Equity, Bottom-up Analyst, Investics Research

Sameer Taneja

Equity, Bottom-up Analyst

Investics Research

It is important to note that the information provided by Investics Research is based on publicly available data and own knowledge, which has been gathered and analyzed from a variety of sources. While every effort has been made to ensure the accuracy and completeness of the information provided, it is not guaranteed to be free from errors or omissions. All forecasts and estimates are based on information that has been obtained from public sources that are considered to be reliable. The sources include but are not limited to, company announcements, exchange filings, presentations, etc. Investics does not guarantee the accuracy and completeness of the forecasts, estimates, and/or other information.

Equity Bottom-up Research

Equity Bottom-Up

Indo Tambangraya Megah / Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/indo-tambangraya-megah-tbk-p" target="_blank" data-smartkarma-citation="entities:15891:1" rel="noopener">Indo Tambangraya Megah (ITMG IJ)</a> reported its Q4 2023/FY23 numbers with revenues down 46%/35% YoY and profits down 58%/69% YoY on declining coal prices (113 USD/ton Vs 192 USD/ton) .</li>
<li>We expect spot coal prices to remain range-bound between 130-150 USD/ton, resulting in company profits ranging between 350-500 mn USD (4x-6x PE range) with dividend yield ranging from 11%-15%.</li>
<li>The company also has a cash buffer of 850 million USD, roughly 45% of the current market capitalization. </li>
</ul>



Indo Tambangraya Megah (ITMG IJ) reported its Q4 2023/FY23 numbers with revenues down 46%/35% YoY and profits down 58%/69% YoY on declining coal prices (113 USD/ton Vs 192 USD/ton) .
We expect spot coal prices to remain range-bound between 130-150 USD/ton, resulting in company profits ranging between 350-500 mn USD (4x-6x PE range) with dividend yield ranging from 11%-15%.
The company also has a cash buffer of 850 million USD, roughly 45% of the current market capitalization. 


ITMG IJ: Q4 2023 Inline, Deep Value, 45% of the Mkt Cash and ~11% Dividend Yield on Spot

External broker reports(aggregated public sources), BRI Danareksa Research

BRI Danareksa Research

External broker reports(aggregated public sources)

As a one-stop financial solution with the vision to be the most valuable securities house, BRI Danareksa Sekuritas (BRIDS) has maintained an excellent track record and extensive experience in the capital market as an underwriter, broker, and financial advisor for individual, institutional, foreign and domestic, private and government clients. Established in 1992, PT Danareksa Sekuritas is a securities company that performs activities as a securities broker, underwriter, or arranger and financial advisor.

<ul><li>ITMG indicated more aggressive FY24 production and sales growth plans (+15-20% yoy), driven by the contribution from its newer mines.</li><li>We raise our FY24F net profit estimate by 31%, as we adjust our sales volume assumptions, in-line with the mgmt’s latest guidance.</li><li>Maintain Buy with a slightly higher TP of Rp28,800 on ITMG’s sustainable FCF generation and solid dividends(current yield of 23.4%).</li></ul><p><em>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.</em></p>

ITMG indicated more aggressive FY24 production and sales growth plans (+15-20% yoy), driven by the contribution from its newer mines.We raise our FY24F net profit estimate by 31%, as we adjust our sales volume assumptions, in-line with the mgmt’s latest guidance.Maintain Buy with a slightly higher TP of Rp28,800 on ITMG’s sustainable FCF generation and solid dividends(current yield of 23.4%).Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

<ul>
<li>
<a href="https://www.smartkarma.com/entities/indo-tambangraya-megah-tbk-p" target="_blank" data-smartkarma-citation="entities:15891:1" rel="noopener">Indo Tambangraya Megah (ITMG IJ)</a> provides investors with fat dividends. We estimate from 2021-2023e, the company will have paid over 20,000 Rph (70% of the current share price) in dividends.</li>
<li>Despite these dividend payouts, cash on the balance sheet by the end of FY23e will easily exceed one bn USD or about 50% of the market capitalization.</li>
<li>Weak results/degrowth are expected due to unsustainably high coal prices in 2022. Nevertheless, there is a good case for future value as hefty dividends will continue to be paid.</li>
</ul>



Indo Tambangraya Megah (ITMG IJ) provides investors with fat dividends. We estimate from 2021-2023e, the company will have paid over 20,000 Rph (70% of the current share price) in dividends.
Despite these dividend payouts, cash on the balance sheet by the end of FY23e will easily exceed one bn USD or about 50% of the market capitalization.
Weak results/degrowth are expected due to unsustainably high coal prices in 2022. Nevertheless, there is a good case for future value as hefty dividends will continue to be paid.


