CIMB Adaro Energy Result note - The best among peers so far

(ADRO IJ / ADRO.JK, OUTPERFORM - Maintained, Rp2,200 - Tgt. Rp2,700, Basic Resources)

Maintain Outperform on Adaro. 1Q10 net profit forms 20-22% of our forecast and consensus expectations, in line with its historical 1Q contributions which typically are the weakest in the year. Despite heavier rain in Mar 10, 1Q10 production was rather good. The results were also affected by a stronger rupiah, particularly as it reports in rupiah. Net profit only declined 5.7% yoy to US$92.9m in US$ terms (best among peers) but fell 25% yoy in rupiah terms. However, this set of results was way better than its rupiah-reporting peer, Bukit Asam, with a much lower rate of decline on better ASPs, production and cost control. We expect stronger 2Q-3Q results, the best seasons for production and prices, 3Q in particular. We maintain our target price of Rp2,700 (NAV of thermal coal + Maruwai stake). We see catalysts from further sets of good results.