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 an inline Q1 FY24, with stabilizing price. Net cash at 875 mn USD is 50% of mkt cap. </li>
<li>If coal prices remain stable at 135 USD/ton, the company will be able to churn out 400 mn USD of profits (~24 mnt sales).  </li>
<li>With a minimum 65% dividend payout ratio, we derive a dividend yield of 15%. This number could be an upside risk as payout ratios have also been 100%.</li>
</ul>



Indo Tambangraya Megah (ITMG IJ) reported an inline Q1 FY24, with stabilizing price. Net cash at 875 mn USD is 50% of mkt cap. 
If coal prices remain stable at 135 USD/ton, the company will be able to churn out 400 mn USD of profits (~24 mnt sales).  
With a minimum 65% dividend payout ratio, we derive a dividend yield of 15%. This number could be an upside risk as payout ratios have also been 100%.


Indo Tambangraya Megah (ITMG IJ): Pure Coal Play at 4.5x PE, 50% of the Market Cap in Cash

<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

<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

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>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

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PT Medco Energi Internasional Tbk is an integrated energy company. The Company explores for and produces oil and gas both in Indonesia and internationally, operates gas-fired power plants in Panaran I, Batam Island, and develops renewable fuels such as Bio-fuel.

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PT ABM Investama Tbk invests in energy resources, energy services and energy infrastructure.  Through subsidiaries, the Company mines coal; offers mining services; offers logistics and warehousing services; generates electricity; and manufactures equipment for the mining, oil and natural gas, electricity generation, and transportation industries.

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PT Energi Mega Persada Tbk explores, develops and produces crude oil and natural gas.

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Oriental Energy Co., Ltd. manufactures, processes and distributes liquefied petroleum gas (LPG).  The Company produces LPG using oilfield associated gases, mainly including propane and butane. Zhangjiagang's products are mainly used as industrial gas, as well as chemical raw materials.

Shanxi Lanhua Sci-Tech Venture Co., Ltd. produces and markets coal and fertilizers.

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Sitio Royalties Corp. focuses on investing in mineral and royalty interests in oil basins. The Company acquires, owns, and manages mineral and royalty interests across a diverse set of operators in unconventional basins within the United States with a specific focus on the Permian Basin.

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Beijing Haohua Energy Resource (601101 CH)

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Chennai Petroleum Corporation Limited refines crude oil and markets petroleum and petrochemical products, including lube oil base stocks, aviation turbine fuel,  propane, propylene and polybutene feedstock.  The Group operates two refineries, the Cauvery Basin Refinery and the Manali Refinery.

SFL Corporation Ltd. owns and charters out ships. The Company operates fleet includes crude oil tankers, bulk and ore vessels, dry bulk carriers, container ships, and jack up oil rigs. SFL serves customers worldwide.

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.

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Indo Tambangraya Megah (ITMG IJ)