Good morning,
Timah Persero
company visit – company guided FY17F net profit of approximately IDR500bn
We have visited PT Timah Persero (TINS IJ,
Not Rated) to get some updates on its 2H17-FY18F outlook. Management guided
strong 3Q17 results, scheduled to be released by the end of October, also
guided 2017F net profit of approximately IDR500bn (32% above consensus
estimates) due to a pickup of production volume in 2H17, and typically higher
sales volume in 4Q. Assuming a net profit base of IDR500bn, TINS is currently
trading at 12x FY17F PER.
The company does not have any viable PER
band range using data from Bloomberg, the stock used to trade at the range of
IDR1,000-1,500 during FY13-14, when it recorded net profit of IDR515-638bn
respectively.
¨ 9M17 tin ingot
production and sales volume at about 24K MT. Company has an
initial tin ingot production target of 32-35K MT, production as of 9M17 is
in-line with management target. (1H17 production stood at 16K MT but sales
volume were only 14.4K MT).
In
addition, it expects further pick up of sales volume in the Tin chemical and
Tin solder segment, both of which saw strong QoQ sales volume growth of 56%
and 2.38x respectively in 2Q17. Company is exploring a strategic partnership
with Yun Nan Tin from China to increase and market its tin chemical sales
volume. Gross margins of tin chemical is higher than sales of tin ingot,
FY17F revenue contribution should be less than 10%, expects higher
contribution of 20-30% over the next 5 years.
¨ Company expect
strong 3Q17 results, guided FY17F net profit of approximately IDR500bn. Despite stable
average TIN price USD20K/MT, Company’s 1H17’s gross profit margins was
hovering at about 15%, lower than the range of 17-22% during 2Q16-4Q16 due to
a higher land/offshore production ratio of 50/50% during 1H17, as opposed to
the average of 30/70 ratio as seen in 2016. We were told that tin ingot
production on land is more expensive than offshore due to the need to pay an
extra layer to royalty fees to the local miners. All in all, 1H17 cash costs
was about USD16-17K/MT, compared to 2016’s average of USD15K/MT.
The
composition of offshore production in 2H17 should be higher and closer to
those in 2016 and cash cost should be lower. Also, Timah typically has higher
sales volume in 4Q to finished off the inventories that it produced and to
chase its yearly revenue target.
Its
president director has earlier spoken to the press that 2017 net profit will
be around IDR800bn, we were told that approximately IDR500bn is a more
realistic target, judging from the performance of 3Q17. We also questioned
the motive behind its rather high net profit target, management appears to be
under pressure to deliver good set of results prior to the formation of
stateowned mining enterprise under PT Inalum, which will proceed to acquire
stakes in Freeport Indonesia.
¨ The ban of illegal
mining in Bangka Belitung to support tin price. Tin price has
fallen below USD20K/MT recently, company expects the recent ban of illegal
mining at Bangka Belitung to provide some support to tin prices. RHB does not
have official forecast and coverage on the tin metal, not rated. (Norman Choong, CFA)
Link to daily
report: Indonesia Morning Cuppa 261017
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Company Update:
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Sentul City (BKSL IJ, NR), Meeting notes
We met with one of Sentul City’s new member
of management, to get a better understanding of the company’s direction going
forward. Here are a few takeaways:
¨ Sentul City
currently has over 15,000 ha of gross landbank combined.
¨ Until 8M17, the
company’s marketing sales has reached IDR700bn or 58% from their full-year
target of IDR1.2trn. Management’s tone remains positive for this year as well
as for FY18 with marketing sales targeted to reach IDR1.5trn or +25% YoY
growth.
¨ Based on our
conversation, management seems to receive several inquiries regarding plans
for landbank monetization from a few umentioned interested parties.
Unfortunately, neither indications were given regarding type of projects nor
timeline of a potential deal.
¨ With new Board members
on the team, we are getting the sense that going forward the company is
trying for a different direction with the LRT line soon to cross over the
region. However, management also admits that the masterplan for the area,
especially regarding Transit Oriented Development, is currently being
finalized.
¨ Currently the
company has started to market a superblock called Centerra, which will be the
CBD, with total saleable area of ~29ha that will consist of:
o Currently operating Pertamedika hospital and Giant
Supermarket
o AEON Mall – Operational in Mid 2018 (GFA of 103,414sqm)
o Saffron Residence apartment – 2019
o Office tower
o 5 star hotel
¨ AEON mall is under
20 years rental agreement with the company with rental fee of USD12/sqm for
the first 5 years, incremental to USD15/sqm for the following 5 years, and
USD30/sqm so forth. Aeon mall topping off is slated for this December.
¨ The company’s
balance sheet is quite healthy with net gearing of 5%. However, management
also indicate plans to further reduce borrowing cost by next year but no
guidance was given yet on the matter.
¨ Based on the last
AGM, management decided not to give out dividends on FY16 net income.
Based on annualized
1H17 EPS, the stock is trading at 35.4x FY17F P/E and 94% discount to NAV
using management’s guidance at IDR2,053/share. We do not have a rating for
the stock. (Yualdo Tirtakencana)
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Media Highlights:
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Corporate
2018 budget approved
by House of Representatives
Mitra Adiperkasa
closes Lotus and Debenhams stores
HM Sampoerna sees
2.87% YoY revenues growth
Royal Prima Hospital
targets IDR1.35trn in IPO
Campina Ice Cream to
go for IPO this year
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Our
Recent Publication:
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Economics Update: BI Pauses In October
After Easing August-September
Link to report: BI
Pauses In October After Easing August-September
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Company Update: Bekasi Fajar – Waiting On
Guidance For 9M17
Link to report: Bekasi
Fajar : Waiting On Guidance For 9M17
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Company Update: Arwana Citramulia – Revenue
Remains Robust Despite Elevated Costs
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Economics Update: September Exports
Moderate, Imports Pick Up
Link to report: September Exports
Moderate, Imports Pick Up
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Sector Update: Building Materials –
Infrastructure Projects Boost Bulk Cement Sales Growth
Link to report: Infrastructure
Projects Boost Bulk Cement Sales Growth
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Company Update: Ciputra Development – Toning Down Our
Forecasts
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Corporate News Flash: Summarecon Agung –
9M17 Marketing Sales Are In Line With Estimates
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Regional Thematic: Halal – An Earnings
Boost Strategy
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Economics Update: September Inflation
Remains Moderate
Link to report: September
Inflation Remains Moderate
|
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Company Update: Nippon Indosari Corpindo –
Details On Rights Issuance
Link to report: Nippon
Indosari Corpindo : Details On Rights Issuance
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Best regards,
Andrey Wijaya
Senior Vice President
Research Analyst – Auto, Consumer, Cement
PT RHB Sekuritas Indonesia
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