Company Report | Sept 18, 2018
Aneka Tambang Tbk | Summary (IDR bn)
2017 2018E 2019E 2020E
the cumulative basis, 1H18’s revenue reached IDR11.85 trillion (+292.4% y-y).
Meanwhile, 2Q18’s net profit was IDR99 billion vs. 1Q18’s net profit of IDR246 billion (-60% q-q). Meanwhile, its EBT margin was 3.3% (vs. 5.5% in
1Q18) and net profit margin was 1.6% (vs. 4.3% in 1Q18).
2Q18: Bottom Line Constrained by the U.S. Dollar
Its finance costs amounted to IDR190 billion soaring 120% q-q (vs. IDR86
billion in 1Q18). The biggest contributor is the interest expense of long-term debt
and bonds debt interest. Furthermore, the loss of forex gain was IDR173 billion soaring 122% (vs. IDR78 billion in 1Q18). 72% of its total debt was in the U.S. dollar denomination sensitive to the trend of rupiah depreciation.
2018E : Increment in Target of Gold Sales
ANTM revised its target of gold sales from 24 tons at the early of 2018 to 25.3 tons consisting of the domestic sales of 13 tons and the exports sales of 12.3 tons. Until 8M18, its gold sales reached 18.1 tons consisting of the domestic sales of 10.7 tons and the exports sales of 7.4 tons. The 8M18’s sales reached 71.5% of 2018’s sales target of 25.3 tons of gold.
Attractive Valuation, Target Price of IDR1,200
Page 22 1H18: Tumbling Global Demand for Gold
The total global demand for gold in 1H18 tumbled by 6.1% to 1,960 tons: the lowest since 2010. The demand for gold as jewelries remains flat (-0.38% y-y) to 1,031 tons; the demand for
gold as investment decreased by 19.8% y-y to 570 tons, whereas the demand for gold for tech.
components raised 3.1% y-y to 165 tons. Meanwhile, the gold purchase by world bank surged
by 8.4% y-y to 193 tons.
The decrease of 5.9% y-y (338 tons in 2Q18 vs. 363 tons in 2Q17) in demand for gold by India
was the major factor tumbling the demand for gold. Moreover, the demand for gold by China was flat at 510 tons.
Gold Rush by China
We project that in 2H18 China likely gives the biggest contribution to the growth in the global demand for gold. Until 1H18, the demand for gold by China reached 510 tons. In ahead years, the upbeat demand for Gold by China breeds two positive impacts as follows:
First, the impacts of China and the U.S. trade war. Investors’ concerns about the further trade war, yuan depreciation, and soaring inflation likely trigger gold purchase for hedging and diversification into investment portfolios.
We project four positive factors boosting ANTM’s target of gold sales in 2H18 as follows:
1) Further innovation in gold bullion. Varied editions and product package such as hello kitty, Chinese New Year, Idul Fitri, Christmas, batik, as thin as card-type gold editions.
2) Increment in the number of distribution channels. Offline gold sale partnership BJB Sharia Bank, Pos Indonesia, Pegadaian, and online gold sale partnership with bukalapak (bukaemas), tamasia, etc.
3) Marriage season from September to December. The phenomenon of marriage season during the rainy season from September to December send the sales of gold jewelry such as rings, gold bullions as dowries to soar.
4) LBMA Certificate. ANTM is the only ASEAN-based gold producer having London Bullion
Market Association (LBMA) certificate. Having the LBMA certificate, ANTM has a strong bargaining power to compete in the global market because it guarantees that ANTM’s gold has purity content of 99%, is free of money laundering and human rights violation, and involves in any of conflicts.
Investment Risks
Source: Company, NHKS Research
Global Gold Price | 2013 - 2018
Source: Company, NHKS Research
Gold Production vs. Sales Volume | 2012- 2019F
Revenue Breakdown | 2Q18
Revenue & Growth | 2013 - 2019F
Source: Company, NHKS Research
Performance Highlights
Gold Revenue & Gold ASP | 1Q12 - 4Q18F
Source: Company, NHKS Research
Page 44 2Q18 review (IDR bn)
Source: Bloomberg, NHKS research
2Q17 3Q17 4Q17 1Q18 Actual Estimate 2Q18 y 3Q18E
-y q-q surprise
Sales 1,360 3,951 5,692 5,731 6,084 6,015 347.3% 6.2% 1.2% 5,597
Gross Profit 52 735 774 728 875 764 1577.4% 20.2% 14.5% 928
Gross Margin 3.8% 18.6% 13.6% 12.7% 14% 12.7% 10.5% 1.7% 1.7% 16.6%
Asia Pacific Mineral Mining Company
Aneka Tambang (ANTM) is a state-owned miner whose business activities cover exploration, mining, processing, and marketing
varied mineral commodities such as gold, nickel, nickel ore, silver, bauxite, and mineral.
Until the current time, more than 50% of ANTM’s total revenue derives from gold sales, whereas the ferronickel sales contributing around 20%-30% to its overall revenue is the second-biggest sales contributor. In ahead years, it focuses
on maximizing the sale of gold, nickel, and bauxite products.
Because ANTM’s products are mostly exported, it sells its products in the U.S. dollar denomination. It major consumers are internationally leading companies across Europe and Asia.
To expand its marketing network, ANTM has Tokyo-based representative office serving the Asia Pacific market. Its preference is
long-term contracts with fixed sales volume and price scheme referring to global commodity market price as the fundamental of
long-term growth.
ANTM’s Competitiveness in Asia
ANTM is the only ASEAN-based gold producer whose products are certified by LBMA to content with 99% pure gold. It
equips ANTM with a competitive advantage to penetrate the international gold purchase and sale market.
ANTM has a small-scaled market capitalization compared to its Asia-based peers, but it is capable of posting a more substantial
sales than its peers having bigger market capitalization.
In addition, it has an interesting valuation of EV/EBITDA of 8.1x and P/BV of 1.0x, but it has less efficient net margin performance of only 5%. Besides, its return on equity (ROE) of only 5% is small.
However, we estimate that ANTM likely maintains its position as the ASEAN-based leader in gold producer markets along the
increment in production, the innovation in products and gold bullion packages, and the higher gold prices. Accordingly, it remains to have further rooms to grow in the global market.
Page 66 Source: Company, NHKS Research
Hello Kitty Edition of Gold Variant | 2018
Source: Company, NHKS Research
Imlek Edition of Gold Variant | 2018
Tamasia : Online Platform for ANTM’s Gold Purchase
Source: Company, NHKS Research
Batik Truntum Edition of Gold Variant | 2018
Source: Company, NHKS Research
Product Review
London Bullion Market Association (LBMA) Certificate
Source: Company, NHKS Research
Pegadaian : ANTM’s Gold Saving Book
Multiple Valuation
Forward EV/EBITDA band | Last 2 yearsSource: 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
05/02/2018 Buy 985 (Dec 2018) 810 1,065 +21.6% -7.5%
09/18/2018 Buy 1,200 (Dec 2019) 800 1,238 +50.0% -3.0%
Source: Bloomberg, NHKS research
Closing and Target Price
Source: NHKS research
Analyst Coverage Rating
Page 88
Summary of Financials
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