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

Jumat, 03 Juni 2011

China urges more coal imports to keep lights on - Reuters

China will encourage coal imports and urge miners to boost output to increase supplies to power plants, China's economic planning agency said, as the world's largest energy consumer tackles its worst power shortages in seven years.
Despite its massive electricity generating capacity, China is facing power shortages because power producers are forced to accept a low fixed price for the electricity they supply to the grid, economists say. With high coal costs, many power firms prefer to cut output rather than incur losses.
The National Development and Reform Commission (NDRC) said on Wednesday that China would take comprehensive measures to increase energy supplies and curb unreasonable demand.

Eleven out of China's 31 provinces and regions have introduced power use restrictions since May, the commission said in a report on its website (www.ndrc.gov.cn).
But it ordered grid firms to ensure power supplies to households and other important power users.

China raised electricity prices for some users by about 3 percent on Wednesday, the first increase since 2009, as power shortages are expected to expand as the peak summer demand season approaches.
It raised the prices at which coal-fired generators sell to grid firms by an average of about 5 percent in three central Chinese provinces from Wednesday after hiking the rates in 12 other provinces on April 10.

After 30 percent growth in coal imports last year, when average monthly imports hovered at around 14 million tonnes, import demand so far this year has been largely unimpressive, with overseas prices too high for many Chinese buyers.
Coal stocks at major Chinese power plants were at nearly 60 million tonnes in late May, enough for 16 days' power generation, the NDRC said.
Total coal imports in the first four months of the year are down 24 percent to 43.5 million tonnes, as utilities shunned more-expensive supplies from overseas and focused on domestic coal instead.

But fast-rising coal prices in China since April have once again made imports an attractive option and traders are eagerly waiting for the world's top coal consumer to regain the appetite for foreign supplies it showed in 2009 and 2010.
Those two years of high imports, a lifeline to miners amid the global financial crisis, were largely the result of China cracking down on its own coal miners, forcing many small, dangerous and inefficient mines to shut.
But that campaign has run its course in some areas, and China is now preparing to ramp up output in a network of new coal bases.

DROUGHT IMPACT
The power crisis has been compounded by a drought in central China which is threatening to slash hydropower output, China's largest power source after coal.
Water stocks in China's major reservoirs are still falling in early June, Water Resources Ministry data showed on Wednesday, suggesting tight power suppy in hydropower-rich regions may not ease soon.
Refined oil products stocks held by state-owned Sinopec group and CNPC were at a reasonable level of more than 13 million tonnes in late May, NDRC added. It was not clear what that referred to or if it represented a fall or rise from April, since

China does not publish transparent data on stocks.
However, Reuters calculations show the two firms' stockpiles of gasoline, diesel and kerosene were about 18.2 million tonnes at the end of April.
That figure is based on data from Xinhua news agency's Oil, Gas and Petrochemicals newsletter, which publishes monthly data on stockpile movements and occasionally absolute stock levels.

China's apparent oil demand rose 9.2 percent in April from a year earlier to almost 9.36 million barrels per day in April, second only to a record high of 9.65 million bpd in December, as refineries stepped up output to ensure domestic supplies, shrugging off soaring oil prices.

Japan, China, India, Malaysia, Thailand: Asian Bonds and Currency Preview - Bloomberg

The following events and economic reports may influence trading in Asia’s bonds and currencies today. Bond yields and exchange rates are from the previous trading session unless stated otherwise.

Japan: Chief Cabinet Secretary Yukio Edano and Finance Minister Yoshihiko Noda will hold media briefings after a Cabinet meeting in the morning. Edano will have another press briefing at 4 p.m. in Tokyo.

The yield on the 1.1 percent government bond due March 2021 was 1.110 percent, according to Japan Bond Trading Co., the nation’s largest interdealer debt broker.

The yen traded at 80.97 per dollar at 7:17 a.m. in Tokyo.

China: HSBC Services’ purchasing managers index for May will be published today. The index was at 51.6 in April.

The yield on the 3.83 percent bond due March 2021 was 3.83 percent, according to Chinabond, the nation’s biggest debt- clearing house. The yuan was at 6.4828.

India: The finance ministry will sell 120 billion rupees ($2.7 billion) of bonds due in 2016, 2022 and 2032 today.

The yield on the 7.80 percent bond due April 2021 was 8.30 percent. The rupee was at 44.86.

Taiwan: The Central Bank of the Republic of China (Taiwan) will publish foreign-exchange reserves data for May today. Reserves were at $399.5 billion in April.

The yield on the 1.375 percent bond due March 2021 was 1.42 percent, according to Gretai Securities Market. The Taiwan dollar was at NT$28.785.

Thailand: Bank of Thailand will release foreign-exchange reserves data for the week ended May 27 today. Reserves were at $185.6 billion the previous week.

The central bank will sell 60 billion baht ($2 billion) of 14-day bills today.

The yield on the 3.125 percent debt due December 2015 was 3.43 percent. The baht was at 30.29 per dollar.

Malaysia: The trade surplus fell to $10.3 billion in April from $13.5 billion in March, according to the median estimate in a Bloomberg survey of economists before the data is published today by the Department of Statistics.

The yield on the benchmark 4.16 percent note due July 2021 was at 3.98 percent. The ringgit was at 3.0160.

Oil Rises 0.5 Percent in New York; U.S. Crude Stockpiles Unexpectedly Gain - Bloomberg

Oil for July delivery rose as much as 0.5 percent today to $100.87 a barrel in electronic trading on the New York Mercantile Exchange and was at $100.77 at 8:13 a.m. Sydney time.

Crude yesterday climbed 11 cents to $100.40 as the dollar gained after after Moody’s Investors Service said it may place the U.S. government’s rating under review for possible downgrade. A weaker dollar typically makes commodities more attractive as an investment. Oil prices have surged 35 percent in New York the past year.

The contract reversed in the last 30 minutes of floor trading. Futures fell earlier after a U.S. government report showed an unexpected increase in inventories to the highest level in two years.

Brent crude for July delivery yesterday rose $1.01, or 0.9 percent, to $115.54 a barrel on the London-based ICE Futures Europe exchange.

U.S. Stocks Decline Ahead of May Jobs Data - Bloomberg

U.S. stocks retreated, a day after the biggest slump for the Standard & Poor’s 500 Index since August, as investors awaited the Labor Department’s monthly report on employment in the world’s largest economy.

Limited Brands Inc. and Gap Inc. (GPS) paced losses among chain stores, falling at least 2.1 percent. Goldman Sachs Group Inc. retreated 1.3 percent after two people familiar with the matter said it received a subpoena from the Manhattan District Attorney regarding the bank’s activity leading into the credit crisis. Joy Global Inc. (JOYG) gained 5.4 percent, spurring a rally in industrial companies, after the mining-equipment maker reported profit that beat analysts’ estimates.

The S&P 500 fell 0.1 percent to 1,312.94 at 4 p.m. in New York. It slumped 2.3 percent yesterday, the most since August, after data showing slower-than-forecast job growth spurred concern that tomorrow’s Labor Department report will trail estimates. The Dow Jones Industrial Average dropped 41.59 points, or 0.3 percent, to 12,248.55 today.

“Nobody is going to jump in with strong conviction before the jobs report,” said Peter Jankovskis, who helps manage about $2.7 billion at Oakbrook Investments in Lisle, Illinois. “We’ve been experiencing fairly weak economic figures. Investors need more evidence that this is a temporary slowdown.”

The S&P 500 tumbled to a six-week low yesterday following ADP Employer Services’ jobs report and separate data from the Institute for Supply Management that showed manufacturing expanded at the slowest pace in more than a year. Citigroup Inc.’s U.S. Economic Surprise Index, which tracks the rate at which data are beating or missing estimates, turned negative in May and has since fallen to the lowest level since January 2009. More ,,,

Kamis, 02 Juni 2011

World Markets - Reuters

U.S. Market Report
US STOCKS-June starts ominously for teetering Wall St


* Wall St firms cut forecasts for U.S. non-farm payrolls
Stocks, Funds News, ETFs News, Financials 5:01pm EDT
UK Market Report
Britain's FTSE drops after weak U.S., UK data

* For related prices, Reuters Terminal users may click on - * UK stock report [.L] FTSE index: <0#.FTS6> techMARK 100 index: FTSE futures: <0#FFI:> Gilt futures: <0#FLG:> Smallcap index: FTSE 250 index: FTSE 350 index: Market digest: Top 10 by vol: Top price gainers: Top % gainers:
Stocks, Financials 11:54am EDT

European Market Report
Disappointing macro figures hurt European equities


LONDON, June 1 (Reuters) - European shares ended sharply lower on Wednesday as risk appetite waned after data showed a slowdown in U.S. manufacturing activity in May and a much lower than expected increase in U.S. private sector employment.
Stocks, European Markets, 12:58pm EDT

Tokyo Market Report
Nikkei falls 2 pct on Wall St, political uncertainty


TOKYO, June 2 (Reuters) - The benchmark Nikkei share average fell sharply on Thursday, dragged lower by a steep fall in Wall Street shares after disappointing data and growing political uncertainty as Japanese Prime Minister Naoto Kan faces a no-confidence motion later in the day. (Reporting by Hideyuki Sano; Editing by Edmund Klamann)
Stocks, Asian Markets, Financials 8:08pm EDT

Hong Kong Market Report
Hong Kong shares slip as investors get defensive, China flat


* Strong HK retail sales data boost consumer plays (Updates to close)

Horror for US Economy as Data Falls off Cliff - CNBC

The last month has been a horror show for the U.S. economy, with economic data falling off a cliff, according to Mike Riddell, a fund manager at M&G Investments in London.

"It seems that almost every bit of data about the health of the US economy has disappointed expectations recently," said Riddell, in a note sent to CNBC on Wednesday.

"US house prices have fallen by more than 5 percent year on year, pending home sales have collapsed and existing home sales disappointed, the trend of improving jobless claims has arrested, first quarter GDP wasn’t revised upwards by the 0.4 percent forecast, durables goods orders shrank, manufacturing surveys from Philadelphia Fed, Richmond Fed and Chicago Fed were all very disappointing."

"And that’s just in the last week and a bit," said Riddell.

Pointing to the dramatic turnaround in the Citigroup "Economic Surprise Index" for the United States, Riddell said the tumble in a matter of months to negative from positive is almost as bad as the situation before the collapse of Lehman Brothers in 2008.

"The correlation between the economic surprise index and Treasury yields is very close, so the lesson is that whatever your long term macro views are regarding hyper inflation vs. deflation or the risk of the US defaulting, the reality is that if you want to have a view about government bond prices, the best thing you can do is look at the economic data to see what’s actually going on," said Riddell.

"And right now, the economic data is suggesting that however measly you may think a 3 percent yield is on a 10-year Treasury, the yield should probably be a fair bit lower given what’s going on in the US economy," said Riddell.

"You’ve also got to wonder at what point the markets for risky assets start noticing, too."

"QE3 anybody?" asks Riddell.

Thursday Look Ahead: Bears Claw at Stock Market Gains - CNBC

Stock investors snapped awake Wednesday to the economic worries that have been bringing out bond market bulls and driving interest rates lower.

