Subject: J.P. Morgan : TLKM to PGAS switch (TLKM rating downgrade)
Research call – TLKM downgraded to Neutral from O/W. It’s a country
bet from here on, U/W Indo telcos on regional bottom-up context.
* Sales call – switch from TLKM to PGAS. Yes, there is real
possibility of the Rupiah going pass 8,000 mark, that would be good
for TLKM and bad for PGAS. But for PGAS, has anyone considered the
real possibility of gas (distribution) selling price going to
US$10/mmbtu (from US$6.32 currently) over-time? I mean….PLN, the
biggest gas buyer in town, has just signed a B-to-B purchase agreement
at US$10/mmbtu yesterday. For every 10% increase in ASP, core EPS will
go up by 21% (a conservative ratio, I think). So for those who likes
to think BIG, there is a hidden 122% upside potential to core EPS.
Just for the sake of the argument, if FY11 EPS is upgraded by 122%,
the P/E could fall to 6.5x from the 14.6x we show currently. On TLKM,
what I don’t like about the stock is that the company has entered into
an acquisition phase, given its growing free cash flow. In the near
term, the company may gravitate towards heavy balance sheet model by
buying BTS towers, where its peers are going on opposite direction. I
am not sure if the market can appreciate the strategic shift in the
short term.
Indonesian telecom – no more a bottom-up call (James Sullivan)
TLKM downgraded from O/W to Neutral. Indo telco is an U/W on regional
context, but still liking EXCL. Telco stocks de-link from EPS
revisions and become country proxies above a certain P/E level: Many
of our prior top stock picks are now trading at multi-year high
earnings multiples, as are their country indices. In our view, many
telcos have now become country plays rather than bottom-up stock
picks. We downgrade PLDT and TLKM to Neutral with no change to our
price targets or estimates.
https://mm.jpmorgan.com/PubServlet?action=open&doc=GPS-485224-0.pdf
Indonesian telecom – more tower deals (Reuters news)
19:16 12Oct10 RTRS-UPDATE 1-Indonesia's Indosat eyes $1.4 bln tower
sale -sources
* May sell 14,000 towers by end yr or early next yr - sources
* Indosat says picked Citigroup as strategic advisor
* Telkom and Tower Bersama may bid for the assets - sources
(Adds details, quote)
By Janeman Latul and Joseph Chaney
JAKARTA , Oct 12 (Reuters) - PT Indosat <ISAT.JK>, Indonesia 's No. 2
mobile phone provider, may sell up to 14,000 telecom towers worth
about $1.4 billion in coming months, three sources with direct
knowledge of the matter said on Tuesday.
Indonesia needs about $7 to $8 billion of annual investment to
build telecom towers across Southeast Asia 's biggest economy to boost
coverage and tap strong mobile phone growth, though foreign investors
are banned from owning or operating towers.
Indonesian state telecom firm PT Telekomunikasi Indonesia
<TLKM.JK> and private telecom tower operator PT Tower Bersama
Infrastructure are likely bidders, said two of the sources, who
declined to be identified because the plan was not public.
Indosat, controlled by Qatar Telecom <QTEL.QA>, confirmed it was
considering a sale.
"We're still evaluating the options, we could sell it or retain it.
Nothing is definite yet on the sale plan. It may be decided this year
or next year," said Fadzri Sentosa, an Indosat director.
Sentosa said the company has appointed Citigroup <C.N> as a
strategic advisor on its tower assets.
Indonesia is one of the world's most crowded telecommunications
markets, with 11 operators fighting for custom in a population of 237
million.
Indosat has 37.8 million subscribers, well behind PT Telkomsel, a
subsidiary of PT Telekomunikasi Indonesia , with 88 million
subscribers, but ahead of PT XL Axiata's <EXCL.JK> 35 million.
Indosat had 17,372 base transceiver station (BTS) towers as of the
first half of 2010, and is likely to use the proceeds of any sale to
pay down debt and for expansion of its core business.
