Please consider the rating criteria & important disclaimer
Indo Tambang Raya Megah Tbk |
Summary (USD mn)
2016/12A
2017/12A
2018/12E
2019/12E
USD67.5/ton. We estimate that until the end–2018,
ITMG is likely capable
of maintaining ASP to top USD80/ton
amid the currently high global coal
prices.
Meanwhile, the sales volume slid by 18.5% y
-
y into 4.4 million tons. The
decline in the 1Q18 sales volume was coupled with
the decline in the
production volume attributable to the less favorable weather
. Most of
coal companies experienced declining production volumes. We project that
ITMG’s production volumes and sales are likely buoyant in the following
remains buoyant along with the high mining activities in Indonesia and the
uptrend rally in global crude prices.
Target Prices of IDR32,400
We recommend Buy with the target price of IDR32,400 in December 2018.
The basis for the recommendation is an assumption of forward P/E of 8.2x
(2SD higher than the one
-
year average of 6.3x) as the basis of valuation
A Glance at ITMG
Indotambangraya Megah (ITMG)—the subsidiary of Banpu Inc. Thailand—is one of big–
scaled coal miners in Indonesia as it focuses its mining concession in Kalimantan Island;
it has the average production capacity of 22–29 million tons per year. Its biggest sales
portion is its export to Japan, China, and India, while its domestic sales portion is only at
the average of 10%
-
12% from the total sales.
Producing high
-
calories coal is one of ITMG’ best qualities. Most of its coal products are
exported to Japan because Japan’s cutting–edge technology–based power plants use
only the high
-
calories coal.
Coal Industry in the Asia Pacific
To the present time, Indonesia is the second–biggest coal producer in the Asia Pacific,
whereas China is the first–biggest coal producer in the Asia Pacific. Compared to its
peers in other Asia regions, ITMG has a relatively small total asset and market
capitalization value.
Nevertheless, on the fundamental basis, ITMG’s ROE of 29.2% is higher than its peers’
ROE, expect Semirara Mining and Power, the Philippine–based coal miner. Another to its
higher ROE, ITMG’s P/E is lower than its peers’ P/E. Additionally, its big dividend yield of
11.8% is still lower than the dividend yield of 13.6% posted by China–based coal miner,
Shenhua Energy Co Ltd.
Source: Bloomberg, NHKS research
Asia Pasific Coal Mining Companies
Company
Market Cap
(USD mn)
Total Asset
(USD mn)
Net Profit
Growth
Net Profit
Margin
ROE
P/E
P/BV
Dividend
Yield
ITMG
2,121
1,359
53.8%
15.0%
29.2%
8.2x
2.4x
11.8%
China
China Shenhua Energy Co Ltd
65,792
87,848
46.8%
19.2%
14.6%
9.3x
1.4x
13.6%
Yanzhou Coal Mining Co Ltd
10,031
30,325
89.1%
14.9%
17.2%
10.7x
1.6x
0.8%
Thailand
Banpu Pcl
3,437
8,251
57.9%
8.1%
6.4%
21.1x
1.3x
3.0%
Lanna Resources PCL
265
269
205.8%
6.0%
19.6%
10.0x
1.9x
5.4%
Philippine
Semirara Mining & Power
2,359
1,372
6.0%
32.3%
38.0%
9.7x
3.4x
8.6%
Performance Highlights
Sales Destination |
1Q18
Source: Company, NHKS research
Domestic Sales Portion to Total Sales |
1Q16
-
1Q18
Source: Company, NHKS research
Production Performance by Mine (in mn ton) |
1Q18
Source: Company, NHKS research
Production & Sales Volume (mn ton) |
1Q16
-
1Q18
Source: Company, NHKS research
World Coal Price (USD/Ton) |
18 May 17
-
18 May 18
Source: Company, NHKS research
Mining Cost (USD mn) |
1Q16— 1Q18
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 Revision
Date
Rating
Target Price
Last Price
Consensus
vs Last Price
vs Consensus
12/15/2017
Buy
25,275
20,450
24,927
+23.6%
+1.4%
03/07/2018
Hold
31,125
28,675
33,170
+8.5%
-
6.2%
05/21/2018
Buy
32,400
26,000
33,946
+24.6%
-
4.6%
Source: NHKS research, Bloomberg
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
Buy
: Greater than +15%
Summary of Financials
DISCLAIMER
This report and any electronic access hereto are restricted and intended only for the clients and related entity of PT NH Korindo Sekuritas Indonesia. This report is only for information and recipient use. It is not reproduced, copied, or made available for others. Under no circumstances is it considered as a selling offer or solicitation of securities buying. Any recommendation contained herein may not suitable for all investors. Although the information here is obtained from reliable sources, it accuracy and completeness cannot be guaranteed. PT NH Korindo Sekuritas Indonesia, its affiliated companies, respective employees, and agents disclaim any responsibility and liability for claims, proceedings, action, losses, expenses, damages, or costs filed against or suffered by any person as a result of acting pursuant to the contents hereof. Neither is PT NH Korindo Sekuritas Indonesia, its affiliated companies, employees, nor agents liable for errors, omissions, misstatements, negligence, inaccuracy arising herefrom.
All rights reserved by PT NH Korindo Sekuritas Indonesia
ITMG Summary
In USD mn 2016/12A 2017/12A 2018/12E 2019/12E EBITDA/As s ets 25.9% 36.4% 38.0% 35.6%
