United Tractors (UNTR) – The stock, along with Indonesia stock market, has taken a beating over the past week, driven partly by rising Indo gov’t bond yields. But as highlighted by Nikolaos Panigirtzoglou (Flows & Liquidity report), while bond funds saw outflows with 4-week average flow marginally above zero, equity funds continue to see inflows at a steady for a third straight week. On this backdrop, it is just a matter of time before buying interests for blue chip Indo stocks re-emerge. When that happens, UNTR would be one of these stocks with strongest rebound potential.
* Aditya Srinath (analyst) sees 9-13% upside to his (and consensus) EPS number for FY11, placing the stock on 15-16x P/E (buying range on historical P/E band analysis). The upside is coming from UNTR’s coal mine ramping coal production output from 2.5-2.7mn tons in 2010 to above 3.5mn tons in 2011, accompanied by rising coal price.
* The company may report super strong unit sales in January, after reporting sub-par unit sales in December of 313 units (down 26% m/m, up 13% y/y). With the 313 unit sales in December, UNTR has comfortably met JPM’s full year 2010 unit forecast of 5300, with actual unit sales of 5404. It could be a game of managing the Street expectations, as the company has the option to defer sales booking in order to smooth-out the yearly numbers, which we already see in 6 out of the last 8 years.
Construction stocks on land clearing – Coordinating minister Hatta Rajasa told the press that the government plans to issue a regulation to limit the negotiation period for land clearing to two months. If the buyer and seller cannot meet after two months, the matter will be handed over to the justice court with a maximum period of one month. This will only apply for projects of national priority. (Bisnis Indo).
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