Well-Oiled Transporter MITRA RAJ by fjwuxn

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									                                                                                                     INITIATION OF COVERAGE

                                                                                                           MITRA RAJASA
                                                               Well-Oiled Transporter
                                                                 Coverage initiated with Buy and TP of Rp1,375
Report date                                      25-Jun-08
                                                               We initiate our coverage of Mitra Rajasa (MIRA), a land transportation
                                                               and oil & gas supporting company. We believe there is sizable upside
Sector                                           Oil & Gas
                                                               potential in the share price on the acquisition of Apexindo. The
Rating                                                  BUY
                                                               upcoming earnings consolidation will serve as the primary catalyst for
                                                               the share price. Our 12-month DCF-based target price of Rp1,375
Last price                                            Rp710    reflects this factor, and hence our Buy recommendation with potential
Price Target                                        Rp1,375    upside of 94%.
Potential upside (%)                                      94
                                                                 Solid earnings outlook
52 week Lo-Hi price                          Rp31-Rp965        We forecast MIRA will deliver strong earnings CAGR of 32 % over the
                                                               next three years (2008F-2010F). Specifically, for 2008, we expect the
                                                               consolidation of APEX’s earning during Aug-Dec will drive ten-fold
Stock data                                                     growth in earnings. We forecast this will continue in 2009 onward as
Bloomb./Reuters code                     MIRA IJ/MIRA.JK       MIRA will start to fully consolidate APEX’s earnings. Multi-year contracts
                                                               for rigs and FPSO point to strong visibility of earnings.
Mkt Cap (Rp bn/US$ mn)                           1,974/213
Issued Shares (mn)                                     2,741     The acquisition story to continue
Avg. daily val. (Rp bn/US$ mn)                      58.8/6.3   MIRA expects to take delivery of its second FPSO by 2010 with oil
                                                               production capacity of 40k bbl/day, double its first FPSO capacity of 20k
                                                               bbl/day. The management also intends to further expand its drilling
Major shareholders & est. FF                                   business (APEX) by acquiring additional rigs in the future.
Intikencana Pranajati                                  18.2%
                                                                 Medium-term highly geared
Est free float                                         36.0%   We expect the company will enter highly geared days in 2008-2009 as it
                                                               intends to finance the US$565mn acquisition via loan, CB and
                                                               guaranteed notes. We expect company’s net gearing will increase from
Market view
                                                               0.5x in 2007 to 2.5x in 2008 before falling to 0.9x in 2009. We estimate
                                 Buy      Hold          Sell   the company will use strong cash generation, dividend from subsidiaries
Analysts rating                    1         0             0   and rights issue as de-gearing efforts.

                                                                 Risk to our call
                                                               The cancellation of the APEX acquisition that may result from MIRA’s
                                                               inability to find sources to finance the acquisition.
Share price performance

                                                                 Valuation and target price
 900                                                     120   We use a DCF valuation method to value MIRA. We use a WACC of
                                                 (%)
 800
         (Rp)
                                                         100
                                                               14.25 % and terminal EV/EBITDA of 4x for our DCF valuation to arrive
                                                               at our target price of Rp1,375. We think the market has yet to factor in
 700                                                     80
                                                               the full acquisition effect, as, on our numbers, MIRA’s shares is now
 600                                                     60
                                                               trading at a 46% discount to it peers valuation on 2009-PER basis.
 500                                                     40
 400                                                     20    Table 1: MIRA Valuation metrics
 300                                                     0
                                                               YE Dec                       FY06        FY07        FY08F        FY09F       FY10F
     01-08       02-08   03-08   04-08      05-08
                                                               Revenue (Rp bn)             116.1        169.9      2,657.5      3,016.2      3,517.5
                  MIRA (LHS)      Rel. to JCI (RHS)
                                                               EBITDA (Rp bn)               20.4         36.5      1,348.8      1,525.4      1,848.7
                                                               Net profit (Rp bn)             1.2        25.5        285.5        343.2        496.8
                                                               Net profit growth (%)       120.3      1,995.9      1,019.7         20.2         44.7
                                                               PER (x)                   1,600.0         76.3          8.9          7.4          5.1
Arief Budiman
                                                               EV/EBITDA (x)                97.5         60.1          6.1          3.3          2.3
arief@optimasecurities.co.id
                                                               PBV (x)                      96.9           3.6         1.1          1.0          0.8
62-21-5795 0101
                                                               Dividend yield (%)             0.0          0.0         0.0          0.0          0.0

                                                               Source: Company and Optima Securities estimates




Please see the back page for rating definition, analysts certification, and important disclosure.
Optima Securities may seek to do business with companies coverage in its reports. As a result investors, should be aware that the firm may
have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making
their investment decision.
                                                                                            Mitra Rajasa       25 June 2008