ADP's private sector employment report and ISM manufacturing data were both stunningly weak, signaling a slowdown in manufacturing and probably, a much lower number for Friday's May employment report.

Car sales were also softer than expected, adding to negative sentiment.

Some economists, while cutting May employment forecasts, are convinced that this soft patch could be a temporary slowdown, and that spiking oil prices and the ripple effect on global manufacturing from the Japanese earth quake and tsunami are factors. Goldman Sachs and others, as of Wednesday, are looking for just 100,000 new jobs in May, compared to 244,000 in April.

Economists also are slashing second-quarter U.S. GDP forecasts to the 2 percent range but have not changed the second half outlook yet. A big concern is that if the markets remain rocky, or the negatives start really denting sentiment, the slowdown could become self-fulfilling.

"Look at the stories you have—lowering of growth estimates globally; housing going in the wrong direction; employment going in the wrong direction; ISM manufacturing going in the wrong direction. You had a case of ubiquitous apathy out there at best. You add the European situation with the Greek bailout, which changes on a daily basis. This tape has been trading with the headline of the day," said Pete McCorry, a trader at Keefe Bruyette. While some progress seemed to be made toward a Greek aid package, Moody's cast another cloud over the situation Wednesday when it downgraded Greek debt.

The Dow Wednesday fell 2.2 percent to 12,290, and the S&P 500 fell 2.3 percent to 1314, in the biggest one-day decline since August. Buyers rushed into the bond market, exiting risk assets, and as a result, rates headed lower again. The 10-year yield broke the psychological 3 percent level, finishing at 2.964 percent, its lowest yield since Dec. 6.

That puts the focus on Thursday's weekly jobless claims, which have been uncomfortably elevated since April, and on Friday's May employment report. Chain stores also report monthly sales Thursday, and Thomson Reuters expects a 5.3 percent increase in sales of the companies it follows. Productivity and costs are reported at 8:30 a.m., and factory orders are released at 10 a.m.

"I think the market is stuck in a big range here. 1300 on the S&P on the downside and 1350 on the upside. Every time we get up there, we lose steam, and they roll over," said John O'Donoghue, head of equities at Cowen. "Here's the problem. Equities as an investable instrument are still the relatively cheapest way to invest. Therefore, I think the market is adjusting to the low end of the trading range. I think the market can go sideways. It can bounce around in this sort of trough. I'm not looking for anything terribly dramatic, to be honest."

"I'm not of the opinion that we're in deep trouble," said O'Donoghue.

Economists Wednesday added to the gloom by chopping their forecasts for May jobs, after ADP reported only 38,000 private sector jobs were added. "We did cut our forecast from 170,000 to 100,000...and I think this is the first time we're collaborating the weakness seen in the claims data," said Citigroup economist Steve Wieting.

Wieting expects second quarter GDP at 2.7 percent, up from 1.8 percent for the first quarter. "We think the second quarter is going to feel worse than the first quarter but print stronger...we think there's been more effect from energy. There's effect from the auto industry impact. We're estimating an almost full percent drag on GDP."

But Wieting is not adjusting second half.

Economists expect auto sales to recover as the Japanese supply issues reverse, and they expect falling gasoline prices to remove some of the weight on consumers. "This could actually boost activity in the second half of the year," Wieting said.

Bonds have been in conflict with risk assets in recent weeks as buyers drove rates lower but stocks held in a range. Now that risk assets responded in Wednesday's big downdraft to the same concerns as bonds, the other markets are becoming key. "Other asset classes we're watching more than closely than the data," said Charlie Parkhurst of Barclays Capital about Thursday's trading.

RBS senior Treasury strategist John Briggs said 10-years could stay below 3 percent for now. "It's hard to see a reversal ahead of (Friday's) payrolls, now that we see ADP and forecast revisions by the street. It's safe to say, even with most of the street revising numbers down to 100,000, whisper numbers are probably going to be lower—between 50,000 and 100,000," he said.

Oil Declines for a Second Day After Reports Show U.S. Economy Is Slowing - Bloomberg

Oil declined for a second day in New York after reports showed U.S. crude supplies rose, companies added fewer jobs than forecast and manufacturing slowed, stoking speculation fuel demand may falter in the world’s biggest crude- consuming nation.

Futures slid as much as 0.7 percent after declining the most in three weeks yesterday. Crude stockpiles climbed the most in five weeks, according to the American Petroleum Institute. Employment rose by 38,000 in May, the smallest gain since September, ADP Employer Services said. A 175,000 increase was forecast, according to a Bloomberg News survey. The Institute for Supply Management’s factory index dropped to 53.5.

“Oil futures fell sharply after the U.S. data printed weaker than expected, raising concerns over growth momentum in the U.S.,” economists at Australia & New Zealand Banking Group Ltd., led by Warren Hogan, wrote in a note today.

Crude for July delivery lost as much as 67 cents to $99.62 a barrel in electronic trading on the New York Mercantile Exchange, and was at $99.82 at 9:20 a.m. Sydney time. The contract yesterday declined $2.41, or 2.4 percent, to $100.29, the biggest single-session drop since May 11. Prices are up 37 percent the past year.

Brent crude oil for July delivery fell $2.20, or 1.9 percent, to end the session at $114.53 a barrel on the London- based ICE Futures Europe exchange yesterday, the lowest settlement since May 24.
Crude Inventories

The European benchmark contract traded at a premium of $14.24 a barrel to U.S. futures yesterday. The difference between front-month contracts in London and New York reached a record $19.54 on Feb. 21. It averaged 76 cents last year.

The industry-funded American Petroleum Institute said U.S. crude supplies rose 3.5 million barrels last week to 371.6 million. An Energy Department report today is forecast to show stockpiles declined 1.6 million barrels, according to the median of 13 analyst estimates in a Bloomberg News survey.

The Institute for Supply Management’s factory index fell more than projected to the lowest level since September 2009, the Tempe, Arizona-based group said yesterday. Economists forecast the ISM gauge would drop to 57.1, according to a Bloomberg News survey.
Forecasts Lowered

The ADP employment report prompted some economists cut their forecasts for payrolls to be reported in two days by the Labor Department. Goldman Sachs Group Inc., Deutsche Bank Securities Inc. and Bank of America Merrill Lynch reduced their estimates. Economists at JPMorgan Chase & Co. in New York lowered second-quarter growth forecasts for the second time in as many weeks.

The world’s largest economy will expand at a 2 percent annual rate from April through June, down from a prior estimate of 2.5 percent, according to an e-mailed statement yesterday from Michael Feroli, the bank’s chief U.S. economist.

The most-active oil option was the July $95 put, a bet that prices will fall. The contract rose 30 cents to 89 cents. The most-traded call option, a bet that prices will rise, was the July $115 call, which fell 9 cents to 10 cents.

The Organization of Petroleum Exporting Countries’ crude output increased for a second straight month in May, led by gains from Saudi Arabia and Nigeria, according to a Bloomberg News survey.

Production rose 165,000 barrels, or 0.6 percent, to average 28.895 million barrels a day, according to the survey of oil companies, producers and analysts. Saudi Arabia bolstered output by 75,000 barrels, or 0.8 percent, to 8.925 million barrels a day, the highest level since October 2008. Nigerian production rose 75,000 barrels a day to 2.06 million last month.

To contact the reporter on this story: Ben Sharples in Melbourne

BI: Target Inflasi 2011 Bisa Tidak Tercapai - AntaraNews

Bank Indonesia memprediksi target laju inflasi yang ditargetkan pemerintah pada 2011 sebesar 5,3 persen akan sulit tercapai apabila pemerintah mulai melakukan penyesuaian harga Bahan Bakar Minyak (BBM).

"Inflasi tergantung pada BBM-nya kapan akan diubah. Kalau BBM ditunda tahun ini tidak diubah, inflasi mencapai 5,2-5,3 persen. Tapi kalau dinaikkan tahun ini harga BBM-nya maka inflasinya 6,3-6,4 persen," ujar Gubernur Bank Indonesia (BI) Darmin Nasution seusai rapat kerja mengenai Kerangka Ekonomi Makro dan Pokok-Pokok Kebijakan Fiskal 2012 dengan Badan Anggaran di Jakarta, Rabu.

Ia menjelaskan pemerintah seharusnya menerapkan kebijakan pembatasan BBM bersubsidi atau melakukan penyesuaian harga pada April ketika sedang terjadi deflasi.

"Kalau berbicara mending, mending dilakukan pada April ketika sedang mengalami deflasi dan juga panen raya," ujar Darmin.

Menurut dia, apabila ada kebijakan yang jelas dari pemerintah tentang BBM tersebut tahun ini, maka tekanan inflasi pada 2012 dapat lebih terkendali dan bisa mencapai asumsi yang telah ditetapkan sebesar 3,5-5,5 persen.

"Kami memperkirakan tekanan inflasi pada 2012 akan berada pada level 4,5 persen plus minus satu," ujarnya.

Sementara, pelaksana tugas Kepala Badan Kebijakan Fiskal (BKF) Kementerian Keuangan Bambang Brodjonegoro mengatakan apabila penyesuaian maupun pengaturan BBM bersubsidi jadi dilakukan akan membuat target inflasi tahun depan tidak tercapai.

"Kalau jadi diterapkan (pengaturan maupun penyesuaian) bisa sekitar 6 persen, kalau tidak, bisa dibawah 6 persen," ujarnya.

Pemerintah dengan mempertimbangkan perekonomian domestik memperkirakan laju inflasi tahunan 2011 akan berada pada kisaran 6 persen diatas asumsi dalam APBN 2011 sebesar 5,3 persen.

Perkiraan tersebut telah mempertimbangkan faktor eksternal yang dapat menahan laju inflasi seperti inflasi mitra dagang utama Indonesia yang cenderung menurun dan arus modal masuk masih cukup besar sehingga mendorong apresiasi Rupiah.

Sedangkan faktor internal yang dipertimbangkan dalam menahan inflasi tahunan adalah apresiasi nilai tukar Rupiah, semakin membaiknya pasokan dan distribusi pangan yang didukung membaiknya sarana infrastruktur, minimalnya kebijakan "administered prices" sehingga ekspektasi inflasi tetap terkendali.

"Kemudian sinergi kebijakan fiskal dan moneter yang semakin solid dan didukung kesadaran Pemerintah Daerah dalam pengendalian inflasi daerah melalui TPID," ujar Bambang.

Badan Pusat Statistik mencatat pada Mei 2011 terjadi inflasi sebesar 0,12 persen karena ada peningkatan harga kebutuhan sandang padahal pada dua bulan terakhir sempat terjadi deflasi.

Dengan demikian, laju inflasi tahun kalender Januari-Mei tercatat 0,51 persen dan inflasi "yoy" 5,98 persen. Selain itu, inflasi inti Mei tercatat 0,27 persen dan inflasi inti "yoy" 4,64 persen.

Carlyle may acquire Garudafood - Insider Stories

Carlyle Group and Japanese brewer Suntory are leading a race to buy a 30% stake in Indonesian consumer firm Garudafood worth over $200 million, one of Indonesia's largest consumer products maker that is owned by A.W.S. Sudhamex's Tudung Group.

