DEALTALK-SE Asia M&A could hit record this year but greed a risk

* Singapore, Malaysia, Thai corporates to invest abroad
* Indonesia could see inbound deals, high price a deterrent
* Resources, retail and finance are hot sectors
* Sellers reluctant to part with prized assets even at top prices
* Value of deals could exceed 2007 record of $132.8 billion

The value of deals involving Southeast Asia looks set to top the boom of 2007 as the region's fast-growing economies attract investors and cash-rich companies snap up overseas targets to drive growth.

Foreign investors are finding it easier to strike deals in Singapore, Thailand and Malaysia compared to India and China, where companies and buyout firms have sometimes struggled due to high valuations and restrictive ownership.

But the reluctance of some sellers to part with prized assets even at high valuations is a big risk for larger deals in Southeast Asia, especially in red-hot Indonesia where some recent retail deals have failed to take off.

"Regional companies are in a very strong cash position and global players are more eager than ever to gain exposure to Southeast Asia's compelling fundamentals through purchasing assets here" said Helman Sitohang, a managing director at Credit Suisse in Singapore.

Malaysia's biggest lender, Maybank , kicked off 2011 with a $1.4 billion offer to buy Singapore broker Kim Eng , a reflection of what could come this year as regional companies seek growth outside their home markets.

Sectors such as natural resources, financials, real estate, as well as telecoms, media and technology are expected to be the most active in this region, said Giles Ong, managing director for Southeast Asia's mergers and acquisitions at Citi Global Investment Banking.

Indonesia -- the biggest economy in the region -- is opening up, attracting multinationals and private equity firms in retail, finance and the resources sector. "The high valuations in Indonesia should encourage sellers to sell their assets. As for the buyers, if they are considering to invest for the long run, this should not be a problem," said one senior analyst at a European investment bank based in Jakarta.

"Some of these buyers are coming to Indonesia to get a bigger market, for example in retail or financial sectors, while those coming to resources sector, they are here to secure raw materials for their productions," said the analyst who was not authorised to speak to the media.

Bankers say dealmaking in the region could exceed the record 2007 level when Southeast Asian companies were involved in $132.8 billion worth of deals, spurred by a jump in outbound activity, according to Thomson Reuters data. 

"I think the flow of deals will be much more balanced. Asian companies will look overseas more than they have been doing historically but I don't think the flow to this region will stop," Sitohang, who co-heads Credit Suisse's investment banking division in Asia.

CASH HOARD

Singapore could see more outbound deals as some of its large telecom, resources and energy firms are sitting on big cash piles that could be used for M&A overseas, bankers said.

These companies also have the firepower of state investor Temasek, which manages $134 billion and holds significant stakes in Singapore Airlines , Southeast Asia's biggest bank DBS and Singapore Telecommunications . 

 

Bankers said that Singapore companies, the most cautious in the region, could be more active now as signs emerge that the global economy is recovering, making this the right time for firms to reduce their cash pile. 

Resources' companies such as Wilmar , the world's biggest listed palm oil firm, and Olam also want to increase their plantation areas through acquisitions and are diversifying into new commodities. 

Armed with $6.2 billion cash, Wilmar is in the process of building up its sugar business, which could take them as far as Brazil, following a $1.5 billion acquisition of Australia's Sucrogen last year. 

In Thailand, energy and resources companies such as PTT group , top coal producer Banpu and power producer EGCO , have enough cash for acquisitions and are expected to keep buying new energy sources and assets overseas. 

"The stronger baht has created great opportunity for Thai firms. Although, the currency is now slightly weaker, it should not stop the plans as making M&As should focus on synergy rather than costs," said an investment banker from a major Thai bank who declined to be identified. 

Malaysia's plan to turn the country into a high income economy is likely to drive acquisitions, particularly from government-linked corporations. State investor Khazanah set the ball rolling last year with its $2.6 billion deal to buy Singapore-listed hospital operator Parkway . 

"We expect a spate of M&As, domestic and regional, and privatisation activity due to low leverage levels, easy access to relatively low funding rates, and government leaning on the private sector to spur the economy," said Haizan Johari, UBS' head of Malaysia equities.

And companies which held back on expansion during the recent financial crisis are unlikely to reward shareholders with larger dividend payouts in the near term due to better business opportunities in Asia. 

