Indo Tambangraya (ITMG) Targets Sales Up to 25.6 Million Tons in 2024

ISSUER NEWS - JAKARTA. PT Indo Tambangraya Megah Tbk (ITMG) is aiming for an increase in coal production and sales volume in 2024. This target will be supported by production from two new mines and contributions from the coal trading business.

Indo Tambangraya Megah Director, Yulius Kurniawan Gozali said that ITMG will soon operate two new mines through its two subsidiaries, namely PT Graha Panca Karsa (GPK) and PT Tepian Indah Sukses (TIS).

"We have prepared both, hoping that they will start production by the end of March or early April," said Yulius in a Media Briefing held on Thursday (29/2).

Yulius continued, the production target from these two mines could reach 1.4 million tons this year. With a breakdown of 1 million tons from GPK and 400,000 tons from the TIS mine.

In addition to production from four existing mines, ITMG targets to produce coal between 19.5 million tons to 20.2 million tons. Meanwhile, the production target for the first quarter of 2024 is 4.6 million tons.

ITMG's production volume target this year has increased compared to the realization in 2023, which reached 16.9 million tons. In line with the surge in production, ITMG also boosted sales volume.

ITMG's coal sales target this year is 24.9 million tons - 25.6 million tons, which comes from production and coal trading business. For comparison, ITMG's coal sales volume throughout 2023 was 20.9 million tons.

ITMG markets coal to China with a portion of 33%, to the domestic market 24%, and Japan 14%. The rest is exported to other countries such as the Philippines, Thailand, Bangladesh, India, and Malaysia.

However, for revenue and net profit targets, Yulius has not detailed. He only gave an overview, with the assumption that the average price level or Average Selling Price (ASP) of coal can be maintained as last year, then ITMG's financial performance this year will experience growth.

"We hope that revenue in 2024 will grow because sales volume increases, with the assumption that ASP is the same as last year," Yulius revealed.

Yulius predicts that the development of the global economic situation, especially in China and India, will affect the demand and global coal price level. Yulius also emphasized that the current coal price has relatively normalized compared to the anomaly in 2022.

According to Julius, this situation also resulted in a decrease in ITMG's revenue and net profit last year. For information, ITMG's revenue in 2023 fell 34.71% compared to 2022 (year on year/YoY) to US$ 2.37 billion.

In line with that, ITMG's net profit was also cut by 58.30% (YoY) to US$ 500.33 million. "So it depends on perception, actually (performance) 2023 is not bad, it's because (coal prices) 2022 were too good, no one expected the golden era at that time," Yulius concluded.

ITMG Stock Recommendations

In the notes of Equity Research Analyst Panin Sekuritas, Felix Darmawan, ITMG's revenue and net profit performance in 2023 was relatively in line with expectations. The performance decline occurred along with the normalization of global coal prices.

Meanwhile, Kiwoom Securities Indonesia Analyst Miftahul Khaer actually considers the full year 2023 performance of ITMG to be below expectations.
"Indeed, last year we considered ITMG's business to be under pressure, but we only expected a performance decline of about 15%-20% from the bottom line," Miftahul told Kontan.co.id, Thursday (29/2).

As a projection for this year, Khaer focuses more on the general coal industry prospects which are still stagnant. This prediction considers that until the first quarter of 2024 there has been no significant catalyst to boost the coal sector.

"From the supply side, at the end of last year there was a price jump due to supply shock and government regulation uncertainty. But that catalyst has dissolved and prices have fallen again," Khaer said.

Considering this, Miftahul suggests wait and see for ITMG shares by observing the support level at Rp 25,600 and resistance at Rp 27,300. Meanwhile, Felix attaches a neutral outlook for coal with an estimated price of around US$ 120 per ton this year.

Several factors that will influence are the increase in production from China and India and a decrease in imports from both countries along with the relatively maintained energy reserve level. As for ITMG shares, Felix recommends hold with a target price at Rp 28,000.

From the stock movement side, closing the February trading month, ITMG's price fell 0.66% to the level of Rp 26,200 on Thursday (29/2). Year to date, ITMG has accumulated a slight increase of 2.14%.