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.

Get Ready to Ride the Bull..!!

In the last few days, the stocks have been in a pullback situation. Fund managers and major investors are taking some profit in the Indonesian market which has been the best performer this year. For me, as an optimistic and a very bullish trader, I see these days are the best time to enter the market.

I would show you guys some perspectives and ideas to time the market from technical point of view.

BMRI Daily Chart
(Source: Dongsuh Securities, edited)

The chart above is the Bank Mandiri (BMRI) candle stick. The chart shows that BMRI has been pushed down beyond the major moving average line (the red MA line). It could be seen as a sign that BMRI is entering a bearish situation. I tried to figure the fibonacci retracement from BMRI chart to get an ideal price to buy this stock. The March 2009 was the initial long rally, with initial price of 1750. The highest level was 5300. The 23.6% retracement for me is an ideal price to get in. The price of 23.6% retracement is around 4462.


INTP Daily Chart
(Source: Dongsuh Securities, edited)

This is another chart of Indocement (INTP). The rally was started on March 2009 with initial price of 4250. The highest level was around 12300. The 23.6% Fib retracement is 10400, which is an ideal level to buy this stock.

The best price level to buy those stocks are unique for every investor since every investor has his own risk-aversion or risk-taking level. For an aggressive investors, 23.6% might be the best level but for moderate investors 38.2% or 50% might be the ideal level.

Here is the summary of the retracement level for BMRI, INTP and SMGR.

Fibonacci	BMRI	INTP	SMGR
Retracement
23.60%	4462	10400	6174
38.20%	3944	9225	5663
50.00%	3525	8275	5250
61.80%	3106	7325	4837
100.00%	1750	4250	3500

UNSP is Undervalued

Reuters Code : UNSP.JK

President SBY just announced the ministers for the period of 2009-2014. I noticed that the economic coordinator minister, Hatta Radjasa might be the weakest person in the economic team. Lets look at the market reaction tomorrow...

By the way, the oil price has reached a new high today at around $81 per barrel. I believe with the upward move in the oil would influence other commodity prices such as crude palm oil (CPO). If you guys are following me, I wrote in my comment here: http://deroncapital.files.wordpress.com/2009/09/factsheet-sep-092.gif
On that comment, I have predicted that CPO price tend to be higher in the coming months. In early October I bought SGRO stock to overweight the plantation sector in my portfolio which had gained almost 20% before I sold it. You guys could check my portfolio here : http://deroncapital.wordpress.com/
SGRO, AALI and LSIP are outperforming the market month to date. UNSP is lagging the market. I believe UNSP would rise in the near to medium term to catch the other plantation stocks.

The 2Q-2009 UNSP financial report showed some sign of improvement, even though the market still think that UNSP is a risky kind of stock which is reflected on its stock price, with P/BV below 1.5 x. If you check the financial statement, obviously the profit were resulted in the April-June period. From here, I concluded that the trend is improving.


(Source : Dongsuh Securities, edited)

The thing that we should be aware of is the BV per share of UNSP is significantly lower than three months ago due to the increasing in the diluted weighted average share. I am expecting that when the CPO price increasing significantly, UNSP management would be able to buy back some of its stock in the market hence the outstanding share would be reduced.

I believe the ideal P/BV ratio of UNSP should be around 1.7-1.8 x, given its strong growth potential. I derived the ideal price of UNSP based on its ideal P/BV :

P/BV	Expected Price
1.7	961.32
1.8	1017.87

October: Continue Rally or Pullback ?

We are entering the 4th quarter in lack of confident. The JCI was opened in red but it managed to close in slightly positive, up only 0.08%. The unemployment report in the US showed a new record low since 1983 with 9.8% unemployment rate.

In my observation, I noticed that there were some re-balancing portfolio activities in the market lately. Fund managers and foreign investors are tend to shift their portfolio into a lower beta stocks. It could be seen as a sign that the market might be in a higher volatility in a near term. Investors are trying to enhance their portfolio so that their portfolio risk would be lower.

With this risk aversion condition, I am expecting the market in a ranging trade with tendency to go down a little bit in this month of October.

(Source: Dongsuh Securities, edited)

The trading range would be in 2400 - 2500 level or if the market go down further beyond the 2400 level support it would test the 2300 level.

You could check my portfolio here : http://deroncapital.wordpress.com/

Wijaya Karya, buy TP : 380

Bloomberg Code: WIKA:IJ
Reuters Code : WIKA.JK

Wijaya Karya (WIKA) is one of the major players in construction business. Compare to ADHI and TOTL, WIKA has more stable and consistent growth in this weak economic condition. Its sales has been growing significantly since 2005. In 2009 I projected a little contraction in its revenue but I am confident that in 2010 WIKA would start its consistent growth again. I would show you the data :


WIKA shows that it is capable in make its business more efficient. The ROE is consistently growing each year. In 2009, even though I projected some negative growth in its revenue WIKA still capable in making some growth in its forecasted 2009 earning.
Its current PE ratio is 10.64 and its P/BV is 1.40 (per 11 September 2009). I believe these multiplier are too low for its potential business growth. I projected its PE ratio would be at least 12 x.



I also made some projection using a Discounted Cash Flow model (DCF) using growth factor 15.25% and required return 19%. The output from this model is the ideal today price of WIKA which is 377.

With today price of 350, I recommend a "BUY" for WIKA.

Cement Industry Analysis

I would show you guys the cement industry players data. Cement is a very prospective sector in Indonesia. There are three major players which are Semen Gresik (SMGR), Indocement (INTP), and Holcim (SMCB). I would start it with trend analysis.

Trend Analysis
The economic crisis is influencing this sector growth as well as other sectors, even though the effect is not that bad. I predicted that in 2010 the industry will grow faster than today.

