BBNI posted excellent profit growth in 1H11 on tepid upper line growth and lower NPL which then resulting in lower provisioning. Going forward, the catalysts will be BBNI’s better assets quality and higher CASA ratio which will fuel future bottom line growth. BUY.
± Lower NPL, Better Profitability
BBNI reported robust bottom line result in 1H11 which grew 41% yoy, 18% qoq. 1H11 net profit was at Rp2.7 tn, in line and fueling 53% of our full year estimates. Such robust growth were primarily driven by tepid net interest income growth by 5% yoy, 6% yoy increased in fee based (due to Rp885 bn loan recovery) and lower provisioning expense by 25% yoy as NPL could be tamed down from 4.3% to 4.0%. The latter NPL ratio is lowest level ever achieved and is a contribution of loan written-off and speeding up loan recovery. Loan grew 21% yoy while third fund deposits up 9% yoy, resulting in higher LDR from 68% to 76%, which is positive, as it will reduce the penalty arising from BI’s Reserve Requirement constraint set at 80%.
± Catalysts
Although BBNI’s ROE is depleted to below 20% post rights issue, we still foresee strong future growth due to: 1). BBNI has now the biggest CASA portion after BBCA. Higher CASA implies lower CoF, hence it could offer competitive loan rate. Because of this, management has revised up their loan growth target from 17% to 20%, matching our estimate. 2). NPL is on the downtrend, which is a result of more selective lending, i.e. best players in SME segment in each region in Indonesia. 3). Should haircut bills be approved this year, the potential fee based will be around Rp5 tn, assuming 20% recovery of Rp25 tn loan written-off.
± Valuation: Reiterate BUY TP Rp4,700
We remain our positive outlook on the stock with TP of Rp4,700 based on Gordon Growth Methodology. Currently, the bank is traded at 1.8x PBV, an 18% discount from BDMN that traded at 2.2x PBV FY12F. Both stocks have the same level ROE in 2012. BUY.
Jumat, 29 Juli 2011
Ahead 2Q BBNI, Upgrade Target Price Rp5,250 - reit Buy BBNI - Credit Suisse
Indonesia Equity Sales
CS Indo: Ahead 2Q BBNI, Upgrade Target Price Rp5,250 - reit Buy BBNI BANK NEGARA INDONESIA (BBNI) Report: Ahead robust 2Q11 +63%YoY NP - Upgrade EPS/TP- reit Buy!
Compared to disappointing BDMN, in-line rather soft BBTN, BBNI above expectation 2Q NP +63%YoY is best, better than BTPN 2Q NP +53%YoY. At Rp4,175- BBNI is trading on 13.3x-10.4x 2011F-12F PER on the back of EPS Growth of 19%-28%, 2.0x-1.7x 2011F-12F PBR on the back of RoE 16.4%-18.1%, and implied 26% Upside to upgraded Target Price Rp5,250/share. Figure 3 page 2 shows that on 2012F PER valuation BBNI is cheaper than our preferred banks BBRI, BBTN, BMRI and the best fundamental but most premium BBCA. Teddy's Strategy in scenario of rapid investment growth (post land reform bill passed by Parliament expected 4Q11-1H12) include BBNI (as well as BMRI, SMGR and UNTR)! We reiterate Buy BBNI.
· Teddy Oetomo (Report attached): BBNI reported 63% YoY, 18% QoQ, 2Q11A earnings growth, 14% YoY, 14% QoQ 2Q11A PPOP growth. 1H11A PPOP was up by 14%, 45% of our FY11E while earnings were up by 41%YoY, 49% of our FY11E and 52% of consensus' expectations. BBNI's YTD loans growth improved from 3% in 1Q11A to 13% in 2Q11A, implying that the bank is on schedule for achieving higher growth ahead. BBNI's 2Q11A earnings are supported by robust recovery. The 1H11A saw Rp879 bn recovery, with gross NPL ratio having improved from 4.1% in 1Q11A to 4.0% in 2Q11A while provision coverage improved from 122.1% to 122.5% during the period.
· We tweak up FY11E loans growth to 21% from 15%, we also tweak down FY11E provision expense by 7% on the back of robust assets quality. Net net, we tweak up our FY11E-13E earnings by 2.8%-4.8%. We tweak up our target price to Rp5,250 from Rp5,000 for BBNI. Our target price for BBNI is derived based on Gordon's growth model, implying 16.7x 11E P/E, 2.5x 11E P/B, 13.1x 12E P/E, and 2.2x 12E P/B.
· The stock price of BBNI had lagged its local peers until recently given (1) we believe market remains partly sceptical with BBNI's ability to complete its operational restructuring and (2) market's expectation for relatively softer growth by BBNI in FY11E relative to peers. However, we believe BBNI's 2Q11A results underlie the bank's improvement fundamentals and offer evidence for stronger growth, potentially improving market's sentiment ahead. We believe BBNI continues to exhibit robust fundamentals, and valuations remain relatively undemanding. Currently, BBNI is trading at fourth lowest P/E and P/B relative to its local peers. We maintain our OUTPERFORM on BBNI.
CS Indo: Ahead 2Q BBNI, Upgrade Target Price Rp5,250 - reit Buy BBNI BANK NEGARA INDONESIA (BBNI) Report: Ahead robust 2Q11 +63%YoY NP - Upgrade EPS/TP- reit Buy!
Compared to disappointing BDMN, in-line rather soft BBTN, BBNI above expectation 2Q NP +63%YoY is best, better than BTPN 2Q NP +53%YoY. At Rp4,175- BBNI is trading on 13.3x-10.4x 2011F-12F PER on the back of EPS Growth of 19%-28%, 2.0x-1.7x 2011F-12F PBR on the back of RoE 16.4%-18.1%, and implied 26% Upside to upgraded Target Price Rp5,250/share. Figure 3 page 2 shows that on 2012F PER valuation BBNI is cheaper than our preferred banks BBRI, BBTN, BMRI and the best fundamental but most premium BBCA. Teddy's Strategy in scenario of rapid investment growth (post land reform bill passed by Parliament expected 4Q11-1H12) include BBNI (as well as BMRI, SMGR and UNTR)! We reiterate Buy BBNI.
· Teddy Oetomo (Report attached): BBNI reported 63% YoY, 18% QoQ, 2Q11A earnings growth, 14% YoY, 14% QoQ 2Q11A PPOP growth. 1H11A PPOP was up by 14%, 45% of our FY11E while earnings were up by 41%YoY, 49% of our FY11E and 52% of consensus' expectations. BBNI's YTD loans growth improved from 3% in 1Q11A to 13% in 2Q11A, implying that the bank is on schedule for achieving higher growth ahead. BBNI's 2Q11A earnings are supported by robust recovery. The 1H11A saw Rp879 bn recovery, with gross NPL ratio having improved from 4.1% in 1Q11A to 4.0% in 2Q11A while provision coverage improved from 122.1% to 122.5% during the period.
· We tweak up FY11E loans growth to 21% from 15%, we also tweak down FY11E provision expense by 7% on the back of robust assets quality. Net net, we tweak up our FY11E-13E earnings by 2.8%-4.8%. We tweak up our target price to Rp5,250 from Rp5,000 for BBNI. Our target price for BBNI is derived based on Gordon's growth model, implying 16.7x 11E P/E, 2.5x 11E P/B, 13.1x 12E P/E, and 2.2x 12E P/B.
· The stock price of BBNI had lagged its local peers until recently given (1) we believe market remains partly sceptical with BBNI's ability to complete its operational restructuring and (2) market's expectation for relatively softer growth by BBNI in FY11E relative to peers. However, we believe BBNI's 2Q11A results underlie the bank's improvement fundamentals and offer evidence for stronger growth, potentially improving market's sentiment ahead. We believe BBNI continues to exhibit robust fundamentals, and valuations remain relatively undemanding. Currently, BBNI is trading at fourth lowest P/E and P/B relative to its local peers. We maintain our OUTPERFORM on BBNI.
2Q11 results: Largely in line with our estimates - Credit Suisse
● Astra Agro 2Q11 net income grew by 69% YoY, but was down 6% QoQ to Rp616 bn, leading 6M11 net income to Rp1,270 bn (+99% YoY), which was in line, at 49% of our FY11 earnings estimate and 48% of consensus’.
● We believe that negative QoQ growth in Astra Agro’s 2Q11 bottom line was largely due to lower CPO average selling price, which was down 6% QoQ in 2Q11, and also due to flat CPO sales volume on a QoQ basis.
● Astra Agro’s 1H11 CPO output was 49% of our FY11 estimates, after experienced positive output growth started from 4Q10A. However, we find that AALI’s June 2011 CPO output was relatively flat on a MoM basis. We foresee more balance production contribution between 1H and 2H throughout this year.
● We maintain our NEUTRAL rating and target price of Rp26,000 for Astra Agro. AALI is currently trading at the highest 2011E and 2012E P/E amongst all Indonesian CPO plantation companies under our coverage.
● We believe that negative QoQ growth in Astra Agro’s 2Q11 bottom line was largely due to lower CPO average selling price, which was down 6% QoQ in 2Q11, and also due to flat CPO sales volume on a QoQ basis.
● Astra Agro’s 1H11 CPO output was 49% of our FY11 estimates, after experienced positive output growth started from 4Q10A. However, we find that AALI’s June 2011 CPO output was relatively flat on a MoM basis. We foresee more balance production contribution between 1H and 2H throughout this year.
● We maintain our NEUTRAL rating and target price of Rp26,000 for Astra Agro. AALI is currently trading at the highest 2011E and 2012E P/E amongst all Indonesian CPO plantation companies under our coverage.
Kredit Bank BJB Tumbuh 24 Persen - Antara
Jakarta (ANTARA News) - PT Bank Pembangunan Daerah Jawa Barat dan Banten Tbk hingga triwulan kedua tahun ini telah menyalurkan kredit Rp26,6 triliun, tumbuh 24,03 persen dibanding periode sama tahun lalu yang merealisasikan Rp21,45 triliun.
Direktur Utama Bank Jabar dan Banten (Bank BJB) Bien Subiantoro mengaku optimistis outstanding penyaluran kredit bisa tembus Rp30 triliun per akhir tahun ini.
"Kami memroyeksikan kredit sepanjang tahun ini bisa tumbuh antara 22-27 persen. Artinya, outstanding di akhir tahun bisa tembus Rp30 triliun," katanya disela analyst meeting di Jakarta baru-baru ini.
Dia mengatakan, salah satu strategi menggenjot penyaluran pinjaman ialah dengan membuat sentra kredit di sejumlah cabang agar lebih fokus sekaligus meminimalisasi risiko.
Pendirian sentra kredit tersebut saat ini masih dalam proses pemetaan, termasuk memilih cabang mana saja yang akan memiliki sentra kredit.
Sentra-sentra kredit itu nantinya akan menyalurkan pinjaman-pinjaman konsumer, seperti kredit pemilikan rumah (KPR), dan pinjaman produktif berupa kredit bagi usaha mikro kecil menengah serta koperasi.
"Sejauh ini rasio kredit terhadap simpanan (NPL) pinjaman konsumer cukup terkendali, namun pertumbuhannya sudah melandai. Oleh karenanya, kami memilih mengintensifkan KPR karena selama ini belum tergarap secara maksimal," jelas Bien.
Bien mengatakan rencana mengintensifkan KPR merupakan upaya diversifikasi pinjaman konsumer yang selama ini lebih banyak untuk pegawai negeri sipil (PNS).
Di sisi lain, kata dia, penyaluran kredit untuk korporasi prospeknya masih terhitung cerah. Bank BJB telah memberikan kredit korporasi antara lain untuk Adira Finance senilai Rp250 miliar, PT Telkom Tbk senilai Rp250 miliar, dan Permodalan Nasional Madani senilai Rp200 miliar.
"Debitur-debitur tersebut sejauh ini terlihat cukup baik, misalnya dilihat dari NPL nya," katanya.
Pada triwulan kedua tahun ini, Bank BJB membukukan laba sebelum pajak Rp728,64 miliar, naik 0,04 persen dibandingkan periode yang sama tahun lalu yang sebesar Rp728,35 miliar.
Total asetnya tumbuh 22,58 persen dari Rp40,23 triliun menjadi Rp49,32 triliun.
"Kami memroyeksikan perolehan laba sebelum pajak tahun ini bisa tumbuh konsisten. Tidak ada biaya mengejutkan yang dikeluarkan pada tiga bulan pertama tahun ini, sehingga laba masih bisa naik," kata Bien optimistis.
Direktur Utama Bank Jabar dan Banten (Bank BJB) Bien Subiantoro mengaku optimistis outstanding penyaluran kredit bisa tembus Rp30 triliun per akhir tahun ini.
"Kami memroyeksikan kredit sepanjang tahun ini bisa tumbuh antara 22-27 persen. Artinya, outstanding di akhir tahun bisa tembus Rp30 triliun," katanya disela analyst meeting di Jakarta baru-baru ini.
Dia mengatakan, salah satu strategi menggenjot penyaluran pinjaman ialah dengan membuat sentra kredit di sejumlah cabang agar lebih fokus sekaligus meminimalisasi risiko.
Pendirian sentra kredit tersebut saat ini masih dalam proses pemetaan, termasuk memilih cabang mana saja yang akan memiliki sentra kredit.
Sentra-sentra kredit itu nantinya akan menyalurkan pinjaman-pinjaman konsumer, seperti kredit pemilikan rumah (KPR), dan pinjaman produktif berupa kredit bagi usaha mikro kecil menengah serta koperasi.
"Sejauh ini rasio kredit terhadap simpanan (NPL) pinjaman konsumer cukup terkendali, namun pertumbuhannya sudah melandai. Oleh karenanya, kami memilih mengintensifkan KPR karena selama ini belum tergarap secara maksimal," jelas Bien.
Bien mengatakan rencana mengintensifkan KPR merupakan upaya diversifikasi pinjaman konsumer yang selama ini lebih banyak untuk pegawai negeri sipil (PNS).
Di sisi lain, kata dia, penyaluran kredit untuk korporasi prospeknya masih terhitung cerah. Bank BJB telah memberikan kredit korporasi antara lain untuk Adira Finance senilai Rp250 miliar, PT Telkom Tbk senilai Rp250 miliar, dan Permodalan Nasional Madani senilai Rp200 miliar.
"Debitur-debitur tersebut sejauh ini terlihat cukup baik, misalnya dilihat dari NPL nya," katanya.
Pada triwulan kedua tahun ini, Bank BJB membukukan laba sebelum pajak Rp728,64 miliar, naik 0,04 persen dibandingkan periode yang sama tahun lalu yang sebesar Rp728,35 miliar.
Total asetnya tumbuh 22,58 persen dari Rp40,23 triliun menjadi Rp49,32 triliun.
"Kami memroyeksikan perolehan laba sebelum pajak tahun ini bisa tumbuh konsisten. Tidak ada biaya mengejutkan yang dikeluarkan pada tiga bulan pertama tahun ini, sehingga laba masih bisa naik," kata Bien optimistis.
Indonesia’s Coal-Export Ban May Deter Investments, Mulyono Says - Bloomberg
A ban may also hurt India and China, which seek coal with a heating value of as much as 4,500 kilocalories a kilogram for blending with higher-grade domestic output, said Jeffrey Mulyono, president director of PT Bhakti Energi Persada.
“Banks may stop funding low-rank coal producers as they will see that the companies are not feasible anymore in the longer term if the ban is imposed,” Mulyono said by telephone from Jakarta today. “How can we expand and run our business if we cannot get financial support from banks?”
Indonesia plans to ban overseas sales of coal with energy of less than 5,100 kilocalories a kilogram, requiring miners to upgrade the burning value if they want to export, according to a draft of a ministerial decree posted on the Directorate General of Coal and Minerals’ website. The government had earlier proposed halting sales of grades with a value below 5,600 kilocalories.
The price of coal for sale this month with an energy value below 5,100 kilocalories was between $61.04 and $83.54 a metric ton, according to government prices. That compares with $118.24 a ton for benchmark coal with a heating value of 6,322 kilocalories a kilogram.
Bhakti Energi and its affiliate PT Pesona Khatulistiwa Nusantara produce coal with a heating value of 3,400 kilocalories a kilogram from mines in East Kalimantan province, said Mulyono, who is also president director of Pesona.
Pesona is estimated to produce 1.5 million tons of coal this year and will boost output to 6 million tons in 2014, he said.
Upgrading Technology
Low- and medium-grade coal accounts for about 60 percent of Indonesia’s production, Mulyono said. The country’s output may rise 19 percent to 326.65 million tons this year, the energy ministry said in January.
“The main issue for the plan is the upgrading technology,” Mulyono said. “There are some small projects but none of them are commercially proven for larger scale.”
Investment in coal industry infrastructure such as railways and ports may also be canceled because of the ban, Mulyono said. “Investors won’t risk spending billions of dollars if they see it won’t support their mining business,” he said.
Bukit Makmur vs Pamapersada - Insider Stories
PT Delta Dunia Makmur Tbk (DOID), parent of PT Bukit Makmur Mandiri Utama (BUMA), Indonesia's second largest coal mining contractor, reported a 14.59% increase in overburden removal for the first 6 months of this year. However, its coal output was unchanged.
Delta Dunia posted 155.5 million bank cubic meter (bcm) of overburden removal in 1H 2011 from 135.7 million bcm in 1H 2010. Coal production was flat at 16.5 million tons in 1H 2011.
How about its competitor, PT Pamapersada Nusantara, a wholly owned subsidiary of PT United Tractors Tbk?
Pamapersada's coal output made a slight increase of 5.84% to 39.9 million tons from 37.7 million tons. Overburden removal rose 15.95% to 364.9 million bcm from 314.7 million bcm.
With flat coal output and nearly 15% growth in overburden, Delta Dunia is indicated to post a weak earning in the second quarter of this year (2Q2011), mainly due to margin compression driven by a jump in depreciation cost, spare part-maintenance cost, and accounting changes in salary and bonus payment from cash basis into accrual basis.
"In addition, there would be one-off refinancing cost of US$16 million-US$17 million," said a morning notes issued by PT Mandiri Sekuritas last week.
Overall, it potentially reduces Mandiri Sekuritas's FY11 forecast operating margin by 2%-3% or equivalent to Rp130 billion-Rp200 billion earning, compared to the brokerage's previous FY11F net profit forecast of Rp454 billion.
Delta Dunia posted 155.5 million bank cubic meter (bcm) of overburden removal in 1H 2011 from 135.7 million bcm in 1H 2010. Coal production was flat at 16.5 million tons in 1H 2011.
How about its competitor, PT Pamapersada Nusantara, a wholly owned subsidiary of PT United Tractors Tbk?
Pamapersada's coal output made a slight increase of 5.84% to 39.9 million tons from 37.7 million tons. Overburden removal rose 15.95% to 364.9 million bcm from 314.7 million bcm.
With flat coal output and nearly 15% growth in overburden, Delta Dunia is indicated to post a weak earning in the second quarter of this year (2Q2011), mainly due to margin compression driven by a jump in depreciation cost, spare part-maintenance cost, and accounting changes in salary and bonus payment from cash basis into accrual basis.
"In addition, there would be one-off refinancing cost of US$16 million-US$17 million," said a morning notes issued by PT Mandiri Sekuritas last week.
Overall, it potentially reduces Mandiri Sekuritas's FY11 forecast operating margin by 2%-3% or equivalent to Rp130 billion-Rp200 billion earning, compared to the brokerage's previous FY11F net profit forecast of Rp454 billion.
BCA, Mandiri post strong Q2 profit - Reuters
* Mandiri Q2 net up 23 pct, revises up 2011 loan growth
* BCA Q2 net up 41 pct on commercial, consumer loans
Leading Indonesian banks, Bank Mandiri and Bank Central Asia , posted strong second-quarter net profit growth on Thursday, reflecting buoyant domestic demand for loans in Southeast Asia's biggest economy.
BCA, the largest by market value and No. 3 lender, saw a 41 percent jump in profit from a year ago, while the largest lender Mandiri said profit rose by 23 percent, leaving them both on track to meet analysts' expectations for full-year growth.
Investors have poured into the stocks of both banks and Indonesia generally this year, as they seek exposure to an economy belying a global slowdown by growing at over 6 percent and driven by consumption from an emerging middle class.
"As long as Indonesia's economy is growing strongly, companies that provide consumer services will do well. And Indonesia's economy still looks good, so it will be good for banks going forward," said Eric Sugandi, an economist at Standard Chartered in Jakarta.
Mandiri's CEO Zulkifli Zaini said the firm has slightly revised up its loan growth outlook to 21-23 percent for this year, after posting 27 percent credit growth in the first half.
BCA, controlled by the nation's wealthiest business empire the Djarum Group, plans to expand its reach into the mortgage and securities business as it sees loan growth in housing could rise by more than 35 percent this year, to outpace overall loan growth of about 20 percent.
"What drove loan growth in the second quarter was commercial and consumers," said BCA's CEO Jahja Setiaatmadja.
Investor bullishness on the Indonesian consumer was also underlined by a 26 percent rise in second-quarter profit for top car retailer Astra International on Thursday, though higher costs weighed down profits at Indocement despite its strong cement sales.
Inflation has eased in recent months but is expected to pick up again from August, and July saw two strikes over higher pay -- at miner Freeport and flag carrier Garuda -- signalling the country's competitive advantage of having among the cheapest labour costs in the region may fade.
HEADING OVERSEAS
Mandiri plans to expand its reach into China and Malaysia as it aims to be among the top five biggest banks in Southeast Asia by 2015. In Indonesia it is pushing into the fast-growing microfinance sector to compete with Bank Danamon.
The firm's second-quarter net profit was 2.5 trillion rupiah ($294.6 million), compared with 2.04 trillion rupiah in the same period a year earlier, according to a Reuters calculation based on the lender's published first-quarter and first-half results.
