PTRO
Contact our analyst Revita
41% upside. BUY
10th February 2023
Price Rp5450
Target price Rp7700
10th February 2023
Price Rp5450
Target price Rp7700
Double digit growth in contract mining
As of 9M22, contract mining revenue growth was maintained at 6% YoY although coal production decreased -41% YoY to 14.04 mn tons while overburden volume (OB) growth was flat at +1%YoY despite a higher average coal selling price. Revenue from construction and engineering increased +40% YoY as a result of higher operational activities from the Flour-Petrosea underground ore project. PTRO continued to work on several projects for PT Freeport Indonesia, PT Kideco Jaya Agung as well as the development of the Awak Mas Gold mine project for PT Masmindo. As the major contributor to PTRO’s revenue, we estimate PTRO’s contract mining in 2023F will maintain its double digit growth. We forecast 2023-2024F contract mining revenue to grow 14% CAGR compared to 2021A.
Margin increasing
As of 9M22, PTRO total revenue increased +9.31% YoY to USD 329.66 million on the back of higher operating activities in Engineering, Procurement, & Construction (EPS) and Contract mining. PTRO also recorded bottom line net profit of USD 30.78 million, up +114.5% YoY helped by low increases in direct and operating expenses which increased +2% and 6% YoY respectively. We estimate net profit in 2023-2024F will grow 20% CAGR compared to 2021A. We estimate PTRO will improve its net profit margin to 10.47% in 2023F compared to 8.11% in 2021A. PTRO has existing contracts worth around USD 1.6 billion and we expect the value of 2023 new contracts will be higher than 2022. We expect PTRO will keep existing opportunities in mining services while increasing value through new contracts for gold, nickel and bauxite mines. The company is well set to reposition itself as a mine owner in the future.
Valuation: 41% upside
Based on adjustments after the 9M22 results, we upgrade our TP within one year to IDR 7,700 which is a 9,0x PER. With 41% upside, we maintain our recommendation to BUY.
As of 9M22, contract mining revenue growth was maintained at 6% YoY although coal production decreased -41% YoY to 14.04 mn tons while overburden volume (OB) growth was flat at +1%YoY despite a higher average coal selling price. Revenue from construction and engineering increased +40% YoY as a result of higher operational activities from the Flour-Petrosea underground ore project. PTRO continued to work on several projects for PT Freeport Indonesia, PT Kideco Jaya Agung as well as the development of the Awak Mas Gold mine project for PT Masmindo. As the major contributor to PTRO’s revenue, we estimate PTRO’s contract mining in 2023F will maintain its double digit growth. We forecast 2023-2024F contract mining revenue to grow 14% CAGR compared to 2021A.
Margin increasing
As of 9M22, PTRO total revenue increased +9.31% YoY to USD 329.66 million on the back of higher operating activities in Engineering, Procurement, & Construction (EPS) and Contract mining. PTRO also recorded bottom line net profit of USD 30.78 million, up +114.5% YoY helped by low increases in direct and operating expenses which increased +2% and 6% YoY respectively. We estimate net profit in 2023-2024F will grow 20% CAGR compared to 2021A. We estimate PTRO will improve its net profit margin to 10.47% in 2023F compared to 8.11% in 2021A. PTRO has existing contracts worth around USD 1.6 billion and we expect the value of 2023 new contracts will be higher than 2022. We expect PTRO will keep existing opportunities in mining services while increasing value through new contracts for gold, nickel and bauxite mines. The company is well set to reposition itself as a mine owner in the future.
Valuation: 41% upside
Based on adjustments after the 9M22 results, we upgrade our TP within one year to IDR 7,700 which is a 9,0x PER. With 41% upside, we maintain our recommendation to BUY.
Previously
PTRO Apr2022