"I don't think many companies will return excess cash to shareholders as there are still a lot of opportunities for growth in almost all sectors," said Credit Suisse's Sitohang.Source: Reuters

Telkom to rethink CDMA deal with Bakrie

PT Telekomunikasi Indonesia , the nation biggest telecommunication firm, is re-evaluating a fixed-wireless deal with PT Bakrie Telecom worth nearly $1 billion as it now wants a majority stake, Telkom's chairman said on Monday. 

Reuters last year quoted sources as saying Bakrie Telecom would acquire the CDMA unit of PT Telekomunikasi Indonesia in a share deal worth up to $1 billion, but Telkom chairman Jusman Syafii Djamal said on Monday that the arangement would be looked at again. 

"We need to re-evaluate this ... we want to be the majority owner," he said, after a meeting with the state enterprise minister. 

Talks between the two companies have beein going on for months, but Djamal said there was no certainty it would be concluded before the end of the year. 

TelkomFlexi, Telkom's CDMA unit, is Indonesia's biggest CDMA operator with about 15 million subscribers and a strong presence offshore from the country's main Java island. Bakrie Telecom with 11 million subscribers is strong on Java. Source: Reuters

Coking Coal Prices May Jump to $300 a Ton as Australian Floods Curb Supply

Coking coal may reach $300 a metric ton this year in the spot market as flooding in Australia crimps supply and demand gains in China and India, coal researcher McCloskey Group Ltd. said. 

“There will be higher demand for coking coal this year, while supplies are most likely going to be less,” Gerard McCloskey, the founder of the U.K.-based company, said in an interview in New Delhi. “There are more steel capacities coming up in Asia this year and there has been a recovery in consumption in the European Union and U.S.”

BHP Billiton Ltd., Rio Tinto Group, Xstrata Plc and other coking coal producers in Queensland state, which supplies about half of global output, have said they may miss deliveries after Australia’s worst floods in 50 years. Steel usage may rise 5.3 percent this year, the World Steel Association estimates. 

Steelmakers including ArcelorMittal and Nippon Steel Corp. may have to pay about 38 percent more than 2010 prices in the spot market if steel gains or hovers at the present level of $700 a ton, McCloskey said yesterday in the interview. The average contract price for coking coal next year will be higher than this year’s average $214.50 a ton, although supplies from U.S., Canada, Mongolia, Indonesia, Russia and Mozambique plug a part of the deficit from Queensland, he said.

Global Demand

Global coking coal demand may gain about 7 percent this year to 245 million tons from about 230 million tons in 2010, said McCloskey, who is attending a three-day steel conference that began yesterday in New Delhi. Shipments may rise to 415 million tons by 2020, he said. 

About 15 million tons has already been lost in the Queensland floods, of which a third is thermal coal, said McCloskey. Mongolia may supply 25 million tons to 40 million tons to China, easing the burden, McCloskey said. 

Indian steelmakers may double coking coal imports to 60 million tons by 2017 and 90 million tons by 2020 as newer capacities come on stream each year, he said. China’s coking coal imports will probably rise to 110 million tons by 2020 from 37 million tons in 2009 and about 53 million tons last year, he said. 

Prices of hard coking coal may reach between $400 and $500 a metric ton after rainfall intensified in Australia’s flood-hit Queensland state, consultant Wood Mackenzie Ltd. said on Jan. 15. 

Coal for use in power stations may rise to more than $197 a ton from the current $140 at Australia’s Newcastle port, the world’s biggest coal-export facility, according to an e-mailed report dated Jan. 14. The Edinburgh, U.K.-based company did not provide comparative prices for hard coking coal, or state a time period for the forecast gains. Source: Bloomberg

Australian Coking Coal Rises 5.7% as Floods Disrupt Supplies

Australian coking coal rose 5.7 percent last week as rains and flooding in the state of Queensland disrupted supplies of the steelmaking material. 

Queensland, which suffered its worst floods in 50 years, supplies half of all seaborne coking coal, according to Bank of America Merrill Lynch. A rail line serving Peabody Energy Corp. and New Hope Corp. coal mines suffered “substantial damage,” the state’s transportation minister said today. Repairs may take as long as three months, GrainCorp Ltd. said today. Flooding also affected the states of Victoria and New South Wales. 

