Bukit Asam's Performance (PTBA) Will Ignite Low Calorie Coal Prices

Jakarta, APBI-ICMA: Bisnis.com March 25, 2019 reported that the stretch of the low-calorie coal price which was called had touched the level of US $ 40 per ton believed by PT Bukit Asam Tbk. will also help hoist the company's financial performance.

In a recent Bisnis.com report, the Indonesian Coal Mining Association (APBI) revealed that the low-calorie coal market began to stretch. This condition is in line with Chinese imports which began to loose for coal in that category.

In addition, APBI considers the significant reduction in production quotas from Indonesia to be a positive sentiment for commodity prices. Because, Indonesia holds the status of being the largest exporter of thermal coal in the world.

APBI revealed coal prices with 4,200 kcal / kg of calories touched the level of US $ 40 per ton. Some time ago, the price of the commodity was at the level of US $ 30 per ton.

The news that the low calorie coal price has brought fresh air to the commodity producers in the country, including, PT Bukit Asam Tbk. Issuer members of the Mining Industry BUMN Holding are optimistic that stretching prices will have a positive impact on the company's financial performance.

"This increase in low-calorie coal prices will certainly affect medium and high calorie coal, which is the target of Bukit Asam's market," said Bukit Asam Corporate Secretary Suherman to Bisnis.com last weekend.

Nevertheless, Suherman explained that PTBA-coded issuers do not necessarily increase or boost production. Because, it is related to several handicaps or obstacles such as transportation, equipment availability, and other factors.

However, he said PTBA will produce according to the approved work plan and budget (RKAB). It will optimize the quality of coal which can provide optimal margins.

In his presentation, PTBA Management has set a number of targets for the 2019 period. From the production side, the company targets 27.26 million tons throughout 2019 or grows 3% on an annual basis.

In terms of sales, PTBA targets a volume of 28.38 million tons or grows 15% on an annual basis. The details are domestic coal sales of 13.67 million tons and export sales of 14.71 million tons.

Meanwhile, the sales target is supported by the export sales plan for medium to high calorie coal to the premium market of 3 million tons.

Meanwhile, the company budgeted an investment of Rp 6.47 trillion. The amount will be used at Rp 1.13 trillion for routine investment and the remaining Rp 5.35 trillion for investment development.

As an illustration, PTBA's development projects are the RAPAP Mine Gasification or Shrinking Project, Tanjung Enim Mining Gasification Project, Sumsel 8 Mouth Mining PLTU, East Halmahera Feni PLTU, and coal transportation projects.

As is known, PTBA pocketed Rp 21.16 trillion in revenue. The realization rose 8.71% from Rp 19.47 trillion in 2017.

Nevertheless, the company's cost of revenue recorded a higher increase of 15.11% on an annual basis in 2018. The amount spent rose from Rp 10.96 trillion in 2017 to Rp 12.62 trillion.

From there, PTBA's gross profit edged up 0.46% on an annual basis. Recorded, there was a growth of Rp. 8.50 trillion in 2017 to Rp. 8.54 trillion. Thus, PTBA pocketed a net profit of Rp 5.02 trillion in 2018. The achievement rose 12.23% from Rp 4.47 trillion in 2017.



In the capital market, Bloomberg noted that the movement of PTBA shares rose 60 points or 1.49% to the level of Rp.4,100 at the close of trading on Friday (3/22/2019). However, for the 2019 period, the movement recorded a correction of 4.65%. Meanwhile, in today's trade, Monday (03/25/2019) shares opened lower by 30 points or 0.73% to the level of Rp4,070 per share.

PTBA's shares are traded with a price earnings ratio (PER) of 9.40 times. The total market capitalization owned is valued at Rp.47.23 trillion.

In research published through Bloomberg, Mirae Asset Securities Indonesia Analyst Andy Wibowo Gunawan still maintains the projection of PTBA's income of Rp24.6 trillion in 2019 and Rp27.8 trillion in 2020. Meanwhile, the projected gross profit is at Rp11.3 trillion in 2019 and Rp12 , 5 trillion in 2020.

"We maintain a projection of full-year net profit at the level of Rp6.1 trillion in 2019 [or grew 22.3% on an annual basis]," he wrote in the research.

In line with the maintained revenue and net profit estimates, Andy also maintains PTBA's stock price target at the level of Rp.5,520. In addition, he repeated his buying recommendation.

He considered the competitive advantage of PTBA, the company 's unique value (CV) coal suitable for the PT Electric Power Company (Persero) thermal power plant. Meanwhile, there is a risk of short-term decline as a result of lower global coal prices and regulatory changes.

On the other hand, in research published through Bloomberg, Kresna Sekuritas analyst Robertus Yanuar Hardy expects the company's net profit to reach Rp6 trillion in 2019. This is in line with expectations of an increase in sales volume of 28 million tons this year.

He also highlighted the collaboration between PTBA and Pertamina for the price of fuel oil. The move is expected to hoist the company's profitability.

Robertus still provides buying recommendations for PTBA's shares. The long-term price target is at the level of IDR 5,000 per share.




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