Analysts forecast Mandiri's 2011 net profit will rise by 26 percent to 11.64 trillion rupiah, according to Thomson Reuters I/B/E/S.
BCA's second-quarter net profit was 2.78 trillion rupiah ($327.5 million), compared with 1.97 trillion rupiah in the same period a year earlier, according to a Reuters calculation based on the lender's published first half results. Its net interest income rose 37 percent in the first half versus 2010.
Analysts' forecast BCA's 2011 net profit will rise by 13 percent to 9.58 trillion rupiah, according to Thomson Reuters I/B/E/S.
The strong outlook has drawn investor interest in buying stakes in local lenders, though existing foreign players are now concerned by the possibility of limits on majority ownership, while valuations are high.
BCA trades at 5.7 times price-to-book and Mandiri at 3.3 times, versus 1.3 times for regional leader DBS Group , according to data from Thomson Reuters Starmine.
Shares in both lenders slipped ahead of the results on Thursday amid a regional sell-off as worries mount over the potential for a U.S. debt default, though both have outperformed the Jakarta index so far this year.
Mandiri shares have gained 24 percent this year and BCA has climbed 28 percent, versus the index's 11 percent rise. Indonesia's stock market is the region's best performer and hit a fresh record on Wednesday. ($1 = 8487.5 Rupiah).
* BCA Q2 net up 41 pct on commercial, consumer loans
Leading Indonesian banks, Bank Mandiri and Bank Central Asia , posted strong second-quarter net profit growth on Thursday, reflecting buoyant domestic demand for loans in Southeast Asia's biggest economy.
BCA, the largest by market value and No. 3 lender, saw a 41 percent jump in profit from a year ago, while the largest lender Mandiri said profit rose by 23 percent, leaving them both on track to meet analysts' expectations for full-year growth.
Investors have poured into the stocks of both banks and Indonesia generally this year, as they seek exposure to an economy belying a global slowdown by growing at over 6 percent and driven by consumption from an emerging middle class.
"As long as Indonesia's economy is growing strongly, companies that provide consumer services will do well. And Indonesia's economy still looks good, so it will be good for banks going forward," said Eric Sugandi, an economist at Standard Chartered in Jakarta.
Mandiri's CEO Zulkifli Zaini said the firm has slightly revised up its loan growth outlook to 21-23 percent for this year, after posting 27 percent credit growth in the first half.
BCA, controlled by the nation's wealthiest business empire the Djarum Group, plans to expand its reach into the mortgage and securities business as it sees loan growth in housing could rise by more than 35 percent this year, to outpace overall loan growth of about 20 percent.
"What drove loan growth in the second quarter was commercial and consumers," said BCA's CEO Jahja Setiaatmadja.
Investor bullishness on the Indonesian consumer was also underlined by a 26 percent rise in second-quarter profit for top car retailer Astra International on Thursday, though higher costs weighed down profits at Indocement despite its strong cement sales.
Inflation has eased in recent months but is expected to pick up again from August, and July saw two strikes over higher pay -- at miner Freeport and flag carrier Garuda -- signalling the country's competitive advantage of having among the cheapest labour costs in the region may fade.
HEADING OVERSEAS
Mandiri plans to expand its reach into China and Malaysia as it aims to be among the top five biggest banks in Southeast Asia by 2015. In Indonesia it is pushing into the fast-growing microfinance sector to compete with Bank Danamon.
The firm's second-quarter net profit was 2.5 trillion rupiah ($294.6 million), compared with 2.04 trillion rupiah in the same period a year earlier, according to a Reuters calculation based on the lender's published first-quarter and first-half results.
Analysts forecast Mandiri's 2011 net profit will rise by 26 percent to 11.64 trillion rupiah, according to Thomson Reuters I/B/E/S.
BCA's second-quarter net profit was 2.78 trillion rupiah ($327.5 million), compared with 1.97 trillion rupiah in the same period a year earlier, according to a Reuters calculation based on the lender's published first half results. Its net interest income rose 37 percent in the first half versus 2010.
Analysts' forecast BCA's 2011 net profit will rise by 13 percent to 9.58 trillion rupiah, according to Thomson Reuters I/B/E/S.
The strong outlook has drawn investor interest in buying stakes in local lenders, though existing foreign players are now concerned by the possibility of limits on majority ownership, while valuations are high.
BCA trades at 5.7 times price-to-book and Mandiri at 3.3 times, versus 1.3 times for regional leader DBS Group , according to data from Thomson Reuters Starmine.
Shares in both lenders slipped ahead of the results on Thursday amid a regional sell-off as worries mount over the potential for a U.S. debt default, though both have outperformed the Jakarta index so far this year.
Mandiri shares have gained 24 percent this year and BCA has climbed 28 percent, versus the index's 11 percent rise. Indonesia's stock market is the region's best performer and hit a fresh record on Wednesday. ($1 = 8487.5 Rupiah).
Jasa Marga 1H net profit up 16.05% - Insider Stories
Toll road operator PT Jasa Marga Tbk (JSMR) today reported a 16.05% increase in net profit for the first 6 months of this year on the back of higher operating revenue.
The state-controlled toll road operator booked Rp751.58 billion net profit in 1H 2011 from Rp647.64 billion in 1H 2010.
Operating profit increased 12.84% to Rp1.23 trillion from Rp1.09 trillion. However, the company's operating margin slightly increased to 52.12% from 51.90%. Jasa Marga's operating revenue grew 12.38% to Rp2.36 trillion from Rp2.10 trillion.
The state-controlled toll road operator booked Rp751.58 billion net profit in 1H 2011 from Rp647.64 billion in 1H 2010.
Operating profit increased 12.84% to Rp1.23 trillion from Rp1.09 trillion. However, the company's operating margin slightly increased to 52.12% from 51.90%. Jasa Marga's operating revenue grew 12.38% to Rp2.36 trillion from Rp2.10 trillion.
Laba Bersih Intraco Penta Melonjak 96,1%
PT Intraco Penta Tbk (INTA) pada semester I 2011 berhasil membukukan laba bersih Rp 61,28 miliar, naik 96,09% dari semester I 2010 sebesar Rp 31,25 miliar. Kenaikan ini dikontribusi oleh pendapatan usaha yang selama setahun naik 56,1% menjadi Rp 1,35 triliun.
Beban pokok pendapatan pada periode yang sama turut meningkat 59,51% menjadi Rp 1,16 triliun, sehingga INTA mengantungi laba kotor Rp 196,12 miliar atau naik 38,55% dari semester I 2010 sebesar Rp 141,55 miliar.
Laba bersih per saham dasar tercatat sebesar Rp 30/saham pada Juni 2011 dibandingkan Juni 2010 sebesar Rp 72. Hal ini menyusul dilakukannya stock split 1:5 pada bulan Juni 2011.
Beban pokok pendapatan pada periode yang sama turut meningkat 59,51% menjadi Rp 1,16 triliun, sehingga INTA mengantungi laba kotor Rp 196,12 miliar atau naik 38,55% dari semester I 2010 sebesar Rp 141,55 miliar.
Laba bersih per saham dasar tercatat sebesar Rp 30/saham pada Juni 2011 dibandingkan Juni 2010 sebesar Rp 72. Hal ini menyusul dilakukannya stock split 1:5 pada bulan Juni 2011.
SMGR Membukukan Laba Rp 1,897 triliun
PT Semen Gresik Tbk (SMGR) membukukan laba Rp 1,897 triliun di semester I-2011, naik 15,67% dibandingkan periode yang sama tahun lalu, Rp 1,64 triliun. Laba naik didorong pertumbuhan pendapatan.
Laba bersih per saham juga naik dari Rp 274 menjadi Rp 316 per saham. Pendapatan Badan Usaha Milik Negara (BUMN) semen ini hingga Juni 2011 tercatat Rp 7,605 triliun, naik 14,17% dari periode yang sama tahun 2010, Rp 6,661 triliun.
Demikian laporan keuangan yang dipublikasikan di Jakarta, Kamis (28/7). Laba kotor hingga akhir Juni mencapai Rp 3,495 triliun, naik tipis dari periode sebelumnya Rp 3,161 triliun. Beban usaha yang mencapai Rp 1,223 triliun menyebabkan laba usaha emiten berkode SMGR ini Rp 2,272 triliun.
Laba usaha naik 10,82% dari sebelumnya Rp 2,05 triliun menjadi Rp 2,272 triliun di semester I-2011. Total aset perseroan pada semester ini berjumlah Rp 18,037 triliun, naik dari semester I tahun lalu Rp 15,562 triliun.
Laba bersih per saham juga naik dari Rp 274 menjadi Rp 316 per saham. Pendapatan Badan Usaha Milik Negara (BUMN) semen ini hingga Juni 2011 tercatat Rp 7,605 triliun, naik 14,17% dari periode yang sama tahun 2010, Rp 6,661 triliun.
Demikian laporan keuangan yang dipublikasikan di Jakarta, Kamis (28/7). Laba kotor hingga akhir Juni mencapai Rp 3,495 triliun, naik tipis dari periode sebelumnya Rp 3,161 triliun. Beban usaha yang mencapai Rp 1,223 triliun menyebabkan laba usaha emiten berkode SMGR ini Rp 2,272 triliun.
Laba usaha naik 10,82% dari sebelumnya Rp 2,05 triliun menjadi Rp 2,272 triliun di semester I-2011. Total aset perseroan pada semester ini berjumlah Rp 18,037 triliun, naik dari semester I tahun lalu Rp 15,562 triliun.
United Tractors - Strong 2Q11 results; improving mining contracting - Deutsche Bank
Reiterating Buy rating
We remain upbeat on United Tractors' outlook, supported by high coal prices.
These bode well for all three of its divisions, which would benefit from buoyant
heavy equipment, greater demand for mining contracting services, and stronger
earnings from its coal assets. In addition, we expect weather normalisation, which
has already started in May, to improve earnings and margin contributions from its
mining contracting (MC) division, which accounts for 40-50% of earnings.
Strong 2Q11 earnings performance
Even with a stronger Rupiah and equipment supply disruptions, UNTR recorded a
strong YoY performance in 2Q, given stronger earnings from the construction
machinery (CM) division following a faster-than-expected supply recovery. In
addition, we note strong earnings and margin improvement at the MC division, as
weather normalised in May-June. The 2Q11 results could have been better than
those of 1Q11 if not for supply constraints following Japan’s catastrophe and a
weaker margin at the coal mining division. Overall, 1H11 results are largely in line
with our 2011 forecasts, some 12% above market consensus.
Expecting stronger earnings performance in 3Q11
Notwithstanding a stronger Rupiah, we expect stronger earnings in 3Q11
supported by 1) stronger MC performances following weather normalisation and
2) higher CM heavy equipment sales due to Komatsu supply recovery.
Maintaining target price at Rp32,000
Our target price is based on a ten-year DCF valuation using a WACC of 14.6% and
terminal growth rate of 5%. Risks: upward integration at coal companies and a
sharp decline in coal prices (see pages 4-5 for more details on valuation and risks).
We remain upbeat on United Tractors' outlook, supported by high coal prices.
These bode well for all three of its divisions, which would benefit from buoyant
heavy equipment, greater demand for mining contracting services, and stronger
earnings from its coal assets. In addition, we expect weather normalisation, which
has already started in May, to improve earnings and margin contributions from its
mining contracting (MC) division, which accounts for 40-50% of earnings.
Strong 2Q11 earnings performance
Even with a stronger Rupiah and equipment supply disruptions, UNTR recorded a
strong YoY performance in 2Q, given stronger earnings from the construction
machinery (CM) division following a faster-than-expected supply recovery. In
addition, we note strong earnings and margin improvement at the MC division, as
weather normalised in May-June. The 2Q11 results could have been better than
those of 1Q11 if not for supply constraints following Japan’s catastrophe and a
weaker margin at the coal mining division. Overall, 1H11 results are largely in line
with our 2011 forecasts, some 12% above market consensus.
Expecting stronger earnings performance in 3Q11
Notwithstanding a stronger Rupiah, we expect stronger earnings in 3Q11
supported by 1) stronger MC performances following weather normalisation and
2) higher CM heavy equipment sales due to Komatsu supply recovery.
Maintaining target price at Rp32,000
Our target price is based on a ten-year DCF valuation using a WACC of 14.6% and
terminal growth rate of 5%. Risks: upward integration at coal companies and a
sharp decline in coal prices (see pages 4-5 for more details on valuation and risks).
United Tractors - 1H11A supported by robust heavy equipment volumes - Credit Suisse
● United Tractors (UT)’s 1H11 net profit grew 35% YoY to Rp2.54 tn, coming in at 50% of our full-year estimates and 51% of consensus’. 2Q11 profit grew by 30% YoY (+1% QoQ).
● 1H11 revenue grew 42% YoY and was at 52% of our FY11E. 2Q11 revenue also increased 39% YoY and 3% QoQ on stronger heavy equipment sales volume. We increase our 2011E heavy equipment sales volume assumption to 8050 units (from 7645 units), resulting in a 2-5% increase in our 2011-13E earnings.
● In our view, UT warrants its current valuation, as we believe UT wil l be able to leverage on both higher investment and coal demand from India.
● We increase our sum-of-the-parts based target price to Rp37,500 (from Rp30,000), but maintain our OUTPERFORM rating. We roll over our target price method to 2012E EV/EBITDA. Our target price for UT implies 10.6x 2012E EV/EBITDA.
● 1H11 revenue grew 42% YoY and was at 52% of our FY11E. 2Q11 revenue also increased 39% YoY and 3% QoQ on stronger heavy equipment sales volume. We increase our 2011E heavy equipment sales volume assumption to 8050 units (from 7645 units), resulting in a 2-5% increase in our 2011-13E earnings.
● In our view, UT warrants its current valuation, as we believe UT wil l be able to leverage on both higher investment and coal demand from India.
● We increase our sum-of-the-parts based target price to Rp37,500 (from Rp30,000), but maintain our OUTPERFORM rating. We roll over our target price method to 2012E EV/EBITDA. Our target price for UT implies 10.6x 2012E EV/EBITDA.
BDMN: NIM erosion - Mandiri
While 2Q results are usually exciting for banks, this is not the case for Bank Danamon (BDMN). Net profit fell by 6.9% qoq to Rp710bn in 2Q11 despite 7.8% qoq growth in loans. The management claimed it as a result of tighter competition that pushed lending rates to fall. We therefore downgraded our earning forecast for the bank by 13.3% for FY11 and 8.5% for FY12. Rolling our valuation into 2012 led us to a new TP of Rp5,900/share (post rights issue), which was a decline from Rp6,300/share previously. Maintain neutral.
Lower loan yield… BDMN reported strong loan growth in 2Q11 of 7.8% qoq or 30.4% yoy, which was particularly derived from wholesale segment (+13.7% qoq or 33.3% yoy), SME segment (+9.2% qoq or 28.8% yoy) and mass market segment (+6.5% qoq or 36.5% yoy). Included in the mass market segment was loans booked by Adira Finance which grew by 7.8% qoq or 46.0% yoy. Despite such strong growth, tighter competition in the market pushed lending rate to fall. The lending rate for motorcycle financing, for instance, has been cut from 25% p.a in 1H10 to 22% p.a in 1H11. We estimate the average loan yield of 18.3% in 1H11, a decline from 19.8% in 1Q11, which caused NIM to slightly decline to 10.0% in 1H11 from 10.2% in 1Q11.
Improved asset quality, yet cost of credit rose. The bank’s NPL fell to 2.9% at end Jun11 from 3.0% at end Mar11. Yet, it is worth noting that the bank wrote off around Rp568.4bn of bad loans in 2Q11, an increase from Rp553.8 bn in 1Q11. This led to a higher cost of credit of 3.3% from 3.0% in 1Q11.
Lower TP, maintain neutral. BDMN will hold a 144-for-1,000 rights issue with offering price between Rp4,100-Rp4,800, translating into total fresh funds of Rp5.0 tn - Rp5.8 tn. CAR (bank only) is estimated to reach 16.98% post rights issue from 12.2% at end Jun11. We estimate that post rights issue, BVPS will increase by 6.0% - 9.2%, which is actually quite attractive. However, fierce competition will likely lead to lower ROAE, thus limiting organic equity expansion in the future. If this prevails, the need for another capital raising in a relatively shorter period is likely, which will expose investors to another dilution risk. We therefore lowered our sustainable ROAE assumption in deriving the bank’s target price from previously 21% to 18%, which coupled with 13.3% and 8.5% downgrade in earning forecast for FY11 and FY12, respectively, led to a TP of Rp5,900/share based on 2012F BVPS (post rights issue at Rp4,100/share). This is lower than our previous TP of Rp6,300/share. Maintain neutral.
Lower loan yield… BDMN reported strong loan growth in 2Q11 of 7.8% qoq or 30.4% yoy, which was particularly derived from wholesale segment (+13.7% qoq or 33.3% yoy), SME segment (+9.2% qoq or 28.8% yoy) and mass market segment (+6.5% qoq or 36.5% yoy). Included in the mass market segment was loans booked by Adira Finance which grew by 7.8% qoq or 46.0% yoy. Despite such strong growth, tighter competition in the market pushed lending rate to fall. The lending rate for motorcycle financing, for instance, has been cut from 25% p.a in 1H10 to 22% p.a in 1H11. We estimate the average loan yield of 18.3% in 1H11, a decline from 19.8% in 1Q11, which caused NIM to slightly decline to 10.0% in 1H11 from 10.2% in 1Q11.
Improved asset quality, yet cost of credit rose. The bank’s NPL fell to 2.9% at end Jun11 from 3.0% at end Mar11. Yet, it is worth noting that the bank wrote off around Rp568.4bn of bad loans in 2Q11, an increase from Rp553.8 bn in 1Q11. This led to a higher cost of credit of 3.3% from 3.0% in 1Q11.
Lower TP, maintain neutral. BDMN will hold a 144-for-1,000 rights issue with offering price between Rp4,100-Rp4,800, translating into total fresh funds of Rp5.0 tn - Rp5.8 tn. CAR (bank only) is estimated to reach 16.98% post rights issue from 12.2% at end Jun11. We estimate that post rights issue, BVPS will increase by 6.0% - 9.2%, which is actually quite attractive. However, fierce competition will likely lead to lower ROAE, thus limiting organic equity expansion in the future. If this prevails, the need for another capital raising in a relatively shorter period is likely, which will expose investors to another dilution risk. We therefore lowered our sustainable ROAE assumption in deriving the bank’s target price from previously 21% to 18%, which coupled with 13.3% and 8.5% downgrade in earning forecast for FY11 and FY12, respectively, led to a TP of Rp5,900/share based on 2012F BVPS (post rights issue at Rp4,100/share). This is lower than our previous TP of Rp6,300/share. Maintain neutral.
PT Bank Danamon Tbk Disappointing Results - AAA
BDMN net profit in 1H11 was only up by 3% due to squeezed margin. Fully loaned up funding coupled with challenging growth in two-wheelers (2W) financing may lead to only modest bottom line growth going forward. Further, with the upcoming rights issue, we expect ROE to be lower. HOLD.
± Squeezed Margin Due to Lower NIM and Higher Cost of Fund
BDMN posted 1H11 net profit at Rp1,473 bn, only increased 3% yoy, -7% qoq. This earning figure represented only 41% of our full year estimate. Profit before tax declined 4% yoy, 8% qoq. The main reasons for BDMN’s 1H11 weak performance were margin compression, higher provisioning expense and higher cost of fund. NIM was depleted from 11.6% in 1H10 to 9.8% as yield on assets was down by 130 bps to 15.5%, due to stiffer competition in lending. The cost of fund increased to 5.7% from 5.4%, which in our view was resulted from BDMN’s high LDR at 111%. One of the risks of fully loaned up funding is the higher cost of managing liquidity. Meanwhile, BDMN loan in 1H11 has increased by 31% yoy while third fund deposits grew 23% yoy.
± 2W Sales Could Face Significant Challenge Due to Higher Down Payment
Currently, around 40% of BDMN’s loan portfolio is contributed by Adira, of which 66% is 2W financing. Going forward, the growth in 2W financing will be somewhat slower as the Central Bank is going to impose higher down payment on 2W credit to reduce credit risk. It should be noted that in the 2W financing, the increase in the down payment has more negative impact on the sales than the increase in interest rate. In the previous 1Q11, Adira’s margin has already started to decline. We believe this trend will continue to the end of 2011 with slightly higher NPL and higher debt portion that will result in only a slight increase in BDMN net profit of 2% yoy.
± Valuation: HOLD. Downgrade TP to Rp5,800
Following the above results, we decrease our FY11 upper and bottom line figures, resulted in lower TP of Rp5,800 (from Rp6,500 previously). Our TP implies 2.4x PBV FY11F, which is equivalent to BDMN’s 3 year historical PBV. Currently, the bank is traded at 2.2x PBV, or less than 10% potential upside. HOLD.
± Squeezed Margin Due to Lower NIM and Higher Cost of Fund
BDMN posted 1H11 net profit at Rp1,473 bn, only increased 3% yoy, -7% qoq. This earning figure represented only 41% of our full year estimate. Profit before tax declined 4% yoy, 8% qoq. The main reasons for BDMN’s 1H11 weak performance were margin compression, higher provisioning expense and higher cost of fund. NIM was depleted from 11.6% in 1H10 to 9.8% as yield on assets was down by 130 bps to 15.5%, due to stiffer competition in lending. The cost of fund increased to 5.7% from 5.4%, which in our view was resulted from BDMN’s high LDR at 111%. One of the risks of fully loaned up funding is the higher cost of managing liquidity. Meanwhile, BDMN loan in 1H11 has increased by 31% yoy while third fund deposits grew 23% yoy.