                                  MIRA operation overview
MIRA entered oil & gas business   Established in 1979 and listed in the IDX in 1997, the company initially runs land
through SSI and PKR acquisition   transportation business carrying cement of major cement makers (Indocement,
last year.                        Semen Gresik and Holcim). Last year, the company entered oil & gas business
                                  by acquiring Sabre Systems International Pte Ltd (SSI) and PT Pulau Kencana
                                  Raya (PKR). SSI owns and operates the Floating Production Storage and
                                  Offloading (FPSO), a system for offshore oil & gas production and storage, called
                                  Sea Good 101. PKR provides oil field expert crew to operate FPSO and other
                                  services such as cargo vessel and well testing equipment.


                                  Chart 1: The company current structure



                                                                                         MIRA
                                                                                   Oil & Gas services
                                                                                   and transportaion




                                                                 Oil and Gas                               Transportation
                                                                   Division                                   Division


                                     100%                         99%                           100%
                                        PKR             1%           SSI                           SOM
                                    - Crew & Support               FPSO 1                         FPSO 2
                                     - Cargo vessel             (Sea Good 101)                (under construction)

                                      67%
                                        PKOS                 MIRA : PT Mitra Rajasa
                                     - Well Testing          PKR : PT Pulau Kencana Raya
                                      - 2 separator          SSI : Sabre System International Pte Ltd
                                                             PKOS : PT Pulau Kencana Raya Oil Services
                                                             SOM : Sabre Offshore Marine Pte Ltd.

                                  Source: company


                                    Oil and Gas segment

                                  This division consists of FPSO operation and other oil & gas service such as
                                  crew and spare part provider. The business commands a high 76% EBITDA
                                  margin due to FPSO low operating cost. The FPSO is chartered by Santos, an
                                  Australian oil & gas company, under bareboat charter contract meaning that
                                  Santos bears all operation cost. The contract period is for 6 years with daily rate
                                  of US$37,225, which will be reviewed in every two years. The oil & gas division
                                  main costs are depreciation (65%), salaries (16%), insurance (13%) and other
                                  costs (6%). The division’s revenue and EBITDA represent 55% and 82% of
                                  MIRA’s revenue and EBITDA in 1Q08.
                                  A Floating Production, Storage and Offloading vessel (FPSO) is a type of floating
                                  tank system (normally converted-tanker) used by the offshore oil and gas
                                  industry and designed to take all of the oil or gas produced from a nearby
                                  platforms, process it, and store it until the oil or gas can be offloaded onto shuttle
                                  tankers, or sent through a pipeline.




                                                                                                                            2
                                                                Mitra Rajasa   25 June 2008


Chart 2: FPSO system




 Source: Maritime services magazine




          Floating Production, Storage and Offloading vessels are particularly effective in
          remote or deepwater locations where seabed pipelines are not cost effective.
          FPSOs eliminate the need to lay expensive long-distance pipelines from the oil
          well to an onshore terminal. They can also be used economically in smaller oil
          fields which can be exhausted in a few years and do not justify the expense of
          installing a fixed oil platform. Once the field is depleted, the FPSO can be moved
          to a new location.


          Chart 3: MIRA’s FPSO (Sea Good 101)




          Source: company




                                                                                           3
                                                                           Mitra Rajasa   25 June 2008



                         Land transportation segment
                       The company has been almost 30 years transporting industrial goods, mainly
                       cement, in Java Island and has transportation contract with major cement makers
                       (Indocement, Semen Gresik and Holcim) and also with Indofood and Petrokimia
                       Gresik. In 2007, MIRA carried 2.2 mn tons or 12% of 19.6 mn tons of cement
                       distributed in Java. Current fleet consists of some 1000 truck. The business
                       yields a low margin with EBITDA margin stood at 16% in 1Q08. The division
                       main costs are fuel (53%) followed by salary (13%) and service and maintenance
                       (12%). Transportation division’s revenues and EBITDA represent 45% and 18%
                       of MIRA’s revenue and EBITDA in 1Q08.
Chart 4: MIRA’s truck fleet




Source: company




                       Apexindo acquisition
                       On 9 June 2008, MIRA signed the US$565mn acquisition of Indonesian listed
                       drilling company, Apexindo Pratama Duta (APEX). MIRA will purchase their 49%
                       stake of Medco and 32% stake ownership of Encore in Apexindo by cash (80%)
                       and guaranteed notes (20%), which will be issued by SSI secured with APEX
                       share. We consider the transaction fair as MIRA pay Rp2,450/share or higher
                       than APEX’s current market price of Rp2,175.
                       The deal is currently pending to both APEX and MIRA shareholder meeting
                       approval, but as the majority shareholder of APEX has committed to approve the
                       acquisition, we expect company consolidation by Aug-08. To this end, it is
                       management’s intention to operate Apexindo as a separate entity under a
                       planned Holding Company, but fully consolidated into MIRA’s financials.

