Target for 2010

The market starts the trading day in 2010 with confidence and full of optimism. You guys might have your personal target for Jakarta Composite Index (JCI) this year. (Please join the poll at the bottom of my blog). Me personally, set 2950 – 3000 as the target for this year or around 15% - 20% return for full year 2010.

The commodity sector I believe would be the main index mover at the beginning of the year, with BUMI as my favorite stock in this sector. I set the TP for BUMI at 4000. The plan to double its production in 2012 would be the main factor to the price movement.

The other stock that I like from Bakrie group is ELTY. The Book Value of ELTY today is around 213. If ELTY could grow about 20% this year, its book value is expected to be at 250. With P/BV ratio of 2, I am expecting ELTY to reach 500 at the end of 2010 or more than 100% gain.

I also still like cement sector with SMGR as my top pick. I am expecting SMGR to grow 20% - 30% this year. With this projection of growth, I am expecting SMGR to reach 9000 – 10000 level this year. Since 2005, SMGR has been successful in growing its book value 20% every year. Hence, I believe it is not a difficult task for SMGR to repeat its growth story.

In banking sector, I would overweight BBRI. I am expecting BBRI to grow 15% - 25% this year. The yoy inflation rate in December 2009 at 2.78% is very likely to boost the credit consumption. The TP that I set for BBRI is at 9200.

Here is the summary of the target price of the index and some stocks that I picked:

	Price 2009	Target Price	Potential Gain
JCI	2534	3000	18.39%
BUMI	2425	4000	64.95%
ELTY	193	500	159.07%
SMGR	7550	10000	32.45%
BBRI	7650	9200	20.26%

ELTY 61.8% Retracement, TP: 225

Bloomberg Code: ELTY:IJ
Reuters Code: ELTY.JK

I would like to discuss ELTY from technical point of view. In my observation, ELTY start the long rally at 55 level and reached the highest level at 390. In the last few months ELTY has been decreasing substantially due to its group (Bakrie) right issue for some of its subsidiaries. The Dubai crisis also has triggered this stock to go down further.

I would show you some chart to get some ideas to buy this stock with fibonacci retracement approach. With its rally from 55 to 390, the 61.80% retracement is around 183 level. If in the next few days the stock shows some strong support around 183, I would recommend a speculative buy for this stock.


(Source: Dongsuh Securities)

BUMI has rebounded more than 8% today. I am expecting that the other Bakrie stocks would follow BUMI to rebound. I would set 222.5 level as the first target (50% retracement), with potential gain about 20%.

Here is the complete retracement level:

23.60%	310.94
38.20%	262.03
50%	222.5
61.80%	182.97
100%	55

BUMI is Lagging the market

Over the last 3 months BUMI has been lagging the overall market. This condition, I believe due to the management way of handling the debt. My previous price target of BUMI was 4000 at the end of 2009. It is very little chance for BUMI to reach that target. Even though BUMI would not be able to reach 4000 this year, I still optimistic that BUMI would pass that target next year.

I would show you some charts, showing the relative performance of BUMI against the other stocks. The first chart would show you the performance of BUMI against other coal stocks over the last 3 months.

(Source: Bloomberg, click to enlarge)

As you can see, BUMI performance is -17% (green line) and the mining index is close to 0 (yellow line) PTBA and ADRO both are performing so nice up more than 25% (red and yellow lines)

On the second chart you could see that compare to other large cap stocks, BUMI has been lagging these other large caps. BBRI (green line), ASII (yellow line), and SMGR (orange line) are performing positively.

(Source: Bloomberg, click to enlarge)

The future performance of BUMI would heavily influenced by the 3Q result which will be published the end of the year. If the result is good, I believe BUMI would go beyond 3000 level.

While the Jakarta Composite Index has reached 2500, it would not go to 2600 if BUMI which is heavily weighted the index still lag the market behind. I am expecting BUMI to reach 2800 at the end of the year, so that the JCI rally would continue.

Tunas Ridean (TURI) is attractive

Bloomberg Code: TURI:IJ
Reuters Code: TURI.JK

PT. Tunas Ridean (TURI) operates automobile dealerships that sell new and used motor vehicles, spare parts and accessories as well as provide after sales services. The company also provides operating lease and consumer financing services.

As a cyclical stock, TURI could be considered as one of the stock that you have to hold in your portfolio these days. The automobile industry is still growing in Indonesia which has large domestic based demand. The improvement in the global economy recently would also contribute some significant portion in TURI’s next quarter sales. While we are approaching the end of the year, I projected the demand of vehicles would be significantly higher in the coming months.

The 3Q-2009 sales has growth more than 30% q/q. I projected that TURI would grow it sales at least 15% in the next quarter. I will show you my projection:

TURI 4Q-2009 EPS PROJECTION

(in Mio RP)	4Q-2009F	3Q-2009	2Q-2009	1Q-2009
Sales	1,631,344.00	1,418,560.00	1,077,900.00	1,045,830.00
Opr Income	32,626.88	27,769.00	16,388.00	7,526.00
Opr Margin	2%	1.96%	1.52%	0.72%
Net Income	60,359.73	51,072.00	42,755.00	140,283.00
Net Margin	3.70%	3.60%	3.97%	13.41%
Total Share	1395	1395	1395	1395
EPS	43.27	36.61	30.65	100.56
Ann EPS	173.07	146.44	122.59	402.25

With the projected annualized EPS of 173.07, I derived the ideal price of TURI at the end of 2009. I believe the ideal PE multiplier would be in the range of 10 – 12x.

TURI EXPECTED PRICE

Expected Price	4Q-09F
PE 10 x	1730.74
PE 12 x	2076.89

INTP: The Growth is real

The cement industry is growing still. My favorite stock in this industry is Indocement (INTP). If you guys have been following me, on my last post I showed you guys the fib retracement as a tool to buy this stock(Here: http://indoekuitas.blogspot.com/2009/10/get-ready-to-ride-bull.html ) On that post, I recommended the 23.6% retracement as the level to buy this stock at 10.400. This week INTP closed at 11.800, so you guys might have made about 13%.

I'll show you guys the q/q result of INTP.



Even though the sales were not growing that fast, INTP capable of making consistent growth on its EPS. I believe on the 4th quarter the revenue would grow faster and would reflected on its EPS.



The 3Q-09 q/q earning is growing although only 3.9%, while the 2Q-09 was growing 33% q/q.