1Q11 earnings underway: PTBA, INDF, APLN winners - JP Morgan

1Q11 results underway, plenty more to come over the next few days. Agung Podomoro Land (APLN), Indofood (INDF), and Perusahaan Tambang Batubara Bukit Asam (PTBA) seem to exceed market expectations. Watch out for Bumi Resources also; Stevanus Juanda revised up PxT to Rp4500 as te stock is off restricted list. Bank Central Asia results may trigger profit taking; over 20x P/E and 4.7x price-to-book is not making any sense unless the bank can grow EPS by 30% per year for the next 5 years (which I very much doubt). Results from smaller banks un-impressive so far (PNBN, BBTN), the exception being BBKP after rights issue. Astra International good results but cautious outlook on Q2 and Q3 may capped the upside potential. Could be time for mid and small caps that can show impressive Q1; watch out property and construction space.

* Research call – Bank Central Asia (BBCA): 1Q results: Earnings Growth falters, could prompt a correction. BCA’s 1Q FY11 net profis came in at Rp2.02T, well below our Rp2.4T estimate. Net profit grew by 5.5% y/y, but was down 15% q/q. Revisions likely – biased towards the downside: 1Q net profit was just over 20% of FY11E consensus PAT, and we believe the direction of revisions is likely to be lower. Last rating is an O/W. My take – If consensus profit for FY11 converge to around Rp9trn, BBCA would trade on 20.8x P/E and 4.7x 12M forward PBV. The share price factors-in aggressive growth potential for BBCA that is unlikely to be met over the medium term. Sell.
https://mm.jpmorgan.com/PubServlet?action=open&doc=GPS-585637-0.pdf

* Research call – Bumi Resources (BUMI): Stevanus Juanda revised up PxT from Rp4000 to Rp4500, as the stock is no longer on a blackout for JPMorgan research. He raised FY11 EPS by 5.6%, previewing 1Q11 net income to come in at US$129mn or 33% yoy. My take – Steve may end-up revising his FY11 net profit forecast of US$516mn (consensus US$511mn) further upward post 1Q11 results and announcement of contracted selling price for year 2011, likely to come in May. Remains a conviction Buy for me.
https://mm.jpmorgan.com/PubServlet?action=open&doc=GPS-585506-0.pdf

* Research call – PTBA: Strong net income growth re-affirming FY11 estimate by the Street. 1Q11 net income came in at Rp761bn; up 108% Y/Y and 23% Q/Q. It accounts for 20% of JPM and consensus full year forecast of Rp3.8 trillion and Rp3.7 trillion. My take – PTBA recently signed price contract with PLN (as buyer) at Rp805k/ton, vs. realized ASP of Rp751k/ton in 1Q11 (+35% yoy). So the results is looking good versus consensus at 20% of full year. Cash cost per ton only rose 7% yoy, that was quite impressive. The stock has lagged the JCI by 8.7% ytd and by 12% on 12M basis. Could be a good candidate for portfolio rotation buying at 13.5x and 11.7x P/E for 2011-12.
https://mm.jpmorgan.com/PubServlet?action=open&doc=GPS-585616-0.pdf

* Research call – Astra International (ASII): Strong results, but will they translate into revisions in the wake of supply risks? Strong 1Q results, PAT up 43% y/y: Astra’s results were strong. Revenues grew by 30% y/y and net profit by 43% y/y to Rp4.3T (up
7.5% q/q), on healthy contributions from almost all businesses. 1Q profits were in range (3.5% below) of our Rp4.45T forecast, with the difference mostly explained by the earnings miss at Astra Agro. My take – I would agree with Aditya that at in the current environment, consensus may opt to hold back on raising estimates until there is more clarity on the magnitude of supply risks. In this situation Astra’s stock price could be range-bound in the near term, despite the supportive results. Hold.
https://mm.jpmorgan.com/PubServlet?action=open&doc=GPS-585588-0.pdf

* Research call – Astra Agro Lestari (AALI): AALI’s 1QPAT at Rp.653bn was well below our Rp.773bn estimate. Although revenues were in line, margins were well below estimates and resulted in the earnings miss. 1Q PAT was 25% of consensus FY11E estimates, and we think that with CPO prices easing revisions to consensus and JPM forecasts are likely to be biased to the downside. Costs higher – driven by fertilizer & newly mature acreage: We estimate that cash costs of nucleus CPO were about Rp 5,425/kg, up a substantial 28% y/y. AALI reclassified 16,700 ha of CPO plantations as
mature in 1Q (a 11% growth in mature acreage q/q). This would have resulted in expensing of costs (as opposed to capitalizing of immature plantation expenses) – but with possible low yields from the newly mature plantations. My take – London Sumatera and IFAR looking like a better bet for me, judging from Indofood’s strong results released today.
https://mm.jpmorgan.com/PubServlet?action=open&doc=GPS-585461-0.pdf