--- On Fri, 8/22/08, hardjoeno <[EMAIL PROTECTED]> wrote:
From: hardjoeno <[EMAIL PROTECTED]>
Subject: [bei-investorclub-jkt] Fw: United Tractors (UNTR IJ, Rp9,850 BUY)
Minor Production Delays
To: [EMAIL PROTECTED]
Date: Friday, August 22, 2008, 11:20 AM
----- Original Message -----
From: Diana Lorenna
Sent: Friday, August 22, 2008 11:08 AM
Subject: United Tractors (UNTR IJ, Rp9,850 BUY) Minor Production Delays
From: Danareksa Equity Research
Sent: Kamis 21/08/2008 11:23
Subject: United Tractors (UNTR IJ, Rp9,850 BUY) Minor Production Delays
United Tractors
Minor Production Delays
Production delays at its KPC site, Pelikan, East Kalimantan
The delays stem from a dispute with a logging company which accuses KPC of
operating in a forest area without a license. Hence, part of the Pelikan site
was shut down by the regional government, meaning that only 60% of the site is
operating. The company's production loss estimate is 10,000 tons of coal/day.
The total loss of production to date is about 90,000 tons of coal. For 2008,
Pama's production target for the site is 6.5mn tons of coal (note that in 7M08
Pama had already produced some 3.7mn tons of coal at the site).
The delays should not be a major setback
Our target for Pama's coal production this year is 62.4mn tons. This is above
the company's guidance of 58-60 mn tons of coal since we believe demand will be
higher this year. Pama's 7M08 coal production reached 34.5mn tons, or in line
with our expectations. Furthermore, Pama is now actively engaged in
negotiations to open more of the Pelikan site for operation (note that
originally 80% of the site had been shut down). Pama itself does not consider
the delays to be a major problem and they have not lowered their production
guidance. However, in the case of lower production, our sensitivity analysis
shows that for every 10% decline in the running production, the core income
would be expected to decline 0.5% while the DCF/share would drop 0.6%.
Catching up should not be a problem
Our argument is based on past experience. In 2007, Pama's production
experienced a setback due to site relocation from Bendili to Pelikan. This, in
addition to very bad weather conditions and accidents in 1H07, resulted in the
loss of around 1 month of operating days. Thus, Pama's 1H07 coal production was
3 mn tons behind schedule. However, production did manage to catch up in 2H07
and the production target for the full year was met. As such, we remain
confident that this year's production target can still be met also.
Maintain BUY recommendation, TP of Rp15,000
We maintain our bullish view on the stock. The outlook for the heavy equipment
industry remains bright. And even though commodity prices are currently
declining, we believe the long term outlook for commodities is still promising.
Furthermore, our TP does not take into account the production of the
soon-to-be-acquired mines. Thus, our TP may be raised in the future. Our TP of
Rp15,000 implies PE08-09F of 19.1-14.8x. BUY.
Felicia Barus
(62-21) 3509888 ext. 3502
[EMAIL PROTECTED] com
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