SMGR is leading the industry with market share 48.61% followed by INTP and SMCB with 34.45% and 16.94% respectively. Table below is the detail:

	2Q-2009	2008	2007	2006	2005
Indocement	34.45%	36.50%	35.42%	35.05%	34.64%
Holcim	16.94%	17.93%	18.16%	16.59%	18.69%
Gresik	48.61%	45.57%	46.43%	48.37%	46.66%
Total	100.00%	100.00%	100.00%	100.00%	100.00%

Company Data

INDOCEMENT (INTP)	2Q-2009	2008	2007
Total Asset (Mio IDR)	11,262,900.00	11,286,700.00	10,037,900.00
Book Value (Mio IDR)	9,118,740.00	8,500,190.00	6,893,500.00
Net Cash Flow (Mio IDR)	346,670.00	482,382.00	264,372.00
CAPEX (Mio IDR)	-57,299.00	-233,286.00	250,110.00
Sales (Mio IDR)	4,795,490.00	9,780,500.00	7,323,640.00
Operating Income	1,628,441.00	2,459,870.00	1,593,420.00
Net Income	1,172,471.60	1,745,500.00	980,103.00
Dividend	552,184.80	147,249.00	110,437.00
Total Share	3,681.23	3,681.23	3,681.23
Profitability
ROE	12.86%	20.53%	14.22%
ROA	10.41%	15.47%	9.76%
Operating Profit Margin	33.96%	25.15%	21.76%
Net Profit Margin	24.45%	17.85%	13.38%
Financial Risk
Debt / Equity	23.51%	32.78%	45.61%
Valuation
BV per share	2477.09	2309.06	1872.61
EPS	318.50	474.16	266.24
Sales per share	1302.69	2656.86	1989.45
Cash Flow per share	94.17	131.04	71.82
DPS	150.00	40.00	30.00

HOLCIM (SMCB)	2Q-2009	2008	2007
Total Asset (Mio IDR)	7,121,705.00	7,674,980.00	7,208,250.00
Book Value (Mio IDR)	2,817,925.00	2,537,926.00	2,257,357.00
Net Cash Flow (Mio IDR)	-308,086.00	171,068.00	394,510.00
CAPEX (Mio IDR)	-33,859.00	-176,723.00	-165,810.00
Sales (Mio IDR)	2,357,731.00	4,803,377.00	3,754,906.00
Operating Income	497,876.00	926,277.00	536,260.00
Net Income	279,999.00	282,220.00	169,410.00
Dividend	0.00	0.00	0.00
Total Share	7,662.90	7,662.90	7,662.90
Profitability
ROE	9.94%	11.12%	7.50%
ROA	3.93%	3.68%	2.35%
Operating Profit Margin	21.12%	19.28%	14.28%
Net Profit Margin	11.88%	5.88%	4.51%
Financial Risk
Debt / Equity	152.73%	202.41%	219.32%
Valuation
BV per share	367.74	331.20	294.58
EPS	36.54	36.83	22.11
Sales per share	307.68	626.84	490.01
Cash Flow per share	-40.20	22.32	51.48
DPS	0	0	0

SEMEN GRESIK (SMGR)	2Q-2009	2008	2007
Total Asset (Mio IDR)	11,991,449.00	10,602,964.00	8,515,227.00
Book Value (Mio IDR)	8,317,759.50	8,069,586.00	6,627,262.50
Net Cash Flow (Mio IDR)	229,750.00	924,404.00	1,078,690.00
CAPEX (Mio IDR)	-385,739.80	-561,764.00	-322,645.00
Sales (Mio IDR)	6,767,275.80	12,209,846.00	9,600,801.00
Operating Income	1,914,283.70	3,387,185.80	2,396,848.20
Net Income	1,513,599.90	2,523,544.50	1,775,408.40
Dividend	1,261,764.00	887,711.30	647,760.20
Total Share	5,863.58	5,922.18	5,931.52
Profitability
ROE	18.20%	31.27%	26.79%
ROA	12.62%	23.80%	20.85%
Operating Profit Margin	28.29%	27.74%	24.97%
Net Profit Margin	22.37%	20.67%	18.49%
Financial Risk
Debt / Equity	44.17%	31.39%	28.49%
Valuation
BV per share	1418.55	1362.60	1117.30
EPS	258.14	426.12	299.32
Sales per share	1154.12	2061.71	1618.61
Cash Flow per share	39.18	156.09	181.86
DPS	215.19	149.90	109.21

From the data above, I prefer to invest in SMGR and INTP since both companies obviously could make some significant profit. SMGR’s ROE are always grows, in 2007 it was 24.97%, in 2008 was 31.27% and for 2Q-2009 its ROE was 18.2% or equal to 36.4% annually.

INTP also managed to grow its ROE which are 14.22% in 2007, 20.53% in 2008 and 12.86% in 2Q 2009 (or equal to 25% annually).

INTP is preferable if we look at the Debt to Equity ratio, which continually decreased. SMGR growth in Debt / Equity might be due to its expansionary plan in the future, which is going to build some new plants.


Valuation

Based on the data, here is the projected EPS and current Book Value per share:

Forecasted next year EPS
SMGR	567.9
INTP	727.76
SMCB	46.94

Current BV per share
SMGR	1418.55
INTP	2477.09
SMCB	367.73

with today 20 August 2009 closing price, here is the ratio:

Ratio	P / BV	Forward P / E
SMGR	4.16	10.39
INTP	3.88	13.19
SMCB	3.59	28.12

I think the SMGR and INTP are still very undervalue given their strong future growth. I believe PE ratio for SMGR should be around 12x and INTP around 15x.