XA Update Report | PT Indo Tambangraya Megah Tbk. (ITMG) – Remaining Resilient Despite Domestic Challenges
By Axell Ebenhaezer (Senior Research Analyst)
22-June-2026
ITMG delivered a 1Q26 net profit of IDR 921.1 billion, a 14.7% YoY decline from IDR 1.08 trillion in 1Q25. The result beat our forecast (34.4%) against a backdrop of the market bracing for a much sharper RKAB-driven deterioration through FY2026, while revenue increased by 3% YoY to IDR 8.37 trillion — in-line with our estimates (26.2%). 1Q26 net profit margin fell to 11.0% from 13.5% as blended ASP slips 3% YoY to USD 79.4 / ton and strip ratio normalized to 10.4x from last year’s efficient 8.8x.
🔹 Third-party coal sales counter impact of RKAB cuts
• ITMG’s 1Q26 ASP increased 6% QoQ to USD 79.4 per ton — in line with our forecasts — as oil volatility in 1H26 pushed up coal demand. We likely will see ASP remaining strong for Q2 and possibly up until Q3 despite the recent de-escalation in the Middle East.
• However, the quarter’s positive surprise is almost entirely attributed to sales volume which reached approximately 6.3 million tons — 26.4% of our FY26 forecast of 23.8 Mt.
• This slight beat was driven by elevated third-party coal sales rather than incremental own-mined production.
• ESDM has been actively tightening domestic RKAB production quotas in order to address industry-wide oversupply, with FY26 total national coal production targeted well below FY25’s realized output.
• We had previously modeled ITMG’s own-mined production facing a meaningful contraction as a result. However, what 1Q26 demonstrated is that ITMG’s trading and blending infrastructure — built up over years of third-party coal purchasing — can credibly backfill a meaningful portion of any production shortfall, allowing total reported sales volume to hold up far better than a simple read-through of RKAB cuts would suggest.
• In light of this, we have raised our FY2026F sales volume forecast to 24.8 million tons.
• Furthermore, solid coal prices in the first half of the year has caused ESDM to consider potentially relaxing RKAB cuts and increase production volume target.
🔹 DSI questions linger
• The Indonesian government has created Danantara Sumberdaya Indonesia (DSI) which will act as an intermediary when exporting key commodities, including coal.
• However, despite the government’s insistence that DSI will simply manage and oversee the export process to tighten governance, there are lingering worries that this “one-door” export model poses severe risks of trade monopolies, operational inefficiencies, and potential corruption.
• This policy could potentially reduce Indonesian coal competitiveness in the international market and squeeze the profit margins of private sector players.
🔹 OVERWEIGHT recommendation with a TP of IDR 25,250
• Following our 1Q26-driven forecast revision — FY2026F net profit raised to IDR 3.55 trillion (FY2026F EPS: approximately IDR 3,154) — we apply a target P/E multiple of 8.0x, modestly below the company’s 3-yr PE SD+2 of 8,87x, reflecting residual caution around the sustainability of elevated third-party coal trading volumes, the still-evolving RKAB policy backdrop, and the uncertainties surrounding DSI, even as we acknowledge the much-improved earnings trajectory.
• This yields a new target price of IDR 25,250, versus a current price of IDR 22,225 — implying a 13.6% upside. We are upgrading our rating to OVERWEIGHT from HOLD.
• Risks: 1) RKAB allocation uncertainty 2) Coal price decline from Middle East de-escalation 3) DSI
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