Coal

On a high note

We conservatively assume global coal prices of USD85.0/tonne in 2018 and

USD90.0/tonne in 2019 (+6.3% and +5.9% vs. our previous estimates, respectively),
and thus remain Overweight on the coal sector. We change our top pick to Indo
Overweight (Maintain)
Tambangraya Megah (ITMG), and raise our target price on the stock to IDR44,000
(from IDR24,100). Given the current conditions of the global and domestic coal
Industry Report
markets, we recommend that investors pick coal miners with higher heating values.
April 13, 2018 Our second preference is Bukit Asam, on which we raise our target price to IDR4,650
(from IDR3,225). Meanwhile, we still recommend Buy on Adaro Energy and lift our
PT. Mirae Asset Sekuritas Indonesia
target price to IDR2,750 (from IDR2,425).

Mining
No impact from trade wars
In our view, the US’ imposition of tariffs on Chinese stainless steel should not affect
Andy Wibowo Gunawan
either global coking or thermal coal prices, considering that stainless steel exports
+62 21 5151140 (ext: 243)
andy.wibowo@miraeasset.co.id from China to the US made up just 1.4% of China’s overall stainless steel export
market in 2M18. Of note, there is a positive correlation between global coking and
thermal coal price movements, as well as between hard coking coal and global
stainless steel price movements.
Upping our global coal price assumption
In the second quarter, there is a seasonal softening of global coal prices due to better
weather conditions in China. Thus, we estimate the global coal price to average
USD87.5/tonne in 2Q18 (-15.0% QoQ), but we project improvement to
USD90.5/tonne in 3Q18 (+3.5% QoQ). We anticipate the uptrend to continue in 4Q18,
when we estimate global coal will reach USD95.5/tonne. Calculating the full-year
figure based on our quarterly estimates would suggest a 2018 average global coal
price of USD94.1/tonne, yet we set our assumption more conservatively at
USD85.0/tonne (+6.3% vs. our previous estimate).
What are the variables for the domestic market going forward?
Among the coal companies under our coverage, ITMG will see the least impact from
the fixed benchmark regulation, as the majority of coal sold by ITMG has a calorific
value exceeding 6,000Kcal/kg. Although most of PLN’s thermal power plants need
medium-grade coal (approximately 5,000Kcal/kg calorific value), PLN is able to blend
ITMG’s coal with lower calorific value coal. Note that the fixed benchmark price is
based on 6,322Kcal/kg calorific value (heating value). Meanwhile, to offset lower
revenue from the domestic market obligation (DMO), we think Indonesian coal miners
are likely to be more efficient going forward by lowering their initial stripping ratio
targets in efforts to expand bottom line.
Overweight on coal sector; Change top pick to ITMG (from ADRO)
Having upped our 2018-19 global coal price assumptions to USD85.0/tonne and
USD90.0/tonne (+6.3% and +5.9% vs. our previous estimates), we maintain our
Overweight investment rating on the coal sector. We change our top pick from Adaro
Energy (ADRO; TP: IDR2,750) to Indo Tambangraya Megah (ITMG; TP: IDR44,000).
Our second preference is Bukit Asam (PTBA), with a target price of IDR4,650.

Table 1. Key investment metrics

Target price P/E (x) P/B (x) ROE (%)
Company Ticker Rating
(IDR) 2018F 2019F 2018F 2019F 2018F 2019F
Adaro Energy ADRO Buy 2,750 9.8 7.7 1.2 1.0 11.7 13.3
Indo Tambangraya Megah ITMG Buy 44,000 6.9 6.0 2.3 2.3 33.9 38.9
Bukit Asam PTBA Buy 4,650 7.8 7.1 2.6 2.3 33.3 32.2
Source: Mirae Asset Sekuritas Research Indonesia

PLEASE SEE ANALYST CERTIFICATIONS AND IMPORTANT DISCLOSURES & DISCLAIMERS IN APPENDIX 1 AT THE END OF REPORT.
April 13, 2018 Coal

C O N T E N T S

No impact from trade wars 3

Upping our global coal price assumption 4

Second quarter of global thermal coal price to soften 4
China to put in the best effort to manage global coal prices 4

Variables for domestic market going forward 5

Coal miners tend to be more efficient 5
Adaro Energy (ADRO IJ) 7
Indo Tambangraya Megah (ITMG IJ) 10
Bukit Asam (PTBA IJ) 13

Mirae Asset Sekuritas Indonesia Research 2

April 13, 2018 Coal

No impact from trade wars

US imposes tariffs on stainless steel imports from China

Last month, the US issued a regulation to impose tariffs on some imported goods from China,
including stainless steel and aluminum. The stated rationale is to protect steel and aluminum jobs
in the US, which have been lost due to cheap foreign imports. The US imposed a 25% tariff on
imported steel and a 10% tariff on aluminum. The tariff on steel has been a negative catalyst for
not only stainless steel but also hard coking coal prices, given the positive correlation between the
two.

Figure 1. Tariffs on Chinese stainless steel and aluminum Figure 2. Global hard coking coal and stainless steel prices

(%) (pts) (pts)

Stainless Steel (LHS) Hard Coking Coal (RHS)
30 5,500 300

25.0
25 4,500 250

20 3,500 200

15 2,500 150

10.0
10 1,500 100

5 500 50
Stainless Steel Alumuniun 4/13 10/13 4/14 10/14 4/15 10/15 4/16 10/16 4/17 10/17

Source: Bloomberg, Mirae Asset Sekuritas Indonesia Source: Bloomberg, Mirae Asset Sekuritas Indonesia

Global thermal coal price to be unaffected going forward

The negative catalyst for hard coking coal prices has also affected thermal coal prices, given their
positive correlation. However, as the US accounted for just 1.4% of China’s total stainless steel
exports in 2M18, we anticipate no major impact of tariffs on stainless steel prices, let alone hard
coking coal and thermal coal prices. Rather than US tariffs, we believe China itself drives global
thermal coal price movements, because it is the world’s largest consumer and producer of
thermal coal.

Figure 3. Global thermal and hard coking coal prices Figure 4. Share of US-bound Chinese stainless steel exports
(pts) (%)
Hard Coking Coal Thermal Coal
320 2.1

1.8
260
1.6
1.4
200

1.1 1.0

140 0.8
0.7

0.6
80

20 0.1
4/13 10/13 4/14 10/14 4/15 10/15 4/16 10/16 4/17 10/17 2015 2016 2017 Feb-17 Feb-18

Source: Bloomberg, Mirae Asset Sekuritas Indonesia Source: Bloomberg, Mirae Asset Sekuritas Indonesia

Mirae Asset Sekuritas Indonesia Research 3

April 13, 2018 Coal

Upping our global coal price assumption

Global thermal coal prices to soften in second quarter

In the second quarter, there is a seasonal softening of global coal prices due to better weather
conditions in China. Furthermore, we expect China to boost its coal production in 2Q18 to support
its stockpile in advance of the next winter season. Thus, we estimate the global coal price to
average USD87.5/tonne in 2Q18 (-15.0% QoQ), but we project improvement to USD90.5/tonne in
3Q18 (+3.5% QoQ). We anticipate the uptrend to continue in 4Q18, when we estimate global coal
will reach USD95.5/tonne. Calculating the full-year figure based on our quarterly estimates would
suggest a 2018 average global coal price of USD94.1/tonne, yet we set our assumption more
conservatively at USD85.0/tonne (+6.3% vs. our previous estimate).