                         Financing structure
                       Within 6 months to 18 months, MIRA’s management intends to finance the
                       US$565m acquisition loan as well as secured notes, which will be issued by SSI.
                       To date, the company has received US$450m worth of financing commitments
                       from several global investment banks. We estimate the lenders and MIRA to set
                       up a Holding Company to run APEX operation post acquisition and lenders will
                       get a portion of APEX share as repayment of loan. At MIRA (parent) level, we
                       expect the company will issue convertible bond worth some US$50-75mn, which
                       will be converted to MIRA shares at the end of 2008. We believe MIRA will be
                       looking to issue new shares via rights issue with one new shares for every three
                       existing shares held (1:3) to raise around US$60mn.




                                                                                                      4
                                                                          Mitra Rajasa     25 June 2008




                    Apexindo operation
                  Established in 1984, APEX offers onshore and offshore drilling services to oil and
                  gas as well as geothermal exploration and production (E&P) companies. With a
                  fleet of 2 jack-up rigs, 4 submersible (swamp barges) and 8 onshore rigs with
                  most massive horsepower (HP) in Indonesia, APEX becomes a leading national
                  drilling company in Indonesia and in SE Asia. It is estimated that the company
                  holds 20% jack-up rig market share in SE Asia, 40%-50% submersible rig market
                  share in Indonesia and 10% market shares of domestic onshore rigs market. All
                  company’s rigs currently operates in Indonesia with some of them was
                  successfully employed in Myanmar, Australia, Middle East and United States
                  over the past two-five years.
                  Jack up rig is a mobile drilling unit with self-elevating drilling platform equipped
                  with legs that are lowered to the ocean floor until a foundation is formed to
                  support the drilling platform. A swamp barge rig is a shallow water drilling unit
                  that usually is operated in swampy areas and delta rivers. These types of rigs are
                  capable to operate in up to 35 feet of water depth and 25,000 feet of drilling
                  depth. Onshore fleet consists of 8 rigs, which have substantial competitive
                  advantage compared to its domestic peers as most of those rigs are of high
                  horse power greater than 1,000 HP with the capabilities to work efficiently and
                  effectively.

                  Table 2 : Rig fleet specification

                  Rig           Year     Design                    Drilling    Horse Power Type
                  Name        acquired                            Depth (ft)   (Drawworks)
                  Raniworo      1995     BMC 300 IC                  25,000          2,000 Jack-up
                  Soehanah      2007     Baker Marine                30,000          3,000 Jack-up
                  Maera         1992     Protomax                    25,000          3,000 Submersible
                  Raisis        1996     Mc. Dermott                 25,000          3,000 Submersible
                  Raissa        2003     Protomax                    30,000          3,000 Submersible
                  Yani          2003     Protomax                    25,000          2,000 Submersible
                  Rig 2         1982     HSMC 1500E                  12,000          1,500 Onshore
                  Rig 4         1983     Skytop Brewster NE-95A      15,000          1,750 Onshore
                  Rig 5         1985     Dreco 2000-A                20,000          2,000 Onshore
                  Rig 8         1990     Gradner Denver 800E         12,000          1,000 Onshore
                  Rig 9         1990     Gradner Denver 1500E        20,000          2,000 Onshore
                  Rig 10        1993     Ideco E-2100                20,000          2,000 Onshore
                  Rig 14        1998     Skytop Brewster RR-850       8,000              900 Onshore
                  Rig 15        2000     Wilson Mogul 42              6,000              750 Onshore
                  Source: Company
Chart 5: APEX’s rigs




Source: Company



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                                                                                            Mitra Rajasa     25 June 2008



  Offshore rigs revenue represents    In 2007, offshore segment contributed 67% of APEX’s total revenue with the
  the biggest chunk of APEX‘s total   remaining 33% revenue came from onshore segment. On revenue breakdown by
  revenue.                            rig type, 4 submersible rigs generated combined revenue of US$77.4mn (39% of
                                      total), followed by 8 land rigs’ revenue of US$66mn (33%) and 2 jack-up rigs’
                                      revenue of US$56.6mn (28 %).


                                      Chart 6 : Revenue breakdown by segment in 2007




                                                                                               Jack-up
                                            Onshore
                                              33%              Offshore                          28%
                                                                 67%
                                                                                                       Sw amp barges
                                                                                                           39%




                                      Source: Company


                                      The company booked CAGR of 20% and 32% in revenue and EBITDA to
                                      US$200mn and US$95.8mn, respectively, during 2002-2007.




