PT Tambang Batubara Bukit Asam Tbk, Strong FY11A earnings, Credit Suisse

● PTBA reported strong net profit growth in FY11 of 54% YoY to
Rp3,085 bn. However, this is 5% below our expectation and 8%
below consensus due to higher-than-expected in COGS and G&A
expenses.
● Sales revenue was Rp10.6 tn, up 34% YoY, on higher sales volume
and ASP, just 2% below our expectation. Coal sales volume was
13.5 mn tonnes in FY11, up 4%, in line with expectations. The
average selling price was up 33% to US$89/t in FY11.
● The company was able to grow output at a six-year CAGR of
6.3%, despite railway transportation constraints, suggesting that
the state-owned railway company, is improving capacity. The
target is to increase the existing railway capacity to 22.7 mn tpa
by 2014. The new railway is projected to start operations in 2015.
● We retain OUTPERFORM on PTBA with a target price of Rp25,000,
based on a 40% premium to the average sector P/E of 8.4x, for its
significant reserves number. We believe it will continue its volume
growth by improving the existing railway capacity.


Strong earnings in FY11, but below expectations
PTBA reported FY11 net profit of Rp3,085 bn, a 54% increase YoY
from Rp2,009 bn. Despite the strong increase, it is 5% lower than our
expectation and 8% lower than consensus. Revenue grew by 34%
YoY to Rp10.6 tn in FY11, just 2% below our expectation. Gross profit
surged 45% YoY to Rp5.3 tn, suggesting higher cost of goods sold.
On a quarterly basis, revenue rose 7% QoQ to Rp2.8 tn in 4Q11, but
gross profit rose merely by 1% QoQ to Rp1.3 tn. Operating profit was
down by 10% QoQ to Rp0.8 tn, due to significant increases in G&A
expenses.

Output continues to grow
Total production volume was 12.9 mn tonnes in FY11, up 4% YoY and
sales volume was 13.5 mn tonnes, also up by 4% YoY. Sales volume
was slightly below our expectation. The railway transportation has
increased by 7% YoY to 11.5 mn tonnes, suggesting that PT KAI, the
state-owned railway company, has committed to increase its capacity.
Despite having railway transportation constraints, the company has
been able to increase its sales volume by 6.3% CAGR in six years.
The improvement of the existing railway is to gradually increase
capacity to 22.7 mn tpa by 2014. Consequently, we believe that this
growth level could be continued before the new railway comes on
operation, planned in 2015. The new railway is designed to add
capacity by 25 mn tpa.
The average selling price was US$89/t in FY11, up 33%. But 4Q11
ASP was down 6% QoQ to US$86/t. PTBA sells 70% of its coal output
to PLN, the state-owned power company, and the remaining 30% is
exported.
We have made slightly adjustments to our earnings estimates with the
inclusion of FY11 actual numbers.

Download file : PTBA daily 6 March 2012