by Credit Suisse Securities
ADRO is scheduled to complete the financial closing for 2x1,000 MW power plant project in Pemalang, Central Java on August 31, 2011. Pemalang power plant is valued at US$3-3.5 bn (80/20 debt/equity). JBIC will fund the debt portion, and ADRO’s stake in equity consortium is 34%. Project construction and completion is scheduled in early 2012 and end 2014. ADRO is also bidding for 2x100 MW power plant project in South Kalimantan , worth US$350 mn, and the announcement is expected at the end of July 2011. ADRO is partnering with Korea East West Power Co. Ltd. For this project.
Sales commentary: We estimate Pemalang project to burn 7-10 mn tons of coal per annum, which is 15-21% of ADRO’s 2011 production target of 48 mn tons. ADRO is the most expensive coal stock in our coverage universe, currently trading at 17.7x 2011 PE with 87% 2011 EPS growth. We prefer Indika Energy (INDY, O, PT Rp5,400) and Borneo Lumbung (BORN, O, PT Rp2,000).