ANTM041610

Base metal | 16 April 2010

SELL Aneka Tambang
Reinitiating coverage Before the sheen starts to fade

Analyst We reinitiate coverage on Aneka Tambang (Antam) with a SELL rating
Lucky Ariesandi, CFA
lariesandi@kimeng.co.id
and target price of Rp2,050. In the short term, Antam stands to benefit
(62 21) 2557 1127 from higher nickel prices as demand for the metal has been strong and
inventory level in the LME has declined over the past several weeks. We

expect prices to increase by 35% y/y to US$20,000/ton in 2010. Long term,
Price (Rp) Rp2,550 however, Antam’s prospects look grim as the projects in its pipeline are
Target (Rp) Rp2,050 not value‐accretive in our view.
IDX Index 2900.5

Nickel market to be in equilibrium: Nickel price has surged by 32% y/y
in 1Q10 to US$24,995/ton in the LME. The rebound came on the heels
Historical Chart of lower inventory level, signalling a recovery in demand rather than

(Rp)
3,000
(Million shares)
450.0
pure speculative activities. However, with a number of huge nickel
Volume (mil. shares) Close
2,800
2,600
400.0
350.0
projects slated to come on‐stream in the near future, there should be
2,400
2,200
300.0
250.0
sufficient supply to satisfy the robust demand.
2,000
1,800
200.0
150.0

1,600
1,400
1,200
100.0
50.0
Gold continues to glisten on weak US$: Antam’s gold business looks
1,000
15-Apr-09 2-Jun-09 21-Jul-09 7-Sep-09 28-Oct-09 15-Dec-09 5-Feb-10 26-Mar-10
0.0

set to be lustrous in 2010, as the outlook for the metal stays upbeat
thanks to a weak US$. With economic recovery still fragile, the Fed will
Performance 1m 3m 6m likely keep interest rate low and the US government will continue to
Absolute (%) 18.6 14.6 ‐2.9
grapple with a large budget deficit, all of which will weigh on the US$.
Relative (%) 10.0 5.0 ‐18.2
We assume the gold price will average US$1,150/troy ounce (Toz) in
2010 (+18% y/y) and US$1,100/Toz in 2011 on demand for alternative
Stock Information national reserve and wealth storage.

Ticker code ANTM
Market cap (US$m) 2,700 Long‐term prospects lacking: Under Indonesia’s new mining law which
52‐week high (Rp) 2,725 came into effect in January 2009, Antam would be prohibited from
52‐week low (Rp) 1,270 exporting unprocessed ores starting 2014. Inevitably, its performance
Shares issued (m) 9,538
6m avg d.vol (US$m) 6.9
would suffer. We are also uncertain about the viability of the projects
Free float (%) 35.0 the company has lined up to help monetise its huge reserves. So far, it
Major shareholders (%) has not been able to deliver on its promise. Our calculation also shows
Government of RI (65.0) that the projects are not value‐accretive.
INDONESIA

Year End Dec 31 2007 2008 2009 2010F 2011F
Key Indicators Sales (Rp b) 12,008 9,592 8,711 9,275 9,429

Pre‐tax (Rp b) 7,493 1,930 784 2,054 2,132
ROE (%) 17.6
Net profit (Rp b) 5,323 1,382 604 1,541 1,599
Net gearing (%) Net cash
NTA (Rp b) 11,211
EPS (Rp) 538 143 63 162 168
Interest cover (x) 206.8 EPS growth (%) 230.5 (73.3) (55.8) 154.9 3.8

PER (x) 4.7 17.8 40.2 15.8 15.2
EV/EBITDA (x) 2.8 11.0 15.1 9.6 9.7
Yield (%) 2.6 8.4 2.2 1.0 2.5
SEE APPENDIX I FOR IMPORTANT DISCLOSURES AND ANALYST CERTIFICATIONS

Aneka Tambang 16 April 2010

Nickel demand has recovered
Nickel price has surged by 32% y/y in 1Q10 to US$24,995/ton in the LME.
Unlike the earlier rebound in 2H09, the bounce back this time round came
on the heels of lower inventory level in the LME. The decline, although a
modest 1.3% to 156,000 tons, signalled recovery in demand rather than
pure speculative activities, in our view.

