INDONESIA'S PT TELECOM(TLK) Message Board

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Technology Stocks : INDONESIA'S PT TELECOM(TLK)

TLK 20.57

+1.8%

3:09 PM EST

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To: needawin who wrote (764)	7/7/1998 3:21:00 AM
From: tom	Read Replies (3) of 947

Last year is irrelevant as far as TLK as concerned. What matters is the future. TLK is on 30x 2000 earnings (If you use Bloomberg it is on 68x 98 earnings and 28x 1999 earnings with negative revisions coming thick and fast). I agree with you that PE is not the best measure but whatever measure you take (EV/EBITDA, EV/Sales, EV/Operating Free Cash Flow) TLK looks expensive. The only measure on which TLK looks OK is EV per line. It is trading at a discount to the replacement cost of the assets. This would normally be a great buying signal if TLK could adjust its prices in order to make an economic return on those assets but that would mean doubling or even tripling call charges! Will a new, unstable government take the risk of angering TLK customers and stoking inflation by allowing this to happen? I agree with the general theory of buying markets when others are despondently selling and buying hysteria etc etc but I DO believe Indonesia is different from say Thailand and Korea (and Mexico previously). I would much rather buy stocks that have fallen 95% when I like the fundamentals. I urge you to look at the chart of TLK in Rupiah terms (after all it is a Rupiah asset that you're buying). It is is practically at an all time high. If it traded at the same level now as it did a year ago but with the Rupiah at today's levels TLK would be under US$5. I thought it was expensive then and I think its expensive now. All that has happened is that the currency has moved 80% since then! Having said all this I don't doubt that the TLK share price will be volatile and if you are nimble you can make money in the stock. STOP PRESS Reuters has just reported that Indonesia 1H98 GDP fell 12.23%, 2Q GDP fell by 16.54% and Indonesia statistic bureau sees a 13.06% contraction in 1998. (Comment: ie they expect a big pick up in 2H 98. Mind you they also expect the Rupiah to return to 10,000 by the end of 1998 so I guess a sense of reality isn't required at the Indonesia statistics bureau) Good luck Tom

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