5 April 2012
Bumi production guidance of 100m tons by CY14,
lower realisation/cost, Neutral
In its CY11 financial results press release, BUMI guides for 75m tons of
production in CY12 (up 14% YoY), which will be ramped up to 100m tons by
CY14 from KPC/Artumin mines. Realisation is expected at US$90/ton (vs
US$92/ton in CY11), but expects cost to moderate by US$2/ton, given lower
strip ratio (between 10-10.5 in CY12, vs 11.5 in CY12).
Our estimates factor in production/sales volume of 72.5/71m tons in CY12
and realisation/cost of US$90/ton and US$42.5/ton (unchanged YoY). Also,
we estimate 100m tons production by CY15, based on discussion with Tata
Power (TPWR IN, Mkt Cap US$4.8b, CMP INR103, Neutral). Assuming current
guidance by BUMI, our FY13E consolidated earnings could be revised
upwards by 25%.
TPWR is net long on coal to the extent of ~20m tons and recent softening of
coal prices (down US$5/ton QoQ) could impact earnings, while benefit of
savings from Mundra UMPP (owing to low fuel cost) would materialise only
in phases as project is commissioned over FY12-14E.
TPWR’s stock has held firm due to the expectation of possible “review” of
Mundra UMPP tariff. Our interaction with Bureaucrats and Regulators
suggest that signed PPA is very important document and thus, the review
needs consent of several stakeholders and may not come in haste. Maintain
Bumi targets KPC/Arutmin mines production at 100m tons in CY14,
Realisation muted in CY12
PT Bumi Resources Tbk (BUMI) released a media statement highlighting its
performance during CY11 and guidance. Key excerpts are:
Production target for CY12 at 75m tons (up 14% YoY) and 100m ton by CY14
(CAGR of ~14%) from KPC/Arutmin mines.