ADRO
Contact our analyst Revita
Significant Upside, BUY
17th May 2023
Current price Rp2590
Target price Rp5650
29% production growth in 1Q23
In 1Q23, ADRO’s production volume grew 29.7% YoY to 15.69 Mt from 12.1 Mt in 1Q22. Coal sales increased 28.9YoY to 15.72 Mt from 12.2 Mt in 1Q22FY. The record production was due to better availability of heavy equipment, and improved demand from both domestic and export markets. We maintain our target for 2023 coal production volume at 59 Mt and coal sales at 58.41 Mt. Going forward, we believe ADRO will continue to see strong demand from customers despite various challenges.
In 1Q23, ADRO’s production volume grew 29.7% YoY to 15.69 Mt from 12.1 Mt in 1Q22. Coal sales increased 28.9YoY to 15.72 Mt from 12.2 Mt in 1Q22FY. The record production was due to better availability of heavy equipment, and improved demand from both domestic and export markets. We maintain our target for 2023 coal production volume at 59 Mt and coal sales at 58.41 Mt. Going forward, we believe ADRO will continue to see strong demand from customers despite various challenges.
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50% YoY increase of revenue in 1Q23
ADRO booked revenue of USD 1,839 million in 1Q23 which is a 50% increase YoY from USD 1,225 million in 1Q22, mainly due to a 17% YoY higher average selling price (ASP). Revenue from sales of metallurgical coal acounted for 14% of ADRO’s mining revenue in 1Q23. We maintain our forecast Royalty payments to the Government of Indonesia and tax expenses as previously. Based on the terms of the IUPK-KOP, the royalties paid by Adaro Indonesia will increase progressively based on coal selling prices. We believe this year coal selling prices will be lower than 2022F. We maintain our 2023 -2024F bottom line profit growth target at a compound annual rate of 10% from 2021A despite higher volume in 2022A. Going forward we expect ADRO will continue to improve operations by focusing on efficiency and cost control.
Valuation: significant upside potential
Despite growing coal production volume in 1Q23, we believe ASP will decline this year compared to last year, we revise our ADRO target price to IDR 5,650 which translates to a 10x PER with new adjustment to the USD/IDR exchange rate. With significant upside, we maintain our BUY recommendation.
ADRO booked revenue of USD 1,839 million in 1Q23 which is a 50% increase YoY from USD 1,225 million in 1Q22, mainly due to a 17% YoY higher average selling price (ASP). Revenue from sales of metallurgical coal acounted for 14% of ADRO’s mining revenue in 1Q23. We maintain our forecast Royalty payments to the Government of Indonesia and tax expenses as previously. Based on the terms of the IUPK-KOP, the royalties paid by Adaro Indonesia will increase progressively based on coal selling prices. We believe this year coal selling prices will be lower than 2022F. We maintain our 2023 -2024F bottom line profit growth target at a compound annual rate of 10% from 2021A despite higher volume in 2022A. Going forward we expect ADRO will continue to improve operations by focusing on efficiency and cost control.
Valuation: significant upside potential
Despite growing coal production volume in 1Q23, we believe ASP will decline this year compared to last year, we revise our ADRO target price to IDR 5,650 which translates to a 10x PER with new adjustment to the USD/IDR exchange rate. With significant upside, we maintain our BUY recommendation.
Previously
ADRO
