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

Jumat, 17 Juni 2011

Energi Mega Persada Highest earnings growth among Asian E&P - UBS

􀂄 A turnaround story: first free cash flow, first positive net profit since 2007 We believe 2011 is a turnaround year for Energi Mega Persada (ENRG) and it will record strong continuous growth in 2012-13. We expect ENRG to post positive free cash flow for the first time ever this year due to an improved balance sheet and 28% net volume growth. ENRG will also post positive net profit for the first time since 2007 this year. We believe earnings will grow by 468% in 2012 and 114% in 2013.

􀂄 Kangean gas project to double production volume in H112
Kangean gas project is the primary driver of a 107% increase in net production volume from 17k boepd in 2011 to 35k boepd in 2012. Japex, the operator of the field, guides for first gas flow in Q112. This project has been delayed for several years and we believe the market remains sufficiently pessimistic and many shareholders already assume one or two quarters of delay.

􀂄 Refinancing could provide another catalyst
ENRG has a US$200m LIBOR + 12% loan that the company may refinance at any time. We believe ENRG will be able to obtain significantly lower interest cost if the company decides to refinance. For every 1% lower interest cost on this loan, our 2012 net profit forecast would rise by 3%.

􀂄 Valuation: upgrade to Buy rating, raise price target from Rp260 to Rp270 We upgrade the stock from Sell to Buy rating. We raise our DCF-based price target by 4% to Rp270 on account of: 1) higher contracted gas price for Kangean gas (22%); 2) our lower WACC (6%) assumption; and 3) rights issue adjustment (-24%). Our price target implies 14x 2013E PE and 6.1x 2013E EV/EBITDX.

Chandra Asri Postpones the Rights Issue - Theindonesiatoday

PT Chandra Asri Petrochemical (TPIA) Tbk has decided to postpone the issuance of new shares due to the recent market volatility.

CAPC informed stock market authorities Thursday (June 16) that market uncertainty has led to the decision to postpone the rights issue.

The company said as at March 31, 2011, Chandra Asri had available funds of US$126 million. "Considering our financial strength, we believe in self-financing of our capital expenditure, including the plan to build new extraction plant for butadiene and butene-1," Chandra Asri said.

Stand-by buyers of the rights issue were DBS Vickers Securities, Deutsche Bank AG, UBS AG, and PT Morgan Stanley Asia Indonesia.

The plan was to issue new shares of up to 20% of equity. About 90% of proceeds were allocated to finance expansion of production facilities, including the construction of butadiene and butene-1 plant.

Chandra Asri shares closed higher by 2.63% Thursday (June 16). The stock has gained almost 100% since September 2010.

Jaminkan Aset, Energi Mega Refinancing Utang US$ 200 Juta - Detikfinance

Jakarta - PT Energi Mega Persada Tbk (ENRG) segera menjaminkan seluruh atau sebagian aset perseroan dan atau anak usaha, sebagai upaya refinancing sisa utang US$ 200 juta dari Credit Suisse (CS).

Penjaminan aset tersebut telah mendapat persetujuan dari mayoritas pemegang saham dalam RUPSLB di Aston Rasuna, Kuningan, Jakarta, Kamis (16/6/2011).

Menurut Presiden Direktur, Imam P Agustino, percepatan pembayaran utang Credit Suisee US$ 200 juta tidak diatur dalam kluasul perjanjian. Utang ini sendiri baru jatuh tempo pada September 2013.

Namun, jika terdapat opsi pendanaan alternatif yang menawarkan tingkat bunga lebih rendah, tentu Imam akan melakukan pelunasan atas sisa utang tersebut. "Untuk itu, penjaminan aset ini sebagai antisipasi awal atau persiapan apabila ada financing atau refinancing dengan beban yang lebih rendah dan term yang lebih baik," kata Imam.

Kinerja perseroan, lanjutnya, terus bertumbuh sehingga beban utang yang ada tidak menghambat ekspansi dan optimalisasi produksi ENRG hingga dua tahun mendatang.

"Kami belum tentukan pilihan, tapi performance kami sudah lebih baik sejak 2009 hingga triwulan I-2011 ini," paparnya. Penjaminan aset juga bisa menjadi bagian dari penggalangan dana baru untuk ekspansi lapangan minyak.

Total pinjaman perseroan memang telah berkurang menjadi US$ 200 juta, dari sebelumnya US$ 450 juta. Dengan demikian, rasio utang terhadap ekuitas menurun 0,6 kali.

Ia menambahkan, utang dari CS sendiri telah mengikutsertakan sebagian aset ENRG, yakni 50% blok Kangean dan blok Malaka milik perseroan, serta seluruh aset anak usaha, PT Tunas Harapan Perkasa.

Untuk seluruh aset yang dijaminkan dalam agenda RUPSLB ini, Imam tidak mengetahui pasti. "Ada valuasi tersendiri. Nilainya jauh lebih besar US$ 200 juta, itu kan sebagian. Ini seluruhnya. Penjaminan aset untung utang CS kurang dari 40% dari total aset," tegasnya.

Tahun ini perseroan menganggarkan belanja modal US$ 189 juta, juga belanja operasi US$ 157 juta. Hingga Juni 2011, sudah teralisasi 45% atau US$ 85 juta.

"Sampai Juni sudah terpakai 45%, dan semuanya untuk pengembangan. Untuk akuisisi lapangan, saat ini belum diputuskan. Tergantung nanti nilai akuisisi. Biaya capex diluar biaya akuisisi," tegas Imam.

Ia menegaskan, perseroan terus menggali cadangan menjadi produksi komersial guna memenuhi profil produksi pertumbuhan perusahaan dalam 18 bulan ke depan. "Kita jaga volume produksi 40 ribu barel dengan produksi maksimal 50 ribu barel," tegasnya.

Penjualan meningkat, laba bersih MASA tumbuh 20% di akhir Maret 2011 - Kontan

JAKARTA. Selama tiga bulan pertama di tahun ini, PT Multistrada Arah Sarana Tbk (MASA) mencetak laba bersih senilai Rp 66 miliar. Jumlah tersebut naik 20% dibanding periode yang sama tahun lalu, yaitu Rp 55 miliar.

Pertumbuhan laba ditopang naiknya penjualan bersih perusahaan di kuartal satu tahun ini, yaitu sebesar 26% menjadi Rp 657 miliar.

Meningkatnya penjualan bersih berdampak terhadap bertumbuhnya laba kotor MASA menjadi Rp 131 miliar. Jumlah ini tumbuh 9% dibanding kuartal pertama 2010 yang sejumlah Rp 120 miliar. Maka, MASA pun berhasil meraup pertumbuhan laba bersih hingga 20% di akhir Maret 2011.

Keterbukaan informasi MASA menyebutkan, selama triwulan pertama 2011, MASA memproduksi 1,5 juta unit ban mobil (passanger car radial), dan 1 juta unit ban motor ( motorcycle). Adapun, volume penjualan masing-masing 1,6 juta unit ban mobil, dan 800.000 unit ban motor.

Distribusi penjualan ban selama kuartal awal tahun ini, yaitu 24% ke Asia Pasifik, 18% didistribusikan ke Amerika Serikat, Eropa 12%, Timur Tengah 11%, sementara 8% ke Afrika, dan 27% lagi untuk pasar domestik.

Adapun, saat ini, proyek pengembangan kapasitas produksi ban sudah memasuki tahap akhir penyelesaian. "Direncanakan selesai dan dapat dioperasikan secara maksimal pada akhir tahun ini," tutur Manajemen MASA dalam keterbukaan informasi BEI, hari ini.

Nanttinya, produksi ban mobil perseroan akan naik dari semula 17.500 unit sehari menjadi 28.500 unit sehari. Sementara, produksi ban motor bertambah dari saat ini 8.000 unit per hari, menjadi 16.000 unit sehari.

Asia Palm Oil Sector - Rising fertiliser and labour costs will likely erode margins - Credit Suisse

● Credit Suisse global fertilisers team revised up prices for N, P and K on: (1) strong grain prices boost demand for the three nutrients; (2) China’s ambition to reduce fertiliser exports through tight export controls and prohibitive export taxes for N and P; and (3) surge in raw material costs for marginal cost producers.
● Fertiliser costs have already risen significantly over the past four years. Over the past four years, Ammonia is up 60–73%, urea by 12–23%, P by 39–44% and K by 61–101%.
● Fertilisers account for about 40-50% of the total operational cost of an oil palm plantation. Hence, rising fertiliser and labour costs will hurt plantation companies’ margins.
● Our estimates suggest that IOI and KLK are more cost efficient than Sime and LSIP.

Cement Sector Update - Mighty May - Bahana

Strong cement consumption on target to surpass our full-year figure
The Indonesian Cement Association revealed May 2011 total cement consumption of 4.15m tons (+9.1%m-m, +19.5% y-y), consisting of domestic consumption of 4.08m tons (+9.3% m-m, +24.8% y-y) and exports of 63,485 tons (-5.6% m-m, -67.9% y-y). This brought ytd domestic consumption to 18.39m tons (+13.5 y-y), accounting for approximately 42% of our FY2011 estimate. As 2H consumption tends to be higher than 1H, 2011 cement volumes are likely to surpass our expectation. Based on the same 26 working days in April and May, the average daily volume showed more than 9% improvement from 143,623tons to 157,034tons respectively.
Growth across all regions, except Sulawesi and East Indonesia

May’s cement consumption in Java grew 11.7% m-m or 28.3% y-y to 2.26m tons, bringing 5M11 volumes to 10.02m tons (+17.1% y-y) and accounting for approximately 54% of total domestic consumption (vis-à-vis 53% a year earlier). All regions within Java displayed consumption uptrend with the strongest growth coming from Central Java (+15.8% m-m, +30.9% y-y). In contrast, Sulawesi and East of Indonesia were the only 2 regions that displayed contraction in consumption. The resource-based regions like Sumatra and Kalimantan booked growth of +15.3% m-m or +31.1% y-y to 1.32m tons, accounting for approximately two-thirds of Outer Java’s demand.

INTP: Moving in line with the industry’s growth
INTP registered +8.0% m-m or +23.2% y-y in domestic consumption, bringing ytd volume of 5.70m tons (+13.6% y-y) and moving in line with the industry’s growth. 5M11 volumes accounted for approximately 41.9% of our FY2011 estimate of 13.6m tons. With ample production capacity, INTP is likely to continue benefiting from growing domestic cement consumption, particularly for the Java market. However, this is progress has been reflected in INTP’s 2.9% ytd market outperformance, which brought valuation to 7.1% premium to the sector’s 2011 P/E of 15.4x. Hence, at current levels, we see limited upside of less than 10% on the counter given our target price of IDR18,400. Hence, we suggest investors to accumulate on weakness.

SMGR: 19% upside potential on early 2012 capacity increase
SMGR experienced acceleration on its May domestic volume, which grew +10.0% y-y and +25.5% y-y. This brought ytd volume growth to 8.8% y-y to 7.60m tons, accounting for approximately 40.4% of our 2011 full-year estimate of 18.8m tons. As we inch closer to towards the 2H, we see some excitement on SMGR’s outlook given the construction of its 2 new mills (Tuban, East Java and Tonasa, Sulawesi), which would bring additional 5m tons annual capacity. Note that the completion stage is on schedule with production slotted for early 2012. This means that production constraint in SMGR will no longer be an issue, allowing for improved earnings growth going forward on higher volumes. Our target price of IDR11,200 implies 2011 implied P/E of 17.0x and 19% upside potential. BUY.

Buy Intraco Penta (INTA): 1Q11 audited results showing 59% sequential growth in sales, on-track to double PBT in year 2011 - JPM

On year-on-year basis, INTA has doubled its sales and EBIT, while EPS grew by 165% in 1Q11. The company is benefiting from the mining investment boom and its new capacity to provide financing (recent LC lines and fresh loans), boosting its heavy equipment unit sales. For the full year, INTA targets to increase unit sales by 55%, from 835 to 1,293 units. The company appears to be on-track to hit its full year 2011 profit target of Rp155bn, or 9.7x P/E.

