CLSA PTBA

Bukit Asam – 2008 earnings indication slight below, comfortable with 2009 outlook
CEO indicated that net profit in 2008 could reach Rp1.8tn, suggesting a 140% increase YoY. The result however came in slightly below consensus and our estimates by around 5% to 10%. Management explained that there were partly one-off costs coming from underpayment of royalties, accumulated since 2005, following audit from state audit body, and changes in calculating pension benefits.
We remain comfortable with our 2009 earnings estimates, which is already 11% below consensus. We have assumed a 15% lower-than-management-guidance price for coal sola to PLN, while our crude oil price assumption of US$60/bbl looks conservative as well compared to the current spot price of around US$40/bbl. Meanwhile, our sales volume target for 2009 of 14.1m tonnes is around 1m tonnes below management guidance.
We maintain our Outperform rating on Bukit Asam with TP of Rp8,800. Our preferred coal play in ITM (ITMG IJ) with Tp of Rp16,600, given its strong balance sheet, high portion of contracted tonnage that translates to good earnings visibility, and good dividend yield as the company pays 60% of earnings as dividend.