Fajar Bumi is expensive while DEWA and Pendopo are fair: Post yesterdays meeting, Mappi (Indonesia professional appraiser
community) views that the Rp2.47 trillion acquisition price (for 76.8%) of Fajar Bumi Sakti is too expensive by Rp370B. In addition, it also views that the acquisition prices of Darma Henwa (Rp2.41 trillion for 44%) and Pendopo Energi (Rp1.3 trillion for 84.46%) are fair. Potential downward adjustment in price: We view that it is likely Bapepam will rule along the findings of Mappi. With that, there is a potential that Bapepam could request BUMI to adjust the acquisition price for Fajar Bumi Sakti downwards by at least Rp370B while keeping the acquisition prices of DEWA and Pendopo unaltered. Next awaited ruling: related or non-related?: The next important awaited ruling is whether the deals are related or not related. If related, BUMI will need to secure a majority of the minority shareholders approvals to close the deals. If non-related, a majority of the total shareholders will be needed to approve. At this point, the regulator has yet to decide on this matter. Press conference today, maintain Neutral & PT of Rp2,100: Bapepam will hold a press conference today to explain to the public. We will follow up with more details. Meanwhile, we maintain Neutral and Jun-10 SOTP based PT of Rp2,100. Our SOTP is derived by adding the DCF values of each of the subsidiaries (risk-free: 11.5%, equity risk premium: 5.5% and terminal growth: 7.0%). Risks to our view and PT: (1) Better than expected profit, (2) Favorable/irrational acquisitions.
