Kim Eng 26 Juli 2010

Indonesia |26 July 2010
Research Team

Katarina SETIAWAN
Head of Research
Equity Daily
ksetiawan@kimeng.co.id
+6221 2557 1125 Top Idea

Ricardo SILAEN, CFA Petroleum distribution
rsilaen@kimeng.co.id
+6221 2557 1126
AKR Corporindo ‐ Sturdy volume growth
- AKR Corporindo (AKRA) expects robust sales volume growth and
Rahmi MARINA ASP increase in 1H10 for its petroleum and chemical distribution
rmarina@kimeng.co.id
+6221 2557 1128
divisions, as well as its manufacturing business. Management
estimates that total revenue for the period will exceed Rp5t,
Lucky ARIESANDI, CFA representing a 27% increase from Rp3.9b in 1H09.
lariesandi@kimeng.co.id
+6221 2557 1127 - Gross margin, however, could be around 9%, compared to 11.7%
in 1H09, because of a lower gross margin in the manufacturing
Adi N. WICAKSONO
business.
anwicaksono@kimeng.co.id
+6221 2557 1130

Arwani PRANADJAYA Market Talk
apranadjaya@kimeng.co.id
+6221 2557 1129
Banking: On its first financial result under the new CEO (Mr. Zulkifli
Zaini), Bank Mandiri posted Rp4.03t profit for 1H10. Loan grew by 9.7%
YTD. It gave the bank optimism in reaching 18‐20% FY10 growth, a figure
higher than its official target of 15‐18%. Pg. 2
Banking: Bisnis Indonesia reported that Bank Rakyat Indonesia has set
the acquisition price of 80% stake in Bank Agroniaga at a range of Rp100‐
110/share. We expect the bank to share more details on the acquisition
process on 1H10 result announcement this Friday. Pg. 3
Mining: Bukit Asam announced that it earmarks Rp1.5t to acquire up to
four coal mines this year, as a bid to boost production. The company
expects to sell 14.5m tons of coal in FY10, up 15% y/y. Pg. 4
Pharmaceutical: Kalbe Farma reported 1H10 net profit of Rp572b, an
increase of 44% y/y from 1H09 figure. The result is slightly below
consensus at 47% of FY10 estimate. Pg. 4
INDONESIA
Property: Bakrieland. Bisnis Indonesia daily reported that market only

subscribed Rp2.56t or 80% of total rights issue plan of Rp3.2t, due to
concerns over the differential reporting with Bank Capital. Standby buyer
Danatama Makmur will cover the remaining Rp640b shortage. Earlier,
Key Indices Bakrieland had downsized its rights issue to Rp3.2t from initial plan of
Last Point % chg Rp5.4t. Pg. 4
IDX Index 3,042.0 32.1 1.1
IDR/USD 9,040.0 10.0 0.1

SEE APPENDIX I FOR IMPORTANT DISCLOSURES AND ANALYST CERTIFICATIONS
Equity Daily 26 July 2010

Petroleum distribution Analyst: Adi N Wicaksono
AKR Corporindo (BUY) ‐ Sturdy volume growth

What’s New
AKR Corporindo (AKRA) expects robust sales volume growth and ASP
increase in 1H10 for its petroleum and chemical distribution divisions, as
well as its manufacturing business. Management estimates that total
revenue for the period will exceed Rp5t, representing a 27% increase
from Rp3.9b in 1H09.
Gross margin, however, could be around 9%, compared to 11.7% in 1H09,
because of a lower gross margin in the manufacturing business.

Our View
In 1H10, the petroleum distribution division likely saw a 26% y/y increase
in sales volume to 550,000KL; the chemical distribution unit a 25% y/y
growth to 540,000MT; and the manufacturing business (Sorini) a 24% y/y
hike to 171,000MT. Such robust growth leads us to believe that AKRA’s
three businesses will be able to achieve our FY10 sales volume target.
The manufacturing business (especially Sorini) was hurt by a 17%
appreciation of the rupiah in 1H10. Thus, in rupiah terms, Sorini’s ASP
only increased by 6% y/y compared to 26% y/y in US$ terms. Higher raw
material price (cassava cost rose 81% y/y) was another issue, resulting in
Sorini’s gross margin falling to 20‐22% compared to 32.5% in 1H09.
However, we have expected the manufacturing division to post a lower
gross margin this year.

Action & Recommendation
Pending full details from AKRA’s 1H10 financial results, which would be
released this week, we maintain our estimates and target price of
Rp1,320. Reiterate BUY.

