IND: Adaro Energy: Earnings Recovering; Stronger 2H18 Expected
Analyst: Hariyanto Wijaya, CFA, CPA, CMT
https://research.rhbtradesmart.com/attachments/33/rhb-report-ind_adaro-energy_results-review_20180824_rhb-537875715631214745b7f4dc0b573b.pdf
Adaro booked 1H18 earnings of USD195m, representing 37% and 39% of our and consensus 2018 expectations – the results are still within expectations as 1H18 coal production was at 43-44% of its 2018 production target.
2Q18 earnings of USD121m recovered strongly from 1Q18 (+62.5% QoQ), mostly on a recovery in coal sales and production volume during 2Q18. We maintain our assumptions and forecasts, as we believe coal production and earnings should improve in 2H18.
Acquisition of Kestrel coking coal mine was completed on 1 Aug 2018. We have not factored in the Kestrel acquisition in our forecasts. Based on our calculations, the acquisition could increase Adaro’s 2019F EPS by around 8%.
Reiterate BUY with unchanged DCF-derived TP of IDR2,600, 34% upside. Our DCF-derived TP of IDR2,600 implies 2018F-2019F P/Es of 11.3x and 10.9x.
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