Posted on 22 Jul 2008
Optima Securities said on Tuesday it has initiated coverage
of the Indonesian heavy equipment sector with an "overweight" rating
amid strong demand.
The brokerage assigned a "buy" rating on two heavy
equipment stocks -- PT United Tractors Tbk and PT Hexindo Adierkasa Tbk -- with
price targets of 12,750 rupiah ($1.39) and 3,900 rupiah, respectively.
"We believe heavy equipment will play an important role
in the robust commodities production activities and infrastructure development
in
Budiman said rising commodity prices and infrastructure
activities will keep demand for new heavy equipment strong although the central
bank's key interest rate is also set to go up further to 9.75 percent by
yearend from 8.75 percent currently.
"We consider it (9.75 percent interest rate) still
supportive of the heavy equipment industry," he said.
He said the risks to his call include a sharp fall in
commodity prices, higher-than-expected interest rates, a major spike in oil
prices and delay in infrastructure projects.
At 0410 GMT, United Tractors gained 1.0 percent to 9,450
rupiah while Hexindo shed 1.0 percent to 2,400 rupiah.
