indonesia untr 180311

7/27/2019 Indonesia UNTR 180311

1/12

United TractorsRp21,900 - OUTPERFORM

Financials

Year to 31 Dec 08A 09A 10A 11CL 12CL

Revenue (Rpbn) 27,903 29,242 37,324 41,778 47,588

Net profit (Rpbn) 2,662 3,818 3,873 4,926 5,830

EPS (Rp) 861.57 1147.48 1164.14 1480.82 1752.25

CL/consensus (20) (EPS%) - - - 102 100

EPS growth (% YoY) 64.5 33.2 1.5 27.2 18.3

PE (x) 25.4 19.1 18.8 14.8 12.5

PB (x) 6.5 5.3 4.5 3.7 3.1

ROE (%) 31.6 30.6 25.7 27.8 27.3

Net debt/equity (%) 13.7 6.9 26.7 (5.0) (20.2)

Source: CLSA Asia-Pacific Markets

Find CLSA research on Bloomberg, Thomson Reuters, CapIQ and themarkets.com - and profit from our evalu@tor proprietary database at clsa.com

Sarina Lesmina [email protected](62) 2125548820

Chuan-yao [email protected]

17 March 2011

IndonesiaMiscellaneous

Reuters UNTR.JKBloomberg UNTR IJ

Priced on 17 March 2011

Jakarta Comp @ 3,484.2

12M hi/lo Rp26,600/15,650

12M price target Rp25,000

% potential +14%Target set on 18 Mar 2011

Shares in issue 3,326.9m

Free float (est.) 40.5%

Market cap US$8,303m

3M average daily volume

Rp123.3bn (US$13.8m)

Foreign s'holding 25.0%

Major shareholders

PT. Astra International 59.5%

Stock performance (%)

1M 3M 12M

Absolute (4.4) (4.8) 23.7

Relative (5.7) (2.1) (2.1)

Abs (US$) (3.2) (2.0) 28.4

5,500

10,40 0

15,300

20,200

25,100

30,000

Mar-09 Sep-09 Mar-10 Sep-10

0

50

100

150

20 0

United Tractors (LHS)

Rel to Comp (RHS)

(%)(Rp)

Source: Bloomberg

www.clsa.com

Co

mpanyupdate

Leverage play to coal demandUT is a direct beneficiary of growing demand for coal given its dominance

in both heavy equipment and mining contracting business. The world is

hungry for energy but the global supply deficit for seaborne market for

coal is expected to last until 2013. Medium term risks exist for UT given

its ties to Japan, but the long term growth story remains. We project a

20% earnings cagr in the future. OPF on UT, offering 14% upside.

Short-term headwindsIt is still early days to quantify the impact of Japans earthquake to UTs

business. But the risks are a potential shortage of heavy equipment, and its

components, disruption in shipment, reduced allocation from Komatsu, and

lower Pamas coal production. UT has inventory for the next two months

delivery. We expect unit sales of 5,730 units for 2011, a soft 6% growth YoY.FY10 was a strong year with unit sales up 74% YoY to 5,404 units. For 2012,

we expect unit sales to grow to 6,580 units.

Long term growth story intactLong term demand for heavy equipment will continue as the world is hungry

for energy. Indonesia plays a crucial role as worlds largest exporter of

thermal-coal. The global thermal-coal seaborne market is in supply deficit

since 2009 and is expected to last until 2013, with cumulative deficit of 75m

tonnes. We expect domestic heavy equipment demand to grow at a min.

10% cagr as per historical. Assuming Komatsu maintaining its market share

of 46%, we also expect a min 10% cagr for UTs heavy equipment sales.

Direct beneficiary of growing demand for coalUT is the market leader in mining contracting business through Pama, with

40% share in total mining contracting revenue. Second largest is Buma at

18%. However, Pama commands a premium pricing due to its better skill,

experience and scale. We expect a soft growth for coal production this year

to 81m tonnes (+5% YoY), and to grow stronger in 2012 to 93m tonnes. OB

removal to increase 10% YoY to 716m tonnes as stripping ratio recovered. As

such, GP margin is expected to rise to 16% in 2011 vs 14.9% in 2010.

