Bukit Asam ($PTBA) – Assesing PLN’s Request On The Coal Price Formula
PLN is requesting for the coal selling price to domestic coal-fired power plants to be at costs plus a 15-25% margin formula amidst the recent strong coal prices. We view such a probability as small, as the Indonesian Government has allocated a higher budget for electricity subsidies in the 2018 proposed state budget. We maintain our assumptions that coal selling prices to domestic power plants would still be linked to international coal prices. Maintain BUY with an unchanged IDR17,400 TP (43% upside).