United Tractors (UNTR.JK) Alert: Weak January Komatsu Sales But Not Alarming, Citi

United Tractors (UNTR.JK)

Alert: Weak January Komatsu Sales But Not Alarming

 Weak start for heavy equipment sales but management maintains guidance —

Komatsu sales fell 15.6% Y-Y (+0.7% M-M) in January to 617 units. The company

attributed the surprising drop to customers’ requests for postponement of their order

deliveries due to heavier-than-normal rainfall in January. We construe the drop as

delayed deliveries and expect a substantial rebound in the next couple of months.

We remain comfortable with our 13% Y-Y sales growth in 2012E to 9,560 units.

Management also maintains its 10-15% growth guidance for 2012.

 Pamapersada’s inline statistics — Despite more challenging weather,

Pamapersada managed to maintain its coal production at the same level as last

January’s of 6.3m tons. Overburden volume however grew 8.4% Y-Y (-4.1% M-M) in

January to 60.4m bcm – in line with our expectation. We expect Pamapersada’s

overburden volume to increase by slightly over 9% Y-Y in 2012E to 865m bcm.

 Strong internal coal production — Production ramp-up at TTA mine boosted a

60.9% Y-Y surge in coal sales in January to 494k tons. We expect 33% Y-Y growth

in 2012E to 6m tons; hence, January volume came in ahead of our estimates.

 Buy maintained — United Tractor’s (UT) robust growth and undemanding

valuations are the main reasons for our positive view. The share price has slightly

underperformed the coal names YTD but it’s understandable given the stock’s

outperformance in 2H11. The stock trades on 2012E P/E of 14.4x against earnings

CAGR of 18.8% in 2012-13E. We maintain our Buy (1) rating.

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