Bumi
Resources: FY09 EPS upgrade, sooner or later
There is a set perception in the marketplace that Bumi’s shares
have traded up based on “non-fundamental reasons”. Is it really?
Listening-in to the management call yesterday (1Q09 results review), I came
away with the impression that at some point this year, sell-side analysts will
need to recognize that their FY09 (and FY10) EPS estimates are too low. Of the
13 foreign brokers covering the stock, there are 8 Sells, 2 Neutrals, 1
Suspended coverage, 1 Trading-buy, and 1 Buy. I think trading momentum behind
the stock may remain positive in the near term.
Consensus is currently looking for US$456mn NPAT for FY09 (P/E of 8.4x)
and US$400mn for FY10 (P/E of 11.1x). Adam Worthington & Albert Saputro
(Macq analysts) are looking for US$417mn NPAT for FY09 (P/E of 9.3x) and
US$200mn for FY10 (P/E of 19.3x). Some
sensitivity analysis to Bumi’s FY09 forecast suggests that FY09 NPAT may
come in at US$600mn or more (P/E of 6.4x), 31% above consensus and 43% above
Macq. The US$600+mn NPAT assumes: (1) 57mn tons output, (2)
US$64/ton ASP, (3) US$29/ton cash cost, (4) 25% effective tax rate.
Where are the surprise factors?
1. Cash cost – 1Q09 cash cost came
in at US$29/ton, lower than Macq full year forecast assumption of around
US$30/ton. This is despite the much higher overburden removal activity (147
Mbcm in 1Q09 vs. 119 Mbcm in 1Q08), or a strip ratio of 13x vs. Macq assumption
of around 9x. Bumi focuses more on overburden due to the unusually heavy
rainfall, the strip ratio should normalize through the year, resulting in a
down-trending cash cost profile.
2. Tax rate – 1Q09 effective tax
rate came in at 14%, vs. Macq assumption of 45%. Management said Bumi has used
up almost all of its historical tax credits, but guides for an effective tax
rate of around 30%. Since the positive tax surprise has been recurring for the
last two years, I increasingly think there is something permanent about
Bumi’s tax saving structure, perhaps due to its complex corporate structure
involving foreign and domestic entities.
Snippets:
Macro –
The government is in the process of revising its 2009 budget to incorporate for
higher oil prices. The budget currently uses an oil price assumption of
US$45/barrel.
Macro – Indonesia's
balance of payments improved to a US$4bn surplus in 1Q09 compared with US$4bn
deficit in 4Q08.
Banks –
Banks are starting to cut mortgage rates by 50-100bp. Bank Mandiri is cutting
its rate to 13-13.5% from 14-14.5% previously. BNI to 13% from 14%. CIMB Niaga
to 12.5% from 13.5%. BCA to 12.5% from 13%.
Banks –
Jamsostek is negotiating with four state-owned banks to help strengthen their
capital reserves by converting cash deposits into subordinated debt. Jamsostek
has around Rp10tr in deposits with the 4 banks: BRI, BNI, Bank Mandiri and BTN.
FDI – Indonesia and Qatar have agreed to speed up an
the establishment of a US$1bn joint venture investment firm, which has been
discussed for over a year. Qatar
will have an 85% stake in the JV, with Indonesia owning the rest.
PT Telkom
– PT Telkom is seeking a strategic partner for its Flexi CDMA unit,
according to Investor Daily. The
company is budgeting US$200m capex for Flexi.
BBRI –
BRI will pay a dividend of Rp168/sh, equivalent to a 35% payout ratio. The
ex-date is 20 June.
ANTM –
Aneka Tambang is considering a dividend payout of 30%, according to Bisnis
Indonesia. The company had a 40%
payout last year.
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