Figure 5. Quarterly global coal price Figure 6. China’s total raw coal output

(USD/tonne) (mn tonnes)

140 425
China announced
cutting workig days
policy
110
350

80

275
50

20
4Q11
1Q12
2Q12
3Q12
4Q12
1Q13
2Q13
3Q13
4Q13
1Q14
2Q14
3Q14
4Q14
1Q15
2Q15
3Q15
4Q15
1Q16
2Q16
3Q16
4Q16
1Q17
2Q17
3Q17
4Q17
1Q18

200
5/14 11/14 5/15 11/15 5/16 11/16 5/17 11/17

Source: Bloomberg, Mirae Asset Sekuritas Indonesia Source: Bloomberg, Mirae Asset Sekuritas Indonesia

China will strive to manage global coal prices

We are confident that China will manage its coal production and issue policies to maintain global
coal prices at a reasonable level (>USD80.0/tonne). Notably, China’s coal regions contributed
19.9% to its total GDP in 2015. Consumption expenditures in these regions contributed 38.6% to
total consumption expenditures, while total consumption expenditures contributed 51.6% to
China’s total GDP.

Figure 7. China’s coal reserves by region Figure 8. 19.9% contribution to China’s economy

(%)
Ningxia
Hebei
Sichuan
Yunnan 19.9
Heilongjiang
Shandong
Anhui
Coal region
Henan
Guizhou Non-coal region
Shaanxi
Xinjiang
Inner Mongolia 80.1
Shanxi
0 20 40 60 80 100
(bn tonnes)

Source: Statista, Mirae Asset Sekuritas Indonesia Source: National Bureau of Statistics of China, Mirae Asset Sekuritas Indonesia

Mirae Asset Sekuritas Indonesia Research 4

April 13, 2018 Coal

Variables for domestic market going forward

Higher heating value = Lower discount to fixed price (USD70.0/tonne)

The domestic market obligation (DMO) regulation of the Ministry of Energy and Mineral
Resources (ESDM) requires Indonesian coal miners to sell 25.0% of their 2018 coal production to
PLN at a fixed benchmark price of USD70.0/tonne, based on 6,322Kcal/kg calorific value (heating
value). Among the coal companies under our coverage, ITMG will see the least impact from the
fixed benchmark regulation, as the majority of coal sold by ITMG has a calorific value exceeding
6,000Kcal/kg. Although most of PLN’s thermal power plants need medium-grade coal
(approximately 5,000Kcal/kg calorific value), PLN is able to blend ITMG’s coal with lower calorific
value coal.

Figure 9. Lower and upper calorific value range Figure 10. 2018F DMO quantity under our coverage
(Kcal/kg) (mn tonnes)
Lower Upper
8,000 17

6,400 14.0
6,300 14
6,000

4,860
11
4,500
4,300

4,000
3,297 8
6.4
5.6

2,000 5
ADRO ITMG PTBA ADRO ITMG PTBA

Source: Companies, Mirae Asset Sekuritas Indonesia Source: ESDM, Mirae Asset Sekuritas Indonesia

Coal miners to be more efficient

Meanwhile, to offset lower revenue from the DMO regulation, we think Indonesian coal miners are
likely to be more efficient going forward by lowering their initial stripping ratio targets in efforts to
expand bottom line. The 2018F stripping ratio targets of ADRO, ITMG, and PTBA stand at 4.9x,
11.5x, and 4.4x, respectively. The overburden removal targets are 274.4bcm for ADRO,
258.8bcm for ITMG, and 111.6bcm for PTBA.

Figure 11. Stripping ratio targets Figure 12. Overburden removal targets

(x) (bcm)

12 11.5 300
274.4
258.8
10
250

8
200

6
4.9
4.4
150
4
111.6

2 100
ADRO ITMG PTBA ADRO ITMG PTBA

Source: Companies, Mirae Asset Sekuritas Indonesia Source: Companies, Mirae Asset Sekuritas Indonesia

Mirae Asset Sekuritas Indonesia Research 5

April 13, 2018 Coal

Table 2. Key comparison (%)

2015 2016 2017 2018F 2019F 2020F
Revenue growth
ADRO -19.3 -6.0 29.1 -1.6 9.4 11.6
ITMG -18.2 -14.0 23.5 8.2 13.0 9.5
PTBA 5.0 2.4 38.5 7.7 11.9 14.0
Gross profit growth
ADRO -24.5 26.1 66.6 -4.3 19.9 12.8
ITMG -14.2 -5.6 52.8 27.9 12.6 28.2
PTBA 2.9 6.3 93.3 3.2 17.4 11.8
Operating profit growth
ADRO -26.8 30.2 79.3 -9.0 22.1 13.1
ITMG -18.0 7.7 86.1 16.2 15.6 31.3
PTBA 4.6 7.4 141.3 4.0 11.1 10.9
Net profit growth
ADRO -14.4 119.5 44.4 9.4 27.4 22.7
ITMG -68.5 107.1 93.3 31.4 14.5 31.8
PTBA 1.0 -1.5 123.1 12.6 10.2 10.7
Gross margin
ADRO 20.2 27.1 35.0 34.1 37.3 37.8
ITMG 22.0 24.2 29.9 35.4 35.2 41.3
PTBA 30.1 31.3 43.7 41.9 43.9 43.1
Operating margin
ADRO 15.3 21.2 29.4 27.2 30.3 30.8
ITMG 12.2 15.3 23.0 24.7 25.2 30.3
PTBA 17.6 18.5 32.2 31.1 30.8 30.0
Net profit margin
ADRO 5.7 13.3 14.8 16.5 19.2 21.1
ITMG 4.0 9.6 15.0 18.2 18.4 22.2
PTBA 14.8 14.3 23.0 24.0 23.7 23.0
ROE
ADRO 4.5 8.8 11.8 11.7 13.3 14.4
ITMG 7.6 14.4 26.4 33.9 38.9 51.2
PTBA 21.9 19.0 32.4 33.3 32.2 31.6
Net debt to equity (x)
ADRO 0.3 0.1 0.0 0.0 Net cash Net cash
ITMG Net cash Net cash Net cash Net cash Net cash Net cash
PTBA Net cash Net cash Net cash Net cash Net cash Net cash
Source: Mirae Asset Sekuritas Research

