun 2009.

China Coal Prices Rise for Sixth Week; Inventories Rebound - Bloomberg

Power-station coal prices at Qinhuangdao port, a benchmark in China, rose for a sixth week to the highest in more than two years as demand soared in the world’s fastest-growing major economy.

Coal with an energy value of 5,500 kilocalories per kilogram gained 0.6 percent to 810 yuan ($125) to 825 yuan a metric ton as of today compared with a week earlier, according to the China Coal Transport and Distribution Association. That’s the highest since October 2008.
Industrial growth and low hydropower output have increased use of coal, benefitting China Shenhua Energy Co., the country’s biggest producer. Inventories of the fuel at Qinhuangdao plunged to the lowest in almost a year last week, data from the association showed.

To meet rising demand for coal, Daqin railway, which transports the fuel from Datong to Qinhuangdao, resumed normal operations this month after a month-long maintenance in April. Stockpiles at Qinhuangdao, which ships half of China’s seaborne coal, rose for the first time in nine weeks as of today.
Inventories gained 19 percent from a week earlier to 5.84 million tons, the China Coal Transport and Distribution Association said.

Stockpiles also increased on higher imports that have become cheaper. The premium of coal delivered to southern China from Australia to the price of shipments from Qinhuangdao narrowed to the lowest since December last week, according to Bloomberg calculations based on data from CLSA Asia Pacific markets.
Looming Power Shortage
China Shenhua has risen 5.3 percent in Hong Kong trading this year. The stock advanced 1.2 percent to HK$34.95 today. China Coal Energy Co., the country’s second-largest producer, was unchanged at HK$10.44. The benchmark Hang Seng Index gained 0.8 percent.

The Yangtze River, the site of the world’s largest hydropower dam, received 40 percent less water at its upper reaches this month compared with levels in the past three years, dam operator China Three Gorges Corp. said on May 7.
State Grid Corp. of China, the country’s biggest grid operator, plans to limit power supply to businesses operating in the eastern province of Jiangsu because of a looming shortage, China Business News reported on April 27.

China has experienced power deficits in the past, typically in July and August when rising temperatures increase the use of air-conditioners. The country’s central and eastern regions have been facing tight electricity supply this year and some areas may have a “relatively large” shortfall this summer, the National Development and Reform Commission, the top economic planner, said on April 15.

Crude Palm Oil Rebounds On External Cues, Demand Outlook - Palm OilHq

Crude palm oil futures on Malaysia’s derivatives exchange ended higher Monday, rebounding from last week’s fall in line with broad gains in commodity markets and an improved demand outlook for the tropical oil.

The benchmark July contract on the Bursa Malaysia Derivatives ended MYR43 higher at MYR3,238 a metric ton.

July soyoil on the Chicago Board of Trade was trading 0.7% higher at 56.10 cents a pound in screen trade at 1000 GMT, and June crude oil on the New York Mercantile Exchange was up 2.9% at $100.02 a barrel on Globex.

Palm oil fell to its lowest level in five months Friday amid a selloff in U.S. commodities due to renewed concerns about the global economic recovery, but the relatively positive U.S. employment data issued after the close of Asian markets Friday has helped to spark a recovery in global commodities markets.

The improving demand outlook for the palm oil, a raw material used in a wide range of consumer products, also supported prices on the BMD.

Traders estimate that Malaysian palm oil exports in the May 1-10 period probably reached 300,000-316,000 tons, an increase of 8%-14% from the previous month.

India is expected to buy 500,0000 tons of palm oil in May and possibly up to 550,000-600,000 tons in June to replenish palm oil stocks at ports, traders said.

India sources palm oil from Indonesia and Malaysia and soyoil from Brazil and Argentina to help cover the country’s total vegetable oil consumption.

Cargo surveyors Intertek Agri Services and SGS (Malaysia) Bhd., are likely to issue export estimates for May 1-10 on Tuesday.

However, rising output in Malaysia may hamper palm oil’s rebound, said a Singapore-based trading executive, as private estimates by planters put April production at 1.54 million tons, up nearly 9% from March’s production.

The government-linked Malaysian Palm Oil Board is scheduled to issue April production, stock and export data on Tuesday.

