Detikfinance Pemda NTB dan Antam Bagi Rata Jatah Saham Newmont

Pemerintah Daerah NTB dan Pemerintah Pusat yang diwakili PT Aneka Tambang Tbk (Antam) akan berbagi saham hasil divestasi saham PT Newmont Nusa Tenggara (NNT) secara adil, masing-masing akan mendapat porsi saham sebanyak 15,5 persen untuk hasil divestasi saham Newmont tahun 2006-2010.

"Pembahasan terakhir kan komposisinya 15,5 persen untuk Pemerintah Daerah dan mitranya, sedangkan untuk Antam dan mitranya juga 15,5 persen sebagai wakil pemerintah pusat," kata Menteri Negara Badan Usaha Milik Negara (BUMN) Mustafa Abubakar di kantornya, Jalan Medan Medan Merdeka Selatan, Jakarta, Selasa (10/11/2009).

Ia mengaku, pihaknya tinggal menandatangani surat untuk pembelian saham divestasi Newmont tersebut. Penandatangan dari pihak Kementerian Negara BUMN itu akan dilakukan hari ini, sehingga semua dokumen sudah siap untuk dibawa ke penandatangan sales and purchase agreement (SPA) bersama Newmont esok hari.

"Ini sudah di meja saya, tinggal tanda tangan. Kan kita mengejar deadline sebelum tanggal 12 nanti," tambahnya.

Menurutnya, porsi rata tersebut dinilai paling proporsional dalam pembelian seluruh saham hasil divestasi perusahaan tambang tersebut.

Total saham yang harus dilepas Newmont sesuai keputusan arbitrase jumlahnya 31 persen. Sebanyak 3 persen tahun 2006, lalu masing-masing 7 persen untuk tahun 2007 hingga 2010.

Associated Press Stocks mostly fall after rally as the dollar rises

Investors take a break after sharp rally; Dow edges higher while broader indexes slip

NEW YORK (AP) -- Caution returned to the stock market Tuesday as investors decided to slow an advance that has lifted the Dow Jones industrial average 475 points in five days.

Stocks mostly fell in light trading, though the Dow tacked on 20 points to close at a new high for the year. The modest advance came a day after the Dow shot up 200 points for the second time in three days.

Broader indexes slipped as the market again took its direction from the dollar. Stocks drove higher Monday as the dollar weakened and slipped Tuesday as the currency rose.

"People are reaching for a little less risk today after we've had such a run," said Bill Stone, chief investment strategist at PNC Wealth Management.

Record-low interest rates in the U.S. and the resulting slide in the dollar have been major forces behind the surge in stocks in recent months. A weaker dollar allows investors to borrow money cheaply, while low interest rates also encourage them to hold any assets other than low-yielding cash, such as stocks, commodities and bonds.

The falling dollar has enabled many investors to look past some of the economy's persistent trouble spots, including unemployment. The jobless rate rose to 10.2 percent in October, the highest level in 26 years.

A number of market watchers still believe this recent surge in stocks has been overdone given the weakness that remains in the economy, such as the sour loans still on banks' balance sheets. Still, some analysts said the ability of major stock indexes to hold their recent gains is a welcome sign.

Ryan Detrick, senior technical strategist at Schaeffer's Investment Research, said it's a good sign that the market isn't as volatile as last month, when big advances were followed by big drops. He sees a day of modest moves as a healthful sign of a market consolidating its moves.

"That fact that we're now sustaining some of the gains is encouraging," he said. "We expect that we'll continue to stair-step higher to the end of the year."

The Dow rose 20.03, or 0.2 percent, to 10,246.97, its highest close since Oct. 3, 2008. The Dow traded up to 10,260.80, a 12-month high. The five-day gain is the Dow's first since September and has pushed the index up 4.9 percent.

The broader Standard & Poor's 500 index slipped 0.07, or less than 0.1 percent, to 1,093.01, after six days of gains. The Nasdaq composite index fell 2.98, or 0.1 percent, to 2,151.08.

Bloomberg Goldman Keeps Crude Forecast at $85 a Barrel by End of Year

Nov. 10 (Bloomberg) -- Goldman Sachs Group Inc. is maintaining its forecast for West Texas Intermediate crude to reach $85 a barrel by the end of this year and $95 next year as it expects the market to shift into a “global deficit” in coming months.

