Top three stocks to take profit from:
1. PT Inco (INCO) -- cheaper to buy global diversified miners. 2. Astra Agro Lestari (AALI) -- CPO price momentum weakening. 3. Perusahaan Tambang Bukit Asam (PTBA) - risk of domestic contract renegotiation. Top three stocks to accumulate into: 1. Bank Mandiri (BMRI) - NPL bottoming-out, loan growth picking-up in 2H09. 2. Perusahaan Gas Negara (PGAS) - Rp strengthening period closer to an end, gas price hike post election. 3. Bumi Resources (BUMI) - most attractively valued coal name in Indo, with potential M&A angle. Indo bank sector update: consumer lending theme Indo banks may appear expensive on P/BV but look reasonable on P/E, with an aggregate sector multiple of 14.0x and 11.0x for 2009-10. Our top three picks, BCA, Mandiri and BNI trade on 2010 P/E of 11.9x, 10.5x and 9.4x. Regional average P/E is 14.9x. Growth prospect looks strong, with one driver being the very low mortgage penetration rate. Indonesia has one of the lowest mortgage loan penetration ratios in the world at 2.5% of GDP (vs 20%+ on average in the Asian region) and 9.5% of total system loans. BCA and Mandiri indicate they would like to grow their mortgage segments and lower their rates to below 10%, boosting mortgage lending growth considerably. In 2007, when banks cut rates to below 10%, mortgage loans grew by 30% YoY in the early part of 2008. The expected pullback in share prices today may offer fresh opportunity to accumulate. Report by Ferry Wong (analyst) attached. Snippets: United Tractors- Mixed data for May. On heavy equipment . . . Komatsu unit sales up 45% MoM to 303 units. YTD, they sold 1,140 units (2,700 units on an annualised basis), ahead of our forecast of 2,600 units, thanks to rebound in the non-mining sector (via small and medium equipments). Inventory level has reduced from 1,000 units in the beginning of the year to a normalised level of 300 units. On coal cntracting . . . . May production up 13% MoM to 5.3mt. YTD they produced 24.6mt, on-track to achieve our 65mt coal production in 2009. On coal mining . . . they sold only 166kt in April, down 56% YoY. Looks weak perhaps due to customers slowing down purchases while trying to renegotiate high-priced contracts. Macq rates the stock a Neutral. NOTICE The information contained in this email is confidential. If you are not the intended recipient, you must not disclose or use the information in this email in any way. If you received it in error, please tell us immediately by return email and delete the document. We do not guarantee the integrity of any e-mails or attached files and are not responsible for any changes made to them by any other person. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ ~~~ Message has scanned by AAAS Mail Security Gateway ~~~ ~~~ No virus found in this incoming message ~~~ ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
