by JP Morgan
Maintain OW with new Jun-12 SOTP PT of Rp22,500:
Our SOTP model suggests a Rp28,700 fair value, implying 105% upside from the current price. However, we recognize that challenging market conditions make it difficult to achieve theoretical fair value, which implies 15x FY12E P/E.
In previous weak market conditions in 1H06 and 1H07 (not as severe as in FY08), we have seen the multiple re-rate back to the average of 12x within 6- 9 months. A 12x multiple equates to a PT of Rp22,500. Risks: Execution risk, such as project delays, and a decline in coal price.