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Wednesday, July 11, 2012
KAEF sudah di titik fibo 61,8%
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Friday, July 6, 2012
Kalbe Farma (KLBF) The Milky deal
New JV: Kalbe Milko Indonesia
Following the acquisition of Hale International, Kalbe continues to aggressively expand its business. The company has signed agreement with Milko Beverage Industry (MBI) to set a JV company, called Kalbe Milko Indonesia in which Kalbe will hold 51% ownership. Kalbe will invest up to Rp150bn on the new company. Our conversation with the management revealed that the company expects to start building the facility in 4Q this year in order to commence operation at end of 2013 or at the beginning of 2014. The new facility will be located in Sukabumi, near the source of milk. From the new JV, Kalbe expects to enter the liquid milk segment using the expertise from MBI.
Milk contributes around 22% to Kalbe's revenues
Currently, milk contributes around 22% to the company's total revenues. Hence, almost all of Kalbe's milk products are powder milk. Therefore, Kalbe intends to expand its Consumer Health and Nutritionals business with more prospective outlook in the future. Having approximately around Rp2tr net cash, Kalbe is focusing to acquire another 3 or 4 companies within those two segments. At the moment, Kalbe has two dairy liquid products: ready to drink Prenagen and Nutrive Benecol, contribution of which are still very low to the company's total revenues. The company's new JV is expected to strengthen its nutritionals units going forward.
Prospective milk industry outlook
According to Food & Agriculture policy Research Institute, average milk consumption in Indonesia has the highest growth amongst ASEAN countries in 2006 - 2010 with CAGR of around 2.9% whereas Thailand 2.4%, Vietnam 2.3%, Philippines 1.6% and Malaysia -3.6%. The Agriculture Minister also said that average milk consumption in Indonesia has shown significant improvement since 2008, from 7.7lt per capita to 11.09lt per capita in 2010 or about half of the average milk consumption in Malaysia. Hence, domestic national milk production accounts for only around 30% of the total milk needs in Indonesia.
Maintain HOLD with a TP of Rp4,050
We like the company's recent movement in expanding its business especially on the Consumer Health and Nutritionals division which have more rooms to expand. Kalbe's recent acquisition on Hale International will strengthen its Consumer Health division whereas the new JV company would allow the company to tap into liquid milk industry where the company has no experience at the moment. The counter is currently trading at 2012F P/E multiple of 22.8x. Maintain Hold
Wednesday, June 27, 2012
United Tractors (UNTR) A challenging year
FY12 sales volume forecast lowered to 9,000 units
Sales of Komatsu rebounded 3% mom to 773 units in May 2012. By sector, the mining accounted for 62% of the total sales volume, followed by the agro (18%), the construction (13%) and the forestry (7%). Komatsu's market share, however, was lower than in 2011 (45% in 5M12 vs 49% in FY11). This owed to the fierce competition in the heavy equipment industry, especially the 20-ton class excavator segment (40% of heavy equipment sales volume and 20% of heavy equipment sales value). On account of this stiff competition, we trim our FY12-13 sales volume forecasts by 5.3-9.6% to 9,000-9,450 units. We feel more comfortable with these numbers, especially since the highest monthly sales so far this year is the 821 units recorded in March. Moreover, the sales volume in the last month of the year, December, is typically low. At the same time, we also foresee lower margins as UT battles the competition through its promotional and financing schemes, although a larger contribution from after-sales services should help support its margins.
Pama Production strong and expected to be higher in 2H
Pama's mining activities were strong in May, supported by better weather and a stable stripping ratio of 9.2x. Coal production and overburden removal in 5M12 were up by 14.7% and 16.2% yoy, respectively, at 37.4mn tons and 343.1mn bcm (+6% mom and +6% mom, respectively, for May). These figures are in line with our full year estimates of 96mn tons and 887mn bcm, given that 2H production is typically higher than 1H production.
Strong May coal sales volume of 650k tons (+53% mom, +75% yoy)
Coal sales volume surged 53% mom to 650k tons in May 2012, supported by the better weather (at the PNM and TTA coal mines only). YTD sales reached 2.6mn tons (+45.4% yoy), or 40% of our full year forecast of 6.5mn tons. Note that PNM's production surged 156.4% mom in May as UT renewed the contract last month adopting 100% index based pricing. Going forward, we expect a larger contribution from the new coal mines - with production expected to start mid-2012 - to boost the company's coal mining activities.