                                      Solid earnings outlook
Long-term contracts for rigs and      We forecast MIRA will deliver strong earnings CAGR of 32 % over the next three
FPSO should translate into strong     years (2008F-2010F). Specifically, for 2008, we expect the consolidation of
earnings visibility.                  APEX’s earning during Aug-Dec will drive ten-fold growth in earning. We forecast
                                      this will continue in 2009 onward as MIRA will start to fully consolidate APEX’s
                                      earnings. Multi-year contracts for rigs and FPSO point to strong visibility of
                                      earnings.


                                        Consolidated operations
82% of consolidated revenue will      APEX acquisition will relatively more diversify MIRA’s business and create
be derived from rigs operation        synergy with its FPSO operation. Post-consolidation we expect MIRA’s revenues
                                      to be largely, 82%, derived from drilling (rig) operations, which should serve as a
                                      strong earnings driver. MIRA’s US$-based revenue (92% of total) will provide
                                      natural hedge to its dollar loan, which represent 88% of total loan , and 70%
                                      dollar-based cost in 2009.




                                                                                                                        6
                                                      Mitra Rajasa     25 June 2008



Chart 7: Business segment revenue contribution, pre-acquisition



 Transportation
 Division
                                                    FP SO
                          Oil & Gas Div.
                                                    46%
                              55%
                  45%


                                                 Other services 9%




Chart 8: Business segment revenue contribution, post-acquisition




 Transportation                                     Rig (A P EX)
                            Oil & Gas Div.
 Division                                              82%
           8%                         92%


                                                                   FPSO 8%

                                                       Other services 2%




Source: Company



  APEX business outlook
We believe APEX will benefit from 1) strong world demand for oil, boosting
exploration and production (E&P) activities 2) high oil price, providing incentives
to oil producer to explore oil in deep water 3) current high world rigs utilization
(90%), supporting future rigs rate 4) escalation of Indonesia oil and gas
production activities. (Please see our initiated report on APEX dated 4 June
2008).



We expect earnings to grow at 22% CAGR from US$53mn in 2008F to US$79mn
in 2010F on stronger revenue from 1) new contract and contract extension with
higher rates and 2) increase in rigs utilization, which help defray fixed cost then
expand margins. As rig Raniworo has started its new job in Jan-08 and Raissa
and Maera came back from its dry-docking (service), offshore rate utilization is
expected to improve from 83% in 2007 to 93% in 2008 and stay at 96% in 2009
onwards. Meanwhile, we expect onshore rig utilization to hover around optimum
level of 70% in 2008 onwards on longer contract period for Rig 4,5,9 and 10.
Onshore rig utilization rate is normally below those of offshore rig due to shorter
contract period, which cause downtime between jobs.




                                                                                  7
                                                        Mitra Rajasa      25 June 2008

Chart 8 : Onshore and offshore rig utilization rate

120%
                   100%      100%     100%
                                                           93%         96%       96%
100%
                                                  83%
          78%
 80%


 60%                                  68%         70%      69%         71%       71%

          57%
 40%               53%        51%


 20%


  0%
          2003     2004      2005     2006        2007    2008F        2009F     2010F
                                    Offshore        Onshore
Source: Company and Optima Securities estimates

Chart 9 : Onshore and offshore rig daily rate




Source: Company and Optima Securities estimates

Moreover, long-term contracts for the company’s offshore swamp barges and
jack-up rigs translates to high revenue and earnings visibility in 2008 onwards.
As of Mar-08, the company revenue backlog stood at US$611 mn for 2008-2012,
showing its ability to obtain long-term contract.

Chart 10 : APEX’s Revenue backlog
 250   (US$ mn)


 200


 150

           235.7
 100                      205.7


                                        115.9
  50
                                                                          17.1
                                                        36.8
   0
           2008           2009          2010            2011             2012
Source: Company and Optima Securities estimates




                                                                                         8
                                                        Mitra Rajasa   25 June 2008



  FPSO operation : expecting higher rate and new FPSO
We expect MIRA to review its FPSO charter rate in Jan-2009 as the contract
agreement with Santos stipulates contract review every two years. Santos
started renting the FPSO in Jan-2007 and benchmarked the contract to oil price
assumption of US$40/bbl. As oil price now more than triple, we expect daily
contract rate to increase at least by 50% to US$55,800 for 2009-2011.
FPSO fundamental should remain strong in the future as only 106 FPSO
operating globally with six of them are in Indonesia, two of which are owned by
Indonesian companies . It is estimated about 200 oil fields in Indonesia are
marginal fields, which is more cost efficient if they use FPSO.
MIRA expects to take delivery of its second FPSO (Sabre 201) by 2010 with oil
production capacity of 40,000 bbl/day, double its existing FPSO (Sea Good 101)
capacity of 20,000 bbl/day. We assume this second FPSO to get daily rate of
US$75,000 and start its operation in 2H10.

