ITMG
Contact our analyst Revita
Significant upside potential
7th September 2023
Price Rp 30,725
Target price Rp 42,000
7th September 2023
Price Rp 30,725
Target price Rp 42,000
In 2Q23, Coal production grew by +13%YoY
During 1H23, ITMG's coal production increased by +6.5% YoY to 8.2 million tons from 7.7 million tons in 1H22. 2Q23 production reached 4.4 million tons, marking a +12.8% YoY increase or +15.8% QoQ, surpassing the target due to increased production at Indominco and Bharinto. The strip ratio in 2Q23 increased to 12.5x from 11.5x in 1Q23. Coal sales volume in 2Q23 also rose by +19% QoQ or +40% YoY to 5.4 million tons from 3.9 million tons in 1Q22. The average selling price (ASP) in 2Q23 decreased to USD 113.5/ton from USD 202.4/ton in 2Q22, continuing the declining price trend since 3Q22. With the lower ASP reflecting normalized global coal prices, ITMG's revenue in 2Q23 decreased by -21.5% YoY or -10.5% QoQ. Royalty payments also decreased following the decrease in global coal prices, with 2Q23 prices at USD 15/ton, a -39% QoQ decrease. Based on 1H23 results, we maintain our projection that ITMG's coal production volume for this year will be 17 million tons. Looking ahead, we still believe that demand for coal will remain strong, and we estimate production volume will increase in 2024.
During 1H23, ITMG's coal production increased by +6.5% YoY to 8.2 million tons from 7.7 million tons in 1H22. 2Q23 production reached 4.4 million tons, marking a +12.8% YoY increase or +15.8% QoQ, surpassing the target due to increased production at Indominco and Bharinto. The strip ratio in 2Q23 increased to 12.5x from 11.5x in 1Q23. Coal sales volume in 2Q23 also rose by +19% QoQ or +40% YoY to 5.4 million tons from 3.9 million tons in 1Q22. The average selling price (ASP) in 2Q23 decreased to USD 113.5/ton from USD 202.4/ton in 2Q22, continuing the declining price trend since 3Q22. With the lower ASP reflecting normalized global coal prices, ITMG's revenue in 2Q23 decreased by -21.5% YoY or -10.5% QoQ. Royalty payments also decreased following the decrease in global coal prices, with 2Q23 prices at USD 15/ton, a -39% QoQ decrease. Based on 1H23 results, we maintain our projection that ITMG's coal production volume for this year will be 17 million tons. Looking ahead, we still believe that demand for coal will remain strong, and we estimate production volume will increase in 2024.
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Bottom line down by -33%
Net profit in 1H23 was USD 307 million, a -33% YoY decrease compared to the level of USD 476 million in 1H22. The decrease in bottom-line profit stemmed from lower revenue due to lower coal prices. Excluding royalty, total costs in 2Q23 decreased to US$ 65/ton from US$ 72/ton in 1Q23, marking a -10% QoQ decrease due to lower fuel prices. We estimate that ITMG's bottom-line margin in 2023F will be lower compared to 2022FY but still higher than in 2021FY.
Valuation: 36% upside potential
Based on 1H23 results, we have a target price (TP) for ITMG of IDR 42,000, which implies the shares are valued at 5x PER with a 37% potential upside. Furthermore, ITMG's IDR 2,660 interim dividend per share is equal to an 8.6% yield from the current price. We recommend a BUY.
Net profit in 1H23 was USD 307 million, a -33% YoY decrease compared to the level of USD 476 million in 1H22. The decrease in bottom-line profit stemmed from lower revenue due to lower coal prices. Excluding royalty, total costs in 2Q23 decreased to US$ 65/ton from US$ 72/ton in 1Q23, marking a -10% QoQ decrease due to lower fuel prices. We estimate that ITMG's bottom-line margin in 2023F will be lower compared to 2022FY but still higher than in 2021FY.
Valuation: 36% upside potential
Based on 1H23 results, we have a target price (TP) for ITMG of IDR 42,000, which implies the shares are valued at 5x PER with a 37% potential upside. Furthermore, ITMG's IDR 2,660 interim dividend per share is equal to an 8.6% yield from the current price. We recommend a BUY.
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