Corporate Result Flash Bukit Asam - Bahana

2Q11 performance
§ PTBA’s 2Q11 net profit reached IDR850b, up 12% q-q and 77% y-y, allowing 1H11 bottom line to come in at IDR1.6t, accounting for 45% of our and consensus 2011 estimates. This is in line with our expectations as we expect 2H11 performance to further improve on higher volumes.
§ PTBA reported solid 2Q11 revenue of IDR2.8t (+35% y-y and +21% q-q) on the back of higher sales volumes (+6% y-y and 10% q-q) and higher ASP. 1H11 revenue was IDR5.1t, accounting for approximately 45% and 44% of our and consensus FY2011 estimates.
§ 2Q11 gross and net profit margin dropped to 51% and 30% (vis-á-vis 54% and 33% in 1Q11) due to higher COGS (+27% q-q). We believe that higher stripping ratio and fuel costs were the main factors that caused PTBA’s to report higher COGS.

Outlook
We use benchmark coal price of USD120/ton in 2011 and IDR assumption of 8,500/1USD, translating to IDR-based 2011 ASP (export and domestic price) growth of 27% y-y. In our view, 2011 revenue and net profit will grow 42% and 78% y-y respectively. We expect PTBA’s 2H11 performance will improve, helped by higher sales volumes of 7.5m tons.

Recommendation and valuation
Using a conservative 2012 benchmark coal price of USD110/ton (-8% y-y), we reiterate our BUY rating on PTBA and IDR29,600 TP. Risks to our call include possible downside on continued delayed implementation of the company’s railway project, which could result in lower than expected 2012 sales volumes.