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Jumat, 15 Februari 2013

RALS - Cheapest play in the department store space

Unaudited FY12 NPAT was weak but expected. It would have been 12-15% higher if the supermarket delivered. Margin enhancement and strong wage hike would be the catalysts. We reiterate BUY. Valuation re-rating in the department stores space could catalyze RALS as the cheapest play.

Weak FY12 NPAT is expected. RALS will report audited FY12 results in end-March. Unaudited NPAT was revealed at Rp424bn (+12.3%yoy), 11% lower than our previous estimates and 5% lower than consensus.

We have fine-tuned our numbers to factor these. Weak NPAT came as supermarket booked some Rp15bn net loss versus Rp40-50bn profit targeted. Consolidated NPAT would have been 12-15% higher if supermarket division met the management's budget.

Record high productivity indeed. 2012 sales/sqm reached Rp8.0mn (+4.4%yoy), a historic high. The decision to replace some supermarket space with the fashion consignment products enhanced productivity. SSSG recovered to 8.8% from 5.0% in 2011, albeit slightly lower than our expectation.

Margin enhancement to continue. Core department stores business performed very well last year. Its EBIT margin could reach c.11% in FY12, higher than MAPI. As consignment proportion rises, the gradual operating margin improvement should continue going forward. Fashion consignment can generate 3-6ppt higher operating margin than outright.

RALS expects fashion consignment proportion to reach up to 35% this year, versus 30.6% in FY12. For department stores alone, consignment proportion is 50%, far below MAPIs department stores (~80%) and LPPFs (~70%), suggesting ample room for operating margin improvement.

Recent hire of an operational manager for the supermarket division, rather than a top-level guy, should also be more effective in addressing the core issues of the business.

Take a more conservative approach. 2013 strong minimum wage hike would benefit RALS. If adjustments are smooth, RALS indicated that achieving Rp550bn FY13F NPAT (8.8% above consensus) is possible. But we decided to be conservative as some deferment in wage adjustments is possible as hundreds of companies are applying for excemption from the wage hike.

We slashed FY13F EPS by 5.9%, factoring higher wages and electricity costs, now aligned with the street.
Reiterate BUY with unchanged TP at Rp1,400 still pegged to 1.0x PEG. Current 16.2x FY13F PE makes RALS an underdog against regional average of 26.2x or even local peers at 30.4x.

Valuation re-rating in the department stores space could catalyze RALS as the cheapest play. On a 12-month forward, RALS 16x PE is also on par with its mean. A discount to execution risk is understandable, but not this high.
me @ LOTS Trading Club (LTC)
Bakrie Group and Bumi PLC agreed on heads of agreement for separation. Based on the agreement, $278m will have to be paid in cash within 5 days following the signing of the agreement, $50 of which would have to be deposited in an escrow by 15/2.


$278 in cash reflects Rp 680/sh and is only for around 19% of the group’s 29.2% holding. Details of at what price and method of payment for the remaining percentage is still forthcoming. The vote will be done on Feb 21, 2013.

Kamis, 14 Februari 2013

KZ - INDY Downgrade to Sell

    INDY’s overhead costs are ballooning. Overhead is 21% of revenue and has grown 45% CAGR from 2010 to 2012. The main driver is salary which takes up nearly 33% of all overhead cost.
·         While we view recent bond issuance as positive (lowering overall borrowing cost from 8.5% to 6.6%), the main overhang is bloated costs, not interest expense
·         As a result of this high overhead cost, earnings are sensitive to changes in revenue. Lowering INDY’s revenue by 6% (from PTRO and MBSS), INDY’s earnings plunged by 40% in 13CL to $42m.
·         As an aside, we don’t think that MTU, INDY’s recent acquisition, may not be able to start before 2015 due to legal concerns.
·         We prefer MBSS and PTRO because of their earnings visibility and cheap valuation. MBSS (PE 4.8x 13CL) and PTRO (PE 4.6x 13CL)
·         As a result we downgrade INDY to Sell from O-PF.  Our sum of the parts valuation results in a change in target price to Rp1,360 per share from Rp1,580 per share
me @ LOTS Trading Club (LTC)
Garuda Indonesia
Overall figures in line

Expansion stayed on track as GIAA increased its fleet to 106 aircraft. Furthermore, the utilization rate remained solid as the SLF and utilization numbers were strong despite the higher capacity. Fuel costs – which constitute the largest chunk of GIAA’s total costs – only inched up 1% YoY, or as expected. Overall, we remain upbeat on
the company. BUY maintained with a TP of Rp940, implying FY13 EV/EBITDAR of 4.95x.

