BASML INDO Cut coal px

Our commodity team cut coal px forecast to US$70/t, $65, and $70 for 2009-11, these are 12.5%, 18.8%, 12.5% lower than previous. The impacts to Indo coal stocks are 6-9% cut in PxT and 3-35% in earnings for 2009-10. Daisy't favorite remains PTBA which is least affected on earnings, followed by ADRO and BYAN. BUMI remains a Sell. Elsewhere, PTBA released '08 numbers which came in below due to one off - we maintain fcast going fwd. In the region we have Jacky Tang's deflation report and from the US Rosie reminded there is nothing extraordinary in the US rally.

Cut coal px
Our commodity team cut coal px forecasts on 5 March to US$70/t for FY09, $65 for FY10, and $70 for FY11 … lower by 12.5%, 18.8%, 12.5% respectively. LT px is unchanged at US$74/t. With demand collapsing in both Europe and Asia, we forecast a lift in seaborne thermal surplus to 5mn t for 2009, expanding further to 7-11mtpa by 2012. Daisy still favors those with dominant domestic presence. PTBA remains as her top pick, followed by BYAN and ADRO. BUMI stays at Underperform. The biggest earnings drop in our Indo coal coverage is in 2010, because most coal output has not been priced to take advantage of the higher coal px environment, while 40-60% of output has been priced for 2009.

PTBA: PO cut 6% to Rp8,500. NPAT cut 3%-14% in 2009-10. 70% of PTBA's output is sold domestically. Buy
BUMI: PO cut 9% to Rp500. Slash NPAT 15%-35% in 2009-10. She remains uncomfortable with Bumi’s substantial investment in Recapital, its rising debt level, recent coal asset acquisitions, and lack of clarity on shareholders’ REPO issues. Underperform.

ADRO: PO cut 6% to Rp860. NPAT cut 4%-19% in 2009-10. 20% of Adaro’s volume will be priced significantly below the current index (legacy contract), which should alleviate downside risks. She reminds that the shareholders’ lock-in date is due to expire on 17 March '09. Buy

BYAN: PO cut 7% to Rp1,855. NPAT cut 9%-35% in 2009-10. 40% of Bayan’s volume will be priced below the current index (legacy contract), which should alleviate any downside risks. Buy