by Samuel Securities
• Secured US$750mn loan. Adaro Indonesia, a principal subsidiary of PT Adaro Energy (ADRO), has secured a 10 year tenor bank loan of US$750 mn. Total commitment loans are US$1 bn, which is the first 10 year corporate loan transaction in Indonesia. Another subsidiary of ADRO, PT Saptaindra Sejati, has completed a US$400 million 7 year loan transaction in February 2011.
• Aggresive expansion ahead. The loan proceed will be used primarily to finance capex and expansion thru potential acquisition. Currently, Debt/EBITDA stood at 1.09x. Assuming additional US$750 mn loan, we expect Debt/EBITDA to rise further to 1.64x, but still below maximum requirement of 3.5x. No details of the interest rate. The Senior Notes issued on 2009 amounting US$800 mn bear a fixed interest rate of 7.625%.
• Chance to win power plant project. Adaro’s consortium, composed of ADRO 34%, J-Power 35%, and Itochu 32%, becomes the only party that technically qualifies to provide the 2x1000MW power plant in Central Java, worth US$3.0-3.5bn. PLN expects to finalize the evaluation and announce the official winner by mid-June. We believe that the winning should boost volume growth opportunities coming from ADRO’s low CV reserves (Wara coal).
• Reiterate BUY. Currently, ADRO is the biggest coal companies with total market cap of Rp76 tr (US$8.5bn). With continuing robust coal price and Adaro’s plan to double production up to 80 mn ton in 2014, we believe Adaro’s outlook remain intact. We retain our BUY recommendation, with price target Rp2,800/share, implies 14.1x PER’12.