JSMR : Overweight, Target : 1980

Bloomberg Code : JSMR:IJ
Reuters Code : JSMR.JK

Jasa Marga ( JSMR ) would increase its toll roads fees on August 31, 2009. The percentage of the increased would be around 15% and would be applied to Jagorawi, Jakarta - Tangerang, Jakarta inner road, Pondok Aren - Ulujami, Padalarang - Cileunyi, Cipularnag, Palimanan - Kanci, Belmera - Medan, Semarang, Surabaya - Gempol and Jakarta outer ring road. (Source: TV One 12 Agustus). Based on this plan, if it is approved by the government, the ideal price for JSMR stock would be in the range of 1840 - 1980. Here is my projection:

(in Mio RP)	2Q-09	1Q-09	2008	2007	2006
Sales	861,889.00	820,551.00	3,319,340.00	2,617,710.00	2,270,450.00
Operating Income	321,256.00	367,735.00	1,371,620.00	1,015,950.00	819,453.00
Operating Margin	37.27%	44.82%	41.32%	38.81%	36.09%
Net Income	199,119.00	196,540.00	707,798.00	277,982.00	462,567.00
Net Margin	23.10%	23.95%	21.32%	10.62%	20.37%
Total Share	6,780.84	6,780.84
EPS	29.36	28.98
Annualized EPS	117.46	115.94

Based on its historical data, its net margin is around 22.5%. I applied this margin to forecast its 3Q and 4Q 2009. Here is the projection:

(in Mio RP)	4Q-09F	3Q-09F
Sales	991,172.35	904,983.45
Operating Income	366,733.77	334,843.88
Operating Margin	37.00%	37.00%
Net Income	223,013.78	203,621.28
Net Margin	22.50%	22.50%
Total Share	6,780.84	6,780.84
EPS	32.89	30.03
Annualized EPS	131.56	120.12

I applied the P/E multiplier to its Annualized EPS. Based on its strategic business and its long term growth potential, I believe the appropriate P/E would be at least 14 x - 15 x.

Expected Price	4Q-09F	3Q-09F	2Q-09	1Q-09
PE 14 x	1841.77	1681.62	1644.44	1623.14
PE 15 x	1973.33	1801.73	1761.90	1739.08

JCI is Approaching 2400 Level

It is not because today is a nice day to write a blog, since today is 07/08/09. The reason I post some words today is that the Jakarta Composite Index (JCI) is approaching the important 2400 level. Why I think this level is a crucial level is because in July 2007 the JCI had failed to pass this level. In August 2007, about 3 weeks after that failure, the JCI was able to start a huge rally that took it to a historical record high at 2800. On that failure, the JCI was having a retracement that last about 3 weeks. The retracement was around 61.8%, since its rally during March 2007 until July 2007.

Today, the JCI closed at 2349, 50 points away from this important level. Current rally, which was started on March 2009 has given the JCI 80% return. If you look at the trend line obviously you could see that this rally accelerating very fast. 80% gain in just 5 months.

While we are waiting for some unemployment data from the US tonight, I think it would be wise to get some cash aside and wait for this important economic data result. In the near term, I am expecting some retracement for some weeks. If the JCI could pass the 2400, I believe the JCI is possible in reaching a new historical high.

Medco ( MEDC ) ready to soar

Reuters Code: MEDC.JK
Bloomberg Code: MEDC:IJ

Medco Energy shows some hope of recovery. Its 2Q revenue is improving compare to 1Q 09. Even though its revenue has decreased 59.2% yoy, and its net income decreased 84.9% yoy, I believe Medco would be doing much better in 3Q and 4Q

(In million USD)

	4Q-09F	3Q-09F	2Q-09	1Q-09	4Q-08	3Q-08	2Q-08
Revenue	357.65	342.1	311	134.9	340.6	183.4	401
Operating Income	71.53	51.315	31.4	24.1	30.1	82	103
Net Income	42.918	27.368	9.6	7.6	-12.4	229.2	40.7
Operating Margin	20%	15%	10.10%	17.87%	8.84%	44.71%	25.69%
Net Margin	12%	8%	3.09%	5.63%	-3.64%	124.97%	10.15%
Total Shares	3077.46	3077.46	3077.46	3077.46	3096.75	2841.62	3108.85
EPS	0.01395	0.00889	0.00311	0.00247	-0.004	0.080658	0.013092

Based on the trend of IDR appreciating against the USD, I projected that in 3Q and 4Q the USD / IDR rate would be respectively 9800 and 9600.

	4Q-09F	3Q-09F
USD/IDR Rate	9600	9800
	133.88	87.15
Annualized EPS	535.52	348.61

Based on my projection for 3Q and 4Q 2009, I derived the ideal price for Medco stock.

	4Q-09F	3Q-09F
PE 8x	4284	2789
PE 10x	5355	3486
PE 12X	6426	4183