What’s exciting is that INTA’s 1Q11 results have been audited, suggesting that its rights issue and coal mine acquisition deal may happen in the next 3 months. I suspect the deal structure may involve an effective share swap, between INTA shareholders and the coal mine selling party. INTA’s share price still appears cheap compared to the negotiated value of the target coal mine of US$2-3/ton of reserves, with around 100mn tons of JORC certified reserves.

If successful, the acquisition would give INTA the benefits of integrating its heavy equipment sourcing and mining contracting expertise into a relatively big coal mine operation, giving it the financial scale and long term earnings stability. In the medium term, INTA shareholders may benefit from the re-rating of brown-field to fully operational coal mine valuation, from US$2-3/ton to above US$10/ton. BUY.

Bakrie Telecom - Beyond its fundamentals; downgrading to Sell - Deutsche

Downgrading to Sell; we re-instate target price of Rp235
Bakrie Telecom has been the best-performing Indonesian telco in 2011. The stock has appreciated 50% YTD (vs. JCI’s 3%). However, we believe the company's weak fundamentals do not warrant current valuations. For the past 18 months, BTEL has seen declining market share vis a vis GSM-based operators, resulting in a largely flat revenue trend in the past 2 years (2009-10). We think the trend is likely continue as data surge will largely go to GSM-based operators. A high debt burden also translates into core earnings losses. Downgrade to Sell from Hold.

Pricing no longer appeals
BTEL’s pricing positioning is increasingly unattractive to many new (and pricesensitive) users. We estimate that BTEL’s RPM of Rp151/mnt are in line with Tsel/ISAT RPM of Rp150-160/mnt and well above XL’s Rp102/mnt. Consequently, we expect BTEL to continue to lose more market share to GSM-based operators. Also, in data business, CDMA operators are losing to GSM-based operators due to coverage and/or equipment.

No value creation
Based on our forecasts, the company will likely deliver negative FCF during our forecast years. We project gearing ratios to continue to rise. Combined with the stock’s strong performance, we downgrade BTEL to Sell.

Downgrading to Sell from Hold
We are downgrading our rating from Hold to Sell with target price of Rp235 per share. We believe that the stock is trading far above its fundamentals. We have derived our target price using DCF (WACC 11%, TGR 2.5%, similar to other telcos reflecting the industry’s mature stage/penetration levels of 100%). Risks are price recovery and cost efficiencies. See pages 6&7 for more details on valuation and risks.

Bumi Resources - Alert: Risks and Opportunities - Citigroup

We came away from a meeting with the company less concerned over the impact of Bumi’s planned 75% stake divestment in Bumi Resources Mineral (BRM).

The planned issuance of US$2.1bn convertible bonds by Vallar to pay for the acquisition of BRM undoubtedly creates a substantial overhang on Bumi’s share price over the next few months. The main uncertainties would be the pricing of the CBs once it’s listed some time in 3Q11. There are also substantial concerns over earnings dilution. However, we opine that the merits of the transaction, albeit via non-cash payment, outweigh the demerits.

First and foremost, the divestment paves way for the realization of Bumi’s major deleveraging efforts. If Bumi can execute the deleveraging plan in a timely manner, we think the stock’s valuations could substantially re-rate given market’s lingering concerns over the company’s high leverage and expensive CIC debts.

The annual interest savings from the first batch of planned prepayments of US$600m debt from CIC two years early in October 2011 would amount to US$114m (excluding the US$30m penalty). The savings alone should more than offset the deconsolidation of Bumi’s attributable annual earnings from BRMS of c. US$65m. Bumi will also receive annual coupons of US$41m from the convertible bonds. Moreover, Bumi is likely to book a substantial one-off gain from the divestment as the 87% stake in BRMS is carried at US$1.5bn on Bumi’s book. Finally, the deconsolidation of BRM would reduce Bumi’s net debt by c. US$180m from US$4.6bn at the end of 2010.

We maintain our Hold rating on the stock with target price of Rp4,200, which is based on 2012E EV/EBITDA of 4.8x – a 40% discount to Adaro’s target multiple.

Strong May cement numbers by Di Shui - CLSA

Domestic sales continue to gather momentum as we head into the dry(er) season.

Domestic sales of 4.146m for the month was 9.1% higher MoM, 19.5% higher YoY. This brings total Indonesian consumption to 18.4m tons YTD, a 13.5% rise over 5M10.

The country’s top three producers (Semen Gresik, Indocement, Holcim) captured 88% of the market, lead by SMGR (41.7%), INTP (31.3%), and SMCB (15.4%).

Of note, SMGR domestic sales of 1.7m tons represents a 10% increase MoM, 25% increase YoY. Given limited excess capacity, and no confirmation of debottlenecking, we suspect the company may have started to buy/import clinker (repackaged under in-house brands) to maintain market share. Pls see attached file for more details.

Maintain our Overweight call on the Indonesian cement sector. BUY INTP and SMCB. O-PF SMGR.

Land revolving fund for 21 stalled toll road projects + construction to complete crucial outer ring road 1 by Sarina Lesmina - CLSA

21 out of the 24 stalled toll road projects will each get a land revolving fund from the government according to the needs.
Total fund proposed is Rp3.85tn. This has been approved by Vice President Boediono himself and the Ministry of Finance.
Also, Waru-Tj. Perak is one of the 21 toll roads, and is a toll road project which jasa marga is in the process of finalizing the acquisition of a majority stake, as reported in news yesterday. Another toll road: Kertosono-mojokerto, also out of the 21, is also a potential acquisition target by JSMR.
Separately, construction will start next month for Jasa Marga’s “Missing Link” JORR W2North section. This is part of Jakarta Outer Ring Road 1 that connects Ulujami and Kebun Jeruk.
This section is only 6km but is crucial as it will complete the outer ring road 1, which runs ~70km around Jakarta city. Hence, it will alleviate some of the nasty traffic jams.
Maintain BUY on Jasa Marga, clearly a main beneficiary as the largest toll road operator in Indonesia.

Bank Rakyat (BBRI IJ) – balancing growth, from Nick Cashmore - CLSA

Bank Rakyat (BBRI IJ) – balancing growth, from Nick Cashmore

After a decade more of deleveraging, Indonesian bank credit currently stands at 28% of GDP, against 130% for China. Indonesia’s low credit to GDP ratio means plenty of potential to leverage up the economy and doing some catch up.

Leveraging up the economy will translate into bank credit growth. Banks are still the best proxy for a reflating economy. And Indonesian banks are still the most profitable in Asia.

Bank Rakyat fits in nicely here. Nick Cashmore points out that BRI remains the most profitable Indonesian bank with the highest net interest margins and ROA amongst its peers. After a brief stint with corporate loans, BRI has refocused on its historical strength, the micro segment. And after growing the micro loan business by 40% YoY, the high yielding micro loans (23% yield) today amount to 1/3 of loan portfolio. BBRI has reduced payout ratio to 20% but will eventually need to raise capital through sub debt. NPL formation from the small and medium commercial segment amount to 13% of the bank’s total NPLs remains a concern. We remain positive on BBRI long term prospects.

Key points:
BBRI has the most extensive network with 7,043 distribution points. BBRI remains the world leader in micro loans
Micro loans generate yield of 23%. BBRI generates the widest NIM among peers at 9.6% as of 1Q11
BBRI has grown its loan book by 28% and deposits by 25% CAGR in the last five years. BBRI has the second largest market share of system deposits
Most of the deposits are expensive time deposits, BBRI’s CASA ratio has dropped from 70% to 55% in the last six years, clearly a potential risk to margin
One concern is with credit quality in the commercial and medium segment, now totaling a little over 13% of BRI’s total NPLs.
BBRI has one of the lowest CAR amongst peer. To help retain capital, payout ratio has been lowered to 20%

Mortgage and Cement - CLSA

Pretty obvious that we are going to see some selling pressures in the market today, following poor US numbers and Eurozone contagion fears. Perhaps a day for looking at more encouraging trends at home.

Over the past 5 years, mortgage rates at Bank Tabungan (BBTN IJ) have fallen by over 40%. It is important to note that this is BEFORE the country reaches investment grade.

BBTN – Average Mortgage Rate

In the mortgage business, BBTN is a giant, especially in the low cost housing. The bank controls 27% mortgage market share.

In term of penetration, Indonesian mortgages to GDP are only 2.2%. With single digit average rates likely on the horizon + GDP approaching $1tn by 2014 + mortgages growing at nearly 40% per annum, we could see the mortgage market nearly triple by 2014 to $40bn, and rise to 4% of GDP. The upside is massive.

This is great news for cement producers. Our cement analyst Di Shui estimates approximately 3/4 of Indonesia's demand for cement is driven by housing projects, growing at ~11% YTD. Population growth, rapid urbanization, household formation, and rising GDP per capita will only further fuel the nation's housing demand.

At 175kg/capita consumption in 2010, Indo's cement penetration still ranks lowest amongst regional peers, at 1/3 of Thailand's and 1/4 of Malaysia. This foretells of enormous upside.

A stimulatory credit environment will surely help finance this building boom.

Indonesia is ASEAN's largest cement market, with 40.8m tons of cement consumed in FY10. 90% of this market is controlled by 3 producers, well poised and well capitalized to capture sector growth.

The latest May cement sales numbers suggests that domestic sales continue to gather momentum as we head into the dry(er) season. Domestic sales of 4.146m for the month was 9.1% higher MoM, 19.5% higher YoY. Please see attached for the details.

We are overweight the cement sector. Buy INTP IJ, SMCB IJ. O-PF SMGR IJ.

IPO Saham_Visi Media Asia - AAASecurities

Summary :
Perseroan merupakan salah satu perusahaan media terkemuka di Indonesia yang berfokus pada penyampaian konten berita, penyediaan konten, khususnya konten olahraga dan gaya hidup melalui berbagai platform, termasuk stasiun televisi dan portal berita internet.
Perseroan adalah pemimpin stasiun televisi di pasar televisi FTA Indonesia berdasarkan jumlah pangsa pemirsa dan belanja iklan kotor (sumber: Nielsen Survey). Kemampuan Perseroan yang terus berkembang dalam produksi in–house memungkinkan Perseroan untuk memaksimalkan marjin laba yang didapat dari program unggulan, karena biaya untuk produksi in–house cenderung lebih rendah daripada pembelian konten berlisensi dari pihak ketiga.

Valuasi yang digunakan adalah valuasi DCF yang dimana menggunakan WACC 13,65% dengan pertumbuhan (g) 4,2% maka akan dihasilkan nilai ekuitas per saham Rp350. Jika Perseroan merencanakan untuk memiliki target harga IPO antara Rp260 - Rp285, maka potensi kenaikan harga akan mencapai 23% - 35%. Perlu diketahui bahwa PE Perseroan untuk FY11 berkisar antara 76x - 83x dan untuk FY12 berkisar antara 17,6x - 19,3x. Jika dibandingkan dengan PE industri yang berada di 19,4x dan pesaing terdekatnya MNCN dimana PE MNCN saat ini berada di 15,5x dan PE FY11F berada di 13,5x, maka Perseroan memiliki harga yang tinggi.

Astra Agro Lestari: Buy; Rp23,050; TP Rp28,100; AALI IJ Jan-May production update - DBS

Astra Agro Lestari reported that it had produced 108,650 MT of CPO in May11. YTD May, it had produced 485,889 MT of CPO – a 28% increase over the same period last year, reflecting 41% of our FY11 CPO production forecast. The stronger CPO production was driven by 23% jump in harvested FFB of 1,79 million MT, compared to 1,46 million MT harvested over the same period last year. It also reported palm kernel production at 100,865 MT, a y-o-y increase of 24%. For the full year we expect the group’s FY11 own FFB output to grow by 6% to 3,538k MT, while CPO production should also grow by 6% to 1,183k MT.

