by Mandiri :
Indotambang: Although 9M12 net income is inline (77% of FY), its 9M12 operating profit is below consensus (72% of FY) (ITMG, Rp 40,900, under review)
„ 9M12 operating profit is below consensus (72% of FY) estimate because of lower than expected revenue. Lower than expected revenue because of 1) decrease in 3Q12 ASP (-7.5%qoq, -11.1%yoy). 2) decrease in 3Q12 sales volume (-1.5%qoq, -3.8%yoy).
„ 9M12 net income is boosted by gain on derivative transactions. ITMG booked gain on derivative transaction of US$57.5mn in 9M12 (vs gain of US$21.9mn in 6M12 vs loss of US$2.8mn in 9M11). Significant gain on derivative transaction in 3Q12 compensated the weak operational financial performance in 3Q12.
„ Although 3Q12 ASP decrease significant (-7.5%qoq), profit margin relatively stable due to temporary lower Stripping ratio. ITMG successfully decrease its Stripping Ratio from 13.1x in 2Q12 to 12.0x in 3Q12. The temporary decrease in Strip Ratio is inline with ITMG’s guidance in 2Q12 as ITMG is in saving cost mode. However, if ITMG maintain the lower Strip Ratio for long time, this would put the amount of coal reserve at downside risk as it changes the mine design.