Carlyle Group, as quoted by Bisnis.com today, is a global asset management company which has managed US$106.7 billion in 84 portfolio funds since December 2010.
Carlyle puts its investment into three different asset categories, corporate private equity, real assets, and global market strategies in Africa, Asia, Australia, Europe, North and South America.

Sumalindo Q1 Loss Widens - The Indonesia Today

Forestry company PT Sumalindo Lestari Jaya Tbk (SULI) posted net loss of Rp48.06 billion in the first quarter (Q1) of 2011, compared to loss Rp14.28 billion in the corresponding period of last year.

Revenue dropped 32% to Rp95.78 billion from Rp140.74 billion a previous year while cost of good sold declined 24% to Rp108.59 billion from Rp143.49 billion a year earlier.

The company recorded gross loss of Rp12.8 billion and operating loss of Rp25.61 billion, compared to operating profit of 5.69 billion in the first quarter of 2010. It also recorded financial charges of Rp45.14 billion.

As of March 2011, its assets totaled Rp1.84 trillion and liability amounted Rp1.54 trillion.

Alam Sutera 1Q profit soars 151.66% - Insider Stories

Property developer PT Alam Sutera Realty Tbk (ASRI), that is controlled by Indonesian conglomerate The Nin King (Argo Manunggal Group), today reported a steep jump in net profit of 151.66% during the first 3 months of this year, boosted by robust sales growth.

Alam Sutera posted Rp158.47 billion net profit in 1Q 2011 or Rp8.88 per share from Rp62.97 billion or Rp3.52 per share in 1Q 2010. Sales rose 97.49% to Rp405.05 billion from Rp205.09 billion.

Argo Manunggal Group controls Alam Sutera via several firms such as PT Argo Manunggal Land Development that owns 3.97% stake, PT Tangerang Fajar Industrial Estate with 16.70% stake, PT Manunggal Prima Development with 11.42%, PT Selarsa Citamanunggal with 11.86%, and PT Bukit Asri Padang Golf with 5.94%. Public shareholders own 50.11% stake in Alam Sutera.
Alam Sutera's Commissioner Harjanto Tirtohadiguno is key person of Argo Manunggal Group, while the remaining executives in board of commissioner are professional.

Agung Podomoro Acquires Griya Pancaloka - The Indonesia Today

Property developer PT Agung Podomoro Land Tbk (APLN) has acquired 75% shares of PT Griya Pancaloka (GPL) from un-affiliated company.

Griya Pancaloka plans to build and manage hotel at 7.6 hectares land in Nusa Dua, Bali. The investment cost does not exceed 20% of the company's equity, categorized as an immaterial transaction.

APLN lost 2.74% to Rp355 per share today. At this price, it has market capitalization of Rp7.28 trillion.

Indika 1Q profit decreases 9.11% - Insider Stories

Energy integrated company PT Indika Energy Tbk (INDY) today reported a slight decrease in net profit of 9.11% in the first 3 months of this year despite higher total cost contracts and cost of goods sold.

Indika, parent company of PT Petrosea Tbk and PT Mitrabahtera Segara Sejati that is controlled by Indonesian tycoon Agus Lasmono, son of businessman Sudwikatmono, posted Rp265.16 billion net profit in 1Q 2011 or Rp51 per share from Rp291.74 billion in 1Q 2010 or Rp56 per share.
Indika Energy's gross profit dropped 26.75% to Rp126.92 billion from Rp173.26 billion. The company booked a slight increase in revenue of 2.71% to Rp768.68 billion from Rp748.42 billion.

The largest contributors for Indika consolidated revenue were PT Gunung Bayan Pratama Coal with Rp155.31 billion revenue, PT Adimitra Baratama Nusantara with Rp101.18 billion, PT Santan Batubara with Rp99.25 billion, and JOB Pertamina Talisman Jambi Merang with Rp15.86 billion.
PT Indika Mitra Energi controls 63.12% stake in Indika Energy and public shareholders own 28.95% stake.

Petrosea Q1 Profit Drops 24.6% - The Indonesia Today

Mining contractor PT Petrosea (PTRO) Tbk, a subsidiary of Indika Energy (INDY), booked net profit of US$7.69 million in the first quarter 2011, dropped 24.6% from the corresponding period last year.

Petrosea reported revenues of US$47.99 million in the quarter, increased 12% from Q1/10, while direct costs rose 12.7% to US$35.6 million. Petrosea then booked gross profit of US$12.39 million, increased from US$11.35 million in Q1/10.

Higher administration expenses and lower equity in net income of associates cut Petrosea's net profit substantially by 24.6% to US$7.69 million.

Petrosea owns 50% shares in PT Santan Batubara, a coal producer. PT Harum Energy (HRUM) Tbk owns the balance.

Indika reportedly plans to divest up to 30% shares in Petrosea. Indika acquired the company for about US$100 million two years ago.

Petrosea closed higher by 5.56% to Rp42,750 Wednesday (June 1). At that price, Petrosea has market capitalization of Rp4.275 trillion or about US$500 million, about four times equity as at March 31 (US$128 million).

AALI:Increasing cost per unit - Mandiri

AALI’s 1Q11 gross margin was the smallest among Indonesian big-cap plantation companies and the increase in its gross margin was also the lowest although the increase in its CPO average selling price is comparable to the others (exhibit 1). The reason is increasing cost per unit, which mainly come from huge proportion of newly mature area and higher cost per ha mature area (exhibit 3 and 8). We expect cost per unit of palm product to keep increasing in FY12F. Meanwhile, we think FFB production should grow lower than 7.0% in years ahead due to huge percentage of its plantation are in declining yield phase (52.7% in 2011). We fined tune our forecasts. We use PE target of 15.0x on EPS FY12F, which led to our target price of Rp23,000/share. We maintain Neutral recommendation on the counter. Our EPS FY12F is lower than consensus by 12.5% because we expect higher cost per unit due to newly mature area of 15,775 ha (9.6% of current nucleus mature area) and increase in cost per ha in FY12F.

Rising cost per unit of palm products. Cost per unit of palm products (CPO and kernel) is increasing in FY11 due to higher cost per ha nucleus mature area (exhibit 3) and newly mature area of 16,700ha (11.3% increase from the end of FY10). If nucleus estate is re-classed from immature to mature, its total operational costs are charged to income statements, which are capitalized to balance sheet during immature stage. The problem is newly mature plantation still produces low FFB yield. Palm products’ production cost of newly mature estates is expensive, around Rp7,400/kg (exhibit 5).

Single-digit growth in FFB production due to unfavorable plantation profile. We think the combination of AALI’s nucleus and plasma’s FFB production should grow lower than 7.0% in years ahead due to huge percentage of its plantation are in declining phase, meanwhile its newly mature areas still produce low FFB yield. Around 139,390ha (52.7% of total) of AALI’s planted area (nucleus and plasma) in 2011 are equivalent or older than 15 years old, declining FFB yield phase (exhibit 9).

New planting is slow. On the Mar11 financial statement, there are 14,297ha unplanted Rights to Cultivate (HGU), however, most of the unplanted landbank is not feasible for new planting and most of them are scattered in different locations. Due to limited unplanted landbank, management decides not to set new planting target in FY11 onwards. The realization of new planting is very slow, only 328ha in 1Q11 (significant lower than 755ha in 1Q10).

Fine tuning forecasts and maintain a Neutral recommendation. We did fine-tuning on our forecasts. We use target PE of 15.0x on FY12F EPS, resulting in target price of Rp23,000/share. We maintain Neutral recommendation.

ASRI Another great start - CIMB

(ASRI IJ / ASRI.JK, OUTPERFORM - Maintained, Rp310 - Tgt. Rp460, Property Devt & Invt)

1Q11 core profit of Rp153bn is ahead of our estimate and consensus by 21% and 12% respectively, assuming 28% seasonality. Revenue was higher than expected, the main reason for the difference, while gross margins were in line. We raise our FY11-12 EPS estimates by 3-5% to factor in higher revenue while cutting our FY13 estimate by 8% on the back of more conservative estimates for Kemis's earnings recognition. We raise our DCF-based target price (WACC 13%) to Rp460 from Rp380 following our earnings adjustments. Alam Sutera remains our top pick, with stock catalysts expected from further margin extension and the launch of its new township.

Property Sector Upper class landed housing solid sales growth - DBS Vickers

Upper class landed housing sales in 5M11 has grown by c.15% y-o-y. 1Q11 sales in Jabodetabek has experienced stronger growth than the industry as sales rose three-fold to 514 units from 141 units in 1Q10. Upper class landed houses are houses priced between Rp800m to Rp2bn per unit. According to Teguh Satria, Asia Pacific FIABCI President, solid economic growth and stronger purchasing power have supported this growth. With the strong economic growth, there is a demand for alternative investment options. Property is popular investment option as property is a relatively safe and stable investment with reasonable return.

Looking at the industry cycle, it is expected that property’s performance for the rest of the year will be slower than 5M11. Generally, housing sales normally decline in mid-year as preparations are underway for the new school year. As Eid ul-Fitr (which will fall in late August this year) approaches, sales will also slow down as people will spend more on for the festive season. Across the board, major property developers are trying to ride on the industry upcycle. The major players have strong launch pipelines with numerous new projects being marketed. The market has responded well with good take up rates.

Economy Today’s inflation report in Indonesia will suggest that further rate hikes from Bank Indonesia are likely - DBS Vickers

Today’s inflation report in Indonesia will suggest that further rate hikes from Bank Indonesia are likely. The annual headline inflation rate is expected to have fallen to 5.94% in May from 6.16% in April, but core inflation should have risen to 4.7% last month from 4.62% the month before. The trend in core inflation still suggests that further rate hikes from Bank Indonesia are still in order later this year. Essentially, even if the annual headline inflation rate is stabilizing, the risk of a broadening of price pressures amid strong growth remains. Against this outlook, government bonds remain expensive, but inflation trends matter little to the bond market at the moment.

They simply don’t have the capacity to cheapen bonds, as in theory they should. The outlook for yields depends more on the direction of capital flows than determinants of fair value, like inflation and fiscal deficits. Because portfolio flows are large relative to the size of the market, the entire net supply of government bonds continues to be taken up by foreign entities and there is a shortage of government bonds overall. That’s why even higher oil prices in 1H11 and their negative impact on inflation measures and the government’s fiscal position had no impact on yields.

This has been the case for a while now and could go on, but the fact remains that yields are low and the curve flat because of foreign demand not fundamental factors. Therefore, we remain wary of short periods of capital outflows or higher USD yields triggering a bearish resteepening of the Indonesian local currency government bond yield curve.

Semen Gresik (SMGR IJ) upgrades, adding capacity and capturing ex Java growth - CLSA

Our cement analyst Di Shui upgrades Semen Gresik (SMGR IJ) to Outperform (from UPF). The new TP is Rp10,400 (from Rp9,500). Our TP is derived from an average 2011-12 EPS applied to 15x PE multiple.

The expansion to add 5mn tons of new capacity in 1Q12 is on schedule.

Moreover, SMGR offers the greatest leverage to commodity wealth driven consumption. SMGR dominates ex-Java franchise. SMGR commands 44% market share in Sumatra, 61% in Sulawesi, 55% in Kalimantan, and 71% in Eastern Indonesia.