± 2W Sales Could Face Significant Challenge Due to Higher Down Payment
Currently, around 40% of BDMN’s loan portfolio is contributed by Adira, of which 66% is 2W financing. Going forward, the growth in 2W financing will be somewhat slower as the Central Bank is going to impose higher down payment on 2W credit to reduce credit risk. It should be noted that in the 2W financing, the increase in the down payment has more negative impact on the sales than the increase in interest rate. In the previous 1Q11, Adira’s margin has already started to decline. We believe this trend will continue to the end of 2011 with slightly higher NPL and higher debt portion that will result in only a slight increase in BDMN net profit of 2% yoy.
± Valuation: HOLD. Downgrade TP to Rp5,800
Following the above results, we decrease our FY11 upper and bottom line figures, resulted in lower TP of Rp5,800 (from Rp6,500 previously). Our TP implies 2.4x PBV FY11F, which is equivalent to BDMN’s 3 year historical PBV. Currently, the bank is traded at 2.2x PBV, or less than 10% potential upside. HOLD.
Corporate Flash Bank Central Asia - Bahana
Breakthrough
§ Effective June 2011, Jahja Setiaatmadja has officially become the President Director of Bank Central Asia (BBCA), replacing Djohan Emir Setijoso. Jahja previously served as Deputy President, having joined the bank in 1990. We believe that his extensive experience and knowledge would mean continued solid performance for BBCA.
§ In the past several analysts’ meetings, Jahja always pointed out the bank’s outstanding loan performance. Being a transactional banking, BBCA has greater flexibility to grow its credit ahead of the industry’s average in the past with the exception of 2006 (exhibit 6). Hence, we believe BBCA is likely to continue beefing up its loan portfolio, allowing us to raise BBCA’s loan growth assumption.
§ BBCA’s recent formal written agreement with Nahdatul Ulama (NU), the largest Islamic organization nationwide with around 70m members, is a breakthrough in our view. With BBCA as the “official” bank of NU, we believe this tie up will help enhance the bank’s medium to long-long term goals of achieving higher fee-based income as well as interest income.
Outlook
Supported by its highly competitive funding structure, BBCA has tremendous room to expand its loan across all segments. Its aggressive expansion in the consumer loans has positioned the bank as the largest non-subsidized mortgage provider with 12% market share. The Central Bank’s proposal to lower the risk weighted assets for mortgage to 35% from 40% (effective 2012) would undoubtedly help BBCA’s CAR, in addition to its plan to issue subordinated notes.
Recommendation and valuation
Despite the recent rally in BBCA’s share price, we believe its premium valuation remains warranted given solid fundamentals, high ROE of nearly 25% and unbeatable loan quality. Hence, we believe downside in the price is limited, particularly as we have upgraded our 2011-12 earnings expectations by 5.1% and 9.4% respectively on higher 2011-12 loan growth assumption of 21-20% from 18-16% previously. Using 2012 valuation, we have raised our target price to IDR9,700 (+24.3%), reflecting 4.8x implied 2012 P/BV. BUY.
§ Effective June 2011, Jahja Setiaatmadja has officially become the President Director of Bank Central Asia (BBCA), replacing Djohan Emir Setijoso. Jahja previously served as Deputy President, having joined the bank in 1990. We believe that his extensive experience and knowledge would mean continued solid performance for BBCA.
§ In the past several analysts’ meetings, Jahja always pointed out the bank’s outstanding loan performance. Being a transactional banking, BBCA has greater flexibility to grow its credit ahead of the industry’s average in the past with the exception of 2006 (exhibit 6). Hence, we believe BBCA is likely to continue beefing up its loan portfolio, allowing us to raise BBCA’s loan growth assumption.
§ BBCA’s recent formal written agreement with Nahdatul Ulama (NU), the largest Islamic organization nationwide with around 70m members, is a breakthrough in our view. With BBCA as the “official” bank of NU, we believe this tie up will help enhance the bank’s medium to long-long term goals of achieving higher fee-based income as well as interest income.
Outlook
Supported by its highly competitive funding structure, BBCA has tremendous room to expand its loan across all segments. Its aggressive expansion in the consumer loans has positioned the bank as the largest non-subsidized mortgage provider with 12% market share. The Central Bank’s proposal to lower the risk weighted assets for mortgage to 35% from 40% (effective 2012) would undoubtedly help BBCA’s CAR, in addition to its plan to issue subordinated notes.
Recommendation and valuation
Despite the recent rally in BBCA’s share price, we believe its premium valuation remains warranted given solid fundamentals, high ROE of nearly 25% and unbeatable loan quality. Hence, we believe downside in the price is limited, particularly as we have upgraded our 2011-12 earnings expectations by 5.1% and 9.4% respectively on higher 2011-12 loan growth assumption of 21-20% from 18-16% previously. Using 2012 valuation, we have raised our target price to IDR9,700 (+24.3%), reflecting 4.8x implied 2012 P/BV. BUY.
Corporate Result Flash Bank Bukopin - Bahana
2Q11 performance
§ BBKP reported 1H11 net profit of IDR337b (+50.8% y-y), above our and market consensus, accounting for 54% of our full-year and market estimates. Note that the strong 1H11 ROAE of 20.7% has not fully factored in the impact of the rights issue.
§ 2Q net profit increased 16.7% q-q to IDR181b, supported by strong loan growth, higher fee-based income and lower provisioning charges. NPL dipped from 3.7% at end 1Q11 to 3.0% at end 2Q11.
§ Loans grew 21.3% q-q to IDR32t in 2Q11, bringing ytd loan growth to 5.7%. This strong loan growth was driven by commercial and SME loans while loans to related-party Bulog, the state-owned logistics agency, only accounted for 9.4% of loan portfolio. This combined with low 1.2% q-q growth in deposits raised LDR to 72% in 2Q11 from 60% in 1Q11.
Outlook
Despite solid 2Q11 results, BBKP still has many challenges: 1) managing liquidity flow, 2) maintaining loan quality and 3) enhancing capital base. BBKP’s 2Q11 strong loan growth has pressured 2Q11 CAR to 14.8% from 16.7% in 1Q11 on higher risk weighted assets from non-Bulog SME and commercial loans. That said, issuance of subordinated notes to raise CAR is on the cards. On a positive note, apart from the current strategic partnerships with Taspen and Jamsostek pension funds, allowing for loan penetration, the bank is currently negotiating with ASABRI, the military insurance company.
Recommendation and valuation
Earlier loan growth recovery and improved NPLs have encouraged us to upgrade our 2011-12 earnings estimates by 11-12% respectively. In addition, we shift our valuation using 2012 book value resulting in higher target price of IDR920 (+18%), reflecting 2012 implied P/BV of 1.8x. With more than 15% upside, we upgrade our rating on BBKP from hold to BUY.
§ BBKP reported 1H11 net profit of IDR337b (+50.8% y-y), above our and market consensus, accounting for 54% of our full-year and market estimates. Note that the strong 1H11 ROAE of 20.7% has not fully factored in the impact of the rights issue.
§ 2Q net profit increased 16.7% q-q to IDR181b, supported by strong loan growth, higher fee-based income and lower provisioning charges. NPL dipped from 3.7% at end 1Q11 to 3.0% at end 2Q11.
§ Loans grew 21.3% q-q to IDR32t in 2Q11, bringing ytd loan growth to 5.7%. This strong loan growth was driven by commercial and SME loans while loans to related-party Bulog, the state-owned logistics agency, only accounted for 9.4% of loan portfolio. This combined with low 1.2% q-q growth in deposits raised LDR to 72% in 2Q11 from 60% in 1Q11.
Outlook
Despite solid 2Q11 results, BBKP still has many challenges: 1) managing liquidity flow, 2) maintaining loan quality and 3) enhancing capital base. BBKP’s 2Q11 strong loan growth has pressured 2Q11 CAR to 14.8% from 16.7% in 1Q11 on higher risk weighted assets from non-Bulog SME and commercial loans. That said, issuance of subordinated notes to raise CAR is on the cards. On a positive note, apart from the current strategic partnerships with Taspen and Jamsostek pension funds, allowing for loan penetration, the bank is currently negotiating with ASABRI, the military insurance company.
Recommendation and valuation
Earlier loan growth recovery and improved NPLs have encouraged us to upgrade our 2011-12 earnings estimates by 11-12% respectively. In addition, we shift our valuation using 2012 book value resulting in higher target price of IDR920 (+18%), reflecting 2012 implied P/BV of 1.8x. With more than 15% upside, we upgrade our rating on BBKP from hold to BUY.
Corporate Result Flash United Tractors - Bahana
2Q11 performance
§ On lower 2Q11 Komatsu sales of 2,126 units (-3.7% q-q), UNTR registered lower 2Q11 earnings of IDR1.2t (-4.2% q-q), bringing 1H11 net profit to IDR2.5t (+35% y-y), in line with our and consensus estimates.
§ UNTR’s 2Q11 operating profit fell 3.4% q-q to IDR1.6t, translating to 1H11 operating income of IDR3.3t (+26% y-y), still on track to meet our 2011 target of IDR6.7t (+28.9% y-y). On the margin front, while construction machinery unit booked lower 2Q11 margin of 14% (from 16% in 1Q11), less rainfalls helped Pama to register significant margin improvement to 13.1% from 9.6% in 1Q11. This provided some cushion on UNTR’s 2Q11 operating margin contraction to just 17% from 17.6% in 1Q11.
§ Higher 2Q11 overburden removal of 18.5% q-q to 198m bcm on Pama compensated lower income from construction machinery, resulting in slightly higher consolidated revenue of IDR13.0t, up 2.5% q-q. This brought 1H11 revenue to IDR25.6t (+41.7% y-y), in line with our and consensus forecasts.
Outlook
Given solid performance in 1H11 and outlook of improved volumes in the following quarters, UNTR is poised to register 2011 earnings growth of 30% y-y to IDR5.2t. We expect positive impact from the recent rights issue to unfold in 2012, allowing UNTR to secure sustainable growth through expansions in the coal-related units.
Recommendation and valuation
We are placing UNTR’s target price under review given just 2% upside potential. Additionally, we plan to revisit our 2012 earnings forecast and roll over our valuation into next year.
§ On lower 2Q11 Komatsu sales of 2,126 units (-3.7% q-q), UNTR registered lower 2Q11 earnings of IDR1.2t (-4.2% q-q), bringing 1H11 net profit to IDR2.5t (+35% y-y), in line with our and consensus estimates.
§ UNTR’s 2Q11 operating profit fell 3.4% q-q to IDR1.6t, translating to 1H11 operating income of IDR3.3t (+26% y-y), still on track to meet our 2011 target of IDR6.7t (+28.9% y-y). On the margin front, while construction machinery unit booked lower 2Q11 margin of 14% (from 16% in 1Q11), less rainfalls helped Pama to register significant margin improvement to 13.1% from 9.6% in 1Q11. This provided some cushion on UNTR’s 2Q11 operating margin contraction to just 17% from 17.6% in 1Q11.
§ Higher 2Q11 overburden removal of 18.5% q-q to 198m bcm on Pama compensated lower income from construction machinery, resulting in slightly higher consolidated revenue of IDR13.0t, up 2.5% q-q. This brought 1H11 revenue to IDR25.6t (+41.7% y-y), in line with our and consensus forecasts.
Outlook
Given solid performance in 1H11 and outlook of improved volumes in the following quarters, UNTR is poised to register 2011 earnings growth of 30% y-y to IDR5.2t. We expect positive impact from the recent rights issue to unfold in 2012, allowing UNTR to secure sustainable growth through expansions in the coal-related units.
Recommendation and valuation
We are placing UNTR’s target price under review given just 2% upside potential. Additionally, we plan to revisit our 2012 earnings forecast and roll over our valuation into next year.
Corporate Result Flash Jasa Marga - Bahana
2Q11 performance
§ JSMR reported solid 2Q11 net profit of IDR381b, up 11% y-y, bringing 1H11 earnings to IDR752b (+16% y-y), in line with our and consensus estimates, supported by steady traffic volume growth of 3.6% q-q to 268m vehicles.
§ Stable 2Q11 operating toll road expenses allowed for modest operating profit growth to IDR626b (+7% y-y), translating to 1H11 operating income of IDR1.2t, up 12% y-y, accounting for 53% of our and consensus forecasts.
§ On the top line, 2Q11 revenue reached IDR1.2t, up 10.4% y-y, partially supported by growth in non-toll revenue of 48% y-y, albeit from a low base. 1H11 sales reached nearly IDR2.4t, up 12.2% y-y, 48% of our full-year projection. This is in line given higher tariffs in 3Q11.
Outlook
We expect higher volumes in the following quarters coupled with tariff adjustment in September to bring JSMR earnings meeting our 2011 net profit estimate of IDR1.4t, up 16% y-y. It is worth noting that the full positive impact from the upcoming tariff adjustment or around 10% would occur in 2012, resulting in higher estimated earnings growth of 28% y-y next year.
Recommendation and valuation
With the current share price reaching close to our 2011 target price, we roll over our JSMR’s valuation to 2012, resulting in raised DCF-based target price of IDR4,800. We continue to like the company’s defensive nature, which would continue to benefit from automatic tariff adjustment schedule, stable volume growth on existing routes and developments of new projects. Reiterate BUY on 22% upside potential.
§ JSMR reported solid 2Q11 net profit of IDR381b, up 11% y-y, bringing 1H11 earnings to IDR752b (+16% y-y), in line with our and consensus estimates, supported by steady traffic volume growth of 3.6% q-q to 268m vehicles.
§ Stable 2Q11 operating toll road expenses allowed for modest operating profit growth to IDR626b (+7% y-y), translating to 1H11 operating income of IDR1.2t, up 12% y-y, accounting for 53% of our and consensus forecasts.
§ On the top line, 2Q11 revenue reached IDR1.2t, up 10.4% y-y, partially supported by growth in non-toll revenue of 48% y-y, albeit from a low base. 1H11 sales reached nearly IDR2.4t, up 12.2% y-y, 48% of our full-year projection. This is in line given higher tariffs in 3Q11.
Outlook
We expect higher volumes in the following quarters coupled with tariff adjustment in September to bring JSMR earnings meeting our 2011 net profit estimate of IDR1.4t, up 16% y-y. It is worth noting that the full positive impact from the upcoming tariff adjustment or around 10% would occur in 2012, resulting in higher estimated earnings growth of 28% y-y next year.
Recommendation and valuation
With the current share price reaching close to our 2011 target price, we roll over our JSMR’s valuation to 2012, resulting in raised DCF-based target price of IDR4,800. We continue to like the company’s defensive nature, which would continue to benefit from automatic tariff adjustment schedule, stable volume growth on existing routes and developments of new projects. Reiterate BUY on 22% upside potential.
Corporate Result Flash Summarecon Agung - Bahana
2Q11 performance
§ SMRA reported 2Q11 bottom line of IDR97b (+65% q-q and +93% y-y), inline with our and consensus estimates.
§ Strong 2Q11 top line of IDR539b (+35% q-q) coupled with lower growth in 2Q11 COGS and opex allowed 2Q11 operating profit to reach IDR140b (+67% q-q), translating to 26% operating margin in 2Q11, on track to reach our full-year 2011 estimate of 24%.
§ High 2Q11 bottom line resulted from improved operating performance has supported 1H11 net profit to reach IDR155b (+53% y-y), translating to 17% net margin, cushioning our 2011 net margin estimate of 15%.
Outlook
We expect improved quarterly results to persist in the subsequent quarters following revenue recognition from 2009-10 high marketing sales. On the back of higher products’ selling prices, we maintain our 2011-12 top line of IDR2.1t and IDR2.4t respectively. On the margin front, we expect 2011-12 operating margin improvements to 24% and 25% (from 22% in 2010), helped by greater efficiencies.
Recommendation and valuation
We think the company’s ability to create value on its existing 852ha land bank in three different areas and high recurring project contribution to EBIT should support the company’s performance going forward. With 15% upside potential to our TP of IDR1,450, we maintain our BUY recommendation on SMRA, which is currently our second top pick given its high EPS growth of 28.4% (sector: 5.3%) and high ROAE of 13.5% (sector: 9%). BUY.
§ SMRA reported 2Q11 bottom line of IDR97b (+65% q-q and +93% y-y), inline with our and consensus estimates.
§ Strong 2Q11 top line of IDR539b (+35% q-q) coupled with lower growth in 2Q11 COGS and opex allowed 2Q11 operating profit to reach IDR140b (+67% q-q), translating to 26% operating margin in 2Q11, on track to reach our full-year 2011 estimate of 24%.
§ High 2Q11 bottom line resulted from improved operating performance has supported 1H11 net profit to reach IDR155b (+53% y-y), translating to 17% net margin, cushioning our 2011 net margin estimate of 15%.
Outlook
We expect improved quarterly results to persist in the subsequent quarters following revenue recognition from 2009-10 high marketing sales. On the back of higher products’ selling prices, we maintain our 2011-12 top line of IDR2.1t and IDR2.4t respectively. On the margin front, we expect 2011-12 operating margin improvements to 24% and 25% (from 22% in 2010), helped by greater efficiencies.
Recommendation and valuation
We think the company’s ability to create value on its existing 852ha land bank in three different areas and high recurring project contribution to EBIT should support the company’s performance going forward. With 15% upside potential to our TP of IDR1,450, we maintain our BUY recommendation on SMRA, which is currently our second top pick given its high EPS growth of 28.4% (sector: 5.3%) and high ROAE of 13.5% (sector: 9%). BUY.
BBNI Lower provisioning - Samuel
Highlights:
BBNI membukukan laba bersih Rp2.7 triliun, naik 41% YoY terutama dikarenakan penurunan provisi. Laba bersih ini in line dengan estimasi kami karena mewakili 49% dari estimasi kami untuk FY11. Sementara itu, meskipun kredit naik 21%, net interest income hanya naik 5%, dikarenakan adanya penurunan penempatan pada Bank Indonesia dan bank lain sebesar 17% dan surat berharga 2%.
Comments:
Penurunan provisi terutama dikarenakan 1) membaiknya kualitas aset dan 2) penerapan PSAK 55. Penerapan PSAK 55 mengharuskan bank membentuk cadangan sebesar jumlah aset yang secara terbukti tidak mampu dibayar debitur. Hal ini berbeda dengan PSAK sebelumnya dimana dihitung berdasarkan tingkat kolektibilitas, sehingga bank dapat mencadangkan lebih besar dari potensi kerugian aset sebenarnya.
Kenaikan laba bersih juga didorong oleh penuruan cost to income menjadi 45% dari sebelumnya 48.5% terutama dikarenakan penurunan beban beban karyawan 12% YoY dan recovery loan Rp879 miliar. Tahun ini BBNI menargetkan recovery loan Rp2.2 triliun. Jumlah write off sendiri hingga Juni’11 telah mencapai Rp1.4 triliun.
NPL mengalami penurunan menjadi 4% dari 4.3% pada 1H10 dan trend NPL juga terus mengalami penurunan dari tahun ke tahun. Penurunan NPL pada 1H11, terutama disumbangkan dari segmen menengah dan komsumsi. Walaupun NPL turun, coverage ratio tetap dikisaran 120%, hal ini dikarenakan recovery loan tidak lagi dijadikan sebagai pengurang provisi di aset namun sebagai penambah pendapatan.
Action and recommendation:
Dalam laporan sebelumnya kami menuliskan kinerja 5M11 BBNI di bawah estimasi, dimana kinerja itu kami peroleh dari laporan Bank Indonesia (BI). Namun manajemen telah mengkomfirmasi adanya perbedaan pelaporan ke BI dan Bapepam, dan laporan ke Bapepam yang valid. Sehingga dengan kinerja 1H11 yang sesuai dengan estimasi kami, kami tetap mempertahankan proyeksi dan target harga kami pada level 4,500 atau pada PBV 2.6x dengan rekomendasi HOLD. Maintain Hold
BBNI membukukan laba bersih Rp2.7 triliun, naik 41% YoY terutama dikarenakan penurunan provisi. Laba bersih ini in line dengan estimasi kami karena mewakili 49% dari estimasi kami untuk FY11. Sementara itu, meskipun kredit naik 21%, net interest income hanya naik 5%, dikarenakan adanya penurunan penempatan pada Bank Indonesia dan bank lain sebesar 17% dan surat berharga 2%.
Comments:
Penurunan provisi terutama dikarenakan 1) membaiknya kualitas aset dan 2) penerapan PSAK 55. Penerapan PSAK 55 mengharuskan bank membentuk cadangan sebesar jumlah aset yang secara terbukti tidak mampu dibayar debitur. Hal ini berbeda dengan PSAK sebelumnya dimana dihitung berdasarkan tingkat kolektibilitas, sehingga bank dapat mencadangkan lebih besar dari potensi kerugian aset sebenarnya.
Kenaikan laba bersih juga didorong oleh penuruan cost to income menjadi 45% dari sebelumnya 48.5% terutama dikarenakan penurunan beban beban karyawan 12% YoY dan recovery loan Rp879 miliar. Tahun ini BBNI menargetkan recovery loan Rp2.2 triliun. Jumlah write off sendiri hingga Juni’11 telah mencapai Rp1.4 triliun.
NPL mengalami penurunan menjadi 4% dari 4.3% pada 1H10 dan trend NPL juga terus mengalami penurunan dari tahun ke tahun. Penurunan NPL pada 1H11, terutama disumbangkan dari segmen menengah dan komsumsi. Walaupun NPL turun, coverage ratio tetap dikisaran 120%, hal ini dikarenakan recovery loan tidak lagi dijadikan sebagai pengurang provisi di aset namun sebagai penambah pendapatan.
