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P H
Nov 23,2016 22:44:26

Harum Energy ($HRUM) targets coal production to grow by 35% to 4m tons in 2017. In 2016, Harum targets its coal production to reach 3m tons.

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P H
Nov 21,2016 22:19:08

Harum: Most Exposed to Spot Market ($HRUM; Rp2,300; Sell; TP:Rp1,600)

  • HRUM will greatly benefit from higher coal price in FY17, but see high risk of coal price reversal on the Chinese
    government's effort to ease the coal price rally. We raise our FY16-18 net profit by 59-183% after imputing FY16/17/18
    coal price assumption of USD64/70/69, but downgrade HRUM to sell with TP of Rp1,600.
     
  • Slight production growth. In order to take advantage of the rising coal price, HRUM indicated a 30% increase in FY17
    coal production volume to 4.5mn tons (from 3.0mn tons FY16 target), which we include in our assumption. Despite its
    low reserve count, we think HRUM is still capable to leverage higher coal ASP as its production is coming from a low base,
    after aggressively cutting production starting in FY14 amid declining coal price.
     
  • Low reserve count. Like ITMG, HRUM is another coal miner with low reserve count. The company’s coal reserve is
    estimated at 71mn tons, which translates to mine life of 24 years (assuming annual production of 3.0mn tons).
    Meanwhile, HRUM still maintains a healthy balance sheet, free of debt, with cash balance of USD203mn, which we think
    can be used to acquire coal assets to replenish its reserve. Assuming USD1/ton acquisition price, we estimate HRUM can
    acquire up to 203mn tons of reserves.
     
  • Better outlook in FY17. Among the coal stocks under our coverage, HRUM is the most exposed to the spot market and
    sells higher quality coal. Hence, it should post the strongest earnings growth, coupled with plans to increase production
    volume. Our sensitivity analysis indicates that every 1% increase in coal price will increase HRUM’s earnings by 4.0%.
    Moreover, we estimate HRUM's FY17 SR ratio to increase to 7.0x (from 5.8x in FY16).
     
  • Downgrade HRUM to sell with TP of Rp1,600. On better earnings outlook, we raise our FY16-18 net profit by 59-183%,
    after imputing FY16/17/18 coal price assumption of USD64/70/69. However, we downgrade HRUM to sell with TP of
    Rp1,600 based on 9.0x FY17 target P/E (-1SD). Our sell recommendation was solely based on risk of coal price reversal
    after China's government stepped up its efforts to ease coal price rally.
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P H
Nov 21,2016 11:47:50

Coal Mining: Take Profit

  • Indonesia's coal stocks are expected to be negatively affected by coal price reversal after China's government stepped up its efforts to cool coal price given the stronger correlation between coal price and stock price recently. Downgrade coal sector to Underweight. Downgrade all coal stocks to Sell.
  • Downgrade coal sector to Underweight, sell all coal stocks. We downgrade our recommendation on coal sector to Underweight (from Neutral) as we see risk of coal price reversal after China's government stepped up its efforts to ease steep increase in coal price. Newcastle coal price index has declined to US$105/ton from the peak of US114/ton with coal contract for January delivery concluded at US$94.5/ton FOB on globalCOAL (vs FY17/18F of US$70/US$69/ton of our forecast). We downgrade our recommendation to Sell on ADRO (Sell, Rp1,200TP), PTBA(Sell, Rp9,500TP), ITMG(Sell, Rp12,250TP), and HRUM (Sell, Rp1,600TP). ADRO, PTBA, ITMG, and HRUM are trading at FY17F PE of 12x/12x/10x/13x.
  • China has intensified efforts to cool down coal price by 1) extending the time period for the supply relaxation policy for selective big coal miners to increase production to an equivalent of 330 days' output from 276 days restriction policy, 2) urging more long-term contracts between major coal miners with major power plants, and 3) raising transaction fee for thermal coal futures for same-day trading to curb short-term speculative trading. In addition to that, one of the largest coal producers recently indicated that it will stop selling coal to buyers without annual long-term contracts to further prevent speculative activity in the coal market.
  • Correlations between coal price and stock price are the highest since 2014. While we expect stronger earnings outlook next year driven by higher coal price, we believe that stock price direction will be determined by the volatility on coal prices due to strong correlations between coal price and stock price recently. We take a look at the 3-month correlations of  coal stocks to coal price since 2014. Based on this, the current correlation levels are the highest, standing at 56% for ADRO, 50% for ITMG, 57% for PTBA, and a whopping 66% for HRUM. This makes Indonesia's coal stocks very vulnerable to coal price reversal given the steep increase in the past few months. Note that Indonesia’s coal stock has increased by an average of +284%YTD vs. the index of +11%YTD.
  • Expect stronger earnings outlook in 2017 for Indonesia coal miners, mainly driven by higher ASP. Our discussion with large coal miners indicates moderate production growth next year to maintain high coal price and avoid oversupply in the market. In terms of coal price, we believe at US$70-75/ton coal price is already a good number for coal miners as it's already >30% higher than the avg. of US$55/ton in 1H16. However, we also expect production cost will increase due to higher stripping ratio and contractors’ fee (lower discount fee). Our sensitivity analysis indicates that every 1% increase in coal price will increase ITMG's and HRUM's earnings by 4.8% and 4.0% respectively vs. ADRO's and PTBA's of 3.3% and 2.8%.
  • Key risk to our call is if coal price can sustain at >US$100/ton due to weather related issue.

