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Thursday, 25 November 10
ANALYSIS: COAL SECTOR: VALUE EMERGENCE - THE JAKARTA POST
 Coal demand will remain firm due to a build-up of coal-fired power plants in India, China and Indonesia. As a result, we have upgraded our coal price from US$95 per ton to a range of between $100, 105, 108, 110 and 115 per ton, respectively in 2011, 2012, 2013, 2014 and 2015 (inflation rate of 1 percent thereafter).
Additionally, Indonesia is one of the lowest cost coal producers in the world, which means that coal prices have to adjust with the incremental cost of production of higher-cost structured companies.
Thermal Seaborne coal demand is set to rise by 74 percent to 1,187 million tons in 2025 from 680 million tons in 2010, according to Coaltrans Coal Conference in Amsterdam last month. This is driven by a higher demand from China and India, which currently accounts for about 28 percent of the global thermal coal market.
China, which currently relies on coal to produce 80 percent of its power needs, is installing two new coal-fired power plants per week with capacities of 500 megawatts per plant. This pace will persist at least in the next decade, potentially doubling power capacity by 2020 and adding a 500-gigawatts new coal-fired electricity generation capacity according to the International Energy Agency. We highlight that with China consuming 43 percent of the global thermal coal production, imbalances between its indigenous production and consumption will drive global coal prices higher.
As for India, at present it imports about 8 percent of global coal production. But the number is set to grow to 25 percent by 2015. Indian thermal coal demand is expected to rise 810 million tons, or 131 percent, by 2025, driven by a 158 percent hike in coal-fired power capacity, in line with power demand, which will rise from the current 147 gigawatts to 380 gigawatts by 2025.
Meanwhile, Vietnam, which three years ago was the largest exporter of coal to China, is expected to become a net importer by 2015, putting further pressure on global supply in the medium term. Vietnam currently exports about 50 percent of its production or about 24 million tons, but this will fall to only 3 million tons, despite rising coal production from 48 million tons in 2009 to about 105 million tons in 2025.
Stripping out PT Bayan Resources’ (BYAN’s) price movements, the coal sector has underperformed the market by 9.8 percent year-to-date (ytd). We believe value is emerging, particularly for our top picks, and we raise our sector weighting to overweight.
At this stage, PT Bukit Asam (PTBA) has the highest upside potential based on Discounted Cash Flow (DCF), helped by the inclusion of the Banjarsari power project in our forecasts. We like PTBA’s railway expansion projects, which will increase PTBA’s railway capacity from 11 million tons currently to 47.7 million tons by 2015 or 82.7 million tons by 2018.
This will increase fourfold PTBA’s production from 12.7 million tons to 52.5 million tons by 2015 or by seven fold to 87.5 million tons by 2018. We also like PTBA for its government link, translating to more secured supply contracts to PLN. Additionally, we like its huge reserves (fives times Indonesia’s coal production), which will pave the way for it to become the second-largest coal producer after BUMI starting in 2018.
This means 33 percent compound annual growth rate (CAGR) for earning per share (EPS) in the next five years through 2015. It also has cash reserves of Rp 4.9 trillion with no debt and solid corporate governance. Our second pick is PT Indika Energy or INDY (+27 percent upside), due to Kideco’s strong performance (which contributes 76 percent of its pre-tax profit). This is followed by Adaro Energy (+19 percent), the largest market cap and second-highest average daily turnover after BUMI, which plans to nearly double production from about 42 million tons in 2010 to 80 million tons by 2014.
Surabhi Chopra, The writer is an analyst at PT Bahana Securities Source: The Jakarta Post
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Tuesday, 14 September 10
MID HIGH TEENS FROM WCI, AND HIGH TEENS FROM ECI TO CHINA - BRS
A fairly flat market for the dry bulk segments this week, although the Panamaxes jumped on the back of strong grain exports in the Atlantic. It ...
Tuesday, 14 September 10
HIGH CHARTERING ACTIVITY NEEDS TO KEEP UP FOR DRY BULK RATES TO REMAIN HIGH
Last week’s increase of spot chartering activity pushed dry bulk freight rates to new highs, after a less than lackluster summer. As a result, ...
Monday, 13 September 10
GLENCORE BUYS STAKE IN MINER BUMI
The Jakarta globe reported that, Switzerland-based Glencore International, the world’s largest commodities trader, has quietly acquired a $200 ...
