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Monday, April 18, 2011

United Tractor Tbk (UNTR)

by Kresna Securities

· Cut EPS by 3.2% in 2011 and 9.6%/% in 2012/13. Aside additional equity by Rp6.1tr and weighted average outstanding shares by 201.5m shares in 2011 as well as 403.3m shares in 2012 onward from the rights issue, several accounts that we also revise are: 1) net capex (+): Rp1.0tr in 2011 and Rp4.0tr/Rp500bn in 2012/13, 2) debt (-): Rp1.9tr in 2011 and Rp679bn/Rp171bn in 2012/13, 3) cash (+): Rp3.3tr in 2011, Rp1.1tr/Rp1.6tr in 2012/13, and 4) net interest income (+): Rp80bn in 2011 and Rp97bn/Rp133m in 2012/13. Due to limited details given by the company, at the moment we have yet incorporated earnings impact resulted from the rights issues’ expansion projects in our profit and loss projection.

· Cut TP by 18% to Rp21,100/share. Our plain vanilla revision in earnings as well as number of shares outstanding suggested DCF TP of Rp19,289/share. Assuming the expansion projects yield excess return of 14.5% (equals to the company’s cost of equity), we then arrived at an approximate NPV of Rp1,841/share. Summing these two figures, we arrived at a rounding new TP of Rp21,100/share.


· Cut EPS by 3.2% in 2011 and 9.6%/% in 2012/13. Aside additional equity by Rp6.1tr and weighted average outstanding shares by 201.5m shares in 2011 as well as 403.3m shares in 2012 onward from the rights issue, several accounts that we also revise are: 1) net capex (+): Rp1.0tr in 2011 and Rp4.0tr/Rp500bn in 2012/13, 2) debt (-): Rp1.9tr in 2011 and Rp679bn/Rp171bn in 2012/13, 3) cash (+): Rp3.3tr in 2011, Rp1.1tr/Rp1.6tr in 2012/13, and 4) net interest income (+): Rp80bn in 2011 and Rp97bn/Rp133m in 2012/13. Due to limited details given by the company, at the moment we have yet incorporated earnings impact resulted from the rights issues’ expansion projects in our profit and loss projection.

· Cut TP by 18% to Rp21,100/share. Our plain vanilla revision in earnings as well as number of shares outstanding suggested DCF TP of Rp19,289/share. Assuming the expansion projects yield excess return of 14.5% (equals to the company’s cost of equity), we then arrived at an approximate NPV of Rp1,841/share. Summing these two figures, we arrived at a rounding new TP of Rp21,100/share.

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