Action and recommendation:
Dalam laporan sebelumnya kami menuliskan kinerja 5M11 BBNI di bawah estimasi, dimana kinerja itu kami peroleh dari laporan Bank Indonesia (BI). Namun manajemen telah mengkomfirmasi adanya perbedaan pelaporan ke BI dan Bapepam, dan laporan ke Bapepam yang valid. Sehingga dengan kinerja 1H11 yang sesuai dengan estimasi kami, kami tetap mempertahankan proyeksi dan target harga kami pada level 4,500 atau pada PBV 2.6x dengan rekomendasi HOLD. Maintain Hold
Asian Daily: Indonesia - Unilever Indonesia. Maintain UNDERPERFORM - Credit Suisse
· Unilever Indonesia reported 1H11 results in line with our estimates, with 17% net profit growth YoY to Rp2.1 tn (47% of our FY11E), on the back of 16% revenue growth YoY to Rp11.5 tn (49% of our FY11E). Margins were relatively stable despite higher commodity prices, but a stronger Rupiah/US$ rate has helped.
· In 2Q11, revenues were only 2% higher QoQ (+17% YoY) and net profit was 7% higher QoQ (+34% YoY). Margins improved with gross margin at 51.9% (51.3% in 1Q11, 51% in 2Q10), and operating margin at 24.4% (23.6% in 1Q11, 21.1% in 2Q10).
· The company is in a net cash position with Rp1.9 tn in cash and no debt. It consistently has a 100% payout ratio which provides less than 4% dividend yield.
· Even though the stock has been underperforming the JCI, we maintain our UNDERPERFORM rating. Our DCF-based target price of Rp14,000 equates to 24.5x 2011E P/E (2012E: 21.4x) with 15% estimated earnings growth.
· In 2Q11, revenues were only 2% higher QoQ (+17% YoY) and net profit was 7% higher QoQ (+34% YoY). Margins improved with gross margin at 51.9% (51.3% in 1Q11, 51% in 2Q10), and operating margin at 24.4% (23.6% in 1Q11, 21.1% in 2Q10).
· The company is in a net cash position with Rp1.9 tn in cash and no debt. It consistently has a 100% payout ratio which provides less than 4% dividend yield.
· Even though the stock has been underperforming the JCI, we maintain our UNDERPERFORM rating. Our DCF-based target price of Rp14,000 equates to 24.5x 2011E P/E (2012E: 21.4x) with 15% estimated earnings growth.
Kamis, 28 Juli 2011
KIJA seeks US$310 million financing - Insider Stories
Property developer PT Jababeka Tbk (KIJA) is seeking US$310 million financing to underpin its business expansion and refinance debt this year.
Jababeka President Director Setyono Djuandi Darmono, as quoted by Bisnis Indonesia today, said the financing is consisting of US$160 million for land acquisition, US$110 million to develop infrastructure facilities in industrial estate, Cikarang, and US$40 million to refinance debt to CIMB Niaga.
"We are exploring options of bond issuance, rights issue, and combination of both," he said.
To develop infrastructure facilities, he said Jababeka needs financing to accomplish power plant of Bekasi Power and Cikarang Dry Port. The company is scouting 400 hectares of land acquisition.
Jababeka has officially mandated PT Danareksa Sekuritas as financial adviser for the actions, including rights issue.
Jababeka President Director Setyono Djuandi Darmono, as quoted by Bisnis Indonesia today, said the financing is consisting of US$160 million for land acquisition, US$110 million to develop infrastructure facilities in industrial estate, Cikarang, and US$40 million to refinance debt to CIMB Niaga.
"We are exploring options of bond issuance, rights issue, and combination of both," he said.
To develop infrastructure facilities, he said Jababeka needs financing to accomplish power plant of Bekasi Power and Cikarang Dry Port. The company is scouting 400 hectares of land acquisition.
Jababeka has officially mandated PT Danareksa Sekuritas as financial adviser for the actions, including rights issue.
Fitch revises Indosat outlook to positive - Insider Stories
Fitch Ratings has revised the outlook on Indonesia-based PT Indosat Tbk's (Indosat) long term local currency issuer default rating (IDR) to positive from stable.
Indosat's long-term foreign and local curreny IDRs have been affirmed at BBB- respectively. The outlook on the FC IDR is Stable. The agency has also affirmed Indosat's senior unsecured rating at BBB-. The outlook change reflects the improvement of Indosat's credit profile during FY10 and Fitch's expectations for the improvement to continue in FY11. During FY10 Indosat recorded a 5.2% and 9.7% y-o-y increase in its revenue and EBITDA, respectively, and improved its EBITDA margins by 200bps to 48.6%.
Net debt adjusted for lease equivalent debt fell to IDR27.3trn from Rp29.6 trillion during the same period, taking the company's leverage ratio (lease-adjusted net debt to funds flow from operations) lower to 2.4x from 3.3x.
Further deleveraging is likely, as for the first time in 2011 Fitch expects the company to cover capex requirements from its cash flow from operations.
The agency also expects Indosat will maintain its EBITDA margins for FY11 (excluding one-off costs related to its voluntary separation scheme) given management's focus on profitability and that competition in the wireless industry in Indonesia is likely to remain subdued for the rest of 2011.
Indosat's long-term foreign and local curreny IDRs have been affirmed at BBB- respectively. The outlook on the FC IDR is Stable. The agency has also affirmed Indosat's senior unsecured rating at BBB-. The outlook change reflects the improvement of Indosat's credit profile during FY10 and Fitch's expectations for the improvement to continue in FY11. During FY10 Indosat recorded a 5.2% and 9.7% y-o-y increase in its revenue and EBITDA, respectively, and improved its EBITDA margins by 200bps to 48.6%.
Net debt adjusted for lease equivalent debt fell to IDR27.3trn from Rp29.6 trillion during the same period, taking the company's leverage ratio (lease-adjusted net debt to funds flow from operations) lower to 2.4x from 3.3x.
Further deleveraging is likely, as for the first time in 2011 Fitch expects the company to cover capex requirements from its cash flow from operations.
The agency also expects Indosat will maintain its EBITDA margins for FY11 (excluding one-off costs related to its voluntary separation scheme) given management's focus on profitability and that competition in the wireless industry in Indonesia is likely to remain subdued for the rest of 2011.
Adaro Energy Optimis Produksi Batubara Sebanyak 46-48 Juta Ton
PT Adaro Energy Tbk (ADRO) optimis produksi batubara sebanyak 46-48 juta ton di akhir tahun 2011. Demikian diungkapkan Presiden Direktur Adaro Boy Garibal di Jakarta, Rabu (27/7).
Menurutnya, sampai paruh pertama tahun ini, produksi perseroan sudah setengah dari target. Pada semester satu ini cukup menggembirakan karena produksi ADRO jika dibandingkan tahun lalu meningkat cukup baik karena faktor cuaca yang mendukung.
Selama ini mayoritas batubara yang diproduksi perseroan dijual ke luar negeri alias ekspor. Hanya sebanyak 23-26 persen saja dari total produksi yang dijual di tanah air.
Menurutnya, sampai paruh pertama tahun ini, produksi perseroan sudah setengah dari target. Pada semester satu ini cukup menggembirakan karena produksi ADRO jika dibandingkan tahun lalu meningkat cukup baik karena faktor cuaca yang mendukung.
Selama ini mayoritas batubara yang diproduksi perseroan dijual ke luar negeri alias ekspor. Hanya sebanyak 23-26 persen saja dari total produksi yang dijual di tanah air.
United Tractors 1H net profit soars 34.6% - Insider Stories
PT United Tractors Tbk (UNTR) booked a 34.6% increase in net profit to Rp2.54 trillion for the first 6 months of this year from Rp1.89 trillion a year earlier.
The increase was a result of increased of commodity price and heavy equipment sales. United Tractors posted Rp25.62 trillion net revenue in 1H 2011, a 42% increase from Rp18.08 trillion in 1H 2010.
The increase in net revenue was contributed by the heavy equipment distribution business unit that contributed 51.0% to UNTR's consolidated revenue, PT Pamapersada Nusantara, the company’s subsidiary in mining contracting which contributed 38.3%.
The remaining of 10.6% came from the mining business unit which is run by PT Prima Multi Mineral (PPM/formerly called DEJ mines) and PT Tuah Turangga Agung.
The significant growth of net revenue was accompanied by growth of consolidated gross profit that grew 33% to reach Rp4.44 trillion from Rp3.34 trillion.
The favorable economic condition and increased commodity price have driven the market of heavy equipment to continue growing.
Operational performance
Until June 2011, Komatsu sales volume reached 4,333 units or up 59% compared the same period last year. Komatsu still succeeds to lead the domestic market with 51% market share (based on internal market research).
Out of the total Komatsu sales volume, the largest portion of sales went to mining sector, namely by 68%, followed by plantation which contributed 16%, then construction and forestry sectors by 10% and 6%, respectively.
Furthermore, revenue from spare parts sales and maintenance services showed a growth of 14% to Rp2.36 trillion from Rp2.07 trillion.
On the mining contracting business, better weather conditions allowed Pama to achieve 6% increase in coal production and 16% in overburden removal or from 37.7 million tons of coal and 314.7 million bcm overburden removal to 39.9 million tons and 364.9 million bcm.
On coal mining business, United Tractors recorded an increase in coal sales volume from 1.28 million tons to 2.20 million tons.
On 13 June 2011, the company has distributed the final dividend for the book year 2010, in total amount of Rp1.0 trillion, or Rp270 per share, while the interim dividend has been distributed on 12 November 2010 amounting to Rp160 per share.
The increase was a result of increased of commodity price and heavy equipment sales. United Tractors posted Rp25.62 trillion net revenue in 1H 2011, a 42% increase from Rp18.08 trillion in 1H 2010.
The increase in net revenue was contributed by the heavy equipment distribution business unit that contributed 51.0% to UNTR's consolidated revenue, PT Pamapersada Nusantara, the company’s subsidiary in mining contracting which contributed 38.3%.
The remaining of 10.6% came from the mining business unit which is run by PT Prima Multi Mineral (PPM/formerly called DEJ mines) and PT Tuah Turangga Agung.
The significant growth of net revenue was accompanied by growth of consolidated gross profit that grew 33% to reach Rp4.44 trillion from Rp3.34 trillion.
The favorable economic condition and increased commodity price have driven the market of heavy equipment to continue growing.
Operational performance
Until June 2011, Komatsu sales volume reached 4,333 units or up 59% compared the same period last year. Komatsu still succeeds to lead the domestic market with 51% market share (based on internal market research).
Out of the total Komatsu sales volume, the largest portion of sales went to mining sector, namely by 68%, followed by plantation which contributed 16%, then construction and forestry sectors by 10% and 6%, respectively.
Furthermore, revenue from spare parts sales and maintenance services showed a growth of 14% to Rp2.36 trillion from Rp2.07 trillion.
On the mining contracting business, better weather conditions allowed Pama to achieve 6% increase in coal production and 16% in overburden removal or from 37.7 million tons of coal and 314.7 million bcm overburden removal to 39.9 million tons and 364.9 million bcm.
On coal mining business, United Tractors recorded an increase in coal sales volume from 1.28 million tons to 2.20 million tons.
On 13 June 2011, the company has distributed the final dividend for the book year 2010, in total amount of Rp1.0 trillion, or Rp270 per share, while the interim dividend has been distributed on 12 November 2010 amounting to Rp160 per share.
Mitra Adiperkasa 1H net income up 58% - Insider Stories
A retail company PT Mitra Adiperkasa Tbk posted a 58% increase in net income in the first half of this year (1H 2011) as revenues strengthened.
Mitra Adiperkasa’s net income for the period ended June 30 gained to Rp157.15 billion (US$18.52 million), or Rp95 a share, from Rp99.75 billion, or Rp60 a share, a year earlier. Sales revenue rose 23.78% to Rp2.66 trillion.
Its operating income grew 42% to Rp264.5 billion.
"Our excellent results underscore the strength of Mitra Adiperkasa's business model and brand portfolio as well as the strong purchasing power of our core customers - the middle to upper income group. With strong fundamentals and a solid business strategy that focuses on our core business and consumers, we are well positioned for new business opportunities and growth," said Corporate Secretary Fetty Kwartati in a statement published today.
In the first half of 2011, the company operated a total of 931 stores in 27 major cities in Indonesia. New retail concepts launched in the first half of 2011 include BCBG Maxazria, Stradivarius, Bershka, Travelogue, Max & Co, H.E. by Mango, Pandora and Payless. The company allocated IDR350 billion to fund its capital expenditure, mostly to open new stores throughout Indonesia.
The MAPI-coded stock gained 1.74% or Rp75 to Rp4,375 in Jakarta trading as of 3.37 p.m.
Mitra Adiperkasa’s net income for the period ended June 30 gained to Rp157.15 billion (US$18.52 million), or Rp95 a share, from Rp99.75 billion, or Rp60 a share, a year earlier. Sales revenue rose 23.78% to Rp2.66 trillion.
Its operating income grew 42% to Rp264.5 billion.
"Our excellent results underscore the strength of Mitra Adiperkasa's business model and brand portfolio as well as the strong purchasing power of our core customers - the middle to upper income group. With strong fundamentals and a solid business strategy that focuses on our core business and consumers, we are well positioned for new business opportunities and growth," said Corporate Secretary Fetty Kwartati in a statement published today.
In the first half of 2011, the company operated a total of 931 stores in 27 major cities in Indonesia. New retail concepts launched in the first half of 2011 include BCBG Maxazria, Stradivarius, Bershka, Travelogue, Max & Co, H.E. by Mango, Pandora and Payless. The company allocated IDR350 billion to fund its capital expenditure, mostly to open new stores throughout Indonesia.
The MAPI-coded stock gained 1.74% or Rp75 to Rp4,375 in Jakarta trading as of 3.37 p.m.
Tingkatkan Kinerja PTPP Akuisisi Saham Gitanusa Sarana Niaga
PT PP Tbk (PTPP) mengakuisisi saham PT Gitanusa Sarana Niaga (GSN) dari pemegang sahamnya langsung, untuk meningkatkan kinerjanya di bidang properti. Demikian diungkapkan Direktur PTPP Tumiyana dalam keterbukaan informasi di Bursa Efek Indonesia (BEI) Rabu (27/7).
Disebutkan juga perseroan melakukan pembelian saham langsung dari pemegang saham GSN dan telah mendapat pengesahan dari menteri hukum dan hak asazi manusia tanggal 25 Juli.
Total harga pembelian saham tersebut adalah sebesar 0,000079 persen dari ekuitas perseroan di tahun 2010. Karenanya, transaksi tersebut bukanlah transaksi material sebagaimana dimaksud dalam peraturan Bapepam.
Disebutkan juga perseroan melakukan pembelian saham langsung dari pemegang saham GSN dan telah mendapat pengesahan dari menteri hukum dan hak asazi manusia tanggal 25 Juli.
Total harga pembelian saham tersebut adalah sebesar 0,000079 persen dari ekuitas perseroan di tahun 2010. Karenanya, transaksi tersebut bukanlah transaksi material sebagaimana dimaksud dalam peraturan Bapepam.
Jul11 CPI inflation and Jun11 trade preview - Mandiri
The Statistics Agency will announce Indonesia Jul11 CPI inflation on Monday (1/8). We expect consumer price to increase 0.88% during the month, which will bring the year-on-year level to slide to 4.82% yoy, thanks to high base effect. Our forecast is higher than consensus figure that expects 0.80% mom and 4.70% yoy in the corresponding month. Surge in food prices and school fees during the beginning of new school year will push inflation higher this month. In addition, the agency will also announce June’s trade data as well. We expect exports and imports may have grown by 44.3% yoy and 34.3% yoy, respectively.
PTBA:Boosted by export - Mandiri
PTBA produced 6.2Mt of coal in 1H11 or represent only 41.3% from its internal FY11 production guidance of 15Mt. Its coal railway delivery was 41.5% of total 13.6Mt planned in FY11. Strong earnings in 2Q11 was mostly driven by export coal selling price that reached a record high of US$103/ton in 2Q11 (+20%qoq) or US$98.8/ton in 1H11 (+62%yoy). Upbeat on coal price outlook, supported by Japan coal contract repricing in April following tsunami disaster, and robust seaborne coal demand lead us to upgrade our coal benchmark to US$120/ton onwards from previously US$115/ton. Rolling valuation into 2012 also lead us to upgrade our TP from Rp23,950/share previously to Rp27,000/share implying 13.0x PER12F and 28.3% upside. Assigning 50% probability to the new railway project could add DCF-NAV by Rp3,800/share, but we leave it as an upside potential until we get more certainty on the execution. Upgraded to Buy.
Strong earnings growth in 2Q11. PTBA posted 1H11 revenue of Rp5,119bn (+34.9%yoy, +21.1% qoq) followed by net profit of Rp1,611bn (+77.4%yoy, +11.9%qoq) in line with our expectation. Mostly was driven by strong export selling price where export revenue jumped 50% yoy (+40%qoq) vs domestic of 27%yoy (+10%qoq). Lower operating margin in 2Q11 is expected following higher salaries due to bonus payment, higher trading activities and higher fuel price.
Delay on new locomotives deliveries. Company has indicated delay on the arrival of new locomotives and trains which is now expected to arrive in mid September 2011 from previously in August 2011. This will give a stronger downside risk indication on its volume target. However, we have anticipated this issue and took more conservative FY11 target of 14Mt, 10% lower than the company’s target. But delivery risk remains since it is beyond PTBA’s control.
Minor earning forecast changes. Despite higher coal benchmark, we only expect higher increase in ASP for its coal export than domestic, which have lower portion of total sales volume. The rupiah’s appreciation factor and higher fuel cost partially offset the earnings upgrade. We only increased our FY11F-12F net profit by 0.6%% and 7.8% to Rp3,439bn and Rp4,865bn respectively.
Strong upside, upgrade Buy. Rajawali has a crucial role to help PTBA unlocking its hidden gem. We believe partnership with Rajawali Group would augur the new railway project (please see our meeting key takeaways with Mr Rudiantara on page 2).. However, being conservative, we leave it as upside potential. Rolling into 2012 valuation, PTBA trades attractively at 10.0x PER12F. Our new target price is based on Blended valuation method combining DCF, P/E and EV/EBITDA multiples.
Strong earnings growth in 2Q11. PTBA posted 1H11 revenue of Rp5,119bn (+34.9%yoy, +21.1% qoq) followed by net profit of Rp1,611bn (+77.4%yoy, +11.9%qoq) in line with our expectation. Mostly was driven by strong export selling price where export revenue jumped 50% yoy (+40%qoq) vs domestic of 27%yoy (+10%qoq). Lower operating margin in 2Q11 is expected following higher salaries due to bonus payment, higher trading activities and higher fuel price.
Delay on new locomotives deliveries. Company has indicated delay on the arrival of new locomotives and trains which is now expected to arrive in mid September 2011 from previously in August 2011. This will give a stronger downside risk indication on its volume target. However, we have anticipated this issue and took more conservative FY11 target of 14Mt, 10% lower than the company’s target. But delivery risk remains since it is beyond PTBA’s control.
Minor earning forecast changes. Despite higher coal benchmark, we only expect higher increase in ASP for its coal export than domestic, which have lower portion of total sales volume. The rupiah’s appreciation factor and higher fuel cost partially offset the earnings upgrade. We only increased our FY11F-12F net profit by 0.6%% and 7.8% to Rp3,439bn and Rp4,865bn respectively.
Strong upside, upgrade Buy. Rajawali has a crucial role to help PTBA unlocking its hidden gem. We believe partnership with Rajawali Group would augur the new railway project (please see our meeting key takeaways with Mr Rudiantara on page 2).. However, being conservative, we leave it as upside potential. Rolling into 2012 valuation, PTBA trades attractively at 10.0x PER12F. Our new target price is based on Blended valuation method combining DCF, P/E and EV/EBITDA multiples.
ENRG:New powerful ally, new value creation - Mandiri
Inpex Corp has finally decided to sell 30% stake in the gas-rich Masela project to Shell. Although we have foreseen this would happen, we do not expect this to happen soon. Latest data showed that average acquisition price for upstream M&A was around US$1.0-2.0/boe, which is higher than the acquisition price of Masela by Energi Mega Persada (ENRG) US$0.3/boe. The inclusion of Shell in the project will not only improve project feasibility (i.e., Shell has strong financial capacity and upstream expertise), but also elevate ENRG’s value in Masela. Assuming acquisition price of US$1-2/boe and ENRG’s Masela acquisition price of Rp23.5/share, we estimate an upside in ENRG value by Rp73-147/share. Using the mid-price of US$1.5/boe, we arrived at our new TP of Rp360/share. Valuation wise ENRG is still attractive at EV/2P US$2.8/boe.
Inpex to sell Masela at premium. Advancing upstream M&A activities can be seen with Inpex Corp. recently announcing the intention to sell a 30% stake in Masela to global upstream giant Royal Dutch Shell. This step is sensible in our view given that Inpex would not bear development risks and costs by itself. The incorporation of Shell in Masela will be beneficial as Shell’s strong financial capacity and upstream expertise may bring great assistance to the project development and lessen the risk of potential delay in the project execution.
Potential value upside to ENRG. Not only good for the project itself, Shell inclusion is also beneficial for contract holders’ value. We then see a potential upside in ENRG value from the corporate action. Assuming acquisition price of US$1-2/boe, we estimate a potential price upside to ENRG’s price by Rp73-147/share or resulting in rounded target price range of Rp325-400/share from current price. We assume acquisition price per share of Rp23.5/share (at exchange rate of Rp9,530).
10% left for regional government. Inpex is must farm out another 10% stake to the Maluku regional government. As we believe that budget for M&A at regional government is limited, a joint-venture with local company is very likely. This might be a good opportunity for ENRG to increase its indirect stakes at Masela by participating in the JV. We estimate that the acquisition price by regional government will be below Shell’s acquisition price. Assuming acquisition price of between US$0.7-1/boe, then ENRG might need to raise US$110-155mn of fund to have a 50% participation in this JV.
Further price upgrade to Rp360/share. Overall, we highly value this plan as this add the value of the Masela project. Consequently, we upgraded our TP for ENRG to Rp355/share based on Masela’s acquisition price of US$1.5/boe (mid range of US$1-2/boe).
