STOCKS NEWS INDONESIA-UBS favors Gudang Garam, less keen on Bumi Resources

Sun Dec 9, 2012 11:34pm EST

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UBS Investment Research added Indonesian cigarette maker PT Gudang Garam Tbk to its most preferred stock list, citing the company's ability to raise product prices.

"We think Gudang Garam's ability to raise prices is now helped by a widening price gap, a potential fix of its product portfolio and rising minimum wages," UBS wrote in a note on Monday.

The research house's top picks included state-owned lender Bank Negara Indonesia, coal miner Perusahaan Tambang Bukit Asam, car maker Indomobil Sukses Internasional and cement producer Semen Gresik.

Its least preferred stocks are consumer retailer Unilever Indonesia, state-owned lender Bank Mandiri and coal miner Bumi Resources.

"Bumi Resources' operations reflect operational and non-operational risk. Operational risks to our earnings forecast and valuation include fluctuation in coal and oil price, and operational disruptions which may adversely affect the company's operation. Non-operational risks include investment strategy into non-coal business, and changes in government regulations," the note added.

The broader Indonesian stock index was up 0.28 percent.

1120 (0420 GMT)

(Reporting by Andjarsari Paramaditha, Editing by Sunil Nair)

*************************************************************** 11:02 STOCKS NEWS INDONESIA-Nomura ups Indocement target price

Nomura Equity Research raised its target price on cement maker PT Indocement Tunggal Prakarsa Tbk to 26,900 rupiah from 23,400 rupiah and kept its 'buy' recommendation on higher production volume and improved enterprise value/earnings before interest taxes depreciation and amortization (EV/EBITDA).

"Despite recent outperformance of the cement sector and INTP's share price, we still favour the sector, as in our view the cement sector and INTP will continue to benefit from rising infrastructure spending and a strong property market," Nomura analyst Andy Lesmana wrote in a note on Monday.

Given high demand and tight supply, Nomura said it expects cement companies, including INTP, to raise prices, partly to pass on the impact of potentially higher operating costs.

"We also expect that additional volume from INTP's new plant, which INTP expects to complete in 4Q13, to be a catalyst for the share price," it added

Indocement's selling price has rsien 6.4 percent as of September, the fastest in the past three years due to strong demand and tight supply, which helped improve the company's operating margins and mitigate potential rising operating costs, the note said.

Shares of the cement firm were down 0.45 percent at 22,300 rupiah, while the broader index was up 0.37 percent. 1045 (0345 GMT)

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