Figure 1: LME nickel price and inventory level
(US$/ton) (tons)
40,000 180,000

35,000 160,000
Nickel price (LHS) Inventory (RHS)
30,000 140,000
120,000
25,000
100,000
20,000
80,000
15,000
60,000
10,000 40,000
5,000 20,000
0 0
6-Jan-10
9-Oct-09
16-Jul-09
23-Jan-09
28-Oct-08
9-May-08
31-Mar-10
21-Apr-09
4-Aug-08
12-Feb-08
Source: Bloomberg

Nickel market turns It is expected that for the first time in four years, the nickel market would
to deficit in the be in deficit as stainless steel demand picks up with the recovery in global
short run economies and supply has stagnated due to production woes during the
financial crisis. Although consensus polled by Bloomberg forecasts the
shortage to be minuscule at just under 23,500 tons out of total consumption
of 1.4m tons, we fear it might further deplete LME’s inventory level and
spark speculative buying that could lift the price higher in this thinly‐traded
market.

The global economic recovery itself looks to have gained footing, with
industrial production as well as durable goods consumption on the rise.
Although still very much dependent on life support, ie, money from the
central banks and deficit spending by governments, we believe that a
double‐dip recession is now out of the table and recovery will not be
stillborn.

2

Figure 2: Industrial production on the rise

1.4
1.2

1

0.8

0.6
Europe China USA
0.4
0.2
0
Mar-07
May-07
Jul-07
Sep-07
Nov-07
Mar-08
May-08
Jul-08
Sep-08
Nov-08
Mar-09
May-09
Jul-09
Sep-09
Nov-09
Jan-07
Jan-08
Jan-09
Jan-10
Source: Bloomberg

But nickel market would be in relative equilibrium

Given the abysmal nickel market in the past two years, several projects

were shelved and chief among them was the Ravensthorpe project with

45,000tpy capacity. The rebound in nickel price will undoubtedly revive

some of these plans, but we do not think there will be any near‐term impact

on the market as a new mine takes around 2‐3 years to develop.

The market will likely remain tight in the short term given the robust

demand. We thus expect the average nickel price to climb to US$20,000/ton

in 2010 from US$14,780/ton a year earlier. Prices would also be buoyed by

restocking activities by consumers whose inventories were consumed in late

2008 and early 2009. We further assume nickel price will stay high in 2011

at US$19,840/ton before declining in 2012 as new supply enters the market.

Nickel to be in We understand that there are several huge nickel projects slated for maiden
abundant supply production in the near future. For example, Inco’s Goro project in New
Caledonia and Sherritt’s Ambatovy in Madagascar, with 60,000tpy capacity
each, is both scheduled to begin production this year. Overall, we gather
that there would be around 16% or 210,000 tons of additional nickel
production in 2010 and 2011. This new primary supply will be enough to
satiate the growing consumption of nickel, which is expected to grow by 9%
y/y in 2010 and 7% y/y in 2011.

3

Figure 3: New nickel supply in 2010‐2013
Project Capacity Timing Type
Ambatovy 60,000 2010 HPAL
Ramu River 31,150 2010 HPAL
Schevchenko 23,765 2010 Smelting to FeNi
Goro 60,000 2010 HPAL
Barro Alto 36,000 2011 Smelting to FeNi
Koniambo 60,000 2012 Smelting to FeNi
Marlborough 63,000 2013 HPAL
Total 333,915
Source: CRU, companies

Further price rally Against this backdrop, we doubt nickel price will go far from here. We
seems unlikely believe that US$25,000/ton would serve as a ceiling for the average nickel
price, although momentary spikes over this level are possible. Aside from
growth in primary supply, with price at above US$25,000/ton, all nickel pig
iron producers will go full throttle to flood the market with their products,
including those with the highest cost. The new supply will alter the market’s
delicate balance and drag the price down.

Short‐term prospect brightens with repairs to FeNi III completed

We find some similarities between the current situation and the golden year

for nickel producers in 2007. During that year, nickel price skyrocketed to

US$52,000/ton, powered by robust demand from China. Antam back then

was also ready to cater to the demand as its FeNi III smelter became fully

operational. This time round, demand is on the rise as the global economies

recover from the financial meltdown and China continues on its strong

growth trajectory.

Ferronickel Antam, once again, is poised to meet the demand as it has finished repairs
production will to the FeNi III smelter, the largest of its three smelters. The company
increase with expects production to increase by around 50% y/y to 18,500 tons of nickel in
FeNi III repaired ferronickel from just 12,000 tons in 2009, just in time to capitalize on the
higher price.

We expect Antam will sell 19,000 tons of nickel in ferronickel in 2010, with
ASP of US$8.8/lb or US$19,500/ton. We also expect rising oil prices to push
up cash cost to US$5.2/lb from US$4.6/lb a year ago. In line with the
company’s guidance, we expect Antam will increase its ore sales volume to
5.35m tons in 2010 from 5.1m tons in 2009.

