In response to a query what we think about the above story here is a response to a member in another group
This is a Feb'17 view of a credit analyst - focus is cash flow, ability to repay loans and TP for future debt - focus is not equity. 2 other credit analysts also have their view.
What is notable in JPM report is their own view that KPC & Arutmin can contribute $468 m to Bumi in an upside case from its 51% stake in KPC & 70% stake in Arutmin.
Bumi's Interest costs are expected to sharply reduce by an annualized $250 m from Jul'17 & further cut by $96m/annum once Tranche A & B $1.2 bn is paid in the medium term
Suggest read OCBC Sek report for an equity view. You could also read Samuel Sekuritas view. Can send these to you
It may also be worthwhile to conduct one's own analysis on Bumi's prospective valuation potentials.
Some suggestions:-
a) coal reserves resources
b) EV/EBITDA
c) Theoretical market cap - present (Rp 13 trillion at Rp 348/ share)
- Post rights issue (Jul'17 - Rp 61 trillion or Rp 926.16/ share (after reduces by $2.6 bn) ;
- then Rp 76 trillion ( Rp 1162: share) after 3/4 years when debt likely to reduce further by $ 1.2 bn (ie tranches A & B settled).
c) P/E comparisons - presently trading at 5 based on prorata FY'17 EPS
d) EV/EBITDA
Matket Cap/ EBITDA after Jun'17 restructuring & 3 years later
e) H2'17 & 2020 post restructuring Debt/EBITDA
f) H2'17 & medium term debt/equity
g) removal of governance perception discount with lenders board nominees in Bumi, stronger perception of internal controls by a top 4 monitoring accountant
g) additional revenue potential from investments in BRMS, DEWA & Pendopo
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