Mirae Asset Sekuritas Indonesia Research 6

April 13, 2018 Coal

Adaro Energy (ADRO IJ)

Continuing efficiency

Mining For Adaro Energy (ADRO), we raise our target price to IDR2,750 (from IDR2,425) after
factoring in our assumptions, and we maintain our Buy call on the stock due to the
30.3% implied upside. We note, however, that ADRO does not have a plan to raise coal
(Maintain) Buy production in the near term in the face of the new fixed benchmark coal price regulation.
The company is continuing to pursue an efficiency strategy.
Target Price (12M, IDR) 2,750
No plan to raise production target in the near term

Share Price (4/12/18, IDR) 2,110 Even though the government is allowing coal companies to raise 2018 coal production
by 10% due to the new fixed benchmark price regulation, ADRO does not plan to raise
production in the near term. ADRO set a 2018 coal production target range of 54.0-
Expected Return 30.3%
56.0mn tonnes. Given solid global coal prices, we believe ADRO can reach production of
56.0mn tonnes (+8.1% YoY).
OP (18F, USDmn) 872
Consensus OP (18F, USDmn) 1,067 Efficiency strategy continues
EPS Growth (18F, %) 9.7 In addition to organic growth, ADRO plans to support growth over the longer term by
P/E (18F, x) 9.8 continuing efficiency strategies such as shortening overburden removal distances,
Industry P/E (18F, x) 8.9 hedging fuel costs, and changing electricity needs from diesel oil power plants to solar
Benchmark P/E (18F, x) 16.3 power plants. Of note, shortening the overburden removal distance could reduce mining
contractor costs, which contributed 35.0% to ADRO’s total cash cost of production in
Market Cap (IDRbn) 67,490.4
2017. Furthermore, fuel costs contributed 25.0% to ADRO’s total 2017 cash cost of
Shares Outstanding (IDRmn) 31,986.0
production.
Free Float (%) 43.8
Foreign Ownership (%) 53.5 2018F-19F earnings growth still expected
Beta (12M) 1.2
Having adjusted our top-line assumptions (global coal prices and the benchmark coal
52-Week Low 1,395
price to PLN), we lower our revenue estimates to USD3.2bn for 2018 and USD3.5bn for
52-Week High 2,650
2019 (-5.5% and -2.8% vs. our previous targets). We also lower our stripping ratio target,
(%) 1M 6M 12M and hence lower our gross profit forecasts to USD1.1bn for 2018 and USD1.3bn for
Absolute 2.9 12.2 11.6 2019 (-8.5% and -11.3% vs. our previous estimates). Overall, we still expect ADRO’s net
Relative 3.1 5.0 -0.2 profit to grow in 2018 (+9.4% YoY to USD529mn) and 2019 (+27.4% YoY to
(D-1yr=100)
USD674mn).
JCI ADRO
150
Raise TP to IDR2,750 from IDR2,425
120
In light of our upward revisions to 2018F-19F earnings, we raise our target price on
90
ADRO to IDR2,750 (from IDR2,425), based on a target P/E of 12.8x (5-year average).
60
4/17 6/17 8/17 10/17 12/17 2/18 4/18

12/15 12/16 12/17 12/18F 12/19F 12/20F

FY (Dec.)
Revenue (USDmn) 2,684 2,524 3,258 3,206 3,508 3,913
Operating Profit (USDmn) 410 534 958 872 1,064 1,204
Net Profit (USDmn) 152 335 483 529 674 827
EPS (IDR) 62 136 196 215 274 336
BPS (IDR) 1,363 1,539 1,663 1,833 2,058 2,330
P/E (x) 34.1 15.5 10.7 9.8 7.7 6.3
P/B (x) 1.5 1.4 1.3 1.2 1.0 0.9
EV/EBITDA (x) 9.7 6.0 4.2 5.2 4.0 3.1
ROE (%) 4.5 8.8 11.8 11.7 13.3 14.4
ROA (%) 2.6 5.1 7.1 7.2 8.5 10.2
Dividend Yield (%) 1.6 1.9 2.7 2.7 2.9 3.7
Net Gearing (x) 0.3 0.1 0.0 0.0 Net cash Net cash
Note: NP refers to net profit attributable to controlling interests
Source: Company data, Mirae Asset Sekuritas Indonesia Research estimates

Mirae Asset Sekuritas Indonesia Research 7

April 13, 2018 Coal

Figure 13. ADRO’s production trend Figure 14. ADRO’s stripping ratio trend

(mn tonnes) (x)

57 6
56.2 5.6 5.7
56.0
5.2
4.9
5
4.5 4.6
54

52.3 52.5
51.8 4
51.5

51
3

48 2
2013 2014 2015 2016 2017 2018F 2013 2014 2015 2016 2017 2018F

Source: Company data, Mirae Asset Sekuritas Indonesia Research Source: Company data, Mirae Asset Sekuritas Indonesia Research

Figure 15. ADRO’s production cash cost breakdown Figure 16. ADRO’s trailing P/E band

(%) (x)
27

10.0
22 +2 stdev
10.0
35.0 Mining
Fuel 17 +1 stdev

Freight & Handling

Coal processing Average
20.0 12
Others
-1 stdev
7
25.0
-2 stdev
2
4/13 10/13 4/14 10/14 4/15 10/15 4/16 10/16 4/17 10/17

Source: Company data, Mirae Asset Sekuritas Indonesia Research Source: Bloomberg, Mirae Asset Sekuritas Indonesia Research

Table 3. Change in assumptions (USDmn)

2018F 2019F
Assumption Change Change
Old New Old New
Global coal price (USD/tonne) 80.0 85.0 6.3 85.0 90.0 5.9
Stripping ratio (x) 5.0 4.9 -2.0 5.0 4.9 -2.0
Revenue (USDmn) 3,394 3,206 -5.5 3,609 3,508 -2.8
Cost of revenue (USDmn) -2,200 -2,113 -4.0 -2,133 -2,198 3.1
Gross profit (USDmn) 1,194 1,093 -8.5 1,476 1,310 -11.3
Operating profit (USDmn) 990 872 -12.0 1,260 1,064 -15.5
Net profit (USDmn) 500 529 5.8 638 674 5.6
Source: Mirae Asset Sekuritas Research

Mirae Asset Sekuritas Indonesia Research 8

April 13, 2018 Coal

Adaro Energy (ADRO/Buy/TP: IDR2,750)

Comprehensive Income Statement (Summarized) Statement of Financial Condition (Summarized)

