ADRO
Contact our analyst Revita
63% Upside, BUY
11th August 2023
Current price Rp2390
Target price Rp3900
Impressive 19.2% production growth in 1H23
ADRO had strong production growth of 19.2% YoY in 1Q23, reaching 33.41 Mt from 28.02 Mt in 1Q22. Coal sales also saw an 18.6% YoY increase to 32.62 Mt from 27.50 Mt in 1H22. This performance was attributed to improved heavy equipment availability and heightened demand from domestic and export markets. Building on 1H23's success, we have revised our coal production volume target for 2023 to 62 Mt, with coal sales projected at 61.38 Mt. Despite challenges, ADRO's robust growth trajectory is expected to persist.
ADRO had strong production growth of 19.2% YoY in 1Q23, reaching 33.41 Mt from 28.02 Mt in 1Q22. Coal sales also saw an 18.6% YoY increase to 32.62 Mt from 27.50 Mt in 1H22. This performance was attributed to improved heavy equipment availability and heightened demand from domestic and export markets. Building on 1H23's success, we have revised our coal production volume target for 2023 to 62 Mt, with coal sales projected at 61.38 Mt. Despite challenges, ADRO's robust growth trajectory is expected to persist.
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Progress on ADRO’s non coal segment
ADRO's power plants demonstrated strong performance in 2Q23, with both projects achieving an availability factor exceeding 90%. PT Makmur Sejahtera Wisesa (MSW) achieved 99.99%, while PT Tanjung Power reached 99.26%. Meanwhile, PT Bhimanesa Power Plant (BPI) attained an availability factor of 87.66% during the quarter, with Unit 1 undergoing planned outage from June to August 2023. In the water segment, 2Q23 witnessed the water treatment business maintaining operational and financial performance in line with projections. Moreover, PT Adaro Tirta Sarana made significant strides by establishing a 5-lps WTP in Kalimantan Industrial Park Indonesia (KIPI) to support smelter construction. The WTP commenced operations on June 16th, 2023, while the pre-construction stage for 2x100 lps WTP in the same area is underway, with an expected completion date in 1Q24.
Valuation: 63% upside potential
After reflecting on 1H23 results, our revised ADRO target price is set at IDR 3,900, which a 3X PER ratio, after adjusting the USD/IDR exchange rate. With a substantial upside outlook, we uphold our BUY recommendation.
ADRO's power plants demonstrated strong performance in 2Q23, with both projects achieving an availability factor exceeding 90%. PT Makmur Sejahtera Wisesa (MSW) achieved 99.99%, while PT Tanjung Power reached 99.26%. Meanwhile, PT Bhimanesa Power Plant (BPI) attained an availability factor of 87.66% during the quarter, with Unit 1 undergoing planned outage from June to August 2023. In the water segment, 2Q23 witnessed the water treatment business maintaining operational and financial performance in line with projections. Moreover, PT Adaro Tirta Sarana made significant strides by establishing a 5-lps WTP in Kalimantan Industrial Park Indonesia (KIPI) to support smelter construction. The WTP commenced operations on June 16th, 2023, while the pre-construction stage for 2x100 lps WTP in the same area is underway, with an expected completion date in 1Q24.
Valuation: 63% upside potential
After reflecting on 1H23 results, our revised ADRO target price is set at IDR 3,900, which a 3X PER ratio, after adjusting the USD/IDR exchange rate. With a substantial upside outlook, we uphold our BUY recommendation.
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ADRO
