The Insider Stories

S&P puts Bakrie Plantations rating on credit watch

2012-05-31T18:00:00.003+07:00

Standard & Poor's Ratings Services (S&P) said today that it had placed its CCC+ long-term corporate credit rating on Indonesian plantation company Agri International Resources Pte. Ltd. on CreditWatch with negative implications.

S&P also placed CCC+ issue rating on the company's guaranteed US$150 million senior secured notes due July 15, 2012, on CreditWatch with negative implications. AI Finance B.V., a wholly owned subsidiary of Agri International, issued the notes.

At the same time, the rating agency placed our CCC+ long-term corporate credit rating on Indonesian plantation company PT Bakrie Sumatera Plantations Tbk (UNSP) on CreditWatch with negative implications.

"We placed the ratings on CreditWatch because UNSP is taking longer than we had expected to finalize a loan to repay the US$150 million guaranteed notes of its subsidiary Agri International," said Standard & Poor's credit analyst Vishal Kulkarni. "A further delay would increase the risk of default by Agri International. Due to a cross default clause in UNSP's syndicated bank loan documents, a default on Agri International's notes would tantamount to a default by UNSP."

Bakrie Plantations has management control over Agri International. Both Agri International and UNSP have "weak" liquidity, as our criteria define the term.

"We expect Agri International's sources of liquidity to likely fall short of its uses over the next six months. We anticipate that UNSP's ratio of sources of liquidity to its uses will remain less than 0.5x in 2012 and 2013."

The company aims to resolve the CreditWatch placements within the next 2 weeks.

"We could lower our rating on UNSP as well as on Agri International by multiple notches to CC if UNSP fails to arrange for the loan during this time."

"At this point, an upgrade of either BSP or Agri International is unlikely even if UNSP refinances the upcoming notes," said Mr. Kulkarni. This is because of the companies' tenuous operating efficiency and weak cash flows. In addition, UNSP has sizable debt amortization.

Disclosure: No position at the stock mentioned above.

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Kalbe Farma acquires Hale International at Rp100 billion

2012-05-31T14:24:00.001+07:00

Pharmaceutical company PT Kalbe Farma Tbk (KLBF) has agreed to acquire PT Hale International with consideration price of Rp100 billion.

Kalbe Farma entered into conditional sale and purchase agreement to takeover 100% stake in Hale International, a healty drink maker, on May 30 2012. The takeover is aimed to strengthen portfolio products of healty drink segment. According to Kalbe Farma, the takeover closing is expected in the coming months.

Disclosure: No position at the stock mentioned above.

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Visi Media secures US$10.80 million bank guaranteed facility

2012-05-31T14:08:00.001+07:00

Media parent company controlled by Erick Thohir and Anindya Bakrie, PT Visi Media Asia Tbk (VIVA) has secured a US$10.80 million bank guaranteed facility on May 29 2012.

In an filing to Indonesia Stock Exchange yesterday, the issuance of bank guarantee facility has been conditions for Visi Media, PT Cakrawala Andalas Televisi (ANTV), and PT Lativi Mediakarya (TVOne) to be sub-license holder or official broadcaster of XX Edition of the FIFA World Cup Football Tournament and Certain Other Fifa Events.

Those companies entered into license agreement with Federation Internationale de Football Association (FIFA) and PT Inter Sports Marketing as licensee on March 23 2012. The appointment of VIVA, ANTV, and TVOne as official broadcaster of Media Rights World Cup 2014 is expected to be issued by FIFA soon.

Disclosure: No position at the stock mentioned above.

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Adaro buys majority stake in affiliated Bhakti Energi

2012-05-31T13:54:00.000+07:00

PT Adaro Energy Tbk entered into an option to provide a convertible loan of up to US$500 million for a period of 3 years (referred to below as Option One), to acquire a controlling interest in an affiliated coal miner PT Bhakti Energi Persada (BEP) and an option, to acquire the majority shares from the controlling shareholders of BEP (referred to below as Option Two, and, together with Option One are referred to as Options or Option Agreements).
Adaro Energy will have full control of the management, operations and all the funding of BEP from the date of
the signing of the Options.

“We are delighted with the BEP Options we have signed. We feel BEP has excellent potential to help us achieve our
main goal of generating substantial sustainable long-term value from Indonesian coal," said President Director Garibaldi Thohir at Adaro in a press statement yesterday filed to Indonesia Stock Exchange.

Adaro also worked for 2 years to negotiate a deal that is structured in a unique way to minimize risk to Adaro.

"While we are excited with the BEP opportunity, we must
also emphasize that we will use our best judgment before injecting any funds to develop the asset.”

Key success factors such as market readiness, receiving required permits from the government, land availability, social and community support, and completing

engineering and geological studies must first be in place before any large capital expenditures will be deployed. “Our investors should not have the perception that once the Options are signed, we will immediately deploy capital to fund BEP. We are entering into these Options to properly assess an opportunity, while minimizing the
risk to Adaro’s capital. We want to ensure both the acquisition risks and the execution risks are addressed well in advance.”

BEP, which was established in 2002, owns seven low grade thermal coal licenses in the District of Muara Wahau, East Kutai Regency, East Kalimantan. BEP also owns two transport businesses in East Kalimantan, which own the hauling road that will be used to transport BEP’s coal to the seashore. The seven concessions form one very large contiguous thermal coal deposit.

