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ITMG

Contact our analyst Revita
Targeting 6% upside. Hold
2nd September 2022
Price Rp 40200
Target price Rp 42570

Production Target 17 mn tons
ITMG’s 1H22 coal production was down -11% YoY to 7.7mn tons from 8.7 mn tons in 1H21 due to bad weather and heavy rainfall, affecting all mine sites. Coal sales volume also declined -10% YoY to 8.1 mn tons in 1H22. The average selling price (ASP) in 2Q22 increased to USD 202/ton from USD 150/ton in 1Q22, continuing the increasing price trend since 2Q21. With a higher ASP, ITMG revenue in 1H22 increased 110% YoY. Royalty payments also increased  with prices to USD 28/ton in 2Q22 or 211% YoY growth. Adjusting our targets after the 1H22 result, we estimate ITMG coal production volume for this year will be 17mn tons. Going forward we believe demand for coal will remain strong,  and we estimate production volume will increase in 2023.




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Maintaining high margin
Net profit in 1H22 was USD 461 mn almost reaching the full year 2021FY level of USD 476 mn or an increase of 292% YoY. The increase in bottom line profit came from the significant increase in coal prices along with an efficient and prudent cost management strategy. Despite supply disruptions and fuel price increases, production costs in 1H22 were still manageable at USD. 50.3/ton compared to USD. 41.0/ton in 1H21. Going forward, we expect cost control will help ITMG maintain production costs at this level.  We estimate ITMG’s bottom line margin in 2023F will continue to be high at 29% compared to 23% in 2021FY.

Solid cash flow
ITMG’s cash position continued to increase in 1H22 to USD.808 mn compared to USD. 390 mn in 1H21. This is driven by the net cash generated from operating activities which in 1H22 increased by 2.63x YoY. With cost efficiency and prudent management, we believe this solid performance in terms of cash flows will continue into the future.

Valuation: 6% upside potential
We have a TP for ITMG  of IDR 42,570, which would mean the shares valued at 4.87x PER with  6% potential upside only. We recommend HOLD.
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Previously
​ITMG Apr2022
​ITMG Dec2021
​ITMG Jan2021
​ITMG Aug2020
​ITMG Jun2020
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