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ITMG – Concern on higher production cost

Indo Tambangraya Megah (ITMG) – HOLD (Maintain)

Price: Rp18,200 – Target Price: Rp19,750

Concern on higher production cost

  • 3Q14 higher costs eat into margins.
  • Lower volume and higher production cash cost in 2015.
  • Venturing into power business.
  • Maintain HOLD.

 

ULTJ – Heading in the right direction

Ultrajaya Milk Industry (ULTJ) – BUY (Maintain)

Price: Rp3,800 – Target Price: Rp4,525

Heading in the right direction

  • 3Q14 gross margin improvement.
  • Falling milk powder cost to boost margins.
  • Cutting sales volume forecast FY14E and FY15E.
  • Maintain BUY.

 

AKRA – Still running low

AKR Corporindo (AKRA) – HOLD (Upgrade)

Price: Rp4,820 – Target Price: Rp4,700

Still running low

  • Lower oil prices to impact 4Q14.
  • Demand from miners remains weak.
  • Coal underperforms.
  • Valuation and catalysts.

 

ADRO – Positive 9M14 results but limited upside

Adaro Energy (ADRO) – HOLD (Downgrade)

Price: Rp1,140 – Target Price: Rp1,200

Positive 9M14 results but limited upside

  • Higher 3Q14 stripping ratio reduces margins.
  • Strong cost control.
  • Low coal price pressuring margins in 2015.
  • Downgrade to HOLD.

 

PGAS – Steady as she goes

Perusahaan Gas Negara (PGAS) – BUY (Upgrade)

Price: Rp5,950 – Target Price: Rp6,950

Steady as she goes

  • Earnings meet expectations.
  • Increased gas supply ahead.
  • PGAS critical to energy security.
  • Upgrade to BUY.