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, 19 Agustus 2011

XL Axiata (EXCL-BUY-IDR5,300-TP:IDR6,400) - Bahana

Transformer
Best managed telco operator; In a de-leveraging phase
In a highly competitive telco industry, XL Axiata (EXCL) has managed to continuously transform itself and emerge as the most successful cellular operator (exhibit 11&12). Testimony to this is was EXCL’s market penetration which expanded from 18% in 2007 to 23% in 2010 coupled with EBITDA margin expansion from 42% to 53% over the same period, allowing net gearing to fall from 198% to 84% (exhibit 13). The company’s initiatives, including pricing strategies and marketing promotions are almost always replicated by its peers. On the SIM card distribution, EXCL successfully implemented the cluster system, which is currently being developed by TSEL.

Data segment: Long-term growth catalyst
As voice & sms revenue growth will be limited ahead, the management believes data migration will be the next growth catalyst for EXCL. With more sophisticated client base and booming user-friendly and cheaper smart phones and tablets (exhibit 22&23), the industry’s future growth will stem from the data segment (exhibit 19&20). Additionally, as 51% of EXCL’s subscriber base utilizes data, this represents a huge potential for growth in the coming years. Hence, going forward, EXCL will still has to invest further on this data segment given that the company’s 3G BTS coverage only covers roughly 80% of the population, versus voice coverage of around 95%.

2Q11 results: Transition to data segment-based revenue in progress
EXCL’s focus on migration to data has resulted in weaker than expected 2Q11 net revenue, which increased just 2% q-q and 9% y-y with voice revenue continuing to fall -1% q-q and -8% y-y and SMS revenue beginning to decrease -2% q-q, although still up 14% y-y. On a more positive note, data revenue increased significantly 45% y-y and 13% q-q (exhibit 25). Going forward, we believe that data revenue will grow at the expense of voice and partially SMS revenues. Thus, in the short term, EXCL is undergoing a transitional phase as its revenues from data are still insignificant, requiring more spending on data infrastructure, resulting in increased depreciation.

Highest growth in the sector; ReInitiating with BUY
In 2H11, we expect higher earnings contribution to stem from Lebaran and year-end festivities, although recent development on data trend as discussed above could mean lower EXCL growth in 2011 compared to levels in the past. Over the longer term, however, we continue to believe that EXCL’s growth rate will be higher than its peers on the back of the company’s aggressive and innovative growth strategy, particularly on data. We believe EXCL will maintain its EBITDA margin around 52% (exhibit 14). We expect EXCL’s revenue to reach IDR19.0t, up 9% y-y and 13% y-y bottom line growth to IDR3.3t. Using our blended 2012 valuation of DCF, industry P/E and EV/EBITDA, we arrive at IDR6,400 TP for EXCL. Thus, as we see 21% upside potential on EXCL and given recent market underperformance (exhibit 5), we re-initiate EXCL with a BUY.

Bumi Resources (BUMI IJ) 1H11 results, from Jayden - CLSA

· Bumi Plc (owner of 29% of Bumi Resources (BUMI IJ)) reported results yesterday. Bumi Resources will report tonight.
· Operational results suggest Bumi Resources is on track to reach its production target of 66Mt this year.
· 1H ASP is in line with our full year estimate of US$91/t, and 2Q11 was higher at US$94/t.
· Cash costs are above our assumption on higher fuel charges and higher strip ratio at 12x vs our assumption of 11x.
· Historically Bumi has produced 45% of its full year target during 1H. Given the improving trend to weather since June, we expect the 66Mt production target (+10% on last year's 60Mt) is achievable
· It has been reported in the local press (Bisnis Indonesia) that the Bumi Plc result implies an NPAT of US$268m at Bumi Resources level. If correct, this is 44% of our full year assumption of US$562m meaning the company is on track to meet earnings forecasts.
· More to come when Bumi Resources releases its detailed results overnight.

PGAS, the end of cheap gas - CLSA

Jayden wrote a note on Perusahaan Gas (PGAS IJ) today. This is a non-consensus call as we are the only SELL on PGAS on the street and Jayden’s analysis is thorough and gives good basis for the negative call.

This stock now does not really have a defensive profile and will see its abnormally high gas distribution margins normalized to those of regional gas utility peers. The company remains in the regulatory purgatory and this uncertainty will limit any re-rating potential in the near-term.

Key points from the report:
· Today we are re-initiating on PGAS with a SELL recommendation and a TP of Rp3,075 implying 8% downside.
· In early August upstream oil/gas regulator BPMigas called for a repricing of legacy gas contracts from upstream E&P players to PGAS to reflect market rates (currently PGAS is paying around ~USD2/mmbtu on key legacy contracts versus a US$5.5/mmbtu market price)
· This will considerably increase PGAS cost of sourcing gas while PGAS ability to pass-through the higher gas cost to its end off take customers (state utility PLN & Industry) remains very fluid and politically sensitive.
· Hence we see an end to the status quo of PGAS super-normal gas distribution margins which are abnormally high versus regional peers and downside exists as they inevitably normalize.
· In the face of this accelerated margin compression and regulatory uncertainty we re-initiate with a SELL. Our TP of Rp3,075 is derived from a probability weighted scenario analysis reflecting potential outcomes.

Agung Podomoro: APLN sets Rp1.2tn bonds with 10% and 11% coupon (APLN, Rp340, Buy, TP: Rp430) - Mandiri

􀂄 APLN announced today final structure of its bonds issuance plan. The total issuance is Rp1.2tn, which comprised into two series: (1) Rp325bn 3-year series at 10%; and (2) 875bn 5-year series at 11%. Tentative timeline:
- Effective date: Aug 18, 2011
- Offering date: Aug 22-23, 2011
- Allotment date: Aug 24, 2011
- Electronic distribution date: Aug 25, 2011
- Listing date: Aug 26, 2011
􀂄 We see the bonds positively as consistent to its commitment in taking active expansion thus sustain the company’s growth going forward. Minimal downside is seen from the issuance, where earnings slipped by only 2%, based on our 12F. APLN currently trades at attractively PE12F of 10.6x, vs. CTRP of 18.7x. Maintain BUY, with TP: Rp430/share.

Bumi Resources: “clean” 2Q11 net income of US$118.8mn, full year consensus of US$477mn looking too conservative (BUMI, Rp2,750, Buy, TP: Rp3,700) - Mandiri

􀂄 The 2Q11 net income rose by 50% QoQ, driven by 11% higher sales, 33% higher gross profit, and 51% higher EBIT.
These results should alleviate yesterday’s concerns that the strong showing by Bumi Plc (who reported 1H11 results two days ago) was only driven by non operating items.
􀂄 If we take-out the US$106.8mn derivatives gain and the US$17.2mn loss on asset write-down and adjust those for the tax effects, the “clean” 2Q11 net income for Bumi would be around US$118.8mn.
􀂄 If Bumi can sustain its “clean” profit level of US$118.8mn in the third and fourth quarter, the company should be able to achieve US$517mn profit for the year, against consensus of US$477mn. We think Bumi should be able to show higher quarterly run-rate for its “clean” profit, due to higher output volumes in 2H11 (heavy rains and floods have forced Bumi to do more over-burden removals in 1H11).
􀂄 We foresee consensus EPS on Bumi Resources to move up as the year progresses. We are currently forecasting FY11F net profit of US$500mn, placing the stock on 13.4-11.4x PER for FY11-12F. Buy with TP of Rp3,700.

Bakrie Sumatera Plantations: 1H11 profit surprise next week (UNSP, Rp405, Neutral, TP: Rp400) - Mandiri

􀂄 We met with UNSP’s new IR head Mr. Hadi Susilo, who joined the company about two to three weeks ago. Prior to joining UNSP, Mr. Hadi Susilo was IR head at Sorini Agro Asia Corporindo (SOBI IJ).
􀂄 We are hopeful that Mr. Hadi Susilo can bring significant improvements to UNSP’s investor relations effort and disclosure ahead. Since the beginning of 2010, the flow of information (especially the operating data) has been somewhat inconsistent.
􀂄 We notice that some brokerage houses have dropped coverage on UNSP over the past months, possibly owing to the inconsistent data flow. Of the eight remaining analysts covering UNSP, only five made some changes to their target price or rating. Coverage from the other three analysts seem stale, with last update done in year 2010.
􀂄 We are pleasantly surprised to learn that UNSP already bagged Rp405bn net profit in the five months to May 2011, against a full year consensus of Rp579bn (FY11F P/E consensus of 9.1x versus peers of 12.2x). In the 1Q11, UNSP reported Rp132.5bn net profit. Its 1H11 results are being reviewed by auditors currently, likely to be out by next week.
􀂄 Granted that much of the profit surprise could be coming from one-off gains, namely FX and perhaps debt restructuring gains. On 12 July, UNSP disclosed to the IDX about the completion of its debt restructuring, for the US$210mn Domba Mas facility where Credit Suisses was the arranger. That said, the one-off profit surprise may serve as a worthwhile catalyst for UNSP, that trades on mere 0.7x PBV and one of the lowest EV-to-planted CPO plantations. We would flag the trading opportunities in the counter ahead of 1H11 results release.

Automotive: July11 official domestic car and motorcycle wholesale reach all-time high - Mandiri

􀂄 Domestic car wholesale reached all-time high in July11 at 89,056 units (+23.5%yoy, +26.9%mom). Astra International also booked all-time high car sales volume in July11 at 47,500 units (+14.4%yoy, +19.2%mom). Astra market share in car wholesale normalize at 53.3% in July11 from 56.8% in June11, mainly due to Honda’s car wholesale has recovered in July11 after drop in June11. We expect car wholesale keep strong in August11 due to car wholesale usually high before Muslim festive and the availability of low leasing rate.
􀂄 Domestic motorcycle reached all-time high in July11 at 737,809 units (+5.5%yoy, +12.0%mom). Meanwhile, Astra’s motorcycle wholesale in July11 only increased slightly by 0.4% mom. Therefore, Astra market share in Motorcycle wholesale dropped to 49.2% in July11 from 54.9% in June11. We expect motorcycle wholesale keep strong in August11 due to motorcycle wholesale usually high before Muslim festive and the availability of low leasing rate.

Behind the Selloff: Stocks Are Pricing 'Worst Case Scenario' - CNBC

Published: Thursday, 18 Aug 2011 | 1:51 PM ET
By: Patti Domm
CNBC Executive News Editor
Fears of a global banking crisis swept across markets, driving stocks sharply lower, Treasury yields to record lows, and gold to record highs.

The dramatic reflex to run for safety also propped up the U.S. dollar, which was stronger against a whole group of currencies.

The yield [cnbc explains] on the U.S. 10-year note fell below the psychologically key 2 percent level temporarily, a level it has not seen since possibly the Eisenhower era. The Dow tumbled more than 500 points at the day's lows, and the industrial and commodities stocks that rely on global growth fell the hardest.

Like an out-of-control cyclone, speculation that Europe's banks are beginning to suffer the contagion of Europe's sovereign debt crisis ripped across global markets, taking bank shares and equities markets lower. That speculation, collided in a perfect storm, with a string of weak U.S. economic reports, which helped fan worries about waning global growth.

But the drama started with fears about Europe, reignited just two days after the leaders of France and Germany tried to calm markets by pledging to create a more unified fiscal structure for the euro zone. They also proposed other measures, including a bank transaction tax, that left markets concerned about the lack of resolution for the debt crisis.

