Bumi Resources: “clean” 2Q11 net income of US$118.8mn, full year consensus of US$477mn looking too conservative (BUMI, Rp2,750, Buy, TP: Rp3,700) - Mandiri

􀂄 The 2Q11 net income rose by 50% QoQ, driven by 11% higher sales, 33% higher gross profit, and 51% higher EBIT.
These results should alleviate yesterday’s concerns that the strong showing by Bumi Plc (who reported 1H11 results two days ago) was only driven by non operating items.
􀂄 If we take-out the US$106.8mn derivatives gain and the US$17.2mn loss on asset write-down and adjust those for the tax effects, the “clean” 2Q11 net income for Bumi would be around US$118.8mn.
􀂄 If Bumi can sustain its “clean” profit level of US$118.8mn in the third and fourth quarter, the company should be able to achieve US$517mn profit for the year, against consensus of US$477mn. We think Bumi should be able to show higher quarterly run-rate for its “clean” profit, due to higher output volumes in 2H11 (heavy rains and floods have forced Bumi to do more over-burden removals in 1H11).
􀂄 We foresee consensus EPS on Bumi Resources to move up as the year progresses. We are currently forecasting FY11F net profit of US$500mn, placing the stock on 13.4-11.4x PER for FY11-12F. Buy with TP of Rp3,700.