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Jumat, 10 Juni 2011

Medco Energi Umumkan Dapat Dana US$ 35 Juta

PT Medco Energi Tbk (MEDC) mengumumkan mendapat dana US$ 35 juta sehubungan pembayaran piutang hasil penerbitan Guaranteed Secured Bonds dari Sabre Sustems International Pte. Ltd. (SSI) sebagai bagian dari penjualan saham PT Apexindo Pratama Duta (APEX) milik Mitra International Resources.

Dana US$ 35 juta didapat perseroan pada 7 juni 2011 dari Northem Edge Investment Ltd (NEIL). Penjualan saham APEX milik MIRA sendiri terjadi pada 9 juni 2008. MIRA menjual 48,72% saham mereka di harga Rp 2.450 per saham. Sehingga nilai transaksi seluruhya mencapai US$ 340,89 juta. Demikian disampaikan Lukman Mahfoedz, Direktur Utama Medco Energy dalam keterbukaan informasi BEI, di Jakarta, Kamis (9/6).

Disebutkan, proses pembayaran menjadi beberapa tahapan, yang salah satunya dari Guaranteed Secured Bonds dari SSI sebesar US$ 68,2 juta. SSI adalah anak usaha MIRA. Surat utang ini jatuh tempai di September 2009 dan dicatat sebagai aset lancar (piutang lain-lain) di neraca konsolidasi 2008.

Laba bersih PTBA di Mei naik 93% - Kontan Online

JAKARTA. PT Bukit Asam Tbk (PTBA) sukses mencatatkan kinerja gemilang hingga akhir Mei ini. Perusahaan pelat merah ini berhasil mencatatkan kenaikan laba bersih hingga 93% menjadi Rp 1,3 triliun dibandingkan periode yang sama tahun lalu.

"Hingga Mei, laba usaha kami naik hingga 115% dan menjadi Rp 1,6 triliun," kata Sukrisno, Direktur Utama PTBA, di Jakarta, Kamis (9/6). Kenaikan ini terjadi karena adanya kenaikan produksi dan penjualan batubara serta tingginya harga batubara dunia saat ini.

Sukrisno menjabarkan produksi batubara PTBA selama lima bulan pertama ini mencapai 5,3 juta ton atau naik 5% dibandingkan periode yang sama tahun lalu. Sementara penjualan batubara PTBA pun naik 3% ke posisi 5,3 juta ton.

Kenaikan harga batubara di pasaran juga mendorong pendapatan usaha PTBA. Pendapatan usaha perusahaan batubara ini sudah mencapai Rp 4,1 triliun. "Kami optimistis target laba bersih tahun ini sesuai target, yaitu lebih dari Rp 3 triliun," lanjut Sukrisno.

Hingga akhir tahun ini PTBA sudah memperoleh kontrak sebesar 11,6 juta ton, yang terbagi atas kontrak lokal sebanyak 9,6 juta ton dan kotrak ekspor sebanyak 2 juta ton. Padahal target penjualan PTBA cuma 17,57 juta ton. "Kontrak itu seperti dari pihak PLN, semen Baturaja dan beberapa negera lainnya seperti Jepang," lanjut Sukrisno.

Harga jual batubara PTBA naik cukup tinggi tahun ini. PTBA telah menandatangani kesepakatan harga jual batubara dengan PT Indonesia Power ke PLTU Suralaya sebanyak 6,1 juta ton sebesar Rp 815.000 per ton untuk batubara 5.000 kcal/kg.

Sementara harga untuk pasokan PLTU Bukit Asam di Mulut Tambang Tanjung Enim sebanyak 1 juta ton menjadi Rp 575.000 per ton, naik 34% dari harga tahun sebelumnya. Sedangkan untuk harga jual ke PLTU Tarahan pun naik menjadi Rp 729.325 dengan total pasokan 0,7 juta ton.

Bukit Asam to pay Rp523/share dividend - Insider Stories

The state-controlled coal miner PT Tambang Batubara Bukit Asam Tbk (PTBA) will distribute Rp523.15 per share total dividend or Rp1.21 trillion on July 23. The dividend is representing 60% of Bukit Asam's net profit last year.
The company distributed Rp66.75 per share interim dividend on December 29 2010 and the remaining of Rp456.37 per share will be distributed this year.

Sampoerna Agro to pay Rp108 dividend - Insider Stories

Palm oil plantation PT Sampoerna Agro Tbk (SGRO), that is controlled by Sampoerna family, will distribute Rp108 a share dividend of Rp204.12 billion, reflecting 45% of its net profit last year.

Last year, Sampoerna Agro distributed Rp45 a share dividend or 30% of its net profit in 2009 of Rp281.77 billion.
President Director Ekadharmajanto Kasih said the cash dividend will be paid on July 18 2011. In 2010, Sampoerna Agro posted Rp452 billion net profit from Rp282 billion net profit in the previous year .

Tahun ini, Bakrieland tanpa pembagian dividen - Bisnis

JAKARTA: Pengembang properti PT Bakrieland Development Tbk memutuskan tidak akan membagikan dividen kepada para pemegang saham perseroan untuk tahun buku yang berakhir pada 31 Desember 2010.

Head of Investor Relations Bakrieland Nuzirman Nurdin mengatakan keputusan tersebut diambil oleh perseroan dan para pemegang saham agar perseroan dapat melakukan ekpansi bisnis tahun ini, terutama pengembangan lahan di Jonggol.

"Kita putuskan untuk tidak bagi dividen untuk memperkuat modal perseroan," ujarnya usai rapat umum pemegang saham (RUPS) perseroan hari ini.

Selama tahun lalu, perseroan mencatat pertumbuhan laba bersih sebesar 35,12% menjadi Rp178,70 miliar dari sebelumnya Rp132,25 miliar. Adapun pendapatan perseroan naik 29,14% menjadi Rp1,37 triliun dari Rp1,05 triliun pada 2009.

Menurut Nuzirman kebijakan membagikan dividen kepada pemegang saham juga menguntungkan pemegang saham itu sendiri, karena artinya mereka berinvestasi lebih untuk kinerja perseroan di kemudian hari.

"Mereka juga diuntungkan, karena walaupun tidak mendapat dividen tahun ini potensi kinerja kami semakin baik pada akhir tahun dan akhirnya dapat meningkatkan keuntungan mereka di kemudian hari," paparnya.

Hingga akhir 2010, emiten dengan kode saham ELTY ini merupakan emiten properti dengan aset terbesar, yakni mencapai Rp17,06 triliun atau naik 47,2% dari perolehan aset tahun sebelumnya sebesar Rp11,59 triliun.

Salim Ivomas gains 10% on trading debut - Insider Stories

Shares of PT Salim Ivomas Pratama, an agribusiness unit of Indofood Agri, gained 10% or Rp110 to Rp1,210 in its first trading debut at the Jakarta Stock Exchange as of 10.00 a.m. local time.

Salim Ivomas set the price for initial public offering (IPO) at Rp1,100 per share, representing a total proceeds raised from the offering up to Rp3.47 trillion. The company sold 3.16 billion new shares or 25% of its enlarged capital.
Salim Ivomas will allocate 40% of the proceeds to settle bank loans, 50% for funding plantation division, particularly for new planting and maintenance, and constructing processing facility, while the remaining 10% is to finance oil and fat division, especially to build up production facility and purchase vessel. Half of the proceeds will be used gradually within five years.

The company allocated Rp2.2 trillion for capital expenditure. Salim Ivomas, which owned 59.48% shares of an oil palm plantation company PT PP London Sumatra Indonesia Tbk, plans to expand its palm oil plantation area by 15,000 hectare per year. Total planted area will increase more than a half from 205,000 hectare this year to 280,000 hectare in the next five years.

The palm oil production this year is estimated to increase 10% to 740,000 tons compared to last year. Meanwhile, the company targets to increase the sugar cane plantation area by 18,000 hectare in the next 2 years.

Unilever Relokasi Pabrik Sabun ke Indonesia - Okezone

JAKARTA - Produsen produk konsumsi, Unilever telah merelokasi pabrik sabunnya ke Indonesia. Hal ini berdasarkan laporan manajemen Unilever pada Rabu 8 Juni 2011.

"Mereka melaporkan proses relokasi pabrik sabunnya dari Jerman ke Indonesia, di Rungkut, Jawa Timur. Sekarang sedang proses konstruksi pabrik. Dengan relokasi itu, pabriknya yang di Jerman tutup. Katanya, alasan relokasi, karena di Indonesia lebih efisien. Selanjutnya, pabrik itu akan memasok pasar ASEAN," kata Menteri Perindustrian MS Hidayat, di Jakarta, Kamis (9/6/2011).

Selain itu, ujar Hidayat, pertemuan itu juga membahas rencana kedatangan Chairman Unilever ke Indonesia untuk bertemu dengan Presiden RI Susilo Bambang Yudhono.

Sementara itu, Human Resources Director PT Unilever Indonesia Tbk Josef Bataona mengatakan, Indonesia memiliki peran penting bagi Unilever di seluruh dunia. Pabrik di Indonesia, lanjut dia, bukan hanya untuk memasok pasar lokal, tapi juga ekspor ke Asia dan Australia.

"Kami menargetkan ke depan, Unilever Indonesia bisa menggantikan posisi India sebagai nomor satu terbesar di Asia. Kita akan terus ekspansi di Indonesia karena potensinya besar, konsumsi terus meningkat. Kita mempunyai 5.200 tenaga kerja. Mengekspor tenaga kerja dengan skill, yakni 48 manajer yang bekerja di Unilever berbagai negara seperti Singapura, Malaysia, dan Jerman. Tenaga Indonesia tidak kalah dalam percaturan global," kata Josef.

Sekretaris Perusahaan Unilever Indonesia Sancoyo Antarikso mengatakan, untuk investasi sepanjang 2010-2012, perusahaan mengalokasikan anggaran sebesar 300 juta Euro. “Dana itu untuk ekspansi, termasuk peningkatan kapasitas,” tutup Sancoyo.

Moody's withdraws Uniflora bond rating - Insider Stories

Moody's Investors Service has withdrawn PT Uniflora Prima's (Uniflora) provisional (P)B2 corporate family rating and
the provisional (P)B2 senior secured bond rating of the proposed senior secured notes to be issued by Uniflora Prima International Pte Ltd, an entity wholly-owned and guaranteed by Uniflora.

Moody's has withdrawn the credit rating for its own business reasons. Uniflora is a private company and one of Indonesia's largest producers of cocoa butter and cocoa powder. The company's production facilities are located in Serang, Banten Province, Indonesia, and include six production lines with a total production capacity of 120,160 tonnes per annum.

Adaro Energy: Hold; Rp2,450; TP Rp2,450; ADRO IJ Close to sealing power plant project - DBS

A consortium of Adaro, J-Power, and Itochu is close to officially winning the project to build and operate a power plant project. The consortium has proposed the use of ultra-supercritical technology which burns coal to produce steam at greater pressure to increase efficiency and curb carbon dioxide emissions. This technology is widely used in Japan . Meanwhile, Japanese cabinet members and senior minister have actively lobbied for the consortium’s bid. Japanese government also offers financial support for the project.

We maintain our Hold call for ADRO, TP of Rp2,450 based on blended valuation of 12x FY12F and 3x PBV. We like ADRO for its long-term growth prospects including the plan to enter the power business, however, we believe that ADRO’s earnings is less sensitive to rising spot coal prices as it produces coal with lower CV.