Inpex to sell Masela at premium. Advancing upstream M&A activities can be seen with Inpex Corp. recently announcing the intention to sell a 30% stake in Masela to global upstream giant Royal Dutch Shell. This step is sensible in our view given that Inpex would not bear development risks and costs by itself. The incorporation of Shell in Masela will be beneficial as Shell’s strong financial capacity and upstream expertise may bring great assistance to the project development and lessen the risk of potential delay in the project execution.
Potential value upside to ENRG. Not only good for the project itself, Shell inclusion is also beneficial for contract holders’ value. We then see a potential upside in ENRG value from the corporate action. Assuming acquisition price of US$1-2/boe, we estimate a potential price upside to ENRG’s price by Rp73-147/share or resulting in rounded target price range of Rp325-400/share from current price. We assume acquisition price per share of Rp23.5/share (at exchange rate of Rp9,530).
10% left for regional government. Inpex is must farm out another 10% stake to the Maluku regional government. As we believe that budget for M&A at regional government is limited, a joint-venture with local company is very likely. This might be a good opportunity for ENRG to increase its indirect stakes at Masela by participating in the JV. We estimate that the acquisition price by regional government will be below Shell’s acquisition price. Assuming acquisition price of between US$0.7-1/boe, then ENRG might need to raise US$110-155mn of fund to have a 50% participation in this JV.
Further price upgrade to Rp360/share. Overall, we highly value this plan as this add the value of the Masela project. Consequently, we upgraded our TP for ENRG to Rp355/share based on Masela’s acquisition price of US$1.5/boe (mid range of US$1-2/boe).
Mitra Adiperkasa (MAPI IJ) in line by Merlissa Trisno - CLSA
MAPI has continued to deliver strong sales growth in 1H11. Sales grew by 24% YoY on the back of 12% SSSG, forming 47-48% of ours and consensus FY forecast – generally in line with company’s historical average. Its specialty stores registered the highest SSSG of 13%, followed by department stores and F&B of 12-6% respectively.
Interestingly, EBIT hit Rp264b in 1H11, +42% YoY or more than 2-folds on quarterly basis due to its operating leverage. This is making up 46-49% of ours and consensus FY forecasts or above expectation as it made up only 41% of total FY operating profit historically. Net profit also up by 58% YoY, representing 49-51% of our and consensus FY forecast.
MAPI remains our top pick in the retail space. Deleveraging balance sheet, improving inventory turnover, and strong growth driven by rising income in the middle class are the key themes for the stock. MAPI is now trading at 17x 12CL PE, yet still attractively trades at 0.4x PEG versus average consumer peers of 1x.
Interestingly, EBIT hit Rp264b in 1H11, +42% YoY or more than 2-folds on quarterly basis due to its operating leverage. This is making up 46-49% of ours and consensus FY forecasts or above expectation as it made up only 41% of total FY operating profit historically. Net profit also up by 58% YoY, representing 49-51% of our and consensus FY forecast.
MAPI remains our top pick in the retail space. Deleveraging balance sheet, improving inventory turnover, and strong growth driven by rising income in the middle class are the key themes for the stock. MAPI is now trading at 17x 12CL PE, yet still attractively trades at 0.4x PEG versus average consumer peers of 1x.
Unilever Indonesia (UNVR IJ) in line by Merlissa Trisno - CLSA
Unilever’s sales, EBIT, and bottom line up by 16-17% YoY, forming 51-55% of our and consensus expectation. In line result, we think, as historically its operating profit represented about 50-55% of its FY number. Its home care grew by ~12% YoY, while foods and personal care increased by ~8-13% YoY respectively. This is largely driven by ASP increase as Unilever has increased their ASP by ~7-8% in 1Q11 and another 4% for soap bar product in 2Q11.
Operating margins stayed flat at 24% both on yearly and quarterly basis, as their ad spending largely offset the Rupiah appreciation. We forecast 23% EBIT margin for 2011CL as we believe that they need to incur more ad spend in 2H11.
The company is now trading at 27x P/E12CL or 50% above consumer average. Maintain Sell.
Operating margins stayed flat at 24% both on yearly and quarterly basis, as their ad spending largely offset the Rupiah appreciation. We forecast 23% EBIT margin for 2011CL as we believe that they need to incur more ad spend in 2H11.
The company is now trading at 27x P/E12CL or 50% above consumer average. Maintain Sell.
Property still going strong - CLSA
"We like investments where the risk is time, not price"
- Richard Chandler -
In an interview with Institutional Investors magazine in 2006, the reclusive legendary Chandler brothers, founders of Sovereign Global Investment reveal their strategies that built a US$5bn+ (back then) fortune (from US$10mn family fortune) in just two decades. Their key competitive advantage is their ability to take a very long term view of "risky" markets.
Indonesian property stocks have been a big laggard but that has not been the case for physical property (still considered risky by many) as land prices have moved up a lot in the last 12-24 months. We have flagged this latest trend numerous times in the past but here are a couple of latest anecdotes:
Bekasi, east of Jakarta, a personal experience. Land prices here have gone up by at least 40% YTD. One of our colleagues, after months of watching prices move up, finally closed the transaction – but 40% more expensive when first offered in the market. Our co-worker made the decision after learning that an independent appraiser confirmed the value of the house - BCA mortgage is the most conservative when appraising.
Cipete, south of Jakarta, an expat favorite. Green and lushes Cipete has long been a favorite amongst expatriates. Only three months ago, land prices here were around US$700-800 psm. That has now gone up to US$900-1000 psm.
Senayan, central Jakarta. My friend’s house in Senayan Residence cost Rp 3 billion two years ago. Market price of the house is now worth at least Rp 8 billion ($944,000).
It’s not often that fundamentals improve ahead of being priced in equities. Property stocks have started to re-rate only very recently. We believe that property is a secular story still has a long way to go. With a stronger currency, growing middle class, lower cost of funding, and very low mortgage to GDP (CIMB Niaga just took it one notch up as the bank is offering 10 years fixed rate, 10% down payment with 20 years tenor - by far the most aggressive mortgage product out there) - all stars are now aligned for continued strong operational performance.
So what are the plays? We like property developers with large landbanks acquired long time ago (assets not revalued per annum as there’s a capital gain tax). This is because as land prices continue to soar, the margins will continue to expand.
Bumi Serpong (BSDE IJ) is a nice example – It has the largest quality landbank in the western area of Jakarta – and seen its gross margins expanding to almost 50% (from 25% just a few years ago). This means that developers with large landbanks have a lot of leverage to NAV appreciation.
BUY developers with large landbanks: Bumi Serpong (BSDE IJ), Ciputra Surya (CTRS IJ), Bakrieland (ELTY IJ) and Lippo Cikarang (LPCK IJ).
- Richard Chandler -
In an interview with Institutional Investors magazine in 2006, the reclusive legendary Chandler brothers, founders of Sovereign Global Investment reveal their strategies that built a US$5bn+ (back then) fortune (from US$10mn family fortune) in just two decades. Their key competitive advantage is their ability to take a very long term view of "risky" markets.
Indonesian property stocks have been a big laggard but that has not been the case for physical property (still considered risky by many) as land prices have moved up a lot in the last 12-24 months. We have flagged this latest trend numerous times in the past but here are a couple of latest anecdotes:
Bekasi, east of Jakarta, a personal experience. Land prices here have gone up by at least 40% YTD. One of our colleagues, after months of watching prices move up, finally closed the transaction – but 40% more expensive when first offered in the market. Our co-worker made the decision after learning that an independent appraiser confirmed the value of the house - BCA mortgage is the most conservative when appraising.
Cipete, south of Jakarta, an expat favorite. Green and lushes Cipete has long been a favorite amongst expatriates. Only three months ago, land prices here were around US$700-800 psm. That has now gone up to US$900-1000 psm.
Senayan, central Jakarta. My friend’s house in Senayan Residence cost Rp 3 billion two years ago. Market price of the house is now worth at least Rp 8 billion ($944,000).
It’s not often that fundamentals improve ahead of being priced in equities. Property stocks have started to re-rate only very recently. We believe that property is a secular story still has a long way to go. With a stronger currency, growing middle class, lower cost of funding, and very low mortgage to GDP (CIMB Niaga just took it one notch up as the bank is offering 10 years fixed rate, 10% down payment with 20 years tenor - by far the most aggressive mortgage product out there) - all stars are now aligned for continued strong operational performance.
So what are the plays? We like property developers with large landbanks acquired long time ago (assets not revalued per annum as there’s a capital gain tax). This is because as land prices continue to soar, the margins will continue to expand.
Bumi Serpong (BSDE IJ) is a nice example – It has the largest quality landbank in the western area of Jakarta – and seen its gross margins expanding to almost 50% (from 25% just a few years ago). This means that developers with large landbanks have a lot of leverage to NAV appreciation.
BUY developers with large landbanks: Bumi Serpong (BSDE IJ), Ciputra Surya (CTRS IJ), Bakrieland (ELTY IJ) and Lippo Cikarang (LPCK IJ).
Indika (INDY IJ) - CLSA
Jayden re-initiates his coverage on Indika (INDY IJ) with an Underperform call and TP of Rp4,000. Jayden is using SOTP valuation with 20% discount to NAV, reflecting the conglomerate structure of the group.
The stock has been an underperformer during 1H11, due to earnings disappointments (one offs at oil and gas contractor Tripatra). The division remains a perennial risk of lumpy earnings and cost impacts, very hard to forecast.
Relisting mining contractor Petrosea (PTRO IJ) will lead to one off after tax gain of US$53mn in 1Q12. Normalising for the one off gain for relisting PTRO, the stock is actually not that cheap at adjusted PER of 10.9x.
Sales desk thinks that the long term picture is good. Challenge will be integrating the pieces together (PTRO, coal logistic company MBSS, and Cirebon power plant), but once that’s done it could be a powerful combination. INDY is acquiring good assets at reasonable prices. The group is working very hard and we like the diligent approach that the group takes.
Key points from the report:
INDY acquired PTRO in July 2009. INDY must increase the free-float of the company by a minimum 16.6%. This will create a one off US$53m windfall to earnings during 1Q12CL. But we believe the relisting of PTRO is already priced in by the market.
INDY this year acquired 51% of coal logistics company MBSS (MBSS IJ) during 2Q11 for Rp1.46t (US$170m). Integrating the various divisions will take time.
It has awarded a coal mining contract from 46% owned coal miner Kideco to contractor Petrosea (PTRO IJ). INDY expects completion of its Cirebon Electric power plant in 1Q12.
660MW Cirebon Independent Power station will be completed in 1Q12 to offtake coal production.
Our 8% 3 year production Cagr is below other major peers targeting 12% to 13% production growth. INDY is investing the dividends from Kideco into PTRO and MBSS to support earnings growth in these divisions.
Valuation: normalizing for the one off gain for relisting PTRO, our valuation of 10.9x 12CL PE, is in line with prior years, and offers only 4% upside.
The stock has been an underperformer during 1H11, due to earnings disappointments (one offs at oil and gas contractor Tripatra). The division remains a perennial risk of lumpy earnings and cost impacts, very hard to forecast.
Relisting mining contractor Petrosea (PTRO IJ) will lead to one off after tax gain of US$53mn in 1Q12. Normalising for the one off gain for relisting PTRO, the stock is actually not that cheap at adjusted PER of 10.9x.
Sales desk thinks that the long term picture is good. Challenge will be integrating the pieces together (PTRO, coal logistic company MBSS, and Cirebon power plant), but once that’s done it could be a powerful combination. INDY is acquiring good assets at reasonable prices. The group is working very hard and we like the diligent approach that the group takes.
Key points from the report:
INDY acquired PTRO in July 2009. INDY must increase the free-float of the company by a minimum 16.6%. This will create a one off US$53m windfall to earnings during 1Q12CL. But we believe the relisting of PTRO is already priced in by the market.
INDY this year acquired 51% of coal logistics company MBSS (MBSS IJ) during 2Q11 for Rp1.46t (US$170m). Integrating the various divisions will take time.
It has awarded a coal mining contract from 46% owned coal miner Kideco to contractor Petrosea (PTRO IJ). INDY expects completion of its Cirebon Electric power plant in 1Q12.
660MW Cirebon Independent Power station will be completed in 1Q12 to offtake coal production.
Our 8% 3 year production Cagr is below other major peers targeting 12% to 13% production growth. INDY is investing the dividends from Kideco into PTRO and MBSS to support earnings growth in these divisions.
Valuation: normalizing for the one off gain for relisting PTRO, our valuation of 10.9x 12CL PE, is in line with prior years, and offers only 4% upside.
ASIAN TELECOM SECTOR: ADDING TELKOM with INDOSAT as Top Buy, ADDING BTEL as Top Sell - Credit Suisse
In Asian Telecom Sector, Colin is overweight Indonesian Telecom, which has laggard both Indonesia market and Asian Telecom (especially China and India ). Colin is recommending Buy ISAT/EXCL and trading Buy TLKM (share buy-back has started despite only less than 10% being spent of US$600m budget). Cellulars Operators are currently trading at half EV/EBITDA than Towers Operators therefore ISAT will be expected to divest its towers as unlocking its tower hidden value.
· Colin McCallum, CA (Daily attached): We are removing Idea from our top five regional telco picks after its strong run of performance relative to the sector. In its place we add more Indonesian exposure, in the form of PT Telkom. The share buyback programme has only just begun and we expect a return to QoQ cellular revenue growth in 2Q11.
· We retain Indosat as a top outperform call, and we also retain Axiata, which offers some Indonesian exposure through its subsidiary XL, as well as indirect exposure to Idea.
· We have removed SmarTone from our top UNDERPERFORM calls, and in its place inserted Bakrie Telecom, which we believe has more pressing fundamental issues, despite its strong management team. We retain both True Corp and TM as top UNDERPERFORM calls.
· Colin McCallum, CA (Daily attached): We are removing Idea from our top five regional telco picks after its strong run of performance relative to the sector. In its place we add more Indonesian exposure, in the form of PT Telkom. The share buyback programme has only just begun and we expect a return to QoQ cellular revenue growth in 2Q11.
· We retain Indosat as a top outperform call, and we also retain Axiata, which offers some Indonesian exposure through its subsidiary XL, as well as indirect exposure to Idea.
· We have removed SmarTone from our top UNDERPERFORM calls, and in its place inserted Bakrie Telecom, which we believe has more pressing fundamental issues, despite its strong management team. We retain both True Corp and TM as top UNDERPERFORM calls.
SARANA MENARA (TOWR): In-line strong 2Q EBITDA (+20% YoY) – reit Buy on both organic & inorganic - Credit Suisse
Both TOWR and TBIG (@Rp2,350 on 13.8x-10.5x 2011F-12F EV/EBITDA & implied 16% Upside to DCF Rp2,725, Neutral; please see attached previous Daily) are competing to bid for ISAT’s towers. At Rp11,000, TOWR is trading on 11.9x-9.8x 2011F-12F EV/EBITDA and implied 32% Upside to DCF Rp14,500, therefore we reiterate Buy TOWR!
· Colin McCallum, CA (Daily attached): TOWR’s revenue grew by 9.3% QoQ and 19.2% YoY in 2Q11, driven by the addition of 375 new towers. Operational gearing continued to work in TOWR’s favour, with EBITDA margins remaining flat QoQ at 83.5%, but rising from 2Q10’s 82.8% level. Rising EBITDA, together with lower net interest costs, resulted in net profit before forex growing by an impressive 40.3% QoQ to Rp73 bn, and more than tripling YoY. TOWR’s net debt to annualised EBITDA ratio also fell from 3.6x in 1Q11 to only 3.1x in 2Q11.
· The core business model is that the tenancy ratio on newly constructed towers should rise over time. We believe that there are strong drivers in this direction, given ongoing growth in voice, SMS and particularly data traffic volumes in Indonesia . Furthermore, government regulations actively encourage shared tenancy of towers and support independent tower operators. We forecast that tenancy will reach 2.55x by FY20, and our DFC based target price remains Rp14,500. Maintain OUTPERFORM.
· Colin McCallum, CA (Daily attached): TOWR’s revenue grew by 9.3% QoQ and 19.2% YoY in 2Q11, driven by the addition of 375 new towers. Operational gearing continued to work in TOWR’s favour, with EBITDA margins remaining flat QoQ at 83.5%, but rising from 2Q10’s 82.8% level. Rising EBITDA, together with lower net interest costs, resulted in net profit before forex growing by an impressive 40.3% QoQ to Rp73 bn, and more than tripling YoY. TOWR’s net debt to annualised EBITDA ratio also fell from 3.6x in 1Q11 to only 3.1x in 2Q11.
· The core business model is that the tenancy ratio on newly constructed towers should rise over time. We believe that there are strong drivers in this direction, given ongoing growth in voice, SMS and particularly data traffic volumes in Indonesia . Furthermore, government regulations actively encourage shared tenancy of towers and support independent tower operators. We forecast that tenancy will reach 2.55x by FY20, and our DFC based target price remains Rp14,500. Maintain OUTPERFORM.
Tambang Batubara Bukit Asam - 1H11 results are strong and in-line - JP Morgan
· 1H11 results are strong and in-line: PTBA reported 1H11 net income of Rp1,611bn, up 77% from Rp908bn in 1H10. Historically, the 1H contributes about 48% of the full year profit; the reported 1H11E net income is in-line with both JPM’s (46%) and consensus’ (45%) FY11E full year forecasts of Rp3,518 bn and Rp3,560 bn respectively. In summary, 1H11 results are strong as operating profit and net income grew by 89% and 77% Y/Y respectively.
· Driven by pricing; while volumes were flat: The strong result in 1H11 and 2Q11 was driven by ASP rather than volume. Sales volume was flat; up 1.5% in 1H11 and up a mere 7% in 2Q11. ASP however rose by 33% in 1H11, from Rp587,500/ton in 1H10 to Rp781,200 in 1H11. In 2Q11, it rose by 30%: from Rp619,600/ton in 2Q10 to Rp807,600 in 2Q11. In addition, ASP rose by 7.5% Q/Q driven by strong realized price in exports: up strongly from US$88/ton in 1Q11 to US$99 in 1H11; implying that average export ASP is US$108/ton in 2Q11.
· FY11E should be a strong year: Going forward, we believe that the strong performance should persist into 2H11 on the back of strong realized ASP from both export and domestic markets. For FY11E, we forecast that operating profit and net income will grow by 111% and 75% Y/Y. The forecast net income of Rp3.5 trillion represents the highest NI that PTBA has ever earned. In addition, we expect further progress in the expansion of the existing railway (which has started) and land acquisition for the Transpacific railway will be strong catalysts for the stock.
Maintain OW and June-12 PT of Rp31,000: Given the potential strong performance in 2H11, we continue to like PTBA and maintain our OW rating and June-12 PT of Rp31,000 on the stock. The risks to our view and PT areinclude execution risk and project delays.
· Driven by pricing; while volumes were flat: The strong result in 1H11 and 2Q11 was driven by ASP rather than volume. Sales volume was flat; up 1.5% in 1H11 and up a mere 7% in 2Q11. ASP however rose by 33% in 1H11, from Rp587,500/ton in 1H10 to Rp781,200 in 1H11. In 2Q11, it rose by 30%: from Rp619,600/ton in 2Q10 to Rp807,600 in 2Q11. In addition, ASP rose by 7.5% Q/Q driven by strong realized price in exports: up strongly from US$88/ton in 1Q11 to US$99 in 1H11; implying that average export ASP is US$108/ton in 2Q11.
· FY11E should be a strong year: Going forward, we believe that the strong performance should persist into 2H11 on the back of strong realized ASP from both export and domestic markets. For FY11E, we forecast that operating profit and net income will grow by 111% and 75% Y/Y. The forecast net income of Rp3.5 trillion represents the highest NI that PTBA has ever earned. In addition, we expect further progress in the expansion of the existing railway (which has started) and land acquisition for the Transpacific railway will be strong catalysts for the stock.
Maintain OW and June-12 PT of Rp31,000: Given the potential strong performance in 2H11, we continue to like PTBA and maintain our OW rating and June-12 PT of Rp31,000 on the stock. The risks to our view and PT areinclude execution risk and project delays.
Astra Agro Lestari - 2Q11/1H11 in a Snapshot - Citigroup
Higher volumes and prices key earnings driver in 1H11 — The combination of higher CPO prices (+22% YoY to Rp8,013/kg) and higher CPO sales volumes (+19%
YoY to 567k tons) led to the 51% surge in revenues to Rp5,297bn (50% of CIRA
FY11E and 51% of Consensus). The strong revenue performance helped cushion the
41% YoY increase in COGS to Rp3,238bn, which stemmed from the 82% higher raw
material and processing costs to Rp1,752bn (54% of total COGS) primarily due to higher 3rd party purchases (+152% YoY to 475k tons). Overall, net profit jumped 100% YoY to Rp1,270bn and accounted for 44% of CIRA FY11E and 47% of consensus’.
2Q11: Positive YoY but negative QoQ — On a quarterly basis, a reverse trend can be seen. The 6% QoQ decline in CPO prices and 1% of CPO volumes (Fig 4) translate to
an 8% QoQ drop in revenues to RP2,532bn. But with COGS also 8% QoQ lower, the overall decline in the bottom line was only at 6% QoQ to Rp616bn. But YoY, it is still registering positive growth both on the top and bottom line. Revenues grew 34% YoY on higher volumes and prices while net profit grew 69% YoY. (Fig 2)
Demand outlook remains favorable — Despite the slower sales performance in 2Q11, we remain optimistic that the upcoming Muslim festivities would help boost demand for CPO in 3Q11 and would be a key demand driver for AALI, which is primarily a local CPO player.
CPO prices should stay firm despite rising output in 2H11 — While the market fears increased CPO production in 2H11, it has in our view failed to realize that much of the increased output would be easily absorbed by the market given shortfalls in competing as well as more expensive oils such as soya oil and rapeseed oil. Hot and dry conditions in key crop producing areas in the US and initial harvesting in Europe suggest low rapeseed yield. These factors should help keep CPO prices afloat in the above US$1,000/t level. AALI, as a pure CPO play would benefit.