Year end Dec 31 (USDmn) 12/17 12/18F 12/19F 12/20F Year end Dec 31 (USDmn) 12/17 12/18F 12/19F 12/20F
Revenue 3,258 3,206 3,508 3,913 Current Assets
Cost of Sales -2,117 -2,113 -2,198 -2,435 Cash and Cash Equivalent 1,207 861 1,217 1,172
Gross Profit 1,142 1,093 1,310 1,478 AR & Other Receivables 315 267 292 326
SG&A Expenses -184 -221 -246 -274 Inventories 85 78 82 90
EBIT 958 872 1,064 1,204 Other Current Assets 372 184 230 273
EBITDA 1,283 1,114 1,322 1,471 Non-Current Assets
Net Interest Income (Exp.) -34 -67 -54 -5 Investments in Associates 46 647 712 783
Forex Gain (Loss) 0 0 0 0 Property, Plant and Equipment 3,862 4,325 4,433 4,497
Others 6 -3 -2 -1 Intangible/Other Assets 927 947 973 999
Net Gain from Inv. In Associates 0 0 0 0 Total Assets 6,814 7,310 7,940 8,141
Pretax Profit 930 801 1,009 1,199 Current Liabilities
Income Tax -393 -200 -252 -300 AP & Other Payables 279 285 296 328
Minority Interest -53 -72 -82 -72 Short-Term Financial Liabilities 237 9 31 596
Net Profit 483 529 674 827 Other Current Liabilities 257 155 181 208
Non-Current Liabilities
Margin Long-Term Financial Liabilities 1,140 1,489 1,289 -
12/17 12/18F 12/19F 12/20F Other Non-Current Liabilities 809 863 1,078 1,277
Gross Margin (%) 35.0 34.1 37.3 37.8 Total Liabilities 2,723 2,801 2,875 2,409
EBITDA Margin (%) 39.4 34.8 37.7 37.6 Controlling Interests
Operating Margin (%) 29.4 27.2 30.3 30.8 Capital Stock 343 343 343 343
Net Margin (%) 14.8 16.5 19.2 21.1 Additional Paid in Capital 1,154 1,154 1,154 1,154
Retained Earnings 1,967 2,357 2,880 3,513
Non-Controlling Interests 623 655 687 722
Others 4 0 0 0
Stockholders' Equity 4,092 4,509 5,064 5,732

Forecasts/Valuations (Summarized)
Year end Dec 31 12/17 12/18F 12/19F 12/20F
P/E (x) 10.7 9.8 7.7 6.3
P/B (x) 1.3 1.2 1.0 0.9
Cash Flows (Summarized) EV/EBITDA (x) 4.2 5.2 4.0 3.1
Year end Dec 31 (USDmn) 12/17 12/18F 12/19F 12/20F EPS (IDR) 196 215 274 336
Cash Flows from Op Activities 598 918 894 1,067 BPS (DR) 1,663 1,833 2,058 2,330
Net Profit 483 529 674 827 DPS (IDR) 57 56 62 79
Depreciation 325 243 258 267 Payout Ratio (%) 29.1 26.2 22.5 23.4
Change in Working Cap 45 60 -17 -11 Dividend Yield (%) 2.7 2.7 2.9 3.7
Others -256 86 -21 -16 Revenue Growth (%) 29.1 -1.6 9.4 11.6
Cash Flows from Inv. Activities -230 -1,327 -457 -428 EBITDA Growth (%) 37.8 -13.2 18.7 11.2
Capex -206 -705 -367 -331 Operating Profit Growth (%) 79.3 -9.0 22.1 13.1
Others -24 -621 -91 -98 EPS Growth (%) 44.4 9.4 27.4 22.7
Cash Flows from Fin. Activities -237 63 -81 -684 Accounts Receivable Turnover (x) 10.4 12.0 12.0 12.0
Change in Financial Liabilities -57 120 -178 -724 Inventory Turnover (x) 24.8 26.9 26.9 26.9
Change in Equity -17 -4 0 0 Accounts Payable Turnover (x) 7.6 7.4 7.4 7.4
Dividends Paid -140 -139 -152 -193 ROA (%) 7.1 7.2 8.5 10.2
Others -19 86 248 233 ROE (%) 11.8 11.7 13.3 14.4
Increase (Decrease) in Cash 130 -345 356 -45 Current Ratio (x) 2.6 3.1 3.6 1.6
Beginning Balance 1,077 1,207 861 1,217 Net Debt to Equity Ratio (x) 0.0 0.0 Net cash Net cash
Ending Balance 1,207 861 1,217 1,172 Interest Coverage Ratio (x) 18.1 8.4 11.5 28.9
Source: Company data, Mirae Asset Sekuritas Research estimates

Mirae Asset Sekuritas Indonesia Research 9

April 13, 2018 Coal

Indo Tambangraya Megah (ITMG IJ)

The high-heat value coal player

Mining Following our adjustments to assumptions, we raise our target price on Indo
Tambangraya Megah (ITMG) to IDR44,000 (from IDR24,100) and upgrade our
recommendation on the stock to Buy (from Sell). We think ITMG will see the least impact
(Upgrade) Buy from ESDM’s new fixed benchmark coal price because of the medium-to-high calorific
value of the company’s coal.
Target Price (12M, IDR) 44,000
Majority of ITMG’s coal has high calorific value

Share Price (4/12/18, IDR) 27,175 ITMG’s full-year coal production comes mostly from subsidiary Indominco Mandiri (IMM),
which company estimates to produce 13.1mn tonnes (5,600-6,200Kcal/kg) in 2018,
contributing 58.2% to ITMG’s total production. Meanwhile, company project Trubaindo
Expected Return 61.9%
(TCM) and Bharinto (BHE) to produce 4.6mn tonnes and 2.7mn tonnes, respectively, in
2018 (6,100-6,300Kcal/kg). Given the medium-to-high calorific value of most of its coal,
OP (18F, USDmn) 451
we think ITMG will see the least impact from the new fixed benchmark price.
Consensus OP (18F, USDmn) 395.7
Lowering our stripping ratio and sales volume targets
EPS Growth (18F, %) 31.4
P/E (18F, x) 6.9 In light of management’s guidance, we lower our 2018F-19F stripping ratio target to
Industry P/E (18F, x) 8.9 11.5x (-8.0% vs. our previous target). We also lower our sales volume estimate to
Benchmark P/E (18F, x) 16.3 25.0mn tonnes (-7.4% vs. our previous target). We believe ITMG is conservatively
estimating full-year 2018F coal sales volume, given that it did not achieve its 2017 coal
Market Cap (IDRbn) 30,705.7
sales volume target (missed by 7.4%).
Shares Outstanding (IDRmn) 1,129.9
Free Float (%) 34.8 Changing 2018F-19F earnings estimates
Foreign Ownership (%) 12.0
Having adjusted our top-line assumptions (global coal prices, sales volume, and the
Beta (12M) 0.9
benchmark coal price), we lower our revenue estimates to USD1.8bn in 2018 and
52-Week Low 14,500
USD2.1bn in 2019 (-10.9% and -14.7% vs. our previous targets). We also lower our
52-Week High 32,200
stripping ratio target, and thus our cost of revenue estimates now stand at USD1.2bn for
(%) 1M 6M 12M 2018 and USD1.3bn for 2019 (-19.7% and -20.5% vs. our previous estimates). Overall,
Absolute 4.5 30.8 36.9 we still expect ITMG’s net profit to expand in 2018 (+31.4% YoY to USD332mn) and
Relative 4.7 23.5 25.1 2019 (+14.5% YoY to USD380mn).
(D-1yr=100)
JCI ITMG Upgrade TP and recommendation
190

