Monday, May 23, 2011

1Q11 result below estimate - PT. Aneka Tambang Tbk

by Samuel Securities


 ANTM recorded 20% YoY revenue growth in 1Q11 to Rp1.99 trillion. Meanwhile, net income for the period was recorded at Rp346.5 billion which grew by 72% YoY.

 1Q11 result was below our estimates. Revenue for the period accounted for 20% from our estimate; meanwhile net profit for the period represents 20% from our estimate.


 During 1Q11, revenue growth was mainly driven by increased sales volume and higher ASP of the commodities, especially nickel. In mid 1Q11, MV Sinar Kudus which was carrying ANTM’s Ferronickel cargo to Europe was hijacked by Somalian pirate. The ship was later released after US$4.5 million of ransom was paid.

 We hope the company will not be affected by this incident as the cargo was fully insured against the risk of loss and damage and shipment will be delayed. This was the reason why 1Q11 performance was below the market and our estimates. The delayed shipment will be recorded in 2Q11.

 The company’s gold production underperformed with only 588 kg (-13.7% YoY) produced due to lower gold grades at Pongkor followed by weak production at Cibaliung as the company had not started at the planned gold vein. Currently, Cibaliung production only accounts for 7.6% from the initial full year target of 1.7 tons. Gold sales volume also declined compared to 1Q10 as the company reduced trading activity to minimize the risk of price volatility.

 Furthermore, Tayan CGA project has begun construction with estimated construction period of 32 months. Commercial production is expected to commence in early 2014.

 Regarding tsunami disaster in Japan, the company has not reported any decline in sales and the company may opt to export to other buyer if necessary.

Action & Recommendation:

 We revise our net income forecast by -0.7% and 3.7% in FY11 and FY12 after factoring the estimated lower gold production from Cibaliung in FY11 and expected higher ASP and volume in FY12.

 We derive a new target price of Rp2,100 (previously Rp2,325), reflecting 11.3x – 10.4x PER’11F – 12F and current price has implied fair value of the stock. Maintain HOLD


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