Jakarta. In average, the performance of coal issuers improved during the third quarter of 2016. Even though some issuers still experienced decreases in income, their margins have started improving. Even, some issuers succeeded to book profits, whereas previously they suffered losses.
A number of mineral mining issuers managed to have improvement in their performances. For an example, PT Timah Tbk (TINS) during the third quarter of 2016 recorded an Rp 50.65 billion net profit, or five times higher than the net profits during the same period in 2015 that amounted to Rp 10.47 billion. Previously, TINS suffered loss in the second quarter of 2016 due to the decrease in tin price.
Meanhwile, PT Aneka Tambang Tbk (ANTM) booked an Rp 38 billion net profits, while the issuer’s income decreased from Rp 9 trillion to Rp 6.45 trillion.
Another issuer, PT Vale Indonesia Tbk (INCO) still booked a US$ 7 million net loss in the nine months of 2016, whereas during the same period in 2015 INCO could secure a US$ 51.85 million net profit.
However, on a quarter basis estimation, INCO actually has shown performance improvement. In only the third quarter, INCO succeeded to secure a US$ 13 million net profit. In the second quarter of 2016 INCO still suffered loss, which amounted to US$ 4.16 million.
Coal issuers also managed to make improvement in their performances. For an example, the net profit of PT Adaro Energy Tbk (ADRO) as of third quarter of 2016 has increased by 16% on year on year basis to US$ 209.1 million.
The increase in net profits was also driven by the efficiency programs along this year that had reduced the burdens of the issuers. In the period of January-September 2016, ADRO’s income has decreased by 16% on year on year basis to US$ 1.7 billion, due to a 14% decrease in the selling price of coal.
Analyst at Asjaya Indosurya Securities William Surya Wijaya said that the improved macro-economic condition, including a stable rupiah exchange rate, has supported the performance of coal and mineral mining issuers.
Furthermore, the improvements in the prices of oil and coal commodities have also boosted the performances of the issuers in the third quarter. “Efficiency has started affecting (to the issuers’ performances). Next year is expected to be better”, William said.
Director of Investa Saran Mandiri Hans Kwee said that the price rise has slightly increased the margin, even though the sales remain stagnant, since the demand has not yet recovered. The price recovery itself was mainly driven by the decrease in Chinese coal production.
The prices of commodities may bring better prospects for issuers, mainly for the nickel issuers. The nickel supplies from the Philippines are expected to decline, after the government took a firm stance over the nickel mining companies, which failed to comply with the environmental impact assessment (AMDAL) and other government regulations.
To date, seven companies have been suspended by the government of the Philippines, while 20 other companies will be likely to be suspended too. “The number is nearing 50% of total number of nickel companies in the Philippines”, said analyst at Daewoo Securities Andy Wibowo Gunawan.
As an information, the Philippines contribute to 25% of global nickel supplies. Therefore, theoretically the price will increase if the supplies decrease. In referring to the sentiment, Andy favors the shares of INCO, on the grounds that the INCO’s performance has been boosted by the increase in nickel price, which preceded this sentiment.
Meanwhile, William predicted that the demand for coals will increase in 2017 along with the massive electricity projects. Therefore, William has recommended buy of the shares of coal mining issuers, such as PTBA and ITMG. In terms of nickel issuers, he recommends ANTM. Hans has also recommended buy of three major coal issuers, such as PTBA, ADRO, and ITMG.
(MUHAMMAD FARID/Translator)
