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17 March 2012
ASEAN Plantations
Malaysia's downstream 'dilemma' - We assess possible counter measures and risk to upstream
Indonesia tax cuts hurting Malaysian downstream players whose profits fell 25-81% Y/Y in 4Q11. As a recap, with the tax cuts last Oct-11, Indo refiners have a cost advantage of up to US$66/t vs. Malaysia currently. As a result, Indonesia plays with refining profits fared better in 4Q11 (Table 7). Indirect impact on upstream. Weaker downstream/refining demand could result in further build-up in inventory of the feedstock, CPO in Malaysia (Feb-12 inventory was higher than expected). But, under this scenario, we believe the government will consider increasing the tax-free export volume quota for CPO from the current 3.6MT pa (20% of total production) as a short-term measure, given that external CPO demand remains strong. Possible counter measures by Malaysia? In our view, one possible measure is to redirect existing windfall and sales taxes already collected from upstream of M$2.66B pa to subsidize downstream. This accounts for 74% of estimated subsidies of M$3.58B required to fully match the pricing advantage that Indo refiners now have. But, in the worst case, if upstream is required to fully absorb this amount as additional taxes/subsidy, we estimate that it would work out to 6% of CPO revenues for each player. This could cut EPS by 5-9% pa, and translate to share price downside of 10-15% for IOI and GENP (both UWs), and 4% for KLK (Neutral), but still a 13% upside for SIME (OW) to our revised fair values (see pages 7-9 for details). Overall sector implications. For now, we believe Indo players are likely to benefit more than Malaysia players from any short-term overshoot in CPO prices. This is in view of the current shift in profitability and market share to Indonesia, the overhang risk from potential counter measures in Malaysia, and continued better long-term land-banking growth prospects in Indonesia. Among the Indo plays, our top picks are FR (OW) and LSIP (OW), and we also like the fundamentals of AALI (Neutral) and GGR (Neutral). We remain positive on big-cap pick, SIME (OW) in Malaysia given its small exposure to refining, additional non-CPO drivers, and attractive valuations.
Table 1: JPM ASEAN Plantations universe
As at: 16 Mar-12 Ticker FYE Dec Dec Dec Jun Sep Jun Dec Dec Dec Dec Dec Mkt cap (US$mn) 3,681 2,110 2,277 11,016 8,124 19,171 2,220 7,164 1,806 621 25,051 Price (LC) 21,350 2,825 9.17 5.24 23.26 9.75 1.89 0.75 1.59 0.52 4.94 Rating N OW UW UW N OW OW N N N OW Target (LC) 22,500 2,900 8.60 5.00 24.00 11.60 2.10 0.75 1.80 0.52 6.00 Reporting crncy IDR IDR MYR MYR MYR MYR USD USD IDR USD USD EPS (RC) FY12E FY13E 1,624 1,624 231 220 0.63 0.68 0.32 0.36 1.33 1.53 0.69 0.78 0.10 0.10 0.05 0.05 990 1,047 0.03 0.04 0.27 0.29 PE FY12E 13.1 12.2 14.5 16.5 17.5 14.2 15.5 12.4 11.6 13.2 14.7 FY13E 13.1 12.8 13.5 14.6 15.2 12.5 15.6 12.3 10.9 10.3 13.5
AC
AC
Jul-08
Jul-10
Astra Agro Lestari AALI IJ London Sumatra Indon LSIP IJ Genting Plantations GENP MK IOI Corporation IOI MK Kuala Lumpur Kepong KLK MK Sime Darby SIME MK First Resources FR SP Golden Agri-Resources GGR SP Indofood Agri Resources IFAR SP Mewah International MII SP Wilmar International WIL SP
Source: Bloomberg, J.P. Morgan estimates.
See page 16 for analyst certification and important disclosures, including non-US analyst disclosures.
J.P. Morgan does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. www.morganmarkets.com
Indonesia Astra Agro Lestari AALI IJ Bakrie Sumatera Plant UNSP IJ BW Plantation BWPT IJ London Sumatra Indon LSIP IJ Salim Ivomas Pratama SIMP IJ Sampoerna Agro SGRO IJ Weighted average* Malaysia Genting Plantations GENP MK Hap Seng Plantations HAPL MK IJM Plantations IJMP MK IOI Corporation IOI MK Kuala Lumpur Kepong KLK MK Kulim Malaysia KUL MK Sarawak Plantation SPLB MK Sime Darby SIME MK Weighted average* Singapore First Resources FR SP Golden Agri-Resources GGR SP Indofood Agri Resources IFAR SP Kencana Agri KAGR SP Mewah International MII SP Wilmar International WIL SP Weighted average* Sector weighted average*
Source: Bloomberg, J.P. Morgan estimates. NR=Not rated. Bloomberg estimates used for NR companies.
