Despite Recent Slide, JCI Still a Buyer’s Market: Analysts

Indonesia’s main stock index posted its biggest decline in almost seven months on Friday amid concerns about slowing economic growth in China and Europe, but some investors say the recent tumble represents a buying opportunity.

“It is actually the time to buy,” Ruben Sukatendel, a fund manager at BNI Asset Management, said on Friday. “The problem is not in Indonesia. Regional markets are concerned about China’s growth, increasing the possibility that we will see a big slowdown.”

The Jakarta Composite Index on Friday fell 2.1 percent, its largest drop since Nov. 1. It has lost 7.6 percent since May 3, when it closed at a record high of 4,224. For the year, the index is up 2.1 percent.

Valuation in the market is comparable to those of other benchmarks across the region. The JCI’s price-to-estimated-earnings ratio is 13.3, compared to 15.1 for the Philippine Stock Exchange Index and 12.8 for the Straits Times Index in Singapore, according to Bloomberg data.

Friday’s plunge has also made some stocks attractive relative to their profit potential.

United Tractors, a unit of Astra International that sells heavy-equipment vehicles, trades at 12.9 times this year’s estimated earnings, Bloomberg data show. The company had net income of Rp 5.9 trillion ($637 million) in 2011, and profit is projected to rise to Rp 6.82 trillion this year and to Rp 8.18 trillion in 2013, Bloomberg data show. Its stock dropped 5.4 percent on Friday, bringing its decline this year to 9.3 percent.

Shares of Semen Gresik, the nation’s biggest cement maker that stands to benefit from planned infrastructure projects, fell 3.5 percent on Friday, putting its price-to-estimated-earnings ratio at 14.3.

Domestic household spending accounts for about 60 percent of Indonesia’s economic activity, which will help to cushion against global financial shocks should demand for the nation’s exports plunge.

The government has forecast economic growth at 6.5 percent this year, accelerating to a range of 6.8 percent to 7.2 percent in 2013. Its 6.5 percent expansion last year was the fastest since 1996.

Source :
Jakarta Globe, 29 Mei 2012
http://www.thejakartaglobe.com/business/despite-recent-slide-jci-still-a-buyers-market-analysts/520447