Indonesia Equity Daily, 6 Apr 2011 - Kim Eng

§ Top Idea

Banking
Banking – Positive Outlook for 2011
- With an estimated average earnings growth rate of 23% for 2011F, we are still bullish on the banking sector. Our top picks are Bank Mandiri (BMRI IJ) and Bank Rakyat Indonesia (BBRI IJ).
- We expect strong loan growth and cost control to enable the banks in maintaining attractive NIM. There is also a possibility of a positive earnings surprise should the government pass the bill on a loan haircut for state-owned banks.

§ Market Talk

Banking: Bank Mandiri (BMRI IJ) and AXA SA will jointly take over Asuransi Dharma Bangsa (ADB), a local general insurance company. After the acquisition, Mandiri will control 60% stakes in ADB, while AXA will hold the remaining 40%. This joint venture will build on the existing life insurance joint venture AXA Mandiri Financial Services, which was formed in 2003. The transaction is expected to be completed by 3Q11, pending the finalization of agreements, shareholder approvals, and regulatory approvals. Pg. 3

Investment: Global Mediacom (BMTR IJ) and Media Nusantara Citra (MNCN IJ) are reported to sell 395.76 million treasury stocks each in the period of 18 months starting 7 March 2011. Pg. 3

Mining: President Director of Berau Coal (BREAU IJ) stated that shareholders have given consent on the company’s US$450m bond buyback. Pg. 3

Automotive: Investor Daily quoted Chairman of the association of car producers (Gaikindo), Jhonny Darmawan, indicating domestic car sales for March 2011 at 81,706 units (up 16.5% m/m and 23.5% y/y).