YoY to 567k tons) led to the 51% surge in revenues to Rp5,297bn (50% of CIRA
FY11E and 51% of Consensus). The strong revenue performance helped cushion the
41% YoY increase in COGS to Rp3,238bn, which stemmed from the 82% higher raw
material and processing costs to Rp1,752bn (54% of total COGS) primarily due to higher 3rd party purchases (+152% YoY to 475k tons). Overall, net profit jumped 100% YoY to Rp1,270bn and accounted for 44% of CIRA FY11E and 47% of consensus’.
2Q11: Positive YoY but negative QoQ — On a quarterly basis, a reverse trend can be seen. The 6% QoQ decline in CPO prices and 1% of CPO volumes (Fig 4) translate to
an 8% QoQ drop in revenues to RP2,532bn. But with COGS also 8% QoQ lower, the overall decline in the bottom line was only at 6% QoQ to Rp616bn. But YoY, it is still registering positive growth both on the top and bottom line. Revenues grew 34% YoY on higher volumes and prices while net profit grew 69% YoY. (Fig 2)
Demand outlook remains favorable — Despite the slower sales performance in 2Q11, we remain optimistic that the upcoming Muslim festivities would help boost demand for CPO in 3Q11 and would be a key demand driver for AALI, which is primarily a local CPO player.
CPO prices should stay firm despite rising output in 2H11 — While the market fears increased CPO production in 2H11, it has in our view failed to realize that much of the increased output would be easily absorbed by the market given shortfalls in competing as well as more expensive oils such as soya oil and rapeseed oil. Hot and dry conditions in key crop producing areas in the US and initial harvesting in Europe suggest low rapeseed yield. These factors should help keep CPO prices afloat in the above US$1,000/t level. AALI, as a pure CPO play would benefit.
BBNI:Still cheap - Mandiri
BBNI’s results came in line with our expectation, thanks to strong 2Q results. Despite the possibilities of better 2H results, we maintained our forecast as the management indicated that a slower loan growth is likely in the 2H. Our concern remains on the bank’s asset quality, yet it has actually been reflected on the its lower valuation compared with its peers. Rolling valuation into 2012F provides strong upside from the current share price. Maintain buy.
Strong 2Q11 results. BBNI showed significant improvement in 2Q11, with net interest income growing by 10.6% qoq (vs 6.4% qoq in 1Q11), supported by strong loan growth of 10.3% qoq (vs 1.7% qoq in 1Q11). Corporate and consumer loans posted strong growth of 11.4% qoq and 10.7% qoq, respectively, representing 37% and 18% of total loans at end Jun11. Despite such strong growth, the management stated that it will maintain its loan growth target of between 17-20% yoy this year (in 1H11, loans grew by 21% yoy), indicating that a slower loan growth is likely in 2H11. The bank prefers to have proper loan acquisition process to aggressive loan growth in order to minimize the loan quality deterioration in the future.
.. yet impairment expenses still grew. Meanwhile, the bank’s NPL declined slightly to 4.0% at end Jun11 from 4.1% at end Mar11. Yet, it is worth noting that there was still an increase in absolute amount of NPL of Rp1 tn in 2Q11 after taking into account a Rp550bn writeoff during the quarter. This brought a higher impairment expenses during the quarter of 31.6% qoq to Rp913bn. Despite such high impairment expenses, the management affirmed that the FY11 impairment expenses would not exceed that in FY10 of Rp3.6tn. We thus maintained our FY11 impairment expenses at Rp2.5tn.
Forecast maintained. We maintained our forecast on the bank as the 1H11 results were basically in line with our expectation. Even though there remains concern on the bank’s asset quality, we like the management’s consistent efforts to improve its risk management covering lots of aspects like infrastructure, policies, risk organization and loan process. Moreover, our concern on the bank’s asset quality has actually been reflected in the bank’s target price of only at P/BV of 2.2x, a discount to average banking sector’s P/BV of 2.6x. Rolling our valuation into 2012F caused us to upgrade our TP from previously Rp4,500/share to Rp4,700/share. Maintain buy.
Strong 2Q11 results. BBNI showed significant improvement in 2Q11, with net interest income growing by 10.6% qoq (vs 6.4% qoq in 1Q11), supported by strong loan growth of 10.3% qoq (vs 1.7% qoq in 1Q11). Corporate and consumer loans posted strong growth of 11.4% qoq and 10.7% qoq, respectively, representing 37% and 18% of total loans at end Jun11. Despite such strong growth, the management stated that it will maintain its loan growth target of between 17-20% yoy this year (in 1H11, loans grew by 21% yoy), indicating that a slower loan growth is likely in 2H11. The bank prefers to have proper loan acquisition process to aggressive loan growth in order to minimize the loan quality deterioration in the future.
.. yet impairment expenses still grew. Meanwhile, the bank’s NPL declined slightly to 4.0% at end Jun11 from 4.1% at end Mar11. Yet, it is worth noting that there was still an increase in absolute amount of NPL of Rp1 tn in 2Q11 after taking into account a Rp550bn writeoff during the quarter. This brought a higher impairment expenses during the quarter of 31.6% qoq to Rp913bn. Despite such high impairment expenses, the management affirmed that the FY11 impairment expenses would not exceed that in FY10 of Rp3.6tn. We thus maintained our FY11 impairment expenses at Rp2.5tn.
Forecast maintained. We maintained our forecast on the bank as the 1H11 results were basically in line with our expectation. Even though there remains concern on the bank’s asset quality, we like the management’s consistent efforts to improve its risk management covering lots of aspects like infrastructure, policies, risk organization and loan process. Moreover, our concern on the bank’s asset quality has actually been reflected in the bank’s target price of only at P/BV of 2.2x, a discount to average banking sector’s P/BV of 2.6x. Rolling our valuation into 2012F caused us to upgrade our TP from previously Rp4,500/share to Rp4,700/share. Maintain buy.
Astra Agro Lestari: 6M11 net income is inline with our (49.3% of FY) and consensus (47.2% of FY) estimates (AALI, Rp23,450, Neutral, TP: Rp23,000) - Mandiri
􀂄 AALI booked 1H1 net income of Rp1.27tn (+99.5%yoy, -5.8%qoq), which is within our (49.3% of FY) and consensus (47.2% of FY) estimates.
􀂄 Its 2Q11 net income decreased by 5.8%qoq due to decrease in sales volume by 0.6%qoq and CPO selling price in 2Q11 was lower than in 1Q11.
􀂄 We maintain neutral recommendation on AALI as we have concern on rising cost per unit next year due to rising cost per ha and newly mature area. At Rp23,450, AALI is traded at PER FY11F and FY12F of 14.3x and 15.3x,respectively.
􀂄 Its 2Q11 net income decreased by 5.8%qoq due to decrease in sales volume by 0.6%qoq and CPO selling price in 2Q11 was lower than in 1Q11.
􀂄 We maintain neutral recommendation on AALI as we have concern on rising cost per unit next year due to rising cost per ha and newly mature area. At Rp23,450, AALI is traded at PER FY11F and FY12F of 14.3x and 15.3x,respectively.
Unilever: 1H11 net income up by 17%yoy, representing around 54% of ours and consensus FY11F estimates (UNVR, Rp15,000, Neutral, TP: Rp16,000) - Mandiri
ô€‚„ UNVR booked 1H11 revenue of Rp11.5tn (+15.5%yoy, +2.2%qoq), or equivalent to some 52% of ours and consensus’s FY11F estimates.
ô€‚„ Net profit was at Rp2.1tn (+16.8%yoy, +7.2%qoq), or equivalent to some 54% of ours and consensus’ FY11F estimates.
􀂄 Margins were relatively stable.
􀂄 We have a Neutral recommendation on UNVR, which is traded at PER11F-12F of 30.5-27.5x.
ô€‚„ Net profit was at Rp2.1tn (+16.8%yoy, +7.2%qoq), or equivalent to some 54% of ours and consensus’ FY11F estimates.
􀂄 Margins were relatively stable.
􀂄 We have a Neutral recommendation on UNVR, which is traded at PER11F-12F of 30.5-27.5x.
Mitra Adiperkasa – 1H11 result represents 53.7% of ours and 51.2% of consensus – Inline (MAPI, Rp4,300, Buy, TP: Rp3,720) - Mandiri
􀂄 MAPI reported a strong net income growth 57.5% yoy which represents 53.7% of our estimates and 51.2% of consensus.
􀂄 The strong result was a result of strong revenue of Rp2.7tn (+23.8% yoy, +9.4% qoq), inline with consensus estimates.
􀂄 At current price, stock is traded at 2011P/BV of 4.1x and PER of 24.4x. We maintain our buy rating on this counter.
􀂄 The strong result was a result of strong revenue of Rp2.7tn (+23.8% yoy, +9.4% qoq), inline with consensus estimates.
􀂄 At current price, stock is traded at 2011P/BV of 4.1x and PER of 24.4x. We maintain our buy rating on this counter.
Sentul City: BKSL’s net income increased 510% yoy, despite no growth in revenue (BKSL, Rp179, Not rated) - Mandiri
􀂄 Sentul City booked strong growth in net income. 1H11 net income was Rp61bn (+510%yoy, -34%qoq).
􀂄 Gross margin increased significantly from 44.0% to 64.7% in 1H11, mainly driven by lower cost of sales. Meanwhile, 1H11 sales was booked in the same amount as in previous year.
􀂄 Currently there are no analysts covering this stock.
􀂄 Gross margin increased significantly from 44.0% to 64.7% in 1H11, mainly driven by lower cost of sales. Meanwhile, 1H11 sales was booked in the same amount as in previous year.
􀂄 Currently there are no analysts covering this stock.
Bukit Asam: Better picture on the new railway project (PTBA, Rp21,050, Neutral, TP: Rp23,950) - Mandiri
We met with Mr Rudiantara, President Director of Transpacific Railway Infrastructure - Key person from Rajawali Group, yesterday. He is very friendly and nice guy. We were impressed with his concise explanation on the JV's integrated coal railway project structure and some key challenges issues. Below are the highlights:
ô€‚„ Rajawali’s solid teams will solve “LLL” issues. License, Land acquisition and Loan (LLL) are the main key factors in this project. Solid team from Rajawali will help solving these issues. 7 out of 8 regency permits have been obtained and 2 province permits are still in process. Railway permit also has been obtained and it is an achievement in Indonesia coal industry history, since until now there are only 2 railway permits have been released, includes railway project in East Kalimantan. Pilot project of 1 km plus 100 m corridor railway line have been successfully done. 50 teams from Rajawali are ready for the land acquisition execution.
ô€‚„ Financing closure. BATR will appoint Standard Chartered Bank as the financial advisor, and Chinese Bank will act as the lenders. Mr Rudiantara has strong relationship and good track record with Chinese banker, which had successfully helped raising fund up to US$4bn debt while He joined in PT PLN. He highlighted that he could get net cost of debt for the project financing about 4 – 5% pa. The financial closure deadline is around end of this year.
ô€‚„ …but some obstacles remain. The crucial obstacle currently is on the coal mining operations structure under PT Bukit Asam Banko (BAB), JV Company with PTBA, with main issue on the coal selling price. Beside that Rajawali Group is also in a renegotiation process with China Railway Engineering to change some critical terms agreement, such as “Train Availability and Reliability Agreement” (TARA) to mitigate future logistic risk.
ô€‚„ It’s a matter of time unlocking the treasure. Notwithstanding all those obstales, Mr Rudiantara is quite confidence with PTBA’s prospect thank to its abundant coal reserves. Once the logistic problem solved, the treasure will be unlocked and monetized, earnings potentially rise by fourfolds. He expects the project will commence in early 2015.
􀂄 Currently we still have Neutral rating on the stock and we are likely to upgrade our earnings forecast and rating. PTBA is traded at 14.2x-10.8x PER11F-12F.
ô€‚„ Rajawali’s solid teams will solve “LLL” issues. License, Land acquisition and Loan (LLL) are the main key factors in this project. Solid team from Rajawali will help solving these issues. 7 out of 8 regency permits have been obtained and 2 province permits are still in process. Railway permit also has been obtained and it is an achievement in Indonesia coal industry history, since until now there are only 2 railway permits have been released, includes railway project in East Kalimantan. Pilot project of 1 km plus 100 m corridor railway line have been successfully done. 50 teams from Rajawali are ready for the land acquisition execution.
ô€‚„ Financing closure. BATR will appoint Standard Chartered Bank as the financial advisor, and Chinese Bank will act as the lenders. Mr Rudiantara has strong relationship and good track record with Chinese banker, which had successfully helped raising fund up to US$4bn debt while He joined in PT PLN. He highlighted that he could get net cost of debt for the project financing about 4 – 5% pa. The financial closure deadline is around end of this year.
ô€‚„ …but some obstacles remain. The crucial obstacle currently is on the coal mining operations structure under PT Bukit Asam Banko (BAB), JV Company with PTBA, with main issue on the coal selling price. Beside that Rajawali Group is also in a renegotiation process with China Railway Engineering to change some critical terms agreement, such as “Train Availability and Reliability Agreement” (TARA) to mitigate future logistic risk.
ô€‚„ It’s a matter of time unlocking the treasure. Notwithstanding all those obstales, Mr Rudiantara is quite confidence with PTBA’s prospect thank to its abundant coal reserves. Once the logistic problem solved, the treasure will be unlocked and monetized, earnings potentially rise by fourfolds. He expects the project will commence in early 2015.
􀂄 Currently we still have Neutral rating on the stock and we are likely to upgrade our earnings forecast and rating. PTBA is traded at 14.2x-10.8x PER11F-12F.
Weekly Economic Research (27-Jul-2011) - Resolution on European debt problem boosts sentiment - Mandiri
Market review
§ The agreement between European leaders and the IMF to extend second bailout for Greece amounting around 159bn euro relieved concern on European debt crisis. Overall, market responded positively. The rupiah appreciated to Rp8,524/US$ (0.2% wow), while the stock market rallied to its new high of 4,107 (2.1% wow).
Global economic update
· The second Greece financial bailout required private sector participation.
· US housing sales figure in Jun showed mix result, suggesting recovery remains fragile.
· Both China's and Europe's PMI points the economy growth is likely to decelerate further in the coming quarter.
Domestic economic update
· Indonesia direct investment rose 22% in 2Q11 to Rp62tn, with FDI amounting around Rp43.1tn. Government’s Rp240tn (15% increase from last year) direct investment target seems to be achievable.
· The parliament approved higher fuel subsidy spending in revised budget, thus reduces the likelihood of fuel price increase this year.
· Fitch sees potential upgrade of Indonesia sovereign rating to investment grade in the next 12-18mo.
§ The agreement between European leaders and the IMF to extend second bailout for Greece amounting around 159bn euro relieved concern on European debt crisis. Overall, market responded positively. The rupiah appreciated to Rp8,524/US$ (0.2% wow), while the stock market rallied to its new high of 4,107 (2.1% wow).
Global economic update
· The second Greece financial bailout required private sector participation.
· US housing sales figure in Jun showed mix result, suggesting recovery remains fragile.
· Both China's and Europe's PMI points the economy growth is likely to decelerate further in the coming quarter.
Domestic economic update
· Indonesia direct investment rose 22% in 2Q11 to Rp62tn, with FDI amounting around Rp43.1tn. Government’s Rp240tn (15% increase from last year) direct investment target seems to be achievable.
· The parliament approved higher fuel subsidy spending in revised budget, thus reduces the likelihood of fuel price increase this year.
· Fitch sees potential upgrade of Indonesia sovereign rating to investment grade in the next 12-18mo.
Astra Agro Lestari: Hold; Rp23,450; TP Rp25,150; AALI IJ; 2Q11 earnings in line - DBS
At a Glance
2Q11 earnings slipped 6% q-o-q, in-line with our expectations
CPO sales volume was flat at c.283k MT (-1% q-o-q, +11% y-o-y) in 2Q11
Excluding cash advance, cash conversion cycle has inched higher
Maintain Hold with limited 7% upside to our TP
Comment on Results
Astra Agro Lestari’s (AALI) 2Q11 net profit came in at Rp615b (-6% q-o-q, +69% y-o-y), translating to 1H11 bottomline of Rp1.27b (+51% y-o-y). This represented 47% of our full year forecast and thus in line with our expectations. Despite higher
output, sales volume growth was flat due to higher inventory (i.e. delays in presold shipments). Reported topline of Rp2.53b (-8% q-o-q, +34% y-o-y) was dragged by 7% q-o-q lower ASP due to higher export taxes (vs. Rp8,278/kg in 1Q11).
Sequentially, gross margin remained unchanged at c.39% however, thanks to seasonally higher yield. Including smallholders, FFB yield rose from 5.5 MT/ha in 1Q11 to 6.4 MT/ha in 2Q11. Cost of sales declined 8% q-o-q to Rp1.55b (+27% y-o-y) commensurate with lower unit cost. AALI reported 31% q-o-q higher 3rd party FFB purchases, which contributed to higher 2Q11 raw materials and processing costs
(accounting for c.54% share), followed by harvesting and maintenance costs at c.33%. As at end of Jun11, AALI’s total planted area was c.264k ha (including smallholder estates). The group remained debt free. Excluding advances from customers, cash conversion cycle increased to 22 days from 10 days. Including advances, however, AALI had negative working capital.
Recommendation
We expect the group CPO output to increase c.5% y-o-y to 1.2m MT next year, which is inadequate to weather an anticipated 20% drop in FY12F ASP. We maintain Hold for its limited 7% upside to our DCF-based TP of Rp25,150, which implies 16.8x FY12F PE.
2Q11 earnings slipped 6% q-o-q, in-line with our expectations
CPO sales volume was flat at c.283k MT (-1% q-o-q, +11% y-o-y) in 2Q11
Excluding cash advance, cash conversion cycle has inched higher
Maintain Hold with limited 7% upside to our TP
Comment on Results
Astra Agro Lestari’s (AALI) 2Q11 net profit came in at Rp615b (-6% q-o-q, +69% y-o-y), translating to 1H11 bottomline of Rp1.27b (+51% y-o-y). This represented 47% of our full year forecast and thus in line with our expectations. Despite higher
output, sales volume growth was flat due to higher inventory (i.e. delays in presold shipments). Reported topline of Rp2.53b (-8% q-o-q, +34% y-o-y) was dragged by 7% q-o-q lower ASP due to higher export taxes (vs. Rp8,278/kg in 1Q11).
Sequentially, gross margin remained unchanged at c.39% however, thanks to seasonally higher yield. Including smallholders, FFB yield rose from 5.5 MT/ha in 1Q11 to 6.4 MT/ha in 2Q11. Cost of sales declined 8% q-o-q to Rp1.55b (+27% y-o-y) commensurate with lower unit cost. AALI reported 31% q-o-q higher 3rd party FFB purchases, which contributed to higher 2Q11 raw materials and processing costs
(accounting for c.54% share), followed by harvesting and maintenance costs at c.33%. As at end of Jun11, AALI’s total planted area was c.264k ha (including smallholder estates). The group remained debt free. Excluding advances from customers, cash conversion cycle increased to 22 days from 10 days. Including advances, however, AALI had negative working capital.
Recommendation
We expect the group CPO output to increase c.5% y-o-y to 1.2m MT next year, which is inadequate to weather an anticipated 20% drop in FY12F ASP. We maintain Hold for its limited 7% upside to our DCF-based TP of Rp25,150, which implies 16.8x FY12F PE.
Sarana Menara Nusantara: Buy; Rp5,550; TP Rp6,200; TOWR IJ; Encouraging result, huge upside potential - DBS
At a Glance
2Q11 EBITDA of Rp337 bn (+14% y-o-y, +9% q-o-q) was towards the upper end of expectations. 1H11 EBITDA comprises over 46% of FY11F forecast
Added 375 towers & 682 tenants in 2Q11, significantly higher than 1Q11.
Maintain BUY for 40% upside potential to Rp15,000TP
Comment on Results
EBITDA of Rp337 bn (+14% y-o-y) was towards the upper end of expectations as EBITDA margins of 83.5% was above our 83% estimate. 1H11 EBITDA of Rp 645 bn comprises 46.3% of our FY11F forecast, implying upside potential to our forecast. Strong tower addition mainly from Telkomsel & XL. TOWR added 375 towers (versus 100 towers in 1Q11) and 682 tenants (290 in 1Q11) in 2Q11. Despite the tower addition spree, tenancy ratio was stable at 1.75x (1.76 in 1Q11). Telkomsel & XL accounted for 50%
& 20% of tower additions respectively.
Strong pipeline to meet or exceed our expectations. TOWR disclosed a strong pipeline of 1299 towers (versus 1536 in 1Q11). Pipeline is typically strongest in 1Q as telcos plan and award contracts. Out of 1299 towers, about 466 would be built to suite (BTS) towers and rest to be acquired from Hutch and other players.
The pipeline of 1299 towers is good enough to meet or exceed our expectations of 675 towers to be added in 2H11F.
Recommendation
Potential upside of 40%. Our DCF-based target price of Rp15,000 (WACC 11.5%, terminal growth 4%), implies over 40% potential upside. TOWR is trading at 11.6x FY11F EV/EBITDA while offering 20% EBITDA CAGR over FY11F-13F. This is at ~30% discount to US and local peers, which trade at average of 16x EV/EBITDA despite much weaker growth prospects for US peers.
2Q11 EBITDA of Rp337 bn (+14% y-o-y, +9% q-o-q) was towards the upper end of expectations. 1H11 EBITDA comprises over 46% of FY11F forecast
Added 375 towers & 682 tenants in 2Q11, significantly higher than 1Q11.