Maintain Buy for 22% upside to Rp28,100 TP

Basic Material Tin: Falling prices caused Indonesia tin exports to decline in May - DBS

Tin shipments from Indonesia dropped sharply to 7,013 tons in May 2011 compared to on average of over 9,000 tons in March and April 2011. Year to date, overall tin shipments of 39,289 tons are still up by 11.5% y-o-y. We believe the sharp drop in the tin price is the key reason for lower tin exports in May as tin producers prefer to wait for a better price by holding their products in the warehouse. Tin prices have dropped by more than 20% from the peak of US$33,000 per ton a few months ago to around US$25,000 currently. Meanwhile we believe tin smelters are likely to have bought tin ores when tin prices were still closer to US$30,000. Since shelf life is not an issue, tin producers in Indonesia would rather keep their products rather selling to the market.

TLKM Depressed growth - Indopremier

We sounded pessimistic on TLKM when we downgraded TLKM to a HOLD recommendation (stock note 17/01/11). Publication of its FY10 results and 1Q11 financials were according to our expectation and that of consensus. Currently trading at a favorable earnings multiple, as a results of recent underperforming the general market, inferior growth prospects should prevent investor to jump to the counter. With an estimated continues declining EBITDA, with WACC of 10% and LTG of 1%, we arrive at DCF value of Rp8,021/share for TLKM, implying a 10% upside from today’s closing price. Maintain our HOLD recommendation.

FY10 Results
Compared with its other two main competitors, ISAT and EXCL, TLKM delivered thinner FY10 results with operational items showed a low single digit growths. We are somehow puzzled by TLKM’s stagnant growth, but suggest that pricing strategy is the main issue.

1Q11 Results
1Q11 still marked TLKM as the slowest one to post earnings achievement among the three operators, and with slightly declining profitability. TLKM did post strong operational results, however, significantly lower Revenue Per Minute (RPM) failed to boost revenue and thus profitability.

Prospects and recommendation
TLKM need a breakthrough marketing scheme to revive growth, in our view. We currently see that current operating environment poses challenge for TLKM to post financial growths. We estimate revenue to grow by 0% and 4% for this and next year, respectively, while estimate that EBITDA will slowly deteriorating into the year 2020. We may change our position when growth resume. We advise investors not to be lured by current low valuation. HOLD

Asian Palm Oil: Malaysia's stock level rose sharply in May - Deutsche Bank

Ending stock increased by 22.8% YoY in May
Malaysia's palm oil inventory rose by 22.8% YoY to 1.9m MT in May (highest since Jan 2010), driven by a 25.6% jump in production. The strong recovery in production was largely expected given the significant improvement in weather conditions. Demand has also softened with export growing by only 2.7% YoY, on the back of lower consumption in China, India and EU. We expect production to peak in Oct while demand should improve ahead of the festive seasons in Aug/Sept.

Price forecast unchanged at RM3,300 for 2011
Although we expect palm oil price to weaken on strong recovery in production in the near-term, a widening price discount to soybean oil should stimulate demand for palm oil. The discount currently stands at 14% versus last year's average of 8% (historical: 20-25%). We maintain our average price assumption of RM3,300/MT for 2011 (YTD: RM3,540; spot: RM3,250). We like upstream players such as GAR, KLK & AALI, which could deliver above average output growth.

Jasa Marga (JSMR IJ) expects higher traffic volume for 2011 by Sarina Lesmina - CLSA

Reported in newspaper, Jasa Marga (JSMR IJ) expects traffic volume in FY11 to increase to 1.93bn vehicles from initial 1.1bn as the ban on trucks passing through inner toll road had increased the throughput of passenger cars:

We expect net profit FY11 to increase 31% YoY to Rp1.5bn, 11% ahead of consensus. Consensus has started to revise up earnings in the past month.

There is upside to our future earnings assumptions and DCF-based valuation from more toll road concessions acquisitions. Reiterate BUY.

Mitra Adi (MAPI IJ) 1,000 and counting - BUY, Tp Upgrade to Rp4,400

Arguably this is the best play to capture the rising middle class theme in Indonesia. Their portfolio (90 plus brands) from Starbucks, Burger King, Dominos Pizza to Sogo, Zara, Marks & Spencer, Reebook is unmatched by any retailer in Indonesia, probably in the region. In fact, they are anchor tenant of almost every major shopping mall here commanding a huge rental terms edge. Mapi expects to have over 1,000 stores by year end.

As Indonesian breach US$3,000 GDP/capita consumption starts to rise in a non-linear way. Not to mention the impact to consumption power as the rupiah continue to appreciate (most of MAPI COGS is in USD). After more than a decade of building up their franchises, Mapi is finally reaping the rewards. Bread and butter specialty stores sales growing 20%+, Department stores now see a big turnaround. Biggest upside F & B is gaining operating leverage. Interesting to note Jubilant Foodworks in India which operates the Dominos Pizza franchise only has a bigger market cap than Mapi.

At 13x 2012CL, this stock is one of the cheapest consumer + F & B play in region with the steepest growth profile (cheapest by far in PEG terms at 0.3)

Key takeaway:

· MAPI reported on track May sales, up 20% YoY with YTD SSG of 11%.

· F&B is the fastest growing segment in the company with a YTD growth of 38%, driven by rapid floor expansion. MAPI is opening the 100th Starbucks at the end of this month.

· Department store also seems to make a nice come back since the divestment of Harvey Nichols with a sales growth and SSG of 15%. EBIT margin also improved from 3% in 1Q10 to 6% in 1Q11. Peak EBIT margin is seen in 4Q10 post Harvey Nichols close-down at 7.4%.

· Turnaround in the department store segment and deleveraging balance sheet are the two key earnings driver. We forecast 32% earnings Cagr in the next two years, suggesting that on a PEG basis, MAPI is trading attractively at 0.3x.

· We are maintaining our BUY call on the stock and upgrade our target price to Rp4,400 based on 17.5x 12CL PE, matching regional peer average.

Kamis, 16 Juni 2011

Asian Palm Oil: Malaysia's stock level rose sharply in May - Deutsche Bank

Ending stock increased by 22.8% YoY in May
Malaysia's palm oil inventory rose by 22.8% YoY to 1.9m MT in May (highest since Jan 2010), driven by a 25.6% jump in production. The strong recovery in production was largely expected given the significant improvement in weather conditions. Demand has also softened with export growing by only 2.7% YoY, on the back of lower consumption in China, India and EU. We expect production to peak in Oct while demand should improve ahead of the festive seasons in Aug/Sept.

Price forecast unchanged at RM3,300 for 2011
Although we expect palm oil price to weaken on strong recovery in production in the near-term, a widening price discount to soybean oil should stimulate demand for palm oil. The discount currently stands at 14% versus last year's average of 8% (historical: 20-25%). We maintain our average price assumption of RM3,300/MT for 2011 (YTD: RM3,540; spot: RM3,250). We like upstream players such as GAR, KLK & AALI, which could deliver above average output growth.

Budi Acid Jaya (BUDI.IJ, BUY) - Heading towards recovery - Kim Eng

Higher sales and better margins year-to-date have bolstered Budi Acid Jaya’s optimism about the recovery of its profitability in FY11. Management expects full-year net profit to grow by 217% y/y to Rp146b, similar to the performance in 2009. The company’s expansion of its sweetener capacity is on track. It increased capacity by 32,400tpa last year to 155,300tpa and will expand it further by another 30,000tpa to bring total capacity to 185,300tpa this year. We raise our TP on Budi to Rp310, from Rp240, in anticipation of the company’s profit recovery. This pegs the stock at 7.4x FY11F PER. Hence, we upgrade our recommendation from HOLD to BUY.

Mitra Adi (MAPI IJ) 1,000 and counting - BUY, Tp Upgrade to Rp4,400 - CLSA

Arguably this is the best play to capture the rising middle class theme in Indonesia. Their portfolio (90 plus brands) from Starbucks, Burger King, Dominos Pizza to Sogo, Zara, Marks & Spencer, Reebook is unmatched by any retailer in Indonesia, probably in the region. In fact, they are anchor tenant of almost every major shopping mall here commanding a huge rental terms edge. Mapi expects to have over 1,000 stores by year end.

As Indonesian breach US$3,000 GDP/capita consumption starts to rise in a non-linear way. Not to mention the impact to consumption power as the rupiah continue to appreciate (most of MAPI COGS is in USD). After more than a decade of building up their franchises, Mapi is finally reaping the rewards. Bread and butter specialty stores sales growing 20%+, Department stores now see a big turnaround. Biggest upside F & B is gaining operating leverage. Interesting to note Jubilant Foodworks in India which operates the Dominos Pizza franchise only has a bigger market cap than Mapi.

At 13x 2012CL, this stock is one of the cheapest consumer + F & B play in region with the steepest growth profile (cheapest by far in PEG terms at 0.3)

Key takeaway:

· MAPI reported on track May sales, up 20% YoY with YTD SSG of 11%.

· F&B is the fastest growing segment in the company with a YTD growth of 38%, driven by rapid floor expansion. MAPI is opening the 100th Starbucks at the end of this month.

· Department store also seems to make a nice come back since the divestment of Harvey Nichols with a sales growth and SSG of 15%. EBIT margin also improved from 3% in 1Q10 to 6% in 1Q11. Peak EBIT margin is seen in 4Q10 post Harvey Nichols close-down at 7.4%.

· Turnaround in the department store segment and deleveraging balance sheet are the two key earnings driver. We forecast 32% earnings Cagr in the next two years, suggesting that on a PEG basis, MAPI is trading attractively at 0.3x.

· We are maintaining our BUY call on the stock and upgrade our target price to Rp4,400 based on 17.5x 12CL PE, matching regional peer average.

Aneka Tambang: HOLD; Rp2,125; TP Rp2,500; ANTM IJ To pay Rp70.71/share final dividend - DBS

Aneka Tambang (ANTM) has received shareholders approval to pay final dividend of Rp673bn or Rp70.71/share, yielding 3.3%. This translates into 40% payout ratio from FY10 net profit of Rp1.7tn. Meanwhile, ANTM is looking for financing for its US$1.6bn FeNi Halmahera projects (including power plant). PT PLN plans to spend US$600m to build a 250MW power plant to supply power for the smelter while ANTM plans to spend US$1bn for the new FeNi smelter with total capacity of 27,000tpa. Assuming 60-65% to be funded by debt, ANTM needs to raise US$600-650m in loans. The project is estimated to be completed in 2014-15. Once completed, ANTM’s FeNi capacity will double to 53,000tpa from 26,000tpa.

We maintain Hold, TP Rp2,500 based on blended valuation of DCF (12% WACC. 3% terminal growth), 14.0x FY11 PE, and 6.5x EV/EBITDA (5-years average). ANTM is trading at 12x FY11 PE against regional peers’ average of 10x. We like ANTM for its attractive long-term growth prospects through several planned projects but execution is the key risk. Short-term earnings growth will depend on prices for both nickel and gold as we don’t expect capacity expansion in the near term.

Indonesia Banks Big Picture - April 2011 Bank Data: Growth Continues, LDR Touches 81% - Citigroup

 Key takeaway(s) — April 2011 banking data highlight: 1) Lending rates are inching down; 2) LDR has jumped to near-peak of 81%, earlier than past peaks in August; 3) Stable deposit rates, with BBCA cutting savings rates; 4) Sustained loan growth at 24%, led by private national banks; and 5) The gross NPL ratio is at 2.8% (end-March). Historic trends show that April accounts for c.8% of full-year loan disbursements and is relatively flat for incremental deposits. Our Top Buys are BMRI and BBRI, and Top Sell is BBCA.
 BI monetary policy statement puts end-May loan growth at 23.3% — This translates into May net disbursements of Rp43trn, slightly below the record for May (Rp46trn in 2010). The YTD growth of 7% is the same as 2010. BI expects 2011 loan growth to at least be the same as 2010’s 23.3%.
 Lending rates down 2bps in April 2011 for all 3 segments — The current rates for local currency working capital loans are 12.3% (38% of the total loans), for investment 12.16% (16% of the total) and for consumer 14.81% (31% of the total). Compared with average lending rates in 2010, the 2011 (4M) rates are down 73bps for working capital, 43bps for investment and 50bps for consumer.
 LDR back to peak of 81% — The Rp LDR stands at 80.5% and FCY at 81.8%. The LDR tends to peak in August at c.81%. In 2011, however, it touched 81% in April itself. This is due to strong YTD loan growth of 4.6% and government fiscal operations. The government is a borrower in 1H (taking liquidity out of the system) and spends in the last quarter.
 Saving deposit rates down, term deposits stable — The Rp saving deposit rates (30% of total) declined 6bps (due to private national banks, of which BBCA is the largest). The April 2011 saving deposit rate of 2.56% is 11bps lower than the 1Q CY11 average and 42bps lower than the CY10 average. The rate on 1M time deposits (21% of toal) of 6.8% is 4bps higher than the 1Q CY11 average and 3bps lower than the CY10 average.
 Loan growth at 24% — The 12M (ending April) loan growth of 24% was driven by working capital (27%), investment (25%) and consumer (20%) loans. Loan growth is dominated by Trade (+25%), Business Services (+52%) and Social Services (+44%). Manufacturing has picked up but is lagging at 15%. In consumer loans, mortgage (+27%) and vehicle (+47%) loans dominate. Private national banks with 30% growth are leading, while state-owned banks have picked up to 20%. Foreign banks are lagging at 18% (the LDR is 101%).
 Gross NPLs at 2.8% (end-March) — The gross NPL ratio has been rising after bottoming in Dec 2010 at 2.56%.

