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Monday, July 11, 2011

United Tractors - Progress on acquisition of coal mine concessions

by Credit Suisse

Investor Daily, on 7 July 2011, reported that United Tractors (UT) through its subsidiaries PT Pamapersada Nusantara (Pama), acquired 20% stake in PT Bukit Enim Energy at US$21 mn.

In addition, UT is currently in the process of increasing its ownership in Asmin Bara Bronang (ABB) and Asmin Bara Jaan (ABJ) to 60% (from 30%), each, which is expected to be completed in two-three months time.

The newspaper also reported that UT’s coal mines Tuah Turangga Agung (TTA), and Dasa Eka Jasatama (DEJ), are estimated to produce 1.5 mn tonnes and 2.5 mn tonnes of coal, respectively, in 2011E, while the company targets 2012 production volume for TTA and DEJ mine of 2.5 mn tonnes, each. This is in line with our forecast.

We maintain our OUTPERFORM rating on UT, and a target price of Rp30,000. Our target price for UT implies 10.6x FY11E EV/EBITDA and 21.8x FY11E P/E.

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