SRK Consulting (Australasia) Pty Ltd (“SRK”) estimated BEP’s concessions to have JORC compliant total resources of 9.53 billion tonnes.

In 2010, Adaro Energy hired Marston, an international mining consultant firm out of St Louis Missouri, USA, to conduct a mining and development study, which verified certain technical assumptions used by SRK in their 2008 and 2009 JORC resource reports. Marston’s estimate of insitu coal tonnages was essentially the same as the SRK estimate as the difference was within acceptable limits.

Option One provides Adaro the option to lend up to US$500 million to acquire 51% equity in BEP over a period
of 3 years.

Adaro can make a decision to convert the loan into equity at the end of the 3 year period. Option two also has a 3 year maturity and was signed with PT Persada Capital Investama (PCI), PT Triputra Investindo Arya (TIA), and the
descendants of the late Mr. Winarto. PCI and TIA each have a 30.787% stake in BEP and combined with the 18.216% Winarto family stake, own 79.8% of the equity of BEP.

Option two provides Adaro a right to acquire shares held by the controlling shareholders of BEP (together holding 79.8% shares in BEP) in exchange for 2,381.7 million shares of Adaro Energy. Both Options are only options for Adaro and not its obligations.

PCI and TIA are owned by two of Adaro Energy’s five key shareholders such as Benny Subianto and Teddy Rachmat. Adaro Energy is 63% held by five key shareholders and no single shareholder has a controlling interest of Adaro Energy.

In June 2011, in an unrelated transaction, Adaro Energy acquired 10.22% of BEP for US$66 million from third party minority holders.

Disclosure: No position at the stock mentioned above.

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Moody's withdraws Davomas Abadi rating

2012-05-30T14:13:00.002+07:00

Moody's Investors Service has withdrawn the Ca corporate family rating and outlook of PT Davomas Abadi Tbk (DAVO).
Moody's has withdrawn the rating because it believes it has insufficient or otherwise inadequate information to support the maintenance of the rating.

DAVO is a producer and exporter of cocoa butter and cocoa powder in Indonesia. Established in 1990 and listed on the Jakarta Stock Exchange since 1994, the company has an annual production capacity of approximately 70,000 tons each of cocoa butter and cocoa powder.

Since Davomas listed stocks at IDX in 1994, the company had held debt restructuring several times. There is no clear information who is the ultimate owner of Davomas right now.
Forbes mentioned that Davomas was controlled by Husein Sutjiadi and did not even explain Setiadi family, who established Davomas when it went public. No single media closely watches and tracks Davomas Abadi activities. Please login or register to read the remaining story.

Disclosure: No position at the stock mentioned above.

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Pefindo downgrades Bakrie Telecom bond to idBB

2012-05-30T14:04:00.001+07:00

Rating agency PT Pemeringkat Efek Indonesia (Pefindo) lowered its ratings for PT Bakrie Telecom Tbk (BTEL) and its Bond I/2007 to idBB from idBBB-.

Pefindo still places the ratings on Credit Watch with Negative Implication. The rating action is to reflect the raising refinancing risk for the Rp650 billion bond, which will fall due on September 4, 2012.

As to date, the readiness to pay the maturing bond remains uncertain. New credit facilities to cover 70% of its bond principal, which is being facilitated by Credit Suisse AG, Singapore branch, has not been completed and the progress has been slower than expected.

The company’s plan to invite new strategic investor through a non preemptive right issue, which will cover the remaining 30%, also still carries high degree of uncertainty.

Pefindo will continue to monitor the company’s progress on the above corporate actions. The ratings could be lowered further if there is no significant progress within three months.

Established in 1993, BTEL provides wireless telecommunication services under the Esia brand. As of December 31, 2011, the company covered 82 cities in Indonesia, supported by 4,016 BTS.

In providing its telecommunication services, BTEL uses CDMA 2000 1x technology on 800 MHz frequency. As of December 31, 2011, BTEL is owned by PT Bakrie & Brothers Tbk (22.0%) and public (78.0%).

Disclosure: No position at the stock mentioned above.

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Arpeni secures transhipment contract from Baruna Dirga

2012-05-29T16:07:00.000+07:00

Shipping operator PT Arpeni Pratama Ocean Line Tbk (APOL) has secured a 1-year coal transhipment contract of 4 million metric tons from PT Baruna Dirga Dharma, a subsidiary of energy integrated company PT ABM Investama Tbk (ABMM).

The contract signing was made on May 25 2012 by President Director Oentoro Surya at Arpeni and President Director Satrio Dari Sasongko at Baruna Dirga Dhama.

The transhipment will use floating crane of Arpeni with capacity of 20,000 metric tons per day. It will be placed at coal floading of PT Tunas Inti Abadi, a subsidiary of ABM Investama, located in Muara Satui, South Kalimantan.

In April 2012, Arpeni signed a coal transhipment contract with PT Borneo Marine Service, one of subsidiaries of Johnlin Group with capacity of 2.4 million metric tons.

Those contracts will be positive achiement of Arpeni despite the gloomy situation in the global shipping industry.

Arpeni is supported by 75 fleets including Capesize, Panamax, Handysize, tug boat, floating crane, and crew boat with capacity of more than 1 million dwt.

