Jul 31, 2010

Gajah Tunggal beats MASA & GDYR

If you are interested to put your money into tire maker stocks, which company do you want to pick? Indonesia's largest tire player PT Gajah Tunggal Tbk (GJTL), fast growing tire manufacturer PT Multistrada Arah Sarana Tbk (MASA), or PT Goodyear Indonesia Tbk (GDYR)?
Considering the first half financial result, you will find that 1H 2010's financial performance of Gajah Tunggal has beaten Multistrada Sarana and Goodyear. The key factor for a steep jump in Gajah Tunggal's performance in 1H 2010 was a lower operating cost, resulting a higher operating margin from 6.43% in 1H 2009 to 13.88%.
Gajah Tunggal posted a 186.75% jump in net profit in 1H 2010 from Rp144.73 billion or Rp42 per share in 1H 2009 to Rp415.01 billion or Rp118 per share.
Operating profit made a sharp surge of 174.99% from Rp242.97 billion in 1H 2009 to Rp668.14 billion in 1H 2010, resulting a steep jump in operating margin from 6.43% in 1H 2009 to 13.88%, beating Multistrada.
Gajah Tunggal's net sales rose 27.25% from Rp3.78 trillion in 1H 2009 to Rp4.81 trillion in 1H 2010. The key factor was a lower operating cost of 9.11% from Rp358.78 billion in 1H 2009 to Rp326.11 billion.
How about Multistrada Arah Sarana?
First half performance of fast growing tire maker was not too impressive. In 1H 2010, the company posted a 37.08% increase in net profit from Rp65.21 billion to Rp89.39 billion.
Operating profit rose 59.66% from Rp76.93 billion in 1H 2009 to Rp122.83 billion in 1H 2010. In return, Multistrada's operating margin increased from 9.46% to 12.19%. Net sales increased 23.78% from Rp813.59 billion in 1H 2009 to Rp1.01 trillion in 1H 2010.
Boost production
MASA is preparing to boost production capacity of car tire from 16,000 units daily to 28,500 units and double motorcycle tire output from 8,000 units per day to 16,000 units.
In the first stage, Multistrada requires US$71.15 million of investment (excluding land acquisition) and US$108.07 million in the second term (excluding land acquisition).   
Following the capacity enlargement, the company also needs working capital of US$15 million in 2010 and US$15 million in 2011.
Goodyear Indonesia is the last stock you can watch. Net sales jumped 69.05% from US$55.18 million in 1H 2009 to US$93.28 million.
But, operating income dropped 16.06% from US$6.54 million in 1H 2009 to US$5.49 million in 1H 2010 on the back of soaring operating cost of 38.75% from US$2.89 million to US$4.01 million, sending down its operating margin from 11.85% in 1H 2009 to 5.89% in 1H 2010.
Goodyear's earning slightly increased 4.55% from US$3.08 billion in 1H 2009 to US$3.22 million in 1H 2010. So, what is your top pick? Gajah Tunggal or Multistrada?

Disclosure: No position at the stocks mentioned above.

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