INDO TAMBANGRAYA (ITMG): Preview on 1Q volume -10% Y/Y - maintain Buy! - Credit Suisse

Despite short-term limited upside, CS is forecasting average Thermal Coal
benchmark prices of US$125/t 2011F (in-line with weekly NEWC spot FOB US$123/t
as of April 15th), US$130/t 2012F. 1Q Sales Volume of 5.5m tonnes (-10% Y/Y &
-5% Q/Q) is In-line 25% of 2011F. EPS Sensitivities Analysis to US$10/bbl rise
in oil coal price is -2.3%, 5% volume shortfall is -5.5%, and US$10/t rise in
coal benchmark price is +8.7%. At Rp47,150/share, ITMG is trading on 13.2x 2011F
PER and implying 21% upside to end-2011F Target Price Rp57,000 (based on 16x
2011F PER), we continue to like ITMG on leverage to International coal price and
good management, therefore we reiterate BUY ITMG!

· Paworamon (Poom) Suvarnatemee, CFA (Daily attached): We forecast ITMG
to report net profit of US$82 mn based on ASP of US$85/t and selling volume of
5.5 mnt. Our profit forecast is before the impact of any derivative gains or
losses. On derivatives side, we expect a gain from diesel oil. Its coal swap
position should not have any major loss if there is no settlement during the
period, as coal price closed relatively flat QoQ. ITMG may provide more
information on its derivatives as it gets closer to the announcement date in the
second week of May.

· ITMG's earnings should improve over the year, as its ASP is expected
to go up to over US$100/t in 4Q11. We currently forecast ASP of US$93/t for 2011
but see upside risk to US$95/t. We believe ASP will rise faster than the cost
increase. Volume risks may matter more in 2H11 when two new mines are scheduled
to ramp up production. Our forecast assumes 1H11 to be 45% of full-year
forecast. We maintain OUTPERFORM on ITMG with target price of Rp57,000 based on
P/E of 16x.