1H24F Preview; ADRO and ITMG might beat consensus but in-line with ours estimate

Considering that most coal companies under our coverage will report 1H24F earnings next month, our preliminary calculation for 1H24F, looking at average 2Q24 Newcastle coal price of USD138/t (+8.3% QoQ), suggests that we might see better-than-expected results for ADRO and ITMG, as earnings could conceivably beat consensus, while staying relatively in line with our forecast. Meanwhile, PTBA is potentially reported below both our estimate and that of street. However, we do expect a stronger coal price in 2H24F:

ADRO: Revenue and earnings are probably in line with ours, but above consensus estimate. Revenue could reach 51.4% of our forecast and 59.1% of consensus, and earnings should achieve 51.9% of our estimates and 71.7% of consensus, these numbers driven by lower cash costs and greater volume. See Exhibit 3.
ITMG: Revenue and earnings probably above ours and consensus' estimate. Revenue could reach 45.6% of our forecast and 50.8% of consensus and earnings should achieve 50% of our estimates and 55.9% of consensus, all driven by lower cash costs and greater volume. See Exhibit 4.
PTBA: Revenue and earnings will likely miss ours and consensus' estimate, with revenue probably only achieving 46.6% of our forecast and 49% of consensus, and earnings 34.3% of our estimates and 37.4% of consensus. Cash costs probably not going to decline as fast as those of ADRO and ITMG. We might downgrade our forecast and target price, depending on 1H24F results, if indeed PTBA misses our estimates. See Exhibit 5.

Valuation: Maintain Our Overweight

We reiterate our OVERWEIGHT rating on Coal sector. At this juncture, for now we change our pecking order to ITMG>ADRO>PTBA from ITMG>PTBA>ADRO, but its higly probable that PTBA could be revised down, while ITMG and ADRO forecast could be maintained. All in all, we maintain our Buy rating and TP for all coal counters under our coverage; our 2024F TP and ratings are: ADRO maintain BUY rating and TP of IDR3,610/sh, ITMG maintain BUY with TP of IDR35,700/sh, PTBA maintain BUY with TP of IDR3,580/sh.

Coal - Not Out of Steam Yet

Coal - Not Out of Steam Yet

12 July 2024 - 07.00am

Coal - Not Out of Steam Yet

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