JP Morgan - Indo Tambang (ITMG)

Its parent company Banpu held an analyst meeting yesterday, painting a sanguine coal market outlook given robust export market demand. China is emerging as the most important market for BANPU’s Indonesian coal (22%-24% of total volume over the past three quarters). In retrospect, compared to Adaro’s surprisingly weak results yesterday, investors should have given more credit to ITMG’s 2Q10 results that showed a 17% QoQ uplift in average selling price (versus flat ASP for Adaro). Our Thai based analyst Sukit Chawalitakul is showing a P/E ratio of 13.7x and 9.9x for FY10-11 for Banpu, while Indo based analyst Stevanus Juanda is showing a P/E ratio of 13.2x and 10.0x for FY10-11 for ITMG. This stock could benefit from the heavy selling flow we seen on Adaro post the earnings disappointment, that could put ADRO on high-teens P/E multiple for FY10.