*Wow it took 3 months for this one to be avail to public?* On Wed, Oct 21, 2009 at 12:58 PM, Sanjaya <mysanjaya...@gmail.com> wrote:
> > > ------------------------------ > > *From: *"Sonny John" <sonny.j...@e-samuel.com> > > *Date: *Wed, 21 Oct 2009 11:17:40 +0700 > > *Subject: *FW: Goldman: Buy Adaro, Sell Bumi > > > > > > > > Please see latest GS research on ASEAN Metals and Mining (Coal), and on > Bumi and Adaro. > > *Stock GS Rating Current Px * > *12 Month Target Px * * * > > *Bumi Resources (BUMI.IJ) **Sell **Idr **2,850 > **Idr **2,300 * > > *Adaro (ADRO.IJ) **Buy **Idr **1,510 ** > Idr **2,800* > > * * > > *Key Summary Points:-* > > · * **Rising oil prices are positive for coal equities* > > Historically, thermal coal prices have been highly correlated to oil prices > > (88% over the past 10 years), and so have coal stock prices (87% correlated > > since 2003). We are positive on the outlook for oil, and last month we > > raised our 2010E and 2011E oil price forecasts to US$90/bbl and US$110/bbl, > > respectively, on stronger demand projections (our report from September > > 24, 2009, “Global: Energy: Oil—Recovery and relapse, v2”). > > · * **No major supply destruction, some projects nearing completion* > > Despite the downturn, there has not been any major reduction in thermal > > coal capex and in fact several projects are nearing completion. Australia’s > > new third coal port terminal (NCIG) is expected to ship first coal in early > > 2010E, with a full ramp-up by 2011 (representing a 30% expansion in > > export capacity). Meanwhile, we estimate that Indonesian coal producers > > may increase capacity by 40% by year-end 2010E. Our global thermal coal > > supply-demand estimates indicate that the supply surplus in 2009E is likely > > to narrow in 2010E due to stronger demand, but it is still in surplus. > > · * **Coal price upcycle may lag oil, initiate with neutral stance* > > Given our positive view on oil prices, we are forecasting higher thermal > > coal prices over 2009E-2011E. However, with a stronger supply availability > > of coal, we believe that the coal price cycle may lag oil. Currently > thermal > > coal prices are 20% of oil on an energy-equivalent basis, which is below > the > > historical average of 26% (the historical range is 14%-51%). On an annual > > average basis we see coal as a percentage of oil declining from 25% in > 2009E > > to 17% in 2011E. We are initiating coverage on the sector with a neutral > stance. > > · * **Stock selective approach; Buy Adaro, Sell Bumi* > > Adaro is our top pick, given attractive valuations and a strong earnings > > growth trend as its low-priced legacy contracts expire. Meanwhile, we rate > > Bumi Resources as Sell due to rising capital costs, its increasing debt > load > > and declining ROIC. We initiate on Straits Asia and Bukit Asam at Neutral. > > · * **Risks* > > Upside risks to our views and price targets include a disruption in the > > global coal supply chain (e.g., from bad weather, port congestion) causing > > coal prices to spike or China coal demand being stronger than we expect; > > downside risks include China’s small mines restarting operations. > > - *Latest Research* > > <<ASEAN Metals & Mining Coal 21 OCt.pdf>> > > Goldman, Sachs & Co. Member SIPC/NASD. > > > > **************** > > CONFIDENTIALITY: The information contained in or attached to this electronic > transmission > > is confidential and may be legally privileged. It is intended for the named > recipient(s) only. > > If you are not the named recipient, you are hereby notified that any > distribution, copying, > > review, retransmission, dissemination or other use of this electronic > transmission or > > the information contained in it is strictly prohibited. > > The information expressed herein may contain the private views and opinions > of the sender > > that does not constitute the formal views and opinions of PT. Danareksa > (Persero) and its > > subsidiaries, and should not in any ways be construed as the views, offers, > or acceptances > > of these entities, unless specifically stated. PT. Danareksa (Persero) and > its subsidiaries > > does not take any responsibilities nor accepts any claims of liabilities > and/or damages > > for statements which are clearly the sender's own and not made on behalf of > the entities > > concerned. > > > >