Market Highlights

Bank Mandiri (UNDER REVIEW): Strong 2Q10 with more upside to come
On its first financial result under the new CEO (Mr. Zulkifli Zaini), Bank
Mandiri posted Rp4.03t profit for 1H10.
Loan grew by 9.7% YTD. It gave the bank optimism in reaching 18‐20%
FY10 growth, a figure higher than its official target of 15‐18%.
The bank expects ~Rp1t cash recovery from Garuda Indonesia upon the
airline’s IPO scheduled for 4Q10. Other major debts are more likely to be
restructured.
INDONESIA EQUITY RESEARCH
Page 2
Moreover, Mandiri is only one step away from securing a 5% tax discount
for 2011 onwards, by increasing its freefloat portion to a minimum 40%.

Analyst comment:
The 1H10 result is inline with our forecast. With a gradual increase in LDR,
we believe the bank will have no difficulty in adjusting to the upcoming
limit changes in LDR‐Reserve requirement.
Our BI rate estimate is maintained at 6.5% throughout 2010. However,
any increase in this benchmark should allow Mandiri to expand its NIM.
We are upgrading our earnings estimate on Bank Mandiri based on strong
loan growth and upside potential from tax discount.

Figure 1: Bank Mandiri’s 1H10 results
(Rp b) 1H10 1H09 % chg y/y 2Q10 1Q10 % chg q/q
Net Interest Income 9,369 8,660 8 4,735 4,634 2
Operating income 3,716 2,819 32 2,138 1,578 35
Operating expenses 7,684 7,098 8 4,171 3,512 19
Pre‐tax income 5,483 4,500 22 2,751 2,732 1
Net profit 4,036 2,927 38 2,033 2,003 2
Gross loans 216,301 180,130 20 216,301 200,378 8
Total assets 402,084 358,897 12 402,084 399,338 1
Total deposits 326,578 287,054 14 326,578 312,899 4
NIM (%) 5.1 5.4 5.1
Gross NPL (%) 2.3 4.8 2.4
LDR (%) 64.2 60.2 61.9
CAR (%) 14.5 14.0 15.3
Source: Company data, Kim Eng

Bank Rakyat Indonesia (HOLD): To acquire 80% Bank Agroniaga at
Rp100‐110/share
Bisnis Indonesia reported that BRI has set the acquisition price of 80%
stake in Bank Agroniaga at a range of Rp100‐110/share.
We expect the bank to share more details on the acquisition process on
1H10 result announcement this Friday.

Analyst Comment:
If accurate, the indicated price implies 0.9x‐1.0x 2009 PBV. This is lower
than Bank Agroniaga’s latest trading range of 1.2x‐2.0x PBV.
At this price we are positive on the acquisition as it should provide an
inorganic expansion opportunity for BRI.
We recommend HOLD on BRI with TP at Rp9,800/share (13.2x 2010F PER;
3.8x 2010F PBV).

Page 3
Bukit Asam (SELL): To acquire up to four coal mines this year
The company announced that it earmarks Rp1.5t to acquire up to four
coal mines this year, as a bid to boost production.
The company expects to sell 14.5m tons of coal in FY10, up 15% y/y.

Analyst comment:
With budget of Rp1.5t, we believe the size of acquisition to be small. We
also believe the company is to acquire greenfield projects, hence small
impact to production in FY10‐11.
We maintain our forecast for sales volume of 13.4m tons for FY10, below
the management’s target.
We recommend SELL on the counter with target price Rp13,800.

Kalbe Farma: Net profit surged 44% y/y in 1H10
Kalbe Farma reported 1H10 net profit of Rp572b, an increase of 44% y/y.
Sales rose 12% y/y to Rp4.71t while operating profit climbed 15% y/y to
Rp838b.

Analyst comment:
The result is slightly below consensus at 47% of FY10 estimate for both
operating and net profit.
On a quarterly basis, net profit rose 23% y/y to Rp316b in 2Q10 from
Rp256b in 1Q10.

Figure 2: Kalbe Farma’s 1H10 results
(Rp b) 1H10 1H09 % chg y/y 2Q10 1Q10 % chg q/q
Sales 4,707 4,217 12 2,518 2,188 15
Gross profit 2,384 2,070 15 1,286 1,098 17
Operating profit 838 698 20 452 387 17
Net profit 572 399 44 316 256 23
Gross profit margin (%) 50.7 49.1 51.0 50.2
Operating profit margin (%) 17.8 16.6 17.9 17.7
Net profit margin (%) 12.2 9.5 12.5 11.7
Source: Company data, Kim Eng

Bakrieland: Rights issue undersubscribed
Bisnis Indonesia daily reported that market only subscribed Rp2.56t or
80% of total rights issue plan of Rp3.2t, due to concerns over the
differential reporting with Bank Capital. Standby buyer Danatama
Makmur will cover the remaining Rp640b shortage. Earlier, Bakrieland
had downsized its rights issue to Rp3.2t from initial plan of Rp5.4t.
Separately, President Director of Bakrieland, Hiramsyah S Thaib, indicated
that 1H10 operating income rose by 35‐40% to Rp86‐89b from Rp64b in
1H10. Sales increased by 40‐50% to Rp516‐553b. Management is
optimistic that Bakrieland will be able to book Rp1.06t or 30% revenue
growth in FY10.