"Telkom may likely be the bidder as the company is currently
consolidating its tower business, but the situation is still fluid,
any local telco players could come in to bid for the assets," said one
of the sources.
Telkom has said it plans capital expenditure of about $2 billion
next year to finance infrastructure projects, and is also looking to
expand through acquisitions in the region as it sees the domestic
market maturing.
Tower Bersama, controlled by Saratoga Capital, has raised about
$220 million for an initial public offering in late October, as more
firms seek to raise capital from investors in a Jakarta stock market
<.JKSE> at record highs this year.
(Additional reporting by Fathiya Dahrul; Editing by Neil Chatterjee)
((Reuters Messaging:joseph.chaney.reuters.com@reuters.net; +852
2843-6557)) ((If you have a query or comment on this story, send an
email to newsfeedback.asia@thomsonreuters.com)) ($1=8920 Rupiah)
Keywords: INDOSAT/TOWERS
PGAS news
PLN will buy 150mmscfd of gas at US$10 from PGAS and Pertamina.
Meanwhile, Total SA and Inpex will supply 1.1mn tons of LNG per year
to PGAS and Pertamina from 2012-22. The supply is coming from Bontang
plant. My take – this sounds like an incremental business for PGAS
that can lift consensus DCF estimate. What is unclear at this point is
what kind of margin can PGAS earn from these new contracts. PGAS has
lagged the JCI index by 30% YTD. Should be time to add.
Listrik Negara Plans to Buy Gas From Gas Negara, Pertamina
2010-10-05 04:29:06.283 GMT
By Bambang Djanuarto
Oct. 5 (Bloomberg) -- PT Perusahaan Listrik Negara plans to sign
a gas purchase agreement on Oct. 12 to buy 150 million standard cubic
feet of gas a day at $10 per million British thermal units from PT
Perusahaan Gas Negara and PT Pertamina, Dahlan Iskan, president
director at Listrik Negara said in Jakarta today.
Gas Negara will supply the fuel next year from its liquefied
natural gas receiving terminal in West Java , Iskan said.
Total, Inpex Sign LNG Deal With Gas Negara Venture (Update1)
2010-10-12 04:29:20.172 GMT
By Bambang Djanuarto
Oct. 12 (Bloomberg) -- Total SA and Inpex Corp. signed an
agreement today with a venture of PT Pertamina and PT Perusahaan Gas
Negara to supply an average 1.1 million tons of liquefied natural gas
a year from 2012 to 2022, a Pertamina executive said.
PT Total EP Indonesie, a unit of Total, and Inpex will supply LNG
from the Bontang plant on Indonesia ’s part of Borneo island to a
receiving terminal in west Java operated by the venture PT Nusantara
Regas, said Hari Karyuliarto, head of LNG business at Pertamina.
“Nusantara Regas will re-sell the gas to PT Perusahaan Listrik
Negara at about 200 million to 240 million cubic feet a day for the
same period of the contract,” Karyuliarto said.
Indonesia , the largest natural gas supplier after Qatar and
Malaysia , is trying to increase the use and investment of the cleaner
burning fuel to make up for declining crude oil output, which led the
country to leave the Organization of Petroleum Exporting Countries in
2008.
LNG is natural gas that has been cooled to liquid for shipping to
markets beyond the reach of pipelines.
Gas Negara , Indonesia ’s largest distributor of the fuel, may
invest $250 million to build an LNG receiving terminal in Belawan,
North Sumatra province, next year, Finance Director Riza Pahlevi
Tabrani said on Sept. 23.
Newsflow
* PT Telkom – CEO told the press that the company is competing with
three other bidders to acquire a company that is involved in telecom,
information, and media, with a budget of more than Rp1trn. The process
could be finalized by year-end. (Bisnis Indo)
* Jasa Marga – plans to complete the acquisition of
Waru-Wonokromo-Tanjung Perak tollroad route by year-end. JSMR wants a
more than 51% stake in the project. (Bisnis Indo).
