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Tuesday, March 15, 2011

PT. Tambang Batubara Bukit Asam Tbk (PTBA)

by Samuel Securities

Higher Domestic Price Settlement

Highlights:

• PTBA reported FY10 earnings of Rp2,009 bn, declined 26.4% YoY. Revenue reached Rp7,909 bn (-11.6% YoY) whilst gross and operating margin dropped to 46.1% (from 54.1%) and 29.1% (from 39.6%), respectively.
• Coal production reached 12.5 mn ton (+7% YoY), inline our expectation, whilst railway transport up by 3% to 10.8 mn ton. Sales volume grew by 4% to 12.95 mn ton.

Comments:


• Overall, FY10 results were inline our expectation. Revenue and net earnings accounting for 92% and 102% of our numbers. Lower revenue was mainly due to lower selling price. Domestic ASP reached Rp612,366/ton (-18% YoY), below our expectation, due to lower price contract to PLN. Meanwhile export selling price reached US$67.5/ton (+4.5% YoY), above our expectation of US$65/ton.
• Management expect sales volume to grow by 23% YoY to 16.8 mn ton in FY11, driven by higher railway transport, contribution from IPC mine (0.9 mn ton) and higher coal trading volume (1.2 mn ton). Railway transport is expected to reach 13.6 mn ton (+26% YoY), supported by additional 6 new locomotive that expect to start commercial in mid 2011.
• PTBA has reached FY11 domestic price settlement with PT Indonesia Power (PLTU Suralaya) at Rp815,000/ton, about +19% YoY. Together with other domestic contracts (PLTU Bukit Asam
and PLTU Tarahan), average domestic ASP will increase by 26.1% YoY to Rp772,413/ton in FY11, or 3.7% higher than our expectation.

Action & Recommendation:

• PTBA has a solid balance sheet with net cash position of Rp5,041 bn. The company has ample coal reserves of 1.9bn but facing bottleneck in term of transportation capacity. We view that dual railway project from BATR and Adani will benefit PTBA in realizing its long term growth.
• The stock is currently trades at 12.2 PER’11 with lowest EV/reserve of US$2.4/ton. We maintain our BUY recommendation on the back of positive domestic price settlement & growth from Railway expansion. price target Rp27,500/share, reflects 16.3x PER’11. BUY

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