ANALYST BRIEFING 2Q18 PERFORMANCE RESULT

Transcription

1 PT Indo Tambangraya Megah Tbk ANALYST BRIEFING 2Q18 PERFORMANCE RESULT Jakarta, 16 August

2 Agenda 1 INTRODUCTION 2 OPERATIONAL REVIEW 3 COMMERCIAL REVIEW 4 FINANCIAL REVIEW 5 QUESTION & ANSWERS 2

3 Highlights of 2Q18 and 1H18 results Coal sales 5.3 Mt Up 0.9Mt Coal sales 9.6 Mt Down 1.3 Mt +20% Q-Q -12% Y-Y Unit: US$ million 1Q18 2Q18 Q-Q 1H17 1H18 y-y Total Revenue % % Gross Profit Margin 29% 27% -2% 28% 28% 0% EBIT % % EBITDA % % Net Income % % ASP (USD/ton) $83.6 $78.3-6% $68.4 $ % 3

4 New Coal Reserves Acquisition Bunyut Port MEDIUM-HIGH CV COAL CONCESSION TCM 6, NPR TCM NPR 5, BEK Central Kalimantan TIS East Kalimantan CV GAR (kcal/kg) Sulfur (%) Ash (%) Acquired 100% stake in PT Nusa Persada Resources (NPR). Total transaction value was $30M for 77 Mt reserves based on JORC calculation. NPR is a medium CV concession which has IUP operation license for concession area of 4,291 ha in Central Kalimantan; adjacent to Trubaindo concession. NPR would utilize the current infrastructure of Melak cluster to synergized the operation. Production is planned to start in Moisture (%) 4

5 Strengthening our premium coal portfolio INDONESIAN THERMAL COAL EXPORT BY QUALITY ITM RESERVES BREAKDOWN BY QUALITY 5,600-6,200 kcal/kg JBG (4,200-5,000 kcal/kg) <4,200 kcal/kg 36% 5% 5,000-5,600 kcal/kg 11% NPR (5,000-5,600 kcal/kg) 24% 2% 385 Mt 327 Mt (5,600-6,200 kcal/kg) KTD TIS 1% 1% 41% BEK 48% 4,200-5,000 kcal/kg IMM 20% 11% TCM High CV coal is increasingly more difficult to source in Indonesia. NPR complements ITM s high CV coal portfolio. This situation is a preferred position for established players with premium products. Source: IHS Energy 5

6 MS&L OPERATION ITM Coal Strategy: progress and way forward 3Q17 4Q17 1Q18 2Q18 onward Reserves acquisition (TIS) ITM organic reserves Reserves acquisition in Central Kalimantan +4.7 Mt +77 Mt +77 Mt VALUE $3/bbl $40 M Target fuel cost reduction from acquisition of PTGE Capex for mining fleet expansion of PT TRUST 0.9 Mt 1.0 Mt Third party coal sales in 2017, +0.2 Mt Coal sales expansion into Vietnam market 66

7 Agenda 1 INTRODUCTION 2 OPERATIONAL REVIEW 3 COMMERCIAL REVIEW 4 FINANCIAL REVIEW 5 QUESTION & ANSWERS 7

8 Operational Summary TARGET : 22.5 Mt QUARTERLY OUTPUT TREND East Kalimantan INDOMINCO 13.1 Mt Unit: Mt Bharinto Jorong Kitadin Trubaindo TRUBAINDO 4.6 Mt Bunyut Port TD.MAYANG Indominco Central Kalimantan BHARINTO 2.7 Mt Palangkaraya South Kalimantan Banjarmasin JORONG 1.1 Mt Samarinda Balikpapan KITADIN EMBALUT 1.0 Mt 3Q17 4Q17 1Q18 2Q18 3Q18e 3Q17 4Q17 1Q18 2Q18 3Q18e YEARLY OUTPUT TREND Unit: Mt Bharinto Jorong Kitadin Trubaindo Indominco Jorong Port e e 8

9 Indominco Mandiri SCHEMATIC 2018 target: 13.1 Mt West Block ROM stockpile Santan River km Mine stockyard East Block Asphalt haul road 35Km Port stock yard Operations Ports Hauling Stockpile Crusher Bontang City Sea conveyor 2.5Km Post Panamax 95,000 Inland DWT conveyor 4km QUARTERLY UPDATES 2Q18 production was close to target due to weather condition and pre stripping activities. Average strip ratio in 2018 is expected to be lower than 2017 due to higher contribution from East Block operation. QUARTERLY OUTPUT Unit: Mt E BLOCK W BLOCK E BLOCK W BLOCK Unit: Bcm/t Avg SR: Q17 4Q17 1Q18 2Q18 3Q18e Q17 4Q17 1Q18 2Q18 3Q18e *SR based on ROM coal **SR FY17 IMM: 11.9, WB: 24.6, EB:

10 Melak group Trubaindo and Bharinto SCHEMATIC 2018 target: TCM 4.6 Mt BEK 2.7 Mt East Kalimantan Operations Barge Port Hauling Stockpile Product coal conveyor, stacking, stockpile ROM stockpile Bharinto 60km south west of Trubaindo North Block South Block 2 (Biangan) North Block South Block 1 (Dayak Besar) Mahakam River 40km Mine to port Bunyut Port PT. Trubaindo PT. TIS Kedangpahu River QUARTERLY UPDATES Trubaindo: 2Q18 production output slightly higher than target. Continue hauling road improvement program from Trubaindo to Bharinto area, expected to be completed by end year of Bharinto: 2Q18 production achieved close to target despite weather conditions. QUARTERLY OUTPUT Unit: Mt BHARINTO TRUBAINDO Unit: Bcm/t Avg SR: BHARINTO Q17 4Q17 1Q18 2Q18 3Q18e PT. Bharinto km TRUBAINDO Q17 4Q17 1Q18 2Q18 3Q18e *SR based on ROM coal **SR FY17 TCM: 11.2, BEK:

11 EMB EMB TDM Kitadin Embalut and Tandung Mayang SCHEMATIC 2018 target: EMB 1.0 Mt Embalut Port ROM stockpile IMM WB Embalut TD. Mayang IMM EB 5km Mine to port Bontang city Bontang Port QUARTERLY UPDATES Kitadin Embalut: 2Q18 production achieved according to target. Further study to optimize coal reserves. Kitadin Td.Mayang: Continue mine closure activities including mine rehabilitation. QUARTERLY OUTPUT Unit: Mt Mahakam River Samarinda to Muara Berau East Kalimantan 3Q17 4Q17 1Q18 2Q18 3Q18e to Muara Jawa Unit: Bcm/t Avg SR: Balikpapan Operations Ports Hauling km Stockpile Crusher 3Q17 4Q17 1Q18 2Q18 3Q18e *SR based on ROM coal **SR FY17 EMB:

12 Jorong SCHEMATIC 2018 target: 1.1 Mt Pelaihari QUARTERLY UPDATES 2Q18 production achieved according to target. Additional reserves from river diversion project would extend the life of the mine beyond Permit requirement by government is continue in progress. Haul road QUARTERLY OUTPUT Unit: Mt 20km Q17 4Q17 1Q18 2Q18 3Q18e Jorong Unit: Bcm/t Avg SR: Operations Barge Port Hauling Coal terminal Java Sea Q17 4Q17 1Q18 2Q18 3Q18e Stockpile km *SR based on ROM coal ***SR FY17 JBG:

13 Agenda 1 INTRODUCTION 2 OPERATIONAL REVIEW 3 COMMERCIAL REVIEW 4 FINANCIAL REVIEW 5 QUESTION & ANSWERS 13 13

14 Positive outlook for H18 Strong demand and tight supply continued to drive coal price 2H18 OUTLOOK Supply tightness continues especially shortage of high quality product China Economy Regulation (safety) Colder-than-expected winter, early summer Low hydropower output India Pre-monsoon restocking US$/t NEWCASTLE SPOT COAL PRICE As of 10-Aug $119/t China Chinese government intervention continues SEA and S.Asia Strong demand growth from emerging economies due to new coal-fired capacity Domestic supply shortage remains in India Australia Rail maintenance and coal supply consolidation Indonesia and Colombia Rain impact production and transport S. Africa High domestic demand and domestic supply shortage tighten export % Jan-16 Jul-16 Jan-17 Jul-17 Jan-18 Jul-18 Indonesia Government strengthen control over illegal miners and DMO Colombia Mining issue, weather, and falling European demand will limit export China Supply expected to improve but growing demand keeps market tightness Source : ITM MS&L 14 14