Economy No policy change expected at today’s BI meeting - DBS Vickers

Bank Indonesia (BI) is widely expected to keep the overnight reference rate unchanged at 6.75% when they meet this afternoon. BI’s policy stance remains accommodative, as reflected by the fact that open market operations increased by IDR 3.7trn in May, a small amount compared to the IDR 33trn rise in BI’s net foreign assets. Indeed, inflation is easing and growth is moderating, both of which suggest that BI will continue to keep policy accommodative for a while. CPI inflation slowed to 6.0% in May from 6.2% in April, thanks to the continued declines in food prices backed by local harvest. Motor vehicle sales fell 6.9% in April, affected by the supply chain disruption in Japan . Exports remained robust at 37.3% as of April, but a slowdown is expected in May, in line with the downward correction in the global commodity cycle.

Going forward, we still caution against the upside risks to inflation and interest rates in 2H. Consumers’ inflation expectations for the next three months have jumped by 8 full points in May, based on the latest consumer sentiment survey conducted by the central bank. Food prices are expected to rebound from 3Q onwards after the end of the harvest season. The finance ministry plans to discuss the fuel subsidy policy during the mid-year budget review in July. As the gap between the unsubsidized and subsided fuel prices is as wide as it was in early-2008, the possibility of a fuel subsidy cut by the government can’t be discounted. Besides food and oil, core inflation is also likely to pick up in 2H to reflect the buildup of demand-pull price pressures. This is in line with our expectations that economic growth will regain momentum in 2H. The disruption impact of Japan earthquake should be short-lived. The decline in global commodity prices also paused in late- May. As such, policy priority would still be given to curbing inflation in the coming quarters. We maintain our view that BI will resume tightening in 2H (+75bps to 7.5%).

China property bubble? don't think so, even less likely in Indo - CLSA

"Property bubble in China deflates. Price Drop in big cities spells trouble for global growth" WSJ frontpage news today

These kind of headlines surely catches attention especially at times when markets are soft. Strange how one minute there could be global inflation risk and the next is deflation. To make it simple, according to conventional wisdom, inflation is a rapid increase in the amount of money (including bank credit, deposits, and currency) that is not supported by a corresponding growth in the output of goods and services.

I would say that the FED, BOJ and to some certain ECB ain't going to stop printing + printing (the Fed's balance sheet expanded to a new record of $2.76 trillion in the week ended May 25th) and the same time I highly doubt their output is growing at the same pace. That is inflation, period.

The myth that there are 64 million empty apartments in China is central to the China bear case of some high profile investors.

CLSA is the only firm on the street with its own indepth research on this issue.

CRR visited more than 200 developments in 54 cities for this study; we talked to building management to get the real vacancy rate.
Our research indicates the true vacancy rate across all urban residential properties in China is 8%, or 16 million apartments.
Reasons to believe the problem has peaked: fewer investors buying at CRR monitored properties; combination of property tax and rising rental yields.
http://www.chinareality.net/evoucher/reports/20110609090424oACOaXGnoqaIDJcKzWWCr.pdf



8% vacancy surely does not indicate a bubbly property market. Here in Indonesia, we are even at an earlier stage of the cycle.

Typical buyers especially for landed housing are end users, and first-time buyers; usually young family buying their first home. Our talk with the main developers who focus on the thriving west suburb of Jakarta, Serpong, a cumulative total of US$1.7bn (Rp14tn) worth of property was sold last year to mostly end-users. Mortgage to GDP is still less than 3%. No leverage = no bubble.

One interesting property play is Surabaya-based property company Ciputra Surya (CTRS IJ). The company just raised its NAV estimate by 18% from Rp2,386/sh to Rp 2,825/sh. Discount to NAV is 73% and the stock is trading at undemanding 11x 2012PER .


Ciputra Group, NAV revision

Ciputra Development (CTRA IJ) announced its latest valuation based on additional projects added and revision to CTRS valuation.
Total NAV for the group is Rp14.15tn. The NAVs are:

CTRA: Rp 933/sh (previously Rp871)
CTRS: Rp 2,825/sh (previously 2386)
CTRP: Rp 1,010/sh (previously Rp1,002)
Given CTRA group has been a laggard last year, even with recent rise in share prices, using company's NAV means:
CTRA still trades at 54% discount.
CTRS at 73% discount.
CTRP at 57% discount.

Salim Ivomas Pratama (SIMP.JK, TP Rp 1856.00, OUTPERFORM INITIATION: Too good to miss - Credit Suisse

n Same good asset at deep discount. SIMP’s IPO is merely a corporate restructuring process for the group. Currently, SIMP’s assets are exactly the same as IFAR’s. At the IPO price of Rp1,100/share, we believe that investors are given the opportunity to buy these same good assets at a deep discount. We initiate coverage on SIMP with an OUTPERFORM rating, and a target price of Rp1,856—offering 69% potential upside.
n Stacking up well against local peers. We believe SIMP’s fundamentals are as robust as, if not better than, its local peers. SIMP exhibits one of the highest growth outlooks given its relatively young plantation age profile than peers. It also has a more favourable cost structure, leading to relatively higher margins than peers. We expect FY11E earnings growth of 102%, with 1Q11A already contributing 27% of our FY11E earning forecasts.
n Valuations have to converge. Despite having the same assets, the 2011E P/E implied by SIMP’s IPO price is at a 28% discount to IFAR’s current 2011E P/E and is at a 26%, 38% and 31% discount to LSIP, AALI and SGRO, respectively. Given the valuation gap, at the IPO price, we prefer to switch from IFAR to SIMP. Our SOTP valuation finds that on a standalone basis (excluding LSIP), SIMP’s IPO price implies 6.7x 2011E P/E, a 46% discount to IFAR and at a 54%, 45% and 48% discount to AALI, LSIP and SGRO, respectively. Our target price for SIMP is based on 15x 2011E P/E, in line with the 2011E P/E implied by our target price for LSIP given our view that the fundamentals of the two companies are comparable.
n Risks to our forecasts: (1) Indonesian economic, regulatory, and political risks, (2) commodity prices, particularly for CPO and edible oils & fats, (3) fluctuations in the Rp exchange rate to US$, and (4) related party transactions with INDF, which is also the company’s majority shareholder.

Kamis, 09 Juni 2011

Inco fokus kembangan blok Bahodopi - Bisnis

JAKARTA: Perusahaan tambang nikel PT International Nickel Indonesia Tbk akan fokus mengembangkan blok Bahodopi di Morowali, Sulawesi Tengah untuk eksploitasi bijih nikel pada tahun ini.

Direktur Utama International Nickel Tony Wenas mengatakan saat ini perseroan sedang mempersiapkan proses penambangan di sana dan mengembangkan infrastruktur untuk mendukung kegiatan pertambangan bijih nikel.

"Sekarang kita persiapkan untuk segera melakukan penambangan di situ, kita juga akan bangun screening station, dan akses jalan sepanjang 80 km," ujarnya belum lama ini.

Tony menuturkan investasi untuk pengembangan blok Bahodopi tersebut diperkirakan mencapai US$100 juta. Adapun pengerjaannya, dia menambahkan akan dilakukan perseroan jika memungkinkan.

Dia menambahkan perseroan juga berencana untuk mengembangkan blok Sorowako dengan menambahkan fasilitas baru berupa pabrik. Menurutnya penambahan pabrik tersebut diupayakan untuk mendongkrak kapasitas produksi nikel.

"Masih belum tahu tepatnya kita akan bangun dengan kapasitas berapa, karena ini masih tahap rencana," tuturnya.(api)

Pagi Ini Salim Ivomas Catatkan Saham Perdana - Inilah

PT Salim Ivomas Pratama Tbk akan mencatatkan sebagai emiten ke-9 di Bursa Efek Indonesia (BEI) dengan kode saham SIMP.

Perseroan melepas 3,16 miliar saham ke publik dengan harga penawaran sebesar Rp1.100 per saham. Total jumlah saham yang dicatatkan sebesar 15.816.310.000. Dana hasil penawaran umum saham perdana yang berhasil diraup sebesar Rp3,47 triliun.

Saham SIMP akan dicatatkan di papan utama. Rata-rata price earning ratio (PER) industri sebesar 13,30 kali dan price book value (PBV) sebesar 3,84 kali. Adapun pemegang saham setelah penawaran umum saham perdana antara lain PT Indofood Oil and Fats Pte Ltd sebesar 72%, PT Indofood Sukses Makmur Tbk sebesar 6,40%, PT Mandiri Investama Sejati sebesar 1,03%, PT Bina Makna Indopratama sebesar 0,31%, PT Multi Langgeng Nusantara sebesar 0,26%, dan masyarakat sebesar 20%.

Perseroan mencatatkan laba bersih sebesar Rp970,97 miliar dan pendapatan sebesar Rp9,48 triliun pada 2010. Hingga kuartal pertama 2011, pendapatan sebesar Rp2,92 triliun dan laba bersih sebesar Rp689,03 miliar.

SIMP adalah salah satu anak usaha terbesar milik INDF, yang bergerak di bisnis kelapa sawit yang terintegrasi, mulai dari perkebunannya hingga produk turunan CPO, seperti margarin, lemak nabati, dan minyak goreng. SIMP ini adalah induk dari LSIP. Jadi bisa dikatakan bahwa SIMP ini isinya adalah LSIP.

Soeharto Berjasa Besar terhadap Pembangunan Ekonomi? - Kompas

JAKARTA, KOMPAS.com — Peran Presiden RI periode 1966-1998, HM Soeharto, dinilai besar dalam pembangunan ekonomi dan pertanian Indonesia. Setidaknya itu penilaian dari mantan Wakil Presiden RI M Jusuf Kalla. Hal tersebut, menurut Kalla, karena Soeharto mampu menurunkan tingkat inflasi dari 650 persen menjadi 12 persen dalam beberapa tahun pertama kepemimpinannya.

Selain itu, almarhum Soeharto semasa menjabat Presiden RI juga punya andil besar dalam pembangunan irigasi pertanian yang tersebar di seluruh wilayah Nusantara, yang sampai saat ini belum ada presiden yang mampu menandinginya. Demikian penuturan Kalla saat memberikan kata sambutan peluncuran perdana buku Pak Harto: The Untold Stories di Jakarta, Rabu (8/6/20111).

"Inflasi tahun 1966 mencapai sekitar 650 persen atau hyper-inflation dan dapat diturunkan secara berangsur-angsur oleh Pak Harto," kata Kalla.

Tingginya inflasi itu, lanjut Kalla, jika tidak diturunkan, tentu akan menjadi masalah utama bagi Pak Harto karena pendapatan riil masyarakat turun dan harga barang terus meningkat sehingga masyarakat tidak dapat menjangkaunya.

"Itulah sumbangan terbesar dalam pembangunan ekonomi, selain membuat Indonesia ini dapat berswasembada pangan karena belum ada presiden yang dapat membangun saluran irigasi pertanian sebesar yang dibangun Pak Harto," ujar Kalla, yang mendapat sambutan tepuk tangan meriah dari tamu yang hadir.

Pada kesempatan itu Jusuf Kalla juga menyampaikan pengalamannya tatkala suatu pagi dipanggil ke rumah Presiden Soeharto di Cendana untuk diminta membantu salah satu badan usaha milik negara (BUMN). "Ketika itu banyak orang mengatakan, hati-hati ketemu dengan Pak Harto, jangan sampai mengangkat tangan di atas bahunya. Saya menerangkan berbagai hal dengan mengangkat tangan di atas bahunya, ternyata beliau tidak marah dan biasa-biasa saja," katanya.

Kalla pun mengemukakan, sebenarnya Pak Harto itu tidak selalu seperti yang dibicarakan orang, tetapi karena kebaikannya itulah yang sering disalahgunakan orang.

Peluncuran buku The Untold Stories tersebut dihadiri sejumlah tokoh masyarakat. seperti Taufiq Kiemas, Aburizal Bakrie, Try Sutrisno, dan Djafar H Assegaf.