1m -3.2% 2.7% -2.6% -3.1% -6.2% 2.2% 6.2% -2.6% -1.6% -16.1% -16.7%
3m 3.6% 31.4% 13.2% 3.8% 5.5% 8.8% 27.7% 5.7% 23.8% 7.2% -1.2%
6m -4.7% 27.0% 28.5% 13.4% 9.8% 21.9% 41.6% 8.8% 10.1% 11.8% -5.7%
12m -2.5% 22.8% 15.8% -5.8% 13.1% 8.2% 48.8% 14.6% -27.3% -42.2% -3.1%
Ytd -1.6% 25.6% 7.2% -2.6% 2.5% 6.0% 25.2% 4.2% 25.3% 11.8% -1.2%
1m -5.6% 0.2% -3.9% -4.4% -7.5% 0.8% 5.0% -3.7% -2.6% -17.1% -17.6%
3m -3.1% 22.9% 5.6% -3.2% -1.5% 1.5% 12.8% -6.7% 9.4% -5.3% -12.7%
6m -9.3% 20.9% 17.0% 3.3% 0.0% 11.0% 31.2% 0.8% 2.0% 3.6% -12.7%
12m -14.5% 7.7% 10.0% -10.5% 7.4% 2.8% 46.9% 13.1% -28.3% -43.0% -4.4%
Ytd -6.7% 19.1% 4.4% -5.1% -0.2% 3.2% 10.0% -8.4% 10.1% -1.7% -13.2%
-20.0% -10.0%
Figure 3: Plantation sector FY12E earnings sensitivity to 10% rise in CPO prices (base case: M$3,200/t for 2012E)
18.0% GENP MK 16.0% 15.3% 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0%
Source: J.P. Morgan estimates.
FR SP 9.1%
Table 5: Plantation sector correlation to CPO, soy-oil and crude oil prices
Golden Agri-Resources Genting Plantations Mewah International London Sumatra Indon First Resources Astra Agro Lestari Kuala Lumpur Kepong IOI Corporation Sime Darby Indofood Agri Resources Wilmar International Mean Median
Source: Bloomberg, J.P. Morgan estimates.
CPO 0.91 0.89 0.85 0.84 0.80 0.79 0.78 0.77 0.72 0.69 0.31 76% 79%
Soyoil 0.82 0.76 0.39 0.72 0.69 0.61 0.69 0.63 0.61 0.43 0.06 58% 63%
Crude oil 0.77 0.69 0.14 0.63 0.61 0.63 0.55 0.68 0.60 0.51 0.21 55% 61%
As a recap, the restructuring of export taxes in Indonesia in 4Q11 has given Indonesia refiners a cost advantage of up to US$66/t to Malaysian players at current CPO prices (for details, please refer to Appendix). The industry is a major export earner for Malaysia. Downstream/refined products accounted for 82% of total CPO exports of M$60.5B in 2011, with the remaining 16% exported in crude form. In Malaysia, there are currently no export taxes on refined/downstream products, but there is a 23% export tax on crude palm oil (excluding the tax free export volume quota of 3.6MT pa currently, which makes up just below 20% of Malaysia's total CPO production). Hence, the existing tax structure is clearly with the objective of promoting the downstream industry and ensuring adequate supply of feedstock or crude palm oil.
100.0% 95.0% 90.0% 85.0% 80.0% 75.0% 70.0% Refined CPO (M$mn) Refined as a % of total exports
Total refining capacity in Malaysia currently amounts to 24MT pa, of which 75% or 18MT pa was utilized as at 2011 before the export tax cuts came into place in Indonesia. The production capacity and profit exposure to the refining/downstream sector for major listed plays are in the table below.
