Tambang Batubara Bukit Asam: Only Coal Miner in Indonesia to See Growth?

Expectation of higher the coal sales volume is supported by the completion of the two coal-fired Banjarsari power plants in South Sumatra (2x135 MW). These power plants, which already started to operate commercially in mid-2015, will require about 1.4 million tons of coal per year,. This coal is to supplied by the developer of these plants: Tambang Batubara Bukit Asam (Bukit Asam). Meanwhile, another plant - the Banko Tengah power plant - is currently being planned and should come online in 2021. In recent years, several Indonesian coal miners have expanded into the power sector due to unattractive coal prices. Moreover, in Indonesia there is a shortage of electricity supply (implying strong demand for the end-product of these power stations), while coal miners have easy access to coal. The expansion into the coal-fired power plant sector is therefore a logical corporate move.

Another factor that is estimated to boost Bukit Asam's coal sales this year is the increase in carrying capacity of its coal train to 22.7 million tons per year (from an annual 15.8 million tons last year).

However, despite expectation of rising sales, the Bukit Asam's net profit is estimated to fall 27 percent (y/y) to IDR 1.49 trillion (approx. USD $113 million) in 2016 due to the weaker coal price. Indonesia's benchmark thermal coal price (harga batubara acuan, abbreviated HBA), which is set (on a monthly basis) by the Energy and Mineral Resources Ministry, stood at USD $52.32 per ton in April 2016. The HBA is expected to stabilize around USD $50 per ton this year. Last year the average HBA was USD $60.1 per ton, implying the price has been declining for the past four years. Despite expectation of sliding net profit, Trimegah Securities states that other Indonesian miners are expected to see a larger net profit decline because they have more difficulty to find a market for their coal and have more difficulty to cut operational costs further.

Indonesian Government's Benchmark Thermal Coal Price (HBA):

Month	2012	2013	2014	2015	2016
January	109.29	87.55	81.90	63.84	53.20
February	111.58	88.35	80.44	62.92	50.92
March	112.87	90.09	77.01	67.76	51.62
April	105.61	88.56	74.81	64.48	52.32
May	102.12	85.33	73.60	61.08
June	96.65	84.87	73.64	59.59
July	87.56	81.69	72.45	59.16
August	84.65	76.70	70.29	59.14
September	86.21	76.89	69.69	58.21
October	86.04	76.61	67.26	57.39
November	81.44	78.13	65.70	54.43
December	81.75	80.31	69.23	53.51
Average	95.5	82.9	72.6	60.1

^{in USD/ton
Source: Ministry of Energy and Mineral Resources}

Trimegah Securities set its target price for Bukit Asam shares at IDR 9,600 a piece. So far this year, shares of the coal miner have surged a whopping 64 percent to IDR 7,450 in line with rising crude oil prices.

Future Projection Financial Performance Bukit Asam:

	2014	2015	2016F	2017F	2018F
Revenue	13,078	13,734	15,015	16,411	17,567
EBITDA	2,225	2,693	2,109	2,408	2,662
Net Profit	1,861	2,036	1,496	1,555	1,669
P/E Ratio (x)	8.8	8.1	11	10.6	9.8
PBV (x)	2	1.8	1.6	1.5	1.3

^{in billion IDR rupiah, except stated otherwise
Source: Trimegah Securities (20/04/2016)}

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lugano | 20 April 2016 13:11

Remarkably - moreover in China have recently been approximately 1.000 coal mines closed - coal passé ?

lugano | 21 April 2016 08:35

.. BHP Biliton weighs getting out of Indonesian coal

lugano | 21 April 2016 17:20

Unexpected move yesterday announced by one of the largest mining companies globally. Showing it may be bailing out of a country that used to be one of the world’s go-to minerals destinations: the firm is BHP Billiton — and the place is Indonesia. . (oilprice.com)