“Strong activity” in China’s petrochemical and metals sectors is likely to provide support to global oil demand, while production outside the Organization of Petroleum Exporting Countries is set to decline, generating “further price and returns upside,” Goldman’s analysts led by Allison Nathan said in a report dated Nov. 9.

“We believe that recent performance is just the beginning of strong expected commodity returns over the coming 12-24 months,” the report said. “Our economist’s outlook for the Chinese economy remains constructive, which supports our view that demand for these industrial-related petroleum products will likely remain strong, providing support to global oil demand.”

WTI crude for December delivery traded at $78.91 a barrel, down 52 cents, in electronic trading on the New York Mercantile Exchange at 11:11 a.m. Singapore time. It reached a one-year high of $82 on Oct. 21, as rising equities boosted investor confidence and a falling dollar encouraged buying of physical assets. Prices have gained 77 percent this year.

To contact the reporter on this story: Ann Koh in Singapore at akoh15@bloomberg.net

Reuters Thai coal miner Banpu Q3 net up, beats forecast

BANGKOK, Nov 10 (Reuters) - Thailand's top coal miner, Banpu BANP.BK, said on Tuesday its third-quarter net earnings rose a higher-than-expected 22 percent, helped by better average sale prices.

Banpu, also the fourth-largest coal miner in Indonesia, posted a net profit of 3.81 billion baht ($114.4 million), or 14.02 baht per share, compared with 3.11 billion baht a year earlier.

Profit was down from 3.98 billion baht in the previous quarter.

Ten analysts polled by Reuters had forecast a net profit of 3.18 billion baht for the July-September quarter.

Analysts said lower coal prices would hold down its net profit in the fourth quarter, but a recovery in demand in tandem with the global economy could drive prices up in 2010.

Banpu stock gained about 28 percent in the July-September period, outperforming a 20 percent climb on the broader market .SETI. Banpu closed down 0.4 percent on Tuesday ahead of the earnings announcement. ($1=33.31 Baht) (Reporting by Ploy Ten Kate; Editing by Alan Raybould)

Bloomberg Crude Oil Falls After Ida Dissipates, the U.S. Dollar Gains

Nov. 10 (Bloomberg) -- Crude oil dropped as Tropical Depression Ida weakened, allowing workers to return to offshore platforms in the Gulf of Mexico, and as the dollar climbed.

Oil fell 0.5 percent after Ida blew ashore on the U.S. mainland today and deflated. Chevron Corp. said its Mississippi refinery was unaffected and Murphy Oil Corp. plans to resume output at an offshore platform today. The greenback’s gain curbed the appeal of commodities to investors.

“I doubt there was any severe damage caused by Ida,” said Bill O’Grady, chief market strategist at Confluence Investment Management in St. Louis. “There will probably be some impact on next week’s inventory data, but that’s it.”

Crude oil for December delivery fell 38 cents to settle at $79.05 a barrel on the New York Mercantile Exchange. Prices have increased 77 percent this year.

Prices were down from the settlement after the American Petroleum Institute reported at 4:30 p.m. that U.S. crude-oil stockpiles increased 1.22 million barrels to 337.5 million. December oil dropped 75 cents, or 0.9 percent, to $78.68 a barrel in electronic trading at 4:31 p.m.

Ida made landfall this morning in Alabama. The storm’s sustained winds dropped to 35 miles (56 kilometers) per hour from 45 mph earlier, the National Hurricane Center reported earlier today.

Murphy plans to restart output today at the Medusa offshore platform in the Gulf, a company spokesman said. Production at the Thunder Hawk platform will resume tomorrow. more...

Palmoil HQ UPDATE: Analyst Fry Trims Crude Palm Oil Price Forecast On Record Output

Top industry analyst James Fry Tuesday revised the crude palm oil price outlook after Malaysia posted a jump in palm oil output to a record high 1.99 million metric tons in October.

Fry shaved MYR250 off his previous outlook, now projecting CPO prices may now rise to MYR2,375/ton by April if Brent crude oil holds steady at $75 a barrel, he said at a regional palm oil conference.

Malaysia's October palm oil output, which has risen 27% to 1.99 million tons, the highest monthly output on record, indicate palm oil stocks may rise to 2.1 million tons towards the end of the year, Fry, chairman of U.K.-based LMC-International Ltd., said.

