Bumi Resources (BUMI) - Inline 9M10 Results

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