3Q18 Review: Top and Bottom Lines Fitting into Estimate
In 3Q18, UNTR posted revenue of USD22.1 trillion (+11.3% q-q, +31.8% y-y), heavy machinery sales of IDR7.4 trillion (+7.0% q-q, +19.8% y-y), and mining contracting revenue of IDR11.4 trillion (+21.7% q-q, +44.0% y-y). On a cumulative basis, 9M18’s revenue amounted to IDR61.1 trillion and floated at 73.7% of our 2018F estimate or 73.3% of 2018F consensus. Meanwhile, its net profit settled at IDR3.5 trillion (+21.9% q-q, +62.2% y-y) a lot higher than our estimate and consensus of IDR2.6 trillion and IDR2.5 trillion, respectively.

Robust Tailwind of Dry Season and Coal Prices
Favorable weather and bullish coal prices during 3Q18 allowed the coal miners to reap buoyant production. The increment in production positively correlated to mining contracting and heavy machinery performances. For example, overburden removal was 271.6 million bcm (+14.2% q-q, +20.9% y-y) and stripping ratio was 8.2x (vs. 7.9x in 2Q18 and 7.4x in 3Q17). Additionally, Komatsu sales were 3,681 units (+4.2% q-q, 29.0% y-y), hitting 96.8% of 2018’s target of 3,800 units. At the early of 2018, UNTR estimated Komatsu’s sales growth to lag and only float at 9% y-y (vs. 61% y-y in 2017) due to supply setback from Japan, prompting prolonged lead time from 9 months into 12 months. However, we are sanguine about Komatsu’s 2018F sales to hit 4,936 units.

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