ValuationUT is a financially sound company with an expected earnings growth of 20%

cagr in the next five years. With net gearing of 27%, UT can finance its

capex needs, mostly for its mining contracting business. We also expect aminimum 40% dividend payout for UT. Our target price is based on average

fair values derived using PE, PB and EV/EBITDA valuations. ROE at 27% is

the highest compared to its regional peers. OPF on UT, offering 14% upside.


2/12

Leverage play to coal demand United Tractors - O-PF

17 March 2011 [email protected] 2

Short-term headwindsJapan was hit by one of the largest earthquake ever recorded, followed by a

deadly tsunami hitting the east coast of the island.

UTs principal, Komatsu is still assessing the damages to their plants and the

impact to their business. It is still early days to quantify the impact, however

Risks are on the following:

Disruption to supply of components, as many suppliers are impacted.

The issue is not just on supply but also the production capacity in the

future. While it is a good thing that main components are made in

Komatsu plants, imported components are still needed from Japan.

Current supply of components is estimated to last until April.

Disruption in delivery/shipments. Komatsu reported no major

damages to the physical buildings of the plants, however the infra

surrounding it (roads, port, electricity, etc.) are heavily damaged. This

means even if plants operation can resume to normal, there is risk that the

supporting infra is not ready yet.

UT has inventory for the next two months delivery.

To UTs Pama, there is risk that coal production is negatively

affected given the potential short term supply of heavy equipments.

Likelihood of reduced allocation from Komatsu as potentially more

equipment will be supplied to domestic demand (Japan) for reconstruction

effort.

UT produces most equipment locally, given small and medium equipmentsare produced in Komatsu Indo, and this segment represents 80% of total

heavy equipment sales volume. The remaining 20% of volume is from

large equipments imported mostly from Komatsu Japan. However, large

equipments represent ~50% of total heavy equipment revenue.

Risks lie on: Supply of some large equipments such as large dump trucks,

and large wheel loaders from Ibarakis plant, and the supply of imported

components (as mentioned above)

As we mentioned before, it is hard to quantify the impact of the event,

and how long it will lasts.

Komatsus competitor, Hitachi Construction Machinery (HCM) also suffered

from damages to their plants in Ibaraki prefecture. Hexindo (HEXA IJ), Hitachisole-distributor in Indonesia said that there is ready inventory for two months

sales only. Komatsu and Hitachi combined make up ~70% of heavy

equipment market in Indonesia.

Risks to heavy equipment

market as a result of the

catastrophe in Japan


3/12



Long term growth story intactLong term demand for heavy equipment will continue as the world is hungry

for energy. Indonesia plays a crucial role as worlds largest exporter ofthermal-coal. The global thermal-coal seaborne market is in supply deficit

since 2009 and is expected to last until 2013, with cumulative deficit of 75m

tonnes. This excludes potential demand increase from Japan.

Figure 1

Global thermal-coal seaborne export market

(mt) 2007 2008 2009 10CL 11CL 12CL 13CL 14CL 15CL

Seaborne demand 693 706 736 816 861 923 983 1,069 1,123

Seaborne supply 684 716 729 783 845 910 977 1,075 1,161

Supply deficit 9 (10) 7 33 16 13 6 (6) (38)

Source: Australian Bureau of Agricultural and Resource Economics (ABARE), Trade data, McCloskey, CLSAAsia-Pacific Markets

Domestically, UTs internal market research estimates that given the national

coal production target, wood-pulp production and governments

infrastructure budget spending, the demand for heavy equipment will still be

strong this year, to reach 13,000 units as compared to 11,700 units in 2010

(+10% YoY, as per historical cagr). The government is targeting coal

production in 2011 to reach 327m tonnes, up 20% from last years production

of 270m tonnes.

