PTBA’s premium price among peers
From January 2018 to March 2019, PTBA’s price rallied by 62.5% as its peers’ prices dropped. BUMI IJ, INDY IJ, ADRO IJ, HRUM IJ, ITMG IJ slumped by -43.2%, -35.0%, -25.1%, -24.1%, +11.2%, respectively. Chinese authorities curbing imported coal is a logical takeaway for the dim coal sector.
We digest well that PTBA’s price is much premium than its peers because of four major reasons 1) PTBA Listed on MSCI All Country World Index (ACWI) on November 18th; 2) Effects of Substantial Amount Dividend Distribution: Estimated Dividend Payout Ratio (DPR) of Virtually 75%; 3) Promising Prospects of Downstream Coal Business, e.g., gasification and power plants; 4) Plenty Domestic Sales Reducing Correlations between PTBA’s Performance and a decline in the world’s coal prices. We forecast that PTBA’s price, for 2019E, stably stands at much premium level compared with its peers as PTBA get the least impacts of the reduction in imported coal by Chinese authorities.
Estimated stable prices of global coal
We forecast, for 2019E, prices of global coal to stably hover at USD85/ton. In light of Chinese stockpile of coal for major power plants, Chinese authorities, in near run, will not massively import coal. But, in a middle run, Chinese demand for coal, on an annual basis, is likely to hike 2% minimum, whereas PTBA’s cash cost of coal production is at the average of USD50/ton.
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