Page 4

Chart Pointers
IDX: The index is still moving along impulse wave 5, to level +3090.
Bullish harami on candlestick side. We prefer banking, base metal, and
infrastructure stocks. Today’s trading range is between 2952‐2993‐3017
(support) and 3058‐3090‐3116 (resistance).
BBTN: Positive cross over signal from momentum, with increasing
volume. Share price is moving along impulse wave 1. TRADING BUY.
INCO: The stock has double bottom in June‐July 2010. Technical rebound
is very sustainable. Near‐term moderate price target is Rp4300. TRADING
BUY.

Page 5

Commodities 23‐Jul‐10 22‐Jul‐10 Change (US$) Change (%)
Nickel (US$/ton) 20,281.00 20,182.00 99.00 0.49
Tin (US$/ton) 19,463.00 18,540.00 923.00 4.98
Gold (US$/t.oz) 1,189.20 1,194.95 (5.75) (0.48)
CPO Malaysia (US$/ton) 800.25 803.61 (3.36) (0.42)
Oil NYMEX (US$/barrel) 78.98 79.30 (0.32) (0.40)
Coal ‐ ARA region (US$/ton) 93.45 92.42 1.03 1.11
Weekly data 16‐Jul‐10 9‐Jul‐10 Change (US$) Change (%)

Coal ‐ Newcastle (US$/ton) 96.20 97.90 (1.70) (1.74)
Source: Bloomberg
Company ADR ADR Close Change Local (Rp) ADR Shares

Ticker 23‐Jul‐10 % Equivalent IDX Close % Prem
Telkom ‐ NY (US$) TLK US 36.02 (1.67) 8,141 8,150 (0.12) 40
Indosat ‐ NY (US$) IIT US 27.24 (0.37) 4,925 4,925 (0.00) 50
BLT ‐SG (Sin$) BLTA SP 0.04 (11.11) 264 255 3.49
Rp 9,040.00
Sin $ 6,597.29
Source: Bloomberg
Key corporate actions
Cum date Ex‐date Company Action Price (Rp) Note
26‐Jul‐10* DILD Stock split (2 (n) : 1 (o) * Trading date
23‐Jul‐10 26‐Jul‐10 PANS Final dividend 09 50
28‐Jul‐10 29‐Jul‐10 ARNA Final dividend 09 7
28‐Jul‐10 29‐Jul‐10 BRNA Final dividend 09 87
28‐Jul‐10 29‐Jul‐10 BUMI Final dividend 09 27.68
28‐Jul‐10 29‐Jul‐10 ELSA Final dividend 09 5
28‐Jul‐10 29‐Jul‐10 ESTI Final dividend 09 2
28‐Jul‐10 29‐Jul‐10 MICE Final dividend 09 20
30‐Jul‐10 2‐Aug‐10 UNSP Final dividend 09 3.8
2‐Aug‐10 3‐Aug‐10 KKGI Final dividend 09 10
4‐Aug‐10 5‐Aug‐10 CTRP Final dividend 09 4
5‐Aug‐10 6‐Aug‐10 PNSE Final dividend 09 60
9‐Aug‐10 10‐Aug‐10 JECC Final dividend 09 30
11‐Aug‐10 12‐Aug‐10 PLIN Final dividend 09 1.25
13‐Aug‐10 16‐Aug‐10 CLPI Final dividend 09 30.20
13‐Aug‐10 16‐Aug‐10 INDS Final dividend 09 250
18‐Aug‐10 19‐Aug‐10 MFIN Final dividend 09 24.48
2‐Sep‐10 3‐Sep‐10 TSPC Final dividend 09 35
8‐Nov‐10 9‐Nov‐10 MAIN Final dividend 09 56

Page 6

APPENDIX I: TERMS FOR PROVISION OF REPORT, DISCLOSURES
AND
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Indonesia |26 July 2010

Property: Bakrieland. Bisnis Indonesia daily reported that market only

Weekly data 16‐Jul‐10 9‐Jul‐10 Change (US$) Change (%)

Company ADR ADR Close Change Local (Rp) ADR Shares

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