* Krakatau Steel – with an IPO price range of Rp800-1150, KS will
raise between Rp2.52trn-3.63trn for 20% stake. The deal is being
priced between 9-11x P/E for 2011. South Korean steel producers
(Posco) have reportedly expressed their interests to participate in
the IPO. (Bisnis Indo).
* Ancora (OKAS) – planning a rights issue in 1Q11 to acquire a coal
mine with around 20mn tons reserves. (Bisnis Indo).
* Japfa Comfeed (JPFA) – to merge its two subsidiary companies PT
Multiphala Agrinusa (MAG) and PT Bintang Terang Gemilang (BTG), for
streamlining and efficiency. (Kontan).
This communication is for informational purposes only. It is not
intended as an offer or solicitation for the purchase or sale of any
financial instrument or as an official confirmation of any
transaction. All market prices, data and other information are not
warranted as to completeness or accuracy and are subject to change
without notice. Any comments or statements made herein do not
necessarily reflect those of JPMorgan Chase & Co., its subsidiaries
and affiliates. This transmission may contain information that is
privileged, confidential, legally privileged, and/or exempt from
disclosure under applicable law. If you are not the intended
recipient, you are hereby notified that any disclosure, copying,
distribution, or use of the information contained herein (including
any reliance thereon) is STRICTLY PROHIBITED. Although this
transmission and any attachments are believed to be free of any virus
or other defect that might affect any computer system into which it is
received and opened, it is the responsibility of the recipient to
ensure that it is virus free and no responsibility is accepted by
JPMorgan Chase & Co., its subsidiaries and affiliates, as applicable,
for any loss or damage arising in any way from its use. If you
received this transmission in error, please immediately contact the
sender and destroy the material in its entirety, whether in electronic
or hard copy format. Thank you. Please refer to
http://www.jpmorgan.com/pages/disclosures for disclosures relating to
European legal entities.
bet from here on, U/W Indo telcos on regional bottom-up context.
* Sales call – switch from TLKM to PGAS. Yes, there is real
possibility of the Rupiah going pass 8,000 mark, that would be good
for TLKM and bad for PGAS. But for PGAS, has anyone considered the
real possibility of gas (distribution) selling price going to
US$10/mmbtu (from US$6.32 currently) over-time? I mean….PLN, the
biggest gas buyer in town, has just signed a B-to-B purchase agreement
at US$10/mmbtu yesterday. For every 10% increase in ASP, core EPS will
go up by 21% (a conservative ratio, I think). So for those who likes
to think BIG, there is a hidden 122% upside potential to core EPS.
Just for the sake of the argument, if FY11 EPS is upgraded by 122%,
the P/E could fall to 6.5x from the 14.6x we show currently. On TLKM,
what I don’t like about the stock is that the company has entered into
an acquisition phase, given its growing free cash flow. In the near
term, the company may gravitate towards heavy balance sheet model by
buying BTS towers, where its peers are going on opposite direction. I
am not sure if the market can appreciate the strategic shift in the
short term.
Indonesian telecom – no more a bottom-up call (James Sullivan)
TLKM downgraded from O/W to Neutral. Indo telco is an U/W on regional
context, but still liking EXCL. Telco stocks de-link from EPS
revisions and become country proxies above a certain P/E level: Many
of our prior top stock picks are now trading at multi-year high
earnings multiples, as are their country indices. In our view, many
telcos have now become country plays rather than bottom-up stock
picks. We downgrade PLDT and TLKM to Neutral with no change to our
price targets or estimates.
