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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Tampilkan postingan dengan label Indo Tambang (ITMG IJ). Tampilkan semua postingan
Rabu, 21 Juli 2010
Selasa, 17 Februari 2009
CLSA Indo Tambang (ITMG IJ), Healthy Choice
Research Today: Indo Tambang (ITMG IJ), healthy choice
Our resource analyst Olie looked at Indo Tambang Raya (ITMG IJ) and believes that it is a healthy choice. To be on the conservative side, we cut earnings forecast by 20%and 17% in 2009 and 2010 respectively, taking into account higher cost assumptions. We have raised cost assumptions after we learn that ITMG will re-start mining in Kitadin using own mining fleet rather than contractors. BUT ITMG is our top pick in the coal space. We have a BUY rating with TP of Rp13,900 (lowered from previously Rp16,600).
Reasons why ITMG is good for your health:
Dividend play. ITMG has a policy to distribute 60%, of earnings as dividend. Parent Banpu relies on dividend from ITMG. Expect 15% yield this year.
Corp governance: parent ranks near top of our CG survey.
Defensive nature: (1) portion of contracted tonnage, around 54% now, at around US$80/t (2) strong cash flows (3) strong cash balance.
Lower fuel cost: ITMG would be key beneficiary. Expect total cash cost, incl. royalty, to fall from US$53/t in 08 to US$48/t this year.
Upward adjustment on reserves? ITMG uses US$45/t for reserve statement. This is conservative. ITMG has total resource of 1.5bn tonnes and portion of this can be converted into reserves.
Key catalyst for the stock: (1) dividend announcement (2) fixing the price of remaining tonnage (3) result announcement (4) achieving production assumptions (5) new reserve estimates, possibly announced end of 1Q09.
Our resource analyst Olie looked at Indo Tambang Raya (ITMG IJ) and believes that it is a healthy choice. To be on the conservative side, we cut earnings forecast by 20%and 17% in 2009 and 2010 respectively, taking into account higher cost assumptions. We have raised cost assumptions after we learn that ITMG will re-start mining in Kitadin using own mining fleet rather than contractors. BUT ITMG is our top pick in the coal space. We have a BUY rating with TP of Rp13,900 (lowered from previously Rp16,600).
Reasons why ITMG is good for your health:
Dividend play. ITMG has a policy to distribute 60%, of earnings as dividend. Parent Banpu relies on dividend from ITMG. Expect 15% yield this year.
Corp governance: parent ranks near top of our CG survey.
Defensive nature: (1) portion of contracted tonnage, around 54% now, at around US$80/t (2) strong cash flows (3) strong cash balance.
Lower fuel cost: ITMG would be key beneficiary. Expect total cash cost, incl. royalty, to fall from US$53/t in 08 to US$48/t this year.
Upward adjustment on reserves? ITMG uses US$45/t for reserve statement. This is conservative. ITMG has total resource of 1.5bn tonnes and portion of this can be converted into reserves.
Key catalyst for the stock: (1) dividend announcement (2) fixing the price of remaining tonnage (3) result announcement (4) achieving production assumptions (5) new reserve estimates, possibly announced end of 1Q09.
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