Strong 1Q09 reaffirms our estimates
ITMG achieved US$101.8mn net income in 1Q09 or 47.7% of our FY09 estimate boosted by US$28.7mn in gain from derivative transactions. On operating level, the achievement was 34.1% at US$113.9mn. We are not changing our estimates as average selling price (ASP) is expected to decline, while fuel price is rising, and rupiah strengthening. Barring any coal price shock, we are optimistic that our estimates have more upside risk. Improving risk tolerance enabled us to upgrade target price to its full DCF valuation at Rp19,831/share. However, as the current share price is skirting around our target price we downgraded our recommendation to Neutral.
Production : below estimates (22.0% of FY09 guidance). ITMG produced 4.4mn tons in 1Q09, which only accounted for 22.0% of its 20mn tons production target for FY09. Meanwhile, average stripping ratio increased from 10.5 in 1Q08 to 14.0 in 1Q09. ITMG expects to lower FY09 stripping ratio (hence, increasing margin) and meets the production shortfall by ramping up its coal production from its new East Block (Indominco) which ha s lower stripping ratio (8.8) and can produce additional 2.0mn tons for the remainder of the year.
Coal contracted : 76.0% at US$76-78/ton. ITMG expects FY09 ASP will be stable at the FY08 level of US$74/ton, and we deem it will be achievable. With cash cost (including royalty, selling and admin fee) at US$53/ton, we estimate its margin will be 28.4%. With depreciation at 3.4% of revenue, operating margin is expected to be around 25%, vs our FY09 estimates of 27%.
Maintaining estimates, upgrading target price, and downgrading recommendation. With revenue at 28.2% of our fully year estimates, and projected FY09 operating margin (based on 1Q09 result) 2% below, we think our FY09F projections is intact. We upgrade our target price from Rp15,129/share (75% of our DCF) to Rp 19,831/share (100% of our DCF), on improving sen timent towards emerging markets. However, as its share price now is within striking distance to our TP, we downgraded our recommendation to Neutral.
Tidak ada komentar:
Posting Komentar