Disclosure: No position at the stock mentioned above.

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Telkomsel President Director Sarwoto replaced

2012-05-17T23:54:00.000+07:00

President Director Sarwoto Atmosutarno at PT Telekomunikasi Selular (Telkomsel) has been replaced by Alex Sinaga, Solo-born executive. Alex Sinaga will be officially replaced Sarwoto on May 16 2012.

Eddy Kurnia, Head of Corporate Communication Affair at PT Telekomunikasi Indonesia Tbk (TLKM), parent company of Telkomsel, said along with the appointment of Alex Sinaga, all directors of the Indonesia's largest cellula operator have been changed as well.
Eddy, as quoted by Bisnis.com today, also confirmed about the appointment of Alex Sinaga.

New Telkomsel's BoD:

Alex Janangkih Sinaga (President Director)
Mas'ud Khamid (Director of Sales)
Heri Supriadi (Director of Finance)
Herdy Rosadi Harman (Director of Human Capital Management).
Abdus Somad Arif (Director Of Network)
Edward Ying Siew Heng (Director Of Planning and Transformasi)
Ng Soo Kee (Director of IT)
Goh Hui Min Rachel (Director Of Marketing)

Disclosure: No position at the stock mentioned above.

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Darma Henwa, Prove Energy & Corfield takeovers

2012-05-12T01:00:00.001+07:00

Coal mining contractor PT Darma Henwa Tbk (DEWA), an affiliated of coal miner PT Bumi Resources Tbk (BUMI), were in frenzy acquisitions last year. However, the actions have raised questions, Prove Energy and Corfield Investments. Was it necessary takeover for DEWA? Who is Thionville Financier? Please login or register to read the remaining story.

Disclosure: No position at the stock mentioned above.

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Berau, KPC, Arutmin 1Q coal productions up 8.69%

2012-05-11T14:05:00.001+07:00

Three coal miners that are controlled by Bumi Plc, PT Berau Coal, PT Kaltim Prima Coal, and PT Arutmin Indonesia mined 20 million tonnes of coal for the first quarter of 2012, a 8.69% increased from 18.4 million tonnes in Q1 2011.

Coal sales volume of Berau Coal was slightly flat at 4.6 million tonnes. Berau's operations were impacted by high levels of rainfall as well as a higher stripping ratio which impacted costs. Higher levels of output for the rest of the year are expected to improve cost performance.

The average selling price per tonne in the first quarter was US$78.3/tonne. Year to date stripping ratio was 10.6 bcm per tonne. Berau is forecast to mine 23 million tonnes for 2012.

Berau's expansion plans include the construction of the Binungan 42 kilometre overland conveyor, one of the longest in the coal industry.

The conveyor will be constructed over two phases with commissioning expected in phases. The introduction of the conveyor is expected to significantly reduce trucking and related fuel costs.

KPC & Arutmin

Kaltim Prima Coal (KPC) mined 8.4 million tonnes of coal, marginally higher than Q1 2011 of 8.3 million tonnes. The months of January and February were impacted by heavy rainfall with March reflecting improved production levels.

The average selling price in the first quarter was US$100.4/t, an increase over the same period in 2011. The year to date stripping ratio was 13.0 bcm per tonne, a decline from 13.7 in the first quarter of 2011.

Arutmin Indonesia mined 7.5 million tonnes of coal, a 25% increase over the first quarter of 2011 of 6 million tonnes.

The average selling price in the first quarter was US$$82.9/t, an increase over the same period in 2011. The year to date stripping ratio was 8.3 bcm per tonne, a reduction of 10%.

Coal sales volume (million tonnes)

                          1Q2011        1Q 2012
Berau Coal       4.6                 4.6
KPC                  9.1                 9.0
Arutmin            4.8                 6.8

Coal production volume (million tonnes)

Berau Coal       4.1                4.1
KPC                 8.3                8.4
Arutmin           6.0                7.5

Disclosure: No position at the stock mentioned above.

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Medco to issue US$450 million bonds

2012-05-10T10:07:00.002+07:00

Oil and gas producer PT Medco Energi Internasional Tbk (MEDC), that is controlled by Panigoro family, aims to issue US$450 million bonds in several foreign currencies in a bid to fulfill working capital and refinance its debts.

Finance Director Syamsurizal Munaf, as quoted by Bisnis Indonesia today, said the company is exploring options to issue bonds in rupiah, US$, yuan, and Sin$ denominated starting from the second, third, and fourth quarters respectively.

For rupiah denominated bonds, Medco has mandated PT Mandiri Sekuritas, PT DBS Vickers Securities Indonesia, and PT Standard Chartered SEcurities Indonesia. For US$ bonds, Medco has picked PT Bahana Securities, while for Sin$ and yuan, the company is underway to hold beauty contest on UBS Securities, Credit Suisse, JPMorgan, DBS, and Standard Chartered Securities.

According to President Director Lukman Mahfoedz at Medco, the company's debt that will mature this year is about US$533 million.

Disclosure: No position at the stock mentioned above.

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Stock recommendations today

2012-05-10T09:58:00.003+07:00

The Dow ended in the red for the sixth day in a row on Wednesday as traders fretted about the deteriorating situation in Spain, Greece and other eurozone nations that are still in the grips of the debt crisis.

