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Sunday, October 16, 2011

Tambang Batubara Bukit Asam (Persero) Tbk.

by JP Morgan

Maintain OW with new Jun-12 SOTP PT of Rp22,500:

Our SOTP model suggests a Rp28,700 fair value, implying 105% upside from the current price. However, we recognize that challenging market conditions make it difficult to achieve theoretical fair value, which implies 15x FY12E P/E.

In previous weak market conditions in 1H06 and 1H07 (not as severe as in FY08), we have seen the multiple re-rate back to the average of 12x within 6- 9 months. A 12x multiple equates to a PT of Rp22,500. Risks: Execution risk, such as project delays, and a decline in coal price.

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