KLBF Though fundamentals is sound, valuation is expensive, time to take profit - UOB

Analyst Adrian downgrade Kalbe Farma to Hold with a slightly lower target price of Rp3,900 based on 1x 2012 PEG . Though fundamentals is still sound, with the current valuation nearing 1X PEG, there seems to be limited upside from this stock.

Hold Kalbe Farma, KLBF IJ, TP: Rp3,900, Share Price: Rp3,675, Upside: +6.1%
Positive catalyst – when Kalbe Farma announce further details on acquisition plans, thus may increase earnings forecast.
The company is currently improving its business development strategy through acquisition, JV and Mergers.
No details of it yet, but it is looking into acquiring around 10 companies in Indonesia and Southeast Asia, with size of US$20-50m, ROE of 20-25% concentrating in consumer health segment, possibly some that focuses on natural herbal companies.
Financing for the acquisition – amount could be about Rp0.5tn-1tn. May resell 781mn of its treasury stocks.
Lifts dividend payout to 50%, higher than last year's 25% and our 30% expectation. Total dividend will be Rp643bn or Rp69/share, 1.9% yield.
Increased dividend payout assumption results in lower interest income, hence Adjust EPS forecast by 0.3% in 2011 and 0.9% in 2012