On domestic coal demand, our luncheon with Dahlan Iskan, President Director

of PLN revealed that about 1,800MW had been delivered to the grid from

three power plants under the 10GW program. PLN is optimistic that it will

have another 4,000MW coming to the grid in 2011 and another 4,000MWnext year. It has also secured coal supplies for the 10GW projects for the next

five years.

All in all, assuming commodity price remains attractive and Komatsu could

maintain its market share (~46%), UT also expects Komatsu sales volume to

grow at a minimum 10% rate pa.

Figure 2 Figure 3

Indo market for heavy equipment Indonesian coal

-

10

20

30

40

50

60

1996 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

-

2,000

4,000

6,000

8,000

10,000

12,000

14,000

Komatsu mkt share (LHS)

Indo market for heavy equip.

% units

-

50

100

150

200

250

300

350

1994 2000 2006 2007 2008 2009 2010 11E

Production

Consumption

Export

m tonnes

Source: Company, CLSA Asia-Pacific Markets, ESDM

Given the damage at the nuclear plants in Japan and no certainty on restart

time, we also believe that Japan will have to resort to more traditional

sources of power, such as coal. Devoid of natural resources, Japan is the

More electricity power

coming in the domestic

market

Japan may resort to more

traditional sources of

power given the damageto the nuclear plants

The world is hungry for

energy

Domestic coal demand

has increased by 10%

historical cagr, and isexpected to continue


4/12



worlds largest importer of sea-borne coal (165mt in 2009), and we see

upside risk in this number as Japan struggles to meet the demand for

electricity. Nuclear energy makes up 30% (47GW) of Japans power supply in2010, and approximately one-fifth of it (9.7GW) is now shut down due to

safety concerns.

Demand from mining sector to drive demand for Komatsu. The

equipment sales to mining sector are now 60% of total Komatsu sales. There

is also plenty of demand from non-coal sectors.

Figure 4 Figure 5

Komatsu sales per sector (in units) Heavy equipment market in Indonesia (12M10)

-

1,000

2,000

3,000

4,000

5,000

6,000

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

Forestry

AgricultureConstruction

Mining

units

Caterpillar, 16%

Kobelco, 13%

Other, 6%

Hitachi, 19%

Komatsu, 46%

Source: Company

Direct beneficiary of growing demand forcoalUT is the leader in both its Construction Machinery and Mining Contracting

business. With ~50% market share in Indonesias heavy-equipment market

and 40% share in the mining contracting business, UT is a direct beneficiary

of growing demand for coal.

UTs revenue and profit have enjoyed a 23% and 29% cagr in past

five years, respectively. UTs Construction Machinery and Mining Contracting

each contributes about 45% to total earnings with the remaining 10% from

coal mining. We expect a 20% cagr earnings growth in the future.

Figure 6 Figure 7

UTs revenue breakdown UTs net profit growth

-

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

2005 2006 2007 2008 2009 2010

Coal mining

Mining contracting

Construction machinery

Rpbn

1,051 930

1,493

2,661

3,817 3,873

4,926

5,830

-

1,000

2,000

3,000

4,000

5,000

6,000

7,000

2005 2006 2007 2008 2009 2010 11CL 12CL

Rpbn

Source: Company, CLSA Asia-Pacific Markets

Strong market positioning


5/12


6/12



replacement is needed every five years (for mining equipment), and eight

years (for non-mining).

Its services are supported by 18 branches, 17 site support offices, 12representative offices and 12 mine offices. The company employs about

14,500 people (excluding contractors) and 12,000 of it are mining employees.

Improved performance of Pama, the Mining Contracting subsidiary

Coal production in Jan2011 was 6.3m tonnes, (-)11% MoM, (3%) YoY. Lower

production was still due to problematic weather. With the risk of getting

heavy equipment for production expansion, we forecast Pamas coal

production volume to grow just 5% this year to 81.9m tonnes, from 77.9m

tonnes in 2010.