Thursday's disclosure from the European Central Bank that a single bank borrowed $500 million for a week spooked markets, recalling for some the memories of the 2008 financial crisis. The report also came at the same time the Wall Street Journal reported that the New York Fed has been engaging more with the European banks operating in the U.S. to see whether they have access to reliable funding.

"The fact that the New York Federal Reserve is actually talking to the U.S. operations of some of these European banks is in the course of business," said Art Hogan of Lazard Capital Markets.

"What's pointed out in the Wall Street Journal is what's obvious to us. We are concerned about European banks, sure. Are they going to need to raise capital? Will they all be solvent at the end of the day? These stories go back and forth, and until we know the answers to that, we're going to try to price worse case scenarios into stocks. Right now the markets are going trough the process of concerns."

A source close to the Fed said it is routinely in contact with banks.

"Because there is stress in the markets, there are more regular interactions," with European and U.S. banks, the source said.

Hogan said the "muscle memory" of the Lehman failure is adding to the anxiety in markets.

"People waiting for the Lehman moment probably will be disappointed," he said. "The psychology of the market is such that we have a very recent memory of calamity."

The markets have been quick to respond to negatives in U.S. data, and Thursday's Philadelphia Fed survey gave it plenty to be concerned about.

The index, which measures factory activity in the Mid Atlantic region, fell to negative 30.7 from a positive 3.2 in July, its lowest reading since March, 2009.

"Today's data is consistent with lower yields. It is consistent with that we get a sub-50 reading on ISM in August, and it does confirm some of the bullishness in the Treasury market," said Ian Lyngen, senior Treasury strategist with CRT Capital.

The ISM manufacturing survey, expected in early September, is a measure of U.S. manufacturing activity, and a reading below 50 would signal a contracting economy.

Lyngen said the 10-year note, while close in 2008, did not dip below 2 percent then, as it did today.

At one point Thursday, the yield was 1.973 percent, and the 30-year was at 3.340 percent.

Hogan said the real worries of the markets are the two barbells of Europe's debt problems and the struggles to contain the U.S. deficit, which resulted in a downgrade of the U.S. credit rating by Standard and Poor's.

"What's difficult for us to contemplate is just how much the cure for the two major issues affecting the markets are going to cost in terms of growth," said Hogan.

Biggs Says S&P May Be Bottoming, Priced for 15% Profit Drop - Bloomberg

August 18, 2011, 5:34 PM EDT
By Nick Baker and Carol Massar
Aug. 18 (Bloomberg) -- The selloff in U.S. stocks may be close to ending with valuations so low they could withstand a 15 percent decline in profits, said Barton Biggs, the hedge fund manager who said this month he was selling shares.

“It’s very possible, in the grand scheme of things, that what we’re seeing is the classic retest of the lows of 10 days ago,” Biggs said on Bloomberg Television today. “We may be in the process of making an important bottom.”

Equities around the world plunged today, with the Standard & Poor’s 500 Index falling 4.5 percent to 1,140.65 as of 4 p.m. in New York. The level is within 1.9 percent of the one-year low of 1,119.46 reached Aug. 8 and down 16 percent from the 2011 high of 1,363.61 on April 29.

The tumble in stocks shows that investors expect a slowing economy to spur analysts to lower earnings estimates, he said. Earnings at S&P 500 companies are forecast to climb 17 percent to $99.08 a share in 2011 and 14 percent to $112.90 in 2012, estimates compiled by Bloomberg show. The index is trading at 12.4 times profits in the last 12 months, 24 percent below its five-decade average.

“If analysts and investors really believed the S&P earnings estimates, the market wouldn’t be selling where it is,” said Biggs, whose equity purchases prior to the March 2009 market bottom sent his Traxis Partners LP hedge fund to a 39 percent gain that year. “The market is already priced for a 10 or 15 percent decline in earnings.”

Fund Performance

Biggs runs the Traxis Global Equity Macro Fund, which produced a 2.2 percent profit, net of fees, for investors in 2011 through the end of July, according to Adam Jaffe, the company’s chief operating officer. That compared with the 3.3 percent gain for the MSCI All-Country World Index of shares in 45 nations, including reinvested dividends.

Equity prices will prove too high should the economy fall into a recession, he said, a possibility the U.S. Federal Reserve should act to prevent with something similar to the purchase of Treasury bonds it began in 2010.

“We do need something more out of the Fed at this point, but are we going to get it? I don’t know,” he said. “I’d like to see the Fed do something drastic, maybe buy a different asset than Treasuries.”

Biggs, who called stocks a “strong buy” on Aug. 3, said five days later he had cut risk in Traxis. Biggs, the former chief global strategist at Morgan Stanley, said he wanted to “get out of the way” of the slide that had wiped out almost $2 trillion from U.S. equities over two weeks.

--Editor: Chris Nagi

Obama Plans Package to Boost Economy - Bloomberg

President Barack Obama is seeking to revive a version of the so-called grand bargain with congressional Republicans that would combine long-term U.S. deficit reduction through entitlement benefit cuts and tax increases with immediate steps to boost job growth.
Obama plans to press Congress for billions of dollars in fresh spending to reduce unemployment as he also pursues a compromise on long-term deficit cuts. He will begin by laying out his ideas in a speech shortly after the U.S. Labor Day holiday, which is Sept. 5.
With the U.S. unemployment rate at 9.1 percent and economic growth slowing, Obama’s aides are working on a mix of tax cuts and infrastructure spending beyond the measures he has been promoting over the last several weeks, an administration official said, speaking on condition of anonymity because details for the speech haven’t been completed.
Separately, Obama will present to a special 12-member congressional committee charged with coming up with at least $1.5 trillion in deficit reduction his own proposal for making deeper cuts in the nation’s debt. It will include raising government revenue as well as cutting entitlement programs such as Social Security and Medicare, along the lines of the scuttled deal he tried to strike with House Speaker John Boehner in July.
“I don’t think it’s good enough for us to just do it part way,” Obama said yesterday at a town hall event in Atkinson, Illinois. “If we’re going to do it, let’s go ahead and fix it. And if we’re going to fix it, the only way I believe to do it in a sensible way is you’ve got to have everything on the table.”

Slowing Growth
The administration is seeking a larger long-term deficit deal to make room for short-term spending aimed at boosting the economy at a time when growth has slowed and consumer confidence is lagging.
Morgan Stanley & Co. yesterday lowered its forecast for economic growth next year to 2.25 percent from 3 percent, citing declines in business and consumer confidence.
The benchmark Standard & Poor’s 500 Index rose 0.1 percent yesterday to close at 1,193.89. The index had rallied 7.5 percent over the three days through Aug. 15 amid a decline in jobless claims, an increase in retail sales and better-than- estimated profits. The S&P 500 is still down 12 percent from April 29 on concern about Europe and an economic slowdown.
“More stimulus would benefit the economy, and that would surely be a good thing,” said Paul Dales, senior U.S. economic adviser for Capital Economics Ltd. in Toronto. The impact “would depend on the size of the overall measures as well as what they are and when they take place.”

Getting Through Congress
“The great issue is whether any such proposals would get through Congress,” he said.
Republican congressional leaders are already lining up in opposition to more federal spending.
“The American people understand that Washington can’t keep spending money it doesn’t have,” Boehner, an Ohio Republican, and Majority Leader Eric Cantor of Virginia wrote in an opinion article published in USA Today. “They want to see less government -- not more taxes.”
Senate Republican leader Mitch McConnell of Kentucky said in a statement yesterday that Obama has “finally” reached the conclusion that reducing the deficit will help the economy.
“But continuing the spending spree on failed stimulus programs won’t shrink the deficit,” he said.
Obama said the country doesn’t have to choose between deficit reduction and measures to stimulate the economy and create jobs.
‘We can do both in a sensible way,” he said.

Grand Bargain
Steps to spur jobs and raise revenue were part of the discussion on a deal for deficit reduction and raising the debt ceiling between the White House and Republicans before talks broke down in July.
In an interview yesterday with CBS News, Obama said that he wished Boehner “had taken me up on a grand bargain to deal with our long-term debt and deficit.”
“I will be putting forward a plan that will be similar to the plan I put forward to the speaker,” Obama said in the interview broadcast last night.
To offset the cost of the new initiatives, Obama will seek additional long-term deficit reduction.
The administration wants “aggressive” steps on the deficit “because it helps you pay for the kinds of things you need to do in the near term to grow the economy and create jobs,” White House press secretary Jay Carney said on MSNBC’s “The Daily Rundown” program yesterday, without giving specifics.

Bus Tour
Obama yesterday wrapped up a three-day bus tour through Minnesota, Iowa and Illinois and is scheduled to leave for a 10- day vacation at Martha’s Vineyard, Massachusetts, later today.
The president used his trip through the Midwest to repeatedly call on voters to pressure Congress to embrace measures that could improve the economy. At a forum on the rural economy in Peosta, Iowa, on Aug. 15, he questioned “the refusal of a faction of Congress to put country ahead of party” and the “politics of the short term.”
“I need you to send a message,” Obama said yesterday in Illinois. “I need you to send a message to folks in Washington: Stop drawing lines in the sand, stop engaging in rhetoric instead of actually getting things done.”
He also sought to counter Republican opposition to raising taxes for the wealthiest Americans, citing a New York Times opinion article written by billionaire Warren Buffett. The Berkshire Hathaway Inc. chairman and chief executive wrote that the nation’s richest individuals have been “coddled” and that he paid a smaller percentage of his taxable income to the government than anyone else in his office.

Tax Rates
“These days, the richer you are, the lower your tax rate,” Obama said. “That can’t be something that is defensible regardless of party.”
Adding to the political hurdles in front of any administration proposals, voters are skeptical of both Obama and Congress. Obama’s job approval rating was 40 percent in a Gallup daily tracking poll taken Aug. 14-16 and it hit 39 percent the day before, the lowest since he took office. Congressional approval was at 13 percent, tying an all-time low, in a Gallup Aug. 11-14 poll.
That was the sentiment of Jerry Smith, a dairy farmer and a registered Republican who was among the crowd that got a surprise visit from Obama yesterday at the Whiteside County Fair in Morrison, Illinois.
“It’s a big mess,” he said. “You can blame it on everybody.”

Beaten-down Wall Street slammed by recession fears - Reuters

Rising fears of another recession hammered U.S. stocks on Thursday, sending major averages sharply lower in a return to the extreme fluctuations investors endured a week ago.

New worries about the health of European banks set the tone before the market's open, and a dismal report on regional U.S. manufacturing fueled a downward spiral in which the Dow dropped as much as 528 points, spurring a flight to safe-haven assets like gold.

The Nasdaq ended more than 5 percent lower, the S&P 500 more than 4 percent and the blue-chip Dow off more than 3 percent. Thursday marks the sixth time in the last two weeks that the S&P has moved by 4 percent or more.

"Are we going to go into recession? Most market participants were looking for slow and steady growth, but the statistics and the financial situation here and in foreign economies have disturbed that view," said Richard Weiss, a Mountain View, California-based senior money manager at American Century Investments.

The Dow Jones industrial average fell 419.63 points, or 3.68 percent, to 10,990.58, while the Standard & Poor's 500 Index declined 53.24 points, or 4.46 percent, to 1,140.65, and the Nasdaq Composite Index dropped 131.05 points, or 5.22 percent, to 2,380.43.