Maintain BUY, lower TP of Rp 27,300
UNTR's share price has fallen 21% over the past month. Besides the market correction this also reflects weaker sales volume in April and lower market share due to an influx of Chinese-made small-medium sized equipment exacerbated by the tough competition posed by the Hitachi and Kobelco brands. We lower our TP to Rp 27,300, as we reduce our Komatsu sales volume forecast and our long term growth rate to 2% to reflect the stiffer competition and regulatory risk whilst also adjusting for higher COGS in the coal mining division. Our new TP implies FY12-13F PE of 16.6-14.5x and FY12-13F EV/EBITDA of 8.3-7.4x. We believe our valuation is justified by the improving sales volume, upside potential for Pama's production, in addition to growing coal sales volume despite the softening coal prices which are already priced into our model. Currently the shares trade at FY12 PE of 12.9x, or similar to the market valuation. For the stock to reach our TP, the share price must be supported by positive market sentiment.
Sales of Komatsu rebounded 3% mom to 773 units in May 2012. By sector, the mining accounted for 62% of the total sales volume, followed by the agro (18%), the construction (13%) and the forestry (7%). Komatsu's market share, however, was lower than in 2011 (45% in 5M12 vs 49% in FY11). This owed to the fierce competition in the heavy equipment industry, especially the 20-ton class excavator segment (40% of heavy equipment sales volume and 20% of heavy equipment sales value). On account of this stiff competition, we trim our FY12-13 sales volume forecasts by 5.3-9.6% to 9,000-9,450 units. We feel more comfortable with these numbers, especially since the highest monthly sales so far this year is the 821 units recorded in March. Moreover, the sales volume in the last month of the year, December, is typically low. At the same time, we also foresee lower margins as UT battles the competition through its promotional and financing schemes, although a larger contribution from after-sales services should help support its margins.
Pama Production strong and expected to be higher in 2H
Pama's mining activities were strong in May, supported by better weather and a stable stripping ratio of 9.2x. Coal production and overburden removal in 5M12 were up by 14.7% and 16.2% yoy, respectively, at 37.4mn tons and 343.1mn bcm (+6% mom and +6% mom, respectively, for May). These figures are in line with our full year estimates of 96mn tons and 887mn bcm, given that 2H production is typically higher than 1H production.
Strong May coal sales volume of 650k tons (+53% mom, +75% yoy)
Coal sales volume surged 53% mom to 650k tons in May 2012, supported by the better weather (at the PNM and TTA coal mines only). YTD sales reached 2.6mn tons (+45.4% yoy), or 40% of our full year forecast of 6.5mn tons. Note that PNM's production surged 156.4% mom in May as UT renewed the contract last month adopting 100% index based pricing. Going forward, we expect a larger contribution from the new coal mines - with production expected to start mid-2012 - to boost the company's coal mining activities.
Maintain BUY, lower TP of Rp 27,300
UNTR's share price has fallen 21% over the past month. Besides the market correction this also reflects weaker sales volume in April and lower market share due to an influx of Chinese-made small-medium sized equipment exacerbated by the tough competition posed by the Hitachi and Kobelco brands. We lower our TP to Rp 27,300, as we reduce our Komatsu sales volume forecast and our long term growth rate to 2% to reflect the stiffer competition and regulatory risk whilst also adjusting for higher COGS in the coal mining division. Our new TP implies FY12-13F PE of 16.6-14.5x and FY12-13F EV/EBITDA of 8.3-7.4x. We believe our valuation is justified by the improving sales volume, upside potential for Pama's production, in addition to growing coal sales volume despite the softening coal prices which are already priced into our model. Currently the shares trade at FY12 PE of 12.9x, or similar to the market valuation. For the stock to reach our TP, the share price must be supported by positive market sentiment.
Jasa Marga (JSMR) May traffic volume
No downturn in traffic
The toll road network seems busier than ever with total monthly traffic at an all-time high of 101mn vehicles in May 2012 (+5.9% mom, +18.6% yoy). The number is very encouraging as it indicates no slowdown in domestic economy activity. Furthermore, the growth is evenly spread among all sections, suggesting that the economic gains are widespread. Cumulatively, up to May 2012, traffic reached 482.2mn vehicles (+11.8% yoy), translating to almost 4.0 mn vehicles per day.
