Citi Research downgraded PT Adaro Energy Tbk to
'neutral' from 'buy' while keeping its target price at 1,650
rupiah, after the stock rose 20 percent from recent lows, having
moved with the recovery in seaborne coal prices from November.
"We think this is fair relative to historical trading ranges
and given our view that coal fundamentals will recover modestly
in 2013. We expect the shares to consolidate near current levels
until the market has more conviction in demand growth," Citi
said in a note on Monday.
Development of the coal miner's projects in South Sumatra
and East Kalimantan appear to be deliberately slow and measured,
which is reasonable given current market uncertainties, the note
"Overburden crush and convey system is now around 96 percent
complete and is expected to reduce costs by $50 million
annually. The expansion of the Kelanis river terminal to 70
million tonnes from 55 million tonnes is expected to be complete
in early 2013."
In a filing with stock exchanges, Adaro on Friday said its
fourth-quarter production was 13.3 million tonnes while sales
stood at 14 million tonnes.
Shares of the coal firm were up 1.22 percent at 1,660
rupiah. The broader index was up 0.08 percent.
1352 (0652 GMT)
(Reporting by Andjarsari Paramaditha in Jakarta, Editing by
11:35 STOCKS NEWS INDONESIA-UBS cuts Garuda Indonesia's target
UBS Investment Research lowered its target price on Indonesia's
national flag carrier PT Garuda Indonesia Tbk to 740
rupiah from 815, while keeping its 'neutral' rating, saying
intense competition in the low-end segment depresses earnings
and the company may not have the financial strength to expand
into the full-service segment.
"Our demand/supply model suggests Indonesia will face rising
overcapacity in 2014. We expect the majority of new capacity to
come from LCCs. Garuda's dual-brand strategy allows it to
compete with LCCs using the Citilink brand and dominate the
premium segment with the Garuda brand," UBS said in a note on
Citilink continued to disappoint in terms of its load factor
of 70 percent from Jan-Sept 2012 due to rising competition in
the low-end segment, the note said.
"We think Citilink's turnaround relies on cost savings with
the expected completion of fleet renewal in 2014 being the main
driver. If this fails, gains at Garuda could be offset by
ongoing losses at Citilink."
Citilink, the low-cost unit of Garuda, has ordered 25 Airbus
A320neo aircraft, the European planemaker said on Monday, in a
deal worth around $2.4 billion at list prices last month.
The airline's shares were unchanged at 660 rupiah, while the
broader index was up 0.22 percent.
1119 (0419 GMT)
(Reporting by Andjarsari Paramaditha, Editing by Prateek