Java is about 54% of domestic demand in FY10. However, as shown by the chart below, consumption growth in commodity wealthy provinces is outpacing Java and could exceed 50% of demand by 2012.

Other key points from the report:
New capacity in 1Q12. Five million tons new capacity = 9.4% of Indo’s total installed capacity at YE10 = 2x installed capacity of the #4,5,6 largest cement producers in Indonesia = SMGR to add in a quarter 1.7x as much new capacity as it has added over the past decade.
This would bring total installed capacity to 25.2m tons.
Semen Padang expansion the next phase. To contribute 2.5mn tons more by 2014.
Immense cash generating capacity. Operating CF has grown at CAGR pf 20% since 2005 and looks to exceed US$500mn in FY11.
Raising our domestic sales volume growth forecast to 4% in 2011 following plant upgrades and 12% in 2012 based on speedy construction progress.
Capex seems to be peaking = rising FCF? We think capex is going to start to come down from 2013 onward. We have factored in US$300mn for Padang expansion. Potential new capex is SMGR’s coal ambition, (with US$400mn budgeted capex).
Upgrade on earnings. Di Shui upgrades the earnings forecast by 5.7% and 4.8% respectively for 2011 and 2012. Even after the earning upgrades, we are still 2% and 8% below consensus for 2011 and 2012. We are more conservative with regard to pricing power.
Upgrading the recommendation from UPF to OPF. The new TP is Rp10,400 (from Rp9,500).

Rabu, 01 Juni 2011

Key takeaways from the 17th Annual Coaltrans Confrence in Bali - Mandiri

It is a great coal event attended by around 2,000 participants (30-40% are coal producers, 20-30% are coal traders or shippers, and 40-50% are bankers/analysts others). Some key highlights from day 1-2 include the Indonesian mining regulation, Indonesian coal outlook and Asia Pacific demand outlook.

Mining regulation (Zulkifli Hasan, Forestry Minister and Luke Devine, Legal consultant-Hadiputranto, Hadinoto & Partners):
Moratorium only applied to forestry and pit-land, which not include the existing coal mining operations. It might query upgrade status for exploration borrow-use permit to exploitation borrow-use. The moratorium mostly affects new players.
Currently around 3,000 out of 8,000 IUPs that have been given out will be verified and audited with regard of overlapping issues
It will take only around 3-6 months for borrow use permit approval (including the principle approval) as long as there are no overlapping issues, all requirement are met and have the necessary recommendation from local government. It’s been improving significantly since previously it could take years.
The 10% area limitation of forest concession (Perhutani) is extended so that it applies even where no forestry concessions overlap. It excludes the infrastructure and protected areas and exempts for exploration approvals.
Government regulation No62/2008 regarding the tax policy encourage for value added project like coal liquefaction and coal gasification through favorable tax scheme.
With regard to minimum coal price related to HBA, Luke reiterated that coal miners can not sell lower than HBA despite pay royalty based on the HBA. This minimum price benchmark is not permitted for blended coal. He also highlighted and expects to see most Indonesia coal export being effected through FOB barge to affiliated trading contractors since it could lower the effective royalty rate due to no transport or logistic cost deduction allowed since 2009.

Indonesian coal outlook:
There is an improvement on the feasibility of coal upgrading technology prospect. Like the one that is introduced by Total Sinergy International (TSI), named Geo Coal. TSI has signed agreement with subsidiary of PLN in Joint Research and Development for Geo Coal which will be commissioned by August 2011 for capacity of 1.5Mt per year. Capex is estimated to US$10mn for 1Mt coal with recovery rate of 55% and upgrading time of 30minutes.
Around 33-34% of total additional export growth in 2020 will be contributed from brown field (47Mt) and green field (79Mt) based on Wood Mackenzie.
Indonesia will remain attractive for global coal investor considering its efficient operations, low cost government take and strategic location vs Australia.
From the panel discussion, there were attractive voting highlights as follow:
70% remain bullish in coal as the main source of energy
49% voted that LNG and natural gas will substitute coal, 30% voted for renewable energy and 15% voted for nuclear
37% voted that Newcastle coal price will rise by $10-20/ton, while 35% steady at current price
55% voted that China and India is the main driver for coal prices in 2H11 and 21% voted for weather issues.
60% voted that Indonesia new investment will reach US$5-25bn within 2-3 years.
65% voted that low rank coal with 3,000 kcal GAR will have attractive market in the next 3-4 years
32% voted that DMO is fair due to solidarity to fulfill local energy but 36% unfair.
40% voted that new Mining Law give improvement, but 35% impeded.
35% voted that HBA is not relevant with regard to term contract, 33% voted unrealistic high.

Asia Pacific outlook:
J-Power lower its estimated thermal coal demand in 2011 from 120Mt to 110Mt. Currently 19GW (8% of total power plant capacity is shut down, which coal fired power plant accounts 6GW). Severely damaged region accounts for 19Mt coal per year or 15.8% from total national demand. Rapid energy growth mostly comes from oil and natural gas, since coal fired power plants have been utilized optimally. Coal import is expected to grow moderately by 5-6Mt post recovery
There is potential development for clearing price for Southeast China index to be more transparent and for hedging purposes.
Based on Neil Dhar from Noble, China’s thermal coal imports will grow from 95Mt in 2010 up to 118Mt in 2015, +6-7%CAGR and India’s thermal coal import will grow from 58Mt in 2010 up to 106Mt in 2015, +12-13% CAGR.
Vietnam will be the next key driver for Asia Pacific with estimated thermal coal import up to 51.5Mt by 2025, account 40% of total domestic demand of 107Mt.
Taipower (Taiwan) expects that its total installed capacity will increase from 42.3GW in 2010 up to 53.7GW in 2021(+2.5%CAGR). Coal demand will increase from 25.7Mt in 2010 up to 42.3Mt in 2020 (+5.2%CAGR), where Indonesia will account for 58% for its total import by 2020.
There will be key changing players for seaborne coal suppliers from West coast US, Mongolia, Russia and Mozambique which in total those would account more than 10-20% of total global seaborne trade by 2020 based on Wood Mackenzie.
For US west coast coal, there is potential huge coal supplies come from Powder River Basin (PRB) that will be the “swing supplier” in coming years considering PRB cycle time of only 6-10 days. US west coast freight day is considered remain competitive at around 13-25 days to Asia Pacific market vs Indonesia 5-10 days and Australia 13-18 days.

Overall we remain positive in Indonesian coal industry. Therefore we reiterate our overweight rating in Indonesian coal sector. We remain have buy rating in BUMI, ITMG, ADRO, HRUM and INDY.

Weekly Economic Research (31-May-2011) - Economy: Rupiah weakened on risk aversion triggered by fiscal crisis in Europe - Mandiri

Market review
§ The rupiah weakened to Rp8,565/US$ and JCI fell to 3,832 on concern over worsening Euro-zone debt crisis and China’s projected slowing growth which led to risk aversion toward emerging markets asset.

Global economic update
§ US & UK second GDP estimates confirmed initial 1.8% annualized and 0.5% qoq growth in 1Q11. Yet, the detail highlighted weakening trend in private consumption.
§ Japan consumer price turn higher in April, the first inflation since Nov10. Fitch lowered its sovereign ratings outlook to negative.
§ Singapore’s inflation eased to 4.5% yoy, while Vietnam’s surged to 19.8% yoy in May11.

Domestic economic updat
e
§ Automotive sales drop in April, due to spare-part shortage from Japan. Yet, in cumulative the sales grew by 19.6% yoy and 16.7% yoy for car and motorcycle, respectively.
§ Subsidized fuel consumption has reached 39.6% of quota as of May 22nd. Government eyes to limit subsidized fuel in September.

ASEAN Plantations 2H11/2012 outlook; top picks - IndoAgri & Sime - JP Morgan

• The downside risk we highlighted in Jan. has largely played out: CPO prices have fallen by up to 16% from a high of M$3,927/t in Jan-11 with the anticipated production pick-up this year (mainly in 2H11). While CPO prices could still ease further in 2H11, stocks have generally underperformed YTD, pricing in the risk, and we see any significant weakness in share prices from here as a buying opportunity. We maintain our CPO forecast at M$3,400/t for 2011 and M$3,200/t for 2012 (spot:
M$3,500/t, YTD: M$3,540/t).

• Weather risks and positive soy-oil outlook to also provide support: Risks to production of soybean (and corn) in the US and rape-oil in the EU due to adverse weather, as well as our positive in-house outlook on soy-oil prices well into 2012, will provide support to CPO prices. Based on our inhouse soy-oil forecast and factoring in a widening in CPO's price discount to US$160-260/t (within its peak and historical mean discount to soy-oil) with the production pick-up, we see CPO prices well supported at M$3,200-3,300/t and with an upside of up to M$3,500-3,600/t in 2H11/2012.

• Capital management/M&A an emerging theme in the next 12-24 months? Strong finances and the recent two-year land moratorium in Indonesia could see companies investing in new markets (i.e. Africa), in other businesses (for the more diversified plays), or paying out higher dividends. Financially, Indonesia- and Malaysia-listed companies – namely AALI, LSIP, and KLK – are in a stronger position to acquire or raise dividends (see pages 4-5 for details).

• Top picks – IndoAgri and Sime; we have upgraded IndoAgri to OW following its 40% underperformance YTD as we see prospects for a nearterm share price rebound post the listing of SIMP on 9 Jun-11 (see separate note on Indofood Agri Resources Ltd: ‘What's next after SIMP listing?’ published today). Sime is our top large-cap plantations pick (see our note on Sime Darby: 'Good momentum in all divisions’ published on 19th May as attached). We are also OW on First Resources, Mewah and London Sumatra. Our key UW in the sector is Genting Plantations.

ASRI 1Q11 result: comfort on earnings delivery - JP Morgan

• 1Q11 earnings slightly above ours and consensus. ASRI reported net earnings of Rp158bn, 31% of consensus and 29% of our FY11 earnings estimate. ASRI’s earnings is up by 250% y/y and 269% q/q. Our FY11E earnings estimate is currently 7% above consensus. We expect the stock to outperform post the earnings announcement as consensus would adjust upward its earnings estimate, towards our forecasts.
• High earnings run rate, giving comfort on earnings delivery. ASRI’s current earnings run-rate, at Rp158bn in 1Q11, is the highest since its IPO. We think that the 1Q11E result should give comfort on the company's ability to deliver earnings. The company's net margin in 1Q11E of 39.1% is broadly in-line with our forecast. We think that the company's is on track to meet our higher-than-street earnings number.
• Maintain OW with June-12 PT of Rp485: Our PT is based on 20% discount to NAV of Rp600. The stock is currently trading at FY11E P/E of 10.2x and FY12E P/E of 7.9x. We maintain our view that consistent recording of earnings coupled with successful launch of Pasar Kemis will lead to re-rating on ASRI (see our initiation note published on May 30th; Alam Sutera; Constructing Growth).
• Key risks. Key risks to our rating, earnings estimates, and price target are: (1) weak response of Pasar Kemis development, which is targeted to be launched in 4Q11, (2) higher-than-expected operating expenses from marketing sales and wider diversification, (3) diversification risks, (3) weak consumer confidence, if fuel subsidy is removed in 2H11.

