Our Head of Research Nick Cashmore is putting on his resource hat and examining Indo Tambang (ITMG IJ). Many of you have already known that our resource guru Olie has departed for the other side of the industry; I guess the more enlightened one (buy side).
Back to ITMG, the combination of ITMG’s US$400mn cash and that the cash hungry parent Banpu, which is closing on a US$2bn acquisition in Australia, could imply a big dividend. ITMG has recently been able to secure loans from various banks to finance capex.
We estimate a dividend yield of anywhere between 6-12%. This is assuming 75-100% of its net cash to be distributed as a dividend. ITMG has been paying out 60% of its earnings as dividends and this is likely to increase.
BUY, with TP of Rp38,600
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