Wednesday, May 4, 2011

PT. Tambang Batubara Bukit Asam Tbk

by Kresna Securities
We maintain BUY with TP of Rp37,400. 1Q11 result indicated strong jump on revenue and net income by 29.9% — 103.8%YoY on the back of higher than expected ASP and lower operational cost. 1Q11 ASP was 3.9% higher than our expectation, while the operational cost inline. Production volume in 1Q11 increased by 18.8%YoY to 3.0mt, reaching 18.8% of our FY11E. We expect production to grow at higher pace in 2H with the additional 6 wagons from PTKAI. Currently, PTBA is trading FY11E P/E of 15.3x and EV/adjusted reserve of Rp47,390/ton.

· Revenue increased by 29.9%YoY to Rp2.3tr. Strong upside on revenue was mainly attributable to higher ASP despite the 3.3% YoY sales volume declined to 3.1mt due to lower trading activity. On the other hand, production volume increased by 15.4%YoY to 3.0mt. Domestic ASP increased by 29.3%YoY to Rp742K, while export ASP increased by 53.9%YoY to US$87.7/ton.

· Net income grew 103.8%YoY to Rp760.3bn, expanding margin. Net margin increased by 11.9% from 1Q10 to 32.8% in 1Q11 due to higher ASP and lower operational cost. Lower operational cost was attributable to rupiah appreciation against USD, lower strip ratio, and lower trading activity. Unlike its peers which mostly experienced rising cost, PTBA is one of coal player registered lower cost.

· Expect 23% higher volume in 2011. This year, the company expects to sell 16.8mt coal including IPC and its trading activity. Meanwhile, transported volume through railway is estimated to increase by 25.9%YoY to 13.6mt all through this year.

· Update on Banjarsari Mine Mouth. Latest PTBA’s news release stated that the company is currently finalizing power purchase agreement (PPA) with PLN as buyer. On Feb 23rd, ESDM has approved the PPA draft. EPC activity is targeted to start in 2Q11 for approximately 33 months development period.

· 1Q11 actual vs our FY11E. Comparing the actual 1Q11 results, the top line accounted for 19.8% while bottom line 22.7% of our FY11E. 1Q11 ASP was 3.9% higher than our projection. Sales and production volume reached 19.0% and 18.8% from our FY11 target while total operational cost/ton reaching Rp457K as compared to our forecast of Rp467K.

· Maintain our ASP. As we mentioned in our previous report, the selling price deal with PLN was 8.4% higher than our expectation. The 1Q11 also showed that our ASP was 3.7% lower than the actual. Having said that, we maintain our ASP forecast waiting for the 1H11 performance.

· Maintain our production forecast. 1Q11 volume did not necessarily represent FY11 performance. We are confident to maintain our production forecast, despite lower than expected 1Q11 volume. We anticipate stronger production volume in 2H upon the arrival of 6 new wagons from PTKAI in mid year.

· Maintaining our cast cost assumption. The lower production cost in 1Q was inline with our expectation. Total operational cost dropped by 12.6% to Rp456K/ton due to 3.9%YoY rupiah appreciation, 2.2% drop on strip ratio, and lower coal purchasing volume. Our production cost estimation was Rp467K vs actual 1Q result of Rp456K.

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