United Tractors (UNTR) - In Line FY10 Result

United Tractors (UNTR) – Maintain HOLD
Price: Rp23,050 -  Target Price: Rp23,700

In Line FY10 result

  • In FY10, UNTR booked Rp37.3 tr of revenue (+28% YoY) with heavy equipment as the largest contributor of 46% to revenue.
  • On full year basis gross margin declined to 18.2% from 22.2%, mainly due to decline on PAMA’s margin from 21.4% to 13.8%.
  • Only the mining business recorded an increase on gross margin of 13.6% in FY09 to 14% in FY10 mainly due to the increase of average selling price as the impact of rising coal price.
  • We are worried by Bank Indonesia continues to raise BI rate , the continuing heavy rainfall and oil price pressure that can swell cost of production.
  • Overall, we maintain our forecast with target price of Rp23,700 reflecting 17.2x PE’11F, while being cautious negative on the sentiments mentioned.
  • Maintain HOLD