Company Report | Nov 26, 2018
(ITMG IJ)
Excellent Performance and Higher
Expectancy
Indo Tambangraya Megah Tbk | Summary (USD mn)
2017 2018E 2019E 2020E
consensus estimated figure of USD521 million. On a cumulative basis, in
9M18, its revenues reached USD1,415 million or 68.4% of our full year 2018F revenue estimate and 69.2% of the consensus estimate version. Meanwhile, its net pofits grew by 115.2% q-q or 37.8% y-y to USD96 million. Additionally, its net
profit margin increased to 15.9% (vs. 10.4% in 2Q18).
3Q18 Operational: Achieved Target
In 3Q18, ITMG posted the total coal production of 6.4 million tons (+23.1% q-q,
or +12.3% y-y), while its ASP surged to USD88.6 (+13.2% q-q, or +19.5% y-y)
thanks to the favorable weather and the rally in coal price of 3Q18. Meanwhile, its stripping ratio was flat at 10.8x (vs. 10.8x in 2Q18, and 12.3x in 3Q17); its
government urged coal producers to produce and export more coal in 4Q18 with a view to narrowing the current account deficit (CAD).
Cheap Valuation, Maintaining BUY Recommendation
Source: Company Data, NHKS Research
Downtrend for coal price (USD/mt) in 4Q18 hit stock price
Source: Bloomberg, NHKS Research
Less rainy days is positive factor for coal production
3Q18: Coal production by mining area
Source: Company Data, NHKS Research
3Q18 coal production (mt) increase of 23,1% q-q
Source: Company Data, NHKS Research
Performance Highlights
3Q18: More efficiency make net profit margin (%) increase
Source: Company Data, NHKS Research
9M18: Sales volume destination by country
3Q18 review (USD mn)
Gross Margin 32.4% 30.2% 29.4% 26.6% 33.5% 29.9% 1.1% 6.9% 3.6% 31.7%
Global Coal Companies
ITMG as the subsidiary of Thailand-based Banpu Inc., is one of the biggest Indonesia-based mining companies, with the mining
concession, situated in South Kalimantan, Central Kalimantan, and East Kalimantan and the average production capacities of 22
-29 million ton per year. Its biggest exports markets are Japan, China, and India, while its domestic sales are only at the average of 10%-12% of the total sales.
One of its strengths is to produce high-calories coal. Most of its coal products are exported to Japan because Japan’s cutting
-edge power plants only use high-calories.
ITMG has 6 main subsidiaries, namely PT Indominco Mandiri, PT Trubaindo Coal Mining, PT Bharinto Ekatama, PT Jorong Barutama Greston, PT Kitadin, PT Tambang Raya Usaha Tama.
ITMG’s Competitiveness in Global Coal Producers
Indonesia is the world’s fifth biggest coal producer. In 2017, it produced 461 million tons of coal and exported 364 million tons of coal. In 2018, President Joko Widodo targets the total national coal production of 535 million tons, while ITMG targets the total coal sales of 24.2 million tons. It posts the ROE of 28.2%, the net profit margin of 14.4%, and the net profit growth of 19.9%. In addition, on a valuation basis, its P/E ratio of 5.5x and P/BV of 1.5x make its stocks attractive to collect.
Multiple Valuation
Forward P/E band | Last 1 year
Source: NHKS research
Dynamic Forward P/E band | Last 1 year
Source: NHKS research
Rating and Target Price Update
Target Price RevisionDate Rating Target Price Last Price Consensus vs Last Price vs Consensus
11/26/2018 Buy 24,225 (Dec 2019) 20,025 32,557 +21.0% -25.6% Source: Bloomberg, NHKS research
Closing and Target Price
Source: NHKS research Analyst Coverage Rating
Source: Bloomberg
NH Korindo Sekuritas Indonesia (NHKS) stock ratings
1. Period: End of year target price
2. Rating system based on a stock’s absolute return from the date of publication
Summary of Financials
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