Indonesian Mining Firm Aneka Tambang (Antam) Still in Troubled Waters
New funds obtained from a rights issue and the revaluation of its assets will have a positive impact on Aneka Tambang (Antam), a diversified mining company in Indonesia. The miner, majority-owned by the Indonesian government, is engaged in all activities ranging from exploration, exploitation, processing, refining to the marketing of nickel ore, ferronickel, gold, silver, bauxite, coal and precious metals refining services. However, its corporate earnings remained disappointing so far in 2015.
In October 2015 Aneka Tambang (Antam) generated IDR 5.3 trillion (approx. USD $387 million) by offering 14.5 billion new shares for a price of IDR 371 per share. The majority of new shares were absorbed by the Indonesian government. The coal miner will use proceeds from the rights issue to establish a ferronickel smelter in East Halmahera (North Moluccas), designed to produce between 27,000 and 30,000 tons of nickel in ferronickel (TNi).
Regarding asset revaluation, Antam took advantage of a recently unveiled government tax incentive. As part of a stimulus package, the Indonesian government cut the tax rate on a company's fixed asset growth from 10 percent to 3 percent, provided that the company submits a proposal for fixed asset revaluation before the end of 2015. Antam's total assets grew to IDR 24.8 trillion (approx. USD $1.8 billion) in the third quarter of 2015, from IDR 22 trillion (approx. USD $1.6 billion) at the end of 2014. With higher-valued assets and larger capital, Antam has more room to borrow externally, hence having more ammunition to invest. Furthermore, as a result of the revaluation, Antam's debt ratio fell from 60.8 percent in the second quarter of 2015 to 50.3 percent in September. The ratio is expected to ease further due to October's rights issue.
Antam's revenue surged 56 percent (y/y) to 9.04 trillion (approx. USD $660 million) in Q3-2015. However, the company posted a net loss of IDR 1.3 trillion (approx. USD $75 million) in Q3-2015 as costs of sales rose to IDR 8.62 trillion.
On a quarter-to-quarter basis, Antam's finance figures are even more disappointing. Its sales fell 76 percent (q/q) to IDR 1.19 trillion in Q3-2015 from IDR 4.98 trillion in the preceding quarter, while its net loss rose by a staggering 312 percent to IDR 642 billion in Q3-2015 from IDR 156 billion in Q2-2015. This was caused by sharply falling sales volumes and prices of gold and nickel. Furthermore, the company incurred foreign exchange losses due to the weakening rupiah.
Future Projection Antam's Financial Highlights:
| 2013 | 2014 | 2015F | 2016F | 2017F | |
| Net Sales | 11,298.3 | 9,420.6 | 12,055.0 | 9,656.0 | 10,732.0 |
| Net Profit (loss) |
409.9 | (775.3) | (849.0) | (295.0) | 48.0 |
| EBITDA | 1,495.0 | 663.0 | 765.0 | 970.0 | 1,312.0 |
| P/E Ratio (x) | 6.1 | (43) | (3.8) | (10.9) | 67.3 |
| P/BV (x) | 0.3 | 0.3 | 0.2 | 0.2 | 0.2 |
in billion IDR rupiah except stated otherwise
¹ in IDR rupiah
Source: Danareksa Sekuritas
Last month it was announced that Antam and Australia-based Newcrest Mining Limited (one of the largest gold miners) agreed to team up (for two years) in order to identify the potential of gold and other mineral resources across Indonesia, sharing information with regard to the technical, economic, legal and commercial feasibility of projects in order to enable further exploration and development of gold mining in Indonesia.
Shares of Aneka Tambang have declined about 70 percent so far this year.
Stock Quote Aneka Tambang - ANTM:
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