LSIP Cheap Valuations, Healthy Fundamentals - but better exposure higher up the structure? - JP Morgan

• Refreshing forecasts – Adjusting PT to Rp 2,950: We refresh forecasts on LSIP – updating numbers for recent quarterlies and cost trends. The impact is minor with just a 0.5% change to FY11E EPS. We use the opportunity to roll our DCF Derived PT forward to June 2012 adjusting it from Rp 2,920 (split adjusted) to Rp 2,950.
• Stock is inexpensive & our forecasts ahead of consensus – maintain OW: At 11x FY11E PE, we see LSIP as inexpensive and an attractive way to gain plantation exposure for country funds. Our EPS forecasts are 8-10% higher than consensus, with the difference rooted in revenues, we think that the street is most likely more conservative ASP’s, either on CPO or underestimating rubber prices - which are YTD averaging about 50% higher than FY10 average levels. Maintain OW
• IFAR perhaps the better exposure to the same assets: YTD, LSIP has been broadly flat, (down about 5%). Parent IFAR however (which controls 53.6% of LSIP Pre SIMP IPO) has declined in the same period by 43%, with declines exacerbated in the last fortnight after SIMP priced its IPO. At this point we see IFAR as a potentially cheaper point of exposure to LSIP’s assets (See IFAR “What’s Next after SIMP listing” 31 May 2011).
• Group Agri structure is a long term risk: Longer term however, we have some concern that on the completion of the SIMP listing, investors would be faced with 4 listed entities offering exposure at different levels to LSIP’s assets (INDF » IFAR » SIMP » LSIP). If choice results in lesser demand for LSIP, the stock could remain at inexpensive valuations in the absence of other catalysts. This is a risk to our PT on the stock. Ultimately we think there will be a case for consolidation, but
it may be a few years away as the Salim group is still listing additional entities at this time.

Toyota targets 90% output in June as part supplies ease - BBC

Toyota Motors has said its production in Japan is likely to return back to normal levels faster-than-expected.

The company's spokesperson Paul Nolasco told the BBC that output at its domestic factories is expected to recover to 90% of pre-quake levels as early as this month.

Last week, Toyota had reported a 74.5% plunge in production at its Japanese factories in April.

Toyota is the world's biggest car manufacturer.

Production at Japan's car manufacturers has been hit hard due to disruptions in the country's supply chain in wake of the 11 March earthquake and tsunami.

However, the company said the situation had been gradually improving.

"We have had a constant recovery in our supply chain and that is starting to have a positive effect on our production," Mr Nolasco said.
'Extremely committed'
Continue reading the main story
“Start Quote

Ninety percent is not the end game, there is still room for improvement”

End Quote Paul Nolasco Toyota Motors

Toyota said the speed at which the company's production is recovering was a result of the combined effort of the firm and its suppliers.

"The key behind all of this has been the extremely committed effort by our suppliers to get back on track," Mr Nolasco said.

"After the quake we were facing a shortage of almost 500 parts, the numbers have since decreased to 30 parts or may be even less right now," he added.

Toyota said that it had also sent workers from its own factories to help its part suppliers get back to normal production.

The company said that while the recovery had been fast, there was still work to be done.

"Ninety percent is not the end game, there is still room for improvement," Mr Nolasco said.

"We still have to reach full capacity and also have to take care of our overseas production," he added.

NYMEX-Crude ends up on shut Canada-US pipeline, weak dollar - Reuters

* EU works on second bailout package for Greece
* Canada-U.S. crude pipeline shut by leak, lifts crude
* Coming up: API oil stocks data, 4:30 p.m. EDT Wednesday

NEW YORK, May 31 (Reuters) - U.S. crude futures rose on Tuesday, lifted by the closure of a pipeline carrying Canadian oil to the United States and a decline in the dollar on new hopes for a debt bailout for Greece.

Brent and U.S. crude prices reached three-week highs intraday, but still posted monthly losses for May that were the biggest in a year in percentage terms.

TransCanada Corp (TRP.TO) on Sunday shut its 591,000-barrels-per-day Keystone crude export pipeline, for the second time in less than a month, due to a small leak in Kansas. [ID:nN31283793]

The company had no estimate for when the pipeline, which runs from Alberta to the Cushing, Oklahoma delivery point for the U.S. oil futures contract, would be restarted.

The euro EUR= rose to a three-week high against the dollar as the European Union stepped up efforts to draft a second bailout package for Greece. [ID:nL3E7GV07I]

Brent crude LCOc1 rose $2.05, or 1.78 percent, to settle at $116.73 a barrel. It ended May down $9.16, or 7.3 percent for the month, the biggest monthly percentage loss since May 2010, when prices fell 14.6 percent.

The expiring NYMEX June RBOB gasoline RBM1 contract rose 5.84 cents, or 1.89 percent to settle at $3.1504 a gallon. RBOB gasoline posted a monthly loss for May of 31.43 cents, or 9 percent, the biggest monthly percentage decline since losing
10.3 percent in August.

The NYMEX June heating oil contract rose 6.58 cents, or 2.2 percent, to settle and go off the board at $3.0563 a gallon. NYMEX heating oil lost 19.95 cents, or 6.1 percent, for the month, the biggest monthly percentage loss since dropping 13.4
percent in May 2010, according to Reuters data.

FUNDAMENTALS

* On the New York Mercantile Exchange, July crude CLN1 rose $2.11, or 2.1 percent, to $102.70 a barrel. It traded from $99.60 to $103.39, the highest price since reaching $104.60 intraday on May 11.

* NYMEX crude prices ended May down $11.23, or 9.9 percent, for the month, the largest monthly percentage loss since tumbling 14.1 percent in May 2010.

* Storm-related power outages shut down a number of Enbridge Inc's (ENB.TO) oil pipelines in the U.S. upper Midwest, although throughput was being restored, the company said. [ID:nN31299604]

* Europe stepped up efforts to draft a second bailout package for Greece, with private-sector participation still seen as an option to help relieve the country of its massive debt burden. [ID:nL3E7GV07I]

* U.S. crude oil inventories were expected to have fallen last week as imports declined, a preliminary Reuters poll of analysts showed. [ID:nN3167536]

* Japan's oil product sales in April dropped 11.9 percent from a year earlier, as demand slumped and refinery operations were disrupted after the March 11 quake and tsunami. [ID:nL3E7GV0K4]

* Libyan leader Muammar Gaddafi is not prepared to leave Libya but will press efforts to find a political solution to the country's conflict, South African President Jacob Zuma said, in a statement issued after meeting Gaddafi on Monday.
[ID:nLDE74U17A]

MARKETS NEWS

* Wall Street bulls took the upper hand with a 1 percent rally as hopes for a new plan to deal with Greece's debt crisis relieved some investor worry, but grim economic data suggested more hurdles ahead as the S&P 500 closed out its worst month
since August. [.N]

* Copper rose to a four-week high, swept up in a wider commodity rally as the dollar fell against the euro and investors increased exposure in the asset class as a hedge against rising inflation. [MET/L]

* Gold dipped slightly in quiet trade after touching its highest in nearly four weeks, as a report that Germany could smooth the way for Greece to get a bailout prompted investment in riskier assets. [GOL/]

UPCOMING DATA/EVENTS

* U.S. Energy Information Administration natural gas storage data to be released at 10:30 a.m. EDT (1430 GMT) on Thursday.

* EIA oil inventory data to be released at 11 a.m. EDT (1500 GMT) on Thursday.

CPO futures' downslide continues - Bernama

CPO FUTURES

CRUDE palm oil futures prices on Bursa Malaysia Derivatives extended their downtrend for the second day yesterday, amid the release of better exports data, dealers said.

June 2011 lost RM44 to RM3,475 a tonne, July 2011 declined RM31 to RM3,434, while both August 2011 and September 2011 shed RM15 to RM3,393 and RM3,365 respectively.

Turnover rose to 24,703 lots from 16,739 lots on Monday while open interest slipped to 104,852 contracts from 105,790 previously.

On the physical market, June South lost RM20 to RM3,500 from RM3,520 on Monday.

OIL

LONDON: Oil rose over US$1 (US$1.00 = RM3.03) yesterday with Brent crude above US$116 a barrel as the dollar weakened on improved prospects for a bailout for heavily indebted Greece, but oil remained on track for an overall fall in May.

The euro rose to a three-week high against the dollar as the EU raced to draft a second bailout package to release loans next month for Greece, and the Wall Street Journal reported that Germany could make concessions on efforts to put together a bailout.

Brent crude futures were up US$1.34 a barrel to US$116.02 at 0808 GMT, and US crude was up US$1.31 a barrel to US$101.90. London and New York were closed for public holidays on Monday.

“The weaker dollar is the main reason why oil prices are up this morning, on hopes that an aid package for Greece will be struck,” said Carsten Fritsch, an analyst said.

The dollar was down 0.55 per cent against a basket of currencies at 0749 GMT. A weaker dollar makes oil cheaper for those holding other currencies.

Despite the rally as traders returned to their desks, both oil contracts are still down for the month of May.

Brent fell about 9 per cent and US crude shed about 12 per cent after a broad commodities sell-off at the start of the month.

RUBBER

THE Malaysian rubber market ended mixed yesterday despite regional rubber futures markets staging an uptrend, dealers said.

Major European tyre makers piled up their supply while demand from China remained weak, he said.

At noon, the Malaysian Rubber Board's official physical price for tyre-grade SMR 20 was 4 sen higher at 1,394.0 sen a kg compared with 1,390.0 sen a kg recorded on Monday, while latex-in-bulk declined 2 sen to 953.0 sen .

The unofficial closing price for tyre-grade SMR 20 gained 5 sen to 1,398.0 sen while latex-in-bulk fell 1.5 sen each to 953 sen from Monday's closing.

TIN

A TECHNICAL correction saw the Kuala Lumpur Tin Market (KLTM) end US$180 higher at US$27,380 per tonne yesterday, dealers said.

Meanwhile, the London Metal Exchange (LME) remained closed for Spring Bank Holiday and US markets are closed yesterday for Memorial Day.

On the KLTM, turnover increased to 51 tonnes, from 45 tonnes on Monday, with Japanese, European and local traders accounting for the yesterday's business.

At the opening bell, buyers bid for 70 tonnes while sellers offered 35 tonnes.

The price differential between the KLTM and LME widened to a premium of US$315 per tonne, from US$135per tonne, previously.

Commodities to rise this fall: Scotiabank - CBC News

Scotiabank predicted that commodity prices will continue to trade close to current levels for the summer before heading higher after September. The bank's Commodity Price Index soared by 6.1 per cent between March and April to a level just 13.4 per cent below its record high in July 2008. But that level likely corrected sharply in May, the bank said.

The index reached 233.6 in April. With a base of 100 in 1997, that means commodity prices are 2.3 times higher than 14 years ago.

