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P H
Apr 11,2017 15:05:35

Despite the recent strong share price outperformance, we believe Delta Dunia’s expected sharp improvement in financial performance has yet to be fully reflected in consensus numbers and its share price. We reinitiate coverage with a BUY call and DCF-derived TP of IDR1,500 (40% upside), which implies 2017F P/E of 10.1X on our projections. Our 2017F EPS is 21.8% higher than consensus. We like the stock given its undemanding valuations (2017F EV/EBITDA of 4x vs United Tractors’ 7.5x), improving ROAE, and strong projected 2017F earnings growth of 142% YoY.

  • 2017F earnings projected to surge 142% YoY but yet to be reflected in consensus. Delta Dunia Makmur ($DOID) is not well covered (consensus numbers reflect only one local broker) – this suggests that the projected sharp improvements in its 2017F operational and financial performance have yet to be reflected in consensus and its share price. We expect a sharp turnaround in Delta Dunia’s operational and financial performance in 2017F, as we project a 142% YoY increase in 2017F earnings on the back of a sizable increase in mining contracting volumes, and improvements in its coal mining contracting fees. Our 2017F EPS is currently 21.8% higher than consensus.
     
  • Spike in 2017F mining contracting volume. Delta Dunia owns 100% o fPT Bukit Makmur Mandiri Utama (Bukit Makmur), the second largest coal mining services contractor in Indonesia in terms of volume. We estimate its 2017F overburden removal volume and coal production to grow by 19.1% and 24.8% respectively. Volume growth in 2017F would mostly come from a ramp-up in coal production at Berau Coal ($BRAU), Sungai Danau Jaya (a subsidiary of Geo Energy Group, and Tadjahan Antang Mineral.
     
  • Stabilising coal price above USD70/tonne favours its mining fees. Most of Bukit Makmur’s mining contracting fees have three tiers, which are reviewed every month and determined based on the rolling average for coal prices over the last three months. Coal mining fees in the first tier (when average coal price <USD60/tonne) is 6% and 12% lower than second tier (when coal price is between USD65-75/tonne) and third tier (when coal price is >USD75/tonne) respectively. Due to weak coal prices, Delta Dunia’s mining fees were in the first tier (the cheapest) during 8M16. Its mining contracting fees moved up to the second tier in Aug 2016 and the third tier (the highest) since Sep 2016. As we project coal prices to sustain above USD70/tonne, we expect Delta Dunia to continue to enjoy higher profit margins from higher mining fees.
     
  • Reinitiating coverage with BUY and TP of IDR1,500. We reinitiate coverage on Delta Dunia with BUY as we think its upcoming sizable improvements in operational and financial performance are still not fully reflected in its share price. Our TP of IDR1,500 is derived using DCF (WACC: 9.8%, TG: 1%), and implies 2017F P/E of 10.1x and EV/EBITDA of 5x – this compares with United Tractors’ ($UNTR) FY17F P/E of 16.7x and EV/EBITDA of 7.5x. Near-term catalyst is a potential sharp upgrade in consensus earnings. Key risks to our call include a slump in coal prices. (Hariyanto Wijaya, CFA, CPA)
     
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P H
Dec 01,2016 23:04:38

United Tractors ($UNTR): Weakening IDR and Coal Price Recovery Play

We think United Tractors should be a good play to monetise the weakening IDR and coal price recovery. We opine that IDR is to weaken further to IDR13,700 in FY17 vs IDR13,290 YTD. Therefore, Pamapersada’s profit margins as the biggest contributor to consolidated earnings should expand. This is on the combination of the weakening IDR and mining contracting fee recovery. We also believe heavy equipment sales would increase. This is due to the sizable rise in customers’2017 capex for such equipment. Reiterate BUY with a higher IDR26,300 TP (from IDR24,700, 20% upside).

¨       Beneficiary of a weakening IDR. We opine that the strengthening USD should cause the IDR to weaken further and average at IDR13,700 in FY17 vs IDR13,290 YTD. The USD’s contribution to PT Pamapersada Nusantara’s (Pamapersada) revenue and costs is at 100% and 60% respectively. Its gross margins, the biggest contributor to United Tractors’ consolidated earnings, tend to expand when the IDR weakens (Figure 1). We expect Pamapersada’s gross margins to expand to 22% in FY17 on a weakening IDR and recovery in mining contracting fees. This is due to the recovery in coal prices.

¨       Heavy equipment sales to improve sizably in FY17. We did channel checks on Delta Dunia Makmur. Its subsidiary PT Bukit Makmur Mandiri Utama (Bukit Makmur) is Indonesia’s second-largest coal mining contractor. Bukit Makmurhas allocated a sizable USD180m capex for FY17 (FY15: USD55m) (Figure 4), which is mainly slated for the purchaseof heavy equipment. This is because Bukit Makmur wants to replace some portions of its mining contracting heavy equipment fleet. This should boost United Tractors’ Komatsu and Scania unit sales for the mining sector during this period.

