No skinny dipping allowed
Potential for margin squeeze?
We forecast oil to rally from current levels of US$45/bbl to roughly US$80/bbl vs coal, which we think should remain relatively flat at around US$70/t. This is as a result of there being no “OPEC” for the coal industry to co-ordinate thermal coal production cuts (in contrast to the oil industry).
We therefore prefer those low-cost producers with net cash balance sheets such as Shenhua, China Coal and PTBA. Bayan and ITMG’s earnings could be at risk if they do not actively manage/hedge costs.
Take profits in Indika and Hidili; Run from Bumi
We downgrade Indika from Outperform to Neutral after its recent 42% rally. The stock looks fully valued, trading close to our revised price target of
Rp1,300 (6% downside).
Also, we downgrade Hidili from Neutral to Underperform and lower our earnings estimates and our price target to HK$2.10 on production and coking coal price concerns.
Bumi: We reaffirm our Underperform recommendation and Rp500 price target due to a lack of transparency regarding recent transactions and future cashflows. We arrive at our price target by applying an 80% discount to an NPV valuation. We acknowledge that this discount is somewhat arbitrary, but consider this appropriate given the lack of clarity over future cashflows.
Tidak ada komentar:
Posting Komentar