Nov 12, 2010

Indo Tambang 9M coal sales up 18%

One of Indonesia's coal miner PT Indo Tambangraya Megah Tbk, controlled by Thai Banpu Plc, posted US$1.22 billion revenue for the first 9 months ended September 30 2010, a 16.19% increase from US$1.05 billion a year earlier.
In an investor digest published by Mandiri Sekuritas today, the company's 9M 2010 revenue is below the brokerage consensus estimates due to lower average selling price (ASP).
Indo Tambangraya booked US$298 million operating profit in 9M 2010, a 12.69% drop from US$341 million in 9M 2009. Net profit fell 30.1% from US$266 million in 9M 2009 to US$186 million in 9M 2010.
The company sold 5 million tons coal in the third quarter of this year, but 9M 2010 sales volume was 16.4 million tons or 18% increase year in year.
The company's ASP in the third quarter of 2010 slightly increased to US$78.3/ton compared to the previous quarter of US$78.2 per ton. For the first 9 months of 2010, ASP reached US$73.9 per ton, a 2% decrease year on year.
In 9M 2010, Indo Tambangraya produced 16.2 million tons coal,  equal to 72% of its 2010 target of 22 million tons. Sales target is 23 million tons in 2010.
The company expects a higher ASP as 15% of sales in index linked. Coal price is expected to increase due to supply tightness as a result of prolonged rainy season and increase in coal demand as anticipation of bad winter to come.
"We have a neutral recommendation on ITMG, trades at PER11F of 18.3x with target price of IDR39,200," said Mandiri Sekuritas.

Disclosure: No position at the stock mentioned above.
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