Good growth from the newer sections
The contribution from the newer sections will be important as they carry higher average tariffs per km compared to the older sections. The tariff difference per km could be almost double. Nonetheless, the newer toll roads only represent a small proportion of Jasa Marga's total toll road portfolio. The total length of the toll roads operated after the year 2000 is only 76km - or 14% of the total length of all the toll roads. We expect another 190km of toll roads to be operated in the next 2-3 years. Of the three new sections - BORR, Surabaya Mojokerto and Semarang Solo - only the latter is showing a relatively slow growth rate.
JORR W2 North still in progress
We do have high hopes for the last piece of the puzzle, JORR W2 north, which should complete the Jakarta Outer Ring Road as a complete circle. The project has been divided into two stages - stage 1 Kebun Jeruk-Joglo and stage 2 Joglo-Ulujami. Land acquisition has reached 73.8% in stage 1 and 73.3% in stage 2. Jasa Marga aims to complete the land acquisition before the end of the year. Construction has also started. Stage 1 is 22% complete and stage 2 stands at 18.7%. Land acquisition remains the major issue, but Jasa Marga feels confident it can finalize land acquisition deals within the year.
Maintain BUY
Positively, Jasa Marga's traffic seems to be unaffected by the ongoing global turmoil. We have not seen any signs of weakness. In our view, the country's inadequate infrastructure is a huge opportunity for Jasa Marga, especially since it has an excellent business model. Nonetheless, we have not seen any acceleration of toll road development since the introduction of the new land bill. Even so, Jasa Marga is keeping up the pace in regard to its toll road development. BUY maintained with a Target Price of Rp6,100.
Tuesday, June 26, 2012
Perusahaan Gas Negara (PGAS) Welcome on board
Commissioning the Floating FSRU
The Nusantara Regas floating terminal (40% owned by PGN) is in place about 15km offshore of North West Java. The unit has begun commissioning and received its first gas delivery in April 2012 from the Bontang gas field. A second LNG delivery is expected at the end of June 2012. The unit is a LNG vessel modified with a regas unit based on open systems that utilize seawater and propane. It is also a self-sustaining unit using part of the LNG to generate power. Full commercial operation can be expected in the next one or two months. The floating unit is operated under Golar Wihelmenson Management. Although PGN has not made public the gas purchase price, the company should, in principle, charge its customers on a cost plus basis.
Floating terminals to help transport gas
The West Java floating terminal is the first floating terminal project in Indonesia. Going forward, such terminals might be the best solution to ensure the demand for gas is met. This is because most of the gas fields are located in the eastern part of Indonesia (East Kalimantan and Papua) whereas the demand mainly comes from PLN and industries that are located in Java and Sumatra i.e. the western part of Indonesia. Building a pipeline is not feasible due to the vast distances involved and because it would have to cross the sea. Demand is growing and the Ministry of Industry estimates gas demand of 5,300 mmscfd coming from sectors such as electricity generation, metals, fertilizer production, petrochemicals and others.
Confusion on the gas price
It seems the recent gas price hikes are likely to be reviewed due to objections from the industrial gas users. The Minister of Energy and Natural Resources held a meeting with the Minister of Industry, the President Director of PGN and industry associations to discuss the recent gas price hikes of 55%. Although the current gas bill is still based on 55% higher gas prices, it appears that the government is trying to meet the wishes of industrial gas users at the expense of PGN's commercial performance. On the one hand, the government insists that PGN needs to increase the gas purchase price but, on the other hand, PGN is seemingly not allowed to pass on the increase in costs to its customers. Furthermore, the increase in the gas purchase price is not being compensated by any volume guarantees. This has resulted in a lot of confusion in the market and created negative sentiment towards PGN shares. Clarification may come soon, however, as the government has stated its intention to resolve the dispute by the end of June 2012.
HOLD reiterated
We maintain our Target Price of Rp3,575. Our calculations already incorporate 55% higher gas prices and take into account the operations of the West Java floating terminal with a one-third utilization rate. HOLD maintained.
The Nusantara Regas floating terminal (40% owned by PGN) is in place about 15km offshore of North West Java. The unit has begun commissioning and received its first gas delivery in April 2012 from the Bontang gas field. A second LNG delivery is expected at the end of June 2012. The unit is a LNG vessel modified with a regas unit based on open systems that utilize seawater and propane. It is also a self-sustaining unit using part of the LNG to generate power. Full commercial operation can be expected in the next one or two months. The floating unit is operated under Golar Wihelmenson Management. Although PGN has not made public the gas purchase price, the company should, in principle, charge its customers on a cost plus basis.