The losses resumed a slide in stocks that began in late July and seemed to moderate in the last few days. In a more worrisome sign, volume was heavier than on recent positive days, with 11.4 billion shares changing hands, highest so far this week.

"It almost feels as though the floor in its entirety is clearly engaged in executions but the overall theme is resignation," said Peter Kenny, managing director at Knight Capital in Jersey City, New Jersey.

Kenny said that traders are increasingly resigned to the idea that the market trend is downward.

"What can you do about a trend that seems to be well established? It's the new -- I hate to say it -- it is the new normal," he said.

Volatility jumped, with the CBOE Volatility Index or VIX, a barometer of Wall Street anxiety, up 38 percent at 43.56. More investors were taking out protective positions against declines in the market.

The S&P 500 is now off 16.4 percent from its April 29 closing high, but the benchmark index still ended above its slump on August 9, when it fell to 1,101.54.

Adding to fears of a another recession, a survey of U.S. Mid-Atlantic factory activity by the Philadelphia Federal Reserve Bank showed a drop in August to its lowest level since March 2009.

Even though European bank worries were at the forefront of investors' minds, financials were not the worst-off stocks on Thursday.

The losses were spread throughout the market, with the biggest hits taken by growth-oriented sectors that speaks more to rising global economic concerns. Luxury retailers and large-cap technology companies, often a hiding spot during market declines, slumped. Shares of luxury retailer Tiffany & Co fell 7.9 percent to $59.21, while software developer Oracle Corp dropped 8.3 percent to $25.19.

Top drags on the Dow included shares of IBM, down 4.5 percent at $163.83, and United Technologies, down 5.5 percent at $68.12. On the Nasdaq, shares of Oracle fell 8.3 percent to $25.19.

Hewlett-Packard Co slumped 6.1 percent after reporting quarterly results.

Bank shares also fueled the market's declines, with the KBW Banks Index down 5.6 percent.

A Wall Street Journal report said regulators are scrutinizing the financial health of U.S. units of Europe's biggest banks more closely.

Among Wall Street bank stocks, Citigroup Inc lost 6.3 percent to $27.98 and Morgan Stanley shed 4.8 percent to $16.20.

Economists at Morgan Stanley lowered the outlook for global growth and said the United States and the euro zone are "dangerously close to recession."

(Reporting by Ashley Lau; Additional reporting by Caroline Valetkevitch and Ryan Vlastelica; Editing by Kenneth Barry)

What moved and why on a big day for the markets - AP

The Dow Jones industrial average fell 419 points Thursday, but that was only part of the story on a head-spinning day in the financial markets. Here's a quick guide to what moved and why.

STOCKS: The Dow was down more than 528 points shortly after trading began. The closing loss of 419 made it the sixth time this month the Dow has moved 400 points in a day. For the month, the Dow has lost almost 10 percent. Investors are worried that a new recession may be coming.

GOLD: Another day, another record. Gold reached almost $1,830 an ounce before closing at $1,824.60. The price has soared 28 percent this year. Some investors see gold as a safe investment at a turbulent time for the markets. Many others are just looking to cash in because it keeps going up.

BONDS: The yield on the 10-year Treasury briefly dipped to 1.98 percent on fears of another recession. That's the lowest since at least 1962, according to the St. Louis Federal Reserve. Standard & Poor's may have stripped the United States of its top-notch credit rating, but investors are still buying bonds with gusto because they see the investment as safe. More demand pushes the price up and the yield down.

OIL & GAS: Oil fell almost 6 percent to $82.38 because investors expect the weakening economy to reduce demand. Gasoline prices usually follow oil, so expect Thursday's national average of $3.59 a gallon to fall. Gas could fall to $3.25 this fall.

CURRENCIES: The dollar, Swiss franc and Japanese yen rose because of their reputation as safe places to invest. The euro fell because of concerns about European countries debt problems.

THE ECONOMY: Investors got a series of discouraging reports. The number of people filing for unemployment benefits for the first time was the highest in four weeks. Sales of previously occupied homes fell for the third time in four months. Manufacturing in the mid-Atlantic states is weakening sharply. And inflation in July was the fastest since March.

Morgan Stanley Cuts 2011 Global Growth Forecast - CNBC

Morgan Stanley slashed its global growth forecast for 2011 and 2012, saying the U.S. and the euro zone were "dangerously close to a recession", and criticized policymakers in Washington and Europe for not acting more decisively to contain the sovereign debt crisis.

The bank cut its global gross domestic product growth forecast to 3.9 percent from 4.2 percent for 2011, and to 3.8 percent from 4.5 percent for 2012.

"Our revised forecasts show the US and the euro area hovering dangerously close to a recession — defined as two consecutive quarters of contraction — over the next 6-12 months," Joachim Fels, who co-heads Morgan Stanley's global economics team, said in a research note dated Wednesday.

That was not the bank's base case scenario, he said, noting the corporate sector still looked healthy and lower inflation will ease pressure on consumers' pocketbooks, while central banks such as the Federal Reserve and European Central Bank could try to loosen policy further.

Still, "it won't take much in the form of additional shocks to tip the balance," he added.

"A negative feedback loop between weak growth and soggy asset markets now appears to be in the making in Europe and the US."

Germany reported on Tuesday that its economic growth came close to stalling in the second quarter, while data from France last week showed its growth had ground to a halt, raising questions over how much drive can be expected from Europe's top economies.

The clouded growth outlook puts further pressure on European politicians who have been haggling over ways to stop the euro zone's sovereign debt crisis from engulfing larger member countries such as Spain and Italy.

Analysts warn that political wrangling and failure to deliver any concrete pledges to increase the size of Europe's rescue fund risks a renewed attack on heavily indebted countries and a further blow to business and consumer confidence.

The U.S. economy also stumbled badly in the first half and came dangerously close to contracting in the first quarter. High unemployment, a bruising political battle in Washington over the debt ceiling and spending cuts in July and a stock market slump all helped push U.S. consumer sentiment to its lowest level in more than 30 years.

"Recent policy errors — especially Europe's slow and insufficient response to the sovereign crisis and the drama around lifting he U.S. debt ceiling — have weighed down on financial markets and eroded business and consumer confidence," the Morgan Stanley note said.

Growth will also be hit by the prospect of fiscal tightening in the United States and Europe where politicians are trying to appease markets by reining in public spending, it added.

It said it now sees growth in developed market economies averaging only 1.5 percent this year and next, down from his previous view of 1.9 percent and 2.4 percent, respectively.

"While we had been calling for a BBB recovery in DM (developed markets) all along, the path now looks even more Bumpy, Below-par and Brittle than previously thought," Fels said, adding that emerging markets were not immune either.

Growth in emerging market economies will slow to 6.4 percent this year from 7.8 percent in 2010, Fels estimated.

This means that emerging market economies — which now account for half of global GDP — will generate 80 percent of the global GDP growth that Morgan Stanley is forecasting for 2011 and 2012, Fels said.

Most economists say they are not cutting their growth forecasts for emerging Asia for now, as the continent is less dependent on exports to Western markets than it was when the financial crisis hit in 2008.

Morgan Stanley left its 2011 growth forecast for China unchanged at 9.0 percent, versus 10.3 percent last year, but dialed back growth expectations slightly for Russia and Brazil.

If the West does slump back into recession, or a prolonged period of meager growth, analysts say China may not be in a position to reprise its role in supporting the global economy as it did in 2008, when it announced a massive stimulus program.

Inflation unexpectedly quickened in China in July, putting pressure on the central bank to keep prices in check with more interest rate rises even as its robust growth showed signs of cooling.

Gold hits latest record high, near $1,830 - The Economic Times

NEW YORK: The price of gold hit its latest record high, near $1,830 an ounce, as investors spooked by the prospect of a return to recession sought out safety in the precious metal.

Gold prices have more than doubled since the recession began in late 2007. They've risen about 19 percent since the beginning of June, as European leaders struggled to keep the debt crisis from infecting the region's major economies and U.S. politicians nearly drove the country to the brink of default, prompting Standard & Poor's to cut the country's AAA credit rating.

Morgan Stanley on Thursday cut its forecast for global economic growth for this year and 2012, saying the U.S. and the 17 countries that use the euro were ``hovering dangerously close to a recession.''

While gold has hit a series of record highs over the past 2 1/2 months, the Standard & Poor's 500 has dropped about 15 percent, while the dollar, a traditional safe haven during periods of market turbulence and fear, is flat against a group of six major currencies.

The metal's value, unlike that of a currency, doesn't depend on the health of a single country's economy. Its swift rise has made it popular with investors seeking big returns, as well as presumed safety from turbulent financial markets.

On Thursday, for example, the S&P 500 fell more than 4 percent at midday, following a selloff in European and Asian markets. A new slate of reports that pointed to a sharp slowdown in the economy spooked investors.

There was a steep drop in U.S. home sales last month, more people filed jobless claims last week and an August regional manufacturing report was weak. There was downbeat data from overseas.

At midday, gold for December delivery, the most-traded futures contract, was worth $1,820.50 an ounce, up $26.70, or 1.5 percent. Earlier Thursday it hit $1,829.70 per ounce, a record high.

Still, when adjusted for inflation, gold remains below its 1980 peak of $850 an ounce. That's about $2,400 in 2011 dollars.

US crude oil prices dive nearly 6 pc on demand fears - The Economic Times

NEW YORK: US crude oil prices sank nearly six percent Thursday after a fresh plunge in global stock markets, as traders fretted over warnings about a new vicious recession that could slam demand for energy.

New York's main contract, West Texas Intermediate (WTI) crude for delivery in September, lost $5.20 to $82.38 a barrel.

In London, Brent North Sea crude for October delivery dropped $3.61 to $106.99 a barrel.

The price drops came after Morgan Stanley issued a report Thursday that said the United States and Europe are dangerously close to recession and that growth in the big emerging economies would be slower than it earlier forecast.

"We are seeing a very diminished demand picture," said oil specialist John Kilduff at Again Capital.

"You're seeing a considerable shift away from the outlook that the economy is going to grow in the second half and next year."

"Crude oil prices have been under pressure amid ongoing concerns about lack of US oil demand," said Myrto Sokou at the Sucden brokerage in London.

"Following the gloomy macroeconomic picture and the recent big builds in oil supplies, we expect crude oil prices to extend recent losses, with potential for WTI to retest the $75-80 level in the coming weeks."

The growth picture was also hurt by poor to outright gloomy US economic data on jobs, inflation, housing sales and regional manufacturing released during the day.

Crude Palm Oil Little Changed; Economic Concerns In Focus - PalmOil HQ

Crude palm oil futures on Malaysia’s derivative exchange were little changed Thursday, with investors more focused on global economic growth and supportive fundamentals relegated to the background, trade participants said.

Benchmark November CPO on the Bursa Malaysia Derivatives ended at MYR3,026 a metric ton, down 0.2% from Wednesday’s close.

Investors are closely watching developments in the euro zone and the U.S. for greater clarity on whether developed economies may be slipping into a recession.

“I think investors are still concerned about external factors and some are sitting on the sidelines for new cues,” a trading manager at a Jakarta-based vegoil exporter said. “But a lot of buying has been taking place this week, particularly from South Asian countries, as palm oil prices appear to be stabilizing.”

Traders also said the long queue of palm oil vessels in several Indonesian and Malaysian ports points to higher overall exports this month, and may lead to a drawdown in palm oil stocks in Malaysia.

