JAKARTA. PT Adaro Energy Tbk (ADRO) will expand the coal sales in the South East Asia (SEA) market. ADRO has a larger opportunity to supply coals to Thailand, after Thai government’s owned electricity company Electricity Generating Authority of Thailand (EGAT) has officially controlled 11,53% of PT Adaro Indonesia Tbk’s shares.
President Director of ADRO Garibaldi Thohir said, EGAT is planning to develop a steam electricity power plant with a capacity of 5,000 megawatt (MW) in the southern Thailand area. The future power plant will demand for 25 million tons of coal supplies.
Garibaldi said, EGAT is developing a number of steam electricity power plants in the southern Thailand region, close to Adaro’s mining area. “Therefore, Adaro may supply coals to the project,” he said.
The penetration of EGAT to Adaro Indonesia does not necessarily require ADRO to supply coals to the Thai government owned company. “It will depend on the market condition,” Garibaldi said.
Aside of a synergy in coal business, ADRO also has a greater opportunity to strengthen its financial position to launch business expansion. EGAT can also contribute to the next ADRO’s electricity project plan. “If EGAT wants to partner in ADRO’s electricity project, we would be very open,” Garibaldi said.
As is known, EGAT acquired 57,857 new shares of ADARO worth US$ 325 million or 11.53% of issued capitals and paid capitals through rights issue mechanism.
Garibaldi said, aside of maintaining domestic market, in the long term, ADRO will expand to other Asia countries, such as Thailand, the Philippines, and Korea. ADRO will also reduce exports to India, China, and Europe. “It is more strategic to supply South East Asia countries, as the prices are more promising. (Let alone), we are facing competition from Australia in exporting to India and China,” he said.
As of the third quarter of 2016, exports contributed to 74% of the total sales of the issuer, with India, China, and Japan as the main markets.
ADRO is preparing as much as US$ 200 million-US$ 250 million capital expenditure for this year. ADRO will allocate the capital expenditure to maintain production capacity at the range of 52 million tons-54 million tons in this year. Along the year of 2016, ADRO’s production capacity has increased by 2% to 52.64 million compared with the previous year.
Analyst at CLSA Janeman Latul said that ADRO has promising prospect, on the grounds that in the last year ADRO has a higher amount of coal sales compared with analysts’ estimations. According to him, ADRO’s position will be more solid with its business diversification in steam electricity power plants and cooking coal business in Central Kalimantan.
He expects that ADRO’s revenues may increase from the estimation of US$ 2.4 billion in 2016 to US$ 3 billion in this year. ADRO’s net profits also increased from US$ 257 million in the last year to US$ 3 billion this year. Janeman recommends ‘buy’ for ADRO’s shares, with the target price of Rp 2,300 per a share.