The Dow Jones Industrial Average, as quoted by Foxbusiness.com, fell 97 points, or 0.75%, to 12835, the S&P 500 slid 9.1 points, or 0.67%, to 1355 and the Nasdaq Composite dipped 11.6 points, or 0.39%, to 2935.

Many sectors recovered markedly from session lows; indeed, the utility sector was in the green. The Dow had been down slightly less than 184 points at the lows of the day.

The situation in Europe remained quite fluid. The European Financial Stability Fund decided to provide Greece with the 4.2 billion euro aid tranche it needs this month, but will hold back on 1 billion euro until next month, according to reporting by the Wall Street Journal, citing a statement. That helped allay fears that Greece will imminently miss a debt payment.

Still, the various parties in parliament remained unable to forge a coalition government. If Greek leadership fails to form a unity government, new elections may have to be held in June. It is also possible that any new government may not be friendly to austerity measures that are needed to receive rescue funds from the European Union and International Monetary Fund.

In either case, it has left market participants uncertain of Greece's fate in the eurozone. Analysts have said that the consequences of a Greek exit are unclear and that it may reverberate through other, weaker nations.

Spain has been of particular concern because of its fragile banking sector, high public debt, and painful borrowing costs. Indeed, The Bank of Spain said it received a request from Bankia, the country's fourth-biggest bank, for a partial takeover and 4.5 billion euro in loans to shore up its capital base.

How about Indonesia stock market today? Bisnis Indonesia provides recommendations:

Panin Sekuritas:

Negative sentiments of European nations's post election last week may shadow the regional stock markets, including Jakarta Composite Index (JCI). Today, the JCI may move in mixed with decline possibility within the range of 4,100-4,150.

e-Trading Securities:

Today, the JCI may test the support 2 level of 4,040 and the resistance 1 level of 4,180 and the resistance 2 of 4,232. Several stocks to watch: JPFA, TLKM, and DGIK.

Minna Padi Investama:

The JCI may try to stay above the support level of 4,109. Wait and see is the choice until rebound sign arrives. Several stocks to monitor: BMTR, BHIT, and BBRI.

Sinarmas Sekuritas:

Technically, the index may move in mixed with decline possibility. The move may range within 4,105-4,167. Several stocks for day trading: JPFA, INTP, KLBF, and TBIG.

Disclosure: No position at the stock mentioned above.

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Telkom bids for cable operator Pacnet US$1 billion

2012-05-08T15:59:00.003+07:00

PT Telekomunikasi Indonesia Tbk (Telkom), the nation's biggest telecom firm, has submitted a bid to buy Asia's leading undersea cable operator Pacnet Ltd, in a deal that could value Pacnet at about US$1 billion including debt, sources said on Tuesday as quoted by Reuters.

Telkom's biggest overseas bid may mark the start of a wave of overseas acquisitions by Indonesian firms as they deploy profits made on the back of a fast-growing domestic economy.

Telkom submitted the bid last week after it reviewed Pacnet's business over the past few months, said one of the sources with direct knowledge of the matter. The source declined to be identified because they were not authorized to speak to the media.

State-owned Telkom, which has a market value of about US$18.2 billion, hopes the deal will be completed by the end of the second quarter, although the valuation has not yet been agreed and could be a stumbling block, one of the sources said.

Telkom, seeking to expand overseas as its home market in Southeast Asia's biggest economy matures, last year tried to buy Cambodia's biggest mobile operator CamGSM but the deal fell through over a valuation issue.

Pacnet's mooted sale comes at a time when the undersea cable unit of India's Reliance Communications Ltd is planning a US$1.4 billion IPO in Singapore.

Pacnet is owned by groups including Ashmore Investment Management and Clearwater Capital Partners. The company put itself for sale last year after its IPO plan was hit by choppy markets, but the sale stalled after it received lower-than-expected offers in the initial round of bidding, sources told Reuters earlier this year.

Pacnet has appointed Credit Suisse and Goldman Sachs to advise the sale. Telkom declined to comment while Pacnet was not immediately available for comment.

When bids were submitted in late November, the vendors were looking for an enterprise value of about US$1 billion, sources told Reuters earlier in January.

The company had an equity value of about US$600 million, debt of about US$300 million and US$100 in cash, sources then said.

Competitive pressurePrivately held Pacnet was formed in January 2008 by the merger of Asia Netcom in Hong Kong and Pacific Internet in Singapore. It owns over 46,420 km of submarine cable infrastructure across Asia and the Pacific Ocean, including cables connecting countries throughout Asia and the United States.

Pacnet, headquartered both in Hong Kong and Singapore, has been expanding its capabilities to tap cloud computing by building data centers in Hong Kong, Singapore and Australia to connect with its regional undersea cables.

Pacnet has been battling intense competition and falling prices and the company is expected to face significant competitive pressures this year, rating agency Moody's Investors Service said in a recent report.

"Furthermore, adjusted leverage of around 4.0x is considered aggressive, given the vulnerability of operating profit and competitive pressures," Moody's analyst Annalisa Di Chiara said in the report.

Pacnet recorded US$528.6 million in revenues in 2011, up 4.4 percent from year ago, driven primarily by the data service and whole sale voice segments. Adjusted EBITDA rose 2.2 percent to US$82 million in 2011, the report added. An enterprise value of $1 billion would give the company an EBITDA multiple of 12, higher than some analysts estimates.

