1H18’s Net Income: Positive Impacts of Recovery in Coal Prices
UNTR posted the net profit of IDR5.74 trillion growing by 60% y-y and 20% q-q. The growth was the positive impacts of the recovery in the global coal prices. Meanwhile, the demand for heavy machinery and mining contractor grew by 24% y-y and 32% y-y, respectively. Furthermore, the sales volume surged 37% y-y inclining from 1,751 units to 2,400 units. Of note, while Komatsu dominates the total sales of heavy machinery in Indonesia by 36%, PAMA dominates market shares by 35%.

Demand: Making Best Use of Momentum
We oversee that in ahead years the prospect of mining contractor and demand for heavy machinery is still promising because of a number of positive catalysts, such as 1) the increment of 100 million tons in coal production by China’s authority, 2) the high demand for coal by China and India, 3) a way more conducive weather, 4) trend of dollar appreciation against rupiah, and 5) the trend of rallying coal prices (the average of USD90-USD95 per ton FY18E-FY19E: our estimate).

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