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Friday, July 29, 2011

Polychem Indonesia Tbk - High Price but still Cheap

By Smart Technical Analysis

ADMG (closing price of 1.020 as 27 July 2011) is one of the issuer which is engaged in manufacturing production of nylon cords, polyester chips, polyester filaments, engineering plastics, engineering resins, ethylene glycol, polyester staple fibers and petrochemicals.

In this sector, will be compared with TFCO ADMG, MYRX, ARGO, and INDR. This sector has a fairly good financial health with the majority of issuers have a number DER (Debt / equity ratio) for each QI-2011 under 1.0 X, except for ARGO.

By profitability, the sector could be said to be profitable for the investor based on enterprise value (value investors), where ROE each issuer (QI-2011) are:

ADMG (54.9%), TFCO (49.9%), INDR (18.9%), ARGO (24.7%), and MYRX (-16.0%).

Appropriate investment theory of William O 'Neill then we'll focus on stocks with ROE above 20%, and the option will exist between ADMG, TFCO, and ARGO.

Sales Growth Analysis based QI-2011 Performance:

ADMG (42.8%), TFCO (43.48%), ARGO (65.49%)

All three have very good performance, but for reasons of liquidity in the stock exchange, then the choice of investment in this sector fell to ADMG.

ADMG targeting a net profit of Rp 309 billion - in 2011 was an increase of more than 800% when compared to earnings in 2010 and the Rp 37.58 billion, -.

Meanwhile, in the QI-2011 alone, ADMG been able to record a profit of Rp 198.4 billion, meaning it has filled more than 60% of target net profit in 2011. When using these data bases and consider the performance of ADMG until the end of 2011 will be as good as QI-2011, the net profit will reach Rp 793.6 ADMG billion, will increase by more than 2.111%. 2.111% is a very fantastic when earnings growth is caused by the growth in sales and not just because of the sale of a subsidiary as happened in the stock AKRA.

Achievement of financial performance in the first quarter of sustained increase in sales volume by 21%. Another driving factor is the increase in average selling price of products ADMG by 35%.

Currently ethoxylate production capacity of 29,000 tons per year. ADMG will also increase the production capacity of polyester fiber as much as 120 tons per day. Additional capacity will be realized in the second quarter. ADMG already has two factories polyester fiber production capacity of 85,750 tons per year.

In addition, ADMG ready press charges, one of them build the power plant itself. Power plant project has been started since last year and is expected to be completed this year.

Valuation:

Until late 2011, assuming that the profit will reach Rp 793.6 billion, then the PE ratio is currently only ADMG of 5.2 x and PBV (price to book) value of 2.63 x. With an estimated growth performance significantly as well as PE valuations are still below the 10.0 x, then the fair value of stock ADMG is Rp 2.040, - or have the potential upside of 100% of the closing today at level of USD 1.020.

Recommendation: BUY & INVEST. Best Buy Point: Rp 980, -1.000, -. Short-term Target (2-4 weeks): Rp 1.100. Medium term: Rp 1.300 (3-6 months). Long term (7-12 months): Rp 2.040, -. Stop Loss Investors: Rp 900, -

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