Indonesia Market Strategy - Re-awakening? - Credit Suisse

● We believe Indonesia needs to achieve 7%+ economic growth for the market to significantly re-rate further. However, in order to achieve 7%+ real GDP growth, we believe annual investments must surge to US$364 bn per year for the next five years, 58% higher than the 2010A level.
● When India’s investment to GDP ratio surged by 14% over five years, its equity market’s valuation re-rated by 117% to peak at 57% premium to MSCI NJA (based on P/B less ROE), 23.4x P/E. Indonesia currently trades at 30% premium to MSCI NJA, at 16x P/E, implying potential for 27–46% upside from the current level.
● Developments to watch: First, the land reform bill needs to be passed for the country to start moving into a higher investment cycle. Second, evidence on ability to secure necessary funding and that the investments are well-targeted on the right sector must be ensured. Third, there should be satisfactory delivery on investment realisations.
● Learning from India, we prepare our long-term portfolio for Indonesia, aiming to benefit from the country’s entry into a multiyear higher investment cycle, which comprises BMRI, BBNI, UNTR and SMGR.

Rabu, 15 Juni 2011

Bumi to sell 75% stake in BRM to Vallar Plc: EPS/CROCI dilute; Sell TP Rp2.850 - Goldman Sachs

News
On june 10, Vallar Plc annouced its intention to acquire 75% of Bumi Resources Minerals from Bumi Resources at Rp850/share for a consideration of US$2.07 bn by issuing Convertible Bonds in Vallar’s proposed new parent company Bumi Plc. The CBs will carry a coupon os 2% and will mature in 2017. The 3Q2011. Per the announcement.
BRM consist of a portofolio of mining assets (lead, zinc, gold, copper, iron ore) of wich Newmont Nusa Tenggara is the main cash generating asset.

Analysis
In our view, the proposed CB issuance is a “related party” debt with a potensial cross-holding structure, if converted into equity (Vallar currently owns a 25% stake in Bumi). We also note that the cash coupon on the CB of 2% is significanly lower compared to the cash flow on NNT. We estimate that Bumi could lose US$226mn of pre-tax cash-flow in 2012E from NNT, while it may earn only US$41mn p.a. of cash coupon on the proposed CB. Overall, we believe the proposed transaction could dilute Bumi’s 2011E/12E/13E EPS by 17%/18%/28% (full year impact), while 2012E CROCI could be reduced from 17.4% to 16.2% on lower cash inflow from NNT.
Although Bumi may become more of a coal pure play post this exercise, the resulting inability to tap into future potential upside from Bumi Resources greenfield projects such as Dairi, Mauritania and Gorontalo could be seen as a negative risk by the market. Meanwhile, we estimate the deal terms imply 14x2012E P/E (if we were to include NNT’s 2012E net profit) and 1.4x2010 P/B.

Implications
We believe the market could react negatively to tjis news, and we reiterate our Sell rating with Target Price Rp2.850.

Bumi Resources - Show us the money - BoAML

Our take on $2bn bond issue: earnings dilutive, no direct cash
Vallar announced last Friday that it will issue $2bn in CBs at 2% coupon, to BUMI,
to buy a 75% stake in Bumi Resources Mineral (BRM). This means: 1) BUMI is not going to receive the cash immediately (unless it sells the CBs immediately) – there is a plan to list the CBs but we doubt it will be 100% - Bakrie and Rothschild could face a massive dilution risk; or, otherwise BUMI has to wait until 2017 to receive Vallar shares (unlikely scenario because we understand it will not be allowed under British law); 2) BUMI will face an earnings dilution. BUMI earned US$236mn in equity via net income of associates (primarily from BRM) in 2010 vs potential coupon receipt of US$40mn.

How much earnings dilution could potentially be?
Assuming no BRM (all BRM shares are transferred to Vallar) in 2010 and no debt repayment, BUMI’s earnings would likely see a reduction of 20%. But on a fullyear basis, the impact on 2012E earnings will be around 13% (as we have assumed declining earnings contribution from NNT). BUMI would trade at 13x 2012E P/E under that scenario. We have kept our earnings estimate mostly unchanged for now.

Raising PO - factoring in US$600mn reduction in CIC loan
Assuming BUMI would successfully reduce US$1.2bn of CIC loan (via CB proceeds) by October 2012 and the CB deals go through, we raise our PO from Rp2900 to Rp3335 based on a target 2012E P/E of 12x. Do note we have valued the rest of Indo coal players with NPV. There is not much upside potential to our PO. We have kept our Neutral rating unchanged.

Not much upside even under the best-case scenario
Assuming BUMI manages to reduce US$1.9bn loan from CIC by end 2011 and the CB deals go through, BUMI would only trade at 9.5x 2012E P/E, which is comparable to SAR and ITMG, without paying for all the uncertainty surrounding BUMI. But we understand only US$600mn of BUMI loan can be repaid by October 2011 but the rest US$1.2bn can only be repaid by October 2012 and 2013.

Sales Call – Bumi Resources - JPM

Bumi Resources: a good deal in transit, Buy. There are reasons to believe that the CB deal is just a transitory deal. The transition period may not be a long one and the end-game could be very positive. Watch BRMS IJ for potential mandatory tender offer at Rp850, with 50:50 chance. Bumi Resources: a good deal in transit (Verdi Budiman)THE EVENTOn 10 June 2011, it was announced that BUMI IJ intend to transfer its 75% stake in BRMS IJ, for a total consideration of US$2.07bn or Rp850/share. The consideration will be in the form of listed CB with a 2.0% coupon and £15.88 initial conversion price. The buyer proposes to engage with the Indonesian regulator to review whether a mandatory tender offer for the remaining shares in BRMS would be required as a result of the reorganisation.

MY TAKEEarnings impact on BUMI IJ, per today’s information disclosure: Consensus is expecting BRMS IJ to deliver US$78mn and US$79mn net profit for FY11-12. On full year basis, BUMI IJ will loose its 75% share of the profit that would amount to US$59mn and US$59mn for FY11-12. In return, BUMI IJ will earn US$40mn interest income per year from the CB in FY11-12. As a result, a marginal earnings downgrade for BUMI IJ in the order of 2-4% for FY11-12. Market sentiment: the deal may confuse the market. In its current form, the deal does not reduce BUMI IJ’s overall debt level and cause its interest expense burden to fall. BUMI IJ’s management has promised the market to meaningfully reduce its debt load in FY11. There are reasons to believe that the CB deal is just a transitory deal (in other words, I speculate that BUMI IJ will either sell its CB for cash to pay down debt, or pass-on the CB to its current debtors to cancel up to US$2.07bn of BUMI IJ’s debt. The transition period may not be a long one and the end-game could be very positive for BUMI IJ, for these reasons:
(1) The CB appears to be designed for quick conversion into shares, with low coupon rate and small premium to the market value of its underlying shares. Under UK law, BUMI IJ cannot convert its CB holding into shares, as it will result in a cross-shareholding. The fact that BUMI IJ is willing to receive the CB as form of payment could mean that there is already captive taker(s) for the CB, pending on some further events such as the step-up transaction and premium FTSE listing. (2) There is 50:50 chance that the BRMS stake sale could classify as an affiliated transaction (transaction with a company that directly or indirectly controls BUMI IJ, under Bapepam law), which will require approval from independent shareholders. For the independent shareholders to vote for the transaction at the time of EGM, they will need convincing on the prospect of BUMI IJ monetizing its CB holding. Beyond legal definition, this particular transaction clearly smells like an affiliated transaction, more so than the controversial Pendopo deal in year 2008. WHAT-IFWhat-if CIC is willing to accept the US$2.07bn CB as a form of payment for its US$1.9bn lending to BUMI IJ? On full year basis, BUMI IJ will loose its 75% share of the profit that would amount to US$59mn and US$59mn for FY11-12. In return, BUMI IJ will see interest cost reduction of US$361mn per year in FY11-12. In this scenario, we could see major upgrade in BUMI IJ’s recurring earnings expectation, in the order of 25-40% for FY11-12.

THE RISKOn legal definition one may argue that this is not an affiliated transaction and the Bapepam may keep a blind eye. Such scenario can point to the prospect of a Mandatory Tender Offer for BRMS IJ, as the non-affiliation verdict would imply that BUMI IJ and the CB issuer are not being controlled by the same shareholder.

Mitra Adiperkasa (MAPI IJ, Rp3,500 BUY) Beating expectations - Danareksa

Earnings upgrade
MAPI is continuing to perform very well with growth beating our expectations. Our FY11F earnings estimates are consequently upgraded reflecting: 1) a higher same-store growth assumption and 2) more aggressive expansion in the second half. Our new Target Price of Rp3,950 implies 21x-16.7x PE 11-12F and offers 12% upside from the current share price. BUY maintained.

Sales up till May grow 21% with 10% same-store growth
Sales surged 21% yoy in the year till May to Rp 2.8tn, with same-store growth of 10%. Specialty stores and F&B continued to drive growth, accounting for 46% and 9%, respectively, of MAPI’s total sales. The sales results were a very impressive 50% above our forecast. Assuming 10% same-store growth and 40,000sqm of additional gross retail space, we raise our 2011 sales target to Rp5.7tn (translating into 21% growth), with the Idul Fitri celebrations and aggressive expansion in the second half of the year underpinning sales.

As for margins, we expect a firm 37.4% gross margin thanks to a higher proportion of higher-margin specialty store sales and F&B sales. Coupled with the closing of less profitable stores and an expected further change in the sales mix, we foresee an operating margin of 7.3% by the year end.

Busy period ahead
MAPI has ambitious expansion plans. This month, 3 Burger King Outlets will be opened. In the year until May, MAPI has opened 60 new retail outlets - yet only 1/5 of their full year 2011 target of 300 new outlets. In the second half, the management has pledged to take a more aggressive stance in regard to the expansion with capex maintained at Rp350bn-400bn. MAPI will focus on its existing proven brands and bring in more brands into its portfolio to strengthen its position in the market aimed at middle income consumers. Pandora (a global jewellery company founded in Denmark) is one of the new brands added, as is a new travelogue outlet concept.

Paying Out More Dividends
At the Annual General Shareholders’ Meeting, it was agreed that MAPI would pay out dividends of 16.5% of net profits - up from 15% last year - on 22 July. In total, the dividends paid out will reach Rp 312bn or Rp20 per share, offering a 0.6% dividend yield based on the current share price. The cum and ex-dividend dates are 8 and 9 July. Furthermore, MAPI will repay around Rp 80bn of debts in June and December. This will help to reduce the company’s interest expenses by 1.6% in FY11.

ADRO Site visit: Tutupan and Wara coalmines - Bahana

36,000ha concession with total reserve close to 1b tons
We recently had the opportunity to visit Adaro Energy’s (ADRO) Tutupan and Wara coalmines (the only two producing coalmines at present) at Tanjung Wara (exhibit 6), South Kalimantan. Within the 36,000 ha concession area, we visited two open-cut pits of Tutupan with total reserve of 552m tons (Calorific value: 5,900) and Wara with total reserve of 386m tons (Calorific value: 4,950). Note that while the Tutupan site has been in operation since 1999, Wara just started its commercial operation in 2H10, contributing around 2.5m tons (5.9%) to 2010 sales volumes of 42.5m tons.