Scotiabank economist Patricia Mohr predicted that traders will remain reluctant to watch copper — the bellwether for base metals — fall below the $4 US per pound mark, given the likelihood of a shortfall in supply likely recurring by late 2011. It currently trades at about $4.15.
Mohr said there have been market jitters for some time about the impact of high food and energy prices on consumer spending. In addition, there's been a mild slowdown in China's growth.
Oil to average $100 US

Mohr said China has been affected by an earthquake-related shortage of auto parts from Japan and the impact of drought on hydroelectric power generation.
Oil prices, she predicted, should average $100 US in 2011and remain high at $103 in 2012 because worldwide supply and demand remains firm.

Mohr suggested that agricultural commodities may be one of the best performing sectors over the rest of this year amid dry conditions in the U.S. Southern Plains, which threaten the winter wheat crop, and flooding in Manitoba and wet weather in eastern Saskatchewan which have also delayed planting. She expected that will lead to strong demand for fertilizers and agricultural equipment.
With feed grain prices expected to remain high, she predicted only limited herd rebuilding in the United States and Canada in the coming year and continued strong cattle and hog prices.

Stocks and euro gain on optimism over Greek aid - GulfNews

New York: Stocks rose worldwide, paring the biggest monthly decline since August, and the euro gained amid speculation nations will pledge more aid to Greece. Commodities advanced, and Treasuries erased losses after US economic reports missed forecasts.

The MSCI All-Country World Index increased 1 per cent in New York, paring last month's loss to 2.8 per cent. The euro climbed to a three-week high of $1.4424 (Dh5.2971), and the yen fell against its 16 major peers.

Among ten-year bonds, German bunds added five basis points to 3.02 per cent, Greek yields slid 23 basis points to 15.93 per cent and Treasuries dropped to 3.06 per cent from 3.10 per cent. Oil rose, and wheat dropped.

More assistance

European Union leaders will decide on a new aid package for Greece by the end of this month, Luxembourg's Jean-Claude Juncker, who leads the group of Eurozone finance ministers, said yesterday in Paris.

More than $1.8 trillion was erased from the value of stocks worldwide last month through yesterday as evidence mounted that the US economic recovery is slowing and EU officials struggled to contain the region's debt crisis.

"Markets are focused on the debt crisis," said Tom Mangan, who helps oversee $2.7 billion at James Investment Research Inc in Xenia, Ohio.

"We have had a pattern where the impact on the dollar is positive, US bonds do better and stocks fade every time the Greek crisis rears its ugly head, and the other way around. This will continue until we get it resolved."

The dollar beat stocks, bonds and commodities for the best performance in May.

Bakrie Telecom Rugi Rp41 Miliar pada Q1-2011 - Inilah.com

PT Bakrie Relecom Tbk (BTEL) mencatatkan kerugian bersih konsolidasi sebesar Rp41,13 miliar pada kuartal 1-2011 dibanding perolehan laba bersih Rp29,04 miliar pada periode serupa 2010.

Dalam penjelasannya ke BEI disebutkan kerugian kuartal 1-2011 ini disebabkan tingginya beban keuangan yang mencapai Rp200,58 miliar atau naik dibanding periode serupa 2010 yang hanya Rp88,08 miliar. Sementara laba usaha kuartal 1-2011 turun sebesar 87,36% menjadi hanya Rp12,96 miliar dari Rp102,55 pada kuartal 1-2010.

Tapi pendapatan usaha kuartal 1-2011 naik menjadi Rp717,94 miliar dibanding kuartal 1-2010 sebesar Rp708,46 miliar. Kwajiban perseroan kuartal 1-2011 naik menjadi Rp7,55 triliun dari Rp7,16 triliun pada periode serupa 2010. Sementara ekuitasnya naik dari Rp12,35 triliun menjadi Rp12,69 triliun.

Adaro Indonesia seals US$750 mio loan - Insider Stories

PT Adaro Indonesia, Indonesia’s second largest thermal coal producer and also a unit of PT Adaro Energy Tbk, secured US$750 million bank loan facility to fund its capital expenditure and acquisition cost.

Citing Director Andre Mamuaya, Investor Daily today reported that he did not give further details about the lender before the two parties sign an agreement.
Adaro Indonesia got an US$1 billion loan commitment, surpassed its targeted loan facility at US$750 million. Meanwhile, Finance Director David Tendian said the US$1 billion loan commitment is the highest commitment in 10 years.

The other subsidiary of Adaro Energy, PT Saptaindra Sejati, also received US$400 million on February 2011 with loan tenor seven years. Adaro Energy paid its US$800 million ten-years bonds which published on Oktober 2009.

Target Produksi Minyak dan Gas Energi Mega 17.500 MMBTU - TopSaham

T Energi Mega Persada Tbk (ENRG) menargetkan produksi minyak dan gas pada tahun 2011 adalah sebesar 17.500 MMBTU. Demikian disampaikan Direktur Utama Imam Agustino kala ditemui dalam acara Rapat Umum Pemegang Saham Tahunan (RUPST) di Balai Kartini, Jakarta, Selasa (31/5).

Menuurut Imam, ENRG sebelumnya pada 2010 produksinya mencapai 13.100 MMBTU. Kuartal I-2011, produksi minyak dan gasnya sudah mencapai 15 ribu MMBTU. Selain itu,perseroan menuturkan harga gas mengalami kenaikan pada tahun ini dimana dari USD2,7 menjadi USD3,5 per MMBTU pada kuartal I-2011.

Iman juga menyampaikan bahwa ENRG juga memiliki garapan CBM (CBM adalah gas alam dengan dominan gas metana dan disertai oleh sedikit hidrokarbon lainnya dan gas non-hidrokarbon). Menurut dia, ada dua lokasi CBM milik ENRG.

Chandra Asri 1Q revenue rises 10.48% - Insider Stories

Indonesia’s largest petrochemical producer, PT Chandra Asri Petrochemical Tbk, posted a 10.48% increase in revenue during the first quarter of 2011, which derives from domestic sales.

Chandra Asri booked US$547.28 million revenue in 1Q 2011 from US$495.35 million. The sales of polyolefin products such as polyethylene and polypropylene contributes most of the revenue, which reached 53% of the total sales, Chandra Asri’s Corporate Secretary Suryandi
“This first quarter report is the first financial report made after merger with PT Tri Polyta Indonesia Tbk early this year,” he said in an official statement yesterday.

The company’s total assets reached US$1.5 billion in 1Q 2011 with total EBITDA of US$51.9 million and US$23.6 million net profit, a 9.15% increase from US$21.65 million in 1Q 2010. Meanwhile, capacity utilization rate of those two petrochemical products reached more than 95%.
“The company’s revenue performance in first quarter shows consistency in business growth after merger. Such consistency will be continuously maintained,” he said.

Selasa, 31 Mei 2011

Alam Sutera : Constructing growth (Seedlings Initiation) - JP Morgan

Initiating with an OW rating and Jun-12 PT of Rp485 (62% upside potential): Despite establishing a strong track record, ASRI trades at a discount to its peer groups - in our view, due to the perception that it is dependent on a single development. Its new Pasar Kemis development, which we expect to be launched in 4Q11, should help dispel this notion and underpin a rerating of the stock to valuations more in line with its sector-high range of 22% RoE and 26% EPS CAGR. We initiate coverage on ASRI with an Overweight rating and Jun-12 price target of Rp485, based on a 19% discount to our NAV estimate of Rp600. Our price target implies an FY11E P/E of 16.0x and FY12E P/E of 12.2x.

Attractive valuation: The stock is trading at FY11E/12E P/Es of 9.9x/7.7x, compared to peers' FY12E P/E multiples of 10.2x-37.0x, despite a better ROE and healthy growth profile. We believe that consistent recording of earnings coupled with the successful launch of Pasar Kemis in 4Q11 will lead to a re-rating of the shares.

Strong earnings growth and potential upside to estimates: On the back of a projected 28% CAGR in marketing sales for FY11-13, we estimate that ASRI will be able to generate a 26% earnings CAGR in FY11-13. Our FY11-12 earnings estimates are currently around 10% above consensus estimates, as we believe that the company's marketing sales will continue to exceed expectations, driven by pricing power and lack of land availability.

Key risks: Key risks to our rating, earnings estimates and price target are: (1) a weak response of Pasar Kemis in 4Q11; (2) higher-than-expected operating expenses from marketing sales and wider diversification; (3) diversification risks; and (4) weak consumer confidence, driven by a potential fuel subsidy rise in 4Q11.

Aneka Tambang: Hold; Rp2,150; TP Rp2,500; ANTM IJ Power plant JV with PLN is in discussion - DBS Vickers

It was reported that Aneka Tambang (Antam) is in discussion with PLN for a power plant project in Mamberamo , Papua as Antam may potentially build a smelter there. However, the timing and the size of the project remain unclear as the discussion is still ongoing. Antam mentioned that they currently do not have a mine in Papua. Prospect of this project is still unclear and even if it comes through, the impact is unlikely to be material in the foreseeable future. The main focus for the company is on the smelter project in Maluku where the total investment is up to US$1.6 billion including a power plant. This project is expected to be completed by end 2014.

Adaro Energy: Hold; Rp2,375; TP Rp2,450; ADRO IJ Adaro receives US$750m loan commitment - DBS Vickers

Adaro Indonesia , a parent company of Adaro Energy (ADRO), received 10-year bank loan of US$750m. We believe the proceeds will be used for capex to develop new coal deposit from acquisition and other investment plan. Meanwhile, ADRO’s mining contractor unit, Sapta Indra Sejati has recently raised a US$400m 7-year bank loan in February 2011 to fund heavy equipment purchase.

We maintain our Hold call for ADRO, TP of Rp2,450. We like ADRO for its long-term growth prospects, however, we believe that ADRO’s earnings is less sensitive to rising spot coal prices as it produces coal with lower CV.

Regional Coal - Coaltrans Conference: Day 1 - Macquarie

Event
· We attended day 1 of the 17th Annual Coaltrans Conference in Bali, which seems to be a well attended conference with more than 1,800 participants. Some of the key highlights include Indonesia's energy policy, impact of the recent forestry moratorium, increasing importance of China trade as a determinant of global seaborne prices, and the prospect of foreign investment in Indonesia (especially low rank coal projects). Details are below.

