KimEng Adaro Energy: Company visit

Adaro Energy: Company visit

We met with Cameron Tough, Head iof Investor Relation at Adaro Energy today.
Sales volume in FY08 is around 40m tons, of which 1.3m came from third party coal.
Adaro expects production in FY09 between 42-45m tons, compared to 38.5m tons in FY08.
The management remains optimistic that demand on its envirocoal in particular to remain strong in 2009. Sales price in FY09 is likely to come between US$52 and 65 per ton. Of FY09 production, about 75% has been contracted at pricing towards US$65 per ton. At present, the company is in negotiation for the remaining 25%. In FY08, average selling price was around US$40/ton.
A recent coal transaction between Japanese buyer and Xtrata was settled at price of US$70-72/ton.
Cash cost in FY09 is expected to be flat around US$30/ton, mostly due to increase in contractor cost. The company still has carry-over contract on oil from last year, hence current decline on oil price will not be fully enjoyed by the company. Increase in stripping ratio is expected to put pressure on cash cost as well.
Adaro indicates that FY08 revenue to come between Rp16-18t, while EBITDA is around US$400m or above consensus estimate.
For FY09, management expects EBITDA to come between US$700m and US$1b.
The company has withdrew Rp240b from investment in Recapital Asset Management recently. As of February 2009, Adaro still has around US$76m in Recapital.
FY08 result will be published on next Monday 30 March 2009