Mandiri Sekuritas ID (04-Jan-2011) Economy: Headline inflation jumped, but on stable core; Jasa Marga eyeing 5 new toll roads; BNII: Maybank has divested 7.18mn shares in BII; PTBA: considers increasing ownership in Transpacific Railway project

Headline inflation jumped, but on stable core
􀂄 Inflation registered at 0.92% mom in Dec10, in line with our estimate (0.94% mom), but higher than consensus estimate (0.67% mom). Overall, the consumer price rose by 6.96% yoy in 2010, above the central bank's upper end target,
􀂄 Raw food prices still dominated Dec10 inflation, with the price of rice, chilis, and cooking oil contributing almost 70% of the on-month inflation. Meanwhile, core inflation was stable at 4.28% yoy in Dec10, mostly on
higher jewelry, housing rent, and transportation costs.
􀂄 Despite sharp increase in the headline figure, stable core inflation and concerns over the adverse impact of capital flows, we think, will provide arguments for the central bank to keep the benchmark rate unchanged at
6.5% in the next governor board meeting (Wednesday 5/1), to our.
􀂄 However, this inflation figure should serve as a wake-up call for the central bank to be more cautious, as we expect inflation to continue trending up in the next few months. Besides unfavorable weather that may keep food inflation high, strong domestic demand would start to affect inflation. Thus, we expect the first rate hike will be delivered in 2Q11 by a total 50bps to 7% and stay flat for the rest of the year.

Jasa Marga eyeing 5 new toll roads (JSMR, Rp3,550, Buy, TP: Rp4,100)
􀂄 Jasa Marga is eyeing 5 toll road projects which will be tendered by the government in 2011. These projects are: (1) Medan-Kualanamu-Tebing Tinggi (60Km), (2) Pandaan-Malang (37.2Km), (3) Cileunyi-Sumedang-Dawuan (58.5Km), (4) Pasirkoja-Soreang (15.0Km) and (5) Manado-Bitung (46Km). Total investments needed for these 5 projects amounting to Rp18.9tn.
􀂄 JSMR targets to acquire 2 toll road in 2010, i.e Cinere-Serpong (12.4Km) and Cinere-Jagorawi (14.7Km), but the negotiation has yet reached an agreement. According to JSMR’s investor relations, the company will continue its expansion by acquiring toll roads which have passed the feasibility test and have minimum IRR of 16%.
􀂄 We have a buy recommendation on JSMR. Currently, JSMR traded at PER11F of 16.0x.

Bank International Indonesia: Maybank has divested 7.18mn shares in BII (BNII, Rp770, Not Rated)
􀂄 Maybank has sold its 7.18 mn shares in BII to public as part of its agreement to divest minimum 20% of its ownership to public within 2 years time after acquisition. This represented 0.0128% of total outstanding shares.
􀂄 The transaction has been done gradually since 22 December 2010 until 29 December 2010 raising a total Rp5.74bn or equivalent to average share price of Rp799/share

Bukit Asam: considers increasing ownership in Transpacific Railway project (PTBA, Rp 23,950 , TP: Rp 20,050, Neutral)
􀂄 Bukit Asam considers increasing its ownership at PT Bukit Asam Transpacific Railway (BATR) for the 307 km railway project from 10% to 30%. The 20% shares worth US$ 320 mn. Bukit Asam will seek bank loan of around US$ 272 mn to finance this acquisition
􀂄 BATR has obtained bank loan facility of US$ 1.36 bn or represent 85% from the total project value. Bukit Asam will face no difficulty in term of financing since it has rich cash position at around US$ 500 mn. Therefore it is positive for Bukit Asam if it is done.
􀂄 Currently we have Neutral rating on PTBA. PTBA now trades at 27.9x – 17.3x PER10F-11F.