Citra Marga (CMNP) – We have upgraded our rating on CMNP to Buy from Neutral with TP of Rp2,000 -Mandiri

􀂄 The stock offers the right characteristics in this volatile market environment: good value (8.7x P/E FY11 vs Jasa Marga on 18.3x), IDR revenue stream, defensive earnings profile, and a play on government spending or stimulus. 􀂄 We provide analysis on why has the stock been cheap for some time. We think one of its influential shareholder has been selling in the market, for his own reason.
􀂄 We see signs of change in the situation. The shareholder registry shows that suspected Bhakti Group ownership dropped to below 5% in April 2011. Number of stockholders in the registry increased from under 1,300 in June- 10 to above 7,000 in April-11. Since then, the number of stockholders has consolidated to under 5,000.
􀂄 The management has since launched new initiatives. The EGM yesterday approved the issuance of non pre-emptive shares (minimum price Rp1,200) to fund new projects. The management has also kicked-off bond issue process.
􀂄 We think CMNP’s management interests are aligned with that of minority investors once again.
􀂄 A more in-depth report is available.