Biggest growth driver: Waste doubling 2026 earnings to 74% of EBITDA. Following its shift from coal to waste management and renewables under its TBS2030 roadmap, TBS Energi Utama (TOBA IJ) emerges as one of Indonesia’s leading energy transition plays. As the transition progresses, EBITDA is projected to grow from USD 71mn in 2024 to USD 231mn by 2030F, with coal shrinking to 1% (from 88% in 2024), while waste (35%) and renewables (24%) will take the lead. The 1Q25 Sembcorp acquisition has transformed TBS into Southeast Asia’s largest integrated waste operator, with waste EBITDA already at ~85% with 2025F EBIT contribution of USD 53mn, accounting for most of TOBA’s operating earnings on coal hiccup this year. Going forward, we expect waste’s earnings growth to double in 2026F reflecting 67% of TOBA’s EBITDA.

Huge potential upside on government ruling & expansions through M&As. In the next 3–4 years, we see tremendous potential upside for TOBA on the back of government regulation on as well as growth through expansions and M&A activities. A key near-term catalyst is the upcoming Presidential Decree on Waste-to-Energy (WTE), which is expected to lift tariffs (USD 0.13 → 0.19/kWh) and streamline IPP permits, pushing IRRs into the low teens and reducing payback periods to 5–6 years. With Jakarta alone generating ~7k tons of waste per day (sufficient to support multiple 40MW plants) TBS is well-positioned to capture Indonesia’s vast WTE opportunity, driving visible growth, stronger returns, and ESG re-rating. Depending on the various M&A activites, TOBA’s 2025F net gearing of 77% may substantially increase, although currently has over USD 200mn in debt headroom to accelerate growth.

Cheap valuation, high ROE, and energy transition – BUY with IDR 2,100 TP. We assign BUY on TOBA given high 2026F ROE of 18% and cheap valuation with EV/EBITDA of 5.8x (35% discount to the sector) and PE of 11.6x (48% discount to peers) despite the stock having re-rated 212% since April 2025. TOBA’s waste management assets are 62.9% cheaper than peers, while its renewable assets trade at 9.6x EV/EBITDA, 45% below peers, highlighting attractive long-term profitability. TOBA’s renewable energy pipeline provides strong visibility on recurring cash flows starting 2026F, supported by diversified mix of hydro, solar, and wind projects. With growing market confidence in its energy transition strategy, we derive our SOTP-based TP at IDR 2,100, implying 2026F EV/EBITDA of 11.5x and offering +67% upside. Further upside would be supported by WTE regulatory tailwinds and monetization of RE projects post-COD. Key risks: regulatory delays, execution challenges & bigger-than-expected funding needs.