$PTBA $KKGI $ADRO $ITMG $HRUM $BUMI $BORN $BYAN

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P H
Nov 16,2016 09:22:30

Coal Mining - Sector Has Mixed Expectations For 2017

We visited four coal miners recently, and got updates on their outlook for 2017. On production, only Indo Tambang is aiming for flat growth while Harum Energy has the highest target (+33% YoY). Up until now, none of the miners’ customers have locked in their FY17 coal purchase prices. Meanwhile, all players expect their stripping ratios to rise next year. We reiterate our BUY on United Tractors, as we expect earnings to recover (mostly on a rise in mining contracting volume). It would also benefit from a weakening IDR and is the safest play on the recovery in coal prices.

¨ No customer has locked in FY17 purchase prices. The increase in coal prices was faster than what the coal miners’ customers had expected. As a result, no customer has locked in their FY17 coal purchase prices yet. Some have only locked in their 2017 coal purchase volume, as they think coal prices may retreat from the currently high levels.

¨ Higher stripping ratios, but with unchanged mining contracting fees. Based on our talks with the coal miners, all of them expect their stripping ratios to rise next year. However, they still hope to see mining contracting fees remaining unchanged. Up until now, most of the firms were still negotiating mining contracting volumes and fees with their contractors. The miners’ expectations for an unchanged mining contract fee in FY17 are different from United Tractors. It expects less discounts in FY17 due to the recovery in coal prices.

¨ Harum Energy expects to see the biggest production increase. Harum Energy expects its coal production to hit 4m tonnes (vs its FY16 target of 3m tonnes) next year. In 2012, its production peaked at 12m tonnes. In 2011-2016, it cut down on coal production to preserve the long-term value of its assets, as coal prices fell. Meanwhile, Indo Tambangraya Megah (Indo Tambang) expects production growth to stay flat (Figure 1).

¨ Harum Energy is the most exposed counter to the spot coal price. Among the four coal miners, Harum Energy is the most exposed to spot coal price. This is as it sells its coal using spot prices. Therefore, it should start benefiting from the increase in prices from 4Q16 onwards. By contrast, its peers should fully benefit from the current increase in prices from 2017 onwards, as most of their coal selling prices for FY16 have been locked in.

¨ Indo Tambang has the biggest exposure to the China market. China is the main driver behind the increase in imported coal demand. Indo Tambang is the most exposed coal miner to this market (25% of sales are made to Chinese customers), followed by Adaro Energy (14% of sales) (Figure 1). As at 9M16, Harum Energy and Bukit Asam have not sold coal to China. However, they said they would record sales to China from 4Q16 onwards.

¨ All coal miners are the beneficiaries of the weakening IDR. We expect the IDR to continue softening to reach an average of IDR13,700/USD in FY17 (YTD average: IDR13,286/USD). The coal miners’ revenues are mostly dominated in USD terms. Meanwhile, the contribution of USD to their costs is less than to their revenue (Figure 1), which should improve profit margins. Harum Energy and Indo Tambang are likely to benefit the most from a weakening IDR, considering that the difference between USD contributions to their revenue and total costs are the highest.