Impact
· Potential for coal upgrading. With regard to Indonesia's energy policy, the government highlights the potential for coal upgrading (similar to what the government was proposing several months ago for upgrading coal before exporting). In our view, this will not be applied in the short-term given the lack of economically feasible and available technology for coal upgrading technology in Indonesia.
· Implication of forest moratorium. The Forestry Minister, Zulkifli Hasan, highlighted that the forest moratorium only applied for the primary forest and pit-land of which majority of current coal mining operations is not included (but could include expansion of mines).
· With regard to borrow use permit application, the Minister was highlighting that it will take around 3-6 months for borrow use permits to be approved as long as there are no overlapping issues (e.g. Logging permit, CPO area) as well as the company has the necessary recommendation from the local governor/Bupati, provincial governor, and environmental checks (each of the process could take approximately 6 months). Further, he reiterated that it is easier for foreign investors to partner with local businesses given their procedural knowhow.
· Increasing importance of China. A presentation from Alex Green (BHP) suggests that given the increasing importance of Chinese import arbitrage (the trigger for increasing Chinese imports in recent years) to determining global seaborne coal prices, a potential exchange or clearing price for the Southeast China index could be developed. Such an index could potentially be based on a combined CFR price for Indonesian, Australian, and Russian coal into Southeast China. Therefore, this would enable for a more transparent coal trade into China as well as enabling the producer to hedge.
· China and India to be the main incremental market for coal. A presentation from Neil Dhar of Noble highlighted that India and China will be the source of incremental demand for seaborne coal. Noble forecasts: (1) China's thermal coal imports to be around 90mt in 2011 (down from 95mt in 2010 due to lack of arbitrage in 1Q11) and growing to 118mt in 2015. (2) India's thermal coal imports to grow from 58mt in 2010 to 67mt in 2011 and 106mt in 2015 driven by the increasing country electrification ratio. (3) Indonesian's exports to grow by 20mt from 264mt in 2010 to 284mt in 2011 as the production growth is partially offset by the increasing domestic demand. (4) Australian exports to grow from 141mt in 2010 to about 146mt in 2011. Further, he also highlighted that Mongolia and Mozambique could be emerging players for both thermal and coking coal trades.
· Strengthening Rupiah squeezing in some of the smaller producers. The presentation from Noble also highlighted that the recent appreciation in Rp has a relatively negative effect on miners' profitability (mainly the smaller producers rather than the big producers given the big producers have mainly US$ exposure). This is because smaller miners typically only engage with domestic contractors (with more tendency to charge a Rp contracting rate).
· Prospect of foreign investment in Indonesian mining with Kalimantan and Sumatra as the main area. Presentation from Bob Kathmandu (Berau and Delmar Mining) suggests some issues and opportunities in Kalimantan and Sumatra:
· Issues in Kalimantan include: Inadequate infrastructure especially in Central Kalimantan, low rank coal is still unexploited (and declining availability of the medium-to-high CV), environmental and social community are issues (e.g. borrow use permit, overlapping issue, and wealth imbalance), lots of unoperating IUP/mining licenses (out of 3000 licenses, only 200 are in operation), lots of unregistered licenses...only 3000 IUP are registered but 8000 were given out.
· Issues in Sumatra include:Inadequate infrastructures (especially coal is inland, i.e. 300km away from the open sea with lack of river transport),
abundant low CV reserves, only 30 companies are operating out of 1000 permits, improper provincial roads (especially South Sumatra and Jambi).
· Opportunities in Sumatra and Kalimantan: Potential investment in coal mines coupled with infrastructure investments (i.e. railways, port, etc), Minemouth power plant, potential for coal blending facility, coal upgrading technology, copper & nickel smelting facility (1t nickel requires 5-7t of coal).

Outlook
· The first day in the conference mainly focuses on regulation, the importance of China, and the development of low rank coal projects in Indonesia. The mood in the conference seems to be relatively positive in the medium-term, which is in line with our view. We maintain our preference toward more defensive names in the short term with SAR, Shenhua, and PTBA as our picks while we continue to prefer ASEAN coal names in the medium term (going into 2012) with SAR, HRUM, INDY and PTBA as our key picks given their production growth, price exposure and attractive valuation (trading on 10x 2012E PER).

Stocks mentioned:
Straits Asia Resources (SAR SP, S$2.97, Outperform, TP: S$3.80)
China Shenhua Energy (1088 HK, HK$37.45, Outperform, TP: HK$40.50)
Bukit Asam (PTBA IJ, Rp21,450, Outperform, TP: Rp27,000)
Harum Energy (HRUM IJ, Rp9,300, Outperform, TP: Rp11,000)
Indika Energy (INDY IJ, Rp4,350, Outperform, TP: Rp5,200)

Foreign investors to continue switch to JCI. China electricity price hike will benefit coal plays - UOBKH

Wake up America, holiday is over. While US were on Memorial day break marking the start of summer, it's been a wild one in Europe. It was reported that The Troika (EU, IMF, ECB) and Greece are moving closer together, as they are likely to provide 65 billion EUR in loans, BUT in exchange, they want Greece to give up some form of sovereignty, i.e. for the country's function relating to tax collection and privatizations to be handled by an outsider. Not so sure if the 'already protesting' people of Athens will react positively to this. Nevertheless, Euro surged on opening today, on confidence that AT LEAST there won't be a total restructuring in Greece.

Meanwhile in China, amid the power shortage troubles, everyone was surprised by Chinese government’s price hike for retail power price by Rmb0.02/Kwh - applies to industrial, agricultural, and commercial users effective on June1st. So much for the price cap concern. This price increase should temporarily alleviate concerns on possibility of coal price cap in the future. Our analyst Helen believes coal price will rise further and inventory to continue to decline. (Open link below for her report) I believe the Chinese government will still continue to import coal, as a cheaper alternative. Indo coal to potentially benefit. We like ITMG (N/R) and ADRO (N/R)

Moreover, we might see more foreign investors switch from Thailand market to other emerging markets like Indo, as Thailand is prepping up for the July 3rd general election. The central bank is due to increase interest rate for the 4th time this year to 3% tomorrow afternoon. Our Thai HOR, Athaporn just came back from a marketing trip and feedback shows that foreign investors are likely to stay on the sidelines on Thailand this time of year on the back of expensive valuations (SET have climbed 4.2% ytd, higher than any SouthEast Asian markets) and worries on political instability. (Report below) Foreign investors in the JCI were slightly net buy on Monday trading, coming back after a week of sell-off.

China power tariff hike - Impact on coal companies - CLSA

NDRC has confirmed the on-grid tariff hikes in 15 provinces by average 7%. The extent of hike is higher than earlier speculations. However, coal prices have also moved up in the meanwhile and we are raising our 2011-13 spot price assumptions. Also there is no tariff hike in over half of the provinces. We are increasing earnings for CPI (by 3-8%) and Huadian. CRP earnings are cut by 3-9% and Datang and Huaneng by 17-26%. CRP and CPI remain our top picks. Given CRP’s strong performance our target price upside is limited and we cut from BUY to O-PF. We are not assuming any further hike in 2011 and that could be the key surprise. (http://www.clsa.com/member/reports/472616885.pdf )

Comments from our resource analyst Jayden Vantarakis

· Increases in China domestic power tarrifs are likely to support gains in domestic thermal coal prices, which have risen 10% in the last 2 months.

· This is positive for Indonesian coal players who are seeing steady regional demand growth ahead of the peak demand season in the second and third quarters.

· Indonesian coal producers with most leverage to export markets are BUMI, ITMG and smaller producers HRUM and KKGI.

Land bill update, Serpong - the boom town - CLSA

Our on the ground specialist Amie “aka the komodo girl” recently met one of the land bill special committee members (report attached). As expected, the land bill is not going to be passed in 1H11. Some potential revisions are still being negotiated. The most important is the removal of “private sector” in the bill.

It appears that the bill may be passed in October at the earliest. Amie is still of the view that the bill is still on track to be passed albeit at a slower pace. Patience, a healthy dose, is required.

Unfortunately, our dire traffic situation and infra bottlenecks is to get worse first before it gets better. But this also means seeing a rapidly growing suburban areas outside of CBD Jakarta. More and more people want to reside, work, and study in these townships, if they have the chance. Our property guru Sarina points out that some these suburban townships are now developing at such a fast pace that would have been unthinkable only a few years ago.

Over the weekend, Summarecon (SMRA IJ) successfully launched Scientia Residences, SMRA’s first apartment towers in the Serpong area. Out of the 563 units (two towers), almost all were sold (556 units sold, total of Rp160bn). The units are selling at Rp220-500m per unit (about Rp10m/sqm or USD1,150/sqm ) Contributing to the successful launching is the presence of some universities like University Media Nusantara is in Scientia Garden. UMN currently has 3,000 students, and expects 15-20,000 in next few years. And this year, the distinguished Surya Research & Education Center will open as well. Developer Alam Sutera (ASRI IJ) had also launched its apartment towers across BINUS university in their township.

Even in its mature Kelapa Gading area, SMRA found it difficult to launch apartments a few years back (although eventually units got sold). But now we have apartment projects in Serpong sold in a heartbeat. In addition to apartments, shophouses are also springing up in Summarecon Serpong area. The rental yield for a shophouse is about 7%, not as good as the double digit yield SMRA’s fetches at its Kelapa Gading township but not bad at all.

Is this a great step towards self-sustainable township? You have the residential clusters and shopping malls. Add good schools, universities and hospital. Throw in a job and boom, it becomes a self-sustainable township.

Bumi Serpong (BSDE IJ) for example, just recently got Unilever (UNVR IJ) and gold and copper miner Freeport to set up headquarters at their township (BBCA and TLKM operational hub is already there).

No need to fight congestion to get to Jakarta. That’s the idea these developers have been pushing.

We like developers with large landbank in Serpong area, strong brand and execution. Top picks are Bumi Serpong (BSDE IJ), Alam Sutera (ASRI IJ), and Summarecon (SMRA IJ).

Timah (TINS IJ; NEUTRAL; TP IDR2,900) Initiation of coverage - Good Value, But Lacks Excitement - OSK

Our 2011-12F benchmark price of USD27,500-USD27,000/tonne and long-term assumption of USD26,000/tonne suggests that tin price's downside would be limited given that a worldwide supply shortage still persists. The 2011 strong net profit growth of IDR1,643bn (73% y-o-y) should ride on the uptrend in LME tin price averaging USD30,223/tonne YTD, before an anticipated 4% fall in the 2012 bottom line due to a drop in our benchmark price assumption. Hence, we are NEUTRAL on the stock. It is worth noting that we see an inverse relationship between tin price and inventory for the last 1 month (exhibit 3), which suggests a near-term pick up for tin price.

Flat production growth. We set our 2011F production volume (-1% y-o-y) at 40k tonnes based on management's guidance. According to management, the flat production growth going forward is based the company's prudent use of its reserves mining life. It is worth noting that TINS' 2010 reserves amounted to 394k tonnes, up 13% y-o-y.

Production still on track.TINS' 1Q11 production progress is on target, accounting for 21% of our 2011 production volume of 40k tonnes (-1% y-o-y) amid typical weather disruptions. Furthermore, we see TINS' strategy of increasing offshore mining to 60% (previous year 54%) this year making progress given that in 1Q11 offshore production stood at 43%, an improvement from 29% in 1Q10. We take comfort on TINS' strategy to increase offshore proportion as this would reduce its variable costs. Note that TINS' production cost is sensitive to its land mining activities as the company has to purchase tin ore from small-scale miners (normally 70% to LME).

Share price performance highly correlated to LME tin price. TINS' share price has the highest correlation of 0.92 to LME tin price compared to its closest peers. Hence, the price of the commodity could be a proxy to Timah. Furthermore, we see an inverse relationship between tin price and inventory for the last 1 month (exhibit 3), which suggests a near-term pick-up in tin price.

Going downstream a wise move. Given that TINS holds a global market share of some 13%, which undeniably makes it the largest tin producer in Indonesia and the largest exporter in the world, a streamlined strategy to the tin chemical business is a wise move since it fetches better margins than its upstream business. However, since no further details are provided, we have not taken this into account in our model.

