Adaro Energy (ADRO) - Secured US$750mn Loan

Adaro Energy (ADRO) – Maintain BUY
Price: Rp2,375 – Target Price: Rp2,800
Secured US$750mn loan

  • Secured US$750mn loan, 10 year tenor with total commitment of US$1bn.
  • The loan proceed will be used primarily to finance capex and expansion thru potential acquisition.
  • Currently, Debt/EBITDA stood at 1.09x. Assuming additional US$750 mn loan, we expect Debt/EBITDA to rise further to 1.64x, still below maximum requirement of 3.5x.
  • Adaro’s consortium got chance to win 2×1000 MW power plant project worth US$3-3.5bn.
  • The biggest coal companies with total market cap of Rp76 tr (US$8.5bn).
  • Reiterate BUY,  price target Rp2,800/share.