PTBA
Contact our analyst Revita
Significant upside, BUY
7th December 2022
Price Rp3700
Target price Rp6560
7th December 2022
Price Rp3700
Target price Rp6560
Maintaining Double Digit production Growth
As of 9M22, PTBA’s coal production volume has reached 27.7 mn tons or 21% growth YoY, while sales volume has increased by 12% YoY to 23.5 mn tons. Production volume in 3Q22 was 11.8 mn tons, the highest quarterly achievement and nearly 2x the 1Q22. PTBA’s strategy of mining digitization has helped to anticipate operational constraints more quickly, add production equipment units, and increase effective working hours, successfully optimizing production volume. The stripping ratio (SR) during 9M22 increased to 5.5x compared to 4.5x in 9M21. The opening of new areas in Banko continued in 3Q22 to help offset the higher stripping ratio (SR). We believe, PTBA is on track to achieve their 2022 production and sales volume targets of 36.41 mn tons and 37.10 mn tons. We maintain our belief that more working hours combined with better weather in recent months, will improve production and sales volumes so that the company can achieve these targets. We maintain our coal production CAGR growth forecast of +11% by 2023 compared to our 2021FY.
9M22 profit up 110%
PTBA recorded a significantly higher net profit in 9M22, up by 110% YoY to IDR 10 trillion compared to IDR 4.77 trillion in 9M21. Growth was supported by an increase in revenue of 60% YoY to IDR 19.4 trillion. A slight 3Q22 decline in net profit, by -1% QoQ, was not surprising after the 71% increase in the 2Q22. The strong performance has been helped by the global and domestic economic recovery which boosted demand for coal and resulted in higher coal prices. As of 9M22, the average selling price of coal increased by 44% YoY to IDR 1,305,280 per ton compared to IDR 915,519 per ton in 9M21. We adjust our profit forecast for 2022 to IDR 16 trillion and then in 2023, we expect a decline to IDR 15 trillion with lower price growth YoY. We adjust our cash cost/ton growth expectation in 2022F to 13% YoY after the 9M22 cash cost/ton increased by +32% YoY. The increase in cash cost/ton in 9M22 is primarily due to an increase in mining expenses by 120% YoY in line with the increase in production volume and an increase in fuel costs. In addition royalty expenses will also increase by 104% YoY.
Valuation: significant upside potential
We maintain our target price for PTBA at IDR 6,560, which is a valuation of 4.77x PER. With 77% upside potential, we maintain our recommendation to BUY.
As of 9M22, PTBA’s coal production volume has reached 27.7 mn tons or 21% growth YoY, while sales volume has increased by 12% YoY to 23.5 mn tons. Production volume in 3Q22 was 11.8 mn tons, the highest quarterly achievement and nearly 2x the 1Q22. PTBA’s strategy of mining digitization has helped to anticipate operational constraints more quickly, add production equipment units, and increase effective working hours, successfully optimizing production volume. The stripping ratio (SR) during 9M22 increased to 5.5x compared to 4.5x in 9M21. The opening of new areas in Banko continued in 3Q22 to help offset the higher stripping ratio (SR). We believe, PTBA is on track to achieve their 2022 production and sales volume targets of 36.41 mn tons and 37.10 mn tons. We maintain our belief that more working hours combined with better weather in recent months, will improve production and sales volumes so that the company can achieve these targets. We maintain our coal production CAGR growth forecast of +11% by 2023 compared to our 2021FY.
9M22 profit up 110%
PTBA recorded a significantly higher net profit in 9M22, up by 110% YoY to IDR 10 trillion compared to IDR 4.77 trillion in 9M21. Growth was supported by an increase in revenue of 60% YoY to IDR 19.4 trillion. A slight 3Q22 decline in net profit, by -1% QoQ, was not surprising after the 71% increase in the 2Q22. The strong performance has been helped by the global and domestic economic recovery which boosted demand for coal and resulted in higher coal prices. As of 9M22, the average selling price of coal increased by 44% YoY to IDR 1,305,280 per ton compared to IDR 915,519 per ton in 9M21. We adjust our profit forecast for 2022 to IDR 16 trillion and then in 2023, we expect a decline to IDR 15 trillion with lower price growth YoY. We adjust our cash cost/ton growth expectation in 2022F to 13% YoY after the 9M22 cash cost/ton increased by +32% YoY. The increase in cash cost/ton in 9M22 is primarily due to an increase in mining expenses by 120% YoY in line with the increase in production volume and an increase in fuel costs. In addition royalty expenses will also increase by 104% YoY.
Valuation: significant upside potential
We maintain our target price for PTBA at IDR 6,560, which is a valuation of 4.77x PER. With 77% upside potential, we maintain our recommendation to BUY.
Previously