In 2010, it raised US$300 million through a bond offering, which helped fund the building of data centres in Asia. Telkom shares were up 0.6 percent by Tuesday afternoon, compared with a 0.3 percent rise in the benchmark Indonesian share index.

Disclosure: No position at the stock mentioned above.

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S&P revises Gajah Tunggal outlook to positive

2012-05-08T12:50:00.001+07:00

Standard & Poor's Ratings Services (S&P) today revised its outlook on Indonesia-based tire manufacturer PT Gajah Tunggal Tbk (GJTL) to positive from stable.

At the same time, S&P affirmed the B corporate credit rating on the company. The rating agency also affirmed the B issue rating on Gajah Tunggal's guaranteed secured notes.

"The positive outlook reflects our view that Gajah Tunggal's financial risk profile will likely strengthen to "aggressive" over the next 12 month-18 months, from "highly leveraged" currently," said Standard & Poor's credit analyst Xavier Jean. "We expect moderate revenue growth and softening raw material prices to support the company's cash flows and improve its leverage."

The rating agency projected Gajah Tunggal's ratio of total debt to EBITDA to gradually decline to less than 2.5x in 2013, from about 3.1x in 2012, in our base-case scenario.

S&P also expected the company's ratio of total debt to total debt plus equity to decline to about 45% in 2013, from about 51% in 2011.

These projections are based on the following assumptions of revenue growth of 6% in 2012 and 7% in 2013 and EBITDA margin of 12%-13% over the next two years.

"We expect that Gajah Tunggal's cash flows will improve in 2012 and 2013, with funds from operations of Indonesian rupiah Rp1,100 billion-Rp1,200 billion, and that the company's free operating cash flows will be positive over the period. We view Gajah Tunggal's liquidity as "adequate", as defined in our criteria. We expect the company's liquidity sources to exceed its liquidity uses by about 1.4x in the next 12 months."

The rating on Gajah Tunggal reflects the company's "weak" business risk profile and a "highly leveraged" financial risk profile.

The agency believed the company has an aggressive capital structure, and it is exposed to the cyclical and competitive tire manufacturing industry.

"We also believe that its financial flexibility is limited. Gajah Tunggal's competitive cost position and leading share in the Indonesian tire market temper these weaknesses.
We could raise the rating by one notch if we believe Gajah Tunggal's total-debt-to-EBITDA ratio will stabilize at 2.5x-3.0x, with the ratio of FFO to total debt exceeding 20% and positive free operating cash flows," said Mr. Jean.

An upgrade assumes that Gajah Tunggal does not engage in a more aggressive dividend distribution or related-party transactions with its 49.7% shareholder Denham Pte Ltd. that could weaken its own cash flows or leverage.

A downgrade seems less likely in the coming months given our expectation of Gajah Tunggal's operating performance.
However, S&P could revise the outlook to stable if: (1) intense price competition or rapidly increasing raw material prices result in revenue growth of less than 1% and a decline in EBITDA margin to below 10% such that Gajah Tunggal's total-debt-to-EBITDA ratio exceeds 3.5x; (2) the company's liquidity deteriorates quickly because of a rapid increase in working capital requirements or less favorable terms of trade with clients; or (3) capital spending significantly exceeds our expectation of Rp500 billion-Rp600 billion in 2012, resulting in a ratio of total debt to total debt plus equity of above 50% for a prolonged period.

Disclosure: No position at the stock mentioned above.

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Churcill Mining sends letter to President SBY

2012-05-08T12:37:00.001+07:00

Churchill Mining plc advises that it has filed a further formal letter to his excellency the President of the Republic of Indonesia, seeking support and legal protection in order to achieve an amicable and commercial resolution to the company’s investment dispute in the East Kutai Coal Project (“EKCP”) (Churchill 75%).

The letter highlights the company’s investment in Indonesia and the subsequent actions of various Indonesian parties, both government and private, aimed at illegally expropriating the company’s legitimate rights to develop the project.

Churchill believes these actions to be in direct breach of both Indonesian law and Indonesia’s obligations under the Bilateral Investment Treaty between the United Kingdom and the Republic of Indonesia.

The letter follows initial formal correspondence in November 2011 and also the recent notations on the Indonesian Supreme Court's register of cases, that indicates the Supreme Court intends to reject the appeal by Churchill/Ridlatama in relation to the revocation of the four mining licenses that comprise the EKCP (Please refer to the RNS dated 3 April 2012).

Churchill Mining’s Chairman David Quinlivan commented, “We are determined to continue to seek a full and legitimate remedy for our shareholders and have provided the opportunity for government intervention to protect our rights as a foreign investor in Indonesia.”

International Arbitration under the Bilateral Investment Treaty between the United Kingdom and the Republic of Indonesia

Churchill continues to prepare its claim against the Republic of Indonesia for direct breaches of Indonesia’s obligations under the Bilateral Investment Treaty between the United Kingdom and the Republic of Indonesia. As previously advised the Company will file its claim at the International Centre for Settlement of Investment Disputes in Washington D.C in late May 2012.
Churchill will be seeking full relief owed to it under the provisions of the United Kingdom / Indonesia Bilateral Investment Treaty and under customary International law.

Disclosure: No position at the stock mentioned above.