In offering his revised price outlook, Fry pointed out that ample palm oil stocks may lead to "a lower premium for CPO prices over Brent crude prices in the next two-three months," he said.

Domestic palm oil reserves jumped 25% on month to a 10-month high of 1.98 million tons at the end of October, the Malaysian Palm Oil Board said earlier in the day.

-By Shie-Lynn Lim, Dow Jones Newswires; +603 2026 1233; shie-lynn.lim@dowjones.com

(END) Dow Jones Newswires

November 10, 2009 08:02 ET (13:02 GMT)

Copyright (c) 2009 Dow Jones & Company, Inc.

Palmoil HQ Crude Palm Oil Ends Down; Record High Output,Stocks Up

Crude palm oil futures on Malaysia's derivatives exchange ended lower Tuesday as higher stocks and rising production weighed on prices, even as exports performed above expectations.

The benchmark January contract on the Bursa Malaysia Derivatives ended MYR24 lower at MYR2,242 a metric ton after trading in a range of MYR2,235-MYR2,285/ton.

Prices traded higher in the morning session as palm oil exports during the Nov. 1-10 period performed better than expected.

Malaysia's palm oil exports during the period were up 19%-22% on month due to higher volumes being shipped to the E.U., Pakistan and India, according to data from two cargo surveyors.

Cargo surveyor Intertek estimated Malaysia's palm oil exports at 403,302 tons, up 19% on month.

Another cargo surveyor, SGS (Malaysia) Bhd., estimated exports at 421,311 tons, up 22% on month.

The export estimates came in above market expectations of a 14%-16% rise in shipments to 394,000 tons.

But the increase in export volume failed to prevent CPO prices from falling into negative territory as record high production pushed stock levels to a new high.

Malaysia's October palm oil output rose 27% compared with September, to 1.99 million tons, the highest monthly output on record, said the Malaysian Palm Oil Board.

Palm oil stocks rose 25% on month to a 10-month high of 1.98 million tons at the end of October.

The October stock level was well above market expectations of being in a range of 1.75 million to 1.80 million tons.

However, prices didn't fall too much despite the bearish news.

"Prices seem well supported at the MYR2,230 level. In fact, the selling pressure during afternoon trade was a fairly muted reaction, as there was no panic selling," said a Kuala Lumpur-based trader.

Cash palm olein for January/February/March was offered at $702.50/ton.

Cash CPO for prompt shipment was offered unchanged at MYR2,180/ton.

A total of 11,963 lots of CPO were traded on the BMD, versus 9,955 lots Monday.

Open interest stood at 94,207 lots Tuesday, up from 94,014 lots. One lot is equivalent to 25 tons.

Closing BMD Crude Palm Oil (CPO) futures prices in MYR/ton at 1032 GMT:

Month Close Previous Change High Low
Nov 09 2,176 2,200 Dn 24 2,180 2,175
Dec 09 2,224 2,250 Dn 26 2,254 2,210
Jan 10 2,242 2,266 Dn 24 2,285 2,235
Feb 10 2,259 2,285 Dn 26 2,298 2,256

-By Fawziah Selamat, Dow Jones Newswires; +62 21 3983 1277; fawziah.selamat@dowjones.com

(END) Dow Jones Newswires

Mandiri Sekuritas Bumi: Another pricey debt (BUMI, Rp2,300, Buy, TP: Rp4,000)

�� Bumi Resources has announced the pricing of its US$300mn 12% Guaranteed Senior Secured Notes due 2016 (“Notes”) to be issued by Bumi Capital Pte. Ltd. The Notes are unconditionally and irrevocably guaranteed by the Company and certain of its subsidiaries. The Notes are expected to be issued on 13 November 2009 and to mature on 10 November 2016. The Notes will bear interest at a fixed rate of 12% per annum, payable semiannually in arrears in May 10 and November 10. The Company intends to use the net proceeds of the offering for initial capital expenditures and mine exploration and development expenditures at the Dairi Project of Herald Resources Ltd. (a subsidiary), future acquisitions and investments in mining related companies, and working capital and general corporate purposes.

