PT Tambang Batubara Bukit Asam Tbk (PTBA) is aiming to be the coal supplier of two South Sumatra power plants of 2x300MW and 2x150MW. This is expected to be completed in 2011.
Tender process is still ongoing. 1000MW needs around 3 million tons of coal, therefore if realized, Bukit Asam could add another 2.7 million tons of coal sales.
The company is targeting coal production volume of 17 million tons in 2011. In a notes published by Mandiri Sekuritas today, the brokerage estimates FY11 production may reach 15.7 million tons. At Rp20,100, PTBA is trading at PER11F and PER12F of 11.9x, and 10.8x, respectively.
"Since our last report, the share price has falling 12.5%, and despite PLN plea for lower domestic coal price, we think it is unfair to pass on the burden of PLN inability to raise tariff to its supplier. We are currently using US$105 per ton benchmark coal price for our assumptions (currently US$133.45 per ton), therefore our forecast has sufficient cushion for a possible lower than market price for domestic coal supply," the notes said.
Disclosure: No position at the stock mentioned above.
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