Sementara itu, ketua panitia peluncuran buku, Soeharjo Subardi, mengemukakan bahwa buku tersebut ditulis kalangan muda, seperti Dwitri Waluyo, Anita D Ambarwati, dan Bakarudin, dengan editor Dr. Arissetyanto yang merupakan Rektor Universitas Mercu Buana.

Fed: Default would be dangerous; Fitch may cut rating - Reuters

(Reuters) - A default would have severe reverberations in global markets, a top Federal Reserve official said just hours after Fitch Ratings warned it could slash credit ratings if the government misses bond payments.

St. Louis Federal Reserve Bank President James Bullard told Reuters on Wednesday "the U.S. fiscal situation, if not handled correctly, could turn into a global macro shock.

"The idea that the U.S. could threaten to default is a dangerous one," he said in an interview.

"The reverberations in those global markets would be very severe. That's where the real risk comes in," Bullard warned.

Some Republican lawmakers have said a brief default, which would be inevitable in August if lawmakers fail to raise the nation's $14.3 trillion debt ceiling, might be acceptable if it forces the White House to deal with large budget deficits.

Bullard's warning came just after Fitch said it would slash to "junk" the ratings on all Treasury securities, seen worldwide as a risk-free investment, if the government misses debt payments by August 15.

The ratings would go back up once the government fulfills its debt obligations, but probably not to the current AAA level, Fitch said, in a stark statement about the impact of even a short-lived default on the credit-worthiness.

"The notion of flirting with a default on existing obligations flirts with irresponsibility," Richard Bernstein, chief executive of Richard Bernstein Capital Management LLC, said at the Reuters 2011 Investment Outlook Summit in New York.

The White House said Fitch's warning makes it clear that "there is no alternative to raising the debt ceiling."

"This is not about additional spending, this is about honoring the obligations the United States government has made," White House press secretary Jay Carney told a daily briefing.

Moody's and Standard and Poor's have issued similar warnings. But Fitch was the first among the big-three rating agencies to say Treasury securities could be downgraded, even for a short period, to a non-investment grade.

The agency said even a short-lived default, also called a technical default, "would suggest a crisis of governance from a sovereign credit and rating perspective."

"Clearly the political signals which are coming (from Washington) are a source of concern," David Riley, head of sovereign ratings at Fitch, told Reuters in an interview.

He added, however, that the agency still believes lawmakers will eventually reach an agreement on the debt ceiling.

"We know from previous experiences -- both with the government shutdown and previous episodes with the debt ceiling -- that although you get a lot of brinkmanship, ultimately it does get resolved," Riley said.

President Barack Obama is trying to win congressional approval to raise the nation's legal debt ceiling before an August 2 deadline.

The Treasury Department said on Wednesday the Fitch warning was "another stark reminder" of the need for Congress to act quickly.

PATH TO DEFAULT

Fitch said it would first place ratings on "watch negative" if lawmakers failed to enact an increase in the debt ceiling by August 2, when the Treasury will have run out of extraordinary measures to avoid a default.

The first test for ratings will come two days later, when $30 billion worth of Treasury bills mature. If the government fails to repay them in full, Fitch will lower the rating on those specific securities to B-plus, four notches into junk territory.

But the real deadline comes on August 15, when $27 billion in Treasury notes and $25 billion in coupon payments come due. If the government misses those, Fitch would downgrade the sovereign issuer ratings to "restricted default" and lower all Treasuries securities to B-plus.

"Though such an event (such as a short-lived Treasury bill default) may not permanently impair the capacity of the government to service its obligations, it is unlikely that its 'AAA' status would be retained in the short to medium term," Fitch said.

Treasury Secretary Timothy Geithner has warned the United States could face a catastrophic default that would roil global markets if Congress does not raise the debt ceiling by then.

Moody's warned last Thursday that it could consider cutting the United States' top-notch credit rating if there was no progress by mid-July on a deal to reduce the deficit and raise the debt limit.

Wall Street slips for a sixth day on growth concerns - Reuters

(Reuters) - Stocks extended losses for the sixth straight day on Wednesday as investors worried that a slowing economy could deepen the market's retreat.

The latest evidence of a slowdown came in the Federal Reserve's Beige Book, which gives an anecdotal report on the economy. It reinforced Fed chief Ben Bernanke's bearish assessment on growth delivered late on Tuesday.

The market's mood soured when Bernanke gave no hint that the central bank would offer a third round of stimulus to an economy losing steam. The Beige Book said costlier food and energy prices as well as supply disruptions stemming from Japan's earthquake were taking a toll.

Stocks are still up for the year, but the market's recent slide has taken a big bite out of those gains.

The Dow, which on May 2nd was up 10.6 percent for the year when it hit its 2011 closing high, is now up just 4.1 percent.

The S&P 500, which had climbed as much as 8.2 percent for the year at its 2011 closing high on May 2nd, is now up just 1.7 percent. And the Nasdaq, which on May 2nd was up 8 percent for the year when it set its 2011 closing high, is now up only 0.9 percent.

Stocks have come under pressure recently due to a slew of weak economic data, especially in the labor market.

"Investors are re-pricing the slowdown after Bernanke crystallized it," said Jason L. Ware, senior equity research and trading analyst at Albion Financial Group in Salt Lake City, Utah.

On top of that, "the market was hoping for an indication that there may be another round of stimulus but clearly, that's not what they got."

The Fed's $600 billion second round of stimulus, expected to end this month, has been a catalyst for the stock market's advance.

Many of the day's biggest decliners were U.S.-traded Chinese companies after Interactive Brokers Group banned clients from borrowing money to buy some Chinese stocks.

New York-listed shares of Renren Inc fell 13.6 percent to $10.51 and Baidu lost 3.3 percent to $120.67.

Mortgage insurers' shares also fell after MGIC Investment Corp reported disappointing monthly operating statistics.

Shares of MGIC Investment, the biggest mortgage insurer to Fannie Mae and Freddie Mac, fell 20.2 percent to $5.80.

The Dow Jones industrial average dropped 21.87 points, or 0.18 percent, to 12,048.94. The Standard & Poor's 500 Index lost 5.38 points, or 0.42 percent, to 1,279.56. The Nasdaq Composite Index fell 26.18 points, or 0.97 percent, to 2,675.38.

"I think 1,250 is a key level (on the S&P) and, if we get there, likely to provide support for the market, barring any further erosion in the underlying economic data," Ware said.

SHARPER SLIDE FORECAST

Credit Suisse's U.S. equity strategist Doug Cliggott said on Wednesday the S&P 500 could fall roughly 10 percent from its current level, partly due to the approaching end of the Federal Reserve's bond-buying program.

"We would think an index between 1,170 and 1,200 would be a realistic estimate of where we might be headed," Cliggott said at the Reuters Investment Outlook Summit in New York.

His comments followed a bearish tone struck on Tuesday by Citigroup strategist Tobias Levkovich. He said major U.S. stock indexes could fall as much as 10 percent from their May highs. A 10 percent fall is typically described as a market correction.

There were also signs of weakness from corporate America. Communications networking equipment provider Ciena Corp forecast third-quarter revenue below expectations, driving down its stock and others in the sector.

Ciena tumbled 16.2 percent to $20.29, while JDS Uniphase Corp dropped 5.5 percent to $17.40.

Limiting losses, the energy sector rose after talks at the oil cartel OPEC in Vienna broke down without an agreement on a production hike. The S&P 500 energy index rose 0.4 percent, with Exxon Mobil up 1 percent at $80.76.

U.S. crude oil futures rose nearly 2 percent to settle above $100 a barrel.

About 7.45 billion shares traded on the New York Stock Exchange, NYSE Amex and Nasdaq, slightly below the daily average of 7.6 billion.

Declining stocks outnumbered advancing ones on the NYSE by 2,217 to 784, while on the Nasdaq, decliners beat advancers by 1,920 to 679.

Oil rises as OPEC maintains production level - AP

NEW YORK (AP) -- A contentious meeting of oil ministers ended Wednesday with a clear message: Don't count on OPEC to do much about oil prices.

The 12-nation group decided not to boost production, which likely would have resulted in lower prices. That sent oil back above $100 a barrel. And more importantly, it sets the stage for higher prices later this year.

Rising energy prices since the beginning of the year have impacted the U.S. economic recovery. The Federal Reserve on Wednesday reported that the economy slowed in several parts of the country this spring and blamed high gas prices for sluggish consumer spending.

At Wednesday's OPEC meeting in Vienna, Saudi Arabia lobbied for an increase in oil output, which likely would have likely lowered oil prices. Countries like Iran resisted, arguing that oil supplies are adequate to meet demand and current prices are appropriate.

"We are unable to reach consensus," OPEC Secretary General Abdullah Al-Badri told reporters after the meeting in Vienna ended. Saudi oil minister Ali Naimi called the meeting "one of the worst ever."

Traders were surprised and oil prices climbed. Benchmark West Texas Intermediate for July delivery gained $1.65 to settle at $100.74 per barrel on the New York Mercantile Exchange. In London, Brent crude added $1.07 to settle at $117.85 per barrel on the ICE Futures exchange.

Many analysts were almost certain that OPEC would increase production. OPEC not only supplies 34 percent of the world's oil -- about 29.7 million barrels per day -- it has the unique ability to crank up production as needed. Other oil-producing countries, such as Canada, Russia and Mexico, don't have that flexibility.

Global oil consumption is expected to increase by 2 percent this year to an average of 88.4 million barrels per day.

While the Saudis and the Iranians are frequently at loggerheads over pricing at OPEC meetings, member countries usually fall in behind the lead of Saudi Arabia, which produces most of the group's oil. This time the Saudi-Iranian rivalry resulted in a deadlock.

The International Energy Agency in Paris had urged oil producers to put more crude on the market. "Ongoing supply disruptions, as well as the fragile state of the global economy, call for a prompt increase in supply," the agency said.

The oil market has been worried for months that unrest in Libya and Yemen could destabilize larger oil-producing nations in the region. The two countries normally produce less than 4 percent of the world's oil needs. Saudi Arabia and others have boosted output to make up for much of the shortfall, but concerns remain that unrest could intensify across the region and disrupt supplies.

Oil prices jumped 25 percent from January through April as global demand grew to the highest level on record while violent uprisings in North Africa and the Middle East threatened oil fields and cut off Libya's oil exports.

The price of gasoline soared as well. The national average in the United States grew 28 percent to record levels from January through early May, nearly topping $4 per gallon. Motorists reacted by driving less. Consumer confidence suffered as more money went to the pump. Though gasoline prices have dropped 21 cents in the past month, they're still above $3.70 per gallon and analysts say they'll continue to squeeze budgets this year.

The U.S. Energy Information Administration's said this week that it expects the global thirst for oil to outpace the industry's ability to pump it by 1.81 million barrels per day between July and September. That's the largest shortfall since the final three months of 2007.

Capital Economics said OPEC would need to boost production by 1.5 million barrels per day to help keep prices in check.

Saudi Arabia has indicated a willingness to supply whatever the market needs. Analyst Jim Ritterbusch thinks the Saudis will quietly increase exports regardless of their quota, since keeping prices under control is in their best interest.

"They don't want countries to turn to alternative fuels," he said. "They don't want people on buses."

But J.P. Morgan analyst Lawrence Eagles questioned if Saudi Arabia really could meet increased demand and believes the lack of an agreement "seems to highlight the limited spare capacity among many (OPEC) members." That's one reason he expects Brent crude will rise to an average of $130 per barrel this year.

