UNTR IJ / UNTR.JK | UNDERPERFORM - Downgrade | Share Price Rp28,450 - Tgt. Rp26,000

Industrial Machinery | - by Erindra KRISNAWAN

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Our recent channel check reveals early signs of pressure in the heavy equipment business from increasing competition. While we do not yet see a major earnings downside risk at this stage, the generally riskier environment warrants a valuation de-rating. We cut our 2012-13 estimates by 5-6% on lower sales and margins. Target price is lowered to Rp26,000 (based on lower target P/E of 11.6x, -1SD from the 3-year mean) to reflect the stock’s higher overall risk due to increasing competition and exposure to the softening coal price.

Chart : by Kedaitrader