STOCKS NEWS INDONESIA-Islamic finance could support infrastructure sector - S&P

JAKARTA Tue Aug 28, 2012 2:31am EDT

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JAKARTA Aug 28 (Reuters) - Indonesia could utilize the potential of Islamic finance to fulfil its ambitious infrastructure plans, Standard & Poor's said in a report on Tuesday.

The poor state of infrastructure is hindering the growth of Southeast Asia's largest economy, the report said, while noting that the government is planning to spend more than $200 billion through 2014 to upgrade and expand infrastructure.

It also noted that most infrastructure projects are backed by the private sector while the government is considering various financing alternatives to fund the rest.

"We believe Indonesia can emulate Malaysia's success thus far in utilizing Islamic finance for infrastructure development. This is due to Indonesia's large infrastructure development needs, the government's willingness to attract private capital to fund these investments, and the rising demand for investable assets of a growing domestic Islamic finance market," said S&P credit analyst Allan Redimerio.

By 12:43am (0543 GMT), the Jakarta Infrastructure Index , Jakarta Finance Index and Jakarta Shariah Index were down 0.32 percent, 0.14 percent and 0.03 percent, respectively, while the broader Jakarta Composite Index was down 0.13 percent.

1252 (0552 GMT)

(Reporting by Andjarsari Paramaditha in Jakarta)

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13:06 STOCKS NEWS INDONESIA-CLSA cuts Gudang Garam to underperform

JAKARTA, Aug 28 (Reuters) - CLSA downgraded PT Gudang Garam Tbk to 'underperform' from 'outperform,' saying the cigarette maker is exposed to margin pressure due to escalating advertising costs.

Gudang Garam's strategy to win more market share in the mild category may translate to continuous aggressive advertising spending, CLSA said in a note to clients.

Gudang Garam will find it difficult to increase its average selling price to fully pass on excise tax and raw material cost given narrow price gap with peer PT Hanjaya Mandala Sampoerna's products, CLSA said.

CLSA, however, expects Gudang Garam to benefit from a new excise tax ruling, which is set to be implemented by November, as it will lower competition by reducing cheap cigarettes from the market.

CLSA cut its target price on the stock to 53,000 rupiah from 67,000 rupiah, citing higher-than-expected raw material and ad costs, as well as lack of positive catalyst.

At 1153 a.m. (0453 GMT) the company's shares were unchanged at 51,900 rupiah while the broader index was down 0.27 percent.

1155 (0455 GMT)

(Reporting by Andjarsari Paramaditha in Jakarta)

**************************************************************** 12:01 UPDATE 1-Bumi Resources' Indonesian shares slide after H1 loss (Updates with details, quotes)

Shares in Indonesia's Bumi Resources, Asia's biggest thermal coal exporter, fell more than 15 percent to a three-year low at one point on Tuesday after the company reported a net loss for the first half of the year.

Bumi suffered a net loss of $322.1 million in the January-June period, compared with a restated net profit of $231.7 million in the same period last year, because of higher costs, lower coal prices and non-coal trading losses, the company reported on Sunday.

The company's Indonesian shares, now down 65 percent so far this year, fell 5 percent on Monday, but trade was limited and lacked transparency due to technical problems that halted trading on Indonesia's stock exchange.

By 0441 GMT on Tuesday, the stock had fallen 12.4 percent to 780 rupiah, the lowest since March 2009. Turnover was the highest on the exchange, with more than 220 million shares traded. The Jakarta Composite Index was only down 0.1 percent.

Bumi, listed in London under a joint venture with financier Nat Rothschild and Indonesian investor Samin Tan, has also seen its London stock slump 60 percent this year, hit by boardroom disagreements and worries over debts.

Bumi sold 10 percent more coal, or 32.3 million tonnes, in the first half of the year, but at average prices that were 3.2 percent lower than in 2011. Thermal coal prices have been battered this year, hitting a two-year low in June.

"Questions now remain on the core profitability for Bumi, given the first half 2012 interest bill of $324 million outweighed $239 million of operating income...with prices likely to trend lower in the second half of 2012 and limited ability to lower the costs," said Riaz Hyder at Macquarie in a report on Bumi on Tuesday.

The firm's costs of leasing equipment more than doubled in the first half of this year, while maintenance costs rose nearly 15 percent. Overall operating expenses rose 48 percent.

Mining sector growth in Indonesia, the world's largest exporter of the thermal coal used in power stations, has led to rising costs and wages at a time of softening global commodity demand.

Bumi Resources also booked a $50.3 million foreign exchange loss that it attributed to a weakening rupiah currency, as well as a derivatives loss of $145.8 million due partly to a fall in the value of equity options after its shares fell.

"The huge net income drop is actually due to series of accounting policy adjustments which reversed a lot of previous gains into losses," said Dileep Srivastava, a director at Bumi. "As the market turns around, all these 'below the line' losses will once again turn into gains," Srivastava said.

Investors and rating agencies seem less confident that a rebound is coming soon. Australian thermal coal prices fell toward $91 a tonne last week on sluggish sales as buyers from China, the world's top consumer, remained on the sidelines.

Moody's lowered Bumi's rating to B1 earlier this month, while Standard & Poor's lowered Bumi to BB- with a negative outlook, citing its debt costs and weak cash flow. (Reporting by Andjarsari Paramaditha and Neil Chatterjee; Editing by Matt Driskill) Keywords: BUMI RESOURCES/

*************************************************************** 09:44 STOCKS NEWS INDONESIA-Indonesia stock exchange resumes trading

Indonesia's stock exchange resumed trading on Tuesday, after being hit by technical problems on Monday.

"On Monday, Aug. 27, 2012, there was connection problem in IDX's main remote trading system, hence trading was done via Disaster Recovery Center (DRC) system. Morning trading was started at 10.00 a.m. on JATS-NextG as IDX gave time for all exchange members to connect via DRC," the exchange said on a statement on Tuesday. "IDX is optimist that trading on August 28, 2012 will run normally."

Trading on the Jakarta benchmark index briefly started late on Monday morning before being halted and stuttered to an early and unexpected close. It was expected to pick up on Monday after being closed for much of last week for the Eid al-Fitr Muslim holiday.

Indonesia's stock exchange has seen greater participation from fund managers and global institutional investors this year after the country won a double stamp of approval as an investment grade nation from rating agencies in January.

At 0942 am. (0242 GMT) The Jakarta Composite Index was at 4154.09 or up 0.20 percent.

0942 (0242 GMT) (Reporting by Andjarsari Paramaditha in Jakarta)

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