The rupiah-denominated palm oil contract for July delivery on the Indonesia Commodity & Derivatives Exchange was trading 1.3% higher at IDR9,390/ton at 1009 GMT.

CME Group’s dollar-denominated palm oil contract was up $5.25 at $1,087.50/ton at 1010 GMT.

In the physical market, palm olein for October, November, December cargo changed hands at prices from $1,105-$1,110/ton, free on board Malaysian ports, said a physical market broker in Singapore.

Cash CPO for prompt shipment was MYR30 higher at MYR3,380/ton.

Traded volume on the BMD reached 25,344 lots compared with 32,482 lots Friday. One lot is equivalent to 25 tons. Open interest was 111,691 lots versus 110,527 lots.

Sarana Menara 1Q profit soars 97% - Insider Stories

PT Sarana Menara Nusantara Tbk (TOWR), parent company of telecommunication tower provider PT Profesional Telekomunikasi Indonesia (Protelindo), which is owned by Djarum family, reported a 97.57% increase in net profit for the first quarter of this year.

Sarana Menara, which is owned by children of two siblings of Djarum family's namely Michael Bambang Hartono and his younger brother Robert Budi Hartono, posted Rp151.26 billion net profit or Rp148 per
share in 1Q 2011 from Rp76.56 billion or Rp78 per share.
The company booked 14.85% increase in operating profit to Rp196.17 billion from Rp170.81 billion, while revenue rose 13.08% to Rp369.05 billion from Rp326.37 billion.

Martin Basuki Hartono, son of Robert Hartono, is currently acting as the president commissioner at Sarana Menara.
Michael Hartono owns 24.55% stake in Sarana Bersama through PT Caturguwiratna Sumapala and Robert Hartono owns 25.55% stake in Sarana Bersama through PT Tricipta Mandhala Gumilang.

Loan facility
Protelindo obtained US$250 million loan facilities on May 3 2011 from a group of lenders consisting of DBS Bank Ltd, Oversea-Chinese Banking Corporation Limited, Standard Chartered Bank, and The Royal Bank of Scotland N.V., Hong Kong branch.
The company will use the new loan to refinance the existing facility of US$100 million previously obtained from Stewart Island Investment Pte Ltd and to pay fees and expenses and to fund acquisition of construction towers.

Moving on
Protelindo is planning to move its branch office from Artha Graha Building to Menara Bank Central Asia at Grand Indonesia, affiliated company, in a bid to increase efficiency among employees.
Grand Indonesia is owned by PT Puri Sinar Timur of 75.19%, PT Cipta Mulyo of 20.06%, and PT Cipta Karya Bumi Indah of 4.75%.
Both Sarana Menara and Grand Indonesia are indirectly controlled by Michael Hartono and Robert Hartono.

Chandra Asri to announce rights issu - Insider Stories

Indonesia's largest petrochemical center PT Chandra Asri Petrochemical Tbk (TPIA), which is owned by Indonesian tycoon Prajogo Pangestu, confirms that the company plans to announce the rights issue this week in a bid to raise over Rp1 trillion.
The proceed will be used by Chandra Asri, which obtained an effective statement of merger with PT Tri Polyta Indonesia Tbk on January 1 2011, to finance a medium-term expansion and make its shares more liquid.

ON THE PLATTER: Asia Pacific Fibers (POLY IJ; Not Rated) Company visit note: An Awakening Giant? - OSK

Company in brief. Established in 1984, Asia Pacific Fibers (POLY) is the largest polyester manufacturer in Indonesia ,holding 27% market share, with combined polyester chain (PTA, Polymer, Polyester Fiber, Filament Yarn, and Synthetic Fabrics) production capacity of 950k tonnes/year and Fabric of 66m yards/year. Its production facilities currently run at a capacity utilization level of more than 95%. The products are sold both in domestic (76%) and export markets (24%). The Company has four subsidiaries: PT Texmaco Jaya, Polysindo International Finance (PIFC), Polysindo Mauritius and PT Eastindo Polymertama (Eastindo). All of its revenue and the largest portion of its costs are denominated in USD.


