We believe changes at Kalbe’s senior management level, coupled with a more offensive marketing strategy, will bring back growth this year. That said, we believe margins could see downside, from rising raw material costs and a weak rupiah. This caused us to our lower gross margin estimates by 2-3%, resulting in earnings reductions of 17-18% for FY08-09. Consequently, our target price has been lowered to Rp1,300 (still DCF derived, with a higher WACC of 13.4% vs. 12.3% previously) from Rp1,775. Two reasons for our continued positive view on the company: 1) aggressive share buybacks; and 2) Kalbe remains a well-managed company. Maintain Outperform.