Table 6: Major refiners/downstream players in Malaysia and Indonesia
Refining capacity pa (MT) 0.25 1.38 1.4 23.0 2.8 2.3 1.6 1.7 Location Indonesia Indonesia Indonesia Indonesia(8MT), Malaysia (5MT), China (10MT) Malaysia Malaysia Malaysia Malaysia FY11 contribution to Profit 9% 8% 7% 30% 65% 12% 16% 1%
First Resources Golden Agri-Resources Indofood Agri Resources Wilmar International Mewah International IOI Corporation* Kuala Lumpur Kepong (largely oleo-chemicals) Sime Darby*
Source: Company data, J.P. Morgan estimates. *Note, including overseas operations outside of Malaysia, refining capacity for IOI Corp and Sime Darby totals to 3.5MT and 2.8MT respectively largely in Europe.
Reported currency for earnings US$MM Rp Billion US$MM US$MM M$MM M$MM M$MM
Comments EBITDA. Contributes 8% to profits EBITDA. PBT Operating profit EBIT (including associates) Operating profit EBIT (including associates)
with the export tax cuts in Indonesia, there are refiners of bulk products now incurring losses or with negative margins
Source: Palm & Lauric Oils Conference & Exhibition. Transgraph Consulting Pvt Ltd. Note: Refining margin is defined as (Sales realization of Olein, PFAD and Stearin) (CPO price + Cost of refining).
2.4 2.2 2.0 1.8 1.6 1.4 1.2 1.0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct 2009 2012 Feb 2010 2007 2011
2008
Nov
Dec
The market share gains or competitive edge which Indonesia now commands is already evident in the export trends of its CPO products in 4Q11 as shown in the table above. In 4Q11, Indonesia's processed palm oil exports rose substantially by 29% Y/Y, while exports of crude palm oil fell by 23% Y/Y with the rising feedstock requirements domestically for downstream.
able to fund the bulk or about 74% of subsidies of M$3.58B which we estimate is required for downstream to remain competitive (see details in following section).
Table 9: Malaysia - Estimated existing taxes collected from upstream CPO players in Malaysia (at CPO prices assumed at M$3,200/t)
Taxes Windfall tax Sabah (31% of CPO output of 19MT pa) Sarawak (14% of CPO output of 19MT pa) Peninsula (55% of CPO output of 19MT pa) Sub-total Sales tax Sabah Sarawak Sub-total MPOB cess tax (cess for R&D, replanting, biofuel subsidy) Total taxes already paid (excluding 25% corporate tax) Estimated subsidies required for downstream
Source: MPOB, J.P. Morgan estimates.
Amount pa (M$MM) 88 40 1,089 1,217 964 229 1,193 246 2,656 3,580
Comments At 7.5% above CPO price of M$3,200/t At 7.5% above CPO price of M$3,200/t At 15% above CPO price of M$2,500/t At 7.5% above CPO price of M$1,000/t At 5.0% above CPO price of M$1,500/t At M$13 per ton of CPO Accounts for 74% of estimated subsidies required for downstream Based on Indonesias cost advantage of US$66/T for refiners at current CPO price levels and based on 18MT of refining capacity utilized in Malaysia.
M$2.66B pa in windfall and sales taxes already collected by the government from upstream players in Malaysia one solution, in our view, may be to redirect these taxes to fund the estimated subsidies of M$3.58B required by downstream players to stay competitive
With the additional cost or subsidies as noted above, our revised PTs compared to current levels, still would translate to upside potential of 13% for Sime (OW), but downside of 15% for Genting Plantations (UW), 10% for IOI Corp (UW) and a smaller 4% downside for KLK (Neutral).
Table 10: Malaysian CPO plays - Risk to earnings if upstream were to subsidize downstream (assuming full impact from FY12 on)
Share price (M$) 9.17 5.24 23.26 9.75 EPS (sen) FY12E 63.2 31.7 132.9 68.6 Base case EPS (sen) FY13E 68.1 35.9 152.9 78.1 EPS (sen) FY12E 57.6 (-8.7%) 30.1 (-5.0%) 124.2 (-6.5%) 65.1 (-5.1%) With downstream subsidies EPS (sen) Price target (M$) FY13E (Downside)/Upside % 62.0 7.80 (-9.0%) (-15%) 34.1 4.70 (-5.0%) (-10%) 143.4 22.40 (-6.2%) (-4%) 74.1 11.00 (-5.1%) (+13%)
Super-normal profitability and market share gains for pure Indonesia refiners until impact of the recent investment boom in refining capacity to capitalize on the cost advantage in the country is felt (likely in the next 12-18 months which is the lead time to set-up operations by new entrants). Indias potential retaliation should be closely watched. India refiners have also been hard hit by the Indo tax cuts, with proposals for the government to increase import duties on refined palm oil to protect domestic producers. Nevertheless, the threat of food inflation reduces this possibility for now. However, if the Indian government succumbs to the proposal, this could erode some of the competitive edge that Indonesian refiners now command, and also pose as a threat as well for Malaysian refiners in the absence of any government counter measures. Counter measures by Malaysia could in the worst case impact upstream players if they are required to subsidize downstream via higher taxes. We have already estimated the worst case impact on the Malaysian names as above. We believe the valuation gap between Malaysia and Indonesia CPO stocks could continue to narrow in favor of the Indo plays (Malaysia commands a PE premium of 20-30% to Indonesia) especially in any short-term overshoot in CPO prices, given tight supply currently. This is in view of the current shift in profitability and market share to Indonesia and the overhang risk from potential counter measures in Malaysia, coupled with continued better long-term landbanking growth prospects in Indonesia for plantations.