Rep. Ed Markey of Massachusetts said the U.S. must be prepared to use its Strategic Petroleum Reserve to "head off an economic collapse from continued high gas prices." Most experts agree that tapping the reserve wouldn't make much difference in prices, since the U.S. already has one of the largest petroleum surpluses on record, not including the strategic reserve.

The EIA's weekly report on petroleum supplies showed a drop of 4.8 million barrels of oil, but supplies are still more than 2 percent above year-ago levels. Much of the decline happened in the Midwest, where problems with a pipeline system temporarily halted deliveries from Canada. Gasoline supplies grew by 2.2 million barrels, while the four-week average demand number inched up for the first time in 11 weeks.

Gasoline pump prices dropped another 1.3 cents on Wednesday to a national average of $3.748 per gallon, according to AAA, Wright Express and Oil Price Information Service. A gallon of regular is 21.2 cents cheaper than it was a month ago, but remains $1.03 higher than the same time last year.

In other Nymex trading for July contacts, heating oil added 1.67 cents to settle at $3.0937 per gallon and gasoline futures fell by 1.32 cents to settle at $2.9787 per gallon. Natural gas rose 1.6 cents to settle at $4.847 per 1,000 cubic feet.

Penjualan Daihatsu Mei 2011 Tumbuh 28,1% - AntaraNews

Jakarta (ANTARA News) - Daihatsu berhasil meningkatkan penjualan wholesales dari 8.160 unit di bulan April 2011 menjadi 10.453 unit di bulan Mei 2011 atau meningkat sebesar 28,1%. Angka penjualan tersebut merupakan 17,2% dari market share wholesales otomotif nasional.

"Hal ini dikarenakan kandungan lokal komponen Daihatsu telah mencapai 85% sehingga tidak terlalu mengalami gangguan yang berarti dalam pasokan komponen. 9% komponen lainnya dipasok dari pasar ASEAN dan 6 % dipasok dari Jepang," ujar Amelia Tjandra, Direktur Marketing PT Astra Daihatsu Motor dalam siaran pers perusahaan itu.

Amelia Tjandra mengemukakan bahwa penjualan otomotif nasional masih terpengaruh dampak bencana alam di Jepang yang ditunjukkan dengan angka penjualan otomotif nasional secara wholesales bulan Mei masih sama dengan bulan April yakni pada kisaran 60.000 unit. "Namun angka penjualan Daihatsu mulai menunjukkan kecenderungan yang menggembirakan," kata Amelia Tjandra.

Penjualan retail Daihatsu bulan Mei 2011 mencapai angka 10.803 unit atau 17,1% dari penjualan retail nasional. Penyumbang terbesar penjualan masih dipegang oleh Daihatsu Xenia dengan kontribusi sebesar 49% atau 5.347 unit dari total penjualan Daihatsu.

Kontributor ke-2 diduduki oleh Daihatsu Gran Max sebagai produk kelas low commercial sebesar 30% atau 3.285 unit. Kontributor berikutnya adalah Daihatsu Terios mewakili produk kelas medium SUV dengan kontribusi sebesar 15% atau 1.646 unit. Selanjutnya diikuti oleh produk Daihatsu Luxio dan Sirion dengan angka penjualan masing-masing sebesar 471 unit dan 54 unit.

Selama periode Januari - Mei 2011 penjualan retail Daihatsu mencapai angka 53.854 unit atau 15,5% dari pangsa pasar retail nasional. Daihatsu masih tetap menduduki posisi ke-2 market share retail nasional. "Jika dibandingkan dengan periode Januari –-Mei 2010, penjualan retail Daihatsu mengalami pertumbuhan sebesar 125%," kata Amelia Tjandra.
(A038)

Japfa to distribute Rp365/share dividend - Insider Stories

Poultry feed company PT Japfa Comfeed Indonesia Tbk will distribute a cash dividend of Rp365 a share or Rp765 billion. The dividend is reflecting a 75% payout ratio from its net profit last year.

Director Ignatius Herry Wibowo said the dividend is significantly higher than Rp5 a share last year. "We can't give a promise to pay higher dividend as it depends on the financial performance and capital expenditure," said in a public expose today as quoted by Bisnis.com.

Rabu, 08 Juni 2011

Indonesia Equity Sales (update 2) - Credit Suisse

Cement Sector: Lafarge to Enter East Java
The Ministry of Industry states that Lafarge is considering expanding into East Java and/or North Sumatra . In North Sumatra , Lafarge would spend US$276 mn for 1.5 mn tons cement factory. Previously, Lafarge acquired 99% stake of Semen Andalas in Aceh, and built 1.5 mn tons cement factory costing US$276 mn – which already in operations in March. The Ministry adds that China Triumph International Engineering Company also plans to spend US$350 mn to build 2.0 mn tons cement factory in Grobongan, Central Java .

Sales commentary: Unless the government passes the Land Reform Bill, by 2014 at the very latest, Indonesia cement industry could face the problem of overcapacity. At present, we like Semen Gresik (SMGR, O, PT Rp11,000) on its expansion plan and strong market positioning.

Astra International (ASII, N, PT Rp64,000): Stable Motorcycle Sales in May
Indonesia Motorcycle Association (AISI) reported May 2011 sales at 709,077 units (+11% YoY, flat MoM), bringing 5M11 total to 3.4 mn units (+15% YoY). AISI targets Indonesia motorcycle sales to grow 12-13% this year. ASII commands 51% market share in 5M2011.

Sales commentary: Good motorcycle sales number in May, in our view, given seasonality ahead of the new school year in June. We are confident there is upside risk in our motorcycle sales projection for 2011 – especially for ASII, where we only assume 2011 market share of 45%.


Bakrie Telecom (BTEL, U, PT Rp185): New Management Line-Up

BTEL VP Director, Muhammad Buldansyah resigns to join Qatar Telecom on July 1. BTEL promotes Jastiro Abi from CFO to replace Mr Buldansyah.

Sales commentary: Key BTEL personnel to watch are Anindya Bakrie and Jastiro Abi, who remain with the company. Despite solid management team, BTEL is likely to undergo structural pressures, which pose challenges to its financials, in our view.

Indonesia Equity Sales (update 1) - Credit Suisse

Highlights of the Day

· Markets: Review and Outlook
· Indonesia Bank Sector: Lower Rates of Merely Normalizing?
· Local News: Cement Sector / ASII / BTEL
· Upcoming Event: Move Over BRIC…PASEAN is Coming to London !
· Picture of the Day: Jakarta Enforces Zoning Laws

Markets: Review and Outlook

Equities: The JCI again traded in narrow range and ticked marginally higher – closing at 3842. Turnover slightly improved to US$450 mn, though still 30-40% lower than the YTD average. Local investors were more active in the market, trading second liner and Bakrie Group names. The JCI is projected to open lower on weak regional markets open, with calm market sentiment ahead of the central bank meeting on June 9.

Fixed Income: The government raised Rp7.0 tn, vs Rp5.0 tn targeted, in yesterday’s bond auction, suggesting strong market appetite for Indonesia sovereign. 10-year government bond yield was flat at 7.35% yesterday.

Currency: The rupiah closed firm at its 7-year high at 8513/US$, supported by the strong appetite for the government bond and expectation of stable interest rate in Bank Indonesia ’s policy meeting on June 9. The rupiah opens at 8513/US$ this morning.

Indonesia Bank Sector: Lower Rates of Merely Normalizing?
Sales commentary: Good analysis from Teddy, showing how sticky lending rates are, and even stickier funding rates, in Indonesia . With robust loan demand in Indonesia , the real competition is actually happening on the funding side. BMRI, BBNI and BBRI are state banks with strong deposit franchise in Indonesia .

· Analyst Teddy Oetomo views Indonesia banking sector’s lending and deposit rates to merely normalizing, as opposed to declining, which implies: 1) low competition in the lending market; and 2) tight liquidity on the funding side.
· In such environment, banks with low LDR and high CASA would be the winners: Bank Mandiri (BMRI, O, PT Rp8,950) and Bank Negara (BBNI, O, PT Rp5,000). Teddy also likes Bank Rakyat (BBRI, O, PT Rp8,330) on undemanding valuations.

Inflation worries starts to crawl back to Indonesia - UOBKH

US was largely driven by the highly anticipated Fed's speech, that some hoped could energize the market on any signal of QE3, but instead gave a negative color to overall sentiment. Bernanke acknowledge the slower growth in US, and stated that the Fed will remain “accommodative”, but market still isn't comforted by his statements. Meanwhile Asia still trade sideways. Yesterday's slight gain was influenced by comments from ECB regarding more Greek bond buying, but Asian inflation worries remains.

Even Indonesia, which was generally “safe” from inflation worries during 2Q11, now may be facing more inflation risks in the upcoming months. As we know, the festive season is coming in the 3Q11, as well as (tentative) fuel subsidy phase out, and the end of harvest season. All of this factors are leading to accelerating inflation in the next 6 months. Moreover, 2 surveys of the consumer confidence index released yesterday showed a 1.6 points drop to 105.3 points, mirroring a mixed sentiment regarding concern on inflation.

Bank Indonesia is due to maintain its benchmark reference rate at 6.75% tomorrow afternoon, as we believe, for now, inflation is still under control and stronger currency has helped contain rising prices.

INCO: Hold; Rp4,675; TP Rp5,000; INCO IJ To shut down furnace for maintenance - DBS Vickers

International Nickel Indonesia (INCO) plans to shut-down one of its four electric furnaces in Soroako for five months starting in October for routine maintenance. Assuming 75% utilization rate for each electric furnaces, we estimate INCO’s output would drop by 7% y-o-y to 68,000 tons in FY11F before recovering to 73,000 tons in FY12F.

Meanwhile, INCO’s third hydro power plant in Karebbe is near completion ( > 78% complete) and is expected to start operation on schedule in 2H2011. With more power, INCO should be able to increase production capacity gradually through de-bottlenecking of its production facility and increase in capacity from 77,000 tons to 90,000 tons by 2014. We forecast 7% production CAGR over FY11F-15F.

We reiterate our HOLD call for INCO, Rp5,000 TP based on blended valuation of DCF (WACC 9% 3% terminal growth), 14x FY11 PE and 8.0x EV/EBITDA. We like INCO because it is one of the lowest cost nickel producers, and will be the prime beneficiary of rising nickel prices. But we think the shares are fairly priced. INCO is trading at 12.0x FY11F PE, above regional peers’ 10x. Maintain HOLD.

Automotive Steady 2W sales growth in May - DBS Vickers

It was reported that preliminary figures of 2W May sales volume is 709,077 units (+11% y-o-y, +1% m-o-m). The data shows that Honda (ASII products) still dominates the market with a share of 53% (377,157 units) while Yamaha was second with 40% market share (281,925 units). Year to date, Honda’s market share of 51% is far ahead of Yamaha’s 41%. Honda’s success in gaining market share is driven by its compelling automatic scooter launches. Year to date, 2W sales are in line with our estimates, comprises 39% of our FY11F projected sales volume of 8.7m units. A slowdown in June is expected as the new school year is about to start. However, sales should increase and reach its peak before Eid ul-Fitr that falls at the end of August.

Economic Review Rabu 8 Juni 2011 - Samuel

§ IDR was relatively stable while JCI went up slightly. The market sentiment has not fully recovered yet that bring the crude prices went mixed in the yesterday market. The price of WTI increased a bit that could bring market sentiment in Asia may go in positive way today including IDR. We expect IDR may appreciate further to Rp.8,500 per USD.

§ Indonesia competitiveness index improves from the rank of 54 to 44 out of 133 countries surveyed by World Economic Forum on Global Competitiveness Index 2010-2011. The increase becomes a positive pull factor to invite foreign direct investment.