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Visi Media 1Q posts Rp193 bio net profit

2012-05-08T09:55:00.001+07:00

Parent media company PT Visi Media Asia Tbk (VIVA), that is controlled by Bakrie Group, today reported a Rp193.69 billion net profit in the first quarter of this year, a reversal from net loss of Rp3.51 billion a year ago.

In the financial statement filed to Indonesia Stock Exchange (IDX) today, ViVA also posted a 170.42% jump in operating profit to Rp37.21 billion from Rp13.76 billion.

Operating revenue increased 22.44% to Rp244.81 billion from Rp199.95 billion. VIVA is parent company of TVOne, ANTV, and Vivanews.com.The company is 77.74% controlled by PT CMA Indonesia and 4.46% owned by PT Trinugraha Thohir, while PT Bakrie Capital Indonesia owns 0.33% and public shareholders with 10.78%.

Disclosure: No position at the stock mentioned above.

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Gozco 1Q CPO sales volume up 5%

2012-05-08T09:32:00.002+07:00

CPO Producer PT Gozco Plantations Tbk (GZCO), controlled by Indonesian businessman Tjandra Mindharta Gozali, reported 9,500 tons of CPO sales volume in the first quarter of this year, a 5% increase from 9,000 tons a year earlier.

In the term of value, Gozco booked Rp75.58 billion in sales, a 4% increase from Rp72.76 billion. Palm kernel sales value dropped 61% to Rp8,4 billion from Rp21.83 billion.

In total, Gozco's sales declined 11% to Rp83.98 billion from Rp94.58 billion. The declines were driven by the decrease both in CPO ASP and palm kernel. CPO price slightly decreased 2% to Rp7,955 per kg from Rp8,084 per kg, while palm kernel price plunged 40% to Rp4,428 per kg from Rp7,277 per kg.

Tjandra Gozali, one of Surabayans' richest businessmen, was born in Jember, a small city in East Java, in 1952.

Tjandra is also a brother of Henry J. Gunawan, which owns publicly listed property developer PT Surya Inti Permata Tbk (SIIP).
Tjandra's elder son namely Kreisna Dewantara Gozali is a husband of Jean Katuari, second daughter of Eddy William Katuari, one of owners and founders of Wings Group. Kreisna is also Director at Gozco Plantations.

Disclosure: No position at the stock mentioned above.

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Stock recommendations today

2012-05-08T09:16:00.002+07:00

The markets wobbled between positive and negative territory on Monday following last week's steep retreat as traders mulled developments in Europe over the weekend.

As of 3:15 p.m. ET, the Dow Jones Industrial Average, as quoted by Foxbusiness.com, fell 8.6 points, or 0.06%, to 13029, the S&P 500 rose 1.9 points, or 0.14%, to 1371 and the Nasdaq Composite gained 6.6 points, or 0.22%, to 2963.

The broad S&P 500 slid 2.4% in its worst showing of the year last week amid data suggesting the recovery in the world's biggest economy may be slowing down. These reports, capped with a disappointing April jobs read, came on the heels of data suggesting many economies in the eurozone may actually be contracting at an increasing pace.

Closely-watched elections in France and Greece added to the concerns for the ailing currency bloc. François Hollande defeated incumbent Nicolas Sarkozy in elections in France in what many called a referendum of the painful budget-cutting measures the country was taking to chop down its public debt.

Hollande will be the first socialist president in 17 years, according to the Wall Street Journal. While he plans on continuing to cut the country's deficit, he plans on asking wealthy individuals to kick in more.

How about Indonesia stock market today? Bisnis Indonesia provides recommendations:

Reliance Securities:

Today, Jakarta Composite Index may continue to fall, trying to break the support level at 4,123. Stochastic shows the decline movement may occur with the target of 4,022 when the support level has been broken.

Panin Sekuritas:

Today, we estimate that index may fluctuate. We predict that the sell-off may abate. The second and third lines stocks are still the top picks for today trading. The support-resistance level is between 4,119-4,190. Top picks: ADHI, PTPP, ACES, TUTI, and SMRA.

Minna Padi Investama:

The JCI may move within the range of 4,111-4,205. Top picks: BBRI, BMTR, and MDLN.

e-Trading Securities:

The index may tend to rebound within the range of 4,115-4,201. Several stocks to watch: INTP, UNVR, and AISA.

Disclosure: No position at the stock mentioned above.

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Sarana Menara 1Q profit drops 50.29%

2012-05-07T15:58:00.001+07:00

Telecommunication tower operator PT Sarana Menara Bersama Tbk (TOWR), affiliated of cigarette maker Djarum Group that is controlled by Hartono family, today reported a 50.29% drop in net profit for the first 3 months of this year as a result of other losses of Rp62.22 billion.

In the first quarter financial statement filed to Indonesia Stock Exchange (IDX) today, Sarana Menara posted Rp75.19 billion net profit in 1Q 2012 from Rp151.26 billion in 1Q 2011.

Operating profit increased 37.51% to Rp269.76 billion from Rp196.17 billion, while gross profit rose 34.38% to Rp319.80 billion from Rp237.98 billion.

TOWR booked a 30.47% increase in revenue to Rp481.50 billion from Rp369.05 billion.

TOWR is controlled by Hartono family via PT Tricipta Mandhala Gumilang and PT Caturguwiratna Sumapala with 24.55%, and public shareholders with 49.90% stake.

