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Strong growth phase starting in 2026F on USD 4.5bn backlog contracts. Following a period of underperformance due to pre-operating costs and limited contribution from newly acquired assets and projects, PTRO is entering strong growth phase backed by sizeable, diversified contract portfolio across coal, nickel, and copper/gold with blue-chip clients such as Vale, Freeport, BP Berau, and CUAN’s ecosystem (Figure 4). In 2024, PTRO secured ~USD 1.9bn in new projects, including EPC contracts for BP Berau, Vale’s Pomalaa HPAL project, and Daya Bumindo Karunia (CUAN), along with mining contracts with Pasir Bara Prima (SINI) and Global Bara Mandiri. Entering 2025, PTRO added another ~USD 1.5bn through new mining contracts with Niaga Jasa Dunia, Bara Prima Mandiri, Freeport Indonesia, and INCO’s 10-year overburden removal contract in Bahodopi, Sulawesi, bringing PTRO’s total backlog to c.USD 4.5bn. These contracts provide multi-year revenue visibility and reinforce PTRO’s position as key mining and EPC partner in Indonesia’s resources value chain.
Expanding into EPC/EPCI and securing growth funding. PTRO’s expansion into EPC/EPCI segment - through acquisitions of Hafar and Scan-Bilt - along with increasing exposure to international projects (Figure 5) is set to structurally enhance profitability. Thanks to these initiatives, EBITDA margin is expected to rise to >19.2% in 2026F (from 14.0% in 2024), while ROE increases to 12.5% (from 3.9%) as major projects ramp up. To support backlog monetization and business diversification, PTRO has secured funding through public offerings of bonds and sukuk, issuing IDR 3tn in bonds and sukuk in Dec-24 and Mar-25 (1–7-year tenors, 6.5–9.5% coupons), with proceeds allocated mainly to working capital (67% for materials and services, 25% for labor).
Earnings inflection and MSCI re-rating; SPEC-BUY with 17,000 TP. With earnings set to inflect from 2026F onward and ROE expected to improve, we believe PTRO has significant further price re-rating, inline with the stock’s potential to enter into MSCI big cap inclusion. Accordingly, we initiate coverage with SPEC-BUY and TP of IDR 17,000, reflecting 58% upside. Downsides to our call: execution delays and regulatory risks.
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