STOCKS NEWS INDONESIA-Citi cuts Astra Intl to 'neutral'

Thu Jan 31, 2013 3:28am EST

Citi Research downgraded PT Astra International Tbk to 'neutral' from 'buy' while keeping its target price at 7,700 rupiah per share, as the stock is 'fairly valued' and close to sum-of-the-parts (SOTP) valuation after it outperformed the broader Jakarta composite index by 10 percent over the past six months.

"Too much is riding on the low-cost green car (LCGC), in our view, and Astra's growth engines may stutter in 2013E. We don't see any strong upside or downside catalysts in the immediate term to give the stock a definitive direction," said Ferry Wong, the head of Jakarta-based Citi equity research, in a note on Thursday.

With the prevalent current-account deficit, the government would be hard-pressed to issue new regulations on LCGC given its keenness to limit subsidised fuel and introducing a tax break without fuel price adjustments or rationing of fuel subsidy would exert pressure on the government's already stretched budget, the note said.

Shares of the car maker were down 1.97 percent at 7,450 rupiah. The broader index was down 0.27 percent.

1513 (0813 GMT)

(Reporting by Andjarsari Paramaditha in Jakarta, Editing by G.Ram Mohan) **************************************************************** 11:00 STOCKS NEWS INDONESIA-Banking sector soars on Moody's rating The Indonesian finance index rose as much as 0.8 percent on Thursday to an all-time high of 591.123, a day after Moody's assigned a stable outlook to the Indonesian banking system.

The outlook on the Indonesian banking system will remain stable for the next 12-18 months, based on a conducive operating environment which is supportive for asset quality and profits, said Moody's Investors Service.

"We expect 6 percent GDP growth, 20 percent loan growth and low credit costs in 2013. These trends will protect the Indonesia banks' strong capital generation capacity," Moody's Vice President Wee Siang Ng said in a note on Wednesday evening.

However, the rating agency remained mindful of various downsides, such as risks of asset quality deterioration after several consecutive years of rapid credit growth and level of political uncertainty due to the presidential election in 2014, the note said.

The Jakarta finance index outperformed the broader Jakarta Composite Index which slid 0.2 percent.

Panin Bank was 3.23 percent higher at 640 rupiah and Bank Central Asia was up 2.12 percent at 9,650 rupiah.

1059 (0359 GMT) (Reporting by Andjarsari Paramaditha, Editing by Subhranshu Sahu)

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