NISP Sekuritas Daily 6 Jan 2011 (Economy, Telecommunication, SMCB, LPKR, TINS, MEDC)

Bank Indonesia maintains interest rate at 6.5% (Economy)

·                      Bank Indonesia has maintained interest rate at 6.5% for another time, lower than 2010 inflation of 6.96%. This news was expected by the market as Bank Indonesia has stressed before that as core inflation was still low, inflation was mostly due to the volatile goods component. Central bank Governor, Darmin Nasution, stated that the Bank sees that inflation was not a monetary phenomenon, as such did not have to be addressed by a change in monetary policy.

·                      Foreign reserves reached US$96.2bn at the end of 2010 or equal to 7.1x government monthly needs and interest payment. While banking credit has grown by 22.8% YoY in 2010. 2010 GDP is expected to be around 6.0% YoY where 4Q10 GDP is forecasted to reach 6.1% YoY.

·                      The bank believes that with better steps made by the government to ensure the stability and distribution of foodstuffs, inflation can be in the target of 5%±1% in 2011 and 4,5%±1% in 2012.

BRTI prepares interconnection tariff for text message (Telecommunication)

·                      Indonesian Telecommunication Regulatory Board (BRTI) prepares new regulation in text message services where the regulator plans to implement interconnection tariff scheme of Rp23/sms as compared to current sender keeps all (SKA) scheme. The regulator said this new rules is prepared to prevent current grievance from consumer about spam text message.

·                      This regulation will require additional infrastructure from telecommunication operator, hence, cost. However, this would benefit operators with large subscriber base.

·                      There is no further details about this new regulation, BRTI sees this new scheme will still acceptable by telecommunication services subscriber.

Holcim Indonesia dismisses dividend rumors (SMCB, Rp2,300)

·                      Holcim Indonesia dismissed rumors that the company may pay any interim or special dividend soon. The company’s quasi reorganization which has been approved by its share holders, enables the company to start paying dividends in accordance with Bapepam regulations.

·                      However spokesman of the company said that there is no near plan to pay out dividends, and any decision will wait for the company’s Annual General Meeting.

·                      SMCB is trading at 2011F consensus PER of 15.0x and EV/EBITDA of 8.7x.

Lippo Karawaci completes sale of 2 hospitals (LPKR, Rp730)

·                      Lippo Karawaci has completed sale of Siloam Hospitals Lippo Cikarang and Mochtar Riady Comprehensive Cancer Centre, with a total value of Sin$205.5mn or US$160mn to First Real Estate Investment Trust (First REIT) Singapore . First REIT is managed by Lippo Karawaci-owned, Bowsprit Capital Corporation Limited (Bowsprit).

·                      With the sale, the company recorded a gain of Rp195bn which will be amortized 15 years. Management reiterated it strategy to grow from a US$3bn property company to a US$8bn company.

·                      LPKR is trading at 2011F consensus PER of 23.1x and EV/EBITDA of 18.1x.

Timah sees two fold growth in 2010 net income (TINS, Rp2,850)

·                      Timah said strong tin price pushes up its 2010 financial performance with net income to come at Rp627.0bn, 100% YoY higher than Rp313.8bn a year earlier. Despite no shared hints for revenue, Timah said its profitability jumped by more than two fold fueled by favorable tin price. Nevertheless, this Rp627bn net income may disappoint consensus expectation as it is still far from the lowest estimate at Rp662.0bn, while mean estimate stood at Rp886.7bn.

·                      The net income translates into Rp152bn of net income for 4Q10, or relatively flat compared to Rp153.1bn in 3Q10. We foresee such condition was due to unfavorable weather condition.

·                      This year, Timah aims to increase offshore production given depleting inland reserves. The company will employ five new dredging vessels to support this plan. Nevertheless, Timah maintain its production target unchanged at 45,000 tons this year, which is similar to 2010’s production target.

·                      TINS is trading at 2011F consensus PER of 12.8x and EV/EBITDA of 6.6x.

KPPU charges Medco Rp11bn (MEDC, Rp3,400)

·                      Business Competition Supervisory Board (KPPU) charges Medco Energi International and Medco E&P Tomori Sulawesi Rp11bn as the board claims these companies have violated competition rules.

·                      Besides Medco, KPPU also charged Pertamina and Mistubishi, which are members of Donggi – Senoro consortium along with Medco Energi Internasional. However, the board said this consortium may continue its plan on Donggi – Senoro.

·                      The decision may cost several billion of Rupiah to the consortium. However, we prefer to see positive long term impact for Medco when this project starts to commence.

·                      MEDC is trading at 2011F consensus PER of 25.2x and EV/EBITDA of 5.9x.