Adaro Energy: Hold; Rp2,375; TP Rp2,450; ADRO IJ New power plant partner for Adaro - DBS Vickers

Adaro Energy is forming a new partnership with South Korean-based East West Power (EWP) for the 2x100 MW steam-based power plant in South Kalimantan . The project value is US$350m. EWP came into the picture after Mitsui & Co from Japan withdrew from the partnership. Previously, EWP was just involved in operations and maintenance. Adaro and EWP have not decided on the portion of ownership, however, Adaro is aiming to become the majority shareholder. David Tendian, Adaro’s Finance Director, had indicated before that the company will pursue project financing from multilateral agencies to fund projects such as this steam-based power plant. Currently, Adaro is also targeting a 2x1,000 MW steambased power plant project in Central Java valued at US$3-3.5bn. This project is a partnership with GDF Suez SA (France), Itochu Corporation and J-Power ( Japan ). Adaro’s stake in this project is only 20%, hence, there is no material impact on Adaro’s cash flow or balance sheet. Garibaldi Tohir, Adaro’s President Director, stated that Adaro is pursuing power plant businesses to integrate with its existing businesses, which should eventually enhance shareholders’ value.