https://mm.jpmorgan.com/PubServlet?action=open&doc=GPS-485224-0.pdf
Indonesian telecom – more tower deals (Reuters news)
19:16 12Oct10 RTRS-UPDATE 1-Indonesia's Indosat eyes $1.4 bln tower
sale -sources
* May sell 14,000 towers by end yr or early next yr - sources
* Indosat says picked Citigroup as strategic advisor
* Telkom and Tower Bersama may bid for the assets - sources
(Adds details, quote)
By Janeman Latul and Joseph Chaney
JAKARTA , Oct 12 (Reuters) - PT Indosat <ISAT.JK>, Indonesia 's No. 2
mobile phone provider, may sell up to 14,000 telecom towers worth
about $1.4 billion in coming months, three sources with direct
knowledge of the matter said on Tuesday.
Indonesia needs about $7 to $8 billion of annual investment to
build telecom towers across Southeast Asia 's biggest economy to boost
coverage and tap strong mobile phone growth, though foreign investors
are banned from owning or operating towers.
Indonesian state telecom firm PT Telekomunikasi Indonesia
<TLKM.JK> and private telecom tower operator PT Tower Bersama
Infrastructure are likely bidders, said two of the sources, who
declined to be identified because the plan was not public.
Indosat, controlled by Qatar Telecom <QTEL.QA>, confirmed it was
considering a sale.
"We're still evaluating the options, we could sell it or retain it.
Nothing is definite yet on the sale plan. It may be decided this year
or next year," said Fadzri Sentosa, an Indosat director.
Sentosa said the company has appointed Citigroup <C.N> as a
strategic advisor on its tower assets.
Indonesia is one of the world's most crowded telecommunications
markets, with 11 operators fighting for custom in a population of 237
million.
Indosat has 37.8 million subscribers, well behind PT Telkomsel, a
subsidiary of PT Telekomunikasi Indonesia , with 88 million
subscribers, but ahead of PT XL Axiata's <EXCL.JK> 35 million.
Indosat had 17,372 base transceiver station (BTS) towers as of the
first half of 2010, and is likely to use the proceeds of any sale to
pay down debt and for expansion of its core business.
"Telkom may likely be the bidder as the company is currently
consolidating its tower business, but the situation is still fluid,
any local telco players could come in to bid for the assets," said one
of the sources.
Telkom has said it plans capital expenditure of about $2 billion
next year to finance infrastructure projects, and is also looking to
expand through acquisitions in the region as it sees the domestic
market maturing.
Tower Bersama, controlled by Saratoga Capital, has raised about
$220 million for an initial public offering in late October, as more
firms seek to raise capital from investors in a Jakarta stock market
<.JKSE> at record highs this year.
(Additional reporting by Fathiya Dahrul; Editing by Neil Chatterjee)
((Reuters Messaging:joseph.chaney.reuters.com@reuters.net; +852
2843-6557)) ((If you have a query or comment on this story, send an
email to newsfeedback.asia@thomsonreuters.com)) ($1=8920 Rupiah)
Keywords: INDOSAT/TOWERS
PGAS news
PLN will buy 150mmscfd of gas at US$10 from PGAS and Pertamina.
Meanwhile, Total SA and Inpex will supply 1.1mn tons of LNG per year
to PGAS and Pertamina from 2012-22. The supply is coming from Bontang
plant. My take – this sounds like an incremental business for PGAS
that can lift consensus DCF estimate. What is unclear at this point is
what kind of margin can PGAS earn from these new contracts. PGAS has
lagged the JCI index by 30% YTD. Should be time to add.
Listrik Negara Plans to Buy Gas From Gas Negara, Pertamina
2010-10-05 04:29:06.283 GMT
By Bambang Djanuarto
Oct. 5 (Bloomberg) -- PT Perusahaan Listrik Negara plans to sign
a gas purchase agreement on Oct. 12 to buy 150 million standard cubic
feet of gas a day at $10 per million British thermal units from PT
Perusahaan Gas Negara and PT Pertamina, Dahlan Iskan, president
director at Listrik Negara said in Jakarta today.
