●
We came
back with the following key takeaways after meeting Bukit Asam’s
management last week: (1) production volume target stays put
despite the current coal market condition and railway capacity
constraint; (2) need to change mining contracts to equipment rentals in
accordance with regulation; (3) review of major power plant
projects.
●
Despite
delays in the improvement of railway capacity and current coal market
condition, Bukit Asam targets sales volume of 18mn t this year as it sells
high grade coal, which still has strong demand.
●
According to the
mining regulation, mining companies have to conduct mining
activities themselves. Thus, there is a need to change the contracts
with mining contractors to equipments rentals. Bukit Asam
has also reviewed its three major mine mouth power plant projects
in order to utilise its massive coal reserves.
●
Bukit
Asam remains our top pick in the sector; we retain our OUTPERFORM rating
with a target price of Rp19,000.
source: CreditSuisse dated 4 September 2012