�� Bumi currently has US$1.9bn debt with CIC, US$375mn 9.25% p.a. convertible bond (conversion price: Rp3,250/share) and US$102.5mn zero coupon convertible bond (conversion price : Rp3,366.9/share). With the new issuance total debt will be lifted to US$2,677.5mn or 2.56x FY09 estimated EBITDA. The USS375mn CB has negative pledge of 3x Total debt to EBITDA. Excluding the new debt, which we have not incorporated into our model, EBITDA/interest coverage for FY09F and FY10F are 10.2x, and 2.9x. Bumi will start to have difficulties in the payment if coal price falls below US$55/ton (Newcastle price). At Rp2,300, Bumi is trading at 11.8x PER09F and 20.2x PER10F, with EV/EBITDA 09F of 6.0x and EV/EBITDA 10F of 5.7x. We are maintaining our Buy call despite corporate actions so far has been detrimental to its profitability without apparent benefits to shareholders (especially minority). We are taking a position of still having ‘good faith’ in the management ability to create value , which admittedly is eroding as time passes.

JP Morgan

* After the G20 finance ministers gave a de facto green light to dollar sellers and vowed to maintain stimulus programs, investors piled aggressively back into risk assets.

* Two interesting reasons why US strategist Tom Lee is bullish on S&P500. Growth over Value; Small-cap over Large-cap; Cyclicals over Defensives; and High Beta over Low Beta.

* Plantations analyst Simone Yeoh calls for 10-15% CPO price rise in 1Q10. Buy AALI.

* PLN will raise power tariff by 20-25% next year, Marubeni & Mitsui will invest US$1.4bn to build 1400MW power plant. (Bisnis Indo).

* West Nusatenggara regional gov't is giving ANTM the chance to offer a similar deal as Multicapital, for the 14% stake in PT Newmont NT. But time is running out, as ANTM may not have the chance to create a new entity. (Bisnis Indo).

* Energi Mega disclosed the purchase price for the 10% stake in Masela gas block. The deal is priced at US$77mn, for a conservative 2P reserves estimate of 14 TCF. That translates to an implied price of US$0.33/boe, vs. normal M&A price range of around US$2.00/boe.

Bullish on US equity market
US equity strategist Tom Lee wrote two reports over the past week on why he is bullish on a 3mo horizon. Both reports are interesting and worth a read.

Reason #1. 23% of fund managers are missing their benchmarks by 500bp.
When looking at performance, the level of fund managers "missing" seemed to be a more important factor, rather than those managers beating. Basically, what this supports is that between October and YE, those behind seem to be more motivated than those ahead, in terms of generating alpha. Those "missing" tend to buy Beta, Small-cap, Growth, and Cyclicals...In general, equities tended to have stronger YE performance when more managers were "missing" their benchmarks (see Figure 8) with 1998 and 1999 serving as good examples - those two years saw a Oct-to-YE rise of 10%-12% and those were the

years in which 30%-plus of managers were missing their benchmarks.
https://mm.jpmorgan.com/servlet/UserDocsHelperServlet?action=openpdf&docId=GPS-342333-0

Best approach on this theme:
. Growth over Value;
. Small-cap over Large-cap;
. Cyclicals over Defensives; and
. High Beta over Low Beta.

Reason #2. S&P500 typically up 12% in the 4mo prior to payrolls turning positive.
As we noted last week, the surge in GDP per worker to an all-time high of $120k, and up 2.8% yoy, is a strong signal that payrolls are likely to turn positive by early 2010, and as early as January (see "US Equity Strategy FLASH: Surge in GDP per worker suggest positive payrolls by early 2010" dated 10/29/09). The period leading to a positive turn in payrolls is extraordinarily strong for the S&P 500. Since 1949, the S&P 500 has gained 12% in the 4 months leading to positive payrolls (see Figure 6), with a gain of 17%-25% seen in the 1975/1980 years, when unemployment surged similar to today.
https://mm.jpmorgan.com/servlet/UserDocsHelperServlet?action=openpdf&docId=GPS-341066-0

Best sectors on this theme
. Technology
. Consumer discretionary
. Basic materials

Implications for Indonesia market
For basic materials - INCO, AALI, BUMI
For high beta - DOID, GJTL
For growth - ASII, INTP

Forecasting CPO price rise in 1Q10 - buy AALI
https://mm.jpmorgan.com/servlet/UserDocsHelperServlet?action=openpdf&docId=GPS-343351-0

