Gold miners ETF massively underperformed gold price in recent months While I would agree it is not easy to quantify the real demand for bullion, demand for coal is a different story. Our recent China Reality Research showed that coal inventory at major ports and powerplants are critically low. Meeting with some Chinese coal traders (representing state owned power plants + privately owned steel mills) here last week tell us the same story. Theydesperately need to source coal (each contract size from 1-3mm tons/annum). According to the traders, most of the 2H2011 coal output of major coal miners have been sold out and they need to go down to those smaller miners (those abt 5-10mt pa) who are more willing to sell on spot. Due to China's tightening policy, the short term cost of capital gas been so high that owners of slack resources would apparently rather sell them at discount to quoted prices so they can release capital that might be needed. This has translated to critically low stock piles in commodities such as coal, copper and even rubber. (note: Copper stockpiles monitored by Shanghai Futures Exchange declined to 21 month low). As we head into peak demand season 4Q, we expect resumption of restocking in the 3Q. Destocking has created a big buying opportunity. I would be buyers of Bumi (BUMI IJ), Borneo (BORN IJ) and Harum (HRUM IJ) .
________________________________ From: positif01 <[email protected]> To: [email protected] Sent: Tue, June 28, 2011 11:59:22 AM Subject: Re: [ob] Re: Bumi Resources (Bumi IJ), Pulling all levers – BUY – Tp4,000 by Jayden Vantarakis Baby face and full of 'cat shy smile' (senyum malu-malu kucing) seperti Hendri IT, Brahma Kumbara? :d '+' On Tue, Jun 28, 2011 at 11:54 AM, jsx_consultant <[email protected]> wrote: > >Jayden Vantarakis, lulusan thn 2008 udah bisa bikin Valuasi >BUMI ... hebat ... > >--- In [email protected], PHâ„¢ <vaulstrad@...> wrote: >> >> Research Today: Bumi Resources (Bumi IJ), Pulling all levers â€" BUY â€" >>Tp4,000 by >> >> Jayden Vantarakis >> Best coal asset by far at the cheapest valuation. Catalyst for re-rating >> will >> >> be deleveraging balance sheet. Mgmt confirmed last week that deleveraging >> its > >> their number 1 priority. Regardless of CIC deal or not, repayment of the >> first >> >> US$600m tranche this October is on track with internal cash flow. Market >> seem > >> to be disappointed with swapping 75% of BRMS with US$2.07b vallar >> convertible >> note without further clarity in plans. However, we feel that this lays the >>path >> >> to further pay down CIC debt. Herald resources will be an extremely >> attractive >> >> asset (highest concentration zinc and lead deposit) for the Chinese to >> participate in. Furthermore, CB puts a real value to BRMS where it >> currently >> does not reflect full value in Bumi’s share price. Jayden Vantarakis >> re-iterates buy call based on earnings upside as debt is repaid. >> Debt plans outlaid >> At an analyst briefing last week Bumi confirmed it is negotiating with CIC >> to >> retire the full US$1.9b debt this year in exchange for the convertible >> notes, >> enabling CIC to become a shareholder in Vallar. If talks are not successful, >> Bumi will sell down the convertible note in stages as the debt tranches fall >> due. Regardless, repayment of the first US$600m tranche this October is on >>track >> >> as the company has access to US$787m in liquidity as of June. >> On track for 66mt production this year >> BUMI produced 14mt during 1Q11 and is on track to produce 30mt for 1H11. >> This >> will be in line with prior years where 44% of annual production is realized >> in > >> the first half. We keep our 2011CL assumptions unchanged with 66mt and ASP >> US$91/t. The 32mt KPC conveyer belt is on track to be completed by 1H12, >> potentially as early as 1Q12. This will double production capacity to 64mt. >> Accounting changes to gain Vallar FTSE 100 listing >> In order for Vallar to obtain entry to the FTSE 100, the company’s >> accounts >>must >> >> be adjusted in line with international peers. The key change for Bumi is the >> recognition of its share of KPC and Arutmin at the top line. This has >> minimal >> impact on future earnings forecasts for the company. >> Stock is cheap compared to peers >> Assuming full repayment, Bumi will save $361m in annual interest costs, >>implying >> >> US$1.1bn in earnings for 2012 and 7x P/E. Based on the long run average of >> 15x > >> earnings multiple, a bluesky fair value then would be 6,350 per share. Our >> 2012CL earnings forecast and Rp4,000 target price only incorporates >> repayment >>of >> >> the first tranche of US$600m to CIC this October. The stock is currently the >> cheapest Indonesian coal play offering 28% upside. Strong BUY. >> Note: Despite recent sell off in commodities. Aussie coal price climbs as >> rains cut production.Australia’s thermal coal prices rose by more than >>US$2/ton >> >> WOW to tip past US$121 per ton, as heavy rains in the Hunter Valley region >> slowed output. COMMENT: China has commenced restocking ahead of peak power >> demand during the 3rd quarter, however inventory levels are up month on >> month meaning a near term pause. We met Chinese coal traders in town telling >> us >> >> they need restock big-time in the 2HAny Australian spot price increase >> against > >> this backdrop is positive and will flow through to Indonesian thermal coal >> indices. The 2 most leveraged stocks to index linked pricing are BUMI and >HRUM. >> >> saham.ws >> > >