SIS controls 25% of 2010 production; low stripping ratio
During our visit, we saw contractors doing their work activities which involved overburden removal, extraction process and coal transportation with dump trucks to stockpiles. Almost 40% of 2010 mining activities (exhibit 12) were provided by Pama Persada, subsidiary of United Tractors (UNTR-BUY-IDR22,850-TP:IDR28,500). Other mining contractors are Sapta Indra Sejati (SIS; 25%) Bukit Makmur Mandiri Utama (BUMA; 19%), Rahman Abdijaya (RA; 14%) and two other small contractors (3%). According to Christopher Pitch, marketing contracts manager, ADRO plans to enlarge its SIS mining contracting unit in the future, allowing an optimum vertically integrated business model. Note that the current average stripping ratio for Tutupan pit was 5.5x, while Wara’s lower calorific value stripping ratio stood at 2.7x (Exhibit 10 & 13). ADRO’s low stripping ratio translated to 2010 stable production volumes of 42m tons (+4% y-y) despite heavy rainfalls.

Expansion on Kelanis Barge terminal capacity to 80m tons
From the stockpiles within the concession area, ADRO’s coal would be transported through 80km haul road (exhibit 17) to one of the largest inland river bulk ports in the world, Kelanis Barge Terminal, located by the busiest and largest Barito river (exhibit 20). At the Kelanis Barge Terminal, ADRO’s coal would be crushed, stockpiled and loaded through two conveyor systems onto the barges. Going forward, ADRO plans to enlarge its bulk terminal capacity by 60% to 80m tons, in line with the management’s plan to double its current production from around 40m tons to 80m tons.

2Q11 less rainfalls = improved production going forward; BUY
At the site, we learned that the area has been experiencing less rain in 2Q11, suggesting that production will improve going forward. Therefore, we retain our positive view that ADRO would be able to achieve our 2011 production target of 46.5m tons (1Q11 production volume: 10.6m, 22% of our full-year estimate). Additionally, ADRO has embarked on several projects in 2011 that would be supportive of its medium-term growth such as the acquisition of three potential coal deposits, development of 2x30MW mine-mouth power plant for internal use and increased capacity on the Kelanis Bulk Terminal. As such, we maintain our DCF-based target price of IDR2,950 on ADRO. BUY.

Behind the closed doors of 2011 Bali coaltrans conference - BoAML

2011, the biggest Bali coaltrans conference
Last week (29 May to 1 June), we attended the 17th Bali Coaltrans Conference.
More than 2000 participants and 50 sponsors took part this year, compared to
around 1700 last year, which is a historic high. Five key things we gathered from
our contacts and conference presentation: 1) sentiment generally bearish, but
price bullish; 2) more Chinese players looking for lower rank coal; 3) India less
aggressive; 4) optimism on higher 4Q price; and 5) royalty could be hiked.

US$115/t floor for coal price – consistent with our last note
Our channel checks indicated that many buyers believe US$115/t coal is good
value for money (vs. current spot of US$118/t). We are aware that a big Indo coal
company sold 2mn t 5300kcal NAR coal with relatively high sulfur (2%) to China
at US$104/t (no discount to the current spot NEWC on an index basis). One week
before the conference, 4400kcal NAR coal could be sold to China at US$82/t, but
post conference, it seems it could be priced a couple of dollars higher.

Chinese buyers even looking for 3500-4000kcal coal
We believe China has come a long way in learning the commercial benefits of
coal blending. We understand they can take up to 3500kcal NAR coal, compared
to 5000-5500kcal NAR coal in 2008. We believe the pricing expectation is pretty
good as well: for 4200kcal NAR coal, we understand they are willing to pay
NEWC minus 25-30%. For 3500kcal coal, the price is NEWC minus 40-50%.

Not much low CV coal available for sales now
This kind of pricing could be achieved as 1) there is not much coal available for
spot sales out of Indonesia; 2) there is even less low rank coal available for sale
as it’s most likely used for blending with higher CV coal.

India not that aggressive
Our contacts indicated that India is not an aggressive buyer at this point. Perhaps,
it is still monsoon in India and it seems they have been downplaying on demand.
Also, India has been watching closely on API pricing and it seems there is a lot of
leverage to buy South African coal. They might be able to do so now as India’s
total import is 60mn t. But it will likely be a different story next year, when their
import requirement rises to 90mn t.

Optimism for prices to go higher in 4Q
There was general optimism for coal price to go higher in 4Q on the back of
stronger demand from China, India buying, Korea spot tender, and additional
demand from Japan in October – which is consistent with our view.

Royalty could be hiked
We gathered that starting 2009, there is no more deduction of cost, such as
barging, demurrage/dispatch, insurance, and other direct costs allowed and
royalty is calculated based on point-of-sale price. Previously, royalty would be
calculated based on deemed point of sales being the last load out facility owned
by the mine owner and such costs are deducted. We are not aware of such
development, having been implemented since 2009 considering coal companies
continued to pay 11-12% effective tax rate (vs. 13.5%) in the past two years. A 1-
2% increase in royalty could impact earnings by 5-9%.

Indonesia Inflation: "Lucky" Scenario Becomes Base Case For 2011 (update3) - Morgan Satnley

No More Rate Hikes in 2011; Policy Normalization to Resume in 2012
So far in this cycle, Bank Indonesia has used a mixture of policy tools – i.e., currency appreciation, liquidity management and policy rate hikes (to a limited extent). With capital inflows being strong, concerns that interest rate hikes will attract even more capital inflows, and BI facing one of the highest net sterilization costs in the region, policymakers have been comfortable allowing currency appreciation as a side effect of capital inflows to manage both inflation and ‘trilemma” pressures. With capital inflows still coming and with headline inflation likely below 6% for 2H11, we think policymakers are unlikely to hike policy rate further in 2011 given the inflation target range of 5%+/-1%.
We think policymakers will only resume policy rate normalization in 2012 for a few reasons. At 4.5%+/-1%, Bank Indonesia’s inflation target range for 2012 would be tougher compared to 2011 (5%+/-1%). Both headline and core inflation re-acceleration will become more evident in 2012. As domestic demand gets stronger, the current account surplus will dwindle, giving BI more room to navigate “trilemma” pressures. We look for a 100bps hike, taking the policy rate to 7.75%, by 2Q12.

Key Risks: Where We Could Go Wrong, What to Watch For
Inflation risks remain skewed to the upside from binary events. With retail fuel prices marked to about US$65/bbl oil, commodity prices will be key to watch. In mid-2008, policymakers hiked retail fuel prices by ~30% when oil prices were at US$120-US$130/bbl. Retail fuel prices have since been brought down to previous levels. With the now stronger currency, we think oil prices at US$140/bbl would be an important threshold.

In addition, we would also watch the refined oil trade deficit as a gauge of oil smuggling and arbitrage activities, which would increase fiscal burden. Credit growth and current account balance would also be useful in gauging whether domestic demand is going into overdrive territory and whether cyclical inflation pressures would behave differently from our expectations. A potential change in retail fuel price policy is captured in our bear case scenario. Our bull case features a structural Goldilocks scenario (Exhibit 10).
We outline our assumptions and outlook for the various scenarios below.

Base case: Base Effects in 2H11, Reacceleration in 2012
Assumptions

1) Oil prices to average ~US$115/bbl for 2011 and 2012; no retail fuel price hikes.

2) Sequential food price pressures gather pace in the run-up to Ramadan in August but are overwhelmed by base effects.

3) Demand-pull pressures to build up gradually.

Inflation peaks and policy moves: Headline inflation to peak at 7.0% YoY in 2Q12; Policy rate normalisation to resume in 1Q12; total policy rate increase of 50bps.

Bull Case: Structural Goldilocks
Assumptions

1) Oil prices falls to US$90/bbl and stay there for the rest of 2011 and 2012; no retail fuel price hike.

2) Structural forces keep cyclical inflation pressures largely anchored.

Inflation peaks and policy moves: Headline inflation peaks at 6.2% in 2Q12; policy rate normalization to resume in 2Q12; total policy rate increase of 100bps.

Bear Case: Tail Risks Materialize
Assumptions

1) Oil prices rise to US$140/bbl and stay there for 2011 and 2012; retail fuel price hike of ~30% by Sep-10. This quantum would be similar to what happened in mid-2008.

2) Strong second-round impact seen in other tradables segment, given the healthy domestic-demand momentum and that road transport accounts for 80%-90% of freight transport.

Inflation peaks and policy moves: Headline inflation peaks at 8.6% in 1Q12; Policy rate normalisation to resume in 4Q11; Total policy rate increase of 150bps

Indonesia Inflation: "Lucky" Scenario Becomes Base Case For 2011 (update2) - Morgan Satnley

DETAILS:

Changing Our Inflation and Policy Rate Forecasts
For 2011, we think Indonesia’s headline inflation peaked in 1Q (Exhibit 1) and the worst of inflation fears are likely past. We are thus revising our 2011 and 2012 average inflation forecasts from 6.5% YoY and 5.5% YoY to 5.9% YoY and 6.8% YoY respectively. Consequently, we are also changing our policy rate forecasts from 7.5% and 7.0% for 2011 and 2012 year-end to 6.75% and 7.75%, respectively. This means we are expecting no more policy rate hikes for the remainder of 2011 and expecting policy rate normalization to resume only in 2012.

We are lower than consensus inflation expectation (6.4%) for 2011 but higher for 2012 (consensus at 6.1%) (Exhibit 2). Some quarters are still calling for further policy rate hikes by late 3Q and 4Q – which we now find unlikely.

Factors in Outlook Revision:
The Three-Way Inflation Tug of War
Our inflation framework has not changed – but when facts change, our conclusions change too. We see Indonesia inflation trend as a three-way tug of war between:

a) Idiosyncratic factors, such as the impact of weather on food prices and of global oil prices on domestic retail fuel price policies. By nature, these are more difficult to predict in terms of timing, direction and magnitude.
b) Structural forces, which exert downward pressures on inflation.
c) Cyclical forces, which are now exerting upward pressures on core inflation.

We elaborate on each of these three factors below:

a) Idiosyncratic Factors: Now Working in Indonesia’s Favour

In an earlier report (See Indonesia Economics – Rate Pause: Walking a Tightrope, March 7, 2011), we had described a “lucky” scenario in which Indonesia may be able to muddle through on inflation and policy rate if a few stars are aligned – i.e. if weather patterns revert to normal and impact on food prices eases, oil prices fall and policymakers delay plans for the fuel subsidy rollback. We think these stars have come together for Indonesia. Recall that an unusually wet spell had caused chilli and rice prices to rise significantly in 2H10. Food prices have been declining since the start of this year. Based on our calculations, May food CPI index has now fallen back to the levels where it would have been if there had been no weather disruptions to begin with (Exhibit 3). This means that the high base effects in 2H10 will likely dampen headline inflation in the next one to two quarters.

In addition, markets have been oscillating between inflation and growth concerns given the recent soft patch in DM. This has had collateral impact on animal spirits and commodity prices. Brent prices have eased from earlier highs of US$128/bbl to US$119/bbl currently, alleviating at the margin the tail risks of retail fuel price hikes. In our original inflation forecasts, we had factored in a hike in retail fuel prices in 2Q11. This, together with the high base effects from weather disruptions a year ago, will likely be the dominant factor for inflation trends in the next three to six months and keep headline inflation below 6% for 2H11.

(b) Structural Inflation Anchor Also Pulling Its Weight
We have been strong proponents of Indonesia’s structural story for a long while now. An important part of this story is the structural decline in inflation it will bring about. The critical “enabler” in this aspect is currency stability. Due to capital account convertibility and higher external funding linkages in Indonesia, the currency has typically been seen as a key barometer of confidence. Historically, the rupiah has tended to be volatile given the high external funding linkages and low FX reserves ammunition. Currency volatility also tends to beget more currency volatility as the locals themselves switch out of rupiah into USD. The high level of dollarization means any currency volatility translates immediately into inflation. Inflation expectations become unhinged quickly, adding powerful second-round effects – and the vicious cycle continues.

