Metals prevented IDX from falling deeper

Metal-related stocks prevented the composite index of IDX from falling deeper this morning as Aneka Tambang, INCO, and Timah gained 5.75%, 5%, and 3.3% respectively.
The composite index only lost 0.7% so far, as big caps like Astra, BCA, PGAS, and BRI lost ground on profit taking. Astra declined 2.32%, while Telkom and BCA lost 1.22% and 1.74% respectively. PGAS and BRI also declined 1.73% and 1.79% respectively. Unilever, United Tractors, and Bukit Asam are all in negative territory this morning, also on profit taking.

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Baltic Dry Index gained 14.3%

Baltic Dry Index (BDI), a leading indicator for shipment of commodities worldwide, and as a result an important sign of demand for commodities, gained 14.3% since February 24, 2010.

The index has bottomed out since February 2009. It once soared to above 4,000 in early June 2009, but then retreated to below 2,500 in August. The index soared again to above 4500 in November, but then fell back to 2500 late last month. But since then the index continued to grow to 3098 last Friday.

Sign of improvement in the commodities market? May be. Crude palm oil, for example, closed at RM2534/ton on Malaysia Derivatives Exchange last Friday, substantially lower from last month. But the current price is already 30% above the same month last year.

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Asiata divests 18% XL for Rp5 trillion

Axiata Group Berhad has accomplished the book building for placement of 18% shares in PT XL Axiata Tbk for Rp3300 per share. Axiata would bag Rp5 trillion or US$550 million from the divestment.

The placement, arranged by Goldman Sachs, CIMB Investment Bank Berhad, PT Mandiri Sekuritas, JP Morgan Securities Ltd, and Morgan Stanley Services Ltd, is oversubscribed 3-4 times. Axiata Berhad currently owns 86.5% shares in XL Axiata, wit Etisalat controls 13.3%, and public 0.2%.

The offering could also be upsized by an additional 153,144,000 XL Shares (representing 1.8% equity stake) under the option granted to Goldman Sachs (Singapore) Pte. on behalf of the initial purchasers for the Offering, in connection with price stabilization initiatives.

At Rp3300/share, XL Axiata is valued Rp28 trillion for 100% shares, right below Indosat (Rp31.24 trillion). XL has gained 71% so far this year, while Indosat gained 21.7%.

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Ten Billion Dollar Club

Seven companies listed on Indonesia Stock Exchange (IDX) currently have market capitalization over US$10 billion.

They are Astra International (US$19 billion), Telkom Indonesia (US$18.3 billion), Bank Central Asia (US$15.5 billion), Bank Mandiri (US$12.25 billion), Perusahaan Gas Negara (US$11.34 billion), Bank Rakyat Indonesia (US$11.16 billion), and Unilever Indonesia (US$10.4 billion).

Combined, these Seven Giants have market capitalization of US$97.95 billion.

Looks like the 10 Billion Dollar Club will not get new member soon. Why? Because, the eight largest company, United Tractors, only has market cap of US$6.9 billion. Unless this company will grow at least another 45% this year.

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IDX almost reached record high

The composite index of Indonesia Stock Exchange (IDX) advanced further by 1.1% to 2805 this morning, the highest level in the past two years, but yet to cross the record high in January 2008 at 2830.

IDX gained 93% last year on rupiah basis, but over 100% on USD. In the first three months of 2010, IDX gained another 10.7%. Astra International (ASII) gained another 3.95% this morning to extend its lead over Telkom (TLKM) by Rp10.5 trillion. Astra currently has market capitalization of Rp175.9 trillion or about US$19.3 billion.

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First Media turned positive

PT First Media (KBLV) Tbk, controlled by Lippo Group, posted net profit of Rp32.8 billion last year against net loss of Rp101.7 billion in 2008 on stronger sales revenue and improved operating margins.

First Media, operator of cable TV Kabelvision, reported net sales revenue of Rp722.46 billion last year, surged 36.2% from 2008 while its cost of services increased slightly by 12.7% to Rp293 billion. As a result, First Media posted gross profit of Rp429.36 billion, soared 60% from 2008. But the company reported substantial increase of 31.4% in operating expenses to Rp364.7 billion. First Media then booked operating profit of Rp64.7 billion against loss of Rp8.7 billion in 2008.