160
Given our higher earnings estimates, we raise our target price on ITMG to IDR44,000
130 (from IDR24,100) and upgrade our call to Buy from Sell. We based our target price on a
100 target P/E of 11.1x (5-year average).
70
4/17 6/17 8/17 10/17 12/17 2/18 4/18

12/15 12/16 12/17 12/18F 12/19F 12/20F

FY (Dec.)
Revenue (USDmn) 1,589 1,367 1,690 1,828 2,066 2,261
Operating Profit (USDmn) 194 209 388 451 521 685
Net Profit (USDmn) 63 131 253 332 380 501
EPS (IDR) 670 1,562 3,019 3,967 4,543 5,988
BPS (IDR) 8,863 10,842 11,448 11,684 11,688 11,692
P/E (x) 40.5 17.4 9.0 6.9 6.0 4.5
P/B (x) 3.1 2.5 2.4 2.3 2.3 2.3
EV/EBITDA (x) 10.3 7.5 4.4 3.3 2.5 1.8
ROE (%) 7.6 14.4 26.4 33.9 38.9 51.2
ROA (%) 5.4 10.8 18.6 18.1 18.7 22.2
Dividend Yield (%) 2.5 1.8 8.8 14.6 16.7 22.0
Net Gearing (x) Net cash Net cash Net cash Net cash Net cash Net cash
Note: NP refers to net profit attributable to controlling interests
Source: Company data, Mirae Asset Sekuritas Indonesia Research estimates

Mirae Asset Sekuritas Indonesia Research 10

April 13, 2018 Coal

Figure 17. ITMG’s calorific value by subsidiary Figure 18. ITMG’s 2018F coal production by subsidiary
(Kcal/kg) (mn tonnes)
Lower Upper 2017 2018F
7,200 16

13
6,400

10
5,600
7

4,800
4

4,000 1
IMM TCM BHE Kitadin JBG IMM TCM BHE Kitadin JBG

Source: Company data, Mirae Asset Sekuritas Indonesia Research Source: Company data, Mirae Asset Sekuritas Indonesia Research

Figure 19. Lowering our sales volume target to 25.0mn tonnes Figure 20. ITMG’s trailing P/E band

(mn tonnes) (x)

28

28

27
21 +2 stdev

26 +1 stdev
14
Average
25
7
-1 stdev

-2 stdev
24 0
Old New 4/13 10/13 4/14 10/14 4/15 10/15 4/16 10/16 4/17 10/17

Source: Company data, Mirae Asset Sekuritas Indonesia Research Source: Bloomberg, Mirae Asset Sekuritas Indonesia Research

Table 4. Change in assumptions (USDmn)

2018F 2019F
Assumption Change Change
Old New Old New
Global coal price (USD/tonne) 80.0 85.0 6.3 85 90.0 5.9
Stripping ratio (x) 12.5 11.5 -8.0 12.5 11.5 -8.0
Revenue (USDmn) 2,052 1,828 -10.9 2,423 2,066 -14.7
Cost of revenue (USDmn) -1,470 -1,181 -19.7 -1,682 -1,338 -20.5
Gross profit (USDmn) 582 647 11.1 741 728 -1.7
Operating profit (USDmn) 362 451 24.5 481 521 8.3
Net profit (USDmn) 263 332 26.3 346 380 9.8
Source: Mirae Asset Sekuritas Research

Mirae Asset Sekuritas Indonesia Research 11

April 13, 2018 Coal

Indo Tambangraya Megah (ITMG/Buy/TP: IDR44,000)

Comprehensive Income Statement (Summarized) Statement of Financial Condition (Summarized)

Year end Dec 31 (USDmn) 12/17 12/18F 12/19F 12/20F Year end Dec 31 (USDmn) 12/17 12/18F 12/19F 12/20F
Revenue 1,690 1,828 2,066 2,261 Current Assets
Cost of Sales -1,184 -1,181 -1,338 -1,327 Cash and Cash Equivalent 374 706 765 873
Gross Profit 505 647 728 934 AR & Other Receivables 195 175 198 216
SG&A Expenses -117 -196 -207 -249 Inventories 109 89 101 100
EBIT 388 451 521 685 Other Current Assets 119 7 8 9
EBITDA 433 475 614 787 Non-Current Assets
Net Interest Income (Exp.) 3 9 9 9 Investments in Associates 0 0 0 0
Forex Gain (Loss) 0 0 0 0 Property, Plant and Equipment 223 314 327 340
Others -29 -17 -23 -25 Intangible/Other Assets 339 540 632 718
Net Gain from Inv. In Associates 0 0 0 0 Total Assets 1,359 1,832 2,031 2,256
Pretax Profit 362 443 507 668 Current Liabilities
Income Tax -109 -111 -127 -167 AP & Other Payables 153 127 144 143
Minority Interest 0 0 0 0 Short-Term Financial Liabilities 0 0 0 0
Net Profit 253 332 380 501 Other Current Liabilities 175 685 859 1,084
Non-Current Liabilities
Margin Long-Term Financial Liabilities 0 0 0 0
12/17 12/18F 12/19F 12/20F Other Non-Current Liabilities 73 42 50 51
Gross Margin (%) 29.9 35.4 35.2 41.3 Total Liabilities 401 854 1,053 1,278
EBITDA Margin (%) 25.6 26.0 29.7 34.8 Controlling Interests
Operating Margin (%) 23.0 24.7 25.2 30.3 Capital Stock 64 64 64 64
Net Margin (%) 15.0 18.2 18.4 22.2 Additional Paid in Capital 329 329 329 329
Retained Earnings 585 585 585 586
Non-Controlling Interests -20 0 0 0
Others 0 0 0 0
Stockholders' Equity 958 978 978 979