¨ Reiterate BUY on United Tractors with a IDR24,700 TP. We reiterate our BUY call on United Tractors, as its earnings are set to recover in FY17 from higher heavy equipment sales, and mining contracting and coal sales volumes. We think this has not been factored in by consensus yet. The company should also benefit from the weakening IDR in its mining contracting and coal sales businesses. Also, with consensus lifting its earnings estimate, this should also boost United Tractor’s share price performance. We consider this stock as the safest play on the recovery in coal prices. (Hariyanto Wijaya CFA, CPA)

$ITMG $HRUM $UNTR $PTBA $KKGI $BUMI $BORN $ADRO

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P H
Oct 04,2016 08:01:16

Morning all, Harga coal ditutup menguat +12.34% menjadi US$81.10/mt dikarenakan data produksi India yang tercatat turun -5.4% yoy di bulan Sept dan operasi tambang China yang dipotong menjadi 276 hari/tahun.

Saham coal bisa pesta hari ini

$PTBA $HRUM $KKGI $ITMG $ADRO $BUMI $BYAN

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P H
Aug 29,2016 22:08:55
Indonesia Equities: Pricing In Near Term Positives

Key Points

- +9% gains in MSCI Indonesia since our country upgrade in July - Since our upgrade of Indonesian equities to overweight two months ago in the MIG publication after clarity on its tax amnesty programme emerged, sentiment has further improved following the appointment of well respected Finance Minister Sri Mulyani Indrawati. The Indonesian equity market has seen strong equity inflows in 3Q16 lifting the index up ~9% (local currency terms, +8.2% in USD), which has outpaced world equities’ gains (+5.2%) for the same period and supported our call.

- Year to date’s gains of +18.6% has also more than recouped 2015’s losses of -12%, which has supported the turnaround highlighted in our January 2016’s South East Asia Equity Strategy report. The equity market rally year to date has been supported by a benign environment of lower interest rates, stable IDR currency vs the USD, under-owned positions in global portfolios and improving confidence in Indonesia’s recovery story. Estimated equity inflows into Indonesia so far for 3Q has exceeded the total inflows for 1H16, driving the market to new highs. Since mid May this year, it is estimated that net equity inflows reached $1.7bln, vs $1.6bln net outflows over the whole of 2015 (source: JPM estimates).


- Near term positives post amnesty and cabinet reshuffle look priced in, valuations are now close to 10 year high – At 16x PER, Indonesian equities is now trading close to +2 standard deviations to its 10 year historical average multiple and at its highest valuation level since 2007, which we believe has priced in much of the near term positives. Although near term liquidity is likely to remain supportive given benign expectations on interest rates, we caution that valuations have caught up and believe it is prudent to start taking some money off the table. On domestic updates, while the recently released 2017 budget is credible, it is unlikely to lead to further corporate earnings upgrades given a moderate government spending target of 6% (planned fiscal deficit for 2017 is 2.4% of GDP, flat/lower than 2016E). Towards the end of September and December which marks the first and second phases of the tax amnesty programme’s staggered tax rates for declared wealth, investor sentiment may also be influenced by expectations over the tax collections.


- Muted start to the 9-month tax amnesty programme, although still early days - As of 23rd August 2016, the asset declaration in the Tax Amnesty Program has reached Rp51.7tn, consisting of 85% onshore/15% offshore assets (12% overseas assets declared, 3% overseas net assets repatriated), while asset repatriation has reached Rp1.6 tn. Momentum of onshore assets declared in first half of August has picked up, with the tax office reporting about Rp11.5tn worth of onshore assets declared (>4x July’s). About three-quarters of the assets declared were from private individuals, and the balance private entities, which we view as supportive of property sector’s recovery given interest rates are expected to remain low while the Ministry of Finance has allowed repatriated funds to be invested in real assets (such as property and gold).


- Looking ahead, earnings upgrades need to pick up momentum for the rally to have more legs - Earnings wise, the recent 2Q results season was mixed with single digit corporate top line growth from a year ago. Concerns on banks remain dragged by asset quality issues while commodity related earnings have been moderate. Following the latest 2Q earnings season (where consensus earnings were trimmed -2% lower for FY16E and FY17E), FY16E and FY17E earnings are now forecast to grow +7% and +14% respectively (higher than Asia ex Japan equities’ 2.2% FY16E and 11% for FY17E respectively) which we believe is priced in current valuations.

