ADRO
Contact our analyst Revita
31% Upside, BUY
9th March 2022
Current price Rp3120
Target price Rp4095
58 Mt production target
ADRO’s 2021 coal production reached 52,7 million tons, a decrease of -3% yoy. Sales volume was 51,58 million tons, down -5% on an annual basis. Overburden removal (OBM) reached 218,9 million bank cubic meters (Mbcm) during 2021 or up 4.5% yoy. This is in line with the company target to increase the stripping ratio in 2021. The 2021 Stripping ratio was 4.2x vs 3.8x in 2020. Unfavorable weather throughout 2021 slowed down ADRO’s overburden removal activities. Amidst the current favorable coal market conditions, we estimate 2022 production will be higher at 58million tons while high coal prices will remain during this year as the global economy continues to recover leading to increased coal demand.
ADRO’s 2021 coal production reached 52,7 million tons, a decrease of -3% yoy. Sales volume was 51,58 million tons, down -5% on an annual basis. Overburden removal (OBM) reached 218,9 million bank cubic meters (Mbcm) during 2021 or up 4.5% yoy. This is in line with the company target to increase the stripping ratio in 2021. The 2021 Stripping ratio was 4.2x vs 3.8x in 2020. Unfavorable weather throughout 2021 slowed down ADRO’s overburden removal activities. Amidst the current favorable coal market conditions, we estimate 2022 production will be higher at 58million tons while high coal prices will remain during this year as the global economy continues to recover leading to increased coal demand.
Sign up now to trade; what you want, when you want, where you want.
Improving operating performance
ADRO booked revenue of US$ 3,993 million in 2021, up 58% yoy mainly due to a 70% higher average selling price (ASP) supported by stronger global coal prices. Cost of revenue increased 14% yoy to US$ 2,223 million mainly due to a higher strip ratio and higher mining costs following higher fuel prices and higher royalty payments as a result of the stronger ASP. ADRO booked bottom line profit of US$ 933 million in 2021 up significantly from 2020. Going forward, ADRO will continue to improve operational excellence, focusing on efficiency and cost control. We estimate the Net profit margin during 2022-2023 will average 22%
Debt under control
ADRO in 2021 managed to achieve a cash balance of US$ 1,811 million with total interest bearing debt at the end of 2021 of US$ 1,598 million or a 7% increase yoy. ADRO has a healthy balance sheet, with net cash in 2021 on the back of higher operating cash flows and carefully managed spending.
December 2020.
Valuation: 31% upside potential
We are targeting ADRO to reach IDR. 4095 or trade at 10x PER. With 31% upside, we maintain our BUY recommendation
ADRO booked revenue of US$ 3,993 million in 2021, up 58% yoy mainly due to a 70% higher average selling price (ASP) supported by stronger global coal prices. Cost of revenue increased 14% yoy to US$ 2,223 million mainly due to a higher strip ratio and higher mining costs following higher fuel prices and higher royalty payments as a result of the stronger ASP. ADRO booked bottom line profit of US$ 933 million in 2021 up significantly from 2020. Going forward, ADRO will continue to improve operational excellence, focusing on efficiency and cost control. We estimate the Net profit margin during 2022-2023 will average 22%
Debt under control
ADRO in 2021 managed to achieve a cash balance of US$ 1,811 million with total interest bearing debt at the end of 2021 of US$ 1,598 million or a 7% increase yoy. ADRO has a healthy balance sheet, with net cash in 2021 on the back of higher operating cash flows and carefully managed spending.
December 2020.
Valuation: 31% upside potential
We are targeting ADRO to reach IDR. 4095 or trade at 10x PER. With 31% upside, we maintain our BUY recommendation
Previously
ADRO