Maintain BUY for 40% upside potential to Rp15,000TP
Comment on Results
EBITDA of Rp337 bn (+14% y-o-y) was towards the upper end of expectations as EBITDA margins of 83.5% was above our 83% estimate. 1H11 EBITDA of Rp 645 bn comprises 46.3% of our FY11F forecast, implying upside potential to our forecast. Strong tower addition mainly from Telkomsel & XL. TOWR added 375 towers (versus 100 towers in 1Q11) and 682 tenants (290 in 1Q11) in 2Q11. Despite the tower addition spree, tenancy ratio was stable at 1.75x (1.76 in 1Q11). Telkomsel & XL accounted for 50%
& 20% of tower additions respectively.
Strong pipeline to meet or exceed our expectations. TOWR disclosed a strong pipeline of 1299 towers (versus 1536 in 1Q11). Pipeline is typically strongest in 1Q as telcos plan and award contracts. Out of 1299 towers, about 466 would be built to suite (BTS) towers and rest to be acquired from Hutch and other players.
The pipeline of 1299 towers is good enough to meet or exceed our expectations of 675 towers to be added in 2H11F.
Recommendation
Potential upside of 40%. Our DCF-based target price of Rp15,000 (WACC 11.5%, terminal growth 4%), implies over 40% potential upside. TOWR is trading at 11.6x FY11F EV/EBITDA while offering 20% EBITDA CAGR over FY11F-13F. This is at ~30% discount to US and local peers, which trade at average of 16x EV/EBITDA despite much weaker growth prospects for US peers.
Bank Danamon: Hold (prev Fully Valued); Rp5,350; TP5,700 Rp; BDMN IJ Negatives partially priced in - DBS
• Rights price ranges between Rp4,100-Rp4,800 (13-25% discount); ex-date on 8 Sep 2011
• Estimated FY12 EPS dilution of 13% while Total CAR would increase to 18-19% (2Q11: 14%)
• Upgrade to Hold on valuations; TP lifted to Rp5,700 as we roll over our valuation base to 2012.
Rights issue details and pro-forma impact (13% EPS dilution; 4ppts capital ratio improvement). In the abridged prospectus, BDMN’s rights price ranges between Rp4,100-Rp4,800, equivalent to a 13-25% discount to the last closing price. This compares to a 19.5% discount for BBNI’s rights in Dec-10 and 11.5% discount for BMRI’s rights in Feb-11(market conditions were soft in Feb-11). We estimate EPS dilution of 13% in FY12. Post rights, Tier-1 CAR would improve to 17%-18% (2Q11: 13.7%), while Total CAR would increase to 18%-19% (2Q11: 14.2%).
The difference with the previous rights issue. BDMN’s rights proceeds would be used to improve funding and to boost growth particularly in micro, SME as well as auto financing. BDMN saw a significant improvement in its earnings and ROE in 2010, the year after the previous rights issue. The difference now is the shift in asset mix (towards SME loans which are lower yielding) with the hope to improve its deposit franchise over time. BDMN excels in asset growth, especially in the mass market segment, but it still lags its peers in deposits. Management has initiated plans to improve its deposit franchise but it would be a 2 to 3 year journey at least. Meanwhile, NIM may continue to slide and incremental ROE would not be great.
Upgrade to Hold on valuations; TP lifted to Rp5,700. Share price has weakened over the past week since the announcement of its rights issue. At current valuations of 1.9x FY12 BV, we upgrade BDMN to HOLD. We note that 1H11 earnings were weak but we do expect a stronger 2H11. As we roll over our valuation base to 2012, our revised Rp5,700 TP is equivalent to 2.1x FY12 BV based on a lower sustainable ROE of 20% (pre-rights), 10% growth and 15% cost of equity.
• Estimated FY12 EPS dilution of 13% while Total CAR would increase to 18-19% (2Q11: 14%)
• Upgrade to Hold on valuations; TP lifted to Rp5,700 as we roll over our valuation base to 2012.
Rights issue details and pro-forma impact (13% EPS dilution; 4ppts capital ratio improvement). In the abridged prospectus, BDMN’s rights price ranges between Rp4,100-Rp4,800, equivalent to a 13-25% discount to the last closing price. This compares to a 19.5% discount for BBNI’s rights in Dec-10 and 11.5% discount for BMRI’s rights in Feb-11(market conditions were soft in Feb-11). We estimate EPS dilution of 13% in FY12. Post rights, Tier-1 CAR would improve to 17%-18% (2Q11: 13.7%), while Total CAR would increase to 18%-19% (2Q11: 14.2%).
The difference with the previous rights issue. BDMN’s rights proceeds would be used to improve funding and to boost growth particularly in micro, SME as well as auto financing. BDMN saw a significant improvement in its earnings and ROE in 2010, the year after the previous rights issue. The difference now is the shift in asset mix (towards SME loans which are lower yielding) with the hope to improve its deposit franchise over time. BDMN excels in asset growth, especially in the mass market segment, but it still lags its peers in deposits. Management has initiated plans to improve its deposit franchise but it would be a 2 to 3 year journey at least. Meanwhile, NIM may continue to slide and incremental ROE would not be great.
Upgrade to Hold on valuations; TP lifted to Rp5,700. Share price has weakened over the past week since the announcement of its rights issue. At current valuations of 1.9x FY12 BV, we upgrade BDMN to HOLD. We note that 1H11 earnings were weak but we do expect a stronger 2H11. As we roll over our valuation base to 2012, our revised Rp5,700 TP is equivalent to 2.1x FY12 BV based on a lower sustainable ROE of 20% (pre-rights), 10% growth and 15% cost of equity.
Economy Investment tax incentives on the horizon - DBS
The government is planning to introduce more tax incentives to selected industries in the coming months. According to the Investment Coordinating Board (BKPM), capital intensive (IDR 100bn with at least 100 workers) and labor-intensive (IDR 50bn with at least 300 workers) industries may apply for the benefits. A 5-8 year tax holiday may also be introduced. Considering that Indonesia’s corporate tax rate is still at a relatively high 25%, these tax measures will spur a surge of investment as firms (which have been holding off on investing in anticipation of the tax breaks since last year) start to make good on their investment commitments.
If the government successfully implements the policy as planned by September, we could see a sharp sequential surge in investment in 4Q11 and 1Q12. With domestic investment realization already up by 50.7% YoY for 1H and foreign direct investment realization up by 16.2% over the same time period, these are all encouraging signs for growth this year. In our view, these policies are positive short-term measures that Indonesia has to utilize as it resolves its structural investment problems. Moreover, given its strong fiscal position, we reckon that the government can afford to draw down its coffers to stimulate investment and job growth
If the government successfully implements the policy as planned by September, we could see a sharp sequential surge in investment in 4Q11 and 1Q12. With domestic investment realization already up by 50.7% YoY for 1H and foreign direct investment realization up by 16.2% over the same time period, these are all encouraging signs for growth this year. In our view, these policies are positive short-term measures that Indonesia has to utilize as it resolves its structural investment problems. Moreover, given its strong fiscal position, we reckon that the government can afford to draw down its coffers to stimulate investment and job growth
Rabu, 27 Juli 2011
BBTN: Not all is well yet - Mandiri
We maintained our FY11 forecast for BTN even though there is a possibility that 2H results would be better than the 1H. The reasons are (1) possible lower earning asset yield as the bank still has VR bonds whose rates have declined sharply and (2) higher cost of funds should BI increase its benchmark rate in the 2H. Rolling valuation into 2012 led us to upgrade our TP from Rp1,600/share previously to Rp1,800share. Yet, the upside potential is still limited. Maintain neutral.
Lower-than-expected loan growth. BBTN reported lower-than-expected loan growth in 1H11 (+21.5% yoy), below the management’s target of 27.0% yoy. This was partly due to lower disbursement of subsidized mortgage after the implementation of FLPP (liquidity scheme facilities). The bank only managed to book mortgage for 40,360 units of houses (from the target of 120,000 units this year). Despite that, subsidized mortgage still contributed 46% of total loans as of end Jun11.
Increase in NPL was only seasonal. The bank’s NPL increased to 4.4% at end Jun11 from 4.0% at end Mar11. Yet, the management claimed that it was only seasonal, expecting it to decline to 3% at the end of this year. It is worth noting that NPL from subsidized mortgage remained high at 5.1% at end Jun11, one of the culprits behind the flat interest income during the quarter (+1.7% qoq).
High reliance on TD caused a spike in interest expenses. Since last year, BBTN has been quite aggressive in opening cash offices. At end Jun11, total cash offices reached 249, which was able to generate Rp1.2tn of low-cost funds (CASA). Despite that, TD still accounted for most of the total deposits or 64% at end Jun11. Coupled with repricing as a result of higher BI rate, the bank experienced a significant increase in interest expense of 7.4% qoq, thus causing net interest income to fall by 4.3% qoq.
Forecast maintained. During the recent analyst meeting, the management stated their confidence that BBTN will be able to achieve its net profit target of Rp1.1 tn this year as 2H is usually stronger than the 1H (last year, 1H results represented 46% of FY10). Even though we buy this argument, we still see two risks on the bank (1) lower earning asset yield as the bank still has Rp6.3tn VR bonds whose rates have declined sharply (in the last auction, the yield on the 3-month SPN as the benchmark rate for VR bonds was reported at 4.18%), (2) additional increase in cost of funds should BI increase its benchmark rate in the 2H. We therefore prefer to maintain our current FY11 net profit forecast of Rp971bn.
Lower-than-expected loan growth. BBTN reported lower-than-expected loan growth in 1H11 (+21.5% yoy), below the management’s target of 27.0% yoy. This was partly due to lower disbursement of subsidized mortgage after the implementation of FLPP (liquidity scheme facilities). The bank only managed to book mortgage for 40,360 units of houses (from the target of 120,000 units this year). Despite that, subsidized mortgage still contributed 46% of total loans as of end Jun11.
Increase in NPL was only seasonal. The bank’s NPL increased to 4.4% at end Jun11 from 4.0% at end Mar11. Yet, the management claimed that it was only seasonal, expecting it to decline to 3% at the end of this year. It is worth noting that NPL from subsidized mortgage remained high at 5.1% at end Jun11, one of the culprits behind the flat interest income during the quarter (+1.7% qoq).
High reliance on TD caused a spike in interest expenses. Since last year, BBTN has been quite aggressive in opening cash offices. At end Jun11, total cash offices reached 249, which was able to generate Rp1.2tn of low-cost funds (CASA). Despite that, TD still accounted for most of the total deposits or 64% at end Jun11. Coupled with repricing as a result of higher BI rate, the bank experienced a significant increase in interest expense of 7.4% qoq, thus causing net interest income to fall by 4.3% qoq.
Forecast maintained. During the recent analyst meeting, the management stated their confidence that BBTN will be able to achieve its net profit target of Rp1.1 tn this year as 2H is usually stronger than the 1H (last year, 1H results represented 46% of FY10). Even though we buy this argument, we still see two risks on the bank (1) lower earning asset yield as the bank still has Rp6.3tn VR bonds whose rates have declined sharply (in the last auction, the yield on the 3-month SPN as the benchmark rate for VR bonds was reported at 4.18%), (2) additional increase in cost of funds should BI increase its benchmark rate in the 2H. We therefore prefer to maintain our current FY11 net profit forecast of Rp971bn.
Bank Danamon (BDMN, N, PT Rp5,700): Assessing the Impact of Rights Issue - Credit Suisse
In the analysis, BDMN’s earnings dilution from the rights issue is limited. In addition, BDMN’s PBV multiple would also be lower post the rights issue. We would remain as a holder of BDMN at present, until the final terms of the rights issue is announced.
· BDMN is targeting to rise up to Rp5.0 tn by issuing up to 1.2 bn shares at Rp4,100-4,800/share in the upcoming rights issue – with a ratio of 144 new shares per 1,000 existing.
· Assuming the targeted proceed of Rp5.0 tn, BDMN’s TERP is estimated at Rp5,324-5423/share – 1-3% discount to yesterday’s closing price of Rp5,500.
· BDMN rights issue would increase 2011 CAR and Tier I ratio to 19.1% and 18.1% respectively – from 15.4% and 14.4% currently.
· BDMN is targeting to rise up to Rp5.0 tn by issuing up to 1.2 bn shares at Rp4,100-4,800/share in the upcoming rights issue – with a ratio of 144 new shares per 1,000 existing.
· Assuming the targeted proceed of Rp5.0 tn, BDMN’s TERP is estimated at Rp5,324-5423/share – 1-3% discount to yesterday’s closing price of Rp5,500.
· BDMN rights issue would increase 2011 CAR and Tier I ratio to 19.1% and 18.1% respectively – from 15.4% and 14.4% currently.
Bukit Asam (PTBA, O, PT Rp26,500): 2Q11 Results: Higher Cost But Offset by Strong Export ASP - Credit Suisse
e like PTBA amid its rather simple and straight-forward coal business, although we are not too keen on company’s execution ability. PTBA 1H11 results is satisfactory, in our opinion, and we feel the downside on its 2011 earnings is limited. With the expected pick up in coal production and selling price in 3Q11, we are a buyer of PTBA at this stage.
· PTBA 1H11 net profit came-in at Rp1.6 tn (+12% QoQ, +77% YoY) – 42% and 44% of our and consensus 2011 forecast respectively.
· PTBA 1H11 revenue stood at Rp5.1 tn (+21% QoQ, +35% YoY) – 44% of our 2011 forecast – supported by higher sales volume of 6.5 mn tons (+4.4% QoQ, +1.6% YoY) and blended ASP of US$89/ton (+13% QoQ, +39% YoY).
· Despite higher production cost in 2Q11, PTBA’s gross, operating and net margin expanded by 100-200bps during the period to 53%, 39% and 31% respectively.
· Analyst Fonny Surya believes that the risk from PT Kereta Api locomotives delivery delay in September 2011 is priced-in into PTBA’s 2011 forecast.
· PTBA 1H11 net profit came-in at Rp1.6 tn (+12% QoQ, +77% YoY) – 42% and 44% of our and consensus 2011 forecast respectively.
· PTBA 1H11 revenue stood at Rp5.1 tn (+21% QoQ, +35% YoY) – 44% of our 2011 forecast – supported by higher sales volume of 6.5 mn tons (+4.4% QoQ, +1.6% YoY) and blended ASP of US$89/ton (+13% QoQ, +39% YoY).
· Despite higher production cost in 2Q11, PTBA’s gross, operating and net margin expanded by 100-200bps during the period to 53%, 39% and 31% respectively.
· Analyst Fonny Surya believes that the risk from PT Kereta Api locomotives delivery delay in September 2011 is priced-in into PTBA’s 2011 forecast.
United Tractors (UNTR, O, PT Rp30,000): Robust June Operating Data, Above Our Expectation - Credit Suisse
We see potential 2011 consensus earnings upgrade for UNTR, post its 1H11 earnings announcement this week. UNTR remains as one of our favourite stock in Indonesia, amid its infrastructure and commodity exposures in addition to its strong balance sheet and management execution.
· UNTR’s June machinery sales came-in at 742 units (+20% MoM, +46% YoY), bringing 6M11 total to 4,333 units (+59% YoY) – 57% of our 2011 target.
· UNTR’s June coal extraction and overburden removal stood at 7.5 mn tons (+7% MoM, +19% YoY) and 71 mn tons (+5% MoM, +31% YoY) respectively, bringing 6M11 total to 40 mn tons (+5% YoY) and 366 mn bcm (+16% YoY) – 44% and 49% of our 2011 targets.
· UNTR’s June coal sales volume stood at 400k tons (+12% MoM, +69% YoY), bringing 6M11 total to 2.2 mn tons (+72% YoY) – 51% of our 2011 target.
· UNTR’s June machinery sales came-in at 742 units (+20% MoM, +46% YoY), bringing 6M11 total to 4,333 units (+59% YoY) – 57% of our 2011 target.
· UNTR’s June coal extraction and overburden removal stood at 7.5 mn tons (+7% MoM, +19% YoY) and 71 mn tons (+5% MoM, +31% YoY) respectively, bringing 6M11 total to 40 mn tons (+5% YoY) and 366 mn bcm (+16% YoY) – 44% and 49% of our 2011 targets.
· UNTR’s June coal sales volume stood at 400k tons (+12% MoM, +69% YoY), bringing 6M11 total to 2.2 mn tons (+72% YoY) – 51% of our 2011 target.
Flavour (Indo): Focus on Risks, more infrastructure next year, BNI result ahead, and PTBA result in line - Nomura
Investors start to focus more on risks: Our view on step up GDP growth and robust macro economics in Indonesia are well received in our recent marketing trip to UK and US. Growing middle class, young population, robust GDP growth outlook of 7% as early as in 2012, and strong government fiscal and monetary discipline are hard to be ignored.
However, given the strong market performance, clients are focusing on what could possibly go wrong and what are the risks in investing in Indonesia. We point out three main risks: global/external factor, potential infrastructure bottleneck, and political risk (more details in the attached file).
President SBY said that government plans to reduce subsidies in 2012 budget and increase infrastructure spending. This will reduce the misallocation of resources/funding as fuel subsidy (Rp129.7tn) accounts for 1.8% of GDP and 9.8% of budget, while electricity subsidy (Rp65.6tn) accounts for 0.9% of GDP and 5.0% of budget. This compared to Rp58tn budget for Ministry of Public Works (proxy to infrastructure spending) and Rp136tn total government capital spending.
Bank Negara Indonesia (BBNI IJ – Buy) declared 1H earnings of IDR2.7tn (+41% y-y). On an annualized basis, it was at around IDR5.8tn, which is significantly ahead of Nomura and consensus at around IDR4.8-IDR5.3tn. This was due to sharp jump in loan growth (+10.3% q-q), expanding NIM (+40bp q-q), loan recoveries that lead to 49% in non-interest income, as well as modest compression on credit and overhead cost, although we expect some catch up on the cost over 2H11. While BNI’s 12% ytd loan growth looks on track with management’s 17-20% target, it is unlikely to be a major driver for our upside. We see, however, upside in NIM trend, from our estimates of 5.4% to align with management’s 5.5-6% target. The increase is as well for fee income, in response to improving franchise perception. Maintain BUY on BNI.
Bukit Asam (PTBA IJ – Buy) announced 1H11 earnings of Rp1,611bn (+77% y-y) on higher ASP (+33% y-y). The result was in-line with our estimates due to our conservative volume and ASP assumptions, but below consensus. The company operational performance was flattish with coal sales volume was up by merely 2% y-y. Railway volume was up 11% y-y, but growth was not visible from quarterly point of view. By the half on 2011, railway volume only reached ~41% internal target and with delay of equipment, we are pessimistic that the company will be able to achieve 13.6mn tones railways target. In spite of flattish growth in present volume, we reiterate BUY rating for Bukit Asam on our medium-term view (5 years), as we remain positive on the outlook of railways performance in the coming years and we believe company efficient production cash cost (excluding royalties) structure enables it to face cost challenges.
Krakatau Steel (KRAS IJ, Neutral), the state-owned and largest steel manufacturing company, announced 1H11 results that was below expectation. Revenue declined by 6.5% yoy and operating profit declined by more than 70% yoy. Problems related to commencement of expanded hot strip mill operation seem to have persisted into early 2Q11 affecting company’s operating financials. However, Krakatau was still able to record 9.5% y-y net income growth as the company booked Rp1.1trilion (US$125mn) of profit from sale of fixed assets (land) to the JV company that Krakatau has with Posco.
We expect problems related to new expanded HSM capacity to be a short term issue, and the new expanded capacity should aid the company to grow. Krakatau’s prospect lies on its future capacity expansion that will increase by 55% in 3 years time and its ability to capture growing domestic steel demand opportunity as the country develops infrastructure. However, execution will remain a key risk, hence our Neutral recommendation on the stock.
However, given the strong market performance, clients are focusing on what could possibly go wrong and what are the risks in investing in Indonesia. We point out three main risks: global/external factor, potential infrastructure bottleneck, and political risk (more details in the attached file).
President SBY said that government plans to reduce subsidies in 2012 budget and increase infrastructure spending. This will reduce the misallocation of resources/funding as fuel subsidy (Rp129.7tn) accounts for 1.8% of GDP and 9.8% of budget, while electricity subsidy (Rp65.6tn) accounts for 0.9% of GDP and 5.0% of budget. This compared to Rp58tn budget for Ministry of Public Works (proxy to infrastructure spending) and Rp136tn total government capital spending.
Bank Negara Indonesia (BBNI IJ – Buy) declared 1H earnings of IDR2.7tn (+41% y-y). On an annualized basis, it was at around IDR5.8tn, which is significantly ahead of Nomura and consensus at around IDR4.8-IDR5.3tn. This was due to sharp jump in loan growth (+10.3% q-q), expanding NIM (+40bp q-q), loan recoveries that lead to 49% in non-interest income, as well as modest compression on credit and overhead cost, although we expect some catch up on the cost over 2H11. While BNI’s 12% ytd loan growth looks on track with management’s 17-20% target, it is unlikely to be a major driver for our upside. We see, however, upside in NIM trend, from our estimates of 5.4% to align with management’s 5.5-6% target. The increase is as well for fee income, in response to improving franchise perception. Maintain BUY on BNI.
Bukit Asam (PTBA IJ – Buy) announced 1H11 earnings of Rp1,611bn (+77% y-y) on higher ASP (+33% y-y). The result was in-line with our estimates due to our conservative volume and ASP assumptions, but below consensus. The company operational performance was flattish with coal sales volume was up by merely 2% y-y. Railway volume was up 11% y-y, but growth was not visible from quarterly point of view. By the half on 2011, railway volume only reached ~41% internal target and with delay of equipment, we are pessimistic that the company will be able to achieve 13.6mn tones railways target. In spite of flattish growth in present volume, we reiterate BUY rating for Bukit Asam on our medium-term view (5 years), as we remain positive on the outlook of railways performance in the coming years and we believe company efficient production cash cost (excluding royalties) structure enables it to face cost challenges.