Floating terminals to help transport gas
The West Java floating terminal is the first floating terminal project in Indonesia. Going forward, such terminals might be the best solution to ensure the demand for gas is met. This is because most of the gas fields are located in the eastern part of Indonesia (East Kalimantan and Papua) whereas the demand mainly comes from PLN and industries that are located in Java and Sumatra i.e. the western part of Indonesia. Building a pipeline is not feasible due to the vast distances involved and because it would have to cross the sea. Demand is growing and the Ministry of Industry estimates gas demand of 5,300 mmscfd coming from sectors such as electricity generation, metals, fertilizer production, petrochemicals and others.
Confusion on the gas price
It seems the recent gas price hikes are likely to be reviewed due to objections from the industrial gas users. The Minister of Energy and Natural Resources held a meeting with the Minister of Industry, the President Director of PGN and industry associations to discuss the recent gas price hikes of 55%. Although the current gas bill is still based on 55% higher gas prices, it appears that the government is trying to meet the wishes of industrial gas users at the expense of PGN's commercial performance. On the one hand, the government insists that PGN needs to increase the gas purchase price but, on the other hand, PGN is seemingly not allowed to pass on the increase in costs to its customers. Furthermore, the increase in the gas purchase price is not being compensated by any volume guarantees. This has resulted in a lot of confusion in the market and created negative sentiment towards PGN shares. Clarification may come soon, however, as the government has stated its intention to resolve the dispute by the end of June 2012.
HOLD reiterated
We maintain our Target Price of Rp3,575. Our calculations already incorporate 55% higher gas prices and take into account the operations of the West Java floating terminal with a one-third utilization rate. HOLD maintained.
Thursday, June 21, 2012
Alam Sutera Realty (ASRI) Expanding its wings
Imminent acquisition
ASRI has agreed to acquire PT Garuda Adhimatra Indonesia ("GAIN"), the owner and operator of the 60.7 hectare Garuda Wisnu Kencana Cultural Park in Bali. ASRI will take an 82% stake in GAIN from PT Multi Matra Indonesia for an investment cost of Rp738 bn. The acquisition is expected to be done in the third quarter of 2012, subject to approval from the authorities and GAIN's shareholder in addition to other customary closing conditions. Through this acquisition, ASRI hopes to expand the geographical scope of its projects and also contribute to the development of Indonesia's tourism sector. Furthermore, ASRI also hopes this project can raise the proportion of its recurring income in the future since it currently stands at a relatively low level (2% of total revenues in 1Q12).
Still upbeat on marketing sales
Total marketing sales in the year to May 2012 have reached Rp2,095 bn. This is already 60% of the company's full year estimate and 62% of our full year estimate - a strong number indeed. In this period, the vast majority of the marketing sales (98%) still originated from the Serpong project. For May alone, marketing sales for the Serpong project reached Rp307 bn, of which 77% were for Sutera Sitara Orlanda, the newest sub-cluster launched by ASRI. Looking ahead, ASRI plans to launch another 1-2 clusters for the Serpong project and 2-3 clusters in Pasar Kemis. Given the strong marketing sales so far, we slightly raise our full year target to Rp3.4 T from Rp3.2 T previously. The company, however, maintains its marketing sales forecast at Rp3.5 T.
Major capex plans
In our previous report, we mentioned that ASRI plans to spend around Rp2-3 Tn on capital expenditure this year. However, with the acquisition of GAIN, this number has now been bumped up to around Rp3.5-4 tn. A breakdown of the planned capex reveals that Rp1.4 tn is for project acquisition and development; Rp1.4-1.8 tn is for continued land acquisition in Serpong and Pasar Kemis; and the remaining Rp700 bn is for construction. This sizeable amount of planned capex will be funded from internal cash (the company is flush with cash after issuing US$150 mn of senior notes in March 2012). However, for funding the acquisition of GAIN, ASRI will use bank loans that are currently in the process of being arranged. Note that we have not incorporated the GAIN acquisition into our calculations but we still believe it is okay for ASRI to use debt financing since the company remained in a net cash position up to 1Q12.
