Bukit Asam: Upbeat on export coal price (PTBA, Rp21,050, Neutral, TP: Rp23,950) - Mandiri

We visited the company yesterday. Below are the key takeaways:
􀂄 PTBA produced 6.2Mt coal in 1H11 (+6%yoy, +14%qoq) which represent 44.2% our FY11F. While sales volume was booked 6.5Mt coal relatively below internal target due to lower trading activities and lower coal production from IPC, since the weather in Kalimantan is wetter.
􀂄 PTBA is also upbeat on coal price outlook which has indicated that 1H11 export coal’s ASP could reach above US$90/ton and guide us with minimum FY11F export coal’s ASP of US$100/ton. This is implying 14-15% upside from 1Q11’s export ASP and a good indication for other coal companies that have higher exposure to spot market like HRUM.
􀂄 Company indicated delay on the arrival of new locomotives and trains which now is expected to arrive in September 2011 from previously in August 2011. This would give a stronger downside risk indication on its volume target this year of 15Mt.
􀂄 Based on our calculation, assuming effective 4 months operation of the new arrival locomotives, we expect it could only
transport additionally 1.0-1.2Mt coal until end of this year. So the target of 13.3Mt coal transportation this year looks challenging.
􀂄 Currently we still have Neutral rating on the stock. PTBA is traded at 14.2x-10.7x PER11F-12F. 1H11 results will be announced around the end of this month.