§ Bernanke said the US economy may loss its momentum and frustratingly slow that still needs monetary stimulus. Even though some analyst start to talk about QE3 but it seems very unlikely to be happened. The Fed may continue to keep the benchmark rate as low as current position to longer period until the US economy shows stable recovery.

INDY:Positive story remains - Mandiri

Indika posted 1Q11 results with a net profit of Rp265bn (-9.6%yoy, -3.0%qoq) mainly due to the rupiah’s appreciation and also lower earnings contribution from Petrosea and Santan Batubara due to lower production and higher operational cost. Redenomination in US dollar reporting will make INDY’s book look better. 16% realization vs peers of 19-20% of our FY11F is expected considering higher back end loaded project realization in 2H11 including new contract Cepu Block that we have incorporated of S$45mn revenue in 2H11 and the consolidation impact from MBSS will take place in 2Q11. Well expected new contracts in PTRO, Tripatra and MBSS are likely to drive their earnings performance next quarters. We reiterate our Buy rating.

Weak 1Q11 results. INDY reported operating loss of Rp55bn mainly due to higher carried over construction cost from Tripatra and continued M&A due diligence costs. Higher strip ratio up to 11.94x, jumping 57.2% yoy, following pre stripping strategy and wet weather also caused weak profitability in Santan Batubara with 1Q11 net profit dropping 52% yoy to US$5.2mn. But it is expected to normalize next quarters following higher coal output in next quarters.

Kideco remains intact. Kideco’s results were in line with our expectation with production reaching 7.65Mt, up 9.1% yoy, or represented 24.2% our FY11F’s of 31.7Mt, considerably higher than peers of around 20% of FY11F target. Kideco’s pricing was also inline with their guidance with 1Q11 ASP of US$62.5/ton, +19.5%yoy representing 95% FY11F of US$66/ton.

Petrosea will grow bigger. Petrosea will get new contracts from Adimitra Baratama Nusantara (ABN), Toba group, worth US$396mn. Our channel checking revealed that Toba Group is one of big domestic coal producers with total production of around 4Mt last year and is expected to double within 3 years.

MBSS has robust prospect. MBSS has signed new contract with Borneo Indobara (Sinar Mas Group) in March 2011 worth around US$12mn/year. MBSS is also expected to have new project in pipeline worth US$94mn. MBSS reported 1Q11 net profit of Rp77bn, up 31.3%yoy, representing 25% FY11F. April’s indicative net profit is Rp30bn, annualized net profit will be around Rp320bn, 3% higher than our FY11F

Maintain TP, reiterate Buy. We maintain our Buy rating on INDY and have not changed our forecast since we prefer to wait its 2Q11 results to see the impact of the MBSS’s consolidation. Catalysts from new contracts in MBSS, PTRO, Tripatra and higher ASP in Kideco will drive its performance in the coming quarters. We maintain our TP at Rp5,200 implying 15.7x PER11F and we reiterate our Buy rating.

BAKRIE TELECOM (BTEL): Reinstating Coverage with Underperform (TP Rp185) - Credit Suisse

Colin is forecasting net earnings loss for 2011F-13F, therefore we reiterate Underperform rating with DCF Rp185, which at Rp365 implies 49% Downside! I am recommending Trading Buy TLKM (@Rp7,650 on 12.0x 2011F PER & implied 27% upside to DCF Rp9,750), while continue to Prefer EXCL (@5,950 on 12.8x & implied 21% upside to DCF 7,200)/ISAT (@5,250 on 23.9x & implied 50% upside to DCF 7,900)/TOWR (@10,400 on 38.3x PER, 11.5x EV/EBITDA & implied 39% upside to DCF 14,500)/TBIG (@2,175 on 14.5x PER, 12.8x EV/EBITDA & implied 22% upside to DCF 2,650)!

· Colin McCallum, CA (Daily attached): We reinstate Bakrie Telecom with an UNDERPERFORM rating. Slowing CDMA fixed wireless growth in our view is a direct result of lower GSM price points following the 2007-8 price war, together with ongoing declines in GSM handset and smart phone price points. While Bakrie Telecom has a strong management team, we believe these to be structural issue which are unlikely to reverse. We, therefore, expect the organic revenue growth rate to remain firmly in single digits and, given ongoing opex and capex pressures due to lack of scale, our DCF-based target price is limited to Rp185.
· Bakrie Telecom has reported 1Q11 results. Gross revenue declined by 0.4% QoQ and rose only 2.2% YoY despite an increase in standard tariffs on 1 November 2010. Given Bakrie Telecom’s small scale (3.7% of total market revenues as at 1Q11), the 2.2% YoY revenue growth rate that was eked out was, in our view, not enough. EBITDA declined by 11.7% YoY due to rising opex, EBIT declined by 87.5% YoY and Bakrie Telecom reported a loss before forex of Rp157 bn.

INDIKA ENERGY (INDY): Slightly Below expected weak 1Q11 results – reit Buy - Credit Suisse

We reiterate Buy INDY on valuation and PTRO re-floating in 3Q. The 1Q11 Coal Earnings from Kideco is in-line. Disappointments are from other subsidiaries (98.5%-owned PTRO and fully-owned Tripatra ) and not consolidated yet 51%-owned MBSS. CS is forecasting average Thermal Coal benchmark prices of US$125/t 2011F (slightly above weekly NEWC spot FOB US$118.4/t as of May 27th), US$130/t 2012F, US$120/t 2013F, US$100/t 2014F and US$90/t Long-Term. INDY remains cheapest amongst SEA Coal and China Coal stocks! At Rp4,150- INDY is trading on 10.5x 2011F PER on +167% EPS Growth and implied 30% Upside to SoTP Rp5,400, we reiterate BUY INDY on valuation, integrated Coal and energy-services earnings, good operations and value-unlocking from 3Q refloating of 98.5%-owned subsidiary Petrosea (PTRO).

· Fonny Surya (Daily attached): Indika posted Rp265 bn of 1Q11 net income, decreased 9% YoY. This net income is slightly below our expectation, at 13% of our FY11E estimates and 14% consensus estimates. Kideco’s earnings are in line with our estimate, at 21% of our FY11E estimates. We expect 1Q11 to be relatively weak given MBSS is not yet consolidated, the higher strip ratio at Kideco and carryover costs from the cancelled order at Tripatra.
· Moving ahead, we expect earnings to improve QoQ at all business units as we expect a lower strip ratio, consolidation of MBSS’ (about 13% of opr profit) and potential new contracts from Tripatra and Petrosea in 2H11.
· We believe Indika is on track (~80% done) with Petrosea’s refloating process and is prepared to re-list Petrosea within the next couple of months. We believe the re-floating of Petrosea will unlock its value and re-rate Indy’s share price. We maintain OUTPERFORM Indika at target price of Rp5,400/share, implying a 13.5x 2011E P/E.

CEMENT SECTOR: Long-term Competition threat as early 2014 - reit Overweight - Credit Suisse

I think Long-Term Competition threat could cap the sector valuation from premium to market in-line valuation (16x PER market target at end-2011F). Ella is currently forecasting cement demand based on organic growth with majority driven by retail/property-related demand (c80%), please note Pre-Asian crisis Infrastructure-related demand was as high as 60% compared to c20% now. At Rp9,650- SMGR is trading at 14.9x 2011F PER (in-line with CS Indonesia Universe 14.4x) and implied 14% upside to TP Rp11,000 (implied 17.0x 2011F PER), given its new capacity coming in 2012F-2013F, we reiterate Buy SMGR as top-pick in the sector on both valuation and mid-term growth prospect! We have seen the premium valuation capped for our 2nd preferred stock INTP, despite being best managed and lowest cost producer, @Rp17,200 is trading at 17.4x 2011F PER (20% premium to CS Indonesia Universe) and par to TP Rp17,400 (implied 17.6x 2011F PER), therefore Hold INTP.

· Ella Nusantoro (Daily attached): Indonesia cement industry operates in a natural oligopolistic market, with a high barrier to entry. This is due to cement mostly being sold in bags (80%) rather than in bulk (20%). However, the industry is attractive for new entrants given ASP is at US$89/t with gross margin at 47.6%, in addition to the availability of coal domestically which accounts for 30% of total cost and is the main source for energy. While current demand of 6% CAGR for 2011-13E seems limited, thus the upside will come from the implementation of GoI infrastructure projects.
· However, threat from new entrants will cloud the industry by as early as 2014. Our estimates are that by 2013, the industry capacity will rise at an 8% CAGR for 2011-13E to 62.4m tpa, and assuming a 6% CAGR for 2011-13E on domestic cement demand growth (exclude government infra project) and 3 mn tonnes exported, by 2013, the industry will have 11mn tonnes excess capacity (or 17% of capacity). Assuming domestic demand growth doubles starting in 2013 with the implementation of government infrastructure projects, Indonesia will face a shortage in cement in 2014, similar to situation in 1994-97, where cement has to be imported. On that scenario, it makes sense for new entrants to want to set foothold in Indonesia and the existing cement companies to expand capacity. Our estimate figures for 62.4 mtpa capacity by 2013 excluded the plan for Holcim Indonesia ’s 1.7 mtpa in Tuban, new entrants Semen Grobogan’s 2 mtpa in Central Java and Siam Cement’s 1.7 mtpa in West Java . It is estimated to take around three years for construction to be complete, thus assuming that it starts today, the combined 5 mtpa will likely be completed by 2014.
· Meanwhile, the existing cement companies will continue to enjoy the current margins with an ability to pass on the rise in input costs. We maintain our OVERWEIGHT rating on the sector, with Semen Gresik as our top pick in the sector, due to valuation.

STRATEGY: Buy Outside Java Consumption - BBRI, GGRM, ASII, INDF, SMGR - Credit Suisse

I agree to overweight Outside Java Consumption stocks, which a good proxy to both domestic consumption and global commodity boom, and hence Buy BBRI (@Rp6,500 on 11.9x 2011F PER), GGRM (@44,600 on 17.2x), ASII (@58,950 on 15.7x), INDF (@5,500 on 14.5x), SMGR (@9,650 on 14.9x). CS GEM Model Portfolio also includes 2 Indonesian stocks ie ASII and INDF. At JCI 3,844pts, CS Indonesia Universe is trading on 14.4x 2011F PER on +27% EPS Growth, Teddy Oetomo is forecasting 8% upside to end-2011F JCI target 4,150pts (16x 2011F PER). Teddy’s market screening on valuation and earnings expectation come up with Cheap stocks- BMRI (@Rp7,100 on 13.1x 2011F PER), INDF (@5,500 on 14.5x), TLKM (@7,650 on 12.0x) & BBRI (@6,500 on 11.9x).

· Teddy Oetomo (Daily attached): Commodity and domestic consumption stories currently remain the two main drivers of Indonesia’s equity market, with commodity and domestic consumption plays representing 17.9% and 11.3% of Indonesia’s capital market (JCI) by weight.
· However, what is often overlooked is that robust commodity prices lead to stronger income, and purchasing power, in commodity producing regions. With the majority of commodities produced outside Java, Credit Suisse’s survey finds higher income in regions outside Java than in Java. Interestingly, we believe that the penetration of consumption goods outside Java remains relatively modest, with residents outside Java still found to exhibit higher propensity to save, providing upside for consumer plays.
· We identify four companies that may benefit from stronger purchasing power outside Java, namely BBRI, GGRM, ASII, INDF and SMGR.