Plantation analyst Simone Yeoh expects CPO price to recover 10-15% by 1Q10 driven by tight soybean supply up to Mar-10, the low output season for palm oil, which should lead to declining inventories, and the global economic recovery. He is forecasting an average CPO price of M$2,450/t for 2010E (M$2,240/t YTD in 2009). He sees more upside than downside risk to this forecast, based on risk of El Nino, crude oil price rally, and drought in Argentina (soybean). Meanwhile, prices of fertilizer, potash have fallen by 50% to US$400/t since 1Q09. Key drivers for 1Q10 CPO price rise:

(1) Continued tight soybean supply up to end-1Q10 before the South American harvest sets-in. Supply should remain tight over this period even after accounting for the current US harvest which has pickedup over the past week with improved weather.

(2) Low CPO output season during the period and hence inventories are expected to show a declining trend M/M by 1Q10 after peaking towards end of 2009.

(3) A supportive demand-supply balance for palm oil next year backed also by the global economic recovery with the CPO global stock-usage ratio forecast to drop from 15.4% to 13.9% over Sept-09/Sept-10E (see Table 7 in Appendix section).

Malaysian CPO stocks trade on 18x CY10E (historical mean: 15x), and we would consider locking in some profits at +1SD to historical mean or as sector PE approaches 20x. Closer to home, Astra Agro Lestari (Outperform) trades on 12.9x CY10E with a forecast dividend yield of 5%.

Commodity News
December crude climbed $2.00 to $79.43 a barrel.
December gold added $5.70 to $1,101.40 an ounce.
LME base metal futures closed mostly higher. Aluminium firmed 2.1%, copper 0.8% and nickel 0.4%. Zinc eased 0.2%. The CRB index gained 4.39, or 1.6%, to 273.83.

CIMB REGIONAL Plantation | Sector update - A better harvest in 2010 (Upgrade to Outperform)

~ We are raising our regional plantation sector rating from Neutral to OVERWEIGHT following our 7-18% CPO price upgrades for 2010-11, 3-39% earnings upward revisions and 2-45% target price upgrades as we roll them over to end-2010.
~ We believe plantation stocks will outperform in the short term as CPO price prospects look rosy for 1Q10 due to supply worries and a pick-up in demand from CNY festivities, global economic recovery, a smaller domestic oilseed crop from India and increased biofuel mandates.
~ Singapore planters remain our top pick, followed by the Indonesian and Malaysian planters.
~ We are upgrading our call on Astra Agro, Bakrie Sumatra, London Sumatra, KLK and Genting Plantations.
~ For exposure to the regional plantation sector, we continue to recommend large-cap liquid planters.
~ Our top picks are Wilmar, Sime Darby, Astra Agro, London Sumatra, Indofood Agri, Sampoerna Agro and Golden Agri.

Danareksa TLKM (TP Rp11,200) - Danareksa: Riding on a new wave

Buy call reiterated
Considering the stiff competition, Telekomunikasi Indonesia (Telkom) has announced a pretty good set of 9M09 results. An encouraging development this year has been the end to the damaging price war which did little to support revenues growth. For its part, Telkom has changed its strategy and is focusing on balanced pricing and service quality in an effort to maintain its existing customers and acquire new ones. So far the strategy seems to be working well as Telkom is continuing to dominate the market. The company’s balance sheet is strong and this should support capex in future years. We maintain our BUY recommendation on the counter with a target price of Rp11,200, translating into PER FY10-11 of 16.3-14.5x and EV/EBITDA FY10-11 of 5.7-5.1x.

“New wave” revenues are key to future growth
Telkom’s revenues can be differentiated into legacy revenues and “new wave” revenues. The legacy revenues are mostly the company’s revenues from its core businesses that are already mature in respect to both its cellular and fixed line services and are recording low single-digit growth. As for the “new wave” revenues – that is revenues from the more prospective business segments such as Data, Internet and IT applications – the growth prospects are much brighter. Telkom currently only has 2.4mn broadband subscribers (wireline & wireless) and if market penetration can get anywhere near to the cellular market penetration then breakneck growth is assured ( Indonesia currently has around 150mn cellular subscribers). Growth has already been solid. From only 6.6% in FY04, the new wave segment now contributes around 9.0% of total revenues.