“Production at some of our estates is marginally lower, so I think palm oil will be well supported at current price levels,” a manager at a major plantation company in Malaysia said.

Output in Malaysia and Indonesia, both major producers of palm oil, is widely expected to be lower in August as workers go on holidays during the fasting month of Ramadan.

In the cash market, refined palm olein for October/November/December was traded at $1,090/ton, free on board Malaysian ports, a physical market broker in Singapore said.

Cash CPO for prompt shipment was offered MYR10 lower at MYR3,160/ton.

Traded volume on the BMD reached 19,201 lots, down from 20,179 Wednesday. One lot equals 25 tons.

Open interest was 135,490 contracts compared with 135,600 contracts Wednesday.

Ketakutan resesi picu kejatuhan baru saham AS - AntaraNews

New York (ANTARA News) - Kekhawatiran baru tentang resesi kedua di Amerika Serikat dan Eropa, didorong oleh laporan bank investasi, mengirim saham AS ke dalam penurunan kembali pada Kamis waktu setempat (Jumat pagi WIB).

Indeks Dow Jones Industrial Average turun 419,63 poin (3,68 persen) menjadi 10.990,58 pada penutupan perdagangan, menyusul kerugian sebelumnya di bursa-bursa Eropa.

S&P 500 yang lebih luas merosot 53,23 poin (4,46 persen) menjadi 1.140,65, sementara indeks komposit Nasdaq terpukul lebih keras oleh aksi jual, jatuh 131,05 (5,22 persen) menjadi 2.380,43.

Pemicu kejatuhan baru adalah laporan Morgan Stanley yang memperingatkan bahwa pertumbuhan global melambat dan bahwa Amerika Serikat dan Eropa berada di tebing dari keterperosokan ke dalam resesi baru, dua tahun setelah resesi lalu berakhir, lapor AFP.

"Sebuah putaran umpan balik negatif antara pertumbuhan lemah dan pasar aset yang lembek sekarang tampaknya dalam pembuatan di Eropa dan Amerika Serikat. Ini akan diperburuk oleh prospek pengetatan fiskal di AS dan Eropa," katanya.

Laporan itu diperkuat oleh segelintir rilis data mingguan dan bulanan di AS yang tidak menunjukkan perbaikan terhadap pekerjaan, penjualan perumahan jatuh, inflasi naik, dan memburuknya kondisi manufaktur di wilayah pusat Pantai Timur di Philadelphia.

"Konsensus umum di belakang penurunan tersebut tampaknya menjadi kekhawatiran tentang prospek pertumbuhan global, meskipun krisis utang zona euro berlanjut tentu tetap pada pikiran investor," kata David Campione dari Briefing.com.

Ada juga sebuah pelarian pada saham bank, didorong sebagian oleh Wall Street Journal yang melaporkan bahwa regulator AS mengatakan sedang memeriksa posisi unit AS dari bank-bank besar Eropa, dengan kekhawatiran tentang kemungkinan paparan mereka terhadap utang zona euro yang bermasalah.

Bank of America kehilangan 6,0 persen, Citigroup turun 6,3 persen dan Wells Fargo merosot 4,7 persen.

Nasdaq ditarik turun oleh penurunan 8,3 persen di Oracle dan penurunan 5,4 persen di Google.

Hewlett-Packard, yang mengatakan sedang mempertimbangkan spin-off bisnis komputer pribadinya menegaskan bahwa pihaknya sedang bernegosiasi untuk membeli perusahaan perangkat lunak Inggris, Autonomy, jatuh 6,0 persen.

Aksi jual di AS dan Eropa memicu lonjakan baru harga obligasi, mendorong Treasury 10-tahun AS sempat turun dalam perdagangan ke rekor imbal hasil terendah selama ini 1,974 persen, memecahkan rekor 2,007 persen pada 18 Desember 2008, pada puncak dari resesi AS.

Pada akhir hari, imbal hasil Treasury 10-tahun berada di 2,07 persen, dibandingkan dengan 2,17 persen pada Rabu, sementara hasil obligasi 30-tahun berada di 3,42 persen, turun dari 3,57 persen.

Harga dan hasil obligasi bergerak dalam arah yang berlawanan.

Ekonomi Kondusif, Capital Inflow Capai US$5,2 M - Inilah.com

Aliran masuk modal asing jangka panjang (investasi langsung di Indonesia) terus meningkat mencapai US$5,2 miliar.

Demikian dikatakan Kabiro Humas BI, Difi A Johansyah di Jakarta, Kamis (18/8). "Kondisi perekonomian Indonesia dan prospek bisnis yang terus membaik menjadi faktor penarik arus penanaman modal asing (PMA)," tandasnya.

Sementara pada investasi portofolio, arus masuk modal asing yang deras terjadi pada pasar saham dan SUN mencapai US$6,3 miliar yang dipicu oleh kombinasi dari faktor penarik dari dalam negeri dan faktor pendorong dari luar negeri. "Faktor-faktor domestik tampak pada fundamental ekonomi yang kondusif, imbal hasil investasi relatif tinggi dan ekspektasi apresiasi di kalangan investor," tuturnya.

Adapun faktor-faktor eksternal tercermin pada ketidakpastian dan lambatnya proses pemulihan krisis utang di negara kawasan Eropa dan Amerika serikat yang terjadi di tengah masih tingginya akses likuiditas global. "Arus modal asing pada investasi lainnya pada triwulan II-2+11 mencapai surplus US$2 miliar, terutama dari penarikan utang luar negeri swasta untuk mendukung kebutuhan bisnis serta bertambahnya penempatan dana asing pada perbakan domestik," jelasnya.

Secara total surplus transaksi modal dan finansial mencapai US$12,5 miliar meningkat hampir dua kali lipat dibanding surplus triwulan sebelumnya. Tingginya surplus tersebut berasal dari arus masuk modal asing pada instrumen saham dan surat utang pemerintah maupun swasta.

Selain itu, meningkatnya kebutuhan pembiayaan yang mendorong sektor swasta menarik pinjaman luar negeri dan simpanan mereka yang ada di perbankan luar negeri.

Tingginya surplus transaksi modal dan finansial akibat derasnya arus modal asing ke Indonesia menyebabkan kenaikan surplus Neraca Pembayaran Indonesia (NPI). Surplus NPI pada triwulan triwulan II-2011 mencapai US$11,9 miliar meningkat cukup tajam dibandingkan surplus US$7,7 miliar pada triwulan sebelumnya.

BI: Capital Inflow Terus Dorong Surplus NPI - Okezone

Bank Indonesia (BI) mengungkapkan derasnya aliran masuk modal asing alias capital inflow terus mendorong surplus pada Neraca Pembayaran Indonesia (NPI). Hal ini terlihat pada kuartal II, yang tercatat mencapai USD11,88 miliar yang priorotasnya melalui transaksi modal dan finansial.

"Kenaikan surplus NPI ini terutama berasal dari tingginya surplus transaksi modal dan finansial akibat derasnya arus masuk modal asing ke Indonesia," ujar Kepala Biro Bank Indonesia Difi A Johansyah kepada wartawan di Jakarta, Kamis (18/8/2011)

Bank sentral sendiri mencatat pada kuartal II surplus NPI mencapai USD11,88 miliar, hal ini naik dibanding kuartal satu 2011 sebesar USD7,67 miliar. Dari surplus tersebut, tercatat transaksi modal dan finansial menyumbang USD12,52 miliar, naik dibanding kuartal sebelumnya sebesar USD6,44 miliar.

"Surplus transaksi modal dan finansial yang signifikan hingga mencapai USD12,5 miliar, terutama bersumber dari derasnya arus masuk investasi portofolio dan investasi langsung (Penanaman Modal Asing/PMA) dan penarikan utang luar negeri (ULN) swasta," tambahnya.

Lebih jauh dia menjelaskan pada kuartal II 2011, dana asing dalam investasi langsung (PMA) mencapai USD5,25 miliar, investasi portofolio sebesar USD6,28 miliar dan investasi lainnya sebesar USD2,02 miliar. Sementara dana domestik yang ditempatkan pada instrumen investasi di luar negeri mencapai USD1,03 miliar.

"Sementara surplus transaksi berjalan sebesar USD0,23 miliar dalam triwulan dua 2011, lebih rendah dibanding triwulan sebelumnya yang mencapai USD2,09 miliar akibat meningkatnya tekanan defisit neraca perdagangan minyak, neraca jasa dan neraca pendapatan," tambahnya

Dia menambahkan, dengan perkembangan tersebut jumlah cadangan devisa RI pada akhir Juni 2012 mencapai USD119,7 miliar. sampai akhir Juli 2011, cadangan devisa RI telah mencapai USD122,7 miliar.

Antam Siapkan Empat Proyek Ekspansif - Kompas

PT Aneka Tambang meneguhkan posisinya sebagai salah satu perusahaan tambang terkemuka di Indonesia dengan memperkuat usaha pengembangan industri tambangnya pada empat proyek pengolahan bahan logam dan tambang. Proyek tersebut paling cepat akan mulai beroperasi secara komersial mulai tahun 2014.

"Kami berupaya untuk bertumbuh melalui proyek-proyek ekspansi yang solid dengan meningkatkan nilai tambah melalui kegiatan pengolahan dan menurunkan ekspor bijih," ujar Sekretaris Perusahaan Antam, Bimo Budi Satriyo, di Jakarta, Jumat (19/8/2011).

Menurut Bimo, keempat proyek tersebut adalah, pertama, proyek Chemical Grade Alumina (CGA) Tayan, Kalimantan Barat. Proyek ini bernilai 450 juta dollar AS dengan rencana kapasitas produksi 300.000 ton Chemical Grade Alumina per tahun. Statusnya saat ini adalah dalam tahap konstruksi dan diperkirakan mulai beroperasi secara komersial pada tahun 2014.

Kedua, proyek FeNi (feronikel) Halmahera di Buli, Halmahera Timur, Maluku Utara, dengan perkiraan biaya proyek sebesar 1,6 miliar dollar AS (termasuk pembangkit listrik) dengan kapasitas produksi 27.000 ton Ni (nikel) per tahun dengan estimasi operasi komersial pada semester II tahun 2014.

Ketiga, proyek Smelter Grade Alumina (SGA) Mempawah, Kalimantan Barat, dengan perkiraan biaya proyek sebesar 1 miliar dollar AS dengan kapasitas produksi 1,2 juta metrik ton SGA per tahun dengan estimasi operasi komersial pada 2015.

Keempat, proyek Mandiodo Nickel Pig Iron (NPI) dengan lokasi Konawe Utara, Sulawesi Tenggara. Perkiraan biaya proyek antara 350 juta dollar AS-400 juta dollar AS dengan kapasitas produksi 1 tahap 120.000 ton nikel per tahun dengan estimasi operasi komersial pada 2014.

Bumi Resources 1H profit up 8.76% - Insider Stories

Indonesia's largest coal exporter PT Bumi Resources Tbk (BUMI) reported a 8.76% increase in attributable profit for the first half of this year as higher average selling price.

BUMI booked US$274.37 million attributable profit in 1H 2011 from US$252.26 million in 1H 2010. Referring to the 1H 2011 profit, it counted 88.22% of BUMI's full year profit last year of US$311 million.

