Indo Tambangraya Megah: 1H11 net profit 42.6% ours and 43.8% consensus (ITMG, Rp44,850, Buy, TP: Rp55,800) - Mandiri

􀂄 ITMG posted 1H11 net profit of US$205mn (+53.1%yoy, +15.6%qoq) slightly below our expectation and consensus, realizing 42.6% -43.8% FY1F. Slower pace of earnings growth in 2Q11 mainly driven by slower volume growth as seen from its top line which grew modestly of only 7.2%qoq growth.
􀂄 On quarterly basis, ITMG made a strong improvement with 28.5%qoq growth on its operating profit up to US$268mn, showing us a good cost management from the company. But, it still below our expectation which accounted 40.5% our FY11F since we had underestimated the production cash cost increase following higher fuel price.
􀂄 We suspect that ITMG’s 2Q11 coal production volume might be lower than had been indicated by the company of 5.7-5.8Mt in our last meeting. Assuming 2Q11’s ASP of US$91-92, we expect ITMG’s 2Q11 coal production would be at range 5.4-5.5Mt or about 5% lower than company's previous indication or about 10-11% below company's target in 2Q11 of 6.2Mt.
􀂄 Company has not released its operational highlights and It will be provided in the analyst meeting today.
􀂄 In line with company’s guidance, ITMG booked unrealized derivative loss of US$4.7mn in 2Q11 result in lower unrealized derivative gain of US$4.8mn.
􀂄 With net gearing maintain at -0.4x or net cash almost US$400mn, ITMG will remain a dividend play stock. Currently we have buy rating on the counter. ITMG trades at 12.4x-9.1x PER11F-12F