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Coal and gold sales remain above UNTR’s targets. 10M21 coal sales
21,000 81
improved to 8.2m tonnes (+7% YoY), in parallel with the positive traction 19,000 72
May-21
May-21
Feb-21
Feb-21
Mar-21
Mar-21
Apr-21
Jul-21
Jul-21
Nov-20
Dec-20
Dec-20
Oct-21
Oct-21
Jan-21
Jun-21
Aug-21
Aug-21
Sep-21
Sep-21
Nov-21
+127% YoY). Hence, earnings support from this segment will remain
beneficial, in our view, given also the higher coking coal portion charted
(10M21: 24% vs 10M20: 18%), which ensures a better selling price. Gold Source: Bloomberg
sales were also maintained during this period at 283,000oz (+3% YoY).
Despite monthly flat achievements due to a mining plan adjustment to
secure its reserves, this remained in line with UNTR’s full-year guidance.
The gold mine will continue to supplement its overall business, as the
second-highest contributor to PBT from a single segment (c.31%) when
compared to UNTR’s coal-related businesses (HE sales: 17%, mining
contracting: 39%, coal mining: 17%).
Downside risks: i) Softening HE sales, ii) an unprecedented downturn in
coal prices, and iii) a prolonged COVID-19 spread that impacts global coal
demand. We maintain our IDR29,400 TP after imputing our proprietary in- Overall ESG Score: 2.80 (out of 4)
house adjustments, which reflects the factors that impact ESG-related E: GOOD
issues (a 4% discount to our multiple valuation target). We retain our BUY UNTR applies international standard ISO 14001: 2015 for
call. environmental management systems, certified by an
independent certification agency. It also applies the Astra
Green Company practices of its parent company as a
reference when implementing environmental impact
Forecasts and Valuation Dec-20 Dec-21F Dec-22F Dec-23F management initiatives
Total turnover (IDRb) 60,347 71,124 78,295 79,455 S: GOOD
UNTR is actively engaged in CSR activities. In 2020, it
Recurring net profit (IDRb) 6,003 9,627 10,542 10,571
received a Padmamitra Award in the Disaster Fields
Recurring net profit growth (%) (46.9) 60.4 9.5 0.3 category from the Ministry of Social Affairs and National
Recurring P/E (x) 14.20 8.85 8.08 8.06 Social Welfare CSR Forum.
P/B (x) 1.5 1.4 1.2 1.1 G: GOOD
P/CF (x) 2.18 2.45 2.45 2.38 UNTR regularly conducts shareholders’ meetings and
ensures equal distribution of public information to all
Dividend Yield (%) 3.3 4.6 5.0 5.0
stakeholders. It has received numerous awards with
EV/EBITDA (x) 4.22 2.97 2.53 2.22 regards its governance practices, one of them being
Return on average equity (%) 10.4 16.4 16.1 14.6 Indonesia 2020 Best Rating on Governance Disclosures of
Net debtcover
Interest to equity
(x) (%) net cash
5.39 net10.51
cash net11.36
cash net15.95
cash Trading Sector, issued by Investor Magazine.
Source: Company data, RHB
Financial Exhibits
Asia Financial summary (IDR) Dec-20 Dec-21F Dec-22F Dec-23F
Indonesia Recurring EPS 1,609.38 2,580.87 2,826.23 2,833.99
Industrials DPS 747.22 1,058.82 1,131.75 1,133.43
United Tractors BVPS 14,776.89 16,681.80 18,512.34 20,214.57
Return on average equity (%) 10.4 16.4 16.1 14.6
UNTR IJ
Buy
Valuation metrics Dec-20 Dec-21F Dec-22F Dec-23F
Recurring P/E (x) 14.20 8.85 8.08 8.06
Valuation basis
P/B (x) 1.5 1.4 1.2 1.1
P/E target at 10.4x of FY22F EPS, at the mean line from FCF Yield (%) 42.4 37.7 34.7 35.4
its 5-year average forward-rolling P/E band. Dividend Yield (%) 3.3 4.6 5.0 5.0
EV/EBITDA (x) 4.22 2.97 2.53 2.22
Key drivers EV/EBIT (x) 9.29 4.86 3.88 3.34
i. Increase in coal sales volumes;
ii. Increase in coal prices; Income statement (IDRb) Dec-20 Dec-21F Dec-22F Dec-23F
iii. Increase in coal-mining activities; Total turnover 60,347 71,124 78,295 79,455
iv. Surge in gold prices.
Gross profit 12,989 17,007 18,550 18,567
EBITDA 18,240 21,667 22,152 21,736
Key risks
Depreciation and amortisation (9,946) (8,432) (7,736) (7,308)
i. A longer-than-expected recovery from COVID- Operating profit 8,294 13,236 14,416 14,427
19; Net interest (781) (779) (759) (390)
ii. Weakening coal and heavy equipment (HE)
Pre-tax profit 7,011 12,067 13,322 13,398
ASPs from demand stoppages due to
Taxation (1,379) (2,655) (2,931) (2,947)
decelerating economic growth
Reported net profit 6,003 9,627 10,542 10,571
Figure 1: UNTR’s operational statistics for October and cumulative 10M21 data
Comp.
