Research & Stock Picks

Emiten Report

20 March 2023

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Huge Expansion in the Pipeline

BRMS reported a net profit of USD 7mn (+172.1% QoQ; -88.4% YoY) in 4Q22, bringing its FY22 net profit to USD 14mn (-80.2% YoY), above our estimate (227.6% of SSI’s FY22 projection) and consensus (195.1% of consensus estimate). The company hinted that its gold production volume would exceed 20k toz (+269.3% YoY) in 2023, thanks to the additional production capacity from its second gold processing plant (completed in 3Q22). Going forward, the company expects its annual gold production capacity could even exceed 70k toz following the completion of its third and fourth processing plants. We reiterate our BUY rating with a SOTP-based TP of IDR 200 per share. Downside risks: 1) lower-than-expected global commodity prices, 2) regulatory changes.

Operating loss in 4Q22. BRMS booked revenue of USD 3mn in 4Q22 (+19.5% QoQ; +41.9% YoY), which brought its cumulative FY22 revenue to USD 12mn (+10.1% YoY), in line with ours (97.0%) but below consensus estimate (89.6%). The quarterly growth in 4Q22 was mainly driven by higher gold sales volume (1,579 toz. +21.0% QoQ), which brought into cumulative FY22 figure to 5,415 toz (+25.1% YoY) while its ASP remained relatively flat at USD1,773 per toz (+0.6% QoQ). However, as the company booked depreciation expenses of USD 697k (3Q22: 0), its gross margin fell to 48.4% (3Q22: 66.1%), translating into an operating loss of –USD 1mn (3Q22: USD 1mn operating profit).

Above-expected earnings. On its bottom line, BRMS posted a net profit of USD 7mn (+172.1% QoQ; -88.4% YoY) in 4Q22, bringing its FY22 net profit to USD 14mn (-80.2% YoY), above our estimate (227.6% of SSI’s FY22 projection) and consensus (195.1% of consensus estimate). The company managed to book a positive bottom line in 4Q22, even while incurring an operating loss and income tax expenses of USD 21.8mn (9M22: USD 2.9mn tax benefit), supported by: 1) share of profit from investment in JV of USD 11.8mn (3Q22:USD 0), and 2) write-off payables of USD 17.6mn (3Q22:USD 0).

Company outlook. The company hinted that its gold production volume would exceed 20k toz (+269.3% YoY) in 2023, thanks to the additional production capacity from its second gold processing plant (completed in 3Q22). Going forward, the company expects its annual gold production capacity could even exceed 70k toz following the completion of its third (in Palu, with a capacity of 4ktpd; operational in 1Q24) and fourth (in Gorontalo, with a capacity of 2 ktpd: 2Q24) processing plants.

Additional portfolio coming in. BRMS recently acquired an 80% stake in the Kerta gold mine using its receivable settlement from PT Suma Heksa Sinergi in 2022. To note, Kerta gold mine has 18mn tons of mineral reserves and 75mn tons of mineral reserves, with an average gold grade of 1.07 g/t.

BUY with a TP of IDR 200. We reiterate our BUY rating with a SOTP-based TP of IDR 200 per share. Downside risks: 1) lower-than-expected global commodity prices, 2) regulatory changes.

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