¨       Reiterate BUY, with a higher IDR26,300 TP. We fine-tune our assumptions on the IDR to accommodate the view that the currency would weaken further. This results in higher FY16-18 EPS by 4.6-7.2%. We reiterate our BUY call with a higher DCF-derived IDR26,300 TP (WACC:12.2%, LTG:2%), which implies 14.8x P/E on our FY17F EPS (its 6-year mean P/E). The call is retained as we think its FY17 earnings recovery has still not been fully factored in by consensus and share price. Our FY17F EPS is 22.5% higher than consensus. We think revising up FY17F consensus earnings should boost share price.

¨       Key risks to our BUY call include coal prices decreasing to <USD50/tonne and a strengthening IDR.

¨       October’s operational performance keeps improving. Pamapersada keeps booking improving mining contracting volumes (Figure 5). Its October coal production grew 15.1%YoY (+10%MoM) due to the recovery in coal prices. We think the decrease in stripping ratio to 5.9x in October is just temporary. This is because coal companies are likely to increase their stripping ratios in FY17, based on our channel checks. United Tractors booked 218 Komatsu sales units (+207%YoY, +7.4%MoM), with the construction and agro sectors as the drivers of growth. (Hariyanto Wijaya, CFA, CFP, CA, CPA)

$UNTR $ASII $DOID

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P H
Jul 27,2016 08:50:23
EARNINGS CALENDAR (Half Year 2016 - Estimated)

JULY 2016

Jul 25, 2016 :
$BBTN (Bank Tabungan Negara (Persero) Tbk PT)

Jul 26, 2016
$BDMN (Bank Danamon Indonesia Tbk PT)
$BMRI (Persero) Tbk PT Earnings Release - 4:00PM GMT+7

Jul 27, 2016
$AALI (Astra Agro Lestari Tbk PT)
$HMSP (Hanjaya Mandala Sampoerna Tbk PT)
$LPPF (Matahari Department Store Tbk PT)
$MPPA (Matahari Putra Prima Tbk PT)
$PTBA (Bukit Asam (Persero) Tbk PT)

Jul 28, 2016
$ASII (Astra International Tbk PT)
$BEST (Bekasi Fajar Industrial Estate Tbk PT)
$BJBR (PT Bank Pembangunan Daerah Jawa Barat dan Banten Tbk)
$DOID (Bloomberg)
$NCO (Vale Indonesia Tbk PT)
$JPFA (Bloomberg)
$PSAB (Bloomberg)
$SSMS (Bloomberg)
$SMGR (Semen Indonesia (Persero) Tbk PT)
$UNTR (United Tractors Tbk PT)
$UNVR (Unilever Indonesia Tbk PT)

Jul 29, 2016
$ASRI (Alam Sutera Realty Tbk PT)
$ADHI (Bloomberg)
$BSDE (Bumi Serpong Damai Tbk PT)
$BNGA (Bloomberg)
$BNLI (Bloomberg)
$BNII (Bloomberg)
$BKSL (Bloomberg)
$BHIT (Bloomberg)
$BISI (Bloomberg)
$CPIN (Bloomberg)
$CTRA (Ciputra Development Tbk PT)
$CTRP (Bloomberg)
$ELSA (Bloomberg)
$GIAA (Bloomberg)
$GJTL (Bloomberg)
$GGRM (Gudang Garam Tbk PT)
$NKP (Bloomberg)
$INTP (Indocement Tunggal Prakarsa Tbk PT)
$INDF (Indofood Sukses Makmur Tbk PT)
$ICBP (Indofood CBP Sukses Makmur Tbk PT)
$INDY (Bloomberg)
$KARW (Bloomberg)
$KAEF (Bloomberg)
$KIJA (Bloomberg)
$KLBF (Kalbe Farma Tbk PT)
$KRAS (Bloomberg)
$LPKR (Lippo Karawaci Tbk PT)
$LSIP (Perusahaan Perkebunan London Sumatra Indonesia Tbk PT)
$MAPI (Bloomberg)
$PWON (Bloomberg)
$PNBN, $PNLF, $PNIN (Bloomberg)
$PTPP (Bloomberg)
$RALS (Bloomberg)
$SMRA (Bloomberg)
$TBLA (Bloomberg)
$TLKM (Telekomunikasi Indonesia (Persero) Tbk PT)
$TOTL (Bloomberg)
$WSKT (Bloomberg)

AUGUST 2016
Aug 1, 2016
$HRUM (Harum Energy Tbk PT)
$SSIA (Surya Semesta Internusa Tbk PT)

Aug 10, 2016
$ITMG (Indo Tambangraya Megah Tbk PT)

Aug 12, 2016
$EXCL (XL Axiata Tbk PT)

Aug 29, 2016
$ADRO (Adaro Energy Tbk PT)
$ANTM (Aneka Tambang (Persero) Tbk PT)
$BBRI (Bank Rakyat Indonesia (Persero) Tbk PT)
$ISAT (Indosat Tbk PT)
$PGAS (Perusahaan Gas Negara (Persero) Tbk PT)

SEPTEMBER

Sep 13, 2016
$SMCB (Holcim Indonesia)

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P H
May 13,2016 09:25:51

Efisiensi Menopang Emiten Batubara


Harian Kontan mengulas kinerja emiten batubara sepanjang kuartal I yang terlihat masih berat. Tapi, beberapa emiten mulai menunjukkan perbaikan kinerja, setelah banyak tergerus karena merosotnya harga batubara tahun lalu.