Cellular: on the right track
The end of the price war is a reassuring development and raises confidence that Telkom’s cellular business is on the right track. This business is extremely important to Telkom since cellular revenues account for the bulk (61%) of Telkom’s total revenues. In 3Q09, Telkomsel added 3.7mn subscribers with relatively stable ARPU of Rp48,000/month. The revenues per minute (RPM) are estimated at around Rp200 per minute. Another positive has been Telkomsel’s good cost control. This has helped lift the EBITDA margin to 66.1% in 9M09 from 64.7% in FY08. With the price war now over, margins should hold steady considering the industry is already quite mature.

Rp20tr of capex planned for 2010
Capex is the main driver for growth as technological innovations bring about faster and better quality communications. For 2010, Telkom has indicated capex of Rp20tr, with 65% of this amount allocated to Telkomsel, 27% to Telkom and the remainder to support its other subsidiaries. For the “new wave” business segment, the allocated capex is Rp3.75tr (+29% higher yoy), consisting of direct capex of Rp1.75tr and indirect capex of Rp2.0tr. With net gearing of only 42.6%, the company will not face any financial constraints in undertaking its capex plans.

CLSA cement supremacy, Gresik upgrades

Nick Cashmore upgrades his earnings forecast and TP for Semen Gresik (SMGR IJ). Our new fair value of Rp8,000 (previously Rp5,000) offers 19% further upside. Maintain Outperform.

Indonesia cement companies are making a fortune. The top 3 cement companies control over 90% of the market means enormous pricing power. Operating margins are the highest in Asia.

The key question to ask will be how sustainable is these margins? Looking at the industry dynamics where incremental (small) capacity addition is still from the top 3 players and demand steady as a base case scenario, cement companies will be able to enjoy an extended period of high profitability.

It is important to note the biggest chunk of cement consumption is still from housing (where we think we are at the infancy of a structural bull market - record low interest rates, the absence of leverage, rapid urbanization, young population), blue-sky will be from the pick up from infrastructure investments as prioritized from President SBY's second term administration.

While we are positive on overall cement in Indonesia, we prefer Holcim (SMCB IJ) and Indocement (INTP IJ) over SMGR. The table below shows more clearly why SMGR will lag peers even with this volume growth. Exports have been cut 50% this year to fund domestic demand and that is helping to boost margins; that will continue for the next few years in our view. But even with modest 5-6% increase in domestic volume growth this will absorb all of the marginal increase in supply for the next five years. CapU will dip the most in 2013 when everything is on stream but still not below 90%.

The bottom line here is SMGR is not going to be destroying cement prices when this capacity comes on stream and the industry still faces bottlenecks, particularly in 2011.

Key points from the report:
SMGR’s9M09 gross margins rose to a record high of 48%, driving margin improvements across the board. However, further margin gains are likely to be modest from here.

SMGR is moving ahead with expansion plans, will add 22% to capacity by 2012. This’ll be matched by growth in domestic demand.

Capex burden is manageable. SMGR to spend US$1.3bn over the next 3 years, largely to be funded internally.

SMGR is generating US$400m in annual operating CF with US$300mn in cash as of 9M09.

Tight capacity utilization = SMGR will lose market share but the benign (oligopolistic) competitive landscape = returns on capital will remain high

Valuations: not demanding. Stock trades at 12.3x 2010 PER, and our new TP of Rp8,800 is based on a blended average of 2010/2011 earnings and a PER multiple of 14x.

KimEng CPIN: Strong results amid superb margin expansion, BUY

Net profit surpassed expectation
In 9M09 net profit surged 172% YoY to Rp1t, beating our forecast. The net profit figure is a record high in the company’s history since listed in JSX in 1991. Higher net profit was spurred by higher sales from all divisions (poultry feed: 5% YoY, DOC: 14% YoY, and processed chicken: 22% YoY), lower raw material cost and higher efficiency in operating expenses. As a result, gross margin and operating margin rose to 18.5% and 13.6% respectively in 9M09 (from 13.8% and 7.7% in 9M08). In addition, higher net profit also came from stronger Rupiah translated into huge foreign exchange gain, as more than 50% of total debt is US$ denominated. Without forex gain, the net profit was still above our expectation