Results of United Tractors’ Limited Public Offering IV

7 June 2011 – Jakarta
On 7 June 2011, PT United Tractors Tbk (“UT” or the “Company”) has successfully concluded the process of its Limited Public Offering IV in the context of the issuance of a pre-emptive rights (“Rights Issue IV”). The shareholders’ large interest to participate was indicated by the total subscription and excess application whose rate attained 1.12 times of the shares being offered. Proceeds obtained by the Company from this Rights Issue was Rp 6.07 trillion. With the conclusion of Rights Issue IV, UT as of now distributes 3,730,135,136 shares. The ownership of PT Astra International Tbk in the Company has not changed or fixed, that is equal to 59.50%.

BBCA - Not a good year - Ciptadana

HOLD recommendation with target price of Rp6,600/share
We change BBCA recommendation from BUY to HOLD with target price of Rp6,600/share. The bank showed unimpressive results in first quarter of 2011. The bank is struggling to maintain its asset yield in the low interest rate environment. BBCA business model tends to avoid high risk (high return) asset and prefer low risk (low return) asset to fill its balance sheet such as SBI. We derived our target price from Gordon Growth model with assumptions of 23% sustainable ROE and 14% cost of equity. Our financial model suggests P/B 2011 of 4.2x and P/E 2011 of 20.2x for BBCA.

Weak first quarter result
BBCA net income only grew 4.4%YoY to Rp2 trillion in 3M2011. The bank’s operating income stood at Rp2.5 trillion in 3M2011, increased 4%YoY. BBCA’ net interest income growth could not cope with provisioning expenses. Note that BBCA booked loan reversal of Rp304 billion a year ago. We expect that 2011 will not be a good year for BBCA as we estimate that net income will only grew 0.5% to Rp8.5 trillion in 2011.

Struggling with the decrease of asset yield
The bank is struggling with the decrease of asset yield. Asset yield is declining faster than cost of fund. Although net interest margin was picked up on YoY basis we expect that this trend could not continue as competition in attracting CASA is getting tighter and Indonesia is in the period of long term decrease of interest rate.

Expanding LDR is inevitable to maintain growth
One logical choice for BBCA to increase its asset yield is expanding its LDR. We expect LDR will increase gradually from 55% in 2011 to 65% in 2013.

Alam Sutera Realty (ASRI IJ; BUY; TP IDR 400): Stellar 1Q11 Showing - OSK

ASRI’s 1Q11 net profit expanded 2.5 times to IDR 159bn, slightly above our and consensus expectation, thanks to a 97.5% y-o-y and 140.7% q-o-q surge in revenue to IDR 405bn. Some 89% of the company’s revenue came from sales of its residential properties. The value of its properties, which may appreciate owing to their direct access to the Jakarta-Merak toll road, could also bolster gross and net margins to 52% and 39% respectively.

Additional 6.1ha in Bali. The company recorded a cash outflow of IDR 221bn, being cash paid as advance for land purchases, including land in South Denpasar, Bali bought at 61,364 sq m for IDR 199.4bn, equivalent to IDR 3.25m/sq m. It also obtained the licence to build condotels, but on 5 Jan 2011, Bali’s governor slapped a moratorium on hotel developments in Denpasar, Badung and Gianyar up to 2015. As ASRI’s licence will expire within a few years, it may consider selling the land. Since the sale price for property facing the sea in Bali could reach IDR4-5m per sq m, the company may be able to at least fetch a 20% gross margin.

Strong profits. The company’s FY11f revenue booking will come mainly from the 2010 pre-sales of IDR 1.6trn. Although some 63% of its FY10 pre-sales is from residential properties where margins are 7% lower than the 58% garnered from commercial sales, we believe that it should be able to maintain gross margin at above 50% considering that the 1Q11 gross margin from housing reached 51% versus 30% in 1Q10. Also, the company still holds advances from customers totaling IDR 1.5trn in 1Q11 which is potential accounting revenue. Elsewhere, ASRI has net cash of IDR 46bn.

May pre-sales hit IDR 852bn. This is up by 7% y-o-y, making up 50% of our FY11f pre-sales target of IDR 1.7trn. Some 71% of the pre-sales is from residential sales, with the remainder from commercial and apartment sales. The selling price of land for residential development is currently at IDR 5.2m/sq m, doubling from IDR 2.6m/sq m in FY09. Around 9ha has been sold and we expect another 11ha in Serpong and 20ha from Pasar Kemis to be sold up to the end of this year.

Maintain BUY, TP 400. We remain conservative and keep our forecasts intact even though the 1Q11 results already reached 32% of our FY11f. Our TP is also held steady at IDR 400 per share since the additional 6.1ha in acquired in Bali – bought in exchange for ASRI’s 41ha in Cikarang, Bekasi (valued at IDR 59.6bn) - only enhanced the company’s NAV by 1%. As such, we believe that the demand for more affordable housing in the fringes of Jakarta will remain strong as among Indonesia’s 61m families out of a total population of 240m, some 22% still live with their parents or are still renting a house.

Indonesia Equity Strategy: Bottom up to top down: Rotate from domestic-facing sectors to export commodities - JPM

· Cautious notes from the bottom up on domestic-facing sectors: Over the past month J.P. Morgan’s analysts in Indonesia have downgraded Cement (materials), Astra International (consumer discretionary) and sounded cautious notes on Banks after their 25% rally since the end of January. Viewed in aggregate, the bottom-up picture is that domestic-facing sectors have done well and the risk-reward ratio appears less favorable at current valuations.

· Domestic-facing sectors have significantly outperformed commodity exporters YTD: YTD MSCI Energy has underperformed Financials by 10.2% and consumer discretionary (Astra) by 6.6%. Industrials (United Tractors), another coal leveraged play, has also been a significant underperformer, trailing financials/consumer discretionary by 11%, while the Jakarta Agri sector has also trailed. A strong currency, healthy domestic demand and downward trending coal and CPO prices since the end of January all contributed towards the performance differential.

We think some of the drivers of the performance divergence could be set to reverse as we go into 3Q, favoring better performance from commodities.
· Our currency strategist Yen Ping Ho holds the view that the pace of IDR appreciation could slow and suggests an Rp8,450/$ rate as a possible trough (less than 0.5% from current levels).

· Our China Strategist Frank Li believes that the China is undergoing an “engineered” slowdown to combat inflation and expects sequential growth to reverse its deceleration in 3Q. Our Economics team forecasts 3Q GDP growth of 9% q/q SAAR from 8.3% in 2Q & 8.8% in 1Q.

· Indonesian CPO exports to China fell 46% q/q in 1Q on high prices relative to Soybean Oil. Industry Journal Oil World however expects Chinese Palm Oil imports to rebound in 3Q to its highest level in 2 years.

· We see a case for rotation – highlighting UNTR, INDY, PTBA, LSIP: We believe there is a case for investors to trim OW positions in domestic-driven sectors (Banks, Astra, Cement) and look to add to positions in lagging commodity stocks. We highlight UNTR (rights overhang now lifted), INDY (healthy leverage to prices, and has capacity to exploit a demand pick up), and PTBA (domestic coal demand growing as generating capacity is added). Our top CPO pick is LSIP on what we view as inexpensive valuations, and we would look to add Astra Agro on a pullback. We are cautious on PGAS, but its 6%/23% underperformance over 1M/12M could create an opportunity if fundamentals turn.

Special Report on Indonesia + Risk-Reward on listing regulation for foreign resources companies + cement - Nomura

Indonesia: Building momentum – we identify six key investment opportunities and 10 milestones which, if realised, should lift Indonesia’s real GDP growth above our base case of 7%, on average, over the next five years.

Indonesia is gaining its rightful place on the global stage, as evidenced by its membership in the G20. Its abundant natural gifts, including a large and young population, a stable liberal democracy, proximity in the world’s fastest growing region, and an abundance of natural resources, underlie its tremendous – and now widely appreciated – potential.

It has however taken one and a half decades since the Asian Crisis to regain the “darling of investors” status. The economy – averaging 5.7% growth over the past five years, compared with 4.7% over the five years preceding that – is building momentum.

On the equity side, we favour natural resources stocks (such as Bukit Asam, Adaro, Bumi Resources and London Sumatra); stocks that benefit from discretionary consumption (Astra International); infrastructure stocks (Jasa Marga and Semen Gresik); and stocks in the under-penetrated banking sector (micro-finance leader Bank Rakyat).

Indonesian Finance Minister (in a press report yesterday) was exploring the possibility of requiring resource companies in Indonesia (including mining, plantations & forestry) to list local assets in Indonesia, with a possible minimum public free float of 40%. Our commodity analysts, Ken Arieff Wong and Isnaputra, think this is still at very preliminary stages with no timeline given, and would make companies with Indonesian assets re-visit their plans to list, but any strict requirement (eg 40% public free-float) could be a negative given dilution concerns (though the flipside positive would be a 5% reduction in statutory corporate tax rate). In the mining sector, ITMG can be impacted by the proposal while the impact on INCO is debatable, in our view.

Lafarge (not listed), the global cement player, is reported to have expressed interest and submitted application to the Ministry of Industry seeking permit to build cement plant in East Java. The company is currently in the process of conducting a feasibility study for the plan. In addition, Lafarge is also planning to build a 1.6m tpa of cement plant in Langkat, North Sumatera with total investments of US$275m. If completed, these two plants will augment Lafarge’s presence in Indonesia, in addition to the existing 1.6m tpa capacity it has in Aceh that it has just recently rebuilt post-Aceh tsunami.

Lafarge will be the second international players reported to have interest in investing in the cement industry in Indonesia (the other was a Chinese player), highlighting the attractiveness and potential growth of the sector. While additional players will increase competition pressure in the industry, execution will be the key challenge for new player. East Java tends to be the place for new players to focus given (i) the presence of abundant resources (there is actually a line of limestone mountain in the northern part of Central/East Java), (ii) presence of ports (as distribution point as well as entry point for coal supply).

Semen Gresik (SMGR IJ, Rp 9,550 BUY) On the right track - Danareksa

Expansion on schedule
In our last visit to the company, the management gave assurances that the construction of the 2 x 2.5mn tonne new plants are on schedule. It seems likely that both plants - one in Pangkep, South Sulawesi and the other in Tuban, East Java - will be completed in early 2012. Some Rp4.0-5.0tr has been spent on capex so far, or representing around 65-80% of the total capex. For this year alone, the total capex is budgeted at around Rp1.4tr - including capex for the expansion. If things go according to schedule, both plants should commence trial operation early next year. The Tonasa plant will be equipped with a 35MW coal fired power generator from Kawasaki of Japan although construction is a bit behind schedule due to the lengthy negotiation process. In the early stage of its trial operation, the Tonasa plant will use a rented power generator from PLN. Meanwhile, the Tuban plant will utilize power from the national grid.

Weak 1Q11 for three reasons
Semen Gresik has shown relatively poor performance compared to its rivals. Whilst the domestic sales volume growth of its competitors has reached double digits, Semen Gresik lagged far behind with sales volume growth of only 1.4% in 1Q11. Despite its capacity constraints, Semen Gresik’s volume growth can still be considered as low. According to Semen Gresik there are three reasons for this: 1) higher than normal rainfall in East Java, 2) the company is still in the learning process for using the new equipment installed last year, and 3) data glitches as Semen Gresik switched its data management system to SAP. However, things have improved and up to April 2011, Semen Gresik reported sales volume growth of 4.7% yoy to 5.9mn tonnes.

Reducing clinker content
Clinkers are the most expensive ingredient in cement production as they consume most of the energy required. In type I cement, known as Ordinary Portland Cement (OPC), clinker content reaches as high as 94%. Lowering the clinker content and replacing it with cheaper materials, but without reducing quality, will enhance profitability. The lower clinker content cement is known as Portland composite cement (PCC). While Semen Gresik aims to reduce its clinker content to 80% in FY11 from 83% in FY10, it should be noted that reduction of clinker content is only possible for bagged cement. By comparison, bulk OPC cement is commonly used for infrastructure and the construction of high rise buildings. OPC has faster drying characteristics compared to PCC, and property and infrastructure are sensitive to completion time. Hence, OPC is preferred over PCC for large projects. About 80-85% of Semen Gresik’s total sales are bagged cement.