Table 11: Key changes to Indonesia palm oil export tax (effective 1st Oct-11)
CPO price (US$/MT) CIF ROTT > than 700 750 800 850 900 950 1,000 1,050 1,100 1,150 1,200 1,250 CPO Old 1.5% 3.0% 4.5% 6.0% 7.5% 10.0% 12.5% 15.0% 17.5% 20.0% 22.5% 25.0% New 0.0% 7.5% 9.0% 10.5% 12.0% 13.5% 15.0% 16.5% 18.0% 19.5% 21.0% 22.5% Change -1.5% 4.5% 4.5% 4.5% 4.5% 3.5% 2.5% 1.5% 0.5% -0.5% -1.5% -2.5% Old 1.5% 3.0% 4.5% 6.0% 7.5% 10.0% 12.5% 15.0% 17.5% 20.0% 22.5% 25.0% Change -1.5% -1.0% -1.5% -2.0% -2.5% -4.0% -5.5% -7.0% -8.5% -10.0% -11.0% -12.0%
Essentially, we believe this change will make refined palm products exported out of Malaysia, significantly less competitive than its Indonesian equivalent. This is due to the unique case in Indonesia where refiners are able to procure their CPO feedstock at spot price less the CPO export tax rate from the upstream CPO producers, while the Malaysia refiners pay the full spot price. In the past, the uniform export tax rate between CPO and refined products in Indonesia meant that whatever the refiner deducts from its CPO purchase is subsequently paid out in the form of export tax to the government, leaving the refiner relatively indifferent. However, with now a differential between the CPO and refined products tax rate, the Indonesia refiner is able to profit from the difference, although over time, some of these margins may be shared with the upstream CPO producers as well when the refining industry gets more mature and competitive.
10
New heightened competition for Malaysian refiners We illustrate below the favorable impact that Indonesian refiners could get over their Malaysian counterparts at various price points above US$700/t. We estimate that Indonesian refiners will enjoy pricing or cost advantage of US$96/t at product prices of US$1,120/t c.i.f. (close to our CPO forecast for 2012/13E) assuming Indonesian upstream players absorb 100% of the export tax on CPO. But, we understand upstream players absorb about 85% of the CPO export tax currently, translating to a cost advantage of up to US$66/t for Indonesian over Malaysian refiners, which is still substantial.
Table 12: Comparison between Malaysia and Indonesia refiner under new Indonesia export tax regime over various price points (US$/t)
Refiner At purchase of CPO feedstock CPO spot price Less: Indo export tax deducted CPO feedstock cost to refiner At sale of refined product Refined palm product price Less: Indo export tax paid to govt Effective selling price Refining margin Pricing advantage of Indo refiner Refiner At purchase of CPO feedstock CPO spot price Less: Indo export tax deducted CPO feedstock cost to refiner At sale of refined product Refined palm product price Less: Indo export tax paid to govt Effective selling price Refining margin Pricing advantage of Indo refiner
Source: J.P. Morgan estimates.
