Dec 1, 2010

BUMI 9M result below consensus

Indonesia's largest thermal coal exporter PT Bumi Resources Tbk (BUMI) posted a 37.02% drop in net income to US$195.61 million for the first 9 months ended September 2010 from US$310.59 million a year earlier as higher interest expenses and finance charges.
In a morning note published by Mandiri Sekuritas today, Bumi’s 9M 2010 result was below consensus. On other aspect, BUMI 9M 2010 net income of US$195.61 million or 58.2% from FY10F net income according to Bloomberg consensus. 
Coal sales also fell short of expectation with 9M 2010 volume sales of 44.9 million tons or 70.1% from FY10 low end range volume sales according to company guidance. 
ASP achievement however was higher than low end range of company guidance, with 9M 2010 ASP of US$69.7/ton vs FY10 company guidance of US$67/ton FOB. "We did not have the full results yet, however, we expect below operating expenses namely interest expenses were the main reason for underperformance," said the note.
"We are having a buy recommendation as we are seeing improvements in the realization of deleveraging. Bukit Mutiara has repaid US$200 million out of US$300 million loan borrowed from BUMI. Local newspaper reported that Vallar is going to buy BUMI’s US$547 million MCB in BRM. The arrival of Vallar, is also expected to help the minority. 
 
Disclosure: No position at the stock mentioned above.

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