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06 December 2024

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Coal: 9M24 Results Round-up

3Q24 Performance

  • In 3Q24, our coal coverage’s earnings showed YoY improvement on the back of aggregate sales volume growth of +8.7% YoY, efficient cash cost management that bolstered cash margins to 6.6%, and rising coal prices to USD 141.4/mt in 3Q24 (+2.8% QoQ).
  • Despite India boosting coal imports to 264.9 Mt (+9.7% YoY) and indications of sustained demand in 2025, we expect coal prices to slightly decline to USD 125/ton, mainly due to global economic slowdown and COP29's emission-cut advocacy, with Australia (14% of global coal reserves) targeting 46% emission reduction by 2030. However, lackluster progress in green financing at COP29, only reaching USD 300bn (target: USD 1.3tn) by 2035, may support coal prices short-term coupled with domestic coal players’ upside potential from the government revising its royalty scheme, potentially boosting earnings.
  • We upgrade our call to OVERWEIGHT (from Neutral) on strong 3Q24 results, potential royalty reforms, MIP benefits for domestic sellers, and solid cash reserves supporting dividend pay-outs, though prices may face pressure due to global energy transition. We retain ADRO (BUY, TP IDR 3,400) as our top pick, due to high-margin contributions from ADMR and SIS along with revenue stream from its 1.5 Mtpa aluminum smelter (COD 2025).

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Tantangan Batu Bara di Akhir 2024

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COAL 3Q24 results

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COAL 3Q24 results

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