First Media reported strong growth of revenue from subscription fees for broadband Internet to Rp331.6 billion, surged 73% from 2008, while subscription fees for cable TV reached Rp255 billion last year, grew by 15.8% from 2008. Data communications revenue also jumped 37.5% last year.

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Nokian Tire, Hankook Consider Buying Multistrada Stakes

European tire producer Nokian Tire Plc and Hankook Tire of South Korea are interested to buy majority shares of domestic tire PT Multistrada Arah Sarana Tbk.

“Negotiation has been started recently, however the controlling shareholder of Multistrada has asked Nokian and Hankook to raise their offered price,” an unnamed investment bank executive quoted by Bisnis Indonesia as saying.

Multistrada’s among well-known tire brands are Corsa and Strada. Multistrada is planning to boost its production capacity, utilsing the loan worth US$200 million that was arranged by CIMB Niaga and HSBC. Rating agency Pefindo projects Multistrada’s sales to rise to Rp 1.69 trillion in 2009, up from Rp 1.33 trillion in previous year, with net profit is also projected to surge to Rp 165 billion from tiny Rp2.97 billion in previous year

Hankook is the seventh largest tire producer in the world that produces tire for passenger car, light trucks, trucks and buses. Around 70% of its products are sold to around 180 countries. In 2009, Nokian posted net profit of 798.5 million euro. (Roffie Kurniawan)

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IDX lost 1.48%

The composite index of IDX closed lower by 1.48% today to 2702. Bumi Resources (BUMI) is the top loser with 9.71% drop and trading value of Rp512 billion. Delta Dunia Makmur (DOID) also lost 9.42% on heavy trading.
Bakrie-related stocks mainly under pressure with Energi Mega declined almost 5%, Bakrieland -5.9%, and Bakrie Sumatra -1.96%. Bakrie & Brothers (BNBR) conceded 3.8%.
Bhakti-related stocks were also lost substantially with Media Nusantara Citra (MNCN) dropped 9%, while Bimantara slashed 6.41%. Astra prevented IDX from falling deeper with 0.25% gain. Astra closed the day as King of IDX with market capitalization of Rp162.73 trillion, slightly higher than TLKM (Rp162.3 trillion) which lost 2.42%.

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Nestle also drops Sinar Mas Group

Nestle SA has followed Unilever in dropping Sinar Mas Group from the list of palm oil supplier after Greenpeace called on the world's largest food producer to cut ties with the company controlled by Eka Tjipta Widjaja family, Bloomberg reported an hour ago.

According to the report, Nestle replaced Sinar Mas with an unidentified supplier. Earlier on Wednesday, Greenpeace published a report saying Sinar Mas has unlawfully destroyed rain forests to set up palm oil plantations, Bloomberg reported.

Who will be the next to drop Sinar Mas?

Sinar Mas Group's plantation units are listed in both Indonesia and Singapore stock exchanges. PT SMART Tbk is listed on IDX, while GoldenAgri Resources Ltd is listed on SGX. SMART declined 2.36% on IDX with thin trading, while GoldenAgri closed unchanged with substantial trading on SGX. GoldenAgri stock has surged over 100% in the past nine months.

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BRI returned to No. 6

PT Bank Rakyat Indonesia (BBRI) Tbk returned to No. 6, taking over the position from Unilever Indonesia (UNVR), with 3.36% gain this morning.

BRI currently has market capitalization of Rp94.02 trillion, bigger than UNVR (Rp93.09 trillion). Telkom (TLKM) is still the largest with Rp169.3 trillion, but only inches away from Astra (Rp162.1 trillion). BCA is the top gainer among the blue chips with almost 10% gain this morning to make it a Rp140.53 trillion company and maintained its position as the third largest company on IDX. Bank Mandiri is fourth with Rp100.6 trillion, but only inches away from PGN (Rp100.03 trillion).

Indo Tambangraya (ITMG) jumps to No. 16, bigger than INCO and AALI, due to 5.42% gain this morning. Bumi Resources? No. 13 with Rp49 trillion, right below Gudang Garam and Indocement.

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Blue chips lifted IDX

Composite index of IDX surged 2.12% to 2726 in the first session due to substantial rebound of blue chip stocks. BCA gained as much as 7.7%, while Astra advanced 3.62% and Telkom increased 1.2%.

