Friday, April 19, 2013

PT Timah (Persero) Tbk Plan to divest assets up to IDR 1 trillion

Timah:  Plan to divest assets up to Rp1tn, potential 14.4% market cap increase (Rp1,380, Not Rated)

To divest assets up to Rp1tn or US$100mn. Investor Daily today reported that PT Timah plan to sell its unproductive assets includes 176 ha landbank in Bekasi, Bandung and golf field in Pangkal Pinang and some buildings, with a target value up to Rp1tn. This plan may take place in 2H13 and the proceed will be used to finance its capex spending which budgeted up to Rp1.4tn for 2013.

3.1% dividend yield. Yesterday, the AGM has announced to distribute cash dividend of Rp215bn or 50% from 2012 net profit which translates into Rp42.8 dividend per share or implies 3.1% yield.

Tin price may reach US$25,000/t in 2H13. Indonesia Market Summaries. From the interview, PT Timah’s CEO expects that LME tin price may rise to US$25,000/t (+21% vs curret spot price at US$20,545/t) in 2H12 as supplies from Indonesia will be tight as the Indonesia government impose higher purity standard for export to comply with the new mineral mining regulation ESDM No 24/2012 effective in July 2013.

Potential 14.4% market cap increase?  These assets divestment plan if executed will lead to a potential big chunck one-time gain to TINS’s P&L which subject to the book value of the assets. With Rp1tn or US$100mn fresh cash raised from the asset divestment plan, it potentially may add up 14.4% of the company’s market cap as of today TIN’s market cap is Rp6.9tn or US$715mn.

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