DJ MARKET TALK: Macq Tips Indonesia As Preferred Coal Sector Play 0713 GMT [Dow Jones] Macquarie tips Indonesia as preferred play in the coal sector after attending leading Asian coal conference Coaltrans in Bali. Says sees upside risk to US$140/ton coal price assumptions as spot prices in US$150-US$155/ton range; "Fundamentals remain robust with stronger-than-expected demand from India and China, while supply remains constrained in Australia and South Africa." Says valuation attractive, with sector trading on 2009E PER of 7.1X, ROE of 70%, 5.5% dividend yield; Indonesian sector trading on roughly 40%-75% discount vs regional peers.
In Indonesia, prefers Indo Tambangraya (ITMG.JK), Tambang Batubara Bukit Asam (PTBA.JK), Bumi (BUMI.JK), Straits Asia (AJ1.SG), United Tractors (UNTR.JK). Also tips M&A potential due to strong demand environment from China and India; "we believe leading utilities, traders or producers from these regions will secure supply via M&A. We think a driver of upcoming IPOs will be to set up a company as an M&A target;" tips Straits Asia Resources as best positioned to be M&A candidate.
