Indo Morning Notes: Market / corporate news. - Kim Eng - 15 May, 2007
Astra International (ASII.IJ): April sales update 4W sales down 2% mom but up 41% yoy to 18,404. 2W sales down 8% mom but up 38% yoy to 594,293. The result is good and within expectation. ASII's regained its top position as no one 2W makers with 44% market share. Trading at 13.4x OER FY07, Buy with TP of 17,000. Apexindo (APEX.IJ): the drilling unit of MEDC.IJ, has just renewed 5 year deal for its swamp barge rig, Maera which is valued at U$ 146mn (for 5 years). It is an approx. 80% increase which will improve APEX.IJ earnings from FY08 onward. Maera accounted for 11.5% of consolidated sales. Trading at 12.7x PER FY07, BUY with TP of 2300. Adhi Karya (ADHI.IJ): to budget U$42mn for JKt monorail. ADHI will take 29% stake in the project. Total project will cost U$ 487mn of which 70% will be funded from debts. ADHI is planning rights issue of Rp 600bn. Commodities: nickel, tin, and gold are all down by 2.59%, 0.18%, and 0.48% respectively. CPO rose again by 2.31% which bode well for AALI.LSIP and UNSP. Unfortunately market attention has been drawn away from CPO play into speculation of micro caps stocks recently, so we can expect not much movement in the above mentioned CPO counters. The ADRs for TLKM (-0.76%) and ISAT (+1.02%) are equivalent to 9781 and 6628 at the FX 8796. Expecting recovery in loan growth. Following the poor loan growth in January (-2.2% M/M) and February (+1.1% M/M), loans increased slightly by 2.1% M/M, signaling stronger loan growth in the coming months. Total loan growth grew by Rp7t (US$780m) YTD, a mere 4.6% of the central bank's full-year 2007 target of Rp150t. Nevertheless we remain confident that the target is achievable because historically the bulk of loan growth occurred between the second and fourth quarters and not in the first quarter. Though margin pressure is inevitable. In the first quarter, the central bank cut the benchmark discount rate by a total of 75bp to 9% at the end of March. Banks usually respond quickly by cutting their deposits rate while being hesitant about lowering their lending rates widened from 3.5% in January 2006 to as high as 5.1% by March 2007. Nevertheless, we think that lending rates will inevitably decline; when demand for loans starts increasing, banks will begin reducing their interest rates as competition intensifies. Infrastructure projects are key to loan growth. On that note, we estimate that demand for financing from infrastructure projects amount to more than Rp13t. Banks have already agreed to finance these projects, although loan disbursements are still pending fulfillment of some requirements (such as land-clearing). But if everything goes as planned, we expect the banks to commence loan disbursements in the second half of the year. Positive outlook for consumer lending. As for the consumer lending segment, out analysis of consumer demand for financing is based on property loans and automotive financing. Both these segments have performed moderately, but the outlook is positive. Property loans have increased 4.1% YTD, but more importantly, month-on-month (M/M) growth has been slowly picking up. Outlook of the automotive sector is also good; car sales have been growing steadily, with YTD growth of 8.8%. Motorcycle sales have also been increasing steadily M/M, albeit with a 17.8% decline YTD.