Private placement

In December 2010, two controlling shareholders in Sarana Menara launched a US$528 million private placement, arranged by two placement agents Credit Suisse (Singapore) Limited and CLSA Singapore Pte Ltd.

Based of indicative summary terms and condition of the shares placement, PT Tricipta Mandhala Gemilang (TMG) and PT Caturguwiratna Sumapala (CGS), 45% and 44% holders in Sarana Menara respectively, intend to offer 396.89 million shares or representing 39% of total outstanding in Sarana Menara at Rp12,000 per share or Rp4.76 trillion or US$528 million.

The offering price is 8,33% discount from today’s market closing of Sarana Menara at Rp13,000 per share. Based on the condition, both sellers will be locked-up during 180 days.

Post private placement, TMG and CGS are estimated to control 50.1% holding in Sarana Menara, 9%-15% will be held by management, management of advisors, and affiliates, and the remaining will be owned by retail financial and portfolio investors.

Sarana Menara, via its wholly owned subsidiary PT Profesional Telekomunikasi Indonesia (Protelindo), few days ago announced a memorandum of understanding to acquire 1,000 towers at US$110,000 per tower or US$110 million from PT Hutchison CP Telecommunication (HCPT).

Based on TOWR’s September financial statement, Martin Basuki Hartono is President Commissioner at Sarana Menara.

Martin Basuki is son of Robert Budi Hartono (first generation of Djarum family with Michael Bambang Hartono). Martin Basuki has two brothers Victor Hartono and Arman Budi Hartono.

Disclosure: No position at the stock mentioned above.

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Bakrie & Brothers posts Rp132 bio profit

2012-05-07T15:01:00.000+07:00

PT Bakrie & Brothers Tbk (BNBR), a holding company of Bakrie family, today reported a Rp132 billion net profit last year. The company posted operating profit of Rp1.76 trillion last year from Rp4.01 trillion operating loss.

In a press statement obtained by The Insider Stories today, Bakrie & Brothers booked a Rp16.19 trillion revenue last year.

The net profit was underpinned by revenue of trading, services, and investment sector that steeply rose to Rp10.55 trillion last year from Rp8.41 trillion in the previous year.

According to Finance Director Eddy Soeparno, the positive growth in revenue showed that the company had a strong ability to develop and improve its business.

"Unconsolidated of PT Bakrie Sumatera Plantation Tbk by end of 2010 had not put into effect to our revenue last year," he said in a press statement.

Disclosure: No position at the stock mentioned above.

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Kartini Muljadi family to place Tempo Scan

2012-05-07T14:44:00.000+07:00

PT Bogamulia Nagadi, that is controlled by Kartini Muljadi family, plans to hold a private placement of certain percentage on its stake in PT Tempo Scan Pacific Tbk (TSPC).

In an official announcement published today, the placement is aimed to boost Tempo Scan's public free floating shares, expand basis of its investor, and increase the company's stock liquidity.

However, Bogamulia Nagadi, that is owned by PT Kumpulan Mulia with 99.99% stake and Handojo Selamet Muljadi who is president director at Tempo Scan as well, has not disclosed the shares percentage to be sold during the private placement.

Tempo Scan, part of The Tempo Group, is currently controlled by Bogamulia Nagadi with 95.06% and public shareholders hold 4.94% stake.

According to Handojo Muljadi, in the first quarter of 2012, net sales of Tempo Scan rose 17.8% compared to the corresponding period last year, such as an increase was supported by all of its three core divisions' net sales positive growth that was led by its pharmaceutical division with its stellar net sales increase of 27.3%, followed by its consumer products and cosmetics division, and distribution division which respectively had increased by 17.8% and 12.9%.

EBITDA grew 16,7% to Rp266.4 billion, hence its EBITDA margin remained at 17.2%. "We would like to convey our highest appreciation and thanks to all stakeholders business partners, professional parties, and Tempo Scan employees for the supports given to our company all these years," Handojo said in a press statement.

Disclosure: No position at the stock mentioned above.

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Prasatya family disposes Mitrabahtera

2012-05-06T12:55:00.001+07:00

PT Patin Resources, that is controlled by Prasatya family, and an institutional investor, had placed their stakes in PT Mitrabahtera Segara Sejati Tbk (MBSS) and PT Ciputra Development Tbk (CTRA) worth Rp800 billion on Friday last week.

Patin Resources placed 210.25 million shares of Mitrabahtera, coal tug boat and barge provider, at Rp1,560 a share, signaling a 10.34% discount from Thursday's closing levet at Rp1.740 a share or Rp327.99 billion proceed.

Those shares placement was arranged by CLSA. Mitrabahtera is a subsidiary that is controlled by PT Indika Energy Tbk (INDY).

Post the placement, Patin Resources holds 22.5% stake in Mitrabahtera. As of March 2012, Indika controls 51% stake in MBSS, Credit Suisse AG with 36.5%, and public shareholders with 12.5%.

Investor Relation Indika Energy Retina Rosabai confirmed that Patin Resources disposed its stake in MBSS. However, she did not know the reason behind the shares placement.

CTRA placement

In the same day, an institutional investor who did not disclose its identity sold 630 million shares in the property developer PT Ciputra Development Tbk (CTRA) at Rp750 a share worth Rp472.5 billion, a 6.25% discount.