Malay 700 700 730 730 30 Malay 1,000 1,000 1,030 1,030 30
Indo 700 0.0% 0 700 730 0.0% 0 730 30 0 Indo 1,000 15.0% 150 850 1,030 7.0% 72 958 108 78
Malay 750 750 780 780 30 Malay 1,050 1,050 1,080 1,080 30
Indo 750 7.5% 56 694 780 2.0% 16 764 71 41 Indo 1,050 16.5% 173 877 1,080 8.0% 86 994 117 87
Malay 800 800 830 830 30 Malay 1,100 1,100 1,130 1,130 30
Indo 800 9.0% 72 728 830 3.0% 25 805 77 47 Indo 1,100 18.0% 198 902 1,130 9.0% 102 1,028 126 96
Malay 850 850 880 880 30 Malay 1,150 1,150 1,180 1,180 30
Indo 850 10.5% 89 761 880 4.0% 35 845 84 54 Indo 1,150 19.5% 224 926 1,180 10.0% 118 1,062 136 106
Malay 900 900 930 930 30 Malay 1,200 1,200 1,230 1,230 30
Indo 900 12.0% 108 792 930 5.0% 47 884 92 62 Indo 1,200 21.0% 252 948 1,230 11.5% 141 1,089 141 111
Malay 950 950 980 980 30 Malay 1,250 1,250 1,280 1,280 30
Indo 950 13.5% 128 822 980 6.0% 59 921 99 69 Indo 1,250 22.5% 281 969 1,280 13.0% 166 1,114 145 115
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Genting Plantations
Company description Genting Plantations is a 55%-owned listed plantation entity of Genting Bhd. The group has 65,838ha of plantation land-bank in Malaysia, of which 70% is located in Sabah and 30% in Peninsula Malaysia. The group also has three separate ongoing JVs in Indonesia with a total land-bank of 67,635ha. P&L sensitivity metrics (FY12E)
Average CPO Price Impact of each 5% Plantation EBIT Margins Impact of each 5ppt CPO production growth Impact of each 5ppt Production cost Impact of each 5%
Source: J.P. Morgan estimates.
EBITDA impact (%) 3,200 7.20% 50.6% 11.40% 6% 7.10% 30% of cost 0.90%
Price target and valuation analysis We forecast CPO prices at M$3,200/t for 2012-13E. Our Dec-12 PT is M$8.60 based on 14x FY12E P/E, in line with the stock's historical mean. Revenue breakdown (FY11)
7%
93%
FY12E EPS (M$) Target FY11E P/E (x) Price Target (M$)
Property
Plantations
Key risks to our PT are higher-than-expected CPO prices versus our forecast and significantly stronger-than-expected contributions from the Johor premium outlets which commenced operations in Dec-11. Please refer to Table 2 for regional valuation comparison table
12
EBITDA impact (%) 3,150 4.5% 32.4% 11.9% 10% 3.0% 30% of cost 1.0%
Price target and valuation analysis We forecast CPO prices at M$3,200/t for 2012-13E. Our Dec-12 PT of M$24.00 for KLK is based on sum-of-the-parts analysis.
84% 13%
Sum-of-the-parts (SOTP) - CY12E Plantation Property, Manufacturing & Retail Total RNAV Total No. of shares
3% Plantations
Source: Company reports.
Manufacturing
Property
Implied blended PE of Price target 24.00 17x At our PT, the implied CY12E P/E for KLK is 17x, a premium to the sector average of 16x, which we believe is fair, given the group's superior fundamentals versus peers. This is in view of its younger trees and effective expansion into Indonesia over the last few years. Key upside risk to our PT is stronger-than-expected CPO prices. Key downside risk is a much more challenging or competitive environment for the downstream manufacturing unit.
13
IOI Corporation
Company Description IOI Corp is the second-largest plantations company by market cap in Malaysia, with 150,931ha of planted land-bank, 99% of which is in Malaysia. IOI has two new palm oil JVs in Indonesia (i.e. 33%-stake and 67%-stake for development of 100,000ha and 66,000 ha of land respectively). IOI is also involved in downstream manufacturing operations (i.e. refining, oleochemicals, specialty fats) as well as property development in Malaysia (Klang Valley & Johor) and Singapore. Operating profit breakdown (FY11) P&L sensitivity metrics (FY12E)
Average CPO Price (M$/t) Impact of each 5% Plantation EBIT Margins Impact of each 5% ppt CPO production growth Impact of each 5ppt Fertilizer cost Impact of each 5%
Source: J.P. Morgan estimates.
EBITDA impact (%) 3,075 4.0% 64.3% 4.50% 7% 2.60% 30% of cost 0.40%
0.50%
Price target and valuation analysis We forecast CPO prices at M$3,200/f for 2012-13E. Our Dec-12 PT is M$5.00 based on sum-of-the-parts (SoTP) valuation.
