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Even though we expect BRMS to book better earnings in 4Q23 with its 2nd gold processing plant running at full capacity, the company might still miss our current full-year earnings forecast. Thus, we decided to trim our 2023F and 2024F earnings forecasts by 29.3% and 37.0%, respectively. As we toned down our forecast, we decided to lower our TP to IDR 230 (prev: IDR 250), though we still kept our BUY rating. Downside risks: 1) lower-than-expected global commodity prices, 2) regulatory changes
Stellar earnings in 9M23. BRMS reported robust revenue growth in 3Q23, posting USD 17mn (+68.4% QoQ; +507.9% YoY), which translates to cumulative 9M23 revenue of USD 33mn (+293.5% YoY), falling short of ours and cons at 59.5% and 67.0% respectively. The robust growth in 3Q23 was mainly driven by higher gold sales volume (8.8k oz, +74.3% QoQ, partly thanks to additional output from its 2ND plant), which offset the drop in gold ASP to USD 1,916 per oz (-3.3% QoQ). We believe BRMS will be able to book even better numbers in 4Q23 BRMS, given the fact that (1) its 2nd plant will start running at full capacity in 4Q23, (2) gold has a relatively favorable outlook in 4Q23; with global uncertainty following the Israel-Hamas war, investors might shift to safe-haven assets, including gold.
Forecast adjustments. On its bottom line, BRMS posted a net profit of USD 5mn (+43.1% QoQ; +86.3% YoY), translating into a cumulative 9M23 net profit of USD 10mn (+62.2% YoY), below ours and cons at 49.9% and 64.5% respectively. Even though we expect BRMS to book better earnings in 4Q23 with its 2nd gold processing plant running at full capacity, the company might still miss our current full-year earnings forecast, as the company’s OpEx is higher than our estimate. Hence, we decided to raise our OpEx assumption to better reflect the company’s current condition. Lastly, we decided to trim our 2023F and 2024F earnings forecasts by 29.3% and 37.0%, respectively
BUY, TP: IDR 230 per share. As we toned down our forecast, we decided to lower our TP to IDR 230 (prev: IDR 250), though we still kept our BUY rating for BRMS. Downside risks: 1) lower-than-expected global commodity prices, 2) regulatory changes.
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