  Mediocre growth on transportation segment
Although land transportation business yield low margin, the company plans to
maintain this business as they believe it will benefit from higher domestic cement
demand on robust property construction and government infrastructure projects.
We estimate the company will expand its truck fleet from 1,000 units in 2008 to
1,200 units in 2009 and 1,400 units in 2010. However, we foresee only 7%-12%
earnings growth during that period as fuel and truck spare parts price hike will
erode margins.

Property development in Indonesia has been buoyant, supported by the low
interest rate environment and greater availability of mortgages. The current low
interest rates and unattractive time deposit rates have sparked property demand.
Besides, the government plans to build 290km of new roads and 1,300m of
bridges starting in 2008. In addition to new road development, there is
construction work opportunity in road maintenance given the poor road
conditions in the country. Domestic cement consumption grew by 5% CAGR
during 2002-2007 and is expected to grow at the same magnitude in 2008.

Chart 11 : Domestic cement demand chart

 40
      (mn tons)
                                                                        36.5

                                    5% CAGR                   34.2
                                                 32.1
                                       31.5
                            30.0
 30
        27.2      27.5




 20
       2002       2003      2004       2005      2006         2007     2008F

Source: Cement companies data




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                                                                                                  Mitra Rajasa     25 June 2008


                                             The acquisition story to continue
                                         MIRA will take the delivery of its second FPSO (Sabre 201), which is now build in
                                         in a shipyard in Batam, by 2010. Several oil companies have shown their interest
                                         in chartering Sabre 201 and are now in discussion to modify FPSO specification
                                         to meet their need. The management also intends to further expand its drilling
                                         business by acquiring additional offshore rigs in the future. We take into account
                                         the second FPSO into our earnings forecast but has yet to include additional rigs.


Table 3 : Our key assumptions to MIRA earnings forecast


                                                   2007     2008F    2009F    2010F    Comments

APEX operation
  Offshore rigs
    No of rig (units)                                  6         6        6        6   We assume no additional rigs
    Rig utilization rate (%)                          83        93       96       96
    Average daily rate (' 000 US$)                  61.2      75.3     79.6     83.8
    Sub revenue (US$ mn)                             134       181      203      224

  Onshore rig
   No of rig (units)                                   8         8        8        8   We assume no additional rigs
   Rig utilization rate (%)                           70        69       71       71
   Average daily rate (' 000 US$)                   22.6      24.6     27.1     29.8
   Sub revenue (US$ mn)                             66.0      70.5     78.9     87.0

  Sub revenue (US$ mn)                               200     252     282     311
  Sub revenue (Rp bn)                            1,850.2 2,330.5 2,579.9 2,854.7

FPSO operation
  No of PFSO                                            1        1        1        2   Company will add 1 FPSO in 2010
  avg daily rate (US$)                            37,225    37,225   55,800   65,400
  Sub revenue (US$ mn)                                3.7     13.8     20.7     36.6   3 mth earnings consolidation for 2007
  Sub revenue (Rp bn)                               33.8     128.0    191.9    338.8



Land transportation
  No of trucks                                       775     1,000    1,300    1,500
  Sub revenue (Rp bn)                              117.8     162.8    201.0    272.0

Revenue fr other oil & gas support (Rp bn)          17.7      36.1     43.3     52.0

Total consolidated revenue (Rp bn)                 169.9 2,657.5 3,016.2 3,517.5       We assume earnings consolidation will
                                                                                       start in Aug-2008

Gross profit (Rp bn)                                31.6 1,093.7 1,218.5 1,540.9
Gross margin (%)                                    18.6    41.2    40.4    43.8
EBITDA (Rp bn)                                      36.5 1,348.8 1,525.4 1,848.7
EBITDA margin (%)                                   21.5    50.8    50.6    52.6
Operating profit (Rp bn)                            13.0   969.2 1,090.4 1,393.9
Operating margin (%)                                 7.7    36.5    36.2    39.6
Net profit (Rp bn)                                  25.5   285.5   343.2   496.8
Net margin (%)                                      15.0    10.7    11.4    14.1



Source: Optima Securities estimates




                                                                                                                               10
                                                                                                   Mitra Rajasa      25 June 2008