Expansion on track with 106 aircraft in its fleet

GIAA had 106 aircraft in its fleet at the end of December 2012 (one more than we had estimated earlier this year), as the company added 22 new aircraft whilst getting rid of three. The additional aircraft were deployed on short to medium haul routes and comprised of A330-200, B737-800 NG, CRJ 1000 NG and A320-200 for Citilink. In an effort to leverage its fleet, GIAA made some changes to its routes (see exhibit 3). This, in turn, boosted its flight frequency figure by 17.9% YoY to 153,266 at the end of December 2012. The overall capacity, meanwhile, climbed 10.9% YoY to 36,014 mn km in FY12 - or in line with our full year estimate.

Better utilization rate with the highest passengers carried growth of 76% YoY coming from

Despite the higher capacity, GIAA still posted better RPK as the SLF and aircraft utilization remained strong. The overall SLF inched up 0.68% YoY in FY12 as the total number of passengers carried continued it double-digit growth. The highest growth came from Citilink which posted a 76% YoY increase in passengers carried during the year to 2,861 thousand in FY12 - albeit falling short of our estimate. However, as Citilink contributed less than the other segments, the overall passengers carried remained in line with our full year forecast.

Fuel costs up slightly by 1% YoY - as expected

Crude oil prices were volatile throughout the year but exhibited a slight upward trend (+0.5% from early 2012), thereby impacting the jet fuel price which rose 2% from early 2012 (please see exhibit 6). As fuel costs account for more than 30% of the total costs, the volatility in prices has a direct
impact on the bottom line. Based on our sensitivity analysis, a 5% change in the jet fuel price results in an 11% change in the FY12 EBITDAR. In FY12, GIAA’s average jet fuel price was USc 91/liter, up only 1% YoY, or pretty much in line with our jet fuel price assumption.

me @ LOTS Trading Club (LTC)

Indofood CBP - New noodle and snack flavours launched

Indofood CBP - New noodle and snack flavours launched

 ● Indofood CBP (ICBP) is starting the year with new variant launches of instant noodles and snack products. In instant noodle Sarimi Isi 2, ICBP launched new flavors—Soto Koya (from East Java) and Goreng Kremes (fried noodle). In addition, it also launched value-for-money Sarimi Gelas, a smaller size instant noodle (35 g) that can be consumed conveniently from a glass/cup.

 ● Within its snack division, a new flavour is launched under the already successful Qtela Tempe Chips—Cabai Rawit (spicy) flavor.
 ● Noodle is the largest division of ICBP, accounting for 64% and 79% of 2013E revenue and operating profit while the snack division is smaller, accounting for 8% of 2013E revenue and 5% of operating profit. Despite its smaller size, snack division growth has been quite promising—27% CAGR in revenue-terms 2010- 13E and 39% CAGR in operating profit 2010-13E.

● We continue to like Indofood CBP for its continuous innovative products strategy. We maintain our OUTPERFORM rating with target price of Rp8,100, implying 18.6x 2013E P/E.
me @ LOTS Trading Club (LTC)

Rabu, 13 Februari 2013

Bank Rakyat Indonesia ( Persero ) (BBRI.JK)

Bank Rakyat Indonesia ( Persero ) (BBRI.JK)
Q4 CY12 Result Preview: Key Will Be Micro Business Trend

Earnings to depend on credit and opex costs —

With strong 11M net profit of Rp16.4trn reported on BI’s website, CY12 profit is likely to exceed Citi’s forecast of Rp16.7trn (consensus is Rp17trn). The share price, in our opinion, will be driven more by trends in the Micro business (both loan growth as well as yields). Analyst meeting is scheduled for Jan 31, 2013 evening (Thursday) and financial statements will be published in Friday’s newspapers.

Citi Q4 PPOP of Rp4.6trn (-16% qoq) and NP of Rp3.5trn (-21% qoq) —

Our forecasts are based on NIM contraction, a seasonal jump in opex and higher credit costs. NIM contraction is due to lower loan yields (20bps) and higher proportion of low yield assets due to year end deposit flow. Our 12M opex growth is estimated at
17% and 12M credit cost at 0.35% (net of cash recovery of Rp2trn). Upside surprises could come from higher trading, other operating and non-operating
income (details in Fig. 1)

Micro loan trends —

Micro loan disbursements have picked up from March 2012,
with net increases of Rp4.8trn in Q2 and Rp4.5trn in Q3. Mgmt indication of 18% growth (end 2012) equates to c~Rp5.3trn disbursement in Q4. The Q4 run rate would translate into 20% growth in 2013F.