Monday, 13 September 10
IT'S JAI INDONESIA FOR OUR POWER FIRMS
Indian power producers have been compelled to look abroad for fuel to run upcoming facilities, as domestic generation is unlikely to be able to meet ...
Monday, 13 September 10
CIL IN TALKS WITH SHIPPING CORP TO FORM JV FOR COAL IMPORTS
Shipping Corporation of India, the largest domestic shipping liner, may form a joint venture with Coal India for coal imports, a top company officia ...
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- Gujarat Electricity Regulatory Commission - India
- Sical Logistics Limited - India
- Krishnapatnam Port Company Ltd. - India
- Orica Mining Services - Indonesia
- Intertek Mineral Services - Indonesia
- ASAPP Information Group - India
- Sree Jayajothi Cements Limited - India
- Semirara Mining Corp, Philippines
- Karaikal Port Pvt Ltd - India
- Sindya Power Generating Company Private Ltd
- Meralco Power Generation, Philippines
- PowerSource Philippines DevCo
- GN Power Mariveles Coal Plant, Philippines
- Videocon Industries ltd - India
- Singapore Mercantile Exchange
- San Jose City I Power Corp, Philippines
- Altura Mining Limited, Indonesia
- LBH Netherlands Bv - Netherlands
- Interocean Group of Companies - India
- Vijayanagar Sugar Pvt Ltd - India
- CNBM International Corporation - China
- Chamber of Mines of South Africa
- Renaissance Capital - South Africa
- Power Finance Corporation Ltd., India
- Billiton Holdings Pty Ltd - Australia
- Gujarat Mineral Development Corp Ltd - India
- Pendopo Energi Batubara - Indonesia
- Sarangani Energy Corporation, Philippines
- Bulk Trading Sa - Switzerland
- Samtan Co., Ltd - South Korea
- Parliament of New Zealand
- Xindia Steels Limited - India
- Cement Manufacturers Association - India
- Bangladesh Power Developement Board
- Baramulti Group, Indonesia
- Straits Asia Resources Limited - Singapore
- Sinarmas Energy and Mining - Indonesia
- New Zealand Coal & Carbon
- Ind-Barath Power Infra Limited - India
- Electricity Generating Authority of Thailand
- Kohat Cement Company Ltd. - Pakistan
- The State Trading Corporation of India Ltd
- Dalmia Cement Bharat India
- Kumho Petrochemical, South Korea
- The University of Queensland
- Kalimantan Lumbung Energi - Indonesia
- Riau Bara Harum - Indonesia
- Mjunction Services Limited - India
- Sakthi Sugars Limited - India
- Binh Thuan Hamico - Vietnam
- GAC Shipping (India) Pvt Ltd
- Vizag Seaport Private Limited - India
- Aboitiz Power Corporation - Philippines
- Global Business Power Corporation, Philippines
- Goldman Sachs - Singapore
- Medco Energi Mining Internasional
- Mintek Dendrill Indonesia
- Ministry of Finance - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Mercuria Energy - Indonesia
- The Treasury - Australian Government
- Jorong Barutama Greston.PT - Indonesia
- Thiess Contractors Indonesia
- Directorate Of Revenue Intelligence - India
- Uttam Galva Steels Limited - India
- Iligan Light & Power Inc, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Salva Resources Pvt Ltd - India
- Kobexindo Tractors - Indoneisa
- Bukit Baiduri Energy - Indonesia
- Oldendorff Carriers - Singapore
- Malabar Cements Ltd - India
- Tamil Nadu electricity Board
- Aditya Birla Group - India
- Miang Besar Coal Terminal - Indonesia
- IHS Mccloskey Coal Group - USA
- TNB Fuel Sdn Bhd - Malaysia
- Price Waterhouse Coopers - Russia
- GVK Power & Infra Limited - India
- Australian Coal Association
- Grasim Industreis Ltd - India
- European Bulk Services B.V. - Netherlands
- Port Waratah Coal Services - Australia
- Indian Oil Corporation Limited
- Pipit Mutiara Jaya. PT, Indonesia
- Siam City Cement - Thailand
- Asmin Koalindo Tuhup - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Lanco Infratech Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Madhucon Powers Ltd - India
- Antam Resourcindo - Indonesia
- McConnell Dowell - Australia
- Electricity Authority, New Zealand
- Global Coal Blending Company Limited - Australia
- White Energy Company Limited
- Agrawal Coal Company - India
- SMG Consultants - Indonesia
- Metalloyd Limited - United Kingdom
- Trasteel International SA, Italy
- CIMB Investment Bank - Malaysia