4

Figure 4: Production will increase now that FeNi III is once again operational
(Ton) (000 ton)

25,000 8,000
7,000
20,000
6,000

15,000 5,000

4,000
10,000 3,000
2,000
5,000 Ni in FeNi (LHS) Nickel ore (RHS)
1,000
0 0
2008 2009 2010 2011 2012
Source: Company, Kim Eng

Gold continues to glisten on weak US$

The outlook for gold should remain upbeat in the near future given the

weakness in the US$. With the US economy still delicate, the Federal

Reserve will likely keep interest rate low as the administration grapples with

a large budget deficit. Granted, support for the currency has been strong

with investors still finding US government securities a safe haven. But we

believe that eventually there will be resistance to propping up the mounting

budget deficit for a minimal return, if not a negative one when the

possibility of US$ depreciation is considered.

Gold price to remain As support for the US$ weakens, the demand for gold will increase ‐ from
high on weak US$ the government sector as an alternative to put its reserves, and from the
private sector for wealth storage. While we believe that the rally on gold is
mostly done, we expect the price will remain high, averaging at
US$1,100/Toz in 2010 and US$1,000/Toz in 2011.

Antam’s gold production from its existing mine in Pongkor, West Java, is
expected to drop slightly to 2.58 tons in 2010 from 2.63 tons in 2009, as the
mine has aged. However, the company expects additional output from new
production in the Cibaliung mine at 500kg in 2H10, boosting total
production to over 3 tons. In 2011, the amount would further increase as
production in Cibaliung approaches its design capacity of 2 tons. The mine
has 14.8 tons of reserves and 16.9 tons of resources with at least six years
of mine life.

5

Figure 5: Contribution from Cibaliung to increase total gold output
(Ton)
5,000

4,500

4,000

3,500

3,000
2,500
2,000
1,500
1,000 Pongkor Cibaliung
500
0
2009 2010 2011 2012
Source: Company, Kim Eng

However, even as Antam steps up its gold production, it expects trading
activity to slow to 7 tons in 2010 from 12 tons in 2009. While this would
have a significant impact on its revenue, the impact on its bottom line
would be minimal as the margin from the gold trading business is very small
at around 1.5%.

Long‐term prospects lacking
Execution risk is Antam has been considering many projects to monetise its huge reserves,
high for Antam seek profits along the whole value chain and utilize its huge cash balance.
However, none of the projects has left the drawing board, except for the
plan to buy more gold assets. This was achieved in 2008 when it acquired a
95% stake in the Cibaliung mine.

The greatest disappointment, in our view, is Antam’s inability to increase its
smelters’ capacity in a timely manner to monetise its nickel ore reserves.
We think this could pose problems for the company given that ore exports
account for 20‐40% of its consolidated revenue and it can no longer make
such exports from 2014 onwards as stipulated under Indonesia’s new
mining law which came into effect in January 2009.

6

Figure 6: Ore export has been a major contributor to consolidated revenue
3.4% 1.6% 1.3%

1.1%
100% 0.9% 1.6%
1.3% 8.7% 4.9%
90% 10.7%
27.9%
80%
70% 41.8% 47.3%

35.7%
60%
31.1%
50%
40%
22.1%
30%
48.8% 47.5%
20% 37.7%
10% Ferronickel Nickel ore Gold Silver Bauxite 24.4%
0%
2006 2007 2008 2009
Source: Company

Antam is vulnerable To be fair, Antam has drawn up plans for two nickel smelter projects. The
to revenue loss from first is for ferronickel smelters in Halmahera with a capacity of 27,000 tons
construction delay of nickel in ferronickel. The smelter will use Antam’s ore deposits in Gee and
Buli Island, which amount to 448m wmt. The second plan is to build a nickel
pig iron facility in Mandiodo, South East Sulawesi, with the raw materials to
also come from its nearby concession. However, both projects are still in the
negotiation and feasibility study phase. With at least two years until new
smelters are ready for commissioning, Antam has very little leeway and
would be vulnerable to revenue loss on any construction delay.

Another of our disappointment is the company’s inability to commence the
construction of its chemical grade alumina (CGA) project in Tayan. Tayan
mine holds huge reserves of around 104.5m tons of bauxite, which also
cannot be exported starting 2014 according to the new mining law. We
estimate the potential revenue loss from the ban at around Rp150b per
annum.

