Mandiri Sekuritas Bukit Asam

Bukit Asam: PLN to cancel contract for coal priced above Rp750k/ton, no impact for PTBA (PTBA, Rp7,550, Buy, TP: Rp9,380)

Head of PLB primary energy unit, Nasri Sebayang is threatening to cancel coal purchases contracts of coal if priced above average budgeted coal price of Rp750,000/ton. Bukit Asam in November 2008, made agreement to Indonesia Power, a PLN subsidiary, to supply 6.1mn tons of coal in 2009 (half of their 2009 annual output)at Rp884,000/ton. Indonesia Power, subsidiary of PLN, made independent decision of their contracts. Therefore we see no impacts to Bukit Asam. We have a Buy recommendation for PTBA with Ro9,380 target price. At Rp7,550, PTBA is traded at 8.3x 2008 PER, and 6.4x 2009 PER to our estimates.