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JAKARTA. The price of coal has started skyrocketing in the second semester of this year. However, PT Indika Energy Tbk (INDY) does not set high target for its performance in 2017.
President Director of INDY Arsjad Rasjid admitted that the company adopt wait and see stance in responding the increase in coal price in the recent times. Arsjad predicted that the coal price will be ranging at the level US$70-US$80 per ton in 2017.
Arsjad said that the price of coal increases and decreases rapidly. “It is assumed that the price of coal will stand at below of the level of US$80 per ton in the next year. We expect for the more stable price,” said Arsjad, Thursday (24/11).
INDY will still focus on efficiency and maintaining the cash funds in the next year. INDY’s production is expected to be not much different with this year.
This year, INDY has cut the production target to 33 million ton, while the company produced 40 million ton of coal in the last year. “Next year, we are still stabilizing, so that the production will be likely to be the same,” he added.
INDY sees to allocate a worth of US$ 30.8 million capital expenditure (capex) by the end of 2016. As of September 2016, INDY has absorbed US$ 10.6 million capex. The number of capes has sharply dropped by 47.53% from US$58.7 million in 2015. “We are still focusing on efficiency,” Arsjad added. He is still refusing to mention the precise number of expenditure budget for 2017, as it is still finalizing the budget plan.
As of the end of September 2016, the revenues of INDY dropped by 32.84% from US$ 845.29 million in the same period in 2015 to US$ 567.71 million. The coal sales contributed to 26.05% or US$ 147.87 million of the total revenues. The revenues of the mining contract service, which amounted to US$ 419.84 million is still the major contributor of the total revenues.
INDY is pursuing financial closing of the project of Cirebon CEP-2 Electric Steam Power Plant with a capacity of 1x1,000 megawatt (MW) by the end of the year. INDY controls 25% of the shares of the project.
Recently, INDY shares its participation rights to a co-investor, namely PT Imeco Multi Prasarana (IMP). This includes the sharing of US$ 2 billion risk burden of the project.
Previously, Arsjad targets to complete the financial closing of the project of electric steam power plant in the last August. However, to date, the target has not completed yet. “We expect that it will be completed by the end of this year, or at the beginning of the year at the latest,” Arsjad said. INDY plans to raise 80% of project investment or around US$ 1.6 billion from project financing, including from Japan Bank for International Cooperation (JBIC).
Analyst at Asjaya Indosurya Securities William Surya Wijaya said that the coal price will be ranging at US$ 65- US$ 85 per ton. According to William, aside of the good coal price, INDY has a chance to book an improvement in financial performance. “In the future, the project of electric steam power plant will drive INDY performance,” said William.
As information, the increase in the prices of mining commodities, including coal, has skyrocketed INDY’s shares during November 2016. Since the beginning of the month until Friday (25/11), the price of INDY’s share has increased by 25,95% to Rp 825 per a share.
(Muhammad Farid/Translator)