BUMI's ASP rose 36.07% to US$91.3 per ton from US$67.1 per ton. The company's coal sales slightly fell 5.48% to 29.3 million tons from 31 million tons, while production abated 2.29% to 29.9 million tons from 30.6 million tons.
BUMI's operating profit rose 42.06% to US$548.74 million from US$386.26 million, sending a higher margin to 30.61% from 26.81%. Revenue increased 24.31% to US$1.79 billion from US$1.44 billion.

Bumi Plc Booked Underlying Operating Profit US$ 62 Million - BUMI Plc

Bumi plc's ("Bumi") first set of financial results includes its ownership of PT Berau Coal Energy ("PT Berau") and 25% interest in PT Bumi Resources ("PT Bumi Resources"), from 4 March 2011, when the acquisition of the two interests became effective. Since then, the group has increased its ownership in PT Berau to 85%, and in PT Bumi Resources to 29%. PT Berau has been fully consolidated as a subsidiary and PT Bumi Resources has been reported using the equity accounting method.

Bumi's operating profit for the period was $62 million, with underlying earnings of $54 million. EBITDA was $146 million. Strong demand for thermal coal, driven by increased consumption levels from Asia, particularly India, resulted in supportive demand conditions overall. Approximately 90% of total coal sales (on a gross revenue basis) went to exports, with around 10% to domestic Indonesian sales.

Average Free-On-Board (FOB) selling prices for the Group were 33% higher than the prior period, more than offsetting production costs of sales, which increased by 18%. Cost pressures were mainly due to a 13% increase in the stripping ratio, greater distances from the coal mined to the coal processing plant, higher fuel prices, and higher contractor costs.

Following the mandatory takeover offer made to PT Berau's minority shareholders, Bumi increased its holding in PT Berau from 75% to 85% for a total amount of $214 million. Group cash at 30 June 2011 was $467 million. $30 million of dividends payable to Bumi, which were declared by PT Bumi Resources in respect of 2010, were paid on 15 August 2011.

The Group is embarking on a major expansion of production at its existing mines in both PT Berau and PT Bumi Resources. Capital expenditure for 2011 is expected to be $106 million for PT Berau and $310 million for PT Bumi Resources, on a 100% basis.

For 2011, PT Berau is currently forecast to produce 20 million tonnes, an increase from 17 million tonnes in 2010 and PT Bumi Resources' operations are expected to produce 66 million tonnes, an increase from 60 million tonnes in 2010.

Performance of Berau Coal

PT Berau recorded a strong operating performance for the first half of 2011. Despite high levels of rainfall PT Berau produced 9.0 million tonnes of coal, a 41% increase over the prior period, and recorded sales of 9.6 million tonnes of coal.

PT Berau's average selling price for the period was $75/tonne. Production costs at PT Berau were $35/tonne. The increase from the prior period is mainly due to an increase in the stripping ratio, greater haulage distances (between the coal mined and the coal processing plant), higher fuel costs, and higher contractor costs. The average stripping ratio for the period was 9.5.

In terms of sales by destination, 36% of sales went to China, 16% to Taiwan, 11% to India and 21% to the rest of Asia, with the remaining 16% sold domestically into Indonesia. PT Berau's first half sales were split 77% contracted priced, 20% contracted index-linked and 3% contracted unpriced.

In terms of PT Berau's coal reserves, a new JORC report published in June 2011 showed total reserves increasing by 35% to 467 million tonnes from 346 million tonnes.


Performance of Bumi Resources
PT Bumi Resources' first half production was 30 million tonnes of coal, slightly lower than the prior period due to higher rainfall. PT Bumi Resources' average selling price for the period was $91/tonne, an increase of 36% over the prior period.

Production costs at PT Bumi Resources were $45/tonne against $36/tonne in the prior period. Higher fuel and contractor costs along with an increase in the stripping ratio were the principal reasons for the increase in production costs. The stripping ratio for PT Bumi Resources of 12.0 was 16% higher than the prior period due to the opening of additional pits at the KPC mine, as well as due to high levels of rainfall, which required a change in the mining plan. The stripping ratio is expected to fall over the rest of the year as weather conditions improve and more coal is mined.

PT Bumi Resources' first half sales were split 95% contracted priced and 5% contracted unpriced. In terms of sales by destination, 21% of coal sales went to Japan, 15% to India, 13% to China, 27% to the rest of Asia, 8% to Europe, and 16% domestically into Indonesia.

Bumi Minerals 1H net profit surges 96.82% - Insider Stories

PT Bumi Resources Minerals Tbk (BRMS), a non-coal subsidiary of coal miner PT Bumi Resources Tbk (BUMI), reported a 96.82% jump in net profit for the first half of this year.
In a press statement today, the profit jump was mainly driven by the favorable realized commodity prices and the reduced interest and financing charges.
Bumi Minerals booked Rp343.82 billion in 1H 2011 from Rp174.69 billion. Revenue slightly increased 7.14% to Rp67.26 billion from Rp62.78 billion, despite the lower gold and copper production.

Ken Farrell, the CEO of BRMS, said the temporary production drop by PT Newmont Nusa Tenggara (NNT) has been anticipated due to the delayed phase six developments in the Batu Hijau mine site.
NNT is currently producing copper and gold from the maturing phase five and from the lower grade stock pile ores nearby.
As the phase six development is being finalized, NNT is expected to increase its copper and gold production rate early in 2013.
"BRMS is also on track to commence its first iron ore production from the Bumi Mauritania S.A. early in 2012, while our zinc and lead project operated by PT Dairi Prima Mineral plans to initiate production in 2013 subject to the borrow and use exploitation permit issued by the Ministry of Forestry by end of this year,” said Ken Farrel.

Yuanita Rohali, the CFO of BRMS, added the company's realized copper and gold prices in the 1H 2011 increased by 36% and 25% respectively from the same period of last year.
In addition, BRMS has successfully de-leveraged its balance sheet and maintained a relatively strong net debt to equity ratio of 0.1x.
"Consequently, the company’s interest and financing charges were reduced by 61% to its current level. These factors were responsible for the 96% profit increase to Rp 343 billions,” she said.

BYAN Teken Pembelian Kapal dari Favor Sum - Inilah.com

Salah satu anak perusahaan PT Bayan Resources Tbk (BYAN), yakni PT Muji Lines (ML) telah menandatangani Perjanjian Jual Beli Kapal dengan Favor Sum Investments Limited (Favor Sum) pada 16 Agustus 2011.

Dalam keterbukaan informasinya ke BEI, Kamis (18/8) dijelaskan, berdasarkan Perjanjian tersebut kapal akan dibangun, diluncurkan, dilengkapi dan diselesaikan di Dalian, China dengan harga pembelian sekitar US$55,4 juta (CIF Balikpapan), di mana kapal akan dikirim oleh Favor Sum kepada ML pada akhir November 2012.

Kapal ini akan berfungsi sebagai terminal pengiriman mengambang kedua untuk Bayan Group dan pembelian ini adalah salah satu bagian belanja modal Perseroan dengan tujuan untuk lebih meningkatkan infrastruktur logistik Perseroan dan kemampuan penanganan batubara. Pembelian ini tidak mencapai 20% dari ekuitas Perseroan sehingga tidak termasuk Transaksi Material sesuai Peraturan Bapepam X.E.2, selanjutnya bahwa Favor Sum adalah pihak ketiga sehingga transaksi ini tidak tennasuk transaksi afiliasi sesuai dengan Peraturan Bapepam X.E.I.

Berau Coal 1H net profit surges 270% - Insider Stories

Coal miner PT Berau Coal Energy Tbk (BRAU) today reported a 270.43% in net profit for the first half of this year as coal sales volume and average selling price surged.
Berau Coal booked US$90.31 million net profit in 1H 2011 from US$24.38 million in 1H 2010. Despite strong bottom line, financial charges surged to US$57.59 million from US$27.03 million.

Berau's operating profit soared 102.25% to US$247.29 million from US$119.90 million, sending a higher margin to 33.91% from 25.64%. Sales rose 55.90% to US$729.06 million from US$467.64 million.
The company produced 9 million tons of coal in 1H 2011 from 6.4 million tons in 1H 2010. Coal sales volume increased to 9.6 million tons from 8.2 million tons, while average selling price increased to US$74.6 per ton from US$56 per ton.

Berau reserves up 35% to 467 mio tons - Insider Stories

PT Berau Coal Energy Tbk, Indonesia's fifth largest coal miner, reported a 35% increase in total coal reserves to 467 million tons from 346 million tons, said a new Joint Ore Reserves Committee (JORC) report published in June 2011.
Berau's assets are located in the northeastern part of Kalimantan and consist of three operating mines, namely Lati (which is the largest mine accounting for circa 60% of PT Berau's output), Binungan and Sambarata.

Berau recorded a strong operating performance for the first half of 2011. Despite high levels of rainfall PT Berau produced 9 million tonnes of coal, a 41% increase over the prior period, and recorded sales of 9.6 million tons of coal.
Berau's average selling price for the period was US$75/ton. Production costs at PT Berau were US$35/ton. The increase from the prior period is mainly due to an increase in the stripping ratio, greater haulage distances (between the coal mined and the coal processing plant), higher fuel costs, and higher contractor costs.

The average stripping ratio for the period was 9.5. In terms of sales by destination, 36% of sales went to China, 16% to Taiwan, 11% to India and 21% to the rest of Asia, with the remaining 16% sold domestically into Indonesia.
Berau's first half sales were split 77% contracted priced, 20% contracted index-linked and 3% contracted unpriced.

80% Apartemen Ciputra World Jakarta Laris Terjual - Detikfinance

Jakarta - Proyek terbesar yang sedang dibangun oleh PT Ciputra Property Tbk yakni Ciputra World Jakarta sudah memberikan kontribusi keuntungan. Misalnya saja untuk katagori apartemen Ciputra World Jakarta telah laku terjual 80%.

"Ciputra World Jakarta sudah mulai dibukukan. Sampai saat ini sudah 80% terjual apartemen My Home per unitnya Rp 3,4 miliar sampai Rp 4,3 miliar. Itu sudah terjual 100 unit dari 136 unit yang ditawarkan jadi ini sudah pada posisi nyaman jadi ada penjualan," kata Direktur PT Ciputra Propertyy Tbk Artadinata Djangkar ketika ditemui di Gedung Ciputra World Marketing Gallery, Kamis (18/8/2011).

Sehingga tak mengherankan PT Ciputra Property Tbk tahun ini menaikkan target laba mereka menjadi Rp 170 miliar sampai. Dibandingkan dengan tahun sebelumnya, perseroan hanya meraih laba Rp 150 miliar.

"Untuk sampai akhir Juli 2011, laba yang dicapai sudah Rp 77 miliar. Kami targetkan sampai akhir tahun tercapai Rp 170 miliar," ungkapnya.

Arta menyampaikan laba yang diraih tersebut tidak termasuk dengan proyek terbaru yang akan dikembangkan Ciputra Property bulan depan, yakni Dipo Business Center (DBC), mengingat proyek tersebut belum memberikan kontribusi di kinerja buku perusahaan tahun ini.

"Dibandingkan dengan tahun lalu. Sampai Juni 2010 kita capai laba hampir sama (Rp 77 miliar). Tapi sampai akhir tahun kita raih Rp 155 miliar. Itu merupakan kenaikan," ungkapnya.