15 Demand and supply trends DEMAND REMAINS STRONG SUPPLY DIFFICULT TO INCREASE CAPACITY HIGH ECONOMIC GROWTH EXPECTATION Rising prosperity drives an increase in energy demand CONSTRAINTS ON NEW CAPACITY EXPANSION Not only economics, but also environmental and social issues BALANCE BETWEEN ECONOMICS, RELIABILITY AND ENVIRONMENT Coal remains important to a balanced baseload solution for power generation in Asia LIMITED CAPITAL Tightening financing conditions for coal projects MORE FOCUS ON QUALITY Requirement for higher calorific value, lower Sulphur, and lower ash coal DECLINING COAL QUALITY Depletion of high-quality coal reserves Source: ITM MS&L 15 15

16 Medium term demand and supply outlook KEY DEMAND COUNTRIES KEY SUPPLY COUNTRIES INDIA Domestic coal could not meet demand growth N.ASIA Challenge from environment issue; focus on high quality coal CHINA Demand continues to grow, but imports depend on regulations SEA Coal remains as most competitive power sources -3 N. ASIA -17 CHINA +23 INDIA +31 SEA +37 Mt Increase in seaborne thermal coal trade INDONESIA INDONESIA Growing domestic demand could limit future exports +14 AUSTRALIA +8 RUSSIA AUSTRALIA Consolidation and high producer discipline will keep high CV price high RUSSIA Increase exports to Asia but require infrastructure investment to support growth EUROPE Paris agreement commitment -19 EUROPE OTHERS Mainly from S.Asia (Pakistan, Bangladesh) and Morocco +22 OTHERS -2 OTHERS potential growth in coal demand potential decline in coal demand -1 S.AFRICA OTHERS S. AFRICA High CV supply shortage unlikely to be solved in near-term potential growth in coal supply potential decline in coal supply Note: No spurt from World/ Asian GDP growth, steel demand, or technical changes Source: ITM MS&L 16 16

17 China: tight supply continues in the short term CHINA DOMESTIC COAL TRADE FLOW Heilongjiang Qinghai Yunnan Sichuan Inner Inner Mongolia Mongolia Ningxia Guizhou Shaanxi Domestic coal Seaborne imports Guangxi Shanxi Hubei Hunan Henan Hainan Beijing Hebei Guangdong Shandong Anhui Jiangxi Tianjin Fujian Liaoning Zhejiang Jilin Jiangsu Shanghai 600 Mt Northern China coal sypply to coastal China 226 Mt Imports to coastal China 2Q18 Reintroduced import coal ban at tier-2 port in April reverses domestic coal prices significantly Strengthened demand for thermal coal (warm weather, low hydropower output) outpaced improving domestic supply Government try to cool down the market by trying to provide more supply of cheaper coal to gencos Outlook Domestic supply started to recover, but import still be required Government will continue intervention to stabilize coal prices Trade war may curtail coal demand but RMB devaluation is likely to maintain demand for industrial products electricity demand would remain high km 800 Note: Figures include coking coal Source: ITM MS&L, Woodmac 17 17

18 India: robust demand amid supply deficit COASTAL DEMAND AND COAL INFRASTRUCTURE IN INDIA DELHI Coal fields Coal ports New railway capacity Under construction Proposed 2Q18 Higher temperature and demand from nonpower sector keep domestic market in supply deficit Domestic coal supply still not sufficient to replenish stocks at power plants Government recognizes coal shortage situation across India and encourages stateutilities to import Indian buyers increased interest on Australian high ash coal due to high Richards Bay prices Outlook Coal shortages may remain common for at least 2 to 3 years Coal supply concentrated in the east while demand is growing in coastal areas o Dislocated market conditions will result in strong import growth o Long distance and low quality of domestic coal will also make import more competitive 18

19 ITM coal sales 1H18 COAL SALES BREAKDOWN BY DESTINATION COAL SALES 1Q Mt 1.7 Mt 0.5 Mt 0.2 Mt 1.1 Mt KOREA ITALY CHINA 0.7 Mt 0.2 Mt 0.6 Mt 0.4 Mt HK JAPAN Mt INDIA TAIWAN 0.2 Mt VIETNAM 1.1 Mt BANGLADESH THAILAND 0.3 Mt PHILIPPINES OTHERS* INDONESIA Italy Others Bangladesh Hongkong 2% Taiwan 2% 2% 3% 4% Vietnam 5% Korea 5% Thailand 6% Indonesia 11% India 12% Japan 18% Philippines 13% China 15% Total Coal Sales 1H18: 9.6 Mt *) Note: New Zealand, Malaysia, Myanmar 19

