A what-if analysis: what-if DOID enters into a 1:1 non-cash share swap deal for a 90% stake in Berau Coal, currently held by Recapital.
The outcome: The market could be looking at a bigger company with a forecast net income of Rp1900bn for FY10 and Rp2400bn for FY11. On 2x the number of shares in DOID at Rp980, the market cap would be equal to Rp13.3trn, implying potential P/E ratio of 7.0x and 5.6x FY10-11.
The forecast: Most conservative consensus forecast on DOID calls for Rp851bn and Rp948bn net profit for FY10-11. When we met with the management recently, they are still endorsing such forecast.
Stevanus Juanda (analyst) has performed back-of-the-envelope analysis on Berau Coal, thinking that the company could deliver Rp1050bn and Rp1435bn net profit for FY10-11, assuming a US$300mn debt on the balance sheet. This forecast is driven by an EBITDA forecast of around Rp1.5trn and Rp1.9trn for FY10-11, based on US$90 and US$95 coal price for JFY11-12; 15.4mn and 17.0mn ton coal production in FY10-11. Steve’s estimate appears conservative compared to the comment made by Recapital CEO Mr.Rosan in January 2010, when he said EBITDA estimate should reach US$340mn on 17mn ton coal production.
The swap ratio: I always wonder why DOID presentation material contains a page where the management explained about Recapital’s deal on Berau Coal (attached); now I am starting to understand. One of the bullet point on page 5 confirmed a reported transation value of US$1.4bn EV, financed with vendor support, mezzanine and senior debt. If we assume a US$300mn debt at Berau upon the day of the swap, the implied equity value will be about US$1100mn or Rp10,920bn.
DOID shares were placed at Rp1400, or a market cap of around Rp9,500bn. That is how I arrive at a hypothetical swap ratio of 1:1, between DOID and Berau Coal.
The sensitivity: What if the swap ratio is unfavorable to DOID shareholders? If we take an extreme ratio of two DOID shares equal to one Berau Coal, the enlarged number of shares for DOID will be around 20,370mn. At Rp980 and 20,370mn shares, the market cap for DOID will be around Rp19.9trn with the same net profit forecast of Rp1900bn for FY10 and Rp2400bn for FY11. The implied P/E for this “less-favorable-scenario” is 10.5x and 8.4x for FY10-11; still looks manageable for me.
The risk: (1) Sentimental sell-off: angry shareholders looking to unload at any price, (2) Seeking cash from the minority: my assumption is for a non-cash deal, where current minority holders need not top up any cash. (3) Very unfavorable swap ratio, valuing Berau Coal at a big premium compared to the pronounced EV value of US$1.4bn, and DOID at a big discount to recent placement price of Rp1400.
Tidak ada komentar:
Posting Komentar