Yet, improved macro fundamentals and higher foreign reserves have been greatly improving currency stability, helping to anchor inflation expectations. Thanks to the FX reserve ammunition, the currency has been extremely well behaved even in periods of risk aversion, most notably in the Jan-Feb equity and bond market sell-off. With foreign reserves crossing the US$100bn milestone much earlier than expected, (See Indonesia: The US$100bn War Chest, Feb 14 2011), policymakers now have more wherewithal to sustain the structural inflation downtrend.

(c) Cyclical Core Inflation – Reacceleration a Story for 2012
Clients ask whether we could see a re-acceleration of inflation pressures beyond the recent disinflation. In our view, underlying cyclical core inflation pressures are gathering pace gradually and will likely continue to do so. Monetary policy remains easy with Bank Indonesia having done only one rate hike. Moreover, still elevated commodity prices will also confer positive terms of trade for the second largest net commodity exporter in AXJ, lending support for growth momentum.

Indeed, though food inflation has eased from the peak of 16.2% YoY in Jan-11 to 10.2% YoY in May-11, inflation of tradeables-ex-food-and-energy – which we take as an indicator of pricing power in manufactured goods – has edged up from 5.6% YoY in Jan-11 to 6.2% YoY in May-11. Non-tradables inflation, which is more symptomatic of local inflation, has also edged from 3.1% in Jan-11 to 3.7%Yoy in May-11 (Exhibit 6).

In our view, %YoY headline inflation will re-accelerate in 4Q11 as core inflation edges slightly beyond 5% by 2011 year-end. However, the base effects from the idiosyncratic food factor will still keep headline inflation below 6% in 4Q11, which is the upper threshold of Bank Indonesia’s 5%+/-1% target range for 2011. Hence, in this context, we think inflation re-acceleration will likely become more of a focus in 2012 rather than 2011. This is why we have raised our 2012 inflation forecast even as we bring down our 2011 forecast.

Indonesia Inflation: "Lucky" Scenario Becomes Base Case For 2011 (update1) - Morgan Satnley

Our economist put out a note this morning changing her call on Indonesia inflation and policy rate outlook. She thinks the inflation peak in 2011 is now behind us and she is delaying her expectation of policy rate normalisation till 2012. On the back of this, our ASEAN Strategist, Hozefa Topiwalla, has removed his tactical caution on the Indonesia mkt. He now recommends investors to play the domestic structural growth stories (O/W Financials, Consumer Discretionary and Industrials). Our ASEAN Banks' analyst, Nick Lord, upgraded the bank sector view to attractive and initiated on Bank Mandiri (O/W) & Bank Negara Indonesia (E/W). Details and report attachments as follows.

**PLS OPEN ATTACHMENT FOR FULL REPORT & CHARTS**
ASEAN MacroScope: Indonesian Inflation: "Lucky" Scenario Becomes Base Case for 2011

KEY SUMMARY:

Investment conclusion: We think Indonesian inflation peaked in 1Q11 and the worst of inflation fears for 2011 are likely behind the nation. We are revising our inflation forecasts, bringing down 2011 from 6.5% YoY to 5.9% but bumping up 2012 from 5.5% to 6.8%. We are also changing our policy rate forecasts for 2011 and 2012 from 7.5% and 7.0% to 6.75% and 7.75%. We now expect further policy rate normalization only in 2012.

Our inflation framework has not changed - but when facts change, our conclusions change: Indonesia's inflation is a tug of war between structural forces (downwards), cyclical factors (upwards) and idiosyncratic factors such as weather and retail fuel price policy (uncertain).

In an earlier report, we described a "lucky" scenario in which Indonesia may muddle through if food/oil prices ease. Both have happened, reducing idiosyncratic risks. On food, prices have fallen back to the levels where they would have been if weather disruptions have not happened in 2H10. This would pose a significant dampener on %YoY headline inflation when high base effects start kicking in in the next 3-6 months. Meanwhile, strong global growth and commodity supply shocks had been a bad combination for inflation in economies where domestic demand has been strong, like Indonesia. The current growth scare hence helps take some heat off Indonesia as commodity prices fall and reduce pressures on policymakers to hike retail fuel prices. Structural forces from currency stability as FX reserves cross the US$100bn milestone have also helped anchor inflation. We expect these factors to overwhelm demand-pull pressures in 2H11, keeping headline inflation below 6% before inflation reacceleration gathers pace in 2012.

Where we differ: Consensus is higher in inflation expectation for 2011 (6.4% YoY) and lower for 2012 (6.1%). Consensus expects more policy normalization towards late 3Q11 and 4Q11.

Key risks & where we could go wrong? Inflation risks are skewed to the upside from binary events like retail fuel price change. Commodity prices are the wild card. Key indicators to watch are oil price (US$140/bbl is an important level), refined oil trade deficit, credit growth and current account balance.

Regional coal - Coaltrans: Positive going into 2012 - Macquarie

Event
§ We attended the Coaltrans 17th annual conference in Bali with more than 1,800
participants. The general mood of the conference was positive, with most participants still suggesting a higher coal price environment going into 2012. This
is being driven mainly by Indian and Indonesian domestic demand as well as the
Japanese reconstruction story. This is also in line with our positive view on the
ASEAN coal sector in medium term.

Impact
§ Positive thermal coal story in 2012. The majority of participants suggested a
potentially higher JFY12 coal settlement price towards US$130-140/t vs the
US$129.85/t coal settlement in 2011 and our current JFY12 forecast of US$120/t.
This is mainly being driven by increasing demand from India and Indonesia (as
they increase their electrification ratios) and the Japanese reconstruction story.
§ China increasingly important to seaborne trade and prices. This is especially
so given the recent re-emergence of import arbitrage opportunities (mainly driven
by rising Chinese domestic prices). We currently forecast Chinese imports to
reach roughly 109mt in 2011, or about 15% of total seaborne demand (down from
114mt in 2010, due to the lack of import arbitrage in 1Q11), and increasing to
112mt in 2012. At the current price (with the recent hike in Chinese domestic coal
prices), we see roughly a +/-US$5/t arbitrage opportunity for Indonesia’s low
quality coal to be imported to China (which is in line with our channel checks with
Indonesian coal producers and traders that suggest increasing enquiries from
China).
§ Indonesia increasing coal production by 10-15% pa in the next 3-5 years.
Most participants suggested that Indonesia's coal production in 2011 would be
roughly 310-370mt (with 31% of participants expecting 310-339mt and 28% 340-
370mt). This compares with the Wood Mackenzie coal production forecast of
about 341mt and our forecast of 363mt.
§ Improvement in regulatory environment but still long way to go. Some 41%
of the participants thought that implementation of the mining law has impeded
mining activities. Recent issues regarding the regulatory environment include
minimum coal pricing (HBA) for royalty calculations, clarity over borrow use
permits, and the recent forest moratorium. Further, there was also discussion on
potential coal upgrading for export (which in our view will not be applied in the
short-term given the lack of economically feasible coal upgrading technology in
Indonesia).

Outlook
§ In conclusion, it seems that the general mood of the conference was relatively
positive towards 2012 and beyond. This is consistent with our medium-term view
and supportive of our preference towards the ASEAN coal sector for its attractive
production growth, pricing exposure and valuations (trading on around 10x 2012E
PER). Our medium-term key picks remain SAR, HRUM, PTBA, and INDY.

ADRO DOWNGRADE TO OUTPERFORM TP IDR 2800 - CLSA

Adaro joins a growing list of Indonesian coal producers who are expanding into power generation. We expect the valuation impact of this move to be neutral given the long time period before project cashflows are realised. We downgrade our price target to Rp2,800 and our recommendation from Buy to Outperform due to higher forecast operating costs at the existing mines. Adaro's ambitious capex plans will provide fuel for growth in its quest for production of 80mt.

Venturing further down the value chain
Adaro's relentless pursuit of vertical integration is leading it down the Independent Power Producer path - one that is very much in vogue at the moment with Indonesian producers. We expect Adaro's 34% share in the US$3.2b Pemalang IPP to have a neutral near term impact on valuation. While returns to shareholders will be above Adaro's WACC, the forecast start date of 2017 will have no bearing on near term valuations.

All signs point to a near-term acquisition
There is continued strong demand for Indonesian coal, especially Adaro's clean low rank product which is well suited to Indian power producers. We forecast Adaro production at 48Mt in 11CL and 53Mt in 12CL. A new US$750m 10 year credit facility also allows for acquisitions and capex, meaning Adaro now has access to US$1.2b cash and undrawn credit lines to support growth ambitions.

Aggressive Capex to fuel 12% CAGR production growth
For 2011, Adaro plans to spend US$625m on capex projects at its existing mines in the pursuit of its 80mt per annum production target. The indefinite hiatus on the overland conveyer project and updated company guidance has led us to revise our forecasts on production cash costs at Tutupan and Wara up from US$35/t to US$44/t in 11CL and US$35/t to US$45/t in 12CL.

Downgrade price target to Rp2,800 implying 17% upside
We value the stock on a blend of DCF and 12.5x 12CL PE. This reduces our fair value to Rp2,800 and our recommendation to Outperform. We have revised down earnings to reflect higher operating costs. In addition, differences with consensus reflect CLSA volume and cost assumptions. We have restated the company's financial statements to USD.

Aneka Tambang: Hold; Rp2,125; TP Rp2,500; ANTM IJ Receives US$292.5m loan for CGA - DBS

Aneka Tambang (ANTM) through its subsidiary PT Indonesia Chemical Alumina (ICA) received Yen denominated loan of US$292.5m from Japan Bank for International Corporation (JBIC) and a consortium of Mizuho Corporate Bank Ltd and The Sumitomo Trust and Banking Co. Ltd (STB). The loan would be used to finance the construction of its US$450m Chemical Grade Alumina (CGA) smelter in Tayan, West Kalimantan with total annual capacity of 300,000 ton. The project will be completed in 2014. Maintain Hold, TP Rp2,500 based on blended valuation of DCF (12% WACC. 3% terminal growth), 14.0x FY11 PE, and 6.5x EV/EBITDA (5-years average). ANTM is trading at 12x FY11 PE against regional peers’ average of 10x.

Perusahaan Gas Negara: Buy; Rp3,950; TP Rp4,815; PGAS IJ Proposes 50% payout ratio - DBS

PGAS proposes Rp3.1tn dividend or 50% payout ratio in 2010 vs 60% in 2009. PGAS paid Rp10.2/share interim dividend in Jan11. The payout is in line with our forecast. We maintain our Buy call for PGAS with DCF-derived TP of RP4,815 for its promising outlook and attractive valuation. Higher gas volume and potential gas price hike are key catalysts.

Jasa Marga (Persero) (JSMR.JK) Paving the Way for Growth; Land Acquisition Bill a Key Catalyst - Cititgroup

 Raising target price; Maintain Buy — We raise our target price on Jasa Marga
(JSMR) to Rp4,000 (from RP2,340) following: a) Upward earnings revisions to factor in higher tariffs, higher volumes, and lower costs; b) Changes in our WACC assumptions (to better reflect current market conditions); and c) Roll forward of valuation to June 2012E (from Dec 2011E). While of late the share price has been range-bound, we believe the land acquisition bill due to be passed in Jul/Aug 2011 could serve as a key catalyst. This, and robust revenue growth, lead us to maintain our Buy (1L) rating.
 Valuation — While a DCF-based NPV of Rp6,141/sh makes JSMR appear sharply undervalued, this relies on timely completion of future projects. We prefer to rely on the near-term instead, using a multi-stage P/E model (15.6x 12E) which yields a Rp4,000 TP.
 2011 tariff hikes — 12 of the JSMR roads have biennial CPI-based tariff djustments due in Sept. However, since the increase is effective in Sept-2011, the full impact would only be felt in 2012. We expect to see FY11 tariffs rise by 1.7% and 10.3% in FY12.
 Hitting the 1bn mark! — In 2011, we expect JSMR to achieve traffic volume of .07bn vehicles (+11.4% YoY). Key reasons: a) Given the limited alternative options for travelers, we don’t expect traffic levels to be impacted by the planned tariff hikes; b) Operations of two new routes (Surabaya-Mojokerto Section 1A & Semarang Ungaran); c) Historically, a rising car sale environment bodes well for JSMR.
 Land acquisition bill: Positive for Medium & Long Term — Difficulties in acquiring land has been a hindrance to toll road development in Indonesia . As GoI looks to pass the land acquisition bill, we believe this will provide better clarity on procedures and timing, leading to a faster realization in the rate of return of toll road co’s (incl. JSMR). Bill finalization is being deliberated and it is targeted to be passed in Jul/Aug 2011.
 Risks — a) Change in GoI regulatory framework (i.e. tariffs), macro, and political conditions; b) Delays in completion of ongoing projects; and c) Rising interest rates).

