26 Apr 2022

MNC Energy Investments - Undemanding valuation despite the anticipated positive contribution from Oil & Gas and Coal mining business units

Jakarta, 26 April 2022 – Henan Putihrai Sekuritas initiates IATA with a BUY rating at a TP of 390 (70% potential return from the current 230), due to its potential recovery of financial performances following the anticipated contribution from Bhakti Coal Resources (BCR) and Bhakti Migas Resources (BMR) which is expected to compensate for its underperforming aviation business.

Post the consolidation of BCR, IATA 1Q22 Revenue/EBITDA is recorded at USD 40.4/23.5 mn. Net Profit managed to recover to USD 9.4mn from 0.5mn of net loss in FY21. We project 22F/23F EBITDA and Net Profit to reach USD 233.4/260.1 mn and 93.35/104.05 mn, respectively, following the anticipated 7.8/8.2 mn tons on coal production in 22F/23F.

Therefore, at the expected market cap of Rp4.65 tn post the rights issue, IATA is currently trading at an undemanding valuation of only 3.5/3.1x of its 22F/23F P/E ratio. Our TP is implying 4.8/4.3x of its 22F/23F P/E ratio. Still quite a bargain if compared to its peers, PTBA and ADRO which currently trades at 5.3x and 7.6x of its P/E ratios, respectively. IDX ENERGY companies are currently trading at a median of 9.1x of its respective P/E ratios (Trailing 12M).

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