PTBA
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26% upside, BUY
21st November 2023
Price Rp2420
Target price Rp3055
21st November 2023
Price Rp2420
Target price Rp3055
Coal production maintains double digit growth
As of 9M23, PTBA's coal production volume reached 31.9 million tons, a YoY growth of 15%, while sales volume increased by 15% YoY to 27 million tons, primarily affected by export growth of 24% YoY. As of 9M23, railway volume reached 23.70 million tons, a +12% YoY increase from 21.1 million tons in 9M22. The stripping ratio (SR) during 9M23 increased to 5.8x compared to 5.5x in 9M22. In 9M23, PTBA's export sales portion reached 42%. Most of their sales contribute to the domestic market, up to 58%, while the remainder goes to Asia, with India being the highest contributor to exports. We estimate 2024F coal production volume will be 44.66 million tons, a +10% increase in CAGR compared to 2022A.
Continuing lower bottom line in 9M23
As of 9M23, PTBA recorded a revenue decrease of -11% to IDR 27.73 trillion due to a lower average selling price (ASP) -38% YoY to IDR 808,000 per ton. In 9M23, PTBA's net profit was lower, down -61% YoY to IDR 3.91 trillion compared to IDR 10 trillion in 9M22. Royalty costs increased significantly by +37% YoY during 9M23. Overall, 9M23 cash costs increased by +9% YoY mainly due to the royalty formula. We estimate that the bottom-line profit for this year will be lower, down -63% YoY from last year or -42% in CAGR compared to 2022A. We forecast that revenue will be impacted by a lower selling price compared to last year, despite production volume increases. We estimate that total revenue growth in CAGR during 2023-2024F will be lower by -7% due to the predicted ASP downtrend and volatility, but then growth will be more stable until the end of 2025 with potentially higher demand.
Valuation: 26% upside potential
Based on the 9M23 results, we revise our target price for PTBA to IDR 3,055, representing a valuation of 7.38x PER. With 26% upside potential, we maintain our recommendation to BUY.
As of 9M23, PTBA's coal production volume reached 31.9 million tons, a YoY growth of 15%, while sales volume increased by 15% YoY to 27 million tons, primarily affected by export growth of 24% YoY. As of 9M23, railway volume reached 23.70 million tons, a +12% YoY increase from 21.1 million tons in 9M22. The stripping ratio (SR) during 9M23 increased to 5.8x compared to 5.5x in 9M22. In 9M23, PTBA's export sales portion reached 42%. Most of their sales contribute to the domestic market, up to 58%, while the remainder goes to Asia, with India being the highest contributor to exports. We estimate 2024F coal production volume will be 44.66 million tons, a +10% increase in CAGR compared to 2022A.
Continuing lower bottom line in 9M23
As of 9M23, PTBA recorded a revenue decrease of -11% to IDR 27.73 trillion due to a lower average selling price (ASP) -38% YoY to IDR 808,000 per ton. In 9M23, PTBA's net profit was lower, down -61% YoY to IDR 3.91 trillion compared to IDR 10 trillion in 9M22. Royalty costs increased significantly by +37% YoY during 9M23. Overall, 9M23 cash costs increased by +9% YoY mainly due to the royalty formula. We estimate that the bottom-line profit for this year will be lower, down -63% YoY from last year or -42% in CAGR compared to 2022A. We forecast that revenue will be impacted by a lower selling price compared to last year, despite production volume increases. We estimate that total revenue growth in CAGR during 2023-2024F will be lower by -7% due to the predicted ASP downtrend and volatility, but then growth will be more stable until the end of 2025 with potentially higher demand.
Valuation: 26% upside potential
Based on the 9M23 results, we revise our target price for PTBA to IDR 3,055, representing a valuation of 7.38x PER. With 26% upside potential, we maintain our recommendation to BUY.
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