Figure 7: Antam’s upcoming projects
Project Commodity and/ Shareholders Project value
or strategic value estimate
Cibaliung gold mine (prod: 2 tons) Gold and silver Antam 100% US$40m
CGA Tayan (cap: 300k tons) Bauxite to CGA Antam 65% US$300‐400m
Showa Denko and
Marubeni 35%
Coal‐fired power plant Pomalaa Lower FeNi production cost Antam 20% US$300m
by 10‐15%
2x75 MW IPP partner 80%
FeNi Halmahera (cap: 27k tons) Nickel ore to ferronickel Likely Antam 65% US$1.2b
NPI Mandiodo (cap: 20k tons) Nickel ore to ferronickel Likely Antam 55% US$700m
Source: Company
7

Without new projects, Antam will not be able to grow its revenue past 2014
absent windfall profit from surging commodities price. Worse, it would not
be able to monetize its reserves, which is considerably huge and of
reasonable quality for a base metal miner.

We assume several We have included the CGA project in our forecasts as the probability of it
projects, but they being delivered is the highest among Antam’s proposed plans. The project
are not value‐ will consume up to 800,000 tons of bauxite and produce 300,000 tons of
accretive in the chemical grade alumina which can be sold for twice the average alumina
short run price or at around US$400‐500/ton.

We also take into account the FeNi project in Halmahera as we believe
Antam must find a way to offset lower earnings from the export ban on
nickel ore. We estimate that the project would cost the company around
US$1.2b and has the design capacity of 27,000 tons of nickel in ferronickel.
We assume that Antam would start making capital outlay next year, and has
the smelter(s) ready by 2014.

However, these projects are not value‐accretive in the short term, in our
view. Investment costs are high and returns would be minimal unless nickel
price stays at above US$25,000/ton, which we think is unlikely. The same
applies to the CGA project, even after we assume a lavish 50% cash gross
margin on the product. We understand that Antam has no other options,
and having the facilities ready is thus still better than having revenue plunge
on ore export ban.

We have not incorporated Antam’s other projects into our model, as
visibility is poor and execution risk is high, in our view. Should there be any
further development, we will make the adjustments as appropriate.

Valuation and recommendation
We use the DCF methodology to value the stock, assuming 13.8% WACC and
5% terminal growth rate on a 10‐year forecast horizon. We arrive at our
target price of Rp2,050/share, which is 20% below the current price and
supports our SELL recommendation.

Despite strong FY10 outlook, we recommend investors to sell into the rally.
The nickel price rally looks to be on its last leg and Antam’s future projects
are not especially promising on closer inspection. The company’s bleak
outlook does not justify holding onto the counter, in our opinion.

8

Figure 8: DCF calculation and sensitivity analysis
CF (Intrinsic Value) Calculation
EV (Equity Value + Net Debt) 16,570
‐ Debt 240
+ Cash 3,238
Net Debt (2,998)
Equity Value (Market Capitalization) 19,568
Diluted Shares O/S 9.54

Fair Value Per Share 2,051
Sensitivity analysis
Perpetual Growth
2,159 3% 4% 5% 6% 7%
WACC
11.8% 2,342 2,491 2,685 2,945 3,313

12.8% 2,081 2,190 2,327 2,504 2,742
13.8% 1,871 1,952 2,051 2,177 2,339
14.8% 1,697 1,759 1,833 1,925 2,039
15.8% 1,552 1,600 1,657 1,725 1,809
Source: Kim Eng

Figure 9: Key assumptions
2009 2010F 2011F 2012F
Sales vol
Ferronickel (m lbs) 31.3 41.9 45.3 47.5
Nickel ore (m wmt) 4.9 6.2 5.4 5.8
Gold (k Toz) 414.5 267.7 334.9 346.8

ASP
Ferronickel (US$/lbs) 6.6 8.8 8.7 8.5
Nickel ore (US$/wmt) 38.4 51.2 50.6 49.3
Gold (US$/Toz) 971.0 1,100.0 1,000.0 950.0

Cash cost
Ferronickel (US$/lbs) 4.6 5.2 5.0 4.3
Nickel ore (US$/wmt) 23.0 28.0 27.7 27.0
Gold (US$/Toz) 440.0 450.0 500.0 505.0