Time to lock in some profits – Switch out of names which have rallied and offer no upside to target prices
- Sectors we are cautious on are: Commodity related plays which have rallied and priced in recovery expectations (coal – Bukit Asam, ITMG, palm oil – Astra Agro, London Sumatra), Banks (loans growth will be moderate while we expect asset quality concerns to remain a near term overhang) and Utilities (in particular, Perusahaan Gas – where we think profitability will remain pressured by regulatory efforts to lower gas prices).

Preferred Picks/Switch Ideas

- Preferred Sectors we would accumulate new positions are: Property (Bumi Serpong – Western Jakarta play, large landbank catering to middle income buyers), Telecommunications (Telekomunikasi Indonesia – improving smartphone penetration and data usage supported by a young population), Consumer (Indofood and Media Nusantara, which benefit from an improving domestic economy in 2H16) and Infrastructure (Jasa Marga – No. 1 toll road operator, long term beneficiary of infrastructure development in Indonesia).


- Risks to the current rally include weaker than expected global economy, faster than expected Federal Reserve interest rate hikes which may result in global liquidity volatility and disappointments in the domestic recovery and infrastructure spending pace (continues to be a focus in the 2017 budget, with 9% yoy expected growth).


$PTBA $KKGI $HRUM $ITMG $AALI $LSIP $SGRO $SMAR $PGAS $BBCA $BBRI $BMRI $BBNI $BSDE $ASRI $LPCK $LPKR $CTRA $TLKM $INDF $ICBP $AISA $MNCN $JSMR

Bull
P H
Aug 29,2016 09:14:47
China imported 9.31 million mt of thermal coal in July, rising 30.7% year on year and up 23.5% from June to the highest level since December 2014, according to data released by the General Administration of Customs Wednesday.

$KKGI $PTBA $HRUM $BUMI $BORN $ITMG
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P H
Aug 02,2016 10:58:07
Harga Batu Bara Memanas Signifikan : Harga batu bara meroket ke level tertinggi dalam 17 bulan terakhir seiring dengan langkah China sebagai produsen terbesar di dunia mengubah strategi menjadi importir. Meskipun demikian, harga masih rentan koreksi akibat proyeksi kenaikan suku bunga Federal Reserve pada kuartal IV/2016. (BISNIS INDONESIA)

$KKGI $PTBA $ADRO $ITMG $HRUM
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P H
Jul 27,2016 08:50:24
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 17,2016 13:20:51
HRUM eyeing powerplant business – PT Harum Energy ($HRUM) is currently eyeing on the possibility of entering the powerplant business on the back of low coal prices. President Director Antonio Gunara stated that the company is eyeing for medium to small sized powerplant and is willing to look for partners in doing the powerplant business.
 

Bear
P H
Apr 08,2016 08:58:34
Harum Energy: Challenging Time Ahead ($HRUM)

- HRUM’s FY15 net loss of USD19.2mn is below expectation. We cut our FY16/17F
net profit/ (loss) by 201%/92% after lowering our coal price assumption and sales
volume. Maintain neutral with TP of Rp910.

- Weak FY15 results. HRUM reported 4Q15 net loss of USD20.2mn, bringing total
FY15 net loss to USD19.2mn (vs. our forecast of (USD4.2mn) and consensus of
USD2.7mn). This is mainly due to lower coal ASP, lower sales volume, and a onetime
impairment charge of USD13.2mn in 4Q15 related to its mining asset
investment in Australia. Excluding the one-time charge (impairment, forex loss,
and net loss of associate), HRUM posted FY15 net profit of USD0.7mn. Revenue
fell to USD249.3mn (-48% YoY) on lower sales volume at 4.6Mt (-43% YoY) and
lower coal ASP at USD52.7/ton (-14% YoY). Gross margin improved by 20bps to
18.4% from 18.2% in FY14 thanks to lower FOB vessel cash cost at USD39.9/ton
(-16% YoY) as a result of lower fuel price. Stripping ratio in FY15 remains
relatively flat at 7.6x.

