June 12, 2009

INDONESIA EQUITY
Investment Research

Company update Private Circulation Only

MINING
BUY
Isnaputra Iskandar, CFA
+62 (21) 520 4101
Tambang Batubara Price Rp13,300
isnaputrai@osknusadana.co.id
Bukit Asam Target Rp16,100

Heading north
Stock Profile/Statistics
Bloomberg ticker PTBA IJ
JCI ticker PTBA TP raised to Rp16,100. Our PTBA higher target price of Rp16,100 (21% upside) is
Outstanding shares (mn) 2,304
Market capitalization (Rp mn) 30,644,950 based on 1) higher coal price assumptions (due to better coal market outlook), 2) slightly
52-week High | Low Price (Rp) 17,250 3,750 higher terminal value growth from 5% to 6% (due to PTBA’s success to solve railway
3-month average volume (000
shares)
11,062 problems), and 3) change of our target price period from 2009-end to 2010-end.

Valuations down 30-40% in two years. Our new target price implies 2010F PER of
15.5x and EV/EBITDA of 10.0x. Given PTBA’s stronger earnings feasibility, our target
price valuations will be down by 30-40% based on 2012F earnings (which implies 2012F
PER of 10.4x and EV/EBITDA of 6.1x).
Major Shareholders (%)
Government of Indonesia 65.02 2010-11F earnings upgrades. We have upgraded our 2010-11F earnings forecasts by
Management & employees 0.24 9.0% and 9.3%, respectively on the back of higher coal price assumptions. Our 2010F
Public 34.74
earnings upgrade remains conservative in our opinion as we maintain our 2010F
Share Performance (%) Suralaya ASP assumption. Our sensitivity analysis suggests that for every 5% change in
Month Absolute Relative our 2010F Suralaya ASP assumption, our 2010F earnings will change by 5.9%.
1m 25.0 11.6
3m 86.6 19.9
6m 76.7 18.1 Potential upgrade in priced-in 2009-10F negative growth. We suggest investors to
12m -9.5 2.2 switch focus from 2009-10F to 2010-11F earnings growth as the 2009-10F negative
earnings growth is already priced in. We even see potential upgrades in 2010F-onwards
6-month Share Price Performance earnings by consensus given our expectation of consensus’ more positive view on future
14,000
coal prices.
13,000

12,000 Maintain BUY. We retain our BUY rating on PTBA due to its better future outlook.
11,000 Catalysts to the share price may include recovery in coal price, better-than-expected
Rp

10,000
2010 Suralaya ASP, and earnings and rating upgrades by consensus.
9,000

8,000

7,000

6,000
Dec-08 Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09

PTBA is a state-owned coal mining company Year end to Dec 2007 2008 2009F 2010F 2011F
which sold 12.8mn tons of coal in 2008. Revenue, Rp bn 4,124 7,216 9,550 8,969 10,386
Proportion of domestic : export sales is some EBITDA, Rp bn 966 2,564 4,047 3,149 3,943
65% : 35%. Net profit, Rp bn 760 1,708 2,917 2,396 3,009
Core profit, Rp bn 717 1,814 2,917 2,396 3,009
EPS, Rp 330 741 1,266 1,040 1,306
EPS growth, % 56.5 124.6 70.8 (17.9) 25.6
Core EPS, Rp 311 787 1,266 1,040 1,306
Core EPS growth, % 39.7 153.1 60.8 (17.9) 25.6
PER, x 40.3 17.9 10.5 12.8 10.2
Core PER, x 42.8 16.9 10.5 12.8 10.2
Yield, % 0.8 1.2 2.8 4.8 3.9
EV/EBITDA, x 29.4 10.8 6.4 8.0 6.0
 KEY HIGHLIGHTS

Exhibit 1. Changes of forecasts

2010F 2011F
JFY coal price, US$/ton
New forecast 80 80
Old forecast 70 80
Change, % 14.3 0.0
Domestic ASP, Rp/ton
New forecast 657,347 741,829
Old forecast 657,347 714,772
Change, % 0.0 3.8
Export price, US$/ton
New forecast 64 66
Old forecast 57 63
Change, % 12.1 4.5
Sales, Rp bn
New forecast 8,969 10,386
Old forecast 8,656 9,984
Change, % 3.6 4.0
EBITDA, Rp bn
New forecast 3,149 3,943
Old forecast 2,886 3,605
Change, % 9.1 9.4
Net profit, Rp bn
New forecast 2,396 3,009
Old forecast 2,198 2,753
Change, % 9.0 9.3
Source: OSK Research

OSK Research
See important disclosures at the end of this publication 2
OSK Research
See important disclosures at the end of this report
OSK Research Guide to Investment Ratings

Buy: Share price may exceed 10% over the next 12 months
Trading Buy: Share price may exceed 15% over the next 3 months, however longer-term outlook remains uncertain
Neutral: Share price may fall within the range of +/- 10% over the next 12 months
Take Profit: Target price has been attained. Look to accumulate at lower levels
Sell: Share price may fall by more than 10% over the next 12 months
Not Rated: Stock is not within regular research coverage

All research is based on material compiled from data considered to be reliable at the time of writing. However, information and opinions expressed
will be subject to change at short notice, and no part of this report is to be construed as an offer or solicitation of an offer to transact any securities
or financial instruments whether referred to herein or otherwise. We do not accept any liability directly or indirectly that may arise from investment
decision-making based on this report. The company, its directors, officers, employees and/or connected persons may periodically hold an interest
and/or underwriting commitments in the securities mentioned.

All Rights Reserved. No part of this publication may be used or re-produced without expressed permission from OSK Research.

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OSK Research
See important disclosures at the end of this publication 3
See important disclosures at the end of this report