Good morning,
Darma Henwa – Key
takeaways from meeting with the new President Director
We met with the new President Director of
Darma Henwa (DEWA IJ, NR) Mr. Faisal Firdaus and his team in order to know
the outlook of the company. Mr. Faisal Firdaus was appointed as the President
Director of Darma Henwa in May 2017. He has experience as Chief Executive
Officer and Chief Operating Officer of Arutmin Indonesia and VP Operations
& SHE of Bumi Resources.
¨ Beneficiary as a
sister company of Arutmin Indonesia and Kaltim Prima Coal. Arutmin Indonesia
(Arutmin)’s Coal Contracts of Work (CCoW) license would expire in November
2019, meanwhile Kaltim Prima Coal (KPC)’s license would expire on 31 December
2021. Short remaining period of the licenses would increase their overburden
and coal production volumes in coming years. According to discussion with
management, the combination of: 1) Darma Henwa’s position as a sister company
of Arutmin and KPC. 2) Darma Henwa works in mine sites that still have room
for expanding makes Darma Henwa should enjoy sizable increase in 2018 mining
contracting volume.
¨ Significant increase
in 2018 mining contracting volume. The management of Darma Henwa claims that
its agreed 2018 mining contracting contracts with Arutmin and KPC should
significant increase its 2018 mining contracting volume. Its 2018
consolidated overburden removal volume should increase by 94%YoY (from 98.7m
BCM in 2017 to 192.2m BCM in 2018), meanwhile Its 2018 consolidated coal
mining volume should increase by 70%YoY (from 14.2m tonnes in 2017 to 24.2m
tonnes in 2018).
¨ Welcoming the new
President Director.
Mr. Faisal Firdaus was appointed as the new President Director of Darma Henwa
in May 2017. His skills, experience and connections when he was the CEO and
COO of Arutmin should help him in transforming Darma Henwa.
¨ Still no clear
guidances on FY17 and FY18 capital expenditure. Although Darma Henwa
has planned significant increase in its 2018 mining contracting volume, Darma
Henwa still not give clear guidances on its 2017 and 2018 capex.
¨ Earnings drivers. Darma Henwa’s
earnings in coming years depends on its ability to execute significant volume
increase and ability to manage costs. As of 6M17, its revenue grew by 6.7%
YoY, but its operating income decreased by 58.9%YoY
¨ Not
rated.
We have no rating on Darma Henwa and no analysts cover this counter. (Hariyanto Wijaya, CFA, CPA, CMT)
Link to daily
report: Indonesia Morning Cuppa 091017
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Media Highlights:
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Corporate
Foreign reserves at
USD129.4bn in September 2017
IDR32trn
disbursement for State’s Asset Management Institution approved
Waskita targets
300km new toll concession by 2020
Prodia to use 19% of
IPO proceeds for lab equipments
M Cash Integrasi
targets IDR314bn IPO funds
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Our
Recent Publication:
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Company Update: Ciputra Development – Toning Down Our
Forecasts
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Corporate News Flash: Summarecon Agung –
9M17 Marketing Sales Are In Line With Estimates
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Regional Thematic: Halal – An Earnings
Boost Strategy
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Economics Update: September Inflation
Remains Moderate
Link to report: September
Inflation Remains Moderate
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Company Update: Nippon Indosari Corpindo –
Details On Rights Issuance
Link to report: Nippon
Indosari Corpindo : Details On Rights Issuance
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Sector Update: Coal Mining - Energy
Minister Does Not Agree With Cost-Plus Margin
Link to report: Energy
Minister Does Not Agree With Cost-Plus Margin
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Company update: Tower Bersama Infrastructure – Not
Our Preferred Exposure In The Sector
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Corporate News Flash: United Tractors –
Mining Equipment Sales To Stay Robust
Link to report: United
Tractors : Mining Equipment Sales To Stay Robust
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Economics Update: BI Cuts Key Policy Rate
Further In September
Link to report: BI
Cuts Key Policy Rate Further In September
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Economics Outlook: Stronger Growth in 2018
But Capped By Spending Constraint
Link to report: Stronger
Growth in 2018 But Capped By Spending Constraint
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Best regards,
Andrey Wijaya
Senior Vice President
Research Analyst – Auto, Consumer, Cement
PT RHB Sekuritas Indonesia
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