ITMG Q2 2023 Weak But Stock At 20% Dividend Yield with ~50% of Mkt Cap In Cash

<ul>
<li>Newcastle coal prices have normalized from the highs of USD 450/ton (in September 2022) to current levels of USD 145/ton (a 68% correction from the peak). </li>
<li>From profits of 100 mn USD/month, we are now down to 90-100 mn USD/quarter. Despite this, the stock trades at 4.5x PE with a 15% dividend yield. </li>
<li>An added buffer of 850 mn USD of net cash represents 50% of the market capitalization. </li>
</ul>


Newcastle coal prices have normalized from the highs of USD 450/ton (in September 2022) to current levels of USD 145/ton (a 68% correction from the peak). 
From profits of 100 mn USD/month, we are now down to 90-100 mn USD/quarter. Despite this, the stock trades at 4.5x PE with a 15% dividend yield. 
An added buffer of 850 mn USD of net cash represents 50% of the market capitalization. 


ITMG IJ: A Healthy 15% Yield Despite the Coal Price Correction, With >50% Mkt Cap In Cash

<ul>
<li>We listened to the <a href="https://whitehavencoal.com.au/wp-content/uploads/2023/10/Whitehaven-Investor_update.mp4" target="_blank" rel="noopener">conference call </a>held by <a href="https://www.smartkarma.com/entities/whitehaven-coal-ltd" target="_blank" data-smartkarma-citation="entities:14253:1" rel="noopener">Whitehaven Coal (WHC AU)</a> to update investors on its acquisition of BHP's coking coal mines and  Q2 2024 production. </li>
<li>Based on spot prices of coking coal over 350 USD/ton and cash costs of 20% lower than the average of 2 years, the EV-EBITDA of acquisition is 1.8x</li>
<li>The acquisition could be massively accretive if coking coal prices remain stronger for longer as the company pivots its strategy to becoming a large met coal producer. </li>
</ul>


We listened to the conference call held by Whitehaven Coal (WHC AU) to update investors on its acquisition of BHP's coking coal mines and  Q2 2024 production. 
Based on spot prices of coking coal over 350 USD/ton and cash costs of 20% lower than the average of 2 years, the EV-EBITDA of acquisition is 1.8x
The acquisition could be massively accretive if coking coal prices remain stronger for longer as the company pivots its strategy to becoming a large met coal producer. 


Whitehaven Coal: Great Acquisition, Cash Gone, Now At The Mercy of The Cycle

Indonesia

PT Indo Tambangraya Megah Tbk operates as a coal exploration and mining company that provides energy and electricity support. The Company operates in Indonesia and supplies coal to the world energy market.

Indo Tambangraya Megah (ITMG IJ)

ITMG IJ: Q4 2023 Inline, Deep Value, 45% of the Mkt Cash and ~11% Dividend Yield on Spot

We summarize the results of ITMG for FY23 and the outlook for FY24. For a 130-150$/ton coal price range the stock trades at 4-6x PE with a 11-15%...

Sameer Taneja

Indo Tambangraya - FY24 Outlook

ITMG indicated more aggressive FY24 production and sales growth plans (+15-20% yoy), driven by the contribution from its newer mines.

BRI Danareksa Research

ITMG Q2 2023 Weak But Stock At 20% Dividend Yield with ~50% of Mkt Cap In Cash

ITMG declared a dividend of 2,660 Rph/share ( implying a dividend of 9% semi-annually or 18% annualized on the close price of September 1st). With...

Sameer Taneja

ITMG IJ: A Healthy 15% Yield Despite the Coal Price Correction, With >50% Mkt Cap In Cash

Despite the recent coal price correction, ITMG trades at 4.5x PE &15% dividend yield. The cash buffer of 850 mn USD (50% of the market cap) also...

Sameer Taneja

Whitehaven Coal: Great Acquisition, Cash Gone, Now At The Mercy of The Cycle

We provide our take on the recent acquisition of the coal assets of BHP by Whitehaven Coal. By consuming all its cash and taking on debt, the...

Sameer Taneja