Gas Negara will supply the fuel next year from its liquefied
natural gas receiving terminal in West Java , Iskan said.
Total, Inpex Sign LNG Deal With Gas Negara Venture (Update1)
2010-10-12 04:29:20.172 GMT
By Bambang Djanuarto
Oct. 12 (Bloomberg) -- Total SA and Inpex Corp. signed an
agreement today with a venture of PT Pertamina and PT Perusahaan Gas
Negara to supply an average 1.1 million tons of liquefied natural gas
a year from 2012 to 2022, a Pertamina executive said.
PT Total EP Indonesie, a unit of Total, and Inpex will supply LNG
from the Bontang plant on Indonesia ’s part of Borneo island to a
receiving terminal in west Java operated by the venture PT Nusantara
Regas, said Hari Karyuliarto, head of LNG business at Pertamina.
“Nusantara Regas will re-sell the gas to PT Perusahaan Listrik
Negara at about 200 million to 240 million cubic feet a day for the
same period of the contract,” Karyuliarto said.
Indonesia , the largest natural gas supplier after Qatar and
Malaysia , is trying to increase the use and investment of the cleaner
burning fuel to make up for declining crude oil output, which led the
country to leave the Organization of Petroleum Exporting Countries in
2008.
LNG is natural gas that has been cooled to liquid for shipping to
markets beyond the reach of pipelines.
Gas Negara , Indonesia ’s largest distributor of the fuel, may
invest $250 million to build an LNG receiving terminal in Belawan,
North Sumatra province, next year, Finance Director Riza Pahlevi
Tabrani said on Sept. 23.
Newsflow
* PT Telkom – CEO told the press that the company is competing with
three other bidders to acquire a company that is involved in telecom,
information, and media, with a budget of more than Rp1trn. The process
could be finalized by year-end. (Bisnis Indo)
* Jasa Marga – plans to complete the acquisition of
Waru-Wonokromo-Tanjung Perak tollroad route by year-end. JSMR wants a
more than 51% stake in the project. (Bisnis Indo).
* Krakatau Steel – with an IPO price range of Rp800-1150, KS will
raise between Rp2.52trn-3.63trn for 20% stake. The deal is being
priced between 9-11x P/E for 2011. South Korean steel producers
(Posco) have reportedly expressed their interests to participate in
the IPO. (Bisnis Indo).
* Ancora (OKAS) – planning a rights issue in 1Q11 to acquire a coal
mine with around 20mn tons reserves. (Bisnis Indo).
* Japfa Comfeed (JPFA) – to merge its two subsidiary companies PT
Multiphala Agrinusa (MAG) and PT Bintang Terang Gemilang (BTG), for
streamlining and efficiency. (Kontan).
This communication is for informational purposes only. It is not
intended as an offer or solicitation for the purchase or sale of any
financial instrument or as an official confirmation of any
transaction. All market prices, data and other information are not
warranted as to completeness or accuracy and are subject to change
without notice. Any comments or statements made herein do not
necessarily reflect those of JPMorgan Chase & Co., its subsidiaries
and affiliates. This transmission may contain information that is
privileged, confidential, legally privileged, and/or exempt from
disclosure under applicable law. If you are not the intended
recipient, you are hereby notified that any disclosure, copying,
distribution, or use of the information contained herein (including
any reliance thereon) is STRICTLY PROHIBITED. Although this
transmission and any attachments are believed to be free of any virus
or other defect that might affect any computer system into which it is
received and opened, it is the responsibility of the recipient to
ensure that it is virus free and no responsibility is accepted by
JPMorgan Chase & Co., its subsidiaries and affiliates, as applicable,
for any loss or damage arising in any way from its use. If you
received this transmission in error, please immediately contact the
sender and destroy the material in its entirety, whether in electronic
or hard copy format. Thank you. Please refer to
http://www.jpmorgan.com/pages/disclosures for disclosures relating to
European legal entities.
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