Company Report | Nov 19, 2018
Delta Dunia Makmur Tbk
(DOID)
Volume Record and Attractive Valuation
Delta Dunia Makmur Tbk | Summary (USD mn)
2017 2018E 2019E 2020E
Sales 765 865 947 995
Sales growth 25.1% 13.2% 9.4% 5.1%
EBITDA 280 299 372 390
Net Profit 47 86 105 110
EPS (IDR) 74 152 188 198
EPS growth 26.0% 83.4% 22.0% 5.1%
BVPS (IDR) 281 475 668 874
EBITDA margin 36.6% 34.5% 39.3% 39.2%
NPM 6.1% 9.9% 11.0% 11.1%
Dividend yield 0.0% 0.0% 0.0% 0.0%
Source: Company Data, Bloomberg, NHKS Research
YTD 1M 3M 12M
TP to Consensus Price -31.4% vs. Last Price +36.0%
Shares data
Last Price (IDR) 750
Price date as of Nov 15, 2018 52 wk range (Hi/Lo) 1,250 / 610
estimate and consensus. Its EBITDA margin , OPM, and NPM was at 41.3% (vs. 33.7% in 2Q18), 16.2% (vs. 15.6% in 2Q18), and 12.5% (vs. 3.9% in 2Q18), respectively. The reduction in production costs and the increment in mining
workers’ productivities are keys to the rosier profitability.
3Q18 Operational: Surprises from Overburden Removal
We overview that the 3Q18 excellent performance was driven by 1) Removal
overburden volume hitting the highest ever for 3 consecutive months, 35.3
million bcm, 38.6 million bcm, and 40.8 million bcm (from July to September); 2) the increment of +30% in assets utilization and capacities since the early of 2018 as the potent driver for the increment in production; 3) Favorable weather in mining locations.
Recovery in Debt Composition and New Contract
In 3Q18, DOID posted the debt to equity ratio and loan to EBITDA of 2.5x and 6.9x, respectively (vs. 3.2x and 9.0x in 2Q18). Besides, it secured 3 new long
-term contracts from coal producers. The total new contracts reach USD2 billion.
Attractive Valuation, Buy Recommendation
Source: Company Data, NHKS Research
Coal price and good weather become positive factors
Source: Company Data, NHKS Research
DOID to have more cleaner of balance sheet
9M18: Revenue breakdown by business segment
Source: Company Data, NHKS Research Profitability margins rose in 3Q18
Source: Company Data, NHKS Research
Performance Highlights
Profitability ratios rose in 3Q18
Source: Company Data, NHKS Research
Revenue breakdown by the name of client in 9M18
Source: Company Data, NHKS Research
Highest-ever mothly overburden removal (million bcm) for 3 consecutive month in 3Q18
Operational Highlights
3Q18: Coal production (million tonnes) relatively flat from early 2017
Source: Company Data, NHKS Research
3Q18 review (USD mn) EBIT Margin 19.6% 21.5% 14.5% 15.1% 25.1% 24.0% 5.6% 10.1% 1.2% 23.8%
EBITDA 65 75 57 63 98 87 49.1% 55.0% 12.1% 81
EBIT Margin 33.1% 36.2% 31.3% 31.1% 38.6% 36.0% 5.5% 7.5% 2.6% 35.6%
Gross Margin -Revised 26.4% 28.6% 29.3%
-Previous 26.4% 28.9% 29.3%
EBIT -Revised 175 214 231
-Previous 168 188 195
-Change 4.0% 13.9% 18.7%
EBIT Margin -Revised 20.2% 22.6% 23.3%
-Previous 20.4% 20.4% 20.9%
EBITDA -Revised 299 372 390
-Previous 278 389 412
-Change 7.4% -4.3% -5.4%
EBITDA Margin -Revised 34.5% 39.3% 39.2%
-Previous 33.7% 42.2% 44.3%
Net Profit -Revised 86 105 110
-Previous 78 92 97
-Change 9.9% 13.7% 13.4%
Net Margin -Revised 9.9% 11.0% 11.1%
-Previous 9.5% 10.0% 10.4%
Asia Coal Mining Contracting Companies
PT Delta Makmur Tbk (“Limited Liability Company”) or generally called as Delta Dunia is a public company incorporated based on the Law of the Republic of Indonesia and domiciled in Jakarta. Its stocks are listed on IDX dated June 15th, 2018 with the code: DOID.
As a parent entity, DOID has one actively operated subsidiary, PT Bukit Makmur Mandiri Utama (“BUMA”): one of the biggest coal mining contractor in Indonesia. Meanwhile, its two other subsidiaries— PT Banyubiru Sakti (“BBS”) and PT Pulau Mutiara Persada (“PMP”)—are entities not actively operating and previously having coal mining exploration concession.
As a publicly listed company, 38% of DOIS’s stocks are currently held by Northstar Tambang Persada Ltd— an investors’ consortium consisting of a number affiliated investments with TPG Capital, Government of Singapore Investment Corporation, China Investment Corporation, and Northstar Equity Partners.
DOID’s Competitiveness in Asia Market
Indonesia’s heavy machinery industry outstrips its peers in ASEAN. Indonesia’s coal production capacities, the biggest among its peers are the catalyst for the industry.
DOID as the second-biggest mining industry after the United Tractor has smaller market cap. and total asset than are its peers in
Asia. It means DOID to occupy more rooms to grow. Its profitability is the highest as it posts the return on equity (ROE) of 33.1% and the high net profit growth of 50.2%. Besides, its stock valuation is attractive to collect; now its stocks are traded at an EV/ EBITDA ratio of 6.8x and P/BV ratio of 1.9x.
Multiple Valuation
Forward EV/EBITDA band | Last 2 years
Source: NHKS research
Dynamic Forward EV/EBITDA band | Last 2 years
Source: NHKS research
Rating and Target Price Update
Target Price RevisionDate Rating Target Price Last Price Consensus vs Last Price vs Consensus
11/19/2018 Buy 1,020 (Dec 2019) 750 1,487 +36.0% -31.4%
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 price2. Rating system based on a stock’s absolute return from the date of publication Buy : Greater than +15%