BUY maintained
Semen Gresik is on track with its time line expansion with no investment cost overruns at the moment. Being on track with its expansion plant will make Semen Gresik more attractive as it will resolve the capacity constraints. Moreover, the additional capacity of Semen Gresik will add more than 10% to the total national capacity – a significant amount.

PT Borneo Lumbung Energi & Metal Tbk - ISP construction near completion - Credit Suisse

● BORN’s ISP construction is progressing and is scheduled to complete this month. Upon the completion of ISP, BORN will be able to store up to 1 mn t in the middle part of the river, from which point BORN will be able to continually ship the coal all year round.
● BORN’s logistical risk will be greatly reduced once ISP starts to operate. We believe that despite weakening prices as Queensland recovers, BORN remains attractive, as its key upside in 2H11 will remain in its volume growth momentum post ISP construction.
● We expect the completion of ISP to lift the majority of concerns over the river logistics issue and prompt for share price re-rating. In addition, we expect BORN’s ASP to strengthen in 2Q11, but weaken in 2H11. We believe that downside risk to our price may be compensated by positive momentum post ISP construction and potential upside to our volume forecast.
● We maintain OUTPERFORM at target price of Rp2,000/share based on 15x 2011E P/E.

Rumors Glencore takeover Banpu's Indonesia (update 1) - Bloomberg

PLG - druidsz2 druids: Banpu Plc, shareholder of 65% Indonesian coal producer Indo Tambangraya Megah, rose intra day in Bangkok today approaching +2% high (http://www.bloomberg.com/apps/quote?ticker=BANPU:TB). (see intra day chart Banpu)
PLG - druidsz2 druids: Thailand's composite index (SET) slipped to -0,418% intra day (http://www.bloomberg.com/apps/quote?ticker=SET:IND).

PLG - druidsz2 druids: Early in the day, unverified news is circulated among sophisticated traders related to Thai equity desk that source closed to Banpu Plc. had advised on late Monday that Glencore, the biggest world coal trader, has approached Banpu for possible takeover or significant stake in Banpu's Indonesia subs Indo Tambangraya Megah

Chinese coal miners expect 2011 consumption rise: Macquarie - Platts

Chinese coal producers are expecting coal consum Save ption to rise during 2011, with thermal coal sentiment bullish in the short term, according to a release from investment bank Macquarie detailing highlights from its China Commodities Conference.

Macquarie said producers China Coal and Shenhua had both reported stronger-than-expected demand so far this year, with power consumption expected to rise 14% year-on-year versus 2010.
The companies also reported little evidence of a slowdown in demand from energy-intensive industries such as aluminum and steel-making, despite "the noise on power rationing in China over the summer."
"China Coal believes the coal markets will remain tight for the next two to three years if railway infrastructure bottlenecks still exist and China fails to manage its GDP reliance on heavy industry development. As a result, thermal coal prices are likely to stay high in the medium term," the report said.

Meanwhile, strong demand coupled with railway bottlenecks mean more imports will be required to fill the gap in Chinese coal supply. However, Macquarie noted that thermal coal imports in 2011 had fallen by almost a third versus the same period in 2010, due to higher prices on the seaborne market resulting from Australian supply losses in early 2011.
"We believe Chinese thermal coal imports will rebound from May onwards as a result of a price surge in China since early April, along with [power plants] restocking ahead of the summer and lower than expected hydropower supply this year," Macquarie said.

According to the report, China Coal World expects 2011 production in Shanxi province to return to its previous 2008 peak of an estimated 800 million mt/year. However, production in Henan province will most likely fall, as a result of safety inspections within the area.
Meanwhile, in the coking coal market, Macquarie reported that Mongolia Mining expects conditions to remain tight, with projections that Mongolian raw coal exports to China will hit 70 million mt by 2015, compared with 16.6 million mt in 2010.

Coal Rises on Speculation Demand May Build as Reservoirs Fall - Bloomberg

European coal derivatives rose on speculation demand may strengthen in the region as countries cut nuclear output and reservoir levels fall.“The drivers in Europe are the nuclear shutdowns and low hydro levels,” Karim Kanji, director of coal trading at Barclays Capital in London, said by phone today. Prices are also gaining on a shortage of coal in China to meet summer demand, he said. The country is the world’s biggest coal user.
Coal delivered to northwest Europe with settlement next year rose 75 cents, or 0.6 percent, to $130.75 a metric ton by 11:17 a.m. in London. That would be the highest closing price since May 4.

French water reservoirs were 59 percent full at the start of this week, Electricite de France SA said today. That’s down 12 percentage points from last year. Lower reservoir levels cut the amount of power that can be generated by water, possibly boosting use of other fuels.
The German Cabinet approved plans yesterday to close the country’s reactors by 2022, accelerating the nuclear exit of Europe’s biggest economy. Chancellor Angela Merkel ordered the halt of Germany’s seven oldest reactors in the second half of March following a meltdown that month at Japan’s Fukushima Dai- Ichi plant after an earthquake and tsunami.

Norwegian Reservoirs
Nuclear power accounted for about 23 of German generation last year, while France gets about 20 percent of its supply from running water through turbines. Reservoirs in Norway, where hydropower plays a bigger role in the energy mix than any other European country, were 37.9 percent full in the week to the end of May, according to data from the Nord Pool Spot AS exchange. That compares with a 44.7 percent median since 2009.

China faces a power shortfall that may extend to 40 gigawatts this summer, surpassing the country’s 2004 record, according to State Grid Corp. of China. A gigawatt is enough to supply 1 million U.S. households on average. China boosted coal imports 64 percent in the two months through April.
China is studying a plan to cut the 17 percent value-added tax levied on coal imports, National Business Daily reported today, citing an unidentified official at the National Development and Reform Commission.

Profit from running coal-fired power plants for next month, the so-called clean-dark spread, is about 7.12 euros ($10.45) a megawatt-hour, compared with 3.19 euros from burning natural gas, Bloomberg data showed. The calculation uses electricity prices in Germany and takes emission costs into account.
December carbon-dioxide permits under the European Union cap-and-trade system fell 0.2 percent to 16.65 euros. Gas for delivery in the six months through September 2012 to the U.K., Europe’s biggest consumer of the fuel, rose 0.3 percent to 65.9 pence ($1.08) a therm in London.

The coal-derivative data are drawn from information supplied by ICAP Plc, GFI Group Inc., Spectron Group Ltd., Credit Suisse Group AG, IHS McCloskey, Bloomberg, Tradition Financial Services and Tullett Prebon Plc.

China seen unlikely to cut taxes on imported coal - Reuters

China is unlikely to cut the value-added tax on coal imports as such a move will only drive up international prices and in turn erase the price advantage of overseas supplies, traders and analysts said on Tuesday.Local media reported that Beijing may cut the 17 percent value-added tax and port charges on imported coal to encourage more overseas purchases, as one of the moves to increase energy supplies to prevent a worsening of its worst summer power shortage in seven years.
But industry watchers said there was little incentive for Beijing to give importers such a boost, as the country was already well-supplied with coal, with most power stations holding coal inventories of around two weeks.

ny move to favour importers and discriminate against domestic suppliers, would not only have Chinese miners up in arms, but also encourage international coal prices to climb, which would in time cause imported shipments to lose their comparative price advantage, traders and analysts said.
"It is very unlikely that Beijing would go down that path," said Helen Lau, a coal analyst at UOB-Kay Hian in Hong Kong.
"What we have seen is probably more of a gesture to show the utilities sector that the government still has other administrative tools to manage coal prices."
China's coal imports in the first four months of the year shrank 24 percent from a year earlier to 43.5 million tonnes, as utilities shunned more-expensive supplies from overseas and focused on domestic coal instead.
A tax cut favouring imports could also lead angry Chinese miners such as China Coal and Shenhua Energy , to cut output, which could cause a shortfall in supply since 95 percent of China's annual 3 billion tonnes consumption still comes from domestic mines.

The current power crunch in China, which has forced a long list of provinces to ration power and factories to cut output, stems from excessively low power tariffs that has forced hundreds of utilities nationwide to cut generation.
"It is not a repeat of 2008 whereby utilities can't run because of a coal shortage. Besides, why should we subsidise imports and pour money at foreign producers?" said a Beijing-based coal trader.
Downpours over the weekend in central and southern China would also start to boost hydropower output, bringing relief to the country's current power shortage, which has been forecast to peak at as much as 40 gigawatt this summer.

REBATES, POWER TARIFFS
China levies 17 percent valued-added tax (VAT) on imported coal and port charges range from 33 to 36 yuan a tonne, in addition to storage cost of 0.10-0.80 yuan a tonne per day, traders said.

A more effective way to encourage imports would be to reduce port charges for buyers -- a move Beijing may be more inclined to take -- analysts said.
"The government can quietly offer some rebates to power plants for port or storage charges they have incurred. That way, it doesn't have to be headline-grabbing news that would encourage overseas prices to climb," said a coal analyst at an investment bank who declined to be identified.
Still, the most effective solution to China's chronic power woes lies in higher power tariffs in the near term as well as a comprehensive on-grid tariff reform in the longer term.

Analysts also poured water on speculation that Beijing might cut the 17 percent VAT tax on the coal sector nationwide as the loss of trillions of yuan in tax revenues would be too high.
"It would be a meaningless move since miners will be reluctant to pass on savings, so coal prices will remain high. The government would be the biggest loser," said Bonnie Liu, a commodities analyst at Macquarie Bank.

US growth will strengthen this year, says Bernanke - BBC

The Federal Reserve chairman Ben Bernanke says the US economic recovery will rebound in the coming months.

Speaking to a banking conference in Atlanta, he acknowledged that growth had been slower than expected this year but said momentum would build in the second half of the year.

He did not suggest the central bank was planning any further monetary easing.

The latest economic news from the US showed employment growth slowed sharply in May.

Investors had been expecting 150,000 new jobs to have been created last month, instead growth was just a third of that number.

The jobs report was the latest of a string of weak economic releases.
Low rates

Mr Bernanke said the main reasons hindering growth were external, such as high energy prices and the Japan crises and that the impact of these problems should recede to allow stronger growth before the end of the year.

He said: "Overall, the economic recovery appears to be continuing at a moderate pace, albeit at a rate that is both uneven across sectors and frustratingly slow from the perspective of millions of unemployed and underemployed workers."

Some investors had been hoping there would be a hint that the Federal Reserve might consider taking further steps to pump money into the economy.

Its $600bn (£366bn) Treasury bond-buying programme, which was designed to help keep interest rates low and money flowing, is ending this month.

Mr Bernanke did say that the economy still needed the benefit of low interest rates.

Obama: No fears of double-dip recession : AP

After a spate of discouraging economic reports, President Barack Obama insisted Tuesday he's not afraid of the country slipping into a double-dip recession. But at the same time he displayed some impatience that the pace of the recovery has "got to accelerate."
"Obviously, we're experiencing some headwinds," Obama said at a joint news conference with visiting German Chancellor Angela Merkel. He said it was unclear whether the latest unemployment report, which showed a slowdown in job growth, was a one-month episode of part of a longer trend.
Obama said his administration was taking a range of steps to boost the economy, and that the nation is on a path to long-term economic growth but he acknowledged, "we've still got a lot to do."

