* Thermal coal price is on the rise…Alan Heap reckons price will go back up to US$100/t in 2011 with LT pricing at US$90/t. Newcastle spot prices are up U$10/t from a month ago to US$95/t. Annual contracts between Australian shippers and Japanese utilities are set at US$98/t. Australian exports YTD annualized are 20mn ton below our forecast, and Indon production is also set to fall short of expectations due to heavy rains. https://www.citigroupgeo.com/pdf/SGL01846.pdf
* To play thermal coal in Indonesia, we like UNTR (TP Rp22,900 - 13% upside) and ADRO (TP Rp2,750 - 37% upside). This is in-line with our thesis to rotate out of overbought consumer/banks and into coal and CPO.
* UNTR August data - Heavy equipment sales moderated -3% MoM, +49% YoY at 453 units due to lower sales to agribusiness while demand from mining sector continued to be robust. 8M10 heavy equip sales at 3,653 units is already above our expectation at 80% of our FY forecast. Pama's coal production and overburden removal both +8% MoM, the highest YTD, thanks to improved weather condition. Coal production level is above our expectation while overburden removal is in line, as the actual strip ratio of 8.4x in 8M10 is below our 8.8x. Shr px has underperdormed the market by 11% in past 3 months, and now trades at undemanding 13.2x '11 PE.
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