Price Normalization Continues, PTBA Performance Predicted to Remain Depressed in 2024

Jakarta,- The performance of PT Bukit Asam Tbk (PTBA) is expected to remain under pressure this year. The continuing normalization of coal prices is the cause.

OCBC Sekuritas Equity Analyst Devi Harjoto explained, the continued normalization of coal prices was reflected in PTBA's performance in the first quarter of 2024. PTBA posted a 32% decline in net profit on an annual basis (YoY) to Rp 791 billion, lower than its projection and consensus.

The decline in the company's profit was due to a decrease in sales volume and average selling price (ASP). PTBA recorded a 9.9% quarter-on-quarter (QoQ) decline in ASP to IDR 958.4 thousand per MT amid falling Newcastle and ICI-3 benchmark prices.

“Then, higher cash costs which increased 15% QoQ due to railroad service costs due to accounting treatment,” he wrote in his research, Thursday (16/5).

In addition, PTBA's revenue also corrected by 5.5% YoY to Rp 9.41 trillion. This was in line with the 3% QoQ decline in sales volume to 9.7 million tons due to a 27% QoQ decline in production volume due to higher rainfall.

However, PTBA managed to increase the proportion of sales from non-PLN to domestic sales. “This is after the start of PLTU 8 South Sumatra, which accounted for 43% of non-PLN domestic sales in the first quarter of 2024,” he explained.

Devi said, this year it is estimated that coal demand will be higher. However, she estimates that Newcastle coal prices will remain stable at US$ 120 - US$ 125 per MT throughout 2024.

Thus, PTBA's revenue is estimated to be IDR 37.72 trillion or corrected by 1.97% YoY. Meanwhile, net profit is projected to decrease by 20.32% YoY to IDR 4.86 trillion.

Meanwhile, it was explained that the high demand was driven by the prolonged heat wave in India which spurred demand for air conditioners. In addition, the general election in India may also influence its government to take advantage to replenish coal inventories during lower prices.

In China, demand is expected to remain strong due to growth in electrification for electric vehicles and manufacturing. Moreover, coal prices for domestic coal in China are relatively high compared to imports, thus encouraging it to make more imports.

According to Devi, higher coal consumption in India and China will offset the decline in consumption in Europe and the United States (US). “On the other hand, increased coal production in Indonesia is expected to meet demand from both countries as we anticipate higher production than this year's target of 710 million tons,” she explained.

OCBC Sekuritas also maintains PTBA's hold rating with a target price of IDR 3,000 per share.

Sources :  May 27.24

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