                                      Medium-term highly geared
                                      We expect the company will enter highly geared days in 2008-2009 as it intends
Gearing level and financing cost
                                      to finance the US$565mn acquisition via loan, CB and guaranteed notes. To
will be significantly higher in the
medium term.                          date, the company has received US$450mn worth of loan commitment and will
                                      issue US$115mn guaranteed notes through its subsidiary Sabre System Int’l
                                      (SSI). We expect company’s net gearing will increase from 0.5x in 2007 to 2.5x in
                                      2008 before falling to 0.9x in 2009.
                                      We also expect MIRA’s financing costs to increase significantly in 2008-2010
                                      driven by 22 times increase in loan in 2008. We assess the company will use
                                      strong cash generation, dividend from subsidiary and new shares from rights
                                      issue to convert its debt into equity as degearing efforts. We estimate the
                                      company will issue a total of some 900 mn new shares for rights issue, and the
                                      estimate ratio is 1 :3 , that is one new shares for every three existing shares held.


                                      Chart 12 : MIRA’s debt and gearing level


                                      8,000   (Rp bn)                           7,467                               (x)     3.0

                                      7,000
                                                                                                                            2.5
                                      6,000
                                                                                                                            2.0
                                      5,000

                                      4,000                                                                                 1.5
                                                                                                 3,206
                                      3,000                                                                       2,606
                                                                                                                            1.0
                                      2,000
                                                                                                                            0.5
                                      1,000                    322
                                                  45
                                         0                                                                                  0.0
                                                 2006          2007              2008            2009             2010
                                                                      Debt (Rp bn)      Net gearing (x)


                                      Source: Company and Optima Securities estimates




                                      Valuation and target price
                                      We use a discounted cash flow (DCF) valuation method to value MIRA with a
                                      projected 5 years of free cash flows before deriving a long-term terminal value for
                                      the company. We believe that DCF valuation is a better methodology to capture
                                      the long-term value of MIRA as it allows consideration for the prospect of long-
                                      term contract of company’s FPSO and rigs. We have assumed a WACC of
                                      14.25 % and a conservative terminal EV/EBITDA of 4x for our DCF valuation to
                                      arrive at our target price of Rp1,375. We think the market has yet to factor in the
                                      full acquisition effect, as, on our numbers, MIRA’s shares is now trading at a
                                      46% discount to it peers valuation on 2009F-PER basis. Main risk to our call is
                                      cancellation of the APEX acquisition.

                                      Risk to our call
                                      We view the cancellation of the APEX acquisition that may result from MIRA’s
                                      inability to find source to finance the acquisition, as main risk to our call. MIRA’s
                                      strong earnings growth expectation            would not be achievable without
                                      consolidation of APEX earnings.



                                                                                                                                  11
                                                                                                      Mitra Rajasa       25 June 2008



  Table 4 : Summary of DCF calculation
   WACC                                                    14.25%
   Terminal EV/EBITDA                                             4x
   NPV 5 years (Rp bn)                                      4,219
   NPV terminal value (Rp bn)                               3,399
   Enterprise Value (Rp bn)                                 7,618
   Net cash (debt) (Rp bn)                                 (2,590)
   Equity value (Rp bn)                                     5,028
   No of shares (bn shares) - adj to rights issue           3.654
   Equity value per share (Rp)                              1,376


  Free cash flow                                            2009F         2010F     2011F       2012F           2013F        2014F
  (Rp bn)                                                     -               1           2           3              4            5
  EBIT                                                     1,090.4     1,393.9     1,449.9     1,299.8         1,345.6      1,399.5
  Depreciation                                              435.0         454.8     466.4       479.8           469.8         477.1
  Change in working capital                                  -32.2        -148.5     25.3          7.9            -4.9         -3.3
  Taxes                                                     -348.9        -460.0    -478.5      -428.9          -444.1       -461.8
  Total operating cash flow                                1,144.3     1,240.3     1,463.2     1,358.5         1,366.6      1,411.4
  Capital expenditures                                      -604.2        -671.3    -162.9      -164.8          -147.2       -111.0
  Free cash flow                                            540.2         569.0    1,300.2     1,193.7         1,219.4      1,300.5

  Source: Optima Securities estimates



                                              Earnings multiple based valuation and comparables
                                           MIRA’s earning multiples at both current share price and our target share price
                                           indicate an attractive valuation multiple, in comparison to global rig operators,
                                           FSO operators and offshore oil and gas support service companies. At current
                                           price, MIRA is trading at 2009F-PER 7.4x, which is at 46% discount to its global
                                           peers valuation. Our target price would place MIRA at 2009F PER of 14.3x,
                                           roughly in line with its peers current valuation.
                                           Moreover , MIRA looks more attractive on EV/EBITDA basis and P/BV as it is
                                           trading only at 2009 EV/EBITDA of 3.3x and P/BV of 1.0x implying 60% and 53%
                                           discount to its peers multiple, respectively .


