Bumi Resources (BUMI) – Maintain BUY
Price: Rp3,025 – Target Price: Rp3,950
In-line 1Q11 results, de-leverage on-track
- BUMI reported net earnings of US$112 mn in 1Q11, dropped by 15% YoY.
- Margin expanded, with operating margin improved 25.7% (from 22.4%).
- Management confirmed it is on track to de-leverage balance sheet. Repayment of US$600mn CIC debt tranche 1 due in October’11 is on track.
- The coy expects sales volume to reach 66 mn tons with ASP of US$90/ton in 2011, higher than our assumption of US$82.5/ton.
- The company’s best case scenario is to exchange full US$1.9bn CIC debt with the Vallar’s CB.
- But if the negotiation failed, BUMI will sell down the CB to others institution with long term investment horizon.
- Recent share’s weakness provides buying opportunity.
- Maintain our price target Rp3,950/share, translating 15.1x PER’12.