China Raises Power Prices as Shortages Loom; Coal Imports to resume

Published: Monday, 30 May 2011

China said on Monday it would raise electricity prices for some users by about 3 percent, the first increase since 2009 as it tackles its worst power shortage in seven years.
The power price rise affects industrial, commercial and agricultural users in 15 provinces, state media said after a briefing by the National Development and Reform Commission (NDRC), China's top economic planning agency.

But authorities in the world's second biggest economy may have already played one of their strongest cards to combat the shortages as the NDRC revealed power companies in 13 of the 15 provinces have been paid higher prices for their electricity since April 10.

China's electricity demand is running so far ahead of supply that it is expected to be short of 30-40 gigawatts of power capacity this summer, twice the deficit caused in Japan by the earthquake and tsunami on March 11.

China has created the shortage by foisting low prices on power companies, who have little incentive to produce electricity because of high coal costs, economists say.

It will avoid a big inflationary effect, economists said, because it excludes residential users but it may also have little impact on the power shortages as it means any filip for power supplies in those 13 provinces already happened almost two months ago.

The other two will follow on June 1, along with the end-user prices in all the provinces.

"If you take a look at the power shortages over the past month, you can see that the hike had no significant impact on the current power shortages," said Wang Wei, senior analyst at Guotai Junan Securities. "Actually, it didn't have the impact it should have because after the on-grid power price hike in April, coal prices rose again, eroding the power price hike.

"Coal imports could rise after the power rise hike as coal producers and trading companies are likely to raise coal prices, triggering more coal imports. Every 0.01 yuan rise in power price could offset an increase of 50 yuan in coal prices," he said.

At an average of 0.02 yuan per kilowatt hour, that would add 100 yuan ($15.43) to a tonne of coal, which was trading around 850 yuan per tonne on May 20.

Chinese coal imports rose in April after a slow start to the year, and analysts at Commonwealth Bank of Australia said on Monday that rising prices suggested further Chinese buying.

Jianguang Shen, chief economist at Mizuho in Hong Kong, said the government would try to support power producers by ordering big state-owned coal miners not to increase their prices, but it would be difficult to stop prices rising.

While higher coal costs may swamp the effect of the price rise on the supply side of the market, power consumers may not flinch at their own increase, which averages 0.0167 yuan per kilowatt hour.

"Steel mills aren't too concerned with power price increases because most of the costs come from raw materials — iron ore, coal. We're not asking for power price increases but they are better than being cut off," said an official at a Chinese steel mill.
Still, analysts say the government's efforts to raise prices — both those the electricity grid pays to producers and those it charges consumers — are a step in the right direction, with little adverse impact on the overall economy.

Liu Shujie, a senior NDRC economic researcher, told state television that it would raise consumer price inflation by only 0.05 percentage points, while Lin Boqiang, director of the Center for Chinese Energy Economics Research, said the price rises would raise industrial prices by 0.5 percentage points.

"But look what will happen if electricity shortages aren't solved: the inflationary pressures will be even larger because the price of raw materials will continue to surge because of heavy demand. In the end, looking at the power shortages, there is simply no choice but to raise prices," Lin told Reuters.

China has already cut power supplies to some industrial users in eastern, southern and central regions as pent-up demand rebounded after local governments ordered power cuts in late 2010 for the purpose of achieving energy saving goals.

The State Grid of China, the country's dominant power distributor, has said it will cut supplies to more industrial users in summer, when the shortfalls are expected to worsen.

"This (price rise) was definitely not the last one," said Shen at Mizuho. "But it depends on the coal price and on a lot of things, like CPI inflation and the power shortage situation."

China's five state-owned power generating groups lost more than 10 billion yuan ($1.5 billion) on their thermal power operations in the first four months of the year, an official with the council said on Tuesday.

The five groups, including the parents of listed firms China Power International Development, Datang International Power Generation, Huadian Power International and Huaneng Power International, had racked up more than 60 billion yuan in losses in past three years, according to the State Electricity Regulatory Commission.

The end-user price increase ranged from 0.004 yuan/kWh to 0.024 yuan/kwh in 15 provinces: Shanxi, Qinghai, Gansu, Henan, Jiangxi, Hainan, Shaanxi, Shandong, Hunan, Chongqing, Anhui, Hubei, Sichuan, Hebei and Guizhou.

Intraco Penta to hold 1:5 stock split - Insider Stories

One of Indonesia’s heavy equipment distributor, PT Intraco Penta Tbk, plans to hold a 1:5 stock split in June, dividing nominal stock to Rp50 from Rp250 a share
The stock split aims to raise the company's stock liquidity, said Intraco President Director Petrus Halim.

“We expect the corporate action may enlarge the number of our shareholders,” he said in a press statement last night.
Intraco recorded a significant sales growth by end of May, Petrus added. The equipment sales have reached 70% of the target this year.
“The sales increase is primarily propelled by a significant rise of the equipment as order on hand of heavy equipment in January-May 2011 was 897 units or 70% of 2011’s sale target of 1,293 units,” he said.

With the conducive market and industry, Intraco is optimistic that this year’s revenue shall exceed the target of Rp3 trillion along with Rp156 billion net income.
Besides serving as distributor of European made heavy equipment such as Volvo, Bobcat and SDLG, Intraco recently partnered Sinotruk, Chinese truck producer.

The company basically offers solution in transportation and logistics industry that can also support other industries such as mining and agribusiness, said Intraco Sales Director Penta Willy Rumondor.

BEI tak ikut cuti bersama - Bisnis Indonesia

JAKARTA: PT Bursa Efek Indonesia memutuskan kegiatan perdagangan, kliring, dan penyelesaian transaksi bursa pada 3 Juni 2011 tetap berjalan seperti biasa, meskipun pemerintah telah menetapkan tanggal tersebut sebagai hari cuti bersama.
Keputusan tersebut disampaikan oleh Direktur Utama BEI Ito Warsito dalam Peng-00135/BEI.PSH/05-2011 yang diumumkan hari ini.

"Menunjuk Pengumuman Bursa No. PENG-00536/BEI.PSH/11-2010 perihal Kalender Libur Bursa 2011 tertanggal 2 November 2010, dengan ini diumumkan bahwa pada hari 3 Juni 2011, kegiatan perdagangan, kliring, dan penyelesaian transaksi bursa tetap berlangsung seperti biasa," katanya dalam keterangan resminya.

China coal imports to double in 2015, India close behind - Reuters

Top coal consumer China should see import demand more than double in the next four years and India will be close behind as both hoover up supplies on international markets to feed rapidly growing power industries, industry executives said on Monday.

China's thermal coal imports could rise to 200 million tonnes in 2015 from around 90 million tonnes in 2011, Neil Dhar, executive vice president of trading house Noble Group, told the Coaltrans Asia conference.

At 90 million tonnes, China's 2011 imports would be steady from 2010, he said. That would indicate shipments would rise for the rest of the year, as China's imports in the first four months of 2011 were down a quarter on 2010.

The flow into China, which emerged as the world's second-largest coal importer after Japan last year, fluctuates according to domestic coal prices and whether or not those are high enough to encourage more electricity output from coal-fired power producers.

China boosted power prices on Monday in an attempt to ease its worst power shortages since 2004. That may encourage more coal imports to boost power supply.

India's thermal imports could rise to more than 100 million tonnes by 2015, from around 67 million tonnes in 2011, Dhar said. Imports would jump by almost 10 million tonnes this year, he added.

Despite a bullish long-term outlook, Asian coal prices have been depressed in recent months, largely due to the aftermath of the Japanese quake and tsunami in March that knocked out some coal-fired plants.

The index for Australian coal on the globalCOAL index closed at $119.47 a tonne on Friday, down from more than $140 in January when prices were driven up by flooding and wet weather in Australia's eastern Queensland state.

WHO BUYS MORE FROM INDONESIA?

India will overtake Japan as the biggest buyer of Indonesian coal in 2011, staying ahead of China in the competition for supply from the world's top thermal coal supplier. Most of India's coal imports come from Indonesia.

India's domestic shortfall in coal supplies to meet power demand will spur the country to import up to 60 million tonnes from Indonesia this year, five million tonnes more than last year and surpassing Japan as top importer, said Bob Kamandanu, chairman of the Indonesian Coal Mining Association.

Imports from Indonesia to India, Asia's third-largest economy, would race to 90 million tonnes by 2013, Kamandanu told Reuters.

"Japan has traditionally been the leader at importing Indonesian coal, but now India is surpassing it," Kamandanu said on the sidelines of the conference. "In terms of tonnage, India is moving toward 50-60 million tonnes... very strong.

Demand from India's growing number of independent power producers would push the country's imports, Kamandanu said.

Japan, which suffered a massive earthquake and tsunami in March, would import 57 million to 58 million tonnes of Indonesian coal this year, down from previous peaks of around 65 million tonnes and unchanged from 2010.

The disaster in Japan shut down some coal-fired power plants along the northeastern coast, crimping demand. Japan's thermal coal imports in April fell 13.4 percent on the year to 6.591 million tonnes.

CRANKING UP OUTPUT

Indonesia's coal mining companies are already cranking up production to meet the fast pace of demand growth, and the country and Kamandanu forecast the country would produce 340 million tonnes this year up from 320 million tonnes in 2010.

"All the big guys are increasing their numbers," he said.

Bayan Resources Tbk, the country's eighth-largest coal miner, is projected to more than double its output to as much as 25 million tonnes by 2013 versus last year, said chief financial officer Alastair McLeod. The company's main focus was on striking long-term supply deal to India, he added.

Bayan expects to produce 14.5 million to 15.5 million tonnes in 2011, up from 11.9 million tonnes in 2010, he told Reuters in an interview.

"We started two new mines in 2008 and two new mines in 2009, therefore they have a ramp-up profile over four or five years before they get up to their capacity," McLeod said. "We'll be continually ramping up -- our target by 2013 is to get to 20-25 million tonnes."

Another major Indonesian coal producer, Bhakti Energi, is also eyeing the stiffening competition between China and India for Indonesian supplies.

"India has no alternative for its energy resources. India will become a very good importer for Indonesia," said Bhakti's president director Jeffrey Mulyono.

"China is different. China is growing well in demand but they still have alternatives for fulfilling (coal) combinations with their own development."

Mulyono expects Indonesian coal output to rise at least 10 percent annually over five years, and sees the easternmost province of Papua tapping into its huge coal reserves longer-term.

China’s Coal Prices Rise for a Seventh Week, Stockpiles Fall - Bloomberg

Power-station coal prices at China’s Qinhuangdao port rose for a seventh week to the highest in more than two years as the country battled with an electricity shortage.

Coal with an energy value of 5,500 kilocalories per kilogram gained 0.6 percent to between 830 and 845 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.

The world’s largest energy user may face an electricity supply shortfall of as much as 40 gigawatts in summer, surpassing the shortage in 2004, China’s worst, according to State Grid Corp. of China, the nation’s dominant power supplier. Coal is used as fuel at more than 70 percent of the country’s power plants.

Stockpiles at Qinhuangdao port, which ships half of the nation’s seaborne coal, fell 1 percent from a week earlier to 5.77 million tons, according to the association.