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18 November 2024

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ITMG: 3Q24 Results – BUY, SSI TP: IDR 30,000

Our take on the results (SSI: In-line, Cons: Above)

  • ITMG delivered strong 3Q24 earnings performance on the back of higher GPM of 33.6% (+580bps QoQ, +480bps YoY), attributable to successful cost efficiency measures, leading to improved cash margin (+55.6% QoQ, +7.9% YoY). Another notable contributor to ITMG’s robust bottom-line performance was improved operational effectiveness coupled with significant FX gain of USD 26.9 mn (2Q24: USD -11.9 mn FX loss) driven by IDR appreciation.
  • ITMG recorded solid 3Q24 coal production of 5.8 Mt (+34.9% QoQ, +9.4% YoY) with lower stripping ratio of 9.2x (-12.4% QoQ, -21.4% YoY), bringing cash cost down to USD 68/ton (-9.3% QoQ, -8.1% YoY). We anticipate further production boosts next year, supported by full operation of GPK, TIS, and NPR mines in East Kalimantan, potentially adding 3–5 million tons per annum (+15–25% relative to FY24 target).
  • In terms of valuation, we upgrade our ITMG rating to BUY (from hold) with TP of IDR 30,000, reflecting 6.0x P/E FY24F with 14% upside potential on top of near 13% yield. Downside risks include IDR depreciation in 4Q24, which could impact earnings as FX gains represented 11.6% of EBT. Additionally, management guided lower 4Q24 production of 5.2 Mt (-10.3% QoQ) on high rainfall in Kalimantan.

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