Sebagian besar emiten batubara menahan ekspansi. Sebagai gantinya, emiten menggenjot efisiensi. Misalnya saja PT Adaro Energy Tbk (ADRO). Emiten ini mencetak kenaikan laba bersih meski pendapatannya menurun. Dalam tiga bulan pertama tahun ini, perseroan membukukan laba bersih senilai US$ 61 juta, atau naik 3%. Di sisi lain, pendapatan usaha ADRO turun 17,51% menjadi US$ 586 juta karena penurunan harga jual rata-rata.

Harga jual rata-rata ADRO 17% lebih rendah daripada periode sama tahun lalu. Namun, volume penjualan masih stabil, yaitu 13,5 juta ton. Tahun ini, ADRO menargetkan produksi batubara sebesar 52-54 juta ton.

PT Tambang Batubara Bukit Asam Tbk (PTBA) mencetak pertumbuhan penjualan 8,16% menjadi Rp 3,54 triliun. Tapi, laba bersih PTBA turun tipis 2,2%. Pada kuartal I 2016, PTBA menjual 5,23 juta ton batubara atau naik 14% jika dibandingkan penjualan di periode yang sama tahun lalu. Jumlah itu terdiri dari penjualan domestik 2,91 juta ton atau 56% dari total penjualan. Sisanya 2,32 juta ton merupakan ekspor.

PT Delta Dunia Makmur Tbk (DOID) juga mencetak kenaikan pendapatan dari US$ 122,17 juta menjadi US$ 126,8 juta. DOID yang merugi US$ 10,43 juta kuartal pertama tahun lalu, mencetak laba bersih US$ 3,06 juta.

PT Indo Tambangraya Megah Tbk (ITMG) masih mencetak penurunan pendapatan 18% menjadi US$ 331,1 juta. Laba bersih ITMG pun turun.

Yudha Gautama, Analis Mandiri Sekuritas, mengatakan, beberapa emiten batubara mencatatkan kinerja di atas ekspektasi. Misalnya saja, margin laba ITMG masih lebih baik dari perkiraan.

$ADRO $PTBA $DOID $ITMG


 

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P H
Apr 11,2016 09:42:44
Mining Sector

Trimegah Securities Mining Conference Takeaways

Mining conference: INCO, DOID, ADRO, HEXA, ELSA
We recently hosted a small Mining Conference on 4th April 2016, inviting 4 prominent mining-related companies (eg; INCO—nickel producer, DOID—mining services contractor, ADRO—coal producer, and HEXA—heavy equipment distributor) and ELSA, a strong player in the O&G related industry. Most of the attendees are from asset management and no representative of pension funds were present, which we think indicates the general positioning among locals: pension funds already own the sector while asset managements are underweight and looking for opportunities.
 


1) Investors are not sure where commodities prices are heading, and so are the corporates
Most of the questions revolve around commodities prices, which seem to be one question that corporates have difficulty on answering. This is not surprising, given recent volatility in commodities prices particularly crude oil. Most corporates seem to be assuming that coal and/or oil prices to hover around current prices in making their investment/operational decisions. The assumptions in our financial models are slightly more conservative. We assume coal price to decline from current level of USD51/ton to USD48.5/ton whereas oil price to USD40/barrel.
 


2) Corporates are focusing on cost efficiency
Given lack of faith in any commodity price forecast, corporates are focusing on cost efficiency instead. A mining consultant who attended our lunch event mentioned that there is plenty of interest on using technology to improve operational efficiency at mining companies these days. This ranges from replacing regular light bulbs with LED to installing GPS on all excavators. This should benefit the larger mining contractors i.e. UNTR and DOID, which have the economies of scale to invest in the higher-end technologies to improve efficiency.
 


3) Expect overall heavy equipment sale to remain sluggish
Coal miners and mining contractors are delaying purchase of new equipment. The impact is less on UNTR as it means higher maintenance activity which is normally a higher margin business, but likely to hurt the smaller heavy equipment sellers more.
 


ADRO remain our top pick in the sector
We have Buys on ADRO and ELSA, with ADRO as our top pick. We like ADRO for its good corporate governance and healthy balance sheet. We also view Batang power plant as a strong catalyst, with projected NAV of IDR104/share (~15% of ADRO’s market cap). Among others, we think INCO has a positive outlook on volume, albeit nickel price remains a risk.

$INCO $DOID $ADRO $HEXA $ELSA $UNTR
Bear