2%
14%
22%
Comment 17x PE on CY12E RNAV 10x PE on CY12E, implying 1.2x P/B 15x implied blended PE on CY12E
At our PT, the implied CY11E blended P/E is 15x versus the sector's historical mean of 16x. Key risks to our PT are stronger-than-expected CPO prices, and also strong long-term contributions from the group's recent property acquisitions in Singapore.
14
Sime Darby
Company Description Sime Darby is the largest listed plantations company on Bursa after its merger with Golden Hope and Kumpulan Guthrie, completed in Nov-07. The group's six core businesses are plantations, property, heavy equipment, auto, energy & utilities, and healthcare. The plantations segment is the largest profit contributor, estimated at 58% of profits for FY12E. Simes FY11 profit breakdown
Motor 10% Energy 4%
EBITDA impact (%) 2,932 3.8% 25% 10.20% 7% 5.00% 30% of cost 0.70%
Plant. 59%
Prop. 8%
Price target and valuation analysis We forecast CPO prices at M$3,200/t for 2012-13E. Our Dec-12 PT of M$11.60 is based on sum-of-the-parts valuation. Sum-of-the-parts (SoTP) M$ Comment Plantation 7.48 17x CY12E PE Property 1.39 30% RNAV discount Heavy equipment 1.70 11x CY12E PE Auto 0.76 10x CY12E PE Others 0.22 Implied CY12E PE of 9x Implied blended CY12E PE of SOTP 11.55 16x Price target 11.60
At our PT, the implied CY12E blended P/E for Sime is about 16x, in line with the stocks and sectors historical mean. Key downside risks to our PT are:
1) The court rules in favor of the E&O minority and Sime is required to make a GO for the remaining E&O shares it does not own, especially if new evidence suggests that there was collusion in the takeover deal. We believe, however, that this is an unlikely outcome (see our Sime Note dated 2 Feb-12 for details). 2) Acquisitions and overseas expansion risk. a) Sime has palm oil concessions in Liberia. However, the group has been expanding here cautiously with no more than 5,000ha of total plantings in the next 1-2 years (of the total 220,000 ha concession), with total development cost of no more than M$100MM we estimate. b) The Star reports that Sime may be looking to buy a 70% stake in the 1,400MW Jimah IPP in Malaysia. This is a third-generation IPP where IRRs are estimated at about 10-12% versus a WACC of no more than 10%. Much is dependant on pricing which remains a key risk. 3) Lower-than-expected CPO prices versus our forecast and a challenging environment for the downstream segment.
15
Companies Recommended in This Report (all prices in this report as of market close on 16 March 2012) Astra Agro Lestari (AALI.JK/Rp21350/Neutral), First Resources Limited (FRLD.SI/S$1.89/Overweight), Golden AgriResources Ltd (GAGR.SI/S$0.75/Neutral), London Sumatra Indonesia (LSIP.JK/Rp2825/Overweight), Sime Darby Berhad (SIME.KL/M$9.76/Overweight)
Analyst Certification: The research analyst(s) denoted by an AC on the cover of this report certifies (or, where multiple research analysts are primarily responsible for this report, the research analyst denoted by an AC on the cover or within the document individually certifies, with respect to each security or issuer that the research analyst covers in this research) that: (1) all of the views expressed in this report accurately reflect his or her personal views about any and all of the subject securities or issuers; and (2) no part of any of the research analyst's compensation was, is, or will be directly or indirectly related to the specific recommendations or views expressed by the research analyst(s) in this report.
Important Disclosures
Lead or Co-manager: J.P. Morgan acted as lead or co-manager in a public offering of equity and/or debt securities for Astra Agro Lestari within the past 12 months. Client: J.P. Morgan currently has, or had within the past 12 months, the following company(ies) as clients: Astra Agro Lestari, Sime Darby Berhad. Client/Investment Banking: J.P. Morgan currently has, or had within the past 12 months, the following company(ies) as investment banking clients: Astra Agro Lestari. Investment Banking (past 12 months): J.P. Morgan received in the past 12 months compensation for investment banking Astra Agro Lestari. Investment Banking (next 3 months): J.P. Morgan expects to receive, or intends to seek, compensation for investment banking services in the next three months from Astra Agro Lestari, Sime Darby Berhad. Company-Specific Disclosures: Important disclosures, including price charts, are available for compendium reports and all J.P. Morgan covered companies by visiting https://mm.jpmorgan.com/disclosures/company, calling 1-800-477-0406, or emailing research.disclosure.inquiries@jpmorgan.com with your request.