As of March 2012, PT Sang Pelopor controls 30.63% stake in Ciputra Development, while Credit Suisse AG Singapore holds 8.08%, and public shareholders hold 61.29%.

Disclosure: No position at the stock mentioned above.

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Barito gives Thiess US$393 mio contract

2012-05-06T12:23:00.000+07:00

PT Thiess Contractors Indonesia has been mandated a US$393 million contract by PT Tamtama Perkasa, a member of the Barito Pacific Group. The contractis for mining services in Muara Teweh, Central Kalimantan.

Under the new contract, Thiess Indonesia will provide mining services over a period of five years to support the delivery of 7.5 million metric tons of coal. Operations are expected to commence in the second semester of 2012.

"This contract award is in line with our strategy for continued growth in Indonesia. It is also recognition of Thiess Indonesia’s expertise as a leading mining services contractor," said Roy Olsen, President Director of Thiess Indonesia, in a press statement on Friday last week.

"The Barito Pacific Group is a diversified business, but one that is successful in everything they do and we are pleased to be in partnership with the group. The Tamtama project is only the beginning of a long-term collaboration with the Barito Pacific Group. We look forward to developing their mining business as well as a strong relationship with the group."

This contract is the second awarded to Thiess Indonesia for works in Central Kalimantan in the last couple of weeks.

Disclosure: No position at the stock mentioned above.

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S&P revises Bumi outlook to negative

2012-05-04T16:11:00.000+07:00

Standard & Poor's Ratings Services (S&P) said today that it had revised its outlook on Indonesia-based thermal coal producer PT Bumi Resources Tbk (BUMI) to negative from stable.

At the same time, S&P affirmed BB corporate credit rating on BUMI and BB rating on the company's senior secured notes.

S&P also lowered our ASEAN scale rating on Bumi to axBB+ from axBBB- following the revision on the outlook.

"The negative outlook reflects our view that Bumi's debt has remained higher than we had earlier anticipated," said Standard & Poor's credit analyst Vishal Kulkarni.

"The negative outlook also reflects our expectation that Bumi's operating performance will be weaker in 2012 than in 2011, and that the company's cash flow growth will moderate. Both these factors will likely further limit Bumi's ability to deleverage over the next 12 months."

S&P assessed Bumi's financial risk profile as "aggressive"."We expect the company's financial metrics to likely breach our downgrade triggers over the next 12 months and remain stretched for the rating. We expect the company's ratio of funds from operations (FFO) to total debt at about 10% over the next 12-18 months, barring any debt repayment or refinancing."

S&P believed the company's plan to prepay its high-cost debt with cash receivables from related parties and asset monetization could be delayed.

S&P assessed Bumi's liquidity as "adequate", as defined in our criteria. "We expect the company's sources of funds to exceed its uses of funds by 1.7x over the next 12 months. Yet, we view Bumi's scheduled debt maturities of US$480 million in 2013 as sizable and we could review our assessment of the company's liquidity if it fails to arrange the funds for these maturities in the next 12 months. Currently, we do not expect Bumi's free operating cash flows to cover these maturities."

In our base-case scenario for Bumi, S&P has not considered any debt prepayments or resulting interest cost savings. S&P also has not considered payments of receivables from related parties. Nevertheless, S&P's negative outlook acknowledges potential financial upside from reduced interest expense if Bumi prepays some of its high-cost debt.

"We also note that the company could potentially use these payments to partially repay its own debt, assuming that related parties repay this year. We could lower the rating on Bumi if the company's ratio of FFO to total debt remains below 12% over the next 12 months," said Mr. Kulkarni.

S&P believed this could happen if production growth is slower or gross profit per ton of coal sold is lower than the rating agency currently expect.

"We could also lower the rating if Bumi's business or financial risk profiles weaken due to: (1) negative implications of Bumi PLC's operational or financial policies for Bumi; or (2) adverse regulatory changes. These factors could constrain Bumi's ability to reduce debt."

S&P could revise the outlook to stable if Bumi's FFO-to-debt ratio is above 15% and the total-debt-to-EBITDA ratio stabilizes below 3.5x.

"We believe this could materialize if Bumi's coal production and its gross profit per ton of coal sold significantly exceed our base-case expectations for a sustainable period. We could also revise the outlook to stable if Bumi repays some of its higher-cost debt. The outlook revision assumes that Bumi's operations and cash flow are not negatively affected by developments at Bumi PLC or Bakrie & Bro., and adverse new regulation."

Disclosure: No position at the stock mentioned above.

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Lautan Luas to issue Rp800 bio bonds

2012-05-04T08:39:00.003+07:00

PT Lautan Luas Tbk (LTLS) aims to issue Rp500 billion-Rp800 billion bonds in the third quarter of this year. Director Herman Santoso said the company will use the bond proceed to refinance existing bonds and additional capital expenditure next year.

According to him, as quoted by Bisnis Indonesia today, Lautan Luas is exploring an opportunity to pick lead underwriters.

"Our existing bonds will due in March next year. Hence, we will use June or September's financial statement," he said.

Lautan Luas is scouting a Rp6 trillion revenue this year, a 20% increase from Rp5.5 trillion last year.

Disclosure: No position at the stock mentioned above.

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