· Earnings gain momentum. Driven by strong margin improvement on polyester product on the back of i) robust market conditions for polyester influenced by cotton shortages resulting in spurt in cotton prices and ii) favorable raw material supply contract terms , POLY delivered strong performances in 2010 with sales and EBITDA growing by 42% and more than double to IDR4.4tn and IDR520bn , respectively. This solid performance continues to 1Q11 with revenue and EBITDA coming in at IDR1.5tn (+15% q-o-q, +50% y-o-y), IDR297bn (+42% q-o-q, +360% y-o-y), respectively. In 1Q11, Polyester fiber price rose 62.5% y-o-y to IDR19,500/kg and polyester yarn prices went up by 36% y-o-y to IDR21,200/kg. The company could pass on the increase in the raw material prices Paraxylene and MEG, which is linked to oil price, due to continued strong demand for the products as cotton continued to be in short supply. POLY is planning its capacity expansion, which will be funded by internal cash if it can’t obtain new loan.


· Expecting solution in debt restructuring. POLY carries on its efforts to find a suitable solution for its secured debt restructuring by the end of 2011. The secured debt restructuring has not yet been completed, as POLY is still waiting for a response from its one of debtor, PT. Perusahaan Pengelola Aset (PPA) which hold 29% portion. Damiano Investments BV, the majority shareholders is also the majority holders of secured debt. Damiano has provided working capital loans and a LC facility for the procurement of raw materials. This has helped considerably to maintain a reasonable capacity utilization of the company’s production facilities. The completion of the secured debt restructure would also enable a “quasi-reorganization”, whereby adjustments and write downs of some of its liabilities will improve the balance sheet.


· Attractive valuation but bad balance-sheet. The company reported net profit of IDR410bn (EPS: IDR173) in 1Q11. Stripping out forex gain of IDR269bn, 1Q11 core net profit was at IDR137bn. Annualizing its 1Q11 core EPS of IDR58/share, POLY is trading at core PER of only 1.1x. Due mostly to its huge debt balance of around IDR10tn, POLY is trading at annualized 1Q11 EV/EBITDA of around 10x. Meanwhile its peers Indo-rama Synthetic (INDR IJ) and Indorama Venture (IVL TB) are trading at around 3x (annualized basis) and 13.3x 2011 EBITDA, respectively. POLY’s poor balance sheet with Debt/EBITDA of around 10x and deficiency in equity might be a concern of investors, although it might see a strong improvement when the planned debt restructuring program is completed.

Market outlook - 1Q11 results recap: driven by resources and banks (JCI Target upgraded to 4,370) - CIMB

~ We lift our end-CY11 index target to 4,370 from 4,330 following 1Q11 results which were slightly above expectations.
~ Our new target remains bottom-up, implying unchanged 17x and 14x CY11-12 P/Es.
~ Resources (+42% yoy) were the star performers, together with banks (+38%).
~ Lacklustre results came from telcos (+8%).
~ Consumer earnings grew 17%, similar to that clocked by industrials and basic materials.
~ Aggregate core profit grew 30% yoy, while net gearing declined 6% qoq to 14%.
~ The strong earnings momentum and benign inflation justified the 0.8-pt P/E expansion over the past three months.
~ Meanwhile, foreign fund flows have been positive for six consecutive weeks while the local appetite remains strong.
~ Key market risk is still high oil prices.
~ Consumer stocks remain our top picks, while we advocate selective picks of banks with strong growth, and coal on cyclical growth.

PGAS downgraded to U/W - JP Morgan

We downgrade to UW from OW and cut our PT to Rp3,750:
Despite the steady underperformance over a period of time, PGAS is a consensus buy (20 Buy/OW calls from 24 analysts). We think consensus’ unanimity reflects the view that last year’s supply constraints were temporary and volumes will bounce back, justifying the stock’s current trading multiples of 14x FY11E and 13x FY12E.
We think the likely slowdown in volume and earnings growth will challenge this view, and as the market adjusts to lower growth rates, underperformance could continue as slower earnings growth results in multiple de-rating. With this, we downgrade PGAS to UW and cut our PT from Rp5,400 (Dec-11) to Rp3,750 (Jun-12), implying 12x 12- month forward P/E multiple by Jun-12 vs. the current 14x.