“Weather conditions are not improving drastically,” Amrita Sen, a London-based analyst with Barclays Capital, said by phone today. “Even if they were, restart of mines and ports would take some time.” 

Australian hard prime coking coal sold for $280 a metric ton on average last week, up from $265 the week before, according to researcher IHS McCloskey. That’s the highest price for data going back to the week ended Nov. 5. Prices have yet to decline since that date. 

About 15 million tons of coal has been lost to the Queensland floods, of which about a third is thermal coal used to generate power rather than make steel, Gerard McCloskey, founder of the Petersfield, England-based company, said in an interview.

Six Weeks

Mongolia may supply 25 million to 40 million tons of coal to China, McCloskey said. China is the world’s biggest coal user. 

Flooded Queensland coal mines may take as long as six weeks to resume production, National Australia Bank Ltd. said in a report today. BHP Billiton Ltd., Rio Tinto Group, Xstrata Plc and other coking-coal producers in the state have said they may miss deliveries.

Thermal-coal prices at the Australian port of Newcastle, an Asian benchmark, rose 4.9 percent last week to $136.30 a ton, according to London-based globalCOAL. 

Between 5 million and 7 million tons of thermal coal, or about 1 percent of global exports, may be lost to the Queensland flooding, Emmanuel Fages, a Paris-based analyst at Societe Generale SA, said in a report dated today. 

“The floods come at a time when regional needs are subdued,” Fages said. “Cargoes could up to now be diverted and additional volumes found in Indonesia. Australian exporting ports were able to continue exports using existing stocks so far.” He raised his 2011 forecast for Newcastle coal prices by 16 percent to $131.30 a ton. 

The price of thermal coal from Richards Bay, South Africa, site of the continent’s biggest coal-export facility, increased 1.8 percent to an average $128.62 a ton, McCloskey said. Rains in the country have delayed trains, interrupting deliveries of coal to the Richards Bay terminal from mines operated by Xstrata and BHP. Source: Bloomberg

BCA Kuasai 1% Saham Bank Ekonomi

PT Bank Central Asia Tbk (BBCA) melakukan penyertaan sebesar 1% saham di PT Bank Ekonomi Raharja Tbk (BAEK). Akta jual beli dilakukan antara BCA dengan PT Surya Sakti Investments, salah satu pemegang saham BAEK.

Bank Ekonomi merupakan anggota dari Grup HSBC. Melalui HSBC Asia Pacific Holdings (UK) Limited, Grup HSBC menguasai 98,96% saham Bank Ekonomi. "Penyertaan modal ini merupakan suatu langkah positif dalam mengembangkan kerja sama yang lebih luas antara BCA dengan Grup HSBC," jelas Presdir BCA DE Setijoso.

Sebelumnya, pada 27 Juni 2008, BCA juga melakukan hal yang sama terhadap Bank DBS Indonesia, yakni melakukan penyertaan modal 1%. Bank DBS Indonesia merupakan anak perusahaan dari Development Bank Singapore Ltd dengan kepemilikan 99%.

Moody's upgrades Indonesia's sovereign ratings

Moody's Investors Service said Monday it upgraded Indonesian government's foreign- and local-currency bond ratings to Ba1, from Ba2, with stable outlook. 

Moody's said in a statement that its main reasons for the move were the country's economic resilience, accompanied by sustained macroeconomic balance; improvement in the government's debt position and the central bank's foreign-currency reserve adequacy; and improving prospects for foreign direct investment inflows.

"We have upgraded the sovereign credit ratings, as the momentum in the economy is expected to be sustained by steady domestic demand, a reasonable pace and sequencing of policy and structural reforms, and rising foreign direct investment," Aninda Mitra, Moody's lead sovereign analyst for Indonesia, said in a statement. 

The upgrade affects the country's ceiling for foreign-currency bonds, which was raised by a notch to Baa3, and the foreign-currency bank-deposit ceiling, which was raised to Ba2. Source: Market Watch

Tin Price May Surge to $40,000 on Global Deficit, Malaysia Smelting's Anuar Says

Tin, the best performer last year of the six principal base metals traded in London, may rally to a record $40,000 per metric ton as global supply may lag behind demand until at least 2013, according to Malaysia Smelting Corp. 

