• TOBA, a former coal player, is undergoing a significant shift towards green energy through corporate actions and M&A. Through its subsidiary SBT Investment 2, the company has acquired 100% ownership of Sembcorp Environment Pte. Ltd., a leading waste management company in Singapore, for approximately IDR 4.8 tn (USD 298,6 mn). This acquisition strengthens TOBA’s focus on non-coal revenue, following its earlier purchases of Asia Medical Environment and ARAH Group, which contributed 2.8% of 9M24 revenue amounting to USD 9.8 mn, but up 15 fold YoY. Additionally, TOBA signed a PPA with PLN Batam for 46 MW Floating Solar Power Plant on the 864-ha Tembesi Reservoir in Batam.
• TOBA posted 9M24 revenue of USD 336.6mn (-10.6% YoY), with 93.8% still derived from coal sales, and EBITDA of USD 79.1mn, reflecting 24.2% EBITDA margin. However, by 2027 TOBA projects non-coal EBITDA to be its profitability driver, aligning with the government’s 2030 net-zero emissions target.
• Another rationale behind TOBA’s shift is the expected depletion of its coal resources by 2027, threatening the coal revenue stream sustainability. TOBA plans to fully transition to green energy post-2027 with projected EBITDA of USD 40-45mn.
• Currently, TOBA trades at 4.7x P/E 2024F, indicating undervaluation relative to the coal industry average of 7.5x P/E and renewables of 15.7x P/E 2024F (excluding BREN).