Oct-20 Sep-21 Oct-21 % MoM % YoY 10M20 10M21 % YoY % FY21F
guidance
UNTR's HE sales (Komatsu):
Mining 37 170 253 49% 586% 472 1,339 183.8%
Forestry 28 27 36 30% 29% 268 337 25.5%
Construction 72 91 59 -35% -18% 436 658 50.8%
Agro 17 15 48 213% 181% 169 257 52.2%
Total 154 304 396 30% 157% 1,345 2,590 92.6% 86% 3,000
Industry sales volume 641 1,448 1,325 -8% 107% 4,483 11,773 163%
UNTR's market share 24% 21% 30% 30% 22%
Coal mining:
Coal sales (m tonnes) 0.508 0.327 0.409 25% -19% 7.7 8.2 7% 86% 9.5
Newcastle coal prices (USD/tonne) 57.5 184.1 234.7 27% 308% 58.1 131.9 127%
Gold mining:
Gold sales (‘000oz) 22 27 25 -7% 14% 276.0 283.0 3% 83% 340
Source: Company data, RHB
13.0
+1SD: 11.9
12.0
11.0
Mean: 10.3 UNTR is still trading at an attractive
-1.5SD from its 5-year forward P/E
10.0
band. This implies a c.29% upside to its
9.0 -1SD: 8.8 P/E target at the mean line to FY22F
EPS
8.0
-2SD: 7.2
7.0
Nov-19
Jul-21
Nov-16
Jul-17
Nov-17
Jul-18
Nov-18
Jul-19
Jul-20
Nov-20
Nov-21
Mar-17
Mar-18
Mar-19
Mar-20
Mar-21
Jan-19
Jan-17
May-17
Sep-17
Jan-18
May-18
Sep-18
May-19
Sep-19
Jan-20
May-20
Sep-20
Jan-21
May-21
Sep-21
82.8
7.5 OB volumes have hovered at lower
levels during the FY19-20 period due
7.0
72.8
to the limited-cost approach by the
6.5 coal players
62.8
Average 4-years OB
6.0 The trend back on its traction started
removal: 73.1m bcm
earlier this year, along with the
52.8 5.5 improvements in mining activity from a
42.8 5.0 recovery in coal prices
Jun-18
Jun-19
Jun-20
Jun-21
Oct-17
Oct-18
Oct-19
Oct-20
Oct-21
Feb-18
Feb-19
Feb-20
Feb-21
Dec-19
Dec-17
Dec-18
Dec-20
Apr-18
Aug-18
Apr-19
Aug-19
Apr-20
Aug-20
Apr-21
Aug-21
OB removal volume (m bcm; LHS) Monthly Stripping ratio (x; RHS)
Source: Company data, RHB
60% 500
55% 445
50% Average 4-years HE sales: 390
265 units / month
45%
335 UNTR’s monthly HE sales have grown
40% MoM since Jun 2020. Although some
280
35% fluctuations happened throughout this
225 year, the sales level was virtually
30%
170 improved vs FY19-20’s achievements
25%
The monthly sales achievement spiked
Average 4-years
20% 115
market share: 31%
15% 60 in October as Komatsu’s market share
recovered to 30% during the month
10% 5
Oct-17
Oct-18
Oct-19
Oct-20
Oct-21
Feb-18
Feb-19
Feb-20
Feb-21
Jun-18
Jun-19
Jun-20
Jun-21
Dec-17
Dec-18
Dec-19
Dec-20
Apr-18
Aug-18
Apr-19
Aug-19
Apr-20
Aug-20
Apr-21
Aug-21
1.75 256
235
1.50
215
1.25 194
Coal prices sharply jumped since their
Average 4-years Newcastle
trough in Sep 2020 and notched to a
174
1.00 price: : USD91.2/ tonne sky-high level in October
153
Oct-18
Oct-19
Oct-20
Oct-21
Feb-18
Feb-19
Feb-20
Feb-21
Jun-18
Jun-19
Jun-20
Jun-21
Dec-17
Aug-18
Dec-18
Apr-19
Dec-19
Dec-20
Apr-18
Aug-19
Apr-20
Aug-20
Apr-21
Aug-21
Coal sales volume (m tonnes; LHS) Newcastle coal price (USD/ tonne; RHS)
Source: Company data, RHB
2,100
Average gold production: 30 k oz/ month
38.5
1,950
33.0
Gold
1,800
volumes throughout 10M21 were
27.5
1,650 stable due to the adjustment on its
mining plan to optimise reserves. The
22.0 1,500 achievement was still in line with the
company’s full-year target, emphasising
16.5 1,350 our view for a recovery in gold
production this year
11.0 1,200
Jul-19
Oct-19
Jul-20
Oct-20
Jul-21
Oct-21
Feb-19
Mar-19
Nov-19
Feb-20
Mar-20
Nov-20
Feb-21
Mar-21
Jan-19
May-19
Jun-19
Jan-20
May-20
Jun-20
Jan-21
May-21
Jun-21
Dec-18
Dec-19
Apr-19
Sep-19
Aug-19
Apr-20
Sep-20
Dec-20
Sep-21
Aug-20
Apr-21
Aug-21
Gold sales volume (k oz; LHS) Gold spot price (USD/ oz; RHS)
Source: Company data, RHB
Recommendation Chart
Date Recommendation Target Price Price
Price Close
2021-10-12 Buy 29,400 26,275
46,000 Recommendations & Target Price
2021-09-27 Buy 27,700 22,875
na
47,600
32,500
22,700
21,700
21,700
25,000
35,00027,500
29,800
29,40027,700
3.0
2.8 2.8
2.0
1.0
0.0
Source: RHB
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Analyst Company
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