Indofood Agri Resources (IFAR SP): IPO of 90% owned subsidiary PT SIMP - CLSA

SUMMARY

PT Salim Ivomas Pratama (SIMP) will issue up to 20% new shares via IDX listing
Indofood Agri (IFAR SP) currently holds a 90% stake in PT SIMP (through wholly owned non listed subsidiary IOFPL)
PT SIMP holds all of IFAR’s operating assets (including upstream plantations for oil palm, rubber, sugar, downstream cooking oil, and 59.5% stake in London Sumatra)
Post IPO, IFAR will still own at least 72% of PT SIMP, but all operating assets will be listed through SIMP.
Management rationale for listing are deleveraging of SIMP B/S, capex funding, reduction of FX risk, facilitation of future dividend payments.
We don’t see much value created through PT SIMP’s listing. Capital can be raised through other means. IFAR will be left as a Singapore-listed investment vehicle while all operating assets will be listed on the IDX.

Astra International (ASII IJ) - AGM results - CLSA

· Astra announced final dividend of Rp1,130/sh which will be paid on 1 June 2011. Hence, final dividend is Rp1.600/sh which includes interim dividend of Rp470/sh (paid in Nov 2010). Total payout was 45% of 2010 profit; we have expected 50% payout. Dividend payout was 45% in 2009.

· An additional director was also appointed; Johannes Loman as Executive Vice President of Astra Honda Monda (AHM)

· Astra mentioned that a 15% decline in car production in the 2Q this year is expected as supply lines from Japan remain disrupted. Astra expects production will bounce back in 2H.

· Indicative domestic car sales in April shows that Toyota's car sales dropped by 34% MoM, Daihatsu's car sales dropped by 20% MoM, and Mitsubishi's dropped by 16.5% MoM. These three combined makes up 70% of the total domestic market in Indonesia. This is expected, and we have forecasted a 10% YoY drop in car sales this year (1Q11 sales rose 29% YoY to 225,049 units.

· Key thing is pent-up demand is building, and when things recover, we are going to see a swift recovery in car sales. The upside is if recovery is sooner than expected. For Astra, every 10% recovery in car sales volume translates into 3% impact to earnings. Car penetration is at a low 4%. For long term, Astra remains a compelling consumption story for Indonesia. Maintain BUY, now trading at 15x PE11, 13.8x PE12.

Bakrieland, a landed opportunity - CLSA

Sarina and Nick Cashmore looked at Bakrieland (ELTY IJ) as an attractive inflation hedge. ELTY’s stock price has been such a big laggard. At low single digit, Bakriland’s ROE is lower than its peers’. This is partly due to a series of capital raising, which translated into higher equity base.

However, the potential is massive. The company owns 16,000 ha of land but trades at a 25% discount to book value. Big leverage to rising property prices in greater Jakarta area.

In term of access, the local government has started construction of an access road that will open mid 2012. Monetizing assets will be the key to improving ROA and price performance.

Valuation looks very attractive at 0.8x P/B. NAV is Rp460/share, stock price offers 67% discount to our estimated NAV. At current share price, investors are paying US$4.10psm for the underlying land. The stock is one of the cheapest stocks in our property coverage. BUY.

Interesting to note that:

Jakarta is one of the ten largest cities in the world. Greater Jakarta’s population of 23mn today is forecast to reach 34mn by 2030. And 2,000 people a day moving into Jakarta!
Mortgage to GDP in Indo is approximately 2.5% of the GDP. Plenty of rooms for upside. Per capita income is surpassing US$3,000 threshold. Current property market in Jakarta is strong. Marketing sales for listed property rose 40% YoY for 1Q11 to Rp4tn (US$465mn).
The group is examining several corporate actions to monetise assets and improve ROA, while the underlying value of Jonggol, its 13,00ha single land bank in South of Jakarta suburb will only rise with time. ELTY is in talks with interested parties to sell up to 8ha of its CBD Episentrum project.
ELTY also plans to list its toll road assets within next 12 months. Ave daily car volumes for its Kanci-Pejagan toll have risen to 15k/day from 11k/day last year.
Housing will remain one of the strongest investment themes this decade. Marketing sales for listed property names rose 40% YoY for 1Q11 to Rp4.0tn (US$465m).