Forecasts/Valuations (Summarized)
Year end Dec 31 12/17 12/18F 12/19F 12/20F
P/E (x) 9.0 6.9 6.0 4.5
P/B (x) 2.4 2.3 2.3 2.3
Cash Flows (Summarized) EV/EBITDA (x) 4.4 3.3 2.5 1.8
Year end Dec 31 (USDmn) 12/17 12/18F 12/19F 12/20F EPS (IDR) 3,019 3,967 4,543 5,988
Cash Flows from Op Activities 174 991 628 809 BPS (DR) 11,448 11,684 11,688 11,692
Net Profit 253 332 380 501 DPS (IDR) 2,378 3,964 4,539 5,984
Depreciation 44 24 92 102 Payout Ratio (%) 78.8 99.9 99.9 99.9
Change in Working Cap -51 14 -18 -19 Dividend Yield (%) 8.8 14.6 16.7 22.0
Others -72 622 174 225 Revenue Growth (%) 23.5 8.2 13.0 9.5
Cash Flows from Inv. Activities 167 -317 -197 -201 EBITDA Growth (%) 66.7 9.7 29.3 28.2
Capex 59 -110 -103 -113 Operating Profit Growth (%) 86.1 16.2 15.6 31.3
Others 107 -206 -94 -88 EPS Growth (%) 93.3 31.4 14.5 31.8
Cash Flows from Fin. Activities -294 -343 -372 -500 Accounts Receivable Turnover (x) 8.7 10.5 10.5 10.5
Change in Financial Liabilities 0 0 0 0 Inventory Turnover (x) 10.9 13.3 13.3 13.3
Change in Equity -1 20 0 0 Accounts Payable Turnover (x) 7.7 9.3 9.3 9.3
Dividends Paid -199 -332 -380 -501 ROA (%) 18.6 18.1 18.7 22.2
Others 9 -31 8 1 ROE (%) 26.4 33.9 38.9 51.2
Increase (Decrease) in Cash 46 332 59 108 Current Ratio (x) 2.4 1.2 1.1 1.0
Beginning Balance 328 374 706 765 Net Debt to Equity Ratio (x) Net cash Net cash Net cash Net cash
Ending Balance 374 706 765 873 Interest Coverage Ratio (x) N.A N.A N.A N.A
Source: Company data, Mirae Asset Sekuritas Research estimates

Mirae Asset Sekuritas Indonesia Research 12

April 13, 2018 Coal

Bukit Asam (PTBA IJ)

Not as bad as expected

Mining We raise our target price on Bukit Asam (PTBA) to IDR4,650 (from IDR3,225), as we
adjusted our assumptions. We reiterate our Buy call on the company given the 36.0%
implied upside potential. We still expect PTBA’s net profit to expand in 2018 (+12.6%
(Maintain) Buy YoY to IDR5.0tr) and 2019 (+10.2% YoY to IDR5.5tr). PTBA is currently trading at
2018F-19F P/Es of 7.8x and 7.1x, respectively.
Target Price (12M, IDR) 4,650
Receiving subsidy from PLN; Sales under DMO to be just 6.4mn tonnes

Share Price (4/12/18, IDR) 3,420 Despite the fixed selling price to PLN set by ESDM, PTBA obtained a subsidy from PLN
amounting to USD7.5/tonne. This should mitigate the impact on PTBA’s total blended
coal ASP for 2018. Of note, PTBA’s coal sold to PLN (under DMO) in 2017 had an ASP
Expected Return 36.0%
of USD60.0/tonne. Given the new fixed benchmark price (USD70.0/tonne), PTBA’s coal
ASP under DMO is USD49.0/tonne. Adding the USD7.5/tonne subsidy from PLN, the
OP (18F, IDRbn) 6,514
figure rises to USD56.5/ton—a 5.8% discount to PTBA’s 2017 coal ASP under DMO.
Consensus OP (18F, IDRbn) 4,967
BA64 products’ contribution to sales volume to rise in 2018
EPS Growth (18F, %) 12.6
P/E (18F, x) 7.8 To offset lower 2018F revenue in the face of the new fixed benchmark price, PTBA will
Industry P/E (18F, x) 8.9 sell more BA64 coal products this year. In 2017, PTBA sold only about 30,000 tonnes of
Benchmark P/E (18F, x) 16.3 such products, but that figure is expected to surge to 2.5mn tonnes in 2018. BA64 is a
coal product with 6,400Kcal/kg coal content.
Market Cap (IDRbn) 39,400
Shares Outstanding (IDRmn) 11,520.7 Adjusting our assumptions
Free Float (%) 35.0
Having adjusted our top-line assumptions (global coal prices, sales volume, and the
Foreign Ownership (%) 70.3
benchmark coal price), we lower our revenue estimates to IDR20.9tr in 2018 and
Beta (12M) 1.3
IDR23.5tr in 2019 (-9.6% and -14.7% vs. our previous targets). We also lowered our
52-Week Low 1,810
stripping ratio target, and hence lower our cost of revenue estimates to IDR12.2tr for
52-Week High 3,570
2018 and IDR13.2tr for 2019 (-27.5% and -33.7% vs. our previous estimates). Overall,
(%) 1M 6M 12M we still expect PTBA’s net profit to expand in 2018 (+12.6% YoY to IDR5.0tr) and 2019
Absolute 22.6 51.7 42.8 (+10.2% YoY to IDR5.5tr).
Relative 22.8 44.4 31.0
Reiterate Buy and raise TP
(D-1yr=100)
JCI PTBA
170
In light of our upward revisions to earnings estimates, we raise our target price on PTBA
150 to IDR4,650 (from IDR3,225), based on a target P/E of 10.6x (5-year average).
130
110
90
70
4/17 6/17 8/17 10/17 12/17 2/18 4/18

12/15 12/16 12/17 12/18F 12/19F 12/20F

FY (Dec.)
Revenue (IDRbn) 13,734 14,059 19,471 20,971 23,470 26,750
Operating Profit (IDRbn) 2,416 2,595 6,261 6,514 7,239 8,031
Net Profit (IDRbn) 2,036 2,006 4,476 5,042 5,554 6,150
EPS (IDR) 177 174 389 438 482 534
BPS (IDR) 806 916 1,198 1,315 1,498 1,691
P/E (x) 19.4 19.6 8.8 7.8 7.1 6.4
P/B (x) 4.2 3.7 2.9 2.6 2.3 2.0
EV/EBITDA (x) 13.3 14.4 4.9 4.7 4.1 3.4
ROE (%) 21.9 19.0 32.4 33.3 32.2 31.6
ROA (%) 12.1 10.8 20.4 22.4 21.0 19.7
Dividend Yield (%) 4.3 1.6 1.5 9.6 10.9 12.0
Net Gearing (x) Net cash Net cash Net cash Net cash Net cash Net cash
Note: NP refers to net profit attributable to controlling interests
Source: Company data, Mirae Asset Sekuritas Indonesia Research estimates

Mirae Asset Sekuritas Indonesia Research 13

April 13, 2018 Coal

Figure 21. Railway production capacity Figure 22. Higher BA64 sales volume in 2018F

(mn tonnes) (%)

25

21.4 10.0

20
17.7
15.8
14.8 BA64
15
12.8 Others
11.9

10

90.0
5
2012 2013 2014 2015 2016 2017

Source: Company data, Mirae Asset Sekuritas Indonesia Research Source: Company data, Mirae Asset Sekuritas Indonesia Research