Table 5 : Valuation comparison

                                   PER (x)                EV/EBITDA (x)             P/BV (x)
Companies                          08F              09F     08F           09F       08F        09F        Business
China Oilfield Service            18.8          15.7        15.6       13.8         2.8         2.5       Rig operator
Sapuracrest                       30.0          12.9         8.3           6.2      1.7         1.5       Rig operator
Diamond offshore                  13.5          11.0         8.4           7.0      3.0         2.6       Rig operator
Seadrill                          21.2          10.0        16.1           8.2      3.0         2.6       Rig operator
Akita Drilling                    18.0          16.8         5.8           5.1      1.3         1.3       Rig operator
Union Drilling                    22.6          15.6         5.8           4.6      2.2         1.9       Rig operator
Seawell Ltd                       16.0          12.0        10.1           7.7      6.3         3.6       Rig operator
Hercules offshore                 22.8          12.1         8.6           6.0      1.5         1.4       Rig operator
Berlian Laju Tanker                 7.4             5.8      8.1           7.3      1.6         1.3       FPSO and tanker operator
Teekay                            15.3          16.7        10.4       10.3         1.2         1.2       FPSO and tanker operator
Ezra                                9.4         12.7        11.4       10.2         2.2         2.0       Offshore support services
Fred Olsen                          8.9             7.6      7.7           6.6      4.1         3.5       FPSO and rig operator
Simple Average                    18.8          13.5         9.9           8.1      2.4         2.0
Mitra Rajasa                        8.9             7.4      6.1           3.3      1.1         1.0

Source: Bloomberg and Optima Securities estimates




                                                                                                                                      12
                                                                                                                             Mitra Rajasa       25 June 2008



MIRA FINANCIALS

Income statement                                                               Cashflow analysis
Year-end 31 Dec (Rp bn)       FY06     FY07      FY08F     FY09F     FY10F     Year-end 31 Dec (Rp bn)           FY06       FY07     FY08F      FY09F     FY10F
                                                                               CFs from operation
Revenue                       116.1    169.9     2,657.5   3,016.2   3,517.5   Net income                          1.2      25.5      285.5      343.2    496.8
Gross profit                   19.3     31.6     1,093.7   1,218.5   1,540.9   Depreciation/amorti.                9.8      23.5      379.6      435.0    454.8
Gross margin (%)               16.7     18.6       41.2      40.4      43.8    Change in working capitals          0.0      -93.1     186.7       -32.2   -148.5
EBITDA                         20.4     36.5     1,348.8   1,525.4   1,848.7   Others                              -0.8       0.0      46.6        0.0       0.0
EBITDA margin (%)              17.6     21.5       50.8      50.6      52.6    CFs from operation                 10.3      -44.1     898.3      746.1    803.2
Operating profit               10.6     13.0      969.2    1,090.4   1,393.9
Operating margin (%)            9.1       7.7      36.5      36.2      39.6    CFs from investments
Net interest inc (exp)         -7.8     -38.9     -395.8    -514.0    -248.9   Net capex                           -4.3    -178.7    -597.6     -604.2    -671.3
Others                         -0.4     36.5       35.3      85.7      30.8    Others                              0.1     -397.2   -2,795.1    -649.1    -234.8
Pre-tax profit                  2.3     10.6      608.6     662.1    1,175.8   CFs from investments                -4.3    -575.9   -3,392.7   -1,253.3   -906.1
Pre-tax profit margin (%)       2.0     27.9       31.7      36.2      38.9
Income tax - net               -1.1      -2.3     -200.9    -185.4    -411.5   CFs from financing
Minority interest               0.0     -97.6      -74.6     -72.2     -72.9   Decrease (inc.) in share cap.       0.0     513.0    1,457.0        0.0       0.0
                                                                               Decrease (inc.) in debt             -0.7    225.9    2,697.4     -572.4    120.7
Net profit                      1.2     25.5      285.5     343.2     496.8    Dividend payments                   0.0        0.0       0.0        0.0       0.0
Net profit margin (%)           1.0     15.0       10.7      11.4      14.1    Others                              -4.3     -42.7      52.3       30.6     39.3
                                                                               CFs from financing                  -5.0    696.2    4,206.7     -541.8    160.0
                                                                               Net inc/(dec) in cash               1.0      76.2    1,712.3    -1,049.0    57.0
No of shares                    2.7       2.7        3.6       3.6       3.6
EPS (Rp)                        0.4       9.3      80.1      96.3     139.4    DPS (Rp)                            0.0        0.0       0.0        0.0       0.0




