We just visited the management of PT. United Tractor Tbk (UNTR IJ) today, and they are still concerned with the prospect of their coal-related businesses, which according to them, might suffer further from negative production growth and margin decompression due to lower overburden and reduced stripping ratio. The industry itself is still undergoing contraction. Since coal-related revenue contribution is still very significant - more than 70 percent of the total, we do not foresee any significant upside to the stock price although the consensus is still valuing the stock at ten times forward earnings this year.
The transformation away from coal-related businesses towards construction-driven model is still progressing slowly. The steps that they had taken so far was to acquire publicly-listed PT Acset Indonusa Tbk (ACST IJ) in 2014. Apparently, PT Acset Indonusa Tbk, which focuses on piling, structure, and building for private sectors, is still an early starter in government infrastructure projects.
They make some progress in co-investing with Sumitomo and Kansai Electric Power in the 2000-megawatt Tanjung Jati B power plant which should cost approximately $4 billion. Although they are proposing ACSET to involve in the construction, we expect ACSET will only get a minor role. Furthermore, investing in a power plant requires patience as investors can only enjoy their profit after several years of operation.
No comments:
Post a Comment