“You still have upside,” Mohd. Ajib Anuar, group chief executive officer of Malaysia’s largest producer, said in an interview. A price of $35,000 to $40,000 in the next five years “is not impossible” as demand climbs, new mines take longer than expected to start output, and ore quality drops, Anuar said. 

Tin, used in electronics and packaging, was the first base metal to reach a record last year after the worst global recession since the World War II. The metal rose 59 percent in 2010, touching $27,500 per ton on Nov. 9, on increased demand and supply disruptions in Indonesia, China and Africa. Barclays Capital has forecast a global shortage of 17,000 tons this year. 

“In real terms, the peak was over $40,000 and today it’s $26,000,” Anuar said on Jan. 14 in Singapore, referring to the price in 1980 adjusted for inflation. 

According to the U.S Geological Survey, tin averaged $8.46 a pound ($18,646 a ton) that year, equivalent to about $22.39 a pound last year when adjusted to reflect the change in the value of money. 

Three-month tin futures on the London Metal Exchange ended at $26,850 a ton on Jan. 14. Its performance last year eclipsed rallies in nickel, which gained 34 percent; copper, which surged 30 percent; and aluminum, which climbed 11 percent. Zinc dropped 4.1 percent and lead gained 4.9 percent last year.

Timah’s Outlook

PT Timah, Indonesia’s largest tin exporter, said on Jan. 14 that production may drop in 2011 for a fourth straight year as bad weather disrupts operations. Output may be 37,000 to 40,000 tons this year compared with 40,000 tons last year, Corporate Secretary Abrun Abubakar said. Tin futures recovered from intraday losses of as much as 1.1 percent that day to end level. 

A La Nina weather pattern has brought heavier-than-usual rain to parts Asia this year and last, curbing tin production in Indonesia, the biggest exporter. Power cuts in China, the world’s largest producer, also curbed output. In the Democratic Republic Congo, Africa’s largest tin producer, a general ban on mining was imposed in September in three eastern provinces. 

The global tin deficit may be 21,300 tons this year after an estimated 25,100 ton shortfall in 2010, according to industry group ITRI Ltd. Malaysia Smelting is one of ITRI’s board members. There was a deficit of 15,700 tons from January to October last year, according to the World Bureau of Metal Statistics. 

ITRI has also forecast deficits in 2012 and in 2013, after which new supplies from Morocco, Russia and Australia are expected to begin, according to Anuar. “I’m not as optimistic,” he said. “I think the lead time will be much longer, so maybe the deficit will be longer.”

‘Very Promising’ 

Demand will be underpinned by growth in the electronics and chemical industries, with use in batteries and glass-making having “a very promising outlook,” Anuar said. London Metal Exchange inventories of tin shrank 39 percent last year, the largest decrease since 2004. 

While there are reserves to support tin consumption for the next 20 years, the quality of ore is declining, meaning less metal is extracted from each ton of earth. That’s driven up the cost of production, Anuar said. 

“Because of the lack of exploration for more than two decades, since the collapse of the tin market in 1985, all the richer deposits and the more-accessible deposits have been mined,” said Anuar. Source: Bloomberg

Rekomendasi HD Capital, 17 Januari 2011

Berikut rekomendasi HD Capital untuk hari Senin, 17 Januari 2011, dengan rekomendasi beli untuk saham Multipolar (MLPL), Bumi Resources (BUMI), Adaro Energy (ADRO), dan Indofood Sukses Makmur (INDF).

BUY: (MLPL, BUMI, ADRO, INDF)

* Walaupun terimbas profit taking, IHSG masih tetap bisa bertahan diatas support kritis 3,530 sehingga rally kembali mengetes resistance atas di 3,630 diharapkan masih dapat berlanjut.

* IHSG close (12-01) 3.569.144(+4.219/+0.12%) (Val.Rp.4.2T)

* Support: 3.530-3.450, Resistance: 3.590-3.650-3.720

Stock picks:

1. Multipolar (MLPL): (BUY) (Target: Rp 340) (close 14/01 Rp 315)

* Secara teknikal saham ini menarik, dengan potensi terjadinya breakout dari downtrend channel ke target pertama di Rp 340

* Fundamental perusahaan juga cukup baik, 2010 ROE 70% & NPM 40% dan diperdagangkan di bawah harga buku (PBV 0.47x) sehingga rekomen akumulasi.