First Resources Limited (FRLD.SI, FR SP) Price Chart
3
OW S$1.9
OW S$2.1
OW S$1.65
OW S$1.75
OW S$1.7
Price(S$)
Source: Bloomberg and J.P. Morgan; price data adjusted for stock splits and dividends. Initiated coverage Jan 11, 2010.
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Rating Share Price (Rp) OW OW OW OW OW OW OW OW OW OW OW N OW OW OW UW UW UW OW OW OW N N N 8900 10600 12250 12050 14250 16050 23000 32050 25100 23900 16100 8100 9800 15050 18700 22150 23850 24200 23250 18550 20050 20850 25450 23850 21700 19850 22550
Price Target (Rp) 10000 12700 16700 16200 17000 18500 30000 36300 33200 31500 22000 9000 9000 15000 21500 25000 26700 26000 19000 14500 17000 23500 28000 27600 20000 19000 22500
55,704OW Rp16,700 OW Rp30,000 OW Rp31,500 Rp9,000OW Rp25,000 N 46,420 Rp12,700 OW Rp18,500 Rp33,200 Rp9,000 Rp21,500 OW OW OW OW
UW Rp14,500 OW Rp28,000
37,136 Rp10,000 OW Rp17,000 OW OW Rp16,200 OW Rp36,300Rp22,000N Rp15,000 Rp26,700 Rp17,000 OW OW OW Rp26,000OW Rp27,600 N Rp19,000 UW Price(Rp)
06-May-08 OW
27,852
12-Dec-08 N
18,568
9,284
04-Dec-09 OW 28-Apr-10 16-Jul-10 13-Aug-10 21-Sep-10 29-Oct-10 13-Jan-11 25-Feb-11 25-Oct-11 16-Feb-12
Source: Bloomberg and J.P. Morgan; price data adjusted for stock splits and dividends. Initiated coverage Oct 02, 2006.
Date
4,110 UW Rp430UW Rp760 OW Rp2,900
Rating Share Price (Rp) OW OW UW UW UW OW OW OW OW 1930 1250 570 680 895 1640 1840 2310 2400 2075 2750
Price Target (Rp) 2600 1800 430 580 760 1960 2140 2920 2950 2400 2900
3,288 Price(Rp)
OW Rp1,960
2,466
1,644
822
31-May-11 OW 16-Feb-12
Source: Bloomberg and J.P. Morgan; price data adjusted for stock splits and dividends. Initiated coverage Apr 23, 2008.
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Date 24-Aug-09
Price(S$)0.5
Rating Share Price (S$) UW UW UW UW N N 0.48 0.60 0.57 0.78 0.66 0.62 0.77
Price Target (S$) 0.40 0.45 0.50 0.58 0.75 0.65 0.75
13-May-11 N
Source: Bloomberg and J.P. Morgan; price data adjusted for stock splits and dividends. Initiated coverage Aug 24, 2009.
Rating Share Price (M$) N N OW OW OW OW OW OW N UW N UW N N UW N OW OW 11.80 11.90 11.10 8.85 8.85 8.05 6.90 6.60 6.60 6.40 5.50 5.75 6.40 6.85 6.85 8.31 8.25 8.98 8.60 8.25 7.60 7.60 7.88 8.74 9.30 8.55 8.88 9.64 9.57
Price Target (M$) 13.20 13.40 13.40 12.80 12.30 10.30 7.70 7.30 7.30 5.80 5.80 4.80 6.30 6.00 6.70 7.80 8.70 10.60 10.30 10.10 8.00 8.40 9.40 10.40 11.00 10.20 10.40 11.30 11.60
11-Nov-08 12-Jan-09
22-Apr-09 22-Jun-09
26-May-09 N
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13-May-10 OW 28-May-10 N 13-Aug-10 27-Aug-10 27-Nov-10 13-Jan-11 25-Oct-11 25-Nov-11 16-Feb-12 29-Feb-12 N OW OW OW OW OW OW OW
Source: Bloomberg and J.P. Morgan; price data adjusted for stock splits and dividends. Initiated coverage Feb 01, 2008.