The economy is the overarching issue as Obama heads into a re-election campaign, and a Washington Post-ABC News poll released Tuesday found that disapproval with how Obama is handling the economy and the deficit has reached a new high.
Mindful of that sentiment, Obama trying to project both confidence and empathy for those still feeling economic pain: "I'm not concerned about a double digit recession. I am concerned that the recovery that we're on is not producing jobs as quickly as I want it to happen."

Merkel's visit is her sixth trip to the United States since Obama took office. Later, Obama was to treat Merkel to a night of high pomp at the White House, awarding her the Presidential Medal of Freedom during a formal dinner. The gestures appear aimed at boosting a relationship that has seemed more cordial than close.
Taking note of the economic turmoil that has roiled both sides of the Atlantic, Obama said: "Recovery from that kind of body blow takes time."
"Our task is to not panic, not overreact," he said.

Obama sought to put to rest any suggestion his relationship with Merkel was in any way strained, praising Merkel's "pragmatic approach to complex issues" and saying that "it's just fun to work together."
Merkel, likewise, depicted a close relationship, although she acknowledged that "sometimes there may be differences of opinion."
Obama and Merkel, for example, have had differences on Libya, after Germany abstained in the U.N. vote that authorized a no-fly zone over Libya and kept its troops out of the NATO-led operation to enforce it.
Obama, without mentioning that, said Germany's deployment of resources in Afghanistan had allowed other NATO allies to increase support for the Libyans, and he stressed that both he and Merkel believe Libyan Leader Moammar Gadhafi has to step down.

On Afghanistan, where Germany has 5,000 troops stationed mostly in the volatile north, Merkel said the two leaders were committed to stabilizing the country not just militarily, but also in terms of bolstering its civil society, adding that "We will not abandon them."

"We wish to go in together, out together," she said of U.S. and German troops. Both leaders face significant opposition to the war from their people at home.
The U.S. has roughly 100,000 troops in Afghanistan, and Obama renewed his pledge to begin a significant drawdown of U.S. troops this summer. Germany hopes to start a gradual troop withdrawal at the end of the year..

Bernanke Admits Economy Slowing; No Hint of New Stimulus - CNBC

Federal Reserve Chairman Ben Bernanke Tuesday acknowledged a slowdown in the U.S. economy but offered no suggestion the central bank is considering any further monetary stimulus to support growth.

He also issued a stern warning to lawmakers in Washington who are considering aggressive budget cuts, saying they have the potential to derail the economic recovery if cuts in government spending take hold too soon.

A recent spate of weak economic data, capped by a report Friday showing U.S. employers expanded payrolls by a meager 54,000 workers last month, has renewed investor speculation the economy could need more help from the Fed.

"U.S. economic growth so far this year looks to have been somewhat slower than expected," Bernanke told a banking conference. "A number of indicators also suggest some loss in momentum in labor markets in recent weeks."

He said the recovery was still weak enough to warrant keeping in place the Fed's strong monetary support, saying the economy was still growing well below its full potential.

At the same time, Bernanke argued that the latest bout of weakness would likely not last very long, and should give way to stronger growth in the second half of the year.

He said a recent spike in U.S. inflation, while worrisome, should be similarly transitory. Weak growth in wages and stable inflation expectations suggest few lasting inflation pressures, Bernanke said.

On the budget, Bernanke repeated his call for a long-term plan for a sustainable fiscal path, but warned politicians against massive short-term reductions in spending.

"A sharp fiscal consolidation focused on the very near term could be self-defeating if it were to undercut the still-fragile recovery," Bernanke said.

"By taking decisions today that lead to fiscal consolidation over a longer horizon, policymakers can avoid a sudden fiscal contraction that could put the recovery at risk," he said.

All Tapped Out?

The central bank has already slashed overnight interest rates to zero and purchased more than $2 trillion in government bonds in an effort to pull the economy from a deep recession and spur a stronger recovery.

With the central bank's balance sheet already bloated, officials have made clear the bar is high for any further easing of monetary policy. The Fed's current $600 billion round of government bond buying, known as QE2, runs its course later this month.

Sharp criticism in the wake of QE2 is one factor likely to make policymakers reluctant to push the limits of unconventional policy. They also may have concerns that more stimulus would face diminishing economic returns, while potentially complicating their effort to return policy to a more normal footing.

But a further worsening of economic conditions, particularly one that is accompanied by a reversal of recent upward pressure on inflation, could change that outlook.

The government's jobs report Friday was almost uniformly bleak. The pace of hiring was just over a third of what economists had expected and the unemployment rate rose to 9.1 percent, defying predictions for a slight drop.

In a Reuters poll of U.S. primary dealer banks conducted after the employment data, analysts saw only a 10 percent chance for another round of government bond purchases by the central bank over the next two years. Dealers also pushed back the timing of an eventual rate hike further into 2012.

The weakening in the U.S. recovery comes against a backdrop of uncertainty over the course of fiscal policy and bickering over the U.S. debt limit in Congress, with Republicans pushing hard for deep budget cuts.

Fragility is Global

Hurdles to better economic health have emerged from overseas as well. Europe is struggling with a debt crisis, while Japan is still reeling from the effects of a traumatic earthquake and tsunami.

In emerging markets, China is trying to rein in its red-hot growth to prevent inflation.

Fed policymakers have admitted to being surprised by how weak the economy appears, but none have yet called for more stimulus.

In an interview with the Wall Street Journal, Chicago Federal Reserve Bank President Charles Evans, a noted policy dove, said he was not yet ready to support a third round of so-called quantitative easing. His counterpart in Atlanta, Dennis Lockhart, also said the economy was not weak enough to warrant further support.

While Boston Fed President Eric Rosengren told CNBC Monday the economy's weakness might delay the timing of an eventual monetary tightening, the head of the Dallas Federal Reserve Bank, Richard Fisher, said the Fed may have already done too much.

Evans and Fisher have a policy vote on the Fed this year while Rosengren and Lockhart do not.

Bernanke: Economy slowing but faster growth ahead - AP

WASHINGTON (AP) -- The economy has weakened in recent weeks, Federal Reserve Chairman Ben Bernanke noted Tuesday. But he stuck with a message he's delivered since April: The slowdown from high gas prices and Japan's crises is temporary, and growth should pick up later this year.

Bernanke made no mention of any new steps the Fed might take to boost the economy. The Fed's $600 billion Treasury bond-buying program is ending this month. The program was intended to keep interest rates low to strengthen the economy. But critics said it raised the risk of high inflation.

The Fed chairman said the economy still needs the benefit of low interest rates. The Fed is scheduled to meet in two weeks and is all but certain to keep those rates at record lows.

Stocks fell after Bernanke began speaking. The Dow Jones industrial average erased gains made earlier in the day and closed down for the fifth straight day, as did broader indexes.

"The market was disappointed," said David Jones, head of DMJ Economic Advisors, a private consulting firm. "Wall Street investors were hoping for the promise of another round of credit easing, and they didn't get it."

Bernanke noted the May jobs report released last week was a setback. It showed the unemployment rate ticked up to 9.1 percent and the economy added just 54,000 jobs, the fewest in eight months. But he said he expected job creation and overall economic growth to rebound in coming months.

"The economic recovery appears to be continuing at a moderate pace, albeit at a rate that is both uneven across sectors and frustratingly slow from the perspective of millions of unemployed and underemployed workers," he said at a banking conference in Atlanta.

Bernanke said the central bank would not consider the recovery well-established "until we see a sustained period of stronger job creation."

He repeated a pledge that central bank officials have been making for more than two years: that they will keep interest rates at record lows "for an extended period."

Bernanke said that consumer inflation has jumped 3.5 percent in the six months ending in April -- well above the average of less than 1 percent over the preceding two years. But he noted that most of the increase had been caused by higher gas prices, which have been creeping down in recent weeks. Excluding food and energy, inflation has been tame, he noted.

He also noted that supply disruptions stemming from the March earthquake and tsunami in Japan have hampered growth in the April-June quarter. But he said the effect on manufacturing output will likely ease in the coming months.

Bernanke disagreed with critics who say the Fed's policies are raising inflation risks by weakening the dollar and contributing to the jump in oil and commodity prices. He said that slow growth in the United States and a persistent trade deficit were the fundamental reasons for the dollar's decline, and not the Fed's interest rate policies.

Jamie Dimon, CEO of JPMorgan Chase & Co., asked Bernanke if he was concerned that rules from last year's financial overhaul law will take effect just as the economy is slowing.

Bernanke responded that the worst financial since the Great Depression "revealed a lot of weak spots" that needed to be addressed. But he said regulators were trying to make sure financial institutions would not be overburdened with costs to meet the rules.

Wall Street adds to losing streak after Bernanke speaks - Reuters

Stocks extended a losing streak for a fifth day on Tuesday on mounting concerns about the economy after bearish comments from Federal Reserve Chairman Ben Bernanke.

The market, which started off on a positive note after the S&P 500 hit a two-month low in the previous session, reversed course to turn negative after Bernanke started speaking. He acknowledged a slowdown in the economy, but offered no suggestion the central bank is considering any further monetary stimulus to support growth.

Bernanke also issued a stern warning to lawmakers in Washington who are considering aggressive budget cuts, saying they have the potential to derail the economic recovery.

"It's not like the market was expecting a positive comment from him, but not quite this negative, either. But I think the impact would be limited. I don't see this carrying over to tomorrow's market," said Stephen Massocca, managing director at Wedbush Morgan in San Francisco.

Bernanke indicated the latest bout of weakness probably would not last very long and should give way to some growth in the second half of the year.

A batch of weak economic data recently, especially in the job market, has pushed major indexes below their support levels.

The Dow Jones industrial average .DJI slipped 19.15 points, or 0.16 percent, to end at 12,070.81. The Standard & Poor's 500 Index .SPX declined 1.23 points, or 0.10 percent, to 1,284.94. The Nasdaq Composite Index .IXIC shed 1.00 point, or 0.04 percent, to finish at 2,701.56.

CORRECTION SEEN, BUT NO BEAR

The S&P 500 has fallen 4.2 percent from a month ago. But a veteran chief equity strategist said the three major U.S. stock indexes could fall as much as 10 percent from their May highs, suggesting that a low in the market might be not far off.

Barring unexpected shocks, though, a bear market is unlikely, Tobias Levkovich, the Citigroup strategist, told the Reuters 2011 Investment Outlook Summit in New York.

"I think we are in a correction," said the Canadian-born strategist, whose year-end forecast for the benchmark S&P 500 index is 1,400 points.

A 10 percent drop from the May 2nd intraday peak of 1,370.58 would put the S&P 500 at 1,233.52.

Defensive stocks in the healthcare and utility sectors added to gains after Bernanke's comments, but financials and

info technology, sectors closely related to growth, turned negative. The KBW bank index .BKX which rose 1 percent earlier, ended down 0.2 percent.

Volume was thin with 6.67 billion shares traded on the New York Stock Exchange, NYSE Amex and Nasdaq, below the daily average of 7.61 billion.

"The problem for institutions on a day like today is the volume being light. Any concerted effort to raise funds (sell positions) could have a disproportionate impact on pricing as buyers will be on the thin side," wrote Peter Kenny, managing director at Knight Equity Markets in Jersey City, New Jersey, in a note to clients.

In company news, International Paper Co (IP.N) launched a $3.3 billion unsolicited offer for rival Temple-Inland Inc (TIN.N). Shares of Temple-Inland shot up 40.4 percent to $29.49, while IP's stock rose 0.4 percent to $29.78. Temple-Inland said it adopted a stockholder rights plan to fend off the hostile takeover.

Advancing stocks outnumbered declining ones on the NYSE by 1,684 to 1,297, while on the Nasdaq, advancers beat decliners by 1,440 to 1,131.