- VISA Power Limited - India
- Parry Sugars Refinery, India
- SMC Global Power, Philippines
- Central Java Power - Indonesia
- Marubeni Corporation - India
- Tata Chemicals Ltd - India
- Kartika Selabumi Mining - Indonesia
- Africa Commodities Group - South Africa
- Energy Link Ltd, New Zealand
- Savvy Resources Ltd - HongKong
- Coastal Gujarat Power Limited - India
- Deloitte Consulting - India
- SN Aboitiz Power Inc, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Petron Corporation, Philippines
- Posco Energy - South Korea
- Wood Mackenzie - Singapore
- Bhoruka Overseas - Indonesia
- Formosa Plastics Group - Taiwan
- Wilmar Investment Holdings
- Latin American Coal - Colombia
- Meenaskhi Energy Private Limited - India
- Vedanta Resources Plc - India
- Eastern Energy - Thailand
- Coal and Oil Company - UAE
- OPG Power Generation Pvt Ltd - India
- Kepco SPC Power Corporation, Philippines
- London Commodity Brokers - England
- Ministry of Mines - Canada
- Gujarat Sidhee Cement - India
- Mercator Lines Limited - India
- Sojitz Corporation - Japan
- IEA Clean Coal Centre - UK
- Indian Energy Exchange, India
- Directorate General of MIneral and Coal - Indonesia
- Global Green Power PLC Corporation, Philippines
- Australian Commodity Traders Exchange
- South Luzon Thermal Energy Corporation
- Merrill Lynch Commodities Europe
- Makarim & Taira - Indonesia
- Essar Steel Hazira Ltd - India
- Chettinad Cement Corporation Ltd - India
- Energy Development Corp, Philippines
- Semirara Mining and Power Corporation, Philippines
- Cigading International Bulk Terminal - Indonesia
- Ministry of Transport, Egypt
- Planning Commission, India
- Bukit Makmur.PT - Indonesia
- Kaltim Prima Coal - Indonesia
- PTC India Limited - India
- Banpu Public Company Limited - Thailand
- Karbindo Abesyapradhi - Indoneisa
- Minerals Council of Australia
- Kideco Jaya Agung - Indonesia
- Jaiprakash Power Ventures ltd
- Eastern Coal Council - USA
- Standard Chartered Bank - UAE
- Edison Trading Spa - Italy
- Siam City Cement PLC, Thailand
- Leighton Contractors Pty Ltd - Australia
- Anglo American - United Kingdom
- Rashtriya Ispat Nigam Limited - India
- Globalindo Alam Lestari - Indonesia
- Indonesian Coal Mining Association
- Carbofer General Trading SA - India
- Commonwealth Bank - Australia
- Attock Cement Pakistan Limited
- Maharashtra Electricity Regulatory Commission - India
- Therma Luzon, Inc, Philippines
- Coalindo Energy - Indonesia
- MS Steel International - UAE
- Offshore Bulk Terminal Pte Ltd, Singapore
- Heidelberg Cement - Germany
- Bharathi Cement Corporation - India
- Borneo Indobara - Indonesia
- ICICI Bank Limited - India
- Manunggal Multi Energi - Indonesia
- Ambuja Cements Ltd - India
- Indogreen Group - Indonesia
- Bhushan Steel Limited - India
- Barasentosa Lestari - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Jindal Steel & Power Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Timah Investasi Mineral - Indoneisa
- Indo Tambangraya Megah - Indonesia
- PNOC Exploration Corporation - Philippines
- Indika Energy - Indonesia
- Larsen & Toubro Limited - India
- Romanian Commodities Exchange
- Neyveli Lignite Corporation Ltd, - India
- Rio Tinto Coal - Australia
- Star Paper Mills Limited - India
- Thai Mozambique Logistica
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Simpson Spence & Young - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Central Electricity Authority - India
- Economic Council, Georgia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Independent Power Producers Association of India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Ceylon Electricity Board - Sri Lanka
- International Coal Ventures Pvt Ltd - India
- Georgia Ports Authority, United States
- TeaM Sual Corporation - Philippines
- India Bulls Power Limited - India
- Toyota Tsusho Corporation, Japan
- Bayan Resources Tbk. - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Holcim Trading Pte Ltd - Singapore
- Bhatia International Limited - India
- Maheswari Brothers Coal Limited - India
- GMR Energy Limited - India
- Orica Australia Pty. Ltd.
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