Exch rate 10,396 9,100 9,000 9,000
Source: Company data, Kim Eng estimates

9

Profit and loss Cash flow
YE Dec (Rp b) 2007 2008 2009 2010F 2011F YE Dec (Rp b) 2007 2008 2009 2010F 2011F
Sales 12,008 9,592 8,711 9,275 9,429 Operating cash flow 4,776 1,052 964 1,901 1,853
Cost of goods sold (4,795) (6,941) (7,513) (6,869) (6,928) Net Profit 5,132 1,368 604 1,541 1,599
Gross Profit 7,213 2,651 1,198 2,405 2,501 Depreciation & amortisation 426 541 873 625 684
Operating expenses (417) (1,197) (610) (800) (833) Change in working capital (497) (200) (125) 92 (139)
Operating Profit 6,796 1,454 588 1,605 1,667 Others (285) (657) (388) (356) (291)
Net interest 52 129 104 128 103 Investment cash flow (137) (462) (639) (1,109) (4,009)
Interest income 126 180 151 139 162 Net capex (87) (348) (649) (1,100) (4,000)
Interest expense (74) (50) (47) (11) (59) Chg in other non curr assets (41) (103) 19 0 0
Pretax income 7,493 1,930 784 2,054 2,132 Others (9) (10) (9) (9) (9)
Income taxes (2,170) (547) (189) (514) (533) Cash flow after invt. 4,639 590 325 792 (2,156)
Minority Interest 0 (1) 9 0 0 Financing cash flow (1,033) (2,050) (836) (328) 1,405
Net profit 5,323 1,382 604 1,541 1,599 Change in equity 2 43 49 (93) 0
EBITDA 7,222 1,995 1,460 2,231 2,352 Cash dividend paid (621) (2,053) (547) (242) (616)
EPS 538 143 63 162 168 Net change in debt (415) (106) (335) (240) 760
Change in other LT liab. 1 66 (3) 247 1,261
Source: Company data, Kim Eng estimates Net cash flow 3,606 (1,460) (511) 465 (751)

Balance sheet
YE Dec (Rp b) 2007 2008 2009 2010F 2011F Key ratios
Total assets 12,044 10,245 9,940 11,211 14,227
YE Dec 2007 2008 2009 2010F 2011F
Current assets 8,048 5,820 5,437 5,800 5,174
Growth (% y/y)
Cash & ST Investment 4,744 3,284 2,774 3,238 2,488
Sales 113.3 (20.1) (9.2) 6.5 1.7
Inventories 1,319 1,391 1,171 1,169 1,216
OP 182.7 (78.6) (59.6) 173.2 3.9
Account receivable 1,680 595 818 809 842
EBITDA 157.4 (72.4) (26.8) 52.8 5.4
Others 305 549 675 583 629
NP 230.5 (73.3) (55.8) 154.9 3.8
Non current assets 3,996 4,426 4,503 5,411 9,053
EPS 230.5 (73.3) (55.8) 154.9 3.8
Net fixed assets 3,023 2,890 2,891 3,526 6,897
Profitability (%)
Others 973 1,535 1,613 1,885 2,156
Gross margin 60.1 27.6 13.8 25.9 26.5
Total liabilities 3,292 2,131 1,748 1,564 2,338
Operating margin 56.6 15.2 6.7 17.3 17.7
Current liabilities 1,818 726 748 738 484 EBITDA margin 60.1 20.8 16.8 24.1 24.9
Account payable 80 131 159 156 151 Net Profit margin 42.7 14.3 6.9 16.6 17.0
ST borrowings 220 256 240 240 0 ROA 53.1 12.3 6.0 14.6 12.6
Others 1,518 340 349 342 332 ROE 78.8 16.3 7.5 17.6 16.2
Long‐term liabilities 1,474 1,405 1,001 826 1,854
Stability
Long‐term debts 700 558 240 0 1,000
Gross debt/equity (%) 10.5 10.1 5.9 2.6 9.7
Others 774 847 761 826 854
Net debt/equity (%) (43.7) (30.6) (28.2) (32.1) (14.4)
Minority interest 1 51 43 292 1,552
Int. coverage (x) 97.2 39.6 31.0 206.8 40.1
Shareholder's equity 8,750 8,063 8,149 9,354 10,337 Current ratio (x) 4.4 8.0 7.3 7.9 10.7
Paid‐in capital 954 954 954 954 954 Quick ratio (x) 2.6 4.5 3.7 4.4 5.1
Reserve 7,772 7,055 7,091 8,390 9,373 Gross debt (Rp b) 920 814 479 240 1,000
Others 25 54 104 10 10 Net debt (Rp b) (3,824) (2,470) (2,294) (2,998) (1,488)
Source: Company data, Kim Eng estimates Per share data (Rp)
EPS 538 143 63 162 168
CFPS 378 (153) (54) 49 (79)
BVPS 917 845 854 981 1,084
SPS 1,259 1,006 913 972 989
EBITDA/share 757 209 153 234 247
DPS 65 215 57 25 65

