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STOCKS NEWS INDONESIA-Morgan Stanley positive on cement sector

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Morgan Stanley Research said it is positive on Indonesia'scement sector as there are signs of higher infrastructurespending and as the industry's growth prospects remained intact,underpinned by higher-than-expected cement consumption inSeptember.

"Accelerated infrastructure spending would not only drivecement demand higher, but would also increase demandsustainability, supporting higher multiples for the cementstocks, as long-term earnings visibility increases," MorganStanley said in a note on Friday.

The research house said the industry's underlying growthremains intact despite weaker trends from June to August. But itmay not be sustainable and the fall in coal and CPO pricessuggests a potential decline in rural incomes, which couldaffect cement demand negatively.

Morgan Stanley's top pick in the sector is PT Semen Gresik, as the company is best positioned to capitalise onstrong demand and deliver above-industry volume and earningsgrowth. PT Indocement Tunggal Prakarsa also offersearnings growth on higher estimated 2013 volume, it said.

Semen Gresik shares were trading up 0.34 percent at 14,700rupiah while Indocement shares were trading up 0.72percent at 21,000 rupiah. The Jakarta Composite Indexwas up 0.69 percent.

1117 (0417 GMT)

(Reporting by Andjarsari Paramaditha,; Editing by Jijo Jacob)

((andjarsari.p@thomsonreuters.com)(+62 21 3199 7170)(ReutersMessaging: andjarsari.p.thomsonreuters.com@thomsonreuters.nett))

Keywords: MARKETS INDONESIA STOCKSNEWS/CEMENT