Indo Tambangraya (ITMG IJ) reported better than expected 2008 full year results. Net profit came in 20% above our and consensus estimate. ITMG remains our top pick in the sector. Here are comments from analyst Olie:
The company posted US$235m in net profit in FY08, up by 321% YoY. The result came in 20% above our and consensus estimate on the back of better than assumed operating performance and some hedging gain.
Operating profit came at US$340m, up by 180% YoY, slightly above our, 5%, and around 10% higher than consensus estimates. We believe this came on the back of lower than assumed cost.
Meanwhile the company also posted net gain from oil and coal hedging amounting US$27m, after had posted hedging loss of US$20m in 9M08.
Strong result should translate to solid dividend, with the company paying out 60% of earnings. We expect total dividend this year to be in the range of US$c12.9/share, translating to a yield of 15%.
Separately, Banpu, the parent company, also announced new reserves numbers following technical studies and audit by independent mining consultants. ITM reserves have increased by 30% YoY, amounting to a total of 312m tonnes. Life of mine has therefore been extended from 13 years to 17 years. Note that ITM total resources are around 1,675m tonnes.
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