Today's Headlines - 14 Agustus 2014

Alam Sutera Launch Indigo Tower (ID) ASRI aggressively build apartments in the Kota Ayodhya superblock, Tangerang, Banten, by launching the fourth apartment tower named Indigo. Previously, the three towers have been sold and received a positive response from the market. The price for this fourth tower increased by 11.5% from the initial price of Rp238 million to Rp265 million per unit. Indigo tower will consist of 828 units and ready to be launched into the market on August 16, 2014. Comment: As of June 2014, ASRI has recorded marketing saIes of Rp2.6 T. This achievement has reached 52.4% and 57.0% of company’s and our total marketing sales target for FY14. We expect Rp4.56 T of marketing sales in 2014, coming from the Serpong project (47%), the Pasar Kemis project (31%), and the office tower project (23%). Marketing sales from Kota Ayodhya is included in the Serpong project. (Anindya) ASEAN Expansion, Kalbe Prepare Rp580 Billion (ID)  Kalbe Farma (KLBF) prepares up to USD50 million or about Rp580 billion to finance expansion into ASEAN in three years. The expansion includes product marketing, appointment of a distribution company, and the establishment of a joint venture (JV). Several target countries of export expansion include the Philippines, Myanmar, and Vietnam. Kalbe also open up opportunities to prioritize the acquisition of the company, particularly for company producing consumer health products. Related to the news about the possibility of buying PT Phapros shares, the company insists that they do not plan on buying shares of PT Phapros. Motorcycles: Increased Exports Next Year (BI) Export of Indonesian motorcycle in 2014 predicted will flat. The small size of the export motorcycle market in the country will encourage businesses to increase exports next year. AISI said that, from year to year exports motorcycles dwell only within the range of 1% of the total national distribution. But in 2015, AISI predicts this figure will climb supported by several car manufacturers plan to expand the export market. The largest export markets for Indonesian motorcycle are in Philippines and Thailand. Pejagan-Pemalang Toll Road Project Will be Accelerated (BI) The Government encourages the acceleration of Pejagan-Pemalang toll road project as part of the Trans-Java toll network. For the initial stage of construction, WSKT will carry out the construction of the two sections, namely the 14km section 1 Pejagan-West Brebes and the 6km section 2 West Brebes-East Brebes. These two sections is expected to be in operation by next year.  Comment: Previously, WSKT through its subsidiary PT Waskita Toll Road took over PT Pejagan Pemalang Toll Road (PPTR) from MNC Group to complete the halted construction progress. We believe if there is no delay during the construction stage, WSKT will enjoy not only from the value from the construction but also the buyback option from MNC Group on its third year. (Joko) Property Price Rise Steepest in East Indonesia (TJP) The latest survey by Bank Indonesia has found property prices in major cities in eastern Indonesia have shown an upward trajectory because of the strongest purchasing power of its citizens and a rise in housing investment. In the April to June period the index of residential property prices in Manado, North Sulawesi, saw the biggest q-q increase of 9.5 percent, followed by Makasar, South Sulawesi, with a rise of 6.5 percent. Both cities property price increase was way above the overall average of Indonesian cities. BI’s index of residential property prices, which includes 16 major cities in Indonesia, only rose 1.7 percent q-q in the same period. BI’s report also warned about the potential acceleration of prices in other cities in the upcoming months. ITMG: 1H14 Results - Cost efficiency improved margin Indo Tambangraya Megah (ITMG) reported net profit of US$148mn in 1H14 (+40% yoy, -46% qoq). While revenue was within our expectation, the net profit was above our expectation as it constituted of 63% of our full year net profit of US$236mn in 2014. This was due to gain on derivative transaction. Higher net profit was mainly due to a) lower COGS, b) lower operating expenses and c) higher gains on derivative transactions amounting of U$45mn in 1H14 vs. only US$5mn during the same period last year. On the quarterly basis, net profit went down by 46% qoq on lower coal sales volume by 6% qoq to 6.7mn tons in 2Q14. We maintain HOLD recommendation as there is now only limited upside to our target price of Rp27,800 (based on DCF valuation with WACC of 12.4%) and reflecting a mine life based on reserves. Our target price also implies 12.9x 2015F PE. http://dmia.danareksaonline.com/BeritaRiset/NewsReader/2900