* Entry: (1) Rp 310, Entry (2) Rp 300, Cut loss point: Rp 290

2. Bumi Resources (BUMI) (BUY): (Target: Rp 3.350) (Close 14/01 Rp 3.175)

* Profit taking dari sentimen negatif akibat ditundanya akuisisi Vallar kelihatannya sudah mereda, dan sekarang BUMI kelihatannya akan kembali mengetes upper trading range atas di Rp 3.250.

* Bila hal di atas terjadi maka akan trigger trending buy signal dari 5 dan 10 hari MA

* Entry (1) Rp 3.150, Entry (2) Rp 3.050, Cut loss point: Rp 2.950

3. Adaro Energy (ADRO) (BUY): (Target: Rp 2.800) (Close 14/01 Rp 2.600)

* Rencana pembangunan pembangkit listrik untuk menyuplai kebutuhan energi proyek conveyor belt dapat offset diesel cost tinggi yang disebabkan oleh melambungnya minyak mentah

* Target 12-bulan fundamental (Rp 3.200) dengan asumsi 2011F PER 18x/PBV 4.4x

*Kenaikan batubara di atas US$ 120/ton menaikan ASP (average selling estimates) 2011 dari US$ 76/ton dari sebelumnya US$ 67/ton.

* Entry: (1) Rp 2.600, Entry (2) 2.475, Cut loss point: Rp 2.350

4. Indofood Sukses Makmur (INDF) (BUY) (Target: Rp 5.200) (close 12/01 Rp 4.875)

*Dominasi pangsa pasar mie instan dan susu di Indonsia, distribusi yang luas serta kebon CPO dan pabrik tepung yang terintegrasi membuat perusahaan ini sangat efisien untuk mengatasi kenaikan harga bahan baku gandum.

* Valuasi saham ini juga menarik di 2011F PER 13.5x/PBV 2.7x dengan tema diutungkan dari exposure ke CPO

*Entry: (1) Rp 4.825, Entry (2) Rp 4.725, Cut-loss point: Rp 4.625

Dibuat oleh:

Yuganur Wijanarko

Senior Research HD Capital. (Yuganur@hdx.co.id)

Rekomendasi Beberapa Sekuritas, 17 Januari 2011

Berikut rekomendasi empat sekuritas untuk perdagangan Senin, 17 Januari 2011.

1. E-Trading Securities

Pada perdagangan Jumat (14/1), IHSG ditutup naik 4 poin (0,12%) ke level 3.569,  meski  sempat dibayangi aksi profit taking saham-saham komoditas pada sesi pertama. Asing mencatatkan net selling Rp 266 miliar. Jumat lalu indeks membentuk pola hammer dan ditutup di level resistance yang tepat. Untuk hari ini, indeks diprediksi bergerak mixed di kisaran 3.530- 3.592 dengan sektor perbankan dan komoditas sebagai motor penggerak. Cermati BRMS, INDF, dan WINS.

2. Reliance Securities 

Mayoritas indeks saham di Asia akhir pekan lalu ditutup turun akibat dirilisnya data pengangguran Amerika Serikat (AS) dan pergantian kabinet di Jepang. Selama pekan lalu, indeks tercatat menurun 62,3 poin (-1,72%). Secara teknikal, indeks hari ini akan bergerak turun di kisaran 3536–3586 dipicu berkurangnya minat beli pemodal. Saham-saham pilihan kami terdiri atas BBCA, BJBR, GGRM, dan WIKA.

3. Sinarmas Sekuritas

Pada perdagangan hari ini, indeks diperkirakan akan bergerak mixed dengan kisaran 3.535-3586. Arah pergerakan bursa juga akan dipengaruhi oleh sentimen dari bursa global. Saham-saham yang dapat diperhatikan antara lain TLKM, INDF, dan LSIP.

4. Sucorinvest Central Gani

Indeks pada perdagangan Jumat lalu berfluktuasi tajam diwarnai dengan kenaikan saham-saham sektor infrastruktur. Namun, saham-saham di sektor pertambangan ditutup merosot terseret penurunan indeks bursa regional, penurunan harga komoditas dan pelemahan rupiah terhadap dolar AS. Hari ini IHSG diperkirakan berfluktuasi dengan kecenderungan melemah pada kisaran 3.530-3.591.