TRUBA ALAM
�� Only two brokers are covering the stock, but we expect
wider coverage given the companys large market cap.
�� Truba was included in the MSCI Index on Dec 3, 2007 with
about 2.0% weighting.
Net Profit 08.....IDR1,736b
................................(Unchanged)
Diff from Consensus........na
Consensus (mean)...................na
Consensus (momentum)..........na
Target Price.......IDR2,150
...........................(From IDR1,600)
Diff from Consensus........na
Consensus (mean)...................na
Consensus (momentum)..........na
Current Price.......IDR1,480
Upside/(Downside).............45.3%
BUY
(Unchanged)
Recs in the Market
Positive.......................................2
Neutral........................................0
Negative.....................................0
Consensus (momentum)..........na
Sources: Thomson One Analytics; Bloomberg; BNP Paribas estimates
Raise TP to IDR2,150 following company visit. Significant improvement
in Trubas projects on hand: EPC and IPP secured projects increased by 4-fold
and 3-fold from July to November. Truba is on target to achieve our 2007
forecast and we have upgraded our 2008-09 earnings by 44% and 62%,
respectively. With MSCI inclusion, we maintain BUY.
Gaining momentum
More projects on hands; upgrade our earnings forecasts
Our visit to Truba Alam indicated that projects on-hands have been
better-than-expected. The secured projects for EPC and IPP have increased from
1,770MW and 684MW in July 2007 to 5,160MW and 4,320MW (about 2,100MW effective
ownership) in November 2007 respectively. To accommodate this, we have
increased our EPC and IPP projects in 2008 to 8,458 MW and 2,100MW respectively
while maintaining our 2009-10 projection as is (600MW for IPP and 1,000MW for
EPC). The company is on target to achieve our 2007 forecast and due to more
projects on hand (see exhibits 1-3) we have increased our earnings by 2%, 44%
and 62% in 2007-09 to IDR232b, IDR1.74t and IDR2.28t respectively.
Transmission grids new short/medium term key drivers
In addition to its existing businesses, Truba has tapped into the power relay
and transmission contractor business by acquiring PT Meta Epsi (now at 51%
ownership). This company is a joint venture with a 49% stake owned by Xin Yuan
International, an arm of the state grid corporation of China for overseas
investment. Truba will be able to tap into the EPC transmissions project. PLN
will spend about IDR70t (USD7.5b) to build transmission projects over the next
3-5 years. There are a number of transmission lines that need to be developed
over the next three years (Exhibit 7).
What are the risks?
We believe the main risks at Trubas EPC business are project delay (i.e.
obtaining financing from either PLN or banks). EPC (power plant and
transmission) should be the main earnings driver in the short to medium term,
while IPP and coal mining should be the main drivers in the medium to longer
term. Note that the IPP companies in Indonesia do not bear the risk of the
fluctuation in coal prices as the PLN will be responsible for the fluctuation.
Upgrade TP to IDR2,150/share from IDR1,600
As a result of our earnings upgrade, we have increased our TP to IDR2,150
based on 20% discount to our DCF and relative valuation. The company has just
been included in the MSCI Index with a 2% weighting. With strong business model
and sound future strategy, we maintain our BUY call.
Ferry Wong, CFA
PT BNP Paribas Securities Indonesia
(62 21) 5798 4662
[EMAIL PROTECTED]
Earnings Estimates And Valuation Ratios
YE Dec (IDR b)
2007E
2008E
2009E
2010E
Revenue
2,270
17,059
22,619
24,237
Reported net profit
232
1,736
2,278
2,751
Recurring net profit
232
1,736
2,278
2,751
Previous rec net profit
227
1,207
1,406
1,653
Chg from previous (%)
2.0
43.9
62.0
66.4
Recurring EPS (IDR)
15
110
144
174
Prev rec EPS (IDR)
14
76
89
105
Rec EPS growth (%)
567.6
649.8
31.2
20.8
Recurring P/E (x)
101.0
13.5
10.3
8.5
Dividend yield (%)
EV/EBITDA (x)
60.8
8.8
6.3
5.5
Price/book (x)
12.0
6.4
3.9
2.7
ROE (%)
14.1
61.8
47.3
37.5
Net debt/equity (%)
(46.2)
(62.0)
89.9
129.5
Sources: Truba Alam; BNP Paribas estimates
Share Price Daily vs MSCI 300 800 1,300 1,800 Dec-06 Mar-07 Jun-07 Sep-07
Dec-07 (IDR) 050 100 150 200 250 300 (%) Truba Alam Rel to MSCI Indonesia
Next results/event
March 2008
Market cap (USD m)
2,471
12m avg daily turnover (USD m)
7.3
Free float (%)
43
Major shareholder
PT Mandala Kapital (25%)
12m high/low (IDR)
1,630/345
ADR (USD)
Nil
Avg daily turnover (USD m)
Nil
Discount/premium (%)
Nil
Disc/premium vs 52-wk avg (%)
Nil
Source: Bloomberg
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