10
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INDIA Confectionary and Beverage
Jigar SHAH Head of Research Oil and Gas
+91 22 6623 2601 jigar@kimeng.co.in Ngo Bich Van
Oil & Gas +84 838 38 66 36 x 164 van.ngo@kimeng.com.vn
Transportation Bank
Anubhav GUPTA Insurance
+91 22 6623 2605 agupta@kimeng.co.in Nguyen Quang Duy
Property +84 838 38 66 36 x 162 duy.nguyenquang@kimeng.com.vn
Capital goods Shipping
R. SRINIVASAN Seafood
+912266232625 rsrinivasan@kimeng.co.in Rubber
Banking and Financial services Trinh Thi Ngoc Diep
Nikhil Agarwal +84 838 38 66 36 x 166 diep.trinh@kimeng.com.vn
+912266232611 nikhil@kimeng.co.in Property
Cement Construction
Metals
THAILAND
Naphat CHANTARASEREKUL
+662 658 6300 x 4770 naphat.c@kimeng.co.th
Energy
Supattra KHONGRUNGPHAKORN
+662 6586300 ext 4800 supattra.k@kimeng.co.th
Media & Publishing
Retail
Information & Communication Technology
Kanchan KHANIJOU
+ 662 658 6300 x 4750 kanchan@kimeng.co.th Recommendation definitions
Banks
Construction Materials
Our recommendation is based on the
Nathavut SHIVARUCHIWONG following expected price
+ 662 658 6300 x 4730 nathavut@kimeng.co.th
Property
performance within 12 months:

KELIVE Thailand (for retail clients) +15% and above: BUY
George HUEBSCH Head of Research ‐15% to +15%: HOLD
+662 658 6300 ext 1400 george.h@kimeng.co.th
‐15% or worse: SELL
11
APPENDIX I: TERMS FOR PROVISION OF REPORT, DISCLOSURES
AND
DISCLAIMERS

This report, and any electronic access to it, is restricted to and intended only for clients of PT Kim Eng Securities ("KES") or a related
entity to KES (as the case may be) who are institutional investors (for the purposes of both the Singapore Securities and Futures Act
(“SFA”) and the Singapore Financial Advisers Act (“FAA”)) and who are allowed access thereto (each an "Authorised Person") and is
subject to the terms and disclaimers below.

IF YOU ARE NOT AN AUTHORISED PERSON OR DO NOT AGREE TO BE BOUND BY THE TERMS AND DISCLAIMERS SET OUT BELOW,
YOU SHOULD DISREGARD THIS REPORT IN ITS ENTIRETY AND LET KES OR ITS RELATED ENTITY (AS RELEVANT) KNOW THAT YOU NO
LONGER WISH TO RECEIVE SUCH REPORTS.

This report provides information and opinions as reference resource only. This report is not intended to be and does not constitute
financial advice, investment advice, trading advice or any other advice. It is not to be construed as a solicitation or an offer to buy
or sell any securities or related financial products. The information and commentaries are also not meant to be endorsements or
offerings of any securities, options, stocks or other investment vehicles.

The report has been prepared without regard to the individual financial circumstances, needs or objectives of persons who receive
it. The securities discussed in this report may not be suitable for all investors. Readers should not rely on any of the information
herein as authoritative or substitute for the exercise of their own skill and judgment in making any investment or other decision.
Readers should independently evaluate particular investments and strategies, and are encouraged to seek the advice of a financial
adviser before making any investment or entering into any transaction in relation to the securities mentioned in this report. The
appropriateness of any particular investment or strategy whether opined on or referred to in this report or otherwise will depend
on an investor’s individual circumstances and objectives and should be confirmed by such investor with his advisers independently
before adoption or implementation (either as is or varied). You agree that any and all use of this report which you make, is solely at
your own risk and without any recourse whatsoever to KES, its related and affiliate companies and/or their employees. You
understand that you are using this report AT YOUR OWN RISK.

This report is being disseminated to or allowed access by Authorised Persons in their respective jurisdictions by the Kim Eng
affiliated entity/entities operating and carrying on business as a securities dealer or financial adviser in that jurisdiction (collectively
or individually, as the context requires, "Kim Eng") which has, vis‐à‐vis a relevant Authorised Person, approved of, and is solely
responsible in that jurisdiction for, the contents of this publication in that jurisdiction.

Kim Eng, its related and affiliate companies and/or their employees may have investments in securities or derivatives of securities
of companies mentioned in this report, and may trade them in ways different from those discussed in this report. Derivatives may
be issued by Kim Eng its related companies or associated/affiliated persons.

Kim Eng and its related and affiliated companies are involved in many businesses that may relate to companies mentioned in this
report. These businesses include market making and specialised trading, risk arbitrage and other proprietary trading, fund
management, investment services and corporate finance.