Selasa, 14 Juni 2011

Bumi Resources - an overview on the Vallar/BRMS transaction - Bumi point of view

Here are some Q & A's to raise understanding from our view point

1) Why did Bumi sell its dominant stake in BRMS

- Refocus on coal mining and related business
- Regroup under larger Vallar Plc group umbrella and benefits from direct access to funding accessible to Vallar Plc
- Benefit from attractive premium afforded to BRMS (Rp 850 vs IPO price of Rp 630)

2) Why not payment in cash but CB's

- CBs allow the holder to benefit from upside in Vallar Plc share price appreciation
- CB can be monetized quickly for liquidity

3) Merits of CB vs cash from Bumi standpoint

- CB striked based on market terms and allow holder to potentially enhance CB asset with Vallar Plc share price appreciation

4) Utililisation plan for CB's - is it to settle CIC loan, if not why sell BRMS

- CB can be monetized for purposes of leverage reduction (repay expensive debt eg CIC loan) in order to maximize return for all shareholders and stakeholders

Regards,

Dileep

BUMI, Show us the money - BoAML

Our take on $2bn bond issue: earnings dilutive, no direct cash
Vallar announced last Friday that it will issue $2bn in CBs at 2% coupon, to BUMI, to buy a 75% stake in Bumi Resources Mineral (BRM). This means: 1) BUMI is not going to receive the cash immediately (unless it sells the CBs immediately) – there is a plan to list the CBs but we doubt it will be 100% - Bakrie and Rothschild could face a massive dilution risk; or, otherwise BUMI has to wait until 2017 to receive Vallar shares (unlikely scenario because we understand it will not be allowed under British law); 2) BUMI will face an earnings dilution. BUMI earned US$236mn in equity via net income of associates (primarily from BRM) in 2010 vs potential coupon receipt of US$40mn.

How much earnings dilution could potentially be?
Assuming no BRM (all BRM shares are transferred to Vallar) in 2010 and no debt repayment, BUMI’s earnings would likely see a reduction of 20%. But on a fullyear basis, the impact on 2012E earnings will be around 13% (as we have assumed declining earnings contribution from NNT). BUMI would trade at 13x 2012E P/E under that scenario. We have kept our earnings estimate mostly unchanged for now.

Raising PO - factoring in US$600mn reduction in CIC loan
Assuming BUMI would successfully reduce US$1.2bn of CIC loan (via CB proceeds) by October 2012 and the CB deals go through, we raise our PO from Rp2900 to Rp3335 based on a target 2012E P/E of 12x. Do note we have valued the rest of Indo coal players with NPV. There is not much upside potential to our PO. We have kept our Neutral rating unchanged.

Not much upside even under the best-case scenario
Assuming BUMI manages to reduce US$1.9bn loan from CIC by end 2011 and the CB deals go through, BUMI would only trade at 9.5x 2012E P/E, which is comparable to SAR and ITMG, without paying for all the uncertainty surrounding BUMI. But we understand only US$600mn of BUMI loan can be repaid by October 2011 but the rest US$1.2bn can only be repaid by October 2012 and 2013.

BRMS is valued at Rp 850 / share and will have direct access to UK and European based capital markets and funds

Following the announcement made by Vallar Plc ("Vallar") on Friday, 10 June 2011 regarding the "major re-organization to simplify corporate structure and enhance transparency", we would like to inform our shareholders the following ke notes related to PT Bumi Resources Minerals Tbk ("BRMS" or the "Company").

Vallar has announced its intention to acquire 75% ownership in BRMS from PT Bumi Resources Tbk ("BUMI")
The acquisition is priced at Rp 850/share which represents a 21.9% premium to BRMS' 30 days average closing price
In exchange of the 75% ownership in BRMS, Vallar will pay approximately US$ 2.07 billion (which represents the acquisition price of Rp 850 / share) through its proposed new parent company (Bumi Plc) to BUMI in the form of listed corporate bonds
The convertible bonds will be convertible into approximately 79 million new Bumi Voting Ordinary Shares (Vallar's shares) at the initial conversion price
The transaction is expected to complete in the third quarter of 2011 and will require approval of Bumi Voting Ordinary Shareholders
The Management of BRMS views that the transaction would be beneficial to the Company in the following ways:
More simplified ownership structure
Direct ownership by Vallar would strengthen BRMS' corporate governance and transparency
Closer access to the UK and European based capital markets and funds which will improve the liquidity of BRMS' stock trading volume
The Rp 850/share acquisition price reflects a 34% premium from the IPO price which shows Vallar's confidence in BRMS' fundamentals and value.
The complete Vallar's Press Release announcement can be accessed at www.vallar.com

More information about BRMS can be found in the www.bumiresourcesminerals.com

Bakrieland tunda divestasi Bakrie Toll - Bisnis Indonesia

JAKARTA: PT Bakrieland Development Tbk menunda rencana divestasi 75% saham di PT Bakrie Toll Road, pengelola ruas tol Kanci-Pejagan yang dijadwalkan berlangsung tahun ini. Dampaknya, PT Pemeringkat Efek Indonesia menetapkan prospek negatif terhadap hasil peringkat Bakrieland.

Peringkat Bakrieland dan obligasi konvensional yang diterbitkan oleh perseroan ditetapkan pada level idBBB+. Pefindo juga menetapkan peringkat idBBB+ (sy) untuk sukuk ijarah I/2009 seri A dan B.

Analis Pefindo Vonny Widjaja dan Rachmadi Kurniawan melalui risetnya yang dipublikasikan hari ini mengungkapkan prospek negatif Bakrieland mencerminkan melemahnya rasio proteksi arus kas karena rencana divestasi PT Bakrie Toll Road tidak direalisasikan pada tahun ini.

"Hasil pemeringkatan mencerminkan kuatnya posisi bisnis Bakrieland sebagai salah satu pengembang properti terbesar dan kualitas asetnya yang diatas rata-rata," paparnya.

Namun, lanjut mereka, hasil pemeringkatan ini dihadapkan kepada rencana bisnis Bakrieland yang agresif. Ekspansi ini didanai dengan utang padahal karakteristik dari industri properti adalah sensitif terhadap perubahan kondisi makroekonomi.

Bakrieland telah merealisasikan dana belanja modal hingga akhir Mei tahun ini mencapai Rp600 miliar untuk pengembangan bisnis residensial. Dana tersebut termasuk dalam dana investasi yang dialokasikan perseroan hingga dua tahun mendatang yang mencapai Rp2,5 triliun.

Saat ini, utang perseroan kepada perbankan baru sekitar Rp1,5 miliar. Rencananya, dana investasi tersebut sebagian besar akan digunakan untuk pengembangan lahan perseroan di Jonggol dan Sentul. Untuk lahan Jonggol, akan dikembangkan menjadi kawasan residensial dan theme park.

Perseroan juga sedang mencari mitra strategis untuk penggarapan lahan yang luasnya mencapai 12.000 hektare tersebut. Perseroan juga dalam proses negosiasi dengan beberapa calon mitra strategis untuk menggarap lahan seluas 3 hektare-8 hektare di kawasan Rasuna Epicentrum, Kuningan.

Adhi Karya Setuju Bagi Dividen Rp32,25 per Saham - TopSaham

PT Adhi Karya Tbk (ADHI) setuju membagikan dividen tahun buku 2010 senilai Rp32,25 per saham atau setara 30% dari laba bersih yang diperoleh perseroan sepanjang tahun lalu senilai Rp189,48 miliar.

Sementara sisa laba bersih sebesar Rp1, 41 miliar atau sebesar 0,75% akan dialokasikan perseroan untuk program kemitraan , sebesar Rp1,42 miliar atau 0,75% digunakan program bina lingkungan dan sisanya sebesar Rp129,79 atau 68,50% akan digunakan sebagai saldo laba ditahan untuk melakukan kegiatan usaha perseroan ke depan.

Corporate Secretary ADHI, Kurnadi Gularso usai Rapat Umum Pemegang Saham Tahunan (RUPS) Senin (13/6) mengatakan pembagian dividen senilai total Rp56,84 miliar akan dilakukan perseroan pada tanggal 20 Juli 2011.

Sepanjang 2010 lalu perusahaan konstruksi milik pemerintah ini berhasil membukukan laba bersih 2010 sebesar Rp189,48 miliar atau naik 14,47% dibanding periode yang sama tahun sebelumnya senilai Rp165,53 miliar.

Senin, 13 Juni 2011

Property: Greater Jakarta ASP Up 15.1% YTD - Mandiri

Favorable macroeconomic condition (inflation and mortgage lending) might have supported property sector, which is shown by an astonishing 15.1% YTD increase in residential ASP, faster than our initial estimate, based on our survey in Greater Jakarta area. We think this phenomenon could continue due to strong property demand as we view that there should be no major interest rate hike in near term. Our sensitivity analysis shows that a 5% increase in our FY11F ASP growth assumption results in an up to 9% increase in NAV and EPS12F for companies under our coverage. BSDE and SMRA are our top picks, given their main exposure in Serpong, an area which we think should have solid growth due to its strong demographic profile

Favorable macroeconomic situation should continue. Our initial jitters on the prospect of the FY11 property sector growth seems to be unfounded, with inflation still under control, while consumer confidence index sustained above 100 (see exhibit 6). These give banks further room to expand, including loan for property that ytd has increased by 15.6% higher than ytd growth for the same period in 2010 (3.1%). Remained low mortgage rates (8.80% - 10.75%) stimulate property demand, hence boost capital value. Our economist predicts only a mild 25-bp hike later this year as he expects moderate inflation in the second half of the year due to high-base effect from last year and relatively favorable weather that will keep food prices under control.

Faster-than-expected ASP growth. Our survey showed that average land price increased in Jakarta ranging from 3% to 30% with West Jakarta recording the highest increase. However, the increase in West Jakarta was mainly driven by landbank scarcity, unlike in Serpong which was driven primarily by strong demand. We see the general price increases in Jakarta has gone faster than analysts’ expectation of about 20% FY11 ASP growth, especially for area in Serpong-Tangerang. Upside risk by 2-9% is seen, in our sensitivity calculation, taking account the 5% upgrade in our FY11F ASP growth assumption, making property stocks more attractive to collect (see exhibit 2).

Expecting sustainable ASP growth in Serpong area. Looking at the price growth, we place our bet on Serpong area. We are intrigued by its demographic profile, resembling to that in West/North Jakarta areas, with strong purchasing power and entrepreneurial spirit to develop the commercial side of the area. As an anecdotal evidence, a 200-m2 land for residential in Kelapa Nias, Kelapa Gading – West Jakarta was priced Rp2.1mn/sqm in 1997, but had already gone to Rp6mn/sqm in 2002 (only in 5 years!!). We may see a similar pattern of land price growth in Serpong.

Top picks: BSDE and SMRA. Given their main exposures in Serpong, we pick BSDE and SMRA as our top picks. BSDE and SMRA, currently trade at 49% and 43% discount to RNAV11F and PE11F 20.5x and 25.0x, respectively. Risks: (1) surge in interest rates (2) execution risks.

