INDO PREVIEW - MONDAY 28 MARCH - CLSA

- The market ended last week consolidating after a number of strong days. Further consolidation in the market expected as FY10 earnings are not providing the strong catalyst either way that was hoped for, despite their general bullish undertone.
- CPO: CLSA changed valuation methodology for plantation names (from PE to a blended PE/DCF calculation) and raised CPO price forecasts at the same time. Despite a 12% increase in CPO price, the effect on Indonesian plantations is only approx 5% due to the incremental export taxes levied. Resulting in the following recommendation changes:
- AALI: UNDERPERFORM with 23,800 target (from buy with 28,000):
- LSIP: UNDERPERFORM with 2500 target (from buy with 2700):
- GZCO: BUY with 525 target (from buy with 520).
- BANKS: The MoF will start using the 3month T-Bill as a new reference rate for its recap bonds (from the 3month SBI). That rate is 120bp below the previously used benchmark, and will have a negative impact on some of the banks' earnings: BMRI -USD 108m (4% of earnings), BBCA -USD 21m (1.4%), BBNI -USD 23m (1.9%).
- CIPUTRA: numbers out for the group companies. CTRA 26% above consensus due to a one-off sale; CTRP in line; CTRS 15% below.
- TLKM: management pushing Singtel to swap its 35% stake in Telkomsel with a direct stake in parent TLKM. Ongoing discussions.
- MAPI: a number of related party transactions rumored to be in the cards.