Strip ratio improved. Overburden removal for Jan2011 was flat MoM at55.4m bcm, which implies a strip ratio of 8.8x. This is an improvement

over last years ave. strip ratio of 8.4x. If this continues, we think PamasGP margin will improve from a disappointing 14.9% for FY10 to 16.0% in2011, especially if weather condition improves.

We forecast a 10% increase in overburden removal in 2011-12, with stripratio of 8.8x. This means coal production should rise to 81.9m tonnes in2011 and 93.3m tonnes in 2012. However, given appreciating currency in2011, revenue will be a flat YoY growth for mining contracting business in2011, but to grow 14% in 2012. The impact of currency appreciation toRp8,500/US$ in 2011E will also be offset by lower cost which are 60-70%US$ related.

Contract mining costs breaks down to 30% for fuel, and explosives and

tyres (consumable goods), 20% repair and maintenance, 10% forsubcontracting, 20% depreciation, and the remaining 20% are labour andoverhead expenses.

UT is not too concern on potential increase in fuel price affecting cost.

Usually, mining companies will fully absorb the cost, unless the increase is

phenomenal such as the case in 05-06 (at that time Adaro only wanted to pay

70% of the charges). Moreover, coal selling price is a key factor, and as

long as they can get good margins from higher price, they won't mind higher

cost. Current production cost for coal is ~US$40/t.

Figure 8 Figure 9

Pamas revenue and coal production Pamas overburden removal and strip ratio

-

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

20,000

2003 2004 2005 2006 2007 2008 2009 2010 11CL 12CL

0

10

20

30

40

50

60

70

80

90

100

Revenue (LHS)

Coal production

Rpbn m tonnes

0

100

200

300

400

500

600

700

800

900

2003 2004 2005 2006 2007 2008 2009 2010 11CL 12CL

-

1

2

3

4

5

6

7

8

9

10Overburden removal

Strip ratio (RHS)

m bcm %

Source: Company, CLSA Asia-Pacific Markets

But, strip ratio recovered,

hence improvement to be

expected in margin

Softer production growththis year


7/12



60% of total coal production of Pama comes from top 4 customers which are

Adaro, Indominco, KPC, and Kideco. Pama should continue to benefit from

the expansion of coal mining companies long term, given its strong marketpresence. Pama has a 40% share in revenue terms, followed by Buma with

18%. On volume, it has a 33% share vs Buma at 18%, reflecting Pamas

premium pricing.

While there is risk that coal concession holders will expand in-house mining

operations or rely more on affiliated mining contractors, such as Bumi with

Dharma Henwa, and Adaro with SIS, at the moment these companies lack

Pamas scale, skill and experience.

Coal mining business: coming from a low base

Coal sales from both DEJ and TTA were 307,000 tonnes in Jan2011. UTs

targeting a 4.5m tonnes coal production this year (from 3.1m tonnes in

2010), driven by more production from TTA mine. Although January numberis weak, we think this target is achievable.

UTs coal mine, Dasa Eka Jasatama (DEJ) in Rantau, South Kalimantan, which

it acquired in 2007, is seeing weaker production due to bad weather. DEJ has

a 14.6m tonnes coal reserve of 6,700kcal. DEJs coal is sold for export

market through trading companies: Noble and Glencore. For DEJ, contract

pricing is based on 1/3 fixed price at US$82/t for the life of the mine, and the

variable portion (2/3) is based on Newcastle index, adjusted monthly. In

2010, DEJ sold 2.6m tonnes.