20 Indicative coal sales 2018 COAL SALES CONTRACT AND PRICING STATUS Contract Status Price Status Uncontracted 13% Unpriced Unsold 13% 2% Indexed 27% 58% Fixed Contracted 87% TARGET SALES 2018: 25.0 Mt 20

21 ITM ASPs vs thermal coal benchmark prices ITM ASP VS BENCHMARK PRICES Monthly NEX COMMENTS Unit: US$/ton Q18 ASP continued firm according to supply tightness ITM ASP: US$78.3/t* (-6% QoQ) 130 NEX (Aug 10, 2018)**: US$119.0/t 110 Monthly NEX US$119.0/t Market was significant strong during 2Q18 with a bullish sentiment started from May. However, ASP was slightly softening due 90 US$78.3/t product mixes changed with surplus of lower 70 Quarterly ITM ASP quality coal sales as well as the domestic price control regulation imposed by government. 50 Supply tightness continued to be a major driven on price. Chinese policy remains a 30 major influence. Note: * Included post shipment price adjustments as well as traded coal ** The Newcastle Export Index (previously known as the Barlow Jonker Index BJI) 21

22 Agenda 1 INTRODUCTION 2 OPERATIONAL REVIEW 3 COMMERCIAL REVIEW 4 FINANCIAL REVIEW 5 QUESTION & ANSWERS 22 22

23 Sales Revenue Unit: US$ million % QoQ +13% YoY 42 Others +44% (QoQ) ; +131% (YoY) Jorong +16% (QoQ) ; +79% (YoY) Kitadin +28% (QoQ) ; +44% (YoY) Bharinto +2% (QoQ) ; +1% (YoY) Trubaindo +8% (QoQ) ; +1% (YoY) Indominco +11% (QoQ) ; +5%(YoY) 2Q17 1Q18 2Q18 23

24 Average Gross Margin Unit : US$ Million Revenue 431 GPM* (%) % 31% 32% 41% 28% 32% 37% 42% 42% 15 33% % 49% 10 41% % 26% 38% 41% 38% 2Q17 1Q18 2Q18 2Q17 1Q18 2Q18 2Q17 1Q18 2Q18 2Q17 1Q18 2Q18 2Q17 1Q18 2Q18 2Q17 1Q18 2Q18 Indominco Trubaindo Bharinto Kitadin Jorong ITM Consolidated Note: Excluding royalty 24

25 Cost Analysis WEIGHTED AVERAGE STRIP RATIO PRODUCTION COST Unit: Bcm/t Avg. FY16 : 8.7 Avg. FY17 : 11.2 Unit: US$/t Avg. FY16: $28.8/t Avg. FY17: $39.2/t Others Coal 2Q17 3Q17 4Q17 1Q18 2Q18 2Q17 3Q17 4Q17 1Q18 2Q18 FUEL PRICE TOTAL COST* Unit: US$/Ltr Avg. FY16: $0.42/ltr Avg. FY17: $0.53/ltr Unit: US$/t Avg. FY16: $43.3/t Avg. FY17: $56.4/t Others Coal 2Q17 3Q17 4Q17 1Q18 2Q18 2Q17 3Q17 4Q17 1Q18 2Q18 * Cost of Goods Sold + Royalty + SG&A 25

26 EBITDA Unit: US$ million % QoQ +11% YoY Others +41% (QoQ) ; n.m (YoY) Jorong -25% (QoQ) ; -48% (YoY) Kitadin +21% (QoQ) ; +143% (YoY) Bharinto -8% (QoQ) ; +11% (YoY) Trubaindo -37% (QoQ) ; +9% (YoY) Indominco +4% (QoQ) ; -14%(YoY) 2Q17 1Q18 2Q18 26

27 Net Income Unit: US$ million -24% QoQ % YoY Jorong +90% (QoQ) ; +2% (YoY) Kitadin -1% (QoQ) ; +43% (YoY) Bharinto -13% (QoQ) ; +17% (YoY) Trubaindo -29% (QoQ) ; +28% (YoY) Indominco -19% (QoQ) ; -33%(YoY) 1 (0.3) (3) Others n.m(qoq) ; n.m (YoY) 2Q17 1Q18 2Q18 27

28 Balance Sheet KEY RATIOS CASH POSITION Net Gearing (%) Net D/E (times) Unit: US$ million (26%) (32%) (36%) (39%) (30%) (0.26) (0.32) (0.36) (0.39) (0.30) Q Q18 DEBT POSITION Unit: US$ million Q18 28

