Room for Potential Hike in ASP
In 4Q17, ITMG posted the sales of USD526 million (+28.5% y-y) coupled with the hike of 30.5% into USD79.7 per ton in ASP. The hike in ASP aligned with the high prices of global coal. The annual ASP was USD73.1 per ton. We estimate that in 2018, ASP is capable of hiking slightly into USD76.5 per ton due to the long-term stability in the global coal prices.

High Stripping Ratio: Potent Driver for Upbeat COGS
COGS picked up by 35.0% y-y from USD272 million in 4Q16 into USD367 million in 4Q17. The incline in COGS occurred amid the decline in sales volume from 6.7 million ton in 4Q16 into 6.6 million ton in 4Q17.

The incline in COGS was dominated by the increment of 44.9% y-y from USD116 million in 4Q16 into USD168 million in 4Q17 in the mining cost. The high stripping ratio (SR) heightened the mining cost. In 4Q17, Indominco Mandiri (IM), one of ITMG mining posted SR of 13.3x (vs 6.9x in 4Q16), and ITMG’s other mining, namely Bharinto posted SR of 12.4x (vs 5.7x in 4Q16).

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