Its other mine, Tuah Turangga Agung (TTA) in Kapuas, Central Kalimantan,

which it acquired in 2008 started commercial sales in May2010, and has sold

0.5m tonnes in 2010. TTA has a 30m tonnes coal reserve of 6,300kcal.Capacity is now at 3m tonnes pa, hence UT expects TTA to produce ~2m

tonnes in 2011. The average stripping ratio is about 7x, with DEJs at 8-11x,

while TTAs at 4.0x. TTAs coal is exported to Japan. TTAs selling price is set

at 13% below index due to the calorific value (6,300kcal) which is below

benchmark (6,700kcal).

We currently forecast total coal production of 4.5m tonnes in 2011, and to

grow to 5m tonnes in 2012 from DEJ and TTA. We are using US$100-110

blended selling price in the next few years.

Figure 10 Figure 11

DEJ and TTA coal production Cost breakdown

0

1

2

3

4

5

6

2007 2008 2009 2010 11CL 12CL

DEJ TTA

m tonnes

Fuel

9%

Transportation

cost

21%

Royalty

22%Coal processing

8%

Depreciation

8%

Stripping cost

28%

Others

4%

Source: CLSA Asia-Pacific Markets, company Source: Company

To ramp up TTAsproduction this year

Pama has a strongpresence in mining

contracting


8/12



UT is targeting coal sales to reach 10m tonnes by 2015, and is actively

looking to acquire surrounding mines to add capacity. In July 2010, the

company acquired 60% of Agung Bara Prima (ABP) through TTA. This ABP islocated near TTAs mine with ~10m tonnes reserve, hence will use TTAs

infrastructure (hauling road, port and intermediate stockpile). UT is targeting

0.5-1m tonnes per year production capacity from ABP. UT is still waiting for a

license (Ijin Pinjam Pakai Hutan Produksi).

UT is currently assessing two potential acquisitions in the vicinity; one of it is

in legal due diligence stage. UT said the reserve is larger than ABPs, but

smaller than TTAs.

Also, the potential mine-mouth power plant project with PTBA and Lanko (EPC

contractor from India) may be formalized this year. This is a project in Riau,a US$1.17bn project with 2 units: 2x300MW and 2x150MW. UT also said

that the project will be 70% debt-financed and 30% equity-financed. UTexpects project IRR of 15% and 12-17% for Pama as the miningcontractor.

Why investment in mine-mouth power plant? UT believes that business

initiative in this area remains closely related to UTs value chain. UTs

participation is focused on mine-mouth power plants that will use low-rank

coal. It is part of UTs strategic approach to utilize the abundant reserves of

low-rank coal in Indonesia. By participating in a consortium (which will

involve coal concession owner, mining contractor and EPC contractor), UT will

expect returns both from mining contracting project (since Pama will serve as

the exclusive mining contractor) and from the power plant operation.

As an illustration, a 2x300 megawatt mine-mouth power plant will require 4-5

million tons of coal per annum, and with minimum power plant contract of

20-25 years with the government, this will generate a project of at least 80-

100 million tons of coal production for the Mining Contracting business. On

top of that, eventually this business will drive demand for heavy equipment

and after sales service.

Average mining cost for UTs mines is now US$55-60/tonne (including

depreciation). Cash cost excluding royalty and depreciation comes at US$43-

50/tonne. We expect GP margin to expand to 17% from 12% in 2010 as TTAs

production increases. Coal mining business contributes 10% to UTs

earnings. It remains to be seen whether this will grow given the other

businesses will grow as well.

Actively looking for minesacquisition


9/12



ValuationUT is a financially sound company with expected earnings growth 20% cagr in

the next five years. With net gearing of 27% as of Dec 2010, UT should beable to finance its capex needs for maintenance and expansion, mostly for its

mining contracting business. We also expect a minimum 40% dividend

payout for UT as in the past.

Share price has fallen 16% from its peak. Despite near term headwinds, we

think the attractive long term investment thesis for UT remains. Our target

price is Rp25,000/sh based on average fair values derived using PE, PB and

EV/EBITDA valuations. This implies a 14% upside.

UT is currently trading at 14.8x PE11CL, vs JCI index at 13.6x. More

expensive, but we believe the future prospect is good hence it warranties

trading at a premium.

