Wednesday, April 13, 2011

Delta Dunia Makmur (DOID)

by Mandiri Sekuritas

(DOID, Rp1,160, Buy, TP: Rp1,600)

Bukit Makmur Mandiri Utama (Buma), primary operating subsidiary of DOID, has signed settlement agreement with Berau Coal related to the fuel charges dispute from the previous or old shareholders.

The total disputed amount is US$24.4mn and Rp161.4bn. Buma will pay 50% of the respective amounts or equivalent to US$12.2mn and Rp80.7bn in 36 equal monthly installments.

Buma will record a provision those numbers in FY10, which in total equivalent to around US$21.2mn or Rp190bn represent around 35% of our FY10’s earnings. Therefore, we expect DOID’s FY10 result to be significantly below our estimates and consensus due to this one off charged.

Buma also intends to write off the amount upon satisfying the relevant requirement under Bapepam regulation and there should only affect the balance sheet in FY11 regarding to the reclassification of the doubtful receivables.

This should not give any impact to future business’s prospect in our opinion regarding old/ past dispute from the old shareholders and it has been disclosed in the prospectus about the dispute (but there was no numbers indication).

Currently we have Buy rating on the stock. Currently DOID is traded at 11.0xPER11F.

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