DAILY INSIGHTS EQUITY RESEARCH

Tuesday, 29 April 2008 MINING /UPDATE

BUY
Maintain

Price Rp31,800
Timah
Target Price Rp33,500
Unchange
1Q08 results: saved by higher tin price
Reuters Code TINS.JK
Bloomberg Code TINS IJ
1Q08 results: saved by higher tin prices
No. of shares (mn) 503.3
TINS recorded 1Q08 earnings of Rp487bn (+55% yoy) on the back of higher selling prices (+36%),
Market cap (Rp bn) 16,005
despite declines in tin metal sales volume (-30% yoy) and higher unit COGS (+29% yoy). The 1Q08
(US$ mn) 1,737
earnings were also in line with our FY08 estimate mainly due to higher-than-expected selling
Weight in JCI (%) 0.9
prices.
3mo Avg. daily T/O (US$ mn) 8.0

Price (Rp) Slightly lower sales

12 mos Hi/Lo 34,950/9,200 The higher selling prices (+36% yoy) were offset by lower tin metal sales volume (-30% yoy). This
led to a slight decline in 1Q08 sales (-3% yoy) to Rp1,812bn. The 30% decline in volume stemmed
PER - 2008F (x)
12 mos Hi/Lo 8.9/2.4 from the impact of the investigation into one of the Company’s barges by the police. As a result
of this incident, TINS postponed delivery to 2Q08, although TINS’ customers were already aware
EV/EBITDA - 2008F (x) of the situation.
12 mos Hi/Lo 5.1/1.0

Key Financial 08F/09F Lower production

Net Gearing, % net cash Tin ore production declined by 61% on the back of lower inland production (-69%) despite higher
ROAA, % 36.2/28.4 offshore production (+22% yoy). The decline in the inland production was due not only to the
ROAE, % 51.4/37.5 police investigation into the company’s shipments, but also because of the very high inland
Price Relative to JCI (%) production in 1Q07 when TINS was requested by the government to buy tin ore from small miners
1 mo 19.6 after closure of private smelters.
3 mos 32.4
6 mos 100.0
Higher costs
12 mos 136.3
TINS was successful in increasing the blended gross margin of its tin business from 36% in 1Q07
USD/IDR - YE (Rp) to 40% in 1Q08. This was due to, in our view, higher tin prices coupled with the company’s ability
2007 9,400 to regain control of the tin market in the Bangka island. Nonetheless, it should also be noted that
2008F 9,445
the increase in the margins was only small despite the significant increase in the tin price. This also
Major shareholders (%) shows that costs increased, albeit at a lower rate, along with the higher selling prices.
Govt. of Indonesia 65
Est. free float 35 Maintain BUY
We maintain our BUY recommendation on the stock due to a favourable outlook for the tin market.
TINS (LHS) relative to JCI (RHS)
Rp % Our target price remains Rp33,500, implying a FY08 PER of 8.6x.
36,000 160
130
29,000
100
22,000 70
40 Year end to Dec, Rp bn 2006 2007 2008F 2009F 2010F
15,000
10
8,000 -20 Revenue, Rp bn 4,076 8,542 8,720 7,976 6,262
6/4/2007

7/9/2007

2/4/2008
4/30/2007

8/13/2007

9/17/2007

3/10/2008

4/14/2008
10/22/2007

11/26/2007

12/31/2007

EBITDA, Rp bn 520 2,879 3,113 3,078 2,069

Net profit, Rp bn 208 1,785 1,967 1,893 1,260
Core profit, Rp bn 241 1,913 1,974 1,901 1,268
EPS, Rp 414 3,546 3,908 3,761 2,504
EPS growth, % 93.6 757.4 10.2 (3.8) (33.4)
Isnaputra Iskandar, CFA Core EPS, Rp 479 3,801 3,922 3,778 2,519
(62-21) 350 9888 ext. 3504 Core EPS growth, % 66.1 692.8 3.2 (3.7) (33.3)
isnaputra@danareksa.com PER, x 76.9 9.0 8.1 8.5 12.7
Core PER, x 66.3 8.4 8.1 8.4 12.6
PBV, x 9.5 5.1 3.6 2.9 2.6
Danareksa research reports are also EV/EBITDA, x 31.8 5.9 4.6 4.3 6.0
available at Reuters Multex, First Call Yield, % 0.3 0.5 3.9 4.9 4.7
Direct and Bloomberg.

www.danareksa.com
29 April 2008 DAILY INSIGHTS

Exhibit. 1Q08 results

1Q07 1Q08 yoy 2008F A/F 4Q07 1Q08 qoq

% % %

Average exchange rate, Rp/US$ 9,134 9,291 2% 9,343 99 9,299 9,291 0

Tin ore production, Ton Sn

Inland 20,230 6,178 -69 43,000 14 1,442 6,178 328
Offshore 2,099 2,552 22 15,000 17 5,793 2,552 -56
Total 22,329 8,730 -61 58,000 15 7,235 8,730 21

Tin metal sales, M tons 14,554 10,176 -30 58,000 18 11,657 10,176 -13

Average tin price, US$/Mton 12,635 17,133 36 15,000 114 16,391 17,133 5
Tin COGS, US$/Mton 8,039 10,352 29 9,337 111 9,906 10,352 5
Margin, US$/Mton 4,596 6,781 48 5,663 120 6,485 6,781 5
Blended gross margin, % 36 40 38 40 40

Sales, Rp bn 1,859 1,812 -3 8,720 21 1,959 1,812 -8

Tin metals 1,680 1,620 -4 7,885 21 1,761 1,620 -8
Coal & others 179 192 7 835 23 199 192 -3

Gross profit, Rp bn 600 866 44 3,184 27 715 866 21

Operating profit, Rp bn 523 767 47 2,812 27 675 767 14
Net profit, Rp bn 314 487 55 1,967 25 520 487 -6

Margins, %
Gross margin 32 48 37 37 48
Operating margin 28 42 32 34 42
Net margin 17 27 23 27 27

Source: Danareksa Sekuritas & Company

2
29 April 2008 DAILY INSIGHTS

Share price and Recommendation

Date 4-Oct-07 1-Nov-07 7-Jan-08 1-Apr-08 29-Apr-08

Rec BUY BUY BUY BUY BUY
Price Target, Rp 18,250 25,000 33,500 33,500 33,500

36,000

32,000

28,000

24,000

20,000

16,000

12,000

8,000
10/25/2007

11/16/2007

12/10/2007
4/30/2007

5/22/2007

6/13/2007

7/27/2007

8/20/2007

9/11/2007

10/3/2007

1/23/2008

2/14/2008

3/31/2008

4/22/2008
7/5/2007

1/1/2008

3/7/2008

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