Quantamental Investing to beat Benchmarks

A. Stotz Investment Research

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PTBA (PTBA IJ): Can Benefit from Selling Mainly to the Local Market

PTBA: Coal Player with a Solid Balance Sheet

CEO, A. Stotz Investment Research

Dr. Andrew Stotz, CFA

Equity Bottom-Up

Tambang Batubara Bukit Asam / Equity Bottom-Up

<ul>
<li>Strong net profit momentum, improving operating profit, and low debt levels relative to its sector</li>
<li>Coal prices should be supported by China’s policy to implement stricter environmental and safety requirements in major mining provinces</li>
<li>Planned increase in railway capacity by 8% YoY to 23m tonnes by the end of 2018 should help PTBA to meet strong demand for coal</li>
<li>Attractive at 18CE* 10.4% ROE/PB versus ASEAN Energy at 8.1%, offers a nice 5.3% dividend yield and PTBA is net cash</li>
<li>Risks: Fall in Chinese demand, domestic price cap policy can lower average selling price on part of PTBA’s annual volume</li>
</ul><p><em>* Consensus Estimates</em></p>


Strong net profit momentum, improving operating profit, and low debt levels relative to its sector
Coal prices should be supported by China’s policy to implement stricter environmental and safety requirements in major mining provinces
Planned increase in railway capacity by 8% YoY to 23m tonnes by the end of 2018 should help PTBA to meet strong demand for coal
Attractive at 18CE* 10.4% ROE/PB versus ASEAN Energy at 8.1%, offers a nice 5.3% dividend yield and PTBA is net cash
Risks: Fall in Chinese demand, domestic price cap policy can lower average selling price on part of PTBA’s annual volume
* Consensus Estimates

PTBA (PTBA IJ): Strong Fundamentals at Indonesian Coal Miner