by CIMB Securities
In line; maintain Outperform. 1H11 net income of Rp1,614bn forms 42.9% of our full-year forecast, in line as PTBA typically books around 45% of its full-year earnings in the first half. The results are also in line with consensus forecast (46% of FY11). 1H11 revenue amounts to 44.7% of our FY11 forecast (+34.9% yoy), powered by higher blended ASPs (+32.8% yoy to Rp783k/tonne), while coal sales were flat at 6.5m tonnes (+1.5% yoy). Production cash costs rose to Rp304k/tone (+4.5% yoy) because of higher fuel costs, while higher royalties of Rp50k/tone (+61.4% yoy) were to be expected in view of higher coal prices. We maintain our earnings estimates, DCF price target of Rp26,000 (WACC 12.4%) and Outperform rating, expecting stock catalysts from additional railway capacity in 3Q11.
Minimum impact from fuel increases. Despite a higher strip ratio of 3.8x in 2Q11 (3.5x in 1Q10), production cash costs only increased 2.5% qoq, below the increase in average gas oil prices of 9.6% qoq. This confirms our belief that PTBA’s earnings are defensive in the face of high oil prices. While 1H11 production cash costs were slightly ahead of our forecast, the increase had been offset by higher-than-expected blended coal ASPs (4.5% above expectation). PTBA expects its export ASPs to exceed US$100/tonne this year, which could provide upside to our forecasts.
Railway capacity the critical factor. As quarterly railway transportation output was flat at 2.8m tonnes in 2Q11 (+1.1% qoq), the timely addition of trains by PTKA will decide whether PTBA can meet its delivery-by-train target for this year. PTBA is banking on the delivery of six new trains at the beginning of September. Our railway output assumption is conservative at 12.6m tonnes for FY11 (vs. management’s target of 13.0m tonnes).