The chart(s) show J.P. Morgan's continuing coverage of the stocks; the current analysts may or may not have covered it over the entire period. J.P. Morgan ratings: OW = Overweight, N= Neutral, UW = Underweight
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Explanation of Equity Research Ratings and Analyst(s) Coverage Universe: J.P. Morgan uses the following rating system: Overweight [Over the next six to twelve months, we expect this stock will outperform the average total return of the stocks in the analyst's (or the analyst's team's) coverage universe.] Neutral [Over the next six to twelve months, we expect this stock will perform in line with the average total return of the stocks in the analyst's (or the analyst's team's) coverage universe.] Underweight [Over the next six to twelve months, we expect this stock will underperform the average total return of the stocks in the analyst's (or the analyst's team's) coverage universe.] In our Asia (ex-Australia) and UK small- and mid-cap equity research, each stocks expected total return is compared to the expected total return of a benchmark country market index, not to those analysts coverage universe. If it does not appear in the Important Disclosures section of this report, the certifying analysts coverage universe can be found on J.P. Morgans research website, www.morganmarkets.com. Coverage Universe: Yeoh, Simone Xenia: CapitaMalls Malaysia Trust (CAMA.KL), Genting Plantations (GENP.KL), IGB Corporation (IGBS.KL), IJM Land (IJML.KL), IOI Corp. (IOIB.KL), KLCC Property Holdings (KCCP.KL), Kuala Lumpur Kepong (KLKK.KL), MISC Berhad (MISC.KL), SP Setia (SETI.KL), Sime Darby Berhad (SIME.KL), Sunway REIT (SUNW.KL), WTK Holdings Berhad (WTKH.KL) Chan, Ying-Jian: BreadTalk Group Limited (BRET.SI), China Agri-Industries (0606.HK), China Minzhong Food Corporation Limited (CMFC.SI), ComfortDelgro (CMDG.SI), First Resources Limited (FRLD.SI), Golden Agri-Resources Ltd (GAGR.SI), Hyflux Limited (HYFL.SI), Indofood Agri Resources Ltd (IFAR.SI), Mewah International Inc (MEWI.SI), SMRT (SMRT.SI), ST Engineering (STEG.SI), SingPost (SPOS.SI), Wilmar International Limited (WLIL.SI) Srinath, Aditya: Astra Agro Lestari (AALI.JK), Astra International (ASII.JK), Bank Central Asia (BCA) (BBCA.JK), Bank Danamon (BDMN.JK), Bank Niaga (BNGA.JK), Bank Pan Indonesia (Panin) (PNBN.JK), Bank Rakyat Indonesia (BBRI.JK), London Sumatra Indonesia (LSIP.JK), PT Bakrie & Brothers, Tbk (BNBR.JK), PT Bank Internasional Indonesia (BNII.JK), PT Bank Mandiri Tbk. (BMRI.JK), PT Bank Tabungan Pensiunan Nasional Tbk (BTPN.JK), United Tractors (UNTR.JK) J.P. Morgan Equity Research Ratings Distribution, as of January 6, 2012
J.P. Morgan Global Equity Research Coverage IB clients* JPMS Equity Research Coverage IB clients* Overweight (buy) 47% 52% 45% 72% Neutral (hold) 42% 45% 47% 62% Underweight (sell) 12% 36% 8% 58%
*Percentage of investment banking clients in each rating category. For purposes only of FINRA/NYSE ratings distribution rules, our Overweight rating falls into a buy rating category; our Neutral rating falls into a hold rating category; and our Underweight rating falls into a sell rating category.
Equity Valuation and Risks: For valuation methodology and risks associated with covered companies or price targets for covered companies, please see the most recent company-specific research report at http://www.morganmarkets.com , contact the primary analyst or your J.P. Morgan representative, or email research.disclosure.inquiries@jpmorgan.com. Equity Analysts' Compensation: The equity research analysts responsible for the preparation of this report receive compensation based upon various factors, including the quality and accuracy of research, client feedback, competitive factors, and overall firm revenues, which include revenues from, among other business units, Institutional Equities and Investment Banking. Registration of non-US Analysts: Unless otherwise noted, the non-US analysts listed on the front of this report are employees of non-US affiliates of JPMS, are not registered/qualified as research analysts under NASD/NYSE rules, may not be associated persons of JPMS, and may not be subject to FINRA Rule 2711 and NYSE Rule 472 restrictions on communications with covered companies, public appearances, and trading securities held by a research analyst account.
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