TRIM FLASH

NOTES
Jun 25, 2012

DKFT: Central Omega Resources

Growing Vigorously
Backdoor to new mining business
Omega was established in 2008 through a backdoor listing by PT. Jinsheng
Mining, turning-around from a lagged multi finance business (previously PT Duta
Kirana Finance) into a nickel mining company. DKFT recently issues rights with
1:10 ratio to raise Rp1tr funds, diluting PT Jinsheng ownership to 77% from 80%,
while the public’s ownership increased to 23% from 20%. Backed with three nickel
mines in Sulawesi, where two mines already producing total 300k MT/month (both
are 2km from pit to port) and each mine has 15mn reserve. The third mine is
recently acquired for a cheap price of only Rp5bn, covering 2000ha area, with
20mn reserve from the 870ha explored, and expected to start production in 3Q12.
DKFT also owned two copper and gold mines in Kupang and Halmahera, but is
still in the exploration stages.

Spacious room for production growth, smelters is on the way

DKFT production capability is still in the infant stage, with spacious room for
growth. The company productivity is growing vigorously with estimated production
NOT RATED of 3.2mn MT in 2012 or 140% YoY growth and 6mn MT (with additional 200k MT/
month) in 2013 or 87% YoY growth. According to the company, the infrastructures
Company Update for those growths are available, and the company could increase production by
hiring more contractors (each contractor estimate to contribute additional 100k
Share Price Rp1.720 MT/month). The Company will either build coal or electricity powered smelter,
Sector Mining 30% funding will be provided from partnership and 70% from loan. The smelter
Price Target - construction should be start in late 2012 and expected to finish in early 2014.
Prev. TP -
Government ban could be a blessing, additional tax can be pass through
Stock Data The recent government ban on unprocessed ore export (UU Minerba 29) already
addressed by submitting smelter plans, and the Company has received 1.1mton
Reuters Code DKFT.JK quota/3 month for exporting ore. The export ban plus the new additional tax
Bloomberg Code DKFT.IJ regulation could cripple small miner operators with no adequate capital or efficient
Issued Shares (m) 1.093 operation, while giving more opportunities for the company to acquire their mines.
Mkt Cap (Rpbn) 1.880 We also believe that the 20% additional tax can be passed to the buyer due to the
Average Daily T/O 4.5m limited supply after the implementation of new export ban regulation.
52-Wk range Rp2.275 / Rp148
Promising growth with 5.8% dividend yield
DKFT offer the biggest upside if the production target realized inline with the
Major Shareholders:
guidance. The Company estimated to book Rp323bn net profit (Rp317/s EPS)
PT Jinseng Mining 75.0% and 2012 PE of 5.5x. Relative to its peers, INCO currently trading at 2012 PE
Public 25.0% of 8.23x and ANTM at 2012 PE of 7.55x. We are putting 20% lower PE multiple
(2012 PE of 6.6x, 20% upside potential) for DKFT on the back of its early stage
of expansion and execution risk. Please note also that the Company agreed to
distribute dividend of Rp100/s with 5.8 dividend yield.
Consensus
EPS 12E 13F Forecast & Rating
Consensus (Rp) - -
TRIM VS Cons (%) - - Year end Dec 2008 2009 2010 2011 1Q12

Stock Price Net Profit (Rpbn) (7.5) (3.9) (4.1) 177.2 76.6
Volume Price
EPS (Rp) (26.6) (13.9) (14.5) 1,018.6 70.1
2,500 40,000,000
EPS Growth (%) (30.1) (47.8) 4.3 (7,115.1) -
35,000,000
2,000
30,000,000 DPS (Rp) - - - - -
1,500 25,000,000

20,000,000 BVPS (Rp) 28.7 14.8 (4.8) 10,597.7 -

1,000 15,000,000

10,000,000
P/E (x) - - - 1.5 2.7
500
5,000,000

- -
P/BV (x) - - - 0.1 -
6/23/2011

8/23/2011

10/23/2011

12/23/2011

2/23/2012

4/23/2012

Div Yield (%) - - - - -

Source: Bloomberg

Richardo Putra Waluyo & William Simadiputra

richardo.waluyo@trimegah.com & william.putra@trimegah.com
 PT Trimegah Securities Tbk
18th Fl, Artha Graha Building
Jl. Jend. Sudirman Kav. 52-53
Jakarta 12190, INDONESIA
Tel : (6221) 2924 9088 Fax : (6221) 2924 9163

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