PT Indo Tambangraya Megah Tbk ANALYST BRIEFING 2Q18 PERFORMANCE RESULT Jakarta, 16 August 2018 1
Agenda 1 INTRODUCTION 2 OPERATIONAL REVIEW 3 COMMERCIAL REVIEW 4 FINANCIAL REVIEW 5 QUESTION & ANSWERS 2
Highlights of 2Q18 and 1H18 results Coal sales Coal sales 5.3 Mt 9.6 Mt Down 1.3 Mt Up 0.9Mt -12% Y-Y +20% Q-Q Unit: US$ million 1H17 1Q18 2Q18 Q-Q 1H18 y-y 378 431 +14% 749 809 +8% T otal Revenue 29% 28% 28% 27% -2% 0% Gross Profit Margin 88 160 167 79 -10% +4% EBIT 188 196 102 93 -9% +4% EBITDA 105 58 44 -24% 103 -3% Net Income $68.4 $80.9 $83.6 $78.3 -6% +18% ASP (USD/ton) 3
New Coal Reserves Acquisition MEDIUM-HIGH CV COAL CONCESSION Bunyut Port 6,500 TCM 1.0 8.6 19.4 0.8 NPR 5,500 13.0 NPR 6.0 TCM CV GAR Sulfur Moisture Ash (kcal/kg) (%) (%) (%) TIS BEK Acquired 100% stake in PT Nusa Persada Resources (NPR). Total transaction value was $30M for 77 Mt Central Kalimantan East Kalimantan 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 2022. 4
Strengthening our premium coal portfolio INDONESIAN THERMAL COAL EXPORT ITM RESERVES BREAKDOWN BY QUALITY BY QUALITY JBG (4,200-5,000 kcal/kg) 5,600-6,200 kcal/kg 5% 5,000-5,600 kcal/kg 2% NPR 11% (5,000-5,600 kcal/kg) 24% <4,200 kcal/kg 36% BEK 41% 1% 385 Mt 327 Mt (5,600-6,200 kcal/kg) KTD 1% TIS 20% 48% IMM 11% 4,200-5,000 kcal/kg 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. 5 Source: IHS Energy
ITM Coal Strategy: progress and way forward 3Q17 4Q17 1Q18 2Q18 onward Reserves ITM organic Reserves acquisition in acquisition (TIS) reserves Central Kalimantan +4.7 Mt +77 Mt +77 Mt VALUE OPERATION $3/bbl $40 M Target fuel cost Capex for mining reduction from fleet expansion acquisition of PTGE of PT TRUST MS&L 1 .0 Mt 0.9 Mt Third party coal sales in Coal sales expansion into 2017, +0.2 Mt Vietnam market 6 6
Agenda 1 INTRODUCTION 2 OPERATIONAL REVIEW 3 COMMERCIAL REVIEW 4 FINANCIAL REVIEW 5 QUESTION & ANSWERS 7
Operational Summary 2018 2018 TARGET : 22.5 Mt QUARTERLY OUTPUT TREND Unit: Mt East 6.1 Kalimantan 6.0 5.7 Bharinto 5.2 Jorong INDOMINCO Kitadin 4.1 13.1 Mt Trubaindo Bunyut Port TRUBAINDO TD.MAYANG Indominco 4.6 Mt BHARINTO Samarinda KITADIN 2.7 Mt 3Q17 4Q17 1Q18 2Q18 3Q18e 4Q17 1Q18 2Q18 3Q18e 3Q17 EMBALUT 1.0 Mt Balikpapan Central YEARLY OUTPUT TREND Kalimantan Unit: Mt Palangkaraya 29.1 28.5 South Kalimantan 25.6 22.5 22.1 Bharinto Banjarmasin Jorong Kitadin Trubaindo JORONG 1.1 Mt Indominco Jorong Port 2014 2015 2016 2017 2018e 2018e 2014 2015 2016 2017 8
Indominco Mandiri SCHEMATIC QUARTERLY UPDATES 2018 target: 13.1 Mt 2Q18 production was close to target due to weather Operations condition and pre stripping activities. Ports Average strip ratio in 2018 is expected to be lower Hauling than 2017 due to higher contribution from East Stockpile West Block Block operation. ROM Crusher Mine stockpile stockyard QUARTERLY OUTPUT East Block Unit: Mt 3.4 Bontang City 3.3 3.2 W BLOCK 2.8 0.3 35Km 0.4 0.4 2.2 0.1 Sea conveyor 0.1 2.5Km 3.1 Asphalt haul E BLOCK 2.9 2.8 2.7 2.1 road Post Santan River 3Q17 4Q17 1Q18 2Q18 3Q18e Panamax Port stock Unit: Bcm/t yard 95,000 Avg 12.5 13.4 11.3 11.0 13.0 Inland DWT SR: 28.1 conveyor 4km 26.5 27.3 26.4 W BLOCK 24.3 12.2 E BLOCK 11.0 11.3 10.4 9.2 km 0 2 4 6 8 10 3Q17 4Q17 1Q18 2Q18 3Q18e *SR based on ROM coal **SR FY17 IMM: 11.9 , WB: 24.6 , EB: 10.2 9