Capex needs this year is expected at US$450-500m for replacement and

expansion capex, mostly for its mining contracting business. This capex

budget does not include any acquisition. But we expect strong cash flow

generation should enable the company to repay debt and to finance some

acquisitions, if any.

Figure 12 Figure 13

PE band of UT PB band of UT

min2.8x

7.2x

avg11.6x

14.4x

max17.2x

1,000.0

6,000.0

11,000.0

16,000.0

21,000.0

26,000.0

Mar06 Mar07 Mar08 Mar09 Mar10 Mar11

United Tractors- Price to Earnings Bands

Source: CLSA Evalu@tor

min0.78x

1.86x

avg2.95x

3.73x

max4.51x

1,300.0

6,300.0

11,300.0

16,300.0

21,300.0

26,300.0

Mar06 Mar07 Mar08 Mar09 Mar10 Mar11

United Tractors - Price to Book Value Bands

Source: CLSA Evalu@tor


Compared to peers, UNTR seems slightly more expensive than the averagevaluations, however peers have lower mean ROE of 21% compared with

~28% for UNTR.

Figure 14

Peer comparisons

Company Ticker PE (x) PB(x) ROE (%) EV/Ebitda (x) Source

2011 2012 2011 2012 2011 2012 2011 2012Komatsu 6301 JP 14.2 12.1 2.3 2.0 17.5 17.9 6.2 5.2 CLSA

HCM 6305 JP 15.0 13.0 1.3 1.2 8.6 9.3 6.6 6.0 CLSA

Hexindo HEXA IJ 13.6 10.1 4.9 3.5 37.6 36.0 8.7 6.8 Consensus

Ave. peers 14.3 11.7 2.8 2.2 21.2 21.0 7.2 6.0

United Tractors UNTR IJ 15.0 12.6 3.8 3.2 27.8 27.3 9.0 7.6 CLSA

Note: Komatsu and HCM year end is March, so we are moving it forward by 1 yearSource: CLSA Asia-Pacific Markets

Earnings growth of 20%

cagr

At a premium, but withhigher growth prospect


10/12



Figure 15

Deriving Target Price

Blended valuation 2012 Value/sh (Rp)

PE 17 29,788

EV/EBITDA 7 22,979

PB 3.2 22,481

25,003



11/12



Summary financialsYear to 31 December 2008A 2009A 2010A 2011CL 2012CL

Summary P&L forecast (Rpbn)

Revenue 27,903 29,242 37,324 41,778 47,588

Op Ebitda 5,900 7,470 8,019 9,336 10,921

Op Ebit 4,160 5,266 5,163 6,036 7,104

Interest income 93 100 67 135 273

Interest expense (283) (188) (207) (153) (118)

Other items (117) 267 39 184 81

Profit before tax 3,853 5,444 5,061 6,202 7,340

Taxation (1,167) (1,595) (1,187) (1,239) (1,466)

Minorities/Pref divs (25) (32) (2) (37) (44)

Net profit 2,662 3,818 3,873 4,926 5,830

Summary cashflow forecast (Rpbn)

Operating profit 4,160 5,266 5,163 6,036 7,104

Operating adjustments 0 0 0 0 0

Depreciation/amortisation 1,740 2,204 2,857 3,300 3,817Working capital changes (2,908) 111 (4,236) 2,341 (713)

Net interest/taxes/other (1,357) (1,832) (1,379) (1,335) (1,533)

Net operating cashflow 1,635 5,749 2,405 10,342 8,674

Capital expenditure (3,670) (4,576) (4,396) (3,825) (3,320)

Free cashflow (2,035) 1,173 (1,991) 6,517 5,354

Acq/inv/disposals 41 98 (26) (9) (10)

Int, invt & associate div 95 103 70 138 273

Net investing cashflow (3,534) (4,376) (4,352) (3,695) (3,056)