Figure 23. Lowering our sales volume target to 25.9mn tonnes Figure 24. PTBA’s trailing P/E band

(mn tonnes) (x)

30 19

+2 stdev
28
15
26.5
25.9 +1 stdev
26

11
Average
24

-1 stdev
7
22

-2 stdev
20 3
Old New 4/13 10/13 4/14 10/14 4/15 10/15 4/16 10/16 4/17 10/17

Source: Company data, Mirae Asset Sekuritas Indonesia Research Source: Bloomberg, Mirae Asset Sekuritas Indonesia Research

Table 5. Change in assumptions (IDR bn)

2018F 2019F
Assumption Change Change
Old New Old New
Global coal price (USD/tonne) 80.0 85.0 6.3 85 90.0 5.9
Stripping ratio (x) 4.7 4.4 -7.0 4.8 4.4 -9.0
Revenue (IDRbn) 23,197 20,971 -9.6 27,523 23,470 -14.7
Cost of revenue (IDRbn) -16,821 -12,192 -27.5 -19,854 -13,159 -33.7
Gross profit (IDRbn) 6,377 8,779 37.7 7,669 10,311 34.4
Operating profit (IDRbn) 3,644 6,514 78.7 4,067 7,239 78.0
Net profit (IDRbn) 2,944 5,042 71.3 3,284 5,554 69.2
Source: Mirae Asset Sekuritas Research

Mirae Asset Sekuritas Indonesia Research 14

April 13, 2018 Coal

Bukit Asam (PTBA/Buy/TP: IDR4,650)

Comprehensive Income Statement (Summarized) Statement of Financial Condition (Summarized)

Year end Dec 31 (IDRbn) 12/17 12/18F 12/19F 12/20F Year end Dec 31 (IDRbn) 12/17 12/18F 12/19F 12/20F
Revenue 19,471 20,971 23,470 26,750 Current Assets
Cost of Sales -10,965 -12,192 -13,159 -15,219 Cash and Cash Equivalent 3,555 4,559 6,379 8,852
Gross Profit 8,507 8,779 10,311 11,531 AR & Other Receivables 5,344 1,456 1,630 1,858
SG&A Expenses -2,245 -2,265 -3,072 -3,501 Inventories 1,156 1,016 1,097 1,268
EBIT 6,261 6,514 7,239 8,031 Other Current Assets 1,063 1,599 1,730 1,893
EBITDA 7,588 7,618 8,353 9,298 Non-Current Assets
Net Interest Income (Exp.) 81 177 131 130 Investments in Associates 1,498 1,498 1,498 1,498
Forex Gain (Loss) 0 0 0 0 Property, Plant and Equipment 7,466 8,297 9,530 10,739
Others -363 0 0 0 Intangible/Other Assets 1,905 4,072 4,547 5,162
Net Gain from Inv. In Associates 122 -2 -2 -2 Total Assets 21,987 22,497 26,410 31,270
Pretax Profit 6,102 6,689 7,369 8,159 Current Liabilities
Income Tax -1,554 -1,639 -1,806 -2,000 AP & Other Payables 886 734 793 917
Minority Interest -71 -8 -8 -9 Short-Term Financial Liabilities 441 0 0 0
Net Profit 4,476 5,042 5,554 6,150 Other Current Liabilities 3,186 3,169 4,186 6,332
Non-Current Liabilities
Margin Long-Term Financial Liabilities 533 1,050 1,500 1,500
12/17 12/18F 12/19F 12/20F Other Non-Current Liabilities 3,142 2,396 2,675 3,041
Gross Margin (%) 43.7 41.9 43.9 43.1 Total Liabilities 8,187 7,350 9,154 11,789
EBITDA Margin (%) 39.0 36.3 35.6 34.8 Controlling Interests
Operating Margin (%) 32.2 31.1 30.8 30.0 Capital Stock 1,152 1,152 1,152 1,152
Net Margin (%) 23.0 24.0 23.7 23.0 Additional Paid in Capital 30 30 30 30
Retained Earnings 14,565 15,810 17,088 18,528
Non-Controlling Interests 192 293 323 358
Others -1,755 -1,553 -691 128
Stockholders' Equity 13,800 15,147 17,257 19,481

Forecasts/Valuations (Summarized)
Year end Dec 31 12/17 12/18F 12/19F 12/20F
P/E (x) 8.8 7.8 7.1 6.4
P/B (x) 2.9 2.6 2.3 2.0
Cash Flows (Summarized) EV/EBITDA (x) 4.9 4.7 4.1 3.4
Year end Dec 31 (IDRbn) 12/17 12/18F 12/19F 12/20F EPS (IDR) 389 438 482 534
Cash Flows from Op Activities 3,082 9,469 7,358 9,124 BPS (DR) 1,198 1,315 1,498 1,691
Net Profit 4,476 5,042 5,554 6,150 DPS (IDR) 52 330 371 409
Depreciation 1,326 1,104 1,113 1,267 Payout Ratio (%) 13.4 75.3 77.0 76.6
Change in Working Cap -2,765 3,875 -196 -275 Dividend Yield (%) 1.5 9.6 10.9 12.0
Others 44 -553 886 1,982 Revenue Growth (%) 38.5 7.7 11.9 14.0
Cash Flows from Inv. Activities -1,969 -4,101 -2,822 -3,091 EBITDA Growth (%) 190.3 0.4 9.6 11.3
Capex -2,677 -1,935 -2,347 -2,476 Operating Profit Growth (%) 141.3 4.0 11.1 10.9
Others 708 -2,166 -475 -615 EPS Growth (%) 123.1 12.6 10.2 10.7
Cash Flows from Fin. Activities -1,232 -4,364 -2,716 -3,560 Accounts Receivable Turnover (x) 3.6 14.4 14.4 14.4
Change in Financial Liabilities -914 76 450 0 Inventory Turnover (x) 9.5 12.0 12.0 12.0
Change in Equity -12 0 802 750 Accounts Payable Turnover (x) 12.4 16.6 16.6 16.6
Dividends Paid -602 -3,796 -4,276 -4,711 ROA (%) 20.4 22.4 21.0 19.7
Others 972 -644 309 401 ROE (%) 32.4 33.3 32.2 31.6
Increase (Decrease) in Cash -119 1,004 1,820 2,474 Current Ratio (x) 2.5 2.2 2.2 1.9
Beginning Balance 3,675 3,555 4,559 6,379 Net Debt to Equity Ratio (x) Net cash Net cash Net cash Net cash
Ending Balance 3,555 4,559 6,379 8,852 Interest Coverage Ratio (x) 60.4 58.3 45.4 50.3
Source: Company data, Mirae Asset Sekuritas Research estimates

Mirae Asset Sekuritas Indonesia Research 15

April 13, 2018 Coal

APPENDIX 1

Important Disclosures & Disclaimers

Disclosures
As of the publication date, PT. Mirae Asset Sekuritas Indonesia, and/or its affiliates do not have any special interest with the subject company and do not
own 1% or more of the subject company's shares outstanding.