Tren kenaikan bagi perusahaan tersebut terjadi dikarenakan ada hasil dari operasional yang cukup untuk Hotel Ciputra yang dikelola di kota Semarang. Khusus untuk capital expenditure (capex), Ciputra Property memproyeksikan Rp 1 triliun untuk proyek Ciputra World Jakarta I. Saat ini sudah digunakan sebesar 55%.

Indonesian economy is more resilient to face outflows - Mandiri

Market review
§ The global market was volatile last week in a knee-jerk reaction to the US credit rating downgrade, the Fed’s latest monetary statement, and ECB struggle to contain Greece-like crisis contagion to Italy and French. Yet the impact on domestic financial sector was relatively contained. We believe Indonesia economy is currently more ready to mitigate the impact of a sudden capital reversal on improvement in macroeconomic backdrop, higher foreign exchange reserves, more prudent fiscal monetary policy, and increasing quality of capital inflows.

Global economic update
§ The Fed’s latest monetary statement to maintain interest rate at its lowest level at least until 2013 will likely keep capital inflows to emerging markets intact.
§ The ECB is on the move to stabilize Italy and Spain bond markets. Debt fear spread to France, caused selloff in the banking sector stocks. BIS data suggests that Indonesia’s exposure to Euro-zone banking lending is low.
§ China trade surplus was at year high; accelerated imports growth should support demand for Indonesia’s exports.

Domestic economic update
§ Bank Indonesia retained interest rate at 6.75% in Aug11, and likely to stay steady for the rest of 2011.
§ Indonesia's balance of payment booked surplus of US$11.9bn in 2Q11, doubling from last year. FDI inflows rose to US$5.3bn in the 2Q, the highest since 2004.

PT BW Plantation Tbk High Production - AAA

Amidst lower ASP and sales qoq, AALI 1H11 overall performance is still good with sales jumped 50.6% yoy to Rp5.9 tn in 1H11 from Rp3.5 tn in 1H10. The net profit 1H11 is almost double (99%) compared to 1H10. Therefore, we maintain our BUY recommendation for AALI with TP Rp29,513.

± Sales Recorded Impressive Result YoY, Albeit Some QoQ Fluctuation.
Despite lower sales qoq, AALI still recorded an impressive results yoy. On quarterly basis, CPO price experienced an opposite trend in the 2Q11 compared to 1Q11 with ASP decreased 3.2% qoq to Rp8,013/kg 2Q11 from Rp8,278/kg in 1Q11 resulting in 8.4% lower sales of Rp2.53 tn (from Rp2.76 tn qoq). However, the net profit slightly increased 1.4% qoq to Rp663 bn from Rp654 bn due to the decline in other losses (plasma plantation development and foreign exchange loss)

On a yearly basis, the ASP yoy was still strong. The CPO ASP in 1H10 was Rp6,590/kg and in 1H11 was Rp8,013/kg, or increased 21.6% yoy. The PK ASP jumped 82.4% yoy from Rp3,356/kg in 1H10 and Rp6,122/kg in 1H11. This affected the derivative PK product ASPs like PKE and PKO to soar 76.5% yoy and 125% yoy, respectively. Taking into account the usually higher FFB production in the 2nd half of the year, we foresee that CPO price should somewhat stabilize at the current level.

± More Mature Plantation Area by 17,000 ha in 1H11.
AALI FFB production jumped 20.2% yoy to 2,192,837 tons in 1H11 (1H10 1,824,649 tons) while it increased 15.9% qoq to 1,015,522 tons in 2Q11 (1Q11 841,893 tons). The increase production was due to more mature plantation area that reach 220,950 ha as of 1H11, compared to 1H10 was 207,846 ha (up 6.3% yoy). The friendly weather was also the factor that pushed up the yield by 15.7% yoy from 8.59 tons/ha in 1H10 to 9.94 tons/ha in 1H11. Some concern remains though regarding the new planting and replanting as AALI has only planted new area of 669 ha and replanted 249 ha in 1H11.

± Valuation
The result of 1H11 was in line with our estimation and maintained our BUY recommendation at a new TP of Rp29,513. The latter slightly above the previous TP due to some minor adjustment in our calculation. Our TP implies PE of 17.6x, which is still lower than AALI historical PEs (FY09 21.5x and FY10 20.5x). Our TP provides an upside potential of 36% from the current price.

AKRA:Pricey growth - Mandiri

AKRA reported 1H11 results with core profit of Rp274bn (+95%yoy, 26.5%qoq), above consensus and our estimates. The net income figure represented around 55% of FY11F consensus and our estimates. Demand on petroleum volume (+81%yoy) and chemical (+13%yoy) drove revenue to increase by 73.5%yoy. We upgraded our TP to Rp3,000 but still maintain Neutral stance as the stock is trading at rich valuation of 19.8x-17.1x normalized PER11-12F. The company is on progress in establishing coal mining CV 5,800-6,100kcal with reserve amounting to 12bn MT (in 1st of 5 coal concessions) in Muara Tewe. Based on our valuations, the coal business will contribute gross profit of 16%-30% starting 2012-15.

1H11 core profit was above our and consensus estimates. AKRA posted 1H11 core profit of Rp274bn, (+95%yoy, +14%qoq), which represented some 55% of our and consensus FY11F. Petroleum business posted strong revenue growth (111.2%yoy, 8.2%qoq) supported by volume growth (67%yoy, -3.3%qoq) and ASP increase (37%yoy, 12%qoq). The company sold 997mnKL of petroleum in 1H11 and we expect it could achieve 2,034mn KL in FY11F, which is equivalent to 41.1% CAGR06-11F. Basic chemical business also performed well with revenue growing by 32%yoy and 13%qoq.

Coal-related business as growth catalyst. The company will mine coal and is building coal shipment terminals. Out of 5 mining concessions that the company has, one has 12mn MT in reserve with 1.8 stripping ratio (CV of 5,800-6,100kcal). For coal terminal business, the company expects recurring income from 3rd party logistic as there are a lot of coal mining concessions (±160) in the surrounding area of Muara Tewe. Currently, the company has completed only 2 coal terminals and will add one more in the near-term. By 2015, the company expects coal mining and logistic businesses will contribute 32% to total gros s profit. Our estimate on this c

Dividend distribution will bring ROE to higher. The company announced its plan to distribute second interim dividend of Rp200/share from 6M11 net profit. The dividend is translated into 7.1% dividend yield and is equivalent to Rp764bn in total. As the distribution date will be in 3Q11, the company’s ROE will go higher due to lower equity base. Note that, company 1H11 core ROE is 14.7%.

Upgraded price to Rp3,000 ,but maintain Neutral stance. We upgraded our TP from Rp2,000/share to Rp3,000/share due to strong growth in petroleum business and inclusion of coal-related business. Yet we still maintain Neutral recommendation as the stock has gone up significantly since our last Buy recommendation 3 months ago and now is trading at rich valuation of 20.5-18.0x normalized PER11-12F.

Indofood Agri (IFAR, O, PT $1.77): 2Q11 Results: Operational In-Line, With Undemanding Valuation - Credit Suisse

Being a holding company, IFAR deserves to trade at a discount against its operational peers – especially against SIMP, which is trading at 2011/12 PE of 10.3x/11.9x respectively. We continue to prefer SIMP in the plantation sector amid its undemanding valuations and its integrated business model.

· IFAR 1H11 net profit came-in at Rp823 bn (-40% QoQ, +60% YoY), amounting to 58% of our previous 2011 estimates. The strong 1H11 performance is supported by higher CPO and cooking oil production, which amounted to 381k tons (17% QoQ, +18% YoY) and 382k tons (+12% QoQ, +20% YoY).
· Analyst Teddy Oetomo and Agus Sandianto raised IFAR’s 2011-13 earnings by 0.6-4.8%, raised IFAR’s SOTP-based TP to S$1.77/share and upgrade the stock rating to Outperform (from Neutral previously).
· Part of the reason behind IFAR’s stock rating upgrade is valuation, following 17% underperformance of the stock over the past two weeks vs its peers. At present, IFAR is the cheapest plantation stock in our coverage universe with 2011/12 PE of 8.8x/10.5x in 2011/12 vs industry’s average at 13.2x/14.9x respectively.

Indosat (ISAT, O, PT Rp7,900): 2Q11 Results – 7.5% QoQ Cellular Revenue Growth, Normalized Earnings Pre-VSS Double YoY - Credit Suisse

ISAT is currently the most expensive telco operator in our coverage universe, which trades at 2011/12 PE of 26.1x/15.3x with -2% 3-year earnings CAGR – which is not exciting, in our view. We prefer TLKM amid its massive recent underperformance and trading cheaply at 11.4x/10.5x 2011/12 PE with 8% 3-year earnings CAGR. In addition, TLKM is three times more liquid than ISAT in the market.

· ISAT 2Q11 net cellular top line grew 7.5% QoQ, vs Telkom’s (TLKM, O, PT Rp9,750) and XL Axiata’s (EXCL, O, PT Rp7,200) at 5.6% and 1.7% respectively. Analyst Colin McCallum views the turnaround in industry’s revenue growth was due to termination of cut throat price competition that plagued the industry between 4Q10-1Q11.
· ISAT 2Q11 normalized EBITDA margin grew 2ppt to 50% driven by cost efficiencies and aggressive voluntary separation scheme (VSS). ISAT’s 2Q11 headline earnings before FX and VSS grew 68% QoQ and more than doubled YoY – mainly due to Rp130 bn FX gains vs Rp155 bn FX loss in 1H10.
· Colin believes the rebound in industry revenue, on-going opex and capex control and new management execution have not been priced-in into ISAT share price.

Indosat (ISAT IJ) 1H11 results were a bit soft by HoR Dee Senaratne - CLSA

While the top line was in-line, the company has experienced pressure at the cost line. 1H11 ebitda was just 46% of our full year forecast. Please see file for more details.

Net income line was skewed by one offs - forex gains (they have a lot of USD debt)
This results confirms our negative view on the Indonesian telecoms sector
While the result is somewhat weak the stock sentiment will continue to be dominated by newsflow around their tower auction process.
ISAT is looking to sell 4,000 of its total 11,000 tower portfolio.
The key bidders are the indpendent tower cos (towr, tbig) and we expect that finalisation of the deal will be towards the end of the year.
This is exactly why I remain negative on this sector - there is no end in sight to the competitive intensity in the sector.
ISAT also has the lowest ROE of the big 3 at below around 6-7 per cent despite having gearing above 100%.

Adaro Energy 1H11 result - strong earnings momentum from Jayden Vantarakis - CLSA

1H11 earnings strong at the upper end of consensus at 49% of full year estimates. For more details pls see attached file.

The financial result is reflective of the operational result Adaro reported on July 28th where production was 48% of our full year estimate.
Due to wet weather in 1Q each year, the first half typically represents 45% of full year earnings and production for Indonesian coal producers.
Costs increased in line with ASP, keeping EBITDA margin stable at 35% for the full year.
Increased costs were predominantly due to higher diesel costs, which the company has guided the market to be 86c/L average for 2011.
CLSA estimates are in line with consensus for 2011 with EPS of Rp 150/share.
We retain our forecast and target price of RP2,800. We note this result could lead to shareprice outperformance in the near term versus peers.

Lippo Karawaci (LPKR IJ), Deeper look into Cikarang by Analyst Sarina Lesmina - CLSA

Lippo Karawaci (LPKR IJ) has a well diversified portfolio of mixed use commercial project, township developments, national hospital chain and industrial parks. Sarina takes a closer look at the industrial park in Lippo Cikarang (LPCK IJ).

