PT Bukit Asam announced 10 new locos from GE USA have arrived in May 2013

PT Bukit Asam:  10 new locos have arrived in May 2013 (PTBA; Rp12,500; Neutral; TP:Rp16,500)

10 new locos arrived. PTBA has announced 10 new locos from GE USA have arrived in May 22nd, 2013. Ytd, total additional new locos that have been delivered are 30 units, and the remaining 14 unit locos is scheduled to deliver on June 24th, 2013. All those additional new locos would increase the coal rail transportation capacity up to 15.6mn tons for Tj enim – Tarahan port this year. However due to some delayed and lag time in commissioning, we only expect effective coal rail transportation capacity of 13.5mn tons this year considering company’s historical execution risk track record (10-15% below guidance).

Tarahan port expansion on progress. Those additional rail transportation capacity to align supporting the Tarahan port loading capacity expansion double up to 25mn tons per year (for Capesize size 150k DWT and Panamax size 80k DWT). Tarahan port expansion progress is on track, and company expect will complete in November 2013.

Currently we have Neutral rating on the counter. PTBA share price has been hammered badly due to continuous negative sentiment in the sector and some regulation overhang issue domestically and externally. PTBA now is trading at 12.4x – 9.2x P/E 13F -14F. Continued selling pressure may suggest attractive entry point to the stock as PTBA has solid balance sheet and one of the highest cash margin among peers.

for Indonesia Market Summaries 31 May 2013