Balance sheet                                                                  Key ratio analysis
As at 31 Dec (Rp bn)          FY06     FY07      FY08F     FY09F     FY10F     Year-end 31 Dec (Rp bn)           FY06       FY07     FY08F      FY09F     FY10F
Assets                                                                         Revenue gr. (%)                    40.6      46.3    1,464.1       13.5     16.6
Cash and equiv                  2.2     78.2     1,790.6    741.6     798.6    EBITDA gr. (%)                     21.1      78.7    3,598.9       13.1     21.2
Receivables                    14.2     33.0      529.7     584.9     652.9    Opr. Profit gr. (%)                43.0      23.0    7,348.5       12.5     27.8
Inventories                     2.2       2.0     190.4     219.2     237.3    Net profit gr. (%)                120.3    1,995.9   1,019.7       20.2     44.7
Others                          4.3     51.1      443.6     409.9     376.2
Total current assets           22.9    164.3     2,954.3   1,955.6   2,065.0   ROE (%)                             6.1        4.7      12.5       13.1     15.9
Net fixed assets               64.0    731.6     4,318.4   4,077.3   4,305.2   ROA (%)                             1.4        2.3       2.6        3.5       5.1
Other assets                    1.1    231.1     3,681.3   3,687.9   3,432.2
Total assets                   88.0   1,126.9   10,954.0   9,720.8   9,802.4   Current ratio (x)                   0.6        0.5       6.1        3.4       4.4
                                                                               Quick ratio (x)                     0.6        0.5       5.7        3.0       3.9
Liabilities and equities                                                       Debt to equity (x)                  2.3        0.6       3.3        1.2       0.8
Acc. Payables                   3.1    235.8      357.5     375.7     268.1    Net debt to equity (x)              2.1        0.5       2.5        0.9       0.6
ST. debt and curr. maturity    27.3     84.3       69.9     134.6     134.6    EBITDA/Interest cov. (x)            2.6        0.9       3.4        3.0       7.4
Other current liabilities       6.2     14.9       60.5      60.5      71.9
LT. debt                       18.1    237.9     7,397.6   3,071.2   2,471.3
Other long term liabilities    13.2     15.3      450.7     480.9     519.6    Valuation
Total Liabilities              67.9    588.3     8,336.2   4,122.8   3,465.5   Year-end 31 Dec (Rp bn)           FY06       FY07     FY08F      FY09F     FY10F
Minority Interest               0.0       0.5     337.6    2,974.6   3,216.7   PER (x)                         1,600.0      76.3        8.9        7.4      5.1
Shareholders' equity           20.1    538.1     2,280.1   2,623.4   3,120.2   EV/EBITDA (x)                     97.5       60.1        6.1        3.3      2.3
                                                                               PBV (x)                           96.9        3.6        1.1        1.0      0.8
BVPS (Rp)                       7.3    196.3      639.9     736.2     875.6    Dividend yield (%)                  0.0        0.0       0.0        0.0       0.0

Source: Company and Optima Securities estimates




                                                                                                                                                              13
                                                                                                      Mitra Rajasa    25 June 2008




IMPORTANT DISCLOSURES


Ratings for Sectors:
Overweight    : Expect the industry to perform better than the primary market index (JCI) over the next 12 months.
Neutral       : Expect the industry to perform in line with the primary market index (JCI) over the next 12 months.
Underweight : Expect the industry to underperform the primary market index (JCI) over the next 12 months.




Ratings for Stocks:
Buy : We expect this stock to give total return (price appreciation + dividend yield) of above 15% over the next 12 months.
Hold : We expect this stock to give total return of between -15% and 15% over the next 12 months.
Sell : We expect this stock to give total return of -15% or lower over the next 12 months.




Analyst Certification
The research analyst(s) primarily responsible for the preparation of this research report hereby certify that all of the views
expressed in this research report accurately reflect their personal views about any and all of the subject securities or
issuers. The research analyst(s) also certify that no part of their compensation was, is, or will be, directly or indirectly,
related to the specific recommendations or views expressed in this research report.




Disclaimers
This document has been prepared for general circulation based on information obtained from sources believed to be reliable
but we do not make any representations as to its accuracy or completeness. Optima Securities accepts no liability
whatsoever for any direct or consequential loss arising from any use of this document or any solicitations of an offer to buy
or sell any securities. Optima Securities and its directors, officials and/or employees may have positions in, and may effect
transactions in securities mentioned herein from time to time in the open market or otherwise, and may receive brokerage
fees or act as principal or agent in dealings with respect to these companies. Optima Securities may also seek investment
banking business with companies covered in its research reports. As a result investors should be aware that the firm may
have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single
factor in making their investment decision.




                                                                                                                                 14
                                                                                          Mitra Rajasa   25 June 2008




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