Melak group – Trubaindo and Bharinto SCHEMATIC QUARTERLY UPDATES Trubaindo: 2018 target: TCM 4.6 Mt Mahakam BEK 2.7 Mt 2Q18 production output slightly higher than River target. Bunyut Port Continue hauling road improvement program Product coal conveyor, East Kalimantan from Trubaindo to Bharinto area, expected to be stacking, stockpile completed by end year of 2018. 40km Bharinto: Mine to port Operations 2Q18 production achieved close to target despite Barge Port weather conditions. Kedangpahu Hauling River QUARTERLY OUTPUT PT. Trubaindo Stockpile Unit: Mt 2.1 2.1 ROM 1.9 1.8 stockpile 1.5 BHARINTO 0.7 North 0.8 0.6 0.7 0.5 Block Bharinto 60km 1.4 1.3 1.3 South Block 1 TRUBAINDO 1.1 1.0 south west of (Dayak Besar) Trubaindo North 3Q17 4Q17 1Q18 2Q18 3Q18e Block Unit: Bcm/t PT. TIS 12.2 Avg SR: 10.6 10.0 10.1 South Block 2 8.3 BHARINTO (Biangan) 13.5 13.4 12.6 11.5 TRUBAINDO 0 5 10 15 20 25 10.9 km PT. Bharinto 3Q17 4Q17 1Q18 2Q18 3Q18e *SR based on ROM coal **SR FY17 TCM: 11.2 , BEK: 9.1 10
Kitadin Embalut and Tandung Mayang SCHEMATIC QUARTERLY UPDATES 2018 target: EMB 1.0 Mt Kitadin Embalut: 2Q18 production achieved according to target. TD. Mayang Further study to optimize coal reserves. Bontang city Kitadin Td.Mayang: IMM WB IMM EB Continue mine closure activities including ROM Bontang mine rehabilitation. Port stockpile Embalut QUARTERLY OUTPUT 5km Mine to port Embalut Port Unit: Mt TDM Mahakam Samarinda River to Muara 0.3 0.3 0.3 0.3 0.3 Berau EMB 3Q17 4Q17 1Q18 2Q18 3Q18e East Kalimantan Unit: Bcm/t to Muara Jawa Avg SR: Operations EMB Balikpapan 12.6 11.6 Ports 11.2 11.0 9.5 Hauling Stockpile 3Q17 4Q17 1Q18 2Q18 3Q18e 0 2 4 6 8 10 km Crusher *SR based on ROM coal **SR FY17 EMB: 12.2 11
Jorong SCHEMATIC QUARTERLY UPDATES 2Q18 production achieved according to target. 2018 target: 1.1 Mt Additional reserves from river diversion project would extend the life of the mine beyond 2019. Permit requirement by government is continue in Pelaihari progress. QUARTERLY OUTPUT Haul road Unit: Mt 0.3 0.3 0.3 0.3 20km 0.2 3Q17 4Q17 1Q18 2Q18 3Q18e Unit: Bcm/t Jorong Avg SR: 7.0 6.1 6.1 5.0 4.0 Coal Operations terminal Java Sea Barge Port 3Q17 4Q17 1Q18 2Q18 3Q18e Hauling Stockpile *SR based on ROM coal ***SR FY17 JBG: 6.3 0 5 10 15 20 25 km 12
Agenda 1 INTRODUCTION 2 OPERATIONAL REVIEW 3 COMMERCIAL REVIEW 4 FINANCIAL REVIEW 5 QUESTION & ANSWERS 13 13
Positive outlook for 2018 1H18 2H18 OUTLOOK Strong demand and tight supply Supply tightness continues especially continued to drive coal price shortage of high quality product China China Economy Chinese government intervention continues Regulation (safety) SEA and S.Asia Colder-than-expected winter, early NEWCASTLE SPOT Strong demand growth from summer COAL PRICE emerging economies due to US$/t Low hydropower output As of 10-Aug 140 new coal-fired capacity $119/t India Domestic supply shortage remains 120 Pre-monsoon restocking in India 100 80 +142% Australia Indonesia Rail maintenance and coal supply Government strengthen control 60 consolidation over illegal miners and DMO 40 Indonesia and Colombia Colombia 20 Rain impact production and Mining issue, weather, and falling Jan-16 Jul-16 Jan-17 Jul-17 Jan-18 Jul-18 transport European demand will limit export S. Africa China High domestic demand and Supply expected to improve but domestic supply shortage tighten growing demand keeps market export tightness 14 14 Source : ITM MS&L
Demand and supply trends DEMAND – REMAINS STRONG SUPPLY – DIFFICULT TO INCREASE CAPACITY HIGH ECONOMIC GROWTH CONSTRAINTS ON EXPECTATION NEW CAPACITY EXPANSION Rising prosperity drives an increase Not only economics, but also in energy demand environmental and social issues BALANCE BETWEEN ECONOMICS, RELIABILITY AND LIMITED ENVIRONMENT CAPITAL Tightening financing Coal remains important to conditions for coal projects a ‘balanced’ baseload solution for power generation in Asia MORE FOCUS ON DECLINING QUALITY COAL QUALITY Requirement for higher calorific value, Depletion of high-quality lower Sulphur, and lower ash coal coal reserves 15 15 Source: ITM MS&L
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