by CIMB Securities
We are cutting our FY11-13 earnings estimates for PTBA by 0.7-3.6% and DCF price target to Rp26,000 (WACC 12.4%) from Rp27,600. PTBA has underperformed its coal peers with an 11% share-price retreat YTD (vs. the sector's +1%). We believe delays in additional 2011 railway capacity and a lack of meaningful progress on its new railway have been the main culprits. These also explain our earnings and price-target downgrades. But given its share-price underperformance and the increasing reflection of low expectations in consensus estimates (5% downgrades over the past three months), we believe the bulk of the bad news has been priced in. We continue to like PTBA's long-term growth outlook and defensive cost structure (vs. peers) and reiterate Outperform. Any news flow on the progress of its railway project should be potent catalysts for the stock.