China coal imports +60% MoM, upgrading PxT on properties

Thermal coal: China imports 60% more coal in April vs. March

Two new developments in the thermal coal space this week :

(1) China trade data this week supports demand strength, confirming 9.2 mt of imports(including coking and thermal coal), up 3.4 mt (60%) from March and 5.7 mt (168%)YoY. (

2) Mc CloskeyEuropean Coal Outlook Conference - Macq commodities team came out of the conference less bearish on prices from here, at least in the Pacific.

On China , the most bullish assessment came from Philip Gasteen, head of marketing and logistics at Asian coal and electricity producer Banpu.

He suggested thata round 55 mt of thermal coal is due to be delivered into China this year under recently completed deals. This would drive imports 20-25 mt higher, while export volumesare likely to fall 15-20 mt. Thus, he sees China's net imports increasing by 40 mt this year.

My take -closer to home, many Asian coal analysts & corporates will attend the Coal Trans conference in Bali during the first week of June.

We shall see whether they will come back with the same positivetake-aways on China/India coal demand. Indoproperty: upgrading price targets Macq research coverage of Indoproperty sector remains on the transition phase, since our previous analyst Lydia Toisuta left the firm on Nov 2008.

In the meantime, ahead of Macquarie Asean conference in June (Bakrieland & Lippo Karawaci have confirmed attendance), Elaine Cheong (Macq property analyst based in Singapore) re-affirms our positive sector view today by lifting price targets on Bakrieland fromRp100 to Rp330 (22% upside), Ciputra Dev from Rp320 to Rp650 (18% upside), andLippo Karawaci from Rp250 to Rp530 (35% downside).

Essentially, she has reduced the NAV discounts implied by those price targets, without changing the NAV estimates by much. She applies a 35%NAV discount for Bakrieland (NAV estimate of Rp519), 35% NAV discount for Ciputra Dev (NAV estimate of Rp1,001), and 35% NAV discount for Lippo Karawaci (NAV estimate of Rp816).

She re-iterates Outperform rating on Ciputra Dev &Bakrieland, Underperform rating on Lippo Karawaci.

Her key arguments for the narrower NAV discounts:

1. Resilient domestic demand in Indonesia

2. Lowering of interest rates PGAS : smoothing out ways for gas price hike (Adam Worthington) Yesterday, PGAS met with government officials and industry players to discuss the future of the gas market.

Upside risk to gas prices post presidential election, re-iterate Outperform.

Three key points:

1. Supply shortage: The domestic gas market is in a supply shortage, and further exploration and development is required at the upstream level.

2. US$ pricing appropriate: Industry participants agreed that US$ pricing is appropriate given that capex, financing cost of gas production, and transmission and distribution costs are US$denominated.

3. Gas is undervalued vs its closest substitute: Participants noted that the selling price of gas has not been raised since July 2007 despite the surge in other commodities, and that at the current exchangerate, the selling price of PGAS 's natural gas is approximately Rp2,038 perdiesel equivalent litre, a competitive price when compared with othersources of energy.

The participants discussed the potential for gas price increases (in the upstream and downstream) to encourage exploration and development of reserves.

Snippets :

Macro - VP candidate Boediono will focus on integrating fiscal, monetary, and sectoral policies, ifhe got elected.

Medco - BPMigashead Mr.Priyono confirms that Medco will get a 20-year extension for its block A project, located in North Aceh, when the term expires in 2011. Block A is a high priority project for the government, since the block will supply to PT Pupuk Iskandar Muda and to PT PLN (85 trillion BTU in 2010-2027). The other partners in block A are Premier Oil (42% stake) and Japan Petroleum Exploration (16%).

Crude Palm Oil - The government may impose 3% tax on palm oil exports, according to theJakarta Post.

PT Telkom -will cancel its plan to acquire a stake in the Telecommunciations Company of Iran, according to Tempo and Bisnis Indonesia.The cancellation is due to the requirement by the Iranian government that the bidders be free of American shareholders. PT Telkom has ADRs listed on the NewYork Stock Exchange.

PT Timah - will pay a dividend of Rp133/sh or equivalent to a 50% payout ratio. The company is budgeting Rp350 bn for capex.

PT Unilever Indonesia -will pay a final dividend of Rp220/sh. The total dividend is Rp315/sh or equivalent to a 100% payout ratio. The company is budgeting Rp700bn for capex.

PT Jaya Ancol -is exploring a Rp250 bn rights issue, according to Bisnis Indonesia. The company will pay adividend of Rp37/sh.