Strong operating cash flow and healthier balance sheet
In 9M09 the company booked strong operating cash flow of Rp1t vs. negative operating cash flow (Rp87b) in 9M08. It was mainly due to lower working capital. We also see the company’s balance sheet figures look healthier in 9M09. The company booked account receivable and inventory decline of 19% YoY and 24% YoY respectively to Rp787b and Rp1,509b. Inventory turnover reached 62 days in 9M09 vs 83 days in 9M08, while collection period reached 27days in 9M09 vs.35 days in 9M08. The company also reduced debt. Based on 9M09 financing cash flow figures, we see the company paid its short term debt of Rp942b and long term debt of Rp156b. We expect the company to continue to reduce debt until YE09 and YE10. As a result, we expect gearing ratio to go lower to 24.1% in FY09 and 3.3% in FY10 from 173.4% in FY08. As it will huge cash next year, we expect the company potential to distribute cash dividend. With assumption of DPOR at 30%, DPS is Rp126 or 6.1% yield. The company has not distributed dividend since last two years.

Rosy industry outlook
We see industry outlook remains positive. The Indonesia Feed mills Association expects feed mill industry growth of 8% to 14m tons in 2010, better than growth target this year of 5% to 13m tons. It is related to robust chicken and egg consumption. Chicken consumption during five next years is expected to reach 7 kg per capita per year compared to current consumption 4.8 kg per capita (7.8% CAGR). In addition, egg consumption is expected reach to 8 kg per capita per year, compared to current consumption of 5 kg per capita per year, or (9.9% CAGR). Management plans to expand its capacity. Management expects the company to increase capacity around 600,000 tpa to 4.6m tpa in 2012.We have factored in poultry feed expansion plan in our estimate.

Retain BUY; raised target price to Rp3,300
We raised our target price for Charoen to Rp3,300 (equivalent to 7.9x 2009 P/E and 7.2x 2010 P/E) from Rp1,550 previously. We raised our target price as 9M09 earnings surpassed our estimate, industry outlook remains firm, poultry feed and DOC to undergo capacity expansion, healthier balance sheet, strong operating cash flow, potential to distribute dividend next year and revised earning estimate in FY09-13. Our target price is based on PER and DCF method, it is still below the highest P/E level in last five years of 14.2x. Based on our revised earnings estimates, the stock is trading at 5.0x 2009 P/E and 4.5x 2010 P/E (with a 59% potential upside). Reiterate BUY.

Mandiri Sekuritas Electricity tariff to increase 20%-25% next year

�� Government plan to increase the electricity tariff by 20%-25% in 2010. In the first phase, the increase would only set for above 6,600 VA or nonsubsidized household, business, and industries subscriber. Currently, government allocated Rp48.2tn and Rp40.4tn in 2009 and 2010 budget respectively for electricity subsidy, as PLN sold electricity below its cost of around Rp1,400/kWh (the tariff for household, business, and industry were Rp600/kWh, Rp980/kWh, and Rp780/kWh, respectively).

�� Although we believe, the increase would be positive for PLN financial performance that could provide room for expansion, we concern on its impact to inflation next year. Electricity tariff is one the biggest contributor on CPI basket of around 2.8%, compared to rice, which is the highest contributor, of around 4.2%. At this juncture, we maintain our inflation forecast at 6.3% in 2010, which is higher than this year expected inflation of 4.0% yoy.

Mandiri Sekuritas 3Q09 GDP: Indonesia economy may have grown faster by 4.1% yoy

�� Today, the Statistics Agency is scheduled to announce Indonesia’s 3Q09 GDP. We expect the economy to have grown faster by 4.11% yoy (4.17% yoy consensus estimate) compared with the previous quarter growth of economic growth of 3.99% yoy.

�� We expect private consumption may have grown faster, as low inflation and increase in consumer bank financing may have supported private consumption growth. Similarly, investment activities may have rebound following rosier Indonesia’s economic growth prospect. Meanwhile, contribution in external demand, we think, likely to be less as pickup in domestic demand may drive demand for imported goods higher.

�� On the production side, we expect, non-tradable sectors (i.e. communication, utilities, and construction) may have continued to drive the economy. However, we expect to see slight improvement in manufacturing sector, as pickup in machinery and transports imports seen in 3Q09.

�� We remain positive on the Indonesia’s economic growth outlook in 2009 and 2010. As government commits to boost infrastructure development, remain solid private consumption, coupled with recovery in global demand, we expect the economic growth to accelerate to 5.2% yoy in 2010 from expected 4.3% yoy in 2009.