Asia Palm Oil Sector: Too Much of a Good Thing - Credit Suisse

Sales commentary: Credit Suisse forecast CPO price to average M$2,950/ton in 2011 and M$2,500/ton in 2012. With YTD average price of M$3,534/ton, 2H11 CPO price should average M$2,366/ton for our 2011 average price to materialize. We reckon the CPO price momentum to be positive in July/August on spiking demand – due to Ramadan and Eid Al-Fitr – and urge investors to ride the wave. We like SIMP, London Sumatra (LSIP, N, PT Rp2,900) and Astra Agro (AALI, N, PT Rp26,000).

· Analyst Tan Ting Min reiterates her Underweight rating on the plantation sector on rich valuations and bearish CPO price outlook in the short-run.
· Ting Min’s bearish view on the CPO price is based on: 1) strong production rebounds in Indonesia and Malaysia , partly due to weather improvements; 2) demand rationing in the export market; 3) record soybean production in Brazil and WASDE upward revision on soy stock/usage ratio.
· For stock calls, Ting Min’s key Underperform are IOI Corp. (IOI MK, U, PT M$5.0) and Sime Darby (SIME MK, U, PT M$8.0). She maintains her Outperform rating on Wilmar International (WIL SP, O, PT S$6.4), as China’s proxy, and Salim Ivomas (SIMP, O, PT Rp1,850), on attractive valuations.

Asia ex Strategy - And So the Worries Turn to Earnings - Citigroup

Earnings revisions remain above average — The best earnings revisions are to
be found in China, Korea and Thailand. The worst are in India, though it is
debatable how much worse they can get. Sector leaders are the banks, real estate
and materials. Technology and industrials look worst.

Aggregate earnings have surpassed their prior peak by 12% — Indonesia and
China lead. Singapore, Taiwan and HK lag. Consumer earnings have surpassed
their prior peak by the greatest margin, as have energy, banks and tech. Other
financials and real estate are the biggest laggards.

The 2011 forecast of 15% EPS growth has remained very stable — The most
active period for EPS revisions is July/August, which is still ahead of us. The good
news is that the Citi LEI continues to show improvements, which bodes well for
Asian earnings.

Note Bumi Resources (BUMI IJ) - CLSA

Nick Cashmore has just written a note Bumi Resources (BUMI IJ). BUMI has announced a corporate restructuring that will potentially cut debt and boost profits. With production uplift on track Bumi is also well placed to benefit from the coal super cycle. Nick has a BUY rating on the stock with TP of Rp4,000.

Bumi has announced that is will divest 75% of its 87% stake in Bumi Minerals (BRMS IJ) to Vallar (VAA LN), receiving US$2.07bn in convertible notes due 1Q17 with a 2% coupon and GBP15.88 initial conversion price or 32% premium over VAA closing price last Friday. Bumi Minerals (BRMS IJ) is a holding company with an 18% effective stake in Newmont Nusa Tenggara as well as holdings in various gold, zinc, diamonds and oil greenfield interests.

Sales comment:

Accounting-wise, selling BRMS to Vallar should result in one time decent size paper profit for BUMI Resources. However, to understand whether the whole deal is commercially attractive for BUMI Resources, I guess the key here is to value the CB that BUMI Resources is receiving for divesting 75% stake in BRMS to Vallar.

The UK companies Act prohibits a subsidiary from owning shares in its parent. BUMI Resources will have to monetize the CB since the convertibility right worth less to BUMI Resources.

This whole announcement is a precursor to a subsequent sale of the CB to eventually support repayment of the US$1.9bn debt to CIC. This will enable CIC in turn to convert its interest into an equity stake in Vallar. While this seems to be a move in the right direction, the ultimate question is whether CIC will eventually swap the very lucrative 19% bond with equity in Vallar. There is no cash changing hand so far.

Plantation Unexpected output jump in May11 - DBS

• May11 palm oil output jumped 13.7% m-o-m to 1.740m MT – 21% higher than expected
• Exports grew by a less-than-expected 4.3% m-o-m in May11 to 1.402m MT. Hence, May11 inventory piled up 14.8% m-o-m to 1,918m MT
• We raised Malaysia ’s CY11F-12F CPO output by 7% each. No change in our CPO price forecasts
• Prefer processors and upstream laggards. Top picks: Sampoerna A., KLK, Sime, Mewah, Wilmar, First R.


Stronger than expected May11 production. Malaysia ’s May11 palm oil output was unexpectedly strong, rising by 13.7% m-o-m to 1.740m MT. This was 21% higher than our forecast of 1.442m MT – due to what we believe are recoveries in biological tree stress and some ease in labour shortage. Strongest yield improvements were reported in Kelantan (+36.4% m-o-m); Terengganu (+25.3% m-o-m), Pahang (+16.3% m-o-m); Johore (+14.6% m-o-m), and Sabah (+11.3% m-o-m). We understand that Jun11 Sabah output thusfar is showing continued upward trend.

May11 exports growth weaker than expected. While May11 palm oil exports grew 4.3% m-o-m to 1.402m MT, this was 9% below forecast, as exports to EU and Egypt dropped, only partially offset by stronger demand from India and Pakistan . Demand from China grew by an unexciting 4.5% m-o-m, as it is releasing domestic edible oil and oilseeds reserves. A combination of higher output and weak exports resulted in inventory pile up to 1.918m MT – significantly higher than 1.633m MT forecast. This level is the highest since Jan10. Stock/usage ratio had accordingly moved to 10.3% vs. 8.8% expected.

Raised Malaysia ’s CPO output by 7%. We expect Jun11 output to taper off slightly to 1.682m MT (raised from 1.449m MT in previous forecast). Malaysia ’s CY11F-12F palm oil output is also raised by 7% to 18.851m MT and 19.941m MT, respectively. We expect exports to reach 1.574m MT in Jun11 (+12.3% m-o-m), on depleting buyers’ inventories and deteriorating crop outlook of substitutes in the current season. Palm oil inventories however, are forecast to break 2m MT in Jun11, peaking at 2.353m MT by end Sep11. No change to our CPO price forecast given stronger-than-expected YTD crude oil price.

Accumulate processors and upstream laggards. We continue to recommend processors as they should benefit from the expected larger CPO supply (top picks: Wilmar and Mewah). We also like upstream laggards for their valuation gap to peers (top picks: Sampoerna A., KLK, and First R.). Please note that our DCF valuations are based on lower CPO price expectations from FY12 onwards. We also like Sime Darby’s potential earnings momentum from its restructuring.

Visi Media launches 14.21% stake IPO - Insider Stories

PT Visi Media Asia Tbk (Viva), a media company controlled by Bakrie family, launches a 2.29 billion new shares IPO or 14.21% of its enlarged capital. The IPO is scheduled on July 11 2011.
Visi Media Asia is parent company of PT Cakrawala Andalas Televisi (ANTV), PT Lativi Mediakarya (TVOne), dan news portal Vivanews under PT Viva Media Baru.

PT Danatama Makmur and PT Ciptadana Securities has been mandated as the IPO lead underwriters, an official press statement obtained today.
Following the IPO, Visi Media will issue 571.50 million of series I warrant. Each holder of four shares will entitle one warrant.
The company will use 40% of the IPO proceed to settle US$54 million loan facility to Credit Suisse. Post the IPO, PT CMA Indonesia controls 79.04% of A series stake in Visi Media, PT Bakrie Capital Indonesia owns 0.32%, and public investors hold 14.21%. Fast Plus Limited holds 6.43% of B series stake in Visi Media.

Trinugraha Thohir
CMA Indonesia and PT Trinugraha Thohir has entered into a mandatory exchangeable bond (MEB) on March 22. Under the agreement, Trinugaha Thohir, a company that is mostly owned by Garibaldi Thohir and Eric Thohir, will convert the US$20 million MEB into Visi Media shares at the listing date or one day after the listing.
In 2010, Visi Media posted Rp3.7 billion net profit from Rp152.7 billion net loss in 2009. Operating revenue increased to Rp889.1 billion in 2010 from Rp668.4 billion in 2009.

Laba bersih Tiga Pilar melonjak 400% - Bisnis Indonesia

JAKARTA: PT Tiga Pilar Sejahtera Food Tbk. meraih laba bersih Rp23,15 miliar per 31 Maret 2011 atau mengalami kenaikan 400% dibandingkan periode yang sama tahun lalu yang hanya Rp5,78 miliar. Berdasarkan laporan keuangan yang dipublikasikan di media cetak hari ini, kenaikan itu disebabkan oleh meningkatnya penjualan bersih yang mencapai Rp365,21 miliar atau naik lebih dari tiga kali lipat pada periode yang sama Rp122,84 miliar.

Laba bersih per saham perusahaan yang bergerak dalam industri produksi bihun jagung itu pada dalam laporan keuangan konsoliasi 31 Maret 2011 sebesar Rp13,84 atau naik dari Rp3,46 pada 31 Maret 2010. Harga saham itu pada penutupan transaksi saham akhir pekan lalu bertengger di posisi Rp650.

Saat ini perusahaan yang didirikan oleh Tan Pia Sioe berupa bisnis keluarga itu memiliki aset Rp1,94 triliun yang berarti tak banyak mengalami perubahan sejak laporan keuangan 31 Desember 2010.

Pada awalnya emiten itu, adalah sebuah Bisnis keluarga yang memproduksi bihun jagung dengan nama Perusahaan Bihun Cap Cangak Ular di Sukoharjo, Jawa Tengah.

Menurut laman emiten itu, berbekal pengalaman yang panjang, tradisi, serta loyalitas konsumen; TPS-Food berhasil meraih posisi sebagai produsen mi kering dan bihun terdepan di pasar Indonesia.

Komitmen TPS-Food untuk menghasilkan produk yang terbaik, diterima oleh pasar, dan berkualitas tinggi dibuktikan dengan diperolehnya sertifikat ISO 9001:2002, HACCP, dan sertifikasi halal.

Medco launches US$150 mio bonds - Insider Stories

Oil and gas producer PT Medco Energi Internasional Tbk (MEDC), that is controlled by Panigoro family, aims to raise US$150 million from the bonds issuance within 2 years.
Under the new regulation of bonds issuance within several stages, Medco plans to issue a 5-year US$50 million of the first stage of bonds issuance.
Medco has appointed PT Bahana Securities as the only lead underwriter. The bonds offer, which has obtained idAA- from PT Pemeringkat Efek Indonesia, is scheduled on July 1- July 4 2011.

Medco will use 60% of the issuance or US$90 million to refinance existing debts and the remaining will be utilized as capital expenditure.
Medco has several debts which will due in 2011, 2012, and 2014:
Based on payment schedule:
*The first trance of medium term notes (MTN I) 2009 worth US$20.60 million with maturity on December 23 2011.
*The second trance of MTN I worth US$7.40 million with maturity on February 3 2012.
*A Series of MTN II worth US$40 million with maturity on March 22 2012.
*Medco's bond II of Rp513.50 billion with maturity on June 17 2012.
Based on buyback program:
*Medco's bond II of B series worth Rp986.50 billion with maturity on June 14 2014.
*Medco's bond II of A series worth Rp513.50 billion with maturity on June 17 2012.

Tidak Bagi Dividen, Duta Pertiwi Siap Lunasi Utang Rp 500 Mlliar - TopSaham

PT Duta Pertiwi Tbk, anak perusahaan PT Bumi Serpong Damai Tbk akan mengumumkan utangnya yang akan jatuh tempo pada tahun 2012 sebesar Rp 500 miliar.

"Hutang kami ini akan jatuh tempo tahun depan. Kami akan melunasinya, posisi kas perseroan saat ini mencapai Rp 570 miliar," ungkap Hermawan Wijaya, Direktur Duta Pertiwi dalam public expose perseroan di Jakarta, Jumat (10/6).

Juga disampaikan bahwa peseroan memutuskan untuk tidak membagikan dividen. Perseroan dalam 2010 membukukan pertumbuhan laba bersih sebesar 26% menjadi Rp 267,04 miliar dibanding tahun sebelumnya Rp 211,9 miliar.

Dalam 2011 ini perseroan akan mengalokasikan dana sebesar Rp 250 miliar untuk memperbanyak landbank di pulau Jawa dan luar Jawa.