Energi Mega Persada (ENRG)

I would like to recommend Energi Mega Persada (ENRG) stock. I have overweighted my position on this stock. I believe as a company ENRG has strong potential to grow. Even though oil prices went down lately, in the long run the oil price would tend to be higher. I believe the ideal price of oil which is around 75-80 dollar per barrel would be reached in year 2010 hence the stock would be more attractive in the coming year.

In the first three month of 2009, ENRG has increased its production to 13.9 mbopd and 94.3 bbtud, compare to 10.5 mbpod and 86 bbtud in 2008. The price to book value per today closed is 0.65. It is very attractive to collect this stock currently with this low P/BV ratio. Even though in 2008 ENRG has failed to make some profit due to the increased in the tax provision, it did manage to make some good operating profit.

Technical Analysis

If you look at this chart, you could notice that the stock has a significant move in mid-April 2009. The market has bought this stock in significant amount, due to the released of its 2008 financial report. The market realized that this stock was extremely undervalued, and since the beginning of April 2009 to today, this stock has given 142% return.

In April 20^th, the stock has a significant pull back. It was mainly due to the political issue in Indonesia when the market realized that Susilo Bambang Yudhoyono (The President of Indonesia) would not continue its partnership with Jusuf Kalla (Vice president). The market thought that the economic and political situation would not be in a good shape if the duet stops working together. The stock indicated a support at 160 levels.

When the political tension in Indonesia diminished and the market would say yes to the next government, I believe this stock would start the rally again. So I would recommend a “BUY” for this stock.