• Adaro Andalan Indonesia (AADI), one of ADRO's most profitable entities, operates as a thermal coal mining company with total coal resources of 4.1bn tons (13% of Indonesia), mainly located in Kalimantan (6 of 7 mining assets). The company reports strong financial performance, with 1H24 bottom line at USD 859mn (+21.2% YoY). The company is preparing to IPO at 5 Dec 2024, issuing 7.8bn with potential fund raising of IDR 3.6-4.6tn (USD 226.9-291.7mn).
• AADI is expected to use IPO proceeds to develop its subsidiary, Maritim Barito Perkasa (MBP), enhancing coal delivery capabilities with additional tug, barge, and floating crane, potentially increasing coal transport c. +31,000 tons (+4.0% capacity). The company forecasts annualized 2024F sales volume of 66 Mt (+8.5% YoY) with stripping ratio of 4.3x, bringing 2024F net profit to USD 1.7bn (+52.1% YoY). AADI’s robust financial standing is further highlighted by its substantial asset base, valued at USD 5.4bn (52.9% of ADRO’s total assets) with ROE of 40.7% and net cash position.
• With offering price range of IDR 4,590-5,900 per share, AADI’s valuation stands at 1.41-1.68x 2024F P/E, 75% discount from sector average. This positions AADI as an undervalued stock with significant upside potential of +222% to IDR 16,900/share (assuming 2024F P/E aligns with peers).
• Post-IPO, AADI will conduct public offering for ADRO’s shareholders (PUPS) with implied diluted conversion ratio of 4.4:1. To fund share conversion, ADRO plans to disburse special dividends of USD 2.6bn, reflecting 34.5% div. yield, equivalent to 90% of AADI’s market cap.