Bumi Resources (BUMI IJ) by Jayden V
· Indonesia's most
newsworthy coal producer Bumi Resources (BUMI IJ), presented at the
CLSA's ASEAN access days in Singapore and Hong Kong.
2012, the ASP for their 68mt coal sales was US$82/t and in 2013 their
budgeted ASP is between US$70/t to US$85/t in a bull case scenario
assuming Newcastle rebounds to US$110/t. They expect c. 10% production
growth in 2013 (lower than previous 2 years) as the focus is now on cost
savings and deferring capex.
· Operationally, the group is
experiencing cash costs of US$45/t but hopes to cut the strip ratio from
~10.8bcm/t in 2012 down to ~10bcm/t saving about US$2.5/t. This means
Ebit margins of c. US$20/t after factoring in depreciation. Fuel costs
(28-30% of its COGS) remains a concern as they're stubbornly high.
The key question though is what they will do to delever (the group has
US$4.2b net debt on its balance sheet with US$50m cash) and what is
happening with the Rothschild/Bakrie divorce at the plc level. Dileep
said asset sales of the mineral (BRMS assets) will occur after all the
plc issues are resolved (though he was unsure on timing) as it will
impact the price realised on asset sales. Asset sales remain
the preferred method of raising cash to delever.
· In our
view, the stock is a leveraged play on the value of the BRMS assets and
any upside for investors hinges upon the timing and price of these
sales. Given CLSA's coal price downgrade this week to US$90/t for 2014,
the cashflow generated from the coal assets KPC and Arutmin will also be
lower than previous years in our forecast.
me @ LOTS Trading Club (LTC)
Senin, 28 Januari 2013
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