LPCK has done very well – land sales achieved are already 81% of LPCK’s FY target. Yes, share price has already tripled YTD but this is coming from no base. Land prices here in Bekasi, east of Jakarta have gone up by at least 40% YTD. One of our colleagues in the Jakarta office, after months of watching prices move up, finally closed the transaction – but 40% more expensive when first offered in the market at the beginning of the year.

Our co-worker made the decision after learning that an independent appraiser confirmed the value of the house - BCA mortgage is the most conservative when appraising.

On Sarina’s estimate, LPCK valuation is still attractive – now trading at 54% disc to NAV and about 7x 2011 PE. Put another way, LPCK sales contribution to the group has soared to 17% in 1H2011 but still has a market cap of only US$160m or 7.5% of parent LPKR’s market cap

What’s the risk? LPCK currently has about 136 ha of industrial landbank left. LPCK is working on replenishment and has identified over 1,100 ha for acquisition. Acquisition price will be the key, making sure LPCK does not overpay.

Key Points from the report:
· LPCK’ contribution to group earnings increased to 17% in 1H11 from 6% in 2010 and 2% four years ago.
· 1H sales of LPCK were already 23% higher than FY10 sales, and 81% of company’s FY target of Rp860bn.
· 168% YoY increase in sales of LPCK which contributed 43% to total LPKR sales. This drove LPKR’s marketing sales +91% YoY in 1H11 to Rp1.6tn.
· Healthcare business now contributes 16% of LPKR earnings, property development contributes 44%. Will see an increase in healthcare contribution as LPKR delivers 20 more hospitals in the next five years from current seven.
· LPKR now trades at 35% disc to our NAV estimate, while LPCK trades at 54% discount.
· We increase earnings forecast for 2012-13 by 5-6% to reflect higher sales.

ADRO (TP Rp2,050) : 1H11 ? above expectation from higher ASP - Credit Suisse

● Above our expectation, in-line with market. ADRO 1H11 net profit of US$268 mn (47.2% QoQ, 405% YoY) is above our expectation, at 56% of our 2011E earnings, in-line with market at 49% of consensus’ forecast.
● Higher-than-expected ASP and other income. Strong result is contributed by increase in sales volume (20.2% QoQ), ASP (12.6% QoQ) offsetting increase in cash cost ex royalties(6.3% QoQ). Higher ASP is due to new benchmark negotiated in 2Q11,
which is also retroactively applied from 1Q11. Cash cost comes in line within our forecast.
● Non-operational risks. ADRO settled a customer claim of US$153 mn in August due to regulatory changes in pricing. ADRO also entered a fuel swap contract on 7 June 2011, when Brent crude was averaged at ~US$115/bboe for the week. If fuel price continues to weaken, we expect impacts on earnings in 2H11.
● We maintain our target price and UNDERPERFORM rating pending further review of our forecast numbers.

Indo market - Indonesia strategy : Myth buster - Deutsche

- The misperction on Indo econ - super dependent on commodities......
- Remember commodity collapse in 08/09, rather than following the direction of commodity prices, the economy still grew by 4.5%.
- Do you know, the commodity sector contributed only 10% of economic growth over the past five years!!
- Broad-based investment surge is driving the manufacturing and trade sectors to account for half of GDP growth.
- The two largest commodity exports (coal and CPO) account for less than 7% of GDP!!
- Weak commodity prices – means less money, but not losing money. Cash costs for coal and CPO companies are well below the respective spot prices (less than 50%).
- Very interesting to note that despite lower commodity prices in 08/09, indo coal and CPO companies actually added employees and continue to do so until now.
- Triple “surges” driving the economy, not commodity sector per se
Invesment surge, from consumer foods, household/personal care, packaging – to the high capital-intensive cement and steel sectors, as well as retail/distribution, etc. The return of P&G and General Motors’ plan to make Indo its regional production hub are two high-profile cases, replicated in many industries at varying scale. The manufacturing sector is already growing at its fastest pace since the FY98 crisis, supporting record-level job growth.
Credit surge, is another important growth driver; with credit expansion accounting for half of Indonesia’s growth over the next five years as credit will triple and nominal GDP doubles again.

Middle-income surge, more money to spend.
- What do we like? Domestic plays with Top Picks of: ASII, GGRM, UNTR, BBNI, ICBP, GJTL and APLN while underweight commodity and cement.

Snippets:
- Econ, the govt will provide tax holiday facilities to lure investments in the country. The facilities will last for 5 to 10 years, in the form of income tax break. Other key details include a minimum investment of Rp1tr and/or pioneer industries. There are five sectors/industries that will receive these incentives such as base metal, oil refinery (and/or oil and gas organic base chemicals), renewable energy and telecomunication tools. So far at least five foreign firms, such as Posco, Hankook Tire, Kuwait Petroleum Corp, heavy equipment maker Caterpillar and acrylic fiber producer Indorama will receive tax incentives. China's Guong Feng Iron Steel and Iranian Oil Refining & Distributioon may also recieve these incentives from the govt. The govt will also allow exiting investors which have commercially in operations for less than a year may also ask for these incentives.

- KIJA, announced its Rp1.5tr rights issues. The proceeds will be used to acquire 100% stakes in Banten West Java Tourism Development (BWT) and 21.63% stakes in Tanjung Lesung Leisure Industri (TLL). As reference, currently BWT owns 78.37% stakes in TLL. As part of the rights issues, the co. planned to issue 6.0bn new shares (with the RI term of 219 for 500). Post rights issues, KIJA asset base will rise by 44%; while equity will rise by 88%. The transaction is implying PB multiple of 2.0x. We expect post acquisitions there will be more capex needed to be spent as both target companies have been loss making in 2010 and during 1H11. Revenue have been very small with consolidated 1H11 revenue of Rp450ml - particularly when compared to the size of the rights issues.

Bukit Asam (PTBA-BUY-IDR19,100-TP:IDR31,500) 2011-12: Growth through de-bottlenecking - Bahana

Higher capacity in existing railway to support 2011-12 coal volumes
Bukit Asam (PTBA) currently has 1.99b tons in total thermal coal reserves, the second highest in our coverage, although the company’s 2010 production volume has remained low at 12.5m tons (+7.4% y-y), the third lowest out of eight companies under our coverage. While PTBA continues to be plagued by lack of production caused by coal transportation bottleneck, we believe the company’s production volume will still be able to grow and reach 13.4m tons in 2011 (1H11: 6.2m tons), before slightly rising to 13.8m tons in 2012. This will be done through increased capacity of the existing railway (exhibit 7 & 8) by way of adding more wagons and locomotives. Over the longer run, PTBA’s future growth will be dependent on the completion of its new USD1.6b railway project with the Rajawali Group. Our recent meeting with PTBA’s management reveals that this Tanjung Enim to Bandar Lampung railway project with 25m tons transport capacity pa would be completed in 2H15. However, as this railway completion has always been delayed, we have assumed the railway to start operation not later than 2017 (exhibit 9).

Biggest beneficiary of strong domestic coal demand
We like the fact that PTBA sells more than 60% of its coal to local customers (exhibit 10), which is the biggest proportion within our coal coverage. In our view, this provides some cushion against external volatilities. In the next three years, we estimate PTBA’s domestic sales will contribute 64% of total sales, allowing domestic sales volumes to grow on average 7% pa (exhibit 11). Note that in the past seven years (exhibit 12), Indonesia’s coal consumption had grown 14% on average pa, to reach 88m tons in 2011, according to the Ministry of Energy and Mineral Resources (ESDM). Going forward, this strong domestic coal consumption will be supported by higher demand stemming from the completion of PLN’s 2x10,000MW power projects. On the sales volume front, we expect PTBA to book 2H11 sales volumes of 8m tons (1H: 6.5m tons +2% y-y), up 23% y-y and accounting for 55% of our full-year estimate of 14.5m tons, lower than the company’s target of 16mt. In 2012, we expect sales volumes will slightly rise to 14.8m tons on higher railway transport capacity, production growth from IPC (Kalimantan-based coal mine subsidiary) and higher third-party purchases.

23.7% ytd underperformance + 65% upside = BUYing opportunity
10.7% share price drop since market peaked on 1 August and 23.7% ytd market underperformance (exhibit 5), should be viewed as a buying opportunity on PTBA in our view. We apply our new 2012-13 benchmark coal price assumptions of USD125-130/ ton respectively on PTBA, translating to substantially higher earnings in 2012-13 (exhibit 6). This and as we roll over using PTBA’s 2012 valuation, we come up with our new DCF-based target price (TP) of IDR31,500, using 13% WACC and 1.5% terminal growth. As this translates to 65% share price upside potential from current share price level, we reiterate our BUY recommendation on PTBA.

Corporate Result Flash Indosat - Bahana

2Q11 performance
§ ISAT reported poor 2Q11 operating results which were below our and consensus expectations, although net profit was roughly in line with our estimate helped by FX gain of IDR218b.

§ 2Q11 cellular revenue growth of 7.5% q-q resulted in overall revenue growth of 6% q-q and 5% y-y, in line with our and consensus forecasts. This brought 1H11 total top line to IDR10t, up 4% y-y.

§ As growth in operating expenses outstripped top line growth, ISAT experienced margin deterioration across the board with 2Q EBITDA margin down to 44% from 45.6% in 1Q11 and operating margin contraction to 12.9% from 13.7% in 1Q11.

Outlook
EXCL is keen on taking over ISAT’s no. 2 market share status this year. This is likely to result in further operating weakness in our view. Additionally, we retain our view that ISAT, not as the No. 2 player behind Telkomsel to foray outside of Java, will continue to struggle in 2011-12. With 1H11 capex of IDR2.5t, down 16% y-y, we expect acceleration in spending ahead to cater to surging data requirements.

Recommendation and valuation
With 1H11 net gearing of 110%, interest charges will be a challenge, making the company’s tower divestment crucial to improve its negative 1H11 cashflow. Although 1H11 bottom line were some 10-12% higher than consensus, we are not impressed by ISAT’s operating performance. On valuation, the stock remains unattractive on 2012 EV/EBITDA of 5.2x and 21.7x 2012 PE. Maintain REDUCE.

Int’l Nickel Indonesia (INCO.IJ, HOLD) – The other shoe has dropped - Kim Eng

Inco’s CEO, Tony Wenas has tendered his resignation, a continuation of the saga of resignation of senior members of the management. Over the last two years, Inco has lost its CFO, COO, Director of Corporate Affairs, Corporate Secretary, Mining Director, Media and Licensing Director, and now, its CEO. We also revisited our model to adjust for Karebbe after Inco’s guidance, which is lower than our estimate. We thus reduce our TP to Rp4,200 (2011F and 2012F PER of 10.9x and 9.7x) and recommend HOLD.

