Bumi Resources (BUMI)– Maintain BUY
Price: Rp3,000 – Target Price: Rp3,250
Inline 9M10 Results
- 9M10’s revenue was above consensus estimation and already represents 82% of our FY10 target of US$3,867 mn.
- Strong revenue was mainly due to higher coal sales volume, up 8.9% YoY to 44.9 mn ton and higher ASP to US$69.6/ton (+9.4% YoY).
- Nonetheless, huge interest expense amounting to US$448 mn and loss on derivative of US$36 mn result net profit to drop by 45.7% to US$195 mn, represents 60% of our FY10 target.
- BUMI also booked an additional US$94 mn associate income (from Newmont) in 2Q10, bringing total of US$183 mn in 9M10. Tax rate was 46.2% vs last period 38.1%.
- Net gearing increased to 2.7x in Sept’10 from 2.5x in June’10.
- We maintain our FY10 forecast as we expect 4Q10 performance should be better after loan repayment and refinancing that will reduce interest cost.
- Recent Bakrie – Vallar deal will be positive as it will improve company’s corporate governance and credibility.
- After the successful of non pre-emptive right issuance, BUMI is still on track to de-leverage loan. Further loan reduction will be from collection of receivable from asset sale.
- Maintain BUY, price target Rp3,250/share
- Bumi Resources (BUMI) – Inline 9M10 Results (69.3 KiB)