29 2018 Capital Expenditure Plan Units: US$ million Indominco Trubaindo Realized up to Jun Capex plan Bharinto Jorong TRUST ITM Consolidated

30 Thank you Question & Answer 30

31 Appendices 31 31

32 Income Statement Unit: US$ thousand 2Q18 1Q18 QoQ% Net Sales 430, ,247 14% Gross Profit 114, ,053 3% GPM 27% 29% SG&A (35,833) (23,350) EBIT 78,859 87,703-10% EBIT Margin 18% 23% EBITDA 93, ,252-9% EBITDA Margin 22% 27% Net Interest Income / (Expenses) FX Gain / (Loss) (3,390) (2,379) Derivative Gain / (Loss) (9,675) (104) Others (1,586) (3,463) Profit Before Tax 64,814 82,579-22% Income Tax (20,401) (24,482) Net Income 44,413 58,097-24% Net Income Margin 10% 15% 32

33 Income Statement Unit: US$ thousand 1H18 1H17 YoY% Net Sales 808, ,784 8% Gross Profit 225, ,543 6% GPM 28% 28% SG&A (59,183) (52,865) EBIT 166, ,678 4% EBIT Margin 21% 21% EBITDA 195, ,655 4% EBITDA Margin 24% 25% Net Interest Income / (Expenses) 1,428 1,303 FX Gain / (Loss) (5,769) 672 Derivative Gain / (Loss) (9,779) 4,566 Others (5,049) (7,134) Profit Before Tax 147, ,085-7% Income Tax (44,883) (53,794) Net Income 102, ,291-3% Net Income Margin 13% 14% 33

34 ITM Structure Banpu 65% INDONESIAN STOCK EXCHANGE IPO 18 th Dec 2007 Public 35%* ITMG PT Indo Tambangraya Megah Tbk % 99.99% 99.00% 99.99% 99.00% Indominco Trubaindo Bharinto Embalut PT Indominco Mandiri (CCOW Gen I) PT Trubaindo Coal Mining (CCOW Gen II) Exp: Mar 2028 Exp: Feb 2035 PT Bharinto Ekatama (CCOW Gen III) PT Kitadin- Embalut (IUP) PT Jorong Barutama Greston (CCOW Gen II) East Kalimantan East Kalimantan East / Central Kalimantan East Kalimantan South Kalimantan Output 1H18: 5.0 Mt 2.1 Mt 1.7 Mt 0.6 Mt 0.5 Mt Reserves 68 Mt Resources 684 Mt 37 Mt 384 Mt Exp: Jun 2041 Exp: Feb Mt 417 Mt 3 Mt 101 Mt Jorong Exp: May Mt 40 Mt 70.00% TIS PT Tepian Indah Sukses (IUP) Exp: Apr 2029 East Kalimantan 5 Mt 11 Mt 99.99% NPR PT Nusa Perdana Resources (IUP) Exp: May 2033 Central Kalimantan 77 Mt 187Mt 99.99% TRUST PT Tambang Raya Usaha Tama Mining Services Jakarta Office 99.99% 99.99% IBU IEU PT ITM Batubara PT ITM Energi Utama Utama Coal Investment Power Investment Jakarta Office Jakarta Office 99.99% ITMI PT ITM Indonesia Trading 75.00% Jakarta Office GEM PT GasEmas Fuel Procurement Jakarta Office 70.00% IBP PT ITM Banpu Power Power Investment Jakarta Office 5,600-6,200 kcal/kg 6,100-6,500 kcal/kg 6,100-6,500 kcal/kg 5,400-5,600 kcal/kg 4,300-4,400 kcal/kg 6,400 kcal/kg 5,500 kcal/kg * : ITM own 2.95% from share buyback program Note: Updated Coal Resources and Reserves as of 31 Dec 2017 based on estimates prepared by Competent Persons (consider suitably experienced under the JORC Code) and deducted from coal sales volume in 1H18 34

35 Rainfall INDOMINCO Unit: Millimeter EMBALUT Unit: Millimeter TRUBAINDO & BHARINTO Unit: Millimeter JORONG Unit: Millimeter 1,200 1, Except for Jorong, this year ITM s mines have seen relatively mild rainfall compared to their 5-year average levels. Rainfall levels in 2Q18 were exceptionally low; they were even at the lowest level in 5 years at Indominco and Embalut. If this favorable weather condition persists in 2H18, ITM to should be able to achieve 2018 production target of 22.5 Mt average rainfall 2018 rainfall rainfall range 35