Positive data points
for thermal coal
Macquarie commodities team keeps its cautious outlook on
thermal coal, but recent developments on China coal inventory and price gap
between domestic and export look encouraging to me. China’s thermal coal
inventory is at three year low, while export price is now cheaper than
domestic.
This could point to an increased importation of thermal coal by China in the
short term. My personal favourite coal names are Bumi Resources and
Adaro.
Figure 1. China thermal coal inventory
Figure 2. Price gap
between domestic and import for thermal coal
Channel checks:
Telkomsel to underspend in 2009
We are hearing about the possibility of Telkomsel
underspending its US$1.5bn capex budget in 2009 (flat YoY), as its board of
commissioner has only approved a US$0.7bn budget thus far. Obviously there is a
possibility that the BOC increases its budget approval as the year progress,
but
I think the chance is less than 50:50 considering its main competitors have
been
guiding for 40-50% lower capex YoY.
If we were to input a US$700mn capex bill for 2009, the
consolidated FCF forecast for PT Telkom will go up by 44% to Rp17.6trn, or a
12%
FCF yield (from 8% based on current estimate). The consolidated EPS will inch
up
by 2%, implying an FY09 P/E ratio of 11.4x.
What strikes me is the ultra-conservative EBITDA margin
assumption by Kenneth Yap (analyst), as he forecasts a 350bps margin
contraction
from 2008 to 2009 for Telkomsel. Telkomsel’s EBITDA margin in 2008 was 52.2%,
vs. 2009 forecast of 48.7%. His top line growth estimate of 12% could be a tad
aggressive, but overall I think the consensus estimate for PT Telkom is on the
conservative side. MacQ rates Outperform.
Perusahaan Gas Negara:
stress testing for worst case scenario
Almost 20 out of the 20 Street analysts covering PGAS
have BUY rating on the stock. Even the used-to-be big bears on the stock have
given up and become bulls. But somehow, the stock has continued to lag the
broader market and investors have started to wonder why. What could they be
missing?
I can personally think of one reason. The Street’s 2010
capex assumption for PGAS appears to good to be true. The company has not
provided official guidance for 2010, but Macquarie is assuming US$337mn for
2009
and US$370mn for 2010. Looking at an operating cash flow forecast of US$1.0bn
for 2010, this state-owned company will likely spend much more than US$370mn.
So we have stress tested the 2010 EPS forecast, by 1)
taking out any gas price increase assumption and 2) increase the capex number
from US$370mn to US$500mn. Doing that, we see a lower 2010 EPS figure of Rp232,
vs. Macq estimate of Rp327 and consensus of Rp247. On the worst case EPS of
Rp232, the stock trades on 10.3x FY10 with mid-teen EPS growth FY11-12, still
looking reasonable. MacQ rates Outperform.
Snippets:
Macro –
Indonesian state budget went surplus of Rp2.9tn in 1Q09, with revenue of
Rp162.6tn and spending of Rp159.7tn. On a side note, tax revenue increased by
1.92% YoY to Rp113.7tn in the same period. Tax revenue without oil and gas grew
by 4.9% YoY to Rp101.9tn. Only 47% out of 8.8mn tax payers deposit the tax
forms
in March 2009.
Bakrie
Plantations – revised 6 accounts of its 2008
financial statement attributing to typo made by the auditor, including long
term
debt of Rp2.64bn from Rp2.62bn, forex translation in cash flow of Rp46.98bn
from
Rp287.08bn. Other revisions include Rp1.52bn of plantation write-off and
Rp367.78bn of subsidiary acquisition.
Mobile-8
Telecom – will hold an EGM for bond holders on 29 April,
after defaulting on Rp20.88bn coupon payment last March. The CDMA operator will
propose bond restructuring. If bondholders agree to execute collaterals, the
proceeds can be used to repay the bonds. The company’s cash balance was down by
97.2% YoY to Rp23.7bn in 2008.
Kalbe Farma –
will pay off Rp300bn maturing bond using internal cash in June. The company is
also allocating Rp300bn for this year’s capex to add factory machineries,
branch
penetration, R&D, and strengthen marketing.
Chinese loans –
Two Chinese banks, China Exim Bank (Cexim) and Bank of China will disburse
US$1.354bn within the next 3 months to four power plants: PLTU Pelabuhan Ratu
(3x300MW), PLTU Aceh (2x100MW), PLTU Pacitan (2x300MW), and PLTU Teluk Naga
(2x300MW). The interest rate is not determined yet but will use LIBOR. The
10,000 MW project will need US$4.9bn forex and Rp19tn Rupiah funding. US$1.9mn
(excluding this new US$1.3bn) and Rp15tn out of the project funding needs have
been signed.
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