BRI also gained 3.4%, while PGAS +3.07%, Unilever +2.08%, and Bumi Resources +1%. INCO, Indofood, and Indosat gained 1.9%, 1.3%, and 2.5% respectively. Bank Mandiri advanced further by 2.08%, while Danamon +2.97%. The Fed's decision to maintain interest rate is responded positively by Asian markets this morning. All of them are in green zone with both Hang Seng and KOSPI gained 1.28%, while others less than 1%.

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Coal stocks lost steam

Coal-related stocks lost steam this morning on weakened thermal coal prices. Shenhua and China Coal dropped 4.2% and 3.53% respectively in Hong Kong, while Bumi Resources and Adaro declined 1.98% and 0.53% on IDX this morning.
Bukit Asam, Indo Tambangraya, and Indika also declined, while BHP and Rio Tinto lost 0.42% and 0.3% respectively in Sidney. Delta Dunia Makmur (DOID) declined further by 1.42% to Rp1390. The stock has lost 36% from its peak last year. But trading volume was relatively small.

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Mobile-8 stocks trading suspended

IDX suspended the trading of Mobile-8 Telecom (FREN) stocks in the first session of trading this morning due to the delay in payment of bonds issued in 2007.

IDX suspended the trading based on Mobile-8 letter dated March 12 stating the company has not been able to provide the 12th interest payment on the bonds issued in 2007. Mobile-8 has also yet to pay fines on the overdue interest payments and including fines payable to KSEI as payment agent.

Last Friday, Mobile-8 stocks were traded heavily. The stock inched up Rp1 to Rp51 with 709 million shares exchanged hands.

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PP posted 35% net profit growth

State-owned construction and investment company PT Pembangunan Perumahan (PTPP) Tbk posted net profit of Rp163.26 billion last year, increased 34.7% from Rp121.6 billion in 2008 on improved margins.
PTPP then reported EPS of Rp43. Last Friday, the stock closed at Rp680. At EPS Rp43, PTPP is traded with PE multiple 15.8 on 2009 earnings.
PTPP reported net sales revenue of Rp4.2 trillion, increased slightly by 6.9% from 2008, but operating profit surged 37.3% to Rp367.9 billion. The company projected a net profit of Rp367 billion this year or an EPS of Rp96.3 The current price then reflected PE multiple 7.

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When SOE Minister Wants a 'BUMN Tower'

Minister for State Enterprise Mustafa Abubakar encourages Wijaya Karya, state-run construction company and other state-owned companies (SOEs) to develop the so-called ‘BUMN Tower’. He hopes the tower could be similar to that of Petronas tower in Malaysia.

The minister made the statement when delivering a speeching marking the 50th anniversary of PT Wijaya Karya (perserso) Tbk.

One would wonder what comes into the mind of the minister when he made such statement. Do we really need this? Isn’t that mean the state-run companies are just following Malaysia? Aren’t there any other ways that make the state-owned companies to be proud of than just a tower? Why don’t focus on, improving performance so that the company or SOEs can pay bigger dividend and tax every year and create a lot of jobs? Well, it is up to the SOEs.

Meanwhile, the SOE minister said the anniversary is a right moment for the company to retreat and move forward and faces future challenges. “Now is the right time for Wika to continue to show its masterpiece both on national and global scale,” Mustafa said, as quoted by Bisnis.com.

Among the well-known projects of Wijaya Karya are coal-fired power plants (PLTU) of Labuan and Indramayu, Suramadu bridge and BI building. (Roffie Kurniawan)

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Moody’s Revises Down Indosat Outlook to Negative

Moody’s Investors Service has revised the outlook on PT Indosat’s Ba1 corporate family ratings and senior unsecured ratings to ‘negative’ from ‘stable’. The downward revision is affecting the company’s debt securities of around US$344 million.

"The revision in outlook to negative is driven by our expectation that Indosat's adjusted debt/EBITDA will rise above 3.0x and remain there for a prolonged period, and that financing requirements during 2010 will increase the company's proximity to financial covenants," Ivan Palacios, a Moody's AVP and analyst said.

"We expect Indosat's operating performance to improve over the coming year, but the improvement in revenues, EBITDA, and resulting cash flows will not be sufficient to lower leverage to less than 3.0x during 2010," said Palacios, also Moody's lead analyst for the company.

Moody's said it expects Indosat's liquidity to “remain tight over the near to medium term, as we forecast that cash on hand and cash flow from operations will not be sufficient to cover capex, working capital, and debt service requirements alone.”