Except with respect the disclosures of interest made above, this report is based on public information. Kim Eng makes reasonable
effort to use reliable, comprehensive information, but we make no representation that it is accurate or complete. The reader
should also note that unless otherwise stated, none of Kim Eng or any third‐party data providers make ANY warranties or
representations of any kind relating to the accuracy, completeness, or timeliness of the data they provide and shall not have
liability for any damages of any kind relating to such data.

Proprietary Rights to Content. The reader acknowledges and agrees that this report contains information, photographs, graphics,
text, images, logos, icons, typefaces, and/or other material (collectively “Content”) protected by copyrights, trademarks, or other
proprietary rights, and that these rights are valid and protected in all forms, media, and technologies existing now or hereinafter
developed. The Content is the property of Kim Eng or that of third party providers of content or licensors. The compilation
(meaning the collection, arrangement, and assembly) of all content on this report is the exclusive property of Kim Eng and is
protected by Singapore and international copyright laws. The reader may not copy, modify, remove, delete, augment, add to,
publish, transmit, participate in the transfer, license or sale of, create derivative works from, or in any way exploit any of the
Content, in whole or in part, except as specifically permitted herein. If no specific restrictions are stated, the reader may make one
copy of select portions of the Content, provided that the copy is made only for personal, information, and non‐commercial use and
that the reader does not alter or modify the Content in any way, and maintain any notices contained in the Content, such as all
copyright notices, trademark legends, or other proprietary rights notices. Except as provided in the preceding sentence or as
permitted by the fair dealing privilege under copyright laws, the reader may not reproduce, or distribute in any way any Content
without obtaining permission of the owner of the copyright, trademark or other proprietary right. Any authorised/permitted
distribution is restricted to such distribution not being in violation of the copyright of Kim Eng only and does not in any way
represent an endorsement of the contents permitted or authorised to be distributed to third parties.

12

Additional information on mentioned securities is available on request.

Jurisdiction Specific Additional Disclaimers:

THIS RESEARCH REPORT IS STRICTLY CONFIDENTIAL TO THE RECIPIENT, MAY NOT BE DISTRIBUTED TO THE PRESS OR OTHER MEDIA,
AND MAY NOT BE REPRODUCED IN ANY FORM AND MAY NOT BE TAKEN OR TRANSMITTED INTO THE REPUBLIC OF KOREA, OR
PROVIDED OR TRANSMITTED TO ANY KOREAN PERSON. FAILURE TO COMPLY WITH THIS RESTRICTION MAY CONSTITUTE A
VIOLATION OF SECURITIES LAWS IN THE REPUBLIC OF KOREA. BY ACCEPTING THIS REPORT, YOU AGREE TO BE BOUND BY THE
FOREGOING LIMITATIONS.

THIS RESEARCH REPORT IS STRICTLY CONFIDENTIAL TO THE RECIPIENT, MAY NOT BE DISTRIBUTED TO THE PRESS OR OTHER MEDIA,
AND MAY NOT BE REPRODUCED IN ANY FORM AND MAY NOT BE TAKEN OR TRANSMITTED INTO MALAYSIA OR PROVIDED OR
TRANSMITTED TO ANY MALAYSIAN PERSON. FAILURE TO COMPLY WITH THIS RESTRICTION MAY CONSTITUTE A VIOLATION OF
SECURITIES LAWS IN MALAYSIA. BY ACCEPTING THIS REPORT, YOU AGREE TO BE BOUND BY THE FOREGOING LIMITATIONS.

Without prejudice to the foregoing, the reader is to note that additional disclaimers, warnings or qualifications may apply if the
reader is receiving or accessing this report in or from other than Singapore.

As of 16 April 2010, PT Kim Eng Securities and the covering analyst do not have any interest in companies mentioned in the report.

Analyst Certification:

The views expressed in this research report accurately reflect the analyst's personal views about any and all of the subject
securities or issuers; and no part of the research analyst's compensation was, is, or will be, directly or indirectly, related to the
specific recommendations or views expressed in the report.

© 2010 PT Kim Eng Securities All rights reserved. Except as specifically permitted, no part of this presentation may be reproduced
or distributed in any manner without the prior written permission of PT Kim Eng Securities. PT Kim Eng Securities accepts no
liability whatsoever for the actions of third parties in this respect.

