Bountiful Record-Breaking Achievements; Any Afterparty in FY23?
Key Takeaways :
• ADRO’s revenue blossomed by +103% to all-time high USD8.1bn in FY22 (vs USD3.9bn in FY21) beyond our forecast of USD7.6bn (106%). Net income came in at a record-breaking USD2.49bn, credits to historically high ASP and low stripping ratio.
• The stripping ratio was reported to dive lower in FY22 to 3.7x (vs 4.1x in FY21), slipping through our forecast of 4.07x, and resulted in operational EBITDA of USD5bn in FY22 (jumped +139% YoY from USD2.1bn in FY-21). Production volume reached 62.88mn t, rendering the sales volume at 61.34mn t or rose 19% YoY (vs 51.58mn t in FY21), in alignment with the guidance and our projections
• ADRO’s cash balance managed to soar +125% YoY to USD4.1bn in FY22 (vs USD1.8bn in FY21). The potential for dividend yield is paved to at least reach an attractive 10.5% for FY23 (vs 9.31% in FY22).
• Potential upsides for ADRO comes from China's increased power demand on the back of strong and sustained economic recovery and India's imminent demand spike from the summer heatwave.
• The newly enacted HBA coal price policy from MoEMR of Indonesia is posed to yield ADRO higher ASPs. Coupled with the IUPK scheme, ADRO’s margins are set to substantially ramp up.
• We recommend HOLD for ADRO at a TP: IDR3,100, implying 1.11x EV/EBITDA in FY23F (8.4% upside). • Downside risks : 1) moderating economic activity in China, 2) mild summer in India, 3) price competitiveness from Australia’s coal and 4) weather conditions. ADRO is currently traded below its -2STD of its 5 years historical EV/EBITDA mean.
MNCS Research
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