• Bumi Resources has yet to release its 1Q10 financial result however we foresee that the company will post a positive growth in its 1Q10 results amid higher sales volume booked during the quarter.
• During 1Q10, the company sold around 16.0mn tons of coal or 41.6% YoY higher compared to 11.3mn tons in 1Q09. This higher sales volume is likely to help revenue amid a possibility of lower selling price.
• We view the company’s average selling price in 1Q10 is relatively stable compared to 4Q09, hence we expect Bumi’s 1Q10 revenue to come around US$880mn or 16% YoY higher compared to 1Q09’s revenue of US$752.9mn.
• For its bottom line, the company is likely to implement a normal effective tax rate in 1Q10 and may adjust its 1Q09 net income due to higher tax rate implementation. The company’s 2009 effective tax rate was at 45% compared to 1Q09 rate of 13.8%. Thus it is likely Bumi had adjusted its 1Q09 tax expense in 1Q10 reporting period. The quarterly performance is likely to be robust as the company expensed its deferred stripping expense in 4Q09.
• Currently the company is trading at 2010F PER of 17.7x and EV/EBITDA of 7.1x and Bumi’s market cap / coal reserve of US$1.6/ton is one of the lowest as compared to other domestic coal companies, Buy.
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