PTBA results - JP Morgan

* Research call – buy PTBA. FY10 results in-line with Steve’s estimate. Most important development is that PTBA has fleshed-out its FY11 sales contract in details, suggesting that the company has locked-in a 27% yoy rise in ASP for about 10mn tons of its coal, out of 15mn sales forecast for the year. This is despite the controversy surrounding PLN (as main buyer of PTBA coal) wanting to negotiate lower the coal price purchase for FY11. My take – In my own opinion, I would remain cautious on PTBA’s ASP outlook for FY11, until somebody can confidently reconcile the two (potentially conflicting) statements from PTBA as the seller and PLN as the buyer, with regards to FY11 ASP. Before that can happen, the statement from PTBA is just a one-sided statement from the seller. Prefer the thermal coal exporters who are better leveraged to upside surprises in international coal price settlement.

Tambang batubara Bukit Asam (PTBA) (Stevanus Juanda)
US$92/ton domestic coal ASP – up 27.4% Y/Y: PTBA also released information that the FY11 average blended domestic coal ASP signing with PLN is likely to be up 27.4% Y/Y: (a) 6.1MM tons to PLTU Suralaya at Rp815,000/ton, up 19%Y/Y; (b) 1.0MM tons to PLTU Bukit Asam at Rp575,000/ton, up 34% Y/Y; (c) 0.7MM tons to PLTU Tarahan at Rp729,325/ton, up 28% Y/Y; and (d) 1.0MM ton additional volime for Rp740,211/ton, up 29% Y/Y. The Rp805,000/ton average blended price is above our estimate of Rp784,000/ton. With domestic accounting for roughly 60-65% of the yearly volume, we believe the signings bode well for strong profit growth in FY11.