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Company Update: PTBA
January 19, 2015 09:16

Despite the currently unfavorable coal price - which will result in 9 – 10% yoy downward adjustments in the company’s coal selling price to PLN in 2015 - we believe that Bukit Asam (PTBA) will book stronger coal production growth going forward at 3-year CAGR of 11.7% in 2013 – 2016. Support will come from: a) the commencement of operations of the Tarahan port expansion, which will almost double the port capacity to 25mn tons in 2Q15 and b) the upgrading of existing railway line and additional railway equipment to transport the coal to the port. Given these positives, we maintain our BUY recommendation with a Target Price of Rp15,500, based on DCF valuation (WACC: 13.2% and long-term growth of 3%). Our Target Price implies 16.6x 2015F PE. Read More