Krakatau Steel (KRAS IJ, Neutral), the state-owned and largest steel manufacturing company, announced 1H11 results that was below expectation. Revenue declined by 6.5% yoy and operating profit declined by more than 70% yoy. Problems related to commencement of expanded hot strip mill operation seem to have persisted into early 2Q11 affecting company’s operating financials. However, Krakatau was still able to record 9.5% y-y net income growth as the company booked Rp1.1trilion (US$125mn) of profit from sale of fixed assets (land) to the JV company that Krakatau has with Posco.
We expect problems related to new expanded HSM capacity to be a short term issue, and the new expanded capacity should aid the company to grow. Krakatau’s prospect lies on its future capacity expansion that will increase by 55% in 3 years time and its ability to capture growing domestic steel demand opportunity as the country develops infrastructure. However, execution will remain a key risk, hence our Neutral recommendation on the stock.
Bukit Asam: Expect stronger earnings in 2H (Buy; Rp20,900; TP Rp24,600; PTBA IJ) - DBS
At a Glance
2Q11 net profit came below expectations on lower sales volume
Expect earnings to pick up in 2H driven by seasonally higher production and higher capacity
Maintain Buy, TP lowered to Rp24,600 as we cut our FY11-13F earnings estimates by 3-7%.
Comment on Results
Bukit Asam (PTBA) reported 1H11 net profit of Rp1.6tn, which made up only 40% of our FY11F of Rp3.9tn. We suspect the lower than expected results was due to delay in delivery of locomotive and wagon as railway capacity expansion took longer than
expected. In addition, weaker coal trading did not help. PTBA sold 6.5m tons of coal in 1H11, up by only 2% yoy while its coal trading was 0.33m tons (vs our FY11 forecast of 1m tons).
However, poor sales volume was somewhat offset by higher blended ASP of Rp783k/share (US$91/ton) up by 41% yoy driven by strong export price of US$98.8/ton (+62%yoy) and domestic prices of Rp760k (+27%yoy).
We expect stronger earnings in 2H driven by seasonally higher production and higher capacity, as the delivery of its locomotive and wagon will increase its transportation capacity by 25% to 13.6m tons.
Recommendation
We have lowered our FY11-13F earnings estimates by 3-7% after imputing 5-6% lower volume to 15.5m/18m/20m tons respectively and 1-3% higher ASP. TP is lowered to Rp24,600 based on blended valuation of 15x FY12F PE and 5.0x P/BV. Current valuation remains undemanding. Maintain Buy for its 18% upside potential despite
lowering our estimates.
2Q11 net profit came below expectations on lower sales volume
Expect earnings to pick up in 2H driven by seasonally higher production and higher capacity
Maintain Buy, TP lowered to Rp24,600 as we cut our FY11-13F earnings estimates by 3-7%.
Comment on Results
Bukit Asam (PTBA) reported 1H11 net profit of Rp1.6tn, which made up only 40% of our FY11F of Rp3.9tn. We suspect the lower than expected results was due to delay in delivery of locomotive and wagon as railway capacity expansion took longer than
expected. In addition, weaker coal trading did not help. PTBA sold 6.5m tons of coal in 1H11, up by only 2% yoy while its coal trading was 0.33m tons (vs our FY11 forecast of 1m tons).
However, poor sales volume was somewhat offset by higher blended ASP of Rp783k/share (US$91/ton) up by 41% yoy driven by strong export price of US$98.8/ton (+62%yoy) and domestic prices of Rp760k (+27%yoy).
We expect stronger earnings in 2H driven by seasonally higher production and higher capacity, as the delivery of its locomotive and wagon will increase its transportation capacity by 25% to 13.6m tons.
Recommendation
We have lowered our FY11-13F earnings estimates by 3-7% after imputing 5-6% lower volume to 15.5m/18m/20m tons respectively and 1-3% higher ASP. TP is lowered to Rp24,600 based on blended valuation of 15x FY12F PE and 5.0x P/BV. Current valuation remains undemanding. Maintain Buy for its 18% upside potential despite
lowering our estimates.
Corporate Result Flash BW Plantation - Bahana
2Q11 performance
§ BWPT reported 2Q11 net profit of IDR116b, up 115% q-q and 118% y-y, bringing 1H11 net profit to IDR171b, up 99% y-y, in line with our (52% of full-year) and consensus expectations (54% of the street’s estimate), as we expect weaker CPO price but higher volumes in 2H11.
§ 2Q11 FFB production reached 140k tons, up 26% q-q and 47% y-y, allowing 2Q11 CPO sales to reach 36k tons, up 51% y-y. Note that BWPT still has around 7k tons of CPO inventory that can be sold in 3Q11. Overall, higher production and ASP allowed 2Q11 revenue to jump 85% y-y to IDR304b.
§ It is worth highlighting that even though BWPT’s gross profit contracted to 67% in 2Q11 as a result of lower selling prices, BWPT was still able to book higher operating margin of 60% in 2Q10 as 1Q11’s performance was skewed towards one-off bonus expense.
Outlook
We believe that BWPT is on track to meet our 2011 full-year earnings target. Additionally, we also believe that the company will continue to deliver the strongest margin and the highest long-term growth in the sector. Therefore, its outlook remains promising in our view.
Recommendation and valuation
BWPT’s valuation is compelling on 2012 PE of 11.7x, 13% discount to the sector, particularly given 2012 PEG of 0.4x, 62% below the sector’s 1.1x. At our TP of IDR1,500, BWPT would be on 2012 PEG of 0.5x, still a 53% discount to the sector. We reiterate BWPT as our top pick in the sector. BUY.
§ BWPT reported 2Q11 net profit of IDR116b, up 115% q-q and 118% y-y, bringing 1H11 net profit to IDR171b, up 99% y-y, in line with our (52% of full-year) and consensus expectations (54% of the street’s estimate), as we expect weaker CPO price but higher volumes in 2H11.
§ 2Q11 FFB production reached 140k tons, up 26% q-q and 47% y-y, allowing 2Q11 CPO sales to reach 36k tons, up 51% y-y. Note that BWPT still has around 7k tons of CPO inventory that can be sold in 3Q11. Overall, higher production and ASP allowed 2Q11 revenue to jump 85% y-y to IDR304b.
§ It is worth highlighting that even though BWPT’s gross profit contracted to 67% in 2Q11 as a result of lower selling prices, BWPT was still able to book higher operating margin of 60% in 2Q10 as 1Q11’s performance was skewed towards one-off bonus expense.
Outlook
We believe that BWPT is on track to meet our 2011 full-year earnings target. Additionally, we also believe that the company will continue to deliver the strongest margin and the highest long-term growth in the sector. Therefore, its outlook remains promising in our view.
Recommendation and valuation
BWPT’s valuation is compelling on 2012 PE of 11.7x, 13% discount to the sector, particularly given 2012 PEG of 0.4x, 62% below the sector’s 1.1x. At our TP of IDR1,500, BWPT would be on 2012 PEG of 0.5x, still a 53% discount to the sector. We reiterate BWPT as our top pick in the sector. BUY.
Corporate Result Flash Bukit Asam - Bahana
2Q11 performance
§ PTBA’s 2Q11 net profit reached IDR850b, up 12% q-q and 77% y-y, allowing 1H11 bottom line to come in at IDR1.6t, accounting for 45% of our and consensus 2011 estimates. This is in line with our expectations as we expect 2H11 performance to further improve on higher volumes.
§ PTBA reported solid 2Q11 revenue of IDR2.8t (+35% y-y and +21% q-q) on the back of higher sales volumes (+6% y-y and 10% q-q) and higher ASP. 1H11 revenue was IDR5.1t, accounting for approximately 45% and 44% of our and consensus FY2011 estimates.
§ 2Q11 gross and net profit margin dropped to 51% and 30% (vis-á-vis 54% and 33% in 1Q11) due to higher COGS (+27% q-q). We believe that higher stripping ratio and fuel costs were the main factors that caused PTBA’s to report higher COGS.
Outlook
We use benchmark coal price of USD120/ton in 2011 and IDR assumption of 8,500/1USD, translating to IDR-based 2011 ASP (export and domestic price) growth of 27% y-y. In our view, 2011 revenue and net profit will grow 42% and 78% y-y respectively. We expect PTBA’s 2H11 performance will improve, helped by higher sales volumes of 7.5m tons.
Recommendation and valuation
Using a conservative 2012 benchmark coal price of USD110/ton (-8% y-y), we reiterate our BUY rating on PTBA and IDR29,600 TP. Risks to our call include possible downside on continued delayed implementation of the company’s railway project, which could result in lower than expected 2012 sales volumes.
§ PTBA’s 2Q11 net profit reached IDR850b, up 12% q-q and 77% y-y, allowing 1H11 bottom line to come in at IDR1.6t, accounting for 45% of our and consensus 2011 estimates. This is in line with our expectations as we expect 2H11 performance to further improve on higher volumes.
§ PTBA reported solid 2Q11 revenue of IDR2.8t (+35% y-y and +21% q-q) on the back of higher sales volumes (+6% y-y and 10% q-q) and higher ASP. 1H11 revenue was IDR5.1t, accounting for approximately 45% and 44% of our and consensus FY2011 estimates.
§ 2Q11 gross and net profit margin dropped to 51% and 30% (vis-á-vis 54% and 33% in 1Q11) due to higher COGS (+27% q-q). We believe that higher stripping ratio and fuel costs were the main factors that caused PTBA’s to report higher COGS.
Outlook
We use benchmark coal price of USD120/ton in 2011 and IDR assumption of 8,500/1USD, translating to IDR-based 2011 ASP (export and domestic price) growth of 27% y-y. In our view, 2011 revenue and net profit will grow 42% and 78% y-y respectively. We expect PTBA’s 2H11 performance will improve, helped by higher sales volumes of 7.5m tons.
Recommendation and valuation
Using a conservative 2012 benchmark coal price of USD110/ton (-8% y-y), we reiterate our BUY rating on PTBA and IDR29,600 TP. Risks to our call include possible downside on continued delayed implementation of the company’s railway project, which could result in lower than expected 2012 sales volumes.
Bank Negara Indonesia Momentum on track (Buy; Rp4,025; TP Rp5,000; BBNI IJ) - DBS
At a Glance
1H11 net profit of Rp2.7trn comprised 53%/52% of our/consensus estimates. Costs are likely to escalate in 2H11.
Loans grew strongly at 10% q-o-q but deposit growth fell short.
Maintain Buy and Rp5,000 TP.
Comment on Results
2Q11 earnings were driven by higher NIM. Loan yields increased across segments and would be sustainable while cost of funds remained relatively stable. We understand that BBNI had given out lower yielding short-term loans in 1Q11 as it had excess funds (largely from the rights issue), but these would be the case going forward. Non-interest income improved with higher fees and commissions. Opportunities for cross-selling of insurance products are likely for future growth. We understand that BBNI was not significantly hit with the re-pricing of its variable rate for
government recap bonds from the 3-month SBI rate to the 3-month SPN rate. Bulk of its government recap bonds will mature in 2017. Operating expenses appear to be low currently but it is expected to inch up in 2H11. Y-o-y, costs was within control with the absence of the voluntary pension program and golden handshake payments it made to 1,200 employees to rationalize its workforce over 2008-10.
Loan growth excelled but deposits fell short. Loans grew by a strong 10% q-o-q in 2Q11, led mainly by corporate, medium and consumer segments. Deposit growth fell short of expectations as BBNI continued to flush out expensive corporate deposits which accounted to as much as 10% of total deposits. Management hinted that it may not achieve its target of 12-15% total deposit growth for the full year but it aims to continue growing CASA (6.4% growth YTD) which we believe would further help boost its NIM for the rest of the year. Asset quality, which has been management’s key focus for the year continued to improve (NPL ratio at 4.0%, loan loss coverage at 121%). Small loans segment’s (loan size
Recommendation
Maintain Buy with Rp5,000 TP. BBNI is still among the cheapest Indonesian banking stocks with strong growth prospects. Its relatively low LDR (76%) and high CASA to total deposits (61%) continue to drive growth. Our Rp5,000 TP is based on the Gordon
Growth Model with the following assumptions: 18% ROE, 13% growth and 15% cost of equity, and implies 2.2x FY12 P/BV.
1H11 net profit of Rp2.7trn comprised 53%/52% of our/consensus estimates. Costs are likely to escalate in 2H11.
Loans grew strongly at 10% q-o-q but deposit growth fell short.
Maintain Buy and Rp5,000 TP.
Comment on Results
2Q11 earnings were driven by higher NIM. Loan yields increased across segments and would be sustainable while cost of funds remained relatively stable. We understand that BBNI had given out lower yielding short-term loans in 1Q11 as it had excess funds (largely from the rights issue), but these would be the case going forward. Non-interest income improved with higher fees and commissions. Opportunities for cross-selling of insurance products are likely for future growth. We understand that BBNI was not significantly hit with the re-pricing of its variable rate for
government recap bonds from the 3-month SBI rate to the 3-month SPN rate. Bulk of its government recap bonds will mature in 2017. Operating expenses appear to be low currently but it is expected to inch up in 2H11. Y-o-y, costs was within control with the absence of the voluntary pension program and golden handshake payments it made to 1,200 employees to rationalize its workforce over 2008-10.
Loan growth excelled but deposits fell short. Loans grew by a strong 10% q-o-q in 2Q11, led mainly by corporate, medium and consumer segments. Deposit growth fell short of expectations as BBNI continued to flush out expensive corporate deposits which accounted to as much as 10% of total deposits. Management hinted that it may not achieve its target of 12-15% total deposit growth for the full year but it aims to continue growing CASA (6.4% growth YTD) which we believe would further help boost its NIM for the rest of the year. Asset quality, which has been management’s key focus for the year continued to improve (NPL ratio at 4.0%, loan loss coverage at 121%). Small loans segment’s (loan size
Recommendation
Maintain Buy with Rp5,000 TP. BBNI is still among the cheapest Indonesian banking stocks with strong growth prospects. Its relatively low LDR (76%) and high CASA to total deposits (61%) continue to drive growth. Our Rp5,000 TP is based on the Gordon
Growth Model with the following assumptions: 18% ROE, 13% growth and 15% cost of equity, and implies 2.2x FY12 P/BV.
Bank BNI (BBNI IJ) First Half Results from Dewi - CLSA
BBNI reported strong headline 6M11 earnings of Rp2.73tn, up 41% YoY, 18% QoQ, and 55% of our FY11 estimates. All metrics are improving both in QoQ and YoY basis.
Increase in net income is largely driven by decrease in provision expense supported by improving credit quality. Both write-off and provision expense are declining 33% and 25% YoY respectively.
BNI is revising their loan growth target to 17-20% from 15-17% earlier this year. YTD, loan has grown by 12%, more than half of their FY target.
Deposit is growing at 9% compared to loan at 21% YoY, driving the LDR to 76%, moving closer to the un-penalized regulatory range of 78-100%.
The stock is trading at 1.7x and 8.8x 12CL PBV and PER, the cheapest among CLSA Indo Banks coverage.
Increase in net income is largely driven by decrease in provision expense supported by improving credit quality. Both write-off and provision expense are declining 33% and 25% YoY respectively.
BNI is revising their loan growth target to 17-20% from 15-17% earlier this year. YTD, loan has grown by 12%, more than half of their FY target.
Deposit is growing at 9% compared to loan at 21% YoY, driving the LDR to 76%, moving closer to the un-penalized regulatory range of 78-100%.
The stock is trading at 1.7x and 8.8x 12CL PBV and PER, the cheapest among CLSA Indo Banks coverage.
United Tractors (UNTR IJ) - Good operational result for June 2011 - CLSA
· Komatsu 6M11 sales volume is 4,333 units (+59% YoY). 6M11 came at 58% of FY11 guidance of 7,500 units.
· 6M11 Pama's coal production was 39.9mn tonnes, +6% YoY, 49% of our FY expectation of 82m tonnes.
· In June 2011, coal sales from PMM (formerly DEJ) and TTA was 0.29m and 0.13m tonnes respectively. Total 6M11 coal sales was 2.2m tonnes (+72% YoY), 49% of our FY11 expectation of 4.5mn tonnes. The increase in production came from both PMM and TTA.
· 6M11 Pama's coal production was 39.9mn tonnes, +6% YoY, 49% of our FY expectation of 82m tonnes.
· In June 2011, coal sales from PMM (formerly DEJ) and TTA was 0.29m and 0.13m tonnes respectively. Total 6M11 coal sales was 2.2m tonnes (+72% YoY), 49% of our FY11 expectation of 4.5mn tonnes. The increase in production came from both PMM and TTA.
Bakrieland Dev (ELTY IJ), starts monetizing its giant landbank - CLSA
Dewi from research team wrote an update on Bakrieland (ELTY IJ). It seems like the worst is behind us. The company has deleveraged. The balance sheet is clean. ELTY sits on 12,000 ha of land and still trades at 20% discount to BV (64% discount to its NAV).
Monetizing assets will be the key to improve ROA and price performance. And the company is starting this process. Our note today highlight the launch of ELTY’s key 12,000 ha Jonggol project. Successful launching will be an important catalyst for ELTY.
ELTY’s “Sentul Nirwana Residence” project in Jonggol was just recently launched, selling at Rp2.5-6mn psm (we think price is high for property in the area, unheard of before). 50 of 400 houses have been sold.
1H11 results are also very strong with 1H11 revenue came at 62% of our FY11CL forecast. Maintain BUY for 36% upside to our Rp225 target price, now trading at 64% discount to NAV.
Monetizing assets will be the key to improve ROA and price performance. And the company is starting this process. Our note today highlight the launch of ELTY’s key 12,000 ha Jonggol project. Successful launching will be an important catalyst for ELTY.
ELTY’s “Sentul Nirwana Residence” project in Jonggol was just recently launched, selling at Rp2.5-6mn psm (we think price is high for property in the area, unheard of before). 50 of 400 houses have been sold.
1H11 results are also very strong with 1H11 revenue came at 62% of our FY11CL forecast. Maintain BUY for 36% upside to our Rp225 target price, now trading at 64% discount to NAV.
PT Tambang Batubara Bukit Asam Tbk - 2Q11 Results: higher cost but offset by strong export ASP - Credit Suisse
● PTBA posted Rp1,611 bn of 6M11 net profit, increased 12% QoQ, 77.4% YoY, in line with our expectation at 42% of our FY11E and at 44% FY11E consensus’. The 6M11 revenues reached 5,119 bn, increased 34.9% YoY, 21% QoQ, 44% of our FY11E. Sales of
6.5 mnt is 4.4% QoQ and 3% YoY, at 45% of our FY11E.
● QoQ earnings pick-up is primarily due to higher export ASP (18% QoQ, 53% YoY) and better sales volume. Earnings are also impacted by higher costs booked in 2Q11, mainly coming from higher salary costs, coal trading and rental of heavy equipment.
● We expect PTBA to pick-up more sales volume in 2H11 from additional railway capacity. We also expect higher export ASP in 2H11, given the lagging impact from 1Q11. We believe PTBA will be able to achieve consensus’ earnings given strong pick-up in export price, regardless of status of current railway expansion.
● We maintain OUTPERFORM at target price of Rp26,500 based on 16x 2011E P/E.
6.5 mnt is 4.4% QoQ and 3% YoY, at 45% of our FY11E.
● QoQ earnings pick-up is primarily due to higher export ASP (18% QoQ, 53% YoY) and better sales volume. Earnings are also impacted by higher costs booked in 2Q11, mainly coming from higher salary costs, coal trading and rental of heavy equipment.
● We expect PTBA to pick-up more sales volume in 2H11 from additional railway capacity. We also expect higher export ASP in 2H11, given the lagging impact from 1Q11. We believe PTBA will be able to achieve consensus’ earnings given strong pick-up in export price, regardless of status of current railway expansion.
● We maintain OUTPERFORM at target price of Rp26,500 based on 16x 2011E P/E.
Bank Negara Indonesia: 1H11 results represented 50.5% of our FY11 forecast and 51.6% of consensus (BBNI, Rp4,075, Buy, Rp4,500) - Mandiri
􀂄 BBNI reported net profit of Rp2.7 tn (+41.1% yoy) in 1H11, representing 50.5% of our FY11 forecast and 51.6% of consensus estimates.
ô€‚„ The bank’s performance improved significantly in 2Q11, partly driven by strong loan growth of 21% yoy during the semester. Consumer and corporate loans posted a strong growth of 34% yoy and 25% yoy, respectively, representing 18% and 37% of total loans at end Jun11.
ô€‚„ During the analyst meeting yesterday, the management maintained its loan growth target of between 17-20% yoy this year, indicating that a slower loan growth is likely in 2H11. The bank prefers to have proper loan acquisition process to aggressive loan growth in order to minimize the loan quality deterioration in the future. At end Jun11, the bank has written off Rp1.5 tn of bad loans, lower than previous year’s of Rp2.2tn. Should this trend continue in 2H11, we might expect lower impairment expenses allocated for FY11.
􀂄 At current price, BNI is traded at 2012F P/BV of 1.8x and PER of 12.2x We maintained our buy rating on the counter.
ô€‚„ The bank’s performance improved significantly in 2Q11, partly driven by strong loan growth of 21% yoy during the semester. Consumer and corporate loans posted a strong growth of 34% yoy and 25% yoy, respectively, representing 18% and 37% of total loans at end Jun11.
ô€‚„ During the analyst meeting yesterday, the management maintained its loan growth target of between 17-20% yoy this year, indicating that a slower loan growth is likely in 2H11. The bank prefers to have proper loan acquisition process to aggressive loan growth in order to minimize the loan quality deterioration in the future. At end Jun11, the bank has written off Rp1.5 tn of bad loans, lower than previous year’s of Rp2.2tn. Should this trend continue in 2H11, we might expect lower impairment expenses allocated for FY11.
􀂄 At current price, BNI is traded at 2012F P/BV of 1.8x and PER of 12.2x We maintained our buy rating on the counter.
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