Analisa Saham ITMG | 25 Februari 2019

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ITMG IJ: ASP declining trend to continue
(Andrew Hotama - RHB)

Morning team,
We wrote a note on ITMG today. The company just posted 4Q18 operational results:
- 4Q18 ASP: USD 75.1/ton (-15% QoQ, -4% YoY. FY18 ASP: USD81/ton (+11% YoY, 100% of RHB's estimate).
- 4Q18 Coal production volume: 6.4mn tons (flat QoQ, +14% YoY). FY18 Coal production: 22.1mn tons (+2% YoY, 100% of RHB's estimate).
- 4Q18 Coal sales volume: 7.4mn tons (+15% QoQ, +11% YoY). FY18 Coal sales volume: 23.5mn tons (+2% YoY).
- 4Q18 Strip ratio: 10.5x (-3% QoQ, -9% YoY). FY18 Strip ratio: 11.1x (-1% YoY, 100% of RHB's estimate). 
- ASP declined faster than Benchmark in 4Q18 (-15% QoQ vs. -10% QoQ), due to: 1) falling CV level from Indominco (57% of production, due to lower contributions from Indominco's East block on the back of depleting reserves) and 2) Fee renegotiations with customers as they demand to put into account falling mid to low coal CV prices into ASP. 
- Expect ASP declining trend to continue in 2019, as we forecast Newcastle benchmark coal price to avg USD90/ton this year (-16% YoY, YTD: USD98.1/ton (-6.7% YoY)). Prefer more laggard and cheaply-valued coal names such as ADRO (BUY, TP:IDR1,830)

- Maintain Neutral with TP IDR23,860. 

Link to report: https://research.rhbtradesmart.com/attachments/50/rhb-report-ind_indo-tambangraya-megah_company-update_20190225_rhb-413856512444148485c7324ebf027e.pdf


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