Samuel Sekuritas BUMI One-Time Cost Won’t Impact Future Earnings

Highlights:
• BUMI’s FY09 net profit dropped by 49% YoY to US$190.4 mn, whilst revenue slightly
decreased by 4.73% to US$3.2bn. Operating profit fell by 42.1% YoY to US$638 mn,
followed by lower operating margin to 19.8% (from 32.6%).
• The company has restated its FY08 earnings to US$371.7 mn as compared to US$645.4
mn mainly due to higher tax payment of US$489 mn (from US$90 mn).

Comments:
• Net profit was dragged down by one-time cost of US$275 mn from deferred stripping cost and interest expense of US$180.9mn. After the amortization, deferred stripping cost on the balance sheet stood at US$243m as of Dec’09.
• Excluding deferred stripping cost, BUMI’s net profit would have been US$448mn or 20.5% increased, and above consensus expectation of US$413 mn.
• On the top line, lower revenue was mainly due to lower ASP of US$63.1/ton (-13.9% YoY). BUMI has achieved its production volume target of 63.1mn ton (+19.5% YoY) meanwhile sales volume reached 58.4mn ton (+13.4% YoY).
• BUMI made tax payment of US$223.9 mn in FY09, equivalent to 45.2%% tax ratio, which
is more reasonable in our view for CCoW’s requirement. Going forward, we are going to
use tax rate assumption of 45% (from current 30%).
• Net gearing remains high at 2.25x per Dec’09, increased from 1.0x in Sept’09.
Debt/EBITDA reached 3.20x.

Action & Recommendation:
• We believe market has been anticipated for the deferred stripping cost and reflected on current market price. Furthermore, the deferred stripping cost would not give any impact for future earnings. However, we are well aware that the tax issue has been the major obstacle that caused overhang in BUMI’s share price. We believe the share price will be back to fundamental once tax issue resolved.
• We have revised down our earning after factor in higher tax rate with our new target price of Rp3,250/share. Currently BUMI is trading at 11.1x PER’11 and 4.7x EV/EBITDA’11. MAINTAIN BUY