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Danareksa Equity Snapshot - TINS 22 Juni 2017
June 22, 2017 10:03 WIB

Timah(TINS IJ)

Higher production to support earnings in 2017


Timah (TINS) reported audited net profits of Rp67bn in 1Q17 (-66.9% qoq) vs. a net loss of Rp138bn in 1Q16. The net profit was below our previous expectation and the consensus. As we cut our long-term refined tin price assumption, we lower our Target Price to Rp1,050 (based on DCF valuation). Yet with the recent share price correction, the stock offers upside of 39.1%. Maintain BUY.

1Q17 result: Below our previous expectation and the consensus.  Timah (TINS) reported net profits of Rp67bn (-66.9% qoq) in 1Q17. The lower quarterly net profits were due to: a) 13.8% qoq lower sales volume, b) 2.6% qoq lower ASP and c) higher costs as reflected in the decline in the gross margin. Thanks to strong refined tin prices and higher sales volume the company booked net profits in 1Q17 vs. a net loss of Rp138bn in 1Q16. The results are below our previous expectation and the consensus.

Strong earnings on higher refined tin production.  Although refined tin prices have declined from a high of USD21,965/tonne in Nov 2017 to their current level of around USD19,800/tonne, we still expect the company to book strong earnings in 2017 owing to: a) 12.4% yoy higher average tin prices and b) 17.9% yoy higher refined tin production of 28,000 tonnes.

Expect tight supply to outweigh muted refined tin demand.  Global demand for refined tin is expected to remain muted with low single-digit growth supported by higher demand for electronics. However, the refined tin price is expected to increase as depleting tin-ore reserves will be reflected in a wider global refined tin deficit. We expect a refined tin price of around USD20,000/tonne in 2017 which will increase to USD20,500/tonne in 2018.

Maintain BUY with a lower target price of Rp1,050 (based on DCF valuation with WACC of 11.1%) as we cut our long-term refined tin price assumption to USD22,000/ton from USD24,000/ton. With the share price of TINS already correcting by more than 34.2%, while the refined tin price is down by only 9.9%, the stock looks attractive with upside of 39.1% to our revised Target Price.

… read more 20170622 TINS


Danareksa Equity Snapshot - UNTR 22 Juni 2017
June 22, 2017 09:53 WIB

United Tractors(UNTR IJ)

Stronger Komatsu sales to the mining sector


Although Komatsu sales fell 10.9% mom to 302 units in May 2017, sales were up 68.7% yoy thanks to higher coal prices. The solid sales in May lifted cumulative sales by 71.4% yoy to 1,488 units in 5M17.  The 5M17 sales volume beats our expectation and the management’s latest guidance of 3,000 units for 2017. Maintain BUY with a Target Price of Rp30,000 (based on DCF valuation).

Solid Komatsu sales to the mining sector. The strong Komatsu sales in 5M17 which reached 1,488 units (+71.4% yoy) were supported by higher coal prices (sales to the mining sector surged almost fourfold). In addition, better commodity prices helped lift sales to the agri and forestry sectors (up 125.0% yoy and 82.9% yoy respectively). Nonetheless, sales to the construction sector were 32.2% yoy lower because of the high base in 2016. Against this backdrop, the management has revised up its full year Komatsu sales target to 3,000 units (+37.6% yoy) from 2,700 units previously.

Better monthly coal production.  Favorable weather in 2Q17 has helped boost monthly coal production under its subsidiary, Pamapersada Nusantara (PAMA), since February 2017. As such, cumulatively, coal production climbed 5.6% yoy to 43.6mn tonnes in 5M17. With overburden (OB) removal up 7.0% yoy, the stripping ratio edged up to 6.8x in 5M17 from 6.7x in 5M16. Despite this, coal sales still dropped 6.4% yoy to 3.1mn tonnes in 5M17.

Solid earnings expected in 2017.  We expect UNTR’s earnings to remain solid given: a) strong Komatsu sales volume (+37.6% yoy), more large-size machinery in the product mix (which will increase ASP further), and strong sales of Scania and UD trucks which will boost earnings in the construction machineries (CM) division, as well as b) 5% yoy better coal production and 10% yoy higher OB removal which will sustain earnings in the mining contracting (MC) division. At the same time, we also foresee earnings enhancement in the construction division under its 50.1% owned subsidiary Acset Indonusa (ACST) after the consortium of ACST and Waskita Karya (WSKT) was awarded the Jakarta – Cikampek elevated toll-road project.

Maintain BUY with a Target Price of Rp30,000 based on DCF valuation (WACC of 12.4% and terminal growth of 3%) supported by stable coal prices which will help to boost the company’s performance. The downside risks are: a) a sharp decline in coal prices, b) tighter competition in the heavy equipment business and c) a strong IDR/USD. Our Target Price implies 17.3x 2017F PE.

… readmore 20170622 UNTR


Danareksa Equity Snapshot - 22 Juni 2017
June 22, 2017 09:52 WIB

FROM EQUITY RESEARCH

UNTR:  Stronger Komatsu sales to the mining sector  

(UNTR IJ. Rp 27,200. BUY. TP Rp 30,000)

Although Komatsu sales fell 10.9% mom to 302 units in May 2017, sales were up 68.7% yoy thanks to higher coal prices. The solid sales in May lifted cumulative sales by 71.4% yoy to 1,488 units in 5M17.  The 5M17 sales volume beats our expectation and the management’s latest guidance of 3,000 units for 2017. Maintain BUY with a Target Price of Rp30,000 (based on DCF valuation).

TINS:   Better production to support earnings for 2017

(TINS IJ. Rp 755. BUY. TP Rp 1,050)

Timah (TINS) reported audited net profits of Rp67bn in 1Q17 (-66.9% qoq) vs. a net loss of Rp138bn in 1Q16. The net profit was below our previous expectation and the consensus. As we cut our long-term refined tin price assumption, we lower our Target Price to Rp1,050 (based on DCF valuation). Yet with the recent share price correction, the stock offers upside of 39.1%. Maintain BUY.

To see the full version of our snapshot, please click here

MARKET NEWS

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Corporate

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TECHNICAL ANALYSIS CORNER

Market Maker

  • JCI Index. 5,818. NEUTRAL. Target 5,820

To see the full version of our technical analysis corner, please click here