June 12, 2009
INDONESIA EQUITY Investment Research Company update
Private Circulation Only
MINING BUY Price Target
Tambang Batubara Bukit Asam
Isnaputra Iskandar, CFA +62 (21) 520 4101
[email protected]
Rp13,300 Rp16,100
Heading north Stock Profile/Statistics Bloomberg ticker JCI ticker Outstanding shares (mn) Market capitalization (Rp mn) 52-week High | Low Price (Rp) 3-month average volume (000 shares)
PTBA IJ PTBA 2,304 30,644,950 17,250 3,750 11,062
TP raised to Rp16,100. Our PTBA higher target price of Rp16,100 (21% upside) is based on 1) higher coal price assumptions (due to better coal market outlook), 2) slightly higher terminal value growth from 5% to 6% (due to PTBA’s success to solve railway problems), and 3) change of our target price period from 2009-end to 2010-end. Valuations down 30-40% in two years. Our new target price implies 2010F PER of 15.5x and EV/EBITDA of 10.0x. Given PTBA’s stronger earnings feasibility, our target price valuations will be down by 30-40% based on 2012F earnings (which implies 2012F PER of 10.4x and EV/EBITDA of 6.1x).
Major Shareholders (%) Government of Indonesia Management & employees Public
65.02 0.24 34.74
Share Performance (%) Month 1m 3m 6m 12m
Absolute 25.0 86.6 76.7 -9.5
Relative 11.6 19.9 18.1 2.2
2010-11F earnings upgrades. We have upgraded our 2010-11F earnings forecasts by 9.0% and 9.3%, respectively on the back of higher coal price assumptions. Our 2010F earnings upgrade remains conservative in our opinion as we maintain our 2010F Suralaya ASP assumption. Our sensitivity analysis suggests that for every 5% change in our 2010F Suralaya ASP assumption, our 2010F earnings will change by 5.9%. Potential upgrade in priced-in 2009-10F negative growth. We suggest investors to switch focus from 2009-10F to 2010-11F earnings growth as the 2009-10F negative earnings growth is already priced in. We even see potential upgrades in 2010F-onwards earnings by consensus given our expectation of consensus’ more positive view on future coal prices.
6-month Share Price Performance 14,000 13,000
Maintain BUY. We retain our BUY rating on PTBA due to its better future outlook. Catalysts to the share price may include recovery in coal price, better-than-expected 2010 Suralaya ASP, and earnings and rating upgrades by consensus.
12,000
Rp
11,000 10,000 9,000 8,000 7,000 6,000 Dec-08
Jan-09
Feb-09
Mar-09
Apr-09
May-09
Jun-09
PTBA is a state-owned coal mining company which sold 12.8mn tons of coal in 2008. Proportion of domestic : export sales is some 65% : 35%.
Year end to Dec
2007
2008
Revenue, Rp bn EBITDA, Rp bn Net profit, Rp bn Core profit, Rp bn EPS, Rp EPS growth, % Core EPS, Rp Core EPS growth, % PER, x Core PER, x Yield, % EV/EBITDA, x
4,124 966 760 717 330 56.5 311 39.7 40.3 42.8 0.8 29.4
7,216 2,564 1,708 1,814 741 124.6 787 153.1 17.9 16.9 1.2 10.8
2009F 9,550 4,047 2,917 2,917 1,266 70.8 1,266 60.8 10.5 10.5 2.8 6.4
2010F 8,969 3,149 2,396 2,396 1,040 (17.9) 1,040 (17.9) 12.8 12.8 4.8 8.0
2011F 10,386 3,943 3,009 3,009 1,306 25.6 1,306 25.6 10.2 10.2 3.9 6.0
KEY HIGHLIGHTS Exhibit 1. Changes of forecasts JFY coal price, US$/ton New forecast Old forecast Change, % Domestic ASP, Rp/ton New forecast Old forecast Change, % Export price, US$/ton New forecast Old forecast Change, % Sales, Rp bn New forecast Old forecast Change, % EBITDA, Rp bn New forecast Old forecast Change, % Net profit, Rp bn New forecast Old forecast Change, % Source: OSK Research
2010F
2011F
80 70 14.3
80 80 0.0
657,347 657,347 0.0
741,829 714,772 3.8
64 57 12.1
66 63 4.5
8,969 8,656 3.6
10,386 9,984 4.0
3,149 2,886 9.1
3,943 3,605 9.4
2,396 2,198 9.0
3,009 2,753 9.3
OSK Research See important disclosures at the end of this publication See important disclosures at the end of this report
OSK Research
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OSK Research Guide to Investment Ratings Buy: Share price may exceed 10% over the next 12 months Trading Buy: Share price may exceed 15% over the next 3 months, however longer-term outlook remains uncertain Neutral: Share price may fall within the range of +/- 10% over the next 12 months Take Profit: Target price has been attained. Look to accumulate at lower levels Sell: Share price may fall by more than 10% over the next 12 months Not Rated: Stock is not within regular research coverage All research is based on material compiled from data considered to be reliable at the time of writing. However, information and opinions expressed will be subject to change at short notice, and no part of this report is to be construed as an offer or solicitation of an offer to transact any securities or financial instruments whether referred to herein or otherwise. We do not accept any liability directly or indirectly that may arise from investment decision-making based on this report. The company, its directors, officers, employees and/or connected persons may periodically hold an interest and/or underwriting commitments in the securities mentioned.
All Rights Reserved. No part of this publication may be used or re-produced without expressed permission from OSK Research. Published and printed by :PT OSK NUSADANA SECURITIES INDONESIA
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OSK Research See important disclosures at the end of this publication See important disclosures at the end of this report
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