Stock Ratings Industry Ratings

Buy Relative performance of 20% or greater Overweight Fundamentals are favorable or improving
Relative performance of 10% or greater, but with Fundamentals are steady without any material
Trading Buy Neutral
volatility changes
Hold Relative performance of -10% and 10% Underweight Fundamentals are unfavorable or worsening
Sell Relative performance of -10%
* Our investment rating is a guide to the relative return of the stock versus the market over the next 12 months.
* Although it is not part of the official ratings at Mirae Asset Sekuritas Indonesia, we may call a trading opportunity in case there is a technical or
short-term material development.
* The target price was determined by the research analyst through valuation methods discussed in this report, in part based on the analyst’s
estimate of future earnings.
The achievement of the target price may be impeded by risks related to the subject securities and companies, as well as general market and
economic conditions.

Analyst Certification
Opinions expressed in this publication about the subject securities and companies accurately reflect the personal views of the research analyst
(the “Analysts”) primarily responsible for this report. PT. Mirae Asset Seukritas Indonesia (“Mirae Asset Daewoo”) policy prohibits its Analysts
and members of their households from owning securities of any company in the Analyst’s area of coverage, and the Analysts do not serve as an
officer, director or advisory board member of the subject companies. Except as otherwise specified herein, the Analysts have not received any
compensation or any other benefits from the subject companies in the past 12 months and have not been promised the same in connection with
this report. No part of the compensation of the Analysts was, is, or will be directly or indirectly related to the specific recommendations or views
contained in this report but, like all employees of Mirae Asset Daewoo, the Analysts receive compensation that is determined by overall firm
profitability, which includes revenues from, among other business units, the institutional equities, investment banking, proprietary trading and
private client division. At the time of publication of this report, the Analysts do not know or have reason to know of any actual, material conflict of
interest of the Analyst or Mirae Asset Daewoo except as otherwise stated herein.

Disclaimers
This report is published by Mirae Asset Daewoo, a broker-dealer registered in the Republic of Indonesia and a member of the Indonesia Stock
Exchange. Information and opinions contained herein have been compiled in good faith and from sources believed to be reliable, but such
information has not been independently verified and Mirae Asset Daewoo makes no guarantee, representation or warranty, express or implied,
as to the fairness, accuracy, completeness or correctness of the information and opinions contained herein or of any translation into English from
the Indonesian language. In case of an English translation of a report prepared in the Indonesian language, the original Indonesian language
report may have been made available to investors in advance of this report.
The intended recipients of this report are sophisticated institutional investors who have substantial knowledge of the local business environment,
its common practices, laws and accounting principles and no person whose receipt or use of this report would violate any laws and regulations
or subject Mirae Asset Daewoo and its affiliates to registration or licensing requirements in any jurisdiction shall receive or make any use hereof.
This report is for general information purposes only and it is not and shall not be construed as an offer or a solicitation of an offer to effect
transactions in any securities or other financial instruments. The report does not constitute investment advice to any person and such person
shall not be treated as a client of Mirae Asset Daewoo by virtue of receiving this report. This report does not take into account the particular
investment objectives, financial situations, or needs of individual clients. The report is not to be relied upon in substitution for the exercise of
independent judgment. Information and opinions contained herein are as of the date hereof and are subject to change without notice. The price
and value of the investments referred to in this report and the income from them may depreciate or appreciate, and investors may incur losses
on investments. Past performance is not a guide to future performance. Future returns are not guaranteed, and a loss of original capital may
occur. Mirae Asset Daewoo, its affiliates and their directors, officers, employees and agents do not accept any liability for any loss arising out of
the use hereof.
Mirae Asset Daewoo may have issued other reports that are inconsistent with, and reach different conclusions from, the opinions presented in
this report. The reports may reflect different assumptions, views and analytical methods of the analysts who prepared them. Mirae Asset
Daewoo may make investment decisions that are inconsistent with the opinions and views expressed in this research report. Mirae Asset
Daewoo, its affiliates and their directors, officers, employees and agents may have long or short positions in any of the subject securities at any
time and may make a purchase or sale, or offer to make a purchase or sale, of any such securities or other financial instruments from time to
time in the open market or otherwise, in each case either as principals or agents. Mirae Asset Daewoo and its affiliates may have had, or may be
expecting to enter into, business relationships with the subject companies to provide investment banking, market-making or other financial
services as are permitted under applicable laws and regulations.
No part of this document may be copied or reproduced in any manner or form or redistributed or published, in whole or in part, without the prior
written consent of Mirae Asset Daewoo.

Mirae Asset Sekuritas Indonesia Research 16

April 13, 2018 Coal

Distribution
United Kingdom: This report is being distributed by Mirae Asset Securities (UK) Ltd. in the United Kingdom only to (i) investment professionals
falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the “Order”), and (ii) high net worth
companies and other persons to whom it may lawfully be communicated, falling within Article 49(2)(A) to (E) of the Order (all such persons
together being referred to as “Relevant Persons”). This report is directed only at Relevant Persons. Any person who is not a Relevant Person
should not act or rely on this report or any of its contents.
United States: This report is distributed in the U.S. by Mirae Asset Securities (USA) Inc., a member of FINRA/SIPC, and is only intended for
major institutional investors as defined in Rule 15a-6(b)(4) under the U.S. Securities Exchange Act of 1934. All U.S. persons that receive this
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any express or implied understanding that they will direct commission income to Mirae Asset Daewoo or its affiliates. Any U.S. recipient of this
document wishing to effect a transaction in any securities discussed herein should contact and place orders with Mirae Asset Securities (USA)
Inc., which accepts responsibility for the contents of this report in the U.S. The securities described in this report may not have been registered
under the U.S. Securities Act of 1933, as amended, and, in such case, may not be offered or sold in the U.S. or to U.S. persons absent
registration or an applicable exemption from the registration requirements.
Hong Kong: This document has been approved for distribution in Hong Kong by Mirae Asset Securities (HK) Ltd., which is regulated by the Hong
Kong Securities and Futures Commission. The contents of this report have not been reviewed by any regulatory authority in Hong Kong. This
report is for distribution only to professional investors within the meaning of Part I of Schedule 1 to the Securities and Futures Ordinance of Hong
Kong (Cap. 571, Laws of Hong Kong) and any rules made thereunder and may not be redistributed in whole or in part in Hong Kong to any
person.
All Other Jurisdictions: Customers in all other countries who wish to effect a transaction in any securities referenced in this report should contact
Mirae Asset Daewoo or its affiliates only if distribution to or use by such customer of this report would not violate applicable laws and regulations
and not subject Mirae Asset Daewoo and its affiliates to any registration or licensing requirement within such jurisdiction.

Mirae Asset Sekuritas Indonesia Research 17