Sector: Indonesian coal
Date: 20 April 2009
Event: Sector review (8p notes attached)
Indonesian coal names have significantly outperformed the market.
From valuation stand point, looking at historical trading range, relative comparison to regional peers and discount or premium to NPV, they no longer look cheap.
Thermal coal might be close to bottom, but near-term demand outlook remains poor.
One recovery, ITM would be the one to pick given high export portion and operating leverage.
Bumi Resources is the one with the most leverage to thermal coal price but hampered by significant balance sheet risk and governance issue.
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