Sunteți pe pagina 1din 6

Equity Research

Company Update

Friday,01 March 2019

BUY Indo Tambangraya (ITMG IJ)


Maintain Solid dividend play
Last price (IDR) 21,375 We continue to like Indo Tambangraya Megah (ITMG) given: a) 6.8% yoy
Target Price (IDR) 30,000 higher coal production of 23.6mn tons expected in 2019 with 12.8% yoy
higher expected sales volume to cushion against a further decline in earnings
Upside/Downside +40.4%
given the expectation of consolidation in coal prices, b) the company’s efforts
Previous Target Price (IDR) 30,000 to increase its coal reserves both organically and through acquisitions to
improve its mining life and c) the expectation of generous dividend payments.
Stock Statistics
Maintain BUY with a target price of IDR30,000 (based on DCF valuation with
Sector Coal Mining WACC of 13.7%).
Bloomberg Ticker ITMG IJ
Higher coal production expected in 2019... Subject to government approval,
No of Shrs (mn) 1,130
ITMG expects higher coal production of 23.6mn tons in 2019 (+6.8% yoy) with
Mkt. Cap (IDRbn/USDmn) 24,152/1,717 the growth coming from the Bharinto and Jorong mining areas, while the
Avg. daily T/O (IDRbn/USDmn) 42.8/3.0 production at its biggest area, Indominco, is expected to decline. Supported by
inventory at end-2018 and brisker trading activities, the company expects coal
Major shareholders (%) sales volume of 26.5mn tons (+12.8% yoy). About 61% of the coal sales volume
Banpu Minerals 65.1 target for 2019 has been contracted, while the remaining 39% is still
Estimated Free Float 31.9 uncontracted.
…to cushion earnings amid expectations of coal price consolidation. We
expect 12.8% yoy higher coal sales volume in 2019 to cushion against a further
EPS Consensus (USDcents)
decline in the earnings amid expectations of consolidation in coal prices to
2019F 2020F 2021F pressure ASP and higher costs as the management expects a higher stripping
Danareksa 21.0 20.6 20.3 ratio compared to the previous year of 11.1x in order to optimize coal reserves.
Consensus 23.1 23.5 21.4 Additional reserves from acquisitions and drilling activities. In 2018, ITMG
Danareksa/Cons (9.2) (12.2) (5.4) increased its coal reserves to 354mn tons from 254mn tons as of end-2017 after
calculating coal production of 22mn tons during 2018. About 74% of the coal
ITMG relative to JCI Index reserves are high calorific value with CV > 5,500 kcal/kg. Higher reserves came
from: a) the acquisition of Nusa Perdana Resources (NPR) in 2Q18. NPR has
77mn tons of coal reserves with CV of 5,500 kcal/kg. And b) further exploration
through additional drilling and mine plan improvements, which increased
reserves by 45mn tons. As such, the mining life of ITMG rose to around 15 years.
We believe that the company will further increase its reserves going forward.
Maintain BUY. Following the release of the 2018 results, we fine tune our
financial models with 8.0 – 9.3% lower forecast net profits for 2019 – 2020.
However, with the company managing to improve its reserves, we maintain our
target price of IDR30,000 (based on DCF valuation with WACC of 13.7%). While
ITMG budgeted higher capex of USD121.9mn for 2019 (2018: USD57.9mn), we
expect generous dividends with a 14.5% dividend yield in 2019.
Source : Bloomberg Key Financials
Year to 31 Dec 2017A 2018A 2019F 2020F 2021F
Revenue (USDmn) 1,690 2,008 2,002 1,996 1,953
EBITDA (USDmn) 448 493 373 373 372
EBITDA Growth (%) 64.3 10.3 (24.5) 0.1 (0.3)
Net profit (USDmn) 253 262 237 233 229
EPS (USDcents) 22.4 23.2 21.0 20.6 20.3
EPS growth (%) 93.3 3.7 (9.5) (1.7) (1.8)
BVPS (USDcents) 84.8 86.1 85.0 84.8 84.6
DPS (USDcents) 17.6 24.6 22.1 20.8 20.4
x Stefanus Darmagiri PER (x) 6.8 6.6 7.2 7.4 7.5
PBV (x) 1.8 1.8 1.8 1.8 1.8
(62-21) 29 555 831
Dividend yield (%) 11.6 16.2 14.5 13.7 13.5
stefanus.darmagiri@danareksa.com EV/EBITDA (x) 3.0 2.7 3.7 3.6 3.6
Source : ITMG, Danareksa Estimates

www.danareksa.com See important disclosure at the back of this report 1


Exhibit 1. Revenues and Growth Exhibit 2. Net Profits and Growth

Source: Company, Danareksa Sekuritas estimates Source: Company, Danareksa Sekuritas estimates

Exhibit 3. Margins Exhibit 4. Gearing Level

Source: Company, Danareksa Sekuritas estimates Source: Company, Danareksa Sekuritas estimates

Exhibit 5. Quarterly coal production and stripping ratio Exhibit 6. Sustained margin amid lower ASP
mn tons Production (LHS) Stripping Ratio (RHS) x USD/ton
100 EBITDA Margin (RHS) ASP (LHS) 40%
7 13
Total cost per tonne (LHS)
6 12 80
30%
5 11
60
4 10
20%
3 9 40
2 8 10%
20
1 7

0 6 0 0%
1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19F 1Q16 3Q16 1Q17 3Q17 1Q18 3Q18

