STOCKS NEWS INDONESIA-Finance companies fall after Fitch report

Tue May 14, 2013 1:00am EDT

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The Indonesian finance index fell as much as 0.25 percent to 666.31, a day after Fitch Ratings said regulations could partly curb volatile growth and risk profiles of multi-finance companies.

Fitch Ratings said while Indonesia's steady economy and low credit penetration may support the domestic multi-finance industry's growth prospect and performance, challenges may be material when preceded by brisk lending, lax underwriting, structural issues of limited funding and business diversity.

"Nonetheless, incremental progress in the regulatory framework and potential shareholder support for most major finance companies may help to partly mitigate such threats," Fitch said late on Monday.

The rating house said companies performance can be volatile through credit cycles, considering narrowly-focused business profiles in consumer loan products and equipment leasing, with end-borrowers generally sensitive to inflation and commodity prices.

"This indirectly inhibits the ability of most finance companies in diversifying their funding sources, which are mostly from banks,"

The Jakarta finance index has risen 21.5 percent year to date, outperforming a 17.1 percent increase in the broader Jakarta Composite Index.

1111 (0411 GMT) (Reporting by Andjarsari Paramaditha in Jakarta, ; Editing by Anand Basu)

*************************************************************** STOCKS NEWS INDONESIA-Mandiri Sekuritas starts Dyandra Media with 'buy' Mandiri Sekuritas initiated coverage of PT Dyandra Media International Tbk with a "buy" rating, citing the media company's growth strategy of actively rolling out exhibitions to new cities in Indonesia.

"We are expecting a 30 percent earnings per share (EPS) growth this year driven by higher IIMS revenue and APEC and WTO events to be held in its Bali hall," Mandiri Sekuritas analyst Handoko Wijoyo wrote in a note.

The research house set a target price of 425 rupiah on Dyandra shares based on its event business valued at about 12 times price-to-earnings ratio, or 10 percent discount to the global peers.

Shares of the company rose 1.35 percent to 375 rupiah. The Jakarta Composite Index was up 0.01 percent.

1049 (0349 GMT) (Reporting by Andjarsari Paramaditha; Editing by Anand Basu)

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