- Keeping cost under control. As we expect headwind to persist in the coal
sector; cost reduction remains the company’s key focus. As such, we factor in
lower strip ratio of 7.0x/7.5x (vs. 7.6x in FY15), overburden, and fuel price in our
FY16/17 forecast, hence putting the cash cost at USD39.6/ton (-1% YoY) and
USD39.2/ton (-1% YoY) in FY16/17. Meanwhile, we also lower our FY16/FY17
production volume target to 3.5mn tons/4.0mn tons in FY16/FY17 (from 7.0mn
tons), in-line with company guidance.

- Clean balance sheet. As of Dec-15, HRUM maintained a debt-free balance sheet.
It has a cash balance of USD195.7mn, higher than its current market
capitalization of USD177.8mn, thus we believe HRUM is the cheapest coal stock
under our coverage.

- Earnings risk on low coal price. Despite its cheap valuation, we think HRUM is
the most vulnerable to low coal price due to 1)high exposure to spot market; and
2) low reserves. We cut our FY16/17F net profit/ (loss) by 201%/92% after
lowering our coal price assumption to USD55/ton (from USD65-70/ton). We also
cut our FY16/17 sales volume target by 43% and 44% to 4.0mn tons and 4.5mn
tons respectively. Overall, we maintain our neutral call with target price of Rp910
based on 0.7x target P/BV.
Bear
P H
May 11,2015 12:57:17
Indeks Harga Saham Gabungan (IHSG) menguat +0,1% (+3 poin) di level 5184,45 poin pada penutupan perdagangan sesi 1, Senin (11/5). Indeks LQ45 naik +0,15% ke posisi 900. Jakarta Islamic Index (JII) naik +0,27% ke posisi 699 poin. Indeks Kompas 100 naik +0,19% ke level 1.134 poin. IDX30 naik +0,15% ke level 466 poin. Pemodal asing membukukan transaksi net sell (jual bersih) -Rp37 miliar. Transaksi yang tercapai Rp2,136 triliun dengan volume trading sebanyak 5,755 miliar saham. Sektor: Agri +2,07% Mining +1,70% Properti -0,69% Infrastruktur +0,16% Finance +0,04% Trade -0,14% Manufaktur -0,17% Consumer -1,17% Basic ind -0,07% Misc-ind -0,25% Kini sektor agro dan mining menjadi penopang utama laju IHSG pada perdagangan sesi siang awal pekan ini. Saham agri ditunjang oleh naiknya AALI +3,07%. BWPT ++3,75%. DSNG +1,41%. GZCO +1,12%. SIMP +2,34%. SSMS +1,01%. Adapun saham-saham mining yang bergerak naik antara lain: ADRO +5,23%. ANTM +0,63%. ARTI +4,44%. HRUM +2,97%. INCO +1,24%. ITMG +5,51%. Kelompok saham properti bergerak negatif seiring terbitnya Revisi PMK No 90 /PMK.03/2015 tentang pengenaan pajak barang super mewah (PPh 22) untuk properti. Saham-saham properti yang melorot adalah: APLN -1,73%. BSDE -0,28%. CTRA -2,92%. JRPT -7,34%. LPCK -0,90% . LPKR -1,19%. Adapun sektor yang turun paling dalam adalah consumer -1,17%. Koreksi consumer dimotori saham: DVLA -1,11%. KAEF -0,84%. GGRM -0,16%. TSPC -1,67%. ULTJ -2,35%. UNVR -0,06%. Bursa Asia Sentimen kebijan Tiongkok yang memangkas suku bunga menjadi sentimen utama bagi market regional. Bank Sentral Tiongkok (People`s Bank of China (PBOC) menurunkan suku bunga kredit dan deposito bertenor 1 tahun sebesar 25 bps. Indeks Nikkei naik +1,27% (+245,32 poin) ke posisi 19.624,51 poin. Indeks Hang Seng naik +0,50% (+132,29 poin) ke level 27.714,63 poin Indeks Shanghai naik +1,18% (+49,62 poin) ke posisi 4.255,54 poin Indeks Straits Times +0,46% (+15,72 poin) ke level 3.467 poin (pukul 12.00 WIB).
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HRUM
2,350.00 0.00 (0.00%)
Harum Energy Tbk.
Last Update 02:54:11