Apr 20, 2011

Resource Alam 1Q profit soars 275%

Indonesia's tenth largest coal miner in term of concession area, PT Resource Alam Indonesia (KKGI), part of Rain Group, recorded a 275.3% jump in net profit last year on the back of better average selling price (ASP) and higher sales volume.
Resource Alam, with concession area of 24,478 hectares located in East Kalimantan, posted Rp81.9 billion net profit or Rp81.9 per share from Rp21.8 billion or Rp21.8 per share in a year earlier.
The ASP rose 12% to US$50.3 per ton from US$44.9 per ton and 110.1%, while sales volume jumped 110.1% to 828,497 tons from 394,315 tons.
Production volume increased 83.8% to 846,983 tons from 460,930 tons. In line with a steep jump of the bottom line, operating profit surged 262.1% to Rp112.6 billion billion from Rp31.1 billion, sending a higher operating margin to 30.3% from 18.6%.
Resource Alam's gross profit soared 144.9% to Rp191.5 billion from Rp78.2 billion, reflecting an increase in gross margin to 51.6% from 46.7%.
Revenue jumped 121.7% to Rp371.4 billion from Rp167.5 billion. Resource Alam's cash position rose 68.2% to Rp210.3 billion compared to Rp132 billion. 
2011 target
The company estimates annual production and sales volume of 3.55 million tons and 3.50 million tons respectively. The 1Q's production and sales volume have reached 23.8% and 23.7% of the annual target respectively.
"We project to reach US$59.8 per ton of the ASP in 2011," said Resource Alam in the newslater.
However, the 1Q ASP was still relatively low at US$50.3 per ton as since January-February prices were tied to 2010's forward contract. All forward contracts were expiring in March 2011, which is evident when looking at the higher ASP of US$56.9 per ton.
Mandiri Sekuritas, in a note today, the brokerage house found an interesting catalyst with regard its production capacity that currently has been exceeded its average monthly production target of 282,000 tons.
"The 1Q11 ASP was relatively low compared to company’s FY11 target of US$59.8/ton since most of the shipments were still based on last year benchmark price. Attractively per March 2011. the ASP jumped significantly to US$56.9/ton, +22.4% month on month," the note said.
Resource Alam has just closed an attractive deal with LG - Korea for 400,000 tons for 1 year contract at US$74/ton. The company currently is in a middle of due dilligence for coal asset acquisition to support its inorganic growth.
Pintarso Adijanto (Tan Hong Pheng), one of Adijanto's son, is in charge as Resource Alam's President Director and Swandono Adijanto (Tan Hong Swan) is one of the company's Commissioner.
Pintarso and Swandono have other siblings, Winoto Adijanto (Tan Hung Hwie), Suparno Adijanto (Tan Hong Kiat), Muriati Adijanto (Tan Phe Phe), Pandjijono Adijanto (Tan Hong Phang), and Mariana Adijanto (Tan Phwe Leng).

Disclosure: No position at the stock mentioned above. 

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