BUMI - Blue-sky PO

BUMI Conference Call Take-away yesterday (Presentation Attached): 1) Business Development Director, Kenneth Farrell believes Thermal Coal price to increase to $100/t in the next 12-18 months, 2) Head IR, Dileep Srivastava confirmed the 3 acquisition (44% of DEWA IJ, 76.8% of Fajar Bumi Coal Mine and 84.5% of Pendopo Coal Mine) are at reasonable prices and non-related parties, 3) 2009M Guidance of 10% Volume increase and 15% production cash cost reduction, 4) AGM on 26th June to agree at least 30% Dividend Payout of $645m Net profit.∙

Assuming a Blue-sky fair multiple of 10x 2010F PER over 12-18 months (please note CS Indonesia Universe is now on 10.7x 2010F PER) to the coal stocks that we cover (BUMI/ITMG/PTBA), on base coal price average assumptions of $80/t for 2010F, $90/t and $100/t, BUMI is the most leveraged on coal price increases! 2010F
Coal Price Fair-Value based on 10x 2010F
PERUSD/tonne FOB BUMI ITMG PTBA
$80/t Rp2,518 Rp16,744 Rp18,080
$90/t Rp3,736 Rp21,764 Rp22,179
$100/t Rp4,954 Rp26,784 Rp26,281