Increase in loans 979 (1,129) 1,944 (1,165) (1,483)

Dividends (760) (1,164) (1,527) (1,549) (1,971)

Net equity raised/other 4,178 87 90 109 143

Net financing cashflow 4,397 (2,205) 507 (2,605) (3,310)

Incr/(decr) in net cash 2,498 (832) (1,440) 4,041 2,307

Exch rate movements (234) 283 22 90 (14)

Opening cash 1,062 3,325 2,776 1,358 5,489Closing cash 3,325 2,776 1,358 5,489 7,782

Summary balance sheet forecast (Rpbn)

Cash & equivalents 3,325 2,776 1,358 5,489 7,782

Debtors 3,471 4,463 5,215 5,723 6,519

Inventories 5,246 3,987 6,977 4,618 5,239

Other current assets 842 771 1,998 2,236 2,547

Fixed assets 9,505 11,836 13,261 13,787 13,289

Intangible assets 0 0 0 0 0

Other term assets 252 266 449 502 572

Total assets 22,848 24,405 29,701 32,804 36,407

Short-term debt 1,893 1,369 2,982 1,676 955

Creditors 4,367 4,164 5,531 6,108 6,929

Other current liabs 1,614 1,726 1,406 1,574 1,793

Long-term debt/CBs 2,972 2,367 2,699 2,838 2,077

Provisions/other LT liabs 799 828 917 1,027 1,170

Minorities/other equity 71 107 29 66 110

Shareholder funds 11,132 13,844 16,136 19,514 23,373

Total liabs & equity 22,848 24,405 29,701 32,804 36,407

Ratio analysis

Revenue growth (% YoY) 53.6 4.8 27.6 11.9 13.9

Ebitda growth (% YoY) 58.1 26.6 7.3 16.4 17.0

Ebitda margin (%) 21.1 25.5 21.5 22.3 22.9

Net profit margin (%) 9.5 13.1 10.4 11.8 12.3

Dividend payout (%) 26.5 30.5 39.4 40.0 40.0

Effective tax rate (%) 30.3 29.3 23.4 20.0 20.0

Ebitda/net int exp (x) 31.1 84.2 57.2 528.9 na

Net debt/equity (%) 13.7 6.9 26.7 (5.0) (20.2)

ROE (%) 31.6 30.6 25.7 27.8 27.3

ROIC (%) 26.6 25.9 21.7 24.1 29.4EVA/IC (%) 10.9 10.2 6.0 8.2 13.6



12/12



Recommendation history - United Tractors UNTR IJ

Date Rec level Closing price Target

03 June 2010 O-PF 17,250.00 20,200.00

26 January 2010 O-PF 16,650.00 19,200.00

22 October 2009 O-PF 16,400.00 18,600.00

13 August 2009 BUY 12,900.00 15,700.00

03 August 2009 BUY 12,950.00 15,000.00

13 May 2009 O-PF 8,850.00 10,000.00


Key to CLSA investment rankings: BUY = Expected to outperform the local market by >10%; O-PF = Expected to outperform the local market

by 0-10%; U-PF = Expected to underperform the local market by 0-10%; SELL = Expected to underperform the local market by >10%.

Performance is defined as 12-month total return (including dividends).

2011 CLSA Asia-Pacific Markets (CLSA). Note: In the interests of timeliness, this document has not been edited.

The analyst/s who compiled this publication/communication hereby state/s and confirm/s that the contents hereof truly reflect his/her/their views andopinions on the subject matter and that the analyst/s has/have not been placed under any undue influence, intervention or pressure by any person/s in

compiling such publication/ communication.

The CLSA Group, CLSA's analysts and/or their associates do and from time to time seek to establish business or financial relationships with companiescovered in their research reports. As a result, investors should be aware that CLSA and/or such individuals may have one or more conflicts of intereststhat could affect the objectivity of this report. The Hong Kong Securities and Futures Commission requires disclosure of certain relationships and

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