13

Singapore London New York Taiwan

Kim Eng Securities Pte Ltd Kim Eng Securities (London) Ltd Kim Eng Securities USA Inc Yuanta Securities Investment
Kim Eng Research Pte Ltd 6/F, 20 St. Dunstan’s Hill 406, East 50th Street Consulting Co.
9 Temasek Boulevard London EC3R 8HY, UK New York, NY 10022, U.S.A. 10/F, No 225, Nanking East Rd
#39‐00 Suntec Tower 2 Section 3
Singapore 038989 Tel: +44 20 7621 9298 Tel: +1 212 688 8886 Taipei 104, Taiwan
Dealers’ Tel: +44 20 7626 2828 Fax: +1 212 688 3500
Tel: +65 6336 9090 Fax: +44 20 7283 6674 Tel: +886 2 8770‐6078
Fax: +65 6339 6003 Jeffrey S. SEO (sales) Fax: +886 2 2546‐0376
Giles WALSH (sales) jseo@kesusa.com
LAU Wai Kwok (sales) gwalsh@kimeng.co.uk Arthur LO (sales)
lauwk@kimeng.com Warren KIM (trading) Arthur.lo@yuanta.com.tw
Geoff HO (sales) wkim@kesusa.com
Stephanie WONG (research) gho@kimeng.co.uk Gary CHIA (research)
swong@kimeng.com Gary.chia@yuanta.com.tw
James JOHNSTONE (sales)
jjohnstone@kimeng.co.uk

Hong Kong Thailand Indonesia Malaysia
Kim Eng Securities (HK) Ltd Kim Eng Securities (Thailand) PT Kim Eng Securities Kim Eng Research Sdn Bhd
Level 30, Public Company Limited Plaza Bapindo 16/F, Kompleks Antarabangsa
Three Pacific Place, 999/9 The Offices at Central World, Citibank Tower 17th Floor Jalan Sultan Ismail
1 Queen’s Road East, 20th ‐ 21st Floor, Jl Jend. Sudirman Kav. 54‐55 50250 Kuala Lumpur, Malaysia
Hong Kong Rama 1 Road, Pathumwan, Jakarta 12190, Indonesia
Bangkok 10330, Thailand Tel: +603 2141 1555
Tel: +852 2268 0800 Tel: +62 21 2557 1188 Fax: +603 2141 1045
Fax: +852 2877 0104 Tel: +66 2 658 6817 (sales) Fax: +62 21 2557 1189
Tel: +66 2 658 6801 (research) YEW Chee Yoon (research)
Ray LUK (sales) Kurnia SALIM (sales) cheeyoon@kimengkl.com
rluk@kimeng.com.hk Vikas KAWATRA (sales) ksalim@kimeng.co.id
vkawatra@kimeng.co.th
Edward FUNG (research) Katarina SETIAWAN (research)
edwardfung@kimeng.com.hk Naphat CHANTARASEREKUL (research) ksetiawan@kimeng.co.id
naphat.c@kimeng.co.th

Philippines Vietnam India
ATR‐Kim Eng Securities Inc. Kim Eng Vietnam Securities Joint Stock Kim Eng Securities India Pvt Ltd
17/F, Tower One & Exchange Plaza Company 2nd Floor, The International,
Ayala Triangle, Ayala Avenue 1st Floor, 255 Tran Hung Dao St. Plot No.16, Maharishi Karve Road,
Makati City, Philippines 1200 District 1 Churchgate Station,
Ho Chi Minh City, Vietnam Mumbai City ‐ 400 020, India
Tel: +63 2 849 8888
Fax: +63 2 848 5738 Tel : +84 838 38 66 36 Tel: +91.22.6623.2600
Fax : +84 838 38 66 39 Fax: +91.22.6623.2604
Lorenzo ROXAS (sales)
lorenzo_roxas@atr.com.ph Mai Phan Lam Hoa (sales) Vikas KAWATRA (sales)
Hoa.maiphan@kimeng.com.vn vkawatra@kimeng.co.th
Ricardo PUIG (research)
ricardo_puig@atr.com.ph Jigar SHAH (research)
jigar@kimeng.co.in

South Asia Sales Trading North Asia Sales Trading North America Sales Trading
Connie TAN Eddie LAU Warren KIM
connie@kimeng.com eddielau@kimeng.com.hk wkim@kesusa.com
Tel: +65 6333 5775 Tel: +852 2268 0800 Tel: +1 212 688 8886
US Toll Free: +1 866 406 7447 US Toll Free: +1 866 598 2267

Indonesia Equity Research Our Reports are available at Bloomberg, Thomson & Reuters www.kimengresearch.com.sg

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Base metal | 16 April 2010

(Ton) (000 ton)

3.4% 1.6% 1.3%

70% 41.8% 47.3%

11.8% 2,342 2,491 2,685 2,945 3,313

SINGAPORE MALAYSIA PHILIPPINES

Singapore London New York Taiwan

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