Results Review:
Harum Energy (HRUM IJ, BUY, TP: IDR2,800)
FY17 Earnings To Spike
Harum Energy (HRUM IJ, BUY, TP: IDR2,800)
FY17 Earnings To Spike
We think Harum should
book strong earnings in FY17 on the back of higher coal production volume and
higher coal selling price. We reiterate BUY with unchanged IDR2,800 TP (15%
upside), as we think a sizable consensus earnings upgrade ahead should boost its
share price. Our FY17F earnings are 70% higher than consensus, based on our 5m
tonnes production estimate (FY16 production was 3.2m tonnes).
¨ Ramp-up in its FY17F
coal production. Harum
cut its annual coal production every year since 2014 due to weak coal prices.
Due to the coal price recovery and better coal industry outlook, the company
aims to ramp up Mahakam Sumber Jaya’s (MSJ) coal production to 5m tonnes in
FY17, from 3.2m tonnes in FY16. The actual FY16 coal production of 3.2m tonnes
is higher than its target of 3m tonnes.
¨ Higher coal selling
price in 1Q17. Harum
has already sold the majority of its 1H17 production. Harum guided that its
1Q17 coal sales volume was priced at a level higher than its coal selling
prices in 4Q16. The combination of higher coal sales volume and higher coal
selling price should boost FY17F earnings.
¨ Reiterate BUY call
with unchanged IDR2,800 TP. We fine-tuned our forecasts and increased
FY17F-18F earnings by 1-2%. We think a boost to share price is ahead, as
consensus is likely to substantially upgrade earnings, on the back of higher
coal sales volume and higher ASP.
¨ Better-than-expected 4Q16 recurring earnings. Harum booked strong 4Q16 recurring earnings of USD8.3m (+30.5%QoQ), which led to higher-thanexpected FY16 earnings (112-129% of our and consensus’ FY16 expectations respectively). The main driver was higher-than-expected coal volume.
¨ Better-than-expected 4Q16 recurring earnings. Harum booked strong 4Q16 recurring earnings of USD8.3m (+30.5%QoQ), which led to higher-thanexpected FY16 earnings (112-129% of our and consensus’ FY16 expectations respectively). The main driver was higher-than-expected coal volume.
Kindly click the following link for the full report: Harum Energy : FY17 Earnings To Spike
Best regards,
Best regards,
Hariyanto Wijaya,
CFA, CFP, CA, CPA
Vice President
Research Analyst – Heavy
Equipment, Coal, Plantation
PT. RHB Securities
Indonesia
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