TP raised to Rp760
Adjusting the land price to reflect the current conditions directly lifts the total marketing sales and the company's total NAV for 2012. There is no significant impact on our net profits estimate, however. This is because we have to take into account the issuance of USD$150 mn of senior notes which push up the company's interest expenses. Using a 25% discount to the new total NAV of Rp19,877 bn, we arrive at a new Target Price of Rp760, offering 41% potential upside from the current share price. This TP implies 14.8-11.5x FY12-13F P/E. BUY.
Kalbe Farma (KLBF) A love deal
Love Juice acquisition
Kalbe recently said that it had signed a Conditional Sale and Purchase Agreement (CSPA) to take over Hale International, the producer of a health drink called "Love Juice". The value of the acquisition is Rp100bn - including fixed assets and brand equity. This acquisition bolsters Kalbe's portfolio of health drinks. At the present time, there are a number of health drinks in Kalbe's portfolio, namely Extra Joss (energy drink), Fatigon Hydro (coconut water) and Tipco (fruit and vegetable juice). The last two products (Fatigon Hydro and Tipco) are toll-manufactured and contribute around 4-5% to the company's total revenues.
60% DPR for FY11 earnings
At the last Annual General Shareholders' Meeting (AGM), Kalbe received approval from its shareholders to distribute 60% of its 2011 earnings as dividends, amounting to Rp95 per share. This is higher than our expectation of a 50% DPR. Looking at the current share price of Rp3,950, the 2011 dividend provides a yield of around 2.4%, or higher than the previous yield of only around 1.6%. However, the company's management also indicated that it would revert to a DPR of 50% in future years, explaining that the 60% DPR for FY11 earnings reflected the especially strong performance in that year.
1:5 stock split
Kalbe also received approval from its shareholders at the AGM to split its shares in a ratio of 1:5, increasing the liquidity of the shares and making them more affordable for retail investors. Following the stock split, the number of shares will increase to around 50.8mn shares. The stock split will become effective after the dividends are paid on 17 July 2012.
Still searching for acquisition target
Kalbe has been sitting on huge cash on hands for many years. Having such strong cash on hands, the company is considering expanding its business, organically as well as inorganically. Last year, the company has nearly Rp2tn cash on hands, which should be more than enough to finance its expansion programs.
Maintain HOLD with a TP of Rp4,050
After adjusting our Risk Free Rate to 8.5% from 9% previously, our Target Price is raised to Rp4,050. The counter currently trades at 2012F P/E of 23.7x. Maintain HOLD.
Kalbe recently said that it had signed a Conditional Sale and Purchase Agreement (CSPA) to take over Hale International, the producer of a health drink called "Love Juice". The value of the acquisition is Rp100bn - including fixed assets and brand equity. This acquisition bolsters Kalbe's portfolio of health drinks. At the present time, there are a number of health drinks in Kalbe's portfolio, namely Extra Joss (energy drink), Fatigon Hydro (coconut water) and Tipco (fruit and vegetable juice). The last two products (Fatigon Hydro and Tipco) are toll-manufactured and contribute around 4-5% to the company's total revenues.
60% DPR for FY11 earnings
At the last Annual General Shareholders' Meeting (AGM), Kalbe received approval from its shareholders to distribute 60% of its 2011 earnings as dividends, amounting to Rp95 per share. This is higher than our expectation of a 50% DPR. Looking at the current share price of Rp3,950, the 2011 dividend provides a yield of around 2.4%, or higher than the previous yield of only around 1.6%. However, the company's management also indicated that it would revert to a DPR of 50% in future years, explaining that the 60% DPR for FY11 earnings reflected the especially strong performance in that year.
1:5 stock split
Kalbe also received approval from its shareholders at the AGM to split its shares in a ratio of 1:5, increasing the liquidity of the shares and making them more affordable for retail investors. Following the stock split, the number of shares will increase to around 50.8mn shares. The stock split will become effective after the dividends are paid on 17 July 2012.
Still searching for acquisition target
Kalbe has been sitting on huge cash on hands for many years. Having such strong cash on hands, the company is considering expanding its business, organically as well as inorganically. Last year, the company has nearly Rp2tn cash on hands, which should be more than enough to finance its expansion programs.
Maintain HOLD with a TP of Rp4,050
After adjusting our Risk Free Rate to 8.5% from 9% previously, our Target Price is raised to Rp4,050. The counter currently trades at 2012F P/E of 23.7x. Maintain HOLD.
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