“This deficit, which we expect will be largely debt-funded, could limit Indosat's headroom under financial covenants and constrain the company's financial flexibility,” it said. As a result, the company may seek new debts to refinance its US$235 million notes due in November this year.

Indosat (ISAT) gained 0.87% to Rp5800 on Thursday. At that price, Indosat has market capitalization of Rp30 trillion. (Roffie Kurniawan)

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Axiata divests up to 20% XL Axiata

Axiata, the sole ultimate shareholder of Indocel, proposes to undertake an offering of up to 20.0% of the issued and paid-up share capital of telecommunication provider PT XL Axiata (EXCL) to eligible institutional/sophisticated investors via a bookbuilding exercise. At the current price, Axiata could bag US$656 million from the divestment.

The Proposed Offering involves an international private placement by Axiata Group of up to 1,701,600,000 XL Shares (Offer Shares), representing 20.0% of the issued and paid-up share capital of XL, to eligible institutional/sophisticated investors via a bookbuilding exercise, to be satisfied entirely through cash. Today EXCL gained 1.43% to close at Rp3550.

At that price, the value of 1.7 billion XL shares being offered is about Rp6.035 trillion or about US$656 million (at Rp9200/USD).

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Bakrie & Bhakti stocks dominated trading

Bakrie-related stocks dominated stocks trading on Indonesia Stock Exchange (IDX) today, led by Bakrieland and Bumi Resources which gained 5.88% and 2.02% respectively.

Bakrieland (ELTY) topped the trading frequency with 995 million shares exchanged hands (worth Rp275 billion), followed by Bumi Resources with Rp251 billion. Bakrie Sumatra Plantation (UNSP) also gained 3.85%, while Energi Mega Persada (ENRG) gained 1.85%. Most gained on technical rebound.

Bhakti Group-related stocks also traded heavily led by Global Mediacom (Rp63.9 billion), Bhakti Investama (Rp64.9 billion), and Media Nusantara Citra (Rp17.8 billion). They gained 13.8%, 22.86%, and 6.25% respectively. Bhakti plans to divest up to 20% shares in PT MNC Sky Vision, market leader in cable TV business.

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Elnusa Secures US$20 Mln Oilfield Service Contract

Oil and gas service company PT Elnusa (ELSA) Tbk, a unit of Pertamina said it has secured oilfield maintenance service contract worth US$20 million. The projects will be located in Java and East Kalimantan.

In the first two months of this year, Elnusa already secured oilfield service contract worth US$55.19 million.

It said it will use hydraulic work-over, snubbing and well testing barge in taking care of the oilfields. It said at present, the company’s oilfield service division is also finalizing work-over projects, snubbing and well testing barge in East Kalimatnan worth US$28.92 million. In addition, it is also working on ongoing maintenance service project for a pipeline and production facilities in Java and Sumatra worth US$6.27 million.

Heru Samodra, VP corporate secretary of Elnusa said, “To strengthen our core business in providing integrated service to oil-gas upstream sector and maintain business growth, Elnusa has set aside capex (capital expenditure) of US$70 million this year. The fund will come from internal cash-flow.”

Elnusa engages in providing integrated geosciences services, drilling services and oil-field services. The company targets to post revenues of Rp 4.46 trillion this year, up 29 percent from last year. Pertamina holds 41.1% stake in Elnusa. In February this year, PT Benakat Petroleum Energy bought 37.2 percent stake in the company from PT Triday Esta. The remainder shares are held by the public.

Elnusa closed at Rp330 today. At that price, Elnusa has market capitalization of Rp2.41 trillion or about US$260 million. (Roffie Kurniawan)

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Sarana Menara gains another 25%

PT Sarana Menara Nusantara (TOWR) Tbk gained another 25% in the first session of trading on Indonesia Stock Exchange (IDX) this morning to make a 133% gain in its third day of trading.

Sarana Menara is the parent company of PT Protelindo, the largest independent tower operator in the country. Protelindo expects to finalize the acquisition of almost 4,000 towers from PT Hutchison CP Telecommunications, operator of GSM service Three.

Kicked off IDX its stocks trading on Monday, Sarana is the fourth company listed on IDX this year. The company raised Rp117 billion from the IPO of 112 million shares at Rp1050. Total issued shares is 1.02 billion. At Rp1360, Sarana has market cap of Rp1.39 trillion.

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