Indosat (ISAT.JK) 2Q11: Look Beyond the Bottom Line - Citigroup

n Underlying earnings were not impressive — On the surface, Indosat appears to be trending well ahead of the Street at 68% of Citi and 60% of consensus profits for FY11 with a forceful swing to profitability vs. the previous year. Numbers however were skewed by FX gains and a Rp425b non-recurring manpower charge. On a recurring
EBITDA level, we estimate Indosat trending at 48% of Citi estimates with 7% growth YoY. This just is inline with our expectations, but shy of official management guidance. We revise up our TP to Rp5350 on lower capex assumptions, but maintain Sell.

n Top line improves but bottom line quality was suspect— Indosat appears to have improved momentum in 2Q with mobile revenues rising a hefty 8% QoQ/YoY, outpacing peers. This was driven by a healthy 1.6m subscriber net addition for the period, with market share gains. Fixed-line segment however dragged down overall momentum,
declining 7% QoQ/13% YoY on a weaker US$ and material slippage in fixed wireless subscriptions. In addition, overall bottom-line earnings quality was suspect with FX gains of Rp678b in 1H11 matching the semester’s profits of Rp682b.

n No guidance means risk of cuts — Management has opted to neither re-affirm nor revise guidance for the moment. Management however did highlight that the competitive environment has been more challenging as voiced by its peers. As such we do see room for the company to eventually temper its growth guidance levels with consolidated revenues of 4% and mobile revenue growth of 6% in 1H11 below previously outlined targets of 7-11% and 8-12% respectively.

n TP raised on capex assumption revision — We revise our TP to Rp5350 following continued capex discipline in 1H11. We revise our capex estimate to Rp6.3tn from Rp8tn previously as the equipment backlog fill we had previously anticipated has been controlled. This has resulted in a 12-18% EPS lift for FY11-13E on depreciation and financing effects. Our EBITDA estimates however remain unchanged. Sell maintained as we find valuations expensive vs. peers with no dividend yield defense.

Tiga Pilar Sejahtera Food reported 1H11 net profit increased by 82.3%yoy (AISA, Rp780, Not Rated) - Mandiri

􀂄 Based on financial statement published by Investor Daily, company reported an increase in 1H11 net profit of Rp45.1bn (+82.3%yoy) but slightly decrease compared to 1Q11 results (-3.9%qoq). The significant increase in net profit was supported by the increase in total revenue of Rp746.2bn (+146.5%yoy and +4.4%qoq).
􀂄 The company also announced its pre-emptive rights issue plan in 4Q11 to raise Rp700bn funds. This rights issue will be impacted 35% dilution on current ownership. Rights issue funds will be used to increase company’s working capital.
􀂄 The company also plans to divest one of subsidiary Taro Snack to Unilever that will be finalized on Dec-11. Management hasn’t confirmed yet about the specific amount of Taro divestment, but it will not be above Rp200bn. (Bisnis Indonesia)
􀂄 At current price, stock is trading at 2011 PER of 13.7x and PBV of 2.1x. We have no rating on this counter.

Indosat: 1H11 result 51% ours, 62% consensus (ISAT, Rp5,750, Neutral, Rp5,600) - Mandiri

􀂄 Indosat (ISAT) reported a surge in net profit to Rp682bn (+137.5%yoy, -45.8%qoq), mainly due to commitment in hedging strategy which resulted in forex gains of Rp678bn. This is inline with our estimate, but above consensus.
􀂄 If we take out the forex gain, ISAT only book Rp228bn core profit. On EBITDA level, ISAT also maintains its performance inline with our and consensus estimate. Yet, operating margin sliced to 13.3% (vs 16.6% 1H10) mainly due to one-off Voluntary Separation Scheme (employee lay-off) in 1Q11.
􀂄 In terms of operational, we highlight the decline in MoU to 95.2bn minutes (-15.4%yoy), especially ISAT booked 25.1% yoy subscribers growth; as a result of reduce bundled minutes.
􀂄 We still maintain our Neutral call on ISAT, currently traded at PER11F-12F 23.4x and 16.3x respectively.

Adaro Energy: 1H11 net profit 47% ours and 50% consensus (ADRO, Rp2,400, Buy, TP: Rp2,800) - Mandiri

􀂄 Inline and strong result. Adaro posted 1H11 revenue of US$1,771mn (+35.8%yoy, +33.9%qoq) followed by net profit of US$268mn (+103.8%yoy, +45.9%qoq), which in line with ours and consensus. These were supported by combination of stronger sales volume in 1H11 of 24Mt (+10.4%yoy, +20.2%qoq) and higher ASP of US$68.1/ton (+23.4%yoy, +12.4%qoq).
􀂄 One of the top result in the industry. Robust bottom line mainly driven by nil goodwill expenses and lower interest expenses. Adaro’s 1H11 result is considerably one of the top in the industry after KKGI that reached 50-51% FY11F target, compare to other peers which only reached 40-42% of FY11F.
􀂄 Strong demand on E-4000. In 1H11, Adaro succesfully sold 2.6Mt Wara coal (52% of FY11F target of 5.0Mt). E-4000 with main customers from India, China, Korea, and Indonesia. In 2Q11 Adaro has made new contract from Thailand market for E-4000.
􀂄 Robust growth from mining contracting business. Mining services segment grew strongly with revenue up by 31.2%yoy to US$369mn, inline with overburden (OB) volume growth of 30%yoy to 41.56mn bcm mainly driven from Adaro which grew by 41%yoy on its OB removal and 22% yoy on its coal getting. While for third pary, OB grew by 18%yoy followed by 30% growth on coal getting.
􀂄 Improvement logistic supported by favourable weather. As we have expected that Adaro this year would make stronger performance on its logistic and supply chain learned from last year underperformance. The vessel waiting time continued to improve and now it had booked despatch in 2Q11. Rain days in 2Q11 dropped by 25%qoq followed by lower volume of rainfall which decreased by 18%qoq.
􀂄 Maintain Buy. Currently we still have Buy rating on the counter. ADRO trades at 15.0x – 11.4x PER12F.

Kawasan Industri Jababeka: The company is issuing 6,036 million new shares (KIJA, Rp191, Buy, TP: Rp220) - Mandiri

􀂄 Short prospectus out on the local press. The company is issuing 6,036 million new shares (around 30% of enlarged capital) at Rp250/share (a premium to last close of Rp191), to raise around Rp1.5trn. Last week, the company announced the plan to acquire a 100% stake in PT Banten West Java tourism (BWJ) and a 21.6% stake in PT Tanjung Lesung Leisure industry (TLI), for Rp1.5trn. BWJ already owns a 78.4% stake in TLI, so post the acquisition KIJA will direct and indirectly own 100% of both BWJ and TLI. EGM will be held on 21 September, ex-date on 28 September.

􀂄 Our comment – The event should be a positive share price catalyst for KIJA, we re-iterate Buy and TP of Rp220. We co-incidentally met with KIJA
management yesterday with the following take-aways:
(1) The key asset for BWJ and TLI is the 1,300 plus hectares of land in Tanjung Lesung, a beach front peninsula overlooking the Anak Krakatoa mountain in Banten West Java, around 170km from Jakarta. With little debt on BWJ’s and TLI’s balance sheets, the acquisition implies land purchase price of slightly over Rp100,000/sqm. Based on third party NAV appraisal, the deal was valued at around 60% discount to NAV. Although not directly comparable, we note that the price of beach front properties in Bali has appreciated to over Rp7mn/sqm on prime locations.
(2) One of the key senior management at KIJA is the chairman of Asia Pacific travel association who is conscious of Indonesia’s recent push toward tourism industry (under the economic acceleration program of PPPI). Indonesia is planning to: (a) re-tender the Serang-Labuan tollroad project that will cut the travel time to Tanjung Lesung (from Jakarta) significantly, (b) build a small international airport 15km away from Tanjung Lesung, and (c) create special tourism zones with tax
breaks and multiple entry visas for international tourists.
(3) Tanjung Lesung offers unique tourist attractions, such as calm water peninsula, scenic route to Ujung Kulon where the near extinct one-horned rhinos are located, virgin forests, and the Badui Village. Current travel time from Jakarta is about 3.5 hours through an in-land road, or 5.0 hours through the coastline Cilegon-Anyer-Carita route, which is congested by industrial traffic. A toll-road connecting Serang and Labuan would cut the travel time significantly.
(4) There is a next corporate action for KIJA, where the company would issue US$150mn promissory note that is exchangeable into shares in PT Jababeka Infrastruktur (JI). JI plans to do an IPO within 5-years, when the exchange into shares will happen.
(5) This particular corporate action would consolidate voting power in KIJA, which was previously fragmented. The controlling consortium would increase its ownership from 40% before the deal, to almost 60%.

Selasa, 16 Agustus 2011

BUMI Postpones Gallo Oil Drilling on Yemen's Political Uncertainties - The Indonesia Today

Bumi Resources (BUMI) said political situation in Yemen delays work plans for Gallo Oil's R-2 block and Block 13.

BUMI said Gallo Oil initially planned to drill one exploration well in the second quarter of 2011. "But work plans delayed temporarily due to political situation in Yemen is not conducive enough for drilling activities," BUMI said.

BUMI said the first well was drilled on November 30, 2007, which was completed in December 2007 to the total depth of 1,557m. "Drilling found no oil reserves. The second well, Tasilah West #1 was drilled on December 30, 2007, but found only water, without oil," BUMI admitted.

BUMI claimed of finding gas reserves in the Al Rizq structure of Block 13. The plan was to conduct further drilling by mid 2011 to calculate gas reserves. "But this has been postponed due to political situation in Yemen," BUMI said.

Foreign Investors Selloff Drops - The Indonesia Today

Foreign investors were in net sell of Rp1 billion Monday (August 15), dropped substantially from daily selloffs last week.

Statistics from the Indonesia Stock Exchange (IDX) pointed to net sell by foreign investors of US$388 million last week. They bought Rp9.32 trillion worth of Indonesian stocks, but sold Rp12.646 trillion worth of stocks.

The selloffs contributed to the correction of composite index of IDX by 0.79% for the week ended August 12.

In the previous week ended August 5, net sell by foreign investors amounted Rp1.4 trillion (buy of Rp21.6 trillion and sell of Rp23 trillion). The composite index dropped substantially by 5.06% that week.

That means total net sell by foreign investors in two weeks was Rp4.73 trillion. But on Monday (August 15), net sell by foreign investors was only Rp1 billion (sell of Rp1.442 trillion and buy of Rp1.441 trillion). Composite index gained 1.79% to 3,960.

U.S . Stocks rise for third day after acquisition flurry - AP

NEW YORK (AP) -- Stocks are having their longest rally since early July. A $19 billion corporate buying spree and encouraging economic news form Japan sent the Dow Jones industrial average up 213 points and erased its losses from last week.

The return of what's called "Merger Monday" on Wall Street made investors more optimistic about the future. So did a report that Japan's economy shrank less than feared following the March 11 earthquake and tsunami. That helped temporarily ease worries that the U.S. economy may slide into another recession.

The Dow rose 213.88 points, or 1.9 percent to 11,482.90. It has gained 762.96 points since Thursday. That's the best three-day point gain since it rose 927.18 in November 2008, during the depths of the financial crisis. The Dow is also up 7.1 percent over the three days, the biggest percentage gain since it rose 9.5 percent the first three days of the bull market in March 2009.

The Standard & Poor's 500 index rose 25.68, or 2.2 percent, to 1,204.49. The Nasdaq composite index rose 47.22, or 1.9 percent, to 2,555.20.

Markets may have stabilized the last three days, but financial analysts warned investors not to assume that stocks have fully settled down after last week's swings. The Dow rose or fell by at least 400 points in four straight days for the first time ever. The first-ever downgrade of the U.S. credit rating triggered the volatility. It was worsened by concerns that Europe's debt problems are worsening and that the U.S. economy is weakening. Read More