Source: Company Source: Company

www.danareksa.com See important disclosure at the back of this report 2


Exhibit 7. Higher coal reserves through acquisitions and organically
mn tons
400
-22
354
350
+77
+45
300
254
250

200

150

100

50

0
END 2017 Exploration and Acquisition NPR 2018 depletion END 2018
mine plan mine in 2Q18
improvement 2018
Source: Company

Exhibit 8. Trading undemanding at slightly above -1SD


(x )
30

25
2sd
20
1sd
15
mean
10
-1sd
5
-2sd
-
Jan 10 Jan 11 Jan 12 Jan 13 Jan 14 Jan 15 Jan 16 Jan 17 Jan 18 Jan 19

Source: Bloomberg

Exhibit 9. Change in our forecasts


New Previous Chg in forecast (%)
2019F 2020F 2019F 2020F 2019F 2020F
Coal sales volume, mn tonnes 26.5 27.5 26.0 27.0 1.9 1.9
Coal production volume, mn tonnes 23.5 24.5 23.5 24.5 0.0 (0.0)
Coal Price, USD/tonne 90 85 90 85 0.0 0.0
Blended Coal ASP, USD/tonne 72 69 73 70 (2.5) (1.8)

Revenue, USD mn 2,002 1,996 1,910 1,893 4.8 5.5


EBITDA, USD mn 373 373 423 401 (11.8) (7.1)
Net Profit, USD mn 237 233 261 253 (9.3) (8.0)
Source: Danareksa Sekuritas estimates

www.danareksa.com See important disclosure at the back of this report 3


Exhibit 10. Income Statement
Year to 31 Dec (USDmn) 2017A 2018A 2019F 2020F 2021F
Revenue 1,690 2,008 2,002 1,996 1,953
COGS (1,184) (1,424) (1,529) (1,523) (1,484)
Gross profit 505 584 473 473 469
EBITDA 448 493 373 373 372
Oper. profit 388 432 313 308 302
Interest income 3 5 3 3 3
Interest expense (1) (1) 0 0 0
Forex Gain/(Loss) 0 (10) 0 0 0
Income From Assoc. Co’s 0 0 0 0 0
Other Income (Expenses) (28) (59) 0 0 0
Pre-tax profit 362 367 316 311 305
Income tax (109) (109) (79) (78) (76)
Minority interest 0 3 0 0 0
Net profit 253 262 237 233 229
Core Net Profit 253 311 237 233 229

Exhibit 11. Balance Sheet


Year to 31 Dec (USDmn) 2017A 2018A 2019F 2020F 2021F
Cash & cash equivalent 374 368 338 359 386
Receivables 195 236 187 175 161
Inventory 109 108 117 108 98
Other Curr. Asset 119 55 55 55 55
Fixed assets - Net 223 227 269 286 298
Other non-curr.asset 339 449 437 425 414
Total asset 1,359 1,443 1,404 1,409 1,411

ST Debt 0 0 0 0 0
Payables 161 209 183 190 194
Other Curr. Liabilities 167 181 181 181 181
Long Term Debt 0 0 0 0 0
Other LT. Liabilities 73 83 83 83 83
Total Liabilities 401 473 446 454 458
Shareholder'sFunds 958 973 960 958 956
Minority interests 0 (3) (3) (3) (3)
Total Equity & Liabilities 1,359 1,443 1,404 1,409 1,411

www.danareksa.com See important disclosure at the back of this report 4


Exhibit 12. Cash Flow
Year to 31 Dec (USDmn) 2017A 2018A 2019F 2020F 2021F
Net income 253 262 237 233 229
Depreciation and Amort. 59 61 60 65 70
Change in Working Capital (125) 85 13 28 29
OtherOper. Cash Flow 95 (90) (3) (3) (3)
Operating Cash Flow 282 319 306 323 324

Capex (50) (58) (90) (70) (70)


Others Inv. Cash Flow 15 16 3 3 3
Investing Cash Flow (34) (42) (87) (67) (67)

Net change in debt 0 0 0 0 0


New Capital 0 0 0 0 0
Dividend payment (199) (278) (249) (235) (231)
Other Fin. Cash Flow (2) (5) 0 0 0
Financing Cash Flow (201) (283) (249) (235) (231)

Net Change in Cash 46 (6) (30) 21 26


Cash - begin of the year 328 374 368 338 359
Cash - end of the year 374 368 338 359 386

Exhibit 13. Key Ratios


Year to 31 Dec 2017A 2018A 2019F 2020F 2021F
Growth (%)
Sales 23.5 18.8 (0.3) (0.3) (2.2)
EBITDA 64.3 10.3 (24.5) 0.1 (0.3)
Operating profit 86.1 11.3 (27.6) (1.6) (1.9)
Net profit 93.3 3.7 (9.5) (1.7) (1.8)
Profitability (%)
Gross margin 29.9 29.1 23.6 23.7 24.0
EBITDA margin 26.5 24.6 18.6 18.7 19.0
Operating margin 23.0 21.5 15.6 15.4 15.5
Net margin 15.0 13.0 11.8 11.7 11.7
ROAA 19.7 18.7 16.7 16.6 16.2
ROAE 27.1 27.1 24.5 24.3 23.9
Leverage
Net Gearing (x) (0.4) (0.4) (0.4) (0.4) (0.4)
Interest Coverage (x) 489.4 334.9 0.0 0.0 0.0

Source : ITMG, Danareksa Estimates

www.danareksa.com See important disclosure at the back of this report 5


www.danareksa.com See important disclosure at the back of this report 6