News Headlines/Others - CLSA

Hard coking coal settled at $330/t. Regional coal analyst Andrew Driscoll comments: coal trade publications report that 2Q CY11 benchmark hard coking coal prices have been settled for US$330/t between Anglo American and Nippon Steel and JFE. This compares to CLSA forecasts of $295/t, and our view of Street expectations at ~$300/t. Borneo Lumbung (BORN IJ) is the only coking coal play in Indonesia. Pls see file for more details.

State-owned ministry open to further stake divestment + reduced dividend payout. Local newspapers reported that the SOE ministry will bless state-owned companies to continue stake divestment up to 40%. At the same time, in separate media news, the minister commented that payout ratios from state-owned companies will slowly be reduced over time. Comment: Publicly listed state-owned companies amount to about 25% of total market capitalization of the JCI. Further stake divestment is positive as publicly listed companies with 40% free float are qualified for a 5% tax cut (corporate income tax currently at 30%). More divestment will also improve liquidity. Publicly listed SOEs with less than 40% free float include Krakatau Steel (KRAS IJ) and Bank Tabungan Negara (BBTN IJ).

New tax regulation repressed car sales in East Java and Kalimantan. New tax regulations on car ownership and change of ownership have started to show impact this year. February sales in areas where the new regulation is implemented have declined especially in East Java and Kalimantan. Comment: We expect slowing car sales this year more due to the higher vehicle taxes than the lifting of fuel subsidy. However, we think the slow down will not be drastic given the slow implementation of the taxes (i.e. by provincial level) and potential further delay on the implementation of the fuel ban. Hence, we think our expectation of a 10% drop in car sales is conservative.

BAKRIE update: lots of talk about Bakrie's recent USD 1.35bn loan earmarked for refinancing. That is likely a part of the Vallar deal that closed last Friday and saw Vallar taking a 25% stake in BUMI.

Jasa Marga (JSMR IJ) buidling Jakarta international airport expansion? + infrastructure update. Jasa Marga (JSMR IJ) is reported that it will form a JV with SOE airport operator Angkasa Pura II to build an additional hangar and cargo village in Jakarta Soekarno-Hatta International airport; the project is estimated to cost Rp3.7tnThe. On a separate note, toll Road Regulator (BPJT) had signed 13 evaluation results of the 24 stalled toll road projects under evaluation. Out of the 24 toll road projects, 11 still need further discussion. Majority of the toll roads are in the West Jakarta area. Comment: We are glad to learn that government is moving ahead with this process, albeit it had took them months since 2H10 last year in evaluating the 24 stalled projects. We hope with the coming land bill and the closing of this evaluation, these stalled projects can recommence. On Jasa Marga, we will be confirming with the company on this news.

Barito Pacific (BRPT IJ) update: further rumors in the local media this morning of a possible privatization of the company with 1200 as a take-out price mentioned.

Wintermar (WINS)'s new development in heavy equipment barges. WINS is developing a JV company for heavy equipments barges to support offshore oil and gas mining projects. WINS Managing DIrector stated that the JV is done with Linpan, with WINS holding 51%.

Alam Sutera (ASRI IJ) update. Indicative net profit increased 219% YoY to Rp300bn, with revenue booked at Rp750bn. Comment: Number unconfirmed at this point, but this implies that net profit came at 7.5% above consensus' estimation with revenue at 16% below consensus. ASRI had a strong marketing sales last year for its Serpong estate and is allocating Rp500bn this year to buy more land in its new project, Pasar Kemis to be launched sometime this year.

Intiland (DILD IJ) reported net profit of Rp300bn as expected. This was a 12x increase from last year as the company divested non-core assets in 2010.

Forex reserve update. Has passed the US$100bn mark at US$101.8bn last week.

PLN provides free upgrades for 450VA and 900VA clients. To encourage consumers to upgrade their electrical capacity and thereby save the state money on power subsidies, utility Perusahaan Listrik Negara is offering free conversions through to the end of June. PLN estimates the conversion would save up Rp1.22tn a year because the higher rated capacities are not subsidized.