The trend of rising coal prices opens room for better performance growth for PT Bukit Asam (PTBA) this year. Optimism for economic recovery also strengthens the potential for recovery in the performance of this state-owned coal company.
Global Coal Prices Have Decreased
Until the third quarter of 2020, PTBA’s revenue decreased 20% on an annual basis to Rp 12.85 trillion. Meanwhile, net profit fell by more than 44% on an annual basis to Rp 1.72 trillion. This decline in performance occurred because global coal prices fell from the second quarter of 2020 to the third quarter of 2020 due to the Covid-19 pandemic.
Realization of Investors Residents of Finoriska PTBA said that PTBA’s performance at that time was indeed heavy because coal demand declined due to limited economic activity during the pandemic.
However, management was still able to book positive profits due to the efficiency of production costs starting from transportation and mining services. Fortunately, at the end of the fourth quarter of 2020, coal prices began to enter an upward trend until now.
Reference Coal Price Increase 15.7%
Quoting Bloomberg, the coal price for the March 2021 delivery contract at ICE Newcastle rose to a level of US $ 83.35 per ton. In comparison, coal prices reached a record low of US $ 55 per tonne in August 2020. The Quick Reference Coal Price (HBA) in February 2021 is pegged to increase 15.7% on a monthly basis to the US $ 87.79 per tonne.
Apart from the increase in coal prices, the increasing trend of coal demand also adds to the positive sentiment. Finoriska said PTBA’s sales in the fourth quarter of 2020 increased due to increased demand from China after the country clashed with Australia.
Increase in Coal Production Volume
However, in terms of production volume in the fourth quarter of 2020, Finorika said it was lower than the previous quarter. “The impact of the rainy season on production has decreased but is relatively under control, while sales are quite large. I can’t describe the mango yet. Wait for the release, “said Finorika. However, production in the first quarter of 2021 is projected to increase.
BRI Danareksa Sekuritas analyst Stefanus Darmagiri projects PTBA’s performance this year to be better than last year. The positive sentiment came from increased production and prices.
Average Coal Selling Price Raised 7.8%
In summary, Isnaputra analyst Iskandar Maybank Kim Eng Sekuritas also projects that PTBA’s revenue has the potential to increase. Isnaputra projects that the average selling price has the potential to increase by 7.8 percent this year so that this year’s profit has the potential to grow 39.8 percent to Rp 3.07 trillion.
PTBA is Targeting Sales Of 25.1 Million Tons
Meanwhile, Isnapitra projects PTBA’s sales volume this year to reach 26.6 million tons. As information, PTBA’s sales volume target in 2020 is 25.1 million tons. Until September 2020, 19.4 million